Economic Survey 2012

Economic Survey 2012
(Included – Union Budget & FYP12)
Chapter 1 (State of the Economy)
 Summary –
o When global economic financial crisis, GoI & RBi gave monetary and fiscal stimulus (tax soaps to individual, lower interest rates on loans)
 Leads to increase in consumption – inflation growth
o GDP FC/MC – GDP (factor cost) = GDP at market prices – indirect tax + subsidies
o India’s foreign exchange reserve is made up of –
 Foreign currency assets, gold, SCR & RTP in IMF
 Forex reserve is stagnant from 2012 – 13 (294.4$ to 295.5)
• Reasons  - CAD (due to Oil + Gold); No FDIs and FIIs
 Investments from private sectors (enterprise & people) decreased because –
• Tight monetary policy
• Exports declined
• Policy bottleneckness
• Investment in valuables (like gold)
o Decline in share debentures –
 Lower returns and high volatility = less savings going to share market
o Why gold –
 Share market is volatile – leass returns
 To invest in shares need pancard + demat account
 Inflation high – bank savings, FD, PFs – give less returns
 Hence gold demand inc. – gold imports inc. – prices inc. – CAD inc.
o Precautionary measures to be taken to stop the present trend:
 Decrease growing inflation
 Govt. to take initiative to increase financial awareness, financial inclusion
 Introduction of Inflation Indexed Bonds
• Principal linked with inflation index
o Agriculture Problems –
 Land Holding:
• Indian agri sector – marginal farmers ^ - can’t afford modern tools – low production (per ha. Avg)
• Solution – Govt. to take land reforms, land consolidation, promote cooperative farming etc to reduce small sized farmers
 Nutritional Security:
• Malnutrition ^ - req. Nutritional security (not Food security)
• Solution – Thrust needed to horticulture, protein rich items apart from regular wheat, rice etc
• Invest more money in agriculture research
 Supply chain management:
• Infra, Transport, logistics, retail – cheap
• Solution – govt allowed FDI in multi brand retail – investment in new technology, storage, processing, less spoilage, better prices for farmers
 Soil Erosion, soil salinity, water logging, excessive fertilizer and pesticides, over exploitation of ground water, dependency of monsoon
o Tax to GDP ratio – Ratio collected against national GDP
 This ratio decreased from 11.9 to 9.9% ( from 2008 to 2012)
 Solution – Improve tax collection mechanism – GST, Direct Tax Code etc
 Steps taken by Govt:
o Govt setups cabinet committee on Investment (CCI) headed by PM
o Cleared land acquisition & rehabilitation and resettlement (LARR) bill
o Increased FDI in areas – multi-brand retail, power exchanges, civil aviation
o Increasing investment in irrigation, storage & cold storage networks
o Banking laws (Amendment) Act 2012, strengthens RBI and entry for new banks
o Financial sector legislative reforms commission is formed
o New External Commercial Borrowing Scheme allows cheap loans from abroad
o As per Tendulkar committee, poverty ! from 37%(2004) t0 29%(2010)
o For government money to reach targeted beneficiaries, govt. introduced Direct Benefit Transfer (DBT) with help of Unique Identification (UID)

Chapter 2 (Seizing Demographic Dividend)
 Demographic Dividend:
o By 2050 Employable people(19-59) in India will be 100cr (Europe – 45cr, US – 27cr)
o More people in productive = more income = more demand = more growth = more GDP
o To increase Demographic dividend, labour force must go through foll. Transitions:
 From agriculture to non-agriculture (Manufacturing/ service sector)
 From rural to urban
 From organized to un-organized sector
 From subsistence self-employment to Wage employment
o Problems in job creation:
 MSME (Micro – 25lac, 10lac; small – 5cr, 2cr; medium – 10cr, 5cr; manu, serv)
 Bureaucratic procedures
 Infrastructure Bottlenecks
 Getting Finance
o Labour laws:
 Downsizing (layoff of workers cannot work if workers>100; IDA rule)
 Shifting business (need written consent of workers – bribery)
o 2012 – National year of Mathematics (Srinivasa ramanujam)
o ASER Survey:
 Annual Status of Education Report; started in 2005
 Conducted by NGO Pratham
Chapter 3 (Public Finance)
 Public Finance:
o Fiscal deficit exceeded budget estimates by 0.2%
o Real GDP growth for 2012–13 is 7.6%
o Expenditure on central subsidies was restricted to 2% of GDP in 2012-13
o Amendments to FRMB act:
 Concept of Effective revenue deficit, which excludes conventional revenue deficit, grants for creation of capital assets
• Eff. Revenue Deficit = Revenue Deficit – Grants for creation of capital assets
 Medium term expenditure framework statement – rolling targets for expenditure, imparting greater certainty, encourages prioritization of expenditure
o Amendments made in FRBM(Fiscal Responsibility and Budget Management) to raise the tax-GDP ratio
 Fiscal Marksmanship – An expert shooter of Fiscal Deficit target
o Fiscal deficit decline as a ratio of GDP – declining growth of fiscal deficit over time or increasing growth of GDP over time or both
o Non-debt receipts – revenue receipts + non-debt capital receipts
o Tax buoyancy – responsiveness of tax receipts with respect to GDP or National Income
o Tax is buoyant – if revenue >+1% when GDP = +1%
 Tax buoyancy dec. in corporate tax sector? High inflation – less profits
o GAAR –
 Shome Committee – Recommended GAAR impl. to be delayed to 2016
o AMT (Alternate Minimum Tax) –
o Advance Pricing Agreement (APA) – agreement in advance between taxpayer and revenue dept. on an appropriate transfer-pricing methodology for set of transactions over a period of time in future
o Service tax increased from former 10% to 12% in 2012-13 year
 Service Tax applied on all services except negative list – 12%
 ST implemented on Railways (first class or an AC coach) from 1st OCT 2012
 2% edu cess on ST(2%12%=.24); 1% senior & Higher edu cess(1%12=.12)
 Total service tax = 12.36%
o Revenue foregone – difference between duty that would have been payable but  for the issue of exemption notification and actual duty paid in terms of relevant notification
o Non-debt capital receipts – recovery of loans, disinvestment
o Subsidies – crude oil, LPG, fertilizers, food (PDS)
o Pay and allowances increased to 1.4%(from 0.9%) of GDP because of 6th PRC
o Direct Benefit Transfer (DBT) scheme:
 1st jan 2013 – 7 schemes (scholarships, pensions, MGNREGA)– 20districts
 Designed to improve targeting, reduce corruption, eliminate waste, control expenditure,
o Outstanding Liabilities – 44,68,714cr – 49.8% of GDP
o Fiscal deficit – 5.9%(2011-12); centre+state – 6.9(2010-11), 8.1(2011-12),7.2(2012-13)
o 14th Finance Commission (2015-20)
 Constitutes how much money Union to share with states
 2nd January 2013; chairman – YV Reddy;
 Article 280 – President sets up Finance commission every five year
 Member of a Finance Commission must be
• Serving or retired judge of High court
• Knowledge of government finances or accounts
• Experience in administration and finance
• Special knowledge of economics
o Fiscal Deficit leads to:
 Higher real and nominal interest rates
 Slower growth in capital formation
 Potentially lowers the rate of output growth

Chapter4
 Prices and Monetary Management:
o Wholesale Price Index (WPI) –
 Compiled by Office of Economic Adviser ->Ministry of Commerce and Industry.
 Base year 2004
 Doesn’t cover services.
 Items are classified into three categories
• Primary articles (22%)
• Fuel, power, light, lubricants (14%)
• Manufactured products (63%)
 Calculation – prices of all items in base year and current year are surveyed, and the values plugged in the Laspeyres formula for weighted arithmetic mean
o Consumer Price Index (CPI) –
 Three subtypes of CPI
• Entire urban population
• Entire rural population
• Urban + Rural (consolidate from above two)
 All prepared by Central Statistical Organisation (CSO) -> Ministry of Statistics and Programme Implementation
 Common base year ( 2010) for all three subtypes
o Difference between WPI and CPI:

o GDP Deflator:
 Calculated by CSO; GDP @ current price / GDP @ constant price
 GDP deflator is the most comprehensive number to measure inflation, but RBI /Government  doesn’t use it much for policy making because GDP deflator data comes quarterly
o Measures to Contain Inflation:
 Govt. – taxation, expenditure, export bans etc.
 RBI – Repo, CRRR, SLR


o Steps taken by Govt to control inflation:
 Reduced Import duties on daily used common man food items (wheat, pulses, oil, sugar)
 Imposed bans on export items thus safeguarding domestic needs
 Subsidies and schemes (AAY, TPDS)
 Introducing new policies/acts (FDI in multi brand retailing, warehousing etc.)
o Implications of above steps – still inflation is high:
 Uncertainty in market – because of exports Ban
 Export ban – CAD – less forex reserves – rupee weakens – imports expensive (crude oil) – inflation increases
 Increase in Black money and Gold purchase
 FDI & Infra – no quick results/outcome; Environmental Clearances
 Fiscal consolidation (increase in diesel/petrol prices, capping of LPG cylinders)
o Steps taken by RBI to curb inflation:
 Increased CRR, SLR, Repo Rate – liquidity decreases – loan interest rate increases – hard to get loans – affects GDP and employment negatively
o Measures:
 Increase in supply of food items
 Continuing welfare schemes targeting only the poor – UID/Adhar, DBT
o Residex:
 % of Urban population – 30%(2011); 50%(2040 expected)
 Index to capture prices of residential buildings in Urban areas – reside
 Launched in 2007 which covers 63 cities under JNNURM scheme
 According to RESIDEX, the housing prices have declined inHyderabad, Banglore and Jaipur (from 2007 to 2012) but they have increased by more than 100% in Pune, Bhopal and Chennai

Chapter 5
 Financial Intermediaries:
o Common individuals who spend part of money and save the remaining for future use. These people have surplus money
o On other side there are business people(or Government) who provide goods and services. They need money to start business or expand it. In Need of money
o Financial Intermediaries are middle-men between these two types who borrow money from individuals and lend the same to business people or govt.
 Banks, Insurance companies, pension funds, mutual funds etc.
o Why Financial Intermediaries:
 Economies of scale of the financial Intermediate
 Investment of the individual is safe
 Body of experts and asymmetry of  information better than individuals
 Large  pool of money with them
o Uses from Borrower point of view:
 Easy availability of money with financial intermediaries
 Reasonable cost of borrowing
 Availability of long term loans worth crores of rupees
o Uses on Overall country’s economy:
 Help circulation of money in the system
 They promote habit of savings
• Individual can use the saved money in bad times
• Businessman will get easy loans
 If borrower gets easy loans at a reasonable cost, they start new businesses, expand existing business, hire more employees, increase production of more goods and services – GDP increase, IIP increase
o Bank Credit:
 Decline in the rate of growth of aggregate deposits also moderated the rate of growth of credit
 The ratio of banks investment in approved securities to aggregate deposits remained at 30%, higher than the minimum required under SLR (23%)
• higher allocation to government securities may be either because of a higher risk perception or non-availability of quality lending opportunities to the private sector or both
 Interest Rates: Banks decreased deposit and lending rates because of decrease in the repo rate and CRR rates
 Domestic Deposit Rates: The rates of interest on Savings deposits are deregulated by govt. from October 2011, however were generally stable
• 18 Scheduled commercial banks(SCBs) with a market share of 5.5% in aggregate deposits, increased their savings deposit rate 1-3%
 Interest rates on NRI Deposits: Modal interest rate on Non Resident Rupee(NRE) deposits declined to 8.71%
o Rural Infrastructure Development Fund:
 RIDF was instituted by NABARD (National Bank for Agr. And Rural Dev.) 95-96
 The annual allocation of budget to RIDF is 20000Cr for FY2012-13
o Financial Inclusion:
 The SHG – Bank Linkage Programme emerged as major micro-finance program
• Implemented by Commercial banks, RRBs, Co-operative banks
• Total SHGs in country – 81.74(having savings account)
 Swabhimaan Financial Inclusion Scheme:
• 74000 population with habitants exceeding 2000 are covered
• Swabhimaan would be extended to habitations in NE & hilly stations with population of 1000 and 1600 in plain areas as per Census2001
 Business Corresponding Agent(BCA) – Person who work under a bank and help rural people in withdrawls and deposits where there is no bank facility (Mobile Banking)
 Ultra Small Branches(USBs) – comprise small are of 150-200sqft; cash services offered by BCAs; Bank officer will offer other services, undertake field verification and follow up banking transactions
 DBT (Direct Benefits Transfer Scheme) – Pilot process (43 districts from 1jan2013, 26 schemes)
 Kisan Credit Card Scheme – Important initiative for universal access of farmers to institutional credit; Operative KCCs – 406lac
 Interest Subvention Scheme – 2006-07; Give short term loans upto 3lac for a period of one year available to farmers at interest rate of 7% pa. The interest subvention to farmers who repay loans in time is 3%
o Financial Performances of Bank:
 Capital Adequacy Ratio remained well above the RBI’s stipulated 9% for the system as a whole as well as for all bank groups during 2011-12
 Recapitalisation of RRBs to improve their CRAR
 Amalgamation of RRBs
 Improving recovery in PSBs
o Non-Banking Financial Institutions (NBFIs):
 Financial Institutions:
• EXIM Bank, NABARD, Small Industries Development Bank of India (SIDBI), NHB are FIs
 Major Policy Developments:
• NBFC -  Micro Finance Institutions  - provisioning Norms , Extension of time and modifications
 Leading against security of single product – Gold jewelry
 IDFs – Assign a risk weight of 50% on bonds covering PPP mode and post commercial operations date projects in existence over a year of commercial operation
o Capital Market:
 Primary Market –
•
• Mutual Funds –
 Secondary Market –
 Volatility in equity and currency derivatives market – Increase in turnover in securities market – decline in volatility of both Nifty and Sensex
o Recent initiatives to develop corporate bond markets:
 Permit banks to take SEBi –approved SEs for purpose of undertaking transactions in corporate bond markets
 IRDA (Insurance Regulatory & Dev Authority) permitted insurance companies to become users of Credit Default Swap (CDS) policy
 Minimum haircut req in corporate debt repo to 7.5/8.5/10 for AAA/AA+/AA- rated corporate bonds
o Expansion of QFI Scheme:
 Govt in 2011-12 permitted QFIs who meet KYC norms to invest in Indian MFs. Now it is extended to invest in Indian Equity market
o India’s Sovereign Credit Rating is rated by six credit rating agencies (Fitch, Moody’s, S&P, Dominon Bond Rating Service, Japanese Credit Rating Agency, Rating and Investment Inf. Inc. Tokyo)

