Rbi GR B Mains Samples

ENGLISH DESCRIPTIVE
Essay: Necessity of censorship in the age of internet at present
Censorship is defined as the suppression or prohibition of any parts of books, films, news etc. that
are considered obscene, politically unacceptable or a threat to security. But the present day
technology "Internet" is definitely carving a niche out for it as far as censorship is concerned. We all
live in an era where technology reigns supreme and Internet is the king of that supremacy. It's rising
globalism and wide gaining popularity proves its facets in the world of Technology.
In the age of Internet we cannot pay hide and seek with any information or media content. As it
provides one with immense scopes to haunt for one's own desires.Censorship in the age of Internet
violates one's freedom of expression and thought. One can stop the expression of views on the
Internet but doing this are we justifying the importance of Internet which is supposed to be free and
open to all.
But the thing that is taking the form of heated argument is the Internet's matter content or its
information accessibility which in other terms might be called "Censorship". Internet is such an
advent of Technology similar to an open book where information has its network without any
boundary, In such a vast sea of information it is very difficult to manage 'Censorship' which means to
keep a check on the contents of the various sites to check what information is being displayed on the
networking sites how it is affecting the youth, what is necessary and what is not which in total is a
time consuming process but what haunts one more is the fact that who is going to keep an eye on
the entire process.
The answer might be a person, a group or more aptly a committee but will the decisions be
acceptable because arguments or debates are nothing rather creates conflicts among the people
which indicates that people are never of the same opinion, different people have different views,
different mind-set and different ways and means of analysing a particular situation, that is why the
universe is not of likeminded people but people of different likes.
Thus what should be censored or what should not be censored is totally people's choice and is very
difficult to decide. Moreover we cannot deny the rights of an individual freedom of speech and
expression.
There are certain things in life which requires proper age to understand to know or to learn and
censorship is necessary to cover up those issues for certain age group but Internet is such a vast
sea that the age is no longer a matter of concern in that sea just like a tiny pebble if thrown into the
sea remains unnoticed of its fall same is the case with the age factor.
Studies indicate that merely 10% of the people use it in negative sense but what about the rest 90%
of the people, why should they suffer for other's deeds. It is very easy to make a halt to one's views
but the halt is not only made in sight but the halt is made in one's mind as well.
On one hand we speak of progression, globalization and broad minded views and on the other we
speak about Censorship. It is not at all justified.
No one has forced us to see censored contents news or events or videos. It completely stands out of
one's own wish and as far as ideologies of safe environment for children are concerned then people
must know what are the pros and cons of the safe environment. Children must be made aware of
both positive and Negative sides of that safe environment.
SAMPLES ARE PREPARED BY DAS SIR.CALL OR EMAIL TO OPT FOR NOTES ASAP
Digital Media is our toy the way we play with it the same result we are expected to get from it. Thus I
personally feel that Censorship in the age of Internet is not at all necessary.
Essay:Advantage & Disadvantages Of Cashless Economy
Cashless economy in layman terms signifies all transactions are being done digitally based on point
of sale machines, where movement of physical money is minimal. Thanks to Sri Narendra Modi,the
hon'ble PM of our country for taking such unquenching step with an aim to curb blackmoney
,reduction in corruption from grassroot level and demolishing Hawala like evils that still exist in some
pockets. On 8,Nov of the very last year he decided to demonitise Rs.500 and Rs.1000 notes in
general circulation declaring them as they are no long in tender.To avoid transactional dilemmas
cashless transaction system was launched. An unbiased discussion on such an issue celibacies
both positive points and negative points as well.
Advantage of Cashless economy
Major advantage could be cited as no problem of counterfeit currency, as someone will be able to do
so by mitigating bans of handling cash. Second, the theft nuisance from handful cash will be
minimum. Third, there will be fewer mismatches of paper currency and on other side production of
goods and services which can delimit inflation (too much price chasing too few goods). Third,
payments through distant places become easier. But there is no one to one relationship between
cashless system and corruption. For instance Germany, whose Corruption Perception Index (CPI)
scores around 81 in a cash intensive economy and in Kenya, the same accounts for 25 for cash
extensive economy, both are not comparable. Most important thing determining benefit of cashless
economy solely lies with the socio economic condition of any state. It must evolve from very
structural set up. From USA, India must learn a thing. Cashless promotion was there from 52 years
but it was a gradual process, which took due time to acclimatize from all sections. But in India it was
all of a sudden.
Enhanced digital economy and digital commerce can amend its pace. Improvement in tax
compliance can be seen since most of private sector companies adulterate their balance sheets
when it comes to submit their receipts and statements at audit time. Paper works are not at par
immune to provide a genuine data regarding annual turn over but cashless transactions can keep a
copy of the same if datas are merely secured by certified cyber agencies.
Disadvantage of Cashless economy
Literacy is a big vagary in our country. According a recent survey conducted by ASER( Asserted
school education report), 50.6% of class 5th students are unable to perform class 2nd algebra.
Anyone intended to go cashless need to be well acquainted with its pros and cons. One should be in
a state to afford those devices which perform cashless transactions. In such stages demonitisation
will only promote avoiding wastage of economic prosperity , upto some extent corruption but has
nothing to do with setting up a cashless economy.Money earned out by devious means may albeit
covinnance of political and administrative sects to perform their task harmoniously. But payments to
corrupted influenced, tax evasion and base erosion in profit shifting (BEPS) is not fully achieved.
A logic arises when a moment comes when the production amplifies so much that it can't exceed
transaction with manifold ramifications. Crime is easily committed in fraud, illegal, and unscrupulous
social activities where anyone can in any instance throw money to let his work done. Politicians
generally perform their tasks whether legal or illegal in circulating physical cash which amounts
about 28% (nearly 4.2 lac crores) of total in the country. Logically it can curb corruption and facilitate
easy execution of transactions, emanate theft consequences but accommodating each and every
section of society into the grasp of going cashless sounds not so good. Again, Cyber hacking is also
a threat for those perform cashless transactions. Privacy concerns are even indomitable ( eg Hitachi
Private Services regime when about 33 million debit card accounts have been hacked. Ola Cab
services even tried to refuse cashless payment sure at some point of time.
For instance someone (particularly myself) who desires to have a petties of Rs.15 have to pay
Rs.2.50 as transaction cost and that goes directly to shopkeepers pocket which is not in favour of
curbing black marketing .Inference drawn from this is transactional tax is not an indirect tax and does
not comply with the regime of GST. Internet users which is only about 43% of total populations in a
good demographic dividend is a meagre compared to 15% who have active broadband connections
at their working places.
What has govt done so far
Raipur, Chattisgarh has become the first state to go utmost cashless with installation of about 1500
POS ( point of sale) machines.
Meityy has launched an official channel "DigiShalla" , an initiative taken by govt of India under the
aegis of Ministry of Information Technology and Ministry of Human resource development in the
state of Haryana also adds to this.
e-Vendors have been installed in Gujurat and Chattisgarh to promote cashless transactions in day to
day goods and services.
VISHAKHA (Vitiya Sakhsharata Abhiyan) has been launched the very last year to promote digital
literacy.
NOFN measures literally induce secure transactional copies at each and every point of deals.
Way Forward
Despite of such steps, India still lags a lot behind to be cherished by cashless economy due to
illiteracy ,less knowledge about technologies, and a more like expression being delivered when
someone is asked to swipe his debit card. Govt rather taking all of sudden such step , should have
to wait for at least 2 to 3 years to at least acquaint people about such initiative. Separate grievances
cell like permanent Consumer Guarantee Protection Fund to be established with prior appellate
authority to be appointed.
"Lies a small line of intricacy between CASHLESS economy and LESSCASH economy which needs
to be demarcated, else vagaries will be threat, since everything flows downhill".
ESI
1.
Pradhan Mantri Rojgar Protsahan Yojana
After launching the Stand up India Scheme successfully, now the central
government has started another employment generation scheme for
the unemployed people namely Pradhan Mantri Rojgar Protsahan
Yojana i.e. PMRPY. It is launched by the central government in 2016-17
Budgets.
About PMRPY:
 PMRPY was launched in Lok Sabha on 1st August 2016. The

information regarding the scheme was announced by Shri Bandaru
Dattatreya, the Minister of State for Labour and Employment.
 The Pradhan Mantri Rojgar Protsahan Yojana(PMRPY) Plan Scheme has
been designed to incentivise employers for generation of new
employment, where Government of India will be paying the 8.33%
EPS contribution of the employer for the new employment.
 People who are working 240 days in a year will be eligible to register
under this scheme.
 This scheme has a dual benefit, where, on the one hand, the
employer is incentivised for increasing the employment base of
workers in the establishment, and on the other hand, a large number
of workers will find jobs in such establishments.
 A direct benefit is that these workers will have access to social security
benefits of the organized sector.
Key features of the Scheme:
 The scheme is to create more employment opportunities for the

unemployed people in the country.
 The scheme is designed to provide some employment facilities to the
newly employed people.
Budget allocation:
The Central government has allocated Rs. 1000 Crore for this scheme.
Objectives of the scheme:
 The main objective of the scheme is to enhance and encourage the

employment in the nation.
 The scheme does not create employment opportunity directly but of
course it accelerates the employers to create more employment
opportunities for the people.
 In this scheme the government will provide incentives to the
employers so that they recruit more people in their departments and
get rid of high unemployment rates.
Implementation:
As of now more than 3 lakh establishments are covered under this scheme
in which nearly 20 workers per establishment are expecting to be hired.
Employee facility:
 As per the expectation from the scheme, this will also balance the
regulation in the labour market. However most of firms might get
disturbed about it as it will lead to regularize their books of their
companies.
 The scheme is no doubt paying full benefits to the employers.
 The main aim of the scheme is to encourage the employers to
generate more vacancies in their firms.
 The scheme also allows the employers to reimburse the money if not
paid by the government on time. The scheme is eligible for the new
employees who are getting nominal wage of up to Rs. 15,000 per
month.
2. PRADHAN MANTRI YUVA YOJANA (PMYY)
Introduction:
In last year the government came up with Start up India Scheme for the
young entrepreneurs who want to set their business rather than getting into
any jobs. The central government has provided a large chunk of money to
the emerging entrepreneurs who have promoted innovative products and
services.
Now the government has come up with yet another encouraging scheme for
the youth of the nation that is Pradhan Mantri Youth Yojana (PMYY) for
the entrepreneurs who are not properly skilled. Under this scheme the
entrepreneurs will get to know about skill development programs and many
more learning and developing processes for the betterment of their future.
About PMYY:
 Pradhan Mantri Yuva Yojana (PMYY), launched by the Ministry of Skill

Development and Entrepreneurship on 9thNovember 2016.
 It is a new scheme to scale up an ecosystem of entrepreneurship for
youngsters.
 It will include easy access to information and mentor network, credit
incubator and accelerator and advocacy to create a pathway for the
youth.
Highlights:
 The scheme will run for a period of five years from 2016-17 to 2020-
21 .
 The project implementation cost would be 499.94 crore.
 Under the Pradhan Mantri Yuva Yojana, more than 7 lakh youngsters
will be provided entrepreneurship education and training.
 Training will be provided through 0050 Institutes across India.
 The scheme also offers easy access to information and mentor
network, credit and advocacy to build a way-out for the youngsters.
 Institutes under Pradhan Mantri Yuva Yojana will include 2200
institutes of Higher Learning (colleges, universities and premier
institutes), 300 schools, 500 ITIs and 50 Entrepreneurship
Development Centers.
 The training programs will be carried out by the institutes through
Massive Open Online Courses (MOOCs).
Key features of PMYY:
 MSDE’s two institutions dedicated to entrepreneur education and

training – NIESBUD and IIE have trained more than 7 lakh trainees
including 2,600 persons from more than 125 countries in the field of
entrepreneurial skills till date.
 After becoming a part of this Ministry, these two institutes are now
focusing on mentorship of budding entrepreneurs across the country
and succeed so far and we are determined to create more
opportunities of employment for our youth through this iniative.
 MSDE also unveiled the Lab Guidelines towards standardization of lab
equipment across skill development training centres in India at the
conference.
 These guidelines specify the number of job roles that can be done in a
lab, standard lab layout, and available brands of equipment which
should be used. These guidelines will pave a pathway in increasing
the employability of trained candidates across States ensuring
industry standards.
Budget allocation:
 It is noted that MSDE has plans to disburse around Rs. 7,000 crore to
states to help align them with the Centre’s skill development agenda.
 The allotted budget for this scheme is Rs. 499.94 crores.
Aim of the scheme:
 The government is expecting to motivate first generation

entrepreneurs to improve and excel in their entrepreneurial pursuits
and inspire those who are part of the country’s entrepreneurship
ecosystem to excel even further through the scheme.
Objectives:
 The main objective of this scheme is to encourage the young

generation and also make them well prepared for global competition.
 The scheme will be for the young people who are educated but not
skilled and knowledgeable enough to face global competition. After
availing the training under PMYY scheme they will be able to grow
more and faster.
 The award under this scheme has introduced to motivate young people
who are below 30 to contribute more to the entrepreneur ecosystem
of the nation through many innovative ways.
Advantages:
 The biggest issue in the Indian economy is the imbalance between

GDP and employment. Many eligible people are still unemployed due
to several reasons.
 Every time a new government comes in power promises for jobs but
unfortunately can’t make them fulfill. This time Modi has made it
possible by launching Start up India Scheme where people can start
their own business instead of looking for jobs.
 This scheme follows the Start up India Scheme, where Start up India
scheme helps people to set up their innovative businesses on the
other, the PMYY scheme helps the people to learn and develop the
skills needed to proceed with the business.
3. Highlights of the Economic Survey 2016-17
The Indian Economy has sustained a macro-economic environment of relatively lower

inflation, fiscal discipline and moderate current account deficit coupled with broadly
stable rupee-dollar exchange rate. The Economic Survey 2016-17 states that such a
sustenance is despite continuing global sluggishness.
It says:
 As per the advance estimates released by the Central Statistics Office, the growth
rate of GDP at constant market prices for the year 2016-17 is placed at 7.1%, as
against 7.6% in 2015-16.This estimate is based mainly on information for the first
seven to eight months of the financial year. Government final consumption
expenditure is the major driver of GDP growth in the current year.
 Fixed investment (gross fixed capital formation) to GDP ratio (at current prices) is
estimated to be 26.6% in 2016-17, vis-à-vis 29.3% in 2015-16.
 For 2017-18, it is expected that the growth would return to normal as the new
currency notes in required quantities come back into circulation and as follow-up
actions to demonetisation are taken. On balance, there is a likelihood that Indian
economy may recover back to 6 ¾% to 7 ½% in 2017-18.
Key facts:
 Indirect taxes grew by 26.9% during April-November 2016.
 The headline inflation as measured by Consumer Price Index (CPI) remained
under control for the third successive financial year. The average CPI inflation
declined to 4.9% in 2015-16 from 5.9% in 2014-15 and stood at 4.8% during
April-December 2015.
 Inflation based on Wholesale Price Index (WPI) declined to (-) 2.5% cent in
2015-16 from 2.0% in 2014-15 and averaged 2.9% during April-December 2016.
Inflation is repeatedly being driven by narrow group of food items, of these pulses
continued to be the major contributor of food inflation.
 Trade deficit declined to US$ 76.5 billion in 2016-17 (April-December) as
compared to US$ 100.1 billion in the corresponding period of the previous year.
 The current account deficit (CAD) narrowed in the first half (H1) of 2016-17 to
0.3% of GDP from 1.5% in H1 of 2015-16 and 1.1% in 2015-16 full year.
 At end-September 2016, India’s external debt stock stood at US$ 484.3 billion,
recording a decline of US$ 0.8 billion over the level at end-March 2016. India’s
key debt indicators compare well with other indebted developing countries and
India continues to be among the less vulnerable countries.
 Agriculture sector is estimated to grow at 4.1% in 2016-17 as opposed to 1.2% in
2015-16; the higher growth in agriculture sector is not surprising as the monsoon
rains were much better in the current year than the previous two years.
 Growth rate of the industrial sector is estimated to moderate to 5.2% in 2016-17
from 7.4% in 2015-16. During April-November 2016-17, a modest growth of
0.4% has been observed in the Index of Industrial Production (IIP).
 The eight core infrastructure supportive industries, viz. coal, crude oil, natural
gas, refinery products, fertilizers, steel, cement and electricity registered a
cumulative growth of 4.9% cent during April-November 2016-17 as compared to
2.5% during April-November 2015-16.
Economic Survey on GST and demonetisation:
The Economic Survey states that against the backdrop of robust macro-economic
stability, the year was marked by two major domestic policy developments-the
passage of the Constitutional Amendment, paving the way for implementing the
transformational Goods and Services Tax (GST), and the action to demonetize the two
highest denomination notes.
 It says, the GST will create a common Indian market, improve tax compliance
and governance, and boost investment and growth; it is also a bold new
experiment in the governance of India’s cooperative federalism.
 The Survey Report says that demonetisation has had short-term costs but holds
the potential for long-term benefits. Follow-up actions to minimize the costs and
maximize the benefits include: fast, demand-driven, remonetisation; further tax
reforms, including bringing land and real estate into the GST, reducing tax rates
and stamp duties; and acting to allay anxieties about over-zealous tax
administration.
 These actions would allow growth to return to trend in 2017-18, possibly making
it the fastest-growing major economy in the world, following a temporary dip in
2016-17.
 The Survey suggests a few measures to maximize long-term benefits and
minimize short-term costs of demonetisation. One, fast remonetisation and
especially, free convertibility of cash to deposits including through early
elimination of withdrawal limits. This would reduce the GDP growth deceleration
and cash hoarding. Two, continued impetus to digitalization while ensuring that
this transition is gradual, inclusive, based on incentives rather than controls and
appropriately balancing the costs and benefits of cash versus digitalization. Three,
following up demonetisation by bringing land and real estate into the GST. Four,
reducing tax rates and stamp duties. And finally, an improved tax system could
promote greater income declaration and dispel fears of over-zealous tax
administration.
Impact of Demonetisation
Sector Impact
Effect through end-December Lik
Money/interest rates Cash declined sharply Cash will rec
Deposits will decl
Bank deposits increased sharply
RBI’s balance sheet largely unchanged: return of currency

