Outline Indian Economy I

7/23/2019 Outline Indian Economy I

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Summary: Five Year Plans in India

First Plan (1951 - 56)

It was based on Harrod-Domar Model.

Community Deelo!ment Pro"ram laun#$ed in 195%

Fo#us on a"ri#ulture& !ri#e stability& !ower and trans!ort

It was a su##ess'ul !lan !rimarily be#ause o' "ood $arests in

t$e last two years o' t$e !lan

e#ond Plan (1956 - 61)

ar"et *rowt$+ ,.5 #tual *rowt$+ ,.%/ lso #alled Ma$alanobis

Plan named a'ter t$e well 0nown e#onomist

Fo#us - ra!id industrialiation

do#ated $u"e im!orts t$rou"$ 'orei"n loans.

$i'ted basi# em!$asis 'rom a"ri#ulture to industry 'ar too

soon. Durin" t$is !lan& !ri#es in#reased by 23& a"ainst a de#line o'

12 durin" t$e First Plan

$ird Plan 1961 - 66)

ar"et *rowt$+ 5.6 #tual *rowt$+ %.4, t its #on#e!tion& it was 'elt t$at Indian

e#onomy $as entered a ta0e-o'' sta"e. $ere'ore& its aim was to ma0e India a sel'-reliant

and sel'-"eneratin" e#onomy.

ased on t$e e7!erien#e o' 'irst two !lans& a"ri#ulture was

"ien to! !riority to su!!ort t$e e7!orts and industry.

Com!lete 'ailure in rea#$in" t$e tar"ets due to un'oreseeneents - C$inese a""ression (196%)& Indo-Pa0 war (1965)&

seere drou"$t 1965-66

$ree nnual Plans (1966-69) Plan $oliday 'or 2years. Preailin" #risis in a"ri#ulture and

serious 'ood s$orta"e ne#essitated t$e em!$asis on a"ri#ulture durin" t$e nnual Plans

Durin" t$ese !lans a w$ole new a"ri#ultural strate"y was

im!lemented. It inolin" wide-s!read distribution o' $i"$-

yieldin" arieties o' seeds& e7tensie use o' 'ertiliers&

e7!loitation o' irri"ation !otential and soil #onseration.

Durin" t$e nnual Plans& t$e e#onomy absorbed t$e s$o#0s

"enerated durin" t$e $ird Plan

It !aed t$e !at$ 'or t$e !lanned "rowt$ a$ead.

Fourt$ Plan (1969 - /,)

ar"et *rowt$+ 5./ #tual *rowt$+ 2.23 Main em!$asis was on "rowt$ rate o'

a"ri#ulture to enable ot$er se#tors to moe 'orward


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First two years o' t$e !lan saw re#ord !rodu#tion. $e last

t$ree years did not measure u! due to !oor monsoon.

In'lu7 o' an"lades$i re'u"ees be'ore and a'ter 19/1 Indo-Pa0

war was an im!ortant issue

Fi't$ Plan (19/,-/9)

ar"et *rowt$+ ,., #tual *rowt$+ 2.4 $e 'i't$ !lan was !re!ared and laun#$ed

by D.D. D$ar.

It !ro!osed to a#$iee two main ob8e#ties+ remoal o'

!oerty (*aribi Hatao) and attainment o' sel' relian#e

Promotion o' $i"$ rate o' "rowt$& better distribution o' in#ome

and si"ni'i#ant "rowt$ in t$e domesti# rate o' sain"s were

seen as 0ey instruments

$e !lan was terminated in 19/4 (instead o' 19/9) w$en anta

Party *ot. rose to !ower.

:ollin" Plan (19/4 - 43) $ere were % i7t$ Plans. anta *ot. !ut 'orward a !lan 'or

19/4-1942. Howeer& t$e "oernment lasted 'or only % years. Con"ress *ot. returned to

!ower in 1943 and laun#$ed a di''erent !lan.

i7t$ Plan (1943 - 45)

ar"et *rowt$+ 5.% #tual *rowt$+ 5.66 Fo#us - In#rease in national in#ome&

moderniation o' te#$nolo"y& ensurin" #ontinuous de#rease in !oerty and unem!loyment&

!o!ulation #ontrol t$rou"$ 'amily !lannin"& et#.

eent$ Plan (1945 - 93)ar"et *rowt$+ 5.3 #tual *rowt$+ 6.31 Fo#us - ra!id "rowt$ in 'ood-"rains

!rodu#tion& in#reased em!loyment o!!ortunities and !rodu#tiity wit$in t$e 'ramewor0 o'

basi# tenants o' !lannin".

$e !lan was ery su##ess'ul& t$e e#onomy re#orded 6

"rowt$ rate a"ainst t$e tar"eted 5.

