misc essay topic
TRANSCRIPT
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Government Budget Meaning, Objective
Components of Government Budget
Classification of receipts Capital and revenue
Classification of expenditure - Capital and revenue
Balanced budget surplus budget, deficit budget- meaning and implication
Revenue deficit, iscal deficit, primar! deficit- Meaning and implication"
Meaning of Government Budget:-A government budget is an annual statement of the
estimated receipts and estimated expenditure of the government during a fiscal year.
Objective of the Government Budget
he objective that are pursued by the government through the budget are-
!. "eallocation of resources -:!t means managed and proper distribution of resources.
As private sector can not provide all the goods and services the government has to
provide these goods.
!!. o reduce ine#ualities in income and $ealth-: hrough budget government tries to
reduce the gap bet$een "ich and poor. his is achieved through taxing the rich and
subsidi%ing the needs of poor people. axing the income of rich people reduces their
purchasing po$er and subsidies to poor people increases real income of poor
people.
!!!. o achieve economic stability -: here may be inflation or depression in theeconomy. !nflation is the situation of rise in price level $hereas depression is lac& of
demand. Both the situations are undesirable. 'uring depression government
reduces rate of tax and borro$ing and increases public expenditure. 'uring inflation
government increases the rate of tax and borro$ing and decreases public
expenditure.
!(. Management of )ublic *nterprises
(. o achieve economic gro$th
+omponents of Government Budget:-
,. Budget "eceipts
. Budget *xpenditure
+lassification of Budget "eceipts:-
,. +apital "eceipts: - +apital "eceipts refer to those receipts of the government
$hich
i tend to create a liability or
ii +auses reduction in its assets. All the +apital receipts are broadly classified into
three categories.
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, "ecovery of loans :- hese are +apital receipts because they reduce financial
assets of the government
Borro$ings: - /unds raised by the government form the borro$ing are treated as
capital receipts such receipts creates liability.
0 Other "eceipts: - /unds raised through disinvestment are included in this
category. By this government assets are reduced.
. "evenue "eceipts:-Any receipts $hich do not either create a liability or lead to
reduction in assets is called revenue receipts.
"evenue receipts consist of
, ax "evenue and 1on-ax "evenue.
, ax "evenue: -
A tax is a legal compulsory payment imposed by the government on the people. All
taxes are broadly classified into
i 'irect ax and ii !ndirect ax.
2hen the liability to pay a tax and the burden of that tax falls on the same person3
the tax is called direct tax. e.g. !ncome tax3 corporation tax3 Gift tax etc.2hen the
liability to pay a tax falls on one person and burden of that tax falls on some other
person3 the tax is called an !ndirect tax. e.g. 4ales tax3 +ustom duties3 4ervice tax
etc.
1on-ax "evenue: - 1on tax revenue consists of all revenue receipts other than
taxes. /or eg.:-i !nterestii )rofit and dividendiii /ees and finesiv *xternal grant-in-
aidMeaning of Budget *xpenditure:-Budget expenditure refers to the estimatedexpenditure to be incurred by the government under different heads in a year.
"evenue *xpenditure:-An expenditure $hich do not creates assets or reducesliability is called "evenue *xpenditure.*xamples are 5 4alaries of governmentemployees3 interest payment on loan ta&en by the government3 pension3 subsidies3grants etc.
+apital *xpenditure:-!t refers to the expenditure $hich leads to creation of assets
and reduction in liabilities eg. *xpenditure incurred on construction of building3 roads3bridges etc.
Balanced Budget:- A Government budget is said to be a balanced in $hichgovernment receipts are sho$n e#ual to government expenditure
4urplus Budget:-2hen government receipts are more than government expenditurein the budget3 the budget is called a surplus budget.
Budget 'eficit
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'eficit Budget:-2hen government expenditure exceeds government receipts in the
budget is said to be a deficit budget.
ypes:-
"evenue 'eficit:-"evenue deficit refers to the excess of revenue expenditure of the
government over its revenue receipts.
"evenue deficit 6 otal revenue expenditure 5 otal revenue receipts.
!mportance: - 4ince it is largely related $ith the recurring expenditure. herefore3high revenue deficit gives a $arning to the government either to cut expenditure or toincrease revenue receipts. !t also implies re#uirement burden in future.
/iscal 'eficit:-
/iscal deficit is defined as excess of total expenditure over total receipts excluding
borro$ings.
