Mrunal Economy PCB-7 Batch 2022-23 Handouts @cse - Updates

Mrunal’s Economy for UPSC & Other Competitive Exams 2022
10 🏛🏛BRIEF INFO ON UPSC CIVIL SERVICES EXAM

वैसे इसक� ज�रत नहीं होनी चािहए, it’s available on internet लेिकन कु छ लोग ये भी पूछते रहते ह� so here it is:
10.2.1 🏛🏛 🔠🔠Syllabus of Preliminary examination
Paper-1 General Studies (2 hrs) Paper-II Aptitude (2 hrs)
100 MCQs x 2 marks = 200 marks. They’re 80 MCQs x 2.5 marks = 200 marks. Since 2015 exam-
counted for shortlisting candidates for the Mains reform, you need to score only 33% qualifying marks
exam stage. (i.e. 67 marks), and they’re not counted while
shortlisting candidates for the Mains exam stage.
1. Current events of national and international 1. Comprehension.
importance. 2. Logical reasoning and analytical ability.
2. History of India, Indian National Movement. 3. General mental ability.
3. Indian and World Geography – Physical, 4. Basic numeracy (numbers and their relations,
Social, Economic Geo.of India, World. orders of magnitude, etc.) (Class X level), Data
4. Indian Polity and Governance – interpretation (charts, graphs, tables, data
Constitution, Political System, Panchayati sufficiency etc. – Class X level).
Raj, Public Policy, Rights Issues, etc. 5. **Interpersonal skills including communication
5. ✅Economic and Social Development skills.
Sustainable Development, Poverty, Inclusion, 6. **Decision-making and problem-solving.
Demographics, Social Sector initiatives, etc. ** while they’re part of syllabus but not asked since
(Covered in this course) 2015 due to protests by the Hindi-belt aspirants.
6. General issues on Environmental Ecology,
Bio-diversity and Climate Change .
7. General Science.
10.2.2 🏛🏛 ✏Mains & Interview

Paper Subject Name Marks
English language paper & regional language paper (Not counted in Merit) N/A
Paper-1 Essay 250
Paper-2 General Studies–I (Indian Culture, History and Geography of the World and Society) 250
Paper-3 General Studies –II (Governance, Constitution, Polity, Social Justice and International 250
relations)
Paper-4 General Studies –III (Technology, Economic Development, Bio‐diversity, Environment, 250
Security and Disaster Management)
Paper-5 General Studies –IV (Ethics, Integrity and Aptitude) 250
Paper-6 Optional Subject – Paper 1 250
Paper-7 Optional Subject – Paper 2 250
Sub Total (Written test) 1750
INTERVIEW/ Personality Test 275
Grand Total 2025
10.2.3 🏛🏛General Studies Mains Paper 1 to 4: What is covered in your course?

✅= covered in Mrunal’s Economy Course/Handout either fully or briefly. <see next table → → >
(Batch:PCB7) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 1

Block Sr Title
GS-I: Indian Heritage and Culture, History and Geography of the World and Society.
History 001 Salient aspects of Art forms, Literature, Architecture (ancient to modern)
002 History Mid-18th century - Present (significant events, personalities, issues)
003 Freedom Struggle
004 Post-Independence (consolidation and reorganisation within country)
005 18th century events (e.g. Industrial Revolution, WWs, redrawn boundaries,
colonisation, decolonisation)
006 Political philosophies (e.g. communism, capitalism, socialism) and their effect on society
Social 007 Salient features of Indian Society
Science 008 Diversity of India
009 Role of women and women's organisation
010 Population and associated issues✅ (Pillar6)
011 Poverty and developmental issues✅(Pillar6)
012 Urbanisation (problems and remedies)✅(Pillar5)
013 Globalisation (effects on Indian society)
014 Social Empowerment, Communalism, Regionalism, Secularism
Geography 015 Salient Features of World Physical Geography
016 Distribution of key Natural Resources (world, S. Asia, Indian subcontinent)
017 Factors responsible for location of Industries (primary, secondary, tertiary; India, world)
REF: https://mrunal.org/tag/gsm1-geo-location
018 Important Geophysical phenomena (earthquakes, tsunami, volcanoes, cyclones)
019 Geographical features and location
020 Critical geographical features, flora, fauna (changes and effects therof)
GS-II: Governance, Constitution, Polity, Social Justice and International Relations
Polity 021 Constitution: Historical underpinnings & evolution- Features, amendments, significant
& provisions, basic structure
Governance 022 Comparison of Indian constitutional scheme with other countries'
023 Functions & responsibilities of the Union and the States; issues and challenges of federal
structure
024 Devolution of powers and finances to local levels; challenges therein
025 Separation of Powers (between different organs, dispute redressal mechanisms,
institutions)
026 Union and State Legislatures (structure, functioning, conduct of business, powers &
privileges; issues therein)
027 Executive, Judiciary (structure, organisation, functioning)
028 Ministries and Departments (of Union and State govts.)
029 Pressure Groups & Formal, Informal associations (and their role in the polity)
030 Salient features of the Representation of People’s Act.
031 Bodies: i) Appointment to various Constitutional posts (ii) Constitutional Bodies
(powers, functions and responsibilities) (iii) Statutory, Regulatory and Quasi-judicial
bodies ✅(only those related to economy e.g. Finance Commission in Pillar2, IBBI in
Pillar1B2 etc.)

Welfare of 032 Government Policies & Interventions for development of various sectors (issues in their
Weaker design, implementation)✅
Section 033 Development Processes & Development industry (role of NGOs, SHGs, groups &
associations, donors, charities, institutional and other stakeholders)
034 Welfare Schemes (centre, states; performance, mechanisms, laws, institutions and
bodies constituted for protection of vulnerable sections)✅ (Ref Pillar6)
035 Social Sector & Social Services (health, education, human resources - issues in
development, management)✅(Ref Pillar6)
036 Poverty and hunger issues✅(Ref Pillar6)
Governance 037 Important aspects of governance
038 Transparency and accountability (institutional and other measures)
039 E-Governance (applications, models, successes, limitations, potential)
040 Citizens Charter✅(Only Investors Charter @Pill1C & TaxPayers Charter@Pill2B)
041 Role of Civil Services in a democracy.
Internationa 042 India and its Neighborhood (relations)
l 043 Bilateral, Regional, Global groupings & Agreements (involving and/or affecting India)
Relations 044 Effect of Policies & Politics of Developed and Developing countries on India (India's
interests, diaspora)
045 Important International institutions, agencies, for a (structure, mandate)
GS-III: Technology, Economic Development, Environment, Security Disaster Management
Economy & 046 Indian Economy (issues re: planning, mobilisation of resources, growth, development,
Agriculture employment)✅(Ref: Pillar2, 4C, 6)
047 Inclusive growth and issues therein)✅(Ref: Pillar4C, 6)
048 Government Budgeting)✅(Ref: Pillar2D, 6)
049 Major Crops in various parts of country (cropping patterns, types of irrigation, irrigation
systems
050 Farm subsidies and MSP and issues therein (direct and indirect)✅(Pill4A)
051 storage, transport & marketing of agro-produce related issues & constraints, ✅(Pill4A)
052 PDS (objectives, functioning, limitations, revamping, issues of buffer stocks & food
security)✅(Pill4A)
053 e-technology to aid farmers, E-Technology missions ✅(Pill4A)
054 Economics of animal-rearing✅ (Pillar4A)
055 Food processing and related industries in India (scope & significance, location,
upstream-downstream requirements, supply chain management)✅(Pillar4A)
056 Land Reforms in India ✅(Pillar4A- ONLY Brief overview)
057 Effects of Liberalisation on the economy ✅ Pillar#4B
058 Changes in Industrial policy & their effects on industrial growth✅ Pillar#4B
059 Infrastructure (energy, ports, roads, airports, railways)✅(Pillar#5A)
060 Investment models✅(Pillar#5B)

Science 061 (i) S&T developments and everyday applications & effects (ii) Awareness in fields of IT,
Tech Space, Computers, Robotics, Nanotech, Biotech, IPR issues
062 (i) Achievements of Indians in S&T, (ii) Indigenization of technology & development of
new technology
Environmen 063 Environmental conservation, pollution and degradation
t & 064 Environmental Impact Assessment
Disasters 065 Disasters & Disaster Management
Internal 066 Linkages between Development & spread of Extremism
Security 067 Role of External State & Non-State actors in creating internal security challenges
068 Internal security challenges through communication networks
069 Role of media and social-networking sites in internal security challenges
070 Basics of Cyber Security
071 Money laundering & Prevention✅( in 📑📑Pillar#2B)
072 Border Areas (security challenges and management thereof)
073 Linkages of Organised crime and Terrorism
074 Security forces & agencies (mandate)
GS-IV: Ethics, Integrity and Aptitude (* including case studies)
Theory 075 Ethics and Human Interface (essence, determinants, consequences of ethics in human
actions)
076 Dimensions of ethics
077 Ethics in public & private relationships
078 Human values (lessons from great leaders, reformers & administrators)
079 Emotional Intelligence (concepts, utility & application in administration & governance)
080 Contributions of Moral Thinkers & Philosophers from India and world
Society & 081 Role of family, society, educational institutions in inculcating values
Behavior 082 Social Influence and Persuasion
083 Attitude (content, structure, function, influence & relation with thought & behaviour)
084 Moral and Political Attitudes
Civil 085 Civil Service aptitude & foundational values (integrity, impartiality, non-partisanship,
Services objectivity, dedication to public service, empathy, tolerance & compassion towards
weaker sections
086 Public service values & Ethics in Public Administration (status & problems)
087 Ethical concerns and dilemmas in government & private institutions
088 Laws, rules, regulations, conscience as sources of ethical Guidance
Governance 089 Accountability & ethical governance
090 Strengthening of ethical & moral values in governance
091 Ethical issues in international relations and funding
092 Corporate Governance✅( in 📑📑Pillar#1C2)
093 Probity in Governance (concept of public service)
094 Philosophical basis of governance and probity
095 Information (sharing & transparency in government), RTI

096 Codes of Ethics, Codes of Conduct
097 Citizens Charters, Quality of Service Delivery
098 Work Culture
099 Utilization of public funds
100 Challenges of Corruption
101 Case Studies on Above Subjects
10.2.4 UPSC Strategy, Planner, Previous Years Papers, Graph Analysis & Cutoff
Covered in Mrunal Success Master Excel File (MSM) and Lecture
https://unacademy.com/course/strategy-to-prepare-indian-economy/3KUWU4NY
10.2.5 💲💲Economy Reading List / Self Study List:

⇒ ✅Mrunal’s lecture series and its handouts for Theory, Contemporary, and Current issues.
⇒ ✋✋No need for NCERT 9-10 or Class12 Micro/Macroeconomics or Old NCERT or
Tamilnadu State Board textbooks.
⇒ ✋No need for Ramesh Singh, Sanjeev Verma, Nitin Singhania, SriRAMIAS or any other
book/material. All embedded in my handout.
⇒ ✋No need for NITI Aayog reports/ World Bank Reports etc. Important aspects covered in
handout.
⇒ ✋ No need to self-prepare Govt Schemes. They’re covered in this course / handout.
⇒ ✋ No need to self-prepare Ministries and Departments. They’re covered in this course /
handout.

⇒ ✋No need to self-prepare current affairs of the past months. All embedded in handout
⇒ ✋No need to self-prepare economic current affairs for future months – they’ll be embedded in
Win23 Series of FREE lectures and Handouts.
To improve vocabulary & expression skills for Mains you may do following:
⇒ ✅# NCERT Class 11 Indian Economic Dev. Yes Read it.

⇒ ✅# After my course is over, read Introductions and conclusions of each chapter of vol1 of all
economic surveys from 2015 onwards from http://indiabudget.gov.in/ (But need not do for
Economic Survey which was published in 2022-Jan. Because it does not have such a great
content)
⇒ ✅# Chief Editor’s Desk (Preface page) of last 2 years’ Yojana & Kurukshetra mags from
http://yojana.gov.in/Recent_archive_2020.asp (URL mein change year number for previous
Archives) alternative URL https://www.publicationsdivision.
nic.in/journals/index.php
10.2.6 🏛🏛🎙🎙Instructions for Live Class

 If audio/video stuck then refresh page by Ctrl+SHIFT+R; If electricity / internet outage, fear not, because
recording will be available in your account.
 Keep following things ready before the class (1) Handout PDF saved in your harddisk. No need to take
printouts. You may get them printed after Corona is subdued. (2) Pens (3) Unruled A4 sized pages. Don’t
staple/spiral the pages or printouts, so you can add more blank pages in future to add your own
thoughts/answers.
 If doubts in lecture itself, notedown in paper/diary → Ask in Google query form after class, which I’ll
reply in a combined PDF file on weekly basis. (गूगल फॉमर् से �मले आपके प्र�ों का सा�ािहक क्रम से जवाब िदया जाएगा,
�न��तं रिहए!)
 To Download Handout: https://unacademy.com/course/mrunals-economy-course-for-upsc-prelims-
mains-2023/M9WQ6SDA → click on ‘updates’ button → a sidebar opens → download from there.
10.2.7 🏛🏛🏛🏛What has UPSC asked from Economy in recent years?

Mrunal’s Prelims P1 (GS 100 🔠🔠❓MCQs) Mains GSM-1-2-3 (750 Marks)
Remark
Economy: 6 201 201 201 201 20 20 20
2016 2017 2018 2019 2020 2021 s
PillarsTM 6 7 8 9 20 21 22
Most
useful
💳💳1_Money
in
Banking,
6 6 7 7 9 6 8 25 0 0 0 15 15 Prelims
Finance & but less
Insurance in
Mains
Second
lowest
🍋🍋2_Budget,
3 3 4 1 1 1 3 12.5 30 25 25 15 20 utility
FC, GST, FRBM after
5_Infra
Third
💱💱3_Intl_Trad lowest
11 4 4 7 7 2 4 25 0 30 0 15 15
e, BoP utility
after

2_Budge
t.
Useful
🛒🛒4_Sectors,
for both
GDP, Inflation,
4 8 3 8 5 5 4 25 60 50 65 55 60 prelims
Microeconomic and
s Mains.
Lowest
🏗🏗5_Infrastuctu utility
2 4 1 3 1 0 2 37.5 10 15 15 15 30
re among 6
pillars.
Useful
for both
�6_HRD 3 4 6 2 0 0 0 50 40 60 75 85 45 prelims
and
Mains.
29Q 29Q 25Q 28Q 23 14 21 200 185
Total 175m 140m 180m 180m
s s s s Qs Qs Qs m m
💸💸Economy Pillar #1-A1) Money: Barter to Bitcoin

10 🏛🏛Brief Info on UPSC Civil Services Exam................................................................................................... 1
10.2.1 🏛🏛 🔠🔠Syllabus of Preliminary examination ................................................................................... 1
10.2.2 🏛🏛 ✏Mains & Interview ................................................................................................................... 1
10.2.3 🏛🏛General Studies Mains Paper 1 to 4: What is covered in your course? .................................... 1
10.2.4 UPSC Strategy, Planner, Previous Years Papers, Graph Analysis & Cutoff............................... 5
10.2.5 💲💲Economy Reading List / Self Study List: ...................................................................................... 5
10.2.6 🏛🏛🏛🏛Instructions for Live Class ....................................................................................................... 6
10.2.7 🏛🏛🏛🏛What has UPSC asked from Economy in recent years? ....................................................... 6
10.3 🍅🍅🍅🍅 Barter system & its disadvantages: (व�ु �व�नमय प्रणाली)................................................................. 9
10.4 📏📏Money: Functions of (पैसे के कायर्) ........................................................................................................ 10
10.5 💵💵 Money: Evolution & Types (मुद्रा क� उ�ां�त व् प्रकार) ............................................................................ 10
10.5.1 🥜🥜Commodity Money / व�ु मुद्रा (Intrinsic value: अंतभूर्त मू�? Yes) ........................................... 10
10.5.2 🥇🥇Metallic Money / धातु मुद्रा (Intrinsic value? Yes)...................................................................... 10
10.5.3 💪💪 Metalic Money → Full Bodied vs Token Coins .................................................................... 11
10.5.4 💵💵Paper Money / कागजी मुद्रा (Intrinsic Value? No) ..................................................................... 11
10.5.5 💵💵⚖Legal Tender (वैधा�नक �न�वदा)................................................................................................ 12
10.5.6 💵💵⚖Legal Tender (वैधा�नक �न�वदा)- Limited and Unlimited ...................................................... 13
10.5.7 � (New) Visually Handicapped (VH) friendly Coins, 2019-March ........................................ 14
10.5.8 ��RBI’s App to help the blind identify currency notes ........................................................ 14
10.5.9 💵💵 (NEW) Mahatma Series Currency Notes in India ................................................................ 15
10.5.10 💵💵 “I promise to pay the bearer…”: Meaning of this promise? ........................................... 15
10.5.11 💵💵 Demonetization of Fiat Money (�वमुद्रीकरण: Previously 1946, 1978)................................ 16

10.6 🤫🤫🤫🤫🤫🤫🤫🤫 Redenomination: Iran’s Toman Currency ..................................................................... 16
10.7 🐷🐷🐷🐷Bank Money / Deposit Money .................................................................................................... 16
10.7.1 🐷🐷🐷🐷 Paper orders: Cheque, Demand Draft (DD).................................................................... 16
10.7.2 🐷🐷🐷🐷 Cheque → NPCi’s Cheque Truncation System (CTS-2010) ......................................... 17
10.7.3 🐷🐷🐷🐷🐷🐷 Cheque → Positive Pay Mechanism for Cheques .................................................... 17
10.8 🐷🐷🐷🐷🐷🐷 Electronic Orders / Digital payment .................................................................................... 18
10.8.1 💸💸💸💸CBS ( full form: Core Banking Solution /system) ............................................................. 18
10.8.2 💸💸💸💸RBI’s Next Generation Treasury Application (NGTA), 2020-Oct .................................. 18
10.8.3 💸💸 NPCi’s UPI-IMPS- 2 lakh → ⏫5 lakh ................................................................................ 19
10.8.4 💸💸💸��Interoperability Problem (इं टरऑपरे�ब�लटी) .............................................................. 20
10.9 � National Payment Corporation of India(NPCi) ............................................................................. 20
10.10 � NPCI → UPI (Unified Payment Interface) ............................................................................... 21
10.11 � NPCI → UPI → 123PAY for FeaturePhones ........................................................................... 21
10.11.1 � NPCI other notable initiatives ............................................................................................ 22
10.12 �💸💸💸💸 DBT → E-Rupi by NPCi (2021) ...................................................................................... 23
10.12.1 �💸💸💸💸E-Rupi: Challenges in Physical Procurement/DBT ............................................... 24
10.12.2 �💸💸💸💸 E-Rupi: How does it fix Problems in Physical Procurement/DBT? ................... 24
10.12.3 �💸💸💸💸 E-Rupi: potential applications in Future [भ�व� म� उपयोग] ...................................... 25
10.13 �💸💸QR Codes: compulsory to implement UPI/Bharat QR from 2022 ...................................... 26
10.13.1 💸💸 : NPCi’s UPI: International cooperation ............................................................................ 26
10.14 �📜📜📜📜 Payment System Operators? ............................................................................................ 26
10.14.1 �New Umbrella Entity (NUE) for Retail Payments System (2019) ................................... 27
10.14.2 � Third Party Application Providers (TPAPs): Google Pay, Whatsapp Pay ..................... 27
10.15 💳💳 Credit & Debit Cards (also called ‘Plastic Money’) .................................................................. 28
10.15.1 💳💳 RBI allows UPI payment via credit cards (2022-June) ..................................................... 29
10.15.2 💳💳 Card Types based on Security Features: (सुर�ा प्रणाली के िहसाब से काडर् के प्रकार)..................... 29
10.15.3 💳💳 📧📧 Card Tokenization (2019) ........................................................................................... 30
10.15.4 💳💳 🚕🚕 National Common Mobility Card (NCMC, 2019) .................................................... 30
10.15.5 💳💳 🚕🚕 FASTag for paying toll fees at highways (2017)......................................................... 31
10.15.6 💳💳Card Entities in Negative News: MasterCard, HDFC Bank ............................................. 31
10.15.7 💳💳 🏧🏧 ATM and its Types ......................................................................................................... 31
10.16 💳💳 MDR: Full form: Merchant Discount Rate (�ापा�रक छू ट दर) ....................................................... 32
10.16.1 💳💳 MDR Subsidy by MEITY .................................................................................................... 33
10.17 💸💸💸💸💸 📈📈 Measures to promote Less-Cash Economy .............................................................. 34
10.17.1 �📒📒 RBI’s Nandan Nilekani Panel (2019: Jan to May) ....................................................... 35
10.17.2 🕵🕵 💳💳💳💳 Payments Infrastructure Development Fund (PIDF) 2020-Jun......................... 36
10.17.3 🕵🕵 💳💳: Offline Retail Payments Using Cards and Mobile Devices ...................................... 36
10.17.4 �📒📒 Payment and Settlement Systems in India: Vision 2019 – 2021................................. 36

10.18 🕵🕵 💳💳 Digital Payment Regulatory bodies (�नयं त्रण सं �ाएँ ) ............................................................... 36
10.18.1 🕵🕵 💳💳 Digital Transactions Ombudsman (DTO-2019)........................................................ 36
10.18.2 🕵🕵(Proposed but NOT YET DONE) Payment Regulatory Board (PRB) ............................. 36
10.19 📊📊 Digital Payment related Index / Competitions ........................................................................... 37
10.19.1 📊📊RBI Digital Payments Index (DPI: िड�जटल भुगतान सूचकांक) ................................................... 37
10.19.2 🐯🐯🐯🐯 RBI’s Financial Inclusion Index (�व�ीय समावेशन सूचकांक) .............................................. 37
10.19.3 Harbinger Hackathon 2021........................................................................................................ 37
10.20 🔗🔗🔗🔗 Crypto-Currency & Blockchain Technology ....................................................................... 37
10.20.1 👝👝Hot Wallet vs Cold Wallet ................................................................................................... 38
10.20.2 🔗🔗🔗🔗:Crypto-Winter in Bitcoin Prices (भाव �गरा अब उठ निह रहा है).......................................... 38
10.21 ⚖🔗🔗🔗🔗 Cryptocurrency legal status in India→ RBI Ban/SC Unban ....................................... 40
10.22 ⚖🔗🔗🔗🔗 Cryptocurrency legal status in India→ Govt’s Attitude ............................................. 41
10.22.1 🔗🔗🔗🔗: Bitcoin Profit pe 30% Tax and transfer pe 1% TDS in 👜👜🥻🥻Budget-2022............. 41
10.23 ⚖🔗🔗🔗🔗 Cryptocurrency Banned in other nations? .................................................................... 41
10.24 🔗🔗🔗🔗: Cryptocurrency Permitted in Other Nations ...................................................................... 41
Bitcoin Mining Council (2021)......................................................................................................................... 43
10.24.1 🔗🔗🔗🔗 🤘🤘🏳🏳El-Salvador: Bitcoin becomes a legal tender (2021) ......................................... 43
10.24.2 🔗🔗🔗🔗🔗🔗 Cryptocurrency → Stable-coins ........................................................................... 43
10.24.3 🔗🔗🔗🔗🔗🔗 Cryptocurrency → Stable-coins → Facebook’s Libra/DIEM #Epicfail .......... 44
10.25 🐯🐯🐯🐯🐯🐯 Central Bank Digital Currency (CBDC) ........................................................................ 44
10.25.1 🐯🐯🐯🐯🐯🐯=👌👌👌👌Benefits of CBDC (क� द्रीय ब�क िड�जटल मुद्रा के फायदे) ......................................... 44
10.25.2 🐯🐯🐯🐯🐯🐯= ✋🥵🥵Challenges of CBDC (चुनौ�तयां) .................................................................. 45
10.25.3 🐯🐯🐯🐯🐯🐯 CBDC Challenges: interest rate (�ाज क� मगजमारी/दु�वधा) ....................................... 45
10.25.4 🐯🐯🐯🐯🐯🐯✍🏻🏻 CBDC: Conclusion (�न�षर्) .................................................................................. 46
10.26 💠💠≠ ❇ Non-fungible token (NFT: ग़ैर-फ़ं जीबल टोकन)......................................................................... 46
10.26.1 (⬜=◻+◻+◻+◻) Fungibility: Meaning? ............................................................................. 47
10.26.2 💠💠 Non-fungible token (NFT: ग़ैर-फ़ं जीबल टोकन) ....................................................................... 47
10.26.3 💠💠🤩🤩NFT-Charms? (आकषर्ण) .................................................................................................. 47
10.26.4 💠💠😰😰NFT-Challenges: (चुनौ�तयां).............................................................................................. 48
10.27 ✍Essay: Cashless Economy- Charms and Challenges ................................................................... 48
10.27.1 ✍ Conclusion: Cashless Economy (�न�षर्) ............................................................................. 49
10.27.2 ✍🏻🏻🎷🎷🎷🎷1⃣✋ Mock question for Mains/ESSAY...................................................................... 49
10.3 🍅🍅🍅🍅 BARTER SYSTEM & ITS DISADVANTAGES: (व�ु �व�नमय प्रणाली)

Barter system was introduced by Mesopotamian tribes. It has following challenges: (चुनौ�तया )
- 😰😰Double co-incidence of Wants (आव�कताओ का दोहरा सं योग नहीं होगा तो �ापार असं भव).
- 😰😰Search Cost & Transaction cost is high. (सही दाम पर चीज ढूँ ढने व लेनदेन क� लागत बढ़ जाती है)
- 😰😰Storage of perishable commodities is difficult, results in loss of value. (नाशवान व�ुओ का मू�हास)
- 😰😰Doesn’t encourage specialization and division of labour (श्रम �वभाजन को प्रो�ािहत नहीं करता).
10.4 📏📏MONEY: FUNCTIONS OF (पैसे के कायर्)

Primary:2 functions[प्राथ�मक] Secondary(S-T-D) 3functions [सहायक कायर्] Contingent 3functions [प्रासं �गक कायर्]
1. 📏📏Measure of Value: 1. 🐷🐷🐷🐷Store of Value (मू� का 1. Basis of credit system,
gm=wt, ml=vol, सं चय) Financial markets (share,
₹=value (मू� का मापक). bond etc.: More in
2. 🚛🚛Transfer of Value (मू� का
2. 🛒🛒Medium of 📑📑Pillar#1C-sharemarket)
�ानांतरण). Soldier in Kashmir to
Exchange: Buy & Sell
parents in Kanyakumari �व�ीय बाजार का आधार है पैसा
goods and services
2. Employing factor of
using money as the 3. ⏰Deferred Payments (��गत
‘medium’. (�व�नमय का production i.e. Land, Labour,
भुगतानो का मानक). E.g. Buy
मा�म). Capital (More in
iphone12 @₹3177 only per
month x 36 months’ Equated 📑📑Pillar#4C) उ�ादन के कारक
Monthly Installments (EMIs) जुटाने म� मदद करता है है पैसा
= ₹1,14,372. Actual price is 3. Creation & Redistribution of
₹79,900, but ₹34,472 extra National Income via
Interest.(�ाज पर िक�ों म� खरीदारी taxation. (📑📑Pillar#2) अमीरों पे
सं भव) �ादा कर वसूल के रा�ी� य आय के
पुन:�वतरण करने म� मदद
10.5 💵💵 MONEY: EVOLUTION & TYPES (मुद्रा क� उ�ां�त व् प्रकार)
Paper /Token /
Commodity Metallic Bank Money,
Representative / Crypto Currency
Money Money Deposit Money
Fiat Money
10.5.1 🥜🥜Commodity Money / व�ु मुद्रा (Intrinsic value: अंतभूर्त मू�? Yes)
⇒ Iron Nails, Bear Pelts, Cocoa Beans, Whale Teeth, Gold Nuggets
⇒ Problems? Perishable, not uniform, not pure, foreigners may not accept.
नाशवान, एकसमान नहीं, शुद्ध नहीं, अ�ीकार भी कर सकते है.
10.5.2 🥇🥇Metallic Money / धातु मुद्रा (Intrinsic value? Yes)

⇒ Traders & Kings stamped their marks on gold nuggets for uniformity & trust. (सोने पर अपना �च�/छाप
लगा देते)
⇒ Indo Greek kings & Kushana kings issued gold coins, but Gupta Gold coins most spectacular-
king is playing Veena, shooting animals, standing with wife.(इन राजाओने सोने के �स�े �नकाले थे)
⇒ Delhi Sultanate Kings: Silver Tanka. Sher Shah Suri Rupiyah silver coin. Akbar: Muhr.

⇒ Metal has INTRINSIC VALUE i.e. Metallic money =Use it as "money", or you can melt the metal
→ use that metal for making jewellery / weapons because metal itself has its value / usages. उस मुद्रा
क� धातु �पघला कर कु छ और चीजे भी बना सकते है. �ोिक धातु का अपना : अंतभूर्त मू� / उपयो�गता है.
⇒ On the other hand, paper-currency note= You can't use currency-note's paper as a notebook or
diary. So currency notes have no intrinsic value. उसके कागज का उपयो�गता कु छ नहीं है, �ोिक उसपे छपाई कर दी है.
� Further SELF STUDY: History of Indian coins from History Lecture/Notes.
10.5.3 💪💪 Metallic Money → Full Bodied vs Token Coins

Table 1: Types of Coins
Gupta Coin: ~8 gm GOLD 50 paisa modern coin: ~4 gm steel

💪💪 Full Bodied Coins Token Coins (प्रतीकका�क)
Intrinsic Value (अंतभूर्त मू�) is Equal to or MORE LESS. (धातु एकदम स�ी वाली इ�ेमाल करते ह� या ब�त ही कम
than its Face Value (अंिकत मू�) वजन क� धातु इ�ेमाल करते ह�)
Challenge? ⇒ 1330s: Tughlaq's Token coin
⇒ Debasement: ⏬decreasing the amount of experimentation = #EPICFAIL (Why?
metal in coins. Usually happens when Prepare in History subject).
king’s rule gets weak/poor e.g. Aurangzeb, ⇒ Modern Indian coins are token coins.
Roman Kings. �स�े म� धातु क� मात्रा को कम िकया जाए Cupronickel metal used to discourage
तब लोगों का उस राजा के शासन से �व�ास कम होने लगता है melting. Coinage Act 2011 prohibits
melting of coins.
10.5.4 💵💵Paper Money / कागजी मुद्रा (Intrinsic Value? No)
Fiat money (वैधा�नक मुद्रा): It MUST fulfil two conditions SIMULTANEOUSLY: दो शत� का एकसाथ पालन :
1. It MUST BE in the form of Physical Currency Coin / Physical Currency Notes / VirtualCoin/
DigitalCoin/ CryptoCoin which can measure value AND simultaneously और साथ ही साथ
2. It MUST BE issued by the order of a King / Queen / Government / Central Bank.
⇒ Govt issues all coins upto ₹ 1,000, using powers of powers of Coinage Act 2011.
⇒ ₹ 1 Note signed by Finance Secretary (�व� स�चव)
⇒ ₹ 1 note doesn’t contain “I promise to pay bearer…”
⇒ RBI issues: Currency notes other than ₹ 1 Note using the powers of RBI Act
1934.
⇒ Currency notes have Governor’s sign: “I promise to pay bearer…”
😤😤 FAQ: why is it like this!!!??? WHY CAN’T RBI ISSUE BOTH coins & currency notes!!?
Ans. Send your suggestion to PM, to merge above two laws. Until it’s implemented, remember table
for passing exam. प्रधानमं त्री को कागज �लखो- दोनों कानूनों का एक�करण करने के �लए. जब तक वह नहीं होता तो इस handout को रटो।

10.5.5 💵💵⚖Legal Tender (वैधा�नक �न�वदा)
To become a ‘legal tender’, a given coin/currency MUST fulfil two conditions SIMULTANEOUSLY:
एक साथ दो शत� को पूरा करना होगा.
1. It must be a FIAT MONEY (जो हमने ऊपर के से�न म� पढ़ा). AND SIMULTENOUSLY और साथ ही साथ
2. It must be legally valid for all debts & transactions throughout the country. Other party can’t
refuse to accept. (लेनदार उसको अ�ीकार नहीं कर सकता)
Table 2: fiat money and legal tender in India
A) Is it in form D) At present, is it E) Is it
C) Result: Is it
of a physical B) Is it issued by legally valid for LEGAL
Fiat money?
coin OR physical Central Bank / transaction in Tender in
ITEM (YES If Both
Note OR Digital Govt / King / India as per India (Yes, IF
Cell A+B give
Coin that can Queen Coinage Act or C+D give
✅+✅)
measure ‘value’? RBI Act? ✅+✅)
₹ Indian Rupee:
Coins & Notes, CBDC ✅ ✅ ✅ ✅ ✅
Demonetized
(�वमुद्रीकृ त) ₹500,₹1000 ✅ ✅ ✅ ✋ ✋
Dollar$, Yuan, Yen,
Euro etc ✅ ✅ ✅ ✋ ✋
G-Sec, T-Bill
(what is this-Ans. ✋ ✅ ✋ ✋ ✋
explained in video)
Shares, Bonds, DD,
Cheque, ATM, Cards,
Kirana coin, Casino ✋ ✋ ✋ ✋ ✋
coin, Filmstar-Notes

A) Is it in form D) At present, is it E) Is it
C) Result: Is it
of a physical B) Is it issued by legally valid for LEGAL
Fiat money?
coin OR physical Central Bank / transaction in Tender in
ITEM (YES If Both
Note OR Digital Govt / King / India as per India (Yes, IF
Cell A+B give
Coin that can Queen Coinage Act or C+D give
✅+✅)
measure ‘value’? RBI Act? ✅+✅)
Marshall Island: SOV
Venezuela: Petro coin ✅ ✅ ✅ ✋ ✋
Bitcoins ✅ ✋ ✋ ✋## ✋
⇒ ##
Bitcoin is not a Fiat money, yet it is legal tender in El-Salvador nation. But it is an exception.
(�बट-कोइन का अल-सा�ाडोर देश म� वेध�नक �न�वदा होना के वल एक अपवाद है, वो पूरी दू �नया के �लए �नयम/�ा�ा नहीं है।)
⇒ 😤😤 FAQ: we can use cheque / credit card to pay fees. So, why are they not fiat money/legal
tender? Ans. They’re instruments to use money. They’re not money. Primary auction on the
money is to measure value. We can say 1 tea cup = ₹15. Two tea cups = ₹30. But, We cannot SAY
“1 tea cup = 1 chequebook. 2 tea cup = 2 credit cards- they can’t be used for measuring value like
that. For more, watch lecture video peacefully.
⇒ 😤😤 FAQ: I did not understand this thing and/or I want to engage in intellectual debate why “X”
thing is legal tender? Ans. Please watch lecture’s recorded video again, more peacefully.
⇒ Commemorative Coins = Fiat money yes but not legal tender unless notified by
RBI/Government to be used as legal tenders. (�ृ�त�च� �प �स�े - सामा� भुगतान म� इ�ेमाल निह हो सकते, �सवाय
के सरकार/आरबीआई उसक� अनुम�त दे।)
10.5.6 💵💵⚖Legal Tender (वैधा�नक �न�वदा)- Limited and Unlimited
Table 3: Fiat Money: Two types of legal tenders

A) 🚯🚯Limited legal tenders B) ∞ Unlimited legal tenders:
(सी�मत वैधा�नक �न�वदा) (असी�मत वैधा�नक �न�वदा)
Recipient can refuse accepting payment beyond a No such restriction.**

limit (एक हद से �ादा छू टटे पेसे �ीकारने से सामने वाला मना कर
सकता है)
⇒ Coinage Act 2011 ⇒ RBI Act 1934 - Section 26: Every bank
⇒ Paper Note: Rs. 1 (एक �पए क� काग़ज़ी नोट) note is legal tender in India.
⇒ Coins Rs. 1 / above → upto Rs.1000 ⇒ They can be used for settling any amount
⇒ Coins 50 paisa x 20 coins → upto Rs.10 of debt in India**, lender can’t refuse to
⇒ Below 50 paisa coins are withdrawn (in 2011) accept it.
So, 10 paisa, 25 paisa are ✋not legal tenders.
(10 पैसा और 25 पैसा वैधा�नक �न�वदा नहीं है। 50 पैसा वैधा�नक
�न�वदा है)

**Although in real life, Finance Act 2017: “Cash transactions for less than Rs.2 lakh only. Beyond that
use Cheque, DD, NEFT etc. else penalty= entire amount.” This rule is to discourage tax-evasion / black
money. For more Ref: 📑📑Pillar#2. But for MCQs, simply accept that bank notes = unlimited legal
tenders. हालांिक वा��वक जीवन म� काले धन / करचोरी को रोकने के �लए नगदी लेनदेन पर कु छ सीमा के बाद रोक है, िक�ु MCQ के �लए
�ीकार लो क�
🚩🚩� FAQ# my shopkeeper doesn’t accept 50 paisa. Then how it is legal tender? मेरा दुकानदार नहीं लेता
50 पैसा का �स�ा। तो आप कै से कह सकते है वो वैधा�नक �न�वदा है?
Ans. as per RBI notification, 50 paisa is legal tender. So, accept it for MCQ & move to next topic.
Further, feel free to file policecase against shopkeeper, if you have plenty of free time/outrage for it.
🔠🔠❓MCQ: Which correctly describes the meaning of legal tender money? (Pre-2018)
(a) The money which is tendered in courts of law to defray the fee of legal cases
(b) The money which a creditor is under compulsion to accept in settlement of his claims
(c) The bank money in the form of cheques, drafts, bills of exchange, etc.
(d) The metallic money in circulation in a country
🔠🔠❓MCQ: Consider the following statements (Asked in UPSC-CDS-2011-II)
1. In India the minimum denomination coin acceptable for transaction is 50 paise.
2. Coins below 50 praise is not a legal tender for payment.
Which of the statements given above is/are correct?
(a) Only 1 (b) Only 2 (c) Both 1 and 2 (d) Neither 1 nor 2
10.5.7 � (New) Visually Handicapped (VH) friendly Coins, 2019-March

 Govt launched new series of VH-friendly coins of ₹ 1, 2, 5, 10, 20. Ascending order of size &
weight. National Institute of Design (NID) helped to design.
 ₹ 20 coin: 12-sided Polygon (Dodecagon आकार: बारह बाजुओ वाला चतु�ोण है)
 Remaining coins are round shaped. (बाक� के �स�े गोलाकार है)
10.5.8 ��RBI’s App to help the blind identify currency notes

80 lakh people in India are blind (नेत्रहीन). To help them identify currency notes:
⇒ Old series of Gandhi notes have square (50), triangle (100), circle (500) diamond (1000)
⇒ New series of Gandhi notes have bleed lines, raised printing of Gandhi etc.
⇒ But, so many varieties of notes, difficult for VH persons to remember size & shapes so,
2020-Jan: RBI launched ‘Mobile Aided Note Identifier (=MANI)’ App.
⇒ Mobile camera scan & identifies the note (Even if it’s half folded), gives audio notification in
Hindi/English, also works offline
⇒ But can’t validate whether note is genuine or fake (Counterfeit जाली नोट नहीं पकड़ सकता यह ऐप),
⇒ If a user is both blind and deaf, the app will tell him by giving vibrations.(मोबाइल कं पन)
⇒ Daffodil Software company developed this App for RBI. (ये कं पनी ने बनाया है एप)

10.5.9 💵💵 (NEW) Mahatma Series Currency Notes in India
Table 4: ✋Less important for UPSC-exams, more IMP for Non-UPSC Exams
Note What image is given in this currency note? (इस नोट के पीछे कौन सा �चत्र होता है?)
₹ 10 Sun Temple, Konark, Odisha. 13th Century Narsimhadev-I
₹ 20 Greenish Yellow, Ellora Caves in reverse.
₹ 50 Humpi Chariot from Vittala Temple, Karnataka
₹ 100 Lavender color. Rani ki Vav on Saraswati river, Patan. Rani Udaymati for King
Bhima-I of Chalukya / Solanki dynasty in 11th century, UNESCO Heritage site
₹ 200 Sanchi Stupa, Madhya Pradesh.
₹ 500 Red Fort, Delhi by Shah Jahan.
₹ 1000 (update when/if released)
₹ 2000 Mangal Yaan / Mars Orbiter Mission

New rupee ₹: selected through a competition by Dept of Economic Affairs in 2010. Designed by
symbol D.Udaya Kumar, a Professor @IIT Guwahati.
Nation - Lion Emblem: Sarnath Pillar, Uttar Pradesh से �लया गया है
Symbol - “Satyamev Jayate”: slogan from Mundaka Upanishad से �लया गया है
Languages While Constitution’s 8th Schedule has 22 languages, but currency note has only 17.
(15 on Reverse + Hindi & English on frontside (obverse) = 17) 🤯🤯FAQ: Why it is
like this? Ans. Either some Indian languages have similar fonts and/or send
suggestion to RBI.
Museum Budget-2020: a museum on numismatics and trade (�स�ाशा� और �ापार का सं ग्रहालय) will
be built at the historic ‘Old Mint Building’ in Kolkata .
You can read more about currency notes’ features at https://paisaboltahai.rbi.org.in . Although notIMP for IAS.
10.5.10 💵💵 “I promise to pay the bearer…”: Meaning of this promise?

Currency note is zero interest, anonymous bearer bond / Promissory Note.
Colonia era: Promised to convert into full bodied gold or silver bars / coins
worth the equal value in weight. E.g. 1 US Dollar = ~14 grams of gold. 1
British pound = ~73 grams of gold. (�in my handout ‘~’ means
‘approximate’)
Modern era: Conversion into other Bank notes and “token coins” of equal
face value. ₹ 2000 = 500 x 4 Nos.= 100 x 20 Nos etc.
Not inflation adjusted value. Not linked with weight of gold or silver.

10.5.11 💵💵 Demonetization of Fiat Money (�वमुद्रीकरण: Previously 1946, 1978)
Definition? Demonetization is the wholesale withdrawal of currency notes from circulation. (मुद्राचलन
म� से कु छ खास िक� क� नोटों को सरकार द्वारा हटा देने क� िक्रया को �वमुद्रीकरण या नोटबं दी कहते ह�)
⇒ 8/Nov/2016: Finance Ministry → Dept of Economic Affairs → notification to ban the
“Specified Bank Notes” (SBN) of Mahatma Gandhi series ₹ 500 and 1000.
⇒ Specified Bank Notes (Cessation of Liabilities) Act 2017= RBI not required to honor “I promise
to pay…”. Old notes can’t be kept except for research or numismatics or museum- and that too
in limited amount! More in 📑📑pillar#2: taxation → black money.
10.6 🤫🤫💸💸👜👜🥚🥚 REDENOMINATION: IRAN’S TOMAN CURRENCY

⇒ I’m taking risk of deleting this topic from handout because either A) it is outdated and/or B) I’m
no longer finding it relevant for present UPSC trend after observing Prelims-2022 Paper.
⇒ Those who want to waste time/satisfy curiosity can learn it from last course (PCB6) at
https://unacademy.com/course/mrunals-economy-course-for-upsc-prelims-mains-2022-
52/I1OWWV6Y (मेरे को अब ये परी�ा के नज�रये से ब�त काम का नहीं लगता, इस�लए टॉ�पक हटा िदया है)
Paper /Token /
Commodity Metallic Bank Money,
Representative / Crypto Currency
Money Money Deposit Money
Fiat Money
10.7 🐷🐷🔖🔖BANK MONEY / DEPOSIT MONEY
10.7.1 🐷🐷🔖🔖 Paper orders: Cheque, Demand Draft (DD)

- Viceroy Ripon’s Negotiable Instruments Act, 1881: Primary Objective? Cheque dishonor &
forgery (परक्रा� �लखत अ�ध�नयम: ब�क खाते मे अप्रा� रकम के चलते चेक अ�ीकार होना/जालसाजी के �ख़लाफ़ क़ानून).
- 2017: Law was amended for faster justice to victim. (��रत �ाय के �लए कानून म� सुधार)
- THREE parties in a cheque: 1) Drawer (Sender), 2) Drawee (Bank), 3) Payee (Recipient)
- Types of cheques: 1) Stale: Not withdrawn in 3 months (3 महीनों म� नहीं डाला तो बासी/अ�ीकायर् होगा), 2)
Post-dated: After a specific date, 3) Ante-Dated: notimp for IAS exam.
- Open / bearer cheque: No ‘crossing’. Anyone can encash.
- IFSC code: Indian Financial System Code- 11 alphanumeric numbers to identify the bank
branch, just like PINCODE identifies an area. (कौन सी ब�क ब्रांच है उसे �च��त करता है, जैसे इलाक़े के �पन कोड होते है)
- MICR code: Magnetic Ink Character Recognition. 9 digits code written in Iron Oxide ink for
automated clearance. (चु�क�य �ाही से चेक के न�र को जाँचने के �लए।)
- Demand Draft (DD): can’t be dishonored (अ�ीकृ त नहीं होगा) because sender has to pay amount
beforehand to Bank before the Bank issued DD to him → then sender gives DD for paying
university fees etc.

- Overdraft: When person has insufficient bank balance, still he may withdraw money from his
account (as a loan). Such facility is called Overdraft. Pradhan Mantri Jan-Dhan account has
Overdraft upto Rs 10,000/- with certain conditions. (More in Pillar1D: Financial Inclusion).
o Overdraft is mainly for short-term operating expenses. (अ�ाई �प से लघु अव�ध के �लए कजर्)
o Loans is mainly for longer term higher value expenses. (दीघर् अव�ध के �लए मोटी रकम का कजर् लेना)
10.7.2 🐷🐷🔖🔖 Cheque → NPCi’s Cheque Truncation System (CTS-2010)

- CTS= canned image of cheque electronically sent to the drawee branch for faster clearance
without theft or tempering. <see diagram given on next page>
10.7.3 🐷🐷🔖🔖🔖🔖 Cheque → Positive Pay Mechanism for Cheques

⇒ Suppose Sender Roman (Axis Bank, Bengaluru) sends ₹50,000 cheque to Mrunal (SBI, A'bad)
⇒ What if Mrunal (recipient) manipulated/ tempered cheque to encash more amount? (चेक क� रक़म म�
छे ड़खानी द्वारा पैसा ग़बन करने क� को�शश क� तो?)
⇒ 2016: ICICI Bank introduced Positive Pay for its customers to safeguard. (उससे बचाने के �लए सु�वधा)
⇒ Later, NPCi adopted it within CTS system (as per the chart shown above)
⇒ 2020: RBI ordered all banks to implement it from 1/1/2021 for amounts larger than ₹”X”.
(✋Exact DATE/number NOT IMP)

10.8 🐷🐷💸💸💸💸 ELECTRONIC ORDERS / DIGITAL PAYMENT
Payment & Settlement System Act 2007 empowers RBI to regulate card payment, e-payment related
products and services. (भुगतान और �नपटान प्रणाली अ�ध�नयम 2007)
10.8.1 💸💸💸💸CBS ( full form: Core Banking Solution /system)

⇒ It is a banking software with web-platform for centralized data management & branch-less
banking. E.g. Finacle software; BanCS software; E-Kuber (used in RBI)
⇒ 👜👜Budget-2022: Post Office Savings Bank (POSB) will be connected with Core Banking System
(CBS). So, their depositors too can use E-banking/net-banking, mobile banking, ATMs etc.
💡💡What is POSB? Ans. Ref Pillar1B1- Bank Classification.
🚩🚩🚩🎓🎓 FAQ I didn’t understand this. Ans. Watch lecture, sufficiently explained in it.
🚩🚩🚩🎓🎓 FAQ: What is the difference between Core Banking Solution (CBS) versus Core Banking
System (CBS)? Ans. Fundamentally it is the same thing. Dictionary word difference/legal
pedantry/academic pedantry/hairsplittery= notimp4exam. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
10.8.2 💸💸💸💸RBI’s Next Generation Treasury Application (NGTA), 2020-Oct

I’m shifting this to Pillar2A Handout near PFMS topic for better understanding/comparison.
🔠🔠❓MCQ: The term ‘Core Banking Solutions’ correct term? (Asked in UPSC Prelims-2016)
1. It is a networking of a bank’s branches which enables customers to operate their accounts
regardless of where they open their accounts.
2. It is an effort to increase RBI’s control over commercial banks through computerization.
3. It is a detailed procedure by which a bank with huge non-performing assets is taken over by
another bank.
Answer Codes: (a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3
Table 5: Digital Payment Systems- transaction limits may differ, depending on banks
RBI's centralised payment systems (CPS)## NPCi’s IMPS
⏰RBI’s NEFT:
RBI’s RTGS: Real Time Immediate
� Type National Electronic
Gross Settlement Payment Service
Funds Transfer
₹ 1 to maximum
💸💸 Transfer Min ₹2 lakh to ₹2000 ₹2 lakhs [this limit
upto ₹10 lakhs (SBI).
Amount crores (SBI). ⏫ to ₹5 lakh in
2021]

RBI's centralised payment systems (CPS)## NPCi’s IMPS
Bizmen wanting high
� Target Ordinary retail customers (आम जनता के छोटे भुगतानों
value transactions
customers के �लए है)
instantly
- Settles net amount
🚛🚛 Settlement 🤩🤩Instant settlement 🤩🤩Instant
between banks at
mechanism (झटपट/ तुरंत �नपटारा) settlement
interval of 30 min.
- BEFORE: from 8 am
BEFORE: Only working to 7 pm on working
days 8AM to 5:30PM(SBI) days. 24/7 on all days
⏰ Timing
- From 2019-Dec: (िदन रात अ�वरल �प से)
From 2020-Dec: 24/7 NEFT operates on
24/7 basis.
💰💰 Fees fee + GST** fee + GST#
- BEFORE-2021: Only Banks can provide this Banks + Prepaid
facility Payment
� Who can - 2021: RBI announces that non-bank entities can
Instrument (PPI)/
provide this also become members of centralized payment
/ mobile-wallet
facility? systems (CPS = NEFT & RTGS). So, in future,
cos like Phonepe,
Amazonpay, PhonePe etc could also directly allow
this Mobikwik
⇒ ** from 1/1/2020 no fees if doing online transactions. (but if NEFT/RTGS done by filling paper-
form at bank branch then fees may be levied.( आपके पास कं �ूटर या मोबाइल नहीं है िफर भी आप ऑनलाइन पैसा भेजना
चाहते ह� तो आपने ब�क ब्रांच म� जाकर NEFT/RTGS करवाने वा�े कागजी फॉमर् भरना पड़ता है उस व� थोड़ी ब�त फ़�स शायद लग भी
सकती है)
⇒ # Although some banks don’t charge IMPS fees for transactions upto ₹ ”X”/- (EXACT Fig
NOTIMP)
⇒ ##
FAQ: 🚩🚩🚩🎓🎓 Why doesn’t RBI Merge RTGS & NEFT? Ans. RBI may have some technical
operational reasons for it. RBI never bothered to disclose it in some big press release or
newspaper headline. So I never bothered to do Google search/PHD, because it is an inefficient
way of preparing for UPSC. Nonetheless, if u feel morally-outraged then Send suggestion to RBI
Governor. Until implemented, prepare things as given in handout. Also, Plz change your
‘approach’ towards preparation of competitive exam. PHD-walli academic curiosity is of no use.
10.8.3 💸💸 📡📡 NPCi’s UPI-IMPS- 2 lakh → ⏫5 lakh

2021: Reforms by RBI (using powers of payment and settlement 😰😰BEFORE 🤩🤩AFTER
systems act 2007 )
IMPS Daily Money transfer limit ₹2 lakhs ₹5 lakhs
UPI Based Mobile Apps: Transaction limit for ₹2 lakhs ₹5 lakhs
A) Retail Direct Scheme for investment in G-secs (Ref#1A2)
B) Initial Public Offering (IPO) applications (Ref#1C)

� Mrunal comments before next section: In the digital wallet apps → companies introduce new features & RBI
introduces new technical norms on daily basis. We are not here to write a MBA research paper on their business-
model & RBI regulations. Q.“sir u said x thing can’t be done in phonepe App but now it can be done…as per my
experience!! Ans. I’ve given simple illustration to explain thing. They keep adding new features in the App. UPSC
asking only general broad MCQs from this. If they ask technical, then goto page1, Fig#2. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
10.8.4 💸💸💸��Interoperability Problem (इंटरऑपरे�ब�लटी)
Figure 1: can’t connect Apple Watch to Android Phone 🤷🤷

⇒ (Definition) Interoperability is the ability of customers to transact across commercially and
technically independent payment platforms. �ावसा�यक और तकनीक� �प से �तं त्र भुगतान �ेटफाम� के बीच लेन-देन
करने क� सु�वधा
⇒ Legal complications under Payment & Settlement System Act 2007, so, we don’t have full
interoperability; We can’t transfer money between one wallet to another wallet, can’t use wallet
to pay all type of taxes, fees, insurance premiums etc. कानूनी बाधाओं के चलते सं पण
ू र्ता इं टरऑपरे�ब�लटी नहीं थी
⇒ This is an obstacle to ‘cashless-economy’. So, later on, RBI issued technical guidelines for
interoperability. इस सु�वधा को लागू करने के �लए तकनीक� िदशा�नद�श िदए है �रजवर् ब�क ने।
Figure 2: in above diagram, interoperability is absent. Phonepay money can't be transferred to Amazonpay directly.
10.9 � NATIONAL PAYMENT CORPORATION OF INDIA(NPCI)

⇒ 2008: NPCi is registered under Company Act as a “Not for Profit Company”. (मुनाफा रिहत कं पनी)
⇒ Originally it was founded by 10 banks with ₹ 100cr capital. 2020-Dec: Paytm, PhonePe, Amazon
Pay etc also became shareholders of NPCi (ये सब शेयर धारकों ने पूंजी डालकर इस कं पनी को बनाया है)
⇒ Objective? cost-effective payment solutions / technology for Banks. (�रयायती लागत पर ब�िकंग टे�ोलॉजी)
⇒ Its UPI-BHIM app & other mechanisms also help in financial inclusion of villagers & poors by
expanding the reach of banking network. (गरीबों / गाँववालों के �व�ीय समोवेशन म� मदद के �लए अलग अलग तकनीक�
आ�व�ार िकए है) ✅More abt financial inclusion in 📑📑Pillar# 1D.

10.10� 🤳🤳NPCI → UPI (UNIFIED PAYMENT INTERFACE)
It is a technology for building digital payment apps based on IMPS with following features:
⇒ QR Scan & Pay to merchants.

⇒ You can link bank account for direct transfer of money without storing money in ‘wallet’ first.
(unlike AmazonPay / Mobikwick etc)
⇒ Such app can have Push transaction (e.g. Remittance to family), Pull Transaction (e.g. monthly
bill deduction by Electricity Co.) or even Bill sharing among friends.
⇒ Examples of UPI based app: SBI’s SBIBuddy/Yono, Axis Bank’s AxisPay and NPCi’s own
BHIM.
⇒ UPI 2.0 (2018): Upgraded version of UPI. What are its new features? How is it different than
UPI 1.0? Ans. not important for our exam.
UPI based apps allow for both 👉👉Push transactions and �pull transactions.
⇒ 👉👉Push = when u send money by your own discretion(मज़�) e.g. sending money to a
relative/friend based on your mood.
⇒ �Pull transaction = when you have given command that every month electricity company should
cut the money from my bank account → company will pull money without requiring u to
push/click buttons every month.
🚩🚩�FAQ: Beyond that, whether “X” thing is push/pull transaction?= Ans. not imp for exam.
10.11� 🤳🤳NPCI → UPI → 123PAY FOR FEATUREPHONES

⇒ If user doesn’t have a smartphone. If he has a Basicphone/Featurephone- with number pads:-
still he can use uPI using USSD (Unstructured Supplementary Service Data) code (99#).
⇒ However this feature was very cumbersome. It was not very popular among the people. (�ाटर्फ़ोन म�
तो UPI आधा�रत ढेर सारी ए� ह� िक�ु बे�जक/फ़�चर फ़ोन म� UPI द्वारा पैसों का लेन देन काफ़� जिटल और क�न� िक़� का था. इस�लए
ग़रीब लोग इसे इ�ेमाल निह करते थे। �रज़वर् ब�क और NPCI ने �मलकर नई मुिहम/ �ेटफ़ॉमर् बनाया ‘123PAY’)
So, 2022-March: RBI launched a new UPI platform named 123PAY (with help of NPCI) to give more
UPI-payment options for Featurephones/Basicphones such as-
- 1) USSD – (This was already available.)

- 2) Interactive voice response or (IVR)
- 3) missed call-based payments - user sends a missed call and then system calls him back in IVR
mode (ग़रीब आदमी �मस्ड कॉल देता है तो सामने से उसे �चा�लत फ़ोन कॉल आएगा जहाँ वो �रकॉड�ड आवाज़ द्वारा िदए गए सूचनाओं के
िहसाब से अलग अलग नं बर दबाकर पैसों का भुगतान कर सकता है।)
- 4) proximity sound-based payments -allow transactions using sound waves for contactless
payments to other phones. (��न आधा�रत �शर्-हीन भुगतान)
- 5) easier utility bill payment (gas, electricity etc) via feature phone
- 6) user need to link the bank account with feature phone. → Money transfer, check account
balances, pay utility bills, recharge FAST Tags of their vehicles etc

- 7) New app for Featurephone
Benefit? 😍😍⏫ Digital payment among the poor people who do not have smart phones but have
feature phones. (ग़रीब लोग �जनके पास महँ गा वाला �ाटर्फ़ोन नहीं है वे भी िड�जटल भुगतान कर पाएं ग.े )
10.11.1 � NPCI other notable initiatives
Table 6: NPCi has built following mechanisms / platforms / systems / apps:

- Bharat Bill Payment system for monthly payments of utility bills (gas,
electricity etc.)
- 2022-Jan: NPCi ‘s daughter/subsidiary company Bharat BillPay Ltd.
Company → launched a Unified Presentment Management System
BBPS & UPMS (UPMS) → users can set up standing instructions for auto-debit for
their recurring bill payments online e.g. "pay every month's electricity
bill from my "X" bank account, automatically."
😤😤FAQ: How is BBPS vs UPMS similar or different? Ans. NOT IMP 4
Exam. These are one-liner GK. Not PHD thesis topics!
National Automated Clearing House for bulk monthly payments of utility
bills, dividends, salaries, pension / insurance premiums etc.
NACH
😤😤FAQ: How is BBPS vs UPMS vs NACH similar or different? Ans. NOT
IMP 4 Exam. These are one-liner GK. Not PHD thesis topics!
NFS National Financial switch. This technology runs the ATM network
CTS Cheque Truncation System (2010) learned in previous section
Full form: Bharat Interface for Money (remember this Fullform for
exam!)
⇒ It works on Android, iOS/Apple mobiles as an APP,
⇒ Works even on non-smart (=basic feature) phones using *99# USSD-
Unstructured Supplementary Service Data.
⇒ Bank to bank / peer to peer transaction using mobile phone (xyz@upi).
No need to install multiple apps for each bank account (SBIBuddy,
AxisPay etc) just one BHIM app to use all such bank accounts. App has
3 factor authentication system.
⇒ Your money stays in bank account and earns interest. It’s not stored in
BHIM
‘wallet outside your bank account’ as it happens in Mobikwick,
(2016)
Phonepe etc. (PS: in later stage, PhonePe etc private apps also included
UPI type mechanism so storing money in ‘wallet’ became optional but
we need not engage in Hairsplittery/PHD.)
⇒ No cards involved so no MDR or such hidden charges.
⇒ Rupee + Payment = RuPay card is world’s 7th payment gateway
similar to Mastercard, Visacard, China’s Union Pay. Rupay charges
less fees than other companies.
RuPay
(2012)

⇒ Works in 3 channels: 1) ATM, 2) Point of Sale Device (PoS/card
reader machine), 3) Online portals.
⇒ Used by banks, railway and even Dairies (to pay ₹₹ to milk depositor
farmers).
⇒ Rupay debit card given free with PMJDY (Jan Dhan) Bank account
(Ref Pill1D).
⇒ Rupay has signed collaboration agreements with some digital
payments companies in Singapore, Japan etc. So, it may be used in
those countries. But presently Rupay is not having the widest reach
across all the countries unlike MasterCard and Visa.
AEPS: Aadhar ⇒ Useful for Direct Benefit Transfer (DBT: प्र�� ह�ांत�रत लाभ) into
Enabled Payment beneficiary’s account for MNREGA wages, LPG subsidy, scholarship
System etc. 📑📑More in Pill#6
⇒ It’s also required for Bankmitra-MicroATM system.
NETC ⇒ National Electronic Toll Collection provides technology support to the
FASTag toll collection. (राजमागर् पर पथकर वसूलने के �लए)
PAI chatbot Artificial Intelligence (AI) based chatbot to reply to people’s online queries
about NPCI’s products like FASTag, RuPay, UPI, AePS etc.
DigiSaathi Helpline RBI launched with help of NPCi. - for digital payment & card payments
Number (14431) problems. The No. is 1800 891 3333 (not imp4exam but personal use)
DakPay (2020) Payment App by Department of Post and its India Post Payments Bank
BharatQR(2016) Given in next section of this handout. Scroll down
E-Rupi (2021) Given in next section of this handout. Scroll down
10.12�💸💸💸💸 DBT → E-RUPI BY NPCI (2021)
- (Origin) E-rupi is an SMS /QR Code based Prepaid Cashless Electronic Voucher created by
National Payment Corporation of India (NPCI) using its UPI Platform. [�ूआर कोड आधा�रत प्रीपेड
नगदीरिहत इले��ॉ�नक रसीद �जसे भारतीय रा��ीय भुगतान �नगम (एनपीसीआई) ने अपने यूपीआई �ेटफॉमर् का उपयोग कर बनाया]
- It is also supported by finance ministries Department of Financial Services and Health ministry’s
National Health Authority (NHA) [�व� मं त्रालय के �व�ीय सेवा �वभाग और �ा� मं त्रालय के रा��ीय �ा� प्रा�धकरण ने भी
इसक� मदद क� है]
- Following reforms taken in E-Rupe in 2022-Feb
BEFORE After
maximum storage limit ₹10,000 per code ₹1 lakh (मह�म इतना पैसा सं ग्रिहत कर सकते ह�)

code can be used one-time/ single-time ⇒ Code can be used more than once /multi-use -
only. (कोड के वल एक-बार इ�ेमाल हो सकता था) until the amount of the voucher is completely
exhausted/redeemed).
⇒ e.g. Out of ₹1 lakh → ₹10,000 paid to furniture
store, ₹20,000 paid to electric-store etc.
10.12.1 �💸💸💸💸E-Rupi: Challenges in Physical Procurement/DBT

Suppose the government wants to give Rs.500 worth shoes to schoolchild of a poor family. Following
as the ways to accomplish it. [मान ली�जए सरकार �ू ल के गरीब ब�ों को ₹500 के जूते देना चाहती है]
Method तरीका How? 😰😰Problem सम�ा
Physical Government ⇒ 😰😰Minister/IAS demand bribe from
procurement (Minister/IAS) buys Bata/Lakhani/XYZ to Approve the government
[सरकार भौ�तक shoes from purchase tender. [सरकारी ठेका पा�रत करवाने के �लए �र�त]
��प म� जूतों क� Bata/Lakhani/XYZ ⇒ 😰😰Substandard quality of shoes may be
ख़रीद कर� और ग़रीब company → send to purchased from crony company who paid bribes.
ब�ों दे ,] school principal → ⇒ 😰😰District education Officer (DEO), School
Delivered to Child principal may siphon/selloff shoes to the retail
[लेिकन यहाँ मं त्री, अफ़सर, �वद्यालय stores instead of giving to poor children [जूतों का
के हेडमा�र पैसे या जूतों का ग़बन गबन. हेड मा�र गरीब जूतों के ब�े जूते क� दुकान को बेच दे]
कर� ऐसा डर] ⇒ 😰😰Shoe Size mismatch → Child may get the
“sarkaari” shoes but may not wear it= waste of
taxpayer’s money. [जूते ब�े के पैर के नाप के बराबर ना हो]
Direct benefit Govt transfers ₹500 to 😰😰Father may use DBT money on Vimal, liquor and
transfer (DBT: father’s account gambling instead of buying shoes for the child
प्र�� लाभ अंतरण) Govt transfers ₹500 to 😰😰Child may use DBT money to buy Chocolates or
child’s account Video Games instead of shoes.
10.12.2 �💸💸💸💸 E-Rupi: How does it fix Problems in Physical Procurement/DBT?
⇒ Govt (e.g. Education department) deposits money in a bank account (e.g. SBI) → NPCi
generates E-rupi code. [Thus it is “pre-paid” by Government for beneficiary]

⇒ Government sends this E-Rupi QR Code/SMS Code to father→ ke “Use this Rs.500 to buy shoes
for child” [सरकार लाभाथ� के मोबाइल फ़ोन पर इ-�पी नामक कोड भेजेगा, के वल जूता ख़रीदने के �लए इ�ेमाल हो सके ]
⇒ Father takes child to the shoe store, buys the shoes Pays via E-rupi digital code. Shoestore then
sends E-rupi code to banker (e.g. SBI) to redeem money (which was deposited by Govt).
⇒ Suppose Child prefers Bata (₹800 ka more comfortable leather shoe) over Lakhani (₹500 ka less
comfortable rubber shoe) → Father pays E-Rupi QR(₹500)+Father’s own cash (300)= buy Bata.
Thus E-rupi gives more freedom to the beneficiary to purchase the goods as per their
requirement/preference. [लाभाथ� को अपनी पसं द और ज़�रत के िहसाब से सामान ख़रीदने का अवसर/ �तं त्रता �मले]
⇒ IF Footware store “X”’s staff very arrogant then father may goto Footware Store “Y” = Dignity &
Power to customer. Unlike PDS stores where beneficiary has to stand in long queues and often
get humiliated by the shopkeeper for asking questions abt quality of rice/wheat/sugar/edible
oil.[ सरकारी राशन क� दुकान पर अगर ग़रीब लाभाथ� अनाज क� गुणव�ा या खाद्य तेल म� �मलावट क� कोई �शकायत करे तो उसे दुकानदार
ज़लील करता था . लेिकन E-rupi के चलते ग्राहक को �तं त्रता �मलती है िक यिद कोई दुकानदार बतमीजी करता है तो ग्राहक दू सरी दुकान चला
जाएगा. ]
⇒ Money will ultimately go to the best quality shoe maker (e.g. Bata). Less scope for corruption/
purchase of substandard quality shoes by taking bribes by the Minister/IAS/ District education
Officer (DEO) or School principal = crony capitalism will decrease. [लाभाथ� वो सामान ख़रीदेगा जो उ�
गुणव�ा का है. इससे पहले कं प�नयां मं त्री अफ़सरों को �र�त �खलाकर, लाभाथ�ऑ को घिटया िक़� का सामान दे दी थी= वो प�पाती पूंजीवाद
कम होगा]
⇒ Father will not be able to use this QR code At Gutkha Parlor, Liquor Shop or Gambling Den.
[ल��त व�ुओ ं के अलावा िकसी अ� चीज़ क� ख़रीद म� ही इ-�पी कोड इ�ेमाल नहीं हो पाएगा]
⇒ cannot siphon shoes to blackmarket.
⇒ Footwear store accepted the E-rupi payment → money transfer takes place through banks = less
scope for evading GST, Income Tax, Corporation Tax. [unlike cash transactions] [िड�जटल तरीक़े से ब�क
खाते म� पैसों का लेन देन होगा तो करचोरी और कालेधन के अवसर भी �ापारी के �लए कम होंगे]
⇒ E-Rupi issued on mobile phone. = Less touchpoints between the beneficiary and government
officials. Beneficiary need not stay in queue to get the physical vouchers from govt office = less
scope for bribery and harassment [कोड सीधे लाभाथ� के मोबाइल फोन म� आ जाएगा। गरीब आदमी ने सरकारी द�र के ध�े
नहीं खाने होंग,े सरकारी बाबू को �र�त नहीं देनी होगी]
10.12.3 �💸💸💸💸 E-Rupi: potential applications in Future [भ�व� म� उपयोग]

- Food for mother, child and poor families under various schemes. Medicines for TB, Corona etc.
Fertilizer subsidies for farmers [खाद्य दवाइयां उवर्रक क� स��डी दी जा सके गी]
- Even private sector companies can issue it for 1] employees e.g. Gym membership, golf club
membership, hotel tourism travel. 2] use it for Corporate Social Responsibility (CSR) programs
(What is CSR? Ans. Ref Pillar1C2). [�नजी कं प�नयां भी कमर्चा�रयों को �व�वध चीजों के �लए दे सकती ह�. कारपोरेट सामा�जक
दा�य� अदायगी म� भी इसका इ�ेमाल हो सकता है]
�Conclusion: Appreciable step by government to deliver the entitlements to the poor families in
targeted and leakproof manner. This will help in a long way in increasing the accountability,
transparency and efficacy of Direct benefit transfer (DBT) programs. [सरकार का प्रशं सनीय कदम. गरीब प�रवारों को

ल��त �प से और �रसावमु� तरीके से सरकारी योजनाओं का लाभ �मले, �जससे प्र�� लाभ अंतरण योजनाओं क� जवाबदेही, पारद�शता और
प्रभावका�रता बढ़ेगी।]
10.13�💸💸QR CODES: COMPULSORY TO IMPLEMENT UPI/BHARAT QR FROM 2022

- 1990s: 2 dimensional (2D) Quick Response (QR) Code system developed in Japan.
- Indian E-payment systems function on 3 types of QR Codes, namely,
Table 7: ✋Difference between UPI QR vs Bharat QR? NOT.IMP.4.EXAM ⏳📚📚थोड़ा-पढ़ो-आगे-बढ़ो
Proprietary QR ⇒ e.g. Paytm or PhonePe ke exclusive QR codes. 😰😰Problem? Other
code companies’ app may not be able to scan and pay it.
⇒ So, RBI has prohibited companies from launching any new
proprietary QR code.
UPI QR code Generated by UPI app of NPCi. 🤩🤩It can be scanned by all Apps which are
developed using UPI technology.
Bharat QR code Developed by NPCi with help of Visa and Mastercard. 🤩🤩It can be
scanned by all Apps which are developed using UPI technology.
⇒ RBI has ordered all the Payment System Operators (PSOs e.g. Paytm, PhonePe, MobiKwik,
Google Pay etc) to shift to UPI QR or Bharat QR by March 31, 2022.
⇒ 🤩🤩Benefit? All Payment apps will be able to scan these QR codes → 'interoperability'.
10.13.1 💸💸 📡📡:🤝🤝🌐🌐 NPCi’s UPI: International cooperation

 India and Singapore joint-project to link UPI with PayNow (Singapore’s money transfer system)
→ 😍😍 Indian tourists can use BHIM/UPI-walle apps for shopping in Singapore (After
converting Rupee into Singapore’s currency online. HOW? NOT.IMP)
 🗞🗞Factoid#1: Bhutan became the first country outside India to adopt UPI and its QR code- says
Newspaper-Business-Standard Published in 2021-july and says Economic Survey 2022 published
in 31/1/2022.
 🗞🗞Factoid#2: Nepal to become the first outside India country to adopt India's UPI system- says
IndianExpress published in Feb-2022.
😤😤FAQ: then which of the above factoid#1 vs #2 is correct? Ans. I don’t care for PHD investigation.
Tick as per options of MCQ in real exam. If both Bhutan and Nepal given in the MCQ, then
complaint to exam-authority to cancel MCQ because multiple answers possible!
10.14�📜📜📜📜 PAYMENT SYSTEM OPERATORS?

Payment and Settlement Systems Act, 2007: RBI gives license to Payment System Operators (PSOs).
Type of PSO Examples
Umbrella Entity For Retail Payments → NPCi (learned in previous section)
Card Payment Gateway Operator → MasterCard, Visa, Rupay
Crossborder / International Remittance Western Union, MoneyGram

Prepaid Payment Instrument (PPI) AmazonPay, Mobikwik, Phonepe, PayU, PayTM Wallet
etc
ATM Operators SBI etc's own ATMs
White label ATMs by Tata, Muthoot, SREI etc
Financial Market Infrastructure Clearing Corporation of India (CCI): provides digital
Provider infrastructure for share/bond/foreign currency deals etc.
(📑📑Ref: HDT-Pillar#1C)
10.14.1 �New Umbrella Entity (NUE) for Retail Payments System (2019)
⇒ Paytm has rival companies like Mobikwick, Phonepe; Mastercard vs Visa; SBI vs Axis Bank;
⇒ But there is no rival company against NPCi. वतर्मान समय म� NPCi का प्र�त�ध� कोई नहीं है
⇒ NPCi is an umbrella entity for retail payments system - it operates in card payment (RuPay),
Money transfer (IMPS), Mobile Apps (UPI, BHIM), ATM Network (NFS) etc.
⇒ 2020: RBI issued a proposal, “if any Indian company interested to compete in this (NPCi-like)
retail payment segment, we’ll license them as new umbrella entity (NUE: खुदरा भुगतान के �लए नई छतरी
इकाई). Subject to these technical “XYZ” technical eligibility requirements” [What are those
eligibility conditions e.g. Minimum Capital, Shareholding Pattern etc ?✋NOTIMP4EXAM, no
matter how many private mock-test-walla ASK it in their Faaltu-Tests #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो ]
⇒ 🤩🤩Benefits? More companies like NPCi → more competition → more innovation and cheaper
services for users. (�धार् बढ़ेगी तो नए तकनीक� आ�व�ार होंग,े िड�जटल भुगतान सेवाएं पहले से भी �ादा स�ी / िकफायती, ग्राहक
का फायदा)
🔠🔠❓ MCQ. Find Correct Statement(s) [asked in UPSC- Prelims-2017]

1. NPCI helps in promoting the financial inclusion in the country.
2. NPCI has launched RuPay, a card payment scheme.
Answer codes: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
🔠🔠❓ MCQ. Find Correct Statement(s) [asked in UPSC- Prelims-2018]
1. BHIM app allows the user to transfer money to anyone with a UPI-enabled bank account.
2. While a chip-pin debit card has four factors of authentication, BHIM app has only two factors of
authentication.
10.14.2 � Third Party Application Providers (TPAPs): Google Pay, Whatsapp Pay
- WhatsApp Pay is a feature that allows users to send/receive money via WhatsApp to their
contact list using UPI technology. UPI technology is developed by (NPCI).
⇒ Google Pay (GPay, formerly called ‘Tez’) is an App by Google for online payments.
⇒ As per rules, Payment Service Operators need to register with RBI under Payment and
Settlement Systems Act, 2007. But Google functioned without authorization. �बना आरबीआई के पं जीकरण
के चला रहा है

⇒ 2019-April: Delhi HC inquired. Google clarified: “Google Pay operates as a technology service
provider to its partner banks, using UPI infrastructure. We are not part of payment processing or
settlement. Payment is directly done from one bank account to another. So, we require no license
/ authorization / registration required from RBI.”
⇒ Beyond that ⚾📻📻⚾✋ �जसको आंदोलनकारी बनना है → वो झं डा लेकर जं तर-मं तर पर धरना प्रदशर्न करे, �जसको IAS/IPS
बनना है वह आगे का Next topic पढ़े….
10.15💳💳 CREDIT & DEBIT CARDS (ALSO CALLED ‘PLASTIC MONEY’)
Table 8: 💳💳 Card Types based on Payment modality

1) Credit Card (कजर् पे शॉ�पंग) 2) Debit Card (अपने ब�क बचत का पैसा इ�ेमाल करो)
⇒ It allows holder to make purchase on credit - It allows holder to make purchases upto the
(=loan), even if he may / may not have extent of the amount lying in own his bank
sufficient balance in his bank account at the balance. अपने ब�क खाते म� �जतना पैसा है उतना ही इ�ेमाल
time of purchase. एक तरह से कज� पर खरीदने क� सेवा - Customer does shopping using debit card
⇒ Customer does shopping using credit card → bank transfer ₹ ₹ from customer’s own
→ bank transfers ₹ ₹ to merchant from bank account to merchant. So, if he has
bank’s own funds and later bank recovers ₹ insufficient balance, he may not be able to
₹ from customer. make purchase. Although nowadays e-
⇒ Customer can pay entire due amount at commerce sites allow debit-card based
once or convert it into Equated Monthly EMIs but that much 🎓🎓PhD/Hairsplittery
Installments (EMI). बकाया रकम िक�ों म� भुगतान कर unnecessary for IAS
सकता है For 🔠🔠❓MCQ. Simply remember: Debit
⇒ Interest rate may be charged depending on card= shopping ONLYIF you have ₹ in bank
billing cycle, grace period and other terms balance, Credit card= shopping without ₹ in
and conditions 🎓🎓PhD करने क� हमको ज�रत नहीं bank balance.
है.
If Credit card used for withdrawing money Debit card can be used to withdraw ₹ ₹ from
from ATM, then it’s a type of ‘borrowing’, so, ATM from your existing bank balance. So, it’s
bank levies interest rate. not ‘borrowing’.
Credit card vs Overdraft? Debit card vs Overdraft?
1. Credit cards = for shopping. You carry card You should be intelligent enough to self-
in your pocket. Bank may give u some understand that much. �श�क हर चीज क� �ून फ�िडगं
reward-points/gifts if you spend “₹.X” per करेगा/च�च से �खलाएं वह �वद्याथ� के मान�सक �वकास के �लए अ��
year बात नहीं
2. - for overdraft= you have to manually visit
the bank branch, fillup form. It’s not in the

1) Credit Card (कजर् पे शॉ�पंग) 2) Debit Card (अपने ब�क बचत का पैसा इ�ेमाल करो)
form of a ‘card’. Doesn’t give u points/gifts.
✋Further difference
not.imp.not.here.for.IBPS-exam
⇒ 3) Hybrid Card / Duo Card: Single card with two chips for 1) credit card and 2) debit card. So,
you don’t have to carry two separate cards. E.g. Indusbank Hybrid card. एक ही काडर् म� दोनों का मजा🤩🤩
⇒ 4) Pre-paid card: It’s a subtype of debit card. Debit card is linked to a given bank account. But
Pre-paid card can be bought even without having account in the given bank e.g. IRCTC’s UBI
Prepaid Card which can be used for buying rail tickets, meals etc. Backend support provided by
Union Bank of India (UBI) and NPCi’s Rupay gateway. (इस काडर् को पैसा देके खरीदना पड़ता है। ब�क खाता होना
ज�री नहीं । )
10.15.1 💳💳 RBI allows UPI payment via credit cards (2022-June)

Before After
Debit Card can be used for making payments This facility made available for credit card as
from UPI-Linked bank account while doing well.
shopping.
🤩🤩Benefit? - While doing shopping, Customer may be able to use/swipe his ‘credit card’ to directly
pay money from his UPI linked bank account, even if his UPI-walli-Mobile-App/Phone not
working. (ख़रीदारी करते व� क्रेिडट काडर् द्वारा सीधा ब�क खाते से भुगतान हो सके गा.)
🚩🚩🚩FAQ: Other technical benefits / MDR challenge / BizGK / PHD-doubts / practical-real life
implications = not imp.
10.15.2 💳💳 Card Types based on Security Features: (सुर�ा प्रणाली के िहसाब से काडर् के प्रकार)
1. Magnetic Card: 1960s technology. Data on magnetic strip. But, such data can be duplicated,
cloned, skimmed while swiping the card = fraud. So, RBI stopped such cards from 1/1/2019
using powers under Payment & Settlement Act. चुंबक�य काडर् म� जालसाजी का खतरा😰😰 → इस�लए आरबीआई ने
✋प्र�तबं �धत िकया
2. EMV card: Full form: Europay+Mastercard+Visa chip infrastructure with encryption. RBI had
ordered migration in 2013- finally effective from 1/1/2019. Two sub-types
o (A) EMV-Contact: cards must remain in Point of Sale (PoS) Terminal during
transaction.
o (B) EMV-Contactless cards: simply tap the card on terminal using RFID (radio-
frequency identification) technology. (बस छू कर �नकल जाओ. काडर् को मशीन म� घुसड़े ने क� ज�रत नहीं)
HomeWork: Read about RFID & NFC from Sci-Tech book/internet.

10.15.3 💳💳 📧📧 Card Tokenization (2019)
Figure 3: थ�ड़ से डर नहीं लगता, Identity theft se lagtaa hai!

⇒ During the the purchase customer may have to enter following data about his credit/debit card:
Account Holder’s Name, 16-Digit Account Number, Expiry Date, Security Code (CVV/PIN).
⇒ Often merchant site (e.g. Amazon) offers to store this data in their server so next time customer
does not have to retype it and he can do “one click purchase”. 😰😰Challenge? Data may be
hacked/leaked/misused.
⇒ Tokenisation = creates a set of numbers called ‘token’ to replace/hide the sensitive card data
such as the 16-digit account number, expiry date and security code. (हैिकंग से बचने वा�े असली काडर् नं बर
क� जगह टोकन/का��नक-नं बर बनाकर दे दो एसी बात है। तािक �वक्रेता का आपके काडर् क� गु� जानकारी �मले नहीं)
⇒ This ensures your card information is not disclosed to merchant website.
⇒ Card owner can generate Tokenization through visiting card-issuer’s/banker’s website/App
through laptops, desktops, tablet, wearables (smartwatch) etc.
⇒ From 1/1/2022, Merchant / Seller can’t store card details. He’ll have to delete previous card data.
Only source banks and card issuers (such as Rupay, Visa, and Mastercard) can store card details.
However, bankers, card companies wanted more time to upgrade servers/technology, so RBI
postponed the deadline. (लागू करने क� तारीख़ को �रज़वर् ब�क ने पीछे धके ला है।)
10.15.4 💳💳 🚕🚕 National Common Mobility Card (NCMC, 2019)
Figure 4: NCMC card unboxing ka video bhi youtube & Instagram पे डालते है
‘One Nation One Card Model’ by Ministry of Housing & Urban Affairs (MoHUA) with the help of
NPCi, Bharat Electronics Limited (BEL Company), and some banks. It has 3 components: (तीन घटक है
इसके )
⇒ 1) NCMC Card: To be issued by banks. Nature can be Debit/Credit/Prepaid. Can be used for
metro, bus, suburban railways, toll, parking, retail shopping etc.
⇒ 2) SWEEKAR: Automatic Fare Collection System. (यात्री िकराया वसूलने क� �चा�लत प्रणाली)
⇒ 3) SWAGAT: Swachalit / Automated Gate at railway/bus station. (अपने आप खुलने-बं द होने वाले दरवाजे)

10.15.5 💳💳 🚕🚕 FASTag for paying toll fees at highways (2017)
FASTags are prepaid rechargeable tags that allow for automatic toll collection at electronic toll
collection gates Radio-frequency Identification (RFID) technology.
⇒ 2013 onwards Govt required automobile companies to install RFID tags on windscreens of cars.
⇒ 2017: National Highways Authority of India (NHAI, a statutory body under Highway ministry)
launched 2 mobile apps MyFASTag and FASTag Partner to facilitate Electronic Toll Collection
(इले��ॉ�नक मा�म से पथकर/टोल वसूली के �लए रा�ी� य राजमागर् प्रा�धकरण द्वारा अलग अलग एप बनवाए गए ह�).
⇒ NPCi’s has developed National Electronic Toll Collection (NETC) technology to aid this.
⇒ Persons loads up ₹ ₹ in his mobile app → actives RFID tag in his car → when it passes through
highway toll-booth, the money is automatically deducted. (गाडी टोल नाके से गुजरेगी अपने आप पैसा कट जाएगा)
⇒ 🤩🤩Benefit? faster traffic movement. (तेज यातायात म� मदद �ोंिक गाड़ी रोककर हाथ से भुगतान नहीं करना)
⇒ FASTag has validity of 5 years. It is vehicle specific and once it is affixed to a vehicle, it cannot be
transferred to another vehicle = helps in tracking of vehicle theft, criminal’s movement etc (एक बार
वाहन को �चपकाया तो दू सरे वाहन म� उस टेग/��कर को �ानांत�रत नहीं कर सकते इसके ज�रए चुराए वाहनों को ढू ंढना पु�लस के �लए आसान)
⇒ From 2021, it became mandatory for all vehicles passing through tolls to have FASTags. Vehicles
without FASTags will have pay up more fees/toll at the gates. (ये लगाना अ�नवायर् �आ, अ�था �ादा फ�स)
10.15.6 💳💳😰😰Card Entities in Negative News: MasterCard, HDFC Bank

- HDFC Bank: 2020-Dec: RBI suspended it from issuing new card due to security /server
problems. 2021-Sept: Ban lifted. (�रज़वर् ब�क ने सुर�ा कारणों से रोक लगाई थी िक तुम नए ग्राहकों को काडर् नहीं दे सकते)
- MasterCard is a payment gateway operator for various banks. But despite RBI directive it was
not storing Indian customer data in Indian servers. So 2021: RBI has prohibited MasterCard
from onboarding (=issuing new cards) to Indians. 2022: Ban lifted (भारतीय ग्राहकों का डेटा के वल भारतीय
सवर्र म� ही सं ग्रिहत करना है ऐसे �रज़वर् ब�क के �नयम को ये मान नहीं रहा था तो �रज़वर् ब�क ने इसे ग्राहकों को नए काडर् जारी करने से मनाई क�)
10.15.7 💳💳 🏧🏧 ATM and its Types
⇒ Automated Teller Machine (ATM) allow bank customer to withdraw money or check balance
without visiting any branch of a bank. (�चा�लत �प से नकदी मुद्रा देने वाला यां�त्रक िड�ा)
⇒ ATM network works on NPCi’s NFS (National Financial Switch) technology.
Bank label Bank itself owns and operates the ATM network.
Brown label Bank owns but operations outsourced (cash refilling truck, guard)
⇒ Note: Some books offer different definition, but I’ve taken above definition
from Economic Times Article 2015.(कु छ िकताबों म� �ा�ा अलग है म�ने इधर से ली है)
White label Non-Bank owns and operates. E.g. Muthoot Finance, Tata Communication,
Prism

⇒ In 2012: RBI invited application, 4 companies given license.
⇒ From 2013-19 no new applications invited.
⇒ 2019-Aug: RBI announced ‘on-tap’ licensing system for white label ATM i.e.
a company can apply to RBI as and when it wants (just like applying for
driving license). company need not wait for notification (unlike IAS exam
notification).
Micro-ATM Bankmitra manually makes entries of deposit and withdrawal for customer. He
uses handheld device for using card & Aadhar biometrics. NPCi’s AEPS
technology gives backend technological support.
2019-June: RBI setup V G Kannan Committee on ATM charges by banks such BankingGK
#notIMP4IAS.
10.16💳💳 MDR: FULL FORM: MERCHANT DISCOUNT RATE (�ापा�रक छू ट दर)

⇒ MDR is the fees that a merchant must pay to his (acquirer) bank for every credit / debit card
transaction.
⇒ MDR fees is shared among 3 parties 1) customer’s card issuing bank 2) merchant’s acquiring
bank 3) payment gateway provider. (तीन प�ों म� इस फ�स को बांटा जाता है)
⇒ MDR hurts merchants’ profit margin, discourages them from adopting Point of Sale (PoS)
terminals (=card swiping machine) → obstacle to digital economy. (�ापारी के मुनाफे पर असर होता है
इस�लए वह काडर् मशीन अपनाने म� उदासीनता िदखाते है। )
Table 9: Steps taken to address MDR issue

RBI ⇒ 2017: Imposed ceilings on MDR fees i.e. MDR can’t be more than “x%” of the
transaction amount. (�रज़वर् ब�क द्वारा तय सीमा से �ादा फ�स नहीं मांग सकते)
Budget ⇒ It imposed some technical rules to help companies. I’m deleting it because old
2019 /faded news, mostly technical.

10.16.1 💳💳 MDR Subsidy by MEITY
Figure 5: Note: Above chart not 100% legally-technically correct. There may be instances where a Bank’s App may be giving both NEFT &
IMPS facility. This chart is meant for simple illustration for MCQ, and NOT for submitting as evidence in some Supreme Court PIL case.
In short, while reading this handout, “🚩🚩🚩🎓🎓” =avoid this mentality.
Instrument UPI NPCI's Rupay NPCI's Rupay Credit Card

Debit Card Mastercard/Visa’s Debit/Debit card etc
MDR % on transaction value 0% 0% “x”% (NOT ZERO)
⇒ 😥😥 So, if a banker promotes Rupay debit card / UPI App → Banker will not earn MDR fees. So
bankers promote MasterCard & Visacard to their customers and merchants (instead of
Rupay/UPI). (ब�कर को मज़ा नहीं आता �ोंिक उसे डे�बट काडर् व यूपीआई एप म� MDR क� फ़�स निह �मलेगी।)
⇒ So, 2021-Dec: MEITY (Ministry of Electronics & Information Technology) announced up to
₹2,000 MDR Subsidy to Merchant's Bank for RuPay debit cards transactions and UPI
transactions.# (तो सरकार ने ब�करों को बोला क� तुमको मज़ा िदलवाने के �लए MDR नुक़सान के एवज़ म� स��डी द�ग)े
⇒ 😍😍 this will encourage digital payment especially in small towns / rural areas (िड�जटल भुगतान ऊपर
लगने वाले मरच� िड�ाउं ट रेट पर सरकार द्वारा स��डी दी जाएगी यिद भुगतान �पये डे�बट काडर् या UPI द्वारा हो रहा है()
⇒ 😥😥 Foreign Players like MasterCard and Visacard are opposed to Indian govt’s preferential
treatment given to India's Rupay. (“�पे” को �मल रही एसी �रयायतों से �वदेशी काडर् कं प�नया नाराज़ है)
🚩🚩🚩🎓🎓 FAQ: "I've 500 jaat ke PHD doubts & counter arguments about this MDR subsidy" Ans.
Plz waste your precious time reading egazette.nic.in/WriteReadData/2021/231960.pdf

🔠🔠❓Which one of the following best describes the term “Merchant Discount Rate” sometimes
seen in news ? (Pre18 Set-D)
A. The incentive given by a bank to a merchant for accepting payments through debit cards
pertaining to that bank.
B. The amount paid back by banks to their customers when they use debit cards for financial
transactions for purchasing goods or services.
C. The charge to a merchant by a bank for accepting payments from his customers through the
bank’s cards.
D. The incentive given by the Government, to merchants for promoting digital payments by their
customers through Point of Sale (PoS) machines and debit cards.
10.17💸💸💸💸💸 📈📈 MEASURES TO PROMOTE LESS-CASH ECONOMY

Note: Need to memorize all of the following events. But memorize a few events, for
writing an essay on digital payment / cashless economy
⇒ During 2016-17 in the aftermath of Demonetization (नोटबं धी/�वमुद्रीकरण के बाद)

 Ratan Watal Committee to Finance Ministry for medium term recommendations to
strengthen digital payment ecosystem. (िड�जटल भुगतान पा�र��तक� तं त्र को मजबूत करना)
 Chandrababu Naidu chief ministers’ Committee to PM to promote digital payment.
 HRD ministry’s Vittiya Saksharta Abhiyan wherein college students explain people
about digital transactions. (िड�जटल भुगतान कै से कर� उसक� जागृ�त फै लाना)
 NITI+NPCi launched lottery / cashback schemes for customers (Lucky Grahak) and
merchants (Digi Dhan Vyapar). Government itself launched further cashback schemes
for using UPI-BHIM.
⇒ Budget-2017: imposed ceilings on cash transactions, gave tax incentives to companies for using
digital transactions, ⏬custom duties on ATM devices. (नगदी �वहारों पर रोकथाम, िड�जटल भुगतान अपनाने पर
करों म� �रयायत)
⇒ Budget-2018: promised to explore blockchain technology [of cryptocurrencies] for promoting
digital economy.
⇒ Budget-2019: imposed TDS on withdrawal of ₹1 cr/> cash from a single user account. <More in
📑📑Pillar2: Taxation → Black Money> (अपने ब�क खाते से मोटी नगदी रकम उठाने पर टीडीएस कटेगा)
⇒ Digidhan Mission (2017) Digital Payment Abhiyan (2019) = Ministry of Electronics and
Information Technology (MeitY)’s camapgisn to ⏫digital payment. But, outdated topics. We’ll
not waste time learning exact features. ✋DONOT lose Sleep

10.17.1 �📒📒 RBI’s Nandan Nilekani Panel (2019: Jan to May)
Nilekani (Ex-chairman of UIDAI, also associated with Infosys) gave 70+ suggestions.
Notable suggestions for Mains/Essay writing are:
Suggested Reforms @Government ( नीलेक�ण ने सरकार को ये सुझाव �दए)
⇒ Government transfers welfare schemes’ money directly into bank accounts of poor people under
Direct Benefit Transfer (DBT) mechanism. But poor people withdraw cash from bank account
entirely because local merchants not accepting digital payments. So, raise awareness about
BHIM-UPI and its adoption.( सरकार गरीबों के ब�क खाते म� �व�वध योजनाओं का पैसा जमा तो करती है, िकं�ु गांव के �ापारी
िड�जटल भुगतान �ीकार नहीं करते इस�लए गरीब आदमी हमेशा ब�क से नकदी रकम �नकालनी पड़ती है और नकदी म� भुगतान करना पड़ता है)
⇒ Give companies tax incentives for using digital payments. (कर प्रो�ाहन /करों म� छू ट दी जाए)
⇒ ⏬ reduce taxes on the devices required for digital payments. (िड�जटल भुगतान क� मशीनों पर करों म� कटौती)
⇒ Govt orgs should not charge convenience fees (सु�वधा शु�) from citizens while accepting digital
payments.
⇒ Setup Computer Emergency Response Team for finance (FIN- CERT: आपातकालीन प्र�तिक्रया टीम).
�📒📒 Nilekani’s Suggested Reforms @RBI ( नीलेक�ण ने �रज़वर् ब�क को ये सुझाव �दए)
⇒ RBI should prepare area wise ‘Digital Financial Inclusion Index’ to monitor progress & take
remedial steps. Ensure no user is more than 5 kms away from a banking access point. (िड�जटल �व�ीय
समावेशन सूचकांक)
⇒ Setup a Fund to develop digital payment infrastructure in poorly served areas e.g. subsidy on PoS
devices. RBI and Banks should co-contribute ₹ ₹ in this fund. (�रज़वर् ब�क और अ� ब�क द्वारा एक �न�ध बनाई
जाए. �जसके पैसों से �पछड़े इलाकों म� िड�जटल भुगतान मशीन खरीद/इ�ेमाल के �लए �ापा�रयों को स��डी दी जाएगी)
⇒ ⏬Reduce the MDR / card payment fees. Allow customer to do “x” no. of digital payment
transactions per month with zero charges. (काडर् भुगतान पर लगने वाले �व�वध फ�स म� कटौती क� जाए)
⇒ RBI should make NEFT available 24/7 and remove its fees. (✅Done in 2019-20: RBI removed
charges on both NEFT and RTGS.)
�📒📒 Nilekani’s Suggested Reforms @NPCi

 NPCI shd offer RuPay and BHIM UPI in other countries to facilitate remittance to India.
 Encourage local language apps/ software for digital payments. (�ानीय भाषाओं म� सॉ�वेयर बनवाओ)
Nilekani also suggested many other technical reforms but notimp4exam
🔠🔠❓MCQ. Who among the following was the Chairman of the Committee on Deepening Digital Payments
appointed by the RBI ? (Asked in UPSC-CDS2019-II-Q116)
(a) H.R.Khan (b) Nandan Nilekani (c) N.R.Narayana Murthy (d) Sanjay Jain

10.17.2 🕵🕵 💳💳💳💳 Payments Infrastructure Development Fund (PIDF) 2020-Jun
⇒ ₹250cr from RBI + ₹250 cr from (Banks and Card Gateway Operators) → ₹500 cr fund setup.
⇒ Objective? Provide funding/ subsidy to encourage merchants in the small towns, villages and
North Eastern states to adopt point-of-sale (PoS) card swiping machines.
भुगतान इं फ्रा��र के �लए �न�ध/कोष: गांव, छोटे शहरों और उ�र-पूव� इलाकों म� �ापा�रयों को काडर् मशीन अपनाने के �लए मदद
10.17.3 🕵🕵 💳💳📡📡:📵📵 Offline Retail Payments Using Cards and Mobile Devices
 While mobile phones, cards, e-wallets, etc. available but, internet connectivity issues especially in
rural/remote areas😰😰😰😰(ग्रामीण और दुगर्म प्रदेशों म� इं टरनेट क� ख़राबी/सम�ाएँ )
 2021: RBI allowed offline mode of payments using cards, wallets or mobile devices upto Rs.200
per transaction AND overall limit of Rs 2,000 for all transactions until balance in the account is
replenished/recharged. (overall limit is prescribed to prevent big frauds if card/mobile gets
stolen. HOW? Ans. 🚩🚩🚩🎓🎓 James-Bond-girl not important) (इं टरनेट बं द हो तब भी िड�जटल भुगतान हो
सके उस प्रणाली. शु�आत म� एक-एक ल�नदे� म� २०० �ादा का लेनदेन नहीं हो सकता। और कु ल �मलाकर 2000 �पये से �ादा
का लेन देन नहीं हो सकता जब तक िक ग्राहक अपने काडर्/ ब�क खाते इ�ािद म� पैसा वापस न भर दे।)
 🤩🤩Benefit? Error-free digital transactions in areas with poor internet connectivity (दुगर्म प्रदेश जहाँ
इं टरनेट क� सतत् �प से सेवा उपल� नहीं, वहाँ पर भी िड�जटल भुगतान को प्रो�ाहन �मलेगा.)
10.17.4 �📒📒 Payment and Settlement Systems in India: Vision 2019 – 2021
RBI published this document in 2019-May. it repeated most of the points that Nilekani report said. As such
✋not much IMP unless preparing for RBI exams (�रज़वर् ब�क के द�ावेज प्रका�शत करता है हालांिक मोटी मोटी बाते हमने पढ़ ली)
10.18🕵🕵 💳💳 DIGITAL PAYMENT REGULATORY BODIES (�नयं त्रण सं �ाएँ )

10.18.1 🕵🕵 💳💳 Digital Transactions Ombudsman (DTO-2019)
⇒ RBI designates senior RBI officials at 21 places across India as DTO. They hear customer complaints upto
₹ 20 lakh against prepaid payment instruments, Mobile wallets, Apps, NEFT/RTGS and other digital
transactions. ((िड�जटल लेनदेन �शकायत �नवारण अ�धकारी/लोकप्रहरी).
⇒ They can order the company / bank to fix problem and pay upto additional ₹ 1 lakh for mental agony of
customer → Higher Appeal to Dy.Gov of RBI. (मान�सक उ�ीड़न के �लए जुमार्ना/मुआवजा).
⇒ If matter > ₹ 20 lakh, then matter outside his jurisdiction. Victim has to approach courts. (20 लाख से अ�धक
रकम का मामला होगा, तो पीिड़त ने �ाय/इं साफ के �लए अदालत/कोटर् म� जाना होगा)
10.18.2 🕵🕵(Proposed but NOT YET DONE) Payment Regulatory Board (PRB)
⇒ 1998: Narsimham-II Committee on Banking Reforms suggested regulatory framework for e-
banking, card payment etc.
⇒ 2007: Payment & Settlement Systems Act (भुगतान और �नपटान प्रणाली अ�ध�नयम) → RBI → (Statutory)
Board for Regulation and Supervision of Payment and Settlement Systems (BPSS: भुगतान और �नपटान
प्रणाली के �व�नयमन और पयर्वे�ण के �लए बोडर्).

⇒ All types of payment system providers have to register with RBI’s BPSS- whether bank, non-
bank, wallet/Prepaid Payment Instrument (PPI) etc. (सभी भुगतान सं �ाओं ने इस वैधा�नक सं �ा म� पं जीकरण
करवाना अ�नवायर्)
⇒ 2016: Ratan Watal Committee suggested replacing above BPSS with a Payments Regulatory
Board (PRB: भुगतान �नयामक बोडर्) in RBI. (उ� BPSS सं �ान को बदलकर एक नया PRB सं �ान बनाने का सुझाव िदया गया)
⇒ 2018: draft Payment and Settlement System Bill to implement PRB. (�वधेयक का मसौदा भी बनाया गया)
⇒ But, not yet setup. RBI vs Govt difference of opinion about who should be chairman, how many
members from Govt side etc. �रजवर् ब�क और सरकार के बीच मतभेद के चलते ये नई प्र�ा�वत PRB सं �ा अभी तक बनी नहीं है।
10.19🐯🐯📊📊 DIGITAL PAYMENT RELATED INDEX / COMPETITIONS
10.19.1 🐯🐯📊📊RBI Digital Payments Index (DPI: �ड�जटल भुगतान सूचकांक)

⇒ With 5 component: (i) Payment Enablers (weight: भारांक 25%), (ii) Payment Infrastructure –
Demand-side factors (10%), (iii) Payment Infrastructure – Supply-side factors (15%), (iv)
Payment Performance (45%) and (v) Consumer Centricity (5%). (✋WEIGHT NOT IMP4IAS
but for RBI-Officer-EXAM)
10.19.2 🐯🐯🐯🐯 RBI’s Financial Inclusion Index (�व�ीय समावेशन सूचकांक)

⇒ 2021: RBI Governor announced to publish Financial Inclusion Index to capture the extent of
financial inclusion across the country in Banking, Investments, Insurance, Pension Sector.
⇒ Index has 3 broad parameters (weights indicated in brackets) viz., Ease of Access (35%), Usage of
services & their availability (45%), and Quality of services (20%)
⇒ Score of 0% = complete financial exclusion and 100% = full financial inclusion of every eligible
person. For 2021 the All India score is 54%. (यिद जवाब 100% आये तो सभी लोगो का अ�े ढंग से �व�ीय समोवशन हो
गया है, लेिकन अभी अपना �ोर 54% ही है)
⇒ What is the base year for comparison? How frequently is the report published? What are the
findings of latest report? Ans. Not very IMP4IAS exam.
10.19.3 🐯🐯🏆🏆Harbinger Hackathon 2021

- RBI’s first-ever hackathon competition for digital payments systems.
10.20🔗🔗💮💮 CRYPTO-CURRENCY & BLOCKCHAIN TECHNOLOGY
⇒ [Definition] Cryptocurrency: is a digital / virtual currency created & stored using blockchain
technology.िक्र�ोमुद्रा एक िड�जटल मुद्रा है �जसे �ॉकचेन तकनीक का उपयोग करके बनाया और सं ग्रहीत िकया जाता है।

⇒ [Definition] Blockchain: A secured decentralized database/ distributed ledger technology (DLT)
that maintains a continuously growing list of records / transactions. Old entries can’t be deleted,
new entries will be visible to all. Mainly used for running cryptocurrency network. But it can also
store any type of data. (�ॉकचेन एक डेटाबेस है जो �रकॉडर् क� �नरंतर बढ़ती सूची को �वके �ीकृ त �प से बनाए रखता है।)
o Decentralised finance (DEFI) is a system in which customers can do financial
transactions using blockchain networks, without the need for middlemen such as banks
and card companies. (�वक� द्रीकृ त �व�ीय प्रणाली)
⇒ [Origin] Anarchist groups lost faith in FIAT MONEY because USA’s Subprime Crisis (2007)
eroded the purchasing power of US Dollar. They also dislike Banks & Card Companies because
of transaction charges on e-banking, card payments, MDR, interoperability issues. (अशासनवादी समूहों
को सरकार द्वारा जारी क� मुद्रा नापसं द। इन अशासनवादी समूहों को ब�क और काडर् कं प�नयों से भी नफरत है)
⇒ 2009: An anonymous user (अनाम/अ�ात) Satoshi Nakomoto launched a cryptocurrency ‘Bitcoin’.
⇒ total 21 million Bitcoins, wherein 1 Bitcoin (BTC) = 108 Satoshi (the smallest unit).
⇒ Other examples: Ethereum, Litecoin, Digicoin, Laxmicoin, Ripple, Dogecoin etc..
10.20.1 👝👝Hot Wallet vs Cold Wallet

Just like you store money in Paytm DIGITAL Wallet. You can store Bitcoin and other
cryptocurrency in Crypto Digital Wallets. Such wallet could be hot wallet or cold wallet.
⇒ 🔥🔥 Hot wallets are connected to the internet, (e.g. an online app)

⇒ ❄ Cold wallets are not connected to internet (e.g. a USB pendrive).
10.20.2 🔗🔗🔗🔗📉📉:🥶🥶☃Crypto-Winter in Bitcoin Prices (भाव �गरा अब उठ निह रहा है)

Between 2021-Nov to 2022-Jun: Bitcoin fell from ~$70,000 to 20,000 → almost 70% loss! & similar
situation in many other cryptocurrencies. Some experts fear the prices will remain frozen in this
range for upcoming months, hence using the term "Crypto-Winter" to denote it. (िक्र�ो-मुद्राओं के दाम �गर
गए ह� और वापस ऊपर निह चढ़ रहे, लगता है जेसे के िक्र�ो-बाज़ार सद�/ठं डी म� जम गया है)
3 ways to obtain 🥵🥵👎👎Negative Points / Challenges

Cryptocurrency (िक्र�ो मुद्रा हा�सल करने के तीन तरीके , और वे खराब �ों है?)
- Graphics cards demand & price hike: 2x-4x times due to bitcoin
1) Mining
mania. E-waste generation. (ग्राफ�कस काडर् अप्र�ा�शत �प से महंगे हो गए ह�)
of the blockchains
- Thermal Electricity wastage worth 20 megaton CO2 per year (�बजली क�
using powerful बबार्दी)
computers - Iran: People deploying large number of computers for Bitcoin mining
श��शाली कं �ूटर द्वारा
→ Electricity outage in normal houses → Diesel generator →
�ड�जटल-खनन
⏫Pollution → 2021-Iran banned bitcoins. (डीजल जनरेटर से वायु प्रदू षण)
2) Selling goods and ⇒ Bitcoin wallets have “public address” (like an email) & private key
services to a miner / (like a password). Unlike Paytm wallet, possible to create a Bitcoin
owner of wallet without any phone number or email id. So, difficult to trace by
cryptocurrency law enforcement agencies. Misuse in Narcotics, Illegal trade, Terror
finance.**

�जसके पास िक्र�ो मुद्रा है उसे ⇒ Selling goods/services in exchange of Bitcoins= Govt deprived of GST,
कोई व�ु या सेवा बेचो Custom duty, Income tax. सरकार को कर नहीं �मलेगा, �ोंिक आय/�बक्र� �छपाना आसान
⇒ If Scam: can’t get justice under Consumer Protection Act. (ग्राहक सुर�ा
कानून म� �ाय नहीं �मलेगा। �ोंिक खरीद �बक्र� वैधा�नक �न�वदा से नहीं �ई। )
⇒ For traditional Rupee to Dollar exchange, Forex dealers have to
register with RBI under FEMA Act. (Foreign Exchange Management
Act, 📑📑Pillar#3)
⇒ But, if ₹ or $ exchanged with Bitcoin = terror finance, sending black
money to tax havens. (📑📑More in Pillar2: आतं क� �व�पोषण, काले धन को
�वदेशभेजना)
⇒ Bitcoin exchange rate: speculation, volatility, Government deprived of
3) Exchanging legal
Capital Gains Tax (CGT: 📑📑Pillar#2. पूंजीगत अ�भलाभ कर को �छपाना,)
tender to buy
cryptocurrency. ⇒ Ponzy investment frauds- so, Government came up with ‘Banning of
वैधा�नक मुद्रा क� मदद से िक्र�ो Unregulated Deposit Schemes Act 2019’. (More in 📑📑Pillar1D:
मुद्रा को खरीदो Financial Inclusion. “इसक� टोपी उसके सर पे पहेनाने वाला धोखा” कर बदमाश भाग जाते है)
⇒ 2022-May: RBI officials raised apprehensions that bitcoin & other
cryptocurrencies could lead to the dollarization in Indian economy.
(= increased influence & usage of dollar-based transactions. Because
bitcoins buying / selling done mostly in dollar using international
websites.) What does it mean? Why this is bad? Ans. (REF: Pillar#3A:
Currency Exchange). (इन िक्र�ो मुद्राओं द्के चलते भारतीय अथर्तंत्र म� “डॉलर का प्रभु�”
बढ़ने का डर। ये पूरा मामला �ा है, इससे �ा चुनौ�तयाँ होंगी- उसे समझने के �लए �पलर#3 दे�खए।)
⇒ 😰😰2021: Car with a Bomb parked outside Mukesh Ambani’s home with a letter demanding
ransom in Bitcoins. This proves criminals prefer the anonymity of Bitcoins. (मुकेश अंबानी के घर के सामने
बम वाली गाडी रखके से िक्र�ॉमुद्रा म� िफरौती माँगी गई. जो सा�बत करती है िक अपरा�धयों को भी �बटकॉइन क� गोपनीयता पसं द है.)
** 🚩🚩�FAQ: FAQ: How is Bitcoin not traceable, we can trace it using XYZ technology?
✅Ans. Using HTML, we can create Wikipedia website and using HTML we can also create gmail
website. While everyone can read Wikipedia, I can’t read your gmail page, unless I know your
username password. Blockchain is similar. It depends on designer to make database “open” or
“private/encrypted”. Beyond that, we are not here for B.Tech (Computer Science) Semester
exam/James Bond recruitment. We just have to memorize 3-4 negative points for Mains-Answer-
writing ……so #�🚫🚫🚫🚫🕰🕰
🔠🔠❓MCQ. Find correct statement(s) about Bitcoin? [UPSC-CDS-2017-I]

1. It is a decentralized virtual currency.
2. It is generated through complex computer software systems.
3. The Reserve Bank of India recognized it as a legal tender in January 2016.
🔠🔠❓ MCQ. Find correct statement(s) about “Blockchain Technology” [UPSC-Prelims-2020]

1. It is a public ledger that everyone can inspect, but which no single user controls.
2. Structure and design of blockchain is such that all the data in it are about cryptocurrency only.
3. Applications that depend on basic features of blockchain can be developed without anybody’s
permission.
Answer Codes: [a) 1 only [b) 1 and 2 only [c) 2 only [d) 1 and 3 only
10.21⚖🔗🔗🔗🔗 CRYPTOCURRENCY LEGAL STATUS IN INDIA→ RBI BAN/SC UNBAN

⇒ RBI’s Institute for Development and Research in Banking Technology (IDRBT)- studying how
to use blockchain technology for promoting digital economy. (�ॉकचेन टे�ोलॉजी क� मदद से िड�जटल भुगतान
को कै से प्रो�ाहन द� इस पर �रजवर् ब�क क� सं �ा सं शोधन कर रही है)
⇒ However, RBI’s attitude towards cryptocurrencies has been skeptical/negative <Refer to Next
Section> (िक्र�ो मुद्राएं के बारे म� �रज़वर् ब�क का रवैया/��कोण सं शयशील/ नकारा�क है)
⇒ Since 2013: RBI warning Indians not to get involved in cryptocurrency due to frauds, tax evasion
and terror finance. (�रज़वर् ब�क चेतावनी देता है इसम� �नवेश न कर� �ोंिक धांधली, करचोरी, आतं क �व�पोषण का खतरा)
⇒ 2018: RBI directed all banks to stop relations with any Cryptocurrency company. (�रज़वर् ब�क ने ब�को को
आदेश िदया क� िक्र�ोमुद्रा कं प�नयों के साथ लेनदेन/�वहार बं द कर�)
Then some cryptocurrency exchange companies like CoinDCX etc went to SC alleging that:
⇒ Parliament has not made any law declaring this illegal (unlike possession cocaine / narcotics.)
⇒ Even Japan, USA, Singapore etc not completely banned investment in cryptocurrency but
imposed regulations to control its misuse/fraud. (इन देशो ने सं पण ू र्ता प्र�तबं �धत नहीं िकया बस �नगरानी के �लए स�
कानून बनाए ह�)
⇒ Anekantavada philosophy of Jainism: 4 blind men try to describe an elephant but end up
describing only one physical feature of the elephant. (आरबीआई और सरकार को पता ही नहीं है िक िक्र�ोमुद्रा �ा
चीज है- जीस तरह एक अंधे/नेत्रहीन आदमी को हाथी को छू कर पता नहीं चल सकता िक वह हाथी कै सा िदखता है)
⇒ Similarly, without fully studying the nature/impact of cryptocurrency, RBI placed a blanket ban
which has harmed our fundamental right to business/profession. (हमारे �वसाय के हक को हा�न)
⚖ 2020-March: SC revoked the RBI ban because (सुप्रीम कोटर् ने �रजवर् ब�क के प्र�तबं ध को हटा �दया �ोंिक):
⇒ Article: 19(1)(g): All citizens have the right to practise any profession including those companies
dealing with cryptocurrency. (�वसाय का हक/मौ�लक अ�धकार सभी को है)
⇒ Same objective (financial fraud protection) could be achieved by imposing a less drastic ban.
⇒ So, RBI ban did not pass the test of proportionality (अनुपा�तकता क� परी�ा)
o Proportionality test is a legal method used by courts in matters where State’s decision
(for public safety/welfare e.g. Aadhar card or Bitcoin ban) interferes with fundamental
rights of people (right to privacy, right to business) (सरकार जो जनिहत म� �नणर्य ले रही है, वह मूलभूत
अ�धकारों का िकस अनुपात म� हनन कर रहा है- अगर ज़�रत से �ादा हनन हो रहा हो तो कोटर् रद करवाएगी।)
What next? 🐯🐯RBI may release a calibrated regulation on cryptocurrency e.g. PAN card required,
can’t invest more than ₹”x” lakh per month etc. topic is still developing.⚾📻📻⚾🎓🎓✋

10.22⚖🔗🔗🔗🔗 CRYPTOCURRENCY LEGAL STATUS IN INDIA→ GOVT’S ATTITUDE
⇒ 2017-18: Dinesh Sharma Committee to FinMin & Subhash Chandra Garg committee to FinMin
suggested Government to ban it. (�व�वध सरकारी स�म�तयों ने इस पर प्र�तबं ध क� �सफा�रश क� है)
⇒ 2018: Budget says Crypto-currencies are not legal tenders. We’ll eliminate use of these crypo-
currencies in financing illegitimate activities or as part of the payment systems. (बजट म� �व� मं त्री ने
कहा िक अवैध/गैर कानूनी �व�ीय ग�त�व�धयों म� िक्र�ो मुद्रा का उपयोग बं द करवाएं ग)े
⇒ 2019: Ministry of Finance→ Department of Economic Affairs has proposed a draft bill called the
‘Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2019’ (िक्र�ो�ूर�सी पर
प्र�तबं ध और आ�धका�रक िड�जटल मुद्रा का �व�नयमन �वधेयक, 2019- �व� मं त्रालय के आ�थक मामलों के �वभाग द्वारा बनाया गया है).
⇒ It aims to ban the use of all types of cryptocurrencies issued by private operators. Non-bailable
offense, jail upto 10 years. (�नजी �नमार्ताओं द्वारा बनाई गई िड�जटल मुद्रा रखना गैर-जमानती अपराध बनाने का प्र�ाव है),
⇒ However, (if and when) RBI launches a blockchain-based digital currency, it’ll be permitted. (जब
�रज़वर् ब�क खुद क� िड�जटल मुद्रा बनाएगा तो वो गैरकानूनी नहीं होगा. उसके �लए गवनर्र श��कांता दास को जेल म� िफट नहीं कर�गे)
⇒ 🤩🤩2021: Ministry of electronics and IT (MEITY) published draft framework to use blockchain
technology in database management of health record, property ownership, electricity
distribution, supply chain management etc. 😰😰Challenge? Lack of skilled man-power,
Cybersecurity/Hacking. (�ा� �रकॉडर्, सं प�� का �ा�म�, �बजली �वतरण, आपू�त �ं खला प्रबं धन आिद म� �ॉकचेन प्रौद्यो�गक�
का उपयोग करने के �लए इले��ॉ�न� मं त्रालय ने एक का मसौदा प्रका�शत िकया हालाँिक भारत म� �ॉकचैन उपयोग के �लए प्र�श��त मानवबल
क� कमी, हेिकंग का ख़तरा)
⇒ 🤩🤩Pradhan Mantri Rashtriya Bal Puraskar awards (Children bravery awards)- Its digital
certificates given to through blockchain technology for the first time in India.
10.22.1 🔗🔗🔗🔗:🍋🍋 Bitcoin Profit pe 30% Tax and transfer pe 1% TDS in 👜👜👜👜Budget-2022
Refer to Pillar2A: Budget Direct Taxes to learn this matter.
10.23⚖🔗🔗🔗🔗✋ CRYPTOCURRENCY BANNED IN OTHER NATIONS?

⇒ Nepal, Algeria, Egypt, Morocco, Turkey etc: Bitcoin is illegal. (कु छ देशों म� िक्र�ो मुद्रा रखना गैरकानूनी है)
⇒ Iran banned Bitcoins for causing electricity outages & pollution (due to diesel generator use in
digital/computer mining of cryptocurrency)
⇒ Chinese prohibited the financial institutions (= Banks and Non-Banking Financial
Companies/NBFCs) from providing buying/selling/investment services for bitcoin etc
cryptocurrencies. After this crackdown, Bitcoin prices ⏬⏬ by 30% [चीनी प्रशासन ने देश क� सभी �व�ीय
सं �ा को आदेश िदया है िक �बटको�न जेसी िक्र�ोमुद्रा क� ख़रीद/�बक्र�/�नवेश से जुड़े �ए कोई भी काम भी ना कर�. इसके बाद �व� बाजार म�
�बटकॉइन का दाम पहले से करीब करीब 30% �गर गया.]
10.24🔗🔗🔗🔗:🤩🤩 CRYPTOCURRENCY PERMITTED IN OTHER NATIONS

⇒ United Nations International Children's Emergency Fund (UNICEF, HQ-
🌐🌐 UNICEF
New York,USA; 1946, later renamed to UN Children's Fund)

⇒ 2019: UNICEF setup a Cryptocurrency Fund to accept donations in
cryptocurrencies. It has become the first UN organization to accept
cryptocurrency. (यू�नसेफ सं �ा दान म� िक्र�ो मुद्रा का भी �ीकार करती है)
⇒ 2018: World Bank launched World’s first blockchain bond called “Bond-i”
in Australia, denomination: Australian Dollars → public invests, gets ~2%
interest after 2 years.
🌐🌐 World
⇒ Blockchain bond requires less cost in server / database /paperwork
Bank
(More about maintenance unlike traditional bonds. 📑📑More in Pillar#1C:
SEBI/Sharemarket
this org in
⇒ World Bank’s report “Remittance Prices Worldwide 2020” says it costs an
📑📑Pillar#3B)
average 6-7%, to transfer money from one country to another, blockchain
based money transfer technologies can help ⏬. (�वदेश से वतन पैसा भेजने पर लगने
वाली फ़�स/ लागत खचर् म� कमी)
⇒ World Economic Forum (WEF) is a non-government organization in
Cologny-Geneva, Switzerland. (�व� आ�थक मं च. गैर सरकारी सं गठन)
⇒ 2020: Published a document, ‘Blockchain Bill of Rights’ . Document talks
about rights to accountability, transparency, data privacy, data protection
Bill of Rights
etc. (�ॉकचेन अ�धकार पत्र/�वधेयक: जवाबदेही, पारद�शता, डेटा गोपनीयता, डेटा सुर�ा आिद के अ�धकार)
⇒ Aims to set global standards for web-developers, corporates and
(अ�धकारो का
governments who’re building/using blockchain technology. (वै��क मानदंड
�वधेयक)
बनाएगा)
But, WEF is not as big body as United Nation, and this report is not as great as
the United Nations’ Universal Declaration of Human Rights. So, ✋DON'T
LOSE SLEEP not matter how much coverage done by CA-PDF wallas.
♟🏆🏆Chess 2021: FTX Crypto Chess Cup: Online tournament. Prize $320,000 will be paid in
cryptocurrency to ⏫ popularity and acceptance of Cryptocurrency. (िक्र�ो मुद्रा क�
लोक�प्रयता व �ीकृ �त बढ़ाने के �लए, ऑनलाइन शतरंज प्र�तयो�गता जहां इनाम क� रकम िक्र�ो मुद्रा के ��प म�)
🏎🏎Elon Musk ⇒ Tesla Electric car company owner. Regularly tweets about Bitcoins,
Dogecoins. → investors become crazy/panicked → cryptocurrency prices
⏫/⏬.
⇒ Thus, price of cryptocurrency = very volatile / unstable / sensitive to social
media news/rumors/influencers. If common man invests, his lifetime
savings may be ruined. Therefore, Government regulation necessary. (एलोन
म� के ट्वीट से िक्र�ोमुद्राओं के दाम म� भारी उथलपुथल आती है। आम आदमी िक्र�ोमुद्रा म� पैसा �नवेश कर�, तो
�ज़ंदगी भर क� कमाई भी बबार्द हो जाने का डर. इस�लए सरकारी �नयं त्रण ज़�री है।)

Bitcoin Voluntary Global Forum of bitcoin miners, to promote sustainability of Bitcoin
Mining system. E.g. using Solar cells instead of diesel generators for electricity (�बटकॉइन का
Council (2021) िड�जटल खनन करने वाले वालों का वै��क �ै��क मं च. सौर �बजली से िड�जटल खनन कर� इ�ािद)
- Bolivar currency =little value in Venezuela country due to hyperinflation,

and failed economy. (अ�ा�धक महंगाई के चलते बो�लवर मुद्रा का मू�/खरीद-श�� न के बराबर है)
- So, 2018: President Nicholas Maduro launched “Petro”- a cryptocurrency
whose price is linked with market price of 1 oil barrel. Their Supreme Court
Venezuela recognized it as “Fiat money – Legal Tender”.
- Can be bought using Dollar, Euro, even other cryptocurrencies.
Capital: Majuro, Sovereign state having free association with USA (for defense,
social security, budget). Legal Tender was U$D. But,
Marshall
⇒ 2018-Feb: became first country to launch sovereign cryptocurrency named
Islands
“Sovereign” [SOV]. So, now two legal tenders: US Dollars and SOV.
⇒ No anonymity unlike Bitcoins. (गुमनामी क� सु�वधा नहीं.)
10.24.1 🔗🔗🔗🔗 🤘🤘🏳🏳El-Salvador: Bitcoin becomes a legal tender (2021)

⇒ El-Salvador: Two Legal tenders [1) US Dollars (from 2001). [2) Bitcoin (from 2021).
⇒ Thus, El-Salvador became 1st nation in the world to allow Bitcoin as legal tender. अल-सा�ाडोर देश म�
दो वैधा�नक �न�वदा: अमे�रक� डॉलर, �बटको�न। �बटकॉइन को ऐसी अनुम�त देने वाला यह दु�नया का पहला देश है।
⇒ Shopping, Salaries, tax payment may be done using Bitcoins or US Dollars. (ख़रीदारी, वेतन भुगतान, कर
भुगतान म� दोनों ही मुद्राओं का इ�ेमाल कर सकते ह�)
⇒ Exchange rate between Bitcoin and US dollar (e.g. 1BTC=50,000 US Dollars) will be decided by
market forces of supply and demand. �बटकॉइन तथा अमे�रक� डॉलर के बीच मुद्रा �व�नमय दर बाज़ार श��याँ तय करेगी।
⇒ If foreign investors bringing bitcoins to El-Salvador, then they will be given certain tax benefits.
(�वदेशी �नवेशक यिद बीटको�न के ��प म� अल-सा�ाडोर मे पैसा �नवेश कर�गे तो सरकार उ�� करों म� कु छ �रयायत�/छू ट/माफ़� देग़ी)
😤😤FAQ: Why El-Salvador allowed Bitcoin? Ans.✋ not important after looking at previous prelims
and mains papers. We’re not preparing for El-Salvadori-ElAS exam
10.24.2 🔗🔗🔗🔗🔗🔗 Cryptocurrency → Stable-coins
⇒ Stablecoin is a type of cryptocurrency whose price is backed by a reserve asset like gold / dollar /
fiat currency e.g. Facebook’s proposed ‘Libra’, Tether, Basecoin, and TrueUSD.
⇒ 😰😰But, stablecoins challenges: 1) money laundering (धनशोधन / काले धन को वैध बनाना) 2) terror
financing (आतं क� �व�पोषण) 3) lack of consumer protection (उपभो�ा सं र�ण क� कमी) 4) financial frauds
(�व�ीय धोखाधड़ी).
⇒ 2019: France, EU, G20 group opposed / apprehensive. (इन सबको आशं का/डर है )

10.24.3 🔗🔗🔗🔗🔗🔗 Cryptocurrency → Stable-coins → Facebook’s Libra/DIEM #Epicfail
- 2019: Meta Company (Facebook) announced the Libra stable coin. But France opposed → 2020:
Facebook renamed it to “Project Diem” (means “day” in Latin) → still opposition continued by
American and European authorities → Facebook sold Project DIEM to another company.
इसका सं पूणर् िहंदी अनुवाद नहीं कर�ग.े कु ल �मलाकर बात यह है िक फे सबुक जैसी �नजी कं प�नयां भी अपनी मुद्रा �नकालना चाहती है िकंतु फ़्रांस जैसे देशो
क� सरकार उसक� अनुम�त देने के �लए राजी नहीं।
10.25🐯🐯🐯🐯🐯🐯 CENTRAL BANK DIGITAL CURRENCY (CBDC)
क� द्रीय ब�क िड�जटल मुद्रा / सं प्रभु िड�जटल मुद्रा

2020: People's Bank of China (PBC) started trials to issue its paper fiat money Yuan/Renminbi in
digital format. (चीन क� क� द्रीय ब�क ने प्रयोग शु� िकया �जसम� - कागजी �प म� मुद्रा छापने क� जगह, िड�जटल �प म� जारी करना → और
उसे लाभाथ� को ई-ब�िकंग के ज�रए मुहैया/ उपल� कराना)
⇒ PBC will use supercomputer to create its fiat currency ‘Yuan’ (also known as ‘Renminbi’) in
digital format → transfer to recipient via e-banking e.g. loan to govt, salary to employee etc.
⇒ 2020-21: Bahamas, Nigeria started such CBDC currencies. Britain, Japan, Singapore, Sweden, are
also engaged in such experiments. (अ� देशों ने भी ऐसे प्रयोग शु� िकये है।)
⇒ 2020: USA's stand: " we don't want to be the 1st to launch the digital currency, rather, we want to
do it error-free. Because there are many risks associated" (अमरीका ने कहा “इस प्रयोग म� जो�खम ब�त है इस�लए
हम� ज�बाजी म� अ� देशो से पहले इसे शु� नहीं करना है!”)
⇒ 👜👜👜👜Budget-2022 announced issuance of Digital Rupee using blockchain technology).
10.25.1 🐯🐯🐯🐯🐯🐯=👌👌👌👌Benefits of CBDC (क� द्रीय ब�क �ड�जटल मुद्रा के फायदे)

CBDC/ Sovereign Digital Fiat Money / Digital Base Money will provide following benefit
1. ⏬ Cost printing and transporting physical currency. (नोट छापने क� लागत और प�रवहन खचर् म� कमी)
2. ⏬ Scope for counterfeiting. (जाली नोट बनाना मु��ल)
3. ⏫Traceability, ⏬Anonymity: (ढूँ ढना आसान, गुमनाम/अ�ात रहेना मु��ल)
a. Whether money is reaching the intended beneficiary or not? (लाभाथ� को योजना का पैसा �मला िक
नहीं)
b. From where did the businessman accumulate this money, did he pay an appropriate
amount of tax or not? Else auto-alert to the Income tax department for tax evasion.
(करचोरी पर �नगरानी आसान)
4. ⏬ Masshysteria of Bitcoin & other Cryptocurrencies, which are issued by private actors & pose
danger of Terror Finance, Narcotics etc. (�नजी �ेत्र द्वारा जारी िक्र�ोमुद्रा के प्र�त लोगों का आकषर्ण/ सामूिहक पागलपन कम
होगा.)
5. ⏫ Homogeneity and promptness of disbursal: (��रत और एक �प तरीके से पेसा हर जगह/ हर �� को भेजना)

a. With the click of a button, Money could be sent to beneficiaries’ account whether he is
located in Kashmir or Kanyakumari. Irrespective of Curfew/Lockdown/Floods/Bank
Hartals- Students will receive scholarship, farmers will receive subsidy, and senior
citizens will receive pension.
6. Can be evolved into a Programmable Digital Currency to control the allocation of new money
for development of various sectors. (अलग-अलग �ेत्रों के �वकास के �लए पैसे को "प्रोग्राम/ल��त" करके भेजना)
a. E.g. if RBI issues Programmable-Digital-Rupee → SBI → Student Loan → its Interest
rate will be automatically “X%”, (यिद िड�जटल मुद्रा �वद्याथ� को �श�ा लोन के �लए दी जा रही है तो अपनेआप कम
�ाज दर लगे)
b. but if SBI manager tries to circulate this money as loan-4-buying-luxury-iphone then A)
either computer system will reject it or B) increase interest rate to Y%
c. [How will that work? Ans. ✋🎓🎓 #Boycott-PHD #थोड़ा-पढ़ो-आगे-बढ़ो.]
7. ⏬🤮🤮 Spread of virus/bacteria through physical currency notes. [Mains Logical Structure: this
type of low level benefits should be written at the bottom part of the answer.] (रोग/�वषाणु प्रसार म� कमी)
10.25.2 🐯🐯🐯🐯🐯🐯= ✋🥵🥵Challenges of CBDC (चुनौ�तयां)

1. 😰😰Digital Divide, Financial Literacy, Access Points: (िड�जटल उपकरणों क� उपल�ता क� खाई, �व�ीय सा�रता का
भाव, िड�जटल भुगतान इ�ेमाल करने के प�ंच �बंदओ
ु ं क� कमी)
a. Not everyone has electronic gadgets or internet connectivity, (सबके पास इं टरनेट निह)
b. Not everyone knows how to operate bank account digitally, (सबको इ�ेमाल करना निह आता)
c. Not every village shopkeeper accepts payments in the digital form. (दुकानदार नक़दी माँगते है)
2. 😰😰Cyber Terrorism/Nuclear Attack/Natural Disaster. If electricity stops → economy will stop
functioning. (साइबर आतं कवाद / परमाणु हमला / प्राकृ �तक आपदा: �वद्युत उपकरण बं द तो अथर्�व�ा बं द)
3. 😰😰Maintaining the blockchain → 24/7 use of server/electricity → e-waste, pollution. (प्रदू षण)
10.25.3 🐯🐯🐯🐯🐯🐯 CBDC Challenges: interest rate (�ाज क� मगजमारी/दु�वधा)

- Paper currency is a non-interest bearing Promissory Note. So Govt/RBI doesn’t have legal
obligation to pay interest on it. (सरकार/ क� द्रीय ब�क ने काग़ज़ी मुद्रा पे �ाज देने का कोई क़ानूनन वचन निह िदया)
- BEFORE: Suppose a if a worker received ₹10,000 salary in paper-currency. He deposited ₹8000
in Axis bank savings account, and kept ₹2000 in cash (for milk, rent, electricity bill, school fees,
VIMAL etc.) So Axis bank required to pay him interest for ₹8,000 savings only. (Neither RBI
nor Axis required to pay him interest on ₹2000 which he kept in CASH.)
- AFTER CBDC: if a worker received ₹10,000 salary in digital-currency → it may automatically go
in his Axis bank savings account & stay there only. He’ll use it digitally via
UPI/BHIM/NEFT/IMPS etc. He can’t take out ‘paper currency’ from his savings account. So,
Axis shall be required to pay him interest on entire ₹10,000. (यिद िड�जटल मुद्रा सीधे ही ब�क म� जमा हो रही है,
और जमाकतार् ग्राहक कभी भी उसे िड�जटल ��प के कारण ब�क खाते से बाहर नहीं �नकल पाएगा, तो ब�क ने तो सदैव उसे �ाज देते रहेना पड़े।
तो ब�करो मज़ा निह आएगा)
- Thus, CBDC ⏫ increase deposit quantity/size/amount. If banker not finding loan takers
immediately → banker will suffer in losses, because banker still need to pay savings interest to
depositors. (�ोंिक अगर ब�कर िडपॉ�ज़ट का पैसा कज़र् के �प म� नहीं घूमा पाएगा तो उसका नुक़सान हो जाएगा)

- Banker may react by ⏫ increasing loan interest rate to cover losses → expensive loans will ⏬
shopping & business activities.
- To prevent such complexities Bahama, and Nigeria issued ‘non-interest bearing’ CBDC (इस�लए
बहामा और नाइजी�रया म� सीबीडीसी को “�ाज-हीन मुद्रा” के ��प म� जारी िकया गया)
Year Nation Paper Currency CBDC
2020 Bahamas (Capital Nassau) – Bahamaian Dollar “digital B$”, also called ‘sand
1st nation in the world to BSD dollar’. issued Non-Interest
issue CBDC Bearing CBDC
2021 Nigeria (Capital Abuja) Naira the “eNaira”-Non-Interest
Bearing CBDC.
🚩🚩🚩🎓🎓 FAQ/Moral Outrage: Then why would Nigerian person accept CBDC, if he’s not going
to earn interest rate? (अगर �� को �ाज नहीं �मलने वाला �ों �ीकार करेगा?)
Ans. Perhaps he may needs to separately fill up forms to transfer the money to a specials type of
savings account / fixed deposit account. We are not here for NiAS (Nigerian IAS exam) When RBI
notifies the system for India, we’ll study. (�ाज कमाने के �लए, शायद उसने अलग से फ़ॉमर् भर के अलग िक़� के बचत खाते म�
सीबीडीसी को �ानांत�रत करना हो ऐसी �व�ा होगी.) #थोड़ा-पढ़ो-आगे-बढ़ो
🚩🚩🚩🎓🎓Marshal island launched SOV currency in 2018 then shouldn’t we call it the first country
to launch CBDC? why above table says Bahamas is 1st country to launch CBDC?
Ans. Big Newspapers using such headlines. I didn’t bother to write/ask to their chief-editors. If asked
in Exam, then tick MCQ depending on options.
10.25.4 🐯🐯🐯🐯🐯🐯✍🏻🏻 CBDC: Conclusion (�न�षर्)

⇒ Considering above charms and challenges, CBDC
⇒ can ‘supplement’ physical currency BUT cannot substitute/replace it completely, for India.
(िड�जटल मुद्रा, कागजी मुद्रा क� 'पूरक' तो हो सकती है, लेिकन 'स�ूणर् �वक�/एवज' नही)
10.26💠💠≠ ❇ NON-FUNGIBLE TOKEN (NFT: ग़ैर-फ़ं जीबल टोकन)

10.26.1 (⬜=◻+◻+◻+◻) Fungibility: Meaning?
Item Can it be Is mutual substitution possible in terms of value? Is it
subdivided in fungible?
smaller units?
₹2,000 Yes ₹500x 4 Yes ₹500 x 4 Notes can buy same quantity of ✅Yes
Note Notes=2000 goods as a single ₹2000 Note
1kg gold Yes 100gm x 10 Yes 100gm x 10 biscuits can buy same quantity of ✅Yes
bar biscuits=1kg gold goods as a single 1kg gold bar
bar
1Bitcoin 1BTC=10^8 Satoshi Yes 1BTC’s value = 10^8 Satoshi coins. So,
coins theoretically, they buy same quantity of goods
100 gm Bigger single piece diamond considered to be more precious/valuable ✋No
single than small-small pieces diamond. So, 100gm Single_Big_Diamond
Diamond =NOT equal 1gm x 100 small_Diamonds, in terms of value
Shares, NOT possible (How Ref: 📑📑Pillar#1C: SEBI sharemarket) ✋No
Bonds
NFT NOT possible. Explained below. ✋No
10.26.2 💠💠 Non-fungible token (NFT: ग़ैर-फ़ं जीबल टोकन)

⇒ (Definition) NFT is a Digital file photo file (JPEG), Animated image (GIF), music file (MP3) etc
Stored using blockchain Technology. �ॉकचेन प्रौद्यो�गक� द्वारा सं ग्रिहत फ़ोटो, सं गीत इ�ािद िक़� क� िड�जटल फाइल है।
⇒ NFT may also be used in storing physical assets. E.g. Ownership document of house, boat,
physical-painting etc. (इस भौ�तक स��यों क� मा�लक� के द�ावेजों का भी िड�जटल करण कर एनएफ़टी म� सं ग्रिहत कर सकते है)
⇒ NFT cannot be subdivided. Their individual sub-units cannot be exchanged with one another.
Because their values are different based on buyer’s preference. So NFTs are non-fungible. (अलग
अलग �चत्र/सं गीत कृ �तऑ का मू�, ग्राहक क� पसं द से िहसाब से अलग अलग हो सकता है इस�लए उ�े छोटे टुकड़ों म� �वभा�जत करना / आपस म�
उनक� अदला-बदली नहीं हो सकती.)
⇒ Mass Hysteria going on to purchase such digital assets from new-age artists using (mostly)
Ethereum cryptocurrency. (नए ज़माने के िड�जटल �चत्र/धुन बनाने वाले कलाकारों से नीलामी म� एनएफटी ख़रीदने का सामूिहक
पागलपन चल रहा है.)
⇒ e.g. American digital artist Beeple’s Painting JPEG auctioned for $70 million in Ether
Cryptocurrency.
⇒ E.g. Robot Sophia created a digital painting/art "Sophia Instantiation" (NFT)→ Auctioned for
more than 6 lakh dollar$.
⇒ Many sportsmen, filmstars also creating NFT out of their posters/autographs but we’ll not waste
preparing all that General Knowledge (GK). (मश�र �खलाड़ी और िफ़� अ�भनेता भी इसे जारी कर रहे ह�)
10.26.3 💠💠🤩🤩NFT-Charms? (आकषर्ण)

⇒ 1) Multimedia Creators: Easier to trade digital assets (िड�जटल �चत्रकार, िड�जटल धुनकार इ�ािद के �लए अपनी
कृ �तयों क� �बक्र� करना आसान.)

⇒ 2) Easier to verify ownership records. Prevent plagiarism. (सं पती क� मा�लक�/�ा�म� क� जाँच करना आसान.
नकल�चयों के �लए जालसाजी करना / बनावटी द�ावेज बनाना मु��ल.)
⇒ 3) Cinema / Sports tournament / Travel tickets etc can be stored with ownership records. Helps in
Paperless administration. (�सनेमा / खेल /प�रवहन क� िटकट क� �बक्र� िड�जटल ��प से करना आसान, काग़ज़ मु� प्रशासन.)
10.26.4 💠💠😰😰NFT-Challenges: (चुनौ�तयां)

⇒ 1) Started in 2017→ steep price rise in 2021. Single GIF /meme file selling for millions
dollar$ worth of cryptocurrencies. This mass-hysteria / investment-bubble will collapse. Investors
will lose money. (ये सामूिहक पागलपन /�नवेश का गु�ारा फट जाएगा तब �नवेशकों का पैसा डू ब जाएगा.)
⇒ 2) Money laundering & terror Finance. How: Ref Pillar#2. (धनशोधन और आतं क� �व�पोषण म� दु�पयोग स�व)
⇒ 4) Maintaining such computer blockchain record → Electricity consumption⏫→ CO2
Emission. (इस डेटाबेस का सं चालन/वहन करने म� ब�त �ादा �बजली खपत होती है, �जससे काबर्न डाइऑ�ाइड उ�जर्न म� बढ़ोतरी.)
🔠🔠❓MCQ. Find correct statements abt Non-Fungible Tokens (NFTs) (Asked in Prelims-2022)
1. They enable the digital representation of physical assets.
2. They are unique cryptographic tokens that exist on a blockchain.
3. They can be traded or exchanged at equivalency and therefore can be used as a medium of
commercial transactions.
Codes: (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3
10.27✍ESSAY: CASHLESS ECONOMY- CHARMS AND CHALLENGES

नगदी-रिहत अथर्तंत्र के आकषर्ण और चुनौ�तयां
- (Origin) In ancient times, people used to trade with each other using barter system. But its
limitations _ _ _ _ <give evolution story>. उद्भव: प्राचीन काल म�, लोग व�ु �व�नमय प्रणाली का उपयोग करके एक दू सरे के
साथ �ापार करते थे। लेिकन इसक� मयार्दाओने पैसों को ज� िदया……बोल के श�मयार्दा के िहसाब से थोड़ा-बहोत इ�तहास छाप दो।
- (Definition) A cashless economy is an economy where financial transactions are not conducted
with money in the form of physical banknotes or coins, but rather through electronic methods
such as _ _ _ <insert examples>. �ा�: नगदी-रिहत अथर्तंत्र का मतलब है क� �व�ीय लेनदेन को भौ�तक/नगदी ��प के �स�ों
या ब�कनोट म� नहीं िकया जाता है, ब�� इले��ॉ�नक तरीकों से �व�ीय लेनदेन िकए जाते ह�।
Stakeholder 🤩🤩: Charms आकषर्ण 😰😰: Challenges चुनौ�तयां
⇒ Saves cost of printing new - MDR, Interoperability, Financial
currency (Rs.27 billion a year) Scams.
– environment, (मुद्रा छपाई का खचर्) - Know your customer (KYC): Aadhar
⇒ Better efficacy of monetary vs privacy debate (Ref: Polity, SC
policy updates, NPA/fraud Judgement) िड�जटल भुगतान म� �व�ीय धांधलीया
surveillance.(More in �कवाने के �लए �रजवर् ब�क यिद कहे िक हर चीज म�
आधार काडर् अ�नवायर् होगा तो और सुप्रीम कोटर्/नाग�रक
📑📑Pill1A2)
क� �नजता का सं घषर्

Stakeholder 🤩🤩: Charms आकषर्ण 😰😰: Challenges चुनौ�तयां
- Better tax surveillance, checks - Power, telecom infra not available
on fake counterfeit currency everywhere. �बजली, सं चार सु�वधा क� कमी
terror finance (कर चोरी, जाली नॉट) - Government itself must become a
- targeted delivery of agri-loans role model first in handling tax,
and subsidies/ Direct Benefit tender, tolls, procurements through
Transfer (DBT): Annually ₹ 1 digital payment. सरकारी �वभाग खुद नगदी म�
lakh crore can be saved in काम पसं द करते है
corruption/leakage. (प्र�� लाभ - To encourage digital payment if
अंतरण. भ्र�ाचार म� कटौती) subsidy, tax breaks, lotteries given for
- Can save farmers from perpetual time → fiscal deficit. लॉटरी
Govt. moneylenders, and poor देकर लोगों को लुभाते रहे तो सरकार का �व�ीय घाटा बढ़
families from Ponzi schemes. जाएगा
(More in 📑📑Pill1D)
- Post-Demonetization, digital
transactions ↑ but then again ↓ so,
punitive measures = :-( सजा देने से लोग
सुधरते नहीं
Secure, difficult to steal, time, - Digital divide, Low financial literacy-
convenience, financial inclusion. notion of security with holding
(सुर��त, चोरी करना मु��ल, समय, सु�वधा, �व�ीय physical currency. (सब के पास िड�जटल
समावेशन) उपकरण और िड�जटल भुगतान क� जागृ�त/सा�रता नहीं
है)
Household
- Cyberfrauds, Card cloning, service
fees on card payments. जालसाजी/धोखाधड़ी
Homework homework
Businessman
10.27.1 ✍ Conclusion: Cashless Economy (�न�षर्)
- Digital payment is not a panacea, nor is cash all bad. For a developing country like India, “Less
cash” economy better than “Cashless” economy. (िड�जटल भुगतान को राम-बाण / सवर्रोगहर औष�ध मानना गलत.
नगदी �पया हमेशा ही खराब चीज है, ऐसा सोचना भी गलत। भारत जैसे �वकासशील देश के �लए 'नगदी-रिहत' बनना उपयु� नहीं। िकंतु, नगदी
का प्रयोग 'कम' करने क� ज�रत अव� है.)
10.27.2 ✍🏻🏻🎷🎷🌞🌞1⃣✋ Mock question for Mains/ESSAY

1) (GSM1-2021) What is Cryptocurrency? How does it affect global society? Has it been affecting
Indian society also? (Answer in 250 words) िक्र�ोकर�सी �ा है ? वै��क समाज को यह कै से प्रभा�वत करती है ? �ा यह
भारतीय समाज को भी प्रभा�वत कर रही है ?
2) (GSM3) Examine critically, the charms and challenges of Central Bank Digital Currency (CBDC)
initiatives for Indian monetary system. भारतीय मौिद्रक प्रणाली के �लए, ‘क� द्रीय ब�क िड�जटल मुद्रा’ क� पहल के आकषर्ण
और चुनौ�तयों क� समी�ा क��जए (250 words)

3) (GSM3) “While regulatory clearance to cryptocurrencies can open Pandora’s box, the
underlying blockchain technology holds panacea for various areas of governance and economy”.
Explain in context of India. िक्र�ो मुद्रा को अनुम�त देने से �वनाश क� प�र��त का �नमार्ण, िक�ु अंतर्�निहत �ॉकचेन टे�ोलॉजी
प्रशासन और अथर्तंत्र के �लए रामबाण इलाज बन सकती है. (250 words)
4) (GSM3) Explain these two terms with respect to ‘less cash economy’ (‘कम नगदी वाले अथर्तंत्र’ के प�रपे�
मे): (1) MDR (2) Interoperability. (150 words)
5) (GSM3) “E-rupi increases the efficacy of Direct-Benefit Transfer by making the entitlement
more targeted and leak-proof.” Substantiate/Elucidate. (ई-�पी पात्रता को अ�धक ल��त और �रसाव-मु� बनाकर
प्र��-लाभ अंतरण क� प्रभावका�रता को बढ़ाता है. उदाहरण द्वारा सा�बत क��जए)
6) (GSM3: Science-Tech) Write Short Notes on 1) Non-Fungible Tokens 2) Fastag (150 words)
📑📑Next Handout: Pillar1A2: Monetary Policy: CRR, SLR, Repo etc.

Pillar1A2: 🤑🤑 Money Supply (M0-M4) & Monetary Policy- CRR, SLR, Repo
Previous Years' official UPSC MCQs also given in this handout. You can see that UPSC is not going
into microscopic details of RBI's Operational/technical guidelines. Very simple-broad-overview type
MCQs asked. So, ✋ Donot live in 😰😰imaginary fear that.... का��नक डर मे मत �जयो के …
⇒ Inexperienced Pvt Mock Test-walla asking random/technical Qs so I must do PHD 🎓🎓✋
⇒ EconomicTimes / Financial Express/ Hindu-BusinessLine columnist are writing long winded
columns on RBI's Operation Twist or TLTRO so I must do PHD 🎓🎓✋
Table of Contents
11 🤑🤑Money’s Demand, Supply & Creation ....................................................................................... 54
11.11 🤲🤲 Demand of Money: Liquidity Preference Theory (तरलता अ�धमान) ................................. 54
11.12 💸💸💸💸Supply of Money (मुद्रा क� पू�त) ......................................................................................... 54
11.12.1 ☔💸💸 Liquidity of assets ................................................................................................... 55
11.12.2 ☔💸💸 Liquidity Trap ( तरलता जाल).................................................................................... 55
11.12.3 💸💸💸💸💸💸Measures of Money Supply (मुद्रा आपू�त के प�रमाण) .......................................... 55
11.13 💸💸💸💸💸💸 Money Supply [M3]................................................................................................. 57
11.14 💸💸⚡Money Multiplier (मुद्रा गुणक) .......................................................................................... 58
11.14.1 Money Multiplier From 2019 to 2021: why fallen? ....................................................... 59
11.14.2 💸💸⚡Money Multiplier From 1981 to 2020 ................................................................. 59
11.15 💸💸💸💸 M0: Creation of Money (मुद्रा का �नमार्ण) ......................................................................... 60
11.15.1 💸💸💸💸Supply of Money: M0 & M3 (मुद्रा क� आपू�त) Trend as per ES22 ........................ 61
11.15.2 💸💸⚡: Currency in Circulation (CIC) ........................................................................... 62
11.15.3 💸💸 Misc. topic: Velocity of Money Circulation (मुद्रा सं चालन का वेग) .............................. 62
12 🐯🐯🐯🐯 Monetary Policy (मौिद्रक नी�त) ................................................................................................. 62
12.11 🐯🐯🐯🐯🐯🐯 MonPolicy: Quantitative Tools (प�रमाणा�क साधन) ............................................... 63
12.11.1 🗄🗄✂Statutory Reserve Requirements: CRR, SLR (Fight inflation: ↑, deflation: ↓) 63
12.11.2 : 🗄🗄✂CRR SLR on Foreigners/NRI’s deposits in Indian Banks? ............................ 64
12.12 🐯🐯🐯🐯✂🗓🗓 CRR, SLR: Development in Recent Years ....................................................... 65
12.12.1 🐯🐯🐯🐯✂🗓🗓 (2016): Incremental CRR during Demonetization (नोटबं दीमे वृ�द्धशील
सीआरआर) 65
12.12.2 🐯🐯🐯🐯✂🗓🗓 (2020-Feb) CRR Exemption for 5 yrs, depending on loans (सीआरआर म�
छू ट) 65
12.12.3 🐯🐯🐯🐯✂🗓🗓 (2020-Mar) CRR ⏬ from 4% to 3% in 👻👻Atmanirbhar Bharat ..... 65
12.12.4 🚩🚩🚩🚩: 🐯🐯🐯🐯✂🗓🗓 CRR Technical things NOTIMP ............................................... 66
12.13 🐯🐯🐯🐯🐯🐯 MonPolicy → Quant Tools → Rates → LAF Repo (2000) ............................. 66
12.14 🐯🐯🐯🐯 REPO → Special Windows under Atma Nirbhar ................................................... 68
(Batch: PCB7) Mrunal’s Economy Pillar#1A-2: Money Supply & RBI’s Monetary Policy → Page 51
12.14.1 (2020) 🐯🐯🐯🐯🐯🐯 Long Term Repo Operations (LTROs: दीधर् अव�ध के रेपो ऋण) ........... 68
12.14.2 🐯🐯🐯🐯 REPO → TLTRO, SLTRO, On-Tap Windows ............................................... 68
12.14.3 🚩🚩🚩RBI’s Special Windows: Useless Doubts by flag-carrying Babushonas ......... 69
12.14.4 (2020) 🐯🐯🐯🐯Reverse Repo Rate cut .............................................................................. 69
12.14.5 🐯🐯🐯🐯🐯🐯 MonPolicy → Quant Tools → Variable Rate Reverse Repo (VRRR) .. 70
12.14.6 🐯🐯🐯🐯 🎛🎛 Variable Rate Repos (VRRs) ........................................................................ 70
12.14.7 🐯🐯🐯🐯 🎛🎛 Enhanced Reverse Repo Rate for Hardworking Bankers ........................ 71
12.14.8 🐯🐯🐯🐯🐯🐯 MonPolicy → Quant Tools → Rates → MSF (2011).............................. 71
12.14.9 🐯🐯🐯🐯🐯🐯 MonPolicy → Quant Tools → Rates → Bank rate (ब�क दर): ................... 71
12.14.10 🐯🐯🐯🐯🐯🐯 Quanti. Tools → SDF (=Reverse Repo walla game Without Collaterals)
72
12.14.11 MSF Repo vs Reverse Repo vs SDF ................................................................................. 73
12.14.12 Policy Corridor / LAF Corridor....................................................................................... 74
12.14.13 �⚖� Tri-Party Repo (�त्र-प�ीय पुन: क्रय-अनुबंध): ....................................................... 75
12.14.14 🔪🔪🔪🔪 BPLR, MCLR, External Benchmarks, etc: .......................................................... 75
12.14.15 🐯🐯🐯🐯🐯🐯 Market Operations (OMO): (Inflation → Sell G-Sec, Deflation → Buy)
75
12.15 🐯🐯🐯🐯🐯🐯🐯🐯MonPolicy: Quanti Tools: OMO → Operation Twist................................ 75
12.15.1 🔪🔪🔪🔪: Security → Debt → G-Sec & Bonds (ऋण के �लए जारी क� गई प्र�तभू�तयां) ............. 75
12.15.2 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) Deepening of G-Sec market- Retail investors’ RDAG @RBI 76
12.15.3 🔪🔪🔪🔪:🤵🤵Corporate Bonds: factors that determine its interest rate ......................... 76
12.15.4 🔪🔪🔪🔪: 🤑🤑 Bond Yield (बांड म� �नवेश करने पर होने वाली आय या मुनाफा) .................................. 76
12.15.5 🔪🔪🔪🔪: 🤑🤑 Bond Yield ∝ 1/Price (स�े म� खरीदा= तो मुनाफा �ादा) ................................... 77
12.15.6 🔪🔪🔪🔪: 🤑🤑 Bond yield: other factors affecting it (अ� कारक) ...................................... 77
12.15.7 🐯🐯🐯🐯🐯🐯🐯🐯Operation Twist: why? ............................................................................ 77
12.15.8 🐯🐯🐯🐯🐯🐯🐯🐯RBI’s Operation Twist: methodology (2019-Dec) .............................. 78
12.15.9 ✋🎓🎓 🔪🔪🔪🔪: 🤑🤑 Bond Yield & Inverted Yield Curve: poor benefit for exam ...... 79
12.16 🐯🐯🐯🐯🐯🐯: 📅📅 MonPolicy: Quanti Tools: OMO → G-SAP ............................................. 80
12.16.1 🐯🐯🐯🐯🐯🐯:📅📅 OMO → G-SAP : Benefit? .................................................................... 80
12.17 🐯🐯🐯🐯🐯🐯 Monetary Policy: Qualitative Tools (गुणा�क साधन) ............................................. 81
12.17.1 � Moral Suasion (नै�तक दबाव / सलाह) & Publicity (प्रचार) ............................................... 82
12.17.2 �🚯🚯 Direct Action (सीधी कायर्वाही: �ोिक लातो के भुत बातो से नहीं मानते) ............................... 82
12.17.3 💍💍 Margin Requirements / Loan to Value (LTV) (सीमा अ�नवायर्ता) ................................ 82
12.17.4 Selective Credit Control (चयना�क ऋण �नयं त्रण) .................................................................. 83
12.18 🐯🐯🐯🐯🐯🐯 Priority Sector Lending (PSL: प्राथ�मकता �ेत्र के �लए ऋण मानक) ............................... 83
12.18.1 🐯🐯🐯🐯🐯🐯 PSL Reforms-2020: on RRB/SFB/UCB? ..................................................... 85
12.18.2 🐯🐯🐯🐯🐯🐯 PSL Reforms-2020: Startups, Renewable Energy and Healthcare .......... 85
12.18.3 🐯🐯🐯🐯🐯🐯 PSL Reforms-2020: Weightage to poor districts (गरीब/�पछड़े �जलों को भारांक)
85
12.18.4 🐯🐯🐯🐯🐯🐯:📜📜 Priority Sector Lending Certificates (PSLC) from 2016 onwards ... 86
12.19 📢📢 � Monetary Policy Tools: A Ready Reckoner Table ................................................... 87
12.20 📢📢 Monetary Policy in Present-Day India ............................................................................. 88
12.20.1 📢📢 Monetary Policy Making under RBI Act since 2016 ............................................. 89
12.21 📢📢 Review of Bi-Monthly Monetary Policies ........................................................................ 91
12.21.1 🚕🚕🚕🚕 Stance: Calibrated Tightening / Neutral / Accommodative ........................... 91
12.22 🐯🐯🐯🐯🐯🐯RBI’s Monetary Policies: Before 2020-Corona.................................................... 91
12.23 🐯🐯🐯🐯🐯🐯RBI’s Monetary Policies: Corona MarchToMay’20 ........................................... 92
12.23.1 👻👻ATMANIRBHAR → Gist of RBI’s March2May 2020 Announcements:........... 92
12.23.2 🐯🐯🐯🐯🐯🐯RBI’s Monetary Policies: 2020-August (Earlier meeting in May-2020) . 93
12.23.3 🐯🐯🐯🐯🐯🐯RBI’s Monetary Policies: 2020-October (दरों म� कोई बदलाव नहीं) ................... 94
12.23.4 🐯🐯🐯🐯🐯🐯Monetary Policy: 2020-December (दरों म� कोई बदलाव नहीं) ............................. 94
12.23.5 🐯🐯🐯🐯🐯🐯Monetary Policy: Feb-2021 update (दरों म� कोई बदलाव नहीं) ........................... 94
12.23.6 🐯🐯🐯🐯🐯🐯Monetary Policy: April-2021 update(दरों म� कोई बदलाव नहीं) ......................... 94
12.23.7 🐯🐯🐯🐯🐯🐯Monetary Policy: June-2021 update (दरों म� कोई बदलाव नहीं) .......................... 95
12.23.8 🐯🐯🐯🐯🐯🐯Monetary Policy: Aug-2021 update (दरों म� कोई बदलाव नहीं) .......................... 95
12.23.9 🐯🐯🐯🐯🐯🐯Monetary Policy: Oct-2021 update (दरों म� कोई बदलाव नहीं) ........................... 95
12.23.10 🐯🐯🐯🐯🐯🐯Monetary Policy: Dec-2021 update (दरों म� कोई बदलाव नहीं) ...................... 95
12.23.11 🐯🐯🐯🐯🐯🐯Monetary Policy: Feb-2022 update (दरों म� कोई बदलाव नहीं) ....................... 95
12.23.12 🐯🐯🐯🐯🐯🐯Monetary Policy: April-2022 (SDF) ............................................................. 95
12.23.13 🐯🐯🐯🐯🐯🐯Monetary Policy: May-2022 Repo⏫ ......................................................... 96
12.23.14 🐯🐯🐯🐯🐯🐯Monetary Policy: June-2022 Repo⏫ ......................................................... 96
12.23.15 🐯🐯🐯🐯🐯🐯Monetary Policy: future updates................................................................... 96
12.23.16 ✋🚫🚫 Monetary Policy bi-monthly announcements: ignored (कु छ भी काम का नहीं है)
Error! Bookmark not defined.
12.24 🔪🔪🔪🏠🏠🏠🏠 Banks’ Lending Rates % (ब�क ऋण क� �ाज दर�) ................................................... 97
12.25 🔪🔪🔪🏠🏠🏠🏠 Bank’s loan interest rate: External Benchmark (बाहरी ब�चमाकर् ) ...................... 98
12.25.1 🔪🔪🔪🏠🏠🏠🏠 External Benchmark: Formula Components: ...................................... 98
12.25.2 �🏠🏠🏠🏠External Benchmark system: Which borrowers eligible?.......................... 98
12.25.3 �🏠🏠🏠🏠:🚩🚩🚩External Benchmark system: FAQ ................................................... 98
12.25.4 Banks’ Lending Rates % → Fixed vs Floating interest loans, teaser loans, NPA etc.
99
12.25.5 😷😷Corona-2020 impact on Deposits interest rate & Loans interest rate as per ES21
99
12.26 🐯🐯🐯🐯 Limitations of Monetary Policy in India (मौिद्रक नीती क� मयार्दाए) ................................ 99
12.26.1 🐯🐯🔇🔇 Monitory policy limitations: Lazy banking in Corona Crisis ......................100
12.26.2 🐯🐯🐯🐯 Monetary policy limitations: Cheap loans causing inflation? .....................101
12.26.3 🐯🐯🐯🐯US Fed Tapering & Impact on India.................................................................101
12.26.4 🐯🐯🐯🐯 Monetary policy limitations: Black Swan Events ...........................................102
12.26.5 🐯🐯✍ Monetary Policy: Conclusion / �न�षर् ...............................................................102
12.27 �🎺🎺🎺🎺1⃣✋ Mock Questions for UPSC Mains/GSM3 (250 words)............................103
11 🤑🤑MONEY’S DEMAND, SUPPLY & CREATION

11.11🤲🤲 DEMAND OF MONEY: LIQUIDITY PREFERENCE THEORY (तरलता अ�धमान)
British Economist John Maynard Keynes (Book: The General Theory of Employment, Interest and
Money, 1936) noted - people prefer to keep a part of assets in liquid form (cash money) with 3
motives: (लोग अपना कु छ पैसा नकदी म� हाथ म� रख�गे. सारे का सारा पैसा ब�को म� जमा नहीं कर द�गे. �ोंिक तीन कारण होते ह�)
1. 🌽🌽 Transaction motive (सं �वहार उद्दे�): For using money as a medium of exchange e.g. for
buying daily milk, vegetables and fruits. (रोजाना क� खरीद के �लए कु छ पैसा हाथ म� रखा जाता है सारा पैसा ब�क म�
नहीं जमा करते)
2. 💊💊 Precautionary motive (एह�तयाती): To protect against sudden / unforeseen expenditure e.g.
medical emergency or impulsive purchase during a holiday trip. (घर म� कोई बीमार हो गया, प्रवास म� जाना
है)
3. 📉📉 Speculative motive (सट्टा-उद्दे�): Investors hold cash to make the best use of any investment
opportunity that arises later e.g. waiting for gold / land prices to fall, then “I will use my cash to
buy it”. Also known as "Asset Demand of Money". (जो सं प�� मुझे खरीदनी है उसका दाम थोड़ा �गर जाए उसक�
राह देख रहा �ँ )
The amount of money held in cash form vary inversely with (deposit) interest rates. If higher
interest available in Bank Deposits etc. → people would invest money in banks, instead of keeping
money in liquid form (cash). (ब�क वाला अगर बचत खाते पर अ�ा �ाज देगा तो लोग हाथ म� नकदी पैसा कम रख�गे ब�क म�
�नवेश �ादा कर�ग)े
11.12 💸💸📥📥SUPPLY OF MONEY (मुद्रा क� पू�त)
🗓🗓 Time Liabilities of a Bank (FDRD) 💪💪 Demand Liabilities of a Bank (CASA)
समय / मीयादी देयताएँ मांग देयताएं
- Fixed deposits, Cumulative/ recurring - Current Account
deposits, Staff security deposit etc. - Savings Account
🗓🗓 Time Liabilities of a Bank (FDRD) 💪💪 Demand Liabilities of a Bank (CASA)
समय / मीयादी देयताएँ मांग देयताएं
- Bank legally not required to pay customer - Demand Draft
before maturity. But may pay after - Overdue balance in Fixed Deposits
deducting penalty/ interest. (व� से पहले पैसा - Unclaimed deposits. (What does it mean?
�नकाला तो दंड लगेगा) Ans. Explained in Video Lecture.)
Public parks more money here, because better LESS (ऐसे बचत खातों पर �ाज कम �मलता है इस�लए जनता
returns / higher interest rates. कम मात्रा म� पैसा रखती है यहाँ पर)
LESS liquid. More liquid because easily convertible into
cash on demand.
🔠🔠❓ ____ is not included in the assets of a commercial bank in India? (Prelims-2019)
(a) Advances (b) Deposits (c) Investments (d) Money at call and short notice
11.12.1 ☔💸💸 Liquidity of assets

- Liquidity= ease of converting an asset into cash. Cash is the most liquid asset.
- ☔☔Highly liquid assets = Gold, Demand deposits, G-Sec/T-Bill, shares/bonds of reputed
companies. (अ��धक तरल सं प��: तुरंत खरीदार �मल जाते ह�.अपनी सं प�� को आप नगदी धन म� आसानी से प�रव�तत कर
सकते ह�)
- ☂Relatively illiquid assets= Home/Real estate, Paintings/Sculptures etc. Because difficult to
find buyers at right price instantly. खरीदार आसानी से नहीं �मलता इस�लए इन सं प��यों क� तरलता थोड़ी कम है
- 💸💸 💉💉Liquidity injection / infusion refers to phenomenon when RBI buys Bank/NBFCs’ G-
Sec/T-bill/financial assets to give them cash. (HOW? Ans. Watch Video) (तरलता अ�ः�ेपण)
11.12.2 ☔💸💸 Liquidity Trap ( तरलता जाल)

- To be covered separately in 📑📑Pillar-4Z: Microeconomics handout.
11.12.3 💸💸💸💸💸💸Measures of Money Supply (मुद्रा आपू�त के प�रमाण)

- (Objective) To make a good nutrition scheme for India, the government will have to first find the
weight of the citizens. Similarly, to make a good monetary policy, RBI will have to find the
quantity of money in the system. (कु पोषण के �ख़लाफ़ अ�� योजना बनाने से पहले सरकार ने लोगों का वज़न नापना
होगा. उसी तरह देश के �लए अ�� मौिद्रक नी�त बनाने के �लए �रज़वर् ब�क ने सबसे पहले तो देश म� पैसों का ज�ा नापना होगा)
- (Definition) Money supply means the total amount of money in an economy at any given time.
(िदए गए समय पर अथर्तंत्र म� कु ल �मलाकर िकतना पैसा है उसक� मात्रा या ज�े को कहते ह� “मुद्रा आपू�त”)
- (Significance) Money supply plays a crucial role in 1) price level (=inflation) and 2) interest rates
on deposits & loans. (मुद्रा क� आपू�त → महंगाई दर और �ाज दरों पर असर करती है)
- (Types) RBI measures the money supply through indicators: M0, M1, M2, M3, M4
Table 1: *CU: Coins & Currency with Public
Commercial Banks Post Office Savings Bank
Measure Demand Time Demand Liquidity Qty
*CU Time
सं कु �चत, �ापक Deposits Deposits Deposits तरलता मात्रा
Deposits
(CASA) (FDRD) (SA)
Narrow M1 ✓ ✓ ✗ ✗ ✗ ☆☆☆☆ ☆
Money M2 ✓ ✓ ✗ ✓ ✗ ☆☆☆ ☆☆
Broad M3✓ ✓ ✓ ✗ ✗ ☆☆☆☆☆
Money M4✓ ✓ ✓ ✓ ✓ ☆ ☆☆☆☆
Apply logic to derive formula e.g. M3 = M1 + Time deposits with banks. (�यं से फामूर्ला बनाइए)
- M3 is the most commonly used measure of money supply, also known as Aggregate Monetary
Resources / Aggregate Money Supply” (सम� मौिद्रक सं साधन) because out of all the money supply
indicators (M0-M4) this is the indicator RBI will focus the most for its analysis while designing
of monetary policy. (अपनी मौिद्रक नीती बनाते व�, �व�ेषण के �लए �रज़वर् ब�क इस आंकड़े पर खास �ान रखती है)
- In above formulas for money supply, we are only counting the “NET Demand / NET Time
deposits” i.e. only public’s deposits in bank. We are not counting inter-bank deposits i.e. one
commercial bank’s deposit in other commercial banks. एक ब�क से दू सरे ब�क म� पैसा िडपॉ�जट िकया हो तो उसे
इधर नहीं �गनते.
- Corona-2020: Initial months of lockdown (May2May-2020) → deposit⏬⏬ because people
withdrew money in panic / precautionary motive. Although in the later months → Unlockdown
and normalcy → ⏫⏫ bank deposit by Dec-2020. तालाबं दी के शु�आती महीनों म� लोगों ने एह�तयाती कारणों से
ब�कों से अपनी िडपॉ�जट �नकाली हालांिक प�र��त सामा� होने पर, बाद के महीनों म� वापस बचत क� मात्रा म� बढ़ोतरी होने लगी है
🚩🚩🚩🚩 FAQ1: Why M3 is Aggregate Money Supply? ✅Ans. Watch video.

🚩🚩🚩🚩 FAQ2: Why is the liquidity of M4 less than M3? ✅Ans. Watch video.
🚩🚩🚩FAQ3: What is Narrow Money and Broad Money?
M1 and M2 are called Narrow money. Because of their smaller size (since they only cover demand
deposits) M3 and M4 are called broad money, because of their relatively larger size than M1 and M2.
since these terms are given in the NCERT so we have to prepare & accept. It is not some great thing
worthy of mains exam that we have to spend more time than that 1 word association.
🚩🚩🚩FAQ: What is Hard Money vs Soft Money? Definition differs from website to website besides
All such random terms mentioned on Investopedia.com are not automatically important for exam.
My boundary for this money-supply/indicator topic is “NCERT textbook, not the entire internet.”
🚩🚩🚩🚩FAQ4: As per NCERT class12: “M4 = M3 + Total deposits with Post Office savings
organisations (excluding National Savings Certificates)”. So why you revision table doesn’t talk about
National Savings Certificates. ✅Ans. This much pedantry I find it less imp for exam so don’t want
to overcomplicate my revision friendly table.
🔠🔠❓ MCQ. If you withdraw Rs. 1 lakh in cash from your Demand Deposit Account at your bank,
the immediate effect on aggregate money supply in the economy will be _ _ . (UPSC-Prelims-2020)
[a) to reduce it by ₹ 1,00,000 [b) to increase it by ₹ 1,00,000
[c) to increase it by more than ₹ 1,00,000 [d) to leave it unchanged
🚩🚩🚩🚩 FAQ: I’ve 500 jaat-ke doubts in above MCQ ✅Ans. Watch entire pillars’ videos.
11.13💸💸💸💸💸💸 MONEY SUPPLY [M3]
🚩🚩🚩🚩 FAQ: I didn’t understand above chart. ✅Ans. 1st finish the entire pillar’s all video lecture.
💸💸💸💸💸💸Indicator Situation in 2021

M0 = also known as reserve money /high Quantity ⏫increased but % growth lower
powered money than 2020. वृ�द्ध दर �पछले साल क� अपे�ा कम रहा
<formula in separate section>
M3 = “Aggregate Monetary Resources / Quantity ⏫increased but % growth lower
Aggregate Money Supply” (सम� मौिद्रक सं साधन). than 2020
Money multiplier 5.6 in 2020 and 5.2 in 2021. So, Money
= M3 divided by M0 Multiplier decreased than 2020 . (Reason:
(मुद्रा गुणक) Bankers couldn’t find enough loan taker, so,
💸💸💸💸💸💸Indicator Situation in 2021
parked large quantity of deposits with RBI
<more explanation in next section> under Reverse Repo Window.)
11.14💸💸⚡MONEY MULTIPLIER (मुद्रा गुणक)
RBI’s Cash Reserve Ratio (CRR) leads to Fractional Reserve Banking & Credit Creation by the
commercial banks, which creates money multiplier effect as following:
Table 2: this process is called 'Fractional Reserve Banking & Credit Creation'
High Powered money (M0) = 100 Asset Side (Deposits) Loaning 10% Reserve (‘R’)
Bank#1 100 90 10
Bank#2 90 81 9
Bank#3 81 72.9 8.1
Bank#.. .. .. ..
Total Money (here M3) Total sum = ₹1000**
𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 𝑜𝑜𝑜𝑜 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀 (𝑀𝑀3) 1000
𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴 𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴𝑴 = = =10
𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 𝑜𝑜𝑜𝑜 𝐻𝐻𝐻𝐻𝐻𝐻ℎ 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚(𝑀𝑀0) 100
🚩🚩🚩🚩 FAQ: How is this possible/ I didn’t understand? ✅Ans. Watch the video.
Here, 10% reserve (R) generated 1/R =(1/(1/10)]= 10x times the high-powered money. [ब�क कजर् देने से
पहले यिद 10% रकम आर��त रखती है तो 10 गुना �ादा पैसों का �नमार्ण]
- 4% reserve ratio will generate [1/(1/25)]= 25x times (in theory). ✋however in reality the
multiplier may be lower, due to poor banking penetration. (गांव गांव तक ब�क क� सु�वधा नहीं है इस�लए
वा��वक जीवन म� इतना मुद्रा गुणक नहीं होगा)
- In a functional economy, money multiplier (MM) is always greater than 1 & CRR will always be
less than 100%. WHY? Ans. Watch video.
- MM directly improves with ⏬reduction in CRR. (सीआरआर घटेगा तो मुद्रा गुणक बढ़ेगा)
- MM indirectly improves as economy develops, consumption / loan demand increases, banking
penetration, digital economy/less-cash economy etc.
- MM improves with the ⏫in banking penetration, financial inclusion (�व�ीय समावेशन)
- Boom period, Whenever loan demand ⏫ (तेजी का माहौल → लोन �ादा �लए जा रहे हो)
- When RBI adopts Cheap / Easy / Dovish / Expansionary monetary policy to combat deflation.
(जब स�ापे/ अप��त से लड़ने के �लए �रज़वर् ब�क लोन के �ाज दर स�े कर दे)
- In 1960s = less than 2x, 90s = more than 3x, At present = more than 5x.
🚩🚩🚩FAQ: What will be the impact of SLR changes on Money Multiplier? Ans. Cann’t be written
mathematically. Reason given in Video.
11.14.1 Money Multiplier From 2019 to 2021: why fallen?
Money multiplier fallen from 5.6 on 31/3/20 to 5.2 on 31/3/21 because
⇒ if banks kept loaning to households & business firms then (M3/M0)=Money Multiplier would
grow thru 'zigzag' lending-deposit activity from One bank account to another bank account.
⇒ But this deposit-to-lending activity seems to have slowed down in Corona & afterwards, and
banks parking more quantity of money in reverse repo in RBI. That’s why multiplier is falling.
यिद वह पैसा �रज़वर् ब�क म� �रवसर् रेपो रेट म� डालने क� वजह, ब�क वाले लोन म� घुमाते तो मुद्रा गुणक म� बढ़ोतरी दजर् होती, लेिकन कोरोना के
चलते लोगों म� लोन क� उ�ुकता कम देखी गई. ब�कर काफ� सारा पैसा �रवसर् �रपो के नाम पे �रजवर् ब�क म� वापस डाल रहे थे, इस�लए मुद्रा
गुणक म� �गरावट।
✋Note: There may be 500 other factors as well affecting these indicators but gives poor:cost benefit
learning all those things from MCQ point of view. वा��वक �जदं गी म� और भी 500 कारकों के चलते इन आंकड़ों पर
असर होता है लेिकन उन सब क� पं चात करने बैठे तो परी�ा के �लए उपयोगी नहीं #⏳📚📚थोड़ा-पढ़ो-आगे-बढ़ो
11.14.2 💸💸⚡Money Multiplier From 1981 to 2020
Figure 1: source- Economic Survey 2020, zigzag pattern means 'not increasing steadily'.
- 📘📘📘📘ES20 observed that between mid-1990’s to 2016-17: Money multiplier (measured as a ratio
of M3/M0) was mostly ⏫.
- But 2017-18 onwards: Money Multiplier is ⏬. Could be attributed to the lack of growth in
loaning activities & slowdown in economy.
🔠🔠❓ MCQ. Money Multiplier in an economy increases with _ _ _? (UPSC-Prelims-2019)
A) Increase in the cash reserve ratio B) Increase in the banking habit of the population
C) Increase in the statutory liquidity ratio D) Increase in the population of the country
👆👆Same above MCQ also repeated in Prelims 2021
11.15💸💸💸💸 M0: CREATION OF MONEY (मुद्रा का �नमार्ण)

M0 / Reserve Money / Government Money / High Powered Money (उ� श�� मुद्रा) is issued under
RBI Act, by RBI’s ISSUE DEPARTMENT, with condition that ISSUE DEPARTMENT’s assets must
match its liabilities. (आरबीआई के वल उतना ही पैसा छाप सकता है �जतनी प�रसं प��यां उसके इ�ू-�वभाग के पास हो)
Assets of Issue Department (प�रसं प��याँ) Liabilities of Issue Department [M0]
1. Rupee coins [RBI ‘buys’ coins & ₹1 notes from Total Bank notes in circulation, which
Govt and circulates it as the ‘Agent of govt’] consists of:
2. Gold coins [Min. ₹ 200 crores] सोने के �स�े 1. Held by Public
3. Gold bullion [Min. ₹ 115 crores] सोने क� �टे 2. Held by other Banks in “Vault cash”
4. Foreign Securities, incl. IMF [Earlier Min. ₹ 400 (i.e. amount kept by banks for day to
crores but Post-1995 no such requirement.] day Operations.)
5. (Indian) Govt. Securities [through which Govt 3. Other Deposits in RBI (of Public*,
borrows money from RBI & returns Principal + Banks & Governments)
Interest at later date] सरकारी प्र�तभू�तयां
Total = suppose 100 Cr @”X”date Total = 100 Cr @”X” date.
- * such as PM Garib Kalyan Yojana (2016) under which Blackmoney holder was required to
deposit 25% of his blackmoney in RBI for a lock-in period of 4 years. More in Pillar#2B
- M0 ⏫increases when RBI’s asset side increases ⏫ e.g. Govt borrowing more from RBI using
G-sec. जब सरकार �रज़वर् ब�क से �ादा पैसा कज� मे ले तब �रज़वर् ब�क क� प�रसं प��यों म� बढ़ोतरी होती है
🚩🚩🚩FAQ: Whose responsibility is it to exchange the public’s torn / soiled ₹ 1 note ?

Ans. RBI will do it as the agent of the Govt.
🚩🚩🚩FAQ: Whose responsibility is it to exchange broken coins?

Ans. First of all it is difficult to break a coin unless with a metal cutter. And secondly I’d not loose
sleep over such JAMES-Bond-Babu-Shona Qs. for UPSC exam point of view. Commonsense
suggests that if RBI is exchanging torn ₹1 Note, then RBI would be exchanges coins as well.
🚩🚩🚩FAQ: All coins and ₹1 paper-note is whose liability ? RBI or Govt

⇒ All coins and ₹1 paper-note are issued by Government. (Ref: Pillar1A1 Handout)
⇒ RBI circulate them as “agent of the government”.
⇒ However these items are liability of government. As per RBI Website.
⇒ So, All coins & ₹1 paper-note are liability of Govt.
⇒ However, some books interpret that since 1) RBI is circulating them 2) RBI is responsible for
getting torn ₹1 rupee notes exchanged, so it is RBI's liability.
⇒ If in Doubt for MCQ → then tick “Govt.” as Answer.
🚩🚩🚩FAQ: Can Govt borrow as much ₹₹ as they want via G-Sec? ✅Ans. No! There are legal
limits on govt borrowing under the Fiscal Responsibility And Budget Management act (FRBM).
(More in 📑📑Pillar#2D) (सरकार अंधाधुंध तरीक़े से उधारी नहीं कर सकती FRBM क़ानून के अंतगर्त उस पर कु छ सीमाएं ह�.)
🚩🚩🚩FAQ: RBI’s money supply is limited by above Asset-liability balance method. But what if govt
issues large number of coins and one rupee notes before election to keep voters happy? Will it not
create problems in the M0 & economy? ✅Ans. Too much money supply without enough goods-
supply → inflation. So, a sensible govt will not do such drama. Beyond that I’ve no interest in
engaging in further PHD-intellectual debates. Not important for exam. Move to next topic. (झं डे वाले
बाबूशोनो को ये ख़ास प्र� होता है यिद सरकार अपनी तरफ़ से अंधाधुंध तरीक़े से �स�े छाप देगी तो �ा M0 पे ख़राब असर निह होगा?
जवाब: अगर ब�त �स�े छापे लेिकन बाज़ार म� माल सामान क� िक़�त होगी तो महँ गाई बढ़ी जाएगी इस�लए एक �ज़�ेदार सरकार ऐसी
नौटंक� नहीं करेगीइससे �ादा मेरे को इसक� चचार् नहीं करनी है �ोंिक वो परी�ा के �लए काम क� निह है।)
🚩🚩🚩FAQ: How did RBI print money in British times? Ans.✅ Watch the lecture videos
🚩🚩🚩FAQ: Where is the repo, where is the RBI’s profit in above table? Ans.✅ Watch the videos
🚩🚩🚩FAQ: If RBI’s gold/G-sec gets stolen/burned/lost then will M0 decrease? ✅ Watch the videos
🚩🚩🚩FAQ: I’ve 500 jaat-ke other doubts. Ans.✅ then u keep looking for answers on Google until Taimur
grows up & gets married. I am done with this topic from Exam point of view.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
11.15.1 💸💸💸💸Supply of Money: M0 & M3 (मुद्रा क� आपू�त) Trend as per ES22
11.15.2 💸💸⚡: Currency in Circulation (CIC)
- What is CIC’s exact formula? Ans. Economic Survey didn’t give, so I didn’t bother to Google.
- CIC is an indicator to measure cash as a payment instrument i.e. instead of other payment
instruments such as Cheque, NEFT/RTGS, Card etc. (भुगतान के �लए नक़दी का िकतना प्रयोग हो रहा है)
- Currency in Circulation (CIC) growth (%) declined from 2021-Jan to 2022-Jan.
- Reason: Corona-led precautionary demand for cash has reduced/subsided → People are
keeping less qty of cash in hand, and depositing more qty in Banks. (लोगों म� कोरोना का ख़ौफ़ कम �आ है
इस�लए जनता अब एह�तयादी �प म� हाथ म� नक़दी कम मात्रा म� रखती है।)
11.15.3 💸💸 Misc. topic: Velocity of Money Circulation (मुद्रा सं चालन का वेग)

It is the average number of times money passes from one hand to another, during given time period.
e.g. you bought pen worth Rs.10 from shopkeeper, he uses same ₹10 note to buy tea from another
shop → same currency note performed function of 20 Rupees. िकतनी बार एक नोट एक हाथ से दू सरे हाथ म� जाता
है?
This “Velocity of money circulation” is affected by following factors:
- Income distribution: Money in the hands of poor people has higher velocity than the rich
people. Why/HOW? Ans. Watch Video.
- If more people borrow money for purchase → higher velocity. Hence developed countries =>
higher velocity, because people save less and spend more because of consumerist lifestyle and
confidence in Government’s social-security e.g. USA. (जब लोगों म� बचत क� भावना कम हो)
- Boom period in economy = more raw material purchase & hiring = higher velocity. (तेजी का माहौल)
- Other 500-jaat-ke permutation-combination-PHD = poor cost:benefit for exam
- What is its scene in Corona? Answer not given in 📔📔📔📔ES21 so no point in SELFPHD.
12 🐯🐯📢📢 MONETARY POLICY (मौिद्रक नी�त)

- [Definition] Monetary Policy is a macroeconomic policy (सम�� आ�थक नी�त), designed by Central
bank of a country, to manage money supply & interest rates. It helps shaping variables such as
inflation, consumption, savings, investment, & capital formation (मुद्राआपू�त व �ाजदरो को �नयं �त्रत कर
मुद्रा��त/महंगाई, मांग/खपत, बचत, �नवेश, पूंजी �नमार्ण को आकार देना- क� द्रीय ब�क द्वारा बनाई गई इस प्रकार क� नीती को
मौिद्रक नीती कहते ह�).
- [Significance] Monetary policy plays an important role in price stability [inflation control],
economic growth, job creation and social justice in any economy. (महंगाई-�नयं त्रण, आ�थक वृ�द्ध, रोजगार
सृजन, सामा�जक �ाय के �लए मह�पूणर् साधन है ये मौिद्रक नीती)
- Milton Friedman: This American economist’s research on monetary policy made this subject
more popular, he also won a Nobel in Economics in this regard (1976).
- Philip Curve: Inflation ↑ = unemployment ↓ (and vice versa). मं हगाई बढ़ेगी तो बेरोजगारी घटेगी. मं हगाई कम
होगी तो बेरोजगारी बढ़ेगी. (More in Pillar#4C)
- So, stable & moderate inflation is good for the economy. (��र व म�म�र महंगाई अथर्तंत्र के �लए अ��)
So, RBI tries to keep inflation with 2-6% Consumer Price Index (CPI: All India) using its bi-monthly
monetary policy made by its 6- member statutory Monetary Policy Committee. (छ:-सद�वाली वैधा�नक
स�म�त द्वारा िद्व-मा�सक मौिद्रक नी�त �नमार्ण करके �रजवर् ब�क महंगाई दर को उपभो�ा मू� सूचकांक के िहसाब से २-६% म� �नयं �त्रत
करने क� को�शश करता है)
12.11🐯🐯📢📢📐📐 MONPOLICY: QUANTITATIVE TOOLS (प�रमाणा�क साधन)

Also known as (aka) General or Indirect Tools as they affect the entire economy, and not just a
particular sector. (ये साधन / ह�थयार / उपकरण सामा� या अप्र�� ह� �ोंिक यह िकसी एक �ेत्र-�वशेष को नहीं, िकंतु पूरी
अथर्�व�ा को असर करते ह�)
12.11.1 🗄🗄✂Statutory Reserve Requirements: CRR, SLR (Fight inflation: ↑, deflation: ↓)
Figure 2: depositors waiting in a queue & demanding- हमारा पैसा वापस करो, ABHI KE ABHI!
- CRR and SLR are collectively known as “Variable Reserve Ratios” or “Statutory Reserve Ratios”
(इन दोनों को प�रवतर्नीय आर��त अनुपात / वैधा�नक आर��त अनुपात भी कहा जाता है)
CRR SLR
Full form: Cash Reserve Ratio Full form: Statutory Liquidity Ratio
(नकद कोष अनुपात) (वैधा�नक तरलता अनुपात)
Banks must keep this much deposits (or Banks must keep this much deposits in liquid
balance) with RBI. RBI doesn’t pay interest on assets such as cash, gold, G-Sec, T-Bills, State
this deposit, except in extraordinary Development Loan Bonds and other securities
circumstances like 1999’s Banking slowdown. notified by RBI. (ब�क ने जमाकतार्ओ ं से हांसील क� �ई रकम
(ब�क ने जमाकतार्ओ ं से हांसील क� �ई रकम का कु छ िह�ा �रजवर् का कु छ िह�ा, �रजवर् ब�क द्वारा मा� तरल प�रसं प�तमे �नवेश
ब�क मे जमा करना पड़ेगा।) करना होगा)
CRR SLR
Bank earns no profit / interest, as such. Some profit may be involved. (मुनाफा हो सकता है)
- CRR: first suggested by British economist Mandated under Banking Regulation Act, 1949
J.M. Keynes & first introduced in US (ब�िकंग �व�नयमन अ�ध�नयम के अनुसार इसे लागू िकया जाता है)
Federal Reserves (=Central Bank of USA).
- Mandated under RBI Act, 1934
⇒ RBI can fix any amount of CRR, legally ⇒ Presently it is 18.00% of NDTL.
there is no minimum or maximum limit. ⇒ Legally, SLR can’t be made more than 40%.
Although in real life, RBI will not keep (कानूनन �प से �रज़वर् ब�क इसे 40% से �ादा नहीं रख
CRR@100% otherwise, no bank can give सकतीं.)
loans then economy will stop functioning.
⇒ Corona-2020: it was 3% of Net Demand &
Time Liabilities of a bank (NDTL: �नवल मांग
और समय देयताएँ )
⇒ 2021: CRR be gradually increased to 4%
⇒ 2022: CRR increased to 4.50%
- All Banks must keep CRR. Similar to left cell of this table.
- However, RBI may prescribe separate % (सभी प्रकार के ब�क के �लए अ�नवायर्. हालांिक �ेत्रीय ग्रामीण ब�क
norms/slabs for Regional Rural Banks तथा सहकारी ब�को के �लए इसक� प्र�तशत मात्रा �रज़वर् ब�क, अ�
(RRBs) and Cooperative Banks. ब�को क� तुलना म� थोड़ी �भ� रख सकती है)
- More in 📑📑Pillar1B1: classification
🚩🚩🚩🚩 ✋Difference between NDTL, ODTL, Total DTL?= NOT IMP4IAS. If you want to satisfy
your curiosity, do google search yourself but I don’t t think it as best use of time.
- CRR-SLR are counted on fortnightly basis. If not maintained, bank will have to pay penalty
interest rate to RBI. This Penalty rate is linked with Bank Rate%. (हर 15 िदनों के �लए �गना जाता है. यिद
ब�कर ने निह नहीं माना तो जुमार्ना लगेगा.)
- CRR-SLR ensure monetary stability of India through two primary functions:
1) CRR assists in money multiplier effect.
2) CRR-SLR provide buffer/protection during a Bank Run (ब�कों म� से जमारा�श वापस लेने क� दौड़)
i.e. an emergency when every depositor wants to pull out money from his bank account
at once, mainly due to fake news / rumours sometimes due to war e.g. in Russia-Ukraine
- While in theory CRR/SLR can be used for inflation control but RBI primarily relies on REPO
Rate (=its Policy Rate) to combat inflation, and not CRR/SLR. (हालांिक, सीआरआर और एसएलआर महंगाई
�नयं त्रण के मु� साधन नहीं है. �रज़वर् ब�क महंगाई से लड़ने के �लए मु�ता रेपो रेट का इ�ेमाल करती है)
12.11.2 🌐🌐� : 🗄🗄✂CRR SLR on Foreigners/NRI’s deposits in Indian Banks?

🚩🚩🚩FAQ: does CRR and SLR also apply to the deposits made by foreigners / NRIs / FCNR
Accounts? Has RBI changed any rules regarding this?
Ans. Wait till we reach Pillar3A: Currency Exchange Rate. Presently we are in Pillar1A2.
12.12🐯🐯🐯🐯✂🗓🗓 CRR, SLR: DEVELOPMENT IN RECENT YEARS

12.12.1 🐯🐯🐯🐯✂🗓🗓 (2016): Incremental CRR during Demonetization (नोटबं दीमे वृ�द्धशील सीआरआर)
- During demonetization (2016-17): public required to deposit the banned ₹500-1000 ke notes in
banks. So, banks’ deposits increased drastically.
- During that time, RBI temporarily prescribed Incremental CRR.
✋What was this? how did it work? Ans. 6 years old technical topic for NOT-IMP. Very
poor cost benefit in preparing #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो.
12.12.2 🐯🐯🐯🐯✂🗓🗓 (2020-Feb) CRR Exemption for 5 yrs, depending on loans (सीआरआर म� छू ट)
2020-Feb: RBI instructed the banks:
⇒ Whatever new (retail) loans you give for (1) automobiles (2) residential housing / home
mortgages. (3) MSMEs [After 31/Jan/2020 upto 31/Jul/2020]. Some of these deadlines later
extended but PHDNOTIMP
⇒ You can subtract that much loaned ₹₹ amount from deposits while computing cash reserve ratio
(CRR) for the next five years (from the date when the loan was given or other technical norms,
which are not important). (यिद ब�कर ने वाहन, मकान और छोटे उद्योगों को कजर् िदया, तो सीआरआर म� उस ब�क को छू ट
�मलेगी)
⇒ In other words, if a bank gives more loans to the above 3 sectors, it’ll have to keep ⏬ CRR →
⏫ loanable funds → profit to the bank. And more loans → more business activity →
economic growth for the country. (देश क� आ�थक वृ�द्ध म� मदद होगी)
12.12.3 🐯🐯🐯🐯✂🗓🗓 (2020-Mar) CRR ⏬ from 4% to 3% in 👻👻Atmanirbhar Bharat
Figure 3: कोरोना महामारी से जुज़ रही अथर्�व�ा पुनज��वत करने के �लए सीआरआर मे कटोती करना मं गता है।
- To revive Indian economy after Corona, RBI made certain changes in its monetary policy during
March-April-2020 period.
- Parallelly, Govt also took announced relief in tax-filling, free-food to poor etc.
- Collectively, Modi labelled these actions of [RBI + Government] = “Atmanirbhar Bharat
Economic revival package”. 📑📑More in Pillar#4C.
⇒ 2020-March: RBI announced 100 basis points (bps) (=1%) cut in CRR. so Earlier 4%-1%=. This
will ⏫ the loanable funds available with the banks. (कोरोना वषर् 2020 के दौरान �रज़वर् ब�क ने सीआरआर म�
1% क� कटौती क� तािक ब�करों के पास लोन म� घूमने के �लए �ादा रा�श उपल� हो जाए)
⇒ 2021: now India moving towards economic recovery, enough loanable funds in banks available
so, RBI ordered restoration/⏫ of CRR in two phases: 3.5% (2021: March2May ) →4% (2021-
May) (�ोंिक भारत के अथर्तंत्र वापस पटरी पर आ रहा है इस�लए �रज़वर् ब�क सीआरआर को वापस मूल ��ती यानी 4% पर ले आ
रहा है)
⇒ 2022: CRR increased to 4.50% to fight inflation. (बढ़ती महँ गाई से लड़ने वा�े CRR म� बढ़ोतरी क� है)
12.12.4 🚩🚩🚩🚩✋: 🐯🐯🐯🐯✂🗓🗓 CRR Technical things NOTIMP

Following technical operational aspects of CRR not imp / poor cost benefit in studying for exam
- What is Automated sweep-in and sweep-out (ASISO) facility? NOT-IMPORTANT.
https://www.youtube.com/watch?v=q-GNbExdTlA&t=2094s (Although explained here)
- What is Flexible Automated Option for Managing CRR? NOT-IMP
- Banks are required to calculate CRR on a fortnightly (15 days) basis. They have to maintain at
least 90% of that amount in CRR on daily basis. RBI also ⏬ minimum daily CRR balance
maintenance from 90% to 80% upto 2020-June. NOTIMP. परी�ा के �लए काम क� नहीं
🚩🚩🚩🚩✋Above type of information is not really important for the scope of civil service exam. So,
don’t lose sleep if some inexperienced private Mocktest quiz master framing MCQs like this.
🔠🔠❓Cash Reserve Ratio refers to _ _ _ . (UPSC-CDS-i-2020)

(a) the share of Net Demand and time liabilities (NDTL) that banks have to hold as liquid assets
(b) the share of NDTL that banks have to hold as balances with the RBI
(c) the share of Net demand and time liabilities that banks have to hold as part of their cash reserves
(d) the ratio of cash holding to reserves of banks
🔠🔠❓Find correct statements about SLR: (UPSC-CDS-2011-II)

1. To meet SLR, Commercial banks must keep cash only.
2. SLR is maintained by the banks with themselves.
3. SLR restricts the banks leverage in pumping more money into the economy.
Answer codes:(a) 1, 2 and 3 (b) 1 and 3 (c) 2 and 3 (d) only 2
🔠🔠❓When RBI reduces SLR by 50 basis points which is likely to happen? (UPSC-Pre-2015)
(a) India's GDP growth rate increases drastically.
(b) Foreign Institutional Investors may bring more capital into our country.
(c) Scheduled Commercial Banks may cut their lending rates.
(d) It may drastically reduce the liquidity to the banking system.
12.13🐯🐯🐯🐯🐯🐯 MONPOLICY → QUANT TOOLS → RATES → LAF REPO (2000)

RBI’s Liquidity Adjustment Facility (LAF, तरलता समायोजन सु�वधा): has two windows:
® LAF-Repo Rate (�रपो दर/पुन: क्रय-अनुबंध) ® ® LAF-Reverse Repo Rate
(उलट �रपो/ पुन: क्रय-अनुबंध)
The Interest rate at which RBI lends short-term It’s the interest rate that clients earn when
loans to its clients, keeping their G-Sec as parking their surplus funds with the RBI for
collaterals. (�रजवर् ब�क अपने ग्राहको को लघु अव�ध के ऋण short periods, to earn interest. (ग्राहक अपना
देता है। उसपर लागू �ाज दर को �रपो दर कहेते है। ग्राहक ने अ�त�र� धन, �रजवर् ब�क मे लघु अव�ध के �लए जमा कर जो
अपनी सरकारी प्र�तभू�तयों को �रजवर् ब�क मे �गरवी रखना पड़ता �ाजदर कमाते है, उसे उलट-�रपो-दर कहेते है)
है)
⇒ Clients enter into an agreement with RBI to Mechanism similar to Repo, RBI gives its G-Sec
repurchase their G-sec at a future date at a as a collateral to client.
(higher) pre-determined price.
⇒ Banks can’t pledge their SLR-quota-G-Secs
for this borrowing.✋
⇒ Repo also called ‘Ready Forward Reverse Repo Rate = Repo% MINUS x%
Transaction’.
⇒ Repo Rate is our Policy Rate to control
inflation. (मौिद्रक नी�त दर)
⇒ Repo = RBI lends short term loans its clients, & demands G-Sec/T-bill as collateral. ✋ At every
place, I’ve not mentioned T-bill, as it just reduces the speed of revision.
⇒ Market Repo = Players other than RBI (such as bank, NBFCs) loaning short money to other
Banks/NBFCs/Corporate Companies, and demanding financial securities (G-Sec/T-
Bill/shares/bonds/commercial paper etc.) as collateral. What do those terms mean? Ans. Ref the
table given in topic Operation Twist.
12.14👻👻🐯🐯🐯🐯📈📈 REPO → SPECIAL WINDOWS UNDER ATMA NIRBHAR
12.14.1 (2020) 🐯🐯🐯🐯🐯🐯 Long Term Repo Operations (LTROs: दीधर् अव�ध के रेपो ऋण)
⇒ Usually, Repo loans are for short term borrowing from overnight to 14-days.
⇒ But, 2020-Feb: RBI announced Long Term Repo Operations (LTROs) of 1 yr & 3 years tenors.
⇒ RBI will loan > ₹ 1,00,000 crore, in various rounds through E-Kuber platform.
⇒ Interest rate: @repo rate. Interest rate will be compounded annually. (वा�षक �प से चक्रवृ�द्ध �ाज)
⇒ This will ⏫ loanable funds with banks → economic growth can be revived. (आ�थक वृ�द्ध म� मदद
होगी)
⇒ MSF and (short term) repo lending will also be continued separately as per their own existing
norms. LTRO doesn’t aim to eliminate / replace them. (बाक� जो लघु अव�ध के उपकरण है, वह भी जारी ही है)
✋Further operational guidelines, how it impacts the bond yields etc. = poor cost:benefit
12.14.2 👻👻🐯🐯🐯🐯📈📈 REPO → TLTRO, SLTRO, On-Tap Windows
Figure 4: कोरोना प�ात लोन म� �ादा पैसा घुमाके अथर्तंत्र को वापस खड़ा करने के �लए �रज़वर् ब�क ने ये नई �खड़िकयाँ खोली है
#In above chart, All Banks doesn’t include Payment Banks. PB can’t give loans (Ref:📑📑Pillar#1B1)
Tools Changes in Corona-2020 upto 2022-Feb

Repo RBI's short term loan interest rate to clients while using non-SLR-quota G-
Sec as collateral. Repo Interest ⏬from 5.15 to 4.00% = 1.15% = 115 basis
points cut= Cheaper loans to revive economy
LTRO Learned in previous section
TLTRO Targeted Long Term Repo Operations (TLTRO): Up to 3 years
loans@Repo% to Banks with condition that they must invest x% of it in
NBFC companies’ Bonds etc.
Special LTRO RBI loan for 3 years @Repo% to ONLY Small Finance Banks (SFB) →
Window (SLTRO) Loans to A) Micro and small industries (सू� और लघु उद्योग) B) Unorganized
sector entities (असं गिठत �ेत्र)
Tools Changes in Corona-2020 upto 2022-Feb
💊💊💊💊 On-Tap RBI loan for 3 years @Repo% to Banker → loans to Hospitals, vaccine
Liquidity Windows manufacturer, vaccine importers, medical device makers, oxygen suppliers
for Healthcare etc (अ�ताल, टीका उ�ादक, आयात करने वाले �चिक�ा साधन बनाने वाले इ�ािद)
🍸🍸⛱ On-Tap RBI loan for 3 years @Repo% to Banker → Hotels, Restaurants, Tour
Liquidity Windows Operators, Bus Operator, Car Repair Service, Beauty Parlours/Spa/Saloons,
for Contact- Event/Conference Organisers ब�कर ने ये पैसा �शर्-सं वेदनशील उद्योग �ेत्र जैसे प्रवासन
Intensive Sectors उड्डयन इ�ािद को कज़र् म� देना होगा
AIFI RBI loaned large amount of money to All India Financial Institutions
(AIFI) i.e., NABARD, NHB, SIDBI and EXIM Bank (More in
📑📑Pillar#1B1)
12.14.3 🚩🚩🚩RBI’s Special Windows: Useless Doubts by flag-carrying Babushonas
1. 🚩🚩🚩FAQ: Why would bank borrow ₹₹ in TLTRO / On-Tap windows, when many conditions
are imposed on it? Ans. maybe the bank feels it will earn profit from such loan/investment. (ब�कर
को ज�रत होगी तो ल�ग,े वरना नहीं ल�ग.े �रज़वर् ब�क के गवनर्र उसको बं दू क िदखाकर ज़बरद�ी नहीं दे रहे)
2. 🚩🚩🚩FAQ: Why would bank borrow ₹₹ in REPO rate (Short term) when LTRO offering long
term loans? Ans. 1) depends on the requirement of the bank 2) TLTRO amount is finite e.g. first
round total ₹1 lakh given. So, if a banker came late to RBI’s office & Parle-G biscuit stock was
finished , banker may have to buy Britannia biscuit.
3. 🚩🚩🚩FAQ: How does LTRO/TLTRO involve “flight of foreign investors & its impact on
exchange rate & bond yield” etc.? Ans. Such long-winded-financial-cause-effect = no
importance in UPSC, even though private mock-test-walla design useless MCQs from it. इतनी दू र
क� बीरबल क� �खचड़ी अपने को पकाने क� ज�रत नहीं है!
4. 🚩🚩🚩FAQ: I want to do PHD on this until Taimur grows up & gets married. Ans. Good luck to
you! You keep doing that, but, I’m finished teaching this topic here. शुभकामनाएँ , आप लेके बैठे रहो.
12.14.4 (2020) 🐯🐯🐯🐯Reverse Repo Rate cut
Figure 5: sir, जब तक आप loan के �लए हाँ नही कं ह�गे, हम आपको telemarketing spam-calls करते रह�गे!
Corona led Economic Slowdown → Loan demand ⏬ → banks parking their excess funds in RBI to
earn interest in the form of reverse repo rate. (कोरोना महामारी के दौरान ब�क वाले अपना अ�त�र� धन �रज़वर् ब�क म�
डाल के बैठे �बठाये �ाज कमा रहे थे. ग्राहकों म� लोन का पैसा घुमाने क� मेहनत नहीं कर रहे थे.)
⇒ By 2020-March: banks parked ₹~3 lakh crores in RBI in Reverse Repo.

⇒ So, RBI has drastically reduced ⏬the reverse repo rate to 3.35% to discourage such laziness of
banks. (ब�को के इस आलसीपन को दू र करने के �लए �रज़वर् ब�क ने �रवसर् रेपो रेट म� कटौती क�)
⇒ 😰😰Benefit of reverse repo reduction?
 IF SBI offers 5.9% Fixed deposit interest rate to depositors, and parks it in the RBI
reverse repo rate (3.35%) then SBI will actually make losses.
 So, RBI hopes SBI will now be ‘forced’ to give loans in a proactive manner (through
SMS-spam, email-spam and unwanted telemarketing calls etc)
Although as per 📔📔📔📔ES21, Banks still continued to park their surplus funds in Reverse repo
because there were not enough loan takers due to Corona slowdown. (हालांिक कु छ खास फायदा नहीं �आ ऐसा
आ�थक सव��ण का कहना है)
12.14.5 🐯🐯🐯🐯🐯🐯 MonPolicy → Quant Tools → Variable Rate Reverse Repo (VRRR)
TRADITIONAL FIXED REVERSE REPO VARIABLE RATE REVERSE REPO
(FRRR) : Interest Rate fixed by RBI e.g. 3.35% Interest Rate decided by Bidding process of
(�रजवर् ब�क द्वारा �रवसर् रेपो रेट क� दर पहले से ही तय कर दी जाती clients (How? Explained in video but not
है.) important.)
Thus, RBI not fixing the percentage% in
advance. It is variable%...depending on bidding
action of clients.
RBI can reject/refuse to accept reverse repo same as the left cell.
deposits from clients without giving him any (आरबीआई �रवसर् रेपो दर मै ग्राहक क� िडपा�जट लेने से मना कर
reasons. (�रज़वर् ब�क मना कर सकता है) सकता है, �बना कोई उस ग्राहक को कारण बताए.)
-- This activity was paused during Corona 2020
but resumed in 2021-January.
Reasons for conducting VRRR (�ों यह “प�रवतर्नीय दर वाला उ�क्रय अनुबंध” खेल खेला जा रहा है?)
⇒ Because RBI wants to suck excess money supply from the market without modifying the 'fixed'
reverse repo % (�रवसर् रेपो के �न��त दरों म� छे ड़छाड़/बदलाव िकए �बना �रजवर् ब�क बाजार से अ�त�र� पैसा चूस सके .)
⇒ Clients may hope to earn more interest rate in VRRR than fixed rate reverse repo. (VRRR नीलामी म�
िकस प्रकार क� बो�लयां लगाई गई है उस िहसाब से ग्राहक को शायद थोड़ा �ादा �ाज कमाने �मले)
🚩🚩🚩FAQ:
⇒ VARIABLE RESERVE RATIO = is a collective term used for describing CRR & SLR.
⇒ VARIABLE RESERVE REPO RATE = is a separate thing under reverse repo.
12.14.6 🐯🐯🐯🐯 🎛🎛 Variable Rate Repos (VRRs)

⇒ 2022-Feb: RBI said It’d also conduct Variable Rate Repos (VRRs) auctions, similar to Variable
Rate Reverse Repo. How it works / what impact will it generate? Ans. Apply logic similar to
TRADITIONAL FIXED REPO Rate. (जेसे �रवसर् रीपो क� नीलामी होगी, वैसे ही रेपो क� नीलामी होगी ऐसी घोषणा क�
है)
⇒ Beyond that PHD / similarity-difference of no use.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
12.14.7 🐯🐯🐯🐯 🎛🎛 Enhanced Reverse Repo Rate for Hardworking Bankers
⇒ If Bankers uses Sector Specific On-tap Liquidity Window (e.g. bankers taking loans from RBI to
lend to hotel, beauty parlours, vaccine manufacturer etc). यिद कोई ब�कर �रज़वर् ब�क द्वारा बनाई गई �ेत्र �वशेष
�खड़िकयों से पैसा कजर् म� लेके �व�वध �ेत्रों को देता है
⇒ If this banker achieved Rs.“XX” loan giving target → IF he parks his surplus funds under
Reverse Repo Window → RBI will pay him 3.75% Reverse Repo Rate. (instead of 3.35% FIXED
reverse repo paid to lazy bankers.) तो उस मेहनतकश ब�कर को रीवसर् रीपो रेट म� �रज़वर् ब�क �ादा प्र�तशत �ाज देगी,
अ� आलसी ब�करों क� तुलना म�.
⇒ 🤩🤩Benefit? It encourages bankers to work harder to give loans to various sectors.
🚩🚩🚩 FAQ: How / Why is this possible? How can banker borrow money and yet have surplus
funds? Ans. Banker will not instantly get all borrowers on day1. So, often he would invest his surplus
money (of depositors) temporarily in RBI (under Reverse Repo)- just to earn small amount of profit,
instead of letting the cash stay idle in his bank office. (ब�कर को यिद तुरंत कजर् लेने वाला कोई ग्राहक नहीं �मले तो
छोटी अव�ध के �लए ब�कर अपना पैसा, �रजवर् ब�क म� रखेगा �ोंिक ऐसा करके ब�कर �रज़वर् ब�क से �ाज कमा सकता है)
12.14.8 🐯🐯🐯🐯🐯🐯 MonPolicy → Quant Tools → Rates → MSF (2011)

- Marginal Standing Facility (MSF: सीमांत �ायी सु�वधा) is the Interest rate at which RBI lends short-
term loans to Scheduled Commercial Banks (SCB) & Regional Rural Banks (RRB) with their
SLR-quota G-Sec as collaterals. (ऐसी खास �खड़क� है जहाँ से �रज़वर् ब�क द्वारा अनुसू�चत वा�ण��क ब�को तथा �ेत्रीय
ग्रामीण ब�कों को, उन ब�को के एसएलआर कोटा क� प्र�तभू�तयों को �गरवी लेकर �रजवर् ब�क उ�� लघु अव�ध के कजर् देता है)
- MSF higher than Repo Rate. MSF = Repo% + 0.25%
- What is the difference/meaning of SCB/RRB/SFB/UCB etc? Ans: (📑📑Ref: HDT-Pillar#1B1:
classification)
🚩🚩🚩FAQ:Which types of banks can access MSF facility? ✅Ans. It is given in above note itself.
12.14.9 🐯🐯🐯🐯🐯🐯 MonPolicy → Quant Tools → Rates → Bank rate (ब�क दर):
Bank Rate MSF Repo Rate
Introduced in RBI Act, 1934** 2011 2000
What is the % Since 2012: Monetary Policy
MSF = Repo% + “x”%
rate? Bank Rate% = MSF% Committee decides
Who can All clients of RBI:
borrow from Only banks bank, non-bank,
the RBI? Union & State Govt
Collateral Bank can pledge securities Yes, G-Sec/T-bill. But
**Yes and No
required? from its SLR quota not from SLR
Loan duration Longer than repo Short term usually overnight to 14 days
Bank Rate MSF Repo Rate
Emergency borrowing by
Nowadays mainly
Primary bank, using their securities Short term borrowing
for deciding penalty
Utility? from SLR quota subject to by all clients of RBI.
on errant banks
certain limits.
⇒ **RBI Act, 1934: “Bank rate is the standard rate at which RBI buys or rediscounts first class
securities, bills of exchange or other commercial papers.(-NCERT)” rediscounting basically
means the “repo-walla game= RBI buys @x price, re-sells@y price where y>x”
⇒ But, since the introduction of the Repo rate in the 2000s, the Bank rate has become a dormant
tool (�न��य उपकरण) =not frequently used by RBI for lending or by banks for borrowing).
⇒ So, reference books/websites differ in its present operational status e.g. some of them would say:
o Bank rate requires no collateral and is meant for long term loans.
o Bank rate accepts collateral which can be both GSec/T-bill as well as private companies’
securities.
🚩🚩🚩🚩✋So, in the real exam, it depends on which book/web source the examiner has copied the
statement(s) and accordingly you’ve to take a judgement call in ticking the answer. �व�भ� और िकताबों
और वेब साइटों पर ब�क दर क� �ा�ा/अथर् गठन अलग अलग है इस�लए असल परी�ा म� जो पूछा जाए तो ��ती/�ववेक के िहसाब से
आपने जवाब tick करना है.
12.14.10 🐯🐯🐯🐯🐯🐯 Quanti. Tools → SDF (=Reverse Repo walla game Without Collaterals)
⇒ 2013: Urjit Patel Committee on Monetary policy proposed standing deposit facility (SDF)
⇒ SDF = Clients park/deposit their extra money in RBI. RBI pays them interest. RBI doesn’t give
any collateral (unlike in REVERSE REPO). (�ायी जमा/िडपॉ�ज़ट सु�वधा = �रज़वर् ब�क के ग्राहक अपना अ�त�र�
पैसा �रज़वर् ब�क म� जमा करेगा. �रज़वर् ब�क ग्राहकों को उस िडपॉ�ज़ट के �लए �ाज देगा. �रज़वर् ब�क ग्राहक के पास �गरवी कु छ नहीं
रखेगा.)
⇒ 🤩🤩Benefit of SDF: To combat inflation → RBI can suck extra money supply via SDF window.
RBI will not have to pledge G-Sec as collateral to clients. (महँ गाई से लड़ने वा�े बाज़ार म� से पैसों क� अ�त�र�
आपू�त को चूसने/हटाने/कम करने के �लए �रज़वर् ब�क एसडीएफ़ का इ�ेमाल कर सकता है- �बना कु छ �गरवी रखे।)
⇒ 2018: RBI act amended to add SDF facility. (�रज़वर् ब�क क़ानून म� सुधार िकया गया).
⇒ 2022-April: RBI started/launched SDF. RBI also made changes in Policy corridor. <REF: NEXT
SECTION>
🚩🚩🚩FAQ: SDF is launched so does it mean Reverse Repo discontinued?
> Reverse Repo rate not discontinued. Reverse Repo will remain as part of RBI’s toolkit. RBI will
continue to use it at its discretion from time to time. Presently Reverse Repo is 3.35%
🚩🚩🚩FAQ: what is the deposit time duration of SDF and Reverse Repo?
> Sufficient to know these are for short-term. Now what exactly is short-term? Is it 1 day, 7 day, 14
day? = Not important for exam. Why overburden the memory card of the brain with unnecessary
information?
🚩🚩🚩FAQ: IF SDF and Reverse Repo both present, then why would Bankers go for SDF where no
collateral given?
> The time period and interest rate offered on SDF and Reverse Repo are different. So, it depends on
bankers’ business-requirement, cash-flow management. RBI is not pointing in gun their head to use
it. (ब�कर को ज़�रत होगी तो इ�ेमाल करेगा. �रज़वर् ब�क उसक� कनपटी पर �प�ौल नहीं रखा है.)
12.14.11 ⛓ MSF Repo vs Reverse Repo vs SDF

Tool MSF Repo Reverse Repo SDF
Present rate 5.15% 4.90% 3.35% Fixed 4.65%
(2022-Jul) Reverse Repo
Rate (FRRR)
Lender RBI RBI Banks+some Banks+some
NBFCs NBFCs
Borrower ONLY Scheduled Banks+some RBI RBI
Commercial NBFCs
Banks (SCB)
Borrower need to Yes Yes Yes Not required.
give Collateral?
##Facility Client (SCB) RBI RBI Client
available at (Banks+Some
Discretion of NBFC)
⇒ ## Discretion = here means suppose a client (Bank/NBFC) comes for Reverse Repo= It's not
compulsory for RBI to entertain him. (�रज़वर् ब�क क� मज़� क� बात है िक उसको सेवा देगा या नहीं देगा.)
⇒ But, If client (Banker) comes for MSF = RBI will not say "NO" to him. RBI will help him.
⇒ What is SCB? Ans. Refer Pillar1B1: Classification of Banks
12.14.12 🚧🚧 Policy Corridor / LAF Corridor
⇒ Policy Corridor also known as Liquidity Adjustment Facility (LAF) corridor. (नी�त ग�लयारा / तरलता
सु�वधा ग�लयारा)
⇒ BEFORE 2022-April: Policy Corridor = total width between: MSF <—> REPO <—> Reverse
Repo. (इन तीनों उपकरणों के बीच क� कु ल चौड़ाई)
⇒ After 2022-April: Policy Corridor = MSF (Repo+0.25%) <—> REPO <—> SDF (Repo-0.25%)
⇒ Thus total width is 0.25+0.25= 0.50%
Upper end of Corridor Center Lower end of Corridor Total width
/ Ceiling (छत/ऊपरी सीमा) / Floor (फ़शर्)
Tool? MSF REPO Before: Reverse Repo. (RR)
After: SDF
Before MSF= R+25 bps R% RR = Repo-25 bps 25+25=50bps
Corona
In Corona MSF= R+25 bps R% RR = Repo - 65bps 25+65=90bps
2020-21
2022-Apr MSF = Repo + 25bps R% SDF = Repo-25bps 25+25=50bps
Note: 100 base point system (BPS) = 1% So 25 bps = 0.25%. 50 bps = 0.50%
⇒ SDF has replaced the Reverse Repo Rate as the floor of the Policy corridor.
⇒ However, Reverse Repo was not discontinued.
⇒ Reverse Repo will remain as part of RBI’s toolkit
⇒ Reverse Repo will be used as per the mood/discretions of the RBI from time to time
12.14.13 �⚖� Tri-Party Repo (�त्र-प�ीय पुन: क्रय-अनुबंध):
⇒ Outdated topic. I find it not important for exam anymore. So DELETED from handout.
⇒ Sufficient to know this is not a tool of Monetary Policy. It is a method to meant to help
companies to borrow money from the market.(ये मौिद्रक नीती का िह�ा नहीं है. )
12.14.14 🔪🔪🐰🐰 BPLR, MCLR, External Benchmarks, etc:

Terms related to how individual banks decide their loan rates. Ref: End section of handout.
12.14.15 🐯🐯🐯🐯📁📁 Market Operations (OMO): (Inflation → Sell G-Sec, Deflation → Buy)
Figure 6: Aloo Lelo, Pyaaz Lelo, G-Sec Lelo...

I. Open Market Operations (खुले बाजार क� िक्रयाए): RBI buys and sells Union & State Govts’
securities to control money supply.
o RBI buying= Money supply ⏫increased/liquidity injected in the market.
o RBI selling = Money supply ⏬decreased/liquidity absorbed from the market.
II. Market Stabilization Scheme (बाजार ��रीकरण योजना): RBI sells special type of G-sec, T-Bill &
Cash Management Bills (CMB) to suck excess liquidity. ✋How it works? How is it similar
or different than OMO? Ans. NOTIMP. Very low profile thing for scope of UPSC.
III. Sterilization / Forex Swap: Their primary objective is to control the currency exchange rate
volatility (e.g. $1=₹65,70,80… मुद्रा �व�नमय दर क� ��रता के साथ जुड़ा �आ मामला). <More in
📑📑Pillar#3 >
IV. Operation Twist (2019): a special type of OMO. Explained in next segment.
12.15🐯🐯📢📢🗃🗃🧬🧬MONPOLICY: QUANTI TOOLS: OMO → OPERATION TWIST

Before that, you’ve to be aware of some many basic concepts:
12.15.1 🔪🔪🔪🔪: Security → Debt → G-Sec & Bonds (ऋण के �लए जारी क� गई प्र�तभू�तयां)
A ‘Security’ means a certificate/document indicating that its holder is eligible to receive a certain
amount of money at a particular time. This could be a…
Table 3: प्र�तभू�तयों के �व�भ� प्रकार
Borrower 🦁🦁Govt 🤵🤵Corporate (�नगम)
Short term Treasury bills, Cash Bill of Exchange, Commercial Papers,
(less than 1 year) Management bills Promissory Notes.
→
Long term G-Sec, Sovereign Bonds Bonds / Debentures
(1 year/>) →
Borrower 🦁🦁Govt 🤵🤵Corporate (�नगम)
Usually lower than Corporates’ Depends on following factors →
Interest rate
because risk is low
12.15.2 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) Deepening of G-Sec market- Retail investors’ RDAG @RBI
- RBI launched “Retail Direct Scheme” in 2021.
- Under this scheme, RBI permits “Retail Direct Gilt (RDG) account” for retail investors on its E-
Kuber online platform. (आम �नवेशक �रज़वर् ब�क म� आरडीजी नामक खाता खोल पाएं गे)
- Both Resident Indians & non-resident Indians (NRIs) can open this account. (गैर �नवासी भारतीय भी)
- Then Retail investors can directly buy Treasury Bills (T-Bill), G-Secs (of Union Government),
State Development Loans (SDL are ‘G-secs’ of State Govts) and Sovereign Gold Bonds, from RBI
directly. (आम �नवेशक सीधा �रज़वर् ब�क से इन प्र�तभू�तयों को खरीद सकता है.)
- Application fees to open the account = ₹ ZERO
− 🤩🤩Benefit? 1) Earlier retail investors bought G-sec “indirectly” through mutual funds wherein
mutual fund manager (MF) charged commission/fees. Now retail investor can buy directly so
does not have to pay such commission/fees to MF managers. (�बचौ�लयों को दलाली/कमीशन नहीं देना होगा)
− (More in 📑📑Pillar#1C- SEBI Share market, DEMAT account etc)
12.15.3 🔪🔪🔪🔪:🤵🤵Corporate Bonds: factors that determine its interest rate

If companies want to borrow money, they may issue bonds to investors. e.g. “Whoever buys this
Reliance Bond worth ₹1000, we will pay him 9.40% interest rate per year and return the principal after
15 years.” Usually the interest rate offered on such bonds depends on
Factor (कारक) How it determines corporate bond interest rate?
(Risk) Credit rating Lower credit rating (e.g. CCC or D) → higher interest rate needs to be
of company offered because risk of default is high. जब िदवा�लयेपन का जो�खम �ादा हो
Inflation why/how: Ans. Ref: 📑📑Pillar1C → Inflation Indexed Bonds
Bank deposit interest Higher the (Bank) deposit interest rate, higher bond interest rate needs to
rates be offered to attract households to shift money from bank savings/FD to
corporate bonds. (अगर ब�क जमाकतार्ओ ं को अ�ा �ाज दे रहा है तो कं पनी ने �ादा �ाज
ऑफर करना होगा)
Yield on G-Sec If G-Sec yield ⏫, then corporate will have to offer even higher bond
interest rate to attract the investors from G-Sec investment towards C-
Bond investment.
12.15.4 🔪🔪🔪🔪: 🤑🤑 Bond Yield (बांड म� �नवेश करने पर होने वाली आय या मुनाफा)
⇒ Bond yield is the profit an investor earns on a bond investment.
⇒ Suppose, Government issues a G-Sec or Bond: 8% annual interest, tenure: 1 year
⇒ Bhide Master invests ₹ 100. So, upon 1 year maturity he’ll get ₹ 8 Interest + ₹ 100 Principal = ₹
108. So his profit or yield will be= 8%
⇒ But suppose, before maturity of 1 year, Bhide Master urgently needs cash. So he sells ₹ 100 face-
value bond to Mr.Jethalal at a discounted price of ₹90. पैसों क� अचानक ज�रत पड़ने पर स�े दाम म� िकसी को
बेच दे
⇒ Jethalal keeps the it till maturity → Government pays him ₹ 108. प�रप� होने तक बेचे नहीं
⇒ So, for Jethalal the profit OR current bond yield to maturity is….
108−90
Yield= �
𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑜𝑜𝑜𝑜 ₹ 90
� ∗ 100 = 20%
12.15.5 🔪🔪🔪🔪: 🤑🤑 Bond Yield ∝ 1/Price (स�े म� खरीदा= तो मुनाफा �ादा)

⇒ Bhide bought @100, his yield is 8%; Jethalal bought @90, his yield is 20%.
⇒ Thus, Bond yield is inversely related to the current selling price of the bond in the secondary
market.
⇒ If a bond’s demand ⏫ → its selling price will ⏫ → bond yield ⏬ (Because of inverse
relation)
12.15.6 🔪🔪🔪🔪: 🤑🤑 Bond yield: other factors affecting it (अ� कारक)
⇒ If the economy is booming (तेजी), companies are making great profit, investors may sell bonds at
lower prices in a hurry to unlock their money to invest it in shares of companies, because they
think it’ll get them more dividend. Then bond’s current selling price in the secondary market
⏬ → yield ⏫.
⇒ If the economy is facing recession (Continuous decline in growth rate: मं दी) → companies will
NOT make great profit → investors sell shares, and prefer to buy bonds hoping they’ll get
secured fixed interest. Then bond’s demand ⏫ in the secondary market → selling price ⏫ →
yield ⏬.
12.15.7 🐯🐯🐯🐯🐯🐯🐯🐯Operation Twist: why?

⇒ Commercial banks were reluctant to lend money to private sector companies because of the
problem of Bad Loans /Non-Performing assets (NPA: More in 📑📑Pillar1B2). िदवा�लयेपन क� घटनाओं
के चलते, ब�कवाले �नजी �ेत्र क� कं प�नयों को कजर् देने से डर रहे थे। आ�थक वृ�द्ध और रोजगार सृजन के �लए यह अ�� बात नहीं थी.
⇒ If such companies could borrow money by issuing corporate bonds (at cheaper interest rate) →
more factories, more jobs, more production, more GDP.
⇒ RBI decided to attack the third factor: “If the yield on long term G-Sec decreased, then
automatically Corporate Bond interest rates could also decrease.”
Figure 7: figures are only for illustration. ✋No need to memorize numbers.
12.15.8 🐯🐯🐯🐯🐯🐯🐯🐯RBI’s Operation Twist: methodology (2019-Dec)
Since RBI’s existing monetary policy tools had failed to make loans cheaper for corporates / boost the
economy. So in 2019-Dec, RBI started a “special OMO” wherein:
RBI Sold→ shorter -term G-Sec (of 1 year & higher tenor) worth ₹10,000 crore
RBI Bought → bought longer -term G-Sec (of 10-14 years tenor) worth ₹10,000 crore (i.e. equal
amount as above, so as to keep money supply unchanged.)
�रज़वर् ब�क ने �जतना बेचा, उतनी ही रकम का कु छ और खरीद �लया तािक मुद्रा आपू�त म� कोई बदलाव न हो.
⇒ Since RBI started buying long-term G-Sec, their demand will ⏫ → price will ⏫ → yield is ⏬.
The 10YearGSec’s yield lowered from 6.75% to 6.60%
⇒ And we’ve already learned, Corporate bonds are priced (benchmarked) keeping G-sec yields in
mind.
So, Op Twist → Lower G-Sec yield means →
 Cheaper borrowing for Private sector Companies. Because
o They can borrow money by issuing their (long term) Corporate-Bonds at much cheaper
interest rate than before. (�नजी �ेत्र क� कं प�नयों के �लए बॉ� जारी कर- ऋण लेना �आ स�ा🤩🤩)
o When a private company meets a bank manager to borrow money, it can negotiate the
loan price, “If your bank does not lend me money at this cheaper interest% then I will
issue my own corporate bonds.” → Even the bank lending rates for corporate loans could
be reduced.
 Cheaper borrowing for Government. For reasons similar to above. (How? Explained in Video)
 Investor of long term G-Sec will feel discouraged to hold the G-Sec till maturity (10-14 years),
He will try to sell it to another party/RBI and pull out his money, then he may park ₹₹ it a
Corporate Bond / Bungalow / car / Goa-vacation etc. Thus, it helps boost the consumption →
economy grows.
समज म� आ गया हो तो ब�ढ़या है, नहीं तो रट्टा मारो �जंदाबाद (if not understood then memorize by Rot-learning)
1. 1961: "Operation Twist" was first used by the US Federal Reserve.
2. 2019: RBI used also done it. Officially called “Special Open Market Operation (OMO) wherein
the Central bank simultaneously buys and sells G-sec of varying maturities to adjust their yields.
Which helps reduce interest rates on corporate bonds/debentures → easier to mobilize
investment → factory expansion → jobs, GDP growth. (यह एक खास िक� क� खुले बाजार क� िक्रया है, जहाँ
अगल अलग �मयादी क� सरकारी प्र�तभू�तयाँ खरीद-व-बेच कर �रजवर् ब�क उनक� उपज को कम करता है, तािक कॉप�रेट कं प�नया
स�े �ाज मे पैसा बाजार से हा�सल कर सके , तािक रोजगार और आ�थक वृ�द्ध मे मदद �मले)
3. Objectives of Op-Twist=
a. To make borrowing cheaper for Companies and Govt. कं पनीओ/�नगमों और सरकार के �लए कजर्
स�ा करवाना (HOW? Ans. Explained in Video).
b. It was NOT MEANT For fighting inflation. महंगाई से लड़ना इसका उद्दे� नहीं है
4. It ensures better Monetary Policy transmission for economic growth. (because, earlier, simply
reducing the repo rate has not helped much in making loans cheaper, for corporates. इससे पहले रेपो
दर कम करने पर भी बाजार म� लोन स�े नहीं हो रहे थे, तो �रज़वर् ब�क ने सोचा ये ऑपरेशन �ट्व� नामक नया साधन आजमाते ह�)
5. Net liquidity remains unchanged because ₹10,000 crore goes in and the same amount comes out
of the market. (सकल तरलता म� कोई बदलाव नहीं �ोंिक ऑपरेशन �ट्व� म� �जतना खरीदा, उतना ही बेचा है)
✋🎓🎓 🚫🚫 Beyond this, further PHD on what/why/how = poor cost:benefit for MCQs.For example
“The simultaneous sale of short-term bonds, on the other hand, helps push up short-term rates
which had fallen below RBI's benchmark rate. This would not only correct the anomaly in the short-
and long-term rates ” …. All this is not important for the scope of competitive exams, even if
inexperienced private mock-test-quiz-masters ask it.
12.15.9 ✋🎓🎓 🔪🔪🔪🔪: 🤑🤑 Bond Yield & Inverted Yield Curve: poor benefit for exam
1. Inverted Yield curve = ✋🎓🎓 इस मुददे को पढने म� हम व� बबार्द नहीं कर�गे
2. Negative Bond Yield = ✋🎓🎓 इस मुददे को पढने म� हम व� बबार्द नहीं कर�गे
3. Chinese Bond Yield ki News, Italian Bond Market crisis = ✋🎓🎓NOT IMP.
🔠🔠❓ India Government Bond Yields are influenced by which of the following? (Prelims-2021)
1. Actions of the United States Federal Reserve [अमे�रक� फे डरल �रजवर् क� िक्रयाओं द्वारा]
2. Actions of the Reserve Bank of India. [�रजवर् ब�क क� िक्रयाओं द्वारा]
3. Inflation and short-term interest rates [महंगाई और लघु अव�ध के �ाज दर]
Answer Code: a) 1 and 2 Only b) 2 Only c) 3 Only d) 1, 2 and 3
🔠🔠❓ MCQ. 'Open Market Operations' refers to: (Prelims-2013)

a) borrowing by banks from the RBI b) lending by commercial banks to industry and trade
c) purchase and sale of government securities by the RBI d) None of the above
🔠🔠❓ MCQ. Which would result in an increase in money supply in economy? (Prelims-2012)
1. Purchase of G-Sec from the public by the Central Bank.
2. Deposit of currency in commercial banks by the public.
3. Borrowing by the government from the Central Bank.
4. Sale of government securities to the public by the Central Bank.
Answer Codes: (a) 1 only (b) 2 and 4 only (c) 1 and 3 (d) 2, 3 and 4
🔠🔠❓ MCQ. Which of them is/are part of Monetary Policy? (Prelims-2015)

1) Bank rate 2) Open market operations 3) Public debt 4) Public Revenue
Answer Codes: (a) 1 only (b) 2, 3 and 4 (c) 1 and 2 (d) 1, 3 and 4
12.16🐯🐯🐯🐯🐯🐯: 📅📅 MONPOLICY: QUANTI TOOLS: OMO → G-SAP

⇒ Full form: (Secondary Market) G-sec acquisition programme
⇒ Mechanism: RBI to buy G-Sec from Secondary market on specified timetable. एक �न��त समय ता�लका
के िहसाब से �रज़वर् ब�क िद्वतीय बाज़ार से सरकारी प्र�तभू�तयां ख़रीदेगा.
G-SAP During these months Total
G-SAP 1.0 (पहला चरण) → 1 Quarter of 2021-22 =April to Jun 2021 (पहली �तमाही)
st
₹1.0 Lakh cr
G-SAP 2.0 (िद्वतीय चरण) → 2nd Quarter of 2021-22 = July to Sept 2021 (दू सरी �तमाही) ₹1.2 Lakh cr
12.16.1 🐯🐯🐯🐯🐯🐯:📅📅 OMO → G-SAP : 🤩🤩Benefit?

⇒ ⏫ Money supply in the economy. (अथर्तंत्र म� मुद्रा आपू�त बढेगी)
⇒ Investors, who sold G-Sec to RBI= those investors got ₹₹ →They may 1) do shopping and/or 2)
invest in other companies shares/bonds→ 1+2=economic growth. मुद्रा आपू�त म� बढ़ोतरी के चलते �नवेशकों
के हाथ म� पैसा आएगा तो वे बाज़ार से ख़रीदारी कर�गे, अ� क��नयों म� �नवेश कर�गे→ देश क� आ�थक वृ�द्ध म� मदद �मलेगी
😤😤FAQ/Moral Outrage: Why G-SAP? Why not achieve this via ⏬ reducing REPO ? Ans.
⇒ Every person may not be interested in taking new bank loans. Some investors may be interested
in selling their previous investments in G-Sec to unlock the money. (हर �� ब�क से कज़र् लेगा ये ज़�री
नहीं है। कु छ �नवेशक अपना पुराना G-sec �नवेश बेचकर पैसा बटोरना चाहते हो तो जी-सेप म� आ सकते है)
⇒ if RBI ⏬decreases the repo rate too much→ it can result in A) inflation and B) ⏬decrease in
the deposit interest rates offered by the bankers on savings account → middle-class and
pensioners affected negatively. (रेपो दर म� ब�त �ादा कटौती �ई तो नई सम�ाए खड़ी होंगी)
Table 4: To Sum up, OMO, GSAP, OP-TWIST (कु ल �मलाकर बात ये है िक)
G-SAP ⇒ RBI is buying G-Sec to increase money supply → Post-corona revival.

⇒ Money amount, date&time/calendar/timetable is transparently & systematically
announced in advance before starting.
⇒ इसम� पैसों क� मात्रा, समय-ता�लका सब कु छ पारदश� और �व��त �प से, ख़रीदारी शु�आत करने से पहले
�रज़वर् ब�क प्रका�शत कर देता है।
OMO ⇒ RBI is selling G-Sec to control inflation.
⇒ RBI is buying G-Sec to fight deflation. मुद्रा��त(मं हगाई)/अप��त(स�ाई) से लड़ने के �लए
�रज़वर् ब�क सरकारी प्र�तभू�तयों को बेचगे ी/खरीदेगी
⇒ Its timetable NOT announced in advance, in detailed manner, unlike G-SAP.
�रज़वर् ब�क के �ववेक/मनमज़� पर अ�नय�मत समय पर ये िक्रया होती थी। समय से पूवर्, �व�ृत �प से इसक�
समय ता�लका प्रका�शत नहीं क� जाती थी।
⇒ OMO window is NOT discontinued. It’ll continue to function as per discretion
of RBI. इस �खड़क� को बं द नहीं िकया गया। �रज़वर् ब�क के �ववेकानुसार भ�व� म� भी जारी रहेगा.
Op.Twist ⇒ RBI is Buying and Selling of G-Sec of varying maturities
⇒ To reduce G-Sec yield → so future borrowing becomes cheaper for Government
and Companies. �रज़वर् ब�क द्वारा �भ� �भ� अव�ध/�मयादी क� सरकारी प्र�तभू�तयों को खरीदना और
बेचना तािक यी� कम हो सके तािक भ�व� म� सरकार तथा कं प�नयों के �लए कजार् लेना स�ा हो सके ।
12.17🐯🐯🐯🐯🌽🌽 MONETARY POLICY: QUALITATIVE TOOLS (गुणा�क साधन)

Quantitative tools (SLR,CRR,Repo etc.) control ‘volume’ of loans. मात्रा�क साधन कज� क� मात्रा तय करते ह�
⇒ Whereas, qualitative tools (PSL,LTV etc.) control “distribution” of loans to a particular sector of
economy. गुणा�क साधन कज� के �वतरण को तय करते ह�
- e.g. how much loan to a particular sector e.g. agriculture, renewable energy.
- how much loan to a particular segment of society (e.g. farmers, women, SC/ST).
- So, qualitative tools also known as SELECTIVE (चयना�क) or DIRECT (प्र��) Tools.
12.17.1 � Moral Suasion (नै�तक दबाव / सलाह) & Publicity (प्रचार)
Figure 8: “म�ने तो अपनी repo-दर कम कर दी लेिकन ये लालची ब�क वाले अपने loan-दर कम नही कर रहे , कम से कम मेरा �लहाज/स�ान रखने के �लए भी उ�े थोड़ा तो स�ा
करना चािहए।“ - RBI Governor
- Moral suasion meaning applying “Persuasion” without applying punitive measures. RBI
governor tries this tactic via conferences, informal meetings, letters, seminars etc
- E.g. RBI-Governor asking banks to transmit repo-rate cuts, open new branches in rural areas,
spread financial literacy, give loans to farmers beyond PSL quota etc.
- E.g. RBI Governor requesting CM or Finance Minister to control fiscal deficit & subsidy leakage
to enhance the efficacy (प्रभावका�रता) of RBI’s monetary policy.
- Publicity: RBI governor could give media statement, speech during university convocation (दी�ांत
पदवीदान समारोह), memorial lectures… “Look I reduced repo rate but banks are not passing the
benefit to customers…and xyz”. By doing so, he can create an effective public opinion which also
pressurizes the banks to stop their thuggery.
12.17.2 �🚯🚯 Direct Action (सीधी कायर्वाही: �ोिक लातो के भुत बातो से नहीं मानते)
- RBI can punish banks (and even non-banks) for not complying with its directives under RBI Act,
Banking Regulation Act, Payment and Settlement Systems Act, Prevention of Money Laundering
Act (PMLA), Foreign Exchange Management Act (FEMA). �रजवर् ब�क के िदशा �नद�शों का पालन न करने पर
�व�भ� कानूनों म� सजा/दंड
- 2019: RBI ordered the banks to have a “Clawback” provision in their CEO & Top executives’
salaries. E.g. If the CEO did any scam/fraud, he’ll have to return his previously paid salary /
bonus, even if he had retired/left the job afterwards. (िकसी ब�क का सीईओ कांड म� पकड़ा गया तो उस सीईओने
पुरानी तन�ाह भी लौटानी होगी.)
12.17.3 💍💍 Margin Requirements / Loan to Value (LTV) (सीमा अ�नवायर्ता)
Figure 9: जब घर मे पड़ा है सोना, िफर काहे को रोना?

⇒ RBI can mandate Loan to Value (LTV) for a gold-loan, home loan, auto loan or business loan
etc. so a Bank/NBFC can’t lend more than x% of the value of the collaterals. RBI can change this
x% to boost / curb demand. (�गरवे रखी चीज के मू� के सामने ब�क या गैर-ब�क सं �ान �� को िकतना कजर् दे सकते
है? �रजवर् ब�क उसके मानदंड म� बदलाव द्वारा, बाजार म� चीज-व�ुओ क� मांग को बढ़ा या कम कर सकता है)
LTV reforms in 2020-Aug Before After
Gold Loan 75% value of gold/gold- 90%
jewellary
🤩🤩Benefit? More quantity of loan by pledging same qty of gold → 😷😷 post-corona-biz-revival.
12.17.4 Selective Credit Control (चयना�क ऋण �नयं त्रण)

😰😰In a negative / restrictive direction (नकारा�क) 🤩🤩In a positive direction
(सकारा�क �दशा म�)
- Credit Rationing System: English (in 18th century) - 🚗🚗 Consumer credit control e.g.
and USSR (till 1990s)– their central bank will not During deflation / recession, RBI
give more than “X” amount as loan to individual can relax the down payment / EMI
banks. And an individual can’t get more than installment norms for durables
prescribed amount of loans for each category like Vehicles, TV, Fridge etc. to
(housing, education, business). (एक �� को इससे �ादा boost consumption and demand.
कजार् नहीं �मलेगा) - Priority Sector Lending <see
- 1960s: Credit Authorization Scheme (CAS) in India: below> प्राथ�मक �ेत्र के ऋण मानक
all commercial banks had to obtain prior approval of
the RBI before loaning ₹ 1 crore/> to a single
borrower.
- 1970s: RBI imposed quantitative ceiling on non-food
loans to boost green revolution, food inflation.
😰😰But such measures failed due to lax monitoring and
loopholes. (�श�थल �नगरानी के चलते, बेअसर रहे ये साधन)
12.18 🐯🐯🐯🐯🐯🐯 PRIORITY SECTOR LENDING (PSL: प्राथ�मकता �ेत्र के �लए ऋण मानक)
Figure 10: थोड़ा लोन हमको भी िदलवा दो Governor-sahib, हम बहोत गरीब है!
⇒ 1968: First time RBI used the word “priority sector”: Banks must give 40% of their loans to 3
priority sectors 1) agriculture 2) small industries 3) exporters by 1985. (कृ �ष छोटे उद्योग और �नयार्तक)
⇒ Over the years, more sectors were included in it. (समय के साथ साथ और भी �ेत्रों को इसम� शा�मल िकया गया)
⇒ 2015: some reforms in PSL. → 2019: RBI's UK Sinha Committee on MSME loan reforms
suggested some more reforms in the PSL. →2020-Sept: RBI reformed PSL guidelines as
following: (�न� सुधार िकए गए)
Priority Sector Loans norms → minimum quota after 2020-Sept Reforms BEFORE AFTER
� Weaker Sections (कु ल लोन का कम से कम 12% जाना चािहए कमजोर वगर् को): 10 % ⏫12%*
⇒ SC, ST, Women, PH, Minorities, Manual scavengers, Artisans,
Priority Sector Loans norms → minimum quota after 2020-Sept Reforms BEFORE AFTER
⇒ PM-Jan DhanYojana Overdrafts upto Rs.10,000
⇒ Beneficiaries of Govt's National Rural/Urban Livelihood Mission Schemes
(NRLM/NULM: More in 📑📑Pill#6: HRD →Poverty Removal Schemes)
🌽🌽 Agriculture (कृ �ष) (all farmers: small and big) 10% 8%
🌽🌽 Agriculture: सीमांत िकसान और छोटे िकसान 8% ⏫10%*
⇒ Marginal Farmer (owns upto 1hectre land) सीमांत िकसान
⇒ Small farmer (>1 upto 2ht) छोटे िकसान
🧵🧵 Micro Enterprises (अ�त लघु उद्योग), Khadi-Village industries 7.50% 7.50%
Above categories (Weaker section, agriculture, micro-enterprise ) 4.50% 2.50%
plus, other categories such as
⇒ Small & Medium Enterprises, Affordable housing loans to beneficiaries under
Pradhan Mantri Awas Yojana
⇒ food processing companies, Vermi compost, biofertilizer, seed production,
⇒ Exporters, Student-Education loans (upto Rs.10lakh),
⇒ Social Infrastructure (schools,drinking water, sanitation facilities, health care,
COVID related hospitals/labs etc);
⇒ Renewable Energy Projects (wind mills, biomass generators, solar street light,
micro-hydel plants etc.) etc. (नवीकरणीय ऊजार् प�रयोजनाएं )
Total PSL for Indian Scheduled Commercial Banks and 40% 40%
(Foreign Banks with 20 or more branches).
* Above quota reforms to be implemented in Phase-Wise manner by 2023-24. (क्र�मक �प से नए सुधार
होंगे)
🤩🤩Benefit? It will ⏫ loan-availability for the weaker section and small farmers thus helping in the
United Nations' Sustainable Development Goals related to poverty removal. (📑📑Ref: HDT-Pillar#6)
कमजोर वगर् और छोटे िकसानों को �ादा मात्रा म� कजार् �मल पाएगा. गरीबी �नवारण, सं यु� रा�� के सतत �वकास ल�ों क� प्रा�� म� मदद
करेगा.
⇒ PSL quotas are ‘minimum (�ूनतम/कम से कम)’ & not maximum. So, if bank wishes, it can EVEN
give even 60% of its loans to weaker sections, instead of just 12% “minimum quota” meant for
weaker section.
⇒ Bank’s Loans given to Non-Banking Financial Company (NBFC) who are lending to above PSL
categories = such ‘indirect loan’ to PSL sectors will also be counted for bank’s quota. (ब�कर द्वारा
गेरब�क �व�ीय कं पनी को िदया गया कजार् यिद परो� �प से प्राथ�मक �ेत्र को जाता है तो वह रा�श भी कवोटा-सफलता म� �गन ली
जाती है। )
⇒ Bank + NBFC’s joint lending / co-lending/ co-origination loans – what does it mean? #PHD-
NOT-IMP. (ब�क और गेर-ब�क का साथ मे �मलकर पीएसएल �ेत्र को कजर् िदया, तो उसमे ब�क ने िदया कजर् इस �ोटे म� �गन �लया
जाता है, कु छ शत� के आधीन)
⇒ NOTE: PSL Norms donot apply to NBFCs. PSL Norms apply ONLY to Bankers.
12.18.1 🐯🐯🐯🐯🐯🐯 PSL Reforms-2020: on RRB/SFB/UCB?
What is the difference/meaning of SCB/RRB/SFB/UCB etc? Ans: (📑📑Ref: HDT-Pillar#1B1:
classification)
Type of Bank & PSL Reforms-2020: Before After
Indian Scheduled Commercial Banks (SCB: अनुसू�चत वा�ण��क ब�क) and 40% same 40%
Foreign Banks in India with 20 or more branches
Foreign Bank in India with <20 branches (�वदेशी ब�क) 40% same 40%
Regional Rural Banks (RRB: �ेत्रीय ग्रामीण ब�क) 75% same 75%
Small Finance Banks (SFB: लघु �व� ब�क) 75% same 75%
Urban Cooperative Banks (UCB: शहरी सहकारी ब�क)* 40% ⏫75%
Rural Cooperative Banks (ग्रामीण सहकारी ब�क) N/A N/A
⇒ These quotas implemented in a gradual/phase-wise manner. Will become effective in 2023-24.
⇒ Internal quotas may be different for these Banks e.g. RRBs: Weaker section =15%. But, poor cost-
benefit in chasing all that information. #⏳📚📚थोड़ा-पढ़ो-आगे-बढ़ो
12.18.2 🐯🐯🐯🐯🐯🐯 PSL Reforms-2020: Startups, Renewable Energy and Healthcare
PSL Loans → other category BEFORE AFTER
Startup Company is a company: only eligible categories: All types of Startups
⇒ Age: Not older than 10 years ⇒ Agro/Food processing allowed in PSL quota
AND related Startup
⇒ Annual turnover: Not more ⇒ MSME Startup For loans upto ₹50cr
than ₹100 cr AND [then What is MSME? (📑📑Ref:
⇒ Function: innovation in HDT-Pillar#1D and #4B)]
goods/services. (नवाचार)
(📑📑Ref: HDT-Pillar#4B)
🔌🔌🔌🔌 Renewable energy(अ�य ऊजार्) only loans upto 15cr eligible ⏫30cr
💊💊 Healthcare project/Hospital? 5cr ⏫10cr
12.18.3 🐯🐯🐯🐯🐯🐯 PSL Reforms-2020: Weightage to poor districts (गरीब/�पछड़े �जलों को भारांक)
RBI will classify the districts based on previous PSL loans given by all banks:
Type of district if Axis bank gives ₹100 PSL loan in this district →
RBI will count Axis’s quota-fulfillment as _ _ .
Low Credit penetration e.g. Tawang, ₹125 (आरबीआई ने एक ऐसी भारांक प्रणाली बनाइ है �जसमे ब�क
Dantewada etc. जहां भूतकाल म� ब�क-कजर् क� प�ँ च �पछड़े �जलों म� लोन देकर ब�त आसानी से अपना पीएसएल ल�ं क
कम रही है हा�सल कर सकती है।)
High Credit penetration e.g. Ahmedabad, ₹90 (तािक ब�क जो पहले से स�� जले है, उसे �ादा स�� बनाने
Pune etc. जहाँ पहले से ही काफ� कजार् िदया जा चूका है क� जगह �पछड़े �जले पर �ान दे)
⇒ Thus, RBI’s PSL weightage system will passively discourage banks from giving more PSL-loans
to the developed districts and it will encourage banks to give PSL-loans to backward districts.
This will help in more balanced regional development. �ेत्रीय �प से सं तु�लत �वकास म� यह कदम फायदेमंद
होगा.
🔠🔠❓ MCQ. Priority Sector Lending by banks in India constitutes loans to _ _ _ _ . (Pre-2013)
a) Agriculture b) Micro and Small Enterprises c) Weaker Sections d) All of the above
12.18.4 🐯🐯🐯🐯🐯🐯:📜📜 Priority Sector Lending Certificates (PSLC) from 2016 onwards
Figure 11: भाई आ�मर/Rancho हमने अपना assignment नही िकया, तू अपना "EXTRA-walla" हमे बेच दे!
⇒ In this arrangement, the overachieving Banks can sell their excess PSL in form of ‘certificates’ to
underachieving banks without transferring the loan assets or its risk. (ल�ं कों से �ादा उपल�� हांसील
करने वाली ब�क, अ� ज�रतमं द ब�क को स�टिफके ट बेचती)
⇒ If an underachiever bank can’t fulfil its PSL-quota through PSL-certificates purchase then
ultimately,
⇒ Underachiever bank will have to deposit PSL-shortfall money to NABARD's Rural Infrastructure
Development Fund (RIDF), SIDBI, National Housing Bank (NHB), MUDRA Ltd. etc as per the
norms decided by RBI from time to time. (ल�ं कों को हा�सल नहीं कर पाने वाली ब�क ने आरबीआई द्वारा �च��त
अलग-अलग सं �ाओं म� पैसा �नवेश करना पड़ेगा)
⇒ Underachiever bank will earn interest from such deposited money, but it’ll be (usually) linked
with Bank-Rate & their money will be locked-in a long-term project. ( पैसा लं बे समय तक अटक जाएगा)
12.19📢📢 � MONETARY POLICY TOOLS: A READY RECKONER TABLE
Table 5: समज म� आ गया हो तो बिढ़या है, नहीं तो रट्टा मारो �जदं ाबाद (If understood then well & good, else memorize by Rot-Learning)
Tools & Strategy? <2%CPI= Fight deflation (अप��त) >6%CPI= Fight Inflation (मुद्रा��त)
⇒ Deflation: ↑ money Easy, Cheap, Dovish, Expansionary Tight, Dear, Hawkish,
supply, inject liquidity=> policy. Contractionary

आसान-स�ा �ाजदरे, �व�ारवादी तं ग- मँ हगी �ाजदरे, सं कु चनवादी
make loans cheaper, ↑
consumption
⇒ Inflation: Do reverse
Reserves: CRR, SLR ↓ (Decrease) ↑ (increase)
Key Rates ↓ (Decrease) ↑ (increase) महंगाई से लड़ना है तो
(Repo, MSF, Bank रेपो दर बढ़ा दो
Rate)
↓ (Decrease) – so banks feel less ↑ (increase) : so banks feel
Quantitative
motivation to park ₹ in RBI & more motivation to park ₹ in

Reverse Repo, they become more proactive to RBI → ⏬loanable funds to
SDF give loans to people → people → ⏫loan interest rate
⏫demand → deflation fought → ⏬demand → inflation
fought
Market Ops OMO: RBI Buys G-Sec from OMO: RBI Sells G-Sec
(OMO) market.
Moral Suasion / Nudge / Force the banks to Enforce the Hawkish policy
Direct Action enforce Dovish Policy
Margin Requirement Increase e.g. Do reverse of left cell.
/ Loan to Value (LTV) Gold-LTV: 60% → 90%
Qualitative Tools
↑ loan-flow to sectors that can - ↓the loan-flow to sectors

generate employment e.g. textile where speculative
→workers buying more investment is leading to
Selective Credit
→demand /consumption demand-side inflation e.g.
Control / Priority
increased →deflation fought. लोन real estate & housing.
Sector Lending (PSL)
का बहाव कु छ ऐसे �ेत्रो म� करो िक रोजगार - ↑loan-flow to sectors
�नमार्ण हो और वह सब मजदू र खरीदारी कर� where loans can ↑supply
तािक अथर्तंत्र म� मांग बढे e.g. onion farmers.
** MCQs usually confined to how can CRR,SLR,Repo & OMO be used for inflation /
deflation control. For rest of the tools you need not waste time thinking 500-jaat-ke-
combinations and Birbal-Khichdi.✋
🔠🔠❓ Which of the following is not an instrument of Selective Credit Control? (Pre-1995)
a) Regulation of consumer credit b) Rationing of credit
c) Margin requirements d) Cash reserve ratio
🔠🔠❓ An increase in the Bank Rate generally indicates that _ _ _ (Pre-2013)
a) Market rate of interest is likely to fall.
b) Central Bank is no longer making loans to commercial banks.
c) Central Bank is following an easy money policy.
d) Central Bank is following a tight money policy.
🔠🔠❓ If RBI decides to adopt an expansionist monetary policy, which of the following would it not
do ? (Pre-2020)
1. Cut and optimize the Statutory Liquidity Ratio
2. Increase the Marginal Standing Facility Rate
3. Cut the Bank Rate and Repo Rate
Answer Codes: [a) 1 and 2 only [b) 2 only [c) 1 and 3 only [d) 1, 2 and 3
🔠🔠❓MCQ. Find Correct Statements: (Prelims-2022)
1. If the inflation is too high, Reserve Bank of India (RBI) is likely to buy government securities.
2. If the rupee is rapidly depreciating, RBI is likely to sell dollars in the market.
3. If interest rates in the USA or European Union were to fall, that is likely to induce RBI to buy
dollars.
12.20📢📢 MONETARY POLICY IN PRESENT-DAY INDIA

There are 3 strategies / ways of making a monetary policy: (तीन तरीके से मौिद्रक नीती बनाई जा सकती है)
1. 💸💸 Exchange rate stability (�व�नमय दर ��रता): Singapore & other export-oriented economies use
this. They try to keep their local currency at certain rate against US-dollar to boost exports.
(How?Ans📑📑Pillar#3)
2. 🎳🎳 Multiple Indicators (एका�धक सं केतक): Central Bank tries to focus on Economic Growth,
Employment, Inflation Control and Exchange rate stabilization. India's RBI followed this
strategy upto 2016.
3. 🧄🧄 Inflation targeting / Price Stability (मुद्रा��त ल�ीकरण): Central Bank only aims to keep
inflation controlled, THEN other indicators (growth, employment, exchange rate) will
automatically fall in line. Model successful in Western nations → RBI’s Urjit Patel Committee
Report (2013-14) recommended it for India → adopted from 2016-October, by amending RBI
Act Section 45. (2016 म� �रज़वर् ब�क के कानून म� सं शोधन कर भारत ने यह रणनी�त/तरीका अपनाया है)
12.20.1 📢📢 Monetary Policy Making under RBI Act since 2016
Figure 12: जाने �ा होगा रामा रे..... सोचना है �ा? जो होना है होगा, चल पड़े है िफ़क्र यारो….
Table 6: composition of the ⚖� statutory Monetary Policy Committee (MPC: वैधा�नक मौिद्रक नी�त स�म�त):
🐯🐯 RBI side (3 members) 🦁🦁 Govt. Side (3 members)
1. RBI Governor, as the Ex-officio Chairman. 1. Dr. Shashanka Bhide from National
2. Dy.Governor responsible for Monetary Council for Applied Economic Research
Policy. Michael Patra (from 2020-Jan). (NCAER, Delhi)
Earlier Viral Acharya. 2. Dr. Ashima Goyal from Indira Gandhi
3. One person nominated by RBI Central Board: Institute of Development Research
Mridul Saggar (Executive Director, RBI). (Mumbai)
3. Dr. Jayanth R Varma from IIM-A
Their tenure tied with their ex-officio job tenure Tenure: 4 years, no re-appointment. (4 साल का
(पदेन कायर्काल) E.g. Shaktikanta’s shakti (powers) कायर्काल और उसके बाद पुन:�नयु�� असं भव)
will be gone after his 3-years tenure as RBI-
Governor expires, unless he is reappointed.
(Note: Shaktikanta is reappointed till December
2024.)
RBI Governor & Dy.Gov are selected by Financial They’re selected by Search-cum-Selection
Sector Regulatory Appointment Search Committee headed by Cabinet Secretary
Committee (FSRASC) is headed by Cabinet (IAS)
Secretary (IAS)
⇒ Meeting quorum 4 persons, incl. Governor. (कायर्साधक सं �ा: कम से कम चार लोगों क� हाजरी ज�री)
⇒ Legally required to hold minimum four meetings in a year. (सालाना कम से कम 4 बार �मलना ज�री)
⇒ In practice, they meet every two months to decide bi-monthly monetary policy updates.
(Although during 😷😷Corona-lockdown met more frequently).
⇒ Repo rate=Policy rate= benchmark interest rate: decided by Majority vote. (मौिद्रक नी�त दर ब�मत से
तय)
⇒ When they vote for the first time, all members, including the Governor, will vote. If tie →
Governor can vote again for second time as casting vote (यिद मतों म� बराबरी �ई, तो गु�ी सुलझाने के �लए
�नणार्यक मत गवनर्र द�गे).
⇒ To ensure transparency / accountability (पारद�शता / जवाबदेही):
⇒ Govt can send message only in writing. (सरकार के वल �ल�खत म� सं देश भेज सकती है)
⇒ Committee must publish its minutes of the meeting on the 14th day, and “Monetary Policy
report” at every 6 months.(�नयत समय पर कु छ द�ावेज प्रका�शत करने होंगे)
⇒ 🎯🎯 Inflation target decided by Union Government, after consulting with RBI Governor. (गवनर्र से
�वमशर् करने के बाद महंगाई �नयं त्रण का ल� सरकार तय करेगी)
⇒ 🎯🎯 Present target: Keep Consumer Price Index (CPI:All India) within 2-6%.[alternate way of
saying= 4% +/- spread of 2%] (More about CPI/Inflation in 📑📑Pillar#4C)
⇒ 📅📅 Target was Valid for: Originally from 2016-2020 (ending at 31/03/2021). Now same target
extended till 31/3/2026.
⇒ 😰😰Target fail: if inflation not kept in this 2-6% zone for 3 consecutive quarters (=9 months)
then Committee must send report to Govt with reasons and remedies (यिद सतत नौ महीनों तक महंगाई
इन सीमाओं के बाहर रही तो स�म�त क� असफलता मानी जाएगी → असफलता के कारण-उपचार क� �रपोटर् �रज़वर् ब�क ने सरकार को
भेजनी होगी).
🔠🔠❓ MCQ. With reference to inflation in India, find correct statement: (Prelims-2015)
a) Controlling the inflation in India is the responsibility of the Government of India only
b) The Reserve Bank of India has no role in controlling the inflation
c) Decreased money circulation helps in controlling the inflation
d) Increased money circulation helps in controlling the inflation
🔠🔠❓ MCQ. Find correct statements about Monetary Policy Committee: (Prelims-2017)
1) It decides RBI’s benchmark interest rates.
2) It is a 12-member body including the Governor of RBI and is reconstituted every year.
3) It functions under the chairmanship of the Union Finance Minister.
Codes: (a) 1 only (b) 1 and 2 only (c) 3 only (d) 2 and 3 only
🔠🔠❓MCQ. Who is responsible for maintaining price stability by controlling inflation ?
(a) Department of Consumer Affairs (b) Expenditure Management Commission
(c) Financial Stability and Development Council (d) Reserve Bank of India
12.21📢📢 REVIEW OF BI-MONTHLY MONETARY POLICIES
12.21.1 🚕🚕🚕🚕 Stance: Calibrated Tightening / Neutral / Accommodative

After every meeting, RBI MPC will announce its stance i.e. What they’ll do with Repo Rate in the
next Meeting. (भ�व� क� मीिटंग म� रेपो दर के साथ �ा िकया जाएगा, इसका इशारा/ सं केत िदया जाता है)
Stance= what RBI will do Will they Will they Will they hold/keep
in next meeting hike/increase cut/decrease repo unchanged?
⏫repo? ⏬Repo?
Calibrated Tightening ✅ Possible ✋No they’ll not cut ✅ Possible
Neutral ✅ Possible ✅ Possible ✅ Possible
Accommodative ✋No they’ll not ✅ Possible ✅ Possible
hike
⇒ This provides guidance to the investors/borrowers/bankers about future action of RBI.
⇒ However, RBI MPC is not legally bound to follow the stance. E.g. Dec-2018 Governor Urjit-Patel
led MPC announced Calibrated Tightening, yet in next meeting Feb-2019 Governor Shaktikanta
led MPC decreased⏬ repo rate, because they felt it was necessary to combat deflation. (कानून �प
से बा� नहीं. कभी कभी स�म�त इसका उ�ं घन भी कर देती है)
⇒ 2022-May-June: Even though MPC said Accommodative Stance, still they kept increasing the
Repo Rate.
12.22🐯🐯🐯🐯🐯🐯RBI’S MONETARY POLICIES: BEFORE 2020-CORONA
📢📢 Policy Decisions & Regulatory Announcements
[We will study in appropriate pillars/sections, so DONOT LOSE SLEEP YET]
2018 -era ⇒ Inflation was high/rising ⏫ so, Governor Urjit Patel led MPC kept ⏫Repo in
pattern the range of 6-6.50% (मुद्रा��त/महंगाई बढ़ रही थी इस�लए रे पो दरों को ऊंचा रखा गया था)
- Stance: Calibrated Tightening.
2019-era ⇒ Inflation was falling below 2%⏬ so, Governor Shaktikanta Das led MPC kept
pattern decreasing Repo from 6.##% to 5.##%. (अप��त/स�ाई बढ़ रही थी इस�लए �रपो दरों म�
कटौती)
- Stance: Accommodative.
Feb-2020 - Repo: 5.15% accommodative stance
- CPI Inflation rose to 7.4% in December-2019 (which is outside the statutory limit
of 2-6%) & this inflation rate was highest since 2014-July. So, ideally, RBI should
have ⏫repo rate to combat inflation but (वैसे तो महंगाई बढ़ रही थी इस�लए रेपो दरों म� बढ़ोतरी
करनी चािहए िकं�ु)
o 1) December-2019 policy had kept Accommodative stance = repo
couldn’t be increased. It could only be kept same/reduced.
o 2) Union Budget-2020 announced various measures to boost economic
growth so Committee preferred to wait & watch how those measures
impact inflation and growth, before changing repo rate.
RBI announces Measures to promote economic growth::
1. LTRO: Long Term Repo Operations (LTROs) of 1 yr & 3 yr.
2. CRR Exemption based on (new) loans given for 1) automobiles, 2) residential
housing and 3) MSMEs
RBI announces measures to promote digital economy
1. RBI to construct a “Digital Payments Index” (DPI) to capture the growth of
digital payments across India. (📑📑Ref: 1A1).
March - Given below as a separate sub-topic for Corona
toApril
12.23🐯🐯🐯🐯🐯🐯RBI’S MONETARY POLICIES: CORONA MARCHTOMAY’20

By default, RBI’s MPC Committee supposed to meet every 2-2 months. So, After February’s meeting,
they should hold next meetings in April. But in Corona crisis economic slowdown they met more
frequently in March to May. (कोरोना महामारी के चलते आए आ�थक सं कट से �नपटने के �लए स�म�त ने तय समय से पहेले
एका�धक मीिटंग का आयोजन िकया)
The gist of above March-April-May announcements are as following (and they’re considered to be
part of 👻👻ATMANIRBHAR BHARAT, which we’ll learn in Pillar#2D and #4C):
12.23.1 👻👻ATMANIRBHAR → Gist of RBI’s March2May 2020 Announcements:

⇒ ⏬CRR to 3% and ⏬Repo to 4%. (इन दरों म� कटौती क� गई)
⇒ Policy corridor changed, to ⏬Reverse repo rate. #SBI-telemarketing4loans
⇒ 🐯🐯🐯🐯🐯🐯🐯🐯:Targeted Long Term Repo Operations (TLTRO: ल��त दीघर्का�लक रेपो) → RBI gives
loans to banks with condition that banks must invest it in “X” places to help Corporates &
NBFCs. (Refer the full short note in earlier part of this handout.)
⇒ 🐯🐯🐯🐯🐯🐯🐯🐯 RBI’s special or flexible liquidity window to help Mutual fund companies.
👻👻ATMANIRBHAR → Reforms by RBI in Mar2May-2020 We’ll learn in 📑📑Pillar#
🐯🐯🐯🐯🐯🐯✋ Loan/EMI/NPA relief / Moratorium (ऋण 📑📑1B2: NPA
अदायगी पर अ�ाई �प से रोक)
🐯🐯🐯🐯🐯🐯🐯🐯 Special Refinance Facility for AIFI (All India 📑📑1B1: classification of Banks →
Financial Institutions). खास िक� क� पुन�वत योजना, अ�खल भारतीय AIFI (NABARD, SIDBI, EXIM,
�व�ीय सं �ानो के �लए NHB)
RBI defers BASEL Norms, IndAS accounting Norms, orders 📑📑1B2: BASEL norms
bank to pause/halt the Dividend Distribution (�नयमों को ��गत
िकया गया)
🐯🐯🐯🐯🐯👨👨: RBI reforms Ways and Means advances 📑📑1C: SEBI/Sharemarket: Short
(WMA) and Consolidated Sinking Fund (CSF) term Debt instruments
RBI reforms attracting foreign investment: 📑📑3A: Balance of Payment (BoP):
⇒ Voluntary Retention Route (VRR: �ै��क अवधारण मागर्) FDI, FPI
⇒ Fully Accessible Route (FAR: स�ूणर्त: सुग� मागर्)
12.23.2 🐯🐯🐯🐯🐯🐯RBI’s Monetary Policies: 2020-August (Earlier meeting in May-2020)
⇒ Repo unchanged @4% so Automatically MSF@4.25 and RR@3.35%. Stance: Accommodative
⇒ No changes in repo because (रेपो दरों म� कोई बदलाव नहीं िकया �ोंिक)
⇒ ⏫ food inflation due to i) corona-lockdown supply chain disruptions and ii) heavy rains. Repo
changes can’t help solving this. (आपू�त श्रृंखला प्रबं धन म� सम�ा और भारी बा�रश के चलते खाद्य महंगाई बढ़ी थी- तो
�रपो दरों म� बदलाव द्वारा उस महंगाई का समाधान असं भव)
⇒ Still if RBI ⏫repo then expensive loans → post-corona economic-revival will be harmed. So,
no changes in Repo. (िफर भी यिद जबरद�ी �रपो म� बढ़ोतरी क� जाए तो मं हगे लोन कोरोंना म� नई सम�ाएं कर�गे)
⇒ Announced to conduct more rounds of Op.Twist, to help Govt & Companies to borrow at a
cheaper rate.
⇒ Gold Loan LTV: Before 75% → AFTER 90%. 🤩🤩benefit? More quantity of loan can be taken by
pledging same quantity of gold → post-corona economic-revival.
⇒ Priority Sector Lending (PSL) reforms: 1) ⏫quota for weaker section, small-marginal farmers.
2) Made all types of Startups eligible for PSL loans. 3) Extra weightage to give PSL-loans in poor
districts. (प्राथ�मक �ेत्र के ऋण मानकों म� सुधार िकए गए)
⇒ RBI Committee under KV Kamath submitted report on how to restructure loans impacted by
the Covid 19 pandemic. RBI assured we’ll implement that report. (More in 📑📑Pillar#1B2: Bad
Loans) (कोरोना से जूझ रहे उद्योगों क� बकाया लोन का पुनगर्ठन िकया जाए ऐसे ही कामथ स�म�त �रपोटर् को लागू कर�गे)
⇒ RBI to loans to All India Financial Institutions (AIFIs: NABARD, SIDBI,EXIM,NHB) → post-
corona economic-revival. (📑📑Ref: HDT-Pillar#1B1- classification of Banks and NBFCs)
⇒ Less Cash Economy / Digital Payment / Fraud Prevention: (1) Scheme of Offline Retail
Payments Using Cards and Mobile Devices (2) Positive Pay Mechanism for Cheques. (📑📑Ref:
HDT-Pillar#1A1)
⇒ We'll create a Reserve Bank Innovation Hub for research in cyber security, digital payment etc.
साइबर सुर�ा, िड�जटल भुगतान इ�ािद म� सं शोधन/नवाचार के �लए �रजवर् ब�क म� एक नवाचार क� द्र बनाएं गे
12.23.3 🐯🐯🐯🐯🐯🐯RBI’s Monetary Policies: 2020-October (दरों म� कोई बदलाव नहीं)

Repo unchanged @4% so Automatically MSF@4.25 and RR@3.35%. Stance: Accommodative.
⇒ CPI inflation >6.5% in July-August 2020. This is beyond the statutory 2-6% limit. So, ideally RBI
should ⏫the repo rate to combat inflation, but that will make the loans expensive and harm the
post-corona economic revival. so the RBI kept the repo rate unchanged. (महंगाई से लड़ने के �लए अगर
लोन महंगे कर िदए तो कोरोना के प�ात भारतीय अथर्तंत्र को पुनज��वत करना मु��ल इस�लए �रजवर् ब�क के दरों म� कोई बदलाव नहीं
⇒ Besides, the present inflation is caused by supply-side problems due to lockdown. Once the
unlockdown progresses → supply ⏫ → inflation ⏬. so changes in the repo rate not required
at present. (तालबं धी हटने प�ात वैसे भी बाजार म� चीज व�ुओ ं क� आपू�त बढ़ेगी तो अपनेआप महंगाई काबू म� आ जाएगी.)
⇒ Promoting Digital Payment: (1) RTGS made 24/7 (📑📑Ref: Pillar#1A1)
12.23.4 🐯🐯🐯🐯🐯🐯Monetary Policy: 2020-December (दरों म� कोई बदलाव नहीं)

12.23.5 🐯🐯🐯🐯🐯🐯Monetary Policy: Feb-2021 update (दरों म� कोई बदलाव नहीं)
⇒ 1) Food inflation is normalizing with arrival / supply of winter fruits & vegetables, but fuel
inflation is worrisome. So can't ⏬ Repo. खाद्य पदाथर् तो स�े होने लगे िकंतु लेिकन इं धन के चलते महंगाई अभी भी
�ाई �प से काबू म� नहीं
⇒ 2) GDP growth yet to fully revived → so cant ⏫ Repo [else Expensive loans= =⏬demand
→⏬GDP growth]. (आ�थक वृ�द्ध दर पुनज��वत नहीं �आ है यिद लोन महंगे �ए तो आ�थक वृ�द्ध दर बढ़ाने म� िद�त� होंगी)
⇒ CRR: During CORONA-2020, CRR was reduced from 4% to 3% (2020-March till 2021-March).
now moving towards economic recovery, enough loanable funds available so, Restoration/⏫ of
CRR in two phases: 3.5% (2021: March2May ) →4% (2021-May)
⇒ 😰😰BEFORE: Retail investors Indirectly invested in G-sec via Mutual funds, stock exchanges.
⇒ 🤩🤩AFTER: Retail Investors can directly open a ‘Retail Direct Gilt Account’ (RDG Account)
with RBI's E-Kuber core banking solution (CBS) platform (More in Pillar1C: SEBI share market)
12.23.6 🐯🐯🐯🐯🐯🐯Monetary Policy: April-2021 update(दरों म� कोई बदलाव नहीं)

⇒ No changes in rates & stance. Repo rate 4%, Reverse Repo rate 3.35%, MSF 4.25%,
Accommodative Stance. (�रज़वर् ब�क क� दरों म� कोई बदलाव नहीं)
⇒ Payment Bank: Before: They can’t accept more than ₹1 lakh per depositor. After: balance limit
increased to ₹2 lakh rupees/ per depositor. (More in 📑📑Pillar#1B1: Classification)
⇒ Centralized Payment Systems (CPS), viz- RTGS and NEFT – Direct Membership allowed to
Non-Bank payment system operators e.g. Phonepe, Amazonpay etc. (More in 📑📑Pillar#1A1)
12.23.7 🐯🐯🐯🐯🐯🐯Monetary Policy: June-2021 update (दरों म� कोई बदलाव नहीं)

⇒ No changes in. Repo rate 4%, Reverse Repo rate 3.35%, MSF 4.25%, Accommodative Stance.
⇒ On-tap Liquidity Window for Contact-intensive sectors such as hotel, tourism, beauty parlours
12.23.8 🐯🐯🐯🐯🐯🐯Monetary Policy: Aug-2021 update (दरों म� कोई बदलाव नहीं)

⇒ No changes in key rates or Stance. Repo unchanged @4% so Automatically MSF@4.25 and
RR@3.35%. Stance: Accommodative
⇒ one MPC member Prof. Jayanth Varma voted against the Accommodative stance. He believes
that repo needs to be increased to combat inflation. But the majority members voted in favor of
the continuing Accommodative Stance with 4% Repo. (हालांिक एक सद� ने �वरोध म� वोट डाला िक हमने रेपो
दरों को महंगी करनी चािहए तािक महंगाई से लड़ा जा सके , लेिकन ब�म�त मतानुसार रेपो दर म� बढ़ोतरी नहीं �ई)
⇒ Announced to absorb over Rs.4 lakh crores via Variable Rate Reverse Repo (VRRR)
⇒ We'll continue to do GSAP, Op-Twist and open market operations (OMOs) depending on the
situation/requirement of the economy.
12.23.9 🐯🐯🐯🐯🐯🐯Monetary Policy: Oct-2021 update (दरों म� कोई बदलाव नहीं)

No changes in key rates or Stance. Repo unchanged @4% so Automatically MSF@4.25 and
12.23.10 🐯🐯🐯🐯🐯🐯Monetary Policy: Dec-2021 update (दरों म� कोई बदलाव नहीं)

No changes: Repo unchanged @4% so MSF@4.25 and RR@3.35%. Stance: Accommodative
12.23.11 🐯🐯🐯🐯🐯🐯Monetary Policy: Feb-2022 update (दरों म� कोई बदलाव नहीं)

No changes: Repo unchanged @4% so MSF@4.25 and RR@3.35%. Stance: Accommodative
- NPCi’s E-Rupi Prepaid Digital Voucher: 1) max limit ⏫from ₹10,000 to ₹1 lakh 2) Before:
Single Use → After: Multi-use (until balance exhausted) So, E-rupi vouchers can be used more
than once (until the amount of the voucher is completely redeemed). (More in 📑📑Pillar#1A1)
12.23.12 🐯🐯🐯🐯🐯🐯Monetary Policy: April-2022 (SDF)

⇒ No changes in key rates or Stance. Repo unchanged @4% so Automatically MSF@4.25 and
⇒ Introduced Standing Deposit Facility (SDF: �ायी िडपॉ�ज़ट सु�वधा).
⇒ BEFORE 2022-April: Policy Corridor = MSF <—> REPO <—> Reverse Repo
⇒ After 2022-April: Policy Corridor = MSF (Repo+0.25%) <—> REPO <—> SDF (Repo-0.25%)
⇒ Digital Payment: proposal for cash withdrawal from ATMs in card-less manner i.e. using UPI
Based Mobile-App. If physical card not inserted in ATM machine → ⏬ dangers of card
skimming, card cloning, etc scams. (ATM मशीन म� �बना काट डाले मोबाइल ऐप के ज़�रए पैसा �नकाला जा सके ऐसी
सु�वधा करवाएं गे )
12.23.13 🐯🐯🐯🐯🐯🐯Monetary Policy: May-2022 Repo⏫

⇒ RBI required to control inflation in 2-6% CPI and RBI MPC usually meets every 2-2- months.
⇒ but inflation crossed 7% (Because Russia Ukraine crisis → imported fertiliser & crude oil prices
increased etc.)
⇒ so emergency MPC meeting held → outcome → (वैसे तो हर दो महीने �मलना था लेिकन महँ गाई हद से �ादा बढ़
गयी तो आपातकालीन मीिटंग बुलायी)
⇒ Repo increased from 4% to 4.40% to combat inflation.
⇒ Automatically, as per the formula: MSF = 4.40% + 0.25% = 4.65%
⇒ Automatically, as per the formula: SDF = 4.40% - 0.25% = 4.15%
⇒ Reverse Repo Unchanged at 3.35%
⇒ Separately, RBI Governor announced to increase CRR from 4% to 4.50%. This will reduce the
loanable funds to by more than ₹85,000 crore. ⏬loanable funds→ ⏫ loan interest rate →
⏬demand/shopping → ⏬inflation. (NOTE: MPC can’t decide CRR. Only RBI Governor
alone can decide CRR.)
⇒ Stance: Accommodative but in future we will ‘withdraw’ it
🚩🚩🚩FAQ: Isn't this repo-increase a violation of the Accommodative stance announced earlier?
Ans. MPC has no legal obligation for accommodative stance. MPC has only 1 legal obligation-
control inflation in 2-6% range. अकोमोडेिटव-रवैये के िहसाब से ही काम करना होगा ऐसा क़ानूनन �प से अ�नवायर् नहीं है।)
12.23.14 🐯🐯🐯🐯🐯🐯Monetary Policy: June-2022 Repo⏫

⇒ Repo ⏫ from 4.40% → 4.90% to fight inflation. So, MSF: 5.15%, SDF: 4.65%.
⇒ Reverse Repo Unchanged at 3.35%
⇒ Stance: Accommodative but in future we will ‘withdraw’ it. = meaning, in future, we’ll take
measures to ⏬money supply / ⏫ loan rates to combat inflation. (धीरे धीरे अकोमोडेिटव-रवैये को कम
कर�ग,े यानी िक भ�व� म� महंगाई से लड़ने के �लए हम ऐसे क़दम उठाते रह�गे जहाँ मुद्रा आपू�त कम हो/ लोन �ाज दर महंगे हो)
12.23.15 🐯🐯🐯🐯🐯🐯Monetary Policy: future updates

Stay tuned for Mrunal’s Free Win23 Series of lectures & handouts for upcoming bi-monthly
monetary policy updates for UPSC Prelims and Mains 2023. Win23 series to start from Feb-2023.
Monetary Policy Committee decides only Repo rate. Other decisions, such as CRR-SLR cut, PSL
norms, banning magnetic-chip cards etc are decided separately alone by RBI Governor. However,
after the meeting, he’ll make above type of announcements, in the Press conference.
🔠🔠❓ MCQ. RBI recent directives relating to ‘Storage of Payment System Data’, popularly known
as data diktat command the payment system providers that : (Prelims-2019)
1) They shall ensure entire data relating to their payment systems are stored in a system only in
India.
2) They shall ensure that the systems are owned and operated by public sector enterprises.
3) They shall submit the consolidated system audit report to the comptroller and Auditor General
of India by the end of the calendar year.
Find Correct Statement(s): codes: (a) 1 only (b)1 and 2 only (c) 3 only (d) 1,2 and 3 only
Ans. After April-2018’s monetary policy RBI governor announced certain regulatory reforms. One of
them was :- Payment System data must be stored in India within next 6 months, to ensure its safety
against misuse / Russian-Chinese-hackers. So, for Prelims-2019, this was D-1 year current affairs. Now
we are targeting 2023, so need not put so much efforts behind 2018’s current affairs.
12.24🔪🔪🔪🏠🏠🏠🏠 BANKS’ LENDING RATES % (ब�क ऋण क� �ाज दर�)
Figure 13: Sir, अब से आपको ये लोन, इतने प्र�तशत �ाज मे पड़ेगी।

RBI’s 6-member statutory MPC decides policy rate (=repo rate) to keep inflation within 2-6%CPI
(All India) but who decides lending rates of individual banks, & how? Ans:
Govt began nationalization of private banks, and ‘administered interest rates’ (प्रशा�सत �ाज
1969 दर�) on them i.e. Govt would decide how much loan interest rate the banks should charge on
borrowers?
M.Narsimham suggested deregulation: Govt should not dictate / administer individual
1991 banks’ interest rates. RBI should only give methodology to banks. (सरकार ने अपने मनमाने �ाज
दर थोपने नहीं चािहए)
2003 RBI introduced Benchmark Prime Lending Rate (BPLR) system
- RBI introduced formula “BASE Rate + Spread = bank’s loan interest rate”;
- update frequency on individual banks’ discretion (अपनी मज�/ �ववेकाधीन). So, it did not
2010 help transmission of monetary policy much. EvenIF RBI reduced repo rate, the banks
would not update their formula figures regularly. �रजवर् ब�क ने अपनी �रपो दर कम करी िकंतु ब�कोने
लोन स�े नहीं िकए😰😰
⇒ RBI introduced formula “Marginal Cost of Funds based Lending Rate (MCLR) +
Spread” system. (how exactly it worked? Outdated info. NOT IMP)
⇒ 😰😰Limitation? From January to Oct 2019, RBI ⏬ repo rate by 1.35% but banks
2016 reduced their loan interest rates by merely 0.40%. Thus, even though RBI reduced its
repo rate, banks are not quickly reducing their loan interest rates. So MCLR system was
ineffective. (�रजवर् ब�क ने अपनी �रपो दर कम करी िकंतु ब�कोने लोन स�े नहीं िकए, इस�लए ये प्रणाली प्रभावी
नहीं)
12.25🔪🔪🔪🏠🏠🏠🏠 BANK’S LOAN INTEREST RATE: EXTERNAL BENCHMARK (बाहरी ब�चमाकर् )

MCLR’s #EPIC-FAIL ultimately forced RBI to order external benchmark formula from 1st Oct 2019.
External Benchmark + Spread(Profit) + Risk premium = Bank’s Loan interest rate.
12.25.1 🔪🔪🔪🏠🏠🏠🏠 External Benchmark: Formula Components:

Individual bank free to pick any one External Benchmark such as
1) RBI repo rate or

2) 91-day T-bill yield or
3) 182-day T-bill yield or
4) any other benchmarks by an organization named Financial Benchmarks India Ltd.
⇒ Banks must feed the latest data of external benchmark in above formula, atleast once every three
months. (हर 3 महीनों पर फामूर्ला म� नए आंकड़े डालने होंगे)
⇒ So both fresh and old/existing borrowers will benefit (e.g.if repo rate decreased).. तो मान ली�जए रेपो
दर स�ी �ई होगी → नए और पुराने लोन ग्राहकों को उस स�े �ाजदर का फायदा �मल जाएगा)
12.25.2 �🏠🏠🏠🏠External Benchmark system: Which borrowers eligible?

1. Personal loans (taken for any sudden emergency expenditure)
2. Retails loans (home, vehicle, electronics etc)
3. Loans to micro & small enterprises
4. Loans medium enterprises (this 4th category is to be added from 1/April/2020).
5. It is applicable to old/previous loans in above categories, if borrower fills the application form.
🤩🤩🤩🤩External Benchmark Benefits? = Better transmission of Monetary Policy; transparency &
accountability to borrowers. (मौिद्रक नी�त का प्रभावी प्रसार म�, लोन ग्राहकों के प्र�त पारद�शता और जवाब देही)
12.25.3 �🏠🏠🏠🏠:🚩🚩🚩External Benchmark system: FAQ

⇒ 🚩🚩🚩FAQ: Can existing existing/old borrowers benefit? Answer is within the handout if
you read it carefully.
⇒ 🚩🚩🚩FAQ: Can bank change external benchmark indicator after giving loan? Ans. Watch
Video
⇒ 🚩🚩🚩FAQ: Can bank change the spread(Profit) in the formula after giving loan to a
client?Ans. Not allowed to change. (and this is not imp for exam)
⇒ 🚩🚩🚩FAQ: Can bank change the “Risk Premium” in the formula after giving loan to a
client? Ans. Yes e.g. Govt employee thrown out of job after getting loan, then banker may
⏫ the risk premium on him because now he’s jobless so the risk probability of his loan
default ⏫. (and this is not imp for exam)
12.25.4 Banks’ Lending Rates % → Fixed vs Floating interest loans, teaser loans, NPA etc.
Refer to 📑📑Pillar1B-2: burning issues → NPA
12.25.5 😷😷Corona-2020 impact on Deposits interest rate & Loans interest rate as per 📔📔📔📔ES21
Deposit ⏬⏬ The saving deposit rates = 3.25-3.5% in 2019 but 2.7-3.0% in 2021.Reason:
interest ⇒ RBI has reduced repo rate, and also provided long term loans in TLTRO so, banks
बचत �ाज are not so greatly desperate to acquire the raw material (i.e. money) from
दर म� �गरावट deposits. �रजवर् ब�क से दीघार्व�ध के �रपोटर् लोन �मलने के चलते ब�कों को िडपॉ�जट कतार्ओ ं क� �ादा ज�रत
नहीं �ई इस�लए उनको बजट का पैसा ब�कों म� जमा करने के �लए लुभाने के �लए �ादा बचत �ाज दर% जारी
करने क� भी ज�रत ब�करों को महसूस नहीं �ई
⇒ 2) ⏬Loan demand So cannot offer high level of profit to depositors. कोरोना क� मं दी
ब�कों का लोन देने का काम वैसे भी धीमा हो गया इस�लए वह िडपा�जट कतार्ओ ं को, अ�ा बचत �ाज दर% नहीं
दे पाए
Loan ⇒ ⏬ due to ⏬in repo rate in the External benchmark system (�ोंिक रेपो दर स�ा
interest िकया गया इस�लए लोन �ाज दर स�े �ए-- ऐसा आ�थक सव��ण का कहना है)
12.26🐯🐯🔇🔇 LIMITATIONS OF MONETARY POLICY IN INDIA (मौिद्रक नीती क� मयार्दाए)
Figure 14: मै काम तो कर रहा �ँ , लेिकन उसक� सकारा�क असर, अथर्�व�ा पर िदख नही रही। 😢😢
Even though monetary policy updated is every 2 months, its efficacy in controlling inflation &
boosting growth is restricted by following factors: (मौिद्रक-नी�त मं हगाई-�नयं त्रण और आ�थक वृध्धीमे असरकारकता
नही िदखा पायी �ोंिक:)
1) 😰😰Western countries’ households → consumerist lifestyle → don’t save large amount of
money in Banks. So their banks borrow more quantum of money from US Federal reserve and
European Central Bank respectively. Whereas in India, Repo is not major source of funds for
Indian banks, due to higher level of savings & deposits. (पा�ा� देशो मे उपभो�ावादी जीवनशैली. जबिक
भारतीयो मे ब�क-बचत क� भावना के चलते हमारे ब�कों के �लए आरबीआई के रेपों लोन, पैसो का मु�य �ोत नहीं है। अंत: �रपो दर
स�े होने पर भारतीय ब�को को खास फकर् नहीं पड़ता। )
2) 😰😰Before the External Benchmark System: Indian Banks did not immediately pass on the RBI
rate cuts to customers, citing NPA/Bad loans / profitability problem. According to RBI’s own
research, it took minimum 6-12 months for repo rate cut to benefit end-customers and it took
about 24 months for repo rate changes to impact inflation. (बाहरी-ब�चमाकर् से पहेले के समय मे,भारतीय ब�क
तुरंत अपने �ाजदर कम नही करते थे।)
3) 😰😰Poor management in Public Sector Banks (PSB), scams in the private sector banks, large level
of Non-Performing Assets (NPA) also stymie the impact of monetary policy. (सावर्ज�नक �ेत्र के ब�कों म�
बेअसर प्रबं धन, �नजी �ेत्र के ब�कों म� घोटाले, अनजर्क प�रसं प��या) 📑📑 More in Pill1B2
4) 😰😰Supply Side Issues: El-Nino/Poor monsoon hurting crop production → food inflation; Wars
& Geopolitical issues ⏫ global crude oil & raw material prices, protectionism by China-US
denting our exports. RBI can’t control them. (कम बा�रश + म�पूवर् क� भूराजनी�तक तनाव= भारत मे क�े माल
क� आपू�त को असर करते है, चीन-अमरीका का सं र�णवाद भारतीय �नयार्तमे बाधा डालता है। इ�े �नयं त्रण मे रखना आरबीआई के
�लए मु��ल।) 📑📑Pill3&4A
5) 😰😰While cheap loans can boost consumption, investment and growth but because of poor-
monsoon-fear and oil-price fear, RBI (during Raghuram Rajan and Urjit Patel’s governorships)
was usually apprehensive of inflation and more inclined to keep repo rate high. Then RBI was get
criticized for not facilitating cheap loans & economic growth because of its ‘Hawkish policy’.
(महंगाई-�नयं त्रण के च�र मे कभी कभी खुद �रजवर् के मं हगे �रपो-�ाजदारों ने अथर्त� को आगे बढ्ने से रोका है।)
6) 😰😰Government Side Issues: Fiscal deficit, Subsidy leakage, Populist Loan-waivers etc. (राजकोषीय
खाध, सब�सडी का �रसाव, लोकलुभावन के �लए िकसानो क� ऋण-माफ�) 📑📑 Pill#2D → FRBM Act
7) 😰😰Structural Issues in Economy: lack of Ease of Doing Biz, electricity-road infrastructure =
production /supply affecting inflation trends. (�ापारमे सुगमता क� कमी, �बजली-सड़क क� अवसं रचना आिद
बु�नयादी मसलो के चलते उ�ादन/आपू�त क� कमी। �रजवर् ब�क जादू क� छड़ी चलाकर इसे दु�� नहीं कर सकता) 📑📑More in
Pill4B&5
8) 😰😰Presence of Informal moneylenders in rural areas who circulate black money at exorbitant
interest rates. Poor penetration of banking sector, lack of financial inclusion, cash-intensive rural
economy etc. (�ाजखोर/सा�कार जो कालाधन ऊंचे �ाज पर घुमाते है, सभी गरीबो के �व�ीय समोवेशन क� कमी, नगदी मुद्रा
पर �ादा आधीन है हमारी ग्रामीण अथर्�व�ा। �रजवर् ब�क अपनी रेपो दर कम भी कर�, इधर कु छ फकर् नहीं पड़ता) 📑📑More in
Pill1D
12.26.1 🐯🐯🐯🐯 Monitory policy limitations: Lazy banking in Corona Crisis

2020-Corona= RBI pursued Easy/Dovish/Expansionary monetary policy wherein it ⏬ CRR,
⏬Repo, opened New windows/Tools such as TLTRO, G-SAP etc. Yet …
Year 2020-21 Loans to households/businessmen. Money invested in G-Sec

Indian Banks→ ~5.8 trillion rupees ~7.2 trillion rupees
Thus, majority of the banks' money invested in G-Sec rather than in Loans to
households/businessmen. This is an evidence of "Lazy Banking". Reasons?
⇒ A) banks are reluctant to give loans to people fearing ⏫ NPA/bad loans (More in Pill#1B2)
⇒ B) People themselves not coming to take loans due to uncertainty in their future income and
business.
कोरोना-आ�थक मं दी से उबरने के �लए �रजवर् ब�क ने �व�ारवादी/आसान मौिद्रक नी�त अपनाई, िकंतु ब�कों ने यह सारा पैसा क़ज़र्/लोन म�
कम घुमाया और �ादातर पैसा तो सरकारी प्र�तभू�तयों म� ही �नवेश िकया है। ऐसी "आलसी ब�िकंग" का कारण= १) क़ज़र्दारों के सं भ�वत
िदवा�लयेपन के डर से ब�कर लोन-आवेदनपत्र/अज� ज�ी से पास निह कर रहे २) नोकरी-�ापार क� आ�थक अ�न��तता के चलते लोगों म�
भी ब�क-लोन लेने का उ�ाह कम है।
12.26.2 🐯🐯🐯🐯 Monetary policy limitations: Cheap loans causing inflation?

⇒ MPC member Prof. Jayanth Varma believes that Covid-19 is becoming like tuberculosis which
kills a very large number of people every year without inflicting major damage to the economy.
And there is a possibility that Covid-19 will haunt us for the next 3-5 years. (�य रोग /टीबी म� भी
सालाना कई लोग मरते ह� लेिकन उससे अथर्तंत्र को कोई नुकसान नहीं होता। भ�व� म� कोरोना भी एसा हो जाएगा। इस�लए कोरोना के
डर से पूरी �जदं गी हम लोन स�े नहीं रख सकते.)
⇒ But we can't continue to keep cheap loans (4% repo) for so long, else it'll cause asset price
inflation. (e.g. suppose rich men buying 3-3 bungalows using cheap loans for 'investment'
→ demand for bungalows increased → home prices increased = inflation in asset prices.
Similar problem in Sharemarket Ref#1C). (वरना यही स�े लोन भ�व� म� मकान, शेयर इ�ािद सं प��यों म� महंगाई
का कारण बन सकते ह�)
⇒ This could also result in Stagflation= Persistent high inflation, high unemployment and low
growth. (अंततः उ� महंगाई दर, उ� बेरोजगारी दर हो सकती है और आ�थक वृ�द्ध दर म� �गरावट हो सकती है)
12.26.3 🐯🐯🐯🐯📈📈US Fed Tapering & Impact on India

2021: USA inflation at 6.2% (highest in 30 years). It may have following negative impact for India
− 😥😥 1) US Feds will ⬆ repo to combat American inflation. US Feds will reduce bond purchase
program (=Fed-Tapering) → ⏫loan interest rates in India → Foreign Portfolio Investors
(FPI-i.e. who invest upto 10% in a single Indian company’s shares)- those FPIs may pullout
money from India to give it as loans in American market → Indian share market ⬇. → Indian
investors also lose money → Indian investors flock towards gold, real-estate & cryptocurrency
for better returns → new set of problems related to tax evasion.
− 😥😥 2) When FPI pullout money from Indian sharemarket → Rupee weakens →⬆ imports
become more expensive (REF: Pillar#3) →⬆ inflation → RBI forced to ⬆ repo to combat
inflation = expensive loans will harm India’s post-Corona economic revival.
− 😥😥3) Imported goods / services from USA to become expensive for India=”imported inflation”.
(अमरीका म� महँ गाई/मुद्रा��त �पछले 30 वष� म� सबसे �ादा अ�धक पाई गई है इससे लड़ने के �लए अमे�रक� क� द्रीय ब�क जो क़दम
उठाएगी उसके प�रणाम��प �वदेशी पोटर्फो�लयो �नवेशक- भारतीय शेयर बाज़ार से भाग जाएं गे। �जससे भारतीय �पया कमज़ोर
होगा,भारत म� क�ा तेल और अ� आयात महँ गे होंगे, िफर भारत म� भी महँ गाई दर बढ़ेगा। उस भारतीय महँ गाई से लड़ने के �लए भारतीय
�रज़वर् ब�क लोन क� �ाज दर महँ गे करेगी तो कोरोना प�ात भारतीय अथर्�व�ा को पुनज��वत करने म� सम�ा/िद�त� आ सकती है)
12.26.4 🐯🐯🐯🐯 Monetary policy limitations: Black Swan Events

⇒ A Black Swan Event means an unprecedented unexpected extreme risk event e.g. 2007’s USA
sub-prime crisis, 2020’s Corona. (ऐसी अप्र�ा�शत घटना �जससे अथर्तंत्र को ब�त नुक़सान हो जाता है)
⇒ RBI report says next black swan event → FPI may pullout $100 billion from Indian market →
it’ll create problems similar to previous section.
⇒ Black Swan Theory was put forward by author Nassim Nicholas Taleb in book– The Black Swan.
🚩🚩🚩FAQ: Can we say “Fed Tapering” is a black swan event? Ans. No. Because it was not
‘unexpected’ event. It was expected by economists. (वो अप्र�ा�शत निह था, पहेले से सब �वशेष�ों को अनुमान था।)
12.26.5 🐯🐯✍ Monetary Policy: Conclusion / �न�षर्

⇒ Monetary policy plays an important role in price stability, economic growth, job creation and
social justice in any economy. But, its efficacy is low for Indian economy, because of the
aforementioned issues. (उ� कारणो के वतर्मानमे मौिद्रक नी�त मं हगाई �नयं त्रण, आ�थक वृ�द्ध, रोजगार सृजन, सामा�जक
�ाय म� मह�पूणर् भू�मका नही अदा कर पाती)
⇒ However, both RBI and Government of India have been making attempts to address it through
various reforms for fixing the bad loan/NPA problem in banking sector, developing the
infrastructure & promoting the ease of doing business, financial inclusion and less-cash
economy. (अनजर्क प�रसं प�तया, बु�नयादी अवसं रचना, �ापार म� सुगमता, �व�ीय समोवेशन, कम-नगदी वाली अथर्�व�ा के
�लए �रजवर् ब�क व सरकार ने कदम उठाए है। )
⇒ In the upcoming time, these reforms will help improving the impact of Monetary policy in
India's economic growth and human development. (इन सुधार/कदमो के चलते भ�व� मे आ�थक- वृ�द्ध, मानव
�वकास मे मौिद्रक नी�त का प्रभावी और सकारा�क असर अव� बढ़ेगा)
12.27�🎺🎺🌞🌞1⃣✋ MOCK QUESTIONS FOR UPSC MAINS/GSM3 (250 WORDS)

1) "Monetary policy is both a catalyst and an impediment to India's growth story." Examine
critically. “भारत क� �वकास-गाथा म� मौिद्रक नी�त एक उद्दीपक भी है और एक अवरोधक भी है।" इस कथन क� समी�ा क��जए।
2) “Monetary policy is a useful medicine, but NOT panacea for economic growth”. Comment in
context of India. “आ�थक �वकास के �लए, मौिद्रक नी�त एक उपयोगी दवा है, लेिकन रामबाण नहीं”.
3) Discuss the significance of Monetary policy in India's economic growth and human
development. भारत क� आ�थक वृ�द्ध और मानव �वकास म� मौिद्रक नी�त के मह� पर चचार् कर�.
4) Give an account of the steps undertaken by RBI to revive the Indian economy from Corona
pandemic. कोरोना महामारी से भारतीय अथर्�व�ा को पुनज��वत करने के �लए आरबीआई द्वारा उठाए गए कदमो का �ववरण
दी�जए।
5) Enumerate the steps taken by the RBI under the Atma Nirbhar Bharat initiative.
आ��नभर्र भारत अ�भयान के अंतगर्त आरबीआई द्वारा उठाए गए कदमो क� सूची दी�जए।
6) Write short notes on 1) Operation Twist 2) G-SAP
📑📑NEXT HDT: Pillar1B1- Classification of Banks and NBFCs
Pillar#1B-1: Classification of Financial Intermediaries: Bank & NBFC
🚩🚩🚩FAQ: This handout is very lengthy, contains lot of Banking GK😰😰!!.
✅Ans. I’ve such Banking-GK for helping UPSC aspirants trying for Bank-exam as backup/Plan-B.
Which GK is imp/notimp for UPSC = Watch lecture, you’ll get idea.
Table of Contents
13 🏛🏛 Financial Intermediaries → Banks....................................................................................................... 105
13.11 🐯🐯🐯🐯 ₹ 🖨🖨 Banks → Reserve Bank of India (RBI): भारतीय �रजवर् ब�क............................................. 106
13.11.1 🏦🏦 ₹ 🖨🖨 RBI Governor & Dy Governor...................................................................................... 107
13.11.2 🏦🏦 ₹ 🖨🖨 RBI Offices & Departments........................................................................................... 107
13.11.3 🏦🏦 ₹ 🖨🖨 RBI: Functions of ........................................................................................................... 107
13.12 🏦🏦 � Scheduled Banks (अनुसू�चत ब�क) ............................................................................................ 108
13.13 🏦🏦 �FI⇒ Commercial Banks⇒ Pre-Independence ................................................................. 110
13.13.1 🦄🦄 → 🦁🦁 Nationalization of Banks After Independence (आजादी के बाद �नजी ब�कों का रा�ी� यकरण)
110
13.14 🤩🤩 Golden Anniversary of nationalization- ES20 ......................................................................... 112
13.14.1 🦄🦄> 🦁🦁: Private sector banks are better than PSBs .................................................................. 112
13.14.2 🦁🦁 = 🐌🐌 PSBs: reasons for inefficiency & remedies?............................................................... 113
13.15 🏦🏦 � 🔂🔂Consolidation of PSBs [एकत्रीकरण] ................................................................................ 113
13.15.1 🔂🔂Consolidation of PSBs → A) Merger (�वलीनीकरण) ................................................................ 113
13.15.2 🔂🔂Consolidation of PSBs → B) Privatization (�नजीकरण) .......................................................... 115
13.15.3 PSB Privatization: Banking Investment Company (BIC-ब�िकंग �नवेश कं पनी)............................ 116
13.15.4 🔂🔂🔂🔂Anti-Arguments against Merger and Privatization of PSBs (�वरोध म� तकर् )...................... 116
13.16 🏦🏦 �Commercial Banks ⇒ Pvt. Sector Banks (PvB) �नजी-�ेत्र के ब�क .......................................... 116
13.16.1 🏦🏦 � 🚗🚗🚗🚗 ‘On-Tap’ License to open Private Sector Banks (जब मन चाहे तब अज� डाल दो) ... 117
13.16.2 🏦🏦 �Steps or procedure to open a bank (एक ब�क �ा�पत करने के क� प्रिक्रया �ा है?) ................ 118
13.17 🚫🚫🚫🚫 � 🚗🚗🚗🚗 Allowing NBFC/Large Corporate to setup Banks ......................................... 118
13.17.1 🚫🚫🚫🚫 � 🚗🚗🚗🚗: Arguments in Favour प� म� तकर् ............................................................. 118
13.17.2 🚫🚫🚫🚫 � 🚗🚗🚗🚗: Arguments Against: �वप� म� तक.............................................................. 119
13.17.3 🚫🚫🚫🚫 � 🚗🚗🚗🚗: Conclusion about banking license to Adani/Ambani? (�न�षर्) ......... 119
13.18 🏦🏦 � 🈶🈶 Commercial Banks ⇒ Foreign Banks (�वदेशी ब�क)....................................................... 120
13.18.1 🤵🤵 Foreign Banks in India: LVB merged with DBS (�वलीनीकरण) ........................................... 120
13.19 🏦🏦 � 🌎🌎🌎🌎Commercial Banks ⇒ Differential Banks ............................................................. 120
13.19.1 🏦🏦 � 🌎🌎🌎🌎 Commercial Banks ⇒ Differential Banks⇒ RRB and LAB .......................... 121
13.19.2 🏦🏦 � 🌎🌎🌎🌎Commercial Banks ⇒ Differential Banks ⇒ SFB & PB ................................. 122
13.19.3 🏦🏦 � 🌎🌎🌎🌎🌎🌎🌎🌎 On-Tap Licenses for starting SFB (मन चाहे तब अज� डालो) ...................... 123
13.19.4 🏦🏦 � 🌎🌎🌎🌎🌎🌎🌎🌎 Unity Small Finance Bank (SFB) gets license (2021) ................... 123
13.19.5 Commercial Banks → 📬📬India Post Payment Bank (IPPB) .................................................... 124
13.19.6 📬📬Post Office Savings Bank (PoSB)?..................................................................................... 124
(Batch:PCB7) Mrunal’s Economy Pillar#1B1: Bank-NBFC Classification → Page 104

13.19.7 🚐🚐 ⏳ (Proposed) Wholesale & Long Term Finance Banks (WLTF) ..................................... 125
13.19.8 💸💸💸💸: Digital Payments- (Proposed) Digital Banks by NITI Aayog (2021)..................... 125
13.19.9 💸💸💸💸: Digital Banking Units in Budget 2022 ...................................................................... 125
13.19.10 💸💸💸💸: Digital Payments- NeoBanks (�चकने चुपड़े श�) ........................................................... 125
13.20 🏦🏦 �FI ⇒ Banks ⇒ Cooperative Banks (सहकारी ब�क) ................................................................. 125
13.20.1 🏦🏦 �😥😥 Cooperative Banks: Negative News (2019): PMC Bank (कांड हो गया)..................... 127
13.20.2 ⚖🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯Banking Regulation (Amendment) Ordinance/Act, 2020......... 128
13.21 🚫🚫🚫🚫🚫 Formal FI ⇒ Non-Banking Financial Institutions .................................................... 129
13.21.1 Development Finance Institutions (DFI: �वकास �व� सं �ान) ......................................................... 129
13.21.2 DFI → NaBFID: National Bank for Financing Infrastructure and Development .............. 130
13.21.3 🚫🚫🚫🚫🚫What is Bad Bank- NARCL-IDRCL? ................................................................... 130
13.21.4 🚫🚫🚫🚫🚫Non Bank ⇒ All India Financial Institutions (AIFI): ............................................. 130
13.21.5 🚫🚫🚫🚫🚫FI ⇒ Non-Bank ⇒ Primary Dealers (PD)- (प्राथ�मक �वक्रेता)..................................... 132
13.21.6 🚫🚫🚫🚫🚫FI ⇒ NBFCs (गेर-ब�िकंग �व�ीय कं प�नया) .......................................................................... 132
13.21.7 🚫🚫🚫🚫🚫 NBFCs Regulated by RBI 🐯🐯 (�नयं त्रण/देखरेख) ........................................................... 134
13.21.8 🚫🚫🚫🚫🚫Credit Information Companies (CIC) versus Credit Rating Agencies (CRA) . 136
13.21.9 🚫🚫🚫🚫🚫 NBFCs Regulated by SEBI 🐱🐱 (📑📑More in Pillar#1C)......................................... 137
13.21.10 🚫🚫🚫🚫🚫 NBFCs Regulated by Others 🦊🦊 ......................................................................... 138
13.21.11 👻👻(🚫🚫🚫🚫): NBFC: Shadow Banking (आभासी / प्र�तछाया ब�िकंग प्रणाली) .................................... 138
13.21.12 🧕🧕NBFC-not allowed in India: Islamic Banking ................................................................... 139
13.21.13 🧔🧔🧔🔪🔪🔪🔪🔪🔪 Informal Financial Intermediaries (अनौपचा�रक �व�ीय म��) ................... 139
13.21.14 ✍🎷🎷 Mock Questions for Mains ......................................................................................... 140
13 🏛🏛 FINANCIAL INTERMEDIARIES → BANKS

- A Financial Intermediary (FI: �व�ीय म��) is an entity that acts as the middleman between two
parties in a financial transaction- between lenders vs. borrowers, investors vs. entrepreneurs,
households vs business firms.
- Such FI can be subdivided into (1) Formal (औपचा�रक) (2) Informal (अनौपचा�रक).
13.11🐯🐯🏦🏦 ₹ 🖨🖨 BANKS → RESERVE BANK OF INDIA (RBI): भारतीय �रजवर् ब�क
1913 Commercial banks were required to register under the Companies Act, but monitoring
was lax. No CRR, SLR, BASEL Norms. (उन पर पहले �नयम स� नहीं थे)
1926 Royal Commission on Indian Currency Hilton Young Commission) recommends
setting up a central bank named 'Reserve Bank of India'. (एक �ब्रिटश आयोग ने �सफा�रश क� �नगरानी
के �लए �रज़वर् ब�क बने)
1929 Great Depression in USA leads to collapse of 450+ banks in India. So British Indian
Govt becomes serious about setting up RBI. अमे�रक� महामं दी के बाद क� द्रीय ब�क क� �ापना क� आव�कता
महसूस �ई
1934 Reserve Bank of India Act was enacted. (इसक� �ापना के �लए कानून बनाया गया)
1935, RBI becomes operational from 1st April, with 1st Governor Sir RBI Gov: Osborne Smith.
April India’s Viceroy: Willingdon. Government ownership was ~4.4% only.
1935, Commercial Banks fulfilling certain conditions were listed in the 2nd Schedule of RBI
July Act, & such “Scheduled Banks” were required to keep CRR with RBI.
1943- C.D. Deshmukh 2nd FM of India becomes the first INDIAN Governor of RBI. He had
49 also participated in the Bretton Woods Conference, USA (1944).
1948- All private investors’ shares transferred to Govt of India under the RBI transfer of
49 ownership act 1948. Therefore, RBI governor answerable to Parliament, has to pay
dividend to Govt from its profits. (�रज़वर् ब�क अपने मुनाफे मे से सरकार को लाभांश �वतरण करता है)
1949 Banking Regulation Act (ब�िकंग �व�नयमन अ�ध�नयम) empowered the RBI to
⇒ Give license to companies to open banks,
⇒ Give permission banks to open new branches.
⇒ Prescribe auditing norms, liquidity norms for Banks such as SLR.
⇒ Protect interest of depositors. Force elimination / merger of weak banks.
⇒ Related Topic: banking regulation ordinance 2020 → Pillar#1B2: Bad loans & other
burning issues in the banking sector.
🔠🔠❓Which was the earliest event to take place? (UPSC Prelims-2009)
A) Nationalization of insurance companies B) Nationalization of State Bank of India
C) Enactment of Banking Regulation Act D) Introduction of first Five year plan
Table 1: RBI Central Board Composition
(Non-Official Directors) (Official Directors)
- 2 Government officials - RBI Governor
- 10 directors nominated by Government. - 4 Dy. Governors
- 4 directors from RBI’s local boards @West, East, North, South

13.11.1 🏦🏦 ₹ 🖨🖨 RBI Governor & Dy Governor
⇒ RBI Act (Section 8) provides for “NOT MORE than 4” Dy. Governors.
⇒ They’re selected by Financial sector regulatory appointment search committee (FSRASC) headed
by the Cabinet Secretary (IAS) → successful candidates’ names sent to Appointments
Committee of the Cabinet headed by the Prime Minister for final approval.
⇒ Governor and Dy.Govs’ tenure usually (not always) 3 years. Re-appointment is possible. कायर्काल
⇒ 2018-Dec: Shaktikanta Das appointed as Governor for 3 years, he replaced Urjit Patel. 2021:
Modi Govt renewed his tenure for three years till Dec- 2024, thus giving him a total tenure of six
years (�रज़वर् ब�क के गवनर्र के �प म� पुनः �नयु��)
⇒ Shaktikanta Das is Retd. IAS, Former finance secretary, Member of 15th Finance Commission.
📑📑 Related Topics: RBI Autonomy, Dividend Controversy, Section 7, PCA/BASEL:

[Handout 1B2 → Burning Issues in Banking Sector]
13.11.2 🏦🏦 ₹ 🖨🖨 RBI Offices & Departments

- RBI 4 regions: Northern: Delhi, Eastern: Kolkata, Southern: Chennai, Western: Mumbai
- RBI has various dept after Banks, NBFCs, Payment Systems, Foreign Exchange Management etc.
13.11.3 🏦🏦 ₹ 🖨🖨 RBI: Functions of
1) Controller of Money Supply: Issues M0 under RBI Act, Makes Monetary Policy. (मुद्रा आपू�त
�नयं त्रक)
2) Controller of Foreign Exchange: through FEMA Act. (�वदेशी मुद्रा का �नयं त्रक, 📑📑more in Pillar#3)
3) Banker to Governments & Public Debt Manager (सावर्ज�नक ऋण प्रबं धक).
4) Banker’s Bank: Lender of Last resort, Advises in monetary matters.
5) Regulator of all “BANKS”: through BR Act’49, Payment Systems’07 (�नयामक)
6) Regulator of AIFI, NBFC-D & others.
7) Promotional Roles (सं वधर्क भू�मका):
a. Customer protection through Ombudsman (�शकायत �नवारण अ�धकारी),
b. Financial Inclusion through PSL norms. Requires bank to open 25% of branches in rural
areas
8) Data Publication & awareness e.g. Annual Financial Stability Report (वा�षक �व�ीय ��रता �रपोटर्)

9) International Cooperation e.g. BASEL, IMF, G20’s Financial Stability Board etc.
a. E.g. 2021: RBI became member of “Network For Greening The Financial System
(NGFS)”. NGFS is a group of central banks to contribute to the development of
environment. HQ: Paris, Foundation Year: 2017 (�व�ीय प्रणाली क� ह�रयाली के �लए नेटवकर् - तािक
अ�य ऊजार्, पयार्वरण आिद को मदद �मले)
🚩🚩🚩FAQ: Article 371-F of Constitution gives special status to Sikkim, as a result their State Bank
of Sikkim is outside RBI’s regulation!! Ans. Such JamesBond/obscure GK = poor cost benefit.
🔠🔠❓ RBI acts as a bankers’ bank. What does it mean? (UPSC-Pre-2012)

1) Other banks retain their deposits with the RBI.
2) The RBI lends funds to the commercial banks in times of need.
3) The RBI advises the commercial banks on monetary matters.
Answer codes: (a) 2 & 3 only (b) 1 and 2 only (c) 1 and 3 only (d) 1, 2 and 3
🔠🔠❓ RBI regulates the commercial banks in matters of (Asked in UPSC-Pre-2013)
1) Liquidity of assets 2) Branch expansion 3) Merger of banks 4) Winding-up of banks
Answer Codes: (a) 1 & 4 only (b) 2, 3 & 4 only (c) 1, 2 & 3 only (d) 1, 2, 3 & 4
🔠🔠❓ In India, the central bank’s function as the ‘lender of last resort’ means what? (क� द्रीय ब�क को
अं�तम उपाय का ऋणदाता कहा जाता है इस श� का मतलब �ा है) (Prelims-2021)
1. Lending to trade and industry bodies when they fail to borrow from other sources. [�ापार औद्यो�गक
सं �ाओं को जब कहीं और से कजर् नहीं �मले तो क� द्रीय ब�क कजर् देता है]
2. Providing liquidity to the banks having a temporary crisis.[अ�ाई सं कट के दौरान ब�कों को तरलता देता है]
3. Lending to governments to finance budgetary deficits [बजट घाटा पूरा करने के �लए सरकार को कजार् देता है]
Codes: a) 1 and 2 b) 2 Only c) 2 and 3 d) 3 Only
13.12🏦🏦 � SCHEDULED BANKS (अनुसू�चत ब�क)
When RBI is satisfied with TWO conditions simultaneously (दो शत� का एक साथ पालन होना चािहए)
⇒ #1: That a public sector or pvt sector bank has (Paid Up Capital + Reserves#1) = Min ₹5 Lakhs

⇒ #2: Bank is not conducting business in a manner harmful to its depositors. (जमाकतार्ओ ं के िहतों का
नुक़सान न हो इस िहसाब से ब�क अपना कायर् कर रहा है)
then such bank is listed in the 2nd Schedule of RBI Act → then it is known as a Scheduled Bank.
⇒ 🚩🚩🚩FAQ: What is paid up capital? Ans. Explained in the video.

⇒ 🚩🚩🚩FAQ#1: Which reserves are included in this ₹5 lakh formula? Ans. Routine books did not
bother to elaborate so I did not bother to do Google search. Such technical things not imp4exam.
⇒ 🚩🚩🚩FAQ: “₹5 lakh is very small!!! It should be ⏫ to ensure safety in bank”. Ans 1) neither
economic survey, NITI Aayog, Court-PIL, nor any big columnists have demanded reform here.
So we need not apply our brain here. 2) Send your suggestion to PM Modi to amend the British
Era provisions of ₹5 lakh from RBI Act. Until that happens, prepare the present facts.
⇒ 🚩🚩🚩FAQ: “nowadays every bank will easily have five lakh rupees of deposits so automatically
all bank will become schedule bank from DAY1!” Ans. No. Because, RBI will also check
condition#2. Usually RBI ticks condition#2 after observing bank for one year from its birth. So
the Scheduled status will not be given on DAY1. (धं धा चालू करने क� एक साल तक तो �रज़वर् ब�क उसका मुआयना
करेगी क� दू सरी शतर् का अनुपालन हो रहा है िक नहीं. पहले ही िदन से �रज़वर् ब�क उसको अनुसू�चत नहीं बना देगी।)
🐴🐴 Scheduled Bank (अनुसू�चत ब�क) 🐭🐭 Non-Scheduled Bank (गैर- अनुसू�चत)

Can be subdivided into two parts Many cooperative banks are non-Schedule. But
1) Scheduled Commercial Banks (SCB) e.g. we need not see their list at
SBI, Axis, ICICI Rbi.org.in/CommonPerson/English
Schedule Cooperative Banks like Haryana Rajya /scripts/banksinindia.aspx
Sahakari Bank, Tamil Nadu State Apex
Cooperative Bank
Required to deposit CRR money to RBI’s Can maintain the CRR money with themselves
office/vault (CRR का पैसा ट�क म� भरके �रज़वर् ब�क म� प�ँ चाना in their own office/vault. (खुद क� �तजोरी म� रख सकते ह�)
होगा)
Eligible to borrow / deposit funds in RBI’s Depends on RBI’s discretion. (�ववेकाधीन/�रज़वर् ब�क
window operations. E.g. LAF-Repo, MSF, etc. क� मज़� – आने भी दे सकता है, लात मार के भगा भी सकता है)
are required to protect the interests of Ofcourse, they also have to do it, else RBI can
depositors and abide to RBI norms. (जमाकतार्ओ के shut them down under Banking Regulation Act.
िहतो क� र�ा करनी होगी, और �रजवर् ब�क के �नयमो का पालन करना
होगा)

🐴🐴 Scheduled Bank (अनुसू�चत ब�क) 🐭🐭 Non-Scheduled Bank (गैर- अनुसू�चत)
Govt departments and big private sector Less likely to happen. (ग़ैर अनुसू�चत ब�कों म� सरकारी �वभाग
companies are more likely to open their bank या बड़ी कं प�नयों वाले अपने ब�क-खाते खोले इसक� सं भावना कम होती
accounts/ employees’ salary deposit accounts in है)
it.
Bank becomes eligible to partner in the govt’s Usually not eligible. (�व�ीय समावेशन क� सरकारी
financial inclusion scheme e.g. PM Jan Dhan योजनाओं म� ग़ैर अनुस�ू चत ब�कों को सामा�त: शा�मल नहीं िकया जाता
Scheme for opening bank accounts of poor है. जैसे िक प्रधानमं त्री जनधन योजना म� गरीबों का ब�क खाता इन ब�को
people. (Ref Pillar1D3: financial inclusion) म� नहीं खोला जा सकता.)
- Airtel Payments Bank and Paytm Payment Bank categorised as a scheduled bank in 2021-22.
🚩🚩🚩FAQ: “After getting scheduled status, Can Payment Banks give loans/credit cards or accept
Fixed Deposits?” Ans. No, they’re prohibited from such activities. Paytm doing such activities as “an
Agent” of a federal bank, IndusIndia bank etc but Paytm cannot do it as ‘its own Banking business’.
13.13🏦🏦 �FI⇒ COMMERCIAL BANKS⇒ PRE-INDEPENDENCE
Table 2: Before Independence (Exact Years Not-IMP.)

1770 Bank of Hindustan, Calcutta (Europeans owned it. So it was not truly ‘Swadeshi’)
1806-42 - Three Presidency Banks at Bengal then Bombay then Madras.
- 1861: all three were given the right to issue currency.
- 1921: They were combined into Imperial Bank of India⇒ SBI (1955)
1865 Allahabad Bank (Europeans owned)
1894 PNB: Indian owned, Lala Lajpat Rai helped in foundation.
1908 Bank of Baroda by Maharaja Sayajirao Gaekwad III
1913-30s State Bank of Mysore, State Bank of Patiala, the rise and collapse of Banking
industry, then Birth of RBI (1935)
1940s State bank of Bikaner, Jaipur, Hyderabad, Travancore by the respective princely
states / Nawabs. Post-Independence, these banks became ‘Associated Banks of SBI’,
and ultimately, merged in SBI (2017).
13.13.1 🦄🦄 → 🦁🦁 Nationalization of Banks After Independence (आजादी के बाद �नजी ब�कों का रा��ीयकरण)
⇒ NEXUS between Banks and Industrialists: From 1950s to 60- only 188 elite people controlled
the economy by being in board of top 20 banks, 1452 companies. This led to reckless lending to
directors and their firms. So, Banks failed frequently, RBI had to close them. (रसूखदार लोग के क�े म�
थी ब�िकंग �व�ा. भाई भतीजावाद म� अंधाधुन कजर् देते थे)

⇒ Private Banks unwilling to open in rural areas- this did not help in financial inclusion of poor,
farmers, MSME or achievement of Five Year Plan (FYP) targets or reducing regional imbalance.
(�व�ीय समोवेशन, पं चवष�य योजनाओ के ल�ाक हा�सल करने म� �नजी �ेत्र के ब�क मदद नहीं करते थे. �ेत्रीय असमनाताए बढ़ी)
Table 3: Nationalization & Merger of Banks after Independence
1948 RBI Transfer of Ownership Act.
1948: Op. Polo, Hyd. → 1951:1st FYP, → 1953: Air India nationalized from Tata
1955 Imperial Bank nationalized and became SBI.
1955-56 LIC Act took over private life insurance cos.
57: 1st Communist Govt in Kerala
61: Operation Vijay for liberation of Goa, Daman and Diu.
1963 State Bank of Jaipur and Bikaner merged together.
1969 ⇒ 'Banking Companies (Acquisition and Transfer of Undertakings) Ordinance,
1969: 14 Private banks with ₹ 50 cr/> deposits were nationalized e.g. Bank of
Baroda, PNB, Dena, Canara etc. (बड़ी जमा-रा�श वाले �नजी ब�को का रा��ीयकरण)
⇒ Catholic Syrian Bank (1920, Kerala), Ratnakar Bank, Dhanlaxmi Bank, etc., did
not have such large deposits, so they were not nationalized. So, they are called
“Old Private Banks”.
1972-73 GIC Act- took over private Non-Life (=General) insurance cos. Later GIC was re-
organized with 4 subsidiaries: National Insurance, New India Assurance, Oriental
Insurance and United India Insurance. More in 📑📑Pillar#1D
1980 6 banks with ₹ 200 cr/> deposits were nationalized e.g. Corporation Bank, Vijaya
Bank, Oriental bank of Commerce etc.
2019 Previously, State Government of J&K owned 60% shares in J&K bank → Article
370 removal → Union Government took-over this shareholding. 🎓🎓✋Further
500 type historical-GK things on how it functioned before and how it’ll function
afterwards...poor cost benefit.
Reform following Committees were made for reforms in banking sector
Committee M Narasimham-I (1991), M Narasimham-I (1997), Dr. Raghuram Rajan
s Committee (2007) and P J Nayak Committee (2014)
Death 2021: Death of M Narasimham. He was ex-Governor of RBI and chairman various
देहांत Committees on Banking Sector Reforms, therefore known as “father of Indian
banking system reforms” (एम नर�संहम भारतीय ब�िकंग प्रणाली सुधार के �पतामह माने जाते है। )
🔠🔠❓(Prelims 2009) Q. In independent India's economy, which was the earlier event to take place?
A) Nationalization of insurance companies B) Nationalization of State Bank Of India
C) Enactment Of Banking Regulation Act D) Introduction of first Five year plan
🔠🔠❓(Prelim-2018) Q. Consider the following events:
1. The first democratically elected communist party government formed in a State in India.
2. India’s then largest bank, ‘Imperial Bank of India’, was renamed ‘State Bank of India’.
3. Air India was nationalised and became the national carrier.

4. Goa became a part of independent India.
Which of the following is the correct chronological sequence of the above events?
A) 4 – 1 – 2 – 3 B) 3 – 2 – 1 – 4 C) 4 – 2 – 1 – 3 D) 3 -1-2 -4
13.14🤩🤩 GOLDEN ANNIVERSARY OF NATIONALIZATION- 📔📔📔📔ES20
Economic Survey 2019-20 (released on 31/01/2020) Vol1Ch.07 observed:

First round of bank nationalisation was done in 1969 so, 2019-1969=50 years Golden anniversary of
the bank nationalisation. (�नजी ब�कों के रा�ी� य करण क� �णर् जयं ती)
😍😍Positive (सकरा�क) 🤢🤢Negative (नकारा�क)
 After nationalisation, the number of Bank  From 1960s to 80s: The Government had
branches in India, the amount of loan launched 1) "green revolution" 2) focused on
given to farmers and villagers= has poverty removal through five year plans.
increased.  RBI had initiated selective credit control
 This greatly contributed to agriculture tools & moral suasion to channelize more
production and poverty removal in rural loans to farmers.
areas. कृ �ष उ�ादन और गरीबी �नवारण म� मदद क� है  So, those actions were responsible for
 PSBs account for 70% of the banking boosting agriculture & reducing poverty.
business in India. Thus, Bank nationalization itself not helped in it
much. सरकार और �रजवर् ब�क के कदमों के चलते थोड़ा ब�त अ�ा
काम �आ था. सावर्ज�नक ब�कों ने खुद से कोई चांद �सतारे नहीं तोड़ �लए.
13.14.1 🦄🦄> 🦁🦁: Private sector banks are better than PSBs
⇒ 😰😰2019: PSBs’ total loss more than ₹ 66,000 crore which is even double than India’s budget
allocation for education. And so on.. सावर्ज�नक �ेत्र के ब�कों के नुकसान क� रकम सरकार के �श�ा बजट से भी �ादा
है
Indicators 🦁🦁:😫😫PSBs =losers 🦄🦄:😍😍Private
Banks
Total NPA in majority of bad loans / Non-Performing assets less
Indian Banks (NPA: अनजर्क परीसं प�तया) (More in 📑📑Pillar#1B2)
Total Bank frauds >90% of cases occur in PSBs (�व�ीय धांधली/गबन) Hardly 7% (घपले कम)
Profitability Usually, less than private sector Banks More (मुनाफा �ादा)
⇒ Thus, PSBs are clearly not efficient today. If they become more efficient = ₹11 lakh+ crore profit
for the Government. अगर सावर्ज�नक �ेत्र के ब�क ढंग से काम कर� तो सरकार को 11 लाख करोड़ से �ादा का मुनाफा हो
सकता है

13.14.2 🦁🦁 = 🐌🐌 PSBs: reasons for inefficiency & remedies?
🐌🐌 Reasons why PSBs are inefficient? Solutions by 📔📔📔📔ES20 (More details in
सावर्ज�नक �ेत्र के ब�क प्रभावहीन है �ोंिक → 📑📑Pillar#1B2) हम �ा सुधार कर सकते है?
😰😰PSB staff’s salary does not depend on the - Allow campus recruitment, lateral entry in
profitability of the bank. Employee unions higher management positions
frequently engage in strikes/hartals. → - Make employees ‘part owners’ through
प्रदशर्न आधा�रत तन�ाह नहीं. बार बार हड़ताल पर चले जाते है Employee Stock Ownership Plan (ESOP)
😰😰They’ve apathetic attitude towards the use - Use Artificial Intelligence (AI), Machine
of artificial intelligence, computer technology, Learning (ML), Big Data Analytics,
marketing, and customer satisfaction. → geotagging of mortgaged assets etc.
नई तकनीक� अपनाने म�, तथा ग्राहकों का सं तोष बढ़ाने म� इन ब�कों का - setup an organization PSBN Network to
उदासीन रवैया है implement above ICT-solutions.
Further, Since the government is the majority shareholder in PSBs, (सरकार ब�मती शेयर धारक है इस�लए)
1) 🤡🤡 Usually the persons favored by the present-day ruling party become the Board of directors,
irrespective of merit or qualification. Thus, political considerations have significant
control/influence over bank’s business operations. (बोडर् मे राजनी�तक त�- �जनम� ब�कों का सही प्रबं धन करने का
अनुभव या कौश� नहीं है)
2) � 🕵🕵:😰😰 PSBs are subjected to Right to Information (RTI) act, Central Vigilance Commission
(CVC), Comptroller Auditor General (CAG), Central Bureau of Investigation (CBI), Courts and
media in a more stringent manner. (ब�कर खौफ म� रहते है क� ईमानदार �नणर्य क� भी शक क� �नगाहो से जांच होगी,
और उनक� पदो��त रोक दी जाएगी)
3) Consequently, PSB officials fear harassment under the veil of vigilance investigations & media-
trials. They prefer safety and conservatism over risk-taking and innovation. (�िढ़वाद पसं द, नवाचार
नापसं द)
13.15🏦🏦 � 🔂🔂CONSOLIDATION OF PSBS [एकत्रीकरण]
PSB consolidation = made up of two types of reforms: A) Merger B) Privatization

13.15.1 🔂🔂Consolidation of PSBs → A) Merger (�वलीनीकरण)
Table 4: Notable PSB Mergers before 2019, April. ✋You need not memorize exact years/ HQ for IAS Exam
2008-10 State Bank of Saurashtra and State Bank of Indore merged into SBI.

2013 - Bharatiya Mahila Bank setup as PSB, HQ Delhi, 100% ownership by Union
Government. (भारत सरकार ने �यं बनाया था)
- BMB’s Board of Directors: All women. Staff & Deposit Holders: both men and
women, Loans given predominantly to women- and that too without collaterals
upto Rs.1 crore.
2017, 1st BMB & 5 Associated Banks of SBI viz. State Bank of Bikaner and Jaipur (SBBJ), State
April Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP)
and State Bank of Travancore (SBT), merged with SBI from 1st April by swapping of
shares.
2017, Nov - Alternative Mechanism Panel setup under the Finance Minister’s chairmanship.
- This panel examine the proposals for merger/consolidation of the Public Sector
Banks (PSBs) and forward to Cabinet for approval.
- Department of Financial Services coordinates the filework.
2019, 1 st
Vijaya & Dena to be merged into Bank of Baroda.
April - Among these three oldest: BoB (1908) > Vijaya (1931)> Dena (1938)
- BoB & Dena nationalized in 1969, HQ: Mumbai
- Vijaya: nationalized in 1980, HQ. Bengaluru
Table 5: 2019, FM Nirmala.S announced merger of 10 banks into 4 anchor banks
Amalgamating Banks → → → Anchor Bank
(एक�कृ त / �वलीन होनेवाली) (सहारा देनेवाली)
− Oriental Bank of Commerce (1943, 1) PNB. (1984, HQ: Delhi, It’ll become the 2nd
HQ: Gurugram, Haryana), largest bank after SBI, in terms of business size
− United Bank of India (1950, Kolkata) and branch network)
Syndicate Bank (1925, HQ: Manipal, 2) Canara Bank (1906, HQ: Bengaluru,
Karnataka) Karnataka)
− Andhra Bank (1923, Hyd) 3) Union Bank of India (1919, Mumbai)
− Corporation Bank (1906, Mangaluru)
− Allahabad Bank (1865, Kolkata) 4) Indian Bank (1907, Chennai)
After this process is over, we’ll be left with only 12 PSBs (+1 India Post Payment Bank).
- Benefit? Geographical & technological synergies in ATM, Branches, Security Staff, Servers cost
etc. (भौगो�लक और तकनीक� तालमेल)
- resulting into reduced cost of business → better lending & deposit rates. Such bigger banks can
even expand business at global level.
📔📔📔📔ES20 Vol1Ch7 on 50 years of bank nationalization also noted:
⇒ 😰😰2019: Global top-100 banks: China (18 banks), USA (12 Banks), Japan > France > …..India
(only 1 bank: SBI at Rank#55). �व� क� 100 सबसे बड़ी ब�कों म� भारत का �सफर् एक ही ब�क है
⇒ 😰😰Even Sweden and Singapore have more global banks than India, even though these countries’
size of economy (GDP: सकल घरेलू उ�ाद) is much smaller than India.

⇒ So, given India’s size of economy (in terms of GDP), India should have 6-8 banks in the global
top 100. → These large banks provide large loans → India can reach $5 trillion GDP by
31/3/2025. (📑📑 More in Pillar4C) Therefore, merger of public sector banks is necessary.
⇒ It’ll increase the manpower, financial strength of the merged entities, then they can compete at
global level. (सावर्ज�नक �ेत्रों के ब�कों का �वलीनीकरण करने से उनक� �मता म� बढ़ोतरी होगी और वह वै��क �र पे �धार् कर
पाएं गी)
13.15.2 🔂🔂Consolidation of PSBs → B) Privatization (�नजीकरण)

It involves Government selling 51% or larger shareholding to private parties. Then such Public
Sector Bank will convert into a private sector bank. For example, Axis Bank and IDBI Bank.
13.15.2.1 UTI Bank → ‘Privatization’ into Axis Bank (2007)

⇒ Setup in 60s as a Sarkaari Mutual Fund Company through Unit Trust of India Act 1963
⇒ 1993: Obtained License to open UTI Bank.
⇒ 2001: Ketan Parekh Sharemarket Scam, Govt has to bailout UTI → further restructuring 2007
→ Became Axis Bank: 77% private shareholding + 23% by Public sector bodies like LIC, New
India Assurance, SUUTI etc. (as of 2019, Jan). So, presently it’s a private sector bank.
13.15.2.2 IDBI Bank → Purchased by LIC (2018)

⇒ 2014: RBI’s P.J. Nayak Committee that suggest Govt should exit shareholding in smaller PSBs, to
enhance their efficiency. सरकार ने छोटी सावर्ज�नक �ेत्र के ब�कों से �नकल जाना चािहए तािक उनक� कायर् �मता म� बढ़ोतरी
हो
⇒ Budget 2016: Govt agreed to reduce its shareholding to <50% in IDBI Bank.
⇒ 2018: IDBI had huge losses among PSB, so no mentally-fit investor willing to buy Govt’s shares.
So, Govt. (forces) LIC to buy its 40% for ~9k crores.
⇒ As of 2022: IDBI Bank ownership: 49.24% by LIC and 45.48% by Govt of India. Government
aims to sell of this shareholding to private investors.
⇒ Though LIC itself is public sector entity, but RBI has declared IDBI as ‘private sector’ bank
(because govt is no longer ‘direct majority shareholder’)
🚩🚩🚩FAQ: Why RBI classified IDBI as 'private sector bank'. Ans. send your suggestion to RBI.
श��कांता को ठीक लगा तो िकया. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
⇒ 💼💼Budget-2021: proposed to take up the privatization of two Public Sector Banks. Names yet to
be disclosed. (दो सरकारी ब�कों का �नजीकरण िकया जाएगा ऐसा बजट म� कहा हालांिक नाम घो�षत नहीं क�ये)
⇒ 2021: Newspapers hint 4 PSBs are shortlisted for privatisation- Bank of Maharashtra, Bank of
India, Indian Overseas Bank, Central Bank of India. (But this news not yet confirmed by Finance

Ministry (चार सरकारी ब�को का �नजीकरण होगा ऐसे अखबारों म� समाचार, िकं�ु �व� मं त्रालय ने अभी इन समाचारों क� पु�� नहीं
क� है)
13.15.3 PSB Privatization: Banking Investment Company (BIC-ब�िकंग �नवेश कं पनी)

Removed from handout because outdate/faded topic until Finance Ministry implements it.
13.15.4 🔂🔂🔂🔂Anti-Arguments against Merger and Privatization of PSBs (�वरोध म� तकर् )

- Employees worried seniority, promotion, increments (व�र�ता, पदो��त, वेतन वृ�द्ध);
- Financial burden of Voluntary Retirement Scheme (VRS: �ै��क सेवा�नवृ�� योजना का �व�ीय बोझ).
🚩🚩🚩What is VRS? Ans. Explained in Video lecture.
- Transfer and VRS of employees → Banks may lose regional identities & customer intelligence.
(�ेत्रीय पहचान चली जाएगी)
- Big customers may shift to other banks for faster service and personalized privileges. (तेजी से सेवा
और ��गत सेवाए नहीं �मलने पर �ापारी दू सरे ब�कों म� खाता खोल�गे)
- Private sector banks are no saints. There have been instances of private sector banks engaging in
money laundering activities, taking bribes to pass loans to unworthy borrowers- which
ultimately harm depositors (�नजी �ेत्र के ब�क काले धन को वैध बनाना, �र�त लेकर गलत लोगों के लोन पास करना, और
दू सरी �व�ीय धांधलीयों म� शा�मल है। इस�लए �नजीकरण को हमारी सम�ाओं का रामबाण इलाज मानना गलत होगा। )
13.16🏦🏦 �COMMERCIAL BANKS ⇒ PVT. SECTOR BANKS (PVB) �नजी-�ेत्र के ब�क
While the nationalization of banks was done with the lofty objectives, but politicization in Public
Sector Banks (PSBs) created new set of problems:
- Government administered loan interest rates for populism= Low profitability for PSBs. (मुनाफा
कम)
- Political Interference= Low recovery difficult (राजनी�तक ह��ेप के चलते दबं ग त�ो से ऋण वसूली मु��ल)
- Employees Unions hampering any innovation or customer responsiveness. (नवाचार, ग्राहक सु�वधा
कम)
- 1991: Balance of Payment crisis (BoP: भुगतान सं तुलन,More in Pill#3) finally forced Govt. to set up a
committee for Banking Sector Reforms under The former RBI Governor M.Narasimham. He
suggested:
o Govt should ↓ its shareholding in Public Sector Banks. (सरकार अपनी शेयर िह�ेदारी कम करे)
o RBI should ↓ CRR and SLR (सीआरआर, एसएलआर मे कटोती करे)
o Govt should not dictate interest rates to Banks. Liberalize the branch expansion policy
(ब�कों को लोनदर, शाखा �व�ार नी�त तय करने मे सरकार दखल न करे।)

o Allow entry of New Private Banks and New Foreign Banks. (�वदेशी ब�क और �नजी �ेत्र के ब�कों को
अनुम�त)
Table 6: Three rounds of bank licensing in India
Round-1 (1993-95) Round-2 (2001-04) Round 3 (2013-16)
1) ICICI 1) Kotak Mahindra Rajan invited applications,
2) HDFC 2) Yes Bank (Founder Rana Bimal Jalan Committee made
3) IndusInd Kapoor). Related Topic: selections:
4) DCB Yes bank scam/Crisis 1. Bandhan (A Microfinance
5) #
UTI → later Axis bank 📑📑Pillar#1B2: Bad loans company based in
6) IDBI → now owned by
#
& other Burning issues in W.Bengal)
LIC Bank/NBFC sector 2. IDFC (An infra finance
7) Global Trust Bank → NBFC based in
Merged with Oriental Bank Maharashtra). Later on,
No. 8-9-10: Bank of Punjab, another NBFC “Capital
Centurian Bank, Times Bank First” merged so renamed
were merged into HDFC into IDFC-First
Above banks are also known as new-generation private banks in India. (नयी पीढ़ी के �नजी �ेत्र के ब�क)
🚩🚩🚩FAQ: In early 90s- UTI Bank & IDBI Bank were not private sector banks, then why have you
kept them here in table? Ans. Because presently, they’re private sector banks. I don’t have to submit
this handout as evidence in the Supreme Court so I don’t care being so pedantic about everything.
You need to change your approach towards studies, to finish syllabus faster.
13.16.1 🏦🏦 � 🚗🚗🚗🚗 ‘On-Tap’ License to open Private Sector Banks (जब मन चाहे तब अज� डाल दो)
A private entity can open Bank only after getting license from RBI under Banking Regulation Act,
1949. Previously, one had to wait till RBI invited applications. But in the On-Tap system (WEF
2016), one can apply to RBI whenever he wishes (like a driving license), provided that:
1. It is a Resident Indian individual, NBFC, or private company
2. min. 10 years of experience in Banking-Finance Sector, (अनुभव)
3. Proposed Bank’s shareholding will be initially controlled by Indians. (शेयरमालीक� भारतीयों के हाथ म�)
4. Must be willing to open 25% branches in unbanked rural areas. (ग्रामीण इलाकों म� कु छ शाखाएं खोली होगी)
5. Min. 500 crore capital required. (�ूनतम इतनी पूंजी होनी ज�री पूंजी)
6. ✋Large industrial groups and NBFC with more than ₹5000 crore asset not allowed.
⇒ Examples of On-Tap Universal Bank Applicants in 2020-21: Chaitanya India, Pankaj Vaish etc.
⇒ RBI’s Shyamala Gopinath committee reviews/pass-rejects the applications. ( समी�ा स�म�त)
🚩🚩🚩FAQ: isn’t above definition conflicting with Scheduled Commercial Bank? Ans, given below

13.16.2 🏦🏦 �Steps or procedure to open a bank (एक ब�क �ा�पत करने के क� प्रिक्रया �ा है?)
Ans. If you open a commercial bank at present, the steps are as following
⇒ First you have to register the company with Ministry of Corporate Affairs, under Companies Act
⇒ Then you've to arrange minimum 500 cr capital. For this, If you want to issue shares in the share
market to acquire this ₹₹ → then you have to get permission from SEBI
⇒ Finally, you apply for bank license from RBI using above “ON-TAP” facility → If RBI is
satisfied with, it will give you license as an “non-scheduled (commercial) bank.”
⇒ After that you run the bank → once you satisfy BOTH conditions to become ‘scheduled bank’
o ✅Condition-A) minimum 5 lakh (capital + reserve)… you may already have THAT
BUT STILL SECOND Condition-B also need to be fulfilled that…
o ✅Condition-B) Your bank is not conducting business in a manner harmful to its
depositors. So, RBI may observe your bank’s business/behavior for some months/years,
to satisfy itself in this.
⇒ After RBI is satisfied with A+B= will give you the status of "scheduled (Commercial) bank."
13.17🚫🚫🏦🏦 � 🚗🚗🚗🚗 ALLOWING NBFC/LARGE CORPORATE TO SETUP BANKS

2016: RBI issued guidelines for 'on-tap' Bank licence. ['On-Tap'= You may apply for it whenever you
are ready - just like a driving licence. You don't have to wait for the notification date or "last date to
apply" like UPSC.]
⇒ On-Tap guideline: Company with minimum ₹500 cr capital can apply. However, its technical
rules about assets/ownership were such that Large NBFCs and industrial houses could not apply
for it.
⇒ 2020-June: RBI’s PK Mohanty committee for Corporate Structure for Indian Private Sector
Banks.
⇒ Mohanty committee recommended allowing large NBFCs/Corporate/Industrial Houses to apply
for Bank licenses. (बड़ी गैर ब�क �व�ीय सं �ान और कॉरपोरेट समूह को ब�क बनाने क� छू ट �मले)
13.17.1 🚫🚫🚫🚫 � 🚗🚗🚗🚗: 🤩🤩 Arguments in Favour प� म� तकर्

⇒ ⏫ competition, better interest rates, customer services. �ादा �धार्, अ�े �ाज दर, ग्राहकों को �ादा अ��
सेवाएं
⇒ Existing banks' balance sheets have deteriorated by scams & bad loans. So, they've become
overcautious and slow in lending to large business projects. Entry of fresh new banks to
invigorate the banking sector. पुरानी ब�कों म� �व�ीय घपलो/सम�ाओ के चलते बड़े प्रोजे� म� लोन देने म� सु�ी। नई ब�कों
के प्रवेश से इस �ेत्र म� �ू �त आएगी।
⇒ ⏬Chances of scams associated with NBFCs in futures- IF ILFS & other big NBFCs convert
themselves into Banks → RBI can supervise them more effectively. (More in pillar1B2-NPA)

13.17.2 🚫🚫🚫🚫 � 🚗🚗🚗🚗: 😰😰Arguments Against: �वप� म� तक
⇒ 😰😰Increased competition may lead to a natural tendency of mis-selling the products and
lending money to more risky businesses as evident from 2008's American Subprime crisis.
अ�ा�धक �धार् के चलते येन के न प्रकार से मुनाफा बटोरने के �लए अनाव�क �प से जो�खम लेकर कमजोर कं प�नयों को लोन िदए
जाएं गे
⇒ 😰😰PNB-Nirav Modi loan scam, Yes Bank-Rana Kapoor scam, ICICI-Vodafone loan scam = RBI
has failed to effectively supervise even the existing banks. (�रजवर् ब�क वतर्मान ब�कों क� �नगरानी करने म� भी
कमजोर सा�बत �आ है)
⇒ 😰😰Already large NBFCs are involved in scams: ILFS scam, DHFL scam, Karvy Capital Scam- the
critics are afraid that allowing large NBFCs in the Banking sector = more such scams. �व�ीय घोटालों
क� मात्रा बढ़ेगी
⇒ 😰😰Corporate governance in large industrial houses is not inspiring confidence at present e.g.
Ratan Tata vs Cyrus Mistry, Infosys founder Narayan Murthy versus ex-CEO Vishal Sikka etc.
Allowing them in the banking sector is not advisable. बड़ी कं प�नयों का कॉरपोरेट शासन ठीक नहीं है. सं �ापक
आपस म� ही लड़ते झगड़ते रहते ह�
⇒ 😰😰Large industrial houses like Tata, Ambani, Adani- may use the depositors money mainly to
finance their own projects/ nepotism, even if such projects are not viable- There will be
evergreening of loans for them. भाई भतीजावाद म� लोन िदए जाएं गे, पुरानी लोन चुकाने के �लए नया लोन िदया जाएगा,
भले कजर्दार का प्रोजे� बेकार हो.
⇒ 😰😰Could be misused for money laundering by big industrialists. (काले धन को वैध बनाने म� दु�पयोग)
⇒ 😰😰May concentrate India's economic power, depositors' savings in the hands of few oligarchs.
Then it could destabilize the entire banking system. (बचत कतार्ओ ं क� जमा पूंजी और भारत क� आ�थक श��
कु छ �गने-चुने रसूखदार/कु लीनवगर् के हाथों म� क� िद्रत, �जसे पूरी ब�िकंग �व�ा अ��र होने का खतरा। )
⇒ 😰😰Even in developed countries regulators do not encourage the entry of large corporates in the
banking sector mainly for the apprehensions about governance and financial stability. (�वक�सत
देशों म� भी �व�ीय �नयं त्रक इस प्रकार क� अनुम�त नहीं देते �ोंिक उ�� भी ब�िकंग शासन और �व�ीय ��रता म� जो�खम िदखता है)
2021-Sept: Newspapers indicate that RBI is unlikely to implement PK Mohanty suggestion.
13.17.3 🚫🚫🚫🚫 � 🚗🚗🚗🚗: Conclusion about banking license to Adani/Ambani? (�न�षर्)

⇒ ✋Anti: Considering aforementioned challenges, risks far outweigh the benefits. RBI and
government should focus on improving the administration & supervision of existing bank
instead of allowing large industrial houses here. (आकषर्ण/फायदे कम और चुनौ�तयां �ादा। इस�लए यह करने क�
जगह, वतर्मान ब�कों का प्रशासन और �नगरानी ठीक करने म� जोर देना चािहए.)
⇒ 🤩🤩Pro: Considering above benefits, Large NBFC and industrial houses may be given bank
licences after due diligence & effective supervision. (उ� फायदों को देखते �ए, प्रभावी �नगरानी के साथ इ�� ब�क
का लाइस�स देना चािहए)

13.18🏦🏦 � 🈶🈶 COMMERCIAL BANKS ⇒ FOREIGN BANKS (�वदेशी ब�क)
In Nehruvian Socialist Economy there was disdain & apprehensions about Foreign Banks. So, only a
handful of them were allowed to open branches. But, Post-1991-Reforms: system liberalized. (नेह�-
समाजवादी �वचारधारा के नी�त �नमार्ताओं म� �वदेशी ताकतों के प्र�त घृणा और डर → ब�त कम �वदेशी ब�कों को अनुम�त दी थी)
🤠🤠 Foreign - They’re Incorporated abroad (i.e. registered under the Companies Act of a
Bank in India foreign nation) & opening branch / subsidiary in India e.g. Citibank, Bank of
America, HSBC. उ�ोंने िकसी अ� देश के कं पनी कानून म� पं जीकरण करवाया है और िफर भारत
आकर शाखाएं खुली है
- While CRR, SLR & other norms applicable, but PSL norms vary depending
on number of branches. [📑📑Ref: Prev. Handout: PSL]
- RBI gives them ‘on-tap’ license on reciprocal basis. (REF: Lecture for its
meaning)
🧔🧔 Indian - Foreigners can invest max. 20% in its shareholding. E.g. BoB (15%), SBI
Public Sector (14%), PNB (13%) भारत क� सावर्ज�नक �ेत्रों म� �वदेशी �नवेश क� सीमा
Bank - Although Government thinking of raising it to 49% to help capital
mobilization for BASEL-III norms. [📑📑More in Next NPA handout]
🤵🤵 India - Foreigners can invest upto 49% (automatic-�चा�लत तरीके ) and upto 74% by
Private Sector approval of Government (सरकार क� अनुम�त लेकर). (More in 📑📑Pillar#3A: FDI)
Bank - e.g. HDFC (73%), ICICI (59%) Axis Bank (52%) is owned by Foreigners.
- Although Govt thinking of ⏫ to 100% to help capital mobilization for
BASEL-III norms . [📑📑More in Next Pillar#1B2: NPA handout]
13.18.1 🤵🤵 Foreign Banks in India: LVB merged with DBS (�वलीनीकरण)

⇒ 1926: Lakshmi Vilas Bank (LVB) was set up in Tamilnadu. So it is an Old Private Sector Bank.
(�नजी �ेत्र क� पुराने जमाने क� ब�क) 2020-Nov: Its financial situation became weak.
⇒ So, RBI approved its merger/amalgamation with Development Bank of Singapore DBS- which is,
a Foreign bank operating in India. (�व�ीय हालत कमजोर होने पर अ� एक ब�क म� �वलीनीकरण)
13.19🏦🏦 � 🌎🌎🚫🚫COMMERCIAL BANKS ⇒ DIFFERENTIAL BANKS

Difference 🌎🌎Universal Bank (सावर्�त्रक ब�क) 🌎🌎🌎🌎Differential Bank (भेदकर ब�क)
Open Anywhere: example SBI, ICICI Geographical Restrictions on branch opening
Branches [*After opening 25% of branches in for Local Area Bank (LAB), Regional Rural
शाखाएं unbanked rural areas] Banks (RRB)
Both Time & Demand Deposits of Payment Bank – Accept Max. 1 lakh deposit
Accept
any amount. only. In 2021- This limit increased to ₹2 lakh.
Give Loans Anyone [After 40% PSL] - SFB, RRB: 75% to PSL
to - ✋Payment Bank can’t give loans;
Chronology of differential banks: RRB(1976) → Local Area Bank (1996) → Small Finance Bank &
Payments bank(2015) → Wholesale banks (proposed)
13.19.1 🏦🏦 � 🌎🌎🌎🌎 Commercial Banks ⇒ Differential Banks⇒ RRB and LAB

Regional Rural Banks (�ेत्रीय ग्रामीण ब�क) Local Area Bank (�ानीय �ेत्र ब�क)
- Based on M.Narasimham’s Committee on - Based on Budget-1996 by Finance Minister
Financial Inclusion in 1970s# Manmohan Singh
- Setup under the provisions of RRB act 1976 - Unlike RRBs, they're not setup by Union or
& its amendment in 2015. Voting power: State govts or by any special act or
(Union + State + Sponsor bank) = 51% parliament. But by pvt entities simply
- e.g. Uttar Bihar Gramin Bank (Sponsor applying to RBI under Banking Regulation
bank- Central Bank of India) Act.
- Subjected to CRR, SLR norms but RBI - Can open branches in Max. 3 districts
could prescribe separate norms. sharing borders with each other. only 1
- PSL: 75%.(More in 📑📑Pillar#1A1) urban centre per district allowed.
- Their loan interest rates can’t be more than Remaining branches need to be opened in
prevailing lending rates of Cooperative rural areas of that district.
Banks in the area. - They’re Non-Sch. Banks so while CRR,
- Restricted to few districts. E.g. Baroda SLR, PSL etc very apply but every norm
Gramin Bank branches confined to with caveats.
Gujarat’s southern districts. - Initially 4: (1) Coastal Bank Andhra
- Ultimate regulator: RBI but immediate Pradesh (first to setup in 99), (2) Subhadhra
regulator NABARD. Local Area Bank, Kolhapur; (3) Krishna
Bhima Samruddhi (Andhra & Karnataka)
and (4) Capital Local Area Bank: Punjab
(Largest). But later Capital LAB converted
into Small Finance Bank (2016), so now
only 3 left.
- Only RBI regulates them.

🚩🚩🚩FAQ#: M.Narasimham committee was made in 1990s so how can he be in 1970s? Ans. Same
gentleman was chairman of many committees ✅(1) Financial inclusion (1970s) ✅(2) banking
reforms-I (1990s) ✅(3) banking reforms-II (1990s).
🚩🚩🚩FAQ: I’ve 500 jaat-ke Doubts about Local Area Banks. Ans. Not Important for UPSC. I’ve
only given short-note of LAB for helping UPSC aspirants trying for Bank-exam as backup/Plan-B.
13.19.2 🏦🏦 � 🌎🌎🌎🌎Commercial Banks ⇒ Differential Banks ⇒ SFB & PB

On Nachiket Mor Committee’s recommendations (2013-14), Governor Raghuram Rajan approved
these new types of banks for (1) financial inclusion (2) competition & innovation among players.
Parameters Small Finance Banks लघु �व� ब�क Payment banks भुगतान ब�क
Examples Capital Small Finance Bank (Punjab), 6 at present: Airtel, India Post, FINO,
Ujjivan (Karnataka), Utkarsh (UP): Paytm, Jio, NSDL. (Total 11 were
Total 10 list at selected; but AdityaBirla-Idea & other
rbi.org.in/scripts/banklinks.aspx withdrew later)
Eligibility Min.100cr. capital-walla Resident Min.100cr. capital-walla resident Indians,
during 1st Indian, Local Area Bank, NBFC, NBFCs, PPI-wallets (pre-paid payment
instrument), mobile telephone companies,
round of Micro-finance, with 10 years exp. in
super-market chains, cooperatives & companies
licensing banking / finance controlled by resident Indians
📌📌Area RBI Committee gave selection preference Anywhere
North East & Central India clusters where
Universal Banks’ penetration is poor
CRR, SLR, Same as Indian private banks Same as Indian Private Banks, but
Repo, FDI? special terms & condition in SLR.
Rural Must have 25% branches in unbanked No need but 25% access points must be
Penetration rural areas in rural areas like Business
correspondence (BC), Kiraana Stores
🛒🛒Target Unserved Underserved Farmers, Promoting Small savings
Consumers Micro, Small industries: िकसान, सू�, लघु Remittance of migrant labors, low income
households, unorganized sector, small business.
उद्योग
💰💰Accept Yes, without any restrictions ✋No NRI deposits, ✋No Fixed
Deposits िडपॉ�जट �ीकार करने म� कोई पाबं दी नहीं है deposit**
- Can accept only Demand Deposits
and Max. balance Rs.1 lakh per
customer. (In 2021- limit increased
to ₹2 lakhs)
Debit cards 💳💳 YES can give. 💳💳 YES can give.

Parameters Small Finance Banks लघु �व� ब�क Payment banks भुगतान ब�क
Credit cards 💳💳 YES can give. ✋No (because can’t give “loan”)
Loans - Yes, but 75% in PSL, - Can’t loan, So no PSL.
- 50% of loan portfolio of Rs. 25 - They’re required to invest all
lakhs/< loans. deposits in G-sec, T-Bill and in other
SCBs. ✋How much% notimp.
Evolve/ After 5 years can become Universal After 5 years can become Small Finance
future Commercial Bank, If RBI is satisfied. Bank, If RBI is satisfied with their record.
growth?
- BASEL-III norms applicable on both of SFB & PB. (More in 📑📑Pillar#1B2:BASEL Norms)
- Both SFB & PB can sell Mutual Fund (MF), Pension, Insurance policies with approvals of
respective regulators i.e. SEBI, IRDAI, PFRDA.
🚩🚩�FAQ: You wrote that Payment Banks can't accept FD or give loans or credit card but Paytm
is doing that!!?? Ans: Paytm doing FD/Credit Card/Loan activities as “an Agent” of a federal bank,
IndusIndia bank etc. Similarly, Although India Post Payments Bank (IPPB) cannot give loans
because it is a payment bank but signed a deal with HDFC Bank to give home loans as an ‘Agent’.
🚩🚩🚩FAQ: if payment banks cannot give loans, then what do they do with deposit money? Ans. It
is answered within the above table itself. Read properly. If you’re going to glance over this handout
casually & carelessly like a WhatsApp message then handout cannot help you in the UPSC exam.
13.19.3 🏦🏦 � 🌎🌎🌎🌎🚗🚗🚗🚗 On-Tap Licenses for starting SFB (मन चाहे तब अज� डालो)
- RBI reviewed & found SFBs have achieved their priority sector targets and helped in financial
inclusion. More competition and new players will help. (अ�धक ब�कों को अनुम�त देने से �धार् म� बढ़ोतरी
�व�ीय समावेशन म� मदद)
- so 2019-June, RBI announced it’ll allow ‘On-Tap’ license for SFB soon. (i.e. no need to wait for
notification unlike IAS exam, apply whenever you wish like a driving license)
Eligibility conditions to start SFB license ‘On Tap’: (Exact norms NOT IMP for IAS Exam)
- Indian persons/Indian companies with minimum “X” years experience in banking/finance.
- Existing NBFCs, MicroFinance, local area banks, Urban cooperative banks (UCB) and Payments
Banks (with 5 years’ experience) may also apply for license.
- Examples of On-Tap SFB Applicants in 2020-21: VSoft Technologies, Akhil Kumar Gupta, and
Dvara Kshetriya Gramin Financial Services, Centrum etc.
- RBI’s Shyamala Gopinath committee reviews/pass-rejects the applications.
13.19.4 🏦🏦 � 🌎🌎🌎🌎🌎🌎🌎🌎 Unity Small Finance Bank (SFB) gets license (2021)
⇒ 2021: RBI approved Unity Small Finance Bank, under ‘On-Tap’ licensing system.

⇒ Unity Small Finance Bank’s Ownership: 50:50 between 1) Centrum Finance 2) BharatPe
⇒ Unity-SFB has acquired scam-walli PMC cooperative bank. (= PMC’s depositors, staff,
buildings, assets etc). (से��म ग्रुप पीएमसी ब�क का अ�धग्रहण िकया है)
🔠🔠❓ Find correct Statement(s) about Payment Banks? (Prelims-2016)

1) Mobile telephone companies and supermarket chains that are owned and controlled by residents are
eligible to be promoters of Payment Banks.
2) Payment Banks can issue both credit cards and debit cards.
3) Payment Banks cannot undertake lending activities.
Codes: (a) 1 and 2 only (b) 1 and 3 only (c) 2 only (d) 1, 2 and 3
🔠🔠❓ What is the purpose of setting up of Small Finance Banks (SFBs) in India? (Prelims-2017)
1. To supply credit to small business units
2. To supply credit to small and marginal farmers
3. To encourage young entrepreneurs to set up business particularly in rural areas.
13.19.5 Commercial Banks → 📬📬India Post Payment Bank (IPPB)

- Registered as a Public Limited Company under Companies Act, 100% owned by Department of
Posts (Ministry of Communication and Information Technology.) → Obtained RBI’s License
under Banking Regulation Act to start working as a Payment Bank.
- Airtel Payments Bank was first to launch operations in 2017. Later, IPPB launched in 2018.
- Largest customer reach with 1.55 lakh Post offices across India.
- Doorstep banking through Postmen.
- Bank Account Types: Safal, Sugam, Saral (internal differences not imp4UPSC).
- Account can be opened with zero balance, no minimum balance requirement. Max. Balance 1
lakh per person. Minor Customer Aged 10 years or more can also open account. (नाबा�लग का भी खाता
खुलवा सकते ह�)
- 2019: IPPB announced it desires to convert itself from Payment Bank into a Small Finance Bank
(SFB), so it can offer loans to customers. (But as per RBI guidelines, Payment bank need 5 years’
experience before upgrading their license to SFB. या�न क� अभी मं �जल दू र है। )
13.19.6 📬📬Post Office Savings Bank (PoSB)?

Refer to Pillar: 1D3: Financial Inclusion → Small Savings Schemes.
🔠🔠❓ MCQ. Find correct about India Post Payments Bank (IPPB)? [Asked in UPSC-CDS-2018-1]
1) It has been incorporated as a Public Limited Company.
2) It started its operation by establishing two pilot branches at Hyderabad and Varanasi.

13.19.7 🚐🚐 ⏳ (Proposed) Wholesale & Long Term Finance Banks (WLTF)
- 2017: RBI proposed WLTF Bank. दीघर्का�लक थोक �व� ब�क.
- Entry capital 1000 crores, can’t accept deposits less than 10 crores, can give loans only to large
corporates & infrastructure projects. Other banks may use it for PSLC-certificate trading.
- 🎓🎓✋But since it’s not yet formed, so we need not loose sleep about how exactly it’ll work.
13.19.8 💸💸💸💸: 🏦🏦 Digital Payments- (Proposed) Digital Banks by NITI Aayog (2021)
⇒ 2021: NITI Aayog proposed setting up 'full-stack digital banks’.
⇒ This will be new type of banks under the Banking Regulation Act, 1949 (BR Act).
⇒ Digital Banks will not have physical branches. They will rely on internet for delivering banking
services. 🤩🤩Benefit? financial inclusion of rural area. (नी�त आयोग ने ऐसा प्र�ा�वत िकया है िक नए िक़� के
िड�जटल ब�क बनाए जाएं जो क� भौ�तक भौगो�लक �प से ब्रांच न हो िक�ु इं टरनेट के ज़�रए ब�िकंग सु�वधा दे इसे गाँव गाँव तक
�व�ीय समावेशन म� मदद �मलेगी)
⇒ 🎓🎓✋But since it’s not yet formed, so we need not loose sleep about how exactly it’ll work.
13.19.9 💸💸💸💸: 🏦🏦 Digital Banking Units in Budget 2022

⇒ Budget-2022 announced to setup 75 DBUs. Then RBI announced rules.
⇒ Basically commercial banks open fancy type of offices wherein every service provided digitally /
paper-less application forms with help of digital kiosks e.g. opening bank account, getting credit
cards etc.
⇒ How is this similar or different than NITI Aayog's Digital Banks? NOT IMP.
13.19.10 💸💸📡📡: 🏦🏦 Digital Payments- NeoBanks (�चकने चुपड़े श�)

- This is a fancy term for Financial technology (FinTech) related startups & Non-Banking
Financial Companies (NBFC) that are helping banking connectivity using digital channels.
🚩🚩🚩FAQ: How NeoBanks are similar or different than “DIGITAL BANKS”? Ans. ✋Not
important. When Startup-wallas want to attract inventors, they plant a lot of paid/PR/embellished
news items & columns with fancy terms like “NEOBANK” → it doesn’t automatically become
“exam worthy current affairs”…First of all let RBI/NITI/Finance Ministry/HC-SC etc make repeated
big headlines around this, then we’ll see. Observe previous years question papers. (�नवेशकों को आक�षत
करने के �लए �ाटर्अप क�नीओ द्वारा �चकने चुपड़े श�ों वाले समाचार �ांट िकए जाते ह�. तो वो अपने आप परी�ा के �लए काम का नहीं बन जाता.
पहले बड़े सरकारी सं �ानों द्वारा कु छ बड़ी बड़ी सु�खयां बटोरने दो िफर देख�ग.े )
13.20🏦🏦 �FI ⇒ BANKS ⇒ COOPERATIVE BANKS (सहकारी ब�क)

Type 🏦🏦 �Commercial 🏦🏦 �Cooperative Banks
Banks
Banking Reg. Applicable since 1949 Applicable since 1966.
Act

Regulator RBI Under RBI’s supervision:
- Multistate Cooperative Banks
- Urban Cooperative Banks
Under Dual supervision
- Other types of cooperative banks are under
dual supervision of RBI + respective State
govt’s registrar for cooperative society.
CRR, SLR, Yes Yes, but, RBI could keep different slabs/ norms.
BASEL-III
Repo, MSF Eligible to borrow Yes, but only selected category of Cooperative
Banks
PSL Lending Yes 40-75% Only urban cooperative banks
Who can Anyone First preference to members
borrow
Vote power Based on Shareholding, According to Cooperative Society norms,
like a Commercial members have vote power. So, 1 member = 1 vote
Company irrespective of how much capital contributed.
Profit Motive Yes, purely profit motive, Desire to help community. So, lending rates little
(मुनाफा करने क� so lending rates may be lower than commercial bank
चाह?) higher than Coop.
Presence (कहा पाई All India & overseas Mainly in Gujarat, Maharashtra, Andhra,
जाती है?) branches. Tamilnadu.
😰😰Challenges: Politicization, casteism, poor recovery of loans, scams, money laundering.
(राजनी�तकरण , जा�तवाद, कजार् वसूली म� अ�नय�मतता, घोटाले, धन-शोधन/ काले धन को वैध बनाना)

Table 7: Classification of Cooperative Banks
Urban Cooperative Banks (UCB: शहरी) Rural Cooperative Banks (ग्रामीण)
Further subcategories depending on 1) Notable State Cooperative Bank → District
- Scheduled / Non-Scheduled; OR Central Cooperative Bank (DCCB) →
- Single State / Multi State. Primary Agricultural Credit Societies
From 2018, RBI allowed them to voluntarily (PACS: प्राथ�मक कृ �ष ऋण स�म�तयां)**
upgrade to Small Finance Banks, with certain 2) Misc Types: Land Banks, Cooperative
conditions. Agriculture & Rural Development Banks.
(they give longer duration loans compared
to above banks. How long-duration?
NOTIMP)
**PACS are not ‘banks’. They can’t issue
chequebooks. RBI doesn’t regulate them. Only
State registrar regulates them.
- 2021: RBI setup NS Vishwanathan Panel for strengthening Urban Cooperative Banks (UCBs).
🔠🔠❓ Find correct statement(s) (asked in UPSC-Prelims-2020)

1. In terms of short-term credit delivery to the agriculture sector, District Central Cooperative Banks
(DCCBs) deliver more credit in comparison to Scheduled Commercial Banks and Regional Rural Banks
2. One of the most important functions of DCCBs is to provide funds to the PACS.
Answer Codes: [a) 1 only [b) 2 only [c) Both 1 and 2 [d) Neither It nor 2
13.20.1 🏦🏦 �😥😥 Cooperative Banks: Negative News (2019): PMC Bank (कांड हो गया)
⇒ The Punjab and Maharashtra Cooperative (PMC, HQ-Mumbai, setup 1984) is a Multi-State
Scheduled Urban Co-operative Bank. It functions in Maharashtra, Delhi, Karnataka, Goa,
Gujarat, Andhra and MP.
⇒ PMC bank loaned large amount to a weak company named ‘HDIL’, because of its cozy relations
with bank directors. Company who couldn’t repay it. NPA became so large, bank might collapse.
⇒ RBI imposed withdrawal limits on the depositors using the powers of Banking Regulation Act.
Because, if there was no withdrawal limit → ‘bank run’ would have been so high even CRR-SLR
can’t fulfill it.
⇒ ⚾📻📻⚾🎓🎓✋Then ball-by-ball commentary of RBI/Govt/SC/HC action = poor cost benefit.
⇒ Budget-2020: Promised to amend the Banking Regulation Act to increase RBI's powers over
cooperative banks. → done through Ordinance, which was later passed as Act ब�िकंग �व�नयमन
(सं शोधन) अ�ादेश/कानून
⇒ 2021-22: Scam-hit Punjab and Maharashtra Cooperative Bank Ltd (PMC Bank) aquired by /
merged with Unity Small Finance Bank Ltd. (USFBL). Now, PMC bank’s victim depositors will
get ₹5 lakh from DICGC (What is this org? Ans. 1B2). → if any remaining due amount beyond
₹5 lakhs → Victim depositors to get it from USFBL bank in instalments in next 10 years

🔠🔠❓ MCQ. Recently the RBI has imposed limitations, initially for a period of six months, on the
withdrawal of amount by account holders of this banks: (UPSC-CDS-i-2020) (a) IndusInd Bank
(b) Dhanlaxmi Bank (c) Punjab and Maharashtra Cooperative Bank (d) South Indian Bank
13.20.2 ⚖🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯Banking Regulation (Amendment) Ordinance/Act, 2020

- 2020-June: Ordinance issued to amend the Banking Regulation Act, 1949. 2020-Sept: Act passed
- Objective? protect depositors, prevent cooperative banks from falling into fraudulent activities.
Table 8:भूतकाल म� दोहरे �नयं त्रण के चलते घोटाले/कांड के बाद कायर्वाही धीमी होती थी, इस�लए अब �ादातर सहकारी ब�को को �सफर् �रजवर् ब�क के दायरे मे लाया गया
Type of Bank 😰😰BEFORE: Regulator(s) 🤩🤩After:
Regulator(s)
Commercial (SBI Axis) 🐯🐯RBI 🐯🐯RBI
Coop (Single State: rural) 🐯🐯RBI + �State Govt (=dual 🐯🐯RBI + �State
regulation) Govt
Coop (Single State: urban) 🐯🐯RBI + �State Govt(=dual 🐯🐯RBI ONLY
regulation)
Coop (Multi State 🐯🐯RBI + 🧔🧔Union Govt(=dual 🐯🐯RBI ONLY
Cooperative) regulation)
Coop: Primary Agricultural �State Govt �State Govt
Credit Societies ("PACS")
⇒ �State Government = State Govt’s Registrar for Coop Societies
⇒ 🧔🧔Union= Agro Ministry’s Registrar Multi-State Coop Societies
Before 😿😿 😿😿 After this Ordinance/Act/Amendment 😾😾 😾😾
If a commercial / cooperative bank was on ⇒ It makes technical reforms for easier/faster
verge of collapse, then RBI would first issue amalgamation / merger / restructuring of weak
“moratorium (रोक)” e.g. banks. (कमजोर ब�कों का आसानी-तेजी से समामेलन / �वलय /
⇒ “single depositor can’t withdraw more पुनगर्ठन)
than XX amount,
⇒ Bank can’t give loans until YY Date.
⇒ Then RBI will begin the process of fixing
the bank. → This disrupted the normal
business of the bank and created panic
among investors. (�नवेशकों म� दहशत फे लती थी)
It was difficult for a coop bank to raise Technical norms relaxed, to make it Easier.
capital/money by issuing IPO-
Shares/Bonds-Debentures. (Ref📑📑#1C)

Before 😿😿 😿😿 After this Ordinance/Act/Amendment 😾😾 😾😾
Provisions were vague / weak. Bank chairman must not be insolvent or a convicted
(कानून म� ��ता नहीं थी / कानूनी प्रावधान कमजोर थे) person etc., else RBI can remove him/her. (िदवा�लया या
अपराधी नहीं होना चािहए)
Provisions were vague / weak. Coop Bank’s Board of directors must have at least
51% of members with knowledge or experience in
accountancy, banking, economics or law. ELSE RBI
can replace board members (हर �ा�नक छू टभैये नेता को अब
बोडर्-सद� नहीं बना सकते)
Provisions were vague / weak. However, if scam in a cooperative bank → RBI can
takeover/supersede its board of directors for upto 5
years, subject to some technical conditions. (घोटाला �आ
तो सहकारी ब�क के बोडर् का अ�धग्रहण कर, �रजवर् ब�क वहाँ अपने लोगों/अफसरों
को 5 सालों तक वहाँ बैठा सकता है- हालाक� कु छ तकनीक� शत� के अधीन)
🔠🔠❓MCQ. Find correct Statements about ‘Urban Cooperative Banks’ in India (Pre-21)
1. They are supervised and regulated by local boards set up by the State Governments. [रा� सरकार
उनक� �नगरानी और �नयं त्रण करता है]
2. They can issue equity shares and preference shares. [वे इ��टी शेयर और वरीयता शेयर जारी कर सकते ह�।]
3. They were brought under the purview of Banking Regulation Act, 1949 through an Amendment
in 1966. [उ�� 1966 म� एक सं शोधन के मा�म से ब�िकंग �व�नयमन अ�ध�नयम, 1949 के दायरे म� लाया गया था।]
Codes: a) 1 only b) 2 and 3 only c) 1 and 3 only d) 1, 2 and 3
Related topics: Refer to
DICGC, UCB’s Supervisory Action Framework Pillar##1B2: Bad loans & other burning issues
(SAF)→ refer to in Banking Sector
Jan Dhan Yojana, Lead Bank Scheme etc → Pillar##1D: Financial Inclusion
13.21🚫🚫🚫🚫🚫 FORMAL FI ⇒ NON-BANKING FINANCIAL INSTITUTIONS

13.21.1 Development Finance Institutions (DFI: �वकास �व� सं �ान)
⇒ are meant for Medium to long term loans to industries, including support services like arranging
foreign currency, underwriting, technical / management consultancy, Bank guarantee etc.
⇒ They don't accept DEPOSITs from ordinary people.
⇒ Previously the financial intermediaries (�व�ीय म��) were classified into three categories 1) Bank,
2) Non-Bank 3) DFI
⇒ But M.Narasimham-II Committee on Banking sector reforms (1998): recommended only two
categories: Bank or non-bank. DFI were required to join either one category.

Table 9: Exact Years, Full Forms not very important but Chronology is important
Industrial Finance Corporation of India (IFCI) owned by the Finance Ministry's

1948
Department of Financial Services.
National Small Industries Corporation (NSIC) under the Ministry of Micro, Small and
1955
Medium Enterprises (MSME).
ICICI: Industrial credit and Investment Corporation of India Ltd was setup by GoI, World
1955
Bank etc. Later became a Private Sector Bank.
Industrial Development Bank Of India (IDBI) Act. 2004: Transformed into a Public Sector
1964
Bank. 2018: Government sold its majority shareholding to LIC.
India Infrastructure Finance Company Ltd (IIFCL) owned by the Finance Ministry's
2006
Department of Financial Services.
National Bank for Financing Infrastructure and Development (NaBFID) Bill, 2021 (बु�नयादी
2021
अवसं रचना और �वकास के �व� पोषण के �लए रा��ीय ब�क)
13.21.2 DFI → NaBFID: National Bank for Financing Infrastructure and Development
⇒ 💼💼Budget-2021: We'll set up this org with ₹20,000cr capital.
⇒ NaBFID will give loans worth ₹5 lakh crore in 3 years. Chairman: K.V. Kamath.
⇒ It'll get funding from RBI, Govt, World Bank etc & by issuing bonds in market etc
⇒ As per news reports 1) The govt may order Insurance & Pension companies to invest some ₹₹ in
NaBFID. 2) This org may replace the India Infrastructure Finance Company Limited (llFCL)
⇒ 🤩🤩Benefit? It’ll help in National Infrastructure Pipeline (NIP) project.(📑📑Ref: HDT-
Pillar#5:Infrastructure)
13.21.3 🚫🚫🚫🚫🚫What is Bad Bank- NARCL-IDRCL?

📑📑Ref: HDT-Pillar#1B2: Bad Loans
13.21.4 🚫🚫🚫🚫🚫Non Bank ⇒ All India Financial Institutions (AIFI):

अ�खल भारतीय �व�ीय सं �ान were setup by respective acts of Parliament
EXIM (Jan 1982) NABARD (Jul 1982) NHB (1988) SIDBI (1990)
आयात �नयार्त के �लए कृ �ष और गाँव �वकास के �लए गृह/आवास �नमार्ण छोटे उद्योगों के �वकास के �लए
Export-Import National Bank for National Housing Small Industries
Bank of India Agriculture and Bank Development
Rural Development Bank of India
Boss: Government Previously RBI had Original boss: RBI Originally 100% owned by
of India (100%) minority-stakes in (100%). But, IDBI. Later on shareholding
NABARD but 2018: 2019-Apr: RBI transferred → SBI, LIC etc
100% Govt owned. sold 100% to
Govt.
Promotes cross - Regulatory - Finance to - Operates Credit
border trade and supervision: banks and Guarantee fund, Small
investment, helps Coop + RRB NBFCs for Enterprises Development
importers-exports - + Indirect housing Fund (SEDF).
with loans and refinance to projects. - Operates udyamimitra.in
foreign currency. farmers, artisans - RESIDEX for loans to small
- Operates Rural index to entrepreneurs via schemes
Infra. monitor like Mudra, Stand-up-
Development residential India. (📑📑Ref: HDT-
fund (RIDF) real estate Pillar#1D: to know more
prices. abt these schemes)
- Earlier it was
Regulator of
Housing
Finance Cos
(NBFC)**
⇒ ** Budget-2019: shifted NHB’s regulatory powers to RBI.
⇒ NABARD Amendment Act 2017: facilitated transfer of RBI shares to Govt.
⇒ AIFIs are not ‘banks’ because can’t accept direct deposits from the public.
⇒ RBI is the regulator over AIFI, BASEL norms applicable but RBI can prescribe different / slabs
norms / deadlines. What/why/how?NotIMP.
⇒ Atmanirbhar Bharat 2020→ RBI announced Special refinance facility for AIFI → they can
borrow more ₹₹ from RBI → circulate loan towards to agriculture, housing, MSME, foreign
trade. (�वशेष पुन�व� सु�वधा)
⇒ ✋5th AIFI = Industrial Investment Bank of India (IIBI) closed in 2012.

🚩🚩🚩FAQ: Whether NABARD is 100% owned by govt or 100% owned by RBI- what difference
does it make? Ans. Shareholders vote for selecting board of directors. Shareholders receive dividend
from the profit of the organization. So Govt or RBI gets power/benefits depending on who owns
majority shareholding.
🔠🔠❓ MCQ. Which of the following grants direct credit assistance to rural households? (UPSC-Pre-2013)
1) Regional Rural Banks
2) National Bank for Agriculture and Rural Development
3) Land Development Banks
Answer Codes:(a) 1 and 2 only (b) 2 only (b) 1 and 3 only (d) 1, 2 and 3
🔠🔠❓Find Correct Statement(s) (Asked in UPSC-Prelims-2004)
A) NHB, the apex institution of housing finance in India, was setup as a wholly owned subsidiary of RBI
B) SIDBI was established as a wholly owned subsidiary of the Industrial development bank of India
C) Both A and B D) Neither A nor B
13.21.5 🚫🚫🚫🚫🚫FI ⇒ Non-Bank ⇒ Primary Dealers (PD)- (प्राथ�मक �वक्रेता)
⇒ They deal in "primary" market i.e. directly buy fresh G-sec from RBI’s E-Kuber platform and sell
it in the secondary market. Total 20+ PD licensed by RBI: 14 of them are Banks. E.g. Standard
Chartered Bank, HSBC (HongKong), SBI, Kotak etc. (Numbers not important)
Related Topic: Retail/Ordinary Investors also buy G-Sec directly from RBI by opening a ‘Retail
Direct Gilt Account’ (RDG Account). (More in 📑📑Pillar#1C: Deepening of Capital Market)
13.21.6 🚫🚫🚫🚫🚫FI ⇒ NBFCs (गेर-ब�िकंग �व�ीय कं प�नया)

Parameter Commercial Banks Non-Banking Financial Companies (NBFCs)
Registration Banking Regulation Act Companies Act
Supervision RBI Depends.Mutual funds-SEBI, Insurance Co:
IRDAI etc.
Entry Capital 500 Cr. Differs. Rs. 5cr for MicroFinance Company, 200
cr. For reinsurer etc. [figures not imp]
Numbers 13 Public Sector (incl. Post Payment Total 10,190. Out of them 108 deposit Taking,
Bank), 56 RRBs, 39 private sectors remaining are non-deposit-taking (ND).
(including SFB, PB), 44 Foreign Banks.
[figures not imp]
Can accept - Can accept Time & Demand - Only NBFC-Deposit-Taking (NBFC-D) &
Deposits? deposits [also known as even they can accept only Time Deposits. E.g.
chequable deposit]. Bajaj Finance.
- Payment banks- can’t accept - Deposits are not insured under DICGC Act.
time deposits e.g. Fixed 📑📑 More in Pillar#1B1
Deposits.
- Their deposits are insured
under DICGC Act.
Can issue - Yes, Banker can issue these - Can’t issue their chequebook, debit/credit
Chequebook, instruments. card.
Credit Card, - 🚩🚩🚩FAQ: Bajaj Finserv is issuing Credit
Debit Card? Cards!!?? Ans. Bajaj Finserv is giving you the
credit card of RBL-Bank. So Bajaj Finserv is
acting as an 'Agent' of the RBL Bank.
Prudential CRR, SLR, applicable - SLR applicable ONLY on NBFC-D. but RBI
Norms सावधानी can prescribe different slabs / formulas than
के मानदंड banks.
- CRR not applicable on any type of NBFC.
BASEL Yes, Applicable. - Applicable on 108 NBFC-D and
Capital 📑📑 More in Pillar#1B2 - Applicable on 276 NBFCs – ND – SI (non-
Adequacy deposit taking Systematically Important with
Norms, LCR- assets over ₹ 500 crores)
HQLA norms - e.g. L&T Finance, Cholamandalam etc.
But RBI can prescribe different slabs / norms /deadlines.
Investment They can keep depositor’s money Can invest clients’ money in share market. E.g.
ग्राहक का पैसा in RBI approved securities. But Mutual Funds, Insurance Companies.
िकधर �नवेश करते can’t invest in share market per se,
directly.

Parameter Commercial Banks Non-Banking Financial Companies (NBFCs)
Loan Interest Decided as per RBI’s methodology Varies & depends on nature of biz.
Rate �ाज दर from time to time (BPLR, MCLR,
External Benchmark etc.) Ref:
1A1
Recovery Loan recovery powers under - Housing Finance Companies have SARFAESI
बकाया रा�श क� SARFAESI Act. powers. But, all types of NBFCs don’t have it.
वसूली 📑📑 More in Pillar#1B2 (More in 📑📑Pillar#1B2)
Consumer RBI’s Ombudsman, Bank’s RBI’s separate Ombudsman for NBFCs starting
Complaints Internal Ombudsman ** �शकायत the NBFC-D since 2018**.
�नवारण
**More about these Ombudsman in 📑📑Pillar#1D: Insurance handout
🔠🔠❓ Find correct Statement(s) about NBFCs in India [Asked in UPSC-Prelims-2010]
A) They cannot engage in the acquisition of securities issued by government.
B) They cannot accept demand deposits like savings account.
🔠🔠❓ The main functioning of the banking system is to [Asked in UPSC-CDS-2013-II]
(a) accept deposits and provide credit (b) accept deposits and subsidies
(c) provide credit and subsidies (d) accept deposits, give credit and subsidies
13.21.7 🚫🚫🚫🚫🚫 NBFCs Regulated by RBI 🐯🐯 (�नयं त्रण/देखरेख)
Table 10: 🎓🎓✋no need to remember examples, just observe pattern

Investment and They mainly help buying ‘assets/machinery’ like tractor, bulldozer, etc
Credit Company E.g. SREI Equipment Finance, Limited
Consumer Durable - Help buying TV, Fridge, Mobile, AC etc. with Buy now Pay later
Loan Finance /BNPL (BNPL) / Equated Monthly Instalment (EMI) model. (How they’re
similar or different = PHD not required. हर चीज़ का �विकपीिडया बनना ज�री
नहीं है पुराने पेपर देख लो)
- Eg. Bajaj Finserv, Flexpay, Zestpay etc.

Core Investment - They do long term investment in Companies. E.g. Tata Capital,
Company (CIC) Reliance Capital, Infrastructure Leasing & Financial Services Limited
(IL&FS)
- IL&FS in controversy because couldn’t repay interest to lenders. 📑📑
More in next NPA handout.
Infrastructure Internal difference notimp for UPSC. Basically, they give loan for infra.
Finance Company Projects like highway, airport, powerplants. ( बु�नयादी अवसं रचना के �लए दीघर् अव�ध के
(IFC) लोन)
Infrastructure Debt - E.g. Rural Electrification Company ltd. (REC)
Fund (IDF) - L&T IDF, Kotak IDF, IDFC IDF (“IDFC First” has separate license
for Private Sector Bank).
Asset Reconstruction They buy bad loans / NPA from Banks & other NBFCs, and try to salvage
Companies (ARC) value from the underlying assets. E.g Anil Ambani’s Reliance ARC.
Factoring They lend short term money to client against his invoices / accounts
Companies receivable. E.g. IFCI Factors, Siemens Factoring. (What is Factoring?
Ans. 📑📑Pillar#1C)
Gold Loan e.g. Muthoot gold loan, Mannapuram Gold.
Companies RBI decides their Loan to Value ratio (LTV) (More in 📑📑Pillar#1A2).
Micro Finance - 2010: RBI’s Y. H. Malegam Committee → RBI created a new NBFC
Institutions category called Micro Finance Institution (MFI)
(MFI: सू� �व� सं �ान) - They give small loans to poor without collateral, flexible EMI.
- eg:Bandhan (W.Bengal, separately got PvB license), Disha (A'Bad:
separately got SFB license), SKS (Andhra), Cashpor (UP), Ujjivan
(Karnataka).
- 📔📔📔📔ES20 appreciated the role of MFI in Helping the weaker section
because Majority of its borrowers are women (97%), SC/ST(30%) and
minorities (29%)
- Who regulates them? RBI + Ministry of Corporate Affairs
- Who can borrow from MFI? Ans. Household whose annual income is
not more than ₹ 1.25 lakh (rural) or ₹ 2 lakhs (urban).
- How much can one person borrow from an MFI? Ans. Not More than
₹ 1.25 lakh. [**Before 2019-Oct above limits were lowers.]
MUDRA (2015) - A non-deposit taking NBFC owned by SIDBI. It gives indirect loans to
Micro enterprises through PM Mudra Yojana.
- 📑📑 More in Pillar1D- Financial Inclusion.

Fintech cos: P2P - It is like Olx-Quickr connecting sellers of second hand goods with
Lenders buyers. the P2P lending websites connect borrowers and lenders. E.g.
Faircent.com, Cashkumar.com, CRED Mint etc.
- 2021- CRED Mint launched. Newspapers gone crazy so Babushonas
are demanding that I should teach them PHD thesis on its business
model. ✋Bhai, I’ll not teach it. Look @previous exam MCQs in this
Handout
Fintech cos: Account - They manage information of a customer’s financial assets & display it
Aggregators (AA) to him or to third party (like loan giver, credit rating company &
Apps)
- 2018: RBI gave license to 5 cos- NeSL,Cookiejar etc.
Fintech cos: - E.g. Loanadda.com, Moneytap.com, Loanbazaar, Paisabazaar etc.
Loan Aggregators portals
(ऋण समूहन) - 😰😰Challenges? Often these digital platforms that act as outsourced
agents of banks/NBFCs to sell loans.
- But, customers face difficulty in complaint/grievance redressal.
- Now even Google Pay app developing features for loans. So RBI has
expressed its displeasure and is presently working on rules to fix this.
Residuary (अव�श�) Any NBFC not regulated by any other regulator- falls under RBI’s
purview.
13.21.8 🚫🚫🚫🚫🚫Credit Information Companies (CIC) versus Credit Rating Agencies (CRA)
Credit Information Credit Rating Agencies (CRA)
Companies (CIC)
Regulator RBI SEBI
E.g. CIBIL TransUnion, CRIF Standards and Poor's, Moody’s, CRISIL,
High Mark, Equifax and CARE, ICRA, FITCH Ratings India Pvt.
Experian. Ltd, Brickwork Ratings India, SMERA.
check the credit “Individual Persons” (एकल companies, NBFCs, governments, local
worthiness/ loan �� के कजर् वापस चुकाने क� औकात है िक bodies, non-profit organizations.
repayment capacity of नहीं उसका मू�ांकन करते ह�) They do not check it for individual
persons. ( सं �ानों क� कजार् वापस चुकाने क� औकात
का मू�ांकन करते ह�. एक एक इं सान के �लए नहीं करते)
Rating numerical scores. e.g. CIBIL alphabetical symbols e.g. AAA, AA-, D-
Score between 300-900. etc.
Utility? Better the score → similar to the left cell.

🤩🤩1) your loan application
will be passed more easily by
the Bank/loan-giving NBFC.
🤩🤩2) You'll have to pay lower
interest rate.
🔠🔠❓MCQ. Find Correct about credit rating agencies (CRA) in India? (Prelims-2022)
1. They are regulated by the Reserve Bank of India.
2. The rating agency popularly known as ICRA is a public limited company.
3. Brickwork Ratings is an Indian credit rating agency.
Which of the statements given above are correct ?
(a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3
13.21.9 🚫🚫🚫🚫🚫 NBFCs Regulated by SEBI 🐱🐱 (📑📑More in Pillar#1C)
- They help clients buy-sell shares and bonds (=debentures) depending

on his instructions E.g. Motilal Oswal, Indiabulls, Sherkhan, Karvy etc.
Stock Broker - 2019: Karvy Stock Broking transferred clients money & shares into its
own group company Karvy Realty without clients’ consent, so SEBI
banned Karvy.
- They pool clients’ money and MF-manager invests it in shares/bonds
using his own discretion & expertise.
Mutual Funds (MF) - E.g. SBI's Shariah Equity Mutual Fund: clients' money invested in
Sharia compliant Cos. That don’t deal with alcohol, pork, debt, tobacco
or weapons.
- Pool & invest money in real estate / infra projects e.g. IRB. <📑📑More
REITs / InvITs
in Pillar#1C: SEBI Handout>
⇒ Underwriting, Merger & Acquisition, Wealth Management of rich
Investment Banks: people:
(USA term) & ⇒ E.g. Kotak Mahindra, Citigroup, Bank of America, DSP Merrill Lynch,
Merchant Banking Morgan Stanley, SBI capital
Companies: ⇒ 2021: SEBI allowed payments banks to act as investment bankers (after
(UK term) fulfilling the rules/regulations of SEBI). सेबी से अनुम�त लेकर भुगतान ब�क ये कर
सकते ह�
Venture Capital VCF Help startup companies to arrange capital e.g. IFCI-VCF, IDG-VCF
Fund

13.21.10 🚫🚫🚫🚫🚫 NBFCs Regulated by Others 🦊🦊
Regulator Example NBFC Companies

Insurance Regulatory and Development Authority (IRDAI) regulates:
IRDAI
- 1) Life Insurance companies e.g. LIC, HDFC Standard Life Insurance
(📑📑More in
- 2) Non-Life (=General) insurance e.g. IFFCO-Tokyo General Insurance.
Pill1D)
- 3) Policy aggregator web-platforms such Policybazaar.com
PFRDA Pension Fund Regulatory and Development Authority (PFRDA) regulates all
(📑📑More in Pill1D) Pension Funds, except EPFO & other statutory funds.
National - Housing Finance Companies such as DHFL, Muthoot Housing finance
Housing Bank etc. These companies were earlier regulated by NHB but after Budget-
(NHB) 2019, this category’s is regulated by RBI.
1. NIDHI Companies: Mutual benefit club, only members can borrow. e.g.
Ministry of South Madras Benefit Fund ltd, Maben Nidhi Ltd (of Mannapuram group)
Corporate 2. Microfinance Companies: learned in previous section. Microfinance
Affairs Companies’ some of the regulation work done by RBI and some of the
regulation work done by Corporate Affairs Ministry.
It regulates ‘Chit funds’. e.g. Shriram
State Registrar
Chit fund is a type of collective investment scheme with monthly
of Chit Funds
contributions & borrowing by contributing members Chits. (Ref 📑📑Pillar#1D)
13.21.11 👻👻(🚫🚫🚫🚫): NBFC: Shadow Banking (आभासी / प्र�तछाया ब�िकंग प्रणाली)

⇒ 📔📔📔📔ES20 observed: Shadow banking is a set of activities and institutions. They operate
partially (or fully) outside the traditional commercial banking sector. They are not fully regulated
by the RBI. ये सं �ाए पारंप�रक ब�िकंग �नयमो के दायरे से बाहर काम करती है.
⇒ A shadow banking system can be composed of a single institution or multiple entities forming a
chain.
⇒ They mobilize funds by borrowing from banks, issuing Commercial Papers (CP) and Bonds
(=Non-convertible debentures)
Table 11: Three important segments of the shadow banking system in India
HFCs Housing Finance Companies. E.g. Dewan Housing Finance Limited (DHFL)
LDMFs - Liquid Debt Mutual Funds invest clients money into short term debt instruments
such as T-bill (of Govt) and Commercial Papers (of companies).
- e.g. certain schemes by UTI, Kotak, L&T, Tata mutual funds
Retail- Retail Non-Banking Financial Companies such As Gold Loan Companies, Asset
NBFCs Finance Companies etc.