;i"$t$ Plan (199% - 9/)

$e ei"$t$ !lan was !ost!oned by two years be#ause o' !oliti#al un#ertainty at t$e

Centre


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allied se#tor& and manu'a#turin" se#tor& "rowt$ in e7!orts and

im!orts& im!roement in trade and #urrent a##ount de'i#it.

=int$ Plan (199/- %33%)

ar"et *rowt$+ 6.5 #tual *rowt$+ 5.25 It was deelo!ed in t$e #onte7t o' 'our

im!ortant dimensions+ >uality o' li'e& "eneration o' !rodu#tie em!loyment& re"ional

balan#e and sel'-relian#e.

ent$ Plan (%33% - %33/)

*oals+

o a#$iee 4 *DP "rowt$ rate

:edu#tion o' !oerty ratio by 5 !er#enta"e !oints by %33/.

Proidin" "ain'ul $i"$ ?uality em!loyment to t$e addition to t$e

labour 'or#e oer t$e tent$ !lan !eriod.

@niersal a##ess to !rimary edu#ation by %33/.

:edu#tion in "ender "a!s in litera#y and wa"e rates by atleast53 by %33/.

:edu#tion in de#adal rate o' !o!ulation "rowt$ between %331

and %311 to 16.%.

In#rease in litera#y rate to /% wit$in t$e !lan !eriod and to

43 by %31%.

:edu#tion o' In'ant Mortality :ate (IM:) to ,5 !er 1333 lie

birt$s by %33/ and to %4 by %31%.

In#rease in 'orest and tree #oer to %5 by %33/ and 22 by

%31%.

ll illa"es to $ae sustained a##ess to !otable drin0in" water

by %31%.

Cleanin" o' all ma8or !olluted riers by %33/ and ot$er noti'ied

stret#$es by %31%.

;leent$ Plan (%33/ - %31%)

*oals+

##elerate *DP "rowt$ 'rom 4 to 13. In#rease a"ri#ultural

*DP "rowt$ rate to , !er year.

Create /3 million new wor0 o!!ortunities and redu#e edu#ated

unem!loyment to below 5.

:aise real wa"e rate o' uns0illed wor0ers by %3 !er#ent.

:edu#e dro!out rates o' #$ildren 'rom elementary s#$ool 'rom5%.% in %332-3, to %3 by %311-1%. In#rease litera#y

rate 'or !ersons o' a"e / years or aboe to 45.

Aower "ender "a! in litera#y to 13 !er#enta"e !oint. In#rease

t$e !er#enta"e o' ea#$ #o$ort "oin" to $i"$er edu#ation 'rom

t$e !resent 13 to 15.

:edu#e in'ant mortality rate to %4 and maternal mortality

ratio to 1 !er 1333 lie birt$s


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:edu#e otal Fertility :ate to %.1

Proide #lean drin0in" water 'or all by %339.

:edu#e malnutrition amon" #$ildren between 3-2 years to $al'

its !resent leel. :edu#e anaemia amon" women and "irls by

53.

:aise t$e se7 ratio 'or a"e "rou! 3-6 to 925 by %311-1% and to

953 by %316-1/

;nsure t$at at least 22 !er#ent o' t$e dire#t and indire#t

bene'i#iaries o' all "oernment s#$emes are women and "irl

#$ildren

;nsure all-weat$er road #onne#tion to all $abitation wit$

!o!ulation 1333 and aboe (533 in $illy and tribal areas) by

%339& and ensure #oera"e o' all si"ni'i#ant $abitation by %315

Conne#t eery illa"e by tele!$one by =oember %33/ and

!roide broadband #onne#tiity to all illa"es by %31%

In#rease 'orest and tree #oer by 5 !er#enta"e !oints.

ttain


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1923 1924

Povert. alleviation+elf/reliance

(ovt enters poer generation andtrans#ission

I 194 1945

Industriali*ationInfor#ation $ech

7ational higha.s launchedPrice controls eli#inated

Fa#il. planning e8panded

II 1945 1949

Increasinge#plo.#ent(rothodernisation

7o FYP 1949/1990 Annual plans 199/1990!alance of pa.#ents crisis 1991:aunch of econo#ic refor#s under P7arasi#ha Rao

III 1990

1992

Hu#an develop#ent

Industrial#odernisationPopulation control

India ;oins an 1995

I? 1992 00

-#plo.#entFood securit.)ontinuedli&erali*ation

? 00 02

-ducationHealth-nviron#ent

(DP groth over 4@

?I 02 010

-ducationHealth-nviron#entInfrastructure

)urrentl. ongoing

Land Systems and Reforms in IndiaLand Systems

1. Zamindari Systemo Government collect land tax through the intermediary of a zamindaro Land assigned to zamindar who bid the highest tax rate. Farmers lose ownership of lando Farmers pay tax to zamindar in casho No remissions granted due to lost produce (due to weather etco !amindari system implemented primarily in North "ndia# especially $engal# %.&.# and