/iscal 'eficit 6 otal budget expenditure - otal budget receipts net of borro$ings.
!mportance: - /iscal deficit is a measure of total borro$ings re#uired by thegovernment. Greater fiscal deficit implies3 greater borro$ings by the government.his creates a large burden of interst payments in the future that leads to increase inrevenue expenditure3 causing an increase in revenue deficit. hus a vicious circle
sets in. !n the present3 a large fiscal deficit may also lead to inflationary pressures.
)rimary 'eficit:-
)rimary deficit is defined as fiscal deficit minus interest payment. !t is e#ual to fiscal
deficit reduced by interest payment.
)rimary deficit 6 /iscal deficit 5 interest payment.
!mportance: - )rimary deficit signifies borro$ing re#uirements of the government. A
lo$ or %ero primary deficit means that $hile government7s interest re#uirement onearlier loans have compelled the government to borro$ but it is a$are of the need to
tighter its belt.
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Balance of pa!ment # Meaning andcomponenetsBy +liffton "odrigueson4aturday3 8 9une ,; at ,;:;ence3 the balance of payments represents a better
picture of a country7s economic transactions $ith the rest of the $orld than the
Balance of rade.
4tructure of Balance of )ayments Accounts :-
A Balance of payments statements is a summary of a nation7s total economictransactions underta&en on international account. !t is usually composed of t$o
sections :-
, +urrent Account
+apital Account
, +urrent Account :- !t records the follo$ing 0 items :-
i (isible items of trade :- he balance of export and import of goods is called the
balance of visible trade eg. ea3 +offee etc.
ii !nvisible trade :- he balance of exports and imports of services is called the
balance invisible trade eg. 4hipping3 insurance etc.iii ?nilateral transfers :- ?nilateral transfer are receipts $hich residents of a country
ma&e $ithout getting anything in return eg. Gifts etc.
he net balance of visible trade3 invisible trade and of unilateral transfers is the
balance on current account.
+apital Account :- !t records are international transactions that involve a resident
of the domestic country changing his assets $ith a foreign resident or his liabilities to
a foreign resident.
(arious forms of capital account transactions :-
, )rivate ransactions :- here are transactions that effect the liabilities and assets of individuals.
Official ransactions :- ransactions affecting assets and liabilities by
the govt. and its agencies.
0 )ortfolio !nvestment :- !t is the ac#uisition of an asset that does not
give the purchaser control over the asset.
@ 'irect !nvestment :- !t is the act of purchasing an asset and at the same
time ac#uiring control of it.
he net value of the balance of direct and portfolio investment is called
the balanced on +apital Account.
Other items in the balance of payments:-
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hese are included since the full balance of payments account must balance. hese
are as follo$s 5
i *rrors and omissions :- hese may arise due to the presence of sampling error or
dishonesty.
ii Official reserve transactions :- All transactions excepts those in the category of
autonomous transactions.
Autonomous !tems :-
Autonomous items in BO) refer to international economic transactions that ta&e
place due to some economic motive. 4uch as profit maximi%ation. hese items are
often called above the line items in BO).
he BO) is in deficit if autonomous receipts are less than autonomous
payments. he monetary authorities may finance a deficit by depleting their reserves
of foreign currencies or by borro$ing from the !M/.
Accommodating !tems :- Accommodating items in the BO) refer to transactions that
occur because of other activities in the BO)3 such as government financing.
Accommodating items are also referred to as belo$ the line items.
'ise#uilibrium in BO) :-
here are number of factors that cause dise#uilibrium in the BO). 4ho$ing either a
surplus or deficit. hese are categori%ed in three factors:- i *conomic factors
i )olitical factors
ii 4ocial factors
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$ocial %nfrastructure, &mplo!ment, and 'uman (evelopmentBy +liffton "odrigueson4aturday3 8 9une ,; at ,;:;
Gro$th $ith e#uity has been the focus of !ndian economic policy since the ,8s. By
3 !ndia is projected to be the youngest nation in the $orld in terms of si%e. 2hile
this youth bulge7 provides !ndia great opportunities3 it also poses challenges. heseyoung people need to be healthy3 suitably educated3 and appropriately s&illed to
contribute optimally to the economy. 'espite global shoc&s3 !ndia has not
compromised on expenditures on $elfare activities3 especially for the vulnerable
population. he success of programmes and policies of the government lies in the
strength of institutional structures $ith strong public delivery systems as $ell as in
the attitudes and mindset of the people. o ensure conversion of outlays into
outcomes the role of )anchayati "aj institutions is crucial. hough significant
outcomes have been achieved in the areas of poverty reduction3 health3 and
education3 more remains to be done. Government3 along $ith civil society3 media3
and other sta&eholders3 must $or& to$ards changing the patriarchal mindset ofsociety and empo$ering $omen to reali%e their untapped potential and fulfill their
aspirations.