 Pension Sector:
o PFRDA – Pension Fund Regulatory & Dev. Authority
o New Pension Scheme (NPS) –
 New Pension System (NPS) was introduced to new recruits who join government service after 1 January 2004
 2009; any person (18-60) in India including NRI
 PRAN – Permanent Retirement Acc. Number – unique account no for NPS subscriber
 National Securities Depository Limited (NSDL) works as the CRA (Central Record keeping Agency) for NPA. It maintains record of every subscriber, based on his PRAN number
 ICICI, UTI, SBI, Kotak etc are the fund managers for NPS
o Insurance Sector:
o Insurance Fund – Types:
 Life – LIC, ICICI Prudential
 Non-life/General – ICICI Lombard, max bupa, star health etc
 Re-insurer – GIC
 Specialized – Export Credit Guarantee Crop; AICIL
o Insurance Penetration – premium underwritten in a given year/ GDP (Growth est.)
o Insurance Density – premium underwritten in a given year/total population
o 1999 was the reform year insurance sector
 Insurance Regulatory and Development Authority (IRDA) Bill passed
 Private sector companies can enter insurance business (they started doing so from 2000)
 26% FDI allowed in Insurance sector.
o In 2012, FDI limit was increased to 49% in Insurance sector
o Bancassurance – Arrangement through which bank sells insurance products
o Revival Package for Insurance Sector:
 New Products – LIC companies can introduce a product even without getting formal approval from the IRDA
 Bank Brokers - as a “broker” One Bank can sell insurance products of multiple insurance companies & can also sell micro insurance products
 KYC - IRDA will accept Know Your Customer (KYC) check done by banks
 Taxation - Service tax to be cut on single premium policies and 1st year premium
 Investment – Life Insurers can invest in infra SPV of any firm
 Capital Market (long term):
o Money market (short term) – other than capital
o Primary Market – New securities are issued here
o Secondary market – share market. Securities issued in PM, are resold or purchased here
o External Commercial Borrowings(ECB):
 When Indian company borrows money from external (Foreign) sources
 Money from NR lenders via bank loans, fixed rate bonds, non-convertible shares, OFCD etc.
 Hotel, Infra, IT, Hospital - (registered under 1956 companies act), MFI, SEZ units can borrow via ECB
 Cannot be used for share market or real estate specs, acquiring other company
 Benificiaries of ECB –
 Infra:
• Infra companies can borrow in Chinese currency(Renminibi)
• Can use 25% to pay debts if invest rem. 75% in new infra projects
 SIDBI:
• SIDBI can borrow via ECB and lend them to MSME sector subject to certain conditions
 NHB – can borrow via ECB and use it on low cost/ affordable houses
o Indian Depository Receipts(IDRs):
 IDR allows a foreign company to raise money from Indian financial market
 IDRs are made two way fungible (ability for mutual substitution)
o FDI vs FII:
 If an investor has a stake of 10% or less in a company is an FII
 More than 10% then he is an FDI
 Arvind Mayaram Panel – panel to define FDI, FII terms
 FII inflow increased in 2012
 FII limit in G-sec (25Bil) and Corporate bonds (51Bil) increased
 Cabinet approved increase in FDI limit in Multibrand retail, pension, insurance, aviation, power and broadcasting
 Qualified Foreign Investor (QFI) –
• Doesn’t live in India, not an FII
• No sub-account under FII; Not a Foreign Venture Capital Investor
• 2012 reforms:
o PAN Card Mandatory
o Can directly invest in Indian Equity Market (if from member country of FATF (Fin. Action Task Force)
o QFI from Gulf and Europe were also allowed to invest
o Permitted to invest in debt market with total ceiling of $1bil
o Alternative Investment Fund (AIF):
 Entity that collects money from people and invests it
 Usually not involved in debt-equity share market, and not covered under SEBI’s regulations for mutual funds and collective investment schemes
 Need to register with SEBI
 Category 1 –
• Venture capital funds, SME funds, social venture funds, infrastructure funds
• have positive spillover on economy
• SEBI or govt give incentives
 Category 2 –
• Invest anywhere in any combination but are prohibited from raising debt, except meeting their day-to-day;
• no incentives from govt. or SEBI
 Category 3 –
• These funds have negative externality – like Hedge funds
• Work only to get short term benefits or speculation
o Financial Stability and Development Council (FSDC) – 2010 is working on forming national policy for financial literacy
 Chairman – Financial Minister
 Promotes –
• Financial Literacy
• Financial Inclusion
• Financial stability
• Inter-regulatory coordination
• Financial sector development
o RGESS:
 Annual Income must be below 12lac
 This must be the first investment in securities market
 Lock in period – 3years
 Need to purchase approved shares/ mutual funds only
 For investment up to 50000, 50% of deduction in income tax
o Misc. Reforms:
 SEBI permitted Multi Commodity Xchange – Stock Xchange (MCX-SX) to operate as full-fledged stock exchange
 Mutual funds, Insurance comp participate in CDS as users – increase liquidity
 IRDA permitted Insurance companies to participate in REPO market
 SEBI mandated electronic voting for top 500 listed companies
 SEBI COmplaints REdressal system(SCOREs) – web portal to file complaints

 Banking Sector:
o Interest Rate:
 Deposit rates –
• RBI controls interest rates on Foreign Currency NonResi account(FCNR)
• In 2011, RBI deregulated interest rates on savings deposits
 Lending rates –
• RBI deregulated interest rate on loans given to exporters
• In 2012-13, RBI started reducing Repo rate and constantly banks to lower their interest rates for easy money flow
o RRBs(Regional Rural Banks) provide loans to villagers includes – farmers, agri labourers, rural artisans, rural entrepreneurs, coop societies, primary agri credit societies(PACS)
 RRBs sponsored by Commercial banks
 Sponsor bank provides training to the staff of RRB
 Also provides initial capital to setup RRB
 Acc to RRB act, paid up capital is central govt : state : sponsor bank = 50:15:35
 There are currently 9 RRBs there all over the country
o Rural Infra Development Fund(RIDF):
 NABARD operates RIDF
 Provides cheap loans to states and state owned corporations to quickly complete the rural infra related projects
o Development Banks:
 Agro related – NABARD
 Housing – NHB
 Industry – SIDBI, IDBI, ICICI, IFCI, IIBI
 Import export related – EXIM
 All India Financial Institutions(AIFI) – NABARD, SIDBI, NHB, EXIM
o Reverse Mortgage Product – NHB; Senior citizen can mortgage his house and will be given monthly income; Doesn’t need to pay loan or EMI; but when person dies the house is auctioned and recover the loan
o Capital Adequacy Ratio –
 Measure of bank’s ability to absorb losses
 CAR – bank’s capital/ bank’s risky assets
 Government should create a new financial holding company. This company will raise money from domestic and international sources and then infuse it as equity in public sector banks
o Interest Subvention Scheme –
 Started 2006; for short term crop loans (upto 3lac; period – 1yr)
 Loan@7% interest; but if repayed in time then a 4% interest subvention
o Core Banking Solution(CBS) –
 CBS – Bank integrates all of its branches in a single IT network
 Core banking solution helps customers to operate their accounts, and avail banking services from any branch of the Bank on CBS network, regardless of which branch he had opened the account
 CBS – Anywhere and anytime banking
 All commercial banks and RRBs are on CBS but UCBs(Urban Coop Banks) haven’t yet
o Summary:
 IDF(Infra Dev Fund) – Finance long term infra projects @ less interest rate
 Financial Literacy – Encourage people to invest in capital market
• RGESS initiative – but it needs PAN card and DEMAT account
 Bank Laws (Amendment )Act 2012 –
• Give more regulatory and supervisory to RBI
• Help banks raise funds from capital market for expand banking business
• SARFAESI Act amendment allows banks to reduce their NPAs
 Priority Sector Lending (PSL) –
• Role given by RBI to banks for providing specified portion of bank lending to few specific sectors like agriculture or small scale industries
• Different categories under PSL are –
o Agriculture, MSE, Education, Housing, Export Credit, Others
• Targets and sub-targets for banks under Priority Sector –
o Domestic Commercial Banks/Foreign with more than 20 branches:
 Total Priority – 40(Tot. agri – 18; Weaker sections – 10)
o Foreign banks with less than 20 branches –
 Total Priority – 32
 Difference between Swabhimaan and Swavalamban schemes –
• Swabhimaan – Banking related; Swavalamban – Pension related(NPS)
 NBFC (Non-Banking Financial Company):
• Company registered under Company Act, 1956 engaged in business of loans and advances, acquisition of shares/stocks/bonds/debentures/ securities but not include business of agricultural, industrial, purchase or sale of goods or services and sale/purchase of immovable properties
• Different from banks in the following ways:
o Cannot accept DDs
o Do not form part of payment and settlement system and cannot issue cheques drawn to itself
o Deposit insurance facility of Deposit Insurance and Credit Guarantee Corp. is not available to depositors of NBFCs
• Should obtain a certificate of registration from the Bank and having a Net Owned Funds of Rs. 2 Crore
• Different types of NBFCs registered with RBI are –
o Asset Finance Company(AFC), Investment Company(IC), Loan Company(LC), Infra Finance Company(IFC), Infra Debt Comp (IDC), Core Investment Company(CIC), Micro Finance Institution (MFI)
Chapter 6 (Balance of Payments)
 Balance of Payment:
o Current Account – Import, Export, Income from abroad, Transfer of money
o Capital Account – Foreign investments (FDI, FII), External Commercial Borrowing etc
o summary / account sheet that shows the cash flow between India and rest of the world
o made up of two parts: Current account and capital account (Acc. to IMF three parts – Current, Capital, Financial)
o current account has been in deficit (negative number) and capital account has been in surplus (positive number)
o BoP is expressed as Current Account + Capital account + Net errors and omissions = 0
o RBI’s intervention to buy Foreign exchange during surge in capital investment= leads to build-up of (foreign exchange) reserves, which provides self-insurance against external vulnerability of rupee


o India Forex Reserves:
 India’s Foreign exchange reserves is made up of –
• Foreign currency assets (FCA)
• Gold
• Special drawing rights (SDRs) of IMF
• Reserve tranche position (RTP) in the IMF
 RBI gains forex reserves by –
• Buy foreign currency
• Funding from IBRD, ADB, IDA
• Aid receipts
• Interest receipts
 China has largest forex reserves. India is 8th
o Volatility in Rupee (Stock Market) –
 Import Export differences
 More FII than FDI
 Dollar is strengthened
 Policy paralysis – envi proj clearances, land acquisition, FDI, pension, insurance
o NEER (Normal Effective Exchange Rate) – weighted avg. of bilateral nominal exchange rates of home currency in terms of foreign currency
o REER (Real Effective Exchange Rate) – weighted avg. of nominal exchange rates, adjusted for inflation
 Captures inflation differentials between India and major trading partners
 Reflect degree of external competitiveness of Indian products
 Captures movements in cross-country exchange rates
o FDI Restrictiveness Index (FRI) – OECD, score of 1 if closed economy and 0 for openness
 China ranked 1st , India – 4th
o FDI – different sectors:
 26% FDI is allowed in Indian defense sector. It also requires
• FIPB approval
• licensing under Industries (Development & Regulation) Act, 1951
• has to follow guidelines on FDI in production of arms & ammunition
 Three top countries from where FDI comes to India: Mauritius, Singapore and UK