RBI’s balance she
reduced the central bank’s cash liabilities but increased its
redee
deposit liabilities to commercial banks
Interest rates on deposits, loans, and government securities Loan rates could
declined; implicit rate on cash increased inc
Increase, to the ex
Financial System Savings Increased
Corruption (underlying illicit activities) Could decline, if

Unaccounted income/black money
Stock of black money fell, as some holders came into the tax Formalization sho
(underlying activity may or may not be
net
illicit)
Private sector wealth declined, since some high denomination Wealth could fall
Private Wealth
notes were not returned and real estate prices fell
Government/R
Public Sector Wealth No effect.
unreturned cash i
Formalization/ Digital transactions amongst new users (RuPay/ AEPS)

Some return to c
digitilisation increased sharply; existing users’ transactions increased in
now-launched
line with historical trend
Prices could fa
Prices declined, as wealth fell while cash shortages impeded income in real est
Real estate
transactions component could
Job losses, decline in farm incomes, social disruption, Should gradu

Broader economy
especially in cash-intensive sectors
Growth slowed, as demonetisation reduced demand (cash,
Could be benefic
GDP private wealth), supply (reduced liquidity and working capital,
increa
and disrupted supply chains), and increased uncertainty
Cash-intensive sectors (agriculture, real estate, jewellery)
were affected more.
Recorded GDP will understate impact on informal sector
because informal manufacturing is estimated using formal
sector indicators (Index of Industrial Production).
Informal output
But over time as the economy becomes more formalized the would increas
underestimation will decline.
Recorded GDP will also be overstated because banking sector

value added is based (inter alia) on deposits which have
surged temporarily
Income taxes rose because of increased disclosure Indirect and cor

Payments to local bodies and discoms increased because e
Tax collection demonetised notes remained legal tender for tax Over long run, tax
payments/clearances of arrears expands
Uncertainty increased, as firms and households were unsure of Credibility will b

Uncertainty/ accompanied by c
the economic impact and implications for future policy
Credibility full remonetisati
Investment decisions and durable goods purchases postponed
harassmen
Fiscal performance of states:
The Economic Survey has highlighted the need for fiscal prudence both by the Centre
as well as the States in order to maintain overall fiscal health of the economy.
 The Economic Survey states that the Centre’s Fiscal Responsibility and Budget
Management (FRBM) Act, was mirrored by Fiscal Responsibility Legislations
(FRL) adopted in the States.
 As per the Economic Survey, there has been an improvement in the financial
position of the States over the last few years. The average revenue deficit has
been eliminated, while the average fiscal deficit was curbed to less than 3% of
GSDP. The average debt to GSDP ratio has also fallen.
 Economic Survey elaborates that as the fiscal challenges mount for the states
because of the Pay Commission recommendations, and mounting payments from
the UDAY bonds, there is a need to review how fiscal performance can be kept on
track.
 Greater reliance will need to be placed on incentivizing good fiscal performance,
not least because states are gradually repaying their obligations to the Centre,
removing its ability to impose a hard budget constraint on them says the
Economic Survey.
 Above all, however, incentivizing good performance by the States will require the
Centre to be an exemplar of sound fiscal management itself.
Labour migration:
New estimates of labour migration in India have revealed that inter-state labour
mobility is significantly higher than previous estimates. The study based on the
analyses of new data sources and new methodologies also shows that the migration is
accelerating and was particularly pronounced for females.
 The data sources used for the study are the 2011 Census and railway passenger
traffic flows of the Ministry of Railways and new methodologies including the
Cohort-based Migration Metric (CMM).
 The new Cohort-based Migration Metric(CMM) shows that inter-state labour
mobility averaged 5-6.5 million people between 2001 and 2011, yielding an inter-
state migrant population of about 60 million and an inter-district migration as high
as 80 million.
 The first-ever estimates of internal work-related migration using railways data for
the period 2011-2016 indicate an annual average flow of close to 9 million
migrant people between the states.
 Both these estimates are significantly greater than the annual average flow of
about 4 million suggested by successive Censuses and higher than previously
estimated by any study.
 Migration for work and education is also accelerating. In the period 2001-2011
the rate of growth of labour migrants nearly doubled relative to the previous
decade, rising to 4.5% cent per annum. Interestingly, the acceleration of migration
was particularly pronounced for females and increased at nearly twice the rate of
male migration in the 2000s.
 There is also a doubling of the stock of inter-state out migrants to nearly 12
million in the 20-29year old cohort alone. One plausible hypothesis for this
acceleration in migration is that the rewards (in the form of prospective income
and employment opportunities) have become greater than the costs and risks that
migration entails. Higher growth and a multitude of economic opportunities could
therefore have been the catalyst for such an acceleration of migration.
 While political borders impede the flow of people, language does not seem to be a
demonstrable barrier to the flow of people. For example, a gravity model indicates
that political borders depress the flows of people, reflected in the fact that migrant
people flows within states are 4 times than migrant people flows across states.
However, not sharing Hindi as a common language appears not to create
comparable frictions to the movement of goods and people across states.
 The patterns of flows of migrants found in this study are broadly consistent with
what is expected – less affluent states see more out migration migrating out while
the most affluent states are the largest recipients of migrants. Seven states have
higher net in-migration: Goa, Delhi, Maharashtra, Gujarat, Tamil Nadu, Kerala
and Karnataka.
 Also, the costs of moving for migrants are about twice as much as they are for
goods – another confirmation of popular conception.
Redistributive Resource Transfers (RRT):

The survey also calculated Redistributive Resource Transfers’ (RRT) from the Centre
(between 1994 and 2015) and value of natural resources for Indian States (over 1980
and 2014) and correlated these with several economic outcomes and an index of
governance.
 Redistributive Resource Transfer or RRT to a state (from the Centre) is defined as
gross devolution to the state adjusted for the respective state’s share in aggregate
Gross Domestic Product(GDP). The top 10 recipients are: Sikkim, Arunachal
Pradesh, Mizoram, Nagaland, Manipur, Meghalaya, Tripura, Jammu and
Kashmir, Himachal Pradesh and Assam.
 Annual per capita RRT flows for all north-eastern states (except Assam) and
Jammu & Kashmir have exceeded the annual per-capita consumption expenditure
that defines the all-India poverty lines, especially the rural line.
 The survey points out that there is no evidence of a positive relationship between
these transfers and various economic outcomes, including per capita consumption,
GSDP growth, development of manufacturing, own tax revenue effort, and
institutional quality. Instead, there is a suggestive evidence of a negative
relationship. For example, larger RRT flows seem to negatively affect fiscal effort
(defined as the share of own tax revenue to GSDP). These trends are robust to
alternative definitions of RRT.
 Also, whether mineral rich states like Jharkhand, Chhattisgarh, Odisha, Rajasthan
and Gujarat, are doing well on the metrics of economic outcomes and governance
is considered in the context of redistributive transfers. However, this does not
reveal conclusive results and there is no evidence of a negative relationship
between fiscal effort and reliance on revenue from natural resources over the
period 2001-14.
 Thus, the existence of a ‘RRT curse’ and the lack thereof of a ‘natural resource
curse’ in the context of Indian States implies that both the Centre and States need
to act to mitigate the effects of the former and guard against the emergence, in
future, of the latter. In this context, the question is whether RRT, in future, can be
linked more saliently to fiscal and governance efforts on the part of the States.
 The Economic Survey 2016-2017, also suggests providing a part of the RRTs or
to redistribute the gains from resource use as a Universal Basic Income (UBI)
directly to households in relevant states which receive large RRT flows and are
more reliant on natural resource revenues.
 Finally, recognizing and responding creatively to possible pathologies created by
large bounties-either in the form of redistributive resources or natural resources,
will be important to avoid making the errors of history.
Public Sector Asset Rehabilition Agency:

The Survey shows that our country has been trying to solve its ‘Twin Balance
Sheet’(TBS) problem – overleveraged companies and bad-loan-encumbered banks, a
legacy of the boom years around the Global Financial Crisis. So far, there has been
limited success. The problem has consequently continued to fester: Non-Performing
Assets (NPAs) of the banking system (and especially public sector banks) keep
increasing, while credit and investment keep falling.
 It says, now it is time to consider a different approach – a centralised Public
Sector Asset Rehabilitation Agency (PARA) that could take charge of the largest,
most difficult cases, and make politically tough decisions to reduce debt.
The Survey reaches to the conclusion that a PARA may be necessary because:
 Public discussion of the bad loan problem has focused on bank capital. But far
more problematic is finding a way to resolve the bad debts in the first place.
 Some debt repayment problems have been caused by diversion of funds. But the
vast majority has been caused by unexpected changes in the economic
environment after the Global Financial Crisis, which caused timetables, exchange
rates, and growth rate assumptions to go seriously wrong.
 This concentration creates a challenge since large cases are difficult to resolve,
but also an opportunity since TBS could be overcome by solving a relatively
small number of cases.
 Restoring them to financial health will require large write-downs.
 Among other issues, they face severe coordination problems, since large debtors
have many creditors, with different interests. And they find it hard –financially
and politically—to grant them sizeable debt reductions, or to take them over and
sell them.
 It increases the costs to the government since bad debts of the state banks keep
rising, and increases the costs to the economy, by hindering credit, investment,
and therefore growth.
 Since, private run Asset Reconstruction Companies (ARCs) have not been
successful either in resolving bad debts, though international experience
(especially that of East Asian economies) shows that a professionally run central
agency with the government backing could overcome the coordination and
political issues that have impeded progress over the past eight years.
Universal Basic Income (UBI) Scheme an alternative to plethora of State

subsidies for poverty alleviation:
The Economic Survey has advocated the concept of Universal Basic Income (UBI) as
an alternative to the various social welfare schemes in an effort to reduce poverty. The
survey juxtaposes the benefits and costs of the UBI scheme in the context of the
philosophy of the Father of the Nation, Mahatma Gandhi. The Survey states that the
Mahatma as astute political observer, would have anxieties about UBI as being just
another add-on Government programme, but on balance, he may have given the go-
ahead to the UBI.
 The Survey says the UBI, based on the principles of universality, unconditionality
and agency, is a conceptually appealing idea but with a number of implementation
challenges lying ahead especially the risk that it would become an add-on to,
rather than a replacement of, current anti-poverty and social programmes, which
would make it fiscally unaffordable.
 Based on a survey on misallocation of resources for the six largest Central Sector
and Centrally Sponsored Sub-Schemes (except PDS and fertilizer subsidy) across
districts, the Economic Survey points out that the districts where the needs are
greatest are precisely the ones where State capacity is the weakest. This suggests
that a more efficient way to help the poor would be to provide them resources
directly, through a UBI.
 Exploring the principles and prerequisites for successful implementation of UBI,
the Survey points out that the two prerequisites for a successful UBI are: (a)
functional JAM (Jan Dhan, Aadhar and Mobile) system as it ensures that the cash
transfer goes directly into the account of a beneficiary and (b) Centre-State
negotiations on cost sharing for the programme.
 The Survey says that a UBI that reduces poverty to 0.5% would cost between 4-
5% of GDP, assuming that those in the top 25% income bracket do not
participate. On the other hand, the existing middle class subsidies and food,
petroleum and fertilizer subsidies cost about 3% of GDP.
 The Survey concludes that the UBI is a powerful idea whose time even if not ripe
for implementation, is ripe for serious discussion.
4.GLOBALISATI
ON & INDIA
Globalization is the buzzword, and there are high hopes for India regarding its role in Global Economy. As
India enters 21st century after 12 years of Creation of New World economic & Trade regime under WTO,
several important issues need attention of policy makers, Businessmen and academicians to critically
examine the issues involved in Concept of Globalization and the role India has to play in New World
Economic order. Can India secure for itself better quality of life and a larger share of the World Trade pie?
How?
Should India take leadership role to represent third world countries, especially poorer countries to
safeguard their interests against developed countries and growing regional cooperation forums across the
world?
There are several issues involved with globalization that have to be answered and clear cut policy
decisions to be taken.
Two Claims have been made in India. One by Corporate lobby that demands dilution of Labor laws and
labor standards, as these are perceived to be obstruction to globalization and world competitiveness, and
the other made chiefly by Mainstream Left parties and trade unions, who allege dilution of labor standards
and attack on workers' rights through the agency of transnational corporations, world bank, IMF and
WTO.
The attachment of Child Labor and environmental conditions to NAFTA is another major concern to India
and developing countries.
While employment conditions in informal sector, could not have been worse as these stand today, in the
formal sector too, which was characterized by job security, union density and collective bargaining up to
1970s there is catastrophic erosion of job security and loss of jobs. Even Bombay textile sector alone has
seen total job losses of 1 lac jobs by end of 1990s.
It is also interesting to observe that National Governments in many countries, both developed and
developing, while yielding to domestic lobbies, try to protect their economies through tariff and non tariff
barriers, on the other hand they clamor for opening of economies and lower tariffs in importing countries
of their own produce.
The unwillingness of EU block countries in reducing Agricultural subsidies and relaxing the trade barriers
is also a point in the case.
How successful has the strategy of attempting to compete in the world market on the basis of cheap labor
could be?. It is still very early to tell. But a look at the experience of textiles and garments, do not support
this thinking. The exports first rose and then fell sharply. Not only the exports decline as a result of stiff
competition from cheaper and /or better quality products from other third world countries, but even the
domestic market began to be invaded by these more competitive products, some of them from countries
like Taiwan and South Korea, with considerably higher labor standards than in India.
It became evident that cheap labor alone could not ensure a secure market position.
What perhaps is required is technological upgrading to increase productivity and produce higher-quality
products with a well paid, educated and skilled work force.
A recent survey of over 1000 top international companies showed that the two major attractions of India
were (1) the potentially huge size of Indian market, and (2) the availability of an educated, skilled, English
speaking labor force at competitive wages (Global policy Council 2001). As far as market size is
concerned, china scores the point. Bureaucracy topped the list of negative features for India.
Also, the global economy at present is still really a game of two-and-a-half players; European Free Trade
Zone, NAFTA and Japan. To make cruel point; in 1914 there were eight great powers, now there is the
G8. The difference is that now the Russians turn up as poor guests and Austro -Hungary has been
replaced by Canada.
Economic activity is centered around a few rich nations. The wealth distribution is asymmetrical and
number of persons earning lesser than a dollar a day in poor countries is increasing phenomenally.
Another issue is, will liberalization and relaxing of financial and capital markets mean higher FDI inflows?
Well, the answer is No.
Their industrious peasantry, higher domestic savings rate and industrialization behind the tariff barriers
built great countries like Taiwan and South Korea.
We must link the progressive implementation of free trade with efforts to reduce the economic
vulnerability of the poorest countries by eliminating Debt, reversing the outflow of net capital assets from
South to North, and creating new facilities at organizations like World bank, IMF and UN for developing
purposes. The new money has to go towards funding global governance issues, towards creating and
investing in SOCIAL infrastructure of poor countries. Particularly, the physical infrastructure, education,
primary healthcare and rural and drinking water schemes, need investment. India will have to take lead
role in this as also in projecting Food and Livelihood as 'non Trade concerns'. It should also play a
productive role in Cairns group and help to change the current distortions in global agricultural trade,
where India stands to gain maximum. To maintain GDP growth rate of 8 %, India will have to increase
exports substantially touching 100 Billion dollars per annum by end of year 2007. And that will require
major realignment of its internal and external competencies. Major reforms in financial markets, legal
systems and administrative models are required, that are investor friendly. India would do well to focus on
"made In India " Brand promotion. And substantially invest in Human resource quality up gradation and
R&D infrastructure. Particularly IT, agriculture, space research, pharmaceuticals and bio genetics, have
great scope to penetrate world markets. Information technology enabled industry is one area where India
can take major leap, due to its inherent strength of English-speaking technocrats base.
Regional cooperation, like SAARC, ASEAN and even alignment with China would definitely give strategic
advantage in Global market place both as suppliers and buyers.
It is absolutely clear that India with its current policies and internal structure is not in a position to take
advantage of globalization, so also most of developing countries. Clear cut decisions regarding, labor
policy, financial and legal reforms and concerted efforts in setting up world class technology and
organizations with sustainable indigenous research base is must for long term benefits to Indian
economy.
How Globalization Has Effected On Indian Economy