. As per provisional results of +ensus ,,3 ,-,, is the first decade in
independent !ndia $here in the population momentum coupled $ith declining fertility
has dampened the pace of net additions to population. hus3 the net addition
=bet$een ,-,, is less than that of the pervious decade by .C8 million. At
present a little more than one out of every six persons in the $orld is an !ndian. As
per 4ample "egistration 4ystem =4"4 =,0 data3 there has been a gradual
decline in the share of population in the age group -,@ from @,. to 0C., per cent
during ,
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poor #uality of education is accentuated by the fact that fe$er students opt for higher
education.
*'?+A!O1AE +>AEE*1G*4
.; 2hile only o$ever3 for it to be fruitful3 it is critical that the local administration is fully involved
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and sensiti%ed. . 2hile the "* Act and the 9uvenile 9ustice Act $ere
promulgated to bring children into education rather than employment3 they have
allo$ed youth in the ,;-,C age-group to slip through the crac&s. !ndia has about ,
million young people $ho fall in this category. 4ince there are educational and age
re#uirements for entry into most vocational s&illing programmes3 and job placements
are not possible before age ,C3 the vast majority of this population could land up in
the unorgani%ed sector. here is need for research into the type of &no$ledge or
s&ills re#uired to address the opportunity gaps and to improve productive capacity in
the unorgani%ed sector.
., +oncurrently3 to build capacity in secondary schools on par $ith expanded
primary enrolments3 several schemes li&e the Mid-'ay Meal =M'M scheme3
"ashtriya Madhyami& 4hi&sha Abhiyan ="M4A3 Model 4chool 4cheme =M443 and
4aa&shar Bharat =4BK Adult *ducation have also been implemented. he focus of
4B is female literacy. !nter alia3 the lac& of trained teachers compounds the problem.
o strengthen the cadre of teacher educators by providing early career choice to
prospective teachers and to fill the vacancies in teacher education institutions3 a ne$
four-year integrated programme3 i.e. BAKB*d. and B4c.KB*d. has been introduced.
.,, he !ndian higher education system is one of the largest in the $orld in terms of
the number of colleges and universities. /rom 0; universities and ,83C colleges
in ;-83 the numbers have gone up to
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s&illing3 and lac& of industryready7 s&ills even in professional courses =Eabour
Bureau "eport ,@. 4ome recent initiatives that aim to enhance access3 e#uality3
#uality3 innovation3 etc. in the area of higher and vocational education are the
"ashtriya ?chchatar 4hi&sha Abhiyan ="?4A3 echnical *ducation uality
!mprovement )rogramme =*!)3 and 1ational 4&ill ualification /rame$or&
=14/.
.,@ A dedicated 'epartment of 4&ill 'evelopment and *ntrepreneurship has been
created under the Ministry of 4&ill 'evelopment3 *ntrepreneurship3 Louth Affairs and
4ports to accord focused attention in this area. !n addition3 the s&illing programme for
rural youth has been refocused and reprioriti%ed to build the capacity of poor rural
youth to address domestic and global s&ill re#uirements. he 'een 'ayal
?padhyaya Grameen oushalya Lojana =''?-GL is a placement-lin&ed s&ill
development scheme for poor rural youth. A total of ;,3;8 candidates have been
s&illed under the ''?-GL3 of $hich C3; have been placed till 1ovember during
,@-,;.
.,; Other ne$ programmes that aim at bringing minorities into mainstream
development include 1ai Man%il for education and s&ill development of dropoutsN
?4A' =?pgrading 4&ills and raining in raditional ArtsK+rafts for 'evelopment to
conserve traditional artsKcrafts and build capacity of traditional artisans and
craftsmen belonging to minority communitiesN 1ai "oshni3 a leadership training
programme for $omenN and MA1A4 for upgrading entrepreneurial s&ills of minority
youths.