'entral &rovinces and $eraro ttributed as a conse)uence of the &ermanent *ettlement under Lord 'ornwallis

+. Ryotwari Systemo Government collects land tax directly from farmers (called ,ryots-o Land belongs to farmer# farmer pays fixed amount to governmento emissions granted lost produce (due to weather etc


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o yotwari system implemented in /adras# $ombay# ssam and $urmao ttributed to *ir 0homas /unro# Governor of /adras

Land Reforms

1. Land Reforms Act 1955o ll share croppers to have permanent use rightso *uch rights to be inheritable

o 'roppers to pay legal share of crop to landlord+. Land reforms in eralao "ntroduced Land eforms rdinance in 1234o *et absolute ceiling on land ownership. 0enants and hut dwellers receive claim on excess

lando Fixity of tenure and protection from eviction

5. Land reforms in !est "en#alo "nitiated peration $arga in 1246o egistered sharecroppers (-bargadars- and educated them about cultivation rightso $argadar rights made hereditary. $argadars to receive fair share of crop (378439o Land 'eiling ct: redistribution of ceiling8surplus land

A$RI%&L'&R( I) I)*IA+i#,li#,ts

o India is ran-ed second worldwide in farm out.uto griculture accounts for 1;.;9 of G


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# study material# general studies# "ndian economy

)ational A#ricultural Insurance Sc,eme 6)AIS7 8 Ras,triya ris,i "ima Yoana 6R"Y7

o Launched in +776o &rovides insurance coverage in the event of failure of crop due to natural causes# pests and

diseaseso 'overs food crops# oilseeds# sugarcane# cotton and potatoo Boint programme of 'entral and *tate governmentso 379 subsidy for small and medium farmerso "mplemented by griculture "nsurance 'ompany of "ndia (combination of N$< and other

nationalized insurance companies# study material# general studies# "ndian economy

Livestoc- Insurance Sc,eme

o Launched in +773o &rovides protection to farmers and cattle rearers against loss due to animal deatho 'overs crossbred and high yielding cattle and buffaloeso Fully funded by the 'entral governmento 379 subsidyo "mplemented by livestoc= development boards of each state

"ndian economyRainfall Insurance 8 ars,a "ima

o Launched in +77Ao &rovides protection against anticipated shortfall in crop yield due to deficit rainfallo "mplemented by griculture "nsurance 'ompany of "ndia Ltd. ("'

"ndian economy

!eat,er "ased %ro. Insurance Sc,eme 6!"%IS7

o Launched in +775o &rovides protection against loss due to adverse weather conditions including rainfall# frost#

temperature etco Bointly funded by 'entral and *tate governmentso %p to 379 subsidy

studies# "ndian economyRainfall Insurance Sc,eme for %offee $rowers 6RIS%7

o Launched in +772o &rotects against loss due to deficit rainfall during blossom and bac=ing periods and excess rains

during monsoon periodo 'overs obustaCrabica variety of coffee in Darnata=a# Derala# 0No Funded by the 'offee $oard ('entral governmento 379 subsidyo "mplemented by "'

A$RI%&L'&RAL S%+((S A)* PR;$RA(Sll programmes fall under the purview of the /inistry of griculture unless otherwise noted.

)ational Food Security ission

o Launched in ug +774o b?ectives:o 0o increase production of wheat# rice and pulses on a sustainable basis to ensure food

security of the countryo estore soil fertilityo Employment generationo Enhance farm8level economy


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o *ee=s to disseminate improved technologies and farm practiceso 'entral Govt. provides 379 subsidyo 0hree components: NF*/ ice# NF*/ heat# NF*/ &ulseso 0argeted increase in production: ice 17 million tonnes# heat 6 m t# &ulses + m to *tructure:o 'hairman: /inister of griculture

o /embers: *ecretaries of


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o 0o provide gainful employment to agriculture graduateso 0o create agriculture entrepreneurso Example pro?ects:o *oil and water testingo &est control serviceso /icro irrigation systems

o *eed processing unitso @atcheries# apiarieso *etting up of "0 =ios=s in rural areaso Financial support from N$s "ntegrated %rban &overty Eradication &rogrammeo &rovides reservations for women (579# disabled (59 and *'C*0 on the strength of local

populationIndira Awaas Yoana 6IAY7

o Launched 122;o 0he "I is a scheme that provides for construction of houses and money to be given to poor

