1. Sugarcane Pricing

Details

• The money would be credited directly into the bank accounts of farmers, who haven’t received the “fair and remunerative price” (FRP) for sugarcane fixed by the Centre.

• The Centre’s Sugarcane (Control) Order mandates mills to pay the FRP within 14 days of cane purchase from farmers, failing which 15% annual interest is charged on the due amount for the period of delay.

• Considering the large cane price arrear dues to farmers the mills say they cannot pay farmers beyond 75% of their realisations from sugar and thus the amount sanctioned by government is grossly inadequate.

• The populist increases in SAP recent years has resulted in excessive production of sugarcane, estimated at 295.07 lakh tone thus triggering a glut of supply of sugar which reached an all-time high of 29.98 million tonne.

• Further considering the high cost of production of sugar (partly due to high cane prices in India) in other countries the export prices of sugar are much lower than from domestic sales.

 

Other Major Challenges facing the Sugar Industry in India

• India has the largest area under sugar cane cultivation in the world but the yield per hectare is extremely low and is even lower in North India than in South India

• The sugar industry has a seasonal character and the crushing season normally varies between 4 and 7 months in a year leaving the mill and the workers idle for almost half of the year.

• Average rate of sugar recovery from the sugar cane is less than 10 per cent which is much lower than other sugar producing areas like Java, Hawaii and Australia, up to 14 per cent.

• Most of the sugar mills in our country are of more old, have small size and outdated machinery with a crushing capacity of about 1200 tons per day.

• The cost of sugar production in India is one of the highest in the world mainly due to high sugar cane cost, uneconomic production process, inefficient technology and high taxes exercised by the state and the central governments.

• The industry faces problems in disposing by-products i.e. bagasse and molasses, especially under pollution control devices.

• The government policy, based on dual price system, discourages the entrepreneurs to make investment for further growth and improvement.

• The per capita annual consumption of sugar is about 10 kg in India, whereas it is about 20 kg in the world.

 

Suggestion

• Government has already taken following measures to arrest the downslide in sugar prices and to ameliorate the liquidity position of sugar mills:

• Increased import duty on sugar from 50 to 100 per cent

• Imposition of stock holding limits on sugar mills for two months

• Fixing of Minimum Indicative Export Quotas (MIEQ) and

• Removal of customs duty on export of sugar to find a way for surplus output in the overseas markets.

• C. Rangarajan Committee (2012) on sugarcane pricing had recommended abolition of SAP and favoured revenue sharing formula (RSF) for cane price payments, 75 per cent of sugar value or 70 percent of the value of sugar and its byproducts should be disbursed to farmers towards sugarcane price.

• CACP has also recommended a hybrid approach with simultaneous implementation of Revenue sharing formula, FRP of Sugar and Sugar Price Stabilization fund.

• Better pricing, predictability and augmentation of storage facilities under Ethanol Blended Petrol programme to incentivise its procurement by OMCs.

• Power generation using cogeneration technology is another option through which companies can generate revenues by selling extra electricity generated as a by-product of sugar production to power distribution companies.

• Government should also incentivise crop diversification towards other less water intensive crops to reduce the problem of excess groundwater extraction from crops like sugarcane.

 

2. Green Revolution - Krishonnati Yojana

​Details about Krishonnati Yojana

• The scheme has been continued as part of its objective to double farmers' income by 2022.

• It is an umbrella of 11 schemes/missions under Ministry of Agriculture:

• Mission for Integrated Development of Horticulture (MIDH): to improve nutritional security and income support to farm Households.

• National Food Security Mission (NFSM), including National Mission on Oil Seeds and Oil Palm (NMOOP): to increase production of rice, wheat, pulses, coarse cereals and commercial crops and to augment the availability of vegetable oils to reduce its import.

• National Mission for Sustainable Agriculture (NMSA): promotes sustainable agriculture practices best suitable to the specific agro-ecology focusing on integrated farming, appropriate soil health management and synergizing resource conservation technology.