Due to globalization, in Indian economy it affect not only to agricultural production but also employment
opportunities in the rural parts, inequality between urban & rural areas. Globalisation is conceived as a
powerful transformative force responsible for a massive shake-out of nations, economies, international
institutions & the whole world order. Thus, we can say that the higher the level of international
corporations/transactions, the higher will be economic growth, income level & living standards the
globalization process would bring. Globalisation has brought many jobs & large sums of investment to
India. India’s economy has been growing at exceptional rates for the past several years & many new
opportunities have opened up for India. Yet, India does remain quite poor. Most of those who profit from
globalization in India are the upper classes, with many in the lower classes being displaced & suffering
from miserable labor conditions. Globalization has created a large economic boom for India with largely
positive effects. At the present, we can also say about the tale of two Indians. We have the best of times;
we have the worst of times. Globalization of financial markets has far outpaced the integration of product
markets. There is sparkling prosperity, there is stinking poverty. We have dazzling five star hotels side by
side with darkened ill-starred hovels. We have everything by globalization, we have noting by
globalization.
Heymath, a firm in Chennai, provide mathematics homework help to students & lesson plans to teachers,
over the net. Its initial target market was schools in Singapore, but after successfully developing & selling
its product there, it is now expanding elsewhere, including India. Despite these examples, however, as an
economy we are still not still as open to foreign goods and services, labor, or knowledge as we should be.
The five major areas where the co-operative global efforts on reform are to be concentrated are:
1. Transparency: The goal is to make timely, reliable data, plus information about economic and financial
policies, practices, and decision making, readily available to financial markets and the public.
2. Internationally Accepted Standards: Adherence to international standards and codes of good practices
helps ensure that economies function properly at the national level, which is a key prerequisite for a well-
functioning international system.
3. Financial Sector Strengthening: Banks and other financial institutions need to improve internal
practices, including risk assessment and management, and the official sector needs to upgrade
supervision and regulation of the financial sector to keep pace with the modern global economy.
4. Involving the Private Sector: Better involvement of the private sector in crisis prevention and resolution
can limit moral hazard; strengthen market discipline by fostering better risk assessment; and improve the
prospects for both debtors and creditors
5. Systemic Improvements: Contingent Credit Lines (CCL): The IMF has created a new instrument of
crisis prevention with the CCL, after cautionary line of defense readily available to member countries with
strong economic policies designed to prevent future balance of payments problems that might arise from
international financial contagion.
5. Multiculturalism in India and West