Shadow banking system’s assets are risky. Sometimes they can’t honour their obligations/bond
repayments. It results into severe crisis, as seen in the ILFS crisis (2019). (उनक� सं प�तया जो�खमपूणर् होती है)
(More in 📑📑Pillar#1B2)
13.21.12 🧕🧕NBFC-not allowed in India: Islamic Banking
- Interest (Riba) is prohibited (Haram) in Islam. So, Islamic Banking operates through Ijara,
Murbaha, Musharaka mechanisms- in which depositors’ money is invested in borrower’s
property / business and returns are shared in form of rent / profit but not in the form of Interest.
- While previous committees said give permission to Islamic Banks in India, but RBI is opposed
(2017).
- 2017: Kerala Govt allowed opening of a Islamic Bank by registering it as “co-operative society”,
so as to avoid the RBI’s ban. But further, legal controversy notimp. 🎓🎓✋
- 👍👍Pro-Arguments? Financial inclusion of Minorities/Muslims. अ�सं �कों का �व�ीय समावेशन
👎👎Anti-Arguments against allowing Islamic Banking in India?
- Specialized Manpower required. Secular India’s PM-Jan-Dhan Yojana & Post Office Payment
bank efforts are sufficient. (ब�क-बचत क� धमर्�नरपे� सेवाएं उपल�. अलग से एक धमर् �वशेष के �लए �व�ीय सेवा
अनाव�क)
- USA Govt alleges their involvement in terror finance & money laundering. (आतं क� �व�पोषण, काले
धन को वैध बनाना)
13.21.13 🧔🧔🧔🔪🔪💵💵😱😱 Informal Financial Intermediaries (अनौपचा�रक �व�ीय म��)
- Unlike banks/NBFCs, they provide loans without formal application procedure, etc but require
Property/Vehicle/Home/Goods/Crop/Gold etc. as collaterals/pawn. (सं प�� गरवी रखवा के कजर्)
- They charge very high compound interest rates & use muscle power for recovery (ऊंचे �ाजदर,
वसूली के �लए धमकाना-बलप्रयोग करना.)
- For every Rs.100 borrowed by a rural household, 33% from informal money lenders, remining
from banks, friends-family etc. (2012 data)
- They don’t fall under RBI purview, but State Govts have individual laws to regulate them e.g.
Bombay Moneylenders Act 1947, Kerala (1958), Gujarat (2011). These laws require such
informal lenders to register, impose ceiling on the interest rate & prohibit strong-arm tactics.
(�रजवर् ब�क क� �नगरानी म� नहीं िकंतु रा� सरकारों ने �नयं त्रण के �लए कानून बनाएं - पं जीकरण, �ाज क� मह�म सीमा �नधार्�रत
करना, बलप्रयोग/जबरन वसूली पर रोक)

Table 12: Following Examples/Differentiation not imp for IAS Exam but Banking Exams
Types → Indigenous Banker (देशी ब�कर) Moneylender / Brokers

Shroff, Shikarpuri, Chettiar, Kabuli Pathan, Quistwala, Arhatia,
Medieval time
Marwari, Aiyar, Rastogi Village Bania, Soni, Mahajan & Seth,
known as →
Pawnbrokers, Financial Brokers
They used to mobilize money They use their own savings-money
Money
from Public via: 1) Hundi: bill of (or sometimes some villain’s black
mobilization →
exchange; money- �यं का पैसा कज� पर देते या िकसी भ्र� नेता
पैसा कहां से लाते ह�
2) Commercial bills अफसर का काला धन कज� पर घुमाते)
13.21.14 ✍🎷🎷 Mock Questions for Mains

1. “Discuss the evolution / structure / function / objective of Payment bank/RRB etc”= This is a too
simplistic Mains Question for UPSC. These institutions have to be seen in the context of
GDP/Economic Growth, Investment/NPA-Bad loans, Inclusive growth/Financial Inclusion. So,
indirectly you may use’em as fodder points in such questions. (इस प्रकार के सामा� प्र� नहीं पूछे जाते
यूपीएससी मु� परी�ा म�)
2. “Suggest reforms for public sector bank, discussion their success after nationalization” etc. =
Those topics are still half-finished until we study Pillar#1B2: Bad loans, BASEL and other
burning issues in the banking sector. (सावर्ज�नक �ेत्र के ब�को म� सुधार िक चचार् क��जए ये मुद्दा अभी हमने पूरा नहीं
पढ़ा �ोंिक िदवा�लयापन क� सम�ा के बारे म� अगले Pillar#1b2 म� और पढ़ाई होगी)
📑📑Next HDT: 🔥🔥 1B2: Burning Issues in Banking: Bad Loans, NPA, IBC, SARFAESI, BASEL etc.

Pillar#1B-2: Bad loans & other Burning issues in Banking sector
Table of Contents
14 🔥🔥🔥🔥 Bad Loans & Other Burning Issues in Banking ............................................................................ 143
14.11 🔪🔪Types of loans: Based on Interest Rate ....................................................................................... 143
14.12 🔪🔪Types of loans: Based on Borrowers ........................................................................................... 143
14.13 🔪🔪💀💀Non-Performing Assets (अनजर्क प�रसं प��यां) ........................................................................... 144
14.13.1 🔪🔪🔪🔪-🤑🤑-😕😕-😭😭NPA / TBS Problem: Three Stages of................................................... 144
14.13.2 🔪🔪🔪🔪NPA related definitions in Banking Sector ................................................................. 145
14.14 👻👻👻👻👻👻✋ ATMANIRABHAR → Loan/EMI/NPA relief / Moratorium ............................... 146
14.15 🐯🐯🐯🐯🐯🐯 RBI “3R” Framework for Revitalizing Stressed Assets (2015-19) .............................. 146
14.15.1 ✔Rectification (सुधार) ................................................................................................................ 146
14.15.2 ⛏Restructuring (पुनगर्ठन: �ाज दर या कजर् चुकाने क� अव�ध या मा�लक� म� बदलाव) ............................... 146
14.15.3 🔪🔪 Recovery (वसूली) .................................................................................................................. 147
14.15.4 🦁🦁 🔪🔪RBI’s Prudential Framework (2019) .......................................................................... 147
14.15.5 🦁🦁 🔪🔪RBI’s KV Kamath Report Resolution Framework for Corona-related Stress ........ 147
14.15.6 🦁🦁 🔪🔪Resolution Framework 1.0 and 2.0 (2020-21) ........................................................... 148
14.16 ⚖🔪🔪 SARFAESI Act 2002: Origin, Objective & Limitations...................................................... 148
14.16.1 ⚖🔪🔪🔪💪💪 Which lenders have SARFAESI powers? ....................................................... 148
14.16.2 🔨🔨⚖ SC Judgement: Yes, Cooperative banks also have SARFAESI powers (2020) ....... 148
14.16.3 ⚖🔪🔪: �Limitations of SARFAESI Act (मयार्दाए)................................................................ 149
14.17 ⚖🔪🔪🔪🔪 Insolvency and Bankruptcy (I&B) Code 2016 ............................................................. 149
14.17.1 ⚖🔪🔪🔪🔪: IBC Not applicable on following borrowers....................................................... 150
14.17.2 ⚖🔪🔪🔪🔪 Insolvency and Bankruptcy Code Amendment (2018: सं िहता सं शोधन)................. 151
14.17.3 ⚖🔪🔪🔪🔪 IBC Code (first) Amendment Act (2019: सं िहता सं शोधन) ....................................... 151
14.17.4 ⚖🔪🔪🔪🔪 IBC Code (second) Amendment Act 2019.......................................................... 151
14.17.5 ⚖🔪🔪🔪🔪:🤫🤫 IBC Pre-Packs (पद� के पीछे ज�ी से के स सुलटा लेते है!)............................................ 152
14.17.6 ⚖🔪🔪🔪🔪: 🥱🥱 IBBI directive on Avoidance Transaction and 500 other technical things
153
14.17.7 👻👻� (⚖🔪🔪🔪🔪) ATMANIRBHAR → IBC Ordinance/Act 2020 to suspend new cases
153
14.17.8 🕵🕵(⚖🔪🔪🔪🔪) Insolvency and Bankruptcy Board of India (IBBI) .................................... 153
14.17.9 🕵🕵 📡📡IBBI → Information Utility ........................................................................................ 154
14.17.10 🕵🕵(⚖🔪🔪🔪🔪)Insolvency → Misc. Org: Indian Institute of Corporate Affairs ............... 154
14.17.11 💪💪 Project Sashakt by Finance Ministry (2018).................................................................... 154
14.17.12 👻👻👻👻👻 ATMA-NIRBHAR → Insolvency → Micro,Small,Medium Enterprises ...... 155
14.17.13 (⚖🔪🔪🤝🤝)🈶🈶🈶🈶 Cross-border Insolvency (सीमा-पार का िदवा�लयापन) .................................. 155
14.18 (⚖🔪🔪🔪🔪) Voluntary Liquidation of Companies ........................................................................ 156
14.18.1 (⚖🔪🔪🔪🔪) : 😥😥 Challenges in voluntary liquidation (चुनौ�तयाँ):......................................... 156
14.19 (⚖🔪🔪🔪🔪)📘📘 📘📘 Economic SurveyS on IBC/NPA (आ�थक सव��ण) ............................................. 156
14.19.1 Economic Survey 2018-19 on IBC/NPA................................................................................. 156
(Batch:PCB7) Mrunal’s Economy Pillar#1B2: Bad loans & Burning Issues in Banking → Page 141
14.19.2 (⚖🔪🔪🔪🔪)Economic Survey 2020 on IBC/NPA (released in 2020-Jan-31st) ................... 157
14.20 🤒🤒🤒 💊💊 📅📅: ES21: Regulatory Forbearance (�व�नयामक� �मा/सहनशीलता) ..................................... 157
14.21 👁👁👁🗨🗨🔪🔪🔪🔪 Borrowers’ Database & Surveillance (उधारकतार्ओ ं का डेटाबेज व् �नगरानी) ......................... 158
14.21.1 👁👁👁🗨🗨🗨🗨🗨🗨-📔📔📔📔ES20: Use AI-ML Technology................................................................... 158
14.21.2 👁👁👁🗨🗨🗨🗨🗨🗨-📔📔📔📔 ES20: setup PSBN Network ...................................................................... 159
14.21.3 👁👁👁🗨🗨🗨🗨🗨🗨- 🐯🐯 RBI → Public Credit Registry (ऋण क� सावर्ज�नक र�ज��ी)................................ 159
14.21.4 👁👁👁🗨🗨🗨🗨🗨🗨- 🌐🌐 Legal Entity Identifier (LEI) Number: (कानूनी इकाई पहचान सं �ांक) ............... 160
14.22 🔪🔪🔪🔪🔪🔪🔪🔪- ⚖ Fugitive Economic Offenders Act, 2018 ......................................................... 160
14.23 🕵🕵 🏦🏦 💸💸💸💸 DICGC Act: Objective & Limitations .................................................................... 161
14.23.1 🕵🕵 🏦🏦 💸💸💸💸- 👎👎 Limitation of DICGC (मयार्दाएँ ) ............................................................... 162
14.24 �(🏦🏦 🔪🔪🔪🔪) Bad Bank (NARCL, IDRCL-2021): Intro............................................................ 162
14.24.1 �(🏦🏦 🔪🔪🔪🔪): 🧬🧬 Bad Bank Structure .............................................................................. 163
14.24.2 �(🏦🏦 🔪🔪🔪🔪) Bad Bank: 🗃🗃 functioning ........................................................................... 164
14.24.3 �(🏦🏦 🔪🔪🔪🔪) Bad Bank: Benefits & Challenges? ............................................................. 164
14.24.4 �(🏦🏦 🔪🔪🔪🔪) Bad Bank: ✍Conclusion (�न�षर्) .............................................................. 165
14.25 🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯� Prompt Corrective Action (PCA) Framework ............................................ 165
14.25.1 🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯� RBI’s Prompt Corrective Action (PCA) for NBFCs .......................... 166
14.25.2 😼😼😼😼😼😼😼😼😼😼� Supervisory Action Framework for Urban Co-operative Banks ...... 166
14.25.3 👻👻ATMANIRBHAR → 🤧🤧🤧🤧🏎🏎� RBI orders bank to halt Dividend Distribution .. 167
14.25.4 🐯🐯: 🦋🦋Regulations Review Authority (RRA 2.0)- for Ease of implementing RBI rules .. 167
14.26 🌐🌐🌐 BASEL-III Norms (बेसल
े -3 मानदंड).......................................................................................... 167
14.26.1 🌐🌐🌐🌐 🕵🕵 BASEL-III norms: Capital Tiers........................................................................... 168
14.26.2 🔪🔪🔪🔪🔪Additional Tier 1 (AT1) Bonds ............................................................................. 169
14.26.3 🔪🔪🔪🔪🔪Zero Coupon Bonds for PSB recapitalization ...................................................... 169
14.26.4 🌐🌐🌐 D-SIB: Domestic Systematic Important Banks.......................................................... 169
14.27 🐯🐯🐯🐯: BASEL Norms deferred / Suspended in Corona............................................................... 170
14.28 🐯🐯🐯🐯🐯🐯 Banks’ Balance sheet / Audit Norms (तुलन पत्र लेखा परी�ण) ............................................ 170
14.28.1 🐯🐯🐯🐯🐯🐯 IndAS Accounting Norms deferred (लेखा मानदंड ��गत/टाल िदये) ........................... 170
14.29 🌐🌐🌐💸💸 Recapitalization of PSBs: [सावर्ज�नक �ेत्र के ब�को का पुन:पूंजीकरण] ......................................... 170
14.30 �Banking Sector: Governance / Administrative Reforms .......................................................... 171
14.30.1 �Gyan-Sangam-I, 2015, Pune .............................................................................................. 171
14.30.2 � Personnel Selection → Bank Board Bureau (BBB), 2016 .............................................. 171
14.30.3 � Personnel Selection → FSIB replaces BBB (2022).......................................................... 172
14.30.4 �PSB Banking Personnel Reforms→ ES20 suggestions .................................................... 172
14.30.5 �Enhanced Access and Service Excellence (EASE) Agenda 2018 .................................... 173
14.30.6 �Ease 3.0: Tech-Enabled Banking (2020-21) ..................................................................... 173
14.30.7 �👮👮:🛡🛡Staff Accountability Framework for PSB-NPA ..................................................... 174
14.30.8 ✍ Conclusion for Public Sector Banks? (सावर्ज�नक �ेत्र के ब�कों के बारे म� �न�षर्) ....................... 174
14.31 🧹🧹🧹🧹: 👹👹(🚫🚫🚫🚫) NEGATIVE News: ILFS & Shadow Banking ............................................. 174
14.31.1 👹👹(🚫🚫🚫🚫) NBFC: Shadow Banking (आभासी / प्र�तछाया ब�िकंग प्रणाली) ..................................... 174
14.31.2 👹👹(🚫🚫🚫🚫) Shadow Banks → IL&FS & NBFC Liquidity Crisis ........................................ 175
14.31.3 👻👻 ATMANIRBHAR → 🐯🐯: 👹👹(🚫🚫🚫🚫) RBI Helping NBFCs/ Shadow Banks .......... 175
14.31.4 👻👻 ATMANIRBHAR → 🧔🧔🧔🧔🧔🧔🧔🧔 Partial Credit Guarantee Scheme (PCGS) 2.0 .. 175
14.31.5 👻👻 ATMANIRBHAR → 🧔🧔🧔🧔🧔🧔🧔🧔 Special Liquidity Scheme for NBFC/HFC......... 176
14.31.6 👹👹(🚫🚫🚫🚫)💊💊💊💊Shadow Banking → other Remedies by Govt post-ILFS crisis .......... 176
14.31.7 👹👹(🚫🚫🚫🚫) 💊💊💊💊 Shadow Banking → Remedies by RBI ................................................ 176
14.31.8 👹👹(🚫🚫🚫🚫) 💊💊 Shadow Banking → Remedies by SEBI .................................................... 176
14.31.9 👹👹(🚫🚫🚫🚫) 💊💊 Shadow Banking → Remedies suggested by ES20 .................................. 177
14.32 🧹🧹🧹🧹🧹🧹 Negative News: PNB, LoU, SWIFT, & Nirav Modi ...................................................... 177
14.32.1 📞📞Financial Messaging Systems: SWIFT- Russia gets banned............................................ 177
14.33 �� RBI Dividend, Reserves, Economic Capital Framework ................................................... 178
14.33.1 �� RBI’s Bimal Jalan panel (2018) ................................................................................... 178
14.33.2 📆📆 RBI’s Financial / Accounting Year (�व�ीय वषर् म� बदलाव)..................................................... 179
14.33.3 🐯🐯🐯Section-7 Directive & Urjit Patel’s Resignation (इ�ीफा) ........................................... 179
14.33.4 🐯🐯🐯🧔🧔 Section-7 of RBI Act .............................................................................................. 180
14.34 ✍🏻🏻🎷🎷 Mock Question for Mains GSM3 (250 Words Each) ........................................................... 180
14 🔥🔥🔥🔥 BAD LOANS & OTHER BURNING ISSUES IN BANKING

14.11🔪🔪TYPES OF LOANS: BASED ON INTEREST RATE
Table 1: Type of Loans based on Lending Rates
Fixed Interest Loan (�न��त �ाजदर का ऋण) 🎈🎈 Floating Interest Loan (चलायमान)
e.g. Short-term crop loans upto ₹3 lakh for e.g. (External Benchmark) + spread + risk
farmers at fixed Interest 7%. premium = 12% originally. (Ref#1A2-
This interest rate will not be changed MonPolicy).
throughout the loan tenure. But benchmark is regularly updated. So
resultant interest rate may increase or decrease
throughout the tenure of loan.
टीजर लोन यानी िक ऐसे लुभावने लोन जहाँ शु�आती वष� म� �ाज Teaser Loan: A sub-type of Floating interest
दर ब�त कम रहे लेिकन बाद के वष� म� ग्राहक पर बड़ा �ाज दर rate loan, wherein initial years have low
थोप िदया जाए. अमे�रका म� सबप्राइम सं कट के पीछे इसे कारण interest, but afterwards- higher interest rate.
माना जाता था While RBI has not banned Teaser loans but has
put stricter regulations on them from 2011.
14.12🔪🔪TYPES OF LOANS: BASED ON BORROWERS
Table 2: Type of Borrowers
🤵🤵 Prime Borrower He has the capacity to repay loans. (वो कजार् वापस चुकाने क� �मता रखता है)
� Subprime Such person doesn’t have the capacity to repay loan. Giving teaser rate
Borrower home loans to them caused Sub-prime Crisis in USA (2007-08),
(Individual) ultimately led to Global Financial Crisis (GFC). (More in 📑📑Pillar#3).
🧔🧔 Overleveraged Such company has borrowed too much money than its ability to pay it
Borrower back. An Overleveraged company has high ratio of Debt (Bonds/loans)
(Company) to Equity (Shares). वापस करने क� �मता से भी अ�धक कजर् ले �लया है
When a weak bank keeps giving new loans to a subprime / overleveraged
� Zombie Lending
borrower. कमजोर ब�क, कमजोर कजर्दार को लोन देता रहे है
🔠🔠❓Why is the offering of "teaser loans" by commercial banks a cause of economic concern? (Pre-2011)
1. The teaser loans are considered to be an aspect of sub-prime lending and banks may be
exposed to the risk of defaulters in future.
2. In India, the teaser loans are mostly given to inexperienced entrepreneurs to set up
manufacturing or export units. (�बनअनुभवी नौसी�खए उद्य�मयों को �व�नमार्ण और �नयार्त इकाइयों बनाने के �लए
टीजर लोन िदए जाते ह�)
Answer Codes: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 or 2
14.13🔪🔪🔪🔪NON-PERFORMING ASSETS (अनजर्क प�रसं प��यां)
14.13.1 🔪🔪🔪🔪-🤑🤑-😕😕-😭😭NPA / TBS Problem: Three Stages of

1. 🤑🤑Till mid-2000s: Boom period in global economy. Indian Corporates were taking large
amount of loans & became overleveraged. (भुगतान क� �मता से बड़ा लोन लेना)
2. 😟😟From 2007-08: Subprime & Global Financial Crisis (GFC: वै��क आ�थक सं कट): Indian exports
⏬. UPA govt’s policy paralysis & judicial activism, environment activism (नी�तगत प�ाघात और
�ा�यक सिक्रयता, पयार्वरण सिक्रयता) ⇒ projects delayed. Companies began facing difficulties finishing
projects & repaying loans.
3. 😰😰By 2013: ~1/3rd of the bank loans were owned by “IC1 companies” i.e. companies with
interest coverage ratio less than 1, meaning they were not generating enough revenue even to
repay the loan interest. (IC>1 is good and IC <1 is bad.)
Thus, balance-sheets of (1) some Large Corporates Companies & (2) Public Sector Banks (PSB)
became weak. It is called “Twin balance sheet syndrome (TBS)” [दोहरे तुलनपत्र क� सम�ा] by Economic
Survey 2015-16.
🔠🔠❓What is the importance of “Interest Coverage Ratio” of a firm in India? (Prelims-2020)

1. It helps in understanding the present risk of a firm that a bank is going to give a loan to.
2. It helps in evaluating the emerging risk of a firm that a bank is going to give a loan to.
3. The higher a borrowing firm’s level of ICR, the worse is its ability to service its debt.
Answer Code: (a) 1 and 2 only (b) 2 only (c) 1 and 3 only (d) 1, 2 and 3
14.13.2 🔪🔪🔪🔪NPA related definitions in Banking Sector

Loan account where borrower is repaying the principal and interest in timely
Std. Assets
fashion. (आदशर् परीसं प�तया= �नय�मत �ाज मुद्दल/ मूलधन �मला)
If loan principal or interest unpaid for 1-30 days from its due date, then such
SMA-0
loan account is classified as Special Mention Account-0.
SMA-1 31-60 days
SMA-2 61-90 days
- If loan principal or interest is not paid for more than 90 days from its due
🥂🥂🥂🥂✈ date, then such loan account is classified as Non-Performing Asset (NPA).
NPA िक� जमा करने क� �नयत �त�थ/तारीख के ऊपर भी 90 िदनों से अ�धक हो चुके हो िक�ु िक� जमा
अनजर्क नहीं क� गयी तो….
प�रसं प��यां - For farm loans, NPA is not counted on number of days but on number of
या cropping seasons. कृ �ष ऋण म� महीनों के िहसाब से नहीं फसल क� मौसम/ऋतु के िहसाब से होता है
गैर-�न�ा�दत - 📙📙📙📙ES22: NPA as a % of total loans : declined from 11% (2017) to 7%
प�रसं प��यां (2021-Sept) Public Sector Banks (PSBs): 2016-2020= losses . 2020-June
onwards= profits.
Provisioning As per RBI norms, banks must set aside funds to cover losses against their NPA.
प्रावधानीकरण Such ‘provisioning of funds’ ⏬decrease profitability of the Bank.
- Gross non-performing assets = grand total of all NPA loans(कु ल योग)
- Indian Commercial Banks’ (Gross) NPA approx. ₹8 lakh crores: within that
Gross NPA PSB (₹6 lakh cr) > private Sector banks (₹2lakh cr)
(GNPA: सकल - Exact Amount: ₹8.2 lakh crore (2021-Mar). ₹8.8 lakh Cr (2020-Mar). Thus
एनपीए) NPA⏬ than last year because 1) better loan recoveries 2) higher write-offs.
- Sectors with highest % NPA= 1) Industries > 2) Agriculture > 3) Service
Sector > 4) Personal Loans [As of 2020]
NET NPA (शुद्ध एनपीए) = GNPA Minus Provisioning
NET NPA
🎓🎓✋WHATITMEANSNOTIMP
Substandard When loan account remains in the NPA classification for 12 months/>
asset (रद्दी/घिटया परीसं प�तया- जब कोई लोन खाता 12 महीना या उससे �ादा एनपीए श्रेणी म� रहे)
Doubtful Asset When loan account in substandard classification for 12 months/>
When a bank, its auditor or RBI declares that given doubtful asset has little / no
Loss Asset
salvageable value. (नीलामी करके भी नुकसान भरपाई असं भव)
- Loan write off= banker removes a loan amount from the ‘asset-side’ of the
bank balance sheet, to save corporation tax (How? = we-are-not-here-for-
Loan write-off CA-exam).
- Loan write-off doesn’t waive bank’s right to recover that bad loan, it’s
merely an accounting exercise for tax-benefits. (कराधान म� कु छ �रयायतों के �लए
िहसाबी प्रिक्रया क� जाती है। हालांिक ऐसा करने के बावजूद भी ब�कर कजर्दार से पैसा वापस तो मांग ही
सकता है)
- Loan write-off⏬ reduces the NPA% of the Bank (Because amount is
written-off/cancelled from balance sheet)
- 2020-21: Indian Commercial Banks written off ₹1.85 lakh crore worth loans
Restructured When principal / interest rate / tenure of the loan is modified. Banks may do it
loan when borrower facing difficulty in repaying loans. (पुनगर्िठत कजर् / ऋण)
Stressed Asset NPA + Loans Written-Off + Restructured Loans = Stressed Assets (तनावपूणर् सं प��)
For example, If bank allows the borrower to pay 60% of dues & forgoes 40% as
OTS with
loss, then bank has offered “One time Settlement (OTS) with 40% haircut”
Haircut
कजर् का कु छ िह�ा ब�क खुद ही नुकसानी समझकर माफ कर दे।
Evergreening When a borrower taking a new loan to pay off his old loan.
of loans पुराना कजर् चुकाने के �लए नया कजर् िदया जाए।
14.14👻👻🤧🤧🤧🤧✋ ATMANIRABHAR → LOAN/EMI/NPA RELIEF / MORATORIUM
⇒ IF a loan is outstanding as of THEN 2020-March: RBI allowed (optional)
moratorium/suspension of loan repayment for 6 months for March, April, May, June, July, Aug.
⇒ So, If a borrower’s income ⏬ due to Corona, he gets relief from Equated Monthly Instalments
(EMIs) for “X” months. (ऋण अदायगी पर 6 महीने के �लए अ�ायी �प से मु��/रोक)
⇒ It WAS NOT compulsory to skip EMI. Borrower MAY repay loan regularly, if his financial
situation was strong. (इन महीनों म� िक�े भरना वैक��क होगा. वो आ�थक �प से सश� हो तो भर सकता है)
⇒ Loan was not ‘removed/waived’. It was only temporarily suspended. (ये कज़ार् माफ़� नहीं था. के वल कु छ
महीने के �लए िक�� भरने म� छु ट्टी दी गई थी- िक बाद म� धीरे धीरे पूरा भर देना। उसने �जतना उधार �लए, वो सारा अंत म� तो पूरा
चुकाना ही होगा।)
💡💡Note: In last handout, I had kept a very big short note here discussing how some banks demanded
compound interest rate for 6 months / matter went to SC / Govt gave subsidy to those banks. But for
2023 exam-cycle all that microscopic details are outdated / faded/not grabbing headlines anymore.
so I am deleting.
14.15🐯🐯🐯🐯🐯🐯 RBI “3R” FRAMEWORK FOR REVITALIZING STRESSED ASSETS (2015-19)

14.15.1 ✔Rectification (सुधार)
- 2015: RBI ordered the Banks to conduct Asset Quality Review (AQR: प�रसं प�� गुणव�ा समी�ा) and
begin rectification of bad loans i.e. Bank doesn’t change in loan interest, tenure or terms, but
asks client to rectify his irregularity in loan-repayment.
- In genuine case, additional loan may be given. Bank may also try to find a new partner / investor
for reviving the project. ब�क अ�त�र� कजर् दे सकता था, नया �नवेशक ढू ंढने मदद कर सकता था।
14.15.2 ⛏Restructuring (पुनगर्ठन: �ाज दर या कजर् चुकाने क� अव�ध या मा�लक� म� बदलाव)

Restructuring = Changing the loan interest (%) or tenure or ownership. it consisted of following
schemes:
- 5/25 for Infrastructure loans: RBI allowed banks to extend infra-loan tenure upto 25 yrs, & even
⏬loan interest rate. But such interest rate will be reviewed each 5yrs. (e.g. airport, powerplant,
highway project etc. ke loans.)
- CDR, SDR, S4A schemes for: non-infrastructure loans. (what was their full form? how did they
work? Ans. not important / outdated current.)
Figure 1: तनावग्र� प�रस��ओं को पुनज��वत करने हेतु आरबीआई का ढांचा: 2019 से पहेले का
14.15.3 🔪🔪 Recovery (वसूली)
Bank liquidates loan-defaulter’s assets under either of the following acts: (सं प��यों क� ज�ी और नीलामी)
1) SARFAESI Act 2002 (सरफाएसी अ�ध�नयम/कानून) OR
2) Insolvency and Bankruptcy Code 2016 (शोधन-अ�मता एवं िदवा�लयापन सं िहता 2016)
🔠🔠❓ ‘Scheme for Sustainable Structuring of Stressed Assets (S4A)’ is related to: (Prelim-2017)
a) procedure for ecological costs of developmental schemes.
b) scheme of RBI for reworking the financial structure of big corporates with genuine difficulties.
c) disinvestment plan for Central Public Sector Undertakings.
d) Provision in ‘The Insolvency and Bankruptcy Code’.
14.15.4 🦁🦁 🔪🔪RBI’s Prudential Framework (2019)

This is outdated topic but, only basic idea required.
2019: RBI released Prudential Framework for Resolution of Stressed Assets Directions 2019
(तनावग्र� प�रसं प��यों के िदशा-�नद�शों के �लए �ववेकपूणर् �परेखा)
1) It discontinued CDR, S4A, SDR, etc. Now IBC to be main tool for resolving business loans.
2) Lenders must upload data of ₹5 crore /> loans to RBI’s CRILC portal on weekly basis.
3) Forbids loan restructuring for borrowers who have committed frauds/willful default in past.
✋😷😷 most of above directives suspended / postponed in Corona so don’t lose sleep
14.15.5 🦁🦁 🔪🔪RBI’s KV Kamath Report Resolution Framework for Corona-related Stress
⇒ 2020: RBI had setup this Committee to look into loan restructuring for large companies, who
are hit by Corona pandemic.
⇒ KV Kamath identified 26 vulnerable sectors (e.g. power, construction, steel, road, cement etc..)
He and gave various technical guidelines for loan restructuring.
14.15.6 🦁🦁 🔪🔪Resolution Framework 1.0 and 2.0 (2020-21)
Based on the recommendations of the aforementioned KV Kamath committee, RBI issued a set of
guidelines for Bank/NBFCs for dealing with the bad loans:
Resolution Framework Applicable to borrowers who are
1.0 Large companies
2.0 Individual persons and small companies
What exactly is written in above frameworks? Ans. 1) Giving extra loans to genuine cases 2)
Extending the loan tenure 3) reducing loan interest rate etc.. We’ll NOT PHD. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
14.16⚖🔪🔪 SARFAESI ACT 2002: ORIGIN, OBJECTIVE & LIMITATIONS

कजर् नहीं चुकाया तो सं प�� क� ज�ी और नीलामी करने के �लए कानून
⇒ 1991: Narsimham-I Committee on banking sector reforms observed that borrowers obtain stay
orders from ordinary courts = banks have difficulty recovering NPA. So, Debt Recovery
Tribunals (DRT: ऋण वसूली �ाया�धकरण) were set up (1993)= ordinary courts can’t interfere in the
loan recovery process.
⇒ 1998: Narsimhan-II Committee observed that DRTs need to be strengthened with a law, so,
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest
(SARFAESI) Act enacted in 2002. [प्र�तभूतीकरण और �व�ीय आ��यों का पुनगर्ठन और प्र�तभू�त िहत को प्रभावी करने
का अ�ध�नयम 2002]
⇒ Under SARFAESI act, lenders can attach the mortgaged assets when loan is not repaid. They can
change board of directors in such companies, can auction such assets, can also sell such assets to
Asset Reconstruction Companies (ARC, NBFC: प�रसं प�� पुन�नमार्ण कं पनी). [2021: RBI setup
Sudarshan Sen Committee to suggest reforms for ARCs]
⇒ SARFAESI not applicable on farm loans. (कृ �ष ऋण पर ये कानून लागू नहीं होता)
⇒ If loan-defaulter wants to obtain a stay order, he cannot go to ordinary courts. He will have to
approach for DRT. If DRT doesn’t help then ⇒ higher appeal to Debt Recovery Appellate
Tribunal (DRAT: ऋण वसूली अपीलीय �ाया�धकरण), but DRAT will require him to deposit minimum
50% of the loan dues (to discourage frivolous appeals). ⇒ higher appeal to high court.
14.16.1 ⚖🔪🔪�💪💪 Which lenders have SARFAESI powers?

 All types of Banks (सभी प्रकार के ब�को को इस कानून के अंतगर्त �मलकत ज�ी करने क� स�ाएँ है)
 Housing Finance Companies (HFCs)
 if an NBFC fulfills two conditions SIMULTANEOUSLY: (गैर ब�क �व�ीय कं प�नयों को भी यह स�ा है यिद)
o 1) The NBFC having asset size of ₹100 cr or more, AND
o 2) loan given is at least ₹50 lakhs. [💼💼Budget-2021 reduced minimum limit to ₹20 lakh]
 For example Bajaj Finserv, Reliance Capital, Muthoot Finance, IL&FS.
14.16.2 🔨🔨⚖ SC Judgement: Yes, Cooperative banks also have SARFAESI powers (2020)
⇒ Constitution: 7th Schedule → Union List: (सं �वधान क� 7वीं अनुसूची → सं घ सूची)
o Entry 43: Incorporation, regulation and winding up of trading corporations, including
banking, insurance and financial corporations, but not including co-operative societies.
o Entry 45: Banking.
⇒ 2007: A High Court judgments said “Union’s SARFAESI Act doesn’t apply to Cooperative
banks. Because cooperative banks are outside the law-making power of the.”
⇒ 2020: Supreme court finally clarified the matter: “Entry 45: banking involves all types of banks-
both commercial and cooperative banks. Therefore, when the Union made the SARFAESI Act to
empower the banking sector, → same powers are also available to Cooperative banks.” (सहकारी
ब�क भी इस कानून का इ�ेमाल करके कजर्दार क� सं प�� ज� कर सकते ह�= एस सुप्रीम कोटर् ने फे सला िकया।)
14.16.3 ⚖🔪🔪: �Limitations of SARFAESI Act (मयार्दाए)

⇒ 😰😰The DRTs & DRATs are understaffed. 1 lakh+ cases pending (2016), so, case will go on for
years, borrower remained in possession of asset. जजों क� कमी के चलते के स �नपटान क� प्रिक्रया ब�त धीमी है
⇒ 😰😰This leads to erosion of asset-value (machinery, vehicles) even when DRT allows auction at a
later time. (गाडी/ मशीन क� ज�ी नीलामी नहीं होगी तो उसके मू� म� �गरावट आती है- �जतनी पुरानी गाड़ी, उतना कम दाम।)
⇒ In some businesses, auction or liquidation may not yield the best returns for the banks e.g. hotel
resort in remote area, where no other hoteliers are keen to invest. (हर प्रकार क� सं प�� क� नीलामी म� अ��
बोली लगाने वाली �मल जाए यह ज�री नहीं। कु छ बार म�म माग� समाधान बेहतर होता है)
⇒ In such cases, if the loans were restructured (i.e. reducing % interest rate, extending tenure,
finding new partners), then banks could salvage more value. (इस�लए नीलामी क� जगह अगर कु छ आपसी
समझौता / बीच का रा�ा/ मांडवाली िकया जाए तो बेहतर)
⇒ But, SARFAESI act doesn’t facilitate such arbitration So, Govt. came up with a new law: IBC.
14.17 ⚖🔪🔪🤝🤝 INSOLVENCY AND BANKRUPTCY (I&B) CODE 2016

शोधन-अ�मता एवं िदवा�लयापन सं िहता 2016: कजर्दार का लेनदार के साथ समझौता/मांडवली करवाने के �लए
⇒ IBC code classifies creditors into two categories
o A) Operational Creditors (OC) = Suppliers, contractors, salaried employees etc.
(कायर्संबंधी लेनदार : �ज�ोंने कं पनी को कु छ व�ु/सेवा मुहैया कराई थी लेिकन उस पर पैसा बकाया है)
o B) Financial Creditors (FC) = banks, NBFC, bond & other debt security holders, +
Home buyers. (�व�ीय लेनदार).
⇒ IF an Individual or Partnership firm or Company defaults on a business loan of ₹ “X” lakh or
more, then, above types of creditor(s) approach National Company Law Tribunal (NCLT: रा��ीय
कं पनी कानून अ�धकरण), to initiate proceedings under the I&B Code.
o NCLT has over 10 benches across India. Also has facility for e-filing of applications.
o NCLT must accept/reject application within 14 days.
⇒ Within that period, an Insolvency Professional (IP: शोधन-अ�मता सं बंधी पेशेवर) will make a resolution
plan e.g. ⏬ loan interest, extend loan tenure, or IP could even find another investor to finance
the pending project etc. (वो पेशेवर लोन-पुनगर्ठन क� कोशीश करे गा िक जैसे �ाज दर कमी, समयाव�ध म� बढ़ोतरी, नया
भागीदार ढूँ ढना)
⇒ IP will present the plan to Committee of Creditors (CoC: लेनदारों क� स�म�त) madeup of the Financial
Creditors (FC). In this Committee. FCs’ voting power is based on amt of loans given by lender.
⇒ If x% of the FCs agree with such resolution plan, then it will be set in motion, otherwise, IP will
liquidate the assets to recover the loan. (यिद �व�ीय कजर्दाताओं क� स�म�त ब�म�त से पुनगर्ठन प्र�ाव पा�रत न करे तो
नीलामी/ प�रसमापन)
⇒ Appeal Structure? (इस प्रिक्रया के �खलाफ़ कजर्दार अपील म� िकधर जा सकता है?)
A. If Borrower is individual / partnership firm: @DRT → DRAT of SAFAESI Act. OR
B. If Borrower is a Company: @ National Company Law Appellate Tribunal (NCLAT: रा��ीय
कं पनी कानून अपीलीय �ाया�धकरण) of the Companies Act.
14.17.1 ⚖🔪🔪🔪🔪: ✋IBC Not applicable on following borrowers
(�न� िक� के कजर्दारो को IBC कानून म� समाधान का लाभ नहीं �मलेगा)
🔪🔪 � Wilful Defaulter A borrower who has the capacity to repay, but he’s not repaying the
(जान-बूझकर बकाएदार) : loan. E.g. Vijay Mallya was declared wilful defaulter by SBI (2017).
Total number of wilful defaulters 2,017 (Year 2019), 2,208 (Year
2020), 2,494 (2021).
🔪🔪 � Incapable A borrower whose loan account is in NPA for more than a year, and
Defaulter (असमथर् बकाएदार): he has no capacity to repay even partial loan amount. (िजसक� औकात
ु ाने क�, उसके साथ क्या समजौता करोगे?)
ही नही लोन चक
Above two categories of borrowers are not eligible for I&B resolution process. Their assets will be
directly liquidated under SARFAESI Act. (उनक� तो बस सं प�� ज� करके नीलामी होगी, इनके साथ कोई समझौता िकया
नहीं जाएगा)
14.17.2 ⚖🔪🔪🤝🤝 Insolvency and Bankruptcy Code Amendment (2018: सं िहता सं शोधन)
- RERA registered building (home & office) buyers are classified as ‘financial creditors’. So, if
builder unable to finish project, unable to repay the loans to banks → homebuyers will have
voting power in the I&B resolution process. (More RERA in Pill#6)
- It ⏬the voting requirements for faster resolution:
Table 3: these % are for observation. ✋Exact numbers NOT important for exam.
Lenders’ Voting requirements (ऋणदाताओ का प्र�ाव के समथर्न म� मतदान) Before After

Routine decisions (सामा� �नणर्यों के �लए) 75% 51%
Key decisions like appointing IP, extending deadlines for resolution process, 75% 66%
approving the resolution plan (मह�पूणर् �नणर्य के �लए)
Withdrawing resolution plan from NCLT NotIMP 90%
14.17.3 ⚖🔪🔪🤝🤝 IBC Code (first) Amendment Act (2019: सं िहता सं शोधन)
2019-Aug: it was passed by Parliament, with following features
- Must finish entire process within 330 days, instead of earlier 180-270 days walli limit.
- If too many FCs (e.g. homebuyers): they may appoint a representative (प्र�त�न�ध) for to attend the
Committee of Creditors on their behalf, for smoother & systematic conduct of meeting.
14.17.4 ⚖🔪🔪🤝🤝 IBC Code (second) Amendment Act 2019

⇒ More technical reforms in the law. It shows that IBC is a ‘work in progress’…many operational
difficulties= govt has to keep changing the norms/amendments.
⇒ IBC is like a ‘Mobile App’ which is still in ‘Beta/under-development’ stage. So frequently new-
updates have to be released.
⇒ This is a ‘criticism/ shortcoming’ of IBC act. (हम� समझना यह है िक बार बार इस कानून म� सुधार करने क�
ज�रत..एक तरह से इसक� खामी है- �ोंिक अगर शु� से ही ठीक से क़ानून बनाते तो इसम� बार बार सुधार नहीं करने पड़ते.।)
14.17.5 ⚖🔪🔪🔪🔪:🤫🤫 IBC Pre-Packs (पद� के पीछे ज�ी से के स सुलटा लेते है!)
Figure 2: इज्ज़त क� इतनी परवाह थी, तो आप टाइम पे ही लोन चुका देते, भाई!
⇒ Pre-Pack System is found in United Kingdom and the United States

⇒ IBC 2021 Ordinance (and later Amendment Bill) aim to enable this in India for MSMEs.
Corporate Insolvency Pre-packaged Insolvency Resolution Process (PIRP)
Resolution Process (CIRP)
IBC's Formal process: lenders - Pre-packaging = Borrower company informally
file complaint to NCLT → (discreetly) negotiates a resolution plan with its lenders /
Insolvency professional buyer-parties who may be interested in its action, before
appointed → Loan approaching IBC/NCLT process. (प्री पैिकंग = �व�धवत �प से
restructuring proposal → If कोटर्/कानूनी प्रिक्रया शु� होने से पहले ही अनौपचा�रक �प से कजर्दार कं पनी
NOT approved by lenders → अपने कजर्दाता तथा भ�व� क� नीलामी म� ��च रखने वाले खरीदारों से पद� के
Auctioning. (औपचा�रक प्रिक्रया कु छ पीछे /बं द दरवाजे म� चुपचाप समझौता कर कर ले.)
इस तरह से होती है) - e.g. Anil proposes, “I’m unable to repay loan but I’m
getting new partner/investor Mahindra. Together we’ll
revive the biz & repay 80% loan.”
- If this is agreeable to lenders, they’ll send letter to NCLT,
“We’ve internally agreed for this plan. Plz give judicial
approval to it.”
If Resolution Plan not Public auction not conducted but Swiss Challenge allowed.
aggregable to Lenders then What is the meaning of this word? Ans. Explained in Video
Public Auction / Open Auction Lecture.
Conducted.
(सावर्ज�नक �प से नीलामी होती)
Time limit: upto 330 days Time limit = 120 days = faster than CIRP (ज� �नपटान)
More number of days = more - 🤩🤩Benefit? a quick (speedy) and discreet (confidential)
negative headlines in newspaper way of completing the insolvency resolution process. ��रत
= ⏬confidence of customers & और गु� �प से मसले को समेट �लया जाए
investors (e.g. Customer may
Corporate Insolvency Pre-packaged Insolvency Resolution Process (PIRP)
Resolution Process (CIRP)
not buy Videocon refrigerator, if - 🤩🤩Prevents the stigma/bad publicity/damage to brand
he continuously sees negative image associated with formal IBC proceedings. else in
news & starts to fear that future difficult to get investors/customers/clients. मामला
company will shut down, he’ll औपचा�रक �प से कोटर् तक नहीं प�ंचेगा= अखबारों म�/जनमानस म� कं पनी
not get warranty/repair service बदनाम/कलं िकत ना हो वरना भ�व� म� �नवेशकों/ग्राहकों को आक�षत करना
after 3-5 years) मु��ल हो जाता है.
- least disruptive to the businesses. Cost-effective. Helps in
workers’ job preservation (compared to a scenario where
company is shut down)
CIRP applicable to all small and Only available to micro, small and medium enterprises
big enterprises. (MSMEs) as per 2021’s IBC Ordinance / Amendment Bill.
(के वल चु�नंदा श्रेणी के �लए है)
14.17.6 ⚖🔪🔪🔪🔪: 🥱🥱 IBBI directive on Avoidance Transaction and 500 other technical things
✋Such technical topics not important for the scope of the exam. If any teacher teaching it / private
quizmaster is asking MCQ on it then please ask them to first go through previous years official
papers and ask him to prove where's the pattern of such questions being asked in real
exam?#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
14.17.7 👻👻� (⚖🔪🔪🔪🔪) ATMANIRBHAR → IBC Ordinance/Act 2020 to suspend new cases
⇒ 2020: Govt issues ordinance to amend IBC Code. (अ�ादेश)
⇒ Corona = business is down, difficult to work out any resolution plan. So, No fresh case will be
registered in IBC code for next “X” months Because Corona (नए के सों के दा�खले को ��गत िकया गया.)
⇒ “X” = 24 March 2021 ✋Exact dates notIMP
IBC Ordinance / Act 2020 Case can start if loan default of minimum _ _ amount
BEFORE Minimum ₹1 lakh/>.
AFTER Minimum ₹1 crore/>**
**So even after suspension is lifted, most of the small businessmen will be spared from IBC
proceedings. (रोक हटाने के बाद भी नए के स दजर् िकए जाएं गे, तो �सफर् बड़े लोन के �लए के स दजर् िकए जाएं गे)
14.17.8 🕵🕵(⚖🔪🔪🔪🔪) Insolvency and Bankruptcy Board of India (IBBI)
⇒ भारतीय शोधन-अ�मता एवं िदवा�लयापन बोडर् - वैधा�नक सं �ा

⇒ IBBI is the statutory body that monitors and implements I&B Code 2016.
⇒ IBBI’s administrative control rests with Ministry of Corporate Affairs (कॉप�रेट मामलों का मं त्रालय).
⇒ It has 1 Chairman, 1 nominated member from RBI, 8 from Govt’s side = total 10 people.
⇒ 1st chairman of IBBI: M.S.Sahoo. Present Chairman: Ravi Mittal (2022). (अ��)
⇒ Chairman has 5 years / 65 age tenure. Also eligible for reappointment (पुन:�नयु�� सं भव).
⇒ IBBI selects Insolvency Professionals Agencies (IPAs). These IPAs enroll and supervise the
members practicing as Insolvency Professionals (IPs). Presently, 3 organizations given “IPA”
status viz. 1) ICAI (Chartered Accounts) 2) ICSI (Company Secretaries) and 3) Institute of Cost
Accountants.
14.17.9 🕵🕵 📡📡IBBI → Information Utility

IBBI also selects Information Utility (IU: सूचना उपयो�गता सं �ा) organization to maintain database of
borrowers. In 2017, NeSL: National E-Governance Services Ltd (owned by consortium of SBI, LIC
etc.) was the first to get the IU status from IBBI. It is compulsory for lenders to share data with IU.
😍😍IU helps lenders in two ways:
1. 😍😍by looking @borrowers’ credit history, lenders can make informed decisions about whether
to give loan or not, and how much interest to charge? कजर्दाता को जानकारी उपल� कराता है िक लोन-
अज़�कतार् �वजय मा�ा का इ�तहास/�व�ीय च�रत्र के सा है, �ा वो लोन देने लायक़ भरोसेमंद �� है क� निह?
2. 😍😍 This database helps establishing documentary proofs during NCLT / DRT / judicial /
liquidation proceedings. कानूनी प्रिक्रया म� द�ावेजी सबूत मुहैया/उपल� कराता है
14.17.10 🕵🕵(⚖🔪🔪🔪🔪)Insolvency → Misc. Org: Indian Institute of Corporate Affairs

- IICA an autonomous body under Ministry of Corporate Affairs. (�ाय� सं �ा)
- It has launched a two-year Graduate Insolvency Programme (GIP). �ातक कायर्क्रम शु� िकया
- The student passing this program can register as IP, without the mandatory 10 years' experience.
14.17.11 💪💪 Project Sashakt by Finance Ministry (2018)
2018-Jul: Finmin’s Project Sashakt for PSB-NPA on report by Sunil Mehta (PNB CEO).
Gave guidelines to resolve the NPA problem in a timebound manner in Public Sector Banks.
What were those guidelines? Too outdated. So, I’m removing it from latest handout.
🔠🔠❓What was the purpose of the Inter-Creditor Agreement signed by Indian banks and financial
institutions under Project Shashakt? (UPSC-Prelims-2019)
a) To lessen the Government of India’s perennial burden of fiscal deficit and current account deficit
b) To support the infrastructure projects of Central and State Governments
c) To act as independent regulator in case of applications for loans of ₹ 50 crore or more
d) ✅To aim at faster resolution of stressed assets of ₹ 50 cr or more which are under consortium
lending.
Answer to Above MCQ is Option D. but now it is outdated current affairs so we will not study the
exact matter.
14.17.12 👻👻👻👻👻 ATMA-NIRBHAR → Insolvency → Micro,Small,Medium Enterprises

- 📑📑Ref Pillar#1D: Financial Inclusion → Mudra and other loans schemes
14.17.13 (⚖🔪🔪🔪🔪)🈶🈶🈶🈶 Cross-border Insolvency (सीमा-पार का �दवा�लयापन)
- Cross-border insolvency has two facets: [1) foreign creditors should be able to recover money
lent to Indian corporates & VICE VERSA. [2) During Indian company's insolvency in India, the
Indian lenders should be able to recover money from Indian company's foreign assets easily,
AND VICE VERSA.
- IBC sections 234 & 235 have provisions for it, BUT they are not notified yet, so they are not
enforced.
- This leads to uncertainty of outcomes for creditors and debtors.
2018: Corporate Affairs Ministry's Insolvency Law (reforms) Committee under Injeti Srinivas
recommended
- We should create a separate law for Cross-border Insolvency. अलग से कानून बने
- More than 40 nations use United Nations Commission on International Trade Law
(UNCITRAL)'s Model Law of Cross Border Insolvency (1997) So, we can use it as a template
while making our own law → 📙📙📙📙ES22 also recommended the same.
- 👜👜👜👜Budget-2022: - We will amend IBC Code to facilitate cross border insolvency resolution.
14.18(⚖🔪🔪🔪🔪)👋👋👋👋 VOLUNTARY LIQUIDATION OF COMPANIES
Liquidation is the process of shutting down a company. Two type of liquidations (प�रसमापन दो िक़�) →
 1) �Involuntary Liquidation: Due to loan default → it can be conducted either through I) IBC
code or II) SARFAESI Act depending on the case. (अनै��क प�रसमापन- जब कं पनी कज़र् म� िदवा�लयापन िदखा
दे)
 2) �Voluntary Liquidation: when the owner has not committed any loan default but wants to
shut down the business. Voluntary liquidation can be done through A) sending application to
the registrar of companies under Companies Act, 2013 B) sending application under the
insolvency bankruptcy code. However Method-A is more popular than B at present. (�ै��क
प�रसमापन. कं पनी ने अभी तक कज़र् म� िदवा�लयापन नहीं िदखाया लेिकन उसके धं धे/�ापार म� अ�ा भ�व� निह िदख रहा इस�लए
क�नी का मा�लक ख़ुद क� कं पनी �यं बं द करना चाहता है.)
14.18.1 (⚖🔪🔪🔪🔪)👋👋👋👋 : 😥😥 Challenges in voluntary liquidation (चुनौ�तयाँ):

Owner of the company needs to get no objection certificate (NoC) from various org such as CBDT &
CBIC (More about them in Pillar#2), EPFO & ESIC (More about them in Pillar#1D2)
- 😰😰But, no well-defined Standard Operating Procedures (SoPs) / timelimits in the Govt
organisations for granting NOC. This results in delays / demand for bribes / harassment of the
owner. (िक�ु एनऑसी क� समयाव�ध क� ��ता क� कमी के चलते उद्योगप�त उ�ीड़न/�र�तख़ोरी का �शकार बनाता है।)
- 📙📙📙📙ES22 suggested simplify the procedure, give clarity in rules, setup an online portal that
combines all the steps at one place.
- 👜👜👜👜Budget-2022: we’ll setup a Centre for Processing Accelerated Corporate Exit (C-PACE)-
to faster voluntary liquidation / winding-up of the companies. Presently, this process takes
nearly 2 years → we will reduce it to just six months. (वै��क प�रसमापन से पहेले कं पनी के मा�लक ने आयकर,
ईपीएफऑ जेसी �व�भ� सरकारी सं �ाओं से अनाप�� प्रमाण पत्र-एनओसी हा�सल करना होता है, इस�लए आ�थक सव��ण ने इन
�नयम-कानूनों म� ��ता, एक ऑनलाइन पोटर्ल क� ज़�रत जतायी थी. नए बजट म� इस वा�े ’सी-पेस’ नामक एक नई सं �ा बनाने क�
घोषणा क� गई।)
14.19(⚖🔪🔪🔪🔪)📘📘 📘📘 ECONOMIC SURVEYS ON IBC/NPA (आ�थक सव��ण)
14.19.1 Economic Survey 2018-19 on IBC/NPA

- With I&B Code and other measures by RBI=NPA % has ⏬ अनजर्क प�रसं प��यों के �नपटान म� मदद �मली
- I&B code's time-bound mechanisms have prompted 'behavioural changes' in corporate
borrowers. Now they fear losing control of the company. This has improved corporate
governance, cash and financial discipline. (कॉप�रेट देनदार के �वहार म� प�रवतर्न, कं पनी क� मा�लक क� मेरे हाथ से
चली जाएगी इस डर म� �नय�मत कजार् वापस कर रहे ह�)
- By 31/3/2018: ₹ 50,000 crores worth NPAs have been upgraded to std assets (meaning the
(arrogant) borrowers have been forced to resume paying principal & interest regularly.)
- Due to IBC Code, India's rank has improved in World Bank's Ease of Doing Biz report. (More in
Pillar#4). However, we also need to begin more reforms:
 We need to increase the number of NCLT benches, number of IP Professionals, use ICT
technology for faster case proceedings. (�ायपीठ, मानव बल और टे�ोलॉजी के उपयोग म� बढ़ोतरी क� ज�रत)
 We should enact separate law on cross-border insolvency. (सीमा-पार िदवा�लयापन के �लए अलग से
कानून बने)
 Group Insolvency: Big Industrialists usually operate through groups of companies, each
having a separate identity e.g. Tata Sons ltd → 1) TCS 2) Tata Motors 3) Tata Steel etc. If one
of these company become insolvent, it creates negative ripples on entire group's financial
health. Certain legal-technical reforms are necessary to address such group-insolvency. (समूह
िदवा�लयापन के मामलों का �नपटान करने के �लए कानून म� कु छ तकनीक� सुधार िकए जाएं )
 Certain legal-technical reforms to address insolvency cases involving individual proprietors
and partnership firms. (��गत मा�लक और साझेदारी फमर् के �लए कानून म� कु छ सुधार िकए जाएं : They’re
legally different entities than ‘Companies under companies Act. More in 1C: SEBI handout)
14.19.2 (⚖🔪🔪🔪🔪)📔📔📔📔Economic Survey 2020 on IBC/NPA (released in 2020-Jan-31st)

- NPA had reached its peak in 2018 but now it appears to be declining because of various measures
taken by the Government and RBI. (धीरे-धीरे अनजर्क प�रसं प��यों क� सम�ा कम हो रही है)
- 🤩🤩Appreciated that IBC proceedings take on average 340 days to complete, unlike SARFAESI
legal proceedings which take 4.3 years. के स का �नपटारा �ादा ज�ी से हो पाता है
- 🤩🤩Appreciated that IBC helps recovering more amount of loan than SARFAESI in 2018-19
Approx. Amount recovered in crores 2017-18 2018-19
SARFAESI and DRT 33,000 52,000
IBC 5000 71,000
(सरफ़ाएसी कानून के तुलना/मुकाबले आईबीसी कानून म� �ादा मोटी मात्रा म� बकाया कजर्/ऋण क� वसूली हो पाती है ऐसी प्रशं सा)
14.20🤒🤒🤒 💊💊 📅📅:📔📔📔📔 ES21: REGULATORY FORBEARANCE (�व�नयामक� �मा/सहनशीलता)

During a great financial crisis the Reserve Bank may allow for some relaxation in above guidelines.
(�व�ीय सं कट काल म� �रजवर् ब�क उ� �नयमों म� �रयायत दे सकता है)
⇒ For example, Restructuring of loans: A stressed / NPA walla borrower's loan tenure⏫ and/or
loan interest rate ⏬ as per RBI norms. (�ण का पुनगर्ठन. लोन क� अव�ध-�मयादी/�ाज दरों म� बदलाव)
⇒ Then such restructured loan account will be reclassified from NPA to Standard account.
⇒ such temporary relief from the strict rules is called "Regulatory Forbearance". (�व�नयामक� �मा)
⇒ RBI permitted it after 2007-08's Subprime & Global Financial Crisis.
But then it results into following side effects:
⇒ Zombie Lending (= weak bank keeps giving new loans to weak / subprime / Over Leveraged
borrower)
⇒ Evergreening of loans (=Companies taking new loans to repay the previous bad loans- (कज� का
�नरंतर ह�रतकरण)
⇒ 😰😰Many loan scams occurred: ICICI-Videocon loan, Yes Bank-Rana Kapoor, PNB-Nirav Modi,
Punjab and Maharashtra Co-operative Bank (PMC) etc. (ढेरों �व�ीय गबन सामने आए)
⇒ Corona-2020-onwards: RBI again relaxed many rules. So Economic Survey recommended RBI
must stop these relaxation immediately after Corona crisis is over. Else, NPA problem could
worsen. (आपातकाल ख� होने के बाद इस प्रकार क� �मा/�रयायतों को तुरंत बं द करना चािहए, वनार् नए कांड होंगे।)
⇒ Because “Those who do not learn from history are condemned to repeat it.” (- said Spanish
philosopher George Santayana) (जो इ�तहास क� गल�तयों से सीखेगा नहीं वह उन गल�तयों को दोहराएगा)
14.21 👁👁👁🗨🗨🔪🔪💻💻 BORROWERS’ DATABASE & SURVEILLANCE (उधारकतार्ओ ं का डेटाबेज व् �नगरानी)
14.21.1 👁👁👁🗨🗨🗨🗨🗨🗨-📔📔📔📔ES20: Use AI-ML Technology

In PSBs, most of the loan-information processing (=Credit analytics) happens manually (ऋण �व�ेषण
ह�चा�लत �प से करते है). This causes inefficiency, frauds and loan default. Tools such as Artificial
Intelligence (AI), Machine Learning (ML) (कृ �त्रम बु�द्धम�ा/आसूचना और मशीन प्र�श�ण) can help them in
following ways:
⇒ Willful defaulters usually create fictitious companies to transfer their assets / shares / money just
before they stop paying loan installments. (जान-बूझकर लोन न चुकाने वाले, फज� क�नी बनाकर लोन के पैसो का
गबन करते है, उसपर �नगरानी सं भव)
⇒ Artificial Intelligence (AI) can alert the authorities through real time surveillance & data
analytics of the borrower’s NEFT/RTGS/DEMAT account transaction. (अलग-अलग खातों पर �नगरानी)
⇒ Geo-tagging of assets i.e. adding longitude and latitude data with the photos & videos of the
Factory building, machinery, vehicles, aeroplanes, helicopter etc. (सं प�� क� �जयो-टै�गंग) Then, →
o Scamster can’t pledge fictitious assets as collaterals for loans (फज� सं प�� जसका अ�� ही नहीं,
उसे धोखेबाज़ �गरवी निह रख पाएगा।)
o Scamster can’t pledge the same asset as collateral to multiple banks/NBFCs. (एक ही सं प��
को एका�धक लोगों के पास �गरती रखकर लोन म� धांधली करना स�व निह होगा।)
⇒ GPS chips may be embedded in factory-machines and vehicle to track their real time location →
o If scamsters move the machinery out of the factory, the banker will be alerted.
o Bankers can remotely disable machines/vehicles, if loans are unpaid.
⇒ Blockchain Technology can used for storing and verifying the authenticity of the data.
⇒ AI can monitor Social media activities e.g. Borrower is not paying the loan and yet sharing the
Switzerland vacation photos on Instagram = He is a wilful defaulter → Attach his assets under
the SARFAESI Act. (कजर्दार के सोशल मीिडया ग�त�व�धयों पर �नगरानी रखी जाए)
✋ Caution? borrower’s privacy and dignity should also be respected while doing such
computerized surveillance. (उ� कदम उठाते व� कजर्दार क� �नजता का भी स�ान रखना चािहए)
Figure 3: Instagram फोटो मे भले हम मोरेशीयश मे ऐ�ाशी करे, ब�क को बोल�गे लोन चुकाने का पैसा नही है।
14.21.2 👁👁👁🗨🗨🗨🗨🗨🗨-📔📔📔📔 ES20: setup PSBN Network

⇒ Government should create a new organization named PSBN (Public Sector Bank Network),
which will act as a Financial Technology/Fintech Hub (FinTech: �व�ीय प्रौद्यो�गक� के �लए एक नई सं �ा
बनाई जाए).
⇒ Whenever a borrower applies for a loan to a public sector bank → Details will be sent to PSBN.
→ PSBN will verify the creditworthiness (�व�ीय साख) and risk profile (िदवा�लयेपन का जो�खम) of the
applicant through:
o Artificial Intelligence (AI), machine learning (ML) and Big Data Analytics- as explained
in the previous section
o E-KYC (Know Your Customer): Aadhar verification → cross checking his Aadhar
number against Financial data from Corporate Affair Ministry, SEBI/share market,
Income Tax Department, GST, etc. (आधार काडर् के ज�रए उस �� के शेयर बाजार, आयकर, जीएसटी
इ�ािद का �व�ीय इ�तहास जांचा जाएगा)
🤩🤩 Benefit? fraud prevention, ⏬ chances NPAs, quicker decision making, process loan
applications faster, cost saving for individual banks as all of them can use a single hub instead of
spending on separate servers/tech. (�व�ीय घोटाले का जो�खम कम होगा, लोन अज�ओं का ज�ी से �नपटान सं भव होगा)
14.21.3 👁👁👁🗨🗨🗨🗨🗨🗨- 🐯🐯 RBI → Public Credit Registry (ऋण क� सावर्ज�नक र�ज��ी)

Presently, multiple organizations keep borrowers’ database / credit history viz.
1) Under the I&B code, Insolvency and bankruptcy board of India (IBBI) has authorized the
National e-governance services Ltd (NeSL) to act as an Information Utility (IU).
2) Separately there are Credit Information Companies (CIC) and Credit Rating Company (CRA)
(More in 📑📑Pillar#1B1- Classification of NBFCs.)
3) RBI has its own “Central Repository of Information on Large Credits (CRILC)” for Loans above
Rs 5 cr. Banks & NBFCs have to submit weekly updates in this portal.
😰😰But, not all of these databases are under the direct control of RBI. Each has their own
methodology for data collection & tabulation. Not all of these databases are covering all individual &
corporate borrowers.
Figure 4: �बग बॉस क� तरह सब पे नजर रखूँ गा। चुन चुन के डेटा �नकालूँगा।
So, RBI’s Yeshwant M. Deosthalee Committee (2017-18) recommended setting up a Digital Public
Credit Registry (PCR) with following features:
1) PCR will be setup under RBI, using data from SEBI, Corporate Affairs Ministry, GST authorities,
IBBI, Banks, NBFCs etc. अलग-अलग सं �ाओं से को डाटा हा�सल करेगा
2) PCR will help lenders to get complete 360-degree profile of borrower on real time basis.
3) PCR will help RBI in early detection of systematic stress, checking the efficacy of monetary
policy & other big data analytics. मौिद्रक नी�त क� अ�धका�रता को जानने म� भी मदद करेगा
🔠🔠❓MCQ. RBI constituted a high-level task force on Public Credit Registry (PCR), headed by _ _ _ (CDS-
2018-I) (a) Sekar Karnam (b) Vishakha Mulye (c) Sriram Kalyanaraman (d) Y. M. Deosthalee
🚩🚩🚩FAQ: “WHY not merge PSBN Network with RBI’s PCR registry? Ans=Send
suggestion to RBI + CEA that they shd not do duplication of work.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
14.21.4 👁👁👁🗨🗨🗨🗨🗨🗨- 🌐🌐 Legal Entity Identifier (LEI) Number: (कानूनी इकाई पहचान सं �ांक)
Figure 5: �वदेश मे नयी कं पनी बनाकर �वदेशो क� ब�कों को चुना लगाएं गे तो �ा उखाड़ लोगे?
- Objective? Even if a company is blacklisted by Indian banks, it could apply for loans overseas,
and those overseas bankers may not be aware of company’s history.
- So, there should be a global “Aadhar card” number for companies, and they must be forced to
quote that number during every financial transaction.
- After USA’s Sub-Prime Crisis and Global Financial Crisis (GFC), the G20 and its Financial
Stability Board (FSB: �व�ीय ��रता बोडर्) came up this LEI concept- a 20-digit alphanumeric code.
- LEI’s Global Boss: Global Legal Entity Identifier Foundation (GLEIF), Frankfurt, Germany. LEI’s
Indian agent: Clearing Corporation of India.
- From 1/10/2022 RBI has ordered all companies undertaking crossborder transactions of Rs 50
crore or more to quote this number in financial transaction.
- RBI has power to issue such directives under: Payment and Settlement Systems Act, 2007 &
Banking Regulation Act 1949. (�व�ीय लेन देन के दौरान कं पनी ने अ�नवायर् �प से ये नं बर �लखना होगा)
14.22🔪🔪🈶🈶🈶🈶🈶🈶- ⚖ FUGITIVE ECONOMIC OFFENDERS ACT, 2018
Figure 6: देश छोड़ के भाग जाऊंगा, 9 लाख का लेधर जेकेट पहेनके लं डन क� ग�लयो मे घूमँ गू ा, तो �ा उखाड़ लोगे मेरा?
भगोड़ा आ�थकर् अपराधी अ�ध�नयम: This act targets economic offenders accused of cheque dishonor, loan /
investment / chit-fund scam, money laundering etc. worth ₹ 100 crores /> & left India to avoid
facing prosecution / arrest.
- Special courts under the PMLA (Prevention of Money-laundering Act, 2002) will order the
villain to appear within 6 weeks, if not then he is declared “Fugitive Economic Offender”⇒ His
Indian & Overseas & Benami properties will be attached (भगोडे आ�थक अपराधी क� भारतीय तथा �वदेशी
सं प��यों को ज� िकया जाएगा).
- Once property attached- the Union Govt will oversee its administration / liquidation
(नीलामी/प�रसमापन).
- No ordinary civil court / tribunal can give stay order. Villain can make appeal only in High Court
and Supreme Court. (भगोड़ा आ�थक अपराधी के वल उ� �ायालय और सव�� ायालय म� जाकर मदद मांग सकता है).
If Borrowers don’t repay, SARFAESI auctions give little recovery, CRR-SLR insufficient
to repay deposits then bank collapse imminent. Then, how to protect the depositors? →
14.23🕵🕵 🏦🏦 💸💸💸💸 DICGC ACT: OBJECTIVE & LIMITATIONS
Figure 7: ब�क तो घोटाले मे बं ध हो गया। कोन करेगा हमारा पैसा वापस?
- 1961: Deposit Insurance and Credit Guarantee Corporation Act - mandates that all types of
banks must buy insurance on their deposit accounts from DICGC. Banks have to pay premium
for this insurance. (�न�ेप बीमा और प्र�य गारंटी �नगम: प्र�ेक ब�क ने अ�नवायर् �प से अपनी जमाकतार्ओ क� िडपो�जत को
बीम� द्वारा सुर��त करना होगा)
- DICGC is 100% owned by RBI. RBI Dy. Governor acts as chairman of DICGC. HQ: Mumbai.
- When a bank shuts down, DICGC will pay upto ₹ 1 lakh insurance to every deposit holder for
his principal and interest. (यिद ब�क बं द हो गया तो जमाकतार् के नुकसान क� भरपाई यहां से होगी)
- 💼💼Budget-2020: announced ⏫the insurance coverage to ₹ 5 lakhs (नुकसान भरपाई क� रा�श म� बढ़ोतरी)
- 2021: Government introduces Deposit Insurance & Credit Guarantee Corporation
(Amendment) Bill →
BEFORE (सुधार/सं शोधन �वधेयक से पहले) AFTER REFORM (सुधार प�ात)
Upto ₹1 lakh deposit insured Protection increased upto Rs 5 lakh
When will depositors get back above amount? When RBI imposes (withdrawal) moratorium
No clear timelines. Often they had to wait for on a weak bank → within 90 days of that event,
many years (पैसा/मुआवजा कब आएगा उसक� समय सीमा DICGC will pay depositors. (�रज़वर् ब�क जब कमजोर
तय नहीं थी) ब�क म� से ग्राहकों के पैसे उठाने पर रोक लगाए उसके 90 िदनों के
भीतर ही मुआवजा �मल जाएगा)
Banks had to pay premium/fees to DICGC at DICGC can ⏫increase the premium fees to
the rate of ₹10 paise to insure every ₹100 worth ₹12-₹15 paise (i.e. 20%-50% more than the
of deposits. (ब�को ने हर ₹100 के िडपॉ�जट का बीमे के �लए
original fees) ✋Exact figures NOTIMP. (बीमा
10 पैसे क� बीमा िक�/फ�स देनी होती थी) िक� म� बढ़ोतरी क� गई)
All types of Banks covered Same as left cell. (सभी प्रकार के ब�क के ग्राहकों को सुर��त
But NBFCs not covered. करता है, िकंतु ग़ैर ब�क �व�ीय सं �ान के ग्राहकों को सुर��त नहीं
करता.)
- Previously, DICGC provided guarantee cover to bank on the loans granted to Priority Sector
Borrowers.
- E.g. if Micro enterprise owner did not repay PSL-loans → DICGC would cover losses of the
banks, hence its name contains the word ‘Credit Guarantee Corporation’.
- But, with formation of SIDBI (1990), National Credit Guarantee Trustee Company Ltd.
[NCGTC, 2016] etc, this credit guarantee work divided among many organizations
(REF:📑📑Pillar#1D), but we need not PHD over it.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
14.23.1 🕵🕵 🏦🏦 💸💸💸💸- 👎👎 Limitation of DICGC (मयार्दाएँ )

- 😰😰If a customer deposited more than ₹5 lakh in a single commercial / cooperative bank, then he
gets only ₹5 lakh from DICGC. And for the remaining amount he must wait till RBI /
Cooperative Registrar liquidates the bank. (📑📑Ref 1B1: Banking Regulation Ordinance 2020)
- 😰😰DICGC doesn’t cover PACS and NBFCs. Those victims may have to approach courts.
- 2002: UTI (a Govt owned mutual fund company) made big losses. DICGC not liable to protect
UTI-clients because it is NOT A BANK. So, Govt had to pay ₹14,500 crores to customers of UTI-
Mutual Fund.
- So, Financial Sector Legislative Reform Commission (FSLRC: �व�ीय �ेत्र �वधायी सुधार आयोग) under
Justice B.N. Srikrishna (2011-13) recommended a new org called Resolution Corporation (RC)
via -Financial Resolution and Deposit Insurance (FRDI) Bill/law. (DIGCG को बं ध कर एक नयी सं �ा
बनाने का सूजाव)
- Govt had proposed the FRDI bill in 2017, but too much opposition in media & public, so
withdrew it in 2018. It’s a defunct topic. We’ll not WASTE TIME learning its salient features.
#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
14.24�(🏦🏦 🔪🔪🔪🔪) BAD BANK (NARCL, IDRCL-2021): INTRO

⇒ (DATA) 📙📙📙📙ES2016-17 had found that total ₹ 2 lakh crore of bank money is stuck in large
sized NPA-accounts. Each of this loan account having ₹500cr or more. (ब�कों का क़रीब 2,00,000 करोड़
�पया ऐसे लोन खातों म� अटका है �जनमे एक-एक क� मात्रा 500 करोड़ या उससे अ�धक है)
⇒ (Origin) Sometimes, the resolution of large sized NPA accounts is difficult under IBC Code (e.g.
Vijay Mallya being a wilful defaulter so he is not eligible for IBC).
⇒ Under SARFAESI act such assets could be auctioned off but sometimes bidders and ARCs (e.g
Anil Ambani’s ARC) do not have enough financial capacity to purchase such big assets (worth
₹500-500 crores!). (इस प्रकार के बड़े लोन खातों का समाधान आईबीसी/सरफ़ाएसी क़ानून म� करते व� सम�ाएं आ रही है)
⇒ Therefore, Economic Survey 2016-17 had suggested to setup a BAD BANK named “Public
Sector Asset Rehabilitation Agency” (PARA). To buy bad loans from, try to get the maximum
value from loan-restructuring / liquidation-auction and absorb the losses. (इस�लए आ�थक सव��ण ने
सुझाव िदया एक बेड-ब�क बनाया जाए जो िक ब�कों के खराब लोन पेपर/ अनअजर्क प�रसं प��यों को खरीदेगा.)
⇒ Then, 💼💼Budget-2021 announced set up an Asset Reconstruction Company (ARC) and Asset
Management Company (AMC) to take over the bad loans from banks. (बजट 2021 ने अमल िकया).
⇒ Govt will not have any shareholding in ARC/AMC. Banks will set these organization(s) up with
their own funds. (सरकार इसम� शेयर धारक नहीं बन�गी. ब�कवाले खुद से शेयर पूंजी देकर इसको बनाएं गे)
⇒ Examples of such bad banks in other countries- Danaharta in Malaysia, UKAR in UK.
14.24.1 �(🏦🏦 🔪🔪🔪🔪): 🧬🧬 Bad Bank Structure
NARCL-ARC (founded in 2021) IDRCL-AMC (founded in 2021)

Type Asset Reconstruction Company (ARC) Asset Management Company
प�रसं प�� पुनगर्ठन कं पनी (AMC)
प�रसं प�� प्रबं धन कं पनी
Full Form National Asset Reconstruction Company India Debt Resolution Company Ltd.
Limited (NARCL) (IDRCL) =
Type Registered company under companies Registered company under
act. (So not a statutory/constitutional companies Act. (कं पनी क़ानून म� पं जीकृ त
body) कं प�नयां है. ये कोई वैधा�नक या सं वैधा�नक सं �ाएं
Given license by RBI for ARC. नहीं है)^^
Function To purchase bad loan assets from banks. To manage/value addition/ auction
(यह ब�कों से अनजर्क प�रस��यां ख़रीदेगा) those bad loan assets which were
purchased by NARCL. (e.g. factory,
airplanes, bulldozer). (ख़रीदी �ई सं प��यों
का प्रबं धन, मू� वधर्न, नीलामी करेगा)
Ownership/ ⇒ 51% PSBs like SBI, BoB, PNB** ⇒ 49% (Public Sector Banks,
Shareholding ⇒ 49% by Pvt banks and NBFCs# NBFCs)
NARCL-ARC (founded in 2021) IDRCL-AMC (founded in 2021)
⇒ 51% (private sector bank,
NBFCs).#
Tenure This organization will exist for five years. Same as left cell
** NARCL Ownership 51% shareholding/ownership among 8 public sector banks (PSB) viz. SBI
(13.17%), Punjab National Bank (12%), Bank of Baroda, Canara Bank, Bank of Maharashtra, Union
Bank of India, Indian Bank, Bank of India. (Note: Future Some of these PSBs may get merged so the
% may change.)
🚩🚩🚩FAQs:
⇒ #what are their names? Ans. Not explicitly mentioned in Pressnote. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
⇒ ^^AMC got license from RBI or SEBI? Ans. Same as above
⇒ Bad Bank means “ONLY NARCL” or (NARCL+IDRCL) Ans. Same as above. But from how
📙📙📙📙ES17 had given the vision of Bad bank, it should be the combined work of
(NARCL+IDRCL)= Bad Bank.
14.24.2 �(🏦🏦 🔪🔪🔪🔪) Bad Bank: 🗃🗃 functioning

बैड ब�क नीलामी म� ब�कों क� अनजर्क प�रसं प��यां ख़रीदेगा, और वह भुगतान क� रक़म: 15%मुद्रा और 85% सुर�ा रसीदों के �प म� ब�कर
को चुकाएगा। ऐसी Rs.30,600 cr करोड़ क� सुर�ा रसीदों के पीछे भारत सरकार ने अपनी सं प्रभु गारंटी अगले पाँच वष� के �लए दी है।
⇒ Suppose Axis Bank has a bad loan account worth ₹200. Axis may conduct an (Swiss Challenge)
Auction. Bad Bank offers ₹100, Anil Ambani’s ARC offers ₹95, Mahindra offers ₹92.
⇒ Then Axis will sell to Bad Bank for ₹100 (because its the highest bidder)
⇒ BadBank will pay Axis ₹100= Partially in currency (₹15) + partially in Security receipts (SR
worth ₹85).
⇒ Security receipts (SR) is a piece of paper issued by BadBank promising to pay the remaining
dues/amount (₹85) to banker in 5 years.
⇒ Security receipts (SR) is a legally valid instrument under the Sarfaesi Act.
⇒ If the Axis banker very urgently requiring money then he may resell the SR at discount (e.g. at
₹80) to another Bank, Insurance/Pension Company, AIFI (e.g. SIDBI, NABARD) etc.
⇒ Then those new SR-holders will receive the money (₹85) from Bad Bank in future.
⇒ IF Bad Bank faces problems in honoring the SR payment deadlines→ then, Union Govt has
given sovereign guarantee of Rs.30,600 cr to Security Receipts (SR). This sovereign guarantee
valid for 5 years.
14.24.3 �(🏦🏦 🔪🔪🔪🔪) Bad Bank: 🤩🤩😰😰 Benefits & Challenges?

⇒ 😍😍 Faster resolution of large sized NPA. (तेज �नपटान)
⇒ 😍😍 Individual Bank’s Bad loan size⬇ = BASEL-III Capital requirement ⬇ (ब�को क� अनजर्क प�रसं प��यां
कम होगी तो उ�ोंने बासेल मानदंड के �लए कम पूंजी प्रावधान करना होगा)
⇒ Further benefits = RE-Paste the points given in Intro & Conclusion. (प�रचय और �न�षर् म� जो मुददे �लखे
ह� उसक� वापस पीपूड़ी बजाओ)
⇒ 😥😥Ultimately the losses caused by Vijay Mallyas are paid by depositors/investors (of the
Banks/NBFCs who own NARCL & IDRCL) and Taxpayers (using whose money Govt’s is giving
sovereign guarantee to Security receipts). (अंत म� तो परो� �प से इस नुकसान क� भरपाई जमाकतार् �नवेशक और
करदाताओं द्वारा ही हो रही है)
14.24.4 �(🏦🏦 🔪🔪🔪🔪) Bad Bank: ✍Conclusion (�न�षर्)

NARCL aims to resolve stressed loan accounts above ₹500 crore each. Total about ₹ 2 lakh crore
stuck in such loan accounts. Thus, individual banks will be relieved from not having to waste time
haggling with NPA-borrower. Bankers will be able to focus energy on business expansion, financial
inclusion. Thus, Govt taken an appreciable step, it will help in a long way in re-invigorating Indian
banking sector. (दो लाख करोड़ क� अनजर्क-प�रसं प��यों का �नपटान होगा। ब�कर अपनी समय और ऊजार् पुराने बकायदारों से लोन
पुनगर्ठन क� माथाप�ी करने क� जगह, अपने ब�क के �ापार �व�ारण तथा �व�ीय समावेशन म� लगा पाएगा। सरकार ने प्रशं सनीय क़दम
उठाया है, �जससे भारतीय ब�िकंग �ेत्र म� नवऊजार् का सं चार होगा.)
14.25🐯🐯💉💉👹👹👹👹👹👹� PROMPT CORRECTIVE ACTION (PCA) FRAMEWORK
Figure 8: need not loose too much sleep, unless preparing for RBI officers' exam
🚩🚩🚩FAQ: What about “XYZ” type of Bank/NBFC which is not mentioned in above Chart? Ans.
Then “XYZ” type of Bank/NBFC is not subjected to above PCA norms at present. �जनका नाम यहाँ नहीं
�लखा पर ये लागू नहीं.
🚩🚩🚩FAQ: Does it mean non-scheduled banks are not supervised by RBI!!? Ans. They are
supervised by RBI under Banking Regulation Act.
- 2002: RBI Governor Bimal Jalan designed it for all Scheduled Commercial Banks, except RRBs.
(��रत सुधारा�क कारर्वाई �परेखा)
- 2018: NABARD announced separate ‘Prompt Corrective Action (PCA) Framework’ framework
for Regional Rural Banks (RRBs �ेत्रीय ग्रामीण ब�कों के �लए नाबाडर् क� अलग से �नयमावली है).
BEFORE-2022: RBI monitored bankers on From 2022: RBI will monitor this under
following indicators PCB framework
🎯🎯 Capital Sufficiency (BASEL-III), पयार्� पूंजी है क� SAME as left cell
नही?
🎯🎯 Asset Quality (NPA or bad loans), परीस��यों same as left cell
क� गुणव�ा अ�� है क� बुरी?
🎯🎯 Profitability (Return on Assets: RoA), पयार्� Replaced with "Leverage". What it means,
मुनाफा हो रहा है क� नही? how it works. how is it different than past? =
NOTIMP.
But sufficient to know that “Bigger/Higher”
leverage is NOT a good sign.
Then RBI classifies the banks into Risk threshold #1, #2, #3. Higher the number, higher the risk.
Then, accordingly, RBI will take corrective actions such as: (जो�खम के िहसाब से ब�कों को वग�कृ त करता है)
⇒ RBI giving strict warning, conducting deeper audit & supervision. (�ादा कड़ी �नगरानी)
⇒ Restricting bank’s directors’ salaries and dividend distribution to its investors. (वेतन, लाभांश �वतरण
पर रोक)
⇒ Restricting bank’s branch expansion & lending operations. (शाखा �व�ार और ऋण देने पर रोक लगाना)
⇒ Forcing merger / shutdown (under Banking regulation Act 1949). (कमजोर ब�क को बं ध करना)
⇒ If a PCA-listed bank wants to get ‘whitelisted’, it’ll have to ⏬its NPA, obtain additional capital,
⏫its profitability. (इस सूची से बाहर �नकलना है तो अनजर्क सं प��यों को कम करना होगा, �ादा पूंजी बटोरनी होगी, �ादा
मुनाफा लाना होगा)
⇒ PCA is “Monetary Policy → Qualitative / Selective Tool → Direct Action”. (मौिद्रक नी�त →
गुणा�क → सीधी कायर्वाही का यह एक साधन है)
⇒ As of 2020-Feb: 4 PSBs in this list viz. Indian Overseas Bank (IOB), Central Bank of India, UCO
Bank and United Bank of India. ✋Dynamically changing info so we need not remember / loose
sleep for MCQs.
14.25.1 🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯� RBI’s Prompt Corrective Action (PCA) for NBFCs

(ग़ैर ब�क �व�ीय कं पनीयो के लीए ��रत सुधारा�क कारर्वाई)
⇒ From 1/10/2022- RBI to monitor NBFCs using 3 indicators/parameters: - 1) Non-Performing
Assets, - 2) BASEL-capital adequacy ratio - 3) BASEL- Tier 1 capital. (What do they mean?
NOTIMP। इन पैमानो पर �नगरानी)
⇒ Accordingly, RBI to classify the NBFCs in risk category#1-2-3. (जो�खम के िहसाब से वग�करण)
⇒ Higher risk → higher restrictions e.g. ✋1) restriction on branch expansion ✋2) halt on
dividend distribution, ✋3) promoters will be asked to infuse capital in NBFC etc. etc (ग़ैर ब�क
�व�ीय कं पनी म� �जतना �ादा जो�खम → तो उतनी �ादा पाबं िदया �रज़वर् ब�क उसपे डालेगी)
⇒ Above PCA-norms applicable on ✅ deposit-taking-NBFCs (e.g BajajFinServ).
⇒ But ✋Not Applicable on govt owned NBFCs (e.g UTI Mutual Fund), primary dealers, housing
finance companies (HFC), non-deposit taking NBFCs (e.g. ILFS).
14.25.2 😼😼😼😼😼😼😼😼😼😼� Supervisory Action Framework for Urban Co-operative Banks

- 2012: RBI launched Supervisory Action Framework (SAF) for Urban Co-operative Banks
(UCBs). (शहरी सहकारी ब�को पर �नरी�णा�क कारर्वाई �परेखा) It is similar to PCA framework on
commercial banks.
- ⏫Tightened it further in 2014, → tightened further in 2020 (इन �नयमों को और स� िकया गया)
- 2022: Launched 4-tier regulation framework. BUT NOTIMP for IAS Exam. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
- �FAQ: How is SAF similar or different than PCA framework? NOT IMP for IAS.
14.25.3 👻👻ATMANIRBHAR → 🤧🤧🤧🤧🏎🏎� RBI orders bank to halt Dividend Distribution

⇒ Scheduled commercial banks and cooperative banks shall not make any further dividend payouts
from profits made during FY 2020-21 until further instructions. (मुनाफे म� से लाभांश �वतरण पर रोक) →
2021: RBI relaxes these norms to allow dividend release. (हालांिक अब �रज़वर् ब�क ने इस पाबं दी पर छू ट दी है)
⇒ This will help the banks to conserve funds and absorb losses in an environment of heightened
uncertainty in CORONA. (धन का सं र�ण और नुकसान को अवशो�षत/सोखना)
⇒ Separately, FinMin has ordered PSBs to reduce 20% non-core spending E.g. PSBs have habit of
buying Audi cars for their Managing Directors, but now they’ll not be able to waste money like
that. (सरकारी ब�कों को िफजूल खच� म� 20% क� कटोती करने का आदेश)
14.25.4 🐯🐯: 🦋🦋Regulations Review Authority (RRA 2.0)- for Ease of implementing RBI rules
- RBI has setup RRA 1.0 (in 1999, for one year) and RRA 2.0 (in 2021, for one year)
- Chairman: RBI’s Dy. Governor M Rajeshwar Rao. Who are other members? NOTIMP.
- Objective: To give suggestions to RBI to simplify its rules/regulations so Bank/NBFCs have ease
of doing business. (�नयं त्रण समी�ा प्रा�धकरण जो िक �रज़वर् ब�क को सुझाव देगा िक कै से �रज़वर् ब�क के �नयमों म� सरलीकरण
िकया जाए तािक उनके अनुपालन मे ब�क और एनबीफ़सी को आसानी रहे।)
14.26🌐🌐🌐 BASEL-III NORMS (बेसेल-3 मानदंड)

Bank for International Settlements (BIS) is an international institution made up of 60 countries’
Central Banks. HQ @ BASEL, Switzerland. Its committee on banking supervision set norms in 1988
(I), 2004 (II), 2011(III) to ensure global financial stability. (वै��क �व�ीय ��रता के �लए मानदंड बनाए ह� इस
स�म�त ने)
- From 1/4/2013, RBI began phased implementation of BASEL-III norms in India:

- First, a bank needs to calculate its Risk-Weighted Assets (RWA: जो�खमपूणर् सं प��).
- Against these RWA, (Universal) Scheduled Commercial Banks (SCB) must keep:
o “Minimum Capital to Risk Weighted Assets Ratio” (CRAR) at 9% or higher from
31/3/2019.
o “a%” Capital Conversation Buffer (CCB) from XX date..
o “b%” Counter Cyclic Capital Buffer (CCCB): whenever RBI notifies.
- “c%” Leverage ratio (LR)
- “d”% Net Stable Funding Ratio (NSFR)
- “e%” High quality liquid assets (HQLA)
- “f%” Liquidity Coverage Ratio (LCR)
- and so on…many things.
Figure 9: We need not bother with Tier-1 Tier-2 Capital etc, #थोड़ा-पढ़ो-आगे-बढ़ो
✋FAQ. How exactly do CCB, CCCB, LR, NSFR, HQLA, LCR etc work? Ans. Not
important for exam, beyond the basic ‘word-association’ that they’re related to BASEL
Norms. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
⇒ Each member country’s Central Bank can prescribe different %, ratios depending on their
country’s situation. (हर देश क� क� द्रीय ब�क अलग-अलग िदशा �नद�श जारी कर सकती है)
⇒ As Bad loans (NPA) ⏫ = bank’s asset quality degrades ⏬= its Risk-weighted assets (RWA)
⏫ → bank must arrange more capital to comply with these ratios, norms and buffers.
⇒ If a bank can’t comply with BASEL norms → RBI puts it in PCA list. In worst case, bank will
have to merge/ sell off its business to another bank or shut down. (इन मानदं डों को नहीं माना तो अंत म� ब�क
बं द हो सकता है)
⇒ BASEL Norms also apply on Differential Commercial Banks (LAB, RRB,
SFB, PyB), Cooperative Banks, AIFI (EXIM, NABARD, NHB, SIDBI) and certain category of
NBFCs, but RBI can prescribe separate norms / limits / deadlines for them. (�व�भ� प्रकार क� �व�ीय
म�� ऊपर सं �ाओं पर इन मानदंडों क� सीमा अलग-अलग ह�)
14.26.1 🌐🌐🌐🌐 🕵🕵 BASEL-III norms: Capital Tiers
BASEL-III norms require banks to keep capital against their risk weighted asset ratio. This capital is
subdivided into:
Capital of a Bank Instruments / subtypes: List not exhaustive
Tier1 / ⇒ Common Equity Tier-1 (CET1) e.g. ordinary shares.
core capital → ⇒ Additional Tier1 (AT1) e.g. 🔪🔪🔪🔪🔪AT1 Bonds, Preferential shares
etc.
Tier2 → ⇒ Bonds/Debenture, Hybrid instruments
BASEL-III prescribed that banks must keep minimum x%, y% etc in each of these tiers, depending
on their Risk Weighted Asset (RWA).
14.26.2 🔪🔪🔪🔪🔪Additional Tier 1 (AT1) Bonds

They have no maturity date (i.e. bank has to pay interest for infinite time / perpetuity and principal
will not be returned). However, bank may ‘buyback’ them after certain years.
If / when a bank makes huge losses → AT1 Bonds’ liability may be
A. written off (खा�रज कर देना) OR
B. converted into shares (process called ‘Bail-In’).
AT1 Bonds are in news because of scam in Yes-Bank.
✋🎓🎓Beyond this any what/why/how/PHD, ball by ball commentary on AT1 and SC
judgements and PILs =poor cost benefit for MCQ. Outdated Current.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
14.26.3 🔪🔪🔪🔪🔪Zero Coupon Bonds for PSB recapitalization

⇒ Ref: Pillar1C- Sharemarket.
🔠🔠❓ What is the objective of BASEL-III norms? (UPSC-Prelim-2016)

a) Develop national strategies for biological diversity.
b) reduce the GHG emissions but places a heavier burden on developed countries.
c) transfer technology from developed Countries to poor countries to replace chlorofluorocarbons
in refrigeration.
d) improve banking sector’s ability to deal with financial and economic stress and improve risk
management.
🔠🔠❓ Basel Convention provides: (UPSC-IES-2020)
(a) Indian standards for pollution measurement and prevention
(b) International guidelines to control the transboundary movements of hazardous wastes between
different countries
(c) Indian standards for the disposal of municipal and industrial wastes
(d) International standards to categorize pollution in air and wastewater
14.26.4 🌐🌐🌐 D-SIB: Domestic Systematic Important Banks

⇒ In 2010, G-20’s brainchild Financial Stability board (HQ: BASEL) asked countries to identify
Systematically Important Financial institutions and put framework to reduce risk in them. [Side
note: Same parents responsible for birth of Legal Entity Identifier (LEI)]
⇒ Each year, RBI identifies banks that ‘too big to fail’ (=if they fail, it’ll severely hurt the economy)’
and labels them as Domestic Systematic Important Banks (D-SIB), & orders them keep
additional equity capital against their Risk Weight Assets (RWA) & other technical norms.
⇒ Presently, 3 D-SIBs in India: SBI, ICICI, HDFC (Latest Entry).
14.27🐯🐯🐯🐯: BASEL NORMS DEFERRED / SUSPENDED IN CORONA

self-explanatory from the topic-title itself. (कुछ मानदंडों क� अितम ितिथ को टाल िदया गया।)
We need not loose sleep over new deadlines, as they may again get extended. So, dynamic
information = dangers of answerkey becoming invalid, so, smart examiners usually avoid it.#🕰🕰थोड़ा-
पढ़ो-आगे-बढ़ो
14.28🐯🐯🐯🐯🐯🐯 BANKS’ BALANCE SHEET / AUDIT NORMS (तुलन पत्र लेखा परी�ण)
14.28.1 🐯🐯🐯🐯🐯🐯 IndAS Accounting Norms deferred (लेखा मानदंड ��गत/टाल �दये)
⇒ Ministry of Corporate Affairs (MCA) ordered all the companies to keep their balancesheet as per
the format prescribed in the Indian Accounting Standards (IndAS).
⇒ 🤩🤩Benefit? IndAS accounting format makes it easier for the local and global investors and
regulators to compare, analyze and understand a company’s financial position from its
balancesheet. (इस �रपोटर् को देखकर �नवेशक को आसानी से कं पनी क� �व�ीय �मता का अंदाज़ा लग जाता है.)
⇒ IndAS is not part of BASEL norm. But, since commercial banks are basically ‘companies doing
banking activity’, so they also have to comply to IndAS norms. But, only RBI has the power to
notify its implementation deadline on banks. (ब�कों के ऊपर भी इ�ी �नयमों को लागू करना है.)
⇒ 2020- Critics demanded RBI should implement it. What is the deadline? NOTIMP.
14.29🌐🌐🌐💸💸 RECAPITALIZATION OF PSBS: [सावर्ज�नक �ेत्र के ब�को का पुन:पूंजीकरण]

If a bank doesn’t have enough capital to comply with BASEL-III norms it can issue debt (bonds) and
equities (shares) to gather new capital. (बा�सल मानदं डो का अनुपालन करने के �लए ब�क ने पूंजी जमा करनी होती है)
- 2015: Estimation that Public Sector Banks (PSBs) will require ₹ 1.8 lakh crore additional capital
by 31/3/19 to comply with BASEL-III norms.
- So, Finance Ministry’s Dept. of Financial Services up with Indradhanush PLAN for phased-
recapitalization of PSBs with ₹ 70,000 crores from 2015 to 2018. Individual PSB will get funding
based on outcomes / performance. (इं द्रधनुष �ान के अंतगर्त �व� मं त्रालय सरकारी ब�को म� पूंजी दे रहा था-बा�सल
मानदंड के अनुपालन के �लए)
- 2017: It became clear ₹70,000 crores was insufficient for BASEL-III compliance. So, Modi Govt.
announced more amount. (हालांिक बाद म� पता चला क� वो रकम पयार्� नहीं थी और �ादा रकम चािहए होगा)
- To arrange ₹₹ for this, Govt began to issue Bank Recapitalization Bonds (RcB) in the market with
following features: These bonds will have interest rate of ~7%, mature@ 2028-2033. Non-
transferable to third party, Non-convertible into shares. (तो �ादा रकम बटोरने के �लए सरकार ने बाजार म�
बॉ� जारी िकये)
- Govt instructed PSBs to mobilize equity (share) capital from private investors. However,
investors shy away from smaller banks with weak balancesheets, so BMB & 5 Associated Banks
merged with SBI (2017). Vijaya & Dena to be merged with BoB (2019, 1st April) etc. (More in
📑📑Pillar#1B1)
- 💼💼 Budget-2020: FM said we’ve given ₹3.50 lakh cr in the last years years.
- 💼💼Budget-2021: ₹20,000 crores for PSB recapitalization in Financial Year 2021-22.
- 💼💼Budget-2022: No money given for this. Govt’s rationale is that PSBs profitability improving
so PSBs can take care of their capitalization problems by themselves by issuing shares/bonds in
market. (सरकार ने नए बजट म� पुनः पं जीकरण के �लए कोई पैसा नहीं िदया. सरकारी ब�को अब तुम खुद अपना देख लो!)
🔠🔠❓MCQ. Find Correct Statement(s) abt Governance in PSBs:( UPSC-Pre-2018)

1. Capital infusion into PSBs by the Govt of India has steadily increased in the last decade.
2. To put the public sector banks in order, the merger of associate banks with the parent State Bank
of India has been affected.
Answer Codes: (a) 1 only (b) 2 only (c) Both 1 and 2(d) Neither 1 nor 2.
14.30�BANKING SECTOR: GOVERNANCE / ADMINISTRATIVE REFORMS

14.30.1 �Gyan-Sangam-I, 2015, Pune
FinMin’s Dept of Financial Services (�व�ीय सेवा �वभाग) organized a workshop of financial regulators,
Public Sector Bank, Insurance Companies etc. It resulted in 3 outcomes:
1) PSBs’ CMD post bifurcated into 1) separate chairman and 2) separate MD&CEO so that banks
can function in more professional and accountable manner.
2) Indradhanush plan for bank recapitalization (₹ 70,000 crores)
3) Finance Ministry setting up an autonomous body- Bank Board Bureau (BBB). →
14.30.2 � Personnel Selection → Bank Board Bureau (BBB), 2016
Figure 10: यूपीएससी क� तरह हम ल�गे नोकरी का इं टर�ू

- It is non-constitutional, non-statutory body (यह सं �ान न तो सं वैधा�नक है न तो वैधा�नक)
- It interviews & selects top officials (MD, CEO, Chairman and full-time Directors) for PSBs,
public sector insurance companies, and other public sector financial institutions (e.g. NABARD,
SIDBI etc.).
- Actual appointment done by FinMin’s Department of Financial Services. (Just like UPSC selects
candidates suitable for IAS but DoPT notifies appointment.)
- BBB also helps the banks in governance reforms, raising capital for BASEL-III etc.
- BBB has 1 Chairman (usually a retired IAS) and some members.
🔠🔠❓MCQ. Chairman of public sector banks are selected by the _ _? (Prelims-2019)
(a) Banks Board Bureau (b) RBI (c) Ministry of Finance (d) Management of concerned bank
🔠🔠❓MCQ. Find Correct about ‘Banks Board Bureau (BBB)’ (Prelims-2022)

1. The Governor of RBI is the Chairman of BBB.
2. BBB recommends for the selection of heads for Public Sector Banks.
3. BBB helps the Public Sector Banks in developing strategies and capital raising plans.
14.30.3 � Personnel Selection → FSIB replaces BBB (2022)

⇒ 2022: Delhi High Court ruled, “BBB cannot select public sector (govt owned) insurance
companies because of conflict with the other laws related to public sector insurance companies.
⇒ 2022: Then Govt replaced BBB with new body named “Financial Services Institutions Bureau
(FSIB)” to comply with court order.
⇒ Every thing else (function, feature etc) about FSIB is same as BBB.
🚩🚩🚩FAQ: is this not unethical / big-joke to subvert court order?

Ans. Court has not banned FSIB yet. Govt did not bother to justify loudly in news headlines.
Columnist did not bother to loudly criticise. So, I did not bother to PHD.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
14.30.4 �PSB Banking Personnel Reforms→ 📔📔📔📔ES20 suggestions

- PSBs should be allowed to do 1) campus recruitment of atleast some specialists (कु छ �वशेष�ों क�
के �स प�रसर से सीधी भत�) 2) lateral entry in higher management (उ� प्रबं धन म� पा��क भत� ).
- PSBs should give Employee Stock Option Plan (ESOP) to their employees. ESOP is a type of
benefit plan wherein employees given some shares of the company (Apart from their regular
monthly salary). [कमर्चारी �ॉक �वक� योजना: वेतन/तन�ाह के अलावा ब�िकंग कं पनी के शेयर भी कमर्चारी को िदए जाये]
When/if company makes profit → How does employee benefit from ESOP? (�ा फायदा होगा)
1) Market price of shares⏫ He can sell his shares to a third party for a large gain.
2) the dividend to the shareholders He can keep the shares with himself, and will get large
will increase. dividend from the company (in addition of his regular
salary) तन�ाह के अलावा कं पनी के मुनाफे म� से लाभांश भी �मलेगा
- As shareholders, some of these employees may even join as board members → help designing
more realistic business policies at the apex level. Thus, ESOP changes mind-set from an
“employee” to that of an “owner”. (कमर्चारी म� कं पनी का मा�लक होने क� भावना जगाता है)
- It encourages the employee to work harder with more dedication, loyalty and passion for the
company’s profitability and brand image. (वह समपर्ण �न�ा और जुनून से ब�क के �लए काम करना शु� करता है)
14.30.5 �Enhanced Access and Service Excellence (EASE) Agenda 2018
- 2017, October: Government announced ₹2 lakh+ crore package for recapitalization of PSB. But
critiques argued such relief measures will just make the PSBs officials lazy & undisciplined
(moral hazard). So,
- 2017, November: First Public Sector Bank (PSB)-Manthan organized by Dept of Financial
Services (DFS) at Gurugram. Based on the participants’ inputs…
- 2018, January: FinMin’s Dept of Financial Services released EASE framework (बढ़ी प�ंच और सेवा
उ�ृ �ता) with 6 pillars to make PSBs more Responsive and Responsible viz.
1. Customer Responsiveness. (ग्राहको के प्र�त जवाबदेही)
2. Responsible Banking: Reduce NPA, prevent frauds. (धोखाधड़ी पर अंकुश)
3. Credit Off Take: Try to reach out to potential borrowers for home, auto, education, loans.
(�यम ब�क ही उधारकतार्ओ को खोज �नकाले)
4. Help MSME entrepreneurs via SIDBI’s Udyamimitra.com portal. Approve/reject loans in
not more than 15 days. (लघुउधोगों क� मदद)
5. Deepening Financial Inclusion & Digitalization. (�व�ीय समोवेशन)
6. Employees’ Human Resource Management (HRM: मानव सं साधन प्रबं धन): improve with training,
performance linked promotion-salaries-posting-transfers etc.
Implementation? Each whole-time director of a PSB will be entrusted with one pillar of the EASE-
framework. Their performance will be checked by the PSB’s board of directors. An independent
agency will be tasked to check public perception. Finally PSB banks will be ranked: E.g. 2018: PNB#1.
14.30.6 �Ease 3.0: Tech-Enabled Banking (2020-21)

- 2018= Ease 1.0 → 2019: Ease 2.0 (some more fancy feature but NOTIMP) → 2020: ease 3.0
- Finance minister proposed Smart, Tech-enabled Banking for Aspiring India.
- Associated keywords: Doorstep Banking, Dial-a-loan, Credit@click, Palm banking (using
phone/tablets).
Table 4: Points for assembling Mains Answers Rapidly
Eco.Survey-2015: “4R” framework Eco.Survey-2014: “4D” framework
Recognition (पहचान): of bad loans via asset Disinter(खोदकर �नकालना): "Digup graves, recover
quality review (AQR) money": using SARFAESI Act, I&B code, Sashakt
Resolution (समाधान): via Differentiate among PSB (�भ� �वहार करना):
schemes/mechanisms I&B, Project Government should recapitalize Profit Making PSB:
Sashakt while merge or privatize Loss Making PSB.
Recapitalization(पुनपू�जीकरण): for BASEL- Diversify (वै�व� लाना): Allow more number and
III norms ⇒ Indradhanush, Bank Recap variety of Banks.⇒ SFB & PyB allowed. Wholesale
Bonds & other measures: Total ₹ >3.5 lakh Bank proposed.
cr lakh crore mobilized.
Reforms(सुधार): Governance & Deregulate (�नयं त्रण मु�): Lower SLR, Promote
Administration of PSB⇒ BBB, EASE Corporate Bond market so they borrow less from
Banks e.g. Tri-Party Repo mechanism.
Further, you can also mention: PCA Norms, PCR registry, PSBN Network, ESOP etc.
14.30.7 �👮👮:🛡🛡Staff Accountability Framework for PSB-NPA
⇒ Finance Ministry’s issued this for NPA accounts up to Rs 50 crore in PSBs from 1/4/2022.
⇒ If PSB Banker took bonafide business decisions to approve loan application but it turned NPA
then banker will be protected from undue inquiries/harassment by 3Cs — CBI (Central Bureau
of Investigation), CVC (Central Vigilance Commission) and CAG (Comptroller and Auditor
General).
⇒ Previously the fear of 3C was discouraging the public sector bank managers from sanctioning big
loans (in the aftermath of TBS, Mallya, Nirav Modi).
(सरकारी ब�क और लोन पास करने से डरते ह� �ोंिक उ�� तो CBI, CVC, CAG क� कारर् वाई का डर लगता है तो अब �वत् मं त्रालय ने
कु छ नए “सावर्ज�नक ब�क कम� जवाबदेही ढांचा” िदशा�नद�श जारी िकए ह� तािक ईमानदारी से �लए गए फै सलों म� अगर लोन का पैसा
वापस न आए तो सरकारी ब�क के ईमानदार ब�कर पर अनाव�क �प से कोई कारर्वाई न हो)
14.30.8 ✍ Conclusion for Public Sector Banks? (सावर्ज�नक �ेत्र के ब�कों के बारे म� �न�षर्)
 A vibrant banking system can support India’s growth story/ PSBs are growth levers for India.
 Inefficient PSBs can severely handicap the country's economic development.
 35% of Indians are in the 15-29 years age group. Majority of them live in rural areas and many of
them require education loans and business loans to progress in life.
 Therefore, aforementioned initiatives are imp in that regard/ need to be addressed on priority
basis to
o 1) Reap India’s demographic dividend and
o 2) To achieve $5 trillion economy status by 2025.
o 3) to achieve V-Shaped recovery Post-Corona
(भारत क� �वकासगाथा को आगे बढ़ाने, तथा जनसां��क�य लाभांश को प्रा� करने के �लए जीवं त बेिकंग प्रणाली आव�क। अत: उ�
�रजवर् ब�क|सरकार के उ� कदम सरहनीय है/ उ� सुधारो क� आव�कता है।)
14.31🧹🧹🧹🧹: 👹👹(🚫🚫🏦🏦) NEGATIVE NEWS: ILFS & SHADOW BANKING
14.31.1 👹👹(🚫🚫🚫🚫) NBFC: Shadow Banking (आभासी / प्र�तछाया ब�िकंग प्रणाली)

📔📔📔📔ES20 Vo1 Chapter 08 on ‘NBFC’s Financial Fragility’ (�व�ीय भं गुरता) observed
⇒ Shadow banking is a set of activities and institutions. They operate partially (or fully) outside the
traditional commercial banking sector. They are not fully regulated by the RBI. ये सं �ाए पारंप�रक
ब�िकंग �नयमो के दायरे से बाहर काम करती है.
⇒ They mobilize funds by borrowing from banks, issuing Commercial Papers (CP) and Bonds
(Non-convertible debentures)
Table 5: Three important segments of the shadow banking system in India
HFCs Housing Finance Companies. E.g. Dewan Housing Finance Limited (DHFL)
LDMFs - Liquid Debt Mutual Funds invest clients money into short term debt instruments
such as T-bill (of Govt) and Commercial Papers (of companies).
- e.g. certain schemes by UTI, Kotak, L&T, Tata mutual funds
- 2019: Some of these LDMFs had invested clients money in IL&FS and DHFL, but
failed to get the money back. Nearly ₹4000 crore of investors’ money is stuck,
triggering the NBFC crisis in India.
Retail- Retail Non-Banking Financial Companies such as Gold loan companies, asset finance
NBFCs companies etc.
Shadow banking system’s assets are risky and illiquid. If there is a ‘bank run’ like situation
(depositors / investors demanding the money bank) these shadow banks can’t honour the
obligations. As seen in the ILFS crisis (2019) →
14.31.2 👹👹(🚫🚫🚫🚫) Shadow Banks → IL&FS & NBFC Liquidity Crisis
- Infrastructure Leasing & Financial Services (IL&FS) is a Systemically Important Non Deposit
Taking Non - Banking Finance Company (NBFC - ND – SI: प्रणालीगत �प से मह�पूणर्- िडपॉ�ज़ट न
लेनेवाली- गैर-ब�िकंग �व� कं पनी) Setup in 1987 HQ@Mumbai.
- Shareholders: LIC > Japan’s Orix group > Abu Dhabi’s group > Central Bank of India > SBI.
- Challenge? 1-2-3 of above diagram. + loans given to unworthy borrowers with forged
documents, bribes were paid to IL&FS board directors & auditors.
14.31.3 👻👻 ATMANIRBHAR → 🐯🐯: 👹👹(🚫🚫🚫🚫) RBI Helping NBFCs/ Shadow Banks

- RBI has launched 1) TLTRO and 2) special liquidity window. (Ref 📑📑1A2 Monetary Policy)
- Govt has announced following 1) Partial credit guarantee 2) Sp. Liquidity scheme 3) Credit
Guarantee Enhancement Corporation
14.31.4 👻👻 ATMANIRBHAR → 🧔🧔🧔🧔🧔🧔🧔🧔 Partial Credit Guarantee Scheme (PCGS) 2.0

- Budget 2019: If NBFCs/ MFCs/Micro Finance Institutions (MFIs) borrowed money by issuing
debt securities (Bonds or Commercial Papers) → Public sector banks (PSB) invested in it → but
borrower default then the government paid 10% of loss to PSB.
- Corona= total 20% loss cover guaranteed to PSB. (सावर्ज�नक ब�कों को आं�शक क्रेिडट गारंटी)
14.31.5 👻👻 ATMANIRBHAR → 🧔🧔🧔🧔🧔🧔🧔🧔 Special Liquidity Scheme for NBFC/HFC

Outdated Current. Deleted from Handout. Sufficient to know it helps NBFCs.
14.31.6 👹👹(🚫🚫🚫🚫)💊💊🧔🧔Shadow Banking → other Remedies by Govt post-ILFS crisis

1) Under Companies Act: Ministry of Corporate Affairs (MCA:) replaced the IL&FS’s Board
members. Uday Kotak made new Chairman. कारपोरेट मामलों के मं त्रालय ने बोडर् ऑफ डायरे �र म� अपने �वशेष�ों
को आसीन िकया
2) MCA constituted the statutory body National Financial Reporting Authority (NFRA) under
Companies Act 2013 for stricter vigilance over Chartered accountants and auditors. (More in
📑📑1C: SEBI Handout) कं पनी कानून के अंतगर्त रा��ीय �व�ीय �रपो�टग प्रा�धकरण नामक एक वैधा�नक सं �ा क� �ापना
3) Corporate Affairs Ministry’s Serious Fraud Investigation Office (SFIO) investigating the IL&FS
officials & auditors. (गं भीर धोखाधड़ी जांच कायार्लय- इसके अफसरों और लेखा परी�कों क� जांच कर रहा है)
4) LIC says we’ll not allow IL&FS to collapse (=we may use Policy holders’ money to rescue it just
like IDBI)
5) 2019: Govt increased ⏫ RBI powers (under RBI Act) to regulate NBFCs in following ways: RBI
can remove NBFC’s board of directors, can inspect any NBFC or its associated group of
companies, RBI can force merger/splitting of non-viable NBFCs, higher fines/penalties for
violation. �रजवर् ब�क क� �नगरानी श��यों म� बढ़ोतरी क� गई
6) Budget-2019: we will setup a Credit Guarantee Enhancement Corporation to help NBFCs.
(CGEC: क्रेिडट गारंटी वधर्न �नगम). (How it’ll work? Ans. We’ll study when it is actually started).
14.31.7 👹👹(🚫🚫🚫🚫) 💊💊🐯🐯 Shadow Banking → Remedies by RBI

⇒ RBI tightened norms of Asset-Liability Management (ALM) norms for NBFCs.
⇒ 2019 July: Dy. Gov Viral Acharya Committee → RBI board approved 3 year medium term
framework to improve RBI regulation & supervision, based on global best practices = “Utkarsh-
2022” roadmap. (वै��क मानदंडों का अनुसरण करते �ए �रजवर् ब�क क� �नयं त्रण और �नगरानी करने क� प्रणा�लयों म� अगले 3
सालों म� सुधार करने के �लए उ�षर् कायर्क्रम )
⇒ 2021: RBI proposes 4-tier structure for tighter regulation of NBFCs: NBFCs to be classified into
four categories BASE, MIDDLE, UPPER & TOP LAYER (most risky companies). Accordingly
tighter regulation on them. ✋Exact details notIMP, Until they actually implemented. (चार श्रे�णयों
म� जो�खम के िहसाब से बांटा जाएगा सबसे उ� श्रेणी म� सबसे �ादा जो�खम पूणर् कं प�नयों को रखा जाएगा और उन पर �रजवर् ब�क क�
�नगरानी सबसे �ादा स� होगी.)
14.31.8 👹👹(🚫🚫🚫🚫) 💊💊📔📔📔📔 Shadow Banking → Remedies by SEBI

⇒ SEBI tightened norms on Mutual Funds, regarding where/how they invest clients’ money. (सेबी ने
भी �नयमों को स� िकया है)
14.31.9 👹👹(🚫🚫🚫🚫) 💊💊📔📔📔📔 Shadow Banking → Remedies suggested by ES20
- CEA Subramanian K. has created a “Health Score for NBFCs” to monitors given NBFC
company’s Asset Liability Management (ALM) problems, balance sheet strength, etc. and gives
them a score between -100 to +100. (�ा� सूचकांक बनाया जाए).
- Higher scores indicating higher financial stability of the firm. This health score can provide early
warning signals to the Financial regulators → they can initiate appropriate measures before it's
too late. (सूचकांक के आंकड़ों म� �गरावट एक प्रकार से पूवर् चेतावनी देगी → उसे देखकर �व�ीय �नयं त्रक तुरंत
आव�क/ज�री/यो� कदम उठा सके )
🔠🔠❓In September 2019, which one of the following travel giants declared itself bankrupt? (CDS-
i-2020) (a) Expedia (b) Cox & Kings (c) SOTC (d) ANS: Thomas Cook
14.32🧹🧹🧹🧹💍💍 NEGATIVE NEWS: PNB, LOU, SWIFT, & NIRAV MODI
PNB (Mumbai Branch): Give foreign currency loan to our client Nirav Modi for purchase of goods (diamonds,
airplanes, whatever), if he doesn’t pay, we’ll pay.
- If such bank guarantee given to another bank in a foreign country, it’s called Letter of
Undertaking/ Letter of Credit/ Letter of Comfort: internal difference not important.
- Bank earns commission / fees from client for issuing such letters / guarantees.
- The foreign currency thus loaned, goes into PNB’s Nostro (Latin:Ours) account, & Nirav uses
the dollars to buy diamonds in HongKong.
- PNB Scam: PNB-Mumbai’s corrupt manager kept issuing LoUs to diamond merchants Nirav
Modi & Mehul Chowkasi without due-diligence or collaterals for 7 years, worth ~₹12,000 crores.
And 2018-January: Nirav & Mehul left India.
- PNB officials couldn’t detect scam because LoUs were generated through SWIFT platform,
which was not integrated with their Core Banking Solution (CBS) server.
14.32.1 💸💸📞📞Financial Messaging Systems: SWIFT- Russia gets banned
Globally (वै��क �र पे पैसा भेजना हो) Within India (भारत के भीतर ही पैसा भेजना हो!)
Society for Worldwide Interbank Structured Financial Messaging System (SFMS)
financial telecommunication (SWIFT)
By a Cooperative organization in designed by Tata Consultancy Services (TCS) for
Belgium’s La Hulpe city (1973). IDRBT (=Research arm of RBI)
To serve the messaging function for to serve the messaging function in NEFT, RTGS, and
Banks, NBFCs & brokers who may / may other inter-bank, intra-bank e-transactions
not have direct bank relations / platforms within India.
settlement systems with each other due to
international borders.
😥😥 Nations banned from SWIFT: 1) Iran (Capital Tehran) 2) 2022: Russia got ban, after invading
Ukraine. This will make it very difficult for the Russian banks/ NBFCs /businessmen to send and
receive money internationally (यूक्रेन-आक्रमण के �ख़लाफ़ �स को ��फ़्ट-�व�ीय सं देश प्रणाली से प्र�तबं �धत िकया गया है
�जसके चलते �सी ब�क �व�ीय सं �ान और उद्योगप�तयों को अंतररा��ीय �र पर पैसों के लेन म� िद�त� आएं गी।)
Afterwards, ⚾📻📻⚾🎓🎓✋ball by ball commentary on Nirav Modi case =NOTIMP
14.33��🐯🐯 RBI DIVIDEND, RESERVES, ECONOMIC CAPITAL FRAMEWORK

RBI’s income sources include � From its income, RBI allocates funds to�
1. Interest on G-Sec that are not sold in Open 1. Staff retirement fund, provisions for bad
Market Ops. loans, depreciation in assets…
2. Interest on Foreign G-Sec / Sovereign 2. Reserves for contingency (emergency): ~₹
Bonds. 2.5 Lcr. आपातकाल के �लए आर��त भं डार
3. Interest on Loans given to other Banks / 3. Reserves for Exchange Rate Stability
NBFCs. कजर् पर �मलने वाला �ाज (Technically called “Currency & Gold
4. Revaluation of foreign currency and gold in Revaluation Reserve: ~₹7 lakh cr �व�नमय दर म�
RBI reserves. �वदेशी मुद्रा और �णर् भं डारों के मू� म� ��रता के �लए आर��त भं डार)
बढ़ोतरी After making these allocations, profit is shared
5. Seigniorage: profits from printing money- with Union Govt. in form of ‘Dividend’ (RBI
because face value > intrinsic value. Act Section 47). �रज़वर् ब�क के मुनाफे म� से ये भं डार/ �न�ध म�
HOW?NOTIMP पैसा रखने के बाद यिद कोई रा�श बची तो वह सरकार को लाभांश
6. Penalties imposed on errant banks. के �प म� देनी होगी
14.33.1 ��🐯🐯 RBI’s Bimal Jalan panel (2018)
- 2017: RBI Governor Urjit Patel gave ₹50,000 crore dividend to Govt but Govt wanted ₹3.6 lakh
crore dividend. Then, (गवनर्र उ�जत पटेल �जतना दे रहा था उससे कई गुना �ादा िड�वड�ड सरकार चाहती थी)
- RBI setup Bimal Jalan panel to decide the principles for dividend transfer to Govt. (आ�थक पूंजी
सं रचना तथा लाभांश �वतरण के �सद्धांत)
- 2019- August: RBI board approved Bimal Jalan report.
- It updated norms in such manner that RBI will be able to transfer more dividend / surplus to the
Government. (तकनीक� मानदंडों म� सुधार तािक �रजवर् ब�क अपने मुनाफे म� से भारत सरकार को अ�धक लाभांश दे सक� . )
14.33.2 🐯🐯📆📆 RBI’s Financial / Accounting Year (�व�ीय वषर् म� बदलाव)
2019: Bimal Jalan panel recommended �reform → RBI’s central board accepted it
� Before � After
RBI’s financial year - From 1 April, 2021, RBI will switch to
st
- 1934 onwards: January to December annual April-March format.

- 1940 onwards: July to June
But Govt’s financial year is April-March so, RBI After this reform, no need for interim dividend
had to give interim dividend to govt until RBI’s (अंत�रम लाभांश �वतरण नही देना होगा।)
final balancesheet was prepared, then another
(full) dividend was given.
14.33.3 🐯🐯�Section-7 Directive & Urjit Patel’s Resignation (इ�ीफा)
Isn’t this topic outdated? Ans. Its points need to be understood for “GSM2-Regulatory Bodies
Problems”. (because earlier UPSC has asked why national commission for woman / Human rights
commission not unable to pay effective role et cetera?)
2018: RBI Governor Urjit Patel was unhappy with Govt interfering / criticizing his work. Such as:
- Higher Dividend: Govt. demanded higher dividend from RBI to finance the recapitalization of
PSBs for BASEL-III, and to finance its own fiscal deficit & populist welfare programs. Urjit Patel
felt RBI’s higher reserves are necessary to check any financial crisis. Excessive dividend could
increase inflation. He did not oblige. (सरकारी योजनाएं चलाने के �लए �ादा िड�वड�ड /लाभांश क� मांग)
- BASEL-III-relaxation: These norms will become fully effective on 31/3/2019 but PSBs don’t
have enough capital to comply so they requested Finance Minister to tell Urjit Patel to extend the
deadline, Urjit Patel did not oblige. (बासेल मानदंडों क� अं�तम �त�थ म� �रयायत क� मांग)
- PCA-relaxation: Urjit Patel vigorously implemented Prompt Corrective Action framework, so
Public Sector Banks’ branch expansion, lending operations were restricted, they came running to
FM. FM asked Urjit to relax PCA. He did not oblige. (पीसीए �नयमों म� �रयायत क� मांग)
- Tight Money Policy: CEA Arvind Subramanian & BJP-Ministers were criticizing RBI’s “Tight”
Monetary Policy depriving MSMEs of cheap loans and thus harming India’s growth rate.
Whereas Urjit Patel deemed tight policy necessary to keep inflation @2-6%CPI (All India) on
durable basis so he did not oblige. (महंगाई से लड़ने के �लए लोन और महंगे क�ए → �ापारी वगर् नाराज)
- PNB Scam: Jaitley expressed displeasure that RBI couldn’t detect PNB-Nirav Modi fraud,
whereas Urjit Patel defended that he lacks effective powers under Banking Regulation Act to take
punitive actions against Public Sector Banks. (पं जाब नेशनल ब�क - नीरव मोदी कांड को पकड़ने रोकने म� असमथर्
रहे ऊ�जत पटेल)
All these forced Govt. to issue Section -7 Directive to RBI.
14.33.4 🐯🐯�🧔🧔 Section-7 of RBI Act
⇒ Section 7(1) of the RBI Act empowers the Government to consult with RBI Governor in Public
Interest. (जनिहत के �लए, �रजवर् ब�क कानून क� धारा नं बर 7 के अंतगर्त सरकार गवनर्र के साथ �वमशर् कर सकती है)
⇒ In, 2018-October, for the first time in the history of Independent India, Govt began a Section-
7(1) consultation with RBI Governor Urjit Patel, on the issues of PCA norms, BASEL-III
deadline, higher dividend to Govt., Cheap Monetary Policy etc.
⇒ If RBI Governor doesn’t positively respond in such Section-7(1) consultation, then Section 7(2):
Government can issue binding direction / orders to RBI Central Board to implement its wishes.
(यिद गवनर्र, एसे �वमशर् मे, सरकार क� बात नही सुनते तो, क� द्रीय बोडर् द्वारा सरकार अपनी बात को लागू करवा सकती है)
⇒ Although, fearing backlash from media & opposition parties, Govt did not issue any specific
directions to the RBI Board. But, 2018-Dec: Urjit Patel resigned before completing 3-year term.
He is not the first RBI governor to resign & we need not prepare list all the RBI governors who
resigned before their term.
🔠🔠❓MCQ. Find Correct statements about RBI: (UPSC Prelims-2021)

1. The Governor appointed by the Central Govt. (�रजवर् ब�क के गवनर्र क� �नयु�� क� द्र सरकार करती है)
2. Certain provisions in the Constitution of India give the Central Government the right to issue
directions to the RBI in public interest. ( कु छ सं वैधा�नक प्रावधानों के अंतगर्त क� द्र सरकार जनिहत म� �रजवर् ब�क को
िदशा �नद�श दे सकती है)
3. The Governor draws his power from the RBI Act. (गवनर्र को आरबीआई कानून से श��यां �मलती है)
Code: a) 1 and 2 only b) 2 and 3 only c) 1 and 3 only d) 1, 2 and 3
14.34✍🏻🏻🎷🎷 MOCK QUESTION FOR MAINS GSM3 (250 WORDS EACH)

1. After 50 years of nationalization, the Public Sector Banks are lagging behind private sector banks
in majority of the performance indicators. Suggest remedies in this regard. रा��ीयकरण के 50 वष� के
बाद, सावर्ज�नक �ेत्र के ब�क प्रदशर्न सं केतकों के �नजी �ेत्र के ब�कों से पीछे ह�। इस सं बंध म� उपाय सुझाएं
2. Explain the significance of governance reforms in Public Sector Banks (PSBs) for India’s
economic growth. भारत के आ�थक �वकास के सं बंध म� सावर्ज�नक �ेत्र के ब�कों म� शासन सुधारों के मह� को समझाइए.
3. Suggest the ways in which information-technology can be utilized for combating the NPA in
Indian economy. अनजर्क प�रस��तयों से �नपटने के �लए सुचना प्रौद्यो�गक� कै से मदद कर सकती है?
4. What is “Twin Balancesheet Syndrome”? Enumerate steps taken by RBI to resolve it. "दोहरे तुलनपत्र
क� सम�ा" �ा है? इसके हल के �लए भारतीय �रज़वर् ब�क द्वारा उठाए कदमों क� सू�च दी�जए.
5. “While Insolvency & Bankruptcy Code doesn’t fully cure the Twin Balance sheet Syndrome, it
certainly helps alleviating the pain.” Elaborate. "हालांिक शोधन-अ�मता एवं िदवा�लयापन सं िहता भारत के दोहरे
तुलनपत्र क� सम�ा को पूरी तरह से ठीक नहीं करता है, लेिकन यह �न��त �प से ददर् को कम करने म� मदद करता है." �व�ृत क��जए.
6. With respect to India’s financial stability, explain significance of (i) PCA framework (ii) BASEL-
III Norms (iii) Public Credit Registry. भारत क� �व�ीय ��रता के सं बंध म� इ�े समझाइए: (i) पीसीए ढांचा (ii)
बेसल-III मानदंड (iii) ऋण क� सावर्ज�नक र�ज��ी
7. Why are shadow banks considered to be a threat to the Indian economy? Discuss the reforms
undertaken by the authorities to address this challenge. प्र�तछाया ब�कों को भारतीय अथर्�व�ा के �लए खतरा
�ों माना जाता है? इस अनुसंधान मे �लए गए सुधारों पर चचार् कर�।
8. Justify the rationale behind Govt’s decision to setup a Bad Bank, despite the existence of IBC
Code and SARFAESI Act. How will this proposed bad bank alleviate the pain of NPA? (आईबीसी
कोड और सरफे सी अ�ध�नयम के अ�� के बावजूद, एक बैड ब�क �ा�पत करने के सरकार के �नणर्य के पीछे के तकर् का औ�च�
सा�बत कर�। यह प्र�ा�वत बैड ब�क कै से एनपीए का ददर् कम करेगा ?)
Next Handout 📑📑Pillar#1C: SEBI SHAREMARKET
Pillar#1C: SEBI-Share Market
Table of Contents
15 🐮🐮🐮🐮🐮🐮Pillar#1C: SEBI-Share Market .......................................................................................185
15.1 🗃🗃Securities (प्र�तभू�त)................................................................................................................185
15.2 🗃🗃 🛒🛒Financial / Securities market: meaning and types ..................................................186
15.3 🔪🔪🔪🔪 Debt Instruments (ऋण उपकरण) ...................................................................................187
15.3.1 🔪🔪🔪🔪⏰Short term debt instruments (लघु अव�ध ऋण उपकरण ) .................................187
15.3.2 🔪🔪🔪🔪⏰:🧔🧔Short term debt instruments → by Government .............................187
15.3.3 🔪🔪🔪🔪⏰: 🐯🐯🐯🐯 🧔🧔🧔 Short term debt instruments → by Govt → WMA ..188
15.3.4 🐯🐯🐯🐯🐯 Consolidated Sinking Fund (CSF) for State Govts’ repayment .............188
15.3.5 🔪🔪🔪🔪⏰Short term debt instruments → by borrowers other than Govt ...........188
15.4 🔪🔪🔪🔪⏰Debt → Short Term → Factoring & TREDS .......................................................189
15.4.1 🔪🔪🔪🔪⏰Factoring Regulation (Amendment) Act, 2021.............................................189
15.4.2 🔪🔪🔪🔪⏰: 📡📡 TReDS platform to connect factoring-players. ....................................190
15.5 🔪🔪🔪🔪⏰Debt → Interest Rate Benchmarks: LIBOR, MIBOR, MIFOR ............................190
15.6 🔪🔪🔪🔪🔪🔪 Long Term Debt Instruments (दीधर्-अव�ध ऋण- उपकरण).......................................191
15.6.1 🕯🕯🕯🕯🕯🕯🕯🕯Colonial era Govt. to borrow money .....................................................191
15.6.2 💡💡💡💡💡💡💡💡Modern day Government to borrow money.........................................192
15.6.3 🥇🥇🥇🥇🥇🥇Bonds by Modern day Govt. to curb Gold Consumption .......................192
15.6.4 🔪🔪🔪🔪🔪🔪🔪 Long term debt instruments by Companies ........................................193
15.6.5 🔪🔪🔪🔪🔪🔪Long Term Debt Instruments: Other issuers .............................................194
15.6.6 🔪🔪🔪🔪🔪🔪Long Term Debt Instruments: Masala, Maharaja, Panda Bond .............194
15.6.7 🔪🔪🔪🔪🔪🔪 Long Term Debt Instruments: Special purpose: 🚦🚦🚦🚦 Surety Bonds ..195
15.6.8 🔪🔪🔪🔪🔪🔪 Long Term Debt Instruments: Special purpose Bonds- Misc. ...............195
15.6.9 🗳🗳(🔪🔪🔪🔪)⏳Electoral bonds (चुनावी बांड, 2017 ) .........................................................197
15.6.10 🔪🔪🔪🔪: 🤑🤑 Bond Yield, Yield Inversion, Negative Yield ..........................................198
15.7 ⚖🗃🗃 Equity Instruments (इ��टी) .........................................................................................198
15.8 ⚖🗃🗃 Methods of Issuing Shares .........................................................................................200
15.8.1 ⚖🗃🗃 IPOs- Big sized IPOs in recent years................................................................201
15.8.2 ⚖🗃🗃 IPOs → LIC & FDI in LIC?.....................................................................................201
15.8.3 ⚖🗃🗃 🤵🤵 IPO → Special Purpose Acquisition Company (SPAC) ..........................201
15.8.4 ⚖🗃🗃 🌐🌐 ADR/GDR: Shares in Videshi locker ........................................................202
15.8.5 👻👻⚖🗃🗃 🌐🌐 ATMANIRBHAR reforms in ADR/GDR/BharatDR ......................202
15.8.6 🔗🔗🔗🔗 Initial Coin Offering (ICO) ...................................................................................202
15.9 📈📈 Stock Exchanges / Secondary Market: meaning & examples ......................................203
(Batch:PCB7) Mrunal’s Economy Pillar#1C: SEBI Share-market→ Page 182

15.9.1 📈📈 Social Stock Exchange ...................................................................................................203
15.9.2 📈📈 Secondary Market: Significance? (िद्वतीयक बाजार का मह�) .......................................203
15.9.3 🗃🗃🗃🗃 DEMAT Account ................................................................................................204
15.9.4 🛒🛒 (💻💻:�) DEMAT → ASBA Reforms ........................................................................204
15.9.5 �🛒🛒 Types of Investors: Depending on Buying Capacity .....................................205
15.9.6 �🛒🛒 Types of Investors: Depending on Buying Behaviour...................................205
15.10 📈📈 SENSEX & other Notable Indices (उ�ेखनीय सं केतक/ सूचकांक) .........................................206
15.10.1 🐮🐮🐮🐮MSCI Emerging Market (EM) index ................................................................206
15.10.2 🌬🌬🌬🌬:�⚖� Force Majeure (अभेद्य श��) ............................................................207
15.11 🐮🐮🐮🐮🐮🐮 Sharemarket: 2020- Impact of Corona...............................................................207
15.11.1 🐮🐮🐮🐮Sharemarket- 2022: IPO Bubble Burst: Case of Paytm (फू ट गया ग़ु�ारा) ........208
15.11.2 🐮🐮🐮🐮🐮🐮 Share Market: Impact of Bond Yield .........................................................209
15.12 🗃🗃🗃🗃Securities and Exchange Board of India (SEBI) .......................................................209
15.12.1 🗃🗃⚖📜📜Securities Market Code ................................................................................210
15.13 🗃🗃🗃🗃 SEBI Investor charter (�नवेशक अ�धकार पत्र) .................................................................210
15.13.1 🗃🗃🗃🗃 SEBI Charter → Investors’ rights (�नवेशक के अ�धकार) ....................................211
15.13.2 🗃🗃🗃🗃 SEBI Charter → Investors’ responsibilities (�नवेशक क� �ज़�ेदारी है) ...............211
15.13.3 🗃🗃🗃🗃: 😪😪 SEBI’s Investor Charter: Criticism/limitation: ......................................211
15.13.4 🗃🗃🗃🗃: ✍ SEBI’s Investor Charter: Benefit/Conclusion ........................................212
15.13.5 🗃🗃🗃🗃: 🏃🏃 SEBI: why protect investors & ⏫investors participation? .................212
15.13.6 💼💼💼💼: measures to ⏫ retail investors participation- 25% public holding in Govt
Companies 212
15.13.7 🗃🗃🗃🗃: 🏃🏃 SEBI Reforms to boost investors’ confidence? .......................................213
15.13.8 T+1 Settlement instead of T+2 .......................................................................................213
15.13.9 🛒🛒 (💻💻:�:) Dabba-trading, Insider Trading, IPF ...................................................214
15.13.10 🛒🛒 (💻💻⏱:�) Algo Trading & Co-Location ...........................................................214
15.14 🛒🛒 (🔪🔪🔪🔪) Bond Market Reforms.......................................................................................214
15.14.1 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) Unified Bond Market (एक�कृ त बॉ� बाजार) .................................214
15.14.2 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) G-Sec Trading- Retail investors’ RDG @RBI ........................215
15.14.3 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) G-Sec Trading: RBI's NDS-OM, OTC ....................................215
15.15 🌽🌽🌽🌽🌽🌽🌽🌽 Commodity Market, FMC, SEBI merger ....................................................216
15.15.1 💍💍💍💍💍💍💍💍Commodity Market: Gold exchanges & 💼💼Budget-2021 ..................216
15.15.2 💍💍💍💍💍💍💍💍Commodity Market: Electronic Gold Receipts (EGRs) ...........................216
15.16 � Related Bodies with similar sounding names.................................................................217
15.17 📦📦 � � Investment Funds → Mutual fund (MF) for aam-aadmi ...........................217

15.17.1 📦📦 � � Mutual fund → ESG, Shariya Mutual Funds ........................................218
15.17.2 📦📦 � � Mutual fund → SIP, ELSS, ULIP ............................................................218
15.17.3 📦📦 � � Mutual fund → 🎛🎛 Mutual fund risk-o-meter ....................................218
15.17.4 📦📦 � � Mutual Fund: Backstop Entity- SEBI proposal for stressed MF ..............218
15.17.5 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) Bond Buying Institution in 💼💼Budget-2021 ........................219
15.18 📦📦 � � Investment Funds → Hedge Fund (हेज फ�) for rich-aadmi........................219
15.18.1 📦📦 � � Investment Funds: “Accredited Investor” ..............................................219
15.18.2 📦📦 � 🏬🏬 🛩🛩 Investment Funds → REITs / InvITs: for rich-aadmi ..................220
15.18.3 📦📦 � � Investment Funds → Sovereign Wealth Fund (सं प्रभु धन कोष) ..............220
15.19 📦📦 🏛🏛 Investment Funds → CPSE-Exchange Traded Funds (ETF: ईटीएफ) .................220
15.19.1 (🦁🦁🦁🦁)📦📦: (🏛🏛🏛🏛🏛🏛) Bharat Bond (Debt) ETF (2019-Dec) ............................221
15.19.2 (🦁🦁🦁🦁)📦📦: (🏛🏛🏛🏛🏛🏛) CPSE-ETF vs Mutual Fund .............................................222
15.20 📦📦 Investment Funds → Alternative Investment Funds (AIF) .......................................222
15.20.1 (🦁🦁🦁🦁):(🏗🏗🏗🏗) Govt’s AIF for Real Estate Sector (2019) .....................................222
15.21 🗃🗃 ⏱ Forward / Future Contracts & Call / Put Option ...................................................223
15.22 🗃🗃 🔗🔗 Derivatives & Swaps (�ु�� प्र�तभू�तयां और अदला-बदली) ..............................................223
15.22.1 🗃🗃🗃🗃: 🚛🚛🚛🚛🚛🚛 Bilateral Netting of Qualified Financial Contracts Act 2020 .224
15.23 👻👻👻👻👻👻 Participatory notes (P-Notes: पा�ट�सपेटरी नोट्स) ...................................................224
15.23.1 ✍ Conclusion: Financial Markets- �व�ीय बाजारों के बारे म� �न�षर् ...................................225
15.24 🏙🏙🏙🏙 Company types .............................................................................................................226
15.24.1 👶👶Company types based on incorporation .................................................................226
15.24.2 🏙🏙🏙🏙 Company types based on number of members ...............................................226
15.24.3 🏙🏙🏙🏙 Company types based on Ownership ...............................................................227
15.24.4 🏙🏙🏙🏙 Company Types: Misc. .......................................................................................227
15.24.5 🏙🏙🏙🏙 Corporate Governance → Small Companies given compliance relief........228
15.24.6 🏙🏙🏙🏙 Commercial Organizations: Other Types ........................................................228
15.24.7 👬👬👬👬👬👬 Corporate Governance → LLP settlement Scheme 2020 .......................228
15.25 🔨🔨 Statutory bodies in Ministry of Corporate Affairs (MCA) ..........................................229
15.25.1 🔨🔨 � Competition Commission of India (भारतीय प्र�त�धार् आयोग)............................229
15.25.2 🔨🔨 � Insolvency and Bankruptcy Board of India (IBBI) .......................................229
15.25.3 🔨🔨🔨 Ministry of Corporate Affairs also associated with: ......................................230
15.26 �👬👬 Corporate Governance (कॉप�रेट शासन).........................................................................230
15.26.1 �👬👬 Corporate Governance: notable Committees .................................................231
15.26.2 💰💰(🏥🏥🏥🏥)CSR: Corporate Social Responsibility (कॉप�रेट सामा�जक �ज�ेदारी) .............232

15.26.3 👻👻👻🗃🗃⚖ ATMANI: Corporate Governance → Companies Act relaxed .......232
15.26.4 ✍ Conclusion: Corporate Governance- �न�षर् ...........................................................233
15.26.5 ✍🎷🎷 Mock Questions for Mains (GSM3/250 Words Each)..................................233
15 🐮🐮🐮🐮🐮🐮PILLAR#1C: SEBI-SHARE MARKET

MCQs from SEBI/ Share market /Financial Market / Companies Act Topic in UPSC Prelims
Year 2014 2015 2016 2017 2018 2019 2020 2021 2022
MCQs 1 MCQ 0 2 0 1 1 3 1 2
These Qs mostly tested very basic foundation level understanding of share market. So, we are not here
to become Investment Bankers / Mutual Fund managers 🎓🎓✋#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
15.1 🗃🗃SECURITIES (प्र�तभू�त)
A ‘Security’ means a certificate/document indicating that its holder is eligible to receive a certain
amount of money at a particular time. This could be a…
🤝🤝Equity: Share certificate 🔪🔪Debt (ऋण): Bond / Debenture
Holder gets dividend from the profits of the Holder gets interest & principal irrespective of
company. If no profit, then no dividend. whether company makes profit or not.
Company’s owners, proprietors (मा�लक) creditors of the company (लेनदार).
Have last claim during liquidation first claim.
नीलामी से �मलने वाली रकम पर पहला हक इनका
Attractive in boom period, since companies Attractive in slowdown period, since bonds
more likely to make profit so more chances of provides fixed interest to the investor
good dividend. Although during corona, many irrespective of profit of the company. �नवेशकों को
investors tried to buy shares cheap from मं दी के दौरान �ादा अ�े लगते ह�, �ोंिक जो�खम कम
secondary market, with hopes of getting profit
after corona-recovery.
� �FAQ: Bond and Debenture are not same. They’re having internal technical differences.
Ans. UPSC not asking b.Com/M.Com pedantry here. Then why burden brain’s memory card?

15.2 🗃🗃 🛒🛒FINANCIAL / SECURITIES MARKET: MEANING AND TYPES
Financial Market is the place where buying and selling of securities takes place. Doesn’t require
physical location. Can be done online / telephone as well.
Classifi. Market Subtypes
Tenure: 1. ⏰Money Market (<1 year maturity) मुद्रा बाजार
(अव�ध) 2. 🗓🗓Capital Market (1 year/> maturity) पूंजी बाजार
Freshness 1. Primary Market (where new securities are issued for the first time). Helps a
प्राथ�मक company /govt to connect with the investor. It has no separate physical existence
एवं but classified like this, for economic analysis. (इस बाजार का अलग से भौ�तक �ान नहीं होता
िद्वतीयक िकंतु आ�थक आकलन के �लए आंकड़ों म� अलग से िदखाया जाता है)
बाजार 2. Secondary Market (where the old securities are resold). It has physical existence
such as Bombay Stock Exchange (BSE) at Dalal Street, Mumbai.
3. It provides liquidity & confidence to investors to buy new securities in Primary
Market. (compared to a scenario if there was no market to resale used cars- तो कम
लोग नई कार खरीदने जाएं गे.)
Settlement 1. Future Market: Where parties write contract today to buy/sell something at
(�नपटान) specific price on a future date. भ�व� क� िकसी तारीख को खरीद/�बक्र� के �लए वतर्मान म�
सौदा/समझौता िकया जाए
2. Spot Market: if bought & sold for immediate delivery.
Asset - Depending on what asset is traded, market can be divided into Bond (Debt)
(प�रसं प��) market, Share (Equity) market, Gilt-Edged Securities Market, Foreign Currency
Market, Commodity Market etc.

Classifi. Market Subtypes
- if there was a supermall where all these products were available in one place it
will be called “Universal Exchange”. SEBI permitted BSE & NSE to launch such
thing (2018).
15.3 🔪🔪🗃🗃 DEBT INSTRUMENTS (ऋण उपकरण)
Bond holders are creditors to company. First claim during liquidation. Assured interest irrespective
of profit of company. These debt instruments can be classified into short-term vs long term.
15.3.1 🔪🔪🔪🔪⏰Short term debt instruments (लघु अव�ध ऋण उपकरण )
- Tenure = less than 1 year. Usually ‘unsecured’ because not backed by any asset.
- Usually sold at discount and re-purchased at Face Value or Par Value. The difference between
these two prices is the interest earned by investor. स�े म� बेचकर मूल भाव पर खरीदा जाता है
- Another synonym for this process: “rediscount the bills.”
- They’re traded at Money Market and are (usually) ‘negotiable & transferable’ in nature i.e.
lender can sell to 3rd party → 3rd party can demand money from borrower. (परक्रा� और ह�ांतरणीय)
- They’re also called Near Money = Asset that is highly liquid = can be readily converted into cash.
15.3.2 🔪🔪🔪🔪⏰:🧔🧔Short term debt instruments → by Government

1. State govt’s treasury bills (T-bill). But stopped since 2001.
2. Union govt’s treasury bills (T-bill: 14, 91, 182 and 364 days) & Cash Management bills (CMB:
upto 90 days, started in 2009).

3. WMA (ways and means advances): given below
15.3.3 🔪🔪🔪🔪⏰: 🐯🐯🐯🐯 🧔🧔� Short term debt instruments → by Govt → WMA
⇒ When Govt faces short term mismatch in receipt (income) and payment (Expenditure)
⇒ RBI Lends money on short term (3 months). Not counted in fiscal deficit figure. (More in
📑📑Pillar2D: FRBM)
⇒ Corona-crisis: ⬆mismatch in cashflow because सरकार क� आमदनी और खचर् म� अंतर बढ़ गया �ोंिक
o ⬇Govt Income: Sales ⬇ GST, Govt gave extension in tax payment deadlines
o ⏫Expenses: free LPG, food, mask etc.
⇒ So, ATMANIRBHAR Bharat → RBI ⏫WMA limits by 60% than before to help the Union
(1.20lcr) and State Governments (₹51,560cr collectively).
⇒ If upto above amount of ₹₹ borrowed = its WMA: loan interest = repo%
⇒ If beyond above amount borrowed then called ‘Overdraft’: loan interest repo+2%
🎓🎓✋^ above % or quantity or figures not imp for scope of exam
15.3.4 🐯🐯🐯🐯🐯 Consolidated Sinking Fund (CSF) for State Govts’ repayment
⇒ Started in 1999. It has >₹1.25 lakh crore by 2019. (समेिकत घाटा �नपटान �न�ध)
⇒ Annually, State Govt has to contribute money equal to 1-3% of its outstanding market loans to
this fund kept with RBI. (रा� ने �जतना कजार् उठाया है उसके सामने इस �न�ध म� थोड़ा पैसा जमा करना है)
⇒ CSF is a fund outside consolidated fund of the State and public account of the State. (Ref
📑📑Pillar2)
⇒ CSF meant to be used for only 1 purpose= repayment/redemption of loans taken by the State
Government. (बकाया ऋण चुकाने के �लए ही इस �न�ध का उपयोग होगा)
⇒ 2020-May: RBI relaxed technical norms related CSF till to help the State Govts. (तकनीक� �नयमो मे
कु छ छू ट दी)
What about GST cess release and end-to-end market borrowing by Union/State?
(Ans 📑📑Pillar#2: Taxation:GST. )
15.3.5 🔪🔪🔪🔪⏰Short term debt instruments → by borrowers other than Govt

Table 1: how does this work in real life? Ans. not important just remember 1-Word Association
Borrower 🔪🔪🔪🔪⏰ Short term debt instrument (लघु अव�ध के ऋण पत्र)
- Bill of Exchange, Hundi, Commercial Papers, Promissory Notes.
- Side note: Currency Note is a ‘Promissory Note’ issued by RBI Governor
Company
however, he’s not bound to pay any interest. He just promises to
exchange it with other currency notes & coins of equal face value.(More

in 📑📑Pillar#1A1)
Merchant to Commercial Bill.
bank
Banks / NBFC Certificate of Deposits (जमा प्रमाण पत्र).
It’s the interest rate when Financial Intermediaries (Banks/NonBanks)
Call Money
borrow for ONE DAY among themselves.
Notice Money Same as above but for 2 to 14 days.
Collateralized Borrowing and Lending Obligation.
CBLO Clearing Corporation of India Ltd (CCIL) helps Financial Intermediaries (FI)
to get short term loans through this instrument.
Repo Repo and Reverse Repo= Ref: Pillar#1A2: Monetary Policy handout.
15.4 🔪🔪🔪🔪⏰DEBT → SHORT TERM → FACTORING & TREDS
⇒ Suppose an MSME seller has sold cardboard boxes for jiophones to Mukesh Ambani but Mukesh
Ambani says he will pay the bill next month. Presently this is an unpaid invoices.
⇒ MSME seller can pledge this invoice to a factor (bank/NBFC) to avail loans. (छोटी कं प�नयां बड़ी
कं प�नयों को सामान और सेवा बेचती है उसका जो बकाया पैसा है उसके �बल को �गरवी रख के लघु अव�ध का कजर् ले आये)
Bill Discounting Factoring
MSME seller collects the money from Buyer Factor (lender: bank/NBFC) directly collects
(Ambani) & delivers ₹ ₹ to the Factor the ₹₹ from unpaid invoices from Buyer
(bank/NBFC). (Ambani).
15.4.1 🔪🔪🔪🔪⏰Factoring Regulation (Amendment) Act, 2021

to amend the Factoring Regulation Act, 2011
Before After
Banks and only “Factoring Companies Banks and all types of NBFCs allowed (After
(NBFC)” allowed to give loans under this registering with RBI). → So now more than

Before After
system. There were only seven NBFCs 9000 NBFCs in India can give loans → this will
registered as Factoring Companies. increase the availability of loans for the MSME.
-- earlier it was less. RBI given more powers to regulate this
business.
-- earlier it was less. More legal clarity about TReDS system.
Earlier this was not clear and so MSME could Need to register the invoice-pledge-factoring-
commit fraud of “dual financing” i.e. Pledging loan transaction on A central registry set up
the same and per invoice as collateral in under the SARFAESI Act. This will prevent the
multiple Bank/NBFCs. dual financing frauds.
15.4.2 🔪🔪🔪🔪⏰: 📡📡 TReDS platform to connect factoring-players.

⇒ Just like quickr/olx connect buyers with sellers, the Trade Receivables Electronic Discounting
System (TrEDS) online-platform Connect the factors (bank/NBFC) with the borrowers (MSME).
⇒ Examples of 3 TReDs platforms: M1xchange, RXIL, and A.TReDS. Have to register with RBI.
⇒ Most famous is RXIL - Owned by the Small Industries Development Bank of India (SIDBI) and
the National Stock Exchange of India Limited (NSE), State Bank, ICICI and Yes Bank .
15.5 🔪🔪🔪🔪⏰DEBT → INTEREST RATE BENCHMARKS: LIBOR, MIBOR, MIFOR

London Inter-bank Offered Rate (LIBOR) is the average interest rate at which
banks in London give short term loans to each other.
🤩🤩Objectives/usage/application of LIBOR?
- (some) global banks decide their call money /notice money rates based on it.
- (some) external commercial borrowing (Indian Bizman taking loans from
abroad),
- (some) FCNR deposit interest rates (Non resident Indians depositing foreign
LIBOR currency savings in Indian banks to earn interest)
😰😰Controversy? LIBOR methodology had become unreliable & fraud-ridden in
recent years. So, UK regulator ordered stopping LIBOR by the end of 2021.
⇒ So accordingly, Financial intermediaries across the world are changing their
LIBOR based contracts/agreements to other benchmarks. e.g. TONAR
(Tokyo/Japan), SARON (Switzerland), SOFR (USA), SONIA (UK-Sterling-
Pound), ESTR (Euro) etc. What are their full forms? how they work is not
important.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
In LIBOR definition, replace the word “London” → “Mumbai” and “Global” →
MIBOR
“Indian”, and you’ll know what MIBOR is!
⇒ Mumbai Interbank Forward Outright Rate (MIFOR) is a benchmark that
MIFOR derives values from LIBOR and a few other indicators etc.
⇒ 🤩🤩objectives/usage/application? Similar to LIBOR.

⇒ 😰😰Since LIBOR is expiring by the end of 2021 → MIFOR will also stop
working, Because it derives value from LIBOR value. 2020-Nov: RBI
announced working on a new Indian benchmark to address this issue.
How will above things affect Indian economy in 500 ways? NOTIMP even though
theHindu and Indian Express writing 800 words column it. Just look at previous
MCQs#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
🔠🔠❓Find Correct statements☹Asked in UPSC-Pre-2018)

1. The RBI manages and services Government of India Securities, but not any State Government
Securities.
2. Treasury bills are issued by Govt of India and there are no treasury bills issued by State Govts.
3. Treasury bills offer are issued at a discount from the par value.
Ans Codes: (a) 1 and 2 only (b) 3 only (c) 2 and 3 only (d) 1, 2 and 3
🔠🔠❓Which of the following is /are example (s) of ‘Near Money’? [UPSC-CDS-2016-I]
1. Treasury Bill 2. Credit Card 3. Saving accounts 4. Money Market Instruments
Answer codes: (a) 1 only (b) 2 only (c) 1, 2 and 3 (d) 1, 3 and 4
🔠🔠❓ In Indian economy, non-financial debt includes ___ ? (Prelims-2020 SetB- Q84)
1) Housing loans owed by households
2) Amounts outstanding on credit cards
3) Treasury bills
Codes: [a) 1 only [b) 1 and 2 only [c) 3 only [d) 1, 2 and 3
🔠🔠❓ Which of the following phrases defines the nature of the ‘Hundi’ generally referred to in the
sources of the post-Harsha period? (UPSC-Prelims-2020)
[a) An advisory issued by the king to his subordinates
[b) A diary to be maintained for daily accounts
[c) A bill of exchange [d) An order from the feudal lord to his subordinates
🔠🔠❓Find correct statement(s) (UPSC-Prelims-2020)
1) ‘Commercial Paper’ is a short-term unsecured promissory note.
2) ‘Certificate of Deposit’ is a long-term instrument issued by the Reserve Bank of India to a
corporation.
3) ‘Call Money’ is a short-term finance used for interbank transactions.
4) ‘Zero-Coupon Bonds’ are the interest bearing short-term bonds issued by the Scheduled
Commercial Banks to corporations.
Codes: [a) 1 and 2 only [b) 4 only [c) 1 and 3 only [d) 2, 3 and 4 only
15.6 🔪🔪🗃🗃🗓🗓 LONG TERM DEBT INSTRUMENTS (दीधर्-अव�ध ऋण- उपकरण)

Tenure = 1 year/>. Further sub-division based on who is the Borrower?
15.6.1 🕯🕯🗃🗃🗃🗃🧔🧔Colonial era Govt. to borrow money
1. Coupon Bonds: Contain detachable coupons. Coupons are presented to the issuer to claim the

interest. Therefore, bond interest rate is also called ‘coupon rate’.
2. Zero Coupon Bonds: Are sold on discount and repurchased at face value, do not have any
coupons.
3. Bearer Bonds: Not linked to a PAN card, Aadhar card or passport, voter card or social security
number. Anyone who presents it to the issuer, will get interest and principal. Usually issued
during the war time.
15.6.2 💡💡🗃🗃🗃🗃🧔🧔Modern day Government to borrow money

⇒ Government securities, Dated securities, Sovereign bonds (सं प्रभु बांड), Kisan Vikas Patra etc.
(more in 📑📑Pillar 1D: Financial inclusion lecture)
⇒ Also called Gilt Edged securities (उ� / अ�ग्रम दज� क� प्र�तभू�तया) because repayment is assured by
Government. (But then, they give lower interest rate because of low risk to the investor).
⇒ Global Credit Rating Agencies gives ‘rating’ to sovereign bonds. “AAA” is the best🤩🤩 and
highest given to US Treasury Bonds. India’s rating is ~“BAA” = moderate risk of default😰😰.
⇒ World’s top three credit rating agencies- Fitch, Moody’s and Standard & Poor have pro-US/EU
allegiance. Critics allege these 3 agencies do not give adequate upgradation to the Govt bonds of
India, China, Russia despite the economic growth. भारत म� अ��-खासी आ�थक वृ�द्ध के बावजूद भी यह प�पाती
�वदेशी सं �ान भारत को खराब रेिटंग देते ह�
15.6.3 🥇🥇🥇🥇🥇🥇Bonds by Modern day Govt. to curb Gold Consumption
⇒ Real Interest Rate (वा��वक �ाज दर) = Nominal (ना�मत) Interest minus Inflation.
⇒ When Real Interest is negative, purchasing power ⏬ despite ⏫ in money quantity in bank
account. Then people prefer to park money in gold/real estate- which is not very beneficial to
economy. So..
15.6.3.1 🍅🍅🍅🍅🍅🍅🍅🍅 Inflation Indexed Bonds (IIB-मुद्रा��त सूचकांिकत बांड)

⇒ RBI launched in 1997, 2013, 2018 to provide positive Real interest rate to household, thereby
reducing the Gold consumption & Current account Deficit (CAD) & weakening of rupee against
dollar (else expensive crude oil → petrol, diesel inflation.(More in 📑📑Pillar#3).
⇒ e.g. Inflation Indexed National Savings Securities-Cumulative (IINSS-C) with Interest Rate =
CPI + 1.5% [and Principal also protected against inflation.] अगर महंगाई दर बढ़ेगा तो आपको �ादा �ाज दर
िदया जाएगा और मूलधन भी �ादा वापस कर�गे- तािक जनता का सोने म� �नवेश करना का पागलपन थोड़ा कम हो।

�❓MCQ. Find correct about “Inflation-Indexed Bonds (IIBs)” in India (Prelims-2022)
1. Government can reduce the coupon rates on its borrowing by way of IIBs.
2. IIBs provide protection to the investors from uncertainty regarding inflation.
3. The interest received as well as capital gains on IIBs are not taxable.
�❓MCQ. Find correct statements about Convertible Bonds (Prelims-2022)
1. As there is an option to exchange bond for equity, Convertible Bonds pay a lower rate of interest.
2. The option to convert to equity affords the bondholder a degree of indexation to rising consumer prices.
Codes: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
15.6.3.2 🥇🥇🥇🥇🥇🥇🥇🥇 Sovereign Gold Bond (2015: सं प्रभु �णर् बांड)

RBI issues them on behalf of govt. Denomination: gold grams. But, RBI/Govt doesn’t ‘promise’ to
give you gold. They only promise to give you ₹₹ equivalent of latest gold price on maturity. इस बांड का
मू� सोने के वजन के �च��त होगा. िक�ु प�रप�ता समय पर आपको सोना नहीं, उस सोने के वजन के िहसाब से मू� �जतना �पया द�गे।
- Annual interest 2.5-2.75% (depending on which year’s ‘batch’ you bought.)
- Tenure: after 8 years you get the amount equivalent to prevailing gold prices at that time. हर साल
�नयत �ाज, प�रप�ता समय पर बाजार म� यिद सोने का दाम बड़ा होगा तो आपको मूलधन से भी �ादा ₹₹ वापस िदए जाएं गे.
- Eligible investor categories: Indian resident individuals, Hindu Undivided Families (HUFs),
trusts, universities and charitable institutions. �सफर् यह लोग या सं �ान हीं खरीद सकते ह�
- How much can you buy? Minimum 1 gm to max upto 20kg depending on investor’s category.
- From where to buy? While RBI ‘sells’ it but customers buy it via following outlets: banks (only
selected types of banks), post offices, selected stock exchanges (NSE and BSE) and a few other
institutions.
- 🤩🤩Benefit / challenges ? reduce the import-demand for physical gold and shift a part of the
domestic savings -- used for the purchase of gold -- into financial savings. (More in
📑📑Pillar#3A along with Gold Monetization Scheme. )
15.6.4 🔪🔪🔪🔪🔪🔪� Long term debt instruments by Companies

1) Bonds (British Term), Debentures (American Term): Internal difference not important.
2) If the company has high risk of default on repayment, the Credit Rating Agencies will mark it as
Junk Bonds (“BB to D” Grade) e.g. IL&FS. Such company will have to offer a very high interest
rate when issuing bonds next time. �ादा जो�खम पूणर् कं पनी ने �नवेशक को लुभाने के �लए �ादा �ाज देना होगा
3) Redeemable Bonds (मो�): will repay regular interest and will return principal on maturity.
4) Irredeemable Bonds (अमो�): will pay only interest but no principal returned. Sometimes issued
by PSB to meet BASEL-capital requirements. Although in reality they offer ‘redemption’ after 5-
10 years when holder has ‘option’ to redeem principal & exit. (Ref: Pillar1B2= AT1 Bonds)
5) Non-convertible Bond/Debenture = can’t be converted into shares.
6) Hybrid instruments: Issued as “Bond” but can be converted into Share. E.g. Optionally Fully
Convertible Debentures (OFCD).

15.6.5 🔪🔪🔪🔪🔪🔪Long Term Debt Instruments: Other issuers
Issuer Objective? उद्दे�?
- Urban Local Bodies Issue Municipal bonds to borrow money from public.
ULB - Ahmedabad was 1st to launch Municipal bonds (1998). 2020-Lucknow 9th city
in India & 1st in North India.
- 2014- BRICS Nations had setup the New Development Bank (NDB, HQ:
BRICS Bond Shanghai, China). Later it launched BRICS Bonds to mobilize money for its
infrastructure loans. Denomination: US Dollars
- 2018: launched world’s first Blockchain Offered New Debt Instrument called
World Bank Bond-i. Sold in Australia using Ethereum blockchain technology. Tenure: 2
🌐🌐 years @~2% interest. Denomination: Australian Dollars, hence also called
“Kangaroo Bond”.
- Evergrande is a Chinese real estate developer company. Facing trouble
Evergrande
repaying its bonds. Foreign investors panicked, resulting in crisis in Chinese
Crisis
and global financial markets. HOW?NOTIMP.
15.6.6 🔪🔪🔪🔪🔪🔪Long Term Debt Instruments: Masala, Maharaja, Panda Bond

🌶🌶 Masala Bonds: These rupee denominated bonds issued outside India, to borrow money for
Indian companies. World Bank’s sister agency International Financial Corporation (IFC) launched
‘Masala Bonds’ to help Indian public sector and pvt sector companies.
⇒ 2015: RBI allowed Indian entities to launch such Masala Bonds.
⇒ 2017: National Highways Authority of India (NHAI) also issued Masala Bonds in London Stock
Exchange to mobilize money for Indian Highway projects.
⇒ 2019: Kerala became the first State of India to issue Masala Bonds. Its Kerala Infrastructure
Investment Fund Board (KIIFB) issued Masala Bond at the London Stock Exchange.
Denomination: ₹ ₹ Total Size: ₹ 21.5 billion. Tenure: 5 years. Masala Bonds are usually issued by
institutions with AAA rating. Since KIIFB has BB rating, hence offered higher interest rate:
~9.7% (वरना कोई खरीदता नहीं)

Table 2: rapid revision table for Bond types based on currency
🤲🤲Issuer → 🌐🌐 Borrowing from 💸💸 In currency → 🔪🔪🔪🔪 Is called
→
Non-Chinese → China → Renminbi (=yuan) 🐼🐼 Panda Bonds
Non-Australian Australia Australian dollar 🦘🦘 Kangaroo Bonds
Non-Indian India Rupee � Maharaja Bonds
(Indian or Outside India Rupee 🌶🌶 Masala Bonds
a non-Indian on
behalf of Indians)
Non-Taiwanese Taiwan OTHER than Taiwan Formosa Bond
entity dollar (इसके अलावावाली
मुद्रा)
15.6.7 🔪🔪🔪🔪🔪🔪 Long Term Debt Instruments: Special purpose: 🚦🚦🚦🚦 Surety Bonds
⇒ Party#1 Road contractor pays fees/premium to party#2 insurance company. Insurance company
gives him a surety bond.
⇒ Road contractor gives this surety bond to party#3 Highway Ministry.
⇒ if the road contractor is not finishing project within prescribed time-limit/quality-limit →
Insurance company will pay ₹₹ to Highway Ministry.
⇒ Earlier, Insurance companies were not allowed to issue surety bonds in India. So contractors had
to submit ‘Bank Guarantees’ to Govt. But then 👜👜👜👜Budget-2022 said we’ll allow Surety Bonds.
IRDAI will regulate this.
�Sub-types of Surety Bonds: Bid Bonds, Performance Bonds, Advance Payment Bonds and
Retention Money Bonds. But we will not study them OR their internal difference. � � � � �
15.6.8 🔪🔪🔪🔪🔪🔪 Long Term Debt Instruments: Special purpose Bonds- Misc.
Oil Bonds Explained in �
Pillar#2- along with taxes on petrol and diesel.

⇒ US Govt (1870s) and British Govt (1917) had issued Consol bond.
⇒ Consol is short form for ‘consolidated annuities’.
🤧🤧🔪🔪🔪🔪♾ ⇒ Consol bonds have no maturity date. They are perpetual bonds that paid 4-5%
(proposed) interest rate, for an infinite time period. In theory they don’t repay the
Consol Bonds principal amount back to investor. Thus, they’re Irredeemable Bonds (अमो�).
for Corona- ⇒ However, in reality, the Govt may redeem(/buyback) the bonds after certain
revival years, by paying principal to the investor. कु छ वष� बाद सरकार पुनः खरीद लेगी
⇒ Some economists suggesting Indian govt should issue Consol Bonds for Post-
corona economic revival. (अथर्�व�ा को पुनर्जी�वत करने के �लए)
⇒ 2019-May: Commerce ministry’s Dr. Surjit S. Bhalla Committee ‘to improve
🐘🐘 (Proposed) India’s share in global trade’ suggested ‘Elephant Bonds’. Tenure: 25-years.
Elephant Bonds ⇒ People declaring Black Money will be required to invest x%. → ₹ ₹ to be used
for black money only for infrastructure projects. �जनके पास काला धन िक�ु सजा से बचना है तो वे इसम� �नवेश
कर� और पैसा बु�नयादी अवसं रचना �नमार्ण म� उपयोग होगा
For renewable energy, pollution control, environment friendly projects.
- World’s first Green Bond launched by World Bank (2007)
- India’s first Green Bond launched by Yes Bank (2015)
🌿🌿Green bonds - BRICS-New Development Bank issued Yuan- green Bonds (2016)
(ह�रत बांड) - Indian Renewable Energy Development Agency (IREDA) launched India’s
पयार्वरण सं र�ण और first Masala Green Bond at London Stock Exchange (2018).
�� ऊजार् सं बं धी - 2021: Ghaziabad Municipal Corporation (Uttar Pradesh), issued first-ever
Green Municipal bond in India. (भारत का सवर्प्रथम ह�रत नगर �नगम बॉ�)
- 2021: India’s first ever euro currency- denominated green bonds by Power
Finance Corporation (PFC, an NBFC company under Power Ministry).
A sub-type of green bond, where money borrowed for climate resilient water /
💦💦Blue Bond
marine / fisheries projects. E.g. 2018- Seychelles issued world's first 'Blue Bond,' to
(नील बांड)
expand its marine protected areas and fisheries sector. (समुद्री सं र��त �ेत्र और म� �ेत्र)
Money is invested in bonds of companies having good track record of
ESG Bonds Environment, Social and Governance (ESG) बॉ� �नवेश उन कं प�नयों म� जो पयार्वरण, समाज
और शासन क� म� अ�ा काम कर रहे ह�
⇒ Govt / Insurance company issues such bond. Investor is promised with high
annual interest rate. But, if a natural disaster happens, his principal will not be
⛈Catastrophe returned.
Bond (आपदा) ⇒ If disaster doesn’t happen then principal will be returned.
⇒ अ�ा �ाज द�गे िकंतु आपदा �ई तो मूलधन वापस नहीं कर�गे �ोंिक वह सारा मूलधन आपदा प्रबं धन म�
इ�ेमाल कर�गे

2019: SIDBI issued ₹ 300 cr. worth Women’s Livelihood Bonds (मिहला आजी�वका बॉ�)
with the help of World Bank, UN Women org etc.
⇒ These bonds will be offered to High Net worth Individuals (HNI), Impact
� Social Investors (rich people interested in ‘indirect’ social service) etc. They’ll earn
Impact Bonds 3% annual interest rate for tenure of 5 years.
(सामा�जक प्रभाव ⇒ Money collected → SIDBI → Micro Finance Institutes (MFI) → loaned to
बांड) individual women entrepreneurs in food processing, agriculture, services etc.
2021: Skill Impact Bond: By National Skill Development Corporation (NSDC)
with help of global partners from UK, Dubai etc.
$14.4 million for skilling 50,000 Indian youth job.
issued by Not for Profit Organisation (NPO) for social service. They repay
Zero coupon NEITHER principal NOR interest.
zero principal 🚩🚩🚩FAQ: Then why don't they simply accept it as 'donation'? Ans. May be PR /
instrument media drama exercise. May be there is tax-saving in it. Newspaper didn't bother to
explain so I didn't bother to google. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
It is a sharia-compliant bond instruments used in Islamic finance. Was in News
☪Sukuk because Pakistan Govt issued such bonds. How it works? In which currency is it
Bond/Islamic issued? How it’s different than ordinary bonds?
Bond
✋NOTIMP4Exam after looking at old papers.
🔠🔠❓ Find correct statement about ‘IFC Masala Bonds' (UPSC-Pre-2016)
1. The International Finance Corporation, which issues them, is an arm of the World Bank.
2. They are rupee-denominated bonds and are a source of debt financing for public & private
sector.
Answer Code: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither1 nor 2
🔠🔠❓ Which one of the following is a viable alternative to term-loans for raising debt finance by
large publicly traded firms? (UPSC-IEnggS-2018)
(a) Shares (b) Debentures (c) Asset loans (d) Gold loans
15.6.9 🗳🗳(🔪🔪🔪🔪)⏳Electoral bonds (चुनावी बांड, 2017 )

⇒ Announce in Budget 2017 → Notified by Dept. of Economic Affairs, Finance Ministry (आ�थक
मामलों का �वभाग). Only SBI can issue at present, and in multiples of Rs.1,000, Rs.10,000,
Rs.1,00,000, Rs.10,00,000 and Rs.1,00,00,000.
⇒ When? For ten days at the start of each quarter. (January, April, July and October). However,
during Lok Sabha election year, can sell for another 30 days.
⇒ Who can buy? Only an Indian Citizen or Company registered in India → deposit money in
their bank account → use that ₹₹to buy Electoral Bond, after giving certain KYC-documents. So,
Electoral Bond can’t be bought anonymously or directly with cash.
⇒ Electoral Bonds can be donated only to a political party registered under Representation of the
People Act 1951 (RPA: लोक-प्र�त�न�ध� अ�ध�नयम) and which has secured 1% /> votes polled in last
Lok Sabha or Vidhan Sabha elections.
⇒ 🗓🗓Validity (वैधता अव�ध)? Only 15 days from date of purchase. Within that time, buyer must
donate, and political party must deposit in its SBI (current) bank account. No interest payable.
⇒ Characteristics of electoral bonds? (�वशेषताएँ )
○ Paper / Physical format (not DEMAT / electronic format).
○ Bearer instrument (Donor or Recipient’s name not mentioned),
○ Promissory Note (promises to transfer money in bank account)
○ Interest Free banking instrument (zero interest payable to anyone).
○ Can’t sell it to third party, can’t pledge it for loans. (�गरवी नहीं रख सकते)
⇒ 🤩🤩Benefits of electoral bonds?
○ Transparency in political funding. (राजनी�तक चं दे म� पारद�शता)
○ Reducing influence of cash and black money in election, (काले धन का प्रभाव)
○ Confidentiality to donor- he can give to any political party without his wife, staff, CA,
Lawyers, journalists, local goons etc. knowing the name of recipient political party. (दाता
को गोपनीयता)
15.6.10 🔪🔪🔪🔪: 🤑🤑 Bond Yield, Yield Inversion, Negative Yield
Bond Yield (More in � Pillar#1A2: Operation Twist)
Yield Inversion Not Important but u can do PHD here
youtube.com/watch?v=BDACRJAo-48
Negative Yield Not Important/outdated
15.7 ⚖🗃🗃 EQUITY INSTRUMENTS (इि�टी)

⇒ Equity holders are called owners / proprietors of the company.
⇒ If company makes profit → they get dividend. They’ve last claim during liquidation.
Keywords Features

Ordinary shares have voting power in the meetings of shareholders. Last claim during
साधारण शेयर: liquidation.
Preferential During liquidation, these investors will be given money before the ordinary
Shares shareholders. Further subtypes: (i) with voting power (ii) without voting
अ�धमा� शेयर: power.
Shares sold @discount to directors & employees for their value addition to
Sweet Equity
company [Amount is regulated under Companies Act]
- 1)What is this? NOT IMPORTANT.
- 2) How different from Sweet Equity? NOT IMPORTANT.
- 3) Repeating for third time for Babu-Shonas= NOT IMPORTANT.
🎓🎓✋
Sweat Equity 🚩🚩🚩FAQ: I’m a commerce graduate / hot-shot MBA-walla and I’ve 500
इसका कु छ काम नहीं jaat ke Counter arguments. Ans. Good. Plz Keep it with yourself. This course
परी�ा म� for teaching some basic one liners for seeking MCQ. UPSC not asking
b.Com/M.Com PHD stuff from here. Then why burden brain’s memory card
with extra info?
Employee Stock Option Plan: Shares may be given free to employees to
ESOP increase their loyalty/motivation for company. Ref: (More in 📑📑Pillar#1B2-
कं पनी के कमर्चारी को PSB reforms)
तन�ाह के अलावा PS: ES-2020 used the term Employee Stock Option Plan. So, I’ve written.
शेयसर् भी �दए जाएं Some website mention Employee Stock Ownership Plan- how these two
(ownership/option) are similar or different? 🎓🎓✋ANS NOT IMP.
Shares whose market price remain excessively low compared to its face value.
Such pathetic companies give zero or little dividend.
Penny stocks 🚩🚩🚩FAQ: I’m a commerce graduate / sharemarket ka hot-shot trader and
फालतू कं पनी का I’ve 500 jaat ke Counter arguments. Ans. Good. Plz Keep it with yourself.
This course for teaching some basic one liners for seeking MCQ. बाक़� आप अपना
देख लो। UPSC not asking b.Com/M.Com PHD stuff from here. Then why
burden brain’s memory card with extra info?
Blue Chip stocks Shares of a nationally recognized, well-established and financially sound
दमदार कं पनी का company with a history of generating good dividend.
Venture Capital VCF are professional firms helping startup companies with seed capital.
Funds (could be debt / equity / hybrid) (�ाटर्अप कं प�नयों को शु�आती पूंजी िदलवाते ह�)
Rich person helping startup companies out of his hobby, passion, profit
Angel Investors motive or time pass. e.g Ratan Tata in Urban Ladder app. (could be debt /
ऐंजल �नवेशक equity / hybrid).
Related topic: 📑📑Pillar#2: Angel Tax in Budget/blackmoney
Invests in startup company with goal of acquiring the company or its
Corporate
technology at later date. �ाटर्अप कं पनी म� �नवेश करता है तािक भ�व� म� उसक� टे�ोलॉजी पर
Strategic Investor
क�ा कर सके
RGESS Rajiv Gandhi Equity Savings Scheme= Govt gives income tax benefit to

Started in 2012 people who invest in the share market for the first time. Discontinued by
Budget-2017
म�मवगर् का नया �नवेशक पहली बार शेयर बाजार म� �नवेश कर� तो आयकर म� राहत
When promoter of a company e.g. Mukesh A. of Reliance or Subhash
Chandra of Zeegroup pledges his shares as collateral to borrow loans from a
Share Pledging
bank / NBFC.
जब कं पनी का सं �ापक अपने शेयर �गरवी रखे पैसा उधार लेता है
🔠🔠❓ What does ‘Venture Capital’ mean? (Asked in UPSC-Pre-2014)
A. A short-term capital provided to industries
B. A long-term start-up capital provided to new entrepreneurs
C. Funds provided to industries at times of incurring losses
D. Funds provided for replacement and renovation of industries
🔠🔠❓ An individual investor who invests in the e-project usually during an early stage is (UPSC-
IES-2020) A) corporate strategic investor B) founder capital C) angel investor D) venture capital
15.8 ⚖🗃🗃 METHODS OF ISSUING SHARES

Share have printed price on the certificate called Face Value or Par Value (सममू�). If they’re sold at
higher price than face value, it’s called “Premium Value”- that usually happens when investor is
confident of getting high dividend/return on his investment.
Related keyword: Price Earnings Ratio (P/E Ratio)- what it means NOTIMP.
⇒ Company hires an underwriter (usually, a merchant bank, investment bank)

for a fee.
Initial public
offer (IPO) ⇒ Underwriter drafts Red Herring Prospectus for SEBI approval.
प्रारं�भक लोग ⇒ Then, Underwriter invites application from public & sells them shares at face
�नगर्म value or higher. If less people subscribe → then underwriter will buy the
unsold shares by himself.

Sidenote: SEBI’s Innovators Growth Platform Framework = It is a set of
easy/relaxed rules to help Startup companies to launch their IPO/Shares. (शेयर
बाजार म� �ाटर्अप कं पनी के शेयर जारी करने के �लए सेबी ने �नयमों म� कु छ �रयायत� दी है)
⇒ If company had already issued IPO-shares previously, and now again issuing
Follow on
more shares to obtain more capital→ it is called FPO.
public offer
⇒ Rights issue (अ�धकार �नगर्म): Company issues additional shares but gives first
(FPO)
right to existing shareholders to buy them, if they refuse then offered to
अनुसरण…
outsiders.
Offer for sale / Private placement / Qualified institutional placement (QIP)
Other
/Issuing bonus shares / share splitting / share swap / share buyback / PE Ratio etc.
methods /
= NOT IMP. However, to satiate your curiosity you may self-study them from
terms
Investopedia, but that’s not the best use of your time!
15.8.1 ⚖🗃🗃 IPOs- Big sized IPOs in recent years
⇒ 2019: Saudi Arabia’s public sector oil company Aramco issued IPO worth >$25 billion. It was
listed at Riyadh’s Tadawul Stock Exchange.
⇒ 2020: Jack Ma, founder of China's e-commerce company Alibaba. He started "ANT" company to
provide Financial services such as loans, insurance, Mobile payment (App 'Alipay') IPO worth
$30 billion
⇒ 📔📔📔📔ES20 & 📔📔📔📔ES21 : No of IPO-issuing Companies have ⏬: 134 (2017) → 103 (2018) →
49 (2019) Which indicates problems like protectionism (=trade war/nations imposing heavy tax
on imported items to protect local industries (📑📑Ref: Pillar3), NPA (bad loans 📑📑Ref
Pillar1B2), slowdown in consumer demand by Corona= preventing some of the companies from
expanding further.
⇒ 2021: Sharemarket revival → many new IPOs launched e.g. Zomato, Paytm (Company Name
One97- Founder Vijay Shekhar Sharma), Nyakaa Fashion E-commerce (Founer Falguni Nayar
became richest self-made woman billionaire of India).
15.8.2 ⚖🗃🗃 IPOs → LIC & FDI in LIC?

Refer to �Pillar#1D1: Insurance Sector
15.8.3 ⚖🗃🗃 🤵🤵 IPO → Special Purpose Acquisition Company (SPAC)

⇒ SPAC is a type of company which does not do production of goods and services by itself, so it's
also labelled as shell company/blank cheque company. (�यं से िकसी व�ु या सेवा का उ�ादन नहीं करती)
⇒ It is created only to acquire share (equity) capital from the public through initial public offering
(IPO) & use that money to buy / acquire another company. (मात्र अ� कं पनी का अ�धग्रहण करने के �लए
बनाया)
⇒ If the acquisition is not made within two years of the IPO, the SPAC is delisted and the money is
returned to the investors.
⇒ Why in the news? USA's RMG-II is a Nasdaq stock exchange-listed Special Purpose Acquisition

Company (SPAC). RMG-II acquired an Indian company "ReNew Power" through this process.
15.8.4 ⚖🗃🗃 🌐🌐 ADR/GDR: Shares in Videshi locker
Figure 1: �बना अमरीक� SEBI मे पं जीकरण िकए, उनके शेयरबाजार से पैसा उठाऊँ , तो कै से?
- A non-American company wants to mobilize money from American share market but does not
want to go through the lengthy & complex process of registration with the American
sharemarket regulator.
- Then such non-American company gives its shares to an American bank.
- Based on those (non-American) shares, the American bank will issue American Depositary
Receipts (ADR: अमरीक� �नपे�ागार रसीद) & sell them to American investors. Denomination: USD.
- Global Depositary Receipt (GDR): Same as above, but when single bank issues receipts for
investors in multiple countries. Denomination: usually USD or Euro.
Share issuing company → Deposits his company’s shares That bank issues -- in local
in a bank of → market in – currency
Non-American company American Bank → Issues ADR (in $) in American
→ Sharemarket
Non-Indian company → Indian Bank → Issues Bharat / Indian depositary
receipt (IDR) (in ₹) in Indian
Sharemarket
15.8.5 👻👻⚖🗃🗃 🌐🌐 ATMANIRBHAR reforms in ADR/GDR/BharatDR
Too technical / getting outdated so DELETED from latest Handout.
15.8.6 🔗🔗🔗🔗 Initial Coin Offering (ICO)
Figure 2: Cryptocurrency मे पागल �ई प��क को िफरसे बेवकू फ बनाऊ, तो कै से?

⇒ Company wants investors’ money for launching new cryptocurrency, or service/app related to
an existing cryptocurrency.
⇒ Then, it’ll issue Initial Coin Offering (ICO) → Investor subscribes to it, and receives ‘tokens’
(and not SHARES). Investors can use the ‘tokens’ to buy companies coins/services or may sell it

to a third party.
⇒ RBI has cautioned Indians not to invest in such instruments, because of the dangers which we
already learned in the Handout Pillar#1A-1: Bitcoins.
15.9 📈📈 STOCK EXCHANGES / SECONDARY MARKET: MEANING & EXAMPLES
Shares are issued through IPO @Primary market. Then, they can be resold at secondary market,
commonly known as Share market or Stock Exchange or Bourses.
⇒ World’s Oldest: Amsterdam Stock exchange, Netherlands (1602)
⇒ Asia’s Oldest: Bombay Stock Exchange (BSE: 1875)
⇒ India’s stock exchanges chronology: BSE → A’bad → Kolkata → NSE (early 90s)
⇒ Just like Banks have Core Banking Solutions for e-banking, Stock exchanges have their electronic
platforms for trading. E.g. BOLT (BSE's On-line Trading System), NEAT (National Exchange for
Automated Trading). They communicate using VSAT (Very Small Aperture Terminal) Satellite.
15.9.1 📈📈 🌈🌈Social Stock Exchange

⇒ It is a market for buying/selling shares/bonds/mutual fund for projects/organizations related to
hunger/malnutrition, poverty, gender equality, LGBT welfare, rural sports, Slum Area
Development, affordable housing. Etc.
⇒ Budget-2019: we’ll set up a Social Stock Exchange under SEBI’s regulation. It’ll help social
enterprises and voluntary organizations to raise capital as share/bond/mutual funds for
eradicating hunger, malnutrition, poverty, gender equality,LGBTQIA+ communities, rural
sports, slum area development, affordable housing
⇒ Then SEBI setup Ishaat Hussain panel to study it. Then SEBI setup Harsh Bhanwala panel to
study is further. They’ve given recommendations but NOTIMP
15.9.2 📈📈🤩🤩 Secondary Market: Significance? (िद्वतीयक बाजार का मह�)

⇒ ⏬ Cost of Transactions . You don't have to search around for buyers/sellers manually. सब लोग
एक जगह पे �मल जाते है। एक दू सरे को ढू ंढने मे �र�ा का खचार्/लागत बच जाता है।
⇒ Providing Liquidity to Financial Assets. तरलता बढती है �ोिक खरीदार �मल जाता है।
⇒ Facilitating Price Discovery of shares / bonds. औकात पता चल जाती है कं पनी क�।
⇒ Investor sells securities in secondary market→ ₹₹ could be re-invested to a new company’s IPO
in primary market → Contributes to Economic Growth. (पुरानी घिटया कं पनी म� से �नवेश क� रकम �नकाल
कर नई और बहेतर कं पनी म� �नवेश हो सकता है )

15.9.3 🗃🗃🗃🗃 DEMAT Account
Figure 3: कागजी शेयसर् को चोरी/आग से बचाऊँ , तो कै से?

⇒ If shares and bonds are traded in paper-form, then transactions are slow & prone to the risk of
theft, forgery and fire. कागजी ��प म� शेर से रखे जाएं तो चोरी होने का जालसाजी का आग लगने का डर😰😰
⇒ Depositary is an organization that holds the securities (like shares/bonds etc.) in electronic
(=DEMATERIALIZED) form. Then facilitates its trading online.
⇒ Upon client’s request, Depository can ‘rematerialize’ it as well (i.e. giving physical/hard copy of
share/bond etc) to client.
⇒ Customer must open a “Demat” account in a depository-partner (DP) which can be a bank or an
NBFC.
⇒ SEBI regulates them under the Depositories Act 1996. Notable examples:
- Central Depository services Limited (CDSL: owned by BSE, HDFC, Canara Bank etc.)
- National Securities Depository Limited (NSDL: owned by SBI, IDBI, UTI, NSE etc.)
NSDL also has RBI license to operate Payment Bank
15.9.4 🛒🛒 (💻💻:�) DEMAT → ASBA Reforms

⇒ Scamster Rupal Panchal (2005) opened multiple fake DEMAT accounts to increase the chances
of getting share allocations in IPO. Then she’d sell such shares in stock-exchange for higher
prices.
⇒ Subsequently, SEBI made PAN Card (issued by Income Tax Dept) compulsory for opening
DEMAT Accounts. SEBI also introduced ASBA (Application Supported by Blocked Amount)- it
allows the underwriter to block the amount in IPO-investor-applicant’s bank account, but only
IF shares allotted to the applicant, his bank money will be deducted. ASBA-Benefits:
- (1) only serious investors with sufficient bank balance can apply.
- (2) investor continues to earn bank interest on his blocked amount until the process of
IPO-share allotment is over.
15.9.4.1 🗃🗃🔢🔢 ISIN Number

⇒ International Securities Identification Number (ISIN) is a Unique 12 characters, consisting of
both letters and numbers. प्र�तभू�तयों का अंतररा��ीय पहचान सं �ांक
⇒ It’s a serial code to identify securities e.g. Reliance Industries Limited Shares ISIN:
INE002A01018; Infosys Shares: INE009A01021.
⇒ Prevents mistakes in buying/selling shares/bonds of companies with similar sounding names.
Facilitates the digital transactions through DEMAT account. तािक �मलते जुलते नाम वाली कं प�नयों म� गलती

ना हो
⇒ RBI issues ISIN for G-sec/T-bill. NSDL issues ISIN for securities other than G-Sec/T-bill.
⇒ 💼💼 Budget-2019: technical reforms in ISIN. HOW? NOTIMP.
15.9.5 �🛒🛒 Types of Investors: Depending on Buying Capacity
1. � Qualified Institutional Buyers (QIB अहर्ता प्रा� सं �ागत �नवेशक): Investors with expertise and
financial muscle to make large investments in capital markets. E.g. Mutual Funds, Insurance
Company, Foreign Venture Capital Funds etc. SEBI has separate registration norms for them.
a. Anchor investors: They’re sub-type of QIBs who are offered shares before IPO-launch.
This gives confidence to other investors to subscribe the given IPO.
2. �Retail investor: An individual investor who is not a QIB. (आम/खुदरा �नवेशक)
Underwriter will keep quota for each category of investors, as per SEBI norms.
15.9.6 �🛒🛒 Types of Investors: Depending on Buying Behaviour
1. Jobbers (आढ़ती): Full time engaged in buying / selling securities using money from their own
pockets. (Whereas brokers / commission agents buy/sell using money/shares of their clients).
2. STAG (Male Deer): He buys newly issued securities from primary market & sells them in
secondary market for quick profit. प्राथ�मक बाजार से खरीद के िद्वतीयक बाजार म� मोटे मुनाफे पर बेचने क� इ�ा रखता
3. 🐮🐮Bull (तेज�ड़या ): Optimistic speculator who hopes share prices will rise⏫, so purchases (to sell
them later at much higher price). Just like a bull tends to throw his victim up in the air, the bull
speculator stimulates the price to rise.
4. 🐻🐻Bear (मं द�ड़या ) – A pessimistic speculator who fears prices will fall ⏬ so, he sells. A bear
usually presses its victim down to ground. Similarly, bear speculator tends to force down the
prices of securities.
5. ⏲Day trading / Intra-day trading: Individuals buy and sell shares over the Internet over a
period of a single day's trading, with the speculative intention of profiting from small price
fluctuations.

Further subtypes with various animal / bird names can be found on Investopedia but with
poor cost : benefit in exam. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
15.10📈📈 SENSEX & OTHER NOTABLE INDICES (उ�ेखनीय सं के तक/ सूचकांक)

⇒ SENSEX?: Sensitive Index/ सं वेदी सूचकांक. It’s the weighted average of Free Float Market
Capitalization (FFMC) of 30 companies, selected by Bombay Stock Exchange (BSE)’s officials
⇒ NIFTY? National Stock Exchange (NSE)’s index of 50 companies.
⇒ Nikkei? Tokyo Stock Exchange index of 225 companies.
📈📈 SENSEX – when does it go up 📉📉 Goes down when
💦💦 RBI’s soft /easy monetary policy → cheap 💧💧 Tight monetary policy (More in
loan & credit cards → consumers to spend 📑📑Pillar#1A2)
more → more profit to company → more सं कुचन वादी मौिद्रक नी�त के दौरान स�से� नीचे �गरेगा
dividend : investor thinks “better I buy more
shares to get more dividend”: Bullish
Peace, Economic boom / prosperity, Political ⚔ War, recession, political instability →
Stability (शां�त, आ�थक समृ�द्ध, राजनी�तक ��रता) Bearish market. (युद्ध, मं दी, राजनी�तक अ��रता)
When govt. hikes foreign direct investment When govt reduces FDI limit
limits
Merger-Acquisition, New product launched, CEO/MD arrest/FIR, Courts slapping fine,
Environmental clearance given to factory media exposing scandal… (कोई कांड हो जाए)
15.10.1 🐮🐮📈📈🐻🐻MSCI Emerging Market (EM) index

⇒ MSCI is a New York based company that publishes various type of stock index indicators.
⇒ Its MSCI Emerging Market (EM) index tracks equity (share) performance of 1400+ companies
in 25 emerging market countries including India.
⇒ 2022: Russian companies removed from this index (due to Ukraine war) → MSCI weightage
given to India⏫ → Western/foreign investors may bring more money towards Indian share
market in future.
⇒ 📙📙📙📙ES22 has also given big descriptions about how much weight is given to Indian companies
in this index & how rivers of milk and honey are flowing but I am not finding such technical
details very useful from exam point of view.

15.10.2 🌬🌬🌬🌬:�⚖� Force Majeure (अभेद्य श��)
Figure 4: Corona के चलते �बजनेस प्रोजे� पूरा नही िकया, तो �ा जेल मे भेज दोगे, या फांसी पे लटका दोगे? कु छ नहीं उखाड़ सकते मेरा!
⇒ French word for ‘superior force’. It refers to unexpected external circumstances (अप्र�ा�शत बाहरी
प�र��तयाँ) that prevent a party to a contract from meeting their obligations. e.g. Acts of God
(natural disasters, epidemics), war, terror attacks.
⇒ In such cases, courts may not punish party for dishonoring contract. (करारनामे के दाय�� को न �नभाना)
⇒ E.g. Corona (COVID-19) Virus → Singapore Govt put restrictions on entry of Chinese →
Singapore construction firms facing labour crunch (श्र�मकों क� कमी) → invoked ‘Force Majeure’ to
clients, “we can’t finish building your homes/offices in time.” Coronavirus: >55million people
infected across the world (as of 2020-Oct).
⇒ Restriction on global travel and trade. Investors fear that companies will not generate much
profit. Many contracts/ payments will be stuck by Force Majeure. So, large scale withdrawal / exit
of share investors from stock exchanges across the world. Even the BSE SENSEX fell by 1400+
points in a single day in 2020-June Month. However in later months, share market has ⏫⏫
significantly.
15.11🐮🐮🐮🐮🐮🐮 SHAREMARKET: 2020- IMPACT OF CORONA

📔📔📔📔ES21 Vol2Ch4: observed When comparing Year 2020 (Jan to Dec) to 2019:
⇒ Nifty50 & BSE SENSEX both have greatly increased ⏫
⇒ Stock Exchange Volatility declined ⏬, esp after March-2020, as measured by "India VIX index"
of NSE. (अ��रता कम �ई है)
⇒ Share Prices of Pharma, IT companies ⏫, But Airline/Luxury goods/fashion ⏬
⇒ Biz of Mutual Funds ⏫ (धं धे म� बरकत)
⇒ Incoming Foreign Portfolio Investment (FPI) has ⏫ [270 billion$] (More in 📑📑Pillar#3A)
2020- Initial months of lockdown, ⏬⏬ due panic among investors, Force Majure but then
⏫⏫ because (शु�-शु� के महीनों म� �गरावट िकंतु बाद म� ब�त तेजी आई �ोंिक…)
1. Cheap Loans / Expansionary Monetary Policy → Some of that money may have entered the
share market through to large investors. (�व�ार वादी मौिद्रक नी�त)
2. 'work from home' + RBI loan Moratorium- may have encouraged many service sector employees
to invest ₹ in the sharemarket. (तालाबं दी के दौरान लोन क� िक� नहीं चुकानी थी तो कु छ ने वह रकम शेयर बाजार म�
�नवेश क� होगी)
3. Unprecedented demand and profit for IT and Pharma sector- Encouraged the investors to park
their money in such shares at very high price. (तालाबं दी के दौरान सूचना प्रौद्यो�गक� और औषधीय कं प�नयों म�
अप्र�ा�शत तेजी)

4. Youtubers/Reddit/Social media influencers giving online share trading Tips. Many Apps
available.
5. American video game store company GAMESTOP's shares ⏫1625% in 1 year. Such gimmickry
will attract more small investors to invest. Associated keyword "short squeeze trading" [✋What
it means? how it works? Ans. not important]
6. 2021-Aug: Finance Minister in Parliament “Even though economic growth seem to be
slow/down but stock market rising ⏫⏫ because, The movement in stock market indices is
driven primarily by expectations of future economic growth.” E.g. Even though hotel business
may be slow at present, but in future unlockdown, people will go on vacation trips with more
enthusiasm. So, in anticipation of future profit, some investors will start buying hotel shares right
now. Then demand for hotel companies shares ⏫ → hotel companies share prices⏫ (शेयर
बाजार �ादा भ�व� म� िकतना और अ�धक मुनाफा होगा उस अपे�ा/सट्टेबाजी से बढ़ता है उदाहरण - हालांिक अभी तो कोरोना म�
होटल धं धे म� मं दी है, िकंतु भ�व� म� ब�त लोग वेकेशन म� होटल म� जाएं गे तब हमे ब�त मुनाफा होगा ये सोचकर कु छ �नवेशक अभी से
होटल कं प�नयों के शेयर जमा करना शु� करते ह� तो शेयर क� मांग बढ़ती है और दाम बढ़ता है)
15.11.1 🐮🐮📈📈🐻🐻Sharemarket- 2022: IPO Bubble Burst: Case of Paytm (फू ट गया ग़ु�ारा)
⇒ 📙📙📙📙ES22- 2021: more than 70 IPOs issued worth nearly ₹90,000 crores - this is higher than in
any year in last decade. More than 2 crore retail investors have open demat account in 2021.
⇒ 2021-Oct: Sensex and Nifty crossed 61,000 and 18,400 respectively on October 18, 2021.
⇒ However by 2022-March these stock indices have started to fall because of FPI-pullout-by-Fed
Tapering & Russia war.
⇒ 2021-Nov: Paytm collected ₹18,300 crore from IPO. (Company’s name is One 97
Communications, CEO Vijay Shekhar Sharma. Other partners-China’s Alibaba-Ant group (6%),
Japan's SoftBank and Warren Buffett's Berkshire Hathaway).
⇒ Stag (Male Deer) Investor - buys shares in IPO (initial public offering in the primary market)
with hopes of selling it at a very high price on LISTING in Secondary market. Often they get
lucky with almost 80-100% profit but their gameplan failed in Paytm. (नर-िहरन �नवेशक जो प्राथ�मक
बाज़ार म� IPO ख़रीदते और तुरंत उसे िद्वतीयक बाज़ार म� मुनाफ़े म� बेचने क� िफ़राक़ म� होते ह�)
⇒ 2021-Nov: Paytm Primary market Price Rs.2150 but but on day1 of listing (in the secondary
market), Paytm fell by almost 25%. → by 2022-March fallen to ₹750 (that is >60% loss to
investor!). CarTrade, Zomato etc also trading @loss. Reason?
⇒ 😥😥 General slowdown in the share market by fed tapering / FPI pullout (Ref:1a2), Russia-
Ukraine War.
⇒ 😥😥 high valuation of Paytm IPO (₹2150 per share) but institutional investors (Mutual Fund,
Pension Fund etc) not very confident of the growth prospects of Paytm. Once upon a time,
Paytm had superiority but faces stiff competition from NPCi’s UPI-Bhim, Mobikwick, PayU,
PhonePe etc. (ऑनलाइन भुगतान म� ब�त सारी कं प�नयों के साथ �धार्. पेटीएम का एका�धकार नहीं है.)
⇒ 😥😥startup bubble, no free lunches in economy- said Raghuram Rajan. Cashback discount is
given to build subscriber base to create hype- ultimately startup founders recovered all the
cashback money from Paytm retail investors (who lost 25% on listing day). → this could also
negatively affect the future IPOs of Startup Companies (अथर्तंत्र म� कोई मु� म� भोजन नहीं देता इन सब

�ाटर्अप वालों ने कै शबैक/ िड�ाउं ट के दम पे पहले ग्राहकों को लुभाया → िफर हमारी कं पनी म� ब�त ग्राहक है, एसा िदखाके
�नवेशकों को चूना लगाया)
⇒ 😥😥Ethical Aspect:- Retail investors with huge greed were blindly applying IPOs hoping to 2x
double their money. At some point they were bound to pay for excess greed. (�बना मेहनत के 25 िदन म�
पैसे डबल करने क� लालच रखने वाले आम �नवेशकों ने भी अपने नै�तक मू�ों पर सोच �वचार करना चािहए- क� लालच बुरी बला है)
15.11.2 🐮🐮🐮🐮🐮🐮 Share Market: Impact of Bond Yield

⇒ Bond yield is the profit you make on Bond investment. (More in 📑📑Pillar#1A2: Op-Twist)
⇒ If Mr.Bhide buys ₹100 principal bond with 10% interest = his yield = (₹110-100) / ₹100
investment= 10% but if he sells it to Mr.Jetha at ₹90 then Jetha's yield = ₹(110-90) interest / ₹90
investment= 22% Profit. Thus bond yield (profit) ⏫, If you manage to buy bond at a cheaper
than the original (face value) price.
⇒ 2021-Feb-March: When bond yield ⏫, some investors sold their shares of the low performing
companies → to invest into bonds → sharemarket⏬ fell for some days/weeks.
🔠🔠❓MCQ. In the parlance of financial investment, ‘Bear’ denotes [UPSC-CDS-2012]

(a) an investor, who feels that the price of a particular security is going to fall.
(b) an investor, who expects the price of a particular share to rise.
(c) a shareholder, who has an interest in a company, financially or otherwise.
(d) any lender, whether by making a loan or buying a bond.
🔠🔠❓ MCQ. Which of the following statements is/ are correct? [UPSC-CDS-2012-I]
1. NIFTY is based upon 50 firms in India.
2. NIFTY is governed and regulated by the Reserve Bank of India.
3. NIFTY is the stock index of Bombay Stock Exchange.
Answer Codes: (a) Only 1 (b) Only 2 (c) Only 3 (d) 1 and 3
15.12🗃🗃🗃🗃SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)
⇒ HQ- Mumbai भारतीय प्र�तभू�त और �व�नमय बोडर्,

⇒ (1988) Formed by an executive order → (1992) Became Statutory Body → powers increased
through amendments in 1999 & 2014. Now it can order search and seizure, attachment of

properties, arrest and detention. (खोज अ�भग्रहण, सं प��यों क� ज�ी/कु क�, �गर�ारी और �नरोध)
⇒ SEBI Board Composition: Chairman + 1 officer from RBI + 2 officers from Union Government
+ 5 members appointed by Union Government.
⇒ Chairman: upto 5 years / 65 age. Reappointment possible.
⇒ 2022: Madhabi Puri Buch-first woman chairperson in history of SEBI. She replaced Ajay Tyagi
(Ex-IAS). Selection was done by Financial Sector Regulatory Appointments Search Committee
(FSRASC) headed by the Cabinet Secretary (IAS).
⇒ Regulates Process of issuing securities (Bonds, Shares, IPO, ETF, ReIT, INVITs, etc.) using the
Securities Contracts Regulation Act, 1956 [SCRA: प्र�तभू�त सं �वदा �व�नयमन]
⇒ Regulates Places (Depositories, Stock exchanges, Commodity Exchanges etc.)
⇒ Regulates Persons (Investors, Brokers, Fund Managers, Public Limited companies etc.)
⇒ Regulates any Collective Investment Scheme (CIS) of ₹100 cr/> [In the aftermath of SAHARA
scam & Chit Fund scams. सामूिहक �नवेश योजनाए ]
⇒ Further appeal: Securities Appellate Tribunal (SAT) → Supreme Court.
○ Same SAT also hears appeals against the orders passed by Insurance Regulatory
Development Authority of India (IRDAI) and Pension Fund Regulatory and
Development Authority (PFRDA).(More in 📑📑Pillar#1D)
⇒ SEBI has “SCORES” online portal for complaint. (�नवेशक इधर ऑनलाइन फ़�रयाद करे)
⇒ SEBI has Securities Market Trainers (SMARTs) Program for investor education (�नवेशक प्र�श�ण)
⇒ Saarthi app: Sebi’s app for investor awareness. (�नवेशकों म� जागृ�त के �लए सेबी का नया एप)
15.12.1 🗃🗃⚖📜📜Securities Market Code

⇒ 💼💼Budget-2021: we’ll create a single new law named "Securities Markets Code" by merging
older acts 1) SEBI Act, 1992, 2) Depositories Act, 1996, 3) Securities Contracts (Regulation) Act,
1956 4) Government Securities Act, 2007. (पुराने �व�भ� कानूनों का एक�करण �वलीनीकरण करके "प्र�तभू�त बाजार
सं िहता" नामक नया कानून बनेगा)
⇒ Benefits? Same as the bullet points written in conclusion of “SEBI Investor Charter.”
15.13🗃🗃💪💪 SEBI INVESTOR CHARTER (�नवेशक अ�धकार पत्र)

⇒ (Definition) A citizens’ charter (नाग�रक अ�धकारपत्र) is a document of commitments made by a
government agency to the citizens in respect of the services being provided to them. e.g. if "X"
problem is not solved in "Y" days then complain to "Z" officer on ABC Phone number / email
address etc.
⇒ (Origin) 💼💼Budget-2021: we’ll create an "investor charter" (�नवेशक अ�धकार पत्र) for financial
investors across all financial products (Share, Bond, derivatives, Commodities market etc).
⇒ SEBI notified this in 2021-November.
o This charter applies on Entities/actors e.g. investors, mutual funds, stock brokers, stock
exchanges, depositories, underwriters, real estate investment trusts (REITs),
infrastructure investment trusts (InvITS), & other collective investment schemes,

o This charter applies on Events e.g. initial public offerings (IPO), FPO, etc.
15.13.1 🗃🗃🗃🗃 SEBI Charter → Investors’ rights (�नवेशक के अ�धकार)

⇒ Investors are entitled to fair treatment from SEBI & its regulated entities (E.g. Mutual fund,
stock-brokers IPO-underwriters etc). (सेबी और उसके द्वारा �नयं �त्रत सं �ाओं से �नवेशक को �ायो�चत �वहार का
अ�धकार होगा।)
⇒ Investors can expect complaint resolution from SEBI’s SCORES Portal in a time bound manner
(if his complaint not solved by the ) (सेबी के ऑनलाइन �ोर पोटर्ल पे समय पर �ाय/ �शकायत �नवारण का
अ�धकार )
⇒ SEBI regulated entities (E.g. Mutual fund, stock-brokers IPO-underwriters etc) Will be required
to display on their website average time taken to solve complaints internally. (सेबी द्वारा �नयं �त्रत
सं �ाओं ने अपनी वेबसाइट पर दशार्ना होगा िक वे आंत�रक �प से ग्राहक �शकायत �नवारण म� िकतना समय लेते ह�)
15.13.2 🗃🗃🗃🗃 SEBI Charter → Investors’ responsibilities (�नवेशक क� �ज़�ेदारी है)

⇒ Investor must not share critical information such as DEMAT passwords with anyone. (िडमेट खाते
का पासवडर् इ�ािद साझा न करने क� �ज़�ेदारी)
⇒ Before making an investment, investors must read and understand offer documents related to a
financial instrument (e.g. share, bond, ETF etc), know the risks involved (िकसी भी जगह �व�ीय �नवेश
करने से पहले उससे जुड़े जो�खमों क� सारी जानकारी पढ़ने क� �ज़�ेदारी �नवेशक क� होगी)
⇒ Investor must read about various fees/service charges involved in a transaction
⇒ Investor must keep track of DEMAT/Bank account statements. if any discrepancy, he must
communicate to the concerned authorities. e.g. password hacked & shares transferred without
knowledge (�नवेशक ने अपनी �व�भ� खातों म� हो रहे लेनदेन पर �नगरानी रखनी होगी। कोई �वसं ग�त िदखे तो तुरंत सं ल� सं �ा
को सु�चत करने क� �ज़�ेदारी �नवेशक क� होगी)
⇒ Investor preserve all transaction documents that will come in handy when filing complaints.
(लेनदेन से जुड़े सभी द�ावेजों का सं ग्रहण करना, तािक �शकायत के दौरान सुबूत के �प म� जमा िकया जा सके )
⇒ While investing, Investor must not make payments in cash, beyond the prescribed limits. Pay
through cheque/NEFT etc. (So it helps tracing fraudsters, tax-evaders. REF: 1A1 & 2B for more
on cash transaction limits). �नवेश करते व� तय मात्रा से �ादा म� नक़दी भुगतान निह करना। �ोंिक यिद ब�क खाते द्वारा
भुगतान िकया जाए तो �व�ीय-धोखेबाज़ों और कर-चोरों को पकड़ने म� सु�वधा रहे।
15.13.3 🗃🗃🗃🗃: 😪😪 SEBI’s Investor Charter: Criticism/limitation:

⇒ 😰😰The charter is treated as reference guide. It has no legal binding / legal rights to investors. (ये
के वल एक पथदशर्क है. क़ानूनी �प से बा� नहीं है)
⇒ 😰😰SEBI could not prevent recent scams/disasters in stock markets such as Franklin Templeton
Mutual Fund, Karvy Broker DEMAT scam, IL&FS crisis etc. This charter’s features not
specifically giving confidence on how SEBI will prevent scams in future. (वतर्मान वष� म� �व�वध शेयर
बाज़ार घोटालों को रोकने म� सेबी असफल रहा है। और इस नए अ�धकार पत्र के मुद्दे पढ़कर �व�ास सं पादन नहीं हो रहा िक भ�व� म�
एसे कांड नहीं होंगे)
⇒ 😰😰Retail investors get fooled into investing in bad/weak companies based on
‘tips/recommendations’ by social media influencers/telegram/Youtubers. But, charter not

sufficiently addressing this menace. (सोशल मीिडया म� बदमाशों क� झूठी सलाहों के चलते कमज़ोर कं प�नयों के शेयर-
बोंड म� भोले �नवेशक फँ स जाते ह�-कोई स� प्रावधान निह।)
15.13.4 🗃🗃🗃🗃: ✍ SEBI’s Investor Charter: Benefit/Conclusion

Appreciable step by SEBI. This will help in a long way in... प्रशं सनीय क़दम
 Ease of doing business & Ease of doing investment (�ापार और �नवेश म� सुगमता होगी)
 More clarity over rights and responsibilities financial market participants [Individual Investor,
Share Broker, Stock Exchange, Depository, Underwriter, Companies etc] अ�धकार और �ज�ेदा�रयों म�
��ता होगी
 Deepening of the financial market, Mobilisation of savings to the productive channels of
economy. पूंजी बाज़ार क� जड़ों को गहरा करने म� मदद �मलेगी.
15.13.5 🗃🗃🗃🗃: 🏃🏃 SEBI: why protect investors & ⏫investors participation?
Figure 5: पूंजी बाजार क� जड़ो को गहरा करना है तो �सफर् अमीरों का नही, गरीबो क� बचत का पैसा भी जाना चािहए!
⇒ Share market scams erode publics’ hard-earned savings → alcoholism, depression, suicide and
other social ills. (जनता क� बचत का पैसा घपले म� बबार्द तो जनता म� शराब, अवसाद, आ�ह�ा और अ� सामा�जक बुराई)
⇒ Duped investors will shy away from share market & they may invest in gold / real estate = not
very beneficial to economy as it our import-bill, creates black money opportunities.
⇒ If households don’t participate in capital market → companies will have to approach the banks
to get more loans. But banks’ lending capacity is limited by CRR, SLR, PSL, NPA, PCA.(REF in
📑📑Pillar#1B2)
⇒ If more retail investors participate in capital market = “Deepening of the capital market” →
factory expansion, job creation, and economic growth. (खुदरा �नवेशक क� मदद से पूंजी बाजार क� जड़ों क� ओर
गहरा करना- तािक रोजगार सृजन और आ�थक वृ�द्ध म� मदद �मले)
15.13.6 💼💼💼💼: measures to ⏫ retail investors participation- 25% public holding in Govt
Companies
⇒ Budget 2019: For all the listed government companies, we will strive for minimum 25% public
shareholding. (आम जनता को भी सरकारी कं प�नयों के शेयर खरीदने का मौका �मले)
⇒ SEBI to raise minimum public shareholding in listed private sector companies to 35%.
⇒ 👻👻ATMANIRBHAR: minimum shareholding related norms deferred under Corona crisis.

15.13.7 🗃🗃🗃🗃: 🏃🏃 SEBI Reforms to boost investors’ confidence?
⇒ Harshad Mehta (1992), Ketan Parekh (2001) arranged money from banks, used it for rigging the
share prices to make windfall gains during Bull-runs by other investors. Once the prices crashed,
small investors suffered. ब�कों से गबन बं द करके पैसा लाए �जससे कं प�नयों के शेयर जमकर खरीद के उसक� मांग और दामों
को बढ़ाया तािक लालच म� अ� �नवेशक भी उन कं प�नयों के शेयर ऊँ ची क�मतों म� खरीदने लगे अंत म� यह लोग अपने शेयर बेच कर
भाग गए
⇒ To prevent such scams, SEBI introduced Circuit Breaker System, wherein if fluctuation in the
share prices is more than “x%” than previous day, then stock exchange must stop trading for “y”
minutes.
15.13.8 🤝🤝⏰T+1 Settlement instead of T+2
⇒ Badla System/Carry forward system: Buying of shares using borrowed money & making
promises to carry forward the settlement for upto 72 days. scamsters misused (इसक� टोपी उसके सर पे:
सौदा आज करते लेिकन पैसों का भुगतान/शेयर क� िडलीवरी ७२ िदनो बाद होती- और इस समय के दौरान वही घपलेबाज उ�ी शेयर
बेचने क� टोपी दू सरों को पहेनाते रहेता)
⇒ so SEBI discontinued Badla System (in 2001) & introduced (T+2) rolling settlement system i.e.
after trade is conducted, the parties must settle it within two working days (= buyer pays money,
seller deliver shares/bonds/securities).
⇒ Settlement cycle represents the time period within which the stock exchanges have to settle
security transactions. Until now we had T+2 days but from 2022: T+1 started.
⇒ T+1 means settlements will have to be cleared within one day of the actual transactions taking
place. (सौदा होने के एक िदन के भीतर ही पाट�ने पैसा चुकाना है और सामने वाली पाट� ने उसको शेयर क� िडलीवरी देनी है)
⇒ 🤩🤩Benefits? ⏬ Volatility, Speculation, Faster Release of shares/funds. HOW?NOTIMP.
(अ��रता,सट्टेबाज़ी)
⇒ 😰😰Foreign investors unhappy due to Time zone difference creating operational challenges for
them. (�वदेशी �नवेशक नाराज़ �ोंिक भारत म� जब सुबह होती है तो अमे�रका म� रात इस�लए एक िदन के भीतर सौदा समेटना उनके
�लए मु��ल!)

15.13.9 🛒🛒 (💻💻:�:😈😈) Dabba-trading, Insider Trading, IPF
⇒ Dabba Trading / Bucketing / Box Trading: While share trade occurs at stock exchange linked
with DEMAT accounts, the Dabba Trades occur in the unofficial books/ledgers of an
unscrupulous broker. He may or may not execute those orders in actual DEMAT account.
Investor prone to scam, govt deprived of taxes. So, SEBI declared it illegal.
⇒ Insider Trading (भेिदया लेनदेन): Whenever company launches new products, wins unique patents,
or undergoes merger/acquisition- its share prices may ⏫. If a person associated with company
uses such confidential information for buying/selling shares to make windfall gains. Such insider
trading is illegal.
⇒ SEBI requires Stock exchanges (BSE, NSE etc) and commodity exchanges (NSEL, MCX etc) to
setup Investor Protection Fund (IPF: �नवेशक सुर�ा कोष). IPF covers investors’ ‘non-speculative’
type of losses. e.g. if the other party is not delivering shares because of some court case. IPF also
promotes investor education and awareness.
15.13.10 🛒🛒 (💻💻⏱:�) Algo Trading & Co-Location

⇒ Algo-Trading = Some brokers / companies use algorithmic trading computer programmes to
automatically buy / sell securities at a speed and frequency that is impossible for a human trader.
This can be misused for manipulating the share prices. (कं �ूटर अलगो�रदम द्वारा ब�त तेज़ी से ऑडर्र देना)
⇒ While SEBI has not banned it, but issued technical measures e.g. a single broker / investor can’t
place more than 100 online orders per second. (सं पूणर् �प से प्र�तबं �धत नहीं लेिकन सेबी ने कु छ सीमाएं लगायी है)
⇒ Co-location = stock exchange allowing the share broker to install their office/computer systems
very close to Stock Exchange. Then broker's computers can monitor/buy/sell shares quicker than
a computer sitting 500 kilometers away: So, co-location gives added advantage, esp for the Algo-
Traders. (�ॉक ए�च�ज के एक दम �नकट अपना ऑिफ़स �ा�पत करना तािक कं �ूटर पर डेटा और तेज़ी से प�ँ च सक� िक)
⇒ 2021: SEBI fines NSE For violation of some norms related to co-location.
15.14🛒🛒 (🔪🔪🔪🔪) BOND MARKET REFORMS
15.14.1 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) Unified Bond Market (एक�कृ त बॉ� बाजार)
⇒ At present (1) Govt bonds’ (G-Sec) market (2) private sector / Corporate Bonds market are
functioning separately. Because
o (A) RBI depository for G-Sec/ T-Bill is separate. Where govts, banks, NBFCs and
primary dealers can participate, and minimum investment guidelines are high (e.g.
investor’s g-sec buying order must be minimum “X” lakh rupees, else RBI rejects
application)
o (B) SEBI regulated depositories (For non-Government = private sectors’ share/bonds) is
separate- where retail investors/common men register & participate.
⇒ 💼💼Budget-2019 promised reform to connecting these two platforms, to facilitate retail investors’
participation in G-sec. (आम जनता भी सरकारी प्र�तभू�तयां सीधे ही खरीद सक� )
⇒ 2020: SEBI proposed “unified bond market” where both G-sec & Corporate Bonds will be
available for buying/selling. This will (1) help govt mobilize public’s savings more easily for its

welfare schemes (2) Give small/retail investors easier opportunity to invest directly in G-sec.
लेिकन ये असल म� अभी बनना बाक� है।
15.14.2 🐯🐯🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) G-Sec Trading- Retail investors’ RDG @RBI
- RBI launched “Retail Direct Scheme” in 2021.
- Under this scheme, RBI permits “Retail Direct Gilt (RDG) account” for retail investors on its E-
Kuber online platform. (आम �नवेशक �रज़वर् ब�क म� आरडीजी नामक खाता खोल पाएं गे)
- Both Resident Indians & non-resident Indians (NRIs) can open this account. (गैर �नवासी भारतीय भी)
- Then Retail investors can directly buy Treasury Bills (T-Bill), G-Secs (of Union Government),
State Development Loans (SDL are ‘G-secs’ of State Govts) and Sovereign Gold Bonds, from RBI
directly. (आम �नवेशक सीधा �रज़वर् ब�क से इन प्र�तभू�तयों को खरीद सकता है.)
- Application fees to open the account = ₹ ZERO
− 🤩🤩Benefit? 1) Earlier retail investors bought G-sec “indirectly” through mutual funds wherein
mutual fund manager (MF) charged commission/fees. Now retail investor can buy directly so
does not have to pay such commission/fees to MF managers. (�बचौ�लयों को दलाली/कमीशन नहीं देना होगा)
− 🤩🤩2) Deepening of G-Sec market through ⏫retail participation (बाजार क� जड़ों को गहरा करेगा)
15.14.3 🐯🐯🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) G-Sec Trading: RBI's NDS-OM, OTC

⇒ RBI owns and regulates Negotiated Dealing System (NDS) for trading in G-Sec.
⇒ Clearing Corporation of India Limited (CCIL a company founded by SBI, IDBI, ICICI, LIC etc)
maintains this system.
⇒ NDS system for recording the transactions of G-Sec buy-sell. NDS has following components:
i.e. buyer/seller call each other on the telephone, make the deal about buying
Telephonic and selling and then inform the reserve bank's NDS system (ke we've done this
deal).
Buyer physically walks into the seller's office (or vice versa) and conducts the
Over-The- transaction. Later they report transactions to RBI's NDS System (ke we've done
Counter (OTC) this deal). (ऑिफ़स म� �ब� �मलके ख़रीद-�बक्र� कर�गे, बाद म� �रज़वर् ब�क को सू�चत कर�गे िक हमने ये
िकया था)
Negotiated Dealing System-Order Matching system (NDS-OM): electronic,
computer screen based, anonymous, order driven trading system for dealing in
NDS-OM G-sec's secondary market.
Buyer-seller places orders online without knowing names/phone numbers of
each other. (ख़रीददार और �वक्रेता एक दू सरे क� असली नाम पहचान नहीं जान पाएं गे)
🚩🚩🚩FAQ: Then what is E-Kuber?
⇒ Ans. E-Kuber is the core banking solution (CBS: REF Pillar1A1) platform of RBI to digitally
handle all operations of RBI e.g. NEFT-RTGS, Repo, MSF, CRR, PSLC certificate trading, G-Sec,
Sovereign Gold Bond, Retail Direct Scheme (RDG) etc.
⇒ You may think of E-kuber as a Windows Operating system, & NDS as a sub-component/excel-
software inside of it that handles G-Sec buying-selling database management/account keeping.

🔠🔠❓MCQ. Find correct statement(s): (Asked in Prelims-2021)
1. Retail investors through demat account can invest in ‘Treasury Bills’ and ‘Government of India
Debt Bonds’ in primary market. [आम �नवेशक डीमैट खाते द्वारा प्राथ�मक बाजार म� सरकारी प्र�तभू�तयों म� �नवेश कर
सकता है]
2. The ‘Negotiated Dealing System-Order Matching’ is a govt securities trading platform of the
Reserve Bank of India. [NDS-OM सरकारी प्र�तभू�तयों म� खरीद �बक्र� करने के �लए �रजवर् ब�क द्वारा बनाया गया मं च है]
3. The ‘Central Depository Services Ltd.’ is jointly promoted by the Reserve Bank of India and the
Bombay Stock Exchange. [CDSL को �रजवर् ब�क और बॉ�े �ॉक ए�च�ज द्वारा सं यु� �प से बनाया गया था]
Codes: a) 1 Only b) 1 and 2 c) 3 Only d) 2 and 3
15.15🌽🌽🧶🧶🧶🧶🧶🧶 COMMODITY MARKET, FMC, SEBI MERGER

⇒ A commodity market / exchange (व�ु बाजार) is a place where buyers & sellers trade goods in bulk
- food grains, cotton, precious metals or energy resources (coal, oil gas)
⇒ “Commodity Futures”: Type of contract for future delivery and settlement of commodity e.g.
“on 1/5/2021, I shall deliver you 500 quintals of wheat at X price”.
⇒ Commodity exchanges were under a statutory regulator Forward Market Commission (FMC)
under the Ministry of Consumer Affairs and Public Distribution.
⇒ But Jignesh Shah generated fake receipts without any commodities in the warehouses & traded at
NSEL-commodity exchange. FMC failed to prevent scam. (एक कांड हो गया था)
⇒ So first FMC transferred to Finance Ministry and FMC ultimately merged with SEBI (2015).
15.15.1 💍💍🎖🎖🎖🎖🎖🎖Commodity Market: Gold exchanges & 💼💼Budget-2021

⇒ Gold exchange is a special type of commodity market devoted only to Gold trading.
⇒ 💼💼Budget-2021: We will undertake reforms in the regulation of gold exchange markets in India.
1) SEBI will be the regulator 2) Warehousing Development and Regulatory Authority (WDRA-
Statutory body under Dept of Food and Public Distribution) Will be responsible for
Warehousing/Vaulting, Assaying, Logistics of gold exchanges. (भं डारण, गुणव�ा परी�ण, रसद के मामलों
क� �ज�ेदारी)
15.15.2 💍💍💍💍💍💍💍💍Commodity Market: Electronic Gold Receipts (EGRs)

�णर् कं प�नयां “ड�ूडीआरए” नाम क� वैधा�नक सं �ा द्वारा पं जीकृ त गोदामों म� सोने क� ईट/�ब��ट जमा कर� गे, उसक� “इले��ॉ�नक
�णर् रसीद�” सेबी द्वारा पं जीकृ त इले��ॉ�नक गो� ए�च�ज पर बेची जाएगी। ग्राहक/�नवेशक ऑनलाइन तरीके से उसे खरीद पाएगा
- Stage1: Gold companies deposit their gold in the warehouses authorized by Warehousing
Development and Regulatory Authority (WDRA, it is a statutory body under Ministry of
Consumer Affairs, Food & Public Distribution.)
- Stage2: Warehouse manager generates Electronic Gold Receipts (EGRs).
- Stage3: EGR are listed on the SEBI regulated electronic gold exchanges. → Buyer can buy the
gold electronically and be assured of the quality. Later he may even sell this EGR to another

investor or he may goto warehouse to collect physical gold.
🤩🤩Benefits: 1) Assured quality. 2) Tax evasion is difficult due to online transactions monitored by
SEBI. इसे ग्राहक को �णर् क� गुणव�ा के बारे म� सु�न��त होगी। कर चोरी मु��ल होगी �ोंिक ऑनलाइन खातों क� �नगरानी होगी.
15.16� RELATED BODIES WITH SIMILAR SOUNDING NAMES
Figure 6: अभी भी इतने सारे "कांड" �ो हो रहे है, गवनर्र साहब?- �व�मं त्री @FSDC meeting.
- Financial Stability & Development Council: Chairman – Finance Minister. Other
FSDC members – 1. RBI Governor 2. SEBI chief 3. IRDAI chief 4. PFRDA chief 5. IBBI
(2010) chief & govt officials
�व�ीय - Functions? Supervision of the economy & large financial conglomerates,
��रता coordination among the financial regulators, financial literacy and financial
और �वकास inclusion.
प�रषद - Secretariat assistance by: FinMin → Dept. of Economic Affairs (आ�थक मामलों का
�वभाग)
FSB - Financial Stability Board is a brainchild of G20. (�व�ीय ��रता बोडर्)
(2009) - Functions? Financial monitoring at global level, Coordination between national
HQ: financial regulators bodies. (अलग-अलग देशों के �व�ीय �नयं त्रक के बीच तालमेल)
BASEL - India has 3 seats in FSB: 1) Secretary of Department of Economic Affairs (IAS) 2)
Dy. Governor of RBI 3) SEBI chairman
FATF - Financial Action Task Force (�व�ीय कारर्वाई कायर्दल) is a brainchild of G7.
(1989) - India member in 2010. Function? Combating Money laundering and terror
HQ: Paris finance. (More 📑📑Pill#2) (धन शोधन और आतं क� �व�पोषण से लड़ना)
- International Organization of Securities Commissions (IOSCO) is the
IOSCO international body of world's securities regulators. SEBI is a member.
- Famous for its IOSCO Guidelines for Investors Protection & risk prevention
🔠🔠❓ 'Financial Stability and Development Council': find correct statement(s): (Pre-2016)
1. It is an organ of NITI Aayog.
2. It is headed by the Union Finance Minister
3. It monitors macro-prudential supervision of the economy.
Answer Codes: (a) 1 and 2 only (b) 3 only (c) 2 and 3 only (d) 1, 2 and 3
15.17📦📦 � � INVESTMENT FUNDS → MUTUAL FUND (MF) FOR AAM-AADMI
Figure 7: swag से कर�गे 'middle-class' का '�ागत'। Observe colors in logo, meant for attracting ordinary crowd

⇒ Mutual Fund is an Asset Management Company (AMC-NBFC) that pools savings of (retail)
investors and gives them “Units”.
⇒ MF Manager parks this money in securities & builds his ‘portfolio’.
⇒ Whatever dividend/ interest is generated from the portfolio, it is distribute among investors in
the proportion of their units.
⇒ Investor pays Entry Load (= fees for joining), Exit Load (= fees while quitting). SEBI regulates
these fees.
⇒ Due to low deposit rates in banks, people invested money in mutual funds however post-IL&FS
crisis, corona crisis, charm declining because mutual funds are subject to such market risks.
⇒ ⚾📻📻⚾🎙🎙✋ “Side pocketing”: SEBI ‘s technical guidelines to help MFs to separate their
IL&FS type stressed/toxic assets from their standard assets. Helps protecting the investors.
How?NOTIMP.
15.17.1 📦📦 � � Mutual fund → ESG, Shariya Mutual Funds

⇒ ESG Mutual Funds= These mutual funds will invest clients’ money in companies that have good
performance on Environmental, Social, And Governance (ESG) aspects.
⇒ Shariya Mutual Fund= These mutual funds will invest clients’ money in companies that are
compliant with Islamic Shariya law. E.g. They will not invest in alcohol, pork, gambling etc
related companies.
15.17.2 📦📦 � � Mutual fund → SIP, ELSS, ULIP
⇒ Traditional Mutual Fund = client invests entire amount at once. एक साथ पूरी रकम जमा करानी होती है
⇒ Systematic Investment Plan (SIP)= Mutual fund wherein client deposits small-small fixed
amounts at fixed interval e.g. month basis etc. ग्राहक छोटी-छोटी िक�ों म� रकम जमा करवाता है
⇒ Equity Linked Savings Scheme (ELSS)= It is a sub-type of mutual fund where money is locked in
for 3 years and invested in equities (shares). It’s eligible for certain benefits in Income Tax.
⇒ Unit linked insurance policy (ULIP)= client invest money in a scheme wherein → (1) some ₹₹
goes into Mutual Fund (2) some ₹₹ goes into insurance policy (📑📑Ref: HDT-Pillar#1D)
15.17.3 📦📦 � � Mutual fund → 🎛🎛 Mutual fund risk-o-meter

⇒ SEBI requires mutual fund company to disclose how much risk is present in their scheme, on a
monthly basis, thru a digital dashboard called 'risk-o-meter'. (िकतने जो�खम पूणर् तरीके से �नवेश कर रहा है)
⇒ It shows 6 categories of risk: low, low to moderate, moderate, moderately high, high, (#)very
high risk. (#) SEBI added this new category 'very high risk' in 2020-Oct.
⇒ This helps the investor to make decision- which Mutual fund he wants to joins depending on his
risk appetite. (उस िहसाब से �नवेशक तय कर� उसे कौन से सलामती पूणर् या जो�खमपूणर् �ूचुअल फं ड म� जाना है.)
15.17.4 📦📦 � � Mutual Fund: Backstop Entity- SEBI proposal for stressed MF

तं गहाल �ूचुअल फं ड क� मदद के �लए “बैक�ॉप” नाम क� नई इकाई/सं �ा

- Mutual Funds invest clients money in shares and bonds.
- Sometimes due to scam/bad news the bond becomes ‘less liquid / illiquid’
- e.g. MF bought bonds of Vodafone or Spicejet, later those companies facing difficulties in
Business. Now MF wants to exit/sell-away its bond in secondary market but no other investors
willing to buy those bonds due to negative news about Vodafone or Spicejet. So bond has
become ‘less liquid / illiquid’
- So, SEBI proposed to set up a ‘backstop entity/organization’
- Backstop entity will buy Corporate Bonds from such mutual funds to reduce their stress. So, MF
can return money to its clients.
🚩🚩🚩FAQ: How is this similar/different than Bad BANK / RBI’s Special Windows for MF/TLTRO?
How will Backstop entity cover its own losses? = NOT IMPORTANT because this organization is yet
to be established.
15.17.5 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) Bond Buying Institution in 💼💼Budget-2021

⇒ Secondary market-Provides liquidity to the investor -Since he can sell existing shares/bonds and
hand to others → motivation to buy new shares/bonds in primary market → capital to healthy
new company.
⇒ But in India, the secondary market for bonds is not fully developed. Inadequate number of large
players → Difficult to re-sell the bonds at the right prices → 😰😰discourages the investors from
bonds → Difficult for companies to mobilize ₹₹ (िद्वतीयक बाजार म� बांड को बेचने म� असु�वधा के चलते �नवेशक
बांड से कतराते ह�)
⇒ So, 💼💼Budget-2021: Proposed to setup a body/organization to purchase investment grade debt
securities. This body will buy bonds both in stressed and normal times.
⇒ 🤩🤩Benefit? development/Deepening of the Bond market. (बांड बाजार क� जड़ों को गहरा कर�)
⇒ ✋Exact name of the organisation? headquarter? Ans. details yet to be announced.
15.18📦📦 � � INVESTMENT FUNDS → HEDGE FUND (हेज फ�) FOR RICH-AADMI
Figure 8: Swag से नही कर�गे 'middle-class' का '�ागत'। Observe ‘premium’ logo-designs to attract rich people
⇒ Special type of Mutual Fund meant for HNI (High Net Worth Individual) who wants high risk
high return. SEBI norms: Minimum investment per person is ₹1 crore. (�सफर् अमीरों के �लए है)
⇒ Hedge Fund manager will invest their money in Junk Bonds, Risky assets; he’ll do risky trading
activities such as Arbitrage, Leverage, Short Selling, Future&Options(F&O) trading, Derivatives
Trading etc. to generate maximum return. (how is that done in real life, what do these words
mean? = UPSC-CSE not for recruitment of HF managers.)
15.18.1 📦📦 � � Investment Funds: “Accredited Investor”

Deleting from handout. Not finding exam-worthy anymore.

15.18.2 📦📦 � 🏬🏬 🛩🛩 Investment Funds → REITs / InvITs: for rich-aadmi
REITs: Real Estate Investment Trusts InvITs: Infrastructure Investment
-(भू-भवन-सं प�� नवेश �ास ) Trusts-(अ�धसं रचना)
Who can HNI / institutions: Min. ₹2 lakh ₹10 lakh. ₹1 lakh
invest? ₹50,000 investment (SEBI ⏬ reduced minimum limits
in 2019 to attract more investors)
Manager parks in real estate projects that are soon to In airport, highway, thermal plants,
the money in? complete. gas grid etc. He’ll earn from toll
He’ll earn income from rent / sale. collection at highways, services fees
at airports etc.
Example Blackstone-Embassy group IRB, India-grid
✅Benefits of REITs and InvITs-
 Stressed developer gets new finance to finish the project while HNI gets new opportunity to
invest his money, and he may also sell the units to third party via stock exchange.
 SEBI permitted these instruments in 2014. Later SEBI relaxed technical norms related to capital,
leverage, issue size but they are not important for us. हर तकनीक� �नयम अपने �लए काम का नहीं
15.18.3 📦📦 � � Investment Funds → Sovereign Wealth Fund (सं प्रभु धन कोष)

⇒ State owned investment fund, wherein central bank, finance ministry and other public sector
financial intermediaries park their surplus fund. →money used for investment.
⇒ E.g. 2020-Jun: Abu Dhabi Investment Authority (ADIA) bought 1.16% of Reliance Jio for
₹5600+cr. Singapore's GIC sovereign wealth fund, Qatar Investment Authority (QIA) also active
in Indian market.
⇒ Sidetopic: What is National Investment & Infrastructure Fund (NIIF) Ans. Ref: Pillar#5:
Infrastructure
15.19📦📦 🏛🏛 INVESTMENT FUNDS → CPSE-EXCHANGE TRADED FUNDS (ETF: ईटीएफ)

⇒ Disinvestment (�व�नवेश): government sells it shares from Central Public Sector Enterprises
(CPSE: क� द्रीय सावर्ज�नक �ेत्र के उद्यम) but does not reduce its shareholding below 51%.
⇒ If Govt’s shareholding reduced below 51%, then it is called Privatization (�नजीकरण), although
NITI prefers the term ‘Strategic Disinvestment’. (More in Pill#2)
⇒ 2014: Govt wanted to disinvest 10 CPSE (ONGC, GAIL ltd etc). If govt tried to sell individual
company- shares, it would be more time consuming, and govt may not get good prices for each
company.
⇒ So, Govt gave CPSE-shares to a fund manager Goldman Sachs - who created new securities out
of it, called “Exchange Traded Funds (ETF)”, and made a “New Fund Offer (NFO)” to the
public to subscribe to these securities at ₹ 10 per unit.

⇒ If an investor holds the ETF → he will get returns from the dividend generated by those CPSE-
companies in the backend. He may also sell these ETF to a third party via stock exchange, hence
called Exchange Traded Funds.
Figure 9: how do exchange traded funds (ETF) work?

⇒ BHARAT-22: Another CPSE-ETF when Govt wanted to disinvest shares from 22 companies
including CPSE, PSBs and UTI using ICICI Prudential as fund manager (2017-18). However,
PSB-NPA problem → poor dividends → BHARAT-22 not giving good returns, so, investors
response was initially lukewarm.
⇒ Later govt announced, “We’ll give the ELSS-walla income tax benefits to CPSE-ETF-investors as
well” to attract investors.
15.19.1 (🦁🦁🔪🔪)📦📦: (🏛🏛🛒🛒🛒🛒) Bharat Bond (Debt) ETF (2019-Dec)
⇒ Fund Manager (Edelweiss Asset Management ltd) → He’ll issue Bharat Bond-ETF.
⇒ Maturity: 3 yrs and 10 years. Unit Size: ₹1000 each. So even middle-class investors buy these
Bond-ETFs.
⇒ Fund managers will invest this ₹₹ into a basket of bonds issued by Central Public Sector
Enterprises, Central Public Financial Institutions (CPFIs such as public sector bank and
insurance companies) and other Government organizations. ETF will be tradable at the stock
exchange.
👍👍 Bharat bond ETF: Benefits?
 For Government companies = Easier and more efficient to borrow ₹₹ instead of individually
launching their bonds in the market. एक एक सरकारी कं पनी अलग से बांड जारी करती तो शायद �नवेशक सब को नहीं
�मल पाते
 For Investors = Safety, assured return on bonds, irrespective of Government company’s profit.
 ⏫retail participation → deepening capital market. (खुदरा �नवेशक क� मदद से पूंजी बाजार क� जड़ों क� ओर
गहरा करना)
 💼💼Budget-2020: given success of Bharat bond ETF, we are planning to launch another debt-
ETF containing G-sec. This will help the retail investors to invest in G-sec.

Misc. : Gold-ETF: Investors give money → manager buys gold for safekeeping and trades it
depending on price movements → returns are divided among the unit-holders. In between, the
investor may sell his Gold-ETF to third party via Stock Exchange therefore they’re also Exchange
Traded Funds. How/why/NOTIMP
15.19.2 (🦁🦁🦁🦁)📦📦: (🏛🏛🏛🏛🏛🏛) CPSE-ETF vs Mutual Fund
Table 3: Sad that I’ve to spoonfeed this much
Mutual Fund CPSE-ETF
Objective = invest clients’ money in Objective different than Mutual Fund
shares/bonds (1) help Government for its disinvestment
(2) help Government company to borrow money
(Bharat-Bond ETF)
fund managers may buy/sell variety of He’s not doing that. His objective given above.
shares and bonds of Government
companies and private sector companies
for best returns through out the scheme.
a fund manager may also change the His portfolio (list of govt companies’ shares/bonds)
composition of the portfolio for example if is fixed. It’ll not change.
Infosys shares are not performing well →
he may sell them and fill up the box with
Wipro shares for better dividend.
15.20📦📦 INVESTMENT FUNDS → ALTERNATIVE INVESTMENT FUNDS (AIF)
It’s a technical classification by SEBI (वैक��क �नवेश कोष)

- AIF Category I: They generate positive spillover effects on the economy. Example: Venture
Capital Funds, Angel investors fund, SME Funds, social venture fund, Infrastructure funds. SEBI
keeps relaxed / lighter norms on them. जो िक अथर्तंत्र म� सकारा�क असर उ�� करते ह�
- AIF Category II: Neither in Cat-1 nor in Cat-3 E.g. Private Equity or Debt Fund. जो ना तो ऊपर क�
श्रेणी म� है ना नीचे क� श्रेणी म� है
- AIF Category III: They undertake excessive risk to generate high returns in short period of time.
E.g. Hedge Funds. SEBI norms are stricter/heavier on them, because otherwise they may
destabilize the capital market. जो िक अथर्तंत्र म� जो�खम बढ़ाते ह�, नकारा�क असर उ�� करते ह�
15.20.1 (🦁🦁🦁🦁):(🏗🏗🏠🏠) Govt’s AIF for Real Estate Sector (2019)
⇒ 2019: Govt to setup an alternative investment fund (AIF Category-II) using ₹₹ of govt, SBI and

LIC. (Total 25,000 cr). [Moral outrage: why not in Cat1? Ans. Send your suggestion to SEBI.]
⇒ AIF Fund manager: SBI Cap ventures ltd.
⇒ AIF Fund manager will give ₹ (as Debt finance) to builders with unfinished housing projects →
demand for steel, cement, construction workers= economic growth.
15.21🗃🗃 ⏱ FORWARD / FUTURE CONTRACTS & CALL / PUT OPTION
Figure 10: भ�व� मे खरीदने का सोदा तो िकया, लेिकन दाम �गर जाए, तो खुद को बचाऊँ तो कै से?
- A Forward / Future contract is a customized contract between two parties where settlement takes
on a future date at a price/quantity agreed upon today. E.g. on 1/5/2021 I shall sell you 100 nos. of
Infosys shares at ₹1000 each.
- In such contracts, there is a risk of other party not honoring commitment if he’s getting better
deal elsewhere in the future. So, for protecting (=hedging) themselves, they (=buyer or seller)
may buy “Option” from a third party by paying fees. नुकसानी से बचने के �लए बीमा �लया जाए
- Option is a type of insurance for executing the forward/future contract in a manner beneficial to
them e.g. I’ll sell you for ₹1000 on X date, & you must buy, but if I’m getting another buyer who
is willing to pay ₹1500 then I may not sell you & you can’t compel me. Such ‘insurance options’
are further subdivided into Call Option and Put Option, their internal difference & real-life
mechanism not imp. for UPSC.
🔠🔠❓Which one of the following terms is used in Economics to denote a technique for avoiding a
risk by making a counteracting transaction? [UPSC-CDS-2016-I]
(a) Dumping (b) Hedging (c) Discounting (d) Deflating
15.22🗃🗃 🔗🔗 DERIVATIVES & SWAPS (�ु�� प्र�तभू�तयां और अदला-बदली)

⇒ A derivative is a contract whose value is derived from the value of another underlying asset
which could be a share, bond, commodity or currency. इस प्र�तभू�त का मू� िकसी और सं प�� से उद्भ�वत होकर
आता है
⇒ They’re usually generated by the process of ‘securitization’. E.g. NHB taking loan papers from
banks, using them to generate new Mortgage Backed Securities. (प्र�तभू�तकरण क� प्रिक्रया से इसे बनाते ह�)
⇒ SWAP: is derivative instrument to swap one financial asset with another financial asset (usually)
to reduce the risk e.g. Currency Swap Agreement between two countries to protect themselves
against dollar volatility (more in 📑📑Pillar#3).
⇒ Similarly, there are Credit Default Swap (CDS) agreement against the risk of default, Interest
swap agreement to protect against volatility in interest rates. But their mechanisms NOT IMP.

15.22.1 🗃🗃🗃🗃: 🚛🚛🚛🚛🚛🚛 Bilateral Netting of Qualified Financial Contracts Act 2020
DELETED from 2022 because outdated/faded topic.
15.23👻👻👻👻👻👻 PARTICIPATORY NOTES (P-NOTES: पा�ट�सपेटरी नोट्स)

⇒ A foreigner wishes to invest his money in India but does not want to go through the hassles of
registering with SEBI, getting PAN card number, opening a DEMAT account etc. So, he will
approach a SEBI registered foreign institutional investor (FII) / foreign portfolio investor (FPI)
such as Morgan Stanley, Citigroup or Goldman Sachs. He’ll pay them & instruct them to
purchase particular shares and bonds and store them in their Demat account.
⇒ Then FII will give him P-Notes, and he’ll receive interest and dividend accordingly.
⇒ He may also sell those P-notes to a third party. (िकसी अ� �� को भी बेच सकता है)
⇒ P-Notes are Offshore Derivative Instruments that derive the value from the underlying Indian
shares and bonds. (अपतटीय �ु�� उपकरण)
⇒
⇒ Figure 11: �बना SEBI पं जीकरण के भारतीय पूंजी बाजार मे �नवेश क�, तो कै से?
😱😱P-Notes are harmful for Indian economy because:
⇒ P-note investors are not directly registered with SEBI. Identity of the actual investor, source of
funds remain disguised= chances of Tax evasion, money laundering, terror finance (इसके �नवेशक ने
�यं सेबी म� पं जीकरण नहीं करवाया वह पैसा िकधर से लेकर आया यह सब जानकारी नहीं �मल पाती, कर चोरी, काले धन को वैध
बनाना,आतं क� �व�पोषण)
⇒ If P-Note owner sells his P-Notes to another foreign investor, Government of India may be
deprived of taxes. (Compared to a scenario where Indian share owner is selling his shares to
another Indian investor at profit, then government gets securities transaction tax and capital

gains tax on his profit, & he can’t dodge it because DEMAT accounts linked with PAN card.
More on PAN card@Pillar#2 → BlackMoney)
Therefore, SEBI tightening the control P-Notes e.g. “X” category of FPIs can’t issue P-Notes. “Y”
category of FPI can issue P-Notes but every time they issue P-notes-they’ll have to deposit $1,000 to
SEBI etc.
Table 4: Sad that even for such simple things I’ve to create such spoonfeeding-tables just to prevent FAQs from weak students
P-Notes Foreign investor wants to invest in Indian share/bond market without
registering with SEBI. He wants to buy Indian companies’ shares/bonds in
India. �फरंगी आदमी भारत क� कं पनी म� �नवेश करना चाहता है लेिकन सेबी से पं जीकरण नहीं
करवाना चाहता
Bharat-DR Foreign Company wants to Indian to invest in its foreign/firangi-shares,
without registering with SEBI. �फरंगी कं पनी अपनी कं पनी के शेयसर् भारतीयों को बेचना
चाहती है लेिकन सेबी से पं जीकरण नहीं करवाना चाहती
ADR/GDR Non-American Company wants to American people to invest in its shares
without registering with American SEBI. गैर-अमे�रक� कं पनी अपनी कं पनी के शेयर
अमरीक� जनता को बेचना चाहती है लेिकन अमे�रका के शेयरबाजार �नयं त्रक से पं जीकरण नहीं
करवाना चाहती.
GDR- similar concept, refer to respective segment.
Masala/Panda/ Foreign company/org wants to borrow money, in a particular currency from
Kangaroo Bonds a particular country. Refer to respective segment
etc
🔠🔠❓Which of the following is issued by registered foreign portfolio investors to overseas
investors who want to be part of the Indian stock market without registering themselves directly?
(Pre19-SetA Q67) (a) Certificate of Deposit (b) Commercial Paper
(c) Promissory Note (d) Participatory Note
15.23.1 ✍ Conclusion: Financial Markets- �व�ीय बाजारों के बारे म� �न�षर्

 A well functioning financial market catalyzes the process of economic development. It is
therefore essential that such markets operate in a free, fair, competitive and transparent manner.
एक सु�वक�सत �व�ीय बाजार आ�थक �वकास क� प्रिक्रया मे उद्दीपक का काम करता है। ऐसे बाजार का �तं त्र, �न��, प्र�त�ध� और
पारदश� �प से सं चा�लत होना आव�क है।
 Deepening the financial market helps mobilize the savings of poor households into the
productive channels of the economy. पूंजी बाजार को गहरा करने से गरीब प�रवारों क� बचत को अथर्�व�ा के �व�भ�
�ेत्रो को िक्रया��त करने मे म� मदद �मलती है।
 Aforementioned initiatives /issues are greatly important in that regard need to be addressed in
priority basis. इस सं बंध म� पूव�� पहल / मुद्दे ब�त मह�पूणर् ह� / उ�े अग्रताक्रम से सं बो�धत करना आव�क.
Pillar 1C2: Corporate Governance

15.24🏙🏙🏙🏙 COMPANY TYPES
15.24.1 👶👶Company types based on incorporation
🤴🤴Chartered Setup by a charter given by a king / queen. E.g. East India Company in
Companies 1600. (चाटर्डर् कं प�नया)
⚖Statutory Setup by special acts of Parliament or State legislature. E.g. RBI, LIC,
Companies SBI. (वैधा�नक कं प�नया)
✒Registered Registered under the Companies Act, 1956 (and later 2013)
Companies e.g. Tata Motors, Infosys. (पं जीकृ त कं प�नया)
15.24.2 🏙🏙🏙🏙 Company types based on number of members
Private ltd. Public Limited Company (Companies Act 2013)

Members Min. 2 to Min. 7 to Max. unlimited number (depending on how many
Max. 200 shares issued & purchased by the people)
can they Can’t ⇒ A public ltd. company can invite public at large, to subscribe
invite public to its shares and bonds.
at large, to ⇒ If their shares are listed on a stock exchange (BSE, NSE etc),
buy shares
it’s a ‘Listed Public Limited Company’ (e.g. Reliance), else
/bonds?
it’s an ‘Unlisted Public Limited Company’ (e.g. India Post
�ा सामा� जनता
Payment Bank : IPPB)
को �व�ापन देकर
अपने शेयर-बांड
बेच सकते है?

Private ltd. Public Limited Company (Companies Act 2013)
Directors 2-15 ⇒ Min 3 to Max 15. out of them one must be Indian Resident,
(Min-Max) 1 must be Woman and 1/3rd of the directors must be
independent directors.
⇒ Independent directors are persons without any pecuniary
interest in company, they are supposed to protect minority
shareholders’ interests. (अ�सं �क शेयरधारकों के िहतों क� र�ा करने
के �लए �तं त्र डायरे�र)
Term limit N/A Their directors have age limit, term limit.
Corporate Norms Companies Act requires them
Governance either not ⇒ to hold specific number of annual meetings of board of
Norms applicable directors, norms for quorum, mechanism for e-voting,
or relaxed. ⇒ have to appoint Company Secretary,
UPSC- ⇒ Implement mechanism for protecting whistleblowers
CSE≠CA And so on…
FAQ: How can pvt limited company have shareholding?
- Ans. They can ask friends and family, venture capital funds, angel investors and other type of
investors to invest in the company. They cannot put an advertisement in the newspaper that we
are inviting the public at large to buy our shares. IF they want to invite public at large, → they
need to convert registration from private limited company to public limited company.
- Companies usually start as originally as private limited companies. e.g. Infosys (private ltd) in
early 80s → when their business grows and they want more capital they will convert into public
limited companies. → they will issue shares for the first time for the public at large → so we
call it Initial Public Offer (IPO) e.g. same infosys (public ltd) in early 90s launched IPO..
- In future same public ltd. company may also require more capital so again they will issue more
shares for the the second time, third time etc. → then we call it Follow on Public Offer (FPO)
15.24.3 🏙🏙🏙🏙 Company types based on Ownership
🧔🧔 Government / Public Sector / सावर्ज�नक �ेत्र 🤵🤵 Private Sector / �नजी �ेत्र क�
When Government owns 51%/> shares. When private parties own 51%>. E.g. Reliance,
Examples: Steel Authority of India (SAIL), Tata, Adani
India Post Payment Bank (IPPB)
Holding Company / �नयं त्रक कं पनी Subsidiary Company / �नयं �त्रत कं पनी
A company that owns majority shares in A company that is controlled by a parent
another company. E.g. Tata Sons ltd. holds holding company. E.g TCS, Tata Steel, Tata
majority shares of Tata Consultancy Services Sky are subsidiary co of Tata Sons.
(TSC), Tata Steel, Tata Sky etc.
15.24.4 🏙🏙🏙🏙 Company Types: Misc.
Under ⇒ One Person Company: special type of private ltd company having only
Companies Act one member. 💼💼Budget-2021: One Person Companies (OPCs)- Legal

reforms in Companies Act to [1) allow NRIs to easily register OPC in
India [2) OPC can be converted to other types of companies any time
⇒ Not for Profit Company: e.g. GSTN, NPCi etc. their profit is re-invested
in business expansion. They get certain tax benefits & relief in how
frequently they’ve to submit data to MCA. (लाभ-रिहत कं पनी, जो कं पनी मुनाफे के
�लए नहीं बनाई गई)
⇒ Dormant Companies: A) setup to start business in future B) setup to store
intellectual property C) not filled annual returns for two consecutive
years. (�न��य/सु� कं पनी)
👬👬👬👬Under ⇒ Limited Liability Partnership (LLP) Company is formed by minimum 2 or
LLP Act 2008 more partners.
सी�मत देयता ⇒ Individual partners are shielded from joint liability created by another
भागीदारी अ�ध�नयम partner's wrongful business decisions or misconduct. E.g. Vajiram and
Ravi IAS Study Centre LLP
⇒ LLP’s registration fees, auditing/reporting norms, tax liabilities, winding
up process etc. are more flexible than a (public or pvt) ltd. company
registered under Companies Act. उनके �लए �नयमो म� �रयायत/आसानी होती है।
Under Indian ⇒ A Partnership firm is formed by minimum 2 or more partners.
Partnership ⇒ Each partner is liable jointly with all the other partners for losses,
Act 1932 wrongful biz. decisions and misconduct.
15.24.5 🏙🏙🏙🏙 Corporate Governance → Small Companies given compliance relief
⇒ 💼💼Budget-2021: Companies with paid up capital not more than ₹2cr & annual turnover not
more than ₹20cr = treated as ‘Small Companies’.
⇒ They’ll be given relief in Companies Act related compliance e.g. how frequently they’ve to
submit accounts and ownership related documents to the Ministry of Corporate Affairs etc.
15.24.6 🏙🏙🏙🏙 Commercial Organizations: Other Types
PSU, CPSE Ref: Pillar2: Disinvestment
MSME Ref: Pillar1D: financial inclusion, Pillar4B
Startups Ref: Pillar4B
15.24.7 👬👬👬👬👬👬 Corporate Governance → LLP settlement Scheme 2020
सरकार म� कु छ द�ावेज जमा कराने होते ह�. अगर नहीं कराए तो इतना दंड भरकर मामला सुलझा लेते ह� / मुकदमा दजर् नहीं कर�गे
⇒ Limited Liability Partnership (LLP) companies are required to submit accounts and ownership
related documents to the Ministry of Corporate Affairs.
⇒ But many of them did not submit the documents on the deadline → Govt ordered them to pay
late fees/penalties, threatened them with prosecuting cases under the LLP Act and cancelling
their registration.
⇒ LLP settlement Scheme, 2020: “If you submit the required documents between x to y date →
Then you will have to pay less penalty and we will give you immunity from prosecution.”, said
the Government.
⇒ 💼💼Budget-2021: we’ll amend LLP Act for further ease of doing biz.

15.25🔨🔨 STATUTORY BODIES IN MINISTRY OF CORPORATE AFFAIRS (MCA)
15.25.1 🔨🔨 � Competition Commission of India (भारतीय प्र�त�धार् आयोग)
⇒ Competition among companies= consumer gets goods and services at the most competitive /
affordable prices. कं प�नयों के बीच �धार् होगी तभी तो ग्राहक को अ�� सेवा और िकफायती दाम म� चीजे �मल�गीं
⇒ Therefore, government must prevent cartelization (price fixing or production fixing by a group
of Companies), prevent monopoly (single company commanding the production / supply),
protect consumers’ interests and ensure freedom of trade.
⇒ 1970: Monopolies and Restrictive Trade Practices (MRTP) Act.
⇒ Later MRTP Act replaced with Competition Act, 2002- which has a statutory regulator
Competition Commission of India (CCI: 1 Chairman + 6 Members)
⇒ In past, CCI has imposed penalties on cement companies, real estate companies. It is also
investigating Airtel, and other telecom companies for alleged cartelization.
15.25.2 🔨🔨 � Insolvency and Bankruptcy Board of India (IBBI)

This too is a statutory body under the Ministry of Corporate Affairs (MCA). Read previous
Pillar#1B-2: NPA-handout for more on IBC Code.
Table 5: Bodies under Companies Act 2013
Features National Company National Financial Investor Serious Fraud
Law Tribunal Reporting Education & Investigation
(NCLT) Authority (NFRA) Protection Fund Office (SFIO)
रा�ी� य क�नी �व�ध रा�ी� य �व�ीय प्र�तवेदन �नवेशक एवं �श�ा र�ण गं भीर धोखाधडी अ�ेषण
अ�धकरण प्रा�धकरण कोष कायार्लय
Members Judicial + technical. Chairman + Boss: Corp. Affairs Civil servants &
They’ve benches members Secretary (IAS). financial experts
@Delhi, Kolkata, Plus, members
Jaipur etc. from RBI, SEBI,
financial experts
Appeal NCLAT (Appellate NFRAA (Appellate Regular Courts Regular Courts
tribunal) Authority)
Cases Hear the cases Sets standards for They use Investigate white-
related to Companies Auditors & (CA), in unclaimed money collar (financial)
Act, Board room listed companies from shares/bonds frauds. Powers to
battles, Merger- and large unlisted for financial search, seize,
Acquisition, companies. If literacy and arrest.
Corporate malpractices-> awareness Once SFIO gets
investigate and case, other

Features National Company National Financial Investor Serious Fraud
Law Tribunal Reporting Education & Investigation
(NCLT) Authority (NFRA) Protection Fund Office (SFIO)
Insolvency & debar them, Powers agencies (like CBI)

Bankruptcy (I&B) of civil court. can’t proceed.
15.25.3 🔨🔨🔨 Ministry of Corporate Affairs also associated with:
Chartered Accountants Regulates the CA profession through a
Act 1949 Statutory body: Institute of Chartered Accountants of India (ICAI).
ICAI also has IPA status under I&B Code.
Company Secretaries Act, Statutory Body: Institute of Company Secretaries of India (ICSI).
1980 Also has IPA status. REF (More in 📑📑Pillar#1B2)
Cost and Works Statutory Body: Institute of Cost Accountants of India (ICAI). Also
Accountants Act, 1959 has IPA status. What does it mean? REF (More in 📑📑Pillar#1B2)
Legislative ⇒ 1860: Societies Registration Act- for registration of literary,
Responsibilities of MCA scientific and charitable societies. E.g. Sahitya Akademi,
National School of Drama etc. जो मुनाफे के �लए नहीं लेिकन कला सािह�
�व�ान के प्रसार के �लए बने
⇒ 1932: Partnership Act
⇒ Companies Act 1956 → 2013.
⇒ 2008: Limited Liability Partnership Act
E-governance initiatives ⇒ INC-29 online form to registration of new company. Later it
of MCA was replaced with Simplified Proforma for Incorporating
Companies (SPICe) online form.
⇒ MCA-21 portal, where companies can file online documents
related to Companies Act compliance. MCA21 Version 3.0=
this latest Version 3.0 portal will have additional modules for e-
scrutiny, e-Adjudication, e-Consultation and Compliance
Management.
Officers Indian Corporate Law service (ICLS) via UPSC CSE-exam
15.26�👬👬 CORPORATE GOVERNANCE (कॉप�रेट शासन)
Figure 12: तुम मेरे पापा के दो� हो? - Cyrus Mistry

It is a way of directing the company to protect the interest of all stakeholders, and ensure three types
of compliance: (कं पनी �नद��शत करने का एक तरीका �जससे िहतधारकों क� र�ा हो)

Compliance Example(s)
⇒ Company obtaining Legal Entity Identifier (LEI) number as mandated
by RBI.
Legal-Regulatory
⇒ Company setting up ‘Internal Complaints Committee’ as mandated by
कानूनी-�नयामक
Sexual Harassment of Women at Workplace (Prevention, Prohibition
and Redressal) Act, 2013 / “POSH Act”
⇒ Companies keeping balance sheets as per the Ind-AS accounting
Technical standards.
तकनीक� ⇒ Automobile company producing car engines as per BHARAT-Stage
emission norms.
Moral-Ethical Gillette scrapping the ad-contract with cricketer Hardik Pandya for his
नै�तक-सदाचार-पूणर् sexist comments against women on Koffee with Karan Show.
⇒ Absence of Corporate Governance leads to fraud, embezzlement (ग़बन), erosion of investors’
confidence. E.g. Satyam Computer Scandal (Chairman Ramalinga Raju manipulated account
books), Boardroom battles at Tata Group (Cyrus Mistry vs Ratan Tata) and Infosys Group
(Narayana Murthy vs Vishal Sikka fighting, 2019: whistle-blower complaint about financial
irregularities), ICICI (Boss Chanda Kochhar gave ₹3000 crore loan to Videocon company
without due-diligence, which turned NPA.)
⇒ Therefore, Companies Act 2013 mandates companies to impose term limits on directors,
appoint independent directors, one person can’t become director in more than “X” number of
companies, one CA can’t audit more than “Y” number of companies, Company has to setup
whistle-blower protection (��सल�ोअर सुर�ा) mechanism, Company can’t give loan to its directors
and so forth.
⇒ An auditor is authorised personnel that verifies the accuracy of financial records. Their primary
objective is to protect businesses from fraud. Companies Act → Companies Auditor’s Report
Order (CARO) = Auditors have to annually submit reports to the Ministry of Corporate Affairs
⇒ Companies Act also has provisions for Related Party Transactions (RPT) to avoid
scam/embezzlement. (More in 📑📑Pillar#4: Ease of Doing Biz)
15.26.1 �👬👬 Corporate Governance: notable Committees
⇒ Notable committees for improving corporate governance in India: Kumar Mangalam Birla
(1999), Narayana Murthy (2003), Adi Godrej (2012), Uday Kotak (2017).
⇒ Further, SEBI too can issue directives to Public Limited Companies in the interest of investors,
beyond what is required under Companies Act. Such as…
Table 6:✋ not imp to memorize all provision. just observe pattern. Most of the Deadlines postponed due to Corona
SEBI implemented Uday Kotak committee’s suggestions From 2020-Apr#
Split CEO/MD and Chairman. One person can’t occupy Top 500 listed cos.
both positions in his company (e.g. Gautam Adani) although now SEBi

SEBI implemented Uday Kotak committee’s suggestions From 2020-Apr#
made it voluntary
now. (�ै��क)
Companies Act requires min.3 directors in Public Listed Top-2000 listed
company, but SEBI mandated to have min. 6 directors cos
Companies Act doesn’t prescribe gender of independent Top 1,000 listed
director but SEBI mandated atleast one independent woman cos.
director.
one person can serve as director in how many companies? 7
(Companies Act: Max.10), but SEBI required
⇒ #👻👻ATMANIRBHAR = SEBI deferred many of above guidelines. Dynamically changing info so
we need not chase it @ball-by-ball commentary.
15.26.2 💰💰(🏥🏥🏥🏥)CSR: Corporate Social Responsibility (कॉप�रेट सामा�जक �ज�ेदारी)

कं पनी ने अपने मुनाफे का कु छ िह�ा समाज क�ाण म� लगाना होगा
⇒ Mandated under Companies Act 2013: Last 3 years' avg. profit → spend 2% of that on CSR
(education, environment, public health, sanitation, disaster management etc.)
⇒ Applicable on both public ltd and private ltd. with very huge profit / turnover / networth
(🎓🎓✋what’s the difference between these terms, what’s the exact figure? Ans. UPSC is not
Chartered Account exam.)
⇒ Ministry of Corporate Affairs (MCA) gives National CSR Awards to companies.
15.26.3 👻👻👻🗃🗃⚖ ATMANI: Corporate Governance → Companies Act relaxed

ब�त सारे अपराधों म� अब जेल नहीं होगी के वल जुमार्ना, और जुमार्ने क� रकम भी कम क� गयी
⇒ Companies Act requires the companies to hold Meeting of the board of directors, and meeting of
the shareholders every “x” number of days etc. This norm is relaxed due to corona lockdown.
Guidelines also provided for e-voting and video conferencing.
⇒ Companies (Amendment) Bill, 2020 → Many offences under Companies Act have been
decriminalized i.e. villains can settle by paying fines, & he’ll not face arrest/jail.
o E.g. if Corporate social responsibility reports not submitted to Government on time,
delay in holding Annual General Meeting of the shareholders etc.
⇒ ⏬ Fines/penalties for Small Companies, One person Companies, Start Ups and Producer
Companies*.
o *A Producer Company (PC) is a registered company by a group of farmers/
agriculturists. We will learn in 📑📑pillar4A: Farmer Producer Company (FPC)

15.26.4 ✍ Conclusion: Corporate Governance- �न�षर्
⇒ A healthy corporate sector plays an important role in creating jobs, improving exports, and
boosting GDP growth rate. एक �� कॉप�रेट �ेत्र रोजगार-�नमार्ण/सृजन, �नयार्त और जीडीपी �वकास दर को बढ़ाने म�
मह�पूणर् भू�मका �नभाता है।
⇒ But, lack of corporate governance erodes investors confidence and prevents deepening of the
financial market. Thereby it harms economic growth of a country. लेिकन, कॉरपोरेट शासन क� कमी/
धांधली- �नवेशकों के �व�ास को ख� करती है, और �व�ीय बाजार को गहरा करने से रोकती है। �जससे देश क� आ�थक वृ�द्ध को
नुकसान प�ँ चाता है।
⇒ Aforementioned initiatives /issues are greatly important in that regard need to be addressed in
priority basis.इस सं बंध म� पूव�� पहल / मुद्दे ब�त मह�पूणर् ह� / उ�े अग्रताक्रम से सं बो�धत करना आव�क.
15.26.5 ✍🎷🎷 Mock Questions for Mains (GSM3/250 Words Each)

1) (GSM2-2015) In the light of the Satyam Scandal (2009), discuss the changes brought in
corporate governance to ensure transparency, accountability. स�म �� डल (2009) पश्�ात पारद�शता,
जवाबदेही सु�न��त करने के �लए कॉप�रेट प्रशासन म� लाए गए बदलावों पर चचार् कर�।
2) (GSM3-2015) Craze for gold in Indians have led to a surge in import of gold in recent years and
put pressure on balance of payments and external value of rupee. In view of this, examine the
merits of Sovereign Gold Bond Scheme and Inflation Indexed Bonds (IIB). भारतीयों म� सोने के �लए
सनक के चलते हाल के वष� म� सोने के आयात म� वृ�द्ध और भुगतान के सं तल
ु न और �पये के बाहरी मू� पर दबाव बढ़ा है। इसे देखते
�ए, सं प्रभु �णर् बॉ� ��म और मुद्रा��त सूचकांिकत बांड क� खू�बयों क� जांच कर�।सं तुलन और �पये के बाहरी मू� पर दबाव
डाला है। इसे देखते �ए, सं प्रभु �णर् बॉ� ��म और मुद्रा��त सूचकांिकत बांड क� खू�बयों क� जांच कर�।
3) "Just as good governance is necessary for vibrant Indian democracy, corporate governance is
necessary for vibrant Indian economy." elaborate. "�जस प्रकार जीवं त भारतीय लोकतं त्र के �लए सुशासन आव�क
है, उसी प्रकार जीवं त भारतीय अथर्�व�ा के �लए कॉप�रेट शासन आव�क है।"
4) Discuss the significance of deepening the capital market to resolve the Twin Balance sheet
Syndrome (TBS) in Indian Economy. दोहरे तुलन पत्र क� चुनौती को हल करने के �लए पूंजी बाजार को गहरा करने के
मह� पर चचार् कर�।
5) Discuss the significance of the Securities Market Code and Investors Charter in deepening the
capital market of India. भारत के पूंजी बाजार को गहरा करने म� प्र�तभू�त बाजार सं िहता और �नवेशक अ�धकारपत्र के मह�
पर चचार् कर�।
6) Why are Indian financial regulators apprehensive about (1) P-Notes (2) Cryptocurrencies?
भारतीय �व�ीय �नयामक (1) पी-नोट्स (2) िक्र�ोकर�सी से आशं िकत �ों ह�?
📑📑Next Handout: 1D: Insurance, Pension, Financial Inclusion

1D: ⚰Insurance, Pension & Financial Inclusion
Table of Contents
16 ⚰Insurance (बीमा): Meaning and Significance ............................................................................................ 237
16.11.1 Insurance Principles (�सद्धा�: hindi not required but understand gist for case studies) .......... 237
16.12 ⚰🏺🏺 History of insurance in India (भारत मे बीमा कं . का इ�तहास) ........................................................ 237
16.13 ⚰💀💀Life Insurance (जीवन बीमा) ....................................................................................................... 239
16.13.1 ⚰💀💀 🦁🦁 Life Insurance → entities in public sector (सावर्ज�नक �ेत्र के जीवन बीमा सं �ान) ......... 239
16.13.2 ⚰💀💀💀💀 🦁🦁 Life Insurance Corporation of India (1956) ..................................................... 239
16.13.3 ⚰💀💀💀💀 🦁🦁 LIC’s Disinvestment (2020, �व�नवेश) ................................................................... 240
16.13.4 ⚰💀💀💀💀 🦁🦁 LIC IPO gets SEBI Approval (2022-March)................................................. 240
16.13.5 ⚰💀💀💀💀💀 LIC- Aam Admi Bima Yojana (AABY), Janshree Bima Yojana: .................... 240
16.13.6 🧔🧔⚰PM schemes for Life Insurance & Accidental (Gen) insurance .................................... 241
16.14 ⚰ 💊💊💊💊💊💊General Insurance (सामा� बीमा) ................................................................................ 241
16.14.1 ⚰🚕🚕🚕🚕 🦁🦁 Public Sector General Insurance Entities: Timeline (समय रेखा)........................ 241
16.14.2 ⚰🚕🚕🚕🚕 🦁🦁: (🤵🤵) General Insurance Business (Nationalisation) Amendment Bill, 2021242
16.14.3 🦁🦁(💉💉💉) Employees' State Insurance Corporation.............................................................. 243
16.14.4 👻👻👻👻⚰Gen Insurance → Corona Warrior ₹50 lakh cover by Govt (2020-March)......... 244
16.15 💊💊 Gen → Health Insurance Schemes (�ा� बीमा योजनाएं ) ............................................................ 245
16.15.1 💊💊 😵😵: 🧐🧐Arogya Sanjeevani Policy (2020) ............................................................................ 245
16.15.2 ⚰ 😵😵: 🧐🧐SARAL JEEVAN BIMA-Standardized term Life Insurance policy ..................... 246
16.15.3 💊💊💊💊Gen→ Health Insurance → Corona Kavach vs Rakshak ............................................ 246
16.15.4 💊💊♿ Niramya Health Insurance for PH. OLD SCHEME DONOT-LOOSE-SLEEP ......... 246
16.15.5 💊💊💊💊 Rashtriya Swasthya Bima Yojana (RSBY: 2008)............................................................ 246
16.15.6 💊💊💊💊: 🧔🧔Why public health insurance for poor? (गरीबों को सरकारी �ा� बीमा �ों िदया जाए) .... 247
16.15.7 💊💊💊💊5⃣L /👪👪/📆📆 Ayushman Bharat / PM Jan Aroyga Yojana (PMJAY) ............................ 247
16.15.8 PM-JAY Sub-schemes ................................................................................................................... 248
16.15.9 Ayushman Bharat Digital Mission .......................................................................................... 249
16.16 ⚰ 💊💊💊💊💊💊 General Insurance → other than Health Insurance............................................. 252
16.16.1 🧔🧔⚰🌽🌽 Pradhan Mantri Fasal Bima Yojana (2016).............................................................. 252
16.16.2 🧔🧔⚰🌽🌽 PM-FBY (2.0) revamped in 2020 .............................................................................. 253
16.16.3 🧔🧔⚰🌽🌽 Other Agriculture Insurance Schemes? (अ� कु छ फ़सल बीमा योजना) .......................... 253
16.16.4 ⛴🔪🔪(�🏦🏦) Insurance to Banks on Exporters’NPA → NIRVIC Scheme (2019) .............. 253
16.16.5 🚕🚕🚕🚕 Third Party Motor Insurance (थडर् पाट� मोटर इं �ोर�स) ........................................................ 254
16.16.6 🚕🚕🚕🚕 Own Damage Insurance (OD: मोटर सं बं�धत �यं के नुकसान का बीमा ) .................................... 254
16.16.7 🏗🏗⚖📜📜Title Insurance (जमीन / इमारत का टाइटल बीमा) ................................................................. 254
16.16.8 💉💉⚖📜📜Clinical Trial Liability Insurance............................................................................... 254
16.16.9 🔥🔥🔥🔥🔥🔥🔥🔥 Bharat Griha Raksha & other: Standardized home/factory insurance policies255
(Batch:PCB7) Mrunal’s Economy Pillar#1D: Insurance, Pension, FinInclusion → Page 234

16.16.10 🌬🌬🌬🌬(Proposed) Catastrophe Insurance (आपदा बीमा) ............................................................. 255
16.16.11 🌬🌬🌬🌬 Catastrophe Bonds, Surety Bonds: ................................................................................ 255
16.16.12 👿👿👿👿General Insurance → Cyber Insurance (साइबर बीमा) .................................................. 255
16.16.13 💻💻eIA: e-Insurance account ................................................................................................... 255
16.17 ⚰↗⚰Re-insurance (पुनब�मा) ....................................................................................................... 256
16.17.1 😷😷(🤵🤵🤵🤵🤵🤵)PANDEMIC RISK POOL proposal by IRDAI ................................................ 256
16.18 ⚰�IRDAI: the insurance sector regulator (बीमा �ेत्र �नयं त्रक) ....................................................... 257
16.18.1 ⚰�Domestic Systemically Important Insurers (D-SIIs, (घरेलु प्रणालीबद्ध मह�पूणर् बीमाकतार्) ..... 257
16.19 ⚰😿😿 Challenges to insurance industry (चुनौ�तयां) ......................................................................... 257
16.19.1 �Insurance progress indicators (बीमा प्रग�त सं के तक) ....................................................................... 258
16.19.2 FDI limits in Insurance sector? (बीमा �ेत्र मे प्र�� वदेशी �नवेश क� सीमा)........................................... 258
16.19.3 Should we ⏫ FDI beyond 49% in insurance companies? (�ा सीमा बढ़ाए?) ............................. 259
17 � → � (💰💰💰💰) PENSION (प�शन) ............................................................................................................. 259
17.11 �🦁🦁 Employee Provident Fund Org. (कमर्चारी भ�व� �न�ध सं गठन)................................................... 260
17.11.2 🧔🧔🧔� (2016) Pradhan Mantri Rojgar Protsahan Yojana (Labour Min) .......................... 262
17.11.3 👻👻ATMANIRBHAR Reforms in EPFO 🧔🧔🧔� (March to August) ................................. 262
17.11.4 👻👻Atmanirbhar Bharat Rozgar Yojana= Subsidy from Central Govt in EPFO contribution
262
17.11.5 🚩🚩🚩FAQ: “why not merge EPFO with ESIC!!? ” ................................................................. 263
17.12 �→�Pension for Govt Employees & Middle Class? = NPS .................................................. 263
17.12.1 �→� Pension: NPA: Minimum Assured Return Scheme (MARS) .............................. 264
17.12.2 Old Pension Scheme (OPS) will not be re-introduced says Govt in Lok Sabha ...................... 264
17.13 �→�Pension for Senior Citizens WITH CAPACITY to Invest? ........................................... 265
17.13.1 Pradhan Mantri Vaya Vandana Yojana (2017-DFS, LIC) ......................................................... 265
17.14 �→�Pension for Poor People WITH capacity to INVEST? .................................................. 266
17.14.1 � → 👴👴👴👴👴👴: 🧔🧔 Pension: Three Maan Dhan Yojanas .................................................... 267
17.14.2 🚩🚩🚩FAQ: “why not merge all these schemes into one!?? ................................................... 268
17.15 �→� Pension for Poor People WITHOUT capacity to INVEST? ........................................ 268
17.16 �� PFRDA, the Pension Funds’ Regulator ............................................................................... 269
17.17 🛫🛫🛫Social Security for Overseas Indians (Pension / Insurance) .............................................. 269
17.17.1 🛫🛫🛫Pravasi Bharatiya Bima Yojana, 2017 .............................................................................. 270
18 (��:💰💰)→💳💳Financial Inclusion (�व�ीय समोवेशन) ................................................................................. 270
18.11 (��:💰💰)→💳💳 Fin. inclusion: Bank accounts for Everyone ................................................... 271
18.11.1 🧔🧔(��:💰💰)→💳💳 Pradhan Mantri Jan Dhan Yojana (प्रधान मं त्री जन धन योजना)................... 271
18.11.2 � Jan Dhan Darshak App (2018) .............................................................................................. 272
18.12 (��:💰💰)→ 📮📮 Fin inclusion: Investments other than Bank .................................................. 273
18.12.1 📮📮 (Yearbook) Dept of Post: POSB vs IPPB............................................................................... 273
18.12.2 (�:💰💰)→(�:💳💳)Sukanya Samriddhi Yojana (2015) .......................................................... 274

18.12.3 ⚖Proposed Government Savings Promotion Act (in 2018)................................................... 275
18.12.4 ⭐📫📫 📫📫
📫 📫 ��
� Five Star Village scheme by Dept of Post (2020) .......................................... 275
18.12.5 ⚰💀💀💀💀💀💀💀💀 ��
� Sampoorna Bima Gram Yojana (2017) .................................................... 275
18.12.6 ⚰💀💀💀💀💀💀💀💀 ��
� Model Insurance Villages (MIV) proposal by IRDAI (2021) ................ 275
18.12.7 (��:💰💰)→ 📦📦 Chit Funds and Prize Chits ........................................................................ 276
18.12.8 📦📦📦📦 Chit Fund Scams? धांधली/ गबन / का� ............................................................................... 276
18.13 �� ←(💰💰💰💰) Financial inclusion: Credit (Loans: ऋण) .......................................................... 277
18.13.1 ��: 🧔🧔 ←(💰💰💰💰) Credit Guarantee (ऋण अदायगी गारंटी) ..................................................... 277
18.13.2 (💰💰💰💰)↗🗃🗃=(💰💰💰💰) Refinance (पुन�व�)................................................................................. 278
18.13.3 👻👻 �🏭🏭 MSME: Definition changed in ATMANIRBHAR (2020) ..................................... 278
18.13.4 👻👻👻👻 �🏭🏭 MSME Non-NPA borrower → ECLGS 1.0 ...................................................... 279
18.13.5 👻👻👻👻 �🏭🏭 MSME Non-NPA borrower → ECLGS 2.0 (Atma-Nirbhar 3.0) ................... 280
18.13.6 👻👻👻👻👻🏭🏭 MSME NPA borrower → Subordinate Debt (गौण ऋण) ..................................... 280
18.13.7 👻👻👻👻👻🏭🏭 MSME → Equity infusion via Fund of Funds (�न�धयो क� �न�ध) .......................... 280
18.13.8 🚫🚫🚫🚫🚫🚫🚫🚫 NBFC → Mudra (2015, 100% SIDBI subsidiary) ...................................... 281
18.13.9 👻👻👻👻 �🏭🏭 Mudra Loans → Shishu Loans pe 2% Interest subvention ............................. 281
18.13.10 ⏰🔪🔪 psbloansin59minutes.com (2018) .............................................................................. 282
18.13.11 🙋🙋Stand Up India Scheme, 2016 (उ�� भारत)......................................................................... 282
18.13.12 👭👭Self-help group (�-सहायता समूह) → Credit........................................................................ 282
18.13.13 🤑🤑🤑Street Vendors’s AtmaNirbhar Nidhi Scheme (PM-SVANidhi)............................. 283
18.13.14 🤑🤑🤑Street vendors’s PM-SVANidhi → Main Bhi Digital (2021) ................................... 283
18.13.15 �PaiSA Portal (2018) ............................................................................................................ 283
18.13.16 �💳💳 Kisan Credit Card (1998) ............................................................................................ 284
18.13.17 ��: 🧔🧔 ←(💰💰💰💰) Interest Subvention (�ाज सहायता) .................................................... 285
18.14 🌽🌽🌽🌽🌽🌽🌽🌽Farm Loan Waiver (कृ �ष ऋण माफ�) ............................................................................... 285
18.14.1 🌽🌽🌽🌽🌽🌽🌽🌽Agri-Finance → Loan waivers for the farmers .................................................... 285
18.14.2 🌽🌽🌽🌽🌽🌽🌽🌽=👌👌Agri-Finance → Farm loan waivers: arguments in favour .......................... 286
18.14.3 🌽🌽🌽🌽🌽🌽🌽🌽=👎👎Agri-Finance → Farm loan waivers: arguments against ............................ 286
18.14.4 🌽🌽🌽🌽🌽🌽🌽🌽=👎👎☠Anti-Argument: Loan waiver will not stop farmer suicide................... 287
18.14.5 🌽🌽🌽🌽🌽🌽🌽🌽 ✍ Farm Loan Waiver: Conclusion .................................................................... 287
18.14.6 👻👻👻👻👻👻 Atma-Nirbhar Farm Loan Reforms (2020) ............................................................. 287
18.15 ⚰� Financial inclusion: Insurance & Pension........................................................................... 288
18.15.1 ⚰🔬🔬 Micro Insurance (सू� बीमा) ............................................................................................... 288
18.15.2 🏍🏍🏍🏍🏍🏍 Gig Workers’ social security code (�गग कम� क� सामा�जक सुर�ा सं िहता) .............................. 288
18.15.3 👻👻ATMANIRBHAR → 👷👷Workers’ Social security (2020) ................................................. 288
18.16 ��: �Financial Inclusion: Customer Protection (ग्राहक सुर�ा) ............................................... 289
18.16.1 😾😾RBI’s 3 Ombudsman (ओमबड्समेन/ �शकायत �नवारण अ�धकारी/लोक प्रहरी) ....................................... 289
18.17 📈📈📈📈📈📈Financial Inclusion: India’s Performance (भारत का प्रदशर्न) ............................................. 290

18.17.1 📈📈📈📈 Global Microscope Report ............................................................................................... 290
18.17.2 📈📈📈📈 Global Findex Database 2017: (released in 2018, April) ............................................... 291
18.17.3 📈📈📈📈 Mercer CFA Institute Global Pension Index for 2021: ............................................. 291
18.17.4 📈📈📈📈 (India’s own) Financial Inclusion Index by DFS........................................................... 291
18.17.5 📈📈📈📈 (India’s own) RBI’s National Strategy for Financial Inclusion (NSFI) ....................... 291
18.17.6 📈📈📈📈 (India’s own) RBI’s Financial Inclusion Index (�व�ीय समावेशन सूचकांक) ......................... 291
18.18 ✍🏼🏼🎺🎺 Mock Questions for Mains (250 words Each) ...................................................................... 291
16 ⚰INSURANCE (बीमा): MEANING AND SIGNIFICANCE

- Meaning: insurance policy is a Debt instrument / Legal contract against eventualities of death or
damage. (मृ�ु या ��त क� घटनाओं के �खलाफ कानूनी अनुबंध).
- 2 parties in this contract: 1) Insured / client 2) Insurer / Underwriter.
- Insurance provide stability to the households (against death, disability, damage) and
entrepreneurs (against fire, theft, natural disasters etc.) बीमा प�रवार और उद्योगप�तयों को जो�खमों के सामने
��रता मुहैया कराता है
- Insurance companies invest clients’ premium in various public and private sector projects,
thereby channelizing savings towards investment & economic growth. बीमा-िक� के द्वारा लोगों क� बचत
�नवेश म� जाती है
16.11.1 Insurance Principles (�सद्धा�: hindi not required but understand gist for case studies)
⇒ Uberrima fides- Good faith, hide nothing. (HIV+ve in Health Insurance)
⇒ Indemnity- Only “REAL” loss, not imaginary. (couldn’t give CAT exam due to fire)
⇒ Subrogation- Insurer can recover from negligent 3rd party.
⇒ Causa Proxima - Direct loss link. Bollywood fan can’t buy policy for Bachchan.
⇒ Insurable interest- If “risk-x” not happen, client remains in same position, “risk-x” happens
client in bad position. (I didn’t win lottery, I lost in horse race betting)
16.12⚰🏺🏺 HISTORY OF INSURANCE IN INDIA (भारत मे बीमा कं . का इ�तहास)

- (1818): Europeans started insurance companies in India, but they charged higher premium on
Indian clients with racist bias that Indians belong to an inferior race = higher probability to die.
अंग्रेज कं प�नयां भारतीय लोगों पर �ादा बीमा िक� मांगते थे
- (1870): Bombay Mutual Life Insurance was the first Swadeshi life insurance company and they
did not charge extra premium on Indian clients.
- (1912): Life Insurance Companies Act to regulate them, but lax norms, so just like the banking
industry, the insurance industry too faced problems in the aftermath of Great Depression in
USA. So, 1938: Insurance Act for tougher regulation. पहले कांड होते रहेते थी िफर क़ानून बनाया गया

- Just like the banking, the insurance industry had to be nationalized after independence due to
scams, financial inclusion and Five-Year Plans. धांधली, �व�ीय समावेशन और पं चवष�य योजना के �लए रा��ीयकरण
Chronology �Bank ⚰ Insurance
1948-49 RBI nationalized -----
1955 SBI nationalized -----
1956 ---- LIC Act took over ~245 (private owned) Life insurance
companies.
1969 Nationalization of 14 ----
Private Banks
1972 ---- GIC Act: GIC and its 4 subsidiaries tookover ~107
(private owned) General insurance companies.
1980 Nationalization of 6 ----
Private Banks
Reforms Narasimham ‘91 & ‘98 Malhotra Committee 1993→ Private insurance
सुधार स�म�त companies were allowed, FDI was liberalized
Safeguards CRR, SLR, BASEL Investment Pattern, Solvency Margin. E.g. They must
सुर�ा के �लए invest minimum “x%” of premium in G-Sec, they can’t
कु छ मानदंड invest more than “y%” of premium in pvt companies
shares/debentures etc. They must not invest in
companies having less than “AA” credit rating etc.
Exact norms not imp.
Financial PSL norms Rural & Social Obligation Norms: every year “x”
Inclusion, 25% branches in number of policies must be sold in rural areas,
Welfarism unbanked rural areas PH/backward etc. Further Insurance companies
required to invest minimum “x%” in affordable
housing projects, State Govt’s fire equipment etc. Else
IRDAI imposes penalty. ग्रामीण और सामा�जक दा�य� मानदंड
Delivery ⇒ Bank branch, Insurance Intermediaries: (म��/ �बचौ�लया)
Channel ⇒ Business - Agents/brokers.
Correspondence - Bankers selling insurance (Bancassurance)
Agent (BankMitra) - Surveyor/Loss Assessor (सव��क).
- Third Party Administrators (e.g. Hospital where
treatment is given for health insurance जहां आप का
इलाज हो)

16.13⚰💀💀LIFE INSURANCE (जीवन बीमा)
Life Insurance Type → Money returned? 📆📆At maturity 💀💀At death
Whole life= Longer policy: (e.g. 35-40 yrs) Yes, savings YES
Endowment= Shorter policy: (e.g. 10-20) returned with
interest
Term life= Short Policy, Low Premium e.g. PM Jeevan ✋No Yes
Jyoti Bima Yojana. मृ�ु नहीं �ई तो बीमा िक� वापस नहीं �मलेगी
ULIP: Unit Linked Insurance Plans: Part of money goes in Yes, savings YES
insurance, part in Mutual fund returned with some
profit
16.13.1 ⚰💀💀 🦁🦁 Life Insurance → entities in public sector (सावर्ज�नक �ेत्र के जीवन बीमा सं �ान)
16.13.1.1 ⚰💀💀 📮📮 Post Office Life Insurance (डाक जीवन बीमा)
- Initially started as postal life insurance for postal employees (1884), later extended to rural
people as well.
- Presently, 6 schemes for govt employees and 6 schemes for rural areas (usually with prefix of
“GRAM” e.g. gram Suvidha / Suraksha / Santosh….)
- They’ve developed “DARPAN” PLI (Postal Life Insurance) App for this.
16.13.2 ⚰💀💀💀💀 🦁🦁 Life Insurance Corporation of India (1956)
⇒ To take over/nationalize the private life insurance companies → LIC Act, 1956. So, LIC is a
statutory corporation/statutory company. (वैधा�नक �नगम)
⇒ Rigveda: “योग�ेम” (Yogakshema: well being) = name of LIC HQ@Mumbai & its corporate
magazine.
⇒ Gita: “योग�ेमं वहा�हम्” (Yogakshemam Vahamyaham:- I ensure safety and well being (of my
devotees) = LIC motto.
⇒ 2018: LIC became majority shareholder in IDBI bank. (More in 📑📑Pillar#1B1- Classification)
⇒ 2021: 1) Govt ⏫retirement age of LIC chairman from 60 to 62 years. 2) LIC launched ‘Ananda’
App for insurance agents.

16.13.3 ⚰💀💀💀💀 🦁🦁 LIC’s Disinvestment (2020, �व�नवेश)
⇒ Disinvestment (�व�नवेश): Reducing ⏬ govt shareholding in a Government company but govt
keeps atleast 51% shareholding with itself. (e.g. if govt selling its shares of ONGC from 100% to
75%, 51% etc)
⇒ Privatization / Divestment / Strategic Disinvestment (�नजीकरण/रणनी�तक �व�नवेश): Govt selling the
majority shareholding/ownership of a Govt company to a private entity (e.g. Adani/Ambani को
पूरी क� पूरी सरकारी कं पनी बेच दी जाए) (More in 📑📑Pillar# 2D)
- 💼💼Budget-2020: LIC Act will be amended → LIC : Initial Public Offering (IPO) → Government
will sell part of its shareholding. 2022: SEBI permitted.
WHY is Govt doing disinvestment of LIC?
⇒ LIC’s insurance products come with a sovereign guarantee (सं प्रभु गारंटी) by the Govt. So people
prefer to buy it over private sector insurance policies. This hampers perfect competition (LIC क�
जीवन बीमा पॉ�लसी के पीछे सरकारी गारंटी – �नजी कं प�नयों को पूणर् प्र�तयो�गता अवसर नहीं देती).
⇒ If Govt shareholding ⬇ → LIC functioning becomes independent → less financial repression
of households e.g. how LIC bought loss making IDBI under Government’s pressure. Ref
📑📑Pillar#1B-1: Banks’ classification. (सरकारी दबाव म�, एलआईसी घाटे वाले �ेत्रों म� �नवेश करता है, �जससे �नवेशकों
का �व�ीय दमन)
⇒ So, earlier, International Monetary Fund (IMF) and Justice B.N.SriKrishna’s Financial Sector
Legislative Reforms Commission (FSLRC-2011) had also advised the same to Government of
India. (आईएमएफ तथा �व�ीय �ेत्र �वधायी सुधार आयोग ने भी कु छ ऐसी ही �सफा�रश� क� थी)
⇒ 🤩🤩1) Disinvestment = Government will earn some ₹₹ by selling its shares → welfare schemes.
(�व�नवेश से कमाई रकम- सरकार गरीब क�ाण योजनाओं म� इ�ेमाल कर सकती है)
⇒ 🤩🤩2) LIC becoming a public limited company → independent directors, women directors,
more transparent disclosure of balance sheet, whistleblower protection, accountability and good
governance. (Ref: Pillar#1C) (कॉप�रेट शासन सु�ढ़ होगा, जवाब देही बढ़ेगी)
16.13.4 ⚰💀💀💀💀 🦁🦁 LIC IPO gets SEBI Approval (2022-March)

⇒ 100% shareholding is presently with the government → 5% to be sold to public in IPO @total
₹50,000 crore to Rs 1 lakh crore from the IPO.
⇒ LIC-IPO share allotment quotes: 1) 5% for LIC’s employees 2) 10% for Insurance policy
subscribers 3) 35% for retail investors. 4) Remaining % for others (इस IPO म� शेयर आवं टन म� �व�वध
समूह के �लए आर�ण कोटा रखा गया है.)
16.13.5 ⚰💀💀💀💀💀 LIC- Aam Admi Bima Yojana (AABY), Janshree Bima Yojana:
✋OLD SCHEMEs of Congress Raj. Discontinued / phased-out in Modi Raj. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो

16.13.6 🧔🧔⚰PM schemes for Life Insurance & Accidental (Gen) insurance
Figure 1: शराब पी के मर गए देवदास बाबू तो PM-सुर�ा बीमा योजना मे कु छ नही �मलेगा!

Table 1: 2015: Finance Ministry → Dept of Financial Services launched these two schemes.
Features 🧔🧔⚰💀💀 🕯🕯✔♿✖ Pradhan Mantri 🧔🧔⚰💀💀♿✔🍾🍾✖
Jeevan Jyoti Bima Yojana (PMJJB) Pradhan Mantri Suraksha Bima
Yojana (PMSBY)
Age 18-50 years with bank account in India. 18-70 years. Remaining same as
NRIs eligible but payment in rupee PMJJB
currency only.
Purchase LIC or any empaneled pvt. life insurance 4 Public Sector, or any empaneled
from company. pvt. General Insurance company.
Premium Rs. 330 per person/ annum Rs.12/- per person/ annum
Type LIFE Insurance General Insurance
Nature of 1 year “term” LIFE insurance. 1-year “term” accident cum
Plan Term LIFE insurance = no death, no death insurance.
money returned.
Return? Any type of death: ₹ 2 lakhs Accidental Death: murder,
िकसी भी प्रकार क� मृ�ु पर प�रवार को मुआवजा �मलेगा natural disaster etc. ₹2 lakhs
- Loss 1 eye/hand/leg: 1 lakh
- Loss 2 organs/>: max. 2 lakhs
Suicide, alcohol-drugs related
death: not eligible
Neither scheme gives hospitalization cost. (अ�ताल म� �चिक�ा खचर् के �बल क� अलग से कोई रा�श नहीं �मलेगी)
16.14 ⚰ 💊💊💊💊💊💊GENERAL INSURANCE (सामा� बीमा)
An insurance policy other than ‘life insurance’, is called General Insurance. e.g. Accident Insurance,
Health Insurance, Crop Insurance, Fire-Theft-Marine & Vehicle Insurance. दुघर्टना बीमा, �ा� बीमा,
फसल बीमा, आग-चोरी-समुद्री और वाहन बीमा
16.14.1 ⚰🚕🚕🚕🚕 🦁🦁 Public Sector General Insurance Entities: Timeline (समय रेखा)
⇒ 1948: Employees' State Insurance Corporation (ESIC) under Labour Ministry – through an act of
Parliament to protect selected category of workers. मजदू रों का �ा� बीमा
⇒ 1957: Export Credit Guarantee Corporation of India (ECGC: �नयार्त ऋण गारंटी �नगम) under
Commerce Ministry. Gives insurance cover to exporters, and credit guarantee to Bank/NBFC
who loan to exporters.

⇒ 1961: DICGC Act: banks must buy deposit insurance from it. Although not considered a General
Insurance Company in textbook sense because doesn’t directly sell insurance policy to any
individual household/businessman. (पाठ्यपु�क क� प�रभाषा म� उसको बीमा कं पनी नहीं बोल सकते)
⇒ 1972: General Insurance Nationalization Act: 107 (private) general insurance companies were
taken over by GIC and its 4 subsidiaries (viz. National insurance, New India Assurance, United
India, Oriental). Later, Govt took direct shareholding-control over these 4 subsidiaries, and left
GIC to take care of re-insurance biz. (पुन:बीमा)
⇒ 2002: Agriculture Insurance Company ltd, (formed with funding of GIC, above 4 public sector
Gen. Insurance Cos and NABARD.) कृ �ष बीमा कं पनी
⇒ 2018: Budget announced to merge (�वलीनीकरण) National Insurance Company, United India
Insurance Company, Oriental India Insurance Company- but the plan has not materialized yet.
⇒ 2018-Oct: FinMin → Dept of Financial services organized ‘Insurance Manthan’ for Public
Sector GI @Delhi. Outcome? six-point agenda: fully insured society, customer orientation,
digital -analytics for future, sustainable-prudent business, reach for everyone and talent
management. ✋How? NotIMP.
⇒ ⚾📻📻⚾🎓🎓✋2020: 1) IRDAI allows insurers to give three-month moratorium on loans. 2)
Union Cabinet has approved the capital infusion of Rs.12,450 crore in the three Public Sector
General Insurance Companies to improve their financial solvency. THIS TYPE OF Technical
NEWS IS NOTIMP for the scope of the exam. DONT WASTE TIME. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
16.14.2 ⚰🚕🚕🚕🚕 🦁🦁: (🤵🤵) General Insurance Business (Nationalisation) Amendment Bill, 2021
General Insurance Nationalisation Act 1972 General Insurance Business (Nationalisation)
(सामा� बीमा रा��ीयकरण कानून) Amendment Bill, 2021
Five General Insurance (GI) Companies To facilitate privatization of these public
brought under Govt control sector/Government owned GIs. सामा� बीमा �ेत्र क�
1) General Insurance Corp of India (GIC) सरकारी कं प�नयों के �नजीकरण का रा�ा आसान बनाने के �लए
2) National Insurance, �वधेयक
3) New India Assurance,
4) Oriental Insurance
5) United India Insurance.
Majority shareholding (minimum 51%) must Removed this rule. So, in future, govt may sell
remain under Government control (ब�मत its majority shareholding to private party (e.g.
शेयरहो��ंग सरकार के हाथ म� अ�नवायर् �प से होनी चािहए) Adani/Ambani etc) [इन पांच कं प�नयों म� ब�मत
शेयरहो��ंग सरकार के पास होना अ�नवायर् नहीं यानी िक �नजी
�ेत्र का आदमी भी मा�लक बन सकता है]
These companies’ employees’ service by the board of directors (and not by
conditions (salary, tenure, promotion, transfer, Government)- so in future if a particular
discipline rules etc) will be decided Govt. [इन government insurance company is privatised
सरकारी बीमा कं प�नयों के कमर्चारीओ क� then the private companies new bosses (e.g.

तन�ाह/वेतन,पदो�ती/तर��, तबादला इ�ािद सेवा और Adani/Ambani etc) will decide. [कं पनी के बोडर् ऑफ
�श�/अनुशासन के �नयम सरकार तय करती थी] डायरे�र यह �नयम तय कर�गे]
- 🤩🤩Pro-Arguments? Privatization will help in Professionalism, Profitability, Customer
responsiveness of these Govt companies (�नजीकरण के प� म� तकर् : पेशेवर तरीके से सं चालन होगा, मुनाफा बढ़ेगा,
ग्राहकों क� सु�वधा बढ़ेगी)
- 😰😰Anti-Arguments? 1] Similar to anti-arguments against Banking merger/consolidation (Ref:
📑📑Pillar#1B1) and [2) Similar to anti-arguments against Insurance FDI
16.14.3 🦁🦁(💉💉💉) Employees' State Insurance Corporation
- 1948: Employees' State Insurance Act → 1952: ESIC corporation (ESIC) setup under Labour
Ministry. (कमर्चारी रा� बीमा �नगम, श्रम मं त्रालय)
ESIC applicability? BEFORE 👻👻ATMA-NIRBHAR (2020)
any establishment with 10/> Compulsory Compulsory (अ�नवायर्)
employees
If establishment less than 10 workers Voluntary Compulsory (खतरनाक उधोगों के मजदू रो
→ but it’s a hazardous industry e.g. (�ै��क/वैक��क) का क-रा-बी-�न मे पं जीकरण अ�नवायर्)
(firecrackers, toxic chemicals, acid)
If establishment less than 10 workers Voluntary Voluntary
→ Non-hazardous industries (�ै��क/वैक��क) (�ै��क/वैक��क)
- 👷👷 Who are ESIC subscribers? Employee in above establishment, with monthly salary less than
₹21,000/-
- 👷👷 � Who pays ESIC premium? “x%” of employee’s wages+ “y%” from employer’s side.
- What is X and Y? notimp unless preparing for ESIC/Insurance Exams. Furthermore, Factoids
like ESIC vision-2022 to enrol 100 million workers. notIMP4UPSC
- ESIC covers both permanent employees & casual/temporary employees (= employed only for a
few days/weeks/months.) �ायी-कम� और अ�ायी/अयाथव�ध-कम� दोनो को लाभ �मलता है।

- 💼💼Budget-2021: we’ll expand this to cover more workers. But exact details yet to be disclosed.
🤩🤩An ESIC subscriber gets following benefits:

1) Medical insurance for the worker and his family from day#1 of joining (�ा� बीमा)
2) Maternity Benefit to women employees (मातृ� लाभ)
3) Monthly pension to family, if worker dies by employment related injuries. Corona-2020-21→ if
worker died of Corona, family member to be given pension. (originally such pension was to be
given for workers’ death in factory employment related accident, and not for corona illness.)
नौकरी करते व� ऑिफस/फै ��ी म� हादसे के चलते मजदू र मर गया तो प�रवार को प�शन। नया सुधार: कोरोना क� बीमारी म� मर गया
तो भी प�रवार को प�शन
4) Sickness benefit: partial wages during medical leave. (बीमारी प्रसु�वधा)
5) Monthly payment on disability (�वकलांगता मा�सक भुगतान)
6) Unemployment allowance if involuntary loss of employment- through the scheme ‘Atal Bimit
Vyakti Kalyan Yojna’. (अटल-बी�मत क�ाण = अनै��क �प से उसक� नौकरी चली गई तो बेरोजगारी भ�ा)
🪔🪔Project Panchdeep digitization and automation of ESIC processes by WIPRO (2017)
🏹🏹 📩📩Project Arrow Modernization of India Post (2008) डाक �वभाग का आधु�नक�करण
🔠🔠❓ Consider the following: [Asked in UPSC-Pre-2012]

1) Hotels and restaurants 2) Motor transport undertakings
3) Newspaper establishments 4) Private medical institutions
The employees of which of the above can have coverage under ESIC?
(a) 1, 2 and 3 only (b) 4 only (c) 1, 3 and 4 only (d) 1, 2, 3 and 4
16.14.4 👻👻🤧🤧⚰Gen Insurance → Corona Warrior ₹50 lakh cover by Govt (2020-March)
Deleting because outdated for 2023-exam cycle.

16.15💊💊 GEN → HEALTH INSURANCE SCHEMES (�ा� बीमा योजनाएं )
Fixed Benefit (�न��त लाभ) Indemnity Based (��तपू�त आधा�रत)
Fixed payment given depending on illness. Upto to the “actual hospitalization cost” from the
⇒ If the Policy agreement said “if you get total insured sum.
cancer, we’ll give you ₹50 lakhs.” ⇒ "Indemnity" = upto actual cost in treatment,
⇒ So, even if a patient spends ₹10 lakh subject to max limit. so, if ₹5 lakh ki policy=
on hospitalization, still the company ⇒ Actual treatment cost ₹2 lakh → company pays
will pay ₹50l. only ₹2 lakh
इससे कोई फकर् नहीं पड़ता िक हॉ��टल का �बल िकतना ⇒ Actual treatment cost ₹7 lakh→ company pays
आया आपको एक �न��त रकम दी जाएगी max ₹5 lakh
Further Subtypes
⇒ Cashless policy: patient simply goes to an
empanelled hospital = free treatment.
⇒ Non-Cashless policy: patient first pays hospital
bill from own pocket → submits bills to
insurance company → gets refund.
16.15.1 💊💊 😵😵: 🧐🧐Arogya Sanjeevani Policy (2020)
Figure 2: पोलीसी खरीदु तो कौन सी, Features क� तुलना करना है ब�त मु��ल! िदमाग चक्रम हो गया मेरा 😵😵
😰😰Too many types of health insurance policies with various features and premiums = a common
man gets confused which health policy is best for him. (आम आदमी भ्र�मत हो जाता है िक कौन सी �ा� �बमा
पॉ�लसी उसके �लए सव��म)
So, IRDAI ordered health insurance companies to launch a Standard Health Insurance Product
(SHIP: आदशर् �ा� बीमा उ�ाद) to cover the basic health insurance requirements of every person. With
following Features:
Table 2: you don't have to remember all features.✋✋
Name must be “Arogya Sanjeevani Policy -<name of the company>”. Any other name
NOT allowed.
Type Indemnity based Health insurance policy. (��तपू�त आधा�रत �ा� बीमा)
Premium Decided by individual insurance company. (बीमा िक�)
Benefit?  Minimum ₹50k to maximum any amount in multiple of 50k e.g. e.g.1l,1.5l…
 However higher cover = higher premium/subscription fees
 What costs will be covered? hospitalization cost, pre and post hospitalization cost, Ayush
treatment (=Ayurveda, homeopathy etc).

16.15.2 ⚰ 😵😵: 🧐🧐SARAL JEEVAN BIMA-Standardized term Life Insurance policy
Matter / logic is similar to previous topic given above.
16.15.3 💊💊💊💊Gen→ Health Insurance → Corona Kavach vs Rakshak
Figure 3: है कोई �ा� बीमा पॉ�लसी जो कोरोना के भारी हॉ��टल �बल से 'र�ा' करवा दे मेरी?!
2020: IRDAI issued guidelines for the general insurance & health insurance companies to launch
standard health policies against Covid-19, with following standard names:
🤧🤧🛡🛡😵😵Corona Kavach 🤧🤧�🤑🤑 Corona Rakshak
Compulsion Gen. insurance & health insurance optional for company to launch this
companies have to compulsorily launch policy (अ�नवायर् नहीं है वैक��क)
this
Type "Indemnity" = upto actual cost in ⇒ Fixed Benefit Plan
treatment, subject to max limit. so, if ₹5 ⇒ Fixed amount of money if
lakh ki policy= subscribers gets Corona.
⇒ Actual treatment cost 2 lakh → Irrespective of actual treatment
company pays only 2 lakh cost.
⇒ Actual treatment cost 7 lakh→
company pays max 5 lakh
Coverage ₹50,000 to ₹5 lakh ₹50k to 2.5 lakh
Premium Decided by an individual company. same as left column
🎓🎓✋further the technical details / differences = poor cost:benefit for UPSC.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
16.15.4 💊💊♿ Niramya Health Insurance for PH. ✋OLD SCHEME DONOT-LOOSE-SLEEP
⇒ Boss? By Dept. of Empowerment of Person with disabilities (िद�ांगजन सश��करण �वभाग)→
Oriental Insurance Company. 🤩🤩Benefit? upto ₹1 lakh health insurance for handicapped
⇒ Premium? Orphan Minor PH= ZERO; Other PH: ₹250-500, depending on poverty level
16.15.5 💊💊💊💊 Rashtriya Swasthya Bima Yojana (RSBY: 2008)

Fee? One time registration ₹ 30. No premium by beneficiary. Govt pays premium.🤩🤩Benefits?
⇒ ₹ 30k for medical treatment [smartcard, cashless: even existing ailment, even private hospital.]
⇒ ₹ 25k for accidental death. And if breadwinner dies: ₹ 50 x 15 days.
⇒ ++Senior Citizen Health Insurance Scheme (SCHIS) –if 60/> they get additional ₹ 30k for
treatment. (व�र� नाग�रक �ा� बीमा योजना)

⇒ Both RSBY and SCHIS are subsumed in PM-JAY (2018) आयु�ान भारत के साथ �वलीन
16.15.6 💊💊💊💊: 🧔🧔Why public health insurance for poor? (गरीबों को सरकारी �ा� बीमा �ों �दया जाए)
⇒ Public goods = water, sanitation, transport, medical care, schools (सावर्ज�नक व�ुएं-पानी ��ता प�रवहन
�ू ल �चिक�ा). Rich people can seek private alternatives/Even migrate to better countries. But Poor
cannot do it → Govt support necessary. अमीर लोग अ�� सेवाएं �बजी बाजार से खरीद सकते ह�, लेिकन गरीब को
सरकारी मदद क� ज�रत
⇒ “Time Horizon Problem” in a democracy: Frequent election cycles = Govts focus more on short
term gain but Healthcare, nutrition, schools: Long gestation period so govts may neglect it. लोकतं त्र
म� समय ��तज सम�ा: चुनाव के च�र म� सरकार दीघर् अव�ध के सुधारों क� जगह लघु अव�ध के लोकलुभावन पर �ान देती है,
�ा� पोषण �श�ा नजरअंदाज.
16.15.7 💊💊💊💊5⃣L /👪👪/📆📆 Ayushman Bharat / PM Jan Aroyga Yojana (PMJAY)

� (Introduction: DATA) In the last decade, in-patient hospitalization (अ�ताल म� भत� रोगी i.e. patient
who stays in hospital overnight) has increased nearly 300% in India. More than 80% of the hospital
expenditure met by out of pocket (खुद क� जेब से). So, rural households are forced to use household
savings and borrowings = vicious cycle of poverty (गरीबी का �वषचक्र). So, Ayushman Bharat launched
in Budget 2018, with two components:
Figure 4: ब�े के इलाज के �लए कोई पैसा दे दो!
A) 1.5 lakh Primary Health Care Centers (PHC) to be transformed into Health & Wellness Centres
with Free drugs, checkup, mother-child care etc. (�ा� और क�ाण क� द्र)
B) National Health Protection Scheme (AB-NHPS) → Later renamed ‘PM Jan Arogya Yojana
(PMJAY)’ and launched with Motto “Swasthya Aapka, Saath Hamara” from Ranchi, Jharkhand
(2018, Sept). It has subsumed Rashtriya Swasthya Bima Yojana (RSBY) & Senior Citizen Health
Insurance Scheme (SCHIS).

16.15.7.1 🧔🧔🧔🧔🧔🧔5⃣L /👪👪/📆📆 PM Jan Arogya Yojana (PMJAY, 2018)?
⇒ What is given? A FREE insurance cover upto ₹ 5 lakh per family,

per year for secondary and tertiary hospitalization. All pre-existing disease covered from day 1.
Pre and post hospitalization & medicine expenses.
⇒ Cashless and paperless access [NITI partnered web portal, with privacy protection]
⇒ Beneficiaries? Socio-Economic Caste Census (SECC: सामा�जक आ�थक जा�त जनगणना) data → + 8 cr
rural + 2 cr urban = 10 cr families= ~50 crore people.
⇒ No limit on family size. No limit on age. (प�रवार म� िकतने सद�, उनक� �ा उम्र है- कोई सीमा नहीं)
⇒ Where to get treatment? (इलाज कहां पर होगा)= All public hospitals and empaneled private hospitals
(by the respective States). [इलाज होगा सरकारी अ�ताल और रा� सरकार द्वारा अ�धकृ त �नजी अ�ताल म�]
⇒ Hospitals to have Pradhan Mantri Aarogya Mitras (PMAMs/hospital-receptionist-type-ke-log) to
help/guide patients in this scheme. These PMAMs are trained by Ministry of Skill
Development. (कौश� �वकास मं त्रालय द्वारा आरो� �मत्र को तालीम)
16.15.8 PM-JAY Sub-schemes

1. PM SEHAT (Social Endeavour for Health and Telemedicine) 2020- ज�ू क�ीर के सभी �नवा�सयों के �लए
a. BEFORE: 6 lakh families of the J&K getting Ayushman Bharat Scheme. (= poor family
selected through socio economic caste census 2011)
b. AFTER PM SEHAT: All residents of J&K (=21 families, rich-poor everyone) eligible for
₹5 lakh health insurance of PM-JAY scheme. Even if they are traveling outside Jammu
Kashmir, in other parts of India, they can avail treatment at PM-JAY-walli hospitals.
2. Ayushman CAPF scheme (2021-Jan) क� द्रीय सश� पु�लस बल
a. Joint initiative of Home Ministry & National Health Authority

b. Assam Rifles, Border Security Force ( BSF), Sashastra Seema Bal (SSB), Central Reserve
Police Force (CRPF), Central Industrial Security Force (CISF), National Security Guard
(NSG), and Indo-Tibetan Border Police (ITBP)
c. Their Personnel & their family members also covered
16.15.8.1 �PMJAY → National Health Authority (रा��ीय �ा� प्रा�धकरण)

⇒ Originally it was an “Agency”, then restructured & renamed into “Authority” (2019).
⇒ NHA oversees the implementation of PM-JAY, operational guidelines, collaborate with
insurance companies & IRDAI, running web-platform etc. (योजना को िक्रया��त करेगा बीमा कं प�नयों के साथ
तालमेल �बठाएगा)
⇒ NHA is an ‘attached (adjunct) office (सं ल� कायार्लय)’ with health ministry (�ा� मं त्रालय). i.e. Health
Ministry only looks after parliamentary matters like replying in question hour, annual reports
etc. thus giving NHA more freedom in day to day functions. (रोजाना काय� म� मं त्रालय क� दखल कम)
⇒ NHA has a Chief Executive Officer (CEO) with status of Secretary to Govt of India (स�चव).
⇒ Above NHA → “Governing Board” (शासक-मं डल)
⇒ Chairman: Minister of Health & Family Welfare (�ा�-प�रवार क�ाण मं त्रालय)
⇒ Members: NITI Ayog CEO, NHA-CEO & other govt officials and experts (�वशेष�).
⇒ States will be represented in the Governing Board on rotational basis (चक्रानुक्रम).
16.15.9 Ayushman Bharat Digital Mission

⇒ NHA also implements “Ayushman Bharat National Digital Health Mission” (Basically Sarkaari-
google-drive mein x-ray report store kro yojana!) More in 📑📑Pillar#6:health schemes
16.15.9.1 PMJAY → State Health Agency (SHA)
- Each State to form a State Health Agency (SHA: रा� �ा� एज�सी) to get the scheme
implementation.
16.15.9.2 PMJAY → Funding / Cost:sharing
Category (श्रेणी) Cost sharing (खचर् क� साझेदारी)
"Special Category States" (�वशेष श्रेणी के रा�): Union contributes 90%: while
- North-Eastern States, and State contributes 10% of the
A
- TWO Himalayan Hilly States: Himachal Pradesh and cost
Uttarakhand#
- Other States: who are not in above category (UP, Bihar, 60:40
etc.)
B - Union territory (UT) with legislature: Delhi,
Puducherry, Jammu & Kashmir. (�वधा�यका वाले क� द्र शा�सत
प्रदेश)

Category (श्रेणी) Cost sharing (खचर् क� साझेदारी)
- UT without legislature: Ladakh, Andaman Nicobar etc. 100%
C
(�बना �वधा�यका के क� द्र शा�सत प्रदेश)
- #
Before the removal of Article 370 (in 2019), the State of J&K was previously in Special category,
so it got 90:10 funding.
- Afterwards: J&K is UT with legislature, so, J&K will get 60:40. So, 2019-Aug: Central
Government considering creating a new category ‘Hill Union Territory (पहाड़ी क� द्र शा�सत प्रदेश)’ so
J&K may continue to received 90:10 funding. But, no need for 🎓🎓✋#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
16.15.9.3 💼💼Budget-2020 on Ayushman Bharat PM-JAY
 We’ll setup hospitals in aspirational (=backward) districts for treatment of PM-JAY
beneficiaries. Hospital construction Funding: Public private partnership (PPP) → Public side’s
funding will be provided using ₹₹ from health cess on imported medical devices.(More about
health cess in 📑📑Pillar#2-Taxation) आयात होने वाले �चिक�क उपकरणों पर �ा� उपकर लगाकर उस पैसों से
�पछड़े �जलों म� अ�ताल बनाएं गे
 We’ll use Artificial Intelligence and Machine Learning (AI-ML) to take preventive actions
against the spread of diseases. Total ₹6400 cr allotted for PM-JAY. (बीमा�रयों का प्रसार रोकने के �लए कृ �त्रम
बु�द्धम�ा का उपयोग)
16.15.9.4 � PMJAY → Challenges? (चुनौ�तयां)
- 😰😰⚔ Cooperative Federalism spirit is missing. (सहकारी सं घवाद क� भावना क� कमी)

o States have to sign agreement with Union to begin operations. But, W.Bengal already has
state-govt sponsored “Swasthyasathi” scheme in State with similar features so CM
Mamta has left PM-JAY (2019, Jan).
o 2021: Rajasthan Right To Health Bill 2021 (�ा� अ�धकार �वधेयक) ₹5lakh health insurance
coverage available at 1) free of cost for workers, small- marginal farmers. 2) others (e.g.
Middle class) can avail at ₹850/year.
o Similar issues in other Non-BJP states. गैर बीजेपी रा� इसे अपनाने म� उ�ुकता / सहयोग नहीं िदखा रहे
- 😰😰💵💵 Fiscal Challenges (राजकोषीय चुनौ�तयां): Budgetary allocations insufficient. If govt borrows
more money→ ⏫ in fiscal deficit. Private hospitals may perform unnecessary surgeries &
prescribe excessive amount of medicines to extract more money from govt. (अनाव�क �प से महंगी
दवाई और श�िक्रया)
- 😰😰🗃🗃 Administrative Challenges (प्रशास�नक चुनौ�तयां):
o Beneficiary identification (लाभाथ� क� सही पहचान. अमीर लोग भी गरीब होने का नाटक करके मु� इलाज
करवा ले)
o Doctor to patient ratio (मरीजो के अनुपात मे डोकटरों क� कमी)

o Physical and IT infrastructure, Transport, connectivity upto village level. (बु�नयादी सं रचना,
प�रवहन, सं चार िक गांव गांव तक प�ंचन नहीं है)
o Medical privacy of Patient- data may be leaked to pharma companies for their clinical
trials and commercial motives. (�चिक�ा डाटा क� गोपनीयता/�नजता.)
16.15.9.5 📔📔📔📔ES21 on PM-JAY (कु ल �मलाकर घी-दू ध क� न�दयां बह रही है-आ�थक सव��ण)
⇒ 📔📔📔📔ES21 analysed the health outcomes of West Bengal (Which did not implement PM-JAY
scheme) and its neighbouring States - Bihar, Assam and Sikkim (Who have implemented the
PM-JAY scheme) between 2015-2019. And found out W.Bengal has lagged behind them on
various health indicators, including Family planning and HIV/AIDS.. प��म बं गाल क� तृणमूल सरकार ने
प्रधानमं त्री जन आरो� योजना नहीं लागू क� इस�लए वह �ा� म� �पछड़ी रह गई और �बहार आसाम और �स��म आगे बढ़ गए
�ोंिक उन पड़ोसी रा�ों म� इस योजना का अमल �आ है
⇒ PMJAY also helped increasing awareness regarding Family planning and HIV/AIDS. (अ�ताल यात्रा
के चलते प�रवार �नयोजन और एचआईवी क� जागृ�त भी बढ़ी है)
⇒ During the Corona lockdown → Many of the surgical procedures were postponed due to
infection fear, Transportation lockdown, Financial hardships= so PM-JAY claims ⏬reduced.
हालांिक कोरोना के चलते ब�त सारी सजर्री/श� िक्रया को ��गत िकया गया था
⇒ Still Poor people continued to avail dialysis in PM-JAY. = Proves success and reliance of the
scheme. लेिकन गरीब लोग िफर भी डाय�ल�सस करवाने आते ही रहे �जससे सा�बत होता है िक गरीब इस योजना म� �व�ास रखते ह�
16.15.9.6 � Conclusion: PM-JAY (�न�षर्)

⇒ Sustainable Development Goal (SDG#3): ensure healthy lives and well-beings at all ages. PM-
JAY is a right step in this regard, provided that aforementioned challenges are addressed.(More
about SDG in 📑📑Pillar#6) [सतत �वकास ल�#3- सभी के �लए �� जीवन सु�न��त करने म� योजना मदद करेगी] OR
⇒ Disease burden robs a poor person of his wages and savings. If aforementioned challenges are
addressed, PM-JAY can greatly help in poverty removal and human development in India. OR
(बीमारी म� गरीब आदमी के वेतन और बचत के पैसे बबार्द नहीं होंगे- �जससे गरीबी �नवारण और मानव �वकास म� मदद)
⇒ If above challenges are addressed, PM-JAY can improve health outcomes, productivity and
efficiency of Indian population, thus leading to improvement GDP and in quality of life. (भारतीय
जनसं �ा क� उ�ादकता और द�ता म� बढ़ोतरी → सकल घरेलू उ�ाद और और जीवन के �र म� सुधार)
🔠🔠❓ MCQ. Which is not a feature of the Ayushman Bharat Scheme? (CDS-i-2020)
(a) There is no cap on family size and age. (प�रवार क� सद�ों क� सं �ा और आयु पर कोई सीमा नहीं)
(b) The scheme includes pre- and post-hospitalization expenses.
(c) A defined transport allowance per hospitalization will also be paid to the beneficiary.
(d) The scheme provides a benefit cover of Rs. 10 lakh per family.
🔠🔠❓ MCQ. Ayushman Bharat is a national health insurance system for: (UPSC-Geologist-2020)
a) women b) every citizen c) old age people d) poor and vulnerable.

🔠🔠❓ MCQ. Which are the benefits of the Pradhan Mantri Jan Arogya Yojana? (CDS-i-2019)
1. Free treatment available at all public and empanelled private hospitals.
2. Cashless and paperless access to quality health care services. नकदी रिहत और कागज रिहत प्रशास�नक प्रिक्रया
3. Govt provides health insurance up to ₹ 5 lakh per family per year.
4. Pre-existing diseases are not covered. पहले से मौजूद बीमा�रयों को कवर नहीं िकया जाता है
Codes: a) 1 and 3 only b) 1 , 2 and 3 c) 2 and 4 only d) 2, 3 and 4
16.16 ⚰ 💊💊💊💊💊💊 GENERAL INSURANCE → OTHER THAN HEALTH INSURANCE

16.16.1 🧔🧔⚰🌽🌽 Pradhan Mantri Fasal Bima Yojana (2016)
- Against natural calamities, pests, diseases; (प्राकृ �तक आपदाएँ , क�ट, बीमा�रयाँ;)
- Protects before, during and after harvest (फसल क� कटाई).
- Premium (बीमा-िक�) paid by farmers against the total insured amount: Rabi winter crops (1.5%)
– Kharif summer monsoon crops (2%) –Horticulture & Commercial crops other than oilseed &
pulses (5%). Remainder premium is paid by Union: State Gov. It’s optional for States to join.
- Nodal Ministry: Agri Min → Public sector general insurance companies, and empanelled private
sector insurance companies. सरकारी सामा� बीमा कं प�नयां तथा �नजी �ेत्र क� ऐसी सामा� बीमा कं प�नयां �जनको कृ �ष
मं त्रालय ने इस योजना लागू करने के �लए सूचीबद्ध िकया है
- 😰😰Challenges? (इस योजना म� �ा चुनौ�तयां ह�)
o States not paying their portion- they feel premium amount very high, so, Pvt insurance
companies not settling claims quickly. रा� सरकार बीमा कं प�नयों क� िक� का िह�ा नहीं चुका पा रहे,
बीमा कं पनी वाले िकसानों को मुआवजा नहीं दे रहे, गुजरात, प��म बं गाल सिहत कई रा�ों ने इस योजना का अमल बं द
कर िदया है.
o W.Bengal stopped it, & launched its own Bangla Fasal Bima Yojana (2019). Gujarat
stopped it & launched ‘Mukhya Mantri Kisan Sahay Yojana (2020)’ so cooperative
federalism missing.
o Union upgraded technical guidelines to fix the delays, but response not good. (भुगतान म�
देरी क� सम�ा को दु�� करने के �लए क� द्र सरकार ने िदशा�नद�शों म� बदलाव तो िकए लेिकन कु छ ख़ास सुधार नहीं आया)

16.16.2 🧔🧔⚰🌽🌽 PM-FBY (2.0) revamped in 2020
Before-2020 From 2020-Kharif
Suppose a kharif crop insurance premium = Suppose a kharif crop insurance premium = ₹100.
₹100. ⇒ Farmer pays ₹2 of the premium
⇒ Farmer paid ₹2 of the premium ⇒ Union pays only ₹25 to 30 based on whether
⇒ Union paid ₹49 + State paid ₹49. In it’s irrigated or unirrigated respectively.
other words, Union and States shared ⇒ State may have to pay ₹68-73. So, states’
their premium burden half-half (50:50). burden increased.
⇒ However, the Union will bear 90:10 of the
burden in case of North Eastern States.
Compulsory for farmer to buy this insurance Voluntary (�ै��क) for farmers. (ब�क लोन पास करवाने के
policy, IF he wanted crop loans from bank �लए िकसान को यह योजना यह बीमा �नकलवाना अ�नवायर् निह)
Multiple Perils (एका�धक आपदाए) covered such ‘Single-peril’ (एकाक� आपदा) insurance can be taken
as flood, drought, hailstorm. But, farmers in e.g. “protection only against drought.” This will
Rajasthan had no fear of floods. help reduce ⏬premium amount.
------ Updated methodology for assessment of crop loss
🔠🔠❓MCQ. Find correct statements about ‘Pradhan Mantri Fasal Bima Yojana': (Prelims-2016)
1. Under this scheme, farmers will have to pay a uniform premium of 2% for any crop they
cultivate in any season of the year. िकसी भी फसल म� �सफर् 2% बीमा िक� िकसान ने चुकानी होगी
2. This scheme covers post-harvest losses arising out of cyclones and unseasonal rains.
16.16.3 🧔🧔⚰🌽🌽 Other Agriculture Insurance Schemes? (अ� कु छ फ़सल बीमा योजना)
- Apart from PM Fasal Bima, there is Restructured Weather Based Crop Insurance Scheme
(RWBCIS, 2016)- protects against weather only. (so not pests/diseases).
- There was a National Agricultural Insurance Scheme and Modified (NAIS), but PM Fasal Bima
subsumed it. लेिकन वो सब याद रखने से परी�ा म� बहोत लाभ नहीं.
16.16.4 ⛴🔪🔪(�🏦🏦) Insurance to Banks on Exporters’NPA → NIRVIC Scheme (2019)
Figure 5: �नयार्तक ब�क का कजार् नहीं चुकाएगा तो नुकसान क� भरपाई कौन करेगा
Boss? Commerce Ministry → Export Credit Guarantee Corporation (ECGC)

⇒ NIRVIK (Niryat Rin Vikas Yojana) is an Export Credit Insurance Scheme (ECIS).

⇒ Exporter takes a loan from a bank. But if he defaults then ECGC will cover upto 90% of his
principal + interest losses to the bank. (Before NIRVIC scheme, it was only 60%)
⇒ Exporters pay ‘premium (बीमा-िक�)’ to the bank → bank pays it to ECGC. (Exporter need not
goto ECGC office himself. He can get the application form from the loan giving bank itself.)
⇒ Premium rates depend on sector e.g. diamond, chemical etc. exact figures=NOTIMP
16.16.5 🚕🚕🚕🚕 Third Party Motor Insurance (थडर् पाट� मोटर इं�ोर�स)
- Motor Vehicles Act (1988) requires all motor vehicle owners to purchase it. (कानूनी �प से अ�नवायर्)
- Third party (TP) insurance: When your vehicle hits another vehicle, person or property → that
victim (third party) registers a case, gets compensation. IRDAI regulates premium rates & other
norms.
- SC judgement (2019): TP insurance validity should be 3-5 years, so even if owner forgets to
renew annually, the third party is protected. (अवधी �ादा होनी चािहए)
16.16.6 🚕🚕🚕🚕 Own Damage Insurance (OD: मोटर सं बं �धत �यं के नुकसान का बीमा )
- It protects owner of vehicle against theft, vandalism, accident, fire.
16.16.7 🏗🏗⚖📜📜Title Insurance (जमीन / इमारत का टाइटल बीमा)
Figure 6: जमीन मकान �ववादों के कानूनी लफड़ो म� नुकसान से बचने का �बमा #गुलाबो-�सताबो
- 'Title' (अ�धकार-�वलेख) means a legal document showing ownership of a property. 'Title dispute':
usually happens when multiple persons are claiming ownership of the same land / building.
- 'Title Insurance' protects the new buyer in case of such legal disputes (by refunding the money he
had spent in buying land, construction, legal expenses etc).
- Real Estate Regulation and Development Act 2016 (RERA) requires the builders to buy this type
of insurance. More on RERA in 📑📑pillar#5: urban infrastructure.
16.16.8 💉💉⚖📜📜Clinical Trial Liability Insurance

⇒ Type: General Insurance Cover
⇒ Objective: To protect the pharmaceutical company From legal expenses/Lawsuits, if a volunteer
patient suffers damage/death in clinical trials. (यिद कोई �� नैदा�नक परी�णों म� ��त / मृ�ु तो फ़ामार् क�नी
को बीमा क�नी मदद करेगी।)

16.16.9 🔥🔥🔥🔥🏡🏡🏭🏭 Bharat Griha Raksha & other: Standardized home/factory insurance policies
- IRDAI ordered @General Insurance companies to sell 1) Bharat Griha Raksha, 2) Bharat
Sookshma Udyam Suraksha 3) Bharat Laghu Udyam Suraksha from 1/4/2021 onwards.
- Type? Standard Fire and Special Perils (SFSP) Policy.
- Beneficiaries? protect homes and factories of micro, small and medium enterprises (MSMEs).
- What damages are covered? fire, natural catastrophes, riot, strike/hartal, malicious damages,
terrorism,, overflowing water tanks etc upto ₹50 crores.
16.16.10 🌬🌬🌬🌬(Proposed) Catastrophe Insurance (आपदा बीमा)

⇒ Protects the client from natural and manmade disasters.
⇒ Presently, farmers’ crops are protected from natural disasters through PM-Fasal Bima Yojana.
But, if his own home was destroyed in floods, it’s not covered → Union & State Governments
forced to use taxpayers' money for paying compensation to victims of floods, cyclones etc.
⇒ IRDAI doing some studies to launch catastrophe insurance (or CAT cover) for poor people.
16.16.11 🌬🌬🌬🌬 Catastrophe Bonds, Surety Bonds:
📑📑Refer Pillar#1C: SEBI-Sharemarket-यह हम पहले ही पढ़ चुके ह�
16.16.12 👿👿👿👿General Insurance → Cyber Insurance (साइबर बीमा)

- It covers the losses related to malware attack, phishing and data, identity theft, ransom payment
demand made by the hackers, data restoration costs, business interruption losses due to
cyberattacks. The loss of reputation, damage to mental health etc.
- Corona lockdown → home-from-home through computer → demand for such policies ⏫.
- Bajaj Allianz and HDFC ERGO are notable general insurance companies offering such products.
🔠🔠❓In India, under cyber insurance for individuals, which of the following benefits are generally covered,
in addition to payment for the loss of funds and other benefits? (UPSC-Prelims-2020 SetB.Q90)
1. Cost of restoration of the computer system in case of malware disrupting access to one’s
computer
2. Cost of a new computer if some miscreant wilfully damages it, if proved so
3. Cost of hiring a specialized consultant to minimize the loss in case of cyber extortion
4. Cost of defence in the Court of Law if any third party files a suit
Answer Codes: [a) 1, 2 and 4 only [b) 1, 3 and 4 only [c) 2 and 3 only [d) 1, 2, 3 and 4
16.16.13 💻💻eIA: e-Insurance account

⇒ Shares/Bonds are stored digitally in DEMAT accounts. (More in 📑📑Pillar#1C)

⇒ Similarly, Insurance policies can be stored digitally in e-Insurance accounts e.g. NSDL's National
Insurance Repository (NIR). (बीमा द�ावेजों को िड�जटल �प से सं ग्रिहत करना)
⇒ 🤩🤩Benefit? convenience to customers especially if he bought insurance policies from different
companies e.g. Vehicle insurance, fire insurance, Health Insurance, Life Insurance. He can easily
track their expiry date/ online renewal etc. in one portal. (सद�ता का ऑनलाइन नवीनीकरण आसान होगा)
16.17⚰↗⚰RE-INSURANCE (पुनब�मा)
- DICGCI Act (1961) requires banks to take deposit insurance from DICGCI.
- Similarly, Insurance Act (1938) requires insurance companies take ‘re-insurance’ on their biz.
बीमा कं पनी ने �यं का "धं धा चौपट बचाओ" बीमा लेना होगा
- Previously, only GIC was the sole-reinsurer, but then norms liberalized (2015). New re-
insurance cos allowed. e.g. India’s ITI Reinsurance Ltd. Even foreign re-insurers such as Swiss
Re, Munich Re, General Reinsurance (Warren Buffet) are permitted. (पहले के वल जीआईसी, लेिकन अब
अनेक कं प�नयों को अनुम�त दी गई)
- 🤩🤩Benefits of multiple re-insurance cos? GIC’s monopoly in dictating re-insurance premium
rates is gone. So, insurance cos’ cost of operations to decline → biz. expansion, launch
innovative products etc.
16.17.1 😷😷(🤵🤵🤵🤵🤵🤵)PANDEMIC RISK POOL proposal by IRDAI

⇒ Corona= many people died/sick = insurance companies required to pay large sum of
compensation. This is putting lot of Business stress/losses on insurance and reinsurance
companies. (महामारी म� काफ� लोग बीमार �ए/मर गए. बीमा कं प�नयों ने मुआवजा देना पड़ा, मुनाफ़े पर गहरा तनाव)
⇒ PANDEMIC RISK POOL = Insurance companies and government will contribute ₹₹ into this
fund to help in insurance companies in future pandemics. (बीमा कं प�नयां और सरकार �मलकर एक
�न�ध/कोष/फं ड म� पैसा जमा कर� तािक भ�व� म� महामारीज� तनावपूणर् ��तयों म� बीमा कं पनी क� मदद हो सके ।)

16.18 ⚰�IRDAI: THE INSURANCE SECTOR REGULATOR (बीमा �ेत्र �नयं त्रक)
- 1996: IRDA setup→ given statutory status in 1999 (वैधा�नक सं �ा बनी)
Org - 2014: Its name changed to Insurance Regulatory and Development
सं गठन Authority of India (IRDAI: भारतीय बीमा �व�नयामक एवं �वकास प्रा�धकरण)
- HQ: @Hyderabad, Telangana. (Whereas RBI & SEBI HQs @Mumbai.)
Structure 1 Chairman: Dr. Debasish Panda (Ex-IAS) (5/65),
सं रचना 9 members (5/62) = Total 10. They can be re-appointed. (पुन�नयु�� सं भव है)
⇒ IRDAI gives separate licenses for life, general & re-insurance companies.
⇒ Prescribes norms for insurance companies for accounting, solvency, audit,
commission to agents etc. It can penalize companies, suspend or cancel
Functions registration. Appeal → Securities appellate Tribunal (SAT) (More in
कायर् 📑📑Pillar#1C)
⇒ Norms for agents & brokers, banks selling products (Bancassurance), Surveyor/
Loss Assessor, and Third-Party Administrators (e.g. Hospital)
⇒ Consumer grievance redressal via Insurance Ombudsman (�शकायत �नवारण अ�धकारी).
IRDAI is member of Financial Stability & Development Council (FSDC). Ref: 📑📑1C
16.18.1 ⚰�Domestic Systemically Important Insurers (D-SIIs, (घरेलु प्रणालीबद्ध मह�पूणर् बीमाकतार्)
- IRDAI prepares a list of big insurance companies that are “too big to fail” i.e. they feel it will
create very great economic distress for India. (यिद ये बीमा कं प�नयां �गर गयी तो अथर्तंत्र म� भारी तबाही होगी)
- IRDAI labels them as D-SIIs & imposes additional rules/monitoring/supervision on them.
- Latest List: 1) Life Insurance Corporation of India (LIC), 2) General Insurance Corporation of
India (GIC), 3) The New India Assurance Co. Ltd. (NIACL) (उनपर �ादा स� �नयम/�नगरानी रख�गे)
16.19⚰😿😿 CHALLENGES TO INSURANCE INDUSTRY (चुनौ�तयां)
1) 😰😰Capital intensive industry (पूंजी प्रधान उद्योग): Private players not generating enough profits due
to poor returns in sharemarket. Heavy costs in paying agent commission rates and marketing
advertisements.
2) 😰😰Corona= many people died/sick = insurance companies required to pay large sum of
compensation. This is putting lot of Business stress/losses on insurance and reinsurance
companies. (महामारी म� काफ� लोग बीमार �ए/मर गए. बीमा कं प�नयों ने मुआवजा देना पड़ा, मुनाफ़े पर गहरा तनाव)
3) 😰😰Premiums expensive. Will become more expensive to cover Corona losses. (फ़�स महंगे हो रही है)
4) 😰😰Insurance agents need more skill, network than banker. For bankers- loan recovery easier
(SARFAESI, I&B) compared to an insurance company that invested into equities/shares of a
weak company. (बीमा एज�ट भी एक ब�कर के मुक़ाबले �ादा कौशल चािहए)
5) 😰😰Rural people: either disinterested / un-served despite IRDAI norms. (ग्रामीण लोग नीरसता िदखाते ह�)
6) 😰😰People hesitate in buying House / Factory / Fire / Theft insurance due to fear of discovery of
‘asset value’- IT/GST raids & ransom demands. → India’s “insurance gap” is high i.e. all the

assets are not insured. (लोग अपनी सं प�� का पूणर् �प से �बमा नहीं करवाते, �ोंिक उ�� आयकर �वभाग के छापे और
दबं गों क� िफरोती से डर लगता है)
7) 😰😰Insurance: Highly regulated, but Healthcare: highly unregulated, so
o Supply demand mismatch: between (doctors-hospitals) vs. patients.
o Standardized medical treatment costs difficult to ascertain, unlike car damage.
8) 😰😰Delays in claim settlement= fewer repeat customers for health insurance. (मुआवज़े म� �वलं ब)
16.19.1 ⚰📈📈Insurance progress indicators (बीमा प्रग�त सं के तक)

Table 3:✋ figures are not important.
As per Insurance penetration (%: बीमा प्रवेश) Insurance Density ($:बीमा घन�)
📔📔📔📔ES22 =Premium divided by GDP =Premium divided by population
Life (2020) 3.20% $59
Non-Life (2020) 1.00% $19
⇒ For India, these indicators ↗Improved in 2011-2020, but zigzag /non-steady graph pattern
⇒ For India, these indicators are low compared to Malaysia, Thailand & many other developing
countries due to aforementioned challenges. (उ� सूचकांकों म� भारत अ� देशों के मुक़ाबले मे काफ़� पीछे है)
16.19.2 🇺🇺🇸🇸💸💸FDI limits in Insurance sector? (बीमा �ेत्र मे प्र�� वदेशी �नवेश क� सीमा)
⇒ Foreign Direct Investment (FDI) is the (more than 10% equity / share) investment made by a
foreign entity into an Indian company, with the objective to get involved in the management /
production of that Indian company. (िकसी �वदेशी इकाई द्वारा एक भारतीय कं पनी म� 10% से �ादा शेयर �नवेश
करना उसे कहते ह� प्र�� वदेशी �नवेश) (More on FDI 📑📑Pillar#3A)
⇒ e.g. 2018: Walmart-USA bought 77% shares in Flipkart-India @$16 billion.
FDI limits in insurance sector→ 😰😰BEFORE 🤩🤩AFTER (Automatic Route)

State owned/public sector Life insurance NO RULE 20% (done in 2022)
corporation i.e. LIC (सावर्ज�नक �ेत्र का जीवन बीमा �नगम)
Insurance company itself (Except LIC) 49% 74%** (done in 2021)
Insurance intermediaries e.g. agent/broker, 49% 100% (done in 2020)
surveyor/loss-assessor, third party
administrators (hospital who give treat to health
insurance clients) (बीमा �ेत्र के �बचौ�लये/द�े)
** 💼💼Budget-2021: announced to amend Insurance Act, 1938 to ⏫ FDI limit from 49% to 74% in
Insurance Companies. With following safeguards: हालांिक कु छ शत� के साथ →
⇒ the Majority of Directors on the Board and key management persons must be Resident Indians.
बोडर् ऑफ डायरे�र तथा कं पनी प्रबं धन के व�र� पदा�धका�रयों म� ब�म�त भारतीय �नवासी होने चािहए
⇒ At least 50% of Directors must be Independent directors. (�तं त्र डायरे�र) (Ref#1C)
⇒ Certain % of profits must be retained as general reserve. मुनाफे का कु छ प्र�तशत सामा� आर��त �न�ध के �प
म� अलग से रखना होगा, ताक� अगर कोई कांड हो जाए तो इन पैसों से ��तपू�त हो सके .
16.19.3 Should we ⏫ FDI beyond 49% in insurance companies? (�ा सीमा बढ़ाए?)
🤗🤗 � yes we should raise FDI limits (हां बढ़ाई जाए) 😣😣 � No, we shouldn’t raise FDI
Indian insurance companies will get additional capital Foreign investors will put pressure on
from Foreign investors = this can help mitigating above Indian insurance companies to
challenges.(�वदेशी �नवेशकों से अ�त�र� पूंजी �मलेगी तो फ़ायदा है) generate more profit. So
- They can expand overseas, mobilize money from - investment in junk bonds that offer
Bangladesh/Kenya’s market etc. & invest it in higher return → Collapse. (तुरंत
Indian economy. (�वदेशो का पैसा भारतीय अथर्त� मे लाना) मुनाफा कमाने क� चाह म� �ादा जो�खम वाले
- IRDAI prescribes “Investment pattern”, there is बॉ� म� �नवेश)
ombudsman for customer complaints. - Insurance company may reject
- Further, Companies Act has norms for independent insurance claims for frivolous
directors, auditing, whistleblower protection, CSR. reasons to increase its profitability
So, apprehension that foreign investors will cause to keep foreign investors happy.
mischief = unlikely. (�नगरानी/�नयं त्रण के पयार्� प्रावधान है, (मुनाफाखोरी के �लए ग्राहकों के बीमादावों को
कं प�नयो के �लए बदमाशी करना मु��ल) अ�ीकार करना)
- 💼💼Budget-2021 too has mentioned safeguards.
- China, Thailand, Indonesia et al ⏫ FDI limits in
insurance sector. We should also follow their path.
17 � → � (💰💰💰💰) PENSION (प�शन)

- ⚰Insurance: person/his family eligible to receive ₹ ₹ if he suffers death / damage. e.g. PM
Jeevan Jyoti: ₹ 2 lakhs on death. जीवन बीमा का लाभ लेना है तो �� का मरना ज�री है

- �Pension: Person eligible to receive monthly ₹ ₹ when he retires. And when he dies, his wife
(is usually) eligible to receive monthly ₹ ₹. When she also dies, scheme stops. बुढ़ापे म� प�शन �मलता रहे.
आपके मरने पर आपके प�त या प�ी को भी प�शन �मलता रहे।
17.11�🦁🦁 EMPLOYEE PROVIDENT FUND ORG. (कमर्चारी भ�व� �न�ध सं गठन)
- 1951-52: EPFO was setup initially by ordinance & then Act.
- Nodal: Labour Ministry (श्रम मं त्रालय).
- EPFO governed by Tri-partite “Central Board of Trustees” �त्रदलीय के �ीय �ास बोडर् -
I. Government (Union + state) – 15 nominees (मनोनीत सद�)
II. Employers (industrialists) - 10 nominees
III. Employees (workers) – 10 nominees
- They make policy decision about where to invest money (usually G-sec>C-Bonds>Shares; with
minimum and maximum slabs) and they decide how much interest should be paid to
subscribers.
Chronology Scheme (Tech. norms not written here as they’re not imp4IASexam)
1952 Employee Provident Fund (EPF)
⇒ Principal + interest returned upon retirement age/ death. Interest Rate:
8.5%(2020-21) → ⏬ Reduced to 8.1%(2021-22)- lowest in last 40 years.
⇒ Partial withdrawal upto “X%” allowed for education, marriage, illness and
house construction. (अव�ध से पहेले आं�शक �प से पैसा �नकालना)
⇒ 2020: 👻👻ATMANIRBHAR → PM Garib Kalyan Package→ labour ministry
allowed EPFO subscribers’ to withdraw upto “X%” of EPF fund to help the
workers during lockdown. (कोरोना के चलते ज़�रतमं द मज़दू र अपने खाते से प�रप�ता-अव�ध से
पहेले आं�शक �प से पैसा �नकाल सके )
1976 Employees Deposit Linked Insurance Scheme (EDLI)
⇒ Boss pays Premium. If worker dies → family gets insurance.
⇒ 2020-Reform: if worker died of Corona family member will be given insurance
(min 2.5 lakh to max 7 lakh). कोरोना मृतक श्र�मक के प�रजनो को बीमा रा�श
1995 Employee Pension Scheme (EPS)
⇒ Monthly pension on retirement (once they attain the age of 58 years old) /
permanent disability (वय-�नवृ�त/�ायी �वकलांगता म� प�शन �मलेगा).

- EPFO covers both permanent employees & casual/temporary employees (= employed only for a
few days/weeks/months.) �ायी कम� और अ�ायी/अयाथव�ध कम� दोनो को लाभ �मलता है।
- EPFO subscriber worker has UAN (Universal Account Number) that remains unchanged even if
he changes job from one organization to another. (मजदू र का खाता नं बर- नौकरी बदलने पर भी वही रहता है)
- Previously, employee himself couldn’t generate his UAN, he had to request his boss to send
forms to EPFO. But 2019: EPFO allowed employees to generate UAN online by simply giving
Aadhar & Mobile Number. (एक जमाने म� मजदू र ने मा�लक द्वारा फॉमर् �भजवाना होता, लेिकन अब मजदू र खुद अपना
खाता खोल सकता है)
- Factory owner/Employer has LIN (Labour Identification Number)- which he uses while
uploading EPFO documents on Shramsuvidha webportal of Labour Ministry.

- EPFO & ESIC transactions can be done through:
o Through public and pvt sector banks (ब�क खाते द्वारा पैसा भेज सकते ह�)
o through Ministry of Electronics and Information Technology (MeitY)’s UMANG App
(Unified Mobile Application for New-age Governance).
17.11.1.1 EPF Commutation (2020)

⇒ EPFO: Employees’ Pension Scheme (EPS: कमर्चा�रयों क� प�शन योजना) = worker gets pension after
retirement age (58 years).
⇒ EPF Pension commutation= Worker can partially withdraw his pension in advance before
reaching retirement age. But, then EPFO will pay him less pension afterwards when he actually
reaches retirement age. (प�शन �पांतरण: वय�नवृ�� उम्र/प�रप�ता समय से पहले पैसा उठाना। हालाँिक ऐसा करने पर बाद
के वष� म� प�शन कम �मलेगा)
⇒ 2020: some technical reforms made to help workers here. NOTIMP#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
17.11.2 🧔🧔🧔� (2016) Pradhan Mantri Rojgar Protsahan Yojana (Labour Min)
- Private sector employers hire workers informally, but don’t report them in official formal
records lest they’ve to contribute to EPFO-funds under statutory norms, face harassment of
EPFO officials. (उधोगप�त मजदू र को औपचा�रक �प से नोकरी देने का रेकडर् नही रखते, तािक EPFO क� वैधा�नक
�ज�ेदा�रयो से �छप सके .)
- So, worker is hired informally, denied job-security & social security. Economic Survey 2015-16
diagnosed it as “EPFO Regulatory Cholesterol preventing formal-job creation. (मजदू रों को नौकरी पर
अनौपचा�रक �प से रखा जाता था. औपचा�रक नौकरीओ का सृजन नही हो रहा था)
So, to encourage pvt companies to hire new workers ‘formally’ → Govt announced to pay
employer (Factory owners) portion (12%) for the first 3 years under following schemes: →
Pradhan Mantri Paridhan Rojgar Protsahan Textile ministry scheme for textile factories.
Yojana →
Pradhan Mantri Rojgar Protsahan Yojana → Labour ministry scheme for non-textile factories
💡💡Note: Above schemes expired/discontinued by 2019. Then 2020: Corona → new schemes- given
below.
17.11.3 👻👻ATMANIRBHAR Reforms in EPFO 🧔🧔🧔� (March to August)

Govt agreed to pay for workers & bosses contribution to EPFO in specific cases (e.g. if small factory
with upto 100 workers.) We’ll NOT prepare exact norms because 2022- it’s faded/outdated info.
17.11.4 👻👻Atmanirbhar Bharat Rozgar Yojana= Subsidy from Central Govt in EPFO contribution
It was launched during the Atmanirbhar Bharat 3.0 package (November 2020)
Beneficiary eligibility: Worker's Monthly wages upto ₹15,000 AND
A) Fresh EPFO-Worker got new job in an EPFO registered firm OR

B) Past EPFO-Worker had lost job between March1 to Sept30 of 2020, BUT got a job
on/after October1, 2020 in an EPFO registered firm
🤩🤩Entitlement: यह योजना म� फायदा �ा �मलेगा
EPF scheme 👷👷worker (मजदू र) �Boss (मा�लक)
if the firm has up to 12% of wages → 🧔🧔 12% → 🧔🧔 Govt to contribute to EPFO
1000 employees Govt to contribute to (सरकार देगी)
EPFO
if the firm has >1000 12% of wages → 🧔🧔 ✋12%: Boss has to contribute from his
employees Govt to contribute to pocket. Govt will not contribute. (सरकार नहीं
EPFO देगी)
🤩🤩Benefit? Formal Job creation, more money in the hands of workers → demand⏫ → Post
corona economy Revival. (औपचा�रक रोजगार सृजन, मजदू र के हाथ म� �ादा पैसा आएगा �जससे बाजार म� मांग म� बढ़ोतरी)
🗓🗓Scheme validity? (यह योजना िकतने �दनों तक वैद्य/जारी रहेगी)
⇒ Scheme registration open till June 2021.
⇒ Registered worker will continue to receive benefit for two years. e.g. if registered in January 2021
→ then ₹₹ upto January 2023.
🎓🎓Note: for faster revision I have used the term worker and boss (मजदू र और मा�लक) But, in real mains
exam, you should write employee and employer/Entrepreneur (कमर्चारी और नोकरीदाता / उद्यमी)
17.11.5 🚩🚩🚩FAQ: “why not merge EPFO with ESIC!!? ”

Their laws are different. To merge them you’ve to merge two laws. But this is not some priority for
govt like ‘Triple Talaq bill’ or Article 370. So, prepare facts as given in the handout. #थोड़ा-पढ़ो-आगे-बढ़ो
17.12 �→�PENSION FOR GOVT EMPLOYEES & MIDDLE CLASS? = NPS

Govt Employees (from 2004) Middle Class (from 2009)
- 2004: New Pension Scheme (नवीन प�शन योजना) - In 2009, the Government employee-walla
→(2009) renamed into National Pension National Pension System was made open
System. (रा��ीय प�शन प्रणाली) for all citizens (and NRIs) aged 18-55 on
- Subscriber? Those who joined govt. service voluntary basis. You contribute money till
on or after 01/01/2004** age of 60, as per your capacity →invested
- Mechanism? Employees (10 % of basic →pension.
pay) + Govt. contribution (14% of basic - 2010: NPS-Lite (Swavlamban): If poor
pay: since Interim-Budget-2019) → goes to person from unorganized sector (असं गिठत
PFRDA →NPS Trust → empaneled NPS- �ेत्र) joined NPS, then govt to co-contribute
Fund-manager → Invested G-sec, (समान योगदान) money for five years**.
Corporate Bonds and Shares depending on
your preference in Tier1/Tier2**.
- ** subject to some technical norms which are not imp for exam. (कु छ शत� के अधीन)
- NPS subscribers have PRAN: Permanent Retirement Account Number, Just like EPFO
subscriber has UAN Number.
- 📔📔📔📔ES20: in NPS: number of of State Govt employees >> union govt employees. And within
State govt employees: UP > Madhya Pradesh >Raj > Maharashtra.
- Corona: Subscribers allowed to withdraw funds partially from NPS for treatment of Corona.
17.12.1 �→� Pension: NPA: Minimum Assured Return Scheme (MARS)

⇒ PFRDA yet to release the guidelines so for the sake of simple example ….
⇒ suppose you contribute ₹100 & PFRDA gave MARS of 8% on the NPS account
⇒ Then if NPS unable to give u 8% return on ₹60 of subscription then whatever loss- will be paid
by PFRDA/other org to subscriber. 😍😍Benefit? It’ll attract more people to join NPS.
�ूनतम सु�न��त वापसी योजना (MARS) - मान ली�जए PFDRA कहता है िक कम से कम 8% सालाना मुनाफ़ा िदया जाएगा और
अगर शेयर /बोंड बाज़ार �सफ़र् 7% दे पाता है तो 1% नुक़सान क� भरपाई PFRDA या कोई और अ� सं �ा द्वारा क� जाएगी। असल म�
�नयम बनने बाक़� है, इस�लए ये तो एक का��नक उदाहरण िदया है)
17.12.2 ✋Old Pension Scheme (OPS) will not be re-introduced says Govt in Lok Sabha
- Before-2004: Government was entirely responsible for arranging the pension money for its
Government employees. (सरकारी कमर्चारी का प�शन सरकार स्�म क� जेब से देती)
- But after 2004’s NPS: Govt Employee’s salary is partially deducted and invested in financial
securities, his pension is thus “NOT FIXED nor fully paid by Government” but it’s dynamically
linked with dividend & interest generated by those financial securities. (प�शन क� रकम �न��त नहीं है.
शेयर/बोंड बाज़ार पर �नभर्र करती है)
- Thus, in NPS, Govt employee himself is ‘contributing money’ towards his pension.

- So, some government employee organizations oppose NPS because it does not provide a fixed
pension amount but depends on uncertainty in financial market. They keep demanding re-
introduction of the old pension scheme (OPS: पुरानी प�शन योजना वापस लाने क� माँग कु छ सरकारी क�मयों के
सं गठन करते ह�, लेिकन सरकार मानती निह).
- 2019-July: Govt clarified in Lok Sabha, “We have no plans of reverting to OPS. Because in OPS,
Government has to arrange entire pension money = less funds available for poor people’s welfare
schemes. So, we’re going to keep NPS for Government employees.”
- 2022: Rajasthan State Govt Budget 2022 announced to revert to OPS. Some other States also
planning similar. 😰😰However, critiques argue that State govts don’t have enough money to
sustain OPS forever. (राज�ान सरकार ने कहा पुरानी प�शन योजना पुनः �ा�पत कर�गे. हालाँिक आलोचकों का मानना है िक
रा� सरकारों के पास इतना पैसा नहीं, क� वो हमेशा के �लए पुरानी प�शन योजना को चला सके ।)
17.12.2.1 �📜📜 → � Jeevan Pramaan (2014)

- Previously, a pensioner (in any Govt / public sector org.) had to submit a physical life certificate
in November each year to prove that he’s alive = hardship, bribery.
- "Jeevan Pramaan" – an "Aadhar-based Digital Life Certificate“ by Ministry of Electronics &
Information Technology (MEITY) (आधार काडर् और अंगूठा लगा के �ज़दं ा होने का प्रमाण पत्र तािक प�शन �मलता रहे)
- Pensioner's Aadhar number + biometric reading device→ PC, Mobile→ “Digital Life
Certificate”→ submit to the authority → pension released.
- 2020: Jeevan Pramaan system also expanded to EPFO subscribers.
- 2022: EPFO also allows facial recognition system because in some very old pensioners, difficult
to scan finger-print/iris.
17.13 �→�PENSION FOR SENIOR CITIZENS WITH CAPACITY TO INVEST?

17.13.1 Pradhan Mantri Vaya Vandana Yojana (2017-DFS, LIC)
⇒ Post-demonetisation, banks were flush with deposits, so deposit interest rates were likely to fall
→ so to protect the senior citizens’ income government launched this.
⇒ A 60 years/> senior citizen can join. (व�र� / बुजुगर् नाग�रक के �लए ह�)

⇒ He can invest minimum ₹ (approx.) 1.5 lakhs to maximum ₹ 15 lakhs.
⇒ Money remains invested in the scheme for 10 years.
⇒ LIC guaranteed approx. 8% annual interest. original amount returned after 10 years. This
resulted into ₹1,000 to ₹10,000 monthly pension.
⇒ In between, if senior citizen dies then nominee (spouse, children) gets original amount back.
⇒ If LIC can’t generate guaranteed return, then Govt (Dept of Financial Services) to pay subsidy for
shortfall to LIC. (यिद जीवन बीमा �नगम इतना मुनाफ़ा नहीं दे पाएगा तो सरकार द्वारा स��डी)
⇒ 2020: Govt reduced guarantee from 8% to 7.40%.
⇒ Other similar schemes: Senior Citizen Savings Scheme, LIC Varistha Pension Bima Yojana but
they are old schemes so poor cost: benefit in preparing for UPSC.
🔠🔠❓ [Asked in UPSC-CDS-2019-1] Consider the following passage about a scheme : It was
launched to provide social security during old age and to protect elderly persons aged 60 years and
above against a future fall in their interest income due to uncertain market conditions. The scheme
enables old age income security for senior citizens through provision of assured pension / return
linked to the subscription amount based on government guarantee to Life Insurance Corporation of
India (LIC). Identify the scheme. Answer Choices:
a) Pradhan Mantri Swasthya Suraksha Yojana b) Pradhan Mantri Vaya Vandana Yojana
c) Liveability Index Programme d) Rashtriya Vayoshri Yojana
17.14 �→�PENSION FOR POOR PEOPLE WITH CAPACITY TO INVEST?
ग़रीब आदमी जो ख़ुद क� जेब से थोड़ा पैसा �नवेश कर सके - उनके �लए प�शन योजना
👴👴Atal Pension Yojana (APY) 🧔🧔Pradhan Mantri Shram-Yogi Maandhan

By Dept of Financial Services, 2015 By labor Ministry, 2019
Only 18-40 age Indian citizen residing in India Income Tax-payer, NPS,EPFO,ESIC-
subscribers not eligible.

👴👴Atal Pension Yojana (APY) 🧔🧔Pradhan Mantri Shram-Yogi Maandhan
No minimum or maximum income limits. unorganized sector workers with monthly
Mukesh Ambani can also join, but given that fact income upto ₹15k. E.g. street vendors,
that maximum pension is ₹5,000 a month so rickshaw pullers, construction workers, rag
target-audience is poor people, unorganized pickers, agricultural workers, beedi workers
workers outside EPFO security. etc. in the age of 18-40
Monthly pay ₹42-210 rupees till the age of 60 Monthly invest ₹55-200 (depending on age of
joining). Govt to co-contribute equal amount.
Till the age of 60
₹1k-5k monthly pension- depends on @which Fixed ₹3k pension per month after 60.
age joined, how much contributed?
- If subscriber dies after 60, then spouse If subscriber dies after 60, spouse
(Husband/wife) continues to receive same (husband/wife) gets ₹1500pm as family
amt. pension. pension.
- Both Husband & Wife die → Nominee (e.g. Both Husband & Wife die → Nominee (e.g.
their child) receives the entire principal their child) get nothing.
(premium) back. (माँ बाप दोनो मर गये तो ब�े को �नवेशक-प�त/प�ी के देहांत पर उसके प�ी/प�त को आधा ही
मूलधन वापस) प�शन �मले। दोनो मर गये तो ब�े को कु छ नहीं �मलेगा।
One person-1-subscription account only. (एक Same as left cell.
�� का �सफ़र् एक ही खाता खुल सकता है)
💡💡Note: 1) Atal Pension Yojana 2) PM Jivan Jyoti Yojana and 3) PM Suraksha Bima Yojana are
collectively known as Pradhan Mantri Jansuraksha Schemes.
🔠🔠❓ [Asked in Prelim 2016] Find correct statement(s) regarding ‘Atal Pension Yojana’:
1. It is a minimum guaranteed pension scheme mainly targeted at unorganized sector workers.
2. Only one member of a family can join the scheme.
3. Same amount of pension is guaranteed for the spouse for life after subscriber's death.
Codes: (a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3
17.14.1 � → 👴👴👴👴👴👴: 🧔🧔 Pension: Three Maan Dhan Yojanas
18-40 Age; ₹ 55-200 fees; LIC Fund manager Who?

Pension @60=3000 → family + This Ministry
pension ₹ 1500 co-contributes
1) Pradhan Mantri Shram-Yogi Labour Ministry unorganized sector workers with
Maan-dhan (Feb’19) monthly income upto ₹15k

18-40 Age; ₹ 55-200 fees; LIC Fund manager Who?
Pension @60=3000 → family + This Ministry
pension ₹ 1500 co-contributes
2) PM Laghu Vyapari Maan- Labour Ministry Small trader / shopkeepers whose annual
dhan Yojana (Jul’19)# also turnover does not exceed Rs 1.5 crore,
known as ‘NPS-Traders’ based on self-declaration.
3) Pradhan Mantri KISAN Agri small / marginal farmers with upto 2ht
Maan-dhan Yojana (Aug’19) land.
- 1 person can join only 1 type of above scheme. (एक �� का �सफर् एक बार ही पं जीकरण होता)
- Income Taxpayers & those who joined EPFO/ESIC are not eligible for any of these schemes.
- 💼💼Budget-2020: we’ll launch a Universal Pension coverage with auto enrolment for workers.
It’ll cover workers even when they change jobs. <update when actually done>
17.14.2 🚩🚩🚩FAQ: “why not merge all these schemes into one!??
- More schemes = more speech points during election-rally for the minister. िफर चुनाव म� बोल�गे �ा?
- So, you may send merger-suggestion to Prime Minister. But until your suggestion is
implemented, prepare the facts as given in the handout. #थोड़ा-पढ़ो-आगे-बढ़ो
17.15 �→� PENSION FOR POOR PEOPLE WITHOUT CAPACITY TO INVEST?
- For Below Poverty Line (BPL) people, Rural Development Ministry’s National Social Assistance
Programme (NSoAP: रा��ीय सामा�जक सहायता कायर्क्रम) in 1995, where direct money is given without
asking for any premium from the beneficiary (लाभाथ�).
- It’s a core of the core scheme (अ�त-मह�पूणर् योजना) with 100% cost is paid by Union. It’s optional
for state govt. to contribute money- They may contribute, if they want to enhance the scheme’s
features. For example: (इस योजना म� रा� सरकार ने पैसा देना वैक��क है) (More in 📑📑Pillar#2D- Schemes
types)

NSoAP Components 🧔🧔Union �State (Optional to give extra)
Old age pension @60 ₹200-500* State Govt may give extra ₹₹ & rename
(depending on how old) it. e.g. Samajwadi Pension in UP
Widow pension ₹200 State Govt may give extra ₹₹ and
Aged 40-59 rename it e.g. UP Vidhva Pension @1k
Disability pension: Same as widow State Govt may give extra ₹₹ and
Aged 18-59 rename it e.g. Guj: Sant Surdas Scheme
National Family Benefit Death of bread winner: ₹10k e.g. Guj: Sankat Mochan (Total 20k)
INSURANCE
Annapurna (2001) If senior citizen uncovered in May give additional
any other scheme 10kg grain
/ pm for FREE.
⇒ 2020: 👻👻🤧🤧ATMANIRBHAR→ PM GaribKalyan → single time ₹1,000 to poor senior citizen,
poor widows & poor disabled (total 3cr person covered)
17.16�� PFRDA, THE PENSION FUNDS’ REGULATOR
2003: Executive order to setup PFRDA- Pension Fund Regulatory and Development
Org Authority (प�शन �न�ध �व�नयामक एवं �वकास प्रा�धकरण)
2013: given statutory status. HQ: New Delhi, just like IBBI.
1 Chairman: (5years / 65age), 5 members (5/62) = 6 people.
Structure
Re-appointment is possible.
⇒ Implement National pension system (NPS), select its fund-managers.
⇒ Regulate all public and private pension funds except EPFO, Seaman, Coal miners,
Assam tea plantations related pension schemes as they’ve their separate acts /
mechanisms.
Functions ⇒ Protect Clients, Pensioners
⇒ Prescribe liquidity, auditing, investment norms for Pension funds.
⇒ Powers of civil court. (दीवानी अदालत क� स�ा/अ�धकार िदए गये है)
⇒ financial awareness generation through pensionsanchay.org.in
⇒ Pension FDI is linked with insurance FDI (49%) so not decided by PFRDA.
17.17🛫🛫🛫SOCIAL SECURITY FOR OVERSEAS INDIANS (PENSION / INSURANCE)
Following schemes’ boss? Ministry of External Affairs (�वदेश मं त्रालय)

17.17.1 🛫🛫🛫Pravasi Bharatiya Bima Yojana, 2017
Some nations do not have strict laws regulating the entry, employment or safety of foreign workers.
So, the Indian Government classifies them under Emigration Check Required (ECR: उ�वास जांच क�
आव�कता) countries. e.g. Saudi, Qatar, UAE, Libya, Malaysia, etc.
 It’s compulsory for Indian workers going ECR nations to join Pravasi Bharatiya Bima Yojana.
(ईसीआर देशों म� जाने वाली प्रवासी भारतीय मज़दू रों के �लए ये ख़रीदना अ�नवायर् है)
 Insurance cover of Rs. 10 lakhs if accidental death/permanent disability while abroad,
 Maternity expenses (प्रसू�त खचर्) cover for women worker, Family Hospitalization etc.
18 (��:💰💰)→💳💳FINANCIAL INCLUSION (�व�ीय समोवेशन)
⇒ Financial Inclusion: providing access to banking, investment, pension, insurance and credit
(loan) facilities to each citizen. This ensures social, economic and transaction security (लेनदेन म�
सुर�ा) (S-E-T), improves social harmony, women empowerment, helps reaping the benefit of
“LESS CASH Economy” (📑📑Ref: Handout#1A1) सभी नाग�रकों को ब�िकंग, �नवेश, प�शन, बीमा और ऋण क� सेवा
प्रदान करना= उसे �व�ीय समोवेशन कहेते है
⇒ Social Security (सामा�जक सुर�ा): a system of payments / assistance by the government to citizens
who are ill, handicapped, poor, aged or unemployed. (बीमार, �वकलांग, गरीब, वृद्ध या बेरोजगार को आ�थक
मदद करना)
o The foundation of SS in our constitution @DPSP Article 41- State to provide public
assistance to its citizens in case of unemployment, old age, sickness and disablement; and
o DPSP Article 42- The State shall make provision for securing just and humane
conditions of work and for maternity relief. (राजनी�तक पथदशर्क �सद्धांतों म� �जक्र)
⇒ Social Justice (सामा�जक �ाय): distribution of wealth, opportunities, and privileges within a
society- through reservation in jobs, admissions and election and through legal safeguards for

protection of civil rights, prevention of atrocity and personnel laws. (समाज के �व�भ� जाती/वग� म�
आर�ण चुनाव तथा कानूनन अ�धकारों द्वारा सं प��, अवसरों और �वशेषा�धकारों का �वतरण= उसे समा�जक �ाय कहेते है)
⇒ Collectively, these three (FI,SS,SJ) help in human development, inclusive economic growth and
Sustainable Development Goals (SDG). (More in 📑📑Pillar#6) [कु ल �मलाकर �व�ीय समावेशन, सामा�जक
सुर�ा और सामा�जक �ाय इन तीनों क� मदद से मानव-�वकास,समावेशी आ�थक वृ�द्ध, और सतत् �वकास ल�ों को हां�सल करने मे
हम� मदद होगी]
18.11 (��:💰💰)→💳💳 FIN. INCLUSION: BANK ACCOUNTS FOR EVERYONE
⇒ Nationalization of Banks (1955, ‘69, ’80)  1961: DICGC Act 1966 Cooperative Banks under
RBI’s Ambit  1969 Lead Bank Scheme (SCB:Pvt or Public) given lead role in district. They
prepared credit plan with ‘Service Area Approach’, and coordinate with the efforts of
Government, banks and NBFCs.
⇒ 1971: State level Bankers’ Committee to moniter progress of financial inclusion
⇒ 1976: Regional Rural Bank (RRB) setup through Act. (�ेत्रीय ग्रामीण ब�कों क� �ापना)
⇒ Further, RBI requires commercial banks to setup atleast 25% of their branches in unbanked rural
areas. Similar norms for White label ATM Companies. (एक चौथाई शाखाएं गाँव म� खोली होगी)
⇒ 2005: RBI permitted no-frills savings account with no penalties on zero balance
⇒ 2006: RBI permitted Banking Business Correspondent Agents (BCA)
⇒ 2011: Government’s Swabhiman to increase banking presence in rural area.
⇒ 2013: e-KYC permitted.e.g. write Aadhar number, put fingerprint in biometric reading device,
no photocopies/xerox required. (काग़ज़ी नक़ल जमा करने क� ज़�रत नहीं, ऑनलाइन प्रमाणीकरण)
⇒ 2014: JanDhan Yojana, new Private Commercial Banks (Bandhan, IDFC First)
⇒ 2015: Small Finance Banks and Payment Banks.(लघु �वत् ब�क और भुगतान ब�क क� �ापना)
⇒ 2017-18: India Post Payment Bank(More in 📑📑Pillar#1B1)
🔠🔠❓ MCQ. Service Area Approach was implemented under the purview of (UPSC Prelims-2019)
(a) Integrated Rural Development Programme (b) Lead Bank Scheme
(c) Mahatma Gandhi National Rural Employment Guarantee Scheme
(d) National Skill Development Mission
18.11.1 🧔🧔(��:💰💰)→💳💳 Pradhan Mantri Jan Dhan Yojana (प्रधान मं त्री जन धन योजना)
⇒ 2014: launched by FinMin → Dept of Financial Services with

⇒ Motto “Meraa Khaataa, Bhagya Vidhaataa”. Scheme in two phases, 6 objectives:

PM JDY – phase I (2014-15) प्रथम चरण म� PM JDY – phase II (2015-18) िद्वतीय चरण
1. Financial literacy (�व�ीय सा�रता) 1. Credit Guarantee Fund (For Overdraft
2. Banking within 5 kms defaults) उधर से ब�क के नुक़सान क� भरपाई
3. Account for every family with overdraft, 2. Direct Benefit Transfer (DBT)
with Rupay ATM-cum-DEBIT Card 3. Sell Micro insurance & pension products
through bank.
⇒ PM-JDY bank account can be opened in any Commercial or Cooperative Bank provided that (1)
bank has CBS (2) bank is tied with Rupay Payment Gateway. अब िकसी वा�ण��क या सहकारी ब�क म� खाता
खोल सकते ह�
⇒ Basic Savings Bank Deposit Account - Age 10/>; Zero balance- no penalty. But, Chequebook
only with “balance”; (नाबा�लगों के भी खाते खोले जा सकते ह�। �बना एक �पया बचत जमा िकए भी खाता खोल सकते ह�।)
⇒ There are restrictions on max. number of money withdrawals per month. (पैसे �नकालने पर कु छ सीमाएं )
⇒ Overdraft upto ₹ 10k (originally ₹5k) depending on balance history of min. 6 months. Overdraft
given on only one account holder in household (preferably woman). (प�रवार क� मिहला को 10,000 �पये
तक क� ओवरड�ा�)
⇒ Money has to be returned with interest within 3 years. Banks to decide the loan interest rate.
(ओवरड�ाफ़्ट म� िदया पैसा �ाज के साथ वापस करना होगा। ओवरड�ा� कोई दान-ख़ैरात निह है, वो एक िक़� का क़ज़र्/ऋण है।)
⇒ EVERY Jan Dhan account comes with FREE Accident Insurance; Premium paid by NPCi, it’s
therefore necessary to regularly use card- atleast for checking balance. Union Government
employees, and income tax payers not eligible for this free insurance. (दुघर्टना/अक�ात् सुर�ा बीमा भी
मु� म� �मलता है)
⇒ 🤩🤩Significance? JAM trinity (JanDhan, Adhar, Mobile) for targeted and direct transfer of
subsidies, scholarship and payments to beneficiaries. (लाभाथ� के खाते म� सीधा /प्र�� लाभ ह�ांतरण)
⇒ 😰😰Criticism? PM-JDY accounts used as money mules during demonetization.
⇒ 2020: 👻👻ATMANIRBHAR→ PM GaribKalyan → ₹500 per month to 20 crore women Jan
Dhan accounts for 3 months. (कोरोना म� मिहलाओं के जन धन ब�क खातों म� 3 महीनों के �लए थोड़ी-थोड़ी रकम जमा क�)
🔠🔠❓ [Asked in Pre-2015] Pradhan Mantri Jan-Dhan Yojana’ has been launched for:
(a) providing housing loan to poor people at cheaper interest rates
(b) promoting women’s Self-Help Groups in backward areas
(c) promoting financial inclusion in the country
(d) providing financial help to the marginalized communities
18.11.2 � Jan Dhan Darshak App (2018)

Jointly developed by Department of Financial Services (DFS) & National Informatics Centre (NIC).
It helps people find the nearby financial touch points such as Bank branches, ATMs, Post Offices etc.

18.12 (��:💰💰)→ 📮📮 FIN INCLUSION: INVESTMENTS OTHER THAN BANK
What if poor / lower middle-class person wants better returns than bank deposit? He may opt for…
Act Small Savings Schemes: लघु बचत योजनाएं
Govt Savings Bank Act 1873 📮📮 Post Office schemes: monthly, 5 year, savings, time
deposit
Govt Savings Bank Act 1873 Senior Citizen Savings (2004)
Government Savings Certi Act ’59 National Savings Scheme (NSC)’59
Government Savings Certi Act ’59 Kisan Vikas Patra 1988-11, 2014
PPF Act 1968 Public Provident Fund (PPF)
No Act → Sukanya Samriddhi Yojana ‘2015
- Individual eligibility, upper-lower limits etc. poor cost: benefit…except Sukanya Samriddhi.
- Money (usually) goes into National Small Savings Fund (NSSF)→ loans to Union and (selected
States), with technical norms which not imp for us.
- Here, interest rates are decided by FinMin’s Dept of Economic Affairs on quarterly basis. (�व�
मं त्रालय का आ�थक मामलों का �वभाग इन योजनाओं क� �ाज दर तय करता है हर 3-3 महीने पर)
- 2021 March:- Corona = Govt’s Tax collection⏬ while Govt’s Expenditure ⏫ So, Finance
Ministry ⏬⏬ decreased interest rates on various small saving schemes. But just after a day of
announcement, fearing public outcry (& Bengal election populism), Govt withdrew the decision.
[महामारी के दौरान सरकार क� आमदनी कम और खचर् �ादा �ए तो सरकार ने लघु बचत योजनाओं के �ाज दर म� कटौती क�
घोषणा क�, लेिकन िफर जनता के �वरोध (और प��म बं गाल चुनाव लोकलुभावन) के चलते एक ही िदन म� �नणर्य को वापस �लया!]
18.12.1 📮📮 (Yearbook) Dept of Post: POSB vs IPPB

Ministry of Communications two dept: 1) Depart of Telecommunications 2) Department of Posts →
 Setup by Clive (1766), expanded by Warren Hastings (1774)
 1854: Dalhousie- Post Office Act; 1st postal stamp, rates by weight & not by distance.
 2008: Project Arrow for modernization.
 2013: Telegram stopped by India Post, due to onset of SMS & email.
 Dept of Post sells
o Gangajal sourced from Rishikesh and Gangotri.
o UTI-Mutual funds and Sovereign Gold bonds.
 Post Shoppe = special outlet in big post offices for philately (stamp collection hobby)
 RTI fees can be submitted by buying Indian Postal Orders (IPO). E-IPO = overseas Indians can
pay RTI fees online using this mechanism.
 Deen Dayal SPARSH Yojana: Students in class 6-9 given scholarship for philately.
 Dhai Akhar Letter Writing Competition-students asked to write letters to Mother Teresa,
Tagore etc.

 Officers’ training conducted at Rafi Ahmed Kidwai National Postal Academy at Ghaziabad, UP.
Kidwai was India's first Minister for Communications.
Table 4: ✋No need to loose sleep, UNLESS preparing for Post-Office staff exams.
Dept of Post → Post Office Savings India Post Payments Bank (IPPB)
Bank (PoSB)
foundation Govt Savings Bank Act Companies act 2013 → Public ltd
1873 company registered in 2016
Accept demand Savings account only 1. Current account
deposits? 2. Savings account
Accept time deposits? YES No, bcoz it is a payment bank
Can keep more than ₹2 YES No, bcoz payment bank. But u can link IPPB
lakh balance? account with PoSB account to auto-transfer
(=SWEEP) excess balance to PoSB.
E-Banking and online Not directly but you yes , UPI, BHIM, NEFT, IMPS and BBPS
bill payment can do it by linking (Bharat Bill pay) available.
PoSB account with
IPPB account
Sukanya Smriddhi Can be opened Not possible. Because time deposits are not
(daughter’s fixed allowed in Payment Banks.
deposit account)
loans to individual? No. ₹₹ goes to NSSF Not until it becomes Small Finance Bank
Objective? Promote savings habits Remittance & digital payments
among poor
- 👜👜Budget-2022: Post Office Savings Bank (POSB) will be connected with Core Banking System
(CBS). So, their depositors too can use E-banking/net-banking, mobile banking, ATMs etc.
- Benefits? 🤩🤩1) Convenience for POSB depositors esp. villagers, farmers and senior citizens.
🤩🤩2) interoperability= (ability to use POSB deposit money in above NEFT/ATM etc facilities)
- Interoperability is the ability of customers to transact across commercially and technically
independent payment platforms. �ावसा�यक और तकनीक� �प से �तं त्र �ेटफाम� के बीच लेन-देन करने क� सु�वधा
18.12.2 (�:💰💰)→(�:💳💳)Sukanya Samriddhi Yojana (2015)
- Parents open a (fixed deposit type) bank account in the name of a 0-10 years girl child, and
deposit annually ₹ 250 to ₹ 1.5 lakhs till she reaches age of 14.
- FinMin’s Dept of Economic Affairs announces interest rate (originally 9.1%, presently ~8.5%)

- Money (principal and interest) can be withdrawn @ the age of 18-21 depending on whether
married or not. So, it indirectly prevents child marriages & empowers the grown-up daughter
with money to pursue higher education, small business etc.
- 1 daughter = ONLY 1 account can be opened in this scheme. (एक बेटी के नाम पर �सफर् एक)
- Maximum two daughters can be enrolled by parents/legal guardians.
18.12.3 ⚖Proposed Government Savings Promotion Act (in 2018)
It aims to merge (outdated) laws related to small saving schemes (ref: previous table)
🤩🤩Benefits? (फ़ायदे)
- Easier withdrawal during medical emergency, college fees etc,
- Clarification on Minor account, PH people- guardian rights; Grievances redressal.
18.12.4 ⭐📫📫 �� Five Star Village scheme by Dept of Post (2020)
गाँव वालों को �व�वध लघु बचत योजना और बीमा योजनाओं से जोड़ने क� डाक �वभाग क� को�शश
⇒ by Ministry of Communications Department of Post (सं चार मं त्रालय → डाक �वभाग)

⇒ Post offices will spread more awareness, enrol more villagers in the following schemes:
⇒ Small saving schemes such as Post office Savings Bank accounts, National small savings
certificate Kisan Vikas Patra, Sukanya Samridhi Accounts, public provident fund (PPF)
⇒ Insurance schemes such as Rural Postal Life Insurance Policy, Pradhan Mantri Suraksha Bima
Yojana Account, Pradhan Mantri Jeevan Jyoti Bima Yojana Account.
18.12.5 ⚰💀💀📫📫 ��

� Sampoorna Bima Gram Yojana (2017)
⇒ by Ministry of Communications Department of Post (सं चार मं त्रालय → डाक �वभाग)
⇒ In every district, atleast 1 village identified → In that village, cover all households with a
minimum of one RPLI (Rural Postal Life Insurance) policy. (गांव के हर प�रवार को कम से कम एक ग्रामीण
डाक बीमा पॉ�लसी बेची जाए)
18.12.6 ⚰💀💀🌽🌽 �� Model Insurance Villages (MIV) proposal by IRDAI (2021)
- Insurance Regulatory and Development Authority of India (IRDAI) proposed this
- To give complete insurance coverage to a village for its people’s life insurance, health insurance,
farm/crop insurance, animal (livestock) insurance, tractor/vehicle insurance etc.
- Funding/Subsidy by Union, State, Companies CSR Funds, NABARD & other AIFIs.
- (गाँववालों के �लए म� सभी प्रकार के जीवन बीमा, सामा� बीमा पॉ�लसी उपल� हो, तािक वह एक आदशर् बीमा ग्राम बन जाए। ऐसी
बीमा पॉ�लसी खरीदने के �लए सरकार तथा अ� सं �ानों द्वारा गांव वालों को स��डी/�रयायत दी जाए)

18.12.7 (��:💰💰)→ 📦📦 Chit Funds and Prize Chits
Chit Funds (�चट् फं ड/कोष)- गैरकानूनी नहीं है Prize Chits (इनामी �चट्स)- गैर कानूनी
Legally valid investment Scheme runs for a definite Scheme is illegal and vaguely designed.
period of e.g. 12 months from Jan to Dec-2020. (�न��त It runs until idiot investors keep coming,
समय तक चलती) then it collapses.
⇒ Every month each subscriber deposits equal ₹₹, as ⇒ There are no official documents or
stipulated in the scheme document account books.
⇒ Every month Foreman draws ‘chit’ → whichever ⇒ Scamster will accept whatever small
subscribers’ name comes he may get loan / prize. / large amount is offered by the poor
(in next month, previous winners’ names may not person who falls prey.
be added to the lottery pool). This way, everyone ⇒ Investor doesn't know with surety
has an equal chance of winning. how much is contributed by other
investors?
Even if you won in Feb-2020, still you'll have to Not compulsory to pay the monthly
compulsorily pay monthly deposits until Dec-2020 deposits after you’ve won the prize.
when the scheme is officially over. (Therefore the scheme will collapse
eventually, when new subscribers stop
coming).
This is legal, under Chit Funds Act (गैरकानूनी नहीं है) This is illegal under Prize Chits and
Money Circulation Schemes Banning
Act, 1978
Beyond that, - How does that work? How’s that different from NIDHI companies (regulated by
Ministry of Corporate Affairs) = B.com thing not. Imp. For UPSC.
18.12.7.1 (��:💰💰)→ 📦📦 Chit Funds (Amendment) Act, 2019

⇒ To amend 1982’s Chit Funds Act.
⇒ Will regulate: ‘Chit Funds’, ‘Kuri’, ‘fraternity fund’, ‘rotating savings and credit institution
(ROSCA)’. (they’re basically synonyms)
⇒ Made some reform to prevent scams. What are those reforms? Ans. Deleting because outdated
for 2023-24.
18.12.8 📦📦📦📦 Chit Fund Scams? धांधली/ गबन / का�

- Chit fund is a type of “contract” = subject to Concurrent list. So, UNION has Prize Chits and
Money Circulation Schemes 1978, Chit Funds Act 1982 (2019); Further state have their own acts
/ rules / State regulator of Chit Funds. (समवत� सूची म� होने के कारण क� द्र और रा� दोनों के कानून)
- Saradha Chit Fund scam, Rose Valley Chit Fund Scam: The scamsters ran multiple schemes in
W.Bengal and neighbouring states, invested money in sharemarket, real-estate, shopping malls
etc. thus violating the chit-fund laws.

- Further, any collective investment scheme of ₹100 cr/> requires SEBI permission. Yet they didn’t
obtain permission. (100 करोड़ �पए से बड़ी िकसी भी सामूिहक �नवेश योजना म� सेबी क� अनुम�त अ�नवायर्)
- They also engaged in Multi-level marketing (MLM) / Pyramid /Ponzy Selling = they’d use new
investors’ money to pay-off old investors. But once new investors stop coming, it’ll collapse.
Further Modus Operandi / Timeline not IMP. (इसक� टोपी उसके सर पर)
- ⚖Action? CBI & other agencies investigating. Union Govt proposed “Banning of Unregulated
Deposit Schemes Bill 2018”→ later Act 2019.
18.12.8.1 ⚖ 📦📦📦📦 Banning of Unregulated Deposit Schemes Act, 2019

- अ�नय�मत जमा योजनाओं पर प्र�तबं ध कानून
- If an entity is soliciting public to deposit /invest money, then it could be regulated by RBI (Bank,
NBFC-D, Home loan NBFCs etc), SEBI (MF, ReITs, InvITs etc), IRDAI & PFRDA, Corporate
Affairs ministry (NIDHI), State Governments (chit fund), EPFO, etc.
- A deposit-taking scheme is defined as ‘unregulated’ if person is asking people to deposit/invest
money but he has not registered with any of the above organizations. E.g. builders, jewellers, etc.
Act prohibits advertisement & money collection in it. (ऐसी कोई भी बचत योजना जो िकसी भी �व�ीय �नयं त्रक
के दायरे म� नहीं आती उसे गैरकानूनी माना जाएगा)
- Penalty upto ₹50 crores and jailtime upto 10 years + attaching the assets to refund depositors
within prescribed timelines. (जुमार्ना, कारावास, सं प�� क� ज�ी)
- Union to setup an online central database of deposit-taking activities in the country.
18.13�� ←(💰💰💰💰) FINANCIAL INCLUSION: CREDIT (LOANS: ऋण)

Self Study? Pillar#1A2: Monetary Policy → PSL. Pillar#1B1: Classification → microfinance
18.13.1 ��: 🧔🧔 ←(💰💰💰💰) Credit Guarantee (ऋण अदायगी गारंटी)

- Meaning? if borrower defaults, then losses of banks/NBFCs will be covered by credit guarantor.
So, Bank/NBFC can lend confidently without requiring borrower to pledge collaterals.
- Earlier DICGCI used to give credit guarantee for PSL borrowers, but now this work is done by
organizations such as:

Organization Credit Guarantee Fund Loans covered
SIDBI + Govt Credit Guarantee fund trust for Micro & Loans to Micro & Small
Small Enterprise (CGTMSE) Enterprise
Dept. of Financial National Credit Guarantee Trustee Mudra, ECLGS, Stand up India,
Services Company (NCGTC) Skill & Education loans
Commerce Export Credit Guarantee Corporation of Exporters
Ministry India fund (ECGC)
18.13.2 (💰💰💰💰)↗🗃🗃=(💰💰💰💰) Refinance (पुन�व�)
- When an AIFI (or MUDRA) gives new finance to Banks/NBFCs based on the quantum of
finance they (Bank/NBFC) have already given to end-borrowers.
- Usually works via the process of securitization of the previous loan papers. How it happens in
real life? Ans. NOT IMP.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
18.13.3 👻👻 �🏭🏭 MSME: Definition changed in ATMANIRBHAR (2020)

- 2006: Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 gave definition
of micro, small and medium enterprises
- 2020: ATMANIRBHAR → MSME ministry changed the definition as following: �नवेश और कु ल
�बक्र� के िहसाब से उधयोगों को वग�कृ त िकया जाएगा. �व�नमार्ण (mfg) और सेवा (services) �ेत्र के उधोगों के �लए एकसमान
�ा�ा।
💡💡 Note: This handout only deals with ‘loan’ component of MSME. For other MSME
issues/challenges, refer (More in 📑📑Pillar#4B → MSME)

✋in above image, read "<" sign as "NOT MORE THAN (से अ�धक नहीं)
Investment: �नवेश annual turnover: वा�षक कारोबार
18.13.4 👻👻🔪🔪 �🏭🏭 MSME Non-NPA borrower → ECLGS 1.0
ऋण अदायगी गारंटी -उन उधोगों के �लए �जनके लोन-खाते अभी एनपीए/अनजर्क प�रसं प�त क� श्रेणी मे नही है
⇒ Corona Lockdown → MSME business hurt → need loans to restart business → Emergency
Credit Line Guarantee Scheme (ECLGS: आपातकालीन क्रेिडट लाइन गारंटी योजना).
⇒ �Eligibility?
o MSME Previous outstanding loan account can’t be more than ₹25 crores, and can’t be
not an NPA.
⇒ New/ Extra Loan Amount? 20% of the outstanding loan.
⇒ Loan Tenure? 4 Years (�मयादी/समयकाल)
⇒ Loan Interest? 9.25% (Bank), 14% (NBFC).
⇒ Collateral? Not required. (�गरवी कु छ भी नही रखना होगा)

⇒ If the borrower doesn’t repay loan principal or interest→ Credit guarantee covered by NCGTC
(National Credit Guarantee Trustee Company Limited), a company under the Dept of financial
services in FinMin.
18.13.5 👻👻👻👻 �🏭🏭 MSME Non-NPA borrower → ECLGS 2.0 (Atma-Nirbhar 3.0)
It was launched during the Atmanirbhar Bharat 3.0 package(November 2020)
�Eligibility? (Two conditions must be fulfilled simultaneously)
1) MSME as well as Non-MSME(large) firms operating in
(a) Healthcare sector (�ा� �ेत्र) OR
(b) 26 stressed sectors Identified by RBI is KV Kamath committee (e.g automobiles,
tourism, cement, gems and jewellery etc तनावग्र� �ेत्र) AND
2) Its outstanding loans are > ₹50 crore - upto ₹ 500 Crore (as on 29.2.2020)
🤩🤩Benefit?
 Extra 20% loans against outstanding loans. (कजार् बकाया है उसके सामने 20% अ�त�र� कजर् िदया जाएगा)
 Interest Rate not explicitly mentioned in Press-Statement. (योजना क� प्रेस �व�� म� �� प से खुलकर
नहीं बताया, तो हमने खुद से गूगल सचर् मारने क� कोई ज�रत नहीं है#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो )
 Repayment tenure of above loan: 5 years including 1 year moratorium on principal
repayment. (5 साल म� कजर् चुकाना होगा और उसम� भी 1 साल तक मूलधन चुकाने पर रोक)
👜👜👜👜Budget-2022: This scheme is continued, with more funds.
18.13.6 👻👻🔪🔪🔪🏭🏭 MSME NPA borrower → Subordinate Debt (गौण ऋण)

ऋण अदायगी गारंटी- उन आ�थक तनावग्र� उधोगों के �लए �जनके लोन-खाते पहेले से एनपीए श्रेणी मे आ चुके है।
⇒ Beneficiary? MSME whose loan account is in NPA/ stressed category. लघु/
⇒ Such stressed MSME to be given subordinate loan Upto ₹75 lakhs to revive business.
⇒ Tenure/Interest? Not clearly mentioned.
⇒ If the borrower doesn’t repay loan principal or interest→ Credit guarantee by CGTMSE (Credit
Guarantee Trust for Micro and Small enterprises, an org funded by SIDBI + Govt).
18.13.7 👻👻🗃🗃🗃🏭🏭 MSME → Equity infusion via Fund of Funds (�न�धयो क� �न�ध)
⇒ Govt will set up a Fund of Funds with ₹10,000 crore.
⇒ This FoF will invest in daughter funds (who’ll supply ₹40k cr from their funds). So, total
10k+40k=50k equity funding/infusion to MSME. (इ��टी के �प म� कं पनी म� जान फूं कना)

18.13.8 🚫🚫🚫🚫🚫🚫🚫🚫 NBFC → Mudra (2015, 100% SIDBI subsidiary)
- Micro Units Development & Refinance Agency. (सू� इकाई �वकास एवं पून: �व�पोषण एज�सी)
- Objective? provides indirect lending via SCB, RRB, Cooperative Banks, MicroFinance Inst &
other NBFCs. (अनुसू�चत वा�ण� ब�क �ेत्रीय ग्रामीण ब�क सहकारी ब�क गैर ब�क �व�ीय कं प�नयों द्वारा परो� �प से कजर् देता है)
- Ownership? It’s wholly owned by SIDBI, and also receives the funding from PSL-shortfalls via
RBI, and budgetary support via Department of Financial Services.
- Beneficiary? Micro Enterprises from Agri-allied sectors, mfg & service sector who are not
registered under the companies act = Non-corporate type. (�ज�ोंने कं पनी कानून म� पं जीकरण नहीं करवाया)
Table 5: Mudra-Products:
Pradhan Mantri MUDRA Yojana MUDRA Rupay Card
1) Shishu : loans upto 50,000/- - ATM cum Debit Card issued against MUDRA loan
2) Kishor : >50,000/- upto 5 lakh account.
3) Tarun : > 5 lakh and upto 10 - For working capital component.
lakhs - Can be accessed in all modes like a routine debit card
(ATM, MicroATM, PoS, Online)
- Mudra loans are collateral-free (जमानत से मु�). If borrower defaults on loan, then lender’s losses
are covered through Credit Guarantee Fund for Micro Units [CGFMU] which is operated by
National Credit Guarantee Trustee Company Ltd. [NCGTC, 2016]- which is a private ltd
company by Dept of Financial Services in Finance Ministry.
- 😰😰MUDRA Challenges? (1) Loan Interests are high (2) Rising NPA/Bad loans.
18.13.9 👻👻👻👻 �🏭🏭 Mudra Loans → Shishu Loans pe 2% Interest subvention

⇒ 👻👻ATMANIRBHAR-2020: Shishu loan borrowers = 2% Interest subvention (�ाज-अदायगी मे
सरकारी-मदद) IF they’re prompt payees (=repaying the loans regularly).
⇒ This offer is valid for 12 months.
🔠🔠❓ Pradhan Mantri MUDRA Yojana is aimed at (Asked in UPSC-Pre-2016)

a) bringing the small entrepreneurs into formal financial system
b) providing loans to poor farmers for cultivating particular crops.

c) providing pensions to old and destitute persons.
d) funding the voluntary orgs involved in the promotion of skill development and employment
generation.
18.13.10 ⏰🔪🔪💻💻 psbloansin59minutes.com (2018)

portal by SIDBI & 5 PSBs. GST-registered MSME get loans 10L to 1 cr. Without collaterals. if loan
approved then ₹1000 fees need to be paid
18.13.11 🙋🙋Stand Up India Scheme, 2016 (उ�� भारत)

- Boss? FinMin’s Dept of Financial Services (�व�ीय सेवा �वभाग)
- Objective? Each SCB bank branch to give Greenfield Loans between ₹10 lakh and ₹1 Crore to at
least 1 SC/ST and atleast 1 Woman entrepreneur with tenure upto 7 years.
- Collateral? Bank can ask collaterals. If loan without collaterals, then Credit Guarantee Fund for
Standup India (CGFSI) operated by NCGTC.
- Budget-2019: this scheme extended till 31/3/2025.
- Margin money =is the amount of money that a bizman has to arrange by himself from his own
pocket/savings for the given biz-project. Remaining amount is given as a loan by the bank.
💼💼Budget-2021: 1) ⏬ margin money requirement from 25% to 15%. 2) Agri-biz projects also
eligible.
18.13.12 👭👭Self-help group (�-सहायता समूह) → Credit
- is an informal group of 10-20 local people to combine their savings/ resources, engage in biz
activity like weaving, agarbatti etc अपनी बचत और सं साधनों क� मदद से कु छ छोटा उ�ादन करने वाला गरीब लोगों का
एक अनौपचा�रक समूह
- and not registered in as a firm / company under partnership act or companies act etc.
- Self-Help Groups are formed under the government schemes like National rural livelihood
mission (NRLM). More in 📑📑Pillar#6]
- Budget-2019:
o 1 woman in each self-help group (SHG) will be made eligible for ₹ 1 lakh loan under
Mudra scheme.
o Every verified woman SHG member with a PM Jan Dhan account eligible for
overdraft of ₹5,000.
- 👻👻ATMANIRBHAR → PM GaribKalyan → Women Self Help Groups (SHGs) to be given ₹20
lakh collateral free loans. Further,

o Government will procure masks and sanitizers prepared by SHG = ₹₹ income for
poor families. (सरकार इनसे मा� और से�नटाइज़र ख़रीदेगी)
o These SHG are given additional 10-15k rupees as Revolving funds (RF: प�रक्रमण �न�ध),
if they’re holding – regular meetings, regular savings, and maintenance of proper
books of accounts etc. ATMANI= RF fund disbursal will be done through PAISA
webportal.
18.13.13 🤑🤑🤑Street Vendors’s AtmaNirbhar Nidhi Scheme (PM-SVANidhi)
⇒ Boss? Ministry of Housing and Urban Affairs (MoHUA)- आवास और शहरी मामलों का मं त्रालय
⇒ Pradhan Mantri Street Vendor’s AtmaNirbhar Nidhi Scheme (PM SVANidhi)
⇒ Street Vendors will be given ₹10,000 loan via banks and NBFCs (e.g. Micro Finance
institutions). (सड़क �वक्रेता/फे रीवाला को ब�क तथा गैर-ब�क �व�ीय सं �ान जेसे क� सू� �व� सं �ान से कजार् �मलेगा)
⇒ Loan Tenure: 1 year. Repayment to be done on a monthly basis.
⇒ Loan Interest? approx @7.25% & if vendor repays in timely fashion → govt will give 7% interest
subsidy in his bank account. (फे रीवाला ने �ण अदायगी �नय�मत �प से क� तो �ाज म� सरकार राहत/स��डी देगी)
⇒ Scheme Valid till: 2022-March.
18.13.14 🤑🤑🤑Street vendors’s PM-SVANidhi → Main Bhi Digital (2021)

⇒ MoHUA to give ₹₹ to Urban Local Bodies (ULBs: नगरपा�लका को शहरी मं त्रालय पैसा देगा)
⇒ To spread digital literacy among street vendors who took SVANidhi Loans e.g. How to use UPI,
BHIM, Netbanking. Connect food-street vendors with online e-commerce players like Swiggy-
Zomato etc to expand street-vendors’ sales etc. (सड़क �वक्रेताओं को िड�जटल भुगतान और िड�जटल �बक्र� मा�मों
क� जानकारी देना)
⇒ 🤩🤩Benefit? Digital Economy-walle benefits (Ref: in 📑📑Pillar#1A1)
18.13.15 �PaiSA Portal (2018)

- Ministry of Housing and Urban Affairs (MOHUA) → Deendayal Antyodaya Yojana-National
Urban Livelihoods Mission (NULM) → urban poor are given skill training, bank loans to setup
business → interest subvention. (more in Pill#6).