4luggish employment gro$th
.,8 A cause for concern is the deceleration in the compound annual gro$th rate
=+AG" of employment during @-; to ,,-, to .; per cent from .C per centduring ,- to @-; as against +AG"s of . per cent and .@ per cent
respectively in the labour force for the same periods. As per the 1ational 4ample
4urvey Office =144O data during ,- to @-;3 employment on usual
status =?4 basis increased by ;. million persons from 0C. million to @;
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that of females3 long-term trends indicate a lo$ and stagnant gro$th. 4uch trends
call for diversification of livelihood in rural areas from agriculture to non-agriculture
activities. !n order to improve generation of productive employment under the
Mahatma Gandhi 1ational "ural *mployment Guarantee Act =MG1"*GA3 the
!ntensive and )articipatory )lanning *xercise =!))* has been initiated to prepare
the labour budget for financial year ,;-,8 in selected ; bac&$ard bloc&s using
participatory rural appraisal techni#ue. *mphasis has been laid on agriculture and
allied activities to ensure that at least 8 per cent of the $or&s in a district in terms of
cost is for creation of productive assets lin&ed to agriculture and allied activities
through development of land3 $ater3 and trees.
., A major impediment to the pace of #uality employment generation in !ndia is the
small share of manufacturing in total employment. >o$ever data from the sixty-
eighth 144O round =,,- , indicates a revival in employment gro$th in
manufacturing from ,, per cent in -, to ,.8 per cent in ,,-,. his is
significant given that the 1ational Manufacturing )olicy ,, has set a target of
creating , million jobs by . )romoting gro$th of micro3 small3 and medium
enterprises =M4M* is critical from the perspective of job creation $hich has been
recogni%ed as a prime mover of the development agenda in !ndia. Although total
informal employment increased by .; million to @0;.< million bet$een @-; and
,,-,3 it is significant that informal unorgani%edsector employment declined by ;.C
million to 0. million3 leading to an increase in informal organi%edsector
employment by ,;. million. +onse#uently the share of unorgani%ed labour has
declined from C< per cent to C.< per cent =able ..
. 144O rounds are #uin#uennial and therefore information on the employmentK
unemployment situation in the country is available only after a gap of five years. oma&e available data in the interregnum3 the Eabour Bureau conducts household
employment-unemployment surveys on annual basis and has also been bringing out
#uarterly survey reports on the effects of the economic slo$do$n on employment in
select sectors in !ndia since . he results of the latest #uarterly summary on
employment3 9uly ,@ =Box .3 indicate an increase in employment by 0.; million
since the first survey.
., he ?4 unemployment rate is generally regarded as the measure of chronic
open unemployment during the reference yearN $hile the +'4 is considered a
comprehensive measure of unemployment3 including both chronic and invisible
unemployment. hus3 $hile chronic open unemployment rate in !ndia hovers arounda lo$ of per cent3 it is significant in absolute terms. he number of unemployed
people =under ?4 declined from ,,.0 million during @-; to .C million in -
, but again increased to ,.C million in ,,-,. >o$ever3 based on the +'4 the
number of unemployed person days declined from [email protected] million in @-; to C.
million in -, and further to @.< million in ,,-,. hus there has been a
significant reduction in chronic and invisible unemployment from C. per cent in
@-; to ;.8 per cent in ,,-, =able .,. 'espite only a marginal gro$th in
employment bet$een -, and ,,-,3 the reason for the decline in
unemployment levels could be that an increasing proportion of the young population
opts for education rather than participating in the labour mar&et. his is reflected in
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the rise in enrolment gro$th in higher education from @. million in ,-, to .8
million in ,-,0 =)rovisional.
Eabour "eforms
. 4ignificant improvement in industrial harmony in !ndia is evident from the fact
that mandays lost on account of stri&es and loc&out have been steadily declining:
from ,ealth3 2omen +hild 'evelopment3 and )anchayati "aj3
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provision has been made for incentivi%ing accredited social health activists =A4>As
and angan$adi $or&ers to promote sanitation. Guidelines are also in place to involve
corporates in the sanitation sector through corporate social responsibility.
.8 !n order to improve the availability of drin&ing $ater in rural areas3 3 solar
po$er based $ater supply schemes have been approved under the 1ational "ural
'rin&ing 2ater )rogramme =1"'2) across all the states for their habitations
located in far-flung K hilly areas or $here availability of electricity is a constraint.
