Indian economy 2016

TABLE OF CONTENTS

INDIAN ECONOMIC OUTLOOK........................................................................................................................ 3

INDIA’S POTENTIAL GROWTH RATE......................................................................................................... 4

THE GLOBAL CONTEXT .................................................................................................................................... 7

THE CURRENT SCENARIO ............................................................................................................................ 7

GLOBAL FINANCIAL CRISES – PAST, PRESENT & FUTURE ................................................................. 8

THE INDIAN CONTEXT .................................................................................................................................... 10

FUTURE PROJECTIONS & PREDICTIONS..................................................................................................... 11

AGRICULTURAL SECTOR OUTLOOK ........................................................................................................... 13

INFLATION ......................................................................................................................................................... 15

INCOME & CONSUMPTION ............................................................................................................................. 18

INDIA’S NATIONAL INCOME ..................................................................................................................... 18

CONSUMPTION TRENDS ............................................................................................................................. 20

EMPLOYMENT ................................................................................................................................................... 24

PUBLIC DEBT ..................................................................................................................................................... 32

FISCAL DEFICIT ................................................................................................................................................ 33

EXTERNAL SECTOR ......................................................................................................................................... 36

INDIAS CURRENT ACCOUNT DEFICIT..................................................................................................... 36

TRADE & EXPORT POLICY AND EXTERNAL SECTOR ......................................................................... 38

PUBLIC SECTOR ENTERPRISES ..................................................................................................................... 43

MAJOR TRADE UNIONS................................................................................................................................... 54

RECENT DEVELOPMENTS IN POLICIES ...................................................................................................... 63

COMMITTEES FORMED IN FY16.................................................................................................................... 75

WTO SERVICES NEGOTIATIONS AND BILATERAL NEGOTIATIONS

INCLUDING SERVICES TRADE .................................................................................................................. 84

TOURISM SECTOR ........................................................................................................................................ 86

FINANCIAL SERVICES ................................................................................................................................. 87

CLIMATE CHANGE AND SUSTAINABLE DEVELOPMENT....................................................................... 88

SOCIAL INFRASTRUCTURE & HUMAN DEVELOPMENT ......................................................................... 94

EASE OF DOING BUSINESS IN INDIA ......................................................................................................... 100

KEY FEATURES OF BUDGET 2016-2017 ..................................................................................................... 106

CHALLENGES TO INDIAN ECONOMY........................................................................................................ 115

KEY TAKEAWAYS FROM THE LATEST STATISTICAL SURVEY OF

INDIA ................................................................................................................................................................. 120

INDIAN ECONOMIC OUTLOOK

A Brief Review of the Current Scenario

It's midterm for Modi government, and the economy has finally found four legs

to walk on, instead of limping along on just two 8% growth can be posted this

year itself. Economists, policy experts and government's economic managers

all say that the uptick is getting stronger. Public investment and urban

consumption demands had been the two growth drivers, but now good

monsoon led rural demand and stabilising exports are also in the mix.

IMF says India's growth will be 7.4% this year. But many independent experts

reckon 8% this year is possible. And things will get even better if private

investment picks up on the back of broader demand revival but that's still a

biggish if. India Inc's highvoltage capex is the fifth leg the economy is looking

for. Independent estimates show public investment in infrastructure could rise

up to 25%, and farm sector growth could be as high as 4%, from 1.2% last

year. There are plenty other data points. Tractor sales rose 15% in the first

quarter of 201617, albeit from a low base, twowheeler sales were up 14% and

light commercial vehicle sales, up 12%. After 18 months of contraction,

exports recovered to post a modest 1.3% growth in June.

"Certainly, the rural economy is showing signs of early revival, but these are

early days," says Abheek Barua, chief economist, HDFC Bank, who has a

good monsoon counted in his 7.67.8% estimate. Morgan Stanley has revised its

estimate for 201617 to 7.7% from 7.5% earlier. "There are three things

working this year that were not there last year — monsoons, increments to

public sector staff and impact of lower interest rates ," says DK Joshi, chief

economist of CRISIL, adding that growth could cross 8% if August rains are as

good.

Monsoon Boost: Good rains have meant that crop area sown has already

jumped 6.3%, with a big spike in pulse sowing, which can deliver much better

incomes to farmers. National reservoirs are currently at 94% of ten year

average, and if the monsoon continues as forecast, should be brimming over

and support a good winter crop, and help next year. Impact will start showing

even before the Kharif crop is in. "Going ahead, assuming rainfall is evenly

distributed across time and regions, we expect GDP growth to rise to 7.9%,

agricultural growth to come in above trend at 4%," ratings agency Crisil said in

a report last week. Government says it has provided a congenial and conducive

policy to make a good monsoon count. "Budget and other measures greater

emphasis on rural roads, step up on irrigation spending to start projects, de-

bottlenecking of highways and higher MSP for pulses have provided that

support," says Economic Affairs Secretary Shaktikanta Das.

Exports not a drag: he other missing leg of growth, exports, turned around

with a small 1.27% growth in June, reversing an 18 month decline. The

outlook is not bright after Brexit threw a spanner in works, but the fact that

exports are stabilising or just growing marginally can give a bit of kick to

growth. Here's a little bit of economics to strengthen the case. GDP is the sum

of consumption, investments and net exports (exports minus imports). That

exports are not declining at a fast pace means that they are not pulling down

overall growth, even if not contributing heavily. "We expect the drag from

exports to lessen going forward," Morgan Stanley said in a report. Dollar

exports had declined nearly 16% in March. Das says the new textiles package

that seeks to make the sector competitive will help in the short term as well,

apart providing a long term boost to jobs.

Public Investment: Public investment has increased less sharply so far this

fiscal year compared to last. Total capital spending, minus loans disbursed, was

Rs 26,090 crore in the first quarter, much less than nearly Rs 41,000 crore in

the same period last year. Payouts thanks to the 7th Pay Commission and 14th

Finance Commission have reduced government capex abilities. But extra

budgetary funding through Nabard for irrigation and the National

Infrastructure Investment Fund (NIIF) for other infrastructure will still keep

public investment high. And rising foreign investments will add to capital

formation in infrastructure; in rupee terms, foreign direct equity investment

was up 39% in the last fiscal. Including extra-budgetary funding, Morgan

Stanley expects public infrastructure spending to rise 24% in FY17. Every

expert hopes government investment plus FDI will sooner rather than later get

private investment going.

Urban Demand: Already robust urban demand will get a boost from the 7th

Pay Commission. In September, central government employees with receive

on an average 15% higher salaries. They will also get arrears for the first seven

months. Consumer durables, autos and real estate are likely beneficiaries,

especially since banking liquidity conditions are also better. "There are two

catalysts an increase in public sector wages/pensions and a strong monsoon

that will provide timely tailwinds to domestic demand," DBS said in a report.

The Worries: There are, as always, a few: bank credit to millions of small and

medium enterprises and smaller corporates haven't picked up these are the

companies that comprise the biggest chunk of the private sector. Perversely,

inflation, given that companies need lower rates, is also in a worrying zone.

Global economy is very tentative: the US is doing ok, but China could receive

another jolt. Das says domestic investment will revive as the government is

addressing banking sector issues while other structural reforms such as FDI

and ECB liberalisation are improving sentiment. "GST will add to sentiment,"

he says. If he's right, and if the economy finds its fifth leg, good times may

finally arrive.

India’s Potential Growth Rate

Typically, economists measure a country’s potential GDP growth in two ways:

First, by extrapolating from past growth; and,

Second, by projecting the underlying drivers of growth: capital

(physical and human), labor, and productivity.

Both have limitations and both rely on a variety of assumptions. The first

methodology has many variants, including the use of Hodrick-Prescott filters.

But they are all essentially mechanical and are really some weighted average of

past growth rates. One disadvantage of this method is that variations in actual

growth can induce considerable volatility in estimates of potential growth. But

potential growth should be relatively stable unless there are some fundamental

shifts in the underlying policy and institutional environment. Estimating

potential GDP by projecting the underlying determinants of growth (as done in

Rodrik and Subramanian, “Why India Can Grow at 7 Per Cent a Year or

More”, Economic and Political Weekly (EPW) [2005]) requires assumptions to

be made on total factor productivity growth, which can be arbitrary unless they

too are based on past performance which leads to the problems noted above. A

different way of estimating potential GDP growth is to use a deep

determinants-cum-convergence framework. There is a well-established

literature (North, D, “Institutions”, Journal of Economic Perspectives, [1991],

Acemoglu, D and J.A. Robinson, “Why Nations Fail: The Origins of Power,

Prosperity and Poverty”, Crown Business [2012]) that suggests that institutions

are a key determinant of long run growth. This is summarized in Figure 1

below.

Fig. 1: Institutions Matter

The upward-sloping line in the figure reflects a strong relationship (on

average) between political institutions and economic development that has

been found in empirical research, validating the central argument of the

“institutions matter” hypothesis. However, China and India are outliers (they

are far away from the line of best fit). And the interesting thing is that each of

these countries is an exception, or even a challenge, to the relationship but in

opposite ways. India (which is way below the line) is not rich enough given its

uncontestably vibrant political institutions. China (which is well above the

line) is too rich given its weak democratic institutions. The assumption is that

India and China will mean-revert, that is they will become more typical, and

move towards the line of best fit, over the medium term.

Mean reversion can happen in different ways. For China, the assumption is that

this process of becoming a “normal” country will happen via a combination of

slower growth and faster democratization as shown in Figure 2. Indeed, the

growth slowdown in China should be seen as a process of normalization after a

period of abnormally high growth. For India, normalization should take the

form of an acceleration of growth shown in the figure below. India’s potential

growth rate can thus be estimated as a reversion to a state of things where its

economic development is consistent with its well-developed political

institutions. The question is what is the implied growth rate that is consistent

with this mean reversion.

Fig. 2: Normalization of growth – China and India

The basic convergence framework provides a framework for estimating, albeit

roughly, India’s potential growth rate during this process of normalization (see

Technical Appendix for the simple algebra of this computation).

According to convergence theory, India’s per capita GDP growth rate (in PPP

terms) between 2015 and 2030 should be some multiple of the difference in the

initial level of per capita GDP between the US and India in 2015. That

difference is about 2.2 log points. The multiple is called the convergence

coefficient—the rate at which India will catch up with the United States. A

reasonable parameter from the literature is that this should be about 2 percent

per year, at least for countries that are converging. The East Asians converged

at a much faster pace but others at a slower pace. The significance of the figure

shown above is that since India has under-achieved so far, it must converge at

a faster pace than usual, so that it can revert to the “normal” line. Hence, its

convergence coefficient should be substantially better than 2 percent. These

PPP-based growth rates need to be converted into market exchange rate growth

rates. The resulting estimates are shown in the table below for alternative

assumptions about this convergence coefficient.

Based on this analysis, India’s medium term growth potential is somewhere

between 8 and 10 percent. Of course, this is an estimate of potential, conveying

a sense of opportunity. Hard policy choices and a cooperative external

environment will be required to convert opportunity into reality.

Table 1: China and India’s Potential Growth Rate 2015-30 (per cent)

Fig. 3: India and World Growth since 1991 (per cent)

THE GLOBAL CONTEXT

The Current Scenario

Indian economy has continued to consolidate the gains achieved in restoring

macroeconomic stability. Inflation, the fiscal deficit, and the current account

deficit have all declined, rendering India a relative haven of macrostability in

these turbulent times. Economic growth appears to be recovering, albeit at

varying speeds across sectors.

Although the major international institutions are yet again predicting that

global growth will increase from its current subdued level, they assess that

risks remain tilted to the downside. This uncertain and fragile outlook will

complicate the task of economic management for India.

The risks merit serious attention not least because major financial crises seem

to be occurring more frequently. The Latin American debt crisis of 1982, the

Asian Financial crisis of the late 1990s, and the Eastern European crisis of

2008 suggested that crises might be occurring once a decade. But then the

rapid succession of crises, starting with Global Financial Crisis of 2008 and

proceeding to the prolonged European crisis, the mini-crises of 2013, and the

China provoked turbulence in 2015 all hinted that the intervals between events

are becoming shorter.

This hypothesis could be validated in the immediate future, since identifiable

vulnerabilities exist in at least three large emerging economies—China, Brazil,

Saudi Arabia—at a time when underlying growth and productivity

developments in the advanced economies are soft . More flexible exchange

rates, however, could moderate full-blown eruptions into less disruptive but

more prolonged volatility.

One tail risk scenario that India must plan for is a major currency re-

adjustment in Asia in the wake of a similar adjustment in China, as such an

event would spread deflation around the world. Another tail risk scenario could

unfold as a consequence of policy actions—say, capital controls taken to

respond to curb outflows from large emerging market countries, which would

further moderate the growth impulses emanating from them.

In either case, foreign demand is likely to be weak, forcing India—in the short

run— to find and activate domestic sources of demand to prevent the growth

momentum from weakening. At the very least, a tail risk event would require

Indian monetary and fiscal policy not to add to the deflationary impulses from

abroad. The consolation would be that weaker oil and commodity prices would

help keep inflation and the twin deficits in check.

Global Financial Crises – Past, Present & Future

Since the 1980s, external financial crises have followed one of three basic

forms:

the Latin American,

the Asian Financial Crisis (AFC), or

the Global Financial Crisis (GFC) model.

So one could ask: in the unlikely event that a major event did take place in a

systematically important emerging market, which form would it follow? The

answer is probably none of the above. The implications would be unlike

anything seen in the last 80 years. (The attached table contains a summary).

In the Latin American debt crisis, governments went on a spending binge

financed by foreign borrowing (of recycled petrodollars) while pegging their

exchange rates. The spending led to a classic sequence: economic overheating,

large current account deficits that eventually proved difficult to finance, and

finally defaults on the foreign borrowing. The Indian external crisis of 1991

belonged to this category, although the country did not and has never

defaulted.

In the AFC of the late 1990s, the transmission mechanism was similar—

namely, overheating and unsustainable external positions under fixed exchange

rates—but the instigating impulse was private borrowing rather than

government borrowing. The troubles in Eastern Europe in 2008 belonged to

this category. The 2013 mini-crises in a number of emerging markets following

the Federal Reserve’s “taper tantrum” were also similar to the Asian crisis,

with the difference that affected countries had more flexible exchange rates

which obviated the large disruptive changes that occur when fixed regimes

collapse.

The GFC of 2008, with America as its epicentre, was unique in that it involved

a systemically important country and originated in doubts about its financial

system. The effects radiated out globally, with the irony that even though the

problems originated in the American financial system, there was a flight of

capital toward the United States, which triggered a sharp appreciation of the

dollar and significant currency depreciations in emerging markets. In this way,

the GFC, while inflicting an adverse financial shock on the rest of the world,

simultaneously set in motion an adjustment mechanism that helped emerging

markets recover from the crisis.

The Japanese crisis was similar to the GFC in terms of the transmission

mechanism (asset price bubbles encompassing equity markets and real estate).

But it was dissimilar in that it was corporate rather than household borrowing

that was the instigating impulse. Also, the crisis did not have a systemic

financial impact, since Japan was not a major international banking centre. Nor

did it have a major impact on global exports, even though Japan was (and is) a

major global trader, because, as in the GFC, the epicentre’s currency

appreciated as the crisis played itself out.

China’s current situation is similar to the AFC case in that fears about

excessive corporate debts—in the context of slowing growth and changing

economic management—are fostering large capital outflows. But the outcome

is less certain, since whereas Asian countries had limited foreign exchange

reserves China has more than $3 trillion in official assets, consequent upon

years of running large current account surpluses. This situation gives China

much more space and time to deal with incipient problems, and minimize their

consequences, for example, by allowing a gradual rather than disruptive

decline in the exchange rate.

Were a major event in China or another large emerging market to take place

nonetheless, it would be very different from the three categories described

above. It would likely involve a large currency depreciation in a systemically

important country which would spread outward as a

deflationary/competitiveness shock to the rest of the world, especially

countries competing with it. Consequently, the built-in adjustment mechanism

that took place in the GFC—where the crisis country’s currency appreciated

would be absent. In this sense, a potential tail event in a systemically important

emerging market would resemble more the events of the early 1930s when the

UK and then the US went off the gold standard, triggering a series of

devaluations by other countries, leading to a collapse of global economic

activity.

Table 2: Anatomical Taxonomy of External Financial Crises

THE INDIAN CONTEXT

The Indian economy has continued to consolidate the gains achieved in

restoring macroeconomic stability. A sense of this turnaround is illustrated by a

cross-country comparison. In last year’s Survey, we had constructed an overall

index of macroeconomic vulnerability, which adds a country’s fiscal deficit,

current account deficit, and inflation. This index showed that in 2012 India was

the most vulnerable of the major emerging market countries. Subsequently,

India has made the most dramatic strides in reducing its macro-vulnerability.

Since 2013, its index has improved by 5.3 percentage points compared with 0.7

percentage point for China, 0.4 percentage point for all countries in India’s

investment grade (BBB), and a deterioration of 1.9 percentage points in the

case of Brazil.

Fig. 4: Improvement in Macro-Economic Resilience, 2013-2016

If macro-economic stability is one key element of assessing a country’s

attractiveness to investors, its growth rate is another. Rational Investor Ratings

Index (RIRI) is an index which combines two elements, growth serving as a

gauge for rewards and the macro-economic vulnerability index proxying for

risks. Higher levels indicate better performance. As can be seen, India

performs well not only in terms of the change of the index but also in terms of

the level, which compares favourably to its peers in the BBB investment grade

and even its “betters” in the A grade1 . As an investment proposition, India

stands out internationally.

Fig. 5: Rational Investor Ratings Index, 2012-16

FUTURE PROJECTIONS & PREDICTIONS

Real GDP growth for 2015-16 was in the 7 to 73/4 range, reflecting various

and largely offsetting developments on the demand and supply sides of the

Indian economy. Before analyzing these factors, however, it is important to

step back and note one important point.

India’s long-run potential GDP growth is substantial, about 8-10 percent. But

its actual growth in the short run will also depend upon global growth and

demand. After all, India’s exports of manufactured goods and services now

constitute about 18 percent of GDP, up from about 11 percent a decade ago.

Reflecting India’s growing globalization, the correlation between India’s

growth rate and that of the world has risen sharply to reasonably high levels.

For the period 1991- 2002 this correlation was 0.2. Since then, the correlation

has doubled to 0.42. In other words, a 1 percentage point decrease in the world

growth rate is now associated with a 0.42 percentage point decrease in Indian

growth rates. Accordingly, if the world economy remains weak, India’s growth

will face considerable headwinds.

For example, if the world continues to grow at close to 3 percent over the next

few years rather than returning to the buoyant 4-4½ per cent recorded during

2003-2011, India’s medium-term growth trajectory could well remain closer to

7-7½ per cent, notwithstanding the government’s reform initiatives, rather than

rise to the 8-10 per cent that its long-run potential suggests.

In other words, in the current global environment, there needs to be a

recalibration of growth expectations and consequently of the standards of

assessment. 1.42 Turning to the outlook for 2016-17, we need to examine each

of the components of aggregate demand: exports, consumption, private

investment and government.

Fig. 6: Growth Rates

To measure the demand for India’s exports, we calculate a proxy-weighted

average GDP growth rate of India’s export partners. The weights are the shares

of partner countries in India’s exports of goods and services. We find that this

proxy for export demand growth declined from 3.0 percent in 2014 to 2.7 per

cent in 2015, which helps explain the deceleration in India’s non-oil exports,

although the severity of the slowdown—in fact, a decline in export volume—

went beyond adverse external developments.

Current projections by the IMF indicate that trading partner growth this

demand will improve marginally this year to about 2.8 percent. But the

considerable downside risks suggest that it would be prudent not to count on a

big contribution to GDP growth from improving export performance.

On the domestic side, two factors could boost consumption. If and to the extent

that the Seventh Pay Commission (7th PC) is implemented, increased

spending from higher wages and allowances of government workers will start

flowing through the economy. If, in addition, the monsoon returns to normal,

agricultural incomes will improve, with attendant gains for rural consumption,

which over the past two years of weak rains has remained depressed.

Against this, the disappearance of much of last year’s oil windfall would

work to reduce consumption growth. Current prospects suggest that oil prices

(Indian crude basket) might average US$ 35 per barrel next fiscal year

compared with US$ 45 per barrel in 2015-16. The resulting income gain would

amount roughly equivalent to 1 percentage point of GDP – an 18 per cent price

decline times a share of net oil imports in GDP of 6 percent. But this would be

half the size of last year’s gain, so consumption growth would slow on this

account next year.

According to analysis done by Credit Suisse, (non-financial) corporate sector

profitability has remained weak, falling by 1 percent in the year to December

2015.2 This decline reflected a sharp deterioration in the financial health of the

metals—primarily steel—companies, which have now joined the ranks of

companies under severe financial stress. As a result, the proportion of

corporate debt owed by stressed companies, defined as those whose earnings

are insufficient to cover their interest obligations, has increased to 41 percent

in December 2015, compared to 35 percent in December 2014.3 In response to

this stress, companies have once again been compelled to curb their capital

expenditures substantially.

Finally, the path for fiscal consolidation will determine the demand for

domestic output from government. The magnitude of the drag on demand and

output will be largely equal to the size of consolidation, assuming a multiplier

of about 1.

There are three significant downside risks . Turmoil in the global economy

could worsen the outlook for exports and tighter financial conditions

significantly. Second, if contrary to expectations oil prices rise more than

anticipated, this would increase the drag from consumption, both directly, and

owing to reduced prospects for monetary easing. Finally, the most serious risk

is a combination of the above two factors . This could arise if oil markets are

dominated by supply-related factors such as agreements to restrict output by

the major producers.

The one significant upside possibility is a good monsoon. This would increase

rural consumption and, to the extent that it dampens price pressures, open up

further space for monetary easing .

Putting these factors together, we expect real GDP growth to be in the 7 to 73/4

per cent range, with downside risks because of ongoing developments in the

world economy. The wider range in the forecast this time reflects the range of

possibilities for exogenous developments, from a rebound in agriculture to a

full-fledged international crisis; it also reflects uncertainty arising from the

divergence between growth in nominal and real aggregates of economic

activity

AGRICULTURAL SECTOR OUTLOOK

From time to time, agricultural production is affected by El Niño, an abnormal

warming of the Pacific waters near Ecuador and Peru, which disturbs weather

patterns around the world.

The 2015 El Niño has been the strongest since 1997, depressing production

over the past year. But if it is followed by a strong La Niña, there could be a

much better harvest in 2016-17. The 1997 episode lasted roughly from April

1997 to June 1998. During these 15 months, the Oceanic Nino Index (ONI) –

which compares east-central Pacific Ocean surface temperatures to their long-

term average and is used by the US National Oceanic and Atmospheric

Administration (NOAA) for identifying El Niño events – was consistently

positive and greater than 0.5 degrees Celsius.

The current El Niño started around February 2015; most climate models

predict a return to “neutral” conditions not before May 2016. That makes it just

as long as the 1997-98 event. Also, in terms of intensity, it is comparable to

that of 1997-98: The most recent Oceanic Nino Index (ONI) value of 2.3

degree Celsius for November 2015-January 2016 tied with the level for the

same period of 1997-98.

An extended and strong El Niño explains why India had a deficient south-

monsoon and dry weather lasting through the winter this time. The prolonged

moisture stress from it has, in turn, impacted both kharif as well as the rabi

crop. The figure below shows that average agricultural growth in El Niño years

since between 1981-82 and 2015-16 has been -2.1 per cent compared with a

period average of 3.

Fig. 7: Agricultural Growth, 1981-82 to 2015-16 (average, per cent)

There is a silver lining here, though. Since 1950, there have been 22 El Niño

events of varying durations and intensities, according to NOAA data. But out

of the 21 prior to this one, 9 have been followed by La Niña, involving an

abnormal cooling of sea surface waters along the tropical west coast of South

America with an ONI less than minus 0.5 degrees Celsius.

This phenomenon – there have been 14 such events since 1950 – has been

associated with normal-to-excess monsoons in India, which may be a by-

product of atmospheric convection activity shifting to the north of Australia.

Now, it is important that some of the strongest El Niño years (1997-98, 1972-

73, 2009-10, 1986-87 and 1987-88, ranked in the order of strength and of

which the last four produced droughts in India) were followed by La Niña

episodes, resulting in bumper harvests. The possibility of this being repeated in

2016 after the second strongest El Niño on record cannot be ruled out. The

figure above shows, for example, that average growth in La Niña years was 8.4

per cent, substantially higher than the period average.

But there is a big catch. El Niño, as of now, continues to be “strong” and is

only gradually weakening. It will enter neutral zone only with the onset of

summer. NOAA’s latest forecast assigns only a 22 per cent probability of La

Niña developing in June-July-August, going up to 50 per cent for September-

October-November. The Australian Bureau of Meteorology suggests the

“neutral” state as the “most likely for the second half of the year”. In other

words, one shouldn’t expect La Niña conditions to develop before the second

half of the southwest monsoon season (June-September). Even if it develops,

the translation into actual rainfall in India could take time. The effects of the

2015 El Niño, after all, were felt only from July, although the east-central

Pacific sea surface temperature anomalies began in February.

In sum, La Niña is unlikely to deliver its full bounty in the coming monsoon,

or at least not until late in the kharif season. That doesn’t, however, mean the

monsoon is going to be bad, especially when all models are pointing to a very

low probability of a repeat El Niño happening this year.

The monsoon could also be good due to other favourable factors such as a

“positive Indian Ocean Dipole”. The latter phenomenon – where the western

tropical Indian Ocean waters near Africa become warmer relative to those

around Indonesia – prevented at least two El Niño years (1997 and 2006) from

resulting in droughts in India.

The policy implication of such a cautious prognosis is that the government

should be ready with a contingency plan for a monsoon, especially after two

successive drought years. Declaring minimum support prices well before kharif

sowing operations, incentivizing farmers to produce crops most prone to

domestic supply pressures (such as pulses), and timely contracting of imports

of sensitive commodities would be essential components of this strategy

INFLATION

For most of the current fiscal year, inflation has remained quiescent, hovering

within the RBI’s target range of 4-6 percent. But looming on the horizon is the

increase in wages and benefits recommended for government workers by the

Seventh Pay Commission (7th PC). If the government accepts this

recommendation, would it destabilize prices and inflation expectations? Most

likely, it will not.

The historical evidence is clear on this point. Figure 9 illustrates the experience

of the Sixth Pay Commission (6th PC). It plots the monthly increase in salaries

during the period of the award, from September 2008 – September 2009,

against non-food inflation. (At that time, overall inflation was rising due to a

sharp increase in global food prices.) The figure shows that the 6th PC award

barely registered on inflation despite the lumpiness of the award, owing to the

grant of arrears. If the 6th PC award barely registered, the 7th PC is unlikely to

either, given the relative magnitudes: even if fully implemented, the expected

wage bill (including railways) will go up by around 52 per cent under the 7th

PC vis-à-vis 70 per cent under the 6th PC.

Fig. 8: Non-food inflation and growth in wage bill

This outcome may seem surprising. Why would such a large wage increase

have so little impact on inflation? There are three reasons. Most important is a

broad theoretical point. In principle, inflation reflects the degree to which

aggregate demand exceeds aggregate supply. And pay awards determine only

one small part of aggregate demand. In fact, they do not even determine

government demand: that depends on the overall fiscal deficit, which is the

difference between how much the state is injecting into the economy through

overall spending and how much it is taking away through taxes. Since the

government remains committed to reducing the fiscal deficit, the pressure on

prices will diminish, notwithstanding the wage increase.

That said, theory does suggest that a sharp increase in public sector wages

could affect inflation if it spilled over into private sector wages and hence

private sector demand. But currently this channel is muted, since there is

considerable slack in the private sector labour market, as evident in the

softness of rural wages. And even if private sector wage increases nonetheless

do quicken somewhat, the existence of substantial capacity underutilization

suggests that firms might find it difficult to pass the cost increase onto

consumer prices.

Fig. 9: Capacity Utilization

Finally, there will be some mechanical impact of the increase in the house rent

allowance (HRA) on the housing component of the CPI. But this effect is

likely to be modest between 0.15 and 0.3 percentage points.4 And even then it

will merely have a one-off effect on the level of the CPI, rather than the rate of

inflation going forward, which is the real target of the RBI.

The outlook for inflation will consequently depend on other factors. On the

domestic side, another year of below-potential growth will mean that the

output gap (reflected for example in the declining capacity utilization) will

widen further. As a result, there will be additional downward pressure on

underlying inflation, which has already fallen below 5 percent, as measured by

services inflation excluding the oil-related sub-indices. Meanwhile, if the

monsoon returns to normal, food prices will ease, especially since the

government remains committed to disciplined increases in MSPs for cereals,

and rural wage growth remains muted.

Fig. 10: Headline CPI vis-a-vis Core CPI Inflation (per cent)

Further relief should come from abroad. Oil prices have plunged in the first

two months of 2016, as have some commodity prices, suggesting that input

prices are likely to be lower next fiscal year. Beyond this factor lie other

deflationary forces. As growth in China continues to slow, excess capacity

there could continue to increase, which will put further downward pressure on

the prices of tradable goods all around the world. Part of this might be offset by

upward pressure coming from a depreciation of the rupee, especially if the

Federal Reserve Bank continues to raise interest rates, prompting capital to

reflow to the U.S, although the prospects of aggressive Fed action are receding.

On balance the risk to imported pressures, as with domestic pressures, remains

firmly to the downside.

All this suggests that the RBI should be able to meet its target of 5 percent by

March 2017. Indeed, with the current stance, there is a possibility of

undershooting. While the current policy rate seems “neutral” in that it is only

modestly higher than consumer price inflation, liquidity conditions are

unusually tight, impeding the pass-through of recent declines in policy rates to

the actual bank rates faced by borrowers.

The Figure below depicts the situation. It shows a measure of the tightness of

monetary conditions: the gap between bank lending (base) rates and nominal

GVA growth. If the difference is negative, then nominal GVA growth—and

for the average firm, revenue growth—is increasing faster than interest is

accruing on its debts. In that sense, the monetary stance poses little problems

for the corporate sector. But if interest rates are higher than nominal GDP

growth, firms’ cash flows are being squeezed. If firms then respond by curbing

price increases in order to boost sale volumes sales and cash flow, this will put

downward pressure on inflation. The chart shows that this is indeed what has

broadly been happening this year

For all these reasons, we project that CPI inflation will ease to between 41/2 - 5

per cent in 2016-17. We therefore think that the effective stance of monetary

policy could be relaxed and in two ways. First, by easing liquidity conditions

to make them consistent with the current policy rate. Second, by further

lowering the policy rate consistent with meeting the inflation target while

supporting weakening economic activity and corporate balance sheets. Robust

measured growth of real GDP may not warrant an easing of monetary

conditions. But a risk framework combined with a focus on the more reliable

nominal aggregates is useful. If, in fact, real growth is weaker than suggested

by the headline number, easing is appropriate. On the other hand, if real GDP

growth is indeed robust, the implied disinflation is large, mitigating the

inflationary risks of easing.

INCOME & CONSUMPTION

INDIA’S NATIONAL INCOME

India's per capital income rose by 7.4 per cent to Rs 93,293 in 2015-16,

compared to Rs 86,879 in the preceding fiscal, government data

showed today.