- 2018: MoHUA launched PaiSA (Portal for Affordable Credit and Interest Subvention Access)
with the help of Allahabad Bank as the nodal / coordinator. [2020: Allahabad Bank merged with
Indian Bank. So, tick accordingly, depending on what options are given in MCQ.]
- PaiSA portal to connect with all banks for delivering the loan interest subsidies.
18.13.16 �💳💳 Kisan Credit Card (1998)
1998: Launched by RBI +NABARD. Farmer gets credit card from PSB, RRB, State Coop Banks for:
- Can swipe it to buy farm inputs (seeds, fertilizers, pesticides etc.)
- Investment credit requirement for agriculture
- Working capital for maintenance of farm assets
- Post-harvest expenses, (फसल काटने के बाद होने वाले खचर्)
- Consumption requirements of farmer household; (घर म� उपभोग हेतु खच�)
- Can withdraw cash (as loan).
- Money to be repaid with interest. Accidental insurance also given.
- Budget-2018: Kisan Credit Card (KCC) extended to Animal Husbandry and Fisheries farmers.
Interim-Budget-2019: they (animal/fisheries-walla) too will get the interest subvention
- Interim-Budget-2019: comprehensive drive with a simplified application form to get all farmers
under KCC cards.
🔠🔠🔠 MCQ. Under the Kisan Credit Card scheme, short-term credit support is given to farmers
for which of the following purposes ? (UPSC-Prelims-2020)
1. Working capital for maintenance of farm assets
2. Purchase of combine harvesters, tractors and mini trucks
3. Consumption requirements of farm households
4. Post-harvest expenses
5. Construction of family house and setting up of village cold storage facility
Codes: [a) 1, 2 and 5 only [b) 1, 3 and 4 only [c) 2, 3, 4 and 5 only [d) 1, 2, 3, 4 and 5

18.13.17 ��: 🧔🧔 ←(💰💰💰💰) Interest Subvention (�ाज सहायता)
Govt pays part of the interest rate for borrower. (farmer, MSME, affordable housing etc) such as:
- Farm loans upto 3 lakhs→ 9% MINUS 2% (to all farmers) MINUS 3% (regular paying farmers)=
only 4% loan interest farmer has to pay.
- Interim-Budget-2019:
o KCC-card-walla Animal Husbandry and Fisheries farmers also eligible.
o If natural disaster- then crop loans are rescheduled, we’ll streamline the subvention
norms there.
o MSME: incremental loans upto ₹1 crore to GST registered MSME industry= 2%
subvention. (As such already announced by Modi in 2018)
18.14🌽🌽🌽🌽🌽🌽🌽🌽FARM LOAN WAIVER (कृ �ष ऋण माफ�)

18.14.1 🌽🌽🌽🌽🌽🌽🌽🌽Agri-Finance → Loan waivers for the farmers
− 2008: 💼💼Budget → Agricultural Debt Waiver and Debt Relief Scheme (ADWDRS). On their
outstanding crop-loans upto 29/Feb/2008→
o Small and marginal farmers given 100% debt waiver : कजर् माफ�;
o Other farmers were given 25% debt relief : ऋण राहत.
− FinMin → Department of Financial Services → paid the dues to the banks in a phased manner
on behalf of farmers → 2009: 15th Lok Sabha Election won by UPA/Congress.
− 2016-18: The state governments of Tamilnadu, Maharashtra, Karnataka, Uttar Pradesh, Jammu
Kashmir, Punjab, Chhattisgarh, Andhra,Telangana et al. also launched in similar debt waiver and
debt relief.
− 2017: 💼💼Budget gave 60 days interest waivers to farmers on account of the problems farmers
suffered during demonetization in 2016. (नोटबं दी के बाद कु छ िदनों के �लए �ाज माफ िकया था)

18.14.2 🌽🌽🌽🌽🌽🌽🌽🌽=👌👌Agri-Finance → Farm loan waivers: arguments in favour
1. 2008: Post-subprime crisis and global financial crisis, the demand for textile declined in the
international market → cotton prices fell in India → farmers suffered. वै��क आ�थक सं कट के बाद
कपास/�ई �नयार्त म� कमी
2. 2014: drought, 2015: again drought. अकाल 😰😰
3. 2016-17: Demonetization → cash shortage → price of agricultural commodities fell.
4. Thus, farmers are suffering for a decade (2008-18), as evident from the violent agrarian
agitations in Madhya Pradesh, Uttar Pradesh and Maharashtra in 2017 and 2018.
5. While corporate borrowers are eligible for loan restructuring, farmers are not given such
benefits. So farmers should be given loan waiver. उद्योगप�तयों के कजर् का तो पुनगर्ठन हो जाता है
6. “Debt overhang” (ऋण क� अ�धकता): a situation where all current income gets used up in repaying
the accumulated debt. Farmer feels no motivation to invest in his ‘business’. Debt waiver cleans
up his liability. It’ll spare his income /savings for investing in better seeds/fertilizers and
machines. (Counter: 📔📔📔📔ES20 found no such evidence.)
18.14.3 🌽🌽🌽🌽🌽🌽🌽🌽=👎👎Agri-Finance → Farm loan waivers: arguments against

1. 🚭🚭Moral Hazard (नै�तक जो�खम): Lack of incentive to be "disciplined", when risky behavior is
insured by someone. If the government continue to give loan waivers, farmers will have no
discipline to be efficient, cost-savvy and hard working. (ज�री नहीं िक कजर् माफ� के बाद वह �ज�ेदार बनके
श्रम करे)
2. “Loan waivers undermine honest credit culture. NPA problem will get aggravated.”, said ex-RBI
Governor Urjit Patel.
3. 🗳🗳Whenever elections are near, agri-loan defaults are increasing. It hints farmers are
strategically defaulting on loans, in anticipation of waiver. ( चुनाव के कारण कजर् माफ कर िदया जाएगा, ऐसी
रणनी�त के साथ, जानबूझकर िकसान लोन वापस नहीं कर रहे)
4. Loan waiver did not ⏫ our crop production or GDP growth, said 📔📔📔📔ES17 (कजर् माफ़� के बाद
फसल उ�ादन तथा सकल घरेलू उ�ाद म� बढ़ोतरी होने के कोई सबूत नहीं �मले)
5. Thus, Government Intervention has hurt more than it has helped., says 📔📔📔📔ES20 (सरकारी दखल से
यहाँ पर मदद कम और तकलीफ �ादा �ई है-ऐसा आ�थक सव��ण का मानना है)
6. Loan waivers → ⏫fiscal deficit → households and business firms will be hurt. (More in
📑📑Pillar#2)

7. Total farm loans: ~5.5 lakh cr (2013). Out of that ~60% by formal lenders (banks, Microfinance
etc.) Rest by informal money lenders (Village Baniya, Shroff etc.) So even if loan waivers are
announced, all farmers will not benefit from it. �ज�ोंने अनौपचा�रक स्रोतों से कजार् �लया उन िकसानों को कोई लाभ
नहीं �मलेगा
8. Govt’s expenditure on healthcare is LESS than 2% of GDP. WHO recommends 5%. If all the
farm loans are waived it will cost 1.5% of GDP. So, if government has so much spare money to
spend, it’ll be better to spend in public healthcare which will benefit both farming and non-
farming families. Similar argument for education expenditure. बेहतर होगा हम �ा� तथा �श�ा पर पैसा
खचर् कर� ना िक िकसानों का कजर् माफ करने म�
18.14.4 🌽🌽🌽🌽🌽🌽🌽🌽=👎👎☠Anti-Argument: Loan waiver will not stop farmer suicide
Farmer suicide is a result of: (िकसान क� आ�ह�ा के �व�भ� कारण)
1. farmer have small sized farm, lack of irrigation, good quality seeds and fertilizers → Not large
quantity of agro-production = can’t earn lot of money by selling it. (खेत छोटे ह�, उ�ादन इतने �ादा
ज�े/हज़ारों िकलोग्राम म� नहीं कर पा रहे िक �जसे बेचकर मोटी रकम कमा सके )
2. Lack of remunerative prices because of challenges in APMC, MSP and transport-storage
infrastructure. (उ�ादन क� िकसान को अ�� क�मती नहीं �मल रही)
3. Lack of financial inclusion and financial planning. Even after good monsoon and good harvest,
they waste money on social events and pilgrimage. (अ�� फसल-िकसान सामा�जक प्रसं गों, तीथर् यात्राओ म� पैसा
बबार्द करते ह�)
So, loan waiver is a short-term remedy that can’t prevent farmer suicide until above three issues are
addressed. (क़ज़र् माफ़� एक अ�ाई उपाय है, �जससे कायमी/�ायी �प से िकसान-आ�ह�ा क� सम�ा हल नहीं होगी)
18.14.5 🌽🌽🌽🌽🌽🌽🌽🌽 ✍ Farm Loan Waiver: Conclusion
 From the aforementioned analysis, it’s evident that farm debt waiver will have negative
consequences for Indian economy. (कजर् माफ� से भारतीय अथर्तंत्र पर नकारा�क असर होगी. यह िकसानों क�
सम�ाओं को �ाई �प से हल नहीं करेगा)
 Debt waiver is not a sustainable solution against agrarian distress, we should work on more
efficient and targeted ways to help farmers. (ल��त �प से िकसानों क� मदद क� जाए) (More in
📑📑Pillar#4A-Agri Schemes)
18.14.6 👻👻👻👻👻👻 Atma-Nirbhar Farm Loan Reforms (2020)
⇒ Suspension/Moratorium on the farm loans for “X” months from March 2020. Originally X=3
months, then 6 months…… (कृ �ष ऋण-अदायगी ��गत क� गई)
⇒ Cheap loans via Kisan Credit Card will be given to PM KISAN beneficiaries, Fishermen and
Animal Husbandry farmers. (�रयायती �ाज दर पे कृ �ष-ऋण द�गे)
⇒ NABARD to give additional refinance to Regional Rural Banks and Cooperative banks and.
(�ेत्रीय ग्रामीण ब�क और सहकारी ब�कों को पहले से अ�धक पुनर�व� िदया जाएगा)
(More AGRO SCHEMES in in 📑📑Pillar#4A-Agri Schemes)

18.15⚰� FINANCIAL INCLUSION: INSURANCE & PENSION
- Various schemes are given in previous sections: But just to quickly recall the notable terms:
Insurance: Postal Life, ESIC, PM Jeevan Jyoti & Surkasha Bima (₹2 lakh), PM-JAY (₹5 lakh
annual health insurance per family), PM-Fasal Bima (1.5-5% premium);
- Pension: EPFO, NPS, Atal Pension (1-5k), PM Shram Yogi Mandhan (3k), PM Vay-Vandana
(8%@LIC), Maan-Dhan Yojanas (3k/pm)
18.15.1 ⚰🔬🔬 Micro Insurance (सू� बीमा)

⇒ Insurance policy may be Life / General Insurance with a very low premium.
⇒ When small sum insured (upto ₹50k) & target audience is poor / villagers / farmers.
⇒ It may be an individual / group based insurance. Intermediaries such as NGO, SHG, MFI help in
selling such policy. Policy/ Contracts are given in local language. e.g. LIC’s Jeevan Madhur and
Jeevan Mangal
18.15.2 🏍🏍🏍🏍🏍🏍 Gig Workers’ social security code (�गग कम� क� सामा�जक सुर�ा सं िहता)
⇒ Informal workers (अयथा�व�ध कम�)= doesn’t have formal job contracts with employers. E.g.
Domestic Maids, Brick Kiln Workers, Construction Labourers, Chowkidar, Dhaabaa
cooks/waiters etc.
⇒ Gig workers (�गग कम�)= Uber Taxi Drivers, Amazon/Zomato Delivery boys, Urbanclap’s
beauticians/ plumbers/ AC repairman, Unacademy Educators etc. They are freelancers /
independent contractors (�तं त्र ठे केदारों) hired by startup or digital companies for short-term
engagements. While they may have some written contract to deliver services to the company, but
the contract is worded in such manner they are not “regular employees” of a company = not
eligible for EPFO, ESIC etc.
⇒ 2019-Sept: Labour Ministry drafting a “social security code for all informal & gig workers”. It
aims to provide ‘insurance on death/disability/sickness’, maternity benefit, pension, scholarship
for their children etc. (मृ�ु / �वकलांगता / बीमारी पर बीमा, मातृ� लाभ, प�शन, �गग कम� के ब�ों को छात्रवृ��)
18.15.3 👻👻ATMANIRBHAR → 👷👷Workers’ Social security (2020)

⇒ Annual health check-up for all employees. (�ा� जांच)
⇒ Govt’s Social security schemes will be extended to Gig workers and platform workers (e.g.
Zomato delivery boys, Urbanclap beautician, uber taxi drivers etc.) (गीग प्रणाली के श्र�मक को भी सरकारी
सामा�जक सुर�ा योजनाओं का लाभ)

⇒ Central Government’s Building and Other Construction Workers Act, 1996: → workers
contribute ₹₹ to a fund held by the State Government → they get pension after
retirement/accident compensation etc. 👻👻ATMANI→ PM GaribKalyan → State Governments
ordered to use this ₹₹ for helping construction workers during Corona.
⇒ Portability of social security benefits to migrant workers. E.g. If a construction worker deposits a
premium in Gujarat building workers welfare fund → Afterwards he returns back to home state
Odisha, he will get pension from there. (सामा�जक सुर�ा लाभ क� सुवाह्यता- अपने वतन वापस जाए तो भी लाभ
�मलते रहे)
18.16��: �FINANCIAL INCLUSION: CUSTOMER PROTECTION (ग्राहक सुर�ा)
😾😾Bank/NBFC 📈📈Share/Bond ⚰Insurance (IRDAI) �Pension
(under RBI) (SEBI)
Ombudsman: Bank, SCORES ⇒ Insurance - If EPFO- then its
NBFC, Digital Portal→ Ombudsman via internal machinery
Transaction (given SEBI→SAT IRDAI Act ‘1999, - If NPS: NSDL→
below) hears matters upto PFRDA.
₹30 lakhs. If higher - If pvt sector pension
claim then consumer company’s scheme:
courts / other courts. PFRDA → SAT.
⇒ Higher appeal against
IRDAI → SAT
18.16.1 😾😾RBI’s 3 Ombudsman (ओमबड्समेन/ �शकायत �नवारण अ�धकारी/लोक प्रहरी)
Table 6: DONOT LOOSE SLEEP unless preparing for RBI officers' Exam
Banking NBFC Digital Transactions

Ombudsman Ombudsman Ombudsman�
When 1995 2018 2019
RBI designates Banking powers to regulate Payment and Settlement
a senior RBI Regulation Act, NBFCs under RBI Act, Systems Act, 2007
official under 1949 1934
Where does he 21 offices across 4@ Chennai, Kolkata, Same as BO
sit? India New Delhi and Mumbai,
looking after respective
zones.
Customer can Any type of bank - Any NBFC-Deposit- Prepaid payment instruments,
file free taking (e.g Mahindra, Mobile wallets, Apps,
complaint Jindal, Sriram), OR NEFT/RTGS and other digital
against transactions

Banking NBFC Digital Transactions
Ombudsman Ombudsman Ombudsman�
- Any NBFC with
assets size of ₹1
billion
For amounts* upto ₹20 lakhs upto ₹10 lakhs upto ₹20 lakhs
Penalty Ombudsman can order penalty upto ₹1 lakh for customer’s mental agony, waste
of time and money
Higher Dy. Gov
Appeal?
- *subject to changes in future, so, don’t lose sleep over it.
- ** gradually RBI keeps adding more category of NBFCs here.
- 2019: RBI launched online Complaint Management System (CMS): Customers can lodge
complaints against any RBI regulated Bank or NBFC → Complaint would be directed to the
appropriate Ombudsman
- 2021-Feb: 😰😰BEFORE: RBI appointed 3 types of ombudsman for consumer complaints: (i)
Banking Ombudsman Scheme (ii) NBFC Ombudsman (iii) Digital Transaction Ombudsman.
🤩🤩After: Integrate these 3 into a One Nation One Ombudsman / Integrated Ombudsman
Scheme (एक�कृ त �शकायत �नवारण अ�धकारी योजना)
18.17📈📈🌐🌐🦁🦁FINANCIAL INCLUSION: INDIA’S PERFORMANCE (भारत का प्रदशर्न)

18.17.1 📈📈🌐🌐 Global Microscope Report
- Annual report started in 2007, to measure financial inclusion levels, this report is prepared by
The Economist Magazine’s Economist Intelligence Unit, Accion global NGO &partners like Bill
& Melinda Gates Foundation, Metlife foundation etc.
- 2019’s report measured gender gap in financial inclusion for the first time.
- 2020’s report measures role of financial inclusion in the COVID-19 response:
 E-banking can help in cash transfers to beneficiaries
 ⏫Digital financial frauds in Corona lockdown etc.
- Over the years, this report identified following challenges in India:
 full interoperability across payment systems. Lack of financial literacy, no trust in
financial system or buying insurance. (Ref:1A1 for more)
 Digital divide, grievances redressal. extreme poverty, no surplus to save / invest.
 No land / property records→ access to loans is difficult.
- 2020’s Ranking? #1 tie-Columbia and Peru, ….. #6:India (last year India was #5) …total 55
nations. I don’t find this report so IMP that I shd update its ranking every year.

18.17.2 📈📈🌐🌐 Global Findex Database 2017: (released in 2018, April)
- By World Bank with help of Bill & Melinda Gates Foundation
- It’s published every 3 years. It doesn’t give ranking but measures how many % of people have
access to banking, credit etc. in a given nation.
- What is India’s data? Ans. for UPSC, Poor cost:Benefit for memorizing such low profile reports.
18.17.3 📈📈📈📈 Mercer CFA Institute Global Pension Index for 2021:
Rank#1- Iceland. India #40 among 47 nations. (⚾📻📻⚾🎓🎓✋ low profile report not greatly
important. )
18.17.4 📈📈🦁🦁 (India’s own) Financial Inclusion Index by DFS

- 2018-Sept: Proposed by Department of Financial Services (DFS).
- This annual index will have three measurement dimensions; (i) Access to financial services (ii)
Usage of financial services and (3) Quality. It complies with the format prescribed by the G20.
- Ranking? Poor Cost benefits memorizing for exam. Save brain’s memory card for gender-gap,
human development Index report etc.
18.17.5 📈📈🐯🐯 (India’s own) RBI’s National Strategy for Financial Inclusion (NSFI)
⇒ 2020-Jan: RBI released this report covering the timeframe “2019-2024.”
⇒ Exact points / salient features = poor cost benefit for UPSC. We already have sufficient points for
a 250 words answer. (अपने पास पयार्� मुद्दे है, इसको असल म� पढ़ने क� ज�रत नहीं)
18.17.6 📈📈🐯🐯 (India’s own) RBI’s Financial Inclusion Index (�व�ीय समावेशन सूचकांक)
⇒ 2021: RBI Governor announced to publish Financial Inclusion Index to capture the extent of
financial inclusion across the country in Banking, Investments, Insurance, Pension Sector.
⇒ (More in 📑📑Pillar#1A1)
18.18�🎺🎺 MOCK QUESTIONS FOR MAINS (250 WORDS EACH)

1. Explain the significance of financial inclusion & social security for achievement of Sustainable
Development Goals (SDG) for India. भारत के �लए सतत �वकास ल�ों क� प्रा�� के �लए �व�ीय समावेशन और
सामा�जक सुर�ा के मह� को समझाएं । Note: SDG-topic is unfinished until we learn Pillar6.
2. Discuss the significance of crop insurance and health insurance in eradication of rural poverty.
Enumerate the notable initiatives of the Government in this regard. ग्रामीण गरीबी उ�ूलन म� फसल बीमा
और �ा� बीमा के मह� पर चचार् कर�। इस सं बंध म� सरकार क� उ�ेखनीय कदमो क� सू�च दी�जए.
3. How is Ayushman Bharat-PM-JAY is different from the previous centrally sponsored schemes
on health insurance? Identify the fiscal and administrative challenges in its implementation. रा��ीय
�ा� सं र�ण �मशन इससे पूवर् क� क� द्र सरकार द्वारा प्रायो�जत योजानाओसे अलग कै से है? �व�ीय व् प्रशास�नक चुनौ�तयो को
�च��त क��जए.

4. Discuss in the need for enhancing participation of domestic and foreign players in insurance
sector of India. Enumerate steps taken by Government in this regard. (भारतीय बीमा �ेत्र म� घरेलू और
�वदेशी �खलािड़ओ क� भागीदारी बढ़ाने क� आव�कता पर चचार् कर�। इस सं बंध म� सरकार द्वारा उठाए गए कदमों क� सू�च दी�जए)
5. (Asked in Mains-2016) Pradhan Mantri Jan-Dhan Yojana (PMJDY) is necessary for bringing
unbanked to the institutional finance fold. Do you agree with this for financial inclusion of the
poorer section of the Indian society? Give arguments to justify your opinion. प्रधान मं त्री जन-धन
योजना (पीएमजेडीवाई) ब�िकंग से वं �चत लोगो को सं �ागत �व� /ऋण के दायरे म� लाने के �लए आव�क है। �ा आप भारतीय
समाज के गरीब वगर् के �व�ीय समावेशन के �लए इससे सहमत ह�? अपनी राय को सही ठहराने के �लए तकर् द�।
6. Discuss in the brief, the reforms ushered by 👻👻ATMANIRBHAR package in providing ‘ease of
credit’. (आ� �नभर्र पैकेज द्वारा 'ऋण म� आसानी' के हेतु से िकए गए सुधारो के मह� क� चचार् करे।)
7. Critically examine the need and feasibility of providing agriculture-debt waiver to small and
marginal farmers of India. कजार् माफ� देने क� ज�रत और �वहा�रकता पर गं भीर समी�ा क��जए
8. (Asked in Mains-2020) “Micro-Finance as an anti-poverty vaccine, is aimed at asset creation and
income security of the rural poor in India”. Evaluate the role of Self Help Groups in achieving
the twin objectives along with empowering women in rural India. ("सू�-�व� एक गरीबी-रोधी िटका है जो
भारत म� ग्रामीण द�रद्र क� प�रसं प�� नमार्ण और आयसुर�ा के �लए ल��त है". �यं सहायता समूहों क� भू�मका का मू�ांकन ग्रामीण
भारत म� मिहलाओं के सश��करण के साथ साथ उपरो� दोहरे उद्दे�ों के �लए क��जए ) Answered in FREE sp.classes
9. (Asked in Mains-2021) Can the vicious cycle of gender inequality, poverty and malnutrition be
broken through microfinancing of women SHGs? Explain with examples. (Answer in 150
words) [ �ा ल��गक असमानता, गरीबी और कु पोषण के दुष्चक्र को मिहलाओं को �यं सहायता समूहों को सू� �व�
(माइक्रोफाइने�) प्रदान करके तोड़ा जा सकता है ? सोदाहरण �� क��जए। ] Answered in FREE sp.classes
NEXT Handout: Pillar2: Budget, Taxation

PILLAR #2: BUDGET, TAXATION, Subsidies, Disinvestment, Deficit, Public Finance
Table of Contents
20 💼💼💼💼 Pillar #2: Budget: Relevance in UPSC?......................................................................................... 294
20.1 💼💼 Fiscal Policy (राजकोषीय नी�त): Meaning & significance ................................................................... 295
A well planned Fiscal Policy can help in following arenas: .......................................................................... 295
20.2 💼💼 Budget (बजट): Meaning ................................................................................................................... 296
20.2.1 🔐🔐Three Funds related to Budget (Self-Study= Laxmikanth chapter on Parliament) ......... 296
20.2.2 🤧🤧🤧🤧Donation Funds: PMNRF vs PM CARES (दान) .............................................................. 297
20.2.3 💼💼💼💼 Three Documents related to Budget (बजट के साथ प्र�ुत तीन द�ावेज) ................................ 298
20.3 💼💼💼SIX Stages of Passing the Budget in Parliament (6 चरण) ......................................................... 300
20.3.1 📆📆Financial Year (FY: �व�ीय वषर्) .................................................................................................. 300
20.4 📃📃📃📃📃📃📃📃⏳Vote on Account- (लेखा अनुदान).................................................................................. 301
20.5 (🤴🤴🤴🤴🤴🤴)=🥛🥛🥛🥛 Interim Budget (अंत�रम बजट) ................................................................................ 302
20.5.1 👜👜👜👜Budget’s THEME (बजट क� �वषयव�ु).................................................................................... 303
20.6 📘📘📘📘 Economic Survey (आ�थक सव��ण)................................................................................................. 303
20.6.1 📙📙📙📙ES22 - WHY Single Volume instead of two volumes? .................................................... 304
20.6.2 📙📙📙📙ES22 – WHY prepared by Principal Economic Adviser? ............................................... 304
20.6.3 📙📙📙📙📙Chief Economic Advisor (CEA: मु� आ�थक सलाहकार) .................................................. 304
20.7 �Finance ministry and its departments: (�व� मं त्रालय और उसके �वभाग) ................................................ 305
20.7.1 �💼💼Department of Economic Affairs (DEA: आ�थक कायर्/ आ�थक मामलो का �वभाग) ................... 305
20.7.2 �🛒🛒FinMin#2: Department of Expenditure (�य �वभाग) ........................................................ 305
20.7.3 �🍋🍋FinMin#3: Department of Revenue (राज� �वभाग)............................................................ 306
20.7.4 �💳💳💳💳FinMin#4: Department of Financial Services (DFS: �व�ीय सेवाएँ �वभाग) .................... 307
20.7.5 �🏭🏭FinMin#5: DIPAM (�नवेश एवं लोक प�रसं प�� प्रबं धन �वभाग) ..................................................... 307
20.7.6 �🏭🏭FinMin#6: Department of Public Enterprises (DPE: सावर्ज�नक उपक्रम �वभाग) .................. 307
20.7.7 �🏭🏭FinMin#6: DPE → National Land Monetization Corporation (NLMC-2022).......... 308
20.7.8 �Sidenote: Indian Audit and Accounts Department .............................................................. 308
20.8 💼💼Budget→ ⏳Revenue Part→ 📥📥Receipts→ 🍋🍋Tax Receipts ................................................... 309
20.8.1 🍋🍋 Types of taxes: direct / indirect: प्र�� कर/ अप्र�� कर ............................................................ 309
20.8.2 Types of taxes: Progressive vs Regressive vs Proportional......................................................... 309
20.8.3 💣💣 Adam Smith’s 4 canons of taxation (कराधान के चार �सद्धांत) ..................................................... 310
21 🍋🍋🍋🍋 Direct Taxes: Types (प्र�� करों के प्रकार) ........................................................................................... 310
21.1 🍋🍋🍋🍋Direct taxes: merits and demerits (प्र�� करों के लाभ व् नुकसान) ................................................... 311
21.2 🍋🍋🍋🍋Union Tax, Cess and Surcharge (क� द्रीय कर, उपकर और अ�धभार) ................................................... 311
21.2.1 🍋🍋🍋🍋: 🚩🚩🚩Cess pe FAQ & PHD ........................................................................................... 312
21.2.2 🍋🍋🍋🍋: 🏦🏦 Direct Tax → Cess: 🍋🍋Pradhan Mantri Swasthya Suraksha Nidhi (PMSSN) .. 313
21.3 🍋🍋🍋🍋: 🏦🏦 Direct Tax → Corporation Tax (�नगम कर) ....................................................................... 313
21.3.1 🍋🍋🍋🍋: 🏦🏦 Corporation Tax Cut in 2019-Sep .......................................................................... 313
(Batch:PCB7) Mrunal’s Economy Pillar#2A1: Budget → Revenue Part → Direct Tax-Receipts → Page 293
21.3.2 🍋🍋🍋🍋: 🏦🏦🏦🏦 Corporation Tax: announcements in budgets ................................................ 314
21.3.3 🍋🍋🍋🍋: 🏦🏦🏦🏦: 🤓🤓 Corporation Tax: Exemption from audit for small companies............. 314
21.3.4 🍋🍋🍋🍋: 🏦🏦🏦🏦 Corporation Tax on Startups ............................................................................ 315
21.4 🍋🍋🍋🍋: 🏦🏦 Equalisation Levy / Google Tax (समकारी लेवी/ गूगल टै�)................................................... 315
21.5 🍋🍋🍋🍋: 🏦🏦🏦🏦 Minimum Alternate Tax (MAT: �ूनतम वैक��क कर) .................................................. 316
21.6 🍋🍋🍋🍋: 🏦🏦🏦🏦 Cooperative Societies: Alternative Minimum Tax (AMT) .................................... 317
21.7 🍋🍋🍋🍋: 🗃🗃 Dividend Distribution Tax (DDT: लाभांश �वतरण कर) ........................................................ 317
21.8 🍋🍋🍋🍋: 🗃🗃🗃🗃 Buyback Tax (शेयर क� वापसी-खरीद पर कर) ....................................................................... 318
21.9 🍋🍋🍋🍋 : 🏠🏠🏠🏠🏠🏠Capital Gains Tax (CGT: पूंजीगत लाभ कर)................................................................ 319
21.10 🍋🍋🍋🍋: 👪👪 Income Tax on Individuals (��क आयकर) ................................................................ 322
21.10.1 ��Income Tax Slabs before Budget-2020 ........................................................................ 323
21.10.2 (Optional) New slabs for Income Tax in Budget-2020 ......................................................... 324
21.10.3 🍋🍋🍋🌱🌱Income Tax in Budget-2021, Compliance relief to Senior Citizen👴👴............... 325
21.10.4 🍋🍋🍋🌱🌱Income Tax in Budget-2022................................................................................... 325
21.11 🍋🍋🍋🌱🌱Direct Tax Code (DTC) Task Force (2017-2019) ......................................................... 325
21.12 🍋🍋🍋🍋Direct Taxes: Misc. Concepts (इधर उधर के �छटपुट मुददे) .......................................................... 326
21.12.1 🍋🍋🍋🍋Hindu Undivided Family (HUF) (िहंदू अ�वभा�जत प�रवार): ............................................. 326
21.12.2 🍋🍋🍋Presumptive Taxation (प्रक��त कराधान) ......................................................................... 326
21.12.3 🍋🍋⏰Advance Tax ? (अ�ग्रम कर).............................................................................................. 326
21.12.4 👻👻 ATMA NIRBHAR BHARAT → Tax Ordinance 2020 [कर अ�ादेश] ............................ 327
21.13 🍋🍋🍋✂TDS & TCS ....................................................................................................................... 327
21.14 🍋🍋🍋✂Tax Deducted at Source (TDS): (स्रोत पर कर कटौती) .......................................................... 328
21.14.1 👻👻 (🍋🍋🍋✂) TDS → ATMA NIRBHAR BHARAT REFORMS .................................. 329
21.14.2 🍋🍋🍋🍋✂Tax Collected at Source (TCS): (�ोत पर सं गृहीत कर) ............................................... 329
21.14.3 🍋🍋🍋🍋Tax refund? (कर वापसी) .................................................................................................. 329
21.15 🍋🍋Misc. Direct Taxes - Financial Transaction Taxes (�व�ीय लेनदेन कर).......................................... 330
21.15.1 🍋🍋🍋🍋 (Concept) Tobin Tax / Robinhood Tax ..................................................................... 330
21.15.2 🍋🍋🍋🍋STT & CTT (प्र�तभू�त लेनदेन कर और व�ु लेनदेन कर) ............................................................ 330
20 💼💼🍋🍋 PILLAR #2: BUDGET: RELEVANCE IN UPSC?

Prelims P1 (GS 100 🔠🔠❓MCQs) Mains GSM-1-2-3 (750 Marks)
Economy: 6 PillarsTM
2016 2017 2018 2019 2020 2021 2022 2016 2017 2018 2019 2020 2021
💼💼 🍋🍋2_Budget, FC, GST,
3 3 4 1 1 2 3 12.5 30 25 25 15m 20m
Disinvestment, FRBM etc
20.1 💼💼 FISCAL POLICY (राजकोषीय नी�त): MEANING & SIGNIFICANCE
- ‘Fiscal’ is a word derived from Greek. Means ‘basket’ and symbolizes the public purse.
- Fiscal Policy is the set of Govt. decisions regarding taxation, expenditure, subsidies and other
financial operations. (कराधान, �य, स��डी और अ� �व�ीय सं चालन हेतु सरकार द्वारा �लए गए �नणर्य)
- Using fiscal policy, Govt influences the savings, investment and consumption in an economy, to
accomplish certain national goals such as income redistribution, socio-economic welfare,
economic development and inclusive growth. (बचत, �नवेश और खपत को सरकार को प्रभा�वत करती→ आय का
पुन�वतरण, सामा�जक-आ�थक क�ाण, समावेशी �वकास हो सकता है)
A well planned Fiscal Policy can help in following arenas:
 Full Employment: through welfare schemes/ rural employment programmes like MGNREGA
(📑📑More in pillar6) (लोक क�ाणकारी योजनाओं द्वारा पूणर् रोजगार)
 🍊🍊To Fight Inflation (मुद्रा��त): Higher Income tax → ⏬disposable income (�य यो� आय) →
demand curbed, To fight deflation= ⏬direct and indirect taxes to boost demand. (📑📑More in
pillar4: Inflation) (अप��त से लड़ने के �लए करों म� कटौती करे माँग को बढ़ाएँ )
 📈📈 To Boost Economic Growth: Provide income tax benefits on household savings in
LIC/Mutual Fund etc. → industries get new capital investment → factory expansion, jobs, GDP
growth. (📑📑More in pillar4: GDP) (करों म� �रयायत� दे कर �नवेश को बढ़ोतरी, आ�थक वृ�द्ध को बढ़ोतरी देना)
 �To Boost Inclusive Growth (समावेशी �वकास): Higher taxes on rich → use money for health,
education, women, poverty removal programs. (📑📑More in pillar6: Human Dev)
 🧭🧭 To Boost Regionally Balanced Growth: Give tax benefits to industrialists for setting up
factories in North East, Naxal/Left-wing Extremism (LWE) & other backward areas. (उद्योगप�तयों को
उ�र पूव� रा� तथा न�ल प्रभा�वत रा�ों म� फै �री लगाने पर करो म� �रयायते देकर सभी प्रदेशो का सं तु�लत �वकास)
 💱💱Exchange Rate Stability (�व�नमय दर ��रता): Give tax benefits to exporters to boost exports;
while impose higher taxes on imported items to reduce imports → Current Account Deficit
(CAD: चालू खाता घाटा) controlled → ₹ :$ Exchange rate volatility controlled. (📑📑 pillar3:BoP)
🔠🔠❓ MCQ. “Fiscal policy” means (UPSC-Indian-Engg-Service-2018)
a) Balancing the revenue collection and expenditure
b) Establishing equilibrium between demand and supply of goods and services
c) Use of taxation, public borrowing and public expenditure by Government for purposes of
stabilisation or development. d) Deficiency as an instrument of growth
20.2 💼💼 BUDGET (बजट): MEANING
Budget is an annual financial statement containing estimated revenues and expenditures for the next
financial year. Budget is the primary tool used by Govt to implement its fiscal policy. (अनुमा�नत राज�
और �य का वा�षक �व�ीय �ववरण, �जसक� मदद से सरकार राजकोषीय नी�त को लागू िक्रया��त है).
20.2.1 🔐🔐Three Funds related to Budget (Self-Study= Laxmikanth chapter on Parliament)
Art. 🔐🔐Consolidated Fund Incoming taxes, loans raised, loans recovered. Withdrawal
266 Of India (CFI) (सं �चत �न�ध) need Parliament Permission (- except for Charged
Expenditure like Judges’ salaries).
Art. 🔐🔐Public Account Incoming ₹ ₹ from provident fund, small savings, postal
266 of India (लोक लेखा) deposit etc. Govt acts similar to a banker transferring fund
�सफर् पहली बार बनाते व� सरकार from here to there so parliament permission ✋not necessary.
ने सं सद क� अनुम�त लेनी है. िफर हर IF separate fund is to be created for the first time, for a specific
बार इसम� से पैसा खचर् करते व� expenditure, then needs parliament permission to “create” it
सं सद क� अनुम�त नहीं लेनी है. e.g. Central Road Fund Act 2000, where Road Cess on Petrol,
Diesel would be deposited.
Art. 🔐🔐Contingency Fund ⇒ Unforeseen events. Held by Finance Secretary (IAS) in
267 of India (आक��कता �न�ध) Dept of Economic Affairs, on behalf of President.
⇒ Parliament approval is “subsequently” obtained, after
expenditure. Money refilled from CFI.
👜👜👜👜Budget-2021 reforms
1. Amount ⏫ from Rs 500 crore to Rs 30,000 crore
2. 40% of this amount will be kept with Dept of Expenditure
& 60% by Dept of Economic Affairs (DEA).
🔠🔠❓ Authorization for the withdrawal of funds from the Consolidated Fund of India must come from: (Pre-2011)
(a) President of India (b) Parliament of India (c) The PM of India (d) The Union Finance Minister
🚩🚩🚩FAQ: What is Cess? Ans. Finish entire Handout first.
20.2.2 🤧🤧🤧🤧Donation Funds: PMNRF vs PM CARES (दान)
👴👴PMNRF by Nehru 1948 🧔🧔PM CARES Fund by Modi 2020

⇒ Prime Minister’s National Relief Fund Prime Minister’s Citizen Assistance and
(PMNRF) रा��ीय राहत कोष Relief in Emergency Situations Fund
👴👴PMNRF by Nehru 1948 🧔🧔PM CARES Fund by Modi 2020
⇒ Originally for helping Pak-refugees. For dealing with any kind of emergency or
Nowadays for floods, cyclones, earthquakes, distress situation, e.g. COVID-19 pandemic
accidents, heart/kidney transplant, cancer, िकसी भी िक� क� आपातकालीन प�र��तयों से लड़ने के �लए
acid attack, riots etc.
⇒ Not setup by Parliament. ⇒ Same। इसे सं सद द्वारा नहीं बनाया गया, बजट म� से इसे
⇒ No support given from the budget. पैसा नहीं िदया जाता, सामा� लोगों के और �व�वध
⇒ Only runs from donations of ordinary people सं �ानों के दान से ये चलता है,
and institutions & foreigners donations.
⇒ Donors get Income tax exemption. ⇒ Same. दान देने पर आयकर म� छू ट मीलती है .यिद
⇒ If company donates ₹₹=counted in Corporate कं पनी दान देगी तो उसे कॉप�रेट सामा�जक दा�य� म�
Social Responsibility (CSR, Ref#1C ). �गना जाएगा
⇒ Prime Minister’s Office (PMO) operates ⇒ same.प्रधानमं त्री कायार्लय सं चा�लत करता है
⇒ PM is the ex-officio chairman. He’s assisted ⇒ Prime Minister is the ex-officio
by officers. (पदेन अ��) Chairman. (पदेन अ��)
⇒ Ex-officio Trustees (पदेन ट��ी): Ministers of
Defence, Home Affairs, Finance
⇒ 3 Nominated Trustees (मनोनीत): experts
from health, science, social work, law etc.
PM selects �ा�, �व�ान, सामा�जक कायर्, कानून
Sidenotes:
⇒ 1962: A separate ‘National Defence Fund’ under PM to help military & paramilitary forces’
families. Other features mostly similar to above funds. (ऊपर के टेबल म� हमने पढ़े वो दो फ� के अलावा एक
तीसरा रा�ी� य र�ा कोष/ �न�ध भी है)
⇒ Usually, such Govt donation funds are registered under Indian Trust Act, 1882. But, some legal
experts / critics suggest these donations should be brought under Public Account / Consolidated
Fund to bring accountability & transparency. (पारद�शता और जवाबदेही क� कमी)
⇒ 😰😰Controversy? PM CARES Fund officials refused to give information to a person under Right
to information Act (RTI), so now court case about applicability of RTI on this. (सरकार इस फं ड का
िहसाब िकताब “सूचना अ�धकार कानून म�” देने से इं कार कर रही थी तो कोटर् म� के स चला)
20.2.3 💼💼📃📃 Three Documents related to Budget (बजट के साथ प्र�ुत तीन द�ावेज)
- Budget comes from a French word 'bougette' meaning a leather bag / suitcase.
- Finance Minister (FM: �व� मं त्री) would keep documents in it → present in parliament.
- 2019: FM Nirmala Sitharaman ended this colonial practice by presenting the budget in a
traditional four-fold red cloth called “Bahi-Khata”. (लाल रंग के कपड़े म� लपेट के पेश िकया)
- While the term ‘budget’ not given in our constitution, but for each financial year, the Govt is
required to present following: (सं �वधान म� इस श� का �जक्र नहीं हालाँिक हर साल तीन द�ावेज सं सद म� रखे जाते ह�। )
📃📃Art. 112 📊📊Annual Financial Statement (AFS: वा�षक �व�ीय �ववरण) containing receipt and
expenditure of last year (and projections for the next year).
1) The revenue expenditure data must be shown separately from other
expenditures data (e.g. capital expenditure)
🚩🚩🚩FAQ: What does this mean? Ans. Finish pillar2D: to learn about capital
expenditure. Presently we are at pillar#2A.
2) No compulsion to show railway budget separately from general budget.
3) No compulsion to show plan expenditure separately from non-plan.
📃📃Art. 265 Taxes can’t be imposed without law so Finance Bill to obtain Parliament's
📃📃Art.117 permission to collect taxes. (�व� �वधेयक कराधान के �लए।)
Further, Parliament can reduce or abolish a tax proposed by the Govt. but
�Read
Parliament cannot increase tax beyond what Govt has proposed in the Finance
more about
them in bill. E.g. If Modi Govt’s Finance bill proposes “we want to ⏫tax on imported
Laxmikanth shoes from 25% → 35%”. Then
⇒ Members of parliament can vote to allow tax@35%/reduce/remove it.
⇒ ✋Members of parliament CANNOT vote “let’s ⏫tax to 45%”.
📃📃Art. 114 🛒🛒Appropriation Bill (�व�नयोग �वधेयक) to obtain Parliament's permission to spend
money from Consolidated Fund of India(CFI: Art 266). Such expenditure can be
�Read of two types :
more about 1) The expenditures ‘charged’ upon the Consolidated Fund of India e.g. Judges
them in salaries. They can be discussed but they are non-votable & automatically
Laxmikanth approved. (भारत क� सं �चत �न�ध पर भा�रत �य. सं सद म� उसक� चचार् हो सकती है, िक�ु मतदान नहीं।
वरना यिद सांसद मतदान से, जज क� तन�ाह ⏬कर द�गे तो जज �न�� प से काम नहीं कर पाएं गे)
2) The expenditure ‘made’ from CFI. E.g. ₹ ₹ for a scheme. They’re discussed
and voted. (भारत क� सं �चत �न�ध से िकये गए �य. सं सद म� इसपर चचार् भी होगी और वोिटंग भी)
⇒ The finance bill and appropriation bill are considered money bills (धन �वधेयक) under article 110.
Therefore Rajya Sabha (RS) approval is not necessary. (रा� सभा क� अनुम�त अ�नवायर् नहीं)
⇒ At maximum Rajya Sabha can discuss it for 14 days and give suggestions to Lok Sabha for
amendments, but it’s not binding on the Lok Sabha to accept Rajya Sabha’s suggestions. (धन
�वधेयक के मामले म� रा�सभा द्वारा िदए गए सुजाव मानना लोकसभा के �लए बा�कारी नहीं है)
⇒ Sometimes, the ruling party does not have majority in Rajya Sabha to pass other type of ordinary
bills (e.g. a bill to transfer National Housing Bank (NHB)’s ownership from RBI to Govt. or
abolishing some low-profile statutory body or enacting a law to make Aadhar card compulsory)…
⇒ Then, ruling party packs those ordinary bills’ proposals inside Finance Bill to get it approved
without Rajya Sabha’s obstruction. (कु छ बार सामा� �वधेयक के मामले भी �व� �वधेयक म� डालकर, �बना रा� सभा
क� अनुम�त के पास करवाने क� हरकते स�ाप� द्वारा क� जाती है, जो नै�तक नहीं)
⇒ In such scenarios, whether a given bill is money bill or not?= Ans: Lok Sabha Speaker’s decision
is final [Art.110(3)]. Speaker’s decision cannot be enquired by any Court [Art.122].
🔠🔠❓ MCQ. What will follow if a Money Bill is substantially amended by Rajya Sabha? (Pre’13)
a. Lok Sabha may still proceed with the Bill, accepting or not accepting recommendations of Rajya Sabha.
b. The Lok Sabha cannot consider the Bill further.
c. The Lok Sabha may send the Bill to the Rajya Sabha for reconsideration.
d. The President may call a joint sitting for passing the Bill.
🔠🔠❓ MCQ. Find correct statement(s): (UPSC Pre’15)
1. The Rajya Sabha has no power either to reject or to amend a Money Bill.
2. The Rajya Sabha cannot vote on the Demands for Grants.
3. The Rajya Sabha cannot discuss the Annual Financial Statement.
20.3 💼💼�SIX STAGES OF PASSING THE BUDGET IN PARLIAMENT (6 चरण)

1. 🎙🎙Presentation of budget (बजट का प्र�ु�तकरण)
2. 🤬🤬General Discussion (आम बहस)
3. 🗳🗳Scrutiny by departmental committees (�वभागीय स�म�तयों द्वारा जांच)
4. 🗳🗳✂Voting on demands for grants, cut motions, guillotine. (अनुदान क� मांग पर मतदान )
5. �🛒🛒Passing of Appropriation Bill (�व�नयोग �वधेयक का पा�रत होना)
6. �🍋🍋Passing of Finance Bill (�व� �वधेयक का पा�रत होना )
📗📗 Self-Study from Indian Polity by M.Laxmikanth’s chapter on Parliament.
20.3.1 📆📆Financial Year (FY: �व�ीय वषर्)

⇒ 1867: British Indian Govt started financial year 1st April to 31st March to align with their home
country’s financial year. �ोंिक इं ��ड म� ऐसा �व�ीय वषर् था, इस�लए भारत म� �व�ीय वषर् ऐसा िकया
⇒ Constitution has not specified any months for FY but we continued the British legacy.
⇒ 2016-17: Finmin setup Shankar Acharya Committee: Whether we shd change FY (like Jan-Dec
or Rabi-Kharif Cropping seasons) for better estimation of tax collection and expenditure?
⇒ ✋2017: All states not in favor because accounting practices /softwares need to be changed. Its
challenges outweighed the benefits. So, Modi Govt not implementing. इसको लागू नहीं कर रहे
⇒ 🤧🤧2020: some fake news that FY changed due to Corona, but it was FAKE-NEWs (झूठा समाचार)
20.4 📃📃🛒🛒🛒🛒📆📆⏳VOTE ON ACCOUNT- (लेखा अनुदान)
The Constitution does not mandate any specific date for presentation of the Budget, but it is
presented to the Lok Sabha on such day as the President directs.
⇒ Before 2017: Presented in the last working day of February. Then it’ll pass through
aforementioned six stages- consuming all the time upto May month.
⇒ But while those six stages were going on, the financial year will be over (on 31st March) so
previous year’s Appropriation Act’s validity will be over.
⇒ Then govt cannot withdraw money from the Consolidated Fund of India even for the routine
expenditure like staff salary, electricity bills.
⇒ So, to avoid such crisis, government will put a motion for vote on account.
⇒ Here, parliament (= practically Lok Sabha) will allow the govt to spend some money from the
CFI, till the (next) Appropriation Act for next financial year is passed.
⇒ Vote on Account is generally granted for two months for an amount equivalent to one-sixth of
the total budget estimation.
✋Vote on Account is no longer necessary because (अब इसक� ज�रत नहीं)
⇒ Constitution has no compulsion to put budget on a specific date. So, 2017 onwards, Modi Govt.
began tabling the budget on the first working day of February.
⇒ All the six stages are completed by the last week of March.
⇒ Appropriation bill gets passed and signed by President before completion of 31st March. So they
did not require vote on account in 2017, 2018.
⇒ (###) However, in 2019’s Interim Budget, Modi Govt demanded “vote on account” because they
planned to place full-budget after general elections and perhaps they wanted to keep the ‘option’
open for tabling a big-sized appropriation bill after winning the election. (2019 के अंत�रम बजट म�
हालांिक मोदी सरकार ने लेखानुदान क� मांग क� थी �ोंिक चुनाव के बाद बड़ा सामा� बजट प्र�ुत कर उसम� मोटी रकम का
“�व�नयोग �वधेयक” डालने का �वक�/ऐसी �खड़क�/रा�ा वे खुला रखना चाहते थे)
🚩🚩🚩FAQ: (###) I’ve 500 types of counter arguments / doubts on this (###) bullet point. Ans. Govt
did not bother to give long reasoning behind their decision. Nobody filed a PIL SC. Economic
survey, NITI Aayog and columnist did not bother to comment much on it. So, I did not bother to
think/reflect more on it, Because it is NOT an efficient way to complete syllabus. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
20.5 (🤴🤴🤴🤴🤴🤴)=🥛🥛💼💼 INTERIM BUDGET (अंत�रम बजट)
⇒ Our constitution does not define or require interim budget. (अंत�रम बजट का सं �वधान म� �जक्र नहीं है)
⇒ But, during election year or extreme situation (E.g. when coalition government may collapse
before its term) then it’s considered unethical for such Govt. to make drastic/populist changes in
budget like “2gm gold for the marriage of every BPL-girl.”
⇒ So, while they’ll present a budget in the regular fashion i.e. 3 documents (AFS, FinBill,
Appro.Bill) & 6 Stages of Passing. But it (should) not have grand populist announcements. (ऐसी
प�र��तमे लोक-लुभावन क� योजनाओ के साथ बजट प्र�ुत करना नै�तक नहीं होगा, वरना �वप�ी नेता जीत नहीं पाएं गे चुनाव)
⇒ Such budgets are called Interim Budgets, and were presented in 2004 (Yashwant S.), 2009
(Pranab M.), 2014 (Chidambaram P.) and 2019 (Piyush G.)
⇒ Just like a Regular General Budget, an Interim budget is valid for the whole financial year,
however in between if new government is formed, they may present another budget to change
the provisions. (वैसे तो पूरे वषर् के �लए वैध होता है)
⇒ E.g. 2014-Feb: FM Chidambaram presented (interim) budget in 15th Lok Sabha, but then
UPA/Congress defeated in general election→ 2014-July: BJP’s FM Arun Jaitley presented (Full)
General Budget in 16th Lok Sabha.
⇒ 2019-Feb: FM Piyush G. presented Interim budget in 16th Lok Sabha → 2019-May: Modi won
General Election → 2019-July: FM Nirmala S. presented (Full) Gen Budget in 17th Lok Sabha.
✋Note: throughout the handout, I’ve used the term “Full” budget to
differentiate it from “Interim” Budget for easier revision & visualization. But in
Mains, you should use the word ‘General Budget’(सामा� बजट)
20.5.1 👜👜👜👜Budget’s THEME (बजट क� �वषयव�ु)
Constitution doesn’t require, but sometimes FM will do it to create media-hype:
Budget Year Did FM Speech mention a specific theme (�वषयव�ु)?
2018 and 2019 No specific theme mentioned in speech
Had three themes: (1) Aspirational India: मह�ाकांशी भारत (2)Economic
2020 (Full)
Development for all: सबके �लए आ�थक �वकास(3) Caring India: दयभावना
• No specific theme mentioned in speech but focus on AtmaNirbhar Bharat
2021 (Full) • Paperless/Digital Budget in a Samsung tablet made in India, covered in
Red-colored cover.
⇒ Azadi ka Amrit Kaal, the 25-year-long leadup to India@100.
⇒ Four priorities: 1) PM GatiShakti, 2) Inclusive Development 3)
Productivity Enhancement & Investment, Sunrise Opportunities, Energy
Transition, and Climate Action 5) Financing of Investments
2022 (Full)
⇒ Paperless/Digital Budget in a tablet, covered in Red-colored cover.
20.6 📘📘📘📘 ECONOMIC SURVEY (आ�थक सव��ण)
- A document prepared by (usually) by the Chief Economic Adviser (CEA) in FinMin.
- ✋No constitutional obligation to prepare or present it but usually it’s tabled in the parliament a
day before the Union Budget. (सं �वधा�नक �प से ऐसा करना अ�नवायर् नहीं)
- 2019-Feb: No economic survey was presented before the interim budget.
- 2019-July: Economic Survey presented before the (Full) General Budget.
- While Budget is labelled after next financial year (e.g. 2019-20), the Economic survey is labelled
after previous Financial Year. e.g. The survey tabled on Jan-2018 labelled as “Economic Survey
2017-18”, the Survey tabled in July-2019 is labelled “Economic Survey 2018-19”.
- For faster revision/easy visualisation, throughout my handout, I’ve used following labels:
- “📙📙📙📙ES22” means Economic Survey 2021-22 presented on 31/1/2022
- “📙📙📙📙ES21” means Economic Survey 2020-21 presented on 31/1/2021. & so forth.
Table 1: Theme / Format of Economic Survey?
Till 2013-14 ⇒ Single Volume survey. (�सफ़र् एक अंक म� प्रका�शत िकया जाता था)
⇒ Adopted Two Volume Systems like “IMF’s World Economic Outlook”. (दो-अंक)
2014-15 ⇒ Vol1= future suggestions | Vol2= Past data.
2 volumes ⇒ Explicitly mentioned Theme in preface (प्रा�थन): “Creating opportunity and
reducing vulnerability” (through JanDhan-Aadhar-Mobile = JAM trinity)
2017-18 ⇒ No theme in preface. PINK Cover for -Ending Gender Violence.
2 volumes ⇒ (गुलाबी रंग का पृ�: ल��गक िहसं ा को समा� करना)
2018-19 No theme. But Sky Blue Cover for -Blueprint for making India a $5 trillion
2 volumes economy” (नीले गगन का रंग: भारतीय अथर्�व�ा को $5 िट��लयन तक ले जाना )
2019-20 No theme but Lavender Purple color cover to show the synthesis of old and new ideas
2 volumes for wealth creation & economic freedom (to do business). Just like ₹100 currency
note which comes in both “old” series as well as “new” Mahatma Gandhi series with
lavender/purple color- जामुनी: धनसृजन और आ�थक �तं त्रता के �लए नये तथा पुराने �वचारो का स��लन
Paperless / Digital Survey. Green&Red/Brownish cover with photo of healthworkers
2020-21 & Corona Virus. No theme explicitly mentioned in preface. but focus areas / major
2 volumes talking points were 1) #SavingLives&Livelihoods 2) V-shaped Recovery 3)
Countercyclical fiscal policy 4) Bare Necessities Index
⇒ Released both in digital and paper (hardcopy)
2021-22 ⇒ THEME in Preface: Art and science of policy-making under conditions of
1 Volume extreme uncertainty using “Agile” approach. ("फु त�ली" ��कोण का उपयोग करते �ए
अ��धक अ�न��तता क� ��तयों म� नी�त-�नमार्ण क� कला और �व�ान)
2022-23 To be released in 2023-January. Stay tuned for Mrunal’s Win23 Series update pack!
20.6.1 📙📙📙📙ES22 - WHY Single Volume instead of two volumes?

⇒ 📙📙📙📙ES22 has Only 1 Volume + Statistical Appendix. It does NOT have Two volumes.
⇒ Official reason given = normal person may not have the time to read 900 pages and connect the
themes of volume#1 to the data of volume#2. So we have decided to compress it to single volume
so that ideas can be presented in a crispy condensed manner. (दो अंकों म� प्रका�शत िकया जाए तो सामा�
�� इतने सारे प�े पढ नहीं सकता, उसम� प्र�ुत �वचारों को आपस म� जोड़ नहीं सकता। इस�लए �सफ़र् एक अंक म� प्रका�शत िकया)
20.6.2 📙📙📙📙ES22 – WHY prepared by Principal Economic Adviser?

⇒ Traditionally the economic survey is prepared & signed by the Chief Economic Adviser (CEA) to
FinMin. But in 2021: K. Subramanian left job. → 28th January 2022: V Anantha Nageswaran
becomes the new CEA → 31st Jan 2022 the new economic survey had to be
published/presented. So, in reality Nageswaran would not have any time to prepare the survey by
himself! So, this 📙📙📙📙ES22 was prepared and signed by another officer in the finance ministry -
Sanjeev Sanyal (Principal Economic Adviser to FinMin, प्रधान आ�थक सलाहकार ).
(आ�थक सव��ण २०२२ प्रका�शत होने के तीन िदन पहले ही नया साहब ‘नागे�रन’ तो नौकरी पे लगा था, इस�लए उसने ये निह �लखा है।
असल ये सव��ण ने एक अ� अफ़सर ‘सं जीव सा�ाल’ ने बनाया है, और सं जीव सा�ाल के ह�ा�र से प्रका�शत �आ है।)
20.6.3 📙📙📙📙�Chief Economic Advisor (CEA: मु� आ�थक सलाहकार)

- Works under Finance ministry’s Department of Economic Affairs
- Usual tenure 3 years, reappointment possible, but not a constitutional or statutory body. Has
control over Indian Economic Service (IES) officers. (तीन साल का कायर्काल पुन�नयु�� सं भव)
- Notable CEAs in Past: Manmohan Singh, Raghuram Rajan, Arvind Subramanian (2014-18).
- 2018-2021: Krishnamurthy Subramanian served as the CEA.
- 2022-Jan: Dr V. Anantha Nageswaran as its Chief Economic Advisor (CEA). Nageswaran MBA
from IIM-A. His famous books: 1) Can India grow? 2) The Rise of Finance: Causes,
Consequences and Cures
20.7 �FINANCE MINISTRY AND ITS DEPARTMENTS: (�व� मं त्रालय और उसके �वभाग)
20.7.1 �💼💼Department of Economic Affairs (DEA: आ�थक कायर्/ आ�थक मामलो का �वभाग)
Functions of DEA:
⇒ Fiscal policy, Preparation and presentation of Union budget including the Railway component of
budget. Budget for union territories without legislature, budget for States under president rule.
⇒ DEA announces the Interest rates of small saving schemes. (Ref:1D, लघु बचत योजनाओं क� �ाज दर)
⇒ DEA maintains a website www.pppinindia.gov.in, to provide information related to Public Pvt
Partnership (PPP). (📑📑Ref-Pill5: Infrastructure for more)
Organizations under/related to DEA

1) Constitutional Body: Art. 280: Finance Commission. DEA liaisons with it.
2) Chief Economic Advisor (CEA) that we learned in previous section.
3) Financial Stability and Development Council (FSDC): is neither Constitutional nor statutory
body. FM is chairman. Members include the chiefs of all financial regulatory bodies- such as RBI,
SEBI, IRDAI, PFRDA and the chief of IBBI (📑📑Ref: 1C)
4) Govt Company: Security Printing and Minting Corporation of India Ltd. (SPMCIL). Registered
under the Companies Act responsible for printing currency notes, coins, commemorative coins,
cheques, postage stamps, non-judicial stamps, passports/visa and other travel documents etc.
20.7.2 �🛒🛒FinMin#2: Department of Expenditure (�य �वभाग)

⇒ Here the Controller General of Account (CGA: महालेखा �नयं त्रक from Indian Civil Accounts Service
(ICAS) service, recruited by UPSC-CSE) prepares estimate of how much money to be spent from
consolidated fund of India.
⇒ It also deals with Pay Commission reports, Pension Accounting office.
⇒ Web Portals of Expenditure Department:
 Public Financial Management System (PFMS): for disbursing money to various
Ministries and departments at Union and State level
 Bharatkosh- Non Tax Receipts Portal (NTRP): For selling India yearbook Yojana
Kurukshetra mags etc products and services by the government of India
20.7.3 💸💸💸💸RBI’s Next Generation Treasury Application (NGTA), 2020-Oct

⇒ RBI planning this web based application / software for management of
o �Money Market Securities ( �Ref: HDT-Pillar#1C)
o Gold Reserves, �
Foreign exchange, �Multi currency transactions ( �Ref: HDT-
Pillar#3A)
⇒ �Will this replace E-Kuber? How will it work? Ans. Topic still under development. Further
operational aspects not important for the scope of IAS exam. # �थोड़ा-पढ़ो-आगे-बढ़ो
🔠🔠❓ MCQ. Public Financial Management System (PFMS) is a web-based online software application
designed, developed , owned and implemented by the (UPSC-CDS2019-II)
A) Department of Financial Services B) Institute of Government Accounts and Finance
C) Controller General of Accounts D) National Institute of Financial Management
20.7.4 �🍋🍋FinMin#3: Department of Revenue (राज� �वभाग)

Looks after the taxation matters using bodies: <Hindi terms not given because it’ll take too much
printout space, but they’re given in indirect tax section of this handout>
 Central Boards of Revenue Act 1963 : 2 bodies →
Statutory
o Central Board of Direct Taxes (CBDT)→ Dept of Income Tax
Bodies
o Central Board of Indirect Taxes and Customs (CBIC). Before-2018-
& Quasi-judicial
March, it was known as Central Board of Excise and Customs (CBEC).
bodies
It implements GST from 1st July 2017, under the 101st Constitutional
Amendment Act, 2016.
वैधा�नक सं �ाएं
 Authorities for Advance rulings for IT, Customs & Central Excise, GST
अधर् �ा�यक
 Various Tribunals and appellate bodies related to taxation.
 Enforcement Directorate (for enforcing PMLA and FEMA Act)
Attached /
 Central Economic Intelligence Bureau
Subordinate##
 Central Bureau of Narcotics Financial Intelligence Unit
Goods and Service Tax Network (GSTN) is a non-profit company. Originally its
Associated
51% shareholding was with HDFC, ICICI etc. but 2018- Govt decided to make it
Companies
100% owned by Union & State Governments.
##🚩🚩🚩FAQ: What is the meaning of Attached/Subordinate/Autonomous Body? Ans.
https://unacademy.com/lesson/mrunals-yearbook-ministries-and-departments-forms-of-
government-organisations-in-hindi/7KCEZHT4
20.7.5 �💳💳💳💳FinMin#4: Department of Financial Services (DFS: �व�ीय सेवाएँ �वभाग)

Functions of DFS:
Schemes for Financial Inclusion (📑📑Ref-1D), PSB supervision and recapitalization, Public Sector
Financial Intermediaries, including their regulators (Except EPFO, ESIC etc.)
Organizations under/related to DFS:
 Bank Board Bureau: Neither Constitutional / statutory. Setup through gazette notification for
selection of top officials (MD, CEO, Chairman and full-time Directors) for PSBs, LIC and other
public sector financial institutions. (📑📑Ref:1B-2)
 Govt Company: National Credit Guarantee Trustee Company (NCGTC): For providing credit
guarantee for loans in Mudra, certain MSME loans, Stand up India, education-skill development
related loans. (इस सरकारी योजनाओं म� लाभाथ� कजार् वापस नहीं कर� तो ब�क के नुकसान क� भरपाई ये कं पनी करेगी)
20.7.6 �🏭🏭FinMin#5: DIPAM (�नवेश एवं लोक प�रसं प�� प्रबं धन �वभाग)
 Department of Investment and Public Asset Management (DIPAM) looks after Disinvestment /
privatization of Govt Companies / Central Public Sector Enterprises (CPSE- सावर्ज�नक �ेत्र के क� द्रीय
उद्यम) (Ref 📑📑#2D: Disinvestment)
20.7.7 �🏭🏭FinMin#6: Department of Public Enterprises (DPE: सावर्ज�नक उपक्रम �वभाग)

BEFORE 🤩🤩AFTER 2021-July Reform
Department of Public Enterprises (DPE) - DPE shifted to Finance Ministry. (सावर्ज�नक
functioned under Ministry of Heavy Industries उपक्रम �वभाग अब से �वत् मं त्रालय के अंतगर्त काम करेगा)
and Public Enterprise - 🤩🤩Benefit? DPE can work with more
(पहले ये सावर्ज�नक उपक्रम �वभाग “भारी उद्योग तथा सावर्ज�नक synergy / coordination with DIPAM
उपक्रम मं त्रालय” के अंतगर्त काम करता था) Department. (तालमेल सं कलन म� बेहतर होगी)
- DPE looks after Government Companies/Central Public Sector Enterprises (CPSEs)’s
administration, expenditure, financial health, survey/performance monitoring etc. (सरकारी कं प�नयों
के प्रबं धन, ख़च� �व�ीय �ा�, सव��ण/प्रदशर्न क� �नगरानी के बारे म� देखता है)
- DPE gives 'Ratna' status to CPSEs’ that are making good profits. (Ref 📑📑#2D: Disinvestment)
- DPE looks after CPSEs’ employees’ training, rehabilitation (Voluntary Retirement Scheme: VRS)
and other personnel matters What is VRS = Explained in Pillar1B1 lecture in public sector bank
merger lecture. (सरकारी कं प�नयों के कमर्चा�रयों के तालीम, �ै��क �नवृ�� इ�ािद का�मक प्रशासन)
- DPE DOESNOT look after selection/recruitment of employees in CPSE. There are separate
organizations for it -given in table below:
Selection/Interview of Managing Director, Who is responsible?
Chairman & other Top-Officials in _ _ (इन उ� पदा�धका�रयों का चयन कौन करता है)
Public Sector Banks/NBFCs/AIFI e.g. SBI, Bank Board Bureau (More in
PNB, LIC, NABARD, NHB etc (What are 📑📑Pillar#1B2) (सरकारी ब�कों/सरकारी �व�ीय
they? Ref: 1B1: Classification) → → सं �ान म� उ� अ�धका�रयों के चयन के �लए अलग
सं �ा BBB है)
Government companies Other than Public Enterprises Selection Board
[Public Sector Bank/NBFC/AIFI] e.g. (PESB) under the Ministry of personnel
ONGC, Coal India, Hindustan Copper, (सरकारी ब�क/ सरकारी �व�ीय सं �ान के अलावा
Hindustan Aeronautics Limited (HAL) etc वाली सरकारी क��नयों म� उ� अ�धका�रयों के चयन
के �लए अलग सं �ा PESB है)
RBI Governor, SEBI Chief etc regulators Separate Committee headed by Cabinet
→. →. → Secretary (IAS)
The highest official in each of above 6 depts is called ‘Secretary’ (usually an IAS)
→ senior-most among them is designated as Finance Secretary=signs ₹ 1 note.
Finance Secretary usually heads the Dept of Economic Affairs (DEA)
20.7.8 �🏭🏭FinMin#6: DPE → National Land Monetization Corporation (NLMC-2022)

⇒ 👜👜👜👜Budget-2021 announced this → 2022-March: Govt said we’ll setup NLMC under Dept of
Public Enterprise. This company 100% owned by Govt with paid up capital of ₹150 cr.
⇒ Function? Renting/selling surplus land-assets of govt depts/govt companies etc. It will hire
experienced professionals from private sector to ensure efficient management.
⇒ Related topics: PM Gati Shakti, National Monetization Pipeline, National Infra Pipeline: (REF: in
📑📑Pillar#5: PPP / public private partnership)
सरकारी कं प�नयों क� अ�त�र� ज़मीन / इमारत /सं प��यों को �नजी �ेत्र के उधोयपतीयो को िकराये पे देना/बेच देना- इन सबके �लए एक
“रा�ी� य भू-मौिद्रकरण �नगम” क� �ापना।
20.7.9 �Sidenote: Indian Audit and Accounts Department

 As per Press Release FinMin = 6 departments that we learned above.
 This (lesser known) dept is headed by Constitutional Body: Comptroller and Auditor General
(CAG: भारत के �नयं त्रक-महालेखापरी�क इस के मु�खया होते ह� तो इस �वभाग को �व� मं त्रालय का िह�ा नहीं माना जाता)
🔠🔠❓ MCQ. Find correct Statement(s): (MCQ-Prelims-2015)

1. The Dept of Revenue is responsible for the preparation of Union Budget.
2. No amount can be withdrawn from the Consolidated Fund of India without authorization from
Parliament of India.
3. All the disbursements made from Public Account also need the authorization from Parliament
🔠🔠❓ MCQ. Which one of the following is responsible for the preparation and presentation of Union
Budget to the Parliament? (MCQ-Prelims-2010)
(a) Department of Revenue (b) Department of Economic Affairs
(c) Department of Financial Services (d) Department of Expenditure
🔠🔠❓ MCQ. Fiscal Policy in India is formulated by: (MCQ-CDS-2012)
(a) the Reserve Bank of India (b) the Planning Commission (c) the Finance Ministry (d)SEBI
20.8 💼💼BUDGET→ ⏳REVENUE PART→ 📥📥RECEIPTS→ 🍋🍋TAX RECEIPTS

बजट→ राज� भाग→ प्रा��यां→ कर प्रा��यां
20.8.1 🍋🍋 Types of taxes: direct / indirect: प्र�� कर/ अप्र�� कर
Parameter 🍋🍋🍋🍋Direct Tax 🍋🍋🍋🍋🍋🍋Indirect Tax (e.g.
(e.g. 5% Tax on your 18% GST on purchase of
income) Biscuit)
🤲🤲Incidence of Tax: Point from where Income Tax Assessee Shopkeeper/seller (�वक्रेता )
government collects the tax. (करापात) (प्र�� करदाता खुद)
😰😰Impact of Tax: point where the burden Income Tax Assessee Customer/buyer (ग्राहक )
of tax is ultimately felt and can’t be (प्र�� करदाता खुद)
transferred elsewhere. (कराघात/कर का प्रभाव)
The incidence and impact of tax is…. On the same person Not on the same person.
🎓🎓Note: Above table’s deeper interpretation also involves how ‘burden’ is shifted from seller to
buyer, But we’ll not waste time learning its GRAPH/PHD. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
20.8.2 Types of taxes: Progressive vs Regressive vs Proportional

Type of Tax Example
Proportional If Govt. had a single 10% flat rate direct tax on income irrespective of whether
समानुपाती🔂🔂 you’re a poor, middle class, upper middle class or a rich person. Then each
taxpayers’ same proportion of income(10%) will go into taxes.
Progressive - 5%-20%-30% income tax slabs depending on your income.
(प्रगामी) - Thus, richer the person, bigger proportion of his income will go into taxes.
�😁😁 Thus, direct taxes are progressive in nature.
↗�😥😥 - Misc. term: Degressive tax: It is a blend of progressive tax and proportional
अमीर पे �ादा गरीब tax. If a direct tax increases upto a point & after that limit, a uniform rate is
पे कम charged (5-5-10-10-...10). So, its partly proportional because tax rate remains
unchanged even if income increases. (✋but further PHD/hairsplittery not req
on this term. If MCQ asks then Ans= income tax is PROGRESSIVE TAX)
Regressive - 18% GST on Biscuits worth ₹100 = ₹18 paid as (indirect) tax.
(प्र�तगामी) - When Mukesh Ambani buys one packet, and a poor man buys one packet,
�😁😁 greater proportion of poorman’s income is gone in taxes. Thus, indirect taxes
↗�😥😥 are regressive in nature. (गरीब आदमी क� वेतन का �ादा िह�ा जाता है)
MCQ. Which one of following is a progressive tax structure? [UPSC-CDS-2015-II]
(a) Tax rate is the same across all incomes (b) Tax rate increases as income increases
(c) Tax rate decreases as income increases (d) Each household pays equal amount of tax
20.8.3💣💣 Adam Smith’s 4 canons of taxation (कराधान के चार �सद्धांत)
1. Canon of Equality (समानता का �सद्धांत): Tax should be equal /proportionate to income. Rich people
should pay more taxes than poors.
2. Canon of Certainty (�न��तता का �सद्धांत): dates, slabs, % should be definite & told in advance.
Randomly govt should not demand “x%” tax to build statue, temple or mosque.
3. Canon of Convenience (सु�वधा का �सद्धांत): tax payer shouldn’t be made wait for a kilometre long
queue & fillup 50 pages worth tax forms.
4. Canon of Economy (�मत��ता का �सद्धांत): to collect ₹ 100 crore tax, govt shouldn’t be spending ₹ 99
crores in salaries of tax officials.
🔠🔠❓ MCQ. Which of the following was not advocated by Adam Smith? (UPSC-CDS-2019-1)
a) Canon of equality b) Canon of certainty c) Canon of convenience d) Canon of fiscal adequacy
🔠🔠❓ MCQ. Find Correct Statements (UPSC-CDS-2016-1)
1. Ability to pay principle of taxation holds that taxes people pay should relate to their income or wealth
2. The Benefit Principle of taxation states that individuals should be taxed in proportion to the benefit they
receive from Government programmes
3. A progressive tax takes a larger share of tax from poor families than it does from rich families
4. Indirect taxes have the advantage of being cheaper and easier to collect
Answer Codes: (a) 1 and 3 only (b) 2 and 4 only (c) 1, 2 and 4 only (d) 1, 2, 3 and 4
21 🍋🍋🍋🍋 DIRECT TAXES: TYPES (प्र�� करो ं के प्रकार)

Direct Taxes 🧔🧔 of Union Govt. * Means Abolished �🕉🕉 Of State Govt.
👜👜On income - Corporation Tax, Minimum Alternate 1. Agriculture Income tax
(आय पर) Tax (MAT) 2. Professional Tax
- Income Tax on income except agri. (Constitutional ceiling of
- Capital Gains Tax (CGT) max ₹2500 per year)
- ❌ *Dividend Distribution Tax (DDT)
🏠🏠On assets, - Securities Transaction Tax (STT) 1. Land Revenue (भू राज� )
transactions & Commodities Transaction Tax (CTT) 2. Stamp/Registration duty
(सं प��, लेनदेन पर) - ❌ *Wealth Tax (सं प�� कर) 3. Property tax in urban areas
- ❌ *Banking Cash Transaction Tax (शहरी �ेत्रों म� सं प�� कर)
- ❌ *Estate Duty
🛒🛒On − ❌ *Hotel Receipt Tax, *Gift Tax #Road Tax (although debatable
expenditure (खचर् − ❌ *Fringe Benefit Tax i.e. When the as in some States/categories of
पर) employer give benefits to employee apart vehicles- the seller will collect &
from salary e.g. subscription to gymkhana submit)
or golf-club.
🚩🚩🚩FAQ: How much money collected from these taxes? Ans. REF: Pillar2A2: GST Handout
🔠🔠❓MCQ. Corporation tax is imposed by _ _ _ [UPSC-CDS-2013-II]
(a) State Government(b) Central Govt (c) Local Government(d) State as well as Central Govt
21.1 🍋🍋🍋🍋DIRECT TAXES: MERITS AND DEMERITS (प्र�� करों के लाभ व् नुकसान)
😀😀Merits of Direct Taxes 😓😓Demerits (नुकसान)
1. Progressive (प्रगामी: richer the person higher
the tax): income inequality ⬇
2. Promotes civic consciousness (नाग�रक चेतना)
since citizen directly feels the ‘pinch of tax’
(चुभन महसूस करना).
3. To ⬆ savings & investment: Income tax
deduction/exemptions on NPS/ LIC etc. 1. Externality (बाह्यता) not counted: Academic
4. Elasticity (लचीलापन): As public’s income level Books Author vs Film star promoting cigars
⬆ then tax revenue ⬆ [30% Income Tax on both].
5. Certainty (when and how to pay IT, �न��तता) 2. Hardship not counted: Working Carpenter
6. Can ⬇ volatility in International currency [5%] vs sleeping landlord [5%] (किठन प�रश्रम के
exchange rates by imposing Tobin Tax �लए कोई �रयायत नहीं )
(📑📑More in Pillar#3) (मुद्रा �व�नमय दर क� अ��रता 3. High level of direct tax= laziness, less foreign
को कम िकया जा सकता है ) investment. (उची दरे लोगों को आलसी बनाती है)
4. Narrow base: poor people not covered. If we
try then very large Income tax staff will
required to supervise over poor people. (सं क�णर्
आधार)
5. Prone to litigation & loopholes, tax evasion,
avoidance. (📑📑More in #2B: Blackmoney)
(मुकदमेबाजी, कर-चोरी, कर-प�रहार)
21.2 🍋🍋🍋🍋UNION TAX, CESS AND SURCHARGE (क� द्रीय कर, उपकर और अ�धभार)
Any Union - Computed on taxable income, profit, transaction. Goes to Consolidated Fund of
Tax India → Later divided between Union and states as per the Finance Commission
(सं घ कर) formula. (except if IGST: divided on GST Council’s formula.)
Surcharge - Computed on Tax amount. So, it is a ‘tax on tax’. This ₹₹ will also goto CFI.
- Surcharge is not shared with States using Finance Commission Formula.
(अ�धभार) - Usually, surcharge doesn’t have any clear objective in ‘prefix’, so it may be used for
any purpose. Exception is 10% Social Welfare Surcharge (समाज क�ाण अ�धभार) on the
customs duty on imported goods. → ₹₹ specifically used for social welfare schemes
of the Union. (सामा� �प से इन पैसों का उपयोग िकस खास काम म� होता है उसे �� बताया नहीं जाता)
Cess - Computed on [(Tax) + (Surcharge, if any)]
(उपकर) - Clear objective is mentioned. E.g. Road & infrastructure cess, Health & Education,
GST compensation cess etc.
- By default, cess goes to CFI→ from there, cess goes to Public Accounts. Sometimes
there may be separate fund inside public account for it, e.g. Central Road Safety
Fund, Prarambhik Shiksha Kosh etc.
- Finance Commission can’t prescribe formula to share cess with States. (Although
some of the cess money will invisibly goto states as a part of scheme implementation
e.g. Pradhan Mantri Fasal Bima Premium share, etc. but that depends on discretion
of Union) (इस रकम को �व� आयोग रा�ों के साथ नहीं बाँट सकता. क� द्र सरकार अपने �ववेक से अलग अलग
योजनाओं म� शायद इस उपकर का कु छ पैसा रा�ों को दे सकती है )
- GST Compensation Cess is shared with States, as per GST Council formula.
<explained in the GST segment of next handout>
21.2.1 🍋🍋🍋🍋: 🚩🚩🚩Cess pe FAQ & PHD

🚩🚩🚩FAQ: Why does Govt levy cess/surcharge, why is Finance Commission Kept out of it?
Ans. So Ruling party@Union can use money for their favourite schemes without having to share the
money it with States. (तािक क� द्र का स�ा प� अपनी मज़� से उस पैसे को इ�ेमाल कर सके । �बना रा�ों को उनका िह�ा िदए)
🚩🚩🚩FAQ: IS it compulsory that every tax MUST have Cess and Surcharge on it?
Not compulsory. Depends on Govt’s mood / discretion. (सरकार क� मज़� पर �नभर्र)
🚩🚩🚩FAQ: Is Cess applicable only on direct taxes OR on indirect taxes?

Some of them applicable on direct taxes. Some of them applicable on indirect taxes.
Cess examples → Applicable on
Health & Education Cess → Levied on Direct Taxes such as Income Tax, Corporation Tax
Health Cess → Levied on Customs Duty on Imported Medical Devices
Agriculture Infrastructure Levied on Customs Duty on some products
and Development Cess Levied on Excise Duty on some products
Road & Infrastructure Cess Levied on Excise Duty on Petrol, Diesel
GST Compensation Cess Levied on GST on some products e.g. Vimal Gutkha, cars etc.
🚩🚩🚩FAQ: Is “Health Cess” and “Health & Education Cess” same or different?
Ans. Different. Observe table given above.
🚩🚩🚩FAQ: I’ve 500 other doubts. Ans. Not important for UPSC exam.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
21.2.2 🍋🍋🍋🍋: 🏦🏦 Direct Tax → Cess: 🍋🍋Pradhan Mantri Swasthya Suraksha Nidhi (PMSSN)
प्र�� करों पर लगाए गए उपकर का पैसा इस फं ड म� डाल�गे और �व�वध �ा� योजनाएं चलाएं गे
⇒ Govt levies 4% Health & Education Cess on direct taxes such as income tax & corporation tax.
(प्र�� करों पर �ा� व �श�ा उपकर)
⇒ 2021-March: govt created a new “Non-Lapsable” fund under Public Account. (What is “Non-
Lapsable fund? Ref: Pillar#2D). लोक लेखा म� एक ग़ैर-��गत �न�ध बनायी जाएगी
⇒ This fund will receive ₹ ₹ from above cess.
⇒ Health ministry will use this money for (More in 📑📑Pillar#6)
o 1) Ayushmann Bharat & its sub schemes like PM-JAY (5L-Health insurance),
o 2) Pradhan Mantri Swasthya Suraksha Yojana (setting up AIIMS-like institutions in
every state & upgrading government medical colleges).
o 3) National Health Mission (NHM) रा��ीय �ा� �मशन
o 4) Health emergencies like Corona �ा� आपदाएँ
21.3 🍋🍋🍋🍋: 🏦🏦 DIRECT TAX → CORPORATION TAX (�नगम कर)
Figure 1: �नचोड़ �नचोड़ के कर/टे� ल�ग,े िकसी को नहीं ब��गे!

⇒ Also known as “Corporate Income Tax (CIT: �नगमो पे लगने वाला आयकर)”
⇒ It’s levied on Company’s profit, under the Income-tax Act, 1961. (Technically called “NET
Income” but we’re not here for CA-exam’s pedantry.)
Table 2: Corporation Tax Rates before 2019-Sept 📅📅
25% If Indian company's turnover is upto ₹400 cr
30% If Indian company’s turnover is higher than ₹400 cr
40% foreign company’s profit from India
⇒ Additionally “x%” surcharge (अ�धभार) amount on above Corporation Tax amount, depending on
the company's turnover.
⇒ Additionally 4% health and education cess (उपकर) on above [Corporation Tax + Surcharge]
21.3.1 🍋🍋🍋🍋: 🏦🏦 Corporation Tax Cut in 2019-Sep

Since Indian corporate sector was facing a slowdown, Nirmala.S announced tax-cuts:
Corporation Tax 😰😰Before 🤩🤩After
🌳🌳 Existing Indian companies 25-30% depending on 22 % tax
(वतर्मान भारतीय कं प�नयों पर ) turnover +10% surcharge on (tax)
Corporation Tax 😰😰Before 🤩🤩After
+ 0-12% surcharge +4% cess (on tax +
depending on profit surcharge)
+ 4% health edu cess = 25.17%
🌱🌱 New INDIAN MFG company -- 15 %
registered from 1/10/2019 onwards. (but +surcharge & cess as
they must start manufacturing by given above
31/3/2024) = 17.01%
🐼🐼 Foreign Company’s profit from India 40%+surcharge+cess no change
🐷🐷 Zero TAX companies 18.5% MAT 15% MAT
Related Topics: Laffer Curve, Tax elasticity etc in 📑📑2B: black money handout.
21.3.2 🍋🍋🍋🍋: 🏦🏦🏦🏦 Corporation Tax: announcements in last few budgets

�Budget-2020 If a Sovereign Wealth Fund ( �Ref-pillar#1C) invests in Indian
infrastructure projects → Tax holiday for them. E.g. Abu Dhabi Investment
Authority
�Budget-2021 Tax holiday for developers of affordable housing till 31/3/2022. (meaning
0% corporation tax on builder’s profit).
� �Budget-2022 small technical reforms. Nothing exam worthy.
🚩🚩🚩FAQ: What is the meaning of “tax holiday?”

Ans. You’ll not have to pay tax for “X” years. कर भरने से छु ट्टी
21.3.3 🍋🍋🍋🍋: 🏦🏦🏦🏦: 🤓🤓✋ Corporation Tax: Exemption from audit for small companies
⇒ Audit (लेखा परी�ण) is a systematic and scientific examination of the Balance Sheet/Accounts
Books/Financial Transactions. Audit is done by an independent person known as 🤓🤓 Auditor.
⇒ By default, companies with turnover above ₹1cr, need to present their audited accounts to the
Govt. (1 करोड़ से �ादा क� कमाई करने वाली कं प�नयों ने अपना लेखा-परी�ण सरकार म� जमा करना होता है)
⇒ 💼💼Budget-2021: if the company carries out 95% of their transactions digitally, they'll be
exempted from the audit requirement, if their turnover upto ₹10cr. (अपना �ादातर लेनदेन िड�जटल
मा�म से करने वाली कं प�नयों को लेखा परी�ण से मु��- भले ही उनक� कमाई 10 करोड़ तक हो।)
⇒ 🤩🤩Benefit? 1) No need to hire auditors → ⏬Tax Compliance Burden for the company (कर
अनुपालन के खच� कम होंगे कं पनी के �लए) 2) ⏫digital Transaction → ⏬ scope for Tax Evasion & Black
Money (िड�जटल भुगतान म� बढ़ोतरी से काले धन और कर चोरी के अवसरों म� कमी)
21.3.4 🍋🍋🍋🍋: 🏦🏦🏦🏦 Corporation Tax on Startups
Figure 2: “अभी अभी धं धा शु� िकया है, थोड़ा ब� दो, मा�लक!” IT Dept: “ठीक है, �सफर् थोड़े वष� के �लए ही!”
Startup is a company not older than 10 years and not having turnover more than 100 cr. & is doing
innovation in goods/services. Govt helps them through Startup India Scheme (📑📑more in Pillar4B).
 Startup can claim 100% deduction (=Tax Holiday) on its profits, for 3 years out of the first 10
years of registration incorporation.
 Related concepts: Angel Tax (More in 📑📑Pillar#2B: Black Money)
21.4 🍋🍋🍋🍋: 🏦🏦 EQUALISATION LEVY / GOOGLE TAX (समकारी लेवी/ गूगल टै�)
Figure 3: “हमारा server तो भारत म� है ही नहीं तो हमे ब� दो!” IT Dept: “तुमको तो �ब�ु ल ही नहीं ब��गे!! 👺👺🤬🤬
⇒ If a foreign company makes profit in India, they have to pay 40% Corporation Tax.
⇒ If an Indian businessman purchases digital advertisement slots in google-adsense / facebook =
those (foreign) digital-ads companies are making profit.
⇒ But earlier, google/facebook did not pay tax on that profit, claiming their business activity (of
displaying digital-ads) is done outside India on global servers.
⇒ So, Budget-2016 imposed tax on such income/fees of foreign digital advertisement companies.
⇒ Officially called “Equalisation Levy” (EQL), unofficially nicknamed “Google Tax” / “Digital
Service Tax (DST).
⇒ It’s not part of “Income Tax” or “Corporation Tax” under the Income Tax Act 1961, but a
separately imposed by the Finance Bill/Act 2016.
⇒ Foreign Company can’t escape it saying we’re protected under Double Taxation Avoidance
Agreement (DTAA) in our home country. (More in 📑📑Pill#2B: blackmoney)
Table 3:✋ further operational guidelines NOTIMP. Not-here4C.A. Exam
💼💼Budget- • 6% Equalisation Levy on foreign digital advertisement companies e.g. Google’s
2016 adsense, facebook digital ads (�वदेशी िड�जटल �व�ापन कं प�नयाँ)
💼💼Budget- • 2% Equalisation Levy on foreign companies engaged in

2020 • E-commerce (ई-�ापार)/selling goods & services to Indian residents e.g.
Microsoft/Adobe selling digital softwares on their site
• Digital subscription (िड�जटल सद�ता) to Indian residents e.g. Netflix,
⇒ 🤧🤧 Corona crisis: foreign companies kept requesting Indian govt to defer tax-filling dates &
reduce tax%. But Indian Govt not giving them relief. (कोई �रयायत नहीं �मलेगी)
⇒ 2021: India & USA working on a deal to ‘phase-out’ equalization levy under ‘Global Minimum
Tax’ regime. (More in 📑📑Pillar#2B: Black Money) (इसे धीरे धीरे ख़� कर िदया जाए एसा समझौता होने वाला है.)
Related terms:
1. Significant Economic Presence (SEP: उ�ेखनीय आ�थक उप��ती): Concepts basically means if a
foreign company is making money from Indians through digital ads / streaming services (e.g.
NETFLIX videos from overseas servers) then the company has ‘SEP’ in India, therefore, Indian
govt has powers to tax it. 💼💼Budget-2020 made some technical changes into it. But, poor
cost:benefit chasing it for MCQs.
2. OECD used a phrase ‘Tax challenges of digitization’ to denote above problems where digital
services type Multinational Corporation (MNC) are avoiding taxes. (ब�रा��ीय �नगमो द्वारा कर को टालना)
3. France has implemented tax on large technology companies called GAFA Tax (Google Apple
Facebook Amazon) from 1st Jan 2019. Other nations also doing similar.
4. 🚩🚩🚩FAQ: What is the difference between tax, duty, levy?= if you get selected in IRS (Indian
revenue service) they’ll teach you in training. 🎓🎓✋Not-imp here. #थोड़ा-पढ़ो-आगे-बढ़ो.
5. 🚩🚩🚩FAQ: What is onshore/offshore safe harbor regime? 🎓🎓✋Not-important
Related terms: Global Minimum Tax, DTAA, GAAR, PoEM etc in 📑📑Pillar#2B:
🔠🔠❓ MCQ. With reference to India’s decision to levy an equalization tax of 6% on online
advertisement services offered by non-resident entities, Find correct statements? (Pre-2018)
1. It is introduced as a part of the Income Tax Act.
2. Non-resident entities that offer advertisement services in India can claim a tax credit in their
home country under the “Double Taxation Avoidance Agreements”.
Answer Codes: a) 1 only b) 2 only c) Both 1 and 2 d) Neither 1 nor 2
21.5 🍋🍋🍋🍋: 🏦🏦🐷🐷 MINIMUM ALTERNATE TAX (MAT: �ूनतम वैक��क कर)
- Some industrialists make profit but use tax-deduction, exemptions, depreciations and
accounting tricks to show ₹0 taxable income to escape paying Corporation Tax. So,
- Budget-1996 (Chidambaram) introduced 18.5% MAT on book profit of such ‘ZERO TAX
Companies’, using a different type of formula. (What was the formula, not important).
- Modi govt ⏬ reduced MAT from 18.5% → 15%
21.6 🍋🍋🍋🍋: 🏦🏦🏦🏦 COOPERATIVE SOCIETIES: ALTERNATIVE MINIMUM TAX (AMT)

⇒ Cooperative Societies? formed by minimum 10 persons and registered under
o A) State laws (if Single State Cooperative Society), or
o B) under union’s multi-state cooperative Societies Act 2002. (More in pillar4A: AGRO)
⇒ Cooperative Societies are subjected to 10-20-30% tax on their taxable income, depending on
cases/technical conditions. (which are NOT IMP for IAS Exam).
⇒ But, using loopholes in the tax deductions → some cooperative societies may show their taxable
income is zero. Such ZERO TAX cooperative societies may be subjected to Alternate Minimum
Tax- AMT. (Similar to how Zero-TAX companies are subjected to MAT)
⇒ 👜👜👜👜Budget-2022 ⏬ AMT from 18.5% → 15% (सहकारी सं �ाओं पर वैक��क �ूनतम कर म� कटौती)
🚩🚩�FAQ: if it is showing zero taxable income, then how can we complete the tax on it?
Ans. I am done teaching the one-liner-GK for Exam. Beyond that you may feel free to do PhD &
Chartered accountant-giri from https://www.incometaxindia.gov.in/tutorials/10.mat-and-amt.pdf
21.7 🍋🍋🍋🍋: 🗃🗃 DIVIDEND DISTRIBUTION TAX (DDT: लाभांश �वतरण कर)
- 1997: FM Chidambaram started to levy DDT on a shareholder’s dividend income. In reality,

company (=source) will cut that much ₹ ₹ portion from shareholders’ dividend, & directly
deposit that ₹ ₹ to the govt, as DDT.
- Shareholder did not have to pay Income tax on it.
- DDT Rate: 15% + cess + surcharge = 20.56% on dividend paid.
- 💼💼Budget-2020: abolished DDT. But, dividend will be taxable in the hands of shareholder (i.e.
he’ll pay income tax on it). 🤩🤩Benefits?
 Previously even lower middle-class shareholder’s ~ 20% dividend was cut in the name of
DDT. But now he may have to pay barely 0-5% income tax on income from dividend.
 Thus, Shareholders get to keep more ₹₹ for spending→ shopping spree → demand,
production, economic growth. (म�म वगर् क� जेब पर कर-बोझ कम होगा.)
21.8 🍋🍋🍋🍋: 🗃🗃🗃🗃 BUYBACK TAX (शेयर क� वापसी-खरीद पर कर)
Profit making companies sometimes repurchase their own shares back from shareholders
⇒ Impact? These many shares are extinguished from company’s liability side.
⇒ Benefit to company? No need to pay dividend on these shares in future + other benefits that are
imp for chartered accountant exam but not for IAS exam so we will not waste time.
⇒ Companies need to pay “20% Buyback tax” to Govt, WHEN company buys back its own shares
from the shareholders.
🚩🚩🚩FAQ: is it compulsory for shareholder to give his shares back in such buyback?
Ans. No, it is not compulsory. It depends on shareholder’s wish. E.g. 2022-March: Tata consultancy
services (TCS) share was trading at ₹3700 in secondary market. Company made offer to shareholders
that “We’ll buy back every 13 shares out of 50 shares at ₹4500.” So if any shareholder wanted to
make profit, he could accept this buyback offer.
21.9 🍋🍋🍋🍋 : 🏠🏠🏠🏠🏠🏠CAPITAL GAINS TAX (CGT: पूंजीगत लाभ कर)
- When an owner makes profit by selling his capital assets such as non-agro-land, property,
jewellery, paintings, vehicles, machinery, patents, trademarks, shares, bonds & other securities-
then he has to pay CAPITAL GAINS TAX (CGT).
- Depending on how long did the owner keep that asset before selling it, he will pay:
- EITHER Long Term Capital Gains tax (LCGT: x% दीघार्व�ध) OR
- OR Short Term Capital Gains tax (SCGT: y% अ�ाव�ध)
- In practice, the buyer will deduct that much ₹ ₹ portion from the payment to seller, and deposit
to the government. (वा��वक जीवन म� खरीदार ये रकम बेचने वाले के भुगतान म� से काट के सरकार को जमा करता है )
- However, some people form shell companies abroad & do transactions from there to avoid
paying taxes to India. (More in 📑📑Pillar#2B: Black Money. For Shell companies, DTAA, GAAR,
Round Tripping, Angel Tax etc)
- 💼💼Budget-2020 & 2021: some minor technical updates. notIMP.

- 👜👜👜👜Budget-2022:
- Bitcoin, NFT and other virtual digital assets (VDA): profit pe 30% CGT. Trade/Transfer
pe 1% TDS (Refer to 📑📑Pillar1: 1A1 about cryptocurrency theory)
21.9.1 🔗🔗🔗🔗:🍋🍋 Bitcoin Profit pe 30% Tax and transfer pe 1% TDS in 👜👜👜👜Budget-2022
- 👜👜👜👜Budget-2022 announced 30% capital gain tax (CGT) on income from virtual digital assets
such as cryptocurrency, bitcoin, Non-Fungible tokens (NFT) etc. (वचुर्अल िड�जटल प�रसं प��यों से �ई
आमदनी पर 30% पूंजीगत लाभ कर/टे� लगेगा.) (More in 📑📑Pillar#2A: Budget Taxation)
- Thus, while crypto trading is not illegal at present, but, the Indian govt does not want to
encourage it- that's why such a high level of taxation- similar to 30% tax on winnings casino-
gambling, lottery or horse-race-betting. (सरकार इतना �ादा टै� लगा रही है �ोंिक वह �नवेशको को िक्र�ॉमुद्रा म�
�नवेश करने के �लए प्रो�ाहन नहीं देना चाहती.)
🚩🚩🚩🎓🎓 FAQ: I’ve 500 types of doubts about “loss-offsetting” provision in 👜👜👜👜Budget-2022.
Ans. Not important for exam. Plz consult your Chartered Account if facing real-life tax problems.
21.9.2 🔗🔗🔗🔗:🍋🍋 Bitcoin Purchase pe 1% TDS in 👜👜👜👜Budget-2022
- 👜👜👜👜Budget-2022: 1% Tax Deducted at Source (TDS) on buying of Virtual Digital Asset (VDA
– such as bitcoin, NFT etc)- to trace the money trail / tax evasion. (More in 📑📑Pillar#2A)
- 😰😰Challenge/Criticism? Difficult to trace if buyer/seller doing transactions using crypto-wallets
that are not linked with PAN-Bank Accounts. (पैसों के लेन देन पर �नगरानी रखने के �लए TDS भी काटा जाएगा.
हालाँिक वा��वक �ज़दं गी म� इसम� TDS काटना काफ़� मु��ल होगा ऐसा �वशेष�ों को डर है।)
🚩🚩🚩🎓🎓 FAQ: I’ve 500 types of doubts about “TDS for transaction above ₹10,000 from 1st july”
provision in 👜👜👜👜Budget-2022. Ans. Not important for exam. Plz consult your Chartered Account
if facing real-life tax problems.
🔠🔠❓MCQ: In which of the following circumstances may ‘capital gains’ arise? (Prelims-2012)
1. When there is an increase in the sales of a product.
2. When there is a natural increase in the value of the property owned.
3. When you purchase a painting & there is a growth in its value due to increase in its popularity.
Answer Codes: (a) 1 only (b) 2 and 3 only (c) 2 only (d) 1, 2 and 3
21.10🍋🍋🍋🍋: 👪👪 INCOME TAX ON INDIVIDUALS (��क आयकर)
James Wilson (financial member of the Council of India, founder of the Economist magazine and
Standard Chartered Bank) introduced income tax in India on 24 July 1860 to compensate the British
losses during 1857’s Sepoy mutiny. So, 24th July is celebrated as Income Tax Day (Aaykar Diwas).
Suppose the gross income of an Indian Resident (age less than 60) is ₹9 lakhs.
- Out of this gross income, first we have to subtract the tax-deductions and tax-exemptions (कर-
कटौती और कर-छू ट) like income from agriculture, investments made in Provident Fund, NPS, LIC,
Medical Insurance etc (upto a certain limit), house rent allowance (HRA), repayment of
home/education loan, money donated in eligible charitable funds etc
- 💼💼Budget-2019: additional tax deduction (कर कटौती) given
- if took loans to buy electric vehicle � � �
- if a taking home loan for the first time. 💼💼Budget-2021 → extended this scheme till
31/3/2022 (छोटे मकान खरीदने के �लए म�म वग�य प�रवार ने जो कजर् �लया होता है उस कजर् पर जो �ाज चुकाना
होता है उस िहसाब से आयकर म� उ�� रयायत दी जाएगी.)
- 👻👻Atma-Nirbhar 2020: �First time home buyers of home upto Rs. 2 cr will get income tax
relief. How exactly? Associated concepts of circle rate of stamp duty etc. = beyond the scope of
UPSC MCQs. We'll not waste time. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
- 👻👻Atma-Nirbhar 2020: If Employers (boss) and wellwishers gave upto ₹10 lakh financial help
to a person for Corona illness/death → such income will not be counted in his taxable income
- 👜👜👜👜Budget-2022: Some tax deduction benefit to PH on buying insurance policy, State Govt
Employees on investment in NPS but NOT IMP.
- After subtracting such all things, suppose taxable Income is: ₹5,50,000/-
- From this amount, Salaried individuals get standard deduction of ₹50000.
- (Previously, it was ₹40k but Interim-Budget-2019 raised it to 50k).
- So, ₹5,50,000 - 50000 = ₹5 lakh is the taxable income, THEN…
Total Taxable Income: ₹5 lakh Income Tax Amount
Out of that upto 2.5 lakhs 0% 0%
From 2,50,001 to 5 lakhs = ₹2.5 lakhs 5% of 2.5 lakhs* 12500
left
From 5,00,001 to 10 lakhs = ₹5 lakhs 20% of of that 5 lakhs N/A
From 10,00,001 & above 30% of that amount N/A
Total Income Tax ₹12,500
Minus Tax Rebate of ₹12,500 (if taxable income is upto ₹5l)** -(MINUS) ₹12,500
0
Total Income Tax to be paid
Surcharge (अ�धभार): 10%-37% surcharge on Tax amount, IF 0% of 0% = 0
taxable-income is above ₹50 lakhs
Cess (उपकर): 4% Health and education cess on (Tax + Surcharge). 4% x (0+0) = 0
(Before Budget-2018, there was only 3% Education Cess).
Total payment to IT Dept: Income Tax + Surcharge + Cess 0
- **Previously, rebate was ₹2500 if taxable income upto ₹3.5 lakhs but Interim-Budget-2019
raised it to keep middle-class voters happy before General Elections.
- Full-Budget-2019: no changes in income tax %rates or slabs, but Nirmala S. justified that ‘rich
people need to contribute more for national development, so I’m raising the surcharges on them.’
Surcharge if taxable income is Before Full-Budget-2019 After full-Budget-2019
More than ₹50 lakh upto 1 cr. 10% Unchanged
More than ₹1 cr upto 2 cr. 15% Unchanged
More than ₹ 2 cr upto 5 cr. 15% 25%
More than ₹5 cr 15% 37%
2019-Sept: Facing protests from the Foreign Portfolio Investors (FPI), Nirmala.S clarified above
enhanced surcharges will not be applicable on the profits made from selling listed companies’ shares.
But, poor cost:benefit chasing all such technical things.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
21.10.1 ��Income Tax Slabs before 💼💼Budget-2020

- Before Budget-2017: there were three tax slabs in income tax: 10%, 20%, 30%;
- After Budget-2017: 5%, 20%, 30%.
- Income tax slabs for senior citizens are slightly relaxed. i.e.
- �Age 60+ but less than 80 Yrs: upto 3l(0%), 3-5l(5%)...remaining slabs same as young.
- ��Age 80+ years: upto 5l(0%)...remaining slabs are same as young.
21.10.2 (Optional) New slabs for Income Tax in 💼💼Budget-2020
IF you give up exemptions and deductions (छू ट और कटौती) such as
- Salaried employees’ standard deduction, HRA, Leave Travel Concession (LTA)
- Section 80C-walle deduction (e.g. investments made in LIC/NPS etc upto ₹1.5 lakh per year) Etc.
- Then you can opt to pay with new (reduced) income tax slabs viz.
(new slab, if you give up deduction & (old slabs, if u don’t give
TAXABLE Income (per annum)
exemptions) up)
Upto ₹2.5 lakh Nil / 0% Nil / 0%
>₹2.5 lakh-₹5 lakh 5% (But 12500 rebate so
5% (But 12500 rebate so in reality ₹0)
(meaning from 2,50,001 to 5,00,000) in reality ₹0)
>₹5 lakh to ₹7.5 lakh 10%
20%
>₹7.5 lakh to ₹10 lakh 15%
>₹10 lakh to ₹12.5 lakh 20%
>₹12.5 lakh to ₹15 lakh 25% 30%
>₹15 lakh 30%
Surcharge & cess applicable? Yes Yes
E.g. An employee with annual salary
₹1.95 lakh** ₹2.73 lakh
₹15lakhs will pay total INCOME TAX
**It is left to individual’s discretion whether he wants to stay in old / new system. (जबरजसती निह है।)
But if all people opted for the new slabs then Govt will hypothetically get ₹40,000 crore less
(compared to old system). Technically, called “Revenue forgone or Tax Expenditure” (अगर सब
आयकर-दाता नयी प्रणाली/�स�म म� आ जाएँ गे तो सरकार का जो नुक़सान होगा-वो “प�र�� राज�/राज� खचर्” है).
⇒ But, ⬇Income tax paid = ⬆disposable income with people → ⏫shopping/ demand →
production, economic growth etc. (खचर् करने के �लए उपल� आय बढ़ेगी �जससे माँग और उ�ादन म� वृ�द्ध)→
⇒ And shopping spree = ⬆Indirect tax collection e.g Mobiles = 18% GST.
⇒ Currently the Income Tax Act is riddled with various exemptions and deductions. Ordinary
people can’t understand and have to consult Chartered Accountants (CA) & investment advisors
before filing taxes. Now process is easier. (सी.ए. क� सहायता नहीं लेनी होगी. कराधान का सरलीकरण होगा)
21.10.3 🍋🍋🍋🌱🌱Income Tax in 💼💼Budget-2021, Compliance relief to Senior Citizen👴👴

- No changes in the income tax slabs. so the previous system of normal slab and optional slab
continued. आयकर क� दरों म� कोई बदलाव नहीं िकया गया, पुरानी �व�ा जारी रहेगी.
- IF senior citizen👴👴 aged 75 years/> or older AND has only pension and interest income THEN:
- He need not file the income tax return form. व�र� नाग�रक �जसका प�शन और ब�क बचत �ाज के
अलावा आय का अ� कोई �ोत नहीं है उसने आयकर फॉमर् नहीं भरना होगा
- The paying bank will deduct the necessary tax on their income.
- 🤩🤩Benefit? ⏬compliance burden on the senior citizen. बुजुगर् पर कर-अनुपालन के बोज म� कमी
21.10.4 🍋🍋🍋🌱🌱Income Tax in 💼💼Budget-2022

No changes in slabs. No exam-worthy changes for income tax payers. (कोई ख़ास �रयायत� निह �मली।)
21.11🍋🍋🍋🌱🌱DIRECT TAX CODE (DTC) TASK FORCE (2017-2019)
⇒ 2017: Finance Ministry setup this taskforce under CBDT member Arbind Modi. Later, he retired
so another CBDT member Akhilesh Ranjan was made Chairman.
⇒ Taskforce had noted IRS officer, Chartered Accountant, Tax Lawyer, Corporate Consultant etc.
⇒ While Government did not disclose full report in public domain, but according to journalists, it
contains following suggestions:
1. Replace the Income Tax Act 1961 with a simpler Direct Tax Code (प्र�� कर सं िहता).
2. Reduce the corporation tax further. �नगम करों म� और कटौती क� जाए
3. Tax rates for domestic and foreign companies should be same. This will encourage ease of doing
business in India. (भारतीय और �वदेशी कं प�नयों पे एक समान �नगम कर लगे तािक �ापार म� सुगमता)
4. Give additional tax relief for the startup companies. (More in Pillar4B)
5. Increase the number of tax slabs from present three (5%,20%,30%) to four (10%, 20%, 30% and
lastly 35% for super-rich earning ₹ 2 crore />).
6. Abolish Dividend Distribution Tax (DDT). [which is actually done in 💼💼Budget-2020]
7. Setup Litigation Management Unit to look after the tax related court cases in an efficient
manner. (मुकदमों क� प्रबं धन इकाई बनाई जाए तािक कराधान के के सों का प्रभावी �प से �नपटारा हो सके )
++ many other reforms, but poor cost:benefit chasing them. #थोड़ा-पढ़ो-आगे-बढ़ो
21.12🍋🍋🍋🍋DIRECT TAXES: MISC. CONCEPTS (इधर उधर के �छटपुट मुददे)
21.12.1 🍋🍋👪👪Hindu Undivided Family (HUF) (िहंदू अ�वभा�जत प�रवार):
- A Hindu, Buddhists, Jains, or Sikhs family members can come together, pool their assets and
form an HUF under the Income Tax Act. (उनको आयकर बचाने म� कु छ फ़ायदे होते ह�)
- HUF is taxed separately from its members, & helps saving taxes due to certain
provisions/loopholes of Income Tax Act. How exactly? Ans. not here for CA exam.
21.12.2 🍋🍋�Presumptive Taxation (प्रक��त कराधान)
- Salaried employees can easily compute their taxable income from their annual salary, & pay
income tax. (तन�ाह-शुदा/ वेतन-भोगी कमर्चारी के �लए आयकर �गनना ब�त आसान होता है)
- Companies hire full time Chartered Accountants to computer their taxable income and pay
Corporation tax. (और कं पनी के मा�लक तो िहसाब िकताब रखने के �लए CA को नौकरी पे रख�गे)
- But self-employed freelance consultants / professionals such as lawyers, doctors, fashion
designers, DJ-walle-babu etc. face difficulty in keeping such account books. (लेिकन �रोजगा�रयों के
�लए िहसाब िकताब रखना थोड़ा मु��ल होता है )
- So, for above persons, Income Tax Act has Presumptive Taxation System i.e. their
‘income/profit’ is computed as “x%” of their gross receipts, and on that amount they’ve to pay
income tax (depending on slabs) + applicable cess and surcharges. (प्रक��त कराधान प्रणाली: �� क�
सकल आय म� से कु छ प्र�तशत उसका मुनाफा मान �लया जाएगा, उस मुनाफ़े पर उसने आयकर भरना होगा)
- To encourage less-cash-economy, Budget-2017 had given benefits in this presumptive taxation
calculation formula, If the entrepreneur received payments in cashless format -NEFT, RTGS,
Cheque, Card etc. (यिद िड�जटल भुगतान से लेन देन कर�गे तो इस प्रणाली म� भी और �रयायत� दी जाएं गी.)
Table 4: ✋don't confuse the terms and at the same time no need for CA-giri
Income Tax on income ⇒ A direct tax levied by Union.
other than agri → ⇒ Every resident has to pay it on his taxable income.
(आयकर ) ⇒ Within that income tax: lawyers, doctors, fashion designers etc.
self-employed/freelance professionals do calculation of income
tax using Presumptive Taxation
Professional tax ⇒ It is a separate direct tax Levied by State Govt on the
(�वसाय कर) →[गैर-िकसान professionals (who are not farmers).
पेशेवर पर रा� सरकार का कर] ⇒ Constitution says it can’t be more than ₹2,500 per yr per person.
21.12.3 🍋🍋⏰Advance Tax ? (अ�ग्रम कर)
- New financial year starts from 1st April 2019 and ends on 31st March 2020.
- If everyone paid all of their direct taxes at 11:59PM on 31st March 2020, then govt. will face
money-shortage for the whole year till 31st March midnight comes.
- So, Advance Tax mechanism requires people to pay their Income tax and Corporation tax in
advance-instalments on quarterly basis (every 3-3 months), If their annual tax liability is ₹10,000
or more. (बड़े आयकरदाता और कं प�नयों ने हर तीन तीन महीने पर िक�ों म� कर जमा करना होगा)
21.12.4 👻👻 ATMA NIRBHAR BHARAT → Tax Ordinance 2020 [कर अ�ादेश]
- Traditionally financial year ends @31st March 2020. So, accordingly, people/companies deposit
the taxes, fillup the tax return-forms, buy LIC/PPF/NPS policies (for tax deduction) etc.
- But, corona lockdown → Ordinance extended deadlines to file Income tax, TDS, TCS and GST
etc. to June 2020. (कोरोना ताला-बं धी मे कराधान क� आ�खरी तारीख/अं�तम �त�थयों म� कु छ �रयायत�/ छू ट दी गई )
21.13🍋🍋🍋✂TDS & TCS

To keep track of income/payment & reduce opportunities of tax-evasion/blackmoney, Government
requires TDS/TCS to be collected in certain payments.
Who collects/cuts it? From whose payment?

TDS (खरीदार) Buyer of goods/services/investment ⇒ Seller’s fees (e.g.
TAX before making payment to the seller/investor. wedding-DJ/Catering
DEDUCTED Examples: walla)
AT SOURCE ⇒ University paying salary to ⇒ Employee’s salary,
employee/professor ⇒ Depositor/ lender’s
interest
⇒ Book Publisher paying royalty to author
⇒ Shareholder’s dividend
⇒ Banker/Bond-Issuer paying Interest
etc.
⇒ Company paying dividend to shareholder
TCS: (�वक्रेता) Seller of Goods/Service e.g. Luxury Car Customer who is buying
TAX Showroom Owner, Foreign Currency Seller specified types of
COLLECTED goods/services/foreign
AT SOURCE currency. (चु�नंदा व�ुओ ं और
सेवाओं के ग्राहक)
⇒ 🚩🚩🚩FAQ: Whether TDS/TCS applicable on “X” thing or not? ✋Ans. not important beyond
examples given in table.
⇒ 🚩🚩🚩FAQ: Can we call TDS and TCS indirect taxes? Ans. ✋No, they are administrative
mechanisms to discourage black money. TDS/TCS are not separate taxes. E.g. TDS that is cut
from salary/dividend/bank interest= ultimately that TDS ₹₹ goes into the income tax
computation of respective employee/shareholder/depositor. So TDS is not a separate tax.
21.14🍋🍋�✂TAX DEDUCTED AT SOURCE (TDS): (स्रोत पर कर कटौती)
- Suppose a college pays ₹10,000 to a freelance visiting faculty.

- Suppose a bank/NBFC/post-office pays ₹10,000 as interest to a depositor, then how to ensure
that payment-recipient (visiting faculty) reports his income to the tax authorities, otherwise he
could avoid paying taxes!!
- So, Income Tax Act requires such organizations (college) to deduct a portion of the payment at
source and deposit it to IT-dept. along with PAN card number of the recipient.
- Then, payment-recipient (visiting faculty) will be forced to file his tax return form, to unlock his
TDS amount.
- 😰😰On one side, TDS helps fighting tax evasion but on the other side, TDS also creates hardship
for lower middle-class persons, because part of their payment is cut in advance. So, in each
budget, Govt will finetune the norms.(कभी स�ी क� जाती है, कभी �रयायत दी जाती है)
- Budget-2019: TDS on cash withdrawal to encourage digital payments
- 2% TDS if total cash withdrawn during a financial year exceed 1 crore from a single user-
account in bank or post-office. This will encourage digital payments.
- Agricultural Produce Market Committee (APMC) Mandi traders are exempted from
above rule. More about APMC in 📑📑Pillar#4A.
- Related? Banking Cash Transaction Tax (BCTT: 2005-09) in 📑📑Pillar#2B:Black Money
- 💼💼Full-Budget-2019: TDS: Other measures
- (while companies are required to cut TDS on almost every payment made to anyone, but
from now onwards) Even if an individual person is paying larger than ₹ 50 lakhs to
contractors or professional, he’ll have to cut 5% TDS. (So tax evasion by real estate
brokers, high-profile wedding-organizers etc. can be checked.)
- 💼💼Budget-2020, 2021: some technical changes. NOTIMP for Exam#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
- 👜👜👜👜Budget-2022: 1% TDS on Bitcoin and other Virtual Digital Assets (VDA)’s transfer/trade.
21.14.1 👻👻 (🍋🍋🍋✂) TDS → ATMA NIRBHAR BHARAT REFORMS
⇒ Whenever salary, contract, professional fees, interest, rent, dividend, commission, brokerage, etc.
are paid, the payment giver is required to cut a certain % of the amount as TDS and deposit to
the Income Tax Department. It helps in tracking tax evasion & tax avoidance.
⇒ These TDS rate% vary as per nature of payment. (It could be 0.5% on some payment, it could be
10% on some payment etc.)
⇒ FinMin had ⏬ TDS% by 25% compared to their original rates so as to unlock ₹50,000 cr in the
hands of people. = ⏫shopping → economic revival. (कोरोना के दौरान TDS दरों म� कटौती क� गई)
21.14.2 🍋🍋🏎🏎✂Tax Collected at Source (TCS): (�ोत पर सं गृहीत कर)
- If a rockstar buys an SUV car worth ₹25 lakhs, then it means he must be a rich man. How to
ensure he is paying Income Tax regularly (apart from TDS mechanism)?
- So, the car showroom owner (seller) is required to collect extra 1% from Rockstar (Buyer) and
deposit to IT-dept. Rockstar will have to file tax-return to unlock this amount.
- Does this apply on used cars? Ans. we are not here for CA exam.
- Indian residents can convert their ₹₹ into foreign currency with the help of RBI-authorized
forex dealers under, RBI’s Liberalised Remittance Scheme (LRS: More in 📑📑Pillar3).
- 💼💼Budget-2020: Authorized Forex dealers will have to cut 5% TCS while converting Indian ₹₹
into foreign currency. Similar norms on foreign tour operators.
21.14.3 🍋🍋🍋🍋Tax refund? (कर वापसी)
- A person is eligible to receive income tax refund from IT-dept IF he has paid more tax to the govt
than his actual tax liability. e.g. If college deducted 10% TDS from freelance visiting faculty
payment, but what if he was in 0% or 5% Income Tax slab? Then, Income Tax Department will
refund his money with interest.
- Similarly, GST refund can be claimed by an entrepreneur from GSTN webportal.
- 👻👻ATMA NIRBHAR BHARAT FM announced, “we’ll issue tax refunds more quickly.” So more
shopping demand ⏫→ economic revival. (�रफं ड का पैसा ज� से ज� आपके खाते म� जमा करवा द�गे)
21.15🍋🍋MISC. DIRECT TAXES - FINANCIAL TRANSACTION TAXES (�व�ीय लेनदेन कर)
21.15.1 🍋🍋🍋🍋 (Concept) Tobin Tax / Robinhood Tax
- 1970s: Nobel recipient American economist James Tobin proposed a small tax everytime
currency is converted into another currency (e.g. $ to ₹).
- Such tax will discourage short term speculative investment and flight of capital from one country
to another = stabilizing the global economy and currency exchange rates and share market.
- In India, foreign currency conversions subjected to GST (which is in indirect tax). However,
some other nations collect it as direct tax. (More in 📑📑Pillar#3A)
21.15.2 🍋🍋🍋🍋STT & CTT (प्र�तभू�त लेनदेन कर और व�ु लेनदेन कर)
- Securities Transaction Tax (STT: प्र�तभू�त लेनदेन कर) is levied on the sale and purchase of shares,
ETF-units, derivatives and other securities at stock-exchanges.
- Its rate (0.001%-2%) varies as per the nature of the securities.
- Commodities Transaction Tax (CTT: व�ु लेनदेन कर) is levied on non-agricultural commodities
traded at Commodities-Exchanges. Rate ~0.01%.
Table 5: Not here for C.A. Exam, #थोड़ा-पढ़ो-आगे-बढ़ो
Direct Tax By Description
Capital Gains Union Applicable when any capital asset e.g. home/share/bond/bitcoin is “sold
Tax Govt at profit” by its previous owner.
Securities Union ⇒ Applicable on the selling price of share, bond and other securities.
Transaction Govt ⇒ Irrespective of whether seller is making profit or loss.
Tax
Dividend Union ⇒ Applicable on the dividend paid by by company to a shareholder.
Distribution Govt ⇒ 💼💼Budget-2020 abolished this tax. (ये टे� तो रद्द/बं ध हो गया है)
Tax
State ⇒ Applies on value of share/bond/securities, immovable properties
Govt (e.g. building) and certain types of legal agreements e.g. rent
agreement etc.
⇒ Irrespective of whether seller is making profit or loss.
⇒ 2020: Union govt amended the Indian Stamp Act, 1899 so that the
Stamp Duty
Stamp duty rates on share/bonds/securities become uniform across
(�ा� शु�)
the states. (प्र�तभू�तयों पर �े� शु� के दरों को सभी रा�ोमे एकसमान िकया).
Union collects → distributes it to State Govt of domicile of the
buyer. (प्र�तभू�त खरीदार �जस रा� का है, उधर क� रा�सरकार को �मलेगा)
⇒ Corona crisis → Union Govt postponed implementation date.
⇒ 🎓🎓✋Further operational mechanism/rules= poor cost:benefit.
Upcoming Handouts in Pillar#2
2A1) ✅ Direct Taxes
2A2) Indirect Taxes & GST
2B) Black Money, 15th Finance Commission
2C) Subsidies, Salaries, Revenue Expenditure, Revenue Deficit
2D) Disinvestment, Deficit, FRBM Act, Fiscal Council, Budgeting-Railway budget, plan-non plan budget,
& scheme types etc.
PILLAR #2A2: BUDGET: TAXATION: Indirect Taxes & GST
Table of Contents
22 💼💼BUDGET→ ⏳REVENUE PART→ 📥📥RECEIPTS→ 🍋🍋TAX →🛒🛒 Indirect Taxes ......333
22.1 🍋🍋🍋🍋 Indirect Taxes: types (अप्र�� करों के प्रकार) .......................................................................334
22.2 🍋🍋🍋🍋 Indirect Taxes: merits and demerits (लाभ व् नुकसान ) ....................................................334
22.3 🍋🍋🍋🍋🍋🍋🍋🍋 (Concept) Pigouvian Tax (�पगो�वयन कर) ............................................................335
22.3.1 🍋🍋🍋🍋🍋Cess and Surcharges on Excise & Customs....................................................335
22.3.2 🍋🍋🍋🍋⛽Indirect Tax → ⛽Petrol & Diesel price high because ................................335
22.3.3 🍋🍋🍋🍋⛽Indirect Tax → additional differential excise duty on Unblended Petrol .336
22.3.4 ⛽🛳🛳Windfall Tax on export of petrol/diesel/fuel (2022) ..............................................336
22.3.5 🍋🍋🍋🍋⛽: GST on Petrol Diesel Electricity: NITI Aayog 6 year roadmap .................337
22.3.6 ⛽Petrol-Diesel: Dynamic Fuel Pricing System & oil bond repayment .......................337
22.4 🍋🍋🍋🍋🍋↗�Cascading Effect of Indirect Taxes..............................................................339
22.5 🍋🍋🍋🍋🍋🍋🍋🍋: Indirect Taxes: A Timeline of Reforms ...........................................................340
22.6 🍋🍋🍋🍋🍋🍋 Indirect Taxes → GST: Timeline (समयरेखा) ............................................................342
22.7 🍋🍋🍋🍋:📙📙📙📙 GST: 101st Constitutional Amendment Act, 2016 ........................................342
22.8 🍋🍋🍋🍋: 🧔🧔🧔🕉🕉 GST Council: Composition? जीएसटी प�रषद ................................................343
22.8.1 🧔🧔🧔🕉🕉 GST Council: Functions? They’ll decide following- ....................................343
22.8.2 �GST Council Decision not binding on States .................................................................345
22.9 🍋🍋🍋🍋🍋🍋 GST Input Tax Credit (ITC: इनपुट कर प्र�य) ............................................................345
22.9.1 🍋🍋🍋🍋↩ Inverted Duty Structure Problem in GST on Textile ..................................348
22.9.2 💿💿GST: Exempt vs ZERO RATED ....................................................................................348
22.9.3 💉💉Vaccine GST can’t be 0% ZERO RATED or “EXEMPTED” because....................349
22.10 🍋🍋🍋🍋🍋🍋🍋🍋 Centre’s Indirect Taxes subsumed in CGST ...............................................350
22.10.1 📈📈 GST Revenue Collection Figures: जीएसटी राज� प्रा�� के आंकड़े....................................352
22.11 🍋🍋🍋🍋(�🕉🕉)🌬🌬 States’ Indirect Taxes subsumed in SGST ..........................................353
22.12 🍋🍋🍋🍋🍋 GST Rates on Services =0%: सेवाओं पर जीएसटी क� दर ............................................354
22.12.1 🍋🍋🍋🍋🍋🍋 GST Rates on Goods : 0% removed............................................................356
22.13 🍋🍋🍋🍋🍋🍋 GST Rates on Goods : 0%: सामान पर जीएसटी क� 0% दर� ........................................356
22.13.1 🍋🍋🍋🍋Indirect Tax → 💊💊GST Rate ⏬ on Corona Related Items (2021-Jun) .......359
22.14 🍋🍋🍋🍋⏰🗓🗓 GST Composition Scheme (जीएसटी सं रचना योजना) ..........................................360
22.14.1 🍋🍋🍋🍋⏰🗓🗓 GST Mechanism: Quarterly Returns and Monthly Payment of Tax
(QRMP) 360
22.14.2 🍋🍋🍋🍋: 💸💸💸💸(😈😈) 1% GST deposit in cash for controlling fake ITC claims ..........360
22.15 🍋🍋🍋🍋↩ Reverse Charge Mechanism (�वपरीत प्रभार क� �व�ा) ...........................................361
(Batch:PCB7) Mrunal’s Economy Pillar#2A2: Budget → Revenue Part → Indirect Taxes & GST → Page 332
22.16 🚛🚛🚛🚛 E-way Bill System (ई-वे �बल प्रणाली) from 2018 onwards ...........................................361
22.17 🧔🧔 → 🤑🤑(��) Compensation to States: WHY?..........................................................362
22.17.1 🧔🧔 → 🤑🤑(��) Compensation to States: HOW? .....................................................362
22.18 🤧🤧🤧🤧:🧔🧔 → 🤑🤑(��) GST Compensation & Back2Back Loans .............................363
22.18.1 🤧🤧🤧🤧🤧🤧[🧔🧔 → 🔪🔪(�� GST compensation: "back to back" loans ₹1.10 lcr....364
22.18.2 🤧🤧🤧🤧🤧🤧[🧔🧔 → 🔪🔪(�� Back to Back loans: Beneficiary States .........................365
22.18.3 🤧🤧🤧🤧🤧🤧:⚖ GST Back to Back Loans & Fiscal Deficit / FRBM for States ..............365
22.18.4 ✍Conclusion : GST compensation (�न�षर्: जीएसटी मुआवजे के बारे म�) ...............................365
22.19 🍋🍋🍋🍋🕵🕵 GST Related Organizations (सं �ाए) .....................................................................365
22.19.1 🕵🕵�� Group of Ministers (GoM: मं �त्रयों का समूह) ........................................................365
22.19.2 Distribution of Admin. Responsibilities प्रशास�नक �ज�ेदा�रयों का �वभाजन ...........................366
22.19.3 ⚖🕵🕵🍕🍕 National Anti-Profiteering Authority (NAA/NAPA) ..................................366
22.19.4 🕵🕵🍼🍼 Authority for Advance Ruling (AAR-अ�ग्रम फै सलों के �लए प्रा�धकरण) .........................366
22.19.5 🕵🕵💻💻GSTN Network (Not for Profit Company- मुनाफ़ा रिहत कं पनी ) ..............................367
22.19.6 📲📲 💻💻 Project Saksham: Digital/ICT integration (2016) ..............................................367
22.19.7 🔢🔢🔢🔢 HSN and SAC Codes ..............................................................................................368
22.20 🔢🔢🔢🔢🔢🔢 PAN vs GSTIN vs Aadhar ...................................................................................368
22.20.1 🔢🔢🔢🔢🔢🔢 PAN/GSTIN vs UID (=Aadhar Card) ...........................................................369
22.21 🍋🍋🍋🍋🍋🍋 GST: Benefits (लाभ) ...............................................................................................370
22.21.1 🍋🍋🍋🍋🍋🍋: ⚓ GST Benefit: Zero Rated Exports (शू� रेटेड �नयार्त ) ................................372
22.22 🍋🍋🍋🍋🍋🍋 GST: Challenges for Mains & Interview (चुनौ�तयां).............................................372
22.22.1 🔢🔢🔢🔢High Rates and Multiple Slabs (उ� दर और कई �ैब) ..............................................372
22.22.2 🤹🤹😢😢Frequent changes harming long term business planning ..................................373
22.22.3 📉📉📉📉 Fall in collection (आमद म� कमी) .................................................................................373
22.22.4 🤯🤯Inconvenience to Small Traders (छोटे �ापा�रयों के �लए असु�वधा) ....................................373
22.23 ✍ GST: Conclusion Template (सार/�न�षर्) ...........................................................................374
22.24 ✍🎺🎺Mock Q for Mains GSM2/GSM3 (250 words each)................................................374
22 💼💼BUDGET→ ⏳REVENUE PART→ 📥📥RECEIPTS→ 🍋🍋TAX →🛒🛒 INDIRECT TAXES

बजट→ राज� भाग→ प्रा��यां→ कर→ अप्र�� कर
- 🤲🤲Tax incidence (करापात)= @Person from whom govt collects the tax. (e.g. shopkeeper)
- 😥😥Tax impact (कराघात/कर का प्रभाव) = @Person who finally bears the tax & can’t pass its burden
on further. (e.g. Consumer)
- In the indirect taxes, tax incidence and tax impact does not fall on the same person. E.g. Customs
Duty on import and export, Excise duty on manufacturing of goods, Service tax on services, Sales
Tax, Value Added Tax (VAT), and Goods and Services tax (GST).
- Indirect taxes fall under the Ambit of FinMin→ Department of Revenue (राज� �वभाग)→ Central
Board of Excise and Customs (CBEC): (क� द्रीय उ�ाद एवं सीमा शु� बोडर्) → Budget-2018 renamed it as
Central Board of Indirect Taxes and Customs (CBIC): (क� द्रीय अप्र�� कर और सीमा शु� बोडर्)
22.1 🍋🍋🍋🍋 INDIRECT TAXES: TYPES (अप्र�� करों के प्रकार)
🥤🥤 Ad- Valorem tax (यथामू� कर) 🚭🚭 Specific Tax per unit (�व�श� कर प्र�त यू�नट)
Taxes based on the value of something. E.g. Tax based on quantity of items. E.g. ₹ 260 Excise duty
35% Customs Duty on import of orange on production of every 1000 cigarettes of 65-70mm
juice. So, if juice priced at ₹1000 imported, length. Here we’re taxing them irrespective of their
then ₹350 as tax. manufacturing price or selling price.
Easier to administer. Difficult to administer, leads to inspector-raj &
[इसे िक्रया��त करना �ादा आसान है] litigation. But, if slight increase in this tax, then greater
burden passed on to the consumer so it helps reducing
harmful consumption. (How exactly? Ans.
microeconomics graph is not imp)
22.2 🍋🍋🍋🍋 INDIRECT TAXES: MERITS AND DEMERITS (लाभ व् नुकसान )
😀😀 Merits लाभ 😥😥 Demerits नुकसान
➔ Convenient (सुगम) to collect because the ➔ Regressive (प्र�तगामी) in nature, both poor and
traders act as honorary (=unpaid) tax rich taxed equally for the same item then
collectors. Wider base because everyone poor people end up paying more portion of
covered e.g. 18% GST on Biscuit. their income in indirect taxes.
➔ Elastic (लचीला): small ⬆brings large revenue, ➔ This tax is hidden in the price. Customers do
because everyone is affected. Although they’re not always feel the pinch of paying indirect
“relatively” less elastic than Direct taxes. tax so it promotes less civic consciousness
(Poor cost benefit interpreting its than direct taxes.[नाग�रक चेतना नहीं जगाता]
Microeconomics graph) ➔ Indirect taxes ⬆→ product becomes
➔ 🚭🚭 Can ⬇harmful consumption by expensive → demand ⬇ so uncertainty
imposing higher taxes on cigar, alcohol, soft involved in how much ₹ ₹ will Govt actually
drinks & fast food. (हा�नकारक पदाथ� का उपभोग कम earn?[वा�व म� िकतनी आमदनी होगी �न��तता नहीं]
करवा सकते ह�) ➔ High level of corruption, evasion, cascading
effect if input credit is not given e.g. erstwhile
sales tax system.[भ्र�ाचार, कर चोरी के अवसर]
22.3 🍋🍋🍋🍋🥂🥂🚭🚭 (CONCEPT) PIGOUVIAN TAX (�पगो�वयन कर)
- An externality (बाह्यता) is a positive or negative consequence of an economic activity experienced
by unrelated third parties. E.g. Cement company (related parties: labourers & consumers
benefit); whereas unrelated third parties (local community, flora and fauna) are harmed by
cement company’s air-pollution. [ग़ैरसं बं�धत तीसरे प� पर सकारा�क या नकारा�क असर]
- English economist Arthur C. Pigou proposed taxing the companies that create such negative
externalities: e.g. polluting industries, cigarettes (passive smoking), alcohol (social disharmony).
- We HAVE high level of indirect taxes on petroleum, tobacco and alcoholic products.
- We HAD “Clean environment cess” on Rs 400 per tonne of coal (but abolished in GST)
- Sin tax? Similar concept- imposing tax on immoral things like alcohol, tobacco. Difference
between Sin Tax vs Pigouvian tax = that pedantism/hairsplittery NOT IMP🎓🎓✋
22.3.1 🍋🍋🍋🍋🍋Cess and Surcharges on Excise & Customs

Cess / Surcharge Description
Social Welfare - 💼💼Budget-2018 It also introduced 10% SWS on Customs Duty on
Surcharge (SWS) imported goods.
On Customs - 💼💼Budget-2021- SWS will no longer be applicable on the gold and
(समाज क�ाण अ�धभार) silver. (Because additional burden of Agriculture Infrastructure and
Development Cess (AIDC) on gold-silver. So, if SWF also levied = too
much tax burden on people= Which may encourage more smuggling
and black money, so govt exempted these goods from SWS)
Health Cess - 💼💼Budget-2020 Introduced 5% Health Cess on the (customs duty
On Customs +Surcharge) on imported medical devices (आया�तत �चिक�ा उपकरण).
(�ा� उपकर) - This Cess ₹₹ will be used for building (Ayushman Bharat scheme ke)
hospitals (to treat PM-JAY ₹5lakh health insurance-walle poor
patients) in Aspirational Districts (आकांशी-�जले=backward districts
identified by NITI Aayog.)
Agriculture - 💼💼Budget-2021 introduced this (कृ �ष अवसं रचना और �वकास उपकर)
Infrastructure and - This cess will be applicable on the Excise duty on petrol
Development Cess (cess@₹2.5/litre) and diesel (cess@₹4/litre)
On Customs - This cess will be applicable on Customs Duty on Gold silver, alcoholic
And beverages, certain types of edible oils, certain fruits, certain Pulses,
Excise Cotton, Urea/fertilizer. (Cess varies from 1.5-100% depending on item)
22.3.2 🍋🍋🍋🍋⛽Indirect Tax → ⛽Petrol & Diesel price high because

⛽🚗🚗PETROL (Approx taxes in middle of 2021) ⛽🚛🚛DIESEL
A) 🧔🧔Union Basic excise ₹1.40 + Special additional excise ₹11 + Basic excise ₹1.80 + Special
Tax ₹18 Road Infrastructure cess +₹2.50 Agriculture additional excise ₹18 + ₹18
infrastructure and development cess (AIDC) Road Infra cess +₹4 AIDC
B) �State State VAT ₹20 per litre. State VAT ₹15 per litre.
Tax
Total in India 135% taxes on base price 116% taxes on base price
=A+B
elsewhere Taxes on fuel: EU (45-60%), Canada 15-30%, USA (15%)
⇒ If above fuels are replaced with highest GST slab (28%) → hardly ₹5-6 per litre each for Union
and State = Loss of over 4 lakh cr on petrol and diesel taxes in GST system compared to present
(Excise VAT) regime.
⇒ So, cheap petrol-diesel is not possible, unless Union and State govts are willing to take deep cuts
in their revenue. Corona= direct tax collection ⏬, so govt can’t afford to reduce tax% on fuel.
22.3.3 🍋🍋🍋🍋⛽Indirect Tax → additional differential excise duty on Unblended Petrol

Govt targets 20% ethanol blending with petrol by 2025 to ⏬GHG emission. 👜👜👜👜Budget-2022
announced one MORE TAX to force the oil refineries to accomplish this target in a timely fashion:
Fuel Ethanol Blended Petrol Unblended petrol

Basic excise + Special additional excise Yes these tax and cess applicable on both type of fuel.
+ Road Infrastructure cess +
Agriculture infrastructure and
development cess (AIDC) →
Additional Differential Excise Duty → Rs.₹0/ litre Rs. 2/litre
Announced in 👜👜👜👜Budget-2022
इथेनॉल �म�श्रत पेटो� ल पर अ�त�र� �वभेदक उ�ाद शु� नहीं लगाया जाएगा जबिक इथेनॉल-अ-�म�श्रत-पेट�ोल पर ₹2 प्र�त लीटर के दर
पर यह टै� लगेगा।
22.3.4 ⛽🛳🛳Windfall Tax on export of petrol/diesel/fuel (2022)

⇒ Windfall Tax is a nickname given to a tax when it is levied on an unforeseen / unexpectedly large
profit (अप्र�ा�शत मुनाफ़े क� ��त म� यिद कोई टै� लगाया जाए तो उसे �वंडफ़ोल टै� क� सं �ा दी जाती.)
⇒ 2022: Fuel prices increased sharply in global market. So when Indian refineries export
petrol/diesel → They will make a lot more profit compared to previous years. (�व� बाज़ार म� �धन के
बढ़ी क़�मतों के चलते भारत के �धन �नयार्तकतार्ओ ं को अप्र�ा�शत मुनाफ़ा हो रहा था)
⇒ 2022-Jul: government imposed Special Additional Excise Duty (SAED) on export of Petrol
(₹6/litre) and Diesel (₹12/ litre) and Aviation Turbine Fuel (₹6/litre).
⇒ Newspapers nicknamed this as “windfall tax”.
⇒ 2022:Aug: fuel prices started to fall in the global market. So now Indian government gradually
deleting / reducing this tax. Then ball by ball cricket commentary notIMP ⚾📻📻⚾🎙🎙✋ (अभी
धीरे धीरे इसम� कटौती क� जा रही है.)
🚩🚩🚩FAQ: can windfall tax be imposed only on indirect taxes / petrol diesel?
Ans. If government is imposing any direct or indirect tax because of some unforeseen profits to a
party, then journalist may label as Windfall Tax.
🚩🚩🚩FAQ: then can’t we say bitcoin profit pe Capital Gains Tax is also windfall tax?
Ans. Journalists/Newspaper/Govt/Chief Economic Advisor/NITI etc have not used this word yet. So
I would not use it.
22.3.5 🍋🍋🍋🍋⛽: 🗓🗓GST on Petrol Diesel Electricity: NITI Aayog 6 year roadmap
2021-Aug: NITI Aayog proposed following formula:
⇒ 28% GST on petrol and Diesel. + Compensation Cess for States (this compensation will be
given to states for a period of six years)
⇒ 18% GST on Electricity.
✋However this is a proposal stage. Separately a case is going on at Kerala High Court. We’ll update
when/if something big happens. (अभी यह सब प्र�ा�वत है.असल म� लागू होना बाक� है. जब कु छ बड़ा होगा, तो देख�गे)
Related topic: OPEC Cartel, crude prices? Ans. (📑📑Ref: HDT-Pillar#3A: BoP)
22.3.6 ⛽Petrol-Diesel: Dynamic Fuel Pricing System & oil bond repayment
⇒ 1970s to 2002: Administered Price Mechanism (APM: प्रशा�सत/�नयं �त्रत मू� तं त्र): Wherein the
government fixed the prices of petroleum fuels and paid subsidy to the oil marketing companies
(OMC: तेल �वपणन कं प�नयां) for their losses by issuing Oil Bonds to them.
⇒ 2002-2014: Govt gradually began decontrolling fuel prices, ⏬its own subsidy burden.
⇒ Present system= Dynamic Fuel Pricing System (�धन क� ग�तशील �प से बदलने वाली मू� प्रणाली): wherein
OMCs decide the prices of petrol and diesel on DAILY basis, based on the movement in
international prices. Associated keyword/formula/methodology is “Trade parity price (TPP)”.
⚾📻📻⚾🎓🎓✋What is means, how it works? = Poor cost benefit chasing that.
⇒ 😍😍 Benefit of dynamic pricing? In theory, If the oil prices lowered in the international
market, petrol diesel should become cheaper in India. �व� बाजार म� दाम �गरने पर इं जन के दाम भारत म� भी
कम होने चािहए. But, Union and State govt keep ⏫⏫ taxes on it so it remains expensive for
common people.
⇒ 🤧🤧🤧🤧Corona crisis = ⏬ transport → ⏬ demand of crude oil → prices fallen or remained
moderate in 2020-21. (�व� बाजार म� क�े तेल क� क�मत� या तो कम �ई है या म�म �र पर रही है)
⇒ But, Corona crisis → direct tax and GST collection ⏬. Government required more ₹₹ to run
the schemes. So, ⏫ excise & VAT. (उ�ाद शु� और वैट क� दरों म� बढ़ोतरी क� गई)
- 2021-Aug: FM Sitharaman says we cannot reduce excise duty on petrol and diesel, because we
have to repay principal + interest on the oil bonds issued by the previous UPA-II government to
subsidise fuel prices in 2012-13.(मोदी सरकार ने कहा पेट�ोल डीज़ल पे उ�ाद शु� नहीं काट सकते �ोंिक कांग्रसे सरकार
ने जो पेट�ोल डीज़ल पर स��डी देने के �लए ऑयल माक� िटंग कं प�नयों को ओईल-बॉ� जारी िकए थे उसका बकाया पैसा चुकाना है)
- 2021-Nov: First time in last 3 years, Modi govt ⏬ cuts Petrol excise duty down by Rs 5/litre,
diesel by Rs 10/litre. Reason? 1) GST collection improved so Excise could be ⬇ without hurting
poverty welfare schemes 2) UP Election 3) farmers require diesel for irrigation pumpsets in
Rabi/winter season. (उ�र प्रदेश चुनाव से पहले क� द्र सरकार ने पेट�ोल डीज़ल के उ�ाद शु� म� क� कटौती)
22.4 🍋🍋🍋🍋🍋↗�CASCADING EFFECT OF INDIRECT TAXES
If a government levies 10% indirect tax every time an item is sold, then buyer will have to to pay tax
on tax. This ‘cascading effect’ of indirect taxes (अप्र�� करों का सोपानी प्रभाव) raises the price of final
product. Observe:
Table 1:✋ <NOTIMP For UPSC. Prepare only for State Tax officers’ Jobs’ Interview>
Suppose, Price 10% Tax on price Total
Retailer bought from wholesaler ₹100 ₹10 ₹110
Retailer sold to customer with ₹10 profit ₹120 ₹12 ₹132
Breakdown the ₹132 paid by the final customer: 132=100+10+10+11+1
- 132= 100 (price of original product)+10 (tax paid by retailer to wholesaler)+10 (as retailer’s
profit margin)+11 (tax paid by customer to buy from retailer) + 1**.
- 1** this one rupee is 10% of 10(tax paid by retailer to wholesaler). So, it’s “TAX on TAX paid at
previous stage” / cascading effect of tax on the end-customer.
- Then, both buyer and seller will prefer to do transaction without bills, to entirely avoid tax
liability and its cascading effect → Govt.’s revenue collection ↓, Fiscal deficit ↑, black money ↑
- This problem can be solved, if govt gives some type of cashback, reward points or input tax credit
(ITC: इनपुट कर प्र�य) to the sellers, on the indirect taxes they’ve already paid in previous stage.
- To claim such input tax credit, the sellers will have to show the bills/ invoices for each stage =
self-policing = black money ↓.
22.5 🍋🍋🍋🍋🍋🍋🍋🍋: INDIRECT TAXES: A TIMELINE OF REFORMS
Year Who? Reform in Indirect taxation [परो� कराधान प्रणाली म� �ा सुधार िकए गए?]
1944 Union Central Excise Act (क� द्रीय उ�ाद शु� अ�ध�नयम) to levy Excise duty on goods
🧔🧔 produced/manufactured in India. Abolished on most items after GST.
1956 Union Central Sales Tax Act (क� द्रीय �बक्र� कर अ�ध�नयम) to levy tax on inter-state commerce.
🧔🧔 In practice, CST was given to the source/exporting state from where goods went to
the destination/importing state. Abolished after GST.
1962 Union Customs Act (सीमा शु� अ�ध�नयम) to levy Customs Duty on import and exports
🧔🧔 - 💼💼Budget 2018: Raised customs duty on a range of imported products—from
fruit juice, perfumes, TVs, mobile phones etc. to encourage Make in India
programme.
💼💼Interim-Budget-2019 & full Budget 2019:
- ⬆Customs duty on gold & other precious metals to control current account
deficit (more in Pill3) [�णर् तथा अ� क़�मती धातुओ ं पर सीमा शु� बढाया तािक चालू खाता घाटा
कम हो सके ]
- ⬆Customs duty on imported items like Cashew & other food items, PVC,
tiles, autoparts, CCTV camera, video recorders, electronics, imported books
etc. to encourage #MAKE-IN-INDIA [�वदेश से आया�तत चीज़ों पर बढ़ाया तािक लोग �ानीय
चीज़� �ादा ख़रीद� और �देशी उद्योग को प्रो�ाहन �मले]
- ⬇Customs duty on import of raw material / intermediate goods required for
Make in India e.g. parts of electric-vehicles, chemicals etc. [�वदेश से आया�तत क�े
माल पर सीमा शु� कम िकया था िक �ानीय उ�ादन म� मदद �मले]
💼💼Budget-2020
- ⬆On imported footwear, furniture, Wallfans, food grinder, oven, tricycle,
scooter, earphones, etc to protect Indian companies
- ⬇ Imported raw material / inputs used in manufacturing vehicles, mobiles,
sports accessories, newspaper etc. in India #MAKE-IN-INDIA
- 0% Customs Duty on import of defense equipment that are not being
manufactured in India.
💼💼Budget-2021
- ⏫Increased On imported raw silk ethanol leather auto parts, Mobile phone
parts, Solar lamps, etc. To help domestic farmers & manufacturers
- ⏬Decreased On imported Naptha Nylon Iron Steel Copper Platinum etc to
help Local manufacturers Who use it as raw material.
- ⏬Decreased Customs Duty on the items which are subjected to Agriculture
Infrastructure and Development Cess (AIDC)- To prevent additional burden
on the customers.
👜👜👜👜Budget-2022
- ⏬customs duty on imported raw material e.g. rough unpolished diamonds
- ⏫customs duty on finished imported items e.g. Imported umbrellas pe 20%,
headphones, earphones, loudspeakers, and imitation jewelry.
Related concepts: Inverted Duty Structure, Countervailing Duty, Anti-Dumping
Duty, RoDTEP/MEIS etc. (More in 📑📑Pillar#3A: Import Export).
1986 Union - Modified Value Added Tax system (MODVAT:क� द्रीय �बक्र� कर सं शो�धत मू� व�धत कर
🧔🧔 प्रणाली) based on LK Jha Committee recommendations.
- Entrepreneur gets Input credit for Excise duty he already paid in previous
stage E.g. Ratan Tata getting input credit for rubber, tires and steel he bought
to make Nano car. [�पछले चरण म� जो उ�ाद शु� बढ़ा था उसक� माफ़� �मले]
- Limitation: he’ll NOT get input credit (इनपुट प्र�य) for the States’ Indirect taxes
like Sale Tax. [हालाँिक ये वाली छू ट रा� सरकार के करों म� नहीं �मलती थी]
1994 Union - FM Manmohan Singh introduces 5% Service Tax (सेवा कर) on telephone bills,
🧔🧔 non-life insurance and stock-brokers [शेयर बाज़ार के दलाल].
- Over the years, more services were subjected to Service Tax. This service tax
was NOT applicable on some services e.g. Postal service, School fees etc.
- Successive govts. also increased tax amount (14% )and added Swachh Bharat
Cess & Krishi Kalyan Cess on it. [डाक सेवा इ�ािद कु छ चु�नंदा सेवाओं को छोड़कर बाक़� सब
सेवाओं पर सेवा कर लगाए जाने लगा]
- Ultimately, Service Tax+Cess = total 15%. Abolished after GST.
2004 Union - Central Value Added Tax system (CENVAT: क� द्रीय मू� व�धत कर) Entrepreneur
🧔🧔 gets Input credit for Excise Duty and Service Tax he already paid in previous
stage. [उद्योगप�त ने �पछले चरण म� जो उ�ाद शु� और सेवा कर िदया है उसक� माफ़� �मले]
- But he’d NOT get input credit for the state taxes like Sale Tax/ VAT.
2005 States - Previously, State governments levied Sales Tax on sale of goods however these
�🕉🕉 rates varied from state to state, no input credit & therefore problem of
cascading effects & tax evasion. [रा� सरकारों के �बक्र�कर म� �पछले चरण वाली माफ़� नहीं]
- From 2005 onwards, State governments begin replacing Sales Tax system with
Value Added Tax (VAT: मू� व�धत कर). Uttar Pradesh was the last state to
implement it from 2008.[िफर रा� सरकार वैट �व�ा लेकर आए जहाँ �पछले चरण पर चुकाए
गए वैट पर उद्योगप�त/�ापारी को माफ़�/ टै� क्रेिडट �मले]
- In VAT regime, a dealer gets input credit for the VAT he already paid in the
previous stage.
- But he’d not get input credit for Union’s Indirect Taxes like Customs Duty,
Excise Duty or Service tax. He’ll not even get input credit for various other
indirect taxes of the state like Luxury Tax, Entertainment Tax, etc. which were
not subsumed in VAT. So cascading continued.[हालाँिक वेट पर �मले इस प्रकार के टै�
क्रेिडट का उपयोग अ� करों क� देयता चुकाने म� नहीं इ�ेमाल कर सकते थे इस�लए GST लाना पड़ा]
2017 Both From 1st July, 2017: Goods and Services Tax (GST: व�ु एवं सेवा कर) became
🧔🧔🧔 effective. Here, supplier gets input tax credit for indirect taxes of Union & States
(CGST,SGST) that he paid in the previous stage. [GST प्रणाली म� �पछले चरण म� चुकाए गए
परो� करों के ऊपर माफ़�/टै� क्रेिडट �मलता है]
🔠🔠❓MCQ-UPSC-Pre-2014. The sales tax you pay while purchasing a toothpaste is a:
(a) tax imposed by the Central Government
(b) tax imposed by the Central Government but collected by the State Government
(c) tax imposed by the State Government but collected by the Central Government
(d) tax imposed and collected by the State Government
🔠🔠❓MCQ-UPSC-CDS-2013-I. Which of the following are direct tax in India?
1. Corporation tax 2. Tax on income 3. Wealth tax 4. Customs duty 5. Excise duty
Ans. Codes: (a) 1, 2 and 3 (b) 1, 2, 4 and 5 (c) 2 and 3 (d) 1, 3, 4 and 5
22.6 🍋🍋🍋🍋🍋🍋 INDIRECT TAXES → GST: TIMELINE (समयरेखा)
2004 Vijay Kelkar Task Force on Fiscal Responsibility and Budget Management (FRBM)
recommends GST. [�वजय के लकर स�म�त ने GST लागू करने क� �सफ़ा�रश क�]
2006 In Budget speech, P.Chidambaram announces the launch of GST from 2010
2011 UPA government introduces 115th Amendment Bill 2011 to implement GST lapsed with
the dissolution of 15th Lok Sabha. (लोकसभा �वघटन चलते ये �वधेयक पास नहीं हो पाया)
2014-16 Modi govt. introduces 122nd Constitutional Amendment Bill 2014 in 16th Lok Sabha.
Since GST aimed to change federal financial relations, so under Art.368, this
constitutional bill required:
- @Union Parliament Lok Sabha and Rajya Sabha each:_50% majority of the total
membership, and 2/3rd majority of all members present and voting.
- @State Vidhan Sabha: approval by majority of state assemblies (i.e. 15 Vidhan-
sabhas of India at that time)
Ultimately, it passed & became
- 101st Constitutional Amendment Act, 2016 (सं वैधा�नक सं शोधन अ�ध�नयम/ क़ानून)
SIDE NOTE: other imp amendments Acts
- 102nd , 2018: Constitutional status to National Commission for Backward Classes
(NCTC को सं वैधा�नक दजार् िदया जाए)
- 103rd , 2019: 10% EWS reservation (आ�थक �प से �पछड़े वगर् के �लए आर�ण)
- 104th , 2020: Anglo Indian reservation removed in LS & Vidhan shaba but SC/ST
continued till January 25, 2030. (एं �ो भारतीय समुदाय का आर�ण हटाया)
- 105th, 2021: To restore states' power to make their own OBC lists- After SC
judgement (रा� सरकार अपनी OBC सूची बना सके )
22.7 🍋🍋🍋🍋:📙📙📙📙 GST: 101ST CONSTITUTIONAL AMENDMENT ACT, 2016
101 वां सं वैधा�नक सं शोधन अ�ध�नयम, 2016 amended following articles in our Constitution.
246-A - States given power to tax goods and services. (previously, they couldn’t tax services.)
- But only UNION will have the power to tax inter-state supply of goods and services
in the form of “IGST” (एक रा� से दू सरे रा� म� व�ु और सेवा क� आपू�त पर के वल क� द्र सरकार टै�
माँग सकता है �जसे IGST कहा जाएगा)
268-A Previously, this article empowered Union to levy Service Tax. But, since tax on services
has been brought under GST, this article was deleted. (सेवा कर को हटाया गया)
269-A IGST (on inter-state trade) will be distributed between Union and states, as per the
formula by the GST Council (जीएसटी प�रषद)
270 CGST (=new indirect tax of Union, which replaced Excise Duty & Service Tax)..this
CGST will be distributed between union and states as per the formula by the Finance
Commission (�व� आयोग �सफ़ा�रशों के अनुसार CGST को क� द्र और रा�ों म� बाँटा जाएगा)
279-A President of India to appoint a constitutional body, “GST Council headed by Finance
Minister. ” (जीएसटी प�रषद िक �नयु�� रा��प�त कर�गे, और �वत् मं त्री इस प�रषद का अ�� होगा)
366 🥂🥂 Alcoholic liquor for human consumption (मिदरा) is kept out of GST. (i.e. State govt
continue to levy State Excise on its production and State VAT on its sale.)
22.8 🍋🍋🍋🍋: 🧔🧔🧔🕉🕉 GST COUNCIL: COMPOSITION? जीएसटी प�रषद
🧔🧔Union representatives (2 प्र�त�न�ध) �🕉🕉 States’ representatives (31)
1. Finance Minister as the Chairman - Each state government (including UT with
2. Union Minister of State for finance or legislature: J&K, Delhi & Puducherry) can
revenue. (�व� या राज� के क� द्रीय रा� मं त्री) nominate 1minister to GST council- it may
be their minister of finance or Dy.CM or any
other minister as per their wish.
- One of them will be selected as the Vice-
Chairman of GST council.
🗳🗳 Voting power: 1/3rd (एक �तहाई) 🗳🗳 Voting power: 2/3rd
✓ If all members don’t no unanimously agree over a proposal (यिद िकसी प्र�ाव पर सवर्स��त नहीं, तो वोिटंग
होगा) → it’ll be put for voting → then minimum 3/4th votes required to pass the proposal.
✓ Council Meetings to proceed only with quorum of 50% of total membership.(अ�नवायर् �ूनतम हा�ज़री)
22.8.1 🧔🧔🧔🕉🕉 GST Council: Functions? They’ll decide following-

1. List of indirect taxes, cess, surcharge of the union and states to be subsumed under GST-regime.
(पुराने करो को जीएसटी-�व�ा म� स��लत/ �वलीन करना)
2. Decide the date from which Crude oil, Petrol, Diesel, Aviation Turbine Fuel and Natural Gas will
be put under GST regime. (Until then excise-VAT on these five hydrocarbon fuel products, will
be unilaterally decided by Union and individual States). [कौन सी तारीख़ से इन पाँच चीज़ों पर GST लगाना है]
3. Decide Standard rates (सामा� दर) for GST (i.e. CGST, SGST and UTGST). IGST = {CGST +
(SGST or UTGST depending on destination)}
4. Decide Special rates (�व�श� दर) for GST, during natural disaster / calamity if required.
a. E.g. 2019-Jan, GST-Council also allowed Kerala to levy a 1% calamity cess (आपदा उपकर)
on intra-state trade for next two years, for the rehabilitation of 2018’s flood-victims.
5. Integrated GST (IGST) system during interstate commerce, and its tax-sharing.[]
6. Norms related to GST registration of businessmen. If a goods selling Bizman has turnover above
“x” lakhs, he must register @GSTN online portal, he must collect GST from consumers and
deposit it there. Originally the “x” was ₹20 lakhs for ordinary states; ₹10 lakhs for Sp.cat states &
Telengana. However, in 2019-Jan the GST council doubled this limit to ₹40l & ₹20l respectively.
Within this, some technical relaxation given to merchants selling products on E-commerce
website. (Turnover limits for service seller bizmen in Manipur, Mizoram etc separate but
hairsplittery not REQ, not here for C.A. Exam).[�ापारी/उद्योगप�त/आपू�तकतार् के पं जीकरण के �लए �नयम
बनाएगा]
7. Protecting the interests of the special category states (खास श्रेणी के रा�) i.e. 8 North Eastern states
and Himalayan states (Himachal and Uttarakhand.) e.g. 2021-Sikkim proposed to levy Covid
Cess on pharmaceutical companies and electricity companies to collect money for Corona wave
2.0. But, GST Council’s group of ministers (GoM) committee rejected Covid Cess proposal.
However GoM committee recommended Union Govt to give ₹250 crore grant/compensation to
Sikkim for fighting Covid Wave 2.0. (कोरोना क� दू सरी लहर से लड़ने के �लए �स��म को मुआवज़ा/अनुदान)
8. Compensation to the states for their revenue loss in switching from VAT to GST regime
(through Cess mechanism: रा�ो को उपकर द्वारा मुआवजा)
9. Dispute settlement between Union vs state(s), state(s) vs state(s). (�ववाद �नपटान)
So, Constitutional Amendment→ set up GST council → GST council’s meeting→ laws passed by
Parliament and Vidhan Sabhas, to implement the GST related mechanisms.
1. 🧔🧔 Parliament has passed:
✓ Central Goods & Services Tax Act (CGST: क� द्रीय व�ु एवं सेवा कर अ�ध�नयम)
✓ Integrated Goods & Services Tax Act (IGST: एक�कृ त माल और सेवा कर अ�ध�नयम)
✓ Union Territory Goods & Services Tax Act (UTGST: क� द्र शा�सत प्रदेश माल और सेवा कर
अ�ध�नयम): Finance Act 2020 → amends UTGST Act to update list of UTs:
i. (new) Ladakh without legislature.
ii. (merged) 1) Dadra and Nagar Haveli + 2) Daman and Diu = treated as single UT
(because Govt merged them in 2019).
✓ Goods and Services Tax (Compensation to States) Amendment Act. माल और सेवा कर (रा�ों
को मुआवजा) सं शोधन अ�ध�नयम
✓ Parliament originally passed them 2017, later amended in 2018 As per the
recommendations of the GST Council.
2. �🕉🕉 State Legislatures have passed State Goods and Services Tax Acts. (SGST)
3. �☪Jammu & Kashmir passed SGST Act on 8th July, 2017→ then GST system became
effective there as well. JAMMU AND KASHMIR REORGANISATION ACT, 2019 has not
abolished this SGST act. Present status is:
✓ SGST applicable on J&K (UT with Legislature:�वधा�यका यु� क� द्रशा�सत प्रदेश)
✓ UTGST on Ladakh (UT without Legi: �वधा�यका-हीन क� द्रशा�सत प्रदेश)
�🕉🕉🕉☪ Stereotyping helps in faster revision
22.8.2 🔨🔨⚖GST Council Decision not binding on States

⇒ 2022- Supreme Court observed that GST Council’s decisions are not binding on the states.
⇒ This may create challenges in the future, if (non-BJP) states do not comply with the GST council
decisions. (सुप्रीम कोटर् ने पाया िक GST प�रषद के आदेशों को मानना- रा� सरकारों के �लए अ�नवायर्/बा� नहीं है.)
22.9 🍋🍋🍋🍋🍋🍋 GST INPUT TAX CREDIT (ITC: इनपुट कर प्र�य)
• GST is a ‘destination based’ indirect tax on consumption of goods & services.(GST उपभोग पर लगने
वाला ‘�ान-आधा�रत’ अप्र�� कर है)
• GST is applicable on supply of goods or services. (व�ुओ ं और सेवाओं क� आपू�त पर लगता है)
Table 2: When Goods / Services (produced &) supplied →
in same the State (or UT without legislature) = in another State (or UT w/o LSR)
Intra-state supply (अंत:रा�) = Inter-state supply (अंतररा�ीय)
🧔🧔(�🕉🕉 → �🕉🕉) 🧔🧔(�🕉🕉 → �☪)
1. 🧔🧔Union levies →CGST 1. 🧔🧔Union levies IGST =CGST + (SGST or

2. �🕉🕉 State levies → SGST UTGST depending on destination).
3. UT without legislature levies → UTGST 2. From this IGST→ CGST goes to Union, and
the other portion goes to the �☪
Destination State/UT without legislature.
Table 3: Suppose in Jan-2021: a Gujarat based Calendar printing company is doing following
Bought (Input) in 2021-January Price ₹ CGST SGST IGST, if inter-state
(Guj) supply
Printer from Mumbai @18% GST 1 lakh N/A N/A 18k
Ink from a factory in Guj @18% GST 10k 900 900 N/A
Paper from Himachal @12% GST 20k N/A N/A 2400
Total 1.30 lac 900 900 20,400
Table 4: Suppose company manufactures (prints) and sells calendars @₹100 each, @12% GST
Sold (Output) in 2021-January Price CGST SGST Guj) IGST, if inter-state supply
500 Calendars within Gujarat 50k 3000 3000 N/A
500 Calendars to Rajasthan 50k N/A N/A 6000
Total 100k 3000 3000 6000
So, how much tax will the Calendar company have to deposit online at the GSTN webportal?
GST liability in 2021-January CGST SGST (Guj) IGST
GST Taxes collected on Output (from wholesalers, 3000 3000 6000
retailers or customers)
MINUS GST Taxes paid on Input (in previous stage -900 -900 -20,400
for raw material, intermediate goods)
=Company must deposit how much tax @GSTN 2100 2100 -14400**
webportal?
** this is the input tax credit (ITC) company can use for offsetting its tax-liability in future.
- Suppose in Feb-2021, company did not purchase any inputs and sold 1,500 calendars in
Tamilnadu @₹100 each = ₹ 1,50,000 + 18,000 (IGST) it must have collected from the
Wholesalers/ retailers/ end-customers of Tamilnadu.
- But in Feb-2019, Company need not deposit ₹18000 @GSTN webportal, because already it
has ₹14400 IGST credit🤑🤑 so Company only needs to deposit 18000 MINUS 14400= ₹3600.
- Cross-utilization of ITC🤑🤑:
- IGST credit can be used for payment of all GST taxes.
- CGST credit can be used only for paying CGST or IGST.
- SGST credit can be used only for paying SGST or IGST.
If the goods or services are sold in union territory without legislature, then instead of SGST, they
(practically the Union Govt) will levy UTGST but the funda will remain similar as above.
22.9.1 🍋🍋🍋🍋↩👚👚 Inverted Duty Structure Problem in GST on Textile
An inverted duty structure in GST arises when the taxes on output or final product is lower than the
taxes on inputs, creating an inverse accumulation of input tax credit- then government has to refund
the GST to the business man. = administrative & accounting inconvenience for the govt.
Input Raw material Output Final Product Implication

Fiber (रेसा) 18% GST Apparel shirt/pants etc. Trader will accumulate
= 5% GST (व�) 13% GST credit. Govt
will have to refund.
AFTER Reform: GST council imposed Uniform 12% GST on manmade fibre (MMF), yarn, fabrics
and apparels, footwear. However, after the protests from textile industry, this decision was
postponed. (जीएसटी म� एक उ�ा शु� सं रचना: यिद क�े माल जेसे के कपड़ा ख़रीद पर उधयोगप�त ने 18 पस�ट जीएसटी टै� देना
पड़े और उसम� से तैयार िकए गए शटर्-पतलून क� �बक्र� पर 5% GST लगता हो तो, तो असल म� सरकार ने उस उधयोगप�त को 13%
GST refund देना होगा। इस िहसाब-िकताब और �रफ़ं ड क� माथाप�ी से बचने के �लए कपड़ा-जुते के क�े माल और अं�तम उ�ाद पर
एक समान 12% जीएसटी लगाया जाएगा । हालाँिक कपड़ा �ापारीऑ के �वरोध के चलते इस �नणर्य को टाल िदया गया है।)
22.9.2 💿💿GST: Exempt vs ZERO RATED
💿💿GST ZERO RATED (0%) GST EXEMPT/NIL RATED 🥂🥂NON-GST Supply
IF Govt levies 0% GST on IF Govt levies 0% GST, & These goods/services are NOT
the Goods/Services & ✋DOESNOT allow Bizman to subjected to GST. They are
✅ALLOWS bizman to claim ITC. E.g. Jaggery (ग�े का subjected to other taxes. E.g.
claim ITC. For example: गुड़). ⇒ Petrol, Diesel etc 5
⇒ 18% GST on laptop ⇒ So if Bizman bought a hydrocarbon products=
bought by Infosys machine for crushing Excise & VAT.
Company (Input) sugarcane → he’ll not get ⇒ 🥂🥂Alcohol for human
⇒ 0% GST on EXPORT of ITC consumption = State
Software Services ⇒ So, then. to recover the Excise & VAT
(Output). cost+tax on input, Bizman
⇒ Here, Indian software may charge more selling
company will price of jaggery on
accumulate / gain 18% customer.
GST. ##
GST-ITC Given = YES🤩🤩 GST-ITC Given = NO✋ GST-ITC Given = NO✋
- In Software EXPORT case, Infosys Company gained ITC. So, A) Govt will REFUND and/or B)
Infosys can use this ITC for adjusting/offsetting future sales within India.
- In both case A and B case, ultimately govt will not be able to earn GST from Infosys, however
government benefits from the increased exports→ jobs, GDP. Besides, more profit for Infosys in
export = more Corporation Tax for Govt.🤩🤩
22.9.3 💉💉Vaccine GST can’t be 0% ZERO RATED or “EXEMPTED” because

Present situation ✈Export of Vaccine 🚛🚛Domestic Sale of Vaccine
Vaccine → 0% GST (Zero Rated) 5% GST
⇒ If Vaccines domestic sales pe 0% GST (ZERO RATED) = Businessman will accumulate large
amount of ITC. Govt will have to refund. = Less tax collection for Govt. 😰😰
⇒ If Vaccines’ domestic sales pe GST EXEMPT/NIL RATED = Businessman will NOT get any ITC
on raw material /machines → he’ll ⏫ price of vaccine on patient.😰😰 (similar to Sugarcane
machine-Jaggery case).
वै�ीन को GST दायरे से बाहर नहीं िकया गया �ोंिक ऐसा करने पर फामार्�ूिटकल कं पनी को क�े माल क� ख़रीदारी पर अदा िकया गया
GST माफ़� भी नहीं �मलेगा तो ग्राहक पर क़�मतों का बोझ बढ़ता है.
😤😤MORAL Outrage: Isn’t there an inconsistency in logic/will there not be inverted duty structure
problem in Vaccine mfg similar to Textile? Ans. GST council decides rates based on variety of
factors like what are the tax rates on the inputs and how much GST-losses for the government versus
the benefit to the ordinary patients etc. If you get selected in IRS they will teach it to you there. सरकार
अपना िदमाग़ लगाकर रेट �नधार्�रत करती हे, अपने को झं डा लेके पीएचडी करने क� ज़�रत निह।
22.10 🍋🍋🍋🍋🍋🍋🍋🍋 CENTRE’S INDIRECT TAXES SUBSUMED IN CGST
Table 5: क� द्र के अप्र�� कर जो क� द्रीय व�ु एवं सेवा कर (सीजीएसटी) म� �वलीन हो गए

Indirect Tax of Union Whether replaced by CGST?
⚓For import-export: Basic - No, Customs Duty is NOT replaced with GST. It’s
Customs Duty, cess / surcharge on separate from GST-regime. So, imported goods are
it. subjected to Customs duty + IGST.
सीमा शु� और �व�भ� उपकर / अ�धभार - Previously, imported goods were subject to Customs
Duty + education cess (�श�ा उपकर) but Budget 2018
replaced it with Customs Duty + 10% Social Welfare
Surcharge (समाज क�ाण अ�धभार).
- 💼💼Budget-2020: 5% Health CESS (�ा� उपकर) on
imported medical devices (�चिक�ा उपकरण) for hospitals
construction in Aspirational (=backward) Districts.
⚓On imports: Special Additional They’re not ‘replaced’ with CGST. More about them in
Customs Duty (SAD), (More in 📑📑Pillar#3B: World Trade Organization)
Countervailing Duty (CVD), Anti-
Dumping Duty (ADD)
Central Sales Tax CST was the Union tax levied on sale of items in inter-state
(CST-क� द्रीय �बक्र� कर) trade, and it was assigned to the ‘Origin state’. It’s replaced
with IGST (= CGST + SGST) एक रा� से दू सरे रा� म� माल सामान
Indirect Tax of Union Whether replaced by CGST?
बेचने पर ये कर लगता था हालांिक उद्गम रा� को क� द्र सरकार यह रकम देता था
�On providing services: Service Yes, completely replaced by CGST. These previous cess /
tax (सेवा कर) and Krishi Kalyan Cess surcharge are deleted. [GST आने पर ये सारी चीज़ ख़� हो चुक� है]
and Swatchh bharat Cess
�On manufacturing/production - Yes, completely replaced by CGST (except 5
of goods: Excise duty and various hydrocarbon fuels: petrol, diesel etc.)
Cess / surcharges on it.(उ�ाद शु� और - Excise on manufacturing medicinal & toiletry
�व�भ� उपकर / अ�धभार) preparations containing alcohol (e.g. Cough syrups,
deodorants and perfumes) also replaced by CGST.
- Alcoholic Liquor for human consumption- falls in States’
purview so Union Excise / CGST not applicable on it.
🚭🚭Excise duty on Tobacco products - It’s replaced with 14% CGST. Further, Union also levies
[तं बाकू उ�ादों पर उ�ाद शु�] + GST Compensation Cess + National Calamity
Contingency Duty** (NCCD:-रा��ीय आपदा आक��कता ड्यूटी)
on them.
- **because 101st Constitutional Amendment allows
Union to tax tobacco products separately.
- NCCD money goes to Public Account → National
Disaster Response Fund set up under Disaster
Management Act, 2005.
⛽Excise duty on - Once GST council decides the date they’ll be brought
production/refining of Crude oil, under GST-regime. अभी जीएसटी नहीं लगता. भ�व� म� जीएसटी
Petrol (Motor Spirit), Diesel, प�रषद तय करेगी उसके बाद लगेगा.
Aviation Turbine Fuel and natural - Until then refineries / oil-drilling companies have to pay
gas: क�े तेल, पेट�ोल (मोटर ��रट), डीजल, excise duty+cess/surcharges to Union for production /
�वमानन टरबाइन �धन और प्राकृ �तक गेस पर manufacturing of these items. (and petrol pump owner,
उ�ाद शु� etc will have to pay VAT to states on their sale.)
- Presently, Petrol & Diesel are also subjected to Union’s
Road and Infrastructure Cess (सड़क और बु�नयादी ढांचा उपकर)
its ₹₹ goes into Public Account→ Central Road &
Infrastructure Fund under Central Road Fund Act 2000.
🍋🍋🍋🍋Corporation Tax, Income ⇒ 👿👿Arre Bhai, they’re 🍋🍋🍋🍋DIRECT Taxes of Union, so
Tax, Capital Gains Tax etc [�नगम कर, they are not replaced by GST. ये सब प्र�� कर है.
आयकर और पूंजीगत लाभ कर] ⇒ The GST is meant to replace 🍋🍋🍋🍋🍋🍋 INDIRECT
Taxes only. जीएसटी के वल परो� करों के साथ जुडा है
22.10.1 📈📈 GST Revenue Collection Figures: जीएसटी राज� प्रा�� के आंकड़े
GST registered suppliers have to deposit the GST at the GSTN portal on monthly basis ( except those
who opted for the GST composition scheme). In monthly collection of GST, there are ups and downs
based on seasonality.
Year/Month 2017 monthly avg. 2018 monthly avg. 2021 monthly avg.
GST collection 89700 cr 98114 cr More than 1 lakh cr.
Table 6: Data from 💼💼बजेट (Approx. Amount in ₹ crores)
Table 7: कौनसे करो म� सबसे �ादा आमदनी होगी सबसे �ादा आमदनी होगी
Upto 💼💼Budget 🏢🏢 Corporation> 🛒🛒GST>�IT >⛽Excise> ⚓ Customs >🗃🗃STT
Estimate-2019 (Securities Transaction Tax)
Revised Est 2019 🛒🛒GST>🏢🏢 Corporation >�IT >⛽Excise> ⚓ Customs >🗃🗃STT
💼💼Budget-2020 🛒🛒GST>�IT >🏢🏢 Corporation >⛽Excise> ⚓ Customs >🗃🗃STT
(RE: revised Estimates on 1/2/2021) सं शो�धत अनुमान
💼💼Budget-2021 (BE) 🛒🛒GST>�IT >🏢🏢 Corporation >⛽Excise> ⚓ Customs >🗃🗃STT
(Budget Estimates: BE- on 1/2/2021) बजट अनुमान
💼💼Budget-2021 (RE) 🛒🛒GST> 🏢🏢 Corporation>�IT >⛽Excise> ⚓ Customs >🗃🗃STT
(Revised Estimates: RE- on 1/2/2022) सं शो�धत अनुमान
👜👜👜👜Budget-2022 (BE) 🛒🛒GST> 🏢🏢 Corporation>�IT >⛽Excise> ⚓ Customs >🗃🗃STT
22.11 🍋🍋🍋🍋(�🕉🕉)🌬🌬 STATES’ INDIRECT TAXES SUBSUMED IN SGST
Table 8: रा�ों के अप्र�� कर जो रा� व�ु एवं सेवा कर (एसजीएसटी) म� �वलीन हो गए

�🕉🕉: Indirect Tax of State Govt. → whether replaced by SGST?
🛒🛒On sale of goods: State Value Added Tax ✅Yes, By default VAT is replaced by SGST, but read
(VAT) (In some states called “Commercial below:
tax” वा�ण��क कर)
🛒🛒⛽State VAT on selling of Crude oil, ✋Once GST council decides the date, these’ll be
Petrol (Motor Spirit), Diesel, Aviation brought under GST-regime. Until then, petrol pump
Turbine Fuel and natural gas [�धन �बक्र� पर रा� owners, LPG gas distributors etc. will have to collect
सरकार क� वेट कर] VAT (+ any cess / surcharges) from the customers
and deposit to the state government.
- 🥂🥂 State Excise on production of liquor ✋No, they're completely kept out of GST. [unlike
for human consumption (मानव उपभोग के above ⛽petro items where GST council will
�लए बनी शराब के उ�ादन पर रा� उ�ाद शु�) implement it after “x” date]. Since inception of our
- 🥂🥂 State VAT on sale of liquor for Constitution, the power to tax 🥂🥂 liquor was with
human consumption. (मानव उपभोग के �लए �🕉🕉:States, & it constituted a major source of
बनी शराब/ म�दरा क� �बक्र� पर रा� वैट) revenue for them, so States were unwilling to hand it
over in GST regime. Had 🧔🧔Modi govt tried to bring
liquor in GST-regime, then majority of the Vidhan-
Sabhas may not have passed this Constitutional
Amendment Bill.
⚡Electricity Duty �बजली शु� ✋No, it’s not replaced by SGST
🚗🚗Road Tax on vehicles. ✋No, it’s not replaced by SGST. Its status as
direct/indirect tax is vague because in some states/
vehicle categories: buyer himself deposits while in
some cases, seller required to collect & deposit.
🚗🚗Purchase tax on vehicle, boats, and ✅Yes replaced by SGST
animals-खरीद कर
🏗🏗Advertisement tax on hoarding, banners ✅Yes replaced by SGST
etc.- �व�ापन कर
⛱Luxury tax at Hotels, Spas, Resorts etc.- ✅Yes replaced by SGST
अ�ाशी �वला�सता कर
🚛🚛Entry tax/Octroi for entry of goods in an ✅Yes replaced by SGST
area -प्रवेश के �लए कर , ऑ��ोई
🐎🐎Taxes on Lottery, horse race betting, ✅Yes replaced by SGST. Since they’re
gambling etc. लॉटरी, घोड़े क� दौड़ सट्टेबाजी, जुआ ‘sinful/demerit goods’, they’re subjected to highest
slab : 14% SGST + 14% CGST = 28%
📽📽Entertainment Tax on Cinema, Live ✅Yes, replaced by SGST unless levied by a local
Performance shows etc.- मनोरंजन कर body. e.g. Kerala local bodies 10% on movie tickets.
🍋🍋🍋🍋Income tax on Agriculture, 👿👿Arre Bhai, they’re 🍋🍋🍋🍋DIRECT Taxes of State
Professional tax, Property tax, Stamp Duty, so not replaced by GST. The GST is meant to replace
Land revenue [कृ �ष आय कर, �ावसा�यक कर इ�ािद] 🍋🍋🍋🍋🍋🍋 INDIRECT Taxes only.
22.12 🍋🍋🍋🍋🍋 GST RATES ON SERVICES =0%: सेवाओं पर जीएसटी क� दर
Which of following is ZERO Rated & which one is NIL Rated/EXEMPT? Ans. Poor cost:benefit.
1. Services provided by union government, state government, local bodies, constitutional bodies,
department of post (except premium services like speed post), Railways (except premium
services like first class AC ticket)
2. Services by Reserve Bank of India and other financial regulators.
3. Services by Banks/NBFCs in connection with Government sponsored banking, insurance and
pension schemes. (Refer to financial inclusion handout)
4. ESIC, EPFO services to the subscribers, Group insurance schemes for paramilitary forces
5. Religious, charitable activities, cooperative societies, Public libraries, Public toilets,
Crematorium, Burial grounds.
6. Rent on residential accommodation
7. Aviation Services in North-eastern States
8. Transport services to milk, (physical/paperbased) newspaper, defence equipment, relief material
during disasters etc.
9. Doctors, para-medics, Ambulance, Blood bank.
10. Agriculture warehouse, cold storage, renting of Agro machinery, Contractor who is supplying
farm labourers, APMC (Agricultural produce market committee)
11. Agriculture pre-processing of food e.g. ripening, waxing, retail packing, labelling of fruits and
vegetables which do not change essential characteristics of the said fruits or vegetables.
12. Veterinary doctor, Animal husbandry related services except racehorses
13. � Educational services by Educational Institutes (like schools colleges universities Vocational
institutes. NOT COACHING Institutes)
14. Entrance Exam fee collected by Union or state government orgs.
15. Private training partners in government skill development schemes
16. Sports training and events by recognised sports body
17. Sports, Art, Culture etc. clubs with member-fees less than “X” rupees.
18. Circus, dance, drama or ballet, award function, concert, pageant, musical performance or any
sporting event where admission fees is less than “X” rupees.
19. Admission to a museum, national park, wildlife sanctuary, tiger reserve, zoo, ASI-recognized
Heritage sites.
20. 2020-Oct decision: satellite launch services supplied by ISRO, Antrix Corporation Ltd. and NSIL
would be exempted. (More about these organizations in (More in 📑📑Pillar#5: communication
infrastructure)
21. Any service EXPORTED outside India (THEY ARE “ZERO RATED Export”)
In the Pre-GST era, most of above services were having 0% Service Tax. वतर्मान म� उ� पर 0% जीएसटी
लगता, उसी प्रकार भूतकाल म� जब ‘सेवा-कर’ था तो वो भी इनम� से �ादातर सेवाओं पर 0% था.
If a given service is not in the above list, then it will be subjected to GST: <see next table>
Example of services (कु छ उदाहरण सेवाओं If supplied in the same If supplied to another State or
के �जन पर GST लगता है) State or UT w/o LSR then UT w/o LSR (: IGST)
(�🚛🚛🚛) (�🚛🚛🚛🚛)
Plumbing, carpentering, Ads in print - 🧔🧔Union gets 2.5% IGST 5% (its bifurcation is same
media, Ebooks CGST like left cell. Union gets half in
- �State/UT gets 2.5% CGST, and other half goes to
SGST or UTGST “DESTINATION” State/UT as
SGST/UTGST amount.
- Accommodation in hotels, inns, Similar as above but 6+6 IGST 12%

guest houses with daily charges upto
₹7500/-
- Movie tickets upto Rs. “x”
(presently ₹100)
- Engineering related services
- � Coaching Services, Similar as above but 9+9 IGST 18%
- Online Information Database
Access and Retrieval such as e-
book, e-newspaper, e-music,
WebSeries/OTT platforms-
AmazonPrime, Hotstar etc.
- Ads in digital media,
- Legal and accounting services
- DTH/TV channels, Movie tickets
above Rs.“x”
- - Hotel rooms ₹ >7500 per day
🏇🏇Gambling, Horse Race club, Similar as above but 14+14 IGST 28%
Casino
For more, you may refer to: https://cbec-gst.gov.in/gst-goods-services-rates.html
22.12.1 🍋🍋🍋🍋🍋🍋 GST Rates on Goods : 0% removed

BEFORE-2022 From 2022
0% GST on cereals (wheat rice etc), flour (aata), 5% GST if they’re
pulses (daal), curd, Lassi, puffed rice (poha) ✅PREPACKED and
✅Labelled and
✅packet size is smaller than 25KG or 25 litres
0% Maps and Bank’s Chequebooks 18% GST
FAQ: Apart from above items, which other XYZ food item pe above rule applicable or not?
Ans. Newspapers did not bother to highlight but you can satisfy curiosity by doing self-PHD on this
list: https://cbic-gst.gov.in/gst-goods-services-rates.html
22.13 🍋🍋🍋🍋🍋🍋 GST RATES ON GOODS : 0%: सामान पर जीएसटी क� 0% दर�

Which of following is ZERO Rated & which one is NIL Rated/EXEMPT/0%? Ans. Poor cost:benefit.
1. Fresh milk, Pasteurized Milk
2. Live animals (except race horses), poultry, pigs, shrimps, fishes, insects etc
3. FRESH, “UNBRANDED” and not ‘Prepacked’ animal products eggs, meat, honey, rawsilk etc.
4. FRESH, “UNBRANDED” and not ‘Prepacked’ flowers, leaves, fruits vegetables, unroasted coffee
beans & tea leaves, Salt.
5. Bread (**except when served in Restaurant/ pizza)
6. Prasadam supplied by religious places. (धा�मक �ानों द्वारा िदया जाने वाला प्रसाद)
7. Deities made of stone, marble or wood; Puja Samagri like Rudraksha, Panchamrit
8. Rakhi, Kumkum, Bindi, Sindur, Plastic / glass bangles without precious metal.
9. Human blood, contraceptives, sanitary napkins, tampoons, hearing aid
10. Tocilizumab (Corona Drug), Amphotericin B (Black Fungus Drug) (From 2021-Jun)
11. Electricity, Firewood (�बजली और जलाने क� लकड़ी)
12. Judicial / Non-judicial stamp papers, Court fee stamps, ordinary post cards etc.
13. Printed Books; physical edition of Newspapers, journals, periodicals irrespective of whether they
have advertisement or not.
14. Khadi sold by Khadi and Village Industries Commission(KVIC) certified outlets
15. Gandhi topi, Charkha, national flag, Earthen pot, clay idols
16. Agricultural hand tools like spade, axes, sickle.
17. When a constitutional / public authority auctions the gifts received by him.
18. Spacecraft, satellites and their launch vehicles.
19. Import of specified defense goods not manufactured in India
20. Free sample or gift given. E.g. “Offer: Toothpaste pe toothbrush FREE” then only Toothpaste
subjected to GST. No gst on that free-toothbrush. (ग्राहक को लुभाने के �लए मु� म� िदया जाने वाला स�पल)
21. Any Goods EXPORTED outside India (technically called “ZERO RATED Export”)
If a given goods is not in the above 0% list (and not kept out the GST-regime like Petrol-Diesel-
Daaru), then it will be subjected to GST: such as:
Example of Goods (list not If supplied in the same If supplied to another State or
exhaustive) State or UT w/o LSR UT w/o LSR (: IGST)
Semi-precious stones like agate, Union gets 0.125% CGST IGST 0.25% (its bifurcation is
amber, topaz, lapis lazuli etc. same as left cell. But
State/UT gets 0.125% “DESTINATION” state/UT gets
SGST or UTGST the SGST/UTGST portion)
Diamonds cut and polished (this new 0.75+0.75% IGST = 1.50%

slab created in 2022-Jul)
Jewellery, Pearls, Gold, platinum, Similar as above IGST 3% (funda same as above)
silver etc. 1.5%+1.5%
Milk powder, Baby food, Pizza bread, 2.5%+2.5% IGST 5%

Mineral ores, certain medicines
💊💊Corona related drugs/devices:
💉💉Vaccines, Remdesivir, Oxygen
Concentrator, Ventilator, Covid
Testing Kits, Pulse Oximeters, 🌡🌡
Temperature check equipment,
🧴🧴Hand Sanitizer, crematorium
furnaces, Ethanol meant for blending
Example of Goods (list not If supplied in the same If supplied to another State or
exhaustive) State or UT w/o LSR UT w/o LSR (: IGST)
with petrol
Fruit Jams, Butter, Cheese, Canned 6%+6% IGST 12%

Fish, Sugar cubes, Textile, certain
medicines & surgical items, Railway
wagon, electric car & its chargers
🚑🚑Ambulances, 🧱🧱Bricks
➢ Ice cream, cakes, biscuits; 9%+9% IGST 18%

➢ Soap, perfume, paint
➢ Electronics, Computer & Mobile
accessories
➢ Certain medicines
➢ Alcohol based hand sanitizers
➢ Paint, Polish, Wax and similar
petroleum products
Luxury goods, Sin Goods, Demerit 14%+14% IGST 28%

goods (�वला�सता /पाप/ अवगुण सामान):
➢ Caffeinated Beverages e.g. Red bull
➢ 🚭🚭 Tobacco products, Pan
Masala
➢ Cement, Granite, Marble
➢ Air Conditioners, TVs of “x” size
➢ Motor vehicles, Aircrafts, Yacht
➢ Guns, Lottery ticket.**
🍸🍸Alcohol for human consumption Outside GST-regime. Subjected to State Excise + VAT
⛽Crude oil, Petrol (Motor Spirit), Until GST council announces: Union Excise + State VAT +
Diesel, Aviation Turbine Fuel and various cess/surcharges.
Natural Gas
As of 2018-December, very few items left in the 28% slab. PM Modi has announced to bring 99% of
the items in 18% or lower slab.
✋Notes: <DONOT LOOSE SLEEP IN FOLLOWING>
- ** Originally, state Government run lottery = 12% GST & other (private) lotteries= 28% GST.
But from 2020 all types of lotteries = 28%. While Kerala Govt opposed to this move fearing less
sales of State lottery so GST council had to go for voting → majority voted in favour of 28%.
This is the first matter since inception of GST council, wherein voting had to be done. All
previous decisions were taken unanimously without voting.
- As the elections come near, GST Council will bring down more items in lower GST-slabs to keep
the voters (or bizmen) happy, so above tables/lists are “not static”. E.g. from 1/4/2019: norms
will be changed for real estate property: affordable houses 1% GST without input tax credit
(ITC), non-affordable housing: 5% without ITC and Commercial properties: 12% WITH ITC.
- 2019: To boost electric vehicle, GST council ⏬ GST on e-vehicle & its chargers to 5%
- For more, you may refer to: https://cbec-gst.gov.in/gst-goods-services-rates.html
22.13.1 🍋🍋🍋🍋Indirect Tax → 💊💊GST Rate ⏬ on Corona Related Items (2021-Jun)

GST Council usually meets every three months. But Corona= meetings not done regularly. e.g. 2020-
Oct meeting → next meeting in 2021-May i.e. more than 7 months passed. (व�ु एवं सेवाकर प�रषद सामा�
�प से तीन तीन महीने पर �मलती है िकंतु कोरोना सं क्रमण के चलते ऐसा नही हो पाया.)
2021-May: GST Council meeting outcomes:
⇒ reduced the penalties on merchants for late-filing of GST documents/data.(GST के द�ावेज़ देरी से
जमा करने पर लगने वाले जुमार्ने म� कमी क� गई)
⇒ Formed a Group of Minister (GoM) headed by Meghalaya CM Conrad Sangma to examine GST
rates of Covid vaccine, drugs and related items. (मं �त्रयों का एक समूह बनाया है जो वै�ीन इ�ािद चीज़ों पर GST
दर� िकतनी लगायी जाए समी�ा करेगा)
⇒ 2021-Jun: GST Council decided following:
Table 9: These GST rates valid upto 30/9/2021, unless renewed further
Item & GST BEFORE AFTER

💊💊Tocilizumab (Corona Drug), Amphotericin B (Black Fungus Drug) 5% Nil /
0%
💊💊Corona related drugs/devices: Remdesivir, Oxygen Concentrator, 12% 5%⏬
Ventilator, Covid Testing Kits, Pulse Oximeters
🌡🌡 Temperature check equipment, 🧴🧴Hand Sanitizer, crematorium furnaces 18% 5%⏬
🚑🚑Ambulances 28% 12%⏬
💉💉Vaccines 5% 5% 🤐🤐
🔠🔠❓MCQ. Consider the following items:(Asked in UPSC-Pre-2018)
1) Cereal grains hulled 2) Chicken eggs cooked
3) Fish processed and canned 4) Newspapers containing advertising material
Which of the above items is/are exempted under GST (Good and Services Tax)?
(a) 1 only (b) 2 and 3 only (c) 1, 2 and 4 only (d) 1, 2, 3 and 4
22.14 🍋🍋🍋🍋⏰🗓🗓 GST COMPOSITION SCHEME (जीएसटी सं रचना योजना)
⏰GST (Regular) scheme 🗓🗓GST Composition Scheme

If an industrialist or seller is registered with GST, Such monthly compliance is very tedious for
he must collect the taxes at above varying rates, small entrepreneurs / small merchants so they
and deposit them on the monthly basis at GSTN may opt for GST Composition scheme wherein
webportal. [उद्योगप�त ने हर महीने GST क� रक़म सरकार म� instead of above (5-12-18-28%) rates they’ll have
जमा करनी होगी] to collect only flatrate GST of 1% on goods, 5%
on restaurants, 6% on all services.
🤩🤩Good: He will get input tax credit, 😰😰Bad: He’ll NOT GET Input Tax Credit.
😰😰Bad: He’ll have to deposit tax & forms on 🤩🤩Good: He’ll not have to deposit tax/forms on
monthly basis @GSTN webportal monthly basis to GSTN webportal. He’ll have to
do it on Quarterly basis (3-3-3-3 months)
Compulsory if turnover is above “x” lakhs / Optional scheme, NOT compulsory. NOT every
crores. [बड़े उद्योप�तयों के �लए अ�नवायर् है] supplier is eligible. Only if turnover is below “y”
lakhs / crores, and doing “z” type of biz, then
you’ll be eligible.
Approx 1.12 crore taxpayers registered here Hardly 17 lakh taxpayers registered here
22.14.1 🍋🍋🍋🍋⏰🗓🗓 GST Mechanism: Quarterly Returns and Monthly Payment of Tax (QRMP)
जीएसटी का पैसा हर महीने सरकार म� जमा करो लेिकन खरीदी और �बक्र� के िहसाब िकताब के फॉमर् आराम से तीन-तीन महीने म� जमा करो
⇒ Bizman will have to deposit the GST Tax ₹₹ to Government on a monthly basis (1-1 month), but
he may submit the GST forms on quarterly basis (3-3 months) [Forms showing summary of
Incoming and outgoing supplies]
⇒ 🤩🤩Benefit? ⏬Compliance burden. Bizman will have to spend less time filling monthly forms /
have to pay less fees to the chartered accountant.
⇒ Scheme applicable to? Small traders/taxpayers having turnover Not more than ₹"X" cr.
(Presently, X = ₹5cr), But the exact figure is not important. Sufficient to know that it is not
available for everyone. छोटे �ापा�रयों पर कर-अनुपालन का बोझ कम होगा
⇒ The scheme is not compulsory. It is optional / Voluntary. अ�नवायर् नहीं है. वैक��क है
22.14.2 🍋🍋🍋🍋: 💸💸💸💸(✋😈😈) 1% GST deposit in cash for controlling fake ITC claims
फज� टै� क्रेिडट को रोकने के �लए अ�नवायर् �प से 1% जीएसटी नगदी म� जमा करना होगा
⇒ Scamsters acquire Aadhaar card/pan card xerox of innocent victims → Register multiple
fake/dummy companies in their name → Generate fake invoices to show they purchased
good/services (input) price+GST → Then they show (output) fake exports bills (Because exports
are subjected to 0% GST) thus they accumulate GST input tax credit (ITC) from govt, thus gain
money. Then they pull out this accumulated ITC money through other fake bills & refund forms.
धोखेबाज फज�-कं प�नयां बनाकर, उसम� खरीदी �बक्र� के फज�-�बल बनाकर सरकार से जीएसटी-क्रेिडट का गबन करते ह�.
⇒ To control this nuisance, the govt ordered Bizmen to compulsorily deposit at least 1% of their
GST liability in Cash to the Govt. (if businessman’s monthly sales is ₹50 lakh/or more)
⇒ 🤩🤩Benefit? Fraudster will have to make a trip to the bank branch /GST office To deposit the
cash. It will generate CCTV footage, paper-evidences, etc which will help nabbing them. धोखेबाज ने
नगदी रकम जमा करने के �लए ब�क शाखा और सरकारी द�रों के च�र काटने होंगे वहां सीसीटीवी और कागजी सबूत द्वारा उ�� ढू ंढना
आसान होगा।
✋How/why/what/JamesBond-giri= They will teach you In the IRS training academy. We are not
here to Learn exact modus operandi.#⏳📚📚थोड़ा-पढ़ो-आगे-बढ़ो
22.15🍋🍋🍋🍋↩ REVERSE CHARGE MECHANISM (�वपरीत प्रभार क� �व�ा)
कु छ ख़ास मामले जहाँ �वक्रेता नहीं ब�� ग्राहक ने खुद सरकार को GST जमा करना पड़ेगा
- Normally, a seller must collect the GST tax from buyer & deposit to the govt.
- However, in selected cases when seller is not registered with GST number, while buyer is
registered with GST number, then buyer will have to deposit the tax to government.
- How / when / why = NOT IMP, EXCEPT the MCQ word Association that ‘Reverse Charge
Mechanism’ is associated with GST, just like ‘E-way bill’ mechanism is associated with GST.
22.16🚛🚛🚛🚛 E-WAY BILL SYSTEM (ई-वे �बल प्रणाली) FROM 2018 ONWARDS
Figure 1: checkpost पे उ�ीड़न कम होगा

- When goods worth ₹50,000/> are moved within a state (intrastate) or from one state to another
(inter-state), then the truck/transport/cargo/shipping/aeroplane company must generate E-way
Bill from GSTN Portal / App / SMS.
- E-way bill’s self-declaration (that our truck is carrying “x” type of goods worth “y” value) reduces
the scope of bribery, delay, red-tape, harassment at the check post, thereby ensuring a hassle-free
rapid movement for transporters throughout the country.
- E-way bill system became effective from 2018.
- Related: GST council announced the E-invoice (=bill generation through govt’s online portal)
from January-2020 on pilot basis, then E-way bill will not have to be generated separately.
- This will provide relief to businessman, will improve the tax-surveillance and fight against false
ITC-credit claims through fake invoices.
- As such E-invoice was to become compulsory from 1/April/2020. However, because of Corona,
deadlines have been deferred. Deadlines keep changing, notIMP. (��गत िकया, बाद म� लागू कर�गे)
22.17🧔🧔 → 🤑🤑(��) COMPENSATION TO STATES: WHY?

Recall Definition: GST is a destination based indirect tax on consumption of goods and services.
(जीएसटी व�ुओ ं और सेवाओं के खपत-�ान पर आधा�रत अप्र�� कर है।)
✓ For the Union govt, largest source of tax collection were corporate tax and personal income tax.
Both are direct taxes and therefore kept out of the GST regime.
✓ For the state governments, VAT was largest source of tax income, but it is to be subsumed under
GST, along with other indirect taxes, cess and surcharges levied by the states. Therefore, states
were afraid their revenue income will ⬇.[रा�ों क� आमदनी का मु� साधन “वैट” हटा िदया इस�लए वे �चं�तत थे]
✓ Secondly, GST is a destination-based tax, therefore industrialized states are not happy with it.
Consider a Nano car manufactured in Tata's Plant in Gujarat and sold in Uttar Pradesh.
(Destination) UP gets SGST, While (Source) Gujarat gets nothing. Although reverse is also true-
UP's bicycle sold in Gujarat, then Gujarat will earn SGST and UP will get nothing.
✓ But the industrialized states such as Gujarat, Maharashtra, Tamil Nadu, Haryana feared they’d
get less SGST revenue in absolute terms compared to erstwhile VAT regime.
Notable States that witnessed revenue ⏫ Notable States that witnessed revenue ⏬in SGST (In
in SGST (In 2019, compared to VAT in 2019) 2019, compared to VAT)
Andhra Pradesh and some NE states -- Mizoram, Punjab, Himachal, Chattisgarh, Uttarakhand, J&K, Odisha,
Manipur, Sikkim, Nagaland Goa, Bihar, Gujarat and Delhi and others.
22.17.1 🧔🧔 → 🤑🤑(��) Compensation to States: HOW?
Parliament enacted GST Compensation to States Act 2017 (रा�ों को मुआवजा अ�ध�नयम)
✓ Under its provisions, GST council recommended Union Govt to impose “GST Compensation
Cess” (जीएसटी ��तपू�त उपकर ) on specified luxury & demerit goods, like
○ pan masala (60%), tobacco products (cess varies as per product),
○ aerated water & Caffeinated Beverages (12%), coal / lignite (₹400 per tonne),
○ motor vehicles-aircraft-yacht (3-22% depending on type of vehicle).
○ [These rates may change/update, but don’t worry about figures. For example, E.g.
Passenger vehicles originally 15% cess, but due to slowdown in automobile sector, GST
council reduced it to 1-3% depending on type of vehicle.]
✓ The cess thus collected is used for compensating States for their revenue losses during the first
five years since inception of GST. i.e. 1st July 2017 to 30th June 2022
Table 10: GST Compensation to States Act 2017 (रा�ों को मुआवजा अ�ध�नयम)
Section- ⇒ It contains formula for compensation: State's Projected Revenue = 14% annual
7 compound growth rate than its 2015's VAT collection (base year). If current year
SGST collection is less than Projected Revenue → Union to pay compensation
⇒ (रा� का " अनुमा�नत राज�" उसके 2015 के वेट अनुपात क� 14% वा�षक वृ�द्ध के साथ क� �गना गया। यिद
रा� को एसजीएसटी मे उससे कम आमदनी �ई तो उस रा� को, पहले 5 वष� के �लए, क� द्र मुआवजा देगा- जनता
पर जीएसटी ��तपू�त उपकर लागू करके । )
Section- ⇒ GST Council can recommend extending GST compensation cess beyond the
8 period of five years. (5 साल से के प�ात भी उपकर जारी रखने क� �सफा�रश कर सकता है. )
✓ Compensation available only for SGST. It is not given to The Union Territory Without
Legislature (because they've UTGST e.g. Ladakh)
✓ State Liquor Taxes are outside GST, so Bihar / Gujarat / Nagaland / Lakshadweep / Parts of
Manipur can’t ask more ₹ for compensation from GST for having liquor prohibition (मद्य-�नषेध).
Year → 2018-19 2019-20 2020-21 2021-22 2022-23
GST 95k cr 98k cr 1.10 Lakh Cr 1.05 Lakh cr. 1.20 lakh cr
Compensation expected but in
Cess प्र�तपू�त उपकर reality hardly
85,000cr earned
😰😰Controversy?
- Before Corona: since 2019-August onwards payment pending. Also known as “GST Arrears
problems” (मुआवजे क� रकम बकाया है) . 2019-Dec: only partial compensation released. FM Nirmala. S
says, “Sales are ⬇, so we have not collected enough ₹₹ to release the cess.” Non-BJP states first
complained to GST council, but it did not help much. So some State Govts even threatened of
going to Supreme Court, which hints cooperative federalism is in danger. (सहकारी सं घवाद खतरे म�)
- During Corona: given below →
22.18🤧🤧🤧🤧:🧔🧔 → 🤑🤑(��) GST COMPENSATION & BACK2BACK LOANS
⇒ Feb 2020: when state govts had presented their budgets in their Vidhan Sabha, for next financial
year → they could only estimate the amount of SGST they'll earn between 1/4/2020 to
31/3/2021. फरवरी म� तो के वल अनुमान ही लगा सकते थे िक अगले �व�ीय वषर् म� िकतनी आमदनी होगी!
⇒ So, States had estimated a large/decent collection in SGST for the 2020-21. because, in Feb'2020,
Corona yet to fully develop, so States were optimistic. [फरवरी मे कोरोनावायरस क� गं भीर हानी भारत म� आई
नहीं, इस�लए रा� आशावादी थे िक अ�� आमदनी होगी]
⇒ Consequently, ₹97,000 cr SGST compensation estimated for 2020-21, before corona impact.
⇒ However, by August-2020, started to become more and more clear that the state is unlikely to
earn good amount in SGST. → States lowered their estimates for SGST for 2020-21. (बाद म� रा�ों
को एहसास �आ िक कोरोना के चलते तो ब�त �ादा आमदनी नहीं होगी 😰😰→ तो हम� ब�त �ादा बड़ा मुआवजा चािहए)
⇒ So then States started demanding ₹2.35 lakh crore in GST compensation.
⇒ Union govt's initial reaction was, "Under the GST compensation Act, we are not legally obliged
to pay this large amount (₹2.35lcr) because of unexpected circumstances / 'Act of God' / 'Force
Majure' like Corona. We can only pay the originally estimated amount (₹97kcr)."
⇒ However the Attorney General opined that GST Compensation Act does not provide such
exceptions; Union ought to pay the entire loss amount ₹2.35lcr. (अटॉन�-जनरल का मानना है िक क� द्र ने पूरी
रकम देनी चािहए �ोंिक जीएसटी मुआवजे के कानून म� कोरोनावायरस जेसी आपातकालीन चीजों मे क� द्र कोई माफ� /अपवाद नहीं)
⇒ But, corona → sales⏬ → GST compensation cess collection ⏬. So, the union offered two
options to borrow money for the compensation (�ोंिक जीएसटी म� आमदनी वैसे भी कम है, इस�लए क� द्र ने
रा�ों को पैसा उधार लेकर मुआवजा चुकाने के �वक� िदए….. )
⇒ We will NOT study the difference between those TWO options because it is technical/outdated.
Just memorize that States accepted ‘modified’ version of Option#1. (उन दो �वक�ों म� �ा मुद्दे/�भ�ताए
थे वो हम पढ़ने नहीं बैठ�गे। बस रट्टा मार लो िक रा�ों ने मुआवज़े के �लए �वक�#1 का एक सं शो�धत ��प पसं द िकया था। )
22.18.1 🤧🤧🤧🤧🤧🤧[🧔🧔 → 🔪🔪(�� GST compensation: "back to back" loans ₹1.10 lcr
2020 October: Union Finance ministry agreed to borrow ₹1.10 lakh from market.
⇒ States are not borrowing from market. Union is borrowing from market to help the States.
⇒ Union will give this borrowed ₹₹ as "back to back loans" to state governments. (बैक टू बैक ��प म�)
⇒ In other words whatever ₹₹ union government has borrowed at 5.19% from market → union
will loan it to States at 5.19% (क� द्र ने बाजार से एक हाथ लोन �लया और दू सरे हाथ वही लोन उसी �ाज दर पर रा�
सरकारों को दे िदया..)
⇒ Interest rate: 5.19% Bcoz union govt's G-Sec has less risk of default than State govts' G-Sec, so
Union can get the loans relatively cheaper from investors. क� द्र सरकार के िदवा�लयापन क� जो�खम कम होती है
इस�लए क� द्र को लोन स�े म� �मल गया। अगर रा� सरकार �यं उधार लेने जाती- चाहे �रजवर् ब�क से- चाहे बाजार से, िफरभी रा�
को 5.19% से तो �ादा ही �ाज चुकाना पड़ता)
⇒ ⏰ Loan Tenure: 3-5 years (ऋण अव�ध)
⇒ Repayment: This principal + Interest will be paid from GST Compensation Cess.
22.18.2 🤧🤧🤧🤧🤧🤧[🧔🧔 → 🔪🔪(�� Back to Back loans: Beneficiary States

States/ UT with List
Legislature
😿😿Will not get Some North Eastern State don’t have any SGST-shortfall → So they will not
get any compensation / back to back loans as per Section-7 formula.
🤑🤑Will get Remaining States & 3 UT (with legislature) who have opted for option#1 →
they will get the money e.g. Andhra, Assam, Bihar, Goa, Gujarat, Haryana,
Kerala etc and Union territories of Delhi, Jammu and Kashmir, Puducherry
22.18.3 🤧🤧🤧🤧🤧🤧:⚖ GST Back to Back Loans & Fiscal Deficit / FRBM for States
Outdated / Faded Topic. Deleting it.
22.18.4 ✍Conclusion : GST compensation (�न�षर्: जीएसटी मुआवजे के बारे म�)

Coronavirus has put unprecedented pressure on the revenue collection of the Union and
States. Consequently, the Union is facing challenges in allocating money for welfare schemes to
releasing the GST compensation to States. Hopefully, after 💉💉 vaccination, when the economy
bounces back, this pressure should subside. (कोरोना के सरकारों के राज� आमदनी म� भारी कटौती आई है �जसके चलते
क�ाणकारी योजना से लेकर जीएसटी मुआवजे तक प्र�ेक �ान म� चुनौ�तया, हालांिक टीकाकरण के जब अथर्तंत्र वापस पटरी पर आ
जाएगा, तब यह चुनौ�तया/ दबाव कम हो जाएं गे)
22.19🍋🍋🍋🍋🕵🕵 GST RELATED ORGANIZATIONS (सं �ाए)

We already learnt about the GST council in the previous pages of handout. Apart from that…
22.19.1 🕵🕵�� Group of Ministers (GoM: मं �त्रयों का समूह)
These committees are set up by GST Council to look into specific issues from time to time
Some examples of GoM headed by _ _ Objective ↡ (for illustration)
2019: Nitin Patel, Dy.CM of Guj Real Estate Sector’s issues under the GST
2019: Sushil Modi, Dy.CM of Bihar Identify the factors responsible for revenue shortfall in
SGST faced by several states, & how to solve it.
2018: Sushil Modi, Dy.CM of Bihar Modalities for revenue mobilisation in case of natural
calamities and disasters.
2021: Conrad Sangma, Meghalaya CM Sangma to examine GST rates of Covid vaccine, drugs
and related items.
22.19.2 Distribution of Admin. Responsibilities प्रशास�नक �ज�ेदा�रयों का �वभाजन
Table 11: ✋don't loose sleep over it unless preparing for State Tax officers' exams
In Excise-VAT regime→ In GST-regime
Union Central Board of Excise and - Budget-2018: CBEC renamed into Central Board
Customs (CBEC:क� द्रीय उ�ाद एवं सीमा of Indirect Taxes and Customs (CBIC:क� द्रीय अप्र��
शु� बोडर् ) officials looked after the कर और सीमा शु� बोडर् )
indirect taxes of the union, - For tax-payers with turnover below ₹1.5 crores:
[They’re recruited by UPSC and their supervision / administrative workload
SSC]. divided between union and state officials in 10:90
State State department officials would ratio.
look after the indirect taxes of the - If turnover ₹1.5 cr/> then 50:50.
state, recruited by the respective
(corrupt/non-corrupt) State PSC.
22.19.3 ⚖🕵🕵🍕🍕 National Anti-Profiteering Authority (NAA/NAPA)
रा�ी� य मुनाफाखोरी �नरोधक प्रा�धकरण
⇒ GST provides input credit for most of the indirect taxes of the Union and State Govt. So,
entrepreneur’s cost of production should ⬇, then he should also ⬇ prices for consumers, yet
many companies had not reduced their prices e.g. Dominos Pizza, Nestle, Hindustan Unilever
toothpaste & detergents etc. [टै� क्रेिडट �मलने पर उ�ादन क� लागत कम होती है तो व�ु स�ी होनी चािहए. हालाँिक
कु छ मुनाफ़ाख़ोर कं प�नयां चीज़ों के दाम स�े नहीं कर रही थी तो िफर उ�� सबक़ �सखाने के �लए ये सं �ा बनायी गई]
⇒ So, Union govt set up NAA under Central Goods & Services Tax Act, 2017.
⇒ Depending on the case, NAA can order the culprit company to 1) reduce prices 2) refund money
with interest to consumers 3) deposit money to Consumer Welfare Funds at union & state level
4) Impose penalty upto 10% of profiteered amt 5) cancel registration. Appeal→ High Court.
⇒ This Authority shall cease to exist after two years from its inception (2017), unless GST council
renews it.(हालाँिक ज� के दो साल म� ही इस सं �ा को अपने आप बं द हो जाना था, �सवाय िक GST प�रषद आयु बढ़ा द�)
⇒ 2019-Jun: GST council extended it for another 2 years, which means all crooked companies have
not yet stopped profiteering. (कायर्काल बढ़ाया, �ोंिक बदमाश कं प�नयों क� मुनाफ़ाख़ोरी अभी भी जारी है।)
22.19.4 🕵🕵🍼🍼 Authority for Advance Ruling (AAR-अ�ग्रम फै सलों के �लए प्रा�धकरण)
⇒ Diabetic foods supplements are subjected to 12% GST whereas pasteurized milk is subject to 0%
GST. If Amul plans to launch ‘Amul Camel Milk' with bottle label: "Camel milk is easy to digest,
high in an insulin-like protein, hence beneficial for diabetic person."
⇒ So, whether Amul’s product be subjected to 0% GST or 12% GST? An entrepreneur would like
to such have clarification from Tax authorities before starting the production, lest he gets
tangled in raids and litigations afterwards. (छापेमारी और मुकदमेबाजी द्वारा उ�ीड़न िकया जाना)
⇒ So, CGST Act, 2017 provides for a statutory body called Authority for Advance Ruling (AAR),
where entrepreneur can seek such advance clarification.
⇒ Higher appeal? Appellate Authority for Advance Ruling (AAAR: अ�ग्रम फै सलों के �लए अपील प्रा�धकरण).
⇒ 🤩🤩Benefit? Reduces scope/opportunity for litigation/harassment/bribe demand → Ease of
doing business (�ापार करने म� आसानी) → helps attract Foreign Direct Investment (FDI: प्र�� वदेशी
�नवेश).
22.19.5 🕵🕵💻💻GSTN Network (Not for Profit Company- मुनाफ़ा रिहत कं पनी )
2013: Goods and Services Tax Network (GSTN) “Not for Profit” Private ltd. company was set up
under the Companies Act.
Original Partners Ownership from Ownership in
2013-18 future**
Union govt 24.5% 50%
All states of India (incl. Delhi & Puducherry) 24.5% 50%
Non-Government Financial Institutions such as 51% 0%
HDFC Bank (20%), ICICI Bank (10%), NSE (10%),
LIC Housing Finance (10%)
**2018-May: GST Council approved acquisition of entire 51% equity held by non-Governmental
institutions & distribute it equally between Centre and the State Governments.
⇒ This company runs the GSTN online portal, where the suppliers register themselves, pay their
GST, claim input tax credits, generate e-way bills etc. [Infosys ltd. helped develop the webportal.]
⇒ GSTN Network ltd. also provides the IT infrastructure and software services to GST officials for
monitoring the tax compliance, issuing notices, data mining etc.
⇒ In future, such data could also be shared with the RBI’s Public Credit Registry (PCR: ऋण क�
सावर्ज�नक र�ज��ी) so the lenders can have a complete picture of the borrower’s business.
⇒ GST Suvidha Providers (GSPs): These are selected private IT/Fintech companies that develop
apps / software to help the taxpayers interact with GSTN portal. E.g. Zoho Accounting Software
22.19.6 📲📲 💻💻 Project Saksham: Digital/ICT integration (2016)

Union Indirect Tax CBEC/CBIC’s Webportal Issue after GST?
Service tax & ACES (Automation of Central Excise & ⇒ Service tax subsumed
Excise duty Service Tax) ⇒ Excise applied only on
सेवा कर और उ�ाद शु� selected items.
Customs Duty SWIFT (Single Window Interface for - Customs duty not
सीमा शु� Facilitating Trade). subsumed in GST.
- These portals/softwares & digital processes had to be re-engineered to align with the GSTN
portal. So, 2016: CBEC/CBIC launched, “Project Saksham” for Digital/ICT re-engineering/web
portals’ integration. [इन �व�भ� वेब पोटर्ल के बीच डेटा का सम�य करने के �लए प्रोजे� स�म]
- Separately, 2018: Indian Railways also launched Project Saksham but with different objective of
employees’ training and skill-upgradation for doing railway related work.
- CBIC has Antarang portal for internal communication among CBIC officers.
- CBIC also launched portals such as i) ECTS (Electronic Cargo Tracking System), ii) Risk
Management System (RMS), iii) Indian Customs Compliance Information Portal (CIP) etc.
What is their objective? how do they work? Ans. not important.
22.19.7 🔢🔢🔢🔢 HSN and SAC Codes

- Service Accounting Code (SAC) are used for classifying services for GST rates. e.g. coaching
services = SAC Code 999293 = 18% GST.
- Harmonized System of Nomenclature (HSN) developed by the World Customs Organization
(WCO) is used for classifying goods for GST rates. e.g. Jarda scented tobacco = HAC code
24039930 = 28% GST.
- 🤩🤩Benefit? HSN-SAC coding helps in computerised accounting, billing, digitization,
surveillance & big data analytics by Tax authorities.
- 2020: Government threatened that if an imported good doesn’t contain HSN code then we’ll
impose higher level of taxes on it. Benefit? traders will quote HSN number, better
surveillance/data-mining. But low profile topic. ✋DONOT LOOSE SLEEP.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
22.20 🔢🔢🔢🔢🔢🔢 PAN VS GSTIN VS AADHAR
Table 12: ✋don't lose too much sleep over it unless preparing for State Tax Dept Exams
Difference PAN: �ायी लेखा सं �ाक GSTIN: व�ु एवं सेवा कर पहचान सं �ाक
Full form Permanent Account Number Goods and Services Tax Identification Number
issued by the Income Tax issued by the Central Board of Indirect Taxes &
Department Customs (CBIC)
example Suzlon Energy ltd: Suzlon Energy ltd:
AADCS0472N 24AADCS0472N1Z8
Format 10 digit alphanumeric number 2 digit state code+ 10 digits PAN number + 3
(=containing both alphabets and characters = total 15 characters (=containing
numbers) both alphabets and numbers)
Who has to Every income tax assessee- - IF Individuals / firms registered under the
get it? individual, HUF, firm, company, Pre-GST law (i.e., Excise, VAT, Service Tax
trust (internal different not imp.) etc.) OR
- IF your biz. turnover is above a threshold
limit of “x” lakhs for ordinary states or “y”
lakhs in Sp.cat. States. OR
Difference PAN: �ायी लेखा सं �ाक GSTIN: व�ु एवं सेवा कर पहचान सं �ाक
- Merchants who sell through e-commerce
aggregators like Amazon.
Do all Every PAN card holder is not Every GSTIN holder is required to have PAN
taxpayers REQUIRED to have GSTIN. (e.g. a card number. (Because its format is like that,
have it? salaried employee) observe “format” row above).
How many - Only 1 PAN number allowed - If firm operates from more than one state,
numbers / per individual. then a separate GST registration is required
cards can - Only 1 PAN number allowed for each state.
one have? per company. - If a firm has multiple subsidiaries, they have
- Subsidiary firms will have to to get GST number for each e.g. “Faith
get separate PAN numbers. Hospitality Chain ltd→ Sam’s Pizza
restaurant, Sankalp Dosa restaurant, Saffron
Punjabi restaurant”
Objective Prevent evasion of direct taxes. Prevent evasion of GST, and help the
entrepreneurs claim their input credits.
- PAN number is required for various activities like opening of bank account, opening of demat
accounts (for trading in securities), obtaining registration for GST, VAT-Excise registration (for
Petrol-Liquor dealers) etc.
- So, PAN is slowly becoming a Common Business Identification Number (CBIN) or simply
Business Identification Number (BIN: सामा� �वसाय पहचान सं �ाक)- because if a Department
knows your PAN number they can dig all information about you, know whether you’re eligible
to fill up a particular tender or contract or a scheme application form or not?
22.20.1 🔢🔢🔢🔢🔢🔢 PAN/GSTIN vs UID (=Aadhar Card)

Table 13: ✋don't lose too much sleep over it unless preparing for State Tax Dept Exams
🔢🔢🔢🔢PAN and GSTIN 🔢🔢UID (=Aadhar Card)
Issued by the direct and indirect tax authorities Issued by a Statutory body- Unique Identification
that function under Ministry of Finance. Authority of India (UIDAI:भारतीय �व�श� पहचान
प्रा�धकरण ) that functions under Ministry of
Electronics and Information Technology
(MeitY).
These Tax authorities derive powers from: Aadhaar Targeted Delivery of Financial and
- Income Tax Act 1961 Other Subsidies, Benefits and Services) Act, 2016
- Goods & Service Tax Acts in 2017. (“आधार ए� 2016”)
Primary objective of these id-numbers is to Primary objective is to eliminate bogus
reduce tax evasion by tracking the transactions. beneficiaries in government schemes & reduce
subsidy leakage. Auxiliary benefits: Identifying
dead bodies, tracking criminals, mobile number
ownership, tax evasion etc.
🔢🔢🔢🔢PAN and GSTIN 🔢🔢UID (=Aadhar Card)
🔢🔢🔢🔢Their format contains both numbers and 🔢🔢Unique Identification number (UID) or
alphabets. Aadhaar is a 12 digit number. No alphabets.
Issued for individual humans, Only for living resident HUMANS of India. Not
HUF/firms/companies/trusts**. given for companies. Resident is defined as
person who lived in India for 182 days/> in last
12 months.
💼💼Full-Budget-2019: we’ll consider giving
immediate Aadhar card to NRIs with Indian
Passport so they don’t have to wait till ~180 days.
It’ll help them get through KYC bank/share
market transaction.
One HUMAN → one PAN number only. No age same (एक इं सान का �सफ़र् एक आधार काडर् �नकल सकता है)
limit. Minors can also join.
- ~₹110 Fees to get PAN card. No fees to get Aadhar. मु� म� �मलता है.
- No fees to get GSTIN
Compulsory to enroll (अ�नवायर् है), if your income Voluntary to enroll. आधार काडर् बनवाना �ै��क है.
or turnover is beyond “x” rupees**. अ�नवायर् / बा�कर नहीं है.**
They contain Demographic info:
- Name - Name, Date of Birth, Gender, Address.
- Photograph & Date of Birth (in case of - Mobile & Email (optional)
“Human”) Biometric info:
- Address. - Ten Fingerprints, Two Iris Scans, and Facial
Photograph.
- **💼💼Budget-2019: > 120 crore Indians have Aadhaarcard but all Indian don’t have PAN card.
Earlier, it was compulsory to give PAN No when filling income tax. But if you don’t have PAN
you can simply quote your Aadhaar number to file Income Tax returns. (�जन लोगों को आयकर भरना है
लेिकन पान-काडर् नं बर नहीं है तो उ�ोंने फ़ोमर् म� अपना आधार काडर् नं बर �लखकर आयकर का पैसा जमा करना होगा।)
- Later IT-department clarified that whoever quotes Aadhar number because he doesn’t have PAN
card → we’ll issue him PAN card on suo-moto basis later on. 💼💼Budget-2020 added technical
reforms in this process. (उसके बाद ऐसे लोगों का पान-काडर् नं बर आयकर �वभाग ख़ुद बनाकर दे देगा।)
22.21🍋🍋🍋🍋🍋🍋 GST: BENEFITS (लाभ)
✓ GST covers both goods and services, with standard rates, minimal number of cess/surcharges.
सामा� दर, ब�त कम चीजों पर उपकर/अ�धभार लगता है।
✓ GST online portal and e-way bill system reduces the interface between tax-officials and the
assesses, thereby reducing the scope of harassment, bribery and Inspector Raj. (=Ease of doing
business) (उ�ीड़न, �र�तखोरी म� कमी → �ापार म� सुगमता बढ़ी).
✓ GST provides input credits to suppliers thereby incentivizing them to sell with invoice at every
stage. Thus, GST will expand our tax collection, and deter tax evasion. (इनपुट क्रेिडट के �लए �बल बनाना
ज�री, इस�लए करचोरी मु��ल)
✓ GST Input credit system ⬇ the cascading effect of taxes, ↓ cost of manufacturing & selling,
while its anti profiteering authority ensures that such benefits are passed on to the customers in
the form of reduced MRP. (मुनाफाखोरी पर लगाम)
✓ Federal nations such as Canada and Australia shifted from VAT to GST regime. It helped
boosting their revenue, GDP and exports. (कर राज�, जीडीपी, �नयार्त म� बढ़ोतरी)
✓ Thus, GST will help to create a unified common national market for India, & catalyse “Make in
India”, and Assemble in India(More in 📑📑Pillar#4B)
😥😥 Before GST (GST आने से पहले) 🍋🍋🍋🍋🍋🍋 After GST (आने के बाद)
A car company would aim for “in-house GST provides input credits in more efficient and
production” of all necessary intermediate-goods comprehensive manner therefore, instead of
and accessories (e.g. tires, windshield, car-stereo trying to become Jack of all trades, company will
player) because if they buy those raw / pursue Ancillarisation, Subcontracting and
intermediate goods from outside, they’ll have to Outsourcing to procure from MSME industry
pay variety of taxes / cess / surcharges on which and freelance professionals.= More
Input credit may not be available. jobs.(अनुषंगीकरण, उपठे का और आउटसो�सग)
State government charged VAT on sale of goods, SGST/UTGST rates are uniform throughout
but VAT rates were not uniform throughout India, so there is no scope of rate arbitrage.
India. A laptop bag might attract 12%VAT in one Whether you buy a laptop from Chennai or
state and 18%VAT in another. This provided Mumbai the GST% tax rate will be same. (और रा�
scope for ‘rate arbitrage’ (दर अपवं चन) i.e. buying म� एक समान दर� लगती है तो दर अपवं चन म� कमी आएगी)
from another state for profiteering, even if same
item available in home state. Then State govt will
have to deploy more officials at the check posts,
leading to bribery, harassment, inspector-raj.
Suppose, a mobile is manufactured at ₹10,000/- & Both CGST and SGST are computed on the same
is subject to 9% Excise duty and 9% VAT. Then base (₹10,000), therefore tax burden on final
- 9% Union Excise duty = 900. (calculated on consumer is less in GST regime, than in Excise-
base of 10,000) VAT regime. (एक आधार पर क� द्र और रा� के जीएसटी क�
- 9% State-VAT = 981 (calculated on base of �गनती से उपभो�ा पर बोज कम होता है)
10,900 after including excise duty). Thus, GST will reduce impact of tax on end-
customer, so his purchasing power will improve,
leading to more demand, more sales, more
business expansion and GDP growth & jobs.
22.21.1 🍋🍋🍋🍋🍋🍋: ⚓ GST Benefit: Zero Rated Exports (शू� रेटेड �नयार्त )
- When company buys raw material or intermediate goods it will have to pay GST but if final
product is exported outside India (or sent to Special Economic Zone/SEZ in India: more in
📑📑Pill#3), it'll be subjected to 0% IGST.
- So, whatever GST the company had paid on the inputs, all of that will become its “Input Tax
Credit” (and company can use this ITC to pay for the taxes on the purchase of raw material and
intermediate goods in the next time), thus reducing its cost of production.
- This will improve price competitiveness of Indian products in foreign markets. (�वदेशी बाजार म�
भारत का सामान िकफायती बनता है)
- Australia and other GST countries also follow similar “zero rated export” regime.
🔠🔠❓MCQ. What are the most likely advantages of implementing GST? (Asked in UPSC-Pre-2017)
1. It will replace multiple taxes collected by multiple authorities thus create a single market in India.
2. It will drastically reduce ‘Current Account Deficit’ of India and will enable it to increase its foreign
exchange reserves.
3. It will enormously increase the growth and size of Indian economy of India & will enable it to overtake
China in the near future.
22.22🍋🍋🍋🍋🍋🍋 GST: CHALLENGES FOR MAINS & INTERVIEW (चुनौ�तयां)

22.22.1 🔢🔢🔢🔢High Rates and Multiple Slabs (उ� दर और कई �ैब)
➢ If Union and States abolished existing indirect taxes (Excise, Custom and VAT), then their
revenue income will obviously decline. Therefore, GST rate needed be high enough to sustain
any fall in revenue collection. Such ‘ideal’ rate of GST, is called Revenue Neutral Rate (RNR). In,
Singapore GST only 7%, Australia GST only 10%.
➢ Whereas in India we’ve FOUR SLABS: 5-12-18-28% slabs. (✋ignore hairsplittery/pedantry over
diamond etc ke 0.125%CGST walle slabs. Official CBIC brochure says four slabs so remember 4)
➢ Many daily necessities are in 18% GST slab. Indirect taxes regressive in nature & harm
purchasing power of poor. (गरीबों क� खरदी श�� को कम करता है)
➢ Petrol, diesel, electricity: not subjected to GST regime yet, So, businessman cannot claim GST-
input credit on them. Even when crude oil prices are ⬇ in the international market, the Union
and State governments ⏫ Union excise and state VAT on the petroleum fuels just to earn more
revenue, which further aggravates the inflation and business cost. (�व� बाजार म� क�ा तेल स�ा होने पर
सरकार �ादा आमदनी के �लए उ�ाद शु� और वेट क� दर बढ़ा देती है।)
22.22.2 🤹🤹😢😢Frequent changes harming long term business planning
 Frequent changes in GST rates makes it difficult for the companies to plan long term business
strategies. (जीएसटी क� दरों म� बार बार बदलाव के चलते, उधयोगप�त लं बी समयाव�ध के �लए रणनी�त नहीं बना पाते।)
 E.g. In 2019-Sept, GST on Caffeinated beverages ⬆ from 18% → 28%. This will ⬇ sales. If
any soft-drinks company had invested in factory expansion it would suffer. 😰😰
 15th Finance Commission Chairman NK Singh criticized frequent changes in GST rates.
22.22.3 📉📉📉📉 Fall in collection (आमद म� कमी)

 Corona pandemic (महामारी),
 Protectionism (सं र�णवाद) by USA, EU and China = they’re imposing more duties on Indian
exports→ Indian exports become expensive for foreigners → sales ⬇ → manufacturing and
service sector production declined → GST ⬇(More in 📑📑Pillar#3)
 Automobiles, consumer durables (TV, fridge etc), real estate ⬇ due to variety of reasons.
 Unscrupulous traders setup phony shell companies and generate fake invoices to claim input tax
credit through Circular Trading. (How it works?=Modus operandi NotIMP.)
 As a result, States are complaining that GST compensation cess amount is not released in a
timely fashion by the Union Government. → State funded welfare schemes suffer. 😰😰
22.22.4 🤯🤯Inconvenience to Small Traders (छोटे �ापा�रयों के �लए असु�वधा)

➢ 😭😭 In GSTN webportal, the traders have to deposit the GST on monthly basis, upload various
forms & invoice details, generate e-way bills. While govt has tried to keep these online forms/
mechanisms as simple as possible, but since many small traders are not proficient with
computer, excel / accounting software, internet, digital payments- GST-compliance creates
inconvenience to them, and forces them to hire full time accountants, ⏫ cost of operations.
○ 😾😾 (Counter: Even in erstwhile VAT system they had to upload similar things online so,
it’s not entirely new or alien system imposed upon them. Besides, they can opt for the
GST composition scheme where they have to upload things on quarterly basis instead of
monthly basis. GSTN portal also provides free accounting software to small traders so
they don’t have to spend ₹ in buying proprietary software like Tally)
➢ 😭😭 GSTN server crashes often so traders can’t upload things on time, and then they’ve to pay
penalty for crossing monthly deadlines. (सवर्र म� बार बार तकनीक� ख़राबी आ जाती है)
○ 😾😾 (Counter: GST Council has reduced the late-fees, GSTN portal has been given
technical upgrades to reduce the glitches/outages.)
➢ 😭😭 Malaysia scrapped GST in 2018 due to popular uproar against it, So it will not be successful
in India either! (मले�शया म� जन आक्रोश के चलते GST को हटा िदया गया तो भारत म� भी ये नहीं चलेगा।)
○ 😾😾 (Counter: Malaysia had subjected all the goods and services to a flat rate of 6% and
the opposition parties were blaming it for the inflation, and there were many political
dimensions to the entire controversy. Whereas in India, we have kept many daily
necessity goods at 0% to 5% GST. RBI has been successful in keeping the inflation within
2-6% CPI limit. GST is implemented through Constitutional Amendment so even if
Rahul Gandhi promises to “UNDO” this Gabbar Singh Tax, he’ll have to go for another
Constitutional Amendment to scrap the GST which is not so easy.)
22.23✍ GST: CONCLUSION TEMPLATE (सार/�न�षर्)

(if asked to examine critically the challenges or obstacles in GST) Any new change is accompanied
by difficulties and problems at first. A tax reform as comprehensive as GST is bound to pose certain
challenges not only for the government but also for business community, tax authorities and even
common. But ultimately, <write any of below benefits> �ाभा�वक है िकसी भी बड़े सुधार से शु� शु� म� असु�वधा
1. With the aforementioned features / benefits, GST will help India progress towards “ONE
NATION, ONE TAX, ONE MARKET”. एक रा�� एक कर एक बाजार OR
2. Indeed, the introduction of GST is truly a game changer for Indian economy as it has replaced
multi-layered, complex indirect tax structure with a simple, transparent and technology–driven
tax regime. OR ब�-��रत, जिटल अप्र�� कर सं रचना को एक सरल, पारदश� प्रौद्यो�गक�-चा�लत कर �व�ा के बदल िदया
3. Thus, GST eliminates cascading of taxes,⏬ operational costs, thereby ⏫ ease of doing business
and catalysing Indian economy. करों का सोपानी प्रभाव, लागत म� कटौती, �ापार म� सुगमता, अथर्तंत्र उद्दीपन
22.24✍🎺🎺MOCK Q FOR MAINS GSM2/GSM3 (250 WORDS EACH)

1. (Asked in GSM3-2018) Comment on the important changes introduced in respect of the Long-term
Capital Gains Tax (LCGT) and Dividend Distribution Tax (DDT) in the Union Budget for 2018. क� द्रीय बजट
2018 के दीघर्का�लक पूंजीगत कर (एलसीजीटी) और लाभांश �वतरण कर (डीडीटी) के सं बं ध म� पेश िकए गए मह�पूणर् प�रवतर्नों पर िट�णी
कर�। → ✋Note we NEED not prepare answer since >D-2 YEARS SPAN. Q given is only for observation.
2. (Asked in GSM2-2017) Explain the salient features of the constitution (One Hundred and First
Amendment) Act, 2016. Do you think it is efficacious enough ‘to remove cascading effect of taxes and
provide for common national market for goods and services’? १०१ वे सं �वधा�नक सं शोधन अ�ध�नयम, 2016 क� मु�
�वशेषताओं को �� कर�। �ा िक करों के सोपानी प्रभाव को हटाने और आम रा��ीय बाजार बनाने के �लए यह पयार्��प से प्रभावकारी है?
3. (Asked in GSM3-2019) Enumerate the indirect taxes which have been subsumed in the Goods and
Services Tax (GST) in India. Also, comment on the revenue implications of the GST introduced in India
since July 2017. (उन अप्र�� करों को �गनाइए जो भारत म� व�ु एवं सेवा कर म� स��लत िकये गए ह� | भारत म� जुलाई २०१७ से
िक्रया��त (जी. एस. टी) के राज� �निहताथ� पर भी िटप�ी क��जए |)
4. (Asked in GSM3-2020)Explain the rationale behind the Goods and Services Tax (Compensation to
States) Act of 2017. How has COVID-19 impacted the GST compensation fund and created new federal
tensions? (व�ु एवं सेवा कर (रा�ों को ��तपू�त) अ�ध�नयम, 2017 के तकार्धार क� �ा�ा क��जए, को�वद-19 ने कै से व�ु एवं सेवा कर
��तपू�त �न�ध (जी.एस.टी.कॉ�े�ेशन फ�) को प्रभा�वत और नये सं घीय तनावों को उ�� िकया है?)
5. Examine critically the apprehensions surrounding the GST compensation to the States. What measures
have been taken by the Union Government in this regard. (रा�ों को जीएसटी मुआवजे देने सं बं�धत आशं काओं क� जांच
कर�। इस म� क� द्र सरकार द्वारा �ा उपाय िकए गए ह�?)
6. “Is GST a boon or a bane?” examine critically from State governments’ perspective. "�ा जीएसटी एक वरदान या
अ�भशाप है?" रा� सरकारों के ��कोण से गं भीर �प से जांच कर�।
7. “Is GST a boon or a bane?” examine critically from the small traders’ perspective. छोटे �ापारी
8. With respect to ease of doing business in India, discuss the importance of following (1) E-Way Bill
System (2) Authority for Advance Ruling. भारत म� �ापार करने म� आसानी के सं बं ध म�, �न��ल�खत के मह� पर चचार् कर� (1)
ई-वे �बल प्रणाली (2) अ�ग्रम फै सलों के �लए प्रा�धकरण
Handout: [2A)✅Direct & Indirect Taxes [2B) Black Money, 15th Finance Commission
[2C) Subsidies to Disinvestment [2D) Fiscal Deficit, FRBM, Budgeting & scheme types
2B: Finance Commission, Black Money & 2C: subsidies, revenue expenditure
Table of Contents
23 🍋🍋 (🧔🧔⚖��) Taxation → Finance Commission........................................................................ 378
23.1 Introduction to Finance Commission (�व� आयोग) ............................................................................... 378
23.2 🕵🕵(🍋🍋 🧔🧔⚖�) Fifteenth FC Composition (setup in 2017-Nov) .............................................. 379
23.2.1 📑📑15th FC Terms of Reference (TOR: �वचाराथर् �वषय)? ................................................................ 379
23.2.2 �15th FC TOR: Conclusion (�न�षर्) ......................................................................................... 380
23.3 🍋🍋 [🧔🧔⚖(��)] FC: Vertical Tax Devolution from Union to States ................................ 380
23.4 🍋🍋 [�⚖�⚖�] Horizontal Tax Devolution among States .................................................. 381
23.4.1 🍋🍋 [�⚖�⚖�]15th FC: Horizontal devolution: States’ share ................................... 382
23.4.2 🧕🧕Finance Commissions & the fate of UTs of J&K & Ladakh ................................................. 382
23.4.3 🧔🧔 → 💸💸💸 (��) Grants from Union to States : 14th FC ............................................... 383
23.4.4 🧔🧔 → 💸💸💸 (��) Grants from Union to States : 15th FC ............................................... 383
23.4.5 💸💸💸🏕🏕15th FC: Local Bodies Grants (�ानीय �नकाय अनुदान).................................................... 386
23.4.6 💸💸💸�Post-Devolution Revenue Deficit Grants (अंतरण-प� राज� घाटा अनुदान).................... 385
23.4.7 💸💸💸�15th FC: Special Grants: (�वशेष अनुदान)........................................................................ 385
23.4.8 💸💸💸🌬🌬🌬🌬15th FC: Disaster Management Grants (आपदा प्रबं धन अनुदान:).............................. 386
23.4.9 💸💸💸🍽🍽15th FC: Sector Specific Grants (�ेत्र-�व�श� अनुदान)-Malnutrition ............................. 387
23.4.10 💸💸💸🍽🍽15th FC: Sector Specific Grants (�ेत्र-�व�श� अनुदान)-Health ....................................... 387
23.4.11 💸💸💸🍽🍽15th FC: Sector Specific Grants (�ेत्र-�व�श� अनुदान)- Others(अ�) ............................. 388
23.4.12 💸💸💸💸💸💸Defence and Internal Security Fund for Union ........................................................ 388
23.4.13 🤏🤏 15th FC: Other recommendations to Govt (सरकार के �लए अ� �सफा�रश�) ................................ 389
23.4.14 ✍ 15th FC Report: conclusion (�न�षर्- उनके �रपोटर् क� सराहना-क� ब� बिढ़या �रपोटर् बनाया है) ................. 389
23.5 🕵🕵(🍋🍋🍋🍋⚖�)⏰ FC: Giving Permanent Status (�ायी दजार् देना)................................................. 390
23.5.1 �👎👎Arguments against giving permanent status to FC (�वरोध म� तकर् ) .................................... 390
23.5.2 �👌👌Argument in favour of giving permanent status to FC (प� म� तक) .................................. 390
23.5.3 � Conclusion: give permanent status to FC or not? (�न�षर्) ................................................. 391
23.6 � FC vs PC vs NITI: What’s the Difference? .................................................................................... 391
23.7 🍋🍋(🧔🧔⚖�🙏🙏) Special Category States? �वशेष श्रेणी के रा�? .......................................................... 392
23.7.1 🍋🍋(🧔🧔⚖�🙏🙏) Sp.Cat States → Economic Surveys criticised .......................................... 393
23.8 � Mock Questions for UPSC Mains (250 words each).................................................................... 394
24 🍋🍋🍋🍋🍋 Taxation → Black Money & Allied Issues .................................................................................. 394
24.1 (🍋🍋🍋🍋)�Black Money → Notable Organisations.......................................................................... 396
24.2 🍋🍋🍋🍋 Tax Evasion (Hiding Income / Transaction) ......................................................................... 397
24.2.1 🍋🍋🍋🍋⚖ Prevention of Money Laundering Act (PMLA-2002) ............................................ 397
24.2.2 🍋🍋🍋🍋⚖ Undisclosed Foreign Income & Assets Act (UFIA-2015) ...................................... 397
24.2.3 🍋🍋🍋🍋⚖ Benami Transactions Prohibition Act (BTPA- 1988, 2016) .................................. 397
24.3 (🍋🍋🍋🍋)💼💼 Tax Evasion → Govt Announcements ......................................................................... 398
(Batch:PCB7) Mrunal’s Economy Pillar#2B: Budget → Revenue → 15th FC, Black Money, Subsidies→ Page 376
24.3.1 🍋🍋🍋🍋🍋🍋 Tax (Evasion) “Surrender” schemes ........................................................................ 398
24.3.2 🍋🍋🍋🍋🍋🍋 Vivad se Vishwas Scheme for Direct Taxes (Budget-2020) ................................... 399
24.3.3 🍋🍋🍋🍋🍋🍋 Dispute Resolution Committee (DRC) in Budget-2021 ....................................... 399
24.3.4 🍋🍋🍋🍋 Tax Evasion → Other Initiatives (अ� कदम)................................................................... 400
24.4 (🍋🍋🍋🍋🍋🍋)Tax avoidance (कर प�रहार / कर टालना) .................................................................................. 400
24.4.1 🍋🍋🍋🍋🍋🍋 Double Taxation Avoidance Agreement (DTAA) & Round Tripping ................. 401
24.4.2 🍋🍋🍋🍋🍋🍋 Tax Avoidance through Non-Resident Status .......................................................... 401
24.4.3 🍋🍋🍋🍋🍋🍋 Place of Effective Management (POEM: पीओईएम) .................................................... 402
24.4.4 🍋🍋🍋🍋🍋🍋 Base Erosion and Profit Shifting (BEPS: बीईपीएस) ..................................................... 402
24.4.5 🍋🍋🍋🍋🍋🍋 Transfer Pricing & Authority for Advance Rulings (AAR) (ह�ांतरण मू�) ............. 403
24.4.6 (🍋🍋🍋🍋🍋🍋) � General Anti-Avoidance Rules (GAAR) ......................................................... 404
24.4.7 🍋🍋🍋🍋🍋🍋 Angel Tax on Startup Investments (2012) ................................................................ 404
24.5 (🍋🍋🍋🍋🍋🍋:⌛) � Retrospective Tax: Vodafone .............................................................................. 404
24.5.1 (🍋🍋🍋🍋🍋🍋:⌛) � Retrospective Tax: Cairn Energy ............................................................... 406
24.5.2 (🍋🍋🍋🍋🍋🍋:⌛) � Retrospective Tax: Conclusion .................................................................. 406
24.6 🍋🍋🍋🍋🌐🌐:🤵🤵 Global Minimum Tax (वै��क �ूनतम कर) ........................................................................ 407
24.6.1 🍋🍋🍋🍋🌐🌐:🤵🤵 Global Minimum Tax: G7 Framework............................................................... 408
24.6.2 🍋🍋🍋🍋🌐🌐:🤵🤵 G7-OECD “Two” Pillar Solution for Global Minimum Tax ........................... 408
24.6.3 🍋🍋🍋🍋🌐🌐:🤵🤵 Conclusion- Global Minimum Tax: �न�षर्......................................................... 408
24.7 🍋🍋🍋🍋🍋🍋🍋: � Reforms to reduce Tax Terrorism / Harassment ................................................ 409
24.7.1 🍋🍋🍋🍋🍋🍋🍋: �: � Cash Transaction Limit Relaxed for Corona ....................................... 409
24.7.2 🍋🍋🍋🍋🍋🍋🍋:🧾🧾 Pre-filled online forms for Tax Payers ......................................................... 409
24.7.3 🍋🍋🍋🍋🍋🍋🍋:🧾🧾Updated Return Form to correct errors- in 👜👜👜👜Budget-2022: ............... 409
24.7.4 🍋🍋🍋🍋🍋🍋🍋:🧾🧾 Faceless interaction between Tax payers and Tax official .......................... 410
24.7.5 🍋🍋🍋🍋🍋🍋🍋:🧾🧾⏰ Time limit on opening of past cases ....................................................... 410
24.7.6 🍋🍋🍋🍋🍋🍋🍋:🧾🧾 Document Identification Number (DIN: द�ावेज़ पहचान सं �ाक) .................. 410
24.7.7 🍋🍋🍋🍋🍋🍋🍋:🧾🧾⏰ Reducing Tax Terrorism: Misc. Committees ........................................ 411
24.8 📯📯🍋🍋📜📜 Taxpayers’ Charter in 💼💼 Budget-2020 (करदाताओ का अ�धकारपत्र) ..................................... 411
24.8.1 📯📯🍋🍋📜📜 (Indian) Tax Payers' Charter released in 2020-Aug................................................ 412
24.8.2 ✍ 📯📯🍋🍋📜📜 Conclusion: Tax Payers' Charter ....................................................................... 412
24.9 🍋🍋🍋: �� Tax Ombudsman in Economic Survey 2021 ............................................................ 412
24.9.1 🍋🍋🍋: ��Tax ombudsman: Indian experience .................................................................. 413
24.9.2 😰😰problems in previous Ombudsman system (2003-19)? ...................................................... 413
24.9.3 🍋🍋🍋: ��Tax Ombudsman: Global experience ................................................................. 413
24.9.4 🍋🍋🍋: �� Tax Ombudsman: Conclusion / way forward (�न�षर्/आगे का रा�ा) ................. 413
24.9.5 🍋🍋🍋: Reducing Tax Terrorism / Harassment: online portals/Apps .................................... 414
24.10 🍋🍋🍋🍋🍋🍋Taxation → Global Treaties, Agreements & Indexes ................................................... 414
24.10.1 🍋🍋🍋🍋🍋🍋 Tax Information Exchange Agreement (TIEA: कर सूचना �व�नमय समझौता) ................. 414
24.10.2 🍋🍋🍋🍋🍋🍋 USA’s Foreign Account Tax Compliance Act (FATCA-2010).............................. 415
24.10.3 🍋🍋🍋🍋🍋🍋 Global Financial Secrecy Index (वै��क �व�ीय गोपनीयता सूचकांक) .................................. 415
24.11 💸💸Black Money → Demonetisation (�वमुद्रीकरण) ............................................................................. 415
24.11.1 💸💸Why Demonetise ₹ 500 & 1000? ............................................................................................ 416
24.11.2 💸💸How did 99.30% SBN returned into banking system? ......................................................... 416
24.11.3 💸💸99.30% SBN returned, but Demonetization not failed experiment because: ..................... 417
24.11.4 💸💸Demonetization: Impact as per Economic survey 2016-17 ................................................. 417
24.12 📘📘📘📘Economic Survey on taxation and fiscal capacity (�व�ीय �मता) ............................................ 417
24.12.1 🍋🍋🍋🍋 Tax: GDP – why low in India (भारत का कर:जीडीपी अनुपात खराब �ों है?) ............................... 418
24.12.2 🍋🍋🍋🍋 Tax: GDP 📘📘📘📘 ES19: “Use Behavioural Economics to improve Tax Compliance”. 418
24.12.3 🍋🍋🍋🍋 Tax: GDP: 15th Finance Commission on how to improve it? ...................................... 420
24.13 🍋🍋Taxation: Misc. Terms ................................................................................................................. 421
24.13.1 🍋🍋 Net Tax Revenue of the Govt (शुद्ध कर राज�) ......................................................................... 421
24.13.2 🍋🍋 Revenue Shortfall (राज� म� कमी) .............................................................................................. 422
24.13.3 � Mock Questions for UPSC Mains (250 words each) .......................................................... 422
24.14 📥📥📥📥📥📥 Budget → Revenue Part → Receipts → Non-Tax Receipts .................................... 423
25 📤📤⏰ Budget → Revenue Expenditure (राज� खचर्/ �य) ........................................................................... 424
25.1 📤📤⏰(🌽🌽⛽) Revenue Expenditure → Subsidies .......................................................................... 425
25.1.1 📤📤⏰(🌽🌽⛽) Types of subsidies with selected examples ...................................................... 426
25.1.2 � � Impact of Subsidies (स��डी का प्रभाव: सकारा�क एवं नकारा�क) ............................................. 426
25.1.3 📘📘📘📘 Past Economic Surveys on subsidy delivery (आ�थक सव��णों के उपाय)................................ 427
25.1.4 📘📘📘📘 ES19: Use ‘Behavioural economics (�वहार अथर्शा�)’ to ↓ subsidy bill ........................... 427
25.1.5 ��🕵🕵National Recruitment Agency (NRA: रा��ीय भत� एज�सी) ............................................... 428
25.2 📤📤⏰🥳🥳 Revenue xpdr → Salaries→ 7th Pay Commission (वेतन आयोग) ..................................... 428
25.2.1 🥳🥳 Pay Commission: Dearness Allowance (DA: महंगाई भ�ा) .................................................... 429
25.2.2 🥳🥳 Pay Commission: Misc. terms ............................................................................................... 429
25.3 👻👻📤📤⏰�🥳🥳 SALARY Reforms in Atmanirbharat 2.0 (Oct 2020) ........................................... 429
25.3.1 👻👻⏰�🥳🥳 Atma-Nirbhar 2.0: Festival Advance Scheme (�ोहारों म� एडवांस रकम) ................. 429
25.3.2 👻👻⏰�🥳🥳 Atma-Nirbhar 2.0: LTC Cash Voucher Scheme ................................................ 429
25.4 (📥📥<📤📤)⏰⚠ Revenue Deficit (राज� घाटा) .................................................................................... 430
25.5 (📥📥<📤📤)⏰⚠ Effective Revenue Deficit (प्रभावी राज� घाटा) ........................................................... 430
23 🍋🍋 (🧔🧔⚖��) TAXATION → FINANCE COMMISSION

23.1 INTRODUCTION TO FINANCE COMMISSION (�व� आयोग)
- Fiscal Federalism refers to the division of responsibilities of i) taxation and ii) expenditure
between the different levels of the government. राजकोषीय सं घवाद: क� द्र और रा�ों के बीच कराधान और खचर् क�
�ज�ेदा�रयों का आवं टन/बटवारा/�वभाजन
- While the 7th schedule assigns many responsibilities to the States but their taxation power is
relatively lower than Union’s. So, Finance Commission plays a key role in transferring union’s
revenue resources to the state.. रा� क� कराधान श��यां कम है इस�लए �व� आयोग क� द्र के करो से िह�ा िदलाता है
- Article 280: President of India forms a Finance Commission (a quasi-judicial body) every 5th
Year or earlier, with 1 chairman and 4 members. Eligible for re-appointment. Recommendations
are not binding on the government but usually not rejected.
📔📔Further self-study & HINDI TERMS@ M.Laxmikanth’s Indian Polity ch.45.
14th FC: YV Reddy Recommendation Period: 1st April, 2015 to 31st March, 2020
15th FC: NK Singh Originally, it was meant to cover: 1st April, 2020 to 31st March, 2025
But later, Modi Govt ordered it to submit two reports:
1) Report#1: for 1/Apr/2020 to 31/March/2021 → submitted to President
in 2019-Nov, and accepted in 2020-Jan
2) Report#2: for 1/Apr/2021 to 31/March/2026. Title of report is "“Finance
Commission in Covid Times”. Published in 2021-February.
23.2 🕵🕵(🍋🍋 🧔🧔⚖�) FIFTEENTH FC COMPOSITION (SETUP IN 2017-NOV)
Chairman N.K. Singh (Retd. IAS, Ex-Member of Parliament)

Member1 Shaktikanta Das (Retd. IAS, RBI Gov)
Member2 Dr. Anoop Singh, Professor
Member3 (Part Time) Dr. Ashok Lahiri, Bandhan Bank
Member4 (Part Time) Prof. Ramesh Chand. member of NITI Aayog & Agri Economist.
Secretary Arvind Mehta (IAS)
23.2.1 📑📑15th FC Terms of Reference (TOR: �वचाराथर् �वषय)?
President of India has ordered them to study and recommend following:
1. Union Taxes’ vertical devolution to the states, and its horizontal distribution among the states.
(except cess, surcharge and IGST).
2. Union’s grant-in-aids to the states. (क� द्र द्वारा रा�ों को अनुदान)
3. How to augment State Govts’ Consolidated funds to help their PRI/ULBs
4. Any other matters referred by the President of India such as:
5. Use Census-2011 for your calculation. (जनगणना) –
✓ 😰😰however, Southern States were apprehensive that they’d get less ₹ compared to
Northern States because Southern states controlled their population.
⇒ While allotting money, FC should keep in mind Union’s responsibilities for New India 2022
vision e.g. Swatchh Bharat, Digital India, PM-Jan Arogya etc. so FC should give more money for
that purpose.😰😰Non-BJP states didn’t like this.
6. Recommend measures for Fiscal Discipline/Consolidation for the Union and State governments.
(राजकोषीय अनुशासन/समेकन) e.g. asking State governments to stop populist schemes like Free
TV/Mixer Grinder etc.
7. Shd union continue to provide revenue deficit grants to States? (राज� घाटे क� भरपाई के �लए अनुदान)
8. How to finance the disaster management initiatives? (आपदा प्रबं धन)
9. Performance based incentives to the state governments. (प्रदशर्न आधा�रत प्रो�ाहन) e.g. reducing
population, stopping electricity theft, stopping populist schemes like free mixer-grinders etc.
10. (2019-Jul) suggest ways for allocation of non-lapsable funds for defence and internal security.
(र�ा और आंत�रक सुर�ा �बन�पगत �न�ध)
11. (2019-Oct) Award for the UT of J&K. (This terms of reference required under Jammu and
Kashmir Reorganisation Act, 2019. ज�ू क�ीर पुनगर्ठन अ�ध�नयम)
23.2.2 �15th FC TOR: Conclusion (�न�षर्)

✓ Economic Survey 2016-17 had observed ‘aid-curse’ ('सहायता-अ�भशाप') i.e. over the years, Special
Category States received large amount of funds via Planning Commission and Finance
Commissions yet couldn’t perform well in poverty removal or economic growth due to lack of
accountability and poor governance. (योजना आयोग और �व� आयोग ने दशकों तक �पछड़े रा�ों को पैसा देते िक�ु
कु शासन के चलते गरीबी उ�ूलन व् आ�थक वृ�द्ध नहीं �ई. )
✓ The 15th FC TOR aimed to link the fund transfers with performance and accountability
parameters. While states are apprehensive, but we’ll have to swallow this bitter pill eventually to
⬆ India’s human dev. & economic growth. (नया �व� आयोग प्रदशर्न आधा�रत प्रो�ाहन और जवाबदेही क� बात
करता है वो आवकायर् प्रशं सनीय है, भारत के मानव �वकास और आ�थक वृ�द्ध के �लए, ये कड़वी दवा हमने पीनी होगी)
✋Error in Answer Writing: Don’t digress to unsolicited Babu-Shona type suggestions &
overthinking like “Southern states should help Northern states in their family planning programs.”
23.3 🍋🍋 [🧔🧔⚖(��)] FC: VERTICAL TAX DEVOLUTION FROM UNION TO STATES
Finance Commission recommends the vertical devolution (ऊ�ार्धर कर अंतरण) from the ‘divisible pool’
of union taxes. (Here IGST, Cess, Surcharge not counted.)
FC → �व� आयोग 12th (2005-10) 13th (2010-15) 14th (2015-20) 15th (2020-21) & 21-26
Chairman? (अ��) C.Rangarajan Vijay Kelkar VY Reddy NK Singh
States Share 30.5% 32% 42% 41%*
 *15th FC’s justification: Compared to 14 FC, 1% extra Union should keep for UTs of J&K &
th
Ladakh’s security & other needs.
 Sometimes finance minister says “States, along with Ladakh, J&K be given 42% share from Union
tax for 2021-2025” Although UT of J&K & Ladakh= to get 1%, so in reality other states getting
42-1=41%.”
23.4 🍋🍋 [�⚖�⚖�] HORIZONTAL TAX DEVOLUTION AMONG STATES
रा�ों के बीच सम�रीय/�ै�तज करअंतरण
Finance Commission also gives formula for How to distribute that share horizontally with
individual States (Guj | Bihar | MH | TN...). 14th FC (YV Reddy)’s formula was…
14th FC horizontal distribution formula components Weight %
👪👪 आबादी Population: as per Census 1971 17%
👪👪 जनसां��क�य Demographic Change as per Census 2011 (To consider the
10%
बदलाव migration angle.)
Income-Distance: Based on per capita income of a state (GSDP ÷
👜👜 आय-दू री 50%
its population). Accordingly, poorer states get more weight
📏📏 �ेत्र Area: more area more weight 15%
Forest-Cover: more forest cover more weight because of
🌳🌳 वन-आवरण Opportunity cost (State can’t allow industries there, else it could 8%
have obtained some taxes)
Based on above formula, Highest to Lowest: Uttar Pradesh > Bihar > MP > WB > MH > Raj> ….. >
Mizoram > Goa > Sikkim.
15th FC horizontal distribution formula components (घटक) → (भारांक%)
Weight%
(both in Report#1 and Report#2)
Income Distance (आय म� अंतर):
⇒ State GSDP divided by its Population = per capita GSDP.
45%
⇒ For most states, Haryana’s per capita GSDP is taken as benchmark. How poorer is
your state compared to Haryana= more ₹₹ you’ll get.**
📏📏 Area (�ेत्रफल) More area = more ₹₹ 15%
👪👪 Population (as per Census-2011: आबादी): More population = more ₹₹ 15%

Demographic Performance (जनसां��क�य �न�ादन): States that have ⬇ Total Fertility
12.5%
Rate (TFR: कु ल प्रजनन दर), will get ⬆₹₹. More in Pill#6
🌳🌳 Forest and Ecology (वन एवं पा�र��क�): More forest= more ₹₹ 10%
🍋🍋 Tax Effort (कर प्रयास) : States who’ve improved their per capita (State) tax collection
2.5%
in the last 3 years = get more ₹₹
Total (कु ल) 100%
** Note: computing income distance: the Highest per capita GSDP: 1) Goa 2) Sikkim 3) Haryana 4) Himachal.
But since Goa, Sikkim are very small states with a unique economic situation, so it’ll distort statistical formula. So, there are some
internal fine tunings done in formula. Long story cut short: Haryana taken as benchmark for most states. If you’ve more intellectual
curiosity about how above indicators are calculated in real life, you may spend waste time in PHD-reading of the original report@
https://fincomindia.nic.in/
23.4.1 🍋🍋 [�⚖�⚖�]15th FC: Horizontal devolution: States’ share

Table 1: Try to remember 3-5 names in top & bottom each, & your home state for UPSC Interview.
1) Uttar Pradesh (17.931%) 11) Chhattisgarh (3.418%) 21) Himachal (0.799%)
2) Bihar (10.061%) 12) Gujarat (3.398%) 22) Meghalaya (0.765%)
3) MP (7.886%) 13) Jharkhand (3.313%) 23) Manipur (0.718%)
4) W. Bengal (7.519%) 14) Assam (3.131%) 24) Tripura (0.709%)
5) Maharashtra (6.135%) 15) Telangana (2.133%) 25) Nagaland (0.573%)
6) Rajasthan (5.979%) 16) Kerala (1.943%) 26) Mizoram (0.506%)
7) Odisha (4.629%) 17) Punjab (1.788%) 27) Sikkim (0.388%)
8) Tamil Nadu (4.189%) 18) Arunachal (1.76%) 28) Goa (0.386%)
9) Andhra (4.111%) 19) Uttarakhand (1.104%) ANY type of UT = 0% here
10) Karnataka (3.646%) 20) Haryana (1.082%)
23.4.2 🧕🧕Finance Commissions & the fate of UTs of J&K & Ladakh
Until 10th Finance Commission, the FC would also prescribe the revenue sharing formula between
the Union Government and Union Territories.
 But this practice stopped since 11th finance commission i.e. Finance ministry itself decides how
much revenue will be shared with Union Territories based on its own discretion (क� द्रशा�सत प्रदेशों को
िकतने पैसा देना है= क� द्र सरकार अपने �ववेक से तय करता है. �व� आयोग इस म� ‘चूं’ नहीं कर सकता).
 Finance Commission no longer prescribed formula in this regard. But,
 31st October 2019: The state of Jammu Kashmir was officially split into the union territories of
Jammu Kashmir and union territory of Ladakh.
 Jammu and Kashmir Reorganization Act, 2019 mandates that:
o Whatever amount the former state of J&K was supposed to receive between 31/10/2019
to 31/3/2020 (as per 14th FC formula) …It will be distributed between these two new
union territories on the basis of population ratio and other parameters.
o President of India shall require 15th FC to make award for UT of J&K.
o But, 15th FC report, no separate share is given in verticle / horizontal tax devolutions.
Simply 1% extra kept with Union to look after J&K & Ladakh, compared to 14th FC.
23.4.3 🧔🧔 → 💸💸💸 (��) Grants from Union to States : 14th FC

Apart from the tax devolution, FC would also suggest Union to give grant to the states (grant= NOT
loan, so need not return with interest). (अनुदान= मतलब रा� सरकार ने वो पैसा क� द्र को वापस नहीं करना)
14th FC suggested following types of grants→
1. For All States: Grants for Panchayati Raj Institutions (PRI) and Urban Local Bodies (ULB) are
subdivided into two parts (पं चायती राज व शहरी �ानीय �नकायों के �लए अनुदान दो िह�ों म� �वभा�जत)
a. basic grant (प्राथ�मक) and
b. (10-20%) performance based grants.(प्रदशर्न आधा�रत)
2. For All States: Disaster Management Grants. (आपदा प्रबं धन अनुदान)
3. For 14 States: Post-Devolution Revenue Deficit Grants. (अंतरण-प� राज� घाटा अनुदान)
23.4.4 🧔🧔 → 💸💸💸 (��) Grants from Union to States : 15th FC

15th FC suggested following types of grants → Numbers NOT GREATLY IMPORTANT
Type Report#2 (2021-26)
1) 💸💸💸🏕🏕Local Bodies Grants (�ानीय �नकाय अनुदान A)2.##Lcr Rural
B)1.##Lcr Urban
=total 4.36Lcr
2) 💸💸💸�Post-Devolution Revenue Deficit Grants 2.94 Lcr
Type Report#2 (2021-26)
3) 💸💸💸🌬🌬🌬🌬Disaster Management Grants (आपदा A) 68 kcr in Union ke Disaster
प्रबं धन अनुदान) funds
B) 1.22 Lcr in State ke Disaster
funds
4) 💸💸💸🍽🍽Sector Specific Grants: (�ेत्र-�व�श� अनुदान) with >1 lakh crore for (Sectoral grants
💸💸💸� Performance-based incentives (�न�ादन- Health, Education, agricultural
आधा�रत प्रो�ाहन) reforms, rural roads, Judiciary,
Statistics, Aspirational districts)
6) 💸💸💸🏰🏰State specific grants for tourism, historical 49599 cr.
monuments, infrastructure, water etc.
7) 💸💸💸�Special Grants: (�वशेष अनुदान) N/A
8) Union Govt ke liye Defense and Internal Security Fund 2.38 Lcr
Total >10 lakh Cr
23.4.5 💸💸💸�Post-Devolution Revenue Deficit Grants (अंतरण-प� राज� घाटा अनुदान)
Figure 1: हमको और पैसा दो, हमारे राज� घाटे क� भरपाई के �लए!

Suppose (amt in ₹cr) 2020-21
Andhra’s own State Budget: (-) 41 kcr
Revenue Expenditure -minus Revenue Income = Revenue Deficit (राज� घाटा)
Andhra’s share from Union’s taxes based on horizontal devolution (+) 35 kcr
Andhra’s Post-Devolution Revenue Deficit = 41-35=6 kcr.
So 15th FC will give Andhra extra 6 kcr as Post-Devolution Revenue Deficit Grant (अंतरण-प� राज�
घाटा अनुदान). Only 14 states eligible: Assam, Himachal Pradesh, Manipur, Meghalaya, Mizoram,
Nagaland, Sikkim, Tripura, Uttarakhand, Andhra,Kerala, Punjab, Tamil Nadu, West Bengal.
🚩🚩🚩FAQ: On above logic/formula, wouldn’t a careless state govt spend truckload of money by
borrowing from market? Ans. REF: Pillar2D: FRBM Act.
23.4.6 💸💸💸�15th FC: Special Grants: (�वशेष अनुदान)

Report#1 (2020-21)
⇒ If a state receives less ₹₹ in (15th FC’s devolution + post revenue deficit grants) in 2020-21
compared to 2019-20 (when 14th FC Rangarajan’s formula was in effect),
⇒ Then such State will get Special Grants just to prevent any ‘feeling of injustice / bias’ (अगर 14व� �व�
आयोग क� अपे�ा 15म� कम �मल रहा हो तो अ�ाय / प�पात के आरोप से बचने के �लए उन रा�ों को �वशेष अनुदान)
⇒ Only 3 states eligible: Karnataka, Telangana and Mizoram. Total ₹6,764 cr for 2020-21
Report#2 (2021-26)
 No such grant announced. (ऐसा कोई �वशेष अनुदान नहीं िदया गया)
23.4.7 💸💸💸🏕🏕15th FC: Local Bodies Grants (�ानीय �नकाय अनुदान)
23.4.8 💸💸�🌬🌬🌬🌬15th FC: Disaster Management Grants (आपदा प्रबं धन अनुदान:)

Disaster Management Act, 2005 → Ministry of Home Affairs (गृह मं त्रालय) looks after the subject.
15th FC: recommend 🧔🧔National Disaster Risk Management Fund �State Disaster
�सफ़ा�रशे (NDRMF: एनडीआरएमएफ/रा��ीय आपदा जो�खम प्रबं धन कोष) Risk Management
Fund (SDRMF)
Internal distribution ⇒ 80% amt for National Disaster Response Fund Same pattern, change
आंत�रक �वतरण (NDRF:एनडीआरएफ/रा��ीय आपदा सहायता कोष) word from National
⇒ 20% amt for National Disaster Mitigation to ‘State’
Funds (NDMF:एनडीएमएफ/रा��ीय आपदा प्रशमन कोष)

**Notes on SDRMF:
1) How much will an individual state get? Ans= depends on its past disasters, risk exposure (area &
population wise) etc. आपके रा� म� आपदा का जो�खम िकतना है उस िहसाब से कम / �ादा पैसा �मले
2) Respective State Govt is also required to contribute some money in SDRMF.
23.4.9 💸💸💸🍽🍽15th FC: Sector Specific Grants (�ेत्र-�व�श� अनुदान)-Malnutrition

 Report#1 (2020-21): 15th FC only recommended health → Nutrition grant (₹7700+ cr पोषण
अनुदान) to combat malnutrition (कु पोषण). Ministry of Women and Child Development (MoWCD:
मिहला बाल �वकास मं त्रालय) will oversee its utilization.
 Report#2 (2020-21): no special mention of Malnutrition grants. But, related to health are given
below in the following table:
23.4.10 💸💸💸🍽🍽15th FC: Sector Specific Grants (�ेत्र-�व�श� अनुदान)-Health
Type Report#2: (2021-26) Amount
Sectoral Grant → Healthcare @Local (Rural and urban) Local Bodies given ₹₹ to 70kcr
Bodies convert Primary Health centres (PHC) into
पं चायती राज/नगरपा�लकाओं को प्राथ�मक �ा� health and wellness centres (HWCs)
क� द्र को �ा� और क�ाण क� द्र म� प�रव�तत
करने के �लए ट�क भर के पैसा
Sectoral Grant → Health Critical Care hospitals i.e. facilities with 15kcr
नाजुक देखभाल के अ�तालों को बनाने के �लए Intensive Care Unit (ICU) ventilator, kidney
पैसा dialysis etc.
Sectoral Grant → Health Training of Allied Healthcare workforce (lab 13kcr
�चिक�ा सं ल� मानव बल क� तालीम के �लए पैसे technicians, radiographers, dieticians,
Physiotherapist, ASHA Worker etc)
Sectoral Grant → Health State government to run Doctor training 2kcr
�जले के अ�तालों म� डॉ�री तालीम के कोसर् courses in district hospital
करवाने के �लए पैसा
कु ल �मलाकर Total: 70kcr to local bodies + 30kcr as Sectoral 1.06
Grants = 1.06 Lakh cr. Lcr.
** Healthcare sector Grants are unconditional i.e. not based on performance of a State Govt.
Additional Recommendations by 15th FC on Healthcare
⇒ Union and State Government together should spend 2.5% of GDP on Healthcare sector by 2025.
(क� द्र और रा� सरकार ने �मलकर �ा� �ेत्र म� सावर्ज�नक खचर् को बढ़ाकर जीडीपी के ढाई प्र�तशत तक करना चािहए)
⇒ All-India Services Act, 1951: (presently we've IAS,IPS,Indian Forest Service) → make 4th All
India service: "All India Medical and Health Service" → UPSC to conduct recruitment. This will
help addressing the shortage of doctor in backward states. आईएएस/आईपीएस क� तजर् पर एक और अ�खल
भारतीय सेवा बनाई जाए "अ�खल भारतीय �चिक�ा एवं �ा� सेवा" तािक �पछड़े रा�ों म� डॉ�रों क� कमी को पूरा िकया जा सके
⇒ Most of the medical colleges and super-speciality hospitals (e.g. Cancer) are concentrated in the
Western and Southern parts of India. Union and State government should make efforts to
address this.(प��मी/द��णी रा�ों के अलावा वाले �व�ार म� भी अ�� मेिडकल कॉलेज| अ�ताल बनाने पर जोर िदया जाए)
23.4.11 💸💸💸🍽🍽15th FC: Sector Specific Grants (�ेत्र-�व�श� अनुदान)- Others(अ�)
Report#2: (2021-26) Amount
कृ �ष �ेत्र म� सुधारों के �लए -नी�त आयोग द्वारा Implementation of agricultural reforms e.g.
प्र�ा�वत कानूनों को पा�रत करना, भूजल Passing the agricultural formula suggested by
सं वधर्न, �तलहन दाल लकड़ी उ�ादों को Niti Aayog, Groundwater conservation,
प्रो�ाहन, कृ �ष �नयार्त को बढ़ोतरी Improving Oilseed pulses wood products, 45kcr
agricultural export, (📑📑Ref: HDT-Pillar#4A)
ग्रामीण सड़कों क� मर�त Maintenance of PMGSY roads (Pradhanmantri 27 kcr
Gram Sadak Yojana) (📑📑Ref: HDT-Pillar#5-
Transport Infrastructure)
�ा�यक सुधार -अ�त�र� �ायालय और Judiciary: ₹₹ for Setting of extra courts and
जजों क� �नयु�� के �लए पैसा- �जसे 5 साल judges to finish the the property cases which are 10 kcr
या उससे अ�धक �वलं �बत सं प��यों के मामलों pending for 5 years or older, Civil cases of
का �नपटारा, ब�ों के यौन शोषण,गं भीर marginalized people, POSCO cases (child sex
अपराध के मामलों का ज�ी �नपटारा abuse) & heinous crimes
उ� �श�ा म� ऑनलाइन पढ़ाई क� �व�ा Higher Education-For 1) developing online 6 kcr
तथा �चिक�ा और इं जी�नय�रंग के कोसर् को learning 2) translating medical engineering
प्रादे�शक भाषा म� अनुवािदत करने के �लए courses in regional languages
�ू ली �श�ा School Education 4.8 kcr
सां��क�/डेटा सं ग्रह Statistics/Data collection >1000 cr
These grants also include internal quota for performance based incentives i.e. Better performing
States will be given additional money. (इन सभी अनुदान म� कु छ अंद�नी/आंत�रक कोटा होता है, �जसम� अ�धक अ�ा
प्रदशर्न करने वाले रा�ों को अ�धक रकम �मल सके )
23.4.12 💸💸💸💸💸💸Defence and Internal Security Fund for Union

For whom? Union Government (क� द्र सरकार के �लए)
Where? Public Account of India → Modernisation Fund for Defence and Internal Security
(MFDIS: लोक लेखा �न�ध के अंतगर्त र�ा तथा आंत�रक सुर�ा के नवीनीकरण/आधु�नक�करण के �लए कोष या
�न�ध).
Type Non-lapsable Fund (The money in such fund will not lapse on 31st March, so it can
be used in future without getting another approval from parliament.) �बन�पगत �नधी
Amount ₹ 2.38 Lcr (total for 2021-26)
😰😰Controversy on MFDIS Fund? (�ववाद/आलोचना)
⇒ Some State governments are unhappy that the 15th finance commission should stick to its
Constitutional mandate of giving ₹₹ to States & not allot to Union. ESLE less money available for
State Governments' development works. �व� आयोग क� सं वैधा�नक �ज�ेदारी है िक रा�ों क� तरफ पैसा दे, ना िक
क� द्र के िह�े म� पैसा बढ़ाते रहे अ�था रा�ों के पास कम पैसा आएगा
⇒ Since the fund is marked as a non-lapsable fund → Defence ministry may be very involved in
utilising it and the amount will remain on spent. A similar problem is present in "Nirbhaya fund
for women safety". (📑📑Ref: HDT-Pillar# 2D for more) �बन�पगत �नधी म� पैसा खचर् करने म� मं त्रालय सु�ी
�ादा िदखाते ह� इस�लए असल म� लाभ होता नहीं. भूतकाल म� मिहला सुर�ा के �लए बनाए गए �नभर्या फं ड म� ऐसा ही अनुभव रहा है.
23.4.13 🤏🤏 15th FC: Other recommendations to Govt (सरकार के �लए अ� �सफा�रश�)

⇒ Some States have requested special category status. But it’s not part of our mandate/Terms of
Reference. So we’ve nothing to say on this matter. (कु छ रा� “�वशेष श्रेणी का दजार्” मांग रहे ह� लेिकन रा��प�त
महोदय द्वारा हम� िदए गए �वचाराधीन �वषय म� यह मुद्दा है ही नहीं इस�लए हम इस पर कोई िट�णी नहीं द�गे).
⇒ Reform the taxation system → ⏫ tax collection. (प्र�� कर प्रणाली म� सुधार)
⇒ Review the outcomes of all Govt schemes. Merge/abolish non-essential schemes. सभी सरकारी
योजनाओं क� समी�ा कर� और अनाव�क योजनाओं को �वलीन कर�
⇒ We need a law on “Public Financial Management System” it’ll prescribe the budgeting,
accounting, internal control and audit standards to be followed at all levels of government. (लोक
�व�ीय प्रबं धन प्रणाली के �लए अलग क़ानून बनाया जाए). WHAT IS THIS EXACTLY? ✋✋NOT IMP unless
doing PubAD Optional.
⇒ Govt should follow FRBM Act with full sincerity in letter and spirit. (More in 📑📑Pillar2D: FRBM
Section पूरी �न�ा के साथ एफआरबीएम कानून का पालन ज�री)
23.4.14 ✍ 15th FC Report: conclusion (�न�षर्- उनके �रपोटर् क� सराहना-क� ब� ब�ढ़या �रपोटर् बनाया है)
✓ Sustainable Development Goal#10: ⏬ inequality within the country. SDG-Goal#16 requires
nations to build effective, accountable and inclusive institutions at all levels. (सतत �वकास ल�:
असमानता को कम करो | लोक प्रशासनके सभी �रो मे सं �ानो को प्रभावी, जवाबदेह और समावेशी बनाओ)
✓ In this regard, 15th FC has tried to provide a framework for
○ 1) equitable distribution of revenue 2) incentives tied with performance. ऐसा ढांचा जहा 1)
कर-�वतरण समानता के साथ और 2) प्रो�ाहन प्रदशर्न के िहसाब से �मलेगा
✓ It’ll greatly help to improve India’s human dev+ eco dev. मानव �वकास और आ�थक �वकास मे मदद
23.5 🕵🕵(🍋🍋🍋🍋⚖�)⏰ FC: GIVING PERMANENT STATUS (�ायी दजार् देना)
Figure 2: CAG-UPSC जेसी कायम चालू रहेने वाली सं �ा बनाओ FC को- तभी ठीक से काम होगा- श��कांता
(Introduction: Origin) Shaktikanta Das, the Governor of RBI and a member of the 15th Finance
Commission (FC), has recommended giving a permanent status to the FC, wherein the old
commission continues to implement & monitor the recommendations till the next commission
starts functioning. (जब तक नया �व� आयोग नहीं बनता पुराने �व� आयोग क� ऑिफस खुली रखनी चािहए)
23.5.1 �👎👎Arguments against giving permanent status to FC (�वरोध म� तकर् )

 Indian economy and Indian union has functioned successfully for over 70 years with this
mechanism, so there is no need for such constitutional amendments and experimentations.
(वतर्मान �व�ा यो��प से चल रही है, नए सं वेधा�नक प्रयोगो क� कोई ज�रत नही )
 Both NITI Aayog and GST Council provide a platform for cooperative federalism (सहकारी सं घवाद
क� चचार् के �लए मं च उपल�).
 Further, we already have the CAG to audit the accounts of the Union and the States.
 Therefore, Giving permanent status to FC= duplication of efforts.(प्रयासों का �थर् दोहराव)
 Even if the FC given a permanent status → states ruled by opposition parties will continue to
allege injustice & partiality, just like they allege with the functioning of Election Commission.
 Then, the Union Finance Ministry’s precious time will be wasted in filing counter-responses to
the States at FC. (�व� आयोग पूरा समय रा�ों क� फ�रयाद सुनता रहेगा और क� द्र सरकार उसी के जवाब देने म� लगी रहेगी)
23.5.2 �👌👌Argument in favour of giving permanent status to FC (प� म� तक)

 Election Commission has a permanent status even though elections are to be conducted every 5
years. Previous Lok Sabha’s speaker continues to hold position until new Lok Sabha meets for
the first time. Following this rationale, Shaktikanta Das’s suggestion that “Previous Finance
Commission should continue to function & oversee the implementation of its recommendations
until new FC is formed” is valid. (चुनाव तो 5 साल म� एक बार होते ह� िफर भी चुनाव आयोग क� ऑिफस खुली रहती है)
 Finance Commission recommendations are valid for a block of 5 years. Even if there is a war,
disaster, famine or an economic crisis which may affect the revenue collection of the union vs.
the demands by the States, still, the FC-formula/recommendations cannot be modified/finetuned
in-between the five years. So, even if Union/states are feeling any injustice in the FC-formula,
they have to wait for five years to make pleas to the next Finance Commission.
 If FC has a permanent secretariat/office = staff will keep all the records/ Knowledge bank for
future reference, and a few officers will act as ‘Resource Persons’ to assist the new panel. Then,
there will be more consistency in the FC recommendations. (जानकार �ाफ का तबादला हो जाता है)
 Such permanent body can keep a constant vigil (अ�वरत सतकर् ता) on the Union and State finances &
revenue collections and hold them accountable for any transgressions or lethargy (उ�ं घन / सु�ी).
[Present approach of the union governments is if they are not getting enough taxes, they will simply
borrow more money and changing the FRBM targets/goalposts as per their convenience. More
under 📑📑 Pillar2D:FRBM handout]
 Previously, Union and States designed their five-year plans, and so it made sense to have a ‘five-
year formula for tax distribution’. But now the five-year planning system has been discontinued.
पं चवष�य योजनाओं का दौर ख� हो चुका है, इसी हमने 5-5 वषर् के मान�सकता से �नकलकर �नरंतर �नगरानी रखनी चािहए
23.5.3 � Conclusion: give permanent status to FC or not? (�न�षर्)

⇒ ✅(In-favor) Considering the aforementioned benefits, Finance Commission should be given a
permanent status for better monitoring, accountability, grievance redressal in the matters related
to fiscal federalism. (राजकोषीय सं घवाद के मामलों म� बेहतर �नगरानी, जवाबदेही और �शकायत �नवारण के �लए �व�आयोग
को �ायी दजार् देना लाभकारक होगा.)
⇒ ✋(Against) Considering the aforementioned issues, the present constitutional and institutional
mechanisms are adequate for fiscal federalism; they do not merit any changes for the time being.
(वतर्मान प्रणाली सुयो�, िफ़लहाल कोई प�रवतर्न अनाव�क)
23.6 � FC VS PC VS NITI: WHAT’S THE DIFFERENCE?
� 🍋🍋⚖ Finance �🤴🤴 Planning Commission �🧔🧔 NITI Aayog

Commission (FC) (PC) योजना आयोग National Institution
for Transforming India
Constitutional body Created by executive resolution, so neither constitutional non
statutory. Both headed by Prime Minister as the chairman.
1951: 1st FC setup under KC - 1951: PC set up and over the - 2015: Formed.
Neogy years designed 12 Five Year - Three Year Action Agenda
plans (12th FYP: 2012-2017) (2017-20).
� 🍋🍋⚖ Finance �🤴🤴 Planning Commission �🧔🧔 NITI Aayog
Commission (FC) (PC) योजना आयोग National Institution
for Transforming India
- 2014: Dissolved by Modi - Seven Year Strategy
Government. Document.
- Fifteen Year Vision
Document(2017-32).
- Taxes’ Vertical 1. How much money should It is not in its scope of work to
Devolution and union give to each state for decide how much money
horizontal distribution implementation of Union’s should be given to each state.
among states. centrally sponsored schemes That component is decided by
- + any other matters (CSS)? the Finance Ministry.
referred by the President 2. How much money should - NITI’s primary objective is
in TOR union government give to the to serve as the think tank of
- Each Finance five year plans of the state the Government of India,
Commission arrived at governments? - Helps in policy design.
its own methodology. To answer these Qs, PC would use - Helps in monitoring
E.g. 14th FC: 42% Gadgil Mukherjee formula schemes’ through its
vertical, and 5 factor (designed in 8TH FYP)- based on dashboard e.g. ‘School
formula for horizontal population, per capita income, Education Quality Index’,
distribution. special problems etc. of a state. ‘SDG India Index’, ‘Digital
Transformation Index’
< More about Planning Commission and NITI Aayog in 📑📑Pillar#4>
🔠🔠❓ MCQ. In India, which of the following review(s) the independent regulators in sectors like
telecommunications, insurance, electricity etc. ? (UPSC Prelims-2019)
1. Ad Hoc Committees set up by the Parliament.
2. Parliamentary Department Related Standing Committees
3. Finance Commission (4) Financial Sector Legislative Reforms Commission (5) NITI Aayog
Answer Codes: (a) 1 and 2 (b) 1 , 3 and 4 (c) 3, 4 and 5 (d) 2 and 5
23.7 🍋🍋(🧔🧔⚖�🙏🙏) SPECIAL CATEGORY STATES? �वशेष श्रेणी के रा�?
Figure 3: हमारा रा� गरीब है, इस�लए हमे �वकास के �लए क� द्र सरकार ने अलग से ढेर सारा पैसा देना चािहए.
- 1952: The National Development Council (NDC: रा�ी� य �वकास प�रषद) was set up, with PM, CMs and
other representatives to approve FYP prepared by the Planning Commission.
- Although NDC became obsolete with establishment of NITI Aayog.(फू टा �आ कारतूस बन चुका है)
- 1969: 5th FC recommended giving extra ₹₹+ tax-relief to certain disadvantaged states. Over the
years, NDC added more states into the Special Category List based on
✓ (i) hilly and difficult terrain (पहाड़ी और किठन भूभाग)
✓ (ii) low population density and / or sizeable share of tribal population (कम जनसं �ा
घन� और / या जनजातीय जनसं �ा का बड़ा िह�ा)
✓ (iii) strategic location along borders with neighbouring countries (पड़ोसी देशों के साथ
सीमाओं के साथ रणनी�तक �ान)
✓ (iv) economic/infrastructural backwardness (आ�थक/अवसं रचना�क �पछड़ेपन)
✓ (v) non-viable nature of state finances. (रा� �व� क� गैर-�निहत प्रकृ �त।)
- Examples: 8 North Eastern states and 3 Himalayan States (JK, Uttarakhand, HP). Although,
Post-370 removal, J&K is no longer in this list.
- 🤩🤩🤩🤩Benefits of Sp.Cat. States? (�वशेष श्रेणी के रा�ों को �ा �रयायते / लाभ �मलते है?)
✓ Industrialists will be given benefits in Union-taxes for setting up factories in these states.
(उद्योगप�त को फै ��ी लगाने पर कर म� छू ट/ �रयायत- तािक वह �पछड़े रा� म� जाने के �लए आक�षत हो )
✓ Union bears higher burden in Centrally Sponsored Schemes (CSS) e.g 90:10 ratio: (क� द्र
प्रायो�जत योजनाएं म� क� द्र सरकार अपनी जेब से �ादा अनुपात म� पैसा देता)
✓ FC & PC would assign more weightage in their formulas to give them more funds.
- 14th FC: Previous FC assigned extra weightage & funds to Sp.Cat states, but 14th FC stopped
- But, whenever elections are near, W.Bengal, Bihar and Andhra CMs would demand Sp.Cat.
status & blame Union for ‘injustice’. (चुनाव करीब हो- उस व� कु छ रा� नाइं साफ� क� बात करते ह�)
- 15th FC: Some States have requested special category status. But it’s not part of our
mandate/Terms of Reference. (�वत् आयोग के �वचाराथर् �वषयो मे ये है ही नही!)
- So, at present, Sp.Cat states don’t get additional revenue/grants in FC’s formula. Although,
Union upon its own discretion continues to give them certain benefits in CSS. (वतर्मान �व� आयोग,
इन रा�ों को अलग से कोई पैसा नहीं देते। िकंतु क� द्र सरकार �यं के �ववेक से योजनाओं म� �ादा पैसा दे सकती है।)
23.7.1 🍋🍋(🧔🧔⚖�🙏🙏) Sp.Cat States → Economic Surveys criticised
Figure 4: इतने सालों तक ढेर सारा अनुदान िदया िफर भी �वकास �ों नहीं? - "दान एक श्राप है"- Former CEA
- 📔📔📔📔Economic survey 2016-17: Noted that Sp.Cat states have received lot of funds & grant
from previous FCs and PCs, and yet they have not made any tangible progress in improving
public administration or removing poverty (=” Aid Curse”: सहायता का अ�भशाप). Similar problem
with the States having abundant mineral resources (=“Resource Curse”: ख�नज सं साधनों का अ�भशाप).
- ES 2017-18: Noted that compared to Brazil, Germany and other countries with federal polity,
India’s State Governments and Local Bodies are collecting less amount of tax for two reasons :
- 1) Constitution has not given them sufficient taxation powers. (सं �वधा�नक श��यां कम)
- 2) Even where constitution gave them powers like collection of Agricultural Income Tax,
Land Revenue, Property Tax: The States/Local Bodies are shy of collecting taxes due to
electoral politics. (चुनावी लोकलुभावन के चलते सही मात्रा म� टै� नहीं वसूला)
😰😰Result? Poor quality of Public Schools, Public Transport, Police, Drinking Water and Sanitation.
सावर्ज�नक �ू लों, प�रवहन, पु�लस, पेयजल और ��ता क� खराब गुणव�ा
23.8 � MOCK QUESTIONS FOR UPSC MAINS (250 WORDS EACH)

1. (GSM2-2021) How have the recommendations of the 14th FC enabled the States to improve their fiscal
position? [भारत के 14व� �व� आयोग क� सं �ु�तयों ने रा�ों को अपनी राजकोषीय ��त सुधारने म� कै से स�म िकया है ?]
2. What are the terms of reference of the 15th Finance Commission? Why were some state governments
apprehensive about them? १५व� �व� आयोग के �वचाराथर् �वषय �ा है? कु छ रा� इस �वषयम� आशं कावान �ों?
3. Compare and contrast the horizontal tax devolution approaches of 14th FC vs 15th FC �े�तज कर अंतरण के
�सध्द्धांतों मे 14वा और 15वे �व�आयोग क� समानता व �भ�ता क� तुलना क��जए
4. Enumerate the grants suggested by 15th FC for 2020-21. अनुदानों क� सूची दी�जए।
5. “The constitution of GST Council has reduced the role of Finance Commission as the balancing wheel of
fiscal federalism in India.” Do you agree? Justify your stand. "जीएसटी प�रषद के गठन ने �व� आयोग क� भारत म�
राजकोषीय सं घवाद के सं तुलन म� भू�मका को कम कर िदया है।" �ा आप सहमत ह�? अपने तकर् को उ�चत ठहराएं ।
6. Examine critically the merits of giving a permanent status to the finance commission. �व� आयोग को �ायी दजार्
देने (के सुझाव) क� यो�ता क� गं भीर समी�ा क��जए.
24 🍋🍋🍋🍋🍋 TAXATION → BLACK MONEY & ALLIED ISSUES
Tax Planning / Tax When person invests money in LIC/PPF/Pension funds etc.in such manner
Mitigation that he can claim various deductions legally available in the Income Tax Act.
(कर-�नयोजन) It’s neither illegal nor unethical. (न ही अवैध और न ही अनै�तक)
Black Money It is an income or transaction that is taxable yet NOT reported to the tax
(काला धन) authorities concealed from the tax authority.
कालाधन ऐसी आय/लेनदेन है जो क� कर-पात्र है, िक�ु कर-अ�धका�रयों से �छपाई गई.
Parallel Economy The economy that runs on black money. (समानांतर अथर्�व�ा जो काले धन पर चलती है)
👺👺Tax Evasion When person hides income or transaction from tax authorities, and thereby
(कर अपवं चन evades paying taxes. It’s illegal. (कराधान यो� आय या लेन देन को सरकार से �छपाना और
कर-चोरी) करचोरी करना)
🤵🤵🤵🤵Tax When person discloses his income and transactions to tax authorities but uses
Avoidance legal loopholes to avoid paying taxes. E.g. Bollywood stars who register digital
(कर प�रहार media companies in Tax Havens. It may not be illegal in every case, but still
unethical. (कराधान यो� आमदनी या लेनदेन को सरकार से �छपाना निह, लेिकन क़ानून मे �छद्रों के
कर-टालना)
इ�ेमाल द्वारा कर को टालना जाना। )
🍸🍸Tax Haven Is a country that demands little taxes from foreigners and offers legal
(कर �गर्) loopholes for Tax Avoidance & opportunities for Tax Evasion. E.g.
एसा देश जहां कर टालने / Liechtenstein, Mauritius, Marshall Islands, Cayman Islands, Panama, Nauru,
Vanuatu etc. These countries are geographically small, & without viable
�छपाने के �लए ब�त अवसर
economy. So they offer such mechanism to attract foreign investors and
�मलते ह�
foreign tourists.
👺👺→🤵🤵Money ⇒ When drug trafficking, ransom, corruption and other criminal activity
laundering generates substantial profits, the criminal tries to spend / invest / hide the
(गैरकानूनी तरीके से प्रा� money without attracting attention.
धन को वैध बनाना) ⇒ Money laundering (धनशोधन) is the process of disguising the source of
money, as if it came from a legitimate activity, & then channelize it into
banks, share market and other financial intermediaries.
Hawala ⇒ Hawala is an illegal money transfer / remittance system. Money is paid to
गैर कानूनी �प से एक जगह an agent who instructs an associate in the relevant country or area to pay
से दू सरी जगह पैसा भेजना the final recipient.
Although used by Indian workers in middle east because lower commission
than post-office/bank transfers, + better network in remote villages
Shell firms, They do not have any active business operations. Created with sole objective
Post-box/ of money laundering/tax evasion/avoidance E.g. Mishail Packers and Printers
Letter-box Pvt Ltd. allegedly setup by Misa Bharti Yadav to launder ₹1.2 crores (as per
companies Enforcement Directorate). मात्र कर चोरी के �लए बनाई गई कं प�नयां
Panama Papers International Consortium of Investigative Journalists is a USA based
(2016) nonprofit organization: released these incriminating documents from certain
Paradise Papers law firms in tax havens & showed how big politicians, businessmen,
(2017) sportsmen, filmstars have setup shell companies for tax evasion/avoidance
Mauritius papers across the world.
(2018) Putin, Sachin, Ambani, Amitabh Bachchan & Aishwarya Rai also named in
Pandora Papers these papers. (पत्रकारों का एक वै��क सं गठन �ज�ोंने अलग अलग द�ावेज़ जारी कर सा�बत िकया-
(2021) कै से दु�नया के रसूखदार लोग फ़ज़� कं प�नयां बनाकर कर चोरी करते ह�)
Tax Terrorism  Happens when tax authorities put undue pressure on an honest taxpayer
(कर आतं कवाद) to pay more taxes. (ईमानदार करदाता पर टै� अ�धकारी अनाव�क दबाव / उ�ीड़न करे)
🍋🍋🍋🍋🍋🍋🍋: �  Critiques have used this word in context of Vodafone & Cairn cases.
TDS/TCS Tax Deduction at Source (TDS) �ोत पर कर कटौती
Tax Collection at Source (TCS) �ोत पर कर सं ग्रह
These are the mechanism to discourage tax evasion. 📑📑Ref:2A: IT Handout
PAN Card 10 letters alphanumeric numbered assigned to all taxpayers in India by
�ाई खाता सं �ाक Income Tax Dept. 📑📑Ref: 2A: GST Handout for more.
24.1 (🍋🍋🍋🍋)�BLACK MONEY → NOTABLE ORGANISATIONS
Enforcement FinMin → Department of Revenue → ED is a Specialized financial

Directorate (ED: प्रवतर्न investigation agency to enforce following laws
�नदेशालय ) 1. Foreign Exchange Management Act,1999 (FEMA)
2. Prevention of Money Laundering Act, 2002 (PMLA)
Directorate of Revenue FinMin → Department of Revenue → CBIC → DRI is an agency to
Intelligence investigate Customs/Narcotics/Wildlife/Arms related smuggling & illegal
activities. (DRI: राज� आसूचना �नदेशालय)
Financial Intelligence It analyses the suspected financial transactions in domestic and
unit (FIU-2004: �व�ीय crossborder levels & reports directly to the Economic Intelligence Council
आसूचना एकक) (EIC: आ�थक आसूचना प�रषद) headed by the FM
Financial Action Task  is a brainchild of G7, Combating Money laundering and terror
Force (FATF-1989: finance. India became member in 2010. HQ@Paris
HQ@Paris  Greylist: nations that safe haven for terror financing and money
�व�ीय कारर्वाई कायर्दल: ऐसे
laundering. E.g. Pakistan, Syria, Yemen, etc are on the grey list.
बदमाश ग़ैर �ज़�ेदार देशों क�
सूची बनाता है जहाँ धनशोधन और (Update 2021: Mauratius was REMOVED from this list)
आतं क� �व�पोषण के �ख़लाफ़  Blacklist: nations that are not cooperating in the global fight against
स�ी नहीं है) money laundering, terrorist financing. Iran and N.Korea
OECD (1961:  Organisation for Economic Co-operation and Development
HQ@Paris.  Works for International cooperation in the matters of economy and
आ�थक सहयोग तथा �वकास taxation. Known for Base erosion and profit shifting (BEPS) Norms.
सं गठन)  India is not a member of OECD, yet. HQ@Paris.
24.2 🍋🍋🍋🍋 TAX EVASION (HIDING INCOME / TRANSACTION)
24.2.1 🍋🍋🍋🍋⚖ Prevention of Money Laundering Act (PMLA-2002)
धनशोधन �नवारण अ�ध�नयम

➢ 1998: UN General Assembly (UNGA) declaration on Money Laundering → 2002: India enacts
this law to combat money laundering with search-seizure-arrest-penalty. Main agency?
Enforcement Directorate. (सं यु� रा�� सामा� प�रषद क� घोषणा के बाद भारत ने क़ानून बनाया था)
➢ Cases heard @ PMLA Adjudicating Authority (�ाय�नणर्यन प्रा�धकारी) → PMLA Appellate Tribunal
(अपीलीय प्रा�धकरण) → High Court
➢ RBI, SEBI, IRDAI and other regulators to make norms for Banks/NBFCs.
➢ E.g. RBI’s Know Your Customer (KYC) norms and Anti-Money Laundering (AML) standards.
2013: Online Magazine Cobrapost’s sting operation proved ICICI, HDFC and Axis Bank were
flouting norms so RBI imposed a heavy penalties.
24.2.2 🍋🍋🍋🍋⚖ Undisclosed Foreign Income & Assets Act (UFIA-2015)
अ�ात �वदेशी आय तथा प�रसं प�� अ�ध�नयम

➢ It requires Indian residents to disclose their foreign assets (e.g. bungalow in Dubai, Bank account
in Switzerland), and income coming from foreign sources (e.g. shell company in Cayman Island)
in their income tax forms. (�वदेशी आमदनी और �वदेशी �नवेश क� जानकारी अपने आयकर फॉमर् म� देनी होगी)
➢ Such foreign income will be subjected to 30% income tax. No deduction, exemption or rebate
➢ Violation = Penalty + upto 10 years jail time.
➢ If a company is found violating the Act, then every person responsible to the company shall also
be liable for punishment unless he proves that it was done without his knowledge.
➢ Empowers Union to enter into agreements with other countries for the tax info exchange.
24.2.3 🍋🍋🍋🍋⚖ Benami Transactions Prohibition Act (BTPA- 1988, 2016)
 1988’s original act did not achieve much results → amended in 2016. Main Agency? Income
Tax Department. (बेनामी लेनदेन (�नषेध) अ�ध�नयम:)
 Benami refers to properties that buyer registers in the name of his relative, personal staff (Driver,
Gardner) or a non-existent/ fictitious persons (का��नक ��) to avoid tax authorities’ attention.
 E.g. 2018: Misa Bharti Yadav (allegedly) bought farmhouse in the name of her brother-in-law
Nilesh Kumar.
 Cases heard @ PMLA-walli bodies. Violation = Confiscation of property + penalty + Jail
🔠🔠❓MCQ. ‘Prohibition of Benami Transactions Act’: find correct statement(s):(Asked in UPSC-Pre-2017)

1. A property transaction is not treated as a benami transaction if the owner of the property is not aware of
the transaction. (यिद सं प�� का मा�लक कह� िक “मुजे लेनदेन के बारे म� नहीं पता था” तो उसक� सं प�� को बेनामी नहीं माना जाएगा)
2. Properties held benami are liable for confiscation by the Govt. (बेनामी सं प�� को सरकार ज�/क़�े मे लेगी)
3. The Act provides for three authorities for investigations but does not provide for any appellate
mechanism.
Answer Codes: (a) 1only (b) 2 only (c) 1 and 3 only (d) 2 and 3 only
24.3 (🍋🍋🍋🍋)💼💼 TAX EVASION → GOVT ANNOUNCEMENTS
24.3.1 🍋🍋🍋🍋🍋🍋 Tax (Evasion) “Surrender” schemes
गुनाह कबूल करो / आ�-समपर्ण करो तो कम जुमार्ना भरना होगा / जेल नहीं जाना होगा
Under such schemes, a tax-evader can declare his undisclosed income, pay the taxes and penalty.
Then, Income Tax Department will not pursue case against him. (Although Police may still pursue
case if income is from narcotics, kidnapping, extortion etc.)
Income Declaration Offer? 45% of the undisclosed income shall be taken away by govt as (tax
Scheme (IDS) 30%+ surcharge + penalty).
Validity? 2016 June to Sept. ~67,000 cr black money was declared.
Pradhan Mantri - ~50% of the undisclosed income shall be taken away by Govt. as Tax +
Garib Kalyan Penalty + Pradhan Mantri Garib Kalyan Cess.
Yojana (PMGKY) - Further, 25% of the undisclosed income shall be deposited in RBI’s
Launched after
‘Pradhan Mantri Garib Kalyan Deposit Scheme, 2016’. It’ll be a fixed
Demonetization
deposit for 4 years @ ZERO % Interest rate.
Validity?
2016-Dec: - The PM Garib Kalyan cess, and deposit will be used for schemes related to
To 2017-April irrigation,housing,toilets,infrastructure, edu, health etc.
- The scheme was not very successful, hardly ~ ₹ 5000 cr. declared.
🍋🍋🍋🍋🍋🍋🍋🍋 - > ₹ 3.75 lakh crore tax revenue is locked in the indirect taxes (service tax
Sabka Vishwas L.D.S and excise duty) related cases. These taxes are discontinued in GST but old
Scheme 2019 tax-evasion cases are still in the court.
In budget-2019
- Budget-2019: Launched Sabka Vishwas (Legacy Dispute Resolution)
Scheme, 2019 (�ववाद समाधान योजना).
For
Service Tax - Businessman accepts his fault, Tax officials gives a ‘discount/relief/waiver’
& Excise Duty in the penalty/late-fees, and the matter is settled, instead of litigating in
courts for years & years.
24.3.2 🍋🍋🍋🍋🍋🍋 Vivad se Vishwas Scheme for Direct Taxes (💼💼Budget-2020)
Presently, >₹9 lakh cr worth direct tax cases pending before Appellate Forums (अपीलीय मं चों के सम�
लं �बत मामले) viz. IT Commissioner (Appeals) → Income Tax Appellate Tribunals (ITAT: आयकर अपीलीय
�ाया�धकरण ) → HC → SC. So, 💼💼Budget-2020 → “Direct Tax Vivad se Vishwas Bill/Act, 2020”.
⇒ Scope: Appeal related to Income tax or Corporation Tax, pending before a forum as of
31/Jan/2020. Then,
⇒ Taxpayers can settle with IT dept in following manner
o A) If IT dept filled appeal → he has to pay 50% of disputed tax amt
o B) If Taxpayer filled appeal → he has to pay 100% of the disputed tax amt
⇒ In both situations, he'll get a complete waiver/relief from interest+penalty (�ाज और जुमार्ना से माफ�).
⇒ Above scheme is valid upto 31/March/2020, then Atma-Nirbhar Bharat extended it further.
⇒ This scheme is not applicable if:
o person is under prosecution for criminal activities. (अपरा�धक मामले चल रहे हो)
o If black money is hidden in foreign countries. (�वदेश म� काला धन �छपाया हो)
😰😰Controversies? 1) Southern India’s Members of Parliament angry that Hindi scheme name is
used. (2) both honest and dishonest tax payers are treated equally. Even dishonest tax payer can now
settle without paying interest/penalty.(3) Income Tax officials’ job-transfer etc will be linked to how
many cases they solve in this scheme. They’re also asked to work on weekends to fulfill these targets.
= resentment among staff (आयकर कमर्चारीओमे आक्रोश िक उनके तबादले और पदो��त के �लए इसम� सफलता को �गन�गे).
24.3.3 🍋🍋🍋🍋🍋🍋 Dispute Resolution Committee (DRC) in 💼💼Budget-2021

⇒ 💼💼Budget-2021 Announced to setup this committee under the Income Tax Act (आयकर कानून के
अंतगर्त �ववाद �नपटान स�म�त)
⇒ Anyone with a taxable income up to `50 lakh and disputed income up to `10 lakh shall be eligible
to approach the Committee. Committee can reduce, waive any penalty or give immunity from
any offence. (गुनाह कबूल कर लो /समझौता करवालो तो कम जुमार्ना भरना होगा / जेल नहीं जाना होगा इ�ािद)
⇒ It will help the small taxpayers to settle tax matters without going through legal expenses & time
wastage in the regular appellate process. (i.e. viz. IT Commissioner (Appeals) → Income Tax
Appellate Tribunals (ITAT: आयकर अपीलीय �ाया�धकरण ) → HC → SC) छोटे करदाता का कोटर् कचहरी म�
मुकदम� बाजी म� समय और पैसे बच जाएगा
⇒ It will be a faceless / online Committee to ensure efficiency, transparency and accountability.
24.3.4 🍋🍋🍋🍋 Tax Evasion → Other Initiatives (अ� कदम)
Banking Cash A 0.1% direct tax levied on cash withdrawals from banks. Started by
Transaction Tax Chidambaram but later withdrawn (2005-09). Objective was to encourage
(BCTT: 2005-09) less-cash economy and data mining of transactions.
(Suggested) Banking A proposal by a Pune based think-tank to Baba Ramdev that all the direct
Transaction Tax (BTT) and indirect taxes of the Union and states should be abolished and
ब�िकंग लेनदेन पर कर replaced with 2% tax on banking transactions.
Impracticable because such experiments were tried and failed in Australia
and other countries as people shifted to using barter system, diamonds
and gold for transaction. 2017: Govt clarified they are not considering
any such proposal. So NOTIMP
SC’s special Chairman: Retd. SC Justice MB Shah, and senior tax officials. They
investigation team (SIT) recommended various measures against Black Money hidden in India, in
on Black Money 2014 overseas banks, P-Notes etc. SC ordered Govt to implement its
recommendations.
Operation Clean Money 2017: IT Dept. verified large bank deposits made Post-demonetization.
Project Insight 2017 Income Tax Dept. hired L&T Infotech ltd to develop an integrated
platform for data mining & tracking tax evaders.
(Related) Project Saksham 2016: CBEC/CBIC’s project for digital re-
engineering related to GST. It’s not a ‘drive against black money’ but for
‘Ease of Paying Taxes’.
(Related) Aaykar Setu: CBDT’s mobile app to pay Income Tax.
Restrictions on Cash Budget 2017 → Finance Act, 2017 → if anyone accepts ₹ 2 lakh /> CASH in
Transactions, 2017 a day / in multiple transactions related to one ‘event’, then Income Tax Dept
penalty = 100% of the cash received.
Banks, post office, government organisations are exempted.
Electoral Bonds, 2017 📑📑Ref: Pillar#1C: SEBI/Sharemarket handout
24.4 (🍋🍋🍋🍋🍋🍋)TAX AVOIDANCE (कर प�रहार / कर टालना)
Here, people will not hide the transaction, they’ll blatantly declare transactions in their official
records, but will use legal loopholes (कानूनी-खा�मया) to avoid paying taxes.
24.4.1 🍋🍋🍋🍋🤵🤵 Double Taxation Avoidance Agreement (DTAA) & Round Tripping
➢ DTAA: It is a tax treaty signed between two or more countries.

➢ Objective? A taxpayer resides in one country and earns income in another, then he need not pay
(direct) tax twice in two countries for the same income.
➢ e.g. India Mauritius DTAA (1982): If a Mauritius person / company buy shares in India and sells
them at profit, then he need not pay Capital Gains Tax (CGT) in India. Only the Mauritius
government can ask CGT from him. And vice-versa. (दोहरा कराधान प�रहार समजौता)
➢ Loophole? India has ~10-20% CGT whereas Mauritius has ~0-3% CGT (depending on nature of
asset, how long the buyer kept asset before selling etc). So many Indian Politicians, Businessmen
and Bollywood actors would transfer the money using Hawala to their shell companies in
Mauritius → make those Mauritius Cos to invest back in Indian assets → avoid Indian CGT.
➢ This process is called Round Tripping (राउं ड-�ट��पंग) i.e. money that leaves the country through
various channels and makes its way back into the country as foreign investment.
➢ Similar loophole in India Singapore DTAA. 2016: Modi government amended the treaties = even
Mauritius and Singapore investments in India will be subjected to Indian taxes.
24.4.2 🍋🍋🍋🍋🍋🍋 Tax Avoidance through Non-Resident Status
If a person is 🦁🦁Has to pay his IT on 🐼🐼Has to pay IT on global income e.g.
income coming from India? income coming from the USA/China?
Ordinarily Yes Yes
resident of India
Non-residents Yes No
If India has a double taxation avoidance agreement (DTAA) with other nation, then above things
may differ (e.g. recall erstwhile Mauritius CGT-roundtripping-walla example)
Table 2: 💼💼Budget-2020 changed these definitions
Definition in Indian Tax laws Before Budget-2020 → 💼💼Budget-2020
Ordinarily Indian Resident (साधारणतया भारतीय �नवासी) 182 days/> in a year 120 days/>
= person who stays in India for →
Non resident (गैर �नवासी)= person who stays outside 182 days/> in a year 246 days/>
India for →
⇒ Implications? Person will have to stay out of India for a longer period if he want to be treated as
“Non-Resident” to avoid taxes on his global income.
⇒ 😷😷Corona lockdown / Travel restrictions so non-residents couldn’t leave India even if they
wanted to. So, Finance ministry allowed some temporary relief regarding "Resident" definition &
submission of documents. How exactly? = NOT-HERE-for-CA-Exam
24.4.3 🍋🍋🍋🍋🍋🍋 Place of Effective Management (POEM: पीओईएम)
 (�वदेश म� बनी फज� कं पनी के प्रबं धन का वा��वक �ान भारत म� ��त है तो भारत सरकार उसके मुनाफे पे टे� मांगेगी।)
24.4.4 🍋🍋🍋🍋🍋🍋 Base Erosion and Profit Shifting (BEPS: बीईपीएस)
 When MNCs shift profit from its source country to a tax-haven to avoid / reduce paying taxes, its
known as “BEPS”. (ब�रा��ीय �नगम द्वारा मुनाफे को �ानांत�रत करना तािक भारत म� उसे टे� कम भरना पड़े )
 India signed the OECD’s joint Multilateral Convention to Implement Tax Treaty Related
Measures to Prevent Base Erosion and Profit Shifting (commonly referred to as MLI) ओईसीडी के
ब�प�ीय समझौते पर ह�ा�र िकए ह�
24.4.5 🍋🍋🍋🍋🍋🍋 Transfer Pricing & Authority for Advance Rulings (AAR) (ह�ांतरण मू�)
✋Not really important। What above thing means ? = explained in video lecture.
24.4.6 (🍋🍋🍋🍋🍋🍋) � General Anti-Avoidance Rules (GAAR)
Till now we learned how Indians and foreigners avoid tax payment in India through loopholes like
DTAA, POEM, BEPS, Transfer Pricing etc.
 So, UPA/Congress Govt setup economist Parthasarathi Shome panel who suggested General
Anti Avoidance Rules (GAAR: कर प�रवजर्न रोधी �ापक �नयम) → they were added Income Tax Act
 GAAR empowers Income Tax officials to send notices to both Indians and foreigners for
suspected Tax Avoidance. (For Tax evasion, we’ve separate laws- PMLA, UFIA, BTPA)
 But critics alleged GAAR will result in tax terrorism, harassment, no ease of doing biz. So
successive Budgets kept delaying the GAAR- implementation. Finally done on 1/4/2017.
24.4.7 🍋🍋🍋🍋🍋🍋 Angel Tax on Startup Investments (2012)
⇒ 2012: UPA/Congress Govt ordered the suspicious startup Companies to pay 30% Tax + Penalty
on the investment which they received from Angel investor. (सं िद� �ाटर्अप कं प�नयों को आदेश िदया िक
आपको जो �नवेश म� पैसा �मला है उस पर 30 प्र�तशत एं जल टै� और जुमार्ना भरना होगा)
⇒ This was called ‘Angel Tax’. But then controversy that Angel Tax will discourage the growth of
startup companies so norms relaxed. (आलोचकों ने बोला ऐसी स�ी के चलते �ाटर्अप के �वकास को अवरोध होगा)
⇒ Budget-2019: IF Start-ups and their investors provide the required declarations and information,
then IT dept will settle the matter. (तो सरकार ने नरमी िदखायी क� हम� जो चािहए वो जानकारी दो तो इस के स का
समाधान कर द�ग।े )
24.5 (🍋🍋🍋🍋🍋🍋:⌛) � RETROSPECTIVE TAX: VODAFONE

⇒ (Intro: Origin) To avoid paying capital gains tax in India, the foreign companies usually create
shell companies to indirectly transfer Indian assets. (भारत म� पूंजीगत लाभ कर से बचने के �लए �वदेशी कं प�नयों
द्वारा शेल कं पनी बनाकर भारतीय स��यों क� परो� �प से ख़रीद �बक्र� क� जाती है)
⇒ e.g. 2007: Vodafone (Its Netherland subsidiary company) bought shares of CGP company
(Cayman Island based shell company) from HTIL Company (based in Hong Kong). Thus,
Vodafone became (indirect) owner of Hutch (India) because CGP company owned Hutch India.
(वोडाफ़ोन ने इसी तरह से परो� �प से भारतीय कं पनी ‘हच’ को ख़रीदा था)
⇒ Income tax dept demanded capital gains tax → Vodafone went to Supreme Court.
⇒ 2012: Vodafone won the case. Indian Supreme Court ruled that presently Indian tax laws do not
allow taxation on non-Indian assets traded outside India. (सव�� ायालय ने पाया िक इन ��तयों म� कर
माँगना भारतीय कराधान कानूनों के अ�धकार �ेत्र से बाहर ह�।)
⇒ 2012-May: UPA/Congress government amended the Income Tax Act 1962 with retrospective /
Ex post facto effect that “even if non-Indian assets (e.g. Shares of Cayman Company) traded
among Non-Indians (Netherland and Hongkong walli companies), but IF the underlying value is
derived from Indian asset (Hutch) then then we can tax it.” (2012 म� सरकार ने क़ानून म� सं शोधन िकया है
तािक 2007 क� लेनदेन पर पूवर् प्रभावी/भूतल�� प से कर/टे� माँग सके )
⇒ (Definition) Respective taxation= It is an act of demanding tax on a transaction that occurred in
the past, when such transaction was not taxable. e.g. in 2012- demanding tax on 2007’s event,
even though in 2007 it was not taxable as per law in 2007. (पूवर्प्रभावी/भूतल�ी कराधान यानी क� कोई ऐसी
भूतकाल क� लेनदेन पर कर माँगना, �जसपर उस भूतकाल म� क़ानून �पसे कर नहीं लगता था)
⇒ Then Govt issued fresh notices against Vodafone “now any transactions that occurred after 1962
are also taxable. So you pay tax + penalties“
⇒ Separately, India had signed an investment treaty with Netherlands. Such investment treaties
allow the aggrieved investor to complain in the specialised international tribunals at Singapore,
Netherland, etc So, Vodafone (its Netherlands subsidiary company) filed case against Indian
Government in Netherlands. (िद्वप�ीय �नवेश समझौतों के अंतगर्त यिद �वदेशी �नवेशक भारत ने नाराज़ है तो वो �नवेशक
�वदेश म� उसके बारे म� के स कर सकता है. वोडाफ़ोन कं पनी ने भारत के �ख़लाफ़ नीदरल�ड म� के स दायर िकया.)
⇒ The then Gujarat chief Minister had Modi called it “Congress/UPA’s Tax Terrorism on
Companies” (उस समय के गुजरात मु�मं त्री मोदी ने इसे कांग्रेस सरकार का कर-आतं कवाद बताया था)
24.5.1 (🍋🍋🍋🍋🍋🍋:⌛) � Retrospective Tax: Cairn Energy

Cairn Energy Company’s case is also similar to Vodafone Hutch case. Income tax dept was
demanding Capital Gains Tax. Cairn complained to Netherland Arbitration Court under the
provisions of India Britain bilateral investment Treaty. (Such treaties allow the aggrieved investor to
complain in the specialised international tribunals at Singapore, Netherland, etc.)
⇒ 2020-21: Netherland Arbitration Court had ordered Indian govt to pay $1.2 billion to Cairn
Energy for tax harassment. (नीदरल�ड क� कोटर् ने भारत सरकार पर एक �ब�लयन डॉलर से �ादा का जुमार्ना डाला)
⇒ To recover this $1.2 billion compensation, Cairn company was trying to seize Indian Govt's
assets in foreign countries e.g. Air India planes parked on USA Airport, Indian Govt’s embassy
office/properties in Paris etc. (कं पनी मुआवज़े क� वसूली के �लए भारत सरकार क� �वदेशों म� ��त सं प��यों पर
क़�ा/नीलामी चाहती है)
⇒ 2021-Aug: FinMin introduced a Taxation Laws (Amendment) Bill, 2021 to end retrospective tax
rule-( �वत् मं त्रालय का कराधान क़ानून सं शोधन अ�ध�नयम २०२१- �जसम� पूवर्प्रभावी/भूतल�ी कराधान को रद्द िकया)
⇒ “If indirect transfer of Indian assets occurred before May 28, 2012, then Indian government will
not demand taxes on it. (2012 से पहले �ए इस प्रकार के लेन देन पर कोई भूतल�ी कराधान नहीं माँगा जाएगा।)
⇒ If income tax authorities had collected any taxes from such companies, then Indian government
will be refund the money to the victim-company (with 0% interest). (यिद आयकर �वभाग ऐसा भूतल�ी
कर/टे� ले चुका है तो उस पीिड़त क�नी को वो रक़म वापस करेगी। िक�ु उस रक़म पर सरकार उ�� ाज नहीं देगी।)
⇒ however it requires that company need to drop the cases against Indian tax authorities, filed in
the Indian and foreign courts. (हालाँिक इस �रयायत म� शतर् ये है, िक कं पनी ने भारतीय सरकार के �ख़लाफ़ जो जो मुक़दमे
भारतीय और �वदेशी अदालतों म� दायर िकए ह�, उ�� वापस लेना होगा।)
⇒ 2021-Sept: Cairn agrees to drop cases filed against India in France, Netherland, USA etc. And
government of India agreed to drop the (retrospective) tax demand against Cairn. Vodafone also
planning to do similar. (उन �वदेशी कं पनीयो ने भारत सरकार के �ख़लाफ़ �वदेशी अदालतो म� दजर् िकए के सों को वापस �लया)
24.5.2 (🍋🍋🍋🍋🍋🍋:⌛) � Retrospective Tax: Conclusion

⇒ While the retrospective tax demand was raised to deal with the problem of tax avoidance by
foreign companies who engaged in the indirect transfer of Indian assets through sale/purchase of
Shell Companies in Tax Havens. (�वदेशी कं प�नयों द्वारा भारतीय स��यों क� परो� �प से ख़रीद/�बक्र�/ह�ांतरण द्वारा
कर-प�रहार/ कर-टालने क� प्रवृ�त पर रोक लगाने के �लए भारत सरकार ने पूवर्प्रभावी/भूतल�ी कराधान क� माँग थी।)
⇒ But, after the ruling of international tribunal in Cairn Case, this was creating more problems
than the benefits for the Government. (िक�ु अंतररा�ी� य िट��ूनल के फ़ै सले के बाद यह पूरा मसला, भारत सरकार के
�लए फ़ायदे से �ादा नुक़सान वाला सा�बत हो रहा है।)
⇒ So, Govt has decided to undo the past amendments of 2021. As per our Hon’ble Prime Minister,
"We undid a mistake of the past by removing retrospective tax. It will increase trust between the
government and the industry.” (इस�लए भारत सरकार ने पूवर्प्रभावी/भूतल�ी कराधान रद्द िकया है और माननीय
प्रधानमं त्री के अनुसार इस से उद्योग जगत और सरकार के बीच �व�ास सं पादन बढ़ेगा)
⇒ Need of the hour is to pass the global minimum tax regime at earliest to put an end to such tax-
avoidance practice of Multinational Corporations (MNC) ( वै��क �ूनतम कर प्रणाली को अग्रता क्रम से
िक्रया��त करना ज़�री है तािक ब�रा�ी� य कं प�नयों द्वारा इस कर प�रहार िक वृ��यों को रोका जा सके .)
�❓Which one of the following situations best reflects “Indirect Transfers” often talked about in
media recently with reference to India ? (Prelims-2022)
(a) An Indian company investing in a foreign enterprise and paying taxes to the foreign country on
the profits arising out of its investment
(b) A foreign company investing in India and paying taxes to the country of its base on the profits
arising out of its investment
(c) An Indian company purchases tangible assets in a foreign country and sells such assets after their
value increases and transfers the proceeds to India
(d) A foreign company transfers shares and such shares derive their substantial value from assets
located in India
24.6 🍋🍋🍋🍋🌐🌐:🤵🤵 GLOBAL MINIMUM TAX (वै��क �ूनतम कर)
⇒ (Introduction: Origin) Tax Haven/Low Tax nations such as Luxembourg (Corporation Tax:
1.39%), British Virgin Island 0.07%, Cayman Islands 0.2 %. These countries are geographically
small, & without a viable economy. So they offer such a mechanism to attract foreign investors
and foreign tourists. (कर �गर् ऐसे देश ह� जहां पर प्र�� करों क� दर ब�त कम होती है तािक �वदेशी �नवेश और �वदेशी
पयर्टकों को आक�षत िकया जा सके )
⇒ Multinational corporations register their company here to transfer their profits/avoid paying
taxes to normal countries where they are operating. India is losing annually $100 cr, while USA
is loosing annually $500 cr by this. (ब�रा�ी� य कं प�नयां ऐसे कर �गर् क� मदद से कर-प�रहार/करो को टालती है.)
⇒ USA: Former President Donald Trump ⏬decreased corporation tax from 35% to 21%. New
President Joe Biden aims to ⏫taxes for Corona-welfare schemes for Americans. Biden also
urged G20 group of countries to keep minimum level of Corporation taxes. (Given in next topic)
24.6.1 🍋🍋🍋🍋🌐🌐:🤵🤵 Global Minimum Tax: G7 Framework

G7 Summit-2021: The theme is ‘Build Back Better’. Venue: Cornwall, England. Members: US, UK,
France, Germany, Italy, Canada and Japan- with following outcomes:
⇒ Companies need to pay in the countries where they do business.(कं पनी �जस देश म� धं धा �ापार कर रही है
वहां उसने कर देने होंगे)
⇒ G7 framework/agreement for global minimum tax framework of 15%. (ब�रा��ीय क��नयों पर �ूनतम 15
प्र�तशत कर/टे�)
⇒ In the past, countries engaged in a tax-reduction race, to attract FDI investments. This needs to
be discouraged. (�वदेशी �नवेश को आक�षत करने के च�र म� अलग अलग देश अपने करो क� दरे कम िकये जा रहे थे. इस
�धार् को रोकना होगा)
⇒ Later such treaty may be used for imposing sanction / international lawsuits /armtwist tax
havens to increase their taxes. Then it'll become difficult for companies to avoid paying taxes.
(भ�व� म� इस प्रकार क� सं �ध द्वारा छू ट-भै�े कर-�गर् देशों पर प्र�तबं ध /दंड/अंतररा��ीय मुकदमे चलाए जाएं गे। तािक वे भी अपने
करो क� दर� बढ़ा द�. अंतत: ब�रा��ीय कं प�नयों के �लए कर-प�रहार मु��ल होगा।)
⇒ 2021-Jul: India supported the idea.
24.6.2 🍋🍋🍋🍋🌐🌐:🤵🤵 G7-OECD “Two” Pillar Solution for Global Minimum Tax
For implementation of above G7 15% Global Minimum Tax Framework → OECD has given “Two-
Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy.“
- Pillar1- Applies to ~100 biggest and most profitable multinational enterprises (MNEs).
o They need to re-allocates “X%” of their profit to the countries where they sell their
goods/services. (So, such govt can count that profit & demand Corporation Tax on it.)
o All member-nations to remove all Digital Services Taxes. (e.g. India will have to remove
equalisation levy/google tax. REF: Handout Pillar#2A1- Direct Taxes.)
- Pillar2: Applies to any company with over 750 million EURO annual revenue. They would be
subject to an minimum 15% tax (on their profit).
24.6.3 🍋🍋🍋🍋🌐🌐:🤵🤵 Conclusion- Global Minimum Tax: �न�षर्

- indeed this is a positive development/step to combat the problem of tax avoidance via base
erosion and profit shifting by the multinational corporation.
- India along with 130+ countries have supported/joined the OECD/G-20 statement.
- This will help channelising the profits and taxes from the multinational corporations for the
development/welfare of poor living in the developing nations. (वाक़ई एक प्रसं श�नय कदम, ब�रा��ीय
कं पनीयो के कर प�रहार को रोकने, उनके मुनाफ़े मे से टे� द्वारा �वक�सत देशों मे गरीब क�ाण योजनाएँ चलानेम� मदद होगी)
24.7 🍋🍋🍋🍋🍋🍋🍋: � REFORMS TO REDUCE TAX TERRORISM / HARASSMENT
We learned about the reforms to fight “Tax evasion” → ban on cash transaction of ₹ 2 lakh / >, -
Operation Clean Money etc. So, on one hand, Income Tax Department has to become 😡😡😡😡strict /
coercive to fight against Tax evasion. At the same time, IT dept. also needs to become more
🤝🤝🤝🤝friendly towards honest taxpayers, So, following measures taken→ (कर आतं कवाद उ�ीड़न)
24.7.1 🍋🍋🍋🍋🍋🍋🍋: �: � Cash Transaction Limit Relaxed for Corona

⇒ Previously, Govt banned cash transactions beyond ₹2 lakh to discourage scope of tax evasion &
black money. करचोरी व कालेधन पर रोकथाम के �लए दो लाख से अ�धक रकम के नगदी लेनदेन पर प्र�तबं ध था.
⇒ But coronavirus wave 2.0= CBDT allowed hospitals to accept cash payments in excess of Rs 2
lakh from patients or relatives. Although hospitals will have to keep a transaction record with
PAN/Aadhaar. हालाक� कोरोना महामारी म� हॉ��टलों को इस मात्रा से अ�धक नगदी लेने क� क� छू ट दी गयी.
⇒ 2021-June: if employer/anyone gave upto Rs.10 lakh money for worker/patient’s corona
treatment= it’ll not be counted as taxable income of that worker/patient
24.7.2 🍋🍋🍋🍋🍋🍋🍋:🧾🧾 Pre-filled online forms for Tax Payers

Income Tax dept extract your financial data from Banks, NBFCs , Stock exchanges, Mutual Funds,
EPFO, Employers’ TDS submissions etc. → provides you with a Pre-filled tax returns containing
your salary income, capital gains from share/bond, bank interests, etc. (पहले से भरा �आ फॉमर् आपको दे द�गे)
1) 🤩🤩Income tax payers’ time and energy saved. He’ll not have to consult Chartered Accountant
for every small matter on how to fill form.
2) 🤩🤩Accuracy of reporting income and paying taxes.
24.7.3 🍋🍋🍋🍋🍋🍋🍋:🧾🧾Updated Return Form to correct errors- in 👜👜👜👜Budget-2022:

- Sometimes, after filling up the Income tax form, the taxpayers may realize he committed mistakes
in reporting his income. So, 👜👜👜👜Budget-2022 announced a new ‘Updated Return Form’ to
provide an opportunity to correct such errors, within two years of filling the original details. (कभी कभी
करदाता फ़ॉमर् म� अपनी आय �लखने म� गल�तयां करता है। तो दो साल के भीतर वो उसे सुधार कर सके , एसा नया फ़ामर् जारी िकया जाएगा)
24.7.4 🍋🍋🍋🍋🍋🍋🍋:🧾🧾 Faceless interaction between Tax payers and Tax official
Personal interaction between the assessee and Income Tax official = more chances of harassment /
bribery. So, Government launched following reforms:
1) Cases will be allotted in random computerized lottery basis to IT officials without disclosing the
name, designation or location of the Officer.
Table 3: कर अ�धकारी और करदाता के �ब� मुलाकात/सं पकर् �बना आकलन और अपील कारर्वाई
Year Scheme meaning

2019 Faceless  Example, taxpayer/assessee received a notice about discrepancy in
Assessment his reported income vs TDS submitted by his banker, then at initial
stage assessee need not visit IT-office, simply give clarification in
web-portal. (फे सलेस: �बना प्र��/�ब� मुलाकात के �नधार्रण)
2020 Faceless  So, even in appeal stage, assessee need not physically visit IT
Appeals commissioner / tribunal. It’ll be done online.
Scheme  all Income Tax appeals will be finalised in a faceless manner. Except
those related to serious frauds, major tax evasion, sensitive matters,
International tax etc. के वल बड़े और सं गीन मामलों म� ही �ब� सुनवाई होगी
24.7.5 🍋🍋🍋🍋🍋🍋🍋:🧾🧾⏰ Time limit on opening of past cases

Before After 💼💼Budget-2021
(ordinary) Tax 6 years 3 years (=No need to live in fear for very long time) e.g.
assessment case can be mismatch in TDS submitted by buyer/employer vs income tax
re-opened up to _ _ return form filed by the individual etc. सामा� िक� के कर
years → �नधार्रण/कर �वसं ग�तयों के मामले �सफर् �पछले 3 साल तक खोला जा सकता है.
Serious tax fraud 10 10 years BUT ONLY IF matter is worth ₹50 lakh or
case गं भीर कर धोखाधड़ी के years more (=Small taxpayers will be saved from tax terrorism/
मामले → harassment)
24.7.6 🍋🍋🍋🍋🍋🍋🍋:🧾🧾 Document Identification Number (DIN: द�ावेज़ पहचान सं �ाक)
Whenever Tax official sends letters to taxpayers regarding search authorisation, summons, arrest
memo, inspection notices etc. All such documents will have computer generated ‘Document
Identification Number’ (DIN).
 2019: Both Central Board of Direct Taxes (CBDT) and Central Board of Indirect Taxes and
Custom (CBIC) started this practice.
DIN system benefits?
 It’ll create a digital directory of communication between tax authorities and taxpayers.
Transparency, accountability, efficient and faster clearance of cases, because all the information
available at the click of a mouse. (पारद�शता, जवाब देही, कायर् द�ता, के सों का ��रत �नपटान)
 If a document doesn’t have DIN number, it’ll be treated invalid. Thus, DIN system will prevent
the corrupt tax officials from sending fake notices to harass/blackmail taxpayers for bribes.
Sidenote: Director Identification Number (DIN): Director of every company is required to obtain
this number from the Ministry of Corporate Affairs under the provisions of Companies Act. It helps
monitoring the company act provisions related to “1 person can’t be director in more than ‘x’ number
of companies” etc.
24.7.7 🍋🍋🍋🍋🍋🍋🍋:🧾🧾⏰ Reducing Tax Terrorism: Misc. Committees

Rajaswa Gyan Sangam Organised by CBDT & CBIC for idea exchange between policy makers
2016 & 2017 and senior tax officers. (�वचार/सुझावों के आदान प्रदान के �लए)
2016: Modi gave them RAPID Mantra: R for Revenue, A for
Accountability, P for Probity, I for Information and D for Digitization.
Direct Tax Code 2010 This bill aimed to replace the Income Tax Act, 1961 with simpler
provisions. But, lapsed with 15th LokSabha dissolution in 2014.
Easwar Panel on Direct To simplify the provisions of IT Act, 1961, to remove ambiguities that
Taxes 2015 cause unnecessary litigations & hardships to Taxpayers.
Direct Tax Code - 2017: Setup by CBDT to draft New Direct Tax Legislation (Law) to
Taskforce 2017 replace IT Act 1961. → 2019: submitted report (📑📑Ref: Pillar#2A)
(Akhilesh Ranjan)
24.8 📯📯🍋🍋📜📜 TAXPAYERS’ CHARTER IN 💼💼 BUDGET-2020 (करदाताओ का अ�धकारपत्र)
A citizens’ charter (नाग�रक अ�धकारपत्र) is a document of commitments made by a government agency

to the citizens in respect of the services being provided to them.
⇒ e.g Dept of Post's citizen charter reads, "we'll deliver speed post anywhere in India by 4-5 days
→ELSE complain online to this website & we'll solve it → if not solved in 90 days then complain
to Postmaster General → then to Chief Postmaster General.”
⇒ Traditionally tax administrations paid limited attention to taxpayer service. पुराने जमाने म�/पारंप�रक �प
से कर-अ�धकारी "करदाता को अ�� सेवा देना" अपनी �ज�ेदारी नहीं समझते थे. घमं ड और बे�ख़ी से काम करते थे
⇒ However, Modern times → ⏫demand for better services to the taxpayers → Govts across the
world, started framing charters and bill of rights for the taxpayers. हालांिक आधु�नक �व� म� इस प्रकार के
अ�धकार पत्र और कानून बनाए गए ह�
1986 UK charters for taxpayers (करदाताओं का अ�धकार पत्र) → more updated 2009
1991  1991: citizen charter system started in UK by PM John Major
 1997: citizen charter introduced in Indian union ministries/departments.
(नाग�रकों का अ�धकार पत्र)
1988 USA Taxpayers’ Bill of Rights (करदाताओं के अ�धकारों का �वधेयक/कानून)
2007 Canadian taxpayers’ Bill of Rights
2020 💼💼 Indian Budget-2020: CBDT will declare a Taxpayers’ Charter. So, Tax payer
will easily know what services / complaint redressal mechanisms (�शकायत �नवारणतं त्र)
are available to him= ⬇taxpayer’s harassment (करदाता का उ�ीड़न)
24.8.1 📯📯🍋🍋📜📜 (Indian) Tax Payers' Charter released in 2020-Aug
It promises following things to taxpayers: करदाताओं को वादा करता है
1. You'll be treated in an impartial,courteous, professional manner. �न��, �वनम्र और पेशेवर तरीके से �वहार
2. You'll be treated/ presumed to be honest, unless there is a reason to believe otherwise. आपको
ईमानदार माना जाएगा।
3. We will provide complete and accurate information about rules & complaint mechanism etc a
timely fashion.�नयम/�शकायत दजर् कराने स��ी जानकारी
4. We will collect only correct amount of tax. (के वल सही रा�श ली जाएगी। ज़बरन �ादा रा�श नहीं ली जाएगी।)
5. We will respect your privacy and confidentiality �नजता व् गोपनीयता का स�ान
6. We will hold our officers accountable for their wrongful actions. अ�धका�रओ को गलत काय� क� सजा द�गे
7. You can appoint a representative / tax lawyer to file replies/complaints//cases on your behalf.
मामले दजर् करने के �लए एक प्र�त�न�ध / कर वक�ल �नयु� कर सकते ह�।
8. We'll reduce cost of compliance (e.g. number of forms to be filled, photocopies to be submitted
etc) अनुपालन क� लागत कम कर�गे- फ़ालतू म� द�ावेज़ो क� दजर्नों कॉपी �नकालके फ़ॉमर् के साथ जोड़ने पड़े- एसे तमाशे बं द कर�गे.
9. +many other points but we have sufficient content for 250 words
It expects following things from taxpayers: Be honest, Pay taxes in time, Keep accurate records, be
informed, respond to notices in time when notices are given. (करदाताओं से �न� अपे�ा करता है क� वे ईमानदार
रह�, समय म� करों का भुगतान कर�, सटीक �रकॉडर् रख�, सू�चत रह�, समयसर नोिटस का जवाब द�)
24.8.2 ✍ 📯📯🍋🍋📜📜 Conclusion: Tax Payers' Charter

Thus, taxpayers' charter will help in building trust between a tax payer and the tax administration
while reducing harassment and litigation. (करदाताओं का चाटर्र/अ�धकारपत्र आने वाले समय मे करदाता और कर प्रशासन
के बीच �व�ास/सौहादर् बढ़ाने मे तथा, उ�ीड़न और मुकदमेबाजी को कम करने मे मदद करेगा)
24.9 🍋🍋🍋: �� TAX OMBUDSMAN IN 📔📔📔📔 ECONOMIC SURVEY 2021

‘Ombud’ is a Swedish term and refers to a person who acts as the representative or spokesman of
another person. 1809: The institution of Ombudsman was first created in Sweden- to look into
citizens grievances (लोकपाल/लोक प्रहरी- नाग�रकों क� �शकायतों के �नवारण के �लए)
✅Homework: READ about Lokpal and Lokayukta
24.9.1 🍋🍋🍋: ��Tax ombudsman: Indian experience

2003 Direct Tax Ombudsman In India Started (प्र�� करों के �लए कर-लोकप्रहरी/�शकायत �नवारण अ�धकारी)
2011 Indirect Tax Ombudsman In India Started (अप्र�� करों के �लए)
2019 Above posts were abolished (दोनों पदों को समा� कर िदया)
24.9.2 😰😰problems in previous Ombudsman system (2003-19)?

⇒ Above ombudsmen were tax officers, who were given additional responsibility by the
government to inquire into grievances/ complaints against other tax officers. They did not have
independence from Senior officers/ministers. There was no separate law to empower them. (वे
�यं भी कर-अ�धकारी थे, कानूनन �प से कोई सता नहीं दी गई थी, इस�लए अ� अ�धका�रयों के �खलाफ �न�� प से जांच या
सजा कर नहीं पाते)
⇒ They could only settle the complaint through advice/mediation between the citizens and tax
officials. (मात्र सलाह/सुलह द्वारा �नपटान)
⇒ They could only offer a token compensation upto ₹5,000 to victim. Thus, failed to deliver any
result and both the posts were abolished in 2019. (पीिड़त को मुआवजे म� ब�त मामूली रकम दे पाते)
At present, Direct Tax Payer can complain to
Mode Organisation 😰😰Challenges?

Physical Aaykar Sewa Kendras Under Income It falls within the Income Tax Department so
Tax Department difficult to ensure impartiality. (यह इकाइयां आयकर
Online e-nivaran portal Under Income Tax �वभाग के अंदर ही है, इस�लए �न��ता मु��ल)
Department
Online CPGRAMS Portals (Central Public It looks into Complaints against all types of
Grievance Redress and Monitoring ministries and departments so long delay in
System) Under Ministry of resolution. (सभी मं त्रालयों क� सभी िक� क� �शकायत� देखता
personnel and training. है इस�लए काफ� देरी से जांच होगी)
24.9.3 🍋🍋🍋: ��Tax Ombudsman: Global experience

USA, Canada, Australia, Canada, UK, France, Brazil, South Africa etc Countries have separate
laws/mechanisms for setting up a tax ombudsman. So they can function independently without
undue pressure & without conflict of interest. (e.g. If the tax ombudsman's promotion/salary bonus
depends on the whims of IRS officer/Finance Minister then he'll not act impartially.) �बना िकसी के दबाव
म� या �बना िकसी िहतों के टकराव म� �न�� प से अपना कायर् कर सक� ऐसे कानूनी प्रावधान/सुर�ा दी गई
24.9.4 🍋🍋🍋: �� Tax Ombudsman: Conclusion / way forward (�न�षर्/आगे का रा�ा)

⇒ Tax Terrorism / Non-resolution of tax grievances discourage the taxpayers from being honest in
future. This encourages tax evasion, black money and parallel economy.
⇒ International experience suggests a tax ombudsman, with powers to investigate, punish &
compensate, is necessary for enforcing taxpayers' charter. (अंतररा�ी� य अनुभव से प्रतीत होता है िक करदाता के
अ�धकार पत्र का अनुपालन वा��वक �प से करने के �लए एक कर-लोक प्रहरी होना चािहए- �जसके पास जांच, सजा और मुआवजा
देने क� सता हो)
⇒ Need of the hour is to set up this institution through a separate law, punitive powers, so as to
ensure its impartiality and independence and effectiveness. (अग्रता क्रम से सरकार ने एक अलग कानून द्वारा
इसे बनाना चािहए तािक �न�� तं त्र और प्रभावी �प से कायर् हो सके .)
24.9.5 🍋🍋🍋: Reducing Tax Terrorism / Harassment: online portals/Apps

Aaykar Setu - 2017: CBDT’s mobile app for Income Tax, TDS refunds etc.
Ease in paying Customs 1. Indian Customs Electronic Gateway (ICEGATE) webportal for e-
Duty services related to the Customs duty.
: 2. ICEDASH webportal: public can view daily data on customs
Portals/Apps by CBIC
clearance at seaports and airports. (launched 2019-Nov)
3. ATITHI mobile app: for international travelers to file the customs
declaration in advance (e.g. ‘we are leaving or coming with “x” gms of
gold/diamonds/electronics etc on which y% customs duty is
applicable/exempted’). So, they don’t have to waste time at airport
queues in filing such declarations. (launched 2019-Nov)
Transparent Taxation - 2020-Aug: PM Modi launched this webportal/online platform with
Honouring the Honest following components:
पारदश� कराधान- ईमानदार का ⇒ Taxpayers’ Charter.
स�ान करना
⇒ Automated Random/lottery allocation of investigation cases.
⇒ Faceless assessment & Faceless appeal. No requirement of physical
interface between taxpayers and the Income Tax department.
Turant Customs ⇒ By Central Board of Indirect Taxes and Customs (CBIC)
⇒ Turant Customs initiatives= Faceless, Paperless, and Contactless
Processes / Application Forms, Assessment, Appeal etc for importers
and exporters
⇒ It is to be implemented phase wise across India by 2021.
24.10🍋🍋🍋🍋🍋🍋TAXATION → GLOBAL TREATIES, AGREEMENTS & INDEXES

24.10.1 🍋🍋🍋🍋🍋🍋 Tax Information Exchange Agreement (TIEA: कर सूचना �व�नमय समझौता)
➢ India has signed such agreements with multiple countries. It enables mutual sharing of
information to detect tax avoidance and tax evasion. Example,
➢ 2019: India has notified a tax information exchange agreement (TIEA) with the Marshall Islands.
➢ From Indian side- CBDT is the the nodal agency for such agreements.
24.10.2 🍋🍋🍋🍋🍋🍋 USA’s Foreign Account Tax Compliance Act (FATCA-2010)

�वदेशी खाता कर अनुपालन अ�ध�नयम
➢ USA’s FATCA Act requires foreign financial Institutions (such as Indian Banks, Pakistani
Insurance Companies, Chinese Mutual Funds etc) to report the assets held by Americans.
➢ This helps US Tax authorities to detect tax avoidance / evasion by Americans
24.10.3 🍋🍋🍋🍋🍋🍋 Global Financial Secrecy Index (वै��क �व�ीय गोपनीयता सूचकांक)
➢ Prepared by London based Think Tank ‘Tax Justice Network (TJN)’.
➢ It uses 20 indicators to measure the countries on their financial secrecy, opportunities for Tax
Avoidance, BEPS etc. 2020 Ranking: 1st rank Cayman Islands>USA> Switzerland,….India (47).
➢ Its report says India is losing over $10 billion in taxes each year due to MNC’s tax abuse.
24.11💸💸BLACK MONEY → DEMONETISATION (�वमुद्रीकरण)
Definition? Demonetization is the wholesale withdrawal of currency notes from circulation. (मुद्रा-
चलन म� से कु छ खास िक� क� नोटों को हटा देना)
 RBI Act 1934: Every banknote is a legal tender. However, RBI Central Board can recommend
the Government of India to notify specific currency note(s) should no longer be treated as legal
tenders. Then FinMin → Department of Economic Affairs makes official gazette notification.
 1946: ₹ 500 Notes demonetized; 1978: ₹ 1000, ₹ 5000, ₹10000 Notes demonetized.
 2016-Nov-8th: Public was ordered to deposit the (old) Mahatma Gandhi series currency notes ₹
500 and ₹ 1,000 (henceforth called “Specified Bank Notes: SBN”) into Banks and post-offices
latest by 30th December 2016. And all the banks and post offices where ordered to deposit such
SBN into RBI.
 Specified Bank Notes (Cessation of Liabilities) Ordinance:
- From 31st December 2016, RBI Governor not required to honour “I promise to pay…”
or exchange the SBN. Except for NRIs: deadline little bit relaxed, with certain caveats.
- Public prohibited from keeping SBN, except for research or numismatics or museum-
and that too in limited amount. This ordinance became Act in 2017.
 India is not the only country in the world to do demonetisation. Sweden ( 2013), European
Union ( 2016) and even Pakistan (2015) has done it for their currency notes.
24.11.1 💸💸Why Demonetise ₹ 500 & 1000?
 Demonetization is usually done in the aftermath of hyperinflation, war & regime-change.
 India did it to combat Corruption, Black money, Counterfeiting and Terror finance .
भ्र�ाचार, काला धन, जाली नॉट,आतं क का �व�पोषण
 We had 12.04% Cash to GDP ratio, one of the highest in the world. Currency printing &
transportation cost alone was 1.7% of GDP.
 “Soil rate” is the rate at which notes are considered to be too damaged to use and returned to the
RBI. (�बगड़े/फटे �ए नोटों को �रजवर् ब�क म� बदलवाना)
 For ₹ 500 & 1000 SBN-notes, soil rate was much lower than the currency notes of ₹ 10 to 100.
(implying that 500-1000 SBN were used for ‘storing black money’, rather than in transactions.)
 So, experts made mathematical comparison of the foreign countries’ economic development,
soil rates of their foreign currency notes etc. and arrived at a figure ₹ 3 lakh crores of Indian
black money is stored in SBN (=2% of GDP).
 So if SBN were demonetised, the black money holders will not return their currency notes into
banks (fearing IT-RAIDS) and thus black money will be destroyed. (काला धन �यं तबाह हो जाएगा)
 But in reality, ~99.30% of the SBN were returned back into the banking system, so hardly ₹
10,720 crore of black money was destroyed by the demonetisation of 2016.
24.11.2 💸💸How did 99.30% SBN returned into banking system?

If the mathematical modelling was correct, then only 80% of the SBN should have returned back, &
20% SBN (presumed to be Black Money) should not have returned. But, Black money owners used
following tricks to deposit their SBN in bank accounts:
1. Businessmen / Politicians used their drivers, cooks, gardeners, personal staff members and
relatives as ‘money mules’. This is evident from exponential rise in the deposits in Pradhan
Mantri Jan Dhan bank accounts. (धनं ख�र/टट्ट� के �प म� इ�ेमाल िकया)
2. SBN were given out as “loans” to poor & as advance salaries to workers.
3. Agents who tied up with corrupt bankers who exchanged SBN without KYC verification.
4. SBN deposited in Cooperative Banks as back-dated Fixed Deposits, because Cooperative Banks
didn’t use Core Bank Solution (CBS) so it was possible to temper records.
5. SBN deposited in banks and then shown as income from sale of (fictitious) grain stock etc. So,
IT-dept can’t demand tax on it (and most state governments not levy tax on agricultural income
due to populism/vote bank politics). (फज� तरीके से आए को कृ �ष �ोत से आया �आ बताया)
6. SBN deposited in shell companies & shown as income from (fictitious) sale and invoices.
7. SBN donationed to trust, temples & political parties with backdated receipts (and those entities
are exempted from Income Tax on their income.)…. And so on
24.11.3 💸💸99.30% SBN returned, but Demonetization not failed experiment because:
✓ Those who could not return their SBN, have lost their black money (₹ 10,720 crore)
✓ Those who used poor people are money mules- must have paid some commission to them. So
even if government did not get tax from black money, atleast poor people benefited. Thus,
indirectly demonetization helped in redistribution of wealth.
✓ Further, Operation Clean money, IT-dept issued notices to the suspicious bank accounts where
large amount of money was deposited. Such shell firms & their benami properties are seized.
✓ With Project Insight & Op. Clean Money: IT dept fetched ₹ 1.30 lakh crore in taxes and penalty,
attached ₹ 7000 crore worth Benami properties, ₹ 1600 crore worth foreign assets & de-
registered ~3.40 lakh shell firms. (says the Int-Budget-2019).
✓ The number of PAN card registration, IT returns, registrations under excise / VAT / GST have
greatly ⏫⏫ in the aftermath of demonetisation which proves that crooked people have
learned lesson. More than 1 cr. new IT assesses added in 2017.
✓ Tax collection ⏫⏫ from ~₹ 6 lakh crores (2013) to ~₹ 12 lakh crores (2018).
24.11.4 💸💸Demonetization: Impact as per Economic survey 2016-17

Area 😢😢 Short Term Challenges 🥰🥰 Long Term Benefits (दीघर् अव�ध के फायदे)
Banking Administrative challenges on Growth in the deposits → more loans can be given
the bankers to exchange the @cheaper interest rate, Less Cash economy &
banned notes, long queues associated benefits.
Real Estate Sale of houses ⏬ (मकानों क�Prices & rents of houses should ⏬.
�बक्र� म� �गरावट) Migrants will benefit.
Economy Job loss in cash-intensive Less-cash economy, digitization and formalization
at large sectors like diamond of economy, Bizmen getting GST registrations →
polishing, farm laborer, further surveillance → forced to show employees
MSME (बेरोजगारी) on paper → EPFO & ESIC benefits to worker.
Growth Slow down (�गरावट) Improvement (आ�थक वृ�द्ध दर म� बढ़ोतरी)
SELF-Study for Mains: Economic survey 2016-17 Vol1ch3, table 2 “impact of demoneti..”
24.12 📘📘📘📘ECONOMIC SURVEY ON TAXATION AND FISCAL CAPACITY (�व�ीय �मता)

The Economic Surveys of 2015, 2016, 2017 have repeatedly observed that
- Democracy is a contract. Taxation is the economic glue that binds government and citizens into
this contract. (लोकतं त्र एक अनुबंध है, कराधान एक आ�थक गोंद)
- But, whenever govt delivers poor quality of service in public schools, hospital etc. → middle
class & rich citizens will “EXIT” towards the pvt school & hospitals → Then they feel ‘moral
right’ to evade / avoid taxes, bcoz, they are no longer using public services.
- Result? hardly 4% of Indian voters are taxpayers (23% is desirable, as per our level of
development against BRICS nations. भारत के के वल 4% मतदाता करदाता है)
- Govt gets less taxes → poor fiscal capacity → poor services → vicious cycle continues and
results in ⏬ of govt’s accountability towards citizens. (सरकार क� जवाबदेही कम होती है)
24.12.1 🍋🍋🍋🍋 Tax: GDP – why low in India (भारत का कर:जीडीपी अनुपात खराब �ों है?)
1) Lack of civic sense among people that paying taxes is a basic duty. (देश के प्र�त कतर्� क� भावना नहीं)
2) Presence of informal sector, parallel economy, cash based economy provides ample
opportunities of hiding income. (नगदी आधा�रत अनौपचा�रक अथर्तंत्र)
3) Low per capita income, high level of poverty. Concentration of income in the hands of few
people- who are greedy to engage in tax evasion & avoidance. (देश क� �ादातर सं प�� चु�नदं ा लोगों के हाथों
म� क� िद्रत, जो �यं क� लालच म� कर जमा नहीं करते)
4) Election funding → source of corruption → black money. Politician-Builders-Mafia nexus.
5) Due to political considerations, state govts and local bodies do not levy all the taxes authorised
by the constitution e.g. tax on agricultural income. So our (direct) tax base is narrow. [Tax base:
कराधार means the total value of all the persons/income/property, etc. on which tax is charged.]
6) Loopholes in the tax laws encourage tax avoidance (कर कानूनों म� खा�मयां)
7) Direct taxes like wealth tax, gift tax and estate duty suffered from loopholes, lax monitoring and
evasion. They didn’t yield much revenue. Hence even referred as ‘paper taxes’, and had to be
abolished ultimately. (कागजी कर �जनसे वा�व म� नाम मात्र क� आमदनी होती थी)
24.12.2 🍋🍋🍋🍋 Tax: GDP 📘📘📘📘 ES19: “Use Behavioural Economics to improve Tax Compliance”
 Plato said, “What is honoured in a country, is cultivated there.” Indians join military because 1)
salary 2) because serving in the armed forces is considered ‘honourable’. (स�ाननीय)
 So, we should use the principles of Behavioral Economics to enhance tax compliance We’ve to
modify the social norm from “evading taxes is acceptable” to “paying taxes honestly is
honorable.” ((�ावहा�रक अथर्शा� के �सद्धांतों द्वारा कर अनुपालन म� बढ़ोतरी कराएं . कर भरना एक स�ाननीय कतर्� बने)
 Tax Morale: it is the motivation of taxpayers to pay taxes. (कर सं बं धी नै�तक मनोबल)
 When tax morale is ⏬ → motivation for tax evasion ⏫.
Table 4: Tax Morale is affected by two types of fairness
Fairness Vertical Fairness Horizontal Fairness
�न��ता (उ�ार्धार �न��ता �ै�तज) (�ै�तज �न��ता)
Tax Payer’s What I pay in taxes is commensurate There should not be a great difference
thought to the benefits I receive as services in the taxes paid by the ‘similar’
process → from the Government. sections of society.
His Tax He sees taxpayers' money wasted in If a salaried employee and a
morale is public expenditure (like Mayawati’s shopkeeper are earning ₹8 lakhs per
lowered when elephant statutes) instead of better annum, still the salaried employee is
→ quality of water, road, education or forced to pay more taxes than this
electricity. shopkeeper, because
- TDS on salary whereas shopkeeper
underreports his sales in cash
payment.
- Shopkeeper shows less profit
through fictitious business
expenditures.
Solution(s)  under-constructions projects  SMS, billboards highlighting self-
should show signboards “Your tax employed individuals who pay
money at work” good amount of tax.
 Reminding tax payers that public  Public shaming of individuals who
goods can only be provided in don’t pay taxes. It’ll scare other
return for tax compliance. Most tax-evaders that the probability of
people in your local community their detection has increased.
pay their taxes on time.  Avoid Tax Amnesties. Give
stringent punishment to tax
evaders.
Further, CEA Subramanian K. suggested:
 Top 10 highest taxpayers within a district → They should be given VIP-treatment such as faster
boarding privileges at airports, special “diplomatic” type lanes at immigration counters, fast-lane
on roads and toll booths, etc.
 Highest taxpayers over a decade → Important places should be named after them e.g. roads,
trains, schools, universities, hospitals and airports.
 In Hinduism, Islam and Christianity - unpaid debt is considered a sin. So, advertisements should
highlight how tax evasion is a violation of such “spiritual/religious norms”.
 Ease in Paying Taxes: Pre-populated Income Tax forms with easy to understand terms. Even if a
person’s tax liability is ZERO, he should be required to fill Income Tax form.
 Automated TDS as and where possible and timely release of Tax refunds.
@Hindi-Medium-Mains candidates: refer ES2018-19 Vol1 Ch.2 page52’s bullet
2.33 upto page 55’s box 5 to get the clean & formal vocabulary
24.12.3 🍋🍋🍋🍋 Tax: GDP: 15th Finance Commission on how to improve it?
⇒ Expand the scope of TDS/TCS to cover more number of transactions and find the tax
evaders. (�व�वध प्रकार के लेनदेन को टीडीएस/टीसीएस के दायरे म� लाया जाए तािक कर चोरी पर �नगरानी रखी जा सके )
⇒ 40% of the people who filed Income Tax forms in 2019-20 did not pay any income tax. Because
either: आयकर का फॉमर् भरने वाले 40% लोग असल म� आयकर नहीं जमा करते �ोंिक.
o the taxable income was very low (आयकर यो� आय ब�त कम है)
o they are hiding / underreporting income (आयकर फॉमर् म� कु छ आमदनी को छु पाया जा रहा है)
o because of tax-deduction & tax rebates. (वह �व�वध प्रकार के टै� िडड�न, टै� �रबेट का लाभ लेकर
अपने आयकर दा�य� 0 कर देते ह�)
o So, Government needs to address this. इस�लए �व�ा म� सुधार ज�री
Income Tax Rate Minimum Maximum Income Tax Rate Minimum Maximum
UK 20 45 Brazil 7.5 27.5

USA 10 40 Japan 5 45
Sweden 20 25 China 3 45
Australia 19 45 India, Indonesia 5 30
⇒ Article 276: Presently Constitution does not allow the state government to demand more than
₹2500 rupees per year as professional tax. Union government should amend the constitution to
increase the limit. 14th FC recommended ₹12,000 per year. (रा� सरकारों को �वसाय कर वसूलने क�
सं �वधान म� जो सीमा दी गई है उसे ढाई हजार से बढ़ाकर 12000 प्र�त वषर् िकया जाए)
⇒ Presently GST has four slabs 5-12-18-28. Rationalize it into just three slabs for more efficient
administration & relief to taxpayers (जीएसटी क� दरों क� सं �ा को कम िकया जाए)
o Merit rate (5%)
o Standard rate (by merging 12-18% slabs into a single figure may be 15-17%)
o Demerit rate (28-30%)
⇒ Govt should ⏬ the overreliance on indirect taxes (e.g. raising excise/VAT on petrol-diesel).
Increase the coverage of direct taxes of Union and State. (सरकार ने �व� प्रबं धन के �लए परो� करो पर अपनी
�नभर्रता को थोड़ा कम करना चािहए, प्र�� करो का �ाप बढ़ाना चािहए)
🔠🔠❓MCQ. Which of the following effects of creation of black money in India has been the main
cause of worry to the Govt of India? [काला धन भारत सरकार के �लए �चंता का �वषय �ों है] (Prelims-2021)
A. Diversion of resources to the purchase of real estate and investment in luxury housing [सं साधनों को
आलीशान बं गले खरीदने के �लए मोड़ िदया जाता है]
B. Investment in unproductive activities and purchase of precious stones, jewellery, gold, etc.[क�मती
जवाहरात सोने और गैरउ�ादक प्रवृ��यों म� �नवेश होता है]
C. Large donations to political parties and growth of regionalism [राजनी�तक प�ों को बड़ा चं दा िदया जाता है
और प्रांतवाद क� वृ�द्ध होती है]
D. Loss of revenue to the State Exchequer due to tax evasion [कर चोरी के चलते राज� आमदनी कम होती है]
24.13 🍋🍋TAXATION: MISC. TERMS
Laffer Curve - American economist Arthur Laffer: if (direct) tax rates are ⏫ above a
(लफ़र वक्र): certain level, then tax revenue collection will ⏬ because higher tax rates
discourage people from working and/or encourage them to evade tax.
- So, tax-cuts could lead to ⏫tax revenue collections.
- 💼💼Modi Budgets from 2017 onwards: The lowest Income Tax slab was cut
from 10% to 5%; The corporation tax on small sized companies was also
brought down from 30 % to 25% in a phased manner.
- 💼💼Budget-2020: new optional Income tax slabs.
- 💼💼USA Budget-2017: Corporation tax cut down from 35 % to 15%
Tax buoyancy - If GDP grew by x%, then how much % Income tax collection will grow?
(कर उ�ावकता): - E.g. if income tax collection growth rate is 11% when GDP growth rate is
10%, then Income Tax’s tax buoyancy is 1.1
Tax elasticity If first income tax slab increased from say 5% to 15%, then in absolute terms how
(कर ल�चलाता): much more IT-revenue will be generated?
24.13.1 🍋🍋 Net Tax Revenue of the Govt (शुद्ध कर राज�)
Sr. Budget → Revenue Receipts → Tax Receipts 💼💼Budget 2022-23
(Approx.)
A Union’s Direct taxes, incl. cess and surcharge 14.20 Lakh Cr
B Union’s Indirect taxes incl. cess and surcharge. 13.## Lakh Cr
(i.e. GST, Customs, Excise)
C Union territories without legislature: their direct and 7800 cr
indirect taxes: �वधानमं डल रिहत सं घ रा� �ेत्र
D Gross Tax Revenue (=A+B+C) सकल कर राज� 27 Lcr
E Minus the Tax devolution to States (कर ह�ांतरण) as (-) 8 Lakh Cr
per the Finance Commission
F Minus Contributions to National Disaster Response (-) 6400 cr
Fund in Home ministry**
D-E-F Net Tax Revenue of Union (शुद्ध कर राज�) +D-E-F= 19 Lakh Cr
**Public Account → National Disaster Response Fund (रा��ीय आपदा प्र�तिक्रया कोष) is a statutory fund under
Disaster Management Act, 2005. Previously, called National Calamity Contingency Fund (NCCF).
24.13.2 🍋🍋 Revenue Shortfall (राज� म� कमी)
Budget Estimates: बजट अनुमान BE-2020-21 Presented RE-2020-21 Shortfall: BE Minus RE
Revised Estimates सं शो�धत अनुमान on 1/2/2020 Presented on 1/2/2021 Amount in Crores
Total = Gross Tax Revenue 24,23,020 lakh cr 20,27,104 lakh cr. 😰😰3.95 lakh cr
इतना कमाने क� उ�ीद थी वा�व म� इसके आसपास इतना �आ राज� घाटा
⇒ Budget 2020 is presented on 1/2/2020 for the next financial year starting from 1st April 2020 to
31st March 2021. So, FinMin could have only made projections /estimations about how much
taxes will be collected during 1/4/20 to 31/3/21.
⇒ But throughout the year, based on the advance tax-collection figures & monthly GST collection
figures, FinMin will have to re-adjust the estimates.
⇒ 1/2/2021: Budget 2021 is presented for next FY-2021-22. Along with that, Govt will present
revised estimates for previous Financial Year (2020-21).
⇒ From the table we can see 2020-21: Gross Tax collection is less than expected (24 MINUS 20) =
~3.95 lakh crore is ‘Revenue Shortfall’, mainly because GST & Corporation Tax collection are
much less than expected due to slowdown in economy.
⇒ In 2021-22: There was no revenue shortfall. Government earned more tax revenue compared to
its budget estimates.
24.13.3 � Mock Questions for UPSC Mains (250 words each)

1. (GSM3-2021) Discuss how emerging technologies and globalisation contribute to money
laundering. Elaborate measures to tackle the problem of money laundering both at national and
international levels. चचार् क��जए िक िकस प्रकार उभरती प्रो�ो�गिकयाँ और वै�ीकरण मनी लॉ��ंग क� सम�ा म� योगदान
देते है। इनसे �नपटने के �लए रा��ीय व वै��क �र पे उपायों को �व�ृत क��जए।
2. (Asked in GSM3-2013) Money laundering poses a serious threat to country’s economic
sovereignty. What steps are required to be taken to control this menace? मनी लॉ��ंग देश क� आ�थक
सं प्रभुता के �लए एक गं भीर खतरा है। इस खतरे को �नयं �त्रत करने के �लए �ा कदम उठाए जाने क� आव�कता है?
3. What is retrospective taxation? Discuss provisions in Taxation Laws (Amendment) Act, 2021 in
this regard. (पूवर्प्रभावी/भूतल�ी कराधान �ा है? इस सं बंध म� कराधान सं शोधन क़ानून 2021 म� �ा प्रावधान िकए गए ह�?)
4. Despite being a trillion dollar economy, India's tax to GDP is quite low. Suggest ways to remedy
this contrast. (िट��लयन डॉलर क� अथर्�व�ा होने के बावजूद, भारत का कर:जीडीपी अनुपात काफ� कम। इस �वषमता को हल
करने के उपाय सुझाए).
5. Discuss the significance of taxpayers charter & tax ombudsman in the tax administration of
India. (भारत के कर-प्रबं धन म� करदाताओं के अ�धकार पत्र और कर-लोकप्रहरी/�शकायत �नवारण अ�धकारी के मह� क� चचार्)
6. Discuss the rationale behind introduction of a global minimum tax. How will it help countries
like India? (वै��क �ूनतम कर क� शु�आत के पीछे तकर् पर चचार् कर� । यह भारत जैसे देशों क� कै से मदद करेगा?)
24.14 📥📥📥📥📥📥 BUDGET → REVENUE PART → RECEIPTS → NON-TAX RECEIPTS
🚆🚆🚆🚆 Notable sources of Non-Tax revenue 2021- 2022-

22 23
✓ Interest receipts (�ाज प्रा��यां received on Union’s loans to states, railways, ~1.6 1.2
CPSE, foreign countries.) is a revenue receipt. [Had those borrowers repaid lakh Lcr
cr.
loan-principal, then that portion is ‘Capital Receipt.]
✓ Dividends and profits received from CPSE, PSBs, RBI. [Had Union sold its
shares to a third party (disinvestment / privatization) → that’s ‘Capital
Receipt’].
Union’s income from (Dividend & Profits) >> from Interests.
Income from selling various goods & services such as railways, postal services, ~1.4 1.3
selling of India Yearbook-, Yojana-Kurukshetra magazines, fees that CISF lakh Lcr
charges for giving protection to Private Airports, auction of spectrum & mining cr.
rights, selling of commemorative coins etc.
Grant in Aid (अनुदान)/ Donations received by Union. 1345 629
[If Union had received ‘loan’, it’ll be ‘Capital Receipt’.] cr.
Similar Non-tax revenue earned by UT without Legislature ~ 2500 2800
cr.
Sum of Above= Total Non-Tax Revenue Receipts कर-�भ� प्रा��यां 3 Lakh 2.7
cr
✋Figures are not important, but the fact is important that revenue budget: tax receipts >> non-tax
25 📤📤⏰ BUDGET → REVENUE EXPENDITURE (राज� खचर्/ �य)

- Expenditures spent on day to day functioning of the organs of the state =
- salaries & pensions, stationery, electricity bill, phone bill etc.
- in Executive, Judiciary, Legislature, Constitutional & Statutory bodies.
- Expenditures that do not create income generating assets or permanent assets or financial assets.
- Thus, money SPENT on loan-interests, subsidies, scholarships, grants etc. counted here
Notable Revenue Expenditures 2021-22 2022-22
Interest to be paid on previous loans is Revenue Expenditure. [Whereas 8.1 Lcr 9.40 Lcr
Union repays loan-principal, its ‘Capital Expenditure’]
- Finance Commission’s Grant-in-Aid (अनुदान) to States & Local Bodies 2.1 Lcr 1.92 Lcr
for Disaster Management, Panchayati Raj Development etc.
- Grant = Amt doesn’t have to be returned with Interest. (Whereas If
Govt gave ‘loans’ to States/CPSE/Foreign Countries then it’s an
income generating financial asset = counted under Capital
Expenditure).
Subsidies: 3.7 Lcr 3.56 Lcr
1. 🌽🌽Food subsidies
2. 🌽🌽🌽Fertilizer (Urea, Others)
3. ⛽Fuel (LPG, Kerosene)
4. Interest Subsidies on loans: Farmers (highest), MSME, Affordable
Housing, LIC Vay Vandana Yojana etc.:
5. Other (Price stabilization fund, Cotton & Jute etc.):
�Pension to retired employees ( 2.10 Lcr 2.07
➢ Economic services related revenue expenditure (Agriculture, energy, --some --some
transport, communication, Science technology) figures figures
Not imp Not imp
➢ Social services’ revenue expenditure ( health, education, social
security):
➢ Expenditure on Administrative machinery (Police, Jail, External
Affairs etc.), Elections, Parliament, Judiciary:
➢ �Defence revenue expenditure (e.g. soldier salaries, fuel for tanks)
➢ Revenue expenditures of UT without Legislature:
Total Revenue Expenditure कु ल राज� �य (approx.) 31.67Lcr 31.94
Total Revenue Receipts (Tax + Non Tax Receipts) कु ल राज� प्रा��यां 20.##Lcr 22
⚠ Revenue Deficit = Revenue Receipt MINUS Expenditure 10.08Lcr 9.90Lcr
Estimated nominal GDP for 2022-23 is ₹ 258 lakh crores. So Revenue 4.7% 3.8%
Deficit as a percentage of GDP = (9.90 divided by 258) x 100=
🔠🔠❓ As per the Budget 2019-20, the maximum subsidy expenditure was likely to be on _ _ _ (UPSC-CDS-
2020-ii) (a) urea subsidy (b) petroleum subsidy (c) food subsidy (d) fertilizer subsidy
25.1 📤📤⏰(🌽🌽⛽) REVENUE EXPENDITURE → SUBSIDIES

Tax Subsidies
Tax is a compulsory contribution imposed by A subsidy is a benefit given to an individual or
State. Refusal to pay the tax is punishable. firm by the government to reduce some type of
कर= रा� द्वारा लगाया जाने वाला कर एक अ�नवायर् योगदान है। burden. A person may refuse to accept the
करचोरी एक दंडनीय अपराध subsidy, he will not be punished.
Tax doesn’t promise specific and direct A specific benefit is promised e.g. 6000 to
goods/services to the taxpayer. (Mukesh farmers, idli@₹ 1 rupee in Amma Canteen
Ambani’s car will still suffer from potholes) (Tamilnadu).
25.1.1 📤📤⏰(🌽🌽⛽) Types of subsidies with selected examples
1. Given in direct cash (or bank transfer): PM KISSAN 6k for farmers, LPG Pahal ~200 per
cylinder. नगद म�.
2. Given in kind: free school bags, uniform and books to the poor children, free medicines in
public hospitals, free insurance. मु� व�ु या सेवा के �प म�
3. Indirect subsidies (परो�): cheap fees in government colleges, cheap kerosene, cheap urea, cheap
crop insurance premium etc. Here govt. is paying some money to an organization so they may
provide goods/services @cheap rate to the beneficiary.
4. Implicit Subsidies (अंत�निहत): Govt supresses the supply so to ⏫ the prices to help a sector. E.g.
Indian govt banned import of American chicken/poultry/eggs. So, shortage of chicken helps
local Indian poultry industry to demand high prices from public. Here Indian poultry receiving
‘implicit subsidy’ (from public), even though Govt is not paying them money. (More in
📑📑Pillar#3B -> WTO)
5. Cross-Subsidization (क्रॉस सहा�यक�करण): To keep rail travel cheap for the poor people, Railways
keeps the passenger tickets lower than its input cost. To compensate this loss, Railways keeps
freight (goods transport) prices higher. This is called “Cross subsidization” (More in 📑📑Pillar#5
Infra → Railways)
6. Regulatory (�नयामक) subsidies: e.g. if State Electricity Regulatory Commission directs companies-
that electricity to farmers must NOT to be beyond ₹ “x” per unit.
7. Procurement (खरीद) subsidies: e.g. FCI purchasing at food grains from farmers at minimum
support price (MSP). (More in 📑📑Pillar#4A -> AGRO)
8. Interest (�ाज) subsidies / subvention: govt pays “x%” interest on agriculture, MSME, affordable
housing loans.
25.1.2 � � Impact of Subsidies (स��डी का प्रभाव: सकारा�क एवं नकारा�क)
 � Merit Goods (लाभदायक व�ुऐ)ं : Healthcare, education, scientific research, LPG, solar panels,
wind mills etc. Here subsidies can increase the positive externalities. (Cheap LPG → poors don’t
use firewood → more trees & less indoor pollution.)
 � But subsidies on diesel, kerosene =negative externalities (नकारा�क बाह्यता) on environment.
 � Urea subsidies to industries → cheap urea to farmers → excessive consumption → soil &
water pollution, algae-blooms. (यू�रया उवर्रक का अ�ा�धक उपयोग जमीन पानी म� प्रदू षण)
 � Subsidy leakage: When ghost beneficiaries (non-existent persons propped up by corrupt
officials), and ineligible (rich) people are receiving subsidy. (स��डी �रसाव, धांधली और गबन)
25.1.3 📘📘📘📘 Past Economic Surveys on subsidy delivery (आ�थक सव��णों के उपाय)
📘📘📘📘 Economic survey 2014-15:
✓ We should use Jandhan Aadhar Mobile (JAM) trinity to reduce the subsidy leakage.
✓ Direct benefit transfer (DBT: प्र�� लाभ ह�ांतरण) can’t be a panacea in every case, because
males of the house may waste DBT-money on liquor & tobacco. So, in some cases,
Biometrically Authenticated Physical Uptake (BAPU) mechanism will be better i.e.
beneficiary goes to a grain / fertilizer shop and uses his Aadhaar & fingerprint to purchase
subsidized goods. (बॉयोमीिट�क �प से प्रमा�णत करके लाभाथ� को व�ु देना)
➢ The present subsidy delivery mechanism suffers from two errors:
○ Inclusion Error (समावेश त्रुिट): Non-poor (=affluent) are receiving ~40% of subsidies.
○ Exclusion Error (बिह�रण त्रुिट): real poor are not getting subsidies due to corruption
✓ So better to abolish all type of subsidies and directly deposit a specific sum of money into
beneficiary’s bank account to help him buy goods/services from open market = Universal
Basic Income (सावर्�त्रक बु�नयादी आय) (UBI): 📑📑More in Pillar#6.
25.1.4 📘📘📘📘 ES19: Use ‘Behavioural economics (�वहार अथर्शा�)’ to ↓ subsidy bill
To ⏬Govt’s subsidy burden: Above Poverty Line (APL: गरीबी रेखा से ऊपर) households shd be
encouraged to voluntarily surrender LPG subsidies using following tools of Behavioral economics:
 People have a strong tendency to go with the status quo. So, ‘Default ticked option’ in LPG
registration forms should be ‘I wish to give up the subsidy’, so a person will be ‘forced’ to untick
the option to avail the subsidy benefit.
 Similarly, income tax forms should contain extra-fields with pre-ticked options like ‘I want to
give up LPG subsidy’.
 The online /SMS-based ‘subsidy giving up process’ should be quick and hassle-free. It should
not take more than a few minutes. Because every additional minute required to complete the
formalities= increases the chances that person will drop out in the middle of the process.
 People act positively when they see others act positively, and particularly when they can relate to
such individuals. So, online “scroll of honour” should show name/photos/social media-profiles
of others in their area who gave up subsidies.
 Advertisements to highlight that “Rich people are helping in poverty removal by giving up
subsidies.“
 When people are watching a movie with social message (such as Padman, Toilet Ek Premkatha
etc), it should contain ad asking people to give up full / partial subsidy.
 Once a person gives up subsidy, he should be shown the photos of poor people benefitting from
his act / or a video with a beneficiary saying ‘thank you’.
@Hindi-Medium-Mains candidates refer ES2018-19 Vol1 Ch.2 bullet 2.26 to

2.31 to get clean & formal vocabulary for answer writing.
25.1.5 ��🕵🕵National Recruitment Agency (NRA: रा��ीय भत� एज�सी)

 Present: multiple recruitment exams conducted by multiple agencies at different points of time
throughout the year..
 Future: NRA will conduct Common Eligibility Test for recruitment to Non-Gazetted personnel
in Government and PSBs. → SSC and IBPS will conduct Mains exams for respective posts →
time and cost saved for both candidate and recruiting agencies.
 💼💼Budget-2020: we’ll set up NRA & open a (computerized) test centre in every district.
 ✋Self-Study-Topics for GSM2/GSM4: 1) Lateral entry in IAS. 2) Three years tour of duty in
Army. Source? Internet / Current Affairs PDF/Lectures.
25.2 📤📤⏰🥳🥳 REVENUE XPDR → SALARIES→ 7TH PAY COMMISSION (वेतन आयोग)
Setup by Finmin → Dept of Expenditure. 1st: Srinivasa Varadachariar (1946). 7th: (Retd) Justice
AK Mathur (2014). Its recommendations became effective from 1/1/2016. Major highlights were:
✓ New system of “Pay Matrix” instead of previous system of pay band and grade pay.
✓ Regulatory bodies salaries increased: Chairman ₹ 4.50 lakh / month, members ₹ 4l.
✓ Minimum pay in Central service increased to ₹ 18k / per month (Group-D).
✓ Maximum pay: ₹ 2.25 lakh per month for Apex scale (e.g. Secretary of a Dept.), and ₹ 2.50l (for
Cabinet Secretary)
✓ It adopted Dr. Aykroyd formula to compute wages at periodic interval (formula tracks the
changes prices of the commodities used by a common man).
✓ So, critiques believe there will not be an 8th Pay Commission because salaries will be updated
automatically at regular interval, using this formula.
✓ It abolished various type of ‘interest free allowances’ e.g. Purchase of bicycle etc.
✓ It continued ‘interest-bearing advances’ for purchase of computer, house building (upto ₹ 25
lakhs). [= employee can borrow money from dept but he will have to return it with interest.]
✓ Various reforms for defence and CAPF services. (सश� सेना /क� द्रीय पु�लस बल के �लए सुधार)
✓ stronger rules in Modified Assured Career Progression (MACP) system so lazy officials don’t
get promoted. (आलसी और �नक�े अफसरों क� पदो��त को रोका जाए)
25.2.1 🥳🥳 Pay Commission: Dearness Allowance (DA: महंगाई भ�ा)

- Dearness Allowance (DA): It is an allowance given by government to (serving/non-Retired)
central government employees to protect them against the inflation. (नौकरीशुदा कम�यो को)
- Dearness Relief (DR): It is an allowance given by government to RETIRED central government
employees to protect them against the inflation. (�नवृत कम�ऑ को)
- In 2020- Union govt had frozen DA&DR because Govt was struggling with money for Corona
relief. 2021-July: Govt resumed paying & ⏫ DA&DR from 17% to 28%. कोरोना-वषर् म� सरकार ने
सरकारी कमर्चा�रयों को महँ गाई भ�ा नहीं िदया, �ोंिक सरकार को खुद ही पैसों क� िक़�त थी, लेिकन अब वापस शु� कर रही है.
25.2.2 🥳🥳 Pay Commission: Misc. terms

- It’s given by an employer to protect the employees against rise in inflation. In government
services, both working employees and retired pensioners are given dearness allowance.
- House Rent Allowance (HRA: मकान िकराया भ�ा): rent allotted by the employer for employee's
accommodation (house).
- Gratuity (ग्रे�ुटी): It’s a lump sum amount “x” given by an employer to the employee for
rendering services continuously for “y” number of years. Usually given at retirement. Norms
governed under Payment of Gratuity Act, 1972
- One Rank One Pension (OROP): 2015- Modi govt. promised equal pension to military
personnel retiring in the same rank with the same length of service, regardless of the date of
retirement. Some, Ex-servicemen unhappy about the base year & calculation formula.
25.3 👻👻📤📤⏰�🥳🥳 SALARY REFORMS IN ATMANIRBHARAT 2.0 (OCT 2020)

To ⏫shopping/market demand during the festival season, FinMin launched two schemes:
25.3.1 👻👻⏰�🥳🥳 Atma-Nirbhar 2.0: Festival Advance Scheme (�ोहारों म� एडवांस रकम)
 Govt will give ₹10,000 as interest-free advance to govt employees. Employee need to repay it
back in maximum 10 instalments. (िक�ों म� रक़म वापस चुकानी होगी हालाँिक �ाज नहीं लगेगा.)
 Govt will not give this ₹₹ in cash form. but in form of a prepaid SBI Rupay Card known as "SBI
Utsav Card". This card can be used like a debit card, for making purchases e.g. billpayment,
ECommerce websites etc. (📑📑Ref: HDT-Pillar#1A1)
25.3.2 👻👻⏰�🥳🥳 Atma-Nirbhar 2.0: LTC Cash Voucher Scheme

Outdated technical topic. Removed from handout
25.4 (📥📥<📤📤)⏰⚠ REVENUE DEFICIT (राज� घाटा)
⇒ When govt spends more than its income in revenue account, it incurs …
⇒ Revenue deficit = Revenue expenditure – Revenue receipts. (�य �ादा आमदनी कम)
⇒ Since most of revenue expenditure is ‘committed’ (like Interest repayment on previous loans,
staff-salaries & pensions which Govt can’t ‘avoid’), so difficult to ⬇ the revenue deficit.
⇒ So, when revenue deficit ⬆, govt forced to borrow more money or ⏬ expenditure in the
capital part (= less new schools, bridges and hospitals) → ⏬ human dev, and lower economic
growth (less new bridges → ⬇ demand of steel/cements → ⬇ growth in those sectors).
25.5 (📥📥<📤📤)⏰⚠ EFFECTIVE REVENUE DEFICIT (प्रभावी राज� घाटा)

- We’ve counted Grant-in-Aid to States / Local Bodies as ‘Revenue Expenditure’, but some
portion of that ₹₹ may have been spent by the States / Local Bodies for building Panchayat-
Bhavans, Disaster Management Training Institutes, Cranes & Bulldozers for Disaster rescue
operations etc. which are actually “Capital Assets”. (पूंजीगत सं प��यां)
- Therefore, Budget 2011 (Chidambaram) introduced a new concept:
- Effective Revenue Deficit = Revenue Deficit MINUS Grants to various bodies which were spent
for creation of Capital Assets
NEXT 📥📥📥📥 BUDGET → CAPITAL → RECEIPTS & Expenditure

- To be continued…. Next Handouts
2A) ✅ Direct Taxes [✅2A2-Indirect Taxes & GST 2B) ✅ Black Money, 15th FC
2C) ✅ Subsidies, Salaries, Revenue Expenditure 2D) Disinvestment, Deficit, FRBM Act,
Fiscal Council, Budgeting-Railway budget, plan-non plan budget, & scheme types etc.
Pillar#2D: Disinvestment to Deficit to Budget & Scheme Types
Table of Contents
26 📥📥📥📥 Budget → Capital → Receipts ...............................................................................................433
26.1.1 💼💼💼💼💼💼 Foreign Borrowing in Foreign Currency ......................................................434
26.1.2 💼💼💼💼💼💼Budget-2022: Foreign Borrowing ...................................................................435
26.2 🧔🧔🗃🗃 ♐ 🤵🤵 Budget → Capital Receipts → Disinvestment: �व�नवेश.................................435
26.2.1 CPSE vs PSU vs PSB .............................................................................................................437
26.2.2 🥉🥉Ratna Companies = freedom to govt companies based on performing.................437
26.2.3 🧔🧔🧔🧔 ♐ 🤵🤵 Government policy towards disinvestment before 2021.....................438
26.2.4 🧔🧔🧔🧔 ♐ 🤵🤵 Disinvestment & Privatization in the Modi Raj (2014-19) .................441
26.2.5 🧔🧔🧔🧔🧔🧔 ♐ 🤵🤵 Strategic Disinvestment in Modi Raj ...............................................441
26.3 👻👻👻👻👻👻 → � New Public Sector Enterprise (PSE) Policy (2021) ..................................442
26.3.1 🚿🚿🚿🚿National Monetisation Pipeline (NMP 2021) ......................................................442
26.3.2 🚿🚿🚿🚿National Land Monetization Corporation (NLMC-2022) .................................442
26.3.3 📞📞 ☎: BSNL MTNL Merger & VRS (�वलीनीकरण) ...........................................................443
26.4 📔📔📔📔ES20 Vol1 Ch9 Privatization and Wealth Creation ......................................................443
26.4.1 📔📔📔📔 Strategic Disinvestment (=privatisation) → ⏫profitability ...........................443
26.4.2 📔📔📔📔Strategic Disinvestment (=Privatisation) → Adopt Singapore Model .............443
26.5 🗓🗓🗓🗓Budget → Capital Part → Expenditure (पूंजीगत �य) ..................................................444
26.5.1 👻👻👻👻👻👻👻🏗🏗Atmanirbharar 2.0 (2020-Oct) → State CAPEX Loans ..................444
27 💼💼💼Types of deficits: घाटे के प्रकार ......................................................................................................445
27.1 💼💼💼Fiscal Deficit: राजकोषीय घाटा ..............................................................................................446
27.2 💼💼💼Primary Deficit: प्राथ�मक घाटा .............................................................................................446
27.3 💼💼💼Debt Composition: Amount-wise ..................................................................................447
27.3.1 💼💼💼Debt Composition: Type-wise ...............................................................................448
27.4 💼💼💼👜👜👜 Extra-Budgetary Resources (बजटेतर सं साधन) .....................................................449
27.5 💼💼💼 Financing the deficit: its negative consequences on economy: ................................450
27.5.1 💼💼💼 ⏫:🛒🛒⏬ Financing the Deficit: Ricardian Equivalence ...............................451
27.5.2 💼💼💼 ⏫:🛒🛒⏬Ricardian Equivalence invalid for India says ES21 .......................451
27.5.3 💼💼💼 Financing the deficit: “Crowding Out” of private borrowers ..........................452
27.5.4 💼💼💼 Crowding out of private investment? 📔📔📔📔ES21 Observations.....................452
27.5.5 💼💼💼 Financing the deficit: Printing More Money ......................................................453
27.5.6 💼💼💼 Fiscal Deficit ⏫= India sovereign rating ⭐⭐⏬ ......................................454
27.5.7 ⭐⭐Rating downgrade⏬: Don’t worry says ES21 ...................................................454
27.5.8 ⭐⭐Rating downgrade: conclusion or way forward...................................................456
(Batch:PCB7) Mrunal’s Economy Pillar#2D: Budget → Disinvestment & Deficits → Page 431
27.6 💼💼💼💼💼💼💼💼Countercyclical policy (प्र�तचक्र�य राजकोषीय नी�त) ..................................................456
27.6.1 💼💼💼💼💼💼💼💼Countercyclical: IRGD & Debt Sustainability..........................................458
27.6.2 💼💼💼💼💼💼💼💼 Countercyclical: Domar Condition of Debt Sustainability ...................458
27.6.3 💼💼💼💼💼💼💼💼Countercyclical: Conclusion/Way forward? (�न�षर्) ..............................458
27.7 🔀🔀🔀🔀Side Note: Automatic Stabilizers (�चा�लत-��रीकारी) .....................................................459
27.8 💼💼💼 Misc Terms related to Deficit Financing ......................................................................460
27.9 💼💼💼💼💼💼 Fiscal Consolidation / Prudence: राजकोषीय एकत्रीकरण / �ववेक ..................................461
27.10 💼💼💼💼 Fiscal stimulus (राज� प्रो�ाहन पेकेज) ............................................................................462
27.10.1 💼💼💼💼 👳👳 Manmohan’s Fiscal Stimulus (2008-) ..........................................................462
27.10.2 💼💼💼💼 🧔🧔 Modi’s Fiscal Stimulus (2019) .......................................................................462
27.10.3 👻👻💼💼💼💼 🧔🧔 Modi’s Atma-Nirbhar Bharat Economic Stimulus Package (2020) ..463
27.11 💼💼💼🔨🔨 Fiscal Responsibility & Budget Management Act, 2003 .................................464
27.12 🙌🙌 FRBM: Trigger Mechanism (to) Escape (Deficit control) Clause ..............................465
27.12.1 💼💼💼🔨🔨 FRBM: Misc. Concepts ....................................................................................466
27.12.2 💼💼�🔨🔨 🗂🗂 FRBM Act: Documents (द�ावेज़) ............................................................466
27.13 👻👻👻👻👻👻👻Fiscal Federalism: Helping the States in ATMANIRBHAR ......................467
27.13.1 🧔🧔🧔🧔🧔Helping States → Tax devolution and grants ...............................................467
27.13.2 🧔🧔🧔🧔🧔Helping States → States’ Fiscal deficit limits ⏫ ........................................467
27.14 🧔🧔🧔🧔🧔Fiscal Deficit target for States by 15th FC & Budget-2021 ...............................468
27.15 💼💼💼🔨🔨🔨 Fiscal Responsibility: NK Singh FRBM Review Panel..............................469
27.15.1 💼💼💼🔨🔨 FRBM Panel’s Notable recommendations: उ�ेखनीय �सफा�रश�? ....................469
27.16 💼💼💼🔨🔨🔨 Fiscal Responsibility: NK Singh’s 15th Finance Commission ..................470
27.16.1 💼💼💼🔨🔨🔨 :🎯🎯 Budget marksmanship is Poor, says 15th FC.................................471
27.17 💼💼💼🔨🔨🔨 Fiscal Responsibility: Freebies / Revdi Culture ..........................................472
27.18 💼💼💼🔨🔨🔨 Fiscal Responsibility: Fiscal Federalism Challenges ..................................472
27.19 💼💼💼🔨🔨🔨 Fiscal Responsibility: Misc Bodies ................................................................472
27.19.1 💼💼💼🔨🔨 Expenditure Management Commission (2014) ..........................................472
27.19.2 💼💼💼🔨🔨🔨 Public Debt Management Agency (PDMA): सावर्ज�नक ऋण प्रबं धन एज�सी..472
27.19.3 💼💼💼🔨🔨🔨 Fiscal Council (राजकोषीय प�रषद) ..................................................................473
27.20 🎺🎺 (MAINS) Public Expenditure Management: Challenges.............................................474
27.20.1 ⚰ 😰😰Public finance challenges: Corona ex-gratia Yojana ..........................................476
28 💼💼 Types of budget: बजट के प्रकार ..........................................................................................................476
28.1 Revenue versus Capital budget: राज� बनाम पूंजीगत बजट ..............................................................476
28.2 💼💼💼💼General budget versus Railway budget (आम बजट बनाम रेलवे बजट) ................................477
28.3 💼💼💼💼 Plan vs non plan expenditure budget: ...........................................................................477
28.4 💼💼💼💼Budgeting (बजट �नमार्ण क� प्रिक्रया/ रणनी�त) ...........................................................................478
28.5 💼💼💼💼💼💼Tribal sub plan & SCSP..............................................................................................479
28.6 💼💼💼💼💼💼Output Outcome Framework for Schemes:............................................................479
28.7 💼💼💼💼Cash vs Accrual Budgeting: नगदी बनाम उपचय बजट ...........................................................480
28.8 💼💼💼💼💼💼Lapsable Funds & March Rush: �पगत �न�ध और माचर् ��ता .....................................480
28.9 💼💼💼💼💼💼 Non lapsable funds & No Rush: �बन�पगत �नधी .......................................................480
28.10 📯📯📯📯Types of schemes (योजनाओं के प्रकार) .............................................................................481
28.10.1 👜👜👜👜Budget-2022: CSS rationalisation........................................................................482
28.10.2 📯📯📯📯Ministry-wise Highest Allocation ..........................................................................482
28.11 �Mock Questions for UPSC Mains GSM3 (250 words each) ........................................483
26 📥📥📥📥 BUDGET → CAPITAL → RECEIPTS

Note: Refer to the Budget classification chart in previous handout to see ‘where we are in the parts of budget’. I could paste
it here again but don’t want to increase no. of pages & printer ink usage.
Table 1: बजट → पूंजी भाग → प्रा��यां: Sub-classified into two parts
Capital Debt Receipts Capital Non-Debt Receipts:
पूंजीगत ऋण प्रा��याँ गैर-ऋण पूंजी प्रा��यां
💼💼💼💼💼💼 Internal Borrowing: आंत�रक ऋण Loan Principal recovered (i.e. Union government
- 🐯🐯From RBI, would have given loans to state governments,
- From market (Banks, NBFCs) foreign countries, public sector companies etc.)
- From small savings (Post-Office Savings so when they return Principal amount back that is
Accounts, Kisan Vikas Patra, etc), counted here. (मूलधन क� बरामदगी)
- From Provident Funds (EPFO, PPF)
💼💼💼💼💼💼 External borrowing: from foreign Disinvestment (�व�नवेश) i.e. Union selling its
countries & international institutions like IMF shares from Public Sector Undertakings (PSUs) /
World Bank, BRICS bank etc. बाह्य।/ �वदेशी ऋण Central Public Sector Enterprises (CPSEs).
Bigger portion of Capital Receipts from this side Smaller portion
🔠🔠❓MCQ. Which of following is not a component of ‘Capital Receipts’? (IEnggS-2018)
(a) Market borrowings including special bonds
(b) External loans raised by the Central Government from abroad
(c) Receipts from taxes on property and capital transactions
(d) Provident Funds (State Provident Funds and Public Provident Fund)
26.1.1 💼💼💼💼💼💼 Foreign Borrowing in Foreign Currency
क� द्र सरकार के �वदेशी ऋण को �वदेशी मुद्रा म� जुटाने का मसला
Introduction (Origin): In the (Full) Budget-2019, FM Nirmala S. announced, "India’s sovereign

external debt to GDP is among the lowest (~5%). The Govt would start raising a part of its borrowing
programme in external markets in external currencies."
🙂🙂Arguments in favor (समथर्न) 😥😥Against (प्र�ाव के �व�द्ध)
1. In domestic market, the 'crowding 1. Exchange Rate Risk (�व�नमय दर का जो�खम): If rupee
out of private corporate borrowers' weakens against the dollar during the bond’s tenure
will decline. ( �more in 2D:Fiscal ($1: ₹ 60 → ₹ 70), the government would have to
Deficit) return more rupees to pay back the same amount of
2. Corporates will be able to mobilize dollars. Then the loan may turn out to be 'more
more funds from local market → expensive' than originally anticipated.
factory expansion, jobs, GDP 2. It's true that presently Indian Govt's external
growth⏫ borrowing is very low, but once this 'door' is opened,
3. In the advanced economies such as subsequent govts may get tempted to borrow more
USA, EU: the loan interest rates and more from the foreign sources to finance their
are very low, so our Indian govt (populist) welfare schemes, ultimately it can result
may be able to get cheaper loans. into crisis when rupee gets weaker. लोकलुभावन योजनाओं
स�े �ाज पर के �लए �वदेशी ऋण लेने क� सरकार को लत लग सकती है
4. If we borrow a little more from 3. Better to ⏫the foreigners' investment limit in G-
external sources it won't harm. थोड़ा Sec (in ₹ currency) and attract them to come to
🙂🙂Arguments in favor (समथर्न) 😥😥Against (प्र�ाव के �व�द्ध)
सा ऋण अगर �वदेशों से �वदेशी मुद्रा म� ले �लया India, rather than we going 'abroad' to get their
तो कु छ जो�खम नहीं money in $ currency.
Conclusion: whether we should borrow in foreign currency or not?
⇒ � (Against) From the aforementioned analysis, it's evident that challenges outweigh the
potential benefits. Noted economists such as Dr. Raghuram Rajan are apprehensive about
sovereign borrowing from external markets in foreign currency. Therefore, this idea, though
well-intended, requires more deliberation. (इस प्र�ाव म� फायदे कम नुकसान �ादा िदख रहे ह� इस�लए इरादा नेक
है लेिकन इस पर �ादा �वमशर् क� आव�कता है)
⇒ � � �= � � (In favor) Considering above points, sovereign borrowing from external
markets in foreign currency may not be a bad idea, provided that it's done in a judicious and
prudential manner. (यह प्र�ाव बुरा नहीं है, �ववेक पूणर् �प से लागू करना चािहए)
26.1.2 💼💼💼💼💼💼💼💼Budget-2022: Foreign Borrowing
⇒ In 2020: Govt borrowed large amount borrowed (₹70,000+ cr) World Bank, Asian Development
Bank etc from abroad due to Corona. But most of our foreign debt denominated in ₹₹ Currency.
So need not worry much.
26.2 🧔🧔🧔🧔 ♐ 🤵🤵 BUDGET → CAPITAL RECEIPTS → DISINVESTMENT: �व�नवेश
There are THREE types of Commercial or industrial undertaking owned by the govt:
🚝🚝 ✉ Departmental 🐯🐯Statutory Corporations ⛽Govt. Companies
Undertakings �वभागीय उपक्रम वैधा�नक �नगम सरकारी कं प�नया
Directly part of a ministry e.g. Created by an act of Parliament Registered under the
Postal, Railways, or state legislature. E.g. RBI Act, Companies Act, Govt’s
They can be created easily SBI Act, LIC Act, FCI Act, shareholding is 51% or
because, no laws required, no EPFO Act. etc, SIDBI, more.Coal India ltd, GAIL,
Companies Act registration NABARD, NHB, EXIM etc. SAIL, NTPC, IOCL, BHEL &
required various Public Sector Banks and
NBFCs which are not statutory
corporations.
👺👺 High level of ministerial 🤘🤘 Middle of both sides More operational flexibility, less
interference (मं त्री क� दख़ल �ादा) interference by Ministers
CAG will audit directly [भारत के Some of these Acts provide for Companies Act requires them
�नयं त्रक और महालेखा परी�क �यं internal audit & exclude CAG to produce audited reports.
�वभागीय उपक्रम के िहसाब िकताब का लेखा from auditing the Corporation. CAG will empanel the (private)
परी�ण कर�ग]े E.g. RBI, LIC. auditors for them.
Their earning will go directly in Their earning → profit → dividend goes to shareholders.
Public Account / CFI
All three types of org are Answerable under the Right to Information Act, 2005
सूचना अ�धकार कानून/ अ�ध�नयम के अंतगर्त इन सभी सं �ानों ने जानकारी देनी होगी
Their employees are considered Not considered govt employees. Their service / discipline
government employee- conditions are governed by the respective organizations’ internal
subjected to service and manuals. सरकारी क�मयों वाले सेवा और अनुशासन/�श� के �नयम इनके कम�यो को
discipline rules framed by the लागू नहीं होते.
government.
⇒ Objective: Public interest & welfare through affordable services, Development of infrastructure,
regional balance, prevent concentration of economic power in the hands of Corporates /MNCs.
(उदे�: जन िहत म� स�ी सेवाएं , बु�नयादी ढांचा, �वकास म� �ेत्रीय सं तुलन, ब�रा��ीय कं प�नयों के हाथों म� आ�थक श�� क�
के �ीकरण रोकना)
⇒ 😭😭Challenges? Political interference, lack of innovation & consumer responsiveness, employee
unions, loss making business. (राजनी�तक ह��ेप, नवाचार क� कमी, उपभो�ा के प्र�त जवाबदेही कम, कमर्चारीओ को
काम से �ादा यू�नयनों-बाजी और हड़ताल म� �ल� रहेना, घाटे म� चलना)
26.2.1 CPSE vs PSU vs PSB

⇒ Central Public Sector Enterprises (CPSEs: क� द्रीय सावर्ज�नक �ेत्र के उपक्रम): Registered in Companies
act & Union Government has 51%/> shareholding. Commonly known as ‘Govt companies’.
The word CPSE is mainly used to denote “govt companies other than Public Sector Banks,
Public Sector Insurance Companies and Public Sector NBFCs”.
⇒ Public sector Undertaking (PSU: सावर्ज�नक �ेत्र के उपक्रम) = collective term for all the govt
companies owned by Union Govt + State Government + Local Bodies.
⇒ PSB: Public Sector Banks = Banks wherein Govt has majority shareholding.
✋ Note: Some book/internet may differ in this definition. But we need not loose sleep over pedantry.
श�भेद म� पांिड� वाली बाल क� खाल �नकालने क� कोई ज�रत नहीं है।
26.2.2 🥉🥉Ratna Companies = freedom to govt companies based on performing

⇒ Ministry of Heavy Industries & Public Enterprises-> its Department of Public Enterprises (DPE)
decided Ratna Status. 2021: DPE shifted to Finance Ministry (REF: Handout #2A for more).
⇒ �This is NOT for private owned companies like Tata, Infosys or Adani.
⇒ “Ratna” status-walli Govt Companies are given for the flexibility in their operations e.g. hiring
more professionals, acquisition of other companies etc. without requiring government approval
for every small decision. (अ�ा प्रदशर्न करने वाली सरकारी कं प�नयों को अपनी कायर् री�त के �लए �तं त्रता देना. हर छोटी
चीज के �लए सरकार से अनुम�त लेना ज�री नहीं)
Category Condition and examples
🥉🥉 ✓ made profits in the last 3 years continuously, further subdivision in Category-I &
Miniratna Category-II depending on how much profit is generated.
Cat-I and ✓ Examples: National Film Development Corporation ltd, Mazagaon Dock ltd,
Cat-II Airports Authority of India, Mishra Dhatu Nigam ltd, NHPC ltd, WAPCOS ltd,
ONGC Videsh ltd, Rail Vikas Nigam ltd,
🥈🥈 ✓ A Mini Ratna company fulfilling “x” conditions OR
Navratna ✓ Non-Mini Ratna Govt companies fulfilling “y” conditions such as Manpower cost
to total cost of production etc.
✓ Examples: Rashtriya Ispat Nigam ltd, Rural Electrification Corporation ltd,
Shipping Corporation of India ltd, Oil India ltd, National Aluminum Company
ltd, Neyveli Lignite Corporation ltd, Mahanagar Telephone Nigam ltd, Hindustan
Aeronautics ltd, Container Corporation of India ltd, Bharat Electronics ltd,
Category Condition and examples
🥇🥇 ✓ Already a Navratna Company+ fulfilling “z” conditions such as min. ₹ 5000 crore
Maharatna profit per year in last 3 yrs, listed at a Stock exchange, significant global presence
✓ Very few here: 1)Bharat Heavy Electricals, 2)Bharat Petroleum Corporation,
3)Coal India , 4)GAIL (India) , 5)Hindustan Petroleum , 6)Indian Oil
Corporation, 7)NTPC , 8)Oil & Natural Gas Corporation (ONGC), 9)Power Grid
Corporation, 10) Steel Authority of India (SAIL)
✋ Above Ratna examples are taken on 1/1/2020. List may change afterwards. Some companies
get privatized. We need not lose sleep over it too much, unless preparing for their specific
recruitment exam.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
 � �FAQ. Are Public Sector Banks (PSB) given Ratna Status? Ans. No. While PSBS are a sub-
set of Government companies but Ratna status is for CPSEs who are NOT PSBs.
 � �FAQ. Are Statutory Corporation like LIC, EPFO etc given Ratna Status? Ans. No. It’s for
Central Govt’s companies only. It is not for statutory corporation.
 � �FAQ. Are State Govt’s Govt Companies given Ratna Status? Ans. No. It is for Central
Govt owned companies only. ये �सफर् क� द्र सरकार क� सरकारी क��नयो के �लए है
 � �FAQ. Are Private sector Companies like Tata/Reliance given Ratna Status? Ans. No. It is
for Central Govt owned companies only. भाई ये �सफर् क� द्र सरकार क� सरकारी क��नयो के �लए है. इतनी आसान
और सीधी सी बात को आप �ों जिटल कर रहे है!?
🔠🔠❓MCQ. Which among the following is designated with ‘Navratna’ status? (CDS-2021-i)
(a) Indian Oil Corporation Limited (b) Gas Authority of India Limited
(c) Bharat Petroleum Corporation Limited (d) Bharat Electronics Limited
26.2.3 🧔🧔🧔🧔 ♐ 🤵🤵 Government policy towards disinvestment before 2021
⇒ Disinvestment: ⏬ govt shareholding in a Government company but govt keeps atleast 51%
shareholding with itself.
⇒ Privatization / Divestment / Strategic Disinvestment (�नजीकरण/रणनी�तक �व�नवेश): Reducing the
government shareholding below 50%
⇒ ✅Arguments in favour: ⏬govt shareholding → Private investors will enter in the board of
directors → ⏫ efficiency, innovation and autonomy. द�ता, नवाचार �ाय�ता
⇒ Disinvestment proceeds can be used for welfare schemes, and ⏬ fiscal deficit.
⇒ ✋ Argument Against: MNC monopolies, exploitation of worker, job loss.
Year Nationalization and Disinvestment related developments
1951  First Constitution Amendment Act: While 19(1)(g) gives citizen's right to
practise any profession. But Government can impose reasonable
restrictions on it for interests of general public → this allowed for
nationalization of pvt industries. (सरकार जन िहत म� �नजी कं पनीयो का रा��ीयकरण कर
सकती है)
 ( �NOTE: first amendment act also contain some other provisions for
SEBC, 9th Schedule etc, but we are only focusing on the parts that are
related with nationalization/disinvestment)
1953 ⇒ 1953: Air Corporations Act: Govt nationalised nine airlines—Air India,
Air Services of India, Airways (India), Bharat Airways, Deccan Airways,
Himalayan Aviation, Indian National Airways, Kalinga Airlines, and Air
India International
⇒ Above private sector companies were nationalised into two Public sector
Enterprises I) Indian Airlines II) Air India International.
1991’s Industrial The term 'disinvestment' was used first time in Interim Budget 1991. “We
Policy will reduce shareholding in all Govt Companies”- said PM Narasimha Rao.
1998’s Vajpayee - In strategic sector (Railways, Defense, Atomic Energy)- ✋we’ll not do
disinvestment
- In Non-strategic sector = ✅we’ll do disinvestment in a phased manner
(गैर-रणनी�तक �ेत्र म� चरणबद्ध तरीके से �व�नवेश कर�गे ).
- 1999: PM Vajpayee set up Department of Disinvestment → privatisation
of Maruti Udyog, Hindustan Zinc, Bharat Aluminum and Videsh Sanchar
Nigam Limited (VSNL) etc. 12 govt companies.
UPA-1 (2004-09) Due to pressure from Leftist/Marxist coalition parties = No Disinvestment
from any government companies. If a government company is sick, we will
try to revive it. वामपं थी / मा�र्वादी गठबं धन दल के चलते �व�नवेश नहीं
UPA-2 (2009-14)  All Govt Companies can be disinvested upto 49% = Govt will keep 51%
minimum and sell remaining shares.
 ₹₹ will goto National Investment Fund (NIF, in Public Account) → used
for Bank recapitalization, metro rail, nuke energy, EXIM-NABARD-RRB
etc. रा��ीय �नवेश कोष
 Also launched CPSE-Exchange Traded funds (ETF): 📑📑Ref Pill#1C:SEBI
26.2.4 🧔🧔🧔🧔 ♐ 🤵🤵 Disinvestment & Privatization in the Modi Raj (2014-19)
✓ Various methods of Disinvestment, depending on the Company
1. Converting Private Limited Company to public limited company and issuing Initial
Public Offers (IPOs) e.g. Indian Railway Catering and Tourism Corporation (IRCTC)
and Rail Vikas Nigam Ltd (RVNL)
2. Exchange Traded Funds (ETFs): CPSE-ETF, Bharat-22-ETF (Ref: Pillar#1C)
3. Institutional placement Programme (IPP): offer shares only to non-retail investors.
4. Offer for sale (OFS): Govt sells its existing shares to both retail and non-retail investors
5. Share Buyback i.e. Govt company itself buys the shares owned by Govt, thereby
decreasing Government's shareholding portion viz a viz private sector's shareholding.
✓ Modi govt shut down many sick Govt companies such as HMT watches, Hindustan Photo Film
etc. (�जसे कोई �नजी �ेत्र का उद्योगप�त खरीद कर चलाना नहीं चाहता था उन बीमार सरकारी कं प�नयों को बं द कर िदया.)
✓ Budget-2016 renamed FinMin’s Dept of Disinvestment into Dept. of Investment & Public Asset
Management (DIPAM: �नवेश और सावर्ज�नक सं प�� प्रबं धन �वभाग).
*💼💼Budget-2019: Govt planned to earn ₹1.05 lakh cr from disinvestment but hardy 65,000 cr
earned, because investors’ response lukewarm, due to slowdown in economy. (�नवेशको ने सरकारी कं प�नयों
के शेयर ऊंची दामों पर खरीदने म� उदासीनता िदखाई)
26.2.5 🧔🧔🧔🧔🧔🧔 ♐ 🤵🤵 Strategic Disinvestment in Modi Raj

⇒ Strategic Disinvestment (रणनी�तक �व�नवेश): it means selling a substantial portion of Government
shareholding in a CPSEs along with transfer of management control to a private party.
⇒ Practically, it means 51% or higher shareholding with private players and 49% or lower with
Govt. For this action, NITI Aayog prefers to use the term ‘strategic disinvestment’, ‘strategic
sale’ instead of ‘privatization’, lest the opposition parties create uproar about it.
⇒ Sometimes, press statement also uses the word “Divestment” for it.
⇒ �Budget-2021: We will privatise 2 Public Sector Banks and 1 Public Sector General Insurance
company in 2021-22 (सावर्ज�नक �ेत्र के दो ब�क और एक सामा� बीमा कं पनी). We will launch the initial public
offer (IPO) of LIC. (जीवन बीमा �नगम म� �व�नवेश)
⇒ � �Budget-2022: NINL (Neelanchal Ispat Nigam Limited) will be privatised
26.3 👻👻👻👻👻👻 → � NEW PUBLIC SECTOR ENTERPRISE (PSE) POLICY (2021)
Strategic sectors (मह�पूणर् �ेत्रो) Non strategic sectors
Example 1) Atomic energy, Space, Defence (परमाणु ऊजार्, All the other sectors. (बाक�
अवकाश,र�ा,) तमाम �ेत्रों= गैर-मह�पूणर् �ेत्रो= म�
2) Transport, Telecom (प�रवहन, दू रसं चार) �जतने भी सरकारी कं प�नयां है उन सब
3) Power, Petroleum, Coal, other minerals को या तो �नजीकरण कर द�गे या बं द कर
(ऊजार्, पेट�ो�लयम, कोयला, ख�नज,) द�गे)
4) Banking, Insurance and financial services
( ब�िकंग बीमा �व�ीय सेवाएं )
Will there be a Minimum one government company will be No government company will
government kept. Remaining will be merged/ be kept. All the Existing
company privatized/shutdown (मह�पूणर् �ेत्रो म� �सफर् एक government companies will
here? सरकारी कं पनी को रखा जाएगा, बाक� सभी अ� सरकारी कं प�नयों be privatized/shutdown.
को उस म� �वलीन/�नजीकरण/बं द कर िदया जाए)
✓ Disinvestment targets previous budgets:
Budget 2017 2018 2019 2020 2021 2022
Target (Lakh cr) 1Lcr 80,000 cr 1.05 lakh crore 2.10 lcr 1.75 lcr 65,000 cr
Target Achieved? ✅ ✅ 😰😰65,000 cr* 😷😷37000 Cr 😰😰78,000 cr We’ll see
26.3.1 🚿🚿🚿🚿National Monetisation Pipeline (NMP 2021)

⇒ Govt initiative for selling/renting/leasing the land/building/machine/assets of CPSE/National
Highways/Railways to mobilise ₹6 lakh crore by 2025. (रा��ीय मौिद्रकरण पाइपलाइन = इस मुिहम के अंतगर्त
सरकारी कं पनी/हाईवे/रेलवे क� सं प��यों को बेचना/िकराये पर देना- इसक� मदद से ६ लाख करोड़ �पये बटोरने ह�)
⇒ More about this topic in �
Pillar#5- along with other associated topics like 1) National
Investment and Infrastructure Fund (NIIF) 2) National Infrastructure Pipeline / GATI Shakti
initiative etc.
26.3.2 🚿🚿🚿🚿National Land Monetization Corporation (NLMC-2022)

Refer to Handout Pillar2A1- Departments of Finance Ministry.
🔠🔠❓MCQ. Why is Govt disinvesting its equity in the Central Public Sector Enterprises (Pre’11)
1. The Government intends to use the revenue earned from the disinvestment mainly to pay
back the external debt.
2. The Government no longer intends to retain the management control of the CPSEs.
Ans Codes: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
26.3.3 📞📞 ☎: BSNL MTNL Merger & VRS (�वलीनीकरण)
Outdated/Faded. Removing from handout.
26.4 📔📔📔📔ES20 VOL1 CH9 PRIVATIZATION AND WEALTH CREATION

26.4.1 📔📔📔📔 Strategic Disinvestment (=privatisation) → ⏫profitability
⇒ In 1980s, UK PM Mrs. Margaret Thatcher started privatization of the Govt companies such as
British Telecom, British Airways, water and electricity companies etc. → ⏫ profitability &
wealth creation for those companies. (�नजी करण द्वारा धन सृजन)
⇒ � �ES20 analysed 11 Indian Govt companies that were privatized during BJP/NDA PM Atal
Bihari Vajpayee tenure (1998-2004) such as Hindustan Zinc, Bharat Aluminium Company Ltd.
(BALCO), Maruti Suzuki, Indian Petrochemicals Corporation Ltd. (IPCL), Modern Food India
Ltd. (MFIL) etc. (वाजपेयी के ज़माने म� कु छ सरकारी कं प�नयों का �नजीकरण �आ था)
⇒ After strategic disinvestment (=privatization) these Indian companies’ sales, profitability etc.
greatly ⏫ because of: (�ब्रक� व मुनाफे मे अप्र�तम बढ़ोतरी)
o Technology Up-gradation (प्रौद्यो�गक� उ�यन)
o Efficient management practices by Private professionals. (कु शल प्रबं धन)
✅Thus, privatized PSUs help in economic growth & employment generation. (सरकारी कं प�नयों का
�नजीकरण करने से आ�थक वृ�द्ध और रोजगार �नमार्ण)
26.4.2 📔📔📔📔Strategic Disinvestment (=Privatisation) → Adopt Singapore Model
1974: Singapore Govt set up a holding company “Temasek Holdings Company” (THC). Then the
Govt transferred its shares of PSUs to THC → THC sold them in market → privatization complete.
⇒ Government of India has 264 CPSEs under 38 different Ministries/Departments.
⇒ � �ES20 suggested, we should also create a Holding Company (�नयं त्रक कं पनी) just like
Singapore, for our / strategic disinvestment (=privatization) drive.
⇒ Benefits of Singapore Model? Professionalism and autonomy (पेशेवर कु शलता और �ाय�ा) to the
disinvestment programme. Because If an individual ministry tried individual company’s
privatization then
o Ministry's (IAS) officers may not have network/experience for selling the shares
@highest price. (सरकारी कं पनी के शेयसर् को सरकारी अफसर ऊँ चे दाम पर को बेचने के �लए �नवेशकों के पास गए
तो असफल हो सकते ह� �ोंिक नेटवकर् और अनुभव क� कमी)
o Internal resistance by employee unions. (कमर्चारी यू�नयन का आंत�रक प्र�तरोध)
⇒ So, better let a separate holding-company look after this process.
26.5 🗓🗓📤📤BUDGET → CAPITAL PART → EXPENDITURE (पूंजीगत �य)

बजट → पूंजीगत भाग → �य: Its notable components in decreasing order are:
1. Capital assets for various schemes, ministries, departments (Building, vehicles..)
2. Giving debt/equity finance to PSUs & foreign institutes, giving loans to State Govt & Foreign
Govt.
a. Sidenote: FinMin: Dept of Economic Affairs (DEA)’s Indian Development and
Economic Assistance Scheme (IDEAS) gives such ₹₹ to foreign nations.
3. Union repaying loan principal for Internal Debts (आंत�रक ऋण का मूलधन वापस देना)
4. Union repaying loan principal for External Debts (बाह्यऋण का मूलधन वापस देना)
26.5.1 👻👻👻👻👻👻👻🏗🏗Atmanirbharar 2.0 (2020-Oct) → State CAPEX Loans

⇒ Special Assistance to States for Capital Expenditure’/CAPEX scheme
⇒ Union to loan interest-free 50-year loan to states. Total amount approx. ₹12,000 cr for capital
expenditure like, health, rural development, water supply, irrigation, power, transport,
education, urban development. (�ा�, ग्रामीण- शहरी �वकास, जल आपू�त, �संचाई, �बजली, प�रवहन, �श�ा के
पूंजीगत ख़च� के �लए क� द्र द्वारा रा� सरकारों को �बना �ाज के लोन)
⇒ � �Budget-2022:- State govts to be given 1 lakh crore CAPEX loans with 50 year tenure, 0%
interest.
27 💼💼💼TYPES OF DEFICITS: घाटे के प्रकार
- If government’s income >> its expenditure it will have a surplus budget/ अ�धशेष बजट
- If government’s expenditure == its income, it will be a balanced budget/ सं तु�लत बजट
- If government’s expenditure >> its income, it’ll be a deficit budget/ घाटे का बजट
Deficit Formula (amt in approx. ₹ lakh cr)
Revenue Deficit राज� घाटा Revenue expenditure – Revenue receipts जब राज� खचर् राज� आय से �ादा
Effective Revenue Deficit Revenue Deficit minus Grants for creation of capital assets
प्रभावी राज� घाटा
Budget Deficit बजट घाटा Budget expenditure minus Budget receipt
Fiscal Deficit Budget Deficit plus Borrowing बजट घाटे क� भरपाई के �लए �लया गया ऋण
राजकोषीय घाटा
Primary Deficit Fiscal Deficit minus interest to be paid on previous loans राजकोषीय
प्राथ�मक घाटा घाटे म� से पुराने ऋण/कजर् पर जो �ाज चुकाना है उसे हटा दी�जए
🔠🔠❓MCQ. Find Correct Statement(s) (Asked in UPSC-Pre-2017)
1. Tax revenue as a percent of GDP of India has steadily increased in the last decade.
2. Fiscal deficit as a percent of GDP of India has steadily increased in the last decade.
🔠🔠❓MCQ. The excess of total expenditure of Govt over its total receipts, excluding borrowings, is known
as _ _ _ (CDS-2021-i) (a) Primary deficit(b) Fiscal deficit (c) Current deficit (d) Capital deficit
27.1 💼💼💼FISCAL DEFICIT: राजकोषीय घाटा

- Fiscal Deficit= Budget Deficit + Borrowing. This borrowing includes internal borrowing [such as
through Small Savings Scheme, and the G-Secs subscribed by Banks/NBFCs) + Borrowing from
RBI] + External Borrowing.
- 1997-98: it was implemented as per Sukhmoy Chakravarti Committee report.
27.2 💼💼💼PRIMARY DEFICIT: प्राथ�मक घाटा
⇒ 1993: Finance Minister Manmohan Singh’s budget speech mentioned:
⇒ If the government continues to borrow year after year, it leads to accumulation of debt and the
government has to pay more and more interest. These interest payments themselves add more
burden to borrow next year. (पुरानी लोन पर जो �ाज चुकाना है उस रकम को घाटे क� �गनती म� नहीं लेना चािहए)
⇒ So, to get a clearer picture of how much is the government borrowing for new programs, they
look at another indicator: (तािक नए वषर् म� �वकास के काम के �लए इतना वा��वक कजर् �लया जा रहा है उसका पता चले)
Primary Deficit = Fiscal deficit minus the interest to be paid on the previous loans.
27.3 💼💼💼DEBT COMPOSITION: AMOUNT-WISE
Table 2: Definition & DATA as per 📔📔📔📔ES22 Vol1Ch2.