• Submission on Agriculture Extension (SMAE): to strengthen the ongoing extension mechanism of State Governments, local bodies, to forge effective linkages and synergy amongst various stake-holders, to support HRD interventions, to promote pervasive and innovative use of electronic / print media, inter-personal communication and ICT tools, etc.

• Sub-Mission on Seeds and Planting Material (SMSP) to increase production of certified / quality seed, to increase SRR, to promote new technologies in seed production, infrastructure, etc.

• Sub-Mission on Agricultural Mechanisation (SMAM): to increase the reach of farm mechanization to small and marginal farmers, to promote ‘Custom Hiring Centres’, to create hubs for hi-tech and high value farm equipment, to create awareness among stakeholders through demonstration and capacity building activities, and to ensure performance testing and certification at designated testing centers located all over the country.

• Sub Mission on Plant Protection and Plan Quarantine (SMPPQ): to minimize loss to quality and yield of agricultural crops from the ravages of insect pests, diseases, weeds, nematodes, rodents, etc. and to shield our agricultural bio-security from the incursions and spread of alien species, to facilitate exports of Indian agricultural commodities to global markets, and to promote good agricultural practices, particularly with respect to plant protection strategies and strategies.

• Integrated Scheme on Agriculture Census, Economics and Statistics (ISACES): to undertake the agriculture census, study of the cost of cultivation of principal crops, to undertake research studies on agro-economic problems of the country, to improve agricultural statistics methodology and to create a hierarchical information system on crop condition and crop production from sowing to harvest.

• Integrated Scheme on Agricultural Cooperation (ISAC): to provide financial assistance for improving the economic conditions of cooperatives, remove regional imbalances and to speed up - cooperative development in agricultural marketing, processing, storage, computerization and weaker section programmes.

• Integrated Scheme on Agricultural Marketing (ISAM): to provide infrastructure facilities for grading, standardization and quality certification of agricultural produce; to establish a nationwide marketing information network; and to integrate markets through a common online market platform to facilitate pan-India trade in agricultural commodities

• National e-Governance Plan (NeGP-A): to improve access of farmers to information & services throughout crop-cycle and to build upon, enhance & integrate the existing ICT initiatives of Centre and States.

 

3. CORPUS FOR MICRO IRRIGATION FUND

NABARD

• It was established under the NABARD Act of 1981 with an objective of providing and regulating credit and other facilities for the promotion and development of Agriculture, Small-scale industries, Cottage and village industries, Handicrafts and other allied economic activities in rural areas.

• It refinances the financial institutions like state co-operative agriculture and rural development banks (SCARDBs), state co-operative banks (SCBs), regional rural banks (RRBs), commercial banks (CBs) which finances the rural sector.

• It promotes SHG-Bank linkage programme for mainstreaming of the microfinance innovation and encourages other banks to lend to SHGs.

• Long Term Irrigation Fund (LTIF) has been established in NABARD during Budget 2016-17, as a part of PMKSY with an initial corpus of 20,000 Crore Rupees and it has been doubled to 40,000 crores in Budget 2017-18.

• A dedicated Micro Irrigation Fund (MIF) with National Bank for Agriculture and Rural Development (NABARD) under Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) has been set up.

 

Status of Micro -Irrigation in India

• According to a study the average penetration level of Micro-irrigation in India is 5.5%. Only few states like Haryana, Sikkim, Andhra Pradesh, Rajasthan, Karnataka, Gujarat, Maharashtra, Tamil Nadu have penetration level greater than national average.

• Micro-irrigation in India is largely being promoted in arid and semi-arid regions where groundwater is the primary

 

Pradhan Mantri Krishi Sichayee Yojana

• It aims to extend the coverage of irrigation ‘Har Khet ko pani’ and improving water use efficiency ‘More crop per drop' in a focused manner with end to end solution on source creation, distribution, management, field application and extension activities.