+;&SI)$ I) I)*IA;verview

o /a?ority of "ndian have per capita housing space less than 17 x 17 s)uare feet. verage rural percapita space is 175 s) ft and urban per capita space is 114 s) ft

o


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o +ousin# is a state su2ect3@owever# the %nion Government is responsible for formulation ofpolicies and programmes

o 'entral8level policies are implemented by the /inistry of @ousing and %rban &overty lleviation

&r2aniDation in India

o &r2an settlements in India are t,ose settlements

o 0hat have a minimum population of 3777 ando @ave 439 of the male population engaged in non8agricultural activities ando @ave a population density of at least A77 persons per s) =mo Furt,erC all towns ,avin# a unici.al %or.orationC unici.al %ouncil or %antonment "oard

are classified as ur2ano s per 'ensus +771# "ndia>s urban population was +6; million (+69 of total populationo 0he number of cities with population more than 1 million is 53o !it, 93>0 of .o.ulation livin# in ur2an areasC $oa is t,e most ur2aniDed state in India .

@imachal &radesh is the least urbanized (2.579

P;LI%I(S A)* PR;$RA(S

ll policiesCprogrammes under the purview of the /inistry of @ousing and %rban &overty lleviation

unless otherwise noted

)ational &r2an +ousin# and +a2itat Policy 4//>

o 0he main aim of the policy is Afforda2le +ousin# for Allo b?ectives of the &olicy includeo &r2an .lannin# includin# ur2an local 2odiesC ruralur2an 2alance and ass Ra.id

'ransit Systems 6R'S7o ffordable housing including development of housing infrastructure# technological

modernization and subsidies for economically wea=er sectionso "ncreased flow of funds from government and private financial sourceso S.atial incentives includin# relaGation of Floor Area Ratio and more efficient use of

s.ace 2y construction of ,i#,rise 2uildin#so

*pecial provisions for minorities and women

Eawa,arlal )e,ru )ational &r2an Renewal ission 6E))&R7

o Launched in +773o "t is a massive city modernization programmeo pplies to ;5 cities in "ndiao &rovides 'ity


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o Envisages construction of 517#777 dwelling units in the country

Swarna Eayanti S,a,ari RoD#ar Yoana 6SESRY7

o Launched in 1221o Aims to .rovide #ainful em.loyment to ur2an unem.loyedo &romotes setting up self8employment ventures and wage employment prospectso *ponsored ?ointly by 'entral and state governments (43:+3 ratio

Inte#rated Low %ost Sanitation Sc,eme 6IL%S7

o Launched in 1267# revised in +775o "L'* scheme launched to eliminate dry latrines in "ndia# which involve carrying of sewage on the

heads of scavengerso ',e (m.loyment of anual Scaven#ers and %onstruction of *ry Latrines 6Pro,i2ition7 Act

199?see=s to remove this unsanitary and restore human dignity of scavengerso ims includeo %onstruct8convert lowcost sanitation units t,rou#, sanitary two.it .our flus,

latrineso %onstruct news latrines for (!S ,ouse,olds ,avin# no latrines

o 0he scheme covers all towns# but only E* householdso Funded by the 'entre (439# state (139 and beneficiary (179o ',e main tar#et of t,e sc,eme is to convert //C/// dry latrines2y arc, 4/1/

$;(R)()'AL ";*I(S A)* ;FFI%(S

ll bodiesCoffices under the purview of the /inistry of @ousing and %rban &overty lleviation unlessotherwise noted

)ational "uildin#s ;r#aniDation 6)";7

o Established in 123Ao @ead)uarters in New


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o @&L provides civil engineering services such as conventional construction as well prefabmaterials

o +PL .ioneered t,e .roduction of .restressed concrete railway slee.ers

o @&L is the first company in "ndia to produce precast pre8stressed concrete railway bridge girders

+ousin# and &r2an *evelo.ment %or.oration Limited 6+&*%;7

o Established in 1247o @%s focus is on the social aspects of housing and infrastructure development# with

preferential access to disadvantagedo ;ne in every 1 ,ouses in t,e country ,as availed of +&*%;@s assistance

o b?ectives of @%s rule

Re.ositories of .u2lic finance

%onsolidated Fund of Indiao 'onsists of all revenue received# loans raised and money received in repayment of loans by the

%nion Governmento ll expenditure incurred by Government is incurred from the 'onsolidate Fundo )o money can 2e wit,drawn from t,is fund eGce.t under t,e aut,ority of Parliament