Outstanding Loan (बकाया क़ज़र् ) 2018-19 2019-20 2020-21
i) Internal Debt (आंत�रक ऋण)- all the pending loans total 70 Lcr 80 Lcr 99 Lcr
A. Marketable debt = Government's dated securities (G-
Sec) and Treasury Bills, issued through auctions.
Investor can be easily resell it in secondary market
B. Non-marketable debt = special types of
securities/bonds issued by Union Govt to EXIM Bank
and other All India Financial Institutions (AIFI), State
Govts etc. It's difficult/sometimes not possible to re-
sell such securities/bonds in the secondary market.
Majority of Govt’s internal debt is marketable debt.
ii) External Debt (बाह्य ऋण) 4 Lcr 5 Lcr 6.15 Lcr
 Borrowed from other nations and multilateral
institutions such as IMF, World Bank, ADB etc.
 At present Govt of India doesn’t borrow directly
from the International Capital Market.
A) Public Debt (सावर्ज�नक ऋण)= (i) + (ii) 75 Lcr 85 Lcr 105 Lcr
B) (Public Accounts): Other Liabilities such as Post Office 9 Lcr 13 Lcr 12 Lcr
Savings, Postal Insurance, Provident Fund etc. small
savings schemes (लघु बचत योजना) (More in 📑📑Pillar#1D3)
C) Extra Budgetary Resources (बजेटेतर सं साधन) 88,000 cr 1.12 Lcr 1.43 Lcr
Total Liability (कु ल देयता) = A+B+C 86 Lcr 99 Lcr 117 Lcr
� �ES22: Total liabilities of the Central Govt ⏫ sharply in 2020- because Corona : GDP⏬ →
tax collection ⏬ → govt’s income ⏬ → Govt had to borrow more money for Atma Nirbhar.
� FAQ: Why are above numbers not matching fiscal deficit numbers!!?? Ans. Fiscal deficit
number only shows loan taken in a single financial year. Above is the cumulative (total)
outstanding/unpaid loans of successive Govt (Vajpayee, Manmohan, Modi…..etc) (ये कु ल बकाया कजर्
िदखा रहा है)
� FAQ: Is EPFO/NPS amount included in above? Ans. EPFO/NPS invests money in 1) Pvt sector
company Shares, 2) private sector company Bonds and 3) G-Sec (=Loans to Govt). The G-Sec
components is included.
27.3.1 💼💼💼Debt Composition: Type-wise
Out of loans majority (अ�धकतर कज़र् इस प्रकार के ह�) minority(ब�त ही कम कज़र् इस प्रकार के ह�)
Total Public Debt State Govt (70%) Union (30%)
Union Debt → Internal (94%) external/foreign (6%)
(Source)
Repayment Rupee Foreign Currency (जो कजर् �वदेशी मुद्रा म�
Currency वापस करने ह�)
Union Debt → 🔨🔨Fixed Interest (�न��त �ाज दर) 🎈🎈Hardly 5% of Govt loans are 'floating
(Type of Interest interest rate' (e.g. may be tied with
Rate) LIBOR etc REF#1C). (चलायमान �ाज दर
वाले लोन ब�त कम है)
Tenure (अव�ध के 📆📆Long Term (दीघर् अव�ध) ⏰Short Term (लघु अव�ध)
िहसाब से)
⇒ Ratio of (External debt: GDP) = <3% (less than three percent)
⇒ India's "debt to GDP" ratio is lowest among following group of countries: 1) G20 2) OECD 3)
BRICS( �Ref: HDT-Pillar#3B: International Organisations)
⇒ Moreover, public debt for India has declined since 2003 and has been stable since 2011.
❓MCQ. Find correct statements (Prelims-2022) :

�
1. A share of the household financial savings goes towards government borrowings.
2. Dated securities issued at market-related rates in auctions form a large component of internal
debt.
27.4 💼💼💼👜👜👜 EXTRA-BUDGETARY RESOURCES (बजटेतर सं साधन)
‘Extra Budgetary Resources’ (EBR) or ‘Off-budget resources’ are loans taken by public sector
undertakings and Government organizations. (सरकारी �नगम सं �ानों द्वारा कजर् �लया जाना)For example,
 Govt not releasing food subsidy to Food Corporation of India (FCI) & (thereby forcing) FCI to
borrow money from National Small Savings Fund (NSSF) for its food schemes. [Although
💼💼Budget-2021 announced to stop this practice].
⇒ Here repayment of the entire principal and interest is done from the Central Government Budget
eventually, behind the curtains. (पद� के पीछे सरकार देरी से पैसा देगी)
 EBR measures are announced after passing of budget so, they may escape the same general level
of media-reporting, parliament debate or audit = bad for financial transparency &
accountability. मीिडया-�रपो�टग, सं सद बहस या ऑिडट से �छपना = �व�ीय पारद�शता और जवाबदेही के �लए बुरा।
 15th FC has termed “EBR” as ‘off-budget borrowings through para-statal entities’ and asked
Government to avoid it. (15व� �व� आयोग ने भी इन हरकतों को बं द करने क� सलाह दी है)
 📔📔📔📔ES20 also criticised this practice (आ�थक सव��ण ने इन हरकतों क� आलोचना/�नंदा क� है)
⇒ These EBRs are not taken into account while calculating the Fiscal Deficit but they’re counted
while calculating Government debt or public debt.
27.5 💼💼💼 FINANCING THE DEFICIT: ITS NEGATIVE CONSEQUENCES ON ECONOMY:
घाटे का �व�पोषण: अथर्�व�ा पे उसके नकारा�क प�रणाम

How to fill deficit? 😰😰Why problematic / impractical? �ा सम�ाएं /�ावहा�रक �ों नहीं है
🍋🍋 🍋🍋1) Demanding ⇒ Taxes can’t be ⏫ beyond a point because it may force people to
more taxes जनता पर evade taxes / discourage their motivation to work. (recall Laffer
�ादा कर लादे जाएं Curve). करो का �र ब�त बड़ा िदया तो लोग करचोरी कर�गे
� � 2) Borrowing ⇒ Ricardian Equivalence: ⏫ Government borrowing → ⏬public
more money सरकार द्वारा shopping = bad for economy. Although �
�ES21 says this will not
�ादा पैसा कजर् म� �लया जाए happen in India.
⇒ Crowding out of the private borrowers Although � �ES21 says
this will not happen in India.
⇒ Fall in the sovereign credit rating. Although � �ES21 says this will
not happen in India.
🖨🖨 🖨🖨3) Printing ⇒ Although known as Monetising the deficit- it results in
More money hyperinflation (दे दना दन नोट छाप िदया जाए तो महंगाई ब�त बढ़ जाएगी)
Above aspects are covered in detail in following sections:
27.5.1 💼💼💼 ⏫:🛒🛒⏬ Financing the Deficit: Ricardian Equivalence
 ⏫ deficit → Government borrows ⏫ money → @Maturity (also called ‘Redemption’) of G-

Sec, Govt will have to return the principal and interest to the lenders.
 At that time, Govt may greatly increase taxes on people to arrange that amount.
 So, Economist David Ricardo argued that during high deficits, people save more, because they
become precautious about future hike in taxes.
 It’s called “Ricardian equivalence: �रका�डयन तु�ता” [& if people begin to spend less and save more,
then companies will face unsold inventories = new problems for economy]
27.5.2 💼💼💼 ⏫:🛒🛒⏬Ricardian Equivalence invalid for India says 📔📔📔📔ES21

📔📔📔📔ES21 cited multiple Research about Indian Economy (1950s-80s) & found REP to be NOT
valid for India Because...
Ricardian Equivalence Proposition (REP) Assumes Why invalid for India? भारत म� यह �सद्धांत गलत
that (�न� धारणाएं आव�क है) �ों सा�बत �आ?
Citizens are perfectly rational and perfectly capable Shopping decisions also depend on
to think about Future income, future tax liability, emotional urges and psychological whims
fiscal deficit when making their consumption e.g. Marriage-DJ/iPhone/Foreign vacation.
decisions.डे�वड �रकाड� क� तु�ता �सद्धांत सही सा�बत होने के �लए ग्राहक सभी �नणर्य तकर् सं गत बनकर नहीं लेते. भावना�क
सभी नाग�रकों का तकर् सं गत और बु�द्धम�ा से सोच �वचार के �लए स�म आग्रह और मनोवै�ा�नक सनक भी आप को खरीदारी के
होना ज�री- िक भ�व� म� उनक� आमदनी, कर-दा�य�, राजकोषीय �लए उ�े�जत करती है
खाध, उपभो�ा मांग िकतनी होगी.
All citizens are paying taxes. डे�वड �रकाड� क� तु�ता �सद्धांत Tax Evasion, Black money, parallel
सही सा�बत होने के �लए सभी नाग�रकों का करदाता होना ज�री economy. भरपूर मात्रा म� कर चोरी, काला धन
27.5.3 💼💼💼 Financing the deficit: “Crowding Out” of private borrowers
 If govt borrows ⏫ money from households & financial intermediaries (LIC, EPFO, Banks via
SLR), then that much less money will be available for loans to private corporate borrowers. = “
Crowding Out Effect” on the private borrowers= harms factory expansion and job creation.
(कॉरपोरेट उधारकतार्ओ को ऋण बाजार से बाहर धके ल देना)
 If Govt forces SBI, LIC, EPFO to buy its G-sec using public deposits → depriving households of
the optimal return (Had the same money been invested in the corporate sector) = “ Financial
Repression of the households.” (घरों/ कु टु�ों का �व�ीय दमन”.)
 Govt (forced) NABARD to buy its ₹ 15,000 crore Swachh Bharat Mission (Gramin) Bonds with
maturity period of 10 years. Govt (forcing) RBI and others to pay higher dividend. →
operational freedom of those organization is affected.
27.5.4 💼💼💼 Crowding out of private investment? 📔📔📔📔ES21 Observations

📔📔📔📔ES21 found some evidence of "crowding out" of private companies in India during 1950s to
1990s. Mainly because (50 से 90 के दशक म� �नजी �ेत्र क� कं प�नयों को �ण-बाजार से बाहर धके ले जाने के सबूत �मले �ोंिक:)
⇒ [1) CRR and SLR were very high therefore PSB banks loanable funds supply was very limited
& due to politicized boards, they may have channeled most of the savings towards the govt.
(िडपॉ�जट म� से सीआरआर एसएलआर को हटाने के बाद कजर् म� देने यो� रकम वैसे भी ब�त कम रहती थी)
⇒ [2) Absence of large private sector banks (�नजी �ेत्र के बड़े ब�कों का आगमन अभी बाक� था)
⇒ [3) Publics' earnings and savings were low. (लोगों के पास भी आमदनी और बचत कम ही थी)
⇒ [4) Capital market / share-bond Market was underdeveloped. (पूंजी बाजार, शेयर/बांड बाजार �वक�सत
नहीं �आ था → �नजी कं प�नयों के �लए पूंजी हा�सल करना मु��ल)
📔📔📔📔ES21 find no evidence of crowding out in India from 1990-2019. Because
1. the above factors have gradually faded. (90 के दशक म� उ� बाधाएं कमजोर हो गई थी)
2. if Govt borrows money for Infra-development (Health, Education, Transport, electricity,
Irrigation etc) → jobs & GDP ⏫ → citizens' income ⏫ → savings ⏫ → more ₹₹ in banks,
NBFC, mutual fund, shares/bonds etc. So, "crowding out" may not happen because 'size of dish'
will become larger. (�श�ा �ा� प�रवहन �बजली �संचाई जैसी बु�नयादी अवसं रचना के �लए अगर सरकार कजार् लेती है →
रोजगार और आ�थक वृ�द्ध म� बढ़ोतरी → नाग�रक क� आमदनी बढ़ेगी → उसक� बचत बढ़ेगी → अपने आप ही ब�क-बचत शेयर
बांड द्वारा कं प�नयों को ढेर सारा �नवेश �मल जाएगा. अतः �ण बाजार से कं प�नयों को बाहर नहीं धके ला जाएगा)
3. 1990-2019: ⏫in the population of youth / working age people ( demographic dividend)→
income & savings & banking habits ⏫ → Loanable funds ⏫ so "Crowding out" chances ⏬
(आबादी म� नौजवानों क� मात्रा बढ़ी → आमदनी और बचत क� भावना भी बढ़ी → कजर् म� देने के �लए रकम भी बढ़ी है)
"Crowding out" assumes that the supply of savings is fixed. But in reality, economic growth⏫ →
the size/quantity of savings⏫ (धारणा से �वपरीत वा��वकता म� बचत क� रकम का ज�ा ��र नहीं होता. आ�थक वृ�द्ध के
साथ-साथ बचत-ज�े म� भी बढ़ोतरी होती है)
27.5.5 💼💼💼 Financing the deficit: Printing More Money
 High level of fiscal deficit → International Credit Rating Agencies will ⏬ the sovereign rating
for India → investors will demand ⏫ interest from government for buying new G-Sec→ G-sec
remains unsold → RBI forced to buy it (and print more money to give to Govt)
 it’s called “Monetizing the Deficit”. It can result in hyperinflation and ⏬ the purchasing power
of currency (if there is not sufficient increase in the supply of onion, tomatoes & goods in the
market. e.g. Germany, after Treaty of Versailles in 1919. (मुद्रीकृ त घाटा: सरकारी कजर् के �लए �रजवर् ब�क द्वारा
दे दना दन नोट छापे जाने पर महंगाई दर/मुद्रा��त को अप्र�ा�शत �प से बढ़ जाएगी)
27.5.6 💼💼💼 Fiscal Deficit ⏫= India sovereign rating ⭐⭐⏬

Table 3: classification not important, sufficient to know AAA=best.
Rating → Moody's sovereign rating (सरकारी प्र�तभू�तयों का रे�टंग/श्रेणीकरण )
Prime अ�ग्रम/उ�तम दज� Aaa (e.g. US Treasury Bonds)
High grade / उ� Aa1 to 3
investment grade: Upper A1
medium / म�म
investment grade: Lower medium Baa1 to Baa3. 2020-June: India rating reduced to Baa3.
because of weak fiscal position, rising fiscal deficit
Non investment grade (junk / रद्दी) BA1 to lower ranks like “C”.
So, now if India’s sovereign rating⏬ any step further= junk status= Implications?😰😰
⇒ Govt will have to offer more interest to investors to lure them into buying g-sec
⇒ Flight of Foreign Capital from India (भारत से �वदेशी पूंजी का उड्डयन/�नगर्म):
⇒ Foreign investors may fear Indian govt will default in payment of previous G-Sec
⇒ So they’ll dump it to other investors and run away from India.
⇒ =Flight of capital from India = $ strengthen, rupee weakens. (Why? Ref: pillar3)
⇒ However, � �ES21 suggested we need not worry about it. मत डरो इनसे और दे दना दन कजार् ले लो
27.5.7 ⭐⭐Rating downgrade⏬: Don’t worry says 📔📔📔📔ES21
⇒ Sovereign credit rating is a quantitative measure to identify the govt's ability/risk to repay its
loans. (सं प्रभु ऋण रेिटगं = सरकार के अपने ऋणों को चुकाने क� �मता / जो�खम क� पहचान करने के �लए मात्रा�क माप)
⇒ How good rating help? Attracts foreign investment. Reduces the future cost of borrowing
(Interest rate), Makes it easier to obtain loans from the World Bank, IMF and other International
organisations. (अ�� रेिटगं हम� �वदेशी �नवेश आक�षत करने म� तथा वै��क �व�ीय सं गठनों से स�े �ाज दर पर कजार् लेने म�
मदद करती है)
⇒ India is stable on GDP growth rate, inflation, Public Debt to GDP, Current account Deficit,
Foreign Exchange Reserves, Political stability, rule of law, control of corruption, investor
protection, ease of doing business. (भारत सभी म� ��रता है- आ�थक वृ�द्ध दर, महंगाई दर, सावर्ज�नक �ण का जीडीपी
से अनुपात, चालू खाता घाटा, �वदेशी मुद्रा क� आर��त �न�ध, राजनी�तक ��रता, कानून का शासन, भ्र�ाचार �नयम, �नवेशक क�
सुर�ा, �ापार म� सुगमता)
⇒ Indian Govt's external debt is also very low. Zero history of sovereign default. (भारत सरकार का �वदेशी
�ण ब�त ही कम है, इ�तहास म� कभी िदवा�लयापन नहीं िदखाया है.)
⇒ Yet, Poor ratings given by Credit rating agencies Standard and Poor's, Fitch Moody. They are
biased against India (& China) -says � �ES21 (हालांिक इन सब के बावजूद भी प��मी देशों क� क्रेिडट रेिटंग
एज�सी भारत चीन के प्र�त भेदभाव करती है)
⇒ 1998: after Pokhran nuclear test → India faced international sanctions → Credit rating was
downgraded. But at a later stage it was upgraded again. (पोखरण परमाणु परी�ण के बाद भारत पर अंतररा�ी� य
प्र�तबं ध, �जसके चलते रेिटगं म� �गरावट)
⇒ Economic survey has observed following impact of the rating downgrade
Whenever India's rating ⏳Short Term (रे�टंग म� 📆📆Long Term from
degraded (1998) �गरावट का अ�का�लक असर) 1998-2018 (दीघर्का�लक)
No strong relation (कोई
Sensex (शेयर बाजार सूचकांक) No strong relation
मजबूत �र�ा नहीं िदखा)
Rupee dollar currency exchange
No strong relation No strong relation
rate (मुद्रा �व�नमय दर)
G-Sec Yield No strong relation No strong relation
Whenever India's rating ⏳Short Term (रे�टंग म� 📆📆Long Term from
degraded (1998) �गरावट का अ�का�लक असर) 1998-2018 (दीघर्का�लक)
GDP growth rate No strong relation No strong relation
Foreign Portfolio Investors in (Shares
⏬fallen😰😰 (�गरावट देखी गई) ⏬fallen 😰😰
and Bonds)�वदेशी पोटर्फो�लयो �नवेशक
27.5.8 ⭐⭐Rating downgrade: conclusion or way forward

⇒ Noisy, Opaque And Biased credit ratings damage FPI flows. (क्रेिडट रे िटंग एज�सी का काम ककर् श, अधर्
पारदश�, भेदभाव यु� है, उनसे भारत म� आने वाले �वदेशी पोटर्फो�लयो �नवेशक को पर नकारा�क असर)
⇒ But overall they do not have a long-term significant impact on India's GDP growth
rate, currency exchange rate, share market performance. (िकंतु दीघर् अव�ध म� क्रेिडट रेिटंग एज�सी के भेदभाव
पूणर् रवैये के बावजूद भी भारत के आ�थक वृ�द्ध दर, मुद्रा �व�नमय दर और शेयर बाजार के प्रदशर्न पर कोई असर नहीं हो पाया है.)
⇒ So, India’s fiscal policy must not remain beholden / hostage to such a noisy/biased sovereign
credit rating by Foreign organisations. (अतः भारत सरकार क� राजकोषीय नी�त ने क्रेिडट रेिटगं एज�सीओ का बं धक
नहीं बनना चािहए, उनसे �बना डरे, (दे-धना-धन) कजार् लेना चािहए और प्र�त-चक्र�य राजकोषीय नी�त को अपनाना चािहए)
⇒ India’s fiscal policy should be guided by considerations of growth and development. (i.e. If
Government borrows ⏫ → ⏫Fiscal deficit → ⏬Credit rating → We need not fear that it
will harm our economy merely on account of fall in credit rating.)
27.6 💼💼💼💼💼💼💼💼COUNTERCYCLICAL POLICY (प्र�तचक्र�य राजकोषीय नी�त)

(Introduction: Origin) Indian Kings used to build palaces, temples, mosques etc during famines to
provide employment. Thus, during an economic slowdown, the Govt must spend more ₹₹ to achieve
a similar objective. (अकाल के िदनों म� राजा महाराजा महल मं िदर और म��द बनवाते, तािक लोगों को रोजगार �मले. आ�थक मं दी
के समय म� सरकार ने भी कु छ ऐसा ही करना चािहए)
Counter ⇒ During economic slowdown → ⏫ Increase Fiscal expenditure to boost
cyclical Fiscal employment & GDP.
policy
⇒ It helps in “Crowding-in” i.e. When govt spending ⏫ increased → private
प्र�तचक्र�य
investment ⏫ e.g. Govt building highway in Arunachal → Private
राजकोषीय नी�त
entrepreneurs building petrol pumps & hotels → jobs GDP. आ�थक मं दी के दौरान
सरकारी खचर् को बढ़ाया जाए-तािक �नजी �ेत्र �नवेश रोजगार आ�थक वृ�द्ध म� मदद.
⇒ During economic boost: ⏬Decrease govt spending (So as to build reserves
for future emergency/future slowdown) आ�थक तेजी म� सरकारी खचर् को कम िकया जाए
तािक सरकार भ�व� क� मं दी के दौरान इ�ेमाल करने यो� रकम को आर��त रख सके /जमा कर सक� .
⇒ USA, UK, Chile have done this in the past, but India has not done it.
� �ES21 Suggested India to pursue this.
Pro-Cyclical ⇒ During economic Boom, ⏫Fiscal expenditure
fiscal policy
⇒ चक्र�य-समथर्क राजकोषीय नी�त ⏫ आ�थक तेजी के दौरान सरकार �ादा पैसा खचर् कर�
🔠🔠❓MCQ. The increase in private investment spending induced by the increase in Government
spending is known as (CDS-2021-i)
(a) Crowding in (b) Deficit financing (c) Crowding out (d) Pumping out
27.6.1 💼💼💼💼💼💼💼💼Countercyclical: IRGD & Debt Sustainability
⇒ Interest Rate Growth Rate Differential (IRGD: �ण-�ाज-दर वृ�द्ध-दर के बीच अंतर): It is the difference
between (loan) interest rate (paid by Govt to investors) and GDP growth rate in an economy.
⇒ so if loan interest 6% - minus growth rate 9% = (-3)% negative IRGD figure basically hints that if
GDP Growth rate is higher than the loan interest rate paid by the govt, then Govt need not worry
much, because GDP⏫ → Tax collection ⏫ → Enough ₹₹ to repay those loans. यिद सरकार ने �जस
�ाज दर पर कजार् �लया है उसे आ�थक वृ�द्ध दर �ादा हो तब तक सरकार ने �चंता करने क� ज�रत नहीं �ोंिक आ�थक वृ�द्ध के
चलते कर-आमदनी म� बढ़ोतरी होगी → कजार् चुकाने के �लए सरकार के पास रकम आती रहेगी.
⇒ Meaning, GDP growth → leads to Debt sustainability/debt affordability. For India, above
situation is valid in past & will remain valid for the next 10 years, even in the worst case scenario.
(आ�थक वृ�द्ध कज� को वह�नय बनाती है खराब से खराब कम प�र��त म� भी अगले 10 साल तक हमारे पास यह अवसर मौजूद है ,
यानी िक दे-धनाधन कजार् लेकर सरकार ने अथर्तंत्र को पुनज��वत करना चािहए)
⇒ � �ES22: tax collection has improved, Government received large dividend from RBI. There
for financial situation of the government is very stable. We’ll be able to repay loans.
27.6.2 💼💼💼💼💼💼💼💼 Countercyclical: Domar Condition of Debt Sustainability

⇒ Economist Evsey Domar (1944) stated that, “Public debt of a country will be sustainable, IF GDP
growth is greater than the public debt growth rate.
⇒ Otherwise government may default on loan-repayment.” (यिद देश का आ�थक वृ�द्धदर, उस देश के सावर्ज�नक
कज़र् वृ�द्धदर से �ादा होगा तो सावर्ज�नक क़ज़र् वहनीय हो पाएगा, वरना तो सरकार िदवा�लयापन िदखा देगी/ कज़र् नहीं चुका पाएगी।)
More on GDP Growth = 📑📑Ref: HDT-Pillar#4C: GDP
27.6.3 💼💼💼💼💼💼💼💼Countercyclical: Conclusion/Way forward? (�न�षर्)

 To revive Indian economy after Corona, Govt should pursue countercyclical fiscal policy,
borrow more money for infrastructure development. (कोरोना महामारी के बाद भारतीय अथर्तंत्र को पुनज��वत
करने के �लए प्र�त चक्र�य राजकोषीय-नी�त आव�क, �वशेष �प से बु�नयादी अवसं रचना �वकास हेतु भारत सरकार बे�झझक बड़ी
मात्रा म� �ण लेना चािहए.)
 Once GDP growth ⏫ → govt should pursue fiscal consolidation. (आ�थक वृ�द्ध दर म� बढ़ोतरी होने पर,
राजकोषीय एकत्रीकरण शु� िकया जाए)
 Simultaneously, the Govt should also reform education, skill development. minimum-wages
Then income & savings⏫, Negative effects associated with Fiscal deficits will ⏬(More in
Pillar4C & #6) (साथ ही साथ �श�ा, कौशल �वकास, �ूनतम वेतन, इ�ािद म� सुधार द्वारा आमदनी और बचत को बढ़ाया जाए तो
अपने आप राजकोषीय खाध के नकारा�क पहलुओ ं को हम कम कर पाएं गे)
27.7 🔀🔀🔀🔀SIDE NOTE: AUTOMATIC STABILIZERS (�चा�लत-��रीकारी)
⇒ For example: if Mr. Jetha-lal with taxable income of Rs.3 lakhs = He needs to pay income tax in
5% slab. [ignoring tax rebate, deduction etc. for this example]
⇒ During a slowdown in economy → his electronics shop will not make good profit → taxable
income ⏬decreases to ₹2.5 lakh → Jetha-lal now in automatically in 0% income tax slab.
[आ�थक मं दी के दोरान जेठालाल �चा�लत आयकर देयता से मु� हो जाएगा]
⇒ Now, he may even become eligible for some govt schemes meant for poor/lower-middleclass
persons. (e.g. Recall PM Shram Yogi Maan-Dhan Yojana ₹3000 pension from pillar1D:- income
Tax payers were not eligible for that scheme. But now Jethalal will be able to join)
⇒ Thus, during recession/slowdown in Economy: Income tax works as “automatic stabilizer”.
Because it can automatically ⏬reduce a family’s financial stress by [आ�थक मं दी के दौरान प�रवार का
�व�ीय तनाव अपने आप थोड़ा कम करता है]
⇒ A] making the family eligible for government welfare schemes. [प�रवार अपने आप सरकारी योजना के पात्र
बन जाता है]
⇒ B] Automatically decreasing family tax liability [no new voting or law passing required in
Parliament at the stage.]
⇒ This is not possible in GST. Because whether rich or poor person= all have to pay same 18% GST
on a mobile phone. It doesn't matter whether customer’s income has ⏫increased or
⏬decreased during that Financial year.- He’ll have to pay 18% GST, until GST council takes a
vote & decides to reduce the GST tax on mobile.
⇒ Automatic stabilizers are mechanisms built into govt budget to address economic slowdown
automatically- by automatically increasing govt’s spending and/or decrease public’s tax liability.
[“�चा�लत-��रीकारी’ - आ�थक मं दी के दौरान अपने आप सरकारी ख़चर् को बढ़ाता है या जनता क� कर-देयता को कम करता है]
⇒ Automatic stabilizer does not require any change in the existing tax law or voting in the
Parliament- because it starts working automatically during slowdown. [उ�� िक्रया��त करने के �लए
अलग से नया क़ानून/ सं सद क� अनुम�त लेने क� ज़�रत नहीं होती. वो अपने आप ही िक्रया��त हो जाता है]
⇒ Examples of Automatic Stabilisers: Income tax, Corporation tax, unemployment allowance,
food subsidy and other Government schemes that are meant only for poor /lower middle class
people. [आयकर, �नगम कर, गरीब के �लए ल��त खाद्य स��डी और दू सरी क�ाणकारी योजनाएं - “�चा�लत-��रीकारी’ है]
Note: Countercyclical fiscal policy / fiscal stimulus = it requires the government to pass a new
budget / new law / permission of Parliament for some new initiatives. So, they are not automatic
stabilisers. They are discretionary stabilisers. [प्र�त चक्र�य राजकोषीय नी�त तथा राजकोषीय प्रो�ाहन पैकेज के �लए
सरकार ने अलग से �वशेष �प से नए बजट म� �ज़क्र करना होगा कोई क़ानून पास करवाना होगा इस�लए वे �ववेकाधीन ��रीकारी है।]
🔠🔠❓MCQ. Which one of the following functions as an automatic stabilizer in the context of fiscal and
monetary policies of an economy? (UPSC-CAPF-2021)
(a) Personal income tax (b) Reverse repo rate of bank (c) Open market operation (d) Bond price
27.8 💼💼💼 MISC TERMS RELATED TO DEFICIT FINANCING

Table 4: ✋need not do PHD on it unless Optional Subject=Public Administration
Methods for repaying debt (ऋण चुकाने के अलग अलग तरीके )

Redemption Repay the loan principal and interest at regular interval. Also known as
(भुगतान) Terminal Annuity. अनुशासन पूवर्क मूलधन और �ाज धीरे-धीरे वापस चुकाना
Govt creates a special fund & keeps depositing money in it regularly. So at the
Sinking Fund
time of G-sec maturity, it has enough ‘buffer’ money to honor the loan
(�न�ेप �न�ध)
repayment. First introduced in England.
पुनगर्ठन : Converting old loan into new loan with modifications in interest /
Conversion / tenure. (पुरानी लोन के �ाज दर या अव�ध म� बदलाव करना)
restructuring 2020-Nov: Zambia became Africa’s 1st nation to default on its Euro loans due
to Corona. Experts believe some restructuring may be done.
Evergreening Taking new loan to repay the old loan (पुरानी लोन चुकाने नया कजर् लेना)
Methods for repaying debt (ऋण चुकाने के अलग अलग तरीके )
Repudiation Govt does not recognize its obligation to repay the loan. E.g. After Russian
(प�र�ाग / बिह�ार) Revolution (1917) Lenin’s Government refused to pay the loans taken by the
कजर् चुकाने से previous Czar regime from Britain & France. Although, in modern times not a
मना कर देना sound strategy because next time, no one will give you loans.
27.9 💼💼💼💼💼💼 FISCAL CONSOLIDATION / PRUDENCE: राजकोषीय एकत्रीकरण / �ववेक
It involves reduction in government expenditure to control its Fiscal Deficit. Such as

1. ⏬ the leakages (�रसाव) by targeted delivery of schemes and subsidies through direct benefit
transfer (DBT) through JanDhan- Aadhar- Mobile (JAM) trinity.
2. ⏬ the quantum (मात्रा) of subsidies: e.g.
a. Deregulation of Petrol prices (2010), Diesel (2013) (दामो को �नयं त्रण मु�)
b. 2016: Oil Ministry began to block LPG-Pahal subsidies to persons with annual taxable
income of ₹ 10 lakh />
c. 2017: Oil Ministry asked oil companies to keep raising prices of subsidised kerosene by
25 paise every fortnight until the subsidy is eliminated.
3. Shutting down loss making PSU. E.g. Hindustan Photo Films, HMT Bearings, HMT Chinar
Watches, Tungbhadra Steel, Hindustan Cable & HMT Watches (2014).
4. Privatization of loss making Govt companies (�नजीकरण) e.g. IDBI, Air India.
5. 2014-16: Government setup an Expenditure Management Commission (�य प्रबं धन आयोग) under
Bimal Jalan to suggest ways to reduce its Expenditure.
6. Austerity Measures (�मत��यता के उपाय) e.g.
a. 2018- W.Bengal govt issued directives to its departments banning flower bouquets and
mementoes in public functions, banning officials meetings at private hotels, frequent
installation of AC, car purchases, office renovations etc. & restricting the no. of foreign
tours by Ministers / IAS etc., More use of video-conferencing instead of physical travel.
b. 2019: PM’s Cabinet Committee on Investment and Growth (CCIG: �नवेश और �वकास क�
कै �बनेट स�म�त) ordered all Union ministries to reduce wasteful expenditure on travel, food
and conferences by 20% (यात्रा, भोजन और स�ेलन क� िफजूल खच� मे कटौती करो).
c. 2021: Parliament canteen subsidy ended e.g. Masala Dosa will no longer be sold at ₹6 etc.
This will help saving ₹8cr
🔠🔠❓MCQ. There has been a persistent deficit budget year after year. What can be done by by the
government to reduce the deficit? (Asked in UPSC-Pre-2015)
1) Reducing revenue expenditure 2) Introducing new welfare schemes
3) Rationalizing subsidies 4) Expanding industries
Answer Codes: (a) 1 and 3 only (b) 2 and 3 only (c) 1 only (d) 1, 2, 3 and 4
🔠🔠❓MCQ. In India, the price of petroleum products has been deregulated to _ _. (CDS-2013-II)
(a) reduce the burden of subsidies given to the oil companies
(b) discourage the exploration of oil reserves in the country
(c) discourage the demand for private vehicles
(d) curb the use of black money in the economy
27.10💼💼💼💼 FISCAL STIMULUS (राज� प्रो�ाहन पेकेज)
When govt ⏬taxes and/or ⏫ public procurement (सरकारी खरीद) to ⏫ demand & growth in
economy, it’s called “Fiscal Stimulus” (राज� प्रो�ाहन पेकेज).
27.10.1 💼💼💼💼 👳👳 Manmohan’s Fiscal Stimulus (2008-)
⇒ Post-subprime crisis in USA, PM Manmohan announced Fiscal Stimulus (2008) such as
- (1) ⏬ in the Excise duty & Custom Duty on exports
- (2) Businessman were given additional benefits in Income Tax & Corporation Tax, if
they purchased new commercial vehicles.
- (3) Hiked the Minimum Support Prices (MSP) for farmers. �
More in Pillar#4A
⇒ However, the economic surveys observed that such Fiscal Stimulus create new set of problems by
⏫ fiscal deficit in the subsequent years.
27.10.2 💼💼💼💼 🧔🧔 Modi’s Fiscal Stimulus (2019)

2019-Aug: Car sales and GDP growth sharply ⏬, Foreign investors exiting on large scale from
India. So, Finance Minister Nirmala.S announced in 2019-September:
1) �Reduced tax burden on companies. (कं प�नयों के मुनाफ़े पर लगने वाले �नगम करों म� कटौती )
⇒ Indian companies corporation tax slabs ⏬ from 25-30% to 15-22%. �Ref:
Corporation Tax section of Handout for more details.
2) �Reduced tax harassment (कर उ�ीड़न /कर आतं कवाद को कम कर�गे )
⇒ No startups will be subjected to 'angel tax'.
⇒ All tax notices to be issued from centralised system to 'end harassment of taxpayers' by
individual officials.
⇒ GST refunds would be given to entrepreneurs within 30 days.
⇒ Violation of Corporate Social Responsibility (CSR) will be treated as a civil offense and
not a criminal offense.
⇒ (Full) Budget-2019 had hiked surcharge on the income tax paid by Super-rich. As a
result, Foreign investors were exiting from India, fearing extra tax burden. So, we’ll
‘undo’ that budget announcement.
3) �We’ll fix the PSBs (सावर्ज�नक �ेत्र के ब�क को दु�� कर�गे/ पुनपू�जीकरण कर�गे )
⇒ Government will infuse more capital in public sector banks, order them to link loan
interest rates with repo rate or other external benchmarks so, loans may become cheaper
especially for home, auto sector. This will boost sales, revive economy
4) �We’ll encourage car sales & other consumption
⇒ Vehicle Depreciation ⏫ from 15% to 30% (meaning Bizman will get more tax benefits
in Income Tax and Corporation Tax). → businessman encouraged to buy new vehicles.
⇒ Govt departments will buy new petrol/ diesel vehicles.
⇒ GST council ⏬ GST rates on 5 star hotels, outdoor catering, GST compensation cess on
passenger vehicles etc.
Plus many other fragmented reforms to ⏬ taxes, or to ⏫ Government spending on highway
projects etc. are done every now and then. BallbyballNOTIMP.
27.10.3 👻👻💼💼💼💼 🧔🧔 Modi’s Atma-Nirbhar Bharat Economic Stimulus Package (2020)

⇒ (Origin) 2020-March: Government of India initiated nationwide lockdown to prevent the spread
of Corona/COVID-19 pandemic. (कोरोना महामारी के चलते देश�ापी तालाबं दी)
⇒ This lockdown affected the income and livelihood of everyone from corporate companies to
common citizens of India. (सबक� आजी�वका को हानी �ई)
⇒ Therefore, to revive the economy, Prime Minister of India launched Atma Nirbhar Bharat
stimulus package in 2020-May to revive the Indian economy. (अथर्�व�ा को पुनजीवन / प्रो�ाहन का
आ�थक पेकेज)
⇒ It’s centred on five pillars of – Economy, Infrastructure, System, Demand and Vibrant
Demography (�ू �तली जनसां��क�).
Table 5: (DATA) 👻👻Atma Nirbhar Bharat consists of
Amt in lakh cr As per
DATE 👻👻 Components of Atma Nirbhar Bharat
(Originally) 📔📔📔📔ES21
2020-Mar to May 1) RBI’s monetary policies → (Ref#1A2) ₹8 lakh cr ₹13 Lcr
2) PM GARIB KALYAN (PMGKY): Covid Relief ₹17 Lcr
2020-Mar ₹1.70-1.90 lcr
Package →
3) FM Nirmala.S made new announcements made like
2020-May Credit guarantee for MSME, ⏬TDS rates, PM Matsya ₹11 lakh cr
Samda Yojana, Agri infra fund etc.
Amt in lakh cr As per
DATE 👻👻 Components of Atma Nirbhar Bharat
(Originally) 📔📔📔📔ES21
= ₹20 lcr approx. ₹30 Lcr = 15%
ATMANI = 1+2+3=Total कु ल �मलाकर जोड़ी गयी रकम
(10% of GDP) of GDP
Note: Salient features of Atma-Nirbhar is spread across 6 pillars of Handout. Its criticism, how useful
in reviving economy & GDP growth, Nehru vs Modi’s ideas of self-reliance etc. = Ref: 📑📑Pillar#4C
🔠🔠❓MCQ. Which one of the following describes the “fiscal stimulus”? (UPSC-Pre-2011)
1) It is a massive investment by the Government in manufacturing sector to ensure the supply of
goods to meet the demand surge caused by rapid economic growth
2) It is an intense affirmative action of the Government to boost economic activity in the country
3) It is Government’s intensive action on financial institutions to ensure disbursement of loans to
agriculture and allied sectors to promote greater food production and contain food inflation
4) It is an extreme affirmative action by the Government to pursue its policy of financial inclusion
27.11💼💼💼🔨🔨 FISCAL RESPONSIBILITY & BUDGET MANAGEMENT ACT, 2003

FRBM Act: राजकोषीय उ�रदा�य� और बजट प्रबं धन अ�ध�नयम, 2003
Originally it required Union and States to control their deficits with following targets:
- By 2008: ⏬ Fiscal Deficit
- 🧔🧔 For Union: 3% of GDP (GROSS DOMESTIC PRODUCT: सकल घरेलू उ�ाद)
- � For States: 3% of GSDP (GROSS STATE DOMESTIC PRODUCT)
- By 2008: Eliminate Revenue deficit (=make it 0%) of their respective GDP or GSDP.
While some of the state govts achieved them, but successive union govts struggled to meet these
targets so they kept amending the act to extend the deadlines and targets. (ल�ों क� समयसीमा को पीछे
धके लते रहे). E.g. Amendment 2012: No need to have 0% Revenue deficit. Instead it required 0%
Effective Revenue Deficit by 2015. These deadlines were extended even further in subsequent
Finance Bills.
27.12🙌🙌 FRBM: TRIGGER MECHANISM (TO) ESCAPE (DEFICIT CONTROL) CLAUSE

FRBM Act Section 4(2): provides for a trigger mechanism to escape the deficit control related clauses
in the act i.e. Government can overcross the targets in following situations (चु�न�ा 'िट�गर' प�र��तयों मे,
घाटे-�नयं त्रण सं बं धी धाराओं से बच सकते ह�)
1. � National Security / Act of War (रा�ी� य सुर�ा / युद्ध)
2. � � National Calamity (रा��ीय आपदा)
3. � If agriculture output and farm incomes collapse (कृ �ष उ�ादन, आय मे पतन)
4. � Fall in real output/ GDP growth rate beyond x% (�वकास दर म� अ�ा�धक �गरावट)
5. � Structural reforms in the economy with unanticipated fiscal implications (अथर्�व�ा म�
सं रचना�क सुधारों क� राजकोष पे अप्र�ा�शत असर हो.)
🔫🔫 🙌🙌 During above ‘trigger conditions’ (उ� '�ट�गर' प�र��तयों मे)

⇒ FRBM Act Section 4(2): Govt may overcross/deviate the fiscal deficit target by upto 0.5% of
GDP, as recommended by NK Singh’s FRBM review Committee. (घाटे क� मयार्दा/ल�यांक को लांघ देना).
⇒ Individual State Governments may also do similar (e.g. overcross by 0.5% of GSDP), but they’ve
to amend their state FRBM Act accordingly with this provision.
⇒ �Budget-2020: FM cited trigger#5 (structural reforms…..) to escape the FRBM targets for
2019-20 and 2020-21.
Table 6: या�न क� घाटा मे कटौती हमसे ना हो पाएगी'
Fiscal deficit → Original target (मूलत:) Overcrossed After Trigger Mechanism
2019-20 3.3% 3.8%⏫
2020-21 3% 3.5%⏫
- Primary deficit target 0% (2020-21): shifted to 2022-23.
- Revenue Deficit and ERD also over crossed but anyways FRBM Act has abandoned targeting
them since 2018’s amendment.
- � �ES19 had suggested Government to reduce deficit through fiscal prudence. BUT
- � �ES20 (Vol2Ch2) identified following challenges in 2020-21 in reducing deficit:
- Slowdown in economic growth⏬, trade protectionism⏫, geopolitical situations in
West Asia, Oil price = tax collection will be affected. (मं दी, �ापा�रक सं र�णवाद और भू राजनी�तक
तनावों के चलते करो म� अ�� आमदनी के आसार नहीं िदख रहे थे )
- To revive growth in the Indian economy, the Government should relax fiscal deficit
targets → in other words, give fiscal stimulus → economic growth. (घाटा �नयं त्रण ल�यांक मे
ढील देदो, राज� प्रो�ाहन पेकेज दे दो)
- 2020-Corona crisis: Govt’s income ⏬ and expenses ⏫ so deficit rose to unprecedented level.
�Budget-2021: FRBM amended to provide fiscal deficit 6.8% (2021-22) and 4.5% (2025-26)-
because 4.5% target is recommended by 15th FC.
27.12.1 💼💼💼🔨🔨 FRBM: Misc. Concepts

1) � in 2018, instead of immediately reducing the Fiscal deficit to 3.0% FM Jaitley promised to
reduce it to 3% in 2020-21 like a glider gradually descending on its landing target. Hence
subsequent Finance Ministers keep reiterating that we’ll continue on that ‘Fiscal Glide’ (राजकोषीय
सरकाव) path. Although �Budget-2020 FM Nirmala.S used FRBM-trigger to escape it,
temporarily.
2) Fiscal Profligacy (अंधाधुंध राजकोषीय खचर्/आवारगी/ऐयाशी): This phrase is used to denote reckless
extravagance/wasteful expenditure of public money.
3) � If government has targeted to keep the fiscal deficit within 3.3% percent of GDP, but if it
crosses that limit, it’s called ‘Fiscal Slippage’ (राजकोषीय िफसलन).
27.12.2 💼💼💼🔨🔨 🗂🗂 FRBM Act: Documents (द�ावेज़)

FRBM Act requires the Union Govt to present following documents along with the budget:
1) Macroeconomic Framework Statement (�ापक आ�थक ढाँचा �ववरण): to show economic data - GDP,
growth rate, import-exports, and government’s receipts,expenditure etc.
2) Medium Term Fiscal Policy Statement (म�म अव�ध क� राजकोषीय नी�त �ववरण)
3) Fiscal Policy Strategy Statement (राजकोषीय नी�त कायर्नी�त �ववरण): To explain how Govt. is controlling
the deficits, and whether there is going to be any deviation from the target. Note: In real life,
Doc#2 and Doc#3 are published together as "Medium Term Fiscal Policy cum Fiscal Policy
Strategy Statement." (दू सरा और तीसरा द�ावेज वा�व म� एक साथ, एक ही फाइल म� दे देते ह�)
4) Medium-term Expenditure Framework (म�म अव�ध �य ढाँचा �ववरण) → �Budget-2021 and 2022
Government not presented this document in Parliament, due to Corona. �
Note: above DATA Table from 💼💼Budget-2020. Later in 💼💼Budget-2021 and 💼💼Budget 2022, govt
not given such table because Nirmala.S said “fiscal projections for the years 2022-23 and 2023-24 will
NOT be presented. We will amend the FRBM Act to allow this exemption.”
🔠🔠❓MCQ. According FRBM Act, the Govt is under obligation to present three statements before the
parliament along with the Annual Budget. Which one of the following is not one of them? [CDS-2008-I]
(a) Macroeconomic Framework Statement (b) Fiscal Policy Strategy Statement
(c) Medium-term Fiscal Policy Statement (d) Statement showing Short term Fiscal Policy
🔠🔠❓MCQ. Along with the Budget, the Finance Minister also places ‘The Macro Economic Framework
Statement’. The aforesaid document is presented because this is mandated by (UPSC-Prelims-2020)
[a) Long standing parliamentary convention
[b) Article 112 and Article 110(1) of the Constitution of India
[c) Article 113 of the Constitution of India
[d) Provisions of the Fiscal Responsibility and Budget Management Act, 2003
27.13👻👻👻👻👻👻👻FISCAL FEDERALISM: HELPING THE STATES IN ATMANIRBHAR
27.13.1 🧔🧔🧔🧔🧔Helping States → Tax devolution and grants

Corona = Union’s tax income ⏬⏬ but still Union has given the Tax Devolution and grants (कर
अंतरण व अनुदान) to the states, as per the figures announced in the Budget and Finance Commission
report.
27.13.2 🧔🧔🧔🧔🧔Helping States → States’ Fiscal deficit limits ⏫

⇒ Constitution Article 239: States require union govt permission before borrowing money.
⇒ Before: Union had kept states net borrowing ceiling @3% of Gross State Domestic Product
(GSDP) (रा�ों के सकल घरेलू उ�ाद के 3% से �ादा कजर् रा� सरकार नहीं ले सकती)
⇒ �After ATMANI: 3% → ⏫to 5% for 2020-21. रा� सरकार क� राजकोषीय घाटे क� मयार्दा को बढ़ाया गया।
State can borrow extra ₹₹
Sr if State Government does following reform
upto _ _ % of GSDP
1 No conditions /un-tied (�बना शत� के ) 0.50%
a) One Nation One Ration Card System(📑📑Ref: HDT- 0.25%
2
Pillar#)
3 b) Ease of doing business reform; (📑📑Ref: HDT-Pillar#) 0.25%
c) Urban Local body/ utility reforms; (शहरी �ानीय �नकायों गटर 0.25%
4
पानी �व�ा इ�ािद म� सुधार)
5 d) Power Sector reforms(📑📑Ref: HDT-Pillar#5) 0.25%
6 if any 3 of the above (a-b-c-d) reforms done *** 0.50%
Total extra borrowing limit (sum of above six rows) 2% of GSDP. Total for all
States=₹4.27 Lcr
*** However, States who opt for GST compensation Option#1 Back2Backloans, will get
unconditional relaxation. (गैर शत� छू ट) (Ref: More in 📑📑Pillar#2A: GST compensation)
27.14 🧔🧔🧔🧔🧔FISCAL DEFICIT TARGET FOR STATES BY 15TH FC & 💼💼BUDGET-2021

State Govt 2020-21 2021-22 2022-23 2023-24
(रा� सरकारों के �लए)
Fiscal Deficit as % GSDP 3% (increased to 5% as given above) 4%* 4%** 3%
⇒ * �Budget-2021: as per 15th FC recommendations, we'll allow this (4%) + extra borrowing upto
0.5% of GSDP subject to some conditions (शत� के अधीन कु छ और अ�त�र� पैसा भी कजर् म� लेने द�गे).
⇒ ** �Budget-2022: As per 15th FC recommendations, we’ll allow this (4%). But within this 4%
limit, 0.5% will be tied to power sector reforms.
27.15💼💼💼🔨🔨🔨 FISCAL RESPONSIBILITY: NK SINGH FRBM REVIEW PANEL
⇒ Budget-2016: Finance Minister Jaitley felt FRBM Act targets were too rigid and did not allow any
room for the government to address any crisis. (ल� ब�त ही स� थे, उ�� लचीला बनाने क� ज�रत)
⇒ e.g. farm loan waivers during drought period or unemployment allowance during global
financial crisis are not possible if government strictly wants to control fiscal deficit at 3% of GDP.
(अकाल म� िकसानों को ऋण-माफ�, या नौजवानों को बेरोजगारी भ�ा देना असं भव)
⇒ So, FM constituted a panel under NK Singh (ex-IAS, 15th FC chairman) to review the FRBM act.
27.15.1 💼💼💼🔨🔨 FRBM Panel’s Notable recommendations: उ�ेखनीय �सफा�रश�?

- Replace the existing FRBM act with a new act, with an Escape clause i.e. During a war, drought
or economic crisis, the government should be temporarily allowed to cross breach targets. →
Government amended FRBM act for this.
- Set up an independent Fiscal Council for monitoring. → NOT YET Done.
- Adopt a fiscal road map for the union from 2017 to 2023 gradually reduce Union Debt to GDP,
Fiscal Deficit and Revenue Deficit
So, citing NK Singh report (as an excuse), Budget 2018 amended the FRBM targets →
Indicator (Actual) (TARGET) (TARGET) (TARGET)
as % of GDP 2018-19 2019-20 2020-21 2024-25
Fiscal Deficit 3.4% 3.3% 3.0% 3.0%
(reality 3.8%) (reality 3.5%)
Primary Deficit 0.2% 0.2% 0.0 % 0.0%
(reality 0.7%) (reality 0.4%)
Revenue Deficit & ERD These targets are abandoned in FRBM
Union Debt: GDP reduce it Actual Reality: 2019(49.1%), 2020 (59.3%) (Target) 40%
gradually (अभी हमारी ये वा��वक हालत है) (ये हमारा ल� है)
General (=Union+State) Debt Gradually reduce to → 60%
to GDP:
✋Note: most of the above targets not going to be accomplished due to Corona.
27.16💼💼💼🔨🔨🔨 FISCAL RESPONSIBILITY: NK SINGH’S 15TH FINANCE COMMISSION

15th FC expects GDP growth to slowly recover to 7%.
15th FC recommendations / targets for 2021-22 2022- 2023- 2024- 2025-

Fiscal Deficit → → 23 24 25 26
if GDP Growth slower than expected (आ�थक 6.5 (reality 6 5.5 5 4.5**
वृ�द्ध दर य�द उ�ीद से कम) 6.8%)
If our assessment holds (i.e. GDP growth 6 5.5 5 4.5 4
slowly returning to 7%)
if GDP Growth is faster than assessed (आ�थक 6 5.5 5 4 3.5
वृ�द्ध दर उ�ीद से तेज रहे)
**💼💼Budget-2021 has accepted this path (⏬Fiscal Deficit to 4.5% by 2025-26).
⇒ If the state government is undertaking reforms in the power sector (e.g. stopping power theft)
→ Union should allow it to borrow extra money. (�बज�लया/ऊजार् �ेत्र म� सुधार करने वाली रा� सरकारों को क� द्र
सरकार अ�त�र� पैसा कजर् लेने क� अनुम�त द�)
⇒ Evaluation of government schemes → Focus on outcome of the scheme → Department should
be asked to justify why the scheme should be continued if annually it is unable to deliver "X"
outcomes. (सरकारी योजनाओं क� समी�ा करवाई जाए, यिद �नधार्�रत ल� हा�सल नहीं हो रहे तो �वभागों से जवाब तलब िकया
जाए िक �ों इस योजना को रद्द ना िकया जाए?)
⇒ Union Government should set up a High-powered Inter-governmental Group/committee
(उ��रीय अंतर-सरकारी समूह / स�म�त को बनाया जाए)
o to recommend reforms in FRBM Acts of Union and State governments.कानून म� सुधार के �लए
o to Monitor the implementation of Reform the FRBM Act. कानून के अनुपालन क� �नगरानी के �लए
o to Monitor the implementation of 15 finance commission recommendations. 15 वे �व�
आयोग क� �सफा�रशों के अमल क� �नगरानी के �लए
⇒ State Govts should form Public Debt Management Cells to plan their borrowing programme
efficiently. (रा� सरकार अपने कज़� का प्रभावी �प से आयोजन करने के �लए एक सावर्ज�नक ऋण प्रबं धन सेल नामक इकाइयों
को �ा�पत कर�)
⇒ If a state govt does not set up a State Finance Commission by March 2024 then the union
government should stop giving it grants afterwards. (रा� �व� आयोग क� �ापना न करने वाले रा� सरकारों
का अनुदान बं द िकया जाए)
⇒ Union and State governments should avoid any extra budgetary resources/off-budget borrowing.
(क� द्र और रा� सरकार बजेतेटर सं साधनों के उपयोग से बच�)
⇒ Cess and surcharge amount to nearly 18% of the gross tax revenue of the union government. FC
can't allot cess-surcharge amount to State governments. Need to rationalize this. (क� द्र सरकार को
�व�भ� करो से जो कु ल/सकल आमदनी होती है उसका 18% तो उपकर और अ�धभार से ही आता है �जसम� रा� सरकारों को �व�
आयोग िह�ा नहीं दे सकता, इस पर थोड़ा �नयं त्रण िकया जाए.)
27.16.1 💼💼💼🔨🔨🔨 :🎯🎯 Budget marksmanship is Poor, says 15th FC
⇒ marksman = gunman who is skilled in shooting targets. (�नशानेबाज)

⇒ budget marksmanship = ability to keep income & expense within the budget targets/estimates.
however in reality...
2019-20 Budget estimate revised estimate Actual (finalized
(presented on (presented on after 31/3/2020)
1/2/2019) 1/2/2020)
Receipt → Taxes 16 Lcr 15 Lcr 13 Lcr😰😰
Expenditure → Revenue (subsidies, 24.47 Lcr 23.49 Lcr 23.50 Lcr😰😰
loan interest repayment etc)
⇒ Thus the union government is poor in budget marksmanship. (बजट �नशानेबाजी म� कमजोर). Why?
⇒ Because generally the income is overestimated in budget presentation to show a rosy picture
(मीिडया और �वप� के सामने गुलाबी �चत्र प्र�ुत करने के �लए आमदनी के आंकड़ों को वा��वक प�र��तयों क� अपे�ा �ादा बढ़ा
चढ़ा कर िदखाया जाता है)
⇒ but, when the tax collection target is missed → it results in:
😰😰problem#1) Tax authorities engaging in tax terrorism / litigation (कर आतं कवाद और मुकदमे बाजी)
Year 2012 2020

Direct Tax dispute amount less than 3 lakh cr nearly 10lakh cr
😰😰problem#2) prediction error leads to ad-hoc expenditure management → A) excessive Reliance
on extra budgetary resources B) randomly cutting the scheme expenditure → not paying the
contactors on time → substandard quality of construction. (अनुमान म� ऐसी गल�तयों के चलते �य प्रबं धन
तदथर्/अ�ाई �प से िकया जाता है, प�रणाम ��प योजनाओं के खचर् म� कटौती कर दी जाती है, ठे केदारों को पैसा व� पर नहीं
चुकाया जाता → वे कमजोर गुणव�ा क� सड़क मकानों का �नमार्ण करते ह� इ�ािद)
27.17💼💼💼🔨🔨🔨 FISCAL RESPONSIBILITY: FREEBIES / REVDI CULTURE

⇒ ‘Revdi Culture’ is a term used by PM Modi to denote the bad habit of political parties to
announce freebies to win elections even if they are not financially sustainable.
⇒ Supreme Court also criticised this & asked the union govt to take action. Topic is still developing,
we will revisit it after new observations of economic survey 2023 in Win23 Series.
⇒ Until then you can listen to this Mains Quality Enrichment Program (QEP) lecture:
https://unacademy.com/class/mains-economy-qep2-budget-taxation-gdp-subsidy-deficit-
disinvestment/A7YOHAUO
27.18💼💼💼🔨🔨🔨 FISCAL RESPONSIBILITY: FISCAL FEDERALISM CHALLENGES

⇒ listen to this Mains Quality Enrichment Program (QEP) lecture:
https://unacademy.com/class/mains-economy-qep2-budget-taxation-gdp-subsidy-deficit-
disinvestment/A7YOHAUO
27.19💼💼💼🔨🔨🔨 FISCAL RESPONSIBILITY: MISC BODIES
27.19.1 💼💼💼🔨🔨 Expenditure Management Commission (2014)

⇒ FinMin setup under Dr. Bimal Jalan. (�य प्रबं धन आयोग)
⇒ Gave suggestions on how to ⏬ fiscal deficit, how to ⏬ subsidy bill etc.
27.19.2 💼💼💼🔨🔨🔨 Public Debt Management Agency (PDMA): सावर्ज�नक ऋण प्रबं धन एज�सी
⇒ RBI decides repo rate & also undertakes open market operation for buying and selling of G-sec.
⇒ Most of the G-sec are purchased by public sector banks, insurance and pension funds.
⇒ As Banking-regulator, the Reserve Bank can prescribe Statutory Liquidity Ratio (SLR) → which
requires banks to keep a portion of their deposits in liquid assets like cash, gold, G-sec and other
securities approved by RBI. (Ref: 📑📑Pillar#1A2: monetary policy)
⇒ So, this creates a ‘conflict of interest’ for RBI in its role as (1) Banking regulator vs (2) Public
Debt manager. (िहतो का आपस मे टकराव)
⇒ 💼💼Budget-2015 proposed creating an independence Public Debt Management Agency (PDMA)
to takeover these functions of RBI.
⇒ But later plan was put on a back burner due to RBI’s objections.
⇒ 2019: NITI Aayog Vice Chairman Rajiv Kumar again reiterated the need to setup PDMA. But,
afterwards, not much in news limelight. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
27.19.3 💼💼💼🔨🔨🔨 Fiscal Council (राजकोषीय प�रषद)

⇒ (Origin) Fiscal Council is an independent authority, usually setup by a law, to supervises the
fiscal policy in the country. (राजकोषीय नी�त क� �नगरानी हेतु एक �तं त्र सं �ा)
⇒ e.g. Sweden, Hungary, & some other western countries. Its functions include:
 Monitoring Govt's Receipt, Expenditure, Annual Budget.
 Ensure that Govt's borrowing remains within the legally permitted limits.
 Recommend fiscal stimulus and fiscal prudence measures depending on the economic
situation of the country. (समय समय क� ज�रत के िहसाब से �व�ीय प्रो�ाहन और �मत��यता के उपाय देना)
27.19.3.1 💼💼💼🔨🔨🔨 Fiscal Council: Why do we need it in India?

Budgeting process in India suffers from following lacunas. (वतर्मान प्रणाली म� खा�मया)
⇒ Overestimation of tax receipts, Creative accounting and data dressing in the budget. (आंकड़ों को बढ़ा
चढ़ा कर/ मरहम पट्टी लगाकर िदखाना)
⇒ If not revenue targets not achieved then
o Extra Budgetary Resources (बजेटेतर सं साधन)
o Fiscal repression of the households via LIC. (�व�ीय दमन)
o Frequent changes in the FRBM goalposts. (ल� बदल देना)
⇒ Engaging Practices against the spirit of cooperative federalism (सहकारी सं घवाद):
o Imposition of cess/surcharge on Union taxes, to avoid FC devolution.
o Union irregularly releasing GST & Finance Commission Devolution/grants to State
governments. (अ�नय�मत �प से पैसा रा�ों को देना)
⇒ India's sovereign credit rating also ⏬ because of such mismanagement.
Therefore, NK Singh’s FRBM Review Panel (2017) and successive Finance Commissions have
recommended setting up such an Independent Fiscal Council in India. because:
😰😰Existing Mechanism (वतर्मान ��त /�व�ा /प्रणाली) 🤩🤩Whereas Fiscal Council
Parliamentary Committees such as Public Accounts, Estimates technical experts (तकनीक�
Committee etc. are made up of Members of Parliament, who may �वशेष� होंगे)
not have the technical expertise over economics and public finance.
(सं सद क� लोक लेखा स�म�त, प्रा�लन स�म�त )
Comptroller and Auditor General (CAG) will audit the government continuously strive to keep
Expenditure after the spending has taken place. (�नयं त्रक और महालेखा the fiscal deficit under
परी�क- खचर् हों जाने के बाद वो जांच करता है) control. (अ�वरल �नगरानी)
😰😰Existing Mechanism (वतर्मान ��त /�व�ा /प्रणाली) 🤩🤩Whereas Fiscal Council
Finance commission: Constituted every 5 yrs, stops functioning will function continuously
after submitting report. Until new body setup. round the year.
27.19.3.2 💼💼💼🔨🔨🔨 Fiscal Council: conclusion YES we NEED it for INDIA

Considering the aforementioned issues, need of the hour is to set up an independent fiscal council,
(�तं त्र राजकोषीय प�रषद क� �ापना वतर्मान समय क� ज�रतों के िहसाब से अ�त आव�क है)
⇒ To make the Public Finance Management in India more prudent, transparent, accountable and
efficient. (सावर्ज�नक �व�ीय प्रबं धन को �ववेकपूणर्, पारदश�, जवाबदेह और कु शल।)
⇒ To achieve UN SDG Goal #16: Develop effective, accountable and transparent institutions at all
levels of governance. (सतत �वकास ल�: शासन के हर एक �र पर जवाबदेही सं �ानों का �नमार्ण)
27.20🎺🎺 (MAINS) PUBLIC EXPENDITURE MANAGEMENT: CHALLENGES

- (Definition) Public expenditure management deals with allocation of Govt’s economic resources
into three channels : सावर्ज�नक �य प्रबं धन - आ�थक सं साधनों का आवं टन करता है:
- 1) Public Administration (लोक प्रशासन)
- 2) Economic Development (आ�थक �वकास)
- 3) Welfare Schemes (क�ाणकारी योजनाएँ )
- 1991: Liberalization, Privatization and Globalization (LPG: उदारीकरण, �नजीकरण और वै�ीकरण)
reforms → then following challenges in management of public expenditure:
Sector Pre-LPG Post-LPG-1991 (More in Pillar4: LPG)
Banking: बासेल Nationalisation of banks, Twin balance sheet syndrome, govt required to
मानदंड: पुनः Basel norms less recapitalise the public sector banks because they
पूंजीकरण के �लए ढेरstringent. (More in cannot do it on their own → Financial burden ⏫
सारी रकम चािहए 📑📑Pillar#1B2)
Monetary Policy High level of fiscal - Private Sectors Investment demand,
and Fiscal Policy deficit. consumerism has ⏫ → RBI is forced to cut
RBI’s monetary policy down the SLR to increase the loanable funds.
मौ�द्रक नी�त एवं which mandated high - Since high level of fiscal deficit was one of the
राजकोषीय नी�त level of SLR to finance
reasons for BOP crisis, now Govt has statutory
Government’s
FRBM requirements to control fiscal deficit.
borrowing using bank
- RBI has statutory requirement to control
depositors’ money.
inflation - So rampant borrowing from RBI is
becoming difficult for government.
Private sector Share of private sector in - Drastically ⏫.
India's economic growth
and employment
�नजी �ेत्र को �नवेश म� generation was limited - Private sector requires ₹20 lakh crores every
लाखों करोड़ों �पए due to the License Quota year for sustaining the current level of
चािहए →सरकार Inspector Raj. (More in Economic Growth & Employment generation
जनता क� बचत का Pillar4) - Therefore, if govt does not control fiscal deficit
सारा पैसा कज� म� ले → crowding out of the private investment =
लेगी, तो �नजी �ेत्र को
⏬India’s growth (although latest �
�ES21
पूंजी �मलेगी कै से
disagrees with this argument)
PSU Loss making public - Difficult to sustain the Public Sector
सावर्जा�नक �ेत्र के sector undertakings were Undertakings against the heavy competition of
उपक्रम, नुकसानी म� supported by the private sector be it Air India or BSNL.
चल रहे ह� तन�ाह देने Government as white - Govt unable to pay salaries, even no buyers for
का भी पैसा नहीं elephant. their privatization
Infrastructure Population was sparse. - Population has ⏫
Most people didn't have
- Aspiration of people have ⏫
बु�नयादी अवसं रचना access to TV, fridge,
- They want clean water, 24/7 electricity, good
के �लए ढेर सारा पैसा mobile, internet or social
quality of roads;
चािहए जो सरकार के media
- Lot of money required for infrastructure
पास नहीं Their demand for
finance,
electricity was low.
- Railway alone requires ₹50 lakh crore between
2016-30, Govt can’t spend more than ₹1.6 lakh
crore a year.
Welfare Right to education, right - Now they have become legal rights so the govt
to food, right to work is required to allocate large amount of funds
�श�ा, अ� और (MGNREGA) were not - Post-LPG era, the level of education and
रोजगार क� �व�भ� yet ‘legal rights’. demand for various amenities, and even per
क�ाणकारी capita income has increased, but that has not
योजनाओं के �लए ढेर been a corresponding increase in our tax to
सारा पैसा चािहए जो
GDP (11%, where as countries with similar
सरकार के पास नहीं
growth have >20%).
Public Small size of - Public aspirations have ⏫, number of
Administration Government staff
welfare schemes ⏫, Border Security
लोक प्रशासन और Their salary levels were
challenges ⏫ → employees have ⏫
र�ा के �लए सरकार ने also low.
- 6th pay commission and 7th pay commission
ब�त लोगों को नौकरी
→ वेतन आयोग क� → salaries have ⏫
�सफा�रशों के िहसाब से - �Challenge? ‘Contracting out of the jobs’ to
मोटी मोटी तन�ाह keep revenue deficit minimal. NPS where
Employee himself is largely responsible for his
pension etc. ⏬vacancies in UPSC/SSC
27.20.1 ⚰ 😰😰Public finance challenges: Corona ex-gratia Yojana

⇒ Disaster Management Act 2005’s Section 12: requires National Disaster Management Authority
(a statutory body headed by PM) to recommend minimum standards of relief to person affected
in a disaster. (आपदा प्रबं धन क़ानून क� धारा 12 म� ये �लखा है िक रा��ीय आपदा प्रबं धन प्रा�धकरण ने आपदा से प्रभा�वत लोगों
के �लए �ूनतम सहायता घो�षत करनी होगी।)
⇒ Home Ministry has notified Corona as a disaster. So, PIL in SC asking Govt to pay compensation
to the family of every dead person. (गृह -मं त्रालय पहले ही कोरोना महामारी को आपदा घो�षत कर चुका है, तो कु छ
लोगों ने सुप्रीम कोटर् म� जनिहत या�चका दायर क� िक कोरोना म� मरे सभी लोगों के प�रजनों को मुआवज़ा िदया जाए)
⇒ 2021-Oct: SC ordered Rs.50,000 for family of every person who died in Corona. This is posing
challenges to Govt’s fiscal capacity.
✍Conclusion: Thus, in the aftermath of LPG reforms, Nation's per capita income has ⏫,
Governments expenditure has ⏫, demands for infrastructure investment ⏫. But not adequate
⏫increase in the tax to GDP levels. As a result, public expenditure management has become a
challenge to the government. (कर राज� म� आमदनी क� कमी के चलते सावर्ज�नक-�य-प्रबं धन, चुनौती बन गया है)
28 💼💼 TYPES OF BUDGET: बजट के प्रकार

28.1 REVENUE VERSUS CAPITAL BUDGET: राज� बनाम पूंजीगत बजट
👜👜 Revenue budget: राज� बजट 👛👛 Capital Budget पूंजीगत बजट
associated with the income and expenditure that
It is associated with the income and expenditure
are of long term nature and/or results into
that are of temporary in nature (1 year or less),
creation of permanent / capital /financial assets,
and/or do not result into creation of permanent /
such as land, buildings, machinery, equipment,
capital / physical / financial assets.
shares, bonds, G-sec.
Taxation, revenue from selling goods and
services, interest payment on previous loans, Borrowings, disinvestment, and expenditure on
salaries, pension, subsidies and other non- assets creation.
developmental expenditure
🔠🔠❓MCQ. Which is/are included in the capital budget of the Government of India? (Asked in UPSC-Pre-2016)
1. Expenditure on acquisition of assets like roads, buildings, machinery, etc,
2. Loans received from foreign governments
3. Loans and advances granted to the States and Union Territories
Ans Codes: (a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3
28.2 💼💼💼💼GENERAL BUDGET VERSUS RAILWAY BUDGET (आम बजट बनाम रेलवे बजट)
- 1920-21: Acworth Committee recommends separate Railway Budget. This practice continued
even after Independence, first the railway minister would present the Railway budget in
parliament, and after a few days finance minister will present General Budget.
- NITI Aayog’s Bibek Debroy committee recommends its abolition because
- 1) No constitutional requirement (सं वैधा�नक �प से यह अ�नवायर् नहीं है)
- 2) During Coalition Governments, Rail budget was used for populism, cheap fares which eroded
the profitability of Railways. (गठबं धन सरकारों म� लोकलुभावन, भारी घाटा)
- 3) during the British time, railway revenue used to be quite large compared to other sources of
revenue, but after independence, Railway revenue is quite small compared to overall General
budget- So it does not deserve a special presentation.
Therefore, Modi govt merged Railway budget with General budget from 2017 (�वलीनीकरण).
28.3 💼💼💼💼 PLAN VS NON PLAN EXPENDITURE BUDGET:
योजना बनाम गैर योजना �य बजट: is a method of classifying the expenditure side
Plan (expenditure) budget: योजना Non-Plan (Expenditure) Budget: गैर योजना
⇒ Central Plans (the Five-Year Plans) - Expenditure related to general, economic and
⇒ Central assistance for State Five Year Plans. social services of the government; Interest
⇒ It is further subdivided into payments, defence services, subsidies, salaries
1) revenue expenditure (e.g. teachers and pensions.
salary under Sarva Shiksha Abhiyan) - It is also further subdivided into revenue
2) capital expenditure (e.g. new school expenditure (e.g. soldier salaries) and capital
buildings to be constructed under expenditure (e.g. Building new aircraft
Sarva Shiksha Abhiyan) carrier).
Since Budget-2017, Modi govt stopped the practice of displaying the plan and non plan expenditure
separately because (1) No such constitutional requirement (2) Government had dissolved the
planning commission in 2014-15 (3) 12th Five Year Plan (FYP:2012-17) was ending in 2017 anyways.
(More about PC & FYP in 📑📑Pillar#4C)
28.4 💼💼💼💼BUDGETING (बजट �नमार्ण क� प्रिक्रया/ रणनी�त)
It is the process / strategy with which the budget is created.
🖋🖋Traditional / पारंप�रक / लाइन-आइटम बजट: Simply calculating the income and expenditure without
Line-item measuring the underlying benefit or performance
Budgeting - Allot ₹ 10,000/- to buy a new bed in government hospital
- Allot ₹ 50,000 to buy a new computer in government department
⏱Performance calculating income and expenditure tied with underlying benefit or performance
budgeting प्रदशर्न - Allot ₹ 50,000 to buy a new computer with target that it should result in 30%
बजट the faster clearance of RTI-applications compared to pen and paper
- Such budgeting helps measuring cost:benefit and efficiency.
⭕Zero based - In a traditional budgeting, the approach is “automatic and incremental e.g.
budgeting “Last year we allotted ₹ 50,000 crore to educational schemes, so this year we
शू� आधा�रत बजट should allot 55,000 crores, lest the opposition parties create controversy.”
- Whereas in Zero Based Budgeting the budget is viewed as a fresh exercise
from zero base. So, each department has to justify its budget demands to
finance ministry. E.g. if last year ₹ 50,000 crores given to education schemes
but still 60% of class 5 kids cannot read class 2 books, then we’ll delete /
modify that scheme.
🌞🌞 Sunset - In a traditional budgeting, once a scheme is launched it runs perpetually, even
Budgeting after regime change e.g. MNREGA, Mid-day Meal.
सूयार्�/ समयसीमा - In a Zero Based Budgeting, schemes are reviewed every year and then they
may get discontinued or continued (with or without modifications).
का बजट
- In Sunset Budgeting, scheme are announced with deadline. e.g. MEITY to give
MDR subsidy for a period of two years starting from 1/1/2018. Thus, this
scheme will self-destruct after deadline just like the sun will set after the sunset.
👜👜 Gender This system was started from Budget-2005.
budgeting It is not a separate budget but rather within the general budget, FinMin will put a
ल��गक बजट separate expenditure docs showing women specific Schemes, Targets,
Commitments- in two parts:
✓ 👩👩Part A = Women Specific Schemes, i.e. which have 100% allocation meant
for women. E.g. Minority Affairs Ministry’s “Nai Roshni” scheme for
Leadership Dev. in Minority Women.
✓ 👩👩👩👩Part B = Pro Women Schemes, i.e. atleast 30% allocation meant for
women. E.g. HRD Ministry → Samagra Shiksha for pre-nursey to Class12
both boys & girls covered.
28.5 💼💼💼💼💼💼TRIBAL SUB PLAN & SCSP

From 70s, Govt required individual ministries to earmark funds for SC/ST within their overall funds:
A. “Scheduled Castes Sub-Plan (SCSP: अनुसू�चत जा�त उप-योजना)” → Social Justice Ministry monitors
via e-utthaan.gov.in
B. “Tribal Sub plan (TSP: आ�दवासी उप योजना)” → Tribal Affairs Ministry monitors via stcmis.gov.in
which is not a fancy name so we need not memorize unlike e-utthaan.
Sidenote: Although not required by the Constitution, but Government also tables separate
documents showing 1) allocation for children 2) allocation for NORTH EASTERN AREAs.
28.6 💼💼💼💼💼💼OUTPUT OUTCOME FRAMEWORK FOR SCHEMES:
योजनाओं के �लए उ�ादन प�रणाम ढाँचा

Started from Budget-2017 onwards, the FinMin uploads a document showing outlay output and
outcomes for each ministry and department. These are monitored by NITI Aayog. For example,
Ministry & Scheme Outlay Output (Deliverables) Outcome
MEITY → Pradhan ₹ 400 Give computer training to Increased number of
Mantri Gramin Digital crores 5 crore persons in rural digitally literate persons in
Saksharta Abhiyan area rural areas
(PMGDISHA)
28.7 💼💼💼💼CASH VS ACCRUAL BUDGETING: नगदी बनाम उपचय बजट
Outdated/Faded technical topic. I am deleting it from latest handout.
28.8 💼💼💼💼💼💼LAPSABLE FUNDS & MARCH RUSH: �पगत �न�ध और माचर् ��ता
Appropriation act allows the government to spend funds from consolidated fund of India for a
period of one year (ending in 31st March).
- If any allotted funds remain unutilised, then by the ‘ rule of lapse ’, they must be returned (&
govt will have to again seek Parliament approval for the next financial year using next
appropriation bill). So, in March, there is a rush among the Govt orgs to spend money (in a
haphazard / reckless manner) lest they’ve to return it back.
- 2017-18: Finance ministry issued directive that in “In the fourth quarter (Jan to March) and in
the March-Month, Govt organizations shall not spend more than “x%” & “y%” of funds”. This
helps controlling the March Rush.
28.9 💼💼💼💼💼💼 NON LAPSABLE FUNDS & NO RUSH: �बन�पगत �नधी

The money in such fund will not lapse on 31st March, so it can be used in future without getting
another approval from parliament. e.g. Dept of Economic Affairs → Nirbhaya fund → women
safety related projects.
- 😰😰Criticism? Since fund is non lapsable, Departments become very lax in utilising it. Budget
2013 started Nirbhaya fund in the aftermath of Dec-2012 Gangrape @Delhi. The successive
budgets kept adding ₹ into it. By 2018: ~3000 crore but not even 50% utilized
- 2018: Defence ministry demands “ non lapsable defence modernization fund”, but Finance
ministry rejected for similar same reason. (money will remain unspent.) Although later 15th FC
has recommended Modernisation Fund for Defence and Internal Security (MFDIS) ₹ 2.38 Lcr
(total for 2021-26). (More in 📑📑Pillar#2B: 15th FC)
28.10📯📯📯📯TYPES OF SCHEMES (योजनाओं के प्रकार)
📯📯📯📯 Central Sector Schemes 📯📯📯📯📯� Centrally Sponsored Schemes

क� द्रीय �ेत्र क� योजनाएं ⏬ क� द्र द्वारा प्रायो�जत योजनाएं
100% funded by Union States may have to bear some cost. [Note: NSoAP:100% is exception-
100% funded by Union. For more refer to Pill1D]
Examples: Further subtypes:
Urea Subsidy, MDR Subsidy, Jan 1. Core of the Core (अ�त मह�पूणर् योजनाऐं): ₹96kcr in Budget21
Aushadhi Scheme, BharatNET, a. Only 6 schemes: MNREGA, NSoAP**, Umbrella
Pradhan Mantri Gramin Digital schemes for SC,ST,Minorities & other vulnerable groups.
Saksharta Abhiyan For these schemes, UPA-era funding pattern will
(PMGDISHA) etc. continue.** [Note: NSoAP:100% is exception- 100%
funded by Union. For more refer to Pill1D]
In the union budgets, collectively b. Those schemes deal with social protection and social
more quantity of ₹₹ allotted for these inclusion are given first priority in the funding for
types of schemes. National Development Agenda
2. Core Scheme ( मह�पूणर् योजनाऐं): 2.83 Lcr in 💼💼Budget-2021
a. e.g. PM Gram Sadak, PM Awas, Swachh Bharat, AMRUT
& Smart cities etc. Here funding pattern could be 50:50,
60:40, 70:30, 75:25, 80:20 or 90:10 depending on a
particular scheme and depending on whether it’s a
general / special cat. state.
⇒ UPA/Congress Raj: hundreds of centrally sponsored schemes (CSS) with overlapping objectives
and duplication of efforts.
⇒ Then Modi-Raj: 2015-16, NITI Aayog forms Shivraj Singh Chouhan Panel for rationalization of
CSS (योजनाओ का सु�व�ीकरण) → Ultimate outcome given in above table.
⇒ In 2016, 3rd category of Centrally Sponsored Schemes was “Optional Schemes” viz. 1) Border
Area Development Programme 2) Shyama Prasad Mukherjee Rurban Mission with funding
pattern (50:50 | 80:20), But over the years they shifted in the Core schemes. So IGNORE
⇒ For any Union Territory without Legislature: 100% funding by Union for any scheme in any
category. ✋We will look at the schemes’ features in the respective pillars.
⇒ To disburse scheme ₹ & monitor it effectively, FinMin →Dept of Expenditure Controller
General of Accounts (CGA) → Public Financial Management System (PFMS) webportal.
28.10.1 👜👜👜👜Budget-2022: CSS rationalisation

Govt has reduced the number of CSS from 130 → ⏬ 65. (योजनाओं क� सं �ा म� कटौती)
 Some schemes are Stopped e.g. Dairying Through Cooperatives, National Dairy Plan-II and
National Dairy Plan. (बं द कर िदया)
 some schemes are merged: e.g. (एक�करण)
 I] previously Woman Child development Ministry was running 19 scheme is now they are
compressed into just 3 viz A) Mission Shakti B) Mission Vatsalya C) Saksham Anganwadi and
POSHAN 2.0. (More in �Pillar#6)
 ii] Ministry of Agriculture running 20 CSSs have been rationalised into three schemes: A)
Krishionati Yojana B) Integrated Scheme on Agricultural Cooperative C) Rashtriya Krishi
Vikash Yojana. (More in �
Pillar#4A)
😍😍effective monitoring, duplication of efforts⏬ → subsidy bill & deficit ⏬ (प्रभावी �प से �नगरानी,
योजनाओं म� प्रय�ों का �थर् दोहराव न हों, तािक स��डी और सरकारी घाटे का बोझ कम हो जाए.)
28.10.2 📯📯📯📯Ministry-wise Highest Allocation

- �Budget-2021: Housing And Urban Affairs <Health Family Welfare < Education <Railways
<Road Transport Highway <Agriculture <Rural Development <Home Affairs <Consumer
Affairs Food And Public Distribution <Defence (highest-सबसे �ादा पैसा र�ा मं त्रालय को �मला है)
- � �Budget-2022: 1) Communications < 2) Chemicals and Fertilisers < 3) Agriculture and
Farmers' Welfare < 4) Rural Development < 5) Railways < 6) Home Affairs < 7) Road Transport
and Highways < 8) Consumer Affairs, Food and Public Distribution < 9) Defence (Highest)
28.11�MOCK QUESTIONS FOR UPSC MAINS GSM3 (250 WORDS EACH)
1) (GSM3-2021) Distinguish between capital budget and revenue budget. Explain the components
of both these Budgets. (पूँजी बजट तथा राज� बजट के म� अ�र �� क��जए। इनके सं घटकों को समझाइए।) Ans.
Solved in Free Sp. Class
2) (Asked in GSM3-2013) What are the reasons for introduction of Fiscal responsibility and Budget
Management (FRBM) act, 2003? Discuss critically its salient features and their effectiveness.
राजकोषीय उ�रदा�य� और बजट प्रबं धन (FRBM) अ�ध�नयम, 2003 को लागु करने का �ा कारण है? इसक� प्रमुख �वशेषताओं
और उनक� प्रभावशीलता पर गं भीर �प से चचार् कर�.
3) (Asked in GSM3-2016) Discuss the requirements and status of gender budgeting in the Indian
context? भारतीय सं दभर् म� �लगं बजट क� आव�कताएं और ��त चचार् क��जए.
4) (Asked in GSM3-2019) public expenditure management is a challenge to the govt of India in the
context of budget-making during the post-liberalization period. Clarify it. (उ�र-उदारीकरण अव�ध के
दौरान, बजट �नमार्ण के सं दभर् म�, लोक �य प्रबं धन भारत सरकार के सम� एक चुनौती है | इसको �� क��जए)
5) Examine critically the apprehensions surrounding the issue of Union Government’s external
borrowing in external currency. क� द्र सरकार के �वदेशी ऋण को �वदेशी मुद्रा म� जुटाने के मसले के साथ जुडी आशं काओं
क� समी�ा क��जए.
6) Discuss the need of setting up an independent fiscal council in India. (एक �तं त्र राजकोषीय प�रषद
�ा�पत करने क� आव�कता पर चचार् कर�)
7) Discuss the need and significance of Countercyclical Fiscal Policy for reviving India's growth in
the aftermath of coronavirus, And examine critically the potential apprehensions about the
same. (कोरोनावायरस के प�ात भारतीय अथर्तंत्र को पुनज��वत करने के �लए प्र�त चक्र�य राजकोषीय नी�त क� ज�रत और मह�
क� चचार् क��जए और उसी के बारे म� सं भा�वत आशं काओं/�चतं ा/ भय�ानो क� गं भीरता से समी�ा क��जए)
Next Handout: Pillar3A: Balance of Payment
PILLAR#3A: Balance of Payment, International Trade, Currency Exchange
Table of Contents
30 ⛽🎖🎖Pillar#3A: Balance of Payment (भुगतान सं तुलन) .......................................................................487
30.1 🐯🐯 RBI’s (Actual) method of classifying BoP ..........................................................................488
30.1.1 Notes about the Data Tables in this Handout Pillar#3A .................................................488
30.2 ⛽🎖🎖 Balance of payment → Current Account → ..................................................................489
30.2.1 ⛽🎖🎖 Balance of Trade (BoT �ापार का सं तुलन) .....................................................................489
30.2.2 ⛽🎖🎖 Net Terms of Trade (NTT) or Commodity terms of trade ..................................490
30.2.3 ⛽🎖🎖 Gross (Barter) Terms of Trade (GTT, �सफर् �प्र�लम के �लए, अत: िहदं ी अनाव�क)..........490
30.2.4 ⛽🎖🎖 Income terms of trade (ITT) ....................................................................................490
30.3 ⛽🎖🎖 Top Import and Exports of GOODS for India: ..............................................................490
30.3.1 ⛽🎖🎖 Goods Export Before & AFTER Corona: Notable items ......................................491
30.3.2 India’s TOP Agriculture Exports .......................................................................................491
30.3.3 ⛽🎖🎖 Goods Import Before & AFTER Corona ................................................................491
30.3.4 ⛽🎖🎖 SERVICES Export Before & AFTER Corona (i.e. 2018, 2019) ...........................491
30.3.5 ⛽🎖🎖 SERVICES Import Before & AFTER Corona (i.e. 2020, 2021) ...........................492
30.3.6 🛒🛒🛒🛒India’s trade partners: Import / Export ................................................................492
30.3.7 India’s trade partners: Trade Surplus / Deficit With Notable Countries .....................493
30.3.8 Largest importer and exporter in world (before Corona 2020) ....................................493
30.4 💌💌💌💌 Reports / Indices related to Export & Remittance ......................................................494
30.4.1 💌💌💌💌Export Preparedness Index by NITI ( �नयार्त तैयारी सूचकांक)....................................494
30.4.2 💌💌💌💌Global Survey on Digital and Sustainable Trade Facilitation by UNESCAP ..494
30.4.3 💌💌💌💌Report: Goods Trade Barometer Index .................................................................494
30.4.4 💌💌💌💌 Remittance: World Bank’s Remittance Report (�व� ब�क क� धनप्रेषण �रपोटर्)..........495
30.4.5 💌💌💌💌Report: Misc. .............................................................................................................495
30.4.6 💌💌 Remittance: Sidetopic → Pravasi Bharatiya Diwas (PBD).....................................495
30.5 ⛽Balance of payment → Current Account → Import of Oil ...............................................495
30.5.1 ⛽� Domestic Oil Exploration Policies? .......................................................................496
30.5.2 ⛽�: �♂NELP’s primary limitations were → ..........................................................496
30.5.3 ⛽📯📯📯📯HELP Policy (हाइड�ोकाबर्न अ�ेषण और अनु��/लाइस��सगं नी�त) .................................496
30.5.4 ⛽India’s Strategic Oil Reserves (भारत के साम�रक तेल भ�ार)...............................................497
30.5.5 ⛽📈📈📈📈 Crude Oil prices & OPEC (क�ा तेल) .................................................................497
30.5.6 ⛽📈📈📈📈 Crude Oil: Russia-Ukraine War (2022) ..........................................................498
30.5.7 ⛽📈📈📈📈 Crude Oil: related concepts?.............................................................................499
30.5.8 ⛽💰💰BoP: Current → Fall of Crude oil prices in negative figure .................................499
30.5.9 ⛽💰💰 Petrol & Diesel Prices & Taxes in India ................................................................499
30.5.10 ⛽ Electric Vehicles, Ethanol Blending etc...................................................................499
30.6 🎖🎖Balance of payment → Current Account → Import of Gold ............................................499
(Batch: PCB6) Mrunal’s Economy Pillar#3A- BoP & Currency Exchange→ Page 484
30.6.1 🎖🎖🐯🐯RBI’s 80:20 Scheme (2013-14) .................................................................................500
30.6.2 🎖🎖🎖🎖🐯🐯 Sovereign Gold Bond Scheme (2015: �णर् बांड योजना) .......................................500
30.6.3 🎖🎖🎖🎖🐯🐯 Gold Monetization Scheme (2015: �णर् मुद्रीकरण योजना) ...................................500
30.6.4 🎖🎖🎖🎖🦁🦁 Indian (Sovereign) Gold Coins (2015: भारतीय �णर् �स�े ) ...................................501
30.6.5 🎖🎖🎖🎖: Gold price in Corona (कोरोना महामारी के दौरान �णर् क़�मत�) ...........................................501
30.6.6 Gold import: ⬆ customs duty (2022).............................................................................501
30.6.7 ☕BoP → Current → Export → GI Tag ........................................................................502
30.6.8 ☕🔖🔖 GI Logo .....................................................................................................................502
30.7 🍋🍋🍋🍋BoP → Current → Exports → SEZ ...............................................................................503
30.7.1 🍋🍋🍋🍋🕵🕵Baba Kalyani report on SEZ..............................................................................504
30.7.2 🍋🍋🍋🍋🕵🕵SEZ → DESH Hubs ...........................................................................................504
30.7.3 👜👜👜👜Budget-2022 Announcements to ⏬CAD ............................................................505
30.7.4 💎💎💎💎💎💎BoP → Current → Exports → Foreign Trade Policy (2015-2020) ..........505
30.7.5 🥵🥵 Foreign Trade Policy: Challenge / Updates? .............................................................506
30.7.6 🍋🍋🍋🍋Tax Credit for Exporters: MEIS/SEIS ....................................................................506
30.7.7 🍋🍋🍋🍋Tax Credit for Exporters: RoDTEP? .....................................................................506
30.7.8 ⚓Port Logistics: Authorised Economic Operator (AEO)............................................507
30.7.9 📲📲📲📲📲📲 “Assemble in India” | Production Linked Incentive Scheme (PLI) ...........507
30.8 ⛽🎖🎖: 🗃🗃🤲🤲 BoP → Capital Account→ Investment→ FDI / FPI .......................................508
30.8.1 🗃🗃🗃🗃 Foreign Portfolio Investors (FPI: �वदेशी पोटर्फो�लयो �नवेशक) .......................................508
30.8.2 🗃🗃🗃🗃🗃🗃🗃🗃 Foreign Direct Investment (FDI: प्र�� वदेशी �नवेश) .......................................508
30.8.3 🗃🗃🗃🗃🗃🗃🗃🗃 FDI in India → Source Nation and sector-wise Top-5 ...............................509
30.8.4 🗃🗃🗃🗃🗃🗃🗃🗃 Foreign Investment → 100% Automatic permitted in ...............................510
30.8.5 🗃🗃🗃🗃🗃🗃🗃🗃 Foreign Investment → Others ........................................................................510
30.8.6 🗃🗃🗃🗃🗃🗃🗃🗃:🖱🖱🖱🖱 India’s FDI rules for E-Commerce ......................................................511
30.8.7 🗃🗃🗃🗃🗃🗃🗃🗃: 🔥🔥🔥🔥 Hotmoney Effect by FPIs ....................................................................511
30.8.8 🗃🗃🗃🗃🗃🗃🗃🗃Investment: Misc Terms & Reports.................................................................512
30.9 � Yearbook: Ministry of Commerce and Industry (वा�ण� और उद्योग मं त्रालय): ......................513
30.9.1 💼💼Budget-2020 : Medieval dictionary GK about Foreign Trade .................................514
30.9.2 🕵🕵 (2019) DIPP becomes DPIIT (�वभाग का नाम बदला गया) .................................................514
30.9.3 � (2017) FIPB Abolished (�वदेशी �नवेश अनुम�त क� सं �ा को हटाया गया) ................................515
30.9.4 🗃🗃🗃🗃🗃🗃 BoP: Capital → Chinese FDI need Govt approval............................................515
30.9.5 � Related Topic: Cabinet Committees ...........................................................................516
30.9.6 🐯🐯🐯🦁🦁 International Financial Services Centre (IFSC) .........................................516
30.9.7 🐯🐯🐯🦁🦁: � IFSC Authority Act, 2019 ........................................................................517
30.9.8 🐯🐯🐯🦁🦁: � IFSC → Variable Capital Companies (VCC).......................................517
30.9.9 � 🔪🔪 BoP → Capital Account → Debt (Loans & Non Resident Bank deposits) ...518
30.9.10 � 🔪🔪 BoP → Capital Account → Misc. Concept: NIIP .........................................518
30.9.11 � 🔪🔪 BoP → Capital Account → Misc. Concept: VOSTRO, NOSTRO, FCNR,
NRE, NRO 518
30.9.12 � 🔪🔪 BoP: External Debt overhang Problem (ऋण क� अ�धकता) ...............................519
30.10 ⛽🎖🎖: 🗃🗃🤲🤲 BoP → summing up .........................................................................................520
30.10.1 💱💱💱💱💱💱 Sterilization (��रीकरण)?...............................................................................521
30.10.2 💱💱💱💱💱💱: 🧅🧅 🧅🧅 Mundell-Fleming Trilemma (मं डल �े�मगं क� �त्र-आयामी दू �वधा) ...522
30.11 (⛽🎖🎖>🗃🗃🤲🤲)⚠ India’s Balance of Payment crisis (1991).............................................524
30.11.1 (⛽🎖🎖>🗃🗃🤲🤲)⚠ Disequilibrium in BoP: Factors responsible (असं तुलन के कारण) ..524
30.11.2 🐯🐯🐯🐯 RBI’s Forex Reserve: �वदेशी मुद्रा �रजवर् ....................................................................525
31 💱💱 Currency Exchange Rate: मुद्रा �व�नमय दर .....................................................................................526
31.1 💱💱 Exchange Rate Regime: Theory ............................................................................................527
31.1.1 💱💱💱💱 Managed Float / Dirty Float; प्रबं �धत चल/ म�लन चल .................................................528
31.2 💱💱💱 Exchange Rate Regime: Historic ....................................................................................529
31.2.1 💱💱💱💱💱 Fixed exchange rate system → Gold Standard; सोने के मानक/ �णर्मान (1870-
1914) 529
31.2.2 💱💱 🔨🔨🔨 Fixed exchange rate system → Bretton Woods System (1946-1971) ......530
31.2.3 💱💱💱💱Currency Exchange in India ...................................................................................531
31.3 💱💱💱IMF Special Drawing Rights (SDR: �वशेष आहरण अ�धकार).............................................531
31.3.1 💱💱💱IMF SDR Formula weightage reforms 2022 .........................................................533
31.3.2 💱💱💱IMF Quota Reform ...................................................................................................533
31.3.3 💱💱💱IMF Governors .........................................................................................................534
31.3.4 💱💱💱 Dollar- the Global Currency & ”DE-Dollarization”? (वै��क-आर��त-मुद्रा) ........534
31.3.5 💱💱⚔🐼🐼🐼 Yuan as global currency? ..........................................................................535
31.4 💱💱⛽🤲🤲 Currency Convertibility (मुद्रा प�रवतर्नीयता) ..................................................................536
31.5 💱💱✋🐯🐯RBI restriction on convertibility of rupee: �पये क� प�रवतर्नीयता..................................536
31.5.1 💱💱💱💱 Full convertibility of Rupee :�पये क� पूणर् प�रवतर्नीयता? ............................................538
31.5.2 💱💱💱💱 ₹ 🕵🕵 Convertibility → S.S. Tarapore Committee (1997) ...............................538
31.5.3 💱💱💱💱 🐯🐯 ₹ Convertibility → RBI reforms (2004-2019) ............................................539
31.5.4 💱💱💱💱 🐯🐯 FEMA Rules for Indian resident’s overseas investment (2022-Aug) ......539
31.5.5 💸💸💸💸Currency Exchange Rate → Attracting Dollars: VRR and FAR .......................539
31.6 ⚖ FCRA Act .................................................................................................................................540
31.6.1 FCRA on donations ..............................................................................................................540
31.6.2 FCRA on remittance .............................................................................................................540
31.7 💱💱⚔ Currency War 2018 (मुद्रा युद्ध) ...........................................................................................541
31.7.1 💱💱⚔Reverse Currency war? ............................................................................................541
31.7.2 💱💱⚔Currency War → Fall of Indian ₹ & RBI’s Response .........................................541
31.7.3 RBI-Govt’s measures to prevent fall of Rupee (2022-Jul-Aug) .....................................544
31.7.4 Rupee Rouble Agreement ....................................................................................................545
31.7.5 💱💱⚔ Misc. Concepts: Quantitative Easing and Federal Tapering .............................546
31.7.6 💱💱⚔ Misc. Concepts: Helicopter Money & Zero interest rate regimes ....................547
31.8 💱💱 Exchange Rate → Miscellaneous Terminologies ..............................................................549
31.8.1 💱💱 NEER and REER? (Hindi not imp because only prelim relevant) .........................549
31.8.2 💱💱 Purchasing Power Parity: क्रय श�� समता (PPP) ...........................................................551
31.8.3 ✍🏻🏻🎺🎺 Mock Questions for Mains: ......................................................................................551
30 ⛽🎖🎖PILLAR#3A: BALANCE OF PAYMENT (भुगतान सं तुलन)

Economy: 6 Prelims P1 (GS 100 🔠🔠❓MCQs) Mains GSM-1-2-3 (750 Marks)
Remarks
PillarsTM 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022
Among 6 pillars, Third
💱💱3_Intl_Trade, 4 4 7 7 2 4 0 30 0 15 15 lowest utility after
BoP Pill2_Budget.
- BoP is a systematic record of all economic transactions made between the residents and non-
residents of a country for a specific time period, usually a year. िकसी देश के �नवा�सयों और गैर-�नवा�सयों के
बीच िकए गए सभी आ�थक लेनदेन का एक �रकॉडर् है।
- Central Banks of each country prepare BoP records as per the format given in IMF’s BPM-6
manual, all the figures are expressed in Dollar$.
- Since any country’s debit (outgoing money) is a credit (incoming money) for another country
→ World’s NET Balance of Payment is ZERO.
- BoP is further sub classified into two parts → Current Account (चालू खाता) and Capital Account
(पूंजी खाता), based on the nature of transactions.
30.1 🐯🐯 RBI’S (ACTUAL) METHOD OF CLASSIFYING BOP
⛽🎖🎖🎖🎖 Current Account 🗃🗃 🤲🤲 Capital & Financial Account
Goods and services 1. Direct Investment (FDI)
Primary Income: wages, dividend, interest 2. Portfolio Investment (FPI)
Secondary income: remittance, gift, donation 3. Loans / External Commercial Borrowing
(ECB)
4. Non-resident’s investment in Bank,
Insurance, Pension schemes.
5. RBI’s foreign exchange reserve
However, for the purpose of learning, we’ll continue with the traditional classification given in the
textbooks (and in below image)
30.1.1 📊📊Notes about the Data Tables in this Handout Pillar#3A

- In most of the tables, I’ve used data of a stable/normal year 2018-19 to explain theory basics.
Because subsequent years’ data trends have some abnormal trends due to economy slowdown
(in 2019), Corona (in 2020 & 21).
- if I have not mentioned the data of Corona-2020 or 2021 in a particular segment= means latest
economic survey 2022 has not bothered to talk about it loudly, so I’ve not bothered to do self-
google search. अगर िकसी भाग म� म�ने लेटे� डाटा नहीं िदया तो मतलब िक इकनो�मक सव� ने उसे बताने क� जहमत नहीं क�.
- What is the latest data for 2021-22 (ending on 31/3/2022) Ans. I don’t do google search, I’ll wait
for next Economic Survey 2023 (to be published on 2023-Jan-31) to update it. So stay tuned for
Win23 series.
30.2 ⛽🎖🎖 BALANCE OF PAYMENT → CURRENT ACCOUNT →
Component NET Amount in billion dollars 2018-19 2019-20 2020-21
Visible Trade in Goods -180 -157 -102
दशर्नीय
Invisible Trade in Services +82 +85 +88
अ��
Primary Income: Wages, Profit, Interest, -28 -27 -36
Dividend.
Secondary Income/Transfer: Remittance, +70 +75 +73
Gift, Grants, Donations.
Net Current Account Balance (if negative: “Deficit”) 😰😰-57 Bn 😰😰-24 Bn 🤩🤩+24 Bn
(Deficit) (Deficit) (+0.9% GDP)
⇒ From 2001-04: We had Current Account Surplus (चालू खाता अ�धशेष) because, it was a time before
the USA’s subprime crisis when global economy boom had ⏫ our exports). But then we started
to have deficit. India’s current account deficit averaged -2.2% GDP in the last 10 years.
⇒ 2020-21: Corona- imports⏬ compared to export (and we managed to export decently in the
Pharmaceutical and IT sector). So, India witnessed a Current Account surplus for the first time
(2020-21) after last 17 years! कोरोना महामारी व तालाबं दी के चलते आयात म� भारी �गरावट के चलते �पछले 17 सालों म�
पहली बार चालू खाता घाटा नहीं, चालू खाता अ�धशेष �आ!
Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020-21 2021-22 2022-23
CAD as - - - - - - - - - +0.9% CAD CAD
% of 4.3% 4.8% 1.7% 1.3% 1.1% 0.6% 1.8% 2.1% 0.9% (Reality) DEFICIT DEFICIT
GDP possible. possible.
1._% # 2._%#
#
Final data yet to release, but these are projection (2021-22 & 2022-23) from theHindu columnists.
30.2.1 ⛽🎖🎖 Balance of Trade (BoT �ापार का सं तुलन)
(Definition) Balance of Trade is the difference between the value of import and export of _ _ _ .
- ✅Of Goods (as per NCERT.)
- ✅Of Goods and Services (as per IMF balance of payment manual)
🚩🚩🚩FAQ: So what to tick in MCQ? Ans. well depends on the context of the MCQ.
Balance of Trade Amount in Billion $ for Year 2018-19
Export Goods +330
Import Goods -510
Export Services +208
Import Services -126
Balance of Trade (ONLY Goods) +330-510 = (-180) 😰😰TRADE DEFICIT in GOODS

Balance of Trade (ONLY Services) +208-126 = (+) 82 🤩🤩TRADE SURPLUS in Services
Balance of Trade (Goods & +330 Goods + 208 Services-510 Goods – 126 Services= (-
Services Combined) 98) =😰😰TRADE DEFICIT
30.2.2 ⛽🎖🎖 Net Terms of Trade (NTT) or Commodity terms of trade

𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉 𝑜𝑜𝑜𝑜 𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒 💸💸
𝑁𝑁𝑁𝑁𝑁𝑁 = ∗ 100 = 𝑓𝑓𝑓𝑓𝑓𝑓 𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝑖𝑖𝑡𝑡 ′ 𝑠𝑠 < 100 (𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢)
𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉 𝑜𝑜𝑜𝑜 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 💸💸
Meaning ($ or value) wise we are importing more and exporting less.
30.2.3 ⛽🎖🎖 Gross (Barter) Terms of Trade (GTT, �सफर् �प्र�लम के �लए, अत: िहदं ी अनाव�क)
𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞 (𝑜𝑜𝑜𝑜 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣) 𝑜𝑜𝑜𝑜 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 ⚖
𝐺𝐺𝐺𝐺𝐺𝐺 = ∗ 100 = 𝑓𝑓𝑓𝑓𝑓𝑓 𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝑖𝑖𝑡𝑡 ′ 𝑠𝑠 < 100 (𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈).
𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞𝑞 (𝑜𝑜𝑜𝑜 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣) 𝑜𝑜𝑜𝑜 𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒 ⚖
So, in physical quantity (kg, litres) we are exporting more than importing. This is possible because
exported Indian rice’s quantity (kg) could be large even though its value ($) will not be very large.
30.2.4 ⛽🎖🎖 Income terms of trade (ITT)

𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉 𝑜𝑜𝑜𝑜 𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒 💸💸
𝐼𝐼𝐼𝐼𝐼𝐼 = � � ∗ (𝑄𝑄𝑄𝑄𝑄𝑄𝑄𝑄𝑄𝑄𝑄𝑄𝑄𝑄 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑜𝑜𝑜𝑜 𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒 𝑄𝑄𝑄𝑄𝑄𝑄)
𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉 𝑜𝑜𝑜𝑜 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 💸💸
= (𝑁𝑁𝑁𝑁𝑁𝑁 𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡 𝑜𝑜𝑜𝑜 𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡) ∗ (𝑄𝑄𝑄𝑄𝑄𝑄)
✋Formula not important. What is quantum index of export = not important.
For India and other developing countries, ITT is much relevant indicator for analysing their foreign
trade compared to previous 2 indicators. Why? Ans. not important.
30.3 ⛽🎖🎖 TOP IMPORT AND EXPORTS OF GOODS FOR INDIA:
30.3.1 📤📤⛽🎖🎖 Goods Export Before & AFTER Corona: Notable items
Before Corona (i.e. 2018, 2019) 😷😷AFTER Corona (i.e. 2020, 2021)
1) 💅💅Petroleum Products (e.g. paint, polish, ⇒ 💅💅Petroleum Products
asphalt) ⇒ 💊💊Drug & Biologicals
2) Pearl & Precious Stones ⇒ Pearl & Precious Stones
3) 💊💊Drug & Biologicals ⇒ Iron and Steel Metal
4) 💍💍Gold Silver jewellery ⇒ Electric Machinery
5) Iron and Steel Metal ⇒ Chemicals
6) Electric Machinery
⇒ 💍💍Gold Silver jewellery
7) Chemicals
⇒ Products of Iron and Steel
8) Products of Iron and Steel
⇒ 🐠🐠Marine Products
9) 🐠🐠Marine Products
⇒ Aluminium
10) Aluminium
30.3.2 📤📤🍊🍊 India’s TOP Agriculture Exports

🐠🐠 (1)Marine Products, (2) NON-Basmati Rice (3) Spices, (4) Sugar, (5) Buffalo Meat, (6) Basmati-
Rice, (7) Cotton, (8) Wheat, (9) Castor Oil, (10) Misc. Processed Food
30.3.3 📥📥⛽🎖🎖 Goods Import Before & AFTER Corona

Import Before Corona (i.e. 2018, 2019) 😷😷AFTER Corona (i.e. 2020, 2021)
⇒ 🛢🛢Crude oil ⇒ 🛢🛢Crude oil
⇒ Gold ⇒ Gold
⇒ 💅💅Petroleum Products ⇒ 💅💅Petroleum Products
⇒ Pearl & Precious Stones ⇒ Pearl & Precious, Stones
⇒ Coal ⇒ Coal
⇒ Electronics Components ⇒ Electronics Components
⇒ Organic Chemicals ⇒ Organic Chemicals
⇒ Plastic Raw Materials ⇒ 🍟🍟Vegetable Oils
⇒ 🍟🍟Vegetable Oils ⇒ 💻💻Computer Hardware, Peripherals
⇒ 💻💻Computer Hardware, Peripherals ⇒ Plastic Raw Materials
30.3.4 📤📤⛽🎖🎖 SERVICES Export Before & AFTER Corona (i.e. 2018, 2019)
Export Before Corona (i.e. 2018, 2019) 😷😷AFTER Corona (i.e. 2020, 2021)
1. 📡📡Telecom, computer, and information ⇒ 📡📡Telecom, computer, and information
services services
2. business services -research development, ⇒ business services -research development,
consultancy services etc.) consultancy services etc.)
3. 🏖🏖Travel of persons ⇒ 🚛🚛Transport of goods
4. 🚛🚛Transport of goods ⇒ 🏖🏖Travel of persons (Passengers coming
5. Financial services to India.)
6. Construction Services ⇒ Financial services
⇒ Construction Services
30.3.5 📥📥⛽🎖🎖 SERVICES Import Before & AFTER Corona (i.e. 2020, 2021)
Import Before Corona (i.e. 2018, 2019) 😷😷AFTER Corona (i.e. 2020, 2021)
1. business services -research development, ⇒ business services -research development,
consultancy services etc.) consultancy services etc.)
2. 🏖🏖Travel of persons (Indians going to ⇒ 🚛🚛Transport of goods(e.g. Indian using
foreign trip using foreign airline) American Cargo Shipping company’s
3. 🚛🚛Transport of goods (e.g. Indian using service to deliver goods)
American Cargo Shipping company’s ⇒ 📡📡Telecom, computer, information
service to deliver goods) services
4. intellectual property (Patent, Trademark) ⇒ 🏖🏖Travel of persons (e.g. Indians going to
5. 📡📡Telecom, computer, information foreign trip using foreign airline)
services ⇒ intellectual property (Patent,
6. Financial services Trademark)
⇒ Financial services
🚩🚩🚩FAQ: Why not given Top-10, why gave only Top-6 services? Ans. Feel free to sort data from
Statistical Appendix of ES21: https://www.indiabudget.gov.in/economicsurvey/doc/Statistical-
Appendix-in-English.pdf
🚩🚩🚩FAQ: Why “X” item’s rank ⏫/⏬ before and after Corona? Ans. May be due to Corona /
May be some factor happened in our competitor nations. Economic Survey did not bother to
comment, I did not bother to google.
30.3.6 🛒🛒🛒🛒India’s trade partners: Import / Export

Top Destination of Indian Exports Top Sources of Indian Import
(भारत के कु ल �नयार्त म� �ादातर िह�ा) (भारत के कु ल आयात का �ादातर िह�ा)
1. USA ⇒ China
2. UAE ⇒ UAE (Gold, Crude Oil)
3. China ⇒ USA
4. Bangladesh
⇒ Saudi
5. Hong Kong
⇒ Iraq
6. Singapore
⇒ Switzerland
7. Netherland ⇒ Hong Kong (Diamonds)
8. Britain ⇒ Indonesia (due to Palm Oil)
9. Belgium ⇒ Singapore
10. Germany
⇒ South Korea
30.3.7 India’s trade partners: Trade Surplus / Deficit With Notable Countries
Trade Deficit (i.e. India imports more but exports Trade Surplus (i.e. India imports LESS but
less to these nations) exports MORE to these nations)
We’ve large Trade Deficit: �ापार घाटा with We’ve Trade Surplus: �ापार अ�धशेष with
⇒ China (cheap electronics, toys etc.) over 50 - USA (Chemicals, textile, services etc.),
billion$ - Britain, Netherlands, Turkey (Tea,
⇒ Middle Eastern nations (Oil import esp Iraq, Spices, textile etc.),
Saudi, Qatar). - Bangladesh, Nepal (Food, medicine,
⇒ Switzerland (Gold, Luxury items), vehicles etc)
⇒ S. Korea (mobile, TV, electronics)

- India’s top five trading partners are USA, China, UAE, Saudi Arabia and Hong Kong (with
whom we’ve largest value of import & export relations)
30.3.8 Largest importer and exporter in world (before Corona 2020)
2018: In The World → Largest Importer Largest Exporter
Goods (Merchandise) → #1:USA…..#10: India #1: China…. #19: India
Services → #1:USA…..#10: India #1: USA…...#8: India
🔠🔠❓MCQ. The balance of payments of a country is a systematic record of (Pre-2013)

(a) All import & export transactions of a country during a given period of time, normally a year.
(b) Goods exported from a country during a year.
(c) Economic transaction between the government of one country to another.
(d) Capital movements from one country to another.
🔠🔠❓MCQ. Which of the following does not form part of current account of BoP? [UPSC-CDS-2014-II]
(a) Export and import of goods (b) Export and import of services
(c) Income receipts and payments (d) Capital receipts and payments
🔠🔠❓MCQ. With reference to Balance of Payments, which of the following constitutes/ constitute the
Current Account? (Asked in UPSC-Pre-2014)
1. Balance of trade. 2. Foreign assets. 3. Balance of invisibles. 4. Special Drawing Rights.
Answer codes: (a) 1 only (b) 2 and 3 (c) 1 and 3 (d) 1, 2 and 4
🔠🔠❓MCQ. Among the following, which one of the following is the largest exporter of rice in the world in
the last five years? (Pre-2019) (a) China (b) India (c) Myanmar (d) Vietnam
🔠🔠❓MCQ. Among the agricultural commodities imported by India, which one of the following accounts
for the highest imports in terms of value in the last five years? (Pre-2019)
(a) Spices (b) Fresh fruits (c) Pulses (d) Vegetable oils
🔠🔠❓MCQ. Since 2014-15, India has consistently run trade surplus with which one among the following
countries? (UPSC-CDS-2020-ii) (a) China (b) Saudi Arabia (c) USA (d) Germany
🔠🔠❓MCQ. Find correct statement(s) about international trade of India at present? (Prelims-2020)
1. India’s merchandise exports are less than its merchandise imports.
2. India’s imports of iron steel, chemicals, fertilisers and machinery have decreased in recent years.
3. India’s exports of services are more than its imports of services.
4. India suffers from an overall trade/current account deficit.
Ans Codes: [a) 1 and 2 only [b) 2 and 4 only [c) 3 only [d) 1, 3 and 4 only
🔠🔠❓MCQ. Consider the following statements: (Prelims-2020)

1. The value of Indo-Sri Lanka trade has consistently increased in the last decade.
2. “Textile and textile articles” constitute an important item of the trade between India and
Bangladesh.
3. In the last five years, Nepal has been the largest trading partner of India in South Asia.
Codes: [a) 1 and 2 only [b) 2 only [c) 3 only [d) 1, 2 and 3
30.4 💌💌💌💌 REPORTS / INDICES RELATED TO EXPORT & REMITTANCE

30.4.1 💌💌💌💌Export Preparedness Index by NITI ( �नयार्त तैयारी सूचकांक)
⇒ It ranks the Indian states based on State government policies, infrastructure, transport
connectivity, ease of doing business etc. (रा� सरकार क� नी�तयां, बु�नयादी अवसं रचना, प�रवहन, �ापार म� सुगमता)
⇒ Overall, most of the Coastal States are the best performers. (तटीय रा� सवर्श्रे� प्रदशर्न)
⇒ Top-3 (2020): Gujarat > Maharashtra > Tamil Nadu.
⇒ 2022-March: NITI Aayog released “Export Preparedness Index 2021”. Gujarat rank#1. Further
sub-rankings for categories -‘Coastal’, ‘Landlocked’, ‘Himalayan’, and ‘UTs/City-States’). But
poor cost benefit preparing the whole list for exam.
30.4.2 💌💌💌💌Global Survey on Digital and Sustainable Trade Facilitation by UNESCAP

⇒ By United Nations Economic and Social Commission for Asia Pacific’s (UNESCAP).
⇒ It gives % score based on Govt’s efforts for Transparency, ⏬Formalities, Institutional
Cooperation, Cross-Border Paperless Trade.
⇒ India’s score improved from 78.5% (2019) to 90.3% (2021)
30.4.3 💌💌💌💌Report: Goods Trade Barometer Index

⇒ by World Trade Organization (More in 📑📑Pillar#3B: International Orgs.)
⇒ This index signals changes in world goods trade growth.
⇒ If Index value > 100: 😍😍. But less than 100 = 😥😥. Current value is 99.5% (as of 2021-Sept)
30.4.4 💌💌📊📊 Remittance: World Bank’s Remittance Report (�व� ब�क क� धनप्रेषण �रपोटर्)
- Since 2008: largest amount of remittance received by 1) India 2) China 3) Mexico.
- World Bank also noted: remittances have a direct impact in poverty removal for many
households, (धन प्रेषण से गरीबी उ�ूलन म� मदद �मलती है)
- but Post Offices charge very high fees in remitting the money to household. So Financial
inclusion, UPI/BHIM/IMPS blockchain Technology led money transfer mechanism are
important in that context as well.(📑📑Ref Pillar#1A)
30.4.5 💌💌💌💌Report: Misc.

Report Organization
Migration and Development Brief World Bank
Global Migration Report International Organization for Migration (IOM, HQ:
Geneva, Switzerland) - a related organization of UN
30.4.6 💌💌 Remittance: Sidetopic → Pravasi Bharatiya Diwas (PBD)

1915 9th January: Gandhi-ji returned from S.Africa to Bombay (India).
2003 NDA-I (PM Vajpayee) decides to celebrate Pravasi Bharatiya divas (PBD) annually every
9th January. First summit @New Delhi. Presently organized by Ministry of External Affairs
2015 ⇒ NDA-II (PM Modi) converts PBD into “biennial” event i.e. grand festival every second
year (भ� उ�व/रंगारंग कायर्�म हर दू सरे साल)
⇒ every other year, only a small event in India, & regional PBD event in a foreign country
2020 @New Delhi. But just a small scale video conference type of event.
भ� रंगारंग कायर्क्रम नही िकया, �ोिक वो तो हर दू सरे साल करते है।
2021 Theme: "Contributing to Aatmanirbhar Bharat”. It was held virtually due to Corona
Chief Guest: Mr. Chandrikapersad Santokhi, President of Suriname.
2022 just a small scale video conference type of event.
भ� रंगारंग कायर्क्रम नही िकया, �ोिक वो तो हर दू सरे साल करते है।
🎓🎓Self Study? Laxmikanth’s Indian Polity ch.6 on citizenship → difference OCI vs PIO
30.5 ⛽BALANCE OF PAYMENT → CURRENT ACCOUNT → IMPORT OF OIL

➢ Govt’s target of ⏬oil import by 10% by 2022 (compared to 2015).
➢ Therefore, boosting domestic oil exploration & production is necessary. So, …..
30.5.1 ⛽� Domestic Oil Exploration Policies?
⇒ Nodal? Directorate General of Hydrocarbons: हाइड�ोकाबर्न महा�नदेशक (DGH) Ministry of Petroleum
& Natural Gas.पेट�ो�लयम और प्राकृ �तक गैस मं त्रालय
⇒ Before the 1991’s LPG reforms, only ONGC and other Public sector companies were allowed to
explore the oil, gas and hydrocarbon reserves in India. But under 1991’s Liberalization norms,
this sector was opened for the private sector players as well. (पहले के वल सरकारी क��नयां कर सकती थी.
हालाँिक बाद म� �नजी �ेत्र क� क��नयों को भी उदारीकरण नी�त के अंतगर्त अनुम�त दी गई है)
⇒ 1997: New Exploration Licensing Policy (NELP: नयी अ�ेषण अनु�� नी�त) to award contract to
public and private sector companies using bidding / auction system.
30.5.2 ⛽�: �♂NELP’s primary limitations were →

Separate license required for each type of hydrocarbon.
NELP worked on production sharing contract (PSC: उ�ादन साझाकरण अनुबंध), wherein the Oil Explorer
will pay a share to Govt from the profits from production. However,
⇒ Indian producers allegedly exaggerated their production costs to show less profit. → Govt
earned less, and will do more ‘inspector raj’ to check account books → No ease of doing Biz.
(उ�ाद खचर् को बढ़ा चढ़ा के िदखाया जाता तािक मुनाफा कम िदखे)
30.5.3 ⛽📯📯📯📯HELP Policy (हाइड�ोकाबर्न अ�ेषण और अनु��/लाइस��संग नी�त)

In 2016, NELP was replaced with Hydrocarbon Exploration and Licensing Policy (HELP).
 Single uniform license sufficient to explore and produce all type of hydrocarbons from the given
area. (oil, gas, coal bed methane, shale gas, tight gas and gas hydrates etc)
 Govt to receive a share from gross revenue from sale of oil / gas etc, irrespective of company’s
profit. (�बक्र� से िह�ा देना होगा, सरकार को आपके मुनाफे से कोई लेनादेना नही)
 Government not to interfere in the marketing and pricing of the oil and gas.
 Relaxed norms for exploration in offshore areas, because they have higher risk and higher cost
of production. (समुद्र म� तट से दू र �ेत्रों म� खोज के �लए सुगम मानदं ड)
 Open Acreage Licensing Policy (OLAP) → company can pick and choose the blocks from the
designated area, even if no specific bids are invited by Govt before. Then Govt will invite other
companies for auction.
 2019-July: Govt finished auctioning process of HELP-OLAP round 2 and 3.
30.5.4 ⛽India’s Strategic Oil Reserves (भारत के साम�रक तेल भ�ार)

Objective? (When crude prices are low) India should buy and store crude oil for strategic-cum-
buffer stock → use during war & other emergency. दाम स�े चल रहे हो तब, खरीद के भं डारण कर लेना चािहए
- Ministry of Petroleum & Natural Gas → Govt petro companies → places such Visakhapatnam
(Andhra), Chandikhol (Odisha), Padur & Mangalore (Karnataka) etc.
- They’re stored in underground rock cavern facilities = more secure / safe during airstrikes, more
economical and environmental friendly than conventional ‘Above Ground Storage Tanks’
30.5.5 ⛽📈📈📈📈 Crude Oil prices & OPEC (क�ा तेल)
⇒ 1961: Organization of the Petroleum Exporting Countries (OPEC: पेट�ो�लयम �नयार्तक देशों का सं गठन) is
a group of oil producing countries Saudi, UAE, Venezuela, Iran, Iraq etc.… total 14 members.
HQ: Vienna city of Austria.
⇒ Qatar withdrew from 1/1/19. Russia is NOT a member. (र�शया/ �स इसका सद� नहीं है)
Depending on following factors of supply versus demand, there have been ups and downs in the oil
price movement in the last 3 years: आपू�त और मांग के कारकों के चलते क�े तेल के दाम कम/�ादा होते ह�
Crude Oil Supply Side Factors (आपू�त) Demand Side (मांग)
Price When Supply Decreases ⏬ When Demand Increases ⏫
up⏫ ⇒ Whenever OPEC + Russia agreed to ⇒ When economic growth ⏫ in USA,
तेल कब महंगा reduce their oil production China, EU → ⏫demand for
हो जाता है
⇒ 2019: Houthi (a Shia rebel group of petroleum, plastic industry
Yemen with Irani support) Drone- ⇒ Post-Corona unlockdown →
attacked oil field of Saudi Arabia travel⏫ → Oil demand⏫
→ Oil production down.
Price When Supply Increases⏫ When Demand Decreases⏬
down⏬ ⇒ When OPEC+Russia can't agree for ⇒ When economic slowdown →
कब स�ा production cuts demand for petroleum ⏬
हो जाता है
⇒ When Saudi Arabia ⏫supply to ⇒ Corona: Travel Ban
Crude Oil Supply Side Factors (आपू�त) Demand Side (मांग)
reduce global prices to harm Iranian ⇒ Chinese imposing more Taxes on
Oil export business. imported American/Japanese cars →
⇒ When USA pressurizes Nigeria, Iraq ⏬ car sales → ⏬ oil demand in
etc to produce more oil China
⇒ When USA also increases its own
domestic oil and Shale Gas
Production
⇒ 2021-Feb: India's biggest oil suppliers: 1) Iraq 2) USA 3) Saudi. Saudi Arabia ranked shifted from
#2 to #3 because Saudi has been ⏬cutting down its production to raise prices.
⇒ 2021-Saudi minister (rudely) tells India, “if you do not like our expensive oil, then use oil from
your own strategic reserves.” Indian Petroleum Minister calls it an ‘undiplomatic’ comment.
⇒ 2021-Mar: Indian Oil Companies decided to ⏬ import from Saudi Arabia -to teach Saudi a
lesson (सऊदी अरब का घमं ड तोड़ने के �लए वहाँ से हमने क�ा तेल आयात करना थोड़ा कम िकया है).
⇒ 2021-April onwards: OPEC+ Group decided to gradually ⏫the production. Thus daily news
keeps going on....If any MCQs asked, solve through 50:50 from above Table. #⏳📚📚थोड़ा-पढ़ो-आगे-
बढ़ो
Figure 1: Oil Barrel Prices in U$D
30.5.6 ⛽📈📈📈📈 Crude Oil: Russia-Ukraine War (2022)

⇒ Oil prices has skyrocketed in February 2022 due to Russia Ukraine were but 2022-March: OPEC
producers UAE and Iraq ⏫ the oil production → oil prices fell by 17% (UAE तथा इराक़ ने कहा िक
हम अपने अपने क�े तेल क� उ�ादन/आपू�त को बढ़ाएं गे इसके बाद क�े तेल क� क़�मतों म� �गरावट)
⇒ India’s STATE-OWNED OIL marketing companies (OMCs) are set to procure crude oil from
Russia at a discount, to the Russia-Ukraine conflict, Russia wants money urgently. (भारतीय सरकारी
तेल कं प�नयों को �स से स�े म� क�ा तेल �मलेगा।)
30.5.7 ⛽📈📈📈📈 Crude Oil: related concepts?
Cartel is an association of manufacturers who collude to keep prices high, and keep
the competitors away. (More in 📑📑Pillar#4Z-Microeconomics)
Sweet Crude Oil Low Sulphur content. Sour crude = High Sulphur content.
BRENT Index is an index to measures crude oil price, mainly in North West Europe.
30.5.8 ⛽💰💰BoP: Current → Fall of Crude oil prices in negative figure

⇒ USA’s crude oil prices are monitored through West Texas Intermediate (WTI) contracts.
⇒ Long story cut short: Oil demand ⏬ due to Corona lockdown on vehicle/aviation traffic. But,
American oil drilling companies can’t stop production because it’s more expensive to ‘restart’
the production after shutting it. खुदाई को पूणर् �प से ��गत िकया तो वापस शु� करने म� ब�त लागत खचर् आता है
⇒ And merchants/intermediaries can’t hold stock because their storage capacity is limited.
⇒ 2020-April: sellers are (temporarily) paying $$ to buyer to take the stock of oil barrels. Hence
negative minus $40 per barrel price. (अमरीक� �वक्रेताओ के पास तेल रखने क� जगह उपल� नही, इस�लए ग्राहक को
सामने से पैसा देकर माल उठवा रहे है।)
⇒ India did not benefit much, since we mostly imported from the middle-east and not the USA.
🔠🔠❓MCQ. Term ‘West Texas Intermediate’, sometimes found in news, refers to a grade of_ _ (Prelims-2020)
[a) Crude oil [b) Bullion [c) Rare earth elements [d) Uranium
30.5.9 ⛽💰💰 Petrol & Diesel Prices & Taxes in India

(Covered in 📑📑Pillar#2A: Indirect Taxes Handout)
30.5.10 ⛽ Electric Vehicles, Ethanol Blending etc.
(Covered in 📑📑Pillar#5A: Energy Infrastructure)
30.6 🎖🎖BALANCE OF PAYMENT → CURRENT ACCOUNT → IMPORT OF GOLD

From 2010 onwards, Indian economy was suffering from high level of inflation (8-12%) due drought
→ Food & Pulses shortage. MNREGA scheme (📑📑more in Pill#6) → higher wages in the hands of
villagers without proportional growth in supply of commodities etc.
⇒ So households earned ‘Negative Real Interest Rate: नकारा�क वा��वक �ाज दर’ on their bank
deposits → started investing in gold. (More in 📑📑Pillar#1C: inflation Indexed Bonds)
⇒ But, ⏫ gold consumption → ⏫ trade deficit, current account deficit → Indian rupee gets
weaker. Gold transactions also help in the storage of black money and tax evasion. India is the
second largest consumer of Gold after China. (सोने म� �ादा �नवेश से �पया कमजोर. कर चोरी व काला धन)
Therefore, RBI and Indian government launched following schemes to reduce gold consumption:
30.6.1 🎖🎖🐯🐯RBI’s 80:20 Scheme (2013-14)
- RBI mandated that minimum 20% of the imported gold must be exported back. Until then the
Jeweller/ bullion dealers will not get permission to (convert their rupees into dollars / foreign
currency) to import next consignment of gold.
- RBI gets this power under Foreign Exchange Management Act (FEMA: �वदेशी मुद्रा प्रबं धन अ�ध�नयम).
Although, 2014: Scheme was stopped as the gold craze had declined.
30.6.2 🎖🎖🎖🎖🐯🐯 Sovereign Gold Bond Scheme (2015: �णर् बांड योजना)
(Covered in 📑📑Pillar#1C: Share Market)
30.6.3 🎖🎖🎖🎖🐯🐯 Gold Monetization Scheme (2015: �णर् मुद्रीकरण योजना)
- Under this scheme, RBI allows commercial banks accept customers’ idle gold / jewellery for 1
year to 15 years tenure. (2019- RBI also allowed Charitable Institutions and Central Govt to
deposit their gold in the commercial banks)
- Commercial Banks pay the depositor ~2% interest.
- Min. 30gm to maximum any amount of gold can be deposited.
- Gold goes to → Metals and Minerals Trading Corporation of India →
- Gold sold to jewellers, electronic circuits companies and
- Some of the gold used for Minting “Indian Gold Coin.”
- Upon maturity you can redeem deposit in the form of gold coin/bars or cash equivalent. The
profit exempted from Capital Gains Tax. (इस स�� नवेश के मुनाफ़े पर �� पर पूंजीगत लाभ कर नहीं लगता)
🔠🔠❓MCQ. Main objectives of Gold Monetization Scheme is _ _ _. (IEnggS-2018)

1. To monetize gold holdings in the country 2. To increase export of gold from the country
3. To reduce India’s import bill 4. To meet the targets of reduction in fiscal deficit
Answer Codes: (a) 1 and 4 only (b) 2 and 4 only (c) 2 and 3 only (d) 1 and 3 only
🔠🔠❓MCQ. What is/are the purpose/purposes of Government's 'Sovereign Gold Bond Scheme' and
'Gold Monetization Scheme’? (Asked in UPSC-Pre-2016)
1.To bring the idle gold lying with Indian households into the economy.
2. To promote FDI in the gold and jewellery sector.
3. To reduce India's dependence on gold imports.
Answer codes: (a) 1 only (b) 2 and 3 (c) 1 and 3 (d) 1, 2 and 3
30.6.4 🎖🎖🎖🎖🦁🦁 Indian (Sovereign) Gold Coins (2015: भारतीय �णर् �स�े )
Issued by a Govt company “Metals and Minerals Trading Corporation of India”.
- Available in denominations of 5, 10, 20 grams.
- These gold coins are not fiat money because not issued under the powers of Coinage act, they
don’t bear any markings indicating rupee denominations. Their markings only indicate gold
grams. And since they’re not ‘fiat money’ → so, not ‘legal tenders’. (More in 📑📑Pillar#1a1)
- Benefit? Trusted Purity → Easily resold → Easy liquidity, and Profit (if) gold price⏫.
30.6.5 🎖🎖🎖🎖: Gold price in Corona (कोरोना महामारी के दौरान �णर् क़�मत�)
As such, Govt’s economic surveys don’t talk much about daily ups/downs of gold price movement.
UPSC also never asked anything like that. So, we need not PHD. ⚾
⇒ Indian banks ⏬ fixed deposit interest rates. People shifting towards gold investment for a better
"positive real" interest rate. (Recall Pillar1)
⇒ Mutual funds = not good profit after ILFS crisis (Ref: Pill1B2) → some investors prefer gold
⇒ Geopolitical tensions like Iran-US, China-US, India-China, Russia – Ukraine have negative
impact on sharemarket → some investors prefer gold
⇒ 2020 Corona-Crisis: Shares and bonds have become risky due to heavy losses faced by
companies. Investors prefer a 'safe assets' = ⏫demand of gold → ⏫prices.
⇒ Corona→ workers @gold mines / refineries ⏬ → gold production ⏬ → price⏫
⇒ However, vaccination = investors expect business revival so they’ll sell gold to invest in shares so
again gold prices fallen from ₹56000 per 10gm in (2020-Aug) to ₹45000 (2021-March) =
₹11,000⏬. … ✋+ other 500 angles on Dollar currency exchange rate, Bond yields, some
investors shifting to Bitcoin etc=poor cost-benefit. Apply logic/50:50.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
30.6.6 Gold import: ⬆ customs duty (2022)

Customs duty on gold hiked (increased) from 7.5% → 12.5% to discourage imports.
⇒ 🚩🚩🚩FAQ: but u told that more taxes on gold= smuggling. Then isn’t this customs duty hike
contradictory/counter-productive?
⇒ Ans. Govt will increase surveillance to prevent smuggling. Just because there is danger of
smuggling so government should not increase the taxes = then it is difficult to run the
country/manage CAD.
30.6.7 ☕BoP → Current → Export → GI Tag
⇒ A Geographical Indication (GI: भौगो�लक सं केतक) is a sign used on products with specific
geographical origin and unique qualities due to that origin. E.g. Darjeeling tea from W.Bengal- It
was the first to obtain GI tag from India.
⇒ 🤩🤩Benefit? GI tag adds premium-ness to a product, helps fetching higher prices in the
international market → better income for farmers and artisans. �वदेशी ग्राहक उसे उ�ा िक� क� समझ के
और �ादा पैसा देने के �लए राजी हो सकता है
GIs are governed under:

⇒ WTO’s Trade Related Intellectual Property Rights Agreement (TRIPS: more in Pill#3B) and
⇒ India’s Geographical Indication of Goods Act, 1999. Once a product gets GI tag, it’s valid for 10
years (and can be renewed further.) GI name cannot be used for products that are manufactured
outside of the designated region, else party can be punished under the law
⇒ International Nodal? UN’s specialized agency World Intellectual Property Organization
(WIPO; �व� बौ�द्धक सं पदा सं गठन), HQ @Geneva,Switzerland
⇒ Indian Nodal? Commerce ministry → Controller General of Patents, Designs and Trademarks
→ Geographical Indications Registry in Chennai.
🎓🎓Self Study? For UPSC interview, your state’s GIs from

ipindia.nic.in/registered-gls.htm
🔠🔠❓MCQ. ‘Kandhamal Haldi’, which received GI tag is indigenous to _ _ _ _. (CAPF-2019)

(a) North Bengal(b) Southern Odisha(c) Sangli, Maharashtra(d) Alleppey, Kerala
30.6.8 ☕🔖🔖 GI Logo

Commerce Ministry has created a logo for GI products with tag ‘Invaluable Treasures of Incredible
India’ to make them more attractive to foreign buyers. (�वदेशी ग्राहकों म� चाहत बढ़ाने के �लए)
30.7 🍋🍋🍋🍋BOP → CURRENT → EXPORTS → SEZ
टै� भरना पड़ता है िक नहीं? 🍋🍋Ordinary area 🍋🍋🍋🍋SEZ area

Mfg pe → Excise / GST N/A (नहीं लगता ये टै�)
Import Exports pe → Customs Duty N/A (नहीं लगता ये टै�)
Profit pe → Corporation Tax/ Income Tax N/A** (नहीं लगता ये टै�)
⇒ Special Economic Zones (SEZ: �वशेष आ�थक �ेत्र) is a specifically demarcated area of India which is
deemed as foreign territory for the purpose of Tax laws and Trade laws. (भारत के कर कानून वहां भारत
के अ� प्रदेशों क� समान नहीं लागू होते। उ�� करो म� छू ट/�रयायत दी जाती है)
⇒ Thus, exempted from aforementioned taxes (OR)/ subjected to lower rate of taxes of Union and
State Govts. This relief is for a specific time-period only, which is called “Tax holiday” (कराधान से
छु ट्टी, एक सी�मत समय के �लए ही होती है, अनं त काल के �लए नहीं).
**SEZ Sunset clause in Income Tax Act (आयकर कानून म� सूयार्� प्रावधान)
⇒ Income Tax Act (Section 10AA) provides for a tax-holiday for SEZ firms for a period of “X”
years only. Corona = Economists suggest this deadline should be extended to attract more
foreign companies in India. ✋Exact norms & deadline? NOTimp#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
🤑🤑🤑🤑Benefits given to SEZ
⇒ They get single window clearance for various import / export licenses / permissions
⇒ Government will bear the cost of developing the roads, sewage, affluent treatment, weighing-
packaging-labelling etc infrastructure within the SEZ.
⇒ They are regulated under SEZ policy (2000) and Special Economic Zone Act, 2005. State Govt
forwards the proposal to create SEZ → Union’s Commerce Ministry approves.
⇒ 1965: Asia's first SEZ was set up in Kandla, Gujarat (At that time it was called Export Processing
Zone/EPZ). Currently we’ve 220+ SEZ in India.
⇒ 🥰🥰Benefit? More exports, employment, economic growth.(�नयार्त,रोज़गार और आ�थक वृ�द्ध के अवसर)
⇒ 😰😰Challenges? SEZ entrepreneurs use legal loopholes → Tax avoidance, Workers deprived of
EPFO/ESIC/Maternity benefit. When entrepreneurs’ Tax holiday is over in one SEZ, they
shutdown operation and move to another SEZ with new name/registration. Agricultural and
forest lands diverted to build SEZs → future challenges in food security, pollution control and
climate change.(कर प�रहार, मज़दू रों का शोषण, कृ �ष ज़मीन कम होना भ�व� म� खाद्य सुर�ा, प्रदू षण के जो�खम)
Solution? 2018: Commerce Ministry had setup Baba Kalyani committee to look into SEZ issues.
Baba is the Chairman of Bharat Forge ltd.
30.7.1 🍋🍋🍋🍋🕵🕵Baba Kalyani report on SEZ

1. While the number of SEZ & SEZ-led employment has ⏫, but their export growth rates were
not encouraging in the last decade. (रोज़गार म� बढ़ोतरी लेिकन �नयार्त म� बोहोत तेज बढ़ोतरी नहीं देखने को �मली)
2. Instead of giving blanket-general-tax-holiday, SEZ-units should be given tax benefits linked to
how many job created, how much FDI investment attracted, how much goods/services exported
etc. सब को एक समान �प से करो म� छू ट नहीं देनी चािहए उद्योगप�त ने िकतना रोजगार सृजन/ �नयार्त िकया, उस िहसाब से प्रदशनर्
के आधार पे छू ट �मले
3. SEZs should be converted into Employment and Economic Enclaves(3Es: रोजगार और आ�थक प�र�ेत्रों)
with efficient transport infrastructure, uninterrupted water and power supply. (So, both
domestic-consumer-centric entrepreneurs and export-centric entrepreneurs can operate from
same locality, supply each other with intermediate goods/services. While export-wallas get
further tax benefits in Customs Duty & Direct Taxes.)
4. Encourage MSMEs in 3Es, so we can create more jobs. लघु उद्योगों को प्रो�ाहन
5. Develop infrastructure: High Speed Rail, Express roadways, Passenger/Cargo airports, shipping
ports, warehouses etc. near SEZ/3Es zones. प�रवहन क� बु�नयादी अवसं रचना
6. Focus on electronics for domestic production for domestic consumers, and need to have a plan
for import substitution (i.e. encourage Swadeshi electronics companies in 3Es, so Indians buy
import less VIDESHI products).
30.7.2 🍋🍋🍋🍋🕵🕵SEZ → DESH Hubs

👜👜👜👜Budget-2022: Development Enterprise and Services Hub (DESH) Bill, 2022 to replace the
existing SEZ law of 2005 with following features:
⇒ DESH hubs will focus to ⏫mfg & services for both domestic market and export market.
⇒ Single window clearance e.g. pollution, fire-safety etc.
⇒ Easy norms for voluntary liquidation / exit (REF: Pillar1B2)
⇒ Promote research & development
⇒ infrastructure facilities
⇒ Input tax credit for indirect taxes – GST, Customs.
✍Conclusion in SEZ related Mains Qs? Government of India has set a target of creating 100
million jobs and achieving 25% of GDP from the manufacturing sector by 2022, as part of its flagship
‘Make in India’, so above reforms / recommendations will help achieving these targets.
🔠🔠❓ Which Asian country established the first Export Processing Zone (EPZ) in 1965? (UPSC-
Geologist-2020) a. China b. India c. South Korea d. Japan
30.7.3 👜👜👜👜Budget-2022 Announcements to ⏬CAD

⇒ ⏫ Customs duties on imported daily use items such as umbrellas, headphones, earphones,
loudspeakers, and imitation jewellery ( आयात होने वाले छतरी हेडफ़ोन लाउड�ीकर और नक़ली गहनों पर आयात-
कर काफ़� बढ़ाया गया है।)
⇒ ⏬Tax benefits given to Bizmen for buying imported capital goods machineries e.g. textile
machine, bulldozer, mining equipment etc. (So they'll be forced to buy India-made machines)
⇒ Banned the import of Drone except for defense and research development. (आया�तत ड�ोन पे प्र�तबं ध)
⇒ 68% Defense purchase will be made from India made products (earlier 58% last year).
⇒ Unblended fuel shall attract an additional differential excise duty of Rs. 2/ litre (To encourage
blending of bio-ethanol.) → 🤩🤩this will help ⏬ import of crude oil.
⇒ Hackers are releasing the data of Indian importers/exporters price details and client details then
Chinese importers and exporters may connect with those foreign clients offering better
deals/prices than Indians. This is harming Indian exporters. So Budget-2022 proposed new
provision in Customs Act for penalising illegal sharing of export-import data (कभी कभी हैकसर् भारतीय
�नयार्तकों का डेटा डाकर् नेट पे बेच देते ह� �जसक� मदद से चीन के �ापारी उन �वदेशी ग्राहकों का सं पकर् कर उ�� भी स�ा बार िदखाकर
अपना माल बेच देते ह� तो यह भारत के हक़ म� नहीं है। इस�लए नए बजट म� सीमा-शु� क़ानून म� सं शोधन: अवैध तरीक़े से आयात
�नयार्त का डेटा साझा करने पर दंड के प्रावधान।)
⇒ Special Economic Zones Act will be replaced with a new law for ‘Development of Enterprise and
Service Hubs (DESH)’.
30.7.4 💎💎💎💎📯📯BoP → Current → Exports → Foreign Trade Policy (2015-2020)

⇒ India's export in goods and services in 2013-14 was ~$465 billions. This FTP Policy (�वदेश �ापार
नी�त) aims to almost double it to $900 billion by 2020.
⇒ Nodal? Director General of Foreign Trade (DGFT) under Ministry of Commerce.
⇒ Introduced new schemes / streamlined previous schemes such as: MEIS/SEIS.
⇒ Interest Equalization Scheme (�ाज समानकरण योजना): MSME exporters given interest subsidy on
loans by Commerce Ministry. Exact details NOT imp because this is a low-profile scheme.
⇒ Duty free import of capital goods (machinery required for production: पूंजीगत व�ु के आयात पे
उद्योगप�त को सीमाशु� मु��).
⇒ Advance Authorization Scheme (अ�ग्रम प्रा�धकरण योजना) allows duty free import of inputs, along
with fuel, oil, catalyst, etc., required for manufacturing export product.
⇒ Niryat Bandhu Scheme: Govt mentors the new and potential exporters and mentor them
through training, counselling, orientation programmes
⇒ Towns of Export Excellence (TEE: �नयार्त उ�ृ �ता के शहर) and Trade Infrastructure for Export
Scheme (TIES: �नयार्त योजना के �लए �ापार आधा�रक सं रचना): where Union gives ₹ for infra development
for export (warehouses, transportation, packaging facilities etc.)
⇒ District Export Promotion Committees (DEPCs) have been setup in 739 districts to focus on
agriculture, GI-products, Toys, handicrafts etc. (�ज़ला �नयार्त प्रो�ाहन स�म�तयाँ)
⇒ Govt. gave extra ₹ ₹ to Export-Import Bank of India (EXIM Bank) and Export Credit Guarantee
Corporation of India Ltd. (ECGC). (More in 📑📑Pillar#1B1: Classification of Banks)
⇒ E-governance initiatives →
○ CBIC → Single Window Interface for Facilitating Trade (SWIFT) for importers and
exporters through icegate.gov.in. Within that, e-governance modules like E-Sanchit,
Turant etc for document approval etc.
○ Commerce Ministry & FIEO (Federation of Indian Export Organisations) launched
India Trade webportal and Niryat Mitra App.
30.7.5 🥵🥵 Foreign Trade Policy: Challenge / Updates?

⇒ Policy aims to double Indian exports to $900 billion by 2020. But US/EU protectionism &
Corona = target difficult to achieve. 2022: Exports India crossed $400-billion exports in goods.
⇒ Existing policy was to expire on 31/3/2020. Although Govt extended it till 30/Sept/2022.
⇒ 2018: Commerce Ministry launched a separate policy for Agriculture Exports (📑📑Ref#4A).
30.7.6 🍋🍋🍋🍋Tax Credit for Exporters: MEIS/SEIS

Boss? Commerce Ministry WAS running two tax-incentive schemes to boost exports
⇒ Services Exports from India Scheme (SEIS: भारत से सेवाएं �नयार्त योजना).
⇒ Merchandise Exports from India Scheme (MEIS: भारत से �ापा�रक माल �नयार्त योजना)
These schemes provide tax credit to exporters, which they can use for paying Union’s Customs Duty.
AFTER RODTEP is notified fully, the MEIS scheme will be STOPPED.
30.7.7 🍋🍋🍋🍋Tax Credit for Exporters: RoDTEP?

2020-March: govt announced Remission of Duties and Taxes on Exported Products (RoDTEP: �नयार्त
उ�ादों पर शु� और कर क� छू ट). Boss? Commerce Ministry
MEIS RoDTEP
Exporter gets Customs Duty ITC given for following taxes Exporter paid:
Input Tax Credit 1. Customs Duty
MEIS RoDTEP
(ITC) for 2. Transport fuel (petrol diesel) Excise and VAT
3. Agriculture raw material pe State Mandi tax
(it’s not a ‘tax’ but rather a FEES charged by
APMC Mandi.)
4. Stamp duty on Commodity trade (Ref:2A)
5. Electricity pe electricity duty (Ref: 2A)
WTO allowed it? No, so WTO ordered Yes (or atleast PM Modi claims so.)
to stop it. RoDTEP will replace MEIS scheme.
30.7.8 ⚓Port Logistics: Authorised Economic Operator (AEO)

⇒ अ�धकृ त आ�थक सं चालक: An importer/exporter/cargo company can apply to the Central Board of
Indirect Taxes and Customs (CBIC) to get this ‘status’.
⇒ Subject to conditions like 1) minimum 3 years experience 2) never filed bankruptcy 3) never
caught in fraud / smuggling etc.
⇒ 🥰🥰 Benefits? Faster clearance times, fewer physical examinations on cargo etc.
⇒ At International level, World Customs Organization (WCO, HQ: Brussels, Belgium)’s “SAFE
Framework” guides this program.
30.7.9 📲📲📲📲📲📲 “Assemble in India” | Production Linked Incentive Scheme (PLI)
Ref in 📑📑Pillar#4B: Sectors of Economy → Mfg
30.8 ⛽🎖🎖: 🗃🗃🤲🤲 BOP → CAPITAL ACCOUNT→ INVESTMENT→ FDI / FPI
30.8.1 🗃🗃🗃🗃 Foreign Portfolio Investors (FPI: �वदेशी पोटर्फो�लयो �नवेशक)
⇒ It is a foreign entity registered @SEBI, and who buys upto 10% in equity / shares of an Indian
Company. [For Corporate Bonds and G-Sec these % are different.]
⇒ Originally, these were called Foreign Institutional Investor (FII: �वदेशी सं �ागत �नवेशक) and
Qualified Foreign Investors (QFIs), but in 2013 SEBI merged them all into a single category- FPI,
based on the recommendations of K.M. Chandrasekhar committee.
⇒ FPI’s primary objective is make money from buying and selling of shares through the capital
market / share market. They even help the SEBI-non-registered foreign investors by issuing them
Participatory notes (P-Notes) [📑📑Ref: 1C: SEBI handout].
⇒ FPIs are not involved in the actual operations / production / management / business policy
making of a company (unlike Walmart is for Flipkart). कं पनी का �यं सं चालन म� ��च नहीं
⇒ If FPI investor is hopeful to get better returns in the other countries’ share/bond market, he may
quickly sell his Indian securities and run away. The flight of such money is called ‘hot money
(चलायमान मुद्रा)', It results into weakening of Indian Rupee and falling of Sensex.
30.8.2 🗃🗃🗃🗃🗃🗃🗃🗃 Foreign Direct Investment (FDI: प्र�� वदेशी �नवेश)
⇒ FDI is the (more than 10% equity / share) investment made by a foreign entity into an Indian
company, with the objective to get involved in the management / production of that Indian
company. भारतीय कं पनी के सं चालन/ उ�ादन म� शा�मल होने के उद्दे� से 10% या उससे �ादा शेयर खरीदना
⇒ (e.g. 2018: Walmart-USA bought 77% stakes in Flipkart @$16 billion.)
⇒ ✋Foreign Investment is prohibited in atomic energy, railway operations (except Metro & infra
dev.); Tobacco Products, Real Estate Business, Farm Houses, Chit Funds, Nidhi Companies,
Betting Gambling Casino & Lottery.
⇒ For the remaining sectors, Foreign Investment is permitted either through:
A. � Automatic Route: �चा�लत मागर् i.e. Foreign entity doesn’t require Indian Govt’s
approval.
B. 🧔🧔 Government Route: सरकारी मागर् i.e. prior to investment, they’ve to get approval from
the Govt of India’s respective Administrative Ministry/ Department (+ Commerce
Ministry).
30.8.3 🗃🗃🗃🗃🗃🗃🗃🗃 FDI in India → Source Nation and sector-wise Top-5

Sector wise Nation Wise
1. 💿💿Computer Software & Hardware 1. Singapore
2. Services Sector 2. U.S.A.
3. Trading 3. Mauritius
Sector wise Nation Wise
4. Automobile Industry 4. Netherlands
5. ☎Telecommunications 5. Japan
Note: above is the data for 2020-21. Then, what is the latest data for 2021-22 (ended on 31/3/2022)
Ans. Let the next economic survey come on 31/1/2023, then we will see in win 23 series.
30.8.4 🗃🗃🗃🗃🗃🗃🗃🗃 Foreign Investment → 100% Automatic permitted in

✓ Agriculture, Animal Husbandry, Plantation Sector, Food Processing companies
✓ Asset Reconstruction Companies (ARC), Credit Information Companies, Core Investment
Company, White Label ATM Operation and Other Financial Services
✓ Pharma & Biotechnology(Greenfield), Healthcare (Greenfield), Medical Devices
✓ Broadcast of non-NEWS TV Channels, Printing of scientific and technical magazines; Wholesale
Trading, Single Brand Retail, E-Commerce (market-place)
✓ IT and Business process management (BPM); Township Construction, Housing, Infrastructure;
Gems & Jewellery, Duty Free Shops, Tourism & Hospitality
✓ Leather, Textiles & Garments, Manufacturing, Capital Goods, Industrial Parks
✓ Mining and Exploration of metal and non-metal,
✓ Petroleum & Natural Gas, Chemicals, Coal & Lignite, Thermal & Renewable Energy
✓ Civil Aviation (**Selected services), Airports (Greenfield & Brownfield)
✓ Ports and Shipping, Railway Infrastructure, Roads & Highways
✓ 📡📡 Direct to Home (DTH) TV/Cable services e.g. Tatasky, DishTV
✓ 2019: Insurance intermediaries (e.g. agents, brokers, surveyors, 3rd party admin etc)
✓ 2019: Coal mining, coal sale & associated activities; Contract manufacturing.
✓ 2021: ⛽ Public Sector Oil Gas Refineries e.g. Bharat Petroleum Corporation Ltd (BPCL). This is
done to facilitate disinvestment/privatization via foreign companies participation. (Ref Pillar:2D)
✓ 2022: State owned/public sector Life insurance corporation i.e. LIC: 20% FDI allowed.
30.8.5 🗃🗃🗃🗃🗃🗃🗃🗃 Foreign Investment → Others

Sector → Foreign Investment limits Automatic 🧔🧔✋With Govt
कु छ िक�ों म� �चा�लत मागर् से. कु छ िक�ों म� क� द्र सरकार क� अनुम�त लेनी ज�री upto? approval?
Banking - Public Sector N/A 20%
State owned/public sector Life insurance corporation i.e. LIC 20% Not Required.
⇒ Printing / Publishing newspaper, current affairs magazines; N/A 26%
⇒ News/Current Affairs through Digital Media
Broadcasting of News TV-channels, FM-Radio N/A 49%
Sector → Foreign Investment limits Automatic 🧔🧔✋With Govt
कु छ िक�ों म� �चा�लत मागर् से. कु छ िक�ों म� क� द्र सरकार क� अनुम�त लेनी ज�री upto? approval?
Multi Brand Retail Trading N/A 51%
REITs / InvITs Infrastructure Companies N/A 49%
Banking (Private Sector) Upto 49% >49 upto 74%
Telecom Services, Private Security Agencies, Upto 49% ABOVE 49%
Air Transport Services
Insurance Company (earlier 49% then 💼💼Budget-2021 ⏫to → ) Upto 74% Not Required.
[Pension sector % = Insurance sector so it shd be 74% as well]
Note: this limit is not applicable on LIC.
1) Defense (2020-Sept: FDI in Defense limit ⏫from 49% to 74%) Upto 74% ABOVE 74%
2) Brownfield projects in Pharma, Biotech, Healthcare
Satellite operation N/A 100%
For future updates, refer to https://www.investindia.gov.in/foreign-direct-investment
30.8.6 🗃🗃🗃🗃🗃🗃🗃🗃:🖱🖱🖱🖱 India’s FDI rules for E-Commerce
Definition? E-commerce means buying and selling of goods and services over digital & electronic
network. Two subtypes
1. Inventory based (इ��टरी आधा�रत) model of e-commerce: Company sells the inventory of goods
and services, which is owned by them to consumers directly. E.g. primeabgb.com (A computer
hardware site). FDI is not permitted here.
2. Marketplace based (बाजार आधा�रत) model of e-commerce: Company merely provides a
webportal/app to act as a facilitator between buyer and sellers. E.g. Amazon, Flipkart. 100% FDI
allowed here.
FAQ: What are E-Commerce Rules by Government ? Ans. More in

📑📑Pillar#4B: Services Sector
30.8.7 🗃🗃🗃🗃🗃🗃🗃🗃: 🔥🔥🔥🔥 Hotmoney Effect by FPIs

2018-19 (Bn. USD) (+) Inflow (Credit) (-) Outflow (Debit) NET inflow
FPI + 256.9 - 257.5 -0.6 (=outflow)
FDI + 64 - 34 + 30
Foreign investment in India: भारत म� �वदेशी �नवेश → + 30 (approx.)
⇒ From the above table you can see large amount of money comes via Foreign Portfolio Investors
but because it is speculative and volatile in nature (HOT MONEY), so it does not stay for long in
Indian market so in “NET” terms its lower than FDI. (�वदेशी पोटर्फो�लयो �नवेशक सट्टेबाज उद्दे� से ��र �प से
पैसा भारतीय बाजार म� �नवेश करते ह� और �नकाल कर ले जाते ह� इस�लए ऐसा पैसा लं बी अव�ध के �लए भारत म� िटकता नहीं उसे हम
हॉट मनी/ गरम मुद्रा कहते है)
⇒ 2018-19: there was net ‘outflow’ of FPIs (i.e. more FPI money left India than the amount of FPI
money that came into India) which shows the Hot Money effect.
⇒ 2020 onwards: FPI situation given in following chart:
30.8.8 🗃🗃🗃🗃🗃🗃🗃🗃Investment: Misc Terms & Reports
30.8.8.1 �✈ Golden Visa (�नवेशकों और प्र�तभावान लोगों को आक�षत करने के �लए �णर् वीज़ा)
⇒ It is a special type of visa given for a investor/ property-buyer/celebrity / sportsman / scientist /
very bright student. System prevalent in Spain, UAE (Sanjay Dutt-2021) etc.
⇒ 🤩🤩Benefit? Helps the nation to attract investors and talented persons.
30.8.8.2 📊📊UNCTAD's World Investment Report (�व� �नवेश �रपोटर्)

⇒ United Nations Conference on Trade and Development (UNCTAD, HQ- Geneva Switzerland,
1964) → report: World Investment Report
⇒ Global FDI flows will ⏬by 40% in 2020 because of the Corona.
⇒ India was the 9th largest recipient of FDI in 2019-20 in the world.
⇒ 2021: it published a report but nothing noteworthy from exam point of view.
🔠🔠❓MCQ. Both Foreign Direct Investment (FDI) and Foreign Institutional Investor (FII) are related to
investment in a country. Which one of the following statements best represents an important difference
between the two?(Asked in UPSC-Pre-2011)
A. FII helps bring better management skills and technology, while FDI only brings in capital.
B. FII helps in increasing capital availability in general, while FDI only targets specific sectors.
C. FDI flows only into the secondary market, while FII targets primary market.
D. FII is considered to be more stable than FDI
🔠🔠❓MCQ. Find correct major characteristics with reference to FDI in India (Prelims-2020)
[a) It is the investment through capital instruments essentially in a listed company.
[b) It is largely non-debt creating capital flow.
[c) It is the investment which involves debt-servicing.
[d) It is the investment made by foreign institutional investors in the Government securities.
🔠🔠❓ Which of the following can be included in Foreign Direct Investments in India [Pre-2021]
1) Foreign Currency Convertible Bonds
2) Foreign Institutional investment with certain conditions
3) Global depository receipts (GDR)
4) Non-resident external deposits
Codes: a) 1, 2 and 3 b) 3 Only c) 2 and 4 d) 1 and 4
30.9 � YEARBOOK: MINISTRY OF COMMERCE AND INDUSTRY (वा�ण� और उद्योग मं त्रालय):

This ministry looks after Internal and External Trade, WTO, Dumping, SEZ, FDI related issues. It’s
the boss of <List not exhaustive- मं त्रालय म� और भी सं �ाएं हो सकती है लेिकन सभी क� सूची म�ने नहीं दी >
Attached 1. Directorate General of Foreign Trade (DGFT: �वदेश �ापार महा�नदेशालय) for promotion
offices of foreign trade. → he issues Importer Exporter Code (IEC) uniqud-id number to
सं ल� bizmen engaged in foreign trade.
कायार्लय
2. Directorate General of Trade Remedies (DGTR) to impose anti-dumping duty on
foreign products.
3. Directorate General of Commercial Intelligence and Statistics
4. Economic Adviser to DPIIT- responsible for publishing Wholesale Price Index
(WPI)- more in Pillar4C: Inflation. थोक महँ गाई सूचकांक
Governme ⇒ Export Credit Guarantee Corporation of India (ECGC: NIRVIC scheme-walle)
nt ⇒ MMTC ltd. (Gold-coin-walle). Although 2020-Jan approved for Strategic
Companie
disinvestment [भ�व� म� इसका �नजीकरण हो जाना है]
s
⇒ National Investment Promotion and Facilitation Agency of India. Commonly known
as “Invest India”: A ‘not for profit’ company by commerce ministry + FICCI +
NASSCOM + other in 2009. Sidenote: FICCI and NASSCOM are not-for-profit
associations made by businessmen, mainly to lobby/highlight their demands to
Government.
Statuto. 1. Agricultural and Processed Food Products Export Development Authority (APEDA:
bodies कृ �ष और सं सा�धत खाद्य उ�ाद �नयार्त �वकास प्रा�धकरण), under its statutory act.
�ाय� 2. Marine Products Exports Development Authority (MPEDA)
�नकाय/ 3. Statutory Commodity Boards → Tea Board, Spices Board, Tobacco Board, Coffee
सं �ाए Board, Rubber Board. Controversy? Some newspapers suggesting these boards may
be closed / merged. So farmers are opposing.
4. Export Inspection Council (EIC): Under 1963’s law to ensures quality and safety of
products exported from India. EIC’s certificate is compulsory/mandatory for
exporting fish, dairy, meat related products from India.
Autonomo Indian Institute of Foreign Trade (IIFT)- a “Deemed University” that offers MBA, PHD
us & other programs.
🚩🚩🚩FAQ: What is attached office / autonomous body? Ans. Self-Study through
government-organisations-in-hindi/7KCEZHT4/
🔠🔠❓MCQ. Find correc about “Tea Board” in India:

1. The Tea Board is a statutory body.
2. It is a regulatory body attached to the Ministry of Agriculture and Farmers Welfare.
3. The Tea Board’s Head Office is situated in Bengaluru.
4. The Board has overseas offices at Dubai and Moscow.
Codes: (a) 1 and 3 (b) 2 and 4 (c) 3 and 4 (d) 1 and 4
30.9.1 💼💼Budget-2020 : Medieval dictionary GK about Foreign Trade

In Indus script- “Takara Kolimi=Tin smithery”, “ Sreni “= Guild ,” Sethi”= wholesale merchant,
“Poddar”= Assayer of metal into treasury. (🎓🎓Medieval dictionary GK sometimes asked in MCQ so
memorize.)
30.9.2 🕵🕵 (2019) DIPP becomes DPIIT (�वभाग का नाम बदला गया)

⇒ 💼💼Interim-Budget- 2019: Govt renamed Commerce Ministry’s Department of Industrial Policy
and Promotion (DIPP: औद्यो�गक नी�त और सं वधर्न �वभाग) → Department for Promotion of Industry
and Internal Trade (DPIIT: उद्योग और आंत�रक �ापार को बढ़ावा देने के �लए �वभाग ).
⇒ It’ll function under Ministry of Commerce and Industry
⇒ DPIIT’s Objectives? Promotion of internal trade, including retail trade; welfare of traders and
their employees; matters relating to ease of doing business; and startups.
30.9.3 � (2017) FIPB Abolished (�वदेशी �नवेश अनुम�त क� सं �ा को हटाया गया)
- Foreign Investment Promotion Board (FIPB: �वदेशी �नवेश सं वधर्न बोडर्) was a non-statutory body in
the Department of Economic Affairs in the finance ministry.
- FIPB processed the FDI applications where government approval was required. If investment
amount exceeded ₹ 5,000 crore → application forwarded to Cabinet Committee on Economic
Affairs (CCEA: आ�थक मामलों क� मं �त्रमं डलीय स�म�त).
- 2017: Govt announced FIPB’s abolition. Now, individual ministries/departments are empowered
to clear FDI proposals in consultation with Commerce Ministry. e.g. FDI in Pendrive factory →
MEITY + Commerce Ministry. (if proposal above ₹5kcr →CCEA)
- FIPB’s webportal was renamed into “Foreign Investment Facilitation Portal” and transferred to
Commerce ministry.
However, Only Home Ministry will clear FDI proposals coming from Pakistan and Bangladesh; and
FDI proposals related to private security agencies, small arms manufacturing.
30.9.4 🗃🗃🗃🗃🗃🗃 BoP: Capital → Chinese FDI need Govt approval

Before From 2020-April
If any FDI proposal coming from Pakistan and ⇒ If any FDI proposal from any country that
Bangladesh, it required approval from shares border with India → Indian Govt
Government of India.
approval required
⇒ Means, Pakistan, Afghanistan, China,
Nepal, Bhutan, Bangladesh and Myanmar
 Govt decided this because: Corona-led slowdown = Indian companies suffering from losses.
China may mis-use this opportunity to takeover such Indian companies @very low share price
→ will harm our strategic & economic interests. (चीन, हमारी भारतीय कं प�नयो का अ�धग्रहण कर लेगा तो हमारे
रणनी�तक और आ�थक िहतों को नुकसान हो सकता है)
 😰😰Criticism? China says this is violation of WTO norms related to foreign investment.
Although Australia and Germany also announced similar restrictions on China for similar
reasons (More on WTO in 📑📑Pillar#3B)
30.9.5 � Related Topic: Cabinet Committees
Table 1: For more PHD you may refer- https://cabsec.gov.in/writereaddata/cabinetcommittees/english/1_Upload_3017.pdf
Cabinet Committee on Boss* Notes

1) Appointments �नयु�� वषयक 🧔🧔 PM finalizes the name for top level appointments like
के �बनेट स�म�त Cabinet Secretary, Indian ambassadors to each
nation etc. This Committee has only 2 persons-
Modi & Shah.
2) Accommodation आवास HM Giving house allocation to politicians, top officials
3) Economic Affairs 🧔🧔 PM FDI approval, Agri-MSP approval (Pillar#4A),
आ�थक मामले Bank merger,disinvestment etc grand things
4) Parliamentary Affairs Defense Defense Minister Rajnath Singh made boss for his
सं सदीय कायर् Minister acumen in parliamentary matters
5) Political Affairs, 6) Security 🧔🧔 PM Self-explanatory. If PM is in a cabinet Committee,
5) राजनी�तक मामले, 6) सुर�ा he automatically becomes its chairman
7) Investment and Growth 🧔🧔 PM These two are new committee formed after 2019's
8) Employment and Skill General Election. 7) �नवेश और �वकास
Development 8) रोजगार और कौशल �वकास
30.9.6 🐯🐯�🦁🦁 International Financial Services Centre (IFSC)
 A nation will not apply its local taxation and investment norms in its IFSCs (अंतरार्�ी� य �व�ीय सेवा
क� द्र:) E.g. UAE → Dubai’s IFSC centre: 100% FDI allowed in any sector. 100% Capital Account
Convertibility (i.e.Invest & pullout money as & when you please in any currency of your
choice!), 0% income tax for 50 years. DTAA with most countries. Independent judiciary not
bound with local laws. Quick Visa etc. (करो म� भारी छू ट, �ा�नक कानूनों से मु��)
 🤩🤩Result? Such place becomes a hub / base of operation for international financial companies
and investment bankers. It also creates trickle down benefits for local people e.g. Chartered
Accountants, Hoteliers, Golf club owners, Taxi operators etc.
 London, New York, Hong Kong and Singapore to have also grown by setting up such centres.
Taking their example, India too has set up Gujarat International Finance Tec (GIFT) city
international financial services centre (IFSC) near Ahmedabad. (2015)
 Although GIFT city not yet attracted good number of international financial companies because
the tax benefits are not as great as Singapore, Hong Kong etc.
 This ‘greenfield’ GIFT city was developed by 50:50 Joint venture of (the infamous) IL&FS +
Gujarat Urban Development Company Limited (GUDCL). Together they were responsible for
the construction, electricity, water, sanitation and other responsibilities of running this city. But
post IL&FS crisis, Govt of Gujarat has bought IL&FS’s 50% shareholding.
⇒ 💼💼Budget-2019: Companies operating from GIFT-city-IFSC given 100% exemption from
Corporation Tax for 10 years
30.9.7 🐯🐯�🦁🦁: � IFSC Authority Act, 2019

 IFSC (such as GIFT city) are setup under the SEZ Act.
 IFSC get relief / exemption in the Indian tax laws. Further, RBI, SEBI, IRDAI and other
regulators’ norms also apply in relaxed manner. E.g. Bank branches in GIFT-city-IFSC are
exempted from RBI’s CRR-SLR-PSL etc. norms.
 2019’s Act aim to setup a statutory International Financial Services Centres Authority (अंतरार्��ीय
�व�ीय सेवा क� द्र प्रा�धकरण), with
- One Chairperson+ One member each nominated from RBI,SEBI, IRDAI, PFRDA
- + few other members from Finance ministry etc
- Tenure? 3 years. Re-appointment? Yes, possible.
 The IFSC Authority will regulate all financial services, products, institutions in International
Financial Services Centres of India.
⇒ 2020-April: Government announced its headquarter will be at Gandhinagar, Gujarat. (Since
Gandhinagar is the only place with an IFSC at present, i.e. GIFT City)
⇒ 😥😥Controversy? Maharashtra political outfits demanding HQ should be in Mumbai.
30.9.8 🐯🐯�🦁🦁: � IFSC → Variable Capital Companies (VCC)

⇒ VCC is a special type of company dealing with several collective investment schemes e.g.
investing in shares/bonds/real estate/startups, Acting as FPI in other nations etc
⇒ VCC has greater operational flexibility than traditional Mutual Fund, Hedge Funds, REITS,
Limited Liability Partnerships (LLPs), Private limited companies etc (REF Pillar1C).
⇒ VCCs are prevalent in Singapore, UK, Luxembourg and other global financial centres.
⇒ 2021: International Financial Services Centres Authority had constituted a Committee under
K.P. Krishnan to see the feasibility of allowing VCCs in IFSC. Krishnan Committee
recommended allowing them in India.
✋Beyond this, VCC pe PHD NOT REQUIRED, irrespective of how many Faaltu-MCQs set by
inexperienced private quizmasters.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
🔠🔠❓MCQ. Who among the following was the Head of the Expert Committee on Variable Capital
Company in India which has submitted its report recently? (UPSC CAPF-2021)
(a) K. P. Krishnan (b) Ketan Dalal (c) J. Ranganayakulu (d) Bobby Parikh
30.9.9 � 🔪🔪 BoP → Capital Account → Debt (Loans & Non Resident Bank deposits)
NET inflow in (Bn. USD) →�नवल आमद 2018-19 😷😷2020-21
Foreign Investment (FPI & FDI) +30 +80
 External borrowing: Pvt. Sector borrowing >Govt. +16 +7
 Further, majority of India’s external debt is in U$D currency >
Indian Rupee > IMF’s SDR > (Yen, Euro, Pound Sterling, etc)
Non-Residents’ Deposits in Indian Banks [Foreign Currency Non- +7 -21
Resident FCNR accounts] & other misc. components of Capital
Account
NET balance in Capital Account (approx.) + 54 +64
30.9.10 � 🔪🔪 BoP → Capital Account → Misc. Concept: NIIP
 Net International Investment Position (NIIP)= value of overseas assets owned by a nation minus
the value of domestic assets owned by foreigners.
⇒ 🧐🧐 Positive NIIP value = creditor nation (लेनदार रा�)�
⇒ 😭😭 Negative value = debtor nation (कजर्दार देश). USA highest, India at 8th place (in 2018)
30.9.11 � 🔪🔪 BoP → Capital Account → Misc. Concept: VOSTRO, NOSTRO, FCNR, NRE, NRO
⇒ VOSTRO, NOSTRO, FCNR, NRO, NRE etc are different-different types of bank accounts
associated with foreign currency transactions
⇒ What are their features, how they are similar or different from each other?
⇒ Such banking general knowledge will give poor cost benefit for exam. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
30.9.12 � 🔪🔪 BoP: External Debt overhang Problem (ऋण क� अ�धकता)
📔📔📔📔ES21: There is a “Laffer Curve” like relationship between foreign debt and GDP growth:
⇒ Up to a certain level, more External borrowing → ⏫economic growth (Because that foreign
money can be used for expanding the local factories, jobs, production).
⇒ But beyond a certain level it will become unsustainable. (Just like in Original Laffer Curve:
⏫direct tax% → ⏫tax collection but then it'll reduce tax collection Because high level of
direct taxes will encourage laziness and tax evasion/blackmoney. Recall Pillar#2B) (एक हद तक
�वदेशी कज� से भारतीय का अथर्तंत्र म� वृ�द्ध क� जा सकती है लेिकन एक हद के बाद वह अ��रता पैदा करता है)
⇒ Because too much debt = then all of your new (monthly/yearly) income will be gone in repaying
the previous loan installments. This phenomena is known as debt overhang. (यिद आपक� सारी कमाई
लोन क� िक� चुकाने म� चली जाए तो काम करने का उ�ाह भी चला जाता है)
o Debt overhang destroys enthusiasm and motivation to work harder.
o Debt overhang increases the chances of loan default e.g. Argentina, Ecuador, Belize,
Lebanon, Suriname and Zambia – have defaulted on their sovereign debt in Corona.
⇒ 📔📔📔📔ES21 and 📙📙📙📙ES22 observed that Presently India's external debt to GDP is at the
optimal level. (In other words we should not let this ratio increase anymore.)
⇒ Corona: business ⏬: now If Indian companies borrow too much money from abroad to revive
their business → It may create the debt overhang problem in the future.
🔠🔠❓MCQ. Find correct statement(s): (UPSC Pre-2019)

1. Most of India’s external debt is owed by government entities.
2. All of India’s external debt is denominated in US dollars.
Codes: (a) 1 only (b) 2 only (c) Both 1 and 2(d) Neither 1 nor 2
🔠🔠❓MCQ. Which of the following constitute Capital Account? (UPSC-Pre-2013)

1. Foreign Loans. 2. Foreign Direct Investment. 3. Private Remittances. 4. Portfolio Investment.
Answer codes: (a) 1, 2 and 3 (b) 1, 2 and 4 (c) 2, 3 and 4 (d) 1, 3 and 4
30.10⛽🎖🎖: 🗃🗃🤲🤲 BOP → SUMMING UP
Sr. Approx Bn. USD 2018-19 😷😷2020-21 2021: April to

Sept
1Current Account Deficit: चालू खाता घाटा - 57 +24 -3
2Capital Account Surplus: पूंजी खाता + 54 +64 +66
अ�धशेष
3 Errors & Omissions: त्रुिटयां और चूक -0.486 -0.3 0.5
4 Overall Balance: समग्र सं तुलन/ शेष (-) 3 bn +87 +63
5 Official Reserve Transactions or (+) 3 bn (-)87 [Meaning (-)63
Monetary Movements in RBI's [Meaning RBI bought this
Foreign Exchange Reserves** RBI sold $$ much $$ from
(�रज़वर् ब�क फॉरे� बाजार से डॉलर क� खरीदी या from its market]
�बक्र� करेगी तािक �व�नमय दर म� ��रता रहे) reserves]
NET Balance of Payment for India 0 (ZERO) 0 (ZERO) 0 (ZERO)
- Sr. no 1 to 4 are called Autonomous transactions because they occur independently on their own
without RBI’s involvement. (यह लेनदेन �ाय� �प से, अपने आप ही हो जाती है, �रज़वर् ब�क के कहने पर नहीं होती)
- Sr. no 5 is called Accommodating transaction, bcoz RBI will do it based on whether we are
having surplus or deficit due to previous 4 items (so that RBI can accommodate NET BoP to
ZERO). (यह अपने आप नहीं हो जाता, �रज़वर् ब�क ने अपना िदमाग लगाकर इसको करना पड़ता है)
- **
Column for 2018-19: (+) sign indicates RBI supplied/sold that many $$ from its forex reserve,
else $ becomes stronger= ₹ becomes weaker bad for importers. Here (+) Sign indicates ⏬in
RBI’s forex reserve (since RBI sold dollars) [�रज़वर् ब�क क� �तजोरी म� इतने डॉलर क� मात्रा कम �ई]
- ##
Column for 2020: (-) sign indicates RBI purchased $$ from market, else ₹ rupee becomes
stronger= bad for exporters. (-) Sign in sr.5 row indicates ⏫in RBI’s forex reserve (since RBI
bought dollars) [�रज़वर् ब�क क� �तजोरी म� इतने डॉलर क� मात्रा बढ़ जाएगी].
30.10.1 💱💱💱💱💱💱 Sterilization (��रीकरण)?
If there is a BoP situation, wherein RBI has to sell ₹ to buy $ to get the NET answer ZERO then…
Such RBI action would result in ⏫supply of rupee currency in the Indian market → it can cause
inflation if there is not sufficient supply of goods for purchase.
So, RBI must ‘absorb’ that excess rupee currency back. RBI will do it through Open Market
Operation (OMO: REF-1A2) → sell govt securities to buyback Indian rupees. This process is called
Sterilization. �रजवर् ब�क ने यिद डॉलर खरीदने के �लए बाजार म� �पए िदए तो उ�ीं �पयों को वापस से भी चूस लेना चािहए, वरना
महंगाई हो सकती है → इस�लए �रजवर् ब�क, सरकारी प्र�तभू�तयां भेजकर बाजार ₹ चूस लेता है इसे ��रीकरण कहते ह�
30.10.2 💱💱💱💱💱💱: 🧅🧅 🧅🧅 Mundell-Fleming Trilemma (मं डल �े�मंग क� �त्र-आयामी दू �वधा)
Theory by economists Robert Mundell and Marcus Fleming (1960s). It argues that three things can't
be accomplished together: �रजवर् ब�क तीन चीज� एक साथ नहीं कर सकते
Trilemma (�त्र-आयामी दू �वधा) Example situation in Corona
1) Keep capital account open / relax Corona:- large foreign FPI,FDI inflow towards India’s
capital account convertibility to boost pharma-IT/Tech sectors. कोरोना के दौरान भारत के औष�ध तथा
economy. पूंजी खाते म� छू ट: भारत म� �वदेशी �पया सूचना प्रौद्यो�गक� �ेत्र म� ढेर सारी �वदेशी पूंजी आई
लाने- ले जाने पर ब�त �ादा पाबं दी ना हो, तािक
अथर्तंत्र को बढ़ोतरी �मल सके
2) Keep exchange rate stable �वदेशी मुद्रा FPI,FDI ⏫ → so, inflow of Dollar$⏫⏫ → then
�व�नमय दर को ��र रखा जाए rupee will become stronger → exchange rate will not
remain stable & exporters will suffer due to stronger
rupee. �वदेशी मुद्रा के भारत म� अ�धक मात्रा म� आने से �पया मजबूत होता
है जो �नयार्तकों के �लए अ�� बात नहीं
3) Keep monetary policy independent ⇒ Stronger rupee will be bad for exporters → RBI
(from what is happening elsewhere in should purchase dollars & sell rupees →
the world / solely focusing on Inflation
⏫Rupees supply → Inflation if there are not
- target) मौिद्रक नीती �तं त्र �प से चलाई जा
sufficient goods in the market. �रज़वर् ब�क �पया बेचकर
Trilemma (�त्र-आयामी दू �वधा) Example situation in Corona
सके -�बना परवाह िकए िक �व�नमय दर म� �वदेशी डॉलर खरीदना शु� कर� तो बाजार म� �पये क� मात्रा बढ़ जाएगी जो
ताकतों/कारको के चलते �ा अ��रताएँ हो रही है. महंगाई उ�� कर सकती है
⇒ So if RBI try to control the exchange rate volatility,
then RBI will end up creating inflation! यानी क�
�व�नमय दर क� अ��रता रोकने के च�र म� महंगाई उ�� हो गई
⇒ Corona-2020: amount of $$ inflow so high,
sterilization game (Ref: previous section) was
difficult. So, inflation inevitable. ��रीकरण वाला खेला
ब�त मु��ल �ोंिक डॉलर/�पये मात्रा ब�त �ादा थी.
In this trilemma, What did RBI do?

Way Forward: Description did RBI implement this solution?
Control the exchange RBI should buy dollars & ✅YES. हाँ यहीं िकया गया
rate volatility, prevent sell rupees. �रज़वर् ब�क ने डॉलर
Rupee from becoming खरीद और �पया बेचना चािहए
stronger →�पया को
मजबूत होने से रोको
Control the Then RBI should not buy ✋No. Because RBI felt that inflation will
inflation → मं हगाई को the dollars and sell the increase ⏫irrespectively, because of the
काबू म� रखो rupees. तो डॉलर मत खरीदों, Corona lockdown related supply-demand
�पया मत बेचो, तािक बाजार म� �पए mismatch. लॉकडाउन म� महंगाई तो वैसे भी होनी थी
का ज�ा ना बढ़े, महंगाई न बढ़े व�ुओ ं क� आपू�त म� �गरावट के चलते. इस�लए �रज़वर् ब�क
ने �पये क� �व�नमय दर को ��र रखना �ादा ज�री समझा.
30.11 (⛽🎖🎖>🗃🗃🤲🤲)⚠ INDIA’S BALANCE OF PAYMENT CRISIS (1991)
Nowadays India usually has “DEFICIT” in current account (due to crude oil imports), but there is
usually sufficient “SURPLUS” in capital account (thanks to FDI & FPI) to counter/offset that
Current Account DEFICIT. (सामा� �प से चालू खाते म� घाटा, और पूंजी खाते म� अ�धशेष होता है)
- But in the pre-1991’s Nehruvian Socialist Economy, many sectors were nationalised (banking
insurance) and / or reserved for the public sector companies only = mismanaged & inefficiency.
Private sector industrialists were allowed only in selected sectors, and were subjected to Licence-
Quota-Inspector Raj → ⏬competition,⏬ innovation = low exports.(Ref: 📑📑Pillar#4B)
- And our policy makers restricted foreign investments (FDI /FPI) fearing that
- It’ll bring USA-CIA’s invisible hand in Indian Affairs,
- Our Swadeshi industries & our ‘Non-Alignment Movement (NAM)’ will be harmed.
- 😰😰End result? High level of “DEFICIT” in Current Account and not enough surplus in Capital
account to counter/offset that DEFICIT. The situation could be like this:
1991 → imaginary figures for illustration only (�सफ़र् उदाहरण के �लए का��नक आंकड़े) (Bn. USD)
Current Account (Deficit) [चालू खाते म� बोहोत बड़ा घाटा] - 100
Capital Account (Surplus, but it’s insufficient surplus) [पूंजी खाते म� अपयार्� अ�धशेष] + 50
Errors & Omissions 0
Overall Balance - 50
Monetary Movements in RBI's Foreign Exchange Reserves** + 50
NET Balance of Payment for India 0
**Here plus (+) indicates RBI must sell dollars from its forex reserve to keep India’s BoP at ZERO
level. If they can’t do it then shortage of dollars in Indian market to pay for our import bills →
results in heavy weakening of Indian rupee (e.g. $1 =₹ 60 → $1= ₹ 6000) then it becomes even more
expensive to import oil. �पया ब�त कमजोर �आ तो क�ा तेल आयात करना और महंगा होगा
- In 1991, RBI didn’t have enough forex reserves to get India’s BoP zero → we had to pledge our
gold to IMF to borrow dollars. सोना �गरवी रखकर डॉलर के लोन �लए
- IMF also imposed certain conditions which required India to open up its economy through LPG
reforms (Liberalisation, Privatisation, Globalisation: उदारीकरण, �नजीकरण, वै�ीकरण). 🎓🎓Self-study
from (new) NCERT Class11:Indian economic development → Ch3.
- 2022: SriLanka facing similar problems but we’re not preparing for SrilankiPSC so boycott-PHD.
30.11.1 (⛽🎖🎖>🗃🗃🤲🤲)⚠ Disequilibrium in BoP: Factors responsible (असं तुलन के कारण)

When Credit (Receipt, income money) = Debit (Payment, outgoing money) then BoP will be ZERO.
If, not then BoP is in disequilibrium. This can happen because of:
⇒ Development disequilibrium (�वकास का असं तुलन): poor nations have to import more grains,
medicines etc. = adverse BoP.
⇒ Secular or Long-term Disequilibrium (दीघर् अव�ध तक रहने वाला): newborn nation is usually poor &
backward so imports >> Export. E.g. Nehru’s India until it matured in the 90s.
⇒ Consumerism and Demonstration Effect: Rich Indians try to copy westernized lifestyles. So,
⬆import of Switzerland wristwatches+Sports Cars = adverse BoP. (उपभो�ावाद, िदखावा करने क� चाह
→ �ादा आयात के चलते भुगतान सं तुलन खराब होता है)
⇒ Structural Disequilibrium =if transport, electricity infrastructure is poor or Technological
Backwardness = exports can’t improve. (सं रचना�क और तकनीक�)
⇒ Cyclical Disequilibrium (चक्र�य असं तुलन): When two countries may be passing through different
phases of business cycle (Boom, slowdown...तेजी और मं दी का चक्र) , so there will be mismatch in
imports, exports, FDI etc.
30.11.2 🐯🐯🐯🐯 RBI’s Forex Reserve: �वदेशी मुद्रा �रजवर्

The Forex Reserve component(s) are =
1) Foreign Currency Assets (includes foreign currencies & G-Sec/bonds of foreign Govts)
2) Gold (�णर्)
3) Reserve Tranche Position (RTP) in the IMF. (What is RTP = NOT IMP)
4) Special Drawing Right (SDR) of International Monetary Fund (IMF)
 Largest forex reserves: 1) China ($3 Trillion)> 2) Japan > 3) Switzerland > 4) India (As of 2021)
 USA is not in the top-10 list, it barely keeps ~$250 billions in reserve.
 2021: RBI forex Reserves crossed $600+ billions. because of following reasons:
⇒ Corona: imports ⏬⏬ → Capital Account surplus. आयात म� �गरावट के चलते चालू खाता अ�धशेष
⇒ Corona: USA/EU ke Central banks cheap/dovish/expansionary monetary policy → Flow of
dollars in euros increased towards Indian share market (Particularly In the pharma/IT-Tech
companies). FPI/FDI ⏫ → so, inflow of Dollar$/Euro etc⏫⏫ कोरोना के दौरान अमे�रक� यूरोपीय
क� द्रीय ब�कों द्वारा �व�ार वादी मौिद्रक नी�त के चलते ढेर सारा �वदेशी पैसा भारतीय बाजार म� आया है.
⇒ then rupee will become stronger → exchange rate will not remain stable & exporters will suffer
due to stronger rupee. �पया �वदेशी मुद्राओं के सामने मजबूत होगा जो िक भारत के �नयार्तकों के �लए अ�� बात नहीं होगी
⇒ So RBI bought dollars/Euro etc foreign currencies & sold rupees → $$/Euro etc accumulation in
the RBI forex reserve. इस�लए भारतीय �पया को मजबूत होने से रोकने के �लए, �रजवर् ब�क ने �पया देकर बाजार से �वदेशी
मुद्रा को खरीदना शु� िकया. और ऐसी �जतनी �वदेशी मुद्रा �रजवर् ब�क ने खरीदी → उससे फॉरे� �रजवर् तो बढ़ना �ाभा�वक है.
🔠🔠❓MCQ. Which one of the following is included in India's foreign-exchange reserves? (UPSC-Pre-2013)
A. Foreign-currency assets, Special Drawing Rights (SDRs) and loans from foreign countries.
B. Foreign-currency assets, gold holdings of the RBI and SDRs.
C. Foreign-currency assets, loans from the World Bank and SDRs.
D. Foreign-currency assets, gold holdings of the RBI and loans from the World Bank.
🔠🔠❓MCQ. “Gold Tranche” (Reserve Tranche) refers to _ _ (UPSC-Pre-2020)
[a) A loan system of the World bank [b) One of the operations of a central bank
[c) A credit system granted by WTO to its members [d) A credit system granted by IMF to its members
31 💱💱 CURRENCY EXCHANGE RATE: मुद्रा �व�नमय दर
Currency Exchange Rate Indian Exporter of Tea Indian Importer of Dell Laptops
Weaker ₹ = Stronger $   . मेरे को आयात करते वकत �ादा
($1=60 → 600) ज�े म� पैसा देना होगा!
Stronger ₹ = Weaker $  मेरे को �नयार्त करते व� 
($1=80 → 40) कम ज�े म� पैसा �मलेगा।
(Definition) The price of one currency in terms of the other currency is called exchange rate. E.g. $1
= ₹ 70. Meaning, it costs ₹ 70 to buy one dollar (or $0.014 to buy ₹ 1).
- This is also called Nominal Exchange Rate because it does not take into consideration inflation
or purchasing power in the respective countries. (औपचा�रक �व�नमय दर, महंगाई को नजरअंदाज िकया)
- The place where currencies are exchanged is called Foreign Exchange Market (�वदेश �व�नमय बाज़ार).
Their dealers are called Authorized (Forex) Dealers (AD). They can be banks or non-banks.
They have to get registered with RBI under the Foreign Exchange Management Act (FEMA:
�वदेशी मुद्रा प्रबं धन अ�ध�नयम के अंतगर्त �वदेशी मुद्रा के दलालों को �रजवर् ब�क से अनुम�त लेनी होती है).
- These dealers keep separate prices for buying and selling, to make profit in between e.g. ICICI:
$1 Dollar buying price ₹ 67.95 and $1 selling price is ₹ 72.76. (इन दलालों का डॉलर खरीदने का दाम अलग
और बेचने का दाम अलग होता है तािक बीच म� उनका मुनाफा रहे)
- Such currency transaction service is also subjected to GST, however the tax depends on the
amount of currency exchanged. (e.g. upto ₹ 10 lakh exchanged in foreign currency then only ~₹
3000 of that 10 lakh will be taxable in GST → 18% of 3000 → ₹ 540 GST Tax. GST will not be
levied on the entire 10 lakh rupees)
- American Economist James Tobin had suggested 0.1% to 0.5% Tobin Tax on currency exchange
transactions to discourage the speculative trading and volatility in the International Financial
Market
31.1 💱💱 EXCHANGE RATE REGIME: THEORY
It is the set of rules governing the exchange of domestic currency with foreign currencies.
🐍🐍 Floating or Flexible (अ�ाई �व�नमय दर) 🔨🔨 Fixed or Pegged (�नयत �व�नमय दर)
Here the exchange rate is determined by the When the central bank of a country itself decides
market forces of demand and supply. the exchange rate of local currency to foreign
- So if there are more number of Indian people currency e.g. People’s Bank of China (PBC) $1 =
wanting to import crude oil, gold, iphones;/ 6 Yuan.
going to USA for higher studies,... Compared - If excess dollars are entering in their market,
to the number of Americans interested to buy the central bank will print more Yuan to buy
Indian goods, services; / coming to vacation and absorb the excess dollars, to ensure Yuan
in Kerala doesn’t strengthen against Dollar ($1=6 → 5
- Then, demand for dollars will be more than Yuan). As a result their forex reserve will get
that of rupees. So, $1 = 50 → $1=70 large build up of dollars, due to central bank’s
purchase.
- In future, if less dollars are entering in their
market, the central bank will sell the
(previously acquired) dollars from its forex
reserve to ensure Yuan doesn’t weaken (₹ 1=
6 → 7 Yuan)
In this system, In this system,
- 😰😰 if rupees weakens, it’s called - 😰😰 if Yuan is weakened by Central Bank’s
‘Depreciation (मू�ह्रास e.g 50 → 70); Makes official notification, it’s called ‘devaluation’
the export look cheaper to the foreign buyer (अवमू�न e.g $1=6 → 7); usually done when it
- 💪💪 if ₹ strengthens it’s called ‘Appreciation doesn’t have enough dollars in reserve to play
(अ�भमु�न e.g. 70 → 50) the game and / or when it wants to
🐍🐍 Floating or Flexible (अ�ाई �व�नमय दर) 🔨🔨 Fixed or Pegged (�नयत �व�नमय दर)
deliberately weaken Yuan to encourage
exports.
- 💪💪 if Yuan is strengthened by Central Bank’s
official notification, it’s called ‘Revaluation’
(पुनमू�न e.g. $1=7 → 6)
😢😢 Challenge? चुनौती 😢😢 Challenge? चुनौती
- Currency Speculation: When a person buys $ - If trade deficit widens / speculators are
and other foreign currency with the hopes hoarding dollars / FPIs are pulling their
they become more expensive in future so he money back to USA due to higher interest
can sell@ profit to others. (so he’d be hoping rates → shortage of $ in local forex market→
for ₹ to depreciate / $ to appreciate). Such PBC will have to sell $ from its forex reserve
elements distort the exchange rate by hording to keep the exchange rate stable.
foreign currencies. सट्टेबाजी - but since PBC will not have infinite amount
- Interest Rates: If US repo rate / Treasury of dollars in its reserve ultimately it will be
Bonds are going @2% whereas in Greece’s forced to be devalue the local currency →
bonds going@4% Then American investors imports will become more expensive.
will convert Dollars to invest in Greece. Later, - Therefore, most of the countries have
when US fed ⏫ their repo rate from 2% to abandoned this system after 70s. China too
4% American investors might pull back from abandoned it in eventually, and shifted to
Greece. (Because America commercial bank Managed Floating Exchange Rate.
loans will become more expensive ~5%, then
there will be American companies willing to
borrow by issuing Bond/debentures at 4.5%.)
🔠🔠❓MCQ. Under flexible exchange rate system, the exchange rate is determined by [UPSC-CDS-2015-II]
(a) predominantly by market mechanism (b) by the Central Bank
(c) as a weighted index of a group of currencies (d) by the World Trade Organization
31.1.1 💱💱💱💱 Managed Float / Dirty Float; प्रबं �धत चल/ म�लन चल
- It is the middle path between the two extremes (floating and fixed).
- RBI will not decide the exchange rate (unlike the fixed system). In the ordinary days, RBI will let
the market forces of supply and demand decide the exchange rate.
- But if there is too much volatility, then RBI will intervene to buy / sell $ to keep the volatility
controlled. (सामा� िदनों म� �रजवर्ब�क दखल नहीं, लेिकन �व�नमय दर म� यिद भारी अ��रता होगी तो बाजार म� दखल देगी)
- Similarly, People Bank of China will not intervene in ordinary circumstances. They’ll intervene
during volatility i.e. if $ to Yuan value changes more than “x%” up or down compared to
previous day’s exchange rate.
31.1.1.1 💱💱💱💱 😰😰Challenges in Managed Float System?
1. Currency speculation and interest rates (e.g USA Fed Tapering – refer to Pillar: 1A2.)
2. Currency Manipulation/ मुद्रा जोड़-तोड़: usually occurs when a central bank keeps buying dollars to
create artificial scarcity of $ in the forex markets → dollar becomes expensive → local currency
becomes weak → boost to exports.
US Department of the Treasury publishes a semi-annual report to track such nations. China,
S.Korea, India etc have been kept in (‘Watch list’) citing the (alleged) lack of transparency and
consistency in their respective Central banks operations. (इन देशों क� क� द्रीय ब�क, मुद्रा �व�नमय दर को �नयं �त्रत रखने
के �लए जो िक्रयाएं करती है, उस म� पारद�शता नहीं, इस�लए अमे�रका उन पर मुद्रा जोड़-तोड़ का इ�ाम लगाता है)
31.2 💱💱💱 EXCHANGE RATE REGIME: HISTORIC

31.2.1 💱💱💱💱� Fixed exchange rate system → Gold Standard; सोने के मानक/ �णर्मान (1870-1914)
- USA would issue $1 note, if only it has 14 grams of gold in reserve, whereas England would issue
one pound note if only it has 73 grams of gold in its reserve. Accordingly, their exchange rate will
be 1 Pound =73/14 = ~5 USD.
- And, each Central Bank Governor has promised to convert their currency into gold at a fixed
amount. So, a person could walk with paper currency & demand gold coins/biscuits in return.
- When the gold mining production declined, nations gradually shifted to ‘bimetallism’ e.g. $1
promised with 14 gm gold or 210 gm of silver whichever available with their Central Bank.
This system collapsed during the First World War (WW1) because the nation’s currency printing
capacity was limited by their gold reserve, but their governments where more eager to print more
money to finance the war (soldiers’ salaries, rifles’ ammunition etc.)
31.2.2 💱💱 🔨🔨🔨 Fixed exchange rate system → Bretton Woods System (1946-1971)
Here, USA agreed to fix price of its $1 = (1/35) ounces of gold. [1 ounce = 28 grams]. USA allowed
free convertibility of Dollar to Gold. So if a person walked into the US Federal Reserve with $35, their
chairman (Governor) will give him one ounce of gold.
⇒ Then IMF fixed the exchange rate of every country's currency against USA. e.g.₹ 1= $0.30 =
~0.24 grams of Gold. So, that implied India can’t issue more currency If Indian RBI does not
have proportionately sufficient gold reserve of its own. Still if RBI issues more ₹ currency,
International Monetary Fund (IMF: अंतररा��ीय मुद्रा कोष) will order India to devalue its rupee
exchange rate against dollar.
⇒ American Economist Robert Triffin claimed this system will collapse eventually because gold is
a finite commodity and its price will continue to rise (from 1 ounce of gold = $35 to $40). So
there is always danger of people converting the local currency into dollars and then converting
dollars into gold @$35, then selling it in open market @profit, then US Feds Chairman can’t
continue honouring his promise. It was called “Triffin Dilemma: �त्र�फ़न दु�वधा”. He therefore
suggested an alternative SDR (Paper gold) system for IMF. (�णर् का ज�ा अमयार्िदत नहीं है इस�लए यह
�व�ा एक िदन तबाह हो जाएगी)
⇒ 1971: USA President Robert Nixon pulled out of Bretton Woods gold convertibility system,
mainly because he wanted freedom to print more dollars to finance the Cold War (शीत युद्ध) and
arms race against the USSR. You may read more about the Cold War in NCERT PolSci-I
Class12ch1: http://ncert.nic.in/ncerts/l/leps101.pdf
⇒ Thus, USA shifted to “Floating Exchange System”. Eventually most of the nations also shifted in
that either floating / managed-floating system. (अमे�रका ने डॉलर का �व�नमय दर बाजार पर छोड़ िदया है)
⇒ 2000: Ecuador adopted Dollarization i.e. it abandoned the domestic currency and adopted the
US dollar as their official currency. (कु छ देशोने अमे�रक� डॉलर को ही अपनी वैधा�नक मुद्रा मान ली है)
31.2.3 💱💱💱💱Currency Exchange in India

We need not waste time looking at what was the system in India before 1995. But for reference of
non-UPSC Exams:
Towards Fixed Exchange Rate: �न��त �व�नमय दर क� ओर →
➢ 1860 onwards: Fixed Fiduciary System. i.e. British Indian Govt can issue Rs.10 crore notes on
fiduciary (“trust”) backed by G-Sec. Beyond that every note must be backed by gold / silver.
➢ 1935 onwards: Proportional Reserve. RBI must keep ~40% gold to the value of currency issued.
British govt fixed exchange rate.
➢ 1946 onwards: Bretton Woods / IMF system of fixed exchange rate. Wherein ₹ price was fixed
(pegged) against dollar, and dollar price was fixed (pegged) against gold.
➢ 1956 onwards: While RBI could issue any amount of Indian currency but that has to be balanced
by the Assets of the issue department (Recall M0). Of course, if RBI printed too much currency
backed by only Indian G-sec but (without adequate Gold / Forex Reserve, then IMF may force ₹
devaluation against Dollar). So, we adopted “Minimum Reserve System” i.e. RBI must keep ₹
400 crore of foreign currency/security + ₹ ‘x’ crore worth gold.
Towards Managed Floating Exchange Rate →
✓ 1995 onwards: “Minimum Reserve System; �ूनतम आर��त प्रणाली” is continued but RBI is required
to only keep ₹ ’x’ crores of gold. No compulsion for RBI to keep additional 400 crore worth
foreign currency or foreign securities. RBI can print as much currency it wants as long as its
balanced by the Assets of Issue Dept. (such as Indian G-sec, Foreign Securities, Gold etc.)
31.3 💱💱💱IMF SPECIAL DRAWING RIGHTS (SDR: �वशेष आहरण अ�धकार)
After the collapse of Bretton Woods Exchange Rate System, IMF was converted into a type of
‘deposit bank’, where the members would deposit currencies in the proportion of quotas allotted to
them (depending on size of their economy, openness etc).
- IMF will pay them a small interest rate for their deposits. And IMF would lend this money to a
member facing balance of payment crisis. To operationalize this mechanism, IMF would allot an
artificial currency / accounting unit called SDR to the members based on their deposits. स� देश
द्वारा जमा क� गयी रा�श के सामने उसे एक कृ �त्रम मुद्रा / लेखा इकाई दी जाती है, �जसे एसडीआर कहते है
- Initially the price of SDR was fixed against the amount of gold but present mechanism:
Currency Basket Weight Exchange rate against $?
U.S. Dollar 43.38% $1=$1
Euro 29.31% 1.13
Chinese Yuan (Renminbi *added in 2015) 12.28% 6.7
Japanese Yen 7.59% And so on
Pound Sterling 8.09 And so on
- By applying a formula involving (weight * exchange rate), IMF will obtain value of 1 SDR = how
many dollars? Presently, 1 SDR = $1.40 = ₹ 98 (assuming $1 is trading @₹ 70).
- SDR is called ‘Paper Gold’ because it’s merely an accounting entry or artificial currency, without
any gold involved. (इसक� पीछे कोई �णर् नहीं है , के वल एक िहसाब िकताब क� एक प्रिक्रया है)
- SDR can be traded among the members, it can be converted into members’ currencies as per
above method & be used to settle their Balance of Payment Transactions / Crisis.
- If the BoP crisis is so big, that a country’s entire SDR quota exhausts, then member country may
borrow more SDR from IMF (and then convert it into dollar etc to pay off the import bill), but
eventually member will have to repay this loan to IMF with interest.
- Individual nations’ central Banks keep some of the SDR as Reserve Tranche Position (RTP):
What that means and how does that work is not important. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
😤😤 MORAL Outrage: Why Indian Rupee currency is not in SDR formula?

ANS. IMF reviews the SDR formula’s currencies every five years -with two conditions [A) Country
must be among the Top exporter Nations. [B) Country’s currency need to be “freely usable” (=
capital account convertibility rules shd be easy/liberal.).
31.3.1 💱💱💱IMF SDR Formula weightage reforms 2022

🌷🌷Latest weighting 🥀🥀Previous weighting
U.S. Dollar 43.38%⬆ 41.73%
Euro 29.31% 30.93%
Chinese Yuan (Renminbi *added in 2015) 12.28%⬆ 10.92%
Japanese Yen 7.59% 8.33%
Pound Sterling 7.44% 8.09%
Total 100% 100%
Reason for reform: IMF directors felt this reform was needed based on international trade and
financial market developments from 2017 to 2021.
31.3.2 💱💱💱IMF Quota Reform

- 2016-Reforms: The total quantity of SDR was increased, and India’s quota was increased from
2.44% to 2.76%
- India is 8th largest quota holder after USA (~18%), Japan (~7%), China (~6%)... India (2.76%)
- 2021: IMF members approved adding extra $650 billion dollars worth of SDR to IMF. India’s
likely to get 2.76% of 650 billion = Approx. 17to18 billion dollars worth of SDR.
31.3.3 💱💱💱IMF Governors

- In IMF, a member’s voting power depends on his SDR quota.
- For India, this voting power is exercised by India’s Finance Minister – who acts as the ex-officio
Governor in IMF’s Board of Governors. (�व� मं त्री होते है आईएमएफ के पदेन / पद के िहसाब से गवनर्र)
- If Finance Minister absent, then RBI Governor can vote as the Alternate Governor during the
IMF’s meetings. (�व� मं त्री क� गैरहाजरी मे वैक��क गवनर्र के �प म� �रज़वर् ब�क के गवनर्र वोट देने जा सकते ह�)
🔠🔠❓MCQ. Recently, which one of the following currencies has been proposed to be added to the basket of
IMF's SDR? (UPSC-Pre-2016) (A) Russian Rouble (B) South African Rand (C) Rupee(D) Renminbi
31.3.4 💱💱💱 Dollar- the Global Currency & ”DE-Dollarization”? (वै��क-आर��त-मुद्रा)

⇒ Foreign exchange reserves of 150 nations- internal composition is: 55% US dollars, 30% euros,
2% Yuan (Renminbi, Chinese currency) and 13% Misc. other currencies. That shows majority of
the nations keep large % of their forex reserve in US dollar. �व� के �ादातर देशों के �वदेशी आर��त �न�ध
कोष म� ब�तायत �प से डॉलर मुद्रा म� इन पैसों को रखा जाता है।
⇒ Thus US dollar is presently the “Global Reserve Currency”. (डॉलर को वै��क-आर��त-मुद्रा माना जाता है।)
⇒ “de-dollarisation” = Attempts to ⏬ the domination of $ in forex reserve and in international
transactions. e.g. 2021: Russian Central Bank reduced dollar-denominated assets to 16% in its
forex reserve. (�वदेशी मुद्रा भं डार म� तथा अंतरार्��ीय लेनदेन म� अमरीक� डॉलर का प्रभु� कम करना)
⇒ Can Indian rupee become global reserve currency? Ans. In a very long future yes if, India adopts
full capital account convertibility, keeps inflation, fiscal deficit, currency exchange rates under
control and becomes a sizeable exporter and global economic superpower. (�पया-मुद्रा ऐसा दजार् हा�सल
कर�गी जब यिद पूँजी-खाते म� सं पूणर् �प से प�रवतर्नीयता दी जाए, महँ गाई क़ाबू म� रहे, राजकोषीय घाटा क़ाबू म� रहे, मुद्रा �व�नमय दर
क़ाबू म� रहे, और भारत एक बड़ा �नयार्तक और आ�थक महास�ा बनकर िदखाए- तो िफर एसा हो सकता हे।)
31.3.5 💱💱⚔🐼🐼🐼 Yuan as global currency?
⇒ 2015: Yuan added in SDR basket of currency. → It ⏫acceptance of Yuan in global economy.
⇒ China is also loaning Yuan to other nations for infra. development in One Belt One Road
Initiative (OBOR: एक �ेत्र एक मागर् पहल), via AIIB and BRICS bank, and even via Panda Bonds.
⇒ In future, China may have to be less dependent on dollar$ while importing oil, missiles, metal
and food commodities- as other nations begin to happily accept Yuan.
⇒ Such Yuan dominance may pose strategic challenges to USA and India.
31.4 💱💱⛽🤲🤲 CURRENCY CONVERTIBILITY (मुद्रा प�रवतर्नीयता)
Presently, India has managed floating exchange rate system wherein, currency exchange rate is
determined by the market forces of supply and demand, however, during high level of volatility RBI
will intervene to buy / sell ₹ or $ to stabilize the exchange rate.
- But if people are allowed to convert the local and foreign currency in an unrestricted manner →
so much volatility that RBI will not be able to manage. (अमयार्िदत �प से लोगों को मुद्रा प�रव�तत करने दी तो
�व�नमय दर म� इतनी भारी अ��रता होगी �जसे �रजवर् ब�क काबू नहीं कर पाएगा😰😰)
- So, RBI puts certain restrictions on the convertibility of Indian rupee to foreign currency using
the powers conferred under
- Foreign Exchange Regulation Act, 1973 (FERA: �वदेशी मुद्रा �व�नयमन अ�ध�नयम)
- FERA was later replaced by Foreign Exchange Management Act, 1999 (FEMA: पुराने कानून
म� मज़ा नहीं आ रहा था तो सरकार ने नया कानून बनाया- �वदेशी मुद्रा प्रबं धन अ�ध�नयम)
31.5 💱💱✋🐯🐯RBI RESTRICTION ON CONVERTIBILITY OF RUPEE: �पये क� प�रवतर्नीयता
💱💱💱💱 Convertibility on Capital Account Transactions: पूंजी खाता लेनदेन पर

💱💱💱💱 BoP → Capital Account → Borrowing → External commercial borrowing (ECB)
- बाहरी वा�ण��क उधार: RBI’s ECB ceiling is up to $1.50 billion (or equivalent other currency) per year
for Indian Companies. [भारतीय कं प�नयां प्र�तवषर् इस मात्रा से �ादा कजर् �वदेशों से नहीं ला सकती]
- That means even if Bank of America was willing to lend $3 billion to Reliance ltd, Mukesh
Ambani can’t bring all those dollars (or its converted rupee equivalent) in India. If he tries
through illegal methods like Hawala, then Enforcement Directorate (ED प्रवतर्न �नद�शालय ) will take
action for FEMA violation.
💱💱💱💱 BoP → Capital Account → Investment → FPI
- An FPI can’t invest in more than 5% of available G-sec in the Indian market and more than 20%
of the available corporate bonds in the Indian market.
- So, even if Morgan Stanley or Franklin Templeton investment fund has billions of dollars they
can’t bring them all to India because of above restrictions.
- Similar restrictions on FDI as well. Govt decides FDI policy → RBI mandates the forex dealers
accordingly to convert or not convert foreign currency into Indian currency. E.g. Las Vegas’s
Flamingo Casino company can’t convert $ into ₹ to invest in Goa’s Casino (Because FDI
prohibited in Casino). If they manage to ‘smuggle’ rupees through Hawala / Mafia-don-walla
boats then again ED will take action for FEMA violation.
Thus, Indian rupee is not fully convertible on capital account transactions.
💱💱⛽ 🎖🎖 Convertibility on Current account transactions: चालू खाता लेनदेन पर

BoP → Current account → Trade → import (of Gold)
⇒ During 2013 to 2014, RBI’s 80:20 norms mandated min.20% of the imported gold must be
exported back.
⇒ Until then Jeweller/bullion dealers will not get permission to (convert their rupees into
dollars/foreign currency) to import next consignment of gold.
⇒ However, if we disregard such few rare examples/restriction, Indian rupee is considered fully
convertible on current account transactions (i.e. Import and export, remittance, income transfer
gift and donations) since 1994. चालू खाता लेनदेन पर �पये क� प�रवतर्नीयता स�ूणर् है।
31.5.1 💱💱💱💱 Full convertibility of Rupee :�पये क� पूणर् प�रवतर्नीयता?

Meaning? India should permit unrestricted conversion of Indian ₹ to foreign currency for both
current account and capital account transactions. → more FDI investment in India → NPA
problem solved, new factories, jobs, GDP growth, rivers of honey and milk will flow.
😡😡Anti-Arguments:
 Before 1997, East Asian “Tiger” economies: (South Korea, Indonesia, Malaysia, Thailand,
Vietnam Philippines etc.) allowed full capital account convertibility to attract FDI.
 But 1997: Their automobile & steel companies filed bankruptcy → The foreign investors
panicked, sold their shares and bonds → got local currency → converted into $ and ran away.
The flight of this ‘HOT MONEY’ resulted into extreme depreciation of local currency $1 = 2000
Indonesian Rupiah → $1= 18,000 Indonesian Rupiah → heavy inflation in petrol diesel →
social unrest, riots and political instability. None of their central banks had enough forex reserve
to combat this crisis. (यिद भारत म� इसक� अनुम�त दी तो द��ण को�रया और इं डोने�शया जैसी सम�ा हो सकती है)
 So, in 1998, their GDP growth rates fell in negative territory e.g. Indonesia (-13.7%) Because of
their mistake of allowing full currency convertibility. Whereas India and China grew at 6-8%
because we had not allowed it.
31.5.2 💱💱💱💱 ₹ 🕵🕵 Convertibility → S.S. Tarapore Committee (1997)

He suggested India to allow full Capital Account Convertibility (CAC) only when the fundamentals
of our economy become strong enough, such as: ( तारापुर स�म�त के िहसाब से यिद भारतीय अथर्तंत्र क� बु�नयाद
एकदम मजबूत हो जाए तो पूणर् प�रवतर्नीयता अनुम�त क� देनी चािहए)
⇒ RBI must have enough forex to sustain 6 months’ import
⇒ Fiscal deficit must not be more than 3.5% of GDP
⇒ Inflation must not be more than 3-5%
⇒ Banks’ NPA must not be more than 5% of their total assets. And so forth. So, time is not yet ripe
for allowing full CAC.
🔠🔠❓MCQ. Convertibility of rupee implies:(Asked in UPSC-Pre-2015)

(a) being able to convert rupee notes into gold.
(b) allowing the value of rupee to be fixed by market forces.
(c) freely permitting the conversion of rupee to other currencies and vice versa.
(d) developing an international market for currencies in India.
31.5.3 💱💱💱💱 🐯🐯 ₹ Convertibility → RBI reforms (2004-2019)

While RBI has not permitted full convertibility of Indian rupee (on Capital Account), but over the
years it has liberalised the norms, such as (पूणर् �प से छू ट तो नहीं दी, लेिकन उदारीकरण सरलीकरण िकया है)
⇒ 2004 → Liberalised Remittance Scheme (LRS: उदारीकृ त �वप्रेषण योजना) for each financial year, An
Indian resident (incl. minor) is allowed to take out upto $2,50,000 (or its equivalents in other
currencies) from India.
⇒ He may use it for either current account or capital account transaction as per his wish. (e.g.
paying for college fees abroad, buying shares, bonds, properties, bank accounts abroad.)
⇒ 😰😰Controversy? Panama papers allege certain Bollywood celebrities used LRS window to shift
money from India in their shell companies in tax havens → later used those shell companies for
tax avoidance. [Ref: Black Money Handout for more]
⇒ 2016 onwards: RBI began relaxing the norms for External Commercial Borrowing (ECB),
Before-2016 2016 onwards 2022 onwards
ECB limit → more strict relaxed to $750 million per $1.50 billion per
company per year. company per year.
(✋Although ECB is prohibited in certain categories e.g. purchase of farm house, tobacco, betting,
gambling, lottery etc. कु छ �ेत्रो म� �वदेशी कजर् लेने क� मनाई)
31.5.4 💱💱💱💱 🐯🐯 FEMA Rules for Indian resident’s overseas investment (2022-Aug)
⇒ No Indian resident can invest in foreign companies who are doing gambling biz or real estate biz.
⇒ Wilful defaulters need to get a No Objection Certificate (NOC) from Indian authorities (RBI, ED
etc) before making any ‘financial commitment’ abroad (e.g. taking new loan from USA)
⇒ plus many other technical things but not very IMP for Exam.
31.5.5 💸💸💸💸Currency Exchange Rate → Attracting Dollars: VRR and FAR

Voluntary Retention Route (VRR: : �ै��क अवधारण मागर्) and Fully Accessible Route (FAR: स�ूणर्त: सुग�
मागर्) are technical rules / systems of RBI to encourage foreigners to buy Indian companies’ Bonds and
Indian Govt’s G-Sec. how exactly they work? Ans. Technical stuff, NOT IMP for Exam. Just accept
and move to next topic.
🤩🤩Benefit? Investors will convert $ & other foreign currency into ₹ currency to buy Bonds and G-
Sec= more $$ coming towards India = helps keeping BoP and currency exchange rate stable during
crisis.
Side note: RBI frequently ⏫ / ⏬ in FPI investment quota/limits in G-sec, depending on how RBI
wants to shape bond-yield, flow of dollars & available quota of G-sec for local investors to play its
repo & OMO games. But that ball by ball chase is NOTIMP. वो सब पं चात हमारे काम क� नहीं.
31.6 ⚖ FCRA ACT

Sr No. MATTER RULES/LAWS APPLICABLE→
1 is Indian sending money abroad for current Yes→FEMA Act→ LRS
account or capital account transactions? (liberalized remittance scheme)
2 is foreign money coming to India for Indian Yes→ FEMA Act
export earning payment, FDI/FPI etc financial
investment, ECB loans etc ?
3 is foreign money coming to India for matters Yes→ FCRA Act
other than cell#2. e.g. inward-donation, inward-
remittance to India etc.
31.6.1 FCRA on donations

⇒ Foreign Contribution Regulation Act 2010 (FCRA -�वदेशी अंशदान �व�नयमन अ�ध�नयम).
⇒ if NGO (Non-Governmental Organization) / Universities were allowed to accept foreign
donations in an unrestricted manner, they may become puppets of ISI / Pakistan / China / CIA.
⇒ So, Ministry of Home Affairs (MHA) requires them to ‘register’ and furnish annual reports.
⇒ Organizations who fail to comply with it, are prohibited from accepting foreign donations.
(भारत म� काम कर रहे समाजसेवी सं �ान/ यू�नव�सटी इ�ािद अगर �वदेशों से चं दा लेते ह� तो उ�ोंने गृह मं त्रालय से पं जीकरण करवाना
होता है और सालाना �रपोटर् जमा करने होते ह�.)
31.6.2 FCRA on remittance

BEFORE After 2022-reform
How much money can Indian receive from his relatives ₹1 lakh ₹10 lakhs
abroad without informing the authorities.
🤩🤩Benefit? Ease of receiving foreign money without legal-paper-work → more $ to India→
prevents more fall of rupee. (�बना सरकार को सू�चत िकए सालाना 10 लाख �पये तक क� रक़म �वदेश म� रहते अपने �र�ेदारों से
आप मँ गवा सकते ह�.)
31.7 💱💱⚔ CURRENCY WAR 2018 (मुद्रा युद्ध)
2015: Chinese authorities announced they don’t manipulate/control Yuan exchange rate. They only
intervene if Yuan’s exchange rate varies more than +/- 4% from previous day.
- During 2018, People’s Bank of China pursued ‘Easy/Cheap/Dovish Money Policy’ (Ref: Pillar#1
Monetary policy) → injected more Yuan (renminbi) in the system to makes loans cheaper in
domestic market and boost the consumption, demand, growth.
- But, on the other side,US Feds pursued Tight/Dear/Hawkish Money Policy, so dollar supply is
shrinking, so dollar is becoming more expensive against other currencies.
- So, ⏫ supply of Yuan vs. reduced supply of $: resulted in $1=6.20 Yuan weakening to almost
$1= 7 Yuan.
- Trump alleges Yuan was deliberately weakened (due to PCB increasing Yuan supply) to make
Chinese product more cheaper in global trade. He even accused Russia and Japan of playing
similar ‘Currency War’ against him.(चीन पर अपनी मुद्रा जानबूझकर कमज़ोर रखने का आरोप)
31.7.1 💱💱⚔Reverse Currency war?

I don’t find it important for exam, until Economic Survey 2023 talks about it however you can satisfy
your intellectual curiosity by watching my lecture on YouTube: https://youtu.be/OFj-oz-DeQI
31.7.2 💱💱⚔Currency War → Fall of Indian ₹ & RBI’s Response

2018: Turkey was suffering from high Inflation, current account deficit and political turmoil.
- US Feds was pursuing Hawkish monetary policy → so dollar supply shrinking → dollar is
becoming more expensive against other currencies. In this atmosphere, foreign investors feared
Turkish companies (who had previously borrowed lot of money from American financial
market) will not be able to repay their loans in dollar currency.
- So foreign investors began selling their shares and bonds from Turkey’s market → got Lira
currency → exchanged it to dollars and ran away from Turkey. (A similar nightmare also
repeated in 2021.)
- Because of this mad rush, demand of dollars strengthened even further → other currencies
became even weaker. Including India: $1=₹ 63 in January → $1= ₹ 74 in Oct’18.
- In 2019-20 also, India rupee continued to weaken towards $1=75₹ because Corona Force Majure
(Ref:1C) → SENSEX⏬ → foreign investors pulling out money from India.
- While such depreciation is good for our exporters but bad for our importers.
To reduce the fall of Rupee, Govt and RBI initiated following steps:
1. FPI’s investment limits in Bond market was relaxed. (So they feel encouraged to convert their
Dollars into Rupees and invest in Indian bond market)
2. External commercial borrowing (ECB) norms were also relaxed.
3. RBI sold dollars from its forex reserve to calm down the demand of dollars.
4. Further, to attract NRI’s dollar savings into India:
a. RBI could announce more interest rates on Foreign Currency (Non-Resident) Account
(Banks) [FCNR (B) Account] & then pay interest subsidy to Indian Banks. This was
done by Governor Raghuram Rajan in 2013.
b. Govt could also tell RBI to issue NRI bonds to attract their $ savings to India.
5. 2018: The central banks of India and Japan signed Currency Swap Agreement (मुद्रा �ैप समझौता) of
$75 billions i.e. either party can use that much dollar currency from other party’s forex reserve
during the crisis. Even in 2008 and 2013 too they had signed similar agreement but lower
amount was involved.
6. 2019: RBI’s $5 bn Currency Swap with Indian banks →RBI gains dollar reserve to fight future
volatility in currency exchange rate, whereas Indian banks got extra rupee liquidity
→(Hopefully) cheaper interest rates to combat deflation.
7. 2020-Feb: CoronaVirus Force Majeure = SENSEX⬇ so FPIs Selling shares from Indian
companies= they got ₹₹ → converting them into $ → running back to USA to invest in (AAA
rated) US treasury bonds which is safest investment. So there is a great shortage of dollars in the
Indian market. If RBI does not supply dollars → further weakening of rupee ($1=₹75 → ₹80).
Therefore...
8. 2020-March: RBI starts Dollars Swap with Indian banks. i.e. A bank shall buy US Dollars from
the Reserve Bank and simultaneously agree to sell the same amount of US Dollars at the end of
the swap period (“X” Months/Years). It is done through auctioning, so, RBI to earn some % of
profit. How it works NOT IMP.
9. 2020-later months: Current account surplus, FPI,FDI ⏫ → so, inflow of Dollar$⏫⏫ →
then rupee will become stronger → exchange rate will not remain stable & exporters will suffer
due to stronger rupee. Stronger rupee will be bad for exporters → RBI purchased dollars & sell
rupees �वदेशी मुद्रा के भारत म� अ�धक मात्रा म� आने से �पया मजबूत होता है जो �नयार्तकों के �लए अ�� बात नहीं. इस�लए �पया
बेचकर डॉलर खरीद�
10. 2022-March: RBI done $5 bn dollar-swap with Indian Bank/NBFCs to ⏫dollar supply in
Indian market, to prevent weakening of Rupee.
11. 📙📙📙📙ES22 has identified following challenges: 1) Fed Tapering: risks of global liquidity
tightening 2) Inflation in global commodity prices 3) high freight costs 4) Geo-political crisis in
Ukraine 5) New variants of COVID-19 with new variants
31.7.3 🐯🐯🦁🦁RBI-Govt’s measures to prevent fall of Rupee (2022-Jul-Aug)

⇒ 🐯🐯RBI Exempts Foreigners’ deposits in Indian bank from CRR and SLR. This will encourage
bankers to offer attractive deposit interest rates to such clients → ⏫dollar flow → stable rupee
/ prevent weakening of rupee (in the aftermath of US Fed Tapering). How? Ref this Video for
more: https://youtu.be/KoiXkAreWoA (�वदेशीयो के द्बचत खातों पे भारतीय ब�को ने सीआरआर व एसएलआर निह
�नभाना होगा। तािक उन खातों पर भारतीय ब�कर �वदेशी �� को �ादा �ाज-दर दे सके और �वदेशी लोग आक�षत होकर ढेर
सारा �वदेशी धन भारत म� लेकर आए।)
⇒ 🐯🐯 (2) RBI increased with the limit of external commercial borrowings (ECB) from present 750
million dollars to to $1.5 billion per financial year.
⇒ 🐯🐯 (3) RBI relax to the guidelines related to FPI investment in G-Sec and Bonds.
⇒ 🦁🦁Govt: Foreign Contribution (Regulation) Act, 2010’s donation limits amended allowing
Indians to receive upto 10 lakh a year from their relatives abroad without informing the
authorities. (The previous limit was 1 lakh) (�बना सरकार को सू�चत िकए सालाना 10 लाख �पये तक क� रक़म
�वदेश म� रहते अपने �र�ेदारों से आप मँ गवा सकते ह�)
⇒ 🦁🦁Govt: Customs duty on gold hiked to 12.5 per cent from 7.5 per cent to discourage imports.
(�वदेशों से आयात होने वाले सोने पर लगने वाली सीमा शु� म� बढ़ोतरी क� गई है।)
31.7.4 🤝🤝💰💰Rupee Rouble Agreement
⇒ 2018-Dec: India signed pact with Iran to pay crude oil bill in rupee currency. National Iranian
Oil Co (NIOC) will open a bank account in India’s UCO Bank (a PSB). Indian oil companies will
make payments there in ₹ currency. Then Iran used this ₹ income to pay for Indian Tea & Rice
purchase → helps ⏬ the demand of dollars. (😰😰However later, due to American pressure,
govt of India stopped this arrangement).
⇒ 2022: Russian banks banned from the SWIFT messaging system that enables international
financial transactions. (Ref: Pillar1B2)
⇒ So, Russia proposed “Rupee-rouble trade agreement”. (‘Rouble’ sometimes also spelled as
‘Ruble’. 1 Ruble = 100 kopeks. Just like ₹1= 100 paisa)
⇒ In such agreement, India pays for Russian imports in rupee currency and then Russian
companies will use that money to import goods from India.
(भारत �स से क�ा तेल आयात करेगा तब भुगतान �पया मुद्रा म� कर� → उन �पयों से �सी सरकारी क��नयां- भारत से अनाज-
दवाइयां इ�ािद ख़रीदे. �स पर ��फ़्ट �व�ीय सं देश प्रणाली क� पाबं िदयों के चलते वो एसा समझौता करने को बेताब है। एक ज़माने म�
भारत ने ईरान के साथ भी कु छ ऐसा ही समझौता िकया था।)
31.7.5 💱💱⚔ Misc. Concepts: Quantitative Easing and Federal Tapering
⇒ 2007-08: Subprime crisis in USA → Borrowers unable to repay home loans → American Banks
NBFCs’ bad loans / NPA / toxic assets increased → to help them, US Federal Reserve printed
new dollars & used $ to buy those toxic assets/bonds (also known as mortgage-backed securities
(MBS) → ⏫ dollar supply in the system. Known as “Quantitative Easing (मात्रा�क आसानी)”.
⇒ 2013: American Central Bank (US Federal Reserve) gradually cut down its toxic asset purchasing
program → less quantity of dollars issued → called “Fed Tapering (सं घीय टे�पंग)”.
⇒ Result?= (perceived) shortage of dollars in USA → Loans% become more expensive in USA→
American investors began selling shares/bonds in other countries, and took their dollars back to
USA (to lend to local businessmen). This phenomenon was called “Taper Tantrum”. It resulted
into weakening of other currencies against USD. [गैर अमे�रक� देशों क� मुद्राएं ब�त कमजोर हो गई थी]
⇒ 2020: During Corona, American Central Bank again started purchase of Bonds to increase
money supply in market. (कोरोना म� अथर्तंत्र को पुनज��वत करने के �लए वापस ये तमाशा शु� िकया था)
⇒ 2021-22: With Corona unlockdown/Economic-recovery, American Central Bank may gradually
cut down this program so again columnists worried about repeat of 2013’s Taper-Tantrum
episode. However 📙📙📙📙ES22 has noted that India need not worry from taper-tantrum (2022),
because foundations of Indian economy are stronger, and RBI has enough forex reserve to
handle any crisis arising from it. (कोरोना महामारी काबू म� आने पर जब अथर्तंत्र वापस पटरी पर आ जाएगा तो अमे�रक�
क� द्रीय ब�क वापस से अपना बॉ� खरीद कायर्क्रम थोड़ा कम कर देगा, तो वापस से 2013 के घटनाओं का पुनरावतर्न होने का डर,
हालाँिक आ�थक सव��ण का मानना है िक हम� �सफ़र् �ादा डरने क� ज़�रत नहीं. हमारी अथर्तंत्र क� बु�नयादी पहले से ब�त �ादा
मज़बूत है और �रज़वर् ब�क के पास पहले से ब�त �ादा �वदेशी मुद्रा आर��त भं डार है।)
31.7.6 💱💱⚔ Misc. Concepts: Helicopter Money & Zero interest rate regimes
🔠🔠❓MCQ. Find Correct Statements (Prelims-2022)

1. Tight monetary policy of US Federal Reserve could lead to capital flight. (अमरीका म� सं कु चन वादी मौिद्रक नी�त के
चलते भारत म� से पूंजी का गमन हो सकता है)
2. Capital flight may increase the interest cost of firms with existing External Commercial Borrowings
(ECBs). (पूंजी गमन के चलते �जन कं प�नयों ने �वदेशी वा�ण��क कर �लया है उनके �ाज का ख़चार् बढ़ सकता है)
3. Devaluation of domestic currency decreases the currency risk associated with ECBs. (�ानीय मुद्रा को कमज़ोर
करने से �वदेशी वा�ण��क कज़र् के साथ जुड़े मुद्रा जो�खम कम हो सकते ह� )
Codes: (a) 1 and 2 only (b) 2 and 3 only. (c) 1 and 3 only. (d) 1, 2 and 3
🔠🔠❓MCQ. In the context of India, which of the following factors are contributors to reducing the risk of a
currency crisis? ( Prelims-2019)
1. The foreign currency earnings of India’s IT sector.
2. Increasing the government expenditure.
3. Remittances from Indians abroad.
Answer Codes: (a) 1 only (b) 1 and 3 only (c) 2 only (d) 1,2 and 3 only
🔠🔠❓MCQ. Which one of the following is not the most likely measure the Government/RBI takes to stop
the slide of Indian rupee? (Prelims-2019)
(a) Curbing imports of non-essential goods and promoting exports
(b) Encouraging Indian borrowers to issue rupee denominated Masala bonds
(c) Easing conditions relating to external commercial borrowing
(d) Following an expansionary monetary policy
🔠🔠❓MCQ. The price of any currency in international market is decided by: (Pre-2012)
1. The World Bank.
2. Demand for goods/services provided by the country concerned.
3. Stability of the government of the concerned country. [उस देश म� सरकार क� ��रता]
4. Economic potential of the country in question. [उस देश क� आ�थक �मता]
Answer codes: (a) 1, 2, 3 and 4 (b) 2 and 3 (c) 3 and 4 (d) 1 and 4
🔠🔠❓MCQ. If another global financial crisis happens in the near future, which of the following
actions/policies are most likely to give some immunity to India? (Prelims-2020)
1. Not depending on short-term foreign borrowings [लघु अव�ध के �वदेशी कजर् पर �नभर्र न रहा जाए]
2. Opening up to more foreign banks [अ�धक �वदेशी ब�को को शाखाएँ खुलने दी जाए]
3. Maintaining full capital account convertibility [पूंजी खाते पर पूणर् �प से प�रवतर्नशीलता]
Codes: [a) 1 only [b) 1 and 2 only [c) 3 only [d) 1, 2 and 3
🔠🔠❓MCQ. Consider the following actions which the Government can take: (Prelims-2011)
1. Devaluing the domestic currency. [देसी मुद्रा को कमजोर कर�]
2. Reduction in the export subsidy. [�नयार्त-स��डी कम कर�]
3. Adopting suitable policies to attract greater FDI and Flls. [�वदेशी �नवेश को बढ़ोतरी द�]
Which of the above can help in reducing the current account deficit?
Codes: A) 1 and 2 B) 2 and 3 C) 3 only D) 1 and 3
🔠🔠❓The effect of devaluation of a currency is that it necessarily _ _ _ . [Pre-2021]

1. improves the competitiveness of the domestic exports in the foreign markets
2. increases the foreign value of domestic currency [�ा�नक मुद्रा के �वदेशी मू� म� बढ़ोतरी होगी]
3. improves the trade balance [�ापार सं तुलन बेहतर होगा]
Codes: a) 1 Only b) 1 and 2 c) 3 Only d) 2 and 3
31.8 💱💱 EXCHANGE RATE → MISCELLANEOUS TERMINOLOGIES
31.8.1 💱💱 NEER and REER? (Hindi not imp because only prelim relevant)
In real life we are not just trading with USA but other countries, using foreign currencies other than
US dollars (Euro, Pound, Yen, Yuan etc).
⇒ Therefore, only tracking $1=60, $1=70 will not give a full picture. So, RBI also calculates
geometric average of rupee’s exchange rate against upto 36 types of foreign currencies. The
formula will give weightage to each of those 36 foreign currencies depending on their trade-
volume with India.
⇒ The result is called “Nominal effective exchange rate (NEER)”.
⇒ When NEER is mathematically adjusted as per the CPI-inflation levels in India and those foreign
countries, it’s called “Real effective exchange rate (REER)”.
⇒ REER interpreted as the quantity of domestic goods required to purchase one unit of a given
basket of foreign goods, says NCERT.
⇒ NEER vs REER values help finding whether a currency is really weakening (depreciating) against
foreign currencies or not, thus helps to know our international competitiveness in exports.
⇒ For example: REER⏬ = foreigners will find our export prices attractive. REER⏫ = foreigners
will find our export prices less attractive. Says 📔📔📔📔ES20. How?NotIMP
⇒ 2018’s analysis reveals that though Indian rupee weakened against dollar $1=₹ 63 → ₹ 74, but
rupee has not so greatly weakened against other foreign currencies.
⇒ 2020: RBI report says rupee remained overall stable on these indicators.
🔠🔠❓MCQ. Find Correct Statements (Prelims-2022)

1. An increase in Nominal Effective Exchange Rate (NEER) indicates the appreciation of rupee. (नीर
बढ़ा तो मतलब यह पैसा मज़बूत �आ)
2. An increase in the Real Effective Exchange Rate (REER) indicates an improvement in trade
competitiveness. (�रर बढ़ा तो मतलब है �व� �ापार प्र�त�धार् (म� भारतीय उ�ादों क�) ��त बेहतर �ई)
3. An increasing trend in domestic inflation relative to inflation in other countries is likely to cause
an increasing divergence between NEER and REER. (यिद भारत म� अ� देशों के मुक़ाबले महँ गाई बढ़ेगी तो के
नीर-�रर के बीच �ादा खाई िदखेगी)
31.8.2 💱💱 Purchasing Power Parity: क्रय श�� समता (PPP)
⇒ Hypothetical concept that tries to compare two currencies’ exchange rate through their
purchasing power in respective countries. (एक समान व�ुएँ ख़रीदने के ख़चर् के अनुपात म� �व�नमय दर)
⇒ So, If 1 cup of coffee in India = ₹ 20 whereas 1 cup of coffee costs $2 in USA then Dollar to Rupee
exchange rate (PPP) should be $1 = ₹ 10. (According to OECD: exact figure is $1=₹ 17@PPP).
⇒ This (hypothetical) exchange rate can happen in real life, if both the countries have Floating
Exchange Rate without any intervention of the respective Central banks; and if the bilateral
trade is free of protectionism (= without tariff or non-tariff barriers).
⇒ GDP is the total market value of all goods and services produced in a country within a year.
When we convert these GDP values from local currencies into PPP $ exchange rates, the largest
economies of the world (GDP, PPP wise) are 1) USA 2) China 3) India 4) Japan 5) Germany
Big Mac Index ⇒ The Economist magazine’s informal index to measure PPP exchange rate using
the price of one McDonald burger in USA vs the respective country.
Twin Deficit ⇒ It’s the term used when both Current Account Deficit and Fiscal Deficit are
दोहरा घाटा high : चालू खाता घाटा और राजकोषीय घाटा
🔠🔠❓MCQ. Find correct statement(s) (UPSC-Prelims-2020)
1. Purchasing Power Parity (PPP) exchange rates are calculated by the prices of the same basket of
goods and services in different countries.
2. In terms of PPP dollars, India is the sixth largest economy in the world.
31.8.3 ✍🏻🏻🎺🎺 Mock Questions for Mains:

1. GSM3-2015: Craze for gold in Indians have led to a surge in import of gold in recent years and
put pressure on balance of payments and external value of rupee. In view of this, examine the
merits of Gold Monetization Scheme. �णर् मुद्रीकरण योजना क� खू�बयों क� जांच कर�।
2. GSM3-2015: There is a clear acknowledgement that Special Economic Zones (SEZs) are a tool of
industrial development, manufacturing and exports. Recognizing this potential, the whole
instrumentality of SEZs requires augmentation. Discuss the issues plaguing the success of SEZs
with respect to taxation, governing laws and administration. �वशेष आ�थक �ेत्र के �वकास म� कराधान, शासी
कानूनों और प्रशासन के सं बं धीत मुद्दों क� चचार् करे।
3. GSM3-2016: Justify the need for FDI for the development of the Indian economy. Why there is
gap between Memorandum of Understanding (MOU) signed and actual FDIs? Suggest remedial
steps to be taken for increasing actual FDIs in India. एमओयू / पर ह�ा�र िकए गए और वा��वक एफडीआई
के बीच अंतर �ों है? भारत म� वा��वक एफडीआई बढ़ाने के �लए सुधारा�क कदम उठाए जाने का सुझाव िदया।
4. GSM3-2014: Foreign direct investment in the defence sector is now said to be liberalised. What
influence this is expected to have on Indian defence and economy in the short and long run?
भारतीय र�ा �ेत्र म� �वदेशी प्र�� नवेश उदारीकरण से भारतीय अथर्�व�ा पर लघु और दीघार्व�ध म� �ा प्रभाव होंने क� उ�ीद है?
5. GSM3-13: Discuss the impact of FDI entry into multi-trade retail sector on supply chain
management in commodity trade pattern of the economy. ब�-�ापार खुदरा �ेत्र म� एफडीआई प्रवेश से
कमोिडटी �ापार क� आपू�त श्रृंखला प्रबं धन पर �ा असर होगी?
6. GSM3-2013: Though India allowed Foreign Direct Investment (FDI) in what is called Multi
Brand Retail through joint venture route in September 2012, the FDI even after a year, has not
picked up. Discuss the reasons. म�ी ब्रांड �रटेल म� �वदेशी प्र�� नवेश को अनुम�त �मलने के बाद भी वा��वक �प से
�नवेश �ों नहीं आ रहा है?
7. GSM2-2014: Though 100% FDI already allowed in non-news media like a trade publication and
general entertainment channel, the Government is mulling over the proposal for increased FDI
in news media for quite some time. What difference would an increase in FDI make? Critically
evaluate the pros and cons. समाचार मीिडया म� �वदेशी प्र�� नवेश बढ़ाने के फायदे और नुकसान क� समी�ा।
📑📑Next HDT: Pillar3B: WTO & other International Economic Orgs, Trade
Agreements, Protectionism and burning issues.
PILLAR #3B: INTERNATIONAL ORGANIZATIONS & AGREEMENTS RELATED TO ECONOMY
T ABLE OF C ONTENTS
32 🌐🌐🌐🌐🌐Pillar #3B: Bretton Woods Organizations ...................................................................556
32.1 🌐🌐🌐🌐🌐 Bretton Woods → 1) World Bank, Washington, 1945, Jul................................557
32.1.1 🌐🌐🌐🌐🌐World Bank President? .....................................................................................558
32.1.2 🌐🌐🌐🌐🌐 World Bank: Controversy?..............................................................................558
32.2 🌐🌐🌐🌐🌐 (Non-Bretton Woods) → Multilateral Development Banks .............................558
32.2.1 BRICS Bank and AIIB...........................................................................................................558
32.2.2 🌐🌐🌐🌐🌐Multilateral Development Banks → Others ..................................................560
32.3 🌐🌐🗡🗡🗡Bretton Woods → 2) IMF, Washington, 1945, Dec ............................................560
32.3.1 🌐🌐🌐🌐🌐🛐🛐IMF bailout loans to Pakistan (2019) and SriLanka (2022) .................561
32.4 🌐🌐🌐🌐 Theories of International Trade .....................................................................................562
32.4.1 Mercantilist Theory: �ापारी �सद्धांत .........................................................................................562
32.4.2 Adam Smith’s Theory of Absolute Cost Advantage (1776) ...........................................563
32.4.3 David Ricardo’s Theory of Comparative/Relative Cost Advantage (1817) .................563
32.4.4 Heckscher and Ohlin’s Factor - Proporations Theory (1919) ......................................563
32.5 🌐🌐🌐🌐🌐Bretton Woods → 3) GATT → WTO (Geneva).................................................564
33 🌐🌐🌐🌐🌐 World Trade Organization: �व� �ापार सं गठन ....................................................................564
33.1 🌐🌐🌐🌐🌐 WTO → functions (�ज�ेदा�रयां या कायर्) .....................................................................565
33.1.1 🌐🌐🌐🌐🌐🌐: Tariff Barriers against international trade....................................................565
33.1.2 🌐🌐🌐🌐🌐🌐 Non-Tariff Barriers against international trade ...........................................566
33.2 🌐🌐🌐🌐🌐: 📝📝 WTO → Notable Agreements .......................................................................566
33.3 🌐🌐🌐🌐⚔🧔🧔 WTO Disputes involving India .........................................................................568
33.3.1 🌐🌐🌐🌐⚔ 🌞🌞🌞🌞 India’s Solar procurement preference..............................................568
33.3.2 🌐🌐🌐🌐⚔ 🐥🐥🐥🐥 Ban on American Poultry ..................................................................568
33.3.3 🌐🌐🌐🌐⚔📯📯📯📯 India’s export incentive schemes .......................................................569
33.3.4 🌐🌐🌐🌐⚔📯📯📯📯 WTO’s Appellate Body (AB) Crisis ..................................................569
33.3.5 🌐🌐🌐🌐⚔📯📯📯📯 WTO Multiparty Interim Arbitration (MPIA) mechanism ..........569
33.4 🌐🌐🌐🌐🌐: 🤝🤝 WTO negotiations / summits / packages ......................................................570
33.4.1 🤝🤝 � Most Favoured Nation (MFN)- अ�ा�धक वरीयता वाले देश ......................................570
33.4.2 🤝🤝 � Least Developed Countries (LDC: सबसे से कम �वक�सत देश) ..................................571
33.4.3 🤝🤝 � Doha Development Round (Qatar 2001) ...........................................................571
33.4.4 🤝🤝🤝 � Food subsidies & peace clause: खाद्य �रयायत� और शा�� अनु�ेद/उपधारा ..............572
33.4.5 🤝🤝🤝 � Food subsidies: Cairns Group .......................................................................573
33.4.6 🤝🤝 � Bali Package & Trade Facilitation Agreement / TFA (2013) ...........................574
(Batch: PCB7) Mrunal’s Economy Pillar#3B- Intl.Org & Agreements → Page 553
33.4.7 🤝🤝 � Nairobi Package & SSM (2015) ............................................................................574
33.4.8 🤝🤝 � Buenos Aires Summit #flop (2017) .....................................................................575
33.4.9 🤝🤝 � Kazakhstan Summit #cancelled (2020-June) .....................................................575
33.5 WTO Summit 2022 @Geneva→ Notable Outcomes...............................................................576
33.6 WTO Fish Subsidies (म� स��डी पर समझौता) ...............................................................................576
33.7 🤝🤝Trade Agreements Types: �ापार समझौते के प्रकार .....................................................................577
33.7.1 FTA: India Mauritius FTA/CECPA, 2021 (मॉ�रशस के साथ मु� �ापार समझौता) ..................579
33.7.2 🤝🤝FTA: India UAE CEPA, 2022 .......................................................................................579
33.7.3 🤝🤝FTA: India Australia ECTA (आ�थक सहकार और �ापार समझौता) .....................................579
33.7.4 Interim (early harvest) trade agreement (शादी से पहेले सगाई) ..............................................580
33.8 🛒🛒⛷📝📝Free Trade agreements → TPP, TPP11, TATIP, IPEF, RCEP ............................581
33.8.1 🛒🛒⛷📝📝 Trans Pacific Partnership (TPP: ट�ांस पै�सिफक साझेदारी) #FAIL .......................581
33.8.2 🛒🛒⛷📝📝 TPP-11 or CPTPP .............................................................................................581
33.8.3 🛒🛒⛷📝📝 Transatlantic Trade and Investment Pact (TTIP) .......................................581
33.9 🌐🌐🌐🌐🌐🌐Indo-Pacific Economic Framework (IPEF) .............................................................582
33.10 🛒🛒⛷📝📝 Regional Comprehensive Economic Partnership (RCEP) .............................583
33.10.1 � Introduction to RCEP ...................................................................................................583
33.10.2 🧔🧔🧔🧔✍ RCEP: Why didn't India join in 2019-Nov? (भारत म� �ों ह�ा�र/द�ख़त नहीं िकए)
583
33.10.3 � RCEP: Counterview: India made a mistake by not joining (भारत से गलती �ई है)......584
33.10.4 � RCEP: Conclusion? (�न�षर्) .........................................................................................585
33.10.5 📘📘 📘📘 Economic survey 2015-16: Observations abt India’s Trade Agreements .......585
33.10.6 ES20: Observations abt India’s Trade Agreements (आ�थक सव��ण) ................................585
33.10.7 Budget-2020: FTA ‘rules of origin’ (उ�� के �नयम) ............................................................586
33.10.8 📝📝 Commerce Ministry: Certificate of Origin (उदगम प्रमाण पत्र) .................................586
33.10.9 🛒🛒⛷📝📝 Trade agreements losing shine → NAFTA & SAFTA ................................586
33.11 🛒🛒⛷📝📝India’s trade agreements .......................................................................................587
33.12 🌐🌐🌐🌐🌐 Burning issues in International trade .................................................................587
33.12.1 🌐🌐🌐🌐🌐Protectionism, Trade war: सं र�णवाद, �ापार युद्ध ................................................587
33.12.2 👻👻👻👻👻👻👻: 🔫🔫🔫🔫Protectionism → Medicine and Defence ................................588
33.12.3 👻👻👻👻👻👻👻: 🛒🛒🛒🛒 Protectionism → Indian Govt procurement (सरकारी खरीद) ..588
33.12.4 🌐🌐🌐🌐🌐🎃🎃USA’s Special 301 report ............................................................................588
33.12.5 🌐🌐🌐🌐🌐🎃🎃USA’s Generalized System of Preferences (GSP) list.............................589
33.12.6 🌐🌐🌐🌐🌐🎃🎃Global System of Trade Preferences.....................................................589
33.12.7 🧔🧔🧔🧔🧔🧔 India-USA limited trade deal (सी�मत �ापार सौदा) ............................................589
33.12.8 🌐🌐🌐🌐🌐How does US/EU/China trade war impact India? .......................................589
33.12.9 ��BREXIT = BRITAIN EXIT.......................................................................................590
33.12.10 🌐🌐🌐🌐 India UK Roadmap 2030 (Held in 2021-May) ...............................................592
34 🌐🌐🌐🌐Other Notable Groupings related to economy ......................................................................592
34.1 🌐🌐🌐🌐🌐🌐🌐🌐Groupings: Indian subcontinent .......................................................................592
34.1.1 🌐🌐🌐🌐🌐🌐🌐🌐Mekong- Ganga Cooperation (2000) .......................................................593
34.2 🌐🌐🌐🌐🌐🌐 Groupings: ASEAN vs SCO .....................................................................................593
34.2.1 ☪🤝🤝Afghanistan 6+2+1 group for redevelopment of Afghanistan ..........................594
34.3 🌐🌐🌐🌐🌐🌐 Groupings: Ocean-rim walla....................................................................................594
34.4 🌐🌐🌐🌐Groupings: BRICS, OECD, OPEC, G20 & JAI .............................................................595
34.5 📝📝📝📝⛷ G20: Osaka Declaration ............................................................................................597
34.5.1 📝📝📝📝⛷🚫🚫🚫🚫Osaka declaration: why India refused to sign ...................................597
34.5.2 ✍Conclusion (�न�षर्)..........................................................................................................597
34.6 🌐🌐🌐🌐🌐🌐Groupings led by Gora (Whites) → G7 and D10 ..................................................598
34.6.1 🌐🌐🌐🌐G7 - Group of Seven (1975) ....................................................................................598
34.6.2 🌐🌐🌐🌐🌐🌐 D10: 5G club proposed by UK (2020) ............................................................598
34.6.3 🌐🌐🌐🌐🌐🌐Minerals Security Partnership (MSP: अ�त मह�पूणर् ख�नजों के �लए भागीदारी/सहयोग)
598
34.7 🌐🌐🌐🌐☪Groupings: Middle East: GCC vs OIC.....................................................................599
34.7.1 ☪🤝🤝🤝🤝Abraham Accords (2020-Sept) .......................................................................599
34.7.2 🌐🌐🌐🌐🌐🌐I2U2: Middle Eastern / West Asian QUAD (2021-22) .................................599
34.8 🌐🌐🌐🌐 Misc groupings / org → World Economic Forum (1971)........................................599
34.9 🌐🌐🌐🌐 Misc groupings / organizations Others ........................................................................600
34.10 🌐🌐🌐🌐🌐🌐 Export control / Non-Proliferation regimes .....................................................600
34.10.1 🔫🔫🔫🔫🔫🔫USA Exit from Arms Treaties ..........................................................................601
34.10.2 🎺🎺✍ Mock Questions for Mains GSM2 (Intl. Org Related to Economy)................601
32 🌐🌐🌐🌐🌐PILLAR #3B: BRETTON WOODS ORGANIZATIONS
⇒ Conference was held in Bretton Woods town, New Hampshire in USA after the WW2 (1939-45)
to restore the global economy. (स�ेलन से तीन अंतररा��ीय सं �ानों का ज�)
⇒ Total 44 nations participated, incl. India. It proposed 3 international institutions:
Outcome Relationship with United Nations (UN)
1) International Bank for Reconstruction and These two are considered “Specialized Agencies
Development (IBRD), commonly known as of UN (सं यु� रा�� क� �व�श� एज��सयां)”
World Bank.
2) International Monetary Fund (IMF).
3) (Proposed) International Trade WTO is considered “Related organization of
Organization (ITO). But could not UN (सं बं�धत सं गठन)” because it doesn’t fulfil all
materialize due to American opposition. requirements of UN charter on specialized
Instead, nations later setup GATT → WTO agencies
32.1 🌐🌐🌐🌐🌐 BRETTON WOODS → 1) WORLD BANK, WASHINGTON, 1945, JUL
⇒ �व� ब�क originally focused on reconstructing war-torn European countries. After 1950s focusing
on poor countries of Asia and Africa.
⇒ World Bank = IBRD + IDA.
⇒ World Bank Group = comprises of 5 institutions, namely
1) International Bank for Reconstruction and
Development (IBRD) Gives development loans with interest.
अंतररा��ीय पुन�नमार्ण और �वकास ब�क
Assists the poorest countries via interest-free
2) International Development Association (IDA)
loans (= “Concessional Loans: �रयायती ऋण” or
अंतररा��ीय �वकास सं घ
“soft loans”).
3) International Finance Corporation (IFC) supports enterprise of developing countries.
अंतरार्ष्ट�ीय �वत्त �नगम Known for its Masala Bonds. (Ref Pillar1C)
offers (foreign) investors insurance against non-
4) Multilateral Investment Guarantee Agency
commercial risk (such as political instability,
(MIGA)
regime change etc.). This helps 3rd world
ब�प�ीय �नवेश प्रत्याभू�त एज�सी
nations attract foreign investment.
Helps in dispute resolution related to foreign
5) International Centre for the Settlement of
investment / foreign companies in 3rd world
Investment Disputes (ICSID)
countries. India is not a member of this
�नवेश सं बं धी �ववादों के �नपटान का अंतरार्ष्ट�ीय के न्द्र
organization.
🗳🗳Voting power?
⇒ In the first four organizations, voting power depends on the share capital provided by a country.
USA highest, followed by various European giants.
⇒ 5th is “dispute settlement” body, so concept of ‘each country’s voting power’ does not apply
32.1.1 🌐🌐🌐🌐🌐World Bank President?
⇒ Since USA and European powers collectively command large shareholding in World Bank &
IMF, so their informal arrangement is- USA’s favorite will be picked as World Bank chief, while
European countries’ favorite will be picked as IMF Chief.
⇒ New Chief : David Malpass (USA). | | 2019: SBI Managing Director Anshula Kant has been
appointed as the Managing Director and Chief Financial Officer of the World bank
⇒ �World Bank is known for Reports? World Development Report, Ease of doing business
Index (More in Pillar4B), Remittance & Migration Report, Global Economic Prospects report
32.1.2 🌐🌐🌐🌐🌐😰😰 World Bank: Controversy?

1. (2021) World discontinued the release of “Ease of Doing Business report” after an allegations
that IMF Chief Kristalina Georgieva (who was previously CEO of World Bank) had pressurized
the World Bank staff to give better ranking to China. (डेटा म� छे ड़खानी करके , चीन को �ापार-सुगमता �रपोटर् म�
अ�े न�र देने का आरोप।)
2. (2019) Trump demanded World bank should stop loaning to China because China has ‘lots of
money’. World Bank clarified, “As countries grow richer, we reduce loaning to them, and the
same is being done with China.” (अमीर देशों को हम कम कजर् द�गे। चीन के साथ भी वही �वहार होगा।)
32.2 🌐🌐🌐🌐🌐 (NON-BRETTON WOODS) → MULTILATERAL DEVELOPMENT BANKS

A multilateral development bank (MDB: ब�प�ीय �वकास ब�क) is an institution, created by a group of
countries, that provides financing and professional advising for the purpose of development. Apart
from World bank, the other notable examples are →
32.2.1 BRICS Bank and AIIB
BRICS Bank: New Development AIIB: Asian Infrastructure Investment
Bank (NDB) नई �वकास ब�क Bank ए�शयाई अवसं रचना �नवेश ब�क
Started in 6th BRICS Summit in Fortaleza 2015-16
(2014) members signed treaty
Members Founding members: Brazil, Russia, China, India, UK, Switzerland, >100 nations
India, China, South Africa as of 2020.
BRICS Bank: New Development AIIB: Asian Infrastructure Investment
Bank (NDB) नई �वकास ब�क Bank ए�शयाई अवसं रचना �नवेश ब�क
originally each of above founding
members had 20% shareholding,
later diluted to 19.42% after
addition of some new members.
Voting power 30 March 2022: new shareholding Based on share capital contributed:
Shareholding pattern to be- ⇒ China largest shareholding ~27%,
pattern - Brazil Russia India China South
⇒ India second largest shareholding~7%.
Africa (19.42% each)
- + Bangladesh (1.83%) ⇒ Asian countries control about 75%
- + UAE (1.08%) shareholding
- + Uruguay and Egypt: added as ⇒ 25% with non-Asian nations.
prospective members but not
yet have shareholding.
All member countries of the United
Nations can become members of
the bank, but BRICS founding
nations' voting power can never be
less than 55%.
HQ Shanghai, China Beijing, China
🔪🔪🔪🔪 Corona $1 billion. (2020-Apr) $750 million (2020-June)
loan2India
- BRICS member have also setup $100 billion BRICS Contingent Reserve Arrangement: (आक��क
�रजवर् �व�ा) to help members during BoP crisis- similar to IMF.
- BRICS nations also planning to setup their BRICS payment system parallel to SWIFT (ref: Pill1:
NPA handout), and BRICS rating agency (ref: 1C: SEBI-Share Market)
🔠🔠❓MCQ. Find correct statement(s) about AIIB: (UPSC-Prelims-2020)

1. AIIB has more than 80 member nations.
2. India is the largest shareholder in AIIB.
3. AIIB does not have any members from outside Asia.
Codes: (a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3 only
🔠🔠❓MCQ. Which one of the following countries is not a founding member of the New
Development Bank? (CDS2019-II) (a) Brazil (b) Canada (c) Russia (d) India
🔠🔠❓MCQ. Find correct statement(s):(Asked in UPSC-Pre-2016)

1. New Development Bank has been set up by APEC.
2. The headquarters of New Development Bank is in Shanghai.
Answer Codes: (a) 1 only (b) 2 only (c) Both 1 and 2(d) Neither 1 nor 2
32.2.2 🌐🌐🌐🌐🌐Multilateral Development Banks → Others
BIS: Bank for ⇒ 1930: setup in BASEL, Switzerland.
International ⇒ Made up of 60 countries’ Central Banks. Its committee on banking
Settlements supervision set norms in 1988 (I), 2004 (II), 2011(III) to ensure
अंतररा��ीय �नपटान के �लए ब�क
global financial stability.(Ref: Pill1:NPA handout).
African Development ⇒ 1964: setup in Abidjan in Ivory Coast
Bank ⇒ India is a member, also gets loans.
Asian Development ⇒ 1966: setup in Manila, Philippines
Bank (ADB) ⇒ India is a member, also gets loans.
ए�शयन �वकास ब�क
⇒ � � Corona loan2India $1.5 billion (2020-Apr) then more
loans for various projects but �
� � � �
European Bank for ⇒ 1991: setup at London.
Reconstruction & ⇒ India became member (shareholder) in 2018. India will not be
Development (EBRD)
eligible for loans from EBRD but India can initiate joint loan
पुन�नमार्ण और �वकास के �लए
proposals for Asian, African, European nations for its soft-
यूरोपीय ब�क
diplomacy. (usually India does it for winning poor nations
friendship. so they vote in favour of India during Kashmir-
Arunanchal etc resolutions in UN General Assembly)
IDEAS ⇒ 2005: Indian Development and Economic Assistance Scheme
भारत द्वारा �वकासशील देशों को (IDEAS) to give loans to Developing countries. Ministry of
�वकास और आ�थक सहायता के
External Affairs selects the loan-projects → FinMin's Dept of
�लए कजर् म� पैसा देना।
Economic Affairs will release the loan ₹₹ to the recipient country.
आ��नभर्र भारत म� नई शतर् क�
लाभाथ� देश ने कजर् क� रकम के ⇒ �Atma-Nirbhar 3.0= EXIM Bank to give loans to [Lines of
तीन चौथाई िह�े म� से भारत से Credit (LOC)] to developing nations under IDEAS scheme.
ही व�ु और सेवा खरीदनी होगी ⇒ These loans will be given Road-Railways, power, auto
components, sugar projects. WITH the condition that the
borrower nation must use a minimum 75% of the loan amount for
importing goods and services from India.
32.3 🌐🌐🌐🌐🌐BRETTON WOODS → 2) IMF, WASHINGTON, 1945, DEC
⇒ International Monetary Fund (IMF) helps in global currency exchange stability, helps against
balance of payment crisis. (अंतरार्��य मुद्रा कोष: मुद्रा �व�नमय दर ��रता भुगतान सं तुलन सं कट म� मदद )
⇒ Acts as a reservoir of the currencies of all the member countries, from which a borrower nation
can borrow the currency of other nations- using the Special Drawing Rights (SDR) mechanism.
(Ref: Previous Handout on Currency Exchange.)
⇒ IMF important decisions need to be passed with 85% majority. USA has 16.52% voting power so
it can effectively block/veto it. (अमे�रका हर सुधार प्र�ाव को रोक सकता है)
⇒ What is SDR? (More in �Pillar#3A)
⇒ IMF Chief?
o 2019: Christine Lagarde (France) resigned to become chief of European Central Bank
(ECB, HQ Frankfurt, Germany). Then,
o Kristalina Georgieva (Bulgarian economist, previously CEO of the World Bank)
becomes the second woman IMF Chief after Christine Lagarde, for five years tenure.
⇒ IMF’ Chief Economist (CE)? Gita Gopinath, an Indian-American economist, she became the
first woman to be the Chief Economist of IMF (2019 to 2022-Jan). Previously Raghuram Rajan
has also served in this position. (मु� अथर्शा�ी)
⇒ 2022: Gita Gopinath promoted to the post of First Deputy Managing Director (FDMD).
⇒ 📚📚Notable reports? Global Financial Stability Report, World Economic Outlook
⇒ United Nations (UN) has 195 members, whereas IMF has 189 members. But pursuing this type
of KBC GK = poor cost:benefit for UPSC #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
32.3.1 🌐🌐🌐🌐🌐🛐🛐IMF bailout loans to Pakistan (2019) and SriLanka (2022)

in the recent years Pakistan and Sri Lanka suffered BoP crisis due to low level of exports, high CAD,
political nepotism, shortage of food fuel and medicines, hyperinflation, high level of fiscal deficit and
general mismanagement of the economy etc.
⇒ IMF given them loans. Associated tools/loan-types/keywords are: Rapid Financing Instrument
(RFI) , rapid financial assistance, Extended Fund Facility (EFF) etc. What do they mean? How
are they different from each other?= NOT IMP. Enough to know that these are loans by IMF.
⇒ Usually, such IMF-loans given with following conditions: (शत� के अधीन कजर् िदया जाता है)
⇒ Nation required to reduce the fiscal deficit → � have to cut down food-fuel subsidies given to
Poor. Freeze on govt recruitment, freeze on military spending → negative implications on the
welfare and national security. (राजकोषीय घाटे को कम करने क� शतर् �जसके चलते गरीबों क� स��डी म� कटौती, सरकारी
नौक�रयों म� कटौती, सै�/र�ा बजट म� कटौती)
⇒ Nation required to privatise the loss-making public sector enterprises → � poor may be
deprived of cheap goods and services (e.g. BSNL prepaid plan vs Airtel prepaid plan) (घाटे म� चल
रही सरकारी कं प�नयों का �नजीकरण करने क� शतर् �जसके चलते गरीबों को स�ी चीज़� �मलना बं ध।)
⇒ nation required to “open up” the economy e.g. relaxed FPI/FDI, Capital account convertibility
etc → � may have negative implications as we learned in Pillar3A (अथर्तंत्र को खुला करने क� शतर्-
बेरोकटोक �वदेशी �नवेश और मुद्रा प�रवतर्नशीलता क� शतर्- हालाँिक इससे कु छ चुनौ�तयां भी पैदा हो सकती है।)
�Points to Reflect: while Economic Survey kept justifying higher level of fiscal deficit for counter-
cyclic fiscal policy (Ref: Pillar#2D), but looking at the example of Pakistan, we must control our fiscal
deficit and improve our balance of payment, lest we get into similar problems. (यध�प/हालांिक आ�थक
सव��ण तकर् देता है क� दे-धनाधन कजार् लो, लेिकन पािक�ान क� हालत देखते �ए, हम� अपने राजकोषीय घाटे को कम करना चािहए और
भुगतान सं तुलन को मजबूत- तािक पािक�ान श्रीलं का जैसी दयनीय/ ग़ुलाम ��त न हो.)
🔠🔠❓MCQ. Rapid Financing Instrument” & “Rapid Credit Facility” are given by _ _ . (Pre-2022)
(a) Asian Development Bank (b) International Monetary Fund
(c) United Nations Environment Programme Finance Initiative (d) World Bank
🔠🔠❓MCQ. Who publishes 'Global Financial Stability Report'? (Asked in UPSC-Pre-2016)
a) European Central Bank
b) International Monetary Fund
c) International Bank for Reconstruction and Development
d) Organization for Economic Cooperation and Development
🔠🔠❓MCQ. Who publishes 'World Economic Outlook'? (Asked in UPSC-Pre-2014)
(a) IMF (b) UN Development Programme (c) World Economic Forum (d) World Bank
32.4 🌐🌐🌐🌐 THEORIES OF INTERNATIONAL TRADE
32.4.1 Mercantilist Theory: �ापारी �सद्धांत

- From the 16th to 18th century, economists believed in mercantilism i.e. The amount of wealth
in the world is static. A nation's wealth and power were best served by ⏫ exports and receiving
payments in gold, silver and precious metals. (आयात करने से रा�ी� य सं प�� का �य होता है ऐसा मानते थे)
- Therefore, any import was seen as loss of nation’s wealth in gold payment.
- So, colonial powers tried to flood their colonies with readymade goods but always prevented
entry of goods in their home country. (औप�नवे�शक श��याँ भारत को गुलाम बनाने लगी)
32.4.2 Adam Smith’s Theory of Absolute Cost Advantage (1776)

Output per one laborer �→ India 🦁🦁 China 🐼🐼
Wheat 🌽🌽 30kg 🌽🌽 🌽🌽 10kg 🌽🌽
Rice 🍚🍚 10kg 🍚🍚 15kg 🍚🍚 🍚🍚
⇒ India has an absolute cost advantage over China in wheat production. (सं पूणर् लागत लाभ)
⇒ So, India should focus on producing more wheat, and import rice from China. India should not
try to be a ‘rice production specialist’. (भारत को जो काम सही से करना आता है वह करना चािहए चीन क� नकल नहीं)
⇒ Adam Smith’s theory assumes 1) there are no production costs except labourers 2) no transport
cost 3) there is free trade (no taxes on import exports)
32.4.3 David Ricardo’s Theory of Comparative/Relative Cost Advantage (1817)
तुलना�क लाभ �सद्धांत
How many workers required to produce → 1-meter textile 🧣🧣 1 bottle of wine 🥂🥂
France 10 workers � � 12 workers � �
England 9 workers � 8 workers �
⇒ Here, we can see England requires less workers than France to produce wine and textiles. So, as
per Adam Smith’s absolute cost advantage, England should not import anything from France!
⇒ But, if plotted on graphs, it’ll appear for England per unit labour cost to produce 1 meter textile is
(relatively) cheaper than 1 bottle of wine.(इं गल�ड के �लए कपड़ा बनाना, शराब बनाने से तुलना�क �पसे स�ा है।)
⇒ So, England should shift domestic English wine workers towards textiles. England should export
textile to France and import wine from France. England should not try to become a ‘Wine
production specialist’. (इं ��ड म� स�ी लागत पर कपड़ा बना के �नयार्त कर� और शराब को आयात कर� । खुद शराब न बनाए)
⇒ Based on Ricardo’s theory, Economists prepare Revealed Comparative Advantage (RCA) index,
which can help monitoring which commodities should a country export?
⇒ � �ES21: India’s top RCA (Relative cost advantage) export commodities are mainly
o Labour-intensive products [such as cotton, carpets, textiles- similar case in Bangladesh]
o some capital /technology intensive products [such as Indian pharmaceuticals.]
32.4.4 Heckscher and Ohlin’s Factor - Proporations Theory (1919)

⇒ Capital-abundant country will export the capital –intensive goods. E.g. USA’s Boeing company
exporting Jet planes. �ोंिक �वमान बनाने म� मजदू र कम और पूंजी �ादा चािहए. अमे�रका के पास मजदू र कम और पूंजी
�वपुल मात्रा म� है
⇒ Labour-Abundant Country will export labour-intensive goods. E.g. India exporting cotton (and
imports jet planes from USA). �ोंिक कपास के उ�ादन म� पूंजी कम और मजदू र �ादा चािहए, भारत के पास मजदू र
�वपुल मात्रा म� है.
32.5 🌐🌐🌐🌐🌐BRETTON WOODS → 3) GATT → WTO (GENEVA)

⇒ Initially, Bretton Woods conference proposed set up the International Trade Organisation (ITO)
But USA opposed → the idea could not materialize (अमे�रक� �वरोध के चलते बन नहीं पाया)
⇒ 1948: General Agreement for Tariffs and Trade (GATT: टै�रफ/शु� और �ापार के �लए सामा� समझौता)
⇒ 1986-1993: Uruguay Round of GATT negotiations → set up a permanent institution to
encourage international trade in goods & services and Intellectual Property Rights (IPR) सेवा और
व�ुओ ं का �ापार तथा बौ�द्धक सं पदा अ�धकार.
⇒ 1994: Marrakesh treaty → WTO started functioning from 1/1/1995 at Geneva, Switzerland.
India is a founding member. (भारत एक �ापक सद�)
33 🌐🌐🌐🌐🌐 WORLD TRADE ORGANIZATION: �व� �ापार सं गठन
✓ Supreme Decision-Making body.

✓ Usually meets once every two years, deliberates on trade agreements.
✓ One country = one vote. (unlike IMF & World Bank, where the money power
Ministerial
→ shareholding → determines the voting power)
Conference
मं त्री स�ेलन ✓ Appoints Director General (DG: महा�नद�शक ) to look after administrative work.
✓ 2021: WTO new DG is Ngozi Okonjo-Iweala, replacing Brazil's Roberto
Azevêdo. She is a former finance minister of Nigeria, First woman and first
African WTO chief. She previously worked in the World Bank
✓ Day to day decision making body @Geneva.
✓ Implements the decision of ministerial conferences
General ✓ Has representative from each member country.
Council has two bodies, with separate chairmen
सामा� 1. Dispute settlement body: �ववाद �नपटान �नकाय → Appellate Body
प�रषद 2. Trade policy review body: �ापार नी�त समी�ा �नकाय
Below general council, there are committees on individual agreements and annexes
e.g. Anti dumping, Subsidies & countervailing measures (SCM) etc.
33.1 🌐🌐🌐🌐🌐 WTO → FUNCTIONS (�ज�ेदा�रयां या कायर्)
Today all countries try to protect domestic industries against foreign imports by creating two types
of barriers against the international trade:
33.1.1 🌐🌐🌐🌐🌐🌐: Tariff Barriers against international trade
Tariff Barriers: शु� बाधाएं : Increasing the taxes, duties, cess, surcharge, on imported goods and
services e.g. Trump imposed 25% custom duty on imported steel.
CVD Anti-Dumping Duty: प्र�तपाटन शु�
two scenarios when foreign goods will appear - If China exports goods to India at a price below
cheaper to Indians than domestic goods: their normal price in domestic Chinese market
- If foreign country is giving subsidies to their or at a price below their cost of production-
exporters AND / OR then it is termed as “Dumping”
- If Indian government imposes higher - Then, India's commerce ministry →
amount of taxes, cess or surcharge on the Directorate General of Trade Remedies : �ापार
locally manufactured products उपचार महा�नद�शालय (DGTR) investigates →
recommends Finance ministry to impose
THEN Indian Govt tries to protect local “Anti-Dumping Duty” on such imported
(domestic) industry by imposing items.
Countervailing Duty (CVD: प्र�तकारी शु�), - E.g. $185 on every one tonne of imported
Special Countervailing Duty, Additional Chinese Steel, Then its prices will become
Customs Duty on imported items on imported equivalent to India Steel, thus Indian steel
items. Internal difference NOTIMP industry will be protected.
⇒ Commerce Ministry → DG foreign trade (DGFT) launched ‘ARTIS’ portal (Application for
Remedies in Trade for Indian industry and other Stakeholders). Applicants can file complaints
against dumping.
⇒ �Budget-2020: Purified Terephthalic Acid (PTA) is used in manufacturing (synthetic) textile
fibres and yarns. Cheap PTA = boost to Indian textile sector, so we’ll no longer charge Anti-
dumping duty on it.
33.1.2 🌐🌐🌐🌐🌐🌐 Non-Tariff Barriers against international trade
गैर शु� बाधाएं : if USA does not increase import taxes but plays other tricks like:
1. Subsidies to domestic industries: Giving free electricity to Detroit car manufacturers. OR USA
govt. giving tax benefits & free car-insurance to USA residents for buying American made cars.
2. Public Procurement: सावर्ज�नक खरीद/प्रा�� : Making rule that only American companies can fill up
tender for supplying stationery, school bags etc. in government schemes.
3. Technical Barriers to Trade: �ापार के �लए तकनीक� बाधाएं : e.g. imported mango must have 0%
pesticides residue, imported cars must have airbags for each passenger.
4. Quota system: e.g. not >50 metric tonnes of steel can be imported from a single foreign country.
WTO aims to reduce such tariff and non-tariff barriers to encourage international trade through its
agreements and dispute settlement body.
33.2 🌐🌐🌐🌐🌐: 📝📝 WTO → NOTABLE AGREEMENTS
Objective 📝📝Agreement(s)
⏬ tariff barriers 1. 🚗🚗 General Agreement on Tariffs and Trade (GATT) for goods- शु� और
�ापार पर सामा� समझौता
शु� बाधाएं
2. 📡📡 General Agreement on Trade in Services (GATS): सेवाओं के �ापार पर
सामा� समझौता
⏬ non tariff 1. 🚗🚗 For non-food: Agreement on Technical Barriers to Trade (TBT: �ापार
barriers म� तकनीक� बाधाय�) e.g. talcum powder should not have more than x% of
asbestos.
गैर शु� बाधाएं 2. 🌽🌽 For food: Agreement on Sanitary and Phytosanitary Measures (SPS:
��ता और पादप उपाय) e.g. ‘x’ food item must not have more than y%
pesticides residue.
⏬ non tariff 1. 🚗🚗 For non-food: Subsidies and Countervailing Measures (SCM:स��डी और
barriers → काउं टरवे�लंग उपाय)
Subsidies
2. 🌽🌽 For food: Agreement on Agriculture (AoA: कृ �ष पर समझौता)- which
aims to regulate the subsidies on agriculture through its ‘box’ mechanism.
a. 📦📦 Subsidies that are classified in Green & Blue box category- are
allowed (e.g. Research, Cattle-Vaccination).
b. 📦📦 Amber (ए�र) box category subsidies will be subjected to
quantitative limits (e.g. Fertilizer, Electricity, Diesel, MSP.)
Misc. measures to 1. Trade-Related Aspects of Intellectual Property Rights (TRIPS: बौ�द्धक सं पदा
encourage global अ�धकारों के �ापार-सं बं�धत पहलू) → related topics: Compulsory licensing,
trade, protect
pharma-patents. 📑📑More in Pillar4B: IPR
environment
2. Trade-Related Investment Measures on Foreigners. (TRIMs: �वदे�शयों पर
�ापार से सं बं �धत �नवेश के उपाय)- it applies to foreign investment norms related
to goods only. Doesn’t apply on foreign investment norms on services.
3. WTO's Agreement on Fisheries Subsidies (AFS-2022): to curb 'harmful'
subsidies that promote overfishing.
4. Plurilateral agreements (ब�प�ीय समझौते): They are not signed by all the
members of WTO e.g. Agreements on aircrafts, dairy product, bovine
meat, Information Technology Agreement (ITA) सभी सद� रा��ो ं ने इस पर
ह�ा�र नहीं िकए
🔠🔠❓ With reference to Trade-Related Investment Measures (TRIMS), which of the following
statements is/are correct? (UPSC-Prelims-2020)
1. Quantitative restrictions on imports by foreign investors are prohibited.
2. They apply to investment measures related to trade in both goods and services.
3. They are not concerned with the regulation of foreign investment.
Ans Codes: [a) 1 and 2 only [b) 2 only [c) 1 and 3 only [d) 1, 2 and 3
🔠🔠❓MCQ. In the context of which of the following do you sometimes find the terms 'amber box,
blue box and green box' in the news? (Asked in UPSC-Pre-2016)
(a) WTO affairs (b) SAARC affairs (c) UNFCCC (d) India-EU negotiations
🔠🔠❓MCQ. The terms 'Agreement on Agriculture', 'SPS Agreement and 'Peace Clause' are in the
context of affairs of the _ _ _ (Asked in UPSC-Pre-2015)
(a) Food and Agriculture Organization (b) UN Framework Conference on Climate Change
(c) World Trade Organization (d) United Nations Environment Programme
🔠🔠❓MCQ. TRIPS Agreement pertains to (Asked in UPSC-CDS-2017-I)
(a) international tariff regime (b) intellectual property protection
(c) international practices on trade facilitation (d) international taxation of property
🔠🔠❓MCQ. Which of the following are the main functions of WTO? (UPSC-IES-2020)
1. To organize meetings of members to arrive at trade agreements covering international trade.
2. To ensure member countries conduct trade practices as per agreements signed by the members.
3. To provide a platform to negotiate and settle disputes of international trade between members.
codes: (a) 1 and 2 only (b) 1 and 3 only (c) 2 and 3 only (d) 1, 2 and 3
33.3 🌐🌐🌐🌐⚔🧔🧔 WTO DISPUTES INVOLVING INDIA
33.3.1 🌐🌐🌐🌐⚔ 🌞🌞🌞🌞 India’s Solar procurement preference

USA argued India’s Jawaharlal Nehru Solar Mission gave public procurement preference & subsidy
to India-made solar panels thus creating a non-tariff barrier for American solar panels. India lost the
case @WTO & forced to withdraw such barriers (2017). However, USA still alleges that India is
playing mischief in solar schemes by giving preference to local manufacturers over American-made
products (2018)
33.3.2 🌐🌐🌐🌐⚔ 🐥🐥🐥🐥 Ban on American Poultry

In 2007, India had imposed the ban on American poultry under the Indian Livestock Importation
Act, 1898 stating avian influenza / bird flu danger in India. USA claimed there was no scientific
basis- India merely banning us to protect local poultry-wallas’ business interest. WTO ruled in
favour of USA (2016). But India has only allowed partial import of poultry from selected states of
USA so, USA has demanded $450 million compensation from Indian Govt. @WTO (2018).
33.3.3 🌐🌐🌐🌐⚔📯📯📯📯 India’s export incentive schemes
⇒ 2018: USA complained to the WTO's Dispute Settlement Body (DSB: �ववाद �नपटान �नकाय) that
India is running various export incentive schemes such as:
⇒ Merchandise Export from India Scheme (MEIS: भारत से �ापा�रक �नयार्त के �लए योजना),
⇒ Export Oriented Units (EOU: �नयार्तो�ुख इकाइयाँ),
⇒ Electronics Hardware Technology Parks (EHTP),
⇒ Special Economic Zone (SEZ: �वशेष आ�थक �ेत्र)
⇒ Export Promotion Capital Goods (EPCG: �नयार्त सं वधर्न के �लए पूंजीगत माल).
⇒ Under above schemes India gives tax reliefs / subsidies to its exporters. So, it is creating tariffs
and non-tariff barriers against American companies, & thus India is violating the WTO
Agreement on Subsidies and Countervailing Measures (SCM: स��डी और प्र�तकार उपायों पर समझौता).
⇒ India’s position is “We’ll phase out these schemes after 8 years from 2017 (=2025). Since we are
a developing country, we should be given such relaxed deadline under SCM agreement.”
⇒ 2019-Oct: WTO’s Dispute Settlement Body (DSB) ordered in favour of USA and ordered India
to stop such schemes within the next 90-180 days.
⇒ 2019-Nov: India goes to WTO Appellate Body (अपीलीय �नकाय) to undo DSB’s order.
⇒ 2020-Mar: Indian Commerce Minister says, “we will not implement WTO's DSB’s orders,
because the appellate body (AB) is not functioning, so our appeal is pending.”
⇒ 2021-Dec: WTO ordered India to stop sugar subsidies (More in Pillar4A: Agriculture)
33.3.4 🌐🌐🌐🌐⚔📯📯📯📯 WTO’s Appellate Body (AB) Crisis

⇒ It is a permanent body) to resolve appeals against DSB’s orders.
⇒ It is ordinarily composed of 7 members, 4 year term & 1 reappointment.
⇒ WTO Appellate Body members are appointed by the WTO members by consensus, (i.e. no
member-nation should formally object to candidate’s name).
⇒ Since July 2017, the United States has been stalling AB appointments. So, body is under-staffed/
dysfunctional. This has resulted in the ‘Appellate Body crisis’. (अपीलीय िट��ूनल म� के स आगे बढ़ नहीं रहे,
�ोंिक अमे�रका यहां पर नए जजों क� �नयु�� म� बाधाएं डाल रहा है )
33.3.5 🌐🌐🌐🌐⚔📯📯📯📯 WTO Multiparty Interim Arbitration (MPIA) mechanism

⇒ Due to the aforementioned appellate body crisis → some WTO members have created a
Multiparty Interim Arbitration (MPIA) body as a temporary solution.
⇒ Members? EU, China, Brazil, Australia, New Zealand etc approx 23 WTO members.
⇒ India is not a member yet. India wants restoration of the original appellate body (AB). (उ� सम�ा
से अ�ाई �प से लड़ने के �लए चीन सिहत कु छ देशों ने 'ब�प�ीय अंत�रम म��ता' प्रणाली बनाई है िकंतु भारत उसका सद� नहीं
है, भारत ड�ूटीओ क� परंपरागत अपीलीय प्रणाली चाहता है)
33.4 🌐🌐🌐🌐🌐: 🤝🤝 WTO NEGOTIATIONS / SUMMITS / PACKAGES
33.4.1 🤝🤝 � Most Favoured Nation (MFN)- अ�ा�धक वरीयता वाले देश
(कु ल �मलाकर प्र�ेक देश ने बाक� देशो के साथ वही �वहार करना चािहए जो वो अपने अ�त �प्रय �मत्र देश के साथ कर रहा है)
⇒ Suppose India levies 0% customs duty/import tax on imported coal from Australia & Australia
levies 0% import tax on Indian shoes.
⇒ Then implies Australia has become the Most Favoured Nation for India (as far as the coal trade is
concerned).
⇒ WTO agreements require that whatever treatment is being given to the Most Favoured Nation,
must also be extended to all other member countries. A member should not discriminate
between its trading partners- provided there is mutual-reciprocity.
⇒ So even imported Chinese coal should be subjected to 0% import tax in India- but ONLY IF
there is reciprocity ke Indian shoes will be subjected to 0% import tax in China. (But, China may
not allow it, so India not bound to ⏬taxes on Chinese coal)
⇒ But in practice, MFN is not implemented in letter and spirit by the members.
⇒ 1996: India granted MFN status to Pakistan but Pakistan didn’t reciprocate (mainly) due to their
local textile industrialists’ lobby who feared competition from Indian textile imports.
⇒ 2019-Feb: India withdrew MFN status for Pakistan, following Pulwama attack on CRPF
personnel. India also ⏫customs duty by 200% on goods originating from Pakistan.
⇒ Since Pak not giving India MFN treatment. So, there is no ‘legal-compulsion’ on India to give
them MFN status. even if Pak complained to WTO’s dispute redressal panel, it’ll lose the case.
🔠🔠❓MCQ. MFN-Clause under WTO regime is based on the principle of [UPSC-CDS-2017-I]

a) non-discrimination between nations b] discrimination between nations
c) differential treatment between locals & foreigners d] uniform tariff across commodities
33.4.2 🤝🤝 � Least Developed Countries (LDC: सबसे से कम �वक�सत देश)

⇒ are identified by the UN Economic and Social Council (ECOSOC: सं यु� रा�� आ�थक और सामा�जक
प�रषद). Somaliya, Ethiopia, Congo, etc.
⇒ Least Developed Countries’ economic growth can ⏫ if they are able to export more. So, WTO
agreements permit other countries to give duty free quota free access to exports from LDC. and
that is not considered as a violation of any other agreement.
⇒ e.g. If India levied 0% custom duty on Somalian pendrives, India will not be required to give
same treatment to Japanese pen drives under “MFN norm”, Bcoz Japan isnot LDC.
Before dwelling into summits, let’s keep a few terminologies in mind →

1. First world countries, Advanced Economies (AE), Developed Countries= such as USA Canada,
France and Germany etc. (प्रथम �व� के देश, उ�त अथर्�व�ाएँ , �वक�सत देश)
2. Second world countries= USSR and its neighbouring European countries which were under the
influence of Communist Socialist ideologies. However, with the collapse of USSR, the term has
become defunct (अप्रच�लत/ मृत).
3. Third world countries, developing countries, Emerging market economies (EME)= India China,
Mexico, Brazil etc. Nowadays, “Global South” term also used for them. तीसरा �व�, �वकासशील देश,
उभरती �ई अथर्�व�ाए, वै��क-द��ण
Some of the burning and contentious issues between 1st world vs. 3rd world at WTO→
33.4.3 🤝🤝 � Doha Development Round (Qatar 2001)
3rd world countries wanted following:
✓ 1st world should liberalize their trade regulation further so that 3rd world’s goods and services
can enter more easily in the first world’s domestic markets. अमरीक� बाजार म� हमारे उ�ादों पे कम टे� लगे
✓ 3rd world should be allowed to keep various barriers to slow down the entry of 1st worlds
agriculture, manufactured goods and service exports in their domestic market. �ानीय उद्योगों को
बचाने के �लए हम अमरीका के �खलाफ �ापार-बाधाओं को कायम रख�गे।
✓ 1st world shd give financial + technical assistance to 3rd world. आ�थक व तकनीक� सहायता �मले
Obviously, USA and European countries would not like this. So, Doha round of negotiation
continues without conclusion. And in future summits the USA/EU would want WTO officials to
begin negotiations on the new matters lucrative to their MNCs (like ICT, E-Commerce) whereas 3rd
world nations will continue to insist that Doha round negotiations must be concluded first.
33.4.4 🤝🤝🤝 � Food subsidies & peace clause: खाद्य �रयायत� और शा�� अनु�ेद/उपधारा
Under WTO’s Agreement on Agriculture (AoA), 1st world and 3rd world countries are required to
limit their food-subsidies to 5% and 10% respectively to the value of their agriculture production.
⇒ But, in absolute quantitative terms USA’s 5% will be much bigger than India’s 10% → 1st world
countries are able to give larger amount of food subsidies to their farmers → export them to 3rd
world countries @cheap price, and ruining local farmers.
⇒ Further, India has a large population of poor farmers who require Govt support in the form of
subsidies & procurement at Minimum support prices (MSP: �ूनतम समथर्न मू�) More in Pill#4A.
⇒ India also has a large number of malnourished poor families who need subsidized food grains
under National Food Security Act (NFSA खाद्य सुर�ा अ�ध�नयम/कानून) More in Pill#6.
⇒ 2013: WTO ministerial conference at Bali (Indonesia) → India refused to sign any new
agreements until this food subsidy issue was resolved.
⇒ So, WTO Peace Clause → it gave temporary immunity to India and other developing countries.
(अ�ायी- बचाव/ अ�का�लक- प्र�तर�ा)
⇒ Basically, 3rd world nations can give any amt of subsidy for their food programs:
- (1) USA/Other countries cannot impose countervailing duty. प्र�तकारी शु� पर रोक
- (2) USA/Other countries cannot complaint to WTO about it. �शकायत पर गौर नहीं िकया जाएगा
⇒ 2020: India informed WTO that in rice production, we've crossed the 10% subsidy limit (in
2018-19). But as per Peace clause, we’ve immunity! हम को खुली छू ट �मली है.
33.4.5 🤝🤝🤝 � Food subsidies: Cairns Group
Agricultural exporting countries' group. Members: Argentina, Australia, Bolivia, Brazil, Canada etc.
20 nations. They want WTO members to ⏬/stop agri subsidies. India is not a member.
33.4.6 🤝🤝 � Bali Package & Trade Facilitation Agreement / TFA (2013)
Bali Package is the trade agreement / outcome resulting from the WTO ministerial conference (मं त्री
स�ेलन) 2013 @Bali, Indonesia. Its two significant components are :
1. Trade Facilitation Agreement (TFA: �ापार सु�वधा समझौता):
a. requires member countries to ⏬their bureaucratic delays, red tapes, inspector raj in
import-export of goods. (नौकरशाही, लाल फ़�ताशाही)
b. They’ve setup online portals where traders can seek permissions, pay fees, custom duties,
self declaration forms (like e-way bill) etc.
c. India & others ratified in 2016 → TFA became effective from 2017.
d. India set up a National Committee on Trade Facilitation (NCTF) under Cabinet
Secretary (IAS). Below him → a steering committee jointed headed by Revenue secretary
(IAS) and Commerce secretary (IAS). (�ापार सु�वधा पर रा��ीय स�म�त → सं चालन स�म�त)
2. Peace Clause on subsidies → explained in previous section.
🔠🔠❓MCQ. Find correct among the following statements: (Asked in UPSC-Pre-2017)

1. India has ratified the Trade Facilitation Agreement (TFA) of WTO.
2. TFA is a part of WTO’s Bali Ministerial Package of 2013.
3. TFA came into force in January 2016.
Answer Codes: (a) 1 & 2 only (b) 1 & 3 only (c) 2 & 3 only (d) 1, 2 and 3
33.4.7 🤝🤝 � Nairobi Package & SSM (2015)
Nairobi Package resulted from the WTO ministerial conference 2015 @Nairobi, Kenya →
1. We’ll extend the Peace Clause for another “x” years.
2. Members must stop the subsidy on Agriculture Exports: 1st world countries must comply
immediately while 3rd world countries given a relaxed deadline.
3. If there is a surge of cheap agro exports from 1st world to 3rd world, then 3rd world countries
will have the right to temporarily increase tariff / taxes on them, to protect their local farmers.
It’s called “ Special Safeguard Mechanism: �वशेष सुर�ा तं त्र (SSM).”
4. 1996 → Information Technology Agreement (ITA) plurilateral agreement (i.e. not signed by all
member nations) → It aims to abolish import export taxes on ~200 IT products. WTO
discussions to try to get more members sign this, so global IT-trade can increase. India signed in
1997 but could not benefit due to low capacity of local manufacturing. (हालांिक भारत म� ह�ा�र तो िकए
थे लेिकन हम� ब�त �ादा फायदा नहीं �आ �ोंिक हमारी कम्�ूटर हाडर्वेयर उ�ादन �मता ही कमजोर है)
5. Technical reforms to help the exports from Least Developed Countries (LDC).
33.4.8 🤝🤝 � Buenos Aires Summit #flop (2017)

The 11th WTO Ministerial conference 2017 @Buenos Aires, Argentina failed to deliver any notable
outcome because : (उ�ेखनीय प�रणाम देने म� �वफल �ोंिक)
1. Food subsidy related reforms remained inconclusive (अ�नण�त) because neither India-China nor
USA-EU were willing to compromise.
a. So, in reality ‘Peace clause’ is extended for infinite period-
b. which is not a good thing because large amount of food subsidies given on (chemical)
fertilizers harm the environment.
2. USA-EU were more keen for a new agreement on e-commerce
a. but India-China opposed that such agreements will benefit 1st world countries more
(because they’ve Amazon, Walmart, Facebook etc) than 3rd world.
b. India-China insisted that first finish negotiations of the original Doha agenda subjects,
before proposing such new topics like e-commerce.
3. Members also failed to conclude negotiations related to Special Safeguard Mechanism (SSM),
investment facilitation, MSME etc..
As a result, this conference ended without a joint declaration by the members.
🚩🚩🚩FAQ: why are you teaching a summit of 2017 when we are targeting 2023/2024/2025?
Ans. Because the tone of UPSC questions is usually, “What are the problem areas between
WTO/members.?” So you need to be aware what are the problem areas / unresolved matters.
33.4.9 🤝🤝 � Kazakhstan Summit #cancelled (2020-June)

⇒ � � 2020-June: WTO ministerial conference was to held at Kazakhstan’s Astana (new name
of this city: Nur-Sultan) But, cancelled by Corona.
⇒ 2021-Dec: Summit will take place in Geneva, Switzerland. (But postponed by Omicron-fear)
⇒ 2022- Summit at Geneva <NEXT SECTION>
33.5 🐠🐠WTO SUMMIT 2022 @GENEVA→ NOTABLE OUTCOMES
⇒ 1998: WTO members had agreed not to impose customs duties on electronic transmissions
(=also known as moratorium on e-commerce of data). Recent years, an exponential rise global
trade of electronic transmissions such as movies (NETFLIX), music (SPOTIFY), video games
(PUBG) and Ebooks (KINDLE) etc. So India and Africa wanted stopping this moratorium to
increase tax collection. But WTO continued it until March 31, 2024. (िड�जटल सं चार के आयात �नयार्त पर
सीमा शु� नहीं लगेगा 2024 तक। हालाँिक भारत और द��ण अफ़्रीका को एतराज़ है िक हमारी कर-आमदनी म� नुक़सान हो रहा है)
⇒ Corona vaccines/medicines ke IPR/Patent pe temporary waiver without the consent of the patent
holder for 5 years. So that 3rd world nations can more easily manufacture Corona
vaccines/medicines domestically. (कोरोना के िटके / दवाइयों का पेट�ट/बौ�द्धक सं पदा अ�धकार �जस कं पनी के पास है,
उस कं पनी क� अनुम�त �लए �बना भी, अ� कं प�नयां उसका उ�ादन कर पाएं गी। तािक स�े दामों पर ये दवाइयां उपल� हो।)
⇒ We’ll resolve the deadlock of Judges vacancies / appointment. We’ll setup a well-functioning
dispute settlement system by 2024. (�ायाधीशों के �र�/ख़ाली पदो को भर�गे। �ववाद �नपटान प्रणाली दु�� कर�गे.)
⇒ Fish Subsidies: WTO’s Agreement on Fisheries Subsidies (AFS): to curb ‘harmful’ subsidies that
promote overfishing. This will help ⬆ Blue economy — sustainable use of ocean resources for
economic growth. 😥😥 but some apprehensions/ discontent among members (REF Next section).
(म� उद्योग से पयार्वरण/ जैव-�व�वधता को हा�न करने वाली स��डी पर कटौती पाबं दी क� बात�)
Above is around 200 words note. Elaborate, give background, add linkages with taxation, food
security, SDG goals to drag it till 250 words. Further PHD NOT required.
33.6 🐠🐠WTO FISH SUBSIDIES (म� स��डी पर समझौता)

WTO’s Agreement on Fisheries Subsidies (AFS) signed in WTO Sumit/ Ministerial Conference 2022
at Geneva. AFS prohibits three kinds of subsidies: (�न� िक� क� मदद से स��डी पर पाबं दी)
⇒ ✋🚨🚨(1) illegal, unreported, or unregulated (IUU) fishing
⇒ ✋🚨🚨(2) fishing of already over-exploited species/stocks
⇒ ✋🚨🚨(3) fishing on unregulated high seas.
🚩🚩🚩FAQ: What do above things mean, how are they different from each others? ANS. NOTIMP.
Sufficient to know ke WTO wants to stop over-fishing.
However, India wants special and differential treatment (S&DT).

⇒ 🤔🤔India wants transition period for phasing out subsidies. (भारत को अ�धक समय-अव�ध दी जाए ताक�
भारत धीरे धीरे स��डी म� कटौती कर�।)
⇒ 🤔🤔 Foreign countries’ fish subsidies contribute to over-fishing. India wants stricter action on
them. E.g.
⇒ Size of Fisheries subsidies 1) India $277 million in 2018 (2) Whereas China, EU, US, South
Korea, and Japan’s subsidies are more than $2000 million respectively.
⇒ So, India wants them to stop first. (अ� देश जो भारत से �ादा म� स��डी दे रहे ह� उन पर �ादा स�ी से कारर्वाई
हो। भारत को अलग और �भ� िक� से देखा जाए। भारत पर ड�ूटीओ स�ी न िदखाएं )
�Conclusion: SDG Goal 14.6 requires countries to stop overfishing. WTO taken an appreciable
step with this new agreement but - 🤔🤔India has set a target of exporting marine products worth $14
billion by 2025. This fisheries subsidies restrictions could create obstacles. Third world country
should be given differential treatment. First action must be taken on the countries that have already
contributed a lot in overfishing. (सतत �वकास ल�ों म� बेरोकटोक मछली-पकड़ने के �ख़लाफ़ का पाबं दी का ल� भी है। इस
िदशा म� ड�ूटीओ ने एक प्रशं सनीय कदम उठाया है हालांिक भारत को कु छ प्रावधानो से ऐतराज है।)
🔠🔠❓MCQ. Find correct statements relating to WTO: [UPSC-CDS-2014-II]

1. The WTO deals with the global rules of trade between nations.
2. The goal of the WTO is to help producers of goods and services, exporters, and importers
conduct their business.
3. The WTO, which is a successor body of the General Agreement on Tariffs and Trade, came into
being following the Uruguay Round of Negotiations.
4. The WTO distances itself in framing of rules on trade in intellectual property rights.
Codes: (a) 1, 2 and 3 (b) 2, 3 and 4 (c) 1, 2 and 4 (d) 1 and 3 only
33.7 🤝🤝TRADE AGREEMENTS TYPES: �ापार समझौते के प्रकार

1. 📝📝Partial Scope Agreement (PSA: आं�शक �ापकता समझौता ): Trade between two countries for a
small list of goods @reduced tariffs.
2. 📝📝Preferential Trade Agreement (PTA: अ�धमानी �ापार समझौता) / Free Trade Agreement (FTA:
�नःशु� �ापार समझौता): Member= lower tariff; non-members: regular tariff.
a. All FTAs are not same. Tariff and list of allowed goods/services could vary depending on
country to country. E.g. India Mauritius Free trade agreement: Comprehensive
Economic Cooperation and Partnership Agreement (CECPA)- More than 300 Indian
goods from agriculture, textile, electronics will get concessional customs duties in
Mauritius. More than 600 Mauritius goods will get Similar treatment in Indian market.
(�ापक आ�थक सहयोग और भागीदारी समझौता �जसम� एक दू सरे पर �रयायती सीमा शु�)
b. Depending on number of participants it can be bilateral or multilateral or regional or
global (e.g. WTO, ऐसे समझौते िद्वप�ीय ब�प�ीय �ेत्रीय या वै��क हो सकते ह�).
c. If countries go further beyond just lower tariffs e.g. relaxed norms for entry of foreign
investment (FDI) and foreign workers → then it becomes
i. CEPA = Comprehensive Economic Partnership Agreement or
ii. CECA = Comprehensive Economic Cooperation Agreement.
iii. PHD over CEPA vs CECA = NOT IMPORTANT. Sufficient to know- CEPA
covers more areas than CECA. E.g. IPR, visa, investment, taxation etc.
⇒ Sometimes they come up with even more fancy names like i) CECPA = Comprehensive
Economic Cooperation and Partnership Agreement ii) ECTA (Economic Cooperation and
Trade Agreement). But pedantry over all such terms = NOT IMP for Exam.
3. 📝📝Customs Union (CU: सीमा शु� सं घ ): FTA in which members apply a common external tariff
(CET) for non- members. E.g. East African Community (EAC). Caribbean Community
(CARICOM, although according to some sources now it evolved into Common Union but that is
not imp. Location is imp.)
4. 📝📝Common Market (CM: सामा� बाजार): Customs union where factors of production
(capital/FDI, labour) can move freely amongst members e.g. MERCOSUR- S.America.
5. 📝📝Economic Union (EU: आ�थक सं घ): common market where member countries keep common
currency & tariff. Allow entry of goods, services, capital and labour among themselves with
minimum restrictions. They decide their fiscal policies and diplomatic policies through a
common parliament ‘European Parliament’, and their monetary policies through a common
central bank – ‘European Central Bank’.
33.7.1 FTA: India Mauritius FTA/CECPA, 2021 (मॉ�रशस के साथ मु� �ापार समझौता)
⇒ India Mauritius Free trade agreement: Comprehensive Economic Cooperation and Partnership
Agreement (CECPA) came into effect from 1st April 2021.
⇒ More than 300 Indian goods from agriculture textile electronics will get concessional customs
duties in Mauritius (300 से अ�धक भारतीय �नयार्त पर मॉ�रशस द्वारा सीमा शु� म� �रयायत)
⇒ More than 600 Mauritius goods will get Similar treatment in Indian market
33.7.2 🤝🤝FTA: India UAE CEPA, 2022

UAE to⏬ taxes on Indian products India to⏬ taxes on UAE products
Indian electronic goods, chemicals and 90% of the goods/services from UAE to India.
petrochemicals cement, ceramics and
machinery
gems and jewelry, textiles, leather, footwear,
sports goods, engineering goods, and
pharmaceuticals.
⇒ � Agreement covers rules of origin, government procurement, intellectual property rights, and
e-commerce etc. (उ�� के �नयम, सरकारी ख़रीद, बौ�द्धक सं पदा अ�धकार, इ-वा�ण�)
⇒ � India-UAE CEPA marks the first time India has included a chapter on e-commerce/ digital
trade in an FTA. (ये भारत का पहला ऐसा �ापा�रक समझौता है जहाँ पर िड�जटल �ापार क� भी बात �ई है)
⇒ � This will give big market access to Indian exports to UAE → further towards not only in
UAE, but also in Middle East and Africa.
33.7.3 🤝🤝FTA: India Australia ECTA (आ�थक सहकार और �ापार समझौता)

India-Australia Economic Cooperation and Trade Agreement (IndAus ECTA-2022)
�Aussie to⏬ taxes on � �India to⏬ taxes on Aussie �India kept these sensitive
Indian products products items OUT
Engineering goods, gems 0% customs duty on Coal, sheep Australian Dairy products,
and jewellery, leather, meat, wool, LNG, alumina, wheat, rice, sugar,
textiles, apparel, footwear- metallic ores,Avocados, onions, chickpeas, beef, apples, toys,
total 96% of India’s exports pistachios, blackberries, cashews, iron ore .
to Australia. blueberries, raspberries. Indian govt will not⏬
⏬Customs duty on – wine, taxes on above Aussie items.
almond, cotton, orange, lenthil etc
�This create 1 million+ �This will help Indian for energy �This will protect the
jobs in India security, cheap raw material local Indian industry
(रोज़गार सृजन /नौकरी �नमार्ण) (ऊजार् सुर�ा और स�ा क�ा माल भारत को (भारत सरकार ने ऑ��े�लया से आने
�मले) वाले कु छ ऐसे सं वेदनशील चीज़� जैसे िक
दू ध गे�ँ चावल चीनी इ�ािद को इससे
बाहर रखा है तािक भारत के िकसानों का
नुक़सान न हो)
⇒ � � Australian govt relaxed Work-visa norms for Indian graduates from STEM (Science,
Technology, Engineering and Mathematics).
⇒ � � faster approval to Indian medicines in Australian market (if such medicine is already
approved in Canada / European Union) (यिद भारत क� दवाई को कै नेडा/ यूरोपीय सं घ ने अनुम�त �मल चुक� है तो
ऑ��े�लया म� उसे ज�ी से अनुम�त दी जाएगी।)
⇒ � � double taxation avoidance agreement for specific category of IT companies. (More in
�Pillar#2B: Tax Avoidance) (सूचना प्रौद्यो�गक� से जुड़ी कं प�नयों पर दोहरे कराधान से मु�� इ�ािद)
⇒ � bilateral trade will ⏫ to $50 billion within 5 years and generate 1 million+ jobs in India.
33.7.4 💍💍Interim (early harvest) trade agreement (शादी से पहेले सगाई)

⇒ Signed between two countries on a small list of goods and services. (एक “अंत�रम �ापार समझौता” �जसम�
व�ुओ ं और सेवाओं क� एक छोटी सूची पर टै� कम क�ए जाए)
⇒ They act as a frontrunner before signing a more comprehensive free trade agreement (FTA).
⇒ 2022: India and UK exploring to sign an “early harvest trade agreement” covering some 40-65%
goods and services. In the final free trade agreement (FTA) agreement, we aim to cover 90%
goods/services’ import export. (बाद म� बड़ा मु� �ापार समझौता कर�गे.)
🔠🔠❓How many nations are in CARICOM, a grouping of Caribbean nations? (UPSC-Geologist-

2020) a. 10 b. 12 c. 15 d. 18
<While the answer is 15 but poor cost:benefit chasing such KBC GK. Better to skip>
33.8 🛒🛒⛷📝📝FREE TRADE AGREEMENTS → TPP, TPP11, TATIP, IPEF, RCEP
33.8.1 🛒🛒⛷📝📝 Trans Pacific Partnership (TPP: ट�ांस पै�स�फक साझेदारी) #FAIL
USA proposed free trade agreement among 12 countries: US, Japan, Malaysia, Vietnam, Singapore,
Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru.
– Aimed to have lower tariffs for participant countries, easier norms for labour, environment and
investment. भागीदार देशों के �लए टे�/करो म� कमी, श्रम, पयार्वरण और �नवेश के �लए आसान मानदंड।
– 2016: President Trump withdrew from the negotiation claiming, “TPP will take away jobs from
USA because companies will setup factories in Mexico where labour is cheaper, and then such
cheap products will be dumped in USA, yet we’ll not be able to impose heavy taxes on them.” So
TPP has become defunct.
33.8.2 🛒🛒⛷📝📝 TPP-11 or CPTPP

⇒ While USA-led TPP could not materialize, but some of the nations in Pacific region separately
worked out a ‘Comprehensive and Progressive Agreement for Trans-Pacific Partnership’
(CPTPP or commonly called TPP-11) in 2018-Dec.
⇒ Presently, it has 11 signatories: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New
Zealand, Peru, Singapore, and Vietnam.
33.8.3 🛒🛒⛷📝📝 Transatlantic Trade and Investment Pact (TTIP)

अंतर-एटलांिटक �ापार एवं �नवेश समझौता: Proposed free trade agreement between USA & EU with objectives
similar to TPP- reduce tariff, easier entry of foreign investment etc. Negotiations are ongoing but it is
not yet signed mainly due to opposition from the European Union side. E.g.
1. In USA’s Farm, Dairy and Meat industry the standards related to pesticide residue, pathogens,
antibiotics, growth hormones, genetically modified (GM) crops etc. are slightly lower than EU.
So, EU’s animal rights & environmental groups worried it will lead to unrestricted flow of those
“harmful” products from USA to Europe. क�टनाशक अवशेष
2. EU has strict norms on private companies to cut their emissions and compulsorily invest in
renewable energy. In USA such norms are relaxed. EU’s environmental groups don’t want such
‘polluting US companies’ to profit via exporting to EU. उ�जर्न, अ�य ऊजार्
3. USA wants EU nations to cut down the subsidies & preferences given to EU’s state owned
enterprises (SOE) / PSUs. EU civil rights / labour rights group fear it will lead to privatization of
Health, Education, Insurance cos which will cause unemployment of PSU-workers, and when
pvt.MNCs are providing such essential services it’ll become unaffordable for many poor citizens.
सावर्ज�नक �ेत्र के उपक्रमों का �नजीकरण → बेरोजगारी
USA had been lobbying for TPP and TTIP because USA is disillusioned (मोहभं ग) with the WTO-
wherein India, China and other emerging economies have equal voting rights and have become more
assertive, so USA and its MNCs are not gaining much benefit out of WTO led agreements.
But, If TPP/TTIP materialized, it’d harm Asian economies exports towards US/EU so to compensate
that loss, Asian economies came up with their own idea RCEP….
33.9 🌐🌐🌐🌐🌐🌐INDO-PACIFIC ECONOMIC FRAMEWORK (IPEF)

⇒ Intro-Origin: 2022- USA launched it on the sidelines of QUAD Summit in Tokyo, Japan.
⇒ President Biden launched IPEF bcoz 1) Trump pulled out of TPP11. Now President Biden need
to make friends again in Pacific 2) To counter RCEP, China’s Belt-Road-Initiative. (3)
⏫influence over Asia. (ए�शया पै�सिफक म� अपना प्रभु� वापस पुनः �ा�पत करने के �लए अमे�रका क� मुिहम है ये)
⇒ IPEF is not a traditional trade agreement. Has four pillars: (पर�रागत �ापार समझौता नहीं।)
⇒ �1) supply-chain resilience. (पहला �� है आपूितर् श्रृंखला को लचीला/ सु�ढ़ बनाना)

⇒ �2) clean energy, decarbonisation, and infrastructure. (स्वच्छ ऊजार्, डीकाब�नाइजेशन और बिु नयादी)
⇒ �3) taxation and anti-corruption. (कराधान और भ्र�ाचार)
⇒ �4) fair and resilient trade. India has not joined this pillar. (�न�� और लचीला/ सु�ढ़ �ापार, हालाँिक
भारत ने इस �� पे ह�ा�र निह िकए)
India signed IPEF (Except Trade pillar), but problems: (भारत को ही चुनौती आ सकती है)
⇒ 😥😥1) Child Labour, environment standards, India’s hesitancy over Genetically Modified
crops. (बाल मज़दू री, पयार्वरण सुर�ा, GM-फ़सलो म� अमरीका अपनी सोच भारत पर थोप सकता है)
⇒ 😥😥2) Myanmar not allowed to join due to its military regime. Later on USA could make some
rules imposing their vision of democracy / Myanmar-relationship on the member
countries. (�ांमार जैसे तानाशाह देशों के साथ भारत के �र�ों पर अमरीका अपनी सोच थोप सकता है)
⇒ 😥😥3) Anti-corruption / transparency / religious freedoms : USA government reports tend to
project India in a poor light. (अमरीक� सरकारी �रपोटर् म� भ्र�ाचार, धा�मक �तं त्रता के बारे म� भारत को नकारा�क �प से
तोला जाता है। तो अब इस नए ढांचे के नाम पर अमरीका हमको और खरी खोटी सुना सकता है।)
⇒ 😥😥4) India has not joined the trade pillar. (Perhaps fearing that American solar panel, poultry
etc industry may harm local Indian industry. REF: WTO Disputes)
Conclusion: IPEF can prove to be a catalyst for furthering India's economic interests in the Indo
Pacific region. provided that aforementioned challenges are nipped in the bud. (हाँ िह�-प्रशांत �व�ार म�
भारत के आ�थक िहतों को बढ़ाने म� मदद तो कर सकता है, िक�ु उ� चुनौ�तयों को ज� के समय ही दबा देना ज़�री।)
33.10 🛒🛒⛷📝📝 REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP (RCEP)
33.10.1 � Introduction to RCEP

⇒ RCEP (�ापक आ�थक भागीदारी का �ेत्रीय समझौता) is a proposed free-trade agreement (मु� �ापार समझौता)
between the 10 ASEAN countries and their six Free-Trade Agreements partners viz. Australia,
China, India, Japan, New Zealand and S. Korea. (मु� �ापार समझौता)
⇒ Collectively, these countries command 25% of global GDP, 30% of global trade.
⇒ RCEP requires them to � tariff & non-tariff barriers against each other, � investments,
economic & technical cooperation, protect Intellectual Property Rights (IPR: बौ�द्धक सं पदा अ�धकार)
etc. This will � trade, economic growth, employment in each of these countries
33.10.2 🧔🧔🧔🧔✍ RCEP: Why didn't India join in 2019-Nov? (भारत म� �ों ह�ा�र/द�ख़त नहीं िकए)
India has >$100 billion trade deficit (�ापार घाटा) with RCEP countries. Out of this, China alone
accounts for $54 billion trade deficit. So India had following apprehensions about this agreement.
1) � � China: RCEP will result in increased flow of (Cheap) Chinese manufactured & electronic
goods → Indian MSME, automobile, steel industries harmed → So, India wanted separate levels
of customs duty against Chinese imports. चीनी सामान से भारत के उद्योग न� हो जाएं गे.
2) � � Dairy: India is among largest producers of milk but our specialty is mostly in the liquid
products whereas New Zealand is renowned for its solid products (milk powder, butter, cheese
etc.) These solid dairy products have a longer shelf-life & easier to transport over long-distance.
So if trade-barriers removed, India will be flooded with cheap dairy products → Indian farmers
& dairy entrepreneurs will suffer. भारतीय िकसान, डेरी उद्योग को �वदेशी आयत से खतरा.
3) � �Agriculture: Southern India’s plantation farmers afraid of cheaper Tea, Coffee, Rubber,
Cardamom and pepper from Malaysia, Indonesia & other RCEP nations.
4) � � So, India wanted an Automatic Trigger Safeguard Mechanism (ATSM: �चा�लत �ट�गर का सुर�ा
तं त्र) to protect itself from surge in imports. (e.g. � customs duty by “X%” on imported products
from “y” country if “z” situation occurs).
5) � � Ratchet Obligation (रैचेट दा�य�): It means a nation can not go back/undo its
commitments under the RCEP agreement. India wants certain exemptions here.
6) � Data localisation (डेटा �ानीयकरण): India wants all RCEP countries to have the rights to protect
data & prohibit cross-border data flow (सीमापार डेटा प्रवाह पर रोक) in the national interest. For this
reason, India even refused to sign G20 Osaka declaration on cross-border data flow.
2019-Nov: RCEP summit at Bangkok, Thailand. Here, Indian demands were not agreeable to the
majority of other members. So, India announced not to join the RCEP Agreement.
2020-Nov: 15 members signed it. India not yet signed. 2021: Singapore becomes 1st to sign.
India also had 500 जात के other objections but the maximum utility of RCEP topic is 250 words in the mains exam. For
that, we have gathered sufficient points. Further PHD useless.
33.10.3 � RCEP: Counterview: India made a mistake by not joining (भारत से गलती �ई है)
1) Competition brings excellence. Unless the Indian industrialists are subjected to the competition
from Asian giants, they will not invest further in the R&D, product upgradation, customer
service & customer satisfaction. ( श्रे�ता के �लए �धार् ज�री, हम� द�ख़त कर लेने चािहए थे)
2) If India doesn’t join RCEP, our products will not be able to compete in those nations because of
the higher taxes on Indian exports viz a viz other RCEP exports. (हम शा�मल नहीं होंगे तो बाक़� देश तो
शा�मल हो रहे ह�, तो उनका फ़ायदा हो जाएगा और हम रह जाएं गे।)
3) Indian manufacturers could import intermediate goods from RCEP countries at cheaper price
→ process them further → re-export towards Middle East, Africa and European. Thus, RCEP
could have provided the perfect opportunity for India to become integrated with the global value
chain (वै��क मू�वधर्न श्रृंखला म� िह�ा बन सकता है).
4) World Bank’s “A Glass Half Full: The Promise of Regional Trade in South Asia” report (2019)
estimates India’s potential trade in goods with South Asia at more than 60 billion, but at present
the actual trade is less than $20 billion- due to tariff barriers and connectivity issues. Hence,
RCEP is necessary for boosting India’s exports. (�नयार्त म� बढ़ोतरी म� मदद �मलेगी)
5) RCEP was still ‘less strict’ in comparison of India’s ongoing FTA negotiations with the USA or
EU. It was a low-hanging fruit, we should have signed it. (अमे�रका यूरोप के साथ प्र�ा�वत �ापार समझौते तो
इससे भी �ादा स� है, उनके मुक़ाबले आरसीईपी तो इतना ख़राब नहीं था। भारत ने द�ख़त/ह�ा�र करने चािहए थे।)
6) Economic Survey observed- India will have to eventually shed-off its ‘big but poor’ mentality.
International agreements always require some sort of bargaining / give and take. ('बड़े लेिकन गरीब'
मान�सकता से �नकलना होगा। अंतररा�ी� य समज़ौतो म� ताली दो हाथ से बजती है।)
7) 2022: Commerce Minister Piyush Goyal has chastised Indian industries: 1) FTAs are two-way
traffic. It cannot be one-sided access for Indian goods and services alone. Otherwise other
nations will not sign it, if we don’t allow their products in India. 2) Local Indian industry needs
to get more innovative and competitive. 3) Indian consumers should not be forced to buy
expensive / poor quality domestic products in areas where other countries’ are offering better
cheaper products. (वा�ण� मं त्री पीयूष गोयल ने भारतीय उधोयपतीयो को फटकार लगायी है िक अगर भारत सरकार �वदेशी
सामान पर टै� कम नहीं करेगी, तो �वदेश क� सरकार भारतीय सामान पर टै� कम नहीं कर�गी। इस�लए भारतीय कं पनीयो ने
�वदेशीयो से प्र�त�धार् के �लए तैयार रहेना होगा। भारत के ग्राहकों �ों भारतीय क�नी का महँ गा और घिटया �ा�लटी का सामान
ख़रीदेगे यिद उ�� वदेशी माल िकफ़ायती दाम और अ�� ा�लटी का �मल रहा हो।?)
33.10.4 � RCEP: Conclusion? (�न�षर्)
⇒ While it is true that India could have gained in certain export-sectors by signing RCEP
Agreement, but its present format did not fully address India's issues and concerns regarding the
protection of the domestic industry. हालांिक भारत को कु छ �नयार्त �ेत्रों म� फायदा हो सकता था, लेिकन वतर्मान प्रा�प
ने घरेलू उद्योग क� सुर�ा के सं बंध म� भारत के मुद्दों और �चंताओं को पूरी तरह से सं बो�धत नहीं िकया
⇒ So we’ve opted not to sign it. The remaining member-nations have planned to sign the RCEP
agreement in 2020 and they are trying to convince India to get onboard.
⇒ India has not permanently shut the doors for negotiation. In future we may sign it, if our
concerns are addressed. �ायी �प से दरवाजे बं द नहीं िकए ह�। यिद हमारी �चतं ाओं पर �ान िदया जाए तो भ�व� म� हम इस
पर ह�ा�र कर सकते ह�।
⇒ Meanwhile, 2022: ASEAN-India Trade in Goods Agreement (AITIGA) negotiations going on.
🔠🔠❓MCQ. Consider the following countries:(Asked in UPSC-Pre-2018)

1.Australia 2.Canada 3.China 4.India 5.Japan 6.USA
Which of the above are among the 'free-trade partners' of ASEAN?
(a) 1, 2, 4 and 5 (b) 3, 4, 5 and 6 (c) 1, 3, 4 and 5 (d) 2, 3, 4 and 6
33.10.5 📘📘 📘📘 Economic survey 2015-16: Observations abt India’s Trade Agreements

- India has signed 40+ trade agreements with various countries, our global trade has improved but
more on import side than export side. �नयार्त क� तुलना म� आयात �ादा बढ़ी।
- RCEP, TTIP, TPP are mega regional agreements that will undermine the WTO processes. ब�
�ेत्रीय समझौते, डब�ूटीओ को कमजोर कर रहे है।
- India must prepare for this changing world. India should shed its “big but poor”
dilemma/mentality ("बड़ा लेिकन गरीब" दु�वधा/मान�सकता) i.e.
- “Our India is poor nation we must protect farmers & MSME so we have moral right to
impose tariff and non-tariff barriers on US/EU goods/services &
- yet US/EU must allow our goods/services into their countries without any barriers!”
- That’s why India-European Broad-Based Trade & Investment Agreement (BTIA) is not reaching
conclusion. International trade is a give-and-take relationship we’ve to ⏬our trade barriers
only then we can expect them to reduce their trade barriers. (पार��रकता, एक हाथ दो-दू सरे हाथ लो)
33.10.6 📔📔📔📔ES20: Observations abt India’s Trade Agreements (आ�थक सव��ण)

⇒ Critiques allege that most of India’s FTAs have not worked in “India’s favour.” e.g. India’s FTA
with S.Korea, Japan and Sri Lanka= %⬆in imports >> are higher than %⬆ of exports.
REASONS?
- � lack of skilled manpower & innovation in India. (कौशल यु� मानवबल तथा नवाचार क� कमी)
- � Electricity, transport, infrastructure problems (�बजली प�रवहन बु�नयादी सु�वधाओं क� कमी)
- � loan interest rate high for small businessmen (छोटे उद्योगप�तयों के �लए कज़र् लेना महँ गा)
⇒ However, the ES20 concluded overall India benefitted by signing FTAs.
(जापान, को�रया, श्रीलं का के साथ मु� �ापार समझौतों के बाद भारत के आयात क� प्र�तशत-वृ�द्ध, उसक� �नयार्त क� प्र�तशत-वृ�द्ध से
अ�धक है. इस�लए ये समझौते भारत के �लए लाभकारी नहीं है, ऐसा आलोचकों का मं त�. हालाँिक आ�थक सव��ण का मानना है क� कु ल
�मलाकर ऐसे सभी समज़ौतो से भारत को फ़ायदा �आ है।)
33.10.7 💼💼Budget-2020: FTA ‘rules of origin’ (उ�� के �नयम)

- 1998: India - Sri Lanka FTA. So ink manufactured in SriLanka = 0% Indian customs duty when
imported in India.
- But sometimes Chinese company manufacture ink bottles in China, transports to its Sri Lankan
company → Sri Lanka’s (phoney/namesake) company pastes a label “this bottle manufactured
in Sri-Lanka” → sell them in India @0% customs duty?
- So, FTA agreements contain 'rules of origin'. Which requires that minimum x%
manufacturing/processing/value addition must be done in originating country (SriLanka in our
example) before it’s eligible for 0% customs duty.
- Originating country (Srilanka) cannot dump goods from some third country (China) in the
Indian market by just putting a label on it. (तािक, उदगम/ �नयार्त करता देश िकसी तीसरे देश क� व�ुओ पर अपना
लेबल �चपका के भारत म� कर-मु�� के साथ न बेच सके .)
33.10.8 📝📝 Commerce Ministry: Certificate of Origin (उदगम प्रमाण पत्र)

⇒ India has signed a free trade agreement with many countries. Such agreements provide that
foreign partner nations will levy 0% or reduced taxes on the imported items of India.
⇒ But for this, Indian exporters need to submit a document to the Foreign partner country' landing
port that "indeed the item was manufactured and sent from India."
⇒ Such Certificate of Origin (CoO) is issued by the Director general of foreign trade under the
commerce ministry. भारत से �नयार्त िकया गया सामान भारत द्वारा ही बनाया गया है ऐसा प्रमाण पत्र तािक �मत्र रा�� उस पर
मु� �ापार समझौते के अंतगर्त टै� म� �रयायत दे
⇒ 2020 -Online portal was created to facilitate this project. But, it does not have any MCQ worthy-
fancy name, so we need not remember its name.
33.10.9 🛒🛒⛷📝📝 Trade agreements losing shine → NAFTA & SAFTA

NAFTA ⇒ North American Free Trade Agreement; उ�री अमे�रका �नशु� �ापार समझौता (1994)
involves Canada, USA and Mexico.
1994
⇒ However, Trump felt NAFTA harms the American interests → 2018: He made a deal
with Mexico and Canada to replace NAFTA with a new agreement called United
States-Mexico-Canada-Agreement (USMCA).
SAFTA ⇒ South Asian Free Trade Area (द��ण ए�शयाई मु� �ापार �ेत्र) is a trade agreement of
SAARC nations- Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan
2004
and Sri Lanka.
⇒ 2016: India refused to attend SAARC Annual summit @Pakistan, after Uri-Attack. In
2019 India raised duties on Pakistani goods so SAFTA’s is losing its shine.
AFCFTA ⇒ African Union (AU) members have signed the African Continental Free Trade
2019 Agreement (AfCFTA) covering 54 nations.
33.11🛒🛒⛷📝📝INDIA’S TRADE AGREEMENTS
Homework: Refer Economic Survey 2019-20 Vol2 ch.3: Annexure-II= table is given, focus on
participants, & whether trade agreement ‘concluded’ or at ‘negotiation stage’.
33.12🌐🌐🌐🌐🌐 BURNING ISSUES IN INTERNATIONAL TRADE
33.12.1 🌐🌐🌐🌐🌐Protectionism, Trade war: सं र�णवाद, �ापार युद्ध

⇒ Protectionism means use of tariff and non tariff barriers to protect the local industry against
foreign competition. (शु� व् गैर शु� बाधाओं द्वारा �ा�नक उद्योगों को �वदेशी �धार् से बचाना)
⇒ Trade war happens when 2/more nations attack each other's exports via tariff & non-tariff
barriers.
⇒ 2017: USA had $375 billion trade deficit with China. Cheap import from China → domestic
American mfg suffer. US cos outsourcing to China → unemployment of American workers.
⇒ 2018: Trump announced 25% tariff on Imported Steel, Semiconductors, Chemicals, Plastics,
Motorbikes and Electric Scooters etc. from China.
⇒ So, China retaliated by hiking tariff on imported American soybean & other food products,
chemicals, medical equipment & vehicles. Both also filled complaints against each other at WTO.
⇒ EU also making similar protectionist moves against China and India.
33.12.2 👻👻🌐🌐🌐🌐🌐: 🔫🔫🔫🔫Protectionism → Medicine and Defence

⇒ �Hydroxychloroquine: anti-malarial drug, could be used in the COVID-19 treatment. Earlier
India had imposed a ban on its export to ensure supply for the Indian patients. But 2020-june:
India lifted the ban for 1) export earning 2) 1) soft-diplomacy: winning support of its friendly
nations. (नरम कू टनी�त)
⇒ �2020-Aug: Defense ministry has put 101 defense items in negative import list (आयात प्र�तबं ध
सूची) i.e. they will be purchased from local manufacturers. They'll not be imported e.g. Multi
barrel rocket launchers, assault rifles, radars. �
Benefit? Local industry will get contracts worth
₹4 Lcr. → Make in India, Atma-Nirbhar, ⏬CAD.
⇒ 2020: Govt banned the import of certain types of tyres and air conditioners, to promote their
domestic manufacturing in India.
33.12.3 👻👻🌐🌐🌐🌐🌐: 🛒🛒🛒🛒 Protectionism → Indian Govt procurement (सरकारी खरीद)

⇒ Atma-Nirbhar: PM asked the nation to be "local ke liye vocal" (to promote local goods) with an
aim to make India self-sufficient in every way.
⇒ So, in Government procurement tenders up to ₹200 crore. → Foreign (global) companies will
not be allowed to apply. (सरकारी खरीद के 200 करोड़ तक के ट�डर मे �वदेशी कं प�नयों को अज� डालने पर प्र�तबं ध, तािक
�ा�नक सू�, लघु और म�म उद्यम को �बक्र� का अवसर �मले)
⇒ This will help Indian Micro, Small & Medium Enterprises (MSME) and large Indian companies
to revive business through ⏫purchase from the Govt.
33.12.4 🌐🌐🌐🌐🌐🎃🎃USA’s Special 301 report
Annual report that lists the countries who are harming the Intellectual Property Rights: (IPR: बौ�द्धक
सं पदा अ�धकार)- copyrights, patents and trademarks of American companies.
- These countries are classified into categories such as “Priority Foreign Country” (Most
dangerous)> "Priority Watch List" > "Watch List" etc.
- Depending on classification, USA will complaint to WTO and / or spend money on those
countries to ⏬ piracy (e.g. training and capacity building of Russian police officers & China’s
cybercrime courts etc.).
- 2018: India, Russia, China etc. are in priority watchlist. Mainly because of their hackers, movie
piracy, counterfeit products; India because of its drug patent norms & NPPA which reduce the
profitability of US pharma companies’ patented drugs.
33.12.5 🌐🌐🌐🌐🌐🎃🎃USA’s Generalized System of Preferences (GSP) list

यूएसए क� प्राथ�मकताओं क� सामा�ीकृ त प्रणाली सू�च
If a developing country’s name is in this list, its exports will be subjected to zero/lower import duties
in USA (for selected products only). (�वकासशील देशों से अमे�रका जाने वाले कु छ व�ुओ ं पर अमे�रका, टै� कम लगाएगा)
- 2019: Trump removed India from GSP list, citing India has imposed heavy import duties on
Harley Davidson bikes and other American exports. (हालाँिक ट�� ने भारत को इस सूची से हटा िदया था)
- As such most of the Indian exported goods to USA are not in the GSP list in the first place, so
this blacklisting will not harm India much, albeit, Indian textile companies are worried that GSP-
removal will make Indian garments more expensive in USA.
33.12.6 🌐🌐🌐🌐🌐🎃🎃Global System of Trade Preferences

Deleting from handout because faded topic.
33.12.7 🧔🧔🧔🧔🎃🎃 India-USA limited trade deal (सी�मत �ापार सौदा)
⇒ 2020-Jul: India USA are negotiating for a 'limited trade deal' i.e. only for selected commodities
taxes may be ⏬. Basically, they're looking for following
⇒ India should ⏬ taxes on American farm & dairy products, pharmaceuticals, electronics etc
⇒ USA should ⏬ taxes on Indian steel & Aluminium etc, and USA should restore India's name in
the Generalized System of Preferences (GSP).
33.12.8 🌐🌐🌐🌐🌐How does US/EU/China trade war impact India?

📘📘📘📘Previous economic surveys observed:
⇒ US’s protectionism is targeted more towards Chinese goods than towards Indian services
(IT/BPO) because of their local political / vote bank perception that Chinese manufacturing
industries are more responsible for the loss of American jobs than Indian call-centres. So, India
need not worry excessively.
⇒ Besides, Chinese tariffs on USA → opportunities for India to export its soyabean, cars, medical
equipment to China. Commerce Ministry has recorded growth in over 300+ Indian exports
including vulcanized rubber, paper, copper wires, electrodes, natural honey and pipes to China.
⇒ Similarly, USA’s 25% import duty on Chinese seafood has made American consumers shift to
Indian frozen shrimps which don’t attract such large duties in USA. This has positively boosted
India’s seafood exports. (भारत के म� उद्योग को फ़ायदा)
⇒ However, with the rise of nationalistic political groups (रा��वादी प�) in the 1st world nations, India
will face following challenges →
⇒ 1st world nations’ local industrial groups keep pressuring their governments to impose more
tariffs on Indian fisheries, textile and pharma sectors.
⇒ 1st world nations tighten their visa / immigration policies = NRIs suffer. (Although positive in
the sense it’ll result into ‘brain gain’ for India, instead of ‘brain drain’- says Mukesh Ambani!)
33.12.8.1 �Protectionism / Trade War: Conclusion (�न�षर्)

⇒ Protectionism has a mixed impact on Indian economic stability because while helped boosting
Indian exports in some sectors (seafood & soybean), it has harmed the other sectors.
⇒ Protectionism will only hurt the US economy & Chinese economy in the long run.
⇒ So, after their initially machismo, both USA & China have softened their stand, and are trying to
negotiate a way out of the present conundrum.
⇒ Hopefully, it will undo negative impact on Indian economy in the upcoming months.
⇒ शु�आत म� चीन और अमे�रका ने काफ� गु�ैल �मजाज के साथ सं र�णवाद और �ापारयुद्ध िकया लेिकन अब दोनों को पार��रक
नुकसान होने के बाद, अपना �ख नरम िकया है और वह समझौता चाहते ह�
33.12.9 ��BREXIT = BRITAIN EXIT
⇒ 1993: Maastricht Treaty formed European Union, a political and economic union to allow easy
movement of goods, services, citizens among themselves.
⇒ 2002: EU introduced its common currency, Euro. Although Britain was an EU member, it
continued with its own currency ‘Pound Sterling’.
⇒ Later, Britain’s political parties campaigned that 1) migrant workers from other EU countries=
job loss for local Britishers. 2) EU framework is harming our economic and foreign diplomacy
interests. (यूरोप के प्रवासी मजदू रों के आगमन से �ब्रिटशरो क� नौकरी को खतरा, आ�थक और �वदेशी कू टनी�त)
⇒ 2016: Britain held a referendum (जनमतसं ग्रह) & asked its citizens “whether the Britain should EXIT
or remain in the European Union?” 52% voted yes, 48% voted no.
⇒ 2017: Britain invokes Article 50 of Lisbon Treaty, which gives them 2 yrs timeframe to workout a
deal for exit / divorce. e.g. What happens to UK citizens living elsewhere in the EU and EU
citizens living in the UK etc. How much money Britain must pay to EU for leaving?
⇒ 2020-Jan-31st: United Kingdom has officially left the European Union. However, in reality, till
31st Dec 2020, UK is under "Transition Period / Implementation Period (कायार्�यन अव�ध)" During
this transition time, most of the things will remain the same as before e.g. visa-travel/driving
license etc. But, gradually 'divorce' will be implemented in phasewise manner. (धीरे-धीरे
चरणबद्ध/क्र�मक �प से �र�ा ख� िकया जाएगा)
⇒ 🤧🤧🤧🤧2020-May: EU announced 750 billion euro (=826 billion$) economic stimulus package.
Basically, the EU will borrow money from the market → give it to Member states in the form of
loans and grants for reviving their economy. How?NOTIMP.
33.12.9.1 ��How does BREXIT affect India?

BREXIT creates both opportunities and challenges for India. (अवसरों और चुनौ�तयों का �नमार्ण)
We will have to rebuild / update our trade agreements with both parties separately.
⇒ With the rise of ‘nationalism’, ‘protectionism’ in Britain/EU → India’s textile, pharma,
automobile exports may get hurt. Although Britain may ease its travel & education visa norms to
attract Indian students for their college fees. (भारतीय प्रवासी और �वद्या�थयों के �लए वीज़ा के �नयम सरल)
⇒ EU planning to create a ‘Digital Single Market by 2020’ to cover digital marketing, E-commerce
and telecommunications related services. Indian IT companies can help in these services.
⇒ British goods will no longer get easy entry in EU, so they’ll try to export more towards India -
bcoz of India’s rising middle class & their purchasing power. We can demand reciprocal
treatment e.g. “we’ll cutdown tariff for your ‘x’ list of goods, if you do the same for ‘y’ list of
Indian goods.” (पार��रक �प से यिद हम आपक� चीजों पे टे� कम करे तो आप भी हमारी चीजों पे टे� कम करे.)
⇒ Britain becomes ‘free’ of EU’s foreign policies so it may come up with new initiatives for
Palestine, Middle East, Afghanistan etc. and to keep India on board, Britain may give some
concessions e.g. “Vote in favour of our “x” resolution @UNGA & we’ll cut down tariff on Indian
goods by y% & will give a cheap infra. loan @z%”. And so forth… (�ब्रटेन िफ़�ल�ीन म�पूवर् अफ़ग़ा�न�ान
पर अपनी कू टनी�त चलाएगा तो उसे भारत क� ज़�रत होगी. तब भारत अपने सहयोग के बदले �ब्रटेन से कु छ चीज़� माँग सकता है-
जैसा िक हम� स�ा लोन दे दो, हमारे माल पर टै� कम लगाओ, अ�णाचल और क�ीर के मामले पर हमारी तरफ़ बोलो इ�ािद। )
33.12.10 🌐🌐🌐🌐 India UK Roadmap 2030 (Held in 2021-May)

India UK: virtual bilateral summit between PM Narendra Modi and British PM Boris Johnson
⇒ 1) Adopted 'Roadmap 2030' to strengthen ties. (वषर् 2030 तक �र�ों को और मज़बूत िकया जाएगा)
⇒ 2) Will negotiate a comprehensive Free Trade Agreement (FTA) with an target of more than
doubling India-UK trade by 2030 (वषर् 2030 तक िद्वप�ीय �ापार को दोगुने से भी �ादा करने के �लए एक मु�
�ापार समझौते पर चचार् होगी)
⇒ 3) cooperation on Maritime Information sharing (सामुिद्रक मामलों पर जानकारी साझा क� जाएगी)
⇒ 4) UK to join Indian Navy’s Information Fusion Centre in Gurgaon
⇒ 5) UK to help development of India’s indigenous Light Combat Aircraft Mark2, joint defence
exercises (लड़ाकू �वमान �नमार्ण म� मदद, सं यु� युद्ध अ�ास)
🔠🔠❓MCQ. The term ‘Digital Single Market Strategy’ seen in the news refers to(Asked in UPSC-Pre-2017)
(a) ASEAN (b) BRICS (c) EU (d) G20
🔠🔠❓MCQ. ‘Broad-based Trade and Investment Agreement (BTIA)’ is in the context of negotiations between
India and_ _ _ _(Asked in UPSC-Pre-2017) (a) European Union (b) GCC (c) OECD (d) SCO
34 🌐🌐🌐🌐OTHER NOTABLE GROUPINGS RELATED TO ECONOMY

34.1 🌐🌐🌐🌐🌐🌐🌐🌐GROUPINGS: INDIAN SUBCONTINENT
SAARC, 1985 BIMSTEC, 1997
South Asian Association for Regional Bay of Bengal Initiative for Multi-Sectoral
Cooperation द��ण ए�शयाई �ेत्रीय सहयोग सं घ Technical and Economic Cooperation
(BIMSTEC) ब��ेत्रीय तकनीक� और आ�थक सहयोग के �लए बं गाल
क� खाड़ी पहल
HQ: Kathmandu, Nepal (1985) Dhaka, Bangladesh (1997)
8: Afghanistan, Bangladesh, Bhutan, India, 7 members: Bangladesh, India, Myanmar, Sri
Nepal, Maldives, Pak & Sri Lanka. Lanka, Thailand , Nepal and Bhutan.
- 2016: summit @Islamabad cancelled after ⇒ Summits every four years.
India and others boycotted due to Uri attack. ⇒ 2018 summit @Kathmandu, Nepal.
- Then no annual summits in 2017, 2018.
⇒ 2022: summit @Colombo, Sri Lanka (virtual
Although 2019 summit is planned
@Colombo, Sri Lanka. mode)
- �Bitter areas: Myanmar coup & Rohingya crisis
→ outflow of refugees India and Thailand.
(�ानमार शरणा�थयों क� सम�ा के चलते आपस म� थोड़ी कड़वाहट)
- SAFTA losing its shine as we learned in earlier section.
- India has setup South Asian University (SAU-2010) @ Delhi (2010) for SAARC students.
- India launched South Asia Communication Satellite (GSAT-9) in 2017 to provide tele-
medicine, tele-education, banking, television broadcasting facilities to SAARC nations.
- 🤧🤧🤧🤧 2020-March: SAARC leaders organized video conference to fight Corona.
- India proposed creation of a COVID-19 emergency (आपातकालीन �न�ध) fund & contributed
$10 million in it.
34.1.1 🌐🌐🌐🌐🌐🌐🌐🌐Mekong- Ganga Cooperation (2000)

India + five of the ASEAN countries, namely, Cambodia, Laos, Myanmar, Thailand and Vietnam. for
cooperation in tourism, culture, education, transport, communications. (पयर्टन, सं �ृ �त, �श�ा, प�रवहन,
सं चार). Mekong river starts from China → flows through Myanmar, Laos, Thailand, Vietnam,
Cambodia → drains in South China Sea.
34.2 🌐🌐🌐🌐🌐🌐 GROUPINGS: ASEAN VS SCO

ASEAN SCO
Association of Southeast Asian Nations : Shanghai Cooperation Organization :
द��ण पूवर् ए�शयाई रा�� सं घ शं घाई सहयोग सं गठन
1969 → Bangkok declaration → HQ: Jakarta, - 2001 → HQ: Beijing, China.
Indonesia - Regional Anti-Terrorist Structure (RATS)
@Tashkent, Uzbekistan
ASEAN SCO
10 Members: Brunei, Cambodia, Indonesia, Laos, - 6 founding members: Russia, China,
Malaysia, Myanmar, Philippines, Singapore, Kazakhstan, Kyrgyzstan, Tajikistan and
Thailand and Vietnam. Uzbekistan.
- +2 new members: India & Pak.
- 2018: marked the 25th Anniversary of ✓ 2017: SCO summit at Astana, Kazakhstan →
ASEAN-India Dialogue Relation, their India, Pak formally given membership.
leaders were invited to India → Delhi ✓ 2018: SCO summit at Qingdao, China
declaration with the theme “Shared Values, resulted Qingdao declaration- a 3-year plan
Common Destiny” to combat terrorism. India refused to endorse
- Their 10 leaders also graced our 26th January China’s One belt one road (OBOR) policy in
2018 Republic Day parade as chief guests.
this summit. (More in Pillar5: Transport)
- 2019: Summit at Thailand‘s capital Bangkok.
Theme: Advancing partnership for ✓ 2019-June: SCO summit at Kyrgyzstan’s
sustainability. Result? Bangkok declaration capital Bishkek. Bishkek declaration major
against Marine Debris (समुद्रम� कचरा) points: 1) condemn terrorism, 2) Settle Syrian
- 2020: Vietnam’s Hanoi. Theme: “Cohesive issue with political dialogue, 3) roadmap to
and Responsive ASEAN” peace in Afghanistan through dialogues, 4)
- 2021: Brunei’s Bandar Seri Begawan. Theme:
appreciated WTO
We Care, We Prepare, We Prosper”
- 2022: @Cambodia. ✓ 2020: Russia virtually hosted summit of
“Head of State(e.g. India’s president)”.
Separately 2020: India virtually hosted
summits of ‘Heads of Govt’ (HoG) e.g.
India’s PM). PM Modi did not attend, VP
Naidu played the host.
✓ 2021@Tajikistan,
✓ 2022: Samarkand @Uzbekistan.
34.2.1 ☪🤝🤝Afghanistan 6+2+1 group for redevelopment of Afghanistan
6: neighbouring countries: China, Iran, Pakistan, Tajikistan, Turkmenistan and Uzbekistan;
+ 2 global players the United States and Russia, and +1: Afghanistan itself.
34.3 🌐🌐🌐🌐🌐🌐 GROUPINGS: OCEAN-RIM WALLA

Indian Ocean Rim Association (IORA); Asia-Pacific Economic Cooperation (APEC)
िहंद महासागर �रम/िकनारा एसो�सएशन (IORA) ए�शया-प्रशांत आ�थक सहयोग
22 Indian Ocean rim nations. India is a member. 21 Pacific Rim ocean economies. India is not a
China-USA are dialogue partners. member, China-USA are members.
Setup in 1997, HQ: Ebene, Mauritius 1989, HQ: Singapore
- 2018 council of ministers’ meeting - 2018 summit @Port Moresby, Papua New
@S.Africa’s Durban- established Mandela Guinea. India is keen to become member but
Scholarship, added Maldives as a member but not yet added.
blocked membership of Myanmar due to - 2019 summit @Chile cancelled due to civilian
S.Africa’s opposition. unrest in the country.
2020 summit held virtually due to Corona. - 2020-Virtual summit adopted “Putrajya
Nothing much exam-worthy. Vision 2040” for economic cooperation and
development partnership.
- 2021: @Newzeland. @022@Thailand.
34.4 🌐🌐🌐🌐GROUPINGS: BRICS, OECD, OPEC, G20 & JAI

BRICS, - Brazil, Russia, India, China and South Africa. S.Africa joined later in 2011.
2009 - 2014: BRICS New Development Bank
- 2018: summit @Johannesburg, S.Africa with theme “Collaboration for Inclusive
Growth and Shared Prosperity”
- 2019-Nov: summit @Brasilia, Brazil. Theme: "BRICS: economic growth for an
innovative future".
- 2020: 12th BRICS summit @Saint Petersburg, Russia (held virtually)- theme “BRICS
Partnership for Global Stability, Shared Security and Innovative Growth”
- 2021: 13th BRICS Summit @India, BRICS Summit theme is “BRICS@15: Intra-
BRICS cooperation for continuity, consolidation and consensus'. [Separately, India
also to host BRICS Games 2021. ]
- 2022: 14th Summit @China
Role of secretariat is played by its pro tempore presidency, so accordingly, 2018:
S.Africa. 2019: Brazil. 2020: Russia, 2021: India
OPEC, - Organization of the Petroleum Exporting Countries: पेट�ो�लयम �नयार्तक देशों का सं गठन-
1961 1961 HQ@Vienna, Austria.
- a group of oil producing countries Saudi, UAE, Venezuela, Iran, Iraq etc.… total 14
members. Qatar withdrew from 1/1/19. Russia is NOT a member.
OECD, - Organisation for Economic Co-operation and Development: आ�थक सहयोग तथा �वकास
1961 सं गठन-1961 HQ@Paris, France.
- Works for International cooperation in the matters of economy and taxation.
Known for Base erosion and profit shifting (BEPS) Norms. India is not a member.
NAM - Non-Aligned Movement was founded under the leadership of Josip Broz Tito of
1961 Yugoslavia, Gamal Abdel Nasser of Egypt, Jawaharlal Nehru of India, Kwame
Nkrumah of Ghana, and Sukarno of Indonesia.
- They advocated 3rd world nations to abstain from allying with USA/USSR during
Cold war. (शीत युद्ध के दौरान असं यु� रहेने का आंदोलन)
- Member nations are in Asia, Africa, Latin America, Caribbean, and Europe.
- 2020-May: Online NAM contact group summit organized. Theme of "United
against COVID-19”. Chairman/Host: Azerbaijan.
- 2023: @Uganda.
2+2 e.g. India Japan 2+2 = meeting of foreign minister & defense minister from each side.
JAI Prime Minister Narendra Modi, US President Donald Trump and Japan Prime Minister
trilater Shinzo Abe met in a trilateral format in the sidelines of G-20 Summit in Buenos Aires,
al Argentina. It was called the first-ever ‘JAI’ meeting. Objective? Economic growth,
2018 common prosperity & harassment of UPSC aspirants.
QUAD Quadrilateral Security Dialogue is a strategic dialogue / group of political democracies,
market economies and pluralistic societies. between the United States, Japan, Australia
and India. (चतुभुर्ज सुर�ा सं वाद : रणनी�तक सं वाद, लोकतं त्र बाजार आधा�रत अथर्तंत्र और एका�धकत�वादी
समाजों का एक समूह)
AUKU 2021: This trilateral security pact between Australia, the United Kingdom. Under the
S pact, the US and the UK will help Australia to acquire nuclear-powered submarines.
France doesn’t like this, because earlier they were going to sell submarine to Australia.
Paris - Paris Club: Informal group of nations that help a debtor nation when debtor nation
Club facing loan repayment problems. Members include Australia, Canada, France,
(1956) Germany et cetera.
- India is an observer state (meaning not full member yet)
G-20, - International forum for the governments and central bank governors from 19
1999 countries and the 1 European Union namely,
- Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia,
Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey,
UK, USA, EU
- Annual summits: 2018@Buenos Aires-Argentina, 2019@Osaka-Japan, 2020-
Nov@Saudi Arabia’s Riyadh, 2021@Italy’s Rome, 2022@Indoensia, 2023@Delhi.
- G20 Common Framework: G20 + Paris Club together devised a framework to help
the low-income countries in its loan repayment problems (2020)
🔠🔠❓ BRICS Summit, 2020 will be hosted by (UPSC-CDS-i-2020)
(a) India (b) China (c) Russia (d) Brazil
🔠🔠❓ In which groups are all the four countries members of G20? (UPSC-Prelims-2020)
[a) Argentina, Mexico, South Africa and Turkey [b) Australia, Canada, Malaysia and New Zealand
[c) Brazil, Saudi Arabia and Vietnam [d) Indonesia, Japan, Singapore and South Korea
MCQ. Find correct about “G20 Common Framework” (Prelims-2022)

1. It is an initiative endorsed by the G20 together with the Paris Club.
2. It is an initiative to support Low Income Countries with unsustainable debt.
34.5 📝📝📝📝⛷ G20: OSAKA DECLARATION
2019-June: G20 summit @Osaka, Japan. Its declaration announced following points:
− Cross-border flow of data, information, ideas and knowledge generates higher productivity,
greater innovation, and improved sustainable development.
− So, we’ll encourage free flow of data to harness the opportunities of the digital economy.
− There should not be any restriction on companies from storing personal information, in foreign
servers. Japanese PM Shinzo Abe called this initiative ‘Data Free Flow with Trust’ (DFFT: �व�ास
के साथ डाटा का सीमापार मु� प्रवाह).
− ++ lot bol-bachchan service on senior citizen welfare, Corruption, Labour, Women’s
Empowerment, Tourism, Agriculture, Global Health & Environmental Issues (भ्र�ाचार, श्रम, मिहला
सश��करण, पयर्टन, कृ �ष, वै��क �ा� और पयार्वरण इ�ािद के मुद्दे)
34.5.1 📝📝📝📝⛷🚫🚫🚫🚫Osaka declaration: why India refused to sign

India, South Africa and Indonesia remained absent when G20 members formally signed Osaka
declaration BECAUSE: (भारत समेत कु छ देशों ने डेटा समझौते पर ह�ा�र से मना कर िदया �ोंिक)
1. India believes that all of the countries must individually manage data. Otherwise MNCs will use
data for their commercial benefits, harming privacy of citizens and sovereign interests of the
States. (e.g. Huawei mobiles’ send their data to China, they may be hacked by Government-
sponsored hackers to spy on India.) �ापा�रक फायदे के �लए जनता के डाटा क� चोरी, धांधली, �नजता का हनन होगा.
2. Such free flow of data may be misused for influencing public opinion through targeted
advertisements and articles on social media. (e.g. The alleged Russian hand in Trump's election.)
(चुनाव मतदान / जनमत को प्रभा�वत करने नाग�रको के �नजी डाटा का दु�पयोग)
3. Data is a new form of wealth. So, this entire matter should be discussed within WTO and not
outside of it. (�व� �ापार सं गठन के मं च पर इसक� चचार् करो)
34.5.2 ✍Conclusion (�न�षर्)
⇒ While India understands & appreciates the role of ICT in economic development & good
governance. (सूचना प्रौद्यो�गक� का आ�थक �वकास और सुशासन म� मह� भारत समझता है)
⇒ The issue of data flow requires a wider global cooperation without undermining an individual’s
privacy or a State’s sovereign interests. (लेिकन ��गत �नजता, रा�ो� ं के सं प्रभु िहत का �ाल रखना भी ज़�री है)
⇒ Considering these facets, India has refused to sign the Osaka declaration on cross border data
flow (उ� पहलुओ ं को देखते �ए सीमापार डाटा प्रवाह सं �ध पे भारत ने द�ख़त/ ह�ा�र नहीं िकया).
34.6 🌐🌐🌐🌐🌐🌐GROUPINGS LED BY GORA (WHITES) → G7 AND D10
34.6.1 🌐🌐🌐🌐G7 - Group of Seven (1975)

⇒ seven major developed countries: Canada, France, Germany, Italy, Japan, USA, UK.
⇒ 1997: Russia was added so it became G8 but then Russia annexed Crimea region of Ukraine to
Russia was Expelled from this group so again it became G7 in 2014.
⇒ 2019: Summit @Biarritz, France. India was also invited to attend.
⇒ 2020: Summit was to be held @USA. But postponed due to Corona.
⇒ Trump proposed Australia, India, South Korea, Russia etc should also be invited at G7. Although
the UK hates the idea of inviting Russia back. But, ball-by-ball notIMP.
⇒ Newspaper Columnists had gone crazier than usual, suggesting expansion of membership to G10
/ G11 by adding above countries as new members.
⇒ 2021's Summit @Cornwall, UK. While India, South Korea and Australia are not members of G7,
but their leaders are invited to attend. PM Modi attended it Virtually. This summit’s theme,
outcome, 15% Global Minimum Tax = Ref Pillar#2B Black Money.
⇒ 2022: Summit@Germany.
34.6.2 🌐🌐🌐🌐🌐🌐 D10: 5G club proposed by UK (2020)

⇒ UK proposed “D10” club of democratic partners including
o G7 countries — UK, US, Italy, Germany, France, Japan and Canada
o + 3 more plus Australia, South Korea and India
⇒ Objective: create supply chain for 5G equipment and technologies. To avoid relying on China/
Huawei- for data security and data privacy. (5G उपकरण और प्रौद्यो�गिकयों के �लए आपू�त श्रृंखला= चीनी
कं प�नयों द्वारा डाटा चोरी का खतरा कम हो)
34.6.3 🌐🌐🌐🌐🌐🌐Minerals Security Partnership (MSP: अ�त मह�पूणर् ख�नजों के �लए भागीदारी/सहयोग)
⇒ US-led partnership to secure critical minerals and reducing dependency on China.
⇒ �MSP includes Australia, Canada, Finland, France, Germany, Japan, the Republic of Korea,
Sweden, United Kingdom, and the European Commission.
⇒ � Cobalt, Nickel, Lithium etc. Required for batteries used in electric vehicles, semiconductors
and high-end electronics manufacturing.
⇒ � Rare Earth Minerals available in India — such as lanthanum, cerium, neodymium,
praseodymium, samarium, etc.
⇒ �
Rare Earth Minerals NOT available in India- dysprosium, terbium, and europium. Hence,
there is a dependence on countries such as China.
⇒ � India not invited to MSP grouping yet. (हालाँिक भारत को सद� बनने का �ोता अभी तक नहीं �मला)
�Conclusion: both for improving usage of clean energy and for decreasing current account deficit
we need to be part of some arrangement for rare earth minerals. MSP membership could greatly help
in this regard. (�� ऊजार् तथा चालू खाता घाटे के सं दभर् म� हम� अ�त मह�पूणर् ख�नजो के �लए भागीदारी/सहयोग करनी होगी.)
34.7 🌐🌐🌐🌐☪GROUPINGS: MIDDLE EAST: GCC VS OIC

Gulf Cooperation Council (GCC); Organisation of Islamic Cooperation (OIC)
खाड़ी सहयोग प�रषद (GCC) इ�ा�मक सहयोग सं गठन (OIC)
1981: HQ-Riyadh, Saudi Arabia 1969: HQ-Jeddah, Saudi Arabia
6 members: Bahrain, Kuwait, Oman, Qatar, ~50 Islamic countries from across of the world.
Saudi Arabia, and the UAE
2017: some of these members have cut off 2019-March: While India is not a member, but
diplomatic and business ties with Qatar. first time invited in OIC meeting as guest of
2021: Extraordinary summit @Pakistan. honour. Sushma Swaraj attended @Abu
Dhabi,UAE while Pakistan (OIC member)
skipped the event in protest.
34.7.1 ☪🤝🤝🤝🤝Abraham Accords (2020-Sept)
⇒ UAE, Bahrain and Israel’s Peace agreement for normalization of relations. (�र�ों को सामा� करने के
�लए शां�त समजोता) U.S. President Trump acted as mediator (म�� क� भू�मका)
⇒ Abraham = regarded as a prophet by both the Jewish and Islam.
34.7.2 🌐🌐🌐🌐🌐🌐I2U2: Middle Eastern / West Asian QUAD (2021-22)

⇒ Indo-Pacific Quad = India, USA, Japan and Australia
⇒ Middle Eastern Quad / / West Asian QUAD = India Israel, UAE, and USA
⇒ six areas for joint action: water, energy, transport, space, health, and food security.
⇒ countering the influence of Chinese belt and Road initiative in Middle East.
⇒ $2 billion to develop a series of integrated food parks across India → 2x farmers’ income.
⇒ 300-megawatt hybrid (Solar+Wind) renewable energy project in Gujarat → help to India’s goal
of 500 GW of renewable energy by 2030.
⇒ Better implementation of the Abraham accords and other peace initiatives in Middle East.
Peaceful and prosperous Middle East = market for Indian Exports.
34.8 🌐🌐🌐🌐 MISC GROUPINGS / ORG → WORLD ECONOMIC FORUM (1971)

⇒ Not-for-profit think-tank in Cologny (a municipal area in Geneva), Switzerland. �व� आ�थक मं च-
मुनाफा-रिहत �वशेष� समूह
⇒ Known for its annual summit at Davos resort in Switzerland where they invite selected world
leaders, thinkers, NGOs and industrialists.
⇒ 2021: Davos Summit 2021- cancelled by Corona’s Omicron variant.
⇒ 2022:Online Davos Agenda 2022 summit, held in virtual mode.
�Annual reports: Global Competitiveness Report, Global Information Technology Report, Global
Gender Gap Report, Global Risks Report, Global Travel and Tourism Report, Financial Development
Report, Global Enabling Trade Report.etc.
🔠🔠❓MCQ. Global Competitiveness Report is published by the _ _ _ (UPSC Prelims-2020)

Codes: A) IMF B) UNCTAD C) World Economic Forum D) World Bank
34.9 🌐🌐🌐🌐 MISC GROUPINGS / ORGANIZATIONS OTHERS

UN, NATO self study from IR-Diplomacy course/books/PDFs
List not exhaustive:
- UNCTAD: United Nations Conference on Trade and Development → famous
for its World Investment Report. 2021’s report says that India is the fifth
UN specialized
largest recipient of Foreign Direct Investment (FDI) in the world.
agencies related
- UNDP: United Nations Development Programme known for its Human
to Economy
development report (more in pillar#6)
- UNIDO: UN Industrial Development Organization
सं यु� रा�� क�
- World Intellectual Property Organization (WIPO: More in 📑📑Pillar#4B-IPR)
�व�श� सं �ाएं
- International Labour Organization (ILO: More in
📑📑Pillar#4C:unemployment)
Their establishment years, HQ, reports etc. = KBC GK poor cost:benefit
Andean Free trade area of South American countries of Bolivia, Colombia, Ecuador, Peru.
Community
Southern Common Market of Argentina, Brazil, Paraguay, Uruguay + ANDEAN +
Mercosur
other countries. However Venezuela was suspended in 2016.
Visegrád Group 4 Central European countries: the Czech Republic, Hungary, Poland, and Slovakia.
(also known as V4 European Quartet)
Organization of cooperation among Azerbaijan, Kazakhstan, Kyrgyzstan, Turkey and Uzbekistan.
Turkic States
MCQ. Who are members of the Organization of Turkic States (Asked in Prelims-2022)
1.Armenia 2. Azerbaijan 3. Croatia 4. Romania 5. Uzbekistan
Codes: (a) 1, 2 and 4 (b) 1 and 3 (c) 2 and 5 (d) 3, 4 and 5
34.10🌐🌐🌐🌐🌐🌐 EXPORT CONTROL / NON-PROLIFERATION REGIMES

ब�प�ीय �नयार्त �नयं त्रण / अप्रसार �व�ा:
- Nuclear Suppliers Group (NSG: परमाणु आपू�तकतार् समूह) is a group of countries that
NSG control the export of nuke materials, equipment and technology & aim to prevent
1974 its use in making nuclear bombs.
- China is a member, India not a member yet due to China’s objection.
Australia - Informal group that encourages members not to export chemical or biological
Group weapons or technology.
1984 - China not a member, India became member (2018).
- Missile Technology Control Regime (�मसाइल प्रौद्यो�गक� �नयं त्रण �व�ा) is an informal
MTCR group that encourages members not to export missiles equipment, software,
1987 technology.
- China not a member, India became member (2016)
- Wassenaar is an area in Netherland. This arrangement (1996) requires members to
Wassenaar
be strict and transparent in the export of conventional arms and dual-use goods
Arrangeme
and technologies (e.g. Night Vision Googles). So they don’t fall in the hands of
nt
terrorists and rogue states like N.Korea.
1996
- China not a member, India became member (2017)
MCQ. India is member of _ _ _ (Prelims-2022)
1. Asian Infrastructure Investment Bank 2. Missile Technology Control Regime
3. Shanghai Cooperation Organisation.
Codes: (a) 1 and 2 only (b) 3 only (c) 2 and 3 only (d) 1, 2 and 3
34.10.1 🔫🔫🔫🔫🔫🔫USA Exit from Arms Treaties

1. 1987:Intermediate-Range Nuclear Forces (INF) treaty between USA-Russia during to prohibit
development of missiles with ranges between 500 and 5,500 km. 2019: USA withdraws from it.
2. 1991: New Strategic Arms Reduction Treaty (New START) treaty between U.S. and Russia for
reducing nuclear weapons. 2021: Treaty will expire.
3. 1992: Open Skies Treaty (OST) signed between NATO and Warsaw Pact countries to
monitor/spy each other's territory through unarmed aeroplanes. 2020-May: USA wants to
withdraw from it.
4. Self-study: CTBT, NPT: NCERT Class12 Political Science ch4: India's external relations
✋for more on IR annual summits, treaties, etc. for prelims study from PDF/Mags/Courses
34.10.2 🎺🎺✍ Mock Questions for Mains GSM2 (Intl. Org Related to Economy)
Syllabus Topic: Important International institutions, agencies, for a (structure, mandate); Bilateral,
Regional, Global groupings & Agreements (involving and/or affecting India)
1) “WTO’s Geneva Conference 2022 has focused not only on global trade but also on global
cooperation for healthcare and environmental sustainability.” Comment. (�व� �ापार सं गठन के �जनेवा
�शखर प�रषद 2022 म� न के वल वै��क �ापार पर ब�� ा� देखभाल और पयार्वरणीय ��रता के �लए वै��क सहयोग पर भी
�ान क� िद्रत िकया गया है)
2) Discuss the significance of IPEF and Minerals Security Partnership groupings for Indian
economy. (भारतीय अथर्�व�ा के �लए आईपीईएफ और ख�नज सुर�ा भागीदारी समूहों के मह� पर चचार् कर�)
3) Discuss the importance of membership to Shanghai Cooperation Organisation (शं घाई सहयोग सं गठन)
in furthering India's interests in the Central Asian region.
4) Why has India refused to sign the Osaka declaration-2019 on cross-border data flow? (भारत ने
सीमा पार डेटा प्रवाह पर ओसाका घोषणा-2019 पर ह�ा�र करने से इनकार �ों कर िदया है?)
5) “Concerns for the domestic industry has prevented India from joining RCEP agreement.”
Comment. "घरेलू उद्योगो क� �चतं ा ने भारत को आरसीईपी समझौते म� शा�मल होने से रोक िदया है।" िट�णी करे.
6) Is India’s decision to stay out of the RCEP agreement appropriate? Examine critically. �ा
आरसीईपी समझौते से बाहर रहने का भारत का �नणर्य उ�चत है? गं भीर�प से समी�ा क��जए.
7) In 2018, the 25th Anniversary of ASEAN-India Dialogue Relations was commemorated under
the theme of "Shared Values, Common Destiny ”. In what areas do India and ASEAN nations
share common values and common destiny? साझा मू�, समान भा� िकन �ेत्रों म�?
8) "The USA-China and USA-EU trade wars present new sets of threats and opportunities for
India." Examine. �ापार युद्ध ने भारत के �लए नए खतरे और नए अवसर पैदा क�ए है
9) (GSM3-2018) How would the recent phenomenon of protectionism and currency manipulations
in world trade affect macroeconomic stability of India? �व� �ापार म� सं र�णवाद और मुद्रा जोड़तोड़ क�
हा�लया घटना भारत क� �ापक आ�थक ��रता को कै से प्रभा�वत करेगी?
10) (GSM2-2018) What are the key areas of reform if the WTO has to survive in the present context
of ‘Trade War’, especially keeping in mind the interest of India? यिद �व� �ापार सं गठन को '�ापार युद्ध' म�
बचकर रहना है तो �ा प्रमुख सुधार करने होंगे? �वशेष �प से भारत के िहत को �ान म� रखते चचार् क��जए।
11) (GSM2-2014) The aim of Information Technology Agreements (ITAs) is to lower all taxes and
tariffs on information technology products by signatories to zero. What impact should such
agreements have on India’s interests? सूचना प्रौद्यो�गक� समझौतों से भारत के िहतों पर �ा प्रभाव होना चािहए?
12) (GSM2-2014) WTO is an important international institution where decisions taken affect
countries in profound manner. What is the mandate of WTO and how binding are their
decisions? Critically analyse India’s stand on the latest round of talks on Food security. �व� �ापार
सं गठन का जनादेश �ा है और उनके फै सले िकतने बा�कारी ह�? खाद्य सुर�ा पर नवीनतम दौर क� वातार् म� भारत के �ख का गं भीर
�प से �व�ेषण कर�।
13) (GSM2-2014) India has recently signed to become founding a New Development Bank (NDB)
and also the Asian Infrastructure Investment Bank (AIIB). How will the role of the two Banks be
different? Discuss the significance of these two Banks for India. दोनों ब�कों क� भू�मका अलग कै से होगी?
भारत के �लए इन दोनों ब�कों के मह� पर चचार् कर�।
14) (GSM2-2013) The World Bank and the IMF, collectively known as the Bretton Woods
Institutions, are the two inter-governmental pillars supporting the structure of the world’s
economic and financial order. Superficially, the World Bank and the IMF exhibit many common
characteristics, yet their role, functions and mandate are distinctly different. Elucidate. सतही तौर
पर, �व� ब�क और आईएमएफ़ कई सामा� �वशेषताओं को प्रद�शत करते ह�, िफर भी उनक� भू�मका, कायर् और जनादेश अलग-
अलग ह�। �� क��जए
15) (GSM2-2020) ‘Quadrilateral Security Dialogue (Quad)’ is transforming itself into a trade bloc
from a military alliance, in present times - Discuss. ('चतुभुर्जीय सुर�ा सं वाद (�ाड)' वतर्मान समय म� �यं को
सै�नक गठबं धन से एक �ापा�रक गुट म� �पा��रत कर रहा है - �ववेचना क��जए) – Solved in free Sp. class
16) (GSM2-2021) Critically examine the aims and objectives of SCO. What importance does it hold
for India? [एस. सी. ओ. के ल�ों और उद्दे�ों का �व�ेषणा�क प�र�ण क��जए। भारत के �लए इसका �ा मह� है ?]
17) (GSM2-2021) The newly tri-nation partnership AUKUS is aimed at countering China’s
ambitions in the Indo-Pacific region. Is it going to supersede the existing partnerships in the
region? Discuss the strength and impact of AUKUS in the present scenario. [भारत-प्रशांत महासागर �ेत्र
म� चीन क� मह�ाकां�ाओं का मुकाबला करना नई �त्र-रा�� AUKUS का उद्दे� है। �ा यह इस �ेत्र म� मौजूदा साझेदारी का �ान
लेने जा रहा है ? वतर्मान प�र�� म�, AUKUS क� श�� और प्रभाव क� �ववेचना क��जए।]
NEXT Handout: Pillar4A: Sectors of Economy- Agriculture
PILLAR4A: SECTORS OF ECONOMY → AGRICULTURE
40 🌽🌽 Agriculture- Intro (कृ �ष- प�रचय) ............................................................................................................ 608

40.1.1 Agri Production Numbers/GK: India is _ _ _ . ........................................................................... 609
40.1.2 �🌽🌽 [Yearbook-Info] A Ministry of Agriculture and Farmers Welfare ......................... 609
40.1.3 �🐮🐮🐮🐮 [Yearbook] Min. for Fisheries, Animal Husbandry and Dairying .................... 610
40.2 ��Cooperative societies & New Ministry ........................................................................................... 611
40.2.1 ��Cooperative Society: Meaning ........................................................................................... 611
40.2.2 ��Cooperative Society: Features / Benefits (ल�ण / खा�सयत / फायदे) ...................................... 611
40.2.3 ��Cooperative Societies: Types of (�व�भ� प्रकार).......................................................................... 611
40.2.4 �� [Yearbook] Modi forms a new Ministry for Cooperation ............................................ 612
40.2.5 ��Benefits of setting up New Ministry .................................................................................. 612
40.2.6 ��Challenges against New Ministry (नए मं त्रालय के सामने चुनौ�तयां) ............................................ 612
40.3 🌽🌽🌽🌽Agri-Input → Land (जमीन) .................................................................................................... 613
40.3.1 🌽🌽🌽🌽Land reforms in India after independence ................................................................. 614
40.4 🌱🌱Agri-Input → Seeds: बीज ............................................................................................................. 615
40.4.1 🌱🌱🌱🌱Agri-Input → Seeds → Green Revolution: ह�रत क्रां�त................................................. 615
40.4.2 🌱🌱🌱🌱Agri-Input → Seeds → Landraces (जमीनी प्रजा�त क� फ़सले/बीज) ........................................ 616
40.4.3 🌱🌱🌱🌱Agri-Input → Seeds → 🥔🥔 Pepsi vs Potato Farmers............................................... 616
40.4.4 🌱🌱🌱🌱Agri-Input → Seeds → Genetically modified (GM) crops ...................................... 616
40.4.5 🌱🌱🌱🌱Seeds → GM crops → Challenges?............................................................................ 617
40.4.6 🌱🌱🌱🌱Seeds → GM crops → suggestions by Economic survey 2017? .............................. 617
40.4.7 ✍ 🌱🌱🌱🌱 GM-Crops: Conclusion templates? .................................................................... 618
40.5 🌧🌧☔Agri-Input → Water (Irrigation: �संचाई)................................................................................ 618
40.5.1 🕵🕵 🌧🌧☔ [Yearbook] Jal Shakti Ministry ............................................................................. 619
40.5.2 🌧🌧🌧🌧🌧🌧 Water Schemes → NRDWP (2009)..................................................................... 620
40.5.3 🌧🌧🌧🌧🌧🌧 Water Schemes → Pradhan Mantri Krishi Sinchai Yojana (2015)................... 620
40.5.4 🌧🌧🌧🌧🌧🌧 Water Schemes → Namami Gange Yojana (2015) ............................................ 621
40.5.5 🌧🌧🌧🌧🌧🌧 Water Schemes → Jal Kranti Abhiyan (2015) .................................................... 621
40.5.6 🌧🌧🌧🌧🌧🌧 Water Schemes → Jal Shakti Abhiyan (2019-July) ............................................ 621
40.5.7 🌧🌧🌧🌧🌧🌧 Water Schemes → Jal Jeevan Mission (Rural) (2019-Aug) ............................... 621
40.5.8 🌧🌧🌧🌧🌧🌧 Water Schemes → Jal Jeevan Mission (Rural) (2021-Budget) .......................... 622
40.5.9 🌧🌧🌧🌧🌧🌧 Water Schemes → ATAL Bhujal Yojana (=ATAL JAL) (2019-Dec) ............... 622
40.5.10 🌧🌧🌧🌧🌧🌧 Water Schemes → Misc. Schemes (�व�वध �छटपुट योजनाएं ) ..................................... 622
40.5.11 ☔📈📈 Agri-Input → Water → Composite Water Management Index ............................. 623
(Batch: PCB7) Mrunal’s Economy Pillar#4A: Sectors of Economy: Agro → Page 604
40.5.12 ☔Agri-Input → Water (irrigation) → suggestions by Economic Surveys ....................... 623
40.5.13 ✍ ⛈ Conclusion? (पेयजल और �सचं ाई के बारे म� �न�षर्) .............................................................. 623
40.6 🌽🌽🌽Agri-Input → Fertilizer (उवर्रक / खाद) .................................................................................... 624
40.6.1 �📯📯📯📯Prevent urea misuse→ Nutrient Based Subsidy (2010) ...................................... 624
40.6.2 �📯📯📯📯Prevent urea misuse→ Soil Health Card (2015) ................................................. 625
40.6.3 �📯📯📯📯Prevent urea misuse→ Neem Coating of Urea (2015)........................................ 625
40.6.4 �📯📯📯📯📯📯 Prevent urea misuse→ DBT of fertilizer (2018) ........................................... 626
40.6.5 � Prevent urea overuse→ Nano-Urea- suggested by📙📙📙📙ES22 ..................................... 626
40.6.6 �📯📯📯📯 Prevent fertilizer misuse→ PM-BJP/One Nation One Fertiliser........................... 626
40.6.7 �📯📯📯📯 Reduce Fertilizer use : PM PRANAM scheme ......................................................... 627
40.7 🌽🌽🌽🌽Agri-Input → Pesticides & weedicides................................................................................ 627
40.8 🌽🌽🚫🚫☣ Agri Inputs → Don’t use chemicals → PKVY (2015) ............................................... 628
40.9 🌽🌽🌽🌽☣ Agri Inputs → PKVY (2015) → (BPKP-2021)................................................................ 629
40.9.1 🚫🚫🚫🚫🚫🚫☣Zero Budget Natural Farming (ZBNF: शू� बजट प्राकृ �तक खेती) ........................ 629
40.9.2 🚫🚫☣😢😢 Organic farming & ZBNF → Limitations? (मयार्दा/चुनौ�तया) ................................ 630
40.9.3 🚫🚫☣✍ Conclusion: Organic farming / ZBNF................................................................. 630
40.10 🌽🌽🌽🌽Agri Inputs → Farm Mechanization (मशीनीकरण) ................................................................ 630
40.10.1 🌽🌽🌽🌽🌽🌽 Agri Inputs → Farm Mechanization: Challenges? ............................................ 631
40.11 🌽🌽🌽🌽🌽🌽 Agri Inputs → Finance / Credit: ऋण .............................................................................. 632
40.11.1 💰💰💰💰Agri-Finance → Negotiable Warehouse Receipts (NWR) ....................................... 632
40.11.2 🌽🌽🌽🌽🌽🌽🌽🌽Agri-Finance → Loan waivers for the farmers (िकसान को कजर्माफ�).................. 633
40.12 🌽🌽⚰ Agri-Input → Risk reduction → Insurance....................................................................... 633
40.13 🌽🌽🌽🌽 Agri-Output → don’t burn the crop residue (फ़सल-अवशेष/ पराली) ...................................... 634
40.14 🌽🌽🌽🌽Agri-Selling → APMC (कृ �षगत उ�ाद �वपणन स�म�त) ................................................................ 634
40.14.1 ⚠APMC Problems? सम�ाएं / चुनौ�तयां ..................................................................................... 635
40.14.2 🔨🔨Model APMC Act? (आदशर् कानून) ........................................................................................ 635
40.15 👻👻⚖�🛒🛒 Agro Ordinance/Act#1 → APMC Ordinance/Act 2020 ...................................... 635
40.15.1 ⚖�🛒🛒:👎👎👎👎 Criticism for Agro-Act#1: आलोचना/ �नदं ा .................................................. 637
40.15.2 ⚖�🛒🛒: Farm Laws Repealed (िकसान क़ानूनों को वापस �लया)................................................... 637
40.15.3 ⚖�🛒🛒: Farm Laws Repeal ka Criticism ........................................................................... 638
40.15.4 ⚖�🛒🛒: Conclusion : Agro-Act#1: (�न�षर्) ....................................................................... 638
40.16 👻👻⚖🥭🥭🥭🤝🤝🤝🤝🤝🤝 Agro Act#2 → Contract farming 2020 .................................................. 639
40.16.1 👻👻 ⚖🥭🥭🥭🤝🤝🤝🤝🤝🤝:Repeal, Criticism & Conclusion Act#2: ....................................... 640
40.17 🌽🌽🌽🌽🌽🌽Agri-Selling Online → e-national agriculture market (E-NAM)................................. 640
40.17.1 🌽🌽🌽🌽🌽🌽🌽🌽E-NAM: Criticism? (आलोचना) ........................................................................... 640
40.17.2 🌽🌽🌽🌽Agri-Selling → Gramin Agricultural Markets (GrAMs).......................................... 641
40.17.3 🌽🌽🌽🌽🌽🌽Agri-Selling→Outside India →Agri Export Policy, 2018 ................................. 641
40.18 🌽🌽🌽🌽🌽🌽🌽Agri-Selling → Farmer’s income: SAS Survey DATA .......................................... 642
40.19 🌽🌽🌽🌽🌽🌽🌽Agri-Selling → Income support for farmers .......................................................... 642
40.20 🌽🌽🌽🌽🌽🌽🌽 Agri-Selling → Minimum Support Prices (MSP) ................................................. 643
40.20.1 🌽🌽🌽🌽🌽🌽🌽 MSP covers which crops?............................................................................... 644
40.20.2 🌽🌽🌽🌽🌽🌽🌽 MSP computation, Swaminathan Committee?............................................ 644
40.20.3 📙📙📙📙ES22: Crop Diversification: by higher MSP (फ़सल �व�वधीकरण- उ� �ूनतम समथर्न मू� द्वारा)
645
40.20.4 Crop Diversification: CDP program (2013) ........................................................................... 645
40.20.5 🌽🌽🌽🌽🌽🌽🌽 Agri-Selling → MSP → Procurement (अ�धप्रापण / खरीद)? ............................ 646
40.20.6 🌽🌽🌽🌽🌽🌽🌽= 👌👌 MSP Benefits? ......................................................................................... 646
40.20.7 🌽🌽🌽🌽🌽🌽🌽= 👎👎 MSP Limitations? (मयार्दा)....................................................................... 647
40.21 🌽🌽🌽🌽🌽🌽🌽: 🧔🧔 Agri-Selling: PM-AASHA: fix MSP limitations............................................. 647
40.22 🌽🌽🌽📦📦📦📦📦�: FCI’s Buffer Stock Problem (बफर भं डार) ...................................................... 648
40.22.1 🌽🌽🌽📦📦📦📦📦: 😥😥 FCI → Problems (सम�ाएं )................................................................. 648
40.22.2 🌽🌽🌽📦📦📦📦📦 FCI → Solutions by ES20 ......................................................................... 649
40.23 🌽🌽🌽📦📦📦📦: 🧔🧔 Agri-Selling: Storage and Transport ............................................................... 649
40.24 💰💰💰💰💰: 🧔🧔 Agri-Selling: Direct income w/o selling → PM-KISAN@6k/pa ......................... 650
40.24.1 💰💰💰💰💰: 🧔🧔= 👎👎 PM-KISAN: Criticism / Challenges? ................................................... 651
40.24.2 � → 👴👴👴👴👴👴: 🧔🧔 Pension: PM Kisan Maan Dhan Yojana........................................... 651
40.24.3 ✍ Income Support: Conclusion template? (आमदनी म� सहयोग -�न�षर्)................................... 651
40.25 🍅🍅🍅🍅🍅🍅Agri-Selling: food inflation for consumers.................................................................... 652
40.25.1 🍅🍅🍅🍅🍅🍅Food Inflation due to shortage of Pulses supply (दालों का उ�ादन) ........................ 652
40.25.2 🍅🍅🍅🍅🍅🍅Food Inflation due to shortage of Vegetable supply............................................ 653
40.25.3 🍅🍅🍅🍅🍅🍅Seasonality in Onion-Tomatoes............................................................................ 654
40.26 🍅🍅🍅🍅🍅🍅: Food INFLATION → Onions ...................................................................................... 655
40.26.1 🍅🍅🍅🍅🍅🍅: 🧔🧔 Govt initiatives → Onion Inflation (2019-Sept to Dec) ............................ 655
40.26.2 🍅🍅🍅🍅🍅🍅: 🧔🧔: 📔📔📔📔ES21 how to control onion inflation? .............................................. 655
40.27 🍅🍅🍅🍅🍅🍅: 🧔🧔Agri-selling: Food-Inflation: Govt initiatives?...................................................... 656
40.27.1 🍅🍅🍅🍅🍅🍅: 🧔🧔 Food Inflation → Govt initiatives → MEP................................................. 656
40.27.2 🍅🍅🍅🍅🍅🍅: 🧔🧔 Food Inflation → Govt initiatives → OMSS .............................................. 656
40.27.3 🍅🍅🍅🍅🍅🍅: 🧔🧔 Govt initiatives → Price Stabilization Fund (2014) .................................. 657
40.27.4 🍅🍅🍅🍅🍅🍅: 🧔🧔 Govt initiatives → Operation Greens for T-O-P (2018) ........................... 657
40.28 🏝🏝🏝🏝🏝🏝 🤯🤯 Food Inflation → Edible Oil (खाद्य तेल) ................................................................... 657
40.28.1 🏝🏝🏝🏝🏝🏝 🤯🤯: 🧔🧔 Govt initiatives → Edible oil ki New Scheme (NMEO-OP: 2021-Aug)
658
40.29 🍅🍅🍅🍅🍅🍅: 🧔🧔 Food Inflation → Essential Commodities Act..................................................... 659
40.30 👻👻⚖🍅🍅🍅🍅🍅🍅✋Agro Ordinance#3 → ECA Ordinance/Act 2020 ....................................... 659
40.30.1 👻👻⚖🍅🍅🍅🍅🍅🍅✋ECA Amendment 2020: Economic Policy Uncertainty.................... 660
40.30.2 👻👻⚖🍅🍅🍅🍅🍅🍅✋ECA Amendment 2020: repealed in 2021-Dec .................................. 661
40.30.3 😷😷😷😷 ECA → N95 Masks and Sanitizers put under ECA ................................................. 661
40.30.4 ✍ Food Inflation: Conclusion? (खाद्य महंगाई /मुद्रा��त पर �न�षर्)............................................ 661
40.31 🍅🍅↘🤯🤯 Agro-Selling→ Deflation (2017 onwards)................................................................... 662
40.31.1 🍅🍅↘🤯🤯 Agro-Selling→ Deflation → Sugar mills’ problem ........................................... 662
40.31.2 🍅🍅↘🤯🤯 Agro-Selling→ Deflation → Sugar Subsidy & WTO order .............................. 663
40.32 �� Agriculture Production & Processing → Other Schemes ................................................. 663
40.32.1 👻👻👻👻👻👻👻👻 💸💸💸💸 Agriculture Infrastructure Fund (2020-Jul) ..................................... 663
40.32.2 �� Agro Produ. & Processing → Farmer Producer Company (FPC) .......................... 664
40.32.3 �� Agro Production & Processing → RKVY & RAFTAAR (2017).............................. 664
40.32.4 �� Agro Prod. & Processing → Green Revolution - Krishonnati Yojana ................... 665
40.32.5 �� Agro Production & Processing → PM Kisan Sampada Yojana .............................. 666
40.32.6 👻👻👻👻👻👻👻👻 Atma-Nirbhar: ”Op Green” expanded to all fruits & veggies..................... 666
40.32.7 👻👻👻👻🍭🍭🍭🍭 Atma-Nirbhar: Food Enterprises promotion (खाद्य उद्यमों को बढ़ावा)................. 667
40.33 🧃🧃Food Processing Industries for GSM3......................................................................................... 667
40.33.1 🧃🧃Food Processing: Meaning (खाद्य प्रसं �रण: अथर्/मतलब) .......................................................... 667
40.33.2 🧃🧃🧃🧃Food Processing Industry: Significance (मह�) ............................................................ 668
40.33.3 🧃🧃🧃🧃Food Processing Industry: Scope / Opportunities (अवसर) ......................................... 668
40.33.4 🧃🧃🧃🧃Food Processing Industry: Challenges → General (चुनौ�तयां) ...................................... 668
40.33.5 🧃🧃🧃🧃Supply Chain Management (SCM: आपू�त श्रृंखला प्रबं धन) ................................................. 669
40.33.6 🧃🧃🧃🧃SCM: Upstream-Downstream: Meaning ..................................................................... 669
40.33.7 🧃🧃🧃🧃🧃Food Processing: Upstream issues ......................................................................... 670
40.33.8 🧃🧃🧃🧃🧃🧃Food Processing: Downstream issues .................................................................... 670
40.33.9 🧃🧃🧃🧃🧃🧃🧃🧃Food Processing: Downstream issues → Export stage .................................. 671
40.33.10 🧃🧃✍Food Processing: Conclusion- हां इस �ेत्र पर �ान देना होगा........................................... 671
40.34 🐮🐮 Sectors → Agro Allied: → Animal husbandry (पशुपालन)......................................................... 672
40.34.1 🐮🐮🐮🐮🐮🐮 Livestock Census (पशुधन क� जनगणना) ..................................................................... 672
40.34.2 🐮🐮🐮🐮 Agro Allied: Animal husbandry → White Revolution ............................................... 673
40.34.3 🍋🍋🐮🐮Cow (welfare) Cess ....................................................................................................... 675
40.34.4 🐑🐑🐑🐑: ES2019 suggests focus on Small Ruminants ............................................................ 675
40.34.5 👻👻👻👻👻👻👻👻👻👻Atma-Nirbhar: Dairy cooperatives (दु�ालय सहकारी स�म�तयां) ......................... 675
40.34.6 🐟🐟Agro Allied: Fisheries → Blue revolution (म� → नीली क्रां�त).......................................... 675
40.34.7 👻👻👻👻👻👻👻👻Pradhan Mantri Matsya Sampada Yojana (2020)......................................... 676
40.34.8 🍤🍤🍤🍤 Shaphari certification for aquaculture exports (MPEDA, 2021) ............................ 677
40.34.9 Sweet Revolution (Honey / Beekeeping) मीठी क्रां�त, शहद, मधुम�ी पालन ................................... 677
40.34.10 🌈🌈Other revolutions:............................................................................................................... 677
40.35 🌽🌽🌽� Agriculture → Research Development & Education .................................................. 678
40.35.1 ⚠ Challenges in Agro R&D? <for Mains GSM3>............................................................... 678
40.35.2 ⚠ Challenges in Agro Education? <for Mains GSM3>...................................................... 678
40.35.3 🌽🌽🌽� Agriculture Research→ Agri- Life Science (कृ �ष जीवन �व�ान) .............................. 679
40.35.4 🌽🌽🌽� Agriculture → Extension Service (�व�ार-सेवा) <for GSM3>............................... 679
40.35.5 🌽🌽🌽� Agri-extension services → Timeline of schemes / events ................................. 680
40.35.6 🌽🌽🌽� AgriStack: integration of database for farmer welfare........................................ 681
40.35.7 � Extension Services: Conclusion template ........................................................................ 681
40.36 🤝🤝 Global Cooperation: Food and Agriculture Organisation (FAO) .......................................... 681
40.36.1 🤝🤝 Global Cooperation: International Years by United Nations (UN).............................. 681
40.36.2 🤝🤝 Global Cooperation: International Decades by UN (अंतरार्��ीय दशक) ............................... 682
40.36.3 🤝🤝 Global Cooperation: Misc. → SAARC Food Bank (2007) ............................................ 682
40.36.4 🤝🤝 Global Cooperation: Misc. → International Grains Council (London)....................... 682
40.36.5 🏆🏆 Global Awards related to Agro ......................................................................................... 682
40.36.6 ✍ Agriculture-Conclusion (�न�षर्) ....................................................................................... 682
40.37 ✍ Mains Qs from Agriculture in Previous UPSC Exams ............................................................ 683
40.37.1 ✍Mains Questions: Agro → Cropping & irrigation & Land Reforms ............................. 683
40.37.2 ✍Mains Questions: Agro →E-Tech. in aid of farmers ...................................................... 684
40.37.3 ✍Mains Questions: Agro →Food processing industry / Marketing ................................ 684
40.37.4 ✍Mains Questions: Agro → MSP ........................................................................................ 685
40 🌽🌽 AGRICULTURE- INTRO (कृ �ष- प�रचय)
(Definition) Agriculture is a primary economic activity that includes growing crops, fruits,
vegetables, flowers and rearing of livestock. कृ �ष एक प्राथ�मक आ�थक ग�त�व�ध है �जसम� बढ़ती फसल�, फल, स��यां,
फू ल और पशुधन का पालन शा�मल है
- Modi-Target: Double farmers’ income by 2022-23 compared to 2015-16. (िकसान क� आय दुगनी करो)
- UN-SDG#1: End poverty in all forms. | UN-SDG#2: Eliminate global hunger, protect indigenous
seed and crop varieties, doubling agriculture productivity and small farmer incomes by 2030.
- Sir Arthur Lewis’ Dual Economy Model (द्वैत अथर्�व�ा): Economic development results in
labourer moving away from agriculture to the more productive industrial sector, & agriculture
sector becomes less important part GDP. कृ �ष से �व�नमार्ण और सेवा म� मजदू रों का गमन
- Indians in agriculture is steadily falling down: 55% (2011) to 42% (2018) (World Bank data).
- The growth rate of agri= zig zag due to El-Nino led drought years. Manmohan target 4% annual
growth rate, Modi’s 2x income target would require 10% annual growth rate in agriculture.
Agriculture & allied sectors 2014 2015 2016 2017 2018 2019- 2020- 2021-
(livestock, forestry, fishing) -15 -16 -17 -18 -19 20 21 22
Annual Growth Rate (%) -0.2 0.6% 6.8% 6.6% 2.6% 4.3% 3.6% 3.9%
- Within Agriculture & Allied sector: Highest production (money-wise)= Crops > Livestock >
Forestry > Fishing. (कृ �ष पर सं ल� �ेत्रों म� सबसे �ादा उ�ादन कहा से होता है)
- For more on GDP&GVA calculation- REF: �Pillar#4C.
40.1.1 🏆🏆Agri Production Numbers/GK: India is _ _ _ .