Multicultural values define India. Mahatma Gandhi showed us power of satya and ahimsa or non-violence
to humble a colonial power and Swami Vivekananda showcased power of seva and tyaga, the two pillars
of Indian cultural values. Gandhiji and Vivekananda represented two of many world leaders that epitomize
power of one.
India is an icon of religious pluralism. In Indian languages, Dipawali incorporates Ali, Ramzan includes
Ram; Indians who revere Ganapati and Guru Nanak may also bow to Ahura, Allah, St. Anthony, Buddha,
Mahavir Jain, at the Khwaja Moinuddin Chishti dargah in Ajmer, at saint Hasti Bibi shrine in Ahmedabad
or any famous Masjids of Islamic religious significance in India, Jesus Christ and Virgin Mary, etc. an
encounter with Catholics doing yoga, pranayam, etc en route to priesthood is more than likely in India. An
Indian Muslim couple at Tirupati said, "For us, Balaji and Allah are one and same."
Indian religious inclusiveness to max is everywhere seen in India. The Y4D (Youth of Development)
program sponsored by INDUSA Endowments (a USA based unregistered family fund set up by overseas
citizens of India) at the V-LEAD (Vivekananda Institute of Leadership Development) is under able
leadership of Mrs Fathima Syeda (Muslim), Dr. Leslie (Christian) and Dr. M. A. Balasubrahamanya
(Hindu). May be Indians should start listing more than one religion they identify with when filling out a
form!
Although every terror attack is a calculated attempt to subvert Indian heritage, Indian secularism has
stood the test of time and India has responded as a mature nation to pressures from the fundamentalist
clerics and jihadists. For the most part, unlike America, India was restrained in responding to terror
attacks on Mumbai, Delhi, Bangaluru, Hyderabad, Ahmedabad, and Jaipur and now in Pune.
Western democracies are liberal to the core. Relative to India they are weak in multiculturalism and
pluralism. Many European nations developed tolerance of Asian immigrants in the 1980s but it has
gradually changed after 2001 with terrorist attacks by Jihadi suicide bombers in America and many
European centers - London, Madrid, etc.
Since 2002 in Iraq and now in Af-Pak region in general and Afghanistan in particular America, NATO and
a reluctant Pakistan are engaged in destroying al Qaeda and its co-linked Taliban. This war on terrorism
or jihad against jihadist is exposing limitations of Western tolerance for cultural symbols of the people of
other faiths. For example, in West there is public disdain and intolerance of the followers of Islam and
especially people of faith who wear their religion on person such as hijab and burqua, clerics preaching
hate and intolerance at madrassahs, and bearded Muslims, Sikhs and Hindus.
On paper multiculturalism is a great idea but in nations other than India how do you stop the Bubbas, the
Rednecks and the followers of Christian fundamentalists who openly stereotype people of other faiths and
confront them in public areas?
English chicken tikka masala, German currywurst, the Hare Krishna Street chanters certainly are a public
reckoning of Western liberalism. But the turbans, the burqas, the minarets now are symbols of
xenophobic mistrusts of select Asian immigrants. Jihadi terrorism coupled with Pakistani army"s
duplicitous behavior has precipitated regional wars. Political developments after 2001 have challenged
Western liberalism and multiculturalism.
For Indians in the West tolerance now is not just an expectation but a birthright. Most Indians including
first generation Indian-Americans, Indian-Europeans, etc are in West for economic opportunities. With a
rare exception of Sikhs and Indian Muslims who make a statement by wearing symbols of their faith on
person most Indians conform to local social and cultural norms as they have already internalized and
practiced principles of democracy and the government by, for and of the people.
2. Jihad against jihadists
A global jihad movement against jihadists al Qaeda and its co-linked Taliban are in progress. America
and NATO have major presence with more than 100,000 troops in Afghanistan. From a major airfield in
tribal Western Pakistani across from Afghanistan America operates its drone attacks in the Af-Pak areas.
Using carrot and stick methods of military dominance they have forced Pakistani army to cooperate in
systematically dismantling Taliban terrorist infrastructure in addition to continuing with attacks using
drones and other state of the art military electronic technologies for the decapitation of al Qaeda and
Taliban leadership. The noose around al Qaeda and its terrorist operatives has continued to tighten.
There are 150 nations with as many as 1.5 billion Muslims globally. Al Qaeda and its co-linked terrorist
organization"s presence now have been reduced to three nations - Afghanistan, Pakistan and Yemen.
Metaphorically, jihad against jihadist can be looked upon as casting of a global fishnet to trap and catch
all kinds of jihadists. There will be jihadists that always will elude the global fishnet. A few jihadists will
struggle and manage to hit soft targets and swim away as was the case in latest terrorist attack on the
day (Feb 14) I was visiting Pune to celebrate my 50th year of immigration to America. Other jihadist will
strive to get out but remain imprisoned. The majority in the fishnet will relax and they may not even be
aware of life-threatening situation. They will not feel the danger. A relatively short time later they will be
dead bringing to conclusion the global jihad against jihadists.
3. God of Love - Jesus vs. God of Laws - Warlords
An unintended consequence of jihad against jihadist is exposure of limitations to the liberalism and
multiculturalism that had taken roots in 1980s in the West, America, etc. A critical analysis of history
shows how the Jesus ministry promoting love, peace and ahimsa for about 300 years was transformed
with conversion of Romans to Christianity. It was a political move to appease masses and further
expansion of Roman Empire deep into Asia (Middle East) and Africa.
Jesus Christ, born to a single Jewish mother in a disadvantaged family and a carpenter by trade, knew
first hand how the "God of Laws" practiced by Roman client Kings of the Jewish Kingdom of Israel and
Judea manipulated and exploited masses for personal gains leaving masses to live in generational cycle
of poverty and misery more than 2010 ago. Jesus countered Jewish "God of Laws" with God of Love.
With a message of peace, love and ahimsa even after he was crucified the Jesus ministry spread like wild
fire among poor masses for 300 years before humbled Romans converted to Christianity to change the
history of world.
Conversion of Romans to Christianity was a political decision to appease masses. Romans mutilated
Jesus ministry by replacing the Jewish value systems with Roman values and a political philosophy of
absolute conformity to authority of the state and infallibility of state appointed clerics for interpretation of
the state religion. Conversion of Romans set the stage to change the world and Christian became
Romans Catholics and a state religion with Roman values.
Roman Catholics transformed Jesus ministry with God of Roman Laws and a Roman system of rewards
and punishment. In Roman Empire non-Christians were tribals, savages, etc and Catholics proceeded to
convert them to Christianity under the power of sword. For more than three centuries Arab and African
tribals were brutalized by Augustine (4th and 5th centuries) and other Christian scholars cum warlords in
the name of spreading Christianity and tentacles of Roman Empire deep into Middle East and Africa until
the Arabs and African tribals revolted and a new religious power - Islam - surfaced in Arab lands
spearheaded by Mohammed. Muslims honor Mohammed as their prophet.
4. Islam with Arab tribal values
Mohammed liberally borrowed from Jewish and Roman Catholic bibles and replaced its value systems
with Arab tribal morals and ethics represented in the Shariah system of personal laws. Allah replaced the
God of Roman Laws and God of Love by Jesus. The rewards and punishments system was replaced with
an Arab version.
Politically Mohammed created an Islamic structured political order by incorporating absolute conformity to
authority and infallibility of clerics as the interpreter of religious scriptures. Muslims also created a class of
select few - martyrs - who were offered a place in heaven if they died for causes promoted by the ruling
class.
Mohammed was basically a decent man of peace. His legacy of "Islam is a religion of peace" was
distorted by powerful feudal warlords who continued territorial expansions for economic growth; they were
assisted by clerics promoting jihad and an agenda for conversion of non-Islamic followers.
5. Morality and Ethics vs. Laws of constitutional democracies
Muslim clerics blurred the distinction between spiritual values and laws needed for good governance by
declaring that Shariah system was the legal system to resolve and social, cultural, political and economic
disputes. Not being exposed to governance that offers equality for all in a law and order dominated
society Muslims continue to follow Arab tribal system that is biased against women and non-Islamic
followers.
Morality and ethics of any religious faith are for personal spirituality and salvation where as laws of
constitutional democracies honoring fundamental human rights are for both genders and all religious
faiths. Religious authorities and politicians who justify their actions invoking religion ignore that moral
rules and ethical codes are values, not laws, for religiously inclined to uphold. Laws as that in a
constitutional democratic nations tell us what we can"t do in a politically governed society. They are not
the same as the religious moral values and ethical codes; moral values and ethical codes tell us what we
should do as man/woman seeking perfect ideal to connect to the God.
Moral rules and ethical codes for all religions are not identical and contrary to what clerics of any faith
may claim they do not have to be conformed absolutely as the laws of any nations that tolerates
multiethnic and multi-religious population required to maintain the law and order for well being and safety
of all its citizens. In the 21st century information age the digital technology offers instant global exposures
to radical pronouncements of clerics. Such clerics get immediately in trouble as soon as they use their
office to present what are moral and ethical value choices as the laws dictated by the faith for absolute
conformity.
6. Colonization of India
India experienced a 1,000 years of colonization (950-1947). Several vassals of Turkish Empire -
Mohamed Ghaznavi invaded and occupied Afghanistan (950 AD). Both Ghaznavi and his son in 10-11th
century and later Mohammed Ghauri in 12th century continued with the loot and plunder in North India
was ravaged and the riches of many Hindu principalities in Punjab, Sindh, Multan (Saraiki), Kashmir,
Rajasthan, Kutch, Saurashtra and Gujarat. In late 16th century Babur, a Mughal, conquered northwestern
India in 1526 and settled in India to establish the Mughal Empire that lasted till 1857. British colonization
of India lasted for next 100 years.
7. Independent India and Pakistan
Gandhiji is credited for freedom of India using most powerful tools of satya and ahimsa against the British
Raj. British partitioned India to establish Pakistan under Mohammed Jinnah and rest of the British India
was left to scores of feudal principalities and the Congress party under the leadership of Pundit
Jawaharlal Nehru and his many associates including Sardar Patel, Rajendra Prasad, Sarvapalli
Radhakrishnan, Rajgopala Charri, Jayaprakash Narayanan, and many, many more - too many to name
here.
History of modern India is found in many volumes published following the Independence of India.
Ramakrishna Guha"s authoritative history titled "India after Gandhi" is a good starting point for such
information. For history of Pakistan Ms Ayesha Siddiqa book, "Military Inc," provides a good account of
Pakistan of today under military rule, both direct and indirect.
A comparison of last 60+ year"s history of South Asia shows contrast between progress a democratic
India has made while Pakistan has suffered economically as it was mostly ruled by dictator and feudal
warlords assisted by clerics promoting jihad and an agenda for converting non-Islamic followers.
7A. Independent Pakistan
Pakistan drifted into military dictatorship in a decade (1947-57) after Jinnah"s death (1948) and
assignation of a number of its Prime Ministers. Its first military dictator General Ayub Khan assumed
power in 1958.
Its army was and continues to be dominated by Punjabis of Chakwal district. For most part Punjabis and
Sindhis have ruled Pakistan as a fiefdom. It has developed into a nuclear military power and it is heavily
dependent on its patrons America, Arabs of Gulf States and Red Sea and china for economic and military
aid.
Pakistan essentially has been ruled by military and feudal warlords aided by state sponsored clerics who
have twisted Islam with ample help from Arabs of Gulf states and Red Sea to pursue their political
ambitions of establishing next Caliphate using a foreign policy of territorial expansion with military force.
Pakistan in 1970-80 under Military Dictator Ziaul Haq and starting from 2001 under the Commando
Dictator Musharraf was and now under General Asif Kayani, COAS is reduced to a "rentier state" for
American hegemony of the South and Central Asia as well as that of Arabian Gulf and Red Sea states.
Blind ambitions of the army precipitated dismemberment of Pakistan giving birth to Bangladesh in its
eastern wing in 1971. Today Pakistan with its over dependence on terrorist jihadi proxy war infrastructure
is mired in both internal and regional instability of South and Central Asia - Afghanistan taking orders from
its patrons - America, Arabs and China.
Pakistani establishment supported by Taliban (of Afghanistan and Pakistan) are now co-linked with al
Qaeda under leadership of Osama bin Laden, a Yemeni/Saudi national and Dr. Ayeman Zawahri, an
internationally known terrorist from Egypt (1980-90) as well as a part of al Qaeda in Afghanistan (1996-
2001). They are leaders of a stateless global terrorist organization spread over the Af-Pak region and
Yemen. They are waging jihad against America, West, moderate energy rich Arab states and all other
non-Islamic majority nations including India.
Pakistan with its jihad proxies is now a troubled nation; internally it is destabilized by jihadists it had
nurtured for more than three decades starting 1980s, and economically and militarily it is heavily
dependent on America, West, Arabs, and China as a rentier state for promoting American hegemony of
the region.
7B. Independent India
India became a unified nation; it was declared a constitutional democratic Republic of India on January
26, 1950 - under able leadership of Nehru. Sardar Patel was architect and responsible for assimilating all
principalities that came into power on August 15, 1947.
India has made a steady progress in uplifting its masses (although it has ways to go), as well as
becoming an economic power to be reckoned with in the global village as described in my several blogs
listed in the references and notes and books by Thomas Friedman, Nandan Nilekani, and many more. In
the decade of 2010 India is on the verge of transitioning from a developing to a developed nation. It is
steadily marching towards empowering its rural youth to be a skilled workforce globally in demand for
generating wealth.
In my opinion in today"s global environment, one needs to look beyond one"s lifespan, bank balance and
work towards achieving what will be good for the country as India continues to empower rural youth by
reforming secondary education for wealth generation and rural development. Rural India represents 70%
of its population. Its economy was dominated by agricultural commodities until end of 1980s. Starting
1990s with deregulation and a steady dismantling of the license raj, the emphasis has shifted to
developing India as a global software power house as well as establishing a wide range of manufacturing
industries to capitalize on its estimated 300 million skilled and empowered youth in more than 1.1 billion
populations for developing a consumer demand driven economy.
We Indians should continue with our tryst with destiny to be a globally recognized economic and military
power second to none but ready to defend our national integrity whenever threatened by anyone as well
as offering equality under law to members of both genders and of al religious persuasions that regard
themselves to be Indian.
Multiculturalism: India and the ‘West’
Multiculturalism is often a loosely used term. It is used to denote the presence of many cultures. Ask a
school or college-goer as to what the example of multicultural society is; chances are he would say it is
India. It is not wrong to say that India is a multicultural society, but ‘multiculturalism’ is a different thing.
Policy of a state to adopt a certain position vis-a-vis the many cultural groups that inhabit its territory is
multiculturalism. For it to take full effect, there must be an official policy duly articulated by the state.
There should be recognition of more than one culture populating the state. Although historically, the
‘majority culture’ has been the culture closely associated with the state, state must strive to treat every
single cultural grouping equally and provide special opportunity to groups that are understood to be
marginalised or discriminated against.
In his essay ‘The Politics of Recognition’, Canadian philosopher Charles Taylor writes about Frantz
Fanon and his contribution to the current debate on multiculturalism (though that was not what Fanon had
intended) in the form of ‘The Wretched of the Earth’. Fanon’s premise was that colonialists succeeded in
de-humanising the colonised, not only by employing brute force, but also by making them believe that
their image of the natives was an accurate one. Therefore driving out the ‘white man’ did not necessarily
mean attaining freedom. Freedom comes only when the erstwhile physically subjugated rids himself of
the very mental subjugation imposed by colonisers. Battle of the dominated against the dominant is
something that not only Fanonians, but also multiculturalists believe in; however with a point of
divergence – unlike Fanon, multiculturalists do not advocate violence.
Multiculturalism in the West
Multiculturalism as a state policy was first tried in Canada when Prime Minister Pierre Trudeau in a
speech delivered in Parliament in October of 1971 said, “for although there are two official languages,
there is no official culture, nor does any ethnic group take precedence over any other”. With this, Mr
Trudeau’s government wanted to make it explicitly known that English Canada wouldn’t get precedence
over French Canada (or the aborigines and the immigrants for that matter) by reason of their greater
population. Canada was already a multinational state, and taking a cue from Canada, other multinational
states including Australia and Britain adopted multiculturalism as an official policy.
Can Europe – with its historically homogenising tendencies be hailed as birthplace of multiculturalism? As
an official doctrine it certainly can. However, it must be pointed out that German, British and French (the
three largest European countries) leaders in the recent past have spoken about the failure of
multiculturalism. So was it a fashionable tool to adopt only to be discarded when it did not seem to work
or their economies went bust?
On 2 December, 1988 a group of Muslims in Britain burned a novel. The event did not generate much
attention. A month later, after having informed national media, the group burned the same book. This
evoked response, but not as much as what was to come a month later when the Grand Ayatollah in Iran
publically issued fatwa on the book’s author Salman Rushdie. Many ‘Bradford Muslims’ who first
protested and burned copies of the book were born and raised in Britain. Weren’t they then by default
brought up with British values and embodied British liberalism? Many British commentators were at a loss
to explain and rationalise the events as this ‘medieval fundamentalism’ was repulsive to the British palate.
The episode was, quite predictably, compared to the Nazi book burnings of 1933.
Unlike in the United States of America (and many scholars have written about this) where national identity
is defined in politico-institutional terms; in Europe, national identity continues to be defined in ethno-
cultural terms. Of course, America’s stress on assimilation can be problematic, but you can safely be
Chinese and American, Irish and American, Indian and American, all at the same time. You are American
as long as you swear to ‘support and defend the Constitution and laws of the United States against all
enemies, foreign and domestic.’ If you ever happen to be in Boston on St Patrick’s Day, you will be
overwhelmed by ‘Irishness’ on display. St Patrick is a patron saint of Ireland and most Irish Americans are
descendents of those who came from Ireland in the 1840s. In contrast, someone once wrote of how in
France one may be only French. One can be an Arab living in France but cannot be a French Arab. There
is no concept of a composite culture per se.
While America is a country built on immigration, countries in Europe are less familiar in dealing with
migrants. Immigration for them is new and largely came in after decolonisation of Africa and Asia.
Therefore, most Europeans still view immigrants as ‘the other’, and in spite of not harbouring any sort of
racial prejudice – like to keep ‘safe distance’ from them. Of course, there is that small minority comprising
white supremacists who like to use physical force with or without provocation.
Multiculturalism in India
‘Indian culture, as it has evolved, has always been prepared to absorb material and ideas from
elsewhere,’ writes Amartya Sen in ‘The Argumentative Indian’. Sen is merely evoking India’s past while
making the statement. Soon after, he goes on to say how the chilli – so vital a part of Indian cooking –
came to India from the New World via the Portuguese, and is today a part of the Indian kitchen. Nobody
doubts or questions its ‘Indianness’. So is the chilli a metaphor for India’s absorptive qualities? an
Multiculturalism as understood in the West is not an official policy in India. Our take on the same is of a
different nature keeping with, however, the ‘majority-minority dichotomy’ that is so essential in the
discourse of multiculturalism. Gurpreet Mahajan in an essay published in ‘Multiculturalism in Asia’ edited
by Canadian political philosopher Will Kymlicka and Professor of International Studies ’ Baogang He
makes a few important points. She writes that although Hinduism as a religion is extremely plural and
does not impinge upon other religions, it is not the ‘Hindu way of life’ – as often claimed – that allows
India to walk the multicultural path. India’s adoption of its own brand of multiculturalism, too, was not a
consequence of its Hindu tradition. The period preceding independence, she writes, ‘saw the growth of a
more aggressive and exclusionary Hinduism.’ The Constituent Assembly charged with framing a post-
independence constitution for the country eschewed any majoritarian tendencies and instead ‘emphasise
(d) the desirability of living with differences.’
In much the same way, Mahajan says that the States Reorganisation Act of 1956 ensured that ‘in case of
linguistic identities, cultural and political boundaries could overlap without dividing the country.’ If India
were to stick to its original plan of imposing Hindi on all its citizens, consequences might have been
calamitous. Any attempt of the state to homogenise its population almost always results in resentment.
More often than not, the outcome is far more devastating than mere resentment.
While India’s ability to incorporate peoples from different backgrounds over the centuries and legislate to
maintain social cohesion (by the Constituent Assembly) has helped tremendously, one should at the
same time keep in mind that any attempt to break with this tradition will result in social exclusion and
hostility between communities.
The major divergence between India and Europe – apart from the differences in attitudes to immigration
(historically speaking) – is that Indian ‘ethos’ has always been dialogic. Every group has found space (to
varying degrees) to make themselves and their grievances heard in public. That is one reason why
ghettoisation of cultural minorities – so common a feature of recent immigration in Europe – is an
exception rather than a rule in India.
International Migration
The Commission on the ‘Future of Multi-Ethnic Britain’ which published the Parekh Report (chaired by
Bhikhu Parekh) in 2000 called for the British government to formally declare itself as multicultural. Britain
was a ‘community of communities’, it said. A year later, after the 11 September attacks, the report was
cast aside and the more pressing need of ‘fighting terror’ preoccupied the state.
Today, across the world, for more reasons than one, immigration is a reality. If in the 1950s and 1960s,
Turks were required as guest workers (Gastarbeiter) in West Germany, hundreds of thousands of Iraqis
have poured into Sweden since the war in their country in 2003. According to the German citizenship law
of 2000, Turks in Germany have to choose their nationality by the age of 23. Failing to do so will result in
the loss of their German passports. This is not the case for other citizens from the European Union who
are not required to give up passports of the country of their birth. The term ‘second or third-generation
immigrant’ is deeply misleading, for the sons and daughters of immigrants are not themselves
immigrants’, writes Bhikhu Parekh (of the Parekh Report) in ‘Rethinking Multiculturalism: Cultural Diversity
& Political Theory’. This only handicaps the ideal of greater integration.
India deals with migration from both its South Asian neighbours (Bangladesh, Sri Lanka, Pakistani Hindus
even) as well as the extended region (Afghanistan, Burma) – the majority of whom are either illegal
immigrants or asylum seekers. America, too, is a magnet for Mexican labour – most of whom illegally
cross the international border between the two countries in perilous circumstances. Many die in the
attempt so much so that it has prompted the setting up of an American advocacy group called ‘No More
Deaths’ in an attempt to ameliorate the situation. Like in the case of post-war West Germany, the United
States of America under the Bracero Programme (Spanish for ‘manual labourer’) of 1942 allowed for the
descent of temporary Mexican labourers into the country to work in agriculture.
The children of the Turkish workers in Germany, Bangladeshi migrants who came to India in 1971 (most
returned after the liberation war), Mexican labourers in the United States cannot be asked to return to the
countries their parents or grandparents came from. Their coming cannot be reversed and their offspring
cannot be targeted for a choice they did not make.
The question of international migration is closely tied to the quest for a truly multicultural society.
Migration in a globalised world is a reality and cannot be stopped although global capitalism favours
opening up of capital markets over labour markets. In view of all this, a multicultural space needs to be
fostered by the articulation of multiculturalism (or something with a similar aim) especially by states at the
receiving end of the said phenomenon. This would go a long way in not only strengthening democracy but
also creating inter-cultural harmony.
6.INDIAN
EDUCATION
SYSTEM
The education system in recent time is a paradox concept because it is
viewedmyopically. The education system in India is relatively reproducing
the book in paper usingmemory rather than increasing the creativity of the
student and enabling them to take decisioneffectively. The education system
currently existing in India can be illustrated as, studentgetting 97/100 in
disaster management subject, doesn’t capable of doing anything
whendisaster strikes, this is because he was made to read instead of
learning. In this context, theeducation system has failed to achieve its
important objective. Students are not difficult theyare different, judging
them through common examination is unfair practice, one may not
beinterested in writing instead he may tell oral, few may not be good in oral
and writtencommunication but, good in making drama play; the ultimate
aim of the education is to installthe fundamental concepts, create an
environment to practice – what he or she have learned.Education institutions
have increased too many folds, but its quality has decreased to the
sameextent. In spite of numerous educational institutions in India, India
could not hold top 10positions in terms of educational quality. The most
humorous are that many organizationshave also formed and accrediting
educational institutions. Most wonder on what standard theyare accrediting,
it is because the quality of education can only be seen through the students
itproduces, not by its infrastructure, off course it is an important component
to create anenvironment where individual can learn practically. Currently,
quality students are not made by the educational institution. The fact is
simple, educational institutions are money orientedrelatively than quality
education, educational institutions started getting bribe in differentforms
such as capitation fees, developmental fees and so on, this has deviated its
ethical path.Every year government and privates are opening educational
institutions; the saddest part isnone has deviated from the existing age-old
educational system, here arises a question, is theteachers and faculties are
not getting adapted to recent times or they are not updated. Most ofthe
institutions don't know to differentiate lecturing, teaching, and training. The
reason behindthe scene is, they are attaining the post in an unethical way,
How could a institution headcompel his staff to teach, if he got lump-sum for
posting also how will the staff attitude be, if heis insisted to teach, he would
reply "have you lead me in free to this post" this situation cancommonly be
seen in most of the government and private institutions. This practice has
lead tointernal politics, which are clearly seen in our everyday life. If this
persists, students who areconsidered as our countries future will paint a
picture of a nightmare on India. Educationinstitution and parents should
treat students as a growing women or men, not a machine thatproduces
money in a future period of time. It had become a common talk that “ you
studywell, you get a good job and handful money" installing money making
attitude rather thanleaning attitude, there exist hardly few parents
supporting Child's to do whatever they would
like to do, considered it is right. Good environment, education and parental
care have thepotential to mold person into personality. Parents can suggest
career, but should not imposetaking advantage of child dilemma in career, if
parent properly has placed their child in rightinstitutions, there won’t be any
necessity for parents suggestion, he will take his careereffectively, the only
parental work is guiding, supporting and encouraging when needed. An
educational institution can work for money, but not only for money – let
need not become greed. I suggest educational institution to make students
see beyond books, learnthrough practice, interact with current updated
environment and modernize learningapproach. Education system have to be
re-engineered from unit level; Primary school shouldmake students practice
fundamental concepts and build their own prototype of what theylearned and
this should be judged through oral or written or any other artistic form, Hi-
schoolstudents should be provided with training in skill set and mentoring in
his interested subjectand lecturing in other fundamental subjects with proper
curriculum, the most important isthat they have to be imparted with ethics
in personal and forthcoming professional life, itwould be better have a
separate subject to induce discipline and human values as a part
ofcurriculum to mold child into growing - responsible human being to
society, country and theworld. Graduating institution should provide an
updated environment to read, learn andinteract with sophisticated & updated
systems 24×7, important point of view is that,experimenting laboratories
should be opened all time allowing access to students to conducthis valuable
work anytime he needed, there should be place for physical activity,
additionallearning facilities, technological environment etc. Work carried out
by the students should beauthenticated and validated, here comes the real
responsibility of teachers and faculties. Re-search and development should
be the predominant work to be imposed to the students atevery stage of the
preliminary level, let them push their brain power to attain their desire,
thiswill help Indians attain what they have lost intangible all these years,
this will create leaders,specialists, experts, helping India regain its pride
better than ever. This when implemented,India will create students, who are
more engaged to research and development of innovativeideas into reality,
prospering economy by marketing innovative products and solution to
theworld. India is a place for ideas and idealism, just like India is the rich
country, whose peopleare poor, tuning-up in the right way through the
education system, is indeed needed. Ipersonally feel Indian are capable of
thinking beyond innovation and doing beyond creativity
7. HUMAN DEVELOPMENT INDEX MCQ
1. Which three indicators are used in the Human Development Index (HDI)?
I. Standard of living
II. Education
III. Life expectancy
IV. Condition of environment
(a) Only I,II & IV
(b) Only I, II, & III
(c) Only I & II
(d) All of the above
2. Who releases the Human Development Report?
(a) World bank
(b) World economic forum
(c) United Nations
(d) UNCTAD
3. Who secured the top rank in The Human Development Report 2014?
(a) Sweden
(b) Norway
(c) Switzerland
(d) Austria
4. Who secured the lowest rank in The Human Development Report 2014?
(a) Afghanistan
(b) Congo
(c) Niger
(d) Kenya
5. What is the rank of India in the Human Development Index 2014?
(a) 142nd
(b) 136th
(c) 140th
(d) 135th
6. When was the Gender Inequality Index (GII) introduced?
(a) 2010
(b) 2011
(c) 1999
(d) 2005
7. Who invented the Human development Index?
(a) Paul krugman
(b) Mahbub –ul Haq
(c) Jean dreze
(d) Alfred marshal
8. Who releases the Multidimensional Poverty Index (MPI)?
(a) World Bank
(b) World Economic Forum
(c) UNDP
(d) Asian Development Bank
9. Which of the following index is not released by the UNDP?
(a) Human Development Index
(b) Multidimensional Poverty Index
(c) Gender Inequality Index
(d) Environmental Quality Index
10. Which statement depicts the best definition of sustainable development?
(a) It means optimal utilization of natural resources.
(b) Sustainable use of natural resources without considering the need of the future generation.
(c) Present generation fulfills its needs while considers the needs of the future generation as well.
(d) None of these
Question Answser
1 b
2 c
3 b
4 c
5 d
6 a
7 b
8 c
9 d
10 c
FM
1.NOTES ON
SEBI
SEBI was established in 1992 by passing of the Securitites and
Exchange Board Act. This board was established to protect the interests of
investors in securities and to promote the development and regulation of
securities market. It extends to entire India. SEBI is headquartered in the
business district of Bandra Kurla Complex in Mumbai, and has Northern,
Eastern, Southern and Western Regional Offices in New Delhi, Kolkata,
Chennai and Ahmedabad respectively. It has opened local offices at Jaipur
and Bangalore and is planning to open offices at Guwahati, Bhubaneshwar,
Patna, Kochi and Chandigarh in Financial Year 2013 – 2014.
Initially SEBI was a non statutory body without any statutory power.
However, in 1995, the SEBI was given additional statutory power by the
Government of India through an amendment to the Securities and
Exchange Board of India Act, 1992. In April 1988 the SEBI was
constituted as the regulator of capital markets in India under a resolution
of the Government of India.
The SEBI is managed by its members, namely
 The chairman who is nominated by Union Government of India.