Pu2lic Account Indiao 'onsists of all other receipts such as deposits # service funds and remittances

o %sually consists of funds that don>t belong to the government# and need to be paid bac=o *is2ursements from t,e Pu2lic Account do not need aut,oriDation of Parliament%ontin#ency Fund of Indiao 'ontains funds for meeting unforeseen needs including supplementary


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Sources of Revenue

o /ain sources of revenue are customs duties# excise duties# service tax# corporate and incometaxes

o Non8tax revenues consist of interest receipts (including interest paid by ailways# dividend andprofits

o For states# revenue is mainly from taxes and duties levied by the state governments# share of

taxes levied by %nion# and grants received from the %niono For local body finance# the primary sources are property taxes# octroi and terminal taxes

Sources of eG.enditure

)on.lan eG.enditure1. evenue expenditure: it consists of interest payments# defence revenue expenditure#

subsidies# debt relief to farmers etc# and grants to states and %nion 0erritories+. 'apital expenditure: include defence capital expenditure# loans to public sector

enterprises# loans to state governments and %0s# and loans to foreign governmentsPlan eG.enditure5. "ncludes agriculture# rural development# irrigation and flood control# energy# industry#

minerals# transport# communications etc

&nion "ud#et

o 0he %nion $udget is a statement of financial position of the %nion Governmento 0he ob?ectives of the $udget includeo 'oordination of resourceso Economic stabilityo /anagement of public enterpriseso


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o "ndirect taxes are the larger source of revenue for the governmento 0he ratio of revenue from direct to indirect taxes is usually around A7:;7o ',e lar#est revenue of t,e #overnment comes from eGcise duty

alue Added 'aG

o "y definitionC A' is a taG levied on t,e value added at eac, sta#e of .roduction and

distri2ution .rocess3"t is an ideal form of consumption taxation since the value added by a firmrepresents the difference between its receipts and cost of purchased inputs

o alue Added 'aG 6A'7 is a #eneral taG on commodities to re.lace sales taGC surc,ar#e andot,er entry level taGes levied 2y t,e states and &nion 'erritories

o J0 is levied on sale of all taxable goods. J0 is not levied if sales of goods are not made in thecourse of furtherance of business

o A' is collected in sta#es: taG .aid on .urc,ases 6in.ut taG7 is re2ated a#ainst taG .aya2leon sales 6out.ut taG73 0he concept of second sale or resale tax is done away with

o J0 can be computed using one of three techni)ueso Su2traction met,od: tax rate is applied to the difference between the value of the output

and the cost of the inputo Addition met,od: the value added is computed by adding all payments that is payable

to the factors of products (wages# interest payments etco 'aG credit met,od:this entails the set off of the tax paid on inputs from tax collected on

saleso India uses t,e taG credit met,od for A' com.utation

o dvantages of J0 includeo 0ax evasion becomes difficult. $usinesses compelled to =eep proper record of purchases

and sales# and =eep a trail of invoiceso voids problem of undervaluingo "ncrease in revenue as tax net widenso %niformity in tax regime avoids confusiono &ermits easy and effective targeting of tax rates# as a result of which exports can be zero8

ratedo &arity with tax structures in other countries

"N


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o In May 2007, the GoI sold its share in the enterprise, and no longer has a

stake in the companyo $o #anufacturing facilities (urgaon and anesar Bnear 7e DelhiC

A2out R(A India

o Largest produced electric car in the worldo Introduced in India in 01

o anufactured in !angalore

o $ravels 4 "# on a 4 hour charge for a running cost of Rs 3 per "#

Automo2ile com.anies and t,eir 2ases

%om.any +eadHuarters In India

Audi (er#an. Auranga&ad

!< (er#an. adras

)hevrolet '+A Pune

Fiat Ital. Pune B;oint ith $ata otorsC, adras

Ford '+A adras

Honda >apan 7oida

H.undai +outh orea adras

ercedes/!en* (er#an. Pune

itsu&ishi >apan $hiruvallur B$7C

7issan >apan adras

Renault France 7asi" Bith ahindraC, adras Bith7issanC

+"oda Boned &.

apan !angalore

ol"sagen (er#an. Pune


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PHARMACEUTICALS INDUSTRY

;verview

o "ndia is in position to meet 479 of drug demand internallyo "mportant drugs produced in "ndia include penicillin# flumeguine# pefloxacin# ramipiril etco &ublic sector companies in the pharmaceutical sector include "ndian


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Nicholas &iramal ?ay &iramal $ombay

'ipla ID @amied $ombay

ldest in "ndia

!orld@s lar#est .roducer of antiretroviral 6AI*S7 dru#s

&ioneered "s industrial output and 579 of exportso "ndian textile industry is the second largest in the world (behind 'hinao India is one of t,e lar#est .roducers of cotton in world