"The per capita income at current prices during 2015-16 is estimated to

have attained a level of Rs 93,293 as compared to the First Revised

Estimate for the year 2014-15 of Rs 86,879 showing a rise of 7.4 per

cent," as per data on Provisional Estimates of Annual National Income

and Quarterly Estimates of Gross Domestic Product 2015-16.

The data was released by the Ministry of Statistics and Programme

Implementation. Per capita income is a broad indicator of prosperity.

In real terms, the per capita income (at 2011-12 prices) during 2015-16

is estimated to have attained a level of Rs 77,435, up 6.2 per cent from

Rs 72,889 for the year 2014-15.

The Gross National Income (GNI) at 2011-12 prices is now estimated

at Rs 112.13 trillion as against Rs 112.14 trillion estimated earlier for

2015-16. In 2014-15, it was Rs 104.28 trillion.

"In terms of growth rates, the gross national income is estimated to

have risen by 7.5 per cent during 2015-16, in comparison to the growth

rate of 7.3 per cent in 2014-15."

Fig. 11: GDP Growth rate

Source : McKinsey Growth Institute

Fig.12: Income Growth rate

Source : Mckinsey Growth Institute

Fig.13: Widening income distribution


Fig.14: Income Pyramid (India)


Fig.15: Income Pyramid (Rural/Urban)


CONSUMPTION TRENDS

If India continues on its current high growth path, incomes will almost triple

over the next two decades and the country will become the world's fifth–largest

consumer market by 2025.

As Indian incomes rise, the shape of the country's income pyramid will also

change dramatically. Over 291 million people will move from desperate

poverty to a more sustainable life, and India's middle class will swell by more

than ten times from its current size of 50 million to 583 million people. By

2025 over 23 million Indians— more than the population of Australia today—

will number among the country's wealthiest citizens

The geographic pattern of India’s income and consumption growth will shift

too. By 2025 the Indian consumer market will largely be an urban story, with

62 percent of consumption in urban areas versus 42 percent today. While much

of this new wealth and consumption will be created in urban areas, rural

households will benefit, with annual real rural income growth per household

accelerating from 2.8 percent over the past two decades to 3.6 percent over the

next two. Indian spending patterns will also evolve, with basic necessities such

as food and apparel declining in relative importance and categories such as

communications and health care growing rapidly. The upcoming changes in

the Indian consumer market will create major opportunities and challenges for

Indian and multinational companies alike. Businesses that can meet the needs

of India's aspiring middle class, keep price points low to reflect the realities of

Indian incomes, build brand loyalty in new consumers, and adapt to a fast

changing market environment willfind substantial rewards in India's rapidly

growing consumer market. Likewise, India's policymakers will be challenged

to keep India on the path of economic reform while addressing major

challenges in infrastructure and social investment. The rewards, however, will

be substantial progress in poverty reduction and a rising standard of living for

much of India's population.

Changing consumption patterns: India’s share of spending is moving from

basic necessities to discretionary spending.

Fig.16: Share of average household consumption


Relative growth of spend categories : Food will remain the largest

consumption category ,while ‘Communications’ will grow the fastest.

Fig.17: Compound Annual Growth Rate of Consumption


Size of Consumer Market: The Indian consumer market will quadruple over

the next 2 decades

Fig.18: Total household consumption

Source: Mckinsey Growth Institute

Sources of consumption growth : Growth in disposable income would be the

greatest contributor to growth in consumption.

Fig.19: Sources of growth in private consumption


Urban India will account for nearly 2/3rds of the growth in consumption.

Fig.20: Aggregate Annual Consumption

The Surging FDI

(Foreign direct

investment) between

October 2015 and May

2016 was up 40% to

$23.7 billion from the

same period a year

earlier.

Contract-manufacturing

giant Foxconn

announced plans to

spend $5 billion on

factories and research

and development in

Maharashtra.

General Motors Co.

has announced that it

will invest another $1

billion in India.


Market Benchmarking: India will become the 5th largest consumer market by

2025.

Fig.21: Top world consumer markets (excluding US) – in Billion $


201

6

202

5

NASSCOM Report

2014- 15 states that

Software Startups are

going to create 80000

jobs by 2016

As of June 2016, the

unemployment

percentage in India was

8.84%, with 9.82% in

Urban India and 8.36%

in Rural India

EMPLOYMENT

According to CMIE statistics, the 30-day moving average unemployment rate

as of July 2016 is 9.41%.

Table 3: Unemployment rate in India, urban and rural

Source: CMIE Website

Fig.22: Unemployment Percentage

Source: CMIE

However, there have been some really encouraging steps towards increase in

employment in India:

Net investments by foreign institutional investors, or the money coming

through financial markets, totalled $40.92 billion in the fiscal year ended

March 31, roughly seven times as much as in the prior year.

Official data show India’s industrial production raised an average 2.7%

year-over-years in the seven month period from October to May. It is a

significant step up from the measly 0.6% increase during the comparable

period a year earlier.

The Prime Minister of India in his Independence Day speech mentioned

that organizations that generate employment opportunities locally will get

special support from the Government.

With all of this happening, more and more organisations would get attracted to

establish their manufacturing bases in India, which in turn will help in job

creation.

Fig.23: Graph of number of people Skilled/Trained vs Placed in Jobs

8.7

2

7.9

8

8.4

2 9.2

7

10.1

6

8.8

4 9.9

9

9.6

2

10.4

8 11

.7

12.4

7

9.8

2

8.0

5

7.1

6

7.4

3

8.1

7

9.0

9

8.3

6

The Surging FDI

(Foreign direct

investment) between

October 2015 and May

2016 was up 40% to

$23.7 billion from the

same period a year

earlier.

Contract-manufacturing

giant Foxconn

announced plans to

spend $5 billion on

factories and research

and development in

Maharashtra.

General Motors Co.

has announced that it

will invest another $1

billion in India.

The increase in

percentage

employability in

females is greater than

that of males from 2014

to 2015

The highest percentage

of employable

population in India is

between the age of 18

to 21 years

Source: Business Standard

Fig.24: Graph of employability

Source: India Today 2016 Report

Startup India

We have about 12 million graduates joining the workforce every year.

Launching of Startup India and Mudra Fund has given a much needed impetus

to young entrepreneurs. NASSCOM Report 2014- 15 states that Software

Startups are going to create 80000 jobs by 2016. India is The Fastest Growing

and 3rd Largest Start-Up Ecosystem Globally (Source: NASSCOM) and the

Startups if nurtured are going to change the Indian business and jobs

landscape.

Digital India

Digital India initiative to transform the nation into digital empowered society

and knowledge economy envisions intensified impetus for further momentum

and progress for e-Governance and would promote inclusive growth that

covers electronic services, products, devices, manufacturing and job

opportunities. Creation of this level of digital infrastructure would create jobs,

which will contribute in overall growth of the economy.

20484

1816

91

402506

1349619

2067859

14399

144238

216

741 646394

4518

45

54%

44.5

6%

29.8

2%

26.4

5%

38.4

1%

45%

44%

10.1

4%

56%

52.5

8%

43.9

9%

27.1

1%

20.5

8%

35.2

4%

39.8

1%

40.9

0%

15.8

9%

40.6

2%

As of June 2016, the

unemployment

percentage in India was

8.84%, with 9.82% in

Urban India and 8.36%

in Rural India

NASSCOM Report

2014- 15 states that

Software Startups are

going to create 80000

jobs by 2016

Fig.25: Gender wise employability

Fig.26: Age wise employability


Table 4: Percentage increase in hiring numbers and gender wise distribution

The increase in

percentage

employability in

females is greater than

that of males from 2014

to 2015

The highest percentage

of employable

population in India is

between the age of 18

to 21 years


Fig.27: Preferred Sourcing Channels


Skilling India - National Skill Development Corporation (NSDC)

This project is yet another major tool of change towards betterment of Indian youth & working group. Skilling India aims to provide skill training to about

120 lakh youth in the country and within a small span of time. The vision is to undertake skill development at an enhanced scale with a view to make India ‘Human Resource Capital’ of the world. This is perhaps India’s first integrated

scheme for developing Skills and challenge of meeting skilled workforce needs depends on these initiatives.

Internal referrals, job

portals and campus

recruitment are the

three most preferred

sources or channels of

employment in that

order.

Between now and 2025

over 250 million young

people are estimated to

enter the Indian

workforce, while only

5% of youth aged 20-24

have obtained

vocational skills

through a formal

training system.

The objective of the National Policy on Skill Development and

Entrepreneurship, 2015 is to meet the challenge of skilling at scale with speed and standard (quality). The National Skill Development Corporation provides

skill development funding either as loans or equity, and supports financial incentives to select private sector initiatives to improve financial viability through tax breaks etc.

Pradhan Mantri Kaushal Vikas Yojana (PMKVY) targets offering 24 lakh

Indian youth meaningful, industry-relevant, skill-based training and a government certification on successful completion of training along with

assessment to help them secure a job for a better future. 5.32 lakh persons have already been enrolled. Of this number, 4.38 lakh have successfully completed training throughout India.

Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY), a placement-linked skill development scheme for rural youth who are poor,

as a skilling component of the NRLM (National Rural Livelihoods Mission) has also been launched. During 2015-16, against a target of skilling 1.78 lakhs candidates under the DDU-GKY, a total of 1.75 lakh

have been trained and 0.60 lakh placed till November 2015.

The National Action Plan (NAP) will establish a network of skill training

providers led by training partners from government and non-government sectors including vocational rehabilitation centres. The plan has a target of

skilling 5 lakh differently-abled persons in next three years Ease of Doing Business

Fig.28: Ease of Doing Business in India Data 2016

The sector with the

highest gender balance

in employment numbers

is pharma and

healthcare, with a 59%

male and 41% female

workforce

The sector with the

highest gender

imbalance in

employment numbers is

automotive and

engineering, with a

84.85% male and

15.15% female

workforce

To improve India`s current Ease of Doing Business Index ranking of 130 among 189 nations, reforms are being undertaken in areas such as starting a

business, dealing with construction permits, registration of property, power supply, paying taxes, enforcing contracts, and resolving insolvency.

India was able to amend the Companies Act in less than six months and made starting a business easier by eliminating the minimum capital requirement and

the need to obtain a certificate to commence business operations, saving entrepreneurs an unnecessary procedure and five days’ wait time. The

Government is also trying to bring in amendments in the indirect tax regime by bringing the Goods & Service Tax through a Constitution (122nd Amendment) Bill 2014, the Right to Fair Compensation & Transparency in Land

Acquisition, Rehabilitation and Resettlement (Second Amendment) Bill 2015 with the ultimate goal of simplifying the ease of doing business in India. The

important measures that have been undertaken are expected to increase investment, and thus, employment in India.

Make in India

The Make in India programme is aimed to facilitate investment, foster innovation, enhance skill development, protect intellectual property and build best-in-class manufacturing infrastructure. The ‘Make in India’ campaign aims

to bring in investments into earmarked sectors, followed by employment opportunities, transfers of technical know-how and, of course, capital and

growth. Investment in the manufacturing sector will also act as an elevator for the development of other sectors. With the establishment of new companies in the infrastructure and energy sector, a plethora of job opportunities are

expected in the service sector as well.

Causes of unemployment

The primary sector although constitutes 50 % of working population, but its

contribution to GDP is mere 17%. Similarly manufacturing share in GDP is 24% while it constitutes 23% of population. While service sector although

constitute much 15 smaller working population but its contribution to GDP is more than 50%. Economists regard this neglect to manufacturing and agriculture as the main cause of mass poverty and unemployment present in

India.

Initiatives like Make in India, Skill India Mission, MUDRA scheme, labour laws and regulatory framework aim to enhance the ease of doing business in India. Only a proper execution of these schemes characterizing the spirit of

Startup India can bring in the equilibrium especially amongst the unemployed and jobless youth population. Thus, the initiatives to revive MSME (Ministry

of Micro, Small and Medium Enterprises) have been a step in the right direction to strengthen the industrial base of the nation for transforming it from a net importer of goods, to a net exporter.

Contractual Workers

Total employment in the organised manufacturing sector increased from 7.5

million in 2000-01 to 13 million in 2011-12, over half of this increase was

accounted for by the increasing use of contract workers. The growing use of

contract workers, workers who are hired by an intermediary or contractor on

short term contracts and can be fired easily reflects the significant

The primary sector of

the economy is the

sector of an economy

making direct use of

natural resources. This

includes agriculture,

forestry, fishing and

mining.

The secondary sector

of an economy

produces manufactured

goods, and the tertiary

sector produces

services.

informalisation of the workforce and raises questions about the sustainability

of employment growth driven by such jobs.

The argument that it is inflexible labour regulations that have incentivised

firms to substitute regular workers with contract workers deserves closer

scrutiny for several reasons:

Labour regulations have not become more rigid over the time period when

contract worker intensity has surged.

Even states which made amendments to their labour laws to make them

more amenable to employers have witnessed a sharp increase in contract

worker usage.

It is capital-intensive and not labour-intensive industries, where pro-labour

regulations hurt the most, which have seen a larger increase in contract

worker usage.

This suggests that there may be other factors at play.

Labour Reforms

The Payment of Bonus (Amendment) Act 2015: The Payment of Bonus

(Amendment) Act 2015 received the assent of the President on 31

December 2015. The eligibility for bonus payment as defined under section

2 (13) of the Payment of Bonus Act 1965 has been increased from Rs

10,000 to Rs 21,000 per month. Section 12 of the principal Act states that

the calculation of bonus with respect to certain employees where the salary

or wage of an employee exceeds Rs 7000 (or the minimum wage for the

scheduled employment as fixed by the appropriate government, whichever

is higher) shall be paid per month, the bonus payable to such employee

under section 10 or, as the case may be, under section 11, shall be

calculated as if his/her salary or wage were Rs 7000 per month (or the

minimum wage for the scheduled employment as fixed by the appropriate

government, whichever is higher).

National Career Services Portal: The Government is mandated to maintain

a free employment service for its citizens. This is now being transformed

with the launch of the National Career Service (NCS) Portal on 20 July

2015. The NCS is envisaged as a digital portal that provides a nationwide

online platform for job seekers and employers for job matching in a

dynamic, efficient and responsive manner. As of 31 December 2015,

approximately 3.58 crore job seekers, 9 lakh employers and 27,000 skill

providers are registered on the NCS portal. The Government has also

approved the establishment of 60 model career centers and these are likely

to become functional during 2016-17.

With a budget allocation of INR 100 Cr., NCS is expected act as a one-stop

platform for both employees and employers and the registration can be

done online. Govt. has already initiated talks to include 900,000 privately

registered companies into the portal. Applicants would be required to link

their Aadhaar Card with the account to filter out genuine applicants and

companies who are registering as employers need to submit their

registration papers for authentication.

Shram Suvidha Portal: The features of the Shram Suvidha Portal launched

by the Government are: unique Labour Identification Number (LIN) to

units/ establishments registered on it (the unique LIN has been issued to

9,70,242 units as on 14th February, 2016); transparent labour inspection

scheme; unified annual returns under nine central acts and unified

electronic challan-cum-return for filling of monthly contribution with

Employees Provident Fund Organization (EPFO) & Employee State

Insurance Corporation (ESIC).

Universal Account Number: As part of the Pandit Deen Dayal Upadhyay

Shramev Jayate Karyakram, portability feature has been launched through

the Universal Account Number (UAN) by EPFO. So far, a total of

6,13,25,767 workers have already been provided UANs.

In the Apprentices Act, 1961, provisions have been simplified to enable

even the MSME sector to take apprentices, extending apprentice training to

non-technical courses, allowing apprenticeship training in informal trades

etc.

The Labour Laws (Exemption from Furnishing Returns & Maintaining

Registers by Certain Establishments) Amendment Act, 2014 extends the

provisions of the Act to units holding up to 40 workers instead of 19

workers and the number of labour laws exempted has been increased from

the present 9 to 16.

Proposed Reforms in the Employees’ Provident Fund & Miscellaneous

Provisions Act, 1952 would extend social security benefits under EPFO to

the unorganized sector as well as to more number of units within the

organised sector.

Future Trends

India has the advantage of the “demographic dividend” (younger population

compared to the ageing population of developed countries), which can be

cultivated to build a skilled workforce in the near future. The country’s

population pyramid is expected to bulge across the 15–59 age groups over the

next decade. This demographic advantage is predicted to last only until 2040.

According to the India Labour and Employment Report 2014 prepared by the

Institute for Human Development (IHD), the low labour force participation in

India is largely because the female LFPR, which is amongst the lowest in the

world and the second lowest in South Asia after Pakistan.

Currently it is estimated that only 2.3% of the workforce in India has

undergone formal skill training as compared to 68% in the UK, 75% in

Germany, 52% in USA, 80% in Japan and 96% in South Korea. Large sections

of the educated workforce have little or no job skills, making them largely

unemployable. Therefore, India must focus on scaling up skill training efforts

to meet the demands of employers and drive economic growth.

National Skill Development Corporation has facilitated setting up of Sector

Skill Councils (SSC) across 37 sectors and having representation from Industry

Members, Industry Associations, Business Leaders, Training providers and

Government bodies. During the FY 2014-15 NSDC has been able to cover

Total employment in

the organised

manufacturing sector

increased from 7.5

million in 2000-01 to

13 million in 2011-12,

over half of this

increase was accounted

for by the increasing

use of contract workers.

twenty eight states and five union territories through its skill development

efforts which include 206 training partners and 3611 training centres across the

country. In the same period NSDC skilled 3.4 million people which includes

training conducted by training partners and training done under schemes like

STAR and UDAAN implemented by NSDC across thirty one sectors.

PUBLIC DEBT

In India, public debt refers to a part of the total borrowings by the Union

Government which includes such items as market loans, special bearer bonds,

treasury bills and special loans and securities issued by the Reserve Bank. It

also includes the outstanding external debt.

Objective

In India, most government debt is held in long-term interest bearing securities

such as national savings certificates, rural development bonds, capital

development bonds, etc. In industrially advanced countries like the U.S.A., the

term government or public debt refers to the accumulated amount of what

government has borrowed to finance past deficits.

In such countries the government debt has a very simple relationship to the

government deficit the increase in debt over a period (say one year) is equal to

its current budgetary deficit. But, in India, the term is used in a different sense.

The State generally borrows from the people to meet three kinds of

expenditure:

(a) To meet budget deficit,

(b) To meet the expenses of war and other extraordinary situations and

(c) To finance development activity.

Public debt (also known as Government debt, national debt and sovereign debt)

is the debt owed by a central government. In a federal set up like India's,

"government debt" may also refer to the debt of a state or provincial, municipal

or local government. By contrast, the annual "government deficit" refers to the

difference between government receipts and spending in a single year, that is,

the increase of debt over a particular year. Debt is an accumulation of yearly

deficits.

The primary deficit is the difference between current government spending on

goods and services and total current revenue from all types of taxes net of

transfer payments. The total deficit (fiscal deficit) is the primary deficit plus

interest payments on the debt. The public deficit is a flow, measured per unit of

time (usually years), while the government debt is a stock, an accumulation. In

India, debt policy is driven by the principle of gradual reduction of public debt

to GDP ratio so as to further reduce debt servicing risk and create fiscal space

for other/developmental expenditure.

Public Debt

It refers to the part of

the borrowing by the

union Government

In India most of the

public debt is held in

long term interest

bearing securities.

There are three kinds of

expenditures

To meet budget deficit,

To meet the expenses of

war and other

extraordinary situations

and

To finance development

activity.

Fiscal Deficit

When a Governments

total expenditure

exceeds the total

revenue

The performance for

the current year has

been according to the

revised roadmap

The state Financial

Deficit for current year

has been 3.9% of GDP

Fig. 29: Debt to GDP ratio

Source: Euromonitor

Fig. 30. Trading Deficiency

Source: Planning Commission Data

FISCAL DEFICIT

When a Governments total expenditure exceeds the total revenue that it has a

fiscal Deficit. A brief summary of Indian Fiscal policies for 2016 -17.

The performance on the select fiscal indicators during the current financial

year and the rolling targets are in line with the revised roadmap of fiscal

consolidation as amended in 2015, except for Effective Revenue Deficit.

Fig.31: Breakdown of GDP % for Fiscal Deficit

0

500

1000

1500

2000

2500

2007 2008 2009 2010 2011 2012 2013 2014 2015

GDP Of India Government Debt to GDP Ratio

-500

0

500

1000

1500

2000

2500

2007 2008 2009 2010 2011 2012 2013 2014 2015

Trading deficiency

Trading Deficit 1238.7

Source: Planning Commission website

The fiscal deficit target in 2015-16 (despite being lower in nominal terms), will

be achieved, without any reduction in expenditure. This is in contrast to the

previous year where drastic reduction in expenditure enabled meeting the fiscal

targets. In fact, in the revised estimates (2015-16), the total as well as the plan

expenditure are in fact higher than the budgeted level. As a consequence of

higher share of tax devolution to the State Governments, the growth in net tax

revenues to the Centre in BE 2015-16 was almost flat with a marginal increase

of 1.8 per cent. However, the growth in Gross tax revenues over 2014- 15 is

comparatively better and as per target. The fiscal deficit targets will be

achieved despite implementation of the Fourteenth Finance Commission (FFC)

recommendations relating to higher devolution of tax share and its

recommended grants to the States and despite a huge shortfall in the projected

disinvestment receipts for 2015-16.

A revenue deficit occurs when the net income generated, revenues less

expenditures, falls short of the projected net income. This happens when the

actual amount of revenue received and/or the actual amount of expenditures do

not correspond with budgeted revenue and expenditure figures. This is the

opposite of a revenue surplus, which occurs when the actual amount of net

income exceeds the projected amount.

Table 5: Deficit patterns throughout the years


Tax Expenditure

The divergence between the statutory tax rate and effective tax rate (defined as

the ratio of total tax revenue collected to the aggregate tax base) is mainly on

account of tax exemptions. Tax expenditure is also termed as ‘revenue

forgone’, but it does not necessarily imply that this quantum of revenue has

2.54

5.99 6.46 4.79 5.75 4.82 5.41 4.62 4.13 3.9

1.51

2.39 2.91

2.07 1.88

2.3 2.35

2.16 2.8 2.5

0

2

4

6

8

10

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Breakdown of GDP % for Fiscal Deficit

Centre Deficit(% of GDP)

States Deficit(% of GDP)

Revenue Deficit

Revenue less

expenditure falls below

projected net income.

Revenue deficits for

2015-16 has been 2.5%

of GDP.

http://www.investopedia.com/terms/r/revenue.asp

been waived by the government. It should be interpreted as targeted incentives

for the promotion of certain sectors that may not, in the absence of such

incentives, have come up. Arguably, high tax expenditure can make the tax

system unduly complex. Tax expenditures have been brought down

significantly as a result of simplification of the tax system and improvements

in tax administration in recent years.

Fig. 32: Taxes in Industry


EXTERNAL SECTOR

INDIAS CURRENT ACCOUNT DEFICIT

Introduction

Current Account Deficit is when a country’s import levels exceeds its output

levels. This essentially means that the country consumes more than it send out

to the rest of the world. Current Account is essentially the net income a country

(including interest and dividends, transfers of cash for example foreign aid)

generates. The current account is a calculation of a country’s foreign

transactions, and along with the capital account is a component of a country’s

balance of payment.

The U.S. dollar is the major currency for international trade. Most

countries use it to pay for their imports and also peg the dollar for

exporting products and services.

The balance of trade (net import or export) would determine if a

country is a net payer or a receiver of dollars. Trade, along with US

dollar inflows (portfolio/FII, FDI, inward remittances), determines the

overall availability of the international currency for a country to engage

itself in the global economy. This also has a bearing on determining the

exchange rate of a country’s own currency with that of the dollar.

An account that keeps a tab on the dollar expenses and dollar inflows

for a period (normally an accounting year) is commonly known as the

‘current account’. A negative balance amounts to current account

deficit (CAD), indicating broadly that the country’s imports exceed

exports.

India has been persistently running a CAD. The deficit has widened in

recent years as a percentage of GDP and has become a concern for

policymakers, economists and global investors.

Components of CAD

India’s growth engine has been predominantly driven by oil (over two-thirds of which is imported). This situation may not change much over the next few decades.

For a change the Indian government does not have to worry too much about oil imports as the crude price is hovering at historical lows. This means that India will be able to grow and not be effected severely by higher oil prices. The Brent is currently trading at $43.53 a barrel, compared to $120 a barrel where it used to be.

Gold is another major import for India and plays a significant role in India’s current account as India together with China consumes more than half of the worlds gold. Indians, irrespective of economic position, are positively inclined towards gold purchase. It is largely driven by custom, marriage, safety concerns, tradability, and as a hedge against the rupee. Compared to the first quarter, the demand for gold has been less. To be precise, the demand for gold was 16% lower this quarter compared to the corresponding quarter last year.

Over the years India has made progress in both information technology and generic pharmaceutical exports, apart from its traditional gems and jewellery, natural fibres and garment sectors.

When imports exceed

exports it is called as

a Current Account

Deficit

Lower oil prices are

immensely helping

India’s cause

The demand for Gold

fell by 16% compared

to last year

USD is the main

trading currency

therefore CAD is

effected by the

exchange rate

Other imports like capital goods and machinery, transport equipment and electronics are necessary for India’s infrastructure growth. Indigenization has reduced dependence on imports, but in areas like telecom and mining, imports have played a crucial role in lowering input cost.

Source: http://ieconomics.com

The current account deficit in India narrowed to USD 0.3 billion or 0.1

percent of GDP in the first quarter of 2016 from a USD 0.7 billion gap

or 0.1 percent of GDP a year earlier, mainly due to a lower trade gap

(USD 24.8 billion from USD 31.6 billion).

Considering April to March of the 2015/2016 fiscal year, the current

account deficit decreased to 1.1 percent of GDP compared to 1.8

percent in the previous year.

Current Account in India averaged -1764.11 USD Million from 1949

until 2016, reaching an all-time high of 7360 USD Million in the first

quarter of 2004 and a record low of -31857.20 USD Million in the

fourth quarter of 2012.

Current Account in India is reported by the Reserve Bank of India.

There are speculations that India might head for a Current Account

surplus.

The contraction in CAD in the fourth quarter of the last fiscal was

primarily on account of lower trade deficit, which stood at USD 24.8

billion compared to USD 31.6 billion in the corresponding quarter a

year ago.

For the full fiscal 2015-16, CAD stood at 22.1 billion, or 1.1 per cent of

GDP, as against USD 26.9 billion, or 1.8 per cent of GDP, in 2014-15,

on the back of contraction in the trade deficit.

The country's trade deficit narrowed to USD 130.1 billion last fiscal

from USD 144.9 billion in 2014-15.

The overall Balance of Payment (BoP) during the fiscal moderated to

USD 17.9 billion from USD 61.06 billion in 2014-15.

21

.8

5.1

5

4.2

2

1.2

1

7.8

4 1

0.9

7.7

0.7

6.1

2 8.5

4

7.1

1

0.3

18

F i g .3 3 : C u r r e n t A c c o u n t D e f i c i t ( U S D M i l l io n )

Current Account

Deficit (USD Million)

2 per. Mov. Avg.(Current AccountDeficit (USD Million))

India’s CAD is the

lowest it has been in a

while 318 million

USD

Current account is

one of the two

component accounts

of the balance of

payments of a nation.

It records the trade of

goods and services of

an economy with

other countries of the

world.

Current Account in

India averaged -

1764.11 USD Million

from 1949 until 2016

India has steadily

opened up its

economy, its tariffs

continue to be high

when compared with

other countries

India has been known

to be a protectionist

economy

India is now worlds

second largest textile

exporter

Per capita income has

almost trebled over

12 years

During the fiscal, there was decline in net invisible receipts, reflecting

moderation in both net services earnings and private transfer receipts.

Net FDI inflows during the last fiscal stood at USD 36 billion, up

sharply by 15.3 per cent over the level in 2014-15, the apex bank said.

Portfolio investment, however, recorded a net outflow of USD 4.5

billion during the fiscal as against a net inflow of USD 40.9 billion in

2014-15.

In 2015-16, there was an accretion of USD 17.9 billion to foreign

exchange reserves (on BoP basis) as compared with USD 61.4 billion

in 2014-15, RBI said.

TRADE & EXPORT POLICY AND EXTERNAL SECTOR

Introduction

The integration of the domestic economy through the twin channels of

trade and capital flows has accelerated in the past two decades which in

turn led to the Indian economy growing from Rs 32 trillion (US$ 500

billion) in 2004 to about Rs 129.57 trillion (US$ 2 trillion) by 2016.

Simultaneously, the per capita income also nearly trebled during these

12 years. India’s trade and external sector had a significant impact on

the GDP growth as well as expansion in per capita income.

Recently, India overtook Italy, Germany and Bangladesh to emerge as

the world's second largest textile exporter, as per the data released by

Apparel Export Promotion Council (AEPC). According to The Cotton

Textiles Export Promotion Council (Texprocil), India’s textile and

clothing exports stood at US$ 43.2 billion in 2016 as compared to US$

41.4 billion in 2015, growing by 4.35 per cent over the previous year.

According to Ms Nirmala Sitharaman, Minister of State (Independent

Charge), Ministry of Commerce and Industry, the Government of India

is keen to grow exports and provide more jobs for the young, talented,

well-educated and even semi-skilled and unskilled workforce of India.

Capital Inflows

According to data released by the Reserve Bank of India (RBI), India's

foreign exchange reserves were US$ 354.40 billion in the week up to

March 11, 2016, an increase of US$ 2.54 billion over the past week.

During April 2000–December2015, India received total foreign

investment (including equity inflows, re-invested earnings and other

capital) worth US$ 408.68 billion. The country was one of the top

destinations for FDI inflows from Asian countries, with Mauritius

contributing 33.7 per cent, Singapore 15.53 per cent and the UK

contributing 8.17 per cent of the total foreign inflows.

Foreign Institutional Investors (FIIs)

FIIs net investments in Indian equities and debt touched record high in

last financial year (2014-15), on the back of factors such as

FOREX reserves were

USD 354 billion

Towards the end of the

financial year in March

the FOREX went up

2.54 billion

India one of the top

destinations for FDI

from Asian countries

expectations of recovering economy, falling interest rates and

improving earnings outlook.

FIIs invested net US$ 43.5 billion in FY 2014-15 which was their

highest investment in any fiscal year so far. Of the total investment,

US$ 26.3 billion was invested in debt while the rest US$ 17.2 billion

was invested in equities.

External Sector

India has expressed interest in signing a preferential trade agreement

with Iran once international sanctions on the Persian Gulf nation are

lifted which would make it India's first trade agreement with a country

in West Asia.

The Government of India plans to build five new railway links with

Nepal, which will boost India's economic links with its neighbouring

country and promote growth, employment and prosperity in the region.

The Union Cabinet has approved a proposal to provide US$ 150

million credit from Export Import Bank of India (EXIM Bank) for the

development of Chabahar Port in Iran.

India and China plan to undertake a joint study on the impact of

regional trade agreements, to be conducted by India’s NITI Aayog and

China's Development Research Centre (DRC).

India and South Africa are considering prospect of setting up a joint

venture (JV) for mining and owning coal blocks in South Africa.