 Two members, i.e., Officers from Union Finance Ministry.
 One member from the Reserve Bank of India.
 The remaining five members are nominated by Union Government of India,
out of them at least three shall be whole-time members.
Objectives of SEBI:-
 To protect the investors, so that steady and regular flow of savings into the
capital markets be maintained.
 To ensure the fair practices by the issuer of securities, so that they can raise
resources easily and cheaply.
 To promote the efficiency services by brokers, sub-brokers, merchant
bankers, and other intermediaries, so that they may become competitive
and professional.
Functions and Responsibilities:-

SEBI has to be responsive to the needs of three groups, which constitute the
market:
 the issuers of securities
 the investors
 the market intermediaries.
SEBI has three functions rolled into one body: quasi-legislative, quasi-
judicial and quasi-executive. It drafts regulations in its legislative capacity, it
conducts investigation and enforcement action in its executive function and
it passes rulings and orders in its judicial capacity. Though this makes it very
powerful, there is an appeal process to create accountability.
Powers:-
For the discharge of its functions efficiently, SEBI has been vested with the
following powers:
 to approve by−laws of stock exchanges

 to require the stock exchange to amend their by−laws.
 inspect the books of accounts and call for periodical returns from recognized
stock exchanges.
 inspect the books of accounts of financial intermediaries.
 compel certain companies to list their shares in one or more stock
exchanges.
 levy fees and other charges on the intermediaries for performing its
functions.
 grant licence to any person for the purpose of dealing in certain areas.
 delegate powers exercisable by it.
 prosecute and judge directly the violation of certain provisions of the
Companies Act.
SEBI Committees:-
 Technical Advisory Committee

 Committee for review of structure of market infrastructure institutions
 Advisory Committee for the SEBI Investor Protection and Education Fund
 Takeover Regulations Advisory Committee
 Primary Market Advisory Committee (PMAC)
 Secondary Market Advisory Committee (SMAC)
 Mutual Fund Advisory Committee
 Corporate Bonds & Securitization Advisory Committee
 Derivatives market review committee
 Committee on Infrastructure Funds
2.NOTES ON
UPI
What is UPI?
UPI is an online payments solution which facilitate the transfer of funds
instantly between person and person smart phone. It can be used both to
send and receive funds.
What is its Umbrella Organisation?
NPCI – National Payment Corporation of India is its umbrella Organisation. It
was set up with the guidance and support of the RBI and IBA ( Indian Bank’s
Association).
It was launched by whom?
Raghuram Rajan.
How it Works?
Popular online payment services like NEFT, RTGS, IMPS require a customer
to register on the bank’s website, add beneficiary and share details of bank
accounts. Whereas in UPI a user just needs to download the UPI app
(offered by 29 banks) from the Google Play Store. Register this app on
android phones. It will ask you to make a virtual address. The good thing is
you can create as many as virtual address on UPI.
Is there any limit for funds?
Yes, one can send or receive funds up to rupees 1 lakh to or from another
person or establishment (like company) after a request from a person on the
leg of the transaction who too has unique virtual address or ID.
What is the difference between NEFT/RTGS/IMPS and UPI?
In UPI bank account details are not shared in transactions as in NEFT/IMPS.
In UPI transactions can be made 24X7 all year around, whereas NEFT/RTGS
can not be done on Sunday or holidays and IMPS needs IFS code every time
you use it.
With UPI app of one bank you can handle other bank’s transactions also.
Banks are allowed to charge for each transactions, but they haven’t started
doing so yet.
How UPI will change the scenario of Indian Banking Transaction

System?
1. It will pave the way to cashless economy.
2. Hassle-less transactions through phones will cover the gap between banks
and customers.
3. It will lower Tax Evasion.
With the growing use of smartphones in India and the number of mobile
phone subscribers a large number of transaction are expected to be carried
out through phones or electronically. This is already reflected in the rising
number of transactions through the electronic mode rather than by
cheques.
3. Management -- Feedback and Performance Counseling
Tips for Successful Performance
Counseling
Counseling a struggling employee is one of the toughest challenges a manager can face, but when done
correctly, the associate, the team and the whole organizati on benefit from the effort.
Coaching, of course, is a standard part of any manager’s job with any (and every) employee; counseling,
on the other hand, kicks in when coaching does not result in improvement or when the
employee’s behavior is not changing.
How do you know what to do and when to do it?
1. Don’t wait too long

It can be tempting to believe a new employee’s struggles will be overcome with time or that a
more tenured employee is simply going through a rough patch. But when poor performance or
negative behavior persists, it’s important to act decisively, for the good of the employee and the
organization.
First, identify shortfalls through your observations. Assess whether the company might bear some
fault for certain issues, such as a lack of training or a bad job-person match.
Next, meet with the employee to clarify expect ations for satisfactory performance. Coach the
associate toward improvement through weekly one-on-one meetings. If nothing has changed after 2-4
weeks, it might be time to move to counseling.
2. Follow a process
A three-level process can make counseling more productive and successful. Remember—the goal is to
change the employee’s behavior or outcomes such that everyone wins! Along the way, be sure to
document each step of the process, follow up on action steps and use support available to you through
your HR team or other resources. Here’s a look at the three levels:
 Level I: At this point, meeting records stay with the manager, who should summarize prior coaching,
address performance and outline a timeframe for change. The manager and employee should agree on
the performance issues in question, as well as the action steps. The manager should create a summary
document capturing shortfalls and improvements needed, and both manager and employee should sign
this paperwork. At this point, there is no need for HR involvement.
 Level II: If there is no improvement over the course of a month, counseling moves to Level II. In this
stage, documentation needs to state the consequences of failure to improve and should become part of
the employee’s record. The manager should reiterate expected changes and use the same or similar
wording to the original, less formal documentation. Reinforce next steps if improvement does not occur,
specify a timeframe for change and that it must be sustained and ongoing, and have both parties sign the
document that goes to HR.
 Level III: If after another 30 days the employee is not achieving or demonstrating the desired outcomes,
counseling moves to Level III. Again, the manager needs to draft a formal document, this time clearly
stating that failure to improve and meet standards will result in termination of employment, specifying a
timeframe with no extension and co-signing the document with the employee to be included in the
employee’s file.
3. Keep it timely
Different performance issues require different timeframes for change. Here are some common
standards:
 Tardiness, missed meetings, unscheduled absences—No change in 1-2 weeks might be long enough to
move to the next level.
 Controlling negativity or adapting to change—This might require more time for the manager to observe
and monitor that change is taking place and is sustained. Generally 30 days is a good place to start.
 Demonstrating ability to meet job standards—Generally one month is enough for most situations, but you
can assure sustained change by extending a level for an additional time period .
4. Drive employee ownership