Chapter 7 (International Trade)
 Gold Related Stuff:
o Gold Exchange Traded Fund:
 Regulated by SEBI
 Requires DEMAT account
 Can be traded at Stock Exchange
 The functioning of GTF involves the following:
• Asset Management Company (AMC)
• Authorized Participants
o Gold Deposit Scheme (2013):
 Given the cons / limitations of the existing gold deposit scheme (1999) and Gold EFT (2006) a new Gold Deposit Scheme (2013) was introduced from Feb 2013
 Money is deposited either in Post Office/ Public Sector Banks and they will get a gold deposit receipt and they get benefit in Tax
 After end of maturity, they get either of the following:
• Get possession of gold
• Take away cash (at the present rates)
• Convert gold deposit to FD(cash) and get interest rates
o Investment in Gold is becoming Price Inelastic (Even price increase – demand not fall)
o Gold import export destinations of India:
 Major imports of gold were from – Switzerland, UAE, South Africa
 Major exports of finished jewelry – UAE, Hong Kong, USA
 India – Intl. Trade:
o Exports and Imports account for 43% of GDP
o Baltic Dry Index (BDI):
 If BDI increases, more raw material is being shipped,  world economy doing good
 BDI was all time high in 2008 and was falling since then
o India’s Imports – Petrol, Gold, Electronic goods, Machinery; Exports – Petroleum, Gems and jewelry, Transport equip., drugs and pharma
o Rise or fall of India’s exports depend on foll factors:
 World growth
 Trading partner’s growth
 Exchange rates
o Market diversification (shift of export markets from developed to asia and Africa) reduced the damage from global crisis in 2008
o Top three trading partners of India – China, UAE and US
o India’s Trade Deficit = 10% (highest in the world)
 Has trade surplus with – UAE, USA, Singapore, Hongkong
 And has trade deficit with – China, Switzerland (because of gold imports)
o WTO (Chief - Pascal Lamy) Negotiations: In Doha, Qatar; yet to be finalized
 Trade Agreements:
o Preferential Trade Agreement (PTA) –
 Lower custom duties on products originating from member countries
o Free Trade Agreements (FTA) –
 Special case of PTA where all tariff and non-tariff barriers are abolished
 Free access is allowed to products of member countries
 Ex: NAFTA (among US, America, Canada)
o Customs Union –
 Beyond FTA, establish common external tariff on all trade b/n members and non-members
 Contain mechanism to re-distribute tariff revenue among members
o Common Market –
 Free flow labour, capital, output among members
• Ex – SICA  (Central America)
o Economic Union –
 Members share common currency and macro-economic policies
• Ex – European Union
o CECA & CEPA (Free Trade Agreements):
 Comprehensive Economic Cooperation Agreement (CECA) –
• Reduce tariffs (customs/ import duties)
• Countries sign CECA first and gradually move to CEPA
• India has CECA with Malaysia, Singapore, ASEAN
 Comprehensive Economic Partnership Agreement(CEPA) –
• Reduce tariffs, cooperation in trade in services, investment = wider spac
• India has CEPA with Japan, South Korea, Sri Lanka
o Recent Trade agreements made:
 SAFTA (South Asian Free Trade Area) –
• India granted zero basic custom duty to all LDCs; Afgh, Bng, Bhu, Mald on all items except alcohol and tobacco
 RCEP (Regional Comprehensive Eco Partnership) agreement –
• Among ASEAN + 6 countries (Ind, Aus, Jpn, NZ, Korea)
o ASEAN – 10 countries – Ind, Phi, Mal, Sing, Thai, Burm, Bru, Camb, Laos, Vietnam
• During 20th ASEAN summit at Phnom penh, Cambodia (in 2012)
• Provide economic trade ASEAN + FTA partners
• Covers trade in goods, services, IPR, dispute settlement etc
 In Nov, 2012 – India and Japan signed pact to enable japan to import Rare Earth Minerals from India
• Rare earth minerals are important for high-tech electronics, mobile phones, hybrid cars, missile guidance systems
•
o Ease of Business Doing Index (developed by World Bank)
 India ranked 132 (Singapore 1st) – required 9 export documents to be cleared
 To increase exports, government has to reduce these procedures and costs need to be barest minimum
 Commerce Ministry releases annual suppl. to Financial Trade Policy every year
o FTP Annual Supplement 2013-14:
 Reduced minimum land area for SEZ
• Government has given formal approvals to setup 579 SEZs, of which 384 have been notified
• 100 per cent FDI is allowed in SEZs through the automatic route
 No minimum land requirement for setting up and IT SEZ
 Permitted sales and transfer of units inside SEZ
 Zero Duty Export Promotion Capital Goods (EPCG) scheme
 Govt to give 2% Interest Subvention scheme for more sectors till 2014
• Earlier handlooms, handicrafts, carpet and SMEs are covered
• Now toys, sports goods, processed agri prod, and readymade garments
 Duty Credit Scrips issued under Focus Market Scheme, Focus Product  Scheme and Vishesh Krishi Gramin Udyog Yojana (VKGUY) can be used for payment of service tax
• To promote the export of produce from agro, minor forest, gram udhyog etc
 Import of cars permitted through designated ports only (inc. Faridabad, Ennore)
 Online issuance of RC for export of cotton, cotton yarn, non-basmati rice, wheat, sugar
o ASIDE (Assistance to States for Dev. Export Infra & Allied Activities) –
 Provides assistance to states and union territories to create infra for export dev
 Top 5 exports(Guj, Mah, TN, Kar, AP) states in India (also top 5 ASIDE alloc)
o Directorate General of Anti-Dumping and Allied Activties (DGAD) falls under commerce ministry has initiated 10 fresh cases against – China PR, EU, Taiwan, SK, Mal, Mex, Thai, Turk, Saudi, USA
o CAD in India is High because –
 Excessive dependence of Oil Imports
 High volume of coal imports
 Passion for gold
 Slowdown of exports
o Taxation:
 Decrease of tax on Precious stone exporting
 Export duty on oil cake removed
 Export duty on ilmenite (Titanium ore) is increased
 Duties on Steamed and Bituminous coal is equalized (2% customs, 2% CVD)
 Duties on Luxury vehicles increased
o Inverted duty structure in sectors like electronics, textiles, and chemicals and artificial inverted duty structure caused by some FTAs/RTAs
 Inverted duty structure - finished goods are taxed at a lower rate than input components

 Important Summits – Timeline:
2012 2013 2014
SAARC Addu, Maldives Kathmandu Srilanka
ASEAN Phnom Penh, Cambodia Brunei Burma
BRICS Delhi Durban, SA Yekaterinburg, RUS
G20 Los Cabos, Mexico, St. Petersburg, Russia Brisbane, AUS

o According to IMF, advanced economies in Asia are – Skorea, HK, Singapore, Taiwan
Chapter 8 (Agriculture and Food Management)
 Agriculture - Introduction –
 India ranks first in production of – milk, pulses, jute, tractors
 India ranks 2nd in production of – sugarcane, rice, wheat, cotton, groundnut, vegetables, fruits
 Agriculture growth rate – 2.5(9th), 2.4(10th), 3.6(11th), 4%(12th expected)
 Agriculture and Allied sectors – 14% of GDP, share of employment – 58%(2001)
 Crop seasons –
• Kharif – Rice, cotton, maize, jute
• Rabi – wheat, pulses
• Zaid – fruits and vegetables
 National Monsoon Mission –
• 50% of cultivated area in India depends on monsoon
• Earth System Science Org(ESSO) – ministry of Earth Sc. – initiated NMM in 12th FYP
• NMM improve reliability of monsoon forecasts help government to take necessary policy / administrative steps to support farmers and food management
o Sugarcane:
 Ethanol (produced from molasses – bye-product of sugar) blending –
• Phased implementation of ethanol blending with petrol
• 1st july 2013 – Deadline for ethanol blending
o Edible oil:
 India 1st producer in world, still 50% of domestic edible oil is imported
• Competitive prices of edible prices in intl. market
• Duty on edible oil is low
 Majority is palm oil,  palmolein and soya bean oil
o Fertilizers – NIP 2012:
 Govt notified New Investment Policy 2012 in urea sector
 Encourage investment in brownfield and Greenfield projects
 Increase domestic prod; decrease import dependence; decrease govt. subsidy
o Nutrient based subsidy:
 To give subsidy on P&K related fertilizers other than urea
 Farmers pay 58-73%, the left over amount is borne by govt.
o Agriculture research and education:
 ICAR (Indian Council of Agriculture Research) –
• Basic and applied research on problems of rainfed regions
• Student READY – Rural Entrepreneurship & Awareness Dev Yojana
o 1yr composite program to handson experience of rural work
• ASPIRE – Agriculture Sciences Pursuit for Inspired Research Excellence
• Garuda – Engine operated weeder for rice intensification
• KIRAN – Knowledge Information Repository in Agr. in North East
• Weather cock – software package designed by ICAR
 SAU (State Agricultural Universities) –
• Generate required manpower for agro research, assistance
• Applied and research on local problems
o Agriculture is a State subject; Increase agri prod – resp. of state govt.
o Cattle Breeds – Binjapuri, Ghumsuri, Khariar, Motu
o Buffalo breeds – Banni, Chilika
o ATMA (Agriculture Technology Management Agencies) –
 Central govt’s effort for state extension reforms
 Ext system of state agro depts. Is the weakest link b/n researcher and farmer
 Large no of vacancies of extension workers in state agri depts.
o National Social Assistance Programme –
 Schemes under NSAP are –
• IGNOAPS, IGNWPS, IGNDPS – Pensions schemes(old,widow,disabled)
• National family Benefit Scheme – BPL family, death of breadwinner
• Annapurna (Food) scheme
o Conclusion –
 In green revolution belt there is over exploitation of water resources , over use of fertilizers – leads soil erosion, salinity, water logging
o Time Line:


Chapter 9(Industrial Performance)
 IIP (Index of Industrial Production):
o Central Statistical Organization (CSO) calculates; Statistic & Program Impl. (Ministry);
o Base year – 2004 (Similar to WPI)
o Calculated based on –
 mining, manufacture, electricity (sectors)
 basic, capital, intermediate, consumer(durable, non-durable) goods (use)
o Measures the increase or decrease in production
 Surveys:
o OBICUS (Order Books, Inventories & Capital Utilization Survey) – RBI:
 Quarterly; to assess consumption and investment demand outlook
 On a sample of 2500 public and private ltd companies in manufacturing sector
o ASI (Annual Survey of Industries) – NSSO under Min. of Stats & Prgrm:
 Annually; organized manufacturing sector’s growth, composition, structure
 Entire manufacturing sector employing 10 or more employees
 Industrial Licensing:
o As per Industrial Development Regulation Act, 1951 license req. for –
 Distillation and brewing alcohol; cigar & cigarette manu
 Electronic aerospace and defense equip.
 Industrial explosives (guncotton, fuses, matches)
• Nitrocelluslose (guncotton) – used in film reels(initially), pregnancy tests
• Match surface – powdered glass + phosphorous; match head – potassium chlorate + antimony sulfide
 Hazardous chemicals (HCN, Phosgene(COCl2), MethylIso Cyanide(CH3NCO) )
• HCN – prussic acid; uses in gas chambers for judicial execution in US
• COCl2 – chemical weapon in WW1; make plastics & pesticides;
• MIC – UC Bhopal(1984); pesticides (brand name - Sevin)
o Reserved Industries – Small scale (20); Public sector (Atomic energy, Rail transport)
 IEM (Industrial Entrepreneurs Memoranda):
o Entrepreneurs to fill dept. of  industrial policy and promotion –
 Industrial undertakings that are exempted from obtaining an industrial license
 For expanding existing industrial undertaking
o IEM provides info on –
 Likely investment flows to industry
 Sectoral preferences of investors
 Perception of entrepreneurs
 Boosting Industrial Sector (Govt. Initiatives):
o DMIC (Delhi Mumbai Industrial Corridor)
o FDI relaxation (in various sectors including retail marketing)
o NMP (National Manufacturing Policy) 2011 –
 Increase share of manufacturing in GDP to 25% within a decade
 Create additional 100million jobs over
 Special focus to industries that are employment intensive
 Give vocational skill/training to rural youth
 Industrial growth in partnership of states
 Industrial regulation will be simplified and rationalized
 Provided National Inv. & Man. Zones(NIMZs) – Chittor, Medak (AP); Nagpur, Tumkur
o E-biz project –
 Mission mode project under e governance plan (NeGP)
 Provides online registration and filling payment services to investors
o Invest India –
 Joint venture company b/n DIPP (Dept. of Ind. Policy and Promotion & FICCI)
 Provides input on all aspects of doing business in India
 Guides investors on all policy and regulation issues
 Handholding services to foreign investors
o Circular 1 of 2013 – contains consolidation of press notes of revised FDI limits from 1991
 IPR (Intellectual Property Rights) Initiatives:
o The Madrid Protocol:
 Administered by WIPO (Geneva, Francis Gurry)
 Provides system for international registration of trademarks
 Helps Indian companies register their trade-marks in all member countries under this protocol via single application in one language and one time fees in one currency
 Trademark Amendment Act 2010 – passed to accede India to Madrid protocol
o I Mark (Indin Design Mark) –
 By DIPP – Ministry of Commerce & Industries
 Indian equivalent of Japanese G Mark(Highest quality marking for ind. Desing)
 National Electric Mobility Mission Plan (NEMMP) 2020:
o Approved by National Council for Electric Mobility (NCEM)
 Apex body for matters related to electric and hybrid vehicles
 Chairman – Minister(Heavy Industries & Public enterprises)
o For increasing use of electric vehicle (incl. hybrid cars) in India; EE & Env. Friendly
o Govt. to provide R&D support, subsidies and tax reliefs for companies involved
 Plants and their related industries:
o Jute –
 Golden Fiber; States ranking in no of jute mills – WB, AP, Bihar, UP
 Jute Technology Mission is being carried on under Agriculture Ministry
o Silk –
 India produces all 4 commercial varieties of silk
 Duty raised on raw silk from 5% to 15%
 Central Silk Board(statutory body under textile industry)
o Cotton –
 India only country to grow all 4 species of cotton
 In 2002,  govt. released BT-cotton seeds for commercial cultivation
 MSP (Minimum Support Price) of cotton implemented by Cotton Corp. of India
 PSU Delegation:
o Navaratna & Miniratna (1997) –
o Maharatna (2009) –
 Feb 2013 – BHEL and GAIL given Maharatna status
 India’s Rank in Production:

o BEE labeling – Bureau of Energy Efficiency under Ministry of Power
o Batteries – Types:
 Lead Acid storage –
• Rechargeable; made of lead sulfate and sulfuric acid
• Used in UPS, vehicles
 Dry Cell –
• Non-rechargeable(usually);
o Non rechargeable – ZC, Alkaline(Zn and MnO2)
o Rechargeable – Lithium Ion, Nickel/Cadmium (NiCd)
• Mobiles, Laptops, Electronic toys
• Alkaline batteries are more efficient than Zinc Carbide and also more expensive


 FDI limit for various sectors:
o Generally, FDI caps are pegged broadly at five levels 26%, 49%, 51% and 74%, and 100%
 Multi brand retailing – 51%
 Industry, Manufacturing – 100%(aut.); mining – 100%(FIPB)
 Petroleum and Natural Gas – 49%(PSU); 100%(Pvt. Companies)
 Various services of broadcasting sector (Telecommunications) – 74%
• 49% automatic; beyond by FIPB(Foreign Inv. Promotion Board)
 Power trading exchanges – 49%
 Asset Reconstruction Companies – 74%
 Aviation Sector – 49%
 Banking – 74%(FDI + FII) where FII < 49%
 Insurance – 26% (automatic)
 Print media (Newspaper) – 26%( FIPB)
 Defense Sector – 26% (through FIPB)
 Agro (Floriculture, Horticulture, Dev. of Seeds, Animal Husbandry, Pisciculture, Aquaculture, Cultivation of vegetables & mushrooms and service related):
• 100% automatic
• Tea sector, cultivation – 100% by FIPB
o Sectors where FDI is banned:
 Single brand retail marketing
 Atomic energy
 Business of chit fund
 Gambling and betting, Lottery
 Agriculture (other than above)
 Real estate business
 Tobacco related manufacturing

Chapter 10 (Service Sector)
 PART 1 (Service Sector – Tourists, Lawyers, CAs):
o Services that are present in Tertiary sector as per National Accounts classification:
 trade, hotels, and restaurants;
 transport, storage, and communication;
 community, social, and personal services
 financing, insurance, real estate, and business services *(BS);
• BS – Computer, R&D, Accnt. & legal serv., renting of machinery
o Services as per WTO and RBI’s Classification – Above sectors + Construction
o FDI in Multi-brand retailing:
 Brazil tops the ranks with retail sales accounting for 70 per cent of Brazil’s consumer spending, followed by Chile, China, and Uruguay
 Retail market contributes 14 per cent of India’s GDP but organized retail penetration remains low, indicating room for growth
o Conditions on Multi-brand retailing:
 Government will have the first right to procurement of agricultural products
 State governments/UTs would be free to take their own decisions in regard to implementation of the policy as retail trade is a state subject
 Foreign investor must bring at least US $ 100 million investment
 He must invest 50% of FDI in backend infrastructure
 Procure at least 30 per cent of manufactured/ processed products from Indian ‘small industries’
• Small Industry - total investment in plant and machinery not exceeding US $ 1million
 Retail sales outlets may be set up only in cities with a population of more than 10 lakh as per Census 2011 and may also cover an area of 10 km around the municipal/urban agglomeration limits of such cities
o Andhra Pradesh, Assam, Delhi, Haryana, Jammu and Kashmir, Maharashtra, Manipur, Rajasthan, Uttarakhand, Daman and Diu, and Dadra and Nagar Haveli have agreed for retail outlets of Multi-brand retailing

o Tourism:
 UNWTO – Madrid;
 70% of workforce of tourism industry is comprised of Women
 International tourist arrivals surpassed the 1 billion mark for the first time in history in 2012
 Medical Visa – New category; to attract foreign tourists for medical treatment
 Surrogacy related Visa – Issues related to surrogacy
• Cost for a surrogate and the entire procedure in India is one-third that in North America or Europe
• Gay couples or singles/ unmarried / live-in couples will not be given visa to enter India for surrogacy
• Only Foreign man and woman are duly married and the marriage should have sustained at least for two years
o R&D Services:
 Government funding of R&D accounts for two-thirds of the total funding
 GoI focusses on nuclear energy, defence, space, health, and agriculture
 Global Innovative Index – by WIPO and INSEAD
• India – 64th
• The Report estimates that India will have 25 per cent shortage of engineers in the country by 2025

o Legal Services:
 FDI is not permitted in legal services
 In India the practice of law is governed by the Advocates Act of 1961
• foreign law firms cannot practice law in India
• International law firms cannot advertise and open offices in India
• Foreigners can neither be appointed as partners in Indian legal firms, they cannot sign legal documents and represent clients in India
• Indian advocates cannot to enter into profit-sharing arrangements with persons other than Indian advocates
 To practice law, one has to get registered in the respective state bar council
• Cannot enroll in more than one state bar council
 Bar Council of India - Statutory body under Advocates Act 1961
• Consists of Elected members from each state bar council, ex-officio members(AGI and SGI)
 Legal Process Outsourcing(LPO) – Like, drafting and reviewing legal documents, making applications for patents, and various paralegal and administrative tasks
 NALSA (National Legal Services Authority) –
• Provides free Legal Services to the poor and weaker section of society
• Organize Lok Adalats for amicable settlement of disputes
• Give direction to State Legal Services Authorities
• Runs “legal aid counsel” scheme to provide assistance to under trial prisoners who cannot get a lawyer
• Runs legal literacy program to provide basic and essential legal knowledge to vulnerable groups (through PLVs – Para Legal Volunteers)
• Runs a newsletter “Nyaya Deep”
• Chief Justice of India is the Patron-in-Chief of NALSA
o Accountancy:
 accountancy service providers in India are self-regulated through a combination of statutory bodies –
• Institute of Chartered Accountants of India (ICAI)
• Institute of Cost and Work Accountants of India (ICWA)
• Institute of Company Secretaries of India (ICSI)
 FDI is not allowed in this sector
 foreign service providers are not allowed to undertake statutory audit of companies as per the provisions of the laws in India
 Indian regulations do not permit exceeding 20 professionals under one firm



 PART 2 (Postal Services)
 During British period:

 Intro:
o Ministry of Communications and IT has – Telecom, DEITY(Department of Electronics & IT), Department of Post
o Pincode or Postal Index Number (PIN) was introduced in the year – 1972 (6digit no.)
 First digit – Geographical region (total 9, 9th reserved for army)
 First two digits – sub region
 First three digits – ‘Revenue / district circle’
 Last three digits – indicate delivery post office
o National Address DBMS – effective mgmt. of address database
o Rural CPI is collected by Department of Post and calculated by Central Statistical Organization (CSO)
o Meghdoot Millenium – s/w used by postal dept. for front and back office operations
 Designed by Centre for Excellence in Postal Technology (CEPT), Mysore
o Letter Sorting Machines(LSM) and Mixed Mail Sorter(MMS) are present in Calcutta and Delhi
o Post Office Savings Bank(POSB) –
 operates the Small Savings Schemes of finance ministry on an agency basis
 Some schemes run by POSB –
• Post Office Savings Account
• Public Provident Fund Scheme
• National Savings Certificate
• Senior Citizen’s Saving Scheme(2004)
o New Pension Scheme (NPS) launched in 1st May 2009 – Dept. of Posts acts as Point of Presence(POP) through postal outlets – Swavalambhan scheme
o Malhotra Committee or Insurance Sector Reforms – Recommendations for Rural postal life insurance plans were launched
o Suraksha, Santosh, Sumangal, Suvidha, Gram Priya are some of the insurance schemes offered by Department of Post
o Philately – Collection of Postal Stamps
 My Stamp scheme – Anyone can get personalized and customized stamps under this scheme (brought out by Dept. of Posts)
 INPEX 2012 – National Philatelic Festival held in Feb 2013 in Mumbai by Philatelic Congress of India under active support of Dept. of Post
o ‘SEVOTTAM’—a Service Delivery Excellence Model and Quality Certification
 Part 3 (Telecommunication and IT):
 Telecom:
o India has 2nd largest telecom network in the world after China
o Teledensity – No of telephones per 100 persons(Rural – 41, Urban -159, Total – 77)
o TRAI (Telecom Regulatory Authority of India):
 Statutory body; established by act of parliament in 1997
 Chairman – Rahul Khullar
 To notify the rates at which telecommunication services within India and outside India shall be provided
 Spectrum management
 lay down the standards of quality of service to be provided by the service providers
o TDSAT (Telecom Dispute Settlement and Appellate Tribunal):
 2000; To hear appeal against any direction/ decision of TRAI
• to adjudicate any dispute between a licensor and a licensee
• between a service provider and a group of consumers
• between two or more service providers
o National Telecom Policy (NTP) 2012:
 secure, affordable, and high-quality telecommunication services to all citizens.
 One Nation-One Licence across services and service areas.
 One Nation-Full Mobile Nor Portability & work for One Nation-Free Roaming
 Recognize telecom as an infrastructure sector
 Recognize telecom, including broadband connectivity, as a basic necessity like education and health
o Universal Service Fund Obligation (USOF) – provision of phone lines in non-viable areas
 National Optical Fibre Network project is funded by USOF
o NeGP (National e-Governance Plan) –
 Financial assistance for establishment of SWANs in state and union territories
 E- District – Electronic delivery of citizen centric services at district and sub-district level (like birth, death, domicile, nationality, caste, marriage, income etc)
 MSDG – Mobile Service Delivery Gateway; INDG – Indian Dev. Gateway
o NIC (National Informatics Centre):
 Under Department of Information and Technology; from 1976
 provides ICT infrastructure for governance
 NICNET – the ICT network of NIC- it provides network connectivity to all ministries/departments of Central, State governments, union Territories and about 625 districts
 Works:
• NiceMail – NIC email service
• E-Lekha – NIC’s electronic payment and accounting system
• VAHAAN – software for automated vehicle registration
• SAARTHI – software for issuing driving license
 National Knowledge Network – NIC aims at interconnect of higher learning institutions with high speed internet connection
o National Knowledge Commission:
 2005; chairman – Sam Pitroda
 High level advisory body to PM; gives policy for edu, research in India
o Information Technology (Amendment) Act 2008 was made to include cyber security, data protection and new forms of cyber crime
o FESTIVOX –
 Open source s/w framework
 Used to develop Text To Speech (TTS) software in different indian languages
 It will be integrated with screen readers in Windows and Linux operating softwares for use of blind people
o BOSS (Bharat Operating System Solution) –
 GNU/Linux -based operating system with Indian language support
 for both desktop and server versions
 it is an example of  free and open source software solution (FOSS)
 Developed by National Resource Centre FOSS(NRCFOSS) under DEITY
o Controller of Certifying Authorities (CCA) – licenses the certifying authorities to issue Digital Signature certificates
o Indian Computer Emergency Response Team (ICERT) – National nodal agency for responding to computer security incidents as and when they occur
o Societies/ Autonomous bodies under DEITY:
 SAMEER(Society for applied microwave Electronics engineering and research) –
• automated research and development laboratory under DEITY
• O/p - Doppler radars, observation platforms for Indian meteorological department, medical electronics etc.
 CDAC(Centre for Development of Advanced Computing) –
• GARUDA –
o cyber infrastructure connecting computational nodes, mass storage and scientific instruments distributed across the country
o India’s first national grid initiative bringing together academic, scientific and research communities
• Meghdoot –
o Open source based cloud stack
o It contains all pre-requisite tools for implement your own cloud network