.< Mission !ndradhanush $as launched on ; 'ecember ,@ $ith the aim of
covering all those children $ho are either unvaccinated or are partially vaccinated
against seven vaccine-preventable diseases $hich include diphtheria3 $hooping
cough3 tetanus3 polio3 tuberculosis3 measles3 and hepatitis B by . he
intensification of immuni%ation activities $ill be carried out in , high focus districts
in the first phase and < districts $ill be targeted for the second phase in ,;.
.C 2ith the goal of providing holistic health solutions3 the erst$hile 'epartment of
AL?4> =Ayurveda3 Loga and 1aturopathy3 ?nani3 4iddha and >omeopathy has
been elevated to a fullfledged ministry from 1ovember ,@. he basic objective of
the 1ational AL?4> Mission =1AM is to promote AL?4> medical systems through
cost-effective AL?4> services and strengthening of educational systems. 4teps are
also under$ay for including yoga in the regular education curriculum. )aying heed to
the )rime Minister7s exhortation during his address to the ?1 General Assembly in
4eptember ,@3 the ?1 has declared , 9une !nternational Loga 'ay.
. Given the multiple determinants of health3 it is clear that a prevention agenda
that addresses the social and economic environment re#uires cross-sectoral3 multi-
level interventions that involve sectors such as food and nutrition3 education3 drin&ing
$ater and sanitation3 housing3 employment3 industrial and occupational safety3$elfare including social protection3 family and community services3 tribal affairs3 and
communications.
)O(*"L
.0 he latest estimates of poverty are available for the year ,,-,. hese
estimates have been made follo$ing endul&ar +ommittee methodology using
household consumption expenditure survey data collected by the 144O in its sixty-
eighth round =,,-,. Over a span of seven years the incidence of poverty
declined from 0?MA1 '*(*EO)M*1: !1*"1A!O1AE +OM)A"!4O1.0, he ,@ >uman 'evelopment "eport =>'" presents the >uman
'evelopment !ndex =>'! values and ran&s for ,C< countries in terms of three basic
parameters: to live a long and healthy life3 to be educated and &no$ledgeable3 and
to enjoy a decent standard of living. !ndia7s >'! value for ,0 is .;C83 positioning
the country at ,0; out of ,C< countries and territoriesFthe lo$est among the B"!+4
countries3 $ith "ussia at ;
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to $hich gender ine#uality erodes national achievements in reproductive health3
empo$erment and labour mar&et participation . A comparison $ith !ndia7s developing
country peers in the G grouping also sho$s !ndia in poor light on gender e#uality
issues. ?nli&e the >'!3 a higher G!! value indicates poor performance =able .8.
.0@ he Gender 'evelopment !ndex =G'!3 defined as a ratio of the female to male
>'! measures gender ine#uality according to three basic parameters of human
development: health =E*B3 .0 !ndia7s >'! is also belo$ the average of countries in
both the medium human development group =.8,@ and in 4outh Asia =.;CC.
Bet$een ,C and ,03 !ndia7s life expectancy at birth =E*B increased by ,,.
years3 mean years of schooling increased by .; years3 and expected years of
schooling increased by ;.0 years $hile gross national income =G1! per capita
increased by about 08. per cent. As compared to B"!+4 nations and some
neighbouring countries3 !ndia reports the least mean years of schooling and an E*B
that is just above that of 4outh Africa. Bangladesh3 $ith less G1! per capita than
!ndia3 has a much higher E*B and mean years of schooling. +hina3 $hich recorded a
slightly higher >'! than !ndia in ,C3 has $idened the margin in ,0 =able .;.
he existing gap in health and education indicators bet$een !ndia and developed
countries and also many developing countries education =expected years of
schooling for children and mean years for adults aged ; years and olderN and
command over economic resources =estimated G1! per capita. +ountry ran&ings
are based on absolute deviation from gender parity in >'!. he G'! is calculated for
,@C countries. he female >'! value for !ndia is .; as compared to .80 for males3
resulting in a G'! value of .CC. !n comparison3 Bangladesh and +hina are ran&ed
higher $ith values of .C and .0 respectively =able .'!3 itran&s in the bottom per cent on the G!!. hese statistics reflect the high levels of
gender ine#uality in !ndia and the poor status of $omen and girls in !ndian society.
!ndia is a signatory to the +onvention on the *limination of All /orms of
'iscrimination against 2omen =+*'A23 $hich is often described as an
international bill of rights for $omen. !t defines discrimination against $omen and
sets the agenda for national action to end violations of $omen7s rights. An important
element of +*'A2 is its affirmation of $omen7s reproductive rights3 including the
right to determine the number and spacing of children and e#ual access to family
planning. ?nfortunately in !ndia there is an increasingly disproportionate emphasis
on $omen7s sterili%ationN thus tubectomies account for a $hooping
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, to ,,, over the same period. /igure .@ gives the trends in +4" in select
countries in Asia bet$een , and ,.