India and the United Arab Emirates (UAE) will set up a joint working

group to forge stronger linkages in the hydrocarbon, chemicals and

fertiliser sectors.

India is looking to develop the Chabahar port project in Iran by signing

an international transit corridor agreement with Iran and Afghanistan.

This project will have economic benefits as well as strategic as Pakistan

is allowing China to build a port in Gwadar which can potentially block

Indian trade routes.

India and Belarus set a trade target of US$ 1 billion by 2018 during the

Seventh Session of the India-Belarus Intergovernmental Commission

on Trade, Economic, Scientific, Technological and Cultural

Cooperation.

Arab-India Economic Forum (AIEF), to be held in November 2015,

would help open up new opportunities for trade and commerce between

India and the Middle East.

The US has restored its program for concessional duty treatment to

Indian products, called ‘Generalised System of Preferences’, till 2017.

India and Japan are expected to sign a pact of cooperation in the field of

intellectual property. The pact will aim to enhance efforts to support

innovation in both the countries and will be renewed automatically

every four years.

According to Mr Andrew Robb, Australia's Trade and Investment

Minister, Australia's top trade priority is to conclude the

Modi is setting up trade

links with the rest of the

world so that India can

grow

India is also trying very

hard to get a seat on the

NSG (Nuclear

Suppliers Group) so

that it can gain easier

access to fissile

material

Comprehensive Economic Cooperation Agreement (CECA) with India

by 2015 which has major focus on services and investment.

At the fourth session of the bilateral Joint commission on Economic

cooperation held in Warsaw, India and Poland have set an ambitious

target to increase bilateral trade from US$ 2.3 billion in 2014 to US$ 5

billion by 2018. India was praised by several members of the World

Trade Organisation (WTO) for following liberal and open

macroeconomic policies while increasing its global presence at the

same time.

During the visit of Mr Vladimir Putin, President of Russia, to India, the

two countries signed several agreements, in areas spanning civil nuclear

cooperation, defence and energy.

Foreign Trade Policy

All export and import-related activities are governed by the Foreign

Trade Policy (FTP), which is aimed at enhancing the country's

exports and use trade expansion as an effective instrument of

economic growth and employment generation.

The Department of Commerce has announced increased support for

export of various products and included some additional items

under the Merchandise Exports from India Scheme (MEIS) in order

to help exporters to overcome the challenges faced by them.

The Central Board of Excise and Customs (CBEC) has developed

an 'integrated declaration' process leading to the creation of a single

window which will provide the importers and exporters a single

point interface for customs clearance of import and export goods.

As part of the FTP strategy of market expansion, India has signed a

Comprehensive Economic Partnership Agreement with South

Korea which will provide enhanced market access to Indian

exports. These trade agreements are in line with India’s Look East

Policy. To upgrade export sector infrastructure, ‘Towns of Export

Excellence’ and units located therein will be granted additional

focused support and incentives.

The Reserve Bank of India (RBI) has simplified the rules for credit

to exporters, through which they can now get long-term advance

from banks for up to 10 years to service their contracts. This

measure will help exporters get into long-term contracts while

aiding the overall export performance.

The Government of India is expected to announce an interest

subsidy scheme for exporters in order to boost exports and explore

new markets.

Road Ahead

India is presently known as one of the most important players in

the global economic landscape. Its trade policies, government

reforms and inherent economic strengths have attributed to its

RBI has simplified the

rules for credit to

exporters

India has signed CEAF

agreement with South

Korea giving India

greater access to their

markets

Interest subsidy scheme

for exporters on the

cards

India is expected to

cross USD 350 billion

worth of exports this

year

Government signing

important deals with

China, Australia and

Japan

standing as one of the most sought after destinations for foreign

investments in the world. Also, technological and infrastructural

developments being carried out throughout the country augur

well for the trade and economic sector in the years to come.

Boosted by the forthcoming FTP, India's exports are expected to

cross the US$ 350 billion mark in the year 2016 and reach US$

750 billion by 2018-2019 according to Federation of India

Export Organisation (FIEO). Also, with the Government of

India striking important deals with the governments of Japan,

Australia and China, the external sector is increasing its

contribution to the economic development of the country and

growth in the global markets. Moreover, by implementing the

FTP 2014-19, by 2020, India's share in world trade is expected

to double from the present level of three per cent.

Balance of Trade

Source: http://ieconomics.com/balance-of-trade-india

The trade deficit in India declined 25 percent year-on-year to USD 8.12 billion

in June of 2016. Exports rose 1.27 percent to USD 22.5 million, the first gain

in 19 months: non-petroleum sales which accounted for 88.6 percent of total

exports increased 3 percent. Among export partners, shipments rose for the

European Union (4.3 percent) but fell for the United States (-7.4 percent),

Japan (-2.2 percent) and China (-1.8 percent). Imports slumped 7.3 percent

over a year earlier to USD 30.7 billion, marking the 19th consecutive month of

declines: oil purchases fell 16.4 percent and non-oil went down 4.1 percent.

However, it is the lowest drop in imports in four months. On a monthly basis,

the country’s trade gap widened for the second month, reaching the highest so

far this year. Balance of Trade in India averaged -2126.93 USD Million from

1957 until 2016, reaching an all time high of 258.90 USD Million in March of

1977 and a record low of -20210.90 USD Million in October of 2012. Balance

of Trade in India is reported by the Ministry of Commerce and Industry, India.

-18

-16

-14

-12

-10

-8

-6

-4

-2

0

JU

L 1

4

AU

G 1

4

SE

P 1

4

OC

T 1

4

NO

V 1

4

DE

C 1

4

JA

N 1

5

FE

B 1

5

MA

R 1

5

AP

R 1

5

MA

Y 1

5

JU

N 1

5

JU

L 1

5

AU

G 1

5

SE

P 1

5

OC

T 1

5

NO

V 1

5

DE

C 1

5

JA

N 1

6

FE

B 1

6

MA

R 1

6

AP

R 1

6

MA

Y 1

6

JU

N 1

6

F i g .3 4 : B a l a n c e o f T r a d e ( U S D M i l l i on s)

India’s trade deficit

fell 25% YoY to

USD 8.12 billion

http://ieconomics.com/balance-of-trade-india

Source: http://ieconomics.com/balance-of-trade-india

Table 6: Statistics

India Trade Last Previous Highest Lowest Unit

Balance of Trade

-8120 -6270 258.9 -20210.9 USD Million

Exports 22600 22200 30541 59 USD Million

Imports 30700 28400 45281 117 USD Million

Current

Account

-318 -6120 7360 -31857 USD

Million

Current Account to

GDP

-1.25 -1.31 1.5 -4.7 percent

External Debt

486000 481000 486000 96392 USD Million

Terms of

Trade

59.7 60.2 100 59.7 Index

Points

Foreign Direct

Investment

1547 2090 5670 -60 USD Million

Remittances 8472 8400 12293 5999 USD Million

Crude Oil Production

758 757 813 526 Bb/d/1k

Source: http://ieconomics.com

0

5

10

15

20

25

30

35

40

45

50

Jul 1

4

Aug

14

Sep

14

Oct

14

Nov

14

Dec

14

Jan

15

Feb

15

Mar

15

Apr

15

May

15

Jun

15

Jul 1

5

Au

g 15

Sep

15

Oct

15

Nov

15

Dec

15

Jan

16

Feb

16

Mar

16

Ap

r 16

May

16

Jun

16

Fig.35: Imports vs Exports (USD 1000 Million)

Imports Exports

The graph shows a

closing gap

between imports

and exports

Hence low CAD

Can also show that

the manufacturing

sector is up and we

are relying less on

imports

Can also be

because Oil prices

are low

http://ieconomics.com/balance-of-trade-india

http://ieconomics.com/

PUBLIC SECTOR ENTERPRISES

INTRODUCTION

A state-owned enterprise in India is called a public sector undertaking (PSU) or

a public sector enterprise. These companies are owned by the

union government of India, or one of the many state or territorial governments,

or both. The company stock needs to be majority-owned by the government to

be a PSU. PSUs may be classified as Central Public Sector Enterprises

(CPSEs), public sector banks (PSBs) or State Level Public Enterprises

(SLPEs). CPSEs are administered by the Ministry of Heavy Industries and

Public Enterprises. The PSUs in India are divided into the following

categories:

As on 30 September 2015 there are 7 Maharatnas, 17 Navratnas and 73

Miniratnas. There are nearly 300 CPSEs in total. The list of Maharatnas:

Bharat Heavy Electricals (BHEL)

Coal India

GAIL

Indian Oil Corporation

NTPC Limited

Oil and Natural Gas Corporation (ONGC)

Steel Authority of India (SAIL)

The financial investment stood at 9, 92,971 Cr as on 2014. The gross turnover

of Central PSUs is around 25 per cent of the India's GDP. These units employ

nearly 1.5 million people and contribute to around five per cent of the total

employment in the organized sector. But the expansion also brought several

Maharatna

•Eligibility: Three years with an average annual net profit of over Rs. 2500 crore

•Investment: Rs. 1,000 crore - Rs. 5,000 crore

Navratna

•Eligibility: A score of 60 (out of 100), based on six parameters which include net profit, net worth, total manpower cost, total cost of production, cost of services, PBDIT (Profit Before Depreciat ion, Interest and Taxes), capital employed, etc.

•Investment: up to Rs. 1,000 crore

Miniratna Category I

•Eligibility: Have made profits continuously for the last three years or earned a net profit of Rs. 30 crore or more in one of the three years

•Investment: up to Rs. 500 crore

Miniratna Category II

•Eligibility: Have made pro fits continuously for the last three years and should have a positive net worth.

•Investment: up to Rs. 300 crore

Introduction

A state-owned

enterprise in India is

called a public sector

undertaking (PSU).

PSUs may be classified

as Central Public Sector

Enterprises (CPSEs),

public sector banks

(PSBs) or State Level

Public Enterprises

(SLPEs).

There are 7 Maharatnas,

17 Navratnas and 73

Miniratnas. There are

nearly 300 CPSEs in

total.

The gross turnover of

Central PSUs is around

25 per cent of the

India's GDP.

These units employ

nearly 1.5 million

people and contribute in

generating around five

per cent of the total

employment in the

organized sector.

https://en.wikipedia.org/wiki/State-owned_enterprise

https://en.wikipedia.org/wiki/Government_of_India

https://en.wikipedia.org/wiki/States_and_territories_of_India

https://en.wikipedia.org/wiki/Stock

https://en.wikipedia.org/wiki/Ministry_of_Heavy_Industries_and_Public_Enterprises_(India)

https://en.wikipedia.org/wiki/Ministry_of_Heavy_Industries_and_Public_Enterprises_(India)

https://en.wikipedia.org/wiki/Bharat_Heavy_Electricals

https://en.wikipedia.org/wiki/Coal_India

https://en.wikipedia.org/wiki/GAIL

https://en.wikipedia.org/wiki/Indian_Oil_Corporation

https://en.wikipedia.org/wiki/NTPC_Limited

https://en.wikipedia.org/wiki/Oil_and_Natural_Gas_Corporation

https://en.wikipedia.org/wiki/Steel_Authority_of_India

challenges. After the liberalization in 1991, the government opened sectors

reserved for PSUs leading to increased competition from large MNCs.

Bharat Heavy Electricals (BHEL)

Overview: Bharat Heavy Electricals Limited (BHEL) owned by the

Government of India, is a power plant equipment manufacturer and operates as

an engineering and manufacturing company based in New Delhi, India.

Established in 1964, the company has been earning profits continuously since

1971-72 and paying dividends uninterruptedly since 1976-77.

BHEL is engaged in the design, engineering, manufacturing, construction,

testing, commissioning and servicing of a wide range of products, systems and

services for the core sectors of the economy, viz. power, transmission,

industry, transportation, renewable energy, oil & gas and defence. It has a

network of 17 manufacturing units, 2 repair units, 4 regional offices, 8 service

centres, 8 overseas offices, 15 regional centres, 7 joint ventures, and

infrastructure allowing it to execute more than 150 projects at sites across India

and abroad. The company has established the capability to deliver 20,000 MW

p.a. of power equipment to address the growing demand for power generation

equipment.

Source: BHEL, Wikipedia

Financial Analysis:

Despite a sharp contraction in the market and fierce competitive environment,

BHEL has retained its market leadership position during 2015-16 with 74%

market share in the Power Sector. An improved focus on project execution

enabled BHEL record its highest ever commissioning/synchronization of

15059 MW of power plants in domestic and international markets in 2015-16,

marking a 59% increase over 2014-15. With the all-time high commissioning

63.06

15.95

10.52

6.80

2.33

13.40 Central Government of Indiaand State governments

Foreign InstitutionalInvestors (FII)

Insurance companies

Banks, Financial Institutionsand Mutual Funds

Individual shareholders

Founded: 1964

Headquarters: New

Delhi

Key People: Atul Sobti

(Chairman and MD)

Revenue:Rs 31741.7 Cr

Employees: 47,525 (As

on March 2014)

https://en.wikipedia.org/wiki/Bharat_Heavy_Electricals

https://en.wikipedia.org/wiki/Engineering

https://en.wikipedia.org/wiki/Manufacturing

https://en.wikipedia.org/wiki/New_Delhi,_India

of 15000 MW in a single year FY2015-16, BHEL has exceeded 170 GW

installed base of power generating equipments.

Amidst the arduous external economic and business environment, BHEL

continued to face challenges in 2014-15 but, policy initiatives taken by the

Government such as allocation of coal blocks through e-auction, rationalization

of fuel prices, expeditious clearance of projects and boost to Defence &

Transportation sector etc. are likely to improve business environment and

provide momentum to existing and upcoming projects.

Source: BHEL, Financial Analysis, Money Control

Future Initiatives:

With the revival in business sentiments, stream of opportunities are expected in

the traditional as well as new areas of business, which shall enable BHEL to

regain the growth trajectory.

Accelerating Project execution is one of the key focus areas of BHEL. Along

with that focus on cost optimization through increased indigenisation of

supercritical technologies, higher value additions, increased vendor base and

design/layout optimization efforts aided the company in enhancing

competitiveness.

Recently BHEL has signed a memorandum of understanding (MoU) with

NHPC for undertaking of hydropower projects in overseas markets. According

to the MoU, NHPC will handle the civil engineering work of the projects,

while BHEL will look after the electro mechanical package.

State-run BHEL has commissioned another 250 MW unit based on eco-

friendly Circulating Fluidized Bed Combustion (CFBC) technology, using low

quality coal (lignite) as the primary fuel. The unit has been commissioned at

Bhavnagar Energy Company (BECL) 2x250 MW thermal power project,

located in Gujarat.

COAL INDIA

Overview: Coal India Limited (CIL) is an Indian state-controlled coal mining

company headquartered in Kolkata, West Bengal, India. It is the largest coal

43394.58

50067.64 49430.15

39667.46

31741.47

6011.2 7039.96 6614.73 3460.78 1419.29

0

10000

20000

30000

40000

50000

60000

Mar '11 Mar '12 Mar '13 Mar '14 Mar '15

Fig.37: Financial Performance of BHEL (Rs Crore)

Revenue

Profit

https://en.wikipedia.org/wiki/Government-owned_corporation

https://en.wikipedia.org/wiki/Kolkata,_West_Bengal

producer company in the world and contributes around 82% of the coal

production in India. It produced 494.24 Million tonnes of coal during FY

2014–15 and earned revenue of INR 954.35 billion from sale of coal in the

same financial year.

Coal India operates through 81 mining areas in eight states in India. It has 430

coal mines out of which 175 are open cast, 227 are underground and 28 are

mixed mines. Production from open cast mines during 2014-15 was 92.91% of

total production of 494.24 MT. Underground mines contributed to 7.09% of

production.

Source: Coal India, Wikipedia

Financial Analysis:

During 2014-15 the coal production was 494.24 Million Tonnes. Coal India

stepped into a higher growth trajectory where the increase in absolute terms,

FY ending 2015, was nearly 32 Million Tonnes, the highest ever incremental

increase in a single financial year since the inception of the company.

Source: Coal India, Financial Analysis, Money Control

The revenues in 2015 declined as demand from power producers, the

company’s biggest customers, has lagged output, leading to rising stockpiles at

plants and the company’s own mines. Also the country has exported the

equivalent of 0.2% of total production.

79.65%

9.04%

1.28% 2.86%

Fig.38: Shareholders of Coal India

Government of India


Domestic Institutions

Non-Institutions

5481.96

9517.57

11440.26

16404.1

14530.52

4696.1

8065.1

9794.32

15008.54

13383.39

0

2000

4000

6000

8000

10000

12000

14000

16000

18000


Fig.39: Financial Performance of Coal India (Rs Crore)

Revenue

Profit

Founded: 1975

Headquarters: Kolkata

Key People: Sutirtha

Bhattacharya

(Chairman and MD)

Revenue:Rs 14530.5 Cr

Employees: 333097 (As

on April 2015)

https://en.wikipedia.org/wiki/Tonne

Future Initiatives:

Coal India is now set to focus on improvement in areas like coal washing,

universalization of e-procurement, geo fencing of mine areas and green

initiatives. India is set to export coal for the first time, shipping 2-3 million

tonnes of the fuel to neighbouring Bangladesh. Coal India Ltd raised output by

8.5% in 2015-16 to 536 million tonnes, which helped bring down imports by

34 million tonnes. The coal stock available with power generation companies

also rose to the equivalent of 27 days’ requirement, up from 18 days a year

ago.

Though coal is in surplus, India is heavily import-dependent on the other two

primary sources of energy—crude oil and natural gas. The government wants

to reduce this dependence by 10 percentage points to 67% by 2022, by

encouraging domestic production of oil and gas through a liberal policy regime

and shifting consumption to more renewable and nuclear energy.

GAIL India

Overview: GAIL (India) Limited is the largest state-owned natural gas

processing and distribution company in India, It is headquartered in New

Delhi. It has following business segments: Natural Gas, Liquid

Hydrocarbon, Liquefied petroleum gas Transmission, Petrochemical, City Gas

Distribution, Exploration and Production, GAILTEL and Electricity

Generation.

GAIL owns the country's largest pipeline network, the cross-country 2300 km

Hazira-Vijaipur-Jagdishpur pipeline with a capacity to handle 33.4 MMSCMD

gas. Today the company owns and operates more than 11000 km long cross

country natural Gas Pipeline in India having presence in 22 states in the

country. It also owns and operates more than 2000 km long LPG pipelines in

the country and operates the world's longest exclusive LPG Pipeline in the

country from Jamnagar in Gujarat to Loni in Uttar Pradesh.

Financial Analysis:

Source: GAIL, Financial Analysis, Money Control

32977.22

40829.83

48287.2

58406.45 57602.84

3561.13 3653.84 4022.2 4375.27 3039.17

0

10000

20000

30000

40000

50000

60000

70000


Fig.40: Financial Performance of GAIL (Rs Crore)

Revenue

Profit

Founded: 1984

Headquarters: New

Delhi

Key People: Shri B.C.

Tripathi (Chairman and

MD)

Revenue:Rs57602.84Cr

Employees: 3994 (As

on 2013)

https://en.wikipedia.org/wiki/New_Delhi


https://en.wikipedia.org/wiki/Liquefied_petroleum_gas

https://en.wikipedia.org/wiki/Petrochemical

https://en.wikipedia.org/wiki/Electricity_Generation

https://en.wikipedia.org/wiki/Electricity_Generation

Despite operating in a harsh environment led by a steep fall in underlying

crude oil prices by nearly 50% from S109/bbl. and with a year on year decline

in domestic gas availability by 10% plus, GAIL managed a ROCE of 11%

which is comparable to many of its global peers during the period. Rapid slide

in crude oil spot prices from October'14 onwards with a drag in demand

growth, inventory write-offs, and crude inventory surpluses along with OPEC's

resistance to cut-back production has all led to global economic scenario being

jittery and volatile. Improvements in consumption growth and cranking up of

the investment cycle can be expected to be gradual if volatility persists.

Future Initiatives:

Company has commenced execution of the 2050 kilometre Jagdishpur-Haldia

Pipeline project. During the first phase of its execution, the fertilizer units

under revival at Gorakhpur and Barauni in Eastern India would be connected.

Additionally, pipeline connectivity to other industrial units and upcoming city

gas projects at Varanasi, Allahabad, Patna etc., would be hooked up en route to

maximize usage of Natural Gas. Further, Gol has entrusted GAIL to model the

500 kilometre Ranchi-Talcher gas pipeline project under Public-Private

Partnership mode as a pilot case before spreading such Natural Gas based

infrastructure development projects in other parts of the country.

Indian Oil Corporation (IOCL)

Overview: Indian Oil Corporation (Indian Oil) is India’s Largest Commercial

Enterprise. Standing true to its corporate vision of being ‘The Energy of

India’, Indian Oil has been successfully meeting the energy demands of India

for more than five decades. Indian Oil's business interests overlap the entire

hydrocarbon value-chain – from refining, pipeline transportation and

marketing of petroleum products to exploration & production of crude oil and

from marketing of natural gas to petrochemicals.

Source: IOCL, Wikipedia

Financial Analysis:

58.57%

40.13%

1.50%

1.32% 0.13%

Fig.41: Shareholders of IOCL

Government of India

Private single body

Insurance Companies

Others


Founded: 1959

Headquarters: New

Delhi

Key People: Mr B.

Ashok (Chairman)

Revenue: Rs 435122.2

Cr


on 2016)

Source: IOCL, Financial Analysis, Money Control

Indian Oil's own outgo on crude oil imports during the year 2014-15 came

down by over Rs. 47,000 crore compared to 2013-14 even though the import

quantum went up by 1 million tonnes. The company’s borrowings, interest cost

and gross under-recoveries have also come down significantly.

However, with product prices following a similar trend, fall in prices also had a

negative impact on the company's financials in the form of huge inventory

losses. For the full year 2014-15, IOCL suffered inventory losses to the tune of

Rs. 15,600 crore on crude oil, which works out to a loss of US$ 6.46 a barrel in

gross refining margins.

Future Initiatives:

Indian Oil's business cycle begins with procurement of crude oil, which

accounts for nearly 92 per cent of our overall costs. In the wake of the recent

global developments, crude oil business is no longer dictated by suppliers

alone; it is gradually evolving into a buyers' market. As one of the major

importers, it is, taking a number of steps to reduce the cost of crude-sourcing.

The crude oil basket is being expanded to include high-value grades and new

suppliers -- from Latin American countries, for instance. Higher volumes of

cheaper, heavy crude oil are being processed at the refineries to bring down

costs. New practices are also being introduced in crude oil procurement to get

better competitive offers.

Next comes refining, which accounts for the bulk of the investments. Indian

Oil's refining capacity (including that of its subsidiary CPCL) will cross 80

million tonnes per annum capacity once its 11th refinery at Paradip on the east

coast goes online. Phase-wise commissioning of the mega-project commenced

in March, 2015, and shall be completed in the current fiscal. This would

greatly enhance the Company's competitiveness and operational flexibility in

the eastern and southern States. Along with that IOCL is implementing in-

house ideas to enhance profitability and margins, and improve systems and

procedures in our refineries through a structured programme titled Samriddhi.

NTPC (National Thermal Power Corporation)

Overview: NTPC Limited is engaged in the business of generation of

electricity and allied activities. The headquarters of the company is situated

336499.8 396819.99

455831.23 479527.18 435122.2

7445.48 3954.62 5005.17 7019.09 5273.03 0

100000

200000

300000

400000

500000

600000


Revenue

Profit

https://en.wikipedia.org/wiki/Electricity_generation

https://en.wikipedia.org/wiki/Electricity_generation

at New Delhi. NTPC's core business is generation and sale of electricity to

state-owned power distribution companies and State Electricity Boards in

India. The company also undertakes consultancy contracts that involve

engineering, project management, construction management and operations of

the power plants.

The company has also ventured into oil and gas exploration and coal

mining activities. It has an electric power generating capacity of 45,548

MW. Although the company has approx. 16% of the total national capacity it

contributes to over 25% of total power generation due to its focus on operating

its power plants at higher efficiency levels. NTPC operates from 55 locations

in India, one location in Sri Lanka and 2 locations in Bangladesh.

Source: NTPC, Wikipedia

Financial Analysis:

Source: NTPC, Financial Analysis, Money Control

The company reported a standalone net profit of Rs 10,290.86 Cr for the full

fiscal as compared to Rs 10,974.74 Cr in 2013-14.

NTPC’s results are in line with the previous results, they are underpinned by its

relatively predictable cash flows from its regulated power business.

74.96

9.19

11.07

4.78

Government of India

Foreign InstitutionalInvestors

Financial Institutions/Banks

Others

57463.61

64946.24 70534.66

74770.56 75564.27

9102.59 9223.73 12619.39 10974.74 10290.86

0

10000

20000

30000

40000

50000

60000

70000

80000


Revenue

Net Profit

Founded: 1975

Headquarters: New

Delhi

Key People: Gurdeep

Singh (Chairman and

MD)


Cr


on April 2015)


https://en.wikipedia.org/wiki/Gas_exploration

https://en.wikipedia.org/wiki/Coal_mining

https://en.wikipedia.org/wiki/Coal_mining

https://en.wikipedia.org/wiki/Orders_of_magnitude_(power)#gigawatt_.28109_watts.29

https://en.wikipedia.org/wiki/Orders_of_magnitude_(power)#gigawatt_.28109_watts.29

Future Initiatives:

NTPC is aggressively pursuing thermal and solar power addition. The thermal

strategy is domestic coal-driven. Projects of 24,000 Mw, with an investment of

Rs 1.5 lakh crore, are under various stages of construction. The company hopes

to commission projects of 4,500 Mw capacities during 2016-17. NTPC is also

in talks with states to take over their old thermal units for revival, exploring a

joint venture route after assessing the financial viability. On solar energy, its

target is 3,000 Mw capacities by 2019, up from 360 Mw now. NTPC hopes

nearly a fourth of its coal will be procured from its own mines in the next five

to 10 years. It has not given any new orders for imports.

Oil and Natural Gas Corporation Limited (ONGC)

Overview: Oil and Natural Gas Corporation Limited (ONGC) is an

oil and gas company headquartered in Dehradun under the administrative

control of the Ministry of Petroleum and Natural Gas. It is India's largest oil

and gas exploration and production company.

It produces around 69% of India's crude oil (equivalent to around 30% of the

country's total demand) and around 62% of its natural gas.

ONGCs operations include conventional exploration and production, refining

and development of alternate energy. The company's domestic operations are

structured around 11 assets, 7 basins (exploratory properties), 2 plants (at

Hazira and Uran) and services (for necessary inputs and support such as

drilling, geo-physical, logging and well services). It owns and operates over

11,000 kilometres of pipelines in the country.

Its international subsidiary ONGC Videsh currently has projects in 17

countries. ONGC has discovered 6 of the 7 commercially producing Indian

Basins, in the last 50 years, adding over 7.1 billion tonnes of In-place Oil &

Gas volume of hydrocarbons in Indian basins.

Source: ONGC, Wikipedia

68.94%

10.09%

9.69%

6.27% 1.83% 2.89%

Government of India

Government Companies

Banks, Financial Inst. &Insurance companies


Private Corporate Bodies

Founded: 1956

Headquarters:

Dehradun

Key People: Dinesh

Kumar Sarraf

(Chairman and MD)


Cr


on Mar 2013)

http://www.business-standard.com/search?type=news&q=Solar+Power

http://www.business-standard.com/search?type=news&q=Ntpc

https://en.wikipedia.org/wiki/Petroleum

https://en.wikipedia.org/wiki/Natural_gas

https://en.wikipedia.org/wiki/Company

https://en.wikipedia.org/wiki/Headquarters

https://en.wikipedia.org/wiki/Dehradun

https://en.wikipedia.org/wiki/Ministry_of_Petroleum_and_Natural_Gas

https://en.wikipedia.org/wiki/Hydrocarbon_exploration

https://en.wikipedia.org/wiki/Hydrocarbon_exploration

https://en.wikipedia.org/wiki/Petroleum

https://en.wikipedia.org/wiki/Natural_gas

https://en.wikipedia.org/wiki/Kilometre

https://en.wikipedia.org/wiki/Tonne

Financial Analysis

Source: ONGC, Financial Analysis, Money Control

ONGC has always focused on organic growth through steady and continuous

enhancement of their already substantial reserve position. FY''2014-15 was a

strong step in that direction. They made 22 oil and gas discoveries in the last

financial year.

However, the biggest positive from last year comes from the arena of

production as we reversed the trend of declining indigenous crude oil output.

The standalone domestic crude output was 22.26 MMT compared to 22.25 in

the previous fiscal (FY''14). The increase is marginal, yet it shows the rich

possibilities of a focused operational approach and effective deployment of

technology in a portfolio that is predominantly mature.

Future Initiatives:

The US Geological Survey has confirmed the discovery of a fat gas reserve in

the form of hydrates - otherwise known as 'fire ice' - off the Andhra coast by a

multi-party expeditionary team led by flagship explorer ONGC.

The sources put the initial reserves potential of the hydrates at 134 tcf (trillion

cubic feet). Even if ONGC manages to pump out a tenth of the reserves, the

discovery could yield nearly 13 tcf of gas against RIL's 9 tcf.

But the cost of production is an issue, especially in a depressed market.

Technology for producing gas from hydrates is still in pilot stage - though

considerable success in Japan, US and Canada provides hope. Besides, the

discovery spans blocks already held by other companies for exploration of

conventional oil and gas. This issue would have to be sorted out before

commercial production can begin.

Irrespective of the current depressed oil and gas price scenario, which makes

fresh investments unviable, the hydrates discovery would put India back in

reckoning in terms of prospectively.

Steel Authority of India Limited (SAIL)

71758.68

84199.96 88465.09 90499.19 88404.96

18924 25122.92 20925.7 22094.81 17732.95

0

20000

40000

60000

80000

100000


Revenue

Profit

http://economictimes.indiatimes.com/oil-and-natural-gas-corporation-ltd/stocks/companyid-11599.cms

Overview: Steel Authority of India Limited (SAIL) is one of the largest state-

owned steel making company based in New Delhi, India and one of the top

steel makers in world with an annual turnover of ₹43,337

crore (US$6.4 billion) (FY 2015-16). The government owns 75% stake in the

company.

Incorporated on 24 January 1973, SAIL has 93,352 employees (as of 31-Mar-

2015). With an annual production of 13.9 million metric tons, SAIL is the 24th

largest steel producer in the world. The Hot Metal capacity of the Company

will further increase and is expected to reach a level of 23.5 million tonnes per

annum by the end of the Financial Year 2015-16. P.K Singh is the current

chairman of SAIL.

SAIL operates and owns 5 integrated steel plants

at Rourkela, Bhilai, Durgapur, Bokaro and Burnpur and 3 special steel plants

at Salem, Durgapur and Bhadravathi.

Financial Analysis

Source: : SAIL, Financial Analysis, Money Control

Steel Authority of India (SAIL) have shown a 20% decline in profits after tax

(PAT) - which stood at Rs 2,092.68 crore for the financial year 2014-15 as

compared to Rs 2,616.48 crore for 2013-14.

At a time when the market conditions are challenging, SAIL has maintained its

output and braved the headwinds by improved production, better techno-

economic parameters and strategic policy initiatives.