• eAgriEn –
o Application of Electronics in agriculture and environment
o Includes electronic nose, region, smell and tongue acknowledge for quality monitoring of agri prods. like turmeric, rice etc
• Bharatiya AFIS – automated fingerprint identification system
• E-Nayana S/W – for mobile tele-ophthalmology
• PARAM – Super computer developed by CDAC
 STPI(S/w Tech. Parks of India) – 1991; promotion of s/w exports from India
 NIELIT (Nat. Inst. Elec. IT) – DOEACC(formerly); offers computer courses
 ERNET – Autonomous sci. society; mix of terrestrial and satellite based WAN
 Media Lab Asia – Not-for-profit Org; Brings advanced ICT tech. for benefit of common man
 NIXI (National Internet Xchange India) – NTP Org; promote domestic internet traffic between ISP member
 Business Services:
o IT & ITeS services – comprise of IT services, BPO, engineering services and R&D, Software Products
o IT Sector challenges –
 Global Slowdown and protectionism
 Competition (new competitors in Computer and IT services)
 Language proficiency (Other countries like china are improving in English)
 Philippines is a serious competitor of India in both hardware and software segments of IT


 PART 4:
 Road Transport:
o National highways comprises only 2.0 per cent of the road network but carry 40 per cent of the road-based traffic
 Longest National Highway – NH7 (2369km)
 Org 4 highway construction is made by – NHAI, PWD, BRO
 Border Road Organisation – East (Tusker – Vartak), West (Beacon)
o PMGSY (Pradan Mantri Gram Sarak Yojana) –
 2000; National Rural Roads Dev. Agency under R&D Ministry
o 12th FYP – Road Transport:
 North-South–East-West Corridor (NS-EW) is the largest ongoing highway project in India. It is the second phase of NHDP
 7300 kilometers of four/six lane expressways connecting Srinagar, Kanyakumari, Porbandar and Silchar
 DMIC (Delhi Mumbai Industrial Corridor) – Develops an industrial zone spanning 6 states Uttar Pradesh 22 km (1.4%) NCR of Delhi 115 km (7.5%) Haryana 130 km (8.5%) Rajasthan 553 km (36%) Gujarat 565 km (36.8%) Maharashtra 150 km (9.8%)
 Golden Quadrilateral – It is a highway network connecting India's four largest metropolises: Delhi, Mumbai, Kolkata and Chennai (Length - 5,846 km)
o NATRiP - National Automotive Testing and R&D Infrastructure Project
 under Department of Heavy Industry
 to set up testing, validation and R&D infrastructure across seven locations in India
 Shipping:
o 100% FDI allowed in Shipping sector
o India’s coastline: 7517 km
o 9 Maritime states(5 in Western coast & 4 in Eastern Coast) – 13 major, 200 minor ports
 JN – Nava Sewa, Mumbai (Maharastra); Kandala (Gujarath); Mormugao (Goa); New Mangalore (Karnataka); Cochin (Kerala)
 Haldia/Kolkata, Vizag, Paradeep(Orissa – deepest harbor); Tuticorin, Chennai, Ennore (TN); Port Blair (A&N Islands)
o NAIS(National Automatic Identification System) Tracking:
 Provide information about ship to other ships and to navy, CG etc automatically
 Information includes ship’s identity, type, position, course, speed, navigational status
 Prevents collision, helps in search and rescue operations and coastal surveillance
 Contract given to Sweden company ‘Saab’ – fitted systems on Indian lighthouses for AIS tracking
 Data  will be used by DGLL, Navy, Coast Guard,  and DG shipping
o Transchart – centralized ship chartering wing of shipping ministry(for govt cntrl cargos)
o Vallarpadam - India’s first dedicated intl. container transshipment terminal setup here
o Sethusamudram Project –
 Sethu samudram is sea that separates Tamil Nadu, India from Sri Lanka
 It encompasses Gulf of Mannar, the Palk Strait, and Adam’s Bridge(Ram Sethu)
 It will create shipping canal linking the Palk Bay and the Gulf of Mannar between India and Sri Lanka. This will reduce the time (and fuel) for ships navigating through the region
 RK Pachauri Committee – said this project is unviable (economic & ecological)
o Stats related to shipping:
 95% of India’s trade by volume and 68 per cent in terms of value is by sea
 Challenges:
 Baltic Dry Index – barometer of merchandise trade as well as shipping serv.
• It has been in the red since the global crisis of 2008
 India’s ship fleet is ageing
 Performance of shipping services and merchandise trade depends on the efficiency of ports
• decline in traffic at major ports
 Indian shipping is currently subjected to 12 types of taxes
 Indian ships have to mandatorily employ Indian seafarers, and cannot employ foreign sea-farers as per the Merchant Shipping Act. This needs reform
o Allahabad-Haldia stretch of Ganga-Bhagirathi-Hoogly river system – 1620(longest inland water system) – #NW1
 #NW4 – In AP (River Godavari and Krishna stretches) – second largest
o Kaladan Multimodal Transport Project – between Mizoram and Haldia/Kolkata port – over River Kaladan of Myanmar
 Aviation:
o Sector wise FDI limit in aviation:
 Scheduled air transport/domestic scheduled passenger airlines -49%(100%-NRI)
 Helicopter services -100%
 Airport greenfield projects – 100%
 Airport brownfield projects – 100%
o Air India (PSU) chief – Rohit Nandan
 Hotel Corporation of India, Vayudoot ltd., Alliance Air
o PAWANHANS Helicopter Ltd:
 provides helicopter service to
• ONGC’s offshore drilling platforms
• hilly and inaccessible areas
• Amarnath Yatra
• emergency evacuation
o Chicago convention(1944) led to birth of ICAO (Aircraft registration and safety) under UN intl. air travel
 Intl. Civil Aviation Organization – Montreal
o DGCA (Director General of Civil Aviation):
 Regulatory body of civil aviation; Registration of civil aircrafts;
 Gives license to pilots, airlines maintenance engineer
 Supervision of flying/gliding clubs; Investigation of minor accidents
o Bureau of Civil Aviation Security (Formed after Kanishka tragedy 1985)–
 Independent department under the Ministry of civil aviation; Matters relating to hijacking, training of civil aviation security personnel
o AAI (Airports Authority of India) – PSU under Aviation Ministry; dev & mgmt. of infra
o GAGAN – Satellite based Navigation system developed by AAI + ISRO
o FANS (Future Air Navigation System) – AAI is implementing
 Obj – Digital data communication, satellite based navigation (GAGAN)
o Recent Developments:
 Tata and Malaysia’s Air Asia formed Joint venture to enter in Domestic airline business In India
 Jet Airways (Naresh Goyal) sold (FIPB) to sell 24% stakes in the company to Etihad Airways (Abu Dhabi, UAE based)
o Aviation Challenges:
 High taxation on aviation turbine fuel (ATF)
 Indian airlines often use the predatory pricing to destroy their competitors
 High aircraft to man ratio

 Part 5 (Railways):
 Intro:
o Lord Dalhousie was governor general of India when Railways was introduced here
 1853 – Mumbai to Thane – 34km
 1854 – Calcutta to Ranigunj
o India railways is divided into 17 zones (17th zone – Metro Railway of Kolkata)
o Guages – Broad(1.67m); Metre(1m); Narrow(0.762 and 0.61m)
o Since 1924 – 25 railway finances are separated from gen finances. (Acworth Committee)
o UNESCO World Heritage –
 India has 29 world heritage sites — 23 cultural and six natural properties:
• Chhatrapati Shivaji Terminus (formerly Victoria Terminus)
• Darjeeling Himalayan Railway
• Nilgiri Mountain Railway
• Kalka Shimla Railway
 This year India nominated following sites –
• six hill forts in Rajasthan  (Chittorgarh, Kumbhalgarh, Ranthambore, Gagron, Amber, and Jaisalmer)
• Great Himalayan National Park in Himachal Pradesh
o General Trains – differences:
 DEMU – Diesel Multiple Unit
 EMU – Electrical Multiple Unit
 MEMU – Mainline Electric Multiple Unit
 Duronto - long distance trains run by the Indian Railways.they run non-stop from source to destination
 Rajdhani – Connects Delhi with State capitals (started 1969)
 Shatabdi - Connects Metro cities with other cities.They’re called “Shatabdi” because it was first was started in 1988 on Nehru’s centenary
 Jan Shatabdi Express – More affordable variety of Shatabdi
 Garib rath – AC trains for poor men
 Red Ribbon – Special train to spread awareness about HIV AIDS(1DEC2007)
 Life line express (Jeevan Rekha Express) – mobile  hospital train run by the Impact India Foundation (UK)
 Sampark Kranti – Quickly connects from a particular state to Delhi
 Vivek Express – Logest train; DIgbrugarh(Assam) to Kanyakumari (4300 km)
 Himsagar – Second longest; from Jammutawi to Kanyakumari (3700km)
 Guru Parikarma – Special trains to cover sikh pilgrimage centres Amritsar, Patna, Nanded
o Metro Rail Amendment Act (2009) - provides umbrella ‘statutory’ safety cover for metro rail work in all the metro cities of India
 Act has been extended to NCR Delhi, Bengaluru, Kolkata, Mumbai, Hyderabad, Kochi, Chennai, Jaipur
 Bangalore Metro Rail Project of ~42 km is targeted for completion by Dec 2013
o Bio-toilets (or Bio –digester):
 Environment-friendly bio-toilets for its passenger coaches.
 Indian Railways has targeted elimination of direct discharge passenger coach toilet systems by the end of the Thirteenth Five Year Plan (2021-22)
 Special bacteria named ‘Psychrophile’ which converts the waste to odourless compost
• It is invisible to the naked eye and originated in the uninhabitable climes of Antarctica