 �Milk: #1 Producer (more than 1/5th of world milk supply)
 �Vegetable Oil: #1 importer India. (वन��त तेल म� दु�नया का सबसे बड़ा आयातकतार् भारत है)
 �Sugar: #2 producer. #1 consumer. (श�र म� दु�नया का दू सरा सबसे बड़ा �नमार्ता और पहेला सबसे बड़ा उपभो�ा)
 �Fisheries: #2 producer. 28 million Indians working. Exports earning ₹40,000+ cr per year
 �Eggs: #3 Producer, Meat: #8 Producer
40.1.2 �🌽🌽 [Yearbook-Info] A Ministry of Agriculture and Farmers Welfare
It is made up 2 departments and implements National Policy for Farmers (2007)
�Dept#1 Department of Agriculture, and Farmers Welfare

Agro-itself - Statutory: Coconut Development Board, National Cooperative Development
Corporation, Protection of Plant Varieties and Farmers’ Rights Authority,
- Attached Office: National Rainfed Area Authority.
- CPSE: National Seeds Corporation Ltd. (NSC)
- Autonomous / Cooperative bodies: National Agricultural Cooperative
Marketing Federation of India (NAFED), Small Farmers Agribusiness
Consortium (SFAC). Various boards / institutes for horticulture, plant health
management, Agro marketing etc.
�Dept#2: Department of Agricultural Research & Education (DARE)

Agro - Autonomous body: Indian Council of Agricultural Research (ICAR: भारतीय
Research कृ �ष अनुसंधान प�रषद)
Extension - Central Agro universities @Imphal (Manipur), Pusa (Bihar), Jhansi (UP)
* Hindi terms not given for most org. because above information is meant for MCQ only. In the mains
exam you may attribute all things to ‘कृ �ष और िकसान क�ाण मं त्रालय क� वैधा�नक / सहकारी / �ाय� सं �ा <insert
English term/abbreviation>’.
40.1.3 �🐮🐮🦈🦈 [Yearbook] Min. for Fisheries, Animal Husbandry and Dairying
This ministry was setup in 2019, with two departments
1. �Dept of Fisheries (Matsyapalan Vibhag)
2. � Dept of Animal Husbandry And Dairying (Pashupalan Aur Dairy Vibhag):
A) → Statutory: National Dairy Development Board (NDDB)
B) → Statutory: Animal Welfare Board of India under The Prevention of Cruelty to
Animals Act,1960.
Previously above subjects were under the Agri ministry.
40.2 ��COOPERATIVE SOCIETIES & NEW MINISTRY
40.2.1 ��Cooperative Society: Meaning

⇒ (Definition) The cooperative society is a voluntary association of persons who join together with
the motive of welfare of the members and/or prevent exploitation by middlemen. (सहकारी
सोसाइटी/सं गठन= लोगों का एक �ै��क समुह जो सद�ों के �वकास के �लए या दलालों के शोषण से बचने के �लए बनाया जाता है)
⇒ For example: The farmers of Kheda region (Gujarat) where exploited by the middlemen in the
milk trade. So, Sardar Vallabhbhai Patel advised them to sell their milk by forming a cooperative
society (1946) which later evolved into AMUL.
40.2.2 ��Cooperative Society: Features / Benefits (ल�ण / खा�सयत / फायदे)
- Voluntary membership: A person is free to join. can also leave anytime. (�ै��क सद�ता)
- Legal status / Stable existence: formed by minimum 10 persons and registered
o under A) State laws (if Single State Cooperative Society), or
o B) under union’s multi-state cooperative Societies Act 2002- if it is operating in more
than 1 state e.g. National Agri. Cooperative Marketing Federation Of India (NAFED).
- Cooperative Society is a separate artificial legal person. It can enter into contracts and hold
property in its name. Death, or insanity of an individual members do not affect continuity of a
cooperative society. Limited liability of members. (Explained in Pillar#1C2)
- Equal Voting: one person gets one vote irrespective of how much capital he contributed.
- Service / Welfare motive: Not driven by desire for excessive profit or excessive growth.
- Support from government: m through low taxes, subsidies, and low interest rates on loans.
40.2.3 ��Cooperative Societies: Types of (�व�भ� प्रकार)

⇒ (i) Consumer’s cooperative societies: purchases goods in bulk directly from the factory and sells
goods to the members, thereby eliminating the middlemen’s commission. (उपभो�ाओं के �लए)
⇒ (ii) Producer’s cooperative societies: small-scale producers buy raw material directly from
source/members, thereby eliminating the middlemen’s commission. e.g. AMUL =Milk
Producers’ cooperative Society → milk: butter cheese ice cream → sell. [उ�ादों के �लए]
⇒ (iii) Farmer’s cooperative societies: member-farmer cooperate for purchase and sharing of
seeds, fertilisers, machinery, land. This helps solving the problems associated with farming on
fragmented land holdings.[िकसानों के �लए]
⇒ (iv) Marketing cooperative societies: They help small producers in selling their products. e.g.
Tribal Co-operative Marketing Development Federation of India (TRIFED) under the Ministry
of tribal affairs. [�वपणन सहकार के �लए]
⇒ (v) Credit cooperative societies: To collect money from members and give loans to the members
at affordable rates. Formed by farmers, villagers, caste-based organisations etc. [पूंजी/�ण देने के �लए]
⇒ (vi) Cooperative housing societies: To help members get houses by pooling land/loans etc.
40.2.4 �� [Yearbook] Modi forms a new Ministry for Cooperation

The country has 1,94,195 cooperative dairy societies and 330 cooperative sugar mill operations.
💼💼Budget-2021: finance minister had promised a “separate administrative structure” for
cooperatives. This was finally done in 2021-July.
BEFORE 🧔🧔AFTER 2021-July Reform
Agriculture Ministry → Department of - Government announced the formation of a
Agriculture, Cooperation and Farmers Welfare separate Union Ministry of Cooperation /
= looked after administrative, legal and policy Cooperative Ministry.
framework for cooperative movement in India. - Home Minister Amit Shah was given
charge of the new Ministry
पहले सहकारी मं डली/सं �ानों क� �ज़�ेदारी कृ �ष मं त्रालय क� थी, - Will look after administrative, legal and
अब इसके �लए अलग से एक सहकार मं त्रालय क� �ापना।
policy framework for cooperative
movement in India- including cooperative
organizations in agriculture, dairies, sugar
mills, spinning mills, banking-finance etc
Statutory Body: Multi State Cooperative Shifted here (‘ब�रा� सहकारी स�म�तयों के र�ज��ार” जो
Societies ACT, 2002 → Registrar of Multi State पहले कृ �ष मं त्रालय के अंतगर्त थे, अब सहकारी मं त्रालय के
Cooperative Societies = functioned under Agri अंतगर्त)
Ministry
40.2.5 ��🤩🤩Benefits of setting up New Ministry
⇒ Cooperative Sector by and large suffers from politicisation, casteism and financial scams.
Agriculture Minitry is burdened with farmer-dairy welfare initiatives- so unable to give much
attention here. कृ �ष मं त्री का �ादातर �ान िकसानों के क�ाण के बारे म� �� रहता है इस�लए सहकारी �ेत्र म�
राजनी�तकरण, जा�तवाद, �व�ीय गबन सम�ाएं सुलझाने के �लए ज�री �ान नहीं दे पाता.
⇒ A dedicated Cooperative Ministry can help cleaning up the mess. एक अलग मं त्रालय बनाया जाए तो ये सब
कचरा साफ िकया जा सकता है.
40.2.6 ��😰😰Challenges against New Ministry (नए मं त्रालय के सामने चुनौ�तयां)

⇒ Non-BJP states fear Union will encroach upon States’ jurisdiction in control over Cooperative
organizations and APMCs. (रा�ों के सहकारी सं गठन-कृ �ष बाजार �नयं त्रण स�ा पर क� द्र का अ�तक्रमण का डर)
⇒ Opposition Parties fear the new ministry’s administrative/legal powers will be misused to harass
political leaders accused in Cooperative Scams e.g. PMC Bank Scam. (�व�वध सहकारी सं गठन कांड क� जांच
के बहाने (अ�मत शाह) द्वारा �वप�ी नेताओं को परेशान िकया जाएगा- ऐसा �वप� को डर है)
⇒ So, without ‘active cooperation’ & confidence building of (non-BJP) State Governments, this
new ministry will struggle to accomplish its goal. (अतः गैर बीजेपी रा� सरकार के �व�ास सं पादन तथा सहकार के
�बना यह मं त्रालय ठीक से काम नहीं कर पाएगा)
⇒ Amul and IFFCO are profitable due to professional CEOs and managers.
⇒ But other Govt sponsered cooperative orgs such as NAFED are manned by IAS officers who
o A) are politically-aligned to ruling party & not immune to political pressures and/or
o B) lack the specialised MBA type knowledge for branding/biz management
(भारत म� कृ �ष डेयरी चीनी मील कपड़ा ब�िकंग �वत् इ�ािद म� एक लाख से �ादा सरकारी सोसाइटी है हालाँिक इनम� �ादातर सं �ान
जा�तवाद, राजनी�तकरन और �व�ीय ग़बन से जूझ रहे ह�। सरकार द्वारा सं चा�लत इस प्रकार के सं �ानों ने आइएएस अफ़सर क� जगह
पेशेवर मैनेजरों को उ� पदों पर �नयु� िकया जाए तो बेहतर से काम हो सकता है- अमूल और इफको क� तरह)
40.3 🌽🌽🌽🌽AGRI-INPUT → LAND (जमीन)
⇒ While India accounts for >17% of world population but barely 2.5 % of land of the world. (भारत के
पास आबादी के अनुपात म� जमीन ब�त कम है)
⇒ Agriculture is a purely land based activity. Size and quality of land has direct bearing on
agriculture productivity and farmers’ income. Land ownership also serves as a social value &
security against credit. (िकसान के �लए सामा�जक प्र�त�ा और कजर् लेने के �लए जमीन क� मा�लक� मह�पूण)र्
⇒ 🥵🥵Challenges? Rising population, division of land among heirs → fragmentation of
landholdings (भू�मजोत का �वखं डन). Small sized-farms are not conducive for farm-machinery →
productivity ⏬.छोटे खेतों म� बड़ी मशीन चला नहीं सकते → उ�ादकता कम😰😰
⇒ fragmentation of land holding has ⏫. Average size of a farm reduced from 0.725 hectare
(2003) to 0.512 ht (2019) (ज़मीन का भी खं डन हो रहा है. खेत क� औसत आकार कम हो रही है.)
⇒ 86% of agri-families have farm size of 2 hectres or less.
⇒ 😍😍Solution? Small-marginal farmers should be encouraged to join mfg / service sector jobs,
selling their land to big farmers = Land Consolidation (भू�म एकत्रीकरण)’.
⇒ Land Reform (भू�म सुधार)’ is the government led division of agricultural land and its reallocation
to landless people. Whereas, Land Acquisition (भू�म अ�धग्रहण) means Govt acquiring private land
for industrial or infrastructure development.
40.3.1 🌽🌽🌽🌽Land reforms in India after independence
⇒ (1) Zamindari Abolition, Vinoba’s Bhudaan movement (2) Ceiling on Landholding i.e. fixing
maximum size of land holding that an individual can own. (3) Laws to protection of tenant
farmers (जोतदार िकसान)
⇒ (4) National Land Records Modernization Programme (NLRMP-2008: रा��ीय भू�म �रकॉडर् आधु�नक�करण
कायर्क्रम) by Department of Land Resources under Rural Development Ministry. Because digital
land records help reducing court case related to sale / inheritance & help keeping track of land
ceilings.
⇒ (5) Forest Rights Act: वन अ�धकार अ�ध�नयम 2006 which gives ‘Patta’ (farm land ownership title) to
the forest dwellers, if the given family was cultivating that forest land for the last 75 years.
⇒ Land is a state subject, so Union circulated Model Agriculture Land Leasing Act, 2016:
- 1) To protects land owner from illegal occupation by tenant farmer
- 2) To help tenant farmer get bank loans using leasing agreement as proof.
Further Self-study? (1) Land reforms is a Mains-GSM3 topic. Do selective study from
mrunal.org/tag/land-reforms (2) Soil pollution & soil erosion is Environment topic do it from your
Unacademy Notes. (3) Soil & Crop distribution: Geography topic from NCERT/ Majid/Unacademy
Booklet.
🔠🔠❓MCQ. Which of the following are responsible for the decrease of per capita holding of cultivated land in
India? (Asked in UPSC-CDS-2012-II)
1. Low per capita income. 2. Rapid rate of increase of population.
3. Practice of dividing land equally among the heirs. 4. Use of traditional techniques of ploughing.
Answer Codes: (a) 1 and 2 (b) 2 and 3 (c) 1 and 4 (d) 2,3 and 4
40.4 🌱🌱AGRI-INPUT → SEEDS: बीज
(Introduction: Origin) Since we can’t drastically increase the area under cultivation, so, agriculture
yield (amount of crop produced in a given acre of land) depends greatly on seed quality.
- For best yield, hybrid seeds must be replaced every year, and non-hybrid must be replaced every
three years. But in India, seed replacement rate is less than optimum because of (1) new seeds are
not affordable and 2) not available to all farmers. So, government has approved 100% FDI (in
automatic route) in seed development. सं कर बीजों को हर साल बदलना चािहए िकंतु गरीब िकसान के �लए मु��ल
- Seed village concept: Group of farmers in a village given training to produce seeds of various
crops so they can fulfill seed demand of their own & neighbouring villages.
- Seed bank / Seed vault is a depository that stores seeds to 1) preserve genetic diversity 2) supply
seeds during natural calamities and unforeseen conditions. Global Seed Vault is located in the
Svalbard @Norway, in Arctic.
- Agro Ministry gives funding for above two initiatives.
🔠🔠❓MCQ. Which best describes the main objective of Seed Village Concept? (UPSC-Pre-2015)
(a) Encouraging the farmers to use their own farm seeds and discouraging them to buy the seeds from
others.
(b) Involving the farmers for training in quality seed production and thereby to make available quality
seeds to others at appropriate time and affordable cost.
(c) Earmarking some villages exclusively for the production of certified seeds.
(d) Identifying the entrepreneurs in villages and providing them technology and finance to set up seed
companies.
40.4.1 🌱🌱🌱🌱Agri-Input → Seeds → Green Revolution: ह�रत क्रां�त

Green revolution refers to the large increase in food production with the help of High Yielding
Variety (HYV: उ� उपज देने वाली िक�) of hybrid seeds.
- Phase-1: mid 1960s upto mid 1970s → focus on wheat, rice and more affluent states such as
Punjab, Andhra Pradesh and Tamil Nadu. (गे�ं चावल �ादा समृद्ध रा�ों म�)
- Phase-2: mid-1970s to mid-1980s → HYV seeds were spread to a larger number of states. They
also focused on crops apart from wheat and rice. (अ� रा�ों म� भी ह�रत क्रां�त का प्रसार)
- Biofortification: is the process by which the nutritional quality of food crops is increased. E.g.
ICAR developed CR Dhan 310- a rice variety that has higher protein & zinc content than
traditional rice. Germans developed Golden rice for VitaminA
Homework: read NCERT Class11 Economy: Ch2 for more vocabulary
40.4.2 🌱🌱🌱🌱Agri-Input → Seeds → Landraces (जमीनी प्रजा�त क� फ़सले/बीज)

− Hybrid crops are created by scientists artificially in the labs.
− Whereas, “Landraces” are naturally occurring variants of commonly cultivated crops. (फ़सलो क�
ज़मीनी प्रजा�तयाँ -�जसे प्रयोगशाला म� नहीं बनाया, ब�� प्राकृ �तक �प से उद्भव �आ)
− Landraces are climate resultant, may contain better quality of nutrients. (एसे ज़मीनी प्रजातीयाजलवायु
प�रवतर्न के �ख़लाफ़ िटकाऊ उ�� ादा पोषक द्र� होते है)
− 2021-Padma-Shree given to Rahibai Popere for conservation of landraces. She’s nicknamed
‘Seedmother’, hails from Ahmednagar, Maharashtra. (महारा�� िक रिहबाइ को पद्मश्री)
40.4.3 🌱🌱🌱🌱Agri-Input → Seeds → 🥔🥔 Pepsi vs Potato Farmers

⇒ 1970’s Indian Patents Act (भारतीय पेट�ट अ�ध�नयम) doesn’t give Patent to seeds / plant varieties. But,
⇒ 2001’s Protection of Plant Varieties and Farmers' Rights Act (पौधों क� िक�ों और िकसानों के अ�धकारों का
सं र�ण) grants Intellectual Property Rights (IPR: बौ�द्धक सं पदा अ�धकार) to plant breeders, researchers
and farmers who have developed any new plant varieties
⇒ Pepsi supplied FC5 potato hybrid variety to Indian farmers. It has a lower moisture content (कम
नमी) so suitable for making Pepsi-Lay’s potato chips. Later, contract expired yet farmers continue
to grow this variety (& selling to other chips makers).
⇒ 2019: Pepsi complained against Guj Farmers, but later withdrew. (�शकायत वापस ले ली).
⇒ 2021: Govt cancelled the registration of Pepsi’s potato variety citing that Pepsi had not given the
required documents while registering the variety. (सरकार ने उसका पं जीकरण ही रद्द कर िदया है)
40.4.4 🌱🌱🌱🌱Agri-Input → Seeds → Genetically modified (GM) crops

➢ Hybrid seeds (सं कर बीज) are developed by cross-breeding / cross-pollination with other plants.
➢ Whereas, Transgenic / Genetically modified (आनुवं�शक आधार पर आशो�धत िक�े) seeds are developed
by transferring selected genes from one organism into another. E.g. Bacterium Bacillus
thuringiensis genes inserted in cotton → Bt. cotton → if bollworm pests eat it, it’ll die by the
toxin crystals in Bt.cotton plant.
➢ GM-Regulation? Environment Protection Act 1986 (EPA: पयार्वरण सं र�ण अ�ध�नयम ) → Genetic
Engineering Appraisal Committee (GEAC: जेनेिटक/जननीक इं जी�नय�रंग/अ�भयां�त्रक� मू�ांकन स�म�त)
conducts studies, and recommends approving a GM crop in India → Environment ministry
gives final permission.
➢ 2002: Environment ministry allowed Bt. Cotton (a non-food crop) cultivation in India
40.4.5 🌱🌱🌱🌱Seeds → GM crops → Challenges?

1. Biosafety concerns (जैव सुर�ा सं बंधी �चंताएं ) GM food crops may be unsafe for human and animal
consumption. They may harm the soil bacteria & bees → harm to entire food web and
biodiversity. GM crop may eliminate the wild/indigenous species by cross-pollination (पर-परागण)
2. American company Monsanto’s Bollgard technology is used for developing Bt Cotton seeds. So,
Indian Bt-cotton seed production companies have to pay a type of royalty to Monsanto, called
Trait fees (�वशेषता शु�). Govt of India decides the ceiling on Trait fees. Some legal disputes going
on. what/how/why NOTIMP.
3. Monsanto also owns patent over Terminator gene technology (समापक जनीन प्रौद्यो�गक�) i.e. when
such seeds are planted, they’ll produce crops only once. Their resultant crop’s seeds will be
sterile (बाँझ/ नपुंसक) → Farmer forced to buy new seeds from company for every season.
Terminator gene seeds are not allowed in India.
40.4.6 🌱🌱🌱🌱Seeds → GM crops → suggestions by Economic survey 2017?

We’ve a robust regulatory framework with GEAC. So, mischief is unlikely so we should allow GM
crops with following precautions →
1. Allow GM seeds which don’t have Terminator Gene or high cost. (लागत खचर् कम)
2. Allow GM seeds that have following properties: 1) Disease, pest & drought resistant 2)
Longer shelf-life (ज�ी �बगड़े नहीं) 3) Shorter crop duration (जो फसल ज�ी तैयार हो जाए) 4) Nonfood
/ Tree format crops -e.g. cotton, rubber etc. (�जसे खाने म� इ�ेमाल न िकया जाए)
3. To prevent MNC monopoly on GM seeds, we’ve to encourage domestic companies. (ब�रा��ीय
कं प�नओ का एका�धकार रोकने के �लए घरेलू कं प�नयो को प्रो�ाहन दो.)
40.4.7 ✍ 🌱🌱🌱🌱 GM-Crops: Conclusion templates?
A. ✅Conclude in Favor: India needs self-sufficiency in agri bcoz 1) SDG goal of ZERO HUNGER
2) Economic goal of low food inflation. GM-crop can help in this regard, so a positive
consideration should be given for GM in India. भुखमरी और खाद्या� म� महंगाई से लड़ने के �लए अनुम�त दो
B. ✋Conclude Against: India is a signatory to Cartagena protocol to protect biodiversity. SDG
Goal (#2.5) also requires all nations to protect the genetic diversity of plants and animals. Given
the aforementioned concerns, GM crops should not be introduced in India without due
diligence. उ� भय�ानों को देखते �ए, जैव �व�वधता बनाए रखने के �लए, �ादा सं शोधन के �बना अनुम�त नहीं देनी चािहए
🎓🎓Further self study of GM Sci.tech → (i) NCERT Biology class 12 chapter 10, 12 (ii) Ravi
Agrahari’s Sci Tech book: ch. On Biotechnology OR any other material that you like/or you have
40.5 🌧🌧☔AGRI-INPUT → WATER (IRRIGATION: �संचाई)
Definition? The supply of water to crops at different intervals is called irrigation.
⇒ Challenges? While India accounts for more than 17% of world population but we have barely
4% of world's water resources. आबादी के िहसाब से जल सं साधन ब�त कम है भारत के पास
⇒ India is a water stressed country. >50% of the agri depends on rainfall. Only four months of
monsoon & if El-Nino we receive even less rainfall. → 2014 & 2015 drought → food inflation.
⇒ The countries with the largest areas under groundwater irrigation: India (39 million ha), China
ं ाई ब�त �ादा मात्रा म� होती है)
(19 million ha) and USA (17 million ha) (भारत म� भूजल द्वारा �सच
⇒ Irrigation water productivity is defined as ratio of the crop output to the irrigation water
applied. To produce 1 kg of rice, Indian farmers use 3,000-5,000 litres of water, whereas Chinese
farmers manage it within 350 litres of water. भारतीय िकसान ब�त �ादा पानी इ�ेमाल करते ह�
⇒ MSP, heavily subsidized electricity, water and fertilizers = 60% of water is consumed by water
intensive crops like paddy and sugarcane. चावल और ग�े क� खेती के चलते पानी �य �ादा
⇒ By 2050, India will be in the global hotspot for ‘water insecurity’. (जल असुर��तता)
⇒ To earn 2x (double) income, a farmer must cultivate multiple crops annually. But majority of
farmers face water shortage so they can’t do so. (�बना पानी के िकसान क� आमदनी दुगना करना असं भव)
40.5.1 🕵🕵 🌧🌧☔ [Yearbook] Jal Shakti Ministry

2019-May: Government formed Jal Shakti Mantralaya by merging following ministries
1. Ministry of Water Resources, River Development and Ganga Rejuvenation (जल सं साधन, नदी
�वकास और गं गा सं र�ण)
2. Ministry of Drinking Water and Sanitation (पेयजल और ��ता)
Now Ministry#1 and Ministry#2 have been made ‘Departments (�वभाग)’ under the Jal Shakti
Ministry. (पहले जो मं त्रालय थे अब वह �वभाग म� त�ील/प�रव�तत कर िदए)
40.5.1.1 🕵🕵 [Yearbook1] Dept. of Water Resources, River Development & Ganga Rejuvenation
जल सं साधन, नदी �वकास एवं गं गा सं र�ण �वभाग consists of <list not exhaustive>
Dept N/A (ये मं त्रालय के पास कोई �वभाग नहीं है)
Attached / - Central Water Commission (क� द्रीय जल आयोग) → National Water
subordinate offices Academy, Pune | Ganga Flood Control Commission | Bansagar
सं ल�/अधीन� कायार्लय Control Board (Son River)| Central Water and Power Research
Station | Central Soil and Materials Research Station
Statutory Bodies - Betwa River Board, Brahmaputra Board under respective Acts.
वैधा�नक सं �ा - Various water dispute tribunals (जल �ववाद �ाया�धकरण) under Inter-
State Water Disputes Act, 1956
- Under Environment Protection Act, 1986 →
- National Ganga River Basin Authority (NGRBA) → later, replaced by
“National Ganga Council” chaired by PM
- Central Ground Water Authority (क� द्रीय भूजल प्रा�धकरण) formed under
the Environment (Protection) Act.1986
Govt Companies - Water and Power Consultancy Services Ltd (WAPCOS)
- National Projects construction Corporation Ltd.
Autonomous Bodies - National Institute of Hydrology | Krishna River Management Board
- Godavari River Management Board
40.5.1.2 🕵🕵 [Yearbook2] Dept of Drinking Water And Sanitation: पेयजल और स्वच्छता �वभाग
→ doesn’t have any MCQ worth Organizations. (परी�ा के �लए जानने लायक कोई सं �ा नहीं)
40.5.2 🌧🌧🌧🌧🌧🌧 Water Schemes → NRDWP (2009)

National Rural Drinking Water Mission रा��ीय ग्रामीण पेयजल �मशन
- Boss? Drinking Water Dept: Centrally Sponsored Scheme → Core Scheme = NOT 100% funded
by Union. (50:50) (क� द्र द्वारा प्रायो�जत - मह�पूणर् योजना जहां रा� ने भी खचर् का कु छ िह�ा देना पड़ता है)
- To provide every rural person with safe water for drinking, cooking & domestic needs.
- Additional focus on areas affected by Arsenic, Fluoride & chemical contamination, Encephalitis
disease etc. (रासाय�नक सं दूषण तथा ए�ेफेलाइिटस बीमारी को रोकने के �लए �ादा �ान िदया जाए)
- 2019: NRDWP subsumed under a new scheme namely Jal Jeevan Mission (JJM).
40.5.3 🌧🌧🌧🌧🌧🌧 Water Schemes → Pradhan Mantri Krishi Sinchai Yojana (2015)
Boss? Agro Ministry (2015) (Implementation done by Jal Shakti Ministry etc). Valid till 2025-26.
Core Scheme = Not 100% Funded by Union. States required to contribute ₹₹
Aim? To improve the irrigation coverage, reduce wastage of water, using 4-pillar strategy:
1. Accelerated Irrigation Benefit Programme (AIBP: ��रत �संचाई लाभ कायर्क्रम) → Requires Jal Shkati
Ministry to finish the ongoing national irrigation projects at a faster pace.
2. Har Khet ko Pani → Requires Jal Shakti ministry to distribute water to each and every farm by
setting up canal network.
3. Watershed Development (जलस्राव �व�ार �वकास) → Requires Rural Development Ministry’s Dept of
Land Resources to setup water harvesting structures like check dams, Nala bund, farm ponds,
tanks etc. + traditional water storage systems such as Jal Mandir (Gujarat); Khatri & Kuhl (H.P.);
Zabo (Nagaland); Eri & Ooranis (T.N.); Dongs (Assam); Katas & Bandhas (Odisha & M.P.).
4. Per drop more crop → Requires Agriculture Ministry to improve the water usage efficiency
through Micro-irrigation devices such as drips, sprinklers, pivots, rain-guns. Related terms →
a. Fertigation: Mixing water-soluble fertilizers in drip system → fertilizer delivered into
the root system → ⏬ wastage of fertilizers.
b. Mulching: It is a simple process of covering the bare soil with straw, wood chips,
shredded bark etc. to ⏬ the water evaporation, soil erosion and weed growth.
⚠😰😰 🐘🐘 Micro-irrigation challenges? High cost of purchase. Trampling by elephant, boar, nilgai
etc. damages the equipment, but repairman not available locally and repair costs not covered in crop
insurance. So less adoption. (सू� �संचाई का सामान हाथी कु चल दे तो मर�त का पैसा नहीं देती सरकार)
40.5.4 🌧🌧🌧🌧🌧🌧 Water Schemes → Namami Gange Yojana (2015)

- 1986: Ganga Action Plan by PM Rajiv Gandhi.
- 2008-09: Ganga was declared the ‘National River’
- 2015: Modi repacked previous schemes / initiatives under ‘Namami Gange’. Boss? Water
Resources Dept. Central Sector Scheme = 100% funded by union
⇒ To make Ganga pollution free in the next 5 years through Sewage / Effluent Treatment Plants
(गं दा पानी साफ़ करने के सं यंत्र), Information, Education & Communication (IEC: सूचना, �श�ा और सं चार) etc.
40.5.5 🌧🌧🌧🌧🌧🌧 Water Schemes → Jal Kranti Abhiyan (2015)

Boss? Water Resources Dept. : In every district, 2 villages facing acute water shortage (पानी क� तीव्र कमी)
are designated as ‘Jal Gram’ and efforts are made to turn them into ‘water surplus’ villages.
− This is not a separate scheme. ₹ ₹ is mobilized from others schemes like Pradhan Mantri Krishi
Sinchayee Yojana, NRDWP, MNREGA etc. to create dugwells, watershed, artificial recharge
tanks etc. water assets. (दू सरी योजनाओं का पैसा इधर-उधर से बटोर के चलाते ह�)
40.5.6 🌧🌧🌧🌧🌧🌧 Water Schemes → Jal Shakti Abhiyan (2019-July)

Boss? Jal Shakti Ministry, to conserve water using following methods/approaches.
- Rainwater harvesting, Renovation of traditional water bodies/tanks, bore well recharge

structures, watershed development (वषार् जल सं चय इ�ािद)
- Water reuse, afforestation. (पानी का पुन उपयोग, वनीकरण)
40.5.7 🌧🌧🌧🌧🌧🌧 Water Schemes → Jal Jeevan Mission (Rural) (2019-Aug)

- Boss? Jal Shakti Ministry
- Objective? Har Ghar Jal (piped water supply) To all rural households by 2024.
- To Cities with million+ population will be encouraged to achieve it in current year (2020) itself.
- Focus on rainwater harvesting, groundwater recharge and using household wastewater for reuse
in agriculture. वषार् जल सं चयन, भूजल पुनभर्रण और कृ �ष म� पुन: उपयोग के �लए घरेलू अप�श� जल का उपयोग करना।
- Previous scheme NRDWP scheme subsumed into this new scheme. (पुरानी योजना इसम� �ई �वलीन)
- Funding? Govt aims to spend ₹ 3.60 lakh crores in this by converging with other Central and
State Govt Schemes and using their funds. Further, if required, the Govt will also use additional
funds available under the Compensatory Afforestation Fund Management and Planning
Authority (CAMPA- ��तपूरक वनीकरण कोष प्रबं धन और योजना प्रा�धकरण) for this purpose.
40.5.8 🌧🌧🌧🌧🌧🌧 Water Schemes → Jal Jeevan Mission (Rural) (2021-Budget)
💼💼Budget-2021: Jal Jeevan Mission (Urban), will be launched
1) To provide Functional Household Tap Connection (FHTC) to houses in all 4378 Urban Local
Bodies. (शहरी आवास को नल द्वारा पानी)
2) This mission will also provide liquid waste management in 500 AMRUT cities. (What are
AMRUT cities? = Ref#5: Urban infrastructure) तरल अप�श� प्रबं धन
40.5.9 🌧🌧🌧🌧🌧🌧 Water Schemes → ATAL Bhujal Yojana (=ATAL JAL) (2019-Dec)
⇒ Boss? Jal Shakti Ministry. Funding: 50:50 by Union + World Bank.

⇒ This scheme is not meant for entire India but only in the selected areas of selected 7 states facing
extreme water shortages viz. Gujarat, Haryana, Karnataka, Madhya Pradesh, Maharashtra,
Rajasthan and Uttar Pradesh. (�सफर् चु�नंदा रा� जहां पानी क� ब�त िक�त)
⇒ Panchayat led ground water management and behavioral change (�वहार / वतर्न म� प�रवतर्न). Better
performing gram panchayats, will be given more funding allocation.
⇒ Villagers formed into ‘Water User Associations’ → try to minimize water wastage, build water
assets, IEC etc. (पानी के �य बबार्दी को रोकना)
⇒ 2019-25th Dec: Modi formally launched this scheme on the 95th birth anniversary of former
prime minister Atal Bihari Vajpayee. Further, Rohtang Tunnel connecting Manali, Himachal
Pradesh with Leh, Ladakh and Jammu Kashmir, will now be known as Atal Tunnel
SideNote: In 2014-15, PM Modi also announced Bharat Ratna for Atal B. Vajpayee, and declared his
b’day (25th Dec) to be celebrated as ‘Good Governance Day’ (वाजपेई के ज�िदवस को सुशासन िदन मनाते ह�)
40.5.10 🌧🌧🌧🌧🌧🌧 Water Schemes → Misc. Schemes (�व�वध �छटपुट योजनाएं )

Boss? Jal Shakti Ministry. Central Sector Schemes =100% funded by union (In the sense that states
are not required to give money) + Additional loans from World Bank.
⇒ Dam Rehabilitation and Improvement Program.
DRIP (2012) ⇒ DHARMA webportal: to monitor safety of dams in India, minimize
loss of life and property damage in case of dam overflow / disaster.
National Hydrology ⇒ Objective? Remote Sensing for water resources, flood forecast etc.
Project (2016) (सुदूर सं वेदन के द्वारा जल सं साधन और बाढ़ का पूवार्नुमान)
− Budget-2017: NABARD given funds for long term irrigation
NABARD
infrastructure (20k cr) and Micro Irrigation (5kcr)
40.5.11 ☔📈📈 Agri-Input → Water → Composite Water Management Index
⇒ NITI Aayog’s: Guidelines Version 1.0 in 2018, Version 2.0 in 2019. (समग्र जल प्रबं धन सूचकांक)
⇒ NITI divides India in: 1) non-Himalayan states 2) North-Eastern and Himalayan states, 3)
Union Territories (UTs).
⇒ NITI ranks them into nine themes and 28 indicators against the base year 2017-18.
40.5.12 ☔Agri-Input → Water (irrigation) → suggestions by Economic Surveys

1. River inter-Linking project. Self-study in Geography for more on this topic.
2. 👜👜👜👜Budget-2022:- Funding for river interlinking: Ken-Betwa, Damanganga-Pinjal, Godavari-
Krishna, Krishna-Pennar, Pennar-Cauvery and Par-Tapi-Narmada (although Par-Tapi-
Narmada dropped due to public protest) (इन निदयों को आपस म� जोड़ने के �लए नए बजट म� कु छ बात� क� गई)
3. Encourage pulses cultivation in the drought prone areas. अकाल प्रभा�वत �व�ार म� दालों क� खेती
4. Canal water usages: cost-based water pricing, stop theft of water. (उपभोग आधा�रत दाम वसूले जाएं , पानी
क� चोरी को रोका जाए)
5. Rain water harvesting i.e. capture and store rainwater. (वषार् जल सं चयन)
6. Watershed management i.e. building percolation tanks, recharge wells, etc. with community
participation. It helps in conservation of rain, surface and groundwater resources.
7. And finally, a National level dedicated agency to push above things. (रा��ीय �र पर सं �ा बनाई जाए)
40.5.13 ✍ ⛈ Conclusion? (पेयजल और �संचाई के बारे म� �न�षर्)

⇒ Water is a scarce natural resource. Water is fundamental to life, livelihood, food security and
sustainable development. SDG Goal#6 requires India to provide Universal access to safe and
affordable drinking water for all. Aforementioned policy / scheme / challenges are significant in
this regard / need to be addressed on priority basis.
⇒ दुलर्भ प्राकृ �तक सं साधन- आजी�वका सुर�ा, सतत �वकास के �लए सब को �� और स�ा पेयजल उपल� कराना ज�री. अग्रता
क्रम से इस सम�ा से लड़ना होगा
🔠🔠❓MCQ. Find correct statement(s): (UPSC-Prelims-2020)

1) 36% of India’s districts are classified as “overexploited” or “critical” by the CGWA.
2) Central Ground Water Authority (CGWA) was formed under Environment (Protection) Act.
3) India has the largest area under groundwater irrigation in the world.
Codes: [a) 1 only [b) 2 and 3 only [c) 2 only [d) 1 and 3 only
40.6 🌽🌽🌽AGRI-INPUT → FERTILIZER (उवर्रक / खाद)
(Introduction: Definition) Manure / Compost is a natural substance from decomposition of organic

waste. Whereas, Fertilizer is an artificial chemical prepared in factories to boost nutrients in the soil.
Fertilizers Notes
Nitrogen (N) - Haber process: natural gas (methane) converted into ammonia (NH3) →
Urea further processing to create Urea.
- Therefore, Urea production requires natural gas import.
- Ministry of Chemicals and Fertilizers statutorily fixes the Maximum Retail
Selling Price (MRP) of urea using Essential Commodities Act, 1955 →
Fertilizer (Control) Order, 1985. Then ministry gives companies subsidy for
their losses.[ यू�रया के �बक्र� के दाम कानूनन �प से रसायन और उवर्रक मं त्रालय तय करता है और
कं प�नयों को होने वाले नुकसान क� भरपाई के �लए उ�� स��डी देता है]
- Urea subsidy is a Central Sector Scheme = 100% paid by Union. (i.e. State
Government not required to contribute money).
Phosphorou ~80-85% demand is met via import. ISRO using remote Sensing technology to
s (P) identify the potential mines for rock phosphate.
Potash (K) - India is 100% import dependent for Murial of potash (MOP) fertiliser- 33% of
this comes from Russia & Belarus but due to Ukraine war 2022, supply chain is
affected. (भारत आयात पर �नभर्र, िकंतु यूक्रेन युद्ध के चलते आपू�त म� सम�ा)
- Govt encouraging “Potash Derived from Molasses (PDM)” fertilizer. Molasses
is a byproduct in Sugar Mills. So in future our import Reliance can decrease.
Ideal Nitrogen: Phosphorus: Potassium (NPK) ratio in soil: 4:2:1, for India it’s 8:3:1 because
subsidized cheap Urea → illiterate farmers use excessively. As a result →
1. Soil & groundwater pollution. (यू�रया के अ��धक उपयोग के चलते जमीन और भूजल प्रदू षण)
2. Subsidized urea smuggled to non-agro purpose in chemical industries related to dyeing, inks,
coatings, plastics, paints even synthetic milk. (गैर कृ �ष उपयोग के �लए त�री)
3. Subsidized urea also smuggled to Bangladesh and Nepal. (स�े यू�रया क� पड़ोसी देशों म� त�री)
4. Increased use & smuggling → increased subsidy burden → increased fiscal deficit.
So Govt. initiated one following reforms to control urea Misuse/Overuse/Diversion:
40.6.1 �📯📯📯📯Prevent urea misuse→ Nutrient Based Subsidy (2010)

- पोषक तत्व आधा�रत सिब्सडी. Central Sector Scheme = 100% Paid by Union (i.e. State Government not
required to contribute money).
- Boss? Ministry of Chemicals and Fertilizers gives subsidy to company based on weight of the
different nutrient in the fertilizer. E.g.
Nutrient N (Nitrogen) P(Phosphorus) K(Potash) S(Sulphur)
₹ Subsidy per kg 19 15 11 4
(hypothetical Numbers)
- Above subsidy given to companies for producing non-UREA type “customized/mixed” fertilizer
according to soil requirement in each region.
- Example diammonium phosphate (DAP)- which contains Nitrogen (N) and Phosphorus (P).
- ☹Challenge? 1) Urea not covered in this scheme, Urea subsidy paid separately. Sometimes
government clears the urea subsidy files in faster manner but delays in NBS subsidy payments.
Because Government does not have enough money to clear all subsidies at once. Therefore
Fertilizer companies focus more on urea than other fertilizers → shortage in supply of non-Urea
fertilizers → Urea overuse continued (ग़ैर-यू�रया स��डी का भुगतान सरकार व� पर नहीं कर पाती �ोंिक सरकार
को पैसों क� िक़�त है। इस�लए क��नयां यू�रया उ�ादन पर �ादा ज़ोर देती है → बाज़ार म� यू�रया ही �ादा उपल� रहता है
इस�लए िकसान यू�रया इसक� �ादा ख़रीदते ह� �ोंिक ग़ैर-यू�रया खाद आसानी से उपल� निह होती है।)
- 2) because of the ongoing Russia Ukraine war: supply shortage in international market →
fertiliser prices are likely to ⏫ so govt may have to pay more quantity of subsidy to prevent the
price ⏫. (युक्रेन युद्ध के चलते आया�तत रसायनों/उवर्रकों क� िक़�त के चलते दामों म� वृ�द्ध होने का भय, �सवाय िक सरकार
क��नयों को दे दनादन स��डी देकर, दाम बढ़ने से रोक� ।)
40.6.2 �📯📯📯📯Prevent urea misuse→ Soil Health Card (2015)

- Boss? Agro Ministry. Core Scheme = not 100% funded by Union.
- मृदा �ा� काडर् contains the status of soils with respect to 12 parameters →
Macronutrients N, P, K
Micro - nutrients Zn, Fe, Cu, Mn, Bo
Secondary- nutrient S: Sulphur
Physical parameters pH, electrical conductivity (EC), Organic Carbon (OC)
- A farmer’s land is tested & he is given updated soil card once in every 3 years.
- The card also advises on which type of crops, seeds, fertilizer, irrigation method will be suitable
ं ाई उपयु� है)
for his farm, according to his soil type. (िकसान को सलाह दी जाएगी कौन सी फसल बीज उवर्रक �सच
40.6.3 �📯📯📯📯Prevent urea misuse→ Neem Coating of Urea (2015)
Boss? Ministry of Chemicals and Fertilizers. From 2015, Government made it mandatory for
fertilizer companies to neem coat the urea before selling it. Benefits? →
1. Prevents diversion of subsidized urea towards non-agricultural purposes.
2. Neem coating slows down the rate of dissolution of urea in soil→ Improves the plant’s
absorption of Nitrogen from the urea → Yield is ⏫. (पैदावार म� बढ़ोतरी)
3. ⏬ in pest and disease attack → Pesticide consumption is also ⏬. (क�टनाशक कम चािहए)
🔠🔠❓MCQ. Why does the Govt promote the use of Neem-coated Urea’ in agriculture? (Prelims-2016)
(a) Release of Neem oil in the soil increases nitrogen fixation by the soil microorganisms
(b) Neem coating slows down the rate of dissolution of urea in the soil
(c) Nitrous oxide, a greenhouse gas, is not at all released into atmosphere by crop fields
(d) It is a combination of a weedicide and a fertilizer for particular crops.
🔠🔠❓MCQ. Find correct statement(s) about chemical fertilizers in India (Prelims-2020)

1) At present, the retail price of chemical fertilizers is market-driven and not administered by the
Government.
2) Ammonia, which is an input of urea, is produced from natural gas.
3) Sulphur, which is a raw material for phosphoric acid fertilizer is a by-product of oil refineries.
Codes: [a) 1 only [b) 2 and 3 only [c) 2 only [d) 1, 2 und 3
40.6.4 �📯📯📯📯💳💳 Prevent urea misuse→ DBT of fertilizer (2018)

Boss? Ministry of Chemicals and Fertilizers. (रसायन और उवर्रक मं त्रालय)
- Direct Benefit Transfer (प्र�� लाभ अंतरण) in fertilizer: Fertilizer companies are paid subsidy only
after the retailer has sold the fertilizer to farmer through Point of Sale (PoS) devices & noting
down his Aadhaar Card/ Kisan Credit Card/Voter Identity Card etc. to verify his identity as
farmer. → Then Govt transfers the subsidy ₹ ₹ directly into the bank account of the respective
fertilizer company. (कं पनी सा�बत करे िक फज� िकसान को नहीं बेचा तभी सरकार कं पनी को स��डी देगी)
😰😰Benefits? Prevents diversion of subsidized urea towards non-agricultural purposes and towards
Bangladesh / Nepal. (�सवाय के बां�ादेशी घुसपैिठए नकली आधार काडर् बनवा कर ले जाए)
40.6.5 � Prevent urea overuse→ Nano-Urea- suggested by📙📙📙📙ES22

� �ES22: We should encourage Nano Urea To protect soil & ⏫fertiliser efficiency
Parameters �Normal ‘powder/solid’ Urea �Nano-Urea

Qty required for 1 acre 90 kilogram 500 ml
Price ₹500+ ₹240 per bottle (By IFFCO#)
#
IFFCO- Indian Farmers Fertiliser Cooperative (IFFCO)- claims to be first company in the world to
produce liquid Nano urea in 2021.
40.6.6 �📯📯📯📯 Prevent fertilizer misuse→ PM-BJP/One Nation One Fertiliser

�Boss: Ministry of Chemicals and Fertilisers
⇒ Scheme name: “Pradhanmantri Bhartiya Janurvarak Pariyojna” (PMBJP) / One Nation One
Fertiliser
⇒ Objective: If company receiving fertiliser subsidy from government → company has to use govt-
mandated brand name, logo and bag-colour design. (यिद कोई कं पनी भारत सरकार से उवर्रक क� स��डी प्रा�
कर रही है तो उसने उवर्रक फ�टलाइजर क� थेलीयों पर के वल, सरकार द्वारा �नधार्�रत नाम-लोगों इ�ािद इ�ेमाल करना होगा.)
⇒ Single brand name for UREA, DAP, MOP and NPK etc. would be BHARAT UREA, BHARAT
DAP, BHARAT MOP and BHARAT NPK etc. respectively
⇒ A logo showing “Pradhanmantri Bhartiya Janurvarak Pariyojna”.
🤩🤩 Benefit?
⇒ 1) Easy to spot such fertiliser bags so, if any smuggling/ diversion being done then easily it can be
detected. (त�री हो रही होगी तो तुरंत िदख जाएगा।)
⇒ 2) Govt can claim credit / fame among farmers. Farmers become aware / sensitive about the
subsidy being paid by Govt, and engage more positively towards the future reforms of Govt.
(िकसानों के बीच सरकार क� छ�व म� सुधार हो और सरकार द्वारा भ�व� म� िकए जाने वाले कृ �ष सुधारो का वो समथर्न कर�)
40.6.7 �📯📯📯📯 Reduce Fertilizer use : PM PRANAM scheme

This is yet to be launched, but Newspaper are making some guesswork. So following info- may be
wrong/partially correct. (अभी तक आ�धका�रक �प से योजना जारी नहीं �ई तो हो सकता है �न� दी गयी नोट म� कु छ त्रुिटयां हो)
⇒ Boss: Ministry of chemicals and Fertilizers

⇒ Objective: To reduce the use of chemical fertilisers.
⇒ Mechanism: if state govt manages to reduce the fertiliser consumption, & saves say Rs.100 cr
subsidy bill for Union, then Union to give Rs.50cr as grant to the state government.
⇒ Scheme became necessary because fertiliser subsidy bill has increased to Rs 2.25 lakh crore in
2022-23. - Government does not have enough fiscal resources to sustain such subsidy burden.
(PM प्रणाम योजना: यिद कोई रा� सरकार ऊवर्रक/फ�टलाइजर उपभोग म� कटौती करवाती है, तो क� द्र सरकार उस रा� सरकार को
अनुदान के �प म� पैसा देगी। क� द्र सरकार के भारी स��डी बोझ को कम करने के �लए यह ज़�री है)
40.7 🌽🌽🐞🐞AGRI-INPUT → PESTICIDES & WEEDICIDES
(Introduction: Definition) Pesticides and weedicides (क�टनाशक, खरपतवार नाशक) are chemicals which
are used for killing / controlling pests and weeds respectively.
⇒ 25% crop loss on account of pests, weed, diseases but India’s per hectare pesticide consumption
is far less than first world. We should encourage organic pesticides and biocontrol agents.
⇒ We should adopt Integrated Pest Management (IPM: एक�कृ त क�ट प्रबं धन) approach i.e. rather than
eradicating pest population to 100%, just try to keep crop damage to economically tolerable level.
Because even pests are important for biodiversity protection and food chain balance.
⇒ Spread awareness about proper use of chemical pesticides (esp. Endosulfan) so it doesn’t
contaminate in food / land / water / human bodies excessively. (सावधानीपूवर्क उपयोग के �लए जागृ�त )
⇒ 2019: Monsanto & its parent company Bayer fined in USA for their weedicide / herbicide ‘
Glyphosate’ (brand name ‘Roundup’) which was causing cancer. This weedicide is already
banned in Punjab, Kerala and selected states of India (2018).
⇒ Homework-Self-Study: Locust disaster Management. (िटड्डी आपदा प्रबं धन)
⇒ 🎓🎓✋Pesticides Management Bill, 2020 to regulate the trade, storage & use of pesticides but
NOT veryIMP4EXAM. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
40.8 🌽🌽🌽🌽☣ AGRI INPUTS → DON’T USE CHEMICALS → PKVY (2015)
(Intro: Definition) Organic farming is a type of agriculture that avoids the use of synthetic fertilizers,
pesticides, and other chemical inputs. It relies on crop rotation, crop residues, manures,
biofertilizers, biopesticides etc. (जै�वक खेती: कृ �त्रम उवर्रक, क�टनाशक और अ� रसायनों का उपयोग न कर�.)
⇒ 🤩🤩Ecological benefits? Less use of chemicals → biodiversity protected, less soil water air
pollution (because farmers will not burn the crop residue). [ जैव �व�वधता का र�ण होगा]
⇒ 🤩🤩Economic benefits? 1) organic products command higher prices among the health conscious
buyers from developed countries → more exports → less CAD, more farmer’s income. 2) less
use of chemical fertilizers → governments urea subsidy bill will decline → fiscal deficit can be
controlled. (चालू खाता घाटा, स��डी बोझ, राजकोषीय खाध म� कमी)
⇒ In 2003, Sikkim stopped entry of chemical fertilizers, and its Vidhan-Sabha declared the
intention to become a 100% organic state. The goal achieved in 2015. (�स��म सं पूणर्ता जै�वक खेती रा�)
⇒ 2015: To encourage organic farming in India, Union Govt. launched Paramparagat Krishi Vikas
Yojana (PKVY). Boss? Agro Ministry. Core Scheme = Not 100% paid by Union. (60:40,90:10)
⇒ Mechanism? Form a group of 50 farmers in a cluster to start organic farming. Every beneficiary
farmer is given ₹ 20,000 per acre for 3 years for doing organic farming.
⇒ Agro Ministry’s Jaivik Kheti webportal to help organic buyers & sellers connect with each other.
⇒ Agro Ministry’s Participatory Guarantee Scheme (PGS: सहभागी गारंटी योजना) for certification of
organic products. It assures the buyers the given fruit/vegetable/produce has organic origin.
(जै�वक उ�ादों का प्रमाणीकरण)
40.9 🌽🌽🌽🌽☣ AGRI INPUTS → PKVY (2015) → (BPKP-2021)
⇒ 2020: Agri ministry launched Bhartiya Prakritik Krishi Padhati (BPKP) as a sub-scheme of
Paramparagat Krishi Vikas Yojana (PKVY) (उप-योजना के �प म� शु� िकया)
⇒ helps farmers with natural farming (don’t use chemicals), biomass recycling, cow dung-urine
manure, and exclusion of all synthetic chemical inputs. (प्राकृ �तक खेती, बायोमास पुननर्वीनीकरण, गोबर-मूत्र से
खाद, और सभी कृ �त्रम रासाय�नक आदानों का बिह�ार।)
⇒ BPKP gives ₹12,200 / hectare financial support every 3 years. (�व�ीय सहायता दी जाती है।)
� �FAQ: How is BPKP similar/different than PKVY – it seems to be like old wine new bottle?
Ans. Not important. To show-off to media, govts usually launch new scheme with same objective.
We need to prepare 2-3 lines & move to next topic.
40.9.1 🚫🚫🚫🚫🚫🚫☣Zero Budget Natural Farming (ZBNF: शू� बजट प्राकृ �तक खेती)
- 'Zero Budget' means without using any loan, and without spending any money on purchase of
inputs (seeds, fertilizers, pesticides). (बीज उवर्रक क�टनाशक म� पैसा खचर् िकए �बना, कजर् �लए �बना, खेती करना)
- 'Natural farming' means farming without chemicals. By using biofertilizers, earthworms, cow
dung etc. Associated keywords:
○ Jiwamrita’ (microbial culture) and ‘Bijamrita’ (seed treatment solution)
○ Biopesticides: ‘Agniastra’, ‘Brahmastra’ and ‘Neemastra’
○ Most of the above are made from Cow-urine.
○ ‘Waaphasa’ (giving water outside the plant’s canopy),
- ZBNF saves farmers from debt-traps; and protects the environment, soil and biodiversity. (कजर् के
�वष चक्र; पयार्वरण, �मट्टी और जैव �व�वधता क� र�ा)
- Practice first started in Karnataka by Subhash Palekar. Himachal, Andhra also frontrunners.
- � Budget-2019 promised to expand ZBNF in other parts of India. Govt thinking of launching
it as a sub-scheme (उप-योजना) under Paramparagat Krishi Vikas Yojana.
- � �Budget-2022:- Chemical-free Natural Farming will be promoted esp on farmers’ lands in
5-km wide corridors along river Ganga (गं गा नदी के 5 िकलोमीटर इलाके म� रसायन मु� प्राकृ �तक खेती बाड़ी को
प्रो�ाहन िदया जाएगा)
- � �Budget-2022:- SC/ST farmers to be given funding for agro forestry. Agro forestry is
integrating trees with crops and animals e.g. Bamboo & Oil-Palm trees in farm land. (अनुसू�चत
जा�त और जनजा�त के िकसानों को एग्रोफोरे��ी के �लए पैसा द�गे).
40.9.2 🚫🚫☣😢😢 Organic farming & ZBNF → Limitations? (मयार्दा/चुनौ�तया)

1. Organic farming yield (quantity produced per acre) is lower than conventional chemical-based
farming. (पारंप�रक रासाय�नक आधा�रत खेती क� तुलना मे कम उपज)
2. In recent years Sri Lankan govt suddenly promoted too much organic farming, discouraging the
import of chemicals pesticides and fertilisers. 😥😥Crop yield/production qty ⏬ because
fertilizer not used → food supply ⏬ → food inflation ⏫, food becomes expensive for
consumers, food exports declined⏬. 2021: Now Lankan government has realised its mistake &
began encouraging use of chemical fertilizer for tea, rubber and coconut (श्रीलं का सरकार ने जै�वक खेती
को ज़�रत से �ादा प्रो�ाहन दे िदया और वहाँ अब फ़सल पैदावार काफ़� कम हो गई है. �जसके चलते खाद्य महँ गाई म� बढ़ोतरी और
कृ �ष �नयार्त म� कमी आयी है। तो श्रीलं का सरकार को गलती समज म� आयी, वापस रासाय�नक उवर्रक के उपयोग पर ज़ोर दे रहे है। )
3. Difficult to produce off-season crops using organic farming. so if entire India became “100%
organic farming” → food shortage → inflation. (उ�ादन म� कमी के चलते खाद्य असुर�ा और महंगाई )
4. Shelf life, colour and texture of organically grown fruits/vegetables are less attractive than
chemically grown hybrid / GM varieties. So, unless ordinary consumers are made aware of their
health benefits they may not buy. (जै�वक फल स��यां ज�ी �बगड़ जाते है, रंग-बनावट आकषर्क नही)
40.9.3 🚫🚫☣✍ Conclusion: Organic farming / ZBNF

 (SDG) New India Vision 2022 requires doubling farmers’ income, while Sustainable
Development Goal No.2 requires nations to adopt agriculture practices that improve land and
soil quality & protect the genetic diversity of flora-fauna. (सतत �वकास ल� और िकसानो क� आय को दुगना)
 Given the aforementioned ecological and economic benefits of organic farming /ZBNF, it can
help us achieve both the targets. (पयार्वरण और आ�थक नज�रए से ब�त फायदेमंद)
40.10 🌽🌽🚜🚜AGRI INPUTS → FARM MECHANIZATION (मशीनीकरण)
(Intro: Definition) It means the higher usage of combine harvesters, land levelers, cultivators,
tractors, reapers, threshers, trolleys and mechanical pickers etc. (कृ �ष म� मशीनों का �ादा उपयोग)
⇒ Significance? (1) ↑ productivity of land, labour by increasing work output per unit time. (2) ↑
employment opportunities to rural youth in production, operation, and repair-maintenance of
machines. (उ�ादन, सं चालन और मर�त-रखरखाव म� ग्रामीण युवा को रोजगार)
⇒ Labour augmenting technological progress: Allows each laborer to be more productive e.g.
Industrial revolution → James Hargreaves' Spinning Jenny that allowed each worker to spin
eight cotton threads at once (1770).
⇒ Capital augmenting technological progress: Allows capital assets / machinery to be more
productive. E.g. wooden plough replaced with steel plough → more sturdy, requires less
maintenance & repairs, resistant to water-fungal attacks.
⇒ After MNREGA scheme (wherein villagers are guaranteed 100 days of unskilled manual work),
the Punjab-Haryana farmers are facing shortage of farm-laborer in peak season, & forced them
to offer higher wages → many of those farmers opting for machinery to reduce labour
requirement. (पं जाब ह�रयाणा म� कृ �ष मजदू रों क� कमी के चलते मशीनों का उपयोग �ादा)
⇒ 📔📔📔📔ES21: Corona lockdown- movement of migrant farm labourers & farm machinery-
repair/movement affected = problems during harvesting season. (फसल कटाई म� िद�त आयी)
40.10.1 🌽🌽🌽🌽😥😥 Agri Inputs → Farm Mechanization: Challenges?
⇒ Indian tractor industry is the largest in the world, accounting for 1/3rd of total global production.
Nearly 80,000 tractors exported every year to African and Asian nations. But within India, the
utilization is low. India farm mechanization (40%) < China (60%)< Brazil (75%) < USA (95%).
⇒ Customized machinery required for India’s soil and climatic diversity so R&D, Make in India
required. Small-marginal farmers lack financial resources to own machines so renting centres
should be setup. (भारत क� जमीन और आबोहवा क� �व�वधता के अनु�प यं त्रों का सं शोधन और �वकास िकया जाए)
⇒ 📯📯 Agri Ministry Scheme? 2017: Green Revolution - Krishonnati Yojana → Sub-Mission on
Agricultural Mechanisation (SMAM): to address above challenges.
⇒ 📯📯 Agri Ministry launched Mobile App called FARMS (Farm Machinery Solutions) for farm
machinery renting.
⇒ 👜👜👜👜Budget-2022:- ‘Kisan Drones’ for crop assessment, digitization of land records, spraying
of insecticides, and nutrients. (फसल �नरी�ण, जमीन द�ावेजों को िड�जटल बनाना, िकट-नाशक दवाई तथा पोषक-त�ों
के �छड़काव के �लए "िकसान ड�ोन" को प्रो�ाहन द�गे)
🔠🔠❓MCQ. The substitution of steel for wooden ploughs in agricultural production is an example of _ _ _ _ _
_ _ _ technological progress. (Asked in UPSC-Pre-2015)
(a) labour-augmenting (b) capital-augmenting (c) capital-reducing (d) None of the above.
🔠🔠❓MCQ. Private investment in Indian agriculture is mostly on labour saving mechanization. This could be
a response to (Asked in UPSC-CDS-2015-II)
(a) rising productivity of agricultural sector (b) rising inequality in agriculture
(c) rising wages and tighter labour market (d) debt write-off by the Government
40.11🌽🌽🌽🌽🌽🌽 AGRI INPUTS → FINANCE / CREDIT: ऋण

(Intro: Origin) Small and marginal farmers produce little marketable surplus, and often deprived of
the remunerative prices even during bumper crops, so without borrowing they can never buy inputs
for the next cropping cycle. (छोटे सीमांत िकसानों के पास बेचने के �लए �वपुल मात्रा म� अनाज होता नहीं और अ�� पैदावार के
दौरान भी, बाजार म� अ�े मू� �मलते नहीं है, इस�लए हमेशा वे कज� म� डू बे रहते ह� )
⇒ Economic Survey 2016 found an inverse relation between size of landholding vs. Indebtedness
(ऋणग्र�ता) of farmers i.e. small/marginal farmers are more indebted than big farmers.
⇒ � �ES20: The share of North Eastern States <1% in total agricultural loans.
⇒ �Budget-2020: 1) Agriculture credit target for the year 2020-21 has been set at ₹15 lakh crore.
NABARD will provide a refinance facility for this. 2) if a PM-KISAN beneficiaries doesn’t have
Kisan Credit Card (Ref:Pillar#1D), he will be given such a card.
⇒ �Agri Loan Targets in Recent Budgets: ₹16.5 lakh cr (2021), ₹18 Lcr (2022).
Table 1: notable steps to enhance credit availability to farmers →
RBI’s PSL norms: �रजवर् ब�क द्वारा प्राथ�मक �ेत्र के ऋण मानक Ref: Pill#1: Monetary policy
handout
Nationalisation of banks after the Independence. Ref: Pill#1: Bank classification
Setting up of differential banks (RRB, LAB, SFB). handout
Kisan credit card, interest subvention scheme, debt waiver Ref: Pill#1D: Fin.inclusion
40.11.1 💰💰🗃🗃Agri-Finance → Negotiable Warehouse Receipts (NWR)
⇒ Boss? Ministry of Consumer Affairs, Food & Public Distribution → Statutory Body
Warehousing Development and Regulatory Authority (WDRA: भांडागारण �वकास एवं �व�नयामक
प्रा�धकरण)- law in 2007.
⇒ Farmer deposits his produce into WDRA registered warehouses and gets negotiable warehouse
receipt (NWR; परक्रा� गोदाम रसीद). He can use it in two ways
a. Pledge it in the banks to obtain loans for the next cropping cycle. OR
b. Trade it via the commodity exchange markets or electronic National Agriculture
Markets (e-NAM).
⇒ 🤩🤩Benefit? NWR prevents the distress sale of agriculture produce. Farmer can wait and watch
for the prices to improve before selling, while his crop is safely stored in the warehouse.
40.11.2 🌽🌽🌽🌽🌽🌽🌽🌽Agri-Finance → Loan waivers for the farmers (िकसान को कजर्माफ�)
(Covered in Handout 📑📑Pillar#1D: Financial Inclusion: Farm loans)
40.12🌽🌽⚰ AGRI-INPUT → RISK REDUCTION → INSURANCE

(Intro: Origin) Though agriculture sector is a minor contributor to India’s GDP, but large
proportion of our population depends on agriculture. Agriculture itself depends on monsoon, pests,
disease and other vagaries of nature. But insurance penetration & insurance density is low in India.
- 2002: Agriculture Insurance Company of India Ltd. (AIC) was setup.
- Agro Ministry launched 🧔🧔🧔🧔⚰Pradhan Mantri Fasal Bima Yojana (Core scheme) and other
crop insurance schemes. (More in 📑📑Pillar#1D: general insurance)
40.13🌽🌽🌽🌽 AGRI-OUTPUT → DON’T BURN THE CROP RESIDUE (फ़सल-अवशेष/ पराली)
(Intro: Origin) Every year during Sept-October, farmers of Punjab, Haryana, Uttar Pradesh burn the
paddy stubble & residue which are leftover from previous cropping season. Burning clears the farm
land for sowing wheat for next cropping season. अगले मौसम म� गे�ं उगाने के �लए फसल-अवशेष/ पराली जलाना
- Result? Thick smog, air pollution, particulate matter (PM 2.5) in Delhi.
- open burning of crop residues has ill effects on soil organic carbon and soil fertility
🤩🤩Solutions?
- In-situ composting (��ानी उपजाऊकरन)
- Machines like Rotary Slasher, Zero Till Seed Drill, Rotavators, 'Happy Seeder: They help in wheat
sowing without having to get rid of paddy straw on the land.
- 2015: National Green Tribunal order → Burning crop residue is a crime under Section 188 of the
IPC and under the Air and Pollution Control Act of 1981
- � Budget-2018: Union to give 100% funding to Punjab, Haryana and Delhi to tackle this
menace. Further, individual farmers to be given subsidy for such machinery purchase.
- � �ES20: PM2.5 emission (g/Kg) from burning crops: Sugarcane (12.0)> Maize (11.2)>
Cotton (9.8)> Rice (9.3)> wheat (8.5). So, we should promote low lignocellulosic crop residues
like rice, wheat, maize etc.
- Setup biomass depots for storage of crop residues. from there
- Thermal power plants to use crop residues with coal. (तापीय ऊजार्) → Budget 2022
announced use of 5-7% biomass pellets in thermal power plants.
- biochar briquettes as fuel for local industries, brick kiln and hotel/dhaba
40.14🌽🌽🌽🌽AGRI-SELLING → APMC (कृ �षगत उ�ाद �वपणन स�म�त)
(Intro: Origin) In the Post-independent India, despite the abolition of zamindari, the farmers were
not ‘liberated’ from exploitation. Because, the goons of local Baniyaa or money lender would forcibly
take away the farmers’ harvest without paying sufficient money. So, state governments enacted
APMC laws that “first sale of agriculture produce can occur only at the market yards / Mandis of
Agricultural Produce Market Committees (APMC).” (िकसानों को सा�कारों के वसूली/शोषण से बचाने के �लए रा�ों
ने कानून बनाए िक कृ �ष उपज क� सबसे पहली �बक्र� मात्रा एपीएमसी मं डी म� ही हो पाएगी)
40.14.1 ⚠APMC Problems? सम�ाएं / चुनौ�तयां
1. APMC trustees (office bearers) are politically influential persons. They enjoy a cozy relationship
with the licensed commission agents. These agents form cartel, manipulate prices, deprive
farmers of remunerative prices; engage in hoarding & artificial shortage of food supply in the
retail market, thereby driving up the food inflation for profiteering. (राजनी�तसे जुड़े त�, िकसान को अ��
क�मत नहीं देते, सं ग्रह-खोरी द्वारा बाजार म� चीजों को महंगा करके मुनाफाखोरी करते ह�)
2. APMC trustees lack the managerial skill / vision for vertical integration with food processing
industries. [because their only skill is ‘Politics’, प्रबं धन कौश� कम है]
3. While these Mandis charge multiple entry, exit and other fees. But money is siphoned off →
poor infrastructure, lack of cold-storage, transport facilities → waste of fruits & vegetables even
in good monsoon years. (शीतगार, प�रवहन बु�नयादी अवसं रचना क� कमी के चलते स�ी फल बबार्द)
40.14.2 🔨🔨Model APMC Act? (आदशर् कानून)
Since agriculture is a state subject, ultimately state governments have to reform their archaic laws.
Union Government already circulated a model APMC Act, 2003 (सातवीं अनुसूची म� रा� सूची म� है)
- It allows the private entrepreneurs and cooperatives to set up their parallel markets, & sell
directly to consumers
- It allows the corporate companies to engage farmers in ‘contract farming (अनुबंध खेती)’ and
directly purchase the produce from farmgate.
Further, Union Government released
1) Model Agricultural Produce and Livestock Marketing Act 2017 (APLM: मॉडल कृ �ष उपज और पशुधन
�वपणन) → it has better features than above model act, covering both Agro commodities as well as
livestock, fisheries and poultry.
2) Model Contract Farming Act, 2018 → aims to protect farmers engaged in contract farming with
better features than model APMC act 2003.
2016: NITI Aayog launched Agricultural Marketing and Farmer Friendly Reforms Index (AMFFRI)
to rank States and UTs. No state has achieved 100/100 score yet.
🔠🔠❓MCQ. In India, markets in agricultural products are regulated under the (UPSC-Pre-2015)
(a) Essential Commodities Act, 1955
(b) Agricultural Produce Market Committee Act enacted by States
(c) Agricultural Produce (Grading and Marking) Act, 1937
(d) Food Products Order, 1956 and Meat and Food Products Order, 1973
40.15👻👻⚖�🛒🛒 AGRO ORDINANCE/ACT#1 → APMC ORDINANCE/ACT 2020

� �FAQ: Why study this when law is withdrawn after farmer Protest? Ans. 1) GSM2: As case
study of challenges in federalism, issues related to policy design and implementation 2) GSM3: Agri
Reform: recycle the same points as suggestions on what should be done to improve farmer income.
⇒ 2020-June: Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance,
2020. िकसान उ�ादन �ापार और वा�ण� (सं वधर्न और सु�वधा) अ�ादेश, later passed as Act in 2020-Sept
⇒ It will prevail / override over state APMC Acts. रा�ों के कानूनों के ऊपर यह कानून अ�धभावी / सव�प�र रहेगा.
�State APMC Acts. 🧔🧔Union’s Ordinance/Act in 2020

They had provisions for trade Covers both intra & inter-state trade.
within "State" = Intra-State. अंत:रा� तथा अंतररा�ीय �र पर िकसान अपनी पैदावार बेच पाएगा
रा� के भीतर / अंत:रा�
first agri-trade can be @any place like farm gates, factory, warehouses, cold storages,
conducted only at APMC APMC Mandi, cooperative society etc. (िकसान के घर के दरवाजे पर ,
mandi, & not at farm gate. कारखाना, गोदाम, शीतगृह, मं डी सहकारी स�म�त..कहीं पर भी �बक्र� हो सकती है)
कृ �ष उ�ाद क� प्रथम बार �बक्र� के वल
मं डी पर हो सकती है. िकसान के घर के
दरवाजे पर नहीं
some states' Acts did not ⇒ covers food produce- cereals,oilseeds,vegetables,fruits, spice,
cover all these agriculture / sugarcane. (खाद्य उ�ाद- अनाज, �तलहन, स��याँ, फल, मसाले, ग�ा)
food commodities → ⇒ poultry, piggery, goatery, fishery, dairy. (मुग�/सुअर/बकरी/म�
पालन, डेयरी)
⇒ cotton, jute, cattle fodder. (कपास, जूट, पशुओ ं का चारा)
Did not have clear provisions Electronic trading permitted.
for this Private players allowed to setup such e-platforms.
इसके �लए �� प्रावधान नहीं थे Union will decide norms for it (क� द्र सरकार क� �नगरानी म� �नजी �ेत्र को कृ �ष
ई-�ापार के �ेटफ़ॉमर् चलाने को अनुम�त)
Did not have clear provisions ⇒ Buyer must pay farmer within 1-3 working days.
for this ⇒ If any dispute, complaint to Sub-Divisional Magistrate (SDM)
इसके �लए �� प्रावधान नहीं थे who will settle the complaint within a specified time limit.
⇒ Higher appeal → DM/Collector/Additional Collector
State Govt and APMC No Union or state tax on such sale/purchase of raw commodity.
Mandis used to charge (क�े कृ �ष माल क� खरीद �बक्र� पर क� द्र रा� कराधान नहीं लग�गे)
market fee, cess or levy on Meaning…
the farmers for the sale. ⇒ When Britannia buys wheat from farmer = no taxes by Union
or State (as per this new law, because raw commodity bought)
(अनेक प्रकार क� फ�स और उपकर का ⇒ After that stage, taxes are as usual-e.g.
बोझ िकसान पर डाला जाता था ) ⇒ When Britannia biscuits made from that wheat → GST yes.
⇒ When Britannia makes profit → Corporation tax yes.
⇒ When Britannia shareholders receive dividend from profit →
Income tax yes.
Penalties? from ₹25,000 to higher, depending on violation. (उ�ं घन के िहसाब से जुमार्ने)
40.15.1 ⚖�🛒🛒:👎👎👎👎 Criticism for Agro-Act#1: आलोचना/ �नंदा
1) Constitution of India → Seventh schedule → State list → Entry#14: Agriculture. Therefore only
the state legislature is empowered to laws on agriculture. Union is encroaching upon the state's
domain and harming the spirit of cooperative federalism. (सं �वधान क� सातवीं सूची अनुसार कृ �ष कानून बनाने
का हक रा�ों को िदया गया है. क� द्र सरकार अपनी मज� थोप के , सहकारी सं घवाद को नुकसान प�ंचा रही है)
a. �Counter: Union List Entry#42: Inter-State trade and commerce & Concurrent Entry
#Contract allow this. (सं घीय सूची और समवत� सूची के अंतगर्त क� द्र सरकार ऐसा कर सकती है)
2) �
State govt prohibited from collecting taxes/fees → ⏬ Fiscal independence. ⏫States'
dependence on Finance Commission. (राजकोषीय �तं त्रता कम हो जाएगी हमेशा �व� आयोग के सामने कटोरा लेकर
खड़ा रहना पड़ेगा िक हमको पैसा चािहए �)
3) �
Punjab Agri Acts much better. Union shd have copied it. (क� द्र ने पं जाब का अनुकरण करना चािहए )
4) Scope of mis-interpretation and exploitation of small farmers by big traders and Multinational
Corporations (MNCs: ब�रा��ीय कं प�नयों द्वारा छोटे िकसानों का शोषण).
5) Liberalisation / Deregulation of a sector has not always helped consumers e.g. in case of
education, health (looting by private colleges/hospitals). (उदारीकरण / �नयं त्रण हटाने से ग्राहकों का नुकसान)
6) If farmers are getting remunerative prices via these ordinances → they'll go less to the Govt's
MSP → MSP subsidy bill ⏬ → India will be able to comply with WTO subsidy norms in
future. So, PM Modi doing it under WTO pressure, and not for farmers' welfare. (स�े िदल से नहीं
लेिकन �व� �ापार सं गठन के दबाव म� िकया गया.)
7) Act prepared in haste, ignores X/Y/Z recommendation of past committees on agriculture.
Ordinance does not have X/Y/Z good provisions seen in other countries' agriculture Acts. (�व�भ�
स�म�तओ के सुझाव /�व�भ� देशों के कृ �ष कानूनो के अ�े मुद्दों को न अपनाकर करके ज� बाजी म� बनाया गया. )
o Counter Argument: � �ES21: Govt amended these laws based on recommendations
of National Commission on Farmers (under Dr M.S. Swaminathan, 2004) and many
other committees & they are in the best interests of the farmers.
40.15.2 ⚖�🛒🛒:👋👋👋👋 Farm Laws Repealed (िकसान क़ानूनों को वापस �लया)

2021-Dec: Union government announced to repeal the 3 farm laws. 1) The Farmers Produce Trade
and Commerce (Promotion and Facilitation) Act, 2020 - for APMC Reforms 2) The Farmers
(Empowerment and Protection) Agreement on Price Assurance & Farm Services Act, 2020 for
contract farming; 3) The Essential Commodities (Amendment) Act, 2020, for giving relief to food
processing companies. [१) APMC मं डी, २) अनुबंध खेती और ३) आव�क व�ु अ�ध�नयम म� सुधार के �लए जो तीन क़ानून
बनाएँ थे, उ�� वापस �लया /रद्द िकया, �ोंिक ]
⇒ �) Govt was unable to convince the farmers. (िकसान-प्रदशर्न, सरकार उ�� मनाने म� नाकामयाब रही।)
⇒ Non-stop farmer protests at Singhu border at Delhi-Haryana. Traffic-jam problem for other
citizens. Incidents of mob lynching. (आंदोलन के चलते यातायात/प�रवहन पर असर. �भड़ द्वारा लोगों का वध)
⇒ �) farm laws were suspended/dead from 2021-Jan: because Supreme Court had stayed farm
laws implementation “until further orders” (वैसे भी सुप्रीम कोटर् ने इन क़ानूनों को ��गत ही कर िदया)
⇒ �) the present farmer protests were preventing government from doing other set of reforms in
agriculture such as urea subsidy electricity subsidy etc. (सरदार यू�रया स��डी, �बजली स��डी म� सुधार करना
चाहती थी लेिकन इन कानूनों के �वरोध क� आग म� वो काम भी अटक गया था)
⇒ �) protesting farm leaders were demanding a new law to make MSP a legal right, similar to the
National Food Security Act. but this is financially difficult for the union government. But now
the protesters will return to their homes so farm leaders will not be able continue the protests for
MSP-legal right in an effective manner. (आंदोलनकारी िकसानों �ूनतम समथर्न मू� को क़ानूनन अ�धकार बनाने क�
माँग कर रहे थे, लेिकन पैसों क� िक़�त के चलते सरकार के �लए वो करना सं भव नहीं है।)
😥😥 Unofficial reasons: keeping farmers happy before upcoming State Vidhan Sabha elections in UP
and Punjab.
40.15.3 ⚖�🛒🛒:👋👋👋👋 Farm Laws Repeal ka Criticism

Agriculture economist Dr. Ashok Gulati argues that govt’s decision to repeal 3 farm laws was
unnecessary because: (सरकार ने इन क़ानूनों को रद निह करना चािहए था �ोंिक)
− These laws would have helped in

o �creating one nation one market for barrier-free trade in agriculture (बाधाओं से मु� रा��ीय
कृ �ष बाजार का �नमार्ण )
o � �private investment, competition in the agriculture sector (�नवेश और �धार् को प्रो�ाहन)
o �doubling farmers’ income. (िकसानों क� आय दुगनी करने म� मदद )
− all farmers of entire India were not against the farm law reforms. Only a few vested interests were
protesting against it. Govt unnecessarily surrendered for electoral politics. (पूरे भारत वषर् के सभी
िकसान तो इसका �वरोध नहीं कर रहे थे। सरकार �सफ़र् चु�नंदा आंदोलनका�रयों के सामने चुनावी समीकरणो के डर से झुक गयी)
− � Cropping patterns will remain skewed in favour of rice and wheat, resulting in subsidy
burden, ground water exploration, crop-stubble burning & air pollution. (अब वही सब पुरानी गे�ं चावल
क� खेती बाड़ी होती रहेगी, स��डी का बोझ, भुजल का दु�पयोग, पराली जलाने पर वायु प्रदू षण होते रहेगा)
− � Farmer will be continued to be exploited at the hand of APMC traders. Consumers will
continue to suffer from food inflation from middlemen commissions. (मं डी के दलालों दवारा िकसानों का
शोषण जारी रहेगा ग्राहकों के �लए खाद्य पदाथ� महँ गे ही रह�गे।)
40.15.4 ⚖�🛒🛒: �Conclusion : Agro-Act#1: (�न�षर्)

👳👳🙏🙏🙏🙏🙏🙏Successive union govts tried to convince the state govts to implement the model laws
for reforming APMC mandis & Contract farming sector viz.
o 2017: Model Agricultural Produce and Livestock Marketing Act 2017 (APLM: मॉडल कृ �ष
उपज और पशुधन �वपणन) covering both Agro commodities as well as livestock, fisheries and
poultry.
o 2018: Model Contract Farming Act, 2018 → (concurrent list) → aims to protect farmers
engaged in contract farming
⇒ But such model laws were not adopted uniformly across all the states of India. (उ�रो�र समय म� बनी
क� द्र सरकारों ने रा�ों को आदशर् कृ �ष कानून लागू करने के �लए मनाने क� को�शश क�, लेिकन असफल.)
�Coronavirus → economic slowdown → forced union government to implement farm
⇒ �
reforms at a faster pace. (कोरोना-आ�थक मं दी ने क� द्र सरकार को ज�ी से कृ �ष सुधार लागू करने के �लए मजबूर िकया)
⇒ But sadly the govt was unable to convince a section of farmers and contain their protests.
Ultimately, Govt has repealed the laws, for preventing further complications in law and public
order. (हालाँिक िकसानों के एक वगर् को मनाने म� सरकार असफल रही। और उनके लगातार आंदोलनो के चलते क़ानून �व�ा क�
सम�ाऑ को देखते �ए, सरकार ने है इन कृ �ष-सुधार क़ानूनों को रद्द िकया.)
⇒ Process of economic reforms has to be more consultative, more transparent to the potential
beneficiaries. It takes patience and humility to implement reforms. (भ�व� म� कृ �ष सुधार और आ�थक
सुधार से पहले सरकार ने �ादा लोगों का �व�ास-स�ादन करना चािहए, धैयर् और �वनम्रता से कायर् करना ।)
⇒ In future, BJP-ruled States’ govts may reform their State-APMC laws. Once those BJP-states do it
(and their local farmers benefit from it), then seeing their example-case study, the other states
will do it sooner or later. (हालाँिक भ�व� म� BJP शा�सत रा� सरकार� अपने कृ �ष क़ानूनो म� सुधार कर सकती है, और वहाँ
के िकसानो को लाभ होगा उसे देखकर अ� रा�ों पर भी दबाव बनेगा िक वे भी ऐसे कृ �ष-क़ानून सुधार करे।)
40.16👻👻⚖🥭🥭🥭🤝🤝🤝🤝🤝🤝 AGRO ACT#2 → CONTRACT FARMING 2020
⇒ Farmers (Empowerment and Protection) Agreement on Price Assurance & Farm Services
Ordinance, 2020. िकसान मू� आ�ासन और कृ �ष सेवा (सश��करण और सं र�ण) अ�ादेश. Later passed as Act
⇒ Its provisions will prevail / override over state APMC Acts and Essential Commodities Act.
⇒ Contract farming agreement means an advance agreement between the farmer and the buyer
agent, before the production of farm commodities. (अनुबंध खेती: ग्राहक और िकसान के बीच, कृ �ष उ�ादन से
पहले, िकया गया एक अ�ग्रम समझौता है)
Contract farming agreement: ideal elements/ it should contain:
⇒ Estimate Date of supply & Minimum quality standards (आपू�त �त�थ �ूनतम गुणव�ा)
⇒ Selling Price. (�बक्र� क�मत/भाव)
⇒ What inputs or services will be provided by the buyer (e.g. Pepsico giving
seeds/fertilizers/pesticides) कं पनी कौन सी चीज� मुहैया करेगी
⇒ Copies of associated Insurance / loan document. (फसल बीमा और ऋण के कागजात)
⇒ �Duration of Contract: From minimum one crop season to maximum five years. It may be
renewed further afterwards, if both parties agree. (अनुबंध क� अव�ध: 1 फसल मौसम से लेकर 5 साल तक)
⇒ Contract farming agreement doesn't mean buyer has got ownership of the farmer's land, (तािक कोई
बदमाश ग्राहक/क�नी ऐसे समझौता के कागजात के बल पर िकसान क� जमीन हड़पना शु� न कर द�)
⇒ Dispute settlement? Conciliation Board → Sub-divisional Magistrate (SDM) → Appellate
�
Authority (DM/collector/additional collector). (�ववाद �नपटान के �लए सुलह मं डल और अपील का प्रावधान)
⇒ �Penalty? Yes possible. But farmer's land can't be confiscated/attached for recovery of any
penalties/damages. (िकसान क� गलती/बदमाशी के चलते ग्राहक/कं पनी का नुकसान हो गया तो जुमार्ना/भरपाई मांग तो सकते
ह�, िकंतु िकसान से उसक� जमीन ज� नहीं कर सकते।)
40.16.1 👻👻 ⚖🥭🥭🥭🤝🤝🤝🤝🤝🤝:Repeal, Criticism & Conclusion Act#2:

Points Similar to Agro-Act#1.
40.17 🌽🌽🌽🌽🖱🖱AGRI-SELLING ONLINE → E-NATIONAL AGRICULTURE MARKET (E-NAM)

- Boss? Agro Ministry (2016) → Small Farmers’ Agribusiness Consortium (SFAC)
- Central Sector Scheme = 100% paid by Union.
- e-NAM (ई-रा��ीय कृ �ष बाजार) aims to connect the existing 580+ APMC mandis across India through
a web portal, thus enabling interstate and intrastate (within state) trade of agricultural
commodities. (मं िडयों को ऑनलाइन जोड़कर �ापार म� सुगमता)
- Govt is providing free software and ₹ 75 Lakh per APMC mandi infrastructure creation.
- It’ll also remove the information asymmetry (सूचना क� �वषमता) between buyers and sellers, and help
in real time price discovery based on actual demand and supply.
- 2019-Nov: FM Nirmala.S says State Govts should dismantle the APMC-mandis & replace them
with E-NAM Mandis so farmers can get a better price for their produce.
- 💼💼Budget-2020: Negotiable Warehousing Receipts (e-NWR) will be integrated with e-NAM.
This will help merchants buy e-NWR from E-NAM portal.
-
40.17.1 🌽🌽🌽🌽🌽🌽🌽🌽E-NAM: Criticism? (आलोचना)
- While the portal was launched for namesake in 2016, but, first inter-state trade started only in
2019. Only 18 states have so far connected their mandis with the web portal as of 2021. (सभी रा�
अभी तक इसम� जुड़े निह है।)
- Many APMC mandis lack quality-check labs before online auction- so buyers hesitant to
purchase. + Delays in the actual delivery. (ग्राहकों म� अनाज क� गुणव�ा क� आशं का, व� पे िडलीवरी निह होती)
🔠🔠❓MCQ. What are the advantages of 'National Agriculture Market' scheme?(Pre-2017)

a) It is a pan-India electronic trading portal for agricultural commodities.
b) It provides the farmers access to nationwide market, with prices commensurate with the quality
of their produce.
c) Both a and b d)Neither a nor b
40.17.2 🌽🌽🌽🌽Agri-Selling → Gramin Agricultural Markets (GrAMs)
- Boss? Agro Ministry (2018) → NABARD fund for Agri-Market Infrastructure Fund (AMIF).
- Gramin Haats are owned by Local Bodies (Panchayats/councils), Agricultural/ Horticultural
Departments of State Govts, Cooperatives, APMCs and Private Sector. Total ~22,000 of them.
Whereas APMC mandis are barely 580+.
- Budget-2018: 1) we will upgrade Gramin haat into GrAMs (ग्रामीण कृ �ष बाजार) 2) We’ll link them
with e-NAM. So, farmers can directly sell from nearby Gram Haat, instead of transporting the
produce to the APMC Mandis at the district level.
40.17.3 🌽🌽🌽🌽🌐🌐Agri-Selling→Outside India →Agri Export Policy, 2018

⇒ Agri Export Policy Boss? Commerce Ministry. (वा�ण� मं त्रालय क� कृ �ष �नयार्त नी�त)
⇒ Target? To double agricultural exports from present ~US$ 30+ Billion to ~US$ 60+ Billion by
2022 and reach US$ 100 Billion in the next few years thereafter.
⇒ To diversify our export basket e.g. Wild Herbs, Medicinal Plants, Aromatic Oils, Frozen
vegetables; Biscuits, Confectionery & Processed Food etc.
⇒ To diversify destinations e.g. Biscuits to Uganda, Nigeria, Kenya. (because Americans are
unlikely to be attracted to our Parle-G biscuits.)
⇒ To boost value added agricultural exports e.g cashew apple jams , flavoured / roasted cashew, etc.
instead of exporting raw cashew. (कृ �ष �नयार्त म� प्रस�रण द्वारा मू�वधर्न करना)
⇒ To help exporters with sanitary and phyto-sanitary (SPS) issues via APEDA, FSSAI and other
bodies. So their products are not banned by US/EU on the allegations of pesticide residue /
pathogen / fruit fly contamination. (अमे�रक� और यूरोपीय �ा� मानकों के चलते भारतीय खा�-उ�ाद के �नयार्त पर
प्र�तबं ध न लग जाए उसके �लए भारतीय सरकारी सं �ानों द्वारा भारतीय उद्य�मयों मदद द�ग।े )
⇒ To focus on branding, packaging & marketing of Indian ethnic products e.g. canned Indian
cuisine like Sarson Da Saag, Agra petha, Hyderabadi biryani in overseas markets.
⇒ To focus on R&D for gluten free, fibre rich products to cater health conscious consumer
overseas. (�ा� के प्र�त जाग�क �वदेशी उपभो�ा को आक�षत करना)
⇒ Encourage private investments through Ease of doing biz. in export oriented activities: cold
storage, packaging, air cargo; Creation of Agri-start-up fund. (�नजी �नवेश को प्रो�ाहन, �ापार म� सुगमता)
✍Conclusion? Thus, this policy will help integrating Indian agricultural products with the global
value chains and help doubling farmers’ income by 2022. (िकसान क� आय दोगुनी करने म� मदद)
40.18🌽🌽🌽🌽🌽🌽🌽AGRI-SELLING → FARMER’S INCOME: SAS SURVEY DATA
⇒ Situation Assessment Survey (SAS) of agricultural households conducted by the Ministry of

Statistics & Programme Implementation (MOSPI)→ National Statistical Office (NSO). ��त
आकलन सव��ण
⇒ Latest Report covers timeframe of 2019. It was published in 2021. Notable Findings →
⇒ agriculture household monthly income has ⏫ from ₹ 6426 (in 2014) to ₹ 10218 (2019) (एक
भारतीय िकसानप प�रवार क� औसत आमदनी मु��ल से 10,000 �पये प्र�तमाह है).
Highest monthly incomes of farming families Lowest monthly incomes of farming families:
− Meghalaya (Rs 29,348) − Jharkhand (Rs 4,895)
− Punjab (Rs 26,701) − Odisha (Rs 5,112)
− Haryana (Rs 22,841) − West Bengal (Rs 6,762)
⇒ fragmentation of land holding has ⏫. Average size of a farm reduced from 0.725 hectare
(2003) to 0.512 ht (2019) (ज़मीन का भी खं डन हो रहा है. खेत क� औसत आकार कम हो रही है.)
40.19🌽🌽🌽🌽🤲🤲🤲AGRI-SELLING → INCOME SUPPORT FOR FARMERS

- NABARD released All India Rural Financial Inclusion Survey found total ~21 crore rural
household. Out of them ~10 crore engaged in agriculture. Farming is not a very profitable
enterprise in India because majority of the families struggle to earn even ₹10,000 per month.
(खेतीबाड़ी ब�त मुनाफ़े वाला धं धा नहीं जा रहा था भगवान वृ�द्ध से 10 हज़ार �पए कमा पाते है)
- 📔📔📔📔ES2018 noted: Climate change’s negative impact is twice on unirrigated farms than
irrigated. With higher temperature and shorter rainfall: income fall will be 15-18% (for irrigated
farm), 20-25% (for unirrigated farm). जलवायु प�रवतर्न से उ�ादकता को खतरा
- Modi-govt has target of doubling the farmers income (from base year 2015-16) in 2022-23. But
for that agricultural sector must grow at 10% annually whereas it’s struggling to grow even @5%!
Therefore, Govt. intervention is necessary in the form of subsidies, procurement, MSP and
minimum income support (PM-KISAN@6k/pa). इस�लए स��डी �वपणन �ूनतम समथर्न मू� �ूनतम आय
समथर्न के �प म� सरकारी ह��ेप ज�री
40.20 🌽🌽🌽🌽🌽🌽🌽 AGRI-SELLING → MINIMUM SUPPORT PRICES (MSP)

Under the State APMC Acts, the first sale of agriculture commodity can occur at Agricultural
Produce Market Committee (APMC) Mandis only. However, a farmer may not get remunerative
prices at the Mandi due to following reasons:
1. Bumper production /⏫supply =market prices⏬ (आपू�त बढ़े: दाम �गरे) AND / OR
2. Cartelization / price-fixing by the mandi-merchants.
So, to protect the farmers, Government of India announces MSP (�ूनतम समथर्न मू�) before each crop
sowing season. (यिद िकसान को मं डी म� अ�� क�मती ना �मले तो सरकार को बेच सक� )
40.20.1 🌽🌽🌽🌽🌽🌽🌽 MSP covers which crops?
For 22 crops (MSP) + 1 sugarcane (FRP) = 23 viz.
14 kharif crops − Kharif: Grown In Summer / Monsoon Season.
− Paddy, Jowar, Bajra, Maize, Ragi, Arhar, Moong, Urad, Groundnut-In-Shell,
Soyabean, Sunflower, Sesamum (�तल), Nigerseed (राम�तल) And Cotton;
6 rabi crops − Rabi: grown in winter season.
− Wheat, Barley, Gram, Masur(Lentil), Rapeseed/Mustard,Safflower (कु सुम)
3 commercial − Jute, Copra (coconut) and Sugarcane.
/cash crops − For Sugarcane, mechanism is different: It requires the sugar mill companies
to pay the minimum Fair and Remunerative Price (FRP) fixed by Govt.
(Whereas for other 22, Govt itself procures @MSP)
** In addition, MSP of Toria (a type of oilseed crop) fixed on basis of rapeseed-mustard and MSP of
de-husked coconut (�छलका उतारा गया ना�रयल) fixed on the basis of the MSP of copra. But for MCQ if
asked then the safe number is ‘22’.
40.20.2 🌽🌽🌽🌽🌽🌽🌽 MSP computation, Swaminathan Committee?
Agro Ministry’s Commission for Agricultural Costs and Prices (CACP: कृ �ष लागत और मू� आयोग)
recommends MSP (& FRP for sugar) → Cabinet Committee on Economic Affairs (CCEA: आ�थक
मामलों क� कै �बनेट स�म�त) chaired by PM approves & announces MSP.
CACP’s computation method is →
A2 Actual costs directly incurred by the farmer on seeds, fertilizers,
pesticides, hired labour, depreciation on farm buildings & machinery,
interest on working capital, diesel/electricity for tractor/ pump sets etc.
FL Imputed cost of (unpaid) family labour.
(A2+FL) * 1.5 times This will be the official MSP. (from Budget-2018 onwards). So farmer
MINIMUM. sees 50% profit on this cost of production.
The National commission on farmers (2006) headed by Scientist MS Swaminathan had suggested
50% profit but using a different ‘C2 formula’, BUT
- C2 formula computed lot of costs, including imputed rent on his own land and imputed interest
on his own capital etc. (i.e. what if farmer had leased the farmland or gave his savings as loan to
someone else, instead of farming by himself, then how much rent / interest would he have
earned?) (का��नक �प से वह िकतना कमा लेता उसके भी कु छ आंकड़े जोड़े जाते ह�)
- If govt. used C2 formula, MSP will become very high due to aforementioned (hypothetical)
imputed costs → higher budgetary allocation, fiscal deficit will increase. So, Govt is using A2+FL
formula only.
- 2020: 😷😷Corona → 👻👻Atma-Nirbhar → Govt promised to ⏫MSP to help farmers.
40.20.3 📙📙📙📙ES22: Crop Diversification: by higher MSP (फ़सल �व�वधीकरण- उ� �ूनतम समथर्न मू� द्वारा)
Critiques argue that due to MSP policies, farmers are encouraged to grow mostly sugarcane, rice and
wheat, which creates 1) water shortage 2) supply-shortage of other crops. (सरकार क� �ूनतम समथर्न मू�
नी�तयों के चलते �ादातर िकसान ग�ा-गे�ं-चावल लगाना पसं द करते ह� �जससे पानी क� बबार्दी, अ� फसलों क� िक़�त होती है.)
⇒ So, to encourage crop diversification, govt is giving MSP @more than 50% of Cost Price for
certain crops e.g. mustard (100%), Masur (70+%), barley (60%) (इस�लए सरकार ने कु छ फसलों पर िकसान
क� लागत ख़चर् के ऊपर 50% से भी अ�धक एमएसपी जारी िकया है)
⇒ Benefits? - �1) crop diversification. 2) water & soil conservation 3) improve farmers income.
4) self-sufficiency in pulses and oilseeds → inflation control, food and nutritional security.
40.20.4 Crop Diversification: CDP program (2013)

2013: Agri Ministry’s Rashtriya Krishi Vikas Yojana (RKVY): Sub-scheme- Crops Diversification
Programme (CDP) to →
 To ⏬ rice cultivation in the original green revolution states viz. Punjab, Haryana, Western UP
 To ⏬ tobacco cultivation in Andhra Pradesh, Bihar, Gujarat, Karnataka etc
 under this scheme, govt helps farmers to shift towards less water requiring crops such as oilseeds,
pulses, coarse cereals, , cotton, etc (चावल और त�ाकू के िकसानों को सरकार मदद करती है अ� फ़सल लगाने म�)
🔠🔠❓MCQ. Consider the following:(Asked in UPSC-Pre-2018)

1. Areca nut 2.Barley 3.Coffee 4.Finger millet 5.Groundnut 6.Sesamum 7.Turmeric
The Cabinet Committee on Economic Affairs announces MSP for which of the above?
(a) 1, 2, 3 and 7 only (b) 2, 4, 5 and 6 only (c) 1, 3, 4, 5 and 6 only (d) 1, 2, 3, 4, 5, 6 and 7
🔠🔠❓MCQ. The FRP of sugarcane is approved by the (UPSC-Pre-2015)
(a) Cabinet Committee on Economic Affairs (b) Commission for Agricultural Costs and Prices.
(c) Directorate of Marketing and Inspection in Ministry of Agriculture.
(d) Agricultural Produce Marketing Committee.
40.20.5 🌽🌽🌽🌽🌽🌽🌽 Agri-Selling → MSP → Procurement (अ�धप्रापण / खरीद)?
Central agencies namely, Food Corporation of India (FCI), Cotton Corporation of India (CCI), Jute
Corporation of India (JCI), Central Warehousing Corporation (CWC), National Agricultural
Cooperative Marketing Federation of India Ltd. (NAFED), National Consumer Cooperative
Federation of India Ltd. (NCCF), and Small Farmers Agro Consortium (SFAC) will purchase the
entire quantity offered by the farmers at MSP.
− So, it’s also called ‘Open Ended Procurement (खुले छोर का)’ i.e. whether farmer brings
20/200/2000/xyz kilo, Govt agencies will buy it, without any ‘quota’ for every farmer. [Although
in real life there are some state-wise quotas but we’ll not get into operational guidelines]
− Collectively, this entire mechanism is called Market Intervention Scheme and Price Support
Scheme (MIS-PSS: बाजार ह��ेप योजना और मू� समथर्न योजना).
− Boss? Agro Ministry. Central Sector Scheme = 100% paid by Union.
From Food Corporation of India’s point of view, the economic cost of food grains is:
1) MSP paid to farmers (technically called ‘Pooled cost of grains bought at MSP’)
2) + Bonus paid to farmers (if any. This is usually announced during election season for votebank
appeasement)
3) Procurement Incidentals: paid to truck drivers, loaders, diesel, cost of operating godowns etc.
4) Cost of Distribution: When delivering grains to States for their Public Distribution System
(PDS) shops, National Food Security Act (NFSA), Mid-day-meal schools etc. More in Pillar#6:
Malnutrition
🔠🔠❓ The economic cost of food grains to the Food Corporation Of India is Minimum Support Price and
bonus (if any) paid to the farmers plus _ _ . (Prelims 2019)
(a) Transportation cost only (b) Interest cost only
(c) Procurement incidentals and distribution costs (d) Procurement incidentals and charges for godowns
40.20.6 🌽🌽🌽🌽🌽🌽🌽= 👌👌 MSP Benefits?
 Farmer always has the option to sell produce to govt, if he can’t get remunerative prices from
private merchants. It prevents distress-sale of produce at throwaway prices to private merchants.
(सरकार द्वारा आ�� िकसान, घबराहट म� उपज �नजी �ापारी को पानी के दामों पर नहीं बेचेगा)
 Govt announces MSP before the sowing season for 23 crops including cereals, pulses, oilseeds &
certain cash crops. This advance information helps the farmer to make an informed decision
about which crop to sow for maximum economic benefit within the limitations of his farm size,
climate and irrigation facilities. (िकसान �नणर्य ले सकता है कौन सी फसल म� उसे �ादा फायदा होगा)
 MSP sends a price-signal to market that if merchants don’t offer higher than MSP prices the
farmer may not sell them his produce. Thus MSP serves as an anchor or benchmark for agro-
commodity market. While MSP doesn’t guarantee that market prices will always be higher than
MSP, but at least it ensures the market prices will not be drastically lower than MSP. (�नजी बाजार के
मू�ों के �लए मानदंड का काम करता है)
40.20.7 🌽🌽🌽🌽🌽🌽🌽= 👎👎 MSP Limitations? (मयार्दा)

 FCI/NAFED procurement (अ�धप्रापण) is usually confined to big towns and district centres.
Farmers in remote & tribal area unable to bring their produce to the procurement agencies due
to high cost of transportation. 1997: Govt launched Decentralized Procurement (DCP: �वक� द्रीकृ त
अ�धप्रापण योजना) wherein State Govt themselves procure wheat and rice from farmers, & Union will
bear the costs. But not much success in increasing the penetration yet.
 Procurement is usually confined to rice and wheat (cereal grains). Not usually done for pulses,
oilseeds and other crops. So, aforementioned benefits of MSP remain ‘only on paper’, they are
not implemented in reality. So farmers are demanding MSP as ‘legal right’ (वा��वकता म� नहीं होती।
�सफर् एक कागजी िदखावा/िक्रया है. इस�लए िकसान इसे ‘क़ानूनी-अ�धकार’ बनाने क� माँग कर रहे ह�.)
 MSP not even announced for vegetables and fruits. (फल स��यों का नहीं होता)
🔠🔠❓(UPSC-Prelims-2020) Q.79. Consider the following statements

1) In the case of all cereals, pulses and oil-seeds, the procurement at Minimum Support Price
(MSP) is unlimited in any State/UT of India.
2) In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market
price will never rise.
Codes: [a) 1 only [b) 2 only [c) Both 1 and 2 [d) Neither 1 nor 2
40.21🌽🌽🌽🌽🌽🌽🌽: 🧔🧔 AGRI-SELLING: PM-AASHA: FIX MSP LIMITATIONS
Pradhan Mantri Annadata Aay Sanrakshan Abhiyan.

Boss? Agro Ministry (2018-Sept). Central Sector Scheme = 100% funded by Union.
The scheme has three components:
1. Price Support Scheme (PSS: मू� समथर्न योजना): Central Agencies will henceforth also do physical
procurement of pulses, oilseeds and Copra. (दलहन, �तलहन और कोपरा)
2. Price Deficiency Payment Scheme (PDPS: मू� म� कमी भुगतान योजना): If Farmers sells oilseed crops
to private merchants in APMC-mandis who are paying them less than MSP price, then govt will
directly transfer the difference money in farmer’s bank account.
3. Private Procurement Stockist Scheme (PPSS: गैर-सरकारी प्रा�� थोक-�ापारी योजना): Private agencies
will be hired for procuring the commodities at MSP on behalf of Govt.
40.22🌽🌽🌽📦📦📦📦📦�: FCI’S BUFFER STOCK PROBLEM (बफर भं डार)

1964-65: Food Corporation of India (FCI, HQ-Delhi), a statutory corporation, setup under
Consumer Affairs Ministry (भारतीय खाद्य �नगम, उपभो�ा कायर् मं त्रालय का वैधा�नक �नगम)
1) Procurement of foodgrains from farmers at Minimum Support Prices (प्रापण करना)
2) Distribution of foodgrains to consumers through Public Distribution System (PDS, सावर्ज�नक
�वतरण प्रणाली द्वारा गरीबों म� खाद्या�ों का �वतरण)
3) Maintenance of buffer stock for food related schemes and to meet emergency situations like
unexpected crop failure, natural disasters, festivals, etc. (खाद्य सुर�ा और क�मत ��रता के �लए खाद्या�ों के
बफर �ॉक का भं डारण करना)
40.22.1 🌽🌽🌽📦📦📦📦📦: 😥😥 FCI → Problems (सम�ाएं )

 Due to electoral populism, successive Governments kept ⏫ MSPs → MSP is no longer
‘minimum support price’ but rather maximum offered prices as rarely any private trader is
matching that amount. Consequently, 80-90% of rice and wheat in Punjab-Haryana is procured
by FCI only. (लोकलुभावन मे सरकार ने एमएसपी इतना बढ़ा िदया है क� �नजी �ापारी उतनी क�मत देने के �लए अ�म है)
 This discourages private sector to undertake long-term investments in procurement, storage
processing of commodities. (�नजी �ापारी खाद्या� भं डारण और प्रसं �रण म� �नवेश करने के �लए हतो�ािहत हो जाते ह�)
 2019: Food Corporation of India’s (FCI) godowns are overflowing with three times the buffer
stock requirement. So 1) started Open market sale. 2) exploring to donate it to the poorest
nations of the world. (�मता से अ�धक भं डारण �)
 FCI forced to spend a large amount of ₹₹ for acquiring, storing and distributing foodgrains. But
the Government is not releasing subsidy / funds to FCI in a timely fashion. FCI is forced to
borrow money. ( �Ref: Pillar2: fiscal deficit → EBR)
 Thus, Govt Intervention has hurt more than it has helped. (सरकारी दखल से यहाँ पर मदद कम, और तकलीफ
�ES20Vol1ch4 recommended following →
�ादा �ई है!), so �
40.22.2 🌽🌽🌽📦📦📦📦📦 FCI → Solutions by 📔📔📔📔ES20
 National Food Security Act (NFSA:रा�ी� य खाद्य सुर�ा अ�ध�नयम): It aims to provide rice(₹3/kg),
wheat(₹2/kg) and coarse grains (₹1/kg) at heavily subsidized price to 67% of Indian population.
o We should reduce the number of beneficiaries to bottom-20% poorest Indians.
o For ‘relatively less poor’ people, Govt should charge slightly higher prices. (More about
NFSAin Pillar6 → Malnutrition).
 Conditional Cash Transfer Schemes (सशतर् नकदी ह�ांतरण योजनाएं -अ� देशों क� तरह हम भी ये कर�)
o Brazil (Bolsa Familia), Mexico (Oportuni dades), Philippines (Pantawid Pamilyang).
o Here poor families given money to buy (non-subsidized) foodgrains from market.
o We should explore similar ways of giving cash/food coupon/smart cards to ⏬ FCI’s
procurement and stock keeping burden.
40.23🌽🌽🌽📦📦🚝🚝: 🧔🧔 AGRI-SELLING: STORAGE AND TRANSPORT
💼💼Budget-2020 announced:
🚝🚝 ⇒ Indian Railways with refrigerated coaches in trains. ट�ेनों म� प्रशी�तत िड�े. �= improve
Kisan national cold supply chain for perishables, milk, meat and fish. (नाशपाती कृ �ष उपज,
Rail दू ध, मांस और मछली।)
⇒ �Challenge? Railway Ministry complained funding shortage for this project.
✈ Ministry of Civil Aviation (नाग�रक उड्डयन मं त्रालय) will permit new flights on international
Krishi and national routes to transport agricultural cargo.
Udaan 🤩🤩= farmers of North-East and tribal districts to sell their exotic fruits/flowers at
premium prices. (अनोखे/जं गली फल-फू लो को ऊँ ची क�मत)
 We’ll encourage the Warehousing Development and Regulatory Authority (WDRA), Food
Corporation of India (FCI) and Central Warehousing Corporation (CWC) to build more
warehouses. [All these are bodies under Consumer Affairs Ministry]
40.24 💰💰💰💰💰: 🧔🧔 AGRI-SELLING: DIRECT INCOME W/O SELLING → PM-KISAN@6K/PA
Pradhan Mantri Kisan Samman Nidhi - Income Support Scheme

- Boss? Agro Ministry. Central Sector Scheme = 100% paid by Union.
- Beneficiary? Originally, A small / marginal farmer family comprising of husband, wife and
minor children -who collectively own cultivable land upto 2 hectare as per the land records of
the concerned State/UT. (2 hectare = ~5 acres). However, 2019-May: After General Election,
Modi 2.0 Govt remove the land holding ceilings. Now scheme available for all farmers,
irrespective of farm size. (सभी छोटे बड़े िकसानों को लाभ िदया जाएगा भले उनके पास िकतने ही एकड़ क� जमीन हो)
- Entitlement? Direct Benefit Transfer (DBT) of ₹ 6000 per year in three equal installments (₹
2000 x 3) in the beneficiary’s bank account. Thus, eliminating middlemen and corruption.
📆📆 PM-KISAN@6k/pa: Timeline?
- 1/2/2019: PM-KISAN scheme announced for the first time in interim budget 2019
- 2020: � � �ATMANIRBHAR→ PM GaribKalyan → ₹2000 PM-KISAN instalment to be
paid ahead of scheduled time (also known as ‘frontloading’, अग्रभार/तय समय से पहेले दे देना)
📑📑 PM-KISAN@6k/pa : Documents required?
- Farmer may show Aadhar card, driving License, Voters’ ID Card, MNREGA Job Card etc. State
authorities will cross check it against their land ownership database.
- Aadhar card is kept optional for the 1st and 2nd instalment. But, in subsequent instalments,
Aadhar to be compulsory for farmers for verifying their identity.
- Mobile number is optional but State Govt are encouraged to capture it.
- Compulsory to give Bank account number and its IFSC code (This code is written on bank’s
passbook, helps identify the name of the bank and address of the branch.)
- Complaint? District Level Grievance Redressal Committees. (�जला �र क� �शकायत �नवारण स�म�त)
40.24.1 💰💰💰💰💰: 🧔🧔= 👎👎 PM-KISAN: Criticism / Challenges?

1. Indian Council of Agricultural Research (ICAR) gets hardly Rs 8,000 crore from budget.
Whereas the [food subsidy + fertiliser subsidies + PM-KISAN] = total cost is about ₹5 lakh cr. To
double the farmer, we need to triple the amount on agri-R&D and extension, especially in the
emerging areas of high-value agriculture (horticulture, medicinal plants, livestock, fishery, etc)
(िकसानों को स��डी के नाम पर इतना सारा पैसा देने क� जगह- कृ �ष सं शोधन के �लए पैसा खचर् करना ज�री).
2. If a farmer’s name is not in the land records of State/UT then he’s not eligible. This excludes
a. landless / tenant farmers - who cultivate someone else’s land on contract.
b. Tribal farmers who may not have land ownership documents.
3. ₹ 6000 rupees per year is too little amount to cover the cost of seeds, fertilizers, wages of farm
labourers. For a 2 ht land, minimum input cost is ~₹ 50k in reality.(रकम ब�त कम है)
4. Some state governments are running better schemes on their own e.g. Telangana’s Rythu
Bandhu, Odisha’s KALIA scheme etc. Either they give more ₹₹ per farmer and/or even landless
farmers given some ₹₹. (कु छ रा� सरकारों क� योजनाएं क� द्र सरकार क� योजना से भी बेहतर है )
👊👊 ✋ Counter-argument? Union government has launched a scheme within the constraints of
fiscal deficit target. 15th finance commission has provided 41% tax devolution to the states so they
may run parallel schemes with their own ₹₹ for the farmers’ welfare. PM-Kisan is a better alternative
than one-time loan-waivers. (रा� सरकार चाहे तो अपनी जेब से �ादा पैसा �नकाल कर िकसानो को द�)
40.24.2 � → 👴👴👴👴💰💰: 🧔🧔 Pension: PM Kisan Maan Dhan Yojana

Ref: Pill1D- Pension Schemes for more details. Basically farmer contributes 55-200 per month. →
pension of ₹3000 upon crossing age of 60. Then on death his/her husband/wife to get 1500 pension.
40.24.3 ✍ Income Support: Conclusion template? (आमदनी म� सहयोग -�न�षर्)

Successive economic surveys have noted that farming is not a profitable enterprise in India. <insert
UN-SDG Goal#1, 2, Modi-Target 2x income>. However, an Indian farmer is often at the mercy of the
monsoon & the APMC-merchants. PM KISAN income support scheme / PM Kisan Maan-dhan
Yojana is a notable initiative to empower him. (इन योजनाओं से िकसान का सश��करण होगा)
40.25 🍅🍅🍅🍅🤯🤯AGRI-SELLING: FOOD INFLATION FOR CONSUMERS
(Intro-Origin) With green revolution, we became self-reliant in cereal production. But perishable
fruits and vegetables have remained our Achilles’ heel. Seasonal spikes in onion, tomatoes & pulses is
a recurring nightmare for middle class families of India. The underlying causes as following:
1. Demand Side: Growth of middle class & their disposable incomes → ⏫ demand of
fruits/veggies than before.
2. Supply Side: shortage of commodities on account of 1) poor monsoon & pests 2) post-harvest
losses due to unavailability of cold-storage & warehousing 3) hoarding (सं ग्रहखोरी/काला-बाजारी).
40.25.1 🍅🍅🍅🍅🍅🍅Food Inflation due to shortage of Pulses supply (दालों का उ�ादन)
1. Finest irrigated land used for cereal and cash crops like sugarcane because of better MSP. So
pulses’ area under cultivation is declining. Govt shd reform MSP for pulses cultivation, especially
in drought prone areas because pulses require less water than sugarcane. (दाल क� फसल म� ग�े से कम
पानी इ�ेमाल होता है, इस�लए सूखा प्रभा�वत �व�ारों म� उसे प्रो�ािहत िकया जाए)
2. Pulses make the soil nitrogen rich, it encourages weed growth- which ⏬ the pulses yield. Pulses
are themselves protein rich, so they’re more susceptible to (1) pests attack and (2) When stored
in open godowns, humid conditions = fungal growth. 25% of the produce is lost by this.
Solution? New seed varieties required but Indian scientists are focused on ‘cereals’ rather than
‘pulses’. (भारत के कृ �ष वै�ा�नकों का �ान दालों पर सं शोधन क� जगह खाद्या� अनाज पर सं शोधन म� �ादा होता है)
📈📈📈📈📈📈📈📈 Cobweb Cycle (मकड़ी का जाला)
⇒ if a farmer observes a high price for a specific crop for a year, he would opt to produce more of it
the next year. But if all farmers think with this mindset → excessive production & supply →
prices ⬇ → then they stop cultivating it in the next cycle → shortage in supply→ price ⬆.
⇒ Faulty producer expectations → cyclical fluctuation in supply & prices. (िकसान क� दोषपूणर् अपे�ाएँ →
उ�ादन और क�मतों मे चक्र�य उतार-चढ़ाव)
⇒ This is called ‘Cobweb’ Cycle. Term given by economist Nicholas Kaldor (1934)
⇒ � �ES20 blamed this phenomenon for price fluctuations in pulses.
40.25.2 🍅🍅🍅🍅🍅🍅Food Inflation due to shortage of Vegetable supply
1. Global Warming: April-May heat waves destroy nascent flowers / buds of vegetable plants. (वै��क
ताप मे वृ�द्ध के चलते नवजात फू ल / क�लयों का मुरजाना)
2. Pests & Diseases (क�ट और रोग): Maharashtra and Southern Indian farmers have been growing
tomatoes & onions since last 3 decades. But, overuse of general pesticides → whiteflies, red
mites, gram pod borers and other pests have gained immunity. → crop-loss has increased.
Farmers had started using Switzerland company’s seeds but later they were found to be
vulnerable to certain viral diseases.
3. UPA-Congress Govt (2004-14) had rapidly hiked MSP for wheat & rice so many farmers shifted
from veggies / pulses to cereal production. (गे�ं चावल म� �ादा समथर्न मू� के चलते दाल और स��यों क� फसल
कम होगा रहे ह� िकसान)
4. After demonetization (2016), cash based retail vegetable industry suffered → lower prices to
farmers in the last season. So they shifted away from vegetables towards sugarcane, maize, soya
etc. cash & cereal crops → veggies production ⏬.
5. Price wedge = large difference between the wholesale and retail prices. It’s due to high
transaction costs, poor marketing infra, huge margins by middleman etc
6. Heavy rains, Unseasonal rains, floods and cyclones disrupt the supply chains. e.g. 2021-Sept:
unseasonal rains in Punjab, Haryana, HP → Tomato crop damaged → inflation.
7. Farmer strike in Maharashtra, UP & MP, wherein they destroyed truckload of tomatoes, milk,
potatoes etc. (िकसानों द्वारा हड़ताल और प्रदशर्न ख़ुद अपना अनाज /स��याँ सड़क पर फ� क देते है)
8. Shortage of cold storage infrastructure (शीतागार). Big traders utilize them for hoarding onions
and potatoes, → less space for other vegetables’ storage even during bumper crops. 70% of
Tomatoes grown in Rabi Season- so in remaining months there will be shortage, if they’re not
stored.
9. Onion inflation – explained in separate section below.
10. 🤧🤧🤧🤧2020- Corona lockdown/supply-chain constrains= price rise in initial months, but later
on with unlockdown, prices moderated by 2020-December (तालाबं दी म� आपू�त श्रृंखला प्रबं धन म� चुनौ�तयां
�जसके चलते 2020 शु�आती महीनों म� खाद्य महंगाई बढ़ी हालांिक बाद के महीनों म� वापस कम �ई)
11. 2021- Soybean shortage → feed prices ⏫ → so fish & chicken prices⏫ (सोयाबीन चारा �आ महँ गा →
मुग�पालन और मछलीपालन करने वालों ने अपने दाम महँ गे क�ए)
12. 2022-August onwards: To increase the availability of wheat, rice and sugar in the local market,
government is either increases taxes on their exports and/or banning the export. I am not going
into the ball by ball commentary. let's wait for the EcoSurvey in 2023, to get the full
comprehensive overview of the entire year, after all our exam is not tomorrow morning. (घरेलू
बाज़ार म� गे�ं चावल और श�र क� स�ाई म� िद�त न आए इस�लए क� द्र सरकार �नयार्त होने वाली इन चीज़ों पर या तो प्र�तबं ध लगा
रही है या उस पर �ादा टै� लगाने का सोच रही है. इस बारे म� म� रोज़ रोज़ पढ़ने नहीं बैठँू गा. अगले साल का आ�थक सव��ण आने
दो। उसम� पूरे साल का ब�त �ौरा िदया होगा, तो एक बार म� समझ ल�गे �ोंिक हमारी परी�ा कल सुबह नहीं है.)
40.25.3 🍅🍅🍅🍅🍅🍅Seasonality in Onion-Tomatoes
� �ES22 observed Onion Tomato

70% grown during Rabi season Rabi season
Transplantation (फ़सल बोना) December-January October-February
Harvest (फ़सल काटना) By May By June
Affected by weather/climate Maharashtra, Karnataka Punjab, UP, HP, Haryana,
in South India
Thus, if drought / cyclone / excess rain / pest attack in above months → huge supply shortage &
inflation.
40.26🍅🍅🍅🍅🍅🍅: FOOD INFLATION → ONIONS

Onion Shortage caused by (�ाज क� कमी)
⇒ Late-arrival of monsoon: sowing (बीजारोपण) period delayed.
⇒ Prolonged rains damaged the standing crop in the Major producers viz. Karnataka, Telangana,
Madhya Pradesh and Maharashtra (largest producer: Its Lasalgaon town in Nasik district is
India’s largest onion market).
⇒ 2019-Sept-Oct: Heavy rains affected cutting and transportation of the crop.
⇒ So, [Supply < Demand] = Onion prices increased to ₹140/kg in late-2019.
40.26.1 🍅🍅🍅🍅🍅🍅: 🧔🧔 Govt initiatives → Onion Inflation (2019-Sept to Dec)
 Commerce Ministry → DG Foreign Trade → temporarily banned the export of Onions since
2019-Sept. (Although Andhra’s Krishnapuram onions were allowed for exports. They are
extremely pungent in taste (�ाद म� तीखा), liked by Srilankan and ASEAN families. But, Indian
families don’t like its taste much.)
 Commerce Ministry’s MMTC ltd company will import onions from Turkey & Egypt using the
₹₹ from Price Stabilisation Fund (It’s a fund under Consumer Affairs Ministry) → onions will
be supplied to State Govt’s Food and Civil Supply Departments → sold at reasonable prices.
 Government also directed the States to build buffer stocks, impose stock limits on traders and
take action against hoarding. (�ॉक सीमा लागू कर�)
 Long term solutions? Help the farmers cooperatives to directly sell to customers, strict action on
hoarding, develop more cold storage warehouses etc.
40.26.2 🍅🍅🍅🍅🍅🍅: 🧔🧔: 📔📔📔📔ES21 how to control onion inflation?

Onion prices skyrocket in August-November every year. Following reforms need to be taken:
⇒ NAFED procures and stores onion mostly in three states- Maharashtra, Madhya Pradesh and
Gujarat = more risk of adverse weather shocks / heavy rains / floods → transport bottlenecks.
Need to decentralise it with modern storage facilities at multiple states. (�सफर् तीन रा�ों म� �ाज का
भं डारण करने क� जगह, �वक� द्रीकृ त �प से अनेक रा�ों म� उ�� भं डा�रत िकया जाए, )
⇒ Health Ministry's eVIN (electronic vaccine intelligence network) =used for monitoring the
Vaccine supply. Similarly, onion supply online-monitoring systems need to be developed.
(ऑनलाइन तरीके से �जस प्रकार से वै�ीन क� �नगरानी रखी जाती है, ऐसा ही �ाज के साथ कर�)
⇒ Use of dehydrated onions that has longer shelf life should be promoted for buffer stock purposes.
Hydrated variety should be sold early. (सुखाए गए �ाज लं बी अव�ध तक �बगड़ते नहीं इस�लए उनका भं डारण िकया
जाए जबिक ताजा / ना सुखाए गए �ाज �ाज थोड़े पहले बेच िदया जाए)
40.27 🍅🍅🍅🍅🍅🍅: 🧔🧔AGRI-SELLING: FOOD-INFLATION: GOVT INITIATIVES?

40.27.1 🍅🍅🍅🍅🍅🍅: 🧔🧔 Food Inflation → Govt initiatives → MEP
⇒ **Minimum Export Price (MEP: �ूनतम �नयार्त मू�) It is the price below which of commodity
cannot be exported from India. During inflation in a particular agro commodity, commerce
ministry will ⏫ MEP to discourage its export from India → ⏫ supply in the local market →
price ⏬
⇒ �Limitation? Frequent changes in MEP = uncertainty for exporter-oriented farmers for the
next cropping season.
Sidenote: Minimum Import Price (MIP): it’s the price below which a commodity can’t be imported.
This is usually done for protecting domestic industries against cheap imports. E.g. Government
imposed MIP on pepper and areca-nut in 2018-19 (इससे कम मू� पर आयात नहीं कर सकते )
40.27.2 🍅🍅🍅🍅🍅🍅: 🧔🧔 Food Inflation → Govt initiatives → OMSS
⇒ 1964-65: A statutory corporation Food Corporation of India (FCI: भारतीय खाद्य �नगम) was set up
under Ministry of Consumer Affairs, Food and Public Distribution (उपभो�ा मामले, खाद्य और
सावर्ज�नक �वतरण). By default, FCI procures cereals/foodgrains @MSP & sells them to poor-families
via the Public Distribution System (PDS:सावर्ज�नक �वतरण प्रणाली) outlets.
⇒ However, during food inflation, FCI would also sell the grains in open market to ⏫supply,
⏬price rise. It’s called Open Market Sale Scheme [खुला बाजार �बक्र� ��म].
⇒ �Limitation? While OMSS can help during shortage / inflation of cereal grains (rice, wheat).
But, not much useful in veggies because they’re out of FCI-MSP ambit.
⇒ � Corona-2020: FCI starts selling wheat & rice to all the charitable/ non-govt orgs who are
running community kitchen for migrant workers / poor people. (कोरोना म� एफ़सीआई ने
सेवाभावी/समाजसेवी/ग़ैर-सरकारी सं �ाओं को भी दे दनादन अनाज बेचा तािक वो प्रवासी मज़दू रों म� खाना उपल� करा सके ।)
40.27.3 🍅🍅🍅🍅🍅🍅: 🧔🧔 Govt initiatives → Price Stabilization Fund (2014)
- मूल्य ��रीकरण कोष is a Central Sector Scheme = 100% funded by Union.

- Boss? Consumer Affairs Ministry gives Interest free loans to FCI, NAFED & other central/state
agencies to procure pulses and perishable vegetables from local and foreign farmers and sell it to
aam-aadmi at reasonable prices. (सरकारी सं �ानों को �ाज मु� कजर् िदया जाएगा �जससे वे दाल और स��यां खरीद
के वा�जब दामों पर बेचे)
40.27.4 🍅🍅🍅🍅🍅🍅: 🧔🧔 Govt initiatives → Operation Greens for T-O-P (2018)
REFER To PM Kisan Sampada Yojana under the topoic “Agriculture Production & Processing →
Other Schemes”
40.28🏝🏝🏝🏝🏝🏝 🤯🤯 FOOD INFLATION → EDIBLE OIL (खाद्य तेल)
Due to faulty MSP polices Edible oilseeds’ production in India is inadequate to meet consumer
demand. And it is becoming expensive for India to import edible oil because [आयात महंगा हो रहा है �ोंिक]
⇒ High demand of oil due to due to fastfood, junkfood (wafers etc) habits of young generation.
⇒ � La Niña climatic conditions affecting crop production in Argentina, Brazil for Soyabean Oil
⇒ Malaysia and Indonesia’s Palm oil purchased in large quantity by China =less qty for India.
⇒ � edible oils used generating biofuels by USA/Brazil= less qty for India. [जैव �धन म� इ�ेमाल]
⇒ � Corona → supply chain constraints and labour issues in lock down.
⇒ 2021: Indian govt ⏬customs duty on imported palm oil to reduce prices in India and imposed
stock limits under Essential commodities act. आयात होने वाले पाम ऑयल पर सरकार ने सीमा शु� कम िकया
तािक भारत म� खाद्य तेलों क� महँ गाई दर म� कमी आ सके । आव�क व�ु अ�ध�नयम क़ानून के अंतगर्त �ॉक �ल�मट तय क�।
⇒ Critics argue reducing taxes on imported edible oils, is not going to help fighting inflation,
because of high demand by customers and profiteering by sellers. िकंतु आलोचकों का मानना है िक �ापा�रयों
क� मुनाफ़ाख़ोरी तथा ग्राहकों क� बढ़ती माँग के चलते खाद्य तेलों म� महँ गाई को क़ाबू म� नहीं हो सकती।
40.28.1 🏝🏝🏝🏝🏝🏝 🤯🤯: 🧔🧔 Govt initiatives → Edible oil ki New Scheme (NMEO-OP: 2021-Aug)
⇒ Boss? Agriculture Ministry launched National Mission on Edible Oils – Oil Palm (NMEO-OP)
to make India self-reliant on edible oil production. [खाद्य तेल उ�ादन म� भारत को ��नभर्र बनाने के �लए]
⇒ Centrally Sponsored Scheme = States also required to contribute money.[क� द्र द्वारा प्रायो�जत योजना.]
⇒ With a special focus on the North east region and the Andaman and Nicobar Islands[ख़ास ज़ोर]
40.28.1.1 🏝🏝🏝🏝🏝🏝 NMEO-OP Scheme Component-1: (DBT)

⇒ The oil palm farmers produce Fresh Fruit Bunches (FFBs) from which crude palm oil (CPO) is
extracted by the industry. Govt of India will give a price assurance to the oil palm farmers for
the FFBs. This will be known as the Viability Price (VP).
⇒ Basically, Farmer will sell the fruits to oil-miller. and if farmer is receiving less money than the
Govt-formula-walla Viability Price (VP) then government will pay Viability Gap (₹) to farmer’s
bank account= Direct benefit transfer (DBT). [सरकार द्वारा तय क़�मतों से यिद कम पैसा िकसानों को फ़सल बेचने
पर �मल रहा है तो सरकार िकसान के ब�क खाते म� पैसा जमा करेगी]
⚾📻📻⚾🎓🎓✋ what is the exact formula for CPO adjusted with WPI to VP??? = NOT
IMPORANT. Don't waste time in such things it’ll give very poor cost benefit because scheme doesn’t
have a fancy name.
40.28.1.2 🏝🏝🏝🏝🏝🏝 NMEO-OP Scheme Component-2: (TRAINING)

Farmer will be given subsidy/support for input/seed/training for New cropping techniques e.g. half
moon terrace cultivation, bio fencing (Biofencing= planting lines of trees / shrubs that provide
protection against cattle, wildlife, winds) [खेतीबाड़ी के �लए अ�� गुणव�ा के बीज, स��डी और तालीम]
🤩🤩Conclusion: Presently India imports 98% of its palm oil requirement. Above scheme will greatly
help reducing our import bill, current account deficit, while creating income and employment
opportunities for farmers and youth. [सरकार का यह क़दम खाद्य तेल के आयात को कम करने म�, िकसानों और नौजवानों के
�लए रोज़गार के अवसर बढ़ाने म� मदद करेगा]
40.29🍅🍅🍅🍅🍅🍅: 🧔🧔 FOOD INFLATION → ESSENTIAL COMMODITIES ACT

⇒ Essential Commodities Act 1955 (ECA: आव�क व�ु अ�ध�नयम) aims to control the production,
supply and distribution of certain goods considered as essential commodities e.g. foodgrain,
pulses, edible oil, sugar, jute, fertilizers & seed, cattle-fodder, medicines, petrol, diesel, kerosene,
etc. During inflation/shortage: govt can impose stock limits, restrict movement of goods.
📔📔📔📔ES20vol1ch4 conducted case study of Onion-Sugar inflation of 2019 & found
⇒ 76,000+ raids were conducted, yet, less than 3000 traders penalized. It hints that raids are
misused for bribery and harassment. (छापेमारी का डर िदखाके �र�त मांगना)
⇒ Assuming every raid needs a minimum of 5 govt officials, this is a waste of manpower as well.
(सरकारी महकमे के समय और ऊजार् क� बबार्दी)
⇒ Under ECA, State Governments randomly impose stock limits on all wholesalers, distributors,
and retailers. But, these raids & stock limits had no impact on⏬ onion inflation (2019) or
pulses (2006) or Sugar (2009). (�ॉक �ल�मट को लागू िकया गया िकंतु खाद्य महंगाई को कम नहीं कर पाए)
⇒ Infact, ECA discourages traders from investing in warehousing and storage facilities. It
discourages entry of large private sector players into agricultural warehousing and marketing,
because they never know when govt will arbitrarily change the stocklimit norm. (बड़ी कं पनीया
गोडाउन, भं डार अवसं रचना मे �नवेश करने मे �न��ाह होती है)
⇒ ECA Act was passed in 1955 when India was worried about famines, shortages, speculative
hoarding and black marketing; it is irrelevant in today's India and must be discarded. ( पुराने जमाने
के इस कानून को फ� क देने का व� आ गया है) Because here, Govt Intervention has hurt more than it has
helped. (सरकारी दखल के चलते फायदा कम नुकसान �ादा �आ है)
40.30👻👻⚖🍅🍅🍅🍅🍅🍅✋AGRO ORDINANCE#3 → ECA ORDINANCE/ACT 2020
Essential Commodities (Amendment) Ordinance/Act, 2020-. आव�क व�ु (सं शोधन) अ�ादेश
Essential Commodities Act’55 Ordinance 2020-June
⇒ Essential commodities examples: In case of food items -cereals, pulses, potato, onions,
food items, fertilizers, medicine and edible oilseeds, and oils → Union Govt can impose
petroleum. stock limit only in the 4 extraordinary circumstances
⇒ However during what exact (असाधारण प�र��तयां) viz.
conditions, can the government ⇒ � War (युद्ध)
impose a stock limit? Ans. Vague ⇒ Famine (अकाल/सूखा)
law. Govt would do it randomly ⇒ � Grave Natural Calamity (गं भीर प्राकृ �तक आपदा)
based on election / media hype.
⇒ � � � Extraordinary Price Rise (असाधारण मू�
⇒ सरकार �ापारी पर �ॉक सीमा कब/िकतनी लगा वृ�द्ध/अ�ा�धक महंगाई). Which means compared to
सकती है? इस बारे म� कानून अ�� था। चुनावी average prices IF →
समय / मीिडया दबाव के आधार पर , o 100% price rise in horticultural
अचानक/अनपे��त �नणर्य होते है /perishable items (बागवानी/नाशपाती)
o 50% price rise in non-perishable (गैर
नाशपाती)
🧃🧃🧃🧃 Food processing companies were ✋Above stock limits may not apply to
also harassed unnecessary in stocklimits ⇒ � � Existing Food processing companies / food
(�ॉक सीमा म� खाद्य प्रसं �रण कं प�नयां परेशान होती value chain participants involved in agri
थी) processing, packaging, storage, transport, and
distribution. (प्रसं �रण, पैके�जंग, भं डारण, प�रवहन और
�वतरण)
40.30.1 👻👻⚖🍅🍅🍅🍅🍅🍅✋ECA Amendment 2020: Economic Policy Uncertainty
- As per the ECA (Amendment) Act 2020, Government can impose stocklimit ONLY in 4
extraordinary circumstances (mentioned in above table)
- Yet, 2021-July: Union Government imposed stock limits on pulses citing inflation. (but the price
rise was not crossing the 50% level required for non-perishable commodities.)
- Traders opposed. Then within 2 weeks, Government did ‘undo’ / reverted decision.
- Such Economic Policy Uncertainty discourage/demotivate private players from investing in
agriculture / warehouse infrastructure.
यद्य�प 2021 म� दालों क� क�मतों म� 50% बढ़ोतरी नहीं �ई थी िफर भी म� सरकार ने उस पर �ॉक सीमा लागू क�, जोिक इस कानून के
प्रावधान के �खलाफ़ है। �ापा�रयों के �वरोध के बाद सरकार ने अपने �नणर्य को वापस �लया, िकंतु आ�थक नी�तऑ म� इसप्रकार क�
अ�न��तता �नजी �ेत्र के उद्य�मयों को कृ �ष और गोदाम म� �ादा �नवेश करने से हतो�ािहत करती ह�।
40.30.2 👻👻⚖🍅🍅🍅🍅🍅🍅✋ECA Amendment 2020: repealed in 2021-Dec
Although farmers were not protesting against this reform. But, 2021-Dec: Govt repealed the above
amendment. Perhaps, because govt had to combat food inflation before Assembly elections and it
difficult to impose stock limits in presence of this amendment. हालाँिक िकसान इसका �वरोध नहीं कर रहे थे,
लेिकन िफर भी भारत सरकार ने इस सुधार को भी रद िकया है। शायद इस�लए �ोंिक चुनावी समय म� खाध महँ गाई से �नपटने के �लए
सरकार को �ोक-सीमा जारी करनी थी, लेिकन ये क़ानूनी सुधार बाधाएँ खड़ी कर रहा था।
40.30.3 😷😷😷😷 ECA → N95 Masks and Sanitizers put under ECA
⇒ 2020-March: Govt put them under ECA act to ⏫supply local market at reasonable prices. If
seller found black marketing and overpricing → 7 years jail / fine / both
⇒ 2020-June: Govt removed them from list, after State Governments reported there is sufficient
supply in market, and prices have become reasonable. (जब मा� और सै�नटाइजर वा�जब दाम पर उपल� होने
लगे तो सरकार ने आव�क व�ु कानून क� सूची म� से उ�� हटा िदया)
40.30.4 ✍ Food Inflation: Conclusion? (खाद्य महंगाई /मुद्रा��त पर �न�षर्)

Vegetables and pulses are rich source of vitamins and nutrients. They’re part of large varieties of
Indian and international cuisines. Therefore, food Inflation is a matter of concern for (1) nutritional
security in India and (2) India’s export competitiveness. Hence aforementioned factors need to be
addressed on priority basis. (पोषण सुर�ा, �नयार्त म� प्र�त�धार् को बनाए रखने के �लए अग्रता क्रम से यह सुधार ज�री)
🔠🔠❓MCQ. Why India experienced high food inflation in the recent past? (UPSC-Pre-2011)
1. Due to a gradual switchover to the cultivation of commercial crops, the area under the
cultivation of food grains has steadily decreased in the last five years by about 30%.
2. As a consequence of increasing incomes, consumption patterns of the people have undergone a
significant change.
3. The food supply chain has structural constraints.
Answer Codes: (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2, and 3
🔠🔠❓ Which were affecting price of rice in India in the recent past? (UPSC-Prelims-2020)
1) MSP 2) Government’s trading 3) Government’s stockpiling 4) Consumer subsidies
Codes: (a) 1,2 and 4 only (b) 1,3 and 4 only (c) 2 and 3 only (d) 1,2, 3 and 4
40.31 🍅🍅↘🤯🤯 AGRO-SELLING→ DEFLATION (2017 ONWARDS)

While agri. Inflation was a recurring nightmare during UPA-Congress raj (2004-14), the Modi-raj
has resulted in food-deflation (fall in the prices) for 3 reasons: (अप��त / दामों म� �गरावट)
1. Demonetization, limits on cash transactions and fear of being tracked by IT/GST authorities →
Traders are less inclined to hoarding → more supply available at market.
2. Protectionism by US/EU & fall of International commodity prices → India's agro exports are
down → More supply available in domestic market.
3. Urjit Patel's hawkish policy helped curbing inflation.(More in 📑📑Pillar#1A2)
40.31.1 🍅🍅↘🤯🤯 Agro-Selling→ Deflation → Sugar mills’ problem
- Fair and Remunerative Price (FRP) is the minimum price decided by union govt at which
sugarcane is to be purchased by sugar mills from farmers. (क� द्र सरकार द्वारा �नधार्�रत एफ़आरपी वो �ूनतम
दाम है �जस पर चीनी �मलमा�लक ने िकसान से ग�ा ख़रीदना होगा)
- Some State govts may announce State Advised Price (SAP) at levels higher than FRP.
- Cane Reservation Area: sugar mills must buy sugarcane from farmers within a specified radius.
This is to protect the sugarcane farmer from cheap sugarcane import from States. (“ग�ा आर��त
�व�ार” यानी चीनी �मल मा�लक ने अपनी फे �री के इदर्-�गदर् के एक �नधार्�रत �व�ार के िकसानो से ही ग�ा ख़रीदना होगा।)
- In recent Years, Bumper production of sugarcane in India and Brazil → ⏫supply → ⏬
global sugar prices → but to keep Indian farmers happy Govt did not reduce FRP. Infact, FRP
has doubled in 10 years. (उ�ादन म� बढ़ोतरी को �व� बाज़ार म� श�र के दाम �गर गए लेिकन िकसानों को ख़ुश करने के �लए
�पछले 10 सालों म� भारत सरकार ग�े के समथर्न मू� को दुगना िकया)
- Mill-owners’ arrears to farmers (i.e. previous payment not cleared yet.) (सरकार द्वारा �नधार्�रत दामों पर
चीनी/श�र �मलमा�लकों ने िकसानों से ग�ा ख़रीदा होता है लेिकन हाल के वष� म� बाज़ार म� चीनी स�ी हो गयी लेिकन िकसानो को
खुश रखने के �लए सरकार ग�े के दाम बढ़ाती रही, इस�लए चीनी/श�र �मल-मा�लक िकसानो का बकाया पैसा चुका निह पा रहे)
Then govt doing following to help the sugar mill owners, in following ways:
- Soft loan / cheap loans to sugar mill owners in the arrears to farmers.
- Finance Ministry imposed 100% customs duty on imported sugar & 0% custom duty on export
of sugar to help Indian sugar mills.(आया�तत चीनी पर 100% सीमा शु�, �नयार्त चीनी पर 0% सीमा शु�)
- Subsidy to sugar exporters
40.31.2 🍅🍅↘🤯🤯 Agro-Selling→ Deflation → Sugar Subsidy & WTO order
2019: Australia, Brazil and Guatemala complained to WTO that
- Indian Govt’s subsidies/soft-loans/tariff barriers to sugar sector led to excess supply & "reduced"
global prices so their local industry is hurt. (भारत सरकार द्वारा ग�ा-चीनी उद्योग को स��डी और कराधान द्वारा जो
प्रो�ाहन िदया गया है उससे �व� बाज़ार म� चीनी के दाम �गर गए ह� और ब्राज़ील, ऑ��े�लया, �ाटेमाला के चीनी उद्योग को नुकसान
�आ है ऐसी �शकायत उ�ोंने �व� �ापार सं गठन म� क� गई है)
- While WTO’s Agreement on agriculture (AoA)’s “Peace-Clause” allows Indian govt to give
food-subsidies (More in 📑📑Pillar#3B: WTO) but such exemption is meant for ‘food security’ of
its own Indians. But sugar export subsides/taxation is going beyond the scope of food-security.
(हालाँिक शां�त-धारा के अंतगर्त भारत सरकार को �व� �ापार सं गठन ने अंधाँधून खाद्य स��डी देने क� छू ट दी थी, लेिकन वो छू ट
�सफ़र् भारतीय लोगों क� खाद्य सुर�ा के �लए थी। चीनी �नयार्त पर भारत के कदम, उस छू ट के दायरे से बाहर है)
- 2021: WTO ordered Indian govt to stop its sugar subsidies. Indian Commerce ministry said that
WTO judgement is “completely unacceptable” to India, and we’ll appeal against it. (�व� �ापार
सं गठन ने भारत को अपनी चीनी-स��डी बं द करने का आदेश िदया है। हालाँिक भारत सरकार इसके �ख़लाफ़ अपील म� जाएगी।)
40.32�� AGRICULTURE PRODUCTION & PROCESSING → OTHER SCHEMES

40.32.1 👻👻👻👻👻👻👻👻 💸💸🔪🔪 Agriculture Infrastructure Fund (2020-Jul)
⇒ Boss? Ministry of Agriculture. (कृ �ष मं त्रालय क� कृ �ष अवसं रचना �न�ध)
⇒ Type? Central Sector Scheme (=States not req. to give money.)
⇒ Beneficiary? Farmers, Agriculture Cooperative Societies, Farmer Producers Organizations
(FPOs), Self Help Group (SHG), Agri-startups, Public Private Partnership (PPP) projects etc.
⇒ Banks and NBFCs will loan them total ₹1 lakh cr. (10k cr this + 30k cr each in next 3 years) =
total 1 lakh cr. NABARD may provide them with refinance. (Ref#1D)
⇒ 🔪🔪 Loan will be given for?
o Post-harvest Management Infrastructure (Warehouse, cold storage, etc. कटाई के बाद भं डारण
के �लए बु�नयादी ढांचा)
o Community Farming Assets (सामुदा�यक खेती क� प�रसं प��यां)
⇒ 🔪🔪 Loan duration? Medium to long term loans.(How many years exactly? Ans. not clearly
mentioned. (म�म से लं बी अव�ध के ऋण)
⇒ 🔪🔪 Loan Interest? To be decided by individual bank/NBFC.
⇒ 🔪🔪 Loan Interest Subvention? 3% by Government (�ाज म� स��डी/मदद)
⇒ 🔪🔪 Loan Default? = upto ₹2 cr credit guarantee by Credit Guarantee Fund Trust for Micro and
Small Enterprises (CGTMSE: Ref1D)
⇒ Scheme Valid for next ten years, starting from 2020
40.32.2 �� Agro Produ. & Processing → Farmer Producer Company (FPC)

⇒ Western economists had predicted that small farms will eventually cease to exist as big farmers
will buy their land, but that hasn’t happened in India. So, Government decided better to enable
small farmers to setup company & combine their landholdings.
⇒ 2003: Companies Act, 1956 was amended to allow new type of company- FPC.
⇒ FPC is a hybrid between a private limited company (=professional management) and a
cooperative society (mutual benefits without excessive weightage to who contributed how much
land / share capital.)
⇒ FPC can be setup by minimum 10 farmers (no upper limit). However, FPC is not allowed to
become a Public Ltd. company i.e. they can’t invite public at large to invest in their shares/bonds.
⇒ Agro ministry gives them financial support, credit guarantee for bank loans.
40.32.3 �� Agro Production & Processing → RKVY & RAFTAAR (2017)

⇒ Boss? Agro Ministry. Core Scheme = not 100% funded by Union.
⇒ Rashtriya Krishi Vikas Yojana (RKVY) started during UPA/Congress (2007).
⇒ 2017: Modi renamed and rebranded it to RKVY-RAFTAAR i.e. Remunerative Approaches for
Agriculture and Allied sector Rejuvenation.
⇒ It provides funding for Infrastructure creation (warehouse, cold storage, market facility etc.);
training & skill development (Mushroom cultivation, beekeeping, aromatic plant cultivation,
floriculture) and financial support to farmers to start agri-enterprise after getting the training.
40.32.4 �� Agro Prod. & Processing → Green Revolution - Krishonnati Yojana
- Boss? Agro Ministry. Core scheme= not 100% paid by Union.
- 2017: Modi made this umbrella scheme (छतरी योजना) by combining previous 11 Congressi
Schemes viz.
1. Mission for Integrated Development of Horticulture (MIDH:बागबानी एक�कृ त �वकास): Bee keeping
also promoted in it. One of MIDH sub-mission is ‘Coordinated Programme on Horticulture
Assessment and Management using ‘geo-informatics’ (Project CHAMAN) to use space
technology / remote sensing data to assess the horticulture production & diseases in India. 2018:
Phase-II of Chaman launched.
2. National Food Security Mission (NFSM) to increase production of rice, wheat, pulses, millets
(coarse cereals) and commercial crops & restore soil fertility.
a. 2018 declared as “National Year of Millets”. Further, UN & FAO accepted India’s
proposal to celebrate 2023 as International Year of Millets (अंतरार्ष्ट�ीय बाजरा वषर्). Because,
millets are tolerant to drought, climate change, photo insensitive; need less water,
provide nutritious elements in poor families’ diet. So, Govt create two sub-missions.
i. NFSM on Makka and Jau.
ii. NFSM on Nutri-Cereals (पौ��क अनाज) - Jowar, Bajra, Ragi and little millets like
Kutki, Kodo, Sawa, Kangni and Cheena.
b. NFSM has another sub-mission: National Mission on Oilseeds and Oil Palm (NMOOP:
�तलहन और तेल पाम) to augment the availability of vegetable oils and to reduce the import of
edible oils. Associated term: Yellow Revolution.
3. National Mission for Sustainable Agriculture (NMSA: �ायी / सतत कृ �ष के �लए रा��ीय �मशन) to
encourage organic manures, bio fertilizers, cropping practices for soil and moisture conservation
measures; Rainfed Area Development (RAD) programme.
a. Subscheme: National Bamboo Mission (NBM) to augment the income of farmers.
Further, Indian Forest Act, 1927 was amended to exclude bamboo from the definition of
‘trees’. This will encourage bamboo grown outside forest area without interference from
Forest Department.
4. Sub-mission on Agriculture Extension (SMAE: कृ �ष �वस्तार पर उप �मशन): farmers training & skill
development with more use of electronic / print media, mobile apps and ICT tools, etc.
5. National e-Governance Plan on Agriculture (NeGP-A: राष्ट�ीय ई-गवन�स): to enhance reach of
extension services- about cropping methods, market prices etc. to the farmers.
6. Sub-Mission on Seeds and Planting Material (SMSP: बीज तथा पौध रोपण सामग्री): to promote new
technologies in seed production, processing, storage, certification and quality etc.
7. Sub-Mission on Agricultural Mechanisation (SMAM: कृ �ष मशीनीकरण पर उप�मशन): To increase the
availability of farm machines to small and marginal farmers. e.g. ‘Custom Hiring Centres’ where
they can rent the machines without spending money on individual ownership. encourage R&D
for small-sized machineries for small landholdings, hill-areas etc.
8. Sub Mission on Plant Protection and Plan Quarantine (SMPPQ: पौध सं र�ण और पौधों के अलगाव पर
उप�मशन ): To minimize the damage by insect pests, diseases, weeds, rodents, etc. and to shield our
agricultural biosecurity from alien species.
9. Integrated Scheme on Agriculture Census, Economics and Statistics (ISACES:कृ �ष गणना,
अथर्व्यवस्थाएं तथा सां��क� पर एक�कृ त योजना): For data collection which can be used for R&D and policy
making.
10. Integrated Scheme on Agricultural Cooperation (ISAC: कृ �ष सहयोग): Give financial assistance for
farmers' cooperatives for agricultural marketing, processing, storage etc.
11. Integrated Scheme on Agricultural Marketing (ISAM: कृ �ष �वपणन): To develop online and offline
agricultural marketing infrastructure.
<Homework? After Prelims, self-study their features in a more comprehensive manner from Yojana-
Kurukshetra magazines, because UPSC is in habit of asking about random obscure agro. schemes in
the mains exam. E.g. horticulture mission.>
40.32.5 �� Agro Production & Processing → PM Kisan Sampada Yojana

⇒ Boss? Food Processing Ministry. Central Sector Scheme. 100% funded by Union.
⇒ Modi’s PMKSY (प्रधान मं त्री िकसान स�दा योजना) is an umbrella scheme incorporating previous
Congressi schemes like Mega Food Parks, Integrated Cold Chain, modernization of reefer vans
etc. Basically, funding is given to setup food processing infrastructure / parks / collection centres.
E.g. Patanjali Food and Herbal Park at Haridwar, Uttarakhand.
⇒ Budget-2018 launched a new sub-scheme under PM Kisan Sampada Yojana called “Operation
Greens” for T-O-P: Tomato, Onion and Potato to improve infra for their storage & transport →
round the year availability of T-O-P @affordable prices.
40.32.6 👻👻🍅🍅🍅🍅🍅🍅 Atma-Nirbhar: ”Op Green” expanded to all fruits & veggies
⇒ Food Processing Ministry → PM Kisan Sampada Yojana → sub scheme called Operation Greens
for T-O-P: Tomato, Onion and Potato
⇒ 2020: �Corona → �ATMANIRBHAR= now we’ll expand from T-O-P to ALL fruits and
vegetables. It’ll provide
o 50% subsidy on transportation from surplus area to deficient area. (�जन �व�ारोम� �वपुल
उ�ादन/आपू�त है वहां से कमी/तं गी वाले बाजारों म� माल प�ंचाया जाए)
o Long term subsidy on storage infrastructure. (भं डारण के �लए बु�नयादी ढांचा)
⇒ Benefit? reduced food wastage, Better prices for farmers, affordable food for consumers
(अप�य/बबार्दी, िकसान को बेहतर क�मत, ग्राहक को िकफायती दाम)
40.32.7 👻👻👻👻🍭🍭🍭🍭 Atma-Nirbhar: Food Enterprises promotion (खाद्य उद्यमों को बढ़ावा)

⇒ Scheme: Prime Minister-Formalization of Micro Food Processing Enterprises (PM-FME):
⇒ Existing (unorganized sector) micro food enterprises, Farmer Producer Organisations, Self Help
Groups and Cooperatives
⇒ will be given funding, training, support for brand Building,marketing . (असं गिठत �ेत्र के लघु खा�
उद्यमों को �व� पोषण, प्र�श�ण, समथर्न)
⇒ Help them comply with Food Safety Standards, (खाद्य सुर�ा मानक)
⇒ Cluster based approach of development e.g. Mango in UP, Kesar in J&K, Bamboo shoots in
North-East, Chilli in Andhra Pradesh, Tapioca in Tamil Nadu etc. → ⏫Export (समूहबध्ध करके
�वकास, �नयार्त मे बढ़ोतरी)
Separately, herbal cultivation of medicinal plant, beekeeping will be encouraged (औषधीय पौधे और
मधुम�ी पालन को प्रो�ाहन)
🔠🔠❓ MCQ. which of the following can be considered as public investment in agriculture? (Prelims-2020)
1) Fixing Minimum Support Price for agriculture produce of all crops
2) Computerization of Primary Agriculture Credit Societies
3) Social Capital development
4) Free electricity supply of farmers
5) Waiver of agriculture loans by the banking system
6) Setting up of cold storage facilities by the governments
Codes: (a) 1, 2 and 5 only (b) 1, 3, 4 and 5 only (c) 2, 3 and 6 only (d) 1, 2, 3, 4, 5 and 6
40.33🧃🧃FOOD PROCESSING INDUSTRIES FOR GSM3
40.33.1 🧃🧃Food Processing: Meaning (खाद्य प्रसं �रण: अथर्/मतलब)

It is the process of turning fresh / raw foods into food products, using mechanical and chemical
operations. (यां�त्रक और रासाय�नक तरीको का उपयोग करके , ताजे / क�े खाद्य पदाथ� को, खाद्य उ�ादों म� बदलने क� प्रिक्रया है)
stage (चरण) What?
🍎🍎Primary Products consumed in the original state. Don’t have any no value addition. (e.g.
प्राथ�मक apples in a wooden box). �बना प्रसं �रण/ मू�वधर्न िकए सीधा उपभोग
🧂🧂Secondary Basic level of processing: cutting, drying, grinding etc.. (e.g. dried fish, turmeric
िद्वतीयक powder, chili powder, wheat flour.) काटने, सुखाने, पीसने के बाद
Combining multiple primary, secondary products from above and doing high
🧁🧁🧁🧁Tertiary
value addition (e.g. ice creams, biscuit, jam, cakes, pastries etc.) उपरो� प्राथ�मक और
तृतीयक
िद्वतीयक चरण क� चीजों म� और �ादा मू�वधर्न करना
40.33.2 🧃🧃🧃🧃Food Processing Industry: Significance (मह�)
⇒ Direct and indirect employment opportunities, ⏬migration. (बेरोजगारी और �ानांतर)
⇒ ⏬wastage of food, ⏬food inflation. (खाद्य चीजों क� �बगाड़ बबार्दी मं गाई)
⇒ ⏫export earning, ⏬Current Account Deficit, ⏫GDP
⇒ Farmer motivated for growing fruits, vegetables, milk, fish, meat, poultry, grain, etc. → doubling
his income.
40.33.3 🧃🧃🧃🧃Food Processing Industry: Scope / Opportunities (अवसर)

⇒ Geographical: multiple types of soil & agro-climatic conditions, large coast line & fresh water
bodies. → Suitable for cultivation of variety of crops & fisheries. (अलग-अलग फसलों क� पैदावार के �लए
�व�भ� िक� क� �मट्टी और जलवायु प�र��तयां)
⇒ Demand: Nuclear families, usually working couples: wanting processed food / ready to cook
instant food. (एकल या �वभ� प�रवार- तुरंत पकाने के �लए तैयार भोजन चािहए)
⇒ Diabetes, obesity, Blood pressure, lifestyle diseases =>demand for healthy food, organic food.
⇒ Export potential for ethnic food and beverages such as Rasgulaa, kokum water, coconut water,
Toddy Palm wine etc. (भारत के पारंप�रक खाद्य और पेय पदाथ� के �नयार्त कर सकते ह�.)
⇒ Govt permitted upto 100% FDI in food processing industries. If foreign companies invest in
India, it can further boost our products’ quality. (�वदेशी �नवेश म� भी 100% अनुम�त दी गई.)
40.33.4 🧃🧃🧃🧃Food Processing Industry: Challenges → General (चुनौ�तयां)

While India is among the largest producers of cereals, Fresh fruits, vegetables, milk, meat, oilseed,
cash crops and fisheries. But less than 1/5th of food gets processed. Reasons:
⇒ Problems in access to Capital / Loans, Infrastructure. (पूंजी, ऋण, बु�नयादी अवसं रचना)
⇒ Need Skilled Manpower, Research Development, Technology
⇒ Plethora of government schemes: overlapping, ambiguous, inefficient. (�मलते जुलते उद्दे� वाली ब�त
सारी सरकारी योजनाएं लेिकन प्रभाव म� बेअसर)
⇒ Obstacles in APMC Act, prevalence of middle-men. No direct linkages with farmers. (Until the
recent E-NAM And Agri-ordinances)
⇒ in the export market:
o 1) Competition from others: Kenya (Tea), Newzealand (Milk), ASEAN (Fish)
o 2) Our products get rejected on health & hygiene standards
40.33.5 🧃🧃🧃🧃Supply Chain Management (SCM: आपू�त श्रृंखला प्रबं धन)

⇒ Supply chain is a system that links a company with its suppliers and customers.
⇒ Supply chain management (SCM) tries to optimize the production and marketing by getting the
right things - to right place- at right time - In a cost-effective manner.
⇒ आपू�त श्रृंखला प्रबं धन - सही चीजों को सही समय पर सही �ान पर प�ंचा कर कं पनी को उसके आपू�तकतार् और ग्राहकों के साथ
प्रभावी, िकफायती, तेजी से जोड़ने क� को�शश करता है.
40.33.6 🧃🧃🧃🧃SCM: Upstream-Downstream: Meaning
In a supply chain: Upstream-downstream depends on the point of reference.
सं दभर् �बंदु Upstream: towards suppliers Downstream: towards
धारा म� ऊपर क� तरफ (आपू�तकतार्) consumers
धारा म� नीचे क� तरफ
�Farmer Suppliers of Seeds, Fertilizer, Pesticides and ⇒ middlemen / trader @Mandi
Agro-machinery. (बीज, उवर्रक, क�टनाशक और ⇒ Food processing company (if
कृ �ष-मशीनरी- के �वक्रेता/आपू�तकतार् ) he has contract farming
agreement)
�Food ⇒ Farmers, ⇒ Wholesalers (थोक �ापारी)
Processing ⇒ Mandi-agents ⇒ Retailers (खुदरा �ापारी)
Company ⇒ Suppliers of food-preservatives, edible- ⇒ E-Commerce
colors, plastic-aluminum packaging etc. Websites/Apps
⇒ Final customers
40.33.7 🧃🧃🧃🧃🧃Food Processing: Upstream issues
⇒ Crops, fruits, vegetables: Climate change, heatwave, drought, diseases affecting the
�
production and quality. (जलवायु प�रवतर्न, स� गम� क� लहर, सूखा, बीमा�रयाँ)
⇒ R&D required to improve their shelf-life, taste, colour and texture for foreigners. (फल स�ी: लं बे
समय तक �बगड़े नहीं, �ाद रंग �चा �वदे�शयों को आक�षत लगे, ऐसे वै�ा�नक सं शोधन क� ज�रत)
⇒ �Cattle & Poultry: Foot & mouth disease, shortage of veterinary doctors, Avian Influenza,
Swine flu. Shortage of green fodder. (मवेशी-मुग�, रोग/�चिक�ा, हरी घास)
⇒ �Cooperative farming/Cooperative dairy sector suffering from politicisation / casteism /
scams. (सहकारी कृ �ष/डेयरी �ेत्र म� राजनी�तकरण, जा�तवाद और धांधली)
⇒ �Transport, Electricity, Infrastructure problems: milk/fruit/vegetable stored at village
collection point gets spoiled. (प�रवहन, �बजली, बु�नयादी सु�वधाएं )
40.33.8 🧃🧃🧃🧃🧃🧃Food Processing: Downstream issues
⇒ �Adulteration in spices, cereals and other food products. synthetic milk made from Detergent,
Urea and caustic soda. (मसाले, खाद्या�, दू ध - हर चीज म� �मलावट खोरी)
⇒ Indian consumers prefer to buy fresh vegetables/meat/fish rather than processed or frozen. (ताजा
स�ी खरीदना पसं द करता है)
⇒ �Rail Transport: timing-schedules, cold storage problems. Congested rail stations, lack of
sorting, grading, warehousing facilities nearby. (अप्रभावी रेल प�रवहन)
40.33.9 🧃🧃🧃🧃🧃🧃🧃🧃Food Processing: Downstream issues → Export stage
⇒ �Tea Competition from Sri Lanka, Kenya, Indonesia and China. Coffee Competition from
Brazil, Columbia. (�नयार्त बाजार म� अ� देशों क� चाय कॉफ� से �धार्)
⇒ �Port & Shipping: Environmental issues in land acquisition= hard to setup new port / expand
the existing port. (बं दरगाहों का �व�ार करने के �लए जमीन सं पादन मु��ल)
⇒ �Often our food-products get banned in the USA and EU for health/hygiene standards. (e.g.
mango: stone weevil insect, buffalo meat : foot-and-mouth disease, fish: heavy metal
contamination). Then we've to undergo a lengthy legal process & inspection process to get the
ban lifted. (�ा� / ��ता मानकों के चलते अमे�रका और यूरो�पयन यू�नयन म� हमारे �नयार्त का अ�ीकार/प्र�तबं ध)
⇒ �
Protectionism: High level of taxes imposed on Indian Exports by USA/EU/China. (सं र�णवाद)
Ref-Pillar#3B. ++Refer to points mentioned in Agriculture Export Policy
40.33.10 🧃🧃✍Food Processing: Conclusion- हां इस �ेत्र पर �ान देना होगा
Food processing industry can increase income of farmers, jobs for youth and export earnings & GDP
growth for India. It can also help in Sustainable Development Goals (SDG)-
⇒ SDG Goal #2: eliminate hunger and malnutrition. (भूख और कु पोषण को ख� करना)
⇒ SDG Goal #5: Gender empowerment via employment opportunities (मिहला सश��करण)
⇒ SDG Goal #8: Decent Work and Economic Growth (रोजगार के अवसर, आ�थक वृ�द्ध)
⇒ SDG Goal#12: Reduce food wastage at post-harvest supply chains. (कटाई के बाद क� आपू�त श्रृंखला म� खाद्य
बबार्दी �बगाड़ को कम कर�।)
Therefore the aforementioned issues need to be addressed on war footing /priority basis. (िकसान क�
आमदनी युवाओं के �लए रोजगार आ�थक वृ�द्ध सतत �वकास ल�- सभी जगह पर खाद्य प्रसं �रण उद्योग मदद कर सकता है अतः उपरो�
मुद्दों को युद्ध�र से �नपटना / प्राथ�मकता देना ज�री)
Homework After Prelims syllabus finished:
 Mains-GSM1: Industrial location factors at mrunal.org/tag/gsm1-geo-location
 Main-GSM3: Food Processing Industry at mrunal.org/tag/food-processing
But, without excessive focus on minute details. (बारीक� से नहीं, िक�ु ऊपर-ऊपर से)
40.34🐮🐮 SECTORS → AGRO ALLIED: → ANIMAL HUSBANDRY (पशुपालन)
- DPSP-Article 48: requires the State to organise animal husbandry on modern and scientific lines,
preserving and improving breeds, and prohibiting the slaughter of cows and other cattle.
- Per capita availability of milk and eggs has steadily ⏫ in recent years, says � �ES22
Above graph also gives a hint of why there is malnutrition in some states.
40.34.1 🐮🐮🐮🐮🐮🐮 Livestock Census (पशुधन क� जनगणना)
- Department of Animal Husbandry conducts livestock Census every 5 year since 1919-20.
- The 20th Livestock Census: data collection started in 2018-Oct. data released in 2019.
- India has the world's largest livestock population
Category Census- % growth / Internal Distribution:
(Largest to 2018-19 fall to More imp for StatePCS Exam than IAS exam
Smallest) (in previous
million) census
Cattle 192.49 0.8% ⇒ WB>UP>MP>BH>MH
⇒ Female Pop>Males.
⇒ Indigenous Population is more than
Crossbred/Exotic Pop.
⇒ In-Milk giving population greater than Dry
Population
Goat 148.88 10.1% RJ>WB>UP>BH>MP
Buffalo 109.85 1.1% UP>RJ>Guj>MP>Bihar
Sheep 74.26 14.1% Telangana>Andhra>Kar>RJ>TN
Pig 9.06 -12.0% Assam>JH>Megha>WB>Chhattisgarh
Mithun 0.38 26.7% It’s a Buffalo like animal found in Northeast
Only 4 States: Arunanchal>Naga>Mani>Mizo
Horses & 0.34 -46.0% UP>JK>RJ>BH>Guj
Ponies
Camel 0.25 -37.5% Only 4 States: RJ>Guj>Haryana>UP
Donkey 0.12 -62.5% RJ>MH>UP>Guj>BH
Mule 0.08 -60.0% info not available in Census document
Yak 0.06 -25.0% Only 5 States: J&K>Arunanchal>Sikkim>HP>WB
Total 535.78 4.6% Top 5-States: UP>Raj>MP>W.Bengal>Bihar
(Mammal)
Livestock
Separately
Poultry 851.81 16.8% Top 5-States: TN>Andhra>Telengana>WB>MH
40.34.2 🐮🐮🍼🍼 Agro Allied: Animal husbandry → White Revolution
- India ranks first in milk production, accounting for 20 percent of world production.
- 1970-1996: Operation Flood in 3 phases, to setup dairy farmers’ cooperatives → increase milk
production in India.
- Afterwards, milk production in India has been increasing steadily.
- All India per capita availability of milk is 375 grams per day, it varies between 71 grams per day
in Assam to 1120 grams per day in Punjab.
- White Revolution Scheme Boss? Department of Animal Husbandry & Dairying.
- Core Scheme = Not 100% Funded by Union.
- It is an Umbrella scheme covering many Congressi schemes like Dairy Entrepreneurship
Development, Livestock Census, National Livestock Mission, fodder & vaccination etc.
- Notable parts of White revolution are →
Table 2: by default, Animal husbandry ministry responsible for this
Pashudhan - Animal Wellness Programme with emergency helpline
Sanjivani - Farmers given Nakul Swasthya Patra: An Animal Health card with UID
identification number of each animal registered in a National Database.
e-Pashudhan Online portal for connecting farmers with breeders of indigenous bovine
Haat portal breeds for bulls, artificial insemination etc. (कृ �त्रम गभार्धान)
E-Gopala App National Dairy Development Board's (NDDB) App to give info on cattle care,
(2020-Sept) health and diet. Later, Animal's separate Unique Identification number
(UID/Aadhar) numbers to be added in e-GOPALA app to make it easier for
cattle owners to buy and sell animals. (मवे�शयों क� �बक्र� होगी आसान )
Rashtriya Gokul - Indigenous bovine breeds (�देशी गोजातीय न�)- conserve them & increase
mission their population. E.g. Gir, Sahiwal, Rathi, Deoni, Tharparkar, Red Sindhi.
- State govts are given money for establishing Gokul Gram breeding &
disease treatment centres.
National For development and conservation of indigenous breeds in a scientific
Kamdhenu manner. Two centres: 1) Itarsi near Hoshangabad in M.P. 2) Chintaladevi
breeding centre near Nellore in Andhra GK-NOTIMP.
Rashtriya Int-Budget-2019 setup this executive body in Department of Animal
Kamdhenu Aayog Husbandry & Dairying. Goals?
2019 - Genetic up-gradation of cow resources
- Enhance cow productivity through research in organic manure, biogas
etc; Cow welfare, cow protection laws.
Structure:
- Chairman with tenure of 2 years.
- Members from govt, research institutions, social workers etc their tenure
depends on govt’s discretion.. HQ: New Delhi.
💼💼Budget-2020  We’ll eliminate following disease by 2025:
o Cattle: Foot and Mouth disease, Brucellosis
o sheep and goat: Peste Des Petits Ruminants (PPR)
 We’ll use MNREGA workers to develop fodder farms.
Dairy Sahakar dairy sector to get loans through National Cooperative Development
2021 Corporation (NCDC).
🐮🐮🐮🐮😢😢 Challenge in dairy sector?
1. Post-2017: Excess supply of milk in global market → crash in milk prices. So, Indian private
dairy owners also cut down their procurement prices, resulting in dairy farmers’ distress &
agitations. So, farmers spilling milk on highways in protest. (अ�ा�धक आपू�त → दामों म� �गरावट)
2. As animal gets old & stops giving milk → farmers sell it to slaughter house to get money to buy
new animals. But, this trade becoming difficult due to present socio-political atmosphere →
even leather-industry also suffering. (वतर्मान सामा�जक-राजनी�तक माहोल म� बूढ़े पशुओ ं को क़�खाने म� बेचने म�
िकसान को िद�त, �जससे िक चमड़ा उधयोग म� भी सम�ा)
3. RCEP Agreement Angle. �Ref- Handout: Pillar-3B
4. Corona-2020: ⏬ in milk demand due to lockdown, tea-shops, sweet shops, ice cream parlours,
restaurants, hotel etc shutdown → private dairies stopped milk procurement from the farmers
→ farmers started selling to milk cooperative dairies but they’re unable to pay money because
slow business. (लॉकडाउन के चलते �नजी डेयरी-मा�लकोने िकसानों से दू ध खरीदना िकया बं द तो िकसान सहकारी दू ध मं ड�लयों म�
�ादा दू ध भरवाने लगे िकंतु वहाँ पर भी धं धा मं दा है)
40.34.3 🍋🍋🍋🍋Cow (welfare) Cess
Punjab was the 1st State start to levy Cow (Welfare) Cess on sale of liquor, electricity etc. Later on
Chandigarh, Uttar Pradesh, Rajasthan also started collecting it.
40.34.4 🐑🐑🐑🐑: 📔📔📔📔ES2019 suggests focus on Small Ruminants
Figure 1: हम तो Day#1 से Mains Answer Writing करते थे!
Sheep and goat are collectively known as small ruminants (जुगाली करनेवाले छोटे जानवर)
− These small ruminants have higher survival rates under drought conditions compared to bovines
(गौ-जातीय पशु: Cattle, Buffalo, Mithun and Yak).
− They can even live on shrubs and trees. Their reproduction rates are higher than large
ruminants. Farmers/producers can sell them more frequently & no fear of ‘cow-vigilantism’. (गौ-
र�ा के �लए नाग�रकों द्वारा कानून को हाथ म� लेना)
− Thus, small ruminants can help ⏫ income of the small-marginal & women farmers. (छोटे सीमांत
और मिहला िकसानों क� आय म� बढ़ोतरी)
40.34.5 👻👻👻👻🍼🍼🍨🍨🍨🍨Atma-Nirbhar: Dairy cooperatives (दु�ालय सहकारी स�म�तयां)

⇒ � �Corona lockdown = milk sales ⏬.
⇒ Government to give 2% loan interest subvention to dairy cooperatives + If they regularly repay
loans then additional 2% = total 4% interest subvention (�ाज मे राहत).
⇒ National Animal disease control → 100% vaccination of domestic animals against Foot and
Mouth Disease (FMD) and for brucellosis. (पशुओ ं का टीकाकरण)
⇒ Animal Husbandry Infrastructure Development Fund will be setup with ₹15,000 cr (पशुपालन क�
बु�नयादी अवसं रचना �वकास �न�ध) → loans subsidy & credit guarantee for various projects
40.34.6 🐟🐟Agro Allied: Fisheries → Blue revolution (म� → नीली क्रां�त)
(Introduction) India is the second largest fish producer in the world. Majority of our production
comes from inland fisheries sector. It provides employment, income, export earning, nutrition and
food security to a large population (more than 25 million Indians). Frozen shrimp is India’s largest
exported seafood item.
- Blue Revolution Boss? Dept of Fisheries. This is also a core scheme.
- Government gives money for modernization of boats, marketing & cold storage infrastructure.
National scheme for welfare of fishermen which gives money for construction of houses, tube
wells for drinking water etc. Promote Inland fisheries, aquaculture & pisciculture i.e. raising fish
in artificial tanks/ ponds.
- 💼💼 Budget-2019: Dept of Fisheries to launch Pradhan Mantri Matsya Sampada Yojana
(PMMSY) for infrastructure, post-harvest management, quality control etc.
- 💼💼Budget-2020:
- “Sagar mitras”: these extension workers to advise fishermen with processing and
marketing. मछु आरों को प्रस�रण-और �वपणन तालीम देने के �लए सागर-�मत्र
- Target to raise fishery export to ₹1 lakh crore by 2024-25.
- We’ll promote growing algae, sea-weed and Cage Culture (growing of fishes in existing
water resources in a net cage which allows free flow of water.)
- 💼💼Budget-2021: 5 major fishing harbours – Kochi, Chennai, Visakhapatnam, Paradip, and
Petuaghat (W.Bengal) – will be developed further (मछली पकड़ने के बं दरगाह अ�धक �वक�सत िकए जाएं गे)
- Mariculture = cultivation of marine organisms in their natural environment in sea upto 12
nautical miles from coast. Just like Agriculture, this is also a State-list subject. 2018: Agro
Ministry announced Draft National Policy on Mariculture which encourages State Govts to lease
the sea area to private entities & even farming of genetically modified species in enclosed / caged
marine spaces. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
40.34.7 👻👻👻👻👻👻👻👻Pradhan Mantri Matsya Sampada Yojana (2020)
⇒ Originally announced in Budget 2019. but was not launched in that financial year. Then Corona
→ Atma-Nirbhar 2020-May/Jun → yes we'll launch it.
⇒ Boss? Ministry of Fisheries, Animal Husbandry & Dairying
⇒ Type? It's an umbrella scheme worth >20kcr. Made up of two sub-schemes/parts:
o 1) Sub-scheme #1: Central Sector Scheme (=state not req to give money)
o 2) Sub-scheme #2: Centrally Sponsored Scheme (=States required to give money.)
This scheme provides Support / Funding / Subsidies for
 �Sagar Mitra youth extension workers: They'll give training to fishermen.
 🛶🛶🛶🛶☠Fishing Boat/Vessels → Loans interest subsidy and Insurance premium subsidies
(नाव/पोत के �लए ऋण के �ाज और बीमा िक� म� स��डी)
 Inland Aquaculture, Coldwater Fisheries in Himalayan areas, (अंतद�शीय, शीत जल म�)
 🌾🌾Seaweed cultivation, 🐠🐠Ornamental Fisheries (समुद्री शैवाल क� खेती, सजावटी मछली)

 Mariculture: cultivation of marine organisms in their natural environment in sea upto 12
nautical miles from coast.
 ⚓Development of fishing harbours, Post harvest infrastructure, transport, marketing support (
बं दरगाह, बु�नयादी अवसं रचना, प�रवहन, �वपणन सहायता)
 ⚗🩺🩺Quality control labs so we can comply with US/EU's health/hygiene, sanitary and phyto-
sanitary (SPS) standards. (गुणव�ा �नयं त्रण प्रयोगशालाएं , तािक अपना म� उ�ाद �वदेशों म� �ा�/��ता सं बं�धत
मानकों पर खा�रज ना हो जाए)
 🗓🗓Scheme Valid for next five years, starting from 2020
 🤩🤩Outcome? 55 lakhs direct and indirect jobs, ₹1 lakh cr fisheries export by 2025.
✍Conclusion? Fisheries and aquaculture are an important source of food, nutrition, employment
and exports in India. Govt has taken an appreciable step to boost this sector further. (भोजन, पोषण,
रोजगार और �नयार्त क� बढ़ोतरी के �लए मह�पूणर् इस म� �ेत्र को, और बढ़ावा देने के �लए सरकार ने, एक सराहनीय कदम उठाया है।)
40.34.8 🍤🍤🍤🍤 Shaphari certification for aquaculture exports (MPEDA, 2021)

‘Shaphari’= Sanksrit for superior quality of fishery products suitable for human consumption.
⇒ 2021: Marine Products Exports Development Authority (MPEDA, a statutory body under
Commerce Ministry) has developed a Shaphari certification scheme for aquaculture (e.g. fish,
shrimp etc), based on United Nations’ Food and Agriculture Organization’s technical guidelines.
⇒ If an Indian aquaculture farmer/company gets this certificate = means his shrimp/fish etc. are
free of harmful chemicals/pesticides/antibiotics. (प्रमाणपत्र क� मछली-झींगा म� जहरीले रसायन नहीं)
40.34.9 Sweet Revolution (Honey / Beekeeping) मीठी क्रां�त, शहद, मधुम�ी पालन
− 2017: �'Honey Mission' was launched by Khadi and Village Industries Commission (KVIC, a
statutory body under MSME Ministry). PM Modi termed it ‘Sweet revolution’. (शहद)
− 2020: Agri ministry launched National Beekeeping & Honey Mission (NBHM)
− Honey provides � income from selling honey to food processing industry, beeswax in
chemical industry, bee-venom to pharma industry etc.
40.34.10 🌈🌈Other revolutions:

- 🐖🐖 “Pink Revolution” for meat and poultry industry, under Ministry of food processing
however not much in Limelight under the Modi-government. (माँस और मुग� पालन)
- Yellow revolution in oilseed also not much limelight. (�तलहन)
40.35🌽🌽�� AGRICULTURE → RESEARCH DEVELOPMENT & EDUCATION
 Indian Council of Agricultural Research (1929) is the apex body of agricultural research,
education and extension under the ministry of agriculture.
 ICAR operates through 690 + Krishi Vigyan Kendra which provide last Mile connectivity to
farmers and help them adopt the latest cropping technologies.
40.35.1 ⚠ Challenges in Agro R&D? <for Mains GSM3>

1. ICAR scientists’ salary structures and promotion rules are time-bound and seniority based. So
highly intelligent scientists opt for private companies / foreign countries.
2. Presently agriculture research funding is <1% of GDP. We need to increase it. 📙📙📙📙ES22
observed that every rupee spent on agricultural research and development, yields much better
returns (11.2), compared to every rupee spent on fertiliser subsidy (0.88), power subsidy (0.79),
education (0.97) or on roads (1.10). (कृ �ष-सं शोधन म� ख़चर् िकया गया प्र�ेक �पया हम� 11 गुना फ़ायदा करा सकता है,
िक�ु सरकार िकसानों को ख़ुश रखने के �लए यू�रया स��डी, �बजली स��डी इ�ािद पर �ादा पैसा ख़चर् करती है जो वा�व म� 11
गुना फ़ायदा या उ�ादन म� बढ़ोतरी नहीं दे पाता।)
3. Govt scientists mainly focus on improving quantitative yields. If they also focused on aroma,
taste, appearance, calorie, nutrient, antioxidants etc. from wealthy health-conscious
urban/foreign consumers’ point of view, then premium varieties can be created to help farmer
earn more money. (सुगंध, �ाद, कै लोरी, पोषक त� के िहसाब से बेहतर उ�ाद बनाए तो �ादा पैसा)
4. Indian agriculture research has become ‘cereal centric’. We need to focus on pulses, oilseeds,
horticulture and animal husbandry as well. (बागायत, पशुपालन, दालों और �तलहन पर भी सं शोधन ज�री)
5. Even if research doesn’t drastically ⏫ the quantitative yield, but improves the shelf life of
onions, potatoes, tomatoes etc. then also food inflation can be controlled by reducing seasonal
variation in the supply. (ज�ी खराब ना हो जाए ऐसे �ाज टमाटर स��यां)
40.35.2 ⚠ Challenges in Agro Education? <for Mains GSM3>

Past Economic Survey & NITI reports observed: There is proliferation of self-financed private agri
colleges without sufficient faculties, proper labs or infrastructure.
- Instead of creating more institutions, we should focus on quality of research and infrastructure
in existing bodies. (उ� �श�ा सं �ानों म� सं शोधन और बु�नयादी अवसं रचना को बेहतर िकया जाए)
- ICAR should have UGC like powers to regulate these private agro. Colleges.
- At least two agri universities should be given large grants so they can do global level research.
- � �Budget-2022:- revise syllabus of agricultural universities for natural, zero-budget and
organic farming, modern-day agriculture, value addition and management. (कृ �ष �व��वद्यालयों के
अ�ासक्रम को नवीनतम िकया जाएगा। �जसम� प्राकृ �तक खेती, मू�वधर्न इ�ािद पर जोर िदया जाएगा)
40.35.3 🌽🌽🌽� Agriculture Research→ Agri- Life Science (कृ �ष जीवन �व�ान)
Table 3: it has four categories
1) Agricultural Biotechnology e.g. develop seeds, fertilizer, pesticides which are less
harmful to environment and human health
2) Novel Farming Systems e.g. indoor farming, aquaculture, algae-farming,
(नवीन कृ �ष प्रणाली) using insects as as fish-feed.
3) Bioenergy (जैव �धन) e.g. using agriwaste to generate bio-ethanol & electricity
4) Innovative Foods (अ�भनव खा�) e.g. lab-grown meat, Soya-milk etc.
− �Benefits? food production⏫, food/nutrition security, energy security, environmentally
sustainable, export earning. (खाद्य उ�ादन,पोषण सुर�ा, ऊजार् सुर�ा, पयार्वरण क� �� से िटकाऊ, �नयार्त आमदनी।)
− �Challenges? Shortage of capital, shortage of SKILLED manpower. Startup Companies more
focused on e-commerce rather than agriculture. regulatory problems in genetically modified
(GM) crops. लेिकन भारत म� यह �ेत्र �ादा �वक�सत नहीं हो पाया �ोंिक पूंजी और मानव सं साधन क� कमी, �ाटर्-अप
कं पनीयो का �झान इ-कोमसर् क� ओर। जीएम फ़सलो के बारे मे �नयमो म� असमं जस
40.35.4 🌽🌽🌽� Agriculture → Extension Service (�व�ार-सेवा) <for GSM3>
Figure 2: हम� खेतीबाड़ी क� को�चगं �मलेगी तो और अ�े से उ�ादन कर पाएं गे

- Definition: Extension service is an informal education process to offer advice, information and
training, usually meant for farmers, villagers and women to change their outlook towards their
agricultural / economic / health problems. (अनौपचा�रक �प से सलाह, जानकारी, तालीम देना तािक लाभाथ� का
अपनी सम�ाओं को देखने का नज�रया बदल�)
- 😰😰Challenge? NSO survey, ~60% of Indian farmers do not get much agricultural technical
assistance from govt-institutes. So they rely on progressive farmers, media, and private sellers of
seeds, fertilizers, and pesticides- who may not give them unbiased advisory because of their own
vested commercial interests. (िकसान, �ापारी क� सलाह �ादा मानते ह� �ोंिक सरकारी सलाह कम �मल रही है)
Usually 5 delivery channels for agri-extension services:
Channel (मा�म) → 😰😰Challenges (सम�ाएं )
Individual counselling via personal meeting, Geographical each, manpower availability.
toll-free Helpline & Letters Barely 1 extension worker available per 800-
1000 farmers.
Channel (मा�म) → 😰😰Challenges (सम�ाएं )
Group counselling via seminar, workshop, Farmers fear loss of workday, lack of
group discussion, field visit. motivation to spend time / travel.
Kurukshetra and other govt magazines / Illiteracy and poverty. then we’ve to use audio-
periodicals. visual methods such as….
Mass Media via Kisan TV (2014) and Public Marginal farmers may not have instruments to
Radio broadcast. (टीवी रेिडयो द्वारा जनसं पकर् ) watch them. Customized / tailor made advisory
/ information difficult to deliver.
E-Technology via E-Krishi (Webportal) ; Mass reach possible because more mobiles and
mKisan (SMS/USSD), Kisan Suvidha App etc jio4G effect.Tailor-made advisory can be given.
40.35.5 🌽🌽🌽� Agri-extension services → Timeline of schemes / events
- 1974: Krishi Vigyan Kendras (KVKs) under ICAR started.
- 1998: Agriculture Technology Management Agencies (ATMAs) supported by ICAR.
- 2002: Agriclinics by private individuals -usually, agri. graduates. They receive funding from
Agriculture Ministry.
- 2011: ICAR launched National Innovations on Climate Resilient Agriculture (NICRA)
- 2014 onwards: Modi launches Kisan TV, Kisan Suvidha App, mKisan portal etc.
- ICAR’s initiatives in recent years are as following.
o ARYA→ Attracting And Retaining Youth In Agriculture- For entrepreneurship in food
processing chains.
o READY→ Student Rural Entrepreneurship Awareness Development Yojana
o Krishi Unnati Mela → Jointly by ICAR & Agro Ministry’s other departments
o KRITAGYA Hackathon (2020) → Krishi-Taknik-Gyan Competition for college
students in startups to provide innovative solutions for agriculture Technology - esp.
women friendly farm machinery.
- 2017: Biotech-KISAN Programme by Ministry of Science and Technology → Department of
Biotechnology for scientist-farmer partnership
- 2018: Agricultural Education Portal EKTA by Dept of Agricultural Research & Education
- 2018: Agri Ministry launched Krishi Kalyan Abhiyaan to advice farmers on how to improve
their farming techniques, Bee Keeping, Mushroom cultivation, animal vaccination, etc
- 2020: Agri Ministry launched Sahakar Mitra scheme for paid internship for youth in
Cooperative organisations.
- 👜👜👜👜Budget-2022:- we will involve startups and PUBLIC PRIVATE PARTNERSHIP in Agri
R&D (कृ षी सं शोधन नवाचार म� �ाटर्अप और सावर्ज�नक �नजी भागीदारी क� मदद ली जाएगी)
40.35.6 🌽🌽🌽� AgriStack: integration of database for farmer welfare
- Agristack concept involves integrating database of farmer’s Aadhar number, his farm land
ownership, his loan records, cropping pattern, GPS-Satellite records, weather-climate in the
region etc. (िकसान के आधार काडर्, जमीन मा�लक�, ब�को से कजर्, वो �ा खेती बाड़ी करता है, उस इलाके म� हवामान क� ��त
इ�ािद डेटा/जानकारी का िड�जटल डेटाबेस म� एक�करण िकया जाए)
- It was proposed by NITI Aayog. 2021: Agri ministry signed agreements with private companies
of the likes of Amazon, Microsoft and Patanjali to start trials.
- �Benefit? 1] Soil Health Card, PM Fasal Bima, PM Kisan, etc scheme’s effectiveness can be
improved. 2] Such Data-GPS mapping can help food processing companies in warehouse, supply
chain management 3] Research Development in Cropping patterns. [सरकारी योजनाओं को �ादा बेहतर
ढंग से लागू िकया जा सके गा, खाद्य प्रसं �रण कं प�नयों को इस जीपीएस डेटा से अपनी आपू�त श्रृंखला प्रबं धन मदद �मल�, फसलों पर
और �ादा सं शोधन िकया जा सके गा]
- Challenges? 1) Personal Data Privacy. 2) If private companies know too much about a
�
farmer’s land ownership, loan history, bank balance etc they could exploit him. [िकसानों के डेटा क�
�नजता का हनन, �नजी कं प�नयों के पास ब�त सारा डेटा चला गया तो िकसान का शोषण करने म� उसका दु�पयोग हो सकता है]
40.35.7 � Extension Services: Conclusion template

Agricultural extension plays a key role in boosting agricultural productivity, enhancing food security,
improving rural livelihoods and changing farming practices positively. However, hardly 40% of
Agricultural Households are getting access to it. So, we need to enhance the access to extension
services on war-footing. (कृ �ष उ�ादकता बढ़ाने म� �व�ार सेवा का मह� है, िकंतु मु��ल से 40% प�रवारों को ही यह सेवा �मल
रही है. इस�लए �ादा से �ादा कृ �ष प�रवारों को �व�ार सेवा �मले इसके �लए सरकार ने अग्रता क्रम से कदम उठाने चािहए)
40.36🤝🤝 GLOBAL COOPERATION: FOOD AND AGRICULTURE ORGANISATION (FAO)

- खाद्य और कृ �ष सं गठन is a specialized agency of UN, setup in 1945 with HQ @Rome, Italy.
- It publishes Food Price Index (FPI) to monitor inflation. This index focuses on five commodity
groups namely - cereals, oilseeds, dairy products, meat and sugar (खाद्य महंगाई सूचकांक बनाता है)
- FAO started celebrating international milk day on June 1 since 2001. Now 20th World Milk Day
2021 with the theme 'Sustainability in the dairy sector.’ अंतररा��ीय दू ध िदवस हर साल जून म� मनाया जाता है
40.36.1 🤝🤝 Global Cooperation: International Years by United Nations (UN)

2024 Camelids (group of Camel species)
2023 Millets – so � �Budget-2022 also announced that we’ll promote millet food processing
2022 Artisanal Fisheries and Aquaculture
2021 1) Creative Economy for Sustainable Development 2) FAO Year of Fruits & Vegetables
2020 Plant Health
40.36.2 🤝🤝 Global Cooperation: International Decades by UN (अंतरार्��ीय दशक)
2018–2028 International Decade "Water for Sustainable Development"
2019–2029 1) Nelson Mandela Decade of Peace 2) United Nations Decade of Family Farming
2021–2030 United Nations Decade on Ecosystem Restoration
2021–2030 International Decade of Ocean Science for Sustainable Development
40.36.3 🤝🤝 Global Cooperation: Misc. → SAARC Food Bank (2007)
 2007: South Asian Association for Regional Cooperation (SAARC) countries signed the
agreement to establish the SAARC Food Bank.
 The Food Bank will help member nations’ people in case of emergencies.
 Each member country is required to contribute either wheat/rice.
 Stock is kept with respective Govt agencies like FCI. So, Bank doesn’t hv a HQ as such.
40.36.4 🤝🤝 Global Cooperation: Misc. → International Grains Council (London)

 HQ: London, for cooperation in wheat and coarse grain matters.
 IGC has two types of members— importing and exporting members. India has been included in
the category of exporting member since 2003
40.36.5 🏆🏆 Global Awards related to Agro

🏆🏆 WORLD ⇒ $250,000 Award given by the World food Foundation (Founder- Dr.
FOOD PRIZE Norman E. Borlaug. HQ: Iowa State in USA)
Also nicknamed as ⇒ Award given Every year on UN World Food Day (October 16).
Nobel Prize in
⇒ 2020: Indian-American soil scientist Dr Rattan Lal won for soil health
Agriculture
⇒ 2021: Indian origin nutrition scientist Dr Shakuntala Haraksingh
Thilsted (Trinidad born) for research in aquaculture & food systems.
🏆🏆 Nobel Peace ⇒ 1970: Dr. Norman E. Borlaug won Nobel Peace Prize for his
Prize contributions to the world food supply (He had also helped in India’s
नोबेल शां�त पुर�ार Green Revolution)
⇒ 2020: United Nations (UN) World Food Programme (HQ: Rome,
founded in 1961) सं यु� रा�� व� खाद्य कायर्क्रम नोबेल शां�त पुर�ार 2020 जीता है
40.36.6 ✍ Agriculture-Conclusion (�न�षर्)
 Agriculture is the largest sector of Indian economy in terms of number of people employed. For
their income security, as well as entire India’s food & nutritional security, we’ve to focus on
improving soil, irrigation, seed, fertilizers, market reforms etc. <insert name of x y z> scheme is
important in that regard. (रोजगार के िहसाब से कृ �ष भारत का सबसे बड़ा �ेत्र है. िकसानो क� आय, तथा भारत क� खाद्य,
पोषण सुर�ा के �लए जमीन, �संचाई, बीज, उवर्रक और बाजार म� सुधार ज�री)
 And / or to double the farmers income, we’ve to focus on Horticulture / Floriculture / Fisheries /
Animal Husbandry / Poultry / Food Processing / Extension Services and therefore addressing
aforementioned <insert name of > challenges is need of the hour.
40.37✍ MAINS QS FROM AGRICULTURE IN PREVIOUS UPSC EXAMS
Suggested reading?
1) Cropping Pattern, Irrigation Types: Prepare from Geography
2) Web-resources mentioned in this handout for Food processing and land reforms.
3) Intro conclusions of past five years’ economic surveys (usually their vol2 ch.7 deals with Agro).
4) Chief Editor’s Desk (Preface) of last 2 years’ Yojana & Kurukshetra magazines from
http://yojana.gov.in/Recent_archive_2018.asp (change year number for getting previous Archives). If a
particular month’s magazine issue is devoted to Agro → further go through index & refer to article
inside it depending on exam requirement.
40.37.1 ✍Mains Questions: Agro → Cropping & irrigation & Land Reforms
GSM3 Syllabus Topic: Major crops cropping patterns in various parts of the country, different types
of irrigation and Land reforms in India.
What is Integrated Farming System? How is it helpful to small and marginal farmers in India? 2022
समेिकत कृ �ष प्रणाली �ा है? भारत म� छोटे और सीमांत िकसानों के �लए यह कै से लाभदायक हो सकती है?. ✅Solved in
Youtube
How did land reforms in some parts of the country help to improve the socio-economic 2021
conditions of marginal and small farmers? देश के कु छ भागों म� भू�म सुधारों ने सीमांत और लघु िकसानों क�
सामा�जक-आ�थक ��त िक सुधारने के �लए िकस प्रकार सहायता क� है? ✅Solved in FREE CLASS
Q04. How and to what extent would micro-irrigation help in solving India's water crisis? भारत के 2021
ं ाई कै से और िकस सीमा तक सहायक होगी? ✅Solved in FREE CLASS
जल सं कट के समाधान म�, सू�-�सच
What is the present challenges before crop diversification? How do emerging technologies 2021
provide an opportunity for crop diversification? फ़सल �व�वधता है के सम� मौजूदा चुनौ�तयाँ �ा ह�? उभरती
प्रौद्यो�गक�याँ फ़सल �व�वधता के �लए िकस प्रकार अवसर प्रदान करती है ? ✅Solved in FREE CLASS
What are the major factors responsible for making rice-wheat system a success? In spite of this 2020
success how has this system become bane in India? (धान-गे�ं प्रणाली को सफल बनाने के �लए कौन-से प्रमुख
कारक उ�रदायी ह�? इस सफलता के बावजूद यह प्रणाली भारत म� अ�भशाप कै से बन गई है?)
How far is the Integrated Farming System (IFS) helpful in sustaining agricultural production? 2019
Elaborate on the impact of the National Watershed Project in increasing agricultural production
from water-stressed areas.
Sikkim first ‘Organic State’ in India. What are the ecological and economical benefits? 2018
Assess the role of National Horticulture Mission (NHM) in boosting the production, productivity 2018
and income of horticulture farms. How far has it succeeded in increasing the income of farmers?
How has the emphasis on certain crops brought about changes in cropping patterns in recent 2018
past? Elaborate the emphasis on millets production and consumption.
What are the major reasons for declining rice and wheat yield in the cropping system? How crop 2017
diversification is helpful to stabilize the yield of the crop in the system?
What is water-use efficiency? Describe the role of micro-irrigation in increasing the water-use 2016
efficiency.
What is allelopathy? Discuss its role in major cropping systems of irrigated agriculture. 2016
Given the vulnerability of Indian agriculture to vagaries of nature, discuss the need for crop 2016
insurance and bring out the salient features of the Pradhan Mantri Fasal Bima Yojana (PMFBY)
Discuss the role of land reforms in agricultural development. Identify the factors that were 2016
responsible for the success of land reforms in India.
Establish the relationship between land reform, agriculture productivity and elimination of 2013
poverty in Indian Economy. Discussion the difficulty in designing and implementation of the
agriculture friendly land reforms in India.
40.37.2 ✍Mains Questions: Agro →E-Tech. in aid of farmers

GSM3 Syllabus Topic: e-technology to aid farmers, Technology missions;
Explain various types of revolutions, took place in Agriculture after Independence in India. How 2017
these revolutions have helped in poverty alleviation and food security in India?
How can the ‘Digital India’ programme help farmers to improve farm productivity and income? 2015
What steps has the Government taken in this regards?
40.37.3 ✍Mains Questions: Agro →Food processing industry / Marketing

GSM3 Syllabus Topic: Food processing and related industries in India (scope & significance,
location, upstream-downstream requirements, supply chain management); storage, transport &
marketing of agro-produce and related issues & constraints; Economics of animal-rearing
What are the main bottlenecks in upstream and downstream process of marketing of 2022
agricultural products in India? (भारत म� कृ �ष उ�ादों के �वपणन क� ऊ�र्मुखी और अधोमुखी प्रिक्रया म� मु�
बाधाएँ �ा ह�?) ✅Solved in Youtube
Elaborate the scope and significance of the food processing industry in India. (भारत म� खाद्य 2022
प्रसं �रण उद्योग के कायर्�त्रे और मह� का स�व�ार वणर्न क��जए) ✅Solved in Youtube
What are the challenges and opportunities of cooperative sector in the country? Explain Mock
how the establishment a dedicated ministry for this subject help in this regard. (देश म�
सहकारी �ेत्र क� चुनौ�तयां और अवसर �ा ह�? समझाइए िक इस �वषय के �लए एक सम�पत मं त्रालय क� �ापना इस सं बं ध
म� कै से मदद करता है)
What are the challenges and opportunities of food processing sector in the country? How 2020
can income of the farmers be substantially increased by encouraging food processing?
(देश म� खाद्य प्रसं �रण �ेत्र क� चुनौ�तयां एवं अवसर �ा है? खाद्य प्रसं �रण को प्रो�ािहत कर कृ षकों क� आय म� पयार्�
वृ�द्ध कै से?)
What are the main constraints in transport and marketing of agricultural produce in 2020
India? (भारत म� कृ �ष उ�ादों के प�रवहन एवं �वपणन म� मु�ा बाधाएँ �ा ह�?)
Elaborate on the policy by the govt of India to meet the challenges of the food processing 2019
sector.
Examine the role of supermarkets in supply chain management of fruits, vegetables and 2018
food items. How do they eliminate number of intermediaries?
What are the reasons for poor acceptance of cost effective small processing unit? How the 2017
food processing unit will be helpful to uplift the socio-economic status of poor farmers?
Livestock rearing has a big potential for providing non-farm employment and income in 2015
rural areas. Discuss suggesting suitable measures to promote this sectors in India
In view of the declining average size of land holdings in India which has made agriculture 2015
non-viable for a majority of farmers, should contract farming and land leasing be
promoted in agriculture? Critically evaluate the pros and cons.
What are the impediments in marketing and supply chain management in industry in 2015
India? Can e-commerce help in overcoming these bottlenecks?
There is also a point of view that agriculture produce market committees (APMCs) set up 2014
under the state acts have not only impeded the development of agriculture but also have
been the cause of food inflation in India. Critically examine.
India needs to strengthen measures to promote the pink revolution in food industry for 2013
better nutrition and health. Critically elucidate the statement.
40.37.4 ✍Mains Questions: Agro → MSP
GSM3 Syllabus Topic: Farm subsidies and MSP and issues therein (direct and indirect); PDS
(objectives, functioning, limitations, revamping, issues of buffer stocks & food security)
Critically examine the need and feasibility of providing agriculture-debt waiver to small mock
and marginal farmers of India. कजार् माफ� देने क� ज�रत और �वहा�रकता पर गं भीर समी�ा क��जए
Enumerate the salient features of the agriculture reform laws issued by the union mock
government in 2020 and discuss the reasons behind their repeal. (क� द्र सरकार द्वारा 2020 म� जारी
िकए गए कृ �ष सुधार क़ानूनों के मु� प्रावधानों क� सूची दी�जए और उ�� हटाने/रद करने के कारणो क� चचार् क��जए)
What are the reformative steps taken by the government to make food grain distribution 2019
system more effective? Ref: Pillar6: Hunger
What do you mean by Minimum Support Price (MSP)? How will MSP rescue the 2018
farmers from the low income trap?
How do subsidies affect the cropping pattern, crop diversity and economy of farmers? 2017
What is the significance of crop insurance, minimum support price and food processing
for small and marginal farmers?
“In the villages itself no form of credit organisation will be suitable except the 2014
cooperative society.” – All Indian rural credit survey. Discuss this statement in the
background of agriculture finance in India. What constraints and challenges do financial
institutions supplying agricultural finances? How can technology be used to better reach
and serve rural clients?
Food security bill is expected to eliminate hunger and malnutrition in India. Critically 2013
discuss various apprehensions in its effective implementation & concerns it has
generated in WTO.
What are the different types of agriculture subsidies given to farmers at the national and 2013
state levels? Critically analyze the agriculture subsidy regime with the reference to the
distortions created by it.
�Next HDT: Pillar4B: Sectors of Economy → MFG, MSME, Make/Assemble in India etc.
Pillar4B: sectors of Economy: MFG, Startup-IPR, Make in India, EoD, MSME-Textile
Table of Contents
41 �Mfg & Services: Industrial policy and LPG reforms ...............................................................690
41.1 �Liberalization, Privatization and Globalization? ............................................................691
41.1.1 � Liberalization :उदारीकरण .............................................................................................691
41.1.2 💂💂 → �Privatization: �नजीकरण .....................................................................................692
41.1.3 🌐🌐Globalization: वै�ीकरण ................................................................................................693
41.2 🤖🤖Beyond LPG → towards 4th Industrial Revolution ......................................................693
41.2.1 🤖🤖🤖🤖 GPAI – the new GANG for A.I. (2020-June) ................................................694
41.2.2 🤖🤖 Beyond LPG → 4th Industrial Revolution → New Industrial Policy .............694
41.2.3 🤖🤖 4th Industrial Revolution → Samarth Udyog Bharat 4.0 ..................................694
41.3 ⛸🗑🗑🗑🗑🗑🗑 Circular Economy (प�रक्रामी अथर्�व�ा) ..........................................................695
41.3.1 🏭🏭 Circular Economy: Business Models ......................................................................696
41.3.2 🚧🚧Circular Economy: Roadmap for India/how to achieve? ....................................698
41.3.3 🚧🚧Circular Economy: India Plastics Pact (IPP) 2021 ....................................................698
41.4 �Mfg Policy → National Mfg Policy 2011: रा��ीय उ�ादन नी�त .............................................698
41.4.1 🏭🏭 Mfg Infrastructure → NIMZ, रा��ीय उ�ादन और �नवेश �ेत्र .........................................699
41.4.2 🏭🏭 Mfg Infrastructure → Industrial Corridors (औद्यो�गक ग�लयारे) .............................699
41.5 �🦁🦁 Mfg & Services → Make in India: Why? (2014) ....................................................700
41.6 �🦁🦁 Make in India: How?...................................................................................................702
41.7 �🦁🦁:📟📟 📺📺📺📺 Mfg: Assemble in India (अस�बल इन इं िडया) ..............................................705
41.7.1 �🦁🦁:📟📟 📺📺📺📺: Assemble in In India → “Network products” ........................705
41.7.2 �🦁🦁:📟📟 📺📺📺📺: Assemble in In India → how will it benefit India? ...............706
41.7.3 �🦁🦁:📟📟 📺📺📺📺: Assemble in In India → Wild Geese Flying Model (1960s) ..706
41.7.4 �🦁🦁:📟📟 📺📺📺📺: Assemble in In India → Policy recommendations? ...............706
41.7.5 👻👻👻👻👻👻:🧔🧔🧔🧔Production Linked Incentive Scheme (PLI: उ�ादन आधा�रत प्रो�ाहन)
707
41.7.6 👻👻👻👻👻👻:🧔🧔🧔🧔 PLI Scheme ke 13 Sectors ....................................................................707
41.7.7 👻👻👻👻👻👻:🧔🧔🧔🧔 -🤩🤩PLI Scheme: Benefits?..............................................................708
41.8 🌱🌱🌱🌱 Mfg & Services → Startup India (2016) ...................................................................708
41.8.1 🌱🌱🌱🌱:💼💼 Budget-2019 on Start-ups ...........................................................................709
41.8.2 🌱🌱🌱🌱:💼💼 Budget-2020, 2021 and 2022 on Start-ups ...............................................709
41.8.3 🌱🌱🌱🌱 Startup: Misc Terms and trends ........................................................................709
41.8.4 🌱🌱🤵🤵 Startup: Factors affecting new firms creation (📔📔📔📔ES20) .........................710
41.9 🦁🦁🦁🦁 Mfg Policy → National Policy on Electronics 2019 ...............................................710
41.9.1 🔌🔌🔌🔌Mfg → Electronics Development Fund (EDF: इले��ॉ�नक� �वकास �न�ध) .............711
41.9.2 🔌🔌🔌🔌Mfg → Design Linked Incentive (DLI) for Semi-Conductor Chips .................712
(Batch: PCB7) Mrunal’s Economy Pillar#4B: Sectors of Economy-MFG & EoD → Page 686
41.9.3 🦁🦁🦁🦁 → National Digital Communications Policy (2018) ..................................712
41.9.4 🦁🦁🦁🦁 → National Policy on Software Products - 2019 ..........................................712
41.9.5 🦁🦁🦁🦁 → Quantum Technology (�ांटम प्रौद्यो�गक�) 2020 ..............................................712
41.10 🌱🌱🌱🌱⚠ Startup Criticism / challenges (�नदं ा/आलोचना) ......................................................713
41.11 🌱🌱🌱🌱 → 🤒🤒 Startup → (SHUTDOWN) “EXIT” of Sick Industries .............................714
42 🔬🔬Mfg & Services → Intellectual Property Rights .......................................................................715
42.1.1 🔬🔬🕵🕵WIPO is known for...............................................................................................715
42.1.2 🔬🔬IPR → Indian Laws ....................................................................................................715
42.2 🔬🔬IPR → Patents → What can’t be Patented? ...................................................................716
42.3 🔬🔬IPR → Patents → Compulsory Licensing (अ�नवायर् लाइस��सगं ) .........................................716
42.3.1 🔬🔬🔬🔬Patent pools (पेटंटो का समूहीकरण) ............................................................................717
42.3.2 🔬🔬🔬🔬Trips Waiver demand by India & S.Africa .......................................................718
42.3.3 💊💊India can be "pharmacy of the world" says 📔📔📔📔ES21 .......................................718
42.4 🔬🔬IPR → Evergreening of Patents (पेट�ट को सदाबहार करना / रखना) ..........................................719
42.5 🔬🔬IPR → Utility Patents: उपयो�गता पेट�ट ...................................................................................719
42.6 🔬🔬🔬🔬 IPR → National IPR Policy 2016 ...............................................................................719
42.7 🔬🔬🔬🔬 = Patents Approval Speed very slow in India- says 📙📙📙📙ES22 😥😥 ........................720
42.7.1 🔬🔬🔬🔬 = Reasons for slow speed in Patent Approval: (पेट�ट-अज़� �न�ादन म� देरी के कारण:)
720
42.8 🔬🔬🔬🔬 IPR → Notable Schemes (कु छ उ�ेखनीय योजनाएं ).........................................................720
42.9 🔬🔬🔬🔬 IPR → Indices & Rankings ........................................................................................722
42.9.1 🔬🔬🔬🔬 IPR Index → Global Innovation Index (GII: वै��क नवीनीकरण सूचकांक) ..........722
42.9.2 📊📊 Index → Global Competitiveness Index (GCI) by WEF...................................722
42.9.3 📊📊 Index → NITI’s India Innovation Index (भारत नवाचार सूचकांक) ............................722
42.9.4 🔬🔬🔬🔬 IPR Index → Misc. फालतू वाले ..............................................................................723
42.10 🔬🔬🔬🔬 Pvt sector not spending enough ₹₹ on R&D says ES21 ..........................................723
42.10.1 🔬🔬🔬🔬 Number of patents filed by a resident of a given country ..............................723
42.10.2 🔬🔬🔬🔬 Gross domestic expenditure on Research & Development (GERD) ...........723
43 🏄🏄Sectors: Ease of Doing Business Report ...................................................................................724
43.1.1 🏄🏄📊📊EoD → Indian States’ EoD: BRAP Ranking ....................................................725
43.1.2 🏄🏄📊📊EoD → Economic Freedom of the World .......................................................725
43.1.3 📔📔📔📔ES20 Vol1ch6 on Ease of Doing Biz in India: observed...................................725
43.1.4 🏄🏄 EODB 2.0 in 👜👜👜👜Budget-2022 (�ापार सुगमता का दू सरा चरण) .....................................726
43.2 🤵🤵🤵Pro-Business vs Pro-Crony, 📔📔📔📔ES20Vol1Ch3 ....................................................726
43.2.1 �🤝🤝🤝🤝Cronyism: Related Party Transaction (RPT: सं बं�धत प�ों से लेनदेन) .............726
43.2.2 �🤲🤲: 🛒🛒🛒🛒Cronyism: Economist David Ricardo & Rent Seeking ....................727
43.2.3 🤵🤵🤵 Pro-business vs Pro-Crony Policies ..................................................................727
43.3 🏄🏄⚖ Ease of doing Biz → Judicial Reforms: �ा�यक सुधार .................................................728
43.3.1 🏄🏄⚖: 🕵🕵 Suggested reforms#1: recruit more judges (�ायाधीशों क� भत�) ................728
43.3.2 🏄🏄⚖: 🕵🕵 Suggested reforms#2: Create a new Judicial Administrative Service..729
43.3.3 🏄🏄⚖: 🗓🗓🗓🗓 Suggested reforms#3: ⏫ courts’ working days (अदालत क� छु �ट्टयाँ कम
करो) 729
43.3.4 🏄🏄⚖: 📡📡📡📡 Suggested reforms#4: E-governance, ICT-Technology ..................729
43.3.5 🏄🏄⚖: 📡📡📡📡 ENFORCING CONTRACTS PORTAL (2021-June) ..........................729
43.3.6 🏄🏄⚖: International Arbitration Centre @GIFT city - in 👜👜👜👜Budget-2022..........730
43.3.7 🏄🏄⚖: ✍Conclusion on Judicial reforms? (�न�षर्) .................................................730
43.3.8 🕵🕵🤲🤲🤲🤲Transparency International → Corruption Perceptions Index ..............730
43.4 🕵🕵🕵🕵 ES21: Over regulation in India ...................................................................................731
43.4.1 🕵🕵🕵🕵 Overregulation & Uncertainty (अ�त �नयमन तथा अ�न��तता) ................................731
43.4.2 🕵🕵🕵🕵 Overregulation: Way Forward- TORA Act (आगे का रा�ा) ..............................731
43.4.3 🕵🕵🕵🕵 Overregulation Solution: Doctrine of Business Judgment Rule ...................732
43.4.4 🕵🕵🕵🕵 Overregulation Solution: ‘Minimum Government and Maximum
Governance’: ...........................................................................................................................................732
43.4.5 🕵🕵🕵🕵 Overregulation Solution: Tribunals Reforms Ordinance, 2021-April ........732
43.5 🏄🏄👷👷Ease of doing Biz → Labour Reforms : श्रम सुधार ........................................................733
43.6 👷👷Ease of doing Biz → Fixed Term Employment 2018 .....................................................735
43.7 👷👷💰💰 Minimum Wages (�ूनतम वेतन) ......................................................................................735
43.7.1 👷👷💰💰⚖ Minimum Wages Act (�ूनतम मजदू री अ�ध�नयम 1948) ...................................736
43.7.2 👷👷💰💰 Minimum Wage Reform: Anoop Satpathy Committee (2019) .....................736
43.8 👷👷💰💰💰💰 Minimum Wages → Code on Wages 2019 (वेतन कोड/ सं िहता) ............................737
43.8.1 👷👷💰💰💰💰 Code on Wages 2019 →Salient Features (figures not IMP) ....................738
43.8.2 📔📔📔📔 ES19 on Minimum Wages reforms (what more we can do?)........................739
43.8.3 � Conclusion: Indeed minimum wage enforcement is important........................739
43.9 🏄🏄🏭🏭Ease of doing Biz (EoD) → Factories Act reforms..................................................740
43.9.1 🏭🏭⚖ Factories (Amendment) Bill, 2014 ...................................................................741
43.10 �⚔�(EoD) → Industrial Dispute Act 1947, 2010 .......................................................741
43.11 🏄🏄🤳🤳Ease of doing Biz → Shram suvidha Portal (2014) ................................................741
43.11.1 👷👷 🖱🖱 Worker Types → Unorganized workers → E-Shram Portal for them (2021-
Aug) 742
43.12 🏄🏄🤳🤳 😷😷😷⚖EoD → Corona: Suspension of Labour Laws? ....................................742
43.12.1 😷😷😷⚖Corona Suspension Labour laws: Union says NO!! .................................742
43.12.2 😷😷😷⚖ DON'T punish employers if they can't pay full salaries- SC ...................743
43.12.3 😷😷😷⚖ Banking = Public Utility Service (सावर्ज�नक उपयो�गता सेवा) ..........................743
43.13 🏄🏄🛒🛒Ease of doing Biz → Building Homes & Running Shops.......................................744
43.13.1 🏄🏄🛒🛒Ease of doing Biz → Model Shops & Establishments Bill, 2016 ..................744
43.13.2 🏄🏄🏡🏡Ease of doing Biz → Real Estate Regulation & Development Act (RERA) 744
44 Sectors of Economy → Mfg → 👘👘Textile & MSME ..................................................................746
44.1 �👘👘Textiles Ministry (कपडा / व� मं त्रालय) ...........................................................................746
44.1.1 👘👘👘👘👘👘 Textile Ministry → Notable schemes / initiatives ...................................747
44.1.2 👘👘👘👘Textile & Leather Industry: Past Economic Surveys’ suggestions: ...............748
44.2 👶👶👶👶 Mfg & Services → MSME → Ministry ..................................................................749
44.2.1 �👶👶👶👶 MSME Problems: RBI’s UK Sinha report (2019) .....................................750
44.3 🧔🧔🧔🧔MSME: Truckload of Scheme/Initiatives ......................................................................751
44.3.1 🧔🧔🧔🧔MSME Ministry → PM's Employment Generation Programme (PMEGP-
2008) 751
44.3.2 👶👶👶👶👶👶👶👶 MSME Ministry → Public Procurement Order(सावर्ज�नक खरीद/अ�धप्रा��
आदेश) 751
44.3.3 👶👶👶👶👶👶👶👶👶👶 Public Procurement → GeM Portal .............................................751
44.3.4 🛒🛒🛒🛒Public Procurement → Various Models – L1, QCBS, SSS- in 📙📙📙📙ES22 ....752
44.3.5 🧔🧔🧔🧔 MSME → PM's Initiatives for MSMEs (2018, Nov) .....................................752
44.3.6 🗺🗺One District One Product (ODOP: 2021) ..............................................................753
44.3.7 👻👻👻👻👻👻👻🏭🏭 MSME → Atma-Nirbhar Funding/Schemes (2020, Corona) ..753
44.3.8 👶👶👶👶Ubharte Sitaare Programme for MSME Exporters (USP: 2021-Aug) ..............753
44.4 👶👶🏭🏭 🧔🧔🧔🧔 MSME Ministry → Misc. Initiatives ..............................................................753
44.4.1 🧔🧔🧔🧔 MSME Ministry → ASPIRE (2015) ................................................................753
44.4.2 🧔🧔🧔🧔MSME Ministry → Solar Charkha Mission (2018) .......................................754
44.4.3 🧔🧔🧔🧔MSME Ministry → Gramodyog Vikas Yojana ..............................................754
44.4.4 🧔🧔🧔🧔MSME Ministry → Portals / Helplines ...............................................................754
44.4.5 🧔🧔🧔🧔 MSME: Funds for their development ...................................................................755
44.5 📔📔📔📔 �↘�🏭🏭 ES19: MSME dwarfism shd be discouraged (बौनापन) ..........................755
44.5.1 �↘�🏭🏭: 🧔🧔 MSME ‘Dwarfism’ is caused by Govt schemes .........................756
44.5.2 �↗🤴🤴🤴🤴 MSME ‘Dwarfism’: Suggested Reforms by ES19 ..............................756
44.5.3 👻👻 �🏭🏭 ATMANI: MSME Definition Changed by Government .......................757
44.5.4 � Conclusion-Template for MSME (�न�षर्) ..............................................................757
45 �💿💿Service Sector (सेवा �ेत्र) ..........................................................................................................758
45.1.1 �💿💿Service Sector: IT & BPM....................................................................................758
45.1.2 �💿💿Other Service Provider (OSP) guidelines of the Department of Telecom. .758
45.1.3 �💿💿💿💿: Knowledge economy of India: Threats/Challenges ................................759
45.1.4 Sunrise sector in 👜👜👜👜Budget-2022 (सूय�दय �ेत्र: जहाँ तेज़ वृ�द्ध क� सं भावना) ........................759
45.2 🖱🖱🖱🖱 SERVICE SECTOR → E-Commerce (ई वा�ण� / ऑनलाइन �बक्र�) ...................................759
45.2.1 🖱🖱🖱🖱 E-Commerce Rules 2019-Feb .............................................................................760
45.2.2 🖱🖱🖱🖱 E-Commerce: (Draft) CONSUMER PROTECTION (E-COMMERCE) RULES,
2020 760
45.2.3 🖱🖱🖱🖱🖱🖱 Criticism against E-COMMERCE) RULES: (आलोचना) ..................................761
45.2.4 🖱🖱🖱🖱 E-Commerce: Open Network for Digital Commerce (ONDC): .......................761
45.3 🕵🕵 Mfg → Bodies for quality standards (गुणव�ा के मानक) ....................................................762
45.3.1 🕵🕵Consumer Affairs Ministry → Statutory → BIS (1986).......................................762
45.3.2 🕵🕵 Power Ministry → Statutory → BEE (2001-02) ...................................................763
45.3.3 🕵🕵 Health ministry→ Statutory → FSSAI (2006) ......................................................764
45.3.4 🕵🕵 Commerce Ministry → Not-Statutory → QCI (1997) .......................................765
45.3.5 🕵🕵 Commerce Ministry → Not-Statutory → NPC (1958) ......................................766
45.3.6 🕵🕵🥇🥇One Nation, One Standard Scheme (2019) ..........................................................766
45.3.7 PARAKH Laboratory Network (2021) ..............................................................................766
45.4 🕵🕵🛒🛒 Consumer Protection Act, 2019 (उपभो�ा सं र�ण) .....................................................766
45.4.1 🕵🕵🛒🛒 Consumer Protection Act 2019 → bodies → Consumer court ..................766
45.4.2 🕵🕵🛒🛒 Consumer Protection Act 2019 → bodies → others.....................................767
45.4.3 🕵🕵🛒🛒 Consumer Protection Act 2019 → Features (प्रमुख/मु� प्रावधान) ....................767
45.5 ✍🎺🎺 Mains Questions in Previous GSM2 & GSM3 ........................................................768
45.5.1 ✍🎺🎺 Mock Questions for Mains ................................................................................768
45.5.2 ✍🎺🎺 Mock Questions for Mains → Post Independence: PM Rao (2020) ..........769
41 �MFG & SERVICES: INDUSTRIAL POLICY AND LPG REFORMS

1948 1st industrial policy by India’s Minister for industries Shyama Prasad Mukherjee.
⇒ Industrial Policy Resolution (औद्यो�गक नी�त सं क�). It focused on public sector led
heavy industries (Oil, mining, shipbuilding, steel, chemicals, machinery
manufacturing etc). सावर्ज�नक �ेत्र के उपक्रमों पर जोर िदया गया, �ोंिक नेह� को लगा था िक रोज़गार
1956 सृजन और आ��नभर्रता के �लए यही ज़�री है
⇒ PM Nehru presumed this will help in 1) employment generation 2) self reliance 3)
provide raw material, intermediate goods and machinery to help other industries
to produce consumer goods.
BoP crisis forces PM Narsimha Rao (& FM Manmohan Singh) to launch New
1991
Industrial Policy with LPG reforms.(BoP crisis- More in 📑📑Pillar#3A)
The contribution of mfg and service sector in India’s GDP & employment increased.
Post-
📑📑More in Pill#4C: GDP handout.
LPG
(�व�नमार्ण और सेवा �ेत्र क� भारत के GDP और रोज़गार म� िह�ेदारी उदारीकरण के सुधारों के बाद बढ़ी है)
41.1 �LIBERALIZATION, PRIVATIZATION AND GLOBALIZATION?
41.1.1 � Liberalization :उदारीकरण

Means the withdrawal of controls and regulations by the government on the industries.
�Till 1991 🤵🤵After LPG-reforms
Ministerial interference in the day2day Govt. signed memorandum of understanding
functioning of CPSEs → fall in professionalism (MoUs:समझौता �ापन) with CPSEs granting them
and efficiency. (सरकारी कं प�नयों के दै�नक काय� म� मं त्री क� operational freedom through ‘Ratna’ status.
दखल के चलते कायर् �मता म� �गरावट) (📑📑Pillar#2 → Disinvestment)
- Mandatory for any private individual to Production quota & Inspector was abolished.
obtain license to start to start any industrial Licenses required only for a selected number of
activity. industries. Namely,
1. Alcoholic drinks (शराब मिदरा)
- Even on licensed industries, govt. would
2. Tobacco products (त�ाकू उ�ाद)
impose ‘production quota’ (e.g. not more
3. Electronic aerospace and Defence
than ‘x’ number of telephones or ‘y’
equipment
number of scooters be produced.)
4. Industrial explosives, gun powder,
Government would appoint inspectors to
nitrocellulose and matchsticks; (िदयासलाई)
check the compliance.
5. Hazardous chemicals: Hydrocyanic acid,
Result? Delays, corruption, No ease of doing
business. Phosgene, Isocyanates & their derivatives.
(जो�खमपूणर् रसायन)
कोई भी उ�ादन करने से पहले ठे का लाइस�स लेना ज�री. उ�ादन For remaining sectors, a private entrepreneur
क� मात्रा पर सरकारी कोटा= भ्र�ाचार, �ापार करने म� कोई can start the business by simplifying an
आसानी नहीं। Industrial Entrepreneur Memorandum
(IEM:उद्यमी �ापन) with Commerce Ministry
(except for the industries reserved for public
sector). The purpose of IEM is merely to collect
data about investment, employment and
industrial activities.
The big corporates were not allowed to enter in Govt gradually shrunk this list. By 2015, no
the sectors reserved for the Small Scale item was reserved for SSI/MSME industries.
Industries (SSI) / MSME. e.g. pickles & पहले कई �ेत्रों को लघु उद्योगों के �लए आर��त िकया गया था
chutneys, mustard oil, groundnut oil, exercise बड़ी कं प�नयों को वहां आने क� मनाई थी. धीरे-धीरे उस आर�ण
books and registers, wax candles, glass bangles, सूची को हटाया गया
steel almirah etc.
41.1.2 💂💂 → �Privatization: �नजीकरण
1. Allowing private sector to enter into the sectors which were previously reserved for public sector
companies only, सावर्ज�नक �ेत्र के �लए आर��त उद्योगों म� �नजी �ेत्र क� कं प�नयों को अनुम�त देना
2. Converting public sector companies to private sector companies by reducing Government
shareholding to below 50% (📑📑Pillar#2 → Disinvestment)
Till 1991 After LPG-reforms
many of the industrial sectors were reserved for Only following industries are reserved for
the public sector Industries only → no public sector undertakings
competition, lack of innovation. कई �ेत्र सरकारी 1. Atomic Energy (परमाणु ऊजार्)
कं प�नयों के �लए आर��त थे. �नजी �ेत्र के उद्य�मयों को आने क� 2. Railways (now even there private train
मनाई। �धार् और नवाचार क� कमी
operators allowed (More in 📑📑Pillar#5)
Government would nationalise private sector - Stopped the practice of nationalisation.
industries in the national interest such as - Private sector companies were allowed in
banking, insurance, aviation. (�नजी कं प�नयों का Banking, Insurance, aviation, telecom and
रा��ीयकरण)
other sectors.
- रा��ीयकरण क� प्रिक्रया बं ध क�, और �नजी क��नयों को
ब�िकंग बीमा उड्डयन दू रसं चार इ�ािद �ेत्रों म� अनुम�त दी
41.1.3 🌐🌐Globalization: वै�ीकरण
Globalization is a process in which nations allow free flow of goods, services, labour, capital
investment, technology, ideas and innovations. व�ु, सेवाओं, श्रम, पूंजी �नवेश, प्रौद्यो�गक�, और �वचारों नवाचारों के
मु� प्रवाह क� प्रिक्रया को वै�ीकरण कहते ह�
😰😰Till 1991 🤩🤩After LPG-reforms
Inward looking economy, Import substitution India joined the WTO-regime, we gradually
policy, variety of tariff & non tariff barriers on relaxed the tariff and non tariff barriers on the
the imported goods & services → problem of imported goods and services. (Ref:
smuggling.(आयात प्र�त�ापन नी�त, शु� और गैर शु� 📑📑Pillar#3B)
बाधाए, त�री)
Very strict controls on currency convertibility, Norms where relaxed (Ref: 📑📑Pillar#3A)
foreign companies, and foreign investment. (मुद्रा (�नयमों म� ढील / छू ट)
प�रवतर्नीयता, �वदेशी �नवेश पर स� �नयं त्रण/रोक)
Further self study on the LPG reforms from NCERT class 11 ch.2 and 3. Mains Answer writing about
LPG reforms: youtube.com/user/TheMrunalPatel/search?query=rao
41.2 🤖🤖BEYOND LPG → TOWARDS 4TH INDUSTRIAL REVOLUTION
Timelines (Approx.) Industrial revolutions & their major components

1.0 (1800 onwards) Powered by coal, iron machines and factories, railways, steamships
and telegraph.
2.0 (1900 onwards) Powered by Electricity, Oil, Motor-Vehicles, Planes, Telephone, TV,
Cinema and radio.
3.0 (1980 onwards) Electric and Hydrogen Powered Vehicles, Drones, Flexible Robots, 3D
Printers and nanotechnology.
4.0 (latest buzzword It further optimizes the computerization of Industrial revolution 3.0
from 2016’s WEF-Davos using cloud computing, Artificial Intelligence (कृ �त्रम बु�द्धम�ा) and
summit onwards) Internet of Things (IoT: e.g. using smartphone app to turn on AC
Timelines (Approx.) Industrial revolutions & their major components
before you arrive at home.)
- The 4th Industrial Revolution = automation of mfg processes through "smart factories" where
cyber-physical systems will make decisions, minimizing wastages, optimizing the use of energy
and raw material. (चौथी औद्यो�गक क्रां�त = �ाटर् कारखानों म� �व�नमार्ण, ऊजार् और क�े माल के �य म� कमी)
- Germany, France, China, USA etc. have already launched government funded programs
- 2017: Commerce ministry set up a taskforce on AI for India's economic transformation under
Dr. V. Kamakoti. 2018: Defense ministry set up a taskforce on AI for national security under N.
Chandrasekharan of Tata Sons. (इस मामले पर सरकार द्वारा �व�भ� स�म�तयों का भी गठन �आ है)
- 2018-Budget gave ₹100 crore to Department of Science & Technology for a mission on cyber
physical systems. NITI Ayog working on National Artificial Intelligence Mission.
- 2019-Budget announced a National Programme on 'Artificial Intelligence'.
41.2.1 🤖🤖🤝🤝 GPAI – the new GANG for A.I. (2020-June)

⇒ Global Partnership on Artificial Intelligence (GPAI: आ�टिफ�शयल इं टे�लज�स पर वै��क भागीदारी).
⇒ Founding members? India, US, the UK, EU, Australia, Canada, France, Germany, Italy, Japan,
Mexico, New Zealand, Republic of Korea, Singapore (भारत इस सं �ा का एक �ापक सद� ह�)
⇒ HQ/Secretariat @Paris, France. Supported by GPAI will be supported by a Secretariat, to be
hosted by Organization for Economic Cooperation and Development (OECD).
41.2.2 🤖🤖 Beyond LPG → 4th Industrial Revolution → New Industrial Policy

1991: Our last industrial policy was made. 2017: Commerce ministry began formulating a New
industrial policy for India focusing on the Fourth Industrial Revolution with six thematic areas viz.
- 1) Technology & Innovation: Govt to provide incentives for artificial intelligence, internet of
things, and robotics.
- 2) Manufacturing & MSME, 3) Ease of Doing Business
- 4) Infrastructure & Investment 5) Trade & Fiscal Policy
- 6) Skills & Employability for Future
2021: This policy is awaiting cabinet approval.(अभी अं�तम अनुम�त नहीं �मली)
41.2.3 🤖🤖 4th Industrial Revolution → Samarth Udyog Bharat 4.0

Boss? Ministry of Heavy Industries & Public Enterprises → Department of Heavy Industries (भारी
उद्योग �वभाग) → to propagate technological solutions to Indian manufacturing units to make them
ready for Industry 4.0 by 2025.
- How? Awareness generation, demo centres, training, networking between industry and
academia, international corporation. (कं प�नयों और शै��णक सं �ाओं के बीच मेलजोल बढ़ाना)
- Related? This department is also responsible for the National Capital Goods Policy 2016, to ⏫
domestic production of textile machinery, Earth moving and mining machinery, printing
machinery etc. (रा��ीय पूंजीगत माल नी�त) Sidenote: Textile Ministry’ SAMARTH scheme= skill
development in textile sector.
41.3 ⛸🗑🗑🗑🗑🗑🗑 CIRCULAR ECONOMY (प�रक्रामी अथर्�व�ा)
 (Definition) A circular economy is an alternative to a traditional linear economy (make, use,

dispose). In circular economy, resources are kept in use for as long as possible, the maximum
value is extracted from them, and ultimately waste is recovered and regenerated in the end.
पारंप�रक-रै�खक-अथर्�व�ा से �वपरीत यहा प�रक्रामी-अथर्�व�ा मे सं साधनो के पुननर्वीनीकरण पे �ादा �ान िदया जाता है।
 (Origin) 2019: NITI Aayog proposed ‘Circular Economy and resources efficiency in India’.
 (DATA) Circular Economy in EU is expected to create savings of €600 billion for EU businesses,
creation of additional 580,000 jobs and reduction of carbon emissions by 450 million tonnes by
2030. In India it can generate 1.4 crore jobs in next 5-7 years. रोजगार सृजन म� मदद
41.3.1 🏭🏭 Circular Economy: Business Models
A Circular Economy functions on following business models:
1) �
Circular Supply Chain (प�रक्रामी आपू�त श्रृंखला): recyclable input materials. E.g. Used newspapers
→ pulp → paper rims for printing new newspapers.
2) Recovery & Recycling (बरामदगी और पुननर्वीनीकरण):
a. � � � � Nike uses scraps of used shoes for filling sports surfaces like basketball
courts, tennis courts, etc.
b. � � � Japan decided to manufacture gold, silver and bronze medals for the 2021
Tokyo Olympics by extracting precious metals from electronic waste only. (ओलं �पक के पदक
म� धातु)
c. India can extract $1 billion worth gold from e-waste, 8 million tonnes of steel from
scrapped vehicles. In India, only 60% plastic is recycled, if we achieve 100% → ~14
lakhs jobs.
d. Homework? Environment → Plastic Waste Management Rules
3) �
Product Life Extension (उ�ाद का जीवन �व�ार): through R&D, we can extend working lifecycle
of products, right to repair laws, refurbishment, upgrading and reselling of second-hand goods
esp. in mobile, laptop, TV, other consumer electronics and vehicle through olx, quikr etc.
4) �Sharing Platform / ownership (साझा करना): Airbnb app allows homeowners to rent their
property for short term to tourists. Uber uses taxis to deliver food. Thus, asset owners can gain a
new revenue stream, while construction for separate hotel, separate food-delivery trucks decline
= resource conservation.
5) �Product as a Service (उ�ाद एक सेवा के �प म� बेचना):
a. �Microsoft Office disk costs $150, however, they also offer Office365 as a ‘software
subscription service’ with deep discount for students so they can afford it at $1 per
month. This discourages piracy → more revenue to company → more R&D for future
upgrades.
b. �Some companies allow short term renting of computers, cameras and other gadgets
→ less generation of e-waste by consumers who don’t want the gadget on 24/7 basis.
c. �In some countries, Philips offers lighting as a service, wherein users are required to
pay for the consumed intensity, rather than how many bulbs purchased.
41.3.2 🚧🚧Circular Economy: Roadmap for India/how to achieve?

⇒ We have to enact a dedicated policy and law for waste to resource management.
⇒ We’ve to create synergy between ongoing initiatives like Swachh Bharat Abhiyan, Smart Cities,
Make in India, Start-up India, Digital India, Corporate Social Responsibility (CSR) etc. for
efficient resources management.
⇒ We’ve to setup a national coordinating body- Bureau of Resource Efficiency, to monitor this
initiative. (रा��ीय �र पर सम�य के �लए एक अलग सं �ा बनायी जाए)
⇒ More taxes on using virgin raw materials, less taxes on using secondary / recycled raw materials.
(पून:नवीनीकरण िकए क�े माल के इ�ेमाल पर कं प�नयों को करो/टे� म� छू ट �मले)
⇒ More funds for R&D in recycling, supply chain management using AI & blockchain technology.
⇒ Bio-economy = deals with production resources from biology e.g. Agriculture, Forestry, Fishery,
Biofuels. (जैव अथर्�व�ा- कृ �ष, वा�नक�, म�, जैव �धन) If we integrate a circular economy with a bio-
economy, then we can combat global warming and climate change.
41.3.3 🚧🚧Circular Economy: India Plastics Pact (IPP) 2021

-Basically Indian companies make promises for developing circular economy for Plastic products.
Boss? World-Wide Fund for Nature-India (WWF) and Confederation of Indian Industry (CII)
� Conclusion: Circular Economy aims at minimising waste and making the most out of the
available resources. SDG Goal#12 requires nations to ensure sustainable consumption and
production patterns. Therefore, we must focus on Circular Economy on war-footing. Taking note of
this, 👜👜👜👜Budget-2022 announced to focus on electronic waste, end-of-life vehicles, hazardous
industrial waste for promoting circular economy. (सं साधनों के अप�य म� कमी, सतत �वकास ल� क� प्रा��, अग्रता
क्रम से इस पर काम करना होगा. इसी को �ान म� रखते �ए नए बजट म� भी प�रक्रामी अथर्तंत्र पर ज़ोर िदया गया है).
41.4 �MFG POLICY → NATIONAL MFG POLICY 2011: रा��ीय उ�ादन नी�त
Boss? Commerce ministry → DIPP / DPIIT. (वा�ण� मं त्रालय)
- Target? To ⏫ manufacturing’s share in GDP to 25% by 2022, & create 100 million jobs.
- For this target, Govt will pursue ease of doing business, skill upgradation for young workforce,
funding for innovation & green Technologies (�वसाय करने म� आसानी, युवा के �लए कौशल, नवाचार और ह�रत
प्रौद्यो�गक� के �लए �व� पोषण)
- Creating National Investment and Manufacturing Zone (NIMZ).
41.4.1 🏭🏭 Mfg Infrastructure → NIMZ, रा��ीय उ�ादन और �नवेश �ेत्र
- NIMZ is an ‘industrial township’ containing Special Economic Zones, Industrial Parks &
Warehousing Zones, Export Oriented Units etc.
- NIMZ are given additional support by government e.g.
- Tax incentives, Relaxed norms for FDI approval (करों,�वदेशी प्र�� नवेश म� �रयायत)
- Providing Rail, Road, energy, communication connectivity, schools-hospitals & other
social infrastructure for the workers, etc. in a time bound manner. (सं चार प�रवहन क� बु�नयादी
सु�वधाएँ )
- relaxations in the labour laws e.g. women allowed to work in night shift, easier hiring-
firing norms: काम पर रखने के - �नकालने के आसान मानदंड.
- NIMZ will be treated as self-governing bodies under Article 243(Q-c) of the Constitution. So the
traditional norms related to Municipality, its functions, election of ward members etc. will not
apply for this township area. (नगरपा�लका के पारंप�रक �नयम यहां पर नहीं लागू होते)
- We have more than 15 NIMZ such as Ahmedabad-Dholera Investment Region@Gujarat, Dadri-
Noida-Ghaziabad investment Region@Uttar Pradesh, Manesar-Bawal Investment
Region@Haryana etc.
- Previously, Delhi Mumbai Industrial Corridor had setup Special Investment Regions (SIR) in its
region. They’re converted into NIMZ.
- 2017: Commerce ministry launched Industrial Information System (IIS), a GIS-enabled
database of industrial areas across the country. This helps entrepreneurs to find out raw material,
distance from key transport hubs etc.
41.4.2 🏭🏭 Mfg Infrastructure → Industrial Corridors (औद्यो�गक ग�लयारे)

Boss? Commerce Ministry → National Industrial Corridor Development and Implementation
Trust (NICDIT).
- They provide funding for industrial and commercial areas, townships, Warehousing and
container depots, Rental Factories, Social infrastructure like- schools, technical institutions,
hospitals etc, Housing and Residential Complexes; roads, railways, airports, Oil and gas pipeline
etc. (उद्योग, प�रवहन, ऊजार् से लेकर मजदू रों के ब�ों के �लए �श�ा क� तमाम बु�नयादी अवसं रचनाए उपल�)
Notable ongoing/ proposed industrial corridors of India:
- Delhi Mumbai Industrial Corridor: (DMIC-2006 onwards) passing through Uttar Pradesh,
Haryana, Rajasthan, Madhya Pradesh, Gujarat and Maharashtra. IT’s implemented by a Special
purpose vehicle (SPV: company) with ownership: 49% NICDIT, 26% Japanese Bank for
International Cooperation (JICA) and rest with India’s Public Sector Financial Intermediaries.
- Other notable corridors: Amritsar Kolkata Industrial Corridor, Chennai Bengaluru Industrial
Corridor, Bengaluru Mumbai Economic Corridor, Vizag –Chennai Industrial Corridor, East
Coast Economic Corridor from Kolkata to Chennai, Odisha Economic Corridor etc.
- 2017: Commerce Ministry approved Defence Park at Pallakad, Kerala.
- 2018: Two Defence Industrial Production Corridors: 1) Tamil Nadu 2) Uttar Pradesh.
Related? infrastructure, National Investment & Infrastructure Fund (NIIF) etc. in Pillar#5
41.5 �🦁🦁 MFG & SERVICES → MAKE IN INDIA: WHY? (2014)
Previous economic surveys observed that nations improve their GDP using three ways
1. Geology (भूत� खनन): Energy & Minerals resources e.g. W. Asia, Australia, Canada. India’s
challenges? Not enough crude oil resources, we still lack cost-effective technologies for large-
scale exploration of Shale gas and nuclear minerals. (�सफ़र् इस से भारत का GDP बढ़ाया नहीं जा सकता)
2. Geography (भूगोल पयर्टन): Tourism e.g. Mauritius, Caribbean. India’s challenges? While India has
great tourism potential due to its geographical, climatic and cultural diversity. But, tourism
income alone cannot sustain a large nation like India. (�सफ़र् पयर्टन क� आमदनी से भारत देश नहीं चल सकता।)
3. Jeans to Jets: As agrarian economy evolves, it’ll begin producing low-skill items like jeans →
further growth & technological advancements to produce jets, software & other high-skilled
goods and services → then country will outsource the jean mfg. to other third world nations.
USA grew like this. China, Thailand, Indonesia, Malaysia and other East Asian economies
pursuing this model. (कम कौश� द्वारा �न�मत व�ुओ ं से शु�आत, िफर उ� कौश� द्वारा �न�मत व�ुओ ं क� तरफ गमन –
जैसा अ� पूव� ए�शयाई देशों ने िकया, भारत म� भी करना चािहए)
India’s case is unique because post LPG-reforms we directly jumped from Agriculture to IT/service
sector. Our growth in (low skill) mfg sector was sub-optimal due to 1) Electricity, road and other
infrastructural bottlenecks 2) Outdated factory and labour laws that prevent ease of doing business.
(हालाँिक भारत म� ये हो नहीं पाया �ोंिक �बजली सड़क और अ� बु�नयादी अवसं रचना क� कमी थी तथा फै �री कानून-श्रम कानून के
जजर्र प्रावधानो के चलते उद्योगप�तयों को �ापार म� सुगमता नहीं थी )
� → �Demographic dividend and the need to shift agricultural labour
➢ In the advanced economies, not more than 25% of the population engaged in agri: USA 4%, UK
5%, France 14%, Australia 16%. (�वक�सत देशों के �ादातर श्र�मक कृ �ष नहीं िकंतु औद्यो�गक �ेत्रों म� काम करते ह�)
➢ Whereas in India >40%, because the non-agricultural sector has not been adequately developed
to absorb the labourers from the growing population. (बढ़ती आबादी को रोजगार देने के �लए)
➢ Demographic dividend= economic growth potential when share of the working-age population
becomes larger than the non-working-age population. India 65% population is below the age of
35 age. (जनसं �ा क� लाभांश: जब ब�ों और बुजुग� का अनुपात नौजवानों क� आबादी के सामने/ अनुपात म� कम हो)
➢ Industries use raw materials from agriculture and agriculture sector needs industrial equipment
and machinery such as pump set, tractor, electricity etc. So both are complementary to each
other. Industrial activities provide higher wages / remuneration than agricultural labour.
(औद्यो�गक �ेत्र म� कृ �ष �ेत्र से �ादा वेतन)
➢ So, industrialization is the only answer to reap India’s demographic dividend. Further, to double
farmers’ income, some of the small-marginal farmers should opt for industrial / service sector
jobs so that land consolidation & mechanization can help doubling the incomes for rest of the
farmers. (भू-एक�करण और मशीनीकरण द्वारा िकसानों क� आय को दोगुना करना)
Keeping these angles in mind, 2014: PM Modi launched ‘Make in India (मेक इन इं िडया)’
41.6 �🦁🦁 MAKE IN INDIA: HOW?
Nodal? Commerce ministry. (वा�ण� मं त्रालय)
Objective? Promote India as global hub for manufacturing goods & services, design and innovation
in 25 sectors. Later it was expanded to total 27 sectors. Basically it focuses:
 FDI norms relaxed for facilitating investment (�नवेश क� सु�वधा)
 fostering innovation, research development (R&D) (नवाचार को बढ़ावा देना)
 building infrastructure (बु�नयादी अवसं रचना)
 making it easy to do business by relaxing the factory-labour-tax laws & administrative
procedures (�ापार करने म� आसानी प्रदान करना)
 enhancing skill development (कौशल �वकास को बढ़ाना)
Sectors (�ेत्र)  Make in India Initiatives- some notable examples
🚗🚗Auto  National Automotive Testing and R&D Infrastructure Project (NATRiP)
Components project for encouraging R&D
🚗🚗Automobiles  FAME-India [Faster Adoption and Manufacturing of (Hybrid &) Electric
Vehicles in India]. More in Pillar5: Infrastructure → transport
infrastructure.
 Electric, Ethanol and Methanol Vehicles exempted from Permit.
🛩🛩Aviation  National Civil Aviation Policy (NCAP) & UDAAN scheme to boost
उड्डयन regional air connectivity. Faster approval to the Greenfield airports in the
North East areas
 2016: FDI policy relaxed for Aviation.
💊💊Biotech  New biotechnology parks launched, FDI policy relaxed.
⚗Chemicals  New plastic parks launched.
⚒Construction  Real Estate (Regulation and Development) Act, 2016- for granting quick
मकान �नमार्ण permissions to the builders at the same time protecting the home buyers.
🔫🔫Defense  Defence Procurement Procedure (DPP-2016: र�ा अ�धप्रा�� प्रिक्रया) :
Manufacturing Government will give first priority to the indigenously designed
र�ा श�ों का �व�नमार्ण developed and manufactured (IDDM) defence equipments.
 Updated Defense Offset Norms (र�ा ऑफसेट मानदंड) i.e. when government
buys defence equipments from a foreign company, that foreign company
will have to reinvest “x%” of the income back into Indian industries.
 👻👻 2020: Atma-Nirbhar:- Banned import of 101 defense items.
🔌🔌Electronic  New electronic parks approved, subsidy to entrepreneurs for purchasing
System Design machinery.
 National Electronics Policy 2019 <its salient features given under the
Standup India portion of this handout>
🍭🍭🍭🍭Food  New Mega Food parks, cold storages, abattoirs approved.
Processing  �
2020: Atma-Nirbhar:- needs funds & support ( �Pillar#4A)
💾💾IT and IT  2016: 100% automatic FDI in market-place E-commerce.
enabled Services  Post demonetisation many initiatives to ⏫digital payment systems.
(IT & ITeS)  Pradhan Mantri Digital Saksharta Abhiyan (PMGDISHA), Digital India
Mission- All of them directly and indirectly increase the demand of
computer hardware and software.
 Public Procurement (Preference to Make in India) Order 2017 which
requires govt depts to buy India-made desktops and computer parts.
👢👢 Leather  India is 2nd largest producer of footwear, second largest exporter of leather
चमड़ा और जूता उद्योग garments. New leather parks and clusters to be approved
 Global demand for footwear is moving towards non-leather footwear for
their comfort & cheapness, so we need R&D.
📡📡Audio-Visual  Single window clearances for film shootings for foreign film makers in
Media and India. Relaxed the norms to start new private FM radio stations.
Entertainment  Budget-2019: Previously Single Window clearance to foreigner film
मनोरंजन �ेत्र makers for shooting movies. This facility made open to Indian as well.
 Cinematography Amendment bill: unauthorized camcording /
duplication of movie → upto 3 years jail + 10 lakh fine.
⛏🎖🎖Mining  Mines and Minerals (Development and Regulation) Act (MMDR)
खनन amended in 2015-16 for ease of mining exploration.
 � 2020: Atma-Nirbhar:- more reforms ( �Ref: Pill#5)
⛽Oil and Gas  Gas based Thermal Power Projects approved.
 Gas grid projects to deliver gas through pipeline.
 Strategic oil reserves created. Hydrocarbon Exploration and Licensing
Policy (HELP) 2016 To facilitate the exploration of all type of
hydrocarbons. (Ref �Pillar#3A)
 PM-Ujjwalla yojana to encourage poor families adopt LPG - indirectly
boosts the demand & mfg of gas stoves, lighters etc. (Ref �Pillar#5)
💊💊Pharma  Additional NIPER institutes approved → ⏫availability of trained
औष�ध manpower. FDI norms relaxed. Compulsory licensing of expensive
MNC-patented drugs to encourage generic drugs’ production in India.
<Ref: IPR portion of this handout.>
⚓Ports (बं दर)  Sagarmala Project to improve port infrastructure.<Ref �Pill#5>
🚅🚅 Railways  New Metro Rail Policy 2017 with public private partnership. Mumbai-
(अ��रथ) Ahmedabad high speed rail project with help of Japan.
 Permitted private train operators (More in �Pillar#5)
🚗🚗 Highways  Expressways between Vadodara Mumbai,Delhi-Mumbai, Bangalore-
(राजमागर्) Chennai etc.
 NHAI approved new investment models.
 Bharatmala project for highway construction. (More in 📑📑Pillar#5)
🔋🔋Renewable  Preference to domestic manufacturers for purchasing equipment for
Energy Jawaharlal Nehru National Solar Mission and similar projects.
(नवीकरणीय ऊजार्)  Although later USA complaint to WTO that it is a ‘non-tariff’ barrier.
(More in �
Pillar#3B-WTO)
🛰🛰Space  ISRO’s commercial arm Antrix Corporation Ltd. getting other countries
अवकाश to launch their satellites using ISRO’s expertise.
(Ref: Pill#5)  � 2020: Atma-Nirbhar:- more reforms to encourage private sector in
space research / space tourism (Ref: Pill#5)
👚👚Textiles  India Handloom Brand launched. Special Textile Package to increase jobs
कपड़ा उद्योग and machinery upgradation. Apparel and garment manufacturing parks
setup in North East.
🔥🔥Thermal Power  New thermal power plants with green supercritical technology. UDAY
ताप ऊजार् scheme to cover the losses of distribution companies. DD Gram Jyoti
(Ref: Pill#5) Yojana & Saubhagya scheme to increase the electricity penetration in
rural households. Unnat Jyoti by Affordable LED for All (UJALA) scheme
to increase consumption of LED bulbs.
🥂🥂Tourism and  e-Visa scheme, Swadesh Darshan scheme, PRASAD scheme etc. to
Hospitality, � increase tourism
Wellness  Yoga day, AYUSH Ministry to attract foreigners for medical tourism
प्रवासन  Tourism sector contributes significantly in terms of GDP, foreign
exchange earnings and employment. But growth rate has been falling in
recent years. So, ES18-19 suggested Government to promote Ayurveda,
Health and Medical Tourism in India so as to overcome the ‘seasonality’
aspect of recreational tourism.
Other services  Medical Value Travel/medical tourism
 Transport and Logistics, Communication
 Accounting and Finance, Legal Services
 Environmental Services, Education Services
** In 2018, Government expanded 25 sectors to 27 sectors. Some original sectors were
removed/renamed/modified/replaced. So, above list will not total to 27. But hairsplittery unnecessary
for Mains. We only need to develop vocabulary from above table.
⚠😰😰 Challenge? Most of the jobs in above 27 sectors are skill intensive while India is burdened
with vast pool of unskilled labour. So, govt has to pay more attention to education, skill development
schemes incl. Skill India (2015) → 📑📑more in Pillar#6. (मजदू रों के कौशल �वकास पर �ान देना होगा)
🔠🔠❓MCQ. Find correct statements about 'Make in India' initiative? (CDS2019-II)
(1) It was launched in the year 2018. (2) Its objective is to foster innovation
41.7 �🦁🦁:📟📟 📺📺📺📺 MFG: ASSEMBLE IN INDIA (अस�बल इन इं�डया)
📔📔📔📔ES20 Vol1Ch5 suggested we move from ‘Make in India’ towards Assemble in India
👗👗 🧸🧸 👢👢 Make in India 👟👟 📟📟 📺📺 🔋🔋 🔌🔌 Assemble in India
What? textiles, clothing, footwear, toys (कपड़े व� Products of Apple, Samsung, Sony, Nike,
जूते �खलौने) Adidas etc.
How? Traditional Unskilled Labour Semi-skilled labour
पारंप�रक अकु शल श्र�मक। अनपढ़ से भी काम चल जाए आं�शक �प से कु शल श्र�मकों के द्वारा
41.7.1 �🦁🦁:📟📟 📺📺📺📺: Assemble in In India → “Network products”
- (Definition) Network Products: Their production occurs across Global Value Chains (GVCs)
operated by Multinational Companies (MNCs) such as Apple, Samsung, Sony, Nike, Adidas etc.
(ब�रा��ीय �नगमों द्वारा वै��क मू� श्रृंखला के द्वारा “नेटवकर् उ�ादों” को बनाया जाता)
⇒ Product is designed by their Headquarter (HQ) located in a rich country @US/EU/Japan. But
Product assembly/manufacturing in done low wage countries.
⇒ Further, these products are not produced from start to finish within a single country. (अलग-अलग
देशों म� �वशेष�ता के अनुसार उ�ादन िकया जाता है)
⇒ Instead, countries specialize in particular stages of production sequence. E.g. Iphone:
⇒ LCD screen @South Korea
⇒ + Processor @Taiwan
⇒ +WiFi chip @Malaysia
⇒ → above parts are finally assembled in Foxconn Factory in China.
⇒ 2020-July: Apple's contract manufacturer Foxconn started iPhone 11 mfg in its Chennai factory.
(Due to the USA-China trade war, companies are shifting the factories away from China. Ref
�Pillar#3B for trade war / protectionism)
41.7.2 �🦁🦁:📟📟 📺📺📺📺: Assemble in In India → how will it benefit India?
IF India joins the assembly chain of Network Products (नेटवकर् उ�ाद) esp. computers, TV, mobile,
electronics (�वद्युत उप�र), road-vehicles (सड़क वाहन), then…
Assemble in India 2025 2030
New Jobs in India रोजगार सृजन → 4 cr 8 cr ⏫
India’s share in World Export वै��क �नयार्त म� भागीदारी → 3.5% 6% ⏫
41.7.3 �🦁🦁:📟📟 📺📺📺📺: Assemble in In India → Wild Geese Flying Model (1960s)
⇒ Formulated by Japanese economist Kaname Akamatsu. जं गली हंसों का उदयन मॉडल
⇒ Japanese companies (Sony) first started assembling Camera, mobiles, TV etc. then later
outsourced manufacturing to South Korea, Malaysia.
⇒ Then South Korean companies (Samsung, LG etc) grew and they started outsourced mfg to other
Asian nations like Taiwan, Thailand etc.
⇒ Thus, Networked Goods assembly will continuously move from the more advanced countries to
the less advanced ones. उ�ादन क� प्रिक्रया �ादा-�वक�सत देशो से कम-�वक�सत देशो मे �ानांत�रत होती है।
⇒ �
�ES20 observed: India is presently at a stage where it can become part of this flying model.
⇒ India has experience of Network products in the Automobile sector: Suzuki, Honda, Ford, Fiat,
and Renault etc. import some of the components and finally ‘assemble’ Car in India. But such
cars are made for domestic consumers (and not ‘exported’ to rich countries, unlike the China-
assembled Iphone & SonyTV).
41.7.4 �🦁🦁:📟📟 📺📺📺📺: Assemble in In India → Policy recommendations?

 Previously, China was seen as a low-cost location for final assembly of industrial products. But
ageing population = labour shortages + increases in wages. (चीन मे श्र�मकों क� कमी और वेतन म� बढ़ोतरी)
 US/EU Protectionism =higher duties on China-made products → companies are shifting
production away from China. (सं र�णवाद से बचने के �लए �वदेशी कं प�नयां चीन के बाहर फ़ै ��ी लगाना सोच रही है)
 So, India should attract these MNCs by reforming its taxation, FDI and labour laws (कराधान, �वदेशी
प्र�� नवेश, श्रम कानूनम� सुधार करना).
 Skill training of Indian youth as workers and middle-level supervisors. (कौशल प्र�श�ण)
 Improve infrastructure for transportation, broadband communication etc. (प�रवहन व सं चार क�
बु�नयादी सु�वधाओं को बेहतर करना)
 Shipping Delays, Electricity Failure, Political Disturbances, Labour Disputes etc could disrupt the
entire production chain & thereby discourage the MNCs. So, Govt should try to monitor them
closely. (नौवहन म� देरी, �बजली क� कटौती, राजनी�तक अ��रता, मजदू रों के �ववाद से पुरी उ�ादन-�ं खला बा�धत हो जाती है.
इन पर सरकार क� �नगरानी ज�री)
 2018: top 3 mobile handset manufacturers 1) China 2) India 3) Vietnam. With the right policies,
we can even overtake China! (को�शश करे, हम चीन से भी आगे �नकल सकते है)
 Challenge? Labour unrest in Apple iPhone factory in Karnataka. Workers burned vehicle, looted
phones over non-payment of salaries. So, on one hand, India wants to attract foreign companies
but at the same time we can’t allow them to exploit workers nor we can allow violence by
workers. Need to balance all these. (श्रम �ववाद, मजदू रों का शोषण, तन�ाह का समय पर भुगतान नहीं- इस�लए ए�ल
के कनार्टक फै ��ी म� मजदू रों द्वारा आगजनी और लूट. सरकार के �लए �वदेशी कं प�नयों को आक�षत करना, साथ ही साथ �ानीय
मजदू रों के अ�धकारों क� र�ा करना, साथ ही साथ मजदू र सं घ क� हड़लात/िहसं ा को रोकना - इन सब का सं तुलन आव�क)
41.7.5 👻👻👻👻👻👻:🧔🧔🧔🧔Production Linked Incentive Scheme (PLI: उ�ादन आधा�रत प्रो�ाहन)

⇒ This scheme aims to ⏫ mfg of automobiles, pharma, mobiles, textile etc. sectors
⇒ By giving them conditional 4-6% subsidy on incremental sales of goods manufactured in India,
against their production in base year (वषर् 2019 के अनुपात म�, भारत म� �न�मत कं पनी के उ�ादनो, क� सालाना �बक्र�,
िकतनी बढ़ी, उस िहसाब से सशतर् स��डी/लाभ दी जाएगी।)
⇒ Note: Drone industry is exception- they’ll be given 20% subsidy on sale of drones.
Base year 2019-20. But to some companies given option to select 2020-21 as base
year, if they want. Who are those Companies? Ans. Not IMP.
Scheme Validity till 2025-26.
41.7.6 👻👻👻👻👻👻:🧔🧔🧔🧔 PLI Scheme ke 13 Sectors

Sr Mfg Approving Org ₹₹
1,2 - 1) Automobiles (But scheme not Dept of Heavy Industries (under More than
given for petrol/diesel/CNG type Ministry of Heavy Industries) 57,000 cr
Internal Combustion Engine (ICE)
vehicles. Focus is on e-vehicles)
- 2) Auto components (e.g. tire,
engine etc)
3 Drones and Drone components Ministry of Civil Aviation 120 cr
4 Advanced Chemistry Cell (ACC) NITI Aayog and Department of 18100 cr
Battery- used in consumer electronics, Heavy Industries
electric vehicles, and renewable energy.
5,6 5) Pharmaceutical Drugs Department of Pharmaceuticals 15000 cr
6 )Medical devices (e.g.Xray, Stent) under Ministry of Chemical
7 Telecom & Networking (दू रसं चार के उपकरण) Department of Telecom (under 12195 cr
e.g. Mobile handsets Communication ministry)
8 Food Products- Veg, Non Veg, dairy- Ministry of Food Processing 10900 cr
ghee/cheese etc are included (खाद्य पदाथर्)
9 Textile Products: Man Made Fibre Ministry of Textiles 10683 cr
(MMF) and technical textiles e.g.
shoelaces, parachutes etc
10 Specialty Steel (खास िक� के �ील उ�ाद) Ministry of Steel 6322 cr
11 White Goods - domestic / home Department for Promotion of 6238 cr
appliances but only two mentioned for Industry and Internal Trade
now- ACs & LED (DPIIT) under Commerce Ministry
12 Electronic/Technology Products Ministry of Electronics and 5000 cr
Information Technology
Sr Mfg Approving Org ₹₹
13 Solar Photovoltaic Modules Ministry of New and Renewable 4500 cr
Energy
Total ₹1.97 Lcr
Total: ₹1.97 lakh crores worth of subsidy will be provided. Presently 13 sectors. Later more sectors
may be added / Government may increase scheme funds….so above table’s numbers may change.
(इसम� अलग अलग समय पर अ� �ेत्रों को जोड़ा जाता है और स��डी क� रक़म म� बदलाव िकए जाते ह� लेिकन ब�त बारीक� से PHD
करने म� फ़ायदा कम, व� क� बबार्दी �ादा है। )
41.7.7 👻👻👻👻👻👻:🧔🧔🧔🧔 -🤩🤩PLI Scheme: Benefits?

⇒ ⏬imports, ⏫exports, ⏫Jobs, GDP⏫ (आयात म� कमी, �नयार्त म� वृ�द्ध, रोज़गार सृजन)
⇒ Scheme will encourage Telecom mfg companies like Foxconn, Wistron and Pegatron, who
assemble iPhones for Apple companies- to shift the base of operation from China to India.
⇒ Mobile handset sector alone is likely to contribute >₹10 LCR of GDP, and 60% of these mobiles
will be exported, 2 lakh direct jobs will be created, 6 lakh indirect jobs will be created e.g. those in
transport, packaging material, advertisement etc. of those mobiles.
⇒ Automobile will create additional 7.5 lakh jobs, Drone industry = 10,000 new jobs, Similar
benefits in other sectors mentioned in the above table. (सकल घरेलू उ�ाद, �नयार्त तथा रोजगार म� बढ़ोतरी)
41.8 🌱🌱🌱🌱 MFG & SERVICES → STARTUP INDIA (2016)
Nodal? Commerce Ministry.

Definition Original definition (2016) New definition after 2019-Feb
Startup company is a 7 years.
company not older than _ _ _ 10 years
(10 years if Biotech Company).
Doesn’t have annual turnover
₹ 25 crore. ₹100 cr
more than _ _ _
Must be working towards
innovation & development of Yes Yes
goods / services
- Under Startup India (�ाटर्अप इं िडया) initiative such startup companies are given 3 years exemption
from Income Tax , Corporation Tax. (आयकर तथा �नगम कर - तीन वष� तक छु ट्टी)
- Self-certification permitted with respect to (WRT) EPFO act, ESIC Act etc. (� प्रमाणीकरण क� हमने इन
कानूनों का पालन िकया है। सरकारी अफ़सर जांच के नाम पे परेशांन नहीं कर�गे)
- Relaxed norms in public procurement. E.g. if Govt tender says ‘we are hiring a web development
company to make a site for Govt department, but it must have x years experience and y crores of
turnover..“- These “x” and “y” requirement would be kept relaxed for a start-up company.
(सरकारी खरीद के दौरान पात्रता के �नयमों म� छू ट)
- Relaxed norms for exit i.e. winding up the companies. (फै ��ी बं ध करने क� क़ानूनी प्रिक्रया म� आसानी)
- Govt established "Fund of Funds for Startups" (FFS) in Commerce Ministry. This fund will
provide money to other startup related schemes. (सरकार ने �न�धयों क� �न�ध बनायी है)
- Industry-academia partnership, incubation and hand holding, Mobile app and Portal, Legal and
Technical Support for filing the patent, lower / zero fees for patent applications etc.
- Foreign Venture Capital Investors (FVCI) given certain technical relaxations by Income Tax
Dept (for TDS/ tax withholding) and Reserve Bank of India (for currency convertibility).
- Startup India Seed Fund Scheme (SISFS): By the Ministry of Commerce to provide financial
assistance to 3600 startups from 1st April 2021 to next four years. (आ�थक मदद/ शु�आती पूंजी)
- Prarambh Startup India International Summit 2021: Indian Commerce ministry + BIMSTEC
(Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) countries viz.
Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka & Thailand.
41.8.1 🌱🌱🌱🌱:💼💼 Budget-2019 on Start-ups

 We’ll stop harassing startups in the Angel Tax cases. ( �Ref: Pillar2)
 We’ll launch special Doordarshan TV channel for helping startup entrepreneurs- how to
register and manage business, how to mobilize capital, tax planning, marketing strategies etc.
(�ान प्रदान के �लए अलग TV चैनल)
 We’ll extend the Stand-Up India Scheme till 31/3/25. ( �Ref: Pillar1D)
41.8.2 🌱🌱🌱🌱:💼💼 Budget-2020, 2021 and 2022 on Start-ups

Nothing exam worthy. Just the usual lip-service/chikni-chupdi-baatein.
41.8.3 🌱🌱🌱🌱 Startup: Misc Terms and trends

Unicorn club → A startup company whose valuation is $1 billion />. Swiggy, Paytm, Byjus,
Unacademy etc. Indian startups are in this list.
January 2022 → India China USA
No. of Unicorn Startups 80+ 300+ 400+
 In India, number of startups have ⏫⏫ from 700 (2016) to 14,000 (2021).
Rank (2020)→ 1 2 3 4 5
Largest number
Maharashtra Karnataka Delhi UP Haryana
found in State →
Largest number Healthcare & Professional Food
IT services Education
found in Sector → Life Science services Beverages
41.8.4 🌱🌱🌱🌱 Startup: Factors affecting new firms creation (📔📔📔📔ES20)
 10% ⬆ in registration of new firms in a district = 1.8% ⬆ in that district’s Gross Domestic
District Product (GDDP: सकल घरेलू �जला उ�ाद म� वृ�द्ध होती है जब उस �ज़ले म� नई कं प�नयां लगायी जाती है )
 Thus, entrepreneurship at district – has a significant impact on wealth creation at the grassroot
level. (उद्य�मता से जमीनी �र पर धन सृजन म� मदद �मलती है)
😰😰😰😰But in Eastern India, growth of new firms is very slow because: →

 � � Eastern India: lowest literacy rate (सा�रता दर: 59.6%, census of 2011). This region has the
lowest registration of news firms. In the past, the privatization of engineering colleges helped ⏫
India’s software exports. So, govts could also explore the privatization of education further
(allow more private colleges: �श�ा का �नजीकरण ज़�री है)
 � � � W.Bengal, Assam, Jharkhand, Kerala and Bihar have inflexible labour laws so
entrepreneurial activity is lowest. (�जन रा�ों म� श्रम कानून लचीले नहीं होते वहां उद्य�मता कम होती है)
 � � Physical infrastructure such as road, electricity, water/ sanitation facilities, and telecom
services. (प�� सड़क, �बजली, पानी ��ता, दू रसं चार सेवा वगेराह भौ�तक अवसं रचना क� कमी है पूव�य भारत म�)
� Report: startup ecosystem for budding entrepreneurs in 2021- Released by DPIIT: Gujarat and
Karnataka emerged the ‘best performers’. (�ाटर्अप कं प�नयों के उद्य�मयों को सबसे �ादा प्रो�ाहन देने वाले रा�ों म�
गुजरात और कनार्टक शा�मल. )
41.9 🦁🦁🦁🦁 MFG POLICY → NATIONAL POLICY ON ELECTRONICS 2019
इले��ॉ�न� पर रा��ीय नी�त 2019 replaces the previous policy of 2012.

- Boss? Ministry of Electronics and Information Technology (MeitY).
- To make India a global hub for Electronics System Design and Manufacturing – (ESDM:
इले��ॉ�न� प्रणाली रचना/�स�म िडजाइन और �व�नमार्ण), Government will do following: →
- Tax benefit, subsidies and other incentive for R&D, innovation, Training and skill development
for 5G, Internet of Things (IoT), Artificial Intelligence (Al: कृ �त्रम बु�द्धम�ा ), Machine Learning,
Virtual Reality (VR), Drones, Robotics, Nano-based devices, Medical Electronic Devices,
Automotive Electronics Industry, Strategic electronics for the defence sector etc.
- Sovereign Patent Fund (SPF: सावर्भौम पेट�ट �नधी): Govt will buy Patents / Intellectual Property Rights
(IPR) from the innovators / Corporate Companies → allow MSME industries to use those IPR
for electronics manufacturing, without having to pay hefty royalties to original patent holder..
- Targets for 2025? Turnover of $400 billion. Produce 100 crore units of mobile handsets & export
60 crores units out of that. Create 1 crore jobs.
- SAMRIDH SCHEME: MeitY scheme for helping Software Product related start-ups.
- Meta resources = are facilities that allow easier access to network-based resources in a defined
subject area. e.g. electronic devices that helps you read e-books, audiobooks, smartwatches for
GPS-tracking your cycling etc (नेटवकर् म� ��त सं साधनों को आसानी से इ�ेमाल िकया जा सके → उसम� मदद करने
वाली चीज़ को मेटा-सं साधन कहा जाता है। जैसे िक मोबाइल फ़ोन, �ाटर्-घड़ी इ�ािद)
41.9.1 🔌🔌🔌🔌Mfg → Electronics Development Fund (EDF: इले��ॉ�नक� �वकास �न�ध)
- Boss? Meity gave money to Canara bank’s CANBANK Venture Capital Funds Ltd.
- 2015: EDF was set up as a “Fund of Funds” (बृहद �न�ध) → money is given to “Daughter Funds”
(उप-�न�धया) e.g. SEBI registered venture capital funds who are investing in electronics related
startup companies.
41.9.2 🔌🔌🔌🔌Mfg → Design Linked Incentive (DLI) for Semi-Conductor Chips
- MINISTRY of Electronics and Information Technology (MEITY) → Centre for Development
of Advanced Computing (C-DAC) → design linked incentive (DLI) scheme.
- 😍😍 Govt will give 4-6% subsidy to Indian company for semi-conductor chips, Integrated
Circuits (ICs), Chipsets, etc. to ⏬reliance on Taiwan for Chips. (ताइवान से आयात कम करना पड़े)
41.9.3 🦁🦁💻💻 → National Digital Communications Policy (2018)

रा��ीय िड�जटल सं चार नी�त replaces National Telecom Policy-2012.
Boss? Ministry of Communications → Dept of Telecom
- Target-2022: 50mbps broadband to every citizen, 10 Gbps to all Gram Panchayats, jobs to 40
lakh people covering 8% GDP.
- Bodies:
⇒ DoT’s Telecom Commission transformed into ‘Digital Communications Commission
(िड�जटल सं चार आयोग)’.
⇒ (proposed) National Fibre Authority(रा��ीय फाइबर प्रा�धकरण): for creating broadband National
Digital Grid.
- Focus data privacy, digital security, 5G, Internet of Things (IOT), Machine to Machine
Communication (M2M)
- United Nations → specialized agency → International Telecommunication Union (ITU) →
ICT Development Index → improve India’s ranking. (presently below 100, have to get top-50.)
- Related: World Economic Forum’s Networked Readiness Index. Although seems ranking not
updated post-2016 so let’s ignore.
41.9.4 🦁🦁💻💻 → National Policy on Software Products - 2019

- Boss? MEITY Target-2025: 10000 startups, 35 lakh jobs, 10% of India’s GDP.
- For this we will help the startup companies, setup Software Technology Parks , Research,
Innovation, Training, Skill Upgradation, Linkages Between Industry-Academia, IPR Protection.
- Software Product Development Fund (SPDF: सॉ�वेयर उ�ाद �वकास कोष) of ₹ 1000 cr → ‘Fund of
Funds’ → give ₹ ₹ to Venture Capital Funds → to software developers.
41.9.5 🦁🦁💻💻 → Quantum Technology (�ांटम प्रौद्यो�गक�) 2020

 Conventional computers process information in ‘bits’ or 1s and 0s.
 Quantum computers compute in ‘qubits’ (or quantum bits). They work on quantum mechanics
principles related to how matter behaves on the atomic scale.
 Google’s quantum computer ‘Sycamore’ claimed ‘quantum supremacy’ bcoz it finished a task in
200 seconds that would have taken a conventional supercomputer 10,000 years to complete.
 Applications? computing, communications, cyber security etc.
 �
Budget-2020: National Mission on Quantum Technologies for a period of 5 years.
 Related Topics: 5g, public data etc in Pillar#5: communication infrastructure.
✍Conclusion Template: Electronics / IT Technology permeates all sectors of economy. It plays

vital role in raising productivity, efficiency, social transformation, employment generation,
economic growth, and strategic security of nation. R&D, IPR and Training are the critical
components for the success of an Electronics / IT Technology company. Aforementioned policy,
initiative, schemes will play a significant role in this regard. (सूचना और प्रौद्यो�गक� �ेत्र क� भारत क� उ�ादकता,
द�ता, सामा�जक प�रवतर्न, रोजगार सृजन, आ�थक वृ�द्ध, और रा�� क� साम�रक सुर�ा म� मह�पूणर् भू�मका। उ� नी�त /योजनाओं से
मदद �मलेगी)
41.10🌱🌱🌱🌱⚠😰😰 STARTUP CRITICISM / CHALLENGES (�नंदा/आलोचना)
- “Valuation game”: Startup try to ⏫ subscribers with cashback /discounts → show the data to
investors about company’s projected sales/growth/valuation to get more funding → eventually
convert the private limited company into public limited company & launch IPO to get even more
capital → people subscribe in IPO hoping large amount of dividend while the promoter leaves
with money & company sees fall in revenue once the cashbacks and discounts are stopped.
- Paytm IPO mega flop: public bought shares at ₹2150 → presently fallen to ₹1230 (2022-Jan).
Resulting in >50% loss on investment.
- Past Economic Surveys: Most of the startups are focused on e-commerce aggregation i.e.
Connecting the buyers with sellers (Uber, Zomato, Flipkart, Pepperfry etc.) due to ‘valuation
game’, whereas India needs more startups in Agriculture, Manufacturing, Healthcare and
Education. (कृ �ष, �व�नमार्ण, �ा� सेवा और �श�ा।)
- 2019: Dr.Raghuram Rajan noted: There is no ‘free lunch’ in economy so when ‘superstar’
companies are giving free products / cashback to consumer - who is paying for it? is it company
itself or the government (through tax-holidays & subsidies given to that company!)
- While Start-up entrepreneurs must be encouraged but at the same time, (fake) Angel investors’
tax evasion and avoidance has to be discouraged. (ref: Pillar#2: Black Money handout).
41.11 🌱🌱🌱🌱 → 🤒🤒 STARTUP → (SHUTDOWN) “EXIT” OF SICK INDUSTRIES
Sick industries: बीमार उद्योग in an entity that has accumulated more losses than its entire net worth
(networth = assets minus liabilities).
Industrial sickness can be a result of (आंत�रक और बाह्य कारक)
⇒ Internal factors like mismanagement, workers low morale & strikes etc.
⇒ External factors like rising cost of energy & raw material, fall in product demand etc.
1985: PM Rajiv Gandhi in enacted Sick Industrial Companies Act → Statutory body in Finance
Ministry → Board for Industrial and Financial Reconstruction (BIFR).
⇒ BIFR would A) help the SICK industry with new funds or B) shut down the SICK industry on
case to case basis.
⇒ Ideally, a sick industry should be liquidated so its labour and capital can be shifted to healthy
companies. (आदशर् प�र��तयों म� तो बीमार उद्योग िक मजदू र और पूंजी �� उद्योग क� तरफ गमन करने चािहए )
⇒ But, above bodies’ decision making was very slow so sick companies will not quickly shut down,
and continue to receive Government funding/support, as if Abhimanyu entered the
‘‘Chakravyuh’ but never exits. So previous economic surveys used term ‘Chakravyuh challenge’.
2016: PM Modi repealed this Act & its statutory bodies. Their pending cases referred to National
Company Law Tribunal (NCLT). So now if a firm becomes sick then:
- IF wilful defaulter or incapable defaulter → liquidation under the SARFAESI Act
- ELSE I&B Code: IP will make a resolution plan within “x” number of days → if IP’s resolution
plan is not agreeable to the lenders → liquidation.
- If a startup company wants to (voluntarily) shut down, it can make application under
I&B Code → IP will liquidate it within 90 days. This helps the entrepreneur to pull out
his portion of capital (to start another startup = Ease of doing business).
✍Conclusion Template: Startups have always been the engine of progress. The mega corporations
of today were startups of yesterday. Startups can be effective instruments for reaping India’s
demographic dividend, catalyze employment generation and augment its economic growth. The
aforementioned policies/ schemes are significant in this regard.
(भारत के जनसां��क�य लाभांश क� प्रा��, रोजगार सृजन, आ�थक वृ�द्ध के �लए �ाटर्अप को मदद करना बेहद ज�री।)
42 🔬🔬MFG & SERVICES → INTELLECTUAL PROPERTY RIGHTS
⇒ WTO’s Trade-Related Aspects of Intellectual Property Rights (TRIPS-1995) protects following

types of IPR (बौ�द्धक सं पदा अ�धकार) : Copyright, Trademarks, Geographical Indications, Industrial
Designs, Patents, Integrated Circuits & Trade Secret.
⇒ 🕵🕵World Boss? UN specialized agency World Intellectual Property Organization (WIPO: HQ
Geneva, Switzerland, �व� बौ�द्धक सं पदा सं गठन).
42.1.1 🔬🔬🕵🕵WIPO is known for
1) Global Innovation Index (वै��क नवाचार सूचकांक)
2) Marrakesh Treaty 2013 which requires nations to increasing accessibility of copyrighted books to
Visually Challenged. India was first to ratify.
a. Further, Social Justice Ministry → Divyangjan Dept → launched ‘Sugamya Pustakalaya
e-library’ for VH, in collaboration with Daisy Forum of India (an NGO) and Tata
Consultancy Service (TCS).
42.1.2 🔬🔬IPR → Indian Laws
Year Act Nodal?
1952 Cinematograph Act Ministry of Information and Broadcasting.
Budget-2019 promised to amend it with anti-
camcording provisions.
1957 Copyright Act Previously HRD ministry, now Commerce
Ministry. Copyright Office → Intellectual
Property Appellate Board (IPAB: बौ�द्धक सं पदा
अपीलीय बोडर्)
1970 Patents Act Commerce Ministry’s Controller General of
1999 Trademarks Act Patents, Designs and Trademarks. (CGPDTM)
1999 Geographical Indications of Goods Commerce Ministry’s Geographical Indications
(Registration and Protection) Act Registry at Chennai
2000 Designs Act CGPDTM
2000 Semiconductor Integrated Circuits MEITY: Ministry of Electronics and
Layout-Design Act Information Technology
2001 Protection of Plant Varieties and Farmers’ Agro Ministry
Rights Act
2002 Biological Diversity Act Environment Ministry
42.2 🔬🔬IPR → PATENTS → WHAT CAN’T BE PATENTED?
⇒ Frivolous inventions. E.g. schoolbag, laptop bag (मामूली आ�व�ार)
⇒ Anything seriously harmful to public order, morality, humans, animals, plants or environment.
E.g. Stone-pelting machine (प�रबाजी करने क� मशीन का पेटंट नहीं �मल सकता)
⇒ Atomic energy related inventions.
⇒ Mere discovery of a scientific principle or the formulation of an abstract theory or discovery of
any living thing or non-living substance occurring in nature;
⇒ Plants-seeds varieties, biological process to create them; (Ref �Pil#4A Pepsi-Potato)
⇒ animals breeding; Medical treatment of humans and animals
⇒ Mere discovery of a new form of a known substance which does not ⏫ efficiency.
⇒ Mere re-arrangement or duplication of known devices.
⇒ Mere aggregation of properties of the components e.g. lemon + sugar + water = juice
⇒ Traditional knowledge. E.g. Ayurvedic information.
⇒ Mathematical formula, business method, method of playing game e.g. Dhoni’s helicopter shot.
⇒ computer program, presentation of information
⇒ Integrated circuit (Its IPR can be registered separately under Semiconductor Integrated Circuits
Layout-Design Act)
⇒ literary, dramatic, musical or artistic work; cinema-TV shows. (सािह� नाट्य सं गीत कला )
🔠🔠❓MCQ. Find correct statement(s): (Prelims-2019)

1. According to Indian Patents Act, a biological process to create a seed can be patented in India.
2. In India, there is no Intellectual Property Appellate Board.
3. Plant Varieties are not eligible to the patented in India.
Answer Codes: (a) 1 and 3 only (b) 2 and 3 only (c) 3 only (d) 1,2, and 3
42.3 🔬🔬IPR → PATENTS → COMPULSORY LICENSING (अ�नवायर् लाइस��संग)
⇒ If public interest is involved → Government can use, manufacture, import or sell a patented
invention without the patent-owner’s consent. Permitted under WTO’s TRIPS agreement.
(जनिहत म� सरकार पेट�ट वाली दवाई का भी �बना पेट�ट-धारक क� अनुम�त के उ�ादन करवा सकती है.)
⇒ 2012: Shortage of an anticancer drug Nexavar in Indian market. Bayer Pharma (Germany) held
patent & production rights & sold of ₹ 2.50 lakhs per 120 tables.
⇒ So, Indian Govt used Indian Patent Act to ‘Compulsory License’ to an Indian company NATCO
to produce this drug, sell it at ₹ 8880 per 120 tablets & pay 6% royalty to Bayer.
⇒ US & EU are apprehensive of Indian Govt issuing CL, because their MNCs will suffer, if such low
prices and royalty % are forced. (भारत सरकार के इन कदमों से गोरे देश �च�ं तत)
⇒ 2020: newspaper columns on how CL can help making Corona drugs cheap.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
42.3.1 🔬🔬🔬🔬Patent pools (पेटंटो का समूहीकरण)
⇒ Patent pools are voluntary agreements between two or more patent holders. (�ै��क समझौते) to
create a "pool" → Appoint a manager → Manager gives the production/licence rights to
multiple third parties for a cheap cost → manager distributes the royalty/license fees among the
patent holders.
⇒ Why in the news? Costa Rica and other poor nations are proposing patent pools for Corona
related drugs/vaccines.
⇒ Pharma MNCs of USA & UK etc are opposed to this idea since it'll harm their monopoly &
profiteering. (गोरों क� िफरंगीं कं प�नया इससे नाराज़ �ोंिक उनके एका�धकार और मुनाफाखोरी को ख़तरा)
42.3.2 🔬🔬🔬🔬Trips Waiver demand by India & S.Africa
⇒ 2020-Oct: India and South Africa jointly proposed waiver from the TRIPS Agreement for
COVID-19 for drugs, vaccines, diagnostics kits, personal protective equipment (PPE), and other
medical technologies. In simple words: (कोरोना के साथ जुड़ी �ई चीजों को बौ�द्धक सं पदा सं �ध म� मु��/�रयायत दी
जाए-ऐसा प्र�ाव भारत और अफ्रीका ने �मलकर �व� �ापार सं गठन म� िकया है)
⇒ First world countries should proactively share such patents / technology with third world
countries. (प्रथम �व� के देशों ने उसक� उ�ादन प्रौद्यो�गक� तीसरे �व� के देशों के साथ साजा करनी चािहए)
⇒ if a third world country is using such patented-technology of a 1st world country then it should
be allowed, without any complaints/penalties at WIPO/WTO. (तािक अ� देश भी उसका उ�ादन कर सके ,
�बना �व� �ापार सं गठन म� �शकायत से डरे)
⇒ 2020-USA opposed this but 2021-now willing to support it. (�पछले साल �वरोध िकया हालांिक अब समथर्न)
42.3.3 💊💊India can be "pharmacy of the world" says 📔📔📔📔ES21
⇒ between 2010 to 2019: India's Pharmaceutical exports have doubled (2x)

⇒ Top 3 Pharma exporters: Germany, Switzerland and USA. India is 11th Rank.
🤩🤩🤩🤩India's Strength (ताकत) 😰😰😰😰Weakness (कमजोरी)
⇒ Availability raw material ⇒ Indian pharmaceutical industry excessively dependent on
from well-developed China for sourcing Active Pharmaceutical Ingredients
petrochemical industry. (APIs). API is a chemical compound that is the most
पेट�ो रसायन उद्योग से क�ा माल important raw material to produce a finished medicine.e.g.
�मल जाता है Paracetamol is the API for Crocin tablets. (सिक्रय दवा सामग्री के
⇒ skilled workforce (कु शल �लए भारत चीन पर �नभर्र.)
मानव बल) ⇒ Private Sector expenditure R&D is very low. (सं शोधन एवं �वकास
पर �नजी कं प�नयों द्वारा ब�त कम खचर्)
⇒ Corona pandemic exposed Indian Pharma sectors weakness
in meeting the domestic demand. (अपनी भारतीय दवाई कं प�नयां
कोरोना म� भारत क� आबादी को भी दवाइयों क� आपू�त करने म� असमथर् है)
42.3.3.1 💊💊Pharma sector: Way forward (आगे का रा�ा)

⇒ Focus research on gene therapy, Novel chemical entity (=Drug molecule that is never discovered
previously by others) (जीन �चिक�ा, नवीन रसायन इकाई पर सं शोधन)
⇒ Focus on improving exports to Japan, China, Africa, Indonesia, Russia/CIS countries, Brazil and
Latin America. (इन देशों म� औष�ध �नयार्त पर जोर िदया जाए)
⇒ Optimal utilisation of Production Linked Incentive (PLI) Scheme.
⇒ Then, In future, India has the potential to become the pharmacy of the world (भ�व� म� भारत �व� का
औषधालय बनने क� �मता रखता है)
42.4 🔬🔬IPR → EVERGREENING OF PATENTS (पेट�ट को सदाबहार करना / रखना)
⇒ Patent is a statutory right given for an invention for a limited period of time. (पेटंट - एक सी�मत समय
के �लए एक आ�व�ार के �लए िदया गया एक वैधा�नक, ‘�ेत्रीय’ अ�धकार है।)
⇒ Patent protection is a territorial right and therefore it is effective only within a country. Suppose
a pharma company is given 20 years patent for xyz drug in India, others cannot manufacture it
during that period. (20 वषर् के बाद ये अ�धकार ख़� हो जाता है।)
⇒ But when the patent is about to expire, the company just slightly modifies the original drug
formula to create a new drug and seeks patent for that new drug. This unethical practice is called
“Evergreening”. (औष�ध के मूल त� म� थोड़ा ब�त मामूली फे रबदल करके दोबारा पेटंट लेने क� फज� को�शश)
⇒ Indian Patent Act prohibits Evergreening. (under Section 3(d)). (क़ानून म� प्र�तबं �धत है)
⇒ (2013) A Swiss pharma company Norvatis’s blood cancer drug Glivec’s patent was about to
expire, they had sought patent for similar new anti-cancer drug but lost the case in Supreme
Court India. SC allowed Indian companies can produce generic version of this anti cancer drug
→ patient will get it at cheaper price.
42.5 🔬🔬IPR → UTILITY PATENTS: उपयो�गता पेट�ट

- Utility patents / ‘petty patents’ recognize the minor / superficial (mechanical) improvements of
existing products e.g. adding speaker in a microwave oven to announce when food is prepared.
(मामूली �छछोरे / सतही �र के यां�त्रक सुधार)
- Commerce ministry is not in favour of amending the Patent Act to allow Utility Patent because
otherwise it could aggravate the problem of ‘Evergreening of Patents’.
42.6 🔬🔬🔬🔬 IPR → NATIONAL IPR POLICY 2016

- Nodal? Commerce ministry. Motto? Creative India; Innovative India.
- This policy shifted the Copyright Office and its statutory body Intellectual Property Appellate
Board (IPAB) from HRD (Education) ministry to commerce ministry.
- Conduct IPR awareness programs for industry, police, customs and judiciary so they can combat
counterfeiting and piracy in a more efficient manner. (जागृ�त तथा तालीम)
- +Filler points like Launching new courses in the higher education to increase the availability of
patent experts in India, reducing the patent application fees for the startup companies and
grassroot innovators etc. (�ाटर्अप कं प�नयों का पं जीकरण फ़�स म� मु��)
🔠🔠❓MCQ. Find correct about ‘National Intellectual Property Rights Policy’ (Asked in UPSC-Pre-2017)
a) It reiterates India’s commitment to Doha Development Agenda & TRIPS Agreement.
b) Dept of Industrial Policy and Promotion is nodal agency for regulating IPR in India.
c) Both a and b [d)Neither a nor b
42.7 🔬🔬🔬🔬 =🥱🥱 PATENTS APPROVAL SPEED VERY SLOW IN INDIA- SAYS 📙📙📙📙ES22 😥😥
Country (2020) China USA Japan Korea India
No. of Patents granted 5.30 lakh 3.52 lakh 1.79 lakh 1.35 lakh 28,000+ �
After a Patent application is filed → it goes through various stages of inspections by the patent
examiner, hearings, and final approval. (पेट�ट अज़� दा�ख़ल होने के बाद उसे अलग अलग चरणों से गुज़रना होता है �जसके
बाद अं�तम-मं ज़ूरी/अनुम�त �मल�गी)
Country (2020) Japan S. Korea China USA India

Months taken to clear a patent
15 15.8 20 20.8 42
application = very slow in India
Months months Months Months Months �
(�वदेशों के मुक़ाबले भारत म� काफ़� देरी/�वल� होती है)
However, within India: average time taken to clear a patent application gradually the speed is
increasing. (हालाँिक �पछले कु छ वष� म� थोड़ी तेज़ी आयी है।)
Within India → 2017 2019 2020

Months taken to clear a patent application 64 months 52 months 42 months
42.7.1 🔬🔬🔬🔬 =🥱🥱 Reasons for slow speed in Patent Approval: (पेट�ट-अज़� �न�ादन म� देरी के कारण:)
😥😥 India does not have enough patent examiners: (भारत म� पयार्� मात्रा म� पेट�ट परी�कों क� िक़�त/कमी है)
Country (2020) → China USA Japan � India
No. of Patent Examiner → 13,000+ 8000+ 1600+ ONLY 615
😥😥 There is no legal/official time limit prescribed within which govt authorities must approve or
reject a patent. → So depends on officer’s hardworking/lazy nature. (िकतने िदनों के भीतर पेट�ट अज़� को बहाल
या ख़ा�रज करना है? उसक� कोई क़ानूनन तय-समय सीमा नहीं है। वो अफ़सर िकतना मेहनती या आलसी ह� इस पर �नभर्र है।)
42.8 🔬🔬🔬🔬 IPR → NOTABLE SCHEMES (कु छ उ�ेखनीय योजनाएं )

SIPP − Commerce Ministry’s Startups Intellectual Property Protection (SIPP:�ाटर्अ�
बौ�द्धक सं पदा सं र�ण) scheme valid from 2016 to 2020.
− Startup entrepreneurs are given free training on how to file the patents. No
patent fees for them.
AIM Atal Innovation Mission in NITI Ayog to help the innovators. E.g. launch challenges
in NITI / competitions and award prize money. Following initiatives launched in 2020:
(2015) - 2020-Sept: ARISE-ANIC initiative for applied research and innovation in Indian
MSMEs and startups.
- 2020-Nov: AIM–Sirius Innovation Programme 3.0 for schoolchildren of India
and Russia In virtual mode. Sirius is a Research Institute of Russia. It included a
competition to create softwares and apps for culture, distance education, science,
health, sports, fitness,, chemistry, artificial intelligence etc in Corona.
SETU in − Self Employment and Talent Utilisation (SETU) in NITI ayog
NITI − to setup incubators for innovation. Incubators are centers that help aspiring
(2015) entrepreneurs to develop /experiment with products without investing in all the
machineries beforehand.
Smart − Organized by the HRD/Edu Ministry since 2017 onwards.
India − 2019: College students asked to give innovative ideas to solve the challenges
Hackatho faced by public sector organisations, industries and even NGOs. 36 hrs software
n development competition, 5 days hardware development competition etc.
😷😷 − 2020: YUKTI 2.0 Young India Combating COVID with Knowledge,
YUKTI Technology and Innovation (YUKTI) is HRD/Edu Ministry's portal for sharing
2.0 info about: Research, Innovation, Technologies, Startup (सं शोधन,
नवप�रवतर्न,तकनीक,�ाटर्अप) esp. those related to Corona
KAPILA − 2020-: HRD/Edu Ministry’s Kalam Program for Intellectual Property Literacy
and Awareness Campaign (KAPILA). [कॉलेज के छात्र और अ�ापकों म� IPR जागृ�त]
− To create awareness about Intellectual Property Rights (IPR) and patents among
students and teachers in Higher Education Institutions (HEIs)
Misc. Dept of Science Technology launched
कु ल �मलाकर 1. INSPIRE (Innovation in Science Pursuit for Inspired Research) – scholarship
छात्रवृ�� and awards given to students and faculty.
इनाम इ�ा�द 2. MANAK (Million Minds Augmenting National Aspiration and Knowledge)
3. NIDHI (National Initiative for Developing and Harnessing Innovation)
4. NIDHI-PRAYAS (PRomoting and Accelerating Young and ASpiring technology
entrepreneurs)
HRD Ministry launched Uchhattar Avishkar Yojana (UAY) for IITs
All these schemes provide some type of grant, funding, scholarship, award the
innovator. By default they’re 100% Union fund. Internal difference & exact
features= poor cost benefit.
✍ Conclusion template? Innovations / Startup can turn Indian youths from job seekers into job
creators. They encourage entrepreneurship, innovation and creation of revolutionary new products
that can be used by people around the world. Hence startups are important / protecting their IPR is
important. Aforementioned initiatives / schemes are important in that regard. ये सब ज�री तािक भारत के
नौजवानों को नौकरी- याचक से नौकरी-दाता बनाना सके , क्रां�तकारी नए उ�ादन करे, �जससे दु�नया के लोगों क� सु�वधा बढ़ सके .
🔠🔠❓Atal innovation mission is set up under the _ _ . (Pre19-SetA-Q19)

(a) Department of science of technology (b) Ministry of labour and employment
(c) NITI Ayog (d) Ministry of skill development and entrepreneurship
🔠🔠❓ INSPIRE is an ongoing initiative of Government of India for (CAPF19)
(a) attracting talent for science and research (b) research advancement through nurturing
(c) promoting research among various S & T stakeholders
(d) augmenting quality manpower in niche areas of research
🔠🔠❓ The policy of Intellectual Property Rights (IPRs) is the responsibility of _ _ _ _ (UPSC-CDS-i-2020)
a) Ministry of Law and Justice b) Department of Science and Technology
c) Department for Promotion of Industry and Internal Trade d) Ministry of Human Resource Development
🔠🔠❓NIDHI is an umbrella scheme for the promotion of (Asked in UPSC-CDS-2021-i)
(a) young and aspiring innovators. (b) scientific research.
(c) primary health care. (d) primary education in rural areas.
42.9 🔬🔬📊📊 IPR → INDICES & RANKINGS
42.9.1 🔬🔬📊📊 IPR Index → Global Innovation Index (GII: वै��क नवीनीकरण सूचकांक)
by WIPO, Cornell University (USA), Insead Business School (Paris).
⇒ 2020-Sept: Ranking: 1) Switzerland 2) Sweden 3) US…... 48) India. Report-Theme- Who Will
Finance Innovation? (नवाचार का �व�पोषण कौन करेगा)
⇒ 2021-Sept: Ranking : 1) Switzerland 2) Sweden 3) US…… 46) India. India’s rank improved by 2
positions: 48th (2020) to 46th (2021). Theme: Tracking Innovation through COVID-19 Crisis.
⇒ India’s overall rank continuously ⏫ since 2015. (सतत �प से अपना र�क बेहतर �आ है)
⇒ GII ranks a country based on performance across 7 pillars viz. 1) knowledge and technology
outputs, 2) market sophistication, 3) human capital and research, 4) institutions, 5) business
sophistication, 6) infrastructure, 7) creative outputs.
42.9.2 📊📊 Index → Global Competitiveness Index (GCI) by WEF

(वै��क प्र�त�धार्�कता सूचकांक-�व� आ�थक मं च) by World Economic Forum ranks nations on GCI 4.0
framework with 12 drivers of productivity: Institutions, Infrastructure; Technological readiness;
Macroeconomic context; Health; Education and skills; Product market; Labour market; Financial
system; Market size; Business dynamism; and Innovation.
✓ 2019-Oct Ranking: 1) Singapore 2) USA 3) Hong Kong….68) India. India has fallen by 10 places
than previous report.
✓ 2020-Dec: Special report with Theme-“ How Countries are Performing on the Road to
Recovery”. Although instead of giving 1-2-3-4-type proper rankings, they seemed to have done
only Timepass-talk about Corona.e.g. A) top-3 flexible work from home :Netherlands New
Zealand Switzerland B) top-3 digital legal framework = USA Luxembourg Singapore etc.
42.9.3 📊📊 Index → NITI’s India Innovation Index (भारत नवाचार सूचकांक)

2019: NITI Aayog released it. Institute for Competitiveness (a private organization) acted as
knowledge partner. It monitors the States and UT on two dimensions viz
1) Enablers Includes five pillars: (1) Human Capital, (2) Investment, (3) Knowledge
(प्रोत्साहनदाता) Workers, (4) Business Environment, and (5) Safety and Legal Environment.
2) Performance Includes two pillars: (6) Knowledge Output and (7) Knowledge Diffusion.
NITI Aayog’s India Innovation Index 2021 (published in 2022-JuL)- Top3 (Major States) Karnataka,
Telangana and Haryana. Bottom-3 (Major States) Chhattisgarh, Odisha and Bihar.
42.9.4 🔬🔬🔬🔬 IPR Index → Misc. फालतू वाले

✋Following are low profile bodies, so their index components / India' ranking = notImp / gives very
poor: cost benefit for exam (इतना सब याद रखने म� फायदा कम ही है। अपनी याददा� पर ब�त ज़ोर मत डालो।)
Index Prepared by
Global Talent Competitiveness Index By INSEAD business school (Paris) in partnership with
(GTCI: वै��क प्र�तभा प्र�त�धार् सूचकांक) Tata Communications and Adecco Group.
World Competitiveness Index • By Switzerland-based International Institute for
Management and Development (IMD).
World Digital Competitiveness By Switzerland-based International Institute for
Ranking Management and Development (IMD).
Index of Economic Freedom By Heritage Foundation (USA) with support of Wall
Street Journal.
Technology and Innovation Report By United Nations Conference on Trade and
Development (UNCTAD, HQ: Geneva, Switzerland).
2021 Report: India listed as the top "over-performer"
among developing countries.
🔠🔠❓ Global Competitiveness Report is published by the _ _ . (Prelims-2019)
(a) International Monetary Fund (b) UNCTAD
(c) World Economic Forum (d) World Bank
🔠🔠❓ Which one of the following countries was ranked 1st in the IMD World Competitiveness ranking
2019? (UPSC-Geologist-2020) a) Singapore b) USA c) India d) Switzerland
42.10🔬🔬💸💸 PVT SECTOR NOT SPENDING ENOUGH ₹₹ ON R&D SAYS 📔📔📔📔ES21
42.10.1 🔬🔬💸💸 Number of patents filed by a resident of a given country

⇒ since 1999 patent applications filed by residents in India increased steadily.
⇒ But, they have increased at a much lower rate than patents by non-residents. भारत म� डाली जाने वाली
�ादातर पेट�ट अ�जयां, गैर-�नवा�सयों द्वारा होती है.
Patents filed by a resident India Top 10 economies except India
Out of 100 patents filed in the 40% are by Residents (so 62% are by residents
country → 60% by non-residents)
Note: In above table: Top 10 economies of the world= USA, China, Japan, Germany, INDIA, United
Kingdom, France, Italy, Brazil and Canada (in terms of GDP at Current prices. 📑📑Ref: HDT-
Pillar#4C for GDP)
42.10.2 🔬🔬💸💸 Gross domestic expenditure on Research & Development (GERD)

GERD= measures how much money is a country spending on R&D? सं शोधन और �वकास म� सकल घरेलू खचर्
Contribution in % of GDP spent on R&D (जीडीपी 📔📔📔📔ES21 TARGET/suggestion (आ�थक
R&D Funding का िकतना प्र�तशत िह�ा सं शोधन और सव��ण के मुता�बक ल� �ा होना चािहए)
�वकास म� जा रहा है)
India → 0.65%- 0.70% of GDP more than 2% of GDP
China → 1.35% (in 2005), 2.5% (2020) N/A
Others in top 10 1.5%-3% of GDP. N/A
economies →
Suppose $100 is being spent on R&D → within that how much is the contribution of the govt sector
and private sector? (सं शोधन एवं �वकास के कु ल खचर् म� सरकार और �नजी �ेत्र क� िह�ेदारी)
Contribution in R&D Funding Govt Private sector
India More than 55% Less than 40%
Top 10 economies of the world except India Less than 40% 68%
⇒ German govt gives no tax benefit yet their private sector spends a large amount of funds on the
research development. जमर्न सरकार कं प�नयों को सं शोधन करने पर टै� म� कोई �रयायत नहीं देती िफर भी वहां जमकर
सं शोधन होता है
⇒ While India Govt provides tax benefits to companies who invest more money in R&D yet
companies are not doing it enthusiastically. हालांिक भारत सरकार सं शोधन और �वकास म� �नवेश करने वाली
कं प�नयों को टै� म� �रयायत देती है लेिकन िफर भी भारतीय कं प�नयां इस बारे म� उदासीनता िदखाती ह�
⇒ such 'jugaad mentality' is not helping real professional Innovation, Which is required for success
of make in India and assemble in India. भारत क� �नजी �ेत्र क� कं प�नयों म� जुगाड़-मान�सकता के चलते पेशेवर तरीके
से नवाचार नहीं हो रहा.
43 🏄🏄SECTORS: EASE OF DOING BUSINESS REPORT
Figure 1: अपना �बजनेस शु� करने के �लए सरकारी द�रों के च�र काटते काटते थक चुका �ं
- �ापार करने म� सुगमता का �रपोटर् is an index by the World Bank to measure how easy or difficult it is to
run a business organisation in a given country, based on simple average (equally weighted) of 10
parameters- such as no. of documents, time & cost involved in registering a property, getting an
electricity connection, paying taxes etc.
- As such no specific themes are given in these reports.
Rank 2020 (released in #1: NZ>Singapore>Hongkong> India (63) >... Somalia (190)
2019-Oct) → Report acknowledges India as one of the top 10 improvers, third time in
a row. India’s rank in 2017 (#130) to 2020 (#63) = shows a jump of 67
steps- this is highest by any large country since 2011.
Rank 2021 (it was to be 2020 Aug: World Bank has paused/suspended this report because of
released in 2020 BUT) allegations of data manipulation / irregularities about China’s rank.
(डाटा म� धांधली /छे ड़छाड़ हो रही है ऐसे आरोपों के चलते इस साल �रपोटर् को ��गत िकया)
Table 1: India’s ranking on 10 parameters-✋✋ although no need to memorize now!
Ease of Doing Biz Parameters Rank-2018 Rank-2019 Improved 2019 over 2018
Overall 100 77 100 -77=23
Starting a Business 156 137 19
🏗🏗 Construction Permits 181 52 129 (highest jump)
🔌🔌Getting Electricity 29 24 5
Registering Property 154 166 -12
💰💰Getting Credit (loan) 29 22 7
🧕🧕Protecting Minority
4 7 -3
Investors
🍋🍋Paying Taxes 119 121 -2 (despite apps & portals!)
Trading across Borders 146 80 66
Enforcing Contracts 164 163 1
🔪🔪Resolving Insolvency 103 108 -5 (despite I&B Code)
🔠🔠❓MCQ. According to the World Bank’s Doing Business Report, 2019, India’s ranking has improved in
in which of the following areas compared to previous year? (UPSC’s-CDS-ii-2018):
1) Paying taxes 2) Resolving insolvency 3) Starting a business 4) Construction Permits
Answer Codes: A) 1 only B) 1 and 2 only C) only 3 and 4 D) All four areas.
🔠🔠❓MCQ Which one of the following is not a sub-index of ‘Ease of Doing Business Index? (Prelims-2020)
(a) Maintenance of law and order (b) Paying taxes
(c) Registering property (d) Dealing with construction permits
🚩🚩🚩FAQ: Do I have to remember ranking when this report is banned? Ans. No. but keywords
should be kept in mind, for vocabulary for Mains Answer writing.
43.1.1 🏄🏄📊📊EoD → Indian States’ EoD: BRAP Ranking

⇒ Commerce ministry → Department of Industrial Promotion and Internal Trade (DPIIT) with
help of World Bank. Indian States are ranked for Access to Information, Single Window System,
Labour, Environment, etc. (सूचना, एकल �खड़क� प्रणाली, श्रम, पयार्वरण)
⇒ 2022: Top rankers: Andhra Pradesh, Gujarat, Telangana, Haryana, Karnataka, Punjab and Tamil
Nadu.
43.1.2 🏄🏄📊📊EoD → Economic Freedom of the World

⇒ by the Fraser Institute in Canada. (�व� क� आ�थक �तं त्रता)
⇒ To rank the ability of individuals to make their own economic decisions in a country e.g. How
easy it is to start a business, get a loan, number of Govt regulations etc
⇒ Ranking: I’d not burden in my brain memory card with this low profile report.
43.1.3 📔📔📔📔ES20 Vol1ch6 on Ease of Doing Biz in India: observed

⇒ � To open a shop, China & Singapore require only 4 licenses, but India requires >20.
⇒ � 45 documents required to get Delhi Police’s permission for opening a restaurant. Far less
number of documents required for a gun license!
⇒ � Hong Kong construction permits available within 2 months, India takes 4 months.
We’ve already learned some of the measures for Ease of Doing Biz in the handouts of tax related
portals, Foreign Trade policy, WTO: TFA agreement etc. Apart from that…
43.1.4 🏄🏄 EODB 2.0 in 👜👜👜👜Budget-2022 (�ापार सुगमता का दू सरा चरण)

EODB 1.0 = So far, Govt removed nearly 1500 laws and 25,000 compliances
�Budget-2022 announced Next phase of Ease of Doing Business (EODB 2.0). It’ll focus on →
�
 idea of ‘trust-based governance’. (�व�ास आधा�रत सरकार)
 digitisation of manual processes (मैनुअल प्रिक्रयाओं का िड�जटलीकरण)
 integration of the central and state-level systems through IT bridges (सूचना प्रौद्यो�गक� द्वारा क� द्र और रा�
सरकार क� प्रणा�लयों के बीच सेतु/पुल बनाना)
 citizen-centric services (नाग�रक-ल�� सेवाएँ )
 removal of overlapping compliances. (अनुपालनों का �थर् दोहराव हटाना)
 Crowdsourcing of suggestions (�यं सेवकों भीड़ द्वारा सुझावों को इकट्ठा करवाना)
43.2 🤵🤵🤵PRO-BUSINESS VS PRO-CRONY, 📔📔📔📔ES20VOL1CH3

Crony capitalism is an economic system in which businessmen thrive not by their hard work or risk
taking capacity, but through a nexus between a business class and the political class. (प�पाती पूंजीवाद:
ऊधयोगप�त अपनी मेहनत या जो�खम लेने क� �मता से नहीं िक�ु, राजनी�तक वगर् से सांठगांठ के चलते तर�� करते है)
📔📔📔📔ES20vol1ch3 found that:
⇒ India: After election results, road contractors associated with the ruling party were given large
numbers of contracts to build Pradhan Mantri Gram Sadak Yojana (PMGSY, More in Pillar5).
But 1/4th of such roads exist only on paper. (स�ाप� के पसं दीदा ठे केदार को रोड-�नमार्ण का काम िदया जाता ह�)
⇒ Brazil’s public sector banks are more likely to approve loan applications of a company if the
company owner gave election donation to the ruling party. (स�ाप� क� पसं दीदा कं प�नयों क� लोन अ�जयों
को सरकारी ब�क ज� ही पास कर देते ह�)
⇒ Eastern Europe: When politically connected firms fail in business → Government will usually
bail them out using taxpayers' money. (घाटे म� चल रही कं प�नयों को सरकार बचा लेती है)
⇒ Politically Connected Underwriters increase the likelihood of clients’ IPO applications being
approved by the Chinese share market regulator. (Ref: pillar1C)
⇒ Across the world, crony capitalist firms pay lower taxes than their actual profits. (कर-चोरी)
43.2.1 �🤝🤝🤝🤝Cronyism: Related Party Transaction (RPT: सं बं �धत प�ों से लेनदेन)

RPT transactions involve company’s directors, their relatives and their related companies. RPTs may
harm the interests of the company’s shareholders. Example,
⇒ Pawnfisher Airlines Ltd gives sponsorship to a IPL cricket team owned by Ajay Dallaya’s Son.
⇒ Jes Bank buys crore ₹₹ worth painting from founder Kana Kapoor’s daughter for ‘office
decoration’ purpose. शेयरधारक के पैसों क� मदद से �र�ेदारों से महँ गे दामों म� सामान ख़रीदके पैसों का ग़बन करना
⇒ Minister gives 2G spectrum / coal auction / highway construction rights to a company. THEN
company appoints that minister's wife/son as a consultant/director & pays a hefty salary.
Companies Act has norms to regulate RPT. But, often Crony capitalists, wilful defaulters and tax-
avoiders misuse RPT using loopholes.
43.2.2 �🤲🤲: 🛒🛒🛒🛒Cronyism: Economist David Ricardo & Rent Seeking

⇒ A Mobile company pays political bribes to get spectrum/license from the Government. (More in
Pillar5: Communication infrastructure)
⇒ Then the Company will charge very high prices on the prepaid plans and data packs to recover
(1) Operational Costs (2) Profit (3) Bribes. मं त्री को दी गई घूस क� रकम ग्राहक पर बोझ डालती है
⇒ Similar examples could be cited in the coal-power based thermal electricity prices, Toll fees
charged by highways developers, heavy fees in private hospitals/ schools/colleges.
⇒ Ricardo labelled it “rent seeking behaviour. (िकरायावसूली/लुंटने क� मान�सकता)” It doesn’t help in (new)
wealth creation because abnormal profits extracted at common citizens’ expense.
⇒ Such crony capitalists do not invest their high profit for research and innovation, they just use it
for debauchery & building more crony-relationship with politicians. (मुनाफे को नई खोज/सं सोधन मे नही
ब�� ऐयाशी, और नेताओ से साँठगांठ बढ़ाने मे इ�ेमाल करते है)
📔📔📔📔ES20 observed
 This type of rent-seeking behaviour was more prevalent till 2011. (यानी िक परो� �प से कांग्रेस सरकार
�नक�ी और भ्र� थी- ऐसा आ�थक सव��ण कहना चाहता है )
 After CAG / Media reported the scam, the profits, share prices, SENSEX performance of such
crony firms greatly declined, since they couldn't compete with the innovative firms.
 CEA Subramanian K. used ‘Herfindahl Index’ to prove this. Economist Herfindahl’s Index
(1950) is used for monitoring the level of competition among the companies.
43.2.3 🤵🤵🤵 Pro-business vs Pro-Crony Policies

🤵🤵Pro-business policies (�ापार समथर्क) �Pro-crony Policy (प�पाती नी�तया)
Make it easy to start a business, Register property, When existing companies pay political bribes
enforce contracts, ⬆competition to restrict entry of new companies / import
�ापार म� सुगमता, सं प�� का पं जीकरण, अनुबंधों को लागू करवाना, restrictions of rival brands.
�धार् को बढ़ाना →⏬competition → ⏫heavy profits, but
at the expense of the customer.
⇒ Make it easy to obtain loans, resolve ⇒ When political masters pressurize Public
insolvency. This helps in biz expansion and Sector Banks to lend ₹ to unviable biz
wealth creation (अ�म कं पनी को कजर् देने के �लए मजबूर करना)
⇒ कजर् लेना, िदवालापन हल करना, �ापार �व�ार और धन ⇒ When wilful defaulters not dealt strictly.
सृजन मे मदद (जानबुज के कजर् न चुकाने वालो पर ढील रखना)
⇒ Thus, they’ve destroyed a total ₹1.4 lakh
cr of loan assets
🤵🤵Pro-business policies (�ापार समथर्क) �Pro-crony Policy (प�पाती नी�तया)
⇒ Transparency in bidding for natural resources ⇒ Government gives preferential treatment
(प्राकृ �तक सं साधनों क� नीलामीमे लगाने म� पारद�शता) to crony companies. (कं प�नयो के प�पाती �प
से आवं टन)
🤩🤩Result? Competition, innovation, lower prices ⇒ Reverse will happen → Wealth is
and better service quality for citizens → demand destroyed. (धन का नाश/�य होता है।)
⬆ → production ⬆ → GDP → (new) wealth
created.
✍Conclusion: Cronyism doesn’t foster competitive markets. It fosters inefficiencies & results in
erosion of wealth. As Dr. Raghuram Rajan said, ‘There is a need for saving capitalism from the crony
capitalists”. अ�मता म� बढ़ोतरी पूंजी का �य बबार्दी
43.3 🏄🏄⚖ EASE OF DOING BIZ → JUDICIAL REFORMS: �ा�यक सुधार
📘📘 📘📘 Economic Survey 2018-19 (Released in July 2019) vol1 Ch5 observed:

⇒ Theory of Matsyanyaya: If no ruler / Government → big fish will eat little fish.
⇒ 3.5 crore cases pending in the judicial system. (करोड़ों के स �वलं �बत है)
⇒ More than 80% of them are concentrated in the district and subordinate courts. Out of these
pending cases, ~70% are criminal cases, ~30% are civil cases. Some economists say poor
performance of the criminal justice system is of no direct consequence to the economy. But, a
behavioural economics: general lawlessness → Mafias thrive → investors are discouraged (e.g.
UP and Bihar). �वहार अथर्शा�: के मुता�बक गुंडाराज �नवेशकों को फै ��ी लगाने से हतो�ािहत करता है
⇒ World Bank’s Ease of Doing Biz → Indicator “Enforcing Contracts” → India’s ranking is in the
range of 160+. And it has not improving at a faster rate. अनुबंध का पालन करवाना मु��ल
⇒ Compared to many European countries we are 4-6 times slower.
⇒ Odisha, Bihar, West Bengal, Uttar Pradesh very slow rate. And these states are also lagging
behind in Sustainable Development Goal achievement as well.
Homework for Interview: data for your own state from Economic Survey 2018-19 Vol1-Ch5
43.3.1 🏄🏄⚖: 🕵🕵 Suggested reforms#1: recruit more judges (�ायाधीशों क� भत�)

 At the district and subordinate level courts: sanctioned strength is ~23,000 judges but at present
we have ~18,000 judges. So we have to fill up the vacant posts through faster recruitment. [~
means approximate]
 High Court: Each HC Judges disposes ~2300 cases per year. So to clear all the backlog cases In
the next five years, ~360 additional HC judges required.
 Similarly a few more judges also required at the supreme court.
43.3.2 🏄🏄⚖: 🕵🕵 Suggested reforms#2: Create a new Judicial Administrative Service

 For faster clearance of cases, judicial staff’s efficiency also matters - Whether it is the Court
Manager, Bailiff, Judicial clerks, Legal assistants, Translators, Typists/Stenographers. But there
recruitment, syllabus, eligibility conditions and training mechanism is not uniform across India.
Many tribunals recruit staff on adhoc-contractual basis, and do not impart adequate training.
 Canada, USA and UK have separate cadre of Government employees for this.
 Therefore, ES19 proposed to create a specialized service called Indian Courts & Tribunal Services
(ICTS: भारतीय �ायालय और अ�धकरण सेवाएँ ) with following functions:
o provide administrative support to judges प्रशास�नक मदद
o Improving administrative aspects of the legal system- Document storage, data
processing etc. backoffice functions through Information and Communications
Technology (ICT) and re-engineering. सूचना प्रौद्यो�गक� का प्रशासन म� अमल
 �Budget-2020: said We’ll reform the recruitment system for tribunal to attract best talents and
professional experts. (सबसे उ�ृ � क़ा�बलीयत वाले लोगों को नौकरी पे रखने क� को�शश कर�गे)
43.3.3 🏄🏄⚖: 🗓🗓🗓🗓 Suggested reforms#3: ⏫ courts’ working days (अदालत क� छु �ट्टयाँ कम करो)
 Presently Central Government offices are open for 244 days per year.
 HC open for only 232 days, SC open for only 190 days in a year- Because they take longer
vacations in summer, winter, Holi, Diwali, Dussehra. (कायर् के िदनों म� बढ़ोतरी, तािक के स ज�ी से �नपटा सके )
43.3.4 🏄🏄⚖: 📡📡📡📡 Suggested reforms#4: E-governance, ICT-Technology

कोटर् क� कायर्वाही म� सूचना प्रौद्यो�गक� का उपयोग
 Lower courts consume a lot of time in sending Notice / summons, recording witness statements.
(अदालत का बुलावा भेजना, गवाह का बयान दजर् करना)
 Higher court cannot proceed until it receives case’s records from the lower court.
 Computers are used as mere ‘modern typewriters’. Their scanning, email, computation facilities
are not fully used. (कं �ूटर बस आधु�नक टाइपराइटर का काम कर रहा है, कमर्चा�रयों को उसम� ईमेल इ�ािद क� समझ नहीं)
 So we have to focus on E-governance, ICT-Technology to increase the efficiency of the court
administration. Even Artificial Intelligence may be deployed for ordinary disputes e.g. Traffic
challan, or Cheque dishonour. ट�ािफक के के सों का कृ �त्रम बु�द्धम�ा द्वारा �नपटान
 Ministry of Law and Justice started eCourts Mission Mode Project - creation of the National
Judicial Data Grid (NJDG: रा��ीय �ा�यक डेटा �ग्रड), digitalization of cases. It allows stake-holders to
keep track of individual cases and their evolving status. We must ensure its speedy
implementation and connectivity with all the courts.
43.3.5 🏄🏄⚖: 📡📡📡📡 ENFORCING CONTRACTS PORTAL (2021-June)

⇒ This portal launched by Department of Justice (under Ministry of Law)
⇒ This portal provides 1) information/statistics about cases in Commercial/Civil Courts of Delhi,
Mumbai, Bengaluru and Kolkata 2) Commercial laws for reading/reference purpose. (भारत क�
प्रमुख शहरों म� दीवानी अदालतों म� िकतने िक इस जारी है उसका डेटा तथा �व�वध दीवानी कानूनों को पढ़ने क� सु�वधा)
43.3.6 🏄🏄⚖: International Arbitration Centre @GIFT city - in 👜👜👜👜Budget-2022

⇒ Arbitration is an alternative dispute resolution system to settle disputes outside the judiciary
courts, using an impartial third party. (“म��ता” = अदालत के बाहर एक तीसरे �न�� क� मदद से �ववाद
हल का वैक��क तरीक़ा है )
⇒ Presently, for disputes involving foreign companies vs Indian Govt/Companies → they
approach Arbitration centres at Singapore, Netherland etc. . (जब भारत सरकार/भारतीय क��नयों का �वदेशी
कं प�नयों के साथ �ववाद हो जाए तो हम नीदरल�ड या �संगापुर के ऐसे म��ता क� द्रों म� जाते ह�)
⇒ � �Budget-2022: - An International Arbitration Centre will be set up in the GIFT City for
timely settlement of disputes under international jurisprudence. (ऐसा एक अंतररा�ी� य म��ता क� द्र →
भारत क� �गफ़्ट �सटी म� भी बनाया जाएगा।)
43.3.7 🏄🏄⚖: ✍Conclusion on Judicial reforms? (�न�षर्)

 Thus, case pendency can be ⏬ through recruitment of more judges, creating separate cadre of
Judicial Administrative Services, ⏫ in working days of court, and deploying ICT technology.
 Preamble to the Constitution of India defines that the first role of the State is to secure social,
economic, and political justice for all citizens. सभी नाग�रकों को �ाय िदलवाना रा� क� �ज�ेदारी
 Therefore, need of the hour is to pursue judicial reforms on a war footing. OR
 Judicial delays discourage the victims from approaching the court. Victims silently continue to
suffer injustice or approach Mafia elements. It also fuels the atmosphere of insecurity (असुर�ा),
vigilantism (लोगो द्वारा कानून को अपने हाथ म� लेना) and mob lynching (भीड़ द्वारा वध करना).
 Therefore SDG Goal 16: provide access to justice for all….hence need of the hour….
📘📘 📘📘 Homework: Read ES19 Vol1 Ch5- Judicial Reforms
⇒ Bullet 5.1 to 5.4. And then read figure11 (Your home-State data for interviews)
⇒ Bullet 5.32 till the end of the chapter. To build the vocabulary.
43.3.8 🕵🕵🤲🤲🤲🤲Transparency International → Corruption Perceptions Index

⇒ Transparency International is a global civil society organisation fighting against corruption.
Setup in 1993, HQ- Berlin, Germany. (भ्र�ाचार-अनुभू�त सूचकांक).
⇒ Ranking for 2021: → #1 (tie) [Denmark and Finland]. Bottom Rank#180 [South Sudan].
Year 2018 2019 2020 2021 (report published in 2022-April)
India’s Rank 78 80⏬ 86⏬ 85⏫
To control corruption, the report recommends:
⇒ Focus on conflicts of interest, preferential treatment given to wealthy. िहतो के टकराव पर �ान द�, धनवानों
को �मलनेवाली सरकारी �रयायतो पर �ान द�
⇒ Regulate electoral financing, election integrity. चुनावी फं िडंग का �नयं त्रण, चुनावी धांधली रोके
⇒ Regulate lobbying activities. (उधयोगप�तओ क� लॉबीइं ग ग�त�व�धयों को �नयं त्रण म� रखे)
43.4 🕵🕵🕵🕵 📔📔📔📔ES21: OVER REGULATION IN INDIA
⇒ If a company wants to undergo voluntary liquidation India: it takes 1570 days because The
company will have to seek a variety of no-objection certificates (NoC) from tax authorities,
Employee Provident Fund Organization, Foreign exchange laws etc. (यिद कोई �ै��क �प से ही अपनी
कं पनी बं द करना चाहे तब भी भारत म� 1500 िदन से �ादा लग जाते ह� �व�वध �वभागों से अनाप�� प्रमाण पत्र हा�सल करने म�)
⇒ Even if there is no tax dispute or court litigation pending and even if all the paperwork is
complete, Still it will take so much time. (भले कोई मुकदमे ना चल रहे हो, सारे कागजात �नयमों के िहसाब से जमा
िकए गए हो, िफर भी इतना व� लगता है)
⇒ As per the World Bank’ Ease of Doing Business report, it takes 1445 days to resolve a
commercial contract in India as compared just 120 days in Singapore. (दीवानी मुकदमे/वा�ण��क �ववाद
�नपटाने म� भारत म� 1400 से �ादा िदन लगते ह� जबिक �संगापुर म� यही दीवानी के स 120 िदन म� �नपट जाते है)
⇒ such over regulation results in undue delays, rent seeking, opaque decision making by the
Government officials. (इस प्रकार का अ�त �नयमन- देरी, भ्र�ाचार, गैर-पारदश� �नणर्य प्रिक्रया को प्रो�ािहत करता है)
43.4.1 🕵🕵🕵🕵 Overregulation & Uncertainty (अ�त �नयमन तथा अ�न��तता)

Human rationality is bounded because humans don't have all the
Herbert Simon
information required for best decision making. The future is unknown. इं सानी
Nobel Economics
तकर् श�� सी�मत है, उ�म �नणर्य �बना असं भव है �ोंिक इं सान के पास सारी जानकारी नहीं होती, भ�व�
Winner →
को जाना नहीं जा सकता
While writing a contract, it is difficult to anticipate and specify all
Oliver Hart
obligations for all parties in all possible contingencies. अनुबंध �लखते व� सभी
Nobel Economics
पा�टयों क�, सभी प्रकार क� आक��कताओ म� सभी प्रकार क� जवाबदेही का पूवार्नुमान करना मु��ल
Winner →
होता है.
⇒ Government officials create too many rules in such an uncertain climate, to save themselves
from criticism by the Court, CAG, CVC, CBI and media. (अ�न��तताओ म� �यं को �नंदा/डांट/सजा से बचाने
के �लए अफसर अनाव�क �प से ब�त �ादा �नयम बना लेते ह�- तािक बाहर जनता कोटर् और पत्रकारों को यह िदखा सके िक हम तो
�नयम अनुसार ही �नणर्य ले रहे ह�, कोई प�पात या धांधली नहीं हो रही)
⇒ More number of rules does not mean less discretion for officers. In fact more number of rules →
more discretion because the rules can be interpreted in multiple ways → Opportunity for
corruption, nepotism. (�ादा �नयम बनाने से अफसर क� �ववेकाधीन श�� भी बढ़ जाती है �ोंिक उ�ीं �नयमों का वह
मौके /�� के अनुसार अलग-अलग �प से अथर् गठन करता है.)
⇒ Banking sector → overregulation → excessively cautious in giving loans → harms the Business
expansion. (भारतीय ब�कों म� भी अ�त �नयमन के चलते आजकल उद्योगप�तयों को कजर् लेने म� असु�वधा.)
⇒ On the other hand, NBFC/Shadow Bank → under-regulation → Multiple financial scams have
occurred. (More in �Pillar#1B2: ILFS) गैर ब�िकंग �व�ीय कं प�नयों/प्र�त छाया ब�कों म�, कम-�नयमन के चलते �व�ीय
धांधली के अवसर)
43.4.2 🕵🕵🕵🕵 Overregulation: Way Forward- TORA Act (आगे का रा�ा)

⇒ � �ES17 had proposed Transparency of Rules Act (TORA): Under such law, all organization
have to publish latest rules and regulations in a unified and comprehensible format, in English,
Hindi and vernacular languages on their website. (आ�थक सव��ण ने सुझाया ‘�नयमों क� पारद�शता कानून’)
⇒ Then any rule, which is not explicitly given on the website = will not apply to people. �जसके अंतगर्त
हर एक �वभाग ने सारे �नयमों को अपनी वेबसाइट म� अंग्रेजी िहंदी तथा प्रादे�शक भाषा म� डालना होगा. जो �नयम वेबसाइट पर नहीं
डाला होगा, उस �नयम को मानने के �लए नाग�रक बा� नहीं होगा)
⇒ e.g. If the Education ministry’s TORA page says “for scholarship scheme: Student need to
submit ONLY aadhar card and school marksheet”, then officials can’t insist on a "student
identity card" as additional proof.
⇒ Benefit? ⏬officers' discretion → ⏬ the opportunities for bribery and harassment.(अफसरों के
�ववेकाधीन स�ा, भ्र�ाचार, उ�ीड़न के अवसरों म� कमी आएगी)
⇒ You may read more about this at https://mrunal.org/2017/08/upsc-mains-answer-writing-gsm4-
transparency-of-rules-act-tora.html
43.4.3 🕵🕵🕵🕵 Overregulation Solution: Doctrine of Business Judgment Rule

⇒ � �ES21 suggested Government to adopt doctrine of Business Judgment Rule: It assumes that
the company's board of director and higher officials has taken all the decisions in good faith.
⇒ So no action will be taken against them unless it is proved that they were acting against the best
interest of the shareholders.
⇒ Indian laws need to clearly codify such provisions. (जब तक अ�था सा�बत ना हो जाए यह मानना चािहए िक
कं पनी के बोडर् ऑफ डायरे�र ने शेयरधारकों के िहत म� ही �नणर्य �लया था. भारतीय कानूनों म� इस प्रकार क� ��ता चािहए)
43.4.4 🕵🕵🕵🕵 Overregulation Solution: ‘Minimum Government and Maximum Governance’:

⇒ � �ES21 suggested Government to reduce the number of govt bodies for efficient supervision
e.g. (कम सरकार द्वारा �ादा प्रभावी शासन. सरकारी सं �ाओं क� सं �ा म� कमी क� जाए)
⇒ Govt has closed down All India Handloom Board, All India Handicrafts Board, Cotton Advisory
Board and Jute Advisory Board etc. (हथकरघा, ह��श� कपास जुट �वकास से जुड़ी सरकारी सं �ाओं को बं द िकया)
⇒ Similarly, the Government approved the merger of 1) Films Division, 2) Directorate of Film
Festivals, 3) National Film Archives of India 4) Children’s Film Society → into the National Film
Development Corporation (NFDC) (रा��ीय चल�चत्र �वकास �नगम म� छोटी-छोटी सरकारी सं �ाओं को �वलीन िकया)
43.4.5 🕵🕵🕵🕵 Overregulation Solution: Tribunals Reforms Ordinance, 2021-April

िट��ूनल सुधार अ�ादेश के अंतगर्त ब�त सारी छोटी-छोटी िट��ूनल को बं द िकया गया है
Many small tribunals have been removed, for example:
1) Cinematograph Act, 1952: Central Board of Film Certification (censor board) → Film
Certification Appellate Tribunal (FCAT- A statutory body under the ministry of Information
and Broadcasting), has been removed. So, now filmmakers will directly appeal Censor Board's
decision to High Court. सूचना और प्रसारण मं त्रालय के अंतगर्त स�सर बोडर् के ऊपर क� िट��ूनल को हटाया गया. अब िफ�
�नमार्ताओं ने स�सर बोडर् के �खलाफ अपील म� जाना हो तो सीधा हाईकोटर् म� जाना होगा
2) Similarly tribunals under the Following acts removed : Customs Act, 1962; Patents Act, 1970;
Airport Authority of IndiaAct,1994;Trade Marks Act, 1999; Geographical Indications Of Goods
(Registration and Protection) Act, 1999; Protection of Plant Varieties and
Farmers’RightsAct,2001; Control of National Highways (Land and Traffic) Act,2002. इन सब कानूनों
म� दी गई िट��ूनल को भी हटाया गया है.
Reasons?
1. Public at large is not the litigant. सामा� जनता यहां पर वादकारी/मुकदमेबाज नहीं थी.
2. These tribunals have not reduced the workload of High Court in a significant manner. इन िट��ूनल
को बनाने के बाद भी हाईकोटर् के कायर् बोज म� कोई कमी नहीं आई थी
3. too many officials' salary/bunglow/cars budget burden. इतने सारे पदा�धका�रयों के तन�ाह गाड़ी बं गले के खच�
का सरकार पर बोझ
43.5 🏄🏄👷👷EASE OF DOING BIZ → LABOUR REFORMS : श्रम सुधार
There are multiple Central laws related to labour e.g. Minimum Wages Act, 1948; the Payment of
Wages Act, 1936; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976.
Entrepreneur has to fill up multiple forms to prove his compliance, and he’s subjected to multiple
annual inspections by the govt officials = No ease of doing biz. Therefore, Second National Labour
Commission (2002) recommended govt to simplify & consolidate these laws. 2017-18: Govt
announced to replace existing central laws with just four labour codes (श्रम सं िहता /कानून) -
Old Laws → Merged in

⇒ Payment of Wages Act, 1936 Code on Wages, 2019. इन सब कानूनों कोका एक�करण
⇒ Minimum Wages Act, 1948 कर बनाई गई ‘वेतन सं िहता’
⇒ Payment of Bonus Act, 1965
⇒ Equal Remuneration Act, 1976
⇒ Trade Union Act, 1926 Code on Industrial Relations, 2020
⇒ Industrial Employment Act, 1946 (श्र�मक और उद्योगप�त के बीच) औद्यो�गक सं बंध सं िहता
⇒ Industrial Disputes Act, 1947
09 Labour Acts like Code on Social Security & Welfare, 2020
⇒ Employees’ Compensation Act, 1923 (श्र�मक क�) सामा�जक सुर�ा और क�ाण सं िहता:
⇒ Maternity Benefit Act, 1961
⇒ Payment of Gratuity Act, 1972
⇒ Unorganized Workers’ Social Security Act,
2008 etc.
13 Labour Acts like Code on Occupational Safety, Health &
⇒ Factories Act, 1948 Working Conditions, 2020
⇒ Plantation Labour Act, 1951 �ावसा�यक सुर�ा, �ा� और कायर् शत� पर श्रम सं िहता
⇒ Mines Act, 1952
⇒ Building and Other Constructions
Workers’ Act, 1996 etc.
Before above labour code bills were passed, Labour Ministry kept amending the existing laws for ease
of doing business and for workers welfare such as. (जब उ� श्रम सिहत आए सं सद म� पा�रत नहीं �ई थी तो पुराने वाले
कानूनों म� सरकार सुधार िकए जाती थी)
Passed Provisions
🤰🤰Maternity Benefit - Applies to factory, mines, plantations, shops and other
(Amendment) Act, establishments.
2017: - Increased paid maternity leave from 12 weeks to 26 weeks (for the
मातृ� लाभ (सं शोधन) first two children only.)
अ�ध�नयम, 2017 - If woman worker adopts a baby <3 years (or gets a baby through
surrogacy)= 12 weeks paid leave for her as well.
- If factory has 50 workers/> then boss must install creche facility;
allow mother to visit child min. 4xtimes a day.
- After maternity leave is over, boss may even allow the woman
worker to work from home.
- Boss must inform every woman worker of her rights in writing.
Payment of Wages Previously the employer was legally required to pay salary in ‘physical
(Amendment) Act, cash only’- in certain industries. Act reformed to allow salary payment in
2017 cheque/NEFT to encourage less cash economy.
👼👼Child Labour It amends the 1986’s act to provide that →
(Prohibition) Children below 14 years can’t be employed anywhere, EXCEPT:
Amendment Act, - TV/ Cinema /Sports (but not circus)
2016: - Non hazardous family enterprise work after the school hours.
बाल श्रम (�नषेध) सं शोधन Adolescents between 14 to 18 age can be employed but only in non-
अ�ध�नयम, 2016 hazardous work. Any violations = Jail + penalty. District Magistrate
given additional powers. Criticism? Chemical mixing, battery acid
recycling etc. occupations removed from the ‘hazardous list’ so Ease of
doing biz for their owners, but exploitation of adolescent workers.
Apprentices - The original 1961 Act regulated the training of apprentices in the
(Amendment) Act, industry. But rules were draconian e.g. Govt shall decide the
2014 apprentice youth’s stipend, holiday, overtime. If factory owner is
प्र�श�ु violating any norm → jail.
- So, the 2014’s amendment relaxed the norms, Factory owner will
decide stipend, holiday etc. and if any violations then only penalty,
no jail for him.
🔠🔠❓MCQ. Which of the following statements is/are correct regarding the Maternity Benefit (Amendment)
Act, 2017? (Prelims-2019)
1. Pregnant women are entitled for 3 months pre-delivery and three months post-delivery paid leave
2. Enterprises with creches must allow the mother minimum six creche visits daily
3. Women with two children get reduced entitlements.
Codes: (a) 1 and 2 only (b) 2 only (c) 3 only (d) 1,2 and 3
43.6 👷👷EASE OF DOING BIZ → FIXED TERM EMPLOYMENT 2018
- Fixed-term employee (�न��त-अव�ध कामदार) is a contractual worker hired for a fixed period. If his
contract is not renewed on expiry then he’s deemed automatically terminated. No notice for
termination is required. Just like a permanent worker, a fixed-term worker is entitled to all
benefits such as wages, hours of work, allowances, EPFO-ESIC and other statutory benefits (But
only for the duration of contract).
- 2016: Labour Ministry allowed Fixed term employment only to the textile sector using the
powers under Industrial Employment (Standing Orders) Act.
- Budget-2018: permitted in all manufacturing sectors.
- 🤩🤩Good? When factory owner has large production order to fulfill, he can hire more people for
short duration without the compulsion of giving them ‘permanent jobs’. → → Ease of doing
business. (अचानक से उ�ादन का बड़ा ऑडर्र पूरा करना हो तो अ�ायी �प से ढेर सारे लोगों को काम पर रखा जाए )
- 😰😰Bad? Trade Unions fear the industrialist will convert all the permanent jobs into ‘fixed term
contract jobs’ → boss may simply refuse to renew contract without giving reasons & replace
them with cheaper younger labourers= job security is diminished. Although Govt clarified that
industrialist can’t convert existing permanent jobs into fixed-term contract jobs.
🔠🔠❓MCQ. Find correct statement(s) about the Industrial Employment (Standing Orders) Central
(Amendment) Rules, 2018: (Prelims-2019)
1. If rules for fixed-term employment are implemented, it becomes easier for the firms/companies to lay off
workers
2. No notice of termination of employment shall be necessary in the case of temporary workman.
43.7 👷👷💰💰 MINIMUM WAGES (�ूनतम वेतन)
⇒ (Definition) According International Labour Organization (ILO) अंतरार्ष्ट�ीय श्रम सं गठन

(आईएलओ),minimum wage is the minimum amount of remuneration that an employer is legally
required to pay to the worker. It’s usually expressed in amount per day or per hour. (क़ानूनन �प से
इससे कम तन�ाह/वेतन म� मा�लक िकसी भी मज़दू र से काम नहीं करवा सकता)
⇒ (Origin) The concept of minimum wages is not a modern-day innovation. Even Arthashastra
written in the 2nd Century BCE ordained the minimum wages for workers based on their skills
and occupation.
⇒ While the Britishers in enacted Payment of Wages Act, 1936 in India to ensure workers are paid
salaries in a timely fashion it did not provide for minimum wages computation or enforcement
or equal remuneration for males and females.
⇒ After independence, Directive Principles of State Policy (रा� के नी�त-�नद�शक त�) mandated the
State (रा� नी�त के पथ प्रदशर्क �सद्धांत)
o to secure a living wage, a decent standard of life for all workers (Article 43),
o to provide adequate means of livelihood for all citizens & equal pay for equal work for
men and women (Article 39)
43.7.1 👷👷💰💰⚖ Minimum Wages Act (�ूनतम मजदू री अ�ध�नयम 1948)

The act protects both regular and casual workers (�नय�मत एवं अ�नयत श्र�मक).
Minimum Wages are fixed for different categories of workers according to skill levels, location and
occupations. But suffers from 3 serious problems.
43.7.1.1 😕😕 Gender injustice (ल��गक �ाय क� कमी)

Minimum wages are the same for both male and female. But, minimum wages of security guards are
higher than domestic workers (This work is mostly done by women). So, minimum wages need to be
accommodative of the gender justice angle as well.
43.7.1.2 😕😕 New-age workers not covered

Minimum wage rates are set both by the Central and the State governments for employees working
in selected ‘scheduled’ employment (अनुस�ू चत रोजगार / �नयोजन). But, with the advent of ICT and
startups, there has been a massive expansion in gig-workers but these are not mentioned in the old
law. Every 1 in 3 workers is not in the ambit of minimum wages.
43.7.1.3 😕😕 Unorganized workers not represented (असं गिठत �ेत्र के मजदू र)

- Act did not prescribe norms / formula for fixing minimum wage. However, it provided for
tripartite advisory boards consisting of employers, employees of scheduled employments, and
independent experts.
- As a result, the unionized workers are able to get better wages compared to unorganized workers,
because unorganized workers have no representation in such advisory boards.
43.7.2 👷👷💰💰 Minimum Wage Reform: Anoop Satpathy Committee (2019)

This committee was setup by the labour ministry for Determining the Methodology for Fixation of
the National Minimum Wage. It recommended:
Minimum wages should be decided based on the following factors:
1. � Cost of food basket: consisting of x units of calories, fats and proteins.
2. � Essential non-food items (गैर-खाद्य पदाथर्): such as clothing, fuel and light, house rent,
education, medical expenses, footwear and transport.
Accordingly, Anoop suggested two proposals:
Proposal#1 (all India) Proposal#2 (Zonal) 📌📌
⇒ National-level minimum wage (NMW): ₹ Indian states and union territories should be
375 per day x 26 working days in the month divided into 5 regions, and have separate
= ₹ 9,750 a month. Additional ₹ 1430 house minimum wages suitable to the local realities
rent allowance / city compensatory and as per socio-economic and labour market
allowance for urban workers. contexts.
⇒ These will be applicable to all, irrespective of ⇒ Zone1 (Assam, Bihar etc): ₹ 8892/month
sectors, skills, occupations and rural-urban ⇒ To…
locations. ⇒ Zone5 (Delhi, Punjab type small &
⇒ Although it’s not implemented. (इसको नहीं माना developed regions with higher cost of
गया है दू सरे प्र�ाव को माना है) living): ₹ 11,622/month
2021-June: Anoop Satpathy recommendations were not acceptable to the union government
(perhaps pressure from the businessmen lobby not to increase minimum wages so much) so now
labour ministry has set up a new committee under Ajit Mishra. (उद्योगपितयों के िवरोध के चलते सरकार ने अनूप क�
िसफ़ा�रशों को नहीं माना बिल्क एक नई सिमित बना दी)
43.8 👷👷💰💰🧔🧔 MINIMUM WAGES → CODE ON WAGES 2019 (वेतन कोड/ सं िहता)
This new act aims to merge the existing Minimum Wages Act, 1948, the Payment of Wages Act,
1936, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976 into a single Code on
Wages, with following features:
Domain Sectors covered
🧔🧔 Union  Sectors: Air transport service, Railways, Major Ports, mines, oil field,
Government telecommunication, banking and insurance company, Central
Government Jobs, CPSEs, autonomous bodies, their subsidiary bodies
क� द्र सरकार  To fix minimum wages here, Government will setup a Central Advisory
इन �ेत्रों म� Body of Employers, Employees, Independent Experts and 5 State
�ूनतम वेतन representatives
तय करेगी  Based on Central Advisory Body’s recommendations, the Union will fix
Floor Wages, for different geographical areas Taking into account
minimum living stds. (Meaning Anoop’s idea is accepted) (भारत के भौगो�लक
िह�ों के �लए रा�ी� य वेतन सीमा के अधीन �नतम मजदू री)
� State Govts  Sectors: They’ll look after all the other sectors of employment which are
रा� सरकार� यहाँ not in Union’s domain.
�ूनतम वेतन तय  They’ll have individual State Advisory Board.
कर�गी  They must keep Minimum wages > or = Floor Wages.
− �Update Frequency? minimum wages norms will be revised every 5 yrs or less.
43.8.1 👷👷💰💰💰💰 Code on Wages 2019 →Salient Features (figures not IMP)
⇒ Depending on sector: Union / State will fix max. hours in a normal
Overtime Pay working day.
⇒ If worker doing more: “Overtime Wage” =Min. 2x normal wages
⇒ Boss (Employer) may pay wages (i) daily, (ii) weekly, (iii) fortnightly,
Payment Frequency or (iv) monthly.
⇒ In coin, currency, cheque, bank money, e-transfer
⇒ Boss (Employer) may deduct worker’s wages for 1) penalty 2) absence
Deduction (कटौती)
3) rental home 4) advance / loan etc.
⇒ If worker’s salary less than “X” ₹ , then he is given Right to bonus
Right to Bonus
⇒ 8.33% of wages or ₹ 100 Whichever higher
⇒ But not more than 20% of his annual wages. + other caveats notIMP
Gender ⇒ It is forbidden. Employer must give equal pay for equal work
discrimination ⇒ एक समान काम के �लए मिहला और पु�ष को एक समान वेतन �मले
Penalty for
⇒ Upto 3 months jail, ₹ 1 lakh fine
violation
- Above Code on Wages is already passed by Parliament and signed by the President. But to
implement it in reality, the Govt of India need to notify the rules & announce the minimum
wages. But, due to Corona, implementation delayed
43.8.2 📔📔📔📔 ES19 on Minimum Wages reforms (what more we can do?)
Economic Survey 2019 appreciated Code on Wages and suggested further reforms →
43.8.2.1 Simplification and Rationalisation (सरलीकरण िकया जाए, �ायो�चत बनाया जाए)
− Present system is extremely complex with nearly 2000 minimum wages defined for various
scheduled job categories. They should be clubbed together into four minimum wages based on
skill category i.e UNSKILLED, SEMI-SKILLED, SKILLED and HIGHLY SKILLED.
− Such Wage Code should be applicable on all jobs, all workers, and all sectors of economy-
Whether it is organised or unorganised.
43.8.2.2 Use ICT to enforce Minimum Wage (सूचना प्रौद्यो�गक� का प्रयोग)

Bounded Rationality (ता�ककता क� सीमाए) Humans can’t make the most rational and optimal decision
because they do not have all the necessary information
− So, spread MW related information through computer, mobile phones, rural haats, TV-Radio-
Massmedia. Then both worker and boss can do effective bargaining. (जागृ�त बढ़ायी जाए)
− Setup Digital dashboard to show updated minimum wages.
− Easy to remember helpline / complaint number for the workers.(�शकायत �नवारण)
− Labour ministry should announced we punished “X” number of violators, so it puts fear into
other employers, and discourages them from violating minimum wages. (दंिडत उद्योगप�तयों के नाम
ज़ािहर करो तािक बाक़� उद्योगप�त भी डर�, और क़ानून का पालन कर�)
43.8.2.3 Adopt Best Practices from abroad (अ� देशों क� अ�� नी�तयों से सीखे)
We should also implement the following best practices from other Nations:
 UAE: All companies are legally mandated to pay all types of salary through banks only.
 South Africa: ‘Impimpi Alive’ system wherein workers can send anonymous SMS messages to
Labour Department, and within 48 hrs, an inspector will come to the factory.
 U.S.: They’ve apps to notify the minimum wages related updates to all the workers & companies.
43.8.3 � Conclusion: Indeed minimum wage enforcement is important
Minimum wages is a subset of labour welfare policies. So we can always connect it with keyword
such as inclusive growth, sustainable development, poverty removal, Social justice and accordingly
we can make a conclusion linking them all:
⇒ India is witnessing a period of demographic dividend (जनसां��क�य लाभांश). But, even if the youth is
equipped with vocational skills (�ावसा�यक कौशल ) but unable to find well paying jobs, then such
circumstances will breed social unrest and perpetuate social injustice. (अ�� तन�ाह नहीं �मलेगी तो
समाज म� तनाव बढ़ेगा, सामा�जक �ाय नहीं हो पाएगा)
⇒ SDG Goal #8 requires India to promote full and productive employment and decent work for all.
Minimum wages protect the vulnerable workers, reduce inequality and poverty. (सतत �वकास ल�ों
म� भी सभी को रोजगार देने क� बात तभी और समानता और गरीबी कम होगी)
⇒ Therefore, establishing an effective minimum wage system is important for sustainable
development and inclusive growth (सतत एवं समावेशी �वकास के �लए यह अ�त आव�क) .
Alternatively you can make a conclusion on the line that “although for complying with the DPSP we
have enacted multiple laws but successive Committees and economic surveys observed these laws
have failed to bring about the change in letter and spirit so aforementioned reforms are necessary.”
📘📘 📘📘 Homework: Read ES19 Vol1 Ch11- Minimum Wages

Introduction from 11.1 upto bullet 11.4. Then ‘Way forward’ from bullet 11.27 onwards.
43.9 🏄🏄🏭🏭EASE OF DOING BIZ (EOD) → FACTORIES ACT REFORMS
Factories Act 1948 regulates safety, health & welfare of workers. (कारखाना अ�ध�नयम: मज़दू रों के �ा� सुर�ा
क�ाण के �लए)
− The original act defines a factory as a premise where manufacturing is done using power and
minimum 10/> workers are employed during last 12 months. (20 workers, if no power used).
− If an establishment is classified as ‘factory’, then the entrepreneur is required to install
washroom, drinking water facility, spittoons, creche and other amenities depending on how
many workers are employed. (अगर आप क� इकाई को फै ��ी म� वग�कृ त िकया गया तो मजदू रों के �लए थूकदान,
�शशुगृह, ठं डे पानी, साफ शौचालय जैसी �व�भ� सु�वधाएं देनी होगी)
− He cannot engage women workers in night shift or near dangerous machineries.(मिहलाओं को रा�त्र
के दौरान और ख़तरनाक मशीनरी के पास काम करने क� अनुम�त नहीं)
− His premises will be subjected to government inspection, If any violation he can be arrested and
jailed. (=more opportunity for the factory inspector to demand bribes)
43.9.1 🏭🏭⚖ Factories (Amendment) Bill, 2014

⇒ Aims to relax definition of factory (20/> workers…) This will create ease of doing business for
the small entrepreneurs because they will not have to comply with the factory act. (�ा�ा म� सुधार
तािक छोटी इकाइयों को फै ��ी के �नयमों का अनुपालन न करना पड़े)
⇒ Allows the entrepreneur to engage women worker in night shift & near dangerous machineries
subjected to various safety conditions (= women equality & empowerment)
⇒ For smaller violations, the entrepreneur can pay specified penalty. No arrest/ jail. (छोटे-छोटे उ�ं घन
के �लए जेल म� नहीं, �सफर् जुमार्ना)
⇒ The bill is still pending in the parliament, but Rajasthan and other state governments have
amended their state laws to implement these reforms, because Labour is in concurrent list.
43.10�⚔�(EOD) → INDUSTRIAL DISPUTE ACT 1947, 2010

⇒ If a factory has 100/> workers, and industrialist want to retrench (fire a group of workers to
reduce salary bill) then State Govt’s approval is necessary. औद्यो�गक �ववाद अ�ध�नयम: मजदू रों को नौकरी से
�नकालने से पहले रा� सरकार क� अनुम�त लेना ज�री
⇒ Employer must give Advance notice to workers before changing office hrs, holiday norms etc.
→ If workers are unhappy they can file complaint to labour ministry officials. कायर् के िदन/ऑिफस
समय अव�ध म� बदलाव से पहले भी मजदू रों को सू�चत करना ज�री
⇒ Result? NOT EASE of doing Biz because what if entrepreneur wants to adopt new labour saving
Machine/technology or what if he has to ⏫ work hours during emergency foreign contract.
⇒ To address these issues, Union amended the act in 2010 with certain technical reforms. Further,
Rajasthan, Madhya Pradesh and other states also relaxed norms because labour=concurrent list,
to attract more investment in their states. (कानून समवत� सूची म� होने के चलते कु छ रा�ों ने सुधार िकए →
उद्योगप�तयों का �नवेश उन रा�ों म� बढ़ सके )
⇒ ES19 observed that after initiating these reforms, Rajasthan has progressed much faster in terms
of employment generation, attracting domestic and foreign companies.
⇒ Whereas inflexible states like W.Bengal, Bihar, Kerala are unable to create enough employment,
cannot attract adequate capital into their states and their wages are lower as their productivity is
lower. (बं गाल �बहार के रला म� श्रम कानून काफ� स� इस�लए उद्योगप�त फै ��ी लगाने से हतो�ािहत)
43.11 🏄🏄🤳🤳EASE OF DOING BIZ → SHRAM SUVIDHA PORTAL (2014)

Labour Ministry’s webportal to facilitates ease of doing business in following manner:
1. Labour inspector has to upload reports within 48 hrs of inspecting the factory. This reduces the
scope of bribery, corruption & tempering of records.
2. Entrepreneur can do online registration & payment of ESIC and EPFO for his workers.
3. Entrepreneur can upload compliance documents under various factory / labour acts.
Separately, Labour Ministry also launched Samadhan portal (Software Application for Monitoring
and Disposal, Handling of Industrial Disputes) for handling industrial disputes between workers’
trade union vs industrialist.
43.11.1 👷👷 🖱🖱 Worker Types → Unorganized workers → E-Shram Portal for them (2021-Aug)
- National Database of Unorganized Workers By Ministry of Labour & Employment
- to register approx 38 crore Unorganised Workers of India such as construction workers, migrant
workers, street vendors, domestic workers, milkman, truck drivers, fisherman, agriculture
workers etc. असं गिठत �ेत्र के मज़दू रों के पं जीकरण के �लए श्रम मं त्रालय का एक ऑनलाइन पोटर्ल बनाया गया है
- There is no registration free. Upon registration the workers shall be issued a e-SHRAM card with
unique Universal Account Number (UAN). पं जीकरण के �लए कोई फ�स नहीं लग�गी
- He can use it for various social security schemes through this Card anywhere anytime.
- �E-Shram Portal registered worker will get Rs 1.0 lakh on partial disability and Rs 2.0 Lakh
Accidental Death. आं�शक �वकलांगता और आक��क मृ�ु पर मुआवजा �मलेगा
43.12🏄🏄🤳🤳 😷😷😷⚖EOD → CORONA: SUSPENSION OF LABOUR LAWS?

State(s) majority of the labour laws suspended for (कोरोना वायरस के चलते श्रम कानूनों का �गन)
UP next 3 years (अगले तीन सालों तक श्रम कानूनों म� �गन!)
Guj, MP first 1000 days for newly established factories
Some other ⇒ Small factories will not be subjected to inspection. (�नरी�ण से मु��)
states ⇒ Factory owners can ⏫ the number of working hours per day, but without any
clarification on how much extra overtime wages need to be paid to
workers. (प्र�त िदन काम के घं टों मे बढ़ोतरी)
😰😰Implications: Trade unions And Labour rights activists fear that (नकारा�क प्रभाव)
⇒ Companies will not invest in workers' safety and amenities- washroom, spittoon, creches etc (श्रम
क़ानून ��गत करने पर फ़ै ��ी मा�लक मज़दू रों क� सुर�ा और सु�वधा को नज़रअंदाज़ कर�गे)
⇒ Companies may force workers to work for extra hours, without paying overtime/bonus.(अ�ा�धक
कायर् बोझ)
⇒ Companies may randomly hire and fire workers. Yet workers will not be able to complain to
Government officials / courts since the laws are suspended. (मन मुता�बक िकसी को नौकरी पर रखना या
�नकाल देना)
⇒ This will undermine workers' right to EPFO, ESIC, payment of bonus, job security and social
security. (श्र�मक क� सामा�जक सुर�ा का हनन)
43.12.1 😷😷😷⚖Corona Suspension Labour laws: Union says NO!!

Constitution → 7th Schedule → Concurrent list → Labour (7 वीं अनुसूची → समवत� सूची → श्रम)
⇒ Article 254 (1): In the concurrent list topics: Parliament's law will prevail over State's law. क� द्र/सं सद
के कानून को रा� के कानून के ऊपर वरीयता �मलेगी
⇒ Article 254 (2): In the concurrent list topics: States need to obtain the President's assent to
modify their own State law. (In practice, President of India will act as per the advice of PM) (रा�
ने समवत� सूची के कानून म� सुधार के �लए रा��प�त क� अनुम�त लेना ज�री)
⇒ So, Union Govt has clarified to Parliament, "we'll not entertain that above reforms by State
governments." (क� द्र सरकार ने �� िकया है िक “हम रा� सरकारों द्वारा श्रम कानून के �गन के प्र�ावों पर �वचार नहीं कर�गे/
अनुम�त नहीं द�ग”े )
⇒ In other words, UP will not be allowed to suspend labour laws for 3 years, Madhya Pradesh will
not be allowed to suspend it for 1000 days etc.
⇒ Further, the Union Government had enacted Inter-State Migrant Workmen Act, 1979 to protect
migrant workers. Union may take actions under this law, if / when the situation requires. (अंतर-
रा� प्रवासी श्र�मक अ�ध�नयम)
43.12.2 😷😷�⚖ DON'T punish employers if they can't pay full salaries- SC
2020-March: Ministry of Home Affairs (MHA) ordered all employers to pay full salaries to workers,
even during Corona lockdown. (Using powers of the Disaster Management Act, 2005: आपदा प्रबं धन
कानून के अंतगर्त गृह मं त्रालय ने सभी नौकरीदाताओं को अपने कमर्चा�रओ को लोकड़ाऊन मे भी पूरा वेतन देने के आदेश)
⇒ MSME owners went to SC with petition, "our business is down. We can't pay full salaries, please
save us!" → SC: Ordered the government not to take any punitive detections against the
employees, if they can't pay full salaries to workers. (सुप्रीम कोटर् ने आदेश जारी िकया है, “पूरी तन�ाह नहीं देने
पर कोई सजा मत दी�जए”)
⇒ 2020-May: Home ministry has withdrawn the order. (गृह मं त्रालय ने आदेश को वापस �लया)
43.12.3 😷😷😷⚖ Banking = Public Utility Service (सावर्ज�नक उपयो�गता सेवा)
Under the Industrial Disputes Act: workers enjoy a 'statutory right to strike' (औद्यो�गक �ववाद अ�ध�नयम म�
मजदू रों को हड़ताल पर जाने का कानूनन हक)
⇒ but there are certain restrictions e.g. (1) Government employees (2) Public Utility Services
employees are not allowed this right. (e.g. Electricity company, Telecom company etc.) (हालाँिक
कु छ श्र�मकों को ये हक़ नहीं है)
⇒ If 'public utility' workers go on strike → it will be deemed "illegal strike" (गेर-कानूनी)
o = 1) the owner can dismiss such workers from job (नोकरी से �नकाल देना)
o = 2) workers may be required to pay compensation to the owner for business
losses. (नुकसान क� भरपाई)
⇒ if bankers go on strike (for salary rise) → Atma-Nirbhar Bharat initiatives related to MSME
loans etc. will get delayed → Difficult to revive the economy. So, (ब�क कम� भी कोरोना वायरस ने हड़ताल पर
चले गए तो भारी सम�ा)
⇒ 2020-April: Union labour ministry notified that the banking industry will also be treated as
Public Utility Service.
43.13🏄🏄🛒🛒EASE OF DOING BIZ → BUILDING HOMES & RUNNING SHOPS
43.13.1 🏄🏄🛒🛒Ease of doing Biz → Model Shops & Establishments Bill, 2016
- State list subject. Each state has separate Shops and Establishment Act to govern the working
conditions, wage payments, leaves and holidays, work hours, etc. (दुकानों के बारे म� हर रा� का अलग
क़ानून होता है)
- Union govt has circulated Model Shops and Establishments Bill, 2016 to the States & UT with
legislatures to adopt / customize it as per their wish. (क� द्र सरकार ने आदशर् दुकान� और प्र�त�ान �वधेयक रा�
सरकारों को अपनाने के �लए कहा)
- This bill allows the shopkeeper / malls the freedom to operate for 24/7 and 365 days in a year
without any restriction on opening/closing time and enables employment of women during
night shifts with safety provisions. E.g. 2019-Feb Gujarat adopted this bill with certain
modifications. (पूरा िदन पूरी रात पूरा वषर् दुकान शॉ�पंग मॉल खुला रख सकते ह� मिहलाओं को भी रा�त्र म� नौकरी करने क� छू ट
हालाँिक उनक� सुर�ा का �ान रखना होगा)
🤩🤩Benefits? 1) ease of doing biz 2) overtime benefit to worker 3) separate workers may be
employed in day shift and night shift = more jobs. (रात क� पारी म� अलग मजदू र को रख�गे तो दो-दो लोगों को काम
�मले= रोज़गार सृजन म� मदद)
43.13.2 🏄🏄🏡🏡Ease of doing Biz → Real Estate Regulation & Development Act (RERA)
�रयल ए�ेट (�व�नयमन और �वकास) अ�ध�नयम/ क़ानून
Boss? Ministry of Housing and Urban Poverty Alleviation: आवास और शहरी गरीबी उपशमन
- While “land” is in the State List of the Constitution, but purchase of home / property / real estate
= ‘Contract’ in the Concurrent List. (अनुबंध �वषय सं �वधान क� समवत� सूची म� है)
- So, Parliament enacted RERA Act, 2016 to regulate transactions between home/commercial
property buyers and builders of the real estate projects, by setting up state level regulatory
authorities called Real Estate Regulatory Authorities: �रयल ए�ेट �व�नयामक प्रा�धकरण (RERAs) →
higher appeal to Real Estate Appellate Tribunals (अपीलीय �ाया�धकरण).
- First, builder must get his project registered @RERA’s website. including the facilities like fire
fighting systems, sewage treatment plants, functional lifts etc. He can’t make advertisements or
accept money from buyers before that registration. (�ब�र ने मकान �बक्र� का �व�ापन तथा ग्राहकों से पैसा लेने से
पहले प्रोजे� को रेरा वेबसाइट पे पं जीकृ त करवाना ज�री)
- Real estate agents dealing in these projects also need to register with RERAs.
- After RERA registration, project details will be published on RERA website where buyer can
cross check / file complaints. (मकान का कोई प्रोजे� असली है या फ़ज़� रेरा क� वेबसाइट पर ग्राहक सु�न��त कर पाएगा)
- Then builder can accept money from buyers, but in a separate bank account. If the project is not
completed in time → builder will have to pay the home/shop/office-buyer’s monthly interest on
bank loans (if any). RERA can order further relief / refund / arrange another builder to finish the
project. (�ब�र ग्राहकों का पैसा अलग ब�क अकाउं ट खोलकर उसम� जमा कर� .)
- If defects found in building upto 5 years → builder must repair free of cost.(पाँच साल तक मकान क�
मर�त मु� म�)
- Punishment? Penalty + jail upto 3 years. (�ब�र पर जेल और जुमार्ने के प्रावधान)
🥰🥰RERA-Good? फायदे 😰😰RERA-Challenges? चुनौ�तयां

- RERA registration system is online & time - Since cost of compliance increases, builders
bound → ease of doing business for the may raise home prices prices (e.g.
Builder as he will not have to make repeated considering the additional business cost of
trips / bribes to govt. officials. (भ्र�ाचार के doing ‘free repairs’ upto 5 years). �ब�र द्वारा
अवसरों म� कमी �ापार म� सु�वधा) मकान के दाम बढ़ा िदए जाएं गे �ोंिक पाँच साल क़ानूनन
- Consumer protection.(ग्राहक सुर�ा) मु� मर�त करनी है
- Since building has to be registered at RERA, - The building projects which were started
money has to be deposited in separate bank before RERA act but still building
account → reduces the opportunities for construction is pending → difficult to get
tax evasion and avoidance; malpractice like justice due to legal loopholes.
selling same home to two buyers etc.(कर चोरी - Some (non-BJP) state governments have
और धाँधली म� कमी) not yet appointed RERA chairman or setup
RERA websites.
� Conclusion-Template: World bank research indicates that countries that improve 10 points on
the Ease of Doing business score create an additional 60 new businesses per 1 lakh population. Those
new businesses create further job opportunities, which help reduce poverty & inequality in a country.
Thus, ease of doing business for ‘corporates’ results into the ease of living for poor people. The
aforementioned scheme / policies / act / initiatives / challenges will play pivotal role in that regard /
must be addressed on priority basis.
रोजगार सृजन, गरीबी �नवारण के �लए ज�री है- कॉरपोरेट कं प�नयों को �ापार म� सुगमता होगी तभी गरीबों को (रोजगार क�) सुगमता
होगी। उकत सुधार आव�क / उ� सम�ाओ को अग्रता क्रम से सुलझाना ज�री
44 SECTORS OF ECONOMY → MFG → 👘👘TEXTILE & MSME
44.1 �👘👘TEXTILES MINISTRY (कपडा / व� मं त्रालय)

CPSE Cotton Corporation of India, Jute Corporation of India, National Textile
Corporation ltd. and others.
Attached offices Development Commissioners for handloom / handicrafts
Statutory Bodies National Jute Board, Central Silk Board, National Institute of Fashion
वैधा�नक सं �ा Technology (NIFT)
+ various autonomous bodies, export promotion councils, research associations and advisory boards
for apparel, textile, wool, silk, carpet etc.
44.1.1 👘👘👘👘👘👘 Textile Ministry → Notable schemes / initiatives
Indian textile industry, the second largest manufacturer and exporter in the world. Textile sector is
the biggest employer after agriculture employing 4.5 crore people directly and another 6 crore people
in allied sectors.
1. Jute Packaging Material (JPM) Act, 1987: requires the foodgrains and sugar companies to pack
“x%” of their produce in jute bags only. This ensures that jute bag industry can survive against
the competition of cheap plastic bags. खाद्या� और चीनी कं प�नयों ने अपना कु छ सामान अ�नवायर् �प से जूट बैग म� ही
सं ग्रिहत करना होगा तािक जूट उद्योग को धं धा �मलता रहे वरना तो �ा��क क� थै�लयों से वो �धार् नहीं कर पाएं गे!
2. Technical textiles = Fishing nets, bullet proof jackets, shoe laces, surgical gowns, parachute etc.
items. Technical Textiles are lightest and toughest. They have a variety of applications in
automobile, aerospace, architecture and building, occupational therapy, sport and apparel
industries etc. (रोज़ाना सामा� �प से पहनने के कपड़ों के अलावा वाली चीज़�)
- 💼💼Budget-2020: India imports a technical textiles worth US$ 16 billion every year. So,
to reverse this trend, we’ll launch a National Technical Textiles Mission (रा��ीय तकनीक� व�
�मशन) from 2020-21 to 2023-24.
3. Project India Size: Presently the makers of shoe / shirt / pants etc. refer to size charts developed
by UK / US standards e.g. Size 44 shirt, XL t-shirt etc. Textile ministry’s project aims to develop
size charts specific to Indian consumers' measurements.
4. India Handloom Brand logo (2015): It certifies that given handloom product - sari, dress
material, bedsheet etc. is 1) Indeed handmade 2) has zero defect 3) has zero negative impact on
the environment 4) has authentic Indian traditional design. Such brand logo increases the appeal
of Indian handcrafts to (mainly foreign) buyers. To obtain this logo, the weaver/entrepreneur
applies online to Textile Ministry → Development Commissioners for handloom. (सु�न��त करता है,
िक हाथ द्वारा �न�मत, �नमार्ण म� कोई ख़ामी नहीं, पयार्वरण पर कोई नकारा�क असर नहीं और पारंप�रक भारतीय शैली से बनाया है)
5. Previously, UPA/Congress had Mahatma Gandhi Bunkar Bima Yojana (MGBBY)- although
gradually Modi switched those beneficiaries to Pradhan Mantri Suraksha Bima Yojana. So we
need not worry about this obscure scheme.
6. 2016: ‘Pehchan’ cards given to handicraft artisans- linked with their Aadhaar numbers and bank
accounts to help them avail various scheme benefits.
7. e-Cocoon App a mobile application for quality certification in silkworm seed sector.
8. E-Dhaga App, BunkarMitra helpline to advising the weavers on business.
9. 💼💼Budget-2021: Total Seven (7) PRADHAN MANTRI Mega Investment Textiles Parks (PM-
MITRA) will be launched for booting textile exports
- Union govt to give 30% subsidy on project cost. State govt to provide 1000 acre land. 7
such parks will be setup in various states.
- '5F' Formula for Success:- (Cotton/Jute/Silk) Farm to fibre → fibre to factory → factory
to fashion → fashion to foreign export.
Textile Ministry’s Central sector schemes = 100% funded by the union →

10. National Handloom Development Programme → Weavers Mudra scheme: Textile ministry
gives interest subvention and credit guarantee for the weavers’ bank loans upto prescribed limits.
11. Amended Technology Upgradation Funds Scheme (ATUFS): Provides funding to the textile
industries to upgrade their machineries. Similarly Power Tex scheme for powerlooms.
12. Ambedkar Hasthshilp Vikas Yojana, Handloom Weaver Comprehensive Welfare Scheme
(HWCWS) etc. schemes to provide training / skill development / marketing support etc. to the
artisans. (कौशलवधर्न तालीम, �वपणन सहायता)
13. 2016: Pradhan Mantri Paridhan Rojgar Protsahan Yojana: Textile ministry pays ‘EPFO
contribution of employer’s side’ for the first three years to encourage formal job creation in the
textile sector. (Ref: Pillar1D Handout) [कपड़ा मं त्रालय नए मज़दू र के EPFO खाते म� पैसा जमा करता था- अब ये
योजना बं ध हो गयी है]
14. 2017: Samarth Scheme for Capacity Building in Textile Sector. Ministry of Skill Development &
Entrepreneurship (MSDE) hires public & private sector institutes for giving training to youth for
textile sector → Textile ministry pays ‘coaching fees’ to those institutes. कौशल �वकास के �लए तालीम
15. 2019: Rebate of State and Central taxes and Levies (RoSCTL) = it is scheme similar to RODTEP
Scheme (Recall Pillar3A). In RoSCTL textile/garment exporters given Input Tax Credit (ITC)-
till 31st March 2024. How it is similar/different than RODTEP = �
that PHD not important for
exam, because not a high profile scheme unlike PM-JAY (REF#1D) or PM-KISAN (REF#4A).
44.1.2 👘👘👢👢Textile & Leather Industry: Past Economic Surveys’ suggestions:

 India is well positioned to get ahead of China in textile sector because wage costs in most Indian
states are significantly lower than in China’s wages. भारत म� कपड़ा उद्योग के मजदू रों के वेतन चीन क� अपे�ा कम
 Textile leather industries should be encouraged to move to smaller towns so they can absorb the
Indian women workers available there. कारखानों को छोटे शहरों म� �ानांत�रत करने के �लए प्रो�ाहन देना चािहए
 To increase export earning, we should go beyond textile → readymade garments. But that
requires R&D in foreigners’ fashion, style & size preferences. �वदेशी ग्राहकों क� पसं द नापसं द के िहसाब से
रेडीमेड/तैयार कपड़ों के सं शोधन क� ज�रत
 👢👢leather industry, India primarily exports leather-based shoes, but nowadays foreigners prefer
non-leather shoes for they are 1) cheaper 2) more comfortable 3) more fashionable. So, we've to
do R&D for non-leather shoes. (गैर-चमड़े के जूते �वदेशी ग्राहक �ादा पसं द करते ह� �ोंिक वे स�े और आरामदायक ह�
तो हमने इस पर सं शोधन क� ज़�रत है)
 😥😥Challenges? (1) Getting quality cattle hides becoming difficult due to present socio-political
atmosphere so leather industry facing problems (2) Bangladesh & Ethiopia emerging as
textile/leather hubs and they get duty free access to USA/EU for being L.D.C. so India textile
industry facing steep competition.(Ref 📑📑Pillar#3B:WTO)
�👘👘👘👘 Conclusion-Template? Textile / Leather industry has great potential to generate new jobs
especially for Indian women, & augment our income from exports. These industries can greatly help
achieving SDG Goal #1: End poverty, Goal #5: Gender Empowerment, Goal #8: Promote sustained,
inclusive and sustainable economic growth, Goal #10: Reduce inequality within India.
Aforementioned policy / scheme / initiative / challenges are crucial in that regard / must be
addressed on priority basis. मिहलाओं के �लए रोजगार- मिहला सश��करण, गरीबी �नवारण, �नयार्त म� बढ़ोतरी के �लए इस �ेत्र
क� सम�ाओं को ज� से/ अग्रता क्रम से �नपटाना ज�री.
44.2 👶👶👶👶 MFG & SERVICES → MSME → MINISTRY
Micro, Small & Medium Enterprises, सू� , लघु और म�म उद्यम मं त्रालय : List not exhaustive →
Govt Company National Small Industries Corporation Limited (NSIC)
Attached offices Development Commissioner (MSME)
Statutory Bodies Khadi & Village Industries Commission (KVIC), Coir Board
44.2.1 �👶👶👶👶 MSME Problems: RBI’s UK Sinha report (2019)
MSMEs contribute 45% to the manufacturing sector’s output and 40% to the nation’s exports. We
should do following to help them: लघु उद्योगों क� बेहतरी के �लए �रज़वर् ब�क क� UK �स�ा स�म�त ने �न� �सफ़ा�रश क� है:
44.2.1.1 🌞🌞Easier registration (पं जीकरण आसान हो)

 MSMEs shd be classified based on turnover, and not investment. �नवेश नहीं आमदनी के िहसाब से वग�करण
 Presently, MSMEs must do multiple registrations with various Departments and get different
registration numbers. Better to use PAN number as their Unique Enterprise Identifier (UEI)
number. �सफ़र् एक बार ही पं जीकरण
44.2.1.2 🌞🌞Easier loans (ऋण कजार् आसानी से �मले)

Non-availability of loan at reasonable rates is the most severe problem faced by MSME. So,
 Mudra scheme (Ref: Pillar1B Classification handout) offers three types of collateral free loans –
Shishu (upto ₹50,000), Kishor (>₹50k-upto ₹5 lakh), and Tarun (>₹5 lakh- ₹10 lakh). UK Sinha
suggested to double these loan amounts. मुद्रा योजना म� कज़र् क� सीमा ब�त कम है, बढ़ाने क� आव�कता है
 Loan application know-your-customer (KYC) processes require the MSME owner to come
physically to the bank branch for verification. We should adopt video KYC.
 We should integrate data from GSTN, Income Tax, Credit Bureaus, Land ownership records,
Fraud Reports, etc. & give it to banks so they can easily know the credit-worthiness of an MSME
owner and process his loan applications. (सरकारी सं �ाओं के डेटा का एक�करण)
 PSBLoansIn59Minutes: to make it more easy for new MSME entrepreneur to get loans.
 SIDBI should help venture capital funds to invest in MSME.
44.2.1.3 🌞🌞Easier NPA resolution (�दवा�लयापन का आसानी से समाधान हो)

 Insolvency & Bankruptcy Code (IBC) technical norms should be fine tuned for MSMEs.
 When Government bans plastic bags or SC puts limits on firecrackers, it affects MSME
producing those goods, and turns their loans into NPA. So to help MSME during such ‘external
shocks’, we need to create a Distressed Asset Fund (आपदाग्र� प�रसं प�� कोष) to help them.
44.2.1.4 🌞🌞Pending payments (बकाया पैसा तुरंत चुकाया जाए)

 MSME Act, 2006 need to be replaced with a better, more stronger law. So, MSME can get quick
justice for delayed payments. लघु उद्योगों को अपने ग्राहकों से बकाया रक़म ज�ी से �मल पाए उसके �लए क़ानून को स�
िकया जाए
 Setup an Information Utility portal. All MSME upload their invoices. If any client not paying on
time, Government should punish him.
44.2.1.5 🌞🌞 Give them training & social security. (तालीम व सामा�जक सुर�ा)
 Focus on technology adoption, capacity building, upstream and downstream linkages.
 Teach rural entrepreneurs how to register for GST, how to file IT return/PAN application, loan
document preparation, etc.
 Government should actively enroll MSME employees in pension & insurance schemes.
++ many other technical reforms, but this is more than enough for 250 words Mains Q.
44.3 🧔🧔🧔🧔MSME: TRUCKLOAD OF SCHEME/INITIATIVES
44.3.1 🧔🧔🧔🧔MSME Ministry → PM's Employment Generation Programme (PMEGP-2008)

Year 2008: ManMohan started → Modi continued it till 31/3/2020. प्रधान मं त्री रोजगार सृजन कायर्क्रम
- Boss? MSME Ministry → KVIC. Central Sector Scheme = 100% funded by the union.
- Beneficiary? Min. std.8 pass / Self-help-group wanting to setup a NEW micro-enterprises in the
non-farm sector.
- Suppose the cost to start a business is 100% then entrepreneurs himself has to contribute 5-10%
from his pocket, KVIC gives him 15-35%, rest is given as bank loans. Thus it’s a ‘Credit linked
Subsidy’ program.
- These % depend on whether the business is to be started in rural area or urban area, and whether
the Entrepreneur is General /SCST/ Women/ PH/Minorities/ Ex-Servicemen/North East.
44.3.2 👶👶👶👶👶👶👶👶 MSME Ministry → Public Procurement Order(सावर्ज�नक खरीद/अ�धप्रा�� आदेश)

MSME Ministry’s Public Procurement Order 2012 requires every Central
Ministry/Department/Govt Company to buy/procure annually,
- At least 25% of their goods & services requirement from Micro and Small Enterprises (MSE).
Further,
- 3% of that 25% must be procured from MSE owned by Women Entrepreneurs: मिहला
उद्य�मयों के �ा�म� वाले MSE
- 4% of that 25% from SC/ST entrepreneurs.
- Give first purchase preference to local suppliers. �ानीय �वक्रेताओं को प्रथम वरीयता
- Try to ensure that procured goods/services have minimum 50% local content (to encourage
Make in India). (सरकारी सं �ान द्वारा खरीदे गए सामान म� �ूनतम 50% घटक �ानीय होना चािहए)
- MSME Ministry → ‘MSME- Sambandh’ webportal monitors the progress.
- MSME Ministry gets power to issue such order / quota under MSME development Act 2006.
44.3.3 👶👶👶👶👶👶👶👶👶👶 Public Procurement → GeM Portal

- Government e-Marketplace (GeM) is an online portal that helps Govt organizations at union,
state, PRI/ULB and PSUs to buy common use goods & services in transparent and efficient
manner e.g. pen, pencil, stationery. (क� द्र, रा� और �ानीय सं �ान ऑनलाइन खरीदी कर सके ऐसा पोटर्ल)
- Verified sellers list products in this portal→ Govt organizations buy it online from here. Ensures
transparency, efficiency, cost saving (compared to individual organization giving newspaper ads
inviting tenders).
- Boss? Commerce Ministry’s not-for-profit company named ‘GeM Special purpose vehicle
(SPV)’. (खास उद्दे� से बनाई गई कं पनी)
- SWAYATT is Commerce Ministry’s initiative to promote Start-ups, Women and Youth
entrepreneurs through GeM portal. (मिहला और नौजवान उद्य�मयों को इस पोटर्ल म� पं जीकृ त करना)
- � �ES22: Wrote a very lengthy case study-commentary on GEM Portal is ‘bahut-mahaan’
(very great). But for General Studies = Not very IMP. If Public Administration optional → Read
from Economic Survey 2021-22 (published in Jan-2022) Ch.02: Fiscal Development Page 73
onwards. (उसने लंबी कहानी तो िलखी है लेिकन मझु े परी�ा के िलए कुछ ख़ास मज़ा निह आया, िसवाय के लोक-प्रशासन आपका
वैकिल्पक िवषय हो)
44.3.4 🛒🛒🛒🛒Public Procurement → Various Models – L1, QCBS, SSS- in 📙📙📙📙ES22 🎓🎓✋
- � �ES22: Wrote a very lengthy Case-Study/commentary on Methods of Public Procurement /
tenders: such as (1) Least Cost System (L1) (2) Quality-cum-Cost Based Selection (QCBS) (3)
Single Source Selection (SSS) etc. (सरकारी ख़रीद म� िकस ठे केदार का ट�डर पास िकया जाए उसके अलग अलग तरीक़े )
- But for GS = Not very IMP. If Public Administration optional → Read from Economic Survey
2021-22 (published in Jan-2022) Ch.02: Fiscal Development Page 76 onwards. (उसने लं बी कहानी तो
�लखी है लेिकन मुझे परी�ा के �लए कु छ ख़ास मज़ा निह आया, �सवाय के लोक-प्रशासन आपका वैक��क �वषय हो)
44.3.5 🧔🧔🧔🧔 MSME → PM's Initiatives for MSMEs (2018, Nov)

✓ Loans upto 1 crore within 59 minutes through an online portal. (Ref: Pillar#1D handout, also
revise Mudra & Standup India while you’re there!)
✓ Interest subvention of 2% for all GST registered MSMEs loans. �ाज म� 2% स��डी
✓ MSME / Corporates can borrow money from banks/NBFCs under Bill of exchange / Factoring /
Trade Receivables Discounting System (TReDS). Technical norms are further tweaked to help
them. (More on TREDS = Ref: 📑📑Pillar#1C)
✓ All govt organizations to compulsorily procure 25% from MSMEs, out of that 25% → 3% from
women owned MSME. (previously women didnot have internal quota)
✓ All Central Govt Companies must compulsorily procure through GeM portal. (अ�नवायर् �प से)
✓ Simplified forms for MSME owners to comply with labour laws. (सरलीकरण)
✓ Factory / labour Inspector will inspect MSME unit via computerised random allotment- to
prevent any nepotism / collusion. (कम्�ूटरीकृ त आबं टन= भाई-भतीजावाद / �मलीभगत पे रोक)
✓ Self-declaration for air and water pollution laws. (हवा और जल प्रदू षण के कानूनों का अनुपालन �प्रमा�णत)
✓ Only 10% MSME units to be inspected to checked. (�प्रमा�णत उद्योगों म� से के वल 10% क� प्रदू षण अ�धका�रयों
द्वारा जांच होगी. यानी िक हर एक लघु उद्योग म� जांच करने के नाम पर �र�त माँगने के अवसर कम �ए)
✓ For minor violations under the Companies Act, entrepreneurs no longer have to approach
NCLT, but file penalties online using simple forms. (सामा� अपराधों के �लए िट��ूनल म� जाने क� ज�रत नहीं
सीधा ऑनलाइन जुमार्ने का भुगतान)
44.3.6 🗺🗺One District One Product (ODOP: 2021)
⇒ By Ministry of Commerce with the help of other union and state government organisations
⇒ To convert each District in Export Hub by identifying products with export potential, e.g.
Rajasthan → Blue Pottery (Jaipur). Through marketing / branding / logistic / infrastructure
support, incubation centres, training, research and development (R&D). प्र�ेक �ज़ले म� से िकसी एक ख़ास
चीज़ के �नयार्त के �लए मदद
44.3.7 👻👻👻👻👻👻👻🏭🏭 MSME → Atma-Nirbhar Funding/Schemes (2020, Corona)

📑📑Ref Pillar#1D3 handout for more details
Scheme What has been done in Atma-Nirbhar?
Loans: MUDRA 2% interest subvention on Shishu Loans(More in 📑📑Pillar#1D3)
Loans: MSME Non-NPA ⇒ Emergency Credit Line Guarantee Scheme (ECLGS:
borrower आपातकालीन क्रेिडट लाइन गारंटी योजना).
⇒ Guaranteed Emergency Credit Line (GECL) facility.
Both are synonyms of the same scheme.
Loans: MSME NPA ⇒ Subordinate Debt (गौण ऋण)
borrower ⇒ [उनके �लए, �जनक� पुरानी लोन पहले ही अनअजर्क प�रसं प�� घो�षत हो चुक� है]
Equity ⇒ infusion via Fund of Funds
Protection from foreign In Government procurement tenders up to ₹200 crore. → Foreign
players in public (global) companies will not be allowed to apply. (सरकारी खरीद के 200
procurement करोड़ तक के ट�डर मे �वदेशी कं प�नयों को अज� डालने पर प्र�तबं ध.)
Swavalamban Challenge ₹₹ to to non-profit organisations/educational institutions/social
Fund (SCF) startups for promoting entrepreneurship, financial inclusion,
green technologies etc. Boss? SIDBI with help of UK-based org.
44.3.8 👶👶👶👶Ubharte Sitaare Programme for MSME Exporters (USP: 2021-Aug)

⇒ Alternative investment fund by EXIM Bank and SIDBI. (More in �Pillar#1B1 Classification)
⇒ To help export-oriented MSMEs (in goods and services sector).
⇒ To give them funding (debt and equity), technological support.
[एक वैक��क �नवेश फं ड �जससे �नयार्त करने वाले लघु उद्योगों को मदद]
44.4 👶👶👶👶 🧔🧔🧔🧔 MSME MINISTRY → MISC. INITIATIVES

44.4.1 🧔🧔🧔🧔 MSME Ministry → ASPIRE (2015)
- A Scheme for Promoting Innovation, Rural Industry and Entrepreneurship.
- Boss? MSME Ministry. Central Sector Scheme =100% funded by the union.
- To encourage Innovation & Rural Entrepreneurship, this scheme will set up Business Incubators
and Startup fund for agro-based industry.
44.4.2 🧔🧔🧔🧔MSME Ministry → Solar Charkha Mission (2018)

- Boss? MSME Ministry → KVIC. Central Sector Scheme = 100% funded by the union.
- KVIC to setup solar charkha clusters in rural areas.
- KVIC will provide training, subsidy for purchasing Solar Charkha, and interest subvention on
the loans taken by the weavers / entrepreneurs. सौर चरखे के �लए तालीम, स��डी, �ाज म� मदद क� जाएगी
- Target? Generating 1 new lakh jobs.
44.4.3 🧔🧔🧔🧔MSME Ministry → Gramodyog Vikas Yojana

⇒ MSME Ministry → Khadi and Village Industries Commission (KVIC) → Gramodyog Vikas
Yojana → For the development of village industries
⇒ 2020-June: Launched a pilot project for mfg. Agarbatti (Incense Sticks). Artists to be given
Automatic Agarbatti making machines etc.
44.4.4 🧔🧔🧔🧔💻💻MSME Ministry → Portals / Helplines

- To register an enterprise as MSME, its entrepreneur has to fill up an
Udyog Aadhaar Memorandum(UAM)-free online form to MSME
ministry’s Udyam Registration webportal.
- (Previously another form called ‘Entrepreneurs’ Memorandum’.)
- He/she’ll be allotted a unique Udyog Aadhar id linked with his personal
UAM Portal Aadhar number. यहाँ पर आधार काडर् के साथ पं जीकरण करवाना है
2015 - Udyog Aadhar id helps applying for Govt’s MSME schemes
onwards - Retail traders and wholesale traders can also register as MSMEs in
“Udyam Portal“. but they are not eligible for all MSME-schemes.
However, they are eligible Priority Sector Lending. (REF: Pillar1A2)
(खुदरा �ापारी और थोक �ापारी भी एमएसएमई के �प म� पं जीकृ त हो सकते ह� लेिकन उ��
एमएसएमई के �लए बनी सारी योजनाओं के लाभ नहीं �मलते ह�। हालाँिक �रज़वर् ब�क के प्राथ�मक �ेत्र
के ऋण मानक कोटे के लोन उ�� मलते है।)
- MSME's Complaint & Grievances Redressal (�शकायत �नवारण)
CHAMPIONS
- Support for various schemes (योजनाओं द्वारा मदद)
WebPortal
- It's a Hub & Spoke Model. Hub = New Delhi main office of MSME
(2020-May)
Ministry. Spokes = its field offices, state govts etc. (पिहए का क� द्र और छड़)
- MSME Act, 2006 requires State Governments to establish Micro and
Small Enterprise Facilitation Council (MSEFC).
MSME - If a buyer (Govt org @Union/State) is not paying money to MSME
Samadhaan supplier within specified time limit, then MSEFC can order him to pay
money with interest rate.
- MSME Ministry’s ‘MSME SAMADHAAN’ webportal helps filing online
complaint for delayed payments. व� भी भुगतान नहीं हो रहा तो �शकायत
- 👜👜👜👜Budget-2022: When seller gives bill → 75% payment to be
released within 10 days by Govt. with Online bill tracking system
- MSME Ministry’s webportal to connect jobseekers (passed out trainees /
MSME- Sampark students of MSME Technology Centres) to recruiters (various
companies).
Udyam Sangam, - MSME ministry organizes such Workshops, Conventions, Mela usually
Udyam Samvad at Delhi.
Udyami Mitra Toll-free helpline mainly to help the first generation entrepreneurs. पहली पीढ़ी
Yojana के उद्य�मयों को सलाह मशवरा मदद तालीम के �लए हे�लाइन है
44.4.5 🧔🧔🧔🧔💰💰 MSME: Funds for their development

India Inclusive For promoting grassroot innovations. गाँव म�, ज़मीनी �र पर नवाचार को प्रो�ाहन के �लए
Innovation Fund
Scheme of Fund for Regeneration of Traditional Industries → to setup
SFURTI
clusters of Khadi, Coir, Handicraft; & help the entrepreneurs inside them.
Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
funded by MSME Ministry and SIDBI to help the MSE Entrepreneurs get
CGTMSE
loans without collateral from the banks. (📑📑Ref:Pill1D: Financial Inclusion)
👜👜👜👜Budget-2022: we’ll give more funding in this.
by World Bank’s International Bank for Reconstruction and Development
RAMP by World
(IBRD) for helping MSME performance. भारत के लघु उद्योगों क� मदद के �लए �व� ब�क
Bank
का ramp प्रोग्राम
44.5 📔📔📔📔 �↘�🏭🏭 ES19: MSME DWARFISM SHD BE DISCOURAGED (बौनापन)
CEA Subramanian K. observed: Following benefits are available to Small firms:

Acts / Policy Only Applicable on Implications
Industrial Disputes 100/> workers Factory owner must get Government
Act,1947 approval before retrenching
workers/shutting units
Factories Act, 1948 Min 10-20 workers Factory owner must provide restroom,
depending on whether creches and other facilities. फै �री मा�लक
power is used in mfg/ or ने मज़दू रों के �लए शौचालय �शशुगृह इ�ािद क�
not? सु�वधा देनी होगी
Acts / Policy Only Applicable on Implications
Employees’ State Insurance 10/> workers Factory owner required to co-
Act, 1948 contribute ₹ ₹ in insurance / pension
accounts of low-salaried workers
Employees’ Provident Fund 20/> workers Factory owner required to co-
& Miscellaneous Provisions contribute ₹ ₹ in insurance / pension
Act, 1952 accounts of low-salaried workers
Similarly, small firms get benefit of
− Priority Sector Lending (Ref:Pillar#1A2: Monetary policy), Public Procurement Quota.
− Benefits in Government tendering such as no need to pay fees / security deposits. Some
tender/contracts are exclusively reserved for MSME.
− GST Composition scheme: where they have to submit the collected GST to Government on a
quarterly basis instead of monthly basis, if turnover less than “X” crores. (Ref: Pillar#2-GST)
44.5.1 �↘�🏭🏭: 🧔🧔 MSME ‘Dwarfism’ is caused by Govt schemes

📔📔📔📔ES19 observed above schemes/laws create a “perverse” incentive for firms to remain small.
अलग-अलग सरकारी योजनाएं और कानूनों म� छू ट घाट के चलते लघु उद्योगों को छोटा रहने का �वकृ त प्रो�ाहन �मल रहा है।
− If the firms grow beyond these worker / turnover → unable to obtain the above benefits.
− So, entrepreneurs find it optimal to start a new firm to continue availing these benefits. But then
firm doesn’t benefit from economies of scale → they can’t create large number of jobs. (बड़े पैमाने
पर धं धा करने से होने वाले फायदे रोजगार सृजन)
− Thus infant firms → giant companies...nope; but infant firms → ‘dwarfs’. Such drawf firm
contribute neither to productivity or jobs. (बौनेपन से ग्र�सत उधोग न तो पैदावार बढ़ाते है, न तो रोजगार)
− a 40-year old firm in Mexico generates 40% more jobs than an 40-year old Indian firm.
− Productivity level for 40-year old enterprises in the U.S. was more than 4x of a newly setup firm.
Whereas in India, productivity level for 40-year old firms in India was only 60% greater than a
newly setup firm. (बौनेपन के चलते भारतीय उद्योग क� उ�ादकता- अमे�रका और मे��को से कम)
44.5.2 �↗🤴🤴🏭🏭 MSME ‘Dwarfism’: Suggested Reforms by ES19

− Under Priority Sector Lending (PSL-More in �Pillar#1A2), banks are required to lend 7.5% of
their annual loans to Micro enterprises. These norms should be tweaked to give first preference
to loan applications by ‘start ups’ and ‘infants’ firms. (प्राथ�मक �ेत्र के ऋण मानक म� सुधार िकए जाएं )
− Sunset Clause for Incentives: MSME benefits should have a ‘sunset’ clause, say, after 5-7 years,
the firm will no longer be able to claim it. If owner starts a new firm, then based on his Aadhar
card number, the system should alert authorities, so he can’t claim the MSME benefits in the new
firm. (प्रो�ाहन के �लए सूयार्� उप�नयम. मात्र सरकारी योजनाओं का बार बार लाभ लेने के �लए नई नई कं प�नयां बनाने वाले लघु
उद्योगप�त को आधार काडर् नं बर जांच कर रोका जाए)
− Focus on high employment sectors such as rubber and plastic products, electronic and optical
products, transport equipment, machinery, textiles and leather & leather products. (अ�धक रोजगार
सृजन क� �मता रखने वाले उद्योगों को वरीयता दी जाए)
− Focus on Service Sectors with high spillover effects (�वन प्रभाव) such as Tourism. Because it can
open up new jobs in tour and safari guides, hotels, catering and housekeeping staff, shops at
tourist spots etc. It would also reduce the migration of the rural labour force to other States.
44.5.3 👻👻 �🏭🏭 ATMANI: MSME Definition Changed by Government

सू�, लघु और म�म उ�ोग क� �ाखया मे बदलाव
⇒ MSME units get certain relaxations in the factory and labour laws compliance.
⇒ MSME are also eligible for priority sector lending loans and quotas in Government procurement.
If MSME firm grows bigger, it’ll not get the above benefits.
⇒ So, if MSME firm#1 is growing bigger in size, its entrepreneur will create MSME Firm#2 to divert
business. Thus infant firms → giant companies...nope; but infant firms → ‘dwarfism (बौनापन)’.
Such firms contribute neither to productivity or jobs, said the �
�ES19. Therefore:
⇒ 1/Jul/2020 Government changed MSME definition:
NOTE: in above image, please read "<" sign as "NOT MORE THAN (से अ�धक नहीं)
Investment: �नवेश annual turnover: वा�षक कारोबार
MSME-Type No. of Units (2022-January)
Micro 62 lakhs
Small 3 lakh
Medium 34,000
Total MSME 66 lakh approx.
44.5.4 � Conclusion-Template for MSME (�न�षर्)

MSMEs contribute 45% to the manufacturing sector’s output and 40%nation’s exports.
They provide employment & entrepreneurship opportunities to weaker sections of the society. Thus
they play a pivotal role for both industrial development and human development of India. <+ the
SDG goals in Textile Template> Aforementioned Policy / Scheme / Act / Bill / Reform is important
to catalyse that role played by MSMEs. लघु उद्योग का भारत के सकल घरेलू उ�ादन तथा देश के �नयार्त म� प्रमुख योगदान है.
कमजोर वगर् को रोजगार के अवसर देता है. मानव �वकास के �लए और औद्यो�गक �वकास के �लए इनको मदद देना ज�री. इस�लए उ�
सुधार मह�पूणर् है या उ� सम�ाओं को अग्रता क्रम से सुलझाना ज�री.
📘📘 📘📘 Homework: Read ES19 Vol1 Ch3- MSME

Introduction bullet 3.1. Then ‘Way forward’ from bullet 3.35 onwards.
Beyond this, pursuing individual industry specific policies / schemes in mfg / service sector = poor cost :
benefit. (e.g. Hotel & Tourism, Filmmaking, Advertizement etc)
45 �💿💿SERVICE SECTOR (सेवा �ेत्र)

⇒ (DATA) Services sector’s accounts for more than 50% of GDP and 80% of total FDI inflows.
भारत का �ादातर सकल घरेलू उ�ाद और �वदेशी प्र�� नवेश सेवा �ेत्र से आता है
⇒ Services sector share in Gross State Domestic Product (GSDP)= Highest in Delhi, lowest in
Sikkim. (‘सकल रा� घरेलू उ�ाद’ म� सेवा �ेत्र क� िह�ेदारी सबसे �ादा कॉनसे इलाके म� है?)
⇒ �
�ES22: Services sector a has mostly recovered from Corona Wave-1 (March-May 2020) and
Wave-2 (April-May 2021). However hotels, tourism, cinema etc’s growth still remains below its
pre-pandemic level. (सेवा �ेत्र कोरोना क� पहली लहर और दू सरी लहर से उबर चुका है, िक�ु कु छ सेवा �ेत्रों म� वृ�द्ध दर,
महामारी के पहले के ज़माने क� वृ�द्ध दर के मुक़ाबले अभी भी कम है।)
⇒ High FDI growth seen in Computer Software & Hardware, ‘e-Retail Trading’, ‘Education',
pharma-research service, etc. (मह�म �वदेशी �नवेश इन �ेत्रों म�)
45.1.1 �💿💿Service Sector: IT & BPM

⇒ Over the last decade, the Information Technology & Business Process Management (BPM)
industry grew by 102%.
⇒ 2019: This sector's Biz Income: US$ >190 billion. Within that, export income: $ >145 billion
alone worth, No. of Employees = 18 lakh.
⇒ Top destination for Indian IT Exports: 1) USA $91 billion 2) UK 3) Europe except UK 3) Asia-
Pacific. (मह�म कं �ूटर सेवा �नयार्त इन देशों म� भारत करता है)
🙇🙇Homework: Interview Homework for IT Graduates: Refer to 📔📔📔📔ES21 Vol2 page 316: Chart 1:
Evolution of the business model for IT-ITeS for interview Qs.
45.1.2 �💿💿Other Service Provider (OSP) guidelines of the Department of Telecom.