From the beginning of the counseling process, ask your employee to summarize the discussion and
recap the action plan to you. This helps you gauge the desire to change and reinforces that the
individual has a choice to improve.
5. Recognize success
After a period of time, write a note to the associate—and include it in his or her HR file—to
recognize that counseling was completed successfully, progress has been sustained and the
individual is performing to standards. Incorporate successful completion into annual feedback.
4.
Measures of Money Supply and Liquidity Aggregates
Reserve Money (M0) = Currency in Circulation + Bankers' deposits with the RBI +
'Other' deposits with the RBI.
Narrow Money (M1) = Currency with the Public + Demand Deposits with the Banking
System + 'Other' Deposits with the RBI.
M2=M1 + Savings Deposits of Post-office Savings Banks.
Broad Money (M3) = M1 + Time Deposits with the Banking System.
M4 = M3 + All deposits with Post Office Savings Banks (excluding National Savings
Certificates).
[Note: 'Other' deposits with RBI comprise mainly: (i) deposits of quasi-government and
other financial institutions including primary dealers, (ii) balances in the accounts of
foreign Central banks and Governments, (iii) accounts of international agencies such as
the International Monetary Fund, etc.] 2
While measures M0, M1 and M3 are widely used in India, M2 and M4 are rarely used.
The RBI initiated publication of a new set of monetary and liquidity aggregates as per
the recommendations of the Working Group on Money Supply: Analytics and
Methodology of Compilation. Following the submission of its report in June 1998, while
no changes were made in the definitions of M0 and M1, new monetary aggregates NM2
and NM3 as well as liquidity aggregates L1, L2, and L3 were introduced, the
components of which are elaborated as follows.
NM1 = Currency with the Public + Demand Deposits with the Banking System + 'Other'
Deposits with the RBI.
NM2 = NM1 + Short Term Time Deposits of Residents (including and up to the
contractual maturity of one year).
NM3 = NM2 + Long-term Time Deposits of Residents + Call/Term Funding from
Financial Institutions.
L1 = NM3 + All Deposits with the Post Office Savings Banks (excluding National
Savings Certificates)
L2 = L1 +Term deposits with Term Lending Institutions and Refinancing Institutions
(FIs) + Term Borrowing by FIs + Certificates of Deposit issued by FIs
L3= L2 + Public Deposits of Non-banking Financial Companies.
Data on M0 are published by the RBI on weekly basis, while those for M1 and M3 are
available on fortnightly basis. Among liquidity aggregates, data on L1 and L2 are
published monthly, while those for L3 are disseminated once in a quarter.
5.GST
The GST is considered to be a major improvement over the former system of central
excise duty at the national level and the sales tax system at the state level, also the
proposed regime was considered a next logical step towards a comprehensive indirect
tax reform in the country. It was supposed to unify the taxes concerning goods and
services and would have taken care of the problems of the way the tax system had
been configured, but due to various political and non-political issues it could not see the
light of the day.
One major reason that it is still not implemented in its entirety is due to the lack of
consensus among the States and Centre on issues concerning fiscal autonomy at the
State level. Another underlying reason till now had been political opportunism, wherein
some state governments have joined hands to oppose any move by the opposition
political party ruling at center. For other states the reasons are not political alone and
have more to do with the financial arithmetic involved as a large number of states do
not have any real source of revenue with their dependence on the financial largesse of
the Centre.
In addition, GST in India is not an entirely new initiative, but it is to address the
implementation problems concerning VAT with the end result of benefits to the
economy and smoother functioning. In the present State-level VAT system, there is a
problem of what we may call 'tax overlapping' between Centre and State taxes. The
problem is the residual of Central Value Added Tax or CENVAT on certain commodities
remains included in the value of goods to be taxed under State VAT.
As per Indian Constitution, taxes upon goods and services can be classified under three
lists, namely Union List, State List, and Concurrent List. Now, certain taxes can be
levied either by the Centre or the State. The underlying problem nevertheless is of
goods repeatedly being taxed, also called the cascade effect (once by Centre and then
by State (the concurrent list ones)). This also adds on to administrative cost. This
'CENVAT Tax Element in State-level Tax' needs to be removed. For GST to be effective
at the State-level, it is essential that the States should be given the power of levy of
taxation of all services. This power of levy of service taxes has so long been only with
the Centre. A Constitutional Amendment may have to be made for giving this power
also to the States.
As pointed out by Tax Expert Prof. Mahesh Purohit, under the present system of VAT,
services should also come under its net. In his words, 'Historically, India's indirect tax
system is unique given that under the Constitution, the Union government has the
authority to impose a broad spectrum of excise duties on production or manufacture
while States are assigned the power to levy tax on the sale of goods. Due to this
dichotomy of authority under the Constitution, India has been rather slow in the
adoption of VAT. Today, India has adopted a model of dual VAT, replacing Union excise
duty with CENVAT and sales tax with State VAT. From an economic stand point, there is
hardly any difference between the taxation of commodities and that of services.
Therefore, under this system of dual VAT, it is of paramount importance that in addition
to goods, services also come under its net. The exclusion of services causes many
administrative problems and paves the way for evasion of tax.' GST attempts to rectify
that. Under the Goods and Services Tax, each manufacturer needs to pay a GST, which
is the difference of the 'output tax' and 'input tax'. Hence, it can be said, GST is a
comprehensive value added tax levied on goods and services. Under the GST regime,
goods and services will not be differentiated as they move from the manufacturer
downwards.
For GST to be effective, it is essential that the States should be given the power for
levy of taxation of all services as this power has so long been only with the Centre. A
Constitutional amendment will have to be made for giving this power also to the States.
(In fact, the most important objective of this new initiative is to amend certain aspects
of the Constitution of India in order to make it very clear which objects to be taxed by
the States and Centre. Unless such amendments are made it would be difficult to
operate GST in an optimal manner).
Recently (on December 19, 2014), a new bill (122nd Constitution Amendment Bill,
2014) has been tabled in the parliament by the NDA Government regarding the
changes in provisions of GST as tabled earlier by the previous UPA government in 2011.
This Bill replaces the earlier bill, which had since lapsed.
GST also attempts to address the evasion of taxes as it will do away with CST as there
would be a continuity in set offs from the manufacturer till the products/services reach
the end consumer. All the taxes would automatically come under the umbrella of the
GST. This would, in turn lead to lesser records being maintained (what the government
is going to do with the surplus manpower, as a result, can be addressed in another
article). A major boost in the arm would be the increased flows of revenues as a result
both at the Centre and consequently the State's share as a result. This will have a
favorable impact on the prices of product and would increase the demand for goods and
bring benefits to the consumers. Thus GST is likely to bring down inflation for
manufactured goods after the initial adjustment phase of 3 years.
Once the production and supply chain costs reduce, it will have an impact on price and
availability of raw material leading to lower costs of production and increased efficiency.
It is expected that rational GST structure would reduce the production costs by an
approximate 10%. GDP growth as a result is expected to increase by 1.4 to 1.6% and
would help to aim at the 8 to 9% GDP growth target.
GST at the State level can be justified for the following reasons-
. Additional power for levy of taxation of services for the States
. Removal of the cascading burdens of CENVAT and service taxes
. Inclusion of a number of taxes in the GST
In a nutshell, the GST, once it gets implemented would address the following issues
plaguing the economic development:
. Cascading effects of taxation
. Competitiveness of indigenous goods & services
. Fragmentation of market resulting in inefficient production/distribution models
. Economic distortions
. High compliance and administration cost
. High selective tax incidence suppresses demand
. Increases litigation, uncertainty and harassment
. Tax inefficiencies influence policy of protectionism leading to high cost economy
A PAN-linked taxpayer identification number with a total of 13/15 digits would be
generated for each tax payer. This would link the GST with PAN-based system for
Income tax, thereby leading to greater tax collections as well as data exchange. As a
result there will be far greater information sharing between the Centre and the States
than it is happening currently.
The Central GST and State GST needs to be paid to the accounts of the Centre and the
States separately and how will each state treat the goods and services tax in the case
of flow of products across multiple states is still to be sorted out. Also, the services
agenda is still lacking and focus is still on sorting out product related issues only. In
addition a few important sectors like oil and gas, real estate are still out of its ambit
and the list of items is still ambiguous.
Finally there is the issue of revenue loss and inclusion/exclusion of state taxes that
continues to be key points of discussion in the corridors of power. GST, once it is fully
implemented would greatly help to create a single Indian national market in which
there is free flow of trade of goods and services. This as a result of the theory of
competitive advantage will aid the different states in India to specialize in production
and manufacture of services with a distinct cost advantage thereby leading to increased
efficiency which will help accelerate the growth engine.
6.NPA ISSUES IN INDIA
According to RBI October to December report, the gross Non-Performing Assets (NPAs)
of Public Sector Banks are just under Rs. 4 lakh crore, and they collectively account for
90% of such rotten apples in the country's banking portfolio. In terms of net NPAs,
their share is even higher - at 92% of the total bad loans reported so far in the banking
system.
What is NPA?
. The assets of the banks which don't perform (that is - don't bring any return) are
called Non Performing Assets (NPA) or bad loans. Bank's assets are the loans and
advances given to customers. If customers don't pay either interest or part of principal
or both, the loan turns into bad loan.
. According to RBI, terms loans on which interest or installment of principal remain
overdue for a period of more than 90 days from the end of a particular quarter is called
a Non-performing Asset.
. However, in terms of Agriculture / Farm Loans; the NPA is defined as under-For short
duration crop agriculture loans such as paddy, Jowar, Bajra etc. if the loan (installment
/ interest) is not paid for 2 crop seasons, it would be termed as a NPA. For Long
Duration Crops, the above would be 1 Crop season from the due date.
Reasons for the rise in NPA in recent years
. GDP slowdown -Between early 2000's and 2008 Indian economy were in the boom
phase. During this period Banks especially Public sector banks lent extensively to
corporate. However, the profits of most of the corporate dwindled due to slowdown in
the global economy, the ban in mining projects, and delay in environmental related
permits affecting power, iron and steel sector, volatility in prices of raw material and
the shortage in availability of. This has affected their ability to pay back loans and is the
most important reason behind increase in NPA of public sector banks.
. One of the main reasons of rising NPA is the relaxed lending norms especially for
corporate honchos when their financial status and credit rating is not analyzed properly.
Also, to face competition banks are hugely selling unsecured loans which attributes to
the level of NPAs.
. 5 sectors Textile, aviation, mining, Infrastructure contributes to most of the NPA,
since most of the loan given in these sector are by PSB, They account for most of the
NPA.
. Public Sector banks provide around 80% of the credit to industries and it is this part of
the credit distribution that forms a great chunk of NPA. Last year, when kingfisher was
marred in financial crisis, SBI provided it huge amount of loan which it is not able to
recover from it.
. There is a myth that main reason for rise in NPA in Public sector banks was Priority
sector lending, However according to the findings of Standing Committee on Finance
NPAs in the corporate sector are far higher than those in the priority or agriculture
sector. However, even the PSL sector has contributed substantially to the NPAs. As per
the latest estimates by the SBI, education loans constitute 20% of its NPAs.
. The Lack of Bankruptcy code in India and sluggish legal system make it difficult for
banks to recover these loans from both corporate and non-corporate.
Other factors
. Banks did not conducted adequate contingency planning, especially for mitigating
project risk. They did not factor eventualities like failure of gas projects to ensure
supply of gas or failure of land acquisition process for highways.
. Restructuring of loan facility was extended to companies that were facing larger
problems of over-leverage& inadequate profitability. This problem was more in the
Public sector banks.
. Companies with dwindling debt repayment capacity were raising more & more debt
from the system.
Steps taken by RBI and Government in last few years to curb NPA:
. Government has launched 'Mission Indradhanush' to make the working of public
sector bank more transparent and professional in order to curb the menace of NPA in
future.
. Government has also proposed to introduce Bankruptcy code.
. RBI introduced number of measures in last few years which include tightening the
Corporate Debt Restructuring (CDR) mechanism, setting up a Joint Lenders' Forum,
prodding banks to disclose the real picture of bad loans, asking them to increase
provisioning for stressed assets, introducing a 5:25 scheme where loans are to be
amortized over 25 years with refinancing option after every 5 years, and empowering
them to take majority control in defaulting companies under the Strategic Debt
Restructuring (SDR) scheme.
How to curb the menace of Public Sector Banks (PSB)
(a) Short Term measures
. Review of NPA'S/Restructured advances- We need to assess the viability case by case.
Viable accounts need to be given more finance for turnaround and unviable accounts
should either be given to Asset Reconstruction Company or Management/ownership
restructuring or permitting banks to take over the units.
. Bankruptcy code should be passed as soon as possible. Bankruptcy code will make it
easier for banks to recover loans from unviable enterprises.
. Government should establish Asset Reconstruction Company (ARC) with equity
contribution from the government and the Reserve Bank of India (RBI). The established
ARC should take the tumor (of non-performing assets or NPAs) out of the banking
system. An ARC acquires bad loans from banks and financial institutions, usually at a
discount, and works to recover them through a variety of measures, including sale of
assets or a turnaround steered by professional management. Relieved of their NPA
burden, the banks can focus on their core activity of lending.
(b) Long term Measures
. Improving credit risk management- This includes credit appraisal, credit monitoring
and efficient system of fixing accountability and analyzing trends in group leverage to
which the borrowing firm belongs to:
. Sources/structure of equity capital-Banks need to see that promoter's contribution is
funded through equity and not debt.
. Banks should conduct necessary sensitivity analysis and contingency planning while
appraising the projects and it should built adequate safeguards against such external
factors.
. Strengthen credit monitoring-Develop an early warning mechanism and
comprehensive MIS(Management Information System) can play an important role in it.
MIS must enable timely detection of problem accounts, flag early signs of delinquencies
and facilitate timely information to management on these aspects.
. Enforce accountability- Till now lower ring officials considered accountable even
though loaning decisions are taken at higher level. Thus sanction official should also
share the burden of responsibility.
. Restructured accounts should treated as non performing and technical write offs
where Banks remove NPA'S from their balance sheets Permanently should be dispensed
with.
. Address corporate governance issues in PSB. This include explicit fit and proper
criteria for appointment of top executives and instituting system of an open market
wide search for Chairman.
8.NUMERICALS
Ratio Analysis
PROBLEMS AND SOLUTIONS
Final Account to Ratio
Problem 1. From the data calculate :
(i) Gross Profit Ratio (ii) Net Profit Ratio (iii) Return on Total Assets
(iv) Inventory Turnover (v) Working Capital Turnover (vi) Net worth to Debt
Sales 25,20,000 Other Current Assets
7,60,000
Cost of sale 19,20,000 Fixed Assets 14,
40,000
Net profit 3,60,000 Net worth
15,00,000
Inventory 8,00,000 Debt.
9,00,000
Current Liabilities 6,00,000
Solution:
1. Gross Profit Ratio = (GP/ Sales) * 100 = 6
Sales – Cost of Sales Gross Profit
25,20,000 – 19,20,000 = 6,00,000
2. Net Profit Ratio = (NP / Sales)* 100 = 3
3. Inventory Turnover Ratio = Turnover / Total Assets) * 100=
1920000/800000= 2.4 times
Turnover Refers Cost of Sales
4. Return on Total Assets = NP/ Total Assets = (360000/3000000)*100 =
12%
FA+ CA +inventory [14,40,000 + 7,60,000 + 8,00,000] = 30,00,000
5. Net worth to Debt = Net worth/ Debt= (1500000/900000)* 100 =
1.66 times
6. Working Capital Turnover = Turnover/Working capital
Working Capital = Current Assets – Current Liabilities
= 8,00,000 + 7,60,000 – 6,00,000
15,60,000 – 6,00,000= 9,60,000
Working Capital Turnover Ratio = 19,20,000 = 2 times.
Problem 2. Perfect Ltd. gives the following Balance sheet. You are required to compute
the following ratios.
(a) Liquid Ratio
(b) Solvency Ratio
(c) Debt-Equity Ratio
(d) Stock of Working Capital Ratio
Balance Sheet
$ $
Equity share capital 1500000 Fixed Assets
1400000
Reserve fund 100000
Stock 500000
6% Debentures 300000 Debtors
200000
Overdraft 100000
Cash 100000
Creditors 200000
2200000
Solution :
(a) Liquid Ratio= Liquid Assets / Liquid Liabilities
(or )
Liquid Assets / Current Liabilities
LA Debtors = 2,00,000 i.e., 3,00,000 / 200000 = 1.5
Cash = 1,00,000
= 3,00,000
Liquid Liabilities : Creditors = 2,00,000
(b) Debt – Equity Ratio = External Equities / Internal Equities
External Equities:
All outsiders loan Including current liabilities
3,00,000 + 1,00,000 + 2,00,000 = 6,00,000
Internal Equities :
It Includes share holders fund + Reserves
15,00,000 + 1,00,000 = 16,00,000
Debt – Equity Ratio = 600000/ 1600000 = 0 · 375
© Solvency Ratio = Outside Liabilities / Total Assets
Outside Liabilities = Debenture + Overdraft + Creditors
= 3,00,000 + 1,00,000 + 2,00,000 = 6,00,000
Solvency Ratio =( 600000 / 2200000) * 100
= 27.27%
(d) Stock of Working Capital Ratio = Stock / Working Capital
Working Capital = Current Assets – Current Liabilities
= 8,00,000 – 3,00,000 = 5,00,000
Stock of Working Capital Ratio =* 100 = 100%
Problem 3. Calculate the following ratios from the balance sheet given below :
(i) Debt – Equity Ratio (ii) Liquidity Ratio
(iii) Fixed Assets to Current Assets (iv) Fixed Assets Turnover
Balance Sheet
Liabilities $
Assets $
Equity shares of $ 10 each 1,00,000
Goodwill 60000
Reserves 20,000 Fixed
Assets 140000
P.L. A/c 30,000
Stock 30000
Secured loan 80,000 Sundry
Debtors 30000
Sundry creditors 50,000
Advances 10000
Provision for taxation 20,000 Cash
Balance 10000
3,00,000 300000
The sales for the year were $ 5,60,000.
Solution:
Debt – Equity = Long – Term Debt / Shareholders Fund
Ratio = Secured loan $. 80,000
Shareholder’s Fund= Equity Share Capital + Reserves + P.L.A/c
= 1,00,000 + 20,000 + 30,000 = 1,50,000
Debt-Equity Ratio = 80,000 / 1,50,000=.53
Liquidity Ratio = Liquid Assets / Liquid Liabilities
Liquid Assets = Sundry Debtors + Advances + Cash Balance
30,000 + 10,000 + 30,000 = 70,000
Liquid Liabilities = Provision for Taxation + sundry creditors
= 20,000 + 50,000 = 70,000
Liquid Ratio = 70,000 / 70,000= 1
Fixed Assets to Current Assets
= Fixed Assets / Current Assets= 1,40,000/ 100000
= 1.4
Fixed Assets Turnover =Turnover / Fixed Assets= 5,60,000/1,40,000
=4
Problem 4. The Balance sheet of Naronath & Co. as on 31.12.2000 shows as follows:
Liabilities $ Assets
$
Equity capital 1,00,000 Fixed Assets 1,80,000
15% Preference shares 50,000 Stores 25,000
12% Debentures 50,000 Debtors 55,000
Retained Earnings 20,000 Bills Receivable 3,000
Creditors 45,000 Bank 2,000
2,65,000 2,65,000
Comment on the financial position of the Company i. e., Debt – Equity Ratio, Fixed
Assets Ratio, Current Ratio, and Liquidity.
Solution:
Debt – Equity Ratio = Debt – Equity Ratio / Long – Term Debt
Long-term Debt = Debentures
= 50,000
Shareholder’s Fund = Equity + Preference + Retained Earnings
= 1,00,000 + 50,000 + 20,000
= 50,000
= 1,70,000
= ·29
Fixed Assets Ratio= Fixed Assets / Proprietor’s Fund= -1,80,000
Proprietor’s Fund=Equity Share Capital + Preference Share Capital+ Retained Earnings
=1,00,000 + 50,000 + 20,000 = 1,70,000
Fixed Assets Ratio = 1,80,000 / 1,70,000= 1.05
Current Ratio = Current Assets / Current Liabilities
Current Assets = Stores + Debtors + BR + Bank= 25,000 + 55,000 + 3,000 + 2,000 =
85,000
Liquid Ratio=45,000 / 85,000= 1.88
Liquid Assets = 45,000
Liquid Liabilities = Debtors + Bill Receivable + Cash=55,000 + 3,000 + 2,000 = 60,000
Liquid Ratio = 60,000 / 45,000 = 1.33
Problem 5: From the following particulars pertaining to Assets and Liabilities of a

company calculate :
(a) Current Ratio (b) Liquidity Ratio (c) Proprietary Ratio
(d) Debt-equity Ratio (e) Capital Gearing Ratio
Liabilities $
Assets $
5000 equity shares $ 10
each 500000 Land &
Building 500000
8% 2000 pre shares $ 100 Plant &
Machinery 600000
Each 200000
Debtors 200000
9% 4000 Debentures of
Stock 240000
$ 100 each 400000 Cash and
Bank 55000
Reserves 300000 Prepaid
expenses 5000
Creditors 150000
Bank overdraft 50000
1600000 1600000
Solution :
Current Ratio = Current Assets / Current Liabilities
Current Assets = Stock + Cash + Prepaid Expenses + Debtors
= 2,40,000 + 55,000 + 5,000 + 2,00,000 = 5,00,000
Current Liabilities = Creditors + Bank Overdraft

=1,50,000 + 50,000 = 2,00,000
=5,00,000 / 2,00,000
= 2.5 : 1
Liquid Ratio = Liquid Assets / Liquid Liabilities
Liquid Assets = Cash and Bank + Debtors

=55,000 + 2,00,000 = 2,55,000
Liquid Liabilities : Creditors = 1,50,000
Liquid Ratio = 2,55,000 / 1,50,000

= 1.7 : 1
Proprietor’s Ratio = Proprietor’s Fund / Total Tangible Assets
Proprietor’s Fund = Equity Share Capital + Preference

Share Capital + Reserves and Surplus
=5,00,000 + 2,00,000 + 3,00,000
Proprietary Ratio=10,00,000 / 16,00,000
= 0.625 : 1
Debt – Equity Ratio = External Equities / Internal Equities
External Equities = Long-term Liabilities + Short-term Liabilities

= 4,00,000 + 2,00,000 = 6,00,000
Internal Equities = Proprietor’s funds
= 6,00,000 / 10,00,000
= 0.6 : 1
Capital Gearing Ratio = Fixed Interest Bearing Securities / Equity Share Capital +
Reserves
Fixed Interest Bearing Securities = Preference Shares 2,00,000

Debentures 4,00,000
6,00,000
= 6,00,000 / 8,00,000
= 0.75 : 1
Problem 6. From the following details of a trader you are required to calculate :
(i) Purchase for the year.
(ii) Rate of stock turnover
(iii) Percentage of Gross profit to turnover
Sales $ 33,984 Stock at the close at cost price

1814
Sales Returns 380 G.P. for the year
8068
Stock at the beginning
at cost price 1378
Solution :
Trading Account
To Opening stock 1378 By Sales 33984

To Purchase (BD 25972 Sales Return 380
To gross profit 8068 33604
By closing Stock 1814
35418 35418
(i) Purchase for the year $ 25,972
(ii) Stock Turnover = Cost of Goods Sold
Cost of Goods Sold = Cost of Goods Sold / Average Stock
Average Stock = (Opening Stock + Closing Stock)/ 2
= (1372 + 1814 )/2

= 25916/1596
=16.23 times
(iii) Percentage of Gross Profit to Turnover = Gross Profit / Sales *100

= 8068 / 33 ,984 * 100
= 23.74%.
Problem 7. Calculate stock turnover ratio from the following information :
Opening stock 5 8,000
Purchases 4,84,000
Sales 6,40,000
Gross Profit Rate – 25% on Sales.
Solution :
Stock Turnover Ratio = Cost of Goods Sold / Average Stock
Cost of Goods Sold = Sales- G.P

= 6,40,000 – 1,60,000 = 4,80,000
Stock Turnover Ratio= 4,80,000 /58000

= 8.27 times
Here, there is no closing stock. So there is no need to calculate the average stock.
Problem 8. Calculate the operating Ratio from the following figures.