 Rail Budget – 2013:
o SPART (Self Propelled Accident Relief Trains)–
 Railways aims to put SPART trains in all divisions by 2017
 SPART trains will have –
• Speed of ~160kmph
• advanced medical facilities
• surgery theatres and
• drug storage
• kitchen to cook basic foods for distribution during relief operations
 Help in fast and reliable disaster management after train accidents
o Azadi Express –
 educational tourist train
 to enable our youth to travel to important places connected with the freedom movement.
 tickets will be given @concessional price
o Adarsh Station –
 Introduced in 2009.
 Adarsh stations are provided with basic facilities such as drinking water, functioning toilets, catering services, waiting rooms and dormitories especially for lady passengers, and better signage
o Anubhuti Coaches –
 Special AC class coaches providing higher travel comfort to passengers
 ergonomically designed cushioned seats, LCD screens, modular toilets and stylish interiors
 Chandigarh Shatabdi will be the first train to have “Anubhuti” coaches
 Anubhuti coaches are LHB (Link Holfmann Busch) coaches
• A rail coach factory at Palakkad has been sanctioned in PPP mode for production of such coaches
 Rail Tourism and initiatives–
o Mountain Railways of India are the World Heritage Sites – it places India in exclusive club of nations that include only Switzerland and Austria
o Railway Energy Management Company (REMC) to harness potential of solar and wind energy
o more usage of agro-based and recycled paper and ban use of plastic in catering
 Others:
o Railways no longer enjoys exemption from service tax- Government implemented service tax on railways (first class or an air conditioned coach) from 1st October 2012
o Goods transport on roads is higher than on railways - higher dependence on fossil fuels and high level of green-house gas emissions
o the recommendations of the Sundar Committee on Roads and the Kakodkar Committee on Railways safety= not yet implemented
 12th FYP – Railways:
o Economy -
 to enhance rail share in freight traffic by at least 2 per cent
 Eastern and Western Dedicated Freight Corridors would be completed during the Twelfth Plan period
 planning for other DFCs—North-South, East-South, East-West and South-West
 Enhancing speed and accommodation of trains
o Indian Railways Vision: 2020 envisage elimination of all unmanned level crossings
o Rail targets for 12th FYP will require more than 5 lakh crore rupees
o Need to setup Railway tariff authority to rationalize the ticket prices, consistent with the level of feasible cross-subsidies
 Schedule VII:
o Taxes on goods and passengers carried by roads or inland waterways: Concurrent list
o Terminal taxes on goods or passengers carried by railways: Union List

Chapter 11(Infrastructure)
Part 1(Energy pricing, coal, crude oil):
 Infra Intro:
o India is 4th largest consumer of Energy
o 12th FYP aims at 1trillion dollar investment in infra (double that of 11th FYP)
o Performance/production of various sectors:
 coal, cement, petroleum refinery was marginally higher than previous year
 steel and power-sector production was comparatively lower
 Fertilizer, crude oil, and natural gas production also declined during the first nine months of this financial year
 Among the infrastructure services,
• Growth in freight traffic railways has been comparatively higher so far
• civil aviation sector=negative growth
• cargo handled at major ports=negative growth
o Elasticity of Energy Use - defined as the amount of energy consumed (Kwh) for generating one unit of gross domestic production (GDP)
 For India, the Elasticity of energy use =less than 1
o Consumption pattern – Electricity>coal>crude oil
 Energy Pricing:
o Petroleum products pricing:
 2010 – Petrol price was fully deregulated and oil companies are free to fix price
• But diesel price deregulation was deferred
 Sept 2012 – Restricted subsidized cylinders of 6 per household
 1oct 2013 – govt. will give DBT for LPG throughout country using Adhar card
• Annual subsidy per consumer is estimated at 4000rs
• Subsidized cylinders to be 9 (earlier it  was 6)
o Gas Pricing:
 Pricing of gas is presently done under New Exploration Lic. Policy (NELP)
 Freedom to sell gas produced from NELP blocks at market-determined price, subject to approval of price formula
 Govt. reviewing price under Price Sharing Contract(PSC) to clarify extent to which producers will have freedom to market gas
• PSC – contractor has the right to recover the money invested in exploring the gas, and has to share the profit with govt. after that
o Coal Pricing:
 From 2012:
• On Gross Calorific Value(GCV) basis (earlier on useful heat value)
• It doesn’t include heat trapped in ash content (included earlier)

 Coal Sector:
o Types of Coal:
 Peat –
• Highest moisture content (more smoke)
• Carbon Content – 40%
 Lignite/Brown coal – 40-60%(TN, Gujarat, Rajasthan)
 Bituminous/black coal (60-80%)–
• Upon heating it releases a liquid called bitumen
• Used to make cooking coal, gas coal, steam coal
• Chattisgarh, Jharkhand, WB, MP, Odisha
 Anthracite/hard coal(90%) – Short blue flame; lowest moisture content
o Fuel Sharing Agreement –
 Aug 2012; To ensure coal based thermal power plants
 Indian Government issued a presidential directive to Coal India Ltd, asking them to sign fuel supply agreements (FSAs) with power companies
 If coal India doesn’t provide 80% of the assured supply, then they’ve to pay penalty to buyer
 If CIL cannot meet demand through domestic supplies, it can meet the shortfall through imported coal
 If a customer does not accept imported coal, CIL doesn’t need to pay any penalties
o UK based Hedge fund TCI(The Children’s Investment) is biggest foreign investor in CIL
o 85% of India’s coal mining is via Opencast (while in china 90% through underground)
o Coal washing - the coal is mixed with a liquid to separate and settle the impurities. The “washed” coal produces less pollution
o 12th FYP – Coal –
 Coal India ltd (CIL) will continue to play a major role for coal supply
 Need to ensure that additional captive coal blocks start producing
 Energy exploration, clean energy alternatives, energy conservation, and energy sector reforms will be critical for energy security
 Petrol and Natural Gas:
o Govt. prioritized allocation of gas from NELP blocks in following order –
 Fertiliser plants producing subsidised fertilisers
 LPG plants
 Power plants
 City Gas Distribution (CGD) for CNG and domestic PNG
 Steel, petrochemicals, refinery, captive power plants and CGD for industrial and commercial customers
o Oil and gas assets in abroad – Russia(Sakhalin, Magadan), Sudan, Brazil, Syria, Vietnam, Venezuela and Columbia

 Alternate Sources of Hydrocarbons:
o Coal Bed Methane(CBM):
 Coal bed methane (CBM) is simply methane found in coal seams
 Generated either from a biological process as a result of microbial action or from a thermal process as a result of increasing heat with depth of the coal
 Potential sites – Jharia, Raniganj
o Oil Shale:
 From sedimentary rocks that contains “kerogen” (a type of fossil fuel)
 Pyrolysis – Above rocks are heated at extreme temp. without oxygen – Thus kerogen is released – It is further refined and thus we get shale oil
 Challenge – Extracting oil from oil shale is complex and expensive
o Gas Hydrate(clathrate hydrates):
 Also known as methane ice, fire ice – solid ice like form of water
 Contains methane, ethane gas molecules in its cavities
 Challenge - When gas hydrates are brought to the surface the pressure is reduced and the temperature rises. This causes the ice to melt and the methane to escape. Hence drilling, extraction, commercial use = difficult and expensive
o Shale gas –
 Gas present in between the shale formations
 India has shale formations insedimentary basins of Cambay, Gondwana, Krishna-Godawari and Cauvery
 USA and India have signed MoU for giving training to Indian geo-scientists and engineers for exploring shale gas
 Others:
o TAPI Pipeline –
 A 1680 km pipeline from Turkmenistan – Afghanistan – Pakistan – India (TAPI)
 It’ll become operational by 2018.
 It will carry 90 million metric standard cubic meters a day for a 30 year period
 India has to pay a transit fee to Pakistan and Afghanistan as the pipeline passes through these nations
o Rajiv Gandhi Gramin LPG Vitaran Yojana:
 LPG ‘Vision-2015′: wants to raise LPG population coverage in rural areas and in the  areas where LPG coverage is low
 2009 – RGGLVY for small-size LPG distribution agencies
 Under this scheme 75 per cent population is to be covered by 2015 by releasing 5.5 crore new LPG connections
o Gas Flaring:
 Drilling company burns natural gas that cannot be processed or sold
 Also done during emergencies like power failures, equipment failures etc. to prevent any accident
 Currently ~3% gas produced by ONGC and OIL is flared
 12th FYP seeks zero flaring of the gas and use it for commercial purpose
Part 2(Electricity, Renewable Energy, Bagasse production):
 Electricity:
o 1897 – First hydel power station, Darjeeling
o 1899 – First thermal power plant,  Calcutta
o 1969 – First Nuke Plant, Tarapur, Maharastra
o Electricity – List III(Schedule 7); 100% FDI in generation, transmission, distribution and trading
o Electricity Act, 2003:
 Electricity generation delicensed
 Setting up of the State Electricity Regulatory Commissions (SERCs) made mandatory
 Appellate Tribunal to hear appeals against CERC and SERCs
 Established CEA(Central Electricity Authority) to prepare National Electricity Plan
• CEA is responsible for concurrence of hydro power development schemes at central, state and private sectors
o Ultra Mega Power Project Initiatives(coal based - 4000MW) – Sasan(MP), Mundra(Gujarath), Krishnapatnam(AP), Tilayia(Jharkand)
o National Grid:
 An integrated power transmission grid helps to even out supply-demand mismatches
 Only the southern grid is yet to be connected to the rest of the system
 Once this is achieved, all the five regional grids will operate as a single system in synchronous mode. This will be the largest single such system in the world, both in terms of the grid size and system capacity of around 200000 MW

 Nuclear power:
 
 Hydro power:
o Hydel power potential – 1.5lac MW
o 12th FYP aims - deployment of latest technologies we can harness the remaining potential without damaging the ecology in NE and Himalayan regions
o Finance –
 IREDA(Indian Ren. Energy Dev. Agency) – Min. of New & Ren. Energy
 Power Finance Corp. – Public sector NBFC; fund & non-fund based support to Indian power sector; Under Power Ministry
 PXI(Power Exchange India Ltd.) – company promoted by NSE
 REC(Rural Electrification Corp.) – RGVY via this; under Power Ministry
 National Clean Energy Fund – Research and innovative projects under clean energy technology; money collected via cess on coal; under MNRE
 National Electricity Fund - interest subsidy to the State Power Utilities; to improve electricity distribution networks
 Renewable Energy:
o Bagasse Cogeneration:
 Bagasse - fibrous matter that remains after juice is extracted from sugarcane
 Cogeneration – process of using a single fuel to produce more than one form of energy in sequence
o JNNSM (Jawaharlal Nehru National Solar Mission):
 2010; NAPCC; under Min. of New & Renewable Energy
 Goal to achieve following things by 2022 –
• install 20GW solar power
• 2 GW of off-grid Solar
• 20 million sq. metre of solar thermal collector area
• 20 million rural households to have solar lighting
o National Mission on Enhanced Energy Efficiency:
 2009; under NAPCC
 Bureau of Energy Efficiency (BEE) (under Power Ministry) as the Mission implementing agency
 Perform Achieve and Trade(PAT) mechanism; If any one overachieve (Energy efficient improvement targets given Energy Saving Certs (ESCerts)
 Government will guarantee the banks for loans to energy-efficiency projects
o National Biomass Cook-stove Initiatives:
 For development for 5500 biomass community cookstoves in Anganwadis, Mid-day meal schemes in schools, Tribal Hostels, etc
 World’s largest system for cooking in community kitchen has been installed at Shirdi in Maharashtra to cook food for 20,000 people per day and is saving around 60,000 kg of LPG every year
o Solar Cities:
 By ministry of New and Renewable Energy
 minimum 10% reduction in projected demand of conventional energy and increasing energy production through renewable energy
 promoting solar water heating systems in homes, hotels, hostels, hospitals and industry; deploying Solar Photo Voltaic(SPV) systems/devices in urban areas for demonstration
 establishing Akshya Urja Shops
 promoting urban and industrial waste/ biomass to energy projects
 All types of renewable energy based projects like solar, wind, biomass, small hydro, waste to energy etc. will be installed
 Implemented in foll. Model solar cities – Nagpur, Chandigarh, Gandhinagar
o Share of renewable energy – 7%(2011-12), 12%(2016-17), 15%(2020)
o Tidal energy Potential sites (in descending order of capacity): Gulf of Cambay > Gulf of Kutch >Sundarban region (West Bengal)
 Urban Infrastructure :
o JNNURM (JN National Urban Renewal Mission) –
 Min. of Urban Dev. for a 7yr period(2005-12) extended by 2years
 Assistance given for water supply, sanitation, sewerage, solid waste mgmt., storm drains, dev. of heritage sites, parking lots on PPP basis, Urban transport including expressway, highway, METRO, BRTS (Bus Rapid Transit System)
o PEARL (Peer Experience And Reflective Learning) –
 for knowledge and experience sharing between JNNURM project cities
 coordinated by National institute of urban affairs
o IRMA (Institute Rural Management Anand) –
 Although for purpose of JNNURM, IRMA= independent review and monitoring agency (IRMA) = for monitoring the progress of JNNURM projects in states
o CVTC (City Volunteer Technical Corps.) –
 Professionally qualified persons in sector of urban planning, urban governance, legal, finance, engineering etc
 They help in JNNURM projects by advising, awareness generation, ensuring accountability etc
o