• It will be supervised and monitored by Inter-Ministerial National Steering Committee (NSC) under PM with Union Ministers of all concerned Ministries. A National Executive Committee (NEC) is to be constituted under the Chairmanship of the Vice Chairman, NITI Aayog to oversee programme implementation

• PMKSY has been formulated amalgamating ongoing schemes viz. Accelerated Irrigation Benefit Programme (AIBP); Integrated Watershed Management Programme (IWMP); and On Farm Water Management (OFWM) component of National Mission on Sustainable Agriculture (NMSA).

• Water budgeting is done for all sectors namely, household, agriculture and industries.

 

Source of water.

• The task force on micro irrigation had estimated a potential of 69.5 million hectare under micro irrigation, whereas the area covered so far is only about 10 million hectares.

 

Micro Irrigation Fund

• It intends to provide states financial assistance on concessional rate of interest to encourage Micro-Irrigation and an allocation of Rs 2,000 crore has been made for this fiscal while Rs 3,000 crore has been earmarked for the 2019-20 fiscal.

• The lending rate under the MIF has been proposed at 3% lower than the cost of raising the fund by NABARD.

• It will have a pan-India coverage and the loans extended by NABARD can be paid back in 7 years, including a grace period of two years.

 

Advantages of MIF

• It would supplement the efforts of Per Drop More Crop Component (PDMC) of Pradhan Mantri Krishi Sinchayee Yojana in an effective and timely manner and may ensures water use efficiency as much as 50- 90%.

• Fund will help to bring more area under micro-irrigation over 5 years, i.e. almost about 10 million hectares.

• Farmers Producers Organization (FPO)/Cooperatives/State Level Agencies can also access the funds with state government guarantee or equivalent collateral.

• It will also help states mobilise resources for their own initiatives, including additional subsidy, to bring about 2 million hectares under micro irrigation each year during the remaining period of the 14th Finance Commission.

• Increase in Farmer Income-Farmers can add more new crops in an improved water scenario which ultimately results in increase in farmer’s income.

 

Challenges Ahead

• High cost of Installation- Micro-sprinklers are quite costly and to offset the financial constraint of the farmers, Government will have to provide the subsidies to the extent of 40-90%, of the cost of Micro-Irrigation.

• Inefficiency in implementation- Implementation agency for micro-irrigation was changed from a dedicated mission to a component part of NMSA under PMKSY this has led to inefficiencies like improper utilisation of funds across the states.

• Other Issues include inadequate electricity supply as well as poor follow up services by drip agencies.

 

4. Precision Agriculture Using Artificial Intelligence

​Details

• It is first of a kind project leveraging AI in agriculture across 10 Aspirational Districts in India across the States of Assam, Bihar, Jharkhand, Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh in its Phase I. The project will aim at improving yields of small landholders.

• IBM will be using AI to provide all the relevant data and platform for developing technological models for improving agricultural output and productivity for various crops and soil types, for the identified districts.

• NITI Aayog, on its part, will facilitate the inclusion of more stakeholders on the ground for effective last mile utilisation and extension, using the insights generated through these models.

• The scope of this project is to introduce and make available climate-aware cognitive farming techniques and identifying systems of crop monitoring, early warning on pest/disease outbreak based on advanced AI innovations. • It also includes deployment of weather advisory, rich satellite and enhanced weather forecast information along with IT & mobile applications with a focus on improving the crop yield and cost savings through better farm management.

 

What is precision agriculture/satellite farming?

• Precision agriculture means application of precise and correct amount of inputs like water, fertilizer, pesticides etc.

• It is a farming management concept based on observing, measuring and responding to inter and intra-field variability in crops.

• The goal is to define a decision support system (DSS) for whole farm management for optimizing returns on inputs while preserving resources.

• Advanced technology like big data analytics, artificial intelligence (AI), and the Internet of Things (IoT) can help farmers to make precise decisions from planting, growing, harvesting, to transporting food.

 

5. Widening Of India’s Tax Base

​​Major trends

• Country’s total taxpayer base increased to 6.41 crore in 2016-17 from 4.38 crore in AY 2011-12 which shows a rise of over 46 per cent over five years with individual tax payers registering a faster growth rate than total tax payers.