.0< he ?1 General Assembly in ,0 defined violence against $omen as Hany act
of genderbased violence that results in3 or is li&ely to result in3 physical3 sexual or
psychological harm or suffering to $omen.J +onse#uently3 apart from violence
against marriedKadult $omen3 excess female child mortality3 female infanticide3 and
child marriage are also considered violence against the female gender. he
implementation of the )rotection of 2omen from 'omestic (iolence Act ;
=)2'(A is $ea&3 as nineteen states have no planned schemes.
.0C Appropriately a ne$ scheme3 Beti Bachao Beti )adhao =BBB) )rogramme3 for
promoting survival3 protection3 and education of the girl child $as launched on
9anuary ,; at )anipat3 >aryana3 a state that is noted for the lo$est +4" 5 C0;
=4"4 ,0. !t aims to address declining +4" through a mass campaign targeted at
changing social mind set and creating a$areness about the criticality of the issue.
he overall goal of the BBB) programme is to celebrate the girl child and facilitate
her education $ith the objectives of preventing gender-biased sex-selective
elimination3 ensuring survival and protection3 and education of the girl child. .0
+omparison of select socio-economic development indicators of states is given in
Appendix able .C.
/O4*"!1G !1+E?4!(* G"O2>
.@ !ndian development planning has focused on formulation of programmes and
policies aimed at bringing the marginali%ed and poor sections of society into the main
stream. he government has been implementing many such programmes for social
and financial inclusion. he disbursement of benefits needs a systematic channel
$hich $ill provide for financial empo$erment and ma&e monitoring easier and thelocal bodies more accountable. he )radhan Mantri 9an 'han Lojna =)M9'L
launched on C August ,@ and the "u)ay +ard3 $hich is a payment solution3 are
important schemes in this regard. hese t$o schemes are complementary and $ill
enable achievement of multiple objectives such as financial inclusion3 insurance
penetration3 and digitali%ation.
.@, Government has restructured and finetuned a number of ongoing programmes
based on the field experience to ma&e them need based. hese are listed in
Appendix )age A,@,-A,@;. o facilitate coordinated functioning of various social
infrastructure and human development programmes3 the government has launched
the 4ansad Adarsh Gram Lojna =4AGL $hich $ill be implemented through theconvergence and implementation of existing government programmes. !n addition3
the (anbandhu alyan Lojna $ill be implemented in one bloc& each of ten states that
have /ifth 4chedule areas.
.@ Given the multiple schemes implemented to foster inclusive gro$th3 the role of
)anchayati
'*MOG"A)>!+ '!(!'*1' A1' "*EA*' )OE!+L !1*"(*1!O14
.@0 A declining -,@ population $ill impact both elementary =;-,@ age group and
higher education =,;- age group. *lementary education can be further subdivided
into primary =;- age group and middleKupper primary =,- ,@ age group. he first
stage of impact $ill be felt in declining enrolment in primary schools. As statedearlier3 total enrolment in primary schools has fallen in ,0-,@ $hile upper primary
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enrolment has gro$n. he dependency ratio for !ndia is expected to fall from ;@ per
cent in , to @ per cent in . !n this scenario3 given interstate disparities3
states that are already facing this situation need to adopt specific policy measures in
the field of education3 $herein3 instead of expanding the number of primary schools3
focus should be on =i improving access to education considering the high dropout
rates among senior studentsN =ii removing gender disparity especially in the higher
age group and in rural areasN and =iii improving #uality of education3 including pupil-
teacher ratios and provision of amenities in schools3 especially in vie$ of the
declining learning levels.
.@@ he lag in demographic transition bet$een different states that necessitates
state-specific policies to optimally garner the benefits of the demographic dividend.
O$ing to substantial fertility decline in the south during the last t$o decades3 the
south is ahead in the demographic transition compared to the north3 thereby the
$indo$ is already $ide open in the south compared to the north. /or instance3 the
projected average age of years in has already been surpassed in some
states li&e erala =00 years3 Goa =0.03 amil 1adu =0,.03 >imachal )radesh
=0.@3 )unjab =.3 Andhra )radesh =.03 and 2est Bengal =.,. +omparative
picture of five states each $ith lo$est and highest average age is sho$n in /igure
.;.