Chapter 12(Sustainable Development)
 Sustainable Development:
o Sustainable Dev – means development that meets the needs of the present without compromising the ability of future generations to meet their own needs
 Defined by Brundtland Commission in 1987 (WCED) in ‘Our Common Future’
o Sustainable Dev – India:
 National Agricultural Policy (NAP) - Use of country’s natural resources should be
• Technic. sound, economic viable, env. Non-degraded, soc acceptable
 National Electricity Policy (NEP) – Underscores use of Renewable sources energy
 National Urban Sanitation Policy – eliminate open defecation, promote integrate citywide sanitation generate awareness
o NAPCC (National Action Plan on Climate Change) –
 8 missions under NAPCC – Solar, Energy, Water, Agro, Green India, Habitat, Knowledge, Himalayan ecosystem
o 12th Plan relating to Hill Areas –
 Continuation of following programmes under 12th FYP –
• Hill Area Dev. Programme (HADP)
• Western Ghats Dev. Programme (WGDP)
 Indian Alpine Initiative – to be started for tracking dynamics of alpine biomes in context of climate change
 Challenges – lack infrastructure, particularly roads, power, educational institutions and health care centres
o Coastal zone management –
 Coastal areas are classified into 4 zones –
• Ecologically Sensitive Zones (1)
• Permit construction activities based on vulnerability (2,3)
• Islands (4)
 Sustainable Dev & Climate Change Schemes –
o Industries:
 Eco Industrial Parks(EIP) or Estate –
• Community of manufacturing and service businesses
• To improve the economic performance of the participating companies while minimizing their environmental impacts
• Seeks benefits for neighboring communities to assure the net impact of its development is positive
 Steel (Fe + Ni) –
• India is largest producer of DRI steel in the world
• Corex-BOF and BF-BOF are two methods in preparation of Steel
• There is need for shift towards more clean and energy efficient processes for steel production
 Cement –
• India is 2nd largest producer of cement in the world
• Blended cement –
o consumes less energy and is less emissions-intensive than ordinary Portland cement
o Market share of blended cement in India is much higher than the US, China and Japan
o Problem – BIS permit cement companies to blend fly ash upto 35% but industries are blending to an extent of 20-30%

 Thermal Power –
• Power sector is the highest contributor to India’s GHG emissions
• India rely heavily on coal based thermal plants hence GHG emissions
• Types of power plants (type (efficiency)) –
o Sub-critical (34%)
o Super-critical (40%)
o Ultra super-critical (46%)
• Faster adoption of SC and USC technology can save as much coal as would be saved by installation of ten times the solar power capacity
• With an USC or SC plant, we can substantially reduce coal consumption + CO2 emission
 Coal Gasification –
• This technology helps in utilization of deep coal deposits, which cannot be mined using conventional means or because they are located in environmentally fragile regions
• It allows possibility of in situ carbon capture
• Problem - Indian coal has very high ash content and initial results suggest that efficiency gain over sub-critical units is only marginal
o Transport:
 Vehicle Fuel Efficiency Programme –
• BEE has introduced labelling scheme for electrical appliances such as AC and refrigerators
• Vehicles soon to carry fuel efficiency labels
 Rail Freight –
• Transport goods via railways is significantly more energy-efficient than road freight
• India transports more than 50% the total goods by road – more reliance on diesel – more GHG emissions – more CAD
 Water-borne Freight –
• Freight carriage by waterways—both inland and coastal—is the most energy efficient form of freight transport
• Share of water in freight transport is 0.3 pc – should be increased
o Energy Conservation Building Code (ECBC)–
 Power Ministry; Specifies the energy performance requirements of commercial buildings in India
 ECBC has been developed by BEE under Energy Conservation act, 2001
 ADARSH (Association for Development and Research of Sustainable Habitats) –
• Independent society;
• For scientific and admin issues related to sustainable habitats in India
• It promotes GRIHA

 GRIHA (Green Rating for Integrated Habitat Assessment) –
• National rating system for green building in India
• TERI + jointly with the Ministry of New and Renewable Energy
 SVA-GRIHA (Small Versatile Adaptable GRIHA) –
• 2012;less complicated green rating system for projects <2500sqmt area
• Need to register with ADARSH then evaluator will come and give rating
o Bachat Lamp Yojana (BLY) –
 Registered under CDM of Kyoto Protocol, part of UNFCCC
 Scheme developed by BEE under aegis of Ministry of Power
 Provides an innovative business model to sell CFLs to households at the same price as incandescent bulbs, the balance being recovered as carbon credits
o Super-Efficient Equipment Programmes (SEEP) –
 This program would offer manufacturers incentives to produce super-efficient appliances (fans, lights) that are 30-50% more efficient than the most efficient ones available in the market such as the five star labeled appliances
o CFL(Florescence – UV light) and LED (electro-luminescence – electron movement)
 Sustainability and Climate Related GOI initiatives –
o Climate Financing –
 Govt – Taxation, Subsidies, Funds
 Market – CDM under Kyoto Protocol, PAT and ESCerts, REC and RPO
o Taxation –
 Green tax – Polluters pay principle
 Government can use the revenue raised by environmental taxes for Development activities and thus reduce the level of other taxes
 Encourages innovation and development of new technology
 GOI Initiatives in this regard –
• Coal cess, Higher excise duty on luxary cars,
o Subsidies –
 Govt. providing subsidies to diesel, kerosene, fertilizers: often they pose a threat to the environment
 Need to rationalize subsidies to make sure they don’t create havoc on environment
o Funds and Tech. transfers –
 UN REDD program – Reduce Emissions from Deforestation & Forest Degradation
 Green Climate Fund - Transfer money from the developed to the developing world, so they can combat climate change
 LDCF(Least Developed Countries Fund) – Preparation & Implementation of National Adaption Programmes of Action (NAPA)
 Climate Inv. Fund – Financing through MDBs like ADB, AfDB, WB(trustee)
o PAT(Perform Achieve and Trade) –
 PAT comes under National Mission for Enhanced Energy Efficiency(NAPCC)
 Scheme for trading Energy-efficient certificates (ESCerts) in large energy intensive industries
 Cap and Trade  - Similar to carbon emission scheme of Kyoto, CBD
o RPO –
 RPO target define how much electricity in the country is estimated to be produced from renewable energy sources (=green electricity)
 2009(5%), 2012(7%), 2020(15%)
 Under RPO DISCOMs to buy certain amount of electricity in the form of Green Electricity
o RECs (Renewal Energy Certificates) –
 Provided under RPO mechanism
 Enables obligated entities (DISCOMs, Captive Power Plants) to meet their RPO
o Green National Account –
 Need GNAs because the contemporary national accounts are unsatisfactory basis for economic evaluation. Because they don’t consider the full environmental consequences of economic Development
 system of green national accounting would
• take into account the environmental costs of development
• reflect the use of precious depletable natural resources in the process of generating national income
o Clean Energies –
 Nuclear –
• important source for low carbon power generation
• Nuclear power through a combination of  -
o Light Water Reactors,
o Heavy Water Reactors
o Fast Breeder Reactors
 Wind Power –
• Electricity generated by a wind turbine is highly sensitive to wind speeds
• Challenges - wind potential is unevenly distributed across the country; only Karnataka, Tamil Nadu, Andhra Pradesh, Maharashtra and Gujarat have significant potential
• set up a National Wind Energy Mission - formulation and implementation of policies both at the National and State levels
 Solar Power –
• Lack of huge profit
• Banks not giving loans
• Technology at its nascent stage


Chapter 13 (HR Development)
 Human Development & Poverty Related:
o HDI –
 Developed by Mahabub ul Haq(Pak), Amartya Sen(Ind)
 Geometric mean (Equal weightage)of 3 dimensions – life expectancy(@birth), Education(Mean years of schooling, Expected years of schooling), Income (GNI per capita)
 HDR report released by UNDP(HQ – New York)
 2013 tagline – ‘ The rise of the south – Human progress in a diverse world’
 Evaluated – 187 countries; India – 136;  Pak& BNG – 146; srilanka – 92;
o Inequality adjusted HDI (IHDI) –
 Inequality adjusted HDI captures this inequality within the same country along with HDI parameters
 India ranked 91st
o Gender Inequality Index(GII) –
 Reflects woman’s disadvantage in three dimensions – Reproductive health (MMR, AFR), Empowerment(Parliamentary seats, secondary & higher edu. Attainment levels), Labour market (participation in work force)
 India ranked 132nd
o Multi-dimensional Poverty Index (MPI) –
 Multiple deprivations at the ind. level in health, education and standard of living
o Poverty –
 NSSO surveys every 5 years
 Planning Commission defines poverty line on the basis of monthly per capita consumption expenditure
o Poverty Removal/ Employee Generation related schemes –
 Ajeevika –
• Originally ‘Swaranjayanti Gram Swarojgar Yojana(SGSY)’ – National Rural Livelihood Mission(NRLM) – Aajeevika
• Self-employment programmee
• To lift assisted rural poor families(swarozgaris) above the poverty line
• gives them income-generating assets through a mix of bank credit and government subsidy
• training, innovation, capacity building and other fancy stuff
• ensuring 50 per cent of the beneficiaries from SC/STs, 15 per cent from minorities, and 3 per cent persons with disability while keeping in view the ultimate target of 100 per cent coverage of BPL families
 Swarna Jayanti Shahari Rozgar Yojana (SJSRY) –
• Provide gainful employment to urban unemployed or underemployed
• Helps in setup of self-employed ventures or creating wage employment opportunities
o Social Security Agreements –
 SSAs are bilateral instruments to protect Indian professionals working abroad (including self-employed)
 SSAs facilitate mobility of professionals between two countries
 SSAs exempting them from double payment of social security contributions

 SC, ST, OBC, Minority welfare schemes :
o PM Adarsh Gram Yojana (PMAGY) –
 launched in March 2010 as a pilot scheme for inte-grated development of 1000 SC majority villages
o 11th FYP – SC Welfare:
 Social empowerment – top priority assigned to education
 Economic empowerment – via promoting employment cum income generation activities
 Social Justice – to eliminate all types of discrimination via legislative support, affirmative action, awareness generation and change in mind-set of people
o 12th FYP – SC welfare goals:
 security and dignity of all SCs especially women
 To bring SC men and women at par with their non-SC/ST counterparts regarding education, health, nutrition, housing, income generation and employability
 Empower SCs to participate in society, nation-building – equal basis on others
 Distribute surplus govt. land to landless SC agro labourers in rural areas
 Complete end to all forms of ‘untouchability’ and discrimination against them
 TRIFED like organization marketing products of SC entrepreneurs/artisans
o ST Welfare –
 PESA(Provisions of Panchayat (Extension to Scheduled Areas)) 1996 act
 12th FYP wants 100% central funding for ST hostels in all areas
 clear cut personnel policy with regard to posting of officials in tribal areas: fixed tenure and incentives
 Better connectivity through railways in naxal affected area and tribal areas
 Converge MGNREGA with artisanal work to provide livelihood to tribals, many of whom are engaged in artisanal work
o Funding for ST welfare –
 SC Sub Plan(SCSP) - channelise funds and benefits through identified schemes, for which the States/UTs and Union Ministries have to earmark funds in proportion to the SC population in the State/UTs and the country respectively
 Tribal Sub Plan(TSP) - For development of tribal areas.TSP has set the twin objectives:
• socio-economic development of STs
• protection of tribals against exploitation
 Special Central Assistance to SCSP and TSP - extends financial assistance to States/UTs as an additive to their SCSP and TSP programmes
o 12th FYP – OBC Welfare –
 Pre-Matric Scholarship and Post-Matric Scholarship are being given to OBCs in 11th FYP but they’re ineligible for National Overseas Scholarship Scheme and Rajiv Gandhi National Fellowship (RGNF)
 12th FYP aims to extend those schemes to OBCs as well
 TRIFED like organization to provide a marketing platform for OBC artisans and handicraft persons
o Minorities Welfare –
 Five communities–Muslims, Christians, Sikhs, Buddhists, and Parsis
 They constitute ~19 per cent of the total population of the country
 Until 11th FYP no substantial dev. programmes attending minorities
 PM’s 15 point programme
 Multi-sectoral Development Programme (MsDP)
 Literacy including graduate and PG studies
 IMR, MMR, Institutional Deliveries, Child Immunisation and Vaccination of religious minorities to be in par with national average
 Work participation, govt. employment to be increased
 Share of total no and total amount of bank loans given to all religious minorities
 100 pc financial inclusion for religious minorities
 education along with skill and vocational training in the minority conc. Towns