• The surge in the numbers is partly attributable to the tax department’s focus on increasing compliance on the direct tax front, especially after demonetisation (Operation Clean Money).

• Even within the class of individual taxpayers, there is a skew in the tax pay out trend wherein average tax payment by a salaried individual is more than average individual business taxpayer.

 

Issues and Concerns

• Currently the total number of individual taxpayers at 6.08 crore, constitute only 4.86 per cent of India’s total population of 125 crore.

• The Standing Committee on Finance has said the low number of individual taxpayers vis-à-vis the country’s

 

Operation Clean money

• It is a programme of Income Tax Department (ITD) Operation Clean Money to bring out illegal wealth.

• It involved e-verification of large cash deposits using data analytics during demonetisation. total population demonstrated the “regressive nature of our direct tax regime” and “the narrow base the (Revenue) Department operates on.

• The Economic Survey 2017-18 highlighted that

 

Tax Administration Reforms Commission (TARC)

• Parthasarathi Shome headed panel gave following recommendations to widen tax base:

• Focus on bringing in new taxpayers by targeting sectors that are currently untaxed, especially the informal/unorganised sectors

• Extension of scope of TDS for early collection of tax and also deter tax evasion

• Using presumptive tax schemes for small businesses to ease and encourage compliance

• Reinstate banking cash transaction tax (BCTT) and Fringe Benefit tax(FBT).

• Large farmers with income more than 50 lakh should be brought into the tax net

• Use surveys and technology based information and intelligence systems to identify potential taxpayers.

• The tax administration needs to be oriented more towards customers to improve voluntary compliance

• there has been a decline in the reliance on direct taxes in India which contribute only around 35 per cent of total taxes as against a contribution of about 70 per cent in Europe.

 

Need to widen tax base

• A Study on Widening of Tax Base and Tackling Black Money by FICCI highlighted widening of tax net helps in achieving higher tax to GDP ratio, achieve fiscal consolidation, meet the targeted tax collection and reduce the shortfall in tax collection with budget estimates.

• Further, it helps the government to undertake planned investments in infrastructure and other important areas for growth & development.

• Above all, it will shift the revenue pressures from honest taxpayers and creates the possibility of reducing the direct and indirect tax rates in the future thus improving ease of doing business scenario in India.

 

Suggestions

• Implement Direct Taxes Code: Government has constituted Arbind Modi headed task force to review the Income-tax Act and draft a new direct tax law.

• Simplifying/rationalising the process and procedures of tax laws & tax administration

• Rationalise the tax slabs/rates in respect of GST may to broadening the tax base and increasing tax compliance.

• Promoting electronic payments by making digital payments mandatory for payment of wages & salaries for some sectors and in case of payment of statutory dues like property taxes, stamp duty, utility bills etc.

• Economic Survey has suggested devolution of taxation powers to local government so that they can collect more direct taxes rather than devolved resources.

​

6. Corporate Environment Responsibility

Responsibilities of Companies under CER

• Ensure, as a part of this policy, adherence with the environmental clearances and forestry clearances wherever applicable, granted to the company.

• Ensure that inter-alia the company functions in conformity with the policy.

• Ensure that deviations from this policy and cases of violation of environmental and forestry clearances conditions should be duly reported to the Board of its Directors and desirably reflected thereafter on its website and its annual report.

• Identify and designate responsible persons at all levels of the hierarchy for ensuring adherence to this policy and compliance with environmental laws and regulations.

• Ministry of Environment, Forest and Climate Change has issued guidelines that will require every corporate seeking green clearance to follow the CER norms.

 

What is CER?

• It is the social responsibility of the companies to protect the environment by integrating the environmental concerns including those related to forestry, wildlife and bio-diversity, wherever applicable, into the main stream of the Corporate Policies.

• This term derives from Corporate Social Responsibility (CSR) and CER activities will include measures like pollution control, wildlife and forest conservation, compensatory afforestation and rehabilitation and resettlement of displaced persons.