SAIL has completed its modernization and expansion programme in Rourkela

Steel Plant and IISCO Steel Plant started their integrated operations. During

FY15, projects worth around Rs 10,000 crores were operationalised, which

includes 4,160 cubic meters Blast Furnace Kalyani at IISCO steel plant.

Future Initiatives:

Steel Authority of India has set its sights on becoming the least cost producer

of steel. The company has managed to lower its cost of production by nearly

44793.24 47964.77

45562.7 47579.82 46731.56

4904.74 3681.89 2170.35 2616.48 2092.68

0

10000

20000

30000

40000

50000

60000


Revenue

Profit

Founded: 1954

Headquarters: New

Delhi

Key People: P.K. Singh

(Chairman)


Cr


on Mar 2015)

https://en.wikipedia.org/wiki/New_Delhi,_India

https://en.wikipedia.org/wiki/Fiscal_year

https://en.wikipedia.org/wiki/Rourkela

https://en.wikipedia.org/wiki/Bhilai

https://en.wikipedia.org/wiki/Durgapur

https://en.wikipedia.org/wiki/Bokaro_Steel_City

https://en.wikipedia.org/wiki/Burnpur

https://en.wikipedia.org/wiki/Salem,_Tamil_Nadu

https://en.wikipedia.org/wiki/Durgapur

https://en.wikipedia.org/wiki/Bhadravathi,_Karnataka

http://www.business-standard.com/search?type=news&q=Sail

Rs 2,000 per tonne. Following its Rs 62,000 crore modernizations and

expansion programme, the company has targeted a production of 17 MT this

year which is tipped to go up to 20 MT by 2017-18.

Despite an indifferent steel market, SAIL is betting on improved demand from

rural sector, a pickup in infrastructure, automotive, capital goods and

construction sectors and a big push in steel demand from the North East to sell

higher volumes during the year.

On its part, SAIL aims to step up research and development activity in a bid to

develop high end products that will largely eliminate need for steel imports in

the near future. It would like to develop some 15-20 new products every year

and commercialise them. SAIL has already been supplying the Defence and

Space sectors by developing and producing high value, niche steels used in

aircraft carriers and for the country's moon mission or 'Chandrayaan' project.

MAJOR TRADE UNIONS

BRICS:

Overview: BRICS is the acronym for an association of five major emerging

national economies: Brazil, Russia, India, China and South Africa. The

BRICS members are all leading developing or newly industrialized country

countries, but they are distinguished by their large, sometimes fast-growing

economies and significant influence on regional affairs; all five are G-20

members.

As of 2015, the five BRICS countries represent over 3 billion people, or 42%

of the world population. The five nations have a combined nominal GDP of

US$16.039 trillion, equivalent to approximately 20% of the gross world

product, and an estimated US$4 trillion in combined foreign reserves. Bilateral

relations among BRICS nations have mainly been conducted on the basis of

non-interference, equality, and mutual benefit.

Objective: The following are the objective of BRICS nations:

The BRICS group also acts as a bridge between developed and

developing countries. For example, in the WTO, the BRICS countries

are trying to promote a fair order regarding agricultural policies.

The BRICS group will also play an increasingly important role in

assisting developing countries in gaining an advantage in trade and

climate change negotiations.

The BRICS also formed an information-sharing and exchange platform

that expands beyond economic cooperation to also involve educational,

cultural, and environmental engagement.

They have a shared interest in challenging the current governance of

Western financial institutions like the International Monetary Fund and

the World Bank for that they have announced the establishment of the

bank

BRICS

Members: Brazil,

Russia, India, China,

South Africa.

The BRICS represent

over 3 billion people

and 42% of the world

population.

They represent 20% of

the world GDP.

Acts as a bridge

between developed and

developing countries

and promotes an

exchange platform.

BRICS

7th

BRICS Summit was

held in Russia. The

agenda was related to

the New Development

Bank and BRICS

Contingent Reserve

Arrangement.

New Development

Bank supports public

and private projects

through loans,

guarantees, equity and

other financial

institutions.

President of NDB –

K.V. Kamath.

India will benefit from

the NDB by getting

loans for funding

climate projects and

education.

https://en.wikipedia.org/wiki/Acronym

https://en.wikipedia.org/wiki/Emerging_market

https://en.wikipedia.org/wiki/Emerging_market

https://en.wikipedia.org/wiki/Newly_industrialized_country

https://en.wikipedia.org/wiki/G-20_major_economies

https://en.wikipedia.org/wiki/G-20_major_economies

https://en.wikipedia.org/wiki/Gross_domestic_product

https://en.wikipedia.org/wiki/Gross_world_product


https://en.wikipedia.org/wiki/Mutual_aid_%28organization_theory%29

Financial Framework:

The BRICS Contingent Reserve Arrangement (CRA): It is a framework

for providing protection against global liquidity pressures. This

includes currency issues where members' national currencies are being

adversely affected by global financial pressures.

BRICS payment system: At the 2015 BRICS summit in Russia,

ministers from BRICS nations, initiated consultations for a payment

system that would be an alternative to the SWIFT system. The main

benefits highlighted were backup and redundancy in case there were

disruptions to the SWIFT system.

New Development Bank: The New Development Bank (NDB),

formerly referred to as the BRICS Development Bank, is a multilateral

development bank established by the BRICS states. According to the

Agreement on the NDB, the Bank shall support public or private

projects through loans, guarantees, equity participation and

other financial instruments. Moreover, the NDB shall cooperate

with international organizations and other financial entities, and

provide technical assistance for projects to be supported by the Bank.

Latest Summit: Since 2009, the BRICS nations have met annually at formal

summits. Russia hosted the group's seventh summit in July 2015. India is going

to host the 8th BRICS conference in Goa in 2016. The 7th BRICS summit was

the annual diplomatic summit of the head of states or government of the

BRICS member states. It was held in the Russian city of Ufa in Bashkortostan

on 8–9 July 2015. The agenda of the summit was as follows. The summit

coincided with the entry into force of constituting agreements of the New

Development Bank and the BRICS Contingent Reserve Arrangement and

during the summit inaugural meetings of the NDB were held, and it was

announced it would be lending in local currency; and open up membership to

non-BRICS countries in the coming months.

India and BRICS: The slowdown in the BRICS countries can be a bit

detrimental for India. BRICS countries have significantly slowed down with

South Africa only growing 1% in 2015 similar to the 1.6% a year from 1994 to

2009, Brazil in its worst recession since the 1930s by some measures, Russia in

a recession as oil prices tailspin and sanctions weigh, and China's slowdown is

set to be a drag on global growth and is reported to be the slowest in the last 25

years.

The comparison India and other BRICS nations is not possible on two factors:

One, India's growth potential, the diversified nature of its economy and its

structure, and the democratic nature of its polity means that it has to be judged

on different parameters and merits.

Second, many of the basic issues and needs that are taken for granted in other

emerging countries are still yet to be fulfilled in India given its huge population

size and the widespread disparities and income inequality.

What benefits will India gets from BRICS-NDB?

ASEAN

Establishment: 1967

Members: 10 South

Asian countries

including Indonesia,

Malaysia, Philippines,

Singapore, Thailand,

Brunei, Cambodia,

Laos, Myanmar and

Vietnam.

Chairman – Thongloun

Sisoulith.

Objective is to

accelerate economic

development, social

progress and socio-

cultural evolution.

India is a dialogue

partner for ASEAN

since 1992.

https://en.wikipedia.org/wiki/7th_BRICS_summit

https://en.wikipedia.org/wiki/Society_for_Worldwide_Interbank_Financial_Telecommunication

https://en.wikipedia.org/wiki/Backup

https://en.wikipedia.org/wiki/Multilateral_development_bank

https://en.wikipedia.org/wiki/Multilateral_development_bank

https://en.wikipedia.org/wiki/BRICS

https://en.wikipedia.org/wiki/Sovereign_state

https://en.wikipedia.org/wiki/Bank

https://en.wikipedia.org/wiki/Loan

https://en.wikipedia.org/wiki/Financial_instrument

https://en.wikipedia.org/wiki/International_organization

https://en.wikipedia.org/wiki/7th_BRICS_summit

https://en.wikipedia.org/wiki/BRICS#Summits

https://en.wikipedia.org/wiki/Head_of_state

https://en.wikipedia.org/wiki/Government

https://en.wikipedia.org/wiki/BRICS

https://en.wikipedia.org/wiki/Sovereign_state

https://en.wikipedia.org/wiki/Russia

https://en.wikipedia.org/wiki/City

https://en.wikipedia.org/wiki/Ufa

https://en.wikipedia.org/wiki/Bashkortostan

https://en.wikipedia.org/wiki/New_Development_Bank

https://en.wikipedia.org/wiki/New_Development_Bank

https://en.wikipedia.org/wiki/BRICS_Contingent_Reserve_Arrangement

India and China both are talking a lot to grow trade among each other but

rivalry between them has shown declining figures in trade from past few years.

Together in BRICS these two countries will try to sort out their differences and

increase the business and trade activity.

With the major shift in policy World Bank has stopped funding for coal

projects in developing countries and instead they are supporting poor countries

so that they can make them dance on their tunes. India is largely dependent on

coal energy but can’t fund for it so BRICS will help India in this major sector

also.

To improve the durability of NDB bank trade among these countries should be

healthy so it will improve trade. The bank could focus on utilizing its funds on

climate projects and educate poorer countries on climate change policy. On 11

May 2015, K. V. Kamath was appointed as the President of the bank.

ASEAN

The Association of Southeast Asian Nations is a regional

organization comprising ten Southeast Asian states which promotes

intergovernmental cooperation and facilitates economic integration amongst its

members. Since its formation on August 8, 1967 by Indonesia, Malaysia,

the Philippines, Singapore, and Thailand, the organization’s membership has

expanded to include Brunei, Cambodia, Laos, Myanmar (Burma),

and Vietnam.

Objective: Its principal aims include accelerating economic growth, social

progress, and socio cultural evolution among its members, alongside the

protection of regional stability and the provision of a mechanism for member

countries to resolve differences peacefully.

India and ASEAN: ASEAN-India dialogue relations have grown rapidly from

a sectoral dialogue partnership in 1992 to a full dialogue partnership in

December 1995. ASEAN and India together form an important economic

space in the world. Besides an economic partnership, India expects to benefit

geopolitically as well from its rejuvenated affinity with ASEAN and other

regional countries.

The ASEAN–India Free Trade Area (AIFTA) is a free trade area among the

ten member states of the Association of Southeast Asian Nations (ASEAN)

and India. The free trade area came into effect on 1 January 2010. As of 2011-

12, two-way trade between India & ASEAN stood at US$76.52 billion

surpassing the US$70 billion target. Much of India's trade with ASEAN is

directed towards Singapore, Malaysia, and Thailand, with whom India holds

strong economic relations.

Country Export Import Total Trade

https://en.wikipedia.org/wiki/K._V._Kamath

https://en.wikipedia.org/wiki/Regional_organisation

https://en.wikipedia.org/wiki/Regional_organisation

https://en.wikipedia.org/wiki/Southeast_Asia

https://en.wikipedia.org/wiki/Indonesia

https://en.wikipedia.org/wiki/Malaysia

https://en.wikipedia.org/wiki/Philippines

https://en.wikipedia.org/wiki/Singapore

https://en.wikipedia.org/wiki/Thailand

https://en.wikipedia.org/wiki/Brunei

https://en.wikipedia.org/wiki/Cambodia

https://en.wikipedia.org/wiki/Laos

https://en.wikipedia.org/wiki/Myanmar

https://en.wikipedia.org/wiki/Vietnam

https://en.wikipedia.org/wiki/Economic_growth

https://en.wikipedia.org/wiki/Social_progress

https://en.wikipedia.org/wiki/Social_progress

https://en.wikipedia.org/wiki/Sociocultural_evolution

https://en.wikipedia.org/wiki/Free_trade_area

https://en.wikipedia.org/wiki/ASEAN

https://en.wikipedia.org/wiki/India

https://en.wikipedia.org/wiki/Singapore

https://en.wikipedia.org/wiki/Malaysia

https://en.wikipedia.org/wiki/Thailand

The signing of the ASEAN-India Trade in Goods Agreement paves the way for

the creation of one of the world’s largest FTAs – a market of almost 1.8 billion

people with a combined GDP of US$2.8 trillion. The ASEAN-India FTA will

see tariff liberalization of over 90 percent of products traded between the two

dynamic regions, including the products such as palm oil (crude and refined),

coffee, black tea and pepper.

Table 7: India’s Trade with ASEAN (in US dollar)

Source: Export Import Data Bank, Department of Commerce, Government of India

Geopolitically, India has raised the importance of maintaining freedom of

navigation in the South China Sea. Apart from that The India–Myanmar–

Thailand Trilateral Highway, the Kaladan Multi-modal Transit Transport

Project , and the Mekong-Ganga Cooperation are some of the projects for

cooperation in tourism, transport and communications.

MTCR

Overview: The Missile Technology Control Regime (MTCR) is a multilateral

export control regime. It is an informal and voluntary partnership among 35

countries to prevent the proliferation of missile and unmanned aerial vehicle

technology capable of carrying above 500 kg payload for more than 300 km.

Objective: The Missile Technology Control Regime (MTCR) was established

in April 1987 by the G7 countries: Canada, France, Germany, Italy, Japan,

Great Britain, and the United States of America. Since its establishment, the

MTCR has been successful in helping to slow or stop several ballistic missile

programs. According to the Arms Control Association countries like

Argentina, Egypt, and Iraq abandoned their joint Condor II ballistic missile

program. Brazil, South Africa, and Taiwan also shelved or eliminated missile

or space launch vehicle programs. Some countries, such as Poland and the

Czech Republic, destroyed their ballistic missiles, in part, to better their

chances of joining MTCR.

India and MTCR: India formally applied for membership to the group in June

2015, with active support from France and the United States, and officially

became a member on 27 June 2016 with the consensus of the 34 member

nations. Membership in this group would help India in the following ways:

India will participate in the next plenary meeting in the Republic of

Korea in October 2016. India is part of the decision-making process for

governing the global commerce of goods with implications for both

missile and space development.

Benefit to ISRO: During the cold war years, Russia denied cryogenic

technology to India. However, in a welcome change ISRO will now

have access to restricted high-end technologies for developing its

cryogenic engines in order to enhance space exploration.

2010-11 2014-

2015

2010-11 2014-

2015

2010-11 2014-

2015

ASEAN 25,627.89 31,812.58 30,607.96 44,714.77 56,235.85 76,527.35

MTCR

Members: 35 countries.

Objective is to establish

a multilateral export

control regime.

It prevents proliferation

of missile and

unmanned aerial

vehicle technology

capable of carrying

above 500 kg payload

for more than 300 km.

India became the

member in June 2015.

https://en.wikipedia.org/wiki/India%E2%80%93Myanmar%E2%80%93Thailand_Trilateral_Highway

https://en.wikipedia.org/wiki/India%E2%80%93Myanmar%E2%80%93Thailand_Trilateral_Highway

https://en.wikipedia.org/wiki/Kaladan_Multi-modal_Transit_Transport_Project

https://en.wikipedia.org/wiki/Kaladan_Multi-modal_Transit_Transport_Project

https://en.wikipedia.org/wiki/Mekong-Ganga_Cooperation

https://en.wikipedia.org/wiki/Multilateral_export_control_regime

https://en.wikipedia.org/wiki/Multilateral_export_control_regime

https://en.wikipedia.org/wiki/Nuclear_proliferation

https://en.wikipedia.org/wiki/Missile

https://en.wikipedia.org/wiki/Unmanned_aerial_vehicle

https://en.wikipedia.org/wiki/Group_of_Seven_%28G7%29

https://en.wikipedia.org/wiki/Canada

https://en.wikipedia.org/wiki/France

https://en.wikipedia.org/wiki/Germany

https://en.wikipedia.org/wiki/Italy

https://en.wikipedia.org/wiki/Japan

https://en.wikipedia.org/wiki/Great_Britain

https://en.wikipedia.org/wiki/United_States_of_America

https://en.wikipedia.org/wiki/Ballistic_missile

Sale of BrahMos: India will be able to sell the Indo-Russian supersonic

cruise missile BrahMos to Vietnam and other countries in a

development that would make India a significant arms exporter.

Procurement of Israel's Arrow II missile: In its bid to develop

indigenous Ballistic Missile System, India wanted to procure Arrow II

missile interceptor from Israel but was denied due to the MTCR

sanctions. The membership will help India in its procurement, which

will further help India defend itself against Pakistani or Chinese

ballistic missiles.

Buying surveillance drones: India will be able to buy surveillance

drones from other countries like the American Predator drones. The US

might also consider exporting UAVs, Reaper etc which have been the

key to counter-terrorism efforts in countries like Afghanistan and

Pakistan.

Boost to Make in India: Indian technology that will be developed or

made under the flagship of Make in India will see free movement out of

the country, which will contribute to the success of the programme.

Step closer to NSG: The accession to MTCR is one step closer to

India's membership to the NSG (Nuclear Suppliers Group). It also gives

India a chance to engage with other global non-proliferation players.

SAARC

Overview: The South Asian Association for Regional Cooperation (SAARC)

is regional intergovernmental organization and geopolitical union in South

Asia. Its member states include Afghanistan, Bangladesh, Bhutan, India,

Nepal, the Maldives, Pakistan and Sri Lanka. States with observer status

include Australia, China, the European Union, Iran, Japan, Mauritius,

Myanmar, South Korea and the United States.

SAARC compromises 3% of the world's area, 21% of the world's population

and 9.12% of the global economy, as of 2015.

Objective: SAARC was founded in Dhaka in 1985. Its secretariat is based in

Kathmandu. The organization promotes development of economical and

regional integration. It launched the South Asian Free Trade Area in 2006.

SAARC maintains permanent diplomatic relations at the UN as an observer

and has developed links with multilateral entities, including the EU. However,

the organization continues to face many challenges. Disputes between nuclear

rivals India and Pakistan have often clouded the union's potential and progress.

Latest Summit

The eighteenth summit of 'South Asian Association of Regional Cooperation'

(SAARC) was held in Kathmandu, Nepal during 26–27 November 2014. The

19th SAARC summit is set take place in Islamabad and Murree, Pakistan in

2016. The theme of the summit was Deeper Integration for Peace and

Prosperity, focused on enhancing connectivity between the member states for

easier transit-transport across the region. Its main highlights were:

SAARC

Establishment: 1985

Members: 8 countries

namely Afghanistan,

Banladesh, Bhutan,

India, Nepal, Maldives,

Pakistan and Sri Lanka.

Chairman: Arjun

Bahadur Thapa

SAARC compromises

3% of the world's area,

21% of the world's

population and 9.12%

of the global economy,

as of 2015.

The organization

promotes development

of economical and

regional integration.

18th Summit held in

Kathmandu, Nepal.

https://en.wikipedia.org/wiki/Intergovernmental_organization

https://en.wikipedia.org/wiki/Geopolitical

https://en.wikipedia.org/wiki/South_Asia

https://en.wikipedia.org/wiki/South_Asia

https://en.wikipedia.org/wiki/Afghanistan

https://en.wikipedia.org/wiki/Bangladesh

https://en.wikipedia.org/wiki/Bhutan


https://en.wikipedia.org/wiki/Nepal

https://en.wikipedia.org/wiki/Maldives

https://en.wikipedia.org/wiki/Pakistan

https://en.wikipedia.org/wiki/Sri_Lanka

https://en.wikipedia.org/wiki/Australia

https://en.wikipedia.org/wiki/China

https://en.wikipedia.org/wiki/European_Union

https://en.wikipedia.org/wiki/Iran


https://en.wikipedia.org/wiki/Mauritius

https://en.wikipedia.org/wiki/Myanmar

https://en.wikipedia.org/wiki/South_Korea

https://en.wikipedia.org/wiki/United_States

https://en.wikipedia.org/wiki/Dhaka

https://en.wikipedia.org/wiki/Kathmandu

https://en.wikipedia.org/wiki/Regional_integration

https://en.wikipedia.org/wiki/South_Asian_Free_Trade_Area

https://en.wikipedia.org/wiki/UN

https://en.wikipedia.org/wiki/EU

https://en.wikipedia.org/wiki/Nuclear_weapons_state

https://en.wikipedia.org/wiki/Kathmandu

https://en.wikipedia.org/wiki/Islamabad

https://en.wikipedia.org/wiki/Murree

https://en.wikipedia.org/wiki/Pakistan

Signing of an agreement on energy cooperation namely 'SAARC

Framework Agreement for Energy Cooperation (Electricity)'.

Better relationships between India and Pakistan with both the Prime

Ministers shaking hands hence leading to a transient peace.

Talks on the following two agreements : 'Regulation of Passenger and

Cargo Vehicular Traffic amongst SAARC Member States', and

'SAARC Regional Agreement on Railways'

China, which holds an observer status in the group, was actively

promoted a more active role for itself in the region including

infrastructure funding through its proposed 'Asian Infrastructure

Investment Bank' (AIIB) and extending its ambitious Maritime Silk

Road project to South Asian nations.

India and SAARC:

India has benefitted from the SAARC membership and here are two basic

advantages:

South Asian Free Trade Area: SAFTA was envisaged primarily as the first step

towards the transition to a South Asian Free Trade Area (SAFTA) leading

subsequently towards a Customs Union, Common Market and Economic

Union. Under this agreement, SAARC members will bring their duties down to

20 per cent by 2009. In 2012 the SAARC exports increased substantially to

US$354.6 billion from US$206.7 billion in 2009. Imports too increased from

US$330 billion to US$602 billion over the same period. But the intra-SAARC

trade amounts to just a little over 1% of SAARC's GDP. In contrast, in

ASEAN (which is actually smaller than SAARC in terms of size of economy)

the intra-bloc trade stands at 10% of its GDP.

SAARC Visa Exemption Scheme: The SAARC Visa Exemption Scheme was

launched in 1992. According to it certain categories of dignitaries should be

entitled to a Special Travel document, which would exempt them from visas

within the region. As directed by the Summit, the Council of Ministers

regularly kept under review the list of entitled categories. Currently the list

included 24 categories of entitled persons, which include Dignitaries, Judges of

higher courts, Parliamentarians, Senior Officials, Businessmen, Journalists etc.

Group of 15 (G15)

Overview: The Group of 15 (G-15) is an informal forum set up to foster

cooperation and provide input for other international groups, such as the World

Trade Organization and the Group of Eight. It was established at the Ninth

Non-Aligned Movement Summit Meeting in Belgrade, Yugoslavia, in

September 1989, and is composed of countries from Latin America, Africa,

and Asia with a common goal of enhanced growth and prosperity. The G-15

focuses on cooperation among developing countries in the areas of investment,

trade, and technology.

Membership has since expanded to 18 countries, but the name has remained

unchanged. Chile, Iran and Kenya have since joined the Group of 15, whereas

https://en.wikipedia.org/wiki/Maritime_Silk_Road

https://en.wikipedia.org/wiki/Maritime_Silk_Road

https://en.wikipedia.org/wiki/South_Asian_Free_Trade_Area

https://en.wikipedia.org/wiki/ASEAN

https://en.wikipedia.org/wiki/World_Trade_Organization

https://en.wikipedia.org/wiki/World_Trade_Organization

https://en.wikipedia.org/wiki/G8

https://en.wikipedia.org/wiki/Non-Aligned_Movement

https://en.wikipedia.org/wiki/Belgrade

https://en.wikipedia.org/wiki/Socialist_Federal_Republic_of_Yugoslavia

https://en.wikipedia.org/wiki/Developing_countries

Yugoslavia is no longer part of the group; Peru, a founding member-state,

decided to leave the G-15 in 2011.

The following are the members of the G15 as of 2016: Algeria, Egypt, Kenya,

Nigeria, Senegal, Zimbabwe, India, Indonesia, Iran, Malaysia, Sri Lanka,

Argentina, Brazil, Chile, Jamaica, Mexico, and Venezuela.

The G-15 nations perceive an ongoing need to expand dialogue with the G8

and with the G20. The G-15 want to help bridge the gap between developing

countries and the more developed and industrialized nations. The fact that

some of the G-15 are simultaneously members of these other forums is

expected to be helpful.

Objective: Some of the objectives of the G-15 are:

To harness the considerable potential for greater and mutually

beneficial cooperation among developing countries.

To conduct a regular review of the impact of the world situation and of

the state of international economic relations on developing countries.

To serve as a forum for regular consultations among developing

countries with a view to coordinate policies and actions.

To identify and implement new and concrete schemes for South-South

cooperation and mobilize wider support for them.

To pursue a more positive and productive North-South dialogue and to

find new ways of dealing with problems in a cooperative, constructive

and mutually supportive manner.

In addition, the Federation of Chambers of Commerce, Industry and Services

(FCCIS) is a private sector forum of G-15 member countries. The purpose of

the FCCIS is to coordinate and maximize efforts which promote business,

economic development and joint investment in G-15 nations.

Latest Summit: The Fifteenth G15 summit was held in Colombo, Sri Lanka in

2012. The G-15 nations perceive an ongoing need to expand dialogue with

the G8 and with the G20. The G-15 want to help bridge the gap between

developing countries and the more developed and industrialized nations. At the

Sri Lankan summit the key focus was on the importance of cooperation in

facing the current challenges of food, energy, climate change, health and trade.

Group of Twenty (G20)

Overview: The G20 (or G-20 or Group of Twenty) is an international forum

for the governments and central bank governors from 20 major economies. It

was founded in 1999 with the aim of studying, reviewing, and promoting high-

level discussion of policy issues pertaining to the promotion of international

financial stability. It seeks to address issues that go beyond the responsibilities

of any one organization.

The members include 19 individual countries—Argentina, Australia, Brazil,

Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea,

Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom and

G20

Establishment: 1999

Members: 20 countries

namely Algeria, Egypt,

Kenya, Nigeria,

Senegal, Zimbabwe,

India, Indonesia, Iran,

Malaysia, Sri Lanka,

Argentina, Brazil,

Chile, Jamaica, Mexico,

and Venezuela.

Chairman: Xi Jinping

Bring together

systemically

important industrialize

d and developing

economies to discuss

key issues in the global

economy.



https://en.wikipedia.org/wiki/Colombo

https://en.wikipedia.org/wiki/Sri_Lanka



https://en.wikipedia.org/wiki/International

https://en.wikipedia.org/wiki/Government

https://en.wikipedia.org/wiki/Central_bank

https://en.wikipedia.org/wiki/Argentina

https://en.wikipedia.org/wiki/Australia

https://en.wikipedia.org/wiki/Brazil

https://en.wikipedia.org/wiki/Canada

https://en.wikipedia.org/wiki/China

https://en.wikipedia.org/wiki/France

https://en.wikipedia.org/wiki/Germany


https://en.wikipedia.org/wiki/Indonesia

https://en.wikipedia.org/wiki/Italy


https://en.wikipedia.org/wiki/South_Korea

https://en.wikipedia.org/wiki/Mexico

https://en.wikipedia.org/wiki/Russia

https://en.wikipedia.org/wiki/Saudi_Arabia

https://en.wikipedia.org/wiki/South_Africa

https://en.wikipedia.org/wiki/Turkey

https://en.wikipedia.org/wiki/United_Kingdom

the United States—along with the European Union (EU). The EU is

represented by the European Commission and by the European Central Bank.

Collectively, the G20 economies account for around 85% of the gross world

product (GWP), 80% of world trade (or, if excluding EU intra-trade, 75%), and

two-thirds of the world population.

Objective: The following are the objectives of the G20:

Bring together systemically important industrialized and developing

economies to discuss key issues in the global economy.

Ensuring international policy cooperation in a coherent manner that is

consistent with the contextual business cycles.

Strengthening the financial system, improving the international

financial architecture and regulation in an interconnected world to avert

and prevent global financial crisis.

Promoting economic growth and sustainable development by

addressing the current economic problems and suggesting measures.

G20 also aims to foster and adopt internationally recognized standards

through the example set by its members in areas such as the

transparency of fiscal policy, global tax network and combating money

laundering and the financing of terrorism.

Latest Summit: The 2015 G20 Antalya summit was the tenth annual

meeting of the G20 heads of government/heads of state. It was held in

Antalya, Turkey. The agenda was to discuss the world's biggest political and

security crises, including Syria and the mass migration of refugees.

The G20 summit was mostly focused on political rather than economic issues

due to the terrorist attacks in Paris, in which 132 people were killed. As an

organization dealing with global issues of financial and economic cooperation,

the G20 decided to change the format of the session. According to the summit

results, in addition to the pre-planned communiqué, the parties adopted a

declaration on fighting terrorism. The 2016 summit is being held in China

whereas India will host the 2018 Summit in New Delhi.

India and G20: The G20 leaders have agreed to step up the fight against

corruption and plug tax loopholes exploited by multinational companies, as

part of the efforts to enhance the resilience of financial institutions. This could

help curb black money in India.

In the last G20 Summit held in Turkey the G20 countries have decided to

cooperate on managing borders, sharing information on suspected terrorists,

airline safety, countering terrorist propaganda and freezing terrorist assets.

Prime Minister Narendra Modi pledged to quadruple India’s renewable power

capacity to 175 gigawatt by 2022 and cut fossil fuel subsidies along with that

he asked world’s top economies to build support systems focused on nations

that have the maximum growth potential. He also asked them to keep

infrastructure financing in developing countries as a key priority. Hence this

would be an impetus in the development of the nation.

https://en.wikipedia.org/wiki/United_States

https://en.wikipedia.org/wiki/European_Union

https://en.wikipedia.org/wiki/European_Commission

https://en.wikipedia.org/wiki/European_Central_Bank

https://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29



https://en.wikipedia.org/wiki/International_trade

https://en.wikipedia.org/wiki/World_population

https://en.wikipedia.org/wiki/Developed_country

https://en.wikipedia.org/wiki/Developing_country

https://en.wikipedia.org/wiki/Developing_country

https://en.wikipedia.org/wiki/World_economy

https://en.wikipedia.org/wiki/List_of_G20_summits

https://en.wikipedia.org/wiki/List_of_G20_summits


https://en.wikipedia.org/wiki/Antalya

https://en.wikipedia.org/wiki/Turkey

https://en.wikipedia.org/wiki/Syria

https://en.wikipedia.org/wiki/Refugees_of_the_Syrian_Civil_War

https://en.wikipedia.org/wiki/November_2015_Paris_attacks

https://en.wikipedia.org/wiki/Anti-terrorism_legislation

http://indianexpress.com/profile/politician/narendra-modi/

RECENT DEVELOPMENTS IN POLICIES

Government of India has introduced several policies in FY16. These policies are giving a new face to India in all facets. Identified below are a few major

policy introductions and policy improvements in FY16 by the government.

Sukhanya Samriddhi Account

The objective behind this initiative is to address the gender imbalance & create positive environment in favour of girl child. It is the part of “Beti Bachao-Beti

Padhao”. Benefits of the scheme are:

High interest rate of 9.2%

Exempted from Tax u/s 80c

The maturity of account is 21 years from date of opening the account or marriage of girl child, whichever is earlier.

Initial deposit of Rs.1000 and thereafter any amount in multiple of Rs.100 can be deposited to maximum of 1.5lakhs.