 HD – Woman & Child Dev:
o MG Pravasi Suraksha Yojana (MGPSY):
 Min. of overseas; for overseas workers having ECR passports
 Is similar to Swavalamban (NPS Lite)
 Free life insurance as long as working in ECR country; Implemented by BoB & LIC
o Rastriya Bal Swasth Karyakram (RBSK):
 2013; provide comprehensive healthcare and improve the quality of life of children
 Focus on Defects at birth, Diseases, Deficiencies, Dev. delays (4 Ds)
o Saksham –
 Similar to SABLA for boys; By Min. of W&CD
 Official name – RG Scheme for Empowerment of Adolescent Boys
 Give training/moral education to adolescent boys (11-18 age) to respect women
Women Related:
o Ahimsa Messengers –
 Scheme of Min of Women and Child dev
 Work for the prevention of violence against women, dowry etc
 Includes Women Panchayati Raj Members, Youth, NGOs etc
 Help victim file FIRs, visit police stations and seek legal aid
o CEDAW (Convention on Elimination of Discrimination Against Women), UN – Ind ratified
o Poorna Shakti Kendras:
 Created under National Empowerment of women
 Information centres; help women get benefit from various govt. schemes
o Priyadarshini:
 Women empowerment and livelihood program in mid-Gangetic plain (UP and Bihar)
 Women form SHGs – NABARD give loans – NGOs get commission
o STEP (Supportive Training & Empowerment Programme) – provides skill training
o Swadhar Greh:
 Created by merging previous two schemes Swadhar + Short stay home schemes
 For women/girls living in difficult circumstances who are without any social and economic support
 Free shelter, food, medical care, counseling, vocational training
o Ujjwala:
 For women/girls trafficked into prostitution
 Includes Rescue, Rehabilitation, Re-Integration and Repatriation for the victims

o Child Adoption:
 CARA (Central Adoption Resource Authority):
• Autonomous body under Ministry of women and Child development
• Deals with Hague Convention on inter-country adoption
 CARINGS (Child Adoption Resource Inf. And Guidance System):
• It is an IT app for greater transparency in adoption system, under CARA
o 12th FYP – Reforming Women laws:
 PC-PNDT act –
• Ban on sex detection and sex selection advt. must be strictly enforced
• Increase penalties;
• Use Decoy and sting operations to catch the doctors/clinics
• Strict Registration/Regulation of sonography machines
 Maternity Benefit act - increase the length of leave women employed in factories, mines, plantations, shops
 PWDVA (Domestic Violence) –
• separate protection officers + Family Counseling Centers
• Training and capacity building of law enforcement agencies & Judiciary
 Dowry Prohibition –
• Full time Dowry Prohibition Officers to enforce the Act
• One Stop Crisis Centres for providing shelter, police desk, legal, medical and counseling services and Women’s Helpline
 ITPA (Immoral Trafficking Prevention Act) –
• Need to be amended
• To clearly define trafficking and sexual exploitation, recognizing different aspects of the same
o Combining the schemes like, IGMSY (Maternity Benefit Scheme), National Food Security Bill (NFSB) and related State schemes with NRHM EDUCATION for an effective convergence of programmes relating to pregnant and lactating mothers

o Gender Budgeting:
 methodology to assist government in integrating gender perspective into the budget
 First of its kind was released in 2005
 under 12th FYP following will be done
• Strengthening and empowering the Gender Budget Cells (GBCs) in each ministry
• Gender Audit as an integral part of Gender Budgeting will be promoted
Children Related:
o 12th FYP – Children:
 12th Plan – Targets:
• Improve the Child Sex Ratio from 914 in 2011 to 950 by 2017
• Prevent and Reduce Child Under nutrition by half
• Reduce anemia in girls and women by 50%
• Ensure that 80 per cent or more Panchayat, districts and cities progressively become child friendly
• A Child Development Index on the lines of ‘Women Development Index’
• Review and Update the National Policy for Children 1974
o Child Labour Act Vs RTE:
 RTE= every child between the ages of 6 and 14 has right to free (and compulsory) elementary education
 Child Labour (Prohibition and Regulation) Act of 1986 makes a distinction b/w hazardous and non-hazardous categories of work for children under 14 years
• Children under the age of 14 years are prohibited from employment only in hazardous industry
 Hence, Children cannot be both working and in school at the same time
 12th FYP want amendment of Child labour act to abolish all forms of child labour
 Cabinet approved to amend Child labour act –
• prohibit employment of children below 14 years in all occupations except where the child helps his family after school hours
• Children between 14 and 18 have now been termed in the amendment as “adolescents” and can only be employed in non-hazardous industries
o IMS Act – Bottle Feeding:
 2003 amendment - direct advertisement of infant milk substitutes(IMS) and bottle-feeding is prohibited
 But, commercial interference with infant and young child feeding practices and growth related claims still continue surreptitiously
 12th FYP aims strict enforcement regarding such ads
o 12th FYP wants Government  to make sure that draft National Food Security Bill does not dilute earlier provisions for all six services of ICDS, mandated by earlier Supreme Court directives and also provides support for maternity protection
o Restructure ICDS:
 focus on the critical age group—pregnant and breastfeeding mothers and children under three years
 Baal Vikas Kendra owned by women
 SNEHA SHIVIRS for severely undernourished children
 Ensuring convergence with related sectors such as NRHM, TSC, NRDWP, SSA, MGNREGA
o Rashtriya Gaurav Gram Sabha Awards:
 planned by the Ministry of Panchayati Raj to improve Child Sex Ratio
 to award panchayats that improve the child sex ratio and enhance care and protection of the girl child

o Awards Relating Women & Children:
 Stree Shakti Puraskar –
• On International Women’s Day 8th of March, the Government of India presents this award
• To individual women in the field of social development (6 awards)
• Devi Ahilya Bai Holkar (Queen of Maratha ruled Malwa kingdom, 1700)
• Kannagi (Central character of the South Indian epic Silapathikaram)
• Mata Jijabai (Shivaji’s Mother)
• Rani Gaidenlou (Naga woman leader; movement against britishers)
• Rani Laxmibai (Fought against britishers(Dalhousie); 1857 revolt)
• Rani Rudramadevi (Queen of  Kakatiyas; 1200s)
 National Child award for exceptional achievement –
• Given to children aged between 4 to 15 years
• For outstanding achievement in various fields including academics, arts, culture, sports etc
 Rajiv Gandhi Manav Seva Award –
• given to 3 individuals
• for outstanding contribution to child development/welfare/protection

 HD – Physically Disabled, Elderly:
o Disability Persons related Schemes:
 ARUNIM(Assoc. for Rehab Under National Trust Initiative of Marketing) –
• A statutory body under the Ministry of Social Justice and Empowerment
• Ffor marketing products made by PH+skill development, training etc
 ADIP - Scheme of Assistance to Disabled Persons for Purchase/Fitting of Aids/ Appliances
 DDRS (Deendayal Disabled Rehabilitation Scheme) –
• for effective implementation of the Persons with Disabilities Act, 1995
• projects for providing education, vocational training, & rehabilitation of persons with disabilities
 DDRC (District Disability Rehabilitation Centres) –
• joint venture of the State & Central Government
• to facilitate the creation of infrastructure & capacity building at district level for awareness generation, rehabilitation, training & guiding rehabilitation professionals
 ALIMCO –
• PSU in Kanpur; Artificial limbs manufacturing corporation of India
• has been exporting its products to Afghanistan, Angola, Bangladesh etc
 Pvt. Jobs –
• To encourage private sector to employ PH candidates
• government providing the employer’s contribution to the Employees Provident Fund (EPF) & Employees State Insurance (ESI) for three years
• for employees with disabilities with a monthly salary up to 25,000
 A new Department, namely Department of Disability Affairs has been set up in the Ministry of Social Justice & Empowerment in May, 2012 to act as the nodal Department for the overall policy
 SPANDAN - Special Performance Award in National Trust Centric Disabilities,Activities and Networking

o NHFDC (National Handicapped Finance & Dev. Corporation):
 It provides loans at concessional rate for education, skill development & self-employment ventures
 Eligibility:
• 40% of more disability
• annual income should not be more than 5 lakh (urban), 3 lakh (rural)
• NHFDC also provided loans to Parents Associations of mentally retarded persons to set up income generating activities
o Youth – Skill Development:
 Definition of youth as per New Youth Policy 12(NYP2012) – 16-30 y.o.
 YES Project –
• Youth Employability Skills (YES) project
• Focus on providing specific employable skills to unemployed youth in all the States in the North Eastern Region
• By Ministry of Youth Affairs and Sports
• The skill training would be provided by NSDC
 NSDC:
• National Skill Development Corporation
• a non-profit company under the Companies Act
• For skilling 500 million persons by the year 2022
 Priority groups – women, PH, socially and economically disadv. Communities
 Youth Development Index (YDI) –
• Will be created under NYP 2012
• Will contain five monitorable indicators
o Youth Health Index
o Youth Education Index
o Youth Work Index
o Youth Amenities Index
o Youth Participation Index
 Senior Citizens:
o IPOP (Integrated Programme for Older Persons) –
 Scheme financial assistance up to 90 per cent of the project cost is provided to non-Governmental Organisations (NGOs) for running and maintenance of Old Age Homes, Day Care Centres and Mobile Medicare Units
o 12th FYP –
 set up a National Commission for Senior Citizens to look into their grievances on priority for redressal and ensure services
 create of National Trust for the Aged
 Smart Identity Cards for senior citizens
 health insurance for senior citizens
 Promote the concept of ‘Ageing in Place’ or ‘Ageing in own home’. Institutional care should be the last resort
 India signatory to Madrid Plan (Policy aims to work towards an inclusive, barrier-free and age-friendly society)
 Long term savings instruments and credit activities in both rural and urban area
 Employment in income generating activities after superannuation
 counseling, career guidance, training services, awareness gen, sensitization
 housing, income-security, homecare services, old age pension, access to healthcare, insurance schemes for dignity in old age
 Nomadic, Semi-Nomadic, De-notified Tribes:
o After freedom, Indian government annulled this Criminal Tribes Act(CTA) of 1871 and thereafter those tribes have been referred to as the De-notified, Nomadic and Semi-Nomadic Tribes (DNTs, SNTs and NTs)
o 12th FYP:
 Housing:
• conduct nation-wide survey of DNT settlements
• Provide permanent habitations/villages for them: with basic amenities such as roads, schools, electricity, drinking water, community centers
• earmark a proportion of the funding for IAY for DNTs
 Schemes:
• DNTs should be covered under existing facilities for ST, SC and OBC categories as applicable: scholarships and hostel facilities etc.
• skill development and marketing, loans for economic empowerment
 Drug addicts & Alcoholics:
o Ministry of Social Justice & Empowerment provides support
o to Rehabilitation Centre run by NGOs
o For de-addiction/ rehab therapy of drug addicts
o Strategy to reduce narcotic drug demand:
 Education
 Treatment
 Rehabilitation
 Social Integration
 Beggars:
o No firm and authentic information regarding number of beggars in the country
o Although following laws contains provisions to prevent  begging:
 Indian Penal Code (IPC)
 the Juvenile Justice (Care and Protection of Children) Act 2000
 Indian Railway Act 1989
o No Central schemes directly  related to beggary
 Many beggars suffer from various types of disabilities, including mental illness and are addicted to various narcotic drugs
 Although there are schemes for elderly, PH, and druggies that also cover issues/problems of beggary
o 12th FYP:
 Make Law:
• Model Legislation on Beggary at the Central level which can be suitably adapted by States/UTs
• National policy for beggars
 Make Scheme:
• New programme/scheme like Integrated Programme for Rehabilitation of Beggars. This program may include –
o Night Shelter-cum-Work Production Centre
o Multiple Skill Training
o Mobile Health Care
o Counseling; Awareness Generation; and Sensitization

 Economic related Statistics –
o State having least Per capita income – rajasthan
 State having no growth in ICDS scheme – rajasthan
o For year 2010-11 the  GINI co-efficient of india – 36.8%
o Birth rate of under-weight children is more in India than sub-saharan countries – IBRD
o State having least poverty – Himachal Pradesh
o For the year 2011-12 Per capita income growth is more in – Bihar
 Bihar – state having highest population density after delhi
o For the year 2011-12 Per capita spending income is more in – Kerala
o Literacy Rate (2010-11) –
 India – 74.04; male – 82.14; female – 65.46
o India rank in GPI, Global Peace Index (for 162 countries) – 141
by Gali Vinod Simha