⇒ OSPs are the Companies that provide database management, telemarketing, telebanking or
telemedicine for other companies, banks or hospital chains, on an outsourcing basis. (अ� सेवा
प्रदाता कं प�नयां= वे अ� कं प�नयों को डेटाबेस प्रबं धन, टेली�वपणन, टेलीब�िकंग टेलीऔष�ध इ�ािद सेवाएं मुहैया कराते ह�.)
⇒ They have to register with the Department of Telecom (DoT), deposit bank guarantees, send
various reports related to their business & online network operations to DoT. (अ� सेवा प्रदाता
कं प�नयों ने दू रसं चार �वभाग म� पं जीकरण, ब�क गारंटी, �व�वध प्रकार के �ावसा�यक �रपोटर् जमा करवाने होते ह�.)
⇒ 2020-Corona: To facilitate "work from home", DoT has relaxed these rules / guidelines on OSPs.
(�नयमों म� सरलीकरण)
45.1.3 �💿💿💿💿:😰😰 Knowledge economy of India: Threats/Challenges
Knowledge economy is primarily based on intangible assets such as the value of its workers'
knowledge and IPR. e.g. Space, Pharma, IT, e-learning etc. �ान अथर्�व�ा मु� �प से अमूतर् सं प�� जैसे िक इसके
श्र�मकों के �ान या बौ�द्धक सं पदा पर आधा�रत होती है.
😰😰Challenges to the knowledge economy of India (भारत के �लए चुनौ�तयां)

⇒ China is providing tough competition in these sectors. चीन भारत को कांटे क� ट�र/�धार् दे रहा है
⇒ Philippines Indonesia etc Asian economies offering graduates with command over english, data
processing, IT, engineering to MNCs. अ� ए�शयाई देशों म� भी अंग्रेजी तथा कं �ूटर के �वशेष� क� सं �ा बढ़ रही है
⇒ Space Sector grew because of Govt support to ISRO- But same is missing in case of
Electronics/hardware. सरकार के इसरो को मदद के चलते, भारत अवकाश �ेत्र म� आगे, लेिकन सरकार द्वारा इले��ॉ�नक और
हाडर्वेयर �ेत्र को इस प्रकार क� मदद काफ� वष� तक नहीं �मली
⇒ Pharma sector growth driven by private sector initiative. But they're not spending an adequate
amount of profits on research and development- as pointed out by the economic survey. (औष�ध
�ेत्रों म� �नजी �ेत्र क� कं प�नयों द्वारा उ�ादन वृ�द्ध तो �ई, लेिकन सं शोधन-�वकास म� पयार्� �प से पैसा खचर् नहीं कर रहे, जुगाड़
मान�सकता.)
⇒ Brain drain of talented Indians to foreign nations since 1970s. भारत के प्र�तभावान युवाओ का �वदेश गमन
45.1.4 🌄🌄 Sunrise sector in 👜👜👜👜Budget-2022 (सूय�दय �ेत्र: जहाँ तेज़ वृ�द्ध क� सं भावना)
- A sunrise industry is a new business sector showing potential for rapid growth.
- � �Budget-2022: we’ll help following Sunrise Sectors: Artificial Intelligence, Geospatial Systems
and Drones, Semiconductor and its eco-system, Space Economy, Genomics and Pharmaceuticals,
Green Energy, and Clean Mobility Systems. (इन सब सूय�दय �ेत्रों को नया बजट मदद करेगा.)
45.2 🖱🖱🖱🖱 SERVICE SECTOR → E-COMMERCE (ई वा�ण� / ऑनलाइन �बक्र�)
Marketplace E-Commerce companies were engaging in Anti-Competitive (�धार् �वरोधी) behaviour e.g.
- 😰😰Flipkart / Amazon would enter in exclusive partnerships with top smartphone brands such
as Xiaomi and Oppo- Prohibiting them from selling their mobile phones through other online or
offline channels → offline mobile shops suffer.
- 😰😰Flipkart / Amazon run “Marketplace E-Commerce model” i.e. they allow any merchant to
list their products on their website. However they will also have their own merchant company
(e.g. Amazon’s cloudtail pvt ltd) who would offer deep discounts / cashbacks to the customers.
→ Other online merchants on the same web platform will suffer. Offline brick and mortar shop
merchants (=kiranawalla) will also suffer.
- 2021: Competition Commission of India [a statutory body under the Corporate Affairs ministry]
is investigating this. However Flipkart Amazon went to court to stop investigation but uski ball-
by-ball news commentary not imp. Wait till final outcome. भारतीय प्र�त�धार् आयोग जांच कर रहा है
45.2.1 🖱🖱🖱🖱 E-Commerce Rules 2019-Feb

Who? Consumer Affairs ministry. उपभो�ा मामलों का मं त्रालय
How? using the powers under Consumer Protection Act 2019. उपभो�ा सं र�ण अ�ध�नयम(Ref:Pill4)
⇒ �Such E-commerce companies can’t have exclusive agreements with sellers (�बक्रेताओ के साथ अन�
समजौते). E.g. Flipkart can’t compel Xiaomi ‘not to’ sell Mi phones on other online/offline
platforms.
⇒ �Tightened the technical norms related to cashback and discounts. (कै शबैक और छू ट से सं बं �धत
तकनीक� मानदंडों को स� िकया)
⇒ �
Tightened norms on E-commerce company who were using their own subsidiary
companies/shell companies as “Online Merchants” to sell products at deep discount (सहायक
कं प�नयों द्वारा गहरी छू ट पर सामान बेचने पर स�ी क� गयी).
⇒ E-commerce companies/E-Tailers must mention the 'expiry date', 'country of origin' of goods, its
policies on return, refund, exchange, warranty and guarantee, delivery, shipment, cancellation
policy. (ई �वक्रेता ने समा�� त�थ, उ�ादन का मूल देश इ�ािद क� जानकारी देनी होगी )
⇒ Must display sellers' geographic address, customer care number, rating etc.
✋Plus many other technical norms. Poor cost:benefit in chasing all them. In MCQs, just apply
logical reasoning that rules are more consumer friendly, and imposes more responsibilities on e-
tailer/seller. Accordingly do logical 50:50 elimination. For example, "E-tailer must not post fake
reviews by creating fake accounts".= Yes this statement is correct.
45.2.2 🖱🖱🖱🖱 E-Commerce: (Draft) CONSUMER PROTECTION (E-COMMERCE) RULES, 2020

Using powers of the Consumer Protection Act → govt notified Consumer Protection (E-Commerce)
Rules, 2020 with following features: <Note: For easier understanding, I’ve used word Amazon instead
of e-commerce so u can visualize quickly.>
⇒ 1) fall-back liability clause= e-commerce entities (e.g. Amazon) will be liable in case suppliers on
the platform fail to deliver the goods to consumers, causing customer a loss. (ख़रीदा �आ सामान न
�मलने पर यिद ग्राहक का नुक़सान होता है तो amazon ने मुआवज़ा देना होगा)
⇒ 2) Amazon need to identify goods based on their country of origin. (माल कौन से देश से आया है �� प से
बताना होगा)
⇒ 3) when customer browsing through the store, amazon need to provide suggestions to customers
(about the product listed by Indian sellers) to ensure “fair opportunity” for domestic sellers.
(ग्राहक कोई चीज़ ढू ंढ रहा है तब एमेज़ोन ने उसे भारतीय �वक्रेताओं के उ�ादनो का सुझाव देना होगा)
⇒ 4) Amazon cannot misuse its dominant position to dictate the commission rates on seller else
consumer protection authority will punish Amazon. (�वक्रेताओं से िकतना कमीशन एमेज़ोन माँग सकता है उस पर
कु छ सीमाएं )
⇒ 5) Amazon cannot share the personal data of the customer with third party without the approval
of customer. (ग्राहक क� अनुम�त के �बना अमेजॉन उसका �नजी डाटा िकसी तीसरी पाट� के साथ साझा नहीं कर सकता)
45.2.3 🖱🖱🖱🖱😰😰 Criticism against E-COMMERCE) RULES: (आलोचना)

⇒ 1) foreign companies are angry that Indian govt is pushing “Make in India” campaign being
pushed through the Consumer Protection Act. If domestic manufacturers are competitive,
consumers will automatically buy Indian products (�वदेशी कं प�नयां नाराज़ ह� क� ज़बरद�ी एमेज़ोन पर दबाव
डाला जा रहा है िक वो भारतीय चीज़ों का सुझाव दे। अगर भारतीय कं प�नयां अ�ा उ�ादन बनाएगी तो ग्राहक अपने आप ख़रीद ल�गे)
⇒ 2) consumer protection authority trying to encroach upon the domain of Competition
Commission of India (भारतीय प्र�त�धार् आयोग क� स�ा पर ग्राहक सुर�ा प्रा�धकरण द्वारा अ�तक्रमण हो रहा है)
⇒ 3) Data sharing related rules need to be covered under the Personal Data Protection Bill and not
the Consumer Protection Act. (�नजी डेटा का �ा करना चािहए उसके �लए अलग क़ानून बन रहा है तो यहाँ ग्राहक सुर�ा
म� उसका �ज़क्र करना ज़�री नहीं था)
45.2.4 🖱🖱🖱🖱 E-Commerce: Open Network for Digital Commerce (ONDC):

o ONDC, set up as a non-profit company by Commerce Ministry’s DPIIT.
o Seller lists the products → Product visible across all the participating e-commerce websites (e.g.
Flipkart, Amazon, Snapdeal and other big and small e-commerce sites.)
o Open source protocol / structure. To prevent exploitation of seller by e-commerce giants
(Flipkart/Amazon).
BEFORE UPI/BHIM: (REF: Pillar1A1)
� AFTER UPI/BHIM
�
Customer paid money to Seller via Paytm→ money directly transferred to sellers bank
PayTM charged fees before seller could transfer account without such fees. = seller’s life
money to bank account. becomes easier.
seller kept product price high, to cover the fees Seller may reduce the product price to attract
of Paytm. more customers because now he does not have
to pay fees to Paytm.
Similarly, ONDC will make the life easier for seller and buyer.
BEFORE ONDC
� �AFTER ONDC
Amazon Flipkart will deduct platform-fees These fees will get uniform across platforms.
before transferring customers’ money to seller. These fees will get reduced. = �seller life
These fees may vary from website to website becomes easier.
e.g. Amazon may charge 8%, Flipkart may
charge 11%
Customer product return, shipping delay etc. ONDC will have common guidelines across all
policies vary from platform to platform e.g. the e-commerce platforms. = �buyer life
Amazon may offer 3 days product-return, while becomes easier.
Flipkart may offer 7 days product-return.
“�ड�जटल वा�ण� के �लए खुला/ओपन नेटवकर् ” = एक एसा िड�जटल-मं च जो �वक्रेताओं को अलग अलग ई कॉमसर् कं प�नयों पर अपना
सामान बेचने म� मदद करेगा। इससे �वक्रेताओं का पं जीकरण, �वक्रेताओं पर लगने वाली फ़�स, व�ुओ ं क� क़�मत� तथा वणर्न, ग्राहक सुर�ा
इ�ािद के �लए एक आदशर्/एकसमान �व�ा/प्रणाली बनेगी, �जसम� �वक्रेता और ग्राहक दोनों के िहतों क� र�ा होगी और एमेज़ोन जेसी
कं पनीयो द्वारा शोषण कम होगा।
E-Commerce Rules Open Network for Digital Commerce (ONDC):

WHO? By Ministry of Consumer Affairs By Commerce Ministry
Objective? Mainly to protect buyers [very To protect both buyers and sellers
few points dedicated to protect
sellers]
😤😤Moral Outrage: why not merge above two things? ✅Ans. Send your valuable suggestions to
PM.
🔠🔠MCQ. Find correct about foreign-owned e-commerce firms operating in India? (Prelims-2022)
1. They can sell their own goods in addition to offering their platforms as market-places.
2. The degree to which they can own big sellers on their platforms is limited.
45.3 🕵🕵 MFG → BODIES FOR QUALITY STANDARDS (गुणव�ा के मानक)
45.3.1 🕵🕵Consumer Affairs Ministry → Statutory → BIS (1986)

⇒ Bureau of Indian Standards (भारतीय मानकों का कायार्लय /�ूरो) is the apex regulator of standardization
and quality certification of goods.
⇒ It allows the manufacturer to use Indian Standards Institute (ISI) mark on their goods (e.g.
helmet, gas stove, pressure cooker etc.) if they meet BIS’s standards.
⇒ BIS also has separate hallmark license system for gold and silver jewellery.
⇒ BIS is India’s nodal for International organisation for standardization (ISO-standards), WTO’s
Technical Barriers to Trade (TBT) agreement.(More in 📑📑Pillar#3B:WTO)
45.3.1.1 🕵🕵: 🥇🥇 BIS & Gold -Silver Hallmarking (�णर् तथा चाँदी हॉलमा�कग के �लए �नयम।)
⇒ Bureau of Indian Standards (BIS, Statutory body under Ministry of Consumer Affairs). → Gold
Hallmarking and Silver hallmarking (to certify purity of metal)
⇒ Year 2000: BIS started for Gold in 3 grades viz. 14 carat, 18 carat and 22 carat.
⇒ So far it was voluntary (=Non compulsory) BUT From June 2021, Hallmarking became
compulsory for Gold & Silver- with following rules:
● ) Jewellers with annual turnover upto Rs. 40 lac will be exempted from mandatory
hallmarking छोटे जौह�रयों पर ये �नयम अ�नवायर् निह।
● 2) Jewellers can continue to buy back old gold jewellery without hallmark from
consumer. यिद ग्राहक �बना हॉलमा�कग का भी सोना बेचने आए तो जोहरी उसे खरीद सकता है।
⇒ �Direct benefit: customer assured of gold quality. ग्राहकों के �लए �णर् गुणव�ा सु�न��त होगी
⇒ �Hidden benefit: Since big Jewellers must register & get their products certified so tax
authorities get data mining opportunities about how much gold items traded, whether jeweller
depositing proportionate amount of taxes or evading it? Etc. परो� �प से कर चोरी पर लगाम.
45.3.2 🕵🕵 Power Ministry → Statutory → BEE (2001-02)

⇒ Bureau of Energy Efficiency (ऊजार् द�ता �ूरो) setup under Energy Conservation Act, 2001.
⇒ BEE’s Energy ‘ Star labeling’ logos help consumers decide which electronic appliance is more
energy efficient than other brands.
- This labelling compulsory for Air Conditioners, Refrigerators, Tubelight, Color TV,
Electric Geysers, Inverter, LED Lamps etc. (अ�नवायर् सूची)
- This labelling is voluntary for other appliances like Computers, LPG stoves, ceiling fans-
Although this list keeps updating. (�ै��क सूची)
⇒ BEE’s Chiller Star Labelling: The traditional star labelling program is for consumer appliances
for households use. While chiller star labelling related to the big heating, ventilation, and air
conditioning devices in the commercial / factory buildings. (औद्यो�गक �र के शीत यं त्रों के �लए)
⇒ Separately, EESL’s Retrofit of Air-conditioning to improve Indoor Air Quality for Safety and
Efficiency (RAISE) it aims to increase quality and efficiency of AC. RAISE Joint initiative of
Energy Efficiency Services Limited (EESL, a company under Power Ministry) and United States
Agency for International Development (USAID) (एयर कं डीशनर क� गुणव�ा और द�ता बढ़ाने के �लए)
45.3.3 🕵🕵 Health ministry→ Statutory → FSSAI (2006)
⇒ Food Safety and Standards Authority of India (भारतीय खाद्य सुर�ा और मानक प्रा�धकरण) lays down
scientific standards for food manufacture, storage, distribution, sale and import in India.
⇒ FSSAI chairman may be a non-bureaucrat, food-scientist etc. While FSSAI functions under the
Administrative control of Health ministry, FSSAI Chairperson enjoys rank of an independent
Secretary to Government of India. He’s not ‘under’ any department of Health Ministry.
⇒ FSSAI act repealed previous central Acts like Prevention of Food Adulteration Act 1954, & other
laws / orders of Fruits, Meat Edible Oils, Edible Flour, Milk Products etc.
⇒ FSSAI labelling rules 2011: Every package containing vegetarian food item must contain a square
symbol with a Green Colour filled circle inside. If egg / non-vegetarian item then Brown Color.
⇒ FSSAI packaging rules banned the use of recycled plastic and newspaper for packing / wrapping
food articles due to chemicals/cancer fear. (खाद्य पदाथ� को अखबार म� लपेट नहीं सकते �ोंिक क� सर का जो�खम)
⇒ FSSAI rules ban the use of calcium carbide and acetylene gas for artificial ripening of fruits,
however ethylene gas is permitted upto certain limits. (फल पकाने वाले रसायनों के उपयोग पर प्र�तबं ध)
⇒ Food product should not contain more than 2% Trans Fatty Acids (TFAs) from 1/1/2022
⇒ 2021: FSSAI has banned blending of mustard oil with any kind of edible oil from 2021. Because
such mixing/blending associated with dropsy disease/allergy. (सरसों का तेल िकसी अ� खाद्य तेल के साथ
�म�श्रत करने पर प्र�तबं ध �ोंिक ऐसा �मश्रण कु छ बीमा�रयाँ पेदा करता है)
⇒ Monosodium Glutamate (MSG) is a flavor enhancer in Chinese food, but leads to obesity and
liver inflation. Earlier FSSAI had banned sale of Nestle's Maggi noodles because it contained lead
and MSG, although later HC lifted the ban.
⇒ 2019: Ministry of Health and Family Welfare will provide training & certificates to youth → they
become ‘Food Safety Mitra’ → they help food processing companies / restaurants etc to comply
with FSSAI norms & earn consultancy fees from them.
⇒ 2022: working on a packaged/junk-food rating similar to energy rating on Fridge. But it is a draft
stage.
Related-Misc.? AGMARK is given by Agro Ministry→ Directorate of Marketing & Inspection →
under the Agricultural Produce(Grading and Marking ) Act, 1986. It covers Agriculture
commodities, wool, cotton, meat etc.
🔠🔠❓MCQ. Find correct statement(s): (UPSC-Prelims-2018)

1) The Food Safety and Standards Act, 2006 replaced the Prevention of Food Adulteration Act, 1954.
2) The Food Safety and Standards Authority of India (FSSAI) is under the charge of Director General
of Health Services in the Union Ministry of Health and Family Welfare.
3) Both 1 and 2 4) Neither 1 nor 2
Now just because above 1 MCQ asked, some Current Affairs PDF walla seems to be giving a
disproportionate amount of coverage to this body for example: (ज�रत से �ादा कवरे ज िदया जा रहा है)
BHOG Voluntary certification for the Prasad / Food at religious places.
State Food Safety Index 2021: FSSAI released ranking
- Gujarat was ranked #1 in the country in terms of food safety. Separate
ranking for UT/Small States but poor cost:benefit in memorising.
- According to the World Health Organisation (WHO), 10% of the
population across the world falls ill due to contaminated food.
World Food Safety Day June 7th.
FoSCoS online platform of FSSAI
✋But, such misc PIB/Yearbook type GK / ranking= poor cost benefit don’t waste time.
45.3.4 🕵🕵 Commerce Ministry → Not-Statutory → QCI (1997)

- Quality Council of India is a non-profit society registered under Societies Registration Act with
the funding from Commerce ministry, Confederation of Indian Industry (CII), Federation of
Indian Chambers of Commerce and Industry (FICCI) & Associated Chambers of Commerce and
Industry (ASSOCHAM). FICCI & ASSOCHAM are non-governmental trade
association/pressure groups of businessmen for highlighting their demand to Govt.
- QCI helps the industries to adopt quality standards like ISI, ISO, OHSAS, KAIZEN etc. िहदं ी
श�ावली यहां ज�रत नहीं �ोंिक मु� परी�ा म� इसका काम नहीं.
- Quality Council of India (QCI) provides certification of Zero Defect and Zero Effect (ZED)
manufacturing to MSME industries.
45.3.5 🕵🕵 Commerce Ministry → Not-Statutory → NPC (1958)
⇒ National Productivity Council of India (NPC)- autonomous body setup under DPIIT, provides
research and consultancy service for Industrial Engineering, Agri-Business, Quality
Management, Human Resources Management etc to companies.
⇒ Commerce minister is the president of this body.
45.3.6 🕵🕵🥇🥇One Nation, One Standard Scheme (2019)

- Boss? Bureau of Indian Standards (BIS, Statutory body under Ministry of Consumer Affairs).
- A Standards setting organizations such as FSSAI, Bureau of Energy Efficiency etc. will apply to
BIS & promise to abide by WTO’s Technical Barriers to Trade (TBT) Agreement’s “Code of
Good Practice” (गुणव�ा मानक बनाने वाली िविवध संस्थाओ ं ने बीआईएस में अज� डाल के कसम खानी होगी िक वह िव� व्यापार
संगठन के TBT समझौते के अनुसार काम करें ग)े (TBT: Ref Pillar#3B)
- Then BIS will label such organization as SDO (Standard Developing Organization) under “One
Nation, One Standard” scheme. (तो िफर बीआईएस संस्था उस संस्था को “एक देश एक मानक” योजना के अंतगर्त “मानक
िवकास संगठन” क� उपािध देगी)
- 2021: Railway Ministry’s RDSO (Research Design & Standards Organization, HQ: Lucknow)
became the first organization to get SDO label from BIS
🤩🤩Benefit? Transparency, Openness, Impartiality, Effectiveness. HOW exactly? Ans. NOT IMP.
45.3.7 💻💻🕸🕸🔬🔬PARAKH Laboratory Network (2021)

Boss? Commerce ministry → DPIIT.
− �
− “PARAKH” online portal contains the directory & GPS-addresses of government approved
public sector and private sector laboratories. → entrepreneur can approach those labs for
getting the necessary testing-certificates. e.g. ISI mark, Gold-hallmarking, FSSAI food-safety tests
etc. (परख- एक ऑनलाइन िडरे�री है जहाँ सरकारी मा�ता प्रा� प्रयोगशालाओं क� सूची/एड�ेस िदए है। तािक उद्योगप�त इन
प्रयोगशालाओं म� अपने उ�ादों को भेजके ज़�री प्रमाणपत्र/स�टिफ़के ट/मानक हा�सल कर सके ।)
45.4 🕵🕵🛒🛒 CONSUMER PROTECTION ACT, 2019 (उपभो�ा सं र�ण)
Nodal? Ministry of Consumer Affairs, Food and Public Distribution (उपभो�ा मामलों का मं त्रालय)
It replaces replace the original act of 1986.
45.4.1 🕵🕵🛒🛒 Consumer Protection Act 2019 → bodies → Consumer court
Consumer Disputes Redressal Commissions (CDRCs: उपभो�ा �ववाद �नवारण आयोग).
CDRC at District �जला �र पर State रा� �र पर National रा��ीय �र पर**
hears complaints upto ₹ Upto ₹1 cr >1 cr upto 10 cr >10 cr (More than ten crore)
(Original Limit)
CDRC at District �जला �र पर State रा� �र पर National रा��ीय �र पर**
REFORM in 2021# Upto ₹50 lakh ₹50l to 2 cr >2 cr
• # Previously the limits were bigger and as a result district and state commissions were burdened
with too many cases, resulting into case pendency. So, Govt has changed the hearing limits. ग्राहक
सुर�ा क़ानून म� �जला रा� और रा��ीय ग्राहक अदालत इतने लाख �पये तक के मामलों क� सुनवाई कर सकते ह� उन सीमाओं म� सुधार.
• **2020: National Consumer Dispute Redressal Commission (NCDRC) has launched E-Daakhil
Portal to help the consumers file online complaints under the Consumer Protection Act.
Appeal structure: District → State → National → Supreme Court
45.4.2 🕵🕵🛒🛒 Consumer Protection Act 2019 → bodies → others

1. Central Consumer Protection Authority (क� द्रीय उपभो�ा सं र�ण प्रा�धकरण): It'll be a body on
consumer issues, headed by the Union Minister of Consumer Affairs.
a. Its investigation wing to be headed by a Director-General (DG).
b. It can intervene to protect consumers from unfair trade practices. It can also launch
class action against a company, order recall or refund of products. The agency is
designed on the lines of highly effective US Federal Trade Commission.
2. Consumer Protection Councils (उपभो�ा सं र�ण प�रषद) These advisory bodies will work for
awareness generation.
45.4.3 🕵🕵🛒🛒 Consumer Protection Act 2019 → Features (प्रमुख/मु� प्रावधान)

1. Product Liability (दोषपूणर् सामान / सेवा क� �ज�ेदारी): If a consumer suffers an injury, property damage
or death due to defective goods / services → company will be liable to pay for damages.
2. Unfair Contract (अनु�चत अनुबंध) e.g. asking excessive security deposits for broadband / DTH
connection, company unilaterally terminating the service without cause → Company liable to
compensate the consumer.
3. Complaints can be filed electronically; cases can be heard through video conferencing.
Punishment - Fines upto ₹ 50 lakhs + upto 5 years jail. (कारावास और जुमार्ना)
दंड - ₹50k fine on Consumer if filing frivolous complaints.
Celebrity If an endorser is giving a misleading advertisement, then he can be banned from
Ads? advertising any product upto 3 years & fine. (भ्र�मत करने वाले �व�ापनो पे समथर्नकार को दंड)
⇒ Provisions for mediation / Alternative Dispute Resolution (ADR) mechanism. However, No
Appeal Against Settlement Through Mediation. (कोटर् के बाहर �ववाद �नपटाना /सुलह करना)
⇒ Stricter rules for eCommerce website (Ref Pill#3A)
⇒ stricter penalties for adulteration/spurious goods. (�मलावट खोरी /नकली माल बेचना)
Conclusion? Thus, new act addresses the lacunas of the original act of '86- by providing for new
methods of filing complaints, new bodies for seeking justice and stricter penalties on violators. This
will help in long way to protect the rights of consumers in India. यह नया कानून पुराने कानून क� खा�मयों को दू र
करता है. �शकायत �नवारण के �लए नई प्रिक्रया, नए सं गठन, और �ादा स� सजा के प्रावधान- - ग्राहक सुर�ा म� ब�त मदद करेगा.
45.5 ✍🎺🎺 MAINS QUESTIONS IN PREVIOUS GSM2 & GSM3
“The emergence of 4th Industrial Revolution (Digital Revolution) has initiated e- 2020
Governance as an integral part of government”. Discuss. (" चौथी औद्यो�गक क्रां�त (िड�जटल -GSM2
क्रां�त) के प्रादुभार्व ने ई-गवनर्� को सरकार का अ�वभा� अंग बनाने म� पहल क� है". )
Account for the failure of manufacturing sector in achieving the goal of labour-intensive 2017
exports rather than capital-intensive exports. Suggest measures for more labour-
intensive rather than capital-intensive exports. पूंजी-सा� �नयार्त के क� अपे�ा अ�धक श्रम सा�
�नयार्त को बढ़ाने हेतु उपाय सुझाएँ ? Ans. Sp. Class
"Success of 'Make in India' programme depends on the success of 'Skill India' 2015
programme and radical labour reforms." Discuss with logical arguments. कौशल भारत क�
सफलता और श्रम कानून म� सुधार के �बना 'मेक इन इं िडया' सफल नहीं हो सकता - ता�कक �प से समझाइए
While we found India's demographic dividend, we ignore the dropping rates of 2014
employability. What are we missing while doing so? Where will the jobs that India
desperately needs come from? Explain. भारत के पास जनसं �ा क� लाभांश तो है िकंतु रोजगार के दर कम
हो रही है. हमने नई नौक�रयां कहां पर खड़ी करनी होगी?
Normally countries shift from agriculture to industry and then later to services, but 2014
India shifted directly from agriculture to services. What are the reasons for the huge
growth of services vis-a-vis industry in the country? Can India become a developed
country without a strong industrial base? �ा भारत एक मजबूत औद्यो�गक �ेत्र के �बना एक �वक�सत
देश बन सकता है?
Examine the impact of liberalization on companies owned by Indian. Are the competing 2013
with the MNCs satisfactorily? �ा उदारीकरण के बाद भारतीय कं प�नयां ब�रा��ीय �नगमों से �धार् कर पा रहे
ह�?
Has the Indian governmental system responded adequately to the demands of 2016
Liberalization, Privatization and Globalization started in 1991? Suggest reforms? एलपीजी
सुधार के अनुसंधान म� सरकार ने और �ा-�ा करना चािहए?
45.5.1 ✍🎺🎺 Mock Questions for Mains
1) Discuss the significance of minimum wages in reaping India’s demographic dividend. जनसां��क�
लाभांश के �लए �ूनतम वेतन का मह�
2) Examine critically the problems in the present system of minimum wages in India & suggest
remedies. का वतर्मान �ूनतम वेतन �व�ा म� �ा सम�ाएं ह�?
3) Despite India’s outstanding growth in the last two decades, low pay and wage inequality remain
serious obstacles towards achieving inclusive growth. Suggest remedies to address this problem /
OR How does the Code on Wages 2019 address this? वेतन सं िहता भारत म� समावेशी �वकास म� कै से मदद कर
सकती ह�?
4) “Job creation in India suffers from policies that discourage small firms from growing large.”
Suggest remedial steps through which MSMEs’ efficacy in job creation and GDP growth rate can
be augmented further. भारत म� छोटे उद्योग को बड़ा होने म� हतो�ािहत करने वाली नी�तयों के चलते रोजगार सृजन नहीं हो पा
रहा. इसके �लए सुझाव दी�जए
5) “Pro-crony policies result in destruction of wealth whereas pro-business policies help in creation
of wealth.” Comment प�पाती पूंजीवाद वाली नी�तयों से रा��ीय धन क� तबाही जबिक �ापार वादी नी�तयों से धन �नमार्ण म�
मदद हो सकती है िट�णी क��जए
6) Examine critically the factors responsible for the uneven growth of Startup firms across various
regions of India. भारत के �व�भ� प्रादे�शक �ेत्रों म� �ाटर्अप क� असमान वृ�द्ध के कारकों क� समी�ा क��जए
7) Enumerate the steps taken under Atma-Nirbhar to revive the MSME sector in India, in the
aftermath of corona crisis. एमएसएमई उद्योगों को पुनज��वत करने के �लए आ� �नभर्र भारत अ�भयान म� उठाए गए क़दमों
क� सूची दी�जए
8) Examine the opportunities and challenges in India becoming pharmacy of the world. (भारत तो �व�
का औषधालय बनाने के �लए उपल� अवसरों और चुनौ�तयों क� जांच कर� )
9) While India has become a “knowledge based economy” it is yet to become a thriving “hub of
research and development”. Examine Critically. (हालाँिक भारत एक "�ान आधा�रत अथर्�व�ा" बन गया है, यह
अभी तक "अनुसंधान और �वकास का एक स�� क� द्र" बनना बाक� है। ग�ीर �प से समी�ा क��जए।
10) Indian administration suffers from over regulation. Explain how a Transparency of Rules Act
(TORA) can help improving ease of doing business in India? (भारतीय प्रशासन को अ�त-�नयमन से ग्र� है ।
समझाइए िक कै से �नयमों क� पारद�शता अ�ध�नयम (TORA) भारत म� �ापार करने म� आसानी म� सुधार म� मदद कर सकता है?)
45.5.2 ✍🎺🎺 Mock Questions for Mains → Post Independence: PM Rao (2020)
11) (GS1) Evaluate PM Rao as one of the makers/architects of modern India. (आधु�नक भारत के
�नमार्ता/रच�यता के �प म� प्रधानमं त्री नर�स�ा राव का मू�ांकन)
12) (GS3) “Legacy Rao’s reforms is an Indian economy where GROWTH has priority over
Redistribution.” Examine critically. नर�स�ा राव क� आ�थक सुधारों क� �वरासत - ऐसी अथर्�व�ा है जहां पर (अमीरों
क�) आ�थक वृ�द्ध को (गरीबों म� उसके ) पुन�वतरण से �ादा वरीयता �मली है" समी�ा क��जए
13) (GS4) “Though written in ancient times, Kautilya’s treaties are effective for modern day crisis
management.” Elucidate with an example of a modern leader/reformer. (हालांिक कौिट� के �सद्धांत
प्राचीन समय म� �लखे गए थे िकंतु आधु�नक समय म� भी सं कट प्रबं धन म� भी उतने ही प्रभावी ह�. िकसी आधु�नक नेता/सुधारक के
उदाहरण के साथ �व�ृत �प से समझाइए).
✅Model Ans to PM RAO:= https://youtube.com/c/TheMrunalPatel → in search box type "RAO".
📑📑Next Handout: 4C: NITI-PC, FYP, Macro-indicators: unemployment, GDP,

inflation, WPI, CPI, IIP etc.
�🧔🧔 PILLAR#4C: ECONOMIC PLANNING, NITI-PC, UNEMPLOYMENT
Table of Contents
46 �🧔🧔 Economic Planning & Economic Systems ............................................................................771
46.1.1 Closed vs Open Economy ....................................................................................................772
46.1.2 🕹🕹 Capitalism- Great Reset Initiative by W.E.F (�व� आ�थक मं च क� ग्रेट रीसेट पहल)..........772
46.2 �🧔🧔 Economic Planning: आ�थक योजना................................................................................773
46.2.1 📚📚 Types of Economic Planning (आ�थक योजना के प्रकार) ...............................................773
46.2.2 � 📚📚 Economy Planning → Before Independence: ...............................................774
46.3 � 📚📚 Economy Planning → After Independence ..........................................................775
46.4 �📚📚 Planning Commission → Five Year plans ..............................................................776
46.5 👳👳👎👎Planning Commission: Limitations / Shortcomings ...............................................778
46.6 �🧔🧔 Planning Commission vs Niti Aayog: Structure .....................................................780
46.7 �🧔🧔 Planning Commission vs Niti Aayog: Functions ....................................................781
46.8 🧔🧔 NITI → Notable initiatives / how different from PC? .................................................782
46.9 🕵🕵 🧔🧔 Economy Planning → PM-EAC?.............................................................................784
46.9.1 🤳🤳 Economy Planning → PRAGATI? ........................................................................784
46.10 ➗📊📊 🕵🕵 📈📈 [Yearbook] MOSPI, NSSO, CSO, NSO ......................................................786
46.11 ➗📊📊 🕵🕵📈📈 National Statistical Commission (रा��ीय सां��क� आयोग) ...............................787
46.11.1 ➗📊📊📊📊 Mahalanobis National Award for Statistics ..............................................788
46.11.2 ➗📊📊⚖ Collection of Statistics Act, 2008 ................................................................788
47 � Pillar#4C: Indicators → Unemployment................................................................................789
47.1.1 🕵🕵🕵🕵🕵🕵International Labour Organization (ILO: अंतररा�ी� य श्रम सं गठन) .......................789
47.1.2 👷👷👷👷Occupational of Indian Workers- as per ES22 (number in Crores)..................789
47.2 � Unemployment → Involuntary → Types .....................................................................789
47.2.1 � Unemployment Major Reasons: (बेरोजगारी के प्रमुख कारण) ............................................790
47.3 �📊📊 Unemployment → NSO Survey Types .....................................................................791
47.4 �📊📊 UNEMPLYOMENT: Periodic Labour Force Survey (PLFS) .....................................792
47.4.1 📊📊 � Indicators → unemployment rate (UR: बेरोज़गारी दर) .........................................792
47.4.2 👷👷/( 👷👷 �) Indicators → Worker Population Ratio (WPR) ....................................793
47.5 👷👷/( 👼👼👼👼👴👴) Indicators → Labour Force Participation Rate (LFPR) ......................793
47.5.1 �⏬⏬Why FEMALE LFPR Declined between 2004 to 2018? ...............................794
47.6 👷👷� Workers Types by NSO ................................................................................................795
47.6.1 👷👷� Worker Types → Census-2011 classification of workers ..................................796
47.6.2 👷👷🧱🧱🧱🧱 Worker Types → Unorganized sector ...........................................................796
47.6.3 👷👷⏳ Worker Types → Informal worker (अयथाव�ध/अनौपचा�रक मजदू र) ...........................798
(Batch: PCB7) Mrunal’s Economy Pillar#4C: NITI, PC, FYP, Indicators- Unemployment→ Page 770
47.6.4 👷👷 🖱🖱 Worker Types → Unorganized workers → E-Shram Portal for them (2021-
Aug) 799
47.6.5 👷👷👷👷👷👷 Worker Types → Gig workers & Two sided market - ES21 ........................799
47.6.6 👷👷👷👷👷👷 NITI Report on Gig Workers ............................................................................800
47.6.7 👷👷👷👷👷👷 How to create more jobs? ..................................................................................801
47.7 ✍🎺🎺 Mock Questions for Mains → NITI PC Unemployment.........................................801
46 �🧔🧔 ECONOMIC PLANNING & ECONOMIC SYSTEMS
Economic System Capitalism Mixed Economies Socialism

आ�थक प्रणाली → पूंजीवाद �म�श्रत अथर्�व�ाएँ समाजवाद
Ownership of the Pvt. Sector Few industries reserved Public Sector / Govt /
industries? �नजी �ेत्र for public sector, Collective ownership.
उद्योगों का मा�लक कौन remaining by Pvt. sector. No ‘pvt’ property.
Economic System Capitalism Mixed Economies Socialism
आ�थक प्रणाली → पूंजीवाद �म�श्रत अथर्�व�ाएँ समाजवाद
What goods and ‘Free Market - Essential Govt. will decide
services should we Economy’: Let the goods/services by what must be
produce? More market forces of Public Sector produced & in how
books or more supply & demand - Others by Pvt sector. much quantity.
bikes? decide it.
During production Whichever mode of In public sector Preference for labour
shd we use more production is more industries- govt will intensive modes of
labour or more cheaper. decide. In pvt sector- production.
capital (machines)? entrepreneur will decide.
Only the consumers - For essential goods Govt to decide who
How to who can afford them, and services → needs how much, and
sell/distribute those can purchase them. If a government may fix will distribute
goods and services sick man cannot afford the prices e.g. NPPA- accordingly, using
among people? medicine, it is not Stent. subsidy / rationing
�वतरण प्रणाली govt’s problem. - For others → market shops.
forces will decide.
⇒ Presently, most nations are ‘Mixed Economic System’ including USA and India. While China
officially claims to be ‘Socialist’ but, in practice, they too have become a Mixed Economy. (वतर्मान
समय म� �ादातर देश को ‘�मश्र’ अथर्तंत्र ही है- चीन ने भी ख़ुद के समाजवादी होने का िदखावा करता है, िकंतु ‘�मश्र’ है।)
- The socialist economic system stopped in most nations after the collapse of USSR, except a
handful of outliers like North Korea, Cuba & Venezuela.
- Communism is a branch of socialism, (usually) run by a totalitarian government made up of one
and only one party. (सा�वाद- समाजवाद क� एक उपशाखा है जहाँ सामा� �प से एक तानाशाह सरकार होती है.)
46.1.1 🚪🚪Closed vs Open Economy

Closed economy (बं द अथर्�व�ा) Open Economy (खुली अथर्�व�ा)
A country that does not have any import-export an economy that is not a closed economy.
/ economic relations with rest of the world
46.1.2 🕹🕹 Capitalism- Great Reset Initiative by W.E.F (�व� आ�थक मं च क� ग्रेट रीसेट पहल)
⇒ by World Economic Forum founder Klaus Schwab
⇒ Capitalism & its business models need to be "reset", to build a new social contract that honours
the dignity and equality of every human- in health, finance, energy and education. (पूंजीवाद और
उसके �बजनेस मॉडल को रीसेट/पुनः शु�आत करना- इस प्रकार के सामा�जक अनुबंध बने, जहां हर इं सान क� ग�रमा और समानता का
�ाल रखा जाए-�ा�,�व�, ऊजार्, और �श�ा म�। �ोंिक वतर्मान पूंजीवाद भी गरीबों का शोषण ब�त हो रहा है)
⇒ Corona’s impact on poor people → has revived this debate again. (कोरोना म� इसक� ज़�रत महसूस �ई)
🔠🔠❓MCQ. Find correct statements about Vietnam: (Prelims-2022)
1) Vietnam has been one of the fastest growing economies in the world in the recent years. (हाल के
वष� म� तेज़ी से वृ�द्ध करने वाले अथर्तंत्र म� से एक है �वयतनाम.)
2) Vietnam is led by a multi-party political system. (ब�प�ीय राजनी�तक �व�ा �वयतनाम म� है)
3) Vietnam’s economic growth is linked to its integration with global supply chains and focus on
exports. (वै��क आपू�त �ं खला म� एक�कृ त होने के चलते और �नयार्त पर �ान देने के चलते �वयतनाम क� आ�थक वृ�द्ध �ई है)
4) For a long time Vietnam’s low labour costs and stable exchange rates have attracted global
manufacturers. (स�े मज़दू र और ��र �व�नमय दर के चलते �वदेशी उ�ादक �वयतनाम म� आक�षत होते ह�)
5) Vietnam has the most productive e-service sector in the Indo-Pacific region. (सबसे �ादा उ�ादक ई
सेवा �ेत्र पूरे िह� प्रशांत इलाक़े म�)
Codes: (a) 2 and 4 (b) 3 and 5 (c) 1, 3 and 4 (d) 1 and 2
46.2 �🧔🧔 ECONOMIC PLANNING: आ�थक योजना

Definition? It is the process through which Govt. prepares a list of socio-economic problems e.g.
mass poverty, inequality, low productivity in agriculture, lack of industrial and infrastructural
development etc.; and then Govt. sets goals / targets / plans to fix these problems. यह प्रिक्रया है �जसके
मा�म से सरकार सामा�जक-आ�थक सम�ाओं क� सूची तैयार करता है उदा। बड़े पैमाने पर गरीबी, असमानता, कृ �ष म� कम उ�ादकता,
औद्यो�गक और बु�नयादी ढांचागत �वकास क� कमी आिद; और उसे ठीक करने के �लए ल� / ल� / योजना �नधार्�रत करती है
46.2.1 📚📚 Types of Economic Planning (आ�थक योजना के प्रकार)

⇒ Totalitarian planning (in USSR, N.Korea) vs Democratic planning (India). सवर्स�ा�क vs लोकतां�त्रक
⇒ Centralized (in USSR, N.Korea) Vs Decentralized (India- after 73rd and 74th Amendments)
के �ीकृ त vs �वक� द्रीकृ त
Planning by Inducement (प्रलोभन द्वारा) by Direction (�दशा�नद�शन)
People are induced to act in a certain way through monetary Central authority gives
policy and fiscal policy predetermined targets
Indicative Planning (सूचक) Imperative (आदेशा�क)
⇒ Started in France by Monnet plan ⇒ State & Public sector
⇒ Found in mixed economies companies have complete
⇒ Government prepares an outline of plan after consulting control over resources.
with public and private sector. They are given funds, ⇒ No private sector involved.
incentives, subsidies, tax breaks to maximize production, ⇒ No consumer sovereignty.
income & employment ⇒ Imperative planning
⇒ Government does not force the private sector but just procedure is strict and
indicates the areas of cooperation and targets to be fulfilled. rigid. E.g. USSR, N Korea
⇒ Indicative planning procedure is soft and flexible. E.g.
India, France
Financial planning (�व�ीय आयोजन बनाम भौ�तक आयोजन) Physical planning
technique of planning in which resources are allocated in terms allocation of resources in terms
of money (योजना बनाने क� ऐसी तकनीक जहाँ सं साधनों का आवं टन मुद्रा के �प म�) of men, materials and
machinery
Table 1: Types of Planning based on timeframe

Planning → Operational Tactical Strategic/Perspective
Timeframe → Short upto 1 year Medium: 3 to 7 years Long: 10 years or more
46.2.2 � 📚📚 Economy Planning → Before Independence:

1909 Gandhi’s book Hind-Swaraj (1909) he opposed industries and machines. Advocated
people should minimize their wants, care for mother nature, become self-reliant, small
scale production using khadi, village and cottage industries. (गांधीजी ने उद्योग और मशीनीकरण का
�वरोध िकया. ज़�रत� कम करो, �-�नभर्र बनो, खादी ग्रामीण और कु टीर उद्योग को प्रो�ाहन दो)
1934 M. Visvesvaraya’s book “The planned economy of India”, containing a 10 years plan. He
was an Engineer, Ex-Diwan of Mysore and Bharat Ratna recipient.
1938 Nehru’s Congress plan advocated setting up “National Planning Commission”.
But not implemented due to World War 2.
1944 15 years’ Bombay Plan for investment, by 8 noted industrialists JRD Tata, GD Birla et al.
1944 Sriman Narayan Agrawal’s Gandhian plan- focusing agricultural and rural economy
1945 MN Roy’s People’s Plan– with socialist leanings. He advocated distribution of resources
by the state only, and mechanization of agricultural production.
1950 Jayprakash Narayan’s Sarvodaya Plan based on Vinoba’s philosophy focused on
agriculture, small and cottage industries.
🔠🔠❓ MCQ. Find wrong statement about Gandhian approach to development? (Geologist-2020)
a) Voluntary limitation of wants b) Development of self-sufficient village community
c) Achieve balance between man and nature d) Industrialization & private participation
46.3 � 📚📚 ECONOMY PLANNING → AFTER INDEPENDENCE
1950, Inspired from the USSR / Soviet Model, PM Nehru established a Planning Commission
Mar. (सो�वयत सं घ से प्रभा�वत होकर प्रधानमं त्री नेह� ने योजना आयोग क� �ापना क� थी)
1951 From 1st April, the first FYP starts. (पहली पं चवष�य योजना शु� होती है)
1952 National Development Council (NDC: रा��ीय �वकास प�रषद) of PM, CM etc. to approve the
Five-Year Plans: पं चवष�य योजनाएँ drafted by Planning Commission.
2014 Modi shuts down Planning Commission. (प्रधानमं त्री मोदी ने योजना आयोग को बं द करवा िदया)
2015, Modi notified the formation of Niti Aayog: National Institution for Transforming India,
Jan to replace the Planning Commission. (और उसक� जगह नी�त आयोग क� �ापना क�)
PC, NDC and NITI were / are neither Constitutional nor Statutory bodies. (सं वैधा�नक/वैधा�नक सं �ा नहीं)
46.4 �📚📚 PLANNING COMMISSION → FIVE YEAR PLANS
✋Following table is more relevant for CDS, SSC & StatePCS than for UPSC-CSE.
Plan Period Theme/Model/Target
1st 51-56 ➢ Harrod Domar Model
➢ Main focus: Agriculture, irrigation and power.
➢ Successful: Got more GDP growth than its original target.
2nd 56-61 ➢ P.C. Mahalanobis model. He was Chief Statistician of India.
➢ Socialist pattern/model of society,
➢ Rapid industrialization, heavy industries.
➢ Successful: Achieved the GDP growth target.
3rd 61-66 ➢ Sukhmoy Chakraborty and John Sandy Model
➢ Also called “Gadgil Yojana”: to make the economy independent
➢ #EPICFAIL due to droughts and wars with Pak-China
Holidays 66-69  Plan Holiday declared thanks to #EPICFAIL of 3rd FYP.
 During this period, annual plans were made.
4th 69-74 ➢ Ashok Rudra and Alon Manney Model.
➢ growth with stability and self-reliance.
➢ Indira gave ‘Garibi Hatao’ slogan in 1971 election campaign
➢ #EPICFAIL due to Bangladeshi refugee problem and drought.
5th 74-79 ➢ C.Subramaniam and later redrafting by D.P.Dhar
➢ Focus: agriculture > Industry & Mines
Plan Period Theme/Model/Target
➢ Originally it was a 10 year long term perspective plan with focus on
poverty removal and self-reliance
➢ While it achieved the targets but terminated in 1978 as Morarji Desai
became PM.
Rolling 78-80 Morarji Desai’s Janta government: “we’ll measure progress every year and
Plan make new plans accordingly for next year.”
6th 80-85 ➢ Poverty removal, IRDP, NREM, TRYSEM schemes etc.
7th 85-90 ➢ Pranab Mukherjee Model Focus on employment.
➢ For the first time, due to the pressure from private sector the private
sector got the priority over public sector
2 annual 90-92 Political instability at Centre. So, only 2 annual plans:
plans (i) 1990-91 & (ii) 1991-92.
8th 92-97 ➢ John W.Miller Model.
➢ PM PV Narasimha Rao- LPG reforms, New Economic Policy
➢ Top priority to human resources i.e. employment, education and
public health.
➢ Successful: Got more GDP growth than its original target.
➢ Fiscal deficit also ⏬but that was done by manipulation, using extra
budgetary resources (EBR) which we saw in Pillar#2
9th 97-02 ➢ Growth with social justice and equity. Mostly “indicative” planning.
➢ identified 7 Basic Minimum Services (BMS) like health, education,
nutrition, roads & gave more ₹₹ for that.
➢ #EPICFAIL due to global slowdown after Asian Financial Crisis
(which we learned in Pillar#3 currency convertibility).
10th 02-07 Target 8% GDP growth rate, double per capita income in 10 years, reduce
poverty to 15% etc. But failed to achieve targets.
11th 07-12 ➢ Theme: “Towards Fast and more Inclusive Growth”
➢ C.Rangarajan framed it with targets: GDP 9% growth rate, 70 million
new jobs, lower IMR, CMR, TFR etc.
➢ But due to US-subprime crisis, failed to achieve targets.
12th 12-17 ➢ Theme: Faster, More Inclusive & Sustainable Growth
Ended on ➢ Target growth: 9% GDP, 4% Agriculture, 10% Mfg. but due to
31/3/201 continued global economic slowdown, most targets not achieved.
7
➢ 10% reduction in poverty, create 50 million new jobs.
➢ Get IMR:26, MMR:1000,Child Sex ratio: 950, TFR: 2.1
➢ Increase mean school years, forest cover, infrastructure investment,
rural tele-density.
🔠🔠❓ MCQ. Which of the following Five Year Plans emphasized the need for establishing a
“Socialist Pattern of Society” in India? (UPSC-Geologist-2020)
A) 2nd Five year Plan B) 3rd Five Year Plan C) 4th Five Year Plan D) 5th Five Year Plan
🔠🔠❓MCQ. The main objective of the 12th Five-Year Plan is (Asked in UPSC-Pre-2014)
(a) inclusive growth and poverty reduction (b) inclusive growth and sustainable growth
(c) sustainable and inclusive growth to reduce unemployment
(d) faster, sustainable and more inclusive growth
🔠🔠❓MCQ. Arrange the following events in sequential order as they happened in India:
1. Mahalanobis Model 2. Plan Holiday 3. Rolling Plan. (Asked in CDS-II-2017)
Answer Codes: (a) 1, 2, 3 (b) 3, 2, 1 (c) 2, 3, 1 (d) 1, 3, 2
🔠🔠❓MCQ. Find correct statement(s) about India’s Five Year Plans (Pre-2019):
1. From the 2nd Five-Year Plan, there was a determined thrust towards substitution of basic and
capital good industries.
2. The 4th Five-Year Plan adopted the objective of correcting the earlier trend of increased
concentration of wealth and economic power.
3. In the 5th FYP, for the first time, the financial sector was included as an integral part of the Plan.
Codes: (a) 1 and 2 only (b) 2 only (c) 3 only (d) 1,2 and 3
46.5 👳👳👎👎PLANNING COMMISSION: LIMITATIONS / SHORTCOMINGS

1) Achieved ~9% GDP growth-rate during 2005-07, thanks to American boom prior to Subprime
crisis. But almost all nations including Pakistan had experienced high growth in that era. So 9%
GDP did not come from PC’s magic wand. (अमे�रक� मं दी से पहले सभी देशों म� आ�थक वृ�द्ध �ई थी. ये कोई योजना
आयोग क� जादू क� छड़ी नहीं थी. पािक�ान म� भी आ�थक वृ�द्ध �ई थी उस ज़माने)
2) Post-Subprime crisis: GDP-fell while food-inflation &NPA rose during 2008-13. PC couldn’t fix
it. सब-प्राइम सं कट प�ात �वकास दर बढ़ा नहीं पाया, महंगाई कम नहीं कर पाया.
3) PC was a toothless body, couldn’t punish any government organizations if targets failed.
4) Failed to implement land reforms, labour laws. भू�म-सुधार और श्रम-कानून सुधार मे �वफल
5) PC designed Government schemes with ‘One Size Fits’ all approach and a few extra crores to
NE/J&K/Hill-states and LWE-affected states. But for long, PC did not use pilot projects / sample
testing / interaction with states. So, Indira Awas Yojana (IAY), ICDS-child development scheme
etc. programs failed to show tangible result despite pumping crores of rupees over the decades.
दशको तक करोड़ो �पए देने के बाद भी क�ीर, न�ल प्रभा�वत रा�ो और पूव��र रा�ो मे कोई ठोस सुधार नही देखने �मलते
6) PC tried to bypass State Govts by designing schemes that directly funded ₹ ₹ to NGO & private
agencies. So, non-Congress states became unenthusiastic about implementing Central Schemes.
(रा� सरकारों को नज़रअंदाज़ कर योजना आयोग सीधा ही �नजी �ेत्र के समाजसेवी सं गठनों को पैसा देता इस�लए रा� सरकार�
क� द्रीय योजना अपने इलाक़े म� चलाने के बारे म� �ादा उ�ािहत नहीं रहती थी)
7) Only in 2013, PC attempted to undo its mistakes by reducing number of Centrally sponsored
schemes (CSS), Performance based funding to States etc. But it was too little, too late.
8) PC’s shortcomings resulted in creation of new bodies like PM’s Project Monitoring Group, PM’s
Economic Advisory Council (PM-EAC), Group of Ministers (GoM) committees etc. → more
lack of coordination. So, Modi felt PC is a hopeless mess beyond repairs & replaced it with NITI
Ayog. योजना आयोग क� नाका�मयो ने अ� सं �ाओ को ज� िदया अंतत: आपस मे सं कलन मु��ल होने लगा।
46.6 �🧔🧔 PLANNING COMMISSION VS NITI AAYOG: STRUCTURE
Position �Planning Commission 🧔🧔 NITI Aayog

Born: 15/3/1950 National Institution for Transforming India was
Born
Dissolved: 13/8/2014 born on 1/1/2015
Chairman Prime Minister same
He enjoys ‘Cabinet Minister’ rank
Vice Last Dy.Chairman was
1. Dr. Arvind Panagariya (2015-17, resigned)
Chairman Montek Singh Ahluwalia
2. Dr. Rajiv Kumar (2017-22, resigned)
उपा�� (Cabinet minister Rank).
3. Dr. Suman K Bery (2022- Current)
A Secretary level bureaucrat with fixed tenure.
CEO Member-Secretary (IAS)
Presently, Parameswaran Iyer (IAS)
Ex-officio
1. Finance Minister PM will nominate Max 4 Union ministers. Presently,
members
2. Planning minister Minister for- Home, Defense, Finance, Agriculture
(पदेन सद�)
Full time
4-7 full time members, 1. Dr. Ramesh Chand (Economist)
members
who enjoyed “Minister of
(पूणर्का�लक 2. Dr. V.K. Saraswat (Technocrat, missile scientist
State” rank.
सद�) and Ex-DRDO chief.)
(क� द्र के रा� क�ा के मं त्री का पद)
Position �Planning Commission 🧔🧔 NITI Aayog
3. Dr. Vinod Kumar Paul (Pediatrician, Public
Health Expert)
They enjoy Minister of State rank in warrant of
precedence, but salary = Secretary rank (IAS)
- Union ministers for Transport, Social Justice,
Special MSME, Textiles, Women-Child, HRD,
Invitees commerce, statistics, planning.(these ministers
N/A
(�वशेष�प से are sometimes added/removed. List keeps
आमं �त्रत ��) changing dynamically)
- PM can invite other experts as and when needed.
Part-time Tech experts from research institutes. Currently
(अंशका�लक सद�) N/A
members none declared as of 2020-Jan.
− Chairman: Prime minister
− CM of all states incl. Delhi, Puducherry
National Development
Governing − Lieutenant governors of UT.
Council (NDC: रा��ीय �वकास
Council − 😰😰Although cooperative federalism spirit
प�रषद) with PM, CM etc.
missing, West Bengal, Telangana and Punjab
boycotted meeting in June 2019
Ad hoc (तदथर्) CMs & Lt.Govs of states/UTs that fall in the region.
Regional N/A They’ll be dealing with specific issue affected them
Councils e.g. irrigation, Naxal-problem, infrastructure etc.
** Nominated ministers keeps on changing. Earlier, Railway minister and Minister of state for
planning, were in it. Now only 1) Defense 2) Home 3) Finance 4) Agri
** There is discrepancy between the theory given in Govt’s India 2020 (yearbook) which says ‘Full
time and part-time members will be maximum of 2” vs real life composition from
niti.gov.in/content/overview where fulltime members = 3. I’ve kept NITI webpage as reference.
46.7 �🧔🧔 PLANNING COMMISSION VS NITI AAYOG: FUNCTIONS

While Finance commission (a constitutional body under Art.280) is responsible for the tax-
devolution from Union to states, these two non-constitutional bodies look/looked after →
👳👳 Planning Commission 🧔🧔 NITI Aayog
Prepared the Five-Year Plans of India It’s given responsibility to draft
पं चवष�य योजना बनाना ✓ Three Year Action Agenda (2017-20).
✓ Seven Year Strategy Document.
✓ Fifteen Year Vision Document (2017-32).
2018: drafted Strategy for New India @ 75 covering
the period 2017 to 2022-23.##
👳👳 Planning Commission 🧔🧔 NITI Aayog
1. How much money should union give to NITI doesn’t decide how much money should be
each state for implementation of given to each state. That component is decided by
centrally sponsored schemes (CSS)? the Finance Commission (tax devolution and
2. How much money should union give to grants) and Finance Ministry (Allocations for
the five year plans of the state schemes).
governments? 1. NITI primarily serves as the think tank, helps
PC would answer these questions using in policy design.

Gadgil Mukherjee formula (designed in 2. Helps in monitoring schemes’ implementation
8TH FYP)- based on population, per capita through its dashboard e.g. ‘School Education
income, special problems etc. of a state. Quality Index’, ‘SDG India Index’, ‘Digital
Transformation Index’ etc.
�FAQ: ##“Do I’ve to read Niti’s report India@75- as recommended by some toppers? Ans. No
Need, because Its important points already embedded in this handout, particularly in Pillar4D: GDP.
46.8 🧔🧔 NITI → NOTABLE INITIATIVES / HOW DIFFERENT FROM PC?
Darpan 2017 onwards: NGO (Non-Governmental Organization) register here, get unique
Portal id → apply for grants under various govt schemes. नी�त आयोग के इस वेब पोटर्ल पर
पं जीकरण करने के बाद ही ग़ैर सरकारी सं गठन सरकारी योजनाओं म� जुड़ सकते ह�
Aspirational - 2018 onwards: to rapidly transform 115 backward districts on 49 key
District performance indicators (KPIs :मु� �न�ादन सं केतक) related to Health, Nutrition,
Programme Education, Agriculture, Water Resources, Financial Inclusion, Skill
Development, Infrastructure etc.
आकां�ा�क
- progress monitored in NITI online portal called ‘Champions of Change’
�जला कायर्क्रम
Strategic - NITI Aayog suggested strategic disinvestment of 30+ sick / loss making
disinvestment CPSEs such as Air India, Pawan Hans Helicopter, Scooters India etc.
रणनी�तक�व�नवेश (PC wouldn’t have done this because of their Nehruvian mindset.)
POSHAN - Ministry of Women and Child Development (MWCD) is implementing
Abhiyaan POSHAN Abhiyaan to make India malnutrition free India by 2022 with focus
कु पोषण �नवारण के on pregnant women, mothers and children. (More in Pillar#6)
�लए - NITI Vice-Chairman is the head of POSHAN Abhiyaan’s National Council.
(Planning Commission’s focus would had been Food-calorie security through
cheap wheat /grain only, whereas Nutritional Security is bigger.)
Bills and Since its inception Niti Aayog has
policies - Helped framing various policies on Energy, Mineral etc.
कानूनों के �नमार्ण म� - Helped framing various bills, Model Acts on Agricultural Land Leasing,
सलाह Livestock Selling etc.
🌽🌽 NITI helped revamping the MSP by suggesting price deficiency payments (under
Agriculture PM-AASHA), & revamping fertilizer subsidies through DBT mechanism to
कृ �ष �ेत्र fertilizer companies. (Ref: Pill#4: Agro Handout)
SDG For Sustainable Development Goals (सतत �वकास ल�)
(More in - NITI developed SDG India Index to monitor our progress in 17 SDG goals
📑📑Pillar#6) - NITI suggested Govt. to focus on methanol / biofuel based economy for
reducing the fuel bill by around 30% by 2030.
GIRG Niti Aayog Global Indices to Drive Reforms and Growth (GIRG) dashboard to
Dashboard monitor India’s performance on various global socio-economic parameters in
(सामा�जक आ�थक such as Multidimensional poverty index of United Nations Development
�वकास के आंकड़े) Program (UNDP-सं यु� रा�� वकास कायर्क्रम का ब�आयामी गरीबी सूचकांक). (📑📑Ref: Pill#6)
📯📯 CSS NITI helped developing Output Outcome Monitoring Framework to monitor the
क� द्र द्वारा प्रायो�जत implementation of Govt schemes. PC simply launched schemes after schemes,
योजनाएं without much attention to performance monitoring.
Seminars NITI regularly organizes seminars, workshops, conferences for idea exchange
with industries and academicians. PC was ‘closed / introvert body’ (अंतमुर्खी) in
terms of interaction with others.
Startups - NITI runs Atal Innovation Mission (AIM) →grant of upto ₹ 10 crores to
setup Atal Incubation Centres incubators. → AIM also started “Mentor
India” program, wherein experts from industry provide mentorship to
students in Atal incubator labs.
- SETU to help startups.(More in �Pillar#4B: Startup)
Digital Age NITI developing National Program on Artificial Intelligence.
� Conclusion? From above points, it is evident that NITI’s approach is more modernised,
forward-looking, less bureaucratic and less status-quo oriented than the erstwhile Planning
Commission. With such initiatives, NITI Ayog is playing a pivotal role for economic growth, human
development and good governance in India. नी�त आयोग का ��कोण अ�धक आधु�नक, दू रंदेशी, कम नौकरशाही और
कम 'यथा��त' वाला है- �जससे वह आ�थक वृ�द्ध, मानव �वकास, और सुशासन म� मदद करेगा
46.9 🕵🕵 🧔🧔 ECONOMY PLANNING → PM-EAC?

Prime Minister's Economic Advisory Council (प्रधानमं त्री क� आ�थक सलाहकार प�रषद)
- Just like PC and NITI, this is also neither constitutional nor statutory body.
- Started in the 2000s to give advice on economic issues to the Prime Minister.
- After PM Manmohan Singh’s term finished (2014), PM Modi did not reconstitute it for a while.
But in 2017, our growth rate ⏬ in the aftermath of demonetisation and GST, so opposition
parties & critics were making lot of hue and cry about PM’s faulty economic policies. In that
atmosphere, PM Modi again reconstituted this Economic Advisory Council (2017-Sept).
- Composition? Economist Bibek Debroy (as Chairman) & other notable full time and part time
members= Total 7 persons. NITI provides administrative / secretarial support to PM-EAC.
PMEAC has suggested to government to:
- 1) Set up a GST Council like body on public expenditure(More in 📑📑Pillar#2)
- 2) ⏬ the number of GST slabs.(More in 📑📑Pillar#2)
- 3) ⏬the Direct Taxes to boost the demand & economy.
46.9.1 🤳🤳 Economy Planning → PRAGATI?

2015: Pro-Active Governance and Timely Implementation (PRAGATI) is a web platform under
Prime Minister's Office (PMO) for
1. Monitoring scheme implementation (योजनाओं के अमल क� �नगरानी)
2. Addressing common man’s grievances related to tax refunds, EPFO claims etc. (आम आदमी क�
�शकायतों का �नवारण)
PM uses this digital platform for monthly video conferencing with ministries & departments
@Union, and Chief Secretaries(IAS) @States.
Table 2: Some Other related Organizations
eSamikSha - 2014: PM Modi launched web portal under Cabinet Secretariat.

- After the Ministers / officials meet PM → decisions / follow up actions are
monitored through this portal.
- If an IAS is sitting on a file, this webportal allows PM / Cabinet Secretary to
digitally ask that IAS to explain the delay or expedite the decision-making.
Project - 2013: PM Manmohan formed “PMG” in Cabinet Secretariat for fast tracking
Monitoring approval / implementation of public sector, private sector and PPP Projects.
Group - They operate a webportal ‘e-Nivesh Monitor’ for investment / biz proposals.
Investment - (2004-09: Under Ratan Tata to make recommendations to the government on
Commission policies and procedures to facilitate investment.
- 2016 Government thought to revive it but faded topic. (फू टा �आ कारतूस)
CPGRAMS - 2007: Personnel Ministry → Department of Administrative Reforms & Public
(भ्र�ाचार Grievances (DARPG: प्रशास�नक सुधार और लोक �शकायत �वभाग) launched the portal
भाई भतीजावाद Centralized Public Grievance Redress And Monitoring System (CPGRAMS)
धाँधली क� - Any citizens can file complaint against any Central
�शकायत के �लए) Ministries/Departments/Organisations for Corruption, Nepotism,
harassment, mismanagement, absenteeism, Delay in providing services etc.
They also launched a mobile app ‘My Grievance’.
[Yearbook] Following don’t fall under any ‘Ministry or Dept’
Misc. APEX/ INDEPENDENT OFFICES/Dept
1) President’s Secretariat (रा��प�त स�चवालय)
2) Cabinet Secretariat (मं त्रीमं डल स�चवालय) → Research & Analysis Wing
3) Prime Minister’s Office (प्रधान मं त्री कायार्लय) → National Security Advisor (NSA:
रा�ी� य सुर�ा सलाहकार)
4) NITI Aayog (National Institution for Transforming India)
5) Department of Atomic Energy (परमाणु ऊजार् �वभाग)
6) Department of Space (अंत�र� �वभाग)
7) National Security Council Secretariat (रा��ीय सुर�ा प�रषद स�चवालय)
🔠🔠❓MCQ Which of following is correct chronology sequence of formation of the Commissions? (UPSC-
CDS-i-2020)
A. Finance Commission (FC), Planning Commission, Investment Commission, Election
Commission (�वत् आयोग, योजना आयोग, �नवेश आयोग, चुनाव आयोग)
B. Election Commission, Planning Commission, FC, Investment Commission
C. Planning Commission, Election Commission, FC, Investment Commission
D. Investment Commission, FC, Planning Commission, Election Commission
Statistical data is required to prepare an economic plan or fiscal policy & to

monitor its success or failure. And that leads to the next topic →
46.10 ➗📊📊 🕵🕵 📈📈 [YEARBOOK] MOSPI, NSSO, CSO, NSO
Ministry of Statistics and Programme Implementation (MOSPI: सां��क� और कायर्क्रम कायार्�यन मं त्रालय)’s
administrative head is called ‘Secretary & Chief Statistician of India’ (भारत के मु� सां��क��वद)् .- usually,
Indian Statistical Service officer recruited by UPSC. MoSPI has →
1. 📈📈 National Statistical Office (NSO: रा��ीय सां��क� कायार्लय) →
a. A] Central Statistics Office (CSO: क� द्रीय सां��क� कायार्लय) → computation of GDP, GSDP,
IIP, ASI, CPI (Rural, Urban, All India) and Economic Census (6th was done in 2013);
b. B] National Sample Survey Office (NSSO: राष्ट�ीय प्र�तदशर् सव��ण कायार्लय) → data collection
for various socio-economic indicators, Annual Survey of Industries (ASI), Rural-urban
prices and other data required for CSO’s calculations.
c. 2019: MoSPI merged A+B, henceforth it’ll be called National Statistical Office (NSO)
only. it will be headed by Chief statistician of India-cum-Secretary of MoSPI. (Earlier, C
Rangarajan’s National Statistical Commission in 2005 had recommended this
CSO+NSSO Merger). Further, MoSPI also planning to setup a National-Level Data
Warehouse: It’ll act as a central repository of all the statistical data collected various
ministries, and provide big data analytics.
2. 📯📯 Programme Implementation wing (कायर्क्रम कायार्�यन �ं ध) →
a. Member of Parliament Local Area Development Scheme (MPLADS-1993: सांसद �ानीय
�ेत्र �वकास योजना) → each MP can suggest development works worth ₹ 5 crore per year in
his constituency. (📑📑More in Pillar#5: Rural infra)
b. Twenty Point Programme (2006: बीस सूत्री कायर्क्रम) to measure performance of various
schemes related to poverty alleviation, employment, housing, education, health, etc.
c. Infrastructure Monitoring and Project Monitoring.
46.11 ➗📊📊 🕵🕵📈📈 NATIONAL STATISTICAL COMMISSION (रा��ीय सां��क� आयोग)

Setup in 2005 in MOSPI by Cabinet resolution based on recommendations of C.Rangarajan
Committee. So, neither constitutional nor statutory.
- (सं रचना) Structure? 1 part time chairman, 4 part time members + NITI Secretary is ex-officio
member = 6 people. Chief Statistician of India serves as ‘Secretary’ to this commission.
- Functions? It replaced the Governing council of the NSSO. It designs the standards of data
collection - data publication, coordination among the different agencies involved.
- 😰😰Controversy? 2019-Jan: Two members resigned citing “Over the months, we have been
feeling that we were not been taken seriously and being sidelined by the govt. NSC had approved
the Employment Survey 2017-18 but it’s not yet released.” Critics allege this Employment survey
shows jobs fell after demonetization / GST so Modi did not want data released.
If this type of data manipulation & window-dressing is continued then eventually,

⇒ international organisations will lose confidence in India's data collection methodologies. They
will not believe fully, even if the Indian economy is growing really. (हमारे आंकड़ों क� �व�सनीयता कम)
⇒ Large sized economy has to contribute more money to IMF & in return gets more voting rights
in IMF board (e.g. USA). But, if IMF loses confidence in our data collection methodologies, they
may not ⏫ our quota, even if we become an economic superpower.
⇒ International credit rating agencies such as Standard & Poor's (S&P), Moody's, and Fitch Group
will give poor ratings to Indian G-Sec and corporate bonds → Foreign investors will feel shy
about investing in India or they will demand higher interest rates.
To install faith in official statistical data, Government is doing following

1) Draft National Statistical Commission (NSC) Bill 2019 to give statutory status to National
Statistical Commission, so it may work more independently. [वैधा�नक �ान देने के �लए]
2) Draft new National Policy on Official Statistics. [नई नी�त बनायी जा रही है]
3) 2019-Dec: MOSPI setup a Standing Committee on Economic Statistics (SCES). Its Chairman
Pronab Sen suggested that
o Govt should announce a specific calendar that on ‘x’ date of each month or quarter, ‘y’
Macroeconomic indicator data will be released. [�नय�मत �प से एक तय तारीख़ पर सव��ण के आंकड़े
जारी क�ए जाए, तािक �वप� और पत्रकार आरोप न लगा सके िक आँकड़ो के साथ छे ड़-छाड़ क� जा रही है]
o This way critiques will have more confidence in the data released by the Govt.
46.11.1 ➗📊📊📊📊 Mahalanobis National Award for Statistics
⇒ P. C. Mahalanobis= Father of Indian Statistics. Architect of 2nd Five Year Plan (FYP)
⇒ MoSPI gives P. C. Mahalanobis National Award for outstanding work in statistics.
⇒ 2020: Given to C. Rangarajan (ex-RBI governor). He's the 1st person to win it.
46.11.2 ➗📊📊⚖ Collection of Statistics Act, 2008

⇒ It regulates the collection of statistics related to social, economic, demographic, scientific and
environmental aspects, by central, state and local governments.
⇒ Penalty if companies, individuals and households doesn’t give information / give false
information to the data collectors. सरकारी सव��णों को आंकड़े नहीं देने पर �� को सजा के प्रावधान।
Sidenote: Data collection / classification is done as per the System of National Accounts 2008 (SNA
2008) by United Nations Statistical Commission (UNSC).
🔠🔠❓ MCQ. National Statistical Commission was established on the basis of the recommendations
of which one of the following commissions/committees? (UPSC-Geologist-2020)
A) Rangarajan B)Lodha C) Santhanam D) M.G.K. Menon Committee
47 � PILLAR#4C: INDICATORS → UNEMPLOYMENT
47.1.1 🕵🕵🕵🕵🕵🕵International Labour Organization (ILO: अंतररा��ीय श्रम सं गठन)

⇒ 1919: ILO was created as part of the Treaty of Versailles that ended World War I.
⇒ It is a specialised agency of United Nations, HQ: Geneva, Switzerland.
⇒ Famous for its World Employment and Social Outlook report.
47.1.2 👷👷👷👷Occupational of Indian Workers- as per 📔📔📔📔ES22 (number in Crores)
47.2 � UNEMPLOYMENT → INVOLUNTARY → TYPES

1) Voluntary Unemployment (�ै��क बेरोजगारी): a person is out of job on his own choice. Either he
wants higher wages or doesn’t want to work at all.
2) Involuntary unemployment (अनैक��क बेरोजगारी): person is willing to work at the prevailing wage
rates, but unable to find work due to factors beyond his control.
47.2.1 � Unemployment Major Reasons: (बेरोजगारी के प्रमुख कारण)
⇒ Slow Economic Growth vs Rapid Population Growth. आबादी क� वृ�द्ध के सामने आ�थक वृ�द्ध कम
⇒ Defective Educational System, Lack of skill / employability.[�श�ा प्रणाली, कौश� क� कमी]
⇒ Lack of Banking/Transport/Communication Infrastructure in some areas → people unable to
pursue educational and economic goals [ब�िकंग, सं चार, प�रवहन िक बु�नयादी अवसं रचना क� कमी- इस�लए कु छ
गरीब लोग �श�ा और आ�थक अवसर ढूँ ढ नहीं पाते]
⇒ Social Factors- discrimination against SC/ST/Women/PH. [कमजोर वगर् के �खलाफ़ भेदभाव]
⇒ (More in �Pillar#6: HRD- Education, Skill, Poverty)
Types Features
Cyclical (चक्र�य बेरोजगारी ) ⇒ Economy goes through boom-bust cycles. [आ�थक तेज़ी/मं दी]
⇒ during bust / recession / depression when workers are laid off on
mass scale.
⇒ E.g. Maruti removed 3000 workers in 2019 because car sales ⏬.
Frictional ⇒ When a person is out of one job and is searching for another job.
(प्र�तरोधा�क) During this transition time, he’s deemed frictionally
unemployed.[एक नौकरी छोड़ के दू सरी ढूँ ढ रहा है]
Types Features
Disguised ⇒ Unemployment which is not visible because person seems visibly
🍒🍒 Unemployment working but his marginal productivity / contribution is zero.
(प्र��) ⇒ E.g. Farming family of 4 persons produces 200 kgs of grapes, but
even if you remove 3 persons still production remains at 200 kgs.
⇒ ऐसी बेरोज़गारी जो ��मान तो नहीं िक�ु मज़दू र का सीमांत उ�ादन शू� ह�।
☔ Seasonal (मौसमी) ⇒ Labourers in Agriculture, Salt-pans, Sugar Mills, Ice-factory,
Tourist spots, Marriage Catering-Orchestra etc.
Underemployment ⇒ Person is employed but not in a befitting position or salary
(अ�रोज़गार) or Educated corresponding to his qualification.
unemployment ⇒ e.g. M.Com working as Swiggy delivery boy, M. Tech working as
Bank clerk etc.
🤖🤖 Technological ⇒ When men are replaced with machines e.g. Handloom workers
Unemployment vs Textile Machines, Horse carriage vs Automobile.
(प्रौद्यो�गक� / मशीनीकरण/ रोबोट- ⇒ 2018-Sept: World Economic Forum released “Future of Jobs
यं त्रमानव के उपयोग से मज़दू रों क� Report”. It says, by 2025, machines will do more work than
बेरोज़गारी) humans. As a result, 75 million worker jobs may be lost, but 133
million new jobs may emerge in robot repair/robot software
design etc. Hence urgently workers need to be reskilled.
Open / Structural ⇒ Lack of jobs when person’s skill/qualification is insufficient for
(सं रचना�क) [आदमी का the jobs available in the market
कौश�, बाज़ार क� ज़�रतों के ⇒ e.g. An IT Graduate knows C++ language but demand is for
अनुकूल नहीं]
software developers of Python/JAVA computer language.
Natural rate of sum of frictional unemployment and structural unemployment is
unemployment. (NROU) referred as the natural rate of unemployment. (NIOS Textbook)
बेरोजगारी का प्राकृ �तक दर
47.3 �📊📊 UNEMPLOYMENT → NSO SURVEY TYPES

NSO surveys → Quinquennial Employment and Periodic Labour Force Survey (PLFS
Unemployment Surveys आव�धक श्रम बल सव��ण)
Survey frequency? Every 5 years. Starting from ⇒ Annual. Started since 2017
(सव��ण क� आवृ�� िकतनी 1972 Last survey done in 2011- ⇒ PLFS Survey: workers aged 15
समयाव�ध पर) 12. Then discontinued years or higher are counted.
NSO surveys → Quinquennial Employment and Periodic Labour Force Survey (PLFS
Unemployment Surveys आव�धक श्रम बल सव��ण)
Which households are Non-agriculture workers in ⇒ Both urban & rural, agro & non-
surveyed? (िकतने घरों का rural and urban areas (के वल ग़ैर agro covered. (शहरी ग्रामीण कृ �ष
सव��ण) कृ �ष मज़दू रों का सव��ण) ग़ैरकृ �ष सभी का सव��ण)
47.4 �📊📊 UNEMPLYOMENT: PERIODIC LABOUR FORCE SURVEY (PLFS)

PLFS Annual Release Year Time period Covered
Report No. (कब प्रका�शत �आ) (उस �रपोटर् म� िकन वष� का डेटा है?)
Report #1 2019-May July 2017- June 2018
Report #2 2020-June July 2018 - June 2019
Report #3 2021-July July 2019-June 2020
Apart from this, MOSPI → NSO also releases quarterly bulletins e.g.
Quarter Released in
Q2:Jul-Sept-2020 2021-Aug
Q3:Oct-Dec-2020 2021-Sept
⚾📻📻⚾🎙🎙✋But preparing the quarterly data = poor cost:benefit from exam point of view. . �तमाही
आंकड़ों के पृथ�रण का डेटा तैयार करने म� परी�ा क� मेहनत �ादा और परी�ा म� फायदा कम है.
47.4.1 📊📊 � Indicators → unemployment rate (UR: बेरोज़गारी दर)
Figure 1: Amount in Crores, Source- latest Economic Survey 2022
👷👷�Labour force (श्र�मक वगर्)= Those who are 'working' (or employed) + Those 'seeking or available
for work' (=involuntarily unemployed).
Unemployment rate finds involuntarily unemployed persons via following formula:
��𝑁𝑁𝑁𝑁 𝑜𝑜𝑜𝑜 (𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖) 𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑖𝑖𝑖𝑖 𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙 𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓
Unemployment Rate = � 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙 𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓 👷👷��
� × 100
For example: 2018: Unemployment Rate= (3 cr divided by 51.8cr) x 100 = 5.8%

Table 3: NSO measures unemployment in 3 different approaches viz.
Current Weekly Status If not employed even 1 hr work in a week
Current Daily Status If not employed even 1 hr work in a day in a given week.
Usual Status - It’s further subdivided into Principal Activity Status (ps) and
(US: सामा� �प से) Subsidiary Economic Activity Status (ss) but internal difference
poor cost benefit.
- If person’s usual status (pp+ss) was “Unemployed” for majority
of the year → he’s deemed unemployed.
- In official reports, this figure is given more prominence.
- 2019: NSO’s periodic labour force survey 2017 (PLFS: आव�धक
श्रमबल सव��ण) says unemployment rate = 6.1% as per (US PP+SS:
2017) which is highest in last 45 years.
- As per 📔📔📔📔ES21 : High % of unemployment: Arunachal, Kerala, Manipur, and Bihar
- Low % of unemployment: Gujarat, Karnataka, West Bengal and Sikkim
- Unemployment %: highest among urban youth (20%) and is lowest among "illiterates" at
1.1% (बेरोज़गारी का प्र�तशत शहरी युवाओं म� सबसे �ादा है। अनपढ़ों म� बेरोज़गारी सबसे कम)
47.4.2 👷👷/( 👷👷 �) Indicators → Worker Population Ratio (WPR)

It is the percentage of employed persons in the population.
𝑛𝑛𝑛𝑛 𝑜𝑜𝑜𝑜 𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝👷👷�
WPR= �𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑜𝑜𝑜𝑜 𝑡𝑡ℎ𝑒𝑒 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 👼👼👼👼��👴👴� × 100
All Persons (Male+Female) in Both (Urban+Rural) areas 2017 2018 2019

As per latest PLFS (Upto June-2020)
Unemployment Rate = steadily decreased 6.1 5.8⏬ 4.8⏬
Worker Population Ratio = steadily increased 34.7 35.3⏫ 38.2⏫
(people who actually have jobs divided by total
population)
Labour Force Participation Rate (LFPR: persons who are 36.9 37.5⏫ 40.1⏫
working or looking for a job)
47.5 👷👷/( 👼👼👼👼👴👴) INDICATORS → LABOUR FORCE PARTICIPATION RATE (LFPR)

(LFPR) is the % of persons in labour force (i.e. working or seeking or available for work) in the
population. (श्रम बल भागीदारी दर)
𝑛𝑛𝑛𝑛 𝑜𝑜𝑜𝑜 𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝👷👷� + ��𝑛𝑛𝑛𝑛 𝑜𝑜𝑜𝑜 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝

� � × 100
𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑜𝑜𝑜𝑜 𝑡𝑡ℎ𝑒𝑒 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 👦👦👦👦👦👦��👴👴👴👴
- 2017: 37% (male+female in rural+urban combined). It can’t be 100% because there will be
children, elderly outside the ‘15-59’ age group meant for workers.
- �LFPR for female: Replace the word ‘person’ with ‘female’ in above formula. It’s lower than
male LFPR.
𝑛𝑛𝑛𝑛 𝑜𝑜𝑜𝑜 𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒 𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓 � + �𝑛𝑛𝑛𝑛 𝑜𝑜𝑜𝑜 𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖 𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢 𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓
𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿(𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓) = � � × 100
𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡 𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓 𝑜𝑜𝑜𝑜 𝑡𝑡ℎ𝑒𝑒 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 👧👧👧�👵👵
% LFPR (Approx.) 2017 2018 2019 Comment,if any
�FEMALE Urban 15 16⏫ 18⏫ Urban Female less LFPR than rural
�FEMALE Rural 18 19⏫ 24⏫ due to city women pursuing higher
education so not looking for job at
present, husband is earning big so
housewife staying @home.
�FEMALE 17 19⏫ 23⏫ Female LFPR(All India)@23% is much
Urban+Rural=All India less than MALE LFPR(All India)@57%
All India (Urban+Rural) 37 मिहलाओं का श्रम बल भागीदारी दर, पु�षों के मुकाबले
37.5⏫ 40⏫
(👷👷Male+ �Female) काफ� कम है😰😰
47.5.1 �⏬⏬Why FEMALE LFPR Declined between 2004 to 2018?

From 2004 to 2017, LFPR (Female: rural+urban) steadily declined ⏬ (from 45% to 17%) because-
 ⏫ women pursuing higher studies → their entry in the job market is delayed.
 ⏫ in income of (some) rural men → their wives have stopped working as labourer and just
playing domestic housewives role.[कु छ ग्रामीण मद� क� आमदनी बढ़ी तो प�ी क� नौकरी बं द करवाई]
 ⏫mechanization of agriculture & animal husbandry → ⏬ demand for female agri workers.
 ⏬ textile/leather exports due to US/EU protectionism → ⏬demand for female workers
 ⏬real estate sales → ⏬ construction of new buildings → ⏬female laborers
 Cultural factors, social constraints and patriarchal norms restricting mobility and freedom of
women. (सां�ृ�तक कारक, सामा�जक बाधाएं और �पतृस�ा�क मानदं ड के चलते मिहलाओं क� आजादी पर पाबं दी)
 Many rural / small-town girls don’t have require knowledge of computer and English to get jobs
in emergent startup sectors. (अंग्रेजी और कं �ूटर �ान क� कमी)
 NSO's Time Use Survey, 2019 reported that females spend relatively more time in unpaid
domestic and caregiving activities (7.5 hours) than in paid/employment activities (5.7 hours) per
day. (मिहलाएँ रोज़गार से �ादा समय घरेलू अवैत�नक काय� म� �बताती है)
 Examples of unpaid domestic activities = taking care of children, elderly in the household,
Cooking, cleaning home etc. (जैसे क� ब�े और बुजुग� क� देखभाल, रसोई, साफ़ सफ़ाई)
 Solution? Government should invest in child care / day care facilities, paid parental leave,
family-friendly work environment, and elderly care facilities, Equal pay and career progression
for women, medical and social security benefits for female workers. If these things are not
available then there will be more family pressure on the women not to do the job and take care of
the house. (सरकार ने ऐसी सु�वधाएँ प्रदान करनी चािहए जहाँ नौकरीशुदा मिहलाओं के ब�े और बुजुग� क� देखभाल क� �व�ा
हो, मिहलाओं के �लए वेतन तथा पदो��त म� पु�षों के समान अवसर उपल� हो, अ�था प�रवार क� तरफ़ से मिहला पर नौकरी क�
जगह घर क� देखभाल का बोझ का दबाव �ादा रहेगा)
Solution to improve LFPR? [कै से इज़ाफ़ा / बढ़ोतरी कर� ?]
⇒ Government schemes for skill development and entrepreneurship among women → �Ref:
Pillar6-HRD → Women empowerment. (मिहला सश��करण के �लए �व�वध कौशल �वकास योजनाएं )
⇒ Government should invest in child care / day care facilities, paid parental leave, family-friendly
work environment, and elderly care facilities, Equal pay and career progression for women,
medical and social security benefits for female workers.( नौकरीशुदा मिहलाओं के ब�े और बुजुग� क� देखभाल
क� �व�ा, मिहलाओं के �लए वेतन तथा पदो��त म� पु�षों के समान अवसर उपल� हो)
⇒ If these things are not available then there will be more family pressure on the women not to do
the job and take care of the house. (अ�था प�रवार क� तरफ़ से मिहला पर नौकरी क� जगह घर क� देखभाल का दबाव)
47.6 👷👷� WORKERS TYPES BY NSO

self-employed ⇒ those who work for themselves & charge 'fees'. They do not sell their
�-रोजगारी labour power to anyone else for a "wage", so they are their own 'boss'. सेवा
के बदले फ�स लेते है.तन�ाह/वेतन नही
⇒ subcategories: 1) Own Account 2) Partners / Owners / Employers Of
Business Firm 3) Unpaid Family Labourers
wage/salaried They sell their labour to 'boss (employer)', for predetermined wages/salary.
employees Their job continuous round the year. �नयत वेतनभोगी कमर्चारी
Their numbers decreased ⏬ as per latest PLFS (it was bound to happen due
to Corona) कोरोना महामारी के चलते वेतनभोगी श्र�मकों / कमर्चा�रयों क� सं �ा कम �ई
casual workers ⇒ They sell labour for 'wage' but 'boss (employer) hires them for very short
अ�नयत कमर्चारी time period on daily or monthly basis. [ब�त छोटे समय के �लए काम �मलेगा]
⇒ As per Latest PLFS: Male = no significant %change (कु छ खास बदलाव नहीं)
⇒ Female = Their proportion ⏬ in Corona-2020 (female ragpickers,
construction workers etc removed from job in lockdown)
47.6.1 👷👷� Worker Types → Census-2011 classification of workers

Worker type Employed for this much duration in a year
Main worker 6 months or more. (183 days to be precise)
Marginal worker less than 6 months. (सीमांत श्र�मक)
🔠🔠❓MCQ. As per Census, ‘Main Worker’ is a person who works for at least _ _ days in a year
(Geologist-2020) A) 100 days in a yr. B) 153 days C) 183 days in a year. D) 200 days in a year.
🔠🔠❓ MCQ. Find correct statement(s) about Indian economy after the 1991 (Prelims-2020)
1. Worker productivity per worker (at 2004-05 prices) increased in urban areas while it
decreased in rural areas. (मज़दू रों क� उ�ादकता शहरों म� बढ़ी गाँव म� कम होगी)
2. The percentage share of rural areas in the workforce steadily increased.
3. In rural areas, the growth in the non-farm economy increased.
4. The growth rate in rural employment decreased.(गाँव म� रोज़गार वृ�द्ध दर म� �गरावट)
🔠🔠❓ MCQ. Which of the following statements about the employment situation in India according to the
periodic Labour Force Survey 2017-18 is/are correct? (UPSC-CAPF-2020)
1. Construction sector gave employment to nearly 1/10th of urban male workforce in India
2. Nearly 1/4th of urban female workers in India were working in manufacturing sector
3. 1/4th of rural female workers in India were engaged in the agriculture sector
🔠🔠❓MCQ. In India, which one of the following compiles information on industrial disputes, closures,
retrenchments and lay-offs in factories employing workers? (Prelims-2022)
(a) Central Statistics Office (b) DPIIT (c) Labour Bureau
(d) National Technical Manpower Information System
47.6.2 👷👷🧱🧱🧱🧱 Worker Types → Unorganized sector
⇒ An unorganized sector (असं गिठत �ेत्र) firm is not registered under any law such as Shop
Establishment Act, Factory Act, Companies Act, Statutory Corporation, Govt org etc.
⇒ Unorganized sector consists of individuals / self employed workers engaged in non-trade-
unionized casual / seasonal work with irregular payments & lack of social security like
EPFO/ESIC. (मजदू र सं घ नहीं होता �ाई/�नय�मत �प से काम/आमदनी नहीं, सामा�जक सुर�ा का अभाव)
⇒ Government has enacted Unorganized Sector Workers' Social Security Act, 2008 to provide
them with life and disability cover, health and maternity benefits, old age protection etc.
(जीवनबीमा, और �वकलांगता बीमा, �ा� और मातृ� लाभ, बुढ़ापे क� सुर�ा आिद।)
Table 4: Labour Ministry classification →

Examples of Unorganized worker <List not exhaustive>
Occupation wise Small and marginal farmers, landless agricultural labourers, share croppers,
(�वसाय के आधार fishermen, those engaged in animal husbandry, beedi rolling, labeling and
पर) packing, building and construction workers, leather workers, weavers, artisans,
salt workers, brick kilns and stone quarries
Nature of Attached agricultural labourers, bonded labourers, migrant workers, contract
employment and casual labourers.
Specially Toddy tappers, Scavengers, Carriers of head loads, Drivers of animal driven
distressed vehicles, Loaders and unloaders.
Service Midwives, Domestic workers, Fishermen and women, Barbers, Vegetable and
categories fruit vendors, News paper vendors etc.
Miscellaneous Cobblers, Hamals, Handicraft artisans, Handloom weavers, Lady tailors,
�व�वध / अ� Physically handicapped self employed persons, Rickshaw pullers, Auto drivers,
Carpenters, Tannery /Power loom workers and Urban poor.
Unorganised worker (असं गिठत मजदू र) = Person working in above sectors. There are more number of
workers in unorganized sector, than in the organized sector.
47.6.3 👷👷⏳ Worker Types → Informal worker (अयथाव�ध/अनौपचा�रक मजदू र)
⇒ = Person who is not in the formal records / contract of a firm. So he could be in unorganized
sector and he could be even in ‘organized sector’ e.g. driver / Security Guard / Chowkidaar /
gardener in Reliance ltd.
⇒ Non-Agri Sectors where large % of workers are Informal workers: Construction (>80% of its
workers), Mining (>30% of its workers) , Transport Hotel restaurant (>10% of its workers) ये ग़ैर-
कृ �ष �ेत्र है जहाँ के मज़दू रों म�, �ादातर अनौपचा�रक / अयथाव�ध मज़दू र है
⇒ They are usually deprived of Minimum wages, EPFO/ESIC's Insurance/pension/social security
=Cannot afford to stay in the city area during Corona uncertainty.
⇒ So they would quickly flee to the village home in panic.
⇒ Corona: more than 60 lakh migrant workers travelled through Shramik Special trains in May-
August 2020. = factory production / Supply ⏬⏬ (अयथाव�ध इन मज़दू रों को सामा� �प से �ूनतम वेतन,
तथा सामा�जक सुर�ा लाभों से वं �चत रखा जाता है इस�लए महामारी िक अ�न��तता के दौरान वे तुरंत वतन वापसी करते ह�. �जससे
फ़ै ��ी उ�ादन/ आपू�त म� �गरावट)
Table 5: Number of workers in Crores each category. Source: Latest Economic Survey 2022
So, basically, 1) workers in unorganized > organized. 2) workers in Informal > Formal.
Formalization of jobs = when proportion of formal workers ⏫ , in above table.
🔠🔠❓MCQ. Which about India's unorganised sector are true? [UPSC-CDS-2014-I]

1. Labour is more in number than that in the organised sector.
2. Job security and work regulation are better in unorganised sector.
3. They are usually not organised into trade unions.
4. Workers are usually employed for a limited number of days.
Answer Codes: (a) 1, 2 and 4 (b) 1, 3 and 4 (c) 3 and 4 (d) 1 and 3
🔠🔠❓MCQ. With reference to the casual workers employed in India, consider the following
statements: [अयथाव�ध मजदू रों के बारे म� सही वा� ढू ं�ढए] (Prelims-2021)
1) All casual workers are entitled for Employees Provident Fund coverage. [सभी अयथाव�ध मजदू र
ईपीएफओ के �लए हकदार ह�]
2) All casual workers are entitled for regular working hours and overtime payment. [सभी अयथाव�ध
मजदू र सामा� घं टों म� िकए गए कायर्वेतन और ओवरटाइम वेतन के �लए हकदार है]
3) The government can by a notification specify that an establishment or industry shall pay wages
only through its bank account. [सरकार यह �नद�श जारी कर सकती है िक �च��त उद्योगों ने के वल ब�क खाते द्वारा वेतन
भुगतान करना होगा]
Codes: a) 1 and 2 only b) 2 and 3 only c) 1 and 3 only d) 1, 2 and 3
47.6.4 👷👷 🖱🖱 Worker Types → Unorganized workers → E-Shram Portal for them (2021-Aug)
- National Database of Unorganized Workers By Ministry of Labour & Employment
- to register Unorganised Workers of India such as construction workers, migrant workers, street
vendors, domestic workers, milkman, truck drivers, fisherman, agriculture workers etc. (असं गिठत
�ेत्र के मज़दू रों के पं जीकरण के �लए श्रम मं त्रालय का एक ऑनलाइन पोटर्ल बनाया गया है)
- There is no registration fee. Upon registration the workers shall be issued a e-SHRAM card with
unique Universal Account Number (UAN). पं जीकरण के �लए कोई फ�स नहीं लग�गी
- He can use it for various social security schemes through this Card anywhere anytime.
- �E-Shram Portal registered worker will get Rs 2.0 Lakh Accidental Death free of cost through
under Pradhan Mantri Suraksha Bima Yojana (PMSBY- REF Pillar1D) . (आक��क मृ�ु पर मुआवजा)
- � �ES22: So far 23 cr registered.
o Area-wise Highest from: UP (35%) > W.Bengal > Bihar
o Sector wise: Highest from: Agri > Domestic Workers > Construction Workers.
47.6.5 👷👷👷👷👷👷 Worker Types → Gig workers & Two sided market - 📔📔📔📔ES21
⇒ Definition: Gig workers are temporary workers who are engaged in livelihoods outside the
traditional employer-employee arrangement. Delivery boys, app-based taxi drivers, service
providers such as cleaners and technicians, and freelance workers are all part of the gig economy.
(�गग-मज़दू र/श्र�मक - अ�ाई मज़दू र है जो िकसी ऑनलाइन मोबाइल ऐप के द्वारा एक �तं त्र ठे केदार के �प म� अपनी सेवाएँ देता है
जेसे क� जोमेटों एप द्वारा ग्राहक को रे�ोर�ट का खाना प�ँ चाना।)
⇒ DATA: 7.5 million+ workers were engaged in the gig economy in 2020-21, and this number
could grow to more than 20 million in the next 8 year.
⇒ Problem: usually deprived of social security benefits such as maternity leave, EPFO, ESIC,
unemployment allowance, disability allowance etc. (इ�� सामा� श्र�मक क� तरह कं पनी द्वारा बीमा, प�शन,
EPFO, बीमारी के दौरान सवेतन छु ट्टी, मातृ� लाभ इ�ािद सामा�जक सुर�ा योजनाओं का लाभ नहीं �मलता।)
Digital technology enables such two-sided markets. Its features are: (दो बाज़ूओ ं वाला बाज़ार)
⇒ 1) two sets of agents (Buyer and seller) interact through an intermediary or platform or
Aggregator app (Amazon, Ola, Uber etc) (दो एज�ट आपस म� एक �बचौ�लए के द्वारा आदान प्रदान करते ह�)
⇒ 2) the decisions of each set of agents affects the outcomes of the other set of agents (e.g.
Customer gives 5-star delivery rating or not → Delivery boy's payment affected etc)
Gig worker- Characteristics/Features: (गीग कम� क� ला��णकता)
⇒ 1) He/she works in a digital technology enabled two sided market. In the company's
records/contracts- such workers are usually shown as "independent service
providers/contractor" and not as "employees". So they are usually deprived of the
EPFO/ESIC/And other social security benefits (Ref: #1D3) Although Code on Social Security
2020 aims to fix this problem. (कं पनी के अनुबंध के िहसाब से यह कम� कं पनी का कमर्चारी नहीं िकंतु एक �तं त्र सेवा देने
वाला ठे केदार है. इस�लए वो प्राय �व�भ� प्रकार क� सामा�जक सुर�ा योजनाओं से वं �चत रह जाता है.)
⇒ 2) work-contract is usually shorter, temporary, Not permanent. (इस लघु अव�ध का अ�ायी अनुबंध)
⇒ 3) Their payment may include
o a) piece rate (e.g. How many deliveries made)
o b) partly reward above a fixed salary (e.g. How many 5 star ratings received on delivery)
(�न��त तन�ाह के अलावा अ�त�र� ईनाम पुर�ार)
o c) partly profit (e.g. Taxi owner, Amazon seller) आं�शक मुनाफ़ा
47.6.6 👷👷👷👷👷👷 NITI Report on Gig Workers

⇒ NITI Report- “India’s Booming Gig and Platform Economy”: following recommendations →
⇒ � Social security measures such as income support, paid sick leave, insurance, and pensions
⇒ � Women are more likely to take up platform jobs after education and marriage. So,
Government should give tax and subsidy benefit to companies if they're hiring more women /
PH. (शादी के बाद कई मिहलाएँ पारंप�रक िक़� क� ऑिफ़स क� नौकरी नहीं कर सकती। वे भी �गग-वकर् र बनना चाहती है। इस�लए
सरकार ने कं प�नयों को टै� और स��डी म� ऐसे प्रो�ाहन देने चािहए तािक वे �ादा से �ादा मिहला और अपािहजों को �गग-वकर् र
क� नौकरी दे।)
47.6.7 👷👷👷👷👷👷 How to create more jobs?

⇒ Mains Quality Enrichment Program (QEP): https://unacademy.com/course/mains-
economy-revision-quality-improvement-program-qep/H6N2TJ6H
⇒ But do it after finishing all 6 pillars, to see interlinkages.
47.7 ✍🎺🎺 MOCK QUESTIONS FOR MAINS → NITI PC UNEMPLOYMENT

Is inclusive growth possible under market economy? State the significance of financial 2022
inclusion in achieving economic growth in India. (�ा बाज़ार अथर्�व�ा के अ�गर्त समावेशी �वकास
सं भव है? भारत म� आ�थक �वकास क� प्रा�� के �लए �व�ीय समावेश के मह� का उ�ेख क��जए।) Ans. Youtube
Economic growth in the recent past has been led by increase in labour productivity. 2022
Explain this statement. Suggest the growth pattern that will lead to creation of more jobs
without compromising labour productivity. (“हाल के िदनों का आ�थक �वकास श्रम उ�ादकता म� वृ�द्ध के
कारण सं भव �आ है।” इस कथन को समझाइए । ऐसे सं वृ�द्ध प्र�त�प को प्र�ा�वत क��जए जो श्रम उ�ादकता से समझौता
िकए �बना अ�धक रोजगार उ�� म� सहायक हो) Ans. Youtube
Examine the role of ‘Gig Economy’ in the process of empowerment of women in India. 2021
भारत म� मिहलाओं के सश��करण क� प्रिक्रया म� '�गग इकोनॉमी' क� भू�मका का प�र�ण क��जए।
The nature of economic growth in India in described as jobless growth. Do you agree with 2015
this view? Give arguments in favour of your answer. भारत क� आ�थक वृ�द्ध, "रोजगार-रिहत/बेरोजगार
यु�" आ�थक वृ�द्ध है.�ा आप इससे सहमत ह�? Ans. Many points similar to 2017 Qs on we failed to
create labour intensive exports. Ref: Sp.classs
How are the principles followed by the NITI Aayog different from those followed by the 2018
erstwhile Planning Commission in India? नी�त आयोग द्वारा अपनाए गए �सद्धांत योजना आयोग से अलग कै से
📑📑Next: Pillar#4C: GDP, GNP, V-Shaped Recovery, $5 Trillion Economy
�🧔🧔 PILLAR#4D: MACROECONOMIC INDICATORS- GDP,GNP,ATMA-NIRBHAR
Table of Contents
48 🌽🌽⌚🎧🎧Pillar#4: Indicators → GDP.......................................................................................................... 804
48.1 📐📐📐📐GDP Calculation Method#1→ via Expenditure (�य द्वारा) ................................................. 804
48.2 📐📐📐📐GDP Calculation Method → via Expenditure (NSO Real Life) ........................................ 805
48.2.1 GDP projections: Economic Survey vs NSO............................................................................... 806
48.3 📐📐📐📐 GDP Calc Method → via Production/GVA (उ�ादन द्वारा) .................................................. 807
48.3.1 GVA of various Sectors (Constant Market Price 2011-12) ....................................................... 808
48.3.2 From GVA to GDP ................................................................................................................... 808
48.3.3 GVA & GDP: Growth Rates @Current vs Constant Price ......................................................... 809
48.3.4 📐📐📐 AGRICULTURE GVA is the “SAVIOUR” in Corona Year 2020? ............................. 810
48.3.5 📐📐 � Agri showed +ve growth despite Corona in 2020 [कृ �ष वृ�द्ध दर �ों नहीं �गरा कोरोना म�] ..... 810
48.3.6 📐📐GDP Misc Topics → Discrepancy (�वसं ग�त)? .................................................................... 811
48.4 📐📐📐📐 GDP Calculation Method → via Income (WIPR)............................................................. 811
48.5 📐📐📐📐 GDP Calculation Method → via Income (CSO real life) .................................................. 812
48.6 📈📈📈📈: GDP → Growth Rate & Deflator (वृ�द्ध दर, अप��तकारक) .................................................. 813
48.6.1 📈📈📈📈: GDP vs CPI&WPI............................................................................................................ 814
48.6.2 📉📉📉📉📉📉GDP Misc Topics → 2015 calculation reform ..................................................... 814
48.6.3 📉📉📉📉📉📉 GDP Misc Topics → Backseries Controversy? (�ववाद) ...................................... 815
48.6.4 📐📐ES20 Vol1ch10: India GDP is not overstated ................................................................... 815
48.6.5 📐📐GDP Misc Topics → Changing base years to 2017 & 18 ................................................ 816
48.7 📐📐📐📐📐📐 GDP → Growth Rate → Economic Cycle ................................................................... 816
48.7.1 🤧🤧🤧🤧🤧🤧Post-Corona: V-shaped recovery for India? ......................................................... 817
48.7.2 ✌📈📈📈📈 📈📈📈📈Low base effect in GDP growth....................................................................... 817
48.7.3 🐗🐗Misc. Terms: Animal spirit in the economy ......................................................................... 817
48.7.4 ♨Misc. Terms: Pent up demand (दबी �ई मांग)............................................................................ 818
48.7.5 🥶🥶 Misc. Terms: Hysteresis ......................................................................................................... 818
48.8 📉📉📉📉⌚🎧🎧GDP Growth Rate & 5 Trillion Economy ............................................................... 818
48.8.1 📐📐🕵🕵🌐🌐World Bank-ICP's GDP series based on PPP ....................................................... 818
48.8.2 💼💼 Budget-2019: $5 Trillion economy .................................................................................. 818
48.9 📉📉📉📉⌚🎧🎧GDP Growth Rate BEFORE Corona............................................................................ 819
48.9.1 📐📐📐📐 Growth rate: why fall / decline? (B4 Corona) ........................................................... 819
48.9.2 📐📐📐📐 Declining Growth rate: future risks / challenges- 📙📙📙📙ES20 and 📙📙📙📙ES21...... 819
48.9.3 😷😷😷😷😷😷⌚🎧🎧Negative GDP Growth: Demand & Supply-side Shocks in Corona .......... 819
48.9.4 😷😷😷😷😷😷⌚🎧🎧Negative GDP growth: Post Independence .................................................. 820
48.9.5 😷😷😷😷😷😷⌚🎧🎧Negative GDP growth: Impact on States in Corona .................................... 820
48.9.6 📐📐📐📐 Declining Growth rate: future risks / challenges- 📙📙📙📙ES22 ................................. 821
48.10 🌽🌽⌚🎧🎧🎧🎧 GDP → $5 Trillion → How to Achieve?: ES strategy .......................................... 821
(Batch: PCB7) Mrunal’s Economy Pillar#4D: Indicators- GDP, GNP, Atma-Nirbhar → Page 802
48.10.1 Capital Output Ratio ..................................................................................................................... 822
48.10.2 ICOR ............................................................................................................................................... 823
48.10.3 Investment⏫ more imp than Savings⏫................................................................................. 823
48.10.4 🌽🌽⌚🎧🎧🎧🎧 GDP → $5 Trillion → How to Achieve?: NITI strategy ............................ 824
48.10.5 📔📔📔📔ES20 Vol1Ch1 on Wealth Creation (धन सृजन) .............................................................. 824
48.10.6 📔📔📔📔ES20: Countercyclic Fiscal Policy, Interest Rate Growth Rate Differential (IRGD)..... 826
48.10.7 📙📙📙📙ES22: supply-side reforms to ⏫ GDP (आ�थक वृ�द्ध के �लए आपू�त �ेत्र के सुधार)..................... 827
48.10.8 👳👳🤕🤕 ES19: GDP growth harmed during Economic Policy Uncertainty......................... 828
48.10.9 📔📔📔📔 ES19: How to reduce Economic Policy Uncertainty .................................................. 828
48.10.10 � Conclusion: Policy Uncertainty ................................................................................... 829
48.10.11 � Conclusion: 5 Trillion economy? ................................................................................ 829
48.10.12 📐📐📐📐 Global Risk Report 2021 (वै��क जो�खम �रपोटर्) ........................................................... 830
48.10.13 📐📐📐📐 Global Risk Report 2022- January (वै��क जो�खम �रपोटर्) ........................................... 830
48.10.14 📐📐📐📐 Global Risk Report 2022- Short term risks for India............................................ 830
48.11 👻👻👻👻⌚🎧🎧🎧🎧 GDP → $5 Trillion → Atma-Nirbhar Bharat ................................................ 831
48.11.1 👻👻👻👻 Chronology wise total allotment as per 📙📙📙📙ES21 ...................................................... 831
48.11.2 👻👻👻👻⌚🎧🎧🎧🎧 Atma-Nirbhar Bharat Salient features ..................................................... 832
48.11.3 👻👻✋👿👿👿👿 Atmani-Criticism: insufficient ₹ to revive Indian economy ....................... 833
48.11.4 👻👻✋👿👿👿👿 Criticism: Statistical Window Dressing (अंको क� फज� िदखावट) ........................ 834
48.11.5 👻👻✋👿👿👿👿👿 Criticism: States Fiscal problems not given sufficient help .................... 835
48.11.6 👻👻✋👿👿👿👿👿 Criticism: Regional Imbalance (असं तु�लत �ेत्रीय �वकास) ............................... 835
48.11.7 👻👻✋👿👿 Atmani-Criticism: Modi shd have given Unemployment Allowance like USA
835
48.11.8 👻👻✋👿👿 Atmani-Criticism: Modi merely copying Nehru’s ideas .................................... 836
48.11.10 👻👻✋🙋🙋Alternate Suggestions to revive Economy: अ� सुझाव ....................................... 837
48.12.1 👻👻👻👻Misc. Terms: Chinese Atma Nirbhar/ Dual circulation (दोहरा प�रसं चरण) ....................... 838
48.13 📐📐 GDP → GNP to NNP to Per Capita Income ............................................................................ 838
48.13.1 📐📐 GDP → National Income → Misc. concepts .................................................................. 839
48.13.2 📐📐Types of Nations : High Income, Low Income................................................................ 840
48.13.3 📐📐Types of Nations : Advanced Economies (AE : उ�त अथर्�व�ाएं ) ......................................... 841
48.13.4 📐📐Types of Nations : EMDEs (उभरते बाजार और �वकासशील अथर्तंत्र) ................................................ 841
48.13.5 📐📐Types of Nations : Bangladesh transition from LDC to Developing Country ................... 841
48.13.6 😵😵Bangladesh Per Capita GDP higher than India? .................................................................. 842
48.13.7 📐📐India As A ‘Developed’ Country? (भारत एक �वक�सत देश?) ...................................................... 843
48.14 📐📐📐📐 GDP & Per Capita Income→ Criticism / Limitations....................................................... 843
48.14.1 GDP → Economic Growth vs Economic Development ....................................................... 845
48.15 ✍🎺🎺 Mains Questions: GDP, Economic Growth ....................................................................... 846
48.15.1 ✍🎺🎺 Mains Questions → Mock Questions → Atma-Nirbhar ....................................... 846
48.15.2 ✍🎺🎺 Mains Questions → Mock Questions → GDP Growth ......................................... 846
48.15.3 ✍🎺🎺 Mains Questions → Previous Years’ official Questions .......................................... 846
48 🌽🌽⌚🎧🎧PILLAR#4: INDICATORS → GDP
⇒ Gross Domestic Product= is the market value of all the goods and services produced within the
domestic territory of a country during a specified time period, usually one year. (िकसी देश के घरेलू
�ेत्र म� उ�ािदत सभी व�ुओ ं और सेवाओं का बाजार मू� को सकल घरेलू उ�ाद कहा जाता है)
⇒ Here, domestic territory = political frontiers of the country including its territorial waters, ships,
aircrafts, fishing vessels operated by the normal residents of the country; AND its embassies,
consulates located abroad. (as per NIOS textbook)
⇒ GDP potential= is the Highest or maximum output that a country can produce using the
available labour and capital (at a constant inflation rate). सं भा� जीडीपी = आपके देश म� उपल� सभी मजदू र
और पूंजी से जो मह�म उ�ादन हो सकता है.
⇒ GDP gap = difference between potential GDP and real GDP. जीडीपी अंतर / खाई = वा��वक और सं भा�
जीडीपी के बीच का अंतर
48.1 📐📐🛒🛒GDP CALCULATION METHOD#1→ VIA EXPENDITURE (�य द्वारा)
If anything is produced in India then someone must have paid money for that. So, accordingly we
can derive GDP = C + I + G + X – M
components Description and Examples
🛒🛒 (C) Consumption ⇒ Purchasing new car, mobiles, computer etc. Both India made &
of final goods and (Imported) foreign made are counted.
services ⇒ If existing house is self-occupied, its ‘notional rent’ is counted (i.e.
उपभोग हेतु अं�तम उ�ाद even if owner didnot rent the property.)
⇒ ✋IGNORE purchase of second hand goods, because we are only
measuring ‘new’ things “MADE in India” in present year.
⇒ ✋IGNORE construction of new house. It is not counted here, it’s
counted in (I: Investment)
🗃🗃 (I) Investments ⇒ Tangible capital assets (मूतर् पूंजीगत सं प��) like New House, Land,
�नवेश Building, Factory, Truck, Machinery.
⇒ Intangible capital assets (अमूतर्) like IPR / Patents, Computer
Software etc.
⇒ Raw material & intermediate goods, wages to workers for
production.
⇒ UNSOLD inventory. (जो माल अभी �बकना बाक� है)
⇒ ✋IGNORE savings in bank, shares and bonds etc. (because it’d
have been given to entrepreneur as ‘Capital’ to buy above things).
🧔🧔 (G) Government ⇒ Salaries to employees, Procurement of computer, stationery, fans,
Purchases tube lights, vehicles etc.
सरकार द्वारा क� जाने वाली ⇒ ✋IGNORE Government’s scholarship, subsidy etc. ‘Transfer
खरीद Payments’. They’re counted in “C” (Private) consumption by the
respective beneficiaries.
💂💂 (X-M) Export ⇒ Export is added because it means a foreigner must have bought
MINUS Imports goods/services “MADE in India” so it’s part of India’s GDP.
�नयार्त -आयात ⇒ Whereas, Import is subtracted because some Indians must have
Consumed (C) foreign products that were not “MADE in India”,
So if you do not subtract the ‘Import(M)’, it will give wrong
estimation of India’s GDP.
Total = GDP ⇒ Thus, we get GDP at Current Market Price (वतर्मान मू� पर).
⇒ When we adjust it with inflation against base year 2011 → GDP at
Constant Market Price (��र मू� पर).
48.2 📐📐📐📐GDP CALCULATION METHOD → VIA EXPENDITURE (NSO REAL LIFE)

Textbook NSO’s Real life formula 2019-20 2020-21 2021-22 (P)
formula (Approx numbers)
(C) (+) Private Final Consumption 123 lakh cr 115 Lcr 140 lcr⏫
Consumption Expenditure (PFCE)
of final goods
and services
Textbook NSO’s Real life formula 2019-20 2020-21 2021-22 (P)
formula (Approx numbers)
(I) (+) Gross Fixed Capital 59 lakh cr 55 Lcr 66 lcr ⏫
Investments Formation (GFCF)+ Change in
Stocks (CIS)
(G) Govt (+) Government Final 22 lakh cr 25 Lcr 26 lcr⏫
Purchases Consumption Expenditure
(GFCE)
(X-M) Export (+) Net Export of Goods & -5.5 lakh cr -1.07 Lcr (-) 5 lcr
MINUS Services.
Imports
(+) Discrepancies (�वसं ग�तयां) 96,000 cr 36,500 cr 41,000 cr
Total = Total = GDP @Current Market 204 lakh cr 197 Lcr 236 lcr
Price (वतर्मान बाज़ार मू� पर)
GDP @Constant Market Price (2011) approx. 145 Lcr 135 Lcr 147 Lcr
% growth compared to previous year 4.2% -6.6% 8.9%##
Now let’s find growth rate for 2020-21→
Year GDP at Constant Market Price (��र मू� पर)
2019-20 ₹145 lakh cr
2020-21 ₹135 lakh cr
GDP Growth rate in 135 − 145
2020 against 2019 � � ∗ 100 = 𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀 6.6%##
145
48.2.1 GDP projections: Economic Survey vs NSO
GROWTH RATE 2020-21 2021-22 2022-23

Upto 31/3/2021 Upto 31/3/2022 Upto 31/3/2023
� �ES22 Published (-) MINUS 7.3% � (+) 9.2% 8.0-8.5%
on 2022-January 31st
NSO Estimates (-) MINUS 6.6% � (+) 8.9% Not predicted.
published on 2022-
Feb-28th
FAQ: Which number is right? Ans. So, tick as per the context of MCQ. परी�ा म� ऑ�शन देख के िटक करे।
48.3 📐📐📐📐 GDP CALC METHOD → VIA PRODUCTION/GVA (उ�ादन द्वारा)
Production method is also known as Gross Value Added method (GVA: सकल व�धत मू�)
Amt in ₹ Mining Engine Tractor Total
Company → Company → Company →
A) Total 1+5+10=16 lakh
Production → Steel: 1 lakh Engine: 5 lakh Tractor: 10 lakh Value of Final Goods
produced by firms
B) Intermediate 00 (suppose 0+1+5= 6 lakh Value
1 lakh (Steel 5 lakh (Engine
Goods → ore dug from of Intermediate Goods
purchased) purchased)
म�वत� व�ुएँ free land!) used by firms
Value Added (A- GVA =16-6
1 lakh → 4 lakh → 5 lakh →
B)= = 1+4+5 =10
⇒ Here, GVA = Value of final MINUS intermediate = (16-6) = 10 lakh. Alternatively, GVA =
Value added at each stage = 1 + 4 + 5 = 10 lakh.
⇒ The amount thus derived is called GVA (at basic price: मूल क�मत पर).
48.3.1 GVA of various Sectors (Constant Market Price 2011-12)
48.3.2 From GVA to GDP

GVA at Basic price: (Suppose a country only produce LPG cylinders) ₹ 600
🍋🍋 Indirect Taxes: CGST + SGST (Earlier, Excise + VAT) (+) ₹ 100
🧔🧔 But Petro ministry is also giving subsidy on the purchase of LPG cylinders (-) ₹ 200
under PAHAL scheme
= GVA (+) Indirect Taxes (-) Subsidies ₹ 500
= GVA + “NET Taxes”
= GDP at Current Market Price 🗓🗓🗓🗓🗓🗓 (वतर्मान बाजार क�मत)
When we adjust 🗓🗓 Current Prices (वतर्मान) with inflation against base year 2011, we get GVA / GDP
📅📅Constant Prices (��र मू�).
🔠🔠❓MCQ. Which of the following activities constitute real sector in the economy ? (2022)
1. Farmers harvesting their crops
2. Textile mills converting raw cotton into fabrics
3. A commercial bank lending money to a trading company
4. A corporate body issuing Rupee Denominated Bonds overseas
Codes: (a) 1 and 2 only. (b) 2, 3 and 4 only (c) 1, 3 and 4 only (d) 1, 2, 3 and 4
48.3.3 GVA & GDP: Growth Rates @Current vs Constant Price
Figure 1✋Screenshot for observation. No need to memorize
Figure 2 ✋Screenshot for observation. No need to memorize all data
In following table, Numbers are not important. Just observe PATTERN
Amt in ₹₹ 2019 2020 Nominal 2019 2020 REAL GROWTH

Lakh Cr Current Current GROWTH Constant Constant @Constant Price(@2011)
Price Price @Current Price(@2011) Price(@2011)
i) GVA 185 179 179/185 133 LCR 125 125/133
=(- =(-)6.2%😰😰
)3.0%😰😰
ii) NET 18 18 NOT IMP 12 10 NOT IMP
TAXES#
i)+ii)=GDP 203 197 197/203 145 135 135/145
=(- =(-)7.3%😰😰
)3.0%😰😰
⇒ While GVA gives a picture of economy from the producers' side or supply side, GDP gives
picture from consumers' / demand side perspective. (GDP हम� उपभो�ाओं का नज़�रया िदखाता है)
⇒ Because GDP considers impact of Indirect taxes and subsidies. (�ोंिक उसम� कराधान और स��डी क� असर
को जोड़ा जाता है)
⇒ Therefore, from 2018, RBI decided to use GDP instead of GVA to measure the economic
analysis. (इस�लए �रज़वर् ब�क आ�थक �व�ेषण म� GVA के मुक़ाबले GDP के आँकड़ो पर �ादा ज़ोर देती है)
48.3.4 📐📐📐 🤩🤩AGRICULTURE GVA is the “SAVIOUR” in Corona Year 2020?
Gist of many news columns/explained series is “While overall growth is negative for 2020, but growth
is positive in Agriculture sector, so Agriculture is the saviour- in the sense that IF there was no
agriculture, there’d be bigger loss/shame in our GVA/GDP numbers for 2020.” [“हालांिक कोरोना म� वैसे तो
जीडीपी वृ�द्ध दर �गर गया लेिकन कृ �ष �ेत्र म� प्र�तशत के �प म� बढ़ोतरी देखी गई, वरना अगर कृ �ष �ेत्र नहीं होता तो हमारा जीडीपी का
आंकड़ा इससे भी �ादा प�तत/�गरा �आ िदखता”- ऐसी टाइमपास िडबेट कु छ �ूजपेपर कॉलम म� काफ� समय से चल रही है.]
Figure 3 : ✋Screenshot for observation. No need to memorize all data
48.3.5 📐📐 � Agri showed +ve growth despite Corona in 2020 [कृ �ष वृ�द्ध दर �ों नहीं �गरा कोरोना म�]
Agriculture production was largely insulated / unaffected from Corona reasons (कोरोना वायरस के बावजूद
कृ �ष उ�ादन म� ख़ास नकारा�क असर नहीं देखी गई �ोंिक)
⇒ Return of the migrant labourers from city area → More agriculture workers available (इन शहरों से
वतन वापस आए प्रवासी मज़दू रों द्वारा कृ �ष कायर् म� मदद)
⇒ farms were not subjected to lockdown, unlike factories. Even during the lockdown, the Govt
provided many exemptions to transport of agri products, Increased the fertilizer subsidy. (इस
तालाबं दी के दौरान भी सरकार द्वारा कृ �ष उ�ादों के प�रवहन को छू ट दी गई)
⇒ Good monsoon → Good harvest (अ�� बा�रश के चलते अ�� पैदावार)
⇒ Agriculture doesn’t require lots of imported inputs [except Potash & Phosphate fertilizer] while
car company require imported inputs (Chips from Taiwan)…so, global lockdown hurts agro
production less than car production. (कृ �ष उ�ादन म� �वदेशी आया�तत क�ा माल नहीं चािहए होता)
⇒ Faster vaccination in the USA, Europe → Opening of restaurants/fast food etc → Demand for
sugar, wheat, rice and other agricultural commodities⏫ → Indian agriculture exports
benefited (�वदेशों म� टीकाकरण के प�ात रे�रां उद्योग पुनज��वत → भारत से चावल चीनी इ�ािद के कृ �ष �नयार्त म� मदद)
48.3.6 📐📐😰😰GDP Misc Topics → Discrepancy (�वसं ग�त)?
- Theoretically, GDP calculated by production method shd equal to GDP by expenditure method.
- But, in real life, GDP (production🛠🛠) ≠ GDP (expenditure🛒🛒); bcoz factory production data is
systematically captured by Govt machinery such as Corporate Affairs ministry’s MCA-21 portal,
NSO’s Annual Survey of Industries (ASI) etc. But, all of the final private consumption may not
be captured in the official statistics due to unreported transactions (e.g. due to black money etc.)
- As a result, mismatch / ‘discrepancy’ will be observed in GDP (expenditure) figures, and
mentioned in the official NSO report. (दो अलग-अलग सूत्रों से बनाए गए जीडीपी के आंकड़े मेल नहीं खाएं गे)
- Therefore, GDP (Production Method GVA) is considered more accurate method among the
three methods (Production, Expenditure, Income). (�ादा �व�सनीय माना जाता है)
- So, while NSO computes data using all 3 methods, but official GDP & growth figures are
presented based on the ‘Production GVA’ method.
48.4 📐📐🤑🤑 GDP CALCULATION METHOD → VIA INCOME (WIPR)

This method follows the simple idea that whatever is “MADE in India”, its revenues must have been
distributed among the factors of production. So,
- GDP = Wages to labourers (W) + Interest on Capital to Lenders (I) + Profits to Entrepreneur /
Owners of the firm (P) + Rent on land (R).
- The GDP thus arrived is called GDP at Current Factor Cost (वतर्मान कारक लागत पर).
48.5 📐📐📐📐 GDP CALCULATION METHOD → VIA INCOME (CSO REAL LIFE)
Theoretical NSO’ real life income formula

1. (+) Compensation (i.e. Employees salary + Employer’s
1. (+) Wages contribution to his Social Security Account e.g. EPFO / ESIC).
2. (+) Interest 2. (+) Operating Surplus and Mixed Income. (Because in a family
3. (+) Profit run farm / enterprise it is difficult to separate income and profit,
4. (+) Rent unlike a Company’s balancesheet)
3. (+) Consumption of fixed assets during production
Total sum= Here total is called “GVA @Factor Cost”
48.6 📈📈📈📈: 🧅🧅 GDP → GROWTH RATE & DEFLATOR (वृ�द्ध दर, अप��तकारक)
- Growth Rate (%) = {GDP (Present year - Last Year) / Last Year} x 100
- But, quantitatively production may not have ⏫ (From 1 kg onions to 2 kg onions), and only
because of inflation in the prices (₹ 10/kg onion to ₹ 100/kg) the growth rate may be appear high.
- Therefore (to remove the inflation impact on growth rate), we must select a base year, and
convert the current prices to constant prices. (उ�ादन मू� म� महंगाई के असर को हटाने के �लए िकसी एक आधार
वषर् के दामों के साथ जोड़कर देखना चािहए)
Nominal GDP at Current Prices (2019)

𝐺𝐺𝐺𝐺𝐺𝐺 𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷 = × 100
Real GDP at Constant Prices (BaseYear 2011)
Table 1: As per data from📙📙📙📙ES22

NSO in 2019-Feb → ₹ lakh crores (Approx) 2017-18 2018-19 2019-20 2020-21
A) Nominal GDP @Current Prices in crores 171 lakh cr 190 lakh cr 203 lakh cr 197
[Production GVA Method]
Nominal Growth Rate @Current Prices 11.3% growth 11.0 % growth 7.5% growth than (-3)%
(against Previous Year) than 2016! than 2017! 2018!
B) Real GDP @Constant Prices (BaseYear2011) 132 140 145 135
Real Growth Rate @Constant Prices (against 7.2% growth 6.1% growth than 4.2% growth (-)6to7%
Previous Year) than 2016 2017 than 2018
GDP Deflator = {A÷B} x 100 129 135 138 146
135−129
GDP Deflator based year-on-year inflation ( ) ∗ 100= 4.65% 2.22% 5.80%
129
GDP Deflator is also known as Implicit Price Deflator
48.6.1 📈📈📈📈: 🧅🧅GDP vs CPI&WPI

GDP Deflator CPI, WPI (More in 4C: Inflation section)
GDP deflator is the most comprehensive - CPI: Only few/selected goods/services
indicator to measure inflation, because it covers prices monitored.
all goods and services’ prices. So, it helps - WPI: Only few/selected goods prices
tracking changes in consumption pattern and monitored. Services price not covered.
investment pattern. [�ोंिक जीडीपी िड�ेटर म� सभी क� [महंगाई के इन सूचकांकों म� सभी क� सभी व�ुओ ं और सेवाओं
सभी व�ुओ ं और सेवाओं के दामों के मू� म� बढ़ोतरी का पता के दामों को नहीं नापा जाता। के वल कु छ चु�नदं ा व�ुओ ं और
चलता है इस�लए जीडीपी िड�ेटर के �व�ेषण से हम उपभोग सेवाओं के दामों पर �नगरानी रखी जाती है]
और �नवेशक और �नवेश म� आ रहे बदलाव को समझ सकते है]
DATA released quarterly basis (3-3- months) DATA released monthly basis
but RBI doesn’t use it for monetary policy RBI uses CPI (All India) to target inflation in its
making because GDP deflator data comes monetary policy making (More in
quarterly (and not monthly basis). [भारतीय �रज़वर् 📑📑Pillar#1A2)
ब�क अपनी मौिद्रक नीती बनाते व� इस आंकड़े का ल� नहीं
रखता �ोंिक ये तीन तीन महीने पर प्रका�शत होता है]
🔠🔠❓MCQ. The 8% growth rate registered by Indian economy during 2015-16 is based on [UPSC-CDS-2017-I]
(a) Gross National Product at market prices. (b) Gross Value Added at constant prices.
(c) Gross Domestic Product at market prices (d) Gross Domestic Product at constant prices.
48.6.2 📉📉📉📉📉📉GDP Misc Topics → 2015 calculation reform

To comply with the United Nations System of National Accounts (SNA-2008) (सं यु� रा�� के रा��ीय-िहसाब
मानकों के मुता�बक़ से भारत म� GDP क� �गनती करने के �लए �न� सुधार िकए गए 2015 म�)
- Base Year Changed from 2004 to 2011. (आधार वषर् म� बदलाव िकया)
- Updated the system of data collection and classification and value calculation for: (�न� �ेत्रों के डेटा
एक�त्रत-करण और मू� वधर्न क� �गनती क� प्रणाली म� अद्यतन सुधार िकए गए)
- Crop data and livestock data, handicraft industries (अनाज पशुपालन ह�-कला उद्योग)
- Meat value calculation (मांस का उ�ादन)
- services produced by local bodies e.g. municipal bus, municipal school-water-sanitation
(नगर �नगम और �ानीय इकाइयों द्वारा जो सेवाएँ उ�ादन क� जा रही है)
- goods/services produced by the informal sector e.g. domestic maids (अनौपचा�रक �ेत्र )
- sand extraction, construction sector, mining sector (बालू-खनन, मकान �नमार्ण)
😰😰BEFORE 🤩🤩From 2015
Companies’ goods/service production data Using companies’ balancesheet details
was computed using Annual survey of submitted to Ministry of Corporate Affairs.
industries (ASI) and index of industrial (कं प�नयों के उ�ादन का डेटा कॉप�रे ट मामलों के मं त्रालय से
production (IIP). �लया जाए)
Bank/NBFC’s financial services production will be captured in more comprehensive
data collection methods were not manner with the help of RBI, SEBI, IRDAI,
modern/comprehensive PFRDA. (�व�ीय सेवाओं के उ�ादन का डेटा)
Private coaching, hotel-tourism etc. services’ Will use service-tax collection data to cross-
production data capturing methods were not check the production/growth of such
modern/comprehensive services. (सेवा-कर म� सरकार को �ई आमदनी क� मदद से
ये जाँच िकया जाए क� सेवा �ेत्र म� िकतना उ�ादन �आ)
++ many other things but this is more than sufficient to handle the random Mains Question
asked in GSM3-2021 for 150 words.(डेढ़-सौ श�ों म� जो Mains Qs पूछा, उसके �लए ये माल काफ़� है।)
48.6.3 📉📉📉📉📉📉😰😰 GDP Misc Topics → Backseries Controversy? (�ववाद)

- During PM Manmohan-raj GDP base year was 2004-05.
- 2015: PM Modi changed GDP base year from 2004 to 2011. It was done to comply with the
System of National Accounts (SNA-2008) of the United Nations.
- Then, Manmohan-raj GDP figures have to updated / re-adjusted as per the new base year. (ए
आधार वषर् के िहसाब से आंकड़ों को बदलना होगा)
- The (new) GDP-data thus re-produced for 2005-2011 is called “Backseries” data.
- 2018: MoSPI → National Statistical Commission → Committee on Real Sector Statistics under
the Chairmanship of Dr. Sudipto Mundle → He discussed various approaches to prepare such
Backseries. Then NITI released backseries data, showing Congress Raj GDP growth was pathetic.
- Critiques alleging “Methodology is wrong, and MoSPI/CSO should have released the report. NITI
Ayog should not have released it on their behalf. So, it’s all Modi’s manipulated data just to show
his growth figures are higher.”
Average Growth rate Base year 2004 Base year 2011
👳👳UPA-1 era (2004-09) 8.1% ~ 6.7% (using Backseries)
👳👳UPA-2 era (2009-14) 7.0% ~ 6.7% (using Backseries)
🧔🧔Modi-era (2014-2018*) N/A ~ 7.4%
48.6.4 📐📐📔📔📔📔ES20 Vol1ch10: India GDP is not overstated
⇒ 2019-March: Former RBI Governor Raghuram Rajan expressed doubts over India’s 7% growth
rate. He felt it was overstated.(“जीडीपी को वा��वक रकम से अ�धक बढ़ाकर िदखाया जाता है”, ऐसा सं देह राजन को)
⇒ 2019-June: Former CEA Arvind Subramanian published a research paper
o He compared the growth rate figures against India’s exports, imports, loans to industry,
petroleum consumption, railway freight traffic, electricity consumption, etc.
o He did not find strong evidence of 7% GDP growth. He estimated it’s only 4.5%.
o That means, India’s growth rate has been overestimated by 7.0-4.5 = 2.5%. (भारत के जीडीपी
वृ�द्धदर को बढ़ा चढ़ाकर दशार्या जाता है )
⇒ So, if Raghuram Rajan & Arvind Subramanian are right then either
o The Govt's data collection methodology is wrong (डाटा को इकट्ठा करने का तरीका/कायर्प्रणाली गलत
है) and/or Collected data is manipulated / doctored. (डाटा के साथ छे ड़खानी क� जाती है.)
📔📔📔📔ES20 has dedicated an entire chapter to prove how above criticism (By Raghuram Rajan and
Arvind Subramanian) is invalid.
⇒ CEA Subramanian K. did a lot of mathematical analysis using heavy academic words like
Difference-in-difference (DID) Method, variable bias in regression models, etc.
⇒ He basically tried to prove that all those critiques are wrong. India’s GDP is not overstated or
mis-calculated. ✋But hardly anything MCQ worthy.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
48.6.5 📐📐GDP Misc Topics → Changing base years to 2017 & 18

2018-Feb: MoSPI declared that it’ll ‘initiate’ steps to change base years:
Indicator Present Base year Proposed New Base Year (प्र�ा�वत नया आधार वषर्)
GDP & IIP 2011 2017-18
CPI 2012 2018-19
This is proposed to ‘accommodate’ the changes take place in the economic scenario of the country
(e.g. GST, Demonetization, RERA). अब यह प्र�ा�वत है लेिकन वा�व म� अमल म� आया नहीं
48.7 📐📐📐📐📐📐 GDP → GROWTH RATE → ECONOMIC CYCLE

1) Expansion, Prosperity, Boom, Upswing of economy (तेजी का दौर).
2) Recession Phase (मं दी): from peak prosperity to moving downwards. Usually evident from
continuous negative growth rate for two successive quarters (=6 months). E.g. USA 2007-09 in
the aftermath of Subprime crisis .
3) Depression Phase (घोर मं दी): Severe and long lasting Recession e.g. USA 1929-39 in the aftermath
of stock market crash. It resulted in great fall in GDP, income, employment, industrial
production, and wholesale-retail sales.
4) Recovery Phase (समु�ान): from recession / depression towards prosperity.
Technical Recession when GDP growth ⏬ for, at least, two consecutive quarters.
मं दी क� तकनीक� �ा�ा सतत दो �तमाही तक वृ�द्ध दर म� �गरावट
Recessionary Phase If GDP growth ⏬in present quarter than previous quarter
मं दी का दौर �पछली �तमाही क� अपे�ा इस �तमाही वृ�द्ध दर म� �गरावट
Expansionary Phase If GDP growth ⏫in present quarter than previous quarter
तेजी का दौर �पछली �तमाही क� अपे�ा इस �तमाही वृ�द्ध दर म� बढ़ोतरी
48.7.1 🤧🤧🤧🤧🤧🤧Post-Corona: V-shaped recovery for India?
Table 2: Types of Recoveries
V-Shaped IF GDP growth suffers a sharp ⏬→ then quickly recovers. So graph will appear
"V-shaped". E.g. 1918-1920: Spanish Flu: USA growth falls to (3.5%) → afterwards
quickly recovers to (7.5%) = V-shaped recovery.
U-shaped If GDP growth takes more time to recover, then rises.
W-shaped If GDP growth ⏫ then ⏬ then again ⏫.
K-shaped If GDP growth ⏫for some sectors e.g. E-Learning, E-Commerce sectors while
Recovery GDP growth ⏬ in some sectors e.g. Tourism, Restaurants, Gyms, Theatre
कु छ �ेत्रों म� तेजी कु छ �ेत्रों म� मं दी जारी रहे
- 📔📔📔📔ES21 (Published in 2021 January) projected V-shaped recovery, assuming 1) mass
vaccination of people → ⏫business of contact-sensitive sectors like trade, hotels, transport,
tourism, 2) unlocking of pent-up demand 3) Low Base Effect. (अ�धकतर आबादी का टीकाकरण होने के
प�ात सं पकर् आधा�रत सेवा �ेत्र जैसे �ापार इस रे�ोर�ट प�रवहन पयर्टन इ�ािद म� बढ़ोतरी, दबी �ई माँग का पुनज�वन, सं दभर् वषर् म�
छोटी रक़म क� असर- के प�रणाम ��प,'वी' आकार के प्र�ेपवक्र से भारतीय अथर्तंत्र पुनज��वत होगा)
48.7.2 ✌📈📈📈📈 📈📈📈📈Low base effect in GDP growth

⇒ It means the choice of the reference/comparison year affects the % growth.
𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 149 − 145 149 − 134
� � ∗ 100 � � ∗ 100
𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷 145 134
Result =2% =11%
⇒ In maths/fractions, whenever denominator gets smaller, the % answer will get bigger.
⇒ Thus, if reference/comparison year had a small figure then → % growth will look big.
⇒ Usually India's real GDP growth is in single digit in 6-7% range. However in 2021: GDP growth
rate is in 8.9-9.2% range this big figure is possible due to the low-base effect of Corona 2020
(सामा� �प से भारत का वा��वक GDP वृ�द्ध दर 6-7% मु��ल से होता है, िकंतु 2021 म� ये बड़ा िदखता है �ोंिक “सं दभर् वषर्
म� छोटी रक़म क� असर” से चलते %प्र�तशत जवाब बड़ा हो जाता है)
48.7.3 🐗🐗Misc. Terms: Animal spirit in the economy

⇒ British economist John Maynard Keynes (book General Theory of Employment, Interest, &
Money) argued that investors and consumers are guided by animal spirit / psychological urge
than unbiased & rational analysis of facts. (�नवेशक और उपभो�ा अपने �नणर्य त�ों का �न�� और तकर् सं गत
�व�ेषण करने क� जगह, पशुभावना या मनोवै�ा�नक इ�ा, के आधार पर लेते ह�)
⇒ When their animal spirit is more active, they will do more investment and spending.
⇒ 2019: RBI report observed that despite govt efforts, domestic Demand not ⏫therefore Animal
spirit not reviving, hence slowdown in economy.
48.7.4 ♨Misc. Terms: Pent up demand (दबी �ई मांग)
⇒ During recession / slowdown, People postpone their shopping plans. Once economy recovers or
if there is a festival season → sudden ⏫ in the shopping, called "Pent up Demand". (मन म� दबी �ई
मांग जो उछलकर बाहर आए- इस�लए िदवाली-से-िक्रसमस म� लोगों ने कोरोना म� भी जमकर ख़रीदी क� होगी)
⇒ 2020-Oct/Nov: Due to Diwali season, sudden ⏫in online & offline shopping due to various
discounts / sale-offers so, GST collection ⏫. But critics argue it was just a festival based 'pent-
up' demand and it may not sustain for a long time, once the Diwali to Christmas season is
over. (लेिकन �ा उ�व ख� होने के बाद भी एसी भारी शो�पंग/माँग जारी रहेगी?)
48.7.5 🥶🥶 Misc. Terms: Hysteresis

Hysteresis= refers to an event in the economy that persists even after the factors that led to that event
have been removed. e.g. Even after the corona is controlled, People continue to spend less, fearing
another lockdown/job-loss. (�जसके कारक अब समा� हो चुके ह� िफर भी वह घटना जारी रहे. जैसे कोरोना वायरस �नयं त्रण म�
आने के बावजूद भी, इस डर से िक वापस महामारी आएगी, लोग खरीदारी कम कर�गे, और बचत �ादा कर�गे)
48.8 📉📉📉📉⌚🎧🎧GDP GROWTH RATE & 5 TRILLION ECONOMY

48.8.1 📐📐🕵🕵🌐🌐World Bank-ICP's GDP series based on PPP
⇒ UN Economic and Social Council → United Nations Statistical Commission →
International Comparison Program (ICP)
⇒ ICP's goal is to convert data on Purchasing Power Parities (PPPs) so GDP and price levels can
compared. More on PPP = Ref Pillar#3A:
⇒ 2020: World Bank released new datasets for 2017, using ICP.
GDP for 2017 Entire world #1 China #2 USA #3: India
$1=₹21 (PPP)
(PPP $, Trillion) 120 Trillion abt 20 trillion abt 20 trillion 8 trillion
% of total 100% 16.4% 16.3% 6.7%
48.8.2 💼💼 Budget-2019: $5 Trillion economy
Year India’s GDP in trillion $ (Current Prices)
2014-15 1.85 trillion
2018-19 2.70 trillion
2019-20 2.90 trillion
2021-24 ….. whatever जो भी होगा
2024-25 5 trillion targeted (i.e.by 31/3/2025)
- ES19 has given blueprint for this and said, “We kept the cover of this survey in skyblue color,
because we’ve given blueprint for $5 trillion economy.”
- Counterview: Former RBI Governor C.Rangarajan said India cannot achieve 5 trillion dollar
economy by 2025, because to achieve it, we’ll have to grow at 9-10% annually but at present we
are struggling with 5-6% growth rate. (या�न क� हमसे ना हो पाएगा)
🚩🚩🚩FAQ: Can we quote “$5 trillion GDP target” number in our Mains answer writing- especially
when in reality it seems impossible to achieve? Ans. Even after Corona, government/NITI/Eco-
Survey has not admitted officially that they cannot achieve it and they are quitting this target. So we
can still use this $ 5 trillion number in our Mains Answer Writing.
48.9 📉📉📉📉⌚🎧🎧GDP GROWTH RATE BEFORE CORONA

48.9.1 📐📐📐📐 Growth rate: why fall / decline? (B4 Corona)
⇒ Protectionism in China and the USA (सं र�णवाद), US-Iran geopolitical tensions (भू-राजनी�तक तनाव)
→ global trade is affected. (अंतररा�ी� य �ापार म� कमी)
⇒ Sharp ⏬in the automobile purchase. This problem will further worsen with Bharat-6 emission
norms. Such vehicles are more expensive than previous models.
⇒ Virtuous Cycle of Growth (सं वृ�द्ध का सु-चक्र):
o ⏫ investment → ⏫ economic growth → ⏫ consumption → ⏫ investment.
o In India, investment slowed down in the aftermath of Nonperforming assets - Twin
balance sheet syndrome (TBS) & IL&FS-NBFC Crisis. (Ref: Pillar#1B)
According to critiques, the demonetization and GST too have harmed the growth rate but
📔📔📔📔ES20 stand is ‘short term challenge, long term benefit’. (लघुअव�ध म� चुनौ�तयां लेिकन दीघार्व�ध म�
�वमुद्रीकरण तथा व�ु एवं सेवा कर से भारतीय अथर्तंत्र को फायदा ही होगा)
48.9.2 📐📐📐📐 Declining Growth rate: future risks / challenges- 📙📙📙📙ES20 and 📙📙📙📙ES21
ES20 and ES21 had identified following challenges😰😰:
⇒ US-Iran geo-political → crude oil price ⏫ → weaker rupee → ⏫ inflation → ⏬
consumption → GDP ⏬.
⇒ Even after the Insolvency Bankruptcy Code, the bad loan resolution process has been very slow.
Banks reluctant to give loans to companies → GDP can’t expand.
⇒ Unless real estate developers reduce home prices, It is difficult to sell the unsold homes →
Builders will not build new homes → ⏬ demand of Steel and cement → GDP cannot expand.
⇒ 🤧🤧🤧🤧Corona lockdown.
48.9.3 😷😷😷😷😷😷⌚🎧🎧Negative GDP Growth: Demand & Supply-side Shocks in Corona

Demand side Shock reasons: Supply side Shock reasons:
माँग म� �गरावट आघात आपू�त म� �गरावट का आघात
😰😰First - loss of income → Increased - Businessman seeing fall in demand →
order/stage uncertainty, lower confidence ⏬Investment in purchase of raw
shock → Precautionary savings, material, biz expansion. माँग म� �गरावट के
(प्रथम चरण का Shopping /spending ⏬. आमदनी चलते उद्योगप�त भी क�े माल और �ापार �व�ार म�
आघात) म� �गरावट के चलते एह�तयाती �प से बचत कम �नवेश करते ह�
म� बढ़ोतरी, ख़रीदी/ खच� म� कटौती - problems in Supply chain management
Demand side Shock reasons: Supply side Shock reasons:
माँग म� �गरावट आघात आपू�त म� �गरावट का आघात
- Fear of infection. सं क्रमण के भय से and migrant labour issues →
ख़रीदारी करने न जाना Production⏬ आपू�त �ं खला प्रबं धन तथा
- Lockdown तालाबं दी प्रवासी मज़दू रों क� वतन वापसी
😰😰Second - migrant workers fleeing home First order/stage problems throughout the
order/stage → their own income⏬ → world = Difficulty in getting raw material,
shock Aggregate demand ⏬. जो श्र�मक Import export, loans repayment =
िद्वतीय चरण के वतन वापसी कर गए → गाँव म� कम Aggregate production ⏬
आघात आमदनी के चलते उनके द्वारा ख़रीदारी ⏬
48.9.4 😷😷😷😷😷😷⌚🎧🎧Negative GDP growth: Post Independence
They have happened 4 times since independence
Year 1965 1971 1979 2020
Reasons? drought and war Drought, war Drought, political Corona
अकाल/सूखा युद्ध instability Pandemic
(राजनी�तक अ��रता) (महामारी)
Did Agro YES. हाँ इन तीनों बार कृ �ष उ�ादन म� काफ़� �गरावट आयी NO, Agro output
Output⏬? did not decline
48.9.5 😷😷😷😷😷😷⌚🎧🎧Negative GDP growth: Impact on States in Corona
State Which sector felt big shock in Corona-2020?
Maharashtra, ⇒ Contact sensitive services sectors (Restaurant, Aviation, Tourism etc)
Delhi ⏬⏬ by lockdown. (सं पकर् आधा�रत सेवा �ेत्र-रे�रां हवाई यात्रा पयर्टन)
⇒ Labour intensive sectors E.g. MSME mfg, maid/servants, retail shopping
(श्र�मक आधा�रत/ श्र�मक �नभर्र उद्योगों)
TN, Kerala, UP ⇒ Construction sector because migrants fleeing to home
Gujarat ⇒ Manufacturing, Diamond polishing sector
In above states' Non agricultural sectors: 30% or more labourers are "informal workers" → migrants
fleeing to home in Corona= big shock on output. (उ� रा�ों के ग़ैर कृ �ष �ेत्र म� 30 प्र�तशत या उससे भी �ादा
मज़दू र- अयथाव�ध मज़दू र ह� → कोरोना वतन वापसी → उ�ादन पर भारी आघात)
Homework for Interview: 📔📔📔📔ES21 Vol2 Ch1 Page 33-34 → Check the data
related to your own home state for (UPSC इं टर�ू/सा�ा�ार के �लए अपने रा� के बारे म�)
48.9.6 📐📐📐📐 Declining Growth rate: future risks / challenges- 📙📙📙📙ES22
⇒ �ES22 analysed High Frequency Indicators (HFI) & concluded that Post-Corona economic
recovering, Government has successfully tackled the corona crisis. Examples of HFIs- E-way Bill
Generation, GST Collection, Electricity/Fuel/Power Consumption, Fastag Electronic Toll
Collection, ticket sales in aeroplanes and railways, UPI and ATM Transactions, sales of tractors,
Share market/FDI-FPI, arrival of crop in APMC Mandis, India’s Export/Foreign Trade, Foreign
Exchange Reserves etc. (उ� तीव्रता वाले सूचकांक जैसे िक GST आमदनी, �बजली खपत, ट�ै�र क� �बक्र� या इ�ािद का
�नरी�ण/मुआयना करते �ए आ�थक सव��ण का ये कहना है िक हाँ, भारत का अथर्तंत्र कोरोना-के बाद वापस पटरी पर आ रहा है।)
⇒ Negative impact of second wave of Corona (2021) was less severe than First wave (2020) on
Indian Economy. (भारतीय अथर्तंत्र को कोरोना क� पहली लहर म� �जतना नुक़सान �आ था उसके मुक़ाबले दू सरी लहर म� कम
नुक़सान �आ है।)
ES22 projected GDP Growth rate for 2022-23= estimated at 8.0-8.5% → ONLY IF
- 😷😷1) IF there will be no more lockdowns / new deadly corona Varients (अगर िफर से तालाबं दी ना हो)
- ☔2) IF monsoon will be normal (अगर बा�रश सामा� रहे)
- ⛽3) IF oil prices will be in the range of US$70-$75/barrel (क�े तेल क� क़�मत� सामा� रहे)
- 🐯🐯4) IF US Fed Tapering completed in an orderly fashion without new surprises or random
changes. (�बना कोइ नये अप्र�ा�शत बदलाव िकए, �व��त/ अनुमा�नत तरीक़े से फ़े ड-टेप�रंग ख़� हो)
- ⚔🚛🚛5) IF global supply chain disruptions (caused by Ukraine war & other geopolitical crisis)
will get solved. (भू-राजनी�तक आपदाओं के चलते हो रही वै��क आपू�त �ं खला क� सम�ाएं सुलझ जाएं . यिद ये सब चीज़�
क़ाबू म� रही → तो अपना आ�थक वृ�द्ध दर 8.0-8.5% हो सकता है)
48.10🌽🌽⌚🎧🎧📈📈 GDP → $5 TRILLION → HOW TO ACHIEVE?: 📔📔📔📔ES STRATEGY
Savings It’s the Income excess of Consumption. Subdivided into Private Savings [by
बचत households & business firm] and Public Savings by Govt organizations.
⇒ It's the domestic Savings + foreign money WHICH IS put in Real (physical)
Assets like machines, tools, buildings, office spaces, storehouses, roads, bridges,
airports and unsold inventory (ऐसा सामान �जसका �नमार्ण �आ लेिकन �बका नहीं)
Investment
⇒ In an Open Economy Country, Investment may become higher than
�नवेश
(Domestic) Savings: - IF there is inflow of Foreign Capital.
⇒ In a Closed Economy, Investment EQUAL = Savings [with many conditions
like 0% taxes, etc. but that MA(Economics) is not IMP]
Gross Fixed Capital Formation Rate (सकल �न��त पूंजी �नमार्ण दर)
= INVESTMENT – DISPOSAL of assets (liquidation, condemnation).
GFCF
Thus, GFCF shows the net increase in physical assets. It IGNORES depreciation,
and land purchases.
48.10.1 🥤🥤Capital Output Ratio
USA India
Cost of bottling plant → $ 3 lakh 3
How many bottles it can produce → 2 lakh 1 lakh
Capital Output Ratio 3/2 = 1.5 � 3/1= 3 �
(Higher is bad)
It is the amount of capital needed to produce one unit of output. It depends on factors such as
technological progress, prices of capital goods / machinery. In India, High Capital Ratio is among the
reasons for subdued growth rates.
48.10.2 🥤🥤ICOR
⇒ ICOR = additional unit of capital or investment needed to produce an additional unit of output.
(एक अ�त�र� पुजार् बनाने के �लए िकतनी अ�त�र� पूंजी चािहए होगी?)
⇒ ICOR in India: 3.8 (2016) → 4.9 (2018) → 6.9 (2019).
⇒ A higher ICOR means is a country's production is less efficient
48.10.3 💰💰Investment⏫ more imp than Savings⏫

📔📔📔📔ES18 had observed:
- Pre-Subprime crisis, above indicators were >30% of GDP. But then ⏬, then struggling zig-zag.
- Pre-subprime crisis our growth rate was in peak 9%, presently struggling in ~7% range (before
Corona). Some countries take as much as 17 years to come out of such crisis.
If we want to quickly recover, & bring our growth to 9% then we must ⏫investment → GFCF will
⏫ → then growth rate will automatically ⏫ → savings will automatically ⏫ Therefore,
✅Increasing Investment / GFCF: should be ✋Increasing / mobilizing savings is important

our urgent priority but should not be our urgent priority
Resolve TBS, encourage Make in India & PMJDY, Pension-Insurance schemes, Sovereign
Startup India, Reforms in Tax Laws, Labour Gold Bonds, Unearthing black money,
Laws, Environment Clearance, FDI approval Demonetization etc. They’re important but not
etc. �नवेश को बढ़ाना हमारी प्राथ�मकता होनी चािहए “URGENT” बचत को बढ़ाना प्राथ�मकता नहीं होनी चािहए
Similar theme is also reiterated by ES19 that private investment is necessary for boosting growth.
🔠🔠❓MCQ. Economic growth in country X will occur if: (Asked in UPSC-Pre-2013)

(a) there is technical progress in the world economy.(b) there is population growth in X.
(c) there is capital formation in X.(d) the volume of trade grows in the world economy.
🔠🔠❓MCQ. Despite being a high saving economy, capital formation may not result in significant
increase in output due to(Asked in UPSC-Pre-2018)
(a) weak administrative machinery (b) illiteracy
(c) high population density (d) high capital-output ratio
48.10.4 🌽🌽⌚🎧🎧🎧🎧 GDP → $5 Trillion → How to Achieve?: NITI strategy

2018: NITI’s Strategy for New India @ 75 has given following strategy for $5 Trillion
Target for 2022-23 Challenges?
⏫ the Gross Fixed To increase Public Sector / Government led-investment:
Capital Formation - Must ⏫ TaxtoGDP by combating tax evasion and tax avoidance.
(GFCF) (करचोरी और कर प�रहार को रोकना)
- Must ⏬ Revenue deficit by combating Subsidy leakage through
सकल ��र पूंजी �नमार्ण JAM-trinity. (स��डी का �रसाव बं द हो)
- Govt has to exit from loss making public sector enterprises. (घाटे म�
चलने वाले सरकारी �नगमों से सरकार हट जाए)
- PPP for Infrastructure. (सावर्ज�नक �नजी �ेत्र क� भागीदारी से)
To mobilize private households’ investment
- Greater coverage in Sovereign Gold Bond, Jan Dhan Account,
Pension-Insurance schemes etc. ;
- Preventing Ponzy & Chit Fund scams...
To mobilize domestic & foreign companies’ investment
- Addressing the NPA crisis, reforms in the FDI policy, Ease of Doing
Biz etc. (अनजर्क प�रसं प��, प्र�� वदेशी �नवेश म� सुधार, �ापार म� सुगमता)
⏫ India’s growth For this we must ⏫ our ‘Exports’ so,
rate to 9-10%. - Address various bottlenecks in our agri and manufacturing sector.
Increase size of - Ease the complex labour and land laws. (श्रम और जमीन कानून म� सुधार)
Indian economy - Industrial Revolution 4.0, artificial intelligence, IoT etc.
(=GDP) - Skilling Youth, ⏫ female participation in labour force. (कौशल �वकास
to $5 trillion USD. मिहलाओं क� श्रमबल म� भागीदारी)
- Renewable energy to ⏬ crude oil import bill. (नवीनीकरण ऊजार्)
- Trade agreements with like-minded countries (समान �वचारधारा वाले �मत्र
देशों के साथ मु� �ापार समझौते) (More in 📑📑Pillar#3B)
48.10.5 📔📔📔📔ES20 Vol1Ch1 on Wealth Creation (धन सृजन)

⇒ Until the entry of Europeans, India has been the dominant global economic power.
⇒ Then our GDP growth started to ⏬ during British Raj and Nehruvian Socialism.
⇒ But since 1991’s LPG reforms, again we are back on track.
📔📔📔📔ES20 identified following benefits of wealth creation by private entrepreneurs:
Employees, suppliers, retailers → ⏫ income, jobs (रोजगार सृजन)
Government → ⏫ tax collection (राज� / कर आमदनी म� बढ़ोतरी)
Common citizen → ⏫ quality of roads, schools, hospitals created through the
आम नाग�रकों के �लए tax revenue (कराधान से सड़क, �श�ा, �ा� बेहतर क� जाए)
Then, CEA Subramanian K. talks about “wealth creation” in context of GDP. He uses ancient and
modern thinkers/economists to suggest how to ⏫ our wealth
Thinker How Economic Survey links their ideas with wealth creation
Kautilya ⇒ Kautilya’s Arthshastra book is centred around Varta (economic policy),
Dandaneeti (law and enforcement), Anvikshiki (philosophical and ethical
framework) and Trayi (cultural context)
⇒ Kautilya asked the King to remove all obstructions to economic activity and
provide economic freedom to the citizens. (आ�थक ग�त�व�ध म� सभी �कावट� हटाकर
आ�थक �तं त्रता प्रदान करना)
⇒ So, Modi should also focus on Ease of Doing Biz (�ापार म� सुगमता)
Thiruvalluvar ⇒ Thiruvalluvar’s Thirukural book advocates wealth creation through ethical
Tamil poet and means. (धन सृजन करना चािहए, िकंतु नै�तक तरीके से)
philosopher. ⇒ Govt should provide equal opportunity for new entrepreneurs, Modi should
avoid Pro-Crony policies of ManMohan. (Recall Pillar4B: mfg → EoD,
प�पाती पूंजीवाद से बचो)
⇒ There should be no shame in privatization (Strategic disinvestment) of the
govt companies, Because after privatization their profitability has ⏫.
(Recall 📑📑 Pillar#2:Disinvestment)
Adam Smith Adam Smith's book ‘An Inquiry into the Nature and Causes of Wealth of
Father of Nations’ described “Invisible hand of the free market is instrumental in
Economics economic growth” (मु� बाजार का अ�� हाथ ही आ�थक वृध्धी िदलाता है).
Thinker How Economic Survey links their ideas with wealth creation
⇒ But Govt intervention in free market often harms more than it helps.
(📑📑Recall Pillar4A: FCI procurement, Essential Commodities Act. (मु�
बाजार म� सरकारी दखल से लाभ कम नुकसान �ादा)
David Hume, “We should assume every man is a knave (=dishonest person), his actions are
Scottish always driven by private interest. So, effective supervision required”. (सब लोग
Philosopher बेईमान और �ाथ� ही होते ऐसा सोचकर सरकार ने स� �नगरानी रखना ज�री.)
⇒ So, we’ve to regulate the Shadow banking sector (प्र�तछाया ब�क) more
vigorously. (📑📑Ref#1B)
⇒ We must deal with the wilful defaulters responsible for the high level of
NPA. → use Artificial intelligence, Machine Learning etc., create PSBN
network. (📑📑Ref#1B)
⇒ American Sharemarket regulators has 15x times employees than SEBI. So,
we also need to increase manpower in regulatory bodies. (📑📑Ref#1C)
Motivation ⇒ Abraham Maslow’s Motivational Pyramid: “Individuals are not driven just
प्रेरणा by physical / material needs, but also have needs of self-esteem & self-
actualization” (�� क� प्रेरणा का �ोत �सफर् भौ�तक सुख नहीं, ब�� आ�-स�ान और आ�-
प्रा�� भी होते ह�)
⇒ Confucius: “if Govt guides the people with penalties → they’ll shamelessly
evade the law. But if the Government guides them with virtue → people will
become upright.” (सरकार सद्गुण के साथ मागर्दशर्न करती है → लोग ईमानदार हो जाएं गे।)
⇒ Therefore we should use the ideas of behavioral economics to increase their
morale to (�वहार अथर्शा�, नै�तक �र बढ़ाएं )
⇒ 1) Give up subsidies and 2) honestly pay taxes (📑📑Ref: Pillar#2)
Trust Adam Smith’s book ‘The Theory of Moral Sentiments’ described, “while people
�व�ास are sometimes selfish, they also derive pleasure from seeing the happiness of
others. (हालांिक लोग कभी-कभी �ाथ� होते ह� लेिकन उ�� अ� क� खुशी देखकर भी खुशी �मलती है)
⇒ Absence of such mutual sympathy / trust (पर�र सहानुभू�त / �व�ास) can result in
financial disasters, as seen in Subprime Crisis, Global Financial Crisis,
India’s NPA & Wilful defaulters.
⇒ So, trust is a ‘public good (सावर्ज�नक व�ु)’ similar to ‘streetlight’- everyone
benefits from it. Govt & entrepreneurs should try to build trust with citizens
Further, “Assemble in India”, “Agri Exports” → ⏫Export → ⏫GDP etc= Ref: (📑📑Pillar#4A&B).
48.10.6 📔📔📔📔ES20: Countercyclic Fiscal Policy, Interest Rate Growth Rate Differential (IRGD)
Covered in 📑📑Pillar#2D
🔠🔠❓MCQ. Which of the following was recognized as 'invisible hand' by Adam Smith? (UPSC-
CAPF-2020) (a) Government (b) Market/Price Mechanism (c) Judiciary (d) Legislature
48.10.7 📙📙📙📙ES22: supply-side reforms to ⏫ GDP (आ�थक वृ�द्ध के �लए आपू�त �ेत्र के सुधार)
⇒ � �ES22 said - Govt has adequately tackled the corona crisis through “barbell strategy” and
“agile” framework (भारत सरकार ने "बारबेल रणनी�त" और "फु त�ली" �परेखा क� मदद कोरोना को ट�र दी है.)
⇒ What does it mean? Ans. REF Pillar6. Gist of his argument is- whatever govt did in the 3 phases
of Atma Nirbhar Bharat = really great. कु ल �मलाकर आ�थक सव��ण ये कहना चाहता है िक भारत सरकार ने
आ��नभर्र के तीन चरणों म� जो जो िकया गया वो ब�त महान/प्रभावी था।)
For ⏫GDP growth, �
�ES22 suggested / appreciated following supply side reforms:
� �Note: To understand the relevance of the following bullet points, you must have completed
the entire course- all pillars:
⇒ deregulation of numerous sectors and simplification of processes e.g. (�नयं त्रण को कम करना, प्रिक्रयाओं
का सरलीकरण)
o � Voluntary liquidation and cross-border insolvency (REF: Pillar#1B2)
o �
TREDS / Factoring reforms for easier/faster loans to MSME. Changed definition of
MSME. (REF: Pillar#1C, 4B)
o � Using MSP for ⏫crop diversification
o � GeM portal for online procurement (REF: Pillar#4B)
o � Drone flying permission. (REF: Pillar#5)
o � Telecom Sector: Adjusted Gross Revenue (AGR) / FDI reforms. (REF: Pillar#5)
o � � Removal of legacy issues like ‘retrospective tax’ (Vodafone) (REF: Pillar#2B)
o � FDI relaxed in Defense, petroleum and insurance sector in recent years. (REF:
Pillar#3A)
o � production-linked incentives to ⏫supply of India-made goods. (REF: Pillar#4B)
o � Four labour codes’ implementation (श्रम सं िहता क़ानून REF: Pillar#4B)
⇒ Reducing the role of government in a sector/ in an activity. E.g.
o �Privatisation (Strategic disinvestment) of Govt companies in Non-strategic sector.
(ग़ैर रणनी�तक �ेत्रों म� सरकारी कं प�नयों का �नजीकरण REF: Pillar#2D)
o � Aviation: Govt to no longer owns Air India (नाग�रक उड्डयन REF: Pillar#2D)
o � Railways: Govt to allow private sector train operators. (REF: Pillar#5)
o 🛰🛰 Space-tech/ISRO: ⏫ the participation/involvement of the private sector companies.
(अवकाश �ेत्र म� �नजी �ेत्र क� कं प�नयों क� िह�ेदारी को बढ़ाना REF: Pillar#5)
⇒ � Creating physical infrastructure via PM-Gati Shakati. (भौ�तक बु�नयादी अवसं रचना REF: Pillar#5)
⇒ �
Creating Social infrastructure - schools, toilets, hospitals, houses for poor etc. via various
schemes. (सामा�जक बु�नयादी अवसं रचना REF: Pillar#5)
� �FAQ: but some of above reforms are not supply-side reforms, but they demand side
reforms!!!??? Ans. UPSC is unlikely to ask you critically examine in Mains-Exam ke “do u agree
that Economic Survey 2022’s supply side reforms are NOT supply side reforms but actually demand
side reforms?!”. Ans. UPSC unlikely to engage in that pedantry! तो िफर �ों बाल क� खाल �नकालनी है भाई?
48.10.8 👳👳🤕🤕 ES19: GDP growth harmed during Economic Policy Uncertainty
Global Economic Policy Uncertainty Index (GEPU or EPU: आ�थक नी�त अ�न��तता सूचकांक) index Started
in 2016, by three US-based economists—Scott Ross Baker, Nick Bloom and Steven J. Davis.
− They capture countries’ newspapers’ headlines related to economic policy uncertainty, and then
rank the nation accordingly. (अखबार क� सु�खयों को देखकर पता करना के सरकारी नी�तयों म� अ�न��तता िकतनी है)
− 2011-12: economic policy uncertainty was the highest in India.
− 2G Scam, Coal allocation scam, Subprime Crisis, Global Financial Crisis.
− During this time, govt did not take the corporate friendly reform decisions or reverted its
original decisions fearing the media scrutiny, judicial scrutiny, protest by the labour unions.
(आ�थक सव� ने पाया िक सरकार मीिडया �ाय तं त्र और मज़दू र सं घ के भय म� कु छ �नणर्य को वापस ले रही थी)
48.10.9 📔📔📔📔 ES19: How to reduce Economic Policy Uncertainty

⏬ economic policy uncertainty is critical for both domestic investment and foreign investment.
Therefore, ES19 suggested following reforms: (�नवेश म� बढ़ोतरी के �लए आ�थक नी�तयों म� �न��ता ज�री)
48.10.9.1 📔📔📔📔 Make Policies predictable (पूवार्नुमान करने यो�)

Top-level policymakers must ensure that their policy actions are predictable. E.g.
⇒ From which date Bharat Stage emission norms will become effective?
⇒ From which date GAAR or E-Way Bill will become effective?
⇒ 2016-Budget proposed to impose income tax on the money withdrawn by subscriber from his
EPFO fund. Later, due to labour unions backlash it was reverted.
⇒ 2019-Budget proposed to hike surcharge on the income tax of super-rich, then due to a backlash
by foreign investors, it was reverted. (�वदेशी �नवेशक को के �वरोध के चलते �नणर्य वापस �लया)
⇒ 2021- Finance Ministry ⏬⏬ interest rates on various small saving schemes (Ref Pillar1D3)
But within a day, fearing public outcry (& Bengal election), they withdrew decision. [पहले लघु बचत
योजनाओं के �ाज दर म� कटौती क� घोषणा क� लेिकन िफर एक ही िदन म� �नणर्य को वापस �लया!]
48.10.9.2 Keep consistency in promises (वादों म� सामं ज� / �नरंतरता र�खये)

Government / Regulators should maintain broad consistency in actual policy with the forward
guidance. They should reduce ambiguity/arbitrariness in policy implementation. E.g.
− 2018-Dec: Monetary policy Committee keeping “Calibrated Tightening”. Means in the next
meeting they would either ‘hold', or 'increase' repo rate. No chance of cutting the repo rate. Yet
in 2019-Feb, they cut the repo rate.
− Similarly, Govt should avoid changing the goalposts and deadlines of Fiscal Responsibility and
Budget Management (FRBM) Act. (राजकोषीय घाटे के ल�ं को को भी बार-बार बदल िदया जाता है)
48.10.9.3 Policy implementations must be monitored (अ�वरल �नगरानी)

− We should construct India-specific index of economic uncertainty To monitor our performance.
− The actual implementation of policy occurs at the lower levels, where ambiguity gets created.
− Therefore, staff should be trained and implementation processes should be certified (by NITI
etc) before implementing a policy. (सरकारी कम�ऑ को नी�त �नमार्ण और उसके अमल क� तालीम दी जाए)
− Poorly drafted laws full of ambiguities, amendments, clarifications and exemptions = endless
litigation. E.g. Provisions related to Capital Gains Tax in the IT Act 1961: Vodafone-Hutch
case. (कानूनों को सरल भाषा म� बनाया जाए तो तािक मुकदमेबाजी कम हो जैसा िक वोडाफ़ोन वाले के स म� �आ था.)
48.10.9.4 Respect boundaries (एक दू सरे क� सीमाओं का स�ान क��जए)

 Judiciary, legislature and executive should respect each other's boundaries. Executive and
legislature should not create a vacuum which could encourage Judicial Overreach such as
firecracker ban, plastic ban, or no selling of liquor on highway hotels, which may create new
challenges in economy. (�ा�यक अ�त�व�ार के चलते उद्योगों म� अ�न��तता)
48.10.10 � Conclusion: Policy Uncertainty

 Indian faces economic uncertainty from many fronts which are beyond our control e.g. Poor
monsoon, BREXIT, OPEC Oil cuts, Geopolitical disturbance in the Korean Peninsula and
Western Asia (Iran), protectionism and tariff wars.
 While policymakers can not control above ‘economic and diplomatic uncertainties’, they can
definitely control economic policy uncertainty. (आ�थक और कू टनी�तक अ�न��तता को तो हम कम नहीं कर सकते
लेिकन नी�त क� अ�न��तता को कम करना ज�री- तभी �नवेश और आ�थक वृ�द्ध म� मदद होगी।)
 Successive economic surveys have found that greater private investment is necessary for
economic growth in India. EPU can spook investors and spoil the investment climate in the
economy, therefore Government must strive for 100% policy certainty on the economic fronts.
🎓🎓📘📘 📘📘 Homework: Economic Survey 2018-19 Vol1 Ch6 Read Introduction upto Bullet 6.2. Then,
read Conclusion from Bullet 6.22.
48.10.11 � Conclusion: 5 Trillion economy?

 Higher economic growth can help increasing employment avenues for citizens & tax revenues
for the Govts. उ� आ�थक वृ�द्ध दर से रोजगार सृजन और राज� आमदनी म� बढ़ोतरी होगी
 Collectively, this results in improved living standards through higher expenditure on health &
education by both the citizens and the State. �श�ा और �ा� पर �ादा खचर् से जीवन �र भी बेहतर होगा
 Therefore, we must leave no stone unturned to accomplish above targets / address above
challenges on priority basis. (अत: अग्रता क्रम से उ� चुनौ�तयों से लड़ना ज�री)
48.10.12 📐📐📐📐 Global Risk Report 2021 (वै��क जो�खम �रपोटर्)

⇒ Published by World Economic Forum (WEF, Switzerland)
⇒ biggest risk in terms of impact: ‘infectious diseases’ (सबसे �ादा नुकसान होगा= सं क्रामक रोग)
⇒ biggest risk in terms of likelihood: ‘extreme weather’ (�जसके होने क� सं भावना सबसे �ादा= हवामान आधा�रत
प्राकृ �तक आपदाएँ )
Short term dangers (0- infectious diseases, employment crises, digital inequality and youth
2 years) लघु अव�ध के disillusionment. (सं क्रामक रोग, रोजगार सं कट, िड�जटल असमानता और युवा मोहभं ग।)
जो�खम
medium-term asset bubble bursts, IT infrastructure breakdown, price instability and
(3-5 years) म�ाव�ध debt crises. (सं प�� का गु�ारा फटना,सूचना प्रौद्यो�गक� अवसं रचना का टू टना, क�मत म�
अ��रता, कजर् म� बढ़ोतरी।)
Long term Existential weapons of mass destruction, state collapse, biodiversity loss,
threats (5-10 years) environmental risks and adverse technological advances (सामूिहक �वनाश के
दीघार्व�ध क� अ��वादी खतरे ह�थयार, सरकार का पतन, जैव �व�वधता हा�न, पयार्वरणीय जो�खम, प्र�तकू ल तकनीक� �वकास)
48.10.13 📐📐📐📐 Global Risk Report 2022- January (वै��क जो�खम �रपोटर्)
@global level following risks identified: (वै��क �र पे �न� जो�खम पाए गए)
48.10.14 📐📐📐📐 Global Risk Report 2022- Short term risks for India
− Fracture of interstate relations: e.g. (रा�ों के बीच बढ़ रहे तनाव)
o Dam & river water sharing e.g. Kerala vs TN over Mulla-Periyar dam (जल-�ववाद)
o Border disputes e.g. 1) Assam-Mizoram border clash-policemen killed. 2) Dispute
between Andhra and Odisha over Kotia region (रा�ों के बीच सीमा �ववाद)
o Trade of agri-commodities e.g. Telangana govt banning sale of UP-Potatoes to protect
local farmers. (कृ �ष उ�ादों के �ापार म� बढ़ रहे तनाव)
− Debt crises in Advanced Economies → repeat of 2007-08’s American subprime crisis → Indian
exports will suffer. Ref Pillar3A (उ�त अथर्तंत्र वाले देशो म� कज़र् क� सम�ा से भारतीय �नयार्तो पर जो�खम)
− Widespread youth disillusionment → unemployment/reservation related protests & social
unrest (नौजवानों म� �व�ासपतन: �जससे बेरोज़गारी / आर�ण के आंदोलनो म� बढ़ोतरी हो सकती है)
− Failure of technology Governance → Data privacy violation, cyber crimes (प्रौद्यो�गक� म� �वफलता के
चलते नाग�रकों का �नजी-डेटा लीक हो जाए, साइबर अपराध म� बढ़ोतरी हो)
− Digital inequality among rich vs poor, urban vs rural → in e-learning, jobs, etc. (िड�जटल असमानता
के चलते अमीर-ग़रीब, ग्रामीण बनाम शहर-�नवासीऑ के बीच क� �श�ा-रोज़गार के अवसरों म� बढ़ती खाई)
48.11👻👻👻👻⌚🎧🎧🎧🎧 GDP → $5 TRILLION → ATMA-NIRBHAR BHARAT
⇒ (Origin) 2020-March: Government of India initiated nationwide lockdown to prevent the spread
of Corona/COVID-19 pandemic. (कोरोना महामारी के चलते देश�ापी तालाबं दी)
⇒ This lockdown affected the income and livelihood of everyone from corporate companies to
common citizens of India. (सबक� आजी�वका को हानी �ई)
⇒ Therefore, to revive economy, PM launched Atma Nirbhar Bharat stimulus package in 2020-
May to revive the Indian economy. (अथर्�व�ा को पुनजीवन / प्रो�ाहन का आ�थक पेकेज)
⇒ It’s centred on five pillars of – Economy, Infrastructure, System, Demand and Vibrant
Demography (�ू �तली जनसां��क�).
48.11.1 👻👻👻👻 Chronology wise total allotment as per 📙📙📙📙ES21

Sr Item → ₹₹ allotted as of 2020-Nov ₹c
1. Pradhan Mantri Garib Kalyan Package (PMGKP, 2020-April): >2Lcr
⇒ ₹₹ transferred in PM Jandhan bank account of women, poor senior citizens, PH
⇒ PMGKP Anna Yojana: Free food grains and pulses to poor families
⇒ Advance installment /frontloading of PM-KISAN beneficiaries
⇒ PM-Ujjwala: Free LPG cylinder to poor people
⇒ Insurance for the health workers
EPFO contributions (📑📑Ref: HDT-Pillar#1D)
2. Atmanirbhar Bharat Abhiyaan 1.0 (2020-May 12th) 11Lcr
4. Atmanirbhar Bharat Abhiyaan 2.0 (2020-October 12th) 73Kcr
⇒ Festival advance via SBI Utsav Cards for Govt employees, LTC benefits to Govt
employees, (More in 📑📑Pillar#2)
⇒ Addl ₹₹ for defense and roads., States given interest free loans
5. Atmanirbhar Bharat Abhiyaan 3.0 (2020-Nov 12th) 2.65Lcr
⇒ Income Tax relief for real estate developers & Home Buyers,
⇒ Production Linked Incentive (PLI) to boost mfg
⇒ Atmanirbhar Bharat Rozgar Yojana / EPFO contribution
⇒ addl ₹₹ for fertilizer subsidy, addl ₹₹ for PM Awaas Yojana – Urban (PMAY-U)
6. RBI measures announced till 31st Oct 2020: e.g. ⏬CRR, ⏬Repo, ⏫WMA, 13LCr
Special loan Windows (📑📑Ref: HDT-Pillar#1A2)
Total Atma-Nirbhar Package (originally it was ₹20 lcr however later it was ⏫ ~30Lcr
48.11.2 👻👻👻👻⌚🎧🎧🎧🎧 Atma-Nirbhar Bharat Salient features
<REFER To respective pillar’s handouts>
Mrunal's Pillars Atma-Nirbhar Salient Features (List not exhaustive)
⇒ RBI's easy monetary policy, loan moratorium, Additional loan towards
States (WMA, CSF), NBFCs & Mutual Funds, Postponed Basel norms
1A, B,C:
⇒ Government schemes for loans towards NBFCs, MSME
Money Banking
⇒ IBC code suspended
Finance
⇒ Allowed Indian companies to directly list their shares in foreign exchange
⇒ Relaxed penalties in the Companies Act
⇒ ₹50 lakh insurance if Corona health worker died
⇒ Expanded the coverage of workers in ESIC
⇒ Atmanirbhar Bharat Rozgar Yojana / EPFO contribution
1D: insurance ⇒ Promised social security, health check up etc for unorganized sector
& Fin Inclusion workers (असं गिठत �ेत्र के मजदू रों के �लए सामा�जक सुर�ा)
⇒ Direct money transfer of 500-1000 rupees in PM-JDY women accounts,
Senior citizen accounts, PH etc. (प्र�� लाभ अंतरण)
⇒ Loans for SHG, MSME, Street Vendors (SVANIDHI)
⇒ Extended the deadline for filing taxes, Reduced TDS rates
⇒ Changed the policy of disinvestment
2: Public Finance ⇒ Promise to help the states finances
taxation ⇒ PM CARES fund for accepting donation
⇒ Festival advance via SBI Utsav Cards for Govt employees, LTC benefits
⇒ States given interest free loans for Capital Expenditure
⇒ RBI's VRR and FAR windows for attracting $$
⇒ Borrowed billions of $$ from BRICS-NDB, AIIB, ADB, World bank etc To
3: International revive Indian economy (ब�प�ीय �वकास ब�कों से कजार्)
trade ⇒ Banned the import of 101 defense items. FDI in defense ⏫
⇒ Global companies can’t apply for Indian Government tenders below “X”
amount. (to reduce import bill & help local biz)
⇒ Paid the PM-KISAN installments ahead of its due date (Frontloading)
⇒ 3 Ordinance to Reform the agriculture and food processing sector
4A: Agriculture, (APMC, Contract Farming, Essential commodities)
⇒ ⏫MSP, Operation Green expanded to all fruits and veggies
⇒ funding / loans for Food processing industry in Dairy cooperatives
⇒ Agriculture Infrastructure Fund, Animal Husbandry Infrastructure Fund,
Pradhan Mantri Kisan Sampada Yojana
⇒ Change the definition of MSME, MSME Loan schemes, equity infusion
⇒ Interest subvention in Mudra loans (�ाज म� स��डी)
4B: mfg, Ease of
⇒ Portals: (MSME) CHAMPIONS portal, YUKTI 2.0 (Corona innovation),
Doing Biz
⇒ Global companies can’t apply for Indian Government tenders below “X”
amount. (to reduce import bill & help local biz)
⇒ Reforms to encourage more commercial Mining
⇒ Funding for DISCOMs to increase electricity production
⇒ PM-Awas yojana sub-components deadline extended
⇒ Rental housing will be promoted (िकराए के मकानों के �नमार्ण को प्रो�ाहन)
5: Infrastructure ⇒ PPP for airports, atomic energy, space tech
⇒ Transport → Vande Bharat mission and Shramik special trains to help the
migrants reach their home
⇒ Force Majeure in RERA act, No penalty on road contractors If projects
not finished in time
⇒ New portals & TV channels for online education
⇒ One Nation one ration card, free grains, pulses, LPG cylinders for poor
6: Poverty,
⇒ MGNREGA wages and funding ⏫
hunger,
⇒ DBT of money in PM-JDY women, poor senior citizens, poor PH
education
⇒ SHG: loans, procure masks and sanitizers produced by them
⇒ Street vendors ko ₹10k loans (SVANiDHI scheme)
👿👿As such Atma-Nirbhar criticism is not important for UPSC exam nowadays. But some idea may be
required for interviews.
🔠🔠❓MCQ. Which among the following steps is most likely to be taken at the time of an economic
recession? [आ�थक मं दी के दौरान �न� म� से कौन सा कदम उठाए जाने क� सं भावना सबसे �ादा है] (Prelims-2021)
a) Cut in tax rates accompanied by increase in interest rate [ करों म� कटौती और �ाज दरों म� बढ़ोतरी]
b) Increase in expenditure on public projects [सरकारी प्रोजे� के खचर् म� बढ़ोतरी]
c) Increase in tax rates accompanied by reduction of interest rate [करों म� बढ़ोतरी और �ाज दरों म� कटौती]
d) Reduction of expenditure on public projects [ सरकारी प्रोजे� के खच� म� कटौती]
48.11.3 👻👻✋👿👿👿👿 Atmani-Criticism: insufficient ₹ to revive Indian economy

Country Japan Malaysia Singapore India
Stimulus package as a % of GDP 20% 16.2% 12.2% 10-15%
Amount is quite insufficient. अथर्�व�ा को पुनज��वत करने के �लए रकम पयार्� नहीं है
Counter argument: (REF Pillar2D) If Modi tried to give bigger fiscal stimulus THEN →
 Fiscal Deficit⏫= Credit Rating ⏬= Flight of Foreign Investors = Currency exchange rate
volatility. (सरकार एक हद से �ादा प्रो�ाहन दे नहीं सकती वरना राज� घाटा ब�त बढ़ जाएगा)
 If the deficit is monetized by RBI printing more currency → demand side inflation like Post-
WW1-ka Germany. (�रजवर् ब�क भी एक हद से �ादा मुद्रा नहीं छाप सकती वरना महंगाई बढ़ जाएगी)
48.11.4 👻👻✋👿👿👿👿 Criticism: Statistical Window Dressing (अंको क� फज� �दखावट)

⇒ Fiscal policy component (Tax cuts, subsidies, interest subvention, MSP hike, EPFO social
security contribution, disinvestment, capital Expenditure for agri infrastructure etc.) = very
small in size. राजकोषीय िह�ा ब�त कम है
⇒ Most of the amount is by (+)(+) summing up bank loans to NBFC, MSME, farmers, builders,
Public Private Partnership etc. So, funding generated from….
o From RBI monetary policy decisions (⏬CRR, Repo, Refinance etc)
o From depositors’ deposits → bank → loans to borrowers
o PPP’s private sector share is generated through shares/bonds issued in market.
⇒ So, amount is not entirely borne by the government from its own pocket.
⇒ IF more money available for loan → it does not mean MSME firms will automatically take
loans, until there is an ⏫ in the demand of goods/services. E.g. Hair Salon allowed it to be
opened up but very few customers came. So, MSME produces hair combs, razor blades, shaving
cream, talcum powders etc. will not see any ⏫demand. So, “xx cr available for loans” is an
imaginary figure, not real revival figure.
⇒ Even budget 2019’s announcements like Pradhan Mantri Matsya Sampada Yojana (PMMSY:
20kcr) are added here. पुराने बजट क� घोषणाओं को यहां वापस जोड़ा गया है
⇒ ATMANI Press release even says “PM Fasal Bima Yojana: ₹6400 crore claim payment given”
& counted in the ₹20 lakh package. But, if there is a natural disaster or pest attack= insurance
company is duty bound to pay insurance money to farmers. How is that a ‘stimulus package’?
⇒ National Animal disease control → vaccination of animals is also counted in the package. But,
it’s an essential requirement of the Dairy Sector, even if coronavirus didn't happen! So, it’s not
‘revival/stimulus package.’
⇒ Even after DBT/Subsidy/MGNREGA wages- the beneficiaries are not spending money, they’re
only saving money, fearing a longer recession so, shopping/demand⏬. (लाभा�थयों को पैसा �मला है
बेशक िकंतु वे लं बी मं दी के डर म� उसे खचर् नहीं कर रहे पैसे क� बचत कर रहे ह�)
48.11.5 👻👻✋👿👿👿👿👿 Criticism: States Fiscal problems not given sufficient help
⇒ 🤧🤧🤧🤧Corona lockdown= State governments’ revenue collection drastically ⏬

⇒ Delhi Govt unable to pay salaries to its employees. Wants ₹5000 cr from union.
⇒ Bihar govt unable to pay its share for centrally sponsored schemes (CSS: क� द्र सरकार द्वारा प्रायो�जत
योजनाएं ) such as MGNREGA, Pradhan Mantri Awas Yojna, PM Jan Arogya Yojana (PM-JAY: 5
lakh ka health insurance), mid-day meal etc. → So, Bihar wants the Union to pay the entire cost
of CSS, else threatens to stop the implementation altogether.
⇒ Delay in release of GST compensation cess (📑📑Ref Pillar#2)
⇒ 🍺🍺Some states imposed additional cess on liquor sales, but that too is insufficient to cover their
revenue losses. (मिदरा पर डाला गया उपकर- लेिकन इतनी रक़म पयार्� निह है। )
⇒ Telangana CM even urged the Union to ⏫ FRBM limit and explore issuing ‘Helicopter money’
(📑📑Ref: Pillar3) But, ATMANI has not adequately addressed fiscal problems of States. (रा�
सरकारों क� �व�ीय सम�ाओं को पूणर् �प से सुलझाया नहीं गया)
⇒ States demanding more funds for Corona health infra.(कोरोना अ�तालों के �लए और �ादा पैसा चािहए)
48.11.6 👻👻✋👿👿👿👿👿 Criticism: Regional Imbalance (असं तु�लत �ेत्रीय �वकास)

⇒ ATMANI focuses on loans to MSME/industries. (लघु उद्योगों क� मदद)
⇒ But, this will benefit more to southern and western Indian States, since they’ve more number of
registered firms / organized sector. िकंतु �ादातर लघु उद्योग- प��म और द��ण भारत म� ही है
⇒ But low levels of entrepreneurship / prevalence of unorganized sector in eastern India and Hindi
belt States = they’ll will not benefit much. पूव� भारत के लोग �सफर् नरेगा के गड्ढे खोद कर दो पैसे कमाएं गे उतना ही.
⇒ The Govt reformed the mining sector → ⏫mining activities in the Chhattisgarh, Jharkhand,
Odisha etc ASPIRATIONAL (=backward) states. But its benefits may be confined to the
industrialist, and not percolate down to the mine-workers, until the minimum wages are
increased and enforced. (�ूनतम वेतन को लागू नहीं िकया तब तक खनन �ेत्र के मजदू रों को कोई लाभ नहीं)
48.11.7 👻👻✋👿👿 Atmani-Criticism: Modi shd have given Unemployment Allowance like USA
⇒ Argument: Some critiques demand that Modi should give unemployment Allowance like USA,
⇒ Counter-argument: In USA, 42% small companies had job vacancies but could not fill in March
2021 while 80 lakh Americans are receiving Unemployment Allowance cheques from
Government. Reason for this contrast: Many jobless/lazy/fearful people are preferring to stay at
home & collect Unemployment allowance cheque, instead of going out for work in the times of
Corona. Lesson: Countercyclical fiscal policy ke naam pe Giving unemployment allowance may
result in such a negative outcome. So Government money should be given conditionally for
doing some work, and not for sitting at home. अमरीक� सरकार बेरोजगारी-भ�ा दे रही है तो ब�त सारे
कामचोर/आलसी/डरपोक लोग नौकरी पर जा ही नहीं रहे ह�, जबिक अमरीका के छोटे उद्योगप�त लोगों को नौकरी देने के �लए तैयार है.
अंत: मोदी सरकार ने बेरोजगारी भ�ा देना चािहए ये मांग वा�जब नहीं है।
48.11.8 👻👻✋👿👿 Atmani-Criticism: Modi merely copying Nehru’s ideas
Ideas of PM → 👴👴Nehru 🧔🧔Modi
Self-reliance through Yes. (सावर्ज�नक �ेत्र के उपक्रमों No. His plan is to privatize most of the
Central Public Sector द्वारा ��नभर्र बनने क� को�शश) CPSEs. (सावर्ज�नक �ेत्र के उपक्रमों का �नजीकरण
Enterprises (CPSEs). कर�गे)
Self-Reliance through No. Capitalism was seen Yes, Capitalism, PPP is embraced with
helping the private with suspicion and open arms. Focus on Ease of doing
sector: controlled through License business. (पूंजीवाद को शक/घृणा से नही देखते ब��
�नजी �ेत्र को मदद करके Quota Inspector raj. गले लगाते ह�)
आ��नभर्रता
Self-reliance through Yes, ban/high taxes on Limited extend. (के वल मयार्िदत �प से)
protectionism imported goods Import ban on selected defense items
आयात पर सं र�णवाद? आयात होने वाली चीजों पर ब�त ऊंची Global companies can’t apply for tenders
मात्रा म� कर below “X” amount
Self-reliance through Yes. Focus on SHGs. More Limited extend.
village-cottage ‘collective’ in nature. More Focus on giving credit guarantee/
industries सामूिहकता पर ज़ोर िदया गया loans given to MSME / individual
ग्रामीण कु टीर उद्योग को िकतना entrepreneurs /street-vendors/
प्रो�ाहन �दया गया? Startups/homebuyers.
+ Jobs for MGNREGA workers
Here, hardly 1-2 points for SHG in
ATMANI== more individualistic in
nature. ��परकता
48.11.9 ✍👴👴👴👴 Conclusion: Self Reliance: Nehru vs Modi
⇒ Both PMs ideas on self-reliance were shaped by the needs and aspirations of their respective era.
⇒ Unlike Nehru, Modi can’t be expected to be more ‘protectionist’ due to WTO & global pressure.
⇒ Unlike Modi, Nehru could be expected to be more Pro-business/Pro-Capitalist, due to
immediate negative experience of British Imperialism & East India Company.
⇒ Nonetheless, both PMs played instrumental roles in shaping the economic vision of India during
their tenure.(मोदी �ादा सं र�णवादी बन नहीं सकते, ना ही नेह� �ादा पूंजीवादी बन सकते थे. दोनों ही अपने समयकाल के
कारकों से बं धे �ए थे, लेिकन दोनों ही ने अपने समय के भारत क� आ�थक सं क�ना को आकार देने म� मह�पूणर् योगदान िदया है।)
48.11.10 👻👻✋🙋🙋Alternate Suggestions to revive Economy: अ� सुझाव
Q. Suggest reforms in addition to 👻👻ATMANI for revival of Indian Economy. (आ� �नभर्र भारत के
अलावा और �ा-�ा सुधार करने चािहए अथर्�व�ा को पुनज��वत करने के �लए?)
 Mobilize funds through Consol Bonds. (📑📑Ref1C)
 💸💸 🤲🤲Bottom 80% of the households should be given Universal Basic Income of ₹15,000 →
⏫demand of goods/services → economic revival. (सावर्ज�नक बु�नयादी आय)(More in 📑📑Pillar#6)
 🌽🌽🌽🌽 Public distribution system needs to be universalized. Free/subsidized cereals, pulses and
cooking oil should be provided to all people irrespective of whether their name is in BPL list/
ration card or not. (सावर्ज�नक �वतरण प्रणाली)
 �MGNREGA scheme needs to be expanded to urban areas as well. MGNREGA’s guaranteed
number employment days need to be increased to 200 days from present 100 days. (मनरेगा योजना को
शहरों म� भी लागू करे, रोजगार िदनो क� सं �ा बढ़ाए) (More in 📑📑Pillar#6)
 💳💳💳💳 PM Garib Kalyan component of ATMANI gave ₹500 DBT in Jan Dhan Bank account of
women. But, many villagers don’t have a bank in 5 km radius. And due to lockdown, staff
shortage in banks. So we have to increase the digital payment ecosystem in rural areas. (िड�जटल
भुगतान को प्रो�ाहन देना) (More in 📑📑Pillar#1A1)
 �We need to raise Minimum support prices for farmers and Minimum Wages for workers.
(�ूनतम समथर्न मू� और �ूनतम वेतन को बढ़ाना) (More in 📑📑Pillar#4A)
 ⛽From Jan to May 2020: Aviation Turbine Fuel (ATF) prices reduced from ₹64 per litre to ₹23
per litter but hardly any change in petrol diesel because govt kept raising the excise and VAT
taxes. While this is justifiable for ⏫ govt's revenue, BUT cheaper fuel is also necessary for
revival of the economy, and for ⏬stress on middle class’s pockets. (�धन के दामों को कम िकया जाए)
 (+) Plus all the suggestions already given in the Mrunal’s economy 📑📑Pillar4 handout → how
to become a $5 trillion economy: reforms in FDI, GST etc.
 ++ Supply side reforms suggested by Economic Survey 2022 <learned in previous section>
✍ Conclusion: IF above suggestions are implemented, they’ll greatly help in catalysing /
augmenting the ATMANI in further revival of Indian economy.
✋ERROR: don’t digress into ‘governance/HRD’ part like we should encourage virtual courts,
virtual parliament, virtual classrooms. These are birbal-ki-khichdi in ‘economic revival’ of India Q.
आपको प्र� म� जो पूछा गया है उसका जवाब दी�जए
🎓🎓✋This is more than sufficient for 250 words answer. Additional effort in
PHD= poor cost-benefit. UNLESS they appear in new Economic survey.
48.12 👻👻� Conclusion: ATMANIRBHAR (Appreciative Tone)
⇒ Thus, ATMANI focuses on the well-being of the poors, credit to MSME, ease of doing biz for
the corporate sector, reforms in agriculture and catalysing the development of infrastructure.
[No need to mention all the salient features in conclusion.]
⇒ OR Thus, ATMANI focuses on boosting the Supply and Demand side of the economy, it also
aims for improving the ease of doing business and ease of availing loans/credit. मांग और आपू�त,
�ापार करने म� आसानी, ऋण लेने म� आसानी।
These reforms will certainly help in a long way to revive Indian economy in the aftermath of the
Corona pandemic crisis. कोरोनावायरस के बाद अथर्�व�ा को पुनज��वत करने म� ब�त योगदान देगा.
48.12.1 👻👻🈶🈶Misc. Terms: Chinese Atma Nirbhar/ Dual circulation (दोहरा प�रसं चरण)
To revive Chinese economy Post-Corona, Chinese government has launched "Double circulation
program". It focuses on ⏫ production in the local economy using certain Foreign Technology &
Foreign Investment. How it works actually?NOTIMP
48.13📐📐 GDP → GNP TO NNP TO PER CAPITA INCOME
- Primary income (or factor income) = wages, interest, profit, rent

- Secondary income (or transfer payments) = gifts, donations, charities, fines
Now, first, we’ve to derive Gross National “Product” (GNP: सकल रा�ी� य उ�ाद) i.e.
- India’s GDP
- PLUS Primary income earned by residents## from overseas.
- MINUS Primary income earned by non-residents from India.
✋IGNORE secondary income. (e.g. gift, donation, remittance)
✋IGNORE the incomes from sale of second hand (=used) goods.
NCERT says citizens. But, for the purpose of GNP. I have gone with the college-level academic
##
book- ‘Macro economics by George Mankiw’. He uses the term “residents”. Q. who is resident? =
“Depends on up to how many months the person is staying in the given country- as defined by
OECD.” In real exam MCQ, tick depending on context/options.
GNP (Market Prices) = GDP + “NET” factor income from abroad. �
Whenever something is produced, capital assets get consumed due to wear and tear. This wear and
tear is called Depreciation (मू�ह्रास). Since, depreciation does not become part of anybody’s income,
so it has to be subtracted.
Net National Product (NNP@Market Price) = GNP MINUS Depreciation. 🛬🛬
However, here we are getting the NNP at ‘Market Prices’. We’ve to convert it to Factor cost.
NNP (Factor Cost) = NNP (Market Price) (-) Indirect Taxes (+) Subsidies.
NNP (Factor Cost) is the National Income of India, says NCERT Class12.
Per Capita Income = NNP ÷ population of India

Per Capita Income (प्र�त �� 2016 2017 2018-19 2019-20 2020-21 2021-
आय) 22
Population in Crores 129 131 135 cr 137 cr 140 cr >140 cr
Per capita income @₹ 1,04,659 1,14,958 >1,25,000 >1,34,000 >1,28,000 >1.50
Current Prices lakh
At ₹ Constant Prices 82,931 87,623 > 92,000 >94,000 >86,000 >93,000
(@BaseYear2011)
🔠🔠❓MCQ. National product at factor cost is equal to [UPSC-CDS-2014-II]
(a) Domestic product + Net factor income from abroad.
(b) National product at market prices - indirect taxes + subsidies.
(c) Gross domestic-product - depreciation.
(d) National product at market prices + Indirect taxes + subsidies.
48.13.1 📐📐 GDP → National Income → Misc. concepts

Gross National Income OECD defines it as GDP + NET receipts from abroad (wages, interest,
(GNI) profit, rent) plus net taxes & subsidies receivable from abroad. Here,
‘Wages and salaries’ from abroad = ‘Guest’ workers who reside abroad
सकल रा�ी� य आय
for less than 12 months and whose centre of economic interest remains
in their home country.
The technical difference between GNP and GNI=notIMP
National disposable = NNP + Other Current Transfers from rest of the world (remittances,
income gift, donations etc.)
रा��ीय प्रयो� आय National Disposable Income gives an idea of what is the maximum
amount of goods and services the domestic economy has at its disposal.
Personal income (PI) Very contrived formula, not important.
Personal Disposable Personal Income MINUS Personal Tax Payments
Income (e.g.income tax) MINUS Non-tax Payments (e.g. fines)
What is National Name of the NCERT chapter dealing with above topics
Income Accounting ?
You can satiate further scholastic curiosity by studying (new) NCERT macroeconomics class 12 Ch.
National Income Accounting page 24 onwards but poor cost : benefit.
🔠🔠❓MCQ. CDS2019-II-Q61 Which of the following equals Personal Disposable Income?

a) Personal Income - Direct taxes paid by households and miscellaneous fees, fines , etc.
b) Private Income - Saving of Private Corporate Sectors - Corporation Tax
c) Private Income - Taxes
d) Total expenditure of Households - Income Tax - Gifts received
48.13.2 📐📐Types of Nations : High Income, Low Income

⇒ World Bank has publishes “World Development Report” annually since 1978.
⇒ 2020- theme: Trading for Development in the Age of Global Value Chains
⇒ 2021-theme : Data for better lives.
Type of country Defined in terms of per capita gross national income (GNI)
High Income (उ�) $12,696 or more e.g. Israel (>$40,000), USA (>6o,000)
Upper-Middle Income $4096 and $12,695 e.g. China (>$10,000)
(उ� म�म आमदनी)
Lower-Middle Income $1,046 and $4095; e.g. India (its >$1928 in year 2020)
(�न� म�म आमदनी)
Low Income (�न�) $1,045 or less
⇒ Earlier, World Bank used above income classifications for analytical purposes only. But since
2018, International Bank for Reconstruction and Development (IBRD, Ref#3B) charges “extra
surcharge” on loan interest on high income countries. (�व� ब�क से कज़र् लेते व� उ� आय वाले देशों ने �ादा
�ाज दर चुकानी होगी।)
⇒ 2022-Jan: India has complained to WTO that China is an upper middle income country so it
should be given less relaxation/concessions in the trade agreements. (Ref#3B) (चीन उ� म�म आय
वाला देश है इस�लए उसे �व� �ापार सं गठन के �ापार सं �धयों म� कम �रयायत� �मलनी चािहए ऐसी भारत ने �शकायत क�)
48.13.3 📐📐Types of Nations : Advanced Economies (AE : उ�त अथर्�व�ाएं )
It is a term used by IMF to describe "Developed nations" or "Mature economies who’ve :
1. per capita income level = high. प्र�त �� आय काफ़� ऊँ ची
2. export diversification = Exporting many types of goods and services. Not just single type of
good/service. So, If 70% of Kuwait export income just comes from crude oil then it is not
"diversified" = Kuwait Not advanced economy. �नयार्त म� �व�वधता
3. Highly integrated into the global financial system= So it is more likely that they would be
members of the OECD group much before the 1990s. (e.g. USA,UK, Germany France, Japan etc)
(वै��क �व�ीय प्रणाली इतने गहरे �प से सुग्र�थत)
48.13.4 📐📐Types of Nations : EMDEs (उभरते बाजार और �वकासशील अथर्तंत्र)
It is a term used by IMF to describe Emerging Market and Developing Economies (EMDEs) = All the
other countries who are advanced economies (AE) yet.
EMDEs may be further sub-classified into two parts
1. Low Income Countries (LIC) e.g. Afghanistan Myanmar Nepal etc कम आमदनी वाले देश
2. Emerging market economies (EM) = neither "AE" nor "LIC" e.g. Brazil, India, China South
Africa Russia etc. उभरते बाज़ार अथर्तंत्र- ऐसे देश जो िक न तो उ�त अथर्�व�ा श्रेणी म� है, न तो कम आमदनी वाले देशों म� है
48.13.5 📐📐Types of Nations : Bangladesh transition from LDC to Developing Country

United Nation's Economic and Social Council (ECOSOC, New York, USA) → its Subsidiary body
United Nations Committee for Development Policy (CDP) has set following parameters for
classifying Least Developed Countries (L.D.C- अ� �वक�सत देश):
- 1) Per Capita Gross National Income (GNI) of $1230 or lower. (प्र�त �� सकल रा��ीय आय)
- 2) Economic and Environmental Vulnerability Index (EVI): based on % Population living
in low elevation coastal zones, Victims of natural disasters, Instability of Agriculture
production and Exports etc. (आ�थक एवं पयार्वरण भेद्यता सूचकांक:- �जसम� क� कम-ऊंचाई के तटवत� इलाकों म�
रहने वाली आबादी, प्राकृ �तक आपदा से पीिड़त ��, कृ �ष उ�ादन और �नयार्त म� ��रता इ�ािद को देखा जाता है)
- 3) Human Assets Index (HAI): based on % of Undernourished population, Mother and
child mortality, School enrollment, adult literacy etc. (मानव सं प�� सूचकांक: कु पो�षत आबादी, मातृ और
बाल मृ�ु दर, �ू ल म� दा�खले, प्रौढ़ सा�रता इ�ािद को देखा जाता है)
- 2021-Nov: United Nations General Assembly has announced that based on above 3
indicators: Bangladesh, Nepal and Republic of Lao will 'upgrade' from LDC to a 'Developing
country by 2026. (सं यु� रा�� क� सामा� सभा ने कहा िक यह तीन देश �वकासशील देश माने जाएं )
😰😰Negative outcomes of exiting L.D.C Status?
1. Bangladeshi exports will not be eligible for duty-free-quota-free access under WTO agreements.
(�नयार्त को शु�-मु�-कोटा-मु� प्रवेश नहीं �मलेगा अ� देशों म�)
2. WTO norms related to agriculture-subsidy & IPR will become tighter. (�व� �ापार सं गठन के कृ �ष-
स��डी और बौ�द्धक सं पदा अ�धकार के �नयम स� होंगे)
3. Bangladesh will not get interest-free loans from World Bank & other multilateral Development
Banks (अंतररा�ी� य सं गठनों से �ाज मु� लोन/कज़र् नहीं �मल�गे)
4. Aid/Donations/Grants from International organisations will decline. (अंतररा��ीय सं �ानों से अनुदान म�
रकम कम �मलेगी)
5. Tighter Norms related to Climate Change / Pollution Control under International agreements.
(जलवायु प�रवतर्न प्रदू षण �नयं त्रण के अंतररा��ीय समझौते/�नयम स�ी से लागू होंगे)
🤩🤩Positive Outcomes of exiting L.D.C Status?
It’ll send signal to foreign investors that Bangladesh can be a large consumer market = Incoming
Foreign Investment ⏫ → job creation & GDP. (�वदेशी �नवेश म� बढ़ोतरी होगी-रोजगार सूजन और जीडीपी म� मदद)
48.13.6 😵😵Bangladesh Per Capita GDP higher than India?

Per capita GDP = dividing the total GDP by the total population. (प्र�त �� जीडीपी)
⇒ International Monetary Fund’s World Economic Outlook 2020 indicates Bangladesh's Per
Capita GDP ($1887) will be larger than India ($1876) in 2020, however in 2021, India will get
ahead in the race.
⇒ Analysts say 'Per Capita GDP' is not right indicator to compare the 2 countries bcoz India is
bigger than Bangladesh in
o In absolute GDP (i.e. GDP without dividing it with the population), then Bangladesh is
hardly 11% of India's GDP.
o In Per Capita GDP, if we compare exchange rates at Purchasing Power Parity (PPP) then
India better than Bangladesh. (📑📑Ref: HDT-Pillar#3A)
o Transparency International corruption perception index - Bangladesh is far worse than
India. Political violence, radical Islamic groups killing bloggers. and so forth. (बां�ादेश म�
भ्र�ाचार, राजनी�तक िहसं ा, इ�ा�मक कट्टरवाद �ादा)
⇒ ✋Counter Arguments: Bangladesh is doing better than India on other indicators such as child
mortality, fertility rate, % of poor population etc.
How is Bangladesh growing fast?
 Low skilled workforce & female laborers tactfully used in textile-jute industry.
 Bangladesh is a Least Developed Country (अ�ं त अ� �वक�सत देश) so it exports gets Duty-free-
quota-free Treatment in USA/EU (📑📑Ref: HDT-Pillar#3B-WTO).
 Water sanitation facilities are better in Bangladesh so prevalence of disease/mortality is lower so
labourers more efficient. etc. (पानी और ��ता बेहतर होने के कारण मजदू रों म� बीमारी और मृ�ु कम)
48.13.7 📐📐India As A ‘Developed’ Country? (भारत एक �वक�सत देश?)

⇒ 15th August 2022: PM Modi Speech - Goal to become a developed country by 2047 when we
celebrates 100 years of independence.
⇒ While there is no unanimous commonly accepted definition of developed country.
⇒ United Nations, the World Bank, the World Trade Organization, and the World Economic
Forum use their indicators to classify “developed” and “developing” countries.
⇒ but some features of a developed nation are:
⇒ GDP is very high. Per capita gross national income (GNI) very high.
⇒ Standard of living and Human Development Index (HDI) very high.
⇒ Now what should India do, to become a developed country? Ans. recycle the points that we have
learnt / will learn in the Pillar4-5-6.
⇒ I am sure economic survey 2023 will write in great detail about this, so we will revisit it in free
Win23 series.
(भारत को 2047 तक एक �वक�सत देश बनाएं गे. हालाँिक �वक�सत देश क� �ा�ा के बारे म� अलग अलग सं �ाओं म� एकमत नहीं है.
लेिकन मुझे यक़�न है अगले आ�थक सव��ण म� इस पर काफ़� चचार् होगी तब इसको हम आराम से देख ल�गे.)
48.14📐📐📐📐 GDP & PER CAPITA INCOME→ CRITICISM / LIMITATIONS
Figure 4: if India becomes #1 producer of cigarette= good for GDP but is it good for society?
1. GDP doesn’t give us true picture of Indian economy because
(a) Presence of unorganised sector of economy = not all the production data is captured.
(b) To avoid any scrutiny by income tax and GST tax officials, the businessmen deliberately
show low level of production during the surveys conducted by CSO/NSSO/NSO/MOSPI.
(c) Large size of parallel economy which functions on black money and cash.
2. Provides only quantitative picture and does not consider the qualitative aspects / negative
externalities (नकारा�क बाह्यताए) e.g. More coal based thermal power production= more GDP,
disregarding how much pollution it created. कोयले से चलने वाले ताप �वद्युत क� द्र, वायु प्रदू षण
a. So, Economist Peter Wood (1980s) came up with the Green (ह�रत) accounting & Green
GDP concept to consider environmental costs as well.
b. 2021: Uttarakhand became the first state in India to take into account Gross
Environment Product (GEP: सकल पयार्वरण उ�ाद) while calculating its Gross State Domestic
Product (GSDP). Forest, air, water & soil quality and quantity to be measured, assigned
monetary value.Then if every year if GEP ⏬ that means environmental degradation is
happening → public /media pressure → state government will be forced to take action
3. Ignores non-marketed activities e.g. domestic work done by mother.
4. Ignores the Opportunity Cost (अवसर लागत) e.g. A child labour produced ₹ 50000 rupees worth
firecracker annually = added in GDP. But, child labourer could not pursue education ELSE he
could have become a doctor/engineer and produced ₹ 5,00,000 worth of annual goods and
services - such angles are not considered in computing GDP.
5. Ignores inequality of income among people. (आय क� असमानता)
a. So, later on Gross Happiness Index, Physical Quality Of Life Index, Human
Development Index etc were invented (Ref: Pillar#6)
48.14.1 GDP → Economic Growth vs Economic Development
Figure 5: �ा इस ब�े को तैमूर �जतना अ�ा खाना और �श�ा �मलेगी?
Economic Growth Economic Development

📐📐आ�थक वृ�द्ध 📐📐+ 💊💊💊💊💊आ�थक �वकास
It measures the ⏫ in the production It measures whether economic growth has resulted in
of goods and services in a country. improving the quality of life & the socioeconomic
(�सफर् उ�ादन म� बढ़ोतरी) structure of the country? (जीवन �र म� सुधार)
Quantitative measurement: gross Qualitative measurements such as UNDP’s HDI
Domestic Product (GDP), (Human Development Index), life expectancy, 🤰🤰gender-
Consumption, Government Spending, related indices, infant mortality, �literacy etc.
Investment, Net Exports.
NNP divided by total population = per It’ll focus on ‘Inequality of income distribution’ e.g.
capita income. obtained through World Bank Gini coefficient or Oxfam
NGO’s Inequality report.(More in 📑📑Pillar#6)
In pillar#4 our focus is economic growth (GDP), whereas in pillar#6 we will be focusing on
Economic Development (Human aspect) and Sustainable Development (सतत �वकास) i.e. development
that meets the needs of the present generation without compromising the ability of future
generations to meet their own needs.
🔠🔠❓MCQ. Increase in absolute and per capita real GNP do not connote a higher level of
economic development, if(Asked in UPSC-Pre-2018)
A] industrial output fails to keep pace with agricultural output.
B] agricultural output fails to keep pace with industrial output.
C] poverty and unemployment increase. D] imports grow faster than exports.
🔠🔠❓ MCQ. A decrease in tax to GDP ratio of a country indicates __? (Prelims-2015)
1) Slowing economic growth rates 2) Less equitable distribution of national income
48.15✍🎺🎺 MAINS QUESTIONS: GDP, ECONOMIC GROWTH

48.15.1 ✍🎺🎺 Mains Questions → Mock Questions → Atma-Nirbhar
1) “Atma Nirbhar Bharat👻👻 is not just a mere fiscal stimulus package but also a set of reforms for
ease of doing business and ease of availing credit” Elaborate (�सफर् राज� प्रो�ाहन नही, ब�� ापार और
ऋण मे सुगमता भी है।)
2) “👻👻ATMANI Economic package is a mix of supply-side and demand-side measures.” Justify.
(मांग और आपू�त दोनों को बढ़ावा देने का �मश्रण है)
3) Discuss in the brief, the significance of the agriculture reforms ushered by 👻👻ATMANI package.
(आ��न* द्वारा कृ �ष �ेत्र मे �लए गए सुधारो के मह� क� चचार् करे।) Similar question for
MSME/infrastructure/Banking etc.
4) “Atma Nirbhar Bharat👻👻 aims to revive Indian economy by targeting land, labour, liquidity and
laws”. Illustrate. (जमीन, श्रम, तरलता और कानून म� सुधार द्वारा अथर्�व�ा को पुनज��वत करना चाहता है)
5) Suggest reforms in addition to 👻👻ATMANI for revival of Indian Economy. (आ� �नभर्र भारत के
अलावा और �ा-�ा सुधार करने चािहए अथर्�व�ा को पुनज��वत करने के �लए?)
6) Compare and Contrast the ideas of PM Nehru and PM Modi on the India’s economic self-
reliance. (भारत क� आ�थक �नभर्रता के सं दभर् म� नेह� और मोदी के �वचारों म� समानता और भेद पर चचार् कर�. )
48.15.2 ✍🎺🎺 Mains Questions → Mock Questions → GDP Growth
1) “Creation of national wealth through ethical means will help us in a long way to achieve SDG.”
Illustrate. नै�तक तरीकों से रा��ीय धन का �नमार्ण करने से हम� सतत �वकास ल� हा�सल करने म� मदद होगी. समझाइए
2) Discuss briefly the challenges associated with achieving the five trillion dollar economy for India
by 2025? 5 िट��लयन डॉलर अथर्�व�ा का ल� हा�सल करने म� चुनौ�तयां
3) “Reducing economic policy uncertainty is critical for both domestic investment and foreign
investment.” Suggest ways for accomplishing this. घरेलू एवं �वदेशी �नवेश को बढ़ावा देने के �लए आ�थक नी�त म�
अ�न��तता को कम करना ज�री है
48.15.3 ✍🎺🎺 Mains Questions → Previous Years’ official Questions

1. Explain the difference between computing methodology of India's gross domestic 2021
product (GDP) before the year 2015 and after the year 2015. (150 words) भारत क� सकल
घरेलू उ�ाद (जी. डी. पी.) के वषर् 2015 के पूवर् तथा वषर् 2015 के प�ात प�रकलन �व�ध म� अंतर क� �ा�ा क��जए।
2. Do you agree that the Indian economy has recently experienced a V-shaped recovery?
Give reasons in support of your answer. (250 words) �ा आप सहमत ह� क� भारतीय अथर्�व�ा ने
हाल ही म� V-आकार के पुन��ान का अनुभव िकया है? कारण सिहत अपने उ�र क� पु�� क��जए ।
Both of above Qs. Solved in Free Special Class
(GSM3) Define potential GDP and explain its determinants. What are the factors that have 2020
been inhibiting India from realizing its potential GDP? (सं भा� स.घ.उ.(जी.डी.पी.) को प�रभा�षत
क��जए तथा उसके �नधार्रकों क� �ा�ा क��जए l वे कौन-से करक ह�, जो भारत को अपने सं भा� स.घ.उ.(जी.डी.पी.) को
साकार करने से रोकते रहे ह�?) Ans. Solved in FREE Special Class
(GSM3) Do you agree with the view that steady GDP growth and low inflation have left the 2019
Indian economy in good shape? Give reasons in support of your arguments. �ा ��र वृ�द्ध दर
तथा कम मुद्रा��त ने भारत क� अथर्�व�ा को अ�� आकार म� रखा है? अपनी दलीलों को कारणों के साथ �� क��जए
Ans. Solved in FREE Special Class
(GSM2) ‘In the context of neo-liberal paradigm of development planning, multi-level 2019
planning is expected to make operations cost effective and remove many implementation
blockages.’-Discuss. [�वकास के �लए आयोजन के नव-उदारवादी प्र�तमान के सं दभर् म�, ब�-�रीय योजना द्वारा
प�रचालन लागत को प्रभावी बनाने और कई �कावटों को दू र करने क� उ�ीद है। — चचार् क��जए ]
Among several factors for India’s potential growth, savings rate is the most effective one. 2017
Do you agree? What are the other factors available for growth potential? भारत के �वकास दर म�
बचत दर एक अ�त मह�पूणर् कारक है �ा आप इससे सहमत है? Ans. Solved In FREE Special Class
The nature of economic growth in India in described as jobless growth. Do you agree with 2015
this view? Give arguments in favour of your answer.
भारत क� आ�थक वृ�द्ध, "रोजगार-रिहत/बेरोजगार यु�" आ�थक वृ�द्ध है.�ा आप इससे सहमत ह�?
Capitalism has guided the world economy to unprecedented prosperity. However, it often 2014
encourages shortsightedness and contributes to wide disparities between the rich and the
poor. In this light, would it be correct to believe and adopt capitalism driving inclusive
growth in India? Discuss. पूंजीवाद ने �व� अथर्�व�ा को अभूतपूवर् समृ�द्ध के �लए �नद��शत िकया है। हालांिक, यह
अ�र अदू रद�शता को प्रो�ािहत करता है और अमीर और गरीब के बीच �ापक असमानताओं म� योगदान देता है। इस
प्रकाश म�, �ा भारत म� समावेशी �वकास को िकया��त करने के �लए, पूंजीवाद को अपनाना सही होगा? चचार् कर�?
📑📑Next Handout 🧅🧅🍅🍅Pillar#4E: Macro Indicators → Inflation
�� PILLAR#4E: MACROECONOMIC INDICATORS: INFLATION, WPI-CPI; ETC
Table of Contents
49 🍅🍅Pillar#4C: Indicators → Inflation ............................................................................................................ 849
49.1 🍅🍅Inflationary and deflationary gaps ............................................................................................. 849
49.2 Combating inflation or deflation ...................................................................................................... 851
49.3 🍅🍅🍅🍅 Inflation: Types based on causation (कारकता के अनुसार) ....................................................... 852
49.4 🍅🍅🍅🍅 Inflation types based on Speed / Quantum ........................................................................ 854
49.4.1 🗓🗓 Inflation → Base Effect? ................................................................................................. 854
49.5 🍅🍅🍅🍅 Effects on individuals ........................................................................................................... 855
49.6 🍅🍅🍅🍅🍅🍅Pillar#4: Indices: CPI, WPI, IIP & others ...................................................................... 856
49.7 🍅🍅🍅🍅🍅🍅Index → Inflation indices.............................................................................................. 856
49.7.1 🍅🍅🍅🍅🍅🍅Wage Rate Index (WRI: वेतन दर सूचकांक) – calculation reforms in 2021 .................. 857
49.7.2 🍅🍅🍅🍅🍅🍅CPI-IW: New reforms in data collection (2020)...................................................... 857
49.7.3 🍅🍅🍅🍅🍅🍅Index → Inflation → CPI (All India), NSO, Base: 2012 .................................. 857
49.7.4 🍅🍅🍅🍅🍅🍅 Inflation rate %: how is it calculated? ...................................................................... 858
49.7.5 🍅🍅🍅🍅🍅🍅 Headline vs Core CPI? .............................................................................................. 858
49.7.6 🍅🍅🍅🍅🍅🍅 “Refined Core Inflation”? ......................................................................................... 859
49.7.7 🍅🍅🍅🍅🍅🍅 CPI Inflation is higher in urban areas than rural area because.............................. 859
49.7.8 🍅🍅🍅🍅🍅🍅 CPI in Corona- ES21 ................................................................................................. 860
49.7.9 🍅🍅🍅🍅🍅🍅: 🐯🐯Inflation targeting by RBI- focus on Core CPI or Headline CPI? ................. 860
49.7.10 🍅🍅🍅🍅🍅🍅Index → Consumer Food Price Index (CFPI: उपभो�ा खाद्य महंगाई सूचकांक) ............. 861
49.7.11 🍅🍅🍅🍅🍅🍅Index → Inflation → Wholesale Price Index, EA-DPIIT, Base: 2011 ............ 861
49.7.12 🍅🍅🍅🍅🍅🍅WPI Kabhi ⏬ kabhi ⏫ .......................................................................................... 862
49.7.13 🍅🍅🍅🍅🍅🍅Index → Inflation → Other Indices.................................................................... 864
49.7.14 🍅🍅🍅🍅🍅🍅: Inflation observations by ES20 Vol2Ch5 ........................................................... 864
49.7.15 🍅🍅🍅🍅🍅🍅: Inflation observations by 📙📙📙📙ES22.................................................................... 865
49.7.16 🍽🍽🍽🍽🍽🍽 Thalinomics by ES20: Vol1Ch11 ......................................................................... 865
49.7.17 🍽🍽🍽🍽🍽🍽 Thalinomics data in ES21.......................................................................................... 865
49.7.18 🍅🍅🍅🍅American Inflation Impact on India? ............................................................................. 866
49.8 🛠🛠🛠🛠🛠🛠Index → Production → Index of Industrial Production (IIP) ....................................... 867
49.8.1 IIP's weights in ascending order (classification: use based) .................................................. 868
49.8.2 🛠🛠🛠🛠🛠🛠 IIP's weights in (sector-based) ............................................................................. 868
49.8.3 🛠🛠🛠🛠🛠🛠: IIP Before Corona Year 2020 .............................................................................. 868
49.8.4 🛠🛠🛠🛠🛠🛠: IIP in Corona-2020 ............................................................................................. 869
49.9 🛠🛠🛠🛠🛠🛠Index → Production → Index of Eight Core Industries ................................................. 869
49.10 🛠🛠🛠🛠🛠🛠Index → Production → Misc. indices .......................................................................... 869
49.10.1 ✍🎺🎺 Mock Questions for Mains → Inflation ................................................................... 870
(Batch: PCB7) Mrunal’s Economy Pillar#4E: Indicators- Inflation-CPI, WPI; IIP→ Page 848
49 🍅🍅PILLAR#4C: INDICATORS → INFLATION
 Inflation is the rise in the general level of prices of goods and services in an economy over a
period of time. (व�ु और सेवाओं क� सामा� क�मतों म� होने वाली बढ़ोतरी को महंगाई या मुद्रा��त कहते ह�)
 Deflation is inverse of above definition. Deflation occurs when the inflation rate falls below 0%
(मुद्रा अव��त- महंगाई जब 0% से भी कम हो जाए)
49.1 🍅🍅INFLATIONARY AND DEFLATIONARY GAPS

- In his book “General Theory on employment, interest, money”, British Economist J.M.Keynes
(1883) said, “when economy is functioning at full employment, aggregate supply will match
aggregate demand.” At this equilibrium, we’ll have ‘General Price’ level → any increase →
inflation, decrease → deflation.
Aggregate Demand (AD)
= Consumption(C) + Investments(I) + Govt Purchases (G) + Exports (X)- Import (M)
🍅🍅🍅🍅 Inflationary Gap 🍅🍅📉📉Deflationary Gap
(मुद्रा��तकारी अंतर ) (अव��तकारी अंतर )
It could have occurred because of It could have occurred because of
1. ↑ Money supply 1. ↓ Money supply
2. ↑ Propensity to consume, 2. ↑ Propensity to SAVE / Consumer delaying
3. ↑ Investment expenditure purchase with hopes of further fall in prices.
4. ↑ Fiscal deficit 3. ↓ Investment expenditure,
5. ↑ NET exports 4. ↑ Fiscal consolidation
6. High growth → higher Aggregate demand 5. ↓ NET exports
→ could lead to inflation. 6. Depression / Recession that results into
falling ‘Aggregate demand’.
🍅🍅🍅🍅🍅🍅🍅🍅 Inflationary Spiral 📉📉📉📉📉📉Deflationary Spiral
(मुद्रा��त म� उ�रो�र वृ�द्ध) Fall in prices → lower profit to firm → lower
When inflation increases, workers demand production, lower wages / workers laid off →
higher wages to keep up with the cost of living lower demand → lower prices → ...
→ firms pass these higher labor costs on to
their customers → higher prices → more
inflation → …...
🔠🔠❓MCQ. A rise in general level of prices may be caused by (UPSC-Pre-2013)
1. An increase in the money supply. (मुद्रा आपू�त म� वृ�द्ध)
2. A decrease in the aggregate level of output.(उ�ादन म� कमी)
3. An increase in the demand. (मांग म� बढ़ोतरी)
🔠🔠❓MCQ. Economic growth is usually coupled with? (UPSC-Pre-2011)

(a) Deflation (b) Inflation (c) Stagflation (d) Hyperinflation
🔠🔠❓MCQ. Which is an appropriate description of deflation? [UPSC-CDS-2012-II]

(a) it is a sudden fall in the value of a currency against other currencies.
(b) It is a persistent recession in the economy.
(c) It is a persistent fall in the general price level of goods and services.
(d) It is fall in the rate of inflation over a period of time.
49.2 COMBATING INFLATION OR DEFLATION
🍅🍅🍅🍅Fighting inflation 🍅🍅🍅🍅 Fighting deflation

RBI Tight / dear / Hawkish Monetary Policy to Cheap / Easy / Dovish - to make loans
🐯🐯 make the loans expensive cheaper
Govt - 🍋🍋 Tax deduction / exemption / - 🍋🍋 Tax deduction / exemption /
🦁🦁 subsidy benefits towards producers to subsidy type benefits to consumers to
decrease the cost of production. encourage purchase / consumption. (e.g.
- Curtailing Fiscal Deficit. cut GST on Television, Computers,
- Curtailing schemes/subsidies that Cars) खरीदारी को प्रो�ाहन देने के �लए कर-
⏫money in the hands of beneficiary छू ट/स��डी
without increasing production. - Increasing the expenditure on public
- 🗃🗃 Ordering RBI to issue inflation projects e.g. highway, dam etc. to boost
Indexed Bonds, Sovereign Gold Bonds demand in steel / cement industry →
- Essential commodities act, Stock workers get money → demand →
limits, Minimum Export Price, FCI’s towards inflation. बु�नयादी अवसं रचना पर
Open Market Sale Scheme, Operation सावर्ज�नक खचर् को बढ़ाया जाए
Greens for TOP, Price stabilization
fund, Offering higher MSP to farmers
to ⏫ cultivation of a particular crops
🔠🔠❓MCQ. Which of the following measures should be taken when an economy is going through
in inflationary pressures? [UPSC-CDS-2012-I]
1. The direct taxes should be increased. 2. The interest rate should be reduced.
3. The public spending should be increased.
Answer Codes: (a) Only 1 (b) Only 2 (c) 2 and 3 (d) 1 and 2
49.3 🍅🍅🍅🍅 INFLATION: TYPES BASED ON CAUSATION (कारकता के अनुसार)
It’s ‘too much money chasing too few goods’ i.e. Prices are rising because
🛒🛒🛒🛒Demand-
people have excess money → demand for goods and services exceeds the
Pull Inflation
available supply. MNREGA, Pay Commission, PM KISAN6k/Rahul’s
(मांगज�नत)
NYAY72k/Universal Basic Income(UBI) etc. could lead to this.
💵💵💵💵💵💵 When RBI printing of more money results in inflation (Recall ‘Monetising
Monetary inflation the deficit’ from Pillar#2: FRBM Handout).
Price rise due to increased cost of inputs e.g.
- Expensive crude oil → higher costs for Transport Companies.
Cost-Push Inflation
- Trade / labour unions’ protests / strikes → wage hike.
🛠🛠 (लागतज�नत)
- Natural disasters → Lower potato / chilly production → Chips
makers have to pay more for inputs.
When Cartels / Monopolists / Oligopolists deliberately cut down the supply
⛽ Profit – Push
/ production or hike the prices because of greed / profit motive. E.g. OPEC
Inflation
group oil production cut.
Linked to the “price/wage inflationary spiral” i.e. when inflation rises,
workers demand higher wages to keep up with the cost of living → firms
Built-in-Inflation
passing these higher labor costs on to their customers as higher prices →
more inflation.
During war, Govt imposes price controls and rationing to keep prices
Repressed Inflation under check. But the moment such controls are withdrawn, prices will go
(द�मत ��त) up (because traders will want to cover up their previous losses by raising
prices). This is called Repressed Inflation.
Persistent high inflation, high unemployment and low growth resulting
Stagflation
into a stagnant economy.
Term to denote episodic price rise in one / small group of commodities
Skewflation while Inflation in the remaining goods and services remain usual. E.g. pulse
/ tomato / onion inflation in india.
🗞🗞 Headline It is the measure of the total inflation within an economy, usually presented
Inflation (सु�ख) in the form of CPI or WPI.
🔬🔬 Core inflation Headline inflation MINUS inflation in food & energy articles.
(प्रमुख मुद्रा��त) Accordingly, it can be CPI (Headline) or WPI (Headline)
In Pillar#1: Philip curve we learned that deflation → unemployment, so,
RBI tries to stimulate economy by increasing the money supply, Govt tries
Reflation
to give ‘fiscal stimulus’ by reducing taxes / increasing public
(पुन: मुद्रा��त)
procurement…. Such actions take economy from deflationary path
towards inflation path, this is process is ‘Reflation’.
Inflation that is part of a particular economic system. A complete change in
economic policy would be needed to get rid of it. e.g.
- To keep farmers happy, Govt keeps raising MSP for wheat / rice but
Structural Inflation
not so much for pulses → inflation in pulses.
(सं रचना�क मुद्रा��त)
- APMC reforms not taken → cartelization & hoarding → inflation.
- When global crude prices falling, Govt raises Excise / VAT to get more
money for their schemes, so, petrol-diesel not getting cheaper
🔠🔠❓MCQ. Which one of the following is likely to be the most inflationary in its effects? [इनम� से
कौन सी चीज सबसे �ादा महंगाई पैदा करेगी] (Prelims-2021)
A. Repayment of Public debt [सरकारी ऋण का भुगतान]
B. Borrowing from public to finance a budget deficit [ बजट घाटे का �व� पोषण करने के �लए जनता से कजार्]
C. Borrowing from the banks to finance a budget deficit [ब�कों से कजार् �लया]
D. Creation of new money to finance a budget deficit [बजट घाटे का �व� पोषण करने के �लए नया पैसा छापा जाए]
🔠🔠❓MCQ. With reference to Indian economy, demand pull-inflation can be caused/increased

by which of the following? [मांग-ज�नत महंगाई म� बढ़ोतरी कब होगी?] (Prelims-2021)
1) Expansionary policies [�व�ार वादी नी�तयां] 2) Fiscal stimulus [राज� प्रो�ाहन]
3) Inflation-indexing wages [महंगाई सूचकांक से जोड़े गए वेतन]
4) Higher – purchasing power [खरीद श�� म� बढ़ोतरी]
5) Rising interest rates [�ाज दरों म� बढ़ोतरी]
Codes: a) 1, 2 and 4 Only b) 3, 4 and 5 Only c) 1, 2, 3 and 5 Only d) 1, 2, 3, 4 and 5
49.4 🍅🍅🍅🍅 INFLATION TYPES BASED ON SPEED / QUANTUM
1. 🐌🐌 Creeping Inflation: ~4% per annum. It's regarded safe and essential for job creation and
economic growth.
2. 🐪🐪 Walking / Trotting: >4% onwards → Running Inflation: When shifts to double digit.
3. 🐎🐎 Galloping / Hyperinflation (अ�त ��त): Very high level. 20%-100%-even 10,000% or more,
as observed in Germany after Treaty of Versailles due to monetized deficit. Modern day
Venezuela, Zimbabwe, Iran due to misgovernance of ruling parties resulting into broken
economy & shortage of essential commodities. Here, money becomes quite worthless and new
currency may have to be introduced. (Related: redenomination, More in 📑📑Pillar#1A1)
🔠🔠❓MCQ. Which is likely to be the most inflationary in its effect? (Asked in UPSC-Pre-2013)
(a) Repayment of public debt (b) Borrowing from the public to finance a budget deficit
(c) Borrowing from banks to finance a budget deficit
(d) Creating new money to finance a budget deficit
49.4.1 🗓🗓 Inflation → Base Effect?

- Suppose price of 1 kg onion = 100 (2010), 110 (2011), 120 (2012). So, as such their price is
increasing at the rate of ₹ 10 per year.
- However, the % rise in inflation over previous year is 10% for 2011 (110 vs 100), and 9.09% for
2012 (=120 vs 110).
- Thus, the choice of base (denominator) could make the inflation look too high or too low even if
the price rise has been same as the same.
- 📔📔📔📔ES21 Has given a lengthy commentary about the base effect in Corona-2020, but poor
cost benefit in chasing it for exam point of view. #⏳📚📚थोड़ा-पढ़ो-आगे-बढ़ो
🔠🔠❓MCQ. A rapid increase in the rate of inflation is sometimes attributed to the "base effect".
What is "base effect"?(Asked in UPSC-Pre-2011)
(a) It is the impact of drastic deficiency in supply due to failure of crops
(b) It is the impact of the surge in demand due to rapid economic growth
(c) It is the impact of the price levels of previous year on the calculation of inflation rate
(d) None of the statements
49.5 🍅🍅🍅🍅 EFFECTS ON INDIVIDUALS
Effect 🍅🍅📈📈During Inflation 🍅🍅📉📉 During Deflation

🤩🤩They make huge profits because the price 😰😰They make losses because
�Businessma of final product is rising at a much faster prices of final products fall
n, Borrowers
speed than the price of raw materials. faster than the cost of
उद्योगप�त और
production→ lay-off workers
कजर्दार
to cut salary bill.
- 😰😰Salaried individual, pensions suffer. 🤩🤩While they will benefit
👴👴�Fixed - Lenders suffer because even if borrowed because the value (=purchasing
Income money is returned their ‘real Purchasing power) of money will increase,
Groups, Power’ would have declined due to the but some workers / employees
Lenders fall in Real Interest Rate. will lose their jobs during
�न��त आमदनी वाले
deflation as per the Philip
समूह
Curve.
- Since rupee’s purchasing power will �, Reverse will happen.
its exchange rate value will weaken How? Ans. Explained in Video
against foreign currencies, as foreigners lecture.
get less keen to buy from India.
💰💰Currency
- E.g. if 1kg onion = ₹50 rises to 1kg = नहीं समझ आया तो वीिडयो देखो. कु छ लोग
exchange rate
₹100. then even if currency exchange �बना वीिडयो देख� सीधा पढ़ने बैठ जाते ह�
मुद्रा �व�नमय दर
rate moving from $1 = ₹50 to $1=₹70 और िफर उनको समझ नहीं आता तो पूछते
rupee (rupee weaking)= still foreign will रहते ह� क� ऐसा �ों है? तो भाई तुम पहले
be able to purchase less quantity of goods वीिडयो देखो.
from India. Then $ supply � → rupee
gets weak (Ref �Pillar#3A)
🔠🔠❓MCQ. Find correct statement(s): (Asked in UPSC-Pre-2013)
A) Inflation benefits the debtors. B) Inflation benefits the bondholders.
49.6 🍅🍅🍅🍅🍅🍅PILLAR#4: INDICES: CPI, WPI, IIP & OTHERS

Laspeyres German economist Etienne Laspeyres formula is used in calculation of WPI, CPI
and IIP index. It is a weighted arithmetic mean (average) of a basket of commodities
that tracks price / production level against the base year. Formula NOTIMP.
Paasche German economist Hermann Paasche’s index tells us what today’s “Basket” of
Index commodities, would have cost @base year’s price.
Fisher American Economist Irving Fisher’s index is the Geometric mean of (Laspeyrese
Index and Passche), to give a more accurate picture.
49.7 🍅🍅🍅🍅🍅🍅INDEX → INFLATION INDICES
Inflation Index By Base year

Consumer Price Index: 1) Rural 2) Urban 3) All India. NSO, MoSPI 2012
उपभो�ा मू� सूचकांक
Consumer Food Price Index (CFPI) 2012
उपभो�ा खाद्य मू� सूचकांक
CPI Industrial Workers (IW) 2016
CPI Rural labourers (RL),Agri. labourers (AL) Labour Ministry’s 1986##
Labour Bureau @Shimla
Wage Rate Index (WRI) 2016
Wholesale Price Index (WPI) Economic Advisor to 2011
थोक मू� सूचकांक DPIIT, Commerce Min.
## News reports suggest that Govt thinking of changing this base year from 1986 to 2019
49.7.1 🍅🍅🍅🍅🍅🍅👷👷Wage Rate Index (WRI: वेतन दर सूचकांक) – calculation reforms in 2021
- prepared by Labour Bureau, an attached office of the Ministry of Labour.
- It surveys/monitors the wages across various industries.
😰😰Before 🤩🤩Reforms in 2021
Base year 1963-65. Base year 2016
Less number of industries surveyed Added more number of industry in the survey list- e.g.
synthetic textiles, textile garments, printing and
publishing, footwear, petroleum, chemical & gases,
fertilizers, drugs & medicines
- Utility of WRI? This database will be helpful in designing the minimum wages under the new
wage code law. (वेतन दर सूचकांक �जसम� श्रम मं त्रालय िक ऑिफ़स द्वारा �व�वध उद्योगों म� वेतन का �ा दर चल रहा है उसका
सव��ण िकया जाए और उस िहसाब से �ूनतम वेतन क� दरों म� सुधार िकया जाए।)
49.7.2 🍅🍅🍅🍅🍅🍅👷👷CPI-IW: New reforms in data collection (2020)

Faded topic for 2023 exam cycle so removed.
🔠🔠❓MCQ. Which of the following brings out the CPI for Industrial Workers?( UPSC-Pre-2015)
(a) The Reserve Bank of India (b) The Department of Economic Affairs
(c) The Labour Bureau (d) The Department of Personnel and Training
🔠🔠❓MCQ. Indexation is a method can be associated with ____? (CDS2019)

(a) Controlling inflation (b) Nominal GDP estimation
(c) Measurement of savings rate (d) Fixing of wage compensation
49.7.3 🍅🍅🍅🍅🍅🍅Index → Inflation → CPI (All India), NSO, Base: 2012

Monthly CPI Components in (All India) Index → (decreasing order) Wt.
Food & Beverages 45.86
Services: (Transport & communication > Health > Education > Recreation) 20.62
Housing 10.07
Fuel & Light 6.84
Monthly CPI Components in (All India) Index → (decreasing order) Wt.
Clothing / footwear 6.53
Misc. Personal care (soap etc) 3.89
Household goods & Services 3.80
Pan Masala, Tobacco, Intoxicants 2.38
Total Weight 100
- For Individual CPI for Urban and Rural areas, these weights are assigned differently. E.g. CPI
rural has zero weight to housing & 54.18 weight to food and beverages.
49.7.4 🍅🍅🍅🍅🍅🍅 Inflation rate %: how is it calculated?

Index value of Headline CPI (All India) was 148.6 (2019-Nov) and 140.8 (2018-Nov). Therefore,
𝐶𝐶𝐶𝐶𝐶𝐶 𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅 (𝑁𝑁𝑁𝑁𝑁𝑁2019)

𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 𝑀𝑀𝑀𝑀𝑛𝑛𝑡𝑡ℎ − 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚ℎ 𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙 𝑦𝑦𝑦𝑦𝑦𝑦𝑦𝑦 148.6 − 140.8
=� � ∗ 100 = � � ∗ 100
𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚ℎ 𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙 𝑦𝑦𝑦𝑦𝑦𝑦𝑦𝑦 140.8
= 5.54%
या�न क� Nov-2019 म� मं हगाई �पछले साल क� तुलना म� 5.54% बढ़ी है.
⇒ Trend? CPI was towards Inflationary path in UPA/Manmohan era. → CPI was towards
Deflationary path during Modi 1.0 era (2014-19)- mainly due to falling food prices. Food
commands ~46% weight in CPI calculation. (�Ref: 4A: Agro Handout)
⇒ Modi 2.0 era (2019-May onwards): back to inflationary path due to oil, onion etc.
49.7.5 🍅🍅🍅🍅🍅🍅 Headline vs Core CPI?
- Headline CPI (सु�ख मुद्रा��त) = The inflation figure arrived based on all of the above components
of CPI (All India).
- Core CPI (प्रमुख मुद्रा ��त) = Headline CPI MINUS (inflation in food & energy)
49.7.6 🍅🍅🍅🍅🍅🍅 “Refined Core Inflation”?
⇒ Conventionally, core inflation is calculated by excluding ‘food and beverages’ and ‘fuel and light’
from overall inflation.
⇒ However, in NSO’s CPI- the petrol and diesel are counted under ‘transport and
communication’ and NOT under ‘fuel and light’. (एनएसओ क� �गनती म� पेट�ोल-डीज़ल के दाम ‘�धन’ निह
‘प�रवहन’ श्रेणी म� िदखाए जाते है इस�लए सीधा सीधा कोर/प्रमुख महंगाई �गनना मु��ल)
⇒ Therefore, it is difficult to directly calculate core inflation using NSO data tables
⇒ So, ��ES22 proposed a new ‘Refined Core Inflation’ concept to deduct the petrol-diesel
prices (which are under ‘transport and communication’ category). What are its interpretations?
NOT-IMP. (तो नए आ�थक सव��ण ने �गनती का नया तरीक़ा �सखाया हालाँिक मुझे परी�ा के �लए वो ब�त ज़ोरदार नहीं लगता)
49.7.7 🍅🍅🍅🍅🍅🍅 CPI Inflation is higher in urban areas than rural area because
1. Housing prices are counted in the urban area's CPI calculation, but not in rural area. ग्रामीण
इलाकों क� महंगाई �गनती म� मकानों के दाम नहीं �गने जाते.
2. Fuel & light component, Clothing and footwear component = These have higher weightage
in urban areas' CPI than in rural areas. शहरी इलाकों क� महंगाई क� �गनती म� ऊजार्, प्रकाश, कपड़े जूतों क�
क़�मतों को ग्रामीण सीपीआई के मुकाबले �ादा वजन िदया जाता है.
📔📔📔📔ES21: The difference between rural-urban CPI inflation, was high in 2019, but difference
declined in 2020. (2019 म� गांव और शहरों क� महंगाई दर म� काफ� अंतर था िकंतु 2020 म� यह अंतर कम �आ है.)
49.7.8 🍅🍅🍅🍅🍅🍅 CPI in Corona- 📔📔📔📔ES21

- Corona : In India, two opposing forces were at play: 1) reduced demand due to lower economic
activity. 2) supply chain disruptions have increased the food and commodity prices.
- (Headline) CPI inflation moderated from 2013 to 2019 but ⏫ considerably in early months of
2020 Due to supply side disruptions- mainly the food items (Although, food prices under control
in December-2020). 2013 से 19 के बीच तो उपभो�ा मू� सूचकांक काबू म� रहा िकंतु 2020 म� आपू�त श्रृंखला प्रबं धन म�
सम�ाओं के चलते खाद्य चीज� महंगी �ई �जसके चलते उपभो�ा मू� सूचकांक भी ब�त महंगा हो गया.
49.7.9 🍅🍅🍅🍅🍅🍅: 🐯🐯Inflation targeting by RBI- focus on Core CPI or Headline CPI?
⇒ At present the RBI act requires the central bank to control the inflation between 2 to 6%
(Headline) CPI (All India combined) “क� द्रीय ब�क ने महंगाई को उपभो�ा मू� सूचकांक के िहसाब से 2-6% म�
�नयं �त्रत/काबू म� रखना है”- ऐसा RBI क़ानून म� �लखा है (More in 📑📑Pillar#1A2)
⇒ However, Some experts say that instead of headline CPI, RBI should target the core inflation i.e.
CPI minus fuel & food. कु छ �वशेष� कहते ह� िक �रजवर् ब�क ने के वल मूल/बु�नयादी महंगाई पर ही �ान देना चािहए, तथा
खाद्य महंगाई और ऊजार् महंगाई को नजरअंदाज करना चािहए.
⇒ This is because food and fuel price shocks are transitory, mainly supply driven and therefore
can't be controlled by RBI's monetary policy tools. �ोंिक वह (खाद्य और क�ा तेल) महंगाई तो �ादातर आपू�त
पर आधा�रत ह�, और �रजवर् ब�क क� मौिद्रक नी�त के साधनों से �नयं �त्रत नहीं हो सकती.
📔📔📔📔ES21 says above argument may be correct for first world, but not for third world because
(हालांिक यह दलील प्रथम �व� म� स� हो सकती है िकंतु तीसरे �व� म� नहीं �ोंिक:)
⇒ 1) Consumption smoothing is difficult for many Indians i.e. Striking a good balance between
their spending and saving. Because they do not have a steady source of income / permanent job,
agriculture monsoon uncertainty, lack of life/health/crop/cattle insurance, lack of financial
planning/financial inclusion etc. So, food inflation hurts them the most & RBI can't turn blind
eye to their welfare/plight. (�ादातर भारतीय अपने खचर् और बचत म� सुचा�रता हा�सल नहीं कर पाते �ोंिक आमदनी के
�ायी साधन नहीं, बा�रश पर कृ �ष �नभर्र, बीमा लेने म� उदासीनता, �व�ीय समावेशन / आ�थक आयोजन क� कमी. इस�लए खाद्य
महंगाई उ�� ब�त परेशान करती है और �रजवर् ब�क उनके क�ाण/परेशानी को नजरअंदाज नहीं कर सकती)
⇒ 2) In poor families' household expenditure- food cost occupies a high share. food prices very
volatile in India. (गरीब प�रवारों के घरेलू खचर् म� खाद्य एक बड़ा िह�ा है, भारत म� खाद्य चीजों के दाम काफ� अ��र रहते ह�)
Food item its price changes in India within how many months?
Vegetable Twice a month (हर 1 महीने 2 बार स��यों के दाम म� बदलाव आ जाता है)
Pulses Thrice every 2 months (हर 2 महीने म� 3 बार दाल के दाम बदल जाते ह�)
Cereal Every 3.5 months
Milk Every 5 months
So, if RBI totally neglects the food inflation and focuses only on the CPI Core inflation, It will not be
in the best interest of the Indian citizens. So 📔📔📔📔ES21 suggestion:
1. RBI should focus on more core inflation. And separately look at food inflation data. In other
words, RBI should ignore fuel inflation! (�रजवर् ब�क ने प्रमुख/मूल/बु�नयादी मुद्रा��त पर �ादा �ान देना चािहए
लेिकन साथ ही साथ खाद्य महंगाई का भी �ाल रखना चािहए.)
2. CPI base year 2012. CPI gives very high weightage to the food. But people's food habits have
undergone changes between 2011-2020 so, Index components need to be updated. (�पछले एक दशक
म� लोगों क� भोजन आदतों म� काफ� बदलाव आया है इस�लए उपभो�ा मू� सूचकांक म� सुधार क� आव�कता)
3. Number of e-commerce transactions ⏫. So, CPI price survey data should also captured E-
Commerce websites prices as well. (ऑनलाइन वेबसाइट से भी जो खरीद-�बक्र� हो रही है, उन मू�ों को भी महँ गाई
सव��ण म� शा�मल िकया जाए)
49.7.10 🍅🍅🍅🍅🍅🍅Index → Consumer Food Price Index (CFPI: उपभो�ा खाद्य महंगाई सूचकांक)
⇒ NSO's CFPI is prepared from the datasets collected in above CPI-survey.

⇒ �CFPI includes: Cereals, Meat, fish egg, Milk, Oils, fats, Fruits, Vegetables, Pulses, Sugar &
Confectionery, Spices.
⇒ �CFPI doesn't include: Non-alcoholic beverages, Prepared meals, snacks, sweets, Pan, tobacco
and intoxicants (खाद्य महंगाई दर म� इनको नहीं �गनते)
⇒ What was the Food inflation scene in Corona? Ans Ref Pillar4A- Agriculture
49.7.11 🍅🍅🍅🍅🍅🍅Index → Inflation → Wholesale Price Index, EA-DPIIT, Base: 2011

Monthly WPI Components in descending order→ Wt.
Manufactured products: Processed Food, Edible Oil, Paper Products, Chemicals, ~64%
Plastic, Cement, Metal Products, Transport Equipments etc.
Monthly WPI Components in descending order→ Wt.
Primary Articles: ~23%
A. (Unprocessed) food articles, eggs, meat-fishes, oil seeds etc. (~19%)
B. Crude Petroleum (~2%)
C. Minerals (~0.8%)
Fuel & Power: High Speed Diesel (HSD) > Petrol > LPG ~13%
Total 100%
WPI: monthly growth is zigzag although towards deflationary path nowadays. During initial Modi
raj it even went into negative zone for some months due to fall in global crude price (although since
Union/State Govts kept raising Excise/VAT so it was not felt in real life).
49.7.12 🍅🍅🍅🍅🍅🍅WPI Kabhi ⏬ kabhi ⏫
WPI ⏬Between 2020-January to April 2020: Crude oil price had declined significantly due to
lockdown, fall in demand all over the world. As a result, Indian WPI also declined significantly. (इन
2020 के शु�आती महीनों म� क�े तेल क� क़�मतों म� काफ़� �गरावट आयी थी, इस�लए WPI म� भी �गरावट देखी गई)
⇒ WPI (after reforms in 2017) doesn’t count indirect taxes on any commodity. It only looks at the
basic price (without indirect taxes). So, even if petrol diesel appears expensive to Indian
customers due to high level of Excise+VAT taxes, it’ll not reflect that in WPI. (WPI म� व�ुओ ं पर
लगने वाले टै�/ को नहीं देखा जाता, के वल व�ु के मूल मू� देख� जाते ह�, इस�लए ग्राहकों को क� द्र और रा� सरकार के �व�भ� करों
के चलते पेट�ोल डीज़ल महँ गा लगे, िक�ु WPI को नहीं लगेगा) For more on crude oil prices 📑📑Ref: Pillar#3A]
⇒ April-July 2020 : WPI inflation in the negative figure, while CPI-C inflation more than 6% (also
known as “Divergence between WPI and CPI”) as because
1. CPI monitors price+ (indirect taxes) on it. Whereas WPI ignores taxes.
2. CPI gives higher weightage to Food than WPI [उपभो�ा सूचकांक म� खाद्य पदाथ� को �ादा वजन िदया जाता
है]
3. 2021: WPI � from (4.83% Feb) → (7.39% Mar) → (10.49% April:). Why?
4. global commodity prices� �due to vaccination & revival in USA/EU (अमे�रका यूरोप म� टीकाकरण
के बाद आ�थक पुनज�वन के चलते क�े माल उ�ादन व�ुओ ं क� मांग और क�मतों म� बढ़ोतरी)
5. � costs in the production and distribution = wholesale prices increased. (उ�ादन तथा �वतरण क�
लागत ख़चर् म� बढ़ोतरी)
6. labour shortages by reverse migration & social distancing in factories (प्रवासी मज़दू रों क� वतन
वापसी, सामा�जक दू री �नयमों के चलते उ�ादन म� बाधाएँ ,)
7. ��ES22: again talked about the divergence between CPI and WPI and hoped that
ultimately it will reduce.
8. ��ES222: also talked abt ‘divergence between CPI (Rural) vs CPI (Urban) because both
have different weights to some goods/services. (ग्रामीण और शहरी उपभो�ा महँ गाई सूचकांक म� कु छ चीज़ों
को अलग अलग भारत िदया गया है इस�लए दोनों का जवाब अलग अलग आता है)
🔠🔠❓Find correct statement(s) (UPSC-Prelims-2020)
1. The weightage of food in CPI is higher than that in Wholesale Price Index (WPI).
2. The WPI does not capture changes in the prices of services, which CPI does.
3. RBI has adopted WPI as its key measure of inflation and to decide on the key policy rates.
Codes: [a) 1 and 2 only [b) 2 only [c) 3 only 4, [d) 1, 2 and 3
🔠🔠❓ Which goods are included to estimate food inflation in India? (UPSC-CAPF-2020)
1. Wheat 2. Paddy 3. Tobacco 4. Sugar.
Codes: (a) 1, 2 and 3 (b) 2, 3 and 4 (c) 1, 3 & 4 (d) 1, 2 & 4
49.7.13 🍅🍅🍅🍅🍅🍅Index → Inflation → Other Indices

Index Features
Producer’s Price - WPI covers only goods but not services.
Index (PPI: उ�ादक मू� - Whereas, PPI covers both goods and services. It measures price
सूचकांक) change from sellers’ perspective. OECD nations use PPI to measure
inflation @wholesale level. Their PPI only measures price (and not
PRICE + Taxes).
- 2014: DPIIT setup Dr. B.N.Goldar Committee to explore this.
Experimental Service EA to DPIIT preparing these experimental indices separately for Railway
Price Index Services, Port Services, Air Services, Postal Services, Telecom Services,
Banking Services, Insurance,
Banking Business It measures the inflation in the fees charged by Banks for NEFT-RTGS,
Service Price by RBI. Mobile Banking, Card Transactions, Issuing Demand Drafts / Bank
Guarantee, annual fees for opening DEMAT account etc. [Base Year
2011]
Inflation Expectation RBI quarterly survey of ~5k households across 18 cities, asking them
Survey for households what is their ‘expected level’ of inflation for next 3 months and 1 year.
Business Inflation by Indian Institute of Management (IIM) Ahmedabad
Expectations Survey
RESIDEX by 9. Measures inflation in the residential house prices in selected
National Housing Indian cities against base year 2017.
Bank (NHB) 10. Separately, NHB introduced new indices to measure inflation in
Land Price, Building Materials & Housing Rental.
⇒ 📔📔📔📔ES21 : In 2020: House prices ⏫, but number of house
purchases ⏬, due to Corona. मकानों के दाम तो बढे ह�, लेिकन कोरोना के चलते
मकानों क� �बक्र� क� सं �ा म� �गरावट आयी है.
49.7.14 🍅🍅🍅🍅🍅🍅: Inflation observations by 📔📔📔📔ES20 Vol2Ch5
⇒ The World bank observed that Inflation has � across developing nations between (119%) 1993
to 4.8%(2018) because of 1) monetary and fiscal policy 2) structural reforms to raise production.
⇒ Some areas have witness higher level of inflation than all India average. E.g. Lakshadweep
Andaman (geographical isolation), Manipur (frequent highway Bandh/blockades), Kerala
(floods) etc. (कु छ इलाकों म� भारत के औसत के मुकाबले �ादा महंगाई पाई जाती है)
⇒ Rest of the Chapter is mostly bol Bacchan about reason for the price in onion and tomato, and
some contrived mathematical models and graphs to downplay the problem of inflation िक कांग्रेस
सरकार �नक�ी थी,मोदी सरकार म� महंगाई काबू म� ही है.
49.7.15 🍅🍅🍅🍅🍅🍅: Inflation observations by 📙📙📙📙ES22

⇒ Corona Un-lockdown → demand in 1st world �→ inflation �
⇒ OECD group �oil supply & geopolitical crisis (Ukraine) → � oil prices.
⇒ During Corona-2020- Number of home sales � but price of home is not declined (meaning,
sellers were not willing to reduce prices) (कोरोना म� मकानों क� ख़रीदारी तो कम �ई थी लेिकन भाव कम नहीं �ए)
⇒ Post-Corona-2021: Banks � home loan interest rates + Union Govt is giving home loan
subsidy + State govts have � the stamp duty tax on home buying → Housing demand � →
so housing prices are � (अभी वापस बैंक लोन सस्ते होने के कारण, तथा कें द्र और राज्य सरकारों क� योजनाओ ं के चलते मकानों
क� िबक्र� बढ़ रही है, माँग बढ़ रही है और उसके चलते मकानों के दाम बढ़ रहे हैं )
⇒ We should sign long-term import agreements / memorandum of understandings (MoUs) with
other nations for purchase of pulses and edible oils. (अ� देशों के साथ लं बी अव�ध के क़रार पर द�ख़त िकया
गया है िक वे हम� �नय�मत �प से दाल और खाद्य तेल बेचते रह�, ताक� भारत म� उन चीजों क� क़�मत� �नयं त्रण म� रहे।)
⇒ Rest of the Chapter is mostly timepass about onion and tomato seasonal inflation, which we have
already studied in Pillar4A. (�ाज़ टमाटर के दाम बढ़ जाते ह� वो सब बोल ब�न हम पहले भी पढ चुके)
49.7.16 🍽🍽🍽🍽🍽🍽 Thalinomics by 📔📔📔📔ES20: Vol1Ch11

Thalinomics is a concept to estimate how much ₹₹ a common person pays for a Thali (platter of
food) across India? भोजन एक थाली पर �� िकतना भुगतान करता है?
⇒ Between 2015 to 2018, the Thali price has reduced: 1) Across all regions of India 2) for both veg
and non-veg thalis. पूरे भारत म� शाकाहारी और मांसाहारी थाली के मू� म� �गरावट
⇒ While Thali prices reduced between 2015-18, they have increased in 2019.
⇒ But overall, thali affordability has �for poor families. गरीबों के �लए स�ी / िकफायती / वहनीय �ई है
⇒ Consequently, a family of five people is able to save >₹10,000/per year because of reduced prices.
पैसों क� बचत �ई है
📔📔📔📔ES20 appreciated various Modi schemes for 1) increasing food production and 2) making
food more affordable. (we’ve learned those schemes in 📑📑Pillar#4A)
49.7.17 🍽🍽🍽🍽🍽🍽 Thalinomics data in 📔📔📔📔ES21

Thali cost at All-India level for Vegetarian and Non-Vegetarian thalis ⏫ between April to
November 2020 due to Corona lockdown & supply chain disruption→ Thali prices ⏬in December
2020 due to unlockdown → ⏫supply of food items → ⏬prices. (अप्रैल से नवं बर 2020 म� आपू�त श्रृंखला
प्रबं धन म� सम�ाओं के चलते भोजन क� थाली महंगी हो गई थी, िकंतु िदसं बर म� वापस स�ी.)
June to Dec 2020 Urban: most Urban: cheapest Rural: most Rural: cheapest
expensive expensive
Veg. thali Andaman & Madhya Pradesh Andaman & Uttar Pradesh
(शाकाहारी) Nicobar ₹40 ₹24 Nicobar ₹39 ₹23
Non veg thali Mizoram ₹52 Haryana ₹28 Arunachal ₹49 Chandigarh ₹30
✋While above trend is not important for the scope of MCQs, but think for interviews- Even
though Thali is cheapest in Uttar Pradesh (rural) and Madhya Pradesh (Urban) Then why is there
malnutrition in these States? [अगर इन रा�ों म� थाली इतनी स�ी है तो कु पोषण �ों है? इस प्रकार िक रा� आधा�रत
UPSC इं टर�ू प्र� के �लए सोच �वचार कर�]
49.7.18 🍅🍅🍅🍅American Inflation Impact on India?

2021: USA inflation at 6.2% (highest in 30 years). It may have following negative consequences for
India (Note: following bullets requires prior knowledge of Pillar 1A1, 1A2, 2B & 3A)
− � 1) US Feds will ⬆ repo to combat American inflation. US Feds will reduce bond purchase
program (=Fed-Tapering) → �loan interest rates in India → Foreign Portfolio Investors
(FPI-who invest upto 10% in a single Indian company’s shares)- those FPIs may pullout money
from India to give it as loans in American market → Indian share market ⬇. → Indian investors
also lose money → Indian investors flock towards gold, real-estate & cryptocurrency for better
returns → new set of problems related to tax evasion that we learned in Pillar2B.
− � 2) When FPI pullout money from Indian sharemarket → Rupee weakens →⬆ imports
become more expensive →⬆ inflation → RBI forced to ⬆ repo to combat inflation = expensive
loans will harm India’s post-Corona economic revival.
− �3) Imported goods and services from America will become expensive for India.
− However, ��ES22 said consumer price inflation in India remained under moderate level
compared to many other nations- like USA (7%), UK, Brazil, Turkey, Argentina (50%) etc.
(अमरीका म� महँ गाई/मुद्रा��त �पछले 30 वष� म� सबसे �ादा अ�धक पाई गई है इससे लड़ने के �लए अमे�रक� क� द्रीय ब�क जो क़दम
उठाएगी उसके प�रणाम��प �वदेशी पोटर्फो�लयो �नवेशक- भारतीय शेयर बाज़ार से भाग जाएं गे। �जससे भारतीय �पया कमज़ोर
होगा,भारत म� क�ा तेल और अ� आयात महँ गे होंगे, िफर भारत म� भी महँ गाई दर बढ़ेगा। उस भारतीय महँ गाई से लड़ने के �लए भारतीय
�रज़वर् ब�क लोन क� �ाज दर महँ गे करेगी तो कोरोना प�ात भारतीय अथर्�व�ा को पुनज��वत करने म� सम�ा/िद�त� आ सकती है)
Note: in above table CPI, WPI and IIP Data for 2021-22 is upto Apr-Nov 2021 from ES21. What
about latest data? Ans. Wait for Free Win23 Series after Feb-2023.
49.8 🛠🛠🛠🛠🛠🛠INDEX → PRODUCTION → INDEX OF INDUSTRIAL PRODUCTION (IIP)
औद्यो�गक उ�ादन सूचकांक is a monthly index prepared by NSO, Base Year 2011 and Laspeyres Formula.
IIP measures production of 407 item groups related to (Classification#1: type of goods):
🎓🎓Note: % shows the weights assigned to them in IIP formula:
 Primary goods (34% प्राथ�मक वस्तु): directly obtained from natural sources e.g. Ores, Minerals,
Crude Oil; energy goods -Petrol, Diesel, Electricity (Both Renewable and Non-Renewable).
 Capital goods (8% पूंजीगत सामान): Plants & machinery used for further production e.g. Boilers, Air
& Gas Compressors, Engines, Transformers, Commercial Vehicles etc.
 Infrastructure/ construction goods (12% बु�नयादी ढांचागत/�नमार्ण वस्तु): e.g. paints, cement, cables,
bricks and tiles, rail materials, etc.
 Intermediate goods (17% बु�नयादी ढांचागत/�नमार्ण वस्तु): which goes as input in production e.g.
Cotton yarn, Plywood, Steel Tubes/ Pipes, Fasteners, etc.
 Consumer durables (13% �टकाऊ उपभोक्ता सामान): Products directly used by consumers and having
a longer durability (2 years or more). E.g. Pressure Cooker, TV, AC, Tyres, Telephone , Mobile,
Cars, Motorcycles, Scooters, Jewellery etc.
 Consumer non-durables (15% गैर-�टकाऊ): Products that are directly used by consumers and can’t
be preserved for long periods. e.g.: Soyabean Oil, Milk Powder, Maida, Rice, Biscuits, Sugar, Tea,
Cigarettes etc.
🔠🔠❓MCQ. As per the use-based classification of the IIP, the maximum weight has been assigned
to _ _(UPSC-CDS-2020-ii)
(a) primary goods (b) intermediate goods (c) consumer durables (d) consumer non-durables
49.8.1 IIP's weights in ascending order (classification: use based)

Capital goods (8%), Infrastructure/Construction goods (12%), Consumer durables (13%), Consumer
Non-durables (15%), Intermediate goods (17%), Primary goods (34%)
49.8.2 🛠🛠🛠🛠🛠🛠 IIP's weights in (sector-based)

Sector Weight(%) Item groups
Mining 14.373 1
Manufacturing 77.633 405
Electricity 7.994 1
Total 100 407
49.8.3 🛠🛠🛠🛠🛠🛠: IIP Before Corona Year 2020
Compared to 2017 → there has been a fall in IIP for 2018 and 2019 because
⇒ NPA problem, ILFS-NBFC crisis = � amount of Loans moving toward the MSME
⇒ Protectionism= US/EU levying �import taxes on Indian products → �demand of Indian
goods in foreign market → �Indian production.
⇒ �demand in automobile, real estate sector. → steel, cement production �
⇒ Coal production � by heavy rain, labour strike in mining States in 2019.
49.8.4 🛠🛠🛠🛠🛠🛠: IIP in Corona-2020
⇒ 2020: The IIP growth started falling immediately after the Corona lockdown reaching its
historical low in April-2020. Then it began recovering in the subsequent months.
⇒ 2021-March: IIP �� to 22%, but mostly due to low base effect.
49.9 🛠🛠🛠🛠🛠🛠INDEX → PRODUCTION → INDEX OF EIGHT CORE INDUSTRIES

Prepared by EA-DPIIT, Base Year 2011, It’s similar to IIP index focusing 8 core industries
- Refinery Products > Electricity> Steel> Coal> Crude Oil> Natural Gas> Cement> Fertilizers.
(Arranged in the descending order of weight).
- Collectively, these 8 industries command 40.27% weight in the overall IIP.
🔠🔠❓MCQ. In the 'Index of Eight Core Industries', which is given highest weight? (Pre-2015)
(a) Coal production(b) Electricity generation (c) Fertilizer production(d) Steel production
🔠🔠❓MCQ. Which are among the 8 Core Industries of IIP?(Asked in UPSC-Pre-2012)

1.Cement 2.Fertilizers 3.Natural Gas 4.Refinery products 5.Textiles
Answer Codes: (a) 1 and 5 only (b) 2, 3 and 4 only (c) 1, 2, 3 and 4 only (d) 1, 2, 3, 4 and 5
49.10 🛠🛠🛠🛠🛠🛠INDEX → PRODUCTION → MISC. INDICES
Indices Features
 By NSO, covering all registered units under factories act, and
Annual Survey of electricity companies.
Industries (ASI)  NOT Surveyed: Defense Factories, Oil-gas Storage, Restaurants,
उद्योगों का वा�षक सव��ण Hotels, Café, Computer Services, Departmental Units such as
Railway Workshops, Govt. Mints, Sanitary, Water Supply, etc.
Indices Features
Because IIP & ASI only cover manufactured items & electricity, so, NSO
Index of Service
working on (Experimental) Index of Service Production covering
Production (ISP)
Banking, Insurance, Education, Telecom and transport.
Services Business 11. Also known as Services Purchasing Managers’ Index. It’s done
Activity Index by A private sector company IHS Markit India. mentioned in
��ES21.
 Order Books, Inventories and Capacity Utilization Survey.
RBI’s OBICUS
 Quarterly survey to assess consumption & investment demand.
 HSBC’s Purchasing Manager Index (PMI) : by surveying 400+
companies senior executives.
Economic Health
 SBI’s Composite Index based on its loan portfolio, inflation,
Indices by
consumer spending etc.
Commercial Banks
Such indices have scale of 0-100 points. Above 50 means economic
growth, below 50 means contraction compared to previous period.
London’s Baltic Exchange measures the cost to transport raw material by
sea. If ⏫ → world economy is growing, and vice versa. Post-Subprime
Baltic Dry Index
crisis fell, then rose from 2016-18, then again falling in 2018 due to
protectionism. (समुद्र के रा�े क�े माल का अंतररा��ीय प�रवहन करने क� लागतखचर्)
49.10.1 ✍🎺🎺 Mock Questions for Mains → Inflation

1. (GSM-2019) Do you agree with the view that steady GDP growth and low inflation have left the
Indian economy in good shape? Give reasons in support of your arguments. �ा ��र वृ�द्ध दर तथा कम
मुद्रा��त ने भारत क� अथर्�व�ा को अ�� आकार म� रखा है? अपनी दलीलों को कारणों के साथ �� क��जए? Ans: In this
Special Class: https://unacademy.com/class/mrunals-upsc-gsm3-2019-model-answers-part-1-
economy-agriculture/2UI0ZJNR (� �Unlock Free content with Code: 'Mrunal.org')
2. (GSM2-2022: Welfare) Besides the welfare schemes, India needs deft management of inflation
and unemployment to serve the poor and the underprivileged sections of the society.
Discuss.(क�ाणकारी योजनाओं के अ�त�र� भारत को समाज के वं �चत वग� और ग़रीबों क� सेवा के �लए मुद्रा��त और
बेरोज़गारी के कु शल प्रबं धन क� आव�कता है। चचार् क��जए । ). Ans given in Youtube Series
📑📑Next: Pillar#5A Infrastructure- Energy, Water, Transport (BIPASA)
🥶🥶FAQ: Do I have to remember all this Ministries/Govt orgs/Schemes/Portals/Rails given here?
Ans. NOT Necessary. However, Some rough idea necessary for occasional [Yearbook] /
Scheme/Portal type MCQs. I’ve pasted info here so as to save your time in not having to google.
इतने सारे सरकारी सं �ान और योजनाएं याद रहे तो ठीक, वरना नींद खोने क� ज�रत नहीं। म�ने तो माल बटोर के आपको िदया है तािक
आपक� मेहनत बचे, इधर-उधर google pe ढू ंढना नहीं पड़े.
Pillar#5A: INFRASTRUCTURE Part#1- Bijli, Paani, Sadak
Table of Contents
50 🧱🧱 Infrastructure → Meaning & Characteristics ........................................................................................ 873
50.1 🏅🏅⚒Infrastructure → Mining (खनन) / Basic Industries................................................................. 875
50.1.1 �🚟🚟 [Yearbook] Ministry of Heavy Industries & Public Enterprises.................................. 875
50.1.2 � 🔩🔩 [Yearbook] Ministry of Steel (इ�ात मं त्रालय) ................................................................... 875
50.1.3 �🧪🧪 [Yearbook] Ministry of Chemicals & Fertilizers ........................................................... 876
50.1.4 �⛽ [Yearbook] Yearbook: Ministry of Petroleum & Natural Gas ..................................... 877
50.1.5 �Lakhshya portal by petroleum ministry (2021) .................................................................... 877
50.1.6 ⛽ Dutch Disease & Resource Curse- ES2016-17 .................................................................... 877
50.1.7 �Crude Oil Prices, Petrol Diesel pe Taxes, Oil Bonds, NELP-HELP Policies .......................... 878
50.1.8 �[Yearbook] Ministry of Mines ( खान मं त्रालय) .......................................................................... 878
50.1.9 🏅🏅⚒🗺🗺 Mineral Products in India: (भारत के ख�नज उ�ादन)..................................................... 879
50.1.10 🏅🏅⚒📯📯 National Mineral Policy (NMP) 2019 ...................................................................... 880
50.1.11 🏅🏅⚒⚖ Mining → MMDR Act 2015..................................................................................... 880
50.1.12 🏅🏅⚒⚖ Mines & Minerals (Development & Regulation) Amendment Bill/Act, 2021 ..... 881
50.2 🔥🔥 Mining → Coal (कोयला) ................................................................................................................... 881
50.2.1 🔥🔥� [Yearbook] Coal Ministry (कोयला मं त्रालय) consists of → ............................................... 882
50.2.2 🔥🔥⚖ Coal Mining- Nationalization & Entry of Private Sector ............................................. 883
50.2.3 🔥🔥⚖ Mineral Laws (Amendment) Ordinance/Act 2020....................................................... 883
50.2.4 🔥🔥🔥🔥 Coal selling – Shakti Policy (2017)? ............................................................................... 884
50.2.5 👻👻👻👻👻👻Mining → Atma-Nirbhar (खनन) .............................................................................. 885
50.2.6 🔥🔥🔥🔥 Coal Crisis/Shortage in 2021-Oct ................................................................................... 885
50.2.7 🔥🔥 📔📔📔📔 Coal Energy: Economic survey suggestions / observations: ................................. 886
50.2.8 🔥🔥🔥🔥⚒ Mining → Misc. Schemes, Apps, Portals, Issues .................................................... 887
51 🔌🔌Infra → Energy → Electricity (ऊजार् → �वद्युत) .......................................................................................... 888
51.1.1 �🔌🔌 [Yearbook] Ministry of Power (�वद्युत-ऊजार् मं त्रालय) ......................................................... 888
51.2 �🔌🔌 National Electricity Distribution Company ........................................................................... 889
51.2.1 🔌🔌 IEX = Current-PDF-walla gone crazy (इसके पीछे PDF वाले दीवाने हो गए है).............................. 889
51.3 🔌🔌✝☪🕉🕉 Electricity → One Nation-One Grid .......................................................................... 890
51.3.1 🔌🔌♻ Grid → Green Energy Corridor Project (ह�रत ऊजार् ग�लयारा प�रयोजना) ............................. 890
51.3.2 🔌🔌♻ Grid → GREEN Grids / OSOWOG ............................................................................... 890
51.4 🔌🔌🔌 Electricity → Power Ministry’s Apps/Portal Overdoze ........................................................ 891
(Batch: PCB7) Mrunal’s Economy Pillar#5A: Infrastructure: Bijali & Paani (Energy, Water) → Page 871
51.5 🔌🔌🔌🔌🔌🔌Electricity → Integrated Power Development Scheme.................................................... 891
51.5.1 🔌🔌⏱ Electricity → Prepaid Smart Meters for Electricity ...................................................... 892
51.6 🔌🔌🔌🔌:🧔🧔🧔🧔Electricity: NPA Solve → UDAY (2015).................................................................... 892
51.6.1 👻👻⚡Energy → DISCOMs Liquidity injection (पैसा क� तरलता देके जान फूं कना) ........................... 894
51.6.2 👻👻⚡Energy infra→ Electricity reforms in Atma-Nirbhar (�बजली �ेत्र म� सुधार) ...................... 894
51.7 🔌🔌Electricity (Amendment) Bill 2022 (�बजली सुधार �वधेयक ) ................................................................ 894
51.7.1 🔌🔌🔌🔌⚖Electricity (Rights of Consumers) Rules,2020: �बजली उपभो�ा अ�धकार �नयम ............. 896
51.8 🔌🔌🔌🔌🔌🔌Electricity → Deen dayal gram jyoti Yojana (2015) ........................................................ 896
51.9 🔌🔌🔌🔌🔌🔌 Electricity → PM Sahaj Bijli Har Ghar Yojana (saubhagya) .......................................... 897
51.9.1 ⚡☂🧔🧔🧔🧔Revamped Distribution Sector Scheme (2021-June) ........................................ 897
51.9.2 🔌🔌✍Conclusion: yes electricity access is imp. ........................................................................ 898
51.10 🔌🔌🔌🔌↘ Electricity → Use ‘Less’ → Energy Efficiency ........................................................... 899
51.10.1 🔌🔌🔌🔌↘🧔🧔🧔🧔 Electricity → Use ‘Less’ → PAT Mechanism ........................................... 899
51.10.2 🔌🔌 💡💡↘ 🧔🧔🧔🧔 Electricity → Use ‘Less’ → National LED Programme ......................... 899
51.10.3 🔌🔌 💡💡↘ 🧔🧔🧔🧔 Electricity → Use ‘Less’ → Gram Ujala Programme ............................. 900
51.10.4 🔌🔌 💡💡↘ 🧔🧔🧔🧔 Electricity → Use ‘Less’ → Misc. Schemes & Topics ............................. 900
51.10.5 🔌🔌 💡💡↘ 🧔🧔🧔🧔 Energy → Index → Global Reports ......................................................... 901
51.11 🔌🔌♻ Infra → Energy → Renewable (नवीकरणीय ऊजार्) .................................................................. 902
51.11.1 🔌🔌♻ PM Modi’s Panchamrit @COP-26 Glasgow, UK.......................................................... 902
51.11.2 🔌🔌♻� Energy → Renewable → [Yearbook] MNRE ......................................................... 903
51.11.3 🔌🔌🔌🔌🔌🔌🔌🔌 💦💦 Renewable → KUSUM (Solar for farmer) 2019....................................... 903
51.11.4 🔌🔌🔌🔌🔌🔌🔌🔌 Renewable → Jawaharlal Nehru National Solar Mission .............................. 904
51.11.5 🔌🔌♻🧔🧔🧔🧔 Renewable → Renewable Purchase Obligation (RPO)................................... 905
51.11.6 🔌🔌♻🧔🧔🧔🧔 Renewable →World's largest Hybrid renewable energy park- Khavda ........ 905
51.11.7 🔌🔌🔌🔌🔌🔌🔌🔌 Renewable /energy Efficiency → Ranking / Portals........................................ 905
51.12 🧯🧯🧯🧯 Infra → Energy → Cooking (रसोई के �लए)............................................................................ 906
51.12.1 🧯🧯🧯🧯: 🧔🧔🧔🧔 Cooking → Pratyaksh Hanstantrit Labh (PAHAL-2015)............................. 906
51.12.2 🧯🧯🧯🧯: 🧔🧔🧔🧔: 😷😷 LPG PAHAL-subsidy paused in Corona ................................................ 906
51.12.3 🧯🧯🧯🧯 👩👩:🧔🧔🧔🧔 Cooking → Pradhan Mantri Ujjwala Yojana 1.0 (PMUY)..................... 907
51.12.4 🧯🧯🧯🧯 👩👩:🧔🧔🧔🧔 Pradhan Mantri Ujjwala Yojana 2.0 [प्रधानमं त्री उ�ला योजना का दू सरा चरण] . 907
51.12.5 🧔🧔🧔🧔 🧯🧯🧯🧯 Cooking → Kerosene subsidy stopped (2020) ............................................... 908
51.12.6 🧔🧔🧔🧔 🧯🧯🧯🧯 Cooking → Misc. (�व�वध योजनाएं ) ....................................................................... 908
51.12.7 👻👻 ⚡☢Energy infra→ Atomic energy → Atma-Nirbhar (परमाणु ऊजार्).............................. 909
52 🌧🌧 Infra → Water & Sanitation (जल व् ��ता) ............................................................................................. 909
52.1 🚽🚽🚽🚽🚽🚽 Infra → Sanitation→ Swachh Bharat Mission (SBM: 2014) .......................................... 909
52.1.1 🚽🚽🚽🚽 Target of Swatchhta Diwas 2/10/2019 → Gandhi’s 150th Birth Anniversary ............ 910
52.1.2 🚽🚽🚽🚽 SBM → How to achieve targets? .................................................................................... 910
52.1.3 🚽🚽� SBM → Who implements this scheme? (कौनसा मं त्रालय करता है) ..................................... 910
52.2 🚽🚽SBM Gramin Phase 2 (�� भारत का दू सरा चरण) ................................................................................. 910
52.2.1 Urban Swachh Bharat Mission 2.0 announced in Budget-2021 .............................................. 911
52.2.2 🚽🚽SBM Protocols (कायर्पद्ध�त)......................................................................................................... 911
52.2.3 📔📔📔📔Why do we need SBM? Economic surveys observed: ................................................... 911
52.2.4 📔📔📔📔 Swatchh Bharat: What more can we do- Eco Survey19 Suggestions? ........................ 911
52.2.5 🏬🏬 📊📊 Sanitation → Index: Swachh Sarvekshan 2022 by Urban Ministry .......................... 912
52.2.6 🏬🏬 📊📊 Sanitation → Index: Prerak Dauur Samman............................................................... 912
52.2.7 � Infra → Sanitation → Swachhta Udyami Yojana (2014)................................................... 912
52.2.8 🚽🚽�Conclusion: Summary: Yes SBM is important ............................................................... 912
52.3 ✍Mains Questions in past UPSC exams............................................................................................ 913
50 🧱🧱 INFRASTRUCTURE → MEANING & CHARACTERISTICS
Definition: Infrastructure is the set of basic facilities that help an economy to function & grow such
as Energy, Irrigation, Roads, Railway & Telecommunication. (बु�नयादी सं रचना / अवसं रचना- वो �ूनतम सु�वधाएँ
ह� जो एक अथर्तंत्र को कायर्रत रखने, और �वक�सत करने म� मदद करती है- जैसे क� �बजली पानी सड़क प�रवहन सं चार.)
Infrastructure sector may exhibit following characteristics → (ला��णकताए/�वशेषताएँ )

1. Sometimes a natural monopoly e.g. Railways (aviation and telecom before LPG Reforms).
2. Sunk costs are high. It's the investment that cannot be recovered even when the firm go out of
business. e.g. If airport closed down, airstrip's asphalt will have little or no resale value because
very bulky to dig-off and transport. (प्रोजे� असफल होने पर लागत ख़चर् का एक मोटा िह�ा डू ब जाता है)
3. ‘Output’ is often Non-Tradable. e.g. A road / bridge / airport constructed at one place cannot be
‘transferred’ to another place unlike a box of carrots.
4. Sometimes intangible in nature e.g. we can’t touch spectrum or electricity. (अमूतर् है, छू निह सकते)
5. Consumption is often ‘Non-Rival’ in nature e.g. 1 person using a road or street light it doesn’t
make product ‘unavailable’ for others (unlike a privately owned iphone.)
6. Price Exclusion often difficult. A rural road/street light can’t be ‘denied’, even if a person not
paying taxes or user-fees. (whereas if a person cannot afford iPhone, he is excluded from buying)
7. Usually creates positive externality: e.g. new railway station / airport → that much more
business for taxi-walla & hotel owners in the surrounding area. (सकारा�क बाह्यता)
Category Sectors granted ‘infra’ status by FinMin → Dept. of Economic Affairs
Transport & - Roads and bridges, Ports, Shipyard, Inland Waterways, Airport, Railway,
Logistics: tunnels, bridges, Transport, Logistics Infrastructure.
-
प�रवहन और रसद Commerce Ministry is working ong a ‘National Logistics Policy’
Energy Electricity, Oil, Gas (�बजली, तेल, गैस)
Water & Water supply & treatment, Sewage/Solid Waste Management, Irrigation
Sanitation जल आपू�त, ठोस अप�श� प्रबं धन, �संचाई
Communication Telecommunication (दू रसं चार)
Social & - Hospitals, Education Institutions, Sports Infrastructure, Tourism
Commercial infrastructure -hotels, ropeways and cable cars etc.
Infrastructure - Industrial Parks, food parks, textile parks, SEZ etc.
(सामा�जक और - Cold storage, Soil-testing laboratories
वा�ण��क) - Affordable Housing
If a sector gets infrastructure ‘status’ → its entrepreneurs may get following benefits:
1. Govt could give tax benefits, lease public land at a token price, faster environment clearance,
faster FDI approval etc. (करों म� छू ट, जमीन �रयायती दामों पर, ��रत �प से पयार्वरण/�वदेशी �नवेश क� मं जूरी)
2. RBI could help them by relaxing the External Commercial Borrowing (ECB) norms, Debt
restructuring (e.g. RBI’s 5/25 rule), Changing PSL norms etc. (�वदेशी ऋण क� सीमाओं पर छू ट)
3. SEBI could relax norms for REITS/InvITs etc. funds to help them mobilize capital easily for the
infrastructure sector. Similarly, IRDAI & PFRDA could oblige insurance and pension cos. to
invest minimum X% in infrastructure companies etc. (�नवेश के �नयमों को सरल िकया जाए)
4. They could get easier funding from World bank & other multilateral banks.
👜👜👜👜Budget-2022:- We’ll give “infrastructure” status to Data Centres, Energy Storage Systems,
grid-scale battery systems, EV charging infra → so they can benefit from tax/subsidies/schemes
benefits meant for other infrastructure sectors. (डेटा स�टर ऊजार् सं र�ण इ�ािद �ेत्रों को इं फ्रा��र क� सं �ा/दजार् दीया
जाएगी तािक उ�� भी वही टै�, स��डी, लोन क� �रयायत�/छू ट �मल� जो अ� इ�फ्रा��र उद्योगों को �मलती है.)
50.1 🏅🏅⚒INFRASTRUCTURE → MINING (खनन) / BASIC INDUSTRIES
Basic industries (बु�नयादी supply their products to manufacture other goods. Examples: Iron and
उद्योग) steel, copper, aluminum, chemical etc.
Capital goods industries goods that are used in producing other goods e.g. textile machinery,
(पूंजीगत माल उद्योग) conveyor belts, mining equipment etc.
Heavy industries (भारी producing large and heavy products e.g. Ship building, bulldozers,
उद्योग) industrial machinery, electric transformers etc.
�Difference between Dept/Statutory/Attached/Autonomous Body etc? =
government-organisations-in-hindi/7KCEZHT4
50.1.1 �🚟🚟 [Yearbook] Ministry of Heavy Industries & Public Enterprises

भारी उद्योग एवं सावर्ज�नक-�ेत्र के उपक्रमो का मं त्रालय
Dept ⇒ 1] Department of Heavy Industry
�वभाग ⇒ 2] Department of Public Enterprises: is responsible for i) Allotting
Ratna Status (Ref: Pillar2) and ii) conduct Public Enterprises Survey.
2021- This department was shifted to Finance Ministry. (More in
�Pillar#2A)
Attached, Subordinate,
⇒ N/A or not MCQ worthy
Statutory
Autonomous ⇒ National Automotive Testing and Research and Development
�ाय� सं �ा Infrastructure Project (NATRiP) → implements FAME-India project
for faster adoption of electric vehicles.
CPSE: Central ⇒ List not exhaustive: (�न��ल�खत के अलावा और भी कं प�नयां हो सकती है)
Public Sector ⇒ Bharat Heavy Electricals Ltd. (BHEL) etc.
Enterprises ⇒ (*) Cement Corporation of India Ltd.
क� द्र सरकार के ⇒ (*) Hindustan Newsprint Ltd, (*) Scooters India Ltd.
सावर्ज�नक �ेत्र के ⇒ (*)Bharat Pumps and Compressors Ltd.
उपक्रम/
सरकारी कं प�नयां
(*) means approved for Strategic Disinvestment (=privatization) in 2019
50.1.2 � 🔩🔩 [Yearbook] Ministry of Steel (इ�ात मं त्रालय)
Dept N/A
Attached, Subordinate, N/A or not MCQ worthy
Statutory
CPSE Many Govt Companies, among them notable are:
क� द्र सरकार के ⇒ Steel Authority of India Ltd (SAIL), Rashtriya Ispat Nigam Ltd (RINL)
सावर्ज�नक �ेत्र के ⇒ National Mineral Development Corporation (NMDC) iron ore.
उपक्रम/ ⇒ (*) Salem Steel Plant (Tamilnadu), Bhadrwati Steel Plant (Karnataka),
सरकारी कं प�नयां Ferro Scrap Nigam Ltd, & a few misc.
E-governance Steel Import Monitoring System (SIMS) portal.
(*) means approved for strategic disinvestment (=privatization) in 2019
Largest Steel 1 2 3
Producer China (54%) India (6%) Japan
Consumer China (49%) USA India (6%)
50.1.2.1 🔩🔩 Steel → Purvodaya Initiative (2020)
⇒ The eastern states of India (Odisha, Jharkhand, West Bengal, Chhattisgarh, and Northern
Andhra Pradesh) are home to 80% of Indian iron reserves.
⇒ Purvodaya Initiative: Setup new steel plants, transport infra etc. Boss? Steel Ministry will
coordinate with other Central Ministries, State Governments and Private Companies.
50.1.3 �🧪🧪 [Yearbook] Ministry of Chemicals & Fertilizers
Dept 1) Dept of Chemicals and Petrochemicals 2) Department of Fertilizers

3) Dept of Pharmaceuticals
Attached, ⇒ Fertilizers Industry Coordination Committee (FICC).
⇒ National Pharmaceutical Pricing Authority (NPPA) �More in Pillar#6:
Subordinate, Either non-existent / not MCQ worthy (या तो मौजूद नहीं है या तो परी�ा के �लए काम क� नहीं)
Statutory
Autonomous These bodies are set up under either Societies Registration Act or Multistate
Cooperative Societies Act= Different?NOTIMP.
⇒ Multi State Cooperative Societies: IFFCO, KRIBHCO
⇒ Bureau of Pharma PSUs of India(BPPI) for supplying cheap medicines to PM
Jan Aushadhi Kendras (� �More in Pillar6)
⇒ National Institute of Pharmaceutical Education Research (NIPER)
⇒ Central Institute of Plastics Engineering & Technology (CIPET), Ranchi
CPSE Many Government companies. Among them, notable are:
क� द्र सरकार के ⇒ Hindustan Insecticide Limited (HIL) → responsible for mfg of Di-chloro-di-
सावर्ज�नक �ेत्र के phenyl-tri-chloro-ethane (DDT) for mosquito control in Nation vector
उपक्रम/ borne disease control program
सरकारी कं प�नयां ⇒ (*) Hindustan Antibiotics, (*) Karnataka Antibiotics & Pharma, (*) Bengal
Chemicals and Pharmaceuticals, (*) Hindustan Fluorocarbon Ltd
50.1.4 �⛽ [Yearbook] Yearbook: Ministry of Petroleum & Natural Gas
पेट�ो�लयम एवं प्राकृ �तक गैस मं त्रालय
Dept ⇒ N/A
Attached / ⇒ Directorate General of Hydrocarbons: regulator for the upstream
Subordinate activities i.e. oil and gas exploration and production activities. 2018:
offices: proposal to give it statutory status was REJECTED.
Statutory ⇒ 2006’s Act: Petroleum and Natural Gas Regulatory Board: regulator for
the downstream activities i.e. laying of pipelines and fuel marketing
CPSE ⇒ (*) Bharat Petroleum Corp Ltd, (*) Hindustan Petroleum Corp Ltd
क� द्र सरकार के ⇒ Engineers India Limited → consultancy services for petro refineries etc
सावर्ज�नक �ेत्र के ⇒ Gas Authority of India, Indian Oil Corporation, Oil India,
उपक्रम/ ⇒ Oil & Natural Gas Corporation (ONGC),
सरकारी कं प�नयां ⇒ ONGC-Videsh Ltd (OVL)- associated with foreign exploration projects
like Sakhalin (Russia), Al-Furat (Syria), Greater Nile (Sudan), San
Cristobal ( Venezuela).
50.1.5 �Lakhshya portal by petroleum ministry (2021)

⇒ Requires all oil-gas companies to upload list of machines (capital goods) & repair-maintenance
services bought by them. → So, Indian businessman can look at the list → if Indian
businessmen can design and supply such ‘swadeshi’ machines / repair services → he can contact
the oil company. → �reliance on imported machines.
⇒ (भारतीय ऑइल-गैस कं प�नयां जो जो मशीन� ख़रीदती ह� उनक� सूची इस वेबसाइट पर डाल�गे → तािक भारतीय उद्योगप�त उसे पढ़के
अगर वो उद्योगप�त ऐसी मशीनों का ‘�देशी’ उ�ादन करके भारतीय ऑइल-गैस कं प�नयों को मुहैया/उपल� करा सके तािक
आया�तत �वदेशी मशीनों पर हमारी �नभर्रता कम हो।)
50.1.6 ⛽ 📔📔📔📔 Dutch Disease & Resource Curse- ES2016-17

⇒ Dutch Disease: Discovery of Natural Gas in Netherlands → Higher inflow of Foreign Currency
($) for import, investment, bribes to win oil exploration rights → Local currency strong → Non-
Energy Exports decline [Agri, textile etc.] → farmer shift to work in oil/gas wells & refineries →
food shortage → hyperinflation → food riots. ऊजार् सं साधनों के चलते ढेर सारा �वदेशी �नवेश आने पर �ा�नक
मुद्रा कमजोर हो जाती है �जससे अ� उद्योगों को नुकसान और खाद्य महंगाई क� सम�ा
⇒ Resource Curse / Paradox of Plenty: Venezuela is #1 oil reserves in OPEC group yet food riots.
Because of 'Dutch Disease'. (सं साधनों का अ�भशाप)
⇒ Resource Curse in context of India: Chhattisgarh, Jharkhand = large mineral wealth → mining
mafia, Naxalite, politician nexus → bribery, corruption, ransom, rent-seeking → high level of
poverty, malnutrition. (ख�नज सं प�ी के चलते भ्र�ाचार िफरौती गरीबी, कु पोषण)
50.1.7 ⛽Crude Oil Prices, Petrol Diesel pe Taxes, Oil Bonds, NELP-HELP Policies
Ref: Pillar2A2- Indirect Taxes and Pillar3A: Import Export.
🔠🔠❓MCQ. Find correct statements: (UPSC Pre19)

1. Petroleum Natural Gas Regulatory Board (PNGRB) is the first regulatory body set up by the Govt.
2. One of the tasks of PNGRB is to ensure competitive markets for gas.
3. Appeals against the decisions of PNGRB go before the Appellate Tribunals of Electricity.
Codes: (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1,2 and 3
50.1.8 �[Yearbook] Ministry of Mines ( खान मं त्रालय)

Dept / Statutory N/A or Not exam worthy. (या तो �वद्यमान् नहीं या तो परी�ा के �लए उपयोगी नहीं)
- National Mineral Exploration Trust रा�ी� य ख�नज अ�ेषण �ास
Attached /
- Geological Survey of India भारतीय भूवै�ा�नक सव��ण
subordinate offices
- Indian Bureau of Mines भारतीय खान �ूरो
- National Aluminum Company Limited (NALCO), Bhubaneswar;
CPSE - Hindustan Copper Limited (HCL), Kolkata;
- Mineral Exploration Corporation Limited (MECL), Nagpur.
- National Inst of Rock Mechanics, Kolar Gold Fields (KGF, Karnataka)
- Districts Mineral Foundations (DMF) in mining districts.
Autonomous bodies
- National Institute of Miners’ Health (NIMH in Karnataka). Although
/ Trusts
in 2020, Govt merged it with Health Ministry’s ICMR-National
Institute of Occupational Health (NIOH, Ahmedabad, Guj)
50.1.9 🏅🏅⚒🗺🗺 Mineral Products in India: (भारत के ख�नज उ�ादन)
Hydrocarbon Energy Minerals (Coal, Lignite, Petroleum & Natural Gas 4 types
Atomic Minerals (Ilmenite, Rutile, Zircon, Uranium, And Monazite) 5 types
Metallic 10
Non-Metallic 21
Minor Minerals. 55
Total number of products 95 types
By default, the ‘regulation of mines and mineral development’, falls under Union List. But,
- �Minor minerals: गौण ख�नज = Their legislation, royalty, administrative work is delegated to the
States’ domain e.g. Sand, Mica, Marble, Granite, Agate, Chalk, Gypsum, Shale etc.
- 🧔🧔Major minerals: प्रमुख ख�नज = Any mineral that is not in Minor mineral list is called ‘Major
Mineral’ → Union’s domain e.g. atomic minerals, bauxite, iron, coal, petroleum, natural gas etc.
🔠🔠❓ MCQ. Find correct statement(s) about minor minerals in India: (Prelims-2019)
1. Sand is a ‘minor mineral’ according to the prevailing law in the country.
2. State Governments have the power to grant mining leases of minor minerals, but the powers
regarding the formation of rules related to the grant of minor minerals lie with the Centre Govt.
3. State Governments have the power to frame rules to prevent illegal mining of minor minerals.
Ans Codes: (a) 1 and 3 only (b) 2 and 3 only (c) 3 only (d) 1, 2 and 3 only
🔠🔠❓MCQ. Which of the following are designated as major minerals? 1) Bentonite 2) Chromite
3) Kyanite 4) Sillimanite (Prelims-2020)
[a) 1 and 2 only [b) 4 only [c) 1 and 3 only [d) 2, 3 and 4 only
50.1.10 🏅🏅⚒📯📯 National Mineral Policy (NMP) 2019

- India produces 95 minerals including 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 minerals
- Boss? Mining Ministry, to replace 2008’s policy.
- Target: For non-fuel and non-coal minerals
- We’ll allow transfer of mining leases from one company to another, help in their merger and
acquisition (कं प�नयों के �वलय और अ�धग्रहण से जुड़े �नयमों को आसान बनाया जाएगा).
- We’ll grant ‘industry’ status to mining. (so they become eligible for certain tax benefits / schemes
meant for ‘industry’ sector, if any.) (खनन �ेत्र को उद्योग का दजार् िदया जाएगा तािक अ� उधोगो को �मलनेवाली टै�
/स��डी छू ट सब खनन उद्योगप�तयों को भी �मले)
- We’ll harmonize India’s mining taxes & royalty rates to global benchmarks. (वै��क �र के समांतर
टै� और रॉय�ी के �नयम, िक �वदेशी कं प�नयां भी भारत म� आने म� ��च िदखाए)
- We’ve already allowed 100% FDI in mineral exploration but we’ll work for ease of doing biz, so
that FDI actually comes. (वा��वक �प से �वदेशी कं प�नयां भारत म� प्र�� वदेशी �नवेश म� िदलच�ी ले उसके �लए कदम)
- R&D, manpower skilling, environmental conservation etc. (सं शोधन, कौशल �वकास, पयार्वरण सुर�ा)
50.1.11 🏅🏅⚒⚖ Mining → MMDR Act 2015

Mines and Minerals Development and Regulation Act, (2015: खान और ख�नज �वकास और �व�नयमन अ�ध�नयम)
replaced the 1957’s act for ease of doing biz.
- Mining Lease (= Concessions अनु�ा पत्र) will be granted only through auction. No discretionary
allotment to any company. (खदानों क� �सफर् नीलामी होगी. �ववेकाधीन आवं टन नहीं �मलेगा)
- Mining Lease shall be given for 50 years, then it’ll be put up for auction (and not renewal unlike
the earlier system).
- Establish a National Mineral Exploration Trust (रा��ीय ख�नज अ�ेषण ट��). Mining companies
required to pay them → it’ll carry out exploration of minerals.
- Establish ‘Not-for-Profit Trusts’ District Mineral Foundations (DMF: �जला ख�नज प्र�त�ान) in all
districts where mining takes place. Mining company required to pay them ₹ ₹ → DMF to use it
for the welfare of people in the district who are affected by the mining related operations. State
govt to prescribe the administrative structure and guidelines of DMFs.
- Higher penalties and jail terms for illegal mining (अवैध खनन के �लए कारावास और जुमार्ना).
50.1.12 🏅🏅⚒⚖ Mines & Minerals (Development & Regulation) Amendment Bill/Act, 2021
✋NOTE: following amendment does not apply to coal and atomic minerals
😰😰BEFORE 🤩🤩AFTER
- Union government to could reserve any - (In future) when new mines are
mine a particular end-use. auction….No mineral can be reserved for
- e.g. if Tata was allotted an iron ore mine, he captive use.
could only use its ore for his own steel plant - The mining company may do whatever it
and cannot send the iron or to any other wishes e.g. Tata can use the iron ore for his
company. Such mines are known as captive own steel plant AND/OR Sale it to some
mines. other company. [खदान कं पनी चाहे तो अपने उ�ादन
के �लए ख�नज का इ�ेमाल कर� या िकसी और कं पनी को
बेचने सरकार – सरकार इन मामलों पर कोई पाबं दी नहीं]
Union govt had allowed State government to Union Govt will specify the time period within
conducted the auction of mines (except Coal which state government must complete the
and atomic minerals) But some states were very auction. otherwise union government will do
lazy and not completing the auction process in auction for that state। [यिद तय समय सीमा म� रा�
a timely and transparent fashion. सरकार खदानों क� नीलामी नहीं करेगी, तो क� द्र सरकार उस रा�
के �लए नीलामी कर देगी]
If mining company doesn’t do mining for 2 😷😷 Govt may give 2 years + one-year extra
years then their lease will expire. (=Govt may extension/relief = total 3 years relief to exiting
sell the mine, to some other company)। खनन company. (e.g. in case Company could not start
कं पनी ने खदान �मलने के बाद दो वष� के भीतर ही उ�ादन शु� the mining process due to Corona
करना होगा वरना उसका आवं टन रद्द हो जाएगा lockdown/labour/disaster) [एक साल अ�त�र� छू ट
यानी तीन साल तक भी उ�ादन नहीं शु� िकया तो सरकार
आवं टन रद्द नहीं करेगी]
🔠🔠❓MCQ. What is the purpose of 'District Mineral Foundations' in India? (UPSC-Pre-2016)

1. Promoting mineral exploration activities in mineral-rich districts
2. Protecting the interests of the persons affected by mining operations
3. Authorizing State Governments to issue licences for mineral exploration
50.2 🔥🔥 MINING → COAL (कोयला)
⇒ Top five largest coal reserves: USA > Russia > China > Australia > #5: India. (प्राकृ �तक भं डार)
⇒ Although India is the world's 2nd largest coal producer (उ�ादन) but our requirements are higher
than production, so, we import >₹1.50 Lcr coal, annually.
⇒ Coal is used in many industries such as electricity, steel, cement, paper, brick-kilns, etc
Coal Type Note Carbon %
Peat Highest moisture = smoke pollution. Most inferior in energy 40
Lignite Important states: TN (Neyveli), Gujarat, Rajasthan 40-60
/Brown Coal
Bituminous/ - Upon heating, it releases a liquid called Bitumin. 60-80
Black-Coal - Used to make coking coal, gas coal, steam coal.
- Imp states: Chattisgarh, Jharkhand, WB, MP, Odisha
Anthracite Burns with short blue flame, lowest moisture, highest energy. 80-90
Hard Coal �ूनतम नमी और मह�म ऊजार्
50.2.1 🔥🔥� [Yearbook] Coal Ministry (कोयला मं त्रालय) consists of →

Dept - N/A
Attached / - Coal Controller’s Organization: functions- (1) Data collection, research,
subordinate quality monitoring for coal. (2) hear public’s objection against govt’s
notification related to coal bearing areas.
CPSE (सरकारी - Coal India Ltd (CIL) & its subsidiaries. HQ: Kolkata, Maharatna company,
क��नयां) single largest coal producing company.
- Neyveli Lignite Corporation, Tamil Nadu.
- Singareni Collieries Company Limited: Telangana Govt 51%: Union: 49%
Statutory - Coal Mines Provident Fund Organization
🔠🔠❓MCQ. In India, what is the role of the Coal Controller’s Organization (CCO) ?
1. CCO is the major source of Coal Statistics in Government of India. (कोयले के बारे म� आंकड़े जमा करना)
2. It monitors progress of development of Captive Coal/Lignite blocks. (कै ��व कोयला खदानों के �वकास का
मुआयना/ �नरी�ण करना)
3. It hears any objection to the Government’s notification relating to acquisition of coal-bearing
areas. (कोयला �व�ारों के ज़मीन अ�धग्रहण के सरकारी ऐलानों के �ख़लाफ़ �वरोध/�शकायतों को सुनना)
4. It ensures that coal mining companies deliver the coal to end users in the prescribed time. (यह
सु�न��त करना िक कोयला कं प�नयां तय समय पर ग्राहक को कोयला प�ँ चाये)
Codes: (a) 1, 2 and 3 (b) 3 and 4 only (c) 1 and 2 only (d) 1, 2 and 4
🔠🔠❓MCQ. Consider the following statements relating to Coal India Limited : (UPSC-CDS-2019-
i)
1. It is designated as a ‘Maha Ratna’ company under the Ministry of Coal.
2. It is the single largest coal producing company in the world.
3. The Headquarters of Coal India Limited is located at Ranchi Jharkhand.
Codes: a) 1 only b) 1 and 2 only c) 2 and 3 only d) 1, 2 and 3
🔠🔠❓ Find correct statement(s) about Coal India Limited (CIL? (UPSC-CDS-i-2020)
1. CIL has its headquarters Kolkata.
2. CIL operates through 82 mining areas spread over twenty provincial States of India.
3. CIL is the single largest coal-producing company in the world.
Codes: a) 1 only b) 1 and 3 only c) 2 and 3 only d)1, 2 and 3
50.2.2 🔥🔥⚖ Coal Mining- Nationalization & Entry of Private Sector
- 1973: Coal Mines Nationalization Act → Coal India and other CPSEs took over private coal
mining companies. They will dig coal, sell it to thermal power plants & other industries.
- 1993: Private Coal mining allowed for ONLY for captive use (अंकु�शत उपयोग) i.e. industrialist
wanting coal for his own steel, cement, aluminium etc. manufacturing processes → UPA-raj
Captive Mining rights given to ministers’ relatives → they sold rights to needy companies
@higher price= SCAM, then 2014: SC cancelled coal block allocations.
- 2015: Coal Mines Special Provision Act: It opens up commercial coal mining for both private
and public entities, and thus ends monopoly of Coal India. (doesn’t mean captive mining is
outlawed. Companies who already have such captive mining rights, which were not cancelled by
SC- they’re allowed to operate. Then Govt takes some reforms #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
🔠🔠❓Find correct statement(s) (Prelims-2019)

1. Coal sector was nationalized by the Govt of India under Indira Gandhi.
2. Now, coal blocks are allocated on lottery basis.
3. Till recently, India imported coal to meet shortages of domestic supply, but now India is self-
sufficient in coal production.
Codes: (a) 1 only (b) 2 and 3 only (c) 3 only (d) 1,2 and 3
50.2.3 🔥🔥⚖ Mineral Laws (Amendment) Ordinance/Act 2020

ख�नज कानून (सं शोधन) अ�ादेश/ कानून amends the
⇒ Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) AND
⇒ Coal Mines (Special Provisions) Act, 2015 (CMSP Act).
😰😰Before ordinance/Act 🤩🤩After
Who can do Only companies related to Any India-registered company. So it’ll also
bidding in the iron steel, power coal sectors. encourage competition and attract FDI in
coal mining such Indian companies
auction?
Prior experience Yes. खनन के अनुभव क� आव�कता Prior experience in mining not required.
required before होगी, तभी नीलामी म� िह�ा ले सकते ह� अनुभव आव�क नहीं
bidding
What type of Separate licenses for Single/Composite license called ‘prospecting
license is /are i. prospecting (survey) license-cum-mining lease’
given? ii. actual mining (पूव��ण-सह-खनन का सं यु� अ�धकारपत्र')
How does Govt Companies to pay a fixed Rs. ⇒ Revenue sharing model= i.e. Mining
earn money? amount per tonne of coal company needs to give a certain portion
mined. क�नी प्र�त टन कोयले के of its revenue (=income from coal sales)
उ�ादन के िहसाब से �न��त रक़म to the govt irrespective of profit or loss in
सरकार को दे दी थी that sale. कं पनी ने कोयले क� �बक्र� क� आमदनी का
कु छ िह�ा सरकार को देना होगा
⇒ During the auction: minimum bidding
is 4% revenue share to the government.
Then whichever company is offering
higher % revenue share (e.g.5%,10%...)
will be given the mining rights.
Captive Miner Captive miner can’t sell coal ⇒ Can sell upto 50% of production. [अंकु�शत
अंकु�शत कोयला खनन to third party. He must use कोयला खनन कं पनी=पहले कोयले को �सफ़र् अपने �ील
कं पनी coal for his own steel, cement सीम�ट उद्योग म� इ�ेमाल कर सकते. अब वे उस कोयला
etc industry only. उ�ादन का 50% खुले बाज़ार म� बेच भी सकते ह�]
50.2.4 🔥🔥🔥🔥 Coal selling – Shakti Policy (2017)?
- Explained in above image.
- National Coal Index: Coal Ministry's index to measure coal price change compared to the base
year 2017-18. It monitors the price of both domestically produced coal & imported coal. [इन रा��ीय
कोयला सूचकांक- भारत म� उ�ािदत तथा �वदेशों से आया�तत कोयले क� क़�मतों पर नज़र रखता है]
Apps?
1. Coal Mitra App by Power Ministry to help companies in buying / selling coal.
2. UTTAM App by coal ministry to monitor coal quality coming from a particular mine.
50.2.5 👻👻👻👻👻👻Mining → Atma-Nirbhar (खनन)

⇒ �ATMANI→ PM GaribKalyan → �District Mineral Foundation Fund (DMF) ₹₹ → can be
used for COVID-19 testing & related infra (�जला ख�नज प्र�त�ान �न�ध)
⇒ Mineral Index (खनन सूचकांक) for different minerals to be prepared. But, details not yet announced.
⇒ Joint Auction of Bauxite and Coal mineral blocks so that: Coal → electricity → use it for
smelting Bauxite into Aluminium = � electricity costs for mining company. (कोयले और बॉ�ाइट
खदानों क� साझा नीलामी तािक बो�ाइट �पघलाने के �लए �बजली लागत/खचर् कम हो. )
⇒ We’ll encourage Coal Gasification / Coal Liquefaction, Coal Bed Methane Extraction → creation
of a gas based Indian economy.
⇒ Commercial Mining allowed in the Coal Sector, through revenue sharing model. (वा�ण��क खनन:
आय मे से िह�ेदारी का मोडेल).
50.2.6 🔥🔥🤲🤲🛒🛒 Coal Crisis/Shortage in 2021-Oct

While India has the world’s fifth-largest coal reserves. But Govt company Coal India's capacity is
limited.In 2021-Oct: nearly 80% of India’s coal based electricity power-plants had less than eight
days of coal supplies left: ( �बजली घरों म� �सफ़र् आठ िदनों तक �बजली पैदा हो सके उतना ही कोयला बचा था.)
⇒ 1) Coal India does not have the technology for mining in the rainy season (वैसे तो भारत म� कोयले के
आर��त भं डार �वपुल मात्रा म� है लेिकन सरकारी कं पनी कोल इं िडया के पास बा�रश म� खनन करने क� अ�� टे�ोलॉजी नहीं है.)
⇒ 2) Coal India’s profits are not reinvested in expansion of the mining activities/research but
rather to give as dividend (so as to help government in its welfare schemes and Fiscal deficit
management. Ref Pillar2D) (सरकारी क�नी को जो भी मुनाफ़ा होता है उससे से कोयला खनन क� नई नई टे�ोलॉजी और
मशीनरी ख़रीदी चािहए। लेिकन वे �ादातर मुनाफ़ा लाभांश/िड�वड�ड के �प म� सरकार को देती है, तािक सरकार का राजकोषीय घाटा
कम हो सके , चुनावों के �लए ग़रीब क�ाण योजना चला सके । )
⇒ 3) so we have to rely on imported coal but China and Australia coal mining activities have facing
problems by the foreign environment activists like Greta Thurnberg. → Those foreign coal
mining company is required to invest in the green technology, which is increasing their cost of
production → expensive coal import for India. (चीन और ऑ��े�लया म� भी कोयला खनन पर �व�वध पयार्वरण
�नयमों के चलते भारत के �लए आया�तत कोयला महँ गा �आ है)
⇒ 4) Corona-lockdown: supply chain issues. (तालाबं दी के चलते आपू�त �ं खला म� िद�त�)
50.2.7 🔥🔥 📔📔📔📔 Coal Energy: Economic survey suggestions / observations:
1. Carbon Imperialism (काबर्न साम्रा�वाद) is a modern day type of imperialism wherein the 1st world
nations are trying to enforce their views about energy-consumption upon the 3rd nations with
hidden agenda to 1) To sell their nuclear fuel & technology. 2) To portray 3rd world in bad light
for using coal power and thereby ⏬ their own culpability for global warming. India's
Contribution to GHG <10% and Per capita emission is less than 2 tons, yet 1st world nations
portray us as villains. (�वकासशील देशों को अपनी परमाणु ऊजार् और तकनीक बेचने के �लए तथा जलवायु प�रवतर्न म� अपनी
अपरा�धक ता को छु पाने के �लए �वक�सत देश कोयला ताप आधा�रत ऊजार् क� �नंदा करते है)
2. But for India coal based electricity is a necessary evil because
a. Wind and solar power are Non-dispatchable (गैर प्रेषणीय), meaning electricity can be
generated only when there is fast wind blowing or there is appropriate sunshine
b. Land requirement for solar based powerplant is 10 times that of thermal power plant.
c. Challenges in acquiring Nuclear Fuel and Nuclear Technology
d. Unemployment if we shut down coal mining & thermal plants. Further mains self study
at mrunal.org/2017/09/upsc-mains-answer-writing-gsm3-carbon-imperialism.html
3. 💼💼Budget-2020: Some of the Indian thermal power plants are old and their carbon emission
levels are high. We’ll close them & use their vacated land for alternative use. (बेहद प्रदू षण करने वाले
पुराने �ांट्स बं ध कर�गे और उस जमीन का कोई ओर वैक��क इ�ेमाल कर�गे)
4. 👜👜👜👜Budget-2022:- Carbon Neutral Economy: 5-7% biomass pellets will be co-fired in thermal
power plants → 😍😍 extra income to farmers +⏬ stubble burning in agriculture fields. (फ़सल
अवशेष/पराली को जलाने क� जगह उसम� से बायोमास-पेलेट बनाकर कोयला �बजली घरों म� इ�ेमाल िकए जाएं गे।)
5. 👜👜👜👜Budget-2022:- Announced projects for 1) coal gasification 2) conversion of coal into
chemicals.
a. Gasification of coal is a process in which coal is partially oxidated by air, oxygen, steam
or carbon dioxide → to produce a fuel gas. (कोयले के आं�शक ओ��डेशन द्वारा �धन गैस बनाना।)
b. Coal can be used for producing chemicals like Formaldehyde, ethylene and propylene,
acetic acid. (कोयले म� से �व�वध रसायनों का उ�ादन)
6. 📙📙📙📙ES22 quoted World bank’s report Minerals for Climate Action: we need following
minerals to ⏫ clean energy:- (1) Copper, Aluminum, Iron, Manganese, Nickel for developing
solar cells, wind turbines, nuclear reactors. (2) Lithium and Graphite for storing electricity.
😰😰But India doesn’t have enough of these mineral resources. (�� ऊजार् के साधनों और सं ग्रहण के �लए इन
ख�नजों क� ज़�रत, िक�ु भारत के पास पयार्� मात्रा म� ये ख�नज स�� उपल� नहीं)
50.2.8 🔥🔥🏅🏅⚒ Mining → Misc. Schemes, Apps, Portals, Issues

��FAQ: Do I’ve to remember all this? Ans. No. I’ve given to prevent your FOMO feeling from
CA-PDFs/365s. (आपको ये डर नहीं रहे िक आपके पास ही माल नहीं है इस�लए आपको यह माल िदया है. नींद खोने क� ज़�रत नहीं.)
Pradhan Mantri - Boss? Mining Ministry.

Khanij Kshetra - It aims to use the funds of the DMFs to complement the ongoing union
Kalyan Yojana and state schemes in that district e.g. drinking water supply, health care,
(2015)
sanitation, education, skill development, women and child care etc.
Star Rating Of Mining Ministry → Indian Bureau of Mines gives 0-5 Star to a mine
Mines, 2016 depending on whether the mining company is working without adversely
affecting the social, economic and environmental well-being of present and
future generation. िकसी खदान क� सामा�जक आ�थक और पयार्वरणीय असर
Illegal mining It’s bad for environment & Govt deprived of royalty so….
गैर कानूनी खनन - Mining Surveillance System (MSS): satellite-based system by Indian
Bureau of Mines under Mining ministry.
- Khan Prahari App: Ministry’s app for reporting illegal coal mining.
- Sidenote: cVIGIL App: Election Commission of India’s app to report
violation of model code of conduct / expenditure.
TAMRA Mining ministry’s TAMRA App/portal for helping the businessmen to bid in
App/portal mining auctions online (2017) (ऑनलाइन तरीक़े से नीलामी म� िह�ा लेने के �लए)
PRAKASH Portal ⇒ PRAKASH (Power Rail Koyla Availability through Supply Harmony)
(2019) portal launched jointly by Power Ministry and Coal Ministry
रेलवे द्वारा कोयले का ⇒ To connect the Coal mining companies, Railways and Thermal Power
प�रवहन Plants on a single platform = better supply chain management.
Satyabhama Mining Ministry's portal for mining related research, science & technology.
Portal (2020-Jun) Satyabhama = wife of Lord Krishna. (खनन के साथ जुड़ी सं शोधन �व�ान प्रौद्यो�गक�)
CIMS and AIMS Mining Ministry's online “Aluminium Import Monitoring System” (AIMS)
& Copper Import Monitoring System (CIMS)
Pollution - Red Mud is a solid waste generated during the Bauxite to aluminum
By mining production process. Ministry of Mines making efforts to utilize red mud
खनन द्वारा प्रदू षण in cement and ceramic etc industries.
- Fly Ash is the pollutant generated by Thermal Power Plants while
burning coal. Can be used in making cement, Bricks, Tiles, roads. Power
ministry launched ASH TRACK Mobile App to monitor fly ash
51 🔌🔌INFRA → ENERGY → ELECTRICITY (ऊजार् → �वद्यतु )
- (Origin) Electricity is a key element in modern day life. Right from running irrigation pumps to
charging mobile phones, electricity is a prerequisite for agricultural growth and digital
connectivity. (�बजली है आधु�नक जीवन का अ�नवायर् िह�ा - चाहे कृ �ष �संचाई हो या मोबाइल फोन सं चार)
- (Significance) Greater access to energy improves both economic growth & human development
of a country. If India wants to improve its Human Development → we must � per capita
energy consumption by 4xtimes. (मानव �वकास को बेहतर करने के �लए प्र�त �� ऊजार् खपत बढ़ानी होगी)
- (DATA) India’s per-capita energy consumption of only ~1/3rd of the global average. OR
Though India accounts for ~18% world’s population, it uses only around 6%of world’s energy.
(DATA as of 2022-Aug) In India’s present electricity mix consists of:

Thermal Electricity (ऊ�ीय �वद्युत: Coal > Gas > Diesel Oil) ~58%
Renewable: Hydroelectricity (जल-�वद्युत) ~12%
Renewable Energy (नवीकरणीय ऊजार्) (Solar, Wind, Biomass etc. except hydro) ~29%
Nuclear (ना�भक�य / परमाणुवीय) ~2%
Total 100%
Source: https://powermin.nic.in/en/content/power-sector-glance-all-india
51.1.1 �🔌🔌 [Yearbook] Ministry of Power (�वद्यतु -ऊजार् मं त्रालय)

Dept & N/A but they’ve truckload of other bodies & apps:
Attached
Statutory ⇒ Joint Electricity Regulatory Commission (JERC) for UT of J&K & Ladakh
Bodies
⇒ Central Electricity Authority (CEA: के �ीय �वदयु् त प्रा�धकरण): prescribes the standards
for construction of electrical plants, electric lines etc.
⇒ Central & State Electricity Regulatory Commissions (�वद्युत �नयामक आयोग) for fixing
the electricity tariff (prices).
⇒ Appellate Tribunal for Electricity (APTEL), Bureau of Energy Efficiency (BEE);
⇒ Damodar Valley Corporation (DVC); Bhakra Beas Management Board
⇒ Joint Electricity Regulatory Commission (JERC) for GOA & UTs
⇒ JERC for Manipur and Mizoram
Autonom Central Power Research Institute, National Power Training Institute
CPSE − National Thermal Power Corporation (NTPC)
सरकारी − National Hydroelectric Power Corporation (NHPC)
कं पनी − SJVN ltd: Satluj Vidhyut (GoI 62%, Himachal 27%, rest % with other investors)
− Power Finance Corp (PFC), Power Grid Corporation of India (POWER GRID)
− Power System Operation Corporation Limited (POSOCO)
− EESL- Energy Efficiency Services Limited- joint venture of NTPC Limited, PFC,
REC and POWERGRID- known for its subsidized UJALA LED bulbs
− (*) THDC India Limited: Tehri Hydro (GoI: 75%, UP State:25%)
− (*) Rural Electrification Corporation (REC)- known for DD Gram Jyoti.
− (*) North Eastern Electric Power Corporation (NEEPCO)
51.2 �🔌🔌 NATIONAL ELECTRICITY DISTRIBUTION COMPANY
- PM Modi had announced 24x7 power to all by 2022. But, since private and State-Government
owned electricity distribution companies are suffering NPA/debt issues, the electricity
distribution sector is not expanding fast enough to achieve this target.
- So, 2019-June: NTPC and Power Grid Corporation of India have formed a 50:50 joint venture
company → named National Electricity Distribution Company.
- Objective? electricity distribution business on a pan-India basis.
51.2.1 🔌🔌 IEX = Current-PDF-walla gone crazy (इसके पीछे PDF वाले दीवाने हो गए है)
✋ this GK very poor cost benefit for exam, But CA-PDF walla gone crazy. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
A private sector company: Indian Energy Exchange Limited (IEX) →
⇒ IEX launched a green term-ahead market (G-TAM). basically future/forward contracts for
renewable energy. (Ref 1C)
⇒ IEX’s subsidiary company → Indian Gas Exchange (IGX) → online trading of natural gas.
⇒ IEX + Power Exchange India Limited (PXIL) → It allows players (thermal powerplants,
DISCOMS etc) to buy/sell electricity from anywhere across the country with just one hour’s
prior notice. = "REAL TIME MARKET" (RTM)
51.3 🔌🔌✝☪🕉🕉 ELECTRICITY → ONE NATION-ONE GRID
- Initially, individual states’ electricity grids (�बजली �ग्रड) were interconnected to form 5 regional
grid regions namely Northern, Eastern, Western, North Eastern & Southern region. If a state
had surplus electricity, it could sell ONLY to other states in that region.
- So, One Nation-One Grid concept aims to connect all 5 regional grids into one national grid so,
electricity can be transferred from surplus region to deficient region.
- Here buying-selling of surplus electricity is done through power exchanges like —Power
Exchange of India (PXIL) and India Energy Exchange (IEX).
- Boss? Power ministry → Power Grid Corporation of India Limited.
51.3.1 🔌🔌♻ Grid → Green Energy Corridor Project (ह�रत ऊजार् ग�लयारा प�रयोजना)
- Project will enable the flow of renewable energy into this National Grid Network. So that
renewable energy rich States like Rajasthan (solar), Tamil Nadu (wind) can sell the electricity to
other states. (एक रा� क� ह�रत �बजली अ� रा�ों को मुहैया/उपल� क� जा सके ।)
- 2022- Phase-II of the scheme started. Union govt to give 33% subsidy on project cost.
51.3.2 🔌🔌♻ Grid → GREEN Grids / OSOWOG

- 2018: India had first proposed connecting solar energy supply across borders at the International
Solar Alliance (HQ: Gurugram, India).
- 2021: PM Modi and UK PM Boris Johnson launched a ‘green grids’ initiative- also known as the
One Sun One World One Grid (OSOWOG) project— on the sidelines of the COP26 Glasgow
summit in UK.
- To connect renewable energy grids across borders. (�व�भ� देशों के बीच ह�रत ऊजार् /�बजली को जोड़ा जाए)
- �(Benefit) If the countries in different time zones are connected then they can continue to
work on solar energy even after the sun is set in their own country. (तािक एक देश म� अगर सूयार्� भी हो
जाए, तो भी दू सरे देश क� सौर ऊजार् से उसका काम चलता रहेगा)
51.4 🔌🔌🔌 ELECTRICITY → POWER MINISTRY’S APPS/PORTAL OVERDOZE😰😰
Garv app to monitor progress of how many villages electrified under DD Gram Jyoti
Yojana.
DEEP portal to help DISCOM companies buy electricity from thermal plants through
auction.
Vidyut PRAVAH & to let people know how much electricity is generated in India, vs. current
MERIT app price, demand & shortages, inter-state purchase of electricity etc.
Urja Mitra App to notify users about upcoming electricity outages.
TARANG App to monitor upcoming power projects & stalled projects.
And lastly, Power Ministry → Central Electricity Authority (CEA) → National Power Portal (NPP)
where above Apps’ data can be displayed
51.5 🔌🔌🔌🔌🔌🔌ELECTRICITY → INTEGRATED POWER DEVELOPMENT SCHEME
शहरों म� �बजली उपल� बेहतर करने के �लए
Originally Manmohan had launched Restructured Accelerated Power Development and Reforms
Programme (RAPDRP), Modi repacked/renamed it as IPDS. एक�कृ त �बजली �वकास योजना
- Boss? Ministry of Power (2014). Central Sector Scheme = 100% funded by Union.
- Target? To strengthen power infrastructure, especially in urban areas.
- How? All Electricity Distribution Companies (Discoms: �बजली �वतरण कं प�नयां) are given ₹ ₹
assistance for improving distribution network, installing ICT enabled smart meters for billing
and collection. Install solar panels if not possible to join an area with grid.
51.5.1 🔌🔌⏱ Electricity → Prepaid Smart Meters for Electricity

⇒ A smart prepaid meter has an internet modem. Electricity co can remotely connect, supply the
electricity as per amount of ₹₹ balance left in the device (similar to a prepaid mobile talktime).
⇒ Electricity usage data collected in a server → �scope of electricity theft by tempering with the
meter box. (मीटर से छे ड्खानी मुमिकन नही)
⇒ �Budget-2020: We’ll replace conventional meters by prepaid smart meters in the next 3 years.
Note: Prices quoted in above chart are only for illustration, they may not be real/accurate.
51.6 🔌🔌🔪🔪:🧔🧔🧔🧔ELECTRICITY: NPA SOLVE → UDAY (2015)

(रा� सरकारों तुम �बजली कं प�नयों का ब�क कजर् भरो योजना)
During UPA/Congress-raj, DISCOMs were suffering losses because: 😰😰
1. Floods and cyclones, environmental activism by NGT/SC, scams in coal allocation → coal
mining ⏬ → Coal became expensive😰😰 → Thermal electricity production became expensive.
(बाढ़ चक्रवात, पयार्वरणीय अ�त सतकर् ता, कोयला खदान आवं टन म� धांधली)
2. 20% of the electricity is lost wasted during the transmission and distribution. But electricity
companies do not have enough money to upgrade their network/equipment. (नए उपकरण/ साधन
ख़रीदने के �लए पैसा निह, इस�लए पुरानी/जजर्�रत लाइनों म� सं चार के दौरान २०% �बजली बबार्द हो जाती है)
3. Under the Electricity Act 2003 →

a. Central Electricity Regulatory Commission regulate the price of Inter-State sale of
electricity.
b. State Electricity Regulatory Commissions regulate the price of intra-state sale.
c. The electricity price slabs are kept different for industrial use, household use and
agriculture use. (औद्यो�गक �रहाइशी और कृ �ष उपयोग के �लए �बजली के अलग अलग दाम होते ह�)
d. 😰😰To keep farmers happy, agri electricity will be subjected to lower tariffs. But State
Govts not releasing subsidies on time to electricity companies. (िकसानो को स�े / मु� म�
�बजली दी जाती है। हालाँिक �बजली कं पनी को �ए नुक़सान क� स��डी- रा� सरकार �नयत समय पर चुकाती नहीं है)
4. 😰😰Electricity thefts rampant but State Govts ignore it for vote bank politics. (लोकलुभावन के �लए
िकसानों को स�े म� �बजली, तथा सरकारों क� �बजली चोरी के �खलाफ लड़ने म� उदासीनता के चलते �बजली कं प�नयां घोर नुकसानी म�)
😰😰DISCOM were making huge losses → Modi launches a scheme to help them called, ‘Ujwal
Discom Assurance Yojana’ (UDAY).
Boss? Ministry of Power (2014)
Target? Financial revival of DISCOMs via following method:
- Whatever was the debt of a DISCOM on 30/9/15: State Govt will take over 75% of the debt in
a phased manner. [It is optional for States to do this.]
- To repay this debt, State govt. will mobilize ₹ issuing bonds in the market. These bonds will
be non-SLR in nature. So, banks are buying them, it will be not counted in their SLR quota.
What is SLR? (More in 📑📑Pillar#1A2: Monetary Policy).
⇒ (if States do above thing) → Union will give them extra ₹₹ for Deendayal Upadhyaya Gram
Jyoti Yojana (DDUGJY), Integrated Power Development Scheme (IPDS), and other such
schemes of (1) Ministry of Power and (2) Ministry of New and Renewable Energy.
⇒ By 2019-20, first phase completed. Data showed that scheme failed to completely solve the
problem of the electricity companies. Then power minister said we will launch UDAY 2.0
scheme with better features but no development yet. [पहले चरण म� कु छ ख़ास सफलता हा�सल नहीं �ई
हालाँिक दू सरा चरण शु� करना बाक़� है]
51.6.1 👻👻⚡Energy → DISCOMs Liquidity injection (पैसा क� तरलता देके जान फूं कना)
⇒ Corona lockdown → Industry and railways shutdown → � demand for electricity → losses
for Electricity/Power Distribution Company (DISCOM).
⇒ Atma-Nirbhar: Govt will give ₹₹ to (i) Power Finance Corporation (ii) Rural Electrification
Corporation (PFC-REC) → they’ll invest ₹₹ in DISCOMS.
51.6.2 👻👻⚡Energy infra→ Electricity reforms in Atma-Nirbhar (�बजली �ेत्र म� सुधार)

⇒ We’ll reform the electricity tariff policy (शु� नी�त),
⇒ encourage DBT for electricity subsidy to farmers (सब�सडी का प्र�� ह�ांतरण);
⇒ install smart prepaid meters
⇒ Will privatise the Union Territories’ DISCOM/Power departments → More efficient operations
in UT (क� द्र शा�सत प्रदेशों म� �बजली क� सरकारी कं प�नयों का �नजीकरण कर�गे)
51.7 🔌🔌ELECTRICITY (AMENDMENT) BILL 2022 (�बजली सुधार �वधेयक )

⇒ electricity is mentioned in the Concurrent List.
⇒ So, Both Parliament and state legislatures can frame laws on electricity.
⇒ In case of a conflict between two laws, Union law will prevail.
⇒ In real life the responsibilities have been divided in such manner that:
�Union looks after �States look after
electricity supply chain electricity distribution
electricity generation
electricity transmission
ELECTRICITY (AMENDMENT) BILL, 2022 aims to amend the Electricity Act, 2003. But it is mostly
in negative news because of the following reasons: (�न� कारणों से �ववादों म� है)
If a DISCOM wants to distribute electricity in more than one state, then
� Central Electricity Regulatory Commission � State electricity regulatory commission

(CERC) (SERC)
give license To operate in multiple states (एक से power to reject license to a discom to operate in
अ�धक रा�ों म� �बजली �वतरण करना चाहती कं प�नयों को their State (�बजली �वतरण कं पनी का लाइस�स रद्द सकती है)
लाइस�स दे सकती है)
Decide minimum capital, code of conduct etc. Decide the minimum and maximum tariff
for the applicant company (�बजली �वतरण कं प�नयों (Electricity prices) that a discom can charge in
क� के पास िकतनी पूंजी होनी चािहए, उनक� आचार सं िहता) their state (�बजली क� उ��म और �ूनतम/लघु�म क़�मत�)
�Critics fear above division of responsibilities will create confusion and power struggle between
union and state electricity regulatory bodies. (�ज़�ेदा�रयों के उ� �वभाजन से क� द्र और रा� क� �बजली �नयं त्रक
सं �ाओं के बीच स�ा सं घषर् और दु�वधाएँ बढ़ेगी।)
⇒ �Bill makes it easier for multiple electricity discoms to operate within an area. This will
increase the competition → State owned (Sarkaari) DISCOM fear this will weaken their
monopoly → biz loss for Sarkaari DISCOM→ privatisation (like AirIndia) → possible jobless
for employees. (एक इलाक़े म� 1 से �ादा �बजली �वतरण कं प�नया काम कर पाएँ गी । �जससे �धार् बढ़ेगी, लेिकन सरकारी
�बजली कं प�नयां �धार् म� िटक नहीं पाएँ गी, घाटे म� चलेगी। िफर एयर इं िडया क� तरह उनका भी �नजीकरण कर िदया जाएगा। और
उनके क�मयों क� नौकरी चली जाएगी ऐसा अंदेशा/�वरोध.)
⇒ �If discom defaults on the payment to electricity generation Company (genco) → Union
government’s can order the stopping electricity supply to such DISCOM. Since most State-
owned (sarkari) Discoms are in losses, unable to pay → electricity might get stopped. (यिद कोई
�बजली �वतरण कं पनी ने �बजली उ�ादन कं पनी का बकाया पैसा व� भी नहीं चुकाया तो क� द्र सरकार उन �बजली �वतरण कं प�नयों
क� �बजली आपू�त बं द करवा सकती है। अब वैसे भी �ादातर रा� सरकार क� सरकारी �बजली कं प�नयां घाटे म� चल रही है, वे
�बजली उ�ादक कं प�नयों को पैसा चुका निह पाती, तो उनका �बजली स�ाई/आपू�त क� द्र-सरकार बं द करवाएगी, ऐसा अंदेशा।)
⇒ �Discoms will compulsorily have to buy minimum X% renewable electricity & distribute it to
customers. Else there will be penalty. This mechanism is known as Renewable Purchase
Obligation (RPO). But, Renewable energy is more expensive than thermal (Coal) energy, so
Discoms apprehensive/opposed. (अ�नवायर् �प से �बजली �वतरण कं पनी ने कु छ �� ऊजार् ख़रीदके ग्राहकों को बेचनी
होगी। वरना जुमार्ना लगेगा। लेिकन �� ऊजार्, कोयला ऊजार् के मुक़ाबले महँ गी होती है इस�लए �बजली कं प�नयों म� एतराज़।)
⇒ �Requires state govt to setup Cross-subsidy Balancing Fund. Some state governments are
opposed to take such additional responsibilities. (how this fund will work? Not important.) (रा�
सरकारों ने एक क्रॉस स��डी बैल��संग/सं तुलन कोष/फं ड बनाना होगा तो रा� सरकारों को नाराज़गी है िक हम पर ये अनाव�क
�ज़�ेदारी थोपी गई। ये फं ड कै से काम करेगा? उसम� अपने को िदमाग़ ख़चर् करने क� �ादा ज़�रत नहीं है।)
�Conclusion: Appreciable attempt by the union government to increase the competition,
accountability and sustainability in the electricity supply. While there are apprehension among
certain quarters, regarding certain provisions of the bill. But, to clean up the energy sector, painful
medicine will have to be taken. (�बजली स�ाई आपू�त म� �धार्, जवाबदेही और वह�नयता/शा�तता/िटकाऊपन बढ़ाने के �लए
क� द्र सरकार का एक प्रशं सनीय क़दम है हालाँिक कु छ लोगों म� �वरोध ह� लेिकन ऊजार् �ेत्र को दु�� करने के �लए कड़वी दवाई ज़�री है।)
51.7.1 🔌🔌🔌🔌⚖Electricity (Rights of Consumers) Rules,2020: �बजली उपभो�ा अ�धकार �नयम

⇒ Power ministry announced them under the Electricity Act 2003.
⇒ It requires the electricity distribution companies to provide 24/7 Electricity, Grievance redressal
and penalty/compensation mechanism etc to consumers. (ग्राहकों को 24 घं टे �बजली का अ�धकार)
⇒ Although Electricity Commission may specify less hours of supply for some categories e.g.
agriculture (Else it may result in over-exploitation of groundwater)
⇒ �Benefit? Electricity distribution companies have become “monopolies” for a particular city
because consumers have no alternative to buy electricity from other companies, even if they are
unhappy with the service. So, govt deemed it necessary to provide such rights to customers.
(सामा� �प से 1 शहर म� एक से �ादा �बजली कं पनी नहीं होती इस�लए एक प्रकार से उनका एका�धकार चलता है। इस�लए ग्राहक
�शकायत �नवारण तं त्र क� �ापना क� जाएगी)
51.8 🔌🔌🔌🔌🔌🔌ELECTRICITY → DEEN DAYAL GRAM JYOTI YOJANA (2015)

(गांव वालों को �बजली कने�न �दलवाओ योजना)
Lack of rural lighting= ⏫use of kerosene lamps → ⏫pollution, import bill, subsidy bill. So, PM
Manmohan’s Rajiv Gandhi Grameen Vidyutikaran Yojana → Modi restructured as DDUGJY.
⇒ Boss? Ministry of Power → Rural Electrification Corporation-REC (2015)
⇒ Central Sector Scheme = 100% funded by Union.
⇒ Target? 24×7 uninterrupted ‘metered’ electricity supply to each rural household by 2022, by
doing following →
⇒ 1) Separate feeder lines for rural households vs agricultural use. (कृ �ष और ग्रामीण �रहायशी के �लए दो अलग
अलग सं भरक लाइन) 2) Strengthen sub-transmission and distribution network to reduce power
losses. 3) Install electricity meters.
51.9 🔌🔌🔌🔌🔌🔌 ELECTRICITY → PM SAHAJ BIJLI HAR GHAR YOJANA (SAUBHAGYA)

(गांव वालों को �बजली कने�न �दलवाओ योजना)
Boss? Ministry of Power→ Rural Electrification Corporation-REC (2017)
Target?
⇒ To give electricity connections to all remaining un-electrified households in rural and urban
areas. (तो िदनदयाल योजना म� दे देना था ना!, अलग योजना �ों बनाई😰😰!!??)
⇒ Provide 24x7 power supply for all by 2019.
How?
⇒ Based on SECC-2011, identify beneficiaries, give them free electricity connection with meter.
⇒ If a household in remote area → not possible to join with grid connected electricity lines→ then
solar cell, DC battery pack, LED lights will be given.
₹ ₹ Funding?
⇒ As of 31/3/2019: All the States have reported 100% electrification of all households except few
households in Naxal affected Bastar region of Chhattisgarh.
51.9.1 ⚡☂🧔🧔🧔🧔Revamped Distribution Sector Scheme (2021-June)

[पुरानी �वद्युत योजनाओं के ऊपर छतरी योजना]
Boss? Power ministry with >₹3 lakh cr funding. - it will act as an ‘umbrella scheme’ subsuming
previous schemes:
⇒ Deen Dayal Upadhyaya Gram Jyoti Yojana [DDUGJY] / SAUBHAGYA = for improving the
electricity supply in rural area. (गाँवो के �लए)
⇒ Integrated Power Development Scheme(IPDS) = for electricity supply in urban area. (शहर)
⇒ Prime Minister’s Development Program (PMDP) = for electricity infrastructure in Union
Territories of J&K and Ladakh (ज�ू क�ीर और लद्दाख के �लए)
⇒ ��ES22: thanks to all these initiatives, 96% Indian families have electricity connection.
51.9.1.1 ⚡☂🧔🧔🧔🧔 RDSS: Features?
Basically the similar features like the previous schemes like DDUGJY, IDPS etc i.e.
⇒ Separation of Agriculture feeder lines. [कृ �ष उपयोग क� �बजली के �लए अलग तार �बछाई जाएगी]
⇒ Solarization of electricity feeder lines under KUSUM = Basically, farmer can sell the excess
electricity from their solarplant to electricity company → extra income for farmer! [कु सुम योजना म�
िकसान ने जो सूयर् ऊजार् से �बजली बनायी है उसे वो �बजली कं पनी को बेच पाएगा]
⇒ Smart electricity meters will be installed [for all users other than agriculture]→ electricity
consumption level will be monitored through artificial intelligence (AI) → power outages
solved in a faster manner. Government will give upto 15-50% subsidy to DISCOM companies,
depending on performance & gen-vs- sp.category state. [कृ �ष के अलावा वाले ग्राहकों के िठकानों पर �ाटर्
�बजली मीटर लगाए जाएं गे �जसक� कृ �त्रम बु�द्धम�ा से �नगरानी होगी, तािक �बजली कटौती का तुरंत उपचार हो सक� ]
⇒ modernisation of state-level electricity distribution infra. [रा� �र पर �बजली अवसं रचना का
आधु�नक�करण]
⇒ Special focus/ extra funding for special category states. Furthermore, UT JK, Ladakh, Andaman
& Nicobar Islands, and Lakshadweep Will also be considered under “special category states” [So,
they can also get extra funding] [�वशेष श्रेणी के रा�ों को अ�त�र� पैसा द�गे]
⇒ Annually the electricity distribution companies [DISCOMs] will be reviewed for their
performance. ONLY If a DISCOM scores minimum 60% marks in performance review= Will be
given government funding. [जो �बजली कं पनी प्रदशर्न मानकों पर कम से कम 60 प्र�तशत गुण सालाना हा�सल करेगी, उसी
को सरकार पैसा देगी]
51.9.2 🔌🔌✍Conclusion: yes electricity access is imp.

 Access to clean, reliable and affordable energy increases the ease of living, improves education
and human development. Therefore, India required to provide it to all, under SDG Goal #7
 Aforementioned schemes / initiatives / challenges are important in that regard / need to be
addressed on a priority basis. ��, �व�सनीय और स�ी ऊजार् तक प�ंचने से जीवनयापन म� आसानी होती है, �श�ा और
मानव �वकास म� सुधार होता है. इस�लए उ� चीजों पर अग्रता क्रम से �ान देना ज�री
🔠🔠❓Saubhagya, a Govt Scheme, relates to which of the following areas? (UPSC-CDS-i-2020)

a) Achieving universal household electrification b) Providing clean cooking fuel to poor households
c) Rationalizing subsidies on LPG d) Stopping female foeticide
🔠🔠❓SAUBHAGYA, a Central Government scheme, is related to (UPSC-CAPF-2020)

(a) providing cash money to women giving birth of single female child
(b) connecting kitchen of every household with piped cooking gas
(c) strengthening and augmenting infrastructure for piped water supply
(d) achieving universal household electrification in the country
^SEE basically same MCQ reused/recycled in two different exams of UPSC
51.10🔌🔌💡💡↘ ELECTRICITY → USE ‘LESS’ → ENERGY EFFICIENCY

The term energy efficiency means using lesser amount of energy to produce a given amount of
output. E.g, a light-emitting diode (LED) light bulb requires ⏬energy than an incandescent light.
Thus LED is more energy efficient than incandescent lights. (ऊजार् द�ता: कम ऊजार् से �ादा प्रकाश या उ�ादन)
51.10.1 🔌🔌🔌🔌↘🧔🧔🧔🧔 Electricity → Use ‘Less’ → PAT Mechanism
(�बजली खपत कम कर के स�टिफके ट से पैसा कमाओ योजना)
2008: Environment Ministry’s National Action Plan on Climate Change (NAPCC: जलवायु प�रवतर्न पर
रा��ीय कायर् योजना ) One of its 8 components is National Mission for Enhanced Energy Efficiency
(NMEEE: व�धत ऊजार् कायर्�मता का रा�ी� य �नयोग ) → PAT.
Boss? Power Ministry → Bureau of Energy Efficiency (BEE).
⇒ Under Perform Achieve and Trade (PAT: प्रदशर्न, हा�सल और �ापार करना) mechanism:
⇒ 8 energy intensive industries are given ‘quotas’ viz. Thermal Power, Aluminium, Cement,
Fertilizer, Iron-steel, Pulp-paper, Textiles and Chlor-alkali.
⇒ They’ve to cut their energy consumption according to the quotas, else face penalties.
⇒ Overachieving firm can obtain Energy Saving Certificates (ESCerts) from BEE’s PATNET portal
and sell it to the underachieving firm (similar to PSLC certificates).
⇒ Central Electricity Regulatory Commission (a statutory body) regulates the prices.
51.10.2 🔌🔌 💡💡↘ 🧔🧔🧔🧔 Electricity → Use ‘Less’ → National LED Programme
लोगों को स�े म� एलईडी ब� देदो योजना
Boss? Power Ministry gives ₹ ₹ to Energy Efficiency Services Ltd (EESL) for:
− Unnat Jeevan by Affordable LEDs and Appliances for All (UJALA) for subsidized home Light-
emitting Diode (LEDs) bulbs. Previously called DELP (Domestic Efficient Lighting Program).
− Street Lighting National Program: whereas EESL replaces conventional Halogen Street Bulbs
with LED street bulbs, free of cost.
51.10.3 🔌🔌 💡💡↘ 🧔🧔🧔🧔 Electricity → Use ‘Less’ → Gram Ujala Programme
गांव वालों को स�े म� एलईडी ब� देदो योजना
Boss? Ministry of Power → its company Energy Efficiency Services Limited (EESL) → its company
Convergence Energy Services Limited (CESL).
− What? Exchange villagers' yellow bulbs with LED bulbs i.e. Villager submits working
incandescent (Filament-walla yellow) bulbs → plus pays ₹10 = gets LED bulb with 3 years
warranty. Maximum quota=5 LED bulbs per villager. गाँव वालों को उनक� िफ़लाम�ट ब� क� एवज़ म� LED
ब� स�े म� िदए जाएं गे.
− Benefit? a 12 Watt LED bulb = light of 100 watt incandescent bulb so �Energy bill for villager,
�CO2 Emission from Thermal power plants, �Waste generation (LED bulbs have longer
lifespan than incandescent).
51.10.4 🔌🔌 💡💡↘ 🧔🧔🧔🧔 Electricity → Use ‘Less’ → Misc. Schemes & Topics
��Budget-2022:- We’ll setup an Energy Service Company (ESCO) to promote
ESCO
Company
energy efficiency in large commercial buildings (बड़ी वा�ण��क इमारतों म� ऊजार् कायर् द�ता
को बढ़ाने के �लए एक नई क�नी बनायी जाएगी.)
Atal Jyoti Yojana (Ajay): FREE Solar Street Light with LED in
1. Special category states
2. 5 states - Assam, Bihar, Jharkhand, Odisha and Uttar Pradesh.
AJAY
3. NITI-ayog-walle Aspirational districts in other states
4. Andaman Nicobar and Lakshadweep
Funding: MNRE 75% + 25% from MPLADS of given constituency.
- Ministry of Power and Ministry of Textiles give money to Energy Efficiency
SAATHI Services Limited (EESL) → give energy efficient instruments to small and
medium Powerlooms to reduce their energy consumption.
Star Label To help the customer to use energy efficient appliances. 📑📑Refer BEE in Pillar #4B
Smart Ministry of Power → Energy Efficiency Services Ltd. (EESL) helps DISCOMs to
Electricity install Smart Electricity Meters. 🤩🤩Benefits? IT enabled monitoring, no need to
Meters manually read the meters, power theft difficult etc.
- Since 2019: Govt allowed ethanol production from surplus rice/maize available
FCI
with the Food Corporation of India (FCI).(More in 📑📑Pillar#4A)
⇒ BEE’s National strategy document ‘UNNATEE’ (Unlocking NATional Energy
UNNATEE
Efficiency Potential) for developing an energy efficient nation (2017-2031).
⇒ Power Ministry’s knowledge portal namely Simplified Digital Hands-on
SIDHIEE
Information on Energy Efficiency in MSMEs for sharing best practices
⇒ BEE’s Eco-Niwas Samhita for minimum energy conservation standards in
Residential Buildings.
Buildings
⇒ EESL’s Building Energy Efficiency Programme (BEEP) for commercial
buildings
🎓🎓Self Study: Nuclear Power from Unacademy Sci/geography-Booklet
51.10.5 🔌🔌 💡💡↘ 🧔🧔🧔🧔 Energy → Index → Global Reports

WORLD was released by International Energy Agency (IEA).
ENERGY Presently, largest energy consumer = 1) China 2) USA 3) EU 4) India
INVESTMENT Future by 2040, = India will be @#3, and EU@#4. India’s domestic oil and gas
REPORT 2021 production not enough so, India’s import bill will ⏫.
Global Energy ⇒ World Economic Forum (HQ Geneva, Swiz)’s index to measure countries
Transition on how much CO2 / pollution is generated while producing energy, And
Index वै��क whether the country is serious abt reducing it.
ऊजार् प�रवतर्न ⇒ Ranking 2020-May: Top3- Sweden, Switzerland, Finland. Then India: 74
सूचकांक (previous years 76 so improved.) Haiti #115 (bottom).
World Energy ⇒ by International Renewable Energy Agency (IRENA, HQ: Abu Dhabi,
Transitions United Arab Emirates)
Outlook
India Energy ⇒ by International Energy Agency (IEA, Setup under OECD framework, HQ:
Outlook Paris, France)
Report [भारत ⇒ 2021: Largest energy consuming countries= China, USA, EU, India.
ऊजार् ��कोण ⇒ 2030=India will replace EU as 3rd largest. India's fuel import bill will
�रपोटर्] become 3x in next 20 years.
⇒ [Note as per ��ES21= India is the 3rd-largest energy after USA, China.
So it depends on the context of MCQ, you've to tick]
State State by Power Ministry's Bureau of Energy Efficiency (BEE) in association with a
Energy non-profit body called Alliance for an Energy Efficient Economy (AEEE).
Efficiency
Index
🔠🔠❓Which of the following is the top ranking country in World Economic Forum's Global
Energy Transition Index 2020? (UPSC-CAPF-2020) (a) China (b) Switzerland (c) Sweden(d) India
🔌🔌 💡💡↘ ✍ Energy Efficiency Conclusion? Under the Paris agreement, India has pledged to
⏬ emissions intensity of its GDP by 33-35% by 2030. Energy efficiency is a crucial factor in this.
Aforementioned initiatives will help in a long way to achieve our promises under Intended nationally
determined contributions (INDC: रा��ीय �र पर �नधार्�रत योगदान) under UNFCCC’s Paris agreement. (सकल
घरेलू उ�ाद क� उ�जर्न तीव्रता कम करने क� भारत ने पे�रस सं �ध म� प्र�त�ा ली है उसम� उ� योजनाओं से काफ� मदद �मलेगी.)
51.11🔌🔌♻ INFRA → ENERGY → RENEWABLE (नवीकरणीय ऊजार्)

⇒ United Nations Framework Convention on Climate Change (UNFCCC)’s Paris Accord (2015)
requires nations to submit their Intended Nationally Determined Contribution (INDC or NDC:
रा��ीय �र पर �नधार्�रत योगदान) about their global warming mitigation commitments. India’s NDCs are
as following (list not exhaustive):
⇒ by 2030, we’ll � emission intensity of GDP by 33-35 % from 2005 level.
⇒ by 2030, 40% of our installed power generation capacity shall be from non-fossil fuel sources (गैर-
जीवा� / नवीकरणीय �धन स्रोत)
In this regard, Modi Govt has set a target of installing:
Type Solar Wind Biomass Small Hydro By 2022
Gigawatts (GW) 100 60 10 5 =Total 175 GW
51.11.1 🔌🔌♻ PM Modi’s Panchamrit @COP-26 Glasgow, UK

⇒ 2021-Nov: PM Modi’s Panchamrit five big announcements at UNFCCC-COP26 Summit in
Glasgow, UK (�ासगो जलवायु प�रवतर्न प�रषद म� प्रधानमं त्री मोदी क� मह�पूणर् घोषणाएँ ) and also proposed
LIFE…L, I, F, E, i.e. Lifestyle For Environment.
⇒ 2022: India’s NDC (nationally determined commitments) updated. (रा��ीय �र पर �नधार्�रत प्र�तबद्धताएं )
Area 🎯🎯Target 🎯🎯Modi included in
originally @Glasgow NDC (2022)
Summit (2021)
1) By 2030: �renewable energy capacity to 450GW 500 GW NOT included
_ _ _ . (पुननर्वीनीकरण ऊजार् का उ�ादन बढ़ाया जाएगा)
2) By 2030: _ _ _% non-fossil fuel energy in 40% 50% Included
India’s total energy production (कु ल ऊजार् म� ग़ैर-
जीवा� इं धन का िह�ा)
3) Emissions intensity= emissions per unit 33-35% 45% Included
GDP.
It will be reduced by at least _ _ _ % by the
year 2030 from 2005 levels. (GDP क� उ�जर्न
तीव्रता को कम िकया जाएगा)
4) a net-zero emissions target by 2070. means N/A 2070 Not included
all man-made GHG emissions must be
Area 🎯🎯Target 🎯🎯Modi included in
originally @Glasgow NDC (2022)
Summit (2021)
removed from atmosphere through
absorption in processes like photosynthesis or
physical removal (उ�जर्न को शुद्ध �प से 0/शू� िकया
जाएगा)
5) REDUCE TOTAL projected carbon N/A 2030 Not included
emissions by 1 bn tonnes from now to 2030.
(काबर्न उ�जर्न म� 1 टन क� कटौती)
6) Carbon sink of 2.5-3 billion tonnes via Yes N/A Yes
afforestation
⇒ 👜👜👜👜Budget-2022:- Solar Power: Target of 280 GW of installed solar capacity by 2030. We’ll
give Production Linked Incentive (PLI) for manufacture of solar cells (Ref:Pillar4B).
51.11.2 🔌🔌♻� Energy → Renewable → [Yearbook] MNRE

Ministry of New and Renewable Energy नवीन एवं नवीकरणीय ऊजार् मं त्रालय consists of:
Dept/Attached/Statutory N/A or nothing MCQ worthy.
Autonomous ⇒ National Institute of Solar Energy (NISE)- Gurugram
Bodies ⇒ National Institute of Wind Energy (NIWE)-Chennai → they’ve
�ाय� सं �ाएं developed the Wind Atlas of India.
⇒ Sardar Swaran Singh National Institute of Renewable Energy
(SSS NIRE) – Kapurthala
CPSE 1. Indian Renewable Energy Development Agency (IREDA)- Delhi
सरकारी कं प�नयां 2. Solar Energy Corporation of India (SECI)- Delhi
Portals 1) India Renewable Idea Exchange (IRIX) Portal
वेबसाइट 2) Akshay Urja Portal (& magazine)
51.11.3 🔌🔌🔌🔌🔌🔌🔌🔌 💦💦 Renewable → KUSUM (Solar for farmer) 2019
Boss? Ministry of New and Renewable Energy. Kisan Urja Suraksha evam Utthaan Mahabhiyan
(KUSUM) has components A, B, C but the gist of the matter is:
 Farmers are encouraged to install Solar pump tube wells for irrigation 💦💦 → less diesel
consumption in pumpsets.
 Farmers, panchayats, cooperatives can install upto 2 MW renewable power plants in their barren
/ cultivable lands.
 Above people can sell the excess electricity to the DISCOMS. Its price will be decided by the
respective State Electricity Regulatory Commissions (SERC).
 ₹ ₹ Funding? Union 30%+ State 30%+ Bank Loan 30% +10% by the farmer himself= 100%
 🤩🤩Benefit? Diesel & Thermal electricity will ⏬ → 27 million CO2 emission reduced / per year.
51.11.4 🔌🔌🔌🔌🔌🔌🔌🔌 Renewable → Jawaharlal Nehru National Solar Mission

2008: Manmohan → National Action Plan on Climate Change (NAPCC) with 8 missions → 2009-
10: J.N. National Solar Mission (रा��ीय सौर �मशन).
Original target by PM ManMohan Singh 🎯🎯20,000 Megawatts by 2022
PM Modi increased to 🎯🎯100 GW by 2022 (=1 lakh Megawatts)
��Budget-2022 increased to 🎯🎯280 GW by 2030
⇒ Boss? Ministry of New and Renewable Energy (MNRE)
Just like the ‘Make in India’ project, this is not a ‘scheme’ but rather a collection of initiatives in
various sectors such as….यह कोई एक योजना नहीं ब�� अनेक प्रकार क� अलग-अलग पहल का समूह है
1. MNRE → SRISTI (Sustainable Rooftop Implementation for Solar Transfiguration of India) →
subsidy for purchase of the solar panel and other equipment.
2. Issuing tax-free solar bonds to finance such initiatives.
3. Install rooftop solar panels in large Govt complexes/ buildings;
4. 'Building bye laws' are the construction norms set by the State Govt to ensure uniform & safe
development of buildings. They'll require compulsory roof top solar in big private buildings.
5. Use wastelands to setup solar parks (बं जर भू�म पर सौर पाकर् का �नमार्ण)
6. Net-metering i.e. residential and commercial customers generate their own electricity from
rooftop solar power and sell excess of this solar electricity to DISCOM.
7. MNRE → NISE (National Institute of Solar Energy) → 90 days coaching skill development
programme “Surya Mitra” to train youth for solar equipment installation / repair / maintenance.
8. “ARUN” Mobile app to help people install rooftop solar panels by themselves.
9. Solar City initiative (2012-17): 60 cities got ₹ 50 lakhs each, to replace minimum 10%
conventional energy (thermal /coal) with solar in five years.
10. Amending Electricity Act for Renewable Purchase Obligation (RPO: नवीकरणीय खरीद के दा�य�) &
Renewable Generation Obligation (RGO);
🔠🔠❓ What is the minimum reduction in projected demand of conventional energy at the end of
five years as per the 'development of solar cities' programme? (UPSC-CAPF-2020)
(a) 2 per cent (b) 5 per cent (c) 10 per cent (d) 15 per cent
51.11.5 🔌🔌♻🧔🧔🧔🧔 Renewable → Renewable Purchase Obligation (RPO)
अ�नवायर् �प से कु छ प्र�तशत नवीकरणीय ऊजार् ख़रीदने का कोटा
Applicable to? Power distribution companies, large electricity consumers and captive power plants.
 They are obliged to buy min. “X” % of the electricity from renewable energy sources.
 This ensures solar, wind and other renewable power producers receive sufficient of consumers /
market demand. This “X%” quota is decided by the MNRE.
 First time setup in 2014 (11.50%, With internal bifurcation for solar and non solar),
 Quota raised over years. 2018: 17%, 2019: 17.5%.....2022: 21% [=10.50% from solar + 10.50%
from Non solar=21%]
 This mechanism is called Renewable Purchase Obligations (RPOs: नवीकरणीय खरीद के दा�य�). Its
prices are decided by CERC/SERC depending on whether its Interstate or intrastate sale.
Related? Renewable Generation Obligation (RGO: नवीकरणीय सृजन दा�य�): It requires coal based
thermal plants to generate/procure “x%” of renewable energy.
51.11.6 🔌🔌♻🧔🧔🧔🧔 Renewable →World's largest Hybrid renewable energy park- Khavda
Near the Indo- Pakistan border near Khavda, in Kutch, Gujarat. 30,000-MW capacity (solar+Wind)
over 72,600 hectares of land give to Adani Green, Gujarat State Electricity company etc.
51.11.7 🔌🔌🔌🔌🔌🔌🔌🔌 Renewable /energy Efficiency → Ranking / Portals

Table 1: Ranking is not written because either govt not updated after 2019/ or poor cost:benefit in exam
SARAL INDEX ⇒ Who? Jointly developed by Ministry of New & Renewable Energy
for Solar rooftop (MNRE), Shakti Sustainable Energy Foundation (SSEF), Associated
Chambers of Commerce and Industry of India (ASSOCHAM) and Ernst
& Young (EY).
⇒ What? State Rooftop Solar Attractiveness Index (SARAL) ranks the
States for their attractiveness for rooftop development.
SAATHEE Portal Power ministry’s portal to monitor energy efficiency in various states
�Conclusion? Access to clean, reliable and affordable energy increases the ease of living, improves
education and human development. Aforementioned schemes / initiatives / challenges are important
in that regard / need to be addressed on priority basis. ��, �व�सनीय और स�ी ऊजार् तक प�ंचने से जीवनयापन म�
आसानी होती है, �श�ा और मानव �वकास म� सुधार होता है। इस�लए अग्रता क्रम से �ान देना ज�री
51.12🧯🧯🍽🍽 INFRA → ENERGY → COOKING (रसोई के �लए)
51.12.1 🧯🧯🧯🧯: 🧔🧔🧔🧔 Cooking → Pratyaksh Hanstantrit Labh (PAHAL-2015)

Manmohan started pilot project in selected districts → 2015: Modi launched@ all India
- Boss? Ministry of Petroleum and Natural Gas. Central sector scheme = 100% funded by Union.
- Previously, LPG dealers would divert the subsidized LPG cylinders to restaurants → households
would be deprived & forced to purchase LPG cylinder at a higher price in the black market.
- Direct Benefits Transfer For LPG (DBTL): Beneficiary buys 14.2 KG LPG cylinder at market
price (e.g. ~₹850), Petroleum min transfers subsidy amount (~₹ 290) in his bank account linked
with his customer ID. Similarly, 5kg LPG cylinder- then lower price, so less amount of subsidy.
- A beneficiary gets subsidy on upto 12 cylinders per year. (Although economic survey suggested
it should be ⏬ because most household don’t need more than 10 cylinders in real life.)
Who is not eligible? (1) Restaurants / commercial enterprises; (2) A person with taxable income
more than ₹ 10 lakh (and husband/wife of such person.)
Year 2014 2018 2020-Mar 2021-Sept
Market Price of Cylinder ₹1241 941 806 885
MINUS Subsidy -₹800** -434 -231 0 😷😷✋(PAUSED)
Effective Price for Customer ₹441 507 575 885
**Note: 2014 =UPA/Congress Govt paid subsidy to Cylinder company (not to customer)
51.12.2 🧯🧯🧯🧯: 🧔🧔🧔🧔: 😷😷✋ LPG PAHAL-subsidy paused in Corona

⇒ Since May 2020, Union government paused paying PAHAL-LPG subsidy to customers.
[although Govt not officially admitted that they have stopped the scheme. [सरकार ने �सल�डर स��डी
देना ��गत कर िदया है हालाँिक आ�धका�रक �प से यह नहीं क़ु बूल िकया है िक हमने योजना (हमेशा के �लए) बं द कर दी है]
⇒ This has saved >₹25,000 crore subsidy bill for the government but caused hardship for the
middle class families.
🔠🔠❓ PAHAL, an initiative for subsidy to bank account, is related to _ _ _ (UPSC-CAPF-2020)
(a) LPG consumers (b) internet consumers
(c) farmers for fertilisers (d) Central Government Employees for medical treatment
51.12.3 🧯🧯🧯🧯 👩👩:🧔🧔🧔🧔 Cooking → Pradhan Mantri Ujjwala Yojana 1.0 (PMUY)
Ordinarily, a customer has to pay ~₹ 1000+ as refundable security deposit to get the LPG connection
from Oil Marketing Company (OMC: Bharat Gas HP Gas etc.).
 Scheme gives Deposit-free LPG connections + rubber tube + pressure regulator to the women of
Below Poverty Line (BPL: गरीबी रेखा के नीचे) families. (Although they have to pay money for the
stove and cylinders to actually start cooking.)
 The BPL families identified using SECC-2011 data. Later, beneficiary list was expanded to cover
the forest dwellers, people residing in Islands etc. whose name may not be in SECC-2011 data.
 Boss? Petroleum Ministry pays ₹ ₹ OMC. Central Sector scheme = 100% funded by Union.
 Benefit? firewood/kerosene consumption ↓= indoor pollution ↓= health + environment :-)
 2019: Himachal =first state in the country to have “100% LPG gas coverage”.
 2020: Corona Lockdown = poor families’ income� �, so can’t afford to pay for cylinders so,
PMUY beneficiaries eligible for 3 FREE LPG cylinders upto 30/June/2020.
51.12.4 🧯🧯🧯🧯 👩👩:🧔🧔🧔🧔 Pradhan Mantri Ujjwala Yojana 2.0 [प्रधानमं त्री उ�ला योजना का दू सरा चरण]
⇒ Boss? Ministry of Petroleum and Natural Gas (MoPNG).
⇒ Phase1 / 1.0 = 2016. Phase-2/2.0 = 2021 onwards. [पहला चरण समा� । दू सरा चरण शु� िकया गया]
⇒ 2.0 = aims to cover A) poor who were not subscribed in 1.0 AND B) poor migrant workers, due
to lack of address proof/documents.
⇒ Eligibility? Adult woman from – poor household, Socio-Economic Caste Census (SECC)-walle
eligible households, SC, ST, Pradhan Mantri Awas Yojana (Gramin), Antyodaya Anna Yojana
(AAY), Tea Garden workers, Forest Dwellers, families residing in Islands
⇒ (Poor) Migrants will not be required to submit ration cards or address proof. They’ll get
connection based on self-declaration (गरीब प्रवासी मज़दू रों �नवास �ान का सुबूत नहीं देना होगा। �सफ़र् �यं को �
प्रमा�णत करना होगा िक म� 1 प्रवासी मज़दू र �ँ ।)
🤩🤩What will Beneficiary get? = 1) Deposit-free LPG connection. 2) First cylinder free 3)
Hotplate/Stove free.
51.12.5 🧔🧔🧔🧔 🧯🧯🧯🧯 Cooking → Kerosene subsidy stopped (2020)
⇒ kerosene is traditionally used in cooking and light. (रसोई �धन तथा प्रकाश के �लए के रोसीन का उपयोग)
⇒ Boss & principle is same as PAHAL-LPG. Kerosene is sold at market price → subsidy ₹ ₹
transferred to poor family’s bank account. This discourages PDS shopkeeper from diverting
subsidized kerosene to the rickshaw-wallas.
⇒ but govt schemes to provide electricity (SAUBHAGYA) & LPG cylinders (PM Ujjwala) to poor
→ so kerosene requirement � (लेिकन �बजली और LPG क� योजनाओं के चलते के रोसीन क� ज़�रत �ई कम)
⇒ So, from 1/3/2020: Govt stopped giving kerosene subsidy. (अतः सरकार ने के रो�सन स��डी को िकया बं द)
⇒ Now, kerosene is being sold @public distribution system (PDS) stores BUT with zero subsidy.
(राशन क� दुकानों पर के रो�सन क� �बक्र� जारी है िकंतु बाज़ार मू� पर बेचा जाता है। स�े दाम पर/स��डी के साथ नहीं बेचा जाता।)
51.12.6 🧔🧔🧔🧔 🧯🧯🧯🧯 Cooking → Misc. (�व�वध योजनाएं )

It’s just a gathering of 100 LPG customers in an area, they’ll discuss LPG
PM LPG
benefits, women empowerment. Petroleum Ministry aimed to organize 1
Panchayat Scheme
lakh such Panchayats across India by 31/3/2019.
To lay down Natural Gas Grid Pipeline across 5 states, viz. UP, Bihar,
PM Urja Ganga Jharkhand, Odisha & W.Bengal. The supply of such Piped Natural Gas
2016 (PNG) can help homes, hotels, fertilizer companies & electricity companies
→ helps creating a gas based economy.
connect all major demand and supply centres in India. → easy availability of
National Gas Grid natural gas across all regions → to achieve uniform economic and social
progress.
Ministry of Chemicals and Fertilizers pays ₹ ₹ subsidy to entrepreneurs to
City Compost
create compost (कू ड़ा खाद) from city (municipal) waste → supply it to farmers
Scheme (2016)
at subsidized rate.
- It’s a sub-component of Swachh Bharat mission (Gramin). Core Scheme
= not 100% funded by Union.
- Boss? Dept of Drinking Water and Sanitation.
GOBARdhan
- GOBARdhan scheme helps farmers & rural entrepreneurs to convert
(2018)
cattle dung & other biowaste to biogas and organic manure. Depending
on the population of the gram panchayat, they will be given up to ₹ 20
Lakh to setup such project.
- It is a web portal developed jointly by ministries of Agriculture, Animal
Unified
husbandry, petroleum, Jal Shakti for above gobar / cattle dung related
Gobardhan
activities
- Bio-gas is produced naturally through anaerobic decomposition of
agriculture residue, cattle dung etc. → purification and Compression,
CBG: SATAT
→ Compressed Bio-Gas (CBG) with >95% pure methane.
(2018):
- 2018-SATAT Initiative by the Ministry of Petroleum and Natural Gas to
promote CBG as an automotive fuel.
- Also known as flexible-fuel vehicle / dual-fuel / Alternative fuel engine:
Definition: Flex
Capable of using traditional Petrol/diesel, as well as alternative fuels
Engine
such as ethanol and methanol.
- 2020-Petroleum and Natural Gas Regulatory Board (PNGRB) notified
Unified Gas Price new tariff rules for natural gas pipelines. Basically new rules will ⏬
System (2020) cost of natural gas for users who are further away from sources of
natural gas. Further technical details NOTIMP.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
51.12.7 👻👻 ⚡☢Energy infra→ Atomic energy → Atma-Nirbhar (परमाणु ऊजार्)
⇒ � PPP mode: Research reactor → produces medical isotopes → use in cancer treatment.
(अनुसंधान �रए�र से के �र �चिक�ा के �लए समस्था�नक त�/आइसोटोप का �नमार्ण)
⇒ � PPP mode: Irradiation facilities for Food preservation. (खाद्य सं र�ण के �लए �विकरण)
� Conclusion? Energy is the prerequisite for development of any society. Energy improves the
access to healthcare, education and overall wellbeing. SDG Goal#7 requires India to provide
affordable, reliable and modern energy services to all by 2030. Aforementioned Scheme/ Challenge
need to be addressed on priority basis….. �व�सनीय और स�ी ऊजार् िकसी भी समाज क� �श�ा �ा� खुशहाली और
�वकास के �लए अ�नवायर् होती है. इस�लए सतत �वकास ल�ों म� भी इसे �ान िदया गया है. ऊकत योजना/ चुनौ�तयों पे �ान देना ज�री
52 🌧🌧 INFRA → WATER & SANITATION (जल व् ��ता)
Ref: pillar4A: Agri for irrigation and drinking water schemes
52.1 🚽🚽🚽🚽🚽🚽 INFRA → SANITATION→ SWACHH BHARAT MISSION (SBM: 2014)

- (Introduction) While ancient Indus valley civilization accorded prime importance to
sanitation by integrating sanitation systems into town planning. But over the ages this
domain received less attention of the policy makers. As a result, even in 2012, more than
50% Indian, still practiced open defecation.
- 2012: PM Manmohan launched Nirmal Bharat Abhiyan → 2/10/2014 Modi restructured as
SBM
- Boss? Originally, Ministry of Drinking Water & Sanitation (So Now Jal Shakti Ministry).
- Core Scheme = Not 100% funded by Union (60:40| 90:10) + Corporates’ CSR funding.
- 2019-Sept: Modi given Global gatekeeper award by the Bill and Melinda Gates foundation
for SBM
🔠🔠❓ The Global Goalkeeper Award is given by (UPSC-CDS-i-2020)
a) Bill and Melinda Gates Foundation b) the United Nations Environment Programme
c) Kellogg School of Management d) World Meteorological Organization
52.1.1 🚽🚽🎯🎯 Target of Swatchhta Diwas 2/10/2019 → Gandhi’s 150th Birth Anniversary
 Open Defecation Free (ODF: खुले म� शौच मु�) India.
 Eradicating manual scavenging (मानव मल-मूत्र को हटाने के �लये सफाई कमर्चा�रयों के �नयोजन को ख� करना)
 Improving Municipal Solid Waste Management (MSWM: नगरपा�लका ठोस अप�श� प्रबं धन)
52.1.2 🚽🚽🚽🚽 SBM → How to achieve targets?