• Funds can be used for creating drinking water supply infrastructure, sanitation, health, education and skill development, among others.

 

New Guidelines vis-à-vis CER

• Every corporate seeking green clearance to set aside 2% of its capital investment for the new projects above 1 billion and for project seeking expansion with 1bn additional cost to spend max. of 1% cost on CER activities.

• CER will be imposed over and above the expenditure the company will have to undertake for implementing the mandatory environment management plan (EMP) for the project-affected area.

 

Criticism

• Loss to the smaller projects- In the name of CER smaller projects will pay more as a percentage of their capital expenditure compared to bigger ones.

• Non-utilisation of Compensatory Afforestation (CA) Fund- CA has been brought under the scope of CER activity, while Compensatory Afforestation Fund Management and Planning Authority is sitting on nearly Rs 42,000 crore of unutilised funds which has been collected from companies seeking environment and forest clearances. Thus, bringing Compensatory afforestation under CER has little justification.

• Another layer of Clearance- The existing mechanism of Environmental Impact Assessment is already facing various issues in terms of compliance and approval and adding another layer of Environmental clearance in form of CER may lead to stagnancy of the projects.

• Over and above CSR- With in this companies are being forced to pay twice the mandatory CSR amount.

 

7. Report Of Task Force On Shell Companies

​Background

• The Task Force was constituted in 2017 under the co-chairmanship of the revenue secretary and the corporate affairs secretary for effectively tackling the malpractices by shell companies in a comprehensive manner.

• In India Shell companies are not defined under Companies Shell Companies

• Shell companies typically refer to companies without active business operations or significant assets.

• Task force has explained that a typical shell firm is incorporated with a standard memorandum or articles of associations. It has inactive shareholders and directors, and is left dormant. It is created for the purpose of being palmed off later.

• After the sale transaction, inactive shareholders usually transfer their shares to the buyer and the so-called directors resign or flee.

• Act, 2013 or any other legislation. However some laws can help curbing illegal activities such as money laundering and can indirectly be used to target shell companies — Benami

• Transaction (Prohibition) Amendment Act 2016; The Prevention of Money Laundering Act 2002 and The Companies Act, 2013 etc.

 

Recommendations

• The task force has listed 18 key parameters to determine if a company has been created to launder money or exploit regulatory arbitrage (See Picture).

• It has recommended that MCA must look into the filings of financial statements of companies which had been misused to channel unaccounted cash after demonetisation.

• Further it has suggested keeping a watch on companies with abnormal increase or decrease in debts, or more than 10 per cent of bad debts written off, and the increase in investment in partnership firms by 100 per cent or more.

 

Other Government Measures to tackle shell companies

• Serious Fraud Investigation Office under the Ministry of Corporate Affairs has prepared comprehensive digital database of shell companies and their associates that were identified by various law enforcement agencies.

• Income Tax department has conducted investigations that led to detection of more than 1155 shell companies which were used as conduits by over 22,000 beneficiaries.

• Information sharing mechanism between various law enforcement agencies is implemented under the Regional Economic Intelligence Council (REIC) and Central Economic Intelligence Bureau (CEIB) forums.

• Ministry of corporate affairs has deregistered over 2.26 lakh companies for various non-compliances and being inactive for long.

• Government has removed the exemption under Section 276CC of the Income Tax Act through Budget 2018-19. It provided that if a person with tax liability more than Rs. 3000 wilfully fails to furnish the return of income in due time, he shall be punishable with imprisonment and fine. The provision was being misused by around 3 lakh inactive companies showing nil income

 

8. Directorate General Of Trade Remedies

​​Anti-Dumping Duties

• These are special import duties imposed when a firm, following an enquiry, is assessed as having sold a product in the importing market-

• At a price below the one it charges in the home market or

• Below the cost of production or at less than fair value; and

• It damages the producers in the importing country.

 

Countervailing Duty

• If the exporting nation is found to offer export subsidies to their exports, then CVD is imposed by the Importing Nation on imports.