Items ($ in Lakhs)
Sales 17874
Sales Returns 4
Other Incomes 53
Cost of Sales 15440
Administration and Selling Exp. 1843
Depreciation 63
Interest Expenses (Non- operating 456
Solution:
Operating Ratio = (Cost of Goods Sold + Operating Expenses * 100) / Sales
= ((15,440 + 1,843)/ 17,870)*100
= 97%
Problem 9. The following is the Trading and Profit and loss account of Mathan Bros
Private Limited for the year ended June 30,2001.
$ $
To Stock in hand 76250 By
Sales 500000
To Purchases 315250 By Stock in
hand 98500
To Carriage and Freight 2000
To Wages 5000
To Gross Profit 200000
598500 598500
To Administration
Expenses 1,01,000 By Gross profit 2,00,000
To Finance Expenses. : By Non-operating
Incomes
Interest 1200 Interest on Securities
1,500
Discount 2400 Dividend on Shares 3, 750
Bad Debts 3400 7000 Profit on Sale of Shares 750
6,000
To Selling Distribution Expenses 12000
To Non-operating expenses
Loss on sale of securities 350
Provision for legal suit 1,650 2000
To Net profit 84000
206000 206000
You are required to calculate :

(i) Gross profit Ratio (ii) Expenses Ratio (individual)
(iii) Net profit Ratio (iv) Operating profit Ratio
(v) Operating Ratio (vi) Stock turnover Ratio
Gross Profit Ratio =Gross Profit/ Sales * 100 = 2,00,000 / 500000 * 100
Expenses Ratio =Individual Expenses / Sales
Administration Expenses / Sales *100 =101000/500000 *100= 2.02%
Finance Expenses/ Sales *100 = 7000/ 500000 * 100=1.04 %
Selling and Distribution Expenses / Sales* 100= 12 000/ 500000 *100= 2.40%
Non- Operating Expenses / Sales * 100 = 2000/ 500000 * 100= 0.4%
Net Profit Ratio :

Net Profit/ Sales *100 = 84000/ 500000 *100= 16.8%
Operating Profit Ratio =Operating Profit / Sales *100
Operating Profit = Net Profit + Non-Operating Expenses – Non Operating Incomes
= 84,000 + 2,000 – 6,000 = 80,000
= 80•000 / 5000000* 100 = 16%
Operating Ratio = ( Cost of Goods Sold + Operating Expenses)/Sales* 100
Cost of Goods Sold = Sales – Gross profit
5,00,000 – 2,00,000= 3,00,000
Operating Expenses
All Expenses Debited in the Profit & Loss A/c Except Non-Operating Expenses
[including Finance expense]
1,01,000 + 7,000 + 12,000 = 1,20,000
Operating Ratio = (3,00,000 + 1,20,0000) 500000 * 84%
Stock Turnover Ratio = Cost of Goods Sold / Average Stock
Costs of Goods Sold = 3,00,000
Average Stock = (Opening Stock + Closing Stock)/2
=(76,250 + 95,500) / 2
= 85,875
9. The Financial Sector Legislative Reforms Committee (FSLRC)

Let’s try to understand the significance of FSLRC and its role.
Formation of the Commission
The Finance Minister in his Budget speech of 2011-2012 announced the formation of FSLRC to
rewrite and harmonise financial sector legislations, rules and regulations. The resolution notifying the
FSLRC was issued by the government in March 2011.
Chaired by Justice BN Srikrishna, the Commission has a diverse mix of expert members drawn from
the fields of finance, economics, public administration, law, etc.
Purpose of formation
FSLRC was formed as most legal and institutional structures of the financial sector in India had been
created over a century. Many financial sector laws date back several decades, when the financial
landscape was very different from that seen today.
There are over 61 Acts and multiple rules and regulations that govern the financial sector. For
example, the SEBI (Securities and Exchange Board of India) Act does not give the regulator powers
to arrest anyone but tasks it with penalising all market related crimes stiffly. The Reserve Bank of
India (RBI) Act and the Insurance Act are of 1934 and 1938 period, respectively.
The Commission was formed to review and recast these old laws in tune with the modern
requirements of the financial sector. FSLRC plans to eliminate 25 of the current 61 laws that
currently govern the financial sector and amend many others.
FSLRC moots single regulator
The FSLRC submitted its report in March 2013. It came up with its recommendation spread over two
volumes and 439 pages. The Commission has proposed an Indian Financial Code Bill 2013 to
create a Unified Financial Authority (UFA) and bring about reforms in financial sector regulations.
The panel suggested that SEBI, IRDA, PFRDA (Pension Fund Regulatory and Development
Authority) and the Forward Markets Commission (FMC) be merged under one regulator—UFA.
However, RBI (Reserve Bank of India) will continue to be the banking regulator. The new UFA would
subsume watchdogs for insurance, capital markets, pension and commodities while letting the RBI
continue its supervisory role over the banking industry.
Consumer protection
According to FSLRC, all financial laws and regulators are intended to protect the interest of
consumers. Hence, a dedicated forum for relief to consumers and detailed provisions for protection
of unwary customers against mis-selling and defrauding by smaller print etc has been
recommended.
The FSLRC report proposes certain basic rights for all financial consumers. For lay investors, the
report proposes additional set of protections. The Commission has recommended some
amendments to existing laws and new legislations. These changes will have to be carefully brought
about accordingly.
Some basic protections consumers would expect include that financial service providers must act
with due diligence. It is essential to protect investors against unfair contract terms, unjust conduct
and protection of personal information. The FSLRC report also recommends fair disclosure and
redressal of investor complaints by financial service providers.
Financial Regulatory Architecture Act
The proposed regulatory structure will be governed by the Financial Regulatory Architecture Act that
will ensure a uniform legal process for the financial regulators. The finance ministry will unify the
regulatory structure before tweaking the legislative structure. It may take two years for the report to
be implemented in a phased manner.
Judicial review
The panel has recommended judicial review of regulations. The report has suggested a sunset
clause of 10 years. In other words, the laws would be reviewed every 10 years. The committee also
recommended giving required attention to debt management and setting up a financial redressal
agency and a financial stability and development council.
10.CORPORATE GOVERNANCE
Corporate governance is most often viewed as both the structure and the relationships which determine
corporate direction and performance. The board of directors is typically central to corporate governance.
Its relationship to the other primary participants, typically shareholders and management, is critical.
Additional participants include employees, customers, suppliers, and creditors. The corporate governance
framework also depends on the legal, regulatory, institutional and ethical environment of the community.
Whereas the 20th century might be viewed as the age of management, the early 21st century is predicted
to be more focused on governance. Both terms address control of corporations but governance has
always required an examination of underlying purpose and legitimacy.
One of the most striking differences among corporate governance systems around the
world is the level of disparity in ownership and control of organizations and identity of
controlling shareholders therein. While some systems are characterized by wide dispersed
ownership (outsider systems), others tend to be characterized by concentrated ownership
or control (insider systems). In outsider systems of corporate governance (notably the US
and UK) the basic conflict of interest is between strong managers and widely dispersed
weak shareholders. In insider systems (notably Germany and Japan) on the other hand,
the basic conflict is between controlling shareholders (or blockholders) and weak
minority shareholders. [see Shleifer and Vishny,1997 and Becht, 1997].
There is no single model of corporate governance and each country over the period of
time has developed a wide variety of mechanisms to overcome the agency problems
arising out of separation of ownership and control. One of the challenges policy makers
are facing is how to develop a good corporate governance framework which can secure
the benefits associated with controlling shareholders acting as direct monitors, while at
the same time ensuring that they do not impinge upon the development of equity markets.
Corporate Governance affects the development and functioning of capital markets and
exerts a strong influence on resource allocation. In era of increasing capital mobility and
globalization, it has also become an important framework affecting the industrial
competitiveness.
Effective Mechanisms of Good Corporate Governance
As per research conducted by Department of Trade and Industry & King's College,
London there are 18 drivers of good corporate governance:
1. Board Independence.
2. Diversity, human and social capital within the board
3. High engagement in board processes
4. Presence of large block shareholders
5. Shareholder activism
6. Breadth and depth of public information disclosure
7. Breadth and depth of private information sharing
8. Independence of the external auditors
9. Competence of the audit committee
10. Presence of internal control systems and support of whistle blowing.
11. Long term performance-related incentives
12. Transparent and independent control of the remuneration committee
13. An active markets for corporate control
14. Transparency and protection for shareholders and stakeholders during mergers and
acquisitions
15. Board power in takeover bids, subject to shareholder veto
16. Shareholder involvement within corporate governance
17. Voice mechanisms for debt holders
18. Employee participation in financial outcomes and collective voice in decision

making.
The efficiency of corporate governance in a particular organization depends upon a

combination of drivers. These drivers may substitute or complement each other in terms
of their efforts on organizational outcomes including business strategy and performance.
Rediker and Seth(1995) suggest that a combination of various governance mechanisms is
required to reduce principal-agent costs and align interests of principal and agents. The
effectiveness and efficiency of these drivers depends upon a number of important
industry level contingency factors such as organization's size, age, industry regulation/
growth/ decline phase, etc. (Dalton et al. 1999,2003, Deutsch 2005, Hermalin and
Weisbach 2003).
Markets for Corporate Control: Important Controversial Mechanism of Corporate

Governance
Markets for corporate control is thought to perform important governance functions in
promoting a greater shareholder orientation among corporate managements, the economic
function of which is' most clearly outlined by agency theory. This theory addresses the
question as to how shareholders can assure that once they invest their funds,
managements will act in their interests. This question arose in the context of the study by
Berle and Means (1932) on the growing "Separation from ownership and control", in US
corporations. They noted a decline in shareholder control over management as ownership
stakes grew smaller and more fragmented among large number of individuals. Few
incentives exist for fragmented owners toactively monitor management. Therefore,
individuals diversify their portfolio and prefer exit over voice in response to poor
performance. Moreover, small shareholders are rarely informed enough to make qualified
decision or monitor management in detail. In sum, corporate control undergoes a "market
failure" that needs to be remedied by several mechanisms to reduce agency cost: legal
protection of shareholders, incentive Contracts for management, large block holders with
capacity and incentives to monitor management or market for corporate control (Shleifer
/ Vishny 1996).
Henry Manne (1965) first described the possible governance function of a market for
corporate control. "The lower the stock price, relative to what it could be more attractive
the takeover becomes to those who believe that they can manage the company more
efficiently". There is a strong relation between share prices and managerial performance
and hence market for corporate control is a new corporate governance mechanism. As
shareholders respond to poor managerial performance through exit, the lower share prices
created incentives for outsiders to accumulate control rights, replace the management
team and restructure the under performing company. These outsiders can recoup their
investment through a share price premium.
Markets for corporate control can thus be defined in terms of transactions for control over
a company's shares and occur through a variety of methods: open market purchases,
block purchases, tender offers, negotiated share swaps or contest over the control of
proxy rights (Bittlingmayer 1998).
Markets for corporate control- Substitute for Corporate Governance?

Markets for corporate control is an effective tool for disciplining poor management. It is
a generalized threat of takeover which places management under greater discipline by
institutionalizing a feed back mechanism between corporate decision making and the
stock market. It increases the scope of shareholder voice, since shareholder exit leads to
the threat of takeover. It is stronger in USA & UK resulting into more than 200 takeovers
in the form of mergers in a year as compared to approx. 50 in Germany and Japan.
A. The impact of Markets for corporate control- Global Scenario

During the 1960's, U.S. companies pursued extensive unrelated corporate diversification
through mergers and acquisitions but the performance of the new conglomerate firms
was, on the whole, disappointing and under valued by stock markets. The Administration
loosened the laws and widen the scope of takeovers contributing to an unprecedented
wave of takeovers during 1980's in USA but it did not work long. Even, Manne (1965)
anticipated the enormous impact of takeover 0 i distribution of wealth by staking: "Given
the fact of special tax treatment for capital gains, we can see how this mechanism
forcontrol of badly run corporations is one of the most important "get-rich-quick"
opportunities in our economy today." The same situation is seen in India as well.
B. Implication of Markets for Corporate Control
Management may react negatively to takeover threats by implementing costly defensive

strategies such as golden parachutes or poison pills and by seeking legal protection from
takeover. It may adopt short term devices by increasing share prices thereby sacrificing
beneficial long term projects and investments. Further, takeovers can change the position
of other stakeholders and thus undermine trust and cooperative relations.
Further, a lot of criticisms are associated with markets for corporate control viz:
1. The Stock Market may often value corporation below their true market value.
2. Takeovers are often motivated by profit seeking redistribution of stakeholders' wealth
that makes little positive contribution to long term company performance. The transfer of
wealth from stakeholders to shareholders accounts for a large proportion of takeover
premiums and leads to net losses of efficiency due to breaches of trust. Employees face
the dangers of assets being stripped from target company, employment being rationalized
and employment agreements being renegotiated.
3.
Markets for corporate control are an effective disciplinary device than either monitoring
by institutional investors or by the board of directors. But every time intensity of the
mergers and acquisitions market is not by itself evidence of a powerful disciplinary
device at work. It can be promoting empire building or tax minimization. As legal,
advisory and financing costs constitute an average 4 per cent of purchase price, it is
expensive way of implementing corporate governance. But it does not mean I that it
should not be accepted. It is indeed difficult to comment that it is a substitute for
corporate governance but indeed it is most effective tool for implementing corporate
governance in organizations.
Further, besides markets for corporate control, product market competition can also be
proved as an effective driver of corporate governance. Firms which will be incapable to
adopt corporate governance policy will be replaced by competitors. Product market
competition can, to some extent Act to reduce the scope for managerial inefficiency and
opportunism. Competition can provide a benchmark by which performance of the
company can be judged when compared to performance of other company in a similar
sector but as its effects are slow, it forces inefficient company to file bankruptcy.
Two approaches are there to analyze the effects of markets for corporate control
1. To examine the share prices of target and acquiring firms around the announcement date
of takeover.
2. To look at post take over performance of merged group Le., whether target firm
shareholders in fact reap real gains or just reflects transfers of wealth from one economic
agent to another.
If takeovers are a means of resolving problems associated with inefficient management,

or with other efficiency gains then the ex-post performance of the merger group should be
better than the weighted average of the ex-ante performance of the acquiring and target
firm prior to the takeover.
To conclude, it is rather the threat of takeover of management than actual takeovers that
seems to act as an effective device for improving performance.
11.TWIN BALANCE SHEET PROBLEM
An Introduction:
Over the past few years, the Indian growth story has become a sort of puzzle for experts and
the general public:
 We have become the fastest growing economy surpassing China.

 But the ground reality looks different:
o Stagnating industrial output,
o Low job creation,
o Low credit growth,
o Low levels of business investment,
o A mounting pressure on banks due to all time high NPAs.
This brings us to the question: Are we really growing that fast? Or are the numbers
hiding something?
—> Given the grim global scenario of weak exports and falling commodity prices, our
achievements and stability are unquestionable.
But, much of our internal fragility is coming from:
 The banking sector, which is in a very bad shape due to skyrocketing NPAs ], and
 The rising corporate debt.
These two issues of NPAs and corporate debt – collectively called the Twin balance sheet
problem have been discussed in this chapter of the survey.
Why are these called the twin balance sheets?
Basically, both are interlinked, as an asset on the bank balance sheet is a liability on
the corporate balance sheet and if corporate does not repay debt, the asset turns bad (Non-
Performing Asset or NPA) and both the balance sheets get stretched. This combination then
proves devastating for growth, since the hobbled corporations are reluctant to invest, while
those that remain sound can’t invest much either since fragile banks are not really in a position
to lend to them.
India’s current NPA ratio is higher than any other emerging market (with the exception of
Russia), higher even than the peak levels seen in Korea during the East Asian crisis.
In this article, we try to understand the problem of TBS along the following lines:
 What went wrong – and when?
 How has India managed to achieve rapid growth, despite its TBS problem?
 Is this financial strategy sustainable?
 What steps have been taken to address the problem? To what extent have they
been effective?
 Why have the existing schemes not performed satisfactorily?
 What now needs to be done?
A. What went wrong – and when?
The crisis has its roots in the mid-2000’s boom. During that period:
 The world economy was expanding.