1. ₹ ₹ given for building toilets in individual homes, community toilets and bathing house, Public
toilets at bus station, schools, temporary construction sites [शौचालयों का �नमार्ण]
2. Additional ₹ ₹ for solid waste management projects- trucks, garbage disposal units etc;
3. Information Education Communication (IEC), Awareness & behavioural changes through
Swachhta Doots, Social Media, posters, advertisements. [जागृ�त अ�भयान]
4. Darwaza Band: awareness campaign to ensure villagers don’t defecate in the open.
5. Research Development in sanitation. [सं शोधन]
6. SBM assets have been geo-tagged. Many mobile applications have been launched to complaint
about unclean areas to municipal corporations. [नगरपा�लका को �शकायत करने के �लए मोबाइल ऐप]
52.1.3 🚽🚽� SBM → Who implements this scheme? (कौनसा मं त्रालय करता है)
52.2 🚽🚽SBM GRAMIN PHASE 2 (�� भारत का दू सरा चरण)

⇒ It’ll be implemented from 2020-2021 to 2024-2025 To ensure villagers continue to use toilets
⇒ + focus on plastic waste management, Animal waste and other bio-degradable solid waste
management (जैव अपघिटत ठोस अप�श� प्रबं धन)
⇒ Greywater management (It is the used water from domestic sources excluding toilet wastewater)
Fecal-sludge management (मल-क�च प्रबं धन।)
52.2.1 Urban Swachh Bharat Mission 2.0 announced in 💼💼Budget-2021
Timeline? 5 years from 2021-2026. Funding? >1 lakh cr. With following features
⇒ Management of faecal sludge & waste water [मल क�चड़ और अप�श� जल का प्रबं धन]
⇒ Segregation of garbage. [कचरे का पृथ�रण]
⇒ Reduction in single-use plastic [एकल उपयोग �ा��क म� कमी]
⇒ �air pollution from construction -demolition activities [�नमार्ण और �व�ं स ग�त�व�धयों से वायु प्रदू षण]
⇒ Bio-remediation of all dump sites [डंप साइटों म� जैव उपचारण]
52.2.2 🚽🚽SBM Protocols (कायर्पद्ध�त)
⇒ Open Defection Free status (+) [खुले म� शौच मु� ��त तथा]
ODF+ protocol ⇒ Operations and maintenance of community toilets and public toilets।
(सावर्ज�नक शौचालयों का यो� तरीके से सं चालन और रखरखाव)
⇒ Above things from ODF+ and additionally, focuses on safe management
of faecal sludge from toilets (मल का सुर��त प्रबं धन)
ODF++ protocol
⇒ Untreated sludge should NOT be discharged into water bodies etc
(अनुपचा�रत कु डा-क�चड़ को पानी मे नही छोड़ना)
Water + protocol untreated wastewater should NOT be discharged in water bodies etc.
52.2.3 📔📔📔📔Why do we need SBM? Economic surveys observed:

⇒ The lack of access to toilet facility → Girls reduce food & water intake to avoid going during day
time → malnutrition and anaemia. (कु पोषण और र� क� कमी).
⇒ Open defecation → infections among pregnant women → Maternal mortality ratio (मातृ मृ�ु
अनुपात), Infant Mortality Rate (�शशु मृ�ु दर) chances increase.
⇒ Intestinal infection (enteropathy: आंत्र�वकृ �त) in children → Even if child given good food their
body will not absorb nutrients fully → �brain development → educational outcomes� �
⇒ Every household in an open defecation free village saved about ₹ 50,000 per year due to lower
chances of disease, time saved due to a closer toilet → �economic productivity
⇒ Open defecation & municipal waste eventually contaminate the water bodies- and harm the
flora-fauna. (खुले म� शौच और शहरी नगरीय कचरे से जल प्रदू षण �जससे वन��त तथा पशु प��यों पर भी खतरा)
52.2.4 📔📔📔📔 Swatchh Bharat: What more can we do- Eco Survey19 Suggestions?
1) Some rural males still don’t use toilets. Even in urban areas, people keep their homes clean but
litter in public places. So, we have to inculcate a behavioral change.[लोगों के �वहार/बतार्व म� सुधार ज़�री]
a. ��ES22 found that average 70% Indians use toilets. But, Bihar (49%), Jharkhand
(57%), Odisha (60%), Manipur (65%), MP (65%), West Bengal (68%), Assam (69%) and
Uttar Pradesh (69%) have remained below the national average. (इन रा�ों म� शौचालय उपयोग
करने वाले लोगों क� सं �ा रा��ीय औसत से कम है।)
2) Water crisis so we’ve to adopt eco-friendly water conservation in toilets. e.g. Bio toilets, dual
flush toilets. जैव शौचालय, दोहरी �श शौचालय
3) Clean India should also be pollution free India, so we should focus
a. industrial effluent, plastic menace, controlling air pollution etc. (औद्यो�गक अप�श�, �ा��क
क� चुनौती, वायु प्रदू षण)
b. bioremediation, river surface cleaning, river front development. (जैव-उपचार, निदयों के तल क�
सफाई, �रवर फ्रंट का �वकास)
c. afforestation and biodiversity conservation. (वृ�ारोपण तथा जैव �व�वधता का सं र�ण)
4) To do above things, we need to get ₹₹ via: Micro-financing (सू� �व�पोषण), Concessional Loans
(�रयायती दरों पर लोन/ ऋण ), Corporate Social Responsibility (कॉरपोरेट का सामा�जक उ�रदा�य�),
Crowdfunding (जनसमूह के द्वारा �व�पोषण), Public Private Partnership (सावर्ज�नक-�नजी भागीदारी)
52.2.5 🏬🏬 📊📊 Sanitation → Index: Swachh Sarvekshan 2022 by Urban Ministry

− Cleanest Cities with 10 lakh+ pop: #1-INDORE (6th consecutive year)
− Cleanest State: Madhya Pradesh
− Furthermore they also have many sub categories of awards e.g. population less than 1 lakh, State
with less than 100 local bodies, etc. you may prepare your State’s ranking for interviews but for
MCQ, I find poor cost:benefit in memorizing.
52.2.6 🏬🏬 📊📊 Sanitation → Index: Prerak Dauur Samman

− 2021: Urban Ministry introduced a new category of awards under the Swachh Bharat Mission,
known as ‘Prerak Dauur Samman’. It is based waste segregation, construction sector waste,
landfill, sanitation etc.
− ‘Prerak Dauur Samman’ has 5 subcategories of awards: Divya (Platinum), Anupam (Gold),
Ujjwal (Silver), Udit (Bronze), Aarohi (Aspiring).
− Latest Ranking? Poor Cost:benefit in memorizing.
52.2.7 � Infra → Sanitation → Swachhta Udyami Yojana (2014)

Ministry of Social Justice → ₹ to National Safai Karamcharis Finance and Development Corporation
→ Concessional loans to Safai Karamcharis/ Manual Scavengers for →
1. Building community toilets → they can charge user fees.
2. Buying Sanitation related Vehicles → Beneficiaries can take contracts from the
Municipalities for garbage collection etc. to earn livelihood.
Related Misc. schemes by above ministry: Self Employment Scheme for Rehabilitation of Manual
Scavengers (SRMS) which give skill and financial assistance to them.
52.2.8 🚽🚽�Conclusion: Summary: Yes SBM is important
 Sustainable Development Goal number 6: “By 2030, achieve sanitation and hygiene for all, and
end open defecation, paying special attention to women, girls and those in vulnerable
situations”. (धारणीय �वकास ल� #6: सबके �लए समतु� ��ता, मिहला, बा�लका और �वकट प�र��त म� रहने वाले लोगों
का खास �ाल रखा जाए) OR
 Sanitation for all ensures social, environmental and economic gains for all. OR
Mahatma Gandhi once said, “Sanitation is more important than independence.” Therefore, only a
Clean, Health and Beautiful India can be our fitting tribute to Gandhi’s 150th Birth anniversary.
(“��ता �तं त्रता से भी अ�धक मह�पूण,र् ग�रमा पूणर् जीवन के �लए ज�री है-गांधी” इस�लए एक �� और सुंदर भारत बनाकर
ही हम अपने रा�� पता को स�ी श्रद्धांज�ल दे सकते ह�).
 So, aforementioned reforms are necessary, need to be pursued on a priority basis or war footing.
52.3 ✍MAINS QUESTIONS IN PAST UPSC EXAMS
Explain the purpose of the Green Grid Initiative launched at world leaders Summit of the 2021
COP 26 UN Climate Change Conference in Glassgow in November, 2021. When was this
idea first floated in the International Solar Alliance (ISA)? (Answer in 150 words)
नव�र,2021 म� �ासगो म� �व� के नेताओं के �शखर स�ेलन म� सी. ओ. पी. 26 सं यु� रा�� जलवायु प�रवतर्न स�ेलन म�,
आर� क� गई ह�रत �ग्रड पहल का प्रयोजन �� क��जए। अंतरार्��ीय सौर गठबं धन (आई एस ए) म� यह �वचार पहली बार कब
िदया गया था? ✅ANS. Solved in Free Sp.Class
With growing energy needs should India keep on expanding its nuclear energy 2018
Programme? Discuss the facts and fears associated with nuclear energy. परमाणु ऊजार् के साथ जुड़े
�ए त� और भय�ान
Access to affordable, reliable, sustainable and modern energy is the sine qua non to achieve 2018
Sustainable Development Goals (SDGs). Comment on the progress made in India in this
regard. सतत �वकास ल�ों (एसडीजी) को प्रा� करने के �लए स�ी, �व�सनीय, िटकाऊ और आधु�नक ऊजार् एक
अ�नवायर् चीज है -इसम� सरकार ने �ा कदम उठाए ह� Ans. Mrunal’s Web Article
📑📑NEXT Handout 5B: Transport Infrastructure (Rail, Road, EV, Shipping, Aviation, Tourism)
Pillar#5B: Infrastructure- Sadak (Transport), My City, Village & Home
Table of Contents
54 🛶🛶Infra → Transport → H20 → Inland Waterways ................................................................................. 918
54.1.1 🛶🛶 �Inland Waterways → IWAI ............................................................................................ 918
54.1.2 🛶🛶 Inland Waterways → National Waterways (रा��ीय जलमागर्)................................................... 918
54.1.3 🛶🛶🛶🛶🛶🛶 Inland Waterways → Jal Marg Vikas Project (2014) ............................................. 919
54.1.4 🛶🛶⚖: 🧔🧔The Inland Vessels Bill/Act, 2021 (आंत�रक जलमागर् जहाज़ �वधेयक) ............................. 920
54.2 ⚓Infra → Transport → H20 → Shipping & Ports .......................................................................... 920
54.2.1 � [Yearbook] Ministry of Ports, Shipping and Waterways नौवहन मं त्रालय consists of ............ 920
54.2.2 ⚓Types of Ports- Classification Method#1: Major and Minor Ports .................................... 921
54.2.3 ⚓Types of Ports- Classification Method#2 .............................................................................. 922
54.2.4 ⚓⚖Major Port Authorities Bill, 2020 .................................................................................... 923
54.2.5 ⚓�Ports → Challenges in India बं दरगाह म� चुनौ�तया................................................................. 923
54.2.6 ⚓🚛🚛🚛🚛ES20 Vol1ch6: logistics Challenge in India (मालसामान प�रवहन) ................................. 923
54.2.7 National Logistics Policy 2022 by Commerce Ministry’s DPIIT .............................................. 924
54.2.8 ⚓🚛🚛🚛🚛 Logistics Ranking (don’t loose sleep) ...................................................................... 924
54.2.9 ⚓🧔🧔🧔🧔 Infra → Transport → H20 → Ports → Sagarmala Project.................................. 924
54.2.10 ⚓ 🧔🧔🧔🧔 Infra → Transport → H20 → Blue economy Policy 2021 ................................. 925
54.2.11 ⚓ 🧔🧔🧔🧔 Infra → Transport → H20 → Maritime Vision 2030 ......................................... 925
54.2.12 ⚓🚕🚕 ⚖ Infra → Transport → Multi-Modal Transportation of Goods Bill, 2019 .......... 925
55 🚕🚕 Infra → Transport → Road (सड़क) .......................................................................................................... 926
55.1.1 [Yearbook] Min. of Road Transport & Highways सडक प�रवहन एवं राजमागर् मं त्रालय →.................. 926
55.2 🚕🚕 Infra → Transport → Road → Types ........................................................................................... 926
55.3 🚕🚕 � TRANSPORT→ NHAI (1988, भारतीय राष्ट�ीय राजमागर् प्रा�धकरण) ................................................. 927
55.4 🚕🚕🚕🚕🚕🚕 TRANSPORT→ NHDP (1998)......................................................................................... 927
55.5 🚕🚕🚕🚕🚕🚕 TRANSPORT→ Pradhan Mantri Gram Sadak Yojana (2000) ...................................... 927
55.5.1 🚕🚕🚕🚕🚕🚕 TRANSPORT→ Bharatmala Pariyojana (2017) .................................................... 928
55.5.2 🚕🚕🚕🚕 TRANSPORT→ E-toll collection via FASTag (2017) ................................................ 928
55.5.3 🚕🚕🚕🚕 TRANSPORT→ NoWAIT@Railway Crossing: Setu Bharatam.................................. 928
55.5.4 🚕🚕🚕🚕 TRANSPORT→ Char Dham Mahamarg Vikas Pariyojana ........................................ 929
55.6 ⛽↘: 🧔🧔🧔🧔 TRANSPORT→ ⏬Fossil Fuel Use→ E20 Blending........................................... 929
55.6.1 ⛽↘: 🧔🧔🧔🧔 TRANSPORT→ ⏬Fossil Fuel Use→ National Hydrogen Mission ........ 929
55.7 ⛽↘: 🚕🚕🚕🚕 TRANSPORT→ ⏬ Fossil Fuel USE→ Electric Vehicle ..................................... 930
55.7.1 🚕🚕🚕🚕🚕🚕🚕🚕 EVs in India: steps taken to promote them ....................................................... 931
55.7.2 🚕🚕🚕🚕🚕🚕 100% EV Adoption? NITI vs Highway Ministry differ ......................................... 931
55.7.3 🚕🚕🚕🚕🚕🚕 📔📔 ES19: EVs in India: Charging is the biggest challenge ................................... 931
55.7.4 🚕🚕🚕🚕E-Vehicle: Lithium → Khanij Bidesh India Ltd (2019) ............................................... 932
55.7.5 🚕🚕🚕🚕✍ EV-Conclusion:.......................................................................................................... 932
(Batch: PCB7) Mrunal’s Economy Pillar#5B: Infrastructure: Sadak, my city village and home → Page 914
55.7.6 🚕🚕🚕🚕 TRANSPORT→ 🚕🚕🚕🚕 ⏬ Fossil Fuel Emission → Bharat Stage Norms ............. 932
55.7.7 🚕🚕🚕🚕 ⏬Decarbonizing Transport in India (2020-June) ...................................................... 933
55.7.8 🚕🚕🚕🚕 ⏬Vehicle Scrappage Policy [वाहन प�रमाजर्न नी�त] ............................................................ 933
55.7.9 👜👜👜👜Budget-2022 on Road Transport / EV ............................................................................ 933
55.7.10 NCAP program for Car Safety 2022 ............................................................................................ 934
55.8 🛵🛵⚔🚕🚕⚖ Motor Vehicle Amendment Act 2019 ........................................................................ 934
55.8.1 🛵🛵⚔🚕🚕⚖ MOTOR VEHICLE AMENDMENT ACT 2019 → Gig Drivers .................... 934
55.9 🚕🚕🚕🚕 TRANSPORT→ Bridges & Tunnel & Misc. (सेतु और सुरंग) ..................................................... 935
55.10 🚕🚕🚕🚕Transport → Transborder Connectivity (सीमापार स�द्धन)................................................... 936
56 🚝🚝 Transport → Railway (अ�ीरथ) ................................................................................................................. 937
56.1.1 🚝🚝 Railways → Concepts ............................................................................................................ 938
56.2 🚝🚝 Railways → Modernization (आधु�नक�करण).................................................................................... 939
56.3 🚝🚝🚝 Railways → Modernization → Personnel & Organizational Reforms (का�मक और सं गठना�क
सुधार) 939
56.3.1 🚝🚝🚝 Railways Personnel Reforms → Unification of Services (सेवाओं का एक�करण) ............... 939
56.3.2 🚝🚝🚝 Railways Organizational Reforms → Restructuring of Railway Board ...................... 940
56.4 🚝🚝 🧔🧔:👲👲 Railways Modernization → Private Train Operators................................................... 940
56.4.1 (🚝🚝 🧔🧔:👲👲) 👿👿✋ Challenges in allowing private trains (चुनौ�तयां)..................................... 941
56.4.2 (🚝🚝 🧔🧔:👲👲) ✍Private Trains → Conclusion- welcome this reform .................................. 941
56.5 🚝🚝 Railways → Modernization attempts before 2019 ....................................................................... 941
56.5.1 🚝🚝 🔖🔖 Railways Fares (िकराया)→ Rail Development Authority .............................................. 942
56.5.2 🚝🚝 🔖🔖 Railways Fares→ Concepts ............................................................................................ 942
56.5.3 🚝🚝 Transport → Rail-Modernization → Green Initiatives by Railways ............................... 942
56.5.4 🚝🚝 Transport → Rail-Modernization → Electric Traction .................................................... 942
56.5.5 🚝🚝 National Rail Plan for India – 2030 [भारत के �लए रा�ी� य रेल योजना - 2030] ............................... 943
56.5.6 🚝🚝 Transport → Rail-Modernization → Safety [रेल सुर�ा] ...................................................... 943
56.5.7 🚝🚝 Transport → Rail Safety → Railways Protection Force (RPF) initiatives-2019............... 943
56.5.8 🚝🚝 Transport → Rail-Types (अ��रथो के प्रकार) ............................................................................. 943
56.5.9 🚝🚝 Transport → Dedicated Freight Corridor (DFC) ............................................................... 945
56.5.10 🚝🚝 Transport → Metro Rail ........................................................................................................ 945
56.5.11 🚝🚝 Transport → Metro Rail → Metro Rail Policy 2017 ......................................................... 945
56.5.12 🚝🚝 Transport → Metrolite, MetroNEO = Cheaper Metros for smaller cities (2021)............ 945
56.5.13 🚝🚝 Transport → 👜👜👜👜Budget-2022 on Railways & goods/cargo transport ....................... 946
56.5.14 🚝🚝 Transport → Hyperloop using vacuum tube ...................................................................... 946
56.6 ✈ Transport → Aviation (उड्डयन / हवाई यात्रा)........................................................................................ 946
56.6.1 [Yearbook] Ministry of Civil Aviation नागर �वमानन / नाग�रक उड्डयन मं त्रालय ................................... 947
56.6.2 ✈ Transport → Cheap flights to Small Towns → UDAN .................................................... 948
56.6.3 ✈ Transport → Udan 3.0 (2018) .............................................................................................. 948
56.6.4 ✈ Transport → Build More Airports → NABH Nirman ...................................................... 948
56.6.5 ✈ Transport → Challenges to aviation sector (चुनौ�तयां) .......................................................... 949
56.6.6 �Airfare price ceiling (हवाई यात्रा दरों म� �नयं त्रण)................................................................................. 949
56.6.7 ✈ Transport → Drone Regulation (ड�ोन �व�नयमन) & GARUD Portal ....................................... 949
56.6.8 ✈ Transport → Drones in 👜👜👜👜Budget-2022 ...................................................................... 950
56.6.9 ✈ Transport → Drone Challenges ........................................................................................... 950
56.7 🤧🤧 ⛴✈ Vande Bharat Mission 2020- Indians ki watan-waapsi.................................................. 950
56.7.1 🤧🤧 ⛴✈Airbubble Agreement ................................................................................................ 951
56.8 🗽🗽Tourism & Museum Infrastructure (प्रवासन व सं ग्रहालय) .................................................................. 951
56.8.1 �🗽🗽 [Yearbook] Ministry of Tourism .................................................................................... 951
56.8.2 🏬🏬 Tourism→ PRASAD & HRIDAY Mission .......................................................................... 952
56.8.3 👻👻 🏬🏬 Tourism Ministry→ Atma-Nirbhar initiatives & 👜👜👜👜Budget-2022..................... 952
56.8.4 Dharamshala Declaration 2022 .................................................................................................... 952
56.8.5 �🎷🎷🎷🎷 [Yearbook] Ministry of Culture (सं �ृ�त मं त्रालय)........................................................ 952
56.8.6 🗽🗽Tourism → Museum Infra in Budget-2020 (सं ग्रहालय) ......................................................... 953
56.9 ✍Mains Questions in past UPSC exams............................................................................................ 953
57 Infrastructure → 🏬🏬 URBAN (शहरी बु�नयादी अवसं रचना) .................................................................................. 954
57.1 🏬🏬 URBAN → Census definitions ...................................................................................................... 954
57.2 🏬🏬 URBAN → [Yearbook] MoHUA .................................................................................................. 955
57.2.1 2020 marks 5th Anniversary of Urban Mission ........................................................................... 956
57.3 🏬🏬 URBAN → AMRUT Mission (2015) → 500 cities ...................................................................... 956
57.4 🏬🏬 URBAN → Smart Cities Mission (2015) → 100 cities ................................................................ 957
57.4.1 🏬🏬 Smart Cities → Selection process (चयन प्रिक्रया) ..................................................................... 958
57.4.2 🏬🏬 💸💸 Smart Cities → funding and administration (�व� और प्रशासन) ...................................... 958
57.4.3 🏬🏬 👿👿 Smart Cities → Criticism / Challenges (आलोचना / चुनौ�तयाँ)........................................... 959
57.4.4 🏬🏬 👭👭Sister City project ............................................................................................................. 959
57.4.5 🏬🏬 Cities → 👜👜👜👜Budget-2022:- Urban Infrastructure related announcements............... 959
57.4.6 🏬🏬 � Cities → TULIP Internship (2020-June) ...................................................................... 960
57.4.7 🏬🏬 �� URBAN → Misc → PH friendly → Sugamya Bharat (2014) ............................. 960
57.4.8 🏬🏬 Cities → Misc → Floor Space index (FSI) ........................................................................... 960
57.4.9 🏬🏬 🌲🌲🌲🌲🌲🌲 URBAN → Misc → Nagar VAN (2020-Jun) .................................................. 960
57.4.10 🏬🏬 URBAN → Misc → Parliament area, Central Vista ........................................................... 961
57.4.11 🏬🏬 📊📊 Cities → Index: TWO Indices for Quality of Life ....................................................... 961
57.4.12 🏬🏬 📊📊 Cities → Index → Misc. (don’t loose sleep) ................................................................ 961
57.4.13 ✍ Urbanization conclusion (शहरीकरण: �न�षर्) ........................................................................... 962
57.5 (🏠🏠) Infra → (Urban and Rural) → Housing for all by 2022 .......................................................... 962
57.5.1 👻👻(🏠🏠) → Affordable rental housing Complexes (AHRC) ................................................... 963
57.5.2 (🏠🏠) → PMAY–U → Angikaar .................................................................................................. 964
57.5.3 (🏠🏠) → National Urban Housing Fund (2018) ........................................................................ 964
57.5.4 👻👻 (🏠🏠) → SWAMIH Fund (�के �ए मकान प्रोजे� ख� करने वा�े �ब�र को थोड़ी लोन देदो योजना) ....... 964
57.5.5 (🏠🏠) PM Unauthorized colonies in Delhi Awaas adhikar Yojna (PM-UDAY) ..................... 964
57.5.6 (🏠🏠) Sustainable Housing → World Habitat Award to Odisha’s JAGA Mission ................. 964
57.5.7 (🏠🏠) Sustainable Housing → Global Housing Technology Challenge 2019 .......................... 965
57.5.8 (🏠🏠) → Model Tenancy Act (आदशर् िकरायेदारी अ�ध�नयम) ............................................................... 965
57.5.9 (🏠🏠) → Corona: Landlords, tenants, rent & eviction ............................................................... 965
58 Infra → Rural (🏞🏞) ......................................................................................................................................... 966
58.1.1 � [Yearbook] Ministry of Rural Development ग्रामीण �वकास मं त्रालय.......................................... 966
58.2 🏞🏞 RURAL → Shyama Prasad Mukherjee rurban mission .............................................................. 967
58.3 🏞🏞 RURAL → Rashtriya Gram Swaraj Abhiyan (2018).................................................................... 967
58.3.1 🏞🏞 📲📲 Panchayati Raj Day & Portals & Awareness Campaigns ............................................ 968
58.3.2 👻👻🏞🏞 📐📐 Land Assets registration- Swamitva scheme for land survey (2020).................... 968
58.3.3 🏞🏞 📐📐 Land Assets registration- ULPIN in 👜👜👜👜Budget-2022........................................... 968
58.3.4 🏞🏞 📐📐 Land Assets registration- Case Studies from Bihar & Kerala........................................ 968
58.3.5 🏞🏞 ��💪💪Model Panchayat Citizens Charter framework (2021)...................................... 969
58.4 🏞🏞🏞🏞🏞🏞 RURAL → MPLADS (1993).............................................................................................. 969
58.4.1 🏞🏞 🤧🤧 MPLADS Suspended (योजना को ��गत करना) ................................................................... 970
58.5 🏞🏞 RURAL → Adarsh Gram Yojanas ................................................................................................. 971
58.6 🏞🏞 RURAL → Border Area Development Programme (BADP)...................................................... 971
58.6.1 🏞🏞 Border infra & Backward Regions Infra → 👜👜👜👜Budget-2022 ........................................ 972
58.6.2 🏞🏞 Border infra and Shekatkar Committee (सीमा �ेत्रों म� बु�नयादी अवसं रचना) ................................ 972
58.7 🌬🌬⚔Infrastructure: Disaster, Security & Strategic Affairs .............................................................. 973
58.7.1 �� [Yearbook] Ministry of Home (गृह मं त्रालय) ..................................................................... 973
58.7.2 � 🌬🌬 Disaster Infrastructure → Home Ministry → CDRI 2019 ........................................ 974
58.7.3 �🛡🛡 Ministry of Defence (र�ा मं त्रालय) ...................................................................................... 974
58.7.4 🕵🕵🕵🕵 → 🤵🤵🤵🤵 Ordnance Factory Board abolished & Essential Defence Services Bill .... 975
58.7.5 👻👻👻👻👻👻👻👻Draft Defence Production and Export Promotion Policy 2020 ....................... 976
58.7.6 �Ministry of External Affairs (�वदेश मामलों का मं त्रालय)................................................................ 976
58.7.7 ✍ 🎺🎺 Mains previous years’ questions from these topics...................................................... 976
53 🛶🛶INFRA → TRANSPORT → H20 → INLAND WATERWAYS
Inland Waterways Transport (IWT: अंतद�शीय जलमागर् प�रवहन) has following benefits →
 Lower CO2 emissions & fuel in transporting per tonne of cargo than Rail / Road.
 IWT requires very little land acquisition (भू�म अ�धग्रहण) than Rail / Road.
 IWT eases traffic congestion (यातायात जमाव/क� भीड़) on Road/Rail networks.
53.1.1 🛶🛶 �Inland Waterways → IWAI
Inland Waterway Authority of India (IWAI: भारतीय अंतद�शीय जलमागर् प्रा�धकरण) is a Statutory Body under
Ministry of Shipping, responsible for the development, management, safety, survey of inland
waterways.
53.1.2 🛶🛶 Inland Waterways → National Waterways (रा��ीय जलमागर्)

- 7th Sch → Union List → Parliament can make laws on inland waterways.
- National Waterways Act, 2016: 5 existing waterways and 100+ additional waterways declared as
National Waterways. 5 existing waterways are:
National Waterway No. Length (km) State(s)
1: Ganga-Bhagirathi-Hooghly River System (Haldia - 1620 Uttar Pradesh, Bihar,
Allahabad) Jharkhand, West
Bengal
2: Brahmaputra River (Dhubri - Sadiya) 891 Assam
3: West Coast, Champakara and Udyogmandal Canals 205 Kerala
4: Krishna, Godavari and a few Canals 2890 (when Tamil Nadu, Andhra,
finished) Telanagana
5: Mahanadi delta rivers & canals 588 Odisha, West Bengal
40: Ghagra/Saryu River. In news for Government 354 Uttar Pradesh
planning Ramayan Cruise tour, Ayodhya
Apart from above, NW68: Mandovi (Goa), NW111 Zuari (Goa), NW97: Sundarbans and a few
others are presently operational.
53.1.3 🛶🛶🛶🛶🛶🛶 Inland Waterways → Jal Marg Vikas Project (2014)
NW-1 has low depth upstream of Farakka → difficult to take big vessels.
- This project aims to develop infrastructure, navigational locks to make NW1 enable commercial
navigation on Varanasi-Haldia stretch of river Ganga.
- Plus, provisions for Roll on-Roll off (Ro-Ro) ferries, Digital dashboard / portals for River
Information System (RIS) and Vessel Traffic Management System (VTMS) etc.
- Central Sector Scheme (0% from States) + loans from World Bank (IBRD) + PPP.
- 2018-Nov: Modi inaugurated India's first multi-modal terminal (एका�धक मॉडल ट�मनल) @Varanasi
& welcomed the cargo ship ‘MV Rabindranath Tagore’ coming from Kolkata.
- Entire project will by finished by March 2023 & will help to convert Ganga into ‘Arth Ganga’
(River of wealth)
Side Note: Same Varanasi also designated as India’s first ‘freight village (माल गांव)’ i.e. an area where
national and international cargo operators carry out their activities.
53.1.4 🛶🛶⚖: 🧔🧔The Inland Vessels Bill/Act, 2021 (आंत�रक जलमागर् जहाज़ �वधेयक)
⇒ To replace the Inland Vessels Act, 1917.
⇒ bring all inland vessels & waterways in India under union government regulation.
⇒ Union govt to decide maximum weight/passenger capacity, max pollutant discharge of vessel,
Minimum educational qualification of the shipping crew etc. [आंत�रक जलमागर् िकतने सामान/आद�मयों का
वज़न ढो सकते ह�? जहाज़ िकतना प्रदू षण फै ला सकते ह�? जहाज़ क�मयों क� �ूनतम शै��णक यो�ता �ा होनी चािहए? इ�ािद
�नयम क� द्र सरकार तय करेगी. रा� सरकार तय नहीं करेगी.]
⇒ if vessel sends SOS help emergency distress signal and yet nearby vessels do not respond then
they will be punished. [यिद पानी म� फँ सी तनावग्र� जहाज़ मदद के �लए सं देश भेज� तो आस पास म� जा रहे जहाज़ों ने
अ�नवायर् �प से उसक� मदद करनी होगी अ�था उन पर जुमार्ना लगेगा।]
⇒ � Controversy? Non-BJP State Govts unhappy because inland shipping is Concurrent List
Item but most of the powers vested to Union as per this bill/law. State govts given no role in it,
this is against the spirit of cooperative federalism. [हालाँिक आंत�रक जलमागर् समवत� सूची म� है िकंतु सभी स�ाएँ
क� द्र ने अपने पास रख ली है. इस�लए ग़ैर BJP रा� सरकार� नाराज़ है क� ये क़ानून ‘सहकारी सं घवाद’ क� भावना के �ख़लाफ़ है]
53.2 ⚓INFRA → TRANSPORT → H20 → SHIPPING & PORTS

- India has a long coastline of about 7,517 km
- Approx. 95% of India’s trade by volume and 68% in terms of value is transported by sea
- Alang-Sosiya (Guj) is the largest ship recycling yard in the world.
53.2.1 � [Yearbook] Ministry of Ports, Shipping and Waterways नौवहन मं त्रालय consists of
Old name: "Ministry of Shipping". New Name: "Ministry of Ports, Shipping and Waterways. (2020)"
Dept. N/A
Statutory ⇒ Inland Waterway Authority of India (IWAI: भारतीय अंतद�शीय जलमागर् प्रा�धकरण)
वैधा�नक सं �ाएं ⇒ Tariff Authority for Major Ports (TAMP) to decide fees of Major ports.
Attached / ⇒ Directorate General of Shipping, Mumbai नौवहन महा�नदेशालय- he is also the
Subordinate National Authority for Ships Recycling, under Recycling of Ships Act, 2019
(office of Ship Recycling @Gandhinagar, Gujarat)
⇒ DG Lighthouses and Lightships| Minor Ports Survey Org, लघु प�न सव��ण,
CPSE ⇒ (*) Shipping Corporation of India, Mumbai | (*) Dredging Corporation of
सरकारी कं पनी India Limited | (*) Kamarajar (Ennore, Tamilandu) Port Limited,
⇒ Cochin Shipyard Limited, Cochin
⇒ Central Inland Water Transport Corporation Ltd | Hooghly Dock & Port
Engineers Ltd | Sethusamundaram Corporation Ltd
(*) means approved for strategic disinvestment (=privatization) in 2019.
Global ⇒ International Maritime Organization (HQ: London, UK) – is a United
Cooperation Nations specialized agency for regulating shipping.
अंतररा��ीय ⇒ Its Hong Kong International Convention (2009) deals with the safe and
सहयोग environmentally sound recycling of ships. 2019: India ratified it.
⇒ United Nations Convention On the Law Of the Sea (समुद्र कानूनों के बारे म� सं यु� रा��
का अंतररा��ीय स�ेलन) Signed in 1982, Jamaica. Sometimes appears in news due to
2012 case where Italian marine soldiers on the Enrica Lexie ship killed 2
fishermen of Kerala, suspecting them to be pirates.
⇒ Ropax= roll on-roll off-cum-passenger ferry service. Such shipping vessel can transport persons
and vehicles over water. 2020-March: Shipping ministry launched ropax service between
Mumbai and Mandwa (Maharashtra).
MCQ. Which one of the following statements best describes the ‘Polar Code’ ? (Prelims-2022)
A. It is the international code of safety for ships operating in polar waters.
B. It is the agreement of the countries around the North Pole regarding the demarcation of their
territories in the polar region.
C. It is a set of norms to be followed by the countries whose scientists undertake research studies in
the North Pole and South Pole.
D. It is a trade and security agreement of the member countries of the Arctic Council.
53.2.2 ⚓Types of Ports- Classification Method#1: Major and Minor Ports

- Indian Ports Act, 1908: State Governments responsible for 200+ minor ports (लघु बं दरगाह), Union
Govt is responsible for 12 Major Ports (प्रमुख बं दरगाह).
Table 1: ⚓List of Major Ports in India: (A: Artificial, N: Natural harbor)
A/ NAME of the Major Port STATE
N?
N Jawaharlal Nehru, Nhava Shewa MH (2)
N Mumbai
N Deendayal Port Kandala, Kutch. Tidal port (�ारीय बं दरगाह). Developed in the Guj (1)
50s because Karachi port lost in Partition. Kandla is also the first Exclusive
Economic Zone (EEZ) in India and Asia (concept nowadays called ‘SEZ)
N Mormugao. Tidal Port, @Zuvari estuary, iron-ore export Goa (1)
A New Mangalore. Deep water, all weather port. Karnataka(1)
N Cochin/Kochi. Willingdon island Kerala(1)
Total Major Ports (West Coast) 6
N Haldia | Kolkata. Oldest major port of India. Problem? It’s a Riverine Port WB(1)
(नदी तटीय बं दरगाह) so Need constant dredging (�नकषर्ण) to remove silt & keep
depth.
N Vishakhapatnam & Eastern Naval command AP(1)
A Paradeep (Manmade lagoon) Odisha(1)
N V.O. Chidambarnar Port, Tuticorin TN (3)
A Chennai (all weather Port)
A Kamarajar Port Ennore (private, under companies Act)
Total Ports East Coast 6
Additionally,
⇒ 2010: Manmohan announced to setup Port Blair (Andaman Nicobar) as Major port.
⇒ 2016: Modi announced to setup Sagar in west Bengal, Duggirajupatnam in Andhra Pradesh,
Vadhavan in Maharashtra, Enayam in Tamil Nadu as major ports.
⇒ 2020-Feb: Govt announced setting up a new major port at Vadhavan in Maharashtra. It’ll be
developed by a Special Purpose Vehicle (SPV) company wherein Jawaharlal Nehru Port Trust
(JNPT) will have 50%/> or higher shareholding.
⇒ But, Govt Annual reports & IYB still continue to list only 12 major ports, given in above table so
we need not lose sleep.
⇒ �Budget-2020: we’ll consider corporatizing at least one major port (= converting it into a
Public limited company) and subsequently listing its shares on the stock exchanges.
53.2.3 ⚓Types of Ports- Classification Method#2

Type of Port Notes
Dry Ports They are inland terminal, directly connected to a seaport by rail or road e.g.
(सूखे बं दरगाह) Patna@Bihar, Hazira@Guj. 20+ such dry ports under development (2018).
Industrial Port deal with bulk cargo like grain, sugar, ore, oil,chemicals and similar materials
Commercial deal with general cargo & passengers
Port
Comprehensive both industrial + commercial port facility
Packet Station Ferry Ports for transporting passengers and mail on water for short distances.
Inland Ports away from sea coast via river/canal. e.g. Kolkata,Memphis, Rhine,Manchester
Out Ports deep water ports built away from the actual port to recieve very large ships e.g.
Piraeus is outport of Athens (Greece)
Ports of Call where ships used to anchor for refuelling, watering and taking food supplies
e.g. Aden, Honolulu, Singapore
Entrepot collection centres where the goods brought from different countries for export.
Ports e.g. Singapore,Asia. Rotterdam (Europe), Copenhagen (Baltic region)
Naval Ports for war ship repair/construction e.g. Kochi, Karwar
🔠🔠❓Singapore is known as Port of Call because (UPSC-CAPF-2020)
(a) it deals in the processing and shipping of oil
(b) it is a deep water port built away from the actual port
(c) it is on main sea route where ships use to anchor for refueling, watering and taking food items
(d) it serves the parent ports by receiving ships which are unable to approach due to their large size
53.2.4 ⚓⚖Major Port Authorities Bill, 2020

✋Mostly Technical. I’m deleting this topic. donot lose sleep [नींद खोने क� ज़�रत नहीं]
53.2.5 ⚓�Ports → Challenges in India बं दरगाह म� चुनौ�तया

1. While India made great success in metro rails and airport infra, But shipping infrastructure has
neglected. We suffer from ageing fleet, manpower shortage, we do not have world class ports.
Large sized ships are unable to enter our ports so their goods are first offloaded in Sri-Lanka,
then sent to India in smaller ships. [जहाज़ पुराने/ जजर्�रत ह�, कु शल मानव बल क� कमी, �व� �र क� बं दरगाह� नहीं।
बड़े जहाज़ क� पा�कग मु��ल]
2. Port congestion, delay in turnaround, takes lot of paperwork to load/unload cargo, customs
clearance / inspection is slow,
3. inadequate roadrail connectivity with the hinterland (आंत�रक इलाके ).
4. Privately owned minor ports are more efficient, whereas major ports suffer from labour unions
and politicization of the Board of Directors. [मजदू र सं घ व् राजनी�तकरण के चलते प्रभावहीन �व�ापन]
5. Problems of land acquisition and environmental clearances while setting up new ports.
6. Desi Shipping companies buy / hire foreign ships at higher cost bcoz domestic shipbuilding
industry is underdeveloped. (भारत क� �ा�नक कं प�नयां अ�े जहाज बना नहीं पाती.हमने �वदेशों से खरीदने पड़ते ह�)
53.2.6 ⚓🚛🚛🚛🚛📔📔📔📔ES20 Vol1ch6: logistics Challenge in India (मालसामान प�रवहन)

CEA Subramanian K. provided a case study:
If an apparel factory in Delhi has to export clothes to USA through India’s largest port
@Maharashtra i.e. Jawaharlal Nehru Port Trust (JNPT) also known as ‘Nhava Sheva Port’
Days taken for cargo to reach Delhi to 5 days
Maharashtra
Customs clearance, loading cargo in 14 days, because port infrastructure is poor. narrow
ship roads, very little use of automatic cranes etc.
Shipping from Mumbai to USA 19 days
Unloading cargo in USA dock including 1 day
customs clearance
Transporting to customer 2 days
Total 41 days😰😰
⇒ ��ES20 gave case studies of Electronics export, carpet import etc. and found
Loading/unloading/customs inspection processes at Indian airports is vastly superior to its
seaports. Ironically, customs clearance processes for imports are better/faster than those for
exports. whereas the Govt should focus on making it ‘easier’ to export for improving our CAD &
BoP! (�वडंबना यह है िक आयात करने के �लए कम द�ावेज जमा करने पड़ते ह�, और �नयार्त करने के �लए �ादा!)
53.2.7 National Logistics Policy 2022 by Commerce Ministry’s DPIIT

cost to transport Global Standard India Present India’s target in few
goods years
as % of GDP 8-9% of GDP 13-14% of GDP single digit of GDP%
⇒ seamless movement of goods and services across the country with the help of Gati Shakti project.
(Refer to Pillar5C: PPP Project for more on this.)
⇒ new logistics policy has four critical features: 1) Integration of Digital System (IDS); 2) Unified
Logistics Interface Platform (ULIP); 3) Ease of Logistics (ELOG); 4) System Improvement Group
(SIG). How do they work in reality? NotIMP.
⇒ greater cooperation among ministries of road transport, railways, customs, aviation and
commerce departments.
(रसद आपू�त/ माल प�रवहन के �लए सरकार क� नई नी�त. जहाँ �व�भ� प्रकार के ऑनलाइन पोटर्ल द्वारा �व�भ� मं त्रालयों के बीच सम�य
करके माल प�रवहन के खच� को कम िकया जाए और ग�त को तेज िकया जाए. वै��क आदशर्/मानक यह है िक माल प�रवहन का ख़चर्
GDP के 8-9% से �ादा नहीं होना चािहए. िक�ु वतर्मान समय म� भारत म� यह लागत खचर् GDP के 13-14% है.)
53.2.8 ⚓🚛🚛🚛🚛 Logistics Ranking (don’t loose sleep)

LPI Index ⇒ World Bank’s Logistics Performance Index, released every 2Years
⇒ But from exam point of view, poor cost benefit memorizing Ranking.
LEADS Index Commerce Ministry’s Logistics Ease Across Different States (LEADS) index.
2021: Guj#1, Haryana#2,Punjab#3. But from exam point of view, poor cost
�थोड़ा-पढ़ो-आगे-बढ़ो
benefit memorizing State Ranking. #�
53.2.9 ⚓🧔🧔🧔🧔 Infra → Transport → H20 → Ports → Sagarmala Project
2003: PM Vajpayee proposed Project Sagarmala → Manmohan ignored → Modi revived (2015).
- Boss? Shipping ministry. Central Sector Scheme = 0% funded by States. Although in practice it’s
Shipping Ministry → Sagarmala Development Company Limited (2016) → invest in Special
Purpose Vehicles (SPVs) companies (in which State & private players may also have
shareholding) → SPVs implement various projects under Sagarmala.
- To develop/improve ports, encourage coastal shipping. बं दरगाहों को बनानां/बेहतर करना
- Costal Economic Zones (CEZs: तटवत� आ�थक �ेत्र) to create manufacturing & employment
opportunities. Give them Hinterland connectivity through rail, road, inland water transport.
- Skill development, training for coastal community. [बं दरगाहो को आंत�रक इलाक़ों से जोड़ना]
53.2.10 ⚓ 🧔🧔🧔🧔 Infra → Transport → H20 → Blue economy Policy 2021

⇒ Blue Economy deals with sustainable use of ocean resources for Job creation and GDP. [नीला
अथर्तंत्र= सामुिद्रक सं साधनों का सतत् �ववेकपूणर् उपयोग रोज़गार सृजन तथा सकल घरेलू उ�ाद म� बढ़ोतरी के �लए िकया जाए]
⇒ India has a coastline of nearly 7500 kms. 12 Major ports, 9 Coastal States, 1300+ islands, 2
million Square kilometre + Exclusive economic zone
⇒ India has both type of ocean resources a) living (Algae, fish, prawns etc) and b) non-living (Oil,
gas, polymetallic nodules). सजीव और �नज�व दोनों िक़� के सामुिद्रक सं साधन ह� भारत के पास
⇒ Ministry of Earth Sciences (MoES) has launched the Draft Blue Economy policy for India 2021.
Major features- [पृ�ी �व�ान मं त्रालय ने �नली अथर्तंत्र नी�त बनायी]
⇒ Fisheries, Marine food processing, deep sea mining, Offshore energy, Research, skill
development etc to achieve United Nation sustainable development goal number #14 i.e.
Sustainable use of ocean resources for sustainable development. [म� खाद्य प्रसं �रण, गहरे समं दर म�
खनन, अपतटीय ऊजार्, सं शोधन नवाचार �वकास, कौशल तालीम]
Misc. Topic: Sethusamudram project (1997) to create a shipping canal between Palk bay & Gulf of
Manner to reduce time & fuel consumption. But case pending in SC-PIL that it’ll hurt marine
biodiversity & Ram Sethu’s religious sentiments.
53.2.11 ⚓ 🧔🧔🧔🧔 Infra → Transport → H20 → Maritime Vision 2030

⇒ Fancy talk similar to above Blue economy policy. (ऊपर के टो�पक म� आपने देखी- वही सब �चकनी चुपड़ी बात�।)
⇒ We’ll improve our ships, ports, export, create 7-10 lakh jobs etc.
53.2.12 ⚓🚕🚕 ⚖ Infra → Transport → Multi-Modal Transportation of Goods Bill, 2019

⇒ Multimodal transportation (म�ी-मॉडल प�रवहन) means using a combination of more than one
mode of movement, such as rail/road/sea for transportation of goods.
⇒ Original act of 1993 contained provisions for 1) Registration of such cargo company 2) their
liability in case of cargo delay / damage.
⇒ 2019: Govt planning to replace this old act, with a new act. but mostly technical features. We
�थोड़ा-पढ़ो-आगे-बढ़ो
need not lose sleep.#�
54 🚕🚕 INFRA → TRANSPORT → ROAD (सड़क)
(Intro) A good road network is an essential requirement for the rapid growth of the economy. Roads
provide connectivity to remote areas, open up backward regions and facilitate access to markets,
trade and investment. सड़क प�रवहन का देश क� आ�थक वृ�द्ध म� मह�. �पछड़े इलाकों म� �ापार/�नवेश को प्रो�ाहन
(Data) Largest road network in world #1 USA (66 lakh kms) #2 India (64 lakh kms)
54.1.1 [Yearbook] Min. of Road Transport & Highways सडक प�रवहन एवं राजमागर् मं त्रालय →
Dept /Attached N/A
Statutory Bodies National Highways Authority of India (NHAI) भारतीय रा��ीय राजमागर् प्रा�धकरण
CPSE National Highways and Infrastructure Development Corporation
Number plate - 2019: Govt allowed “LA-” number plate mark for vehicles registered
in UT of Ladakh. (Lakshadweep: “LD” plates)
- 2021: BH-series of number plates for Defense personnel, Govt
employees and private sector companies, which have their offices in
four or more States/UTs Ministry.
E-Governance - Vahan Portal: vehicle registration, taxation, permit, fitness and
modules associated services across the country [वाहनो का पं जीकरण]
- Sarathi Portal: driving license, learner licence, driving schools and
related activities. [वाहनचालको का पं जीकरण]
- mParivahan App: has features similar to above two portals
- Integrated Road Accident Database Project (iRAD) with help of lIT
Madras and National Informatics Centre (NIC)
- Data Lake and Project Management Software → NHAI's digital
platform for paper-less decision making & dispute resolutions related
to highway construction.
54.2 🚕🚕 INFRA → TRANSPORT → ROAD → TYPES
Name → Responsibility of Connects [ये मागर् िकसे जोड़ता है?]
National Highways Union Government State capitals, major cities, ports
State Highways State Government State Capital to District HQ
District Roads Zila Parishad District HQ to tehsil and Blocks
Village Roads Gram Panchayat Villages to neighboring towns
Expressway PPP / SPV Six to eight lane high class highways e.g. A’bad
(usually under aegis Vadodara Expressway made by SPV owned by
for NHAI) NHAI+ IRB Infrastructure Developers.
⇒ 3 organizations associated with highway construction: 1) National highways authority of India
(NHAI), 2) State Public Works Department (PWD: लोक �नमार्ण �वभाग), 3) Border roads
Organization (BRO:सीमा सड़क सं गठन under Defense Ministry)
⇒ In terms of total road length (bigger to smaller): Other roads >> State highways >> National
highways >> expressways [सड़कों क� ल�ाई के िहसाब से बड़े से छोटा]
54.3 🚕🚕 � TRANSPORT→ NHAI (1988, भारतीय राष्ट�ीय राजमागर् प्रा�धकरण)

National Highways Authority of India is a statutory body under Road Ministry. It gets ₹ ₹ from →
- Road and Infrastructure cess on Petrol & Diesel → Central Road and Infrastructure Fund (setup
in 2000, Non-Lapsable) (More in 📑📑Pillar#2- Taxation)
- External Assistance from World Bank, ADB, Japan Bank for International Cooperation etc.;
- Market Borrowings by NHAI, Public Private Partnership(PPP).
- 2019: NHAI to setup Infrastructure Investment Trust (InVITs) (📑📑Ref: Pillar-1C)
2020: GATI Portal by NHAI to monitor the progress of Highway construction in India. Contractors
can file complaints (e.g. Govt engineer demanding bribes, not clearing files on time etc)
54.4 🚕🚕🚕🚕🚕🚕 TRANSPORT→ NHDP (1998)

PM Vajpayee started National Highways Development Programme (NHDP) to build:
- Golden Quadrilateral (GQ: ��णम चतुभुर्ज)- 4 metro cities of Delhi, Mumbai, Chennai, Kolkata
- North-South corridor to connect Srinagar to Kanyakumari. [उ�र द��ण]
- East-West corridors to connect Silchar to Porbandar.[पूवर् प��म]
- Related terms: Diamond quadrilateral → to connect major metros via High Speed Railways.
54.5 🚕🚕🧔🧔🧔🧔 TRANSPORT→ PRADHAN MANTRI GRAM SADAK YOJANA (2000)
- Boss? Rural Development Ministry. Centrally Sponsored Scheme → Core Scheme = NOT 100%
funded by Union. (General-60:40, Sp. Cat States-90:10)
- 2000: PM Vajpayee launched to construct all-weather single (lane) roads for all unconnected
rural habitations �जन ग्रामीण इलाकों म� पहले से सड़क क� सु�वधा नहीं वहां तमाम मौसमों म� कायर्रत रहे ऐसी सड़कों का �नमार्ण
- upto min. 500 population (plains) by 2019
- 250/> (Sp.Cat States, tribal districts and desert areas) by 2019
- 100-249 population (if Naxal/LWE: Left Wing Extremism affected areas) by 2020
- PMGSY – II (2013 onwards): To repair previous rural roads and to construct new roads.
- PMGSY Phase-III (2019-20 to 2024-25): To upgrade 1,25,000 kms of road in the next five years.
In this phase, we’ll also construct road bridges. We’ll connect with roads with Agricultural
Markets, Schools and Hospitals. [तीसरे चरण म� सड़कों को �नमार्ण, पुल भी बनाएँ गे।]
- To ⏬carbon footprint, PMGSY roads are built using Green Technology, Waste Plastic and
Cold Mix Technology. (🎓🎓Read more in environment books/courses)
- 🤩🤩 Benefit of Rural Roads? World Bank study (2019) found that PMGSY roads had a positive
impact on human capital formation in rural India by increasing ⏫ 1) school enrolment 2)
institutional delivery 3) vaccination. (�व� ब�क ने पाया िक गाँव म� सड़क �नमार्ण से मानव पूंजी �वकास होता है →
�ोंिक सड़को क� सु�वधा होगी तो ब�ों के �ू ल-प्रवेश, घर क� जगह अ�तालों म� बाल-प्रसव,और टीकाकरण म� वृ�द्ध होती है.)
54.5.1 🚕🚕🧔🧔🧔🧔 TRANSPORT→ Bharatmala Pariyojana (2017)

Boss? Ministry of Road Transport & Highways → NHAI. ₹ ₹ mobilized via Cess/PPP/SPV.
- It aims to upgrade & expand the highways that were built under the previous NHDP.
- It has 7 phases. Phase-1 aims to upgrade 24,800 kms of national highways by 2022.
- Special focus on connecting the coastal areas, economic corridors, and border regions (for easier
troop movement against China-Pak & increase land based export-import with Nepal, Bhutan,
Bangladesh and Myanmar). पड़ोसी देशों के साथ जमीनी आयात �नयार्त तथा सेना को रसद प�ंचाने के �लए
54.5.2 🚕🚕🏷🏷 TRANSPORT→ E-toll collection via FASTag (2017)

📑📑Ref: pillar1A-1: Digital payments
54.5.3 🚕🚕🚅🚅 TRANSPORT→ NoWAIT@Railway Crossing: Setu Bharatam

Boss? Road Ministry. Central Sector Scheme = 100% funded by Union.
- Setu Bharatam aims to make all National Highways free of railway level crossings by by
constructing Railway Over Bridges (ROB)/Railway Under Bridges (RUB).
- Deadline: 2019. 🤩🤩Benefits? 1) Less traffic condition & accidents in highways 2) Less employees
required for manning the railway crossing signals.
54.5.4 🚕🚕🚕🚕 TRANSPORT→ Char Dham Mahamarg Vikas Pariyojana
⇒ Boss? Road Ministry to build/renovate roads to connect four prominent Dhams in Uttarakhand
viz. Gangotri, Yamunotri, Kedarnath and Badrinath.
54.6 ⛽↘: 🧔🧔🧔🧔 TRANSPORT→ ⏬FOSSIL FUEL USE→ E20 BLENDING

On 5th June, 2021 = World Environment day, Modi released the report of Dr Rakesh Sarwal expert
committee on Road Map for ethanol blending in India 2020-2025 with following recommendations:
Mixing 📙📙📙📙ES22 remarked

E10 mixing/blending 10% Ethanol in Petrol. To be finished in 2022.
⇒ mixing/blending 20% Ethanol in Petrol. It reduces carbon monoxide emission
E20 by 30-50% and hydrocarbon by 20%.
⇒ To be finished by 2025.
⇒ Govt is providing funds for R&D for E20 compliant vehicle engines [ऐसे वाहन इं जनों के सं शोधन नवाचार
के �लए सरकार पैसा देगी]
⇒ Tax / Subsidies for purchase of E20 compliant vehicles. [ऐसे वाहन ख़रीदने पर कर-�रयायत�/स��डी दी जाएं गी]
⇒ Presently India is suffering from excess supply of sugarcane and rice -so they may be diverted for
Ethanol making. However rice & sugarcane are water intensive crops so in future, we should
encourage Maize cultivation & non-food crop cultivation to produce ethanol. [अभी तो चावल और ग�े
क� बोहोत �ादा आपू�त/स�ाई/ पैदावार �ई है तो उसी से ईथोनोल बना ल�गे। िक�ु ये दोनों फ़सले ब�त पानी माँगती है, इस�लए
भ�व� म� मकई तथा ग़ैर खाद्य फसलों द्वारा एथनॉल बनाएं गे]
⇒ Ethanol manufacturers maybe given loan interest subsidy for setting up distilleries. [ईथेनोल फे �री
लगाने के �लए टै� स��डी म� मदद]
⇒ Ultimate goal is E100 (i.e. running vehicle completely on ethanol, without petrol) at some future.
🤩🤩Conclusion? Appreciative step that will help saving Rs 30,000 crore of fuel import bill per year,
energy security/self reliance, lower carbon emissions, better air quality, use of damaged/rotten
foodgrains productively, increasing farmers' incomes, employment generation. [सरकार का प्रशं सनीय क़दम
�जससे �धन आयात �बल/ चालू खाता घाटा/वायु प्रदू षण कम होगा। ऊजार् सुर�ा/ ऊजार् आ��नभर्रता / िकसानों क� आमदनी / रोज़गार
बढ़े। �बगड़ा �आ सड़ा �आ अनाज भी �धन बनाने म� काम आएगा।]
54.6.1 ⛽↘: 🧔🧔🧔🧔 TRANSPORT→ ⏬Fossil Fuel Use→ National Hydrogen Mission
- Announced by Budget-2021 and then by PM Modi on 15th August 2021 speech
- Boss? Ministry of New and Renewable Energy
- For manufacturing of hydrogen and fuel cells- for Indian transport sector and industry sector.
- Fertilizer, steel, petrochemicals etc industries may be mandated to use minimum x% of their
energy requirement from green hydrogen.
- Green hydrogen=Produced from renewable energy. Grey hydrogen =Produced from fossil fuel.
Blue hydrogen=Produced from fossil fuel with carbon capture and storage option.
Table 2: Misc. Schemes / Initiatives related to Fossil Fuel
To use ‘less’ petrol & diesel in transport & electricity generators:

Methanol - Methanol can be generated from bio waste. It is the simplest alcohol (CH3OH)
Economy and does not emit particulate matter (PM) / Sulphur or nitrogen pollution.
Fund - 2017: Niti Aayog proposed to setup a Methanol Economy Fund to finance
R&D in this area.
- 2003: Oil Companies to blend upto 10% of ethanol in Petrol, by 2022.
- 2019: "Pradhan Mantri JI-VAN (Jaiv Indhan- Vatavaran Anukool fasal
PM Ji-VAN awashesh Nivaran) Yojana" for providing ₹ ₹ to second generation (2G)
bioethanol projects
- Boss? Petroleum Ministry. 100% Union funded.
54.7 ⛽↘: 🚕🚕🚕🚕 TRANSPORT→ ⏬ FOSSIL FUEL USE→ ELECTRIC VEHICLE
Figure 1: Elon Musk is renowned for his Tesla brand of Electric cars
- (Definition) Electric vehicle (इले��क वाहन) is an automobile that is propelled by the energy stored
in rechargeable batteries. Such vehicles are further classified into
○ 1) Battery Electric Vehicles (BEVs) and
○ 2) Hybrid Electric Vehicles (HEVs) which can run on both battery (using electric motor)
and petrol/diesel (using internal combustion engine).
- (Origin of the problem) In India, transport sector is the second largest contributor to CO2
emissions after the industrial sector. Electric vehicle can help reducing it.
- (Data) Currently, the market share of electric cars is less than 1% in India, compared to
compared to 2% in China and nearly 40% in Norway.
- Why encourage? 1) less import of crude oil import = less CAD 2) India can emerge as a hub for
manufacturing for EVs. This can provide employment opportunities and earning of foreign
exchange through exports. रोजगार व �वदेशी मुद्रा कमाने का साधन बन सकता है
54.7.1 🚕🚕🚕🚕🚕🚕🚕🚕 EVs in India: steps taken to promote them

- 100 % FDI through automatic route is permitted in the automobile sector.
- 2013: National Electric Mobility Mission Plan 2020 (NEMMP) for promoting electric and
hybrid vehicles.
- 2015: Ministry of Heavy Industries & Public Enterprises launched Faster Adoption and
Manufacturing of Electric vehicles (FAME) scheme to fast-track the goals of NEMMP.
- 2019: FAME India Phase II has been launched for period upto 31/3/2024.
o It’ll setup 2700 charging stations in major cities in such manner that
 at least one charging station is available in a grid of 3 km x 3 km in cities,
 At least one charging station is available every 25km on highways.
o It’ll also focus on electrification of public transportation. (सावर्ज�नक प�रवहन का �वद्युतीकरण)
GST on EVs is reduced to 5% from the current rate of 12%.
- 🧳🧳Budget-2019: Additional income tax deduction on loans taken to buy EV.
- Ministry of Road Transport Highways (MoRTH) notified Green Number plate for the use of
Electric Vehicles.
- 💻💻E-AMRIT PORTAL: web portal on electric vehicles (EVs) was launched by India at the
COP26 Summit in Glasgow, UK- a joint initiative between NITI Aayog and the UK Government.
54.7.2 🚕🚕🚕🚕🚕🚕 100% EV Adoption? NITI vs Highway Ministry differ

नी�त आयोग ने कहा 2030 से भारत म� �सफ़र् इले��क वाहन �बक� गे, िकंतु प�रवहन मं त्रालय ने कहा हमने एसा अभी तय निह िकया
- 2017: NITI proposes at least 40% private transportation should be electric by 2030.
- 2019-Jun: NITI proposed only electric vehicles should be sold after 2030. However, automobile
makers have heavily criticized this move. So, ultimately
- 2019-Aug: Union Minister of Road Transport and Highway, Nitin Gadkari cleared the air that 1)
There will be no ban on petrol and diesel vehicles in the country. 2) Govt has not set any
deadline for automakers to switch to electric vehicles. 3) I am the minister, NITI Aayog does not
have the authority to set Electric Vehicle deadline.
Sidenote: GERMAN CARMAKER Volkswagen announced it’ll stop selling fossil fuel / Internal
combustion engines (ICE) cars in Europe by 2035. It’ll sell only electric vehicles.
54.7.3 🚕🚕🚕🚕🚕🚕 📔📔 ES19: EVs in India: Charging is the biggest challenge 😰😰

Norway has the highest share of electric cars in its private transport. Because they provide tax
incentives to EV buyers, waiver of toll fees, free parking, etc. However, the Latest Economic Survey
observed that more than such tax incentives, need of the hour is to develop charging station
infrastructure in India because:
 EV batteries limited driving range. So, charging stations must be available throughout the roads.
Else, people will prefer Internal Combustion Engines (ICE) vehicles like petrol-diesel cars.
 Depending on the technology of charging stations, it can take from 30 minutes to 8 hours to
recharge the battery. So, universal charging standards are required in India.
 Govt should also inform users about the availability of charging stations in their vicinity with the
help of physical science, GPS maps / Apps. (सावर्�त्रक चा�जग मानक)
 India's climate is much hotter than Norway. High temperature =⏬ battery life cycle. We’ve to
encourage R&D accordingly. Otherwise, frequent battery replacement costs will discourage
potential buyers. (बार-बार बैटरी बदलवाने का खचार् ग्राहक को हतो�ािहत कर सकता है.)
 EV batteries’ primary components is Lithium. China has secured a supply of this metals from
Congo, Bolivia, Chile, Australia. India shd also expand to such upstream areas to secure Lithium
54.7.4 🚕🚕🚕🚕E-Vehicle: Lithium → Khanij Bidesh India Ltd (2019)

⇒ 2019: This company setup by NALCO, Hindustan Copper and Mineral Exploration Ltd- to
acquire strategic minerals like Cobalt & Lithium.
⇒ 2020: It bought a Lithium mine in Argentina.
54.7.5 🚕🚕🚕🚕✍ EV-Conclusion:

Electric vehicles represent the next generation in sustainable mobility. India must emphasize on
them to reduce its GHG emissions, and to provide new avenues for employment and export
earnings. Aforementioned initiatives / reforms are important in this regard/need to be addressed on
priority basis. (प्रदू षण म� कमी, रोजगार सृजन, �नयार्त म� बढ़ोतरी)
54.7.6 🚕🚕🚕🚕 TRANSPORT→ 🚕🚕🚕🚕 ⏬ Fossil Fuel Emission → Bharat Stage Norms
⇒ Environment Ministry → Statutory Body: Central Pollution Control Board (CPCB) has
instituted Bharat Stage emission norms (BS) norms . जीवा� �धन उ�जर्न मानक
⇒ Higher number = stricter norms = more expensive for automakers to design such engines.
- 1/4/2017: BS-IV compliant vehicles made compulsory.
BS-IV(4)
- 1/4/2020: SC banned their sale from this date
BS-V(5) Modi decided we’ll directly jump to Stage 6.
Only this type of vehicles can be sold from 1/4/2020 onwards
BS-VI(6)
Stage-VI vehicles will emit less Sulphur and Nitrogen Oxides than their predecessors.
⇒ 1) Many buyers awaiting new BS6 cars’ prices to fall instead of buying BS4 models.
⇒ 2) Even though the BS4 car may be cheaper, it’ll not have good re-sale value in the 2nd-hand
used market after 5-6 years. So buyers are hesitant.
⇒ 1+2 = among reasons for � in automobile sales in 2019 (वाहनों क� �बक्र� म� कमी)
⇒ Separately, Dept of Heavy Industry notified Corporate Average Fuel Efficiency (CAFE) norms
for passenger cars (E.g. taxis, buses), requiring them to ⏬CO2 emission from 2017 onwards.
54.7.7 🚕🚕🚕🚕 ⏬Decarbonizing Transport in India (2020-June)
⇒ 5 year Project by NITI + OECD's International Transport Forum (ITF)
⇒ 13% of India's Co2 emissions come from the transport sector. This project aims to reduce it.
प�रवहन म� काबर्न क� उ�जर्न को कम करना
⇒ �More details prepare from Environment lecture/Current PDFs.
54.7.8 🚕🚕🚕🚕 ⏬Vehicle Scrappage Policy [वाहन प�रमाजर्न नी�त]

💼💼Budget-2021: Automakers to give 5% rebate (discount) on purchase of new car, If the customer
gives his old vehicle for scrapping. Later Road Transport Ministry gave more clarification→
⇒ Official name? “Voluntary Vehicle-Fleet Modernisation Programme”

⇒ Who? Road Transport Ministry by amending the Motor Vehicles act. [सड़क प�रवहन मं त्रालय का
"�ै��क वाहन-बेड़े आधु�नक�करण कायर्क्रम"]
⇒ Commercial vehicle e.g. Taxi, Truck older than 15 years and personal vehicles e.g bike, moped,
car older than 20 years. [15 साल से पुरानी वा�ण��क वाहन तथा 20 साल से पुरानी �नजी वाहनों पर लागू]
⇒ Vintage/Museum Vehicles which older than 50 years = given exemption from such rule.
However, they cannot be used for day-to-day travel. [�ू�जयम/महाराजाओ के जमाने क� पुरानी गाडीओ को छू ट]
⇒ If non-govt Vehicle fails the fitness test after above age → It'll be seized and destroyed. (वरना ज�)
⇒ If the owner voluntarily submits the vehicle to the authorised scrapping centre → gets the old
Vehicle scrapped ka certificate → 4-6% Discount on buying a new vehicle. If he does not want
to buy the new vehicle he may even sale/exchange the discount certificate to another party. [वाहन
मा�लक �े�ा से कबाड़ी म� देगा, तो स�टिफ़के ट �मलेगा �जससे नए वाहन क� ख़रीदारी म� �रयायत/ छू ट/ िड�ाउं ट.]
⇒ He may also get exemption/relaxation in registration fees & State Road Tax. [कर म� भी �रयायत]
⇒ Registered vehicle scrapping centres will be linked to the National Police database to track
vehicle stolen / involved in crime. [कबाड़ी क� द्रों को रा��ीय पु�लस डेटाबेस के साथ जोड़ा जाएगा तािक चोरी �ए, अपराध
म� इ�ेमाल �ए वाहनों पर नज़र.]
⇒ 🤩🤩Benefits? cleaner emissions, fuel efficiency, better road safety (e.g. seat belt airbags),
automobile jobs (35k⏫), GDP (₹10kcr⏫). [प्रदू षण म� कमी. सड़क सुर�ा-रोज़गार सृजन-सकल घरेलू उ�ाद म�
बढ़ोतरी]
⇒ Note: Some of these rules/%/deadlines may get changed in future.
54.7.9 👜👜👜👜Budget-2022 on Road Transport / EV

⇒ ��Budget-2022:- The National Highways network will be expanded by 25,000 km in 2022-
23
⇒ ��Budget-2022:- Electric vehicle battery swapping policy to solve the space shortage. (शहरों
म� जगह क� िक़�त को देखते �ए गाड़ी को चाजर् करने क� जगह इसक� बैटरी ही बदल दी जाए ऐसी नी�त)
⇒ shift to use of public transport in urban areas. (शहरों म� �नजी वाहनो से �ादा सावर्ज�नक प�रवहन मा�म जैसे बस
रेल इ�ािद को बढ़ोतरी द�गे)
⇒ special mobility zones with zero fossil-fuel policy,and EV vehicles. (कु छ इलाकों को जीवा� �धन मु�
घो�षत िकया जाए, यानी वहाँ पर पेट�ोल डीज़ल नहीं के वल इले��क वाहन चल�गे।)
54.7.10 🚗🚗NCAP program for Car Safety 2022
⇒ Transport Ministry’s Bharat New Car Assessment Program (NCAP) for awarding ‘Star Ratings’
to automobiles based upon their performance in crash tests, will be introduced on April 1, 2023.
⇒ Bharat NCAP is applicable on type approved motor vehicles of category M1 (i.e. having 8 seats +
driver seat). This will help customers to opt for safer cars based upon their star-ratings. (वाहन
िकतना सुर��त है उसके बारे म� नए “एनएसीपी” मानदंड)
54.8 🛵🛵⚔🚕🚕⚖ MOTOR VEHICLE AMENDMENT ACT 2019
- Road accidents claim ~1.5 lakh lives every year. So, Union’s Motor Vehicles Act, 1988 was
amended in 2019 with steep penalties such as Drunk-driving fine increased from ₹ 2,000 to ₹
10,000 etc. (ट�ैिफक �नयमों का उ�ं घन करना, मिदरा/शराब पीकर गाड़ी चलाना इन सब पर भारी जुमार्ना)
- Even road contractors & Enginers can be punished if faulty infrastructure results in accidents.
- Concurrent List Entry 35: Mechanically propelled vehicles. So, both union and states can enact
laws but Union’s law will prevail. [समवत� सूची]
- But, some State Govts have notified reduced penalties. Union Highway Minister said, “States can
revise fines if they want. However, peoples’ lives should be saved."
Further, this Motor Vehicle (Amendment) Act 2019 mandates:

1. Aadhar card compulsory for getting a driving licence and vehicle registration.
2. Good Samaritan (नेक आदमी: who helps the injured victim in good faith) will not be harassed in
civil /criminal cases. It’ll not be mandatory for them to disclose identity to police / doctors.
3. Road builder can be penalized if poor quality of road leads to accident.[सड़क ठे केदार को भी सजा]
4. Vehicle company can be penalized for sub-standard components. Govt can order recall of such
faulty vehicles. (घिटया गुणव�ा के वाहनों के �नमार्ण पर कं पनी को जुरमाना)
5. Easier registration process of vehicles modified for Divyang(PH)
6. A Motor Vehicle Accident Fund will provide compulsory insurance cover to all road users in
India for certain types of accidents. (मोटर वाहन दुघर्टना �न�ध)
7. Technical reforms in third party motor-vehicle insurance & claims.
54.8.1 🛵🛵⚔🚕🚕⚖ MOTOR VEHICLE AMENDMENT ACT 2019 → Gig Drivers

⇒ Motor Vehicle (amendment) Act 2019 → guidelines requiring Ola/Uber cab aggregators/gig
�Pillar#1D)
platforms required to provide drivers Health insurance, Term Life Insurance(�
⇒ Norms on surge pricing. Fare linked with WPI (More in �Pillar#4C- Inflation)
⇒ Cab Data must be stored in Indian server. Training, Gender sensitization.
54.9 🚕🚕🔗🔗 TRANSPORT→ BRIDGES & TUNNEL & MISC. (सेतु और सुरंग)
Table 3: if u can remember good, else don't loose sleep.
IRAD Integrated Road Accident Database Project (iRAD) by IIT-Madras and NIC.
IBMS Road Ministry developed an Indian Bridge Management System (IBMS)
webportal to monitor 50,000+ bridges on National Highways of India. Such
database can help 1) repair works 2) mega-sized trucks could be diverted to other
routes to avoid structural damage to small bridges.
Maitri Setu connecting Sabroom (Tripura) with Ramgarh (Bangladesh) over Feni River →
From Ramgarh (Bangladesh) → Chattogram port is hardly 80 kilometres from
Ramgarh = so, will help Northeastern Indian States to export through sea port.
Constructed by India's National Highways & Infra Development Corporation
Limited (NHIDCL). This is also part of HIRA-wala Development= Highways, I-
ways (information highway/communication infra), Railways and Airways.
Bogibeel The longest Rail-cum-Road Bridge of the India (4.94 km).
Bridge Connects Assam’s two districts over Brahmaputra river. 2018: Modi inaugurated.
Dhola- Longest road bridge of India (9.15kms) to connect Dhola in Assam to Sadiya in
Sadiya Arunachal over river Lohit, a tributary of River Brahmaputra. 2017: Modi
Bridge inaugurated.
Dhubri- 19.3 kms road bridge to connect Dhubri (Assam) and Phulbari (Meghalaya) over
Phulbari river Brahmaputra. 2019: Modi approved, will finish by 2026-27, then it’ll become
Bridge longest bridge.
Diffo Bridge built over Diffo River in Arunachal Pradesh.
River India’s longest river ropeway (2kms) to connects north & south banks of the
Ropeway Brahmaputra river in Kachari Ghat, Guwahati, Assam.
SARDP-NE Road Ministry → extra funds for roads in North East. Special Accelerated Road
Development Programme (SARDP-NE)
Atal Tunnel World's longest highway tunnel (9.02 km) from Manali to Lahaul-Spiti valley in
Himachal built by the Border Roads Organisation (BRO, under Defense Ministry).
Sela Tunnel Arunachal Pradesh passing thru Sela Pass. It’ll cut down the distance to China
border through Tawang by 10 km. At a height of over 13,000 feet.
Mavala Mavala = India's Biggest tunnel boring machine used for creating tunnels for
Machine India's first undersea tunnel Road -In Mumbai -To connect South Mumbai with
Worli. "Mavala" word associated with infantry Warriors in Shivaji Army.
��MCQ. Which is NOT correct about the Atal Tunnel? (IES-2021)
a) It is the highest altitude tunnel in the world। सब �व� म� सबसे �ादा उचाई पर ��त सुरंग है
b) It was inaugurated on 03 October 2020 in Rohtang ये तारीख को उद्घाटन �आ था
c) In connects Manali to Lahaul-Spiti valley। इन दो जगह को जोड़ती है
d) It is capable of handling 5000 cars and 2500 trucks per day with maximum speed of 80 kmph
54.10🚕🚕🚕🚕TRANSPORT → TRANSBORDER CONNECTIVITY (सीमापार स�द्धन)
Kartarpur - Kartarpur Sahib is located on the Ravi river bank, Pakistan, about 4.5 km
Sahib from the international border.
Corridor - Here Guru Nanak Sahib spent his 18 years until his death in 1539.
(2019) - 2019: 550th birth anniversary of Guru Nanak Sahib.
- Govt launched Visa-free corridor - Indian citizens and OCI (Overseas
Citizens of India) can travel from India to Pak.
Kaladan - To connect Haldia/Kolkata Port → Sittwe Port (Myanmar) → Kaladan
Multi-Modal River → Road transport to Mizoram.
- in other words, this project aims to provide alternate connectivity between
eastern ports of India to Mizoram via Myanmar.
Sonamura- - Sonamura (Tripura) to Daudkandi (Bangladesh)
Daudkandi - This is a riverine route connecting Tripura’s Gomati river with India’s
(2020-Sept) national waterways through Bangladesh’s Meghna river.
IMT India-Myanmar-Thailand Trilateral Highway
BBIN Bangladesh-Bhutan-India-Nepal (BBIN) Motor Vehicles Agreement (MVA) to
(2015) enable movement of passenger and cargo vehicles across borders. While
Bangladesh, India and Nepal have implemented it but Bhutan’s yet to do
INSTC International North–South Transport Corridor (अंतरार्��ीय उ�र-द��ण प�रवहन ग�लयारा):
(2000) - Members: India, Iran, Russia, Turkey, Azerbaijan, Kazakhstan, Armenia,
Belarus, Tajikistan, Kyrgyzstan, Oman, Ukraine, Syria. Observer member -
Bulgaria. (It helps connecting Afghanistan through Chabahar port although
directly it may not be passing through it.)
- With ship, rail, and road route for faster cargo transport.
Ashgabat - Ashgabat (@Turkmenistan) Agreement For multimodal goods transport
agreement between Central Asia and the Persian Gulf.
(2011) - Signatories: Kazakhstan, Uzbekistan, Turkmenistan, Iran, Oman, Pakistan
(2016), India (2018). This also creates synergy for INTC.
Gwadar - Gwadar Port@Pakistan. So obviously China helped building it.
Chabahar - Chabahar Port@Iran. India helped building it.
- 2016: PM Modi signed agreement with Iran to construct a railway line from
Chabahar port to Zahedan (a region bordering Afghanistan)
- 2020-Jul: Iran dropped India from project citing India’s funding delays.
Separately, Iran is also seeking a 25 years economic and security partnership
pact with China to get billions of funding. So, critics term it as failure of
Indian diplomacy. ईरान चीन क� गोद म� बैठ गया वह भारतीय कू टनी�त क� �वफलता
OBOR China One Belt One Road (OBOR) initiative to connect Asia, Africa and Europe
(2013) via 6 proposed corridors
1. New Eurasia Land Bridge Economic Corridor
2. China-Mongolia-Russia economic corridor
3. China-Central Asia-West Asia Economic Corridor
4. China-Indochina Peninsula Economic Corridor
5. Bangladesh, China, India, Myanmar Economic Corridor (BCIM): 2019-
April: China dropped this BCIM from the OBOR list.
6. China-Pakistan Economic Corridor: It passes through Gilgit-Baltistan - a
territory of India that is illegally occupied by Pakistan.
7. India has not officially joined, YET.
🤧🤧 Corona = Partner nations unable to repay infrastructure loans taken from
China. Now China is thinking of shifting its policy. e.g. loan restructuring
(Changing interest rate/tenure), fresh loans at 0% etc.
B3W US President Joe Biden’s Build Back Better World (B3W) initiative announced in
G7 Summit 2020 for infrastructure development in the aftermath of Corona.
Blue Dot ⇒ Proposed by the USA, Japan and Australia. India is yet to join.
Network ⇒ If an infrastructure project gets ‘Blue Dot’ Certification = Project has high
(2019) standards of quality, transparency, sustainability, and developmental impact.
⇒ It will encourage pvt investors from 1st world nations in such projects.
✍ Conclusion? Good connectivity is a fundamental requirement equitable industrial growth in all
regions. SDG Goal #9 requires India to build resilient infra including all weather roads connecting
all villages. Aforementioned scheme / policy / challenges….(सभी इलाकों म� सं तु�लत ओधो�गक �वकास के �लए
अ�� प�रवहन सु�वधा ज�री। सतत �वकास ल� के अनुसार गांव गांव तक सभी मौसमों म� कायर्रत हो ऐसी सड़कों का �नमार्ण)
55 🚝🚝 TRANSPORT → RAILWAY (अ�ीरथ)
⇒ 1853: First railway from Mumbai to Thane (34kms). Governor General Dalhousie
⇒ 1921: Acworth Committee recommends separation of rail budget from General budget; practice
started from 1924-25, ended in 2017 by PM Modi 🧔🧔.(More in 📑📑Pillar#2D)
⇒ Today, Indian railways 4th largest network (>65,000 route-km) after US, China,Russia.
⇒ 2019-20: Railways carried >8 billion passengers = Largest in the world
Ministry of Railways रेलवे मं त्रालय consists of
Dept N/A
Zonal - 17th zone is Metro Railway Zone = Kolkata
Headquarter - (proposed) 18th Zone is: South Coast Railway - Vishakhapatnam (Andhra)
Subordinate - Railway Recruitment Boards.
Offices - Railway Staff College, Vadodara, Guj
- Indian Railway Engineering Institute, Pune.
Statutory Railway Board, under the Indian Railway Board Act, 1905
CPSE - IRCON (Construction), IRFC (Finance), IRCTC (Catering Tourism),
- Konkan Railway Corporation Ltd.,Mumbai Rail Vikas Corporation,
- RITES (Technical and Economic Services), Rail-Tel (communication), Rail
Vikas Nigam Ltd.
- Dedicated Freight Corridor Corp. of India Ltd.,
- Bharat Wagon and Engineering Co. Ltd., Burn Standard Coy. Ltd,
Braithwaite and Company Ltd.
- (*)Container Corporation of India Ltd. (CONCOR)
55.1.1 🚝🚝 Railways → Concepts
Cross - To keep rail travel cheap for the poor people, Railways keeps the
Subsidization passenger tickets lower than its input cost.
क्रॉस सहा�यक�करण - To compensate this loss, Railways keeps freight (goods transport) prices
higher. This is called “Cross subsidization”
Operating Ratio - It means Railways operating expenses divided by its operating revenues.
सं चालन अनुपात - 2017: 98.4% (means only ₹ 1.6 rupees left out of every ₹ 100 revenue
earned.) → 2018: 96.2%
- Budget-2019: we’ll try to improve it to 95%
55.2 🚝🚝 RAILWAYS → MODERNIZATION (आधु�नक�करण)
- 1) Cross subsidization, poor operating ratio → sanitation, service quality & safety compromised.
Railways ill-equipped to combat robberies, vandalism, stone-pelting.
- 2) While truck transport-more pollution, expensive and slow than trains, yet more than 2/3rd
cargo carried by trucks. 3) Too many rail stoppages to appease the voters → speed slow.
55.3 🚝🚝� RAILWAYS → MODERNIZATION → PERSONNEL & ORGANIZATIONAL REFORMS (का�मक और

सं गठना�क सुधार)
⇒ Earlier, Sam Pitroda Committee (2012) and Bibek Debroy Committee (2015) and many others
had suggested various organizational reforms for the Railways.
⇒ Modi Cabinet had constituted Alternate Mechanism (AM / वैक��क िक्रया�व�ध: a group of cabinet
ministers to decide on a particular subject).
⇒ 2019-Dec: following was approved (1) Unification of Services (2) Restructuring of Railway Board
55.3.1 🚝🚝� Railways Personnel Reforms → Unification of Services (सेवाओं का एक�करण)

BEFORE AFTER
Technical services ⇒ These eight services will be
recruited through Indian Engineering Service (IES) exam merged into Indian Railways
of UPSC viz. Management Service (IRMS):
भारतीय रेलवे प्रबं धन सेवा).
⇒ 1) Indian Railway Service of Engineers 2) Signal
⇒ �Benefit? Improved
Engineers 3) Mechanical Engineers 4) Electrical
coordination and
Engineers 5) Stores Services
efficiency. (बेहतर सम�य और द�ता)
Non-Technical services (गैर तकनीक� सेवाएं )
recruited via Civil Services Exam (CSE) of UPSC viz.
6. Indian Railway Traffic Service (IRTS)
7. Indian Railway Accounts Service (IRAS)
8. Indian Railway Personnel Service (IRPS)
This resulted in fragmented manpower planning, lack of
coordination with each other, departmental rivalries
Indian Railway Medical Service (IRMS), recruited Renamed as Indian Railway Health
through Combined Medical Services Exam of UPSC Service (IRHS: भारतीय रेलवे �ा� सेवा ).
👿👿✋ Unification of Services → Controversy? (सेवाओं के एक�करण से �ववाद)
⇒ Officers fear their seniority / promotion may be affected with merger.
⇒ Electrical / mechanical engineering works can’t be manned by non-Engineers because they don’t
have subject knowledge. Therefore merger into a single service is irrational (तकर् हीन).
⇒ Bibek Debroy Committee (2015) suggested merger of these services into two services 1) technical
and 2) non-technical. That’d have been more rational decision.
55.3.2 🚝🚝🚝 Railways Organizational Reforms → Restructuring of Railway Board
BEFORE AFTER (रेलवे बोडर् का पुनगर्ठन)
Railway Board, the apex decision Similar to a Company board.
making body of Railways had ⇒ Chairman of the Railway board will be the Chief
⇒ One Chairman [अ��] Executive Officer (CEO: मु� कायर्कारी अ�धकारी)
⇒ Members selected from various ⇒ 4 functional Members (कायर्परक सद�) i.e. officers from
Railway departments. [अलग अलग Railways selected on merit cum seniority basis.
रेल �वभागों से सद�ों को चुना जाता था] ⇒ Some independent members with knowledge &
experience in industry, finance, economics and
management fields
55.4 🚝🚝 🧔🧔:👲👲 RAILWAYS MODERNIZATION → PRIVATE TRAIN OPERATORS
Table 4: benefits of allowing private trains in India?

🚝🚝 🧔🧔 BEFORE 👲👲 AFTER: allowing private train operators
⇒ Indian Railways itself responsible for On selected routes (NOT all routes):
running the trains, collecting ticket-fees, ⇒ Private train operators (�नजी ट�ेन सं चालक) will
delivering passengers and goods. buy their design/buy their own private trains
⇒ Affluent passengers prefer Airlines over from anywhere in the world. They’ll run it
Railways because they’re faster, cleaner & on railtracks with their own staff, & charge
safer. धनी / पैसो से सं प� यात्री हवाई यात्रा पसं द करते ह� market-linked fares. (बाजार आधा�रत िकराए.)
�ोंिक वह �ादा तेज साफ-सुथरी और सुर��त होती है ⇒ Govt (Indian Railways) provide timetable,
track and signaling infrastructure to them.
⇒ Private train operator will share % of its
revenue with Govt. (�बक्र� म� िह�ा)
⇒ Lately, Govt itself started ‘premium trains’ Passengers benefit from world-class services e.g.
such as Duronto, Tejas, Vande Bharat, ⇒ No nuisance of hawkers, beggars, unhygienic
Uday, Hum-Safar etc. toilets. फे रीवाले, �भखारी और गं दे शौचालय नहीं
⇒ But there is a long waitlist for tickets. ⇒ Lady train hostesses to deliver food &
Which proves people are willing to pay for amenities. (प�रचा�रका)
good service, but Govt alone doesn’t have ⇒ Such trains will stop at very few stations, will
enough funds to launch many such have min.60 kmph speed → faster & more
‘premium trains’. pleasant journey. (तेज व् सुखद यात्रा का अनुभव)
⇒ 2006: Ministry of Railways allowed private operators to run container trains on the Indian
Railways (IR) network. [नीजी �खलािड़यों क� मालवाहक गािड़यों को तो ये अनुम�त काफ़� समय पहले से दी गई थी]
⇒ Railways constituted Amitabh Kant Panel for entry of private operators in passenger trains.
⇒ 2019-Oct: FIRST ‘Private’ train: Lucknow-Delhi Tejas Express launched. It’s operated by
IRCTC. Although, IRCTC is a subsidiary co of Ministry of Railways. So, technically, it’s not ‘fully
private train’ but if this experiment successful, then actual private operators may be allowed.
⇒ 2020-Jan: Indian Railways has invited private companies to apply for running 150 passenger
trains on 100 routes. Draft proposal is as following:
Table 5: Draft Public Private Partnership (PPP) model for private railways
Private player will Design, Build, Finance and Operate (DBFO: िडजाइन,
Model �नमार्ण, �व� और सं चालन) his private trains on the routes given to him. Train
must have minimum 16 coaches.
Concession Period 35 Years. After that, the govt may renew/ Govt itself may start operating
(�रयायत क� अव�ध): it / select another party...depending on the mutually agreed conditions
private train operator will share a % of his revenue with the Government.
Fees
(�नजी सं चालक ने अपनी आमद म� से कु छ प्र�तशत सरकार को देना होगा)
55.4.1 (🚝🚝 🧔🧔:👲👲) 👿👿✋ Challenges in allowing private trains (चुनौ�तयां)
1. Apprehension among railway employees about job-loss, if Govt �number of Govt trains.
2. Coordination / ego-tussle (सम�य / अहं-तु��) between private crew running the train and railways
Govt officials operating the track & signal system.
3. Fixing responsibility / insurance claims during train accidents. [नुक़सान/बीमा-दावों क� �ज़�ेदारी]
4. To keep their operational costs low, Private airlines not doing regular service-maintenance of
aircrafts- which endangers passenger security (यात्री सुऱ�ा). Similar danger in private railways.
5. In the aviation sector, Jet Airways et al engaged in Predatory Pricing (= selling tickets at deep
discount) to kill rival companies. Eventually all suffering from losses. Similar crisis in mobile
service providers (Jio vs others). So, fair competition & price regulatory mechanism required.
(सरकार ने �� प्र�तयो�गता एवं क�मत �नयं त्रण सु�न��त करना होगा)
6. If private player imports railway from foreign country, its repair parts / mechanic may not be
easily available in India…. <We can find 500 such faults but not imp.>
55.4.2 (🚝🚝 🧔🧔:👲👲) ✍Private Trains → Conclusion- welcome this reform

⇒ Entry of private train operators will bring greater investment, innovation, employment and
pleasant travelling experience for the passengers.
⇒ So, the Govt has taken an appreciative step, provided the aforementioned challenges are kept in
check (ये एक सराहनीय कदम है यिद, उपरो� चुनौ�तयों को काबू/�नयं त्रण म� रखा जाए).
55.5 🚝🚝 RAILWAYS → MODERNIZATION ATTEMPTS BEFORE 2019

Project uni-gauge - Track gauge is the spacing of the rails on a railway track. Broad [1,676
Started in 90s mm] > Meter [1,000 mm] > Narrow [762 mm, 610mm].
- Project Unigauge to convert selected routes into broad gauge.
- Presently, in terms of track length: Broad > Meter > Narrow.
Project Saksham 2018: Skill / Training program for railway employees. Phase-II in 2019.
Mission Avataran (2016) To transform Indian Railways’ speed, safety, profitability
Yatri Mitra Sewa wheelchair cum porter services for PH passengers (2016)
Rail Drishti Portal Webportal for customer complaints & train information
55.5.1 🚝🚝 🔖🔖 Railways Fares (िकराया)→ Rail Development Authority
⇒ 2017: Modi Govt setup “Rail Development Authority (रेल �वकास प्रा�धकरण)” - non-Constitutional,
non-statutory body via cabinet resolution. It’s headed by a chairman + 3 members; 5 years term.
⇒ Suggest Tariff (fares) determination, efficiency and performance standards, customer
satisfaction, technological upgrades..
⇒ Although it can only ‘suggest’ (यह सं �ा के वल सुझाव दे सकती है) because under Railway Act, only the
Railway Board can decide on the fares of rail services.
55.5.2 🚝🚝 🔖🔖 Railways Fares→ Concepts

Tatkal Tickets for booking the tickets in hurry / emergency.
Flexi-Fare / ⇒ 2016: Govt introduced this system on premium trains such as Rajdhani,
Dynamic pricing Shatabdi and Duronto trains.
⇒ Here, base fare (मूल िकराया) will keep increasing by x% with every 10% of
seats booked. (या�न क� अगर देरी से िटकट बुक िकया तो �ादा िकराया लगेगा).
⇒ Consequently, sometimes train tickets became more expensive than
airplane tickets! 2018: Govt gradually stopping this system
55.5.3 🚝🚝 Transport → Rail-Modernization → Green Initiatives by Railways
⇒ Windmill/ solar panels at each rail station.
⇒ Green curtain: wall around railway station, chowkidar to combat defecation and littering.
⇒ Biotoilets with help DRDO: They contain anaerobic microbial bacteria to decompose and
convert human excreta into water and gasses.
⇒ “Green corridors in Railways” = on these routes all trains have bio-toilets to avoid direct
discharge of human excreta on Railway tracks/station premises.
⇒ 5% blending of biodiesel.
55.5.4 🚝🚝 Transport → Rail-Modernization → Electric Traction

⇒ It means replacing diesel / coal powered engines with electric engines because they’re more
environmental friendly and energy efficient. (डीजल इं जनों को �बजली वाले इं जनों से बदलना)
⇒ Earlier, Modi & NITI Member Bibek Debroy raised doubts from strategic & economic angles:
- it’ll cost ~₹1 lakh crores, while our existing investment in diesel engines will go to waste
- Difficult to accomplish in J&K & NE due to topography.
- EU/China/Russia use electric trains for passengers and diesel for cargo transport.
⇒ 2018 Still, forgetting above ANTI-arguments, Committee on Economic Affairs (CCEA)
approved 100% Electric Traction by 31/3/2022.
55.5.5 🚝🚝 National Rail Plan for India – 2030 [भारत के �लए रा��ीय रेल योजना - 2030]
⇒ freight transport- � Railways share by 45% and � avg speed by 50kmph. (माल वाहन ने रेलवे क�
िह�ेदारी और रेलवे क� ग�त को बढ़ाना)
⇒ 100% electrification of engines (रेल इं जनों को डीज़ल क� जगह �वद्युत/ �बजली से चलाना)
⇒ � speed to 160 kmph on Delhi-Howrah and Delhi-Mumbai routes
⇒ Identify new Dedicated Freight Corridors and High Speed Rail Corridors.
⇒ Develop more railway stations, improve track safety etc (रेल अड्डे और सुर�ा)
55.5.6 🚝🚝 Transport → Rail-Modernization → Safety [रेल सुर�ा]

- 182 toll-free Helpline number
- Rashtriya Rail Sanraksha Kosh (2017) created to finance the projects related to railway safety
e.g.Train Collision Avoidance System.
- 💼💼Int-Budget-2019: “We’ve removed all Unmanned railway crossing in January 2019.”
- 💼💼Budget-2020: Rate of occurrence of rail accidents has steadily ⏬ from 2016 to 2019.
- RPGRAMs (Railway Passenger Grievance Redressal and Management System) web-portal and
Rail Madad App have been launched
- Rail Drishti Web dashboard: provides statistical info related to railway operations.
- NINA-UAV [unmanned aerial vehicles] drones- for surveillance and safety of railway track
railway stations etc. [रेल सुर�ा के �लए ड�ोन द्वारा सव��ण]
55.5.7 🚝🚝 Transport → Rail Safety → Railways Protection Force (RPF) initiatives-2019

⇒ Commando for Railway Security (CORAS) battalion created by Railway Protection Force (RPF),
they’ll be responsible for fighting terrorism and naxalism in Railways. (Sidenote: CRPF’s
COBRA battalion is a separate entity to fight naxals)
⇒ Operation Thirst: RPF to combat selling of unauthorised Packaged Drinking Water in railways.
⇒ MeriSaheli: women security initiative in trains. [मिहला सुर�ा के �लए उठाया गया मेरी सहेली कायर्क्रम]
55.5.8 🚝🚝 Transport → Rail-Types (अ��रथो के प्रकार)
Table 6: ✋✋✋✋Table has very little utility in the UPSC, self-study for other exams:
Red ribbon to spread AIDS awareness
Rajdhani Connects Delhi with state capitals. Started in 1969
Shatabdi Connects Metro cities with other cities. called “Shatabdi” because started in
1988 Nehru’s centenary.
Garib-rath AC trains for poor people- at cheaper cost. But seat space narrow, no
2006 (Lalu) food/bedding given. So it's called ‘No frills’.
Duranto Express Duranto means ‘restless’ in Bengali. Long distance non-stop from source to
2009 (Mamta) destination. Speed as fast as Rajdhani and Shatabdi. Although now stops at
more stations for voters appeasement so original objective is defeated.
Mumbai Monorail Monorail runs on a single rail. rail may be located either above or beneath
2014 the railway cars. 2014: Started in Mumbai by Maharashtra State Govt.
Mumbai-A’bad - Length: ~520 km; proposed speed ~320 kmph.
bullet train 2014 - Duration: 3-4 hours (currently 8 hours)
- Project funded by JICA (Japanese International Cooperation Agency).
- 😰😰Challenges? Farmers protest against the land acquisition, Ticket
price will have to be kept very high ELSE difficult to recover the cost.
🤩🤩Benefit? Even if the cost is not recovered, experience gained → later
-
try ‘Make in india’ & export bullet trains to third world.
- (Full) Budget-2019: Once above project is finished in 2023, we’ll launch
second bullet train from Delhi to Amritsar via Chandigarh. The project
will be funded by the Govt and not by any public private partnership.
AntyodayaExpress These trains have only general coaches and they’re unreserved. (2016)
Humsafar Express Attempted to give a taste of 'luxury' to the common man. Fully AC coaches,
2016 more comfortable seats, LCD TV, laptop-mobile charging, coffee/tea/soup
vending machine, toilet's flush button has automatic perfume releaser.
Tejas Express’16 Similar to above. Their new version even has Small TV behind every chair.
Gatimaan ‘16 Semi-high speed train, maximum speed 160 kmph, runs on electricity.
UDAY Utkrisht Double-Decker Air-conditioned Yatri (UDAY Express) connects
2018 notable cities of Southern India. features similar to above
Vande Bharat ⇒ Same as above, made by Integral Coach Factory in Chennai. Technical
Express 2019 name ‘Train 18’. First train on Delhi -Kanpur-Allahabad-Varanasi.
⇒ Amrit Mahotsav of independence for 75 weeks started from 12th March
2021 and will continue till 15th August, 2023. So, During these 75 weeks
of the Amrit Mahotsav of Independence, 75 Vande Bharat trains will be
launched to connect every corner of the country.
⇒ Sidenote: Amrit Kaal =for the NEXT 25 years until India celebrates 100
years of its independence.
🚝🚝Shramik 2020-May: During corona crisis to bring migrants within Indian states back
Special Trains to their home states in India. (भारत मे ही ��त प्रवासी मजदू र)
Bharat Gaurav Pvt tour operators can lease Govt’s trains on tour circuit. (भारत गौरव योजना के
Scheme (2021) अंतगर्त �नजी �ेत्र के ऑपरेटर भी िकराये पर सरकारी ट�ेन लेकर पयर्टन �लों पर उसे चलाए)
Future of Rail 2019-January: This report was launched International Energy Agency (IEA,
report an autonomous body based in Paris).
55.5.9 🚝🚝 Transport → Dedicated Freight Corridor (DFC)
⇒ 2006: Started to construct 2800kms separate railway line exclusively for the cargo trains
⇒ Eastern Arm:- Ludhiana (Punjab) to Haryana, UP, Bihar, Jharkhand to Dankuni (WB)
⇒ Western Arm:- Dadri (UP) to Haryana, Rajasthan, Gujarat to Jawaharlal Nehru Port @Mumbai.
⇒ �Benefits? Faster cargo movement (60km/h instead of present 20km/h)
55.5.10 🚝🚝 Transport → Metro Rail

Metro Rail is a Mass Rapid Transport System (MRTS: सामूिहक द्रत� प�रवहन प्रणाली) for daily commuters.
It runs on electricity & usually confined within a given city.
- At present, India has operational metro rails at Delhi, Mumbai, Kolkata, Chennai etc.
- City Roads = very congested, slow, accident prone, air pollution. While metro rails provide relief
in daily commuting. [मेट�ो रेल सड़कों पर वाहनो क� भीड़ को कम करेगी, वायु प्रदू षण कम करेगी]
- 😰😰However, metro trains are not panacea for India because they need more capital and
technology than ordinary public bus/local railways. They require dedicated tracks, underground
tunnels and bridges → problems in land acquisition and remodelling of existing urban road
infrastructure. (�ादा पूंजी और तकनीक� प्रौद्यो�गक�, अलग से जमीन सं पादन, सड़कों का पुनगर्ठन करना पड़ता है)
- 😰😰Since metro rails cater urban middle class commuters, so, fares can’t be raised beyond a point
for faster recovery. So it takes a very long time to recover investment. [�नवेश िकया पैसा मुनाफ़े के साथ
�नकालने म� काफ़� व� लग जाता है, �ोंिक म�म वग�य प�रवार पर सरकार रेल िकराया ब�त �ादा बढ़ा नहीं सकती]
55.5.11 🚝🚝 Transport → Metro Rail → Metro Rail Policy 2017

Boss? Ministry of Housing and Urban Affairs (MoHUA).
- Considering aforementioned challenges, Metro train should be launched only after cost: benefit
compared to launching more buses and ordinary trains.
- State Govt will be responsible for Land acquisition(भू�म अ�धग्रहण).
- Proposed Investment models for Metro rails: →
- 50:50 joint venture(सं यु� उद्यम/साहस) between Union & State OR
- Public Private Partnership (लोक/सावर्ज�नक �नजी भागीदारी) between State & private company;
while Union gives them grants through Viability Gap Fund (�वहायर्ता अवकाश �नधी).
- 💼💼 Budget-2019 More metro railway initiatives via PPP. Because, modernizing Indian Railway
requires total ₹ 50 lakh crore from 2019- 2030, but in annual budgets we can barely allot ~₹1.6
lakh crore per year, so public partnership necessary. [सरकार के पास पैसा कम है इस�लए PPP द्वारा बनाएं गे]
55.5.12 🚝🚝 Transport → Metrolite, MetroNEO = Cheaper Metros for smaller cities (2021)
💼💼Budget-2021 announced Metro Lite and Metro Neo for smaller cities like Nashik, Thane,
Gorakhpur, Jammu, Srinagar and Coimbatore. They are cheaper than normal Metro rail.
Type of Metro Cost to build 1 kilometre of track & train
Normal / conventional metro rail 222 cr
Metro Lite = looks like a tramway 140 cr
Metro Neo= looks like an electric trolleybus 71 cr
55.5.13 🚝🚝 Transport → 👜👜👜👜Budget-2022 on Railways & goods/cargo transport

⇒ 400 Vande Bharat Trains will be launched.
⇒ Kavach-the indigenous safety technology to be launched (रेलवे सुर�ा के �लए कवच नामक� �देशी
टे�ोलोजी)
⇒ New services for small farmers, & small enterprises. (छोटे िकसान छोटे उद्योगों के �लए नई नई सेवाएँ )
⇒ ‘One Station-One Product’ concept to help local businesses.
⇒ integration of Postal and Rail networks (रेलवे और डाक नेटवकर् का एक�करण- माल/रसद प�रवहन के लीए।)
⇒ 100 PM GatiShakti Cargo Terminals for multimodal logistics (एका�धक प�रवहन मा�म - रेलवे जल
सड़क का एक�कृ त माल प�रवहन ट�मनल।)
⇒ We’ll release ‘OPEN SOURCE’ transport related softwares and e-platforms
⇒ (1) Unified Logistics Interface Platform (ULIP)
⇒ (2) Open-source mobility stack for travel of passengers
(How? NOT important. Just visualise it can help developing apps like UBER, MakemyTrip etc.
(इं सानों और व�ुओ ं के प�रवहन के �लए नए नए िक़� के वेबपोटर्ल और ऐप बनाने क� टे�ोलॉजी मु� बाँटी जाए)
55.5.14 🚝🚝 Transport → Hyperloop using vacuum tube

⇒ Space-X & Tesla founder Elon Musk proposed this 5th mode of transport after boat, rail, plane
and automobile. Basically a vacuum / pneumatic tube system to transport passengers using
aluminium pod cars.
⇒ Maharashtra Govt was talking with international developers to build a Hyperloop between
Mumbai and Pune to cover 150 kms in 25 minutes.
⇒ Avishkar Hyperloop = IIT-Madras research team on Hyperloop
55.6 ✈ TRANSPORT → AVIATION (उड्डयन / हवाई यात्रा)
55.6.1 [Yearbook] Ministry of Civil Aviation नागर �वमानन / नाग�रक उड्डयन मं त्रालय
Dept N/A [मं त्रालय के नीचे कोई �वभाग नहीं है]
Attached ⇒ Directorate General of Civil Aviation (DGCA: महा �नद�शक): registers civil
aircrafts, gives license to pilots, supervises gliding clubs, implements
Chicago Convention on International Civil Aviation.
⇒ e-GCA online platform of Directorate General of Civil Aviation (DGCA)
for pilot licensing etc.
Statutory − Airports Authority of India (AAI, Act 1994: भारतीय �वमानप�न प्रा�धकरण):
Bodies Statutory body responsible for creating, upgrading, maintaining airports &
वैधा�नक सं �ाएं runaways in India. It operates 130+ airports in India- some directly, some
via PPP basis e.g. GMR group → Delhi and Mumbai airports, Adani
group → A’bad, Lucknow etc.
− Airports Economic Regulatory Authority (Act 2008): Statutory regulator
setup with powers regulate fees/tariffs charged at airports. 2019: New bill to
increase its powers through some technical reforms.
− Rajiv Gandhi National Aviation University
− Commission of Railway Safety (CRS) is under Administrative control of
Aviation Ministry.
CPSE − (1) Air India (Govt sold to Tata Ref: Pillar2D).
सरकारी कं प�नयां − (2) Pawan Hans (Helicopter- Govt wants to privatize it as well)
− (3) Hotel Corporation of India Ltd.
Autonomous (1) Bureau of Civil Aviation Security,
(2) Indira Gandhi Rashtriya Uran Akademi
Civil Aviation Policy 2016: Highlights →
1. More airports and flights for North East & small towns to improve regional connectivity.
2. Making the air travel more affordable for middle class [म�म वगर् के �लए हवाई यात्रा स�ी करवाएँ गे]
3. Improving Airplanes’ Maintenance, Repair and Overhaul (MRO) operations.
55.6.2 ✈ Transport → Cheap flights to Small Towns → UDAN
- Boss? Civil Aviation ministry (2017).

- Earlier, Airlines avoided small towns, fearing that not enough passengers will come.
- So, under Ude Desk ka Aam Naagrik- Regional Connectivity Scheme (RCS: �ेत्रीय
सं योजकता/कने��वटी योजना), Govt. fixed ₹ 2,500 airfare per seat for one-hour travel on selected
regional / small town routes.
- Airlines fly @this rate, small town passengers will come because it’s affordable, and if airline
making any losses on such route → covered by Union’s Viability Gap Funding (VGF)+ States
also contribute 10-20% money depending on whether NE or Non-NE.
- Govt arranges VGF money by charging ~₹ 5000 levy per flight on airlines operating at major
cities (E.g. Mumbai Bengaluru, A’bad-Delhi).
- 2018: “International UDAN” launched to connect India’s smaller cities directly to some key
foreign destinations in the neighbourhood. (पड़ोसी देशों के साथ भी स�ी हवाई यात्रा)
55.6.3 ✈ Transport → Udan 3.0 (2018)

Civil Aviation Ministry invited the airline operators to bid for new regional routes connecting
- Additional tourist cities & North East cities.
- Seaplanes using Water Aerodromes (e.g. Statue of Unity-Sardar Sarovar Dam @Gujarat,
Sabarmati RiverFront A’bad@Gujarat, Brahmaputra Riverfront Guawahati@Assam etc.)
55.6.4 ✈ Transport → Build More Airports → NABH Nirman

- Budget 2018 announced ‘NextGen Airports for BHarat’ (= NABH) Nirman
- It aims to build 100 new airports in 15 years at the cost of ₹ 4 lakh crore (mostly via PPP)
- It also aims to expand / upgrade existing airports.
Related Topic: No Frills airports (�बना तामझाम वाले स�े हवाई-अड्डे) → AAI develops No Frills airports at
small towns / North East with only basic safety and security features. No fancy lounges with
airconditoners, no aerobridges, no conveyor belts for luggage. It’s just a single storey building
without any posh facility → low operational costs.
for more about the public private partnership (PPP) in Airport → Refer Pillar5C: PPP.
55.6.5 ✈😰😰 Transport → Challenges to aviation sector (चुनौ�तयां)

- 😰😰ATF-Taxes: Airlines spend ~50% of the revenues on Aviation Turbine Fuel (ATF). India’s
ATF excise & VAT are among the highest in world = profitability hurt :-( (�धन पर ब�त टे� लगता है)
- 😰😰Predatory Pricing: deliberately selling product below the cost price, to eliminate rival
companies. AirDeccan, Spicejet etc. accused of this. It’s bad for economy because in long term,
either the firm will collapse or it’ll establish monopoly by eliminating rivals. (प्र�त�ध� कं प�नयों का धं धा
ठ� करवाने वा�े कु छ �वमान क��नयां जानबूझकर ब�त स�े म� िटकट बेचती थी, �जससे उसका ख़ुद का धं धा चौपट हो गया।)
- 😰😰Passenger Safety Compromised: Due to higher operating costs, Indian Airlines not doing the
regular service & maintenance of the aircraft. [मुनाफ़े क� लालच म� यात्री सुर�ा को नज़रअंदाज़ िकया जाता है]
- 😰😰Govt. owned Air India is making losses → 2021: Sold to Tata Sons ltd @approx ₹18,000 cr.
[घाटे म� चल रही एयर इं िडया को सरकार ने टाटा को बेचा]
- 😰😰Jet-Airways, a pvt sector airline, was shut down (in 2019) due to heavy losses.
55.6.6 ✈Airfare price ceiling (हवाई यात्रा दरों म� �नयं त्रण)

⇒ 2020-May: Civil Aviation ministry announced technical reforms e.g. The minimum airfare for
Delhi to Mumbai is ₹3,500 and the maximum is ₹10,000. etc. �But poor cost benefit for exam.
⇒ This may help in
o Consumer protection during Corona travel. ग्राहक सुर�ा.
o solving the 'predatory pricing' problem among aviation companies. ("जानबूझकर �यं क�
नुकसानी म� स�े िटकट बेचना तािक दु�न कं पनी का धं धा बं द हो जाए".- उस पर रोक.)
55.6.7 ✈ Transport → Drone Regulation (ड�ोन �व�नयमन) & GARUD Portal

- Boss? Civil Aviation ministry designed the rules effective from 31/12/2018.
- India’s airspace classified into (भारतीय वायु �ेत्र को तीन िह�ों म� �वभा�जत िकया गया है)
- Red Zone (flying not permitted),
- Yellow Zone (controlled airspace),
- Green Zone (automatic permission).
- Drone-User will have to do one-time-registration with Digital Sky Platform app (पं जीकरण)
- Then for every flight, Drone user must ask permission from mobile app. Based on the zone &
GPS location its system will automatically permit / deny.
- Any drone without a digital permit will not be able to takeoff. Thus, it has “no permission, no
takeoff” (NPNT) mechanism.
- 🤧🤧 😷😷 2020: Garud Portal: DGCA to give fastrack permission to Govt agencies for COVID-19
related drone operations.
- ��ES22: Ministry of Civil Aviation has � the drone registration fees, � the numbers
documents for registration, � the penalties. So we should explore similar process simplification
in other sectors as well. (आ�थक सव��ण म� पाया िक सरकार ने ड�ोन पं जीकरण म� लगने वाले द�ावेजों और फ़�स क� मात्रा म�
कटौती क� है. इसी प्रकार का प्रिक्रया-सरलीकरण अ� �ेत्रों म� भी करना चािहए.)
55.6.8 ✈ Transport → Drones in 👜👜👜👜Budget-2022

⇒ ‘Kisan Drones’ for digitization of land records, crop assessment, spraying of insecticides, and
fertilizers. (भू�म सव��ण और खेतीबाड़ी के �लए िकसान-ड�ोन)
⇒ ‘Drone Shakti’: Drone-As-A-Service (DrAAS). HOW? Not disclosed, but probably related to
‘renting’ drones by paying daily/weekly/monthly fees. (ड�ोन एक सेवा के �प म�/ िकराए पे लेने के �लए )
⇒ Drone training in ITIs (industrial training institutes) (ड�ोन-उड़ान, ड�ोन-मर�त के �लए आईटीआई म�
�श�ा/तालीम)
⇒ �Drone import banned except for R&D & defence. This will help domestic / swadeshi drone
industry. ( ड�ोन का आयात �आ प्र�तबं �धत- �सवाय के सं शोधन नवाचार या र�ा के �लए �वदेशी ड�ोन ख़रीदना हो। तािक �देशी
उद्योग को प्रो�ाहन �मले)
⇒ Drone sector identified as a sunrise sector will be given various benefits in taxation subsidies.
(सूय�दय �ेत्र के �प म� कराधान और स��डी म� �रयायत�/ लाभ/ छू ट दी जाएगी।)
55.6.9 ✈ Transport → Drone Challenges

- 2019: Iran-backed Yemenis Houthi rebels used drone to destroy oil refineries in Abqaiq, Saudi.
2022: they drone-attacked oil company in UAE’s Abu Dhabi. (आतं क� ग�त�व�धयों म� �आ इ�ेमाल)
- 2019: USA used drone to kill Iran’s military General Qassem Soleimani.
- So, we need to have strict supervision to prevent misuse of drones. (ग़ैर क़ानूनी ग�त�व�धयों म� ड�ोन का
इ�ेमाल न हो इस वा�े स� �नगरानी ज़�री)
Figure 2: Akshay may need ‘Airlift’, but ‘Bhai’ doesn’t need Vande Bharat Mission. Capable of 1) becoming Captain of a ship 2)
Rescuing kidnapped nurses 3) surviving oil-mine blast- all in Middle East
55.7 🤧🤧 ⛴✈ VANDE BHARAT MISSION 2020- INDIANS KI WATAN-WAAPSI

⇒ Boss? Ministry of Civil Aviation is coordinating with Ministry of External Affairs and state
Govts ( नाग�रक उड्डयन मं त्रालय, �वदेश मं त्रालय)
⇒ for bringing Indians back to India, who were stuck overseas during Corona.
⇒ Over 30 lakh Indians returned by 2020-Dec= India’s largest repatriation (प्र�ावतर्न/ वतन वापसी)
operation since the 1990’s Gulf/Kuwait war. [But UPSC doesn’t usually engage in superlatives-
KBC-GK: biggest/largest/longest...so not really imp whether it’s bigger than Gulf rescue.]
⇒ Separately, to provide skill/employment for these returned-Indians, Govt also launched
SWADES (Skilled Workers Arrival Database for Employment Support) but all skill schemes
under �Pillar6: HRD.
55.7.1 🤧🤧 ⛴✈Airbubble Agreement

“Air bubble/Transport Bubbles" are temporary arrangements between two countries to restart
passenger airplanes when regular international flights are suspended by COVID-19 pandemic.
INDIA HAS more than 25 such pacts e.g. with SriLanka [कोरोना के दौरान हवाई यात्रा समझौता]
55.8 🗽🗽TOURISM & MUSEUM INFRASTRUCTURE (प्रवासन व सं ग्रहालय)

- World Economic Forum’s Travel & Tourism Competitive Index: India’s rank improved from
#64(2014) → #34(2019) → 2020 yet to be announced
- In India, tourism sector is a major contributor to GDP growth, foreign exchange earnings and
employment. However, Covid-19 pandemic had a debilitating impact on world tourism. (आम
िदनों म� प्रवासन उद्योग से आ�थक वृ�द्ध, �वदेशी मुद्रा क� कमाई, तथा रोज़गार म� बढ़ोतरी �मलती है. िक�ु कोरोना महामारी के चलते-
पूरे �व� और भारत म� प्रवासन उद्योग को भुगतना पड़ा भारी नुक़सान।)
- Medical Tourism: Ref Pillar4B – Make in India. [�चिक�ा प्रवासन पर �ान िदया जाए]
- MICE Tourism: Meetings, incentives, conferences & exhibitions’ Tourism. �Benefit? (1) Biz
investment / Import export deals (2) Soft Diplomacy & Development loans: e.g. African
Development Bank (AfDB)'s annual summit held in Mahatma Mandir, Guj (2017). (3)
People2People connect (4) Income from event management. [समारोह प्रवासन]
55.8.1 �🗽🗽 [Yearbook] Ministry of Tourism

Dept ⇒ N/A
Attached,Subordinate, ⇒ N/A or not MCQ worthy (या तो �वद्यमान ही नहीं है या परी�ा के �लए काम क� नहीं)
Statutory
Autonomous ⇒ Indian Institute of Tourism and Travel Management
⇒ National Institute of Watersports
⇒ National Council for Hotel Management & Catering Technology
⇒ Institutes of Hotel Management
CPSE ⇒ (*) India Tourism Development Corporation
E-governance ⇒ National Integrated Database of Hospitality Industry (NIDHI) to give a
clear picture of the geographical spread of the Hospitality Sector
(*) means approved for strategic disinvestment (=privatization) in 2019.
55.8.2 🏬🏬 Tourism→ PRASAD & HRIDAY Mission
Both are Central Sector Schemes: 100% funded by Union. Both aim to improve the city
infrastructure & amenities with special focus on improving the tourism.
PRASAD (2014-15) HRIDAY (2014-15)
Pilgrimage Rejuvenation & National Heritage City Development and Augmentation Yojana
Spiritual Augmentation Drive. [धरोहर वाले शहेरो का �वकास]
Ministry of Tourism, initially Ministry of Urban Development, 12 cities: Ajmer (Rajasthan),
12 cities but then list keeps Amaravati (Andhra Pradesh), Amritsar (Punjab), Badami
getting expanded to 20+. [यात्रा (Karnataka), Dwaraka (Gujarat), Gaya (Bihar), Kanchipuram
धाम वाले शहेरो का �वकास] (Tamil Nadu), Mathura (UP), Puri (Odisha), Varanasi (Uttar
Pradesh), Velankanni (Tamil Nadu), Warangal (Telangana),
⇒ 2015: Ministry of Tourism launched the Swadesh Darshan Scheme to develop circuits having
tourism potential e.g. Tourist reception Centres, Solid Waste Management, Streetlight,
Landscaping, parking etc. where the Private Sector is not willing to invest.
⇒ To facilitate international tourism, India introduced the e-Tourist Visa online application
system. 2016: Government renamed e-Visa scheme with five sub-categories i.e. ‘e-Tourist Visa’,
‘e-Business Visa’, ‘e-Medical Visa’, ‘e-Conference Visa’ and ‘e-Medical Attendant Visa
⇒ � Travel and Tourism Competitiveness Index by World Economic Forum (WEF)- India
ranked 34th (2019).
55.8.3 👻👻 🏬🏬 Tourism Ministry→ Atma-Nirbhar initiatives & 👜👜👜👜Budget-2022

� � "Stranded in India" portal for foreigners stuck in India in Corona [�वदेशी पयर्टकों क� मदद]
� � "Dekho Apna Desh" virtual campaign / webinar to promote tourism
��Budget-2022 Parvatmala National Ropeways Development Programme via
Public Private Partnership (PPP)
55.8.4 ⛱Dharamshala Declaration 2022

⇒ By tourism ministry.
⇒ Make India global leader in tourism in 2047, when the country turns 100.
⇒ Earn $1 trillion by 2047 from tourism.
⇒ Develop medical tourism, film-shooting tourism, Yuva Tourism club, etc.
55.8.5 �🎷🎷🎷🎷 [Yearbook] Ministry of Culture (सं �ृ �त मं त्रालय)
Dept ⇒ N/A
Attached ⇒ Archaeological Survey of India, New Delhi (पुरात� �वभाग)
सं ल� ⇒ National Archives of India, New Delhi
Subordinate 1] Kolkata: = Anthropological Survey of India [मानव �व�ान सव��ण], National Library
अधीन� [रा��ीय पु�कालय], 2] Delhi = National Museum [रा��ीय सं ग्रहालय]
Autonomous ⇒ Lalit Kala Akademi, New Delhi| National School of Drama, New Delhi
Bodies ⇒ Sahitya Akademi, New Delhi| Sangeet Natak Akademi, New Delhi
�ाय� सं �ान ⇒ Central Institute of Buddhist Studies, Leh
⇒ Central Universities of Tibetan Studies, Sarnath, Varanasi
⇒ The Asiatic Society , Kolkata| Jallianwala Bagh National Memorial Trust
⇒ Zonal Cultural centers
💼💼Budget-2020: an Indian Institute of Heritage and Conservation under Ministry of Culture with
the status of a deemed University. (Although location = yet to be announced)
55.8.6 🗽🗽💼💼Tourism → Museum Infra in 💼💼Budget-2020 (सं ग्रहालय)

5 Onsite Archaeological Rakhigarhi (Haryana), Hastinapur (Uttar Pradesh) Shivsagar
Museums at (Assam), Dholavira (Gujarat) and Adichanallur (Tamil Nadu).
Maritime Museum Lothal - the Harrapan age maritime site near Ahmedabad, Gujarat,
by Shipping Ministry
Oldest Museum Indian Museum in Kolkata is the oldest. We’ll renovate it.
Museum on Numismatics To be setup at Old Mint building Kolkata (Ref: Pillar#1A)
and Trade
Tribal Museum Ranchi (Jharkhand)
1) GS1 Syllabus Topic: Urbanization: problems and remedies
2) GS3 Syllabus Topic: Infrastructure (energy, ports, roads, airports, railways); Investment models
How is efficient and affordable urban mass transport key to the rapid economic 2019
development of India? द� और िकफायती शहरी सावर्ज�नक प�रवहन िकस प्रकार से भारत के द्रत� /��रत आ�थक
�वकास क� कुं जी है?
National urban transport policy emphasizes on moving people instead of moving vehicles. 2014
Discuss critically the success of various strategies of the Govt in this regard. रा��ीय शहरी
प�रवहन नी�त म� वाहन नहीं इं सानों का प�रवहन करने क� बात क� गई है इस अनुसंधान म� सरकार ने �ा-�ा कदम उठाए ह�
(GSM3: Environment-Pollution) Identify the prospects and constraints in adoption of Mock
electric vehicles in India and provide suggestions in this regard. भारत म� �बजली द्वारा चलने वाले
वाहनों को अपनाने म� आकषर्ण और चुनौ�तयां. तथा इस अनुसंधान म� सुझाव दी�जए
(GSM3: SciTech) write a short note on the application of drones, what has been done by Mock
Govt. of India for the development of this sector. (ड�ोन के �व�वध उपयोग बताइए और इसके �लए सरकार
ने �ा िकया?)
56 INFRASTRUCTURE → 🏬🏬 URBAN (शहरी बु�नयादी अवसं रचना)
2011 2030
Urban population 31% 40% (and 50% by 2050)
Contribution to GDP 63% 75%
Introduction (Data): Urban areas support >30% of India’s population and contribute to more than
60% of India's GDP. These figures are expected to grow to 40% and 75% respectively by 2030. देश क�
आबादी और सकल घरेलू उ�ाद का एक बड़ा िह�ा शहरी इलाकों से आता है.
56.1 🏬🏬 URBAN → CENSUS DEFINITIONS
Census-2011 definitions of urban area: (जनगणना)
Statutory If an area is governed by a municipality, corporation, cantonment board or

towns 4000+ notified town area committee, etc.
Census towns If an area doesn’t have municipality etc. yet it could be counted as a ‘town’ if
3800+ - Minimum 5000 people residing; AND
- Min. population density: 400/sqkm AND
- Min.75% of males engaged in non-agriculture occupations
Further,
Size / class of the area Population Size

Urban Class I 1,00,000 & above: further Metro city = 40 lakh/>, mega city = 1 cr />
Semi-Urban Class II 50,000 - 99,999
Class III 20,000 - 49,999
Class IV 10,000 - 19,999
Rural** (if Class V 5,000 - 9,999
<75% male Class VI less than 5,000
population in
non-agro)
Related Term: Constitution (74th Amendment) Act, 1992 defines a Metropolitan Area = population
of 10 lakhs or more, comprising of one or more districts.
56.2 🏬🏬 URBAN → [YEARBOOK] MOHUA

2017: PM Modi merged (1) Ministry of Urban Development and Housing (2) Ministry of Urban
Poverty Alleviation into a single ministry called →
� 🏬🏬 Ministry of Housing & Urban Affairs आवासन एवं शहरी कायर् मं त्रालय consists of →
Dept NA
Attached ⇒ Central Public Works Department (CPWD) के �ीय लोक �नमार्ण �वभाग
offices ⇒ National Buildings Organisation (NBO) रा��ीय भवन �नमार्ण सं गठन
⇒ Land & Development Office (L&DO)- it has two Portals: 1) E-
SAMPADA- for allocation of central govt houses/office buildings 2)
E-DHARTI - property disputes, registration etc in Delhi
Statutory − Delhi Development Authority, Rajghat Samadhi Committee,
वैधा�नक − Delhi Urban Arts Commission, Capital Region Planning Board
Autonomous − National Institute of Urban Affairs
Bodies �ाय� सं सथान − Building Materials & Technology Promotion Council (BMTPC)
− Central Government Employees Welfare Housing Organisation
− National Cooperative Housing Federation of India (NCHFI)
Subordinate − Town & Country Planning Organisation
Office अधीन� कायार्लय − Government of India Stationery Office
− Department of Publication (responsible for printing Gazettes)
CPSE सावर्ज�नक �ेत्र के − Housing and Urban Development Corporation Ltd. (HUDCO)
उपक्रम − National Buildings Construction Corporation Limited
− (*) Hindustan Prefab Limited (HPL)
E-governance − 2019: mHariyali App to encourage Public to plant trees & uploads it
geotagged photos through App.
MCQ. Find correct: (Prelims-2022)
1. The India Sanitation Coalition is a platform to promote sustainable sanitation and is funded by
the Government of India and the World Health Organization.
2. The National Institute of Urban Affairs is an apex body of the Ministry of Housing and Urban
Affairs in Government of India and provides innovative solutions to address the challenges of
Urban India.
Answer Codes: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
56.2.1 2020 marks 5 Anniversary of Urban Mission
th
Schemes → Collectively called

1) 500 AMRUT cities 2) 100 Smart cities → Urban Rejuvenation Mission (शहरी कायाक� �मशन)
Above two + PM Awas Yojana (Urban) → Urban missions
56.3 🏬🏬 URBAN → AMRUT MISSION (2015) → 500 CITIES
2005: Manmohan launched Jawaharlal Nehru National Urban Renewal Mission (JNNURM).
→ 2015: Modi repacked it as Atal Mission for Rejuvenation and Urban Transformation (AMRUT).
- 🕵🕵 Boss? Urban Development Ministry. Core Scheme = NOT 100% funded by Union.
- Covering 500 cities with population of 1 lakh /> people
- Validity? 2015 to 31/3/2020. It’s a five-year SUNSET scheme Then later on govt renewed for
another 2 years, till 31/3/2022. योजना क� अव�ध को बढ़ाया गया
- Aims to improve basic infrastructure - public transport, water supply, sewerage, storm-water
drains, green spaces and parks. (सावर्ज�नक प�रवहन, जल आपू�त, गटर, बा�रश के पानी क� ना�लयां, बाग़-बगीचे)
56.3.1.1 🏬🏬 AMRUT 2.0 [2021-Oct]

⇒ Primary objective: “WATER SECURE” Cities [“जल सुर��त” शहरों का �वकास इसका उद्दे� है]
⇒ 100% connectivity for water-sewage to all households in 4700 urban local bodies. [नगरपा�लका �व�ार
के सभी घरों को पानी और गटर क� सु�वधा �मले]
⇒ Focus on circular economy for water management, with latest global technology. [जल प्रबं धन के �लए
वै��क �र क� प्रौद्यो�गक� तथा प�रक्रामी अथर्तंत्र के �सद्धांतों का उपयोग िकया जाएगा] (More on circular economy in
�Pillar#4B)
56.4 🏬🏬 URBAN → SMART CITIES MISSION (2015) → 100 CITIES
Definition: It is a city with smart physical, civic and economic infrastructure. It provide smart
technology, utility & mobility to its residents through 0% bureaucratic hassles & 100% use of
Information and Communications Technology (ICT). Although ICT/computerization itself is not
the ‘end goal’ of a smart City. The end goal is to improve quality of life, ease of living, economic
growth and sustainable development. (ऐसा शहर जहा पर भौ�तक, नगरपा�लका और आ�थक बु�नयादी ढांचे '�ाटर्' होते है.
इस शहर म� 0% नौकरशाही / लाल-फ�ताशाही, तथा १००% और सूचना और सं चार प्रौद्यो�गक� (ICT) के 100% उपयोग होता है. इसका
अं�तम ल� - जीवन �र म� सुधार, आ�थक वृ�द्ध और सतत �वकास है)
Infra. अवसं रचना 🤩🤩Facilities in a Smart City

🔌🔌Electricity �बजली: Automated streetlights, Smart electricity grids, Rooftop Solar
💧💧Water पानी/ जल आपू�त: Heavy penalties for littering & water wastage. Facilities for
जल आपू�त rainwater harvesting, storm water drainage
🛺🛺Transport - Walking lanes, public cycle sharing, public transport within 10-15m
प�रवहन waiting time. Multimodal transport: Bus Rapid Transit System (BRTS),
Waterways, railways (Metrorail, Monorail, Trams etc.)
- Bypass, underpass, overbridges, smart traffic signals to prevent traffic
congestion. ICT to send automated challans to traffic violators.
🏠🏠Housing 100% housing to all with 24/7 water, electricity and Wi-Fi connectivity.
आवास School, Mall, Parks available within 400m of residential area.
Infra. अवसं रचना 🤩🤩Facilities in a Smart City
Education �श�ा From nursery to college- all educational facilities will be available.
💉💉Healthcare - From Primary Health Care Centre to multispecialty hospital and even
�ा� veterinary hospital for the pets will be available.
- 108 ambulance with maximum 30 minutes of response time.
📞📞Communicatio Wifi @all houses. Apps, emergency helplines for medical / fire / police.
n
Economic Bank-ATM, Centres for Skill Development & Startup Incubation;
आ�थक Warehousing, Freight Terminals, Export Parks
56.4.1 🏬🏬 Smart Cities → Selection process (चयन प्रिक्रया)
- Cities prepare Smart city plan → send to state government → MoHUA → final selection among
total 100 slots with internal quotas assigned to each state/UT in proportion of their population
and number of statutory towns.
- So, UP (13) > TN (12) > Maharashtra (10)......Union territories and special category states are
given minimum 1 City each e.g. Srinagar(J&K), Arunachal (Pasighat, Itanagar), Kavaratti
(Lakshadweep), Andaman-Nicobar-Islands (PortBlair) etc.
- 💼💼Budget-2020: we’ll develop five new smart cities. But, names yet to be announced.
🔠🔠❓MCQ. Which one of the following cities was not included in the list of smart cities in India?
(Asked in UPSC-CDS-2019-i) a) Silvassa b) Jorhat c) Itanagar d) Kavaratti
56.4.2 🏬🏬 💸💸 Smart Cities → funding and administration (�व� और प्रशासन)

Boss? Urban Development Ministry. Core Scheme = NOT 100% funded by Union.
Contribution Total amount from 2015-20

Union budget ₹ 48k cr
Union’s National Investment & Infra Fund (NIIF) ₹ 2k cr
State/UT ₹ 50k cr
Total (100 cities vs. 1l cr so each city gets ₹ 1,000 cr) ₹ 1 lakh crore
To implement this project, every smart city is required to set up a Special Purpose Vehicle (SPV: �वशेष
उद्दे� से बनाई गई कं पनी) company under the Companies Act: wherein
Co-contribution from (State / UT) + its respective Urban Local Body (ULB) x% (majority
shareholder)
Any private company or financial intermediary (Bank / NBFC) → y% (minority
shareholder)
Total shareholding 100% (but x% must be > greater than y%) 100%
56.4.3 🏬🏬 👿👿 Smart Cities → Criticism / Challenges (आलोचना / चुनौ�तयाँ)
1. 😰😰 India is a country of poor people and rural people. So, instead of spending ₹ 1000 crore x 100
big cities, it would have been better to spend ₹ 10 crores each on 10,000 towns and villages where
people are struggling for basic amenities like water and electricity. �सफर् कु छ बड़े शहरों का �वकास
2. 😰😰 Excessive reliance on ICT in city administration makes us more vulnerable to hacking &
cyber warfare. City will completely stop functioning if electricity gone during natural disasters /
nuclear attacks. प्राकृ �तक आपदा / परमाणु/ साइबर हमले- म� शहरों क� भेद्यता बढ़ जाएगी.. जनजीवन एकदम ठ� हो सकता
3. 😰😰 Nothing will be free except the Wi-Fi because the SPV company will charge user-fees on
everything from water, sanitation, education and healthcare. हर चीज पर फ�स.कु छ भी मु� नहीं �मलेगा
4. 😰😰 Soul of the city & sense of the community will be lost. It will become an artificial jungle of
concrete and internet cables. People will become Digital-Zombies where nobody has time for
anybody except their electronic gadgets. समुदाय क� भावना और शहर क� आ�ा चली जाएगी हर आदमी मोबाइल
कं �ूटर का िड�जटल गुलाम बन जाएगा।
5. IT data centres require centralized air conditioning (AC) to keep the server infrastructure cool.
But large number of such AC units turn the city into an ‘urban heat island‘ (गम� ब�त बढ़ जाएगी)
6. Wi-Fi, Internet and mobile telephony generates elector-magnetic radiation, which is harmful for
birds, insects and small animals. (�वद्युत-चु�क�य तरंगों से इं सान, पशु प��यों को ख़तरा)
✋Counter-argument? Smart city will improve the quality of life & create economic opportunities.
And looking at such best cities, even the voters in the small cities will become more assertive in
demanding better quality of city administration from their municipal corporators → then even small
towns will become more clean and comfortable to live. �ाटर् शहरों क� सु�वधा देखकर छोटे शहर के वोटर भी अपने
�ा�नक नेताओं से अ�� शहरी बु�नयादी सु�वधाओं क� मांग कर�गे �जससे िक पूरे भारत म� जीवन �र म� बढ़ोतरी होगी
56.4.4 🏬🏬 👭👭Sister City project

2020: Urban ministry found some Smart cities are lagging behind in implementation of projects.
(Biharsharif, Bareilly, Itanagar, Moradabad, Saharanpur etc.)
⇒ So, Top-20 best performing smart cities will be paired with Bottom-20 worst performing smart
cities as ‘Sister Cities’. अ�ा प्रदशर्न करने वाले शहरों क� बुरा प्रदशर्न करने वाले शहरों के साथ जुगलबं दी
⇒ E.g. Ahmedabad (Rank#1) paired with Chandigarh (Rank#81)
⇒ �Benefit? Sharing of best practices with each other, inspiration & motivation etc.
56.4.5 🏬🏬 Cities → 👜👜👜👜Budget-2022:- Urban Infrastructure related announcements

- Focus on Town Planning Schemes (TPS), and Transit Oriented Development (TOD) for people
to live and work closer to mass transit systems (शहरों क� रचना इस प्रकार से क� जाए िक लोगो के घर के पास ही
रेल-बस जैसे सामूिहक प�रवहन उपल� हो ताक� �नजी वाहन लेकर रोज़ द�र जाना न पड़े)
- Focus on mass transit projects (सामूिहक प�रवहन पर ज़ोर िदया जाए)
- Urban planning ke 5 College / universities will be given funding of ₹250 cr each.
- AICTE to improve syllabus for urban planning/engineering. (शहरी आयोजन के �लए �श�ा अ�ासक्रम)
56.4.6 🏬🏬 � Cities → TULIP Internship (2020-June)
⇒ TULIP (The Urban Learning Internship Programme.)
⇒ � Boss? Joint initiative by Minister for Housing and Urban Development (MoHUA) and the
All India Council for Technical Education (AICTE, Statutory body under the HRD/Edu
Ministry) for giving 1 crore internships by 2025.
⇒ Urban local bodies (ULB) can announce Internship opportunities on TULIP website.
⇒ Internship subjects? Urban Planning, Water Supply, Waste Management, Slum rehabilitation,
Digital Governance, Transport Engineering, Municipal Finance. (शहरी �नयोजन, जल आपू�त, अप�श�
ु ी-पुनवार्स, िड�जटल प्रशासन, प�रवहन इं जी�नय�रंग, नगर �नगम �व� प्रबं धन )
प्रबं धन, झ�
⇒ Eligibility? Indian citizen who finished the final year of college within the last 18 months. (यो�ता)
⇒ Duration of Internship? eight weeks to one year. (इं टनर्�शप/ प्र�श�ुओ ं क� अव�ध)
⇒ Budget allocation? No separate budget provided but stipend may be given from the funds
available under may be used from smart cities, AMRUT etc schemes, if ULBs wish
⇒ �Further administrative procedures / Salient features of the scheme = poor cost benefit.
56.4.7 🏬🏬 �� URBAN → Misc → PH friendly → Sugamya Bharat (2014)

🕵🕵 Boss? Ministry Social Justice and Empowerment → Divyangjan Dept.
- Ramps in public buildings / railways / airports; toilets for wheelchair users, Braille symbols and
auditory signals in lifts, disabled-friendly websites etc. so that life becomes easier for the PH.
- Under Accessible India Campaign (Sugamya Bharat Abhiyaan), Divyangjan Dept hires auditors
to check public buildings & websites → then respective organization required to do above things
under the Persons with Disabilities Act (�वकलांग �� अ�ध�नयम). Grants given as & where required.
- + Awareness generation, IEC, mobile app etc.
56.4.8 🏬🏬 Cities → Misc → Floor Space index (FSI)

⇒ It prescribes the maximum construction that can be done in a given area of land.
⇒ �FSI = more number of floors may be created = more residents may be accommodated in a
single building. Norms are decided by the Municipal / Local bodies / State Government.
56.4.9 🏬🏬 🌲🌲🌲🌲🌲🌲 URBAN → Misc → Nagar VAN (2020-Jun)

⇒ � Boss? Ministry of Environment, Forest and Climate Change (पयार्वरण, वन और जलवायु प�रवतर्न)
⇒ To develop 200 Urban Forests across the cities of India in 5 years.
Sidenotes:
⇒ 2021: Hyderabad city became the Only city of India to get "Tree Cities of the World" title/status
by the UN-FAO + a private organization Arbor Day Foundation.
⇒ Chandigarh became the first region in India to launch "Carbon Watch"- it is a mobile application
to assess the carbon footprint of an individual through his activities related to transport, energy,
waste generation.
56.4.10 🏬🏬 URBAN → Misc → Parliament area, Central Vista

⇒ � Boss? Ministry of Housing & Urban Affairs → CPWD
⇒ New Delhi's Central Vista region has Rashtrapati Bhawan, Parliament House, North and South
Block, India Gate, National Archives etc.
o All these iconic buildings were constructed before 1931. So these old buildings pose
structural dangers. (जजर्र इमारत �गरने का डर)
o Central Govt ministries/dept/offices are scattered over different locations → →
unnecessary travel & pollution.
⇒ So, Central Vista project aims to redevelop these buildings @₹20,000 crores.(पुन�नमार्ण)
⇒ � 2022= India's 75th Independence Day. So, govt hoped to finish building parliament by 2022.
Other buildings to be finished in 2021-24.
⇒ �� Then Corona: funding issues, SC petitions, Bhumi-Pooja etc current affairs. But ball by
ball commentary of news is not important for exam.
56.4.11 🏬🏬 📊📊 Cities → Index: TWO Indices for Quality of Life

2021-March: Urban ministry launched two indexes/indices to assess quality of life of citizens in 100
Smart Cities and 14 other Million Plus Cities viz. Following area the rankings for 2020:
i. Ease of Living Index (EoLI) Top5: Bengaluru, Pune Ahmedabad Chennai Surat.
ii. Municipal Performance Index (MPI) Top5: Indore, Surat, Bhopal, Pimpri-Chinchwad, Pune.
Note: Above rankings for Million+ Pollution walli Cities. There is Separate ranking for cities with
less than million population. इसके अलावा 10 लाख से कम आबादी वाले शहरों के �लए अलग से र�िकंग बनाया है.
56.4.12 🏬🏬 📊📊 Cities → Index → Misc. (don’t loose sleep)

IUDX India Urban Data Exchange (IUDX) by MoHUA + Indian Institute of
Science (IISc), Bangalore. This portal provides open source data for
researchers / app developers / startups.
सं शोधन कतार्ओ ं को डाटा प्रदान करने के �लए
Global Smart City ⇒ Institute for Management Development (IMD, Switzerland) with
Index Singapore University for Technology.
⇒ 2020: Top-3: Singapore, Helsinki, Zurich.... Indian cities like New
Delhi, Mumbai, Hyderabad, Bengaluru far behind in 85-95 ranking-
due to high level of pollution, poor quality of water-sanitation etc.
Global Liveability ⇒ by the Economist magazine’s Economist Intelligence Unit (EIU)
Index
⇒ 2021: New Zealand’s Auckland is world’s most liveable city due to its
successful handling of the Corona pandemic. (रहने यो� सबसे उपयु� शहर)
Global Real Estate By a low-profile private organization. Poor Cost:Benefit preparing. कोई छोटी
Transparency Index वाली �नजी �ेत्र क� सं �ा बनाती है ऐसे हर सूचकांक को पढ़ने म� खास फायदा नहीं
56.4.13 ✍ Urbanization conclusion (शहरीकरण: �न�षर्)

India is a fast urbanizing country and is witnessing a steady increase in migration from rural areas to
urban centers. This poses stress on the already overburdened infrastructure of the cities. SDG Goal
11 requires India to work towards Sustainable cities and communities. Aforementioned scheme /
policy / challenges need to be addressed in war footing/priority basis.
भारत म� ब�त तेजी से शहरीकरण हो रहा है गांव क� आबादी भी �ानांतर कर शहरों क� तरफ आ रही है �जससे शहरी बु�नयादी अवसं रचना
अ�ा�धक बोझ महसूस कर रही है। सतत �वकास ल� प्रा�� के �लए इन चुनो�तयो से लड़ना ज�री/ अग्रता क्रम से सुधार आव�क
56.5 (🏠🏠) INFRA → (URBAN AND RURAL) → HOUSING FOR ALL BY 2022
- 1985: Indira Awas Yojana for rural areas gave money to poor families to build homes,
- 2008: Rajiv Rinn Yojana for urban areas gave home loan Interest subsidy to poor.
- 2015-16: Modi restructured them into Pradhan Mantri Awas Yojana (PMAY).
- It’s a Centrally Sponsered Scheme → Core Scheme = NOT 100% funded by Union. States also
need to contribute money. (क� द्र द्वारा प्रायो�जत → मह�पूणर् योजना)
- Target: Housing for all by 2022. PMAY has two components.
🏠🏠 � PMAY (Urban) 🏠🏠 � PMAY (Rural)
by Ministry of Housing and Urban Affairs By Ministry of Rural Development .
It has following components: (योजना के घटक/अवयव) Beneficiaries are identified through SECC-
1. If person owns land: give him ₹ 1.50 lakh to 2011 data, and verified by Gram Sabha.
build / renovate his house. They’re given money to build home.
2. If a builder is keeping 35% apartments’ quota - ₹ 1.50 lakh (plains area),
for EWS then builder gets subsidy. - ₹ 1.60 lakh (hilly states)
- Additionally, they can get upto ₹ 70,000
3. Slum redevelopment (झोपिड़यों को हटाकर गरीबों को
as bank loans
प�े मकान बना कर देना)
Money transferred to beneficiary’s bank
4. Credit-linked subsidy scheme (CLSS): account via AwaasSoft web platform.
Depending on the annual income, the - Convergence with other schemes to
beneficiaries are classified into 3 groups: provide electricity, LPG, drinking water
a. Economically Weaker Section (EWS), & toilet. अ� योजनाओं के साथ सम�य
b. Low Income Groups (LIGs) - Also provides skill programs for rural
c. Middle Income Groups (MIGs: i.e. masons. ग्रामीण कारीगरों के �लए कौशल कायर्क्रम
annual income upto ₹ 18 lakhs).
These groups are given 3-4% interest subsidy on
loan amounts upto ₹ “x” lakhs. Govt has setup
Credit-linked Subsidy Services Awas (CLAP)
Portal where beneficiary can track his application
status in real-time.
5) AHRC: given below
56.5.1 👻👻(🏠🏠) → Affordable rental housing Complexes (AHRC)
िकराए के मकान िकफायती दरों पर गरीबों और प्रवासी श्र�मकों के �लए. → �ब�र सरकारी जमीन पर / जजर्र सरकारी मकानों तो तोड़कर
नए मकान बनाएगा- गरीब िकरायेदारों के �लए. इस योजना म� �ब�र को �रयायती दरों पर कजार् और टै� म� लाभ िदया जाएगा
⇒ � Boss? Ministry of Housing & Urban Affairs (MoHUA)

⇒ Pradhan Mantri Awas Yojana – Urban (PMAY–U) → new subcomponent AHRC launched in
2020-May (under Atma-Nirbhar initiative).
⇒ Govt will sign an agreement with builders (technically called as "Concessionaire"). Basically..
⇒ Builders will be given vacant govt land & dilapidated govt buildings, concessional loans, and tax
relief. (How exactly? NOT IMP)
⇒ Builders will construct housing complexes → rent it for 25 years at affordable prices to urban
migrants / poor.
⇒ �Benefit? Migrants live in slums, illegal colonies or peri-urban areas to save rent. They spend
lot of time travelling to workplaces. AHRC will � unnecessary travel from peripheral areas,
congestion and pollution.
56.5.2 (🏠🏠) → PMAY–U → Angikaar
⇒ Pradhan Mantri Awas Yojana – Urban (PMAY–U) → Angikaar campaign launched to mobilise
communities for water & energy conservation, waste management, sanitation, hygiene. �बजली पानी
बचाओ ��ता अ�भयान जागृ�त अ�भयान
56.5.3 (🏠🏠) → National Urban Housing Fund (2018)

🕵🕵 Boss? Ministry of Housing and Urban Affairs → (Autonomous body) Building Materials and
Technology Promotion Council.
- They’ll raise mobilize ₹ 60,000 crores in next 4 years to finance the PMAY (Urban).
- This money will be raised through ‘extra Budgetary Resources’ i.e. BMTPC itself borrowing from
market / CPSEs / lenders without involvement of Govt. (so Govt’s fiscal deficit appears under
control.) (More in 📑📑Pillar#2D) (बजटेतर सं साधन)
56.5.4 👻👻 (🏠🏠) → SWAMIH Fund (�के �ए मकान प्रोजे� ख� करने वा�े �ब�र को थोड़ी लोन देदो योजना)
⇒ MoHUA, LIC, Banks etc gave ₹₹ to SBICAP Ventures Ltd (an NBFC) → "Special Window for
Completion of Affordable and Mid-Income Housing (Swamih Investment Fund)".
⇒ SWAMIH Fund gives loans stalled projects for affordable and Middle-Income Housing. e.g.
Builder unable to finish project → extra ₹₹ from here, so he can finish project.
56.5.5 (🏠🏠) PM Unauthorized colonies in Delhi Awaas adhikar Yojna (PM-UDAY)

- for giving ownership rights to people living in 1,731 unauthorised colonies in Delhi.
- िद�ी क� अवैध कॉलोनी म� रहने वाले ��यों को मकान के मा�लकाना हक िदया जाएगा.
56.5.6 (🏠🏠) Sustainable Housing → World Habitat Award to Odisha’s JAGA Mission
⇒ By a UK-based organization in partnership with United Nation (UN)-Habitat
⇒ 2019-Bronze award given Odisha government's Odisha Liveable Habitat Mission also known as
‘Jaga Mission’ in partnership with Tata Trust.
⇒ In this scheme, urban slum dwellers are given land ownership titles, create road, streetlight,
water-sanitation infrastructure → Then Govt will not evict /destroy their slums. Permanent
home address proof also helps poor families to enroll children in school, open bank accounts etc.
⇒ Beneficiaries are given 30 square metre of land free of cost and for the remaining land they have
to pay as per the State Govt determined price. (गरीब प�रवार को 30 वगर् मीटर जमीन मु� म� और उसे अ�त�र�
जमीन गरीब को चािहए तो रा� सरकार द्वारा �नधार्�रत रकम, गरीब प�रवार ने अदा करनी होगी)
FAQ: Do I’ve to remember this? Ans. Yes, 1-2 case studies shd be remembered
for citing as example for GSM1: urbanization problem remedies
56.5.7 (🏠🏠) Sustainable Housing → Global Housing Technology Challenge
- � Boss? Ministry of Housing and Urban Affairs
- asked experts / private sector companies to propose disaster-resilient, environment friendly,
cost-effective and speedy construction technologies.
- They’ll be implemented on a pilot basis in some cities to see the results.
56.5.8 (🏠🏠) → Model Tenancy Act (आदशर् िकरायेदारी अ�ध�नयम)

RBI’s survey found that housing affordability has worsened over (2015-19). People’s income failed
to keep pace with rising property prices. In Mumbai, difficult to find home even with a budget of ₹
45 lakhs! (मकान अप्र�ा�शत �प से महंगे हो रहे ह� लेिकन लोगों क� आमदनी म� उस ग�त से वृ�द्ध नहीं हो रही.)
Since it is not possible to construct houses for each and everyone, we also need to promote rental
housing especially for migrant workers. But, current Rental Laws are archaic. So, 2019-20 Ministry
of Housing & Urban Affairs drafted a Model Tenancy Law with following features, and asked States
to adopt it: . [क� द्र सरकार ने आदशर् िकराएदारी अ�ध�नयम अपनाने के �लए रा� सरकारों को सू�चत िकया है. यह अ�ध�नयम ग्रामीण
और शहरी दोनों इलाकों के िकरायेदारों और मकान मा�लक ऊपर लागू होगा.]
 It covers properties rented for residential, commercial, educational use- both urban and rural.
 digital platform to upload rent agreements. Houses cannot be rented on Verbal agreements.
[के वल �ल�खत करारनामे पर ही मकान िकराये पर िदया जा सकता है। मौ�खक बात/ ज़ुबान देने मात्र से नहीं]
 Specific provisions about security deposit, penalties, eviction of Tenant - in a way that it protects
both the tenant and landlord. (िकरायेदार और मकान मा�लक दोनों के िहतों को सुर��त रखने के प्रावधान)
 If tenant refuses to vacate after expiry of agreement / after doing nuisance, then landlord can
claim double the monthly rent for two months, and four times the monthly rent thereafter etc.
[अव�ध समा�� के बावजूद यिद िकरायेदार मकान ख़ाली नहीं करेगा, उपद्रव करेगा- तो मकान मा�लक उसे दोगुना /चार गुना िकराया
भी माँग सकता है]
 In case of a force majeure event, tenant unable to pay rent then the landlord shall allow the
tenant to continue in possession until 1 month after disaster/pandemic etc ends. [महामारी और दू सरी
अप्र�ा�शत घटनाओं म� मकानमा�लक- िकरायेदार को घर से नहीं �नकाल सकता, चाहे िकरायेदार िकराया देने म� असमथर् हो. हालांिक
ऐसी आपदा ख� होने के एक महीने बाद मकानमा�लक िकरायेदार को घर से �नकाल सकता है.]
 Dy.Collector rank officials will be designated as ‘Rent Authority. Higher appeal to Rent Court →
Rent Tribunal. Disputes will be settled within 60 days deadline. (इन मामलों क� सुनवाई के �लए िकराया
प्रा�धकरण और अपीलीय सं �ाओं का भी प्रावधान)
56.5.9 (🏠🏠) → Corona: Landlords, tenants, rent & eviction

🤧🤧 😷😷 Corona lockdown → Jobs lost → tenant families unable to pay rent → eviction. (मकान
मा�लक द्वारा िकरायेदारों को घर से �नकाल देना )
⇒ Some landlord widows / elderly solely relying on rent income for their survival. They also need
protection. (कु छ मकान मा�लक, �वधवा, बुजुग� के �लए िकराया ही उनक� आमदनी का सहारा था)
⇒ Some state governments announced relief/rules to address this. But, if all States adopt Central
government’s Model Tenancy Act, 2019- It will be useful. (आदशर् िकराएदार अ�ध�नयम अपनाया जाए तो
भ�व� म� इन सबक� भी मदद हो सकती है)
🏠🏠 ✍ Conclusion Housing? A homeless family is more vulnerable to crime, disease & disasters.
SDG Goal #11 requires India to provide safe and affordable housing to all by 2030. Aforementioned
scheme / policy / challenges….. अपराध, बीमारी और आपदाओं म� एक बेघर प�रवार क� भेद्यता अ�ो से अ�धक होती है. सतत
�वकास ल� : सभी को सुर��त और िकफायती आवास उपल� कराना ज�री
57 INFRA → RURAL (🏞🏞)
57.1.1 � [Yearbook] Ministry of Rural Development ग्रामीण �वकास मं त्रालय

Dept − Dept. of Rural Development.
− Dept. of Land Resources (भू�म सं साधन).
Autonomous − National Institute of Rural Development and Panchayati Raj- Hyderabad. रा��ीय
Bodies ग्रामीण �वकास और पं चायती राज सं �ान
− Council for Advancement of People’s Action and Rural Technology
(CAPART) chaired by the Union Minister for Rural Development to
coordination with NGOs & Government
CPSE/ Statutory N/A or Not MCQ worthy. या तो �वद्यमान नहीं या �वद्यमान है िकंतु परी�ा के �लए काम के नहीं
/Attached इस�लए आगे बढ़ो
E-Governance Yuktdhara- portal for rural planning developed by this ministry + ISRO
�There is also a Ministry of Panchayati Raj - but doesn’t have any MCQ-worthy orgs.
🔠🔠❓ The ministry of Rural Development consists of which departments? (UPSC-Geologist-

2020)
a. Department of Rural Development and Department of Land Resources
b. Dept of Community Development, Dept of Drinking Water and Sanitation and Dept of
Social Assistance
c. Dept of Rural Development, Dept of Community Resources and Dept of Drinking Water
and Sanitation
d. Dept of Land Resources, Department of Drinking Water and Sanitation and Department of
Social Assistance
57.2 🏞🏞 RURAL → SHYAMA PRASAD MUKHERJEE RURBAN MISSION
2004: President Dr. Kalam suggested PURA (Providing Urban Amenities in Rural Areas), but failed
to takeoff because inter-ministerial miscoordination in UPA. → Modi repacked (2016)
- �Boss? Rural Development Ministry. Core Scheme = NOT 100% funded by Union.
- 15-20 villages clusters are selected. They’re given ₹ ₹ to improve Electricity, water, roads; centres
for Agri Processing, Tourism, Skill development etc.
🤩🤩Benefit? economic opportunity & ease of living will improve in the rural areas itself → cities will
face less migration and congestion (गांव म� ही अगर शहरों जेवीसी सु�वधा �मलेगी तो �ाना�रण / अ�तप्रजन कम होगा).
🔠🔠❓ Who among the following envisioned the framework of sustainable development called PURA
(Providing Urban Amenities to Rural Areas)? (UPSC-Geologist-2020)
a) Jawaharlal Nehru b) A.P.J. Abdul Kalam c) Atal Bihari Vajpayee d) K.R. Narayanan
57.3 🏞🏞 RURAL → RASHTRIYA GRAM SWARAJ ABHIYAN (2018)

ई शासन, पं चायत भवन के �नमार्ण/ मर�त, पं चायत क�मयों को तालीम के अनुसंधान योजना
- Under Manmohan-era, the Panchayati Raj Ministry had following schemes:

a. Backward Region Grant Fund (BRGF) → Additional ₹ ₹ to backward areas to build
schools, roads, streetlights etc.
b. Rajiv Gandhi Panchayat Shasaktikaran Abhiyan → ₹ ₹ for Panchayat Building
renovation.
c. Rashtriya Gram Swaraj Yojana (RGSY) for training of PRI’s elected representatives &
civil servants.
- Since 14th Finance Commission provided huge grant in aid to the Panchayati Raj bodies, so
Modi stops / suspends these schemes from 2015. (�व� आयोग द्वारा अनुदान)
- 2018: Modi launches (restructured) Rashtriya Gram Swaraj Abhiyan with basically above
features i.e. Panchayati Raj Institutions (PRIs) given ₹ ₹ to improve e-governance, repair /
renovate panchayat building. PRI officials given training & exposure visits → capacity building
→ they become capable to achieve SDG goals. (पं चायती सं �ाओं म� ई प्रशासन, पं चायत भवनों का मर�त
पुननर्वीनीकरण, पं चायत कमर्चा�रयों क� तालीम और �मता �नमार्ण के �लए पैसा द�ग)े
- Boss? Panchayati Raj Ministry. Core Scheme = NOT 100% ₹₹ by Union. States also have to pay
57.3.1 🏞🏞 📲📲 Panchayati Raj Day & Portals & Awareness Campaigns

- 73rd Constitutional Amendment Act,1992 came into force from 24 Apr’93. So, Govt started
commemorating 24th April as National Panchayati Raj Day since 2010.
- Panchayati Raj Ministry runs following Portals:
- e-GramSwaraj: Gram Panchayat Development Plans:- to prepare and monitor them.
- PRIASoft: monitor Receipts & Expenditure of the Panchayati Raj bodies viz. Zilla, Block and
Village Panchayat. (आमदनी खचार् �व�ीय �व�ापन के �लए)
- Sabki Yojana Sabka Vikas : awareness campaign to encourage villagers in Gram Panchayat
Development Plan formulation. ग्राम पं चायत के �वकास कायर्क्रमों म� जन भागीदारी बढ़ाना
57.3.2 👻👻🏞🏞 📐📐 Land Assets registration- Swamitva scheme for land survey (2020)
⇒ Ministry of Panchayati Raj → launched on pilot basis in 6 states. (प्रायो�गक तौर पर चु�नदं ा रा�ों म� ही)
⇒ Rural inhabited lands will be survey with drones and technology. (जमीन का सव��ण)
⇒ It will help getting clarity over property rights → Land revenue collection, Bank loans
application approval, Settlement of Title Disputes (जमीन मा�लक क� के कोटर् �ववादों का �नपटान)
57.3.3 🏞🏞 📐📐 Land Assets registration- ULPIN in 👜👜👜👜Budget-2022

⇒ ��Budget-2022 announced Unique Land Parcel Identification Number (ULPIN).
⇒ This could be linked to Aadhaar-number of the land plot owner. (ज़मीन के प्लॉट को एक यिू नक नबं र िदया
जाएगा जो आधार काडर् के साथ िलंक िकया जाएगा
⇒ � Identification of farmers for welfare schemes, Settling legal-disputes. (िजससे ज़मीन मािलक िक के
क़ानूनी िववाद और िकसानों को िविभन्न सरकारी योजना का लाभ देने में सुिवधा रहे।)
⇒ Govt to provide facility for transliterating the land records in any language - to break the
linguistic barriers in land records & property deals. e.g. Property buyer from Maharashtra should
conveniently get access to land records of Tamil Nadu in his Marathi language. (इसके अलावा ज़मीन के
दस्तावेजों को िविवध भाषाओ ं में अनवु ािदत करने क� भी सुिवधा क� जाएगी।)
57.3.4 🏞🏞 📐📐 Land Assets registration- Case Studies from Bihar & Kerala
Bihar ⇒ BIHAR HAS become the first state in the country to introduce the concept of a
dynamic map for villages
⇒ Map will get updated every time land ownership changes hands. This will
reduce legal disputes. (�बहार म� �जतनी बार ज़मीन को बेचा जाएगा उतनी बार मा�लक� के न�ों को
अपडेट िकया जाएगा- ताक� ज़मीन �ववादों म� कमी हो)
Karnataka ⇒ Bhoomi project → digitize all land records.
⇒ Dishaank app to enable citizens to avail the information about the land and its
ownership as recorded in the Bhoomi database.
(कनार्टक म� सभी ज़मीन द�ावेजों का भू�म प्रोजे� के अंतगर्त िड�ज-करण िकया गया है। आम नाग�रक भी ये
सारी जानकारी अपने मोबाइल पे देख सके इस�लए िदशांक नाम क� एप बनायी गई)
57.3.5 🏞🏞 ��💪💪Model Panchayat Citizens Charter framework (2021)

⇒ [introduction] Copypaste definition of Citizen charter from Pillar2D: Tax Payers’ Charter.
⇒ [Origin] In 2021, Model Panchayat Citizens Charter framework Created by Ministry of
Panchayati Raj (MoPR) with National Institute of Rural Development and Panchayati Raj
(Hyderabad). [पं चायतों के �लए नाग�रक अ�धकार पत्र बनाया गया है]
⇒ Individual panchayats will adopt/copy this model template to design their own individual
Panchayat Citizen Charter- and post it in their office / website. Charter will outline the
services provided by Panchayat, including its time limit, and the grievance redressal
mechanism. for example[�जसम� यह जानकारी दी जाएगी क� नाग�रक को कौन सी सेवाएँ िकतने समय म� उपल� क�
जाएं गी और �शकायत �नवारण के �लए कहाँ पर सं पकर् करना है]
⇒ 3 Days deadline for issuing: birth/ marriage / death certificate, repairing the streetlights
⇒ 7 Days deadline for repairing public toilets [सात िदनों के भीतर सावर्ज�नक शौचालय क� साफ़ सफ़ाई मर�त]
⇒ 15 days deadline for issuing MGNREGA job card, enrolling a beneficiary in govt skill
development programmes (More in �Pillar#6: Poverty & Skill Development)
⇒ 30 days deadline for repairing Village Road, fixing panchayat Wi-Fi connectivity issue etc.
⇒ if the required work is not completed within the time limit the citizen can complain to
panchayat secretary/Patwaari → Pradhan/Sarpanch → Block development officer on XYZ
Address /phone number /email ID. [व� पर पं चायत क�मयों ने काम नहीं िकया तो इधर �शकायत कर�]
🤩🤩Conclusion? Appreciable step by the government for improving transparency, accountability,
good governance at grassroot. SDG Goal#16: will help building effective, accountable and inclusive
institutions at all levels. [प्रशं सनीय क़दम- ज़मीनी �र पर पारद�शता, जवाबदेही, और सुशासन को बेहतर करेगा]
57.4 🏞🏞🏞🏞🏞🏞 RURAL → MPLADS (1993)
Members of Parliament Local Area Development Scheme (सांसद �ानीय �ेत्र �वकास योजना).
Central Sector Scheme =100% funded by Union.
- Boss? Ministry of Statistics and Programme Implementation (MoSPI).

- Each MP can suggest development works worth ₹ 5 crore per year in his constituency. Rajya
Sabha MP: any district in his State. Nominated MP can select any district in anywhere in India.
- Role of the Members of Parliament is limited to recommend works. Thereafter, it is the
responsibility of the district authority (DM/Collector,IAS) to sanction, execute and complete the
works recommended within the stipulated time period. (अपने सं सदीय �ेत्र म� �वकास के काय� के �लए हर
सांसद �जला कले�र को सुझाव देगा उस िहसाब से बस �ेशन �ू ल क्र�डांगण पेयजल गटर पानी इ�ािद क� सु�वधा)
- If area inhabited by SC → 15% fund quota for their development works, if ST → 7.5%.
- Max. 20 lakhs / year (out of his 5 cr quota) for PH welfare e.g. giving tricycles, artificial limbs,
hearing aids etc. (�वकलांगों क� भी मदद कर सकते ह� िकं�ु हर साल 20 लाख से �ादा नहीं)
- Further, if any MP wishes, he may also recommend works anywhere in India upto Max. 25 lakhs
/ year (out of his 5 cr quota) e.g. during natural disaster or to promote national unity.
- Funds are non-lapsablein i.e. if not used this year, it is carried forward to the next yr. (अ-�पगत)
57.4.1 🏞🏞 🤧🤧 MPLADS Suspended (योजना को ��गत करना)
2020-April: To save the money for fighting Corona, Government announced two measure
⇒ MP salaries will be cut by 30% वेतन म� कटौती

⇒ MPLADS scheme will suspended for two financial years i.e. 2020-21 and 2021-22#. Govt
justified it, “every rupee was needed to bolster the resources available to our nation as we address
the impact of Covid-19”
⇒ #2021-Dec: Govt has restored MPLADS. Each MP to get ₹ 2cr for 2021-22. Then from 2022
onwards: Each MP to get ₹5 cr per year. जो कोरोना म� ��गत क� गई थी,लेिकन िफर वापस शु� क� जाएगी)
✅Arguments favouring suspension ✋Opposing scheme suspension
योजना ��गत करना= सही कदम योजना ��गत नहीं करनी चािहए थी
⇒ Nepotism: Politicians' relatives will be ⇒ 2010 Court judgement has held that the
given the contracts. (भाई भतीजावाद) MPLADS scheme is not unconstitutional. कोटर् ने
⇒ Corruption: District administration भी इसे असं वैधा�नक नहीं माना है
will get the bribes, Substandard quality ⇒ All members of parliament cannot become
of assets developed- as per CAG ministers. But if they have some funds at their
⇒ Appeasement: Assets generally be disposal they can do some important work for
developed in area with high their constituency and voters, depending on
concentration of a particular local needs. सांसद को अपने इलाके म� अ�े काम करने के
caste/religion who gave large number �लए अवसर �मलता है.
of votes to the said MP. (तु��करण) ⇒ Every government scheme has instances of
⇒ 16th Lok Sabha: 55% of the members corruption, nepotism and sub standard quality
have not even used the funds allotted work. It doesn’t justify that we should stop the
from their quota. Usually MP spend ₹₹ scheme, rather we should fix those loopholes.
only in the last year Before election for
✅Arguments favouring suspension ✋Opposing scheme suspension
योजना ��गत करना= सही कदम योजना ��गत नहीं करनी चािहए थी
media-limelight. But such "election धांधली तो हर योजना म� होती है िकंतु इसका उपाय यह नहीं योजना
rush"= Work done in a haphazardly. बं द कर दी जाए ब�� योजना क� खा�मयों को दू र करना चािहए
⇒ भाई भतीजावाद, भ्र�ाचार, तु�ीकरण, चुनाव से पहले
ज�बाजी म� ढेर सारी रकम और प्रोजे� जारी करना-
लेिकन गुणव�ा पूणर् सं प��यों का �नमार्ण नहीं
🔠🔠❓ Find wrong statements about MPLADS? (UPSC-CDS-i-2020)
(a) Members of the Parliament (MPs) sanction, execute and complete works under the scheme.
(b) Nominated Parliament can recommend works for implementation anywhere in the country.
(c) The scheme is fully funded by the Government of India.
(d) The annual entitlement per MP is Rs.5 crore.
🔠🔠❓Which of the following statements are correct about MPLADS? (UPSC-Prelims-2020)
1) MPLADS funds must be used to create durable assets like physical infra for health, education
2) A specified portion of each MP’s fund must benefit SC/ST populations
3) MPLADS funds are sanctioned on yearly basis and unused funds cannot be carried forward to
next year.
4) The district authority must inspect at least 10% of all works under implementation every year
Codes: [a) 1 and 2 only [b) 3 and 4 only [c) 1, 2 and 3 only [d) 1, 2 and 4 only
57.5 🏞🏞 RURAL → ADARSH GRAM YOJANAS

Saansad Adarsh Gram Yojana (SAANJHI) Pradhan Mantri Adarsh Gram Yojana
Rural Development Ministry (2014) Social Justice Ministry (2009: Manmohan
launched → Modi continued)
सांसदों ने गांव को गोद म� लेना है, और वहां �व�भ� सरकारी अनुसू�चत जा�त क� आबादी �ादा हो, उन गांव पर �ान देना,
योजनाओं को को अ�े से लागू करवाना है। और वहां �व�भ� सरकारी योजनाओं को को अ�े से लागू करवाना
Members of Parliament adopt village in their Govt to focus on villages with than 50%
constituency (if nominated member then adopt Scheduled Caste (SC) population
anywhere) - Develop these villages through better
- MP to give personal attention to develop implementation of existing schemes.
these villages through better - A village is declared ‘Adarsh Gram’ once it
implementation of existing schemes. achieves minimum 3 targets from a long list
- MP to encourage the villagers to build of targets related to school enrollment,
library via donation, prepare village song, 100% adult literacy, 100% vaccination,
remember martyrs, celebrate girl child 100% ODF-free, 0% child marriage, 0%
birth, plant trees etc. drinking of desi-liquor in public places etc.
57.6 🏞🏞 RURAL → BORDER AREA DEVELOPMENT PROGRAMME (BADP).
− Boss? Ministry of Home Affairs → Dept of Border Management. 100% funded by Union.
− सीमा �ेत्र �वकास कायर्क्रम (BADP) covers 17 states/UT which people living within 50 kilometres of the
International Border. Funding for roads, bridges, school, hospital etc.
− Eligible states are: Arunachal Pradesh, Assam, Bihar, Gujarat, Himachal Pradesh, Jammu
Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Rajasthan, Sikkim, Tripura, Uttar
Pradesh, Uttarakhand, West Bengal.
− RELATED event: Seemant Vikasotsav @Dhordo, Kutch to sensitize the border population about
their role in national security and development.
57.6.1 🏞🏞 Border infra & Backward Regions Infra → 👜👜👜👜Budget-2022

PMDevINE ⇒ Prime Minister’s Development Initiative for North East Region
(उ�र पूवर् के रा�ों के (PMDevINE): for infrastructure development in Northeast.
�वकास �लए मुिहम) ⇒ It will be implemented through the North-Eastern Council (it is a statutory
body made in 1971 under Ministry of Development of North Eastern
Region)
Vibrant ⇒ for Border villages on the northern border: infrastructure, housing, tourist
Villages centres, road connectivity, provisioning of decentralized renewable energy,
Programme ⇒ access for Doordarshan and educational channels, and support for
(उ�र भारत के livelihood generation. (टीवी पे �श�ा कायर्क्रम रोज़गार सृजन)
सीमावत� गांव)
Aspirational to focus on 112 Aspirational Districts’ (Ref:4B-NITI) → most backward
Blocks blocks → on key sectors such as health, nutrition, financial inclusion and basic
Programme: infrastructure. (सबसे �पछड़े-यानी िक आतं क� �ज़लों के सबसे �पछड़े �ॉक/तहसील के �वकास के �लए)
57.6.2 🏞🏞 Border infra and Shekatkar Committee (सीमा �ेत्रों म� बु�नयादी अवसं रचना)
2015: Defense ministry setup Lt General D B Shekatkar Committee to enhance combat capability
and rebalance defence expenditure of the armed forces. 2020-May: Defence ministry announced
we'll implement it suggestions related to border infrastructure namely,
⇒ Border Roads Organisation (BRO)'s road construction work → Outsource to private players via
Engineering Procurement Contract (EPC), if costing more than ₹100 cr= faster and more
professional building of roads.
⇒ BRO to be given high-tech machines for snow clearance on Himalayan roads. Use Geo-Textiles
for soil stabilisation, to prevent landslide damage to roads. सड़क से बफर् हटाने और भू�लन से नुकसान रोकने
के �लए अद्यतन मशीन और तकनीक�
⇒ Field officers to be given more financial and administrative powers. �ानीय अ�धका�रयों को �ादा �व�ीय
और प्रशास�नक स�ाई दी जाएं गी तािक ज�ी कम हो सके
⇒ Reforms for land acquisition and environmental clearance. भू�म अ�धग्रहण और पयार्वरणीय मं जूरी।
⇒ �? Socio economic development & �security in border areas. सामा�जक आ�थक �वकास और सुर�ा
✍Conclusion? SDG Goal #8 requires India to provide decent work and economic growth
opportunities to all. Since majority of Indians reside in rural areas, the rural infrastructure
development is the lynchpin factor in this regard. Aforementioned scheme / policy /… सतत �वकास
ल�: सभी लोगो को काम और आ�थक �वकास के अवसर देना । चूंिक अ�धकांश भारतीय आबादी ग्रामीण �ेत्रों म� �नवास करते ह�, इस�लए
ग्रामीण बु�नयादी सु�वधाओं का �वकास अ�ाव�क है.
57.7 🌬🌬⚔INFRASTRUCTURE: DISASTER, SECURITY & STRATEGIC AFFAIRS

57.7.1 �� [Yearbook] Ministry of Home (गृह मं त्रालय)
Dept 1) Department of Border Management (सीमा प्रबं धन)

2) Department of Internal Security (आंत�रक सुर�ा)
3) Department of Jammu, Kashmir & Ladakh Affairs
4) Dept of Home: Notifies the appointment of PM & other Ministers etc.
5) Department of Official Language
6) Department of States
Attached / 1) Registrar General & Census Commissioner: National Register of Indian
Subordinate Citizens, Census; helps rural and urban ministries for conducting Socio-
Offices Economic and Caste Census (SECC) in respective areas.
2) Assam Rifles, Border Security Force (BSF), Central Reserve Police Force
(CRPF), Sashastra Seema Bal (SSB)
3) Central Industrial Security Force (CISF)
4) Indo Tibetan Border Police (ITBP)
5) National Security Guard (NSG)
Statutory 1) National Investigation Agency (NIA)
वै�ा�नक सं �ान 2) National Disaster Management Authority (NDMA) →Subhash Chandra
Bose Aapda Prabandhan Puraskar (Awards for disaster management)
3) National Human Rights Commission (NHRC)
4) Land Ports Authority of India for managing border infrastructure in India.
Also helped in Kartarpur-sahib corridor.
CPSE ⇒ Repatriates Co-op. Finance & Development Bank
Autonomous 1) Sardar Vallabhbhai Patel National Police Academy, SVNPA, Hyderabad for
�ायत सं �ान training of IPS officers
2) National Crime Records Bureau (NCRB)
3) National Foundation for Communal Harmony (NFCH)
4) International Coalition for Disaster Resilient Infrastructure (CDRI)
E-Governance - 2009-Crime and criminal tracking network and systems (CCTNS) to keep
database of criminals
- 2011- National Intelligence Grid (NATGRID) for intelligence sharing-
mainly for counter terrorism.
⚖ Home ministry also looks after the administrative matters related to Padma Awards, and
legislative matters related to Passport Act & Citizenship. (नाग�रकता)
57.7.2 � 🌬🌬 Disaster Infrastructure → Home Ministry → CDRI 2019

⇒ International Coalition for Disaster Resilient Infrastructure (CDRI)
⇒ Announced in 2019’s UN Climate Action Summit in New York, USA
⇒ HQ: Delhi. Registered under Societies Registration Act,1860
⇒ Function: international knowledge exchange for disaster and climate resilience of infrastructure
→ help achieving the Sendai Framework targets for disaster risk reduction
57.7.3 �🛡🛡 Ministry of Defence (र�ा मं त्रालय)
⇒ Department of Defence → Armed Forces (army, navy, airforce), Coast

Guard, Border Road Organization, National Cadet Corps (NCC-1948,
Motto: एकता और अनुशासन, Unity and discipline)
⇒ Department of Defence Production →Subordinate organization: Ordnance
Factory Board (OFB, HQ: Kolkata) → 41 Ordnance factories (OFs) [New
Dept update in next section]
⇒ Department of Defence Research and Development
⇒ Department of Ex-Servicemen Welfare
⇒ Department of Military Affairs → Chief of Defence Staff (Late General
Bipin Rawat was the first person to be in this post. He had the rank of four
star general and also ‘Secretary’ to Govt)
⇒ DG Defence Estate, DG Defence Accounts and others
Attached
⇒ Indian Ordnance Factories → later became Companies (CPSE)
⇒ Indian Military Academy (IMA), Dehradun; Sainik School Ghorakhal,
Autonomous Nainital, Uttarakhand and other similar organizations.
⇒ Institute for Defence Studies and Analyses (IDSA)
⇒ 2001: Defence Acquisition Council (DAC) was set up under Defence
Committee Minister to fasttrack the procurement of armaments for army, navy, airforce,
coastguards. (र�ा साधनों क� खरीद के �लए प�रषद)
Srijan portal (2020-Aug)
⇒ displays defence items that are being imported currently. So that the Indian
industry can design, develop and manufacture them domestically.
Portals
⇒ Help interaction between defence public sector undertakings (DPSUs),
Ordnance Factory to interact with the Indian industry.
⇒ �Benefit: Promotes indigenization of defence production.
iDEX (2018)
- For Innovations for Defence Excellence (iDEX)
⇒ Hindustan Aeronautics Limited, HAL.
CPSE ⇒ Bharat Electronics, Bharat Dynamics
सरकारी ⇒ Garden Reach Shipbuilders, Goa Shipyard, Hindustan Shipyard, Mazagon
कं प�नयां Dock Shipbuilders | Mishra Dhatu Nigam Limited, MIDHANI.
⇒ (*) Bharat Earth Movers
Local ⇒ Cantonment Boards: Civic administration bodies (Ref Laxmikanth for more)
Governance ⇒ e-Chhawani Portal = e-governance portal for cantonment boards.
⇒ �OPERATION SAMUDRA SETU: Indian Navy as a part of national effort
Operations
to repatriate Indian citizens from overseas. (भारतीयों क� वतन वापसी कोरोना म�)
Exercises
⇒ + many other defense exercises etc. self-Study from CA-PDF
57.7.4 🕵🕵🕵🕵✋ → 🤵🤵🤵🤵 Ordnance Factory Board abolished & Essential Defence Services Bill
😰😰BEFORE 🤩🤩AFTER 2021-Oct
⇒ Department of Defence Production → ⇒ This OFB&OF corporatized / converted from
Subordinate organization: Ordnance “departmental undertaking” (�वभागीय उपक्रम) to
Factory Board (OFB, HQ: Kolkata) → Defence Public Sector Undertakings (DPSUs
41 Ordnance factories (OFs) र�ा �ेत्र के सावर्ज�नक �ेत्र के उपक्रम)
⇒ This can also be termed as ⇒ Meaning it is re-registered into (total seven)
“Departmental Undertaking” similar Government companies under Companies Act
to Dept of Post & Ministry of Railways [आयुध �नमार्णी बोडर् और उसके नीचे क� ह�थयार फै ��यां जो
(More in �Pillar#2D: Types of Org) पहले एक �वभागीय उपक्रम के �प म� कायर् करती थीं उ�� अब
सरकारी कं प�नयों के �प म� पं जीकृ त िकया गया है]
76,000 workers in 41 Ordnance factories - Eventually, through merger/privatization of
produce less than ₹12,000 cr worth of companies and voluntary retirement scheme
defence equipment annually = problem of (VRS) of employees, this problem will be
overstaffing & low output. solved. (More in �Pillar#1B1: PSBs)
- Ordnance Factory workers are afraid of job loss
[इतने सारे मजदू र काम करते थे लेिकन उ�ादन काफ� कम and so they were planning to go on strike/hartal
था. यानी क� अनाव�क �प से अ��धक मानव बल को so government has passed Essential Defence
Services Bill to stop them from going on
नौकरी पर रखा गया. भ�व� म� इन सब सरकारी ह�थयार
Hartal/Strike.
फै ��यों का एक�करण, �नजीकरण तथा कमर्चा�रयों को
- If employee/worker in these defense factory
�े��क �नवृ�� योजना द्वारा नौकरी से हटाया जाएगा.
goes on strike, he will be punished with up to 1
हालांिक “हमारी नौकरी चली जाएगी” इस डर से कमर्चारी year jail or Rs 10,000 fine, or both.
हड़ताल पे उतरे- तो उ�� रोकने के �लए सरकार ने
“आव�क र�ा सेवा �वधेयक” पास करवाया है, तािक
हड़ताली कमर्चारी को जेल तथा जुमार्ना हो सके ]
57.7.5 👻👻👻👻👻👻👻👻Draft Defence Production and Export Promotion Policy 2020
⇒ By Defence ministry to �dependence on imports, Achieve US$ Bn exports by 2025.
⇒ Encourage "Make in India" via domestic research, IPR protection, FDI & Ease of Doing Business,
Training subsidies, support to MSMEs/Startups etc (र�ा उ�ादन तथा �नयार्त प्रो�ाहन नीती= र�ा उपकरणों का
भारत म� ही उ�ादन, सं शोधन, बौ�द्धक सं पदा र�ण, �वदेशी प्र�� नवेश म� बढ़ोतरी, �ापार म� सुगमता इ�ािद कदम उठाए जाएं गे)
57.7.6 �Ministry of External Affairs (�वदेश मामलों का मं त्रालय)
Responsible for organizing the Pravasi Bharatiya Diwas: (More in 📑📑Pillar#3A).

Dept ⇒ N/A
Attached ⇒ Foreign Service Institute, Delhi
Autonomous ⇒ India Centre for Migration (ICM)
�ायत सं �ान ⇒ India Development Foundation of Overseas Indians
⇒ Indian Council for Cultural Relations
Portals ⇒ Madad Portal for consular grievances.
⇒ Passport India Portal| Kailash Mansarovar Yatra Portal
⇒ e-Sanad for online verification of documents of Indian citizens abroad.
57.7.7 ✍ 🎺🎺 Mains previous years’ questions from these topics
What are the main socio-economic implications arising out of the development of IT 2021
industries in major cities of India? भारत के प्रमुख शहरों म� आई. टी. उद्योगों के �वकास से उ�प� होने वाले
मु�ा सामा�जक-आ�थक प्रभाव �ा ह� ? (250 words) Ans. mrunal.org/2018/08/upsc-model-answer-
gsm1-it-bpo-cities.html
What are ‘Smart Cities? Examine their relevance for urban development in India. Will it 2016
increase rural-urban differences? Give arguments for Smart Villages’ in the light of PURA
and RURBAN Mission. �ाटर् शहर �ा ह�? भारत म� शहरी �वकास के �लए उनक� प्रासं �गकता का परी�ण कर�। �ा
इससे ग्रामीण-शहरी म� होने वाले अंतर म� बढो�री होगी ? �ाटर् गांवों के �लए PURA एवं RURBAN �मशन के प्रकाश म�
तकर् द� |
Smart cities in India cannot sustain without smart villages. Discuss this statement in the 2015
backdrop of rural urban integration. “भारत म� �ाटर् शहरों का अ�� ाटर् गांवों के �बना नहीं है |” ग्रामीण
शहरी एक�करण क� पृ�भू�म म� इस कथन पर चचार् कर�।
With a brief background of quality of urban life in India, introduce the objectives and 2016
strategy of the ‘Smart City Programme’. भारत म� शहरी जीवन क� �वशेषताओं क� सं �� पृ�भू�म के साथ,
'�ाटर् �सटी प्रोग्राम' के उद्दे�ों एवं इससे सं बं�धत रणनी�त को प्र�ुत कर�।
The basis of providing urban amenities in rural areas (PURA) is rooted in establishing 2013
connectivity. Comment. ग्रामीण �ेत्रों म� PURA के आधार पर शहरी सु�वधाएं प्रदान करने का उदे� 'स�द्धता'
�ा�पत करना है । िट�णी कर� |
📑📑NEXT Handout 5C: Communication Infra, NIP, PM-Gati-Shakti PPP & Investment models
MRUNAL’S ECONOMY PILLAR#5C: INFRASTRUCTURE: Communication, IT, PPP, NIP etc
Table of Contents
58 📡📡Infrastructure → Communication (सं चार) .......................................................................................... 979
58.1.1 � [Yearbook] Ministry of Communication (सं चार मं त्रालय) ....................................................... 979
58.1.2 � Ministry of Communication → Fraud Prevention Bodies................................................ 980
58.1.3 �Dept of Telecommunications → Digital Communications Commission ......................... 980
58.1.4 � Ministry of Electronics & IT इले��ो�नक� एवं सूचना प्रौद्यो�गक� मं त्रालय............................................ 980
58.2 Communication (💻💻/📞📞) related Regulators /Apps / Portals ......................................................... 981
58.2.1 � Comm → Regulators → TRAI ............................................................................................ 981
58.2.2 �📞📞 Comm → Stolen phone? → Central Equipment Identity Register portal ............... 981
58.2.3 �📞📞 Telecom → Emergency Response Support System (ERSS) ......................................... 982
58.3 📞📞☎ Communication → Telecom .................................................................................................. 982
58.4 ☎� ⚔� Adjusted Gross Revenue (AGR) ............................................................................ 982
58.4.1 ☎� ⚔� AGR Dues → Relief Package 2021-SEPT .................................................... 983
58.4.2 ☎� ⚔� AGR: Interest Payment in form of equities/shares- Vodafone-Idea (Vi). 984
58.4.3 ☎� ⚔� : AGR: Way forward/Conclusion ................................................................. 984
58.4.4 ☎⚔🤬🤬 Controversy: Telecom → 2G Spectrum Scam ........................................................ 984
58.4.5 ☎⚔🤬🤬 Controversy: Telecom → Interconnect Usage Charges (IUC) ............................. 985
58.5 💻💻 Communication → IT → Digital India programme .................................................................. 985
58.5.1 💻💻 Digital India → PM-WANI Public Wifi (2020-Dec)......................................................... 987
58.5.2 💻💻/📞📞 → IT/Telecom → Training (Misc. schemes) ............................................................ 988
58.6 💻💻💻💻💻💻💻💻 Communication → IT → 5G revolution in India.................................................... 988
58.6.1 💻💻💻💻💻💻💻💻 Challenges and Opportunities in of 5G (इसे अपनाने म� चुनौ�तयां+अवसर ) ............... 989
58.6.2 � 5G Hackathon by DoT (2020)............................................................................................... 990
58.6.3 💻💻💻💻💻💻5G Trials start in India (2021, 2022) ......................................................................... 990
58.6.4 � NEST Division in MEA.......................................................................................................... 990
58.7 💻💻 Communication → IT → Private initiatives for internet........................................................... 990
58.7.1 💻💻📊📊 COMMUNICATION → IT → Rankings .................................................................... 990
58.8 📔📔 📔📔 💾💾 ES19: Public Data: For the people, by the people ........................................................... 991
58.8.1 💾💾Types of Government Data .................................................................................................... 992
58.8.2 💾💾 🥰🥰Public Data: Opportunities through Data integration ................................................. 992
58.8.3 💾💾 Telangana Government’s Samagra Vedika initiative:......................................................... 993
58.8.4 💾💾 Govt efforts to release statistical data [सां��क� डेटा को सावर्ज�नक बनाना]................................... 993
58.8.5 💾💾💾💾 Challenges in public data [सावर्ज�नक डेटा क�चुनौ�तयां] .......................................................... 993
58.8.6 💾💾🧾🧾⚖ Draft Data Empowerment and Protection Architecture (DEPA) ......................... 994
58.8.7 💾💾 ✍🏼🏼Conclusion: Public Data (सावर्ज�नक डेटा) .............................................................................. 994
58.9 �📽📽 [YB] Ministry of Information & Broadcasting (सूचना एवं प्रसारण मं त्रालय) ................................. 994
(Batch: PCB7) Mrunal’s Economy Pillar#5C: Infrastructure: Communication, IT, PPP, NIP etc → Page 977
58.9.1 �🤬🤬🤬🤬 Comm → Regulators (Statutory) → Censor board .............................................. 995
58.9.2 �🗞🗞 Comm → Regulators (Statutory) → Press Council of India ...................................... 995
58.10 🔭🔭🔭🔭SPACE TECH Infrastructure (अवकाश �ेत्र) .......................................................................... 997
58.10.1 👻👻👻👻👻👻Space Tech: Atma-Nirbhar ................................................................................... 997
58.10.2 📙📙📙📙ES22: using cartography and geospatial data to track development........................ 997
59 🧱🧱🧱🧱 Infra → GSM3: Investment Models (�नवेश के तरीके )...................................................................... 999
59.1 🧔🧔🧔🧔🧔🧔 Infra.Dev.→ PPP (Public Private Partnership)................................................................ 999
59.2 🧔🧔🧔🧔🧔🧔🧔🧔 Infra.Dev. → PPP (Greenfield) Models ................................................................... 1000
59.2.1 🧔🧔🧔🧔🧔🧔🧔🧔 Infra.Dev. → PPP (Brownfield) BLT & ToT .................................................. 1002
59.2.2 🧔🧔🧔🧔🧔🧔🧔🧔 Infra.Dev. → PPP (Brownfield) → OMDA Model....................................... 1002
59.2.3 🧔🧔🧔🧔🧔🧔🧔🧔 PPP/Privatization: Airport Bundling............................................................... 1003
59.3 🧔🧔🧔🤵🤵 Infra.Dev. → Non-PPP .................................................................................................... 1003
59.4 🧔🧔🧔🤵🤵 🛡🛡 Infra.Dev. → Non-PPP → GOCO for Indian Army ............................................... 1003
59.4.1 🛡🛡GoCo Mechanism? ................................................................................................................. 1004
59.4.2 🛡🛡GoCo: Pros and Cons ............................................................................................................. 1004
59.5 🧔🧔🧔🧔🧔🤵🤵Hybrid Annuity Model (HAM) = mix of PPP + NonPPP ....................................... 1005
59.6 🧔🧔🧔🧔🧔🧔Infra.Dev → Misc. Topics................................................................................................. 1006
59.6.1 �👊👊👊👊Swiss Challenge (��स चुनौती / ललकार) ........................................................................ 1006
59.6.2 🧔🧔🧔🧔🧔🧔Viability Gap Funding (VGF: �वहायर्ता अ�र फं िडगं ) ................................................. 1006
59.7 💰💰💰💰 Infrastructure Funds ............................................................................................................... 1007
59.7.1 💰💰💰💰 National Investment and Infrastructure Fund (NIIF: 2015)..................................... 1007
59.7.2 👜👜 (Full) Budget-2019 on NIIF, Investment & PPP ............................................................... 1008
59.7.3 👻👻Atma-Nirbhar 3.0: NIIF Strategic Opportunities Fund..................................................... 1008
59.8 💰💰💰💰 Infra Finance → National infrastructure pipeline (NIP) .................................................... 1009
59.8.1 💰💰💰💰 NIP → Infra Finance Reforms → Financial Market Reforms .................................. 1010
59.8.2 💰💰💰💰 NIP → Infra Finance Reforms → Credit Enhancement Fund (CEF) ...................... 1010
59.8.3 💰💰💰💰 NIP → Others reforms .................................................................................................. 1010
59.9 💰💰💰💰 Infra Finance → NIP, NMP, GATI Shakti ........................................................................... 1010
59.9.1 💰💰💰💰 👜👜 Budget-2021: National MONETISATION Pipeline 2021................................... 1011
59.10 💰💰💰💰:� Infra Finance: Gati Shakti Plan 2021 [₹100 lakh cr]..................................................... 1011
59.10.1 (💰💰💰💰:�) PM GatiShakti — National Master Plan Digital Portal .................................. 1012
59.10.2 👜👜👜👜Budget-2022 on Infra Finance................................................................................... 1012
59.11 (🧔🧔🧔🧔🧔🧔)😰😰PPP challenges (चुनौ�तयां)....................................................................................... 1012
59.12 🧱🧱✍Infra → Conclusion (सार / �न�षर्) ....................................................................................... 1013
59.13 ✍Mains Questions in past UPSC exams ..................................................................................... 1013
59.13.1 Mains Mock Questions from these topics ............................................................................ 1013
59.13.2 ✍ 🎺🎺 Mains previous years’ questions from these topics ............................................... 1014
58 📡📡INFRASTRUCTURE → COMMUNICATION (सं चार)
58.1.1 � [Yearbook] Ministry of Communication (सं चार मं त्रालय)

Dept − Dept. of Telecommunications (दू रसं चार �वभाग )
− Dept. of Posts (डाक �वभाग): ref Pillar#1D for more
Statutory Bodies − Telecom Regulatory Authority of India (TRAI: भारतीय दू रसं चार �व�नयामक
प्रा�धकरण)
− Telecom Disputes Settlement and Appellate Tribunal (TDSAT: दू रसं चार
�ववाद समाधान एवं अपील अ�धकरण)
CPSE/PSB − BSNL: Bharat Sanchar Nigam Limited & MTNL: Mahanagar Telephone
सरकारी कं प�नयों Nigam Ltd for Delhi & Mumbai. 📑📑Ref Pillar#2: for their merger.
सावर्ज�नक − BBNL: Bharat Broadband Network Ltd. (2012) to implement
�ेत्र के ब�क
BHARATNET project to lay internet lines to Gram Sabha→ although,
govt planning to merge this company with BSNL.
− Telecommunications Consultants India (TCIL) Ltd
− Indian Telephone Industries (ITI) Ltd
− India Post Payments Bank (IPPB) Ltd (More in 📑📑Pillar#1B1)
Attached / − Universal Service Obligation Fund (USOF)
subordinate − Telecommunication Engineering Center
Autonomous − Centre for Development of Telematics (C-DOT)
58.1.2 � Ministry of Communication → Fraud Prevention Bodies
2021: Communication minister to set up two bodies
- 1) Digital intelligence unit (DIU) against Unsolicited commercial communication -
Telemarketing, SMS spam.
- 2) Telecom analytics for fraud management and consumer protection (TAFCOP).
🤩🤩Objective? Combat: digital frauds involving Mobile calls and SMS.
58.1.3 �Dept of Telecommunications → Digital Communications Commission

⇒ 1989- Telecom Commission was setup. (दू रसं चार/ दू रभाष आयोग)
⇒ 2018: Renamed in Digital Communications Commission (िड�जटल सं चार आयोग)
⇒ DoT’s Secretary (IAS) is the chairman of this body. NITI CEO (IAS) is a part time member.
⇒ Functions? finalizing policy, dept’s budget, spectrum auction etc → sending for
Minister/Cabinet’s approval
58.1.4 � Ministry of Electronics & IT इले��ो�नक� एवं सूचना प्रौद्यो�गक� मं त्रालय

Dept N/A
Attached National Informatics Centre (NIC, रा��ीय सूचना �व�ान क� द्र) → 2020 they setup Centre
offices of Excellence (CoE) in Blockchain Technology in Bengaluru, Karnataka,
Statutory Under the Information Technology Act, 2000 →
Bodies 1. Controller of Certifying Authorities (CCA) प्रमाणन प्रा�धकरण �नयं त्रक → Cyber
Appellate Tribunal
वैधा�नक 2. Computer Emergency Response Team-India (CERT-In) भारतीय कं �ूटर आपात
सं �ाएँ प्र�तिक्रया दल
Under the Aadhaar Act 2016 →
Unique Identification Authority of India (UIDAI) भारतीय �व�श� पहचान प्रा�धकरण
CPSE ⇒ National Informatics Centre Services Inc.(NICSI) (CPSE under control of
सरकारी कं प�नयां NIC) भारतीय सूचना �व�ान क� द्र सेवा सं �ान
Autonomous ⇒ Centre for Development of Advanced Computing (C-DAC) प्रगत सं गणक �वकास
Bodies क� द्र → “E-Sangam” for delivery of Data among geographically dispersed
(�ाय� �नकाय) departments
⇒ Centre for Materials for Electronics Technology (C-MET)
⇒ Education & Research in Computer Networking(ERNET)
⇒ National Institute of Electronics and Information Technology (NIELIT -
Formerly DOEACC Society)
⇒ Society for Applied Microwave Electronics Engineering and Research
(SAMEER); Software Technology Parks of India (STPI)
⇒ National Internet Exchange of India(NIXI) - a meeting point for Internet
Service Providers (ISP)
App ⇒ 2017: UMANG- Unified Mobile Application for New-Age Governance
(UMANG). It delivers government services by by Central and State
Government departments and Local bodies such as locating exam centre,
booking govt doctor appointment, applying for soil health card & filing
EPFO complaints.
- Data Security Council : is a (private sector) not-for-profit body on data protection by
NASSCOM. NASSCOM is a not-for-profit association of Software companies.
58.2 COMMUNICATION (💻💻/📞📞) RELATED REGULATORS /APPS / PORTALS
58.2.1 � Comm → Regulators → TRAI

⇒ 1999: Telecom Regulatory Authority of India (TRAI: भारतीय दू रसं चार �नयामक प्रा�धकरण), a statutory
body under the Communications Ministry → higher appeal to Telecom Dispute Settlement And
Appellate Tribunal (TDSAT: दू रसं चार �ववाद �नपटान और अपीलीय �ाया�धकरण).
⇒ TRAI regulates the operators of telecom, internet, DTH/cableTV sector.
TRAI’s notable initiatives for consumer interest are →
⇒ DND (Do Not Disturb) registry: To prevent Telemarketing Calls/SMS.
⇒ SMS scrubbing guidelines: Telecom service providers will have to verify Every SMS for its
content before delivery.- mainly to prevent marketing spam SMS.
⇒ Strong directives to reduce Call-drops in mobile plans.
⇒ MySpeed App to help customers to measure 3G/4G speed & share with TRAI.
⇒ Directives for Net Neutrality (नेट तट�ता) i.e. Internet Service Providers (ISPs) must treat all
internet traffic equally without increasing/slowing down speed towards any website.
⇒ DTH / Cable operators required to give customer the freedom of choosing channels, and fixed
prices for services.
⇒ 2007: Telecommunication Consumers Education and Protection Fund (TCEPF). Requires
Telecom service providers to deposit all unclaimed money of consumers, including excess
charges and security deposit.
58.2.2 �📞📞 Comm → Stolen phone? → Central Equipment Identity Register portal
⇒ By Dept of Telecom
⇒ If your mobile gets stolen or lost → file First Information Report (FIR) in Police → upload FIR
details and International Mobile Equipment Identity (IMEI) on this portal
⇒ Govt will block the IMEI number of the phone → Phone will become unusable for the thief.
58.2.3 �📞📞 Telecom → Emergency Response Support System (ERSS)
- Boss? Home Ministry. Launched pan-India in 2019-Feb. Although some states yet to roll it out.
- Victim dials 112 → Emergency Response Centre (आपातकालीन प्र�तिक्रया क� द्र) → redirect to police
(100), fire (101), health (108), women's safety (1090) & other helplines.
- Alternatively, victim can use Panic Button on the phone by longpressing ‘5’ or ‘9’, or, '112 India'
mobile app which also has a ‘shout’ button so registered volunteers close to the victim can come
for immediate assistance before police/firemen arrive.
58.3 📞📞☎ COMMUNICATION → TELECOM

Teledensity = number of telephones per 100 population Urban Rural All India
As per 📔📔📔📔ES21 139% 59% 86%
⇒ telephone subscribers in India = more than 98% mobile. Less than 2% landline
⇒ 1995: Consumer internet connections started in India. 2020: >75cr connections. 50% of these
new connections came within the last 4 years. Shows the exponential growth of digital India.
⇒ �Challenge? 30 cr out of above >75cr connection still having 2G speed.
58.4 ☎� ⚔� ADJUSTED GROSS REVENUE (AGR)
⇒ Early 90s: LPG reforms, private sector telecom companies allowed to start operating in India.
⇒ They had to obtain telecom licenses & pay certain fees to the Govt every year.
⇒ This fees is calculated as a % of their Adjusted Gross Revenue (AGR: समायो�जत सकल राज� / आमद).
⇒ Later, Department of Telecommunications (DoT) and Private Telecom Companies differed over
the definition / formula of AGR. → Matter went to Supreme Court.
⇒ DoT said [Telecom revenue + non-telecom revenue] → Adjusted Gross Revenue (AGR). Uska
pay X% to government as “licence and spectrum fee.”. (Started from 1999)
⇒ Telecom companies (Telecos) demanded that non-telecom biz revenue (e.g. rent on property,
interest from bond investments, dividend from subsidiary companies etc) should not be counted
in this AGR formula. AGR क� �गनती म� ग़ैर टेलीकॉम आमदनी को भी �गना जाता था, टेलीकॉम कं प�नयों को इससे एतराज़
था लेिकन वो सुप्रीम कोटर् म� के स हार गए.
⇒ 2019: Supreme Court judgement: Department of telecom (DoT)’s definition of AGR is right.
Telcos must pay the AGR, interest and penalty on late payment.
Company Jio Vodafone-IDEA (Vi) Airtel
AGR dues in Crore >62 kcr >58 kcr >43 kcr
(figures not IMP)
⇒ Telecos unable to pay this much money. If govt did not help → weaker companies like
Vodafone-Idea could shut down → Bad loan/NPA for banks, job loss, foreign investors
confidence loss. [कं प�नयों ने AGR का बकाया पैसा, तथा उस पर �ाज और दंड क� रक़म सरकार को चुकानी है लेिकन उनका
धं धा नुक़सान म� है. यिद सरकार कोई राहत नहीं देगी तो वोडाफ़ोन के िदवा�लयेपन जो�खम]
⇒ IF Vodafone shuts down – only 2 Telecos left [Jio+Airtel] = Duopoly = not good for customer.
58.4.1 ☎� ⚔� AGR Dues → Relief Package 2021-SEPT

बकाया रक़म चुकाने म� अगले चार साल तक अ�ाई �प से �गन/राहत। और �वदेशी प्र�� नवेश म� सुधार।
😰😰BEFORE 🤩🤩AFTER REFORM
Telecos had to pay AGR. - Four years (optional) moratorium/suspension
कं प�नयों ने AGR का बकाया पैसा चुकाना है, from 1/10/2021
िक�ु 2021 म� सरकार ने उ�� अगले चार सालों के - Meaning Telecos need not start paying it
�लए वैक��क �गन/ अ�ायी राहत दी है. immediately. Telecos can start paying in
हालाँिक अगर अगले चार साल कं पनी ने वो पैसा instalments after 4 years, if they wish.
नहीं चुकाया तो चार साल का �ाज का पैसा कं पनी - However, IF telecos opt for the suspension, they
ने सरकार को चुकाना होगा. will have to pay interest rate for these four years to
Govt. (e.g. Vodafone-Idea VI) opted for this
scheme. This interest amount may be paid in form
of A) rupee currency or B) equity (shares of the
company).
AGR Calculation included both Non-telecom revenue excluded from formula [कं पनी क� ग़ैर
telecom and non-telecom revenue. टेलीकॉम आमदनी को AGR क� �गनती म� से हटाया गया]
Govt demanded spectrum usage SUC removed, with some technical conditions.
charge (SUC)/fees
Spectrum rights were given for 20 30 years [�े��म इ�ेमाल करने के क�नी के अ�धकार क� अव�ध को बढ़ाया
years to company. गया]
FDI: Upto 49% (Automatic route). Upto 100% FDI allowed through automatic route.
Beyond that, Government approval Meaning Govt approval not required (Except FDI coming
required i.e. 50 to 100% FDI also from India’s land neighbours e.g. China, Pak, Bangladesh)
allowed But ONLY AFTER [�चा�लत मागर् से, यानी िक, �बना सरकार क� अनुम�त �लए १०० प्र�तशत तक
permission of government. प्र�� वदेशी �नवेश को छू ट दी गई है]
-- Certain technical reforms in penalty interest-rate
calculation, bank guarantees etc. but NOTIMP.
58.4.2 ☎� ⚔� AGR: Interest Payment in form of equities/shares- Vodafone-Idea (Vi)
[कं पनी बकाया AGR के ऊपर चढने वाले �ाज क� रक़म सरकार को �पए मुद्रा क� जगह अपने शेयर के �प म� अदा करे]
Vodafone-Idea (Vi) has opted for 4 year moratorium on AGR payment (of ₹58,000 cr). So, they need
to pay total ₹16,000 crore interest rate for next four years to Govt, in the form of A) Rupee currency
or B) Equity (shares of the company) so, Vi’s promoters i) Vodafone Group and ii) Aditya Birla
group will transfer Rs.16,000 worth of shares to Govt. as interest payment. Resultant situation:
Party → Govt +Vodafone +Aditya Birla +Others =Total
Shareholding (%) 35.8% 28.5% 17.8% 17.9% =100%
58.4.3 ☎� ⚔� : �AGR: Way forward/Conclusion

- govt needs large amount of funds for India’s social economic development & Post Corona
economic revival. So, govt cannot forgo the entire AGR dues.
- But, at the same time, the health of telecom and banking sector is also crucial for economic
growth. So govt has taken an appreciable middle path in the AGR dilemma.
- However, even after this (temporary) relief, Telecom companies are still in huge debt & losses.
Telecos will have to raise prepaid & postpaid tariff to increase ARPUs (average revenue per user).
- Telecos may have to issue additional shares/bonds to arrange the money. Then, hopefully in the
long run Telecos will be able to come out of this crisis.
[सरकार को भी क�ाणकारी योजना के �लए ढेर सारा पैसा चािहए तो सं पूणर् �प से तो AGR माफ़ नहीं कर सकती लेिकन अ�ायी �प से
एक प्रशं सनीय म�मागर् �नकाला है- वरना टेलीकॉम कं प�नयों और ब�कों का िदवा�लया �नकल जाता।]
58.4.4 ☎⚔🤬🤬 Controversy: Telecom → 2G Spectrum Scam
To run telecom business, two things required → A) License, B) Access to Spectrum. Spectrum
refers to the radio waves that are used by mobile phones to transmit data.
- UPA-1: we’ll give give license by “First Come First Serve Basis”, and whoever gets the license, he
will automatically get free 2G spectrum linked with his License.
- 😰😰Scam? Certain shell companies who had no intention of actually running telecom business
applied and got licence & free spectrum → they sold it to the needy companies at higher prices,
thus, making windfall profit without doing any business at all. UPA’s ally DMK party’s A.Raja
(Telecom Minister) & Kanimozhi were arrested → later acquitted (2017).
Present system:
- A) Companies has to apply for Unified License (i.e. valid for both voice and data services) and
- B) Company has to separately buy Spectrum through Dept of Telecom’s auctioning.
58.4.5 ☎⚔🤬🤬 Controversy: Telecom → Interconnect Usage Charges (IUC)

Outdated topic. Deleting from handout.
58.5 💻💻 COMMUNICATION → IT → DIGITAL INDIA PROGRAMME
- 1977: National Informatics Centre (NIC) to develop websites, softwares, ICT services for govt
- 2006: Manmohan’s National e-Governance Plan (NeGP)
- 2014: Modi’s Digital India Mission by restructuring above things:
Boss? Ministry of Electronics & IT. Central Sector Scheme = 100% Funded by Union.
Digital India program (िड�जटल इं िडया कायर्क्रम) 9 Pillars:
1) Broadband Communication Ministry’s Department of Telecom (DoT) →
Highways
- 1) Bharatnet Project/ National Optical Fibre Network (NOFN):
Connect all 2.50 lakh+ village Panchayats with broadband.
👜👜👜👜Budget-2022:- We'll finish Bharatnet via PPP by 2025.
- 2) National Broadband Mission: To provide broadband access to all
villages by 2022.
- 3) Ghar Tak Fiber to connect Bihar villages through high speed
internet. Launched 2020-Sept.
- 4) PM-WANI Public Wifi launched in 2020-Dec.
1) Broadband National Knowledge Network (NKN): to provide highspeed internet
Highways (Gbps speed) to all universities, libraries, laboratories, healthcare,
(continued) research & agricultural institutions
2) Universal Access Telecom companies required to pay ₹ ₹ to DoT’s Universal Service
to Mobile Obligation Fund (USOF: �व��ापी सेवा कतर्� �न�ध) → new mobile towers in
Connectivity unconnected rural / remote / LWE (naxal) areas.
👜👜👜👜Budget-2022:- Universal Service Obligation Fund (USOF)’s 5%
funds will be allocated for R&D on affordable broadband and affordable
mobile service. Target- Rural and remote areas.
3) Public Internet - MEITY → Setup Common Services Centre (CSC) in all 2.50 lakh+
Access Programme gram panchayat. So, even if a poorman doesn’t own PC/mobile, he
(सावर्ज�नक इंटरनेट ए�ेस can use CSC to apply online for exams/schemes/certificates, check
कायर्क्रम)
result, pay bills etc.
- Dept of Post to create similar facilities in 1.50Lakh post offices.
4) e-Governance Develop more apps, websites and portals to reduce to improve Govt’s
5) e-Kranti - efficiency, reduce corruption. e.g.
Electronic Delivery - FinMin → Dept of Expenditure Controller General of Accounts
of Services (CGA) → Public Financial Management System (PFMS) webportal to
disbursal of scheme money.
- Same CGA → Bharatkosh webportal for transactions related to govt’s
“Non-tax revenue receipts” e.g. selling Yojana / Kurukshetra
magazines online.
- Dept of Post → online tracking of speed post, online sale of stamps.
- NIC’s Sandesh App = Whatsapp like app only for Govt employees.
- MeghRaj platform: To provide Cloud Computing services Benefit?
Cloud servers can store the file & run the softwares/Apps →
individual Govt. organizations needn't buy very powerful CPU/large
hard disks etc.
- State Wide Area Network (SWAN) to run State Government website
& e-governance services.
Similarly, portals / apps for paying taxes, getting passport, registering a
company, applying for admissions etc.
6) Information for - MyGov.in: to facilitate 2-way idea exchange between citizens and
All Government for good governance.
सबको जानकारी /सूचना - Data.gov.In: researchers can obtain datasets related to ministries,
प्रदान करना
departments, Macroeconomic indicators etc.
- E-taal portal: It tracks the statistics of govt-citizen transactions e.g.
“x” number of RTI applications filed online by the people in “y” age
group from “z” state.
- IGNOU, Delhi University etc. given funding to put their courses /
learning modules online.
- mKisan app/portal for e-extension services to farmers.And so on….
7) Electronics Mfg Ref: Pillar#4 → Mfg → National Policy on Electronics (NPE)
8) IT for Jobs 1) IT cos given subsidies & tax benefits for setting up BPO/call centers in
रोजगार सृजन North East. 2) More computer courses for villagers and ITIs.
9) Early Harvest Focuses on projects to be implemented within short timeline. e.g
Programmes - Biometric attendance in govt organisations to check the absenteeism
शीघ्र प�रणाम कायर्क्रम of employees, teachers and students
- 👦👦Women and Child Ministry → Khoyapaya portal to announce
lost children so others may inform the authorities.
- 👦👦Labour Ministry → Pencil portal to complaint about child
labour.
- �HRD Ministry → Convert all school books into ebooks.
- 🌪🌪IMD + NDMA → SMS based weather info. & disaster alerts
- MEITY → CERT-In → Cyber Swachhta Kendra webportal for free
tools for removal of botnet / malware / ransomware such as Petya,
WannaCry etc.
- MEITY → Digilocker: It’s similar to google drive to store files.
citizen opens an online account linked with Aadhar number. 1) He
can store his important documents 2) Organizations can send
electronic copies of documents (e.g. driving license, Voter ID, School
certificates) directly into his lockers. 3) he can even sign documents
using eSign facility.
- 👻👻👻👻MEITY → Saathi Chat Bot For corona awareness
58.5.1 💻💻 Digital India → PM-WANI Public Wifi (2020-Dec)

⇒ Boss? Department of Telecom
⇒ Pradhan Mantri Wireless Access Network Interface (PM-WANI) scheme is meant to provide
public Wi-Fi service through Public Data Offices (PDOs) spread across India.
⇒ A kirana shop owner, a tea-stall vendor, or a Common Service Centre (CSC) — can register as
PDO → install wireless routers & provide the internet to people.
⇒ Such PDO will not have to pay any license fees to Govt, for providing internet services (unlike
JioFiber, Airtel Broadband etc companies)
⇒ �Benefit? � domination/looting by the Internet service providers(ISPs) and 3g/4g mobile
companies & their roaming charges on data usages.
छोटे �ापा�रयों क� दुकानों म�, सामा� सेवा के �ों म�, वायरलेस राउटर �ा�पत कर सावर्ज�नक वाई फ़ाई. तािक मु� म�/ िकफ़ायती दामों पर
इं टरनेट क� सु�वधा लोगों को �मल सके .
🔠🔠❓MCQ. Which are aims of "Digital India" Plan of the Govt of India? (UPSC-Pre-2018)
1. Formation of India's own Internet companies like China did.
2. Establish a policy framework to encourage overseas multinational corporations that collect Big
Data to build their large data centres within our national geographical boundaries.
3. Connect villages to the Internet and bring Wi-Fi to schools, public places and major tourist
centres.
58.5.2 💻💻/📞📞 → IT/Telecom → Training (Misc. schemes)
Training Target Scheme? [Central Sector Scheme = 100% Funded by Union.]

📞📞 Youth for − Pandit Deen Dayal Upadhayay Sanchar Kaushal Vikas Pratisthan
telecom jobs Scheme. Boss? Dept of Telecom (Communication Ministry).
💻💻Villagers to get − Pradhan Mantri Gramin Digital Saksharta Abhiyan (PMGDISHA)

computer training − Boss? Ministry of Electronics & IT
Apart from above, many other skill development schemes also directly or indirectly involve Computer
training, but that we will see in Pillar#6 handout.
58.6 💻💻📡📡📡📡📡📡 COMMUNICATION → IT → 5G REVOLUTION IN INDIA

Fifth generation (5G) of wireless technology = 2 to 20 Gbps speed, which is much higher than
present 4G which gives 6-7 Mbps speed. (एक अद्यतन बे-तार तकनीक जो 4g के मुकाबले ब�त ही �ादा तेजी से डाटा
प�ंचा सकती है)
5G Spectrum Frequency Band Coverage Area Max Speed
Low Frequency 🤩🤩🤩🤩🤩🤩(largest among 3) 😰😰 (100Megabits per sec)
Mid Band 🤩🤩🤩🤩 (middle) 🤩🤩🤩🤩 (middle level)
High Band 😰😰 (smallest area covered) 🤩🤩🤩🤩🤩🤩(20Gigabits per sec)
 Latency is the amount of time taken by data to travel between its source and destination. 5G has
very low latency. (स्रोत और ल� के बीच डाटा प�ंचाने म� ब�त ही कम �वलं ब होता है)
 Network slicing (नेटवकर् के टुकड़े करना): mobile operators to create multiple virtual networks within a
single physical 5G network. Provide faster data to tele-surgery in rural areas, driverless car, etc.
 Thus, 5g is useful in Internet of Things (IoT) and machine to machine (M2M) communications,
CCTV surveillance, drones, real time data analytics, industrial revolution 4.0.
58.6.1 💻💻💻💻💻💻💻💻 Challenges and Opportunities in of 5G (इसे अपनाने म� चुनौ�तयां+अवसर )

 �China already enslaving the small Nations through cheap infrastructure loans in its 'One belt
one road'. Now, China providing 5G technology & equipment to Nepalese Tourism Industry.
Later China may also supply 5G to the militaries of small nations. This poses grave economic and
strategic challenges to India. (Related Topic D10 club Ref: in �Pillar#3B) (चीन भारत से आगे)
 �5g signals tend to deteriorate faster over long distances than lower-frequency signals. So,
more number of towers may be required than 4g, to cover same geographical area (�ादा टावर)
 �5g signals may create interference to aeroplane’s altimeter device. Altimeter is a device to
gauge the altitude and the distance covered by an aircraft, spacecraft or missile (एक हवाई जहाज़
िकतनी ऊँ चाई पर ��त है वो नापने के �लए अ�ीमीटर नाम के उपकरण का इ�ेमाल होता है। हालाँिक वो �जस फ़्री�� सी/आवतर्न पर
काम करता है उसी पर 5G टे�ोलॉजी के साथ कु छ �व�ेप/िद�त� आ सकती है)
 750 million Internet users in India but 300 million still trapped in 2G speed. 5G’s faster internet
required for e-learning, e-medicine, e-judiciary etc.
 �When People upgrade their devices to use 5G → Make in India, employment opportunities.
 Considering these benefits, USA, China, S. Korea are working on war-footing to implement 5g.
Our Department of Telecom too had setup A.J.Paul Raj Committee, it prepared a roadmap for
rollout of 5G telephony in India by 2020.
 Govt wants to auction 5G spectrum [8300MHz] at a reserve price of ₹5 Lcr. (Reserve price नीलामी
म� आर��त रकम = minimum this amount required to participate in the auction.) But,
Airtel,Vodafone unable to afford. Only Reliance-Jio may buy 5G= monopoly = not in the best
interest of consumers. (मुकेश अंबानी के के हाथ म� 5g का एका�धकार होने का भय)
58.6.2 � 5G Hackathon by DoT (2020)

⇒ 2020: Department of Telecommunications (DoT) has launched ‘5G Hackathon’ in association
with Niti Aayog, MEITY, MSME Ministry, IITS & other academic and industry stakeholders.
⇒ Participants to give innovative ideas/solutions for 5G → win prizes worth total ₹2.5 cr!
58.6.3 💻💻💻💻💻💻5G Trials start in India (2021, 2022)

- DEPARTMENT of Telecommunications( DoT) Allowed Airtel, Reliance Jio Infocomm and Vi
(formerly Vodafone-Idea), MTNL to start 5G trials
- Following frequencies will be tested for 5G: 3.2 GHz to 3.67 GHz, 24.25GHz to 28.5 GHz band,
800 MHz, 900 MHz, 1800 MHz and 2500 MHz
- 2022-October: 5G launched in 8 cities then ball-by-ball commentary not important.
58.6.4 � NEST Division in MEA

- New, Emerging and Strategic Technologies (NEST) division created by the Ministry of external
affairs (MEA) for collaboration with foreign nations for 5g, artificial intelligence etc.
- Sidenote: D10 group? (More in �Pillar#3B)
58.7 💻💻 COMMUNICATION → IT → PRIVATE INITIATIVES FOR INTERNET

Starlink ⇒ By Elon Musk, the founder of Tesla e-cars & Space-X company.
Network ⇒ Aims to launch 12,000 internet-providing satellites by 2027.
Project ⇒ It’ll provide high-speed and affordable internet at global level.
Aquila ⇒ Facebook project to use solar powered drones for delivering internet in remote
areas. Although 2018, company abandoned the project.
Project Loon ⇒ Google company’s project to provide internet connectivity in remote / hilly
locations using helium balloons.
🔠🔠❓MCQ.'Project Loon', sometimes seen in the news, is related to?(UPSC-Pre-2016)
(a) waste management (b) wireless communication
(c) solar power production (d) water conservation
58.7.1 💻💻📊📊 COMMUNICATION → IT → Rankings

�Don’t loose sleep.
Digital Quality of Life by Surf Shark, a foreign private sector tech company
Index
− To measure internet speed, affordability, cyber security & govt
regulation etc-Then ranking given on each of these parameters so
poor-cost benefit #� ��थोड़ा-पढ़ो-आगे-बढ़ो
− While India in top 10 in terms of Internet affordability but
speed/reliability is very poor
Global Cybersecurity by the International Telecomm. Union (ITU)-under United Nations
Index (UN). India given 10th Rank in 2021. We are ahead of China & Pakistan
� Conclusion: SDG Goal #9 (infrastructure) requires India to provide universal telephone and
internet connectivity to all. Above scheme / policy helps in digital access, digital inclusion, digital
empowerment and bridging the digital divide. Thus, it’ll play an important role in transforming
India into a knowledge-based economy and digitally empowered society.
सबको सावर्�त्रक �प से टेलीफोन और इं टरनेट क� सु�वधा मुहैया कराएं गे तभी िड�जटल समावेशन -सश��करण होगा। अमीर गरीब
ग्रामीण शहरी के बीच िड�जटल खाई/�वभाजन कम होगा- सतत �वकास ल� को हा�सल करने के �लए अग्रता क्रम से यह सब करना ज�री
58.8 📔📔 📔📔 💾💾 ES19: PUBLIC DATA: FOR THE PEOPLE, BY THE PEOPLE
(Define) Data is a set of factual information stored in digital form. (िड�जटल �प म� सं ग्रहीत त�ा�क जानकारी)
(Origin) When people conduct their day-to-day activities online, they leave digital footprints- in
chatting, searching google, buying on amazon, file taxes, posting on social media etc. While doing
these activities online, people produce data about themselves which is stored on public and private
servers. [इं टरनेट पर रोज़ाना �व�वध ग�त�व�धयों के चलते ह� लोग �यं ही ख़ुद का डेटा सावर्ज�नक और �नजी सवर्र म� जमा करवाते ह�]
58.8.1 💾💾Types of Government Data
1) Administrative data (प्रशास�नक डाटा): Birth-death records, pensions, tax records, marriage records,
crime reports, land-property registrations, vehicle registrations etc.
2) Survey data (सव��ण): Census data, National Sample Survey data about employment, education,
literacy, nutrition etc. [जनगणना रोज़गार �श�ा सा�रता पोषण]
3) Transactions data (लेनदेन सं बं धी): e-National Agriculture Market data, Taxes, User-fees such as
railways etc.
4) Institutional data (सं �ागत): Public school data on pupils, public hospital data on patients, etc.
Most such data are held locally, predominantly in paper based form.
58.8.2 💾💾 🥰🥰Public Data: Opportunities through Data integration

Since the Administrative, Survey, Transaction and Institutional datasets are unconnected, each
ministry only has a partial picture. If all these public datasets are integrated then (सावर्ज�नक डेटासेट
एक�कृ त िकए जाए तो):
- While filling every new form, Person will not have to provide same details everytime while
filling up form e.g. his education, address proof, farm-land ownership proof etc. [बार बार अनेकों
आवेदन पत्रों म� एक ही िक़� क� जानकारी देने म� समय बचेगा]
- Weeding out bogus beneficiaries: If vehicle ownership records are compared with BPL
beneficiaries list → remove car owners claiming to be BPL for Government schemes. [फ़ज़�
लाभा�थयों को रद्द करना- वाहनों क� मा�लक� के डेटाबेस से ग़रीबी रे खा के नीचे के नाग�रकों के डेटाबेस को �मलाया जाए]
- National health register -Similar to Digilocker it’ll contain medical records of patient tied with
his Aadhar. Benefits? 1) During emergency doctor can access the medical history, even if patient
is unconscious 2) surveillance of syndromes 3) immunization information. (रा��ीय �ा� र�ज�र-
�जसम� आपक� �ा� �चिक�ा सं बं �धत जानकारी द�ावेज़ों को ऑनलाइन सं ग्रिहत िकया जाए)
- Digital Dashboard for Transparency & Accountability(पारद�शता और जवाबदेही)
- A district education officer can make better decisions if he knows, for each school in his
district, attendance rates of students and teachers, average test scores and status of school
toilets. [�जला �श�ा अ�धकारी �वद्या�थयों तथा �श�क क� हा�ज़री परी�ा के गुण इ�ािद के िहसाब से �नणर्य ले सक� ]
- Parents can make better decisions about which school to send their children to if they
know the average absenteeism rate of teachers in their village and can compare the rate
to that in the neighboring village. [कौनसी �ू ल म� �श�क �ादा ग़ैर हा�ज़र रहते ह� उस िहसाब से माता �पता
ब�े के �लए अ�� ू ल म� चयन कर सके । ]
- Researchers can use such data to validate the efficacy of Govt schemes and suggest
remedies for future. (Note: Union govt’s already launched Open Government Data
platform for this.)
- Private sector should be given selected databases for commercial use, after paying fees to Govt.
for example, [वा�ण��क उपयोग के �लए �नजी क��नयों को भी ऐसा सावर्ज�नक डेटा सरकार ने बेचना चािहए]
- If school test scores’ data of a given district / city is sold to a coaching company, it can
use it for more targeted advertising / setting new classrooms in the areas accordingly. So,
the company will benefit, parents will benefit. [कौन से �ज़ले म� �ू ल बोडर् परी�ाओं म� ब�त ही कमज़ोर
प�रणाम आ रहा है, यह डेटा- को�चंग �ास कं प�नयों को बेचा िकया जाए तािक वे उस �ज़ले म� �ादा �व�ापन कर सके ]
- Similarly, Uber can use public bus transport / passengers data to identify congested
areas, deploy more taxis / rickshaws in the peak hours accordingly. [िकस इलाक़े म� िकस समय
पर सावर्ज�नक बसों क� िक़�त रहती है यह डेटा -टै�ी कं प�नयों को बेचा जाए]
- Since govt is selling data-> it’ll earn a new stream of revenue to control fiscal deficit. [इस
प्रकार सावर्ज�नक डेटा को बेचकर सरकार अपनी आमदनी बढ़ाएं तो उसक� राजकोषीय घाटे म� कटौती होगी]
- 2019: Considering these benefits, MEITY setup Kris Gopal Krishnan committee for the
regulation of non-personal data such as community data, anonymous data. (गैर-�नजी डेटा)
58.8.3 💾💾 Telangana Government’s Samagra Vedika initiative:

Using the name & address of an individual as common identifier, Telangana Govt linked 25
Government datasets such as
− crimes, assets, electricity connection, subsidies, education, taxes etc
− Each individual was then further linked to relatives such as spouse, siblings, parents and other
known associates. [हर एक �� क� आपरा�धक �रकॉडर्, सं प��यां, �श�ा कराधान, इ�ािद डेटा को आपस म� जोड़ा गया तथा
एक एक �� के प�रवार और �ात सहयोगीओ के डेटा को आपस म� सं क�लत िकया गया]
− This helps in detection of crime, Identifying ineligible/fictitious beneficiaries. [तेलंगाना सरकार क� ये
पहल अपरा�धयों को ढू ंढने म�, फ़ज़� लाभा�थयों को हटाने म� उपयोगी]
Union Government is also “linking” of Bank account datasets – primarily through Aadhaar number,
PAN database, mobile numbers. It helps combing through transaction records, find out tax evaders
and Benaami accounts. [इसी प्रकार करचोर और बेनामी खातेदारों को पकड़ने के �लए क� द्र सरकार भी ब�क खातों को पान काडर्,
आधार नं बर इ�ािद से जोड़/�मला कर जाँच कर रही है ]
58.8.4 💾💾 Govt efforts to release statistical data [सां��क� डेटा को सावर्ज�नक बनाना]
Following initiatives to help the policymakers, researchers, innovators, data scientists, journalists and
citizens to find statistical information related to governance:
⇒ National Informatics Centre (NIC) → Open Government Data (https:// data.gov.in)
⇒ NITI announced to launch National Data and Analytics Platform (NDAP) in 2021
58.8.5 💾💾😰😰 Challenges in public data [सावर्ज�नक डेटा क�चुनौ�तयां]

− If Data Privacy (डेटा क� �नजता / गु�ता) is breached or data is leaked accidentally, it may bring forth
legal consequences, financial implications and disruption in family / social life. E.g. if death
certificate leaked online that Mr.”X” died of HIV/AIDS. His entire family may be ostracized by
the neighbors. [िकसी �� को एड्स है ये सब को पता चल गया, तो उसके प�रवार का भी सामा�जक बिह�ार]
− If data is hacked: financial loss, national security. (आ�थक नुकसान रा��ीय सुर�ा खतरे म�)
− A majority of the poor still have no digital footprint. Existing paper-based data need to be
converted into digital form. Govt can ask citizens to become volunteers, even launch App.
− District govt official should be trained in “How to use data for analytical decision making?”
Otherwise mere collection of data will be of limited use. (डाटा क� मदद से �नणर्य �मता को कै से बढ़ाएं ? इसक�
�जला �र के अफसरों को तालीम देनी होगी, तभी वे सावर्ज�नक डेटा का प्रभावी �प से उपयोग कर पाएं गे)
− Many State govt create ‘online dashboards’ for monitoring schemes BUT These dashboards are
not easily accessible to citizens, require password; sometimes portals are not functional or
contain outdated data [रा� सरकारों द्वारा बनाएँ ऑनलाइन डैशबोडर् म� सामा� �प से डेटा ब�त ही पुराना होता है]
58.8.6 💾💾🧾🧾⚖ Draft Data Empowerment and Protection Architecture (DEPA)

⇒ by NITI Aayog, to protect personal data, digital privacy, cyber security.
⇒ To �unauthorised data sharing, fake news. [अवैध �प से डेटा साझा करना]
⇒ Individuals should have control over how their personal data is used and shared. [आपका �नजी
डेटा इस प्रकार से उपयोग म� लाया जाएगा और साझा िकया जाएगा इस पर �� को �नयं त्रण देना चािहए]
⇒ We need to Adopt best practices from General Data Protection Regulation (GDPR) in the
EU etc यूरोप क� अ�� बातों क� नक़ल क� जाए इ�ािद �चकनी चुपड़ी बात�.
58.8.7 💾💾 �Conclusion: Public Data (सावर्ज�नक डेटा)

 If scattered public data is integrated, it’ll bring greater transparency, accountability in public
services and improve targeting in welfare schemes. (�बखरे �ए सावर्ज�नक डेटा को एक�कृ त िकया जाए-
पारद�शता जवाबदेही योजनाओं क� असरकारकता बढ़ेगी)
 Therefore, just like highways, government needs to view data as a public good and important
infrastructure. Govt should make necessary investments & regulations for it, while protecting
data privacy. (सरकार ने �नवेश करना ज�री �नयं त्रण करना ज�री िकंतु नाग�रक क� �नजता का स�ान करना चािहए)
 In the spirit of the Constitution of India, data “of the people, by the people, for the people” must
therefore become the mantra for the govt. [लोगों के डेटा का लोगों द्वारा लोगों के �लए इ�ेमाल हो]
58.9 �📽📽 [YB] MINISTRY OF INFORMATION & BROADCASTING (सूचना एवं प्रसारण मं त्रालय)
Dept N/A
Attached 1. Press Information Bureau (PIB).पत्र सूचना कायार्लय
offices 2. Publications Division.प्रकाशन �वभाग
सं ल� सं �ाएं 3. Office of the Registrar of Newspapers for India
4. Directorate of Photo Division,
5. New Media Wing, Electronic Media Monitoring Centre
6. National Film Archives of India (Merged in NFDC)
7. Directorate of Film Festivals (Merged in NFDC)
Statutory 1. Press Council of India (भारतीय प्रेस प�रषद)
Bodies 2. Central Board of Film Certification (के �ीय िफ� प्रमाणन बोडर्) → Film
वै�ा�नक सं �ाएं Certification Appellate Tribunal (this tribunal removed in 2021)
3. Prasar Bharati: a) All India Radio b) Doordarshan
CPSE सरकारी 1. National Film Development Corporation Limited (NFDC)
कं पनी 2. Broadcast Engineering Consultants (India) Limited (BECIL)
Autonomous 1. Film and Television Institute of India (FTII), Pune
Organizations 2. Satyajit Ray Film and Television Institute, Kolkata
�ाय� सं �ाएं 3. Indian Institute of Mass Communication
4. Children’s Film Society of India (Merged in NFDC)
Activities - 2019: launched Doordarshan Arunprabha, a dedicated 24x7 TV channel for
प्रवृ��यां Arunachal
- Responsible for 1) National Film Awards, 2) International Film Festival of
India- which is jointly hosted by this ministry & State Government of Goa.
INDEX? सूचकांक - Press Freedom Index: Compiled by a Paris based non government
organisation Reporters sans frontières (Reporters Without Borders)
- 2021's top3 rankers: Norway, Finland, Denmark. 142: India.
✋But this type of low profile bodies giving negative rankings about India’s
freedom/democracy are not really important for exam! #⏳📚📚थोड़ा-पढ़ो-आगे-बढ़ो
58.9.1 �🤬🤬🤬🤬 Comm → Regulators (Statutory) → Censor board
Indian Cinematograph Act, 1952 → Central Board of Film Certification (CBFC: क� द्रीय िफ� प्रमाणन बोडर्)
commonly known as ‘Censor board’, under Ministry of Information & Broadcasting. It gives
following types of movie certificates:
- Unrestricted public exhibition (U)
- Parental guidance for children <12 (U/A) e.g. “Jungle Book”
- Adult (A)
- Viewing by specialized groups only (S) e.g. documentary movie about surgeries, meant to be
shown to doctors only, because ordinary person may get disturbed by the blood & gore.
😰😰Controversy? 1) Former chairman Pahlaj Nihalani would do excessive cuts in the movies to stop
display of smoking-alcohol, Cuss words, Kiss scenes etc. leading to debate on ‘social values vs artistic
freedom of expression’. (सामा�जक मू� बनाम अ�भ�� क� कला�क �तं त्रता)
2) Film Certification Appellate Tribunal was abolished in 2021 (Ref Pillar4B)
58.9.2 �🗞🗞 Comm → Regulators (Statutory) → Press Council of India
- 1978: Press Council Act → भारतीय प्रेस प�रषद, a statutory body under Ministry of Information &
Broadcasting. Readers can complaint against violation of press ethics (e.g. yellow journalism,
paid news, hate news).
- Newspaper / Journalists can complaint if their freedom of press violated.
- Chairman + members from journalism field, (members from LS & RS), members sent by (UGC,
Bar Council, Sahitya academy).
Press Council of India doesn’t cover TV-News channel and so we have →
News channels ⇒ News broadcaster association (NBA): Non-statutory Self regulatory body
set up by the news channels themselves (2008)
⇒ It punishes news-channels if they spread misinformation, hate news, harm
privacy of women by showing rape victim name / face etc.
Entertainment ⇒ Broadcasting Content Complaints Council (BCCC): Non-statutory Self
channels मनोरंजन regulatory body set up by non-news general entertainment channels
themselves. (2011) Punishes them for objectionable content.
Over the Top e.g. Netflix, Amazon Prime, Hotstar, ALT-Balaji, SonyLIV etc
(OTT) ⇒ Before: they were regulated by the Ministry of Electronics and
platforms Information Technology.(MEITY)
⇒ 2020-Nov: Their regulation shifted to the Ministry of Information and
Broadcasting (I&B). It's likely to ⏫censorship over their content.
Notable laws ⇒ 1954: Drugs and Magic Remedies Act prohibits advertising drugs for
�व�ापनों के साथ जुड़े cancer, diabetes, abortion etc. (औष�ध और जादुई इलाज कानून)
कु छ प्रमुख क़ानून ⇒ 1986: Indecent Representation of Women (Prohibition) prohibits
indecent representation of women in Print Media, TV etc
⇒ 1995: Cable Television Networks (Regulation) Act prohibits sports-
gambling ads. �Controversy? ads about online sports gambling sites
shown in IPL
Television is a data-matrix to calculate popularity of a TV show/channel. Broadcast
Rating Point Audience Research Council (BARC), a private organization, prepared such
(TRP) TRP. 😰😰Controversy? Data Manipulation by some journalists.
58.10🔭🔭🔭🔭SPACE TECH INFRASTRUCTURE (अवकाश �ेत्र)
⇒ Prime Minister → Department of Space (DOS: HQ Bengaluru) → Indian Space Research

Organisation: (ISRO: HQ Bengaluru)
⇒ DOS/ISRO has two Government companies.
o Antrix: It helps foreign nations/ companies to launch satellites with ISRO's help.
o NewSpace India Limited (NSIL, 2019) for production of launch vehicles & collaboration
with private sector players.
58.10.1 👻👻🔭🔭🔭🔭Space Tech: Atma-Nirbhar

⇒ 2020-Jun: Govt setup Indian National Space Promotion and Authorization Centre (IN-SPACe),
an independent agency under ISRO.
⇒ IN-SPACe will help private companies to use Indian space infrastructure for developing /
launching satellites / space tourism etc. (�नजी �ेत्र क� कं प�नयों को अवकाश �ेत्र क� सरकारी बु�नयादी सु�वधा उपयोग
के �लए अवसर)
Year 2019-20 data from 📔📔📔📔ES21 India USA China
Amount spent on space programs $1.8 billion 10 times India 6 times India
Number of satellites launched 5-7 satellites 19 satellites 34 satellites
⇒ �At present, India accounts for only about 2% of the space economy, much behind the major
players – USA and China. (अवकाश अथर्तंत्र म� भारत क� िह�ेदारी मु��ल के २% है)
⇒ � hardly 75 Indian startups out of total 60,000+ Indian registered startups are working in
Space technology sector. (ब�त कम भारतीय �ाटर्-अप इसम� काम करते है।)
58.10.2 📙📙📙📙ES22: using cartography and geospatial data to track development

⇒ Cartography = The art and science of graphically representing a geographical area on a flat
surface such as a map or chart. (मान-�चत्रकारी यानी एक भौगो�लक �व�ार को सपाट सतह जैसे िक काग़ज़ी-नक़्शे पर
अंिकत करने क� कला और �व�ान)
⇒ Geospatial data = Geospatial data is information that describes objects or events with a location
on surface. e.g. tracking location of Amazon / Flipkart delivery package or Google maps showing
traffic jams. (भू-�ा�नक डेटा यानी एसी जानकारी जो िकसी व�ु या घटना को नक़्शे क� सतह पर अंिकत करती है, जेसे क�
ट�ािफ़क-जाम, कु �रयर िडलीवरी।)
⇒ 📙📙📙📙ES22 Vol1Ch11 showed many competitive maps to track the development of India
example. Map of Airports in India showing 2016: 60+ airports → 2021: 130 Airports. Thus, the
number of airports have increased in India
⇒ Similarly, national highways, bank branches, metros, etc. increased.
⇒ India’s night-time luminosity map → more urbanisation has taken place, access to electricity has
improved. (रा�त्र के नक़्शे म� �वगत वष� के मुक़ाबले वतर्मान समय म� भारत का �ादा इलाक़ा प्रका�शत िदखता है यानी िक
शहरीकरण बढ़ा है �बजली क� उपल�ता बढ़ी है.)
⇒ Tracking the Kharif and Rabi crop sowing cycles and crop stubble burning (फसलों का बीजारोपण और
पराली जलाना)
⇒ so we can use such Geospatial data for planning, SDG goals, tracking scheme implementation,
deciding property tax rates, deforestation, disaster management etc. (इस प्रकार के भू-�ा�नक डेटा का
आ�थक आयोजन, सतत् �वकास ल�ों क� �नगरानी, सं प�� के कर तय करना, -वृ�छे दन/पैड-कटाई को रोकना, आपदा प्रबं धन
इ�ािद अनेक �ेत्रों म� इ�ेमाल कर सकते ह�)
59 🧱🧱🧱🧱 INFRA → GSM3: INVESTMENT MODELS (�नवेश के तरीके )
Origin: Infrastructure projects require large amount of investment. Govt alone can’t finance it due to
fiscal deficit targets. राजकोषीय घाटा �नयं त्रण ल� के चलते सरकार बु�नयादी सु�वधाओं म� खुद अके ले पूरा �नवेश नहीं कर सकती
- Such projects also require the level of technical expertise, management skills and professionalism
that may not be available in the traditional bureaucratic apparatus. (तकनीक� �वशेष�ता, प्रबं धन कौशल
और �ावसा�यकता)
- Therefore, Infrastructure investment / development has to be done through:
I. PPP: BoT, BOOT
II. Non-PPP: such as EPC, Outsourcing (Contracting-Out)
III. Or a mixture of both using Hybrid Annuity Model
59.1 🧔🧔🧔🧔🧔🧔 INFRA.DEV.→ PPP (PUBLIC PRIVATE PARTNERSHIP)
- Definition: is a long-term contract between a public sector organization (Union/State/Local
Body/PSU) and a private sector company (सावर्ज�नक-�नजी �ेत्र क� भागीदारी - सरकारी और �नजी �ेत्र क�
इकाइओ बीच एक लं बी / दीघर् अव�ध का समझौता है)
- to build a public infrastructure (highway, ports etc.) or सावर्ज�नक अवसं रचना
- to provide public utility service (electricity, gas, water, transport, etc.). सावर्ज�नक सु�वधा
- In such PPP contract the ownership, risks & rewards are shared in some fashion. Unlike
privatization where it's completely transferred from public sector to private sector. मा�लक�/�ा�म�,
धं धे के जो�खम और मुनाफे /लाभांश क� िह�ेदारी होती है
- PPP can be :
A. for a Greenfield project (ग्रीनफ�� प�रयोजना) e.g. GMR group building fresh new airport in
Hyderabad. OR
B. for a Brownfield project e.g. Private companies upgrading the existing airports at Delhi and
Mumbai. [जहाँ पर पहले से ही कोई इमारत ��त थी, उसे और बड़ा/बेहतर बनाया जा रहा है]
- PPP can be :
A. Done by govt forming a Joint Venture (सं यु� उद्यम 50:50) or Special Purpose Vehicle (SPV:
�वशेष उद्दे� से बनाई गई कं पनी) company with equity from public and private sector. OR
B. Done by Govt granting ‘Concession / lease / licence / permit’ (a legal right) to private
company (=Concessionaire) to design, develop, finance, construct, operate, maintain a
greenfield / brownfield infrastructure asset. [सरकार �नजी कं पनी को अनु�ा पत्र देकर बनवा सकती है]
59.2 🧔🧔🧔🧔🧔🧔🧔🧔 INFRA.DEV. → PPP (GREENFIELD) MODELS
<list not exhaustive, there may more types apart from the following list>
- Build-Operate-Transfer (BoT: �नमार्ण-सं चालन-ह�ांतरण)

- Design-Build-Finance-Operate (DBFO: रचना-�नमार्ण-पूंजी लगाना-सं चालन)
- Build–own–operate–transfer (BOOT: �नमार्ण-�ा�म�-सं चालन-ह�ांतरण)
(BoT: Toll / Annuity) DBFO / BOOT
Who owns Private player but after time limit is over / his investment recovered,
infrastructure? the ownership transferred to Govt.
Who is responsible for Govt. प्रोजे� ख़चर् के �लए पैसों का Private player responsible to arrange
financing the project इं तज़ाम सरकार करेगी from his pocket / market. �नजी �खलाड़ी
cost? पैसों का इं तज़ाम करने के �लए �ादा �ज़�ेदार होगा
Who is the responsible Private player during the contract period, then government itself may
for the building, start operating it (or outsource it to a third private company)
operation and �नमार्ण , सं चालन और रखरखाव: अनुबंध अव�ध के दौरान �नजी �खलाड़ी �ज़�ेदार, अव�ध ख़�
maintenance (O&M)? होने के बाद सरकार �ज़�ेदार
Who collects the toll / - If BoT: Toll (पथकर) model Could be toll or annuity depending
fees from users? then Private player levies on project.
जनता से फ़�स कौन लेगा? toll from users (e.g. E.g. Delhi-Mumbai highway - private
highway)- but he’ll face a players would love to have a Toll
risk- what if less traffic! model, whereas in Nagaland Manipur
- If BoT: Annuity (वा�षक�) highway they’d prefer annuity model
model then Govt pays due to less growth projection in
private player fixed ₹ ₹ at traffic.
regular period from its
budget.
Example(s) उदाहरण NHAI highways** Water pipeline contracts by
Municipal corporations
- Some alternatives to above: Build Own Operate (BOO) / Build-develop-operate (BDO) /
Design-construct-manage-finance (DCMF): In these models private player remains the owner
in perpetuity (सदा के �लए मा�लक).
- ** 2020-July: Govt announced some technical reforms in BoT model for highway construction
but very poor cost benefit in chasing.
59.2.1 🧔🧔🧔🧔🧔🧔🧔🧔 Infra.Dev. → PPP (Brownfield) BLT & ToT
- Build-Lease-Transfer (BLT): (�नमार्ण-ठे का-ह�ांतरण): Usually associated with brownfield projects

(ब्राउनफ�� प�रयोजनाएँ ) e.g. Govt owned existing airport is leased to private player for operation →
he renovates it → charges user fees → After the contact period is over / investment recovered
then govt again assumes operational responsibilities (or gets another private player). Thus Govt
remains the owner in perpetuity.
- Toll-Operate-Transfer (TOT): (टोल -सं चालन-ह�ांतरण): Private player pays upfront fees (e.g. ₹
9000 crore) to the government to obtain the ‘right to collect toll’ on an existing road
(=brownfield) for a fixed period (e.g. 30 years). Benefits? →
- To Government: we got upfront money to finance schemes / build new roads; no need to
pay salary of those toll-booth employees.
- To private player: we will make profit depending on how much traffic comes.
- 2018: NHAI award projects worth 680+ kms in Andhra Pradesh and Gujarat
💼💼Budget-2020: due to FASTAG (Ref:1A) toll collection became more easier. So, we’ll monetise at
least twelve highway bundles worth 6000+ Kms before 2024
59.2.2 🧔🧔🧔🧔🧔🧔🧔🧔 Infra.Dev. → PPP (Brownfield) → OMDA Model

- 1942: Mumbai International Airport was formed. So, it’s already present = brownfield.
- 2006: Joint venture companies formed e.g. Mumbai International Airport Private Limited.
Presently its shareholding has 74% Adani + 26% AAI.
- Airport Authority of India (AAI) signs - OMDA Agreement (Operation, Management,
Development Agreement) with Adani= It effectively provides operational responsibilities to
Adani, And Adani will have to share profit with AAI.
- More examples with % shareholding of AAI: Delhi (26%), Mumbai(26%), Hyderabad (13%),
Bengaluru (13%). Remaining of the 100% with the private player
59.2.3 🧔🧔🧔🧔🧔🧔🧔🧔 PPP/Privatization: Airport Bundling
- AAI to privatise airports in a pair of profit-making airport with loss making airport(s) e.g. 1)
Varanasi Airport with (Kushinagar and Gaya airport) 2) Amritsar airport with Kangra 3) Raipur
Airport with Jalgaon. 4) Indore with Jabalpur etc यिद �नजी �खलाड़ी ने सरकार द्वारा बनाया गया मुनाफ़े वाला
एअरपोटर् चलाना है तो नुकसान वाला एक एअरपोटर् क� भी �ज�ेदारी लेनी होगी
- So, investor will have to compulsorily buy Loss making airport if he wants to buy profit making
airport. This will �AAI’s burden of running loss making airport.
59.3 🧔🧔🧔🤵🤵 INFRA.DEV. → NON-PPP

In these models, the private player is not given ownership of infrastructure or right to collect
toll/user fee at any point of time. So, they’re not PPP. Notable examples are
- Engineering, Procurement and Construction (EPC: अ�भयां�त्रक�, खरीद और �नमार्ण)
- Outsourcing / Contracting out (करार के द्वारा बाहरी �� को काम देना).
PPP model (BoT: Toll) Non PPP models e.g. EPC,
outsourcing, GoCo
Who owns infrastructure? Private player owns until Govt owns in perpetuity.
�ा�म� या मा�लक क� िकस के पास contract time expired/ his
investment recovered.
Who is the responsible for Private player �नमार्ण सं चालन Private player
the building, operation and रख-रखाव क� �ज़�ेदारी �नजी
maintenance? �खलाड़ी क� होगी
Who collects the toll / Private player जनता से फ़�स का Govt pays the private player. Govt
user/fees? पैसा �नजी �खलाड़ी लेगा itself will collect user fees or
arranging ₹ ₹ from budget.
59.4 🧔🧔🧔🤵🤵 🛡🛡 INFRA.DEV. → NON-PPP → GOCO FOR INDIAN ARMY
Army’s Central Ordnance Depot (COD) & Army Base Workshops (ABWs) are responsible for mfg
& warehousing, maintenance, repair and overhaul (MRO: �व�नमार्ण और भं डारण, रखरखाव, मर�त) of
⇒ Weapons, Ammunition, Tanks, Trucks, Radars, Air defense system etc.
⇒ Clothing, footwear, headgear, tent & camping gears, kitchen equipment etc.
But,😰😰
⇒ 2015: CAG audit found them to be overstaffed, inefficient and slow.
⇒ 2016: Defence Ministry’s Lt. Gen. DB Shekatkar (Retd.) committee to “enhance combat
capability and re-balancing defence expenditure.” → recommended GOCO Model.
59.4.1 🛡🛡GoCo Mechanism?
⇒ Government-Owned Contractor-Operated (GOCO) model: private contractors operate the
army’s base workshops that repair equipment from guns and vehicles to tanks and helicopters.
⇒ Government remains the owner of the ABW workshop / COD depot। �नजी �खलाड़ी सेना के ह�थयार और
वाहनों क� मर�त करेगा, िकंतु उस ज़मीन और मर�त के � पर मा�लक� सरकार क� रहेगी।
⇒ But a private player is given a contract to take over the operation / running of such a workshop /
depot. He’ll be responsible for warehousing operations, transportation of material, repair,
maintenance etc.
⇒ He will have to absorb the existing civilian employees working there. वहाँ कायर्रत वतर्मान सरकारी क�मयों
को �नजी �खलाड़ी ने अपनी कं पनी म� नौकरी म� रखना होगा, तािक बेरोज़गारी न हो।
⇒ Private player must be an Indian registered company with at least 10 years of working experience
& “y” crore of turnover
59.4.2 🛡🛡GoCo: Pros and Cons

😍😍Benefits? फायदे 😪😪Challenges? चुनौ�तयां
⇒ �salary bill for Govt वेतन खचर् कम होगा ⇒ Private operators may not have the
⇒ Private operators can easily go into expertise to deal with military equipment;
partnership with Original Equipment ⇒ Private companies interested in bidding
Manufacturer (OEM) for service, repair mostly for workshops/Depots that handle
and spare parts. आसानी से पुज� का इं तजाम कर Combat Tanks because they can easily
सकता है charge Rs 8-9 crore for tanks’
⇒ Private firms will not have to invest in land, repair/services/spareparts every time.
infrastructure, machinery. Because Whereas not much profit in
Government already built that. �नजी �ेत्र के clothing/kitchen utensils/cooking stove
😍😍Benefits? फायदे 😪😪Challenges? चुनौ�तयां
�खलाड़ी का जमीन मशीनरी इ�ािद म� �नवेश का पैसा बच related work. �नजी �खलािड़ओ को �सफर् ट�क क� फै ��ी
जाएगा, �ोंिक सरकार पहले से ही बना चुक� है। म� िदलच�ी है �ोंिक वहां पर मुनाफे के अवसर �ादा है
⇒ Strategic / Security challenges: what if pvt
player sells the tank/radar blueprints to
Pakistan/China? साम�रक चुनो�तया: दु�न देश को
सेना क� गु� जानकारी बेच दी तो ?
59.5 🧔🧔🧔🧔🧔🤵🤵HYBRID ANNUITY MODEL (HAM) = MIX OF PPP + NONPPP
2016: सं कर वा�षक� मॉडल Introduced for highway projects in India.

Suppose the cost to build a new highway is ₹ 100, then.
- ₹ 40: Govt pays in phased manner (as road construction progresses).
- ₹ 60: private player arranges from his pocket and / or market borrowing.
- Once the highway is finished, Govt (NHAI) starts collecting toll → pay the private player at
regular interval (=annuity) till the private player recovers ₹ (60+some profit).
PPP model (BoT: Toll) Non PPP Hybrid Annuity
model (EPC)
Govt. has to bear the burden = more fiscal Private player bears higher burden of financing
deficit. the project = less fiscal deficit for Govt.
BoT: Toll- Private player Private player has no right to collect toll (But at the same time, he is
has the right to collect toll also saved from the risk if sufficient traffic did not come!)
In Bharatmala Pariyojana, NHAI has decided that →
Hybrid Annuity Model (HAM) 60%
BOT (Toll) Model 10%
Engineering, Procurement, Construction (EPC) 30%
Total projects under Bharatmala → 100%
59.6 🧔🧔🧔🧔🧔🧔INFRA.DEV → MISC. TOPICS
59.6.1 �👊👊🤵🤵Swiss Challenge (��स चुनौती / ललकार)
Without waiting for the government advertisement, suppose a private company (Mukesh Ambani)
sends a suo-moto / unsolicited proposal to develop a railway station.
- Government puts it online so other private companies can challenge it.
- Ratan Tata challenges, “I can finish this project at 10% less price and / or 5 additional facilities in
the same price etc.” → Mukesh Ambani is given opportunity to counter Ratan Tata’s proposal,
then Government selects the best offer.
- 2015: While Govt of India was considering to allow Swiss challenge method for infrastructure
development, but Vijay Kelkar committee on PPP reforms suggested not to do it.
- Because there is a scope for non-transparency / collusion: What if both Ratan Tata and Mukesh
Ambani decide internally -“I will not challenge your projects in X cities and you will not challenge
me in Y cities! And together we’ll milk the maximum money from govt!”
59.6.2 🧔🧔🧔🧔🧔🧔Viability Gap Funding (VGF: �वहायर्ता अ�र फं �डंग)

- Sometimes, the project is justifiable from social welfare / human development point of view but
it’s not financially profitable or viable e.g. solar panels in remote villages, or airport in
Ladakh/Lakshadweep. कभी कभी सामा�जक क�ाण और मानव �वकास के �लए कोई प्रोजे� करना ज़�री है िकंतु �व�ीय
�प से वह मुनाफ़ाकारक/ �ावहा�रक न हो, तो नुक़सान का पैसा सरकार देगी
- Then, Union Government / Multilateral Bank may provide grant (अनुदान: not Loan) in the form
of Viability Gap Funding (VGF).
59.7 💰💰💰💰 INFRASTRUCTURE FUNDS
Global Infrastructure - By World Bank to help emerging economies and developing
Facility (GIF: 2004) countries.
- It provides ₹ ₹ & advisory to design PPP contract.
National Investment During UPA raj, the ₹ ₹ from disinvestment were transferred in this
Fund (NIF: 2005) fund to finance various schemes, projects, PSB recapitalization.
India Infrastructure setup in Dept of Economic Affairs with ₹ 100 crores to help PPP
Project Development projects.
Fund (IIPDF: 2007)
59.7.1 💰💰💰💰 National Investment and Infrastructure Fund (NIIF: 2015)
- रा�ी� य �नवेश और बु�नयादी ढांचा कोष ₹ 40,000 crore. Out of that 49% from Dept of Economic Affairs
(FinMin), remaining by domestic & foreign investors & financial intermediaries.
- SEBI registered NIIF as Category II Alternative Investment Funds.
- NIIF is ‘fund of funds’ → gives funding to other funds. E.g. 2017: India & UK set up Green
Growth Equity Fund (GGEF) to finance green infrastructure projects in India. So, from Indian
side NIIF invested money in GGEF.
59.7.2 👜👜 (Full) Budget-2019 on NIIF, Investment & PPP

- Presently, union ministries and Central Public Sector Enterprises have many unused land assets.
We’ll create public infrastructure and affordable housing on such land.
- India requires annually ₹ 20 lakh crores (=$300 billion) investment in Infrastructure. For this,
we’ve to encourage foreign pension, insurance and sovereign wealth funds to invest in India. So,
we’ll invite them to India through annual ‘Global Investors Meet in India’, using NIIF.
59.7.3 👻👻Atma-Nirbhar 3.0: NIIF Strategic Opportunities Fund

- NIIF Strategic Opportunities Fund (a type of NBFC debt fund company that gives loans to infra
projects)- this company is owned by NIIF.
- Atma-Nirbhar: Govt to invest ₹6k cr in this company
🔠🔠❓MCQ. With reference to ‘National Investment and Infrastructure Fund’, which of the
following statements is/are correct?(Asked in UPSC-Pre-2017)
1] It is an organ of NITI Aayog. 2] It has a corpus of Rs. 4,00,000 crore at present.
Answer Code: (a) 1 only (b) 2 only (c) Both 1 and 2(d) Neither 1 nor 2
🔠🔠❓MCQ. Which one of the following statements is not correct? [UPSC-CDS-2016-II]

a) Creation of National Investment and Infrastructure Fund (NIIF) was announced in the Union
Budget, 2015-16.
b) NIIF is a fund for enhancing infrastructure facility in the country.
c) NIIF and NIF (National Investment Fund) are the names of the same organization.
d) NIIF can finance more than one alternative investment fund.
🔠🔠❓MCQ. The Global Infrastructure Facility is a/an(Asked in UPSC-Pre-2017)

a) ASEAN initiative to upgrade infrastructure in Asia and financed by Asian Development Bank.
b) World Bank collaboration that facilitates the preparation and structuring of complex
infrastructure Public-Private Partnerships (PPPs) to enable mobilization of private sector and
institutional investor capital.
c) Collaboration among the major banks of the world working with the OECD and focused on
expanding the set of infrastructure projects that have the potential to mobilize private
investment.
d) UNCTAD funded initiative that seeks to finance and facilitate infra development in the world.
59.8 💰💰💰💰 INFRA FINANCE → NATIONAL INFRASTRUCTURE PIPELINE (NIP)
⇒ 15th Aug, 2019: PM Modi announced Rs.100 lakh crore would be invested on infrastructure
over the next five years.
⇒ 2019-Sept: Finance Ministry set up a task force under the Secretary of Dept of Economic Affairs
(DEA). Based on its report,
⇒ 2019-Dec: FM Nirmala S. announced NIP (रा��ीय अवसं रचना पाइपलाइन). It aims to mobilize 102 lakh
crore worth infrastructure investment in the next five year (2019-20 to 2024-25).
⇒ 2020-Apr: Investment target has been � from ₹ 102 lakh cr to 111 lakh cr
⇒ This funding will be spread across Energy (24%), Roads (19%), Urban (16%), Railways (13%),
Irrigation (7%) etc.
⇒ Sources of Funding/investment? Centre 39% + Private 21% + State 40%=100% funding.
Further, the Government will also initiate following reforms:
59.8.1 💰💰💰💰 NIP → Infra Finance Reforms → Financial Market Reforms
1) Government and SEBI will undertake technical reforms to strengthen municipal bond market,
and NBFCs such as
a) infrastructure investment trusts (InvITs),
b) Infrastructure Development Funds (IDFs),
2) Stringent monitoring to prevent ILFS-NBFC type crisis in future.
3) FDI, FPI investment norms will be relaxed.
59.8.2 💰💰💰💰 NIP → Infra Finance Reforms → Credit Enhancement Fund (CEF)
⇒ Pension and insurance companies usually avoid investing in bonds lower than ‘AA’ rating, due
to strict regulatory norms by PFRDA and IRDAI respectively.
⇒ So Government will ask them to relax the investment norms for infrastructure projects.
⇒ Many of Indian infrastructure companies / projects have poor bond-rating. So, Government will
setup a Credit Enhancement Fund (CEF: ऋण सं वधर्न �न�ध), which will basically provide guarantee to
such projects’ lenders → bond rating upgraded → more investors attracted.
59.8.3 💰💰💰💰 NIP → Others reforms

1. Monetization of land assets owned by Govt. (सरकारी भू�म को बेचना/िकराये पर देना)
2. Market based pricing mechanisms (बाजार आधा�रत मू� �नधार्रण तं त्र) to increase user fees on
infrastructure. (e.g. if electricity price increased by x% then raise metro-train-fares by y%)
3. Technical guidelines for uniform quality, disaster resilient roads, buildings, etc. (e.g. x% cement
with y% sand etc.)
4. Training and capacity building for legal and financial experts so they can frame better type of
PPP contracts → less chances of project delays or disputes or NPA.
5. Legal reforms so PPP contract disputes can be settled through arbitration outside courts. (कोटर् के
बाहर ही म��ता से समाधान/सुलह)
59.9 💰💰💰💰 INFRA FINANCE → NIP, NMP, GATI SHAKTI
NAME Announced Objectives
National 2019-Aug ⇒ Over ₹100 lcr worth infrastructure investment in the next
Infrastructure by PM five year (2019-20 to 2024-25). This funding will be spread
Pipeline across Energy (24%), Roads (19%), Urban (16%), Railways
(13%), Irrigation (7%) etc.
⇒ Sources of Funding/investment? Centre 39% + Private 21%
+ State 40%=100% funding.
⇒ Learned in above section
NAME Announced Objectives
National 💼💼Budget- To mobilise money by above thing by selling/renting
Monetisation 2021 Government companies’ assets to mobilze ₹2.5 lakh crores
Plan Given in Next Section →
Gati Shakti 2021-Aug National Master Plan worth ₹100 trillion to improve transport/
by PM speed of transport (rail, road, airway, waterway etc)
Given in Next Section →
59.9.1 💰💰💰💰 👜👜 Budget-2021: National MONETISATION Pipeline 2021
सरकारी सड़क, मालगाड़ी के �ड�े, रेलवे �ेशन, �बजलीघर, खेलकू द �े�डयम इ�ा�द चीजों का सरकार मुद्रीकरण करेगी अथार्त -
इ�� बेचकर/िकराए पर देकर सरकार पैसा जुटाएगी। इस कायर्क्रम क� �परेखा बनाने क� �ज�ेदारी नी�त आयोग को दी गई है.
Govt planning to sell/lease assets including Roads, Railway Wagons, Railway Station, Electricity
stations, Telecom Towers, Jawaharlal Nehru Sports Stadium etc. These assets will be sold/leased in
following models-
1) Toll operate transfer
2) InvITS (Infrastructure investment trusts, Ref Pillar#1C)
3) Operation and maintenance contract
4) Operation management development agreement (ODMA)
NITI tasked to prepare National MONETISATION pipeline i.e. how to accomplish above things in
systematic manner. Target ₹2.5 lakh crore. Out of them majority will come via Roads (27%),
Railways (25%), Power (15%), oil & gas pipelines (8%) and Telecom (6%).
(सरकारी सड़क, मालगाड़ी के िड�े, रेलवे �ेशन, �बजलीघर, खेलकू द �ेिडयम इ�ािद चीजों का सरकार मुद्रीकरण करेगी अथार्त -
इ�� बेचकर/िकराए पर देकर सरकार पैसा जुटाएगी। इस कायर्क्रम क� �परेखा बनाने क� �ज�ेदारी नी�त आयोग को दी गई है.)
59.10💰💰💰💰:🚗🚗🚊🚊✈⛵ INFRA FINANCE: GATI SHAKTI PLAN 2021 [₹100 LAKH CR]
वतर्मान म� रेलवे, राजमागर्, वायुमागर् और जलमागर् से सं बं �धत मं त्रालय अलग अलग िक़ले/सूबे के ��प म� अपनी नी�तयां और योजनाएं
बनाते ह�। ग�त श�� योजना इन सब प�रवहन माग� को को एक�कृ त ��प म� आयो�जत कर- भारत के आम आदमी और उद्योगप�तयों
को तेज़ प�रवहन क� सु�वधा देना चाहता है
- Presently all transportation modes (rail, road, airway, waterway) etc are treated in silos while
Individual ministries design their schemes and policies.
- GATI Shakti plan will integrate them for faster connectivity with a ₹100-trillion [=100 lakh
crore]– as per PM’s 15th Aug 2021 speech.
- �How govt will mobilize ₹100 lakh cr? Critiques argue that PM Modi just renaming the same
100 lakh cr-walla National Infrastructure Pipeline (2019) again as “GATI Shakti”. But details
not announced to difficult to say whether both [NIP vs GATI] are same or different?
- Common man will be able to travel at a faster speed.
- Biz man will be able to receive raw materials and send finished goods at a faster speed
- It will help creating new (special) economic zones for exports, synergy with make in India,
assemble in India, production linked incentive scheme.
- Thus, our local manufacturers will become globally competitive → � Jobs, GDP. [यह तेज प�रवहन
योजना द्वारा भारत के �व�नमार्णकतार् अंतररा��ीय �र पर दू सरे �नयार्तकों को �धार्/ट�र दे पाएं गे �जससे भारत म� रोज़गार और
आ�थक वृ�द्ध दर म� बढ़ोतरी के अवसर होंगे]
59.10.1 (💰💰💰💰:🚗🚗🚊🚊✈⛵) 💻💻📡📡 PM GatiShakti — National Master Plan Digital Portal
− (2021-Oct)Digital portal to connect 16 ministries — Roads and Highways, Railways, Shipping,
Petroleum and Gas, Power, Telecom, Shipping, and Aviation etc
− NODAL? Dept for Promotion of Industry & Internal Trade (DPIIT) under Commerce Ministry.
− Portal developed by? Bhaskaracharya Institute for Space Applications and Geoinformatics
(BISAG, Autonomous Scientific Society under the MeitY Ministry).
− Benefit? for better coordination in planning and project approval.
− E.g. if new railway line is to be constructed → i) environment ministry can give faster clearance
and ii) power ministry can lay down electricity cables for the railway in a faster manner.
− Portal would officers in different-different ministries to be constant touch in real time. [ग�त श��
वेब पोटर्ल जहाँ पर अलग अलग 16 मं त्रालय के बीच प्रभावी �प से सम�य िकया जा सके । जैसे िक रेलवे क� पटरी �बछाते व� तुरंत
ही पयार्वरण मं त्रालय से अनुम�त �मले और ऊजार् मं त्रालय तुरंत ही रेलवे-इं जन के �लए �बजली क� लाइन� �बछा द� इ�ािद.]
59.10.2 👜👜🥻🥻Budget-2022 on Infra Finance

⇒ Blended Finance: We will set up new fund of fund. (FoF) with 20% govt share and 80% by
private fund managers. (Similar to NIIF model). This FoF will focus sunrise sectors such as
Climate Action, Deep-Tech, Digital Economy, Pharma and Agri-Tech
⇒ We'll issue sovereign Green Bonds to arrange money for green infrastructure. (ह�रत बु�नयादी
अवसं रचना �नमार्ण के �लए पैसा जमा करने के �लए सं प्रभु ह�रत बॉ� जारी िकए जाएं ग।े )
⇒ National Bank for Financing Infrastructure and Development (NaBFID) has been setup (Ref:
Pillar-1B1)
⇒ National Land Monetization Corporation (NLMC) has been setup (Ref: Pillar-2A1)
59.11(🧔🧔🧔🧔🧔🧔)😰😰PPP CHALLENGES (चुनौ�तयां)
While the PPP-led infrastructure sector witnessed boom before the American-Subprime Crisis
(2007-08) but afterwards facing following challenges:
1. Environment groups / Civil society protest / PILs → land acquisition difficult. जमीन सं पादन मु��ल
2. Fall in demand post subprime crisis → less cargo traffic in highways / seaport / airports etc. so
those developers wanted extension of toll collection period / loan restructuring / extra money to
finish remainder of projects but UPA’s coal scam, 2G scam and subsequent ‘policy paralysis’
where ministers, IAS & public sector bankers avoided taking decisions on any file due to fear of
media & courts → Time & cost overruns for the infra-developers → NPA problems. अलग-अलग
घोटालों के चलते ब�कों के कजर् वापस करने म� सम�ा
3. Crisis/Scams in IL&FS & other NBFCs in the infrastructure finance sector. �व�ीय घपले
4. In PPP projects the fees paid by the users may be higher than when the project was government
operated. Excessive reliance on PPP may eventually result in exclusion of poor persons from
infrastructure facilities. हर सु�वधा के �लए नाग�रक ने पैसा देना पड़ता है. गरीब आदमी को लाभ नहीं �मलता
5. Private players providing substandard services / construction material to keep bigger profit
margin. Solution? Performance / service audit. सड़क/हवाई अड्डे के �नमार्ण के दौरान मुनाफा �ादा रखने के �लए
घिटया िक� क� सामग्री
6. PPP not appropriate for small sized projects e.g. building a school.
7. In India, PPP model projects confined mostly to airports & highways. In other sectors, growth is
either mostly private sector led (e.g. Telecom / ICT) or mostly public sector led (e.g. Railways &
atomic energy) even though there is lot of scope for synergy. भारत म� कु छ �ेत्रों तक ही सी�मत है
8. Allegations of political connivance / crony capitalism where some firms given large number of
airports, without sufficient history / experience in this business. (प�पाती पूंजीवाद: गौतम अदाणी को हवाई
अड्डे चलाने का लं बा अनुभव नहीं है िफर भी उसको ब�त सारे प्रोजे� दे िदए गए ह�- एसा �वप� का आरोप)
59.12 🧱🧱✍INFRA → CONCLUSION (सार / �न�षर्)
Infrastructure is a critical determinant of economic development. It has a direct bearing on
investment, manufacturing sector, logistics and productivity. Infrastructure is equally important for
social sectors - be it education or health. Therefore SDG Goal #9 focuses on building resilient &
sustainable infrastructure. [बु�नयादी अवसं रचना िकसी भी देश के आ�थक �वकास का एक मह�पूणर् �नधार्रक है। इसका सीधा
असर �नवेश, �व�नमार्ण �ेत्र, रसद आपू�त श्रृंखला, और उ�ादकता पर पड़ता है। सामा�जक �ेत्रों के �लए भी ये मह�पूणर् है - चाहे वह
�श�ा हो या �ा�। अत: सतत �वकास के �लए यह करना ज�री]
A. Aforementioned scheme / policy / initiative is important in that regard. OR
B. Aforementioned challenges need to be addressed on priority basis. OR अग्रता क्रम से
C. While the aforementioned XYZ, PPP-investment model may not be the panacea in every case
but it can surely help improving our infrastructure. - रामबाण इलाज नहीं लेिकन उपयोगी है
- GS1 Syllabus Topic: Urbanization: problems and remedies
- GS2 Syllabus Topic: Welfare Schemes (centre, states; performance, mechanisms)
- GS3 Syllabus Topic: Infrastructure (energy, ports, roads, airports, railways); Investment models
59.13.1 Mains Mock Questions from these topics
1. “Construction of toilets is only “one part” of the solution for a clean India.” Elaborate. ("शौचालय
�नमार्ण, �� भारत के �लए समाधान का के वल एक ही िह�ा है।" �व�ृत �ा�ा कर� |)
2. Discuss the significance of Panchayat Citizen Charter and Tax Payers Charter in furthering good
governance in India. [पं चायत नाग�रक अ�धकार पत्र और करदाता अ�धकार पत्र का सुशासन म� मह�]
3. Discuss the significance of Rental homes in providing affordable housing to all in urban areas.
What has been done by government in this regard in the recent years? शहरी �ेत्रों म� सभी को िकफायती
आवास प्रदान करने म� िकराये के घरों के मह� पर चचार् कर� . हाल के वष� म� इस सं बंध म� सरकार द्वारा �ा िकया गया है
4. "India stands to gain a lot from the global 5G revolution." Elaborate (“भारत,वै��क 5 जी क्रां�त से ब�त
कु छ हा�सल करने के �लए प�रप� है। ”�व�ृत �ा�ा कर� | )
5. Mobile Telecom industry in India has been facing challenges in recent times. What has been
done by government of India to address their grievances? [भारत का मोबाइल टेलीकॉम �ेत्र कु छ सम�ाओं से
जूझ रहा है, उसके �नपटान के �लए सरकार ने �ा िकया है?]
6. “Aggregation of public data holds a variety of applications for good governance.” Substantiate
with examples.("सावर्ज�नक डाटा का सम�यन- सुशासन के �लए कई प्रकार क� उपयो�गता रखता है।" सउदाहरण अपने कथन
क� पु�� कर� | )
7. “Public data is as important for good governance as national highways are for economic
growth.” Discuss. ("सावर्ज�नक डाटा सुशासन के �लए उतना ही मह�पूणर् है �जतना िक रा�ी� य राजमागर् आ�थक �वकास के
�लए है ।" चचार् कर�।)
8. Discuss significance of National Infra Pipeline, National Monetisation Plan and Gati Shakti in
augmenting the infrastructure development of India. [बु�नयादी अवसर इतना �नमार्ण म� इन तीनों का मह�]
59.13.2 ✍ 🎺🎺 Mains previous years’ questions from these topics
Why is Public Private Partnership (PPP) required in infrastructural projects? Examine the 2022
role of PPP model in the redevelopment of Railway Stations in India. (बु�नयादी ढांचागत
प�रयोजनाओं म� सावर्ज�नक �नजी साझेदारी (पी.पी.पी.) क� आव�कता �ों है? भारत म� रेलवे �ेशनों के पुन�वकास म�
पी.पी.पी. मॉडल क� भू�मका का परी�ण क��जए) Ans. In Youtube- GSM3-Economy
The Gati-Shakti Yojana needs meticulous coordination between the government and the 2022
private sector to achieve the goal of connectivity. Discuss.(ग�त-श�� योजना को सं योजकता के ल�
को प्रा� करने के �लए सरकार और �नजी �ेत्र के म� सतकर् सम�य क� आव�कता है। �ववेचना क��जए)
Ans. In Youtube- GSM2-Govt-Schmes
"Investment in infrastructure is essential for a more rapid & inclusive economic growth." 2021
Discuss in the light of India's experience. (250 words) "तीव्रतर एवं समावेशी आ�थक सं वृ�द्ध के �लए
आधा�रक-अवसं रचना म� �नवेश आव�क है।" भारतीय अनुभव क� प�रप्रे� म� �ववेचना क��जए। Ans. Ans. Free
Special Class
Explain the meaning of investment in an economy in terms of capital formation. Discuss 2020
the factors to be considered while designing a concession agreement between a public
entity and a private entity. (एक अथर्�व�ा म� पूँजी �नमार्ण के �प म� �व�नयोग के अथर् क� �ा�ा क��जए. उन
कारकों क� �ववेचना क��जए, �जन पर एक सावर्ज�नक एवं एक �नजी �नकाय के म� �रआयत (कॉनसेशन एग्रीमे�) तैयार
करते समय �वचार िकया जाना चािहए) Ans. Free Special Class
Explain how private public partnership agreements, in longer gestation infrastructure 2014
projects, can transfer unsustainable liabilities to the future. What arrangements need to be
put in place to ensure that successive generations’ capacities are not compromised? �नजी-
सावर्ज�नक भागीदारी,समझौते (तथा), दीघर्कालीन अवसं रचना प�रयोजनाए, भ�व� मे देनदा�रयों को कै से �ानांत�रत कर
सकती ह�। भावी पीिढ़यों क� �मताओं से समझौता न िकया जाए इसे सु�न��त करने के �लए �ा �व�ा करने क�
आव�कता है ? समझाए ? (Ans. Similar to 2020-walla Q given above)
Adaptation of PPP model for infrastructure development of the country has not been free 2013
from criticism. Critically discuss the pros and cons of the model.
देश के बु�नयादी ढांचे के �वकास के �लए �नजी-सावर्ज�नक भागीदारी / पीपीपी मॉडल का अंगीकरण आलोचना से मु� नहीं
�आ है। पीपीपी मॉडल के प� एवं �वप� पर आलोचना�क चचार् कर�।
Examine the developments of Airports in India through Joint Ventures under Public- 2017
Private Partnership(PPP) model. What are the challenges faced by the authorities in this
regard. (�नजी-सावर्ज�नक भागीदारी (पीपीपी) मॉडल के अ�गर्त सं यु� उद्यम के मा�म से भारत म� होने वाले हवाई
अड्डों के �वकास का परी�ण कर�। इस सं बंध म� प्रा�धका�रयों को िकस प्रकार क� चुनौ�तयों का सामना करना पड़ रहा है?)
📑📑Next Pillar6A: Human Resource Development (HRD)
PILLAR#6A-DEMOGRAPHY, HEALTH AND HUNGER
�FAQ: Why your handout crossed 1000 pages, it is very bulky? Ans. Because it covers →
 Both Prelims and Mains ka maal in one handout.

 Both Theory and Current ka maal in one handout.
 Budget, Economic Survey, NITI Reports, Yojana-Kurukshetra Magz’ imp points embedded
 Government Schemes, Policies, Apps. Yearbook Info (Ministries/dept) embedded
 English handout with Hindi translation for important terms
 Previous Qs for Prelims and Mains given below topics. (ONLY when Student sees MCQs below
the topic, they realize they don’t have to do PHD. So, it’s necessary add Qs in handout.)
�FAQ: How do I revise such handout quickly for Prelims?
⇒ for prelims → Factual info
⇒ for mains → Opinion/analytical/suggestion type info
⇒ You can highlight using different color pens in Foxit PDF Reader software.
⇒ Watch lecture, you’ll get more idea.
Table of Contents
60 👫👫HRD → Population Census (जनगणना)............................................................................................... 1018
60.1.1 �🔢🔢Census -2021 ................................................................................................................... 1018
60.1.2 �🔢🔢Census → Demand for OBC Caste Census................................................................. 1019
60.1.3 👫👫👫👫Demographic transition → Census perspective .......................................................... 1020
60.1.4 👫👫👫👫Demographic Transition → Theoretical Perspective.................................................. 1020
60.1.5 👫👫x👫👫=🌩🌩🌩🌩Malthusian Theory of Population Growth .................................................. 1021
60.2 👫👫👫👫Demographic Indicators (जनसां��क� सं के तक) ........................................................................... 1021
60.2.1 📊📊 Census-2011: migration & occupation (�ाना�रण) ............................................................ 1023
60.3 💊💊💉💉💉💉 Demographic Indicators: 500 Jaat ke Reports ................................................................ 1024
60.3.1 💊💊💉💉💉💉 NITI’s “Healthy States, Progressive India”/Heath Index .................................... 1024
60.3.2 💊💊💉💉💉💉 National Family Health Survey (NFHS) ................................................................ 1024
60.3.3 💊💊💉💉💉💉National Health Profile 2019 (Released in 2019-Oct) ........................................... 1025
60.3.4 👫👫👫👫Demographic Indicators → Sample Registration System (SRS) ............................... 1025
60.4 👫👫↘ 📜📜:🧔🧔National Population Policy 2000 (रा��ीय जनसं �ा नी�त) ............................................... 1026
60.4.1 👫👫↗�:📊📊 World Population Prospects 2019 (Released in 2019-Jul)............................ 1026
60.4.2 👫👫↗�:📊📊 State of World Population Report................................................................... 1026
60.5 📔📔📔📔 ES19: Indian Demography @2040- Policy suggestions ....................................................... 1027
60.5.1 �<��Demographic Changes (जनसां��क� प�रवतर्न) and Education ................................. 1027
60.5.2 �<��Demo Changes: Working-Age Population (कायर्शील आयु क� जनसं �ा) .................. 1027
(Batch: PCB7) Mrunal’s Economy Pillar#6A HRD: Census, Health, Hunger → Page 1015
60.5.3 �<��Demographic Changes and Health Care Facilities (�ा� सु�वधा) ....................... 1028
60.5.4 �<�� Demographic Changes and: Retirement Age (�नवृ�� आयु)................................... 1028
61 💊💊 HRD → Health (�ा�) .......................................................................................................................... 1028
61.1.1 � 🧬🧬 🔬🔬 [YEARBOOK] Ministry of Science and Technology.......................................... 1029
61.1.2 �💊💊💉💉 [YEARBOOK] Ministry of Health And Family Welfare...................................... 1030
61.1.3 💊💊🌐🌐� World Health Organization (WHO: �व� �ा� सं गठन)........................................... 1031
61.1.4 💊💊🌱🌱�[YEARBOOK] Ayush Ministry ............................................................................... 1032
61.1.5 💊💊 📜📜:🧔🧔 → National Health Policy 2017 (रा��ीय �ा� नी�त) ................................................ 1033
61.1.6 💊💊 📜📜:🧔🧔 → National Policy for Rare Diseases-2020 ......................................................... 1033
61.2 💊💊🤑🤑� → Cheap Medicine → NPPA Price control .................................................................. 1034
61.3 💊💊📯📯📯📯 → Cheap Medicine → PM Bhartiya Janaushadi Pariyojana ........................................ 1034
61.4 💊💊📯📯📯📯 → National Health Mission (2005: रा��ीय �ा� �मशन) ..................................................... 1035
61.5 💊💊 → Mother & Child Healthcare (🤰🤰🤰🤰) .................................................................................... 1036
61.5.1 🤰🤰🤰🤰📯📯📯📯 → Integrated Child Development Services (ICDS-1975) ........................... 1036
61.5.2 🤰🤰🤰🤰📯📯📯📯 → via NRHM’s JSY & JSSK............................................................................. 1037
61.5.3 🤰🤰🤰🤰📯📯📯📯 → PM Matru Vandana Yojana (₹ 5k for 1st child+1k from other scheme*)
1038
61.5.4 Paalan 1000 - Journey of the First 1000 Days', ......................................................................... 1039
61.5.5 🤰🤰🤰🤰💉💉 → Vaccination (टीकाकरण) ........................................................................................ 1039
61.5.6 🤰🤰🤰🤰💉💉💉💉 Intensified Mission Indradhanush (IMI) 3.0 from 2021 onwards................ 1040
61.6 💊💊💊🦸🦸 → Adolescent boys and girls (िकशोर) ............................................................................... 1040
61.6.1 🤰🤰🤰🤰🤰🤰🤰🤰 → WCD Ministry’s 3 Umbrella Schemes in 2021 ........................................ 1041
61.6.2 Saksham Anganwadis in 👜👜👜👜Budget-2022 .......................................................................... 1041
61.7 💊💊📯📯📯📯 → Ayushman Bharat & PMJAY ₹ 5 lakh insurance ...................................................... 1042
61.7.1 🍋🍋Health Cess to build hospitals-2020 .................................................................................... 1042
61.7.2 🍋🍋Pradhan Mantri Swasthya Suraksha Nidhi (PMSSN) 2021-March.................................. 1043
61.7.3 💸💸💸🍽🍽15th FC: Sector Specific Grants (�ेत्र-�व�श� अनुदान)-Health ................................ 1043
61.8 💊💊📯📯📯📯 → National Health Mission → Comm/Non-Comm diseases ..................................... 1044
61.8.1 🤧🤧 PRADHAN MANTRI TB MUKT BHARAT ABHIYAN ................................................. 1044
61.8.2 🦗🦗🦗🦗🦗🦗 Communicable Diseases: Malaria free country: ................................................... 1045
61.8.3 🌴🌴[🦇🦇 🐷🐷]🤒🤒 Communicable Diseases: “One Health” approach .................................... 1045
61.9 🤒🤒ES21vol1Ch5 on Healthcare problems-Solutions ....................................................................... 1046
61.9.1 🤒🤒🤒🤒🤒🤒ES21: Indian Healthcare Problems:........................................................................ 1046
61.9.2 🤒🤒🤒🤒🤒🤒ES21: Healthcare Solutions: Oligopsony for universal health insurance coverage
1047
61.9.3 🤒🤒🤒🤒🤒🤒ES21: Indian Healthcare Solutions: Patient Rights like UK, Sweden .................. 1047
61.10 😷😷ES21Vol1Ch1- Corona Saving Lives & Livelihood................................................................. 1048
61.10.1 😷😷Basic Reproduction Number R0...................................................................................... 1048
61.10.2 😷😷Mitigation versus suppression ......................................................................................... 1048
61.11 📙📙📙📙ES22 Barbell strategy/Agile Response vs Waterfall strategy ............................................ 1049
61.11.1 💦💦Waterfall strategy (USA, EU) (झरना/ जल प्रपात रणनी�त) ..................................................... 1049
61.11.2 ��👟👟 Barbell strategy/Agile Response- India: (बारबेल रणनी�त और फु त�ली प्र�तिक्रया) ................ 1050
61.12 👻👻👻👻: 💊💊📯📯📯📯 Atma-Nirbhar Bharat → Medicine / Health .............................................. 1051
61.12.1 👻👻👻👻: 💊💊📯📯📯📯→ Ayushman Bharat National Digital Health Mission (15th Aug, 2020)
1051
61.12.2 👻👻👻👻: 💊💊📯📯📯📯→Draft Health Data Management Policy (�ा� डेटा प्रबं धन नी�त) ........ 1052
61.12.3 👻👻👻👻👻👻Health → E-Sanjeevani telemedicine ................................................................ 1052
61.12.4 👻👻👻👻👻👻Health Training → iGOT.................................................................................... 1052
61.12.5 👻👻👻👻👻👻Health Training → COVID Warrior TRANING ............................................ 1052
61.12.6 👻👻👻👻👻👻👻👻 PM AtmaNirbhar Swasth Bharat Yojana [PMASBY] from 👜👜Budget-2021
1052
61.12.7 👻👻👻👻👻👻👻👻 PM-Ayushman Bharat Health Infrastructure Mission (PM-ABHIM) .... 1053
61.13 👻👻 💉💉 📯📯📯📯: Corona → Vaccination Timeline ..................................................................... 1053
61.14 👻👻 💉💉 📯📯📯📯: Corona → Vaccine Procurement Policy 2021................................................. 1053
61.14.1 💉💉 Booster Dose / precautionary Dose (2022) ................................................................... 1054
61.14.2 Vaccine hesitancy- how to reduce: (टीकाकरण से डर/िहचिकचाहट) ............................................. 1054
61.14.3 👻👻 💉💉 📯📯📯📯: Corona → Vaccine & Corona medicines pe 0% GST YES OR NO? ... 1054
61.15 👻👻👻👻: 💊💊💊💊💊💊: Corona → Health Apps / Portal / ORG ...................................................... 1054
61.15.1 🌐🌐🌐: COVAX Network to buy vaccine for member countries ............................................ 1054
61.15.2 👻👻👻👻👻👻: CoWIN (Covid Vaccine Intelligence Work) App & Portal ........................... 1054
61.15.3 💊💊😷😷 → Health: Corona related Drugs/Kits..................................................................... 1055
61.16 💊💊📯📯📯📯 → Health: Misc. Schemes (�व�वध गौण योजनाए).............................................................. 1056
61.16.1 💊💊✍→ Conclusion-Template-Health? (�न�षर्)................................................................... 1057
61.17 🍴🍴 HRD → Health → Hunger, Malnutrition, Food Security .................................................... 1058
61.17.1 🍴🍴 �[YEARBOOK] Min. of Consumer Affairs, Food & Public Distribution .................. 1059
61.17.2 🍴🍴📯📯📯📯 → Hunger → Schemes before NFSA .................................................................... 1059
61.17.3 🍴🍴📯📯📯📯 → Hunger → National Food Security Act 2013 (खाद्य सुर�ा कानून) ...................... 1060
61.17.4 🍴🍴📯📯📯📯:💳💳 → Hunger → NFSA → One Nation One Ration Card................................ 1062
61.17.5 🍴🍴📯📯📯📯 Hunger → Food distribution reforms taken by Govt ..................................... 1062
61.17.6 Fortification of Rice (चावल क� िकलेबंदी) ................................................................................... 1062
61.17.7 🍴🍴📯📯🧔🧔 Hunger → NFSA → ES20 says ⏬number of beneficiaries............................... 1062
61.17.8 👻👻👻👻🍴🍴📯📯📯📯 Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY)- free grains in
Corona 1063
61.17.9 👻👻👻👻🍴🍴📯📯📯📯 Corona: other initiatives for cooking / hunger? .................................. 1063
61.17.10 🍴🍴📯📯📯📯 → Hunger → Malnutrition (कु पोषण) → Poshan Abhiyaan (2018) ................ 1063
61.17.11 �Poshan → National Council on India's Nutrition Challenges ..................................... 1064
61.17.12 🍴🍴📯📯📯📯 → Hunger → Malnutrition (कु पोषण) → Mission Poshan 2.0 (2021) ............. 1065
61.17.13 🍴🍴🍴🍴 → Ranking: Global Hunger Index (GHI: वै��क भूख/�ुधा सूचकांक) ............................ 1065
61.17.14 🍴🍴🍴🍴 → Ranking: Food/Hunger ke 500 Types/Jaat-ke-Reports .................................... 1066
61.17.15 🍴🍴🍴🍴 ✍→ Conclusion-Template-Hunger? (�ुधा - �न�षर्) ............................................ 1066
61.17.16 Mains Questions ..................................................................................................................... 1066
60 👫👫HRD → POPULATION CENSUS (जनगणना)
- 1872: Mayo conducted Census for the first time in India, but not first time in World
- 1881: Ripon started census every decade.
- Constitution → Union List Entry 69 → Census Act 1948: Home Ministry → Registrar General
and Census Commissioner → At district level under respective DM (IAS).
- Post Independence: Census conducted every 10 years. 2011= 7th Census of Free India.
60.1.1 �🔢🔢Census -2021
⇒ 2019-Dec: Union Cabinet allotted Rs. ~8700+crores for conducting Census of India 2021
⇒ Following details will be captured: Housing Condition; Amenities & Assets, Demography,
Religion, SC & ST, Language, Literacy, Economic Activity, Migration & Fertility.
⇒ For the first time, Mobile app will be used for data collection.
⇒ Census-2021 was to be conducted in two phases:
⇒ 1) Population Enumeration: 9th February to 28th February 2021.
⇒ 2) House listing and Housing Census: April to September 2020.
⇒ In this phase, parallely, National Population Register (NPR: रा��ीय जनसं �ा र�ज�र) will also be
updated for entire India except Assam. NPR exercise done under Citizenship Act, 1955)
⇒ �Corona: Above census exercise postponed till further notice.
⇒ 2022: GOVERNMENT updates Census rules to allow online self-enumeration in the upcoming
Census. जनगणना म� ऑनलाइन तरीक़े से �� ख़ुद अपना पं जीकरण और ख़ुद ही अपनी �गनती करवा सके ऐसे कु छ �नयमों को
सरकार लागू करने वाली।
🎓🎓Homework- NPR/Citizenship Amendment Act (CAA)/ NPR from POLITY
60.1.2 �🔢🔢Census → Demand for OBC Caste Census

अंग्रेजों के ज़माने म� जनगणना के दौरान जा�त आधा�रत डेटा भी जारी िकया जाता था। हालाँिक बाद के वष� म� अंग्रेज़ों ने ये ओबीसी
जा�त आधा�रत data देना ✋बं द िकया. कु छ राजनी�तक प� चाहते ह� िक अगली जनगणना म� ओबीसी समुदाय के भी सव��ण हो.
लेिकन क� द्र सरकार ने लोकसभा म� जवाब �दया है िक हम अगली जनगणना म� ओबीसी समुदाय के भी सव��ण ✋करने वाले नहीं.
Group Until 1931 Census 1941 Census 1951-2011

SC & ST Collected & Published Collected & Published Collected & Published
OBC Collected & Published YES Collected but NOT Collected
NOT Published NOT Published
⇒ The Mandal Commission (1979) estimated the OBC population at 52%
⇒ Socio Economic Caste Census (SECC)-2011 has CASTE related data, BUT NOT released in
public yet. [सामा�जक आ�थक जा�त जनगणना-2011: उसका डेटा सरकार ने सावर्ज�नक मं च पर जारी नहीं िकया है]
⇒ In the absence of OBC population / education / income data→ Difficult to make better quality of
government schemes and policies to help them. [ओबीसी समुदाय क� आबादी, �श�ा और आमदनी के डेटा क�
गैरहा�जरी म� उनके �लए अ�� नी�तयां और योजनाएं बनाना मु��ल]
⇒ So certain political groups demanding the next census should include OBC census as well.
⇒ 2021: Modi Govt replied in Lok Sabha: “The Government of India has decided not to
enumerate caste-wise population other than SCs and STs in Census.”
😰😰Controversy? if the OBC census is done and it is found that certain castes have benefited too
much and some OBC castes / unreserved castes benefited too less, then it may create some new set of
controversy about reservation so perhaps the government indecisive about it. [यिद ओबीसी जनगणना क�
जाती है और यह पाया जाता है िक कु छ जा�तयों को �श�ा और रोजगार म� ब�त अ�धक लाभ �आ है और कु छ ओबीसी जा�तयों/अनार��त
जा�तयों को ब�त कम अवसर �मले ह�, तो आर�ण के बारे म� कु छ नया �ववाद पैदा कर सकता है, इस�लए शायद सरकार इसे टाल रही है]
60.1.3 👫👫👫👫Demographic transition → Census perspective
Census Period जनसां��क�य प�रवतर्नकाल: Remarks
- In Census 1921 our population declined (-0.31%)
1) Stagnant Population ग�तहीन compared to 1911, due to WW1, Drought, Epidemics,
(1901-1921) Spanish flu influenza.
🥳🥳Birth rate: High. - This happened only once throughout the demographic
☠Death rate: High. history of India, so 1921 is called the year of Great
Demographic Divide
2) Steady Growth अ�वचल (1921-51) Called ‘Mortality induced growth’ because death rate had
🥳🥳Birth rate: High. declined and so population is rising. �ोंिक लोग कम हो रहे ह�
☠Death rate: Medium. इस�लए आबादी बढ़ रही है
- 🌽🌽 Agri revolution: famine impact reduced कृ �ष क्रां�त के
3) Rapid High Growth तेजी से उ� चलते अकाल क� प�र��तयों म� भुखमरी नहीं
�वकास (1951-1981) - � Medical research: epidemics contained & �चिक�ा
🥳🥳Birth rate: High. सं शोधन के चलते महामारी �नयं त्रण म�
- Life expectancy increased.
☠Death rate: Low.
- But people yet to change breeding behavior. Result:
population explosion / ‘Fertility induced growth’
4) High Growth with Definite
Signs of Slowing Down Birth rate is gradually ⏬ due to family planning, nuclear
(1981-2011) family, high cost of living. प�रवार �नयोजन, �वभ� प�रवार, जीवन
🥳🥳Birth rate: Medium → low. यापन क� उ� लागत के चलते युगल कम ब�े पैदा करते है
☠Death rate: Lower.
60.1.4 👫👫👫👫Demographic Transition → Theoretical Perspective
Stage 🥳🥳Birth rate ☠Death Rate India in this period
1: High HIGH HIGH Upto 1920
Stationary
2: Early HIGH MED. 1921-51
Expanding
3: Late MED. LOW 1971 onwards India is here.
Expanding
4: Low LOWEST LOWEST Population begins to “contract / shrink”.
Stationary Most developed countries in this phase. India
to enter here ~2026.
🔠🔠❓MCQ. Arrange the stages of demographic transition associated with economic development
(Prelims-2012)
1) Low birth rate with low death rate 2) High birth rate with high death rate
3) High birth rate with low death rate
Answer Codes: (a) 1, 2, 3 (b) 2, 1, 3 (c) 2, 3, 1 (d) 3, 2, 1
🔠🔠❓MCQ. Decadal growth rate of population in percentage was highest in India in the year
(UPSC-CDS-2020-ii)
(a) 1991 (b) 1981 (c) 1971 (d) 1961
🔠🔠❓Broadly both birth and death rates are low in which one of the following stages of
demographic transition model? [UPSC-CAPF-2021]
(a) High stationary stage (b) Early expanding stage
(c) Late expanding stage (d) Low stationary stage
60.1.5 👫👫x👫👫=🌩🌩💀💀Malthusian Theory of Population Growth

A British scholar Thomas Robert Malthus (1798) noted,
- Food production increases in arithmetic progression while population increases in geometric
progression. Therefore, Nature itself tries to establish equilibrium between population vs food
supply, using ‘Positive Checks (सकारा�क अवरोध)’ such as famine, epidemics, earthquake.
- Malthus also advised humans to initiate ‘Preventative Checks (�नवारक अवरोध)’ to control
population growth e.g. family planning (प�रवार �नयोजन), celibacy (ब्रह्मचयर्), late marriages.
60.2 👫👫👫👫DEMOGRAPHIC INDICATORS (जनसां��क� सं के तक)
Indicators Census-2011 definitions
Population density − Number of people per square kilometer.
(जनसं �ा घन�) − It was 382 in 2011
Decadal pop. growth − It is the Population in (Latest Census2011 – Last Census2001 / Last
rate Census 2001. It was 17.7% in 2011 (दशक�य जनसं �ा वृ�द्ध दर)
🥳🥳Birth Rate ज�दर − Number of live births per 1000 population. It’s ~20 in 2018 (SRS)
☠Death Rate मृ�ुदर − Number of live deaths per 1000 population. It’s ~6 in 2018 (SRS)
Population’s Growth − It is the difference between the birth rate and the death rate.
Rate
− If it’s a positive figure → rate of natural ⏫ in population.
जनसं �ा वृ�द्ध दर
− When it’s close to zero then population is said to be ‘stabilised’ or has
reached the ‘replacement level’.
Fertility Rate − number of live births per 1000 women in the childbearing age group
(प्रजनन दर) (15 to 49 years).
Total Fertility Rate − IF woman lived through above age group, how many babies would
(कु ल प्रजनन दर) she have produced hypothetically?
🤰🤰 → 👼👼 👼👼=2 − India’s target: 2.1 (Replacement level: प्र�त�ापन �र) i.e. she + her
husband replaced by two new human beings. The Extra 0.1 is kept to
compensate risk of unforeseen accident/deaths (of the babies).
− 📙📙📙📙ES22: Total Fertility Rate (TFR) declined from 2.2 (2015) to 2
(in 2019) which is a great achievement. This was achieved by ⏫ use
of contraceptives, better family planning, and girl education.
(गभर्�नरोधक साधनों का �ादा उपयोग, प�रवार �नयोजन के बारे म� अ�धक जानकारी, और
लड़िकयों क� �श�ा के चलते हम कु ल प्रजनन दर को कम कर पाए)
IMR: �शशु मृ�ु दर Infant Mortality Rate = number infant deaths under the age of 1 year per
1000 live births. It’s ~34/1000 in 2016 & 32 in 2018 (SRS).
CMR: बाल मृ�ु दर Child Mortality Rate = number child deaths under the age of 5 years per
1000 live births. It’s ~50 in 2016. SDG-2030-Target: 11
MMR: मातृ मृ�ु अनुपात Maternal Mortality Ratio = number of women who die in childbirth per
1 lakh live births. It’s ~130 in 2016. SDG-2030-Target: 70.
Life Expectancy Estimated number of years that an average person is expected to survive.
(जीवन प्र�ाशा) Indian Females (70), Males (67)
📆📆💀💀 - 📙📙📙📙ES22: Life Expectancy higher in urban areas (72.6 years) than in
rural areas (68.0 years)
- 📙📙📙📙ES22: Life Expectancy highest in Kerala and Delhi (75-75 years).
And Lowest in Chhattisgarh (65 years)
- 📙📙📙📙ES22: Females are expected to live longer than men in all areas,
except for Bihar and Jharkhand. (मिहलाओं क� जीवन प्र�ाशा पु�षों से �ादा �सवाय के
�बहार और झारखं ड। )
Sex Ratio - Sex Ratio = number of females per 1000 males. 2011: 943.
�लंगानुपात - Child Sex Ratio = girls (0-6 years) per 1000 boys in that age group. All
Indicators Census-2011 definitions
India declined from 927 (2001) → 919 (2011).
?? 👧👧 - 📙📙📙📙ES22: Sex ratio at birth for children born in the last five years
/ has improved in 2019-21 from 2015-16 in all states (Table 13), except
1000👦👦 for Himachal Pradesh, Bihar, Jharkhand, Chhattisgarh, Odisha,
Maharashtra, Tamil Nadu, Kerala, Meghalaya, Goa and Nagaland
- In India, sex ratio is expressed as no of females per thousand males
- But in some nations, it’s expressed as no of males per 1000 females
- @global: sex ratio is about 102 males per 100 females
- @ Asia: sex ratio is low i.e. # of men > # female
Age Pyramid It’s a structure that shows proportion of persons in different age groups
relative to the total population.
Dependency Ratio -👼👼 👴👴÷��= (population below 15 & above 64) divided by
�नभर्रता अनुपात (%) population in the 15-64 age group.
Demographic - Phenomenon when dependency ratio of a country declines, and
Dividend larger proportion of people in the working age compared to
(जनसां��क�य लाभांश) dependency age. जब �नभर्रता अनुपात म� �गरावट , और कायर्शील आयु म� लोगो क� सं �ा
बढ़े, उसे कहते है
- demographic dividend temporary because the larger pool of working
age people will eventually turn into non-working old people.
You can prepare ascending descending orders of states / UTs demographic indicators from here
cbhidghs.nic.in/WriteReadData/l892s/Chapter%201.pdf but very poor cost benefit
60.2.1 📊📊 Census-2011: migration & occupation (�ाना�रण)
Migrant: person settled in a place different from his previous residence.
�Push factors [ध�ा देनेवाले कारक] �Pull factors [आक�षत करने वाले कारक]
Push Factors: force that drives people away from a Pull Factors: force that draws people to
place. immigrate to a place.
Lack of jobs/good salary/Biz Opportunity Presence of it (धं धे/रोजगार के अवसर)
Lack of Basic amenities: water, shelter, hospital Presence of it (उन सु�वधाओं क� मौजूदगी/ उपल�
(पानी अ�ताल घर जैसी बु�नयादी सु�वधाएँ न होना) होना)
Disasters, floods, famines (आपदा, बाढ़, अकाल) Absence of it
Crime, War, lack of safety (अपराध, युद्ध, असुर��त) Safe, peaceful society (सुर��त और शांत समाज)
⇒ 37% of Indian are internal migrants. Among them, majority are female (70%)
⇒ Main reason for migration: A) Female: marriage (70%) B) Male: work & employment (28%)>
moved with household > moved after birth.
Occupation: Census divided the working population of India into four major categories:
1.Cultivators 2.Agricultural Labourers 3.Household Industry Workers 4.Other Workers
🔠🔠❓MCQ. According to the Census 2011, in India, what is the % of people (approximately) considered
to be migrants (internal),i.e. now settled in a place different from their previous residence? (CDS-i-2020)
(a) 25% (b) 35% (c) 45% (d) 55%
🔠🔠❓ Which is the biggest cause of migration of females in India? (UPSC-CDS-i-2020)
(a) Employment (b) Education (c) Marriage (d) Business
🔠🔠❓2011 Census has divided the working population of India into four major categories. Which one of
the following is NOT one of them ? (UPSC-CAPF-2020)
(a) Cultivators (b) Domestic workers (c) Household industrial workers (d) Agricultural Labourers
��Which one of the following is a pull factor for migration? [UPSC-CAPF-2021]
(a) Natural disaster (b) High wage (c) Housing shortage (d) Low income
60.3 💊💊💉💉💉💉 DEMOGRAPHIC INDICATORS: 500 JAAT KE REPORTS

Note: No need to memorize all of them, but try to memorize some data for using in Mains
intro/body/conclusion.
60.3.1 💊💊💉💉💉💉 NITI’s “Healthy States, Progressive India”/Heath Index

− NITI Aayog health index for 2019-20 (Released in 2021-Dec) (नी�त आयोग का �ा� सूचकांक)
− Top-3: #1: Kerala, TN, Telangana.
− Bottom-3: MP, Bihar, UP (Bottom-most).
− W.Bengal didn’t participate.
− Further, ranking in sub-categories: (larger states, smaller states, and Union Territories), but poor
cost benefit in memorising.
− Started since 2017. This report measures 24 indicators grouped under 3 pillars 1) ‘Health
Outcomes’ 2) ‘Governance and Information’, 3) ‘Key Inputs/Processes’
60.3.2 💊💊💉💉💉💉 National Family Health Survey (NFHS)

- Who? Health Ministry’s International Institute for Population Sciences (IIPS), Mumbai.
- NFHS done 5 times: 1992–93, 1998–99, 2005–06, 2015–16, & 2019-21(NFHS-5)
- NHFS-5: Phase1) Data published in 2020-Dec for 22 State/UT’s
- NHFS-5: Phase2) Data published in 2021-Nov, for remaining State/UT Uttar Pradesh (UP), TN,
Punjab, Rajasthan, MP, Jharkhand, Haryana, and Chhattisgarh etc. 14 State/UT.
Major Findings from NHFS-5
- All India level: Total fertility rate has declined: 2.7 children (2005). This TFR � to 2.2 (2015)
and now � 2.0 (as per latest NFHS). (अ�खल भारतीय �र पर मिहलाओं के कु ल प्रजनन दर म� कमी आयी है.)
- But, still TFR>2.1 in Madhya Pradesh, Rajasthan, Jharkhand, Uttar Pradesh. (हालाँिक कु छ रा�ों म�
अभी भी मिहला कु ल प्रजनन दर �ादा है)
- Overall usage increased for Contraceptive’s usage, Vaccine usages� �, institutional births,
breast-feeding, women bank accounts, women mobile phones (इनम� बढ़ोतरी �ई है: गभर्�नरोधक-साधनो का
उपयोग, टीकाकरण, प्रसव अ�ताल म�, ब�ों का �नपान, मिहलाओं के ब�क खाते और मिहलाओं के मोबाइल फ़ोन)
- �child malnutrition but change is not significant as drastic changes in respect of these
indicators are unlikely in short span period. (बाल कु पोषण थोड़ा-सा/ह�ा सा कम �आ है, लेिकन बहोत प्रभावी
असर अभी तक नहीं देखी गई, �ोंिक ये कु छ सम�ाएँ है �जसम� कम अव�ध/ छोटे समय म� ज़ोरदार सुधार नहीं िदख सकता।)
- Anaemia among children and women continues to be a cause of concern. (मिहला और बालको म�
अनी�मया �चंता का �वषय अभी भी है।)
60.3.3 💊💊💉💉💉💉National Health Profile 2019 (Released in 2019-Oct)
Heath Ministry → DG Health Services → Central Bureau of Health Intelligence doing annually.
⇒ Only 1 Govt Doctor For 10,926 People. (WHO’s recommended doctor-population ratio of
1:1000) [हर 1 हजार लोगों के सामने एक डॉ�र होना चािहए]
⇒ India’s public expenditure on healthcare barely 1.28% of GDP. (WHO recommends 5%). �ा�
सेवाओं पर सरकारी खचर् ब�त कम हो रहा है
⇒ + other filler stuff: IMR & MMR �, life expectancy �, but anaemia is a huge health concern
as more than 50% of Indian women and children suffer from it.
It’s a 340 pages document, chasing the ascending descending ranks=poor cost:benefit.
60.3.4 👫👫👫👫Demographic Indicators → Sample Registration System (SRS)

⇒ Home Ministry → Registrar General of India → नमूना पं जीकरण प्रणाली
⇒ Annual Demographic Survey for birth/death etc indicators started in the last 1960s.
⇒ 2020-May = data for 2018 released. (given in respective cells of above table)
⇒ �As such poor cost benefit chasing 'best / worst States & UT'. In all such surveys,
o Usually Bihar / Madhya Pradesh / Chhattisgarh / Andaman will be worst part
o Usually Kerala (State), Delhi (UT) etc will be in the better part.
🔠🔠❓MCQ. Find wrong statement(s) about sex composition? (CDS2019-II-Q75.)

a) In some countries , sex ratio is expressed as number of males per thousand females
b) In India, sex ratio is expressed as number of females per thousand males
c) At world level, sex ratio is about 102 males per 100 females
d) In Asia, there is high sex ratio.
60.4 👫👫↘ 📜📜:🧔🧔NATIONAL POPULATION POLICY 2000 (रा�ी� य जनसं �ा नी�त)
⇒ Achieving TFR= 2.1 (Replacement level) by 2010. (Although now shifted to 2025)
⇒ Achieve stable population by 2045 i.e. India’s population growth rate and age pyramid
composition should remain stable. ��र आबादी
⇒ Encourage family planning, use of contraceptives, safe abortions, HIV control, universal
immunization, compulsory registration of birth and death etc. प�रवार �नयोजन, गभर् �नरोधकों का उपयोग,
एचआईवी �नयं त्रण, टीकाकरण, ज� और मृ�ु का अ�नवायर् पं जीकरण
⇒ Recommended that Lok Sabha and the Rajya Sabha seats be freezed based on the 1971 Census,
until 2026. So that political parties don’t encourage people to produce more babies just to
increase number of parliament seats.
⇒ Setup two bodies →
⇒ A National Commission on Population (रा�ी� य जनसं �ा आयोग) Under the chairmanship of Prime
Minister, all CMs, selected union ministers, NGO & experts to oversee the implementation.
(Although appears defunct body).
⇒ 2005: Population Stabilization Fund (जनसं �ा ��रता कोष): An autonomous body, chaired by
Health Minister, for awareness generation, community participation, mobilising ₹ ₹ donations
etc. Known for 2 schemes:
- � Prerna Scheme (for encouraging delayed marriage, childbirth and spacing. ASHA
workers will give counselling to couples, provide contraceptives etc)
- � Santushti Scheme (Public Private Partnership for sterilization services, नसबं दी)
60.4.1 👫👫↗�:📊📊 World Population Prospects 2019 (Released in 2019-Jul)
Published by United Nations department of economic and social affairs.
2019 Population in billions % of world population
India 1.37 18%
China 1.43 19%
In the next 8 years (2027), India's population to cross China's. Then India will remain the most
populous country in the world for the entire century. 2027 के बाद भारत पूरी शता�ी के �लए दु�नया म� सबसे अ�धक
आबादी वाला देश
60.4.2 👫👫↗�:📊📊 State of World Population Report
⇒ By United Nations Population Fund (UNFPA)- United Nations sexual and reproductive health
agency HQ: New York.
⇒ Theme of 2021’s report: “My body is my own” Highlighted the problems of human rights
violation and child abuse. (“मेरा शरीर मेरा है”- मानव अ�धकार हनन तथा ब�ों का शोषण रोकना)
⇒ Theme of 2020’s report: ‘Against my will: defying the practices that harm women and girls and
undermine equality’. (मेरी इ�ा के �व�द्ध: मिहलाओं और लड़िकयों को नुकसान/ कमजोर करने वाली प्रथाओं को चुनौती
देना) Highlighted the problems of sex-selective abortion, neglect of girl child = 46 million Indian
girls are either not allowed to be born or died before age of 5 due to neglect. (2013-17). भ्रूणह�ा तथा
नवजात ब�ीओ क� उपे�ा के चलते 46 million लड़िकया भारत क� आबादी से गायब है.
⇒ Early marriage = obstacle to education, income and safety of women in India.
⇒ 2010-19: India’s population grew at 1.2% per year= more than double speed of China
🔠🔠❓ theme of the annual report UNFPA on State of World Population – 2019. (UPSC-CAPF-2019)?
a) Worlds apart : Reproductive health and rights in an age of inequality
b) The power of choice : Reproductive rights and the demographic transition.
c) Unfinished business – the pursuit of rights and choices for all
d) How our future depends on a girl at this decisive age
60.5 📔📔📔📔 ES19: INDIAN DEMOGRAPHY @2040- POLICY SUGGESTIONS

ES19 said that National TFR will ⏬ below replacement level (i.e. TFA < 2.1), because of:
⇒ continued urbanization. सतत शहरी करण
⇒ improvements in health care → decline in infant mortality → mothers will not produce second /
third child to offset the loss of the first child.
⇒ � in female education → family planning, birth control, postponement of marriage
⇒ other socio-economic drivers. शहरीकरण, अ�� चिक�ा, मिहला �श�ा और दू सरे सामा�जक-आ�थक कारकों के चलते
कु ल प्रजनन दर प्र�त-�ापन दर पर प�ँ च जाएगा।
This demographic transition will have the following implications for the policymakers:
60.5.1 �<��Demographic Changes (जनसां��क� प�रवतर्न) and Education

⇒ Proportion of elementary school-going children, i.e. 5-14 age group, will witness significant �.
⇒ Himachal Pradesh, Uttarakhand, Andhra Pradesh and Madhya Pradesh have more than 40% of
elementary schools with fewer than 50 students enrolled. It’ll be better to consolidate/merge
such schools located within 1-3 kms radius of each other. ब�ों क� सं �ा म� कमी �जसके चलते �ू लों को
बं ध/�वलीन करना होगा।
⇒ Japan, China, South Korea, Singapore and Canada, already doing the same. We should focus on
quality and efficiency of education rather than quantity of schools. �ू लों क� सं �ा नहीं गुणव�ा को बढ़ाओ
60.5.2 �<��Demo Changes: Working-Age Population (कायर्शील आयु क� जनसं �ा)

⇒ India’s demographic dividend will peak around 2041, when the share of working-age population
(20-59 years) will be 59%. Then it will begin to �.2041 के बाद बुजुग� क� सं �ा बढ़ेगी
⇒ So before that time, we will have to create additional jobs to reap the demographic dividend,
prevent social unrest from unemployment. उससे पहेले रोजगार सृजन नहीं िकया तो सामा�जक आक्रोश
⇒ The population of coastal States will begin to age sooner than the interior states. So, migration of
workers will have to encouraged, and we will have to provide them with affordable rental
homes. आंत�रक रा�ों से तटवत� रा�ों म� मजदू रों को लाना होगा, िकराये के मकानों को प्रो�ािहत करे
60.5.3 �<��Demographic Changes and Health Care Facilities (�ा� सु�वधा)

⇒ India already has low per capita availability of hospital beds compared to other emerging and
developed economies.
⇒ Although India's population growth rate is going to slow down, but in absolute terms our
population is going to increase in the next 20 years. So we will have to increase the per capita
availability of the hospital beds. अ�तालों म� खिटया बढ़ाने क� ज�रत
⇒ We also need to increase investments in geriatric health-care, old age homes. जरा�चिक�ा, वृद्धाश्रम
60.5.4 �<�� Demographic Changes and: Retirement Age (�नवृ�� आयु)
⇒ While the life expectancy will � but the total fertility rate will � so, some states will start
transitioning to an ageing society by the 2030s. कु छ रा�ों म� ब�त �ादा बुजुगर् हो जाएं गे
⇒ Due to ageing population and increasing pressure on pension funding, Germany, France, Japan
& others have begun raising the pensionable retirement.
��If India’s ⏫ the age of retirement: (सेवा�नवृ�� क� आयु म� बढ़ोतरी करना)
 It’ll help keeping the Govt funded pension programs viable. सरकारी प�शन योजनाओ का बोज कम रहे
 Income tax revenues will remain viable (Because salaried person is likely to pay more Income
Tax compared to a retired person who is receiving lower amount of pension.)
 We can benefit from the experience of older people who continue in the job-service.
But, Govt should notify this change well at least 10 years in advance, so people can make their
pension/retirement plans accordingly. (अ�ग्रम जानकारी देकर चरणबद्ध तरीके से धीरे-धीरे लागू हो)
61 💊💊 HRD → HEALTH (�ा�)
SDG Goal#3: Ensure Healthy Lives & Promote Well-being For All
India’s Baseline (आधार रे खा) India’s SDG-Target-2030 (ल�)
Maternal Mortality Ratio (MMR per 1 lakh Reduce to 70: Kerala, Maharashtra, Tamilnadu
live births): 130. मातृ मृ�ु अनुपात achieved. While UP, Assam etc. have 200+ deaths
Under-5 Child Mortality Rate (per 1000 live Reduce to 11: Only Kerala achieved so far (7)
birth): 50. बाल मृ�ु दर
Annual Reported TB cases per 1 lakh Reduce to 0
population: 138
No. of Govt doctors , nurses and midwives per Increase to 550: Only Kerala achieved so far
1,00,000 population: 221 (700)
SDG Goal #3 (health) also requires nations to reduce road accidents, alcohol and tobacco abuse,
mental-illness, and end HIV/AIDS, Malaria, Hepatitis and other communicable diseases. However,
India has not put any quantifiable targets for that. (हमने अपनी औकात के िहसाब से ल�ांक चुने है. )
61.1.1 � 🧬🧬 🔬🔬 [YEARBOOK] Ministry of Science and Technology
(�व�ान और प्रौद्यो�गक� मं त्रालय)
Dept ⇒ Department of Science and Technology (DST)
⇒ Department of Scientific and Industrial Research
⇒ Department of Biotechnology
Subordinate ⇒ Survey of India, The National Survey and Mapping Organisation
⇒ National Atlas and Thematic Mapping Organisation (NATMO)
Statutory ⇒ Under DST: Science & Engineering Research Board, Technology
Development Board
Autonomous ⇒ National Innovation Foundation in DST
⇒ Indian Science Cong. Association, KOLKATA, in DST
⇒ National Institute of Immunology, in Biotech Department
⇒ Technology Information, Forecasting and Assessment Council (TIFAC).
⇒ ++Truckload of Science and Research bodies.
CPSE ⇒ Bharat Immunological & Biological Corporation
सावर्ज�नक �ेत्र ⇒ Indian Vaccine Corporation Ltd (IVCOL)
उपक्रम ⇒ Biotechnology Industry Research Assistance Council (BIRAC)
⇒ (*) Central Electronics Ltd.
NOTE: Dept of Pharmaceutical = Chemical & Fertilizer ministry (Pillar#5)
61.1.2 �💊💊💉💉 [YEARBOOK] Ministry of Health And Family Welfare
�ा� एवं प�रवार क�ाण मं त्रालय consists of <following notable orgs..>

Dept − Dept. of Health and Family Welfare
− Dept. of Health Research
Attached − Directorate General of Health Services
offices o Central Bureau of Health Intelligence (CBHI) → release annual
सं ल� कायार्लय report ‘National Health Profile of India’.
o National Organ and Tissue Transplant Organization (NOTTO)
@Safdarjung Hospital, Delhi
− Central Drugs Standard Control Organization (CDSCO) → Drug Controller
General of India (DCGI) for drug clinical trials & approvals.
− National Health Authority (NHA) to implement PM-JAY ₹5L.
Statutory − Indian Red Cross Society, All India Institute of Medical Sciences (AIIMS)
वैधा�नक सं �ा To regulate syllabus & profession-following bodies
− Pharmacy Council, Dental Council: New Delhi
− Medical Council Of India: Accused of corruption & mismanagement in
granting permission to new medical colleges → National Medical
Commission (NMC: रा��ीय �चिक�ा आयोग) Act 2019 replaces this archaic body
with a new commission with powers to control fees in private medical
colleges, system of ‘common entrance exam’, and ‘exit (Licentiate) exam’ to
ensure doctor quality etc.
− (Proposed) National Nursing and midwifery Commission Bill) to replace
Indian Nursing Council. Florence Nightingale award. She was a British
reformer & founder of modern nursing.
− 2020- National Commission for Allied Healthcare Professionals Bill to cover
physiotherapist, X-ray Machine operator, physiotherapists, optometrists,
nutritionists etc. (�ा� सेवाओं से जुड़े पेशेवर)
Autonomous − National Population Stabilisation Fund
�ाय� सं �ा − All India Institute of Speech and Hearing, Mysore
− International Institute for Population Sciences, Mumbai, a ‘Deemed
University’, nodal for National Family Health Survey (NFHS). Five rounds of
NFHS (1992, 1998, 2005, 2015, 2019) done in India.
− Indian Pharmacopoeia Commission (IPC)
− Indian Council of Medical Research (ICMR, origin in 1911)
− National Inst of Mental Health and Neurosciences (NIMHANS), Bengaluru →
��Budget-2022: we’ll launch National Tele Mental Health Programme
under this organization.
Budget − �Budget-2020 allotted <₹70,000 cr on health which is barely 0.3% of GDP.
Even if we add union+state budgets = 1.6% of GDP.
− ��ES22: presently Union+State spending total 2.1% of GDP on health.
− National Health Policy 2017 aims to � it to 2.5% of GDP by 2025.
− WHO recommends minimum 5% of GDP be spent on public healthcare
CPSE − (*)Hospital Services Consultancy Ltd. (HSCC) (*)HLL Lifecare
Intl Bodies − UN Specialized Agency: World Health Organization (WHO) HQ: Geneva,
Switzerland (1948) specialized agency of United Nations सं यु� रा�� क� �वशेष एज�सी
61.1.3 💊💊🌐🌐� World Health Organization (WHO: �व� �ा� सं गठन)
⇒ at Geneva, Switzerland, 1948.
⇒ Its supreme decision making body known as Health Assembly (�ा� सभा)
⇒ It consists of all member states. It elects the Director-General of WHO for a period of five year.
⇒ WHO's Health Assembly's decisions are implemented by the Executive Board (कायर्कारी बोडर्).
⇒ The Executive Board has 34 individual health experts elected for three-year terms.
⇒ 2020: India's health minister Dr. Harsh Vardhan elected as the chairman of the Executive Board.
⇒ �WHO-Controversy#1? Mishandling of the Corona crisis. US President Trump wanted to
withdraw membership from WHO. Brazil also threatened similar.
⇒ �WHO-Controversy#2? Taiwan wants to be added as an observer in WHO. China hates this
because China says 'Taiwan is a part of China. Taiwan is not a separate country.'
2020: WHO panel to examine WHO's Response to Corona. Panel/ committee recommended:
⇒ 1) Need to setup a Pandemic Framework Convention Agreement within six months to address
gaps in international regulations. Setup an international pandemic financing facility [महामारीओं से
�नपटने के �लए एक अंतररा��ीय समझौता बने, महामारी के �ख़लाफ़ �व� पोषण / पैसा जुटाने के �लए के �लए अलग सं गठन बने,]
⇒ 2) �Power & Money of WHO [धन और स�ा को बढ़ाया जाए]
⇒ 3) WHO Director General should have a 7-year term With no reappointment. (Presently 5 years
term and reappointment possible, Once there was a director general who served for four
consecutive terms= 20 years then It is difficult to expect innovation, fresh ideas. Such person will
More likely surround himself with his own favourite people, and then administration will
become stagnant). [�व� �ा� सं गठन के डायरे�र जनरल को 7 साल का �सफर् एक कायर्काल �मले, पुनः �नयु�� न क�
जाए. अगर/ यिद एक ही आदमी पूरी �ज़दं गी नाग क� तरह फ़न फै ला के बैठा रहेगा उसी कु स� म� तो नवाचार हो नहीं सकता]
61.1.4 💊💊🌱🌱�[YEARBOOK] Ayush Ministry
- Ministry of Ayurveda, Yoga (Maharshi Patanjali) and Naturopathy, Unani (Arabs. Noted person
in India: Hakim Ajmal Khan freedom fighter), Siddha (by Tamil Siddhar Saints) and
Homoeopathy (by a German Physician), abbreviated as AYUSH
- 2017: Sowa-Rigpa (Tibetan) medicine system is latest to be added in the Ayush list. Later Govt
setup its national research institute in Leh, Ladakh
Dept N/A
Autonomous − Morarji Desai National Institute of Yoga, Delhi
− National Institutes for individual subjects of AYUSH:
o Ayurveda @Jaipur, Naturopathy @Pune (campus name “Nisarga
gram”), Unani Medicine @Bangluru, Siddha @Chennai,
Homoeopathy @Kolkata, Sowa Rigpa@ Leh
− Central Councils for research in individual subjects of AYUSH
o Siddha@Chennai, other subjects’ @New Delhi
Statutory Following bodies regulate the syllabus/practionners:
Bodies − Central Council of Homoeopathy(CCH) 2020- It was replaced by National
Commission for Homoeopathy (NCH).
− Central Council for Indian Medicine (CCIM). 2020- It was replaced by
National Commission for Indian System of Medicine. Common entrance
and exit exam for Ayush practitioners etc.
− 2020: Institute of Teaching & Research in Ayurveda (ITRA) at Jamnagar,
Gujarat
Drugs & Cosmetics Act, 1940- two statutory bodies related to Ayush
1. Ayurveda, Siddha, Unani Drugs Technical Advisory Board (ASUDTAB)
2. Ayurveda, Siddha, Unani Drugs Consultative Committee (ASUDCC),
Attached / − National Medicinal Plant Board (NMPB)
Subordinate − Pharmacopoeia Commission for Indian Medicine & Homoeopathy
(PCIM&H)
CPSE [सरकारी − (*) Indian Medicine Pharmaceutical Corporation Ltd. approved for
क�नी] strategic disinvestment (=privatization) in 2019
E-Governance − National AYUSH Morbidity and Standardized Terminologies
Electronic(NAMASTE) Portal for illness/disease related database
🔠🔠❓Match the following list (CDS2019-II-Q108.)

List I (Institute) List II (Location)
A. National Institute of Ayurveda 1. Chennai
B. National Institute of Homeopathy 2. Bengaluru
C. National Institute Unani Medicine 3. Kolkata
D. National Institute of Siddha 4. Jaipur
Codes: A B C D: → (a) 1 2 3 4 (b) 1 3 2 4 (c) 4 3 2 1 (d) 4 2 3 1
61.1.5 💊💊 📜📜:🧔🧔 → National Health Policy 2017 (रा��ीय �ा� नी�त)

- ⏫ public health expenditure to 2.5% of the GDP.
- Transform primary health care into Health and Wellness Centres.
- Proposed to setup National Digital Health Authority (NDHA) / National eHealth Authority
(NeHA) to encourage telemedicine, remote evaluation of Xray, CT scan etc.
- ⏫ Generic Drugs, Cheap Medical Devices, Make In India, Alternative Medicinal System
(=AYUSH)
- HIV/AIDS: Achieve global target of 2020 (also termed as target of 90:90:90). Further
- HIV Prevention Act 2017: end AIDS by 2030 & prevent discrimination against HIV +ve
persons. [एड्स पीिड़त के साथ भेदभाव न हो, इसके �लए क़ानून।]
- 1st December observed as World AIDS Day. [�व� एड्स िदवस]
- National AIDS Control Organisation (NACO) is nodal body.
- Eliminate / ⏬ various non-communicable diseases in time bound manner.
61.1.6 💊💊 📜📜:🧔🧔 → National Policy for Rare Diseases-2020

⇒ �वरल/असाधारण रोगों के �लए रा��ीय नी�त-2020 replaced 2017’s policy.
⇒ Upto ₹15 lakh financial support through Rashtriya Arogya Nidhi.
⇒ Govt will also encourage donation / crowdfunding.
⇒ Indian Council of Medical Research (ICMR) to create a database of rare diseases like
Haemophilia, Thalassemia, Sickle cell anaemia, Lysosomal storage disorders etc.
61.2 💊💊🤑🤑� → CHEAP MEDICINE → NPPA PRICE CONTROL
- 1997: National Pharmaceutical Pricing Authority (NPPA: रा��ीय औष�ध मू� �नधार्रण प्रा�धकरण) setup as
an attached office under Dept of Pharmaceuticals under Ministry of Chemicals & Fertilizers.
- NPPA derives power from Essential Commodities Act, 1955 → Drugs Prices Control Order
(DPCO), 1995 & 2013. → NPPA monitors availability & prices of drugs. It enforces price
ceilings on 800+ essential medicines.
- 🤳🤳 Pharma Sahi Daam: NPPA’s app & portal. Customer can check drug prices before buying.
- 🤳🤳 Pharma Jan Samadhan: NPPA’s webportal where consumers can file complaint about drug
pricing and availability. (महंगी दवाई और दवाइयों क� अनुपल�ता के �खलाफ �शकायत)
- A coronary stent is a tube-shaped device placed in the arteries that supplies blood to heart. Stent
keeps the arteries open for coronary heart patients.
- 2017: NPPA enforced price ceilings on Stent to stop profiteering by the companies and hospitals.
- ��ES20 vol1ch4: NPPA drug price control has harmed more than it has helped. Its logical
argument is similar to what we learned in Pillar#4A: food inflation → Essential Commodities
Act. Here, NPPA price control → companies discouraged to produce more / innovate more →
shortage of medicine supply → chemist (illegally) demand more prices from patients. (ब�त �ादा
भाव �नयं त्रण से फायदा कम, नुकसान �ादा �ोंिक िफर कं प�नया मुनाफे म� कमी के चलते नवाचार /�रसचर् नहीं कर पाती)
61.3 💊💊📯📯📯📯 → CHEAP MEDICINE → PM BHARTIYA JANAUSHADI PARIYOJANA

− Boss? Ministry of Chemicals and Fertilizers → Bureau of Pharma PSUs of India (BPPI is an
autonomous body of all Pharma-PSUs under this department. BBPI is registered under Societies
Registration Act, 1860) [रसायन और उवर्रक मं त्रालय]
− NGO / individual applies to open a Jan Aushadhi Stores (JASs) to sell generic medicines** at
affordable prices to all. BPPI supplies the generic drugs to such stores.
− Such stores are opened at district hospitals and other public places.
− �Budget-2020: we’ll expand Jan Aushadhi Kendra in all districts by 2024.
Table 1: Related Terminologies
Generic Drug After a branded drug patent expires (or Govt gives Compulsory License), other
companies can manufacture the same formula. Such non-proprietary drug are
called ‘Generic’ Drugs. [पेटंट अव�ध ख़� होने पर कोई भी क�नी उस दवा को बना सकती है]
Fixed Dose It’s a cocktail / mixture or two or more drugs. Govt banned many FDCs because
Combinations they’re unsafe / multiple side effects. E.g. Corex, Saridon, D'Cold, Vicks Action
500.
🔠🔠❓MCQ. Find correct statements about Bureau of Pharma PSUs of India (BPPI) [CDS-2019-i]
1. It is the implementing agency of Pradhan Mantri Bhartiya Janaushadhi Pariyojana.
2. It has registered as an independent society under the Societies Registration Act, 1860.
Codes: a) 1 onlyb) 2 only c) Both 1 and 2 d) Neither 1 nor 2
61.4 💊💊📯📯📯📯 → NATIONAL HEALTH MISSION (2005: रा�ी� य �ा� �मशन)

Boss? Ministry of Health and Family Welfare. Core Scheme (Not 100% funded by Union)
1. ⏬ MMR to 1/1 lakh live births; IMR to 25/1000 live births.
2. ⏬ Total Fertility Rate to 2.1.
3. ⏬ Anaemia in women (15–49 years) [मिहलाओं म� र� अ�ता]
4. ⏬ Household expenditure on healthcare.
5. Focus on Tuberculosis, Leprosy, Malaria etc.
6. Eliminate Kala-azar by 2015. (WHO says not achieved fully yet)
7. The Mission has two sub missions viz.
○ National Urban Health Mission (रा��ीय शहरी �ा� �मशन) → to reduce urban poor’s
healthcare expenditure. Although nothing MCQ-worthy.
○ National Rural Health Mission (रा��ीय ग्रामीण �ा� �मशन)
61.5 💊💊 → MOTHER & CHILD HEALTHCARE (🤰🤰🤰🤰)
SDG Goal#3 requires- मातृ मृ�ुदर और बाल मृ�ुदर म� कमी करना

- India’s Maternal Mortality Ratio (MMR per 1 lakh live births): 130 → reduce to 70.
- India’s Under-5 Child Mortality Rate (per 1000 live birth): 50 → reduce to 11.
61.5.1 🤰🤰🤰🤰📯📯📯📯 → Integrated Child Development Services (ICDS-1975)

- सम��त बाल �वकास योजना Boss? Ministry of Women and Child Development.
- Centrally sponsored scheme → Core Scheme (60:40, 90:10)
- Who? Children 0-6 years, Pregnant women and Lactating mothers. ICDS is an ‘Umbrella
Scheme’, its components include:
- Anganwadi Services Scheme
- Pradhan Mantri Matru Vandana Yojana (₹ 5k + ₹ 1k for birth of first live child)
- SABLA: Scheme for Adolescent Girls (11-18 years)
- POSHAN Abhiyan
- National Creche Scheme: to setup Creches for working women.
- Child Protection Scheme: for children in difficult circumstances.
- 🤩🤩Benefits? ⏬ IMR, MMR & Anaemia, Immunization, Health check-up, Pre-school edu
61.5.2 🤰🤰🤰🤰📯📯📯📯 → via NRHM’s JSY & JSSK
Boss? Health Min’s National Rural Health Mission’s notable schemes for mother & child:
1. Accredited social health activists (ASHA workers) to provide Reproductive, Maternal,
Newborn, Child and Health and Adolescent (RMNCH+A) services.
2. 🤰🤰 Janani Suraksha Yojana (JSY):
a. BPL women (irrespective of age or number of children) is given conditional cash transfer
around ₹ 1000 for delivering child @hospital. The amount depends on whether it is a
rural area or urban area etc. गरीब मिहला का हॉ��टल म� प्रसव करवाने पर मिहला को ₹1000 �पये द�गे।
b. ASHA worker given bonus ₹ ₹ for bringing her to hospital.
3. 🤰🤰 Janani Shishu Suraksha Karyakram (JSSK):
a. Free normal / caesarean deliveries @public hospitals. मु� म� प्रसव
b. Free food, medicines, free transport from home to hospital by dialling 102.
4. Surakshit Matritva Aashwasan (Suman-2019): if pregnant women visits a govt hospital but
denied any of the scheme/services or her dignity is not respected then complaint can be
registered through SUMAN helpline/sms/web portal & govt will adopt ZERO tolerance to the
culprit doctor/nurse/wardboy. Result? ⏬IMR,MMR, ⏫Positive birthing experience। सरकारी
अ�ताल म� गभर्वती मिहला को अ�� सेवा न �मली तो �शकायत
5. Pradhan Mantri Surakshit Matritva Abhiyaan (2016): all pregnant women given free medical
checkup, iron folic acid (IFA), calcium tablets etc. on 9th of every month. This scheme is for
‘Antenatal Period’ = before the delivery. Private doctors also encouraged to ‘volunteer’ for this
campaign (in other words, Government will not pay them ₹ ₹ )
6. Laqshya- Labor Room Quality Improvement Initiative (2017): to ensure public hospital delivery
room is sterilized & has necessary medicines/equipment to deal with delivery related
complications / emergencies. (Side Note: Swatchha Bharat Mission’s sub-component ‘Kayakalp’
aims for cleanliness in Public hospitals)
7. Mother's Absolute Affection (MAA 2016): Awareness generation to encourage mothers to
breastfeed babies. Because exclusive breastfeeding for the first six months is essential to improve
child health & immunity. [�नपान को प्रो�ाहन देना]
8. Mission Parivar Vikas (2016): Uttar Pradesh, Bihar, Rajasthan, Madhya Pradesh, Chhattisgarh,
Jharkhand and Assam constitute 44% of the country’s population because of their high TFR. So
this mission aims for:
a. Encourage family planning in these states. प�रवार �नयोजन / नसबं धी
b. new FREE contraceptives in Govt hospitals:
i. ‘Chhaya’ contraceptive pill (गभर्�नरोधक गोली) which has to be taken only once in a
week. Chemical name: Centchroman, it’s a non-hormonal pill.
ii. ‘Antara’ injectable hormonal contraceptive which has to be taken once in three
months.
c. All India TFR = 2.2 (2016) → Reduce it to 2.1 (2025) कु ल प्रजनन डर म� कमी
🔠🔠❓MCQ. 'Janani Suraksha Yojana' Program aims to: (Asked in UPSC-Pre-2012)

1. to promote institutional deliveries
2. to provide monetary assistance to the mother to meet the cost of delivery.
3. to provide for wage loss due to pregnancy and confinement
Codes: (a) 1 and 2 only (b) 2 only (c) 3 only (d) 1, 2 and 3
61.5.3 🤰🤰🤰🤰📯📯📯📯 → PM Matru Vandana Yojana (₹ 5k for 1st child+1k from other scheme*)
Manmohan launched Indira Gandhi Matritva Sahyog → Modi renamed as Matritva Sahyog Yojana
(2014) → again renamed Pradhan Mantri Matru Vandana Yojana(2017)
- Boss? Ministry of Women and Child Development
- Core Scheme (Not 100% funded by Union). 60:40, 90:10
PM Matru Vandana Installment िक�#1 → ₹1k
PM Matru Vandana Installment #2 → ₹2k
PM Matru Vandana Installment #3 → ₹2k
Janani Suraksha Yojana (JSY) ONLY IF BPL women → ₹1k

Total amount (₹) ₹6k**
**National Food Security Act (NFSA 2013) requires Govt to provide ₹ 6,000 to pregnant and
lactating mother. So, Govt has created this contrived arrangement of ₹ 6,000.
- This ₹ ₹ helps poor woman to get adequate rest before and after delivery, without worrying about
wage loss → Child can receive adequate breastfeeding.
- This ₹ ₹ is conditionally transferred in bank account, as woman goes for medical checkup, child
vaccination etc. so it helps reducing MMR, IMR.
1. Women in Government jobs or PSUs jobs not eligible. (सरकारी नौकरी करने वाली मिहलाओं को लाभ नहीं)
2. Women less than age 19 not eligible. (19 साल से कम आयु क� मिहला को लाभ नहीं �मलेगा)
3. Women can receive this ₹ ₹ only for the birth of first live child. (मात्र पहले जी�वत ब�े के ज� पर लाभ)
61.5.4 �� Paalan 1000 - Journey of the First 1000 Days',
⇒ Health Ministry’s campaign and app
⇒ To guide parents with practical advice on how to improve child's physical, mental, emotional,
cognitive and social health for the 1st two years of a child’s life.
61.5.5 🤰🤰🤰🤰💉💉 → Vaccination (टीकाकरण)

Boss? Health Ministry 100% funding, plus support from WHO, UNICEF
⇒ 1985: Universal Immunization Programme (सावर्�त्रक टीकाकरण कायर्क्रम) to give free vaccines for
 BCG vaccine for TB & tubercular meningitis.
 Oral Polio Vaccine → WHO declared India ‘Polio Free’ in 2014.
 Rotavirus vaccine for Diarrhoea (द�)
 Japanese Encephalitis (in selected areas only)
 Measles-rubella Vaccine (MR)
 Vaccine for Diphtheria, Tetanus, Pertussis (Whooping cough), Influenza Type B and
Hepatitis B.
 Although by 2014, UIP had covered only 65% of children. So,
⇒ 2014: Mission lndradhanush by Modi
 To immunization 100% children (Below 2 years) against atleast 7 (=number of rainbow
colors) diseases viz. diphtheria, whooping cough, tetanus (धनु�ंभ), polio, tuberculosis,
measles and hepatitis B.
 In the subsequent years even more vaccines for Japanese Encephalitis etc.
 Pregnant women also given vaccines for selected disease. [गभर्वती मिहलाओं के �लए भी]
⇒ 2017: Modi launches Intensified Mission Indradhanush (IMI) to cover atleast 90% children
below age of 2 and all pregnant women by 2018 December.
⇒ e-VIN (Electronic Vaccine Network): United Nations Development Programme (UNDP) gave ₹
₹ & technology to India for online monitoring of vaccine stocks. Health ministry runs it.
61.5.6 🤰🤰🤰🤰💉💉💉💉 Intensified Mission Indradhanush (IMI) 3.0 from 2021 onwards
लॉकडाउन के चलते �जन ब�ों-मिहलाओ का पो�लयो, धनु�ंभ इ�ािद टीकाकरण न हो पाया उनका टीकाकरण कर�गे
 focus on Children and pregnant women who have missed their (non-corona) vaccine doses
during the corona pandemic/lockdown
 Focus on migrants & remote area/ hard to reach areas। प्रवासी मज़दू र-प�रवार, दुगर्म प्रदेश पे �ान
 Health ministry to use staggered approach = instead of inviting everyone at the same time, 10-10
beneficiaries will be invited. This will reduce crowding in Corona.
61.6 💊💊💊🦸🦸 → ADOLESCENT BOYS AND GIRLS (िकशोर)
Table 2: पुरानी योजनाए, �ादा नींद खोने क� ज�रत नहीं है

Women & − SAKSHAM: for Adolescent Boys aged 11-18. similar objectives like SABLA.
Child − SABLA: Rajiv Gandhi Scheme for Empowerment of Adolescent Girls aged 11-
Ministry 18. To promote awareness about health, hygiene, nutrition, adolescent
reproductive and sexual health (ARSH), Iron-Folic Acid (IFA)
supplementation, home management, vocational skill training.
− Kishori Health Cards for Adolescent Girls (aged 11-18) containing info about
weight, height, Body Mass Index (BMI) etc
Health − Rashtriya Kishor Swasthya Karyakram: Boys aged 10-19. objectives like above.
Ministry − Rashtriya Bal Swasthya Karyakram (RBSK): Children aged 0-6. For early
identification of defects at birth, deficiencies, Diseases, Development delays
including disability. Free medical checkup for children in 6-18 age group once a
year in Government schools.
61.6.1 🤰🤰🤰🤰🤰🤰🤰🤰 → WCD Ministry’s 3 Umbrella Schemes in 2021
2021-March, Ministry of Women and Child Development announced that existing schemes will be
clubbed into 3 umbrella schemes. Reason? More effective monitoring & implementation.
प्रभावी �प से �नगरानी और अमल करने के �लए वतर्मान योजनाओं को तीन छतरी योजनाओं के नीचे वग�कृ त िकया गया है
Sr Umbrella Scheme Schemes included Amt 2021

1. Saksham Anganwadi and ICDS and its components like - Anganwadi >₹20,000 cr
POSHAN 2.0 Services, Poshan Abhiyan, Scheme for
मिहला िकशोरी और ब�ों के Adolescent Girls, National Creche Scheme
�लए- भोजन पोषण इ�ा�द
2. Mission VATSALYA Child Protection Services and Child Welfare ₹900 cr
बाल सुर�ा और क�ाण Services. 📑📑More in Pill#6C weaker section
3. Mission Shakti (Mission A. SAMBAL (One Stop Centre, Mahila >₹3,000 cr
for Protection and Police Volunteer, Women's
Empowerment for Helpline/Swadhar/Ujjawala/Widow
Women) मिहला सुर�ा और Homes etc.)
सश��करण B. SAMARTHYA (Beti Bachao Beti
Padhao, Creche, Pradhan Mantri
Matru Vandana Yojana/ Gender
Budgeting/Research.
📑📑More in Pill#6C weaker section
61.6.2 Saksham Anganwadis in 👜👜👜👜Budget-2022

⇒ ICDS →Anganwadi center provides services such as 1) family planning advice 2) nutrition / free
food for mother and infants 3) pre-school activities for small children.
⇒ We’ll setup a new generation of Anganwadis with better infrastructure and audio-visual aids,
clean energy. Two lakh anganwadis will be upgraded under the Scheme.
61.7 💊💊📯📯📯📯 → AYUSHMAN BHARAT & PMJAY ₹ 5 LAKH INSURANCE
What is the meaning of above mindmap? Ans. Already taught in Pillar1D.

Budget 2018: Ayushman Bharat National Health Protection Mission (AB-NHPM). Core Scheme:
NOT 100% funded by Union. It has two components:
1. Primary Health Care Centers (PHC) to be transformed into Health & Wellness Centres (�ा�
और क�ाण क� द्र). Free drugs, checkup, mother-child care
2. National Health Protection Scheme (AB-NHPS) → Later renamed ‘Pradhan Mantri Jan
Arogya Yojana (PMJAY)’ to give free Health Insurance of ₹ 5 lakh per poor family, per year.
(More about its benefits & challenges refer to 📑📑Pillar#1D)
3. PM-JAY SEHAT:
a. Before: 6 lakh (poor) families of J&K were getting benefit of PM-JAY (₹5 lakh family
health insurance). 2020-Dec Reform: PM-JAY-SEHAT = All residents of J&K (21 lakh
families) will get benefit of ₹5 lakh family health insurance. सभी �नवा�सयों को लाभ
b. There is no cap /limit on family size. JK residents can avail these health insurance
benefits at all designated hospitals across the country = it is 'portable' in nature.
c. SEHAT = Social, Endeavour for Health and Telemedicine.
61.7.1 🍋🍋Health Cess to build hospitals-2020

⇒ �Budget-2020: Introduced 5% Health Cess (�ा� उपकर) on the customs duty on imported
medical devices (आया�तत �चिक�ा उपकरण).
⇒ This Cess ₹₹ will be used for building (Ayushman Bharat ) hospitals in PPP mode,
⇒ In Aspirational Districts (आकांशी-�जले=backward districts identified by NITI Aayog.)
⇒ So the PM-JAY patients in those backward district, can actually get medical treatment.
61.7.2 🍋🍋Pradhan Mantri Swasthya Suraksha Nidhi (PMSSN) 2021-March

उपकर का पैसा इस फं ड म� डाल�गे और �व�वध �ा� योजनाएं चलाएं गे
 Govt levies 4% Health & Education Cess on direct taxes such as income tax & corporation tax.
(What is Cess? Ref: Pillar#2A) प्र�� करों पर �ा� व �श�ा उपकर
 2021-March: govt created a new “Non-Lapsable” fund under Public Account. (What is “Non-
Lapsable fund? Ref: Pillar#2D). लोक लेखा म� एक ग़ैर-��गत �न�ध बनायी जाएगी
 This fund will receive ₹ ₹ from above cess. Health ministry will use this money for
 1) Ayushmann Bharat & its sub schemes like PM-JAY (5L-Health insurance),
 2) Pradhan Mantri Swasthya Suraksha Yojana (setting up AIIMS-like institutions in every state
& upgrading government medical colleges).
 3) National Health Mission (NHM) रा��ीय �ा� �मशन
 4) Health emergencies like Corona �ा� आपदाएँ
61.7.3 💸💸�🍽🍽15th FC: Sector Specific Grants (�ेत्र-�व�श� अनुदान)-Health

Note: this I’ve already taught in Pillar2B
(More in 📑📑Pillar#2B) Report#2: (2021-26) Amount

Local Bodies Grant (Rural and urban) Local Bodies given 70kcr
पं चायती राज/नगरपा�लकाओं को प्राथ�मक ₹₹ to convert Primary Health centres
�ा� क� द्र को �ा� और क�ाण क� द्र म� (PHC) into health and wellness centres
प�रव�तत करने के �लए ट�क भर के पैसा (HWCs)
Sectoral Grant → Health Critical Care hospitals i.e. facilities 15kcr
नाजुक देखभाल के अ�तालों को बनाने के with Intensive Care Unit (ICU)
�लए पैसा ventilator, kidney dialysis etc.
Sectoral Grant → Health Training of Allied Healthcare 13kcr
�चिक�ा सं ल� मानव बल क� तालीम के workforce (lab technicians,
�लए पैसे radiographers, dieticians,
Physiotherapist, ASHA Worker etc)
Sectoral Grant → Health State government to run Doctor 2kcr
�जले के अ�तालों म� डॉ�री तालीम के training courses in district hospital
कोसर् करवाने के �लए पैसा
कु ल �मलाकर Total: 1.06 Lcr = approx.
10% of total grants to
Healthcare sector **
** Grants to Healthcare sector are unconditional i.e. not based on performance of State Govt.
Additional Recommendations by 15th FC on Healthcare
⇒ Union and State Government together should spend 2.5% of GDP on Healthcare sector by 2025.
(क� द्र और रा� सरकार ने �मलकर �ा� �ेत्र म� सावर्ज�नक खचर् को बढ़ाकर जीडीपी के ढाई प्र�तशत तक करना चािहए)
⇒ All-India Services Act, 1951: (presently we've IAS,IPS,Indian Forest Service) → make 4th All
India service: "All India Medical and Health Service" → UPSC to conduct recruitment. This will
help addressing the shortage of doctor in backward states. आईएएस/आईपीएस क� तजर् पर एक और अ�खल
भारतीय सेवा बनाई जाए "अ�खल भारतीय �चिक�ा एवं �ा� सेवा" तािक �पछड़े रा�ों म� डॉ�रों क� कमी को पूरा िकया जा सके
⇒ Most of the medical colleges and super-speciality hospitals (e.g. Cancer) are concentrated in the
Western and Southern parts of India. Union and State government should make efforts to
address this.(प��मी/द��णी रा�ों के अलावा वाले �व�ार म� भी अ�� मेिडकल कॉलेज| अ�ताल बनाने पर जोर िदया जाए)
61.8 💊💊📯📯📯📯 → NATIONAL HEALTH MISSION → COMM/NON-COMM DISEASES

Poor cost benefit in chasing these schemes but DO self-study the biology / medical angle about TB,
Malaria, HIV, Swine flu, Ebola, Nipah, Zika, CORONA etc.
🤮🤮:🤒🤒 Communicable Diseases (सं चारी) 🦷🦷🦷🦷Non-Communicable Diseases: गैर - सं चारी
⇒ 🦗🦗National Vector (रोगवाहक) Borne Disease ✓ Mental Health Programme (NMHP)
Control Programme → Malaria, Dengue, ✓ National Programme for Prevention and
Filaria, Kala-azar, Japanese Encephalitis,
control of cancer, diabetes, cardiovascular
Chikungunya.
diseases, and stroke (NPCDCS).
⇒ Leprosy (कु � रोग) Eradication
⇒ HIV/STD program ✓ Programs for Blindness, Tobacco control,
⇒ Integrated Disease Surveillance Programme Fluorosis, senior citizens (=Geriatric
(IDSP) for Swine flu, Ebola, Nipah, Zika, diseases).
CORONA (COVID-19) etc. ✓ eDantSeva portal for oral/teeth healthcare
⇒ TB elimination target by 2025 <next part> awareness.
61.8.1 🤧🤧 PRADHAN MANTRI TB MUKT BHARAT ABHIYAN

⇒ (DATA) India has a little less than 20 percent of the world's population, but has more than 25
percent of the total TB patients of the world.
⇒ Health Ministry is running National Tuberculosis Elimination Programme (NTEP) → Directly
Observed Treatment Short course strategy (DOTS) to eliminate TB by 2025.
⇒ 2022: Health Ministry launches PRADHAN MANTRI TB MUKT BHARAT ABHIYAN
⇒ Individual persons / organizations can adopt TB Patients via 🖱🖱 NIKSHAY webportal by
donating money for patient’s food, vocational training for his/her family members.
⇒ Such donors will be called Nikshay Mitras.
⇒ This exercise will reduce govt’s fiscal burden, reduce stigma around TB by community support.
(सेवाभावी �� और सं �ानों द्वारा टीबी के मरीज़ को गोद �लया जाए, मरीज़ के पोषण तथा उसके प�रजनो क� कौशल तालीम के �लए दान
म� पैसा िदया जाए ऐसी योजना। सरकार पर राजकोषीय बोझ कम होगा, समाज म� भी टीबी के मरीज़ों के प्र�त घृणा/लांछन क� भावना कम
होगी।)
61.8.2 🦗🦗🦗🦗🦗🦗 Communicable Diseases: Malaria free country:

य�द तीन वष� तक सतत �प से आपके देश म� मले�रया के कोई भी �ानीय/आंत�रक मामले नहीं �दखते, तो �व� �ा� सं गठन द्वारा
आपके देश को “मले�रया मु�” घो�षत िकया जाता है। २०२१ म� चीन ने उपल�� हा�सल क� है।
⇒ WHO aims to eliminate Malaria from world by 2030. IF a Country has 0% local cases of Malaria
in 3 consecutive years =can apply for WHO certification of malaria-free status.
⇒ Examples: Australia, Brunei and Singapore, Algeria, Argentina, El Salvador (2021), China (2021)
⇒ ��ES22: while malaria not yet eliminated in India but we’ve eliminated polio, guinea worm
disease, yaws, maternal tetanus and neonatal tetanus. (भारत ने इन बीमारीयो को ख़� िकया)
61.8.3 🌴🌴[🦇🦇 🐷🐷]🤒🤒 Communicable Diseases: “One Health” approach

पयार्वरण का �ा�, जानवरों का �ा�, मनु�ों का �ा� ये तीनों आपस म� जुड़े �ए ह� और एक दू सरे को असर करते ह�- इस�लए
तीनों क� सम�ाओं को एक�कृ त �प से सं बो�धत करना ज़�री- इस �ख़/अ�भगम/��कोण को “एक �ा�” ��कोण कहते ह�
⇒ One Health = An approach recognizes that animal health, human health and the environment’s
health are interconnected. Esp. for Zoonotic diseases (= spread from animal to human. [ख़ासकर
ऐसे रोग/बीमा�रयां जो जानवरों से मनु�ों म� फै लती है] For example
⇒ Environmental degradation: human encroachment in jungles → Nipah Virus spreads from
Jungle Bats to Domestic animals (Pigs) to Humans. [from Malaysia’s NIPAH Village]
⇒ Environmental degradation: Men kill Monkeys, Antelopes for meat → infected with Ebola
virus. [From Africa’s Ebola river region near Congo]
⇒ China’s Wuhan’s Wildlife Meat Market: Cats, ferrets, fruit bats, hamsters, racoon, etc. → Corona
⇒ �Boss? One Health approach is advocated by multiple orgs such as Food and Agriculture
Organization (FAO), the World Organisation for Animal Health (OIE), the World Health
Organization (WHO) and the United Nations Environment Programme (UNEP).
Why in news? Indian govt’s Dept of animal husbandry also organizing seminars/workshops on this
matter. Then CA-PDF-wallas have gone “crazier than usual” over this topic.
61.9 🤒🤒📔📔📔📔ES21VOL1CH5 ON HEALTHCARE PROBLEMS-SOLUTIONS
61.9.1 🤒🤒🤒🤒🤒🤒ES21: Indian Healthcare Problems:

Public (Govt) Expenditure Out of pocket expenditure
National Health ⏫ from 1.5% GDP to 2.5-3% ⏬65% to 30%
Policy 2017 target GDP
�ा� सेवा ख़चर् ल� सरकारी ख़चर् म� बढ़ोतरी मरीज़ क� जेब से होने वाले ख़चर् म� कटौती
⇒ �“Saliency Bias” = policymakers give excessive weightage to recent phenomenon, even though
it may not repeat in an identical fashion in the future e.g Corona wave 2.0=Oxygen shortage→
too much focus on Oxygen factories but next pandemic may require some other medicine, & not
oxygen cylinders! [सा�ता पूवार्ग्रह- नी�त �नमार्ता वतर्मान नज़दीक� वतर्मान म� �ई घटनाओं को �ादा होगा ज़ोर/अग्रता देते
है, जबिक वा�व म� उसी प्रकार क� सम�ाओं का भ�व� म� पुनरावतर्न होगा? कोई गारंटी नहीं।]
⇒ �Shortage of medical professionals. Mismatch in Doctors versus nurses: like Punjab, Himachal
Pradesh and Chhattisgarh have a larger number of nurses and midwives but a very low density of
doctors। �ा� क�मयों क� कमी
⇒ �Irresponsible Doctors: Medical Ethics says doctors should practise altruism But in reality,
many doctors get greed & prescribe unnecessary drugs and x-ray tests to patients, they conduct
Caesarean delivery (C-Section) instead of normal delivery to charge more fees। �चिक�ा नी�तशा� के
िहसाब से डॉ�र ने ब�त ही दयावान होना चािहए िकंतु लोभ लालच म� अनाव�क िक़� क� दवाइयाँ, टे��ंग और सजर्री क� जाती है।
⇒ �Irresponsible Patients: people do smoking, chewing Tobacco, eating unhealthy food, not
wearing seatbelt/helmet while driving, not wearing masks in Corona = they die prematurely =
Insurance companies have to pay hefty compensation to family= Insurance companies profit
�→ Insurance companies � premium (subscription fees) on new subscribers to cover the
losses. Thus, risky behaviour of some people create negative externalities for the entire
healthcare system through higher costs and poorer outcomes. लोगों क� शराब त�ाकू इ�ािद ग़ैर �ज़�ेदार/
ख़राब आदतों के चलते समय से पहले मृ�ु, बीमा कं पनी मुआवज़ा देती है िकंतु बीमा कं पनी का मुनाफ़ा इसके चलते कम होता है. तो
भ�व� म� नए ग्राहकों पर बीमा िक� का बोझ बढ़ता है।
⇒ �Hesitancy/Ignorance: 1) Even after a person has TB symptoms, they delay visiting doctor for
minimum 5.2 months, even in Delhi. As a result their disease has already become worse and they
have infected more people with TB. 2) Many Indian women die in breast cancer, cervical cancer
because they seek medical help very late, tumour has reached advanced stage. िहचिकचाहट / जाग�कता
क� कमी के चलते �यरोग और क� सर म� भी लोग जब तक ददर् असहनीय न हो जाए, डॉ�र से �मलते नहीं. अंतत: बीमारी ब�त गं भीर
हो जाती है, मरीज़ को बचाया नहीं जा सकता।
61.9.2 🤒🤒🤒🤒🤒🤒ES21: Healthcare Solutions: Oligopsony for universal health insurance coverage
⇒ Oligopsony = few buyers and many sellers. Then buyers can command the prices.
⇒ E.g. if individual purchases Rs. 5 lakh Health insurance from insurance company, he may have to
pay Rs 5,000-7000 [premium] scription fees= this discourages many middle-class families from
buying health insurance because the salaries are not very high.
⇒ But Rajasthan govt tied up with health insurance companies → Chiranjeevi Health Insurance
scheme. Poor get free health insurance, and non-poor (middle class) permanent residents of
Rajasthan can get it for Rs.850 premium.
⇒ So, Economic survey basically suggesting that we should adopt models of similar to 1st world
countries wherein few govt organizations / Union/State governments will purchase the
healthcare insurance for everyone & then give it for free/at affordable prices. प्रथम �व� के देशों म� कु छ
सरकारी सं �ान तमाम नाग�रकों के �लए �यं ही �ा� बीमा कं प�नयों से बीमा पॉ�लसी ख़रीदते ह� और िफर नाग�रकों को वह बीमा
पॉ�लसी मु� या िकफ़ायती दामों म� दी जाती है। इस प्रकार का मॉडल भारत म� अपनाया जाए।
61.9.3 🤒🤒🤒🤒🤒🤒ES21: Indian Healthcare Solutions: Patient Rights like UK, Sweden
⇒ Information asymmetry = one business party possesses more information than the other party =
they can exploit the situation. E.g. Nirav Modi knew the weaknesses of Punjab National Bank’s
LOU/SWIFT messaging system, while PNB did not know about Nirav Modi’s losses in diamond
business = Nirav Modi scammed PNB. (Ref Pillar: 1B2)
⇒ Similar information asymmetry exists even in Indian healthcare industry. जानकारी/सूचना क� कमी के
चलते �ापार म� एक �� दू सरे का ग़लत फ़ायदा उठाता है।
⇒ Treatment costs are not uniform across hospitals. Cancer treatment at 1 hospital could cost “X”
lakh ₹, & same treatment could cost “3.7X” lakh ₹ at another hospital. Similarly, cardio (6.8x),
injuries (5.9x), gastro (6.2x), and respiratory (5.2x) disease, But patient does not know what is
the price range for treatment across different hospitals, which hospital has better success rate in
saving the patients? Etc. . एक ही बीमारी क� अलग अ�तालों म� अलग अलग फ़�स होती है। मरीज़ को पता नहीं कौनसा
अ�ताल िकफ़ायती है, िकस अ�ताल म� लोग कम मरते ह�?
⇒ So just like banking industry uses credit rating agencies to pass the loan applications (Ref#1B2),
Govt should create rating agencies to assess the quality of doctors and hospitals. E.g. 2004: UK
→ National Health Service (NHS) → Quality and Outcomes Framework (QOF) → annual
appraisal of all doctors→ further analyses through artificial intelligence- public reports/datasets
released. So patients can know which hospital is better? what is the price range of various
surgeries etc. इं ��ड म� गुणव�ा प�रणाम �परेखा / ढांचे के अंतगर्त सभी डॉ�रों का सालाना सव��ण- इस डेटा को सावर्ज�नक
�प से प्र�ुत िकया जाता है तािक सबको पता चले अलग अलग बीमा�रयों क� फ़�स �ा होती है, कौनसा अ�ताल बेहतर है इ�ािद
⇒ 1992: Finland’s Status and Rights of Patients Law= hospitals require to release the data of how
many patients died. Ombudsman system where patients families can complain against hospital.
िफनल�ड म� मरीज़ों के अ�धकारों के �लए क़ानून- अ�तालों ने अ�नवायर् �प से मरीज़ों के मृ�ु दर का डेटा प्रका�शत करना होगा,
अ�ताल के �ख़लाफ़ �ाय देने के �लए �शकायत �नवारण अ�धकारी।
61.10😷😷📔📔📔📔ES21VOL1CH1- CORONA SAVING LIVES & LIVELIHOOD

✋Note: On daily basis, new development occurring about new drugs, testing kits, vaccine
distribution policy, court judgements, new Apps and portals. You can find those updates at
Mrunal.org/current. In the handout, I have confined the discussion only up to the matters covered
in Economic Survey 2021, to ensure the compactness.
⇒ COVID-19 virus - SARS-CoV-2 - first identified in Wuhan city of China in December 2019.
⇒ Hungarian physician Ignaz Semmelweis. = father of Hand washing / hygiene & hospital
sanitisation.
61.10.1 😷😷📔📔📔📔Basic Reproduction Number R0

R0 value Meaning- एक सं क्र�मत �� िकतनी और लोगों को सं क्रमण फै लाएगा?
Less than 1 One Patient infecting less than one person = disease will gradually vanish.
Equal to 1 One Patient infecting one person. Disease will not vanish but it will not result
in an epidermic. बीमारी सं पूणर् �प से लु� तो नहीं होगी, िक�ु महामारी का बड़ा/�वकट �प नहीं ले
पाएगी।
Greater than 1 One patient infecting more than one person = epidemic possible.
> 10 or >100 Super spreader event. One patient infecting tens & hundreds of people.
61.10.2 😷😷📔📔📔📔Mitigation versus suppression

✋Mitigation [बीमारी का शमन] 👊👊Suppression [स�ूणर् दमन]
Objective Slow down the spread of pandemic by reducing Stop or reverse the spread of
the R0 (e.g. from R0=100 to R0=2) infection completely by
सं क्रमण के दर को पहेले क� तुलना म� कम करना। ensuring R0<1 सं क्रमण को सं पूणर्
�प से रोक देना
How? Not complete lockdown. allowing factories to run Nationwide complete
with 50% staff etc. Use mask-sanitizers, Social lockdown of everything. सं पूणर्
distancing, home quarantine, contact tracing, �प से तालाबं दी/क�ूर्
active surveillance etc. सं पूणर् �प से तालाबं दी नहीं
Implications? Without damaging the economy greatly, it’ll help Great damage to economy.
⏬death by 50% अथर्तांतर को बहोत �ादा हा�न प�ँ चाएँ अथर्तंत्र को अप्र�ा�शत हा�न
�बना मृ�ु दर म� 50% क� कटौती सं भव
⇒ Barbell strategy in finance = while making an investment in a risky situation you should first
hedge / protect yourself for the worst outcome initially. Then after new feedback/development
you should update your response state by step. बारबेल रणनी�त - अ�न��त प�र��तयों म� �नवेश करते व� सबसे
पहले “यिद ब�त ख़राब प�र��त होगी उससे �यं को सं भालना/सुर��त करना”। उसके बाद जैसे जैसे नई जानकारी सामने आये,
�नवेश के नए फ़ै सले लेते रहना।
⇒ So considering above angles, Indian policymakers followed a similar ‘barbell approach’. First
nationwide lock down to ‘save lives’ & ‘flatten the epidemic curve’ & reduce ‘R0’. Then gradual
unlock down to ‘save the livelihood.’ कोरोना महामारी म� भारत ने कु छ ऐसा ही िकया। सबसे पहले सबक� जान बचाने के
�लए �यं को सुर��त करने के �लए रा��
� ापी तालाबं दी। उसके बाद नई जानकारी और नए माहौल को देखते �ए धीरे धीरे लोकड़ाऊन
को खोला/ढीला गया बाक़� सब क� आजी�वका का भी र�ण हो सके ।
⇒ Parallely govt also focused on social distancing, contact tracing and vaccination.
✋In the remaining chapter1vol1- economic survey 2021 has done great appreciation of
government lockdown policies. But in retrospect, when we compare the situation in Corona wave 2.0
most of that appreciation looks redundant. इस पूरे प्रकरण म� कु ल �मलाकर सरकार क� पीठ थपथपायी गई है, हालाँिक
कोरोना सं क्रमण क� दू सरी लहर के बाद ये सब चीज़� / मुद्दे इतने �ादा आकषर्क नहीं िदख रहे ह�।
61.11📙📙📙📙ES22 BARBELL STRATEGY/AGILE RESPONSE VS WATERFALL STRATEGY
Note: ��ES22 has written a very long case-study about it, we’ll not do MBA/PHD on it, but
we’ll collect a few points for quoting in “GSM2- issues in policy design and implementation.”
61.11.1 💦💦Waterfall strategy (USA, EU) (झरना/ जल प्रपात रणनी�त)

Conventional method of policy-making. It involves linear progression e.g. GIVE Corona vaccine to
all adults AT ONCE (नी�त �नमार्ण का पारंप�रक तरीक़ा। रे खीय �प से आगे बढ़ते ह�। दे दनादन सब वय�ों को िटका द� दो)
⇒ it usually involves front-loading = spending greater amount in advance. (ढेर सारी रक़म शु�आत म� ही
ख़चर् कर दो) e.g. if government has to spend Rs.6000 in a year:
o �DONT do 2000 in January + 2000 in June + 2000 in December = 6,000.
o �DO ₹4000 in January + 2000 in June = 6,000
⇒ USA, EU etc. tried this type of fiscal stimulus packages to revive their economies post-Corona.
(what is fiscal stimulus? Ref: Pillar2D) (अमे�रका और यूरोप ने ने इस तरह का �व�ीय प्रो�ाहन पैकेज जारी िकया था)
⇒ � It does not give any space to adjust things based on new feedback or new development. e.g.
what if there is third wave of Corona with Omicron variant! (वा��वक जीवन क� नयी घटनाओं, प्र�तिक्रयाऑ
के िहसाब से बाद म� कोई सुधार कर नहीं सकते)
⇒ � you are left with less money in future. So even if you want to adjust some scheme, you
cannot do it. (वैसे भी ढेर सारा पैसा तो आपने शु� म� ही ख़चर् कर िदया तो अभी त�ूरा कु छ नया करोगे, जब पैसा तो बचा निह!)
Waterfall strategy assumes that future can be predicted and so we can go on a FIXED path of action.
Such thinking was also reflected in five-year plans (FYP) & its failures e.g. India forced to take “plan
holiday (1966-69)” after the failure of 3rd FYP due to wars and famines (REF Pillar4B)। (इस रणनी�त म�
हम मानते ह� िक हम भ�व� का पूवार्नुमान कर सकते ह�, और उस िहसाब से एक �न��त मागर् पर आगे बढ़ सकते ह�, और सब कु छ हमारे
योजना के िहसाब से ही होगा। पं चवष�य योजनाओं म� हमने एसा िकया था, तो असफलता �मली थी। जैसे क� युद्ध और अकाल के बाद तीसरी
पं चवष�य योजना क� नाकामयाबी के चलते हम� “योजना छु ट्टी” घो�षत करनी पड़ी थी।)
61.11.2 �👟👟 Barbell strategy/Agile Response- India: (बारबेल रणनी�त और फु त�ली प्र�तिक्रया)
 It involves graded and incremental approach e.g. Give Corona vaccine to 1) Health workers and
senior citizen 2) other adults aged 18&above then 3) teenagers then 4) children. (धीरे धीरे हौले हौले
उ�रो�र आगे बढ़ेग।े दे दनादन सब वय�ों एकसाथ िटका मत दो, सबसे पहले बुजुगर् → बाद म� नौजवान → बाद म� िकशोर और
→ बाद म� छोटे ब�े।)
 real-time adjustment based on feedback-loops, and new developments (वा��वक जीवन क� नयी
घटनाओं, प्र�तिक्रयाऑ के िहसाब से बाद म� सुधार करते रहो )
 e.g. Atma Nirbhar Bharat Stimulus package 1.0 then 2.0 then 3.0 was done. Modi did not do
entire year ka “Atma Nirbhar Bharat” AT ONCE. (जैसे क� आ��नभर्र भारत को एक चरण ही नहीं, तीन चरणों म�
 RBI did not open all the “on-tap loan windows” at once. RBI gradually opened them based on
feedback. (REF: Pillar1A2 (�रज़वर् ब�क ने भी सारे लोन �खड़िकयाँ एक साथ नहीं खोली थी, धीरे धीरे खोली थी। )
 Production linked incentive (PLI) scheme- 1) more number of sectors were gradually added later
on, based on feedback. e.g. Drone. 2) Base-Year/Subsidy calculation formula was changed based
on feedback. (REF: Pillar4B) (पीएलआई योजना म� नए नए �ेत्रों को जोड़ना स��डी �गनती फ़ॉमूर्ला म� सुधार करना)
 Barbell/Agile improves responsiveness. It does not attempt to predict future. It tries to adjust
itself with the future evolving situations. (बारबेल रणनी�त और फु त�ली प्र�तिक्रया म� हम भ�व� का पूवार्नुमान नहीं
लगाते। हम अपनी योजनाओं को भ�व� म� हो रहे बदलावों के मुता�बक़ धीरे धीरे बदलते रहते ह�)
��FAQ: here you are saying that front loading is not done in the barbell strategy, but
government of India had done “front loading” in the PM-KISAN instalments as per Pillar4A. Ans. 1)
Economic Survey has to do chikni-chupdi fancy-talk even if in reality govt didn’t truly do it. 2) You
should simply accept and memorize the points for Mains Answer writing. You need not be
nitpicking over every single word. Such approach is not useful for clearing competitive exams. (मु�
परी�ा म� छाप दो मुद्दे! हम� इस मामले क� वकालत करने सुप्रीम कोटर् थोड़ी जाना है?)
61.12👻👻👻👻: 💊💊📯📯📯📯 ATMA-NIRBHAR BHARAT → MEDICINE / HEALTH
🎓🎓Homework: Corona science tech / vaccination angles
61.12.1 👻👻👻👻: 💊💊📯📯📯📯→ Ayushman Bharat National Digital Health Mission (15th Aug, 2020)
⇒ 2020-15th August speech. PM announced National Digital Health Mission रा��ीय िड�जटल �ा� �मशन
⇒ 2021-Oct: launched with the name “Ayushman Bharat Digital Mission (ABDM)”
⇒ Boss? Health Ministry → National Health Authority (NHA) (Recall PM-JAY walli organization
from Pillar1D. This is same NHA)
⇒ National Health Authority (NHA) will act as the Health Information Exchange and Consent
Manager (HIE-CM). Which doctors/hospitals can access person’s health data? Ans. Person will
give consent about that to NHA.
⇒ Person registers on portal/App using mobile number or Aadhar card. Not compulsory to give
Aadhar card number at present. He gets 14 digit health ID number.
⇒ Citizens to be given Unique Health ID (UHID) with personal records about diseases, diagnosis,
report, medication etc. (रोग, �नदान, �रपोटर्, दवा आिद)
⇒ UHID will be free of cost, voluntary, consent-based with opt-out feature. (�न: शु�, �ै��क और
सहम�त-आधा�रत. मरीज अपना डेटा हटवा/िडलीट भी करवा सकते ह� ).
⇒ Patients can share with doctors = saves time/trouble of keeping multiple files/xerox/X-rays etc.
⇒ Can person delete his account /data? Ans. Yes
⇒ Can a person add a nominee to access account? (e.g. PH person unable to use phone wants to
add his guardian/relative?) Ans. Yes.
⇒ It’ll also connect with digi-doctor, tele-medicine, e-pharmacy. (िडजी-�चिक�क , दू रभाष-दवाइया, ई-
औषधालय)
⇒ ��Budget-2022: Ayushman Bharat Digital Mission → we'll create digital database/registries
of doctor, hospital, patient records.
��MCQ. Find Correct about Ayushman Bharat Digital Mission: (Prelims-2022)

1. Private and public hospitals must adopt it. (सरकारी व �नजी अ�तालों म� अ�नवायर् �प से इसे अपनाना होगा)
2. As it aims to achieve universal health coverage, every citizen of India should be part of it
ultimately. (इसका उद्दे� सावर्�त्रक �ा� कवरेज प्रा� करना है, भारत के प्र�ेक नाग�रक को अंततः इसका िह�ा होना चािहए)
3. It has seamless portability across the country. (पूरे देश म� इसक� �नबार्ध सुवाह्यता है)
Codes: (a) 1 and 2 only. (b) 3 only (c) 1 and 3 only. (d) 1, 2 and 3
61.12.2 👻👻👻👻: 💊💊📯📯📯📯→Draft Health Data Management Policy (�ा� डेटा प्रबं धन नी�त)
⇒ Released by National Health Authority (NHA) for National Digital Health Mission (NDHM):
⇒ covers all stakeholders- Patients, Doctors, Union & State Govt, Health insurance cos, pharma
cos, & research bodies. यह नी�त सभी ही धारकों को सं बो�धत करती
⇒ Patient health id number will be created free of cost. मु� म� �ा� सं �ाक िदया जाएगा
⇒ Patient will have the right to remove his personal data, get errors corrected, Restrict the
disclosure of data to other organizations, Request copy of data. मरीज अपना डाटा हटवा सकता है, डाटा
गल�तयों म� सुधार करवा सकता है, िकसी सं �ा से डाटा साझा करने से मना कर सकता है, अपने डेटा क� नकल मांग सकता है- यह सब
अ�धकार प्रा�
⇒ Data will be shared with orgs only with compliance of applicable laws and international
standards. भारतीय कानून और वै��क मानकों के आधार पर ही डाटा को अ� सं �ानों के साथ साझा िकया जाएगा
⇒ Awareness program about data privacy. डाटा �नजता के बारे म� जन जागृ�त अ�भयान
🤩🤩Conclusion? NDHM will help providing access to inclusive, affordable, and safe healthcare to the
people of India. This will greatly help in SDG goals.... रा�ी� य िड�जटल �ा� �मशन भारत के लोगों के �लए समावेशी,
स�ी और सुर��त �ा� सेवा प�ँ चाने म� मदद करेगा. सतत �वकास ल�ों क� प्रा�� के �लए उपयोगी
61.12.3 👻👻👻👻👻👻Health → E-Sanjeevani telemedicine

⇒ Ministry of Electronics and Information Technology (MeitY) → Centre for Development of
Advanced Computing (C-DAC, Mohali centre) → e-Sanjeevani Tele-Consultation Services
(टेली/दू रसं चार से �चिक�ा परामशर् सेवाएँ ).
⇒ It provides Patient registration, Audio-Video Consultation with a Doctor, ePrescription.
61.12.4 👻👻👻👻👻👻Health Training → iGOT

⇒ HRD Ministry’s ‘Digital Infrastructure Knowledge Sharing’ (DIKSHA) platform for education
and training → inside DISHA, they developed a new portal ‘Integrated Government Online
training’ (iGOT) portal.
⇒ iGOT provides Training modules for Doctors, Nurses, Paramedics, Hygiene Workers,
Policemen, civil servants@Union & State, National Cadet Corps (NCC), and other volunteers for
Corona crisis= �capacity building. �मता �नमार्ण
61.12.5 👻👻👻👻👻👻Health Training → COVID Warrior TRANING

PM launches crash course to train 1 lakh ‘Covid warriors’ in six job roles — Home Care Support,
Basic Care Support, Advanced Care Support, Emergency Care Support, Sample Collection Support,
and Medical Equipment Support. कोरोना के दौरान लोगों क� �चिक�ा, देखभाल, �ा� उपकरणों क� मर�त इ�ािद के �लए
एक लाख लोगों को तालीम दी जाएगी।
61.12.6 👻👻👻👻👻👻👻👻 PM AtmaNirbhar Swasth Bharat Yojana [PMASBY] from 👜👜Budget-2021

कोरोना जैसी नई महामा�रयों को ढू ंढने और इलाज करने के �लए पैसा
⇒ Who? Health Ministry’s Scheme. Tenure? 2021 to 31/3/2026
⇒ Centrally sponsored scheme. State governments also required to contribute money.
⇒ To detect and cure of new and emerging diseases, deal with present and future pandemics.
⇒ Develop Primary, Secondary, And Tertiary Care Health Systems.
⇒ Focus on IT enabled surveillance, Public Health Labs, National Centre for Disease Control etc.
61.12.7 👻👻👻👻👻👻🧔🧔 PM-Ayushman Bharat Health Infrastructure Mission (PM-ABHIM)

it is the new name of the above scheme - PM AtmaNirbhar Swasth Bharat Yojana.
61.13👻👻 💉💉 📯📯📯📯: CORONA → VACCINATION TIMELINE

⇒ From Jan, 2021: Corona Vaccines for Health workers and front line workers (e.g. policemen)
⇒ From April, 2021: Corona Vaccines for all citizens aged 45 years and above.
⇒ From May 2021: Corona Vaccines for all aged 18 and above.
⇒ From January 2022: Corona Vaccine for teenagers aged 15-18 years
61.14👻👻 💉💉 📯📯📯📯: CORONA → VACCINE PROCUREMENT POLICY 2021
⇒ Which state will receive how much doses from Union Govt? Ans. Depends on 1) population, 2)
disease burden 3) progress of vaccination. [in these three parameters higher the number more
vaccine doses will be given to state] 4) wastage of vaccines= if more wastage in a State then
union will give less doses in future. [क� द्र सरकार क� इस िकस रा� को िकतनी वै�ीन देगी? जवाब= �जन रा�ों म�
आबादी �ादा होगी, रोगप्रकोप �ादा होगा और वै�ीन क� बबार्दी कम रही होगी- उन रा�ों को �ादा कोटा ज�ा �मलेगा]
⇒ For 1st two doses = Every citizen above the age of 18 will be vaccinated free at centres run by the
Centre or a state government. नाग�रकों को क� द्र और रा� सरकार के क� द्रों म� मु� म� टीका लगवाए जाएं गे।
⇒ if person wants to get vaccinated at private centre then Vaccine fee @pvt hospital= Rs 780 for
Covishield, Rs 1,410 for Covaxin; and is Rs 1,145 for Sputnik V. ADD EXTRA Rs. 150 service
charge. और अगर �� चाहे तो �नजी अ�तालों म� भी पैसा देकर टीका लगवा सकते ह�।
⇒ 2022: Govt started ) vaccination for 15-18 years age group teenagers.
61.14.1 💉💉💪💪 Booster Dose / precautionary Dose (2022)

Given free NOT free. You’ve to pay @pvt clinic.
for health workers, frontline workers (e.g. Other persons aged 18/>
policeman) and senior citizens above 60 age. Starting from 2022-April.
61.14.2 Vaccine hesitancy- how to reduce: (टीकाकरण से डर/िहचिकचाहट)

⇒ Govt � awareness via media channels, radio jockeys, columnists, social media influencers,
celebrities, fact-check videos by key experts to �Corona vaccine hesitancy among people.
(जागृ�त कायर्क्रम – तािक लोग टीका लेने से डरे निह)
⇒ 2021-Nov: A house-to-house mobilisation campaign (Har Ghar Dastak) to identify and
vaccinate those who missed 1st dose through mobile teams named ‘vaccination Toli’ along with
‘prachar Toli’ (घर घर जाकर)
61.14.3 👻👻 💉💉 📯📯📯📯: Corona → Vaccine & Corona medicines pe 0% GST YES OR NO?
Covered in 📑📑Pillar#2: GST.
61.15👻👻👻👻: 💊💊💊💊💊💊: CORONA → HEALTH APPS / PORTAL / ORG
61.15.1 🌐🌐�: COVAX Network to buy vaccine for member countries

⇒ �Boss? World Health Organisation, GAVI (Global Alliance for Vaccines and Immunisation),
and the Coalition for Epidemic Preparedness Innovations (CEPI).
⇒ Objective? This organisation / alliance buys vaccines for member countries. [ये सं �ा सद� देशों के
�लए कोरोना वेक�सन ख़रीदता है]
⇒ �Controversy? 1) Allegations that it is not making enough efforts to get sufficient vaccines for
the poor countries. 2) Punjab state government tried to buy vaccines from it but COVAX
denied saying we deal only with union government and not state governments.
61.15.2 👻👻👻👻💉💉: CoWIN (Covid Vaccine Intelligence Work) App & Portal
⇒ �Boss? Health ministry’s National Health Authority (NHA, same organization also looks after
PM-JAY ₹5lakh health insurance)
⇒ COWIN App & Portal helps people to register for vaccination slot and download the vaccine
certificate. [टीकाकरण के �लए पं जीकरण और प्रमाण पत्र उपल� करता है]
⇒ IF person does not have Aadhaar card then he can register with other documents like voter ID,
driving license, etc.[आधार काडर् आव�क नहीं]
⇒ 2021: PM Modi declared COWIN will be given Open source/free to all the nations, so other
nations don’t have to spend ₹₹ on developing similar software/app. [अ� देशों को मु� म� सो�वेयर द�गे]
Table 3: don't loose sleep
COVAID ⇒ �Boss? NITI Aayog webportal (covaid.niti.gov.in)

[�चिक�ा उपकरण to facilitate the import/Donation of Corona relief material into India by
व�ुएँ दान देने के domestic and foreigers. e.g. Oxygen Cylinders, Oxygen Concentrators,
�लए] Ventilators, Rapid Detection Kits, Remdesivir etc.
🤳🤳🤳🤳 Department of Consumer Affairs monitors health-safety guidelines @retail
Suraksha Store stores, with help of tech-startups Safejob and Seekify. These tech-startups
initiative provide online training to kirana shop owners about Corona safety guidelines.
🤳🤳🤳🤳 ⇒ uses Bluetooth technology and GPS location data to track people infected
Aarogya Setu with Corona / came in close contact with infected patients.
2020-April ⇒ Developed by National Informatics Centre (NIC, under MEITY) with help
of NITI Aayog & private sector IT experts.
😰😰Controversy? Privacy / hacking / misuse of data. (नाग�रकों क� �नजता पर खतरा)
🤳🤳😷😷 Ministry of Science & Technology → CSIR → AarogyaPath Supply Chain
AarogyaPath Portal gives info about real-time availability of masks, PPE (Personal Protective
2020 Equipment), medicines and other critical healthcare supplies for Corona
Health Ministry →National Health Authority portal for Corona vaccine
Co-WIN
distribution/supply chain management, monitoring adverse/side effect etc.
Mission COVID Atma-Nirbhar: Ministry of Sci & Tech → Department of Biotechnology
Suraksha (DBT) given ₹900 cr to help companies develop Corona Vaccine😷😷😷😷
Niti Aayog & Dept of Biotechnology's Consortium for Affordable & Rapid
😷😷Project Card
Diagnostics (CARD) to ⏫ Indian production of coronavirus testing kits.
📊📊📊📊 Oxford University to how strict a country's Corona lockdown measures were.
Stringency Marks: 0 to 100 (100 = strictest). Scoring changes with time. E.g India <20 in
Index January, but 100 during March-April. िकस देश ने िकतने कठोर तालबं धी के कदम उठाए।
61.15.3 💊💊😷😷 → Health: Corona related Drugs/Kits

Table 4: don't loose sleep.
Diganostic kit: Corona Self Diagnostic kit developed by Defence Research and Development
DIPCOVAN Organisation's Defence Institute of Physiology and Allied Sciences (DIPAS)
laboratory. Can give result in 75 minutes & cost ₹75. This will be commercially
launched Delhi-based Vanguard Diagnostics company. डीआरडीओ द्वारा कोरोनावायरस
का घर पे ही �-परी�ण के �लए नई क�ट का �नमार्ण. ₹75 म� �मलेगी पर 75 �मनट म� नतीजा देगी
Corona Defence Research and Development Organisation (DRDO)'s new oral drug 2-
Medicines: deoxy-D-glucose (2-DG) drug can provide early relief from oxygen
2DG dependency among the Corona patients. Drugs Controller General of India
(DCGI) granted emergency use permission to it. कोरोना मरीज यह दवाई मुंह से लेगा तो
उसे ऑ�ीजन क� ज�रत कम होगी.
Amphotericin- ⇒ Myucomercosis is a black fungal infection occurring as a post-coronavirus
B complication. result in loss of vision if not treated immediately.
FOR ⇒ Excessive use of steroids in diabetes patients increases their vulnerability.
Mucormycosis ⇒ Myucomercosis is not contiguous from one person to another but, fungus
is present in a closed area and enters the respiratory system through air.
⇒ Antifungal injection Amphotericin-B required
Remdesivir This Anti-viral injection is meant to be used for critical/severe case of Corona.
But excessively prescribed even in normal cases → supply shortage of
injection and its black marketing. [अनाव�क �प से दे दनादन सभी मरीज़ों को दी गई �जसके
चलते स�ाई/आपू�त म� कमी �ई थी और कालाबाज़ारी म� शु� �ई थी]
61.16💊💊📯📯📯📯 → HEALTH: MISC. SCHEMES (�व�वध गौण योजनाए)
Pradhan Mantri सभी रा�ों म� ए� जेसे अ�ताल बनाओ योजना Central Sector Scheme: 100% funded by
Swasthya Union to ⏬regional imbalance in Healthcare infrastructure of India by
Suraksha 1. Setting up new AIIMS like Institutions
Yojana 2. Upgrading Government Medical Colleges.
Rashtriya Health Ministry gives ₹ ₹ for BPL patient suffering from major life threatening
Arogya Nidhi diseases to get FREE treatment at super specialty hospitals from this RAN fund
National Health Ministry to monitor
Pharmacovigila ⇒ Adverse Drugs Reactions (ADR: दवा क� प्र�तकू ल प्र�तिक्रया),
nce Programme ⇒ Spurious/Fake drugs. (�मलावटी / नकली दवा)
Deworming Children given Albendazole tablets, awareness, cleanliness etc. [कृ �महरण]
Science Ministry → Dept of Biotechnology launched this with 5 sub-missions:
1. GARBH-ini: A research mission to find out reasons for for pre-term /
Atal Jai
premature births. So such babies can be saved accordingly.
Anusandhan
2. IndCEPI: A Mission to develop affordable vaccines for endemic diseases.
Biotech
3. UNaTI: to transform health, agro & energy e.g. research on bio-fortified
Missions
and protein rich wheat.
2019
4. Mission on Antimicrobial Resistance
5. innovative technological for the Swachch Bharat mission
Boss? Ministry of Ayush
- Core Scheme (Not 100% funded by Union)
National Ayush
- Encourage the use of AYUSH medicine, setup new colleges, setup new
Mission (2014)
hospitals, increase manpower etc.
- Encourage Medicinal plants cultivation, ensure quality control of drugs
PM Vrikshayush Ayush Ministry scheme for medicinal plants’ cultivation and post-harvest
Yojana management (कटाई के बाद का प्रबं धन)
Ayush Ministry portal for online licensing of Ayurveda, Siddha, Unani and
🤳🤳 Homoeopathy drugs. It’ll also provide information of cancelled and spurious
e-AUSHADHI
drugs.
🤳🤳Yoga Apps ⇒ BHUVAN-YOGA: ISRO app to know about how many people participated
International Yoga day across different venues.
⇒ Yoga Locator: to find venues for International Yoga day.
⇒ 21 June: Day of Yoga (started since 2015, by UNGA)
🤳🤳Imp. Days ⇒ 4th January: Siddha Day. Ayush Ministry started this from 2018.
⇒ 1 Dec: World AIDS Day.
Disease ��ES22: India has eliminated eliminating polio, guinea worm disease,
eliminiated yaws and maternal tetanus and neonatal tetanus.
61.16.1 💊💊✍→ Conclusion-Template-Health? (�न�षर्)
- People can lead socially and economically productive life only when they have a good health. अ�े
�ा� के �बना मनु� सामा�जक और आ�थक �प से उ�ादक जीवन नहीं जी सकता।
- Preventable illness / death of a father / mother may push a family into poverty, students into
child labourers, adolescents into juvenile delinquents. बीमारे म� मा-बाप क� मृ�ु एक प�रवार को गरीबी म�, ब�ों
को बाल मजदू रों म�, िकशोरों को अपराध-जगत म� धके ल सकती है।
- Universal health coverage is therefore a prerequisite for human development. Else, India's
economic growth will neither be sustained or secured for long term. �ा� सेवाओं का सावर्�त्रक �प से
�मलना मानव �वकास क� पूवर् शतर् है, वरना वृ�द्ध दीघर्कालीन �प से / सतत �प से चल नहीं पाएगी।
- Aforementioned schemes / initiatives / challenges are important in that regard / need to be
addressed on priority basis / war-footing. ऊकत योजनाओ/ सम�ाओ को अग्रताक्रम देकर लागू करना / लड़ना ज�री
61.17🍴🍴 HRD → HEALTH → HUNGER, MALNUTRITION, FOOD SECURITY
- Hunger =distress arising from insufficient calorie / food intake. (भूख: भोजन न �मलने पर होने वाली पीड़ा )
- Malnutrition is the deficiency arising from insufficient calories and / or insufficient nutrients in
a person’s diet. (कु पोषण: अपयार्� भोजन / पोषक त�ों के चलते होंने वाला शारी�रक अभाव /सम�ा)
- खाद्य सुर�ा Food security means the availability of nutritious food at stable & affordable prices
round the year for all the people. (��र / िकफायती दामों पर पूरे साल पोषण�म आहार/भोजन �मलना )
SDG Goal#2 requires India to end hunger & achieve food security.
Food security Pillar What has India done to achieve it?
food should be available in  Union: MSP, fertilizer subsidy, PM-KISAN
sufficient quantity at all times and  States: cheap canal water and electricity to farmers.
at all places [पयार्� मात्रा म� भोजन �मले  Together, they encourage farmers to produce more
सबको] grains.
Food should be affordable To Through National Food Security Act (NFSA), Govt provides
poor people. िकफायती दामों गरीबों को cheap grain to poor.
�मले
Food should be nutritious to Through Poshan Abhiyan, Mid-day meal, Integrated-Child
ensure healthy development of Development Services (ICDS) and half dozen other schemes,
body of mind. पोषणयु�, शरीर म�� Govt ensures nutritious food to children & women.
�वकास
In food prices and supply must be FCI keeps ‘buffer-stock’ of grains. It can be sold to open
stable. खा� चीजों म� दामों म� ��रता रहे market or distributed among people during high inflation,
natural disaster etc. (More in 📑📑Pillar#4A: agri)
61.17.1 🍴🍴 �[YEARBOOK] Min. of Consumer Affairs, Food & Public Distribution
उपभो�ा मामले, खाद्य और सावर्ज�नक �वतरण मं त्रालय consists of <notable organizations are >
Dept − Dept. of Consumer Affairs → Integrated Grievance Redress Mechanism
(INGRAM) portal for consumer complaints.
− Dept. of Food and Public Distribution
Attached / − Directorate of Sugar and Vegetable Oils → National Sugar Institute
subordinate offices − Indian Grain Storage Management & Research Institute
Statutory Bodies − Warehousing Development and Regulatory Authority (2007)
(we learned them − National Consumer Disputes Redressal Commission
in 📑📑Pillar#4A) − Bureau of Indian Standards (BIS)- ISI & Gold hallmarking
− + enforcement of Essential Commodities Act, 1955
Commercial − Food Corporation of India (FCI-statutory corporation, 1964)
Undertakings − Central Warehousing Corporation (Statutory corporation, 1962)
− Central Railside Warehouse Company Limited
− Hindustan Vegetable Oils Corporation Limited
Autonomous N/A or not MCQ worthy.
61.17.2 🍴🍴📯📯📯📯 → Hunger → Schemes before NFSA
TPDS-1997 Targeted Public Distribution System (ल��त सावर्ज�नक �वतरण प्रणाली )
- Panchayats, Self-help Groups, Co-operatives, Individuals are given
‘license’ to open fair price shops / PDS shops.
- Beneficiaries can buy subsidized grains, fuel (kerosene) etc. from such
shops using their ‘ration card’.
AAY-2000 - Antyodaya Anna Yojana to give 35 kg subsidized grains per poorest of
poor family per month.
NFSA-2013 National Food Security Act 2013 converted above scheme entitlements into
‘legal rights’. ऊकत योजनाओ म� �मलने वाली चीजों को कानूनन हक म� प�रव�तत िकया।
61.17.3 🍴🍴📯📯📯📯 → Hunger → National Food Security Act 2013 (खाद्य सुर�ा कानून)
- aims to provide subsidized food grains to poor families. स�ी क�मतों पर गरीब प�रवारों को भोजन /अ� देना
- Boss? Dept of Food and Public Distribution (खाद्य और सावर्ज�नक �वतरण का �वभाग)
- Union procures grains from farmers at Minimum Support Price (MSP: �ूनतम समथर्न मू�, Ref:4A).
- Union sells the grains to States at Central Issue Price (CIP: क� द्रीय �नगर्म मू�). Quantitative allotment
to each state is done on the basis of number of beneficiaries.
- NFSA Act requires that CIP can’t be greater than MSP.
- Food Subsidy = FCI’s Economic Cost MINUS Central Issue Price (CIP)
- States ultimately sell the grains to beneficiary through Fair Price Shops/Ration Shops/ Public
Distribution System/PDS Shops. (राशन क� दुकान�)
- It’s a Central Sector Scheme. Budget-2019 allotted >₹ 1.50 lakh crore for this.
- States shortlist the beneficiaries & sell them foodgrains in such manner that
- ~2/3rd =67% Indian population is covered, including
- 75% rural population is covered (तीन-चौथाई ग्रामीण आबादी को शा�मल िकया)
- 50% urban population is covered. (आधी शहरी आबादी को शा�मल िकया)
- Thus, both BPL and (slightly) above poverty line (APL) families are covered. गरीबी रेखा के नीचे/ऊपर
- These beneficiaries are entitled to grains at subsidized rate, through PDS shops →
Rice ₹ 3/kg
Wheat ₹ 2/kg These prices are fixed by Union. Union
Coarse grains ₹ 1/kg may update these subsidized prices, but
not higher than MSP.
 There are two categories of households under NFSA Act:

- Priority Households (PHs): 5 kg of foodgrains for each family member at above price
- Antyodaya Anna Yojana (AAY) households= 35kg grain at above price. Doesn’t matter
how many members are in the family.
 If State / UT doesn’t want the administrative burden of providing grains in PDS shop at above
price, they may do Direct Benefit Transfer (DBT: प्र�� ह�ांत�रत लाभ) to beneficiaries so they can
purchase @market prices (such as ₹ 35/kg rice, ₹24/kg wheat). Chandigarh, Puducherry, Dadra
& Nagar Haveli adopted this route. [खुद अनाज नहीं दे सकते तो बाजार से खरीद ने के �लए पैसा दे दो गरीब को]
 If State / UT can’t provide food within stipulated time / quantity then they’ve to pay food
security allowance (खाद्य सुर�ा भ�ा) to the beneficiaries.
 Beneficiary can complaint at district & state level. States required to form State Food
Commissions for monitoring / implementation.
 For women empowerment: The eldest woman in the household (aged 18/>) shall be considered
the head of the household for issuing ration card. (घर क� सब से बुजुगर् मिहला के नाम पर राशन काडर् बने)
 Pregnant and lactating mothers (upto 6 months) are eligible for
- "Take home ration" of 600 Calories.
- entitled to a free meal at the local Anganwadi (including their 0-6 years child)
- Maternity benefits of min. ₹ 6,000, in instalments. (Ref: PM Matru Vandana Yojana in
previous section.)
 6-14 aged children entitled to one free hot meal or ‘take home rations’ in Govt schools (Ref: Mid
Day Meal Scheme under Education section). [ब�ों को �ू ल म� खाना �मले]
🔠🔠❓MCQ. Find correct statement(s) about National Food Security Act, 2013 (UPSC-Pre-2018)
1. The families coming under category of 'below poverty line (BPL)' only are eligible to receive
subsidised food grains.
2. The eldest woman in a household, of age 18 years or above, shall be the head of the household for
the purpose of issuance of a ration card.
3. Pregnant women and lactating mothers are entitled to a 'take-home ration' of 1600 calories per
day during pregnancy and for six months thereafter.
Codes: (a) 1 and 2 only (b) 2 only (c) 1 and 3 only (d) 3 only
61.17.4 🍴🍴📯📯📯📯:💳💳 → Hunger → NFSA → One Nation One Ration Card
सामा� �प से राशन काडर् क� सु�वधा �ान- आधा�रत होती है, यानी मुंबई म� बनाया गया राशन काडर् लखनऊ म� स�ा अनाज ख़रीदने के
�लए इ�ेमाल नहीं कर सकते। “ एक रा�� एक राशन काडर् प्रणाली” क� जहाँ प्रवासी मज़दू र को एसी सु�वधा �मले। िक�ु कु छ रा�ों ने
अभी तक यह प्रणाली नहीं अपनायी तो नाराज़ सुप्रीम कोटर् ने उ�� 31 जुलाई तक का समय �दया।
😰😰BEFORE 🤩🤩AFTER
⇒ Generally ration card is made in the name ⇒ WILL BE ABLE TO DO IT.
of a family and it is location specific. ⇒ Project started from 2019 but in 2021: Four
⇒ So, if a migrant worker has got a ration card states were yet to join the scheme —
in Mumbai → he cannot use it for buying Assam, Chhattisgarh, Delhi and West
cheap grains at Pune (Intrastate) or Bengal. : SUPREME Court ordered all
Lucknow (Interstate). governments to implement this by a
deadline July 31, 2021.
Thus, ONORC aims to provide inter-state and intrastate portability of public distribution system
(PDS) / National Food security act (NFSA) entitlement. It functions using two portals:
Boss? Ministry of Consumer Affairs, Food & Public Distribution:
🖱🖱IMPDS Integrated Management of Public Distribution System (IMPDS) ) to implement

portal national level portability.
🖱🖱Annavitran to display the sales data of subsidized foodgrains bought through e-Point of Sale
Portal (e-PoS) devices. राशन क� दुकानों पर स�े अनाज क� �बक्र� के आँकड़े
61.17.5🍴🍴📯📯📯📯 Hunger → Food distribution reforms taken by Govt
 Global Positioning System (GPS) and Radio-frequency identification (RFID) based real time
vehicle tracking system for trucks used to transport subsidised food grains. It curbs the menace
of diversion of subsidized food grains in black market. (राशन अनाज �वतरण प्रणाली म� जीपीएस का प्रयोग से
कालाबाजारी के अवसरमे कमी)
 electronic Point of Sale (ePoS) devices are being installed at Fair Price Shops (FPSs). This helps
tracking the distribution of food in a more systematic manner.
 Aadhaar Number helps removing duplicate / ghost / dead beneficiaries.
 Toll-free helpline.
61.17.6 🍚🍚💪💪 Fortification of Rice (चावल क� िकलेबंदी)

 Rice fortification involves artificially adding extra vitamins & micronutrients such as Iron, Folic
Acid, and Vitamin B12 in rice before supplying to customer. PM announced to finish this by
2024. (ग्राहक को चावल देने से पहले उसम� अ�त�र� �वटा�मन और पोषक द्र� डालना)
61.17.7 🍴🍴📯📯📯📯 Hunger → NFSA → 📔📔📔📔ES20 says ⏬number of beneficiaries
⇒ NFSA provides grains at heavily subsidized price to 67% of Indian population. We should reduce
the number of beneficiaries to bottom-20% poorest Indians. (�सफर् एकदम गरीब लोगों को लाभ दो।)
⇒ For ‘relatively less poor’ people, Govt shd charge slightly higher prices.(जो कम गरीब है उनहे थोड़ा मं हगा)
⇒ We should also explore Conditional Cash Transfer Schemes, wherein poor families are given
money to buy (non-subsidized) foodgrains from the market. This will � FCI’s procurement
and stock keeping burden. (सशतर् नकदी ह�ांतरण योजनाएं : प�रवार बाजार भावों पर अ� खरीद ले)
61.17.8 👻👻👻👻🍴🍴📯📯📯📯 Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY)- free grains in
Corona
⇒ Corona → Atma-Nirbhar → PMGKAY: 80 crore poor people will to get 5 kg [wheat or rice] + 1
kg of pulses for free every month for the next three months.
⇒ Boss? Ministry of Consumer Affairs, Food & Public Distribution → FCI → releases the
foodgrains to State government. Funding: ₹1.5 lakh crores
⇒ Duration? Phase-1: from April to June 2020. Phase-2: July to November 2020. Then in 2021:
Scheme is extended, but only 5kg grain given, no pulses given. [दू सरे चरण म� दाल नहीं, के वल अनाज द�गे]
⇒ This scheme is valid till 2022-Dec.
61.17.9 👻👻👻👻🍴🍴📯📯📯📯 Corona: other initiatives for cooking / hunger?