I)*&S'RIAL P;LI%I(S A)* PR;$RA(S I) I)*IA


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;verview

o "ndustrial policies and programmes in "ndia fall under the purview of the /inistry of @eavy"ndustry and &ublic Enterprises# and the /inistry of 'ommerce and "ndustry

o 0he /inistry of @eavy "ndustry and &ublic Enterprise contains two departments:o


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o ptimal utilization of human resourceso ttain international competitiveness

o 0he &olicy enshrines the liberalisation of industrial licensing policyo ',e Policy ens,rines t,e esta2lis,ment of Software 'ec,nolo#y Par-s 6S'P7 and

(lectronic +ardware 'ec,nolo#y Par-s 6(+'P7

F*I Policy

o "ndia has one of the most liberal F


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o Global mar=eting of "ndian leathero ctivities covered under the scheme includeo /odernisation of machineryo @ardware and "0 solutionso or=er safetyo Environmental and waste management

Industrial Infrastructure &.#radation Sc,eme

o Launched in +771o "mplemented by


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o 0he /*/E sector in "ndia employs about ;7 million people# it is the second largest sector interms of employment (after agriculture

o /*/E sector accounts for A39 of industrial output and A79 of exportso ',e S( sector in India falls under t,e .urview of t,e inistry of icroC Small and

edium (nter.rises3 0his /inistry was formed by the merger of the /inistry of *mall *cale "ndustriesand /inistry of gro and ural "ndustries in +774

o egistration of an industrial unit as a micro# small or medium scale enterprise is voluntary.@owever# benefits such as power and tax subsidies can only be obtained if registeredo egistration is done by the


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InstituteLocatio

nEstablished

National Institute for Micro, Small and Medium Enterprises (NIMSME) Hyderabad 1960

National Institute of Entrepreneursip and Small !usiness "e#elopment (NIES!$") Noida 19%&

Indian Institute of Entrepreneursip (IIE) 'uaati 199&

PROGRAMMES FOR THE MSME SECTOR

*ome of the important programmes are highlighted in this section. For a complete list of schemes andprogrammes seehereand here

%luster *evelo.ment Initiative 6%*I7o 'lusters are defined as sectoral and geographical concentrations of enterprises that share common

opportunities and threatso 'lusters facilitate the development of inter8firm cooperation to promote local production and collective

learningo %lusters account for over /0 of manufactured eG.orts from India

o "ndia has over A77 clusters of *mall and /edium Enterprises (*/E and +777 artisan clusterso ',e %*I in India is su..orted 2y t,e %luster *evelo.ment Pro#rammer of t,e &nited )ations

Industrial *evelo.ment ;r#anisation 6&)I*;7o 0he '


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;verview

o rganized ban=ing in "ndia originated in the late 16thcenturyo ',e State "an- of IndiaC ,eadHuartered in um2aiC is t,e lar#est 2an- in India

o 'urrently# "ndia has 66 *cheduled $an=s H +4 public sector ban=s# 51 private ban=s and 56foreign ban=s

o 0he public sector ban=s hold over 439 of ban=ing assets in the country# followed by privateban=s (16.+9 and foreign ban=s (;.39

o 'entral ban=ing in "ndia is the responsibility of the eserve $an= of "ndiao "an-in# in India is t,e res.onsi2ility of t,e *e.artment of Financial ServicesC inistry of

Financeo 'urrently there are 147 scheduled commercial ban=s# which includes 21 regional rural ban=s# 12

nationalised ban=s# 6 ban=s in the *$" group and the "


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RESERVE BANK OF INDIA

;verview

o

0he eserve $an= of "ndia is the central ban= of "ndiao It was esta2lis,ed in 19?5 and nationalised in 199. "ts head)uarters was initially 'alcutta# but

moved to $ombay in 1254. "t is currently head)uartered in /umbai.o ',e first $overnor of t,e R"I was Sir ;s2orne Smit,3 0he current Governor of the $" is


26/38

$a.lor

Started te practice of sinin ban* notes

+Sir 3

3eshmukh#$4+-#$4$

.irst Indian Go(ernor o/ 1I

+#ersa Independence -artition

Represented India at the Bretton Woods Conference 1944

Ser#ed as Minister of .inance 19/019/6

4Sir 1enegal

ama ao#$4$-#$7

Longest ser(ing Go(ernor

as Indian 2mbassador to $S2 prior to 3!I

itnessed commencement of .i#e 4ear -lans, and transformation of

Imperial !an* of India to S!I

5 (

A#&egaon"ar

>an 1952

Fe& 1952Did not sign an. &an" notes

5 6 Iyengar #$7-#$52

8itnessed introduction o/ decimal coinage

5ariable cas reser#e ration (33) introduced

2P )

!hattachar.a1960/1962

9 L : Jha #$57-#$70

8itnessed nationali;ation o/ *anks "#$5$%

2ppointed as 2mbassador to $S in 1970

9 ! 7 Adar"ara. 192

>une 192+erved as India%s -8ecutive Director at the IF

1 + >agannathan 192/1925


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1ank cadre

airperson of ommittee on .inancial System (1991) and ommittee

on !an*in Sector 3eforms (199%)

Ser#ed as Eecuti#e "irector for India at te orld !an* and te IM.