 

Safeguard Duty

• The safeguard duty as a temporary measure is used when imports of a product, due to tariff concessions or other WTO obligations, increase unexpectedly to a point that they cause or threaten to cause serious injury to domestic producers.

• A unified Directorate General of Trade Remedies (DGTR) has been formed for providing comprehensive and swift trade defence mechanism in India.

 

About Directorate General of Trade Remedies

• It would subsume the Directorate General of Anti-dumping and Allied duties, Directorate General of Safeguards and some functions of the Directorate General of Foreign Trade.

• It will be the apex national authority for all trade remedial measures including anti-dumping, countervailing duties and safeguard measures.

• It will have all expertise, including legal skills, people dealing with accounting, trade experts and revenue people, under one roof and it will function as an attached office of Department of Commerce.

• The recommendation of DGTR for imposition of anti-dumping, countervailing and safeguard duties would be considered by the Department of Revenue.

 

9. Cabotage Law

​About Cabotage?

• Cabotage refers to shipping along coastal routes between foreign sea ports, and also to the restriction on the operation of vessels between sea ports within a particular country.

• It is governed by the Merchant Shipping Act (MSA) of 1958.

• It aims to protect domestic shipping industry from foreign competition as well as for the purpose of national security.

• Presently, foreign-flagged ships can transport cargo within the country, in the non-availability of India Ships, after obtaining a licence.

• Recently, Ministry of Shipping relaxed Cabotage restrictions on the movement of foreign ships.

 

About the move

• It will allow movement of foreign ships engaged in transporting containers laden with goods for export or import as well as empty containers between and among Indian ports along the country’s coastline.

 

Benefit of the move

• Cargo Growth: Indian ports can now attract cargo originating from or destined to foreign ports which would turned Indian ports into major transhipment hub.

• Time-Cost Saving: it will increase competitiveness of the Indian traders and manufacturers by reducing the supply chain lag time and transhipment cost at a foreign port.

• Competition: It would allow coastal movement of export, import/ empty containers by foreign vessels leading to healthy competition among shipping lines.

• Congestion: it would also address the problem of empty containers getting accumulated at some Indian port while other ports facing a shortage of empty containers.

 

Concerns

• Indian trade carried by Indian ships/flagships has come down from around 42% in the 1990s to less than 8% at present. Similarly, Operational expertise available to foreign shipping industry would undermine the position of the domestic shipping industry.

• Moreover, relaxation in cabotage law demand a balance in national security consideration.

 

10. Free Trade Agreement And Their Costs

Drivers of Indian Exports

• India’s exports are more sensitive to changes in external demand than price changes. Thus given the export basket composition first, increase in global demand drives India’s exports much more than price cuts.

• Further, the supply-side constraints like energy shortages dampen price responsiveness of exports. Tackling the issue of energy deficit can boost export performance considerably.

• Similarly, higher logistics costs have been a major impediment to export growth. The Economic Survey 2017-18 also points out that, “Improved logistics have huge implications on increasing exports, as a 10% decrease in indirect logistics cost can contribute to around 5-8% of extra exports.”

• In the Global Competitiveness Index 2017-18 compiled by the World Economic Forum, while China ranks 27th, India is placed 13 points below at the 40th place. India has improved but India’s manufacturing exports have been technologically backward and have also grown slower than China.

 

Regional comprehensive Partnership Agreement (RCEP)

• RCEP is a proposed free trade agreement (FTA) between 10 ASEAN countries and their six FTA partners, namely Australia, China, India, Japan, Korea and New Zealand.

• It accounts for 25% of global GDP, 30% of global trade, 26% of FDI flows and 45% of the total population.

 

Indian experience with FTAs

• India is a fairly open economy with overall trade (exports plus imports) as a percentage of GDP at around 40% with exports diversified both in terms of markets and products in the past two decades.

• India’s exports to FTA countries has not outperformed  overall export growth or exports to rest of the world with both growing at an 13 % year on year average.