Mudra Bank Yojana

MUDRA stands for Micro Unit Development And Refinance Agency Bank. MUDRA will provide credit up to Rs.10 lakh to small entrepreneurs & act as

regulator of Micro finance institutions. Objective of the scheme are to encourage entrepreneurs and small business units to expand their capabilities and to reduce over indebtedness.

Schemes offered by MUDRA bank are:

Shishu-the starters-covers loan up to Rs.50,000 Kishor-the mid stage finance seekers-covers loan above Rs.50,000 and

up to Rs.5,00,000.

Tarun-growth seekers- covers loan above Rs.5,00,000 and up to Rs. 10,00,000

Under this scheme, nearly 1,65,000 people avail the over-drafting facility

where the government mobilised US$ 157,400,000 for this scheme by 1 September 2015. As of 26th of Sep 2015, Banks have already disbursed US$3.6 billion to 27 lakh small entrepreneurs under this scheme.

Till the date of 7th April, 2016, the Mudra Yojana scheme in the state of Gujarat has served to 9.5 lakh beneficiaries under the ‘Shishu Loans’ category with a loans disbursement worth of Rs 2111 crore; 85,039 beneficiaries under

the ‘Kishore Loans’ category with a loan disbursement worth of Rs 1,843 crore; and 25,852 beneficiaries have been served under the ‘Tarun Loans’

category with a loans disbursement worth of Rs 1,875 crore in the last 12 months.

Pradhan Mantri Jeevan Jyoti Bima Yojana

It is government backed life insurance scheme.

Age limit: 18 to 50 years of age.

Rs. 330 to be paid yearly, that means less than 1 re per day and Rs. 27.5 per month

The payment of premium will be debited from the bank account of the

individual in single instalment.

Risk coverage of Rs.2 Lakh in case of death for any reason.

The scheme will be offered by Life Insurance Corporation and all other life insurers who are willing to join the scheme and tie-up with banks for this purpose.

The contribution of government towards this scheme is to be decided separately every year. It is to be noted that the contribution amount to

be paid by the government will come from the unclaimed money that has been lying idle in various public welfare funds.

The banks have complained that revenue received will be very low.

Some bankers have claimed that amount they are receiving is not

sufficient to cover the service costs.

Insurers have also pointed out that no health certificate or information

of pre-existing disease is required for joining.

As per http://data.gov.in/ gross enrolment reported by banks as on 1st

June 2016 was 2.97 crores.

As per http://data.gov.in/ total number of claims received till 1st June

2016 was 28,636 and claims disbursed were 25,555.

Pradhan Mantri Suraksha Bima Yojna

Pradhan Mantri Suraksha Bima Yojana is a government-backed accident insurance scheme in India.

Age limit: 18-70 years

Annual premium: Rs.12 per year.

Coverage: Claim of Rs.2,00,00 against accidental death or full disability and claim of Rs.1,00,000 for partial disability.

Private Banks have complained that the Government should focus on upper middle class instead of the poorer section.

Western scholars and Congress have argued that financial inclusion is a myth and serving such large number of people would only increase the

burden and work-load of public sector.

As per a report by http://jansuraksha.gov.in/ 124 million Indians have

already enrolled for this scheme as of 2 February 2016.

Atal Pension Scheme

Atal pension scheme is targeted at unorganized sector workers.

Age limit: 18-40 years

Pension will start at age of 60 years.

Depending upon the contribution, the beneficiary will get guaranteed pension of Rs.1000 to Rs.5000 per month.

Govt will contribute 50% of total contribution or Rs.1000 whichever is lower.

Pradhan Mantri Krishi Sinchai Yojana

Pradhan Mantri Krishi Sinchai Yojana (PMKSY) is a national mission

to improve farm productivity and ensure better utilization of the resources in the country.

A budget of Rs.500 billion in a time span of five years has been allocated to this scheme.

The primary objectives of PMKSY are to attract investments in

irrigation system at field level, develop and expand cultivable land in the country, enhance ranch water use in order to minimize wastage of

water, enhance crop per drop by implementing water-saving technologies and precision irrigation.

The plan additionally calls for bringing ministries, offices, organizations, research and financial institutions occupied with creation

and recycling of water under one platform so that an exhaustive and holistic outlook of the whole water cycle is considered. The goal is to open the doors for optimal water budgeting in all sectors.

Soil Health Card Scheme

Under the scheme, the government plans to issue soil cards to farmers which will carry crop-wise recommendations of nutrients and fertilisers

required for the individual farms to help farmers to improve productivity through judicious use of inputs.

All soil samples are to be tested in various soil testing labs across the country. Thereafter the experts will analyse the strength and

weaknesses (micro-nutrients deficiency) of the soil and suggest measures to deal with it.

The result and suggestion will be displayed in the cards.

The government plans to issue the cards to 14 crore farmers.

An amount of Rs.568 crore was allocated by the government for the scheme. In 2016 Union budget of India, Rs.100 crore has been allocated to states for making soil health cards and set up labs.

The number of soil card issued has grown up to 1.12 crore as of February 2016. As of February 2016, against the target of 104 lakh soil

samples, States reported a collection of 81 lakh soil samples and tested 52 lakh samples.

The government plans to distribute 14 crore soil health cards by 2017

Digital India

Digital India is a campaign launched by the Government of India to ensure that

Government services are made available to citizens electronically by improving online infrastructure and by increasing Internet connectivity or by making the country digitally empowered in the field of technology.

Digital India is keyed on three key areas – Digital Infrastructure as a Utility to Every Citizen Governance & Services on Demand

Digital Empowerment of Citizens

Pillars of Digital India –

Broadband Highways - Laying of national optical fibre network

(NOFN) in all 2.5 lakh gram panchayats in the country will happen in a phased manner.

Universal Access to mobile connectivity - Ensuring mobile access in around 44,000 uncovered villages in the country and taking steps to ensure that all villages are covered by 2018.

Public Internet Access Programme - To expand the coverage of common services centre (CSC) from 1.35 lakhs to 1.5 lakhs,

i.e. one in every panchayat. E-Governance – Reforming government through Technology -

UIDAI-Unique

Identification Authority of

India. It is responsible for

enrolment of citizens for

Aadhar card along with

Registrar General of India.

VSAT- Very small

aperture terminal.

It is a satellite

communications system

that serves home and

business users.

BPL – Below Poverty

Line

Business process re-engineering will be undertaken to improve processes and service delivery. Services will be integrated with

UIDAI, payment gateway and mobile platform. e-Kranti – Electronic delivery of services - e-Kranti focuses on

electronic delivery of services whether it is education, health, agriculture, justice and financial inclusion.

Information for All - The focus will be on online hosting of

data and proactive engagement through social media and web based platforms like MyGov.

Electronics Manufacturing – Target net zero imports - Focus is on set top boxes, VSAT, mobile, consumer electronics, medical electronics, smart energy meters, smart cards and micro ATMs.

IT training for Jobs - The government is planning to train one crore students from small towns and villages for IT sector.

Early Harvest Programmes - The government is planning to deploy Aadhaar Enabled Biometric Attendance System in all central government offices located at Delhi. A web based

application software system will enable online recording of attendance and its viewing by the concerned stakeholders.

Major projects active under Digital India –

Digi Locker

The service was launched as an important facility to store crucial documents like Voter ID Card, Pan Card, BPL Card, Driving License, education certificates, etc. in the cloud.

MyGov.in

The portal works as an online platform to engage citizens in

governance through a “Discuss”, “Do” and “Disseminate” approach.

eSign Framework

This initiative would enable users to digitally sign a document online using Aadhaar authentication.

Swach Bharat Mission mobile app

The app will enable organizations and citizens to access information regarding the cleanliness drive and achieve the

goals of the mission. National Scholarship Portal

This initiative aims at making the scholarship process easy.

From submitting the application, verification, sanction and disbursal to end beneficiary, everything related to government

scholarships can be done on this single portal online. eHospital

Online Registration System under this initiative enables people

to avail services like online registration, payment of fees and appointment, online diagnostic reports, checking on the

availability of blood online, etc. Digitise India Platform

This initiative will involve digitization of data and records on a

large scale in the country to provide quick access. Bharat Net

Under this initiative, a high-speed digital highway will connect all 250,000 gram panchayats of the country. This is the world’s largest rural broadband project using optical fibre.

Wifi Hotspots

NASSCOM

The National Association

of Software and Services

Companies is a trade

association of Indian

Information Technology

and Business Process

Outsourcing industry.

DeitY

Development of

Electronincs and


It is an initiative of

Ministry of Electronincs

and Information

Technology (MeitY)

ERNET

Education and Research

Network is an autonomous

scientific society of

Ministry of

Communications and


(Govt. of India).

Development of high speed BSNL wi-fi hotspots throughout the country is yet another initiative to improve digital connectivity

in the country. Next Generation network

Launched by BSNL, this service will replace 30-year old telephone exchanges to manage all types of services like voice, data, multimedia and other types of communication services.

Electronics Development Fund

The fund will be set up to support the manufacturing of

electronics products that would help create new jobs and reduce import. The funds will promote innovation, research and product development to create a resource pool within the

country. Centre of Excellence on IoT

In partnership with NASSCOM, DeitY and ERNET in Bangalore, Centre of Excellence will enable rapid adoption of IoT technology and encourage a new growth strategy. IoT will

help the citizens in services like transport system, parking, electricity, waste management, water management and women’s

safety to create smart cities, smart health services, smart manufacturing and smart agriculture, etc.

Skill India

Skill India is a campaign launched by Prime Minister Narendra Modi

with an aim to train over 40 crore people in India in different skills by 2022.

It includes various initiatives of the government like "National Skill Development Mission", "National Policy for Skill Development and Entrepreneurship, 2015", "Pradhan Mantri Kaushal Vikas Yojana

(PMKVY)" and the "Skill Loan scheme".

The government has decided to revamp the antiquated industrial

training centres that will skill over 20 lakh youth annually creating 500 million jobs by 2020.

As of 15 February 2016, the "Indian Leather Development Programme" trained 51,216 youth in a span of 100 days and it plans to train 1,44,000

young people annually.

Four new branches of "Footwear Design & Development Institute" — at Hyderabad, Patna, Banur (Punjab) and Ankleshwar (Gujarat) — are

being set up to improve training infrastructure. The industry is undergoing acute skill shortage and most of the people trained are

being absorbed by the industry. Recent inclusion in DBT – Kerosene

The government has unveiled Direct Benefit Transfer (DBT) scheme for kerosene from 1st April 2016, where the users will buy the cooking fuel at

market rate but will get financial support directly in their bank accounts.

The scheme will be implemented in selected 26 districts of 8 states.

States will be given cash incentive of 75% of subsidy savings during the first two years, 50% in the third year and 25% in the fourth year.

Eight States who have been rolled out the subsidies are as follows – Chhattisgarh, Haryana, Himachal Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Punjab and Rajasthan.

Ganga Gram Yojana launched

The Union Minister of Water Resources, River Development and Ganga Rejuvenation Uma Bharti launched Ganga Gram Yojana at Village Puth in

Hapur district of Uttar Pradesh (UP). Under the scheme, 1600 villages of UP situated along the banks of river Ganga will be developed.

Highlights of the Ganga Gram Yojana

In the first phase of the progamme, 200 villages have been selected

initially.

In these villages, open drains falling into river Ganga will be diverted and alternative arrangements for sewage treatment will be made.

The villages will have toilets in every house hold.

It is proposed to incur the expenditure of 1 crore rupees on every

village.

Start-up India, Stand up India

To create a strong ecosystem for enhancing innovation and startups in India,

Department of Industrial Policy and Promotion (DIPP) has organised “Startup India, Standup India” initiative along with other key Indian start-up ecosystem players. Here are some key features:

Financing & Incentives – It is basically to promote bank financing for start-ups and offer incentives to boost entrepreneurship and job

creation. Government will set up a fund with an initial corpus of Rs 2,500 crore and a total corpus of Rs 10,000 crore over a period of 4

years.

Simplification – A startup will be able to set up by just filling up a short form through amobile app and online portal that will be launched in

April.

Patent protection – Patent applications of the startups shall be fast

tracked for examination and disposal. The government will make IPR procedure transparent for startups.

Self-certification – Start-ups can self-certify their compliance with environment and labour laws. There will be no inspection for three

years.

Patent rebate – Startups will also be given 80% rebate in filing patents, however, this is a pilot launch for one year.

Tax exemption – Starting April 1, 2016, startups will be exempted from income-tax for three years.

Capital gain tax exemption – Exemptions shall be given in case capital gains are invested in the fund of funds recognised by the government.

Pradhan Mantri Fasal Bima Yojana

In a bid to provide a social security to farmers, Union Cabinet has approved a new crop insurance scheme, having premiums as low as 1.5% of the sum insured.

It will charge a uniform premium 2% of the sum insured from farmers for all kharif crops and 1.5% for rabi crops. For horticulture crops, the

annual premium will be 5% of the sum insured.

The balance premium would be paid by the government to the

insurance companies. This would be shared equally by the Centre and state governments.

Stand Up India Scheme

Union Cabinet has approved the “Stand Up India Scheme” to promote entrepreneurship among SC/ST and Women entrepreneurs. Under this, the

government aims to achieve the target of at least 2.5 lakh approvals in three years from the launch of the scheme.

It envisages reaching out to under-served sectors of the population by

facilitating bank loans repayable up to 7 years and between 10 lakh to Rs. 1 crore for Greenfield enterprises in the non-farm sector set up by

such SC, ST and Women borrowers.

Key Highlights of Scheme

Refinance window through Small Industries Development Bank of India (SIDBI) with an initial amount of 10,000 crore.

The loan under the scheme would be appropriately secured and backed

by a credit guarantee through a credit guarantee scheme for which Department of Financial Services would be the settler and National

Credit Guarantee Trustee Company Ltd. (NCGTC) would be the operating agency.

Handholding support for borrowers at the pre loan stage and during operations.

Margin money of the composite loan would be up to 25%.

Rurban mission

The government launched Shyama Prasad Mukherjee Rurban Mission which is an initiative to transform the rural areas to get an urban look.

An initiative to create smart villages and to improve the quality of life

in villages

Started in Dongargarh near chattisgarh

To attract 5100 crore investment

Scheme divided into 300 clusters in next 3 years and 100 clusters to be

implemented in this year

Gram panchayat a cluster has 25000 to 50000 population and Tribal

and Hilly areas a cluster has 5000-10000 population

4 clusters in Rajnandgaon, Dhamatri, Kawardha and Bastar districts of

Chattisgarh. It replaces PURA scheme of UPA government

Electronic manufacturing cluster started in Naya Raipur with 2000

crores investment. 30% of the project fund provided as Critical Gap Funding.

Slogan– “rural soul, urban amenities”

Atal Innovation Mission

Atal Innovation Mission and Self Employment Talent Utilization are being set up by National Institution for Transforming India and will have Headquarter in New Delhi.

Aim of the Mission: An innovation Promotion Platform that involves

Academics, Entrepreneurs, and Researchers possessing national and international Experiences to foster a Culture of Innovation, R&D in India.

AIM – Atal Innovation

Mission

SETU – Self Employment

and Talent Utilization

MGNREGA – Mahatma

Gandhi National Rural

Employment Guarantee

Act

• AIM and SETU under NITI to come up with Rs 500 Crore and Rs. 1,

000 crore respectively as stated in Budget Speech 2015- 2016 by finance minister.

• NITI Aayog established an Expert Committee on Innovation and Entrepreneurship to work out detailed forms of AIM and SETU by the chairmanship of Tarun Khanna Professor at Harvard University.

MOEFCC has classified industries based on colour index

The Union Ministry of Environment, Forest and Climate Change (MoEFCC) has released a new Four-colour Classification Scheme for industries based on

their pollution level. The four-colour classification scheme of industrial sectors is based on the Pollution Index (PI) which is a function of the Emissions (air

pollutants).

• Red category: PI score of 60 and above. These are severe polluting

industries. It includes sugar, thermal power plants, paints etc.

Orange category: PI score of 41 to 59. They moderately polluting

industries. It includes coal, automobile servicing etc.

Green category: PI score of 21 to 40. They are significantly low

polluting industries. Totally there are 63 industries in it.

White category: PI score below and upto 20. They are non-polluting

industries. These industries do not require Environmental clearance for their functioning.

Pradhan Mantri Ujjwal Yojana

The cabinet approved the Pradhan Mantri Ujjwal Yojana– a scheme for providing LPG to households Below Poverty Line.

The scheme is estimated at the cost of 8000 crores.

The scheme will benefit five crore families below poverty line.

It ensures a financial support of Rs 1600 for each LPG connection to

the BPL households.

This Scheme would be implemented over three years, namely, the FY

2016–17, 2017- 18 and 2018-19.

Pradhan Mantri Awaas Yojana(PMAY)

This scheme intends to provide houses for all people in the rural area

Under this scheme, incentive will be given by the government to build Pucca house

Financial assistance of 1,20,000 in plain areas and 1,30,000 in hill areas will be given to all houseless and people those who live in dilapidated

houses

The scheme proposes to build 1 crore houses in the year 2016-17

to2018-19

The cost will be shared between the centre and states in the ratio of

60:40 in plain areas

For north eastern and Hilly areas, the ratio will be 90:10

The total fund allotted for 2017-19 is 81795 crores

The beneficiary is entitled to 90 days of unskilled labour from

MGNREGA. This will be ensured through a server linkage between PMAY and MGNREGA.

Gujarat first state to launch “Agro-Solar Policy”

Gujarat is set to become the first state in India to launch ‘Agro-Solar Policy’ to encourage the farmers to tap the solar energy. The new policy seeks to

encourage the farmers in the state to tap free solar energy from sun, which will in turn help them to earn additional income from power generation companies.

Key facts:

Gujarat Energy Research and Management Institute (GERMI) will be nodal implementing agency for projects under this policy.

Farmers can use the free solar energy for their own consumption purpose and sell the surplus energy to the state run power generation companies. Thus, power generation companies and farmers will be in a

win-win situation with generation of solar energy in agricultural fields.

Power generation companies will set up solar photo voltaic (SPV)

plants in different agricultural fields for the purpose of power generation without disturbing agricultural production. It should be

noted that these SPV plants have been already tested in different agricultural universities in the State.

On the experimental basis power generation companies like Gujarat

Industries Power Company Limited (GIPCL), Gujarat Power Corporation Limited (GPCL) and Gujarat State Electricity Corporation

Limited (GSECL) have already set up SPV plants in farm fields.

The SPV plant will be set up on poles in the fields so that farmers can

also grow their crops.

After buying surplus power, power generation companies will give 30

to 40 per cent share from the profit to the farmers.

Some other successful solar projects in Gujarat State has Asia’s largest

solar power plant in Charanka village in Patan district which is built on a 2,000-hectare land.

In January 2015, the first canal-top solar power plant (10 MW solar

capacity) was inaugurated by UN Secretary General Ban-Ki Moon on Narmada canal in Vadodara.

Union Cabinet approves Civil Aviation Policy

The Union Cabinet has given its approval for the Civil Aviation Policy 2016 to boost the domestic aviation sector and provide passenger-friendly fares. This is

for the first time since Independence that an integrated Civil Aviation Policy has been brought out by the Union Ministry of Civil Aviation (MoCA). The

policy’s mission is to provide safe, secure, sustainable and affordable air travel for passengers and air transportation of cargo with access to various parts of India and the world.

Civil Aviation Policy 2016 aims at:

Make India 3rd largest civil aviation market by 2022 from current 9th position.

Increase domestic ticketing to 30 crore by 2022 from 8 crore in 2015.

Increase airports having scheduled commercial flights from 77 in 2016

to 127 by 2019.

Increase cargo volumes to 10 million tonnes i.e. by 4 times by 2027.

Under Regional Connectivity Scheme, enabling Indians to fly at Rs. 2,500 per hour at un-served airports.

5/20 Rule

According to the

previously held '5/20 rule,'

all airlines in India needed

five years of domestic

flying experience and at

least 20 aircraft in its fleet

in order to fly abroad.

7th

Pay Commission

background

The 7th Pay

Commission headed by

Justice AK Mathur had

recommended 14.27 %

hike in basic pay at

junior levels in

November 2015.

The Commission had

recommended changes

in the pay of around 1

crore individuals which

includes 33 lakh central

government employees,

14 lakh armed forces

personnel, and 52 lakh

pensioners.

OROP-One Rank One

Pension

Union Government had

constituted Judicial

Committee headed by

Justice L. Narasimha

Reddy, in December

2015 to give

recommendations for the

removal of anomalies

that may arise in the

implementation of

OROP retrospectively.

It has given its ex-post

facto approval for

implementation of One

Rank One Pension

(OROP) retrospectively

with effect from 1st July,

2014.

Decision in this regard

was taken by Union

Cabinet meeting chaired

by Prime Minister

Narendra Modi in New

Delhi.

OROP will provide ex-

servicemen of same rank

and same length of

service uniform pension

regardless of date of

retirement.

For starting international operations, requirement of 5 years of domestic

flying removed but 20 flights retained.

Liberalized and Flexible ‘open skies’ and ‘code share’ agreements.

Incentives to Maintenance, Repair and Overhaul (MRO) sector in order

to develop India as hub for South Asia.

Ensure availability of quality certified 3.3 lakh skilled personnel by

2025.

Development of green-field airports and heliports

Enhancing ease of doing business through simplified procedures, deregulation and e-governance.

Promote ‘Make In India’ in Civil Aviation Sector

Union Government issues notification for implementation of 7th Pay

Commission

The Union Government has issued notification for the implementation of 7th Pay Commission. It was issued as per the Cabinet approval in June 2016. With

this issuance, 4.8 million central government employees and 5.2 million pensioners will get the increased pay-out from their August 2016 salaries.

Besides, Union Government has given CBSE chief Rajesh Kumar Chaturvedi an additional charge of Chief of the implementation cell of the Seventh Central Pay Commission.

Key Facts:

The 7th Pay Commission hike will result in increase in salaries of

central government employees in the range of 7 thousand rupees to 18 thousand rupees per month.

A fitment factor of 2.57 will also apply for pay revision of all

employees and the rate of annual increment has been retained at 3%.

There will be two dates for grant of increment i.e. on January 1 and

July 1 every year – instead of the existing July 1 only.

Employees will be entitled to only one annual increment on either of

these two dates depending on the date of appointment, promotion or grant of financial upgradation.

It is estimated that the total burden on the exchequer on account of the 7th Pay Commission recommendation will be 1.02 lakh crore rupees in

2016-17.

There will be an additional impact of 12,133 crore rupees on arrears and of salary and pension for two months.

Union Cabinet agrees to implement OROP Scheme

OROP will benefit ex-servicemen of Army, Navy and Air Force service.

The benefits will also be extended to family pensioners including war widows and disabled pensioners.

All arrears will be paid in four half-yearly instalments. However all widows, family pensioners including those in receipt of Gallantry

award will be paid arrears in one instalment.

Pension will be re-fixed every five years and future enhancements in rates of pension would be automatically passed to the past pensioners.

Armed forces personnel who retire voluntarily would not be covered under OROP. However, it will be applicable to personnel who have

retired prematurely.

GST

Goods and Services Tax

is a comprehensive

indirect tax which is to

be levied on the

manufacture, sale and

consumption of goods

and services at a national

level.

This is so far the biggest

tax reform in the

country.

France was the first

country to introduce

GST system in 1954.

More than 140 countries

have implemented the

GST. Most of the

countries have a unified

GST system.

Brazil and Canada

follow a dual system

where GST is levied by

both the Union and the

State governments.

Rajya Sabha passes The Constitution (122nd Amendment) (GST) Bill, 2014

The Rajya Sabha has unanimously passed The Constitution (122nd Amendment) (GST) Bill, 2014 to introduce the goods and services tax (GST). With this passage of bill, India took giant step in structural indirect taxation

reform and paved way for the concept of one nation, one tax. After its passage in Parliament, at least 50 percent state legislatures will have to pass resolutions

to ratify the Bill. Once the constitutional framework is in place, the Centre will have to pass simple laws to levy CGST and IGST. Similarly, all states will have to pass a

simple law on SGST. These laws will specify the rates of the GST to be levied, the goods and services that will be included, the threshold of the turnover of

businesses to be included, etc.

Goods and Service Tax

GST is single indirect tax for the whole nation, which will make India one unified common market. It is a single tax on the supply

of goods and services, right from the manufacturer to the consumer.

GST is essentially a tax only on value addition at each stage i.e. credits of input taxes paid at each stage will be available in the subsequent stage of value addition.

Thus, the final consumer will bear only the GST in the supply chain charged by the last dealer with set-off benefits at all the

previous stages.

Purpose of GST GST aims to bring uniform indirect tax regime throughout the

country by subsuming central and state indirect taxes into single indirect tax.

It also seeks to enhance fiscal federalism by removing indirect tax barriers across states and integrate the country into a common market, boosting government revenue and reducing business costs.

Indirect taxes subsumed into GST At the Central level:

Central Excise Duty, Additional Excise Duty,

Service Tax, Additional Customs Duty (also known as Countervailing

Duty)

Special Additional Duty of Customs. At the State level:

State Value Added Tax (VAT) or Sales Tax, Octroi and Entry tax, Purchase Tax

Luxury tax, Taxes on lottery, betting and gambling

Entertainment Tax (other than the tax levied by the local bodies)

Central Sales Tax (levied by the Centre and collected by the

states)

Clause 2014 Bill 2016 proposed

amendments

Additional tax up

to 1% on inter-

State trade

An additional tax of up to 1%

on the supply of goods will be

levied by centre in the course

of inter-State trade or

commerce. The tax will be

directly assigned to the States

from where the supply

originates. This will be for two

years or more, as

recommended by GST

Council.

Deletes the provision.

Compensation to

States

Parliament may, by law,

provide for compensation to

states for any loss of revenues

for a period which may extend

to five years. This would be

based on the recommendations

of the GST Council. This

implies that Parliament may

decide (i) whether it wants to

provide compensation; (ii) the

time period for which it can

provide such compensation, up

to five years.

Parliament shall, by law,

provide for compensation

to states for any loss of

revenues, for a period

which may extend to five

years. This would be based

on the recommendations of

the GST Council. This

implies that (i) Parliament

must provide

compensation; and (ii)

compensation cannot be

provided for more than five

years, but allows

Parliament to decide a

shorter time period.

Dispute resolution The GST Council may decide

upon the modalities to resolve

disputes arising out of its

recommendations.

The GST Council shall

establish a mechanism to

adjudicate any dispute

arising out of its

recommendations.

Disputes can be between:

(a) the centre vs. one or

more states; (b) the

centre and states vs. one or

more states; (c) state vs.

state. This implies there

will be a standing

mechanism

to resolve disputes.

Replacement of

the term IGST

Under the 2014 Bill, the GST

Council would make

recommendations on the

apportionment of the

Integrated Goods and Services

Tax (IGST). However, the

term IGST was not defined.

The 2016 amendments replace

This is a technical change

in relation to the

apportionment of the

IGST. It clarifies that the

states’ share of the IGST

shall not form a part of the

Consolidated fund of India.

this term with ‘goods and

services tax levied on supplies

in the course of inter-State

trade or commerce’.

Inclusion of

CGST and IGST

in tax devolution

to states

The GST collected and levied

by the centre, other than states’

share of IGST,(CGST and

Centre’s share of IGST) shall

also be distributed between the

Centre and States.

The amendments state that

the CGST and the Centre’s

share of IGST will be

distributed between the

Centre and States. This is

just a restatement of the

provisions in the 2014 Bill

in

clearer terms.

COMMITTEES FORMED IN FY16

Vijay Kelkar committee on revitalising the PPP infra model

Several infrastructure projects in India have been hit by various issues related to Public-Private-Partnership (PPP) model. It is in this context, the Vijay Kelkar panel recommended various measures for revival of PPP model. The

panel was appointed by the Union Finance Ministry in the Union Budget 2015-16.

Some of the major recommendations include:

It recommended for strengthening of 3 main pillars of the PPP

framework viz. Governance, Institutions and Capacity.

The Prevention of Corruption Act, 1988 should be amended at the

earliest to punish corrupt practices while saving those who made genuine mistakes in decision-making.

Swiss Challenge Method of awarding contracts should be avoided as it discourages transparency. Unsolicited Proposals encourages unequal

treatment of potential bidders in the procurement process, so they should be discouraged.

For sourcing long-term capital at low-cost, banks and financial

institutions should be encouraged to issue deep discount bonds, also known as zero coupon bonds. This will reduce the debt servicing

charges during the initial period of the project. After successful completion of the projects, equity in the project may be offered to long-

term investors including overseas institutional buyers. The divestment amount would be utilised for new infrastructure projects.

Independent sectorial regulators should be set up as and when a new

sector is declared to adopt PPP model. The regulators should follow a unified approach. Without the independent regulators, the projects

would be subjected to bureaucratic and political pressure.

For rational allocation of risks among various stakeholders, the Model

Concession Agreement (MCA) should be revisited. The “One-size-fits-all” approach should be avoided.

It should be explored for extension of PPP into new sectors such as

health, other social sectors, and urban transport. Private sector should be protected against any abrupt changes in the economic or policy

environment.

Government may develop a PPP law with endorsement from

Swiss Challenge Method

A Swiss challenge is a

form of public

procurement in some

(usually lesser developed)

jurisdictions which

requires a public authority

(usually an agency of

government) which has

received an unsolicited bid

for a public project (such

as a port, road or railway)

or services to be provided

to government, to publish

the bid and invite third

parties to match or exceed

it.

Zero coupon bond

A bond that is issued at a

deep discount to its face

value but pays no interest.

Model Concession

Agreement

The model concession

agreement is the contract

that sets the terms of

execution of a project and

is signed between the

concessionaire and the

government

Parliament. It gives an authoritative framework to implementing executives along with an oversight responsibility to legislature and

regulatory agencies.

Infrastructure PPP Project Review Committee (IPRC) should be set up

for evaluating and sending recommendations in time-bound manner for a stress in projects under PPP model.

An Infrastructure PPP Adjudication Tribunal (IPAT) should be set up and its benches will be constituted by the Chairperson as per needs of the matter in question.

The state owned enterprises and public sector undertakings should not be allowed to bid for PPP projects. The PPP model meant for

leveraging the managerial and operational efficiency of private sector.

A dispute resolution mechanism that is quick and flexible is needed to

allow restructuring within the commercial and financial boundaries of the project.

PPP model is not recommended for small scale projects in view of the transaction costs involved.

Bibek Debroy committee on restructuring of Indian Railways

Bibek Debroy Committee on the restructuring of Indian Railways has submitted its final report to the Union Ministry of Railways. The committee

has suggested measures for restructuring the Railway Board and its departments so that policy making is separated from day-to-day operations.

Recommendations of Bibek Debroy committee:

Establishment of an independent regulator Railway Regulatory Authority of India (RRAI) with a separate budget and to be independent of the Ministry.

RRAI will decide on tariffs to revamp the cash-strapped railways.

Railway Budget should be phased out with gross budgetary support to

Indian Railways.

There is need to improve the internal resource generation and explore

varied methods of financing but also to improve utilisation of available resources.

No privatisation of Indian Railway but allowed participation of private sector in the railway projects.

Separation of activities like running of hospitals, schools, real estate development, catering, manufacturing of locomotives, coaches and

wagons from the core business of running trains.