13 Dr I ( Patel 1922/1940

+erved as +ecretar. at the 'nited 7ations Develop#ent

Progra##e B'7DPC

itnessed demonetisation of i denomination ban* notes and :old

auctions;

itnessed nationali ?is as te larest

arranement of te IM. at te time

15Dr an#ohan

+ingh1940/1945 alan 1992/0ERepresented India on the -8ecutive !oards of the IF and


28/38

01 Dr Y Redd. 0E/04 -8ecutive Director to IF prior to R!I

00 Dr D +u&&arao 04/Present

Prior to R!I, he has &een

o +ecretar. to the P%s -cono#ic Advisor. )ouncil

B05/02Co :ead econo#ist in the


29/38

o 'ommercial ban=s are those that cater to the regular ban=ing and financial needs of thepublic

o %ommercial 2an-s include .u2lic sector 2an-s and .rivate sector 2an-s3&ublicsector ban=s include the *tate $an= Group and other nationalised ban=s# while private sectorban=s include "ndian ban=s and foreign ban=s

%oo.erative "an-so

'ooperative ban=ing is retail and commercial ban=ing organised on a cooperative basis.'ooperative ban=s include credit unions# savings and loans associations and building societies andcooperatives

o 'ooperative ban=s operate on the principles of cooperation H mutual help# democraticdecision ma=ing and open membership

o ',ey are #overned 2y controls of t,e R"I as well as state #overnments3'ooperativeban=s in general operate under the 'ooperative 'redit *ocieties ct 127A# but large %rban'ooperative $an=s operate under the $an=ing egulation ct 12A2

o 'ooperative ban=s in "ndia are the primary financiers of agricultural activities# small scaleindustries and self8employed wor=ers

o 'ooperative ban=s in "ndia were first established in the late 12 thcentury# following thesuccess of such ban=s in $ritain and Germany

o ',e Anyonya %oo.erative "an- Ltd3 6A"%L7 was t,e first coo.erative 2an- in

India3"t was established Jithal Laxman (a=a $hausaheb Davthe=ar in 1662 under the namenyonya *ahaya=ari /andali 'ooperative $an= Ltd. 0he ban= closed functioning in /arch +776following an order by the $". e8opening is under consideration

Re#ional Rural "an-so egional ural $an=s ($s were first established in 1243o "nitially five $s were established at /oradabad (% Gorap=hpur (% $hiwani

(@aryana# Baipur (a?asthan# /alda ($. 'urrently there are 21 $so RR"s eGist in all states eGce.t $oa and Si--im

o 0he share of $s in agricultural credit is around 39Sc,eduled "an-so *cheduled $an=s are those ban=s that have been included in *econd *chedule of the

$" ct 125Ao *cheduled $an=s must fulfil two conditions

o 0he paid up capital and collected funds of the ban= must not be less than s 3la=hs

o ny activity of the ban= should not adversely affect the interest of depositiono *cheduled $an=s en?oy the following benefitso 0hey are eligible for obtaining loans on $an= ate from the $"o 0hey ac)uire membership of the clearing houseo *cheduled $an=s include commercial ban=s# cooperative ban=s and regional rural ban=so 0here are around 57+ *cheduled $an=s in operation

)onSc,eduled "an-so Non8*cheduled $an=s are those that are not included in the list of *cheduled $an=so 0hey have to follow the 'ash eserve atio (' condition. @owever# they are not

compelled to deposit these funds with the $"o ',ey can avail loans from t,e R"I only under emer#enciesC and not for daily

activitieso 0here are only A Non8*cheduled $an=s in operation

GOVERNMENT ENTITIES IN BANKING

Small Industries *evelo.ment "an- of India 6SI*"I7 Established in 1227# head)uarters Luc=now

0he main ob?ective of the *"


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"t provides direct credit to micro# small and medium enterprises# supports microfinance institutionsand refinancing to state level finance bodies

Industrial *evelo.ment "an- of India 6I*"I7 Established in 12;A# head)uarters /umbai

0he "s international trade

"t acts as the apex financial institution for financing foreign trade in "ndia",aratiya Reserve "an- )ote udran Private Ltd 6"R")PL7 holly owned subsidiary of the $"