 �ATMANI→ PM GaribKalyan → Free monthly LPG cylinder to PM-Ujjwala beneficiaries for
next 3 months. (Ref: Pillar#5A: energy)
 �ATMANI→ �If a migrant is not covered under the National Food Security Act (NFSA) or
unable to get food because he does not have a ration card….then, State Government will
distribute (5kg grain per person + 1 kg chana per family) per month x for 2 months. Union will
bear its full cost. [प्रवासी मजदू र के पास भले राशन काडर् न हो, उसे अनाज िदया जाए]
 � One Nation One Ration Card to be implemented across India by 2021-March. (At present
only 20 States have done it) → Then migrants will be able to get NFSA’s subsidized food at any
place, irrespective of whether his name entered in given State’s ratio card database or not.
61.17.10 🍴🍴📯📯📯📯 → Hunger → Malnutrition (कु पोषण) → Poshan Abhiyaan (2018)
With National Food security act, India achieved ‘food security’ but not nutritional security, because
malnutrition is caused by →
1. Income Inequality: Poor people unable to buy milk / veggies / almonds. Since ~21% of Indian
population is Below Poverty Line (2011), this is bound to happen. (आय म� असमानता)
2. Gender Inequality: Women eating last and least. >1/3rd of Indian women have low Body Mass
Index (BMI) (मिहलाओ से भेदभाव)
3. Social Inequality: SC/ST etc deprived of economic opportunities → unable to buy good food.
(सामा�जक असमानता- अनुसू�चत जाती/जनजा�त के प�रवार गरीबी के चलते अ�ा भोजन ले नहीं पाते)
4. Water-sanitation-disease e.g. open defecation → worms in intestine, enteropathy. (गं दगी, अंतड़ी म�
कृ �म/सूजन)
5. Psychological issues e.g. Anorexia nervosa: person fears gaining weight so avoids eating. Social
media/instagram → insecurity about weight gain & body image. (मनोवै�ा�नक कारण। अपने
�प/सुं दरता/बाहरी िदखाव के �लए असुर�ा क� भावना )
6. Dietary habits: Vegetarians suffer from protein deficiency, according to Western scientists.
(शाकाहार के चलते शरीर म� प्रोटीन क� कमी)
To address above problems, Govt. launched ….
2018: National Nutrition Mission = POSHAN = Prime Minister’s Overarching Scheme for Holistic
Nutrition. Motto: Sahi Poshan, Desh Roshan
- Boss? Ministry of Women and Child Development (मिहला एवं बाल �वकास मं त्रालय)
- Core Scheme (Not 100% funded by Union). 60:40, 90:10. Union will arrange its side of money-
half from budget and half from World Bank (IBRD) and other Multilateral Development Banks
(MDBs).
- Iron Folic Acid (IFA)tablets, nutritious food in Anganwadi / Schools, convergence with ongoing
schemes for women/child, Online monitoring, IEC awareness generation, E-learning, even Yoga.
- Bharatiya Poshan Krishi Kosh (BPKK) database of diverse crops across 128 agro-climatic zones
in India for better nutritional outcomes.
- Poshan Anthem song by Prasoon Joshi and Shankar Mahadevan.
- Rashtriya Poshan Mah – celebrated every year in the Month of September.
Objective & Indicators Target
1) Stunting in 0-6 group (all India average above 35%) In Bihar Reduce to 25% by 2022 (=
& Madhya Pradesh etc. it’s >40% Mission25 by 2022)
2) Stunting (low height for age), undernutrition, low- Reduce by 2% every year upto
birthweight. 31/3/2020
3) Anemia (र�ा�ता) in 0-6 age children, adolescent girls, Reduce by 3% every year upto
women. 31/3/2020
- Anaemia is a condition when blood doesn’t have enough Red
Blood Cells (RBC) or Haemoglobin → Blood unable to
transport enough Oxygen → Fatigue.
- Anemia results from poor diet, malaria etc. or genetic
disorders- sickle cell disease, Thalassamia.
- >½ of Pregnant women suffer from Anaemia in India.
61.17.11 �Poshan → National Council on India's Nutrition Challenges

Govt setup it to oversee Poshan Abhiyan. (भारत के पोषण सं बंधी चुनौ�तयों पर रा��ीय प�रषद)
- Chairman: Vice Chairman of NITI Ayog
- Members:) NITI Ayog CEO (IAS) | Union ministers of Women and child development,
drinking water and sanitation, Tribal Affairs, rural development etc. | CM / their representatives
from selected (=backward) states on rotation basis.| secretary rank officers from Health Ministry
61.17.12 🍴🍴📯📯📯📯 → Hunger → Malnutrition (कु पोषण) → Mission Poshan 2.0 (2021)
💼💼Budget-2021: we will launch Mission Poshan 2.0 by merging following two schemes
1) Poshan Abhiyan Learned in above section.

2) Supplementary - a subscheme of Integrated Child Development Services (ICDS)
Nutrition Scheme - Gives hot cooked meals and/or take home ration (rice, wheat flour,
(अनुपूरक पोषण योजना) kabuli chanaa, rajma, eggs, soyabean, jaggery, biscuit etc for to
children (6 months to 6 years), Pregnant Women, Lactating Mothers
and out-of-school Adolescent Girls (11-14 years).
Above scheme#1 + scheme#2 merged → Mission Poshan 2.0 (2021) under Women-Child Ministry
with following features: �मशन पोषण के िद्वतीय चरण के िदशा �नद�श जारी िकए गए।
 Take-home rations [घर ले जाने के �लए अनाज दाल इ�ािद राशन द�गे]
 Focus is on the 1,000 days between a mother’s pregnancy and her child’s second birthday. मिहला
के गभार्धान से लेकर ब�े के दू सरे ज� िदन तक के कु ल �मलाकर 1000 िदनों म� पोषण पर जोर िदया जाएगा
 � Poshan Tracker Portal: to moniter — pregnant women, lactating mothers, children and
adolescents. � Boss? Women-Child Ministry. माता, ब�ों और िकशोरीओ के कु पोषण क� �नगरानी के �लए।
 � Poshan Gyan Portal: national digital repository / knowledge bank / Wikipedia type thing on
nutrition. � Boss? NITI Aayog, in partnership with Bill & Melinda Gates Foundation etc orgs.
What about free meal in schools? Ans. Refer Pillar6B: → HRD Education
🔠🔠❓MCQ. objectives of ‘National Nutrition Mission’ are _ _ _ .?(Asked in UPSC-Pre-2017)

1. To create awareness relating to malnutrition among pregnant women and lactating mothers.
2. To reduce the incidence of anaemia among young children, adolescent girls and women.
3. To promote the consumption of millets, coarse cereals and unpolished rice.
4. To promote the consumption of poultry eggs.
Codes: (a) 1 and 2 only (b) 1, 2 and 3 only (c) 1, 2 and 4 only (d) 3 and 4 only
61.17.13 🍴🍴🍴🍴 → Ranking: Global Hunger Index (GHI: वै��क भूख/�ुधा सूचकांक)
Annual reported by Concern Worldwide (Ireland) and Welthungerhilfe (Germany). Previously this
report was prepared by IFPRI (International Food Policy Research Institute).
To compute the GHI, they measure four indicators:
1. Undernourishment: Population whose caloric intake is insufficient
2. Child wasting: low weight for height.
3. Child stunting: low height for age. caused by (chronic) long-term insufficient nutrients
4. Child mortality (0-5 age)
�India’s rank fallen: 94th (2020) → 101st (2021) to 107 (2022).
Although NITI Aayog defends, “International surveys’ methodologies are faulty, otherwise as per
Indian Govt’s own surveys there has been improvement in India.” (वै��क / आंतररा��ीय सं �ाओ के �गनती करने
के तरीकों म� ही गलती है, हम गलत नहीं है)
61.17.14 🍴🍴🍴🍴 → Ranking: Food/Hunger ke 500 Types/Jaat-ke-Reports
World’s Children report By UNICEF. Highlighted that in India, every second child is
affected by some form of malnutrition (2019)
Global Nutrition Report Nutrition for Growth (N4G) is partnership between the United
Kingdom, Brazil and Japan governments + donors + NGOs →
based on their 2013’s summit, group of experts started this annual
report. It doesn’t give a composite ‘rank’ but generates ‘profile’.
India is profiled as a nation suffering from anaemia and stunting.
State of Food Security and Annual report by Food and Agriculture Organization (FAO),
Nutrition in the World WHO & a few other org.
report It uses the Food Insecurity Experience Scale developed by FAO.
Food Waste Index Report By United Nations Environment Programme (UNEP). Found that
2021 [अ� बबार्दी सूचकांक] 50 kg of food is waste/thrown away per person every year in
Indian homes. Food Waste → Landfill → GHG Emission
Hunger Hotspots Report By Food and Agriculture Organisation and World Food
Programme. Identified Ethiopia, Madagascar, Yemen, South
Sudan and Nigeria for hunger problems.
Global Food Security Index By less-famous body London-based Economist Impact. So poor
cost benefit in memorising the India's ranking
🔠🔠❓MCQ. Which indicator(s) is/are used in Global Hunger Index Report?(Pre-2016)
1) Undernourishment 2) Child stunting 3) Child mortality
Codes: (a) 1 only (b) 2 and 3 only (c) 1, 2 and 3 (d) 1 and 3 only
61.17.15 🍴🍴🍴🍴 ✍→ Conclusion-Template-Hunger? (�ुधा - �न�षर्)

⇒ Hunger elimination / Nutritional security is fundamental for human dev. Malnutrition in
women ⏫ IMR & MMR. (मानव �वकास, भुखमरी, बाल/मातृ मृ�ु दर- इन सब अनुसंधानों म� कु पोषण से लड़ना ज�री)
⇒ A malnourished person cannot pursue education, economic opportunities or have a long life
expectancy. (कु पो�षत �� न तो �श�ा यो��प से ग्रहण कर पाएगा, न हीं आ�थक अवसरों का लाभ यो��प से ले सकता है)
⇒ So, SDG Goal #2: to end all forms of hunger & malnutrition by 2030. Aforementioned schemes /
initiatives / challenges imp / need to be addressed on priority basis. (अग्रता क्रम से लड़ना ज�री)
61.17.16 ✍Mains Questions

Given in the Pillar6D Handout.
Next Handout📑📑
 #6B: Education, Skill Development.
 #6C: Poverty.
 #6D: Women & other Weaker Section, UNDP, HDI, SDG
 Mains Qs of Pillar6 = at the end of Handout No. 6D
PILLAR#6B-EDUCATION, SKILL, POVERTY
Table of Contents
62 📐📐HRD → Education (�श�ा)................................................................................................................... 1069
62.1.1 📐📐 Edu →�[YEARBOOK] Ministry of Human Resource Development/Education ..... 1070
62.1.2 📐📐 � Bodies → Higher Edu → HEFA (2016) ..................................................................... 1071
62.1.3 📐📐 � Bodies → Vedic Edu → Bharatiya Shiksha Board.................................................... 1071
62.1.4 📐📐�[YEARBOOK] Notable Schools funded by Union ...................................................... 1072
62.2 �📯📯📯📯New education policy 2020 (नई �श�ा नी�त)........................................................................ 1072
62.2.1 ✍NEP-2020: Introduction (प�रचय) .......................................................................................... 1072
62.2.2 🏫🏫Education: Schooling → Curriculum changed (�ू ली पाठ्यक्रम म� बदलाव) ............................. 1073
62.2.3 �Education: Primary- other reforms (प्राथ�मक �श�ा म� सुधार).................................................... 1074
62.2.4 �Education: Primary- ECCE upto age 8 ................................................................................ 1074
62.2.5 🈶🈶Education: Language / Medium (भाषा /मा�म) ..................................................................... 1075
62.2.6 PM SHRI Schools Scheme (2022) .............................................................................................. 1075
62.2.7 �Education: Higher (उ� �श�ा) ............................................................................................... 1076
62.2.8 �Education: Higher → Credit (गुण आधा�रत �श�ा) .................................................................. 1076
62.2.9 �Education: Higher → Entry & Exit (प्रवेश और प्र�ान) .......................................................... 1077
62.2.10 �🕵🕵Education: Higher → New Orgs → HECI ............................................................. 1077
62.2.11 ��Education: Higher → New Orgs → Others............................................................ 1078
62.2.12 👨👨👨👴👴👴👴Education: Adult/PH (प्रौढ़ �श�ा और �वकलांग �श�ा) ................................................ 1078
62.2.13 �Education: Open/Distance/E-Learning (दू र - �श�ण/ई �श�ा)........................................... 1078
62.2.14 📊📊📊📊Assessment of students (छात्रों का मू�ांकन)................................................................... 1079
62.2.15 📊📊�Assessment of students: bodies (मू�ांकन/परी�ा के �लए सं �ाएं ) ..................................... 1079
62.2.16 📊📊📊📊Assessment of schools (�ू लों का आकलन) .................................................................... 1079
62.2.17 �Teachers recruitment and training (�श�कों क� भत� और तालीम)......................................... 1080
62.2.18 🤑🤑NEP-2020: Funding (�श�ा �ेत्र के �लए �व�पोषण) .................................................................. 1080
62.2.19 👿👿NEP-2020: Criticism (नई रा��ीय �श�ा नी�त के �खलाफ आलोचना/�नंदा) ...................................... 1080
62.2.20 ✍NEP-2020: Conclusion (�श�ा नी�त के बारे म� �न�षर्)............................................................. 1081
62.3 �🤳🤳PRAGYATA Guidelines on Digital Education (2020-Jul) ................................................... 1081
62.4 📐📐😋😋😋😋😋😋😋😋 Edu → Std1-8 → Mid-Day Meal Scheme (MDM-2001-2020) ...................... 1082
62.5 📐📐😋😋😋😋😋😋😋😋 Edu → Std1-8 → PM Poshan (2021-2026) ...................................................... 1083
62.6 📐📐📯📯📯📯 Edu → Std1-8 → Sarva Shiksha Abhiyaan (SSA-2001)............................................... 1084
62.6.1 📐📐📯📯📯📯Sarva Shiksha Abhiyan (SSA) → Notable Subscheme / Programs ...................... 1084
(Batch: PCB7) Mrunal’s Economy Pillar#6B HRD: Edu, Skill → Page 1067
62.7 📐📐📯📯📯📯 Edu → Std. 9-12 → RMSA (2009) मा��मक �श�ा ............................................................ 1085
62.7.1 👻👻👻👻👻👻👻👻👻👻CBSE: Syllabus reduction (पाठ्यक्रम म� कटौती) ............................................... 1085
62.8 📐📐📯📯📯📯 Edu → Std. Jr.KG to 12: Samagra Shiksha scheme (2018).......................................... 1086
62.8.1 � 2019: NISHTHA scheme for Teachers training (2019) .................................................... 1086
62.9 Edu (📐📐📐📐) → Rankings for School Education ............................................................................. 1086
62.9.1 Annual Status of Education Report ASER Report by NGO Pratham ..................................... 1086
62.10 📐📐�:🧔🧔 Edu → no detention policy & RTE Amendment 2019 .......................................... 1088
62.11 🎓🎓Edu → CBSE Class12 Result 30:30:40 formula ...................................................................... 1088
62.12 📐📐🔠🔠🔠🔠🔠🔠 Edu → National testing agency (NTA) & NEET .............................................. 1088
62.13 📐📐 Edu → Higher Edu: Colleges & Uni. (उ�तर �श�ा) ................................................................. 1089
62.13.1 📐📐📐📐 Edu → Higher Edu: Ranking by Education Ministry ........................................... 1090
62.13.2 📐📐📐📐 Edu → Higher Edu: Ranking : Misc ....................................................................... 1090
62.14 👻👻👻👻📐📐🤳🤳 Edu → Portals/Apps/Orgs → Post-Corona ....................................................... 1091
62.15 📐📐🤳🤳 Edu → Misc. portals / initiatives (Before Corona) ......................................................... 1092
62.15.1 📐📐🤳🤳 Edu → Misc: School infra/result monitoring ........................................................ 1092
62.15.2 📐📐🤳🤳 Edu → Misc: E-learning .......................................................................................... 1092
62.15.3 📐📐🤳🤳 Edu → Misc: Anti-ragging / life values/mental health ......................................... 1093
62.15.4 📐📐🤳🤳 Edu → Misc: Startup ke liye .................................................................................... 1093
62.15.5 📐📐🤳🤳 Edu → Misc: Teachers’ training ............................................................................. 1094
62.15.6 📐📐🤳🤳 Edu → Misc: NRI/foreign teachers/students ko bring to India? ......................... 1094
62.15.7 📐📐🤳🤳 Edu → Misc: Girl students / girl scientists............................................................. 1094
62.15.8 📐📐🤳🤳 Edu → Misc: Making science/research useful/popular ........................................ 1095
62.15.9 📐📐🤳🤳 Edu → Misc: National Unity................................................................................... 1096
62.15.10 📐📐🤳🤳 Edu → Misc: Civic duties, Adult Edu (प्रौढ़ �श�ा) .................................................... 1096
62.16 📐📐 Edu → Misc. → Youth org. .................................................................................................... 1097
62.16.1 Yearbook: Ministry of Youth Affairs And Sports (युवा कायर् और खेल मं त्रालय) .......................... 1097
62.16.2 Youth Schemes= Central Sector Schemes = 100% funded by Union. ............................... 1097
62.16.3 ⚽�Khelo India Scheme → National Sports Education Board .................................... 1097
62.17 📐📐 ✍ Conclusion-Template-Education:.................................................................................... 1097
63 💇💇💇 HRD → Skilling, Vocational Training, Recruitment ............................................................... 1098
63.1 � Yearbook Recruitment & Training Related Ministries .............................................................. 1099
63.1.1 � Ministry of Personnel, Public Grievances & Pensions...................................................... 1099
63.1.2 👮👮 � 🤳🤳 Mission Karmayogi: Training of Civil servants (2020-Sept) ............................ 1100
63.1.3 � Yearbook: Ministry of Labour and Employment .............................................................. 1100
63.2 💇💇💇 �[YEARBOOK] Ministry of Skill Development & Entrepreneurship ........................... 1100
63.3 (💇💇💇)→ NSDC, NSDF, NSDA, NSQF, NCVET .......................................................................... 1101
63.3.1 � NCVET 2018 (�ावसा�यक �श�ा और प्र�श�ण के �लए रा�ी� य प�रषद) ................................................. 1102
63.4 (💇💇💇)📯📯📯📯 Skill India Campaign (2015: कौशल भारत अ�भयान) .................................................... 1102
63.4.1 (💇💇💇)📯📯📯📯 Skill India3 → National Policy for Skill Dev. & Entrepreneurship 2015 .. 1103
63.4.2 (💇💇💇)📯📯📯📯 Skill India4 → Pradhan Mantri Kaushal Vikas Yojana (PMKVY) ........... 1104
63.4.3 💇💇💇)📯📯📯📯 Skill India4 → PMKVY phase 3.0 (2020) ...................................................... 1104
63.5 (💇💇💇)📯📯📯📯 Skilling → SHREYAS Scheme (2019) ................................................................... 1105
63.5.1 👻👻👻👻👻👻(💇💇💇)Skilling → Post Corona / Atma-Nirbhar ............................................... 1105
63.6 (💇💇💇)📯📯📯📯 Skilling & Entrepreneurship → Before Corona.................................................... 1106
63.7 (💇💇💇)✍ Conclusion-Template-Skill (कौशल �वकास के बारे म� �न�षर्) ............................................... 1108
62 📐📐HRD → EDUCATION (�श�ा)
(Definition) Education is the process of imparting knowledge in a systematic manner, usually at a

school or university. एक �ू ल या �व��वद्यालय म�, �व��त तरीके से, �ान प्रदान करने क� प्रिक्रया को �श�ा कहते है।
1. Literacy Rate (सा�रता दर )= (Person aged 7 or higher who can read & write) / (Total population
of age 7 & higher.) Census-2011: 73%. Literacy of urban area > rural ; males > females.
2. Adult Literacy Rate (�� सा�रता दर) is measured for age 15 Years and above.
3. Gross Enrolment Ratio (GER: सकल नामांकन दर) = (No. of students enrolled in an age group or
std) / (total population in that group).
I. GER in 6 to 14 age group is ~97.2% means 2.8% children (6-14 age) out of school.
II. 💼💼Budget-2020: GER (girls) >> GER (boys) in all 3 levels i.e. elementary, secondary,
higher secondary. Thanks to Beti-Bachao-Beti-Padhao scheme.
4. Gender Parity Index (GPI: �लगं समतु�ता सूची) for education = ratio of female students enrolled in
an age or std-group divided by male students in that group.
5. A ‘dropout’ (पढ़ाई छोड़ने वाला) is a pupil who enrolls in a school but leaves before the completion
of a school stage (e.g. primary, highschool..). Factors responsible? →
I. Not interested in education, lack of aspirations due to traditional gender / societal /
occupational norms in a village. (पढ़ाई म� ��च नहीं, गाँव के सामा�जक और ल��गक बं धनों के चलते जीवन म�
आगे बढ़ने क� आकां�ा नहीं)
II. Girls engaged in domestic work / early marriage. Non-availability of girls’ toilet
III. Financial constraints, engaged in child labour activities. (पैसों क� िक�त, बाल मजदू री)
IV. School is far off / transport / timings not suitable. (प�रवहन क� सम�ा)
V. Teacher absenteeism, Poor quality of teaching, Tribal students unfamiliar with
language/medium. (�श�कों क� अनुप��त, पढ़ाई के अ�� गुणव�ा नहीं, भाषा मा�म क� सम�ा)
VI. Dropout rates ⏫ after class8 as mid-day meal stops, while course difficulty and family
pressure to earn ⏫. (आठवीं क�ा के बाद �ू ल म� मु� का म�ान भोजन नहीं �मलता, ब�� सलेबस क�
किठनाई और प�रवार से पैसे कमाने का दबाव बढ़ता है)
SDG Goal 4.1: Universal primary and secondary education
SDG Goal #4: India’s baseline in (brackets) India’s SDG Target 2030
Enrollment ratio from class 1 to 10 (75%) 100%
Dropout rate at Secondary level (17%) 10%
% of schools where Pupil Teacher ratio is 30% or less (70%) 100%
Improve Learning Outcomes in Maths, Language, Science 57-67% score in learning outcome
etc subjects at class 5 and class 8 (pathetic) quiz
🔠🔠❓MCQ. Which one of the following is correct for the purpose of Census 2011 [Asked in UPSC-CDS-2017-I]
a) a person aged 7 & above who can both read and write with understanding in any language is
treated as a literate
b) a person aged 8 & and above who can both read and write with understanding in any language is
c) a person aged 9 & above who can both read and write with understanding in any language is
d) a person aged 10 & above who can both read and write with understanding in any language is
62.1.1 📐📐 Edu →�[YEARBOOK] Ministry of Human Resource Development/Education
✋Note: National Education Policy 2020 aims to rename the HRD/Edu

Ministry into Education Ministry. So, read the HDT/old schemes/sentences
accordingly. अगर िकसी लाइन म� सुधार करना रह भी गया हो तो आप समझ लेना
मानव सं साधन �वकास/ �श�ा मं त्रालय consists of <list not exhaustive>
Dept  Department of School Education & Literacy �ू ली �श�ा और सा�रता
 Department of Higher Education उ� �श�ा
Attached /  N/A or not MCQ-worthy
subordinate
Statutory  All India Council of Technical Education (AICTE) Act, 1987. Runs schemes
Bodies like Pragati, Saksham, Prerana, Samridhi, Ishan Uday for scholarship /
वैधा�नक सं �ाएं research funds to girls, SC/ST, PH, North East students.
 University Grants Commission Act, 1956 (UGC: �व��वद्यालय अनुदान आयोग) →
(When bill is passed) Higher Education Commission of India (HECI: भारत का
उ� �श�ा आयोग).
CPSE सरकारी  Higher Education Financing Agency (HEFA)
कं पनी  Educational Consultants of India Limited (EdCIL)
Autonomous  Central Board of Secondary Education (CBSE: के �ीय मा��मक �श�ा बोडर्)
bodies National Council for Educational Research and Training (NCERT)
�ागत सं �ाएं  National Institute of Open Schooling (NIOS)
 Kendriya Vidyalaya Sangathan (KVS)- it had some seats reserved for
recommended by member of Parliament (MP) but this quota removed in
2022. (सांसदो द्वारा नामांिकत ब�ों का कवोटा ख़� )
 Navodaya Vidyalaya Samiti (NVS),
 National Testing Agency (NTA),
 National Council for Teacher Education (NCTE),
 Indian Council of Historical Research (ICHR),
 National Book Trust (NBT)
 National Bal Bhavan → Bal Kendras
 National Institution Of Industrial Engineering (Mumbai)
Advisory Central Advisory Board of Education (CABE) क� द्रीय �श�ा सलाहकार बोडर्
सलाह प�रषद ⇒ Highest advisory body to advise the Union and State Governments in the
field of education since 1920.
⇒ Chairman: HRD Minister.
⇒ Members: Selected Union ministers, One minister from each state, few MP,
heads of education regulatory bodies / research bodies.
Intl. Org  UN Specialized Agency: United Nations Educational, Scientific and Cultural
Organization (UNESCO, 1946, HQ: Paris, France)
62.1.2 📐📐 � Bodies → Higher Edu → HEFA (2016)
⇒ Higher Education Financing Agency (HEFA उ� �श�ा �व�पोषण अ�भकरण) is a not for Profit
company with shareholding: 91% HRD/Edu Ministry + 9% Canara bank.
⇒ HEFA is registered as a Non–deposit taking NBFC with RBI.
⇒ HEFA provides loans to IITs, IIITs, NITs, IISCs, AIIMS etc.to upgrade their infrastructure, lab
equipments etc. It also gives loan to Kendriya Vidyalayas, Navodaya Vidyalaya.
⇒ RISE-2022: Budget 2018 gave more ₹ ₹ to HEFA to give out as loans to those IIT/IIM/NIT etc.
for Revitalising Infrastructure and Systems in Education (RISE) by 2022
62.1.3 📐📐 � Bodies → Vedic Edu → Bharatiya Shiksha Board

⇒ Presently, CBSE / State Education boards doesn’t recognize all the types of Acharyakulam,
Vidya Bharati schools (of RSS) and Gurukuls (of Arya Samaj).
⇒ So, 2019: HRD/Edu Ministry announced to setup Bharatiya Shiksha Board for standardizing
(मानक�करण) Vedic education with new syllabus, conducting exams and issue certificates.
62.1.4 📐📐�[YEARBOOK] Notable Schools funded by Union
Kendriya Class 1 to 12, mainly for Govt employees- both in India, even abroad. Boss?
Vidyalayas Edu Ministry. Shaala Darpan: e-Governance platform for Kendriya Vidyalayas.
Kasturba  Class 5 to Class 12 Residential (=with hostel) girl school for SC, ST, OBC,
Gandhi Balika Minorities & BPL. Boss? Edu Ministry
Vidyalaya
Eklavya schools Residential schools in high ST % population area. Boss? Tribal Affairs Ministry.
 HRD/Edu Ministry’s free residential schools for talented rural children
Jawahar
from class 6 to 12. (प्र�तभावन ग्रामीण ब�ों के �लए �ू ल. �रहायशी छात्रालय क� सु�वधा)
Navodaya
 Student has to pass an entrance exam to get admission, unlike the above
Vidyalayas
schools. [दा�ख़ला पाने के �लए प्रवेश परी�ा होती है.]
 Initiative by HRD + Defence Ministry + Home Affairs Ministry for the
Seema Darshan students of Kendriya Vidyalayas and Navodaya Vidyalayas. Take them to
border area / meet with armed forces to cultivate the spirit of Patriotism.
62.2 �📯📯📯📯NEW EDUCATION POLICY 2020 (नई �श�ा नी�त)
⇒ 1948-49: University Education Commission [�व��वद्यालय �श�ा आयोग]
⇒ 1952-53: Secondary Education Commission
⇒ 1964-66: Education Commission under Dr. D.S. Kothari
⇒ 1968: National Policy on Education
⇒ 1976: 42nd Constitutional Amendment: Education put in Concurrent List (समवत� सूची)
⇒ 1986: National Policy on Education (NPE) → modified in 1992.
⇒ 2015-16: T.S.R. Subramaniam Committee for education policy
⇒ 2017-19: Dr. K. Kasturirangan Committee for education policy
62.2.1 ✍NEP-2020: Introduction (प�रचय)
(Origin) 2017: HRD/Edu Ministry had set up Dr. K. Kasturirangan Committee, to replace the
education policy of 1986. Based its report, Govt announced a new National Education Policy in
2020 with following salient features: �न��ल�खत मु� �वशेषताओं के साथ)
62.2.2 🏫🏫Education: Schooling → Curriculum changed (�ू ली पाठ्यक्रम म� बदलाव)
International studies have found 3-6 years = crucial for mental development. So, the Govt will target
it via 3 three years of Anganwadi/ pre schooling. (मान�सक �वकास के �लए प्री-�ू �लंग मह�पूणर् है ऐसा अंतररा��ीय
सं शोधन म� पाया गया)
62.2.3 �Education: Primary- other reforms (प्राथ�मक �श�ा म� सुधार)
⇒ 🎯🎯 Target: 100 % Gross Enrolment Ratio (GER) from pre-school to secondary school education
by 2030. (सकल प्रवेश अनुपात)
⇒ National Mission on Foundational Literacy and Numeracy - to ensure by 2025, all children in
class 3 are able to do basic level of reading and maths. (बु�नयादी सा�रता और ग�णत �मता)
⇒ ⚗No rigid separation between academic streams (sci vs commerce etc.) शै��णक धाराओं म� भेद नहीं
िकया जाएगा
⇒ No rigid separation curricular and extracurricular activities (अ�ास प्रवृ��यां बनाम पाठ्येतर प्रवृ��यां)
⇒ No rigid separation between vocational and academic streams. (�ावसा�यक और शै��णक धाराएँ )
⇒ 🔧🔧Vocational Education to start from Class 6 with Internships. (�ावसा�यक प्र�श�ण द�गे)
⇒ We'll use counsellors & social workers with schools e.g. Psychological counselling, sexual
harassment, bullying, depression (ब�ों के �लए मनोवै�ा�नक परामशर्दाता उपल� कराएँ गे)
⇒ Open / Distance learning for classes 3, 5 and 8 through NIOS. (दू र - �श�ण)
⇒ Collectively, it will help bring 2 crore "out of school" children back into the schooling. (ब�ों क�
�ू ल-वापसी)
Table 1: we will setup these institutes हम ये सब बनाएँ गे!
“Bal Bhavans” These will be special daytime boarding schools with art-related,
career-related, and play-related activities.
Samajik Chetna Kendras Social Consciousness Centres will be setup in the Free (Spare)
school infrastructure.
�Artists- कलाकारों के �नवास क� Colleges, school complex to have Artist(s)-in-Residence. Such
�व�ा artists will promote traditional arts / Lok Vidya.
62.2.4 �Education: Primary- ECCE upto age 8
⇒ For upto class12 NCERT will develop National Curricular Framework for School Education
(NCFSE: पाठ्यक्रम क� रा��ीय �परेखा)
⇒ For upto class8 NCERT to develop a National Curricular & Pedagogical Framework for Early
Childhood Care and Education (NCPFECCE or ECCE: बचपन क� परव�रश और �श�ा के �लए रा��ीय पाठ्यक्रम
और �श�ा शा�)
⇒ Ministries of HRD/Edu, Ministry of Women and Child Development (WCD), Ministry of
Health and Tribal Affairs will jointly implement ECCE. (ये तीन मं त्रालय लागू कर�गे)
⇒ ECCE to improve syllabus (Curriculum: पाठ्यक्रम) & teaching methodology (=pedagogy: �श�ा शा�)
But basically it involves ⏬pressure of rote-learning/coaching classes to pass the exams, ⏫critical
thinking ability & emotional intelligence, 21st century skills, scientific temper etc. समालोचना�क
सोच�मता, भावना�क बु�द्धम�ा, 21 वीं सदी का कौशल, वै�ा�नक �भाव। पढ़ाई का बोझ कम करने के �लए �व�भ� कदम ल�ग।े
⇒ ⏬in Curriculum to Core Concepts. पाठ्यक्रम म� कटौती करके के वल अ�त मह�पूणर् अवधारणाओं को �सखाना
62.2.5 🈶🈶Education: Language / Medium (भाषा /मा�म)

⇒ Teaching in mother tongue/ regional language? Yes upto class5 definately And we'll try to
continue it even upto class8 and beyond. (पांचवी क�ा तक मातृभाषा या प्रादे�शक भाषा म� �श�ा)
⇒ Sanskrit medium to be offered at all levels of school and higher education
⇒ @secondary level, we'll also offer foreign languages. (मा��मक �ू लों म� �वदेशी भाषा म� भी)
⇒ Three-language formula i.e. All students will learn 3 languages in their school. At Least two of
the languages must be native Indian. e.g. You may opt for (1) mother tongue:
Gujarati/Punjabi/Marathi (2) Hindi/Sanskrit (3) English / French / Russian etc. (3 भाषाओं का सूत्र है
या �सद्धांत)
⇒ No language will be imposed on any student. [This is to calm the apprehension of Southern
states that students will be compulsory required to learn Hindi. [कोई भी भाषा �वद्या�थयों पर थोपी नहीं
जाएगी। �श�ा नी�त म� ये बात �� प से कही गई, तािक द��ण भारत के लोग �चंता म� न रहे िहदं ी उनको जबरद�ी �सखाई जाएगी]
⇒ New organizations will be setup 1) National Institute for Pali, Persian and Prakrit , 2) Indian
Institute of Translation and Interpretation (IITI: अनुवाद और �नवर्चन).
62.2.6 🏫🏫PM SHRI Schools Scheme (2022)

⇒ Pradhan Mantri Schools for Rising India (PM SHRI) - by Education Ministry
⇒ Govt to give to give extra funding to 14000+ schools across the country to comply with NEP-
2022 objectives. Such as
⇒ 1) Focus on foundational literacy 2) interaction with local artisans
⇒ 3) vocational training and skill development 4) Develop Green school via energy efficient
infrastructure etc.
(देश म� क़रीब 14,000 �वधालयो को चुना जाएगा �जनम� सरकार अ�त�र� पैसा देकर �श�ा नई रा�ी� य �श�ा नी�त को िक्रया��त करेगी
जहाँ पर बु�नयादी सा�रता, �ानीय कलाकारों के साथ मेलजोल, कौशल �वकास, �� ऊजार् सं चय द्वारा ह�रत �वद्यालय बनाना इ�ािद पर
ज़ोर िदया जाएगा)
62.2.7 �Education: Higher (उ� �श�ा)
⇒ 🎯🎯 Target: Gross Enrolment Ratio (GER: higher education): 26% (2018) → ⏫ 50% (2035);
⇒ Add 3.5 crore admission seats in higher education. (उ� �श�ा म� प्रवेश सीटों को बढ़ाया जाए)
⇒ Creative combinations of subjects & multi-disciplinary courses to be allowed. e.g. philosophy
and architecture, Earth Science and architecture. (अलग-अलग �वषयों का रचना�क सं योजन)
⇒ At present, most Private colleges are usually affiliated to some universities. Colleges have to
follow the admission process and syllabus defined by the university. In the next 15 years
gradually more autonomy will be given to colleges in this area. (महा�वद्यालयों को अपनी प्रवेश प्रिक्रया और
पाठ्यक्रम बनाने म� �ादा �तं त्रता दी जाएगी)
⇒ 🔧🔧Vocational education to be integrated. (�वसा�यक �श�ण को शा�मल िकया जाएगा)
62.2.8 �Education: Higher → Credit (गुण आधा�रत �श�ा)

⇒ In the USA, a student completes a particular course =gets credit. When he accumulates sufficient
number of credits he can get a degree.
⇒ Students can enroll in more courses to earn more credits and finish the college graduation faster.
Some Indian universities too adopted the Credit Based Semester System (CBSS).
⇒ 🔖🔖NEP-2020 policy aims to improve it further by creating an "Academic Bank of Credits" with
Transfer of Credits. If you enroll in multiple courses / Institutions = your credits will be stored
digitally so you can combine them to earn a degree. This organisation was set up in 2021 under
Education Ministry. “अकाद�मक ब�क ऑफ क्रेिडट” क� �ापना. अलग-अलग कोसर् क� पढ़ाई ख� करने पर गुण िदए
जाएं गे, �जसका िड�जटल सं चय इस ब�क म� होगा. इन गुणों को जोड़कर �वद्याथ� िडग्री हा�सल कर सकता है.
62.2.9 �Education: Higher → Entry & Exit (प्रवेश और प्र�ान)
⇒ IIT: 4 years course = BTech degree. If a student is weak/wants to EXIT after 3 year, IIT will give
a Bachelor of Science (BSc) degree. Such proposal was approved in 2019
⇒ so with similar pattern, in NEP-2020 proposed: multiple entry and exit points with appropriate
certification. उ� �श�ा सं �ान म� प्रवेश के बाद अलग-अलग चरणों पर पढ़ाई छोड़ सकते ह� उस िहसाब से आपको
प्रमाणपत्र/उपा�ध �मले
If you Exit @ What you get? (इस चरण पर कॉलेज छोड़ �दया तो ये �मलेगा)
1 year Certificate प्रमाणपत्र
2 years Advanced Diploma उ� िड�ोमा
3 years Bachelor’s Degree �ातक क� उपा�ध
4 years Bachelor’s with Research अनुसंधान के साथ �ातक
62.2.10 �🕵🕵Education: Higher → New Orgs → HECI
🕵🕵BEFORE (पहले क� प्रणाली) 🕵🕵AFTER (भ�व� क� प्रणाली)
⇒ Multiple Regulators in the higher education Higher Education Commission of India(HECI:
sector for example UGC, AICTE, Medical भारत का उ� �श�ा आयोग) will be set up
Council of India (later replaced with ⇒ as a single umbrella body the for entire
National Medical Commission (NMC), Bar higher education, excluding medical and
Council of India etc. legal education (Bar council). भारत का उ�
�श�ा आयोग- जोिक �चिक�ा और वकालत के अलावा
सभी उ� �श�ा कायर्क्रमों का �नयं त्रण करेगा
⇒ It will penalise Higher education
Institutions (HEIs) For violating the rules.
(�नयमों का उ�ं घन करने वाले उ� �श�ा सं �ानों पर
जुमार्ना /दंड)
UGC / AICTE officers would demand bribes It will do faceless inspection with technology
during inspections/ for approving the funds =⏬ scope for bribery, similar to Faceless
(उ� �श�ा पर �नयं त्रण के �लए �व�भ� सं �ाएं थी �जन के assessment in Income Tax dept. (फे सलेस �नरी�ण)
अफसर प्र�� नरी�ण के बहाने �र�तखोरी करते थे.)
Govt colleges may not be subjected to as strict Both Public and private higher education
rules as private sector colleges. (सरकारी कॉलेजों पर institutions will be governed by the same set of
गुणव�ा के �नयं त्रण �नजी कॉलेजों �जतने स� नहीं थे, उनक� rules.(सरकारी और �नजी सभी सं �ानों पर एक समान �नयम
खा�मयों और गल�तयों को नज़रअंदाज़ िकया जाता था।) लागू होंगे.)
HECI to have four independent verticals (4 �तं त्र इकाइयां होंगी)-

1. National Higher Education Regulatory Council (NHERC) for regulation. �नयं त्रण के �लए एक सं �ा
2. General Education Council (GEC ) for standard setting, मानक बनाने के �लए एक सं �ा
3. Higher Education Grants Council (HEGC) for funding, अनुदान के �लए एक सं �ा
4. National Accreditation Council( NAC) for accreditation. मा�ता के �लए एक सं �ा
✋above fullforms may be IMP4UGC-NET, but not so much for IAS.
62.2.11 ��Education: Higher → New Orgs → Others

�MERU Similar to IITs & IIMs, the Govt will set up Multidisciplinary Education and
Research Universities (MERUs: ब�-�वषयक �श�ा एवं सं शोधन के �लए �व��वद्यालय)
�NRF National Research Foundation will be created as the apex body for research
in India. सं शोधन के �लए उ�तम सं �ा बनाई जाएगी
�University we'll expand the definition of university to include more institutions that
Definition offer Research-intensive and Teaching-intensive courses.
�Ministry Ministry of HRD to be renamed as M/o Education
renamed “मानव सं साधन �वकास मं त्रालय” का नाम बदलकर “�श�ा मं त्रालय” िकया गया
62.2.12 👨👨👨👴👴👴👴Education: Adult/PH (प्रौढ़ �श�ा और �वकलांग �श�ा)
⇒ � Target: 100% Adult Literacy. सं पूणर् प्रौढ़ सा�रता

⇒ We'll focus on life-enrichment programs. (जीवन-सं वधर्न कायर्क्रम)
⇒ We'll prepare a National Book Promotion Policy to encourage writing, publishing and reading of
good books. (रा��ीय पु�क सं वधर्न नी�त- अ�� िकताब� �लखी जाए प्रका�शत क� जाए पढ़ी जाए )
⇒ We'll prepare a uniform/standard Indian Sign Language (ISL) across the country for students
with hearing impairment. ब�धर छात्रों के �लए भारतीय सांके�तक भाषा.
62.2.13 �Education: Open/Distance/E-Learning (दू र - �श�ण/ई �श�ा)
⇒ We'll provide open learning for classes 3,5 and 8 through NIOS.
⇒ We will encourage more online / distance learning courses using Massive Open Online Courses
(MOOCs) technology.
⇒ E-learning content in Regional Languages. प्रादे�शक भाषाओं म� ई-�श�ण सामग्री
⇒ Divyang (PH) Friendly Education Software. �वकलांगों के �लए शै��णक सॉ�वेयर
�New ⇒ National Educational Technology Forum (NETF)
Org: ⇒ for idea exchange on how to use Technology for improving the learning, exams,
NETF administration of school/colleges.

⇒ रा��ीय शै��क प्रौद्यो�गक� फोरम- �श�ा, परी�ा, �ू ल प्रबं धन म� प्रौद्यो�गक� का बेहतर इ�ेमाल
62.2.14 📊📊📊📊Assessment of students (छात्रों का मू�ांकन)
360 degree Holistic Progress Card to track Student Progress (समग्र �वकास काडर् के साथ मू�ांकन प्रिक्रया)
🔠🔠😰😰BEFORE 🔠🔠🤩🤩AFTER
Summative Assessment Exams = We'll encourage Formative Assessment = During the
only at the end of semester / year class- ask oral questions, give homework assignment etc
checking factual / memory based to check student's analytical/critical thinking, and
knowledge. conceptual clarity. [रचना�क आकलन तािक �वद्याथ� क� �व�ेषण
सत्रांत परी�ाएं �जसम� �सफर् याददा� / रटने का और वैचा�रक ��ता को जांच सके ]
मू�ांकन होता है
BOARD EXAM = test of memory & Board exams will test core concept and 'application of
factual knowledge. High stake exam: knowledge'. It'll be made 'low-stake' (e.g. school
life and death situation if 99% not assignments marks may be counted, more admission
scored. बोडर् क� परी�ा: जुए का ऊंचा और opportunities even with low score etc) �वद्याथ� क� रटने क�
जो�खम भरा दांव �जसम� बाजी �जदं गी और मौत क� �मता नहीं िकंतु वैचा�रक ��ता, �ान के अनुप्रयोग को परखा जाएगा. बोडर्
लगी हो. परी�ा म� अ�े गुण ना �मले तो भी “�जदं गी-बबार्द”- उस जो�खम को कम
िकया जाएगा।
62.2.15 📊📊�Assessment of students: bodies (मू�ांकन/परी�ा के �लए सं �ाएं )
�new body National Assessment Centre called 'PARAKH' (Performance Assessment,
Review, and Analysis of Knowledge for Holistic Development) for setting
assessment standards. परी�ा म� मू�ांकन कै से करना है उसक� मानक तैयार करने क� सं �ा
�existing National testing agency will continue to function and will offer common
body NTA entrance exams for admission in various college। अलग-अलग कॉलेजों म� दा�खले के �लए
सामा� प्रवेश परी�ा
62.2.16 📊📊📊📊Assessment of schools (�ू लों का आकलन)
States/UTs to setup State School Standards Authority (SSSA: �ू ल मानक के �लए रा� का प्रा�धकरण).
⇒ These bodies will require schools to disclose information e.g. how many seats/facilities/fees in
your school, how is your school's board exam result etc. → This will � public oversight and
accountability. �ू लों ने अ�नवायर् �प से अपने �वद्या�थयों क� सं �ा, बोडर् परी�ाओं म� प�रणाम, फ�स इ�ािद अलग-अलग
जानकारी देनी होगी �जससे सावर्ज�नक �नगरानी तथा जवाबदेही बढ़ेगी
⇒ School Quality Assessment & Accreditation Framework (SQAAF)= NOTIMP �ू लों के आकलन के
मानक।
62.2.17 �Teachers recruitment and training (�श�कों क� भत� और तालीम)
⇒ by 2030: Minimum degree qualification for teachers = 4-year integrated B.Ed. (�ूनतम यो�ता)
⇒ National Council for Teacher Education (NCTE) + NCERT to design as new framework for
Teacher Education (NCFTE: �श�कों क� तालीम/�श�ा के �लए रा��ीय �परेखा)
⇒ National Council for Teacher Education (NCTE) will design National Professional Standards for
Teachers (NPST: रा��ीय �ावसा�यक मानक)
⇒ Teachers' Recruitment will be made more transparent, merit based promotions, they will be
given more operational freedom in teaching etc. (भत� प्रिक्रया �ादा पारदश�, यो�ता आधा�रत पदो��त, पढ़ाने म�
�ादा �तं त्रता)
⇒ A National Mission for mentoring the (College) teachers. With help of senior/retired
faculty. (व�र�/�नवृ� प्रोफे सरों द्वारा वतर्मान �श�कों को गु��श�ा/तालीम दी जाएगी)
✋ Above fullforms / features not imp for UPSC but for UGC-NET/TAT
62.2.18 �🤑🤑NEP-2020: Funding (�श�ा �ेत्र के �लए �व�पोषण)
⇒ Union Budget’s Expenditure on Education as % of GDP= 2.8% annually from 2014 to 2018.
Then 3% (2019), 3.5% (2020)
⇒ Union+State's total public investment in education currently about 4.4% of GDP. NEP aims to
⏫ to 6% of GDP at earliest. (�श�ा म� सावर्ज�नक �नवेश को बढ़ाकर सकल घरेलू उ�ाद के 6% तक िकया जाएगा)
⇒ We'll expand & reform National Scholarship Portal to cover more SC/ST/OBC, and other
Socially and Economically Disadvantaged Groups(SEDGs) such as women, transgender, etc.
(कमजोर वगर् को छात्रवृ�� देने के �लए �व�भ� सुधार)
⇒ Gender Inclusion Fund to improve education of girl child. (ल��गक समावेशन �न�ध)
⇒ Special Education Zones for disadvantaged regions and groups (�वशेष �श�ा �ेत्र)
⇒ We will encourage private colleges to give scholarship to students (छात्रवृ��)
62.2.19 �👿👿NEP-2020: Criticism (नई रा��ीय �श�ा नी�त के �खलाफ आलोचना/�नंदा)

⇒ Not enough clarity about funding mechanism and fees regulation, so, it'll only encourage
privatization / commercialisation of higher education.(पैसों का कोई ख़ास प्रावधान नहीं. �श�ा का �नजीकरण)
⇒ Not enough focus on girl education, weaker section. क�ा और कमजोर वगर् का �श�ण पे खास �ान नहीं
⇒ Teachers demand related to permanent jobs, good salaries and suitable work conditions not
mentioned. (�श�कों के �लए �ाई नौक�रयां ,अ�� तन�ाह -के बारे म� कोई बात/ �जक्र नहीं )
⇒ Only lip service about emotional needs of the students, depression and suicide due to excessive
competition. (छात्रों क� भावना�क ज�रतों के बारे म� �सफर् िदखावे के �लए �चकनी चुपड़ी बात�)
⇒ Doing Sanskrit promotion for RSS-BJP-Hindutva agenda.(सं �ृत का अनाव�क प्रसार)
⇒ X/Y/Z Good Recommendation of the previous committee/ best practices from the foreign
country are not adopted. (अ� देश और अ� स�म�त क� अ�� बातों को शा�मल नहीं िकया)
62.2.20 ✍NEP-2020: Conclusion (�श�ा नी�त के बारे म� �न�षर्)

 SDG goal#4 aims for inclusive, equitable quality education and promote lifelong learning
opportunities for all. समावेशी, समान गुणव�ा वाली �श�ा और सभी के �लए आजीवन सीखने के अवसरों को बढ़ावा देना।
 With aforementioned reforms, NEP-2020 will surely help in a long way to universalize the
education, reap demographic dividend and achieve SDG Goal#4. उ� सुधारों द्वारा नई �श�ा नी�त वाकई म�
�श�ा के सावर्�त्रककरण, जनसां��क�य लाभांश को हा�सल करने और सतत �वकास ल� म� मदद करेगी/उपयोगी होगी
�❓Which of the following statements is NOT correct regarding the National Education Policy
2020 in India? [Asked in UPSC-IES-2021]
(a) It proposes sweeping changes in the Education system from pre-primary to PhD and skill
development.
(b) universities from among top 100 in the world will be able to set up campuses in India
(c) It expects that India will achieve 60% GER by 2030
(d) It suggests NAAC to be merged with UGC and AICTE
62.3 �🤳🤳PRAGYATA GUIDELINES ON DIGITAL EDUCATION (2020-JUL)
Figure 1: पूरा िदन कं �ूटर पर पढ़ाई करके मेरी आंखे दुख रही है😰😰
⇒ By HRD/Edu-Ministry ई �श�ा के बारे म� िदशा�नद�श
⇒ Corona lockdown= 240 million Indian children unable to go to school.
o Synchronous digital education: This is real-time (live) teaching. (जीवं त प्रसारण)
o Asynchronous digital education: non-real time e.g. article, recorded TV program.
⇒ PRAGYATA guidelines = eight steps of e-learning: Plan- Review- Arrange- Guide- Yak(talk)-
Assign- Track- Appreciate.
Class Screentime Recommendation (Synchronous/ Live classes)
Pre Primary not more than 30 minutes.
Classes 1 to 8 Not more than two lectures of 30-45 minutes each
Classes 9 to 12 Not more than four lectures of 30-45 minutes each on the days
⇒ Further individual school-teachers should not be required to teach more than 2 to 3 hrs of
online/day
⇒ Do's and Don'ts to ensure physical wellbeing (Back pain, eye strain), Mental health and
wellbeing, Cyber safety, Digital privacy. शारी�रक पीठ ददर्, आंखों का तनाव, मान�सक �ा�, साइबर सुर�ा,
िड�जटल गोपनीयता/�नजता।
For more on E-learning, E-Court, E-Diplomacy charms and challenges:
https://unacademy.com/class/economy-pillar1a2-monetary-policy1-money-supply-m1-m4/8FJCUJBT
62.4 📐📐😋😋😋😋😋😋😋😋 EDU → STD1-8 → MID-DAY MEAL SCHEME (MDM-2001-2020)
− Boss? Ministry of Human Resource and Development / Edu Ministry

− म�ान भोजन योजना is a Core Scheme (Not 100% funded by Union). 60:40, 90:10.
− Govt provides foodgrains & ₹ ₹ for buying kitchen utensil, hiring cooks etc.
− MDM gives free hot cooked meal to child in every govt / govt aided school / Madarsas / Maqtabs
(=Islamic school) upto class 8 for min. 200 days a year.
Lower primary (std.1 to 5) Min. 450 Calories and 12 gram of protein
Upper primary (std.6 to 8) Min. 700 Calories and 20 grams of protein
- ++ food security allowance to students if MDM can’t be provided due to non-availability of
food/cooks. [पका पकाया खाना नहीं दे पाए तो ब�े के प�रवार को पैसा िदया जाएगा]
- 🤩🤩Benefit? Ensures nutritional security & class attendance of poor children.
- Sub-component: Tithi Bhojan → People can contribute ₹ ₹ / food / sweets to school children to
celebrate important days such as child birth, marriage, birthdays etc. (लोग शुभअवसरो पे दान म� दे)
😣😣😣😣 MDM Challenges? 1) Siphoning of rations by teachers, slum children run away from school
after taking lunch, food prepared in unhygienic surroundings, 2) goons mix poison / pesticides, 3)
villagers resist hiring of Dalit cooks etc. 4) During Corona, schools closed down but students not
given take home ration or food allowance in many schools.
62.5 📐📐😋😋😋😋😋😋😋😋 EDU → STD1-8 → PM POSHAN (2021-2026)
2021-Oct: Modi announced that above MDM scheme will be known as PM Poshan Scheme:
Mid-Day Meal Scheme PM Poshan (POshan SHakti Nirman)

Covered Class1-8 in Government Same MDM scheme henceforth known as PM Poshan
schools & Government aided Scheme with validity of 2021-22 to 2025-26 (पुरानी योजना
schoolschildren to be given one hot- को आपसे ये नाम िदया है)
cooked meal.
Did not cover Pre-school children (e.g. They’ll also get food under PM Poshan. (पूवर् प्राथ�मक �र के
Anganwadi/Bal-Vatika). Those poor आंगनबाड़ी ब�ों को भी खाना �मलेगा)
kids got free food under ICDS/ Mission
Poshan.
⇒ Tithi Bhojan: community donation Same continued [ये सब जारी रहेगा]
No specific mention [पहले क� योजना म� ऐसा Government to develop school nutrition gardens.
कोई खास �जक्र नहीं था] Schoolkids to grow fruit/vegetables/ grains etc. → use
it their food [�वद्यालय पोषण बगीचे बनाए जाएं गे जहाँ ब�े खुद फल
स�ी इ�ािद उगाएं गे और खाएं गे]
No specific mention [पहले क� योजना म� ऐसा - Cooking competition [खाना पकाने क� �धार्]
कोई खास �जक्र नहीं था] - Farmer producer organizations (FPO: Ref 4A) and
Mid-Day Meal Scheme PM Poshan (POshan SHakti Nirman)
Village self help groups (SHG) to be used for
supplying cooking ingredients. [िकसान उ�ाद सं गठन और
� सहायता समूहों क� मदद भी ली जाएगी]
Social Audio only done in few schools - Compulsory Social Audit for all schools by local
depending on enthusiasm of authority. public e.g. whether school giving proper food to
kids or not? [�ानीय लोगों द्वारा सामा�जक लेखा परी�ण]
- college student may also be used for monitoring.
[�नगरानी के �लए कॉलेज छात्रों क� भी मदद ली जाएगी]
�Criticism: National Education Policy (NEP) 2020 recommended breakfast in schools but not
done in new scheme. [रा��ीय �श�ा नीती म� तो सुबह का ना�ा भी देने क� बात थी, लेिकन नई योजना म� ऐसा नहीं िकया]
62.6 📐📐📯📯📯📯 EDU → STD1-8 → SARVA SHIKSHA ABHIYAAN (SSA-2001)
− Boss? Ministry of Human Resource and Development / Edu Ministry

− Core Scheme (Not 100% funded by Union) मह�पूणर् योजना.
− 2002: 86th Constitutional Amendment Act: inserted (सं वैधा�नक सं शोधन अ�ध�नयम)
○ Article 21A → Fundamental right to free and compulsory education to all children aged
6-14. मु� और अ�नवायर् �प से �श�ा का सभी ब�ों को मौ�लक अ�धकार
○ Article 51A (k) → Fundamental duty of parent/guardian to ensure above thing.(कतर्�)
− 2004: Union created non-lapsable fund (अ�पगत �न�ध) under Public Account ‘Prarambhik Shiksha
Kosh’. It receives ₹ ₹ from the education cess levied on direct taxes.
− 2009: Right of Children to Free and Compulsory Education Act ( �न:शु� एवं अ�नवायर् �श�ा अ�ध�नयम का
बाल अ�धकार) to operationalise above thing. Including 25% reservation to Economically Weaker
Section (EWS) in private schools. (आ�थक �प से कमजोर वगर् के ब�ों को �नजी �ू लों म� आर�ण भी िदया गया)
− 2001: PM Vajpayee had launched Sarva Shiksha Abhiyan (SSA). Over the years it was modified
& updated to achieve aforementioned constitutional & legal obligations. ₹ ₹ for construction of
schools, free uniforms & textbooks, teachers recruitment, computer lab, library etc.
62.6.1 📐📐📯📯📯📯Sarva Shiksha Abhiyan (SSA) → Notable Subscheme / Programs
Name Description
Shagun = Shala + Gunvatta = School quality. So, this portal is for Online
Shagun Portal
monitoring of schools under SSA.
Improve quality of Govt primary schools esp. Class 1 & 2 by
Padhe Bharat
1. Min. 4 hrs per day teaching of maths, reading writing. Extra teaching
Badhe Bharat
hrs / mentoring to students who are weak in it.
(2014)
2. Min. Pupil-Teacher Ratio (PTR) 30: 1
Name Description
3. Min. 200 school working days.
4. Min. 75% attendance of students, Min. 95% attendance of teachers
To improve the foundational literacy and numeracy of Class3 students by
NIPUN BHARAT 2026-27. Nipun Bharat = National Initiative for Proficiency in Reading
2021 With Understanding And Numeracy
तीसरी क�ा के ब�ों पढ़ने और ग�णत क� बु�नयाद को बहेतर करो योजना
Motivate 6-18 years children to pursue Science, Mathematics and
Rashtriya Avishkar
Technology by organizing science melas, extra mentoring to bright students
Abhiyan (2015)
etc.
Involve volunteers like NRIs, retired teachers, govt officials, defence
Vidyanjali personnel, professionals, etc. in primary govt schools for teaching & co-
scholastic activities e.g. play acting, preparing story books
🔠🔠❓MCQ. What is the purpose of Vidyanjali Yojana?(Asked in UPSC-Pre-2017)
1. To enable the famous foreign educational institutions to open their campuses in India.
2. To increase quality of education provided in govt schools by taking help from the pvt sector
& community.
3. To encourage voluntary monetary contributions from private individuals and organizations
so as to improve the infrastructure facilities for primary and secondary schools.
Codes: (a) 2 only (b) 3 only (c) 1 and 2 only (d) 2 and 3 only
62.7 📐📐📯📯📯📯 EDU → STD. 9-12 → RMSA (2009) मा��मक �श�ा
- Rashtriya Madhyamik Shiksha Abhiyan is Core Scheme (Not 100% funded by Union).
- Boss? Ministry of Human Resource and Development / Edu Ministry
- 2007: Union created non-lapsable fund under Public Account ‘Madhyamik and Uchchtar
Shiksha Kosh (MUSK)’. It receives ₹ ₹ from the education cess levied on direct taxes.
- RMSA aims for 100% universal retention upto class 10 by 2020. (=noone should ‘dropout’
before class10, सब ब�ों ने कम से कम दसवीं �श�ा तक पढ़ाई करनी चािहए �ू ल नहीं छोड़ना चािहए)
- ₹ ₹ for building school, library, laboratory, computer lab, toilets & hostels for girls, teachers
recruitment & salary etc.etc.
62.7.1 👻👻🤧🤧🤧🤧🤧🤧🤧🤧CBSE: Syllabus reduction (पाठ्यक्रम म� कटौती)

⇒ CBSE � class 9 to 12 syllabus by 30% for 2020-21 Academic year to � the burden of students
during Corona lockdown
⇒ � Controversy? Federalism, Nationalism, Secularism and other important topics were also
dropped from syllabus. (सं घवाद, रा��वाद, धमर्�नरपे�ता जैसे अ�त मह�पूणर् मुद्दों को अ�ासक्रम से हटाया गया)
⇒ CBSE clarified this is only one time step for 2020-21 only. So in future these topics may be re-
added. (�सफर् एक बार के �लए �लया गया कदम है)
⇒ 2021: Board Exam cancelled ki daily commentary = Mrunal.org/Current
62.8 📐📐📯📯📯📯 EDU → STD. JR.KG TO 12: SAMAGRA SHIKSHA SCHEME (2018)
Before Budget 2018 → After Budget 2018

Boss HRD/Edu Ministry → National Education Previous schemes are henceforth merged into a
Mission with 3 sub-schemes single scheme covering pre-school to std12
1. Sarva Shiksha Abhiyan(SSA), ⇒ It’ll be called Samagra Shiksha Scheme-
2. Rashtriya Madhyamik Shiksha Abhiyan Integrated Scheme for School Education
(RMSA) (�वद्यालय �श�ा हेतु समेिकत योजना)
3. Teacher Education (TE) → and its ⇒ More focus on e-learning, skill
“DIKSHA” digital portal for teachers development, funding, stipend etc.
training. Boss & funding pattern remains the same as
Funding? Centrally Sponsored Scheme → before i.e. 60:40, 90:10
Core Scheme = Not 100% funded by Union.
60:40, 90:10
62.8.1 � 2019: NISHTHA scheme for Teachers training (2019)
⇒ Sub-component under Samagra Shiksha Scheme. [�श�कों क� तालीम के �लए]
⇒ For training of teachers and headmasters. They’ll also be sensitized & trained for gender rights,
PH-students’ rights, and the Protection of Children from Sexual Offences (POCSO) Act.
⇒ NISHTHA – National Initiative for School Heads’ and Teachers’ Holistic Advancement
62.9 EDU (📐📐📐📐) → RANKINGS FOR SCHOOL EDUCATION
62.9.1 Annual Status of Education Report ASER Report by NGO Pratham

ASER Report-2018
- ~70% class3 kids cannot read class2 books or do subtraction.
- ~50% class 5 kids can’t read class2 books. ~70% class 5 kids can’t do division..
- ++ data about How many girls are out of school? how many enroll in private schools? etc.
ASER Report-2019 (Released in 2020-Jan)
⇒ 2019’s report focused on the students in the ‘early years (aged 4 to 8) in rural areas’.
⇒ In Class1: only 16% of students can read text. Only 60% can recognize 2- digit numbers.
However, these figures slightly better among pvt school children than Govt school children.
⇒ Even cognitive skills (सं �ाना�क कौशल) such as sorting images by colour and size, recognising
patterns, identifying human emotion in poster faces etc are less than satisfactory.
⇒ % of girls studying in Govt schools >> in private school.
⇒ Parents send even underage students (4-5 years) to sit in class1 (perhaps to get them free meal).
But such underage students can’t be expected to learn class1 subject matter, as their brain is yet
to develop. अवय� गरीब ब�ों को �सफर् म�ान भोजन के �लए �ू ल म� भेजा जाता है
ASER Report-2020 (Released in 2021-Nov)
⇒ Telephonic survey found that due to Corona

⇒ 1) Admissions in Govt Schools � (ncreased) because during Corona parents lost income so
unable to afford private schools. (कोरोना दौरान आमदनी कम होने के चलते कई माँ बाप ने अपने ब�ों को सरकारी �ू ल
म� दा�ख़ल करवाया है - �ोंिक �नजी �ू ल क� महँ गी फ़�स स�व निह।)
⇒ 2) 30% rural households purchased mobile / tablet to have the child for e-learning Bhatt's
problems persist
⇒ 3) increased reliance on tuitions (ट्यूशन पर �नभर्रता बढ रही ह�)
⇒ Only 1/3rd of the surveyed children had access to online learning; Highlighted sad data about the
digital divide in e-learning. (गरीब ब�ों के पास मोबाइल इं टरनेट लैपटॉप क� सु�वधा नहीं वगैरह)
Table 2: School Ranking → other notable reports। DONOT LOOSE SLEEP
Programme for International Student Assessment (PISA) is a test conducted by
OECD every 3 yrs to check 15-yr-old students in reading, maths and science.
PISA by
- 2009: India got very poor score so boycotted tests in next seasons (2012,
OECD
2015, 2018).
- 2019: India signed agreement with OECD to conduct it in 2021.
Since Govt doesn’t like ASER/PISA methodology (or their findings!!) so NCERT
NAS by
carries out separate National Achievement Survey (NAS) survey to assess kids in
NCERT
class 3, 5, 8 and 10
SEQI by NITI Ayog’s School Education Quality Index (SEQI) - doesn’t have any MCQ
NITI worthy components.
- by EDUCATION Ministry for 2019-20. To monitor performance of school. It
collects data from
- 1) Unified District Information System for Education Plus (UDISE),
PGI by Edu - 2) National Achievement Survey (NAS), 3) Mid-Day Meal.
Ministry - Ranking: It has 10 levels. Level 1 indicates top-notch performance.
No state had reached Level 1. Punjab achieved highest score and Meghalaya
lowest score. �वद्यालय गुणव�ा परी�ण के �लए �श�ा मं त्रालय का PGI सूचकांक �जसम� पं जाब को सबसे
�ादा और मेघालय को सबसे कम अंक �मले ह�
⇒ Ending Learning Poverty report: It defines Learning poverty as being unable
World Bank
to read and understand a simple text by age 10. (शै��णक गरीबी)
⇒ For India, it’s 54.8% of children’s aged 10 suffer from ‘learning poverty’.
Sweden barely 2%
62.10 📐📐�:🧔🧔 EDU → NO DETENTION POLICY & RTE AMENDMENT 2019
- RTE Act 2009: Section 16: ‘No child can be failed till class 8’.
- Although students have to be examined under Continuous and Comprehensive Evaluation
(CCE: सतत और �ापक मू�ांकन) wherein teacher gives them assignments, essay writing, personal
mentoring & remedial classes for weak students. (असाइनम�ट, �नबं ध लेखन, ��गत सलाह)
- But Govt school teachers don’t have time / energy / morale due to low salary / contractual job /
Election / Census / Yoga-day / Khelo India / Mann-Ki-Baat & other auxiliary duties e.g. Bihar
teachers required to do morning patrolling to stop open defecators with torchlight and whistles
under Swatchh Bharat Mission. (ब�त सारी सरकारी सव��ण और योजनाओं के काम �श�क से करवाए जाते ह�)
- So, CCE done for namesake, every student is passed casually till class 8 → students become very
lax in studies → pathetic scores in ASER survey. [�सफर् कागजी िदखावे के �लए ये िक्रया क� जाती थी]
- Finally, Govt woke up & enacted Right of Children to Free and Compulsory Education
(Amendment) Act, 2019 that from now onwards:
I. Regular exam @class 5 and 8. [परी�ा होगी, हवा म� पास करके आगे नहीं चढ़ा द�गे]
II. If student fails → re-test within 2 months → if he again fails → State Govt may hold
(detain) him in the same class for another year. So ‘yes detention policy’ (ब�ा उस
परी�ा म� असफल �आ तो उसी क�ा म� एक साल और रोकना होगा..)
62.11🎓🎓EDU → CBSE CLASS12 RESULT 30:30:40 FORMULA
कोरोना के चलते 10-12th क� बोडर् परी�ाएं �ई रद्द। तो �फर ब�ों को आगे क� क�ा/कोलेज म� दा�ख़ला कै से �मलेगा
Corona-2021: Central Board of School Education (CBSE) cancelled the Class12 board exams.
Student to get marksheet based internal exam using the 30:30:40 formula. How it worked? NOTIMP
62.12📐📐🔠🔠🔠🔠🔠🔠 EDU → NATIONAL TESTING AGENCY (NTA) & NEET
- 2017: रा��ीय परी�ण एज�सी (NTA) setup as an autonomous body under HRD/Edu Ministry, registered
under Indian Societies Registration Act, 1860.
- Initially, NTA given ₹ 25 cr. then it’s supposed to be self-sustained (by charging exam fees)
- Structure:
○ Board of Governors → Chairman: A noted educationist. Members: From the institutes
for which NTA conducts entrance exam. [अ�� एक जानामाना �श�ा�वद होना चािहए]
○ A CEO / Director General for day to day affairs. [रोज़ का काम देखने के �लए]
Earlier CBSE conducted JEE, NEET & UGC NET entrance. NTA’s task is to conduct those exam
(online), and then expand itself to conduct other exams as well. Presently, NTA conducts →
1. Engineering: Joint Entrance Examination (JEE)
2. Medical: National Eligibility Cum Entrance Test (NEET: रा��ीय पात्रता व् प्रवेश परी�ा): twice a year
from 2019. It replaces the erstwhile All India Pre-Medical Test (AIPMT).
a. NEET remains in controversy because of the age limit criteria, stringent security checks,
wrong questions/ wrong translation, alleged injustice to non-English medium students,
Tamilandu Govt opposed. (त�मलनाडु का इ�ाम िक हमारे ग़ैर-अंग्रेज़ी मा�म के ब�ों के साथ अ�ाय)
b. 2022: Maximum age limit for appearing in NEET-UG exam is removed. (आयु मयार्दा ख़� )
3. UGC National Eligibility Test(NET) for Assistant Professorship & Research Fellows: twice a year.
4. Pharmacy: Graduate Pharmacy Aptitude Test (GPAT)
5. Management courses: Common Management Admission Test (CMAT)
6. Hotel Management Joint Entrance Examination
7. National Testing Agency (NTA): to get admission in 45 Central universities.
62.13 📐📐 EDU → HIGHER EDU: COLLEGES & UNI. (उ�तर �श�ा)
RUSA ⇒ Rashtriya Uchchatar Shiksha Abhiyan (RUSA)

⇒ Boss? HRD/Edu Ministry, core scheme not 100% funded by Union.
⇒ ₹ ₹ for new colleges, faculty recruitment, research grants, scholarship etc.
IoE ⇒ Budget 2016: We’ll develop 10 Public + 10 private = 20 Institutions with world
class teaching & research facilities.
⇒ We’ll give them 1000 cr over the next 5 year & call them ‘Institutions of
Eminence’ (IoE) उ�ृ � सं �ान.
⇒ Edu Ministry + UGC invited applications from institutes → N. Gopalaswami
Committee shortlisted SIX IoE (2018): 3 from private + 3 from public.
⇒ 😰😰Controversy because Jio Institute (Reliance Foundation), Pune also
shortlisted as a ‘greenfield project’ but they’ve not even started the institute yet.
Later, they even announced more institutes. Ball by ball
Deemed to ⇒ Based on UGC advise, HRD/Edu Ministry grants “Deemed to be University”
be status to an institute, then it gets freedom in deciding courses, syllabus,
University admissions and fees. [ये सं �ान अपना अ�ासक्रम, प्रवेश�न�त, फ�स इ�ािद तय कर सकता है]
⇒ Deemed Universities can also grant degrees on their own. During UPA raj,
many institutes given this tag, later 40+ found deficient in faculty &
infrastructure so blacklisted.[हालांिक ऐसी क� सं �ाओं म� बु�नयादी सु�वधा और �श�कों क� कमी]
⇒ 2017: SC ordered such institutes can’t use ‘university’ tag. So, Manipal
University need to use the term ‘Manipal Academy of Higher Education’ etc.
Sanskrit Central Sanskrit Universities Act, 2020 to convert following institutions into
Univ 'Central Universities' [क� द्रीय �व��वद्यालय कानून]
- 1) Rashtriya Sanskrit Sansthan, New Delhi,
- 2) Shri Lal Bahadur Shastri Rashtriya Sanskrit Vidyapeeth, New Delhi,
- 3) Rashtriya Sanskrit Vidyapeeth, Tirupati
(✋BUT MORE IMP for UGC-NET exam, less for IAS exam)
62.13.1 📐📐📊📊 Edu → Higher Edu: Ranking by Education Ministry
1. National Institutional Ranking Framework (NIRF) done annually since 2016. Separate rankings
for following categories- overall, universities, engineering, management, college, pharmacy,
medical, architecture, law, dental and research institutions. 2021: Overall #1= IIT Madras.
Research #1 = IISC Bengaluru. College#1: Miranda College.
2. Atal Ranking of Institutions on Innovation Achievements (ARIIA): It gives rankings for different
different types of institutes viz. 1) ranking Centrally funded technical institutions (eg IITs, NITs,
etc) 2) State Universities 3) State Standalone Technical colleges 3) Private Universities 4) Private
Standalone Technical Colleges 5) Non-Technical Government 6) Private Universities. Rank#1
given to IIT -Madras, Panjab University, College of Engineering Pune etc.
3. All India Survey on Higher Education (AISHE)
62.13.2 📐📐📊📊 Edu → Higher Edu: Ranking : Misc

📊📊 NAAC ⇒ National Assessment and Accreditation Council (NAAC) is a body funded by
rating UGC that evaluates colleges & universities on A++ to D rating.
⇒ Edu Ministry provides mentoring to institutions seeking NAAC Accreditation
under a scheme called “Paramarsh”
QS Quacquarelli Symonds (QS) World University Rankings by UK based org
Ranking - Usually following organizations tend to be Top-200 ranking- IIT-Bombay, IIT-
Delhi, Indian Institute of Science (IISc, Bengaluru).
📔📔📔📔ES20: Indian students spend US$ 5.0 billion (2018-19) in foreign universities’ education,
hostel etc. if we want to ⏬current account deficit, we must ⏬ such ‘education (service) imports’.
🔠🔠❓ National Institutional Ranking Framework 2021, ____ got overall top ranking? [IES-2021]
(a) Indian Institute of Technology, Madras (b) Indian Institute of Science, Bengaluru
(c) Indian Institute of Technology, Delhi (d) Indian Institute of Technology, Bombay
62.14👻👻😷😷📐📐🤳🤳 EDU → PORTALS/APPS/ORGS → POST-CORONA
🤳🤳 Abhyas app National Testing Agency (NTA)'s mobile app for IIT-JEE mock tests.
🤳🤳 VidyaDaan 2.0 HRD/Edu Ministry portal To help the educators contribute e-learning
(2020-April) content via DIKSHA portal
🤳🤳 YUKTI 2.0 Young India Combating COVID with Knowledge, Technology and
कोरोना सं शोधन के बारे म� Innovation (YUKTI) is HRD/Edu Ministry's portal for sharing info about:
Research, Innovation, Technologies, Startup (सं शोधन,
नवप�रवतर्न,तकनीक,�ाटर्अप) esp. those related to Corona
🤳🤳Bharat Padhe HRD/Edu Ministry campaign for Crowd sourcing of Ideas for Improving
Online (2020-April) Online Education ecosystem of India
🤳🤳SAMARTH ⇒ It is an open source Enterprises Resource Planning (ERP) software. उद्यम
सं साधन आयोजन के �लए बना सॉ�वेयर
⇒ Helps keeping track of student attendance, teacher salary, fees
collection, exam score etc. It is developed by the HRD/Edu Ministry
⇒ under the National Mission of Education in Information and
Communication Technology Scheme (NMEICT). =Such microscopic
technical preparation = NOTIMP
🎅🎅STARS program ⇒ Who? World Bank, Education Ministry, Department of Economic
by World Bank Affairs (DEA, FinMin),
�व� ब�क द्वारा आ�थक ⇒ What? $500 million to � school education in six States viz Himachal
सहायता Pradesh, Kerala, Madhya Pradesh, Maharashtra, Odisha, and
Rajasthan.
⇒ For Strengthening Teaching-Learning and Results for States' (STARS)
🤳🤳 GOAL Project Facebook + Tribal Affairs Ministry to skilling and mentorship of ST youth
through online mode.
📊📊Global Edu by UNESCO. 2020-June
Monitoring (GEM) Corona affected the access to education od 1.5 billion students across the
Report world. Poor suffered the most because of no access to internet.
Plus lots of data but poor cost-benefit in chasing it
🎅🎅Global launched by UNESCO. 2020-May
Education Coalition To coordinate educational activities during Post-Corona
Yuva 2.0 Competition for the young others to get their book published with the help
of national book trust (NBT)
62.15 📐📐🤳🤳 EDU → MISC. PORTALS / INITIATIVES (BEFORE CORONA)
✋As such Following things more imp4 UGCNET/TAT exams. less so for IAS यूपीएससी म� तो इ�ा-दु�ा
प्र� ही �नकले है. लेिकन अगर म� content नहीं दूंगा तो आपको लगेगा िक दू सरे CA-PDF वाले बेहतर है, भले परी�ा के �लए माल
�ादा उपयोगी न हो 😅😅
62.15.1 📐📐🤳🤳 Edu → Misc: School infra/result monitoring
- To collaborate with NGO, Corporates for sharing innovative
Shaala Saarthi portal
practices running schools. अ�े प्रबं धन प्रणा�लयों को साझा करना
Shaala Siddhi portal - Help the Schools in their self-evaluation. �वद्यालयों का � मू�ांकन
- HRD/Edu Ministry’s portal for Unified District Information on
UDISE+
School Education �जला �र पर �वद्यालय �श�ा क� जानकारी
62.15.2 📐📐🤳🤳 Edu → Misc: E-learning
Digital - ��Budget-2022: we’ll setup a Digital University for students across

country in local languages. So they can earn degree from anywhere in
University
India.
- For digital/online/ on-air (TV) education. It includes →
- One Nation, One Digital Education (DIKSHA) Platform.
PM E-Vidhya
- One Class, One TV channel through Swayam Prabha TV Channels
- ��Budget-2022: we’ll launch these TV channels for Class-1 to 12.
e-Pathshala - Portal By NCERT to provide textbooks in e-books, audiobooks format.
- HRD/Edu Ministry’s free Massive Open Online Courses (MOOCs) portal
SWAYAM for school, college courses. Anyone can join and learn online for free.
Portal - SWAYAM = Study Webs of Active–Learning for Young Aspiring Minds.
- National Programme on Technology Enhanced Learning (NPTEL) is an
Launched in
initiative by 7 IITs + Indian institute of science (IISC). They’ve launched
2017
many free courses on SWAYAM portal.
[मु� म� ऑनलाइन
- 2019: Version 2.0 launched which offers 1) courses translated in Indian
पढ़ाई के �लए] languages 2) online degrees 3) better features etc.
- e-PGPathshala : For credit (marks) database for SWAYAM courses.
- HRD/Edu Ministry’s project to run 32 DTH channels for education e.g.
SWAYAM
‘IITPAL’ TV Channel to assist the class11-12 students prepare for IIT
PRABHA
entrance exam.
- Operation Digital Board (ODB): HRD/Edu Ministry to create minimum 2
ODB
smart classes for every Secondary/Senior Secondary schools by 2023.
E-Gyankosh - massive open online course (MOOC) portal by IGNOU.
E9 Initiative - UNESCO to focus on 9 countries for Digital Education viz. Bangladesh,
Brazil, China, Egypt, India, Indonesia, Mexico, Nigeria and Pakistan. This
will help in achievement of SDG4 – Education by 2030.
- United Nations Educational, Scientific and Cultural Organization is a
specialised agency of UN. (HQ: Paris, France, Founded in 1945)
DigiSaksham - Labour Ministry’s scheme for digital skills for youth with help of Microsoft
NEAT ⇒ by the All India Council for Technical Education (AICTE),
(2019) ⇒ National Education Alliance for Technology (NEAT),
⇒ PPP with ed-tech companies to help the poor students to get computer
related courses and devices. �पछड़े वगर् और ग़रीब वगर् के ब�ों को कं �ूटर के कोसर् और
साधन �मल सके उसके �लए सरकारी योजना
62.15.3 📐📐🤳🤳 Edu → Misc: Anti-ragging / life values/mental health
Manodarpan Edu ministry provides psycho-social support to students, teachers and parents
AntiRagging App by University Grants Commission (UGC) to complaint against ragging.
- HRD/Edu Ministry’s (higher education) Student Induction Programme.
Deeksharambh UGC prepared guidelines for it e.g. setting up mentor groups, physical
2019 fitness & hobby groups, interaction with teacher before start of semester
etc. so freshers become comfortable in college.
Jeevan - UGC designed this Curriculum for Life Skills (Jeevan Kaushal) for
Kaushal Undergraduate to give them Life Skills e.g. communication skill,
interpersonal skill, time management, problem solving ability, decision
making capacity, leadership ability [सं वाद कौशल, समय प्रबं धन, सम�ा �नवारण, �नणर्य
�मता, नेतृ� �मता को बेहतर करने के �लए]
🔠🔠❓ Find correct Statements. [UPSC-IES-2021]
1. NISHTHA is a teachers training program.
2. SVANidhi is a scheme to facilitate artisans to access affordable working capital load.
3. SATYABHAMA is a scheme to promote research and development in science and technology.
4. Manodarpan is a scheme to promote tourism in rural parts of India.
Which of the above statements is/are correct?
(a) 1 and 3 only (b) 2 and 4 only (c) 3 and 4 only (d) 2 only
62.15.4 📐📐🤳🤳 Edu → Misc: Startup ke liye

- National Educational Alliance for Technology (NEAT). HRD/Edu Ministry
NEAT ties up with Edutech companies for personalized learning through
Artificial Intelligence (AI) [कृ �त्रम बु�द्धम�ा क� मदद से ऑनलाइन �श�ा]
- HRD/Edu Ministry’s annual competition inviting youth to develop
Smart
hardware / software solutions to address problems faced by Govt
Hackathon
organizations, PSUs and even NGOs.
2017
- Social Justice ministry to support 1000 Start-ups of Scheduled Caste (SC)
ASIIM, 2020
youth over next 4 years via venture capital fund.
KAPILA - Edu Ministry training college students on how to file patents
62.15.5 📐📐🤳🤳 Edu → Misc: Teachers’ training
ARPIT - Annual Refresher Programme in Teaching for online training of college
initiative faculty. [कॉलेज अ�ापकों क� ता�लम]
EQUIP five - HRD/Edu Ministry’s five year plan to improve higher education in 2019-
year plan 2024. [उ� �श�ा सं �ानों को बेहतर करने के �लए �श�ा मं त्रालय क� 5 साल क� योजना]
62.15.6 📐📐🤳🤳 Edu → Misc: NRI/foreign teachers/students ko bring to India?
VAJRA Ministry of Science & Technology pays ₹ ₹ to get NRI/Overseas scientist

🛫🛫 � faculties to come & teach in India under VAJRA (Visiting Advanced Joint
Research) scheme. [�वदेशों से भारतीय प्रोफे सरों क� अ�ायी घर वापसी]
- HRD/Edu Ministry’s Global Initiative for Academics Network (GIAN)
GIAN Network portal helps students connect with national & foreign faculty, industrialists
for knowledge sharing.[�वद्याथ� देश-�वदेश के अ�ापकों और उद्योगप�तयों से �मल सके ]
Stay in India − HRD/Edu Ministry’s campaign to attract foreign students to study in our
and higher educational institutions. [�वदेशी �वद्या�थयों को भारत म� पढ़ाई के �लए बुलाओ]
Study in India − Through centralised admission web-portal (studyinindia.gov.in)
(2019) − Student awareness seminars, social media campaigns in South-East Asia,
Middle East and Africa. [�वदेशों म� जागृ�त अ�भयान]
− 25-100% fee waivers to meritorious foreign students.[फ�स माफ�/�रयायत]
− �Budget-2020: If foreign student from Asia / Africa wants scholarship,
he’ll have to pass Indian Scholastic Assessment (IND-SAT) online test.
- Related: e-VidyaBharati and e-AarogyaBharati (e-VBAB) Network: It’s
setup by External Affairs Ministry for health-education info exchange with
AFRICAN Countries.
🔠🔠❓MCQ. 'Stay in India and Study in India' is initiated by _ _ _ (UPSC-CDS-2020-ii)
(a) the Ministry of Youth Affairs and Sports (b) the Ministry of Culture
(c) the Ministry of Education (d) the Ministry of Tourism
62.15.7 📐📐🤳🤳 Edu → Misc: Girl students / girl scientists
कु ल �मलाकर ने अपने सभी योजनाएं लड़िकयों/मिहलाओं को वै�ा�नक बनाने के �लए प्रो�ाहन देती है
KIRAN � - Dept of Sci & Tech’ scheme for helping women scientists
- SEPARATELY, Social Justice Ministry has “KIRAN HELPLINE” For
mental health.
- HRD/Edu Ministry’s ‘UDAAN- Giving Wings to Girls’ scheme gives free
UDAAN coaching to 1000 selected girls so they can pass IIT/technical institutes’
entrance exam.
Dept of Sci & Tech’s scheme to encourage girls to join career in Science,
Vigyan Jyoti
Technology, Engineering and Mathematics (STEM)
- Dept of Sci & Tech’s "GATI- Gender advancement through transforming
institutions" to encourage women scientists.
GATI
- British Govt project "Athena SWAN" (Scientific Women's Academic
Network): similar objective & they’re collaborating with GATI
CURIE Dept of Sci & Tech’s scheme to improve R&D infra in women universities.
62.15.8 📐📐🤳🤳 Edu → Misc: Making science/research useful/popular
- Dept of Sci & Tech (DST) and IBM Computer company collaboration to
STEM promote STEM (Science, Technology, Engineering and Mathematics)
learning among students.
Unnat Bharat - HRD/Edu Ministry gives ₹ ₹ to IIT, NIT etc to carry out research /
Abhiyan 2014 consultancy for rural / local problems.
- ISRO to train 60 talented students from Class 9 to Class 12. ₹₹ by
DHRUV
HRD/Edu Ministry (So later some of them could become scientist)
STRIDE Faculty given ₹₹ for research in this Scheme for Trans-disciplinary Research for
India’s Developing Economy (STRIDE)
ECHO Prime Minister’s Principal Scientific Advisor (PSA) → setup EChO Network
for providing leadership training to scientists and researchers.
PMRF Prime Minister Research Fellows by HRD/Edu Ministry
Talented B.Tech / M.Tech / M.Sc students from selected institutes given direct
Ph.D admission in the IITs / IISc + monthly stipend.
IMPRINT India IIT and IISc joint initiative to solve major engineering and technology
challenges of India, started in 2015.
IMPRESS Impactful Policy Research in Social Science (IMPRESS). It gives ₹₹ to social
science research.
SPARC Scheme for Promotion of Academic and Research Collaboration (SPARC)
HRD/Edu Ministry gives ₹₹ for to Joint Research Projects between top ranked
Indian Institutions and globally ranked Foreign Institutions.
NRF − While China and USA spend over 2% of their GDP on research, India
Foundation spends less than 0.7%.
(proposed) − Presently individual ministries give research grants, which results into lack
of coordination, some sectors receive too much attention, some get
neglected. So, (Full) Budget-2019 announced to setup a National Research
Foundation (NRF) to coordination research funding in India.
Further, Ref: Pillar#4 handout → Smart India Hackathon, and truckload of other
schemes for IPR but beyond a point, poor cost benefit.
62.15.9 📐📐🤳🤳 Edu → Misc: National Unity
- HRD/Edu Ministry pairs 1 state/UT with another state on yearly basis e.g.
Ek Bharat
Rajasthan : West Bengal. They organize Youth Exchange, sports, singing-
Shrestha Bharat
dancing, cultural programs etc. → More unity in India & less stone pelting.
- Appointment of Language Teachers (ALT) Scheme: HRD/Edu Ministry to
ALT give ₹₹ for appointment and training of Hindi teachers in North Eastern
States and the Urdu Teachers in States/UTs.
62.15.10 📐📐🤳🤳 Edu → Misc: Civic duties, Adult Edu (प्रौढ़ �श�ा)
- HRD/Edu Ministry Launched on the 70th Constitution day on (26/11/19).
- The portal will be used primarily for holding monthly essay / quiz / poster
Kartavya Portal
making competitions for students for Nagrik Kartavya Paalan Abhiyan- to
create mass awareness about fundamental duties. नाग�रक कतर्� के प्र�त चेतना
Saakshar - HRD/Edu Ministry scheme for achieving min. 80% Adult literacy, &
Bharat 2009 reduce the gap between male-female adult literacy rates.
- Edu ministry scheme for adult-literacy through 4 month coaching course
Padhna Likhna
with help of civil society, NCC Cadets, CSR funding (Ref1C) etc.
Abhiyaan 2020
- Main focus on Aspirational Districts (Ref:4C NITI)
🔠🔠❓MCQ. ‘Unnat Bharat Abhiyan’ aims for ?(Asked in UPSC-Pre-2017)
a) Achieving 100% literacy by promoting collaboration between voluntary organizations and
government’s education system and local communities.
b) Connecting institutions of higher education with local communities to address development
challenges through appropriate technologies.
c) Strengthening India’s scientific research institutions in order to make India a scientific and
technological power.
d) Developing human capital by allocating special funds for health care and education of rural and
urban poor, and organizing skill development programmes and vocational training for them.
🔠🔠❓MCQ. ‘SWAYAM’, an initiative of the Govt of India, aims at: (Asked in UPSC-Pre-2016)
a) promoting the Self Help Groups in rural areas
b) providing financial and technical assistance to young start-up entrepreneurs
c) promoting the education and health of adolescent girls
d) providing affordable and quality education to the citizens for free
62.16 📐📐 EDU → MISC. → YOUTH ORG.
According to the National Youth policy 2014: adolescents=10-19 years, youth= 15-29 years.
62.16.1 Yearbook: Ministry of Youth Affairs And Sports (युवा कायर् और खेल मं त्रालय)
Dept 1) Dept of Youth Affairs 2) Dept. of Sports
Attached / ⇒ National Service Scheme (NSS) is a subordinate organization
Subordinate ⇒ whereas National Youth Corps and Youth Hostel are simply names of
(सं ल� / अधीन�) schemes.
Statutory ⇒ N/A or not MCQ worthy
Autonomous ⇒ Sports Authority of India (SAI)
bodies �ाय� ⇒ National Anti-Doping Agency (NADA), and Dope Testing laboratory.
सं �ान ⇒ National Sports Development Fund
⇒ Nehru Yuva Kendra Sangathan (NYKS-1972)
⇒ National Sports University, Manipur
62.16.2 Youth Schemes= Central Sector Schemes = 100% funded by Union.
Organization Notes
National Cadet Corps ⇒ Boss? Defence Ministry
(NCC-1948) ⇒ Motto: ‘Unity and Discipline’
National Service Scheme ⇒ Boss? Ministry of Youth affairs and Sports.
(NSS-1969) ⇒ Motto: “Not me, but you”. Voluntary Community Service.
1. Nehru Yuva Kendra ⇒ These Congressi-era things are all merged into a new
Sangathan (NYKS) umbrella’ scheme “Rashtriya Yuva Sashaktikaran Karyakram
2. National Youth Corps (RYSK)”
(NYC) ⇒ Boss? Ministry of Youth affairs and Sports
3. Youth Hostel
62.16.3 ⚽�Khelo India Scheme → National Sports Education Board

⇒ Ministry of Youth Affairs and Sports scheme that gives ₹ ₹ to financial help to meritorious
sportsmen, training of the coaches, ₹ ₹ to build stadium and other sports infrastructure,
awareness generation through mobile app, Fit INDIA campaign etc.
⇒ (Full) Budget-2019 announced to setup a National Sports Education Board (रा��ीय खेल �श�ा बोडर्)
under this scheme, for development of sportspersons.
⇒ Yogasana given status of competitive sports.
62.17 📐📐 ✍ CONCLUSION-TEMPLATE-EDUCATION:
⇒ SDG Goal #4: ensure inclusive and equitable quality education and promote lifelong learning
opportunities for all. OR
⇒ India can’t achieve SDG Goal 1 (Poverty removal) or SDG Goal 5 (Gender Equality) without
achieving SDG Goal 4 (education). OR
⇒ Without education, a person can’t lead productive life in a globalising world OR
⇒ Education improves a society’s health and nutritional status, economic growth, population
control, empowerment of the weaker sections.
Aforementioned schemes / initiatives / challenges are important in that regard / need to be addressed
on priority basis. �श�ा प्रा� िकए �बना भारत ल� 1 (गरीबी हटाने) या ल� 5 (ल��गक समानता) प्रा� कर नहीं सकता. �श�ा के
�बना, कोई �� वै�ीकरण क� दु�नया म� उ�ादक जीवन वहन नहीं कर सकता । �श�ा, समाज के �ा� और पोषण क� ��त, आ�थक
�वकास, जनसं �ा �नयं त्रण, कमजोर वग� के सश�ीकरण म� सुधार करती। ऊकत कदम प्रशं सनीय / ऊकत चुनौ�तयों से लड़ना ज�री।
63 💇💇💇 HRD → SKILLING, VOCATIONAL TRAINING, RECRUITMENT
Meaning & Significance:

- (Definition) Skill (कौशल) is the special ability to perform a task in a proficient manner. (िकसी कायर्
को कु शल तरीके से करने क� �वशेष �मता को कौशल कहते है)
- Vocational training is the method to improve a person’s skill for a given trade e.g. Auto repair,
Plumbing, carpentry or welding
- (Definition) Demographic dividend (जनसां��क�य लाभांश) is economic growth potential when the
share of working-age population (कायर्शील आयु क� जन सं �ा ) becomes larger than the dependent
population (आ�श्रत जनसं �ा: below 15 years & above 65). India >65% population is below 35 age.
- (DATA) Periodic Labour Force Survey (PLFS) 2017-18: less than 14% workforce in 15-59 years
has received formal training. Majority of them learned the work through self-experience, family
or on-the-job training. (आव�धक श्रमबल सव��ण- �ादातर भारतीयों ने अनुभव या प�रवार से काम करना सीखा, नौकरी
करने से पहले औपचा�रक तालीम नहीं �मली)
- By 2020, average age of Indian population will be 29 years against USA (40 years), EU (46), Jap
(47). During next 20 years, 1st world’s labour force to decline by 4%, while in India it will
increase by 32%. So we’ve to reap our demographic dividend but that requires skill development.
- In the advanced economies, not more than 25% of the population is engaged in agriculture (
USA 4%, UK 5%, France 14%, Australia 16%). Whereas in India >40%. To shift this
population towards mfg / service sector jobs they must be given skill training.
63.1 � YEARBOOK RECRUITMENT & TRAINING RELATED MINISTRIES
63.1.1 � Ministry of Personnel, Public Grievances & Pensions

का�मक, लोक �शकायत और प�शन मं त्रालय
Dept 1. Department of Personnel and Training (DoP&T)
2. Department of Pensions and Pensioners’ Welfare (DPPW). Associated with
Jeevan Pramaan digital life certificate with help of MEITY Ministry.
(Ref:Pillar-1D)
3. Department of Administrative Reforms and Public Grievances (DARPG:
प्रशास�नक सुधार और लोक �शकायत):
o celebrates Civil Services Day on 21st April since 2006,
o runs CPGRAMS portal for receiving citizen complaints,
o Good Governance index for States 2019: TN>MH >Karnataka.
Attached/ ⇒ Lal Bahadur Shastri National Academy of Administration (LBSNAA) for
Subordinate training IAS Probationers.
⇒ Staff Selection Commission (SSC)
⇒ Institute of Secretariat Training and Management (ISTM)
⇒ Public Enterprises Selection Board (PESB)
⇒ Central Bureau of Investigation (CBI) which obtains powers from the Delhi
Special Police Establishment Act (1946)
Constitutional ⇒ UPSC
Statutory ⇒ Read about following in Detail from Laxmikanth:
⇒ Central Administrative Tribunal (CAT) from 1985
⇒ Central Vigilance Commission (CVC) setup in the 60s based on the
Santhanam Committee on Prevention of Corruption, given statutory status
in 2003.
⇒ Central Information Commission (CIC) under the Right to Information Act,
2005
⇒ Lokpal act in 2013 → 1st Lokpal Justice Pinaki Chandra Ghose in 2019.
Autonomous National Recruitment Agency (NRA)
⇒ to conduct the Common Eligibility Test (CET) to screen/shortlist candidates
for Staff Selection Commission (SSC), Railway Recruitment Boards (RRBs)
and Institute of Banking Personnel Selection(IBPS).
⇒ Based on the score obtained in the CET, candidates may appear in the
domain-specific tests by SSC, RRBs & IBPS respectively for the actual
recruitment.
63.1.2 👮👮 � 🤳🤳 Mission Karmayogi: Training of Civil servants (2020-Sept)
Mission Karmayogi:- National Programme for Civil Services Capacity Building (NPCSCB) To
implement this, Govt employees will be trained for new India. Govt will setup….
- 1) Public Human Resources (HR) Council headed by Prime minister
- 2) setup a not-for-profit company Special Purpose Vehicle company for e-training
- 3) � Integrated Govt Online Training-iGOT Karmayogi Platform.
✋more details not important, unless PubAD is your optional subject
63.1.3 � Yearbook: Ministry of Labour and Employment
Dept ⇒ N/A
Attached/ ⇒ Director General Employment
Subordinate ⇒ Chief Labour Commissioner
⇒ Labour Bureau: It publishes Consumer Price Index Numbers for industrial
and agricultural rural workers.
⇒ Directorate General of Mines Safety (DGMS)
Statutory ⇒ Employees State Insurance Corporation (ESIC)
⇒ Employees Provident Fund Organisation (EPFO)
⇒ Central Govt Industrial Tribunal-cum-Labour Courts under the Industrial
Disputes Act 1947
Autonomous ⇒ V.V. Giri National Labour Institute, UP
CPSE ⇒ N/A or not MCQ worthy
63.2 💇💇💇 �[YEARBOOK] MINISTRY OF SKILL DEVELOPMENT & ENTREPRENEURSHIP
कौशल �वकास और उद्य�मता मं त्रालय consists of <list not exhaustive>
Dept N/A
Attached offices Directorate General of Training: to see Industrial Training Institute (ITI)
in State/UT have common syllabus, training modules
Statutory Bodies − N/A
Related company − National Skill Development Corporation (2008).
Autonomous body − 30+ Sector specific Skill Councils e.g. Beauty & Wellness Sector Skill
Council, Construction Skill Development Council, Furniture &
Fittings Skill Council etc.
Non-Statutory − National Council for Vocational Training (NCVT 1956)
regulatory body − National Skill Development Agency (NSDA 2013)
through gazette 2020: Govt merged above two bodies into a non-statutory regulatory
body known as ‘National Council for Vocational Education and
Training (NVCET)’
63.3 (💇💇💇)→ NSDC, NSDF, NSDA, NSQF, NCVET
- 2008: National Skill Development Corporation (NSDC: रा��ीय कौशल �वकास �नगम) setup as a not-
for-profit public limited company with shareholding: 49% from Skill Ministry + 51% from
private sector ASSOCHAM, CII and FICCI etc.
- 2009: National Skill Development Fund (NSDF-�न�ध) operated by Skill Ministry → NSDC. It
receives ₹ ₹ from various schemes & private donors → ₹ ₹ given to various ministries for
running their skill development programs.
- 2013: National Skill Development Agency (NSDA-एज�सी) Autonomous Body under Skill
Ministry. It’s responsible for:
- Preparing National Labour Market Information System (LMIS) database.
- National Quality Assurance Framework (NQAF) to ensure that the coaching training
courses’ syllabus / methods are actually useful for the jobs requirements in present and
future. (सु�न��त करना क� जो �सखाया जा रहा है वह असल म� नौकरी/धं धे म� उपयोगी है िक नहीं?)
- National Skills Qualifications Framework (NSQF: रा��ीय कौशल यो�ता फ्रे मवकर् ) to organize
learners’ qualifications according to a levels of knowledge, skills and aptitude, including
the Recognition of Prior Learning (RPL: पहले क� �वद्वता क� मा�ता). For example:
Sample NSQF Framework →
Sector Job title & Code NSQF Training Job Description & Skill Set
Level hrs
Beauty & Assistant Hair 3 150 An Assistant Hair Stylist shampoos
Wellness Stylist and conditions hair, blow dries hair,
(BWS) (BWS/Q0201) provides basic hair cuts as well as
assists the hair stylist.
Hair Stylist 4 300 In addition to above skills, he can do
(BWS/Q0202 ) advanced hair styling, color the hairs,
scalp massage etc.
63.3.1 � NCVET 2018 (�ावसा�यक �श�ा और प्र�श�ण के �लए रा��ीय प�रषद)
− ‘National Council for Vocational Education and Training (NVCET)’ under Skill Ministry, is a
non-statutory regulatory body setup through Gazette notification.
− NCVET will have Chairman + members.
NCVET will be responsible for
1. Advise on short term long term vocational programs / syllabus etc.
2. Overseeing the Sector Skill Councils (SSCs), Skill certification / assessment bodies.
3. Those SSCs will supervise ground level vocational training institutes: their recognition,
regulation, inspection, certification etc. So, NCVET will be an ‘indirect regulator’ of the ground
level vocational training institutes.
4. Grievance redressal, research, awareness generation and information dissemination and
grievance redressal.
63.4 (💇💇💇)📯📯📯📯 SKILL INDIA CAMPAIGN (2015: कौशल भारत अ�भयान)
Boss? Ministry of Skill Development and Entrepreneurship. 4 components
1. National Skill Development Mission 2015→
a. 2017: SANKALP (Skills Acquisition and Knowledge Awareness for Livelihood
Promotion) → To set up new training institutes, improve infrastructure of existing
institutes, Training of the trainers/assessors, encourage women, SC/ST/PH to join
programs. Core Scheme = States required to contribute some money.
b. 2017: STRIVE (Skill Strengthening for Industrial Value Enhancement) → To improve
the National Skill Development Corporation (NSDC), National Skill Development
Agency (NSDA), etc. Central sector scheme = States not required to contribute money.
c. World Bank is giving ₹ ₹ support to both the schemes.
2. Skill Loan scheme: Students given bank loan from ₹ 5,000/- to ₹ 1,50,000/- to join skill
programs. (�वद्या�थयों को कौशल प्र�श�ण के कोसर् करने के �लए ब�क से लोन / क़ज़ार् �मले)
a. Loan tenure upto 7 years, Interest rate varies as per bank.
b. Bank will not charge processing/application fees, bank will not demand collaterals.
c. National Credit Guarantee Trust Company Ltd (NCGTC, under Department of
Financial Services) gives credit guarantee.
d. Govt / Bank ‘MAY’ give interest subsidy, if they want.
3. National Policy for Skill Development & Entrepreneurship 2015. Shortnote below
4. Pradhan Mantri Kaushal Vikas Yojana (PMKVY) scheme. Shortnote Given below
63.4.1 (💇💇💇)📯📯📯📯 Skill India3 → National Policy for Skill Dev. & Entrepreneurship 2015
- India’s Social-traditional view sees ‘Graduation Degree’ as a status. Vocational training
programs such as mason, carpenter, hair stylist, bicycle repairman are seen as the last option for
academically ‘weak’ students. We’ll generate awareness to break this taboo & inferiority complex
(हीन भावना को समाज से हटाया जाए क� वे��ंग-�ं �बगं का काम पढ़ाई म� कमज़ोर ब�े ही करते ह�).
- We’ll try to add vocational skilling programs from class9 itself. (�ू ल से ही �सखाना शु� कर�गे)
- When Govt offers ‘free’ skill training, students don’t take it seriously (सरकारी कौशल कायर्क्रमों म� भी
थोड़ी ब�त फ़�स ल�गे, एकदम-मु� म� निह पढ़ाएँ गे, तािक प्र�श�ु �वद्याथ� उस तालीम को गं भीरता से ले।)
- We’ll do sector-wise skill gap analysis, update training syllabus, train the workforce accordingly
with Recognition of Prior Learning (RPL- पहले से �मली सीख / कौशल क� मा�ता).
- IT based monitoring, evaluation, placement (ऑनलाइन �नगरानी, तालीम के बाद रोज़गार िदलवाना)
- New ITIs will be set up in PPP mode. (सावर्ज�नक �नजी भागीदारी म� नए ITI खोल�गे)
63.4.2 (💇💇💇)📯📯📯📯 Skill India4 → Pradhan Mantri Kaushal Vikas Yojana (PMKVY)
Boss? Skill Ministry → ₹ ₹ to National Skill Development Corporation (NSDC) and State
Government’s State Skill Development Missions.
⇒ Centrally Sponsored Scheme → Core Scheme = Not 100% funded by Union.
⇒ Target: 40 crore people in India in different skills by 2022., through following components:
1) Short Term 150-300 hrs training at public sector Training institutes (e.g. ITI,
Training (STT): Polytechnics) and empanelled private sector training institutes. These
लघु अव�ध क� तालीम centres will be designated as ‘Kaushal Vikas Kendra’.
2) Recognition of Those who already have learned from job / informal training / personal
Prior Learning experience e.g. Tailors, Masons, Plumbers, Cobbler, Hair Stylist, etc.
(RPL: पहले क� �वद्वता Their skills are tested, they’re given certificate. So accordingly they may join
क� मा�ता) ‘bridge courses’ to enhance their skills without needing to join basic level
courses.
Special Project launching training programs in sectors / persons not covered in Short Term
Training (STT). (�ज�� यिद लघु अव�ध क� तालीम न �मल पाई, उनके �लए ख़ास कायर्क्रम का)
++ Training mela, rozgar mela, tracking of how many people got placement, etc.
63.4.3 💇💇💇)📯📯📯📯 Skill India4 → PMKVY phase 3.0 (2020)

⇒ Pradhan Mantri Kaushal Vikas Yojana (PMKVY) Phase 1.0= 2015-16
⇒ Phase 2.0= 2016 to 31/3/2020
⇒ Phase 3.0=target to training 8 lakh people in 2020-21. in this phase, more powers given to
district administration to cater local demand. �ानीय उद्योगों क� ज़�रत के िहसाब से कौशल �वकास कायर्क्रमों के
आयोजन के �लए �जला प्रशासन को अ�त�र� स�ा/छू ट दी गई
🔠🔠❓MCQ. Find correct about Pradhan Mantri Kaushal Vikas Yojana: (UPSC-Pre-2018)
1. It is the flagship scheme of the Ministry of Labour and Employment.
2. It, among other things will also impart training in soft skills, entrepreneurship, financial and
digital literacy.
3. It aims to align the competencies of the unregulated workforce of the country to the National
Skill Qualification Framework.
Codes: (a) 1 and 3 only (b) 2 only (c) 2 and 3 only (d) 1, 2, and 3
63.5 (💇💇💇)📯📯📯📯 SKILLING → SHREYAS SCHEME (2019)
Boss? HRD/Edu Ministry’s Scheme for Higher Education Youth in Apprenticeship and Skills
(SHREYAS) scheme aims to cover 50 lakh students by 2022 in 3 ways:
1. SHREYAS Webbportal to connect Non-Technical college youth (BA/Bcom/BBA type) with
industries so they can join apprenticeship, earn stipend & increase their employability. Govt to
pay 25% of stipend (upto max₹ 1500 per month), rest by the industrialist.
2. Launching B.A (Professional), B.Sc (Professional), B.Com (Professional) etc. courses - They’ll
contain educational input + vocational input + a mandatory apprenticeship for 6-10 months
3. Colleges without ‘campus recruitment / placement’ facilities- they’ll be connected with Labour
Ministry’s National Career Service (NCS) portal so their students can find jobs/placement.
63.5.1 👻👻👻👻👻👻(💇💇💇)Skilling → Post Corona / Atma-Nirbhar
NMIS ⇒ Home Ministry → National Disaster Management Authority

(NDMA) : online Dashboard - National Migrant Information System
(NMIS). (कोरोना म� घर लौटे प्रवासी मज़दू रों क� ऑनलाइन �नगरानी)
⇒ It can help coordinating the transport/train arrangements for migrants
to return back home. And also for monitoring the spread of COVID
SWADESH ⇒ SWADES (Skilled Workers Arrival Database for Employment Support)
2020-June is a joint initiative by Skill Ministry, Aviation Ministry and External
Affairs Ministry
⇒ It's a skill mapping exercise of the returning citizens under the Vande
Bharat Mission (from foreign countries during Corona).
⇒ Returning Workers will fillup online SWADESH Skills card. → Data
shared with companies → Job placement
⇒ �वदेशों से वतन वापस आए भारतीय श्र�मकों का कौशल मान�चत्रण
ASEEM ⇒ Aatamanirbhar Skilled Employee Employer Mapping (ASEEM) portal
2020-Jul ⇒ by Skill Ministry → by National Skill Development Corporation
(NSDC) with help of a Bengaluru startup company "Betterplace".
⇒ To map regional details of workers vs local industry demands.
⇒ This will help govt to analyse the migration patterns and implement the
skill development courses श्र�मकों का �ववरण बनाम �ानीय उद्योग म� श्र�मकों क� मांग।
⇒ ��Budget-2022: we’ll connect the data of Udyam (MSME
registration), e-Shram (unorganised sector workers registration), NCS
(apply biodata online) and ASEEM portals → this will help in
employment generation
SAKSHAM DST (Department of Science & Technology) → TIFAC (Technology
(Shramik Shakti Information, Forecasting and Assessment Council)→ portal for laborers’
Manch) skill mapping, skill cards, conneting with employers for jobs.
Shramshakthi ⇒ Tribal Affairs Ministry’s portal for migrant workers.
Portal ⇒ Objective? connecting them with other schemes for employment &
skill development. श्र�मकों को रोज़गार कोश� क� अ� योजनाओं से जोड़ने के �लए।
PM-DAKSH ⇒ For skilling of marginalized persons including scheduled castes,
backward classes and safai karamcharis.
IISC Network ⇒ India International Skill Centre (IISC- a body under Skill Ministry) To
provide Indian workers to foreign countries.
⇒ For this, IISC signed agreements with Germany, Belarus, United
Kingdom, France, Australia, Japan and Qatar etc.
DESH-Stack eportal ⇒ ��Budget-2022: DESH-Stack e-portal: for on-line training for skill
development.
🔠🔠❓MCQ. ASEEM is _ _ _ _. (UPSC-CDS-2020-ii)
(a) Aatmanirbhar Skilled Employee Employer Measurement (b) Aatmanirbhar Skilled Employee
Employer Mapping (c) Aatmanirbhar Skilled Employee Enterprises Medium
(d) Automatic Skilled Employee Employer Mission
63.6 (💇💇💇)📯📯📯📯 SKILLING & ENTREPRENEURSHIP → BEFORE CORONA
YuWAAH ⇒ UNICEF project for skill development of adolescent and young Indians,
2019 labelled "Generation Unlimited India"
Pradhan Mantri - Boss? Skill Ministry
Yuva Udyami - Just the usual stuff- Connect the aspiring entrepreneurs with peers,
Mitra Vikas mentors, funding and business services. Setup incubators & training centres
Yojana (YUVA)
in colleges, ITI
Ref Pillar1D & Pradhan Mantri Mudra Yojana, Stand up India Loan Scheme
4B: Startup India Scheme, PM Rojgar Protsahan Yojana etc
Startup Village - Boss? Rural Development Ministry. Helps the rural poor to start business.
Entrep.ship - It’s a subcomponent of Deendayal Antyodaya Yojana – National Rural
Programme Livelihoods Mission (DAY-NRLM).
National Career 2015: Labour Ministry set up an online portal & offline centres to help ITI /
Service diploma / graduate job seekers connect with job givers. Organize rozgar melas,
spread career awareness etc.
National - Boss? Skill Ministry. After Youth has completed basic training in Industrial
Apprenticeship Training Institutes (ITIs) / Kaushal Vikas Kendra, then Industrialist takes
Promotion him as apprentice ((शा�गदर् / प्र�श�ु)), trains him in practical aspects, pays
Scheme stipend.
2016 - Govt pays part of the stipend.
- Target: ⏫ apprenticeship training to 50 lakh youth by 2020. Online
registration of apprentice, centralized monitoring, exam & certification.
Apprenticeship Under the Apprenticeship Act, Govt has notified these rules:
Rules - minimum monthly stipend: ₹5,000 for school pass out class5-9 and ₹9,000
for graduate
- 10-15% hike in stipend for 2nd and 3rd year of apprenticeship
Disturbed areas Rural Development Ministry (ग्राम �वकास मं त्रालय) →
अशांत �ेत्र - HIMAYAT: skill development in J&K
- ROSHNI: skill development in Naxal / LWE areas.
Minorities Minorities Ministry (अ�सं �क मं त्रालय) →
अ�सं �क - USTTAD: Upgrading the Skill and Training in Traditional Art craft for
Development
- Nai Manzil: Madressa students, school-dropouts given additional training
so they can get jobs.
- Nai Udan, Naya Savera: free coaching / stipend for competitive exams.
- Learn And Earn (Seekho Aur Kamao)
Yukti Yukti - Yogya Kalakriti ki Takneek: HRD/Edu Ministry’s scheme for skill
development of traditional craftsman
Women - Social Justice Ministry: National Backward Classes Finance & Development
Corporation (NBCFDC) → Mahila Samriddhi Yojana → Concessional
Loans for female entrepreneurs.
- Department of Financial Services → credit guarantee through NCGTC ltd
→ Standup India: SC/ST & Women entrepreneurs given loans from 10 lakh
to 1 cr in each SCB Bank branch.
- Women Child Ministry →
- PM Mahila Shakti Kendra for skilling & availing scheme benefits.
- Support to Training & Employment Program for Women (STEP)
Scheme
Jan Shikshan Skill Ministry’ vocational training centres for school dropouts & illiterates.
Sansthan Previously under HRD/Edu Ministry, it was called Shramik Vidyapeeth.
📊📊India Skill Survey conducted by Pvt orgs. & funded by AICTE, UNDP etc.
Report 2019 - More than 50% MBA and >40% of B.Tech/B.E are unemployable (रोज़गार के
�लए अयो�) because they do not have the skills required by the industries.
- Overall, ~53% of youth coming out of higher educational institutions are
unemployable. Although it is improvement compared to previous years.
Global Skills Park India’s first Global Skills Park is to be setup in Madhya Pradesh by Union Govt
(2018) + loans from Asian Development Bank (ADB)
Reskilling World Economic Forum's initiative to provide 1 billion people better edu, skills
Revolution & jobs by 2030. India joined as founding member (2020-Jan)
MNGF Skill Ministry gives Mahatma Gandhi National Fellowship (MNGF) to young
professionals for helping district level officials in skill dev programs.
ISDS Skill Ministry created this new Group A service, Indian Skill Development
Group ‘A’ Service Services (ISDS: भारतीय कौशल �वकास सेवाएं ). They’ll be recruited through Indian
Engineering Service Examination, conducted by UPSC. First batch taken in
2019, and undergoing training at Mysuru.
63.7 (💇💇💇)✍ CONCLUSION-TEMPLATE-SKILL (कौशल �वकास के बारे म� �न�षर्)
- According to India Skill report 2019 more than 50% of youth with college degrees are
unemployable. To reap the demographic dividend of India, it is therefore necessary to focus on
the vocational training and skill development. OR
- SDG Goal 8 requires India to provide full, productive & decent work/employment for all. A
person without skill remains either unemployed, disguisedly unemployed or underemployed.
Aforementioned schemes / initiatives / challenges are important in that regard / need to be
addressed on priority basis.
भारत के जनसां��क�य लाभांश को प्रा� करने के �लए, �ावसा�यक प्र�श�ण और कौशल �वकास पर �ान देना आव�क है। सतत
�वकास ल� प्रा�� हेतु सभी के �लए पूणर्, उ�ादक और स� रोजगार उपल� कराने क� आव�कता है। �बना कौशल वाला �� या तो
बेरोजगार रहता है, प्र�� प से बेरोजगार रहता है। उ� योजनाएँ / पहल / चुनौ�तयाँ उस सं बंध म� मह�पूणर् ह� / प्राथ�मकता के आधार पर
सं बो�धत करने क� आव�कता है।
🔠🔠❓MCQ. Find correct statement(s) about ‘National Career Service’: (Pre-2017)
1. National Career Service is an initiative of the Dept of Personnel and Training, Govt of India.
2. National Career Service has been launched in a Mission Mode to improve the employment
opportunities to uneducated youth of the country.
🔠🔠❓MCQ. To obtain demographic dividend, what should India do? (Asked in UPSC-Pre-2013)
(a) Promoting skill development (b) Introducing more social security schemes
(c) Reducing infant mortality rate (d) Privatization of higher education
📄📄Next Handout Pillar6C: Poverty – measurement and removal
PILLAR#6C- POVERTY, INEQUALITY, MGNREGA & OTHER SCHEMES
Table of Contents
64 🤲🤲💸💸 HRD → Poverty (गरीबी) ............................................................................................................... 1110
64.1.1 🤲🤲🤲🤲🤲🤲Vicious Circle of Poverty (गरीबी का दुष्चक्र/�वषचक्र) ..................................................... 1112
64.1.2 🤲🤲🤲🤲Economics Nobel 2019 for Global Poverty Alleviation ............................................... 1112
64.2 🤲🤲💸💸📏📏 Poverty → Measurement / Estimation (गरीबी का �नधार्रण) ................................................ 1113
64.2.1 🤲🤲💸💸📏📏 Videshi methods → World Bank: ~21% Indian juntaa is poor ........................... 1113
64.2.2 🤲🤲💸💸📏📏 Videshi methods → UNDP-MPI: ~16% Indian juntaa is poor .......................... 1113
64.3 🤲🤲💸💸📏📏 Videshi methods → Inequality (असमानता )..................................................................... 1114
64.3.1 🤲🤲🤲🤲🤲🤲World Inequality Report 2022: ................................................................................ 1115
64.3.2 🤲🤲💸💸📏📏 Oxfam Inequality Index वै��क असमानता सूचकांक ....................................................... 1115
64.3.3 🙇🙇🙇♀Period Poverty (मा�सक धमर् के चलते गरीबी) ............................................................................... 1115
64.4 🤲🤲💸💸📏📏 DESHI methods: (BPL: गरीबी रेखा से नीचे) ........................................................................... 1116
64.4.1 🤲🤲💸💸📏📏 DESHI methods → SECC-2011 ............................................................................. 1116
64.4.2 🤲🤲💸💸📏📏 deshi methods → NITI-MPI: ~25% Indian juntaa is poor ................................. 1118
64.4.3 🤲🤲💸💸📏📏 deshi methods → 📊📊📊📊📊📊📊📊 Bare Necessities Index (BNI) By 📙📙📙📙ES21
1118
64.4.4 📊📊📊📊📊📊📊📊 BNI index Findings (सूचकांक से �ा त� सामने आए?) ............................................ 1120
64.4.5 📊📊📊📊📊📊📊📊 ✍BNI index Analysis: Conclusion / Significance? [�न�षर् /मह�] ............... 1121
64.5 📙📙📙📙📙📙⚡👷👷 ⏫Economic Growth to ⏬poverty says 📙📙📙📙ES21 ................................... 1121
64.5.1 📙📙📙📙📙📙⚡👷👷 Trickle Down in China [आ�थक वृ�द्ध का नीचे क� ओर टपकना] ............................ 1122
64.5.2 📙📙📙📙📙📙⚡👷👷 Moderate Inequality =NOT BAD! Says ES21 .......................................... 1123
64.5.3 📙📙📙📙📙📙⚡👷👷 Conclusion: Eco Growth⏫ → Poverty⏬ ............................................ 1123
64.6 🤲🤲💸💸 Poverty → Poverty Removal (गरीबी उ�ूलन) ........................................................................... 1123
64.7 🤲🤲🤲🤲:📯📯📯📯 Poverty Removal → MGNREGA (2005) ............................................................... 1124
64.7.1 🤲🤲🤲🤲:📯📯📯📯 Poverty Removal → MGNREGA Problems/Corruption ............................ 1125
64.7.2 🤳🤳MGNREGA: Use of JAM-DBT ............................................................................................ 1125
64.7.3 🤳🤳MGNREGA: Use of Space technology (अंत�र� प्रौद्यो�गक� का उपयोग) ...................................... 1126
64.7.4 🤳🤳MGNREGA: Use of Apps ..................................................................................................... 1126
64.7.5 📔📔📔📔 MGNREGA: Future suggestion by ES19? (अ� सुझाव दी�जए) ....................................... 1126
64.7.6 👻👻(🧱🧱⛏:💸💸🤲🤲�)Atma-Nirbhar → PM Garib Kalyan Rojgar Abhiyaan (GKRA) .... 1127
64.7.7 🤲🤲🤲🤲:📯📯📯📯 Poverty Removal → National Livelihood Missions =Skill+Loan .............. 1127
64.7.8 🤲🤲🤲🤲:📯📯📯📯 Poverty Removal → DISHA Committees (2016)........................................ 1128
64.7.9 🤲🤲🤲🤲:📯📯📯📯 Poverty Removal → Mission Antyodaya (2017) ......................................... 1129
(Batch: PCB7) Mrunal’s Economy Pillar#6C HRD: Poverty , Inequality, MGNREGA & Other Schemes → Page 1109
64.7.10 🤲🤲🤲🤲:📯📯📯📯 Poverty Removal → SMILE 75 (�भखारी-मु� हो 75 शहर) ............................ 1129
64.8 🤲🤲🤲🤲:📯📯📯📯 Poverty Removal → Directly give ₹ ₹ → UBI ...................................................... 1129
64.8.1 👌👌 UBI: Pro-Arguments by Eco Survey (इस सुधार के प� म� तकर् ) ................................................. 1129
64.8.2 👎👎 UBI: Anti-Arguments by Eco Survey (सावर्�त्रक बु�नयादी आय �वरोधी तकर् ) ................................. 1130
64.9 �💸💸💸💸Poverty Removal: DBT → E-Rupi ................................................................................... 1131
64.10 🤲🤲🤲🤲:✍→ Conclusion-Template-Poverty (�न�षर्- गरीबी �नवारण)............................................ 1131
64.10.1 ✍Past Questions in UPSC Mains Exams ........................................................................... 1131
64 🤲🤲💸💸 HRD → POVERTY (गरीबी)
Definition: Poverty is the lack of sufficient money to meet the minimum standard of living-
including food, clothing, shelter, health and education. भोजन, कपड़े, आश्रय, �ा� और �श�ा सिहत जीवन के
�ूनतम �र को पूरा करने के �लए पयार्� धन/पैसों क� कमी को गरीबी कहेते है।
Factors responsible for poverty in India
1. Poor fiscal capacity of the govt due to tax evasion and avoidance versus large population →
Public healthcare, education, housing, water & sanitation infra is poor →
a. Educational outcomes are poor → illiteracy, lack of vocational skills → Unemployment,
Underemployment, Disguised Unemployment.
b. Unhygienic slums → Disease → wages lost, savings lost, school days lost.
2. Lack of family planning → ⏫ birth-rate → child labour → education. अ�धक ब�े पैदा करना, बाल
मजदू री
3. Large family → insufficient food → malnutrition → insufficient mental & physical capacity to
pursue better economic opportunities. कु पोषण के चलते शारी�रक और मान�सक �वकास नहीं, पढ़ाई म� �ान नहीं
4. Unprofitable nature of agriculture due to vagaries of monsoon & structural bottlenecks in the
APMC Market. िकसानों का मं डी म� शोषण
5. Low asset base: Most of the rural households don’t possess land, milch animals, farm machinery
or sufficient bank deposits in the first place- it reduces their capacity to generate self-
employment / business opportunities. Vicious trap of low savings → low investment → low
income. Such poor parents are unable to provide better education to children → 2nd
generation is also deprived of economic opportunities. सं प�� कम है, इस�लए �पता अपने भ�व� क� पीिढ़यों के
�लए अ�� श�ा म� �नवेश नहीं कर सकता
6. Lack of financial planning: wasting money in Tobacco, Liquor, Social Rituals, Pilgrimages.
7. Lack of financial inclusion, debt trap by informal money lenders. सा�कारों का �ाज चक्र
8. Majority of labour engaged in unorganized / informal sector: minimum wages are not enforced.
9. Insurance density is poor. Most workers lacking social security → Once the breadwinner dies /
permanently handicapped → family pushed into poverty. बीमा और सामा�जक सुर�ा का अभाव
10. Social barriers faced by SC / ST / Minorities in advancing economically in rural area.
11. Female Labour Force Participation Rate is low. Maternity Benefits Act, Equal Wages Act not
strongly enforced. Gender inequality in education & nutrition → females’ energy and talent
mostly confined to unpaid domestic work → family unable to come out of poverty. (श्रमबल म�
मिहला सहभा�गता दर कम है, इस�लए वह अपने प�रवार के �लए �ादा धन कमा नहीं सकती)
12. Misgovernance, Terrorism, Secessionism in the Special Category States → infrastructure,
industries and tourism remained underdeveloped. In mineral rich states economic growth & per
capita income is high (due mining activities) but Left Wing Extremism, Mining Mafia, Weak
governance → Poor infrastructure → lack of economic opportunities for poor. कु शासन आतं कवाद
उग्रवाद के चलते कु छ �ेत्र �पछड़े अ�वक�सत रहे है, इस�लए वहाँ के लोग गरीब
13. Corruption / leakages in the poverty removal programs. Failure of the Finance Commission &
Planning machinery to hold the state governments accountable. भ्र�ाचार और स��डी का �रसाव
14. Economic survey 2016 observed that after independence
a. USA did not give Universal Voting Rights to all people immediately (women and blacks
were excluded initially) → USA pursued pro-industrialist policies → growth.
b. China, Indonesia, S.Korea: Democracy / Voting rights ‘on paper only’ → They pursued
pro-industrial policies without trying to appease all linguistic, religious or caste groups
→ growth.
c. India: voting rights to all immediately after independence → ….
15. While both India & China adopted ‘Five Year Plans’ system but China began LPG-like reforms
in 80s itself so its economy grew very fast. Whereas India kept industrialists under license, quota,
inspector raj; archaic factory laws & labour laws without ease of doing business. → More Jobs
could not be created in mfg. sector.
64.1.1 🤲🤲🤲🤲🤲🤲Vicious Circle of Poverty (गरीबी का दुष्चक्र/�वषचक्र)
⇒ Poor person doesn’t have enough money to buy good food / education → his productivity
remains low → he doesn’t have enough money.
⇒ low level of development in Less Developed Countries (LDCs: अ� �वक�सत देश) is also explained
through the vicious circle on supply and demand side:
Supply Side ( आपू�त) Demand Side (माँग)
Poor person has low income → low savings Low income → low demand by poor families (of
→ low investment / capital → he can’t start mobiles, TV, fridge) → low capital investment by
or expand business to increase his income companies / factories due to lack of customers →
→ more poverty less new jobs → more poverty
64.1.2 🤲🤲🏆🏆Economics Nobel 2019 for Global Poverty Alleviation
⇒ Originally, Nobel Prizes were given for 1) Physics, 2) Chemistry, 3) Physiology or Medicine, 4)
Literature, and 5) Peace. From the fund created by Swedish inventor Alfred Nobel.
⇒ 1968-69: Bank of Sweden started giving “Sveriges Riksbank Prize in Economic Sciences”. So,
technically not a Nobel Prize, but it’s nicknamed as “Nobel for Economics”
⇒ 2019: Abhijit Banerjee (born in Mumbai, teaches at Massachusetts Institute of Technology, USA)
& his wife Esther Duflo (France) and Michael Kremer (USA) received for “experimental
approach to alleviating global poverty." ("वै��क गरीबी को कम करने के �लए प्रयोगा�क ��कोण।")
⇒ They’ll receive 9 million Swedish krona, to be shared equally between the Laureates.
2019’s winner suggested we shd divide poverty issue into smaller & manageable questions such as:
⇒ “How can we improve educational outcomes? → extra classes for the weak students
⇒ ”How can we improve child health?” → � vaccination→ give foodgrains to parents if they
bring child for vaccination.
Economics Nobels in Research Topic Winners (no need to loose sleep if u can’t
last.2 years remember their names.)
2021 Labour economics David Card, Joshua D Angrist and Guido W
Imbens
2022 Banks' role in Ben S. Bernanke, Douglas W. Diamond, Philip
financial crises H. Dybvig
64.2 🤲🤲💸💸📏📏 POVERTY → MEASUREMENT / ESTIMATION (गरीबी का �नधार्रण)

64.2.1 🤲🤲💸💸📏📏 Videshi methods → World Bank: ~21% Indian juntaa is poor
⇒ World Bank’s International Poverty Line (IPL) stands at person living daily on US$1.90 (PPP
exchange rate).
⇒ So, a person who spends less than an absolute amount ‘US$1.90’ a day is considered ‘below IPL
line’ → classified as poor.
⇒ So, spending $1.90 is non-poor while $1.89 is poor. This is an example of “Absolute Poverty” (
�नरपे� �नधर्नता ) measured with an artificial line. The result is usually expressed in Poverty Head
Count Ratio (HCR) कु ल �ानीय ��यों का अनुपात i.e. proportion of a population that lives, below
this poverty line.
⇒ 2011: India’s 21.2% population classified as poor by World Bank’s method. In absolute figures,
India was the home to largest number of people below IPL. But, 2018 Nigeria took over India.
⇒ 📊📊World bank aims to eliminate extreme poverty by 2030. In this context, they published
reports titled ‘ Poverty and Shared Prosperity ’ in 2016, 2018,2020
⇒ 📊📊😷😷World Bank’s ‘ Poverty and Shared Prosperity-2020 report noted: Coronavirus may push
150 million into poverty by 2021. Also criticized India for that lack of latest data on poverty, But
appreciated Mumbai Dharavi slum community support to poor families during the Corona.
Side note: Relative Poverty (सापे� �नधर्नता): Households are arranged in ascending order of annual
income → Households earning less than x% of median income is classified as poor. (e.g. UK uses
x=60%) Thus it measures poverty ‘relative’ or ‘compared‘ to how much others are earning.
64.2.2 🤲🤲💸💸📏📏 Videshi methods → UNDP-MPI: ~16% Indian juntaa is poor

- As per World bank definition, if a person is spending $1.91 per day, he is NOT Poor. Although,
he would be suffering from many deprivations.
- Multidimensional Poverty Index (MPI ब�आयामी �नधर्नता सूची) looks beyond income to understand
how people experience poverty in multiple ways.
- prepared by United Nations Development Programme (UNDP) and the Oxford Poverty and
Human Development Initiative (OPHI)
- Household survey with set of 10 questions spread across 3 dimensions viz. health, education and
standard of living. E.g.
- A) Health → 1) nutrition, 2) child mortality
- B) Education → 3) years of schooling 4) school attendance
- C) Living standards → 5) cooking fuel (dung, wood, charcoal or coal) 6) sanitation 7)
drinking water 8) electricity, 9) housing 10) household assets (e.g. radio, TV, telephone,
computer, animal cart, bicycle, motorbike, refrigerator, car or truck?).
- These 10 Qs are assigned different weights add data → UNDP arrives at MPI Head count ratio.
Year 2005-06 2019-21 (Report published in 2022-Oct)
MPI: % of poor in India 55% 16.4%
- India moved 41.5 crore people out of the MPI poverty during 2005-2021 भारत करोड़ों लोगों को गरीबी से
बाहर लाने म� सफल रहा है.
- largest number of poor people in the world: #1 India (22.8cr) #2: Nigeria.
- globally, 19.1% (=120 crore) people live in MPI poverty
🔠🔠❓MCQ. The Multi-dimensional Poverty Index of UNDP covers following?( UPSC-Pre-2012)

1. Deprivation of education, health, assets and services at household level
2. Purchasing power parity at national level
3. Extent of budget deficit and GDP growth rate at national level
64.3 🤲🤲💸💸📏📏 VIDESHI METHODS → INEQUALITY (असमानता )

Gini − Italian statistician Corrado Gini(1912)’s a formula for measuring
Coefficient inequality. Its associated graph is called ‘Lorenz Curve’
− 0 or 0% = perfect equality; 1 or 100% = perfect inequality.
− World Bank, Credit Suisse, and other international organizations use it to
measure inequality.
− India Gini coefficient degraded from 81% (2013) to 85% (2018), which
proves inequalities increasing in India.
Global Wealth − By Credit Suisse, an Investment banking company of Switzerland.
Report − Inequality is high in India. richest 10% of Indians own more than 70% of
the country’s wealth.
− More than 70% of Indians have personal wealth below $10,000.
Inclusive − Prepared every two years (biennial ) by UN Environment, to measure
Wealth Report sustainability of economy and wellbeing of their people. Last report was
समावेशी धन �रपोटर् prepared in 2018.
Global Social ⇒ By World Economic Forum (WEF) from 2019 onwards
Mobility Report ⇒ IF children can experience a better life than their parents, then the country
वै��क सामा�जक has +ve social mobility.
ग�तशीलता �रपोटर् ⇒ It measures– access to health, education, technology access, work
opportunities, social protection etc.
⇒ 2020: report launched for the first time. Ranking #1 Denmark> #2 Norway
> #3 Finland>...#76 India>....#82: Ivory Coast
64.3.1 🤲🤲🤲🤲🤲🤲World Inequality Report 2022:

by World Inequality Lab (Paris based research org), with economists Thomas Piketty etc.
⇒ 1) World’s richest 10 per cent own around 60-80 per cent of wealth and the poorest half
systematically own less than 5 per cent of wealth (�व� असमानता �रपोटर् म� पाया गया िक पूरी दु�नया क� 60-80
प्र�तशत क� सं प��- के वल 10% अमीरों के क़�े म� ह� जबिक सबसे ग़रीब लोगों के पास पूरी दु�नया क� 5% सं प�� भी नहीं है)
⇒ 2Women today get just one-third of all labour income in the world.
⇒ Suggested more tax on rich. (अमीरों पर �ादा कर लगाया जाए ऐसी �सफ़ा�रश)
⇒ India ‘very unequal’: The bottom 50% population earned less than Rs 55,000 per year, while the
top 10% Indian population earned over Rs 11 lakhs per year.
FAQ: “this data is not matching by the NSO data given in Pillar4C Handout. Ans. This data is
collected by a non-govt organisation based in foreign nation!
64.3.2 🤲🤲💸💸📏📏 Oxfam Inequality Index वै��क असमानता सूचकांक

⇒ UK’s NGO Oxfam International’s ‘Commitment to Reducing Inequality (CRI) Index’
⇒ It measures Govt’s ‘seriousness’ in reducing inequality by 3 dimensions 1) Govt’s spending on
social sector 2) progressive taxation 3) labour rights.
⇒ 2018 Ranking: #1: Denmark, #147: India, #157: Nigeria (lowest)
⇒ 2020-Jan: Oxfam presented a report in WEF-Davos summit that 1% Indian hold four times more
wealth than 70% of poor and it would take a female domestic worker in India 22,277 years to
earn what a top CEO of a technology company makes in one year.
⇒ 2021-Jan: Report Theme ‘The Inequality Virus’: Rich Indians’ wealth �by 35% during
lockdown = ₹13 trillion- This amount is large enough to give cheque of ₹94,000 to each poor
person / run Health ministry for 10 years/MGNREGA scheme for 10 years. E-learning business
for exponential growth Whereas poorest 20% families mein only 9% have internet. Coronavirus
spread higher in poor families because live in congested unhygienic place, common
toilet/water/spitting points.
64.3.3 🙇🙇🙇♀Period Poverty (मा�सक धमर् के चलते गरीबी)

⇒ It's a concept about how social taboo/hygiene issues surrounding menstruation period prevent
women from rising to their true potential in education and employment. मा�सक-धमर् के साथ जुड़े �ए
सामा�जक-�नषेध और ��ता क� सम�ाओ के चलते मिहला �श�ा-रोजगार म� उनक� वा��वक �मता को हाँसील नहीं कर पाती
अत: पु�षों क� तुलना मे 'गरीब' रह जाती है।
⇒ Menstruating girls miss school because they don’t have access to sanitary products / separate
toilets to change pads at school.
⇒ Chhaupadi = an ancient practice in rural Nepal. Menstruating women forced to live in separate
mud huts → death due to infection / illness.
⇒ 2020: Scotland- first country to issue a bill/law for providing free sanitary products to women, to
end period poverty. India has 0% GST on Sanitary napkins, UK also abolished sales tax on it.
⇒ 2021: “Udaan” free sanitary napkin distribution scheme of Rajasthan for all females.
64.4 🤲🤲💸💸📏📏 DESHI METHODS: (BPL: गरीबी रेखा से नीचे)

Alagh Committee Adult daily calories intake: 2100 (Urban), 2400 (Rural). If a person is not
(1979) getting this much calorie he is Below Poverty Line (BPL)
Lakdawalla:1993 Calories Intake + Clothing + Shelter
Suresh Tendulkar Setup by Planning Commission, this Committee defined poverty line at
committee monthly per capita expenditure Rural@₹816 per month (approx. ₹27 per
(2005-09) day), Urban@₹1000 (approx. ₹33 per day).
यिद आप शहर म� रहते ह� - Then, State specific poverty line are updated using the CPI inflation
और एक महीने म� हज़ार figures, as a result, official poverty line ₹ amounts for each states may
�पया भी ख़चर् नहीं कर पाते differ due to varying price level. हर रा� के �लए ये �ा�ा थोड़ी अलग हो सकती है
तो आप ग़रीबी रेखा के नीचे - As per Tendulkar method, % of Indians living below poverty line are:
है 21.9% (All India), 25.7% (Rural India), 13.7% (Urban area) in 2011-12.
- NITI & Modi Govt use this figure in all official documents.
- State/UT that have higher % poverty than National 21.9%: Uttar
Pradesh < Madhya Pradesh < Assam < Odisha < Bihar < Arunachal
Pradesh < Manipur < Jharkhand < Dadra & Nagar Haveli <
Chhattisgarh (most poor)
C. Rangarajan Setup by Planning Commission, this Committee suggested poverty line
(2012-14) @monthly expenditure for family of five: ₹ 4860 (Rural), ₹ 7035 (Urban).
🔠🔠❓MCQ. In a given year in India, official poverty lines are higher in some states than in other because (Pre-2019)
a) Poverty rates vary from state to state b) Price levels vary from state to state
c) Gross state product varies from state to state d) Quality of public distribution varies from state to state
64.4.1 🤲🤲💸💸📏📏 DESHI methods → SECC-2011

Socio Economic Caste Census (साम�जक आ�थक एवं जा�तगत जनगणना)
− SECC is different from poverty lines because SECC’s primary objective is not to ‘measure’
poverty but rather ‘eligibility’ of a family for Govt schemes. ग़रीबी नहीं, सरकारी योजनाओं म� आपक� पात्रता
देखी जा रही है
− SECC is different from Population Census (जनगणना )because under Population Census Act, 1948
Govt must keep individual's personal information confidential. But SECC is done outside of it, so
personal information can be uploaded online (e.g. Mr.X is given ₹ ₹ for PM Awas Yojana because
he was found eligible in SECC)
− SECC 2011 was a paperless census done by electronic devices.
− Nodal? Rural Development Ministry, Below them→
o Rural area → Rural Development Ministry
o Urban area → Urban Affairs Ministry
o Caste Census component → Registrar General & Census Commissioner, India (Home
Ministry)
SECC-2011 classified (rural) Households were classified into three categories:
Automatically excluded 7 Deprivation Indicators Automatically included in a
अभाव के 7 सं के त SCHEME if
1) Motorized vehicle/ 1) Landless households earning 1) Households without
fishing boat. from manual labour? shelter
2) Kisan credit card with 2) One room house with kuccha 2) Destitute / living on alms
limit of over Rs. walls & roof? (�नरा�श्रत / �भ�ु)
50,000/-. 3) No adult (18-59 aged) member 3) Manual scavengers
3) If govt employee / in household? 4) Primitive Tribal Groups
owner of non-agro 4) No literate adult in household? (आिदम जनजातीय समूह)
enterprises / earning 5) Female headed household with 5) Legally released bonded
>10k/per month no adult male member? labourers (बं धुआ मजदू र )
4) Paying income tax 6) Households with only PH
/Professional tax. members?
5) 3 or more rooms with 7) SC/ST Households?
pucca walls and roof.
6) Owns a
refrigerator/Owns
landline phone.
7) Owns more than “x”
acre of land
7 cr. (~39%) out of 18 cr 11 cr. (~43%) rural households 16 lakh (~0.9%) rural
rural households here here. households here
If a govt scheme is using SECC-2011 data then
 Left column-walla: automatically excluded (�त: बाहर करना) from scheme benefit.
 Right column-walla: automatically included.
 Middle column-walla: included based on how deprived they are. So household with more ‘yes
tickmarks’ will get first preference in allotment of PM Awas Yojana, PM Ujjwala cylinder
connection etc. over a less deprived households (वं �चत प�रवार).
− PM Jan Arogya Yojana (₹ 5lakh annual health insurance) also uses SECC data to cover 8 cr rural
+ 2 cr urban = 10 cr families.
− During SECC (Rural) survey → Households were asked questions → results displayed at Gram
Sabha → others can ‘counter’ it (like Mr. X is not a destitute but has mercedes car!) →
reverification.
− SECC (Urban) methodology slightly different but we need not PHD. Further, Govt has not
released the ‘Caste census’ portion of this SECC (fearing demands for inclusion / exclusion of a
caste based on above data)
64.4.2 🤲🤲💸💸📏📏 deshi methods → NITI-MPI: ~25% Indian juntaa is poor
- 2021-Nov: NITI Aayog prepared India’s own first ever MPI Index.
- This Multi-dimensional Poverty Index (MPI)’s calculation methodology is inspired by MPI-
index of UN Development Programme (UNDP)+Oxford Poverty and Human Development
Initiative (OPHI)
- NITI has collected data indirectly through National family health survey (NHFS-4: 2015-16)
- NITI’s MPI Index has 3-Dimensions (– health, education, and standard of living): Each given
equal weight). Total 12 Questions: nutrition, school attendance, years of schooling, drinking
water, sanitation, housing, bank accounts etc.
Figure 1: % total population of India who are multidimensionally poor and deprived in each indicator
- Highest Poverty: 1) Bihar (52% Population is poor) 2) Jharkhand (42% Population), 3) Uttar Pradesh
(38% Population), 4) MP (36%) 5) Meghalaya (32%)
- Lowest Poverty? Kerala (0.71%), Goa (3.76%), Sikkim (3.82%), Tamil Nadu (4.89%) and Punjab (5.59%)
(नी�त आयोग का ब� आयामी ग़रीबी-�नधर्नता सूचकांक। �ा� �श�ा और जीवन �र के तीन आयामों पर कु ल �मलाकर 12 अलग अलग प्र�ों के
आधार पर लोगों क� गरीबों को नापा जाए इसम� �बहार झारखं ड और उ�र प्रदेश म� सबसे �ादा प्र�तशत लोग गरीब/�नधर्न है)
64.4.3 🤲🤲💸💸📏📏 deshi methods → 📊📊📊📊📊📊📊📊 Bare Necessities Index (BNI) By 📙📙📙📙ES21
⇒ Nobel Winner Economist Dr. Amartya Sen defines poverty as a failure to achieve certain
minimum basic needs. Therefore, access to “the Bare Necessities” such as Food, Housing,
Water, Sanitation, Electricity, Clean Cooking Fuel are a Sine-Qua-Non / Prerequisite for
poverty alleviation and a decent life. [अम�र् सेन के िहसाब से ग़रीबी का मतलब है �ूनतम ज़�रतों या �मताओं को
हा�सल करने म� �वफलता. अत: ग़रीबी उ�ूलन के �लए भोजन, आवास, पेयजल, ��ता, �बजली इ�ािद ज़�री/ �ूनतम
आव�कता क� चीजे/सु�वधाए लोगो को �मले यह अ�नवायर् है]
⇒ So, 📙📙📙📙ES21Vol1Ch10 prepared a Bare Necessities Index to quantify this approach. (उ�
सोच/ ��कोण के मात्रा�क �प से मू�ांकन के �लए आ�थक सव��ण ने बनाया है ‘ज़�री आव�कता / बु�नयादी आव�कता
सूचकांक’)
⇒ With 5 Dimensions viz., water, sanitation, housing, micro-environment, and other facilities and
26 indicators.
5 26 indicators (सं के तक). [Note: following table contains only
dimensions[आयाम] notable/imp/exam-worthy indicators, & NOT all 26 indicators.]
💦💦1) Water 📊📊Indicators: (सं के तक)
पानी ⇒ Source of Water? tanker-truck/ river, dam, stream etc [आपके घर म� पेय जल
कै से हा�सल करते ह� ],
⇒ Distance from water source [आपका घर पेयजल स्रोत से िकतना दू र है],
⇒ Method of collection: through tap, carrying pot over head etc. [पानी कै से
जमा करते है? नल से, सर पे मटके पे लाते है?]
🔍🔍Implications: [प्रभाव /असर]
If water source away from home→ Water hauling→ daughters' education
suffers, since they will have to fetch water. [यिद पेय जल का स्रोत घर से ब�त दू र होगा -
लड़िकयों क� �श�ा म� हा�न, �ोंिक उ�� रोज़ पानी भरने के �लए दू र दू र तक चलते जाना होगा]
📯📯Related Scheme: Jal Jeevan Mission for Piped water supply
🚽🚽2) Sanitation 📊📊Indicators: nature of toilet, whether exclusive use for household /
��ता community toilet? etc [शौचालय का प्रकार]
🔍🔍Implications of Open Defecation: [खुले म� शौच का मानव जीवन पर प्रभाव /असर]
⇒ Infection, Disease, IMR/MMR [खुले म� शौच से बीमा�रयां / मृ�ु]
⇒ safety and modesty, ⏬School attendance of girls, women
Unconsciously ⏬Intake of food and water so as to avoid going in the
daytime → Malnutrition. [सुर�ा और ग�रमा को �ान म� रखते �ए िदन के समय खुले म�
शौच म� न जाना पड़े इस�लए लड़िकयाँ �ू ल नहीं जाती, मिहलाएँ भोजन और पानी कम लेती है �जसे
कु पोषण क� सम�ा बढ़ती है]
📯📯Related Scheme: Swachh Bharat Mission
🏠🏠3) Housing 📊📊Indicators: House condition, Nature of wall and roof etc. [मकान और छत क�
मकान आवास ��त]
🔍🔍Implications: Dilatated House = vulnerability to Crime, Disaster,
Diseases. [जजर्�रत मकान म� अपराध, आपदा, और बीमा�रयों का प्रभाव/भे�ता �ादा]
📯📯Related Scheme: Pradhan Mantri Aawas Yojana
🦟🦟4) Micro- 📊📊Indicators:
Environment ⇒ Drainage system of the household [गटर �व�ा का प्रकार]
सू� पयार्वरण ⇒ flies/mosquitoes problem during the last 365 days. Did govt authorities
came to tackle that problem? [म�र क� सम�ा के �लए �ा �पछले एक वषर् म� सरकार
मदद करने आयी थी?]
🔍🔍Implications: Vulnerability to Diarrhea jaundice malaria etc. [उ� सु�वधाएँ
नहीं होंगी तो बीमा�रयों का प्रकोप �ादा]
5 26 indicators (सं के तक). [Note: following table contains only
dimensions[आयाम] notable/imp/exam-worthy indicators, & NOT all 26 indicators.]
🍜🍜5) Other 📊📊Indicators:
facilities ⇒ 🔌🔌Electricity (📯📯Related Scheme: Saubhagya Yojana)
अ� सु�वधाएँ ⇒ 🍜🍜Cooking fuel: LPG, firewood, dung cake (📯📯Related Scheme:
Pradhan Mantri Ujjwala Yojana) [रसोई म� इ�ेमाल होने वाले �धन का प्रकार]
⇒ 🍜🍜Kitchen type [रसोईघर का प्रकार], Bathroom [�ानगृह का प्रकार]
🔍🔍Implications:
⇒ Wood / charcoal / dung / kerosene → Indoor air pollution → Mother
and child health ⏬। लकड़ी /गोबर = घर म� वायु प्रदू षण के चलते �ा� को नुक़सान
⇒ Firewood / dung collection: 1) Girls / daughters' education suffers in this
labour. 2) Deforestation. �धन के �लए लकड़ी बटोरने के च�र म� बेिटयों क� �श�ा को
हा�न , जं गलों क� कटाई से पयार्वरण को नुक़सान
⇒ Electricity =Mobile internet television radio usage⏫: Education of
child, Democratic awareness of adults. �बजली उपल� होगी तो मोबाइल इं टरनेट
टेली�वज़न का प्रयोग बढ़े, �जससे ब�ों क� �श�ा तथा वय� म� देश दु�नया के समाचार और
चुनावी/लोकतां�त्रक जागृ�त बढ़ती है
⇒ Based on availability of above facilities → Arithmetic Mean (Average) → Bare Necessities
Index score will be computed → score range from 0 to 1. (उ� सु�वधाओं क� उपल�ता के िहसाब से औसत
�नकाला जाएगा और एक सूचकांक बनेगा)
⇒ Higher the score/value of index, better is the access to the bare necessities (सूचकांक म� �जतने �ादा
मा�र् �मल�गे वो अ�� बात होगी)
⇒ green, yellow and red, colors will be used in the maps show the level of a State in providing
access to bare necessities to its households. (भारत के नक़्शे पर �व�भ� रंगों म� इसे अंिकत िकया जाएगा)
⇒ Using above data, 📙📙📙📙ES21also created sub-indices such as Drinking Water Accessibility
Index, Sanitation Index etc [उ� डेटा क� मदद से आ�थक सव��ण ने कु छ और भी घटक-सूचकांक बना िदए जैसे पेयजल
उपल�ता सूचकांक, ��ता सूचकांक इ�ािद]
64.4.4 📊📊📊📊📊📊📊📊 BNI index Findings (सूचकांक से �ा त� सामने आए?)

😍😍Highest progress Kerala, Punjab, Haryana, Gujarat, Uttarakhand, Delhi, Goa, Mizoram,Sikkim
😢😢Lowest progress Odisha, Jharkhand, West Bengal and Tripura (इन रा�ों म� प्रग�त अ�� नहीं)
Area wise Score is better for urban areas than rural areas (गाँव के मुक़ाबले शहरों म� ज़�री-
आव�कताएं अ�धक मात्रा म� उपल�)
⇒ Economic Survey appreciated schemes for ⏫ bare necessities such as Swachh Bharat Mission
(SBM), National Rural Drinking Water Programme (NRDWP), Pradhan Mantri Awaas Yojana
(PMAY), Saubhagya, and Ujjwala Yojana. [ज़�री आव�कता उपल� करवाने म� मोदी सरकार क� �व�वध योजनाओं
क� प्रशं सा क� गई- आ�थक सव��ण द्वारा]
⇒ BNI has ⏫ for all the states from 2018 (Modi-raj) compared to 2012 (Congress Raj).
Consequently, from 2012 to 2018’s National Family Health Surveys show ⏬in infant mortality,
health outcomes improved etc. Here 📙📙📙📙ES21’s tone is similar to Thalinomics (Ref Pillar4C).
कु ल �मलाकर 2012 क� तुलना मे 2018 म� ज़�री आव�कता सूचकांक म� बढ़ोतरी �ई. जो दशार्ती है िक कांग्रेस सरकार क� अपे�ा
मोदी सरकार ने बेहतर काम िकया. इससे पहले महँ गाई वाले थालीनो�म� मुद्दे म� भी आ�थक सव��ण कु छ ऐसी ही बात� कर चुका है.
64.4.5 📊📊📊📊📊📊📊📊 ✍BNI index Analysis: Conclusion / Significance? [�न�षर् /मह�]

🤩🤩Tracking BNI will help in following ways [इस सूचकांक पे �नगरानी रखने से �न� फ़ायदे होंगे]
⇒ SDG monitoring. E.g. Goal 6 focuses on water and sanitation, Goal 7 electricity and clean
cooking fuel. (सतत् �वकास ल�ों म� भारत क� प्रग�त पर �नगरानी म� मदद)
⇒ Schemes implementation can be improved with real time monitoring, geo-tagging of assets,
social audit, direct benefit transfers wherever possible. (इस सूचकांक द्वारा �मले आंकड़ों को देखते �ए �व�भ�
योजनाओं को �ादा प्रभावी �प से, �ादा सतकर् ता से लागू िकया जाए।)
⇒ Improved the Transparency, Accountability, Good-Governance. (पारद�शता, जवाबदेहीता और सुशासन म�
मदद होगी)
64.5 📙📙📙📙🤵🤵⚡👷👷 ⏫ECONOMIC GROWTH TO ⏬POVERTY SAYS 📙📙📙📙ES21

⇒ Inequality= degree of gap in the distribution of assets, income or consumption among people. [
असमानता यानी क� ��यों क� सं प��, आमदनी तथा उपभोग म� िकतनी खाई/ �वषमता है]
⇒ Poverty = Very low assets, income, consumption. It could be measured in relative terms or in
absolute terms. ��ES21 argues that our focus should be to remove Absolute poverty. [ग़रीबी
यानी सं प�� आमदनी उपभोग क� कमी। ऐसे ही ग़रीबी सापे� या �नरपे� हो सकती है। आ�थक सव��ण �नरपे� ग़रीबी हटाने क�
वकालत करता है]
⇒ Critics argue that capitalism, rapid economic growth increases inequality- as evident in USA-
IT/Tech companies’ CEOs earning million$ while many young Americans forced to do two jobs
just to pay the home loan/education loans. Etc. [तेज आ�थक वृ�द्ध से असमानता बढ़ती है. अमरीका म� एक तरफ़
कं पनी के CEO मोटी तन�ाह पाते ह�, जबिक कई आम नौजवान अपने क़ज़र् चुकाने के �लए दो अलग अलग नौक�रयां करने को
मजबूर।]
Thus, there is an inverse relationship between economic growth and equality.
However, 📙📙📙📙ES21Vol1ch4: argues that:
⇒ Income Redistribution = taxing the rich→ using the money for poverty welfare. [अमीरों के कराधान
क� रक़म से ग़रीब क�ाण योजनाएं चलायी जाए- तो आय का पुन�वतरण होता है ]
⇒ � GDP growth→ more rich people→ � Tax collection→ � more income redistribution
possible. In other words, if size of GDP pie chart grows bigger, then more people will be lifted out
of poverty. [आ�थक वृ�द्ध से अमीरों क� सं �ा बढ़ेगी तो कराधान क� आमदनी बढ़ेगी= �जससे आय का �ादा पुन�वतरण सं भव]
⇒ However, � GDP growth = � inequality = gap between the rich & poor may increase e.g.
poor person’s income may � by 10% while rich people’s income may � by 200%. आ�थक वृ�द्ध से
आय क� असमानता तो बढ़ेगी.
⇒ But, we’ve to � GDP growth to remove absolute poverty / BPL e.g. not able to spend even
Rs.1000 per month in city area. िक�ु िफर भी हमने आ�थक वृ�द्ध को बनाना है तािक �नरपे� �प से ग़रीबी को कम िकया
जा सके .
⇒ American Political philosopher John Rawls: Govt should prefer a distribution system which
maximizes the income of the poorest and provides basic liberties. So, ��ES21 uses his
argument to justify that even if economic growth increases inequality still, it helps poor people
earn more money so economic growth is desirable. अमरीक� राजनै�तक �चंतक जॉन रो� के मुता�बक़- सरकार ने
ऐसी पुन�वतरण �व�ा प्रणाली बनानी चािहए �जसम� अ� प्रणा�लयों क� तुलना म� गरीबो को �ादा रक़म तथा बु�नयादी �तं त्रता
�मल रही हो. इस तकर् के आधार पर आ�थक सव��ण सुझाव देता है क� आ�थक वृ�द्ध को तेज़ी से बढ़ाने क� को�शश करनी चािहए
�ोंिक भले तेज आ�थक वृ�द्ध से आय क� असमानता बढ़ेगी िक�ु िफर भी ग़रीब के हाथ म� पहले से �ादा पैसा आएगा.
��ES21 then wrote lengthy paragraphs about Maxmin principle, game theory, Feldstein's
⇒ [�
experiment, permanent income hypothesis- but that much academic depth gives poor cost:
benefit from exam point of view. so we will not invest more time]
64.5.1 📙📙📙📙🤵🤵⚡👷👷 Trickle Down in China [आ�थक वृ�द्ध का नीचे क� ओर टपकना]
⇒ Trickle Down= Economic growth→ � when rich people’s wealth �→ they will do more
investment shopping→ � jobs, income for workers. जब अमीरों क� सं प�� बढ़ेगी तो अमीर �ादा �नवेश और
ख़रीदारी कर�गे �जससे गरीबों को रोज़गार और अ�त�र� आमदनी �मलेगी।
⇒ While some critics argue that “trickle down” does not work very efficiently in real life because
rich person continues to underpay the poor, even if rich person’s own income continues to
increase. Etc. therefore economic growth does not trickle down to the poor people. हालाँिक कु छ
आलोचकों का मानना है िक इस तरह से आ�थक वृ�द्ध गरीबों क� ओर बहती/टपकती नहीं, �ोंिक चाहे आ�मर पहले से �ादा अमीर हो
जाए, वह ग़रीब को पहले से �ादा तन�ाह नहीं देता।
⇒ However, World Bank research found China’s economic growth have really trickled down
because Chinese government initiated following reforms 1) compulsory education till ninth
standard 2) Focus on rural healthcare 3) Focused on minimum wages & pension. हालाँिक �व� ब�क क�
चीनी आ�थक वृ�द्ध पर सं शोधन से मालूम �आ िक आ�थक वृ�द्ध ग़रीबो क� ओर बह सकती है, जब चीन क� तरह �ू ली �श�ा को
अ�नवायर् िकया जाए, ग्रामीण �ा�, �ूनतम वेतन और प�शन पर ज़ोर िदया जाए।
64.5.2 📙📙📙📙🤵🤵⚡👷👷 Moderate Inequality =NOT BAD! Says 📔📔📔📔ES21

⇒ ��ES20 had cited Tamil Saint Thiruvalluvar that wealth creation is not a bad thing, as long
as it is created through ethical means. पैसा कमाना ग़लत बात नहीं है जब तक नै�तक �प से कमाया हो।
⇒ ��ES21 cited some new American surveys showing-
⇒ 1) Americans wish that a CEO should earn $7 for every $1 earned by a factory worker. CEO
deserves this much more salary because of his qualification and talent. But if the income gap is
bigger than this level= disliked. कं पनी के CEO को मज़दू र क� तुलना म� सात गुना �ादा तन�ाह �मले उसे अमरीक�
लोग ग़लत नहीं मानते �ोंिक CEO को उसक� प्र�तभा मेहनत वृ�द्ध के िहसाब से �ादा पैसा �मलना चािहए। तो यिद सात गुना से
�ादा तन�ाह �मल रही हो तो वे उस ��त/प्रणाली को नापसं द करते ह�।
⇒ 2) Americans wish that if rich people should have 3x times more wealth than poor. But if the
income gap is bigger than this level= disliked. अमीरों के पास गरीबों क� तुलना म� तीन गुना से �ादा सं प�� हो उस
��त/प्रणाली को अमे�रक� नापसं द करते ह�।
⇒ 4) self-interest: people will tolerate, support or reject inequality depending on what favours their
own position. �� अपने �-िहत के देखते �ए, असमानता को बदार्� करेगा, समथर्न करेगा, अ�ीकार करेगा
⇒ 5) Thus, people do not want total equality in income. Moderate level of inequality is considered
“just/reasonable” because some people deserve to earn more money because of their hard work
and talent. यानी क� अमरीक� सव��ण से यह �ात होता है िक लोग सं पूणर् �प से आय म� समानता नहीं चाहते। आय म� म�म �प
क� असमानता �ायपूणर् औ�च� पूणर् है, �ोंिक वो कु छ लोगों को उनक� मेहनत/प�रश्रम के िहसाब से अ�त�र� पैसा �मलना चािहए।
64.5.3 📙📙📙📙🤵🤵⚡👷👷 Conclusion: Eco Growth⏫ → Poverty⏬

⇒ Economic growth has a far greater impact on removing poverty than on removing inequality.
आ�थक वृ�द्ध असमानता को कम करने क� तुलना म� गरीबी को �ादा कम करती है।
⇒ Considering India’s stage of development, India must continue to focus on economic growth to
lift the poor out of poverty. Because, Redistribution is only feasible in a developing economy if
the size of the economic pie grows। भारत क� वतर्मान �वकास को देखते �ए, सरकार ने आ�थक वृ�द्ध पर ज़ोर देना चािहए
तािक गरीबों को ग़रीबी से बाहर �नकाला जा सके । �ोंिक यिद सकल घरेलू उ�ाद क� थाली का आकार बढ़ेगा तभी उसम� से ग़रीबों के
िह�े म� पहले से मोटी रोटी आएगी।
64.6 🤲🤲💸💸 POVERTY → POVERTY REMOVAL (गरीबी उ�ूलन)
SDG Goal 1 aims to end poverty in all its forms everywhere. While it defines extreme poverty @$1.25
but nations are allowed to use their ‘national poverty line’ methods.
India’s SDG Goal1 Baseline Indicators in (brackets) Target-Goal-2030
Reduce atleast half of the BPL population. So, 21.9% population is BPL 10.95% population
(2011) then its half should be removed uplifted. → living below poverty
गरीबी रेखा से नीचे रहने वाले लोगों क� सं �ा को पहले से आधा करना line.
Number of homeless households per 10,000 households (presently ~11) 0 homeless
Households with min. 1 member with health insurance (~29% at present) 100% households
Improve Social Protection Schemes’ coverage: (सामा�जक सुर�ा योजना) 100% households
India’s SDG Goal1 Baseline Indicators in (brackets) Target-Goal-2030
- Number of eligible households receiving MNREGA jobs (85%)
- No. of eligible households receiving Maternity benefits (36%)
Over the years we have launched the following schemes for removal of poverty.
Note/Homework: Refer to Pillar1D for
 NSOAP (National Social Assistance Program- poor people given pension, insurance without
needing to pay premium/subscription fees),
 PMJDY (Jan Dhan Bank Account)
64.7 🤲🤲💸💸:📯📯📯📯 POVERTY REMOVAL → MGNREGA (2005)

⇒ 2005: Parliament enacted MGNREGA Act.
⇒ 2006: starts in 200 districts → 2008: launched in whole country as Mahatma Gandhi National
Rural Employment Guarantee Scheme(MGNREGS महा�ा गांधी रा��ीय ग्रामीण रोजगार गारं टी कायर्क्रम)
⇒ Boss? Ministry of Rural Development → Centrally sponsored scheme → core of the core
scheme→ not 100% funded by the Union. क� द्र द्वारा प्रायो�जत योजना → अ�त मह�पूणर् योजना
⇒ It promises to give minimum 100 days of unskilled manual labour to rural household whose
adult members volunteer for it. Households are eligible for unemployment allowances if
employment not been provided within 15 days of demand.
⇒ MNREGA labourers are used for creating durable assets as per local needs e.g. ponds, wells,
cattle sheds, granary, vermicompost plants, crematorium; renovation of Anganwadi centres,
school buildings, playground (तालाब, कु एं , अ� भं डार, वम� कं पो� �ांट, �शान। �ू ली इमारतों का पुन�द्धार,
खेलकू द के मैदान)
⇒ No contractors / machinery allowed. (ठे केदार और यं त्रों क� मनाई / इ�ेमाल व�जत है)
⇒ In any project, 60% of amt should go towards wages and 40% towards material. (�ादा िह�ा वेतन म�)
⇒ Union bears 100% wage cost and 75% of material cost.
⇒ Wages are linked to Consumer Price Index (Agriculture labour:AL). [Although Modi thinking of
linking it with CPI-Rural] महंगाई के िहसाब से वेतन को बढ़ाया जाता है
⇒ Social audit by gram sabha at least once in every 6 months. ग्रामसभा सामा�जक ऑिडट/ िहसाब क� जांच करेगी
⇒ 👻👻😷😷Corona: Atma Nirbhar→ MGNREGA daily wages ⏫ from ₹182 to 202. So worker will
get Rs.20 extra than before. So, works for 100 days = ₹20x 100 days = ₹2000 more than before.
64.7.1 🤲🤲💸💸:📯📯📯📯 Poverty Removal → MGNREGA Problems/Corruption

⇒ 😥😥 Delayed payments. As per MGNREGA Act, workers should be paid within 15 days of
completion of work. But, in 2021, many villagers still awaiting payment for the works they did in
2020. Consequently poor people forced migrate to urban areas even if less wages available in
private sector- because they feel that in the private sector employer will at least pay on monthly
basis and they will not have to wait for the entire year! (मज़दू र का वेतन व� पर चुकाए नहीं जाता, �वल�
िकया जाता है। अत: मजबूरन वो मज़दू र शहरों म� चले जाते ह�, चाहे शहर म� तन�ाह कम �मलती हो, लेिकन �म से कम व� भी तो
�मल जाती है!)
⇒ 😥😥 Allegations that SC/ST workers payments released faster after than others. (perhaps because
govt doesn’t have enough money to pay everyone on time, so first priority given to SC/ST
workers) → inter-caste acrimony in village. (सरकार के पास पैसा कम है इस�लए एससी-एसटी मज़दू रों का
भुगतान/बकाया पैसा अ� जा�त के मज़दू रों से पहेले िकया जाता है। इसके चलते गाँव म� जा�त आधा�रत तनाव /कड़वाहट बढ़ रही)
⇒ 😥😥 As per MGNREGA Act: villager shd be given work within 15 days of demanding it, ELSE the
villager is entitled to an unemployment allowance. But not implemented in letter and spirit in
real life. (क़ानूनन यिद गाँव वाला काम क� माँग करे और 15 िदन के भीतर यिद उसे काम न िदया जाए, तो सरकार ने बेरोज़गारी
भ�ा देना होगा। लेिकन वा��वक �ज़दं गी म� इसका अनुपालन नहीं होता।)
⇒ 😰😰Corruption, substandard quality of work (भ्र�ाचार घिटया िक़� का �नमार्ण के )
⇒ 😰😰Sarpanch/Govt officials use contractors & bulldozers to build the road/phone etc then claim
that it was done manually by (fictitious) workers → funds siphoned (सरपं च और सरकारी अफ़सरों द्वारा
ठे केदार/मशीन क� मदद से रोड/तालाब बना देना और िफर काग़ज़ पे “फ़ज़�-मज़दू रों से काम करवाया” ऐसा बोल के सरकारी पैसा
ग़बन करना)
64.7.2 🤳🤳MGNREGA: Use of JAM-DBT
📔📔 📔📔ES19 noted that: During UPA/ManMohan-raj, MGNREGA suffered from widespread
corruption, political interference, leakage, and significant delay in wage payments.
- So, distressed villages/ farmers would migrate to cities / other states in search of work because
even if private parties gave them wages lower than MGNREGA (due to delays in MGNREGA).
- However, during Modi-raj, the use of technology helped fixing these problems
- 2015: Jan Dhan, Aadhaar and Mobile (JAM) Technology revolution started
- Aadhar linked Payments (ALP): Biometric data, ghost accounts removed.
- 2016: MoRD’s National Electronic Fund Management System (NeFMS) and NREGASoft →
Money transferred to State Govt’s bank account → NPCi’s Aadhar Enabled Payment System
(AEPS) → Direct Benefit Transfer (प्र�� ह�ांत�रत लाभ) to Beneficiary’s bank account.
- Since Wages directly into MGNREGA workers’ bank accounts → reducing scope for delays /
leakage / corruption in payment
64.7.3 🤳🤳MGNREGA: Use of Space technology (अंत�र� प्रौद्यो�गक� का उपयोग)

− Geo-tagging (भौ�ग�लक �च�ी लगाना) is a process of adding latitude and longitude to a photo/video.
In MNREGA, PM Awas Yojana, Gram Sadak Yojana etc.
− PM Modi introduced the concept of Geo-tagging for preventing ₹ ₹ siphoning in fraudulent /
non-existent assets / claiming ₹ ₹ multiple times on same asset.
− GeoMGNREGA portal for keeping track of assets through mobile based photo geo-tagging
64.7.4 🤳🤳MGNREGA: Use of Apps

− JanMnREGA: an asset tracking + feedback app for MGNREGA assets.
− Gram Samvaad Mobile App: Here citizens can find information about the money allotted to
their village under various rural development schemes, It has initiated debate at the gram
panchayat level why development is not happening despite the release of funds.
✍Thus, use of technology has ⏬ delays and scope for corruption in MGNREGA, thereby
increasing its efficacy in helping the rural people during the times of distress. Similar models need to
be adopted in all the other centrally sponsored schemes for ensuring India’s rapid economic growth
and human development. प्रौद्यो�गक� के उपयोग से योजना म� ढील और धांधली कम �ई, गरीबी �नवारण म� मदद, अतः अ� सभी
योजनाओं म� भी प्रौद्यो�गक� के उपयोग को बढ़ाया जाए
64.7.5 📔📔📔📔 MGNREGA: Future suggestion by ES19? (अ� सुझाव दी�जए)

 Big Data Analytics: We should do real time monitoring of demand for work under MGNREGA
@district level. If more work demand by villagers = proof of farm / rural distress. Then correlate
with weather data etc. then display flash alert on policymaker’s dashboard. So he can take
corrective actions. e.g. Timely release of crop insurance claims, distribution of more loans,
additional allocation of foodgrains in PDS Shops etc. िकतने मजदू र काम मांग रहे ह� उस डाटा पर अ�वरत
�नगरानी रखकर, अ�ग्रम कदम उठाने चािहए
 Deepening MGNREGA workers’ financial inclusion through microinsurance, micropensions,
microcredit schemes. �व�ीय समावेशन करना चािहए, सू�ा बीमा सू� ऋण क� �व�ा
 Upskilling the MGNREGA Workers: Convergence of MGNREGA with Deen Dayal Upadhyaya
Grameen Kaushalya Yojana (DDUGKY). So, they can eventually find gainful employment, and
don’t have to demand ‘unskilled’ MGNREGA work all the time. कौश� बढ़ाना चािहए. तािक भ�व� म� उस
मजदू र को वापस इस योजना का लाभ मांगने के �लए ना आना पड़े
🔠🔠❓MCQ. Who are eligible to benefit from the MGNREGA Act?(Prelims-2011)
a) Adult members of only the scheduled caste and scheduled tribe households
b) Adult members of below poverty line (BPL) households
c) Adult members of house holds of all backward communities
d) Adult members of any household
🔠🔠❓MCQ. Which one of the following is not an objective of MGNREGA? (CDS-i-2020)
a) Providing up to 100 days of skilled labour in a financial year b) Creation of productive assets
c) Enhancing livelihood security d) Ensuring empowerment to women
64.7.6 👻👻(🧱🧱⛏:💸💸🤲🤲�)Atma-Nirbhar → PM Garib Kalyan Rojgar Abhiyaan (GKRA)
⇒ PM started this “GKRA” from Bihar's Telihar village in 2020-June.
⇒ 🧔🧔Boss? Rural Dev Ministry coordinates with other ministries e.g. roads, mines, Jal Shakti etc.
⇒ 🌐🌐Where? 6 states of Bihar, Uttar Pradesh, Madhya Pradesh, Rajasthan, Jharkhand and Odisha
to help the returnee migrants. चु�नंदा रा�ों म� लागू िकया जाएगा जहां पर प्रवासी मजदू र बड़ी मात्रा म� वतन वापस आए ह�
⇒ ⏰Duration? 125 days. To build Panchayat Bhavans, Community Toilets, Rural Mandis, Rural
Roads, Cattle Sheds, Anganwadi Bhavans Etc. with help of returnee migrants. कोरोना महामारी म� वतन
वापस �ए श्र�मकों को रोजगार देने के �लए ग्रामीण बु�नयादी अवसं रचनाओं का �नमार्ण कर�गे
64.7.7 🤲🤲🤲🤲:📯📯📯📯 Poverty Removal → National Livelihood Missions =Skill+Loan

- In the late 70s, Govt had launched Integrated Rural Development Programme (IRDP), Training
of Rural Youth for Self Employment (TRYSEM) and a half dozen other schemes
- PM Vajpayee restructed them into Swarnjayanti Gram Swarozgar Yojana (SGSY-1997), Swarna
Jayanti Sahari Rozgar Yojana (SJSRY-1999)
- ManMohan restructured them into National Rural Livelihood Mission (NRLM-2011) & Urban
Livelihood (NULM-2013) → Modi added Deen Dayal Antyodaya Yojana in prefix.
Table 1: They’re Core Schemes (Not 100% funded by Union)
Deen Dayal Antyodaya Yojana: National Deen Dayal Antyodaya Yojana: National Rural
Urban Livelihoods Mission (DAY-NURM) Livelihoods Mission (DAY-NRLM)
रा��ीय शहरी आजी�वका �मशन रा��ीय ग्रामीण आजी�वका �मशन
Ministry of Housing and Urban Affairs Ministry of Rural Development
1. Give urban poors skill training and loan 1. Bring min.1 woman from each poor
for self-employment → Govt pays its household to Self Help Group (SHG: �यं -
interest subvention via PAISA Portal. सहायता समूह) → give them training and loans
Portal (Ref: Pillar1D for more) for candle/soap/handicraft etc. biz.
2. Develop vendor markets for urban 2. Give training to rural men.
vendors (शहरी �वक्रेता) . 1+2= They’ll do self employment or skilled
3. Shelters for homeless people. (बेघर लोगों wage employment = More income then
के �लए आश्रय �ल।) working as farm labourers.
64.7.7.1 📯📯📯📯 Poverty Removal → DAY-NRLM/NULM → sub-schemes (उप-योजनाएं )
- Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDUGKY-2014):
- Rural Youth given FREE skill training using public and private sector training org.
- Higher age limit for SC/ST/Women/PH.
- Guaranteed Placement for at least 75% trained candidates. [नोकरी �मलने का आ�ासन]
- Covers Youth of Jammu and Kashmir (HIMAYAT scheme)
- Cover Youth of North Eastern & Left-Wing Extremist (LWE) districts (ROSHNI Scheme
उ�र पूव� और वामपं थी उग्रवाद से प्रभा�वत �जलों म�)
- Startup Village Entrepreneurship Programme (SVEP-2015): self-explanatory- training, loan,
marketing assistance etc. [Recall similar scheme in Pillar#4: MSME Ministry: PM’s Employment
Generation Scheme where person / SHG given credit linked subsidy to start non-farm micro-
enterprise]
- Aajeevika Grameen Express Yojana (AGEY-2017): interest-free loans given to SHG /
Community Based Organisations (CBOs) to buy public transport vehicle so they can earn ₹ ₹ by
transporting passengers.
- ‘SonChiraiya’ – A brand logo for marketing of urban SHGs’ products by Urban Ministry.
🔠🔠❓Which one of the following statements about the DDU – GKY is not correct?(CDS-2021-i)
(a) It is a skill training programme. (b) It is for rural youth from poor families.
(c) Its objective is placement in wage employment.
(d) It relies entirely on skill training by Government agencies.
🔠🔠❓MCQ. How does the NRLM help the poor?(Asked in UPSC-Pre-2012)
1. By setting up a large number of new manufacturing industries and agribusiness centres in rural
areas
2. By strengthening ‘self-help groups’ and providing skill development
3. By supplying seeds, fertilizers, diesel pump-sets and micro-irrigation equipment free of cost to
farmers
Codes: (a) 1 and 2 only (b) 2 only (c) 1 and 3 only (d) 1, 2 and 3
🔠🔠❓MCQ. Which is the earliest launched scheme of the Govt of India? (UPSC-CDS-i-2020)
a) Deendayal Antyodaya Yojana b) Pradhan Mantri Gram Sadak Yojana
c) Saansad Adarsh Gram Yojana d) Deendayal Upadhyaya Grameen Kaushalya Yojana
64.7.8 🤲🤲🤲🤲:📯📯📯📯 Poverty Removal → DISHA Committees (2016)

Boss? Ministry of Rural Development (ग्राम �वकास मं त्रालय)
- District Development Coordination and Monitoring Committee (DISHA) = elected members of
(Parliament + State legislature + Local Governments: PRI,ULB) for efficient and time-bound
development of districts.
- They’ll meet once every quarter and assess the schemes implementation.
- DISHA Committee’s chairman will be the senior most MP (Lok Sabha) from the given district.
DM/Collector(IAS) will act as member Secretary to implement the Committee’s directives.
64.7.9 🤲🤲🤲🤲:📯📯📯📯 Poverty Removal → Mission Antyodaya (2017)
Boss? Ministry of Rural Development (ग्राम �वकास मं त्रालय)
− It’s similar to those two timepass ‘Adarsh Gram Yojanas’ we learned in Pillar#5.
− Here Govt will implement the other ongoing schemes with more vigilance and accountability
with the help of Gram Panchayat, NGOs, SHGs, ASHA workers etc.
− Target? At least 50,000 Gram Panchayats become poverty free by 2020.
64.7.10 🤲🤲🤲🤲:📯📯📯📯 Poverty Removal → SMILE 75 (�भखारी-मु� हो 75 शहर)

⇒ By Social Justice Ministry to make 75 cities “begging-free”.
⇒ To help beggars through rehabilitation, medical facilities, education, skill development,
economic opportunities etc. (�भ�ुओ ं का पुनवार्स, �चिक�ा सु�वधाओं, �श�ा, कौशल �वकास, आ�थक अवसर आिद)
64.8 🤲🤲🤲🤲:📯📯📯📯 POVERTY REMOVAL → DIRECTLY GIVE ₹ ₹ → UBI
Int-Budget-2019: We are spending ~₹ 12 lakh crores in schemes. Out of that ₹3.3 lakh crores in
subsidies. Yet, schemes/subsidies suffer from two problems.
− Inclusion Error (समावेश त्रु�ट): Non-poor families receive benefits = “free rider” problem. ~40% of
Food subsidies wasted in this manner. (जो लोग वा�व म� गरीब है िक वो सरकारी योजनाओं क� मज़े ले जाते ह�)
− Exclusion Error (बिह�रण त्रु�ट): Real Poor not receiving benefit. ~40-60% of real needy families
don't receive scheme benefit. (जो वा�व म� गरीब है उनको सरकारी योजना का लाभ �मल नहीं रहा)
− Leakage (�रसाव): 20-36% money allotted in PDS/MNREGA is gone in corruption by the
middleman / bureaucrats. (भ्र� अफसर और दलाल पैसा गबन कर जाते ह�)
− Suresh Tendulkar Poverty Estimation Method (2011) says
o Any rural person who is spending monthly ₹ 816/> is not poor = annual ₹ 9800 />
o Any urban person who is spending monthly ₹ 1000/> is not poor = annual ₹ 12000/>
− So, Economic Survey 2017 suggested, “better we simply give them money so they can spend
minimum aforementioned amounts, then they’ll automatically come out of the poverty!” That is
the idea behind UBI.
(Definition) Universal Basic Income (UBI) means govt depositing a specific sum of money in a
beneficiary’s bank account each year to augment his/her purchasing power in the open market. The
term ‘universal’ is ‘de-jure’ (औपचा�रक), in reality, UBI is not meant for rich & middle class, they’ll be
excluded. (सावर्�त्रक बु�नयादी आय: लाभाथ� के खाते म� एक �न��त रकम सरकार द्वारा जमा क� जाए.)
64.8.1 👌👌 UBI: Pro-Arguments by Eco Survey (इस सुधार के प� म� तकर् )
 Safety Net. Protects people from deprivation, destitution (अभाव, �नरा�श्रतता)
 PDS= leakage, diversion. Better give ₹ ₹ to needy to buy from open market. सावर्ज�नक �वतरण प्रणाली म�
स��डी �रसाव/धांधली �ादा
 MNREGA = Not good because it is creating shortage of farm labourers. Scheme is rife with
corruption & mismanagement. खेत मजदू रों क� कमी, भ्र�ाचार-धांधली ब�त है
 Some people face accident of birth (SC/ST/Rural/Poor). Some people face accident of life (e.g.
drought, disaster, husband dead, caught in debt trap by informal money lender). UBI will help
them overcome these accidents, boost their psychological aspirations. �पछड़े वगर् को कज� के �वष चक्र से
�नकाल सकता है, उनक� मनोवै�ा�नक आशाओं को, आ��व�ास व् आकांशाओ को प्रो�ािहत कर सकता है
 PAN cards already linked with Bank accounts so possible to exclude rich / middle class easily. So,
implementation of UNIVERSAL BASIC INCOME should not prove difficult.
 National Human Rights Commission (NHRC) has informed the United Nations Human Rights
Council (UNHRC) that the recommended implementation of a universal basic income was
“under examination and active consideration” of the Centre. रा��ीय मानवा�धकार आयोग ने भी सं यु� रा�� क�
मानवा�धकार सं �ा को बताया है िक “हमारे देश क� सरकार इस प्र�ाव पर सिक्रय �प से गौर कर रही ह�। ”
64.8.2 👎👎 UBI: Anti-Arguments by Eco Survey (सावर्�त्रक बु�नयादी आय �वरोधी तकर् )

 Able bodied men given ‘charity’. It’ll turn them lazy. Gandhi will not approve it. (यह प्रकार से
भीख/दान देना है, गांधीजी �जदं ा होते तो कभी इसका समथर्न नहीं करते.)
 1st world nations can afford UBI because their tax:GDP is high. If we give ₹ 12000 per year to
poor people (without shutting down existing schemes) then Fiscal deficit = ~12% of GDP = new
variety of problems: Crowding out of the private borrowers → Industrial expansion + job
creation declines. (Counter arguments: if we stop all schemes/subsidies and give only ₹ 2500 /
per year as UBI to only poor people, then Fiscal deficit will stay @3% while poverty will decline
from 21.9% → just 9%] (राजकोषीय घाटा अप्र�ा�शत �प से बढ़ेगा)
 Extra money in the hands of poor without proportional increase in the supply of goods →
demand side inflation. So, poor person’s real purchasing power will not increase, he’ll remain
poor only. (मांगज�नत मं हगाई के चलते वो गरीब ही रहेगा. �ोंिक उसक� वा��वक खरीद श�� बढ़ नहीं पाएगी)
 Providing Universal basic income without crossing the fiscal deficit target will require stopping
the schemes like NFSA, MDM, MNREGA → but that will not be ‘politically feasible’. (यिद इसम�
पैसा खचर् करना है तो बाक� सारी योजनाएं बं द करनी होगी जो िक राजनी�तक �प से असं भव)
 Many families hid their assets during SECC-2011 survey, so it’s not a reliable data. So if UBI
given to people based on SECC data → Inclusion Error, with non-poors getting benefit. (अमीरों
लोग भी गरीब होने का नाटक करके योजना का लाभ ल�गे)
 Men of the house may misuse ₹ ₹ on alcohol, gambling & other social ills. Better to give
entitlements in the form of ‘kind’ e.g. free food under mid day meal, subsidized grains @PDS
shop. (शराब और जुए म� दु�पयोग)
📔📔📔📔ES17 gave both the pro and anti-arguments. Its intent was only to ‘generate a debate’ around
the topic (without suggesting UBI for immediate implementation). However eventually,
- Interim-Budget 2019: PM-KISAN ₹ 6k / per year to small and marginal farmers.
- General Election 2019 Congress Manifesto promised to launch Nyuntam Aay Yojana (NYAY)
schemes giving ₹ 72,000 / per year to poorest 5 crore families [IF they’re elected to power].
- 2020-March: Corona- Atma Nirbhar: Pradhan Mantri Garib Kalyan Package (PMGKP)- ₹1500
transferred to women having PM Jan Dhan Bank Account. ₹1000 to poor elder, poor widows,
poor PH. [कोरोना के दौरान गरीबो के ब�क खाते म� प्र�� लाभ अंतरण/पैसा जमा िकया गया]
👍👍✍Conclusion-UBI-Favour: UBI can play a pivotal role in eliminating poverty and providing
safety net against deprivation and destitution. However, UBI should be designed & implemented in a
manner that minimizes leakage & doesn't put heavy burden on fiscal resources. गरीबी �नवारण म� सावर्�त्रक
बु�नयादी आय मदद कर सकती यिद इसे सावधानी से जाए तािक भारत का राजकोषीय घाटा ब�त न बढे और अयो�/अमीर ��यों को
इसका लाभ न �मले।
👎👎✍Conclusion-UBI-Anti: While UBI can play a pivotal role in eliminating poverty and
providing safety net against deprivation and destitution, but in the light of the aforementioned
challenges, the conditions are not yet ripe for its introduction in India. हालाक� गरीबी �नवारण म� सावर्�त्रक
बु�नयादी आय मदद तो कर सकती है िकंतु भारत म� इसे लागू करने के �लए अभी प�र��तयां /समय प�रपक़्व नहीं है
64.9 �💸💸💸💸POVERTY REMOVAL: DBT → E-RUPI

Refer to Handout Pillar1A1: Digital Payments. Already covered there.
64.10🤲🤲🤲🤲:✍→ CONCLUSION-TEMPLATE-POVERTY (�न�षर्- गरीबी �नवारण)

- While India’s GDP and national income is rising every year, not everyone has benefited equally
from this prosperity, as evident from <insert xyz report data>.
- Poverty acts as a barrier against gender development & human development. Therefore, SDG
Goal 1 aims to end poverty in all its forms everywhere.
- Aforementioned schemes / initiatives / challenges are important in that regard / need to be
addressed on priority basis.
- (भारत का सकल घरेलू उ�ाद और रा��ीय आय तो बढ़ी है लेिकन इसम� हर एक �� को इस समृ�द्ध से एक समान �प से लाभ नहीं
�मला है। गरीबी हमेशा ल��गक �वकास और मानव �वकास म� अवरोध पैदा करती है। इस�लए उ� चीजों पर अग्रता क्रम से �ान देना
ज�री तभी हम सतत �वकास ल� नं बर#1 'गरीबी का अंत' हा�सल कर पाएं गे. )
64.10.1 ✍Past Questions in UPSC Mains Exams

- All Qs provided in the last �Handout#6D where we see weaker section, gender development,
human development and SDG.
PILLAR#6D: WEAKER SECTION, GENDER DEVELOPMENT, HDI, SDG
Table of Contents
65 ☪✝HRD/EDU → Weaker Section → Minorities, SC/ST .................................................................... 1134
65.1 ☪✝ Minorities (अ�सं �क समुदाय) ......................................................................................................... 1134
65.1.1 ☪✝ Minorities → Constitutional Protection (सं वैधा�नक सं र�ण) ................................................ 1135
65.1.2 ☪✝ Minorities → Legal Protection (कानूनी सं र�ण) .................................................................... 1135
65.1.3 ☪✝:📊📊 Minorities → DATA/Index/Report: Census-2011 ................................................... 1135
65.1.4 ☪✝:📊📊 Minorities → DATA/Index/Report: Religious freedom (धा�मक �तं त्रता) ................. 1136
65.1.5 ☪✝ �[YEARBOOK] Ministry of Minority Affairs (अ�सं �क कायर् मं त्रालय) ......................... 1136
65.1.6 ☪✝:📯📯📯📯 → Minority Schemes → PM Janvikas Karykram (2018)................................... 1136
65.1.7 ☪✝:📯📯📯📯 → Minority Scheme → Education / Exams ........................................................ 1137
65.1.8 ☪✝:📯📯📯📯 → Minority Skilling → USTTAD Master Trainers ............................................ 1138
65.1.9 ☪✝:📯📯📯📯 → Minority Skilling → Seekho Aur Kamao (Learn & Earn) ............................ 1138
65.1.10 ☪✝:📯📯📯📯 → Minority Skilling → MANAS Academy .................................................... 1138
65.1.11 ☪✝:📯📯📯📯 → Preserving a community / culture / pilgrimage?....................................... 1139
65.1.12 ☪✝:📯📯📯📯 → Pilgrim → Hajj → Subsidy ........................................................................ 1139
65.1.13 ☪✝:📯📯📯📯 → Pilgrim → Hajj → Mehram ....................................................................... 1139
65.2 HRD/EDU → Weaker Section → Scheduled Tribes (ST) ............................................................... 1139
65.2.1 ST → Constitutional Protection (सं �वधा�नक सुर�ा) ...................................................................... 1140
65.2.2 ST → Legal Protection (कानूनी सुर�ा) ........................................................................................... 1140
65.2.3 ST → Census 2011 ...................................................................................................................... 1140
65.2.4 �[YEARBOOK] Ministry of Tribal Affairs (जनजातीय कायर् मं त्रालय) ......................................... 1141
65.2.5 ST → Particularly Vulnerable Tribal Groups (PVTGs) .......................................................... 1141
65.2.6 📯📯📯📯 ST → Tribal Sub Plan (1974: जनजातीय उप-योजना) .......................................................... 1142
65.2.7 📯📯📯📯 ST → Vanbandhu Kalyan Yojana (2014) .................................................................... 1142
65.2.8 📯📯📯📯 ST → Van Dhan Yojana ................................................................................................ 1142
65.2.9 📯📯📯📯 ST → MSP for Minor Forest Produce (लघु वन-उपज के �लए �ूनतम समथर्न मू�) ............... 1143
65.2.10 📯📯📯📯 ST → Central Tribal University ............................................................................... 1143
65.3 Weaker Section → Scheduled Castes (SC: अनुसू�चत जा�त) ................................................................... 1143
65.3.1 SC → Constitutional Protection ................................................................................................ 1143
65.3.2 SC → Legal Protection ................................................................................................................ 1143
65.3.3 SC → Census 2011 (जनगणना) ...................................................................................................... 1143
65.3.4 �[YEARBOOK] Ministry of Social Justice & Empowerment ............................................. 1144
65.3.5 � [Yearbook] Ministry of Law & Justice (�व�ध और �ाय मं त्रालय) .............................................. 1145
65.3.6 📯📯📯📯 SC → Welfare Schemes (क�ाणकारी योजनाएं ) .................................................................. 1146
65.4 Weaker Section → OBC & EWS ......................................................................................................... 1146
65.4.1 Weaker Section → OBC Sub-categorization (ओबीसी उप-वग�करण) commission ...................... 1146
65.4.2 Weaker Section → EWS Reservation ........................................................................................ 1146
66 👩👩 HRD/EDU → Weaker Section → Women & Children................................................................. 1147
(Batch: PCB7) Mrunal’s Economy Pillar#6C HRD: Weaker Section, UNDP-HDI, SDG → Page 1132
66.1 👩👩👩→ Constitutional Provisions (सं वैधा�नक सं र�ण) ............................................................................. 1147
66.2 👩👩👩→ Legal Provisions (कानूनी सं र�ण) ................................................................................................. 1148
66.2.1 Women → Global cooperation: Beijing+25 ............................................................................. 1149
66.3 👩👩👩Women →→ Census-2011 [जनगणना 2011] ................................................................................ 1149
66.4 👩👩👩�[YEARBOOK] Ministry of Women & Child Development ................................................ 1149
66.5 👶👶>👧👧 Son-Meta Preference (पुत्री के बाद पुत्र क� चाह) .......................................................................... 1150
66.5.1 👶👶>👧👧= Son Meta Preference: why bad? ............................................................................... 1150
66.5.2 👣👣📅📅 JAYA Jaitley Task Force for ⏫marriage age 4girls ................................................... 1150
66.6 👩👩👩📊📊 Report → UNDP → Gender Inequality Index (GII) .......................................................... 1150
66.7 👩👩👩📊📊 Report → WEF → Global Gender Gap Report ................................................................... 1151
66.7.1 👩👩👩📊📊 Report → OECD’s SIGI Report.................................................................................... 1152
66.7.2 👩👩👩📊📊 Gender Indices → Gender Social Norms Index (GSNI) ............................................ 1152
66.8 👩👩👩📊📊 SDG Goal #5: Gender Equality & Empowerment ................................................................ 1152
66.9 👩👩👩📯📯📯📯 Women Schemes → Health............................................................................................ 1153
66.10 👩👩👩📯📯📯📯 Women Schemes → Beti Bachao Beti Padhao (2015) ............................................. 1153
66.10.1 👩👩: 👻👻👻👻👻👻👻👻 Atama-Nirbhar: PM GARIB KALYAN → Women will benefit, how?
1154
66.11 👩👩 📯📯📯📯 Women Schemes→ Violence / Skilling / Misc........................................................ 1154
66.12 👩👩👩💰💰 🗄🗄:📯📯📯📯 Women Funds ................................................................................................. 1155
66.12.1 👩👩👩📯📯📯📯- 3 Umbrella Schemes to cover all women schemes ........................................ 1155
66.12.2 👩👩👩✍ Women / Gender Development: Conclusion-Template (�न�षर्).............................. 1156
66.13 👶👶 Weaker Section → Children (बालक ब�े) ................................................................................. 1157
66.13.1 👶👶 → Constitutional Protection .......................................................................................... 1157
66.13.2 👶👶 → Legal Protection.......................................................................................................... 1157
66.13.3 👶👶 📯📯📯📯 HRD Weaker Section → Children → Orphan in Corona ............................. 1158
66.13.4 👶👶 📯📯📯📯 HRD Weaker Section → Children → Misc. Portal/GK ................................. 1158
66.14 HRD/EDU → Weaker Section → PH (♿) ................................................................................. 1158
66.14.1 ♿ PH → Constitutional Protection: .................................................................................. 1158
66.14.2 ♿ PH → Legal Protection: .................................................................................................. 1159
66.14.3 ♿ 📯📯📯📯 PH → Welfare schemes ..................................................................................... 1159
66.15 HRD/EDU → Weaker Section: Elderly, Drug Addicts ................................................................ 1159
66.15.1 👴👴 Elderly (��) .................................................................................................................... 1160
66.15.2 🍻🍻 Drug Addicts (नशे के लती/ नशेड़ी) ........................................................................................ 1161
66.16 👭👭👭👭Weaker Section: LGBT (समल��गक और िक�र) ......................................................................... 1161
66.16.1 � National Council for Transgender Persons (NCTP: ट�ासं ज�डर ��यों के �लए रा�ी� य प�रषद) 1161
67 ��
� � 🌿🌿 Human Development & Sustainable Development ................................................................. 1161
67.1 📊📊📊📊 UNDP’s Human Development Report (मानव �वकास �रपोटर्) .................................................... 1162
67.1.1 📊📊📊📊UNDP → Human Development Index (HDI:मानव �वकास सूचकांक) ............................... 1164
67.1.2 📊📊📊📊UNDP → Inequality Adjusted HDI.............................................................................. 1164
67.1.3 📊📊📊📊 UNDP → Gender Development Index (GDI: ल��गक �वकास सूचकांक)............................. 1165
67.2 📊📊📊📊 UNSDSN → World Happiness Report ................................................................................. 1165
67.3 📊📊 World Bank → Human Capital Index ........................................................................................ 1165
67.4 📊📊 Human development → Misc. Indicators ................................................................................. 1165
67.4.1 📊📊📊📊✍Human Development: Conclusion-Template (�न�षर्) ............................................. 1166
68 🌱🌱 Sustainable Development Goals (SDG) ........................................................................................... 1166
68.1.1 �🌴🌴🌴🌴🌴🌴 [Yearbook] Ministry of Environment, Forest & Climate Change ................ 1166
68.1.2 �☔🌪🌪 [Yearbook] Ministry of Earth Sciences (पृ�ी �व�ान मं त्रालय) ...................................... 1167
68.2 🌱🌱 Sustainable Development: meaning............................................................................................. 1168
68.3 🌱🌱 📔📔📔📔ES20 on SDG & Environment ......................................................................................... 1168
68.4 🌱🌱 📔📔📔📔ES21 on SDG & Environment ......................................................................................... 1169
68.4.1 📙📙📙📙ES21 Climate Change damages Indian economy [जलवायु प�रवतर्न से भारतीय अथर्तंत्र को ख़तरा]
1169
68.4.2 📙📙📙📙ES21: Climate Risk & Pandemic Risk Insurance need to be encouraged ................. 1169
68.4.3 📙📙📙📙ES21: solar energy misused for groundwater exploitation .......................................... 1169
68.5 🌱🌱 📐📐 📊📊 SDG → India’s Implementation / Monitoring ........................................................... 1170
68.5.1 🌱🌱 📐📐 📊📊 NITI’s SDG India Index: overall scoring ............................................................. 1170
68.5.2 🌱🌱 📐📐 📊📊 NITI SDG Urban India Index ............................................................................... 1171
68.5.3 🌱🌱🌱🌱 NITI’s VNR Review to UN ........................................................................................... 1171
68.6 🌱🌱 SDG Goals vs India’s Notable Schemes....................................................................................... 1172
68.6.1 🌱🌱✍SDG: Conclusion-Template (�न�षर्) ................................................................................. 1176
68.7 ✍🎺🎺 Mains Answer Writing: Poverty, Hunger, Social Sectors .................................................... 1177
68.7.1 ✍🎺🎺 GSM1 Syllabus: Poverty, Population; Development & associated issues ................. 1177
68.7.2 ✍🎺🎺 GSM2 Syllabus: Poverty & hunger issues/गरीबी और भुखमरी के मुद्दे .................................. 1177
68.7.3 ✍🎺🎺 GSM2 Syllabus: Schemes for Social Sectors ................................................................. 1178
68.7.4 ✍🎺🎺 GSM2 Syllabus: Schemes for Social Sectors → Education ........................................ 1180
68.7.5 ✍🎺🎺 Mains Answer Writing: Inclusive Growth................................................................... 1181
68.7.6 ✍🎺🎺 Mains Answer Writing: Women Development .......................................................... 1182
65 ☪✝HRD/EDU → WEAKER SECTION → MINORITIES, SC/ST

65.1 ☪✝ MINORITIES (अ�सं �क समुदाय)
65.1.1 ☪✝ Minorities → Constitutional Protection (सं वैधा�नक सं र�ण)
Constitution did not define the ‘minority’, but
✓ Art 25-28: Right to freedom of religion. [धा�मक �ातं �]
✓ Article 25(2): Sikhs have the right to wear & carry kirpans.
✓ Article 29(1): Conserve distinct language, script or culture. [सां�ृ�तक धरोहर क� र�ा]
✓ Article 30(1): Minorities’ right to establish & administer educational institutions.
✓ Article 350B: Commissioner for Linguistic Minorities (भाषाई अ�सं �कों के �लए आयु�).
65.1.2 ☪✝ Minorities → Legal Protection (कानूनी सं र�ण)
 1992: National Commission for Minorities Act (रा��ीय अ�सं �क आयोग) → Section 2(c): we’ve 6
national minorities: Muslims, Christians, Buddhists, Sikhs, Zoroastrians (Parsis) & Jains (Latest
added in 2014).
 1995: Waqf Act → Waqf Councils @Union & State levels. When a Muslim donates property for
the society, it’s called Waqf.
 2002: Haj Committee Act.
 2004: Minority Educational Institutions Act.
65.1.3 ☪✝:📊📊 Minorities → DATA/Index/Report: Census-2011

- Out of total population: Hindu (79.8%) > Muslim(14.2%) > Christian(2.3%) > Sikh (1.7%) >
Buddhist (0.7%) > Jain(0.4%) > Parsis (0.06%) > Animist & others (0.72%)
- Decadal population growth rate of religious groups (2001-2011): Hindus: 16.8%; Muslim: 24.6%;
Christian: 15.5%; Sikh: 8.4%; Buddhist: 6.1% & Jain: 5.4%.
- % Jains out of total state population: Maharashtra (1.3%) > Rajasthan (1.2%) > Delhi (1.1%) >
Gujrat (1.0%). Elsewhere in the country their proportion in negligible.
Where Non-hindus are Majority Where Hindus are Minority
- Muslims: J&K & Lakshadweep Lakshadweep, Mizoram, Nagaland, Meghalaya,
- Sikhs: Punjab J&K, Arunachal, Manipur & Punjab (According
यहाँ ग़ैर िह�ू ब�सं �क है to a PIL in SC)
65.1.4 ☪✝:📊📊 Minorities → DATA/Index/Report: Religious freedom (धा�मक �तं त्रता)
⇒ United States Commission on International Religious Freedom (USCIRF)
⇒ Their Religious Freedom Report 2020: India is labelled as a Country of Special Concern (CSC)
because of the communal violence. (ऐसा देश �जसपर अमरीक� धा�मक �ातं � आयोग को �वशेष �चंता है, सांप्रदा�यक
िहसं ा के कारण)
⇒ But India’s External Affairs ministry has rejected this report so we need not apply much brain
here. (भारत के �वदेश मामलों के मं त्रालय ने इसे खा�रज िकया है। तो हमने ब� िदमाग़ ख़चर् करने क� ज़�रत नहीं)
65.1.5 ☪✝ �[YEARBOOK] Ministry of Minority Affairs (अ�सं �क कायर् मं त्रालय)
Dept / Attached N/A
CPSE National Minorities Development & Finance Corporation (NMDFC) : A
‘non-for-profit’ company under Companies Act. Union owns 73%.
Shareholding of each state/UT NMDFC is in proportion to its population of
minorities. Virasat = NMDFC loan scheme for craftsman.
Autonomous Maulana Azad Education Foundation (MAEF). Maulana Abul Kalam Azad,
�ाय� सं �ा the first Education Minister of India
Statutory 1) National Commission for Minorities [रा��ीय अ�सं �क आयोग]
वैधा�नक 2) Waqf Council 3) Haj Committee
Constitutional 350B: Commissioner for Linguistic Minorities [भाषाइ अ�सं �क]
65.1.6 ☪✝:📯📯📯📯 → Minority Schemes → PM Janvikas Karykram (2018)
- 2005-06: PMO → Justice (Retd) Rajinder Sachar Committee for social, economic & educational
status of the Muslims in India. [मु��मों क� सामा�जक आ�थक और �श�ा ��त के �लए स�म�त बनी थी]
- 2005: Prime Minister’s New 15 Point Programme for the Welfare of Minorities= “We’ll apply
existing schemes in better manner” + some ₹ ₹ for upgrading Madressa, skilling etc. in areas with
25% /> minority population. [वतर्मान योजनाओं को बेहतर तरीक़े से लागू कर�गे]
- 2008: Manmohan starts Multi-sectoral Development Programme (MsDP)
ManMohan (2008) → Modi (2018)
Multi-sectoral Development Program(MsDP) renamed it into PM Janvikas Karykram
for village-clusters where minority population Minority population 25%/> (So more areas
was 50%/> & high level of backwardness. ~90 covered)
districts covered
− Boss? Ministry of Minority Affairs (अ�सं �क मामलों का मं त्रालय)
− Centrally sponsored scheme → Core of the Core Schemes (Umbrella Scheme for Minorities) →
not 100% funded by Union. 60:40, 90:10. (क� द्र द्वारा प्रायो�जत अ�त मह�पूणर् योजना)
− ₹ ₹ Health, Education, Skills, Community Hall, Sadbhav Mandap, Marketshed, Rural Housing,
Water, Toilets etc. [�ा� �श�ा कौशल तालीम इ�ािद]
○ 80% of the ₹ ₹ to be used for Health (more PHC, Anganwadi centres), Education (more
schools, more classrooms & labs), Skill programs (more ITI, Polytechnics) etc.
○ 33-40% for women centric projects (which could also have overlapping objectives of
education / health / skilling.).
65.1.6.1 PMJVK → Sub-component → CyberGram

− Boss? Ministry of Minority Affairs for giving computer training to Madressa Students.
65.1.7 ☪✝:📯📯📯📯 → Minority Scheme → Education / Exams
Nai Roshni − Minority Affairs Ministry’s leadership development among minority women.
अ�सं �क मिहला Training them on how to interact with Govt orgs, banks, etc. so they can be
नेतृ� ता�लम more assertive about their rights & more confident to use their talent.
Nai Manzil − Madressa Passout & School-dropout minority youth (aged 17-35)
मदरसा के ब�ों को − They’ve face difficulty in getting jobs because they don’t have ‘school
मु�धारा म� लाना Leaving Certificate’ or a proof of having class 8 or 10 level education
− So, Nai Manzil scheme gives them employable skills in computer, accounting
etc. + National Institute of Open Schooling (NIOS) certification so they can
get jobs in organized sector.
− Minimum 30% seats are earmarked for minority girls.
Competitive − Central Sector Scheme: 100% Union Funded
Exam − Naya Savera: Govt gives ₹ ₹ to public & private institutes for giving free
को�चंग के �लए पैसा coaching to minority students for competitive exams.
स��डी − Nai Udaan: Govt gives ₹ ₹ to minority students IF they clear Prelims stage of
UPSC, SSC & StatePCS Gazetted-. Provided family annual income is not >6
lakh, & he’ll not claiming it for more than once. Only 2000 students given
this ₹ ₹ annually, on first-cum-first-serve basis.
Padho Education loan subsidy for minority students for higher education overseas.
Pardesh �वदेश म� उ� �श�ा के �लए ली गई �श�ा लोन पर �ाज स��डी
Fellowship Maulana Azad National Fellowship for M. Phil & Ph.D. minority students.
65.1.8 ☪✝:📯📯📯📯 → Minority Skilling → USTTAD Master Trainers
USTTAD abbreviation: Upgrading Skills & Training in Traditional Arts/Crafts for Development
⇒ Boss? Ministry of Minority Affairs. Central Sector Scheme: 100% Union Funded
⇒ Minority craftsman aged of 30 years & having 10 years experience in his field. → They are given
further training + marketing skills + stipend → they will become Ustad (Master Trainer) →
Ustad will give training to younger generation to preserve their craft.
⇒ Examples: Phulkari embroidery (Sikh), Kashmiri Shawl-Carpets & Aligarh’s handmade locks
(Muslims), Thanka Painting (Buddhist), Parsi Gara Hand Embroidered Saree etc.
Related Schemes:
- Hunar Haat: Govt organizes trade mela, marketing exhibition to help the minority craftsmen
display their work & connect with the buyers. मेलों का आयोजन
- Virasat is credit scheme for crafts persons by NMDFC.
65.1.9 ☪✝:📯📯📯📯 → Minority Skilling → Seekho Aur Kamao (Learn & Earn)
⇒ Boss? Ministry of Minority Affairs. Central Sector Scheme: 100% Union Funded.
⇒ Beneficiary? Minority person who is min. class 5 pass, aged 14-45.
⇒ They’re given training with stipend for छात्रवृ�� दी जाएगी
○ A) modern trades (saloon, restaurant, computer data entry operator etc) or
○ B) traditional crafts (Carpet, handicraft etc).
⇒ Then, Govt helps them get placement / self-employment. [नौकरी/�रोजगार के �लए मदद]
65.1.10 ☪✝:📯📯📯📯 → Minority Skilling → MANAS Academy

Boss? Ministry of Minority Affairs → National Minorities Development & Finance Corporation
(NMDFC) → Maulana Azad National Academy for Skills (MANAS)
⇒ MANAS receives ₹ ₹ from various Govt schemes for minorities’ education / skill / poverty
removal + ₹ ₹ from donations. MANAS uses those ₹ ₹ to
○ To setup training institutes in PPP mode.
○ To give Concessional loans to minorities for skill courses & to start businesses. [�रयायती
�ाज पर कज़र् िदया जाएगा]
⇒ + Technical & Marketing Support to new entrepreneurs.
+ online portal to monitor (private) training institutes, in collaboration with Skill Ministry.
65.1.11 ☪✝:📯📯📯📯 → Preserving a community / culture / pilgrimage?
Boss? Ministry of Minority Affairs [Central Sector: 100% funded by Union]
⇒ Beneficiaries- Parsi married couples encouraged to produce children- to reverse
Jiyo Parsi the falling population of Parsis. पार�सयों क� �गरती आबादी को बढ़ाना
(2013) ⇒ ₹ ₹ for infertility treatment / IVF baby etc. व�� इलाज
⇒ Advocacy, Counselling, awareness generation. वकालत, परामशर्, जाग�कता
Hamari ⇒ Ministry of Minority Affairs (with help of Culture Ministry).
Dharohar ⇒ To preserve minorities’ culture, heritage, manuscripts.
65.1.12 ☪✝:📯📯📯📯 → Pilgrim → Hajj → Subsidy
- 1932: British Indian Govt started subsidized sea-transport Muslims going for Hajj to Mecca,
Saudi Arabia. In Modern times, Civil Aviation Ministry gave ‘Hajj Subsidy’ to Air India to provide
cheap transport, free meal etc. to them. (The beneficiaries selected by Haj Committees under
Minority Ministry).
- 2012: Supreme Court ordered Govt to gradually phase out Hajj subsidy & use ₹ ₹ for educational &
social development of Muslims instead. [सव�� ायालय ने हज स��डी पर रोक लगायी और यह पैसा मुसलमानों के �श�ा
और सामा�जक �वकास म� इ�ेमाल के �लए सरकार को �नद�श िदए]
- 2018: Govt finally cancelled Hajj Subsidy based on Afzal Amanullah committee (2017) report.
- 2019: Minority Affairs ministry’s “E-MASIHA” health app for Haji pilgrims.
65.1.13 ☪✝:📯📯📯📯 → Pilgrim → Hajj → Mehram

- Earlier, Muslim women were not allowed to go for Hajj without ‘Mehram’ i.e. husband, son or a
male first blood relation as guardian.
- But PM Modi allowed Muslim women aged 45/> to go without Mehram, in a group of at least four
women, based on Afzal Amanullah committee (2017) report. पु�ष सं र�क अ�नवायर् नहीं
65.2 HRD/EDU → WEAKER SECTION → SCHEDULED TRIBES (ST)
65.2.1 ST → Constitutional Protection (सं �वधा�नक सुर�ा)
✓ Art 23: Abolish human trafficking & bonded labour (मानव त�री और बं धुआ मजदू री)
✓ Art 164: Tribal Welfare Minister in the state Govts of Chattisgarh, Jharkhand, Madhya Pradesh
& Odisha. While Bihar excluded after 94th Amendment Act of 2006.
✓ Art 330 & 332: SC/ST reservation in Lok Sabha & Vidhan Sabha.
✓ Art 243D & T: Reservation in PRI & ULB [�ा�नक �रा� सं �ाओं म� आर�ण]
✓ Art 338A: National Commission for ST (रा�ी� य अनुसू�चत जनजा�त आयोग). Originally we had a
combined National Commission for SCs & STs (NCSC) → 89th Constitutional (Amendment)
Act, 2003 → SC & ST commissions bifurcated.
✓ Constitution (Scheduled Tribes) Order (Amendment) Bill 2021: It seeks amending
nomenclature/names of certain tribes from Arunachal Pradesh mentioned in the Constitution
(Scheduled Tribes) Order, 1950. अ�णाचल प्रदेश के कु छ आिदवासी समुदायों के नाम क� सूची म� कु छ सुधार के �लए नया
सं वैधा�नक सं शोधन �वधेयक
✓ 5th & 6th Schedule areas (Ref: Laxmikanth)
65.2.2 ST → Legal Protection (कानूनी सुर�ा)

✓ 1955: Protection of Civil Rights Act (नाग�रक अ�धकारों का सं र�ण अ�ध�नयम)
✓ 1976: Bonded Labour System Abolition Act [बं धुआ मज़दू री प्र�तबं ध क़ानून]
✓ 1989: Prevention of Atrocities Act for SC & ST (अ�ाचार �नवारण अ�ध�नयम)
✓ 1996: PESA- Panchayats Extension to Scheduled Areas Act
✓ 2006: Scheduled Tribes & Other Traditional Forest Dwellers Recognition of Forest Rights Act
(वन अ�धकार कानून)
65.2.3 ST → Census 2011

8.6% Indian Population is Scheduled Caste (ST: अनुसू�चत जनजा�त).
- Among ST, sex ratio is 990, which is better than All India sex ratio of 943.
- Among ST, literacy rate is 59% which is worse than All India (73%)
- ST (%): Lakshadweep > Mizoram > Nagaland > Meghalaya > Dadra & Nagar Haveli.
- ST (Absolute): Madhya Pradesh > Maharashtra > Odisha > Jharkhand > Gujarat > Rajasthan
- ST list is ‘state wise’. Punjab, Haryana, Chandigarh, Delhi & Puducherry have no notified
Scheduled Tribes.
65.2.4 �[YEARBOOK] Ministry of Tribal Affairs (जनजातीय कायर् मं त्रालय)
Dept/Statutory N/A
Cooperative Tribal Cooperative Marketing Development Federation of India
सहकारी सं �ान ⇒ TRIFED-1987: a cooperative registered under Multi-State
Cooperative Societies Act. It deals with Minor Forest Produce, Tribal
handicraft & sells them under brand name ‘TRIBES INDIA’ .
⇒ 2020: It launched TRIFOOD Processing Units to develop mahua drink,
amla juice, , jamun juice etc
CPSE सरकारी National Scheduled Tribes Finance & Development Corporation, a not-for-
कं प�नयां profit co. under Companies Act. (रा��ीय अनुसू�चत जनजा�त �व� और �वकास �नगम)
Constitutional Art 338A: National Commission for ST (रा��ीय अनुसू�चत जनजा�त आयोग)
E-Governance ⇒ Swasthya portal: health, nutrition related info of tribal population
⇒ GOAL: Going Online as Leaders Programme for leadership
Development among ST Students.
⇒ ALEKH newsletter for tribal communities
⇒ Shramshakthi Portal for migrant workers.
65.2.5 ST → Particularly Vulnerable Tribal Groups (PVTGs)
− 1960s: Dhebar Commission → certain tribes identified with pre-agricultural level of technology
(i.e. hunting & gathering), extreme isolation & shyness from outsiders, negligible literacy,
declining/stagnant population etc. [�शकार और वन उपज पर �नभर्र, बाहर के लोगों से अलग रहना]
− Initially, they were called Primitive Tribal Groups (आिदम जनजातीय समूह) but it’s a derogatory term,
later changed Particularly Vulnerable Tribal Groups (PVTGS).
− Presently, 75 such groups are spread across 18 States & 1 UT of Andaman-Nicobar.
State PVTGs (�वशेष �प से कमजोर जनजातीय समूह) (List is not exhaustive= यानी िक यहाँ पर जो
नाम िदए ह� इनके अलावा भी कु छ और समूह आ�धका�रक सूची म� हो सकते ह�)
Andhra & 1. Bodo Gadaba 2. Bondo Poroja 3. Chenchu 4. Dongria Khond 5. Gutob
Telangana Gadaba 6. Khond Poroja 7. Kolam 8. Kondareddis 9. Konda Savaras 10. Kutia
Khond 11. Parengi Poroja 12. Thoti
Gujarat 1. Kathodi 2. Kohvalia 3. Padhar 4. Siddi 5. Kolgha
Karnataka 1. Jenu Kuruba 2. Koraga
MP & 1. Abujh Macias 2. Baigas 3. Bharias 4. Hill Korbas
Chhattisgarh 5. Kamars 6. Saharias 7. Birhor
Maharashtra 1. Katkaria (Kathodia) 2. Kolam 3. Maria Gond
Rajasthan 1. Seharias
Tamil Nadu 1. Kattu Nayakans 2. Kotas 3. Kurumbas 4. Irulas 5. Paniyans 6.. Todas
Andaman 4. Negrito tribes: Great Andamanese, Onge, Jarawa & Sentinalese
Nicobar 2. Mongoloid tribes: Nicobarese & Shompens
🔠🔠❓MCQ. Find correct statements about PVTGs in India (Prelims-2019)
1. PVTGs reside in 18 states & one union Territory.
2. A stagnant or declining population is one of the criteria for determining PVTG status.
3. There are 92 PVTGs officially notified in the country so far.
4. Irular & Konda Reddi tribes are included in the list of PVTGs.
Codes: (a) 1,2 & 3 (b) 2,3 & 4 (c) 1, 2 & 4 (d) 1,3 & 4
65.2.6 📯📯📯📯 ST → Tribal Sub Plan (1974: जनजातीय उप-योजना)

- Tribal Sub-Plan (TSP) is a strategy for the rapid Socio-economic development of ST.
- Union ministries are required to design TSPs & allot ₹₹ to states in proportion of the ST
population therein. (उनक� आबादी के िहसाब से रा�ों को पैसा आवं िटत होगा)
- Such ₹ ₹ helps in development of tribal area with creation of public infrastructure e.g. HRD/EDU
Ministry → schools (Eklavya School, Ashram-Schools), Road Ministry → Roads, Health
Ministry → Hospitals. सड़क �ा� �श�ा इ�ािद बु�नयादी अवसं रचना का �नमार्ण
- While Planning Commission (योजना आयोग) has been abolished & plan vs non-plan budget has
been merged, but the system of TSP is still continued.
Note: Schemes given below are part of Centrally Sponsored Schemes → Core of the Core Scheme →
Umbrella Program for Development of ST= NOT 100% Union funded.
65.2.7 📯📯📯📯 ST → Vanbandhu Kalyan Yojana (2014)

− Boss? Ministry of Tribal Affairs.
− It covers areas with significant tribal population: ‘We’ll implement the existing schemes in better
manner’, & few extra ₹ ₹ to setup school, hospital, road, irrigation, housing etc. infrastructure.
वतर्मान योजनाओं को बेहतर तरीक़े से कायार्��त कर�गे, तथा �ू ल अ�ताल सड़क इ�ािद के �लए थोड़ा और पैसा दे द�गे.
− + extra focus on Sickle Cell Anemia- a genetic disorder passed from generation to generation.
− Preserve Tribal Cultural Heritage; Promotion of Sports in Tribal Areas etc.
65.2.8 📯📯📯📯 ST → Van Dhan Yojana

− Boss? Ministry of Tribal Affairs → TRIFED
− Govt to setup Van Dhan Vikas Kendras in forested tribal districts.
− These Kendras will form Self Help Groups (�-सहायता समूह) of tribal gatherers for non-timber
based forest produce (गैर-लकड़ी आधा�रत वन उपज) e.g. Tamarind, Mahua flowers, Chironjee etc.
− SHG given training & finance for value addition on such forest produce.
− + Marketing linkage so they can sell it within the state & outside the state.
65.2.9 📯📯📯📯 ST → MSP for Minor Forest Produce (लघु वन-उपज के �लए �ूनतम समथर्न मू�)
− 2013: Tribal Ministry announces Minimum Support Price (MSP) for 20+ Minor Forest Produce
(MFP), based on recommendations of TRIFED’s Pricing Cell.
− It covers Chironji, Tamarind, Wild Honey, Mahua Seeds Karanj Seeds, Baheda, Shikakai Pods,
Guggul Arjuna Bark Etc. State agencies procure them @MSP.
− Benefit? Prevent the exploitation of Schedule Tribes by forest contractors / merchants.
65.2.10 📯📯📯📯 ST → Central Tribal University

- As per the 13th schedule of the Andhra Pradesh Reorganisation Act, 2014, Union Govt has to
setup a tribal university each in Andhra & Telangana
- 2019: Central Tribal University will be setup in Araku of Visakhapatnam district, Andhra
65.3 WEAKER SECTION → SCHEDULED CASTES (SC: अनुसू�चत जा�त)

65.3.1 SC → Constitutional Protection
✓ Art 17: Abolish untouchability (अ�ृ�ता �नवारण )
✓ Art 23: Abolish human trafficking & bonded labour (मानव त�री और बं धुआ मजदू री)
✓ Art 25(2)(b): Entry in Hindu Temples (मं िदरों म� प्रवेश)
✓ Art 330 & 332: SC/ST reservation in Lok Sabha & Vidhan Sabha
✓ Art 243D & T: Reservation in PRI & ULB (�ानीय �नकायों म� आर�ण)
✓ Art 338: National Commission for Scheduled Castes (रा��ीय अनुसू�चत जा�त आयोग)
65.3.2 SC → Legal Protection

✓ 1955: Protection of Civil Rights Act (नाग�रक अ�धकारों का सं र�ण अ�ध�नयम)
✓ 1976: Bonded Labour System Abolition Act (बं धुआ मजदू र प्रणाली उ�ूलन अ�ध�नयम)
✓ 1989: Prevention of Atrocities Act for SC & ST (अ�ाचार �नवारण अ�ध�नयम)
✓ 2006: Central Educational Institutions Reservation in Admission Act
✓ 2013: Prohibition of Employment as Manual Scavengers & their Rehabilitation Act. हाथ से मैला ढोने
वाले कम� के �प म� �नयोजन पर प्र�तबं ध तथा उनका पुनवार्स , 2013
65.3.3 SC → Census 2011 (जनगणना)

- Census 2011: 16.6% Indian Population is SC. (While 8.6% is ST)
- SC (%): Punjab > West Bengal > Himachal > UP > Haryana
- SC (Absolute figures): UP > WB > Bihar > Tamil Nadu > Andhra Pradesh > MH
- SC list is state wise. Nagaland, A&N, Lakshadweep have no notified Scheduled Castes.
65.3.4 �[YEARBOOK] Ministry of Social Justice & Empowerment
सामा�जक �ाय एवं सश��करण मं त्रालय Consists of... <list not exhaustive>
Dept − Dept of social Justice & empowerment.
− Dept of empowerment of persons with disabilities. (िद�ांगजन सश��करण �वभाग,
previously called �न:श� कायर् �वभाग but Modi felt it derogatory so changed
name.)
Constitutional − Art 338 : National Commission for Scheduled Castes (NCSC: रा��ीय अनुसू�चत
Bodies जा�त आयोग)
− Art 338B: National Commission for Backward Classes (NCBC: रा��ीय �पछड़ा वगर्
आयोग) via 102nd amendment Act. 2018. Originally, it was setup as a statutory
body in 1993.
Statutory − 1992: Rehabilitation Council of India Act (for PH)
− 2019: National Council for Transgender Persons (ट�ांसज�डर ��यों के �लए रा��ीय
प�रषद)
Non-statutory − National Commission for Safai Karamcharis (NCSK). Its Act expired in
2004, since then functioning as a ‘non-statutory body’ through Gazette
notification.
− National Commission for Denotified, Nomadic & Semi-Nomadic Tribes
2003, reconstituted in 2005….. 2015 formed under Chairmanship of Bhiku
Ramji Idate to prepare state-wise list of DNTs. British Govt had notified
some tribes as ‘Criminal Tribes’ under Criminal Tribes Act (CTA), 1871.
Post-Independence this act was removed & such tribes were ‘denotified’.
Most DNTs are categorized as SC/ST/OBC though a few of the DNTs are
not covered in any of these categories.
Autonomous − 2019-Feb: Development & Welfare Board for De-notified, Nomadic & Semi-
Bodies / Nomadic Communities (�वमुक्त, घुमंतू और अद्धर्घुमंतू समुदायों के �लए �वकास एवं क�ाण
Foundations बोडर्) under Society Registration Act
�ाय� सं �ाएं − Dr. Ambedkar Foundation, Babu Jagjivan Ram National Foundation
− National Institute of Social Defence (सामा�जक र�ा), Delhi
CPSE − National Scheduled Castes Finance & Development Corporation (NSFDC):
सरकारी क��नयां A ‘non-for-profit’ company under Companies Act.
− Similar Corporations for Backward Classes, Safai Karamcharis.
− Artificial Limbs Manufacturing Corporation (ALIMCO)
Imp Days − From 2015 onwards: 26th Nov observed every year as Constitution Day,
मह�पूणर् िदवस because on 26/11/1949 Constituent Assembly adopted the Constitution.
− 14th April: Dr. Ambedkar’s B’day.
Notable − Justice G. Rohini Commission: OBC-Subcategorization
committee − Justice K.G. Balakrishnan Commission: SC reservation to people who
converted to religions other than Hinduism, Buddhism and Sikhism. (e.g.
Islam, Christianity)
65.3.5 � [Yearbook] Ministry of Law & Justice (�व�ध और �ाय मं त्रालय)
Dept 1) Department of Legal Affairs 2) Legislative Department 3) Dept of Justice
Executive ⇒ Law Commission of India is a non-statutory non-constitutional body set up
body through gazette notification. 2020: 22nd commission formed for 3 years.
Statutory ⇒ National Legal Services Authority (NALSA) & SALSA @State to provide free
वैधा�नक सं �ाएं legal aid to poor people. (गरीबों को मु� कानूनी सहायता)
⇒ Bar Council of India to regulate lawyers
⇒ Delimitation Commission (प�रसीमन आयोग)
Constitutional ⇒ Election Commission (चुनाव आयोग)
App ⇒ Nyay Bandhu App by Department of Justice to connect poor people with
volunteer advocates willing to provide Pro Bono (=free) legal service.
⇒ Tele-Law App & helpline number to help rural & poor people in
understanding the legal issues.
Index 📊📊 Rule of Law Index (कानून का शासन सूचकांक)
⇒ By World Justice Project (WJP) a non-profit organization with offices in
USA, Singapore, & Mexico.
⇒ #1: Denmark, #2: Norway, #3: Finland, #79: India
Index focuses on nations' performance on factors such as Govt openness,
fundamental rights, civil & criminal justice & containing corruption. (सरकारी
पारद�शता, मौ�लक अ�धकार, नाग�रक और आपरा�धक �ाय और भ्र�ाचार)
✋We also have a Ministry of Parliamentary Affairs (सं सदीय कायर् मं त्रालय) but no MCQ worthy stuff.
65.3.6 📯📯📯📯 SC → Welfare Schemes (क�ाणकारी योजनाएं )
Most of the following schemes are part of Centrally Sponsored Schemes → Core of the Core Scheme
→ Umbrella Program for Development of SC= NOT 100% Union funded.
Schemes - SC Scholarship, fellowship, hostel facility; loans for self-employment named
after Dr. Ambedkar, Babu Jagjivan Ram & Rajiv Gandhi but nothing
particularly 🔠🔠❓MCQ worthy.
- 2020: ₹59kcr post-matric scholarship for 4 Cr SC students in 5 years. Cost
Sharing 90:10 for Sp.Category States, 60:40 for General States. Money directly
transferred to Student account.
Biz Loans - Vanchit Ikai Samooh aur Vargon ki Aarthik Sahayta (VISVAS) Yojana: Social
Justice Ministry gives 5% loan interest subvention on business related loans
taken by SC and OBC
SCDC (1979) States encouraged to setup Scheduled Castes Development Corporations
(SCDCs) with shareholding Union:States = 49:51. Their main task is to give
concessional loans to beneficiaries
Inter caste - Dr. Ambedkar scheme for Social integration through Inter Caste Marriages
marriages - Social Justice ministry → Ambedkar foundation → gives ₹ ‘x’ lakh to a
couple in two installments if one is SC & the other spouse is non-SC.
PM Adarsh Govt to focus on villages with more than 50% Scheduled Caste (SC) population.
Gram Yojana Develop these villages through better implementation of existing schemes. (Ref:
Pillar #5: infrastructure.)
ASIIM Ambedkar Social Innovation & Incubation Mission by Social Justice ministry to
(2020) Support 1000 Startups of SC Youth over next 4 Years via venture capital fund.
Standup - Each Scheduled Commercial bank branch to give Greenfield Loans between
India ₹10 lakh and ₹1 Cr to at least 1 SC/ST and atleast 1 Woman entrepreneur
with tenure upto 7 yrs.
- Boss? FinMin’s Dept of Financial Services (�व�ीय सेवा �वभाग) (Ref📑📑Pillar#1D)
65.4 WEAKER SECTION → OBC & EWS
Economy / Schemes bullets not much. Some contemporary issues are:
65.4.1 Weaker Section → OBC Sub-categorization (ओबीसी उप-वग�करण) commission
REF: Pillar6A: 🔢🔢Census → Demand for OBC Caste Census → OBC Sub-categorization
65.4.2 Weaker Section → EWS Reservation

- 2019: 103rd Constitutional Amendment Act to provide 10% reservation to Economically Weaker
Sections (EWS: अनार��त श्रेणीम� आ�थक �प से कमजोर वगर्) among the unreserved category i.e. those not
in SC/ST/OBC list.
- Gujarat became the first state to implement the 10% EWS quota after this amendment.
- Union Social Justice ministry looks after the matters related to EWS.
66 👩👩 HRD/EDU → WEAKER SECTION → WOMEN & CHILDREN
(Introduction Template- Origin/DATA) While nearly half of the Indian population consists of
women, but despite more than 70 years of independence they are lagging behind in the men. For
example, हालांिक भारत क� आधी आबादी मिहलाओं क� है िकंतु आजादी के 70 साल बाद भी वे पु�षों के अनुपात म� �पछड़ी �ई है.
वै��क सं गठनों द्वारा बनाए गए अलग-अलग �रपोटर् म� भी यही बात प्र�ुत �ई है.
⇒ UNDP GENDER INEQUALITY INDEX, (यूएनडीपी का ल��गक असमानता सूचकांक)
o female Labour Force Participation Rate in India is less than 30%, (मिहला श्रम बल भागीदारी
दर)- Ref: Pillar4C-Unemployment.
o share in Parliament seats is less than 15%. (सं सद म� मिहलाओं क� सं �ा)
⇒ World Economic Forum's GLOBAL GENDER GAP REPORT too points towards as a similar
gloomy picture. (�व� आ�थक मं च का वै��क �लंग अंतर �रपोटर् म� भी कु छ ऐसा ही हतो�ािहत करने वाला �चत्र उभर आता है)
66.1 👩👩👩→ CONSTITUTIONAL PROVISIONS (सं वैधा�नक सं र�ण)

✓ 14: Equality before law
✓ 15: No discrimination. But State allowed to make special provisions for women & children
✓ 15/3 : Special provision in favour of women & children
✓ 16: Equal opportunity in Govt jobs [सरकारी नौक�रयों म� समान अवसर]
✓ 23: Prohibit forced labour & human trafficking (मानव त�री)
✓ 39/D: equal pay for equal work for both men & women [एक समान कायर् के �लए एक समान वेतन]
✓ 39/A: Equal justice & Free Legal Aid [समान �ाय और मु� क़ानूनी सहायता]
✓ 42: Just & humane conditions of work & for maternity relief. [मातृ� लाभ]
✓ 44: State shall endeavour for a Uniform Civil Code (समान नाग�रक सं िहता).
✓ 46: State to promote educational & economic interests of the weaker sections, & protect them
from social injustice & exploitation. [कमज़ोर वगर् को सामा�जक अ�ाय और शोषण से बचाना]
✓ 47: raise nutrition level & standard of living of people [पोषण और जीवन �र बेहतर करना]
✓ 51/A/e: Duty to renounce practices derogatory to the dignity of women
✓ 243: 1/3rd reservation to women in PRI / ULBs. [Some states have already kept even higher- 50%
reservation e.g. Gujarat, Bihar, Madhya Pradesh]
66.2 👩👩👩→ LEGAL PROVISIONS (कानूनी सं र�ण)

✓ 1860: Indian Penal Code: Section Rape (376), Dowry torture (498-A), Sexual Harassment (509).
SC removed ‘Section 497: Adultery(��भचार) in 2018.
✓ 1952: Cinematograph Act 1952 → Censor board prohibits glorification of violence against
women in films. But, Over-the-Top (OTT) video streaming service / Online Curated Content
Providers like NETFLIX, HOTSTAR, Amazon prime etc are outside the purview of traditional
censors certification. So, 2019: supreme court directed Union Govt to regulate such content.
✓ 1956: Immoral Traffic (Prevention) Act, amended in 1986
✓ 1986: Indecent Representation of Women (Prevention) Act
✓ 1961: Dowry Prohibition Act (दहेज �नषेध अ�ध�नयम), amended in 1986
✓ 1961: Maternity Benefit Act (मातृ� लाभ अ�ध�नयम)
✓ 1971: Medical Termination of Pregnancy Act
✓ 1976: Equal Remuneration Act (समान पा�रश्र�मक अ�ध�नयम)
✓ 1986: Muslim Women (Protection of Rights on Divorce) Act
✓ 1987: Sati (Prevention) Act
✓ 1990: National Commission for Women Act [रा��ीय मिहला आयोग]
✓ 1992: Infant Milk Substitutes & Feeding Bottles & Infant food Act
✓ 1994: Pre-Conception & Pre-Natal Diagnostic Techniques (Prohibition of Sex Selection)-
PCPNDT Act [गभर् के �लंग परी�ण को रोकने के �लए क़ानून]
✓ 2000: Juvenile Justice Care & Protection of Children Act & its amendment in 2015
✓ 2005: Commission for Protection of Child Rights Act [बाल अ�धकार सुर�ा आयोग]
✓ 2005: Protection of Women from Domestic Violence Act (घरेलू िहसं ा अ�ध�नयम)
✓ 2006: Prohibition of Child Marriage Act, replaced previous Act of 1929.
✓ 2012 : The Protection of Children from Sexual Offences (POCSO) Act
✓ 2013: Prevention of Sexual Harassment of Women at Workplace (POSH) Act. [Related term:
Supreme Court’s Vishakha guidelines 1997 to deal with sexual harassment of women at
workplace]. [यौन उ�ीड़न के �ख़लाफ़ सव�� ायालय के �वशाखा िदशा �नद�श]
✓ 2019: Muslim Women (Protection of Rights on Marriage) Act, 2019 / Triple Talaq ban
✓ 1st August celebrated as “Muslim Women Rights Day”. because Triple Talaq was outlawed on
this day in 2019.
66.2.1 Women → Global cooperation: Beijing+25
- 1995: UN World Conference on Women, Beijing, China → Beijing Declaration
- 2010: UN setup a body called “UN Women” (HQ: New York)
- 2020: marks 25 years so, Beijing+25 revise exercise by UN Women.
66.3 👩👩👩WOMEN →→ CENSUS-2011 [जनगणना 2011]

- Sex ratio higher than All India 943: Kerala > Pudu > TN > Andhra > Chhattisgarh
- Lowest sex ratio: Daman-Diu < Dadra-Nagar < Chandigarh < Delhi < Andaman < Haryana <
J&K < Sikkim < Punjab.
66.4 👩👩👩�[YEARBOOK] MINISTRY OF WOMEN & CHILD DEVELOPMENT
मिहला एवं बाल �वकास मं त्रालय consists of <list not exhaustive>

Dept,Attached,CPSE N/A or not MCQ worthy
Statutory Bodies - National Commission for Women (NCW:रा�ी� य मिहला आयोग)
वैधा�नक सं �ा - National Commission for Protection of Child Rights (NCPCR:रा��ीय बाल अ�धकार
सं र�ण आयोग)
- Central Adoption Resource Agency (CARA:क� द्रीय द�क ग्रहण सं साधन प्रा�धकरण):
originally autonomous body later given statutory status under Juvenile Justice
Act 2015
Autonomous �ाय� - Rashtriya Mahila Kosh (RMK), Central Social Welfare Board
सं �ा - National Institute of Public Cooperation & Child Development
Intl. Org अंतररा��ीय - UN specialized agency: United Nations International Children's Emergency
Fund (UNICEF) setup in 1946, HQ: New York, USA.
2001: National Policy for the Empowerment of Women. New policy in 2016 but still in ‘draft’ stage.
- International Women’s Day : 8th March. WCD Ministry gives annual Nari Shakti Puraskar
Awards named after Rani Rudramma Devi, Rani Gaidinliu Zeliang, Mata Jijabai, Kannagi Devi,
Devi Ahilya Bai Holkar.
66.5 👶👶>👧👧 SON-META PREFERENCE (पुत्री के बाद पुत्र क� चाह)
Due to strict implementation of Pre-Conception & Pre-Natal Diagnostic Techniques (PCPNDT) Act
in India, the sex-selective abortion of female foetus have become difficult.
− So, couples have adopted a different strategy where they’ll continue to produce children until
desired number of sons are born. Economic Survey 2017-18 used the term ‘Son Meta-
Preference’ to describe this phenomenon. [जब तक बेटा नहीं पैदा होता तब तक माँ बाप ब�े पैदा करते रहे]
− According to this survey, there are 21 million+ ‘unwanted girls’ in India.
66.5.1 👶👶>👧👧=😰😰 Son Meta Preference: why bad?
− As such girls & women are neglected in their food & health needs. Majority of them suffer from
Anaemia & malnutrition. When wife is often forced to produce more children to have a son →
detrimental to her health → high MMR. (भोजन �श�ा और �ा� म� बेिटयों क� अवहेलना)
− Since daughters seen as burden, poor parents are keen to marry them off as soon as possible.
Child Marriages → early pregnancy before the age of 19→ high MMR.
− Girl married off early → she becomes mother at early age → can’t pursue higher studies / career
ambitions → low Labour Force Participation Rate. (छोटी उम्र म� शादी)
− Economic Survey 2017-18 noted Economic Development is not an antidote to gender inequality
or Son Meta preference because per-capita income & GSDP wise Punjab is better than North
Eastern states YET Punjab’s gender indices (sex ratio, violence against women) etc. are pathetic.
− As a result, India lags behind in UNDP’s GII Index & WEF’s Global Gender Gap report.
66.5.2 👣👣📅📅 JAYA Jaitley Task Force for ⏫marriage age 4girls
⇒ 1929: Sharda Act - Minimum age of marriage was 15 for girls → 1978 ⏫to 18
⇒ 2020-Feb: Budget- Finance minister observed: to ⏫ nutrition, higher education, career
opportunities & to ⏬MMR, TFR, we need to re-examine the minimum of marriage /
motherhood. we'll setup a taskforce for this. (लड़िकयों क� शादी क� �ूनतम आयु म� बढ़ोतरी)
⇒ 2020: Ministry of Women and Child Development setup Jaya Jaitley taskforce → Prohibition of
Child Marriage (Amendment) Bill, 2021 to raise the age of legal marriage for girls from 18 to 21.
66.6 👩👩👩📊📊 REPORT → UNDP → GENDER INEQUALITY INDEX (GII)

In UNDP’s Annual Human Development Report, �लंग असमानता सूचकांक (GII) measures inequality
between women & men in 3 dimensions
3 Dimensions Indicators & Data: 2020’s Report → India Denmark
Note: these datasets copied from UNDP report.
They may not always match with 📙📙📙📙ES21or
NITI Data. [यहाँ पर आंकड़े अंतररा�ी� य �रपोटर् से �लए ह� वो
अपने सरकारी �रपोटर् के आँकड़ो से थोड़े अलग हो सकते ह� ]
1) Reproductive Maternal Mortality Ratio: Number of deaths 133 4
Health due to pregnancy-related causes per 100,000
(प्रजनन �ा�) live births. [मातृ मृ�ु अनुपात]
Adolescent Birth Rate: Number of births to 17 2
women aged 15–19 per 1,000 women in that age
2) % of females aged 25/> who at least enrolled till 42% (for 95% (for men
Empowerment Secondary Education [कम से कम मा��मक �र तक men 47%) also 95%)
सश��करण दा�ख़ला]
Share of seats in parliament 13% 40%
3) Labour Labour Force Participation Rate (LFPR:श्रम श�� 19% (for 57% (for men
Market [श्रम क� भागीदारी दर ) Proportion of the females (15 men its its 67%)
बाज़ार म� मिहलाओं years/>) who’re employed or seeking work as a 70%)
क� ��त] % of the total female working-age population.
Plug above values in GII formula, you get score → 0.490 0.013
Based on score, you give ranks India#122 Denmark#1
- Lower GII score = less inequality = better rank will be given.
- 2021-22’s Ranking: #1: Denmark, #2: Norway, #3: Switzerland, #122: India…... Yemen #170.
- India’s rank has improved from last report #123 (in 2020) to #122 (in 2021-22)
- While UNDP’s HDI index ranked 191 nations, GII covers 170, due to lack of data for some
nations / some nations don’t have system of parliament with women seats.
66.7 👩👩👩📊📊 REPORT → WEF → GLOBAL GENDER GAP REPORT

Annual report by the World Economic Forum since 2006, to measure
Gender Gap Across Four Pillars & India’s Rank → 2021 2022
1) Economic Opportunity: Female labour force participation rate, 151 143
wage equality, number of women in managerial / senior executive
position. (आ�थक अवसर)
2) Educational Attainment: female literacy, enrollment rate at 114 107
primary secondary tertiary level (�श�ा प्रा��)
3) Health & Survival: Life Expectancy at Birth, Sex Ratio. 155 146
4) Political Empowerment: How many females in Parliament, how 51 48
many ministers, how many became Prime Minister or President?
Overall Rank of India → 140 135
Bottom Ranker [सब से �न� �र पर यह देश है] Afghani Afghani
(156) (146)
Top Ranker = Iceland since last 13 years. Iceland Iceland
2021’s report found 1) It will take more than 135 years to bridge the gap between male and female
development. 2) Corona has increased in the jobloss and gender gap for women.
66.7.1 👩👩👩📊📊 Report → OECD’s SIGI Report

⇒ Social Institutions & Gender Index prepared by OECD since 2007. Although not annually
updated. It measures various types of discrimination faced by women at home & in the society.
Nations are classified into Very low level of discrimination to very high level. [मिहलाओं सेघर म� और
समाज म� िकस प्रकार के भेदभाव िकए जाते ह�]
⇒ Ranking? Poor Cost:Benefit in preparing it.
66.7.2 👩👩👩📊📊 Gender Indices → Gender Social Norms Index (GSNI)

⇒ United Nations Development Programme (UNDP) started for the first time in 2020
⇒ It measures how the public's own social beliefs obstruct gender equality in politics, work, &
education. (�लंग समानता के बारे म� जनता क� मा�ताएं और पूवार्ग्रह मिहला सश��करण को असर करती है)
⇒ 90% of world people & 98% of Indians hold one bias against females e.g. men are better political
/business leaders than women etc.
⇒ Consequently, women will suffer in 4 indices: 1) political empowerment, 2) educational
empowerment, 3) economic empowerment 4) physical integrity
⇒ NUMBER OF female heads of country ⏬ (e.g. British PM Theresa May replaced by a male,
South Korea & Brazil’s female presidents impeached/removed for corruption)
⇒ Ranking? Poor Cost:Benefit in preparing it.
66.8 👩👩👩📊📊 SDG GOAL #5: GENDER EQUALITY & EMPOWERMENT

India’s Baseline for SDG Goal#5 Target-2030
Sex Ratio at birth: 898 females / 1000 males 954. Chhattisgarh &
ज� के समय पर �लंग अनुपात Kerala achieved
Ratio of female : male wages for equal work: 0.7 1
% of women in 15-49 age who experience domestic violence: 33% 0
% of women in 15-49 age using modern family planning methods: 54% 100%
Percentage of seats won by women in Lok Sabha & Vidhan Sabha: 9% 50%
Ratio of femaleLFPR to maleLFPR = 0.32 1
66.9 👩👩👩📯📯📯📯 WOMEN SCHEMES → HEALTH
Umbrella ICDS Seen in health section. Core Scheme: not 100% funded by Union.
By WCD Ministry Its sub-components include:
1. Anganwadi Services Scheme
2. PM Matru Vandana Yojana (₹5k + ₹1k for birth of 1st child)
3. SABLA: Scheme for Adolescent Girls (11-18 years)
4. POSHAN Abhiyan
5. National Creche Scheme (�शशु-गृह): to setup Creches for working women.
6. Child Protection Scheme: for children in difficult circumstances.
Janani Suraksha Seen in health section. BPL mothers given conditional ₹ ₹ for delivering child
Yojana By Health in public hospital. No limit on age or number of children.
Ministry
Stree Swabhiman - Ministry of Electronics & IT’s Common Service Centres (CSC) will
provide affordable sanitary napkins to females in rural areas.
- MEITY will also help village level entrepreneur & self help groups to
manufacture sanitary napkins.
- Generate awareness about menstrual hygiene among girls etc.
Udaan - Rajasthan State Govt scheme for free sanitary napkins for all woman
66.10👩👩👩📯📯📯📯 WOMEN SCHEMES → BETI BACHAO BETI PADHAO (2015)
All India Child Sex Ratio (CSR: 0-6 years) ⏬ from 927 (2001) → 919 (2011). So, 2015: BBBP
launched to improve it by targeting 161 districts with lowest CSRs.
⇒ Boss? WCD Ministry with coordinated efforts of Health Ministry, HRD/EDU Ministry.
⇒ Stronger enforcement of PCPNDT Act to stop female infanticide.
⇒ Digital Guddi-Gudda Board to display birth statistics of boy : girl births in a given district.
⇒ HRD/EDU ministry: separate toilets for girls in schools.
⇒ Information Education Communication (IEC), campaigns in TV, Radio, Social Media etc.
⇒ Sukanya Samriddhi Yojana: Bank savings account in the name of girl child that offers more
interest rate than ordinary bank accounts. Interest rates decided by Dept of Economic Affairs.
(Ref: Pillar1D: Financial Inclusion → Small Savings Schemes).
⇒ UDAAN: CBSE’s scheme to give free coaching for girls in entrance exams of IIT etc
⇒ PRAGATI: AICTE’s scholarship to girls who qualify in entrance exams of IIT/ technical courses.
⇒ Gender Champions scheme: WCD Ministry → Boys & girls aged 16 years/> nominated as
‘Gender Champions’. They’ll try to spread awareness in their school / college / society for gender
sensitization, dignity & respect for women etc.
66.10.1 👩👩: 👻👻👻👻👻👻👻👻 Atama-Nirbhar: PM GARIB KALYAN → Women will benefit, how?
Table 1: plus, many other initiatives refer to respective pillars for more!
⇒ ₹500 per month x 3 months=₹1500 to 20 crore women PM Jan Dhan Bank
accounts. (April, May, June 2020)
⇒ (Single time) ₹1,000 to 3 crore poor senior citizen, poor widows & poor
disabled
Social
��Further, male & female workers will benefit from following
Security
⇒ If worker earning <₹15,000 per month in a firm with <100 workers → Govt
(More in 📑📑
will pay 24% of his monthly wages into his EPFO account for next 3 months.
Pillar#1D)
⇒ EPFO workers can withdraw xx% from their account for next 3 months.
⇒ ₹50 lakh insurance cover for health workers involved in managing the
Coronavirus such as doctors, nurses, paramedical staff, ASHA workers etc. for
the next 90 days.
📑📑1D:Loans Women Self Help Groups (SHGs) to be given ₹20 lakh collateral free loans.
MGNREGA ��MNREGA wage ⏫ from ₹182/day to ₹202
Food/ ⇒ (Pillar6A: Malnutrition) PM Garib Kalyan Ann (अ�) Yojana
Cooking ⇒ (📑📑Pill: 5A) PM-Ujjwala LPG
66.11👩👩 📯📯📯📯 WOMEN SCHEMES→ VIOLENCE / SKILLING / MISC.
In following table, by default the boss is WCD Ministry, unless mentioned otherwise:
SHe-Box (2017) − Online portal where Women employees (both in public & private sector
jobs) can register sexual harassment complaints. → Govt initiates action
under the POSH Act 2013. [यौन उ�ीड़न के �ख़लाफ़ �शकायत के �लए]
Helpline (2015) − Women Helpline Scheme Number: 181
Pradhan Mantri − Petroleum Ministry gives free LPG connection for BPL women. 📑📑Ref:
Ujjawala Yojana Pillar#5: Infra handout
Ujjawala Scheme − WCD Ministry scheme for women-children trafficking / prostitution
(2007) − Prevention, rescue & rehabilitation of victims: send them to shelter homes
or reconnect with family, give skill training to former prostitutes etc.
Swadhar Greh − To setup 1 Swadhar Greh Shelter home in each district to provide shelter,
Scheme food, clothing & skill training for women in distress.
Sakhi One Stop − Setup using ₹ ₹ from Nirbhaya Fund. These centres provide assistance to
Centres (2015) women victims of domestic abuse / rape / prostitution / trafficking etc.
(and depending on case they may be sent to Swadhar Greh Shelter homes
or reconnected with family.)
PM Mahila − This is for all women who want to enroll in Govt schemes - be it for
Shakti Kendra education, skill, entrepreneurship, LPG connection etc.
(2017) − NCC/NSS/Students are placed as ‘Volunteers’ in these centres to help
women fill up forms etc.
STEP (1986) for − ‘Support to Training & Employment Programme for Women (STEP)
skilling − Girls aged 16/> are given skill training & support for Agriculture,
Horticulture, Food Processing, Handlooms, Tailoring, Stitching,
Embroidery, Zari etc, Handicrafts, Computer, spoken English, Gems &
Jewellery, Travel & Tourism, Hospitality etc.
Entrepre- − Social Justice Ministry: National Backward Classes Finance &
neurship Development Corporation (NBCFDC) → Mahila Samriddhi Yojana →
उद्य�मता
Concessional Loans for female entrepreneurs.
− Department of Financial Services → credit guarantee through NCGTC ltd
→ Standup India: SC/ST & Women entrepreneurs given loans from 10
lakh to 1 cr in each SCB Bank branch.
− MSMS Ministry: Public procurement quota for women entrepreneurs’
Micro & Small Enterprises.
#www: Web- − WCD Ministry’s online campaign to recognize women who did good
Wonder Women work through social media. Any Indian origin woman working anywhere
in the world is eligible.
66.12👩👩👩💰💰 🗄🗄:📯📯📯📯 WOMEN FUNDS
Rashtriya - Autonomous body registered under the Societies Registration Act 1860.
Mahila Kosh Chairman? WCD Minister.
(1993) - It gives loan ₹ to Microfinance institutes → loans to women self-help
groups so they can achieve economic independence. (लघु �वत/सू� ऋण)
Nirbhaya Fund - Non-lapsable fund administered by the Dept of Economic Affairs of the
(2013) Finance ministry.
- Govt dept / NGOs propose women safety projects to WCD ministry (e.g.
CCTV cameras, panic button in public buses etc) → ₹ ₹ given from
Nirbhaya Fund.
66.12.1 👩👩👩📯📯📯📯- 3 Umbrella Schemes to cover all women schemes

2021-March, Ministry of Women and Child Development announced that existing schemes will be
clubbed into 3 umbrella schemes. Reason? More effective monitoring & implementation.
प्रभावी �प से �नगरानी और अमल करने के �लए वतर्मान योजनाओं को तीन छतरी योजनाओं के नीचे वग�कृ त िकया गया है
Sr Umbrella Scheme Schemes included
1. Saksham Anganwadi and ICDS and its components like - Anganwadi Services,
POSHAN 2.0 Poshan Abhiyan, Scheme for Adolescent Girls, National
मिहला िकशोरी और ब�ों के �लए- Creche Scheme
भोजन पोषण इ�ा�द
2. Mission VATSALYA Child Protection Services and Child Welfare Services.
बाल सुर�ा और क�ाण 📑📑More in Pill#6C weaker section
3. Mission Shakti (Mission for A. SAMBAL (One Stop Centre, Mahila Police
Protection and Empowerment Volunteer, Women's
for Women) मिहला सुर�ा और Helpline/Swadhar/Ujjawala/Widow Homes etc.)
सश��करण B. SAMARTHYA (Beti Bachao Beti Padhao, Creche,
Pradhan Mantri Matru Vandana Yojana/ Gender
Budgeting/Research.
66.12.2 👩👩👩✍ Women / Gender Development: Conclusion-Template (�न�षर्)
− Sustainable Development Goal SDG# 5 requires India to achieve gender equality & empower all
women & girls. Both human & economic development of India, it’s imperative that we address
the rampant gender inequality in India on war-footing. OR
− While Beti Bachao Beti Padhao & Sukanya Samridhi Yojana are important steps in gender
empowerment, yet, India’s poor ranking in the global report indicates that Govt schemes alone
can’t ⏬ the gender inequality until the collective will & mindset of Indian society is changed.
(के वल सरकारी कदमो से कु छ नहीं होगा सामूिहक इ�ाश��, समाज क� मान�सकता बदलने क� भी ज�रत है)
66.13 👶👶 WEAKER SECTION → CHILDREN (बालक ब�े)
66.13.1 👶👶 → Constitutional Protection

✓ Art. 15/3 : No discrimination but special provision in favour of women & children allowed.
✓ **21A: Right to free & compulsory education for children aged 6-14.
✓ Art. 23: Prohibition of human trafficking & bonded labour. [मानव त�री और बं धुआ मज़दू री]
✓ Art. 24: Prohibition of child labour in factory, mine or any other hazardous occupation.
✓ Art. 39 (f): State shall ensure that Children are given opportunities for healthy development &
protected against exploitation, moral & material abandonment.
✓ Art. 45: State to provide early childhood care & education for all children.
✓ **51A(k): Fundamental duty of parents & guardians to provide right to education for 6-14 aged
children. (माता-�पता और अ�भभावक का मौ�लक कतर्� है ब�ों क� �श�ा) **inserted by 86th Amendment, 2002
66.13.2 👶👶 → Legal Protection
 1986: Child Labour (Prohibition & Regulation) Act. → Amendment in 2016: <14 aged can’t be
employed anywhere except TV/ Cinema /Sports (but not circus) & Non hazardous family
enterprise work after school hours. Adolescents (aged 14 to 18) can be employed but only in
non-hazardous work. (बाल मजदू री प्र�त बं धन)
 2000: Juvenile Justice Care & Protection of Children Act (िकशोर �ाय देखभाल और ब�ों का सं र�ण
अ�ध�नयम). Replaced by new Act in 2015 → gives Juvenile Justice Board certain powers against the
16-18 y.o child offenders who commit heinous offences (जघ� अपराध) like rape & murder.
 2005: National Commission for Protection of Child Rights (NCPCR) Act in 2005, setup in
2007. [बाल अ�धकारों क� र�ा के �लए रा��ीय आयोग]
 2006: Prohibition of Child Marriage Act. Replaced earlier act of 1929. (बाल�ववाह प्र�तबं ध)
 2012: Protection of Children against Sexual Offences Act (POCSO: यौन अपराधों के �खलाफ ब�ों का
सं र�ण)
 2015: Central Adoption Resource Authority (CARA: क� द्रीय द�क ग्रहण सं साधन प्रा�धकरण). It was
originally set up as an autonomous body but given statutory status in 2015, under the Juvenile
Justice Act & given certain powers to enforce Hague convention on protection of children
during inter-country adoption. CARA falls under WCD Ministry.
66.13.3 👶👶 📯📯📯📯 HRD Weaker Section → Children → Orphan in Corona
PM CARES for - �Boss? Women and Child Development Ministry
Children Scheme - To identify the children who lost both the parents during Corona, and
help them [कोरोना म� अनाथ �ए ब�ों क� मदद करो योजना]
- They’ll be given free Education in School, Eligible for PM-JAY: ₹5
lakh health insurance, Interest free loans for higher education etc.
Bal Swaraj portal National Commission for Protection of Child Rights (NCPCR) Bal Swaraj
portal for children in need of care and protection. And it is also used for
helping children/orphans who lost both their parents in Corona.
66.13.4 👶👶 📯📯📯📯 HRD Weaker Section → Children → Misc. Portal/GK

For the health / education schemes, refer to previous sections of Handout 📑📑6B
Carings Portal WCD Ministry → CARA’s portal for adoption of orphans.
Khoya-Paya Portal WCD Ministry’s portal for missing children information.
Pencil Portal Labour Ministry portal for child labour complaints
Pocso E-box National Commission for Protection of Child Rights (NCPCR)’s portal for
child sex abuse complaints. (ब�ों का यौन शोषण)
Children’s Day - India celebrates on 14th November, Nehru’s B’day.
बाल िदवस - UN celebrates on 20th November
Hausala 2018 Sports / Drama / Arts Competition of orphans, abandoned children living
in Child Care Institutions by WCD Ministry @ Delhi.
Policies - 2013: National Child Policy. [रा��ीय बाल नी�त]
- 2018: (draft) National Child Protection Policy - against sexual abuse.
📊📊Ranking/Report - State of the World’s Children 2021 Report Released by UNICEF.
66.14 HRD/EDU → WEAKER SECTION → PH (♿)
Boss? Social Justice Ministry → Dept of Empowerment of Persons with Disabilities (िद�ांगजन
सश��करण �वभाग)
66.14.1 ♿ PH → Constitutional Protection:
- Art. 16: Equal opportunity in Govt jobs. (सरकारी नौक�रयों म� समान अवसर)
- Art. 41: The State shall, within the limits of its economic capacity make effective provision for
the right to work, right to education & right to public assistance in cases of unemployment, old
age, sickness & disablement. [बेरोज़गार, बुजुगर्, बीमार और अपािहजों/ �वकलांग क� सहायता सरकार का कतर्�]
- Art. 46: State to promote educational & economic interests of the weaker sections, & protect
them from social injustice & exploitation. [कमज़ोर वगर् को सामा�जक अ�ाय और शोषण से बचाना]
- 7th Sch: State List Entry 9: Relief of the disabled & unemployable.
66.14.2 ♿ PH → Legal Protection:
- 1987: Mental Health Act (मान�सक �ा� कानून)
- 1992: Rehabilitation Council of India Act (भारतीय पुनवार्स प�रषद अ�ध�नयम).- A statutory body under
Social Justice Ministry.
- 1999: National Trust for the Welfare of Persons with. Autism, Cerebral Palsy, Mental
Retardation & Multiple Disabilities Act
- 1995: Persons with Disabilities Equal Opportunities, Protection of Rights & Full Participation
Act (replaced with new act in 2016, given below)
- 2016: Rights of Persons with Disabilities Act: (िद�ांग अ�धकारअ�ध�नयम 2016) It increases PH
reservation from 3% to 4%, & recognizes new types of disabilities like Acid Attack victim, Sickle
Cell disease etc. <Full list given below>
Legally recognized Disabilities: →
✓ Blindness, Low-vision ✓ Muscular Dystrophy
✓ Mute / Speech & Language disability ✓ Chronic Neurological conditions,
✓ Hearing Impairment (deaf & hard of Parkinson's disease, Specific Learning
hearing), Locomotor Disability, Dwarfism Disabilities, Multiple Sclerosis
✓ Leprosy Cured persons, Intellectual ✓ Thalassemia, Hemophilia, Sickle Cell
Disability, Mental Illness disease
✓ Autism Spectrum Disorder, Cerebral Palsy ✓ Acid Attack victim
66.14.3 ♿ 📯📯📯📯 PH → Welfare schemes
Ministry of Social Justice runs following schemes →
Scheme features
Sugamya Bharat 2015: launched to make the public buildings & websites more accessible to
Accessible India PH. Ref: Pillar#5 Infra
ADIP - Assistance to Disabled Persons for purchase of Fitting Devices (ADIP)
(2005) e.g. Tricycles, Wheelchairs, Crutches, Walking Sticks, Brail kits,
Hearing Aids etc
- Social Justice Ministry → Artificial Limbs Manufacturing Corporation
of India (ALIMCO) implements it.
DDRS Deendayal Disabled Rehabilitation Scheme (DDRS)
(1999) - It has subschemes like Samarth, Nirmaya, Sahyogi, Gharaunda, Gyan
Prabha, Uddyam Prabha etc. for scholarships for students with
disabilities, Skill training, rehabilitation, awareness generation etc.
66.15 HRD/EDU → WEAKER SECTION: ELDERLY, DRUG ADDICTS
Social justice ministry is also responsible for ‘social defense’ (सामा�जक सुर�ा)…
66.15.1 👴👴 Elderly (��)
- Senior citizen is a person aged 60 / >

- 2007: Maintenance & Welfare of Parents & Senior Citizens Act. Children / heirs can’t abandon
elderly, else penalty through special tribunals.
- 2012: National Council of Senior Citizens (NCSrC) headed by Minister of Social Justice &
Empowerment. Neither statutory nor constitutional but set up via gazette notification.
- 2017: Rashtriya Vayoshri Yojana: Social Justice Ministry → Artificial Limbs Manufacturing
Corporation (ALIMCO) gives free assisted living devices such as Walking Sticks, Crutches, Hearing
Aids, Wheelchairs, Artificial Dentures & Spectacles at FREE of cost to BPL senior citizens only.
- 2017: Pradhan Mantri Vaya Vandana Yojana: LIC guaranteed return scheme that we learned in
Pillar#1: Insurance.
- 2021: Atal Vayo Abhyuday Yojana [National Action Plan for Senior Citizens]= Social Justice
Ministry’s umbrella scheme for financial security, healthcare and nutrition, shelter and welfare,
protection of life and property, etc. [बुजगु � क� आ�थक सुर�ा, �ा�, आवास, जीवन तथा सं प�� क� र�ा इ�ा�द के �लए
सामा�जक �ाय मं त्रालय िक छतरी योजना]
- 2021: Social Justice Ministry’s Poshan Abhiyan for the Elderly to combat malnutrition to the elders,
who are not staying in the Old Age Homes and are victims of severe malnutrition, by serving hot-
cooked mid-day meals using Gram Panchayats and Urban Municipalities using ₹₹ from Senior
Citizens Welfare Fund. [जो गरीब बुजगु र् वृद्धाश्रम म� नहीं रहते, िकं�ु अ�ं त कु पोषण से पी�ड़त ह� उ�� ग्राम पं चायत और शहरी
नगरपा�लका क� मदद से दोपहर को गमर् खाना �दया जाए- उस वा�े सामा�जक �ाय मं त्रालय का पोषण अ�भयान]
📆📆 Notable Days - 1st October: International Day for Older Persons (Social Justice ministry
organized “Vayo Naman Program” to honor them)
- 2020-2030: United Nations Decade of Healthy Ageing
� SACRED Portal To help senior citizens to find jobs. Boss? Social Justice Ministry
👴👴 SAGE Initiative - �Boss? Social Justice Ministry
�ाटर्अप कं प�नयों को बुजगु � क� - Use Startup companies to help senior citizens. (e.g. delivering food,
मदद करो योजना medicine, home care etc)
- Senior care Ageing Growth Engine (SAGE) project
♿ Unique Disability - �Boss? Divyangjan Department [�वकलांगों को एक और नया काडर् दे दो योजना]
Identification (UDID) - It is a photo ID card for physically handicapped persons So they can
Card benefit from various government schemes
🤲🤲 SMILE Scheme - �Boss? Social Justice Ministry
[�भखा�रयों को कौशल रोज़गार - Beggars rehabilitation program
देके पुनः �ापन करो योजना] - SMILE scheme (Support for Marginalized Individuals for Livelihood
and Enterprise scheme).
Conclusion? XYZ issue need to be address to ⏫ older persons' well being, dignity & participation in
social, cultural, economic and civic and political life (वृद्धो क� प्र�त�ा और स��लयत, वृद्धो क� सामा�जक, सां�ृ�तक, आ�थक
और नाग�रक और राजनी�तक जीवन म� भागीदारी के �लए कदम उठाना ज�री )
66.15.2 🍻🍻 Drug Addicts (नशे के लती/ नशेड़ी)

- Narcotic Drugs & Psychotropic Substances Act (NDPS-1985: �ापक औष�ध एवं मन:प्रभावी पदाथर्
अ�धनयम) contains provisions for punishment for drug-peddlers & rehabilitation of drug addicts.
66.16👭👭��WEAKER SECTION: LGBT (समल��गक और िक�र)
- Lesbian, gay, bisexual, transgender, queer & intersex (LGBTQI)

- 2018: Supreme Court declares Indian Penal Code (IPC) Section 377 unconstitutional.
Consensual homosexual acts between consenting adults are decriminalized.
- 2019: Akhil Bhartiya Kinnar Siksha Seva Trust (a non-Govt body) announced setting up India’s
first university for transgender in Fazilnagar in Kushinagar district in UP (Uttar Pradesh).
- 😷😷 2020: Manipur NGO’s initiative “Khudol (gift)” for giving food, medicine, & quarantine
facility material to LGBTQI+ & HIV community during Corona Crisis. It’s listed among top-10
global initiatives for an inclusive fight against Corona, by UN.
66.16.1 � National Council for Transgender Persons (NCTP: ट�ांसज�डर ��यों के �लए रा��ीय प�रषद)
2016: Transgender Persons (Protection of Rights) Bill → became Act in 2019. to prohibit
discrimination against them in education / employment / residence; National Council for
Transgender (NCT) for their welfare. While SC earlier directed Govt to give reservation to TG but
bill did not have it.
⇒ NCPT is a statutory body under Transgender Persons Protection of Rights Act, 2019
⇒ Chairman = Union Minister for Social Justice & Empowerment
⇒ Vice Chairman= Union Minister of state for Social Justice & Empowerment (उपा��)
⇒ representatives of various Ministries/Departments, NHRC & NCW, State Govt/UT, NGOs.
⇒ Five representatives of transgender community.
⇒ Non ex-officio members will have 3 years tenure.
⇒ More details about the functions & responsibilities prepared from CA-PDF/Polity courses.
67 ��
� � 🌿🌿 HUMAN DEVELOPMENT & SUSTAINABLE DEVELOPMENT
Introduction: Human development measures the ‘richness’ of human life, rather than measuring
‘richness’ of the economy. It stands on three foundations 1) To live a healthy & creative life 2) to be
knowledgeable 3) A decent standard of living. मानव �वकास अथर्�व�ा क� ’समृ�द्ध’ को मापने के बजाय मानव जीवन
क� ‘समृ�द्ध ’को मापता है। यह तीन नींवों पर खड़ा है 1) एक �� और रचना�क जीवन जीना 2) �श�ा हाँसील करना 3) एक अ�ा
जीवन �र हाँसील करना ।
As per NCERT: Four pillars of human development are Equity, Sustainability, Productivity &
Empowerment. Four approches (��कोण) to human development are:
Approch Description (वणर्न)
1. Income - Oldest approch. Higher income = higher human development. (आय
Approach ��कोण)
2. Welfare - People are not participants in development but only passive recipients.
Approach - higher Govt expenditure on education, health, social services etc welfare
⇒ क�ाण ��कोण scheme required to help them.
3. Basic needs - by International Labour Organisation (ILO).
⇒ बु�नयादी ज�रत� - Six basic needs: health, education, food, water supply, sanitation, &
housing need to be focused
4. Capability - By Prof. Amartya Sen: Govt should focus on building human capabilities
Approach in health, education & access to resources (such as jobs, loans etc) = ⏫
⇒ �मता ��कोण human development.
🔠🔠❓Which of following are the 4 pillars of human development? (UPSC-CDS-i-2020)
a) Equity, inclusion, productivity & empowerment
b) Equity, productivity, empowerment & sustainability
c) Productivity, gender, inclusion & equity
d) Labour, productivity, inclusion & equity
🔠🔠❓Which one of the following approaches of human development was initially proposed by
the International Labour Organisation (ILO) and emphasised on health, education, food, water
supply, sanitation and housing ? (UPSC-CDS-2021-i)
(a) Welfare approach (b) Basic needs approach (c) Income approach (d) Capability approach
67.1 📊📊📊📊 UNDP’S HUMAN DEVELOPMENT REPORT (मानव �वकास �रपोटर्)

- New York: United Nations → Economic & Social Council (ECOSOC) → United Nations
Development Programme (UNDP:सं यु� रा�� वकास कायर्क्रम) prepares this annual report since 1990,
based formula devised by Economists Mahbub ul Haq (Pak) & Amartya Sen (India). Mahbub ul
Haq was the first to give human dev concept
Published in THEMES
2020-Dec next frontier human development and anthropocene. [Earth’s history is
divided into time series known as eons, eras, periods, epochs, and ages.
Officially the current epoch is called 'Holocene' (began approx 11,000 yrs ago)
although unofficially called Anthropocene - to mark the impact of human
activity.]
2021 No report published
2022-Sept “Uncertain times, unsettled lives Shaping our future in a transforming world”
It covers period from 2021-22
UNDP’s report provides FIVE indices of Human Development viz.

FIVE INDICES (started 2021-22 Report (Released in Sept’22)
from) #1-5 🧔🧔 India #bottom
1990: Human 1.Swiz 132 191: South
Development Index (HDI) 2.Norway (In previous Sudan
3.Iceland report it was 131
4.HongKong so declined.)
5.Australia
2010: Multidimensional India 16.4% people are poor.
Poverty Index (MPI). It For remaining details refer to Handout: Poverty.
doesn’t give ‘rank’ but % of
poor people.
(Ref: Poverty section)
2010: Gender Inequality #1: Denmark 122 170: Yemen
Index (GII) (Ref: Women #2: Norway (last time 123 so
section) 3: Switzerland improved)
FIVE INDICES (started 2021-22 Report (Released in Sept’22)
from) #1-5 🧔🧔 India #bottom
�लंग असमानता सूचकांक
2014: Gender Development - Group#1: Norway, Iceland, Sweden etc
Index (GDI). Doesn’t give - Group#5: India, Niger, Chad etc.
‘rank’, it clubs nations into
group 1 to 5
2010: Inequality Adjusted Not important / poor cost benefit in chasing it for exam
HDI
67.1.1 📊📊📊📊UNDP → Human Development Index (HDI:मानव �वकास सूचकांक)
It’s the geometric average of three basic dimensions of human development:
Table 2: पैदा होता → पढ़ता → पैसे कमाता
Dimension Indicators 🧔🧔 Swiz.
India
Healthy Life Life expectancy at birth yrs (आयु सं भा�वता) 67.2 84
(before
corona it
was 69
yrs)
Knowledge Expected years of schooling 17 12
�ान Mean years of schooling 14 7
Standard of Per capita gross national income (GNI:सकल रा��ीय प्र�त �� $6,590
$66,933
Living आय) in US$ (PPP Exchange rate @2017)
(जीवन �र)
Plug above values in HDI formula you get HDI score between 0.000 to 0.633 0.962
1.000 (higher score is better)→
Based on above HDI Scores,
- Nations are given rank: Swiz. #1, India #132 in 2021-22’s Report (published in 2022-Sept)
- Nations are clubbed into groups: 1) Very High Human Development (उ�तम मानव �वकास)2) High
Human Development 3) Medium Human Dev (India is here) 4) Low Human Development. ‘
🔠🔠❓MCQ. Which one of the following educational development indicators is currently used by UNDP to
construct the Human Development Index ? (UPSC-CAPF-2020)
(a) Level of Literacy (b) Gross Enrolment Ratio (c) Mean Years of Schooling (d) Dropout rate
67.1.2 📊📊📊📊UNDP → Inequality Adjusted HDI

- Since HDI is a geometric mean, it hides internal inequality of a country. So, using another
formula, UNDP will adjust the HDI score with inequality among rich & poor in those 3
dimensions. [एक ही देश के भीतर अमीरों और गरीबों के बीच मानव �वकास म� िकतनी असमानता है?]
- So while India’s HDI score = 0.633 but inequality adjusted HDI (असमानता समायो�जत मानव �वकास
सूचकांक)= 0.475. Lower score = more inequality. Separate rank is given but NOTIMP.
67.1.3 📊📊📊📊 UNDP → Gender Development Index (GDI: ल��गक �वकास सूचकांक)
It’s simply the (Female HDI) divided by (Male HDI) for a given country. (पु�षों के अनुपात म� मिहलाओं का
मानव �वकास अनुपात िकतना है?)
- Based on this score, nations are not ‘ranked’ but clubbed into five groups. India is in bottomest
group #5 along with Niger, Chad et al.
- GDI value could even be even greater than 1 if female life expectancy, education, income) is
more than men e.g. Estonia, Latvia where more men dropout of school & die early by desi-liquor
addiction.
67.2 📊📊📊📊 UNSDSN → WORLD HAPPINESS REPORT
Annual report by United Nations Sustainable Development Solutions Network since 2012
- Citizens are asked to give score 0 to 10 on how happy they’re for following parameters: income,
freedom, healthy life expectancy, social support by friends & relatives, generosity & corruption.
Ranking 2020 2021 2022
Most Happy #1 Finland Finland Finland
India** @144😰😰 @139 @136
Most unhappy Afghan Afghan Afghan
bottom rank
⇒ In 2020- the report even ranked ‘cities’ for happiness. But poor cost benefit chasing.
⇒ China, Pakistan, Nepal, Bhutan, Sri Lanka, Bangladesh - all are more happier than us. ये बात कु छ
हजम नहीं होती है.
67.3 📊📊 WORLD BANK → HUMAN CAPITAL INDEX
2018: World Bank’s first ever report on Human Capital Index (HCI:मानव पूंजी सूचकांक)
- It measures a nation's progress in health & education for the productivity of its next generation
of workers using following components:
a. Survival rate of children (under-5 mortality)
b. Expected years of schooling (अनुमा�नत �वद्यालयी �श�ा के वषर्)
c. Overall health measured in A) under-5 stunting B) adult survival rate.
- Govt of India has rejected this report citing “World Bank methodology is faulty.”
67.4 📊📊 HUMAN DEVELOPMENT → MISC. INDICATORS

Gross National - 1972: term coined by the fourth king of Bhutan, Jigme Singye
Happiness Index Wangchuck,
(GNHI- सकल रा��ीय - It is an indicator to measure sustainable development, environmental
खुशहाली सूचकांक) conservation, culture & good governance.
Physical Quality - mid-1970s by Morris D Morris (जीवन �र क� भौ�तक गुणव�ा का सूचकांक)
of Life Index - Focuses on 1) life expectancy, 2) infant mortality rate 3) literacy rate
(PQLI) - Scores a nation on a scale of 1 to 100. Score 1 = represents the worst
performance. 1) जीवन प्र�ाशा, 2) �शशु मृ�ु दर 3) सा�रता दर)
🔠🔠❓MCQ. Human capital formation as a concept is better explained in terms of a process which
enables (Pre-2018)
1. Individuals of a country to accumulate more capital.
2. Increasing the knowledge, skill levels & capacities of the people of the country.
3. Accumulation of tangible wealth.
4. Accumulation of intangible wealth.
Answer Codes: (a) 1 & 2 (b) 2 only (c) 2 & 4 (d) 1, 3 & 4
🔠🔠❓MCQ. In any country _ _ _ would be considered as part of its social capital? (Pre-2019)
a) The proportion of literates in the population.
b) The stock of its buildings, other infrastructure & machines.
c) The size of the population in the working age group.
d) The level of mutual trust & harmony in the society.
67.4.1 📊📊📊📊✍Human Development: Conclusion-Template (�न�षर्)

- Human development is fundamentally about giving more opportunities & freedom to people.
अंतत: मानव �वकास लोगों को अ�धक अवसर और आज़ादी देने पर ल��त है
- Gandhi-ji noted, “A nation's greatness is measured by how it treats its weakest members. Every
human being counts, & every human life is equally valuable.” - This universalism is also at the
core of our Constitution. एक देश क� महानता इससे नापी जा सकती है िक वह अपनी सबसे कमज़ोर सद�ों से कै से पेश
आता है।
- While India has done well in terms of economic growth but aforementioned report(s) / index
indicate(s) that more needs to be done to ensure our economic growth translates into human
development for all. हालाँिक भारत म� आ�थक वृ�द्ध तो �ई है िक�ु �व�वध सूचकांकों से प्रतीत होता है िक इस आ�थक वृ�द्ध को
मानव �वकास म� प�रव�तत करने के �लए अभी हम� और क़दम उठाने चािहए।
68 🌱🌱 SUSTAINABLE DEVELOPMENT GOALS (SDG)

68.1.1 �🌴🌴🌴🌴🌴🌴 [Yearbook] Ministry of Environment, Forest & Climate Change
(पयार्वरण वन एवं जलवायु प�रवतर्न मं त्रालय)
Dept ⇒ N/A
Subordinate/ ⇒ Forest Survey, Dehradun
Attached ⇒ Botanical Survey, Kolkata
⇒ Zoological Survey of India, Kolkata
⇒ Indira Gandhi National Forest Academy, Dehradun
⇒ Directorate of Forest Education, Dehradun
⇒ National Zoological Park, New Delhi
⇒ National Museum of Natural History, New Delhi
⇒ National River Conservation Directorate, New Delhi
⇒ National Centre For Sustainable Coastal Management, Chennai
Statutory Central Pollution Control Board (CPCB Delhi) to implement
Bodies o Water (Prevention & Control of Pollution) Act 1974
o Air (Prevention & Control of Pollution) Act, 1981
o Environment (Protection) Act 1986
⇒ 1972: Central Zoo Authority, under Wildlife (Protection) Act, Delhi
⇒ 1972: National Tiger Conservation Authority under Wildlife (Protection)
Act, Delhi
⇒ 1972: Wildlife Crime Control Bureau under Wild Life (Protection) Act, Delhi
⇒ 2002: National Biodiversity Authority, under Biological Diversity Act,
Chennai
⇒ 2010: National Green Tribunal, under National Green Tribunal Act, Delhi
⇒ 2021: Commission for Air Quality Management (CAQM)- is an Statutory
body under The Commission For Air Quality Management in National
Capital Region and Adjoining Areas Act, 2021 set up to curb air pollution in
the National Capital Region NCR, Haryana, Uttar Pradesh and Rajasthan.
Autonomous ⇒ Govind Ballabh Pant Institute of Himalayan Environment & Development,
Uttarakhand
⇒ Indian Council of Forestry Research & Education, Dehradun
⇒ Indian Institute of Forest Management, Madhya Pradesh
⇒ Indian Plywood Industries Research & Training Institute, Punjab
⇒ Wildlife Institute of India, Dehradun
⇒ Salim Ali Center for Ornithology & Natural History(SACON), Anaikatti,
Coimbatore, Tamil Nadu
CPSE ⇒ Andaman & Nicobar Islands Forest & Plantation Development Corporation
Limited, Port Blair
E- ⇒ Parivesh Portal for environment clearance for various projects e.g. cutting
Governance trees to build factory/highway etc. 👜👜👜👜Budget-2022- we’ll make this portal
better. (�व�वध प्रोजे� के �लए पेड़ कटाई इ�ािद क� मं ज़ूरी के �लए ओनलाइन पोटर्ल।)
68.1.2 �☔🌪🌪 [Yearbook] Ministry of Earth Sciences (पृ�ी �व�ान मं त्रालय)
Dept ⇒ N/A
Attached ⇒ National Center for Seismology, Noida
⇒ Centre for Marine Living Resources & Ecology, Kochi
Subordinate ⇒ India Meteorological Department (IMD), New Delhi
⇒ National Centre for Medium Range Weather Forecasting, Noida
Autonomous ⇒ National Institute of Ocean Technology, Chennai
⇒ National Centre for Polar & Ocean Research, Goa
⇒ Indian Institute of Tropical Meteorology, Pune
⇒ Indian National Centre for Ocean Information Service, Hyderabad
⇒ National Centre for Earth Science Studies, Kerala
CPSE ⇒ N/A or not Not MCQ worthy
68.2 🌱🌱 SUSTAINABLE DEVELOPMENT: MEANING
 1980s: UN’s Brundtland Commission on Environment & Development → “Our Common
Future” Report → defined “Sustainable development is the development that meets the needs of
the present without compromising the ability of future generations to meet their own needs.” [सतत
�वकास वह �वकास है जो भावी पीिढ़यों क� अपनी ज�रतों को पूरा करने क� �मता से समझौता िकए �बना वतर्मान क� ज�रतों को पूरा
करता है]
 1992: Earth Summit @Rio, Brazil → 2012: Rio+20 summit: leaders announced to prepare
“Sustainable Development Goals” (SDG:सं धारणीय/सतत �वकास ल�) for post-2015 era when MDG
goals expired.
Year UN Approved Goals Target
2000-2015 Millennium Development Goals (MDG:सहस्रा�ी �वकास ल�) 8 18
2015-2030 “Sustainable Development Goals” (SDG:सं धारणीय/सतत �वकास ल�) 17 169
68.3 🌱🌱 📔📔📔📔ES20 ON SDG & ENVIRONMENT

- Vol2Ch10: Government’s expenditure in last five years (2014-2019)
- On health as % of GDP = steadily ⏫
- On education as % of GDP = steadily ⏫
- On other social services (water, sanitation, urban dev, SC-ST-OBC welfare, labour
welfare, nutrition, natural disasters etc) = NOT steadily ⏫
- Vol2ch6: CEA Subramanian K. talks about how absence of a certain input creates challenges to
SDG such as:
Education & ⇒ non-electrified schools have
Electricity ⇒ Poor staff-retention (लोग नोकरी छोड़ के चले जाते है)
Nexus ⇒ Higher Drop-outs, Poor results in exams
⇒ States with lower literacy rates have low electricity rates at the schools &
vice-versa
Health & ⇒ Hospitals & states with electricity consumption have lower Infant Mortality
Energy Nexus Rate (IMR)
⚠ Homework: Economic Survey 2020 contains certain info about environment/forests. So, prepare
following information
📔📔📔📔ES20 vol2ch6 bullet Topic to focus
number
6.21 → ISA’s new awards in collaboration with Indian state Govts
📔📔📔📔ES20 vol2ch6 bullet Topic to focus
number
6.25 & 6.26 → Forest report: types & sizes of forests etc.
6.27 upto 6.29 Shannon-Weiner Index for Biodiversity, forest distribution
across world, carbon stock.
✋Don’t waste time in other sections of this chapter, as I’ve either covered them (e.g. crop residue
in 4A etc.) and/or they’re not worth MCQ utility. आ�थक सव��ण िक इस प्रकरण म� हरेक चीज़ पढ़ना वैसे ज़�री नहीं है
68.4 🌱🌱 📔📔📔📔ES21 ON SDG & ENVIRONMENT
68.4.1 📙📙📙📙ES21 Climate Change damages Indian economy [जलवायु प�रवतर्न से भारतीय अथर्तंत्र को
ख़तरा]
⇒ 2018- India lost US$ 37 billion due to cyclones, floods and landslides- said Global Climate Risk
Index (prepared by Germany-based think tank “greenwatch”)
⇒ International Labour Organisation says by 2030: Global warming ⏫→ Heat stress→ workers
will be able to do less work → jobloss, lower wages, construction sector will suffer. [गम� क� तीव्रता
बढ़ने से मज़दू र पहले से कम मात्रा म� काम कर पाएं गे, �जस से उनक� तन�ाह म� कमी होगी]
⇒ Solution? 1) Heat prevention measures for workers [खुले इलाक़े म� कायर्रत मज़दू रों को गम� से बचाने के �लए
प्रबं ध] 2) Insurance, pension, skilling for alternate jobs for workers in construction sector. [मकान
�नमार्ण �ेत्र के मज़दू रों को प�शन, बीमा, वैक��क रोज़गार के �लए कौशल प्र�श�ण िदया जाए.]
68.4.2 📙📙📙📙ES21: Climate Risk & Pandemic Risk Insurance need to be encouraged
जलवायु प�रवतर्न जो�खम तथा आपदा जो�खम के �ख़लाफ़ बीमा लेना ज़�री/ उसे प्रो�ािहत िकया जाए
⇒ 2003: SARS Virus outbreak. The organisers of Wimbledon tennis tournament had taken a
pandemic insurance. They received compensation = could use the money for covering up their
financial losses. [�वंबलडन टे�नस प्र�तयो�गता म� SARS महामारी के नुक़सान क� भरपाई- एसे बीमे से �ई थी]
⇒ Many farmers do not take crops insurance because poor / illterate, previous negative experience
of not receiving compensation, etc. Need to reform & Popularize PM-Fasal Bima Yojana (Ref
Pillar#1D) [कई िकसान फ़सल बीमा नहीं ले रहे �ोंिक उ�� जानकारी नहीं है/ या भूतकाल म� फ़सल नुक़सान पर बीमा कं पनी ने
मुआवज़ा नहीं िदया था, इस�लए �नराश/ठगे �ए िकसान फ़सल बीमा नहीं ख़रीदते. प्रधानमं त्री फ़सल बीमा योजना म� इसके �लए ज़�री
सुधार िकए जाएं .]
⇒ Karnataka state govt “Varun Mitra” weather advisory system = it informs both the farmer as well
as the insurance company about the upcoming adverse weather events. 📙📙📙📙ES21 appreciated
its efficient working, recommended its replication at all India level. [कनार्टक रा� सरकार द्वारा हवामान क�
जानकारी िकसानों और बीमा कं प�नयों को दी जाती है।ऐसी प्रणाली को पूरे भारत म� लागू िकया जाए- कहा आ�थक सव��ण ने]
68.4.3 📙📙📙📙ES21: solar energy misused for groundwater exploitation

⇒ KUSUM Scheme = farmers given subsidised solar pumps. (Ref Pillar5 Energy Infrastructure).
⇒ But then what if those are solar pumps are misused for overuse/exploitation of groundwater.
⇒ Therefore, such energy schemes must have provisions to encourage water conservation. [स��डी
पर �मले सोलर प� द्वारा यिद िकसान दे दनादन भू-जल का दु�पयोग/ अ�तउपयोग कर� तो पयार्वरण/प्रकृ �त का फ़ायदा कम नुक़सान
�ादा है। इस�लए ऐसी योजनाओं म� ��-ऊजार् के साथ साथ जल-सं चय का भी �ाल रखना चािहए।]
68.5 🌱🌱 📐📐 📊📊 SDG → INDIA’S IMPLEMENTATION / MONITORING
India has tasked NITI Aayog to monitor the SDG implementation in India, tie up with Union
ministries, State governments, academia, civil society & other stakeholders.
 2018-Dec: NITI prepared ‘Baseline (आधार रेखा) Report of the SDG India Index’, which contains
baseline vs targets to be achieved for each goal & how much progress by the States.
 Accordingly, NITI assigns “SDG Goal Score (0-100)” to each State & UT & classifies them into
following categories:
68.5.1 🌱🌱 📐📐 📊📊 NITI’s SDG India Index: overall scoring

##
In the latest 2021-June’s report, NITI/Newspapers Then created multiple sub-index/categories
using the scores e.g. Which state is number one in drinking water, Solar panel etc. = but very poor
cost benefit in memorising all those factual GK.#🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
Score → 2018’s Report 2019’s (Released in Dec’19) 2020’s (Released in 2021-Jun)##
Monitoring 13 goals 16 goals. 17 goals
Aspirant: 0- आकां�ी: Assam, Not any Not any
49 Bihar, UP
Performer: अ�ा प्रदशर्न: Among these most pathetic/lowest scorer is Bihar.
50-64 Remaining Others: Jharkhand, Assam, Uttar Pradesh, Rajasthan, Odisha
State/UT etc.
Front अग्रणी: ⇒ Best: Kerala(70) & ⇒ Best: Kerala(75) &
Runner: 65- Himachal, Chandigarh (70). Chandigarh (79).
99 Kerala, TN, ⇒ Then Himachal, Tamil ⇒ Himachal, Tamil Nadu,
Chandigarh & Nadu, Andhra, Andhra, Telangana,
Puducherry Telangana, Karnataka, Karnataka, Goa, Sikkim,
Goa, Sikkim, & Uttarakhand, Gujarat,
Puducherry = total 10 Maharashtra, Mizoram,
States/UT Punjab, Haryana, Tripura,
⇒ Puducherry, Delhi,
Lakshadweep, Andaman
and Nicobar, J&L, Ladakh
⇒ Total 22 State/UT
Achiever: 100 सफल: all SDG goals achieved but no one here YET.
For example, SDG Goal#3 Ensure Healthy Lives & Promote Well-being For All
Associated Targets under Goal#3 SDG Goal#3 States/UT categorization
 Reduce MMR (Baseline:130) → Target 70  Achiever: None achieved all targets
(by 2030), Kerala already achieved.  Frontrunners: Kerala, TN, Puducherry etc
 Eliminate TB by 2030 (No State Yet  Performer: Bihar, UP, MP, Odisha, etc.
Achieved)
 Reduce Under-5 Child Mortality Rate  Aspirants: None (because each state has
(Baseline:50) → Target 11 (by made some progress)
2030),Kerala, Maharashtra, Tamilnadu
achieved.
 Increase no. of Govt doctors , nurses &
midwives per 1,00,000 population:
(Baseline:221) → Target 550 (by 2030).
Kerala already achieved.
🔠🔠❓Which one of the following States ranked first on Sustainable Development Goal India
Index, 2020-21 released by NITI Aayog? [UPSC-CAPF-2021]
(a) Himachal Pradesh (b) Tamil Nadu (c) Kerala (d) Goa
68.5.2 🌱🌱 📐📐 📊📊 NITI SDG Urban India Index

⇒ NITI Aayog’s first Sustainable Development Goals(SDG) Urban India Index 2021-22:
⇒ Top 10 Urban Areas are Shimla, Coimbatore, Chandigarh, Thiruvananthapuram, Kochi, Panaji,
Pune, Tiruchirappalli, Ahmedabad and Nagpur.
⇒ Bottom 10 Urban Areas are Dhanbad, Meerut, Itanagar, Guwahati, Patna, Jodhpur, Kohima,
Agra, Kolkata and Faridabad.
⇒ This dashboard developed with the Indo-German Development Cooperation.
68.5.3 🌱🌱🌱🌱 NITI’s VNR Review to UN

⇒ 2020-Jul: NITI presented India's second time Voluntary National Review (VNR: �ै��क रा�ी� य
समी�ा) to UN's SDG monitoring forum.
⇒ Theme of the report: "Taking SDGs from Global to Local". िक सतत �वकास ल� हा�सल करने म� हमारी अब
तक क� प्रग�त �ा रही है? �ादातर बोल ब�न और �चकनी चुपड़ी बात� है, परी�ा उपयोगी माल ब�त कम है.
68.6 🌱🌱 SDG GOALS VS INDIA’S NOTABLE SCHEMES
SDG Goal India’s Notable Schemes <List not exhaustive>
Goal End poverty in all its forms  MGNREGA & the National Livelihood Missions
1 everywhere  Pradhan Mantri Jeevan Jyoti Beema Yojana
(PMJJBY) & Pradhan Mantri Jeevan Suraksha
गरीबी क� पूणर्तः समा��
Beema Yojana (PMJSBY), National Social Assistance
Programmes (NSAP) which provides pension to the
elderly, widows, PH in BPL category.
 PMJAY ₹ 5l health insurance that reduces healthcare
burden on poor people.
Goal End hunger, achieve food  Green Revolution — Krishonnati Yojana & its 11
2 security & improved nutrition sub-schemes, esp. National Mission for Sustainable
& promote sustainable Agriculture, National Food Security Mission
agriculture
 Food Security Act, POSHAN Abhiyaan, Mid-day
भुखमरी क� समा��
Meal (MDM: New Name PM Poshan),
Goal Ensure healthy lives &  National Health Mission & its rural, urban
3 promote well-being for all at components, various schemes for Communicable &
all ages noncommunicable diseases
 Ayushman Bharat: 1) transform PHC 2) PMJAY ₹ 5l
अ�ा �ा� और जीवन�र
health insurance that reduces healthcare burden on
poor people.
 Intensified Mission Indradhanush vaccination.
 PM Matru Vandana Yojana (₹ 5k), Janani Suraksha
Yojana (₹ 1k to BPL) Janani Shishu Suraksha
Karyakram (Free delivery) etc.
Goal Ensure inclusive & equitable  Samagra Shiksha by merging 1) Sarva Shiksha
4 quality education & promote Abhiyan (SSA) 2) Rashtriya Madhyamik Shiksha
lifelong learning opportunities Abhiyan (RMSA) 3) Teacher Education (TE).
for all- सभी के �लए समोवेशी तथा
 SWAYAM online portal for free learning etc.
गुणव�ा यु� �श�ा
Goal Achieve gender equality &  Gender Budget Statement from 2005 onwards
5 empower all women & girls  Beti Bachao, Beti Padhao, Sukanya Samridhi (Bank
ल��गक समानता Savings) Yojana
 Pradhan Mantri Ujjwala Yojana (LPG connection to
BPL women),
 Procurement quota for MSME owned by Women,
Standup India loan scheme
Goal Ensure availability &  Swachh Bharat Mission, National Rural Drinking
6 sustainable management of Water Programme.
water & sanitation for all
साफ पानी और ��ता
Goal Ensure access to affordable,  Target: achieve 40% electricity from non-fossil fuel
7 reliable, sustainable & modern sources by 2030;
energy for all  LPG: PAHAL subsidy, Pradhan Mantri Ujjwala
स�ी और �� ऊजार्
Yojana (LPG connection to BPL women),
 Deen Dayal Upadhyaya Gram Jyoti Yojana →
Pradhan Mantri Sahaj Bijli Har Ghar Yojana
(Saubhagya) to give electricity connection to all,
Revamped Distribution Sector Scheme
 National Solar Mission, Green Energy Corridor etc.
 National Bio-fuels Policy 2018: 20% of ethanol in
petrol & 5% blending of biodiesel in diesel by 2030.
 PM Ji-Van Yojana: biowaste → biofuel; GOBAR-
DHAN) scheme, UJALA LED, Gram Ujala LED
International Solar Alliance (ISA, HQ: Gurugram,
Haryana) launched following initiatives
 1) World Solar Bank to provide loans for solar
energy projects
 2) One Sun One World One Grid Initiative/Green
Grids= to create interconnected electricity grids to
transfer solar electricity among nations.
 3) 2020: First World Solar Technology Summit
(organised in virtual mode because of corona)
Goal Promote sustained, inclusive  Make India, Startup india, Skill India → Pradhan
8 & sustainable economic Mantri Kaushal Vikas Yojana
growth, full & productive
 Mudra loans,Standup India loans
employment & decent work
 Prime Minister’s Employment Generation
for all
अ�ा रोजगार, आ�थक �वकास Programme (PMEGP): credit linked subsidy for
Micro enterprises in non-farm sector.
Goal Build resilient infrastructure,  Pradhan Mantri Awas Yojana, Pradhan Mantri gram
9 promote inclusive & Sadak Yojana, Bharat Mala, Sagar Mala,
sustainable industrialization  Digital India, Smart City, AMRUT.
& foster innovation
उद्योग, नवाचार और बु�नयादी सु�वधाओं
का �वकास
Goal Reduce inequality within &  To reduce inequality within the country- all the
10 among countries schemes that are focusing on rural area & weaker
देशों के भीतर और देशों के बीच section e.g. MNREGA, Deen Dayal Upadhyaya
असमानता म� कमी
Grameen Kaushalya Yojana (DDU-GKY), Standup
India loans for SC/ST & Women, Pradhan Mantri
Jan Dhan Yojana (PMJDY) Rurban Mission
 To reduce inequality among countries - Technical
& Financial Assistance given by India to its
neighbouring countries, & least developed countries
Goal Make cities & human  Smart City, AMRUT, Rurban Mission, PM Awas
11 settlements inclusive, safe, Yojana, Swachh Bharat Mission etc Which we
resilient & sustainable learned in pillar#5
िटकाऊ शहरी �वकास
Goal Ensure sustainable  Targets: 1) ⏬ emissions intensity of GDP by 45%
12 consumption & production by 2030 compared to 2005; (earlier target 33-35%)
patterns
 2) ⏬ per capita consumption of fertilizer, fuel,
�ज�ेदारी के साथ उपभोग और उ�ादन
plastic waste etc.
 2021: SEBI rules: Top-1000 Listed Companies
required to publish Business Responsibility and
Sustainability Report (BRSR)- showing their
environmental, social and governance standards.
This reporting will be voluntarily in 2021 but
compulsory from 2022. सेबी के �नयमानुसार शेयर बाज़ार म�
�ल�ेड बड़ी कं प�नयों ने 2022 से अ�नवायर् �प से “�ापार उ�रदा�य�
और सतत-��रता �रपोटर्’ प्रका�शत करनी होगी। इस �रपोटर् म� कं पनीने
अपने द्वारा उठाए गये पयार्वरण, समाज-क�ाण और कॉरपोरेट शासन के
कदमों क� जानकारी देनी होगी।
Goal Take urgent action to combat  India’s national Greenhouse Gas Emission (2014) is
13 climate change & its impacts made up of: Energy sector > industrial process >
जलवायु प�रवतर्न और उसके प्रभावों से Agriculture > Waste material.
�नपटने के �लए त�ाल कारर्वाई
 Targets: 0 Deaths in Extreme weather events, 40% of
electricity generation from renewable sources,
increase adoption of LED bulbs etc.
 National Action Plan on Climate Change (NAPCC)
& its 8 missions.
 National Air Quality Monitoring Programme
 National Adaptation Fund on Climate Change
(NAFCC) under NABARD
 Climate Change Action Plan (CCAP, 2014) to
improve scientific analysis of climate change. It has
two components: A) National Carbonaceous
Aerosols Program (NCAP) led by IIT-Bombay &
other institutes. B) Long-Term Ecological
Observatories (LTEO).
Goal Conserve & sustainably use  Marine protected areas, Coastal Regulation Zone,
14 the oceans, seas & marine National oil spill disaster contingency plan.
resources for sustainable  If a States mangrove forest cover decreases then it
development
will be awarded ZERO marks in the SDG index.
समुद्री सं साधनों का सं र�ण
Goal Protect, restore & promote  NAPCC → National Mission for a Green India,
15 sustainable use of terrestrial  National Mission for Sustaining the Himalayan
ecosystems, sustainably Ecosystem
manage forests, combat
 Project Tiger, Elephant etc.
desertification, & halt &
reverse land degradation &  Target-2030: 1) increase Land area under forest from
halt biodiversity loss 21.54% (Baseline) to 33% 2) Use these trees/forests
�लीय पा�र��तक�य प्रणा�लयों, भू�म to add carbon sink equivalent to 2.5-3 billion tons
CO2
�रण और जैव �व�वधता का सं र�ण
Goal Promote peaceful & inclusive Target-2030:
16 societies for sustainable  Reported murders per 1 lakh population (from 2.4
development, provide access to To 1.2)
justice for all & build effective,  Reduce reported corruption crimes per 1 crore
accountable & inclusive
population (from 34 to 17)
institutions at all levels
शां�तपूणर् समावेशी समाजों को बढ़ावा  increase number of courts per 10 lakh persons (from
देना,सभी के �लए �ाय तक प�ंच 12 to 34)
सु�न��त करना  Cover 100% population with aadhar card
 Etc. so accordingly more ₹ funding, amending
criminal laws etc.
Goal Strengthen the means of  India has joined International Solar Alliance, India
17 implementation & revitalize has committed to Paris deal on Climate Change etc.
the global partnership for  2019: India became founding member of European
sustainable development commission’s International Platform on Sustainable
सामूिहक साझेदारी-वै��क भागीदारी को Finance
पुनज��वत करना  NITI has set no quantitative targets for this Goal
because MOSPI is unable to frame statistical
methods to capture it. (e.g. SDG Target 17.15:
‘Respect each country’s policy space’ - difficult to
quantify & compare!). But in 2021’s SDG Index
Report, NITI provided some qualitative assessment
e.g. we need to increase the cooperation at global
level, Corona has created new challenges etc. [यहाँ पर
मात्रा�क �प से तो ल� नापना सं भव नहीं है िक�ु गुणा�क समी�ा
नी�त आयोग ने द्वारा क� गई है]
CoP26 Summit: Glasgow, UK in 2021

 India’s commitments given in Handout Pill#5A
Pitfalls in Essay: In Human Development / Gender Development / Sustainable Development topic
essays Students merely give a long index of constitutional articles, laws & schemes like a parrot. But
you’re required to ‘describe’ how it actually helps & what more can be done to improve the
development. Read Yojana, Kurukshetra, Eco. Survey, Newspaper columns to gather such ‘fodder’
points. [तोते क� तरह रटकर �सफर् योजनाओं के नाम नहीं �लखने- असल म� �ा फायदा होता है ऐसा आराम से समझाना भी होगा �नबं ध]
68.6.1 🌱🌱✍SDG: Conclusion-Template (�न�षर्)

- SDG goals recognize that
- ending poverty requires economic growth, गरीबी �नवारण के �लए आ�थक वृ�द्ध
- while ending socio-economic disparities requires economic development
- But neither the economic growth (वृ�द्ध) nor the economic development (�वकास) should come at
the cost of harming future generations. (भ�व� क� पीढ़ी को नाइं साफ� ना हो)
- Accordingly, the 17 goals have been framed to provide education, health, social protection, & job
opportunities to all, while tackling climate change & environmental protection.
- Achievement of SDG goals is therefore necessary for
- reaping India's demographic dividend, (जनसं �ािकक लाभांश)
- reducing India’s socio economic disparities (सामा�जक आ�थक �वषमताएँ )
- and at the same time protecting India's vast biodiversity. (�वशाल जैव �व�वधता)
OR As Gandhi-ji noted, “The earth, air, land & water are not inheritance from our forefathers but on
loan from our children. So we have to handover to them at least as it was handed over to us. Earth
provides enough to satisfy every man's needs, but not every man's greed.” Therefore, timely
achievement of SDG goals must become India’s top priority. (पृ�ी हर आदमी क� ज�रतों को पूरा सकती है,
लेिकन हर आदमी क� लालच नहीं।)
68.7 ✍🎺🎺 MAINS ANSWER WRITING: POVERTY, HUNGER, SOCIAL SECTORS
68.7.1 ✍🎺🎺 GSM1 Syllabus: Poverty, Population; Development & associated issues
COVID-19 pandemic accelerated class inequalities and poverty in India. Comment. (को�वड -19 2020
महामारी ने भारत म� वगर् असमानताओं एवं गरीबी को ग�त दे दी है । िटप�ी क��जए )
‘Despite implementation of various programmes for eradication of poverty by the Govt in India, 2018
poverty is still existing.’ Explain by giving reasons.
भारत म� गरीबी उ�ूलन के �लए �व�भ� कायर्क्रमों के कायार्�यन के बावजूद, गरीबी अभी भी मौजूद है। '' कारण �� कर�।
Mention core strategies for the transformation of aspirational districts in India & explain the nature 2018
of convergence, collaboration & competition for its success.
भारत म� आकां�ा�क �जलों के प�रवतर्न के �लए मु� रणनी�तयों का उ�ेख कर� और इसक� सफलता के �लए अ�भसरण, सहयोग और
प्र�त�धार् क� प्रकृ �त क� �ा�ा कर�।
“An essential condition to eradicate poverty is to liberate the poor from deprivation.” Substantiate 2016
this statement with suitable examples. "गरीबी उ�ूलन के �लए एक आव�क शतर् गरीबों को अभाव से मु� करना है।"
उपयु� उदाहरणों के साथ इस कथन को प्र�त�ा�पत कर�
Critically examine whether growing population is the cause of poverty OR poverty is the main cause 2015
of population increase in India. समालोचना�क �प से जांच कर� िक बढ़ती जनसं �ा गरीबी का कारण है या गरीबी भारत म�
जनसं �ा वृ�द्ध का मु� कारण है।
68.7.2 ✍🎺🎺 GSM2 Syllabus: Poverty & hunger issues/गरीबी और भुखमरी के मुद्दे
Reforming the government delivery system through the Direct Benefit Transfer Scheme is a 2022-
progressive step, but it has its limitations too. Comment.(प्र�� लाभ अंतरण योजना के मा�म से सरकारी प्रदेय GSM2
�व�ा म� सुधार एक प्रग�तशील क़दम है, िक�ु इसक� अपनी सीमाएँ भी ह� िट�णी क��जए।) Solved in Youtube
What are the major challenges of Public Distribution System (PDS) in India? How can it be made 2022-
effective and transparent? (भारत म� सावर्ज�नक �वतरण प्रणाली (पी.डी.एस.) क� प्रमुख चुनौ�तयाँ �ा है? इसे िकस प्रकार GSM3
प्रभावी तथा पारदश� बनाया जा सकता है?) Solved in Youtube
What are the salient features of the National Food Security Act, 2013? How has the Food Security 2021-
Bill helped in eliminating hunger and malnutrition in India? (Answer in 250 words) रा��ीय खाद्य GSM3
सुर�ा अ�ध�नयम, 2013 क� मु� �वशेषताएँ �ा ह� ? खाद्य सुर�ा �वधेयक ने भारत म� भूख तथा कु पोषण को दू र करने म� िकस प्रकार
सहायता क� है? ✅Solved@ https://unacademy.com/class/mrunals-upsc-mains-gsm3-model-ans-
economy-budget-2021/VHWAMSQF
Can the vicious cycle of gender inequality, poverty and malnutrition be broken through 2021-
microfinancing of women SHGs? Explain with examples. (Answer in 150 words) [ �ा ल��गक GSM2
असमानता, गरीबी और कु पोषण के दुष्चक्र को मिहलाओं को �यं सहायता समूहों को सू� �व� (माइक्रोफाइने�) प्रदान करके तोड़ा
जा सकता है ? सोदाहरण �� क��जए। ]
“Micro-Finance as an anti-poverty vaccine, is aimed at asset creation and income security of the 2020-
rural poor in India”. Evaluate the role of Self Help Groups in achieving the twin objectives along GSM2
with empowering women in rural India. ("सू�-�व� एक गरीबी-रोधी िटका है जो भारत म� ग्रामीण द�रद्र क� प�रसं प��
�नमार्ण और आयसुर�ा के �लए ल��त है". �यं सहायता समूहों क� भू�मका का मू�ांकन ग्रामीण भारत म� मिहलाओं के सश��करण
के साथ साथ उपरो� दोहरे उद्दे�ों के �लए क��जए ) ✅Solved@ https://unacademy.com/class/mrunals-upsc-
gsm2-model-ans-governance-welfare-socj-2020/IOFX6TG7
“The incidence and intensity of poverty are more important in determining poverty based on 2020
income alone”. In this context analyse the latest United Nations Multidimensional Poverty Index GS2
Report. ("के वल आय पर आधा�रत गरीबी के �नधार्रण म� गरीबी का आपतन और तीव्रता अ�धक मह�पूणर् है"। इस स�भर् म�
सं यु� रा�� ब�आयामी गरीबी सूचकांक क� नवीनतम �रपोटर् का �व�ेषण क��जए ।)
✅Solved@ https://unacademy.com/class/mrunals-upsc-gsm2-model-ans-governance-welfare-
socj-2020/IOFX6TG7
There is a growing divergence in the relationship between poverty & hunger in India. The 2019
shrinking of social expenditure by the Govt is forcing the poor to spend more on Non- Food GS2
essential items squeezing their food – budget.- Elucidate.
भारत म� गरीबी और भुखमरी के बीच के सं बं ध म� अंतर बढ़ रहा ह�। सरकार द्वारा सामा�जक खचर् को कम करना ग़रीबों को उनके भोजन
- बजट को �नचोड़ने वाले गैर-खाद्य आव�क व�ुओ ं पर अ�धक खचर् करने के �लए मजबूर कर रहा है।- �� क��जए ।
✅Solved@ https://unacademy.com/class/mrunals-upsc-gsm2-2019-model-ans-part-2-social-
justice-welfare/QXSTIV74
What are the reformative steps taken by the Govt to make food grain distribution system more 2019
effective? खाद्य �वतरण प्रणाली को और अ�धक प्रभावशाली बनाने के �लए सरकार द्वारा �ा सुधारवादी कदम उठाए गए है? GS3
How far do you agree with the view that the focus on lack or availability of food as the main cause 2018
of hunger takes the attention away from ineffective human development policies in India?
आप इस राय से िकतने सहमत ह� िक भोजन क� कमी या उपल�ता को भूख का मु� कारण समझना भारत म� अप्रभावी/बेअसर मानव
�वकास नी�तयों से �ान हटाता है?
Hunger & Poverty are the biggest challenges for good governance in India still today. Evaluate 2017
how far successive governments have progressed in dealing with these humongous problems.
Suggest measures for improvement.भारत म� सुशासन के �लए भूख और गरीबी आज भी सबसे बड़ी चुनौती है। मू�ांकन
कर� िक इन ब�त बड़ी सम�ाओं से �नपटने के �लए �सल�सलेवार सरकारों ने कहाँ तक प्रग�त क� है। सुधार के उपाय सुझाए।
‘Poverty Alleviation Programmes in India remain mere show pieces until & unless they are 2017
backed by political will’. Discuss with reference to the performance of the major poverty
alleviation programmes in India.भारत म� ‘गरीबी उ�ूलन कायर्क्रम तब तक के वल िदखावा (शो पीस) बने �ए ह�, जब तक
िक वे राजनी�तक इ�ाश�� द्वारा सम�थत नहीं ह�।’ भारत म� प्रमुख गरीबी उ�ूलन कायर्क्रमों के प्रदशर्न/तामील के सं दभर् म� चचार् कर�।
Though there have been several different estimates of poverty in India, all indicate reduction in 2015
poverty levels over time. Do you agree? Critically examine with reference to urban & rural
poverty indicators.हालांिक भारत म� गरीबी के कई अलग-अलग अनुमान ह�, सभी समय के साथ गरीबी के �र म� कमी का
सं के त देते ह�। �ा आप सहमत ह�? शहरी और ग्रामीण गरीबी सूचकांकों/सं के तकों के सं दभर् म� समालोचना�क �प से जांच कर�।
The Central Govt frequently complains on the poor performance of the State Governments in 2013
eradicating suffering of the vulnerable sections of the society. Restructuring of Centrally
sponsored schemes across the sectors for ameliorating the cause of vulnerable sections of
population aims at providing flexibility to the States in better implementation. Critically
evaluate.क� द्र सरकार समाज के कमजोर वग� क� पीड़ा को �मटाने म� रा� सरकारों के खराब प्रदशर्न पर लगातार �शकायत करती है।
जनसं �ा के कमजोर वग� क� सम�ाओं को सुधारने के �लए सभी �ेत्रों म� क� द्र प्रायो�जत योजनाओं का पुनगर्ठन, रा�ों को बेहतर
कायार्�यन के �लए लचीलापन प्रदान करना है। समालोचना�क �प से मू�ांकन कर�।
Discuss the changes in India's demography at 2040. In what ways will it require the policymakers Mock
to change their present course of action? 2040 म� भारत क� जनसां��क� म� बदलाव पर चचार् कर�। िकन तरीकों से
नी�त �नमार्ताओं को अपनी वतर्मान कारर्वाई को बदलने क� आव�कता होगी?
68.7.3 ✍🎺🎺 GSM2 Syllabus: Schemes for Social Sectors
GSM2 Syllabus: Social Sector & Social Services (health, education, human resources – issues in
development, management: सामा�जक �ेत्र और सामा�जक सेवाए (�ा�, �श�ा, मानव सं साधन - �वकास, प्रबं धन म� मुद्दे);
The Rights of Persons with Disabilities Act, 2016 remains only a legal document without intense 2022-
sensitisation of government functionaries and citizens regarding disability. Comment.(िद�ांगता के GSM2
सं दभर् म� सरकारी पदा�धका�रयों और नाग�रकों क� गहन सं वेदनशीलता के �बना िद�ांगजन अ�धकार अ�ध�नयम, 2016 के वल
�व�धक द�ावेज़ बनकर रह जाता है। िट�णी क��जए) Answered in Youtube
Q. “Besides being a moral imperative of a Welfare State, primary health structure is a necessary 2021-
precondition for sustainable development.” Analyse.(Answer in 150 words) ["एक क�ाणकारी रा� GSM2
क� नै�तक अ�नवायर्ता के अलावा, प्राथ�मक �ा� सं रचना धारणीय �वकास क� एक आव�क पूवर् शतर् है।" �व�ेषण क��जए। ]
Q. “‘Earn while you learn’ scheme needs to be strengthened to make vocational education and
skill training meaningful.” Comment. (150 words) ["�ावसा�यक �श�ा और कौशल प�र�ण को साथर्क बनाने के
�लए 'सीखते �ए कमाना (अनर् �ाइल यू लनर्)' क� योजना को सश� करने क� आव�कता है।" िट�णी क��जए।]
During Corona pandemic the response of Government of India was focused first on saving lives MOCK
and then on saving livelihoods. Elaborate (कोरोना महामारी के दौरान भारत सरकार क� प्र�तिक्रया पहले जीवन बचाने
और िफर आजी�वका बचाने पर क� िद्रत थी)
Healthcare sector of India is marked by lower level of accountability and transparency compared MOCK
to the first world countries. Suggest some novel ways to fix this. [भारत का �ा� सेवा �ेत्र म� प्रथम �व� के
देशों क� तुलना म� �न� �र क� जवाबदेही और पारद�शता है। इसे ठीक करने के �लए कु छ नए तरीके सुझाएं ।]
“E-rupi increases the efficacy of Direct-Benefit Transfer by making the entitlement more MOCK
targeted and leak-proof.” Substantiate/Elucidate. (ई-�पी पात्रता को अ�धक ल��त और �रसाव-मु� बनाकर
प्र��-लाभ अंतरण क� प्रभावका�रता को बढ़ाता है. उदाहरण द्वारा सा�बत क��जए)
In order to enhance the prospects of social development, sound and adequate health care 2020
policies are needed particularly in the fields of geriatric and maternal health care. Discuss. GSM2
(साम�जक �वकास क� सं भावनाओं को बढ़ने के क्रम म�, �वशेषकर जरा�चिक�ा एवं मातृ �ा� देखभाल के �ेत्र म� सु�ढ़ और पयार्�
�ा� देखभाल स��ी नी�तयों क� आव�कता है l �ववेचन क��जए ।) ✅Solved@
https://unacademy.com/class/mrunals-upsc-gsm2-model-ans-governance-welfare-socj-
2020/IOFX6TG7
⇒ Performance of welfare schemes that are implemented for vulnerable sections is not so 2019
effective due to absence of their awareness & active involvement at all stages of policy
process – Discuss. कमजोर वग� के �लए लागू क� गई क�ाणकारी योजनाओं का प्रदशर्न नी�तगत प्रिक्रया के सभी चरणों
म� उनक� जाग�कता और सिक्रय भागीदारी के अभाव के कारण प्रभावी नहीं है। चचार् कर� |
⇒ Despite Consistent experience of High growth, India still goes with the lowest indicators of
human development. Examine the issues that make balanced & inclusive development
elusive. उ� �वकास दर के लगातार अनुभव के बावजूद, भारत अभी भी मानव �वकास के �न�तम सं के तकों के साथ �न�
पायदान पर है। उन मुद्दों क� परी�ण कर� जो सं तु�लत और समावेशी �वकास को दुग्रार्ह्य बनाते ह�।
✅Solved@ https://unacademy.com/class/mrunals-upsc-gsm2-2019-model-ans-part-2-social-
justice-welfare/QXSTIV74
Appropriate local community-level healthcare intervention is a prerequisite to achieve ‘Health 2018
for All ‘ in India. Explain. यथो�चत/उपयु� �ानीय सामुदा�यक-�र क� �ा� सेवा अंतः�ेप/ह��ेप भारत म� ‘सभी के
�लए �ा�’ प्रा� करने के �लए पूवार्कां��त (एक शतर्) है। �� क��जए।
‘To ensure effective implementation of policies addressing water, sanitation & hygiene needs, 2017
the identification of beneficiary segments is to be synchronized with the anticipated outcomes’
Examine the statement in the context of the WASH scheme. ‘जल, ��ता और �ा� ज़�रतों को सं बो�धत
करने वाली नी�तयों के प्रभावी कायार्�यन को सु�न��त करने के �लए, लाभाथ� वृत-खं डों क� पहचान को प्र�ा�शत प�रणामों के साथ
समक्र�मक/�संक्रनाइज़ िकया जाना चािहए। वॉश/WASH योजना के सं दभर् म� कथन क� जांच कर�।
Examine the main provisions of the National Child Policy & throw light on the status of its 2016
implementation.रा��ीय बाल नी�त के मु� प्रावधानों क� जांच कर� इसके कायार्�यन क� ��त पर प्रकाश डाल�।
“Demographic Dividend in India will remain only theoretical unless our manpower becomes 2016
more educated, aware, skilled & creative.” What measures have been taken by the Govt to
enhance the capacity of our population to be more productive & employable? “भारत म� जनसां��क�
लाभांश के वल सैद्धां�तक रहेगा जब तक िक हमारी जनश�� अ�धक �श��त, जाग�क, कु शल और रचना�क नहीं हो जाती है।"
हमारी जनसं �ा क� �मता को अ�धक उ�ादक और रोजगारपरक बनाने के �लए सरकार ने �ा उपाय िकए ह�?
Professor Amartya Sen has advocated important reforms in the realms of primary education & 2016
primary health care. What are your suggestions to improve their status & performance? प्रोफे सर
अम�र् सेन ने प्राथ�मक �श�ा और प्राथ�मक �ा� देखभाल के �ेत्र म� मह�पूणर् सुधारों क� वकालत क� है। उनक� ��त और
प्रदशर्न म� सुधार के �लए आपके सुझाव �ा ह�?
The quality of higher education in India requires major improvements to make it internationally 2015
competitive. Do you think that the entry of foreign educational institutions would help improve
the quality of higher & technical education in the country? Discuss. भारत म� उ� �श�ा क� गुणव�ा को
अंतररा��ीय �र पर प्र�त�ध� बनाने के �लए बड़े सुधार क� आव�कता है। �ा आपको लगता है िक �वदेशी �श�ण सं �ानों के प्रवेश
से देश म� उ� और तकनीक� �श�ा क� गुणव�ा म� सुधार होगा? चचार् कर�।
Public health system has limitations in providing universal health coverage. Do you think that 2015
the private sector could help in bridging the gap? What other viable alternatives would you
suggest?सावर्ज�नक �ा� प्रणाली म� सावर्लौिकक �ा� �ा��/कवरेज प्रदान करने क� मयार्दाएँ ह�। �ा आपको लगता है िक
यह �र�� को भरने म� (यह मयार्दाएँ दू र करने म�)�नजी �ेत्र मदद कर सकता है? �ा आप अ� �वहायर् �वक� सुझाएं ग?े
An athlete participates in Olympics for personal triumph & nation’s glory; victors are showered 2014
with cash incentives by various agencies, on their return. Discuss the merit of state sponsored
talent hunt & its cultivation as against the rationale of a reward mechanism as encouragement.
एक एथलीट ��गत �वजय और रा�� क� मिहमा के �लए ओलं �पक म� भाग लेता है; �वजेताओं पर �व�भ� एज��सयों द्वारा उनक�
वापसी पर नकद प्रो�ाहन क� बौछार क� जाती है। प्रो�ाहन के �प म� एक इनाम िक्रया�व�ध/�मके �नज़्म के औ�च� के �खलाफ रा�
प्रायो�जत प्र�तभा-शोध और इस के �वकास क� श्रे�ता/यो�ता पर चचार् कर�।
Should the premier institutes like IITs/IIMs be allowed to retain premier status, allowed more 2014
academic independence in designing courses & also decide mode/criteria of selection of
students? Discuss in light of the growing challenges. �ा आईआईटी / आईआईएम जैसे प्रमुख सं �ानों को
उनक� अ�ग्रमता क� ��त बनाए रखने क� अनुम�त दी जानी चािहए, अ�ास/पाठ्यक्रमों क� रचना/िडजाइ�नंग म� अ�धक अकाद�मक
�तं त्रता क�, और छात्रों के चयन क� री�त/ मानदंड तय करने क� भी अनुम�त दी जानी चािहए? बढ़ती चुनौ�तयों को �ान म� रख के
चचार् कर�।
The concept of Mid Day Meal (MDM) scheme is almost a century old in India with early 2013
beginnings in Madras Presidency in pre-independent India. The scheme has again been given
impetus in most states in the last two decades. Critically examine its twin objectives, latest
mandates & success.म�ाह्न भोजन (एमडीएम) योजना क� अवधारणा भारत म� लगभग एक सदी पुरानी है, �जसक� शु�आत
पूवर्-�तं त्र भारत म� मद्रास प्रेसीड�सी म� �ई थी। इस योजना को �पछले दो दशकों म� अ�धकांश रा�ों म� िफर से आवेग/प्रो�ाहन िदया
गया है। उस के दुगनु ा उद्दे�ों, नवीनतम शासनादेश/अ�धदेशों और सफलता क� समालोचना�क �प से जांच कर�।
Identify the Millennium Development Goals (MDGs) that are related to health. Discuss the 2013
success of the actions taken by the Govt for achieving the same. सह�ा�ी �वकास ल�ों (एमडीजी) क�
पहचान कर� जो �ा� से सं बं�धत ह�। उसी क� प्रा�� के �लए सरकार द्वारा िकए गए काय� क� सफलता पर चचार् कर�।
⇒ With a suitable example of a Govt scheme, explain how e-governance & use of technology Mock
can result in greater transparency & accountability? एक सरकारी योजना के उपयु� उदाहरण के साथ,
समझाएँ िक कै से ई-गवन�स और प्रौद्यो�गक� के उपयोग से अ�धक पारद�शता और जवाबदेही हो सकती है?
⇒ “Use of ICT-technology has enhanced MGNREGA’s efficacy in combating rural distress.”
Elaborate. - "आईसीटी-प्रौद्यो�गक� के उपयोग ने ग्रामीण क�/सं कट से �नपटने म� मनरेगा क� प्रभावका�रता को बढ़ाया है।"
�व�ार से बताएं ।
68.7.4 ✍🎺🎺 GSM2 Syllabus: Schemes for Social Sectors → Education
The Right of Children to Free and Compulsory Education Act, 2009 remains inadequate in 2022-
promoting incentive-based system for children's education without generating awareness about GSM2
the importance of schooling. Analyse.(�ू ली �श�ा के मह� के बारे म� जाग�कता उ�� िकए �बना, ब�ों क� �श�ा म�
प्रेरणा-आधा�रत पद्ध�त के सं वधर्न म� �नःशु� और अ�नवायर् बाल �श�ा का अ�धकार अ�ध�नयम, 2009 अपयार्� है। �व�ेषण
क��जए। ) Answered in Youtube
How have digital initiatives in India contributed to the functioning of the educational system in 2020
the country? Elaborate your answer. (भारत म� िड�जटल पहल ने िकस प्रकार से देश क� �श�ा �व�ा के सं चालन म� GS1
योगदान िकया है? �व�ृत उ�र दी�जए ।) GSM1-2020. This is not typing mistake. UPSC indeed asked this in
GSM1 even though not ‘fitting’ in syllabus of GSM1.
National Education Policy 2020 is in conformity with the Sustainable Development Goal-4 (2030). 2020
It intends to restructure and reorient education system in India. Critically examine the statement. GS2
(रा��ीय �श�ा �न�त 2020 धारणीय �वकास ल�-4 (२०3०) के साथ अनु�पता म� है । उसका �ेय भारत म� �श�ा प्रणाली क�
पुनःसं रचना और पुनः�ापना है l इस कथन का समालोचना�क �न�र�ण क��जए)
⇒ NEP-2020 aims to bring transformational reforms in school and higher education." Discuss. Mock
"(नई) रा��ीय �श�ा नी�त का उद्दे� �ू ल और उ� �श�ा म� प�रवतर्नकारी सुधार लाना है।" चचार् कर�।
⇒ "NEP-2020 is built on the foundational pillars of Equity, Quality, Affordability and
Accountability". Substantiate. (नई) रा�ी� य �श�ा नी�त को समानता, गुणव�ा, िकफायत/कमखच� और जवाबदेही के
�ं भों पर बनाया गया है
⇒ Enumerate the measures in the NEP for (INSERT SUB-Sector: school education / higher
education / assessment etc.) (नई) रा��ीय �श�ा नी�त के x/y/z/ �ेत्र के अनुसंधान म� प्रमुख प्रावधानों क� सूची दी�जए
68.7.5 ✍🎺🎺 Mains Answer Writing: Inclusive Growth
GSM3 Syllabus Topic: Indian Economy (issues re: planning, mobilisation of resources, growth,
development, employment); Inclusive growth & issues therein, Infrastructure
Even though there is an inverse relationship between the economic growth and equality, it is MOCK
necessary for India to pursue higher level of economic growth. Do you agree? Justify your stand.
(भले ही आ�थक वृ�द्ध और समानता के बीच एक �वपरीत सं बंध है, भारत के �लए आ�थक वृ�द्ध के उ� �र का पीछा करना आव�क
है। �ा आप सहमत ह�? अपने मं त� को ता�कक �पसे समझाइए.।)
Explain intra-generational and inter-generational issues of equity from the perspective of 2020
inclusive growth and sustainable development. (समावेशी सं वृ�द्ध एवं सं पोषणीय �वकास के प�रप्रे� म�, आंतपीढ़ी एवं
अंतपीढ़ी सा�ा के �वषयों क� �ा�ा क��जए।)
It is argued that the strategy of inclusive growth is intended to meet the objectives of 2019
inclusiveness & sustainability together. Comment on this statement. यह तकर् िदया जाता है िक समावेशी
�वकास क� रणनी�त एक साथ समावे�शता एवं ��रता के उद्दे�ों को पूरा करने के �लए है। इस कथन पर िट�णी कर�।
Access to affordable, reliable, sustainable & modern energy is the sine qua non to achieve 2018
Sustainable Development Goals (SDGs). Comment on the progress made in India in this regard.
सतत �वकास ल�ों को प्रा� करने के �लए स�ी, �व�सनीय, िटकाऊ और आधु�नक ऊजार् तक प�ँ च आव�क शतर् है। इस स�भर् म�
भारत म� �ई प्रग�त पर िट�णी कर�।
What are the salient features of ‘inclusive growth’? Has India been experiencing such a growth 2017
process? Analyze & suggest measures for inclusive growth. 'समावेशी �वकास' क� मु� �वशेषताएं �ा ह� ? �ा
भारत ऐसी �वकास प्रिक्रया का अनुभव कर रहा है ? समावेशी �वकास के उपायों का �व�ेषण कर सुझाव द�।
Comment on the challenges for inclusive growth which include careless & useless manpower in 2016
the Indian context. Suggest measures to be taken for facing these challenges. भारतीय स�भर् म� समावेशी
�वकास क� प्रा�� हेतु अनाव�क एवं अनुपयु� जनश�� को शा�मल िकया जा रहा है | इस स�भर् म� आने वाली चुनौ�तयों पर
िट�णी कर� । इन चुनौ�तयों का सामना करने के �लए िकए जाने वाले उपायों पर सुझाव द�।
Women empowerment in India needs gender budgeting. What are the requirements & status of 2016
gender budgeting in the Indian context? भारत म� मिहला सश��करण के �लए ल��गक बजट क� आव�कता है।
भारतीय सं दभर् म� ल��गक बजट क� वतर्मान ��त एवं आव�कताएं �ा है ?
68.7.6 ✍🎺🎺 Mains Answer Writing: Women Development
GSM1 Syllabus Topic: Role of women & women’s organisation;
1. What are the continued challenges for women in India against time & space? (समय और 2019
�ान के प�रपे� म� भारत म� मिहलाओं के �लए �नरंतर चुनौ�तयां �ा ह� ?)
2. “Empowering women is the key to control population growth”. Discuss "मिहलाओं को
सश� बनाना ही जनसं �ा वृ�द्ध को �नयं �त्रत करने क� कुं जी है"। चचार् कर� |
‘Women’s movement in India has not addressed the issues of women of lower social strata. 2018
Substantiate your view. ‘भारत म� मिहलाओं के आंदोलन ने �न� सामा�जक �र क� मिहलाओं के मुद्दों को सं बो�धत
नहीं िकया है’। अपने ��कोण क� पु�� कर�।
How do you explain the statistics that show that the sex ratio in Tribes in India is more 2015
favourable to women than the sex ratio among Scheduled Castes? भारत क� जनजा�तयों म�
�लंगानुपात अनुसू�चत जा�तयों म� �लंगानुपात क� तुलना म� मिहलाओं के प्र�त अ�धक अनुकूल है, इस आंकड़े क� आप िकस
प्रकार �ा�ा कर�गे ?
How does patriarchy impact the position of a middle class working woman in India? 2014
�पतृस�ा भारत म� एक म�मवग� कामकाजी मिहला क� ��त को कै से प्रभा�वत करती है?
Discuss the various economic & socio-cultural forces that are driving increasing 2014
feminization of agriculture in India. �व�भ� आ�थक और सामा�जक-सां�ृ�तक कारक भारत म� कृ �ष �ेत्र के
ना�रकरण को बढ़ा रहे है ?
Why do some of the most prosperous regions of India have an adverse sex ratio for 2014
women? Give your arguments. भारत के कु छ सबसे समृद्ध �ेत्रों म� मिहलाओं के �लए प्र�तकू ल �लंगानुपात �ों है?
इस स�भर् म� अपने तकर् द� |
Male membership needs to be encouraged in order to make women’s organization free 2013
from gender bias. Comment. मिहला सं गठनो को ल��गक पूवार्ग्रह से मु� करने के �लए पु�ष सद�ता को प्रो�ािहत
करने क� आव�कता है।
📑📑Next & Last Handout of this Course: Pillar#4Z: Microeconomics
🔬🔬(PILLAR #4Z) MICROECONOMICS
Table of Contents
70 🔬🔬(Pillar #4Z) Microeconomics- an Introduction ............................................................................... 1184
70.1 📦📦📦📦Types of Goods ......................................................................................................................... 1184
70.1.1 Goods: Noone pays directly & Noone is excluded (सबको मु� म� , कोई बिह�ृ त नहीं).................... 1185
70.1.2 📦📦📦📦 Goods where you’ve to pay ₹ ₹ else you’re excluded ................................................. 1185
70.1.3 ✈ Price Discrimination (मू� म� भेदभाव करना) ........................................................................... 1186
71 🔬🔬🔬🔬🔬🔬 Microeconomics → Demand (मांग) .......................................................................................... 1186
71.1 🤲🤲🤲🤲 Demand Types for Economic Good ...................................................................................... 1186
71.2 🔖🔖✋🧔🧔Price control ....................................................................................................................... 1187
Demand Elasticity : responsiveness to Price/Income ..................................................................................... 1188
71.3 🤲🤲🤲🤲↗Demand Elasticity Type#1: Against Price of the Good .................................................. 1188
71.3.1 💧💧 Normal Good: Demand may be Perfectly inelastic (eP=0) .............................................. 1189
71.3.2 🍼🍼 Normal Good: Demand may be (Relatively) inelastic (eP<1).......................................... 1189
71.3.3 🥤🥤 Normal Good: Demand may be (Relatively) elastic (eP>1) ............................................. 1189
71.3.4 Normal Good: Demand may be Unitary elastic (Ep=1) .......................................................... 1190
71.3.5 Normal Good: Demand may be Perfectly elastic (eP=∞)........................................................ 1190
71.3.6 🤳🤳Veblen Good: Higher price → Higher Demand ................................................................ 1190
71.3.7 🥔🥔🥔🥔 Giffen Good: Higher Price = ↑ Demand; Lower Price = ↓ Demand ........................ 1191
71.4 🤲🤲🤲🤲↗ Demand Elasticity Type#2: Against Income of People ................................................. 1192
71.4.1 Normal Good: Demand Elasticity with respect to income ...................................................... 1192
71.4.2 🌽🌽 Inferior Good: Demand Elasticity with respect to Income............................................... 1192
71.4.3 🤲🤲↗✖ ↙ Demand Elasticity Type#3: Cross-Price Elasticity ........................................ 1193
72 🔬🔬🔬🔬🔬🔬 Microeconomics → Supply (आपू�त) .......................................................................................... 1193
72.1 📦📦↗ Supply Elasticity against Price Offered.................................................................................. 1194
72.1.1 Supply Curve: Backward sloping when ..................................................................................... 1195
73 ⚔Microeconomics → Market & Competition Types ............................................................................. 1195
74 ⚙ Microeconomics → Production (उ�ादन).............................................................................................. 1197
74.1 ⚙ Production → Returns to Scale.................................................................................................... 1199
74.1.1 ⚙ ⚙: 🤑🤑 Economies of Scale: बड़े पैमाने पर उ�ादन करने से होने वाली िकफायत� .............................. 1199
74.1.2 ⚙ ⚙ ⚙ : 😢😢 Diseconomies of scale- ब�त बड़े पैमाने पर उ�ादन करने से होने वाले नुकसान ............ 1199
75 🔬🔬🔬🔬 Microeconomics → Utility, Preferences & Misc........................................................................... 1199
75.1 �Preferences, Indifferences (वरीयता, उदासीनता).................................................................................. 1201
75.2 ⚙📈📈Production Possibility Curve .................................................................................................. 1202
76 🎭🎭Economic Models & Concepts ............................................................................................................... 1203
76.1 ⚙📈📈 Pareto Optimal ........................................................................................................................ 1204
76.2 💎💎💎💎 Adam Smith’s Diamond-water paradox ............................................................................... 1205
76.2.1 🛒🛒✖Marginal Propensity to consume → Output Multiplier ............................................. 1205
(Batch: PCB7) Mrunal’s Economy Pillar#4z: Microeconomics → Page 1183

76.3 🥇🥇Commodity Theory of Money (Karl Marx) ................................................................................. 1206
76.4 �💪💪Managerial Revolution (1941) ................................................................................................ 1206
76.5 💦💦Liquidity Trap (J.M. Keynes)......................................................................................................... 1207
76.6 💰💰💰💰 Income Hypothesis: 4 Types .................................................................................................. 1207
76.7 �📈📈📈📈Kuznets Curve (by US Economist Simon Kuznets) ....................................................... 1208
76.8 😿😿😿😿😿😿😿😿 Environmental Kuznets Curve .................................................................................. 1208
70 🔬🔬(PILLAR #4Z) MICROECONOMICS- AN INTRODUCTION

मु� परी�ा म� इसका काम नहीं इस�लए िहदं ी श�ावली क� �ादा ज�रत नहीं.
IAS Prelims → 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Microeconomics 0 0 0 0 0 0 1 0 0 1 0
MCQ MCQ MCQ MCQ MCQ MCQ MCQ MCQ MCQ MCQ MCQ
Although Microeconomics frequently asked in non-IAS exams like IES, EPFO, CDS, CAPF, StatePSC.
Economics is the science which studies human behaviour in areas of consumption, production and
exchange. Depending on its ‘scope’ of study, economics is subdivided into:
🔬🔬Microeconomics (��) 🔭🔭Macroeconomics (सम�� अथर्शा�)
When the economics study relates to - When the study relates to the whole / aggregate
an individual unit or part of the economy. पूरे अथर्तंत्र का सकल �प से जांच / अ�यन
economy. अथर् तं त्र के िकसी एक छोटे िह�े या - It gained focus after the British economist John
प�रवार क� जांच / अ�यन Maynard Keynes published ‘The General Theory of
Employment, Interest & Money’ (1936)
Focus on Production, Consumption, Focus on Income, Savings, Investment, Unemployment,
Supply-Demand, Price GDP, Inflation, Budget, Balance of Payment etc. आय, बचत,
Determination उ�ादन, उपभोग, आपू�त- �नवेश, बेरोजगारी, जीडीपी, मुद्रा��त, बजट, भुगतान सं तुलन
मांग, मू� �नधार्रण
70.1 📦📦📦📦TYPES OF GOODS

70.1.1 Goods: Noone pays directly & Noone is excluded (सबको मु� म� 🤩🤩, कोई बिह�ृ त नहीं)
Types→ प्रकार 💨💨Free 🌿🌿Common goods 💡💡Public goods
goods
Examples उदाहरण Air Fishponds, grazing land Street light, Defence
Free or Paid? Free Free Free
Can anyone be excluded No No No
from using?
Rivalry in consumption? No Yes (1 farmer grazing his (usually) No.
उपभोग म� �धार् herd= ⏬grass for other)
No No Yes, Govt could have used
Opportunity Cost?* that ₹ to develop a new
अवसर लागत app/portal with a fancy
name
*Opportunity Cost = Return of Next Best Alternative Not Chosen MINUS Return of the Option Chosen
😥😥Tragedy of Commons: In common goods (fishing pond, grazing land) there is rivalry in
consumption - one farmer grazes sheep → less grass for next farmer. Too many farmers & sheep →
grassland can’t replenish & no one cares about it→ negative externality for the grasshoppers, snakes
etc. Solution? Tax on grazing rights, ceiling on number of sheep etc.
🔠🔠❓MCQ. What is meant by ‘Public Good’? (Asked in UPSC-CDS-II-2015)

a) A commodity produced by the Government
b) A commodity whose benefits are indivisibly spread among the entire community
c) A Government scheme that benefits the poor households
d) Any Commodity that is very popular among general public
🔠🔠❓MCQ. Which one of the following is not a “Public Good”? (UPSC CDS-2016/1)
(a) Light House (b) Public Parks (c) Electricity (d) National Defense
70.1.2 📦📦📦📦 Goods where you’ve to pay ₹ ₹ else you’re excluded
Types→ Private / Economic Good 📔📔 Club Good / Artificially Scarce

Good �
Free or Paid? Paid Paid
Can anyone be excluded Yes you can’t use without paying. Yes you can’t use without
from using? paying.
Rivalry in Yes, one person buying textbook No. Quantity available for

consumption? means less units of textbook purchase doesn’t decline e.g.
available for purchase for the next Kindle Ebooks, iTunes, Netflix,
customer. Similarly TV, Fridge, Google play-store paid /
Mobile etc.😰😰😰😰 freemium apps.
These goods can also be subclassified into:
A. 📔📔 Merit Good (िहतकारी व�ुएँ ) e.g. textbook & ebooks or
B. 🥂🥂Demerit Good (अवगुण /अिहतकारी व�ुएँ ) e.g. tobacco & violent video games.
70.1.3 ✈ Price Discrimination (मू� म� भेदभाव करना)
It happens when a Company charges different price to different groups of consumers for an identical
good. Example,
- Microsoft & Adobe giving ‘educational-discount’ to students for purchasing softwares. (Because
most students can’t afford the regular price, & software serial key is a ‘club-good’ so cost of
producing ‘additional unit’ is almost zero for the Company.)
- Self-financed colleges charging extra fees for NRI quota students for the same course. (to make
more profit on limited seats).
- ✈ Airfares differ based on how early you book the ticket. (To ensure all seats get filled.)
- Jio prepaid plans are different for non-prime customers vs prime-customers. (To lure customers
into buying the prime-pack.)
- Netflix’s subscription plans for Mobile device are cheaper than their TV plans.
🔠🔠❓MCQ. What is meant by price discrimination? (Asked in UPSC-CDS-II/2015)
a) Increase in price of a commodity over time
b) A situation where the same product is sold to different consumers for different prices
c) Subsidization of a product by the Government to sell it at a lower price
d) General decrease in price of a commodity over time
71 🔬🔬🔬🔬🔬🔬 MICROECONOMICS → DEMAND (मांग)

71.1 🤲🤲🤲🤲 DEMAND TYPES FOR ECONOMIC GOOD

�Individual ⇒ Demand by one person / household e.g. 10 kg onion
Demand िकसी एक प�रवार क� मांग
👪👪 👪👪 ⇒ Total Sum of all households’ demands e.g. 1 lakh kg onions + 1 lakh kg
Market Potatoes.. सभी प�रवारों क� कु ल / सकल मांग.
Demand
🤗🤗Ex Ante ⇒ Actual need of a consumer. He wanted to buy 10 kg onion
😪😪Ex Post ⇒ Need of consumer changed due to market factors. Although he wanted to buy
10 kg but bought only 5 kg due to price rise / supply shortage.
Joint Demand ⇒ Items used together and bought together. E.g. Car-Petrol, Tea-Sugar, Bread-
🍞🍞+🍯🍯 Butter, Cigarette-lighter. These are examples of ‘joint-demand’.
⇒ Here, If car becomes expensive then demand of petrol also falls as less people
buy car. And vice versa.
Composite ⇒ Total demand of a good with multiple alternative uses.
Demand ⇒ E.g. Steel → demanded by spoons & cutlery factories, pipe makers, automobile
🍴🍴+🚕🚕 industry etc.
Derived ⇒ Customer wants to buy a final product e.g. a house → A builder starts
Demand constructing an apartment → leads to demand of steel + wood + cement = this
🏗🏗 is ‘derived demand’.
⇒ Also leads to demand of Land + Labour + Capital to build that apartment.
Therefore, ‘Demand for factors of production’ is said to be a ‘derived demand’.
🔠🔠❓MCQ. The demand for a “factor of production” is said to be derived demand because
(Asked in UPSC APFC/EPFO-2016)
(a) It is a function of the profitability of an enterprise
(b) It depends on the supply complementary factors
(c) It stems from the demand for the final product
(d) It arises out of means being scarce in relation to wants
71.2 🔖🔖✋🧔🧔PRICE CONTROL
⇒ Price Ceiling is the legal maximum price for a good or service. E.g. MRP written on a packet of
biscuits, NPPA’s price control over medicine and medical devices, House rent control,
Rickshaw/Taxi fare ceilings. इससे �ादा भाव नहीं रख सकते
⇒ Price Floor is the legal minimum price. E.g. Minimum wages for workers, Minimum support
price (MSP) for the farmers & Minor forest produce collected by ST. इससे कम भाव नहीं रख सकते.
🔠🔠❓MCQ. Which one of the following is an example of a price floor? (CDS2019-II-Q28)

a) Minimum Support Price (MSP) for Jowar in India
b) Subsidy given to farmers to buy fertilizers
c) Price paid by people to buy goods from ration shops
d) Maximum Retail Price (MRP) printed on the covers/packets of goods sold in India

🔠🔠❓MCQ. Which one of the following is an example of a price ceiling? (CAPF19-Q119)
a) Fares charged by Airlines in India b) Price printed on biscuit packets
c) Minimum support price for cane growers d) Minimum wages fixed by state Governments
DEMAND ELASTICITY : RESPONSIVENESS TO PRICE/INCOME

आप क� पगार/तन�ाह या व�ु क� क�मत म� बदलाव आने पर उस व�ु क� मांग पर �ा असर होता है...वह मांग िकतनी तेजी से
⏫बढ़ती या ⏬कम होती है... उसका लचीलापन (elasticity) देखना है.
71.3 🤲🤲🤲🤲↗DEMAND ELASTICITY TYPE#1: AGAINST PRICE OF THE GOOD

Law of demand: Consumer’s demand for a good is Inversely related to the price of the good (at
‘Ceteris Paribus’ meaning all other things remaining same / constant- his salary doesn’t increase, he
doesn’t fall ill, there is no new fashion for clothes, rival brand’s mobile phones have not changed
their price / features /added 500 cameras on back etc.) जैसे-जैसे चीज महंगी होगी उसक� मांग कम होगी
🔠🔠❓MCQ. Which one of the following is not an assumption in the law of demand? (UPSC-CDS-2019-i)
a) There are no changes in the taste and preferences of consumers
b) Income of consumers remains constant
c) Consumers are affected by demonstration effect
d) There are no changes in the price of substitute goods.
For normal goods (bread, butter, soap, shampoo, ice cream etc.), following could happen:

71.3.1 💧💧 Normal Good: Demand may be Perfectly inelastic (eP=0)
- When increase or decrease in price doesn’t change demand. दाम म� फे रबदल होने से मांग म� कोई फे रबदल नहीं
- E.g. If a company had monopoly on drinking water. Demand will be inelastic, because people
will be (forced) to buy about the same amount whether the price drops or rises. Here slope will
be vertical.
71.3.2 🍼🍼 Normal Good: Demand may be (Relatively) inelastic (eP<1)
- Price ▲ by 10% = demand falls, BUT by less than 10%
- E.g. Milk because no close substitute, Railways by monopoly, Tobacco by addiction.
71.3.3 🥤🥤 Normal Good: Demand may be (Relatively) elastic (eP>1)
- Price ▲ by 10% = demand ▼ by more than 10%
- Happens if close substitutes (करीबी �वक�) available e.g. Pepsi gets expensive → people start
drinking Coca Cola → Pepsi’s demand falls significantly. Similarly Pizza Hut to Domino; Asus
mobile to Xiaomi etc. दाम अगर थोड़ा भी⏫ बढ़ जाए तो माग ब�त �ादा कम⏬ हो जाती है

- This is more prevalent for Luxury / Comfort items: TV, AC, Organic Food.
- If time-period is longer → R&D → new substitutes → more fall in original item’s demand (e.g.
Blackberry phones in the aftermath of multiple Chinese brands)
- If buying can be postponed (e.g. jeans) then price rise → more ⏬⏬ in demand.
71.3.4 Normal Good: Demand may be Unitary elastic (Ep=1)

- For a good when price increased by 10% = demand falls by 10%; and
- when price decreased by 20% = demand increases by 20%,
- then its Elasticity of Demand with respect to price is ‘Unitary’ = 1.
- Elasticity = How responsive one variable (Demand) is to a change in another variable (Price).
Since the two variables are measured in percentage changes, the units of each variable are
cancelled, and the resulting elasticity has no units.
- Here Price rise (y-axis) vs quantity demanded (x-axis): Curve shape= Rectangular Hyperbola
(Banana shape 🍌🍌)
71.3.5 Normal Good: Demand may be Perfectly elastic (eP=∞)

- Customers willing to buy all they can at “x” price, but will buy zero quantity at slightly higher
price. Hypothetical scene, happens during Perfect competition. Here slope will be horizontal.
71.3.6 🤳🤳Veblen Good: Higher price → Higher Demand
- For normal good, price of good (y- axis) vs quantity demanded (x-axis) shows a negative slope
i.e. As the prices ⏫increase, the demand ⏬decreases. However in certain good or situation:
when price increases, demand also increases! So it will show a positive slope ↗. (which is called
‘Exceptional Demand Curve’). For example: कु छ ऐसे खास िकससे जहां पर व�ुक� क�मत बढ़ने पर माग भी बढ़ने
लगती है
- During Curfew / Indira-Gandhi-walli-Emergency: People expect there will be more shortage in
future & prices will rise even more, so they continue to demand (& buy) more and more, even if
price (of rice, petrol, LPG cylinder) keeps increasing.
- Snob Appeal Good or Veblen Good (named after US Economist Thorstein Veblen)
- Diamond, Iphone, Paintings: higher price is seen as status symbol, so when company
increases price, demand also increases.
- Thinking expensive item = Better quality & more status (Iphone 6 to 6s)

🔠🔠❓MCQ. What is the slope of exceptional demand curve? (UPSC-CDS-2015-I)
(a) Downwards to right (b) Upwards to right (c) Horizontal (d) Upwards to left
🔠🔠❓MCQ. The value of slope of a normal demand curve is (CDS2019-II-Q27)
(a) positive (b) negative (c) zero (d) infinity
🔠🔠❓MCQ. Zero price elasticity of demand means (CAPF19-Q98)
a) whatever the change in price, there is absolutely no change in demand
b) for a small change in price, there is a small change in demand
c) for a small change in price, there is a large change in demand
d) for a large change in price, there is a small change in demand
🔠🔠❓MCQ. Suppose that the price of a commodity increases from ₹ 90 to ₹ 110 and the demand
curve shows that the corresponding reduction in quantity demanded is from 240 units to 160 units.
Then, the coefficient of the price elasticity of demand will be (CAPF19-Q99) Answer Codes: (a) 1.0
(b) 2.4 (c) 1.5 (d) 2.0
%𝑐𝑐ℎ𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎 𝑖𝑖𝑖𝑖 𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑 (33.33%)
𝐴𝐴𝐴𝐴𝐴𝐴. 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸 𝑜𝑜𝑜𝑜 𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷 = = = 1.5
%𝑐𝑐ℎ𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎 𝑖𝑖𝑖𝑖 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 (22.22%)
71.3.7 🥔🥔🥔🥔 Giffen Good: Higher Price = ↑ Demand; Lower Price = ↓ Demand
Scottish economist Robert Giffen (1800s) observed:
- If there is an inferior good without substitutes e.g. potato, rice, jowar, bajra then its higher prices
will increase the demand (because poor people fear even more shortage in future, and they don’t
have any ‘alternative’ food to replace potato, rice.) So they’ll demand (& buy) more quantity as
buffer.
- Giffen good’s lower price will decrease its demand. Because then poor people will use their
(sparred) income to buy superior good in daily-diet such meat, wheat etc.
- Some economist debate Giffen Goods are hypothetical, they don’t exist in real life.
Veblen and Giffen goods are special type of goods which do not follow law of demand.
- **In Veblen Good: higher price = higher demand, lower price will decrease demand because
‘status symbol effect will decline’ but it’ll still not greatly decrease demand, because people will
still buy paintings / iphones for their resale value in future.
- ***In Giffen Good: lower price = greater fall in demand because people prefer to use income for
better quality foods so ‘income effect’ dominates.
Price effect on Demand: ⏫Higher price will result in ⏬ Lower price will result in
Normal Good Lower Demand Higher Demand
📱📱 Veblen Good Higher Demand **Demand will fall but greatly
fall
🥔🥔 Giffen Good Higher Demand ***Greater fall in demand
🌽🌽Inferior Good 🤵🤵Higher INCOME = Lower 👷👷Lower INCOME = Higher

(Kerosene, coarse grains) Demand Demand
71.4 🤲🤲🤲🤲↗ DEMAND ELASTICITY TYPE#2: AGAINST INCOME OF PEOPLE
- Effect of people’s income on demand of a good is called ‘Income Effect’.

- Graphs showing the relationship between income and demand are called, “Engel Curves” named
after German Statistician Ernst Engel.
- For Normal good, Income of people (y- axis) vs Quantity demanded (x-axis) shows a positive
slope (↗) i.e. As your income increases⏫, the demand of that good increases⏫. (that is the
definition of a ‘normal good’). जैसे जैसे आप क� आमदनी बढ़ेगी → आप �ादा चीजों क� मांग खरीदारी कर�गे
71.4.1 Normal Good: Demand Elasticity with respect to income

- Ei = 1: Demand may unitary elastic IF 10% salary rise = 10% demand rise.
- Ei > 1: Demand may relatively more elastic IF 10% salary rise → More than 10% demand rise
e.g. mobile phones, movie tickets, Swiggy food orders, air travel & other luxury goods.
- 0 < Ei < 1: Demand may relatively inelastic IF 10% salary rise → demand grows but at less than
10% e.g. daily necessities like soap, toothpaste because salary increase doesn't mean daily you’ll
brush & bath four times a day.
- Ei = 0: Demand may perfectly inelastic for inexpensive essential items: salt, matchbox. So,
increase or decrease in salary may have no effect on its demand.
71.4.2 🌽🌽 Inferior Good: Demand Elasticity with respect to Income

- When a poor Gullyboy becomes a famous Rapstar, or bus conductor Shivaji Rao Gaekwad
becomes Rajinikanth- he’ll shift (substitute / replace) consumption pattern from Maize to
Wheat, Kerosene stove to LPG stove. आदमी �जतना रईस होगा → वह गरीब लोगों वाली चीज� कम खरीदेगा

- So, Inferior goods (with substitutes) like Maize, Bajra, Kerosene will show negative Income
elasticity e.g. 10% salary rise → “x%” fall ⏬in their demand. Accordingly, they’ll have a
Negative-slope (↘). Ei < 0.
- Thus, we can say demand for normal goods is directly related to the income of the buyer but
demand for inferior goods is inversely related to the income of the buyer. (�न�कोिट के सामान क� मांग
→ �� क� आमदनी के ��/उलटे अनुपात म� होगी)
🔠🔠❓MCQ. Other things remaining unchanged, market demand for a good might increase if _ _
[UPSC Prelims-2021]
1. price of its substitute increases [2] price of its complement increases
3. the good is an inferior good and the income of the consumers increases its price falls
4. Its prices fall. Answer Codes: (a) 1 and 4 only (b) 2, 3 and 4 (c) 1, 3 and 4 (d) 1, 2 and 3
🔠🔠❓MCQ. Income elasticity of demand for inferior good is (UPSC-CDS-2013-II)
(a) Less than one (b) Less than zero (c) Equal to one (d) Great than one
🔠🔠❓MCQ. In view of the fact that kerosene is an inferior good in India, what is/are its
implication(s)? (UPSC-CDS-2015-II)
1. As households get richer, they consume less kerosene.
2. Over time there is a decline in quality of kerosene.
3. Government needs to stop subsidies on kerosene.
🔠🔠❓MCQ. Which of the following modes of transportation has the highest elasticity?
(APFC/EPFO-2016): (a) Air (b) Rail (c) Road (d) Water
71.4.3 🤲🤲↗✖ ↙ Demand Elasticity Type#3: Cross-Price Elasticity

It measures the responsiveness of demand for one good with respect to a change in the price of
another good:
Table 1: यह चीज का दाम अगर बदलेगा तो दू सरी चीज क� मांग पर �ा असर होगा?
+ve Cross elasticity ☕☕ Substitutes: Coffee and tea. If tea price ⏫ then people
(Demand ⏫increase) will shift to coffee → coffee demand ⏫. चाय महंगी तो कोफ़� क� मांग बढ़े
-ve Cross elasticity 🍞🍞🍞🍞 Complementary Goods: Increase in bread price will
(Demand ⏬decrease) reduce the demand of bread and butter both. Similarly, Pizzabread
& Cheese, Car & Petrol, Cigar & Lighter. पेट�ोल महंगा तो कार क� मांग कम
ZERO Cross elasticity ☕🌽🌽Unrelated Goods: Cheaper tea → no impact on corn
(No effect on demand) demand. (असं बं�धत माल)
72 🔬🔬🔬🔬🔬🔬 MICROECONOMICS → SUPPLY (आपू�त)

⇒ Stock (भ�ार) = Available quantity of goods at a particular date with the seller.
⇒ Supply (आपू�त) = Quantity of goods (stock) that a seller is willing to sell.

⇒ Total Sum of individual firms’ supply= Market supply.
72.1 📦📦↗ SUPPLY ELASTICITY AGAINST PRICE OFFERED
- For a normal good, more price offered → more entrepreneurs will manufacture → ⏫ supply.
- So for normal good, Price offered (y- axis) vs Quantity supplied (x-axis) shows a POSITIVE
SLOPE (↗) i.e. As price increases, the supply increases, at ceteris paribus (all other things
remaining same- no war, disaster, hoarding etc.) अगर ग्राहक �ादा दाम ऑफर कर�गे तो उस चीज क�
आपू�त/स�ाई बढ़ेगी
- Break-even point is the point on the supply curve at which a firm earns normal profit
Elasticity of Supply When
Perfect Inelastic - Price change can never change supply. e.g. MONA LISA Painting.
Es=0 िकतना भी पैसा दे Medieval / Colonial era’s Philately, Numismatics, Museum collections.
दो आपू�त नहीं बढ़ेगी - Here, supply curve will be VERTICAL (↑).
(Relatively) - 10% price rise= supply will increase eventually but less than 10%
Inelastic - E.g. Milk, Tomatoes, Pulses, Electricity etc. because inputs are finite
Es < 1 (land / cattle / coal) or its time consuming to produce more quantity.
Unitary Elastic - 10% ⏫ in price offered = 10% ⏫ in supply. �जतनी क�मत� बढ़�गी आपू�त भी
Es = 1 उतनी बढ़ेगी
(Relatively) Elastic - 10% ⏫ in price offered= supply will ⏫ MORE THAN 10%.
Es > 1 - For durable, non-perishable goods because seller will unload stock
दाम म� बढ़ोतरी के सामने from godown. �ापारी गोदाम से �ादा माल बेचने को �नकाले
आपू�त म� और �ादा - In long run, supply will greatly increase with new plants, rival
बढ़ोतरी हो जाए companies, R&D (e.g. mobile phones in 1990s vs 2010s)

Elasticity of Supply When
Perfect Elastic - At “x” price- seller willing to supply infinite quantity. At any price less
Es=∞ than “x”- he completely stops the supply.
(Hypothetical) - Here supply curve will be HORIZONTAL.
72.1.1 Supply Curve: Backward sloping when
Wages offered (y- axis) vs hourly labour supplied (x-axis) shows a backward slope (=mirrored ‘C’),
because beyond a point, labourer would prefer to spend time on rest / leisure instead of working
more. एक हद से �ादा तन�ाह दोगे तो भी मजदू र एक हद से �ादा काम नहीं करेगा- �ोिक उसको उन पैसो से मौज भी करनी होती है
🔠🔠❓MCQ. When some goods are completely fixed in amount, regardless of price, the supply
curve is (UPSC-CDS-2019-i)
[a) horizontal b) downward sloping to the right c) vertical d) upward sloping to the right
73 ⚔MICROECONOMICS → MARKET & COMPETITION TYPES
Market (बाजार) is a place / platform where buyer and seller strike a deal. Doesn’t need geographical
location. Market can be classified by on type of competition:
प्र�तयो�गता Buyers ⇒ Sellers
- INFINITE sellers with identical products. So, even little
⚔⚔Perfect
INFINITE change in price will shift ALL buyers to another seller.
Competition
Buyers - So, buyer is the PRICE MAKER, Seller is the PRICE TAKER
पूणर् प्र�तयो�गता
(बेचना है तो बेच, वरना फु ट इधर से)
- MANY sellers. Each seller has slightly different version of
product (iphone vs Samsung Galaxy vs Oneplus) each with
⚔
MANY some loyal fans. So, a little change in price will not instantly
Monopolistic
Buyers shift all buyers to another seller.
Competition
- So, Seller is the PRICE MAKER not Price TAKER (upto a
level depending on brand loyalist fans)
- Few sellers with identical product & but with intense
competition among themselves e.g. SpiceJet, Jet Airways,
IndiGo, Vistara so price wars, discount-offers,
Oligopoly advertisement cost high.
MANY
अ�ा�धकार - Cartel (उ�ादक सं घ)= when they form a gang to restrict the
Buyers
�🤝🤝🤝 supply / raise prices e.g. OPEC oil producing nations. Cartels
often engage in ‘Bid rigging / collusive tendering’ i.e. e.g. If
Ratan Tata deliberately lets Mahindra win Andhra Govt cars
purchase tender, provided Mahindra lets Tata win

प्र�तयो�गता Buyers ⇒ Sellers
Uttarakhand Govt’s truck purchase tender.
- To fight against cartelization / price fixing once we had
Monopolies & Restrictive Trade Practices Act (MRTP: 1969)
→ 2002 replaced by Competition Commission of India
(CCI: भारतीय प्र�त�धार् आयोग), a statutory body under the
Ministry of Corporate Affairs.
- ONLY ONE Seller e.g. Indian Railways.
- No close substitute or competition for a particular price /
service / region.
- Marketing / Advertising cost = ₹0 (�व�ापन लागत नहीं)
- Seller is the PRICE MAKER, Buyer is the PRICE TAKER
Monopoly
MANY (लेना है तो ले वरना फु ट इधर से)
एका�धकार
Buyers - Duopoly= a market with just two firms. But if they form a
🚝🚝 cartel, then it’ll become as if it’s ‘monopoly’.
- Monopoly firm can restrict output, raise prices, and enjoy
super-normal (= abnormally high) profits in the long run.
Ofcourse, that does not happen in Indian Railways because
of cross subsidization of passenger fares for populism.
- MANY Sellers but only ONE Buyer. e.g. Indian Railways
Monopsony buying seats for railway; or Indian Army buying Uniforms /
🚝🚝 Insignia / Machineguns.
ब�त सारे �वक्रेता ONE Buyer - Buyer is the PRICE MAKER. Seller is the PRICE TAKER.
लेिकन के वल एक (बेचना है तो बेच, वरना फु ट इधर से)
ग्राहक - Term was coined by British Economist Dr. Joan Robinson,
she was teacher of both ManMohan & Amartyasen.
⇒ Oligopsony = few large-sized buyers vs many sellers.
Oligopsony Few ‘Large’ ⇒ Then buyers can command the prices. E.g. Indian Dairy
Buyers industry vs dairy farmers. American fastfood companies
(KFC, McDonalds, Subway) vs poultry farmers.
🔠🔠❓MCQ. Which is a particular form of collusive price-fixing behaviour by which firms coordinate their
bids on procurement or project contracts? (UPSC-IES-2020)
(a) Predatory pricing (b) Horizontal price-fixing (collusion) (c) Bid rigging (d) Exclusive territory
🔠🔠❓MCQ. Mobile phone operators market in India is an example of (UPSC-CAPF-2020)
(a) Monopoly (b) Monopolistic Competition (c) Oligopoly (d) Perfect Competition
🔠🔠❓MCQ. Which one of the following is an example of a ‘natural monopoly’? (CDS-2015-II)
(a) Indian Airlines (b) Delhi Jal Board (c) Delhi Transport Corporation (d) Steel Authority of India
🔠🔠❓MCQ. Market with large number of sellers but each selling somewhat differentiated but close
product, is termed as (Asked in UPSC-CDS-2014-II)
(a) Perfect competition (b) Monopoly (c) Oligopoly (d) Monopolistic competition

🔠🔠❓MCQ. A market, in which there are a large number of firms, homogeneous product, infinite elasticity
of demand for an individual firm and no control over price by firms, is termed as (UPSC-CDS-2020-ii)
(a) oligopoly (b) imperfect competition (c) monopolistic competition (d) perfect competition
🔠🔠❓MCQ. Match the following (UPSC-CDS-i-2020)
List-I: (Market structure) List-II: (Characteristic)
A. Perfect competition 1. only one producer selling one commodity
B. Monopoly 2. few producers selling similar or almost
similar products
C. Monopolistic competition 3. many producers selling differentiated
products
D. Oligopoly 4. many producers selling similar products
Code ABCD：a) 4 3 1 2 b) 4 1 3 2 c) 2 1 3 4 D) 2 3 1 4
74 ⚙ MICROECONOMICS → PRODUCTION (उ�ादन)

- ‘Production Function’ is the relationship between inputs used and output produced by a firm.
This production function is determined by the given level of technology.
- Since technological knowledge determines max output that can be produced using different
combinations of inputs, so, If technology improves → Production Function will change.
- ‘Cost Function’ is the relationship between cost incurred while producing output. This cost
function is determined by level of output. To produce more output you’ll have to engage more
factors of production → have to bear more cost (as wages to workers, rent on bigger factory,
interest on capital).
🔠🔠❓MCQ. The production function of a firm will change whenever (UPSC-CDS-2013-II)
(a) input price changes (b) the firm employs more of any input
(c) the firm increases its level of output (d) the relevant technology changes
Factories emit smoke → local residents fall ill, their cars / clothes
Social Cost
require more frequent washing. Those are ‘social cost’, not recorded in
सामा�जक लागत
company’s balance sheet.
Private Cost ₹ ₹ Amount a factory owner has to spend to produce goods. Recorded
�नजी लागत in company’s balance sheet.
A producer takes a lots of pain, stress, sacrifices and toils to establish
Real Cost
business. This is ‘real cost’, CANNOT be measured
वा��वक लागत
in monetary terms.
Money Cost Wage to labour, rent for building, interest on borrowed funds etc. are
मौिद्रक लागत paid in monetary units and hence called money cost
Explicit Cost Farmer’s Cost of buying fertilizer, insecticide etc from market
Implicit Cost / Farmer’s (imputed) Cost of self provided inputs like farmer’s own land,
Imputed cost (अंत�निहत) water, seeds saved from last crop, his own family’s labour.

- ‘Normal profit’ is producer’s minimum expectations from a
business. So long as he gets this minimum, he will continue to do
Normal Profit
this business, ELSE he will shift to another business.
सामा� मुनाफा
- So, to remain in a business, he must recover his Explicit Cost +
Implicit Cost + Normal Profit.
- If a firm makes more than normal profit it is called super-normal
Supernormal Profit
profit. Usually occurs in case of monopolies and cartels when they
अलौिकक/ अप्र�तम मुनाफा
can control the prices as per their greed.
Table 2: To Produce Vimal Gutka

Fixed Cost, Irrespective of how many Gutka packets are produced, industrialist
Supplementary Cost, will have to pay:
Overhead Cost, ⇒ Property tax, Rent on building, Depreciation of machinery
Unavoidable Cost ⇒ Salary to permanent employees
��र लागत ⇒ Interest on loan.
⇒ License fee / royalty if Gutka formula patent bought from
Manikchand.
Here Fixed Cost (y-axis) vs Quantity produced (x-axis): slope will be a
horizontal line.
Variable Cost, Prime - Raw Material, GST, Casual Workers, Electricity.
Cost, Direct Cost, - These costs will increase or decrease depending on how many
Avoidable Cost Gutkha packets are to be produced
प�रवतर्नीय/ चलायमान लागत Here the Variable Cost (y-axis) vs Quantity produced (x-axis): slope
will be a positive slope (↗).
Total Cost It is the sum of above things (fixed + variable cost)
Average Cost Total Cost divided by Total Units produced
Average Fixed Cost - Total fixed cost divided by Total units produced.
- It’ll be a Rectangular Hyperbola (🍌🍌banana shape).
- Average fixed cost will fall with the increase in output because
now the fixed cost is spread over more number of Gutka packets.
Shadow Price - Shadow prices measure the true / intrinsic value of products.
औसत ��र लागत - For example, the price of fertilizer without subsidy, taxes etc.
- It is often used in cost-benefit accounting.
Capital output ratio (or It expresses how much capital investment required to generate 1 unit
capital coefficient) of output. It's further divided into
- 1) Average capital output ratio: total capital divided by total
output
- 2) Marginal or the incremental capital output ratio (ICOR): To
produce one additional unit of output, how much additional
capital will be required?

🔠🔠❓MCQ. Which is a fixed cost to a manufacturing firm in the short run? (UPSC-CDS-2013-I)
(a) Insurance on buildings (b) Overtime payment to worker
(c) Cost of energy (d) Cost of raw materials
🔠🔠❓MCQ. The average fixed cost curve will always be (Asked in UPSC-CDS-2013-II)
(a) a rectangular hyperbola (b) a downward sloping convex to the origin curve
(c) a downward sloping straight line (d) a U-shaped curve
🔠🔠❓MCQ. Which reflects an intrinsic or true value for factors or products? (UPSC-IES-2020)
(a) Price inflation (b) Economy pricing (c) Penetration pricing (d) Shadow price
🔠🔠❓MCQ. Which one of the following ratios is referred to as everything that has been invested
in the past and to the whole income? (UPSC-IES-2020)
(a) Capital-output ratio (b) Average capital-output ratio
(c) Incremental capital-output ratio (d) Marginal ratio
74.1 ⚙ PRODUCTION → RETURNS TO SCALE

- It’s a set of laws to measure relations between increase in inputs (land, labour, capital, raw
material) to increase in production of final goods / services.
- Depending on a company’s size & technological progress, it could be A) increasing⏫ B)
constant C) decreasing⏬
74.1.1 ⚙ ⚙: 🤑🤑 Economies of Scale: बड़े पैमाने पर उ�ादन करने से होने वाली िकफायत� 🤩🤩🤩🤩
- As the firm grows in size, its average fixed cost continues to decline → Production starts to
become ‘More PROFITABLE’.
- This happens due to better R&D, managerial & operational efficiency = less wastage of raw
material, upstream expansion (e.g. Vimal buying farms in Kashmir to cultivate KESAR)
- Result: 10% ⏫ in inputs (of land, labour, capital, raw material) brings more than 10% increase
in production.
74.1.2 ⚙ ⚙ ⚙ : 😢😢 Diseconomies of scale- ब�त बड़े पैमाने पर उ�ादन करने से होने वाले नुकसान 😰😰
- Beyond a point, if firm grows bigger in size → production starts to become ‘LESS
PROFITABLE’ with increased Average cost (total cost divided by total units).
- E.g. Vimal’s A’bad factory ⏫ production from 20 lakh to 100 lakh Gutka packets but Gujarati
addicts in the local market are finite/limited so Vimal must send cargo to Maharashtra’s market
= added transportation cost + have to hire new salesmen to tie up with their pan-parlours etc.
- Accordingly, there is a Law of Variable Proportion: Stage-I: increasing return (profit), State-II:
diminishing return, State-III: negative return on production.
🔠🔠❓MCQ. The way total output changes due to change in all inputs in same proportion is known as law of (Asked in
UPSC-CDS-2014-II) (a) Returns to scale (b) Diminishing returns (c) Increasing returns (d) Constant returns
75 🔬🔬🔬🔬 MICROECONOMICS → UTILITY, PREFERENCES & MISC.

⇒ 🙁🙁Need(ज�रत): Demand of a particular good whose absence cause death e.g. Food/Water/ Air.

⇒ 🥰🥰 Want / Desire (चाहत/इ�ा): demand of a good whose absence may not cause death e.g. Shelter,
Clothing, Mobile etc.
⇒ 🤲🤲 DEMAND: Willingness to buy @certain price @certain time.
⇒ ⚙Production: Making goods/ services that have "utility".
⇒ Utility (उपयो�गता): Power of a good to satisfy your ‘need / want / desire’. Utility is relative in
nature. Hungry man will value a Roti more than a non-hungry man. Utility is free of morality &
ethics. Customer buys knife for cutting vegetables or doing murder- utility doesn’t say it’s ‘right’
or ‘wrong’. (उपयो�गता का �सद्धांत नै�तकता को नहीं देखता. चाकू से ह�ा क� जाए तो चाकू ने अपनी उपयो�गता पूरी क� है ऐसा ये
�सद्धांत कहता है.)
⇒ Marginal Utility (सीमांत उपयो�गता): It is the additional satisfaction from consuming one more unit.
Marginal utility is usually diminishing, because with every piece of biscuit your belly will start to
fill up & your hunger will start to decrease. (However this law does not apply to a mad collector of
rare stamps or a miser who likes accumulating wealth- (पुरानी डाक िटकटों का सं ग्रह करने वाले शौक�न आदमी
तथा कं जूस इं सान को ये �नयम लागू नहीं होता �ोंिक मान�सक शौक/�वकृ �त के चलते उनको मौज आती ही रहेगी चाहे वो िकतना ही
अ�त�र� सामान या पैसा बटोरते रहे)
⇒ Total Utility (TU) = Sum of Marginal Utilities (MU). When total utility is maximum, marginal
utility is ZERO. Beyond this point, total utility will decline and marginal utility will enter
negative zone.
🔠🔠❓MCQ. Demand of a particular commodity refers to (Asked in UPSC-CDS-2015-I)

(a) Desire (b) Need (c) Quantity demanded
(d) Quantity demanded at certain price during a particular period of time.

🔠🔠❓MCQ. According to the law of diminishing marginal utility, as the amount of a good
consumed increases, the marginal utility of that good tends to (UPSC-CDS-2018-1)
(a) improve (b) diminish (c) remain constant (d) first diminish and then improve
🔠🔠❓MCQ. Which one of the following statements is not correct? ( UPSC-CDS-2019-i)
a) When total utility is maximum, marginal utility is zero
b) When total utility is decreasing, marginal utility is negative
c) When total utility is increasing, marginal utility is positive
d) When total utility is maximum , marginal and average utility are equal to each other.
75.1 �PREFERENCES, INDIFFERENCES (वरीयता, उदासीनता)

⇒ Budget set is the collection of all bundles that the consumer can buy with his income at the
prevailing market prices. E.g. (2 jeans, 2 shirts), (4 books, 0 movie) etc.
⇒ Budget line consists of all bundles which cost exactly equal to the consumer’s income. Bundles
above the budget line are ‘not-affordable’ e.g. (5 jeans, 5 shirts).
⇒ When a consumer consumes various goods, then there are some combinations (bundles) which
may give him same satisfaction (1 jeans, 2 shirts) (2 jeans, 1 shirt). The graphical representation
of such combinations is termed as Indifference Curve. It’s convex shaped (🍉🍉). If there are
multiple Indifference Curves then higher curve will give more satisfaction. Indifference curves
run parallel, they don’t cut / intersect each other.
⇒ Marginal rate of Substitution (MRS) refers to the rate at which consumer is willing to give up
number of jeans to obtain one extra shirt without affecting total satisfaction. E.g. IF (5 jeans, 3
shirts) → (2 jeans, 4 shirts) → same satisfaction, then MRS=5-2=3

⇒ Non-monotonic preference: For some goods, there is a perfect optimal amount beyond which
it’ll give negative utility / experience e.g. salt in a soup, sugar in a tea. Accordingly he will not
purchase some bundle even if his budget permits e.g. (50 bags sugar, 1 bag tea).
⇒ Monotonic Preference: For some goods, consumer will continue to buy more and more quantity
(within his income limit) because it’ll give him more utility /satisfaction. e.g. more clothes &
shoes for an instagram-selfie addict. More guns & ammunition for an army, So, if their budget
permitted (2 guns, 50 bullets).....(1 guns, 25 bullets) → they’ll always buy (2 guns, 50 bullets).
🔠🔠❓MCQ. Find correct statement(s) about indifference curves : (UPSC-CDS-2019-i)

1. Indifference curves are convex to the origin.
2. Higher indifference curve represents higher level of satisfaction.
3. Two indifference curves cut each other.
Codes: a) 1 onlyb) 1 and 2 c) 2 and 3 d) 3 only
75.2 ⚙📈📈PRODUCTION POSSIBILITY CURVE

- The basic / central Economic Problem faced by every nation is: our resources finite, but our
wants are infinite. हमारी इ�ाए / �ािहशे अमयार्िदत है िकंतु हमारे सं साधन मयार्िदत ह�- तो िकस चीज का उ�ादन �ादा
कर�?😰😰
- If we have 100 kg steel and 100 kg wood what should we produce? (200 guns for army, 0 chairs
for students), (150 guns, 50 chairs), (0 guns, 200 chairs).
- When this is plotted on a graph, the resultant curve is called Production Possibility Curve or
Production Possibility Frontier (PPF) or Transformation curve. It is concave from origin and
slopes downward: This means that more of a good can be produced only by sacrificing some
quantity of the other good.
- Opportunity cost is the ‘gain’ foregone from the “Activity A” when you’re doing “Activity B”.
More chairs = more comfort to students, but you’ve forgone the national security by NOT

producing guns. Thus, the sacrifice of ‘guns for army/ national security’ is the ‘opportunity cost’
of producing chairs. (अवसर लागत वो का��नक नुकसान है जो आप भोगते ह�, जब आप एक �वक� क� जगह दू सरा
�वक� पसं द करते है)
- Opportunity Cost Formula = Return of Next Best Alternative Not Chosen – The Return of the
Option Chosen
- If the economy functions at a point inside the production possibility curve (e.g. 20 guns, 20
chairs), then it indicates either underutilization or inefficient utilization of resources.
- If there is growth of resources (100 kg steel and 100 kg wood → 200-200 kgs) there will be an
outward shift of the production possibility curve = higher levels of outputs possible.
🔠🔠❓MCQ. Suppose an agricultural labourer earns Rs. 400 per day in her village. She gets a job to
work as babysitter in a nearby town @ Rs.700 per day. She chose to work as agricultural labourer.
Which one of the following is the opportunity cost of the agricultural labourer? (UPSC-CDS-i-
2020)
(a) Rs.1,100 (b)Rs.700 (c) Rs.400 (d) Rs.300
🔠🔠❓MCQ. If a commodity is provided free to the public by the Government, then (Pre-2018)
a) the opportunity cost is zero.
b) the opportunity cost is ignored.
c) the opportunity cost is transferred from consumers of the product to tax-paying public.
d) the opportunity cost is transferred from the consumers of the product to the Government.
🔠🔠❓MCQ. Which one of the following statements is true with regard to an economy which is on
its production possibility frontier? (CAPF19-Q120)
a) The economy has to sacrifice some production of one commodity in order to increase the
production of another commodity
b) There is no limit or constraint for the economy in the production of goods and services
c) The economy can produce more of one commodity up to a point without reducing the
production of any other commodity
d) Its production possibility frontier is an upward sloping curve
76 🎭🎭ECONOMIC MODELS & CONCEPTS

Economic model is a simplified representation of real situation.
- Such models to describe economic activities, their relationships and their behavior. E.g. circular
flow of income between household and business firms.
- Such models explain how the economy, or part of the economy, works.
- Most economic models are built with mathematics, graphs and equations, and attempt to explain
relationships between economic variables.

🔠🔠❓MCQ. Find wrong statements with regard to economic models? (CDS2019-II-Q26)
a) They involve simplification of complex process
b) They represent the whole or a part of a theory
c) They can be expressed only through equations
d) They help in gaining an insight into cause and effect
76.1 ⚙📈📈 PARETO OPTIMAL
- Named after Italian Economist Vilfredo Pareto.

- Once an economy is in a Pareto Optimal state...then beyond this point one person/sector can’t
be made more happier / efficient / profitable without making others unhappy. एक बार इस इष्टतम
��त पर प�ंच गए🤩🤩 → तो इससे बेहतर ��त का �नमार्ण नहीं हो सकता → वरना कोई ना कोई नाराज हो जाएगा😰😰
- E.g. during Pareto optimal situation, all the disguisedly unemployed workers from agriculture
have been given skill training and shifted to the industrial sector. So, agricultural sector is
producing maximum output and industrial sector is also producing maximum output, And all
the (domestic) customers are happily buying the their desired goods / services at the best prices.
- So beyond on this equilibrium, if an industrialist wanted to increase output (so as to increase his
profit through exports etc.), he may have to offer higher wages shifting agro labourers to
factories= agro production down = food inflation = unhappiness for customers = inefficient
economy.
🔠🔠❓MCQ. Which of the following statements (s) are true with respect to the concept of
“EFFICIENCY” as used in mainstream economics? (Asked in UPSC-CDS-2016-I)
1. Efficiency occurs when no possible reorganisation of production can make anyone better off
without making someone else worse off
2. An economy is clearly inefficient if it is inside the Production Possibility Frontier (PPF)
3. At a minimum, an efficient economy is on its Production Possibility Frontier (PPF)
4. The terms such as ‘ Pareto Efficiency’, ‘Pareto Optimality’ and ‘Allocative Efficiency’ are all
essentially one and same which denote ‘efficiency in resource allocation’
Codes: (a) 1 and 4 only (b) 1 and 3 only (c) 2 and 3 only (d) 1, 2, 3 and 4

76.2 💎💎🥛🥛 ADAM SMITH’S DIAMOND-WATER PARADOX
- In his book ‘Wealth of Nations’, the father of Economics Adam Smith (Scotland) wrote about
the ‘invisible Hand’ - an unseen force that moves the supply, demand and free market economy.
- He also observed that water has high ‘Value in Use’ - from survival, to cooking and bathing. So,
water has little ‘value in exchange’ e.g. sold for just ₹ 10-15 a bottle.
- Whereas diamond, which has little ‘value in use’ - ladies wear only on special occasions yet it has
great ‘value in exchange’ - diamonds are sold for lakhs & crores of rupees.
- The reason behind this “Value paradox (मू� का �वरोधाभास)” is ‘Scarcity (दुलर्भता)’ because water is
abundantly available whereas diamonds are scarce / rare.
- Therefore, we also have ‘Paradox of Plenty (ब�तायत का �वरोधाभास)’: more the crop production =
farmer will earn lesser, because crop prices will crash with excess supply- just like the water.
- ‘Paradox of Thrift (�मत�यता का �वरोधाभास)’: John Maynard Keynes noted that when an individual
begins to save more → he buys less TV/fridge/Computer → industrialist’s profit declines →
he’ll throw out employees / reduce their wages → those employees will be able to save less ₹ ₹ .
Thus, when individual’s saving increases, ‘TOTAL Savings’ in economy decreases⏬. यिद एक
�� ब�त �ादा बचत करेगा तो पूरी अथर्तंत्र क� बचत कम होना शु� हो जाएगी
- Avg. Propensity to Save = Total Saving ÷ Total Income
- Marginal Propensity to save = % Change in yours saving with the % change in your income?
- Average propensity to consume (उपभोग करने क� सामा� सहजप्रवृ�त ) = Total Consumption ÷ Total
Income
- Marginal Propensity to consume = what is the % change in your consumption with the %
change in your income? Since as your income increases, your consumption will increase so the
graph of Consumption (Y Axis) vs Income (X Axis) is always a positive slope (↗)
🔠🔠❓MCQ. Who coined the concept of “Paradox of Thrift”? (CAPF19-Q121)

(a) Adam Smith (b) Alfred Marshall (c) John Maynard Keynes. (d) Paul A. Samuelson
🔠🔠❓MCQ. According to simple Keynesian theory, the slope of the aggregate consumption curve
against income is (CAPF19-Q118) (a) Positive (b) Negative (c) Zero (d) Infinity
76.2.1 🛒🛒✖Marginal Propensity to consume → Output Multiplier
- Suppose in a closed economy with zero taxes, income of a family increased by x%. And their
marginal propensity to consume = 0.9. So their consumption will increase by 0.9 times the
original consumption.
- To meet this increased consumption demand, bread factory may produce more quantity of
goods → factory workers will get overtime salaries → workers will also consume more gutka→
more production. Thus, there is a multiplier effect on output.
1
𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂 𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀 =
(1 − 𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝑡𝑡𝑡𝑡 𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶)

In above example, Output multiplier will be = 1/(1-0.9)= 10 times the aggregate output of economy
will increase.
🔠🔠❓MCQ. In a closed economy with no taxes, if the marginal propensity to consume is always
0.90, then the value of the output multiplier will be _ _ _.(CAPF19-Q117)
(a) 10.00 (b) 1.00 (C) 0.90 (d) 0.10 (Hint: put the value in above formula)
76.3 🥇🥇COMMODITY THEORY OF MONEY (KARL MARX)

In his book Das Kapital, Karl Marx observed: 2 primary functions of money are 1) measure of value
and 2) medium of exchange.
- We measure volume in litres, weight in kilograms, similarly we measure value of a commodity in
₹. E.g. 1 litre milk = $ 50.
- Suppose we’ve a gold-standard currency system where $1 = US promised to pay bearer on
demand 14gm of gold.
Money’s value Commodity’s ‘use-value’ Impact on ‘price’ of
commodity
If Increased (e.g. milk required Milk price will increase
If unchanged not just for tea but also in ice-
cream industry)
If decreased (e.g. overprinting If unchanged Milk price will increase
of $ disregarding gold-std, or
reducing underlying gold
quantity $1= 10gm)
If increased (e.g. new gold std If unchanged Milk price will decrease
$1=15 gm of gold)
If decreased (e.g. new diet- Milk price will decrease
If unchanged fashion where people sip black
coffee without milk)
🔠🔠❓MCQ. Rise in the price of a commodity means (Asked in UPSC-CDS-2015-I)
(a) rise in the value of currency only (b) fall in the value of currency only
(c) rise in the value of commodity only
(d) fall in the value of currency and rise in the value of commodity.
76.4 �💪💪MANAGERIAL REVOLUTION (1941)
American Philosopher James Burnham argued in his book ‘The Managerial Revolution’:
⇒ Capitalism: industrialists greatly influence the public policy.
⇒ Socialism: workers greatly influence the public policy.
⇒ Gradually, Capitalism will disappear, but Socialism will not replace it. Instead, the business
executives, technicians, bureaucrats and soldiers, will collectively act as “managers”.

⇒ These managers will eliminate the influence of both industrialists and the workers. They’ll form
‘super states’ consisting of multiple industrial centres across multiple nations.
🔠🔠❓MCQ. CDS2019-II-Q99. Who among the following in his book "The Managerial Revolution"
argued that a managerial class dominated all industrial societies, both capitalist and communist, by
virtue of its technical and scientific knowledge and its administrative skills?
(a) James Burnham (b) Robert Michels (c) Gaetano Mosca (d) Vilfredo Pareto
76.5 💦💦LIQUIDITY TRAP (J.M. KEYNES)
⇒ We measure value of ‘(borrowed) money’ in terms of interest rate.
⇒ To fight deflation, RBI should pursue cheap money policy: cut the repo rate / increase the
money supply → cheaper loan interest rates → more car loans / home loans / biz.loans →
more demand → deflation is fought.
⇒ During a severe and long lasting depression (= Recession) there is fall in demand of goods and
services. So, even if RBI tries to increase money supply (by cutting repo rate, engaging in OMO
etc.), it merely increases the idle cash balances of (liquid) money in the hands of
banks/NBFC/people. It’ll not result in further reduction in loan interest rates because they have
already fallen very low. This phenomenon is called ‘Liquidity Trap’. गं भीर मं दी क� प�र��त म� अगर �रजवर्
ब�क → मुद्रा आपू�त बढ़ा⏫ दे → तो भी लोन �ाज दर कम नहीं होंगे �ोंिक वह ऑलरेडी ब�त कम हो चुके ह�.
⇒ Thus, Liquidity trap refers to a situation in which an increase in the money supply does not
result in a fall in the interest rate but merely in an addition to idle cash balances.
76.6 💰💰🤑🤑 INCOME HYPOTHESIS: 4 TYPES
1. Absolute Income Hypothesis by J.M. Keynes: It deals with how consumer divides his disposable
income between consumption and saving. Rich people consume a lower proportion of their
income (= save more portion of their income), compared to poor people. But, USA Economist
Simon Kuznets found this hypothesis wrong in his research, he called it ‘Kuznets Paradox’.
2. Relative Income Hypothesis: A person’s present consumption or saving pattern is not
dependent on his current income but relative income compared to previous years. E.g. after
recession → economy grows → Workers getting more salaries but still they’re not immediately
increasing consumption because they’ve to repay old debts, they fear of another recession hence
saving more and consuming less.
3. Permanent Income Hypothesis by Milton Friedman: people will spend money at a level
consistent with their expected long-term average income. (लं बी अव�ध क� औसत आय)
4. Life-Cycle Hypothesis: Young people take (education / car / home) loans hoping that future
income will allow them to repay it. Whereas middle aged people spend less & prefer to save more

for their retirement planning / child-education / child-marriage etc. (जवानी म� आदमी पैसा खचर् �ादा
और बचत कम करता है जब उसक� आयु बढ़ने लगती है तो वह िफजूलखच� कम और बचत �ादा करता है)
🔠🔠❓MCQ. Which one of the following hypothesis postulates that individual’s consumption in
any time period depends upon resources available to the individual, rate of return on his capital
and age of the individual? (Asked in UPSC-CDS-2019-i)
a) Absolute Income b) Relative Income c) Life Cycle d) Permanent Income Hypothesis
76.7 �📈📈🤵🤵KUZNETS CURVE (BY US ECONOMIST SIMON KUZNETS)
- As an economy develops, market forces will first increase inequality and then decrease inequality
among people. (because growth will percolate towards rural areas and poor people). So,
Inequality (Y axis) vs per capita GDP (X axis) = inverted U shape curve. (देश क� अथर्�व�ा म� जैसे
जैसे �वकास होगा पहले समाज म� असमानता बढ़ेगी⏫ और िफर असमानता कम होगी⏬)
76.8 😿😿📈📈🌱🌱🌱🌱 ENVIRONMENTAL KUZNETS CURVE
Pollution / environmental degradation (Y axis) vs per capita GDP (X axis)= Inverted-U Shape curve.
- As countries develop from agriculture to industrial economy → Pollution ⏫. But with further
development → industrial to service sector led-economy (while industrial production is
outsourced to a third world country & people have become more climate-conscious) →
pollution ⏬ in given country.
- (देश क� अथर्�व�ा म� जैसे जैसे �वकास होगा, पहले प्रदू षण बढ़ेगा ⏫ → िफर धीरे धीरे प्रदू षण कम होगा⏬)
🔠🔠❓MCQ. Find correct in the context of income-environment relationship (CDS-2015-II)
1. Pollution trends tend to follow an inverse-U shaped relationship across different stages of
economic development.
2. In the beginning stage, pollution increases due to urbanization and industrialization.
3. In the later stage, pollution declines due to structural changes towards services sector.
Codes: (a) 1 only (b) 1 and 2 only (c) 1, 2 and 3 (d) 2 and 3 only
�प�र अभी बाक� है! If Targeting 2023 then Stay tuned for FREE Economy updates under Win23 Series
at Mrunal.org/download

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Mrunal’s Economy for UPSC & Other Competitive Exams 2022

10 🏛🏛BRIEF INFO ON UPSC CIVIL SERVICES EXAM

10.2.2 🏛🏛 ✏Mains & Interview

10.2.3 🏛🏛General Studies Mains Paper 1 to 4: What is covered in your course?

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10.2.5 💲💲Economy Reading List / Self Study List:

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⇒ ✅# NCERT Class 11 Indian Economic Dev. Yes Read it.

10.2.6 🏛🏛🎙🎙Instructions for Live Class

10.2.7 🏛🏛🏛🏛What has UPSC asked from Economy in recent years?

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💸💸Economy Pillar #1-A1) Money: Barter to Bitcoin

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(Batch:PCB7) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 8

(Batch:PCB7) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 9

10.4 📏📏MONEY: FUNCTIONS OF (पैसे के कायर्)

10.5.2 🥇🥇Metallic Money / धातु मुद्रा (Intrinsic value? Yes)

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10.5.3 💪💪 Metallic Money → Full Bodied vs Token Coins

Gupta Coin: ~8 gm GOLD 50 paisa modern coin: ~4 gm steel

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(Batch:PCB7) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 12

Table 3: Fiat Money: Two types of legal tenders

Recipient can refuse accepting payment beyond a No such restriction.**

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10.5.7 � (New) Visually Handicapped (VH) friendly Coins, 2019-March

10.5.8 ��RBI’s App to help the blind identify currency notes

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₹ 2000 Mangal Yaan / Mars Orbiter Mission

10.5.10 💵💵 “I promise to pay the bearer…”: Meaning of this promise?

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10.6 🤫🤫💸💸👜👜🥚🥚 REDENOMINATION: IRAN’S TOMAN CURRENCY

10.7 🐷🐷🔖🔖BANK MONEY / DEPOSIT MONEY

10.7.1 🐷🐷🔖🔖 Paper orders: Cheque, Demand Draft (DD)

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10.7.2 🐷🐷🔖🔖 Cheque → NPCi’s Cheque Truncation System (CTS-2010)

10.7.3 🐷🐷🔖🔖🔖🔖 Cheque → Positive Pay Mechanism for Cheques

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10.8.1 💸💸💸💸CBS ( full form: Core Banking Solution /system)

10.8.2 💸💸💸💸RBI’s Next Generation Treasury Application (NGTA), 2020-Oct

(Batch:PCB7) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 18

10.8.3 💸💸 📡📡 NPCi’s UPI-IMPS- 2 lakh → ⏫5 lakh

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10.8.4 💸💸💸��Interoperability Problem (इंटरऑपरे�ब�लटी)

Figure 1: can’t connect Apple Watch to Android Phone 🤷🤷

10.9 � NATIONAL PAYMENT CORPORATION OF INDIA(NPCI)

(Batch:PCB7) Mrunal’s Economy Pillar#1A1 Money: Barter to Bitcoins → Page 20

⇒ QR Scan & Pay to merchants.

10.11� 🤳🤳NPCI → UPI → 123PAY FOR FEATUREPHONES

- 1) USSD – (This was already available.)

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10.11.1 � NPCI other notable initiatives

Table 6: NPCi has built following mechanisms / platforms / systems / apps:

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10.12�💸💸💸💸 DBT → E-RUPI BY NPCI (2021)

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10.12.1 �💸💸💸💸E-Rupi: Challenges in Physical Procurement/DBT

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10.12.3 �💸💸💸💸 E-Rupi: potential applications in Future [भ�व� म� उपयोग]

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