State governments should be asked to entirely fund the Government

Railway Police (GRP).

General Managers should have the freedom to choose between private security guards and RPF for security on trains.

The recommended changes should be implemented only by Union Railways ministry in the first five years including the resolution of the

social cost issue.

CEA Dr Arvind Subramanian Committee suggests GST rate of 17-18 per

cent

Chief Economic Advisor Dr Arvind Subramanian led Committee recommended standard rate for Goods and Services Tax (GST) at 17 to 18 per

cent in December 2015.

Recommendations of Dr Arvind Subramanian Committee:

Standard GST rate of 17 to 18 per cent. It is the rate at which most products would likely be taxed. Not to specify GST rate in

Constitutional Amendment Bill.

Revenue-neutral rate of 15 to 15.5 per cent. It is a single rate at which there will be no revenue loss to the centre and states in the GST regime.

Eliminate all taxes on inter-state trade including one per cent inter-state tax on transfer of goods.

Two options for states: Single rate of 1 per cent or a range of 17-18 per cent. Allocation to states will depend on revenues raised by Centre and

states.

Three-tier GST rate structure: Essential goods will be taxed at a lower

rate of 12 per cent. Demerit goods such as luxury cars, aerated beverages, pan masala and tobacco products will be taxed at 40 percent

and remaining all goods will be taxed at a standard rate of 17 to 18 %.

Excluded real estate, electricity and alcohol and petroleum products while calculating tax rates but suggests bringing them under the ambit

of GST soon.

Deepak Mohanty Committee on Medium-term Path on Financial Inclusion

The Reserve Bank of India (RBI) has released the Report on Medium-term

Path on Financial Inclusion submitted by 14-member committee headed by RBI Executive Director Deepak Mohanty.

RBI had constituted the committee in July 2015 to examine the existing policy regarding financial inclusion and then form a five-year (medium term) action plan. It was tasked to suggest plan on several components with regard to

payments, deposits, credit, social security transfers, pension and insurance.

Key recommendations:

Augment the government social cash transfer in order to increase the

personal disposable income of the poor. It would put the economy on a medium-term sustainable inclusion path.

Sukanya Shiksha Scheme: Banks should make special efforts to step up account opening for females belonging to lower income group under

this scheme for social cash transfer as a welfare measure.

Aadhaar linked credit account: Aadhaar should be linked to each

individual credit account as a unique biometric identifier which can be shared with Credit information bureau to enhance the stability of the credit system and improve access.

Mobile Technology: Bank’s traditional business model should be changed with greater reliance on mobile technology to improve ‘last

mile’ service delivery.

Digitisation of land records: It should be implemented in order to

increase formal credit supply to all agrarian segments through Aadhaar-linked mechanism for Credit Eligibility Certificates (CEC).

Nurturing self-help groups (SHGs): Corporates should be encouraged to nurture SHGs as part of Corporate Social Responsibility (CSR)

initiative.

Subsidies: Government should replace current agricultural input

Financial Inclusion

Financial inclusion or

inclusive financing is the

delivery of financial

services at affordable

costs to sections of

disadvantaged and low-

income segments of

society, in contrast to

financial exclusion where

those services are not

available or affordable.

subsidies on fertilizers, irrigation and power by a direct income transfer scheme as a part of second generation reforms.

Agricultural interest subvention Scheme: It should be phased out.

Crop Insurance: Government should introduce universal crop insurance

scheme covering all crops starting with small and marginal farmers with monetary ceiling of Rs. 2 lakhs.

Multiple Guarantee Agencies: Should be encouraged to provide credit guarantees in niche areas for micro and small enterprises (MSEs). It

would also explore possibilities for counter guarantee and re-insurance.

Unique identification of MSME: It should be introduced for all MSME

borrowers and information from it should be shared with credit bureaus.

Justice Lodha Committee on BCCI reforms

Justice RM Lodha Committee has submitted its report to the Supreme Court suggesting reforms in the Board of Control for Cricket in India (BCCI). The committee was appointed by the SC in 2014 to make recommendations to the

BCCI in order to prevent frauds and conflict of interest in cricket administration.

Major Recommendations:

Committee Governing Bodies: They should be separate for Indian

Premier League (IPL) and BCCI, with limited autonomy for the IPL Governing Council.

BCCI office-bearer: No Minister or government servant should become a BCCI office-bearer.

BCCI office-bearer’s tenure: It should not exceed more than two consecutive terms, and he/she cannot hold two posts at the same time.

Membership: Only to team representing the respective states. Each state should have only one vote.

Zones: The relevance of different zones should be for the purpose of tournaments and not for the governance of the BCCI and its committees.

State Associations: There should be uniformity of structure in the organisation and functioning of state associations on the lines of BCCI.

Management: The BCCI management affairs should be done by professionals led by Chief executive officer (CEO).

Players Associations: It should be formed for the international as well as for the first class levels. It should be for both men and women teams.

Player’s ethics: BCCI should carry out awareness programmes for the players.

Players Agents: They must be registered under the BCCI and players association norms.

Betting and match-fixing: Betting should be legalised and match fixing should be made criminal offence.

Conflict of Interest: To avoid conflicts it should be handled with the norms laid down by an ethics officer.

The Electoral Officer and Ombudsman: The electoral officer will oversee the election process, while the ombudsman to resolve grievances.

Functioning and Transparency: All details and rues of BCCI must be uploaded on the website on BCCI for transparency functioning purpose.

BCCI should come under the purview of the Right to Information Act,

2005.

Supervision of Expenses: It should be carried out by an independent

auditor.

Sanjay Mitra committee to prepare policy framework for taxi operators

The Union Government has constituted a three member committee to prepare a policy framework for online taxi aggregators and other transport operators. The committee will be headed by Sanjay Mitra, Secretary of Union Ministry of

Road Transport & Highways. The committee was constituted after taxi and other transport operators had appraised the situation emerging from Supreme

Court’s order and directions of Environment Pollution Control Authority of banning diesel taxis in the National Capital Region (NCR). It will look into these issues and come up with appropriate recommendations in a time bound

manner.

Supreme Court Rulings:

So far the apex court has given four rulings aimed at bringing down

pollution levels in the NCR Delhi that has earned it the tag of the world’s most polluted city.

Top court’s first order against diesel-run commercial vehicles came in

December 2015. Later it issued an interim order banning registration of diesel-run vehicles with engine capacity of 2000 cc and above.

The Supreme Court on May 10, 2016 ruled that diesel taxis with All

India Tourist permit will be allowed to operate in Delhi/NCR till their permit expires.

SC says no new diesel taxis will be registered in Delhi. All registration of city taxis shall only be permitted only if the vehicles operate on dual-

fuel (CNG/Petrol), or purely CNG or petrol. The apex court made it clear that no new diesel vehicles can be registered as city taxis.

NK Singh Committee to review FRBM Act

The Union Government has constituted a five member committee to comprehensively review and give recommendations on the Fiscal Responsibility and Budget Management (FRBM) roadmap for the future.

Composition: The committee will be headed by Former Revenue Secretary and

Rajya Sabha MP, NK Singh. Its members are former Finance and Revenue Secretary Sumit Bose, Chief Economic Adviser (CEC) Dr. Arvind Subramanian, Deputy Governor of RBI Urijit Patel and Director of National

Institute Public Finance and Policy (NIPFP) Rathin Roy. The committee was constituted as per the announcement made by the Union Finance Minister Arun

Jaitley in his 2016-17 Budget speech. It will submit its Report to the Union Government by the 31st October, 2016.

Terms of Reference of the Committee:

Review the working of the FRBM Act, 2003 over last 12 years and

suggest the way forward. The suggestions should be submitted keeping in view the broad objective of fiscal consolidation and prudence and the

changes required in the context of the uncertainty and volatility in the global economy.

Look into various factors, aspects, considerations going into

determining the FRBM targets.

Consider the possibility of replacing absolute fiscal deficit targets with

a target range that may be adjusted in line with the overall credit trends in the economy.

Examine the need and feasibility of aligning the fiscal contraction and expansion with credit expansion or contraction respectively in the

economy. RBI sets up Sudarshan Sen-headed Working Group on Fin Tech and Digital

Banking

The Reserve Bank of India (RBI) has set up an inter-regulatory Working Group to study the regulatory issues relating to Financial Technology (Fintech) and Digital Banking in India. The inter-regulatory Working Group will be

headed by RBI’s Executive Director Sudarshan Sen and consist of 12 members. It will submit its report within six months from date of its first

meeting. It was constituted based on the recommendation of sub-committee of the Financial Stability and Development Council (FSDC) in view of the growing significance of Fintech innovations and their interactions with the

financial sector as well as financial sector entities. Terms of reference of Working Group:

Undertake a scoping exercise to gain a general understanding of the

major innovations and developments, technology platforms involved in Fintech.

Take into consideration how markets as well as the financial sector in

particular are adopting new delivery channels, products and technologies.

Assess opportunities and risks arising for the financial system from digitisation and use of financial technology.

Suggest how these opportunities can be utilised for optimising financial product innovation and delivery for the benefit of customers, users and

other stakeholders.

Evaluate implications and challenges vis-à-vis various financial sector

functions such as clearing, intermediation and payments being under taken up by non-financial entities.

Chalk out an appropriate regulatory response with a view to re-aligning

and re-orienting statutory provisions and regulatory guidelines for enhancing Fintech and digital banking.

Shankar Acharya Committee to examine desirability and feasibility of new

financial year

The Union Finance Ministry has constituted four members committee to

examine the feasibility and desirability of having a new financial year. The committee has been tasked to examine the merits and demerits of various dates

for the commencement of the financial year including the existing date (April to March) by taking into account the various relevant factors.

Composition: The committee will be headed by Dr. Shankar Acharya (former Chief Economic Adviser). Besides it will consist of PV Rajaraman (former

Finance Secretary, Tamil Nadu), KM Chandrasekhar (former Cabinet Secretary) and Dr. Rajiv Kumar (Senior Fellow, Centre for Policy Research) as its members.

DIPP - Department of

Industrial Policy and

Promotion

NITI - National Institution

for Transforming India

Terms of Reference of Committee:

Take into consideration genesis of the current financial year and the earlier studies made in the past on the desirability of change in FY.

It will take into consideration suitability of the financial year from point of view of

Correct estimations of receipts and expenditure of Union and State Governments.

Effect of the different agricultural crop periods.

Relationship of financial year on the working season. Impact on business.

Taxation systems and procedures. Statistics and data collection. Convenience of the legislatures for transacting budget work.

Other relevant matters

Recommend the date of commencement of the financial year which in

its views is most suitable for the country.

In case the committee recommends change in financial year, it will also

work out on the modalities for effecting the change.

It will include:

Appropriate timing of change Determination of transitional period

Changing tax laws during transitional period Amendments needed in various statues Changes in coverage of the recommendations of the Finance

Commission.

It can interact with experts, institutions, Government Departments and

others as deemed necessary.

The committee will submit its report to the Union Government by 31st

December 2016. Amitabh Kant Committee to review e-Commerce rules

The Union Government has decided to set up a committee to look at easing the

policy regime for e-commerce players, including the rules for foreign direct investment (FDI). The committee will be headed by Amitabh Kant, CEO of NITI Aayog. The other members in the panel will include officials from Union

Commerce Ministry and Industry and Department of electronics and IT among others. Representatives from four states including Maharashtra and Karnataka

will also be the members of the committee. The terms of reference of the Committee:

Examine various issues in e-commerce sector and making

recommendations for further liberalisation of the policy.

Look into all issues including FDI norms pertaining to the fast growing

e-commerce industry in the country. There are issues related to e-commerce players selling pharmaceuticals and some e-commerce firms are facing taxation related problems in few states.

Setting up of this committee assumes significance as the Union Government

recently had permitted 100 per cent FDI in food processing sector. The DIPP has permitted 100 per cent FDI through automatic route in the marketplace format. But FDI has not been allowed in inventory-based model of e-

commerce.

SECTORAL ANALYSIS – SERVICE SECTOR

Introduction

The Services sector has emerged as the most dynamic sector of the world

economy, contributing almost one-third of world gross value added, half of

world employment, one-fifth of global trade and more than half of the world

foreign direct investment flows. It remains the key driver of India’s economic

growth, contributing almost 66.1 per cent of its gross value added growth in

2015-16, important net foreign exchange earner and the most attractive sector

for foreign direct investment inflows. However, the global slowdown has cast a

shadow even on this promising sector.

In the US$ 74.0 trillion world gross value added (GVA) in 2014, the share of

services (at current prices), and growth rate (at constant prices), improved

marginally to 66.0 per cent and 2.5 per cent respectively over 2013. But in the

last thirteen years, the share of services in world GVA has declined by 2.7

percentage points (pp). Among the world’s top 15 countries in terms of gross

domestic product (GDP), the US ranks first in both services GVA and overall

GDP, followed by China in second and Japan in third position. India ranked

ninth in terms of overall GDP and tenth in terms of services GVA in 2014,

climbing one rung in both rankings.

Employment in the Service Sector

As per the World Bank, the share of services in global employment has

increased by 15 pp from 35.9 per cent in 2001 to 50.9 per cent in 2010. Among

the top 15 services producer countries, the share of services in employment is

high, contributing more than two-thirds of total employment in 2014 in most of

them except India and China, where the shares are low. India has the lowest

share of 28.7 per cent. Of the 15 countries, in the last 13-year period between

2001 and 2014, China had the highest increase in the share of services

employment (34.3 pp), followed by Brazil (17.2 pp) and Spain (14.3 pp). For

India, the increase was by only 4.7 pp.

Fig.48: Share of Hiring trends in India

Source: Gov.nic.in

Fig.49: Growth of Merchandise and Services trade

Source: Based on World Bank Data

Foreign Direct Investment in Service Sector

According to the Global Investment Trend Monitor January 2016 Edition of

the United Nations Conference on Trade and Development (UNCTAD), global

foreign direct investment (FDI) flows jumped 36% in 2015 to an estimated

US$1.7 trillion, which is the highest since the global economic and financial

crisis of 2008-9. However, the growth was largely due to cross-border mergers

and acquisitions (M&A), with only a limited contribution from greenfield

investment projects in productive assets. Moreover, a part of the FDI flows was

related to corporate reconfigurations involving large values in the financial

account of the balance of payments, with little movement in actual resources.

As per the World Investment Report 2015, the shift towards services FDI has

continued over the past 10 years in response to increasing liberalization in the

sector, the increasing tradability of services and the growth of global value

chains in which services play an important role. In 2014, services accounted

for 51 per cent of global FDI projects. Globally, the services sector recorded a

high growth in the value of cross-border M&As (37 per cent), against a

decrease in the value of greenfield projects (-15 per cent). FDI in China and

India at US$129 billion and US$34 billion, increased by 4 per cent and 22 per

cent respectively over 2013, mainly due to increase in FDI in the services

sector times cheaper

Table 9: FDI Equity Inflows in the Service Sector

Source: Reserve Bank of India

Table 10: Export Performance of major Service Sector


WTO Services Negotiations and Bilateral Negotiations Including Services

Trade

WTO negotiations

The 10th session of the WTO Ministerial Conference was held in Nairobi,

Kenya, from 15 to 18 December 2015. In the area of services trade, the

conference took decisions such as implementation of preferential treatment in

favour of services and service suppliers of least developed countries (LDC)

and increasing LDC participation in services trade; and moratorium on

payment of customs duties on electronic transmissions until 2017.

Preferential treatment for LDCs: So far, 21 members, including India, have notified preferential

treatment to LDCs in services trade. India has offered this in respect of: (i) article XVI of the

General Agreement on Trade in Services (GATS) (Market Access); (ii) technical assistance and

capacity building; and (iii) waiver of visa fees for LDC applicants applying for Indian business

and employment visas. The fee waiver will be valid until 31 December 2030.

India is the only member which has offered waiver of visa fees. This is a unique and almost

path-breaking offer by India. So far, visa issues have remained untouched in the WTO/free trade

agreements (FTA). India’s offer should give significant advantage to service suppliers from

LDCs vis-à-vis service suppliers from any other country.

E-commerce: The WTO Members agreed to maintain the current practice of not imposing

customs duties on electronic transmissions until the next Ministerial Conference which will be

held in 2017.

Major Services: Over All Performance

The services sector has shown subdued performance in recent years with the

slowdown in the global economy, though certain segments of the sector remain

key drivers of economic growth. Analysis of the sector-wise performance of

services activities based on firm-level data indicates a healthy rise in sales of

the health services segment in the Q1 and Q2 of 2015-16, though profits

declined on account of expense heads like professional fees to doctors and rent.

The performance of the Indian aviation industry has improved following a fall

in prices of aviation fuel, which accounts for nearly 40 per cent of the

operating expenses of airlines in India. The telecom industry registered a

healthy profit in Q1 of the year. However, muted order inflows and a stretched

financial position impacted the execution capacity of many construction

companies, while lower margins in the infrastructure sector impacted their

profit margins.

Some available indicators of the different services in India for 2015-16 show

reasonably good performance in telecom, aviation and port services and

information technology-business process management (IT-BPM) although the

last is slightly muted compared to earlier years

Table 11: Performance of India’s Services sector

Major Performance

Services Sectors

performance has

subdued

Profits have declined

In the US 74.0 trillion

got added


TOURISM SECTOR

Introduction

The Indian tourism and hospitality industry has emerged as one of the key

drivers of growth among the services sector in India. The second-largest sub-segment of the services sector comprising trade, repair services, hotels and

restaurants contributed nearly US$ 295.7 billion or 19.2 per cent to the Gross Domestic Product (GDP) in 2015-16, while growing at 8.9 per cent year-on-year. Tourism in India has significant potential considering the rich cultural

and historical heritage, variety in ecology, terrains and places of natural beauty spread across the country. Tourism is also a potentially large employment

generator besides being a significant source of foreign exchange for the country.

The industry is expected to generate 13.45 million jobs across sub-segments such as Restaurants (10.49 million jobs), Hotels (2.3 million jobs) and Travel

Agents/Tour Operators (0.66 million). The Ministry of Tourism plans to help the industry meet the increasing demand of skilled and trained manpower by providing hospitality education to students as well as certifying and upgrading

skills of existing service providers. India has moved up 13 positions to 52nd rank from 65th in Tourism & Travel

competitive index@. Tourism Australia expects Indian tourist’s arrivals in Australia to increase 12 per cent year-on-year to reach 245,000 visitors during FY 2015-16, thus making India the eighth largest source market for tourism in

Australia.

Market Size

India’s rising middle class and increasing disposable incomes has continued to

support the growth of domestic and outbound tourism. Total outbound trips

TOURISM

Tourism has been one of

the key drivers

Contribution to nearly

19.2% to the GDP

Potentially a large

employment generator

Industry Expected to

generate 13.45 Million

Jobs

Moved from 65 to 52 in

tourism rank

TOURISM

Tourism has been one of

the key drivers

Projected to reach 3.9

billion

CAGR 27% over the last

3 years

Revenue Growth of

Indian Hotel industry

strengthening

FINANCIAL SERVICES

Financial services

showed rapid expansion

Government introduced

reforms to liberalise the

sector

MSMEs have come up

in importance

increased by 8.7 per cent to 19.9 million in 2015. Inbound tourist volume grew

at a Compound Annual Growth Rate (CAGR) of 6.8 per cent during 2010-15.

The number of Foreign Tourist Arrivals (FTAs) has grown at a CAGR of 3.7

per cent to 5.29 lakh year-on-year in May 2016. Foreign Exchange Earnings

(FEEs) during the month of May 2016 grew at a rate of 8.2 per cent year-on-

year to Rs 10,285 crore (US$ 1.52 billion).

The number of tourists arriving on e-Tourist Visa during June 2016 reached a

total of 36,982 tourists registering a year-on-year growth of 137.7 per cent.

Online hotel bookings in India are expected to double by 2016 due to the

increasing penetration of the internet and smart phones

Road Ahead

India’s travel and tourism industry has huge growth potential. The medical

tourism market in India is projected to reach US$ 3.9 billion in size having

grown at a CAGR of 27 per cent over the last three years. Also, inflow of

medical tourists is expected to cross 320 million by 2015 compared with 85

million in 2012. The tourism industry is also looking forward to the expansion

of E-visa scheme which is expected to double the tourist inflow to India.

Rating agency ICRA ltd estimates the revenue growth of Indian hotel industry

strengthening to 9-11 per cent in 2015-16. India is projected to be the fastest

growing nation in the wellness tourism sector in the next five years, clocking

over 20 per cent gains annually through 2017.

FINANCIAL SERVICES

India has a diversified financial sector undergoing rapid expansion, both in

terms of strong growth of existing financial services firms and new entities

entering the market. The sector comprises commercial banks, insurance

companies, non-banking financial companies, co-operatives, pension funds,

mutual funds and other smaller financial entities. The banking regulator has

allowed new entities such as payments banks to be created recently thereby

adding to the types of entities operating in the sector. However, the financial

sector in India is predominantly a banking sector with commercial banks

accounting for more than 64 per cent of the total assets held by the financial

system.

The Government of India has introduced several reforms to liberalise, regulate

and enhance this industry. The Government and Reserve Bank of India (RBI)

have taken various measures to facilitate easy access to finance for Micro,

Small and Medium Enterprises (MSMEs). These measures include launching

Credit Guarantee Fund Scheme for Micro and Small Enterprises, issuing

guideline to banks regarding collateral requirements and setting up a Micro

Units Development and Refinance Agency (MUDRA). With a combined push

by both government and private sector, India is undoubtedly one of the world's

most vibrant capital markets.

Market Size

Total outstanding credit by scheduled commercial banks of India stood at Rs

72,606.11 billion (US$ 1.08 trillion). The Association of Mutual Funds in India

(AMFI) data show that assets of the mutual fund industry have reached a size

of Rs14.21 trillion (US$ 210 billion)@.

During April 2015 to March 2016 period, the life insurance industry recorded a

new premium income of Rs 1.38 trillion (US$ 20.54 billion), indicating a

growth rate of 22.5 per cent over the previous year. The general insurance

industry recorded a 12 per cent growth year-on-year in Gross Direct Premium

underwritten in April 2016 at Rs105.25 billion (US$ 1.55 billion).

India’s life insurance sector is the biggest in the world with about 360 million

policies, which are expected to increase at a Compounded Annual Growth Rate

(CAGR) of 12-15 per cent over the next five years. The insurance industry is

planning to hike penetration levels to five per cent by 2020, and could top the

US$ 1 trillion mark in the next seven years. The total market size of India's

insurance sector is projected to touch US$ 350-400 billion by 2020.

India is the fifteenth largest insurance market in the world in terms of premium

volume, and has the potential to grow exponentially in the coming years. Life

insurance penetration in India is just 3.9 per cent of GDP, more than doubled

from 2000. A fast growing economy, rising income levels and improving life

expectancy rates are some of the many favourable factors that are likely to

boost growth in the sector in the coming years.

Investment corpus in India’s pension sector is expected to cross US$ 1 trillion

by 2025, following the passage of the Pension Fund Regulatory and

Development Authority (PFRDA) Act 2013.

Road Ahead

India is today one of the most vibrant global economies, on the back of robust

banking and insurance sectors. The country is projected to become the fifth

largest banking sector globally by 2020##. The report also expects bank credit

to grow at a Compound Annual Growth Rate (CAGR) of 17 per cent in the

medium term leading to better credit penetration. Life Insurance Council, the

industry body of life insurers in the country also projects a CAGR of 12–15 per

cent over the next few years for the financial services segment.

Also, the relaxation of foreign investment rules has received a positive

response from the insurance sector, with many companies announcing plans to

increase their stakes in joint ventures with Indian companies. Over the coming

quarters there could be a series of joint venture deals between global insurance

giants and local players. The relaxation in the foreign direct investment (FDI)

limit to 49 per cent can result in additional investments up to Rs 60,000 crore

(US$8.81 billion).

CLIMATE CHANGE AND SUSTAINABLE DEVELOPMENT

The year 2015 witnessed two landmark international events: the historic

climate change agreement under the UNFCCC in Paris in December 2015 and

the adoption of the Sustainable Development Goals in September 2015. The

Paris Agreement aims at keeping the rise in global temperatures well below

2°C, which will set the world towards a low carbon, resilient and sustainable

future, while the Sustainable Development Goals, which replace the

Market Size

Outstanding credits by

scheduled commercial

banks

Life insurance sector is

biggest in the world

CAGR of 12 – 15% in

the next 5 years

Millennium Development Goals, set the development agenda for the next

fifteen years. On the domestic front too some important climate-related

initiatives were taken, including the launching of the historic International

Solar Alliance and the submission of the ambitious Intended Nationally

Determined Contribution.

On the domestic front, India continued to take ambitious targets in its actions

against climate change. As a part of its contributions to the global climate

change mitigation efforts, India announced its intended nationally determined

contribution (INDC) which set ambitious targets for domestic efforts against

climate change. Including other efforts, the country has set itself an ambitious

target of reducing its emissions intensity of its gross domestic product (GDP)

by 33-35 per cent by 2030, compared to 2005 levels, and of achieving 40

percent cumulative electric power installed capacity from non-fossil fuel-based

energy resources by 2030.

Climate Change

According to the World Meteorological Organization, 2015 was the warmest

year, with temperature 1°C above the preindustrial era. This was owing to El

Nino and warming caused by greenhouse gases (GHG). Anthropogenic

emissions have been increasing at an unprecedented rate since the industrial

revolution. According to an International Energy Agency (IEA) report,

concentration of CO2 in 2014 was 40 per cent higher than in the mid-1800s.

The energy sector is the largest contributor to GHG emissions and, within this,

CO2 emissions from combustion of fuels have the largest share.

The global emissions profile shows that emissions have been distributed very

unequally among different countries. If historical CO2 emissions from 1970 to

2014 are considered, India with 39.0 Gt is way behind the top three emitters –

the USA,the EU and China. The USA’s emissions, for example, were around

six times India’s. Even if historical levels are discounted and only present

levels considered, both in terms of absolute and per capita emissions, India is

way behind the three major CO2 emitters. In 2014, in terms of absolute

emissions, China was at the top, while in terms of per capita emissions, the

USA was at the top. India’s per capita emissions are among the lowest in the

world.

Fig. 50: Historical (1970-2014), Absolute and per capita CO2 emissions of select economies

in 2014

The India Innovation Lab

for Green Finance is a

public-private initiative to

seek out and help implement

novel solutions for

unlocking and scaling up

investment for green

infrastructure in India. By

addressing investors’ needs,

it aims to drive new private

investment for clean growth.

The Paris Agreement

aims at keeping the rise

in global temperatures

well below 2°C

Domestic contribution:

Launching of the

historic International

Solar Alliance and the

submission of the

ambitious Intended

Nationally Determined

Contribution

Reducing its emissions

intensity of its gross

domestic product

(GDP) by 33-35 per

cent by 2030

Climate Change

2015 was the warmest

year, with temperature

1°C above the

preindustrial era Energy sector is the

largest contributor to

GHG emissions

India is way behind the

three major CO2

emitters

Source: Based on PBL Netherlands Environmental Assessment Agency data used in

‘Trends in Global CO2 Emissions

If the different levels of development and differentiated responsibilities and

equity are considered, the United States has the highest per capita CO2

emissions and per capita income while India has the lowest of both among the

four.

We can compare the emissions from different sectors:

Source: Based on data from IEA CO2 Emissions from Fuel Combustion, OECD/IEA, Paris, 2015

Paris Agreement

The Paris Agreement for the first time brings together all nations for a common

cause under the UNFCCC. One of the main focus of the agreement is to hold

the increase in the global average temperature to well below 2°C above pre-

industrial level and on driving efforts to limit it even further to 1.5°C. The

Paris Agreement comprises of 29 articles and is supported by 139 decisions of

the COP. It covers all the crucial areas identified as essential for a

comprehensive and balanced agreement, including mitigation, adaptation, loss

and damage, finance, technology development and transfer, capacity building

and transparency of action and support

0

20

40

60

80

100

120

140

World China India EU (28) USA

Fig.51: Emissions from different sectors

Other sectors

Transport

Manuf. Industries and

construction

Other energy industry own use

Electricity and heat production

The Paris Agreement acknowledges the development imperatives of

developing countries by recognizing their right to development and

their efforts to harmonize it with the environment, while protecting the

interests of the most vulnerable.

The Agreement seeks to enhance the ‘implementation of the

Convention’ while reflecting the principles of equity and CBDR-RC, in

the light of different national circumstances.

Countries are required to communicate to the UNFCCC climate action

plans known as nationally determined contributions (NDCs) every five

years. Each Party’s successive NDC will represent a progression

beyond the Party’s then current NDC thereby steadily increasing global

effort and ambition in the long term.

The Agreement is not mitigation-centric and includes other important

elements such as adaptation, loss and damage, finance, technology

development and transfer, capacity building and transparency of action

and support.

Climate action will also be taken forward in the period before 2020.

Developed countries are urged to scale up their level of financial

support with a complete road map towards achieving the goal of jointly

providing US$ 100 billion by 2020. At the same time, a new collective

quantified goal based on US$ 100 billion floor will be set before 2025.

The Agreement mandates that developed countries provide financial

resources to developing countries.

Other Parties may also contribute, but on a purely voluntary basis.

Developed countries are urged to take the lead in mobilization of

climate finance, while noting the significant role of public funds in the

mobilization of finance which should represent a progression beyond

their previous effort.

The Agreement includes a robust transparency framework for both

action and support.

Starting in 2023, a global stocktake covering all elements will take

place every five years to assess the collective progress towards

achieving the purpose of the Paris Agreement and its long term goals.

The Paris Agreement establishes a compliance mechanism, overseen by

a committee of experts that operates in a non-punitive way, and is

facilitative in nature.

Green Finance

The term green finance has gained a lot of attention in the past few years with

the increased focus on green development. The Rio+20 document clearly states

what green economy policies should result in and what they should not. While

there is no universal definition of green finance, it mostly refers to financial

investments flowing towards sustainable development projects and initiatives

that encourage the development of a more sustainable economy. Green finance

includes different elements like greening the banking system, the bond market

and institutional investment. Several working definitions and sets of criteria of

green finance have also been developed. Examples include the China’s Green

Credit Guidelines, the Climate Bonds Taxonomy of Green Bonds, the

International Development Finance Club’s (IDFC) approach to reporting on

green investment, the World Bank/International Finance Corporation’s (IFC)

The Paris Agreement is

an agreement within the

framework of

the United Nations

Framework Convention

on Climate

Change (UNFCCC)

dealing with

greenhouse gases

emissions mitigation

Sustainability Framework and the UK Green Investment Bank Policies. An

initial review of the current definitions in use reveals sizeable intersections of

the various definitions in thematic areas such as clean energy, energy

efficiency, green buildings, sustainable transport, water and waste

management, as well as areas of controversy such as nuclear and large-scale

hydro energy, biofuels and efficiency gains in conventional power.

So far four banks have issued green bonds in India. Proceeds from these bonds

are mostly used for funding renewable energy projects such as solar, wind and

biomass projects and other infrastructure sectors, with infrastructure and

energy efficiency being considered as green in their entirety. The Securities

and Exchange Board of India (SEBI) has also recently approved the guidelines

for green bonds.

While mobilization and effective use of green finance is of primary

importance, there are some issues which need to be taken note of.