• Taking example of ASEAN, Korea and Japan it is visible that Bilateral trade has increased post signing of FTAs but Imports from FTA partners into India increased more than India’s exports to partner countries resulting into widening of trade deficit.

• According to Economic Survey 2016-17, FTAs have had a bigger impact on metals on the importing side and textiles on the exporting side. A 10% percent reduction in FTA tariffs for metals increases imports by 1.4 %

• India’s exports are much more responsive to income changes as compared to price changes and thus a tariff reduction/elimination does not boost exports significantly.

• Since India runs a trade deficit with ASEAN as well as the partner countries of RCEP, tariff eliminations may be more harmful to Indian Industry and more so due to India’s inability to negotiate a good services deal in the past and China’s excess capacity in most sectors.

• Further the Utilisation rate of other Regional Trading Agreements by exporters in India is very low (between 5 and 25%). Lack of information on FTAs, low margins of preference, delays and administrative costs associated with rules of origin, non-tariff measures, are major reasons for underutilization

 

Suggestions

• Before getting into any multilateral trade deal India should firstly, review and assess its existing FTAs in terms of benefits to various stakeholders like industry and consumers, trade complementarities and changing trade patterns in the past decade.

• Second, negotiating bilateral FTAs with countries where trade complementarities and margin of preference is high may benefit India in the long run.

• Third, India needs to reduce compliance cost and administrative delays which are extremely critical to increase utilisation rate of FTAs.

• Fourth, proper safety and quality standards should be set to avoid dumping of lower quality hazardous goods into the Indian market.

• Fifth, circumvention of rules of origin should be strictly dealt with by the authorities as occurred in case of India-SriLanka FTA regarding copper exports.

• Thus FTAs have to be signed keeping two things in mind, mutually reciprocal terms and focusing on products and services with maximum export potential.

 

11. Designated Offshore Securities Market

Bombay Stock Exchange

• It is Asia's oldest stock exchange establishes in 1875.

• BSE's overall performance is measured by the Sensex, an index of 30 of the BSE's largest stocks covering 12 sectors.

• India INX, India's 1st international exchange, located at GIFT CITY IFSC in Ahmedabad is a fully owned subsidiary of BSE.

 

IDR

• It is a financial instrument denominated in Indian Rupees in the form of a depository receipt created by a Domestic Depository (registered with the SEBI India) against the underlying equity of issuing company to enable foreign companies to raise funds from the Indian securities Markets.

• Till now, equity and bond securities traded on the BSE and issued in the US could not generally be resold in non-prearranged trades without fulfilling certain requirements.

• DOSM status allows sale of securities to US investors through the trading venue of BSE without registration of such securities with the US SEC, which eases the trades by US investors in India.

• It will also enhance the attractiveness of Indian Depository Receipts (IDRs) amongst US investors.

• The BSE’s new status will provide additional benefits to companies whose securities are traded both in the US and on the BSE for e.g. certain directors and officers of dual-listed companies will be permitted to resell their securities on the BSE, regardless of any restrictions or holding periods that may apply under the US securities laws.

• Only a few exchanges globally enjoy the DOSM recognition, such as London Stock Exchange, Bourse de Luxembourg, Tokyo Stock Exchange and Toronto Stock Exchange.

 

12. Government Savings Promotion Act

About Small Saving Schemes (SSSs)

• They are important source of household savings for providing social benefit.

• These can be classified under three heads;

• (i) Postal deposits: Savings account, recurring deposits, time deposits of varying maturities and monthly income scheme(MIS)];

• (ii) Savings certificates: (National Small Savings Certificate and Kisan Vikas Patra (KVP).

• (iii) Social security schemes: Public Provident Fund (PPF), Senior Citizens Savings Scheme(SCSS), and Sukanya Samridhi Account Scheme.

 

Features of Small Saving Scheme

• They offer slightly higher interest rates compared to bank deposits. Some of the small savings schemes also have income tax benefits, assure return and government’s guarantee.