 India’s GDP growth had surged to 9-10 percent per annum.
 Corporate profitability in India was amongst the highest in the world.
The firms reacted to this situation by investing more particularly in infrastructure related areas
like power generation, steel and telecom. Within the span of four years, the investment-GDP
ratio had reached 38 percent by 2007-08.
This investment was financed by:
 An astonishing credit boom from banks

 Large inflows of funding from abroad, which reached 9 percent of GDP in 2007-08.
[This was mainly due to foreign capital searching for higher returns and to diversify.
Emerging market economies which are relatively more stable in macroeconomic
indicators provided them with these options.]
In order to take advantage of the perceived opportunities, the companies started taking more
risks and leveraging themselves. But soon things started to go wrong e.g.
 Higher Costs: Costs soared far above budgeted level, as securing land and
environmental clearances proved much more difficult.
 Lower Revenues: Forecast revenues collapsed after the Global Financial Crisis.
 Increase in Financing Costs:
o Firms that borrowed domestically suffered when the RBI increased interest rates to
quell double-digit inflation.
o And firms that had borrowed abroad when the rupee was trading around Rs
40/dollar were hit hard when the rupee depreciated, forcing them to repay their
debts at exchange rates closer to Rs 60-70/dollar.
In other words, India followed the standard path to the TBS problem >>> A surge of borrowing
leading to overleverage and debt servicing problems.
But, what distinguishes India from other countries is the consequence of TBS:
The scenario observed in TBS cases in other countries >>> In other TBS cases, growth was
derailed because high NPA levels had triggered banking crises. E.g. TBS lead to economic
stagnation in the U.S. and Europe after the Global Financial Crisis.
The scenario observed in India >>>
1. There have been no hints of pressure on the banking system.
 There have been no bank runs, no stress in the interbank market, and no need for
any liquidity support, at any point since the TBS problem first emerged in 2010.
 This is because the bulk of the problem has been concentrated in the public sector
banks, which not only hold their own capital but are ultimately backed by the
government, whose resources are more than sufficient to deal with the NPA
problem. As a result, creditors have retained complete confidence in the banking
system.
2. Even as the balance sheets have suffered structural damage, the impact on growth has been
quite modest. To the contrary, it co-existed with strong levels of aggregate domestic demand, as
reflected in high levels of growth despite very weak exports and moderate, at times high, levels
of inflation.
In other words, India developed its own unique version of TBS: what recent Economic Surveys
called a ‘Balance Sheet Syndrome with Indian Characteristics’.
B. How has India managed to achieve rapid

growth, despite its TBS problem?
1. The unusual structure of India’s banking system ensured that there would be no financial
crisis. Prudential restrictions kept bank credit from expanding excessively during the boom.
2. The unusual structure of the Indian economy: India has long suffered from exceptionally
severe supply constraints, as the lack of infrastructure hindered the expansion of manufacturing
and certain services (e.g. trade and transport).
These constraints were loosened considerably during the boom, as new power plants were
installed, and new roads, airports, and ports built. As a result, there was ample room for the
economy to grow after the GFC, even as the infrastructure investments themselves did not
prove financially viable.
So, the legacy of the historic mid-2000s investment boom was a curious combination of both
TBS and growth. In comparison, the US boom was based on housing construction, which
proved far less useful after the crisis. And in any case, the US never suffered from severe
supply constraints.
3. The response of the Financial System:
 In other countries, creditors would have triggered bankruptcies, forcing a sharp
adjustment that would have brought down growth in the short run (even as the
reconfiguration of the economy improved long run prospects).
 But in India, this did not occur. Instead, the strategy was, as the saying goes, to
“give time to time”, meaning to allow time for the corporate wounds to heal.
o That is, companies sought financial accommodation from their creditors, asking for
principal payments to be postponed, on the grounds that if the projects were given
sufficient time they would eventually prove viable.
o Accordingly, banks decided to give stressed enterprises more time by postponing
loan repayments, restructuring loans and extending fresh funding to the stressed
firms to tide them over until demand recovered.
 Though this strategy has proved successful so far in allowing rapid growth to
continue, but there remains a question of whether this model is truly sustainable.
C. Is this financial strategy sustainable?
In principle, a financing strategy can be sustainable in one of the two scenarios:
1. Phoenix scenario e. a scenario in which accelerating growth would gradually raise

the cash flows of stressed companies, eventually allowing them to pay back their
loans.
2. Containment scenario: Under this scenario, the NPAs would merely need to be
limited in nominal terms. When growth accelerates, NPAs as a proportion of GDP
and Bank Balance sheet will fall. In that way, the twin balance sheet problem, while
never being explicitly solved, could simply fade away in importance.
For some time, these scenarios actually seemed feasible. But more recently the picture has
started to change dramatically and this strategy appears to have reached its limit as:
1. Deepening of the TBS Problem – Deteriorating Financial Position of Stressed
Companies:
Due to a reduced cash flow, these companies have consequently had to borrow considerable
amounts in order to continue their operations. Stressed companies are consequently facing an
increasingly difficult situation:
 Their cash flows are deteriorating even as their interest obligations are mounting.
 In some cases, the companies have tried to “square the circle” by selling off some
of their assets. But this has sufficed mainly to buy them time, since selling off
assets provides immediate revenues but leaves firms with less income to service
their debts in the future.
2. Widening of the TBS Problem: The stress has now expanded to the other sectors as well
e.g. increased competition and the resulting price cutting has deteriorated the situation in the
telecom Sector. Also, beginning 2016, corporate stress started spreading to smaller firms and
MSMEs due to lower sales and profitability.
3. The impact on growth: The TBS problem itself is beginning to take a toll on growth as:
Stressed Corporate sector>>>Fall in new investment to conserve cash flow>>> Low demand for
credit from Banks + Banks reluctant to take new credit risk>>> Leading to pilling of NPAs.
Thus, as believed earlier, growth will not solve the problems of the stressed firms; to the
contrary, the problems of the stressed firms might actually imperil growth.
4. The Deteriorating health of the Public Sector Banks.
13 banks accounting for 40% of the total loans are severely stressed, with over 20 percent of
their loans classified as NPAs. Banks have responded to this difficult financial situation by:
 Cutting down new credit to other sectors like household credit (a sector with
minimal defaults), corporates and MSMEs leading to a fall in productive investment.
 Compensating for the lack of earnings by widening their interest margins. It was
only following the extraordinary influx of deposits consequent on demonetisation
that public sector banks finally cut their lending rates by significant amounts.
To sum up, while for some years, the financing strategy has worked, in the sense that it has
allowed India to grow rapidly, despite a significant twin balance sheet problem. But this strategy
may now be reaching its limits. After eight years of buying time, there is still no sign that the
affected companies are regaining their health, or even that the bad debt problem is being
contained. To the contrary, the stress on corporates and banks is continuing to intensify and
this, in turn, is taking a measurable toll on investment and credit.
ESI & FM MCQS

A.With reference to the Maternity Benefit Programme, consider the following statements:
1. It is a conditional cash transfer scheme for pregnant and lactating mothers.
2. It has been formulated to implement the provisions of National Food Security Act,
2013.
3. It is being implemented by Ministry of Women and Child Development.
Which of the statements given above is/are correct?
(a) 1 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2 and 3
D... All the given statements are correct.

 Ministry of Women and Child Development, in accordance with the provisions of Section 4(b) of
National Food Security Act, formulated a scheme for pregnant and lactating mothers called Maternity
Benefit Programme - a conditional cash transfer scheme.
 The Scheme provides cash incentives to pregnant and lactating women (i) for the wage loss so that
the woman can take adequate rest before and after delivery; (ii) to improve her health and nutrition
during the period of pregnancy and lactation; and (iii) to breastfeed the child during the first six
months of the birth, which is very vital for the development of the child.
B.With reference to economy, what does the term soil rate refer to?
(a) It is the rate of return on a real estate investment property based on the income
that the property is expected to generate.
(b) It is the rate at which notes are
considered to be too damaged to use and have been returned to the central bank.
(c) It is the benchmark lending rate for the agricultural sector.
(d) It is the environmental cost of preparing a currency note.
B... Soil rate is the is the rate at which notes are considered to be too damaged to use and have been
returned to the central bank. RBI data show that in India low denomination notes have a soil rate of
33 percent per year. In contrast, the soil rate for the Rs 500 note is 22 percent, and the Rs 1000 just
11 percent.
C.With reference to the Electoral Bonds, announced recently in the Union Budget, consider the
following statements:
1. They are a financial instrument for
making donations to political parties.
2. They cannot be purchased by paying cash.
3. They are issued by the Election
Commission of India.
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
Statement 1 and 2 are correct and statement 3 is not correct: Electoral Bond is a financial instrument
for making donations to political parties. These are issued by Scheduled Commercial banks upon
authorisation from the Central Government to intending donors, but only against cheque and digital
payments (it cannot be purchased by paying cash).
 Electoral bond was announced in the Union Budget 2017-18. Required amendments to the Reserve
Bank of India Act, 1934 (Section 31(3)) and the Representation of People Act, 1951 were made
through Section 133 to 136 of Finance Bill, 2017
D.Middle Income Group Scheme, recently in news, aims to:

(a) facilitate easier filing of income tax returns.
(b) provide legal services to middle income group citizens.
(c) provide easy credit to small and medium enterprises.
(d) broaden tax base by bringing more people into the tax net.
B... The Supreme Court of India has introduced the Middle Income Group Scheme. It is a self-
supporting scheme which provides legal services to the middle income group citizens i.e. citizens
whose gross income is not exceeding Rs.60, 000 per month or Rs. 7, 50, 000 per annum.
E.Which of the following correctly describes evergreening of loans in banking sector?
(a) Writing off loans
(b) Loans given to the priority sectors
(c) Additional loans to repay earlier loans
(d) Transferring loans to Asset
Restructuring Companies
Evergreening refers to the practice of companies taking a fresh loan to pay up an old loan. It is a
practice of "managing" the balance sheet through means, which may not be violating banking laws in
letter, but breaching them in spirit.
 For instance, a bank can lend money to a company to pay off another bank's loan. This way, the
second bank can save an account from going bad and reduce its non-performing assets (NPAs). The
second bank can then extend a similar facility to a company which has not been been able to repay
loans from the first bank.
 This is the most common method of evergreening.
F.TAMRA Portal and Mobile Application, recently launched by the union government, aims to:
(a) facilitate digital mode of monetary transaction.
(b) speed up mining activity.
(c) provide 24x7 information on air quality for tier-I and tier-II cities.
(d) facilitate easier access to cultural
knowledge.
B.. . The Ministry of Mines has developed the TAMRA Portal and Mobile Application which is a step to
speed up mining activity in India and facilitate all the stakeholders to track the status of the statutory
clearances associated with mining blocks for getting mines to reach till operationalisation for the
same.
TAMRA will be an interactive platform for all the stakeholders to compress the timelines for statutory
and other clearances as it would help minimize the gestation period for commencing production.
G.In the budget 2017-18, setting up of 'National Testing Agency' has been proposed. Which among
the following is the function of 'National Testing Agency'?
(a) Detection of toxic elements in Indian herbal drugs and supplements.
(b) Detection of air pollutants in metro cities.
(c) Conducting at national level testing of Indian soils to determine the density,
moisture content.
(d) Conducting entrance exams to higher education institutions.
The Finance Minister in his budget speech, has announced setting up an autonomous National Testing
Agency for conducting entrance exams to higher education institutions.
 This would free the Central Board of Secondary Education (CBSE) and the All India Council for
Technical Education from administrative responsibility, so that they can focus more on academics.
H.Which of the following is/are the advantages of India against its competitors in apparel and leather
manufacturing?
1. Cheap and abundant labour.
2. Competitive logistics costs.
3. Larger size of manufacturing firms.
4. Better international market access
through low tariffs.
Select the correct answer using the code given below.
(a) 1 only
(b) 1, 2 and 4 only
(c) 2 and 3 only
(d) 1, 2, 3 and 4
A... India still has potential comparative advantage in terms of cheaper and more abundant labour.
Despite a set of cheap and abundant labour force, some of the common challenges being faced by the
low skill manufacturing sectors like the Apparel and leather sector of India are:
Logistics cost: On logistics, India is handicapped relative to competitors in a number of ways. The
costs and time involved in getting goods from factory to destination are greater than those for other
countries. Further, few very large capacity containers (VLCC) come to Indian ports to take cargo so
that exports have to be transshipped through Colombo which adds to travel costs and hence reduces
the flexibility for manufacturers.
 Indian apparel and leather fims are smaller compared to fims in China, Bangladesh and Vietnam.
 Discrimination in export market: India's competitor exporting nations for apparels and leather and
footwear enjoy better market access by way of zero or at least lower tariffs in the two major importing
markets, namely, the United States of America (USA) and European Union (EU).
I.Which of the following factors may be considered responsible for the improved state finances in
India?
1. Increase in GDP growth
2. Increased transfers from Centre to States
3. Fiscal Responsibility Legislation
4. Increased expenditure under Centrally Sponsored Schemes
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1, 2 and 4 only
(d) 1, 2, 3 and 4 only
D... Apart from direct Fiscal Responsibility Legislation(FRL), deficit reduction of states owes much to
favorable exogenous factors such as:
 An acceleration of nominal GDP growth (of 6 percentage points on average) helped boost states‟
revenues by about 1 percent of GSDP;
 Increased transfers from the centre both because of the 14th Finance Commission recommendations
and the surge in central government revenues;
 Reduced interest payments on account of the debt restructuring package offered by the centre; and
 Reduced need for spending by the states as the centre took on a number of major social sector
expenditures under the Centrally Sponsored Schemed(CSS).
J.With reference to Advance Estimates of National Income, consider the following statements:
1. They are released at current prices and constant prices with base year 2011-12.
2. They are released by the Central
Statistics Office, Ministry of Statistics & Programme Implementation.
3. They include estimates of GDP and GVA at Basic Prices.
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
D... All statements are correct: The Central Statistics Office (CSO), Ministry of Statistics and
Programme Implementation releases the Advance estimates of national income at constant (2011-12)
and current prices for the current financial year (e.g. 2016-17 for this fiscal year). They include
estimates of GDP and GVA at Basic Prices.
K.With reference to Skills Strengthening for Industrial Value Enhancement Project (STRIVE),
consider the following statements:
1. It aims to improve the quality and the market relevance of vocational training
provided in ITIs.
2. It is a World Bank supported project being implemented by Ministry of Skill
Development and Entrepreneurship.
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
C... Both the statements are correct.
 The objective of the Skills Strengthening for Industrial Value Enhancement Operation Project for
India is to improve access to quality and market-driven vocational training provided in ITIs and
apprenticeships.
 STRIVE is a World Bank supported project with a central component and enough resources at states'
disposal. It is implemented by Ministry of Skill Development and Entrepreneurship.
 Finance Minister in his budget speech said that the next phase of skill strengthening for industrial
value enhancement (STRIVE) will be launched in 2017-18 at a cost of Rs 2,200 crore, which will focus
on improving on the quality and the market relevance of vocational training provided in ITIs and
strengthen the apprenticeship programme through industry-cluster approach.
L.Universal Basic Income, if implemented in India, will cover which of the following?
1. BPL card holder
2. Refugees from other countries in India
3. OCI card holders
Select the correct answer using the code given below
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
A
 It is a basic minimum income given to the individuals which would provide the necessary material
foundation for a life with access to basic goods and a life of dignity. it would give every person a right
to a basic income to cover their needs, just by virtue of being citizens.
 OCI card holders and refugees are not considered as citizens, hence, they would not be covered by
UBI

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ENGLISH DESCRIPTIVE

Essay: Necessity of censorship in the age of internet at present

Essay:Advantage & Disadvantages Of Cashless Economy

 PMRPY was launched in Lok Sabha on 1st August 2016. The

Key features of the Scheme:

 The scheme is to create more employment opportunities for the

 The main objective of the scheme is to enhance and encourage the

 Pradhan Mantri Yuva Yojana (PMYY), launched by the Ministry of Skill

Key features of PMYY:

 MSDE’s two institutions dedicated to entrepreneur education and

Aim of the scheme:

 The government is expecting to motivate first generation

 The main objective of this scheme is to encourage the young

 The biggest issue in the Indian economy is the imbalance between

3. Highlights of the Economic Survey 2016-17

The Indian Economy has sustained a macro-economic environment of relatively lower

RBI’s balance sheet largely unchanged: return of currency

Corruption (underlying illicit activities) Could decline, if

Formalization/ Digital transactions amongst new users (RuPay/ AEPS)

Job losses, decline in farm incomes, social disruption, Should gradu

Recorded GDP will also be overstated because banking sector

Income taxes rose because of increased disclosure Indirect and cor

Uncertainty increased, as firms and households were unsure of Credibility will b

Redistributive Resource Transfers (RRT):

Public Sector Asset Rehabilition Agency:

Universal Basic Income (UBI) Scheme an alternative to plethora of State

How Globalization Has Effected On Indian Economy

5. Multiculturalism in India and West

2. Jihad against jihadists

3. God of Love - Jesus vs. God of Laws - Warlords

4. Islam with Arab tribal values

5. Morality and Ethics vs. Laws of constitutional democracies

7. Independent India and Pakistan

7A. Independent Pakistan

7B. Independent India

Multiculturalism in the West

 The chairman who is nominated by Union Government of India.

Functions and Responsibilities:-

 the issuers of securities

 to approve by−laws of stock exchanges

 Technical Advisory Committee

How UPI will change the scenario of Indian Banking Transaction

3. Management -- Feedback and Performance Counseling

How do you know what to do and when to do it?

1. Don’t wait too long

4. Drive employee ownership

6.NPA ISSUES IN INDIA

Problem 5: From the following particulars pertaining to Assets and Liabilities of a

Current Liabilities = Creditors + Bank Overdraft

Liquid Ratio = Liquid Assets / Liquid Liabilities

Liquid Assets = Cash and Bank + Debtors

Liquid Ratio = 2,55,000 / 1,50,000

Proprietor’s Ratio = Proprietor’s Fund / Total Tangible Assets

Proprietor’s Fund = Equity Share Capital + Preference

=5,00,000 + 2,00,000 + 3,00,000

Proprietary Ratio=10,00,000 / 16,00,000

Debt – Equity Ratio = External Equities / Internal Equities

External Equities = Long-term Liabilities + Short-term Liabilities

Internal Equities = Proprietor’s funds

Fixed Interest Bearing Securities = Preference Shares 2,00,000

Sales $ 33,984 Stock at the close at cost price

To Opening stock 1378 By Sales 33984

(ii) Stock Turnover = Cost of Goods Sold