For a developing country like India, poverty alleviation and

development are of vital importance and resources should not be

diverted from meeting these development needs. Green finance should

not be limited only to investment in renewable energy, as, for a country

like India, coal based power accounts for around60 per cent of installed

capacity. Emphasis should be on greening coal technology. In fact,

green finance for development and transfer of green technology is

important as most green technologies in developed countries are in the

private domain and are subject to intellectual property rights (IPR),

making them cost prohibitive.

Green bonds are perceived as new and attach higher risk and their

tenure is also shorter. There is a need toreduce risks to make them

investment grade.

There is also a need for an internationally agreed upon definition of

green financing as its absence could lead to over-accounting.

While environmental risk assessment is important, banks should not

overestimate risks while providing green finance.

Green finance should also consider unsustainable patterns of

consumption as a parameter in deciding finance, particularly

conspicuous consumption and unsustainable lifestyles in developed

countries.

Intended Nationally Determined Contribution

INDCs are plans by governments communicated to the UNFCCC regarding the

steps they will take to address climate change domestically.

India’s INDC climate change contributions are as follows:

To put forward and further propagate a healthy and sustainable way of

living based on traditions and values of conservation and moderation.

To adopt a climate friendly and cleaner path than the one hitherto

followed by others at a corresponding level of economic development.

To reduce the emissions intensity of its GDP by 33 to 35 per cent of the

2005 level by 2030.

To achieve about 40 per cent cumulative electric power installed

capacity from non-fossil fuel- based energy resources by 2030 with the

INDCs are plans by

governments communicated

to the UNFCCC regarding

the steps they will take to

address climate change

domestically

As per the Human

Development

Report (HDR)

2015 released by

the UN

Development

programme

(UNDP), India

ranks 130 out of

188 countries in

Human

Development

Index.

As a proportion of

the Gross Domestic

Product (GDP),

expenditure on

education has been

around 3 per cent

during 2008-09 to

2014-15

Expenditure on

health as a

proportion of GDP

has remained

stagnant at less

than 2 per cent

during the same

period

help of transfer of technology and low cost international finance

including from the Green Climate Fund (GCF).

To create an additional carbon sink of 2.5 to 3 billion tonnes of CO2

equivalent (CO2eq.) through additional forest and tree cover by 2030.

To better adapt to climate change by enhancing investments in

development programmes in sectors vulnerable to climate change,

particularly agriculture, water resources, the Himalayan region, coastal

regions, health and disaster management.

To mobilize domestic and new and additional funds from developed

countries for implementing these mitigation and adaptation actions in

view of the resources required and the resource gap.

To build capacities, create a domestic framework and an international

architecture for quick diffusion of cutting-edge climate technology in

India and for joint collaborative R&D for such future technologies.

SOCIAL INFRASTRUCTURE & HUMAN DEVELOPMENT

Social infrastructure with its positive externalities has a significant role in the

economic development of a country. It is empirically proven and widely

recognized that education and health impact the growth of an economy.

Investing in human capital by way of education, skill development, training

and provision of health care facilities enhances the productivity of the

workforce and welfare of the population.

Table 12: Trends in Social Services Expenditure as Percentage to GDP

Item/Year 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

Total Expenditure

28.4 28.6 27.6 27.4 27.0 26.2 28.1 27

Expenditure on social services

6.8 6.9 6.8 6.6 6.6 6.5 7.0 6.7

Of which:

Education 2.9 3.0 3.1 3.1 3.1 3.0 3.1 3.0

Health 1.3 1.4 1.3 1.2 1.3 1.2 1.3 1.3 Others 2.6 2.5 2.4 2.2 2.2 2.3 2.6 2.4

Source: indiabudget.nic.in

Table 13: Budgeted Estimates (BE) and Revised Estimates (RE) for Initiatives in Social

Infrastructure domain

Scheme 2015-16 BE (in thousand crores)

2015-16 RE (in thousand crores)

2016-17 BE (in thousand crores)

Sarva Shiksha Abhiyan 22000 22015.42 22500

Midday Meal Scheme 9236.4 9236.4 9700

National Health Mission 18875 19135.37 19,437 MNREGA 34699 36967 38500

Pradhan Mantri Gram Sadak Yojana

14291 18297 19000

Swachh Bharat Mission 3625 6525 9000 Integrated Child Development Scheme

8371.77 15502.27 14000

Source: thewire.in

Human Development Index (HDI)

As per the Human Development Report (HDR) 2015 released by the UN

Development programme (UNDP), India ranks 130 out of 188 countries in

Human Development Index. The Human Development Index (HDI) is based

on the indices for life expectancy, educational attainment and per capita

income. It is an alternative indicator of socio-economic development of the

country. India’s HDI value for 2014 is 0.609.

India has improved its ranking by 6 places between 2009 and 2014. In

comparison to other nations in the BRICS grouping, India has the lowest rank

with Russia at 50, Brazil at 75, China at 90 and South Africa at 116.

Between 1980 and 2014, India’s Gross National Income (GNI) per capita

increased by about 338 per cent. Over the same period, the Life Expectancy at

As per the Human

Development Report

(HDR) 2015 released

by the UN

Development

programme (UNDP),

India ranks 130 out of

188 countries in Human

Development Index.

As a proportion of the

Gross Domestic

Product (GDP),

expenditure on

education has been

around 3 per cent

during 2008-09 to

2014-15

Expenditure on health

as a proportion of GDP

has remained stagnant

at less than 2 per cent

during the same period

Between 1980 and

2014, India’s Gross

National Income (GNI)

per capita increased by

about 338 per cent.

The NITI Aayog, that is

replacing the Planning

Commission, is not

accountable to the

parliament.

Between 1980 and

2014, India’s Gross

National Income (GNI)

per capita increased by

about 338 per cent.

The NITI Aayog, that is

replacing the Planning

Commission, is not

accountable to the

parliament.

Poverty estimates by

using household

consumption

expenditure survey data

collected by the NSSO

(National Sample

Survey Organization

2011-12) shows that the

incidence of poverty

declined from 37.2% in

2004-05 to 21.9% in

2011-12, with a sharper

decline in the number

of rural poor.

Birth (LEB) increased by 14.1 years, mean years of schooling by 3.5 years and

expected years of schooling by 5.3 years.

Along with HDI, the Human Development Report 2015 also gives the Gender

Development Index (GDI) for all the 188 countries. The HDI value for females

in India is 0.525 in 2014, which remains unchanged in comparison to that in

2013

NITI Aayog

NITI Aayog or National Institution for Transforming India Aayog is a non-

Constitutional, non-statutory body formed by a cabinet resolution. It replaces

Planning Commission and aims to involve the states in economic policy-

making in India. It will be providing strategic and technical advice to the

central and the state governments by adopting bottom-up approach rather than

traditional top-down approach as in planning commission.

The Prime Minister heads the Aayog as its chairperson. The current vice

chairperson is Arvind Panagariya. While the Planning Commission had no

representation for State and Union territories, the NITI Aayog has. Some ways

in which the NITI Aayog is expected to contribute to Social Infrastructure and

Human Development are:

Find best practices from other countries, partner with other national and

international bodies to help their adoption in India

Involve state governments and even villages in planning process

Sustainable development, in line with Make in India’s Zero Defect - Zero

Effect (on environment) manufacturing mantra

Urban Development: To ensure cities can remain habitable and provide

economic venues to everyone

Participatory Development: With help of private sector and citizens

Inclusive Development or Antyodaya: Ensure SC, ST and Women too

enjoy the fruits of Development

Poverty elimination to ensure dignity and self-respect

Focus on 5 crore small enterprises: To generate more employment for

weaker sections

Make policies to reap benefits out of demographic dividend and social

capital

Regional Councils will address specific issues for a group of states; e.g.

Regional Council for drought, left-wing extremism, tribal welfare, etc.

Extract maximum benefit from NRI’s geo-economic and geo-political

strength for India’s Development

Water, Sanitation and Hygiene

A World Bank report in 2006 said that India loses 6.4 percent of GDP annually

because of inadequate sanitation. Advocating the idea of Clean India, Prime

Minister Narendra Modi had said, "The pursuit of cleanliness can be an

economic activity, contributing to GDP growth, reduction in healthcare costs,

and a source of employment."

Swachh Bharat Abhiyaan: Swachh Bharat Abhiyan is a national campaign by

the Government of India, covering 4041 statutory towns, to clean the streets,

The Swachh Bharat

Abhiyaan was

officially launched on 2

October 2014 at

Rajghat, New Delhi,

where Prime Minister

Narendra Modi himself

cleaned the road.

India ranks 143 among

190 countries in terms

of per capita

expenditure on health.

It has 157th position

according to per capita

government spending

on health.

The National Rural

Health Mission

(NRHM) was launched

by the Prime Minister

on 12th April 2005

As on 1 January 2016,

about 3.63 crore

households had been

provided employment

of 134.96 crore person

days under

MGNREGA.

roads and infrastructure of the country. This campaign aims to accomplish the

vision of a 'Clean India' by 2 October 2019, the 150th birthday of Mahatma

Gandhi. It is expected to cost over ₹62000 crore (US$9.4 billion).

The initiative aims to achieve universal sanitation coverage and eliminate

open defecation in India by 2 October 2019 and to promote better hygiene

and improve cleanliness by initiating Solid and Liquid Waste Management

(SLWM) projects in villages, towns and cities.

In its first year, i.e. from 2 October 2014 to 2 October 2015, 88 lakh toilets

were constructed, against an expected outcome of 60 lakhs.

Sanitation coverage, which stood at 40.60 per cent as per NSSO data, has

risen to around 48.8 per cent as on 31 December 2015.

The Union Budget 2014-15 provided for setting up an Integrated Ganga

Conservation Mission namely “Namami Gange” with an allocation of Rs.

2037 crore (Rs 1500 crore for Namami Gange and Rs. 355 crore for on-

going NGRBA (National Ganga River Basin Authority) projects, 100 crore

for project in the tributaries including river Yamuna and Rs. 82 crore for

National River Conservation Programme) for FY 2014-15.

In order to improve availability of drinking water in rural areas, the

National Rural Drinking Water Programme (NRDWP), supported by the

World Bank, initiated the ‘Rural Water Supply and Sanitation Project–Low

Income States’ with a total cost of Rs 6000 crore. As on 31 December

2015, the project has implemented 275 single and multi-village piped

drinking water supply schemes through the decentralized delivery

mechanism of empowered Gram Panchayat Water and Sanitation

Committees. The NRDWP is a component of Bharat Nirman which focuses

on the creation of rural infrastructure.

A new scheme for installation of 20,000 Solar Energy based dual pumps in

remote rural areas of the country where electricity is not accessible has

been initiated with the collaboration of Ministry of New and Renewable

Energy.

NITI Ayog has recommended Rs 1000 crore as one time additional Central

assistance to all the States having arsenic and fluoride affected rural

habitations

The Ministry of Drinking Water and Sanitation in collaboration with

National Clean Energy Funds (NCEF) has executed 10,000 solar energy

based dual pumps for Piped Water Supply Scheme PWSS in remote

habitations targeted for Integrated Action Plan Districts (IAP).

Health in India

The Universal Health Coverage (UHC) index has been developed by the World

Bank to measure the progress made in health sectors in select countries of the

World. India ranks 143 among 190 countries in terms of per capita expenditure

on health. It has 157th position according to per capita government spending

on health.

Targeting coverage of all those children by 2020 who are either

unvaccinated, or are partially vaccinated against seven vaccine-preventable

diseases which include diphtheria, whooping cough, tetanus, polio,

With the average age

of India becoming 29

years by 2020, it is

estimated that our

labour force will

increase by 32%

NSDC launched an

advocacy campaign

called “Hunar Hai to

Kadar Hai” which

means “With Skills

Comes Respect” to

generate awareness

about skill

development programs

and to break the social

stigma towards blue-

collar jobs among

youth.

The Chairperson of the

NITI Aayog is the

Prime Minister

The vice chairperson of

the NITI Aayog is

Arvind Panagariya

A World Bank report in

2006 said that India

loses 6.4 percent of

GDP annually because

of inadequate

sanitation.

tuberculosis, measles and hepatitis B, Mission Indradhanush was launched

in December 2014.

Under the Rashtriya Bal Swasthya Karyakram (RBSK), support is being

provided to States/UTs for child health screening and early intervention

services through early detection and early management of common health

conditions.

National Iron Plus Initiative has been rolled out to address anaemia among

children (6 months to 19 years) and women in reproductive age including

pregnant and lactating women in both rural and urban areas throughout the

country.

Considering the rising incidence of Non-Communicable Diseases (NCDs),

the Government of India has initiated an integrated National Programme

for Prevention and Control of Cancers, Diabetes, Cardiovascular Diseases

and Stroke (NPCDCS) jointly by the Ministry of Health and Family

Welfare and Ministry of AYUSH (Ayurveda, Yoga, Unani, Siddha and

Homeopathy) on pilot basis in six districts.

Findings from NSSO (National Sample Survey Organisation) 71st round:

o Over 60 per cent of all institutional deliveries are in the public

sector and the Out of Pocket expenditures for childbirth in the

public sector is about one-tenth that in the private sector.

o As regards non-hospitalised care, only 28.3 per cent of care is being

provided by public sector.

o Under five, mortality has declined from 126 in 1990 to 49 in

2013, much faster than global rate of decline during the same

period.

The National Rural Health Mission (NRHM) was launched by the Prime

Minister on 12th April 2005, to provide accessible, affordable and quality

health care to the rural population, especially the vulnerable groups.

o Various initiatives under the National Health Mission (NHM), which

subsume the National Rural Health Mission (NRHM) for rural areas

and the NUHM for urban areas with a population of more than 30,000,

have been taken up for providing free health care through a nationwide

network of public health facilities like CHCs, PHCs and Sub-Centres

(SCs) in both rural and urban areas.

o Initiatives such as 'RBSK' and ‘Rashtriya Kishor Swasthya Karyakram’

(RKSK) have been launched in 2013 and 2014 respectively under the

NHM to provide comprehensive health care.

o Government of India has intensified efforts for provision of free

essential drugs in public health facilities under the NHM Free Drugs

Initiative. ‘Jan Aushadhi Scheme’ for providing quality generic

medicines at affordable prices in collaboration with the State

Governments

MNREGA

The Government, to address the low female LFPR (Labour Force Participation

Rate) and WPR (Worker-Population Ratio), has launched various legislation

based schemes and other programmes/schemes where the emphasis is on

female participation. For example, the Mahatma Gandhi National Rural

Employment Guarantee Act (MGNREGA), guaranteeing at least 100 days of

The National Rural

Health Mission

(NRHM) was launched

by the Prime Minister

on 12th April 2005

As on 1 January 2016,

about 3.63 crore

households had been

provided employment

of 134.96 crore person

days under

MGNREGA.

12.90 procedures, takes

29.00 days, costs

13.50% of income per

capita and requires

paid-in minimum

capital of 0.00% of

income per capita are

required to set up a

business in India

Streamlining

procedures are essential

and making it a one

stop shop

Introduce technology

and reduce unnecessary

capital requirements

employment to every household in rural areas has been enacted with a

stipulation of one-third participation by women.

As on 1 January 2016, about 3.63 crore households had been provided

employment of 134.96 crore person days under MGNREGA. Of the above

person days, 76.81 crore person days (57 per cent) were availed of by women.

The participation by women under the MGNREGA has been more than the

stipulated 33 per cent since its inception.

NRLM

The National Rural Livelihoods Mission (NRLM), a restructured version of the

Swarnajayanti Gram Swarozgar Yojana (SGSY), has been in operation since 3

June 2011. It aims at organizing all rural poor households and nurturing and

supporting them till they come out of abject poverty, by organizing one woman

member from each household into affinity-based women SelfHelp Groups

(SHG) and their federations at village and higher levels by 2024-25. The

mission has covered 1.7 lakh villages and mobilized around 24.61 lakh SHGs,

of which 8.3 lakh are new.

Skill India Initiative

More than 93% of our workforce is unorganised. It is estimated that only

4.69% of the total workforce in India has undergone formal skill training as

compared to more than 50% across the developed countries in the world. To

add to this conundrum, with the average age of India becoming 29 years by

2020, it is estimated that our labour force will increase by 32% due to this

demographic shift. Skill development is considered as a national priority with a

dedicated Ministry of Skill Development and Entrepreneurship (MSDE) being

created.

National Skill Development Corporation has facilitated setting up of Sector

Skill Councils (SSC) across 37 sectors and having representation from Industry

Members, Industry Associations, Business Leaders, Training providers and

Government bodies. During the FY 2014-15 NSDC has been able to cover

twenty eight states and five union territories through its skill development

efforts which include 206 training partners and 3611 training centres across the

country. In the same period NSDC skilled 3.4 million people which includes

training conducted by training partners and training done under schemes like

STAR and UDAAN implemented by NSDC across thirty one sectors.

NSDC has championed the ‘World Skills India’ initiative under MSDE to

facilitate India’s participation at World Skills Competition.

Labour- sector reforms

A Shram Suvidha portal has been launched for online registration of units,

filing of self-certified, simplified, single online return by units, introduction of

a transparent labour inspection scheme via computerized system as per risk-

based criteria, uploading of inspection reports within seventy-two hours and

timely redressal of grievances. A Universal Account Number has been

launched facilitating portable, hassle-free, and universally accessible Provident

Fund accounts for employees. The Apprentices Act, 1961 has been amended so

as to make it flexible and attractive to youth and industry and an Apprentice

Protsahan Yojana to support micro small and medium enterprises (MSME) in

the manufacturing sector in engaging apprentices has been launched.

EASE OF DOING BUSINESS IN INDIA

The ease of doing business is the measure of how conducive the regulatory

environment in the country is in order to conduct business operations. World

Bank Group created an index called 10-points ease of doing business

indicators to rank economies from 1 to 189, with first place being the best.

Higher ranking (a low numerical value) indicate better, usually simpler,

regulations for businesses and stronger protections of property rights. It cover

the spectrum from starting a business, obtaining necessary permissions, getting

credit, protecting minority investors and taxes to enforcing contracts and

resolving insolvency.

India as of 2016 ranks 130 which is four year improvement from last year

ranking of ease of doing business. The country also jumped 16 places in the

World Economic Forum’s global competitiveness rankings, released in

September—to 55 out of 140 countries, from 71 out of 144 the previous year.

The budget of this year is a boost for Prime Minister Narender Modi’s

ambition to take India into the top 50 in the World Bank’s Doing Business

rankings in five years.

The Ministry of Corporate Affairs (MCA) issued the Companies (Amendment)

Act, 2015(Amended law) thereby amending certain sections of the Companies

Act, 2013. The amendment received an assent from the President on May 25,

2015 and was notified in the Official Gazette on May 26, 2015. Further the

amended law mainly strives to improve the ease of doing business in India and

has addressed the issues/concerns faced by the stakeholders. The key

amendment in the Companies Act, 2015 were:

Requirement of Minimum Paid up Share Capital [Section 2(68) and

Section 2(71)]

The requirement of having a minimum paid up share capital by a company has

been done away with. Hence, going forward, a private or a public company can

be incorporated without the need for minimum paid up share capital of one

lakh or five lakh rupees, respectively.

Common Seal made optional [Sections 9, 12, 22, 46 and 223]

The requirement of having a common seal has been made optional, and as a

consequence, changes have been made with regards to authorization for

execution of documents.

Commencement of Business [Omission of Section 11]

Hitherto, before commencement of business or exercising any borrowing

powers, the director of a company having share capital was required to file

with the Registrar of Companies a declaration that every subscriber to the

Memorandum has paid the value of shares committed by him/her and that the

paid-up share capital of the company is not less than the amount prescribed.

India ranks 130 for ease

of doing business

Lots of new reforms

have been done to boost

India’s ranking from

168

Jumped 16 places in

global competitiveness

ranking

The requirement of

having a minimum paid

up share capital by a

company has been done

away with

The requirement of

having a common seal

has been made optional

Filing a declaration

before commencement

of business has been

done away with

The relevant Section has now been omitted and the requirement of filing a

declaration before commencement of business has been done away with.

Declaration of Dividend [Section 123(1)]

Additional provision has been inserted in Section 123 in accordance with

which no company shall declare dividend unless carried over past losses and

depreciation in previous year or years are set off against profit of the company

for the current year.

Corporate Affairs Minister Arun Jaitley introduced the Companies

(Amendment) Bill, 2016 which has taken into consideration the suggestions

made by a high level panel on further possible changes to the law.

Finance Minister Arun Jaitley has proposed in Budget 2016-17 that if the

dividend income earned by a resident individual, HUF or firm exceeds ₹10

lakh, it will be taxed at the rate of 10 per cent in the hands of the recipient.

That comes on top of the Dividend Distribution Tax (DDT) already in force;

which is effectively 20.36 per cent (including surcharge and cess). But it is the

company that is charged the DDT; the dividend was exempt in the hands of the

shareholder.

Infosys as a start-up was a beneficiary of the liberalization process started in

1991. The credit has to be given first to PV Narasimha Rao, then to Dr.

Manmohan Singh and to P Chidambaram and also to Montek Singh Ahluwalia.

They abolished licensing in most sectors because of which license to import

duration was reduced.

Also introduced was the concept of current account convertibility. Before that

one had to apply and wait endlessly for foreign exchange from the RBI.

Current account convertibility allowed them to open offices abroad, to send

their employees to man those offices, hire consultants from abroad in quality

and branding. Without this, Indian companies could not have become

international.

Then they also abolished the office of the Controller of Capital Issues. There

used to be civil servants in Delhi who did not understand anything about

capital markets and he was supposed to decide on the pricing of the IPO.

Manmohan Singh realized that this office was unnecessary and abolished it. He

then told entrepreneurs that you can go public at a price which you can decide

with your investment bankers which was an incentive for them.

Table 14: Summary of India as a country to do business in

Topics 2016 Rank 2015 Rank Change in Rank

Starting a

Business

155 164 9

Dealing with

construction

permits

183 184 1

Getting

electricity

70 99 29

Registering 138 138 No Change

• 12.90 procedures, takes

29.00 days, costs

13.50% of income per

capita and requires paid-

in minimum capital of

0.00% of income per

capita are required to set

up a business in India

• Streamlining procedures

are essential and making

it a one stop shop

• Introduce technology

and reduce unnecessary

capital requirements

No company shall

declare dividend unless

carried over past losses

and depreciation in

previous year or years

are set off against profit

of the company for the

current year

Dividend income

earned by a resident

individual, HUF or firm

exceeds ₹10 lakh, it

will be taxed at the rate

of 10 per cent

Current account

convertibility allows

companies to open

offices abroad

Property

Getting Credit 42 36 -6

Protecting

Minority

Investors

8 8 No Change

Paying Taxes 157 156 -1

Trading Across

Borders

133 133 No Change

Enforcing

Contracts

178 178 No Change

Resolving

Insolvency

136 136 No Change

Source: www.doingbusiness.org/data/exploreeconomics/india

Starting a Business

What does it take to start a business in India? According to data collected by

Doing Business, starting a business there requires 12.90 procedures, takes

29.00 days, costs 13.50% of income per capita and requires paid-in minimum

capital of 0.00% of income per capita. Most indicator sets refer to a case

scenario in the largest business city of an economy, except for 11 economies

for which the data are a population-weighted average of the 2 largest business

cities.

Economies around the world have taken steps making it easier to start a

business streamlining procedures by setting up a one-stop shop, making

procedures simpler or faster by introducing technology and reducing or

eliminating minimum capital requirements. Many have undertaken business

registration reforms in stages—and they often are part of a larger regulatory

reform program. Among the benefits have been greater firm satisfaction and

savings and more registered businesses, financial resources and job

opportunities.

Following are some of the reforms India has done to make staring a business

easier in India:

2011: India eased business start-up by establishing an online VAT

registration system and replacing the physical stamp previously

required with an online version.

http://www.doingbusiness.org/data/exploreeconomics/india

2015: India made starting a business easier by considerably reducing

the registration fees, but also made it more difficult by introducing a

requirement to file a declaration before the commencement of business

operations. These changes apply to both Delhi and Mumbai.

2016: India made starting a business easier by eliminating the

minimum capital requirement and the need to obtain a certificate to

commence business operations. This reform applies to both Delhi and

Mumbai.

Dealing with Construction Permits

Regulation of construction is critical to protect the public. But it needs to be

efficient, to avoid excessive constraints on a sector that plays an important

part in every economy. Where complying with building regulations is

excessively costly in time and money, many builders opt out. They may pay

bribes to pass inspections or simply build

illegally, leading to hazardous construction that

puts public safety at risk. Where compliance is

simple, straightforward and inexpensive,

everyone is better off.

What does it take to comply with the formalities

to build a warehouse in India? According to data

collected by Doing Business, dealing with

construction permits there requires 33.60

procedures, takes 191.50 days and costs 26.00%

of the warehouse value.

Getting Electricity

Access to reliable and affordable electricity is

vital for businesses. To counter weak electricity

supply, many firms in developing economies

have to rely on self-supply, often at a prohibitively high cost. Whether

electricity is reliably available or not, the first step for a customer is always to

gain access by obtaining a connection.

What does it take to obtain a new electricity connection in India? According

to data collected by Doing Business, getting electricity there requires 5.00

procedures, takes 90.10 days and costs 442.30% of income per capita.

Registering Property

Ensuring formal property rights is fundamental. Effective administration of

land is part of that. If formal property transfer is too costly or complicated,

formal titles might go informal again. And where property is informal or

poorly administered, it has little chance of being accepted as collateral for

loans—limiting access to finance.

What does it take to complete a property transfer in India? According to data

Ease of buying property in

India:

India’s score is 50.29

Getting credit in India:

India’s score is 50.29

Construction needs to

be efficient, to avoid

excessive constraints

on a sector that plays

an important part in

every economy

33.60 procedures, takes

191.50 days and costs

26.00% of the

warehouse value are

the requirements get a

construction permit in

India

collected by Doing Business, registering property there requires 7.00

procedures, takes 47.00 days and costs 7.50% of the property value.

Getting Credit

`Two types of frameworks can facilitate access to credit and improve its

allocation: credit information systems and borrowers and lenders in collateral

and bankruptcy laws. Credit information systems enable lenders’ rights to

view a potential borrower’s financial history (positive or negative)—valuable

information to consider when assessing risk. And they permit borrowers to

establish a good credit history that will allow easier access to credit. Sound

collateral laws enable businesses to use their assets, especially movable

property, as security to generate capital— while strong creditors’ rights have

been associated with higher ratios of private sector credit to GDP.

How well do the credit information system and collateral and bankruptcy laws

in India facilitate access to credit? The economy has a score of 7.00 on the

depth of credit information index and a score of 6.00 on the strength of legal

rights index (see the summary of scoring at the end of this chapter for details).

Higher scores indicate more credit information and stronger legal rights for

borrowers and lenders. Globally, India stands at 42 in the ranking of 189

economies on the ease of getting credit.

Protecting Minority Investors

Protecting minority investors’ matters for the ability of companies to raise the

capital they need to grow, innovate, diversify and compete. Effective

regulations define related-party transactions precisely, promote clear and

efficient disclosure requirements, require shareholder participation in major

decisions of the company and set detailed standards of accountability for

company insiders.

How strong are minority investor protections against self-dealing in India? The

economy has a score of 7.30 on the strength of minority investor protection

index, with a higher score indicating stronger protections. Globally, India

stands at 8 in the ranking of 189 economies on the strength of minority investor

protection index.

Paying Taxes

Taxes are essential. The level of tax rates needs to be carefully chosen—and

needless complexity in tax rules avoided. Firms in economies that rank better

on the ease of paying taxes in the Doing Business study tend to perceive both

tax rates and tax administration as less of an obstacle to business according to

the World Bank Enterprise Survey research.

What is the administrative burden of complying with taxes in India—and how

much do firms pay in taxes? On average, firms make 33.00 tax payments a

year, spend 243.00 hours a year filing, preparing and paying taxes and pay total

taxes amounting to 60.60% of profit.

Paying taxes:

India’s rank is 157

Trading across borders:

Following are some reforms that India has done to improve the tax scenario:

2011: India reduced the administrative burden of paying taxes by

abolishing the fringe benefit tax and improving electronic payment.

2012: India eased the administrative burden of paying taxes for firms

by introducing mandatory electronic filing and payment for value

added tax.

Now we have to wait and see if and when the GST bill will be passed by

parliament. This should make it easier to do business in India.

Trading Across Borders

In today’s globalized world, making trade between economies easier is

increasingly important for business. Excessive document requirements,

burdensome customs procedures, inefficient port operations and inadequate

infrastructure all lead to extra costs and delays for exporters and importers,

stifling trade potential.

Globally, India stands at 133 in the ranking of 189 economies on the ease of

trading across borders. Political tensions is also a major reason as to why

India is relatively reluctant to trade with its neighbours.

Enforcing Contracts

Effective commercial dispute resolution has many

benefits. Courts are essential for entrepreneurs

because they interpret the rules of the market and

protect economic rights. Efficient and transparent

courts encourage new business relationships

because businesses know they can rely on the

courts if a new customer fails to pay. Speedy trials

are essential for small enterprises, which may lack

the resources to stay in business while awaiting the

outcome of a long court dispute.

How efficient is the process of resolving a

commercial dispute through the courts in India?

According to data collected by Doing Business,

contract enforcement takes 1420.00 days and costs

39.60% of the value of the claim.

Resolving Insolvency

A robust bankruptcy system functions as a filter,

ensuring the survival of economically efficient

companies and reallocating the resources of

inefficient ones. Fast and cheap insolvency

proceedings result in the speedy return of

businesses to normal operation and increase

returns to creditors. By clarifying the

Enforcing contracts:

Resolving Insolvency:

expectations of creditors and debtors about the outcome of insolvency

proceedings, well-functioning insolvency systems can facilitate access to

finance, save more viable businesses and sustainably grow the economy.

According to data collected by Doing Business, resolving insolvency takes

4.30 years on average and costs 9.00% of the debtor’s estate. The average

recovery rate is 25.70 cents on the dollar.

KEY FEATURES OF BUDGET 2016-2017

Introduction

• Growth of Economy accelerated to 7.6% in 2015-16.

• India hailed as a ‘bright spot’ amidst a slowing global economy by

IMF.

• Robust growth achieved despite very unfavourable global conditions

and two consecutive years shortfall in monsoon by 13%

• Foreign exchange reserves touched highest ever level of about 350

billion US dollars.

• Despite increased devolution to States by 55% as a result of the 14th

Finance Commission award, plan expenditure increased at RE stage in

2015-16 – in contrast to earlier years.

Challenges in 2016-17

• Risks of further global slowdown and turbulence.

• Additional fiscal burden due to 7th Central Pay Commission

recommendations and OROP.

Roadmap & Priorities

• 'Transform India' to have a significant impact on economy and lives of

people.

• Government to focus on –

o Ensuring macro-economic stability and prudent fiscal

management.

o boosting on domestic demand

o Continuing with the pace of economic reforms and policy

initiatives to change the lives of our people for the better.

• Focus on enhancing expenditure in priority areas of - farm and rural

sector, social sector, infrastructure sector employment generation and

recapitalisation of the banks.