• All the money pooled form different SSSs goes to National Small Savings Fund (NSSF) which was established in 1999 within the Public Account of India.

 

​More on News

• The Act would be a merger of Government Savings Certificates Act, 1959 and Public Provident Fund (PPF) Act, 1968 with the Government Savings Banks Act, 1873.

• No existing benefits to depositors are proposed to be taken away through this process, while certain new benefits have been proposed.

• Moreover, no change in interest rate or tax policy on small savings scheme is being made through these amendments.

• The proposed amendments intend to remove the various existing ambiguities due to multiple Acts and rules for Small Saving Schemes and also introduce certain flexibilities for the investors.

 

Present Scenario

• There has been a sharp rise in government borrowings from small savings scheme in the past five years.

• Small savings schemes accounted for a little over a fifth (20.9 per cent, in FY18) of all central government borrowing, up from 17.2 per cent a year before and 2.4 per cent in FY14.

• Interest rates for small savings schemes are to be notified on a quarterly basis.

 

Proposed Amendments

• Provision of premature closure of Small Savings Schemes may now be introduced to deal with medical emergencies, higher education needs, etc. -through specific scheme notification. Presently this provision is absent in PPF act.

• Investment in small saving scheme can be made by a guardian on behalf of minor(s). The guardian may also be given associated rights and responsibilities- such as, provisions for nominations etc. Thus, the move will promote culture of savings among children.

• Provisions of accounts for differently abled persons have now been made, which was not clear in aforesaid acts.

• The amended Act place a mechanism for redressal of grievances and for amicable and expeditious settlement of disputes relating to Small Savings.

 

Other Issues and suggested Reforms

• The sharp rise in central borrowing from small saving schemes distorts the interest rate structure, which hampers the cost of funds economy-wide. Thus, it is imperative to align the government borrowing with fiscal prudence.

• Government needs to create a more conducive environment for monetary transmission, (process through which the policy action of the central bank is transmitted for stable inflation and growth) by aligning the rates on small savings schemes with market rates or to align SSSs to the benchmark Government Security yield, as suggested by the Urjit Patel committee report (2014).

• The tax administration for the small savings instruments need to be made more efficient to ensure tax compliance (Shyamala Gopinath 2011).

 

13. Private Participation In National Apprenticeship Promotion Scheme

​National Apprenticeship Promotion Scheme (NAPS)

• Its objective is to promote apprenticeship training and incentivize employers who wish to engage NSDC (National Skill Development Corporation)

• It was established in 2009 as a Public Private Partnership Company with an objective to bridge the emerging skill gaps in the Indian economy and also addresses the worldwide skill shortages.

• Government of India through Ministry of Skill Development & Entrepreneurship (MSDE) holds 49% of the present equity base, while the private sector has rest 51%.

• It is also aligned to re-skilling and upskilling those who are already a part of the formal human resource. Sector Skill Councils (SSCs)

• They are set up under NSDC as autonomous industry-led bodies for steering skill development and training by identifying Skill gaps, conducting Train the Trainer Programs, providing the real time information about the labour market and developing a robust training delivery mechanism.

• Sharada Prasad Committee (2016), recommended scrapping of the existing Councils due to their overlapping roles and also highlighted the conflict of interest in these.

 

Apprentices.

• It reimburses 25% of prescribed stipend subject to a maximum of Rs. 1500/- per month per apprentice and targets 15 lakh apprentices in 2018-2019 & 20 lakh apprentices in 2019-20.

• It covers all apprentices except the Graduate, Technician and Technician (Vocational) apprentices which are covered by the scheme administered by MHRD.

• It also promotes dual-learning Mode of training in which theoretical instructions are given in the ITI’s while practical training is given in the industry, thus improves the connect between industry and ITI’s

 

NAPS under PPP Mode

• Until now, the programme was being run by the director general of training under the ministry of skill development and entrepreneurship.

• It will be partly operated by National Skill Development Corporation (NSDC) and Sector Skill Councils (SSCs) to increase the rate of private participation.