.@; his lag in demographic transition among states in !ndia could turn out to be a
great blessing from the point of vie$ of coping $ith the problem of declining
population. !ndia is better placed in this respect than most other countries. hus
states already $ell into the demographic $indo$ should actively pursue policies for
employment generation to the already bulging labour force3 $hile states just entering
the $indo$ period have some time to plan and must pursue policies simultaneouslyin several areas li&e education3 health =including reproductive health3 gender issues3
and employment generation from no$ on so that they can fully utili%e the opportunity.
"*1'4 !1 !1'!A74 4O+!AE-4*+O" *P)*1'!?"*
.@8 "eserve Ban& of !ndia ="B! data on expenditure on social services by the
general government =centre and states as a proportion of total expenditure has also
been sho$ing a mixed trend. !t had declined to . per cent in ,-,0 from @.o$ever3 delay in agreementamongst different lending institutions often comes in the $ay of suchendeavors. Based on the experience in countries li&e the ?3 hailand3 orea3Malaysia3 etc. of putting in place an institutional mechanism for restructuring ofcorporate debt and need for a similar mechanism in !ndia3 a +orporate 'ebt"estructuring 4ystem $as evolved and detailed guidelines $ere issued by"eserve ban& of !ndia on August 03 , for implementation by financialinstitutions and ban&s.
he +orporate 'ebt "estructuring =+'" Mechanism is a voluntary non-
statutory system based on 'ebtor-+reditor Agreement ='+A and !nter-+reditor Agreement =!+A and the principle of approvals by super-majority ofo$ever3 +ore Group3 after revie$ing thereasons for classification of the borro$er as $ilful defaulter3 may consideradmission of exceptional cases for restructuring after satisfying itself that theborro$er $ould be in a position to rectify the $ilful default provided he isgranted an opportunity under +'" mechanism.
$tructure of C(R $!stem#he edifice of the +'" Mechanism in !ndia standson the strength of a three-tier structure:
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+'" 4tanding /orum
+'" *mpo$ered Group
+'" +ell
egal Basis of C(R
he legal basis to the +'" 4ystem is provided by the 'ebtor-+reditorAgreement ='+A and the !nter-+reditor Agreement =!+A. All ban&s Kfinancialinstitutions in the +'" 4ystem are re#uired to enter into the legally binding!+A $ith necessary enforcement and penal provisions. he most importantpart of the +'" Mechanism $hich is the critical element of !+A is the provisionthat if o$ever3 the stand still7 is applicable only to any civil action3either by the borro$er or any lender against the other party3 and does not
cover any criminal action.
Besides3 the borro$er needs to underta&e that during the stand still7 period thedocuments $ill stand extended for the purpose of limitation and that he $ouldnot approach any other authority for any relief and the directors of thecompany $ill not resign from the Board of 'irectors during the stand still7period.
http://www.cdrindia.org/standingforum.htmhttp://www.cdrindia.org/empgroup.htmhttp://www.cdrindia.org/cdrcell.htmhttp://www.cdrindia.org/standingforum.htmhttp://www.cdrindia.org/empgroup.htmhttp://www.cdrindia.org/cdrcell.htm -
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!ndia7s public sector ban&s are heading to$ards bad times. 2e don7t need a soothsayer to say
thisFa close loo& at the earnings of ban&s in the #uarter ending March ma&es it #uite clear.
Among 0 listed ban&s in !ndiaFboth private and publicFfour recorded net losses in the March
#uarter3 and three of them are public sector ban&s. hey are Ban* of %ndia3Oriental Ban* of
Commerceand .unjab and $ind Ban*. At least nine other public ban&s recorded a drop in net
profit compared $ith the year-ago #uarterN and for a fe$ of them3 the drop has been pretty sharp.
/or instance3.unjab /ational Ban*=./B posted a 8U drop in net profitN for (ena
Ban*3 0nited Ban* of %ndia=0B% and%ndian Overseas Ban*=%OB3 the drop in net profit $as
even sharperFbet$een
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close to 8U in ,@ and rose about CU in ,;. After setting aside money for bad loans3 private
ban&s7 net profit rose ,
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. Issuer of Bank otes# The RBI has the sole right to issue currency notes. &t !resent, notes of
Rs "*+ Rs "**+ Rs **+ and Rs ",*** are only !rinted. The !rinting of Re ", Rs and Rs has
been sto!!ed. -owever, the RBI has !owers to !rint currency notes of u! to Rs "*,***
denomination. But, an amendment to the Reserve Bank of India &ct, "/0 will be needed if any
note of higher denomination has to be !rinted.