• Focus on Vulnerable sections through:

o Pradhan Mantri Fasal Bima Yojana

o New health insurance scheme to protect against hospitalisation

expenditure

o Facility of cooking gas connection for BPL families

• Continue with the ongoing reform programme and ensure passage of

the Goods and Service Tax bill and Insolvency and Bankruptcy law

• Undertake important reforms by:

o Giving a statutory backing to AADHAR platform to ensure

benefits reach the deserving.

o Freeing the transport sector from constraints and restrictions

o Incentivising gas discovery and exploration by providing

calibrated marketing freedom

o Enactment of a comprehensive law to deal with resolution of

financial firms

o Provide legal framework for dispute resolution and re-

negotiations in PPP projects and public utility contracts

o Undertake important banking sector reforms and public listing

of general insurance companies undertake significant changes in

FDI policy.

Agriculture and Farmers’ Welfare

• Allocation for Agriculture and Farmers’ welfare is Rs. 35,984 crore

• ‘Pradhan Mantri Krishi Sinchai Yojana’ to be implemented in mission

mode. 28.5 lakh hectares will be brought under irrigation.

• Implementation of 89 irrigation projects under AIBP, which are

languishing for a long time, will be fast tracked

• A dedicated Long Term Irrigation Fund will be created in NABARD

with an initial corpus of about Rs. 20,000 crore

• Programme for sustainable management of ground water resources with

an estimated cost of Rs. 6,000 crore will be implemented through

multilateral funding

• 5 lakh farm ponds and dug wells in rain fed areas and 10 lakh compost

pits for production of organic manure will be taken up under

MGNREGA

• Soil Health Card scheme will cover all 14 crore farm holdings by

March 2017.

• 2,000 model retail outlets of Fertilizer companies will be provided with

soil and seed testing facilities during the next three years

• Promote organic farming through ‘Parmparagat Krishi Vikas Yojana’

and 'Organic Value Chain Development in North East Region'.

• Unified Agricultural Marketing ePlatform to provide a common e-

market platform for wholesale markets

• Allocation under Pradhan Mantri Gram Sadak Yojana increased to Rs.

19,000 crore. Will connect remaining 65,000 eligible habitations by

2019.

• To reduce the burden of loan repayment on farmers, a provision of Rs.

15,000 crore has been made in the BE 2016-17 towards interest

subvention

• Allocation under Prime Minister Fasal Bima Yojana Rs. 5,500 crore.

• Rs. 850 crore for four dairying projects - ‘Pashudhan Sanjivani’,

‘Nakul Swasthya Patra’, ‘E-Pashudhan Haat’ and National Genomic

Centre for indigenous breeds

Rural Sector

• Allocation for rural sector - Rs. 87,765 crore.

• Rs. 2.87 lakh crore will be given as Grant in Aid to Gram Panchayats

and Municipalities as per the recommendations of the 14th Finance

Commission

• Every block under drought and rural distress will be taken up as an

intensive Block under the Deen Dayal Antyodaya Mission

• A sum of Rs. 38,500 crore allocated for MGNREGS.

• 300 Rurban Clusters will be developed under the Shyama Prasad

Mukherjee Rurban Mission

• 100% village electrification by 1st May, 2018.

• District Level Committees under Chairmanship of senior most Lok

Sabha MP from the district for monitoring and implementation of

designated Central Sector and Centrally Sponsored Schemes.

• Priority allocation from Centrally Sponsored Schemes to be made to

reward villages that have become free from open defecation.

• A new Digital Literacy Mission Scheme for rural India to cover around

6 crore additional household within the next 3 years.

• National Land Record Modernisation Programme has been revamped.

• New scheme Rashtriya Gram Swaraj Abhiyan proposed with allocation

of Rs. 655 crore.

Social Sector Including Health Care

• Allocation for social sector including education and health care – Rs.

1,51,581 crore.

• Rs. 2,000 crore allocated for initial cost of providing LPG connections

to BPL families.

• New health protection scheme will provide health cover up to Rs. One

lakh per family. For senior citizens an additional top-up package up to

Rs. 30,000 will be provided.

• 3,000 Stores under Prime Minister’s Jan Aushadhi Yojana will be

opened during 2016-17.

• ‘National Dialysis Services Programme’ to be started under National

Health Mission through PPP mode

• “Stand Up India Scheme” to facilitate at least two projects per bank

branch. This will benefit at least 2.5 lakh entrepreneurs.

• National Scheduled Caste and Scheduled Tribe Hub to be set up in

partnership with industry associations

Allocation of Rs. 100 crore each for celebrating the Birth Centenary of

Pandit Deen Dayal Upadhyay and the 350th Birth Anniversary of Guru

Gobind Singh.

Education, Skills and Job Creation

• 62 new Navodaya Vidyalayas will be opened

• Sarva Shiksha Abhiyan to increasing focus on quality of education

• Regulatory architecture to be provided to ten public and ten private

institutions to emerge as world-class Teaching and Research

Institutions

• Higher Education Financing Agency to be set-up with initial capital

base of Rs. 1000 Crores

• Digital Depository for School Leaving Certificates, College Degrees,

Academic Awards and Mark sheets to be set-up.

Skill Development

• Allocation for skill development – Rs. 1804. crore.

• 1500 Multi Skill Training Institutes to be set-up.

• National Board for Skill Development Certification to be setup in

partnership with the industry and academia

• Entrepreneurship Education and Training through Massive Open

Online Courses

Job Creation

• GoI will pay contribution of 8.33% for of all new employees enrolling

in EPFO for the first three years of their employment. Budget provision

of Rs. 1000 crore for this scheme.

• Deduction under Section 80JJAA of the Income Tax Act will be

available to all assesses who are subject to statutory audit under the Act

• 100 Model Career Centres to operational by the end of 2016-17 under

National Career Service.

• Model Shops and Establishments Bill to be circulated to States.

Infrastructure and Investment

• Total investment in the road sector, including PMGSY allocation,

would be Rs. 97,000 crore during 2016-17.

• India’s highest ever kilometres of new highways were awarded in 2015.

To approve nearly 10,000 kms of National Highways in 2016-17.

• Allocation of Rs. 55,000 crore in the Budget for Roads. Additional Rs.

15,000 crore to be raised by NHAI through bonds.

• Total outlay for infrastructure - Rs. 2,21,246 crore.

• Amendments to be made in Motor Vehicles Act to open up the road

transport sector in the passenger segment

• Action plan for revival of unserved and underserved airports to be

drawn up in partnership with State Governments.

• To provide calibrated marketing freedom in order to incentivise gas

production from deep-water, ultra deep-water and high pressure-high

temperature areas

• Comprehensive plan, spanning next 15 to 20 years, to augment the

investment in nuclear power generation to be drawn up.

• Steps to re-vitalise PPPs:

o Public Utility (Resolution of Disputes) Bill will be introduced

during 2016-17

o Guidelines for renegotiation of PPP Concession Agreements

will be issued

o New credit rating system for infrastructure projects to be

introduced

• Reforms in FDI policy in the areas of Insurance and Pension, Asset

Reconstruction Companies, Stock Exchanges.

• 100% FDI to be allowed through FIPB route in marketing of food

products produced and manufactured in India.

• A new policy for management of Government investment in Public

Sector Enterprises, including disinvestment and strategic sale,

approved.

Financial Sector Reforms

• A comprehensive Code on Resolution of Financial Firms to be

introduced.

• Statutory basis for a Monetary Policy framework and a Monetary

Policy Committee through the Finance Bill 2016.

• A Financial Data Management Centre to be set up.

• RBI to facilitate retail participation in Government securities.

• New derivative products will be developed by SEBI in the Commodity

Derivatives market.

• Amendments in the SARFAESI Act 2002 to enable the sponsor of an

ARC to hold up to 100% stake in the ARC and permit non institutional

investors to invest in Securitization Receipts.

• Comprehensive Central Legislation to be bought to deal with the

menace of illicit deposit taking schemes.

• Increasing members and benches of the Securities Appellate Tribunal.

• Allocation of Rs. 25,000 crore towards recapitalisation of Public

Sector Banks.

• Target of amount sanctioned under Pradhan Mantri Mudra Yojana

increased to Rs. 1,80,000 crore.

• General Insurance Companies owned by the Government to be listed in

the stock exchanges.

Governance and Ease of Doing Business

• A Task Force has been constituted for rationalisation of human

resources in various Ministries.

• Comprehensive review and rationalisation of Autonomous Bodies.

• Bill for Targeted Delivery of Financial and Other Subsidies, Benefits

and Services by using the Aadhar framework to be introduced.

• Introduce DBT on pilot basis for fertilizer.

• Automation facilities will be provided in 3 lakh fair price shops by

March 2017.

• Amendments in Companies Act to improve enabling environment for

start-ups.

• Price Stabilisation Fund with a corpus of Rs. 900 crore to help

maintain stable prices of Pulses.

• “Ek Bharat Shreshtha Bharat” programme will be launched to link

States and Districts in an annual programme that connects people

through exchanges in areas of language, trade, culture, travel and

tourism.

Fiscal Discipline

• Fiscal deficit in RE 2015-16 and BE 2016-17 retained at 3.9% and

3.5%.

• Revenue Deficit target from 2.8% to 2.5% in RE 2015-16

• Total expenditure projected at Rs. 19.78 lakh crore

• Plan expenditure pegged at Rs. 5.50 lakh crore under Plan, increase of

15.3%

• Non-Plan expenditure kept at Rs. 14.28 lakh crores

• Special emphasis to sectors such as agriculture, irrigation, social sector

including health, women and child development, welfare of Scheduled

Castes and Scheduled Tribes, minorities, infrastructure.

• Mobilisation of additional finances to the extent of Rs. 31,300 crore by

NHAI, PFC, REC, IREDA, NABARD and Inland Water Authority by

raising Bonds.

• Plan / Non-Plan classification to be done away with from 2017-18.

• Every new scheme sanctioned will have a sunset date and outcome

review.

• Rationalised and restructured more than 1500 Central Plan Schemes

into about 300 Central Sector and 30 Centrally Sponsored Schemes.

• Committee to review the implementation of the FRBM Act.

Relief to Small Tax Payers

• Raise the ceiling of tax rebate under section 87A from Rs. 2000 to Rs.

5000 to lessen tax burden on individuals with income up to Rs. 5 laks.

• Increase the limit of deduction of rent paid under section 80GG from

Rs. 24000 per annum to Rs. 60000, to provide relief to those who live

in rented houses.

Boost Employment and Growth

• Increase the turnover limit under Presumptive taxation scheme under

section 44AD of the Income Tax Act to Rs. 2 crores to bring big relief

to a large number of assessees in the MSME category.

• Extend the presumptive taxation scheme with profit deemed to be 50%,

to professionals with gross receipts up to Rs. 50 lakh.

• Phasing out deduction under Income Tax:

o Accelerated depreciation wherever provided in IT Act will be

limited to maximum 40% from 1.4.2017

o Benefit of deductions for Research would be limited to 150%

from 1.4.2017 and 100% from 1.4.2020

o Benefit of section 10AA to new SEZ units will be available to

those units which commence activity before 31.3.2020.

o The weighted deduction under section 35CCD for skill

development will continue up to 1.4.2020

• Corporate Tax rate proposals:

o New manufacturing companies incorporated on or after

1.3.2016 to be given an option to be taxed at 25% + surcharge

and cess provided they do not claim profit linked or investment

linked deductions and do not avail of investment allowance and

accelerated depreciation.

• Lower the corporate tax rate for the next financial year for relatively

small enterprises i.e companies with turnover not exceeding Rs. 5

crore (in the financial year ending March 2015), to 29% plus surcharge

and cess.

• 100% deduction of profits for 3 out of 5 years for startups setup during

April, 2016 to March, 2019. MAT will apply in such cases.

• 10% rate of tax on income from worldwide exploitation of patents

developed and registered in India by a resident.

• Complete pass through of income-tax to securitization trusts including

trusts of ARCs. Securitisation trusts required to deduct tax at source.

• Period for getting benefit of long term capital gain regime in case of

unlisted companies is proposed to be reduced from three to two years.

• Non-banking financial companies shall be eligible for deduction to the

extent of 5% of its income in respect of provision for bad and doubtful

debts.

• Determination of residency of foreign company on the basis of Place of

Effective Management (POEM) is proposed to be deferred by one year.

• Commitment to implement General Anti Avoidance Rules (GAAR)

from 1.4.2017.

• Exemption of service tax on services provided under Deen Dayal

Upadhyay Grameen Kaushalya Yojana and services provided by

Assessing Bodies empanelled by Ministry of Skill Development &

Entrepreneurship.

• Exemption of Service tax on general insurance services provided under

‘Niramaya’ Health Insurance Scheme launched by National Trust for

the Welfare of Persons with Autism, Cerebral Palsy, Mental

Retardation and Multiple Disability.

• Basic custom and excise duty on refrigerated containers reduced to 5%

and 6%.

Make In India

• Changes in customs and excise duty rates on certain inputs to reduce

costs and improve competitiveness of domestic industry in sectors like

Information technology hardware, capital goods, defence production,

textiles, mineral fuels & mineral oils, chemicals & petrochemicals,

paper, paperboard & newsprint, Maintenance repair and overhauling

[MRO] of aircrafts and ship repair.

Moving Towards a Pensioned Society

• Withdrawal up to 40% of the corpus at the time of retirement to be tax

exempt in the case of National Pension Scheme (NPS). Annuity fund

which goes to legal heir will not be taxable.

• In case of superannuation funds and recognized provident funds,

including EPF, the same norm of 40% of corpus to be tax free will

apply in respect of corpus created out of contributions made on or from

1.4.2016.

• Limit for contribution of employer in recognized Provident and

Superannuation Fund of Rs. 1.5 lakh per annum for taking tax benefit.

Exemption from service tax for Annuity services provided by NPS and

Services provided by EPFO to employees.

• Reduce service tax on Single premium Annuity (Insurance) Policies

from 3.5% to 1.4% of the premium paid in certain cases.

Promoting Affordable Housing

• 100% deduction for profits to an undertaking in housing project for

flats up to 30 sq. metres in four metro cities and 60 sq. metres in other

cities, approved during June 2016 to March 2019 and completed in

three years. MAT to apply.

• Deduction for additional interest of Rs. 50,000 per annum for loans up

to Rs. 35 lakh sanctioned in 2016-17 for first time home buyers, where

house cost does not exceed Rs. 50 lakh.

• Distribution made out of income of SPV to the REITs and INVITs

having specified shareholding will not be subjected to Dividend

Distribution Tax, in respect of dividend distributed after the specified

date.

• Exemption from service tax on construction of affordable houses up to

60 square metres under any scheme of the Central or State Government

including PPP Schemes.

• Extend excise duty exemption, presently available to Concrete Mix

manufactured at site for use in construction work to Ready Mix

Concrete.

Resource Mobilization for Agriculture, Rural Economy and Clean

Environment

• Additional tax at the rate of 10% of gross amount of dividend will be

payable by the recipients receiving dividend in excess of Rs. 10 lakh

per annum.

• Surcharge to be raised from 12% to 15% on persons, other than

companies, firms and cooperative societies having income above Rs. 1

crore.

• Tax to be deducted at source at the rate of 1 % on purchase of luxury

cars exceeding value of Rs. Ten lakh and purchase of goods and

services in cash exceeding Rs. two lakh.

• Securities Transaction tax in case of ‘Options’ is proposed to be

increased from .017% to .05%.

• Equalization levy of 6% of gross amount for payment made to non-

residents exceeding Rs. 1 lakh a year in case of B2B transactions.

• Krishi Kalyan Cess, @ 0.5% on all taxable services, w.e.f. 1 June 2016.

Proceeds would be exclusively used for financing initiatives for

improvement of agriculture and welfare of farmers. Input tax credit of

this cess will be available for payment of this cess.

• Infrastructure cess, of 1% on small petrol, LPG, CNG cars, 2.5% on

diesel cars of certain capacity and 4% on other higher engine capacity

vehicles and SUVs. No credit of this cess will be available nor credit of

any other tax or duty be utilized for paying this cess.

• Excise duty of ‘1% without input tax credit or 12.5% with input tax

credit’ on articles of jewellery [excluding silver jewellery, other than

studded with diamonds and some other precious stones], with a higher

exemption and eligibility limits of Rs. 6 crores and Rs. 12 crores

respectively.

• Excise on readymade garments with retail price of Rs. 1000 or more

raised to 2% without input tax credit or 12.5% with input tax credit.

• ‘Clean Energy Cess’ levied on coal, lignite and peat renamed to ‘Clean

Environment Cess’ and rate increased from Rs. 200 per tonne to Rs.

400 per tonne.

• Excise duties on various tobacco products other than beedi raised by

about 10 to 15%.

• Assignment of right to use the spectrum and its transfers has been

deducted as a service liveable to service tax and not sale of intangible

goods.

Providing Certainty in Taxation

• Committed to providing a stable and predictable taxation regime and

reduce black money.

• Domestic taxpayers can declare undisclosed income or such income

represented in the form of any asset by paying tax at 30%, and

surcharge at 7.5% and penalty at 7.5%, which is a total of 45% of the

undisclosed income. Declarants will have immunity from prosecution.

• Surcharge levied at 7.5% of undisclosed income will be called Krishi

Kalyan surcharge to be used for agriculture and rural economy.

• New Dispute Resolution Scheme to be introduced. No penalty in

respect of cases with disputed tax up to Rs. 10 lakh. Cases with

disputed tax exceeding Rs. 10 lakh to be subjected to 25% of the

minimum of the imposable penalty. Any pending appeal against a

penalty order can also be settled by paying 25% of the minimum of the

imposable penalty and tax interest on quantum addition.

• High Level Committee chaired by Revenue Secretary to oversee fresh

cases where assessing officer applies the retrospective amendment.

• One-time scheme of Dispute Resolution for ongoing cases under

retrospective amendment.

• Penalty rates to be 50% of tax in case of underreporting of income and

200% of tax where there is misreporting of facts.

• Disallowance will be limited to 1% of the average monthly value of

investments yielding exempt income, but not exceeding the actual

expenditure claimed under rule 8D of Section 14A of Income Tax Act.

• Time limit of one year for disposing petitions of the tax payers seeking

waiver of interest and penalty.

• Mandatory for the assessing officer to grant stay of demand once the

assesse pays 15% of the disputed demand, while the appeal is pending

before Commissioner of Income-tax (Appeals).

• Monetary limit for deciding an appeal by a single member Bench of

ITAT enhanced from Rs. 15 lakhs to Rs. 50 lakhs.

• 11 new benches of Customs, Excise and Service Tax Appellate

Tribunal (CESTAT).

Simplification and Rationalization of Taxes

• 13 cesses, levied by various Ministries in which revenue collection is

less than Rs. 50 crore in a year to be abolished.

• For non-residents providing alternative documents to PAN card, higher

TDS not to apply.

• Revision of return extended to Central Excise assesses.

• Additional options to banking companies and financial institutions,

including NBFCs, for reversal of input tax credits with respect to non-

taxable services.

• Customs Act to provide for deferred payment of customs duties for

importers and exporters with proven track record.

• Customs Single Window Project to be implemented at major ports and

airports starting from beginning of next financial year.

• Increase in free baggage allowance for international passengers. Filing

of baggage only for those carrying dutiable goods.

Technology for Accountability

• Expansion in the scope of e-assessments to all assessees in 7 mega

cities in the coming years.

• Interest at the rate of 9% p.a against normal rate of 6% p.a for delay in

giving effect to Appellate order beyond ninety days.

• ‘e-Sahyog’ to be expanded to reduce compliance cost, especially for

small taxpayers.

CHALLENGES TO INDIAN ECONOMY

Inequality of distribution of wealth

It is hoped that economic growth would help drag the Indian poor above the

poverty line. The distribution of wealth is highly disproportionate in India.

Many of India’s rural poor are yet to receive any tangible benefit from the

India’s economic growth. More than 78 million homes do not have electricity.

33% (268million) of the population live on less than $1 per day. India’s

economy has been one of the largest contributors to global growth over the last

decade, accounting for about 10% of the world’s increase in economic activity

since 2005, while GDP per capita in PPP (purchasing power parity) terms is

today three times as high as in 2000.

Yet, this period also witnessed a rise in inequality, which has been mainly

driven by income gaps between India’s states, and a growing urban-rural

divide. India continues to have the largest number of poor in the world

Gini coefficient stood at

33.9 in 2009 and 33.4

in 2004 as per data

from World Bank.

(approximately 300 million are in extreme poverty), and nearly half of the poor

are concentrated in five states. Some countries effectively use redistribution to

reduce inequality, but India is not among them. Its Gini coefficient (a measure

of income distribution) is the second highest among lower middle income

countries and is barely changed by fiscal transfers. Tax revenues are extremely

low and India’s tax code is regressive, meaning that the poor bear a heavier

burden than the rich, which is not offset by social spending. The country

spends only 2.5% of GDP on social protection compared with over 6% in

many peer countries. Gini coefficient stood at 33.9 in 2009 and 33.4 in 2004 as

per data from World Bank.

Info graphic 1: Use of redistribution of taxes collected to reduce inequality in India with

respect to peer countries based on Gini coefficient

(Source:

Standardized World income Inequality Database)

The different definitions and different underlying small sample surveys used to

determine poverty in India have resulted in widely different estimates of

poverty from 1950s to 2010s. In 2012, the Indian government stated 21.9% of

its population is below its official poverty limit. The World Bank, in 2011

based on 2005's PPPs International Comparison Program, estimated 23.6% of

Indian population, or about 276 million people, to be living below $1.25 per

day on purchasing power parity. According to United Nation's Millennium

Development Goal (MDG) program 270 million or 21.9% people out of 1.2

billion of Indians lived below poverty line of $1.25 in 2011-2012. According to

the Modified Mixed Reference Period (MMRP) concept proposed by World

Bank in 2015, India's poverty rate for period 2011-12 stood at 12.4% of the

total population, or about 172 million people; taking the revised poverty line as

$1.90.

According to MMRP

concept proposed by

World Bank in 2015,

India’s poverty rate

stood at 12.4% of the

total population, or

about 172 million

people, taking revised

poverty threshold as

USD 1.90.

(Source: Poverty and Equity Data bank)

Low Taxes to GDP ratio

India has a great deal of opportunity to enhance the generosity and

progressivity of its social protection system so that it can give its citizens the

safety net needed to take risks and participate fully in the economy and society.

Only 5.5 per cent of earning individuals are within the tax net, translating to

ratio of about 4 per cent of taxpayers to voters. India's tax to GDP ratio is 16.6

per cent, which is much lower than the emerging market economy average of

21 per cent and OECD average of 34 per cent. This data is based on the

Economic survey of India 2015-16. As the country struggles with the objective

of keeping a check on its finances while supporting social sector and capex, the

ratio of taxpayers to GDP will have to rise to 23 per cent, as per the Economic

survey report’s suggestion.

Increasing its narrow tax base can also give India more fiscal space to make

these much needed social expenditures, particularly in health. India’s public

health system remains limited in coverage. Out-of-pocket expenses are high,

limiting affordability. This translates into poor (and unequal) health outcomes.

Inequality adjusted life expectancy is 25 years while in many peer countries

like Thailand and Vietnam there is only around 10 years’ difference between

high and low-income individuals.

Low Labour productivity

India is often cited as an example of an economy that is modernizing by

jumping directly into services without passing through manufacturing. The

weight of manufacturing in India has been relatively stable over the past two

decades, at much lower levels than China and ASEAN countries. Business

services – a high value added sector – represent a larger share of economic

activity in India than in Europe.

Agriculture accounts today for only 16% of total value added (down from 44%

in 1965), but still employs about half of the Indian population. Productivity in

0

40.1

42.4

42.8

44.2

0

21.5

21

20.8

20.5

0

16.5

15.8

15.7

15.2

0

12.8

12.2

12.1

11.8

0

9.1

8.6

8.5

8.2

1993

2004

2009

2011

Distribution of percentage of wealth based on percentile of

population in India

highest 20% fourth 20% third 20% second 20% lowest 20%

Agriculture accounts

today for only 16% of

total value added (down

from 44% in 1965), but

still employs about half

of the Indian

population.

this sector did not increase significantly in the past decades, limiting

improvements in living standards in rural areas.

Unequal access to finance and barriers to Entrepreneurship

India scores relatively well in terms of access to finance for developing

businesses and investing in the economy. India’s entrepreneurs have better

access to bank accounts, credit, venture capital, and equity markets than their

counterparts in most peer countries. However, access to finance remains

limited for low income individuals, especially women. 400 million people

remain unbanked in India and disconnected from the financial system

despite impressive gains in recent years. Most unbanked are poor and female:

only 27% of individuals in bottom quintiles and 37% of women have access to

400 million people

remain unbanked in

India and disconnected

from the financial

system despite

impressive gains in

recent years.

a bank account. Finance can help poor households optimize severely

constrained resources across their lifetime.

(Source: World bank)

Yet, only 7% used their savings account to start a business (the proportion is

even smaller for those in the bottom 40% of the income distribution). A last-

placed ranking on small business ownership is evidently not for want of good

ideas, as India scores fourth on a measure of patent applications. But budding

entrepreneurs are held back by red tape and an inefficient justice system, with

relatively low rankings for indicators such as the time and cost of starting a

business, enforcing a contract and resolving insolvency.

(Source: World Economic Forum)

Modernizing India’s public institutions

Modernizing public institutions has been high on the agenda of reforms in

India in recent years, and results are starting to show. In 2015, businesses

perceived lower levels of corruption among public officials and showed more

trust in government’s decisions. Improved public institutions are one of the

main drivers of the increase in India’s competitiveness. Yet, there is still a lot

of ground to cover.

India is ranked at 155th

position by World Bank

for starting a business.

Private investment, especially from foreign firms, requires a favorable business

environment, which includes strong property rights protection and also fair and

speedy trials in the case of disputes. To this end, ensuring the independence of

the judicial system and increasing efficiency in settling disputes will be the

key. Business ethics should also improve in line with that of public institutions.

Reporting and accounting standards are necessary to ensure transparency in the

private sector, increase trust and facilitate long-term financing and investment.

KEY TAKEAWAYS FROM THE LATEST STATISTICAL SURVEY OF

INDIA

The Sixth Economic Census (EC) covered all States and Union Territories of

Indian Union. Fieldwork was conducted during January, 2013 to April, 2014

in collaboration with State/UT Governments. The EC enumerated all

establishments engaged in various agricultural and non-agricultural activities

excluding crop production, plantation, public administration, defense and

compulsory social security.

Establishments

As per the Sixth Economic Census (2013), 58.5 million establishments were

found to be in operation, 34.8 million establishments (59.48%) were found in

rural areas and nearly 23.7 million establishments (40.52%) were found to be

located in urban areas.

Out of 58.5 million establishments, about 77.6% establishments (45.36

million) were engaged in non-agricultural activities (excluding public

administration, defense and compulsory social security activities) while the

remaining 22.4% establishments (13.13 million) were found to be engaged in

agricultural activities (excluding crop production and plantation).

Livestock was the major economic activity (86.74%) of agricultural sector.

Retail Trade (35.41%) followed by Manufacturing (22.77%) were the

dominant ones within the non-agricultural sector.

Proprietary Establishments

89.39% of the establishments were owned by proprietors.

Among the proprietary establishments, 15.4% were owned by females.

Employment in Establishments

Around 131.29 million persons were found employed in 58.5 million

establishments. Out of the total 131.29 million persons, 67.89 million persons

(51.71%) were employed in rural areas and 63.4 million persons (48.29%) in

urban areas. While employment in Own Account Establishments was of the

order of 58.15 million persons (44.29%), the employment in establishments

with at least one hired worker was about 73.14 million persons (55.71%).

Agricultural establishments provided employment to around 22.88 million

persons (17.42%) and the non-agricultural establishments provided

employment to around 108.41 million persons (82.58%).

The growth rate of employment since 2005 was of the order of 38.13%.

Livestock was the

major economic activity

(86.74%) of agricultural

sector. Retail Trade

(35.41%) followed by

Manufacturing

(22.77%) were the

dominant ones within

the non-agricultural

sector.

7.2% of the workers were employed in Government or Public Sector

Undertakings, 78.5% of the workers in proprietary establishments and rest

14.3% in Private Companies/SHGs/Cooperatives etc.

Around 57.14 million persons (43.53%) were hired workers and the remaining

74.14 million persons (56.47%) were not-hired workers. Among the total

workers, 74.83% were male and 25.17% female.

Manufacturing sector was the largest employer providing employment to 30.3

million (23.1%) persons. This was followed by retail trade employing 27.19

million persons (20.7%) and livestock sector employing 19.4 million persons

(14.8 %).

REFERENCES

http://www.theigc.org/

https://wheebox.com/

http://www.business-standard.com/

http://unemploymentinindia.cmie.com/

www.makeinindia.com

indiabudget.nic.in/

http://economictimes.indiatimes.com

http://timesofindia.indiatimes.com/

http://www.digitalindia.gov.in/

http://www.doingbusiness.org/

http://www.livemint.com/

http://indianexpress.com/

http://indiabudget.nic.in/

http://indiabudget.nic.in/vol1_survey.asp

http://indiabudget.nic.in/vol2_survey.asp

http://indiabudget.nic.in/es2015-16/echapter-vol1.pdf

http://indiabudget.nic.in/es2015-16/echapter-vol2.pdf

http://indiabudget.nic.in/eBook_Economic_Survey2015/index.html

http://mospi.nic.in/Mospi_New/upload/SYB2016/index1.html

http://publicationsdivision.nic.in/ (Book: India 2016

http://publicationsdivision.nic.in/Downloads/Catalogue%202016%20Publicat ions%20Divi

sion.pdf

http://www.adb.org/countries/india/economy

http://www.ibef.org/economy/indian-economy-overview

https://en.wikipedia.org/wiki/Economy_of_India

http://data.worldbank.org/

http://www.imf.org/en/data

https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/0FSR6F7E7BC6C14F42E99568A8

0D9FF7BBA6.PDF

India is up by 4 ranks in

2016 from its previous

rank of 134 of 2015 in

terms of overall ease of

doing business and is

currently ranked at

130th

position.

http://www.theigc.org/

https://wheebox.com/

http://www.business-standard.com/

http://unemploymentinindia.cmie.com/

http://www.makeinindia.com/

http://economictimes.indiatimes.com/

http://timesofindia.indiatimes.com/

http://www.digitalindia.gov.in/

http://www.doingbusiness.org/

http://indianexpress.com/

122

Research and Scholastic Development Team

S—Team

Artika Dixit (Marketing)

Eeshan Bhalerao (Operations) Priyank Parashar (Marketing)

Rohan Doshi (Finance) Shobhika Singh (Marketing)

Soumik Nath (Operations) Soumya Sharma (Finance)

I—Team

Archishman Bandyopadhyay (Marketing)

Arka Mascharak (Marketing) Debashish Chatterjee (Operations)

Ishaan Bahree (Marketing) Naman Tandon (Marketing)

Saanya Mehra (Operations) Sampurna Ray (Human Resources)

Research and Scholastic Development Team

Symbiosis Institute of Business Management Pune, Symbiosis Knowledge Village,

Gram Lavale Pune-412115

[email protected]

Date post:	12-Apr-2017
Category:	Economy & Finance
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Indian economy 2016

Economy & Finance