/. Banker to 1overnment# &s banker to the government the RBI manages the banking needs of
the government. It has to maintain and o!erate the government2s de!osit accounts. It collects
recei!ts of funds and makes !ayments on behalf of the government. It re!resents the
1overnment of India as the member of the I34 and the %orld Bank.
0. 5ayment system# The RBI takes !art in the !ayment system as a user of the system, a service
!rovider and is also the regulator of the systems. &s a user it deals with the che'ue based clearing
o!erations. It also !artici!ates as a user in the Electronic learing 6ervice (E6) and (Electronic
4unds Transfer) E4T systems for making its own internal !ayments to its em!loyees, vendor
!ayments etc. 6imilarly, RBI transactions in Re!o 7 Reverse Re!o under 8&4, 9!en 3arket9!erations, would also be settled through the res!ective com!onents of !ayment systems. &s a
!rovider it manages the entralised 4unds 3anagement 6ystems (436), egotiated :ealing
6ystem (:6) and Real Time 1ross 6ettlement (RT16) systems have been fully develo!ed,
o!erationalised and maintained by RBI. Besides the above, RBI (through I:RBT) has also
!rovided the communication backbone to the financial system in the country in the form of
Indian 4inancial etwork (I4IET).
. Regulates banks# RBI regulates banks in the country. &ll those as!iring to start a bank or
ac'uire an e$isting one, have to seek RBI a!!roval. RBI also monitors financial stability of banks
and kee!s a check on lending in the system. Banks have to maintain a !ortion of their de!osits
for cash reserve ratio or RR and at all times maintain minimum ca!ital ade'uacy. RBI monitorsrisks to the financial system by kee!ing a check on banks.
;. E$change rate stability# RBI may intervene in the market to influence the e$change rate or to
reduce volatility. The basic intention in such actions is to maintain the demand
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of control of credit becomes obvious. redit is controlled by the Reserve Bank in accordance with
the economic !riorities of the government.
Short notes on Accounts for NRI/PIO in India
What are the different types of accounts which can be maintained by an NRI/PIO in India?
Types of accounts which can be maintained by an NRI / PIO in India:
A. Non-Resident Ordinary Rupee Account (NRO Account)
NRO accounts may be opened / maintained in the form of current, savings, recurring or fixed
deposit accounts. Interest rates offered by banks on NRO deposits cannot be higher than those
offered by them on comparable domestic rupee deposits.
Account should be denominated in Indian Rupees.W
Permissible credits to NRO account are transfers from rupee accounts of non-resident banks,W
remittances received in permitted currency from outside India through normal banking channels,
permitted currency tendered by account holder during his temporary visit to India, legitimate dues
in India of the account holder like current income like rent, dividend, pension, interest, etc., sale
proceeds of assets including immovable property acquired out of rupee/foreign currency funds or
by way of legacy/ inheritance.
NRI/PIO may remit from the balances held in NRO account an amount not exceeding USD oneW
million per financial year, subject to payment of applicable taxes.
The limit of USD 1 million per financial year includes sale proceeds of immovable propertiesW
held by NRIs/PIOs.
B. Non-Resident (External) Rupee Account (NRE Account)
1) NRE account may be in the form of savings, current, recurring or fixed deposit accounts.
2) Such accounts can be opened only by the non-resident himself and not through the holder of
the power of attorney.
3) Account will be maintained in Indian Rupees.
4) Accrued interest income and balances held in NRE accounts are exempt from Income tax.
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5) Authorised dealers/authorised banks may at their discretion allow for a period of not more than
two weeks, overdrawings in NRE savings bank accounts, up to a limit of Rs.50,000.
6) Loans up to Rs.100 lakh can be extended against security of funds held in NRE Account either
to the depositors or third parties.
C. Foreign Currency Non Resident (Bank) Account FCNR (B) Account
FCNR (B) accounts are only in the form of term deposits of 1 to 5 yearsW
Account can be in any freely convertible currency.W
Loans up to Rs.100 lakh can be extended against security of funds held in FCNR (B) depositW
either to the depositors or third parties.
The interest rates are stipulated by the Department of Banking Operations and Development,W
Reserve Bank of India.