Established in 1223# head)uarters $angalore

/ain function is to augment the product of ban= notes to meet demand 0he company manages two presses: /ysore and *alboni (est $engal*e.osit Insurance and %redit $uarantee %or.oration 6*I%$%7 holly owned subsidiary of the $"

Established in 12;+# head)uarters /umbai

"ndia was one of the first countries to provide deposit insurance

/ain ob?ective is to provide insurance to depositors against collapse and ban=ruptcy of ban=s

&rovides deposit insurance coverage up to s 177#777


31/38

F"NN'"L /DE0* "N "Ns financial mar=et is one of the oldest in the worldo "t is considered the fastest growing and strongest among emerging economieso Financial mar=ets in "ndia are under the purview of the %a.ital ar-ets *ivision of t,e

*e.artment of (conomic Affairs of t,e inistry of Financeo 0he mar=ets in "ndia are regulated by the *ecurities and Exchange $oard of "ndia (*E$"o ',e PA) is t,e sole identification num2er for all transactions in securities mar-ets

o Alt,ou#, t,ere are more t,an 45 stoc- eGc,an#es in t,e countryC t,e "om2ay Stoc-(Gc,an#e and t,e )ational Stoc- (Gc,an#e account for a lar#e maority of securitieseGc,an#es

GOVERNMENTAL REGULATORY BODIES

Securities and (Gc,an#e "oard of India 6S("I7

o Established 122+# head)uarters /umbaio Functions under t,e *e.artment of (conomic AffairsC inistry of Finance

o *E$" is the regulator for financial mar=ets in "ndiao *E$" has regional offices in New


32/38

o In terms of t,e num2er of listed com.aniesC t,e "S( is t,e lar#est stoc- eGc,an#e in t,eworld (with over A377 listed companies

o ',e -ey indeG of t,e "S( is t,e S()S( ($*E *ensitive "ndex. "t is a composite measure ofthe performance of 57 =ey listed companies

)ational Stoc- (Gc,an#e 6)S(7

o Established 122+# location /umbaio 0he N*E is the second largest stoc= exchange in "ndia (after $*Eo In terms of num2er of trades in eHuityC it is t,e lar#est stoc- eGc,an#e in India and t,e

t,ird lar#est in t,e worldo 0he N*E is also the second fastest growing stoc= exchange in the worldo 0he N*E is owned by a set of financial institutions# ban=s and insurance companies.',ere are

at least two forei#n investors in )S(: )YS( (uroneGt and $oldman Sac,so ',e )S(@s -ey indeG is t,e )ifty

"N*%N'E "N "N


33/38

o ',e LI% is t,e lar#est life insurance com.any in India and also t,e nation@s lar#est investor

o "t funds close to +39 of the government>s expenseso 0he L"' owns the following subsidiarieso Life "nsurance 'orporation of "ndia "nternational: provides %*< denominated policies to

N"so L"' Nepal

o L"' Lan=ao L"' @ousing Finance

$eneral Insurance %or.oration 6$I%7

o Established 124+# head)uarters /umbaio ',e $I% is a ,oldin# com.any for four su2sidiary com.anies

o riental "nsurance 'ompany Ltd (New


34/38

o *ocial *ecurity Fund (**F was set up in 1266862 for providing social security through groupinsurance schemes to the wea=er sections of society

o ',e SSF is administered 2y t,e LI%

o 0he **F provides up to s 3777 on death from natural causes and s +3#777 upondeathCdisability due to accident

Eanas,ree "ima Yoana 6E"Y7

o 0he Banashree $ima Io?ana was launched in +777o ',e E"Y is a #rou. insurance sc,eme30he minimum membership of the group should be +3

personso ',e E"Y is administered 2y t,e LI%

o 0he B$I provides for insurance protection to rural and urban poor. 0he scheme covers $&Lpeople and above poverty line people who belong to certain identified occupational groups

o 0he scheme provides for cover of s +7#777 on natural death. 0he scheme also provides pensionof s +77

Aam Aadmi "ima Yoana 6AA"Y7

o Launched in +774o Provides insurance to t,e ,ead of t,e family of rural landless ,ouse,olds

o 'overs natural death and accidental deathCdisabilityo 0he scheme also provides additional benefit of scholarships for max two children between 2 thand

1+thstandardso Administered 2y t,e LI%

&niversal +ealt, Insurance Sc,eme 6&+IS7

o 0he %@"* is meant to improve access of health care to poor familieso *cheme provides for reimbursement of medical expenses# death and compensation due to loss

of earning capacityo ',e &+IS tar#ets only "PL families

)ational A#riculture Insurance Sc,eme 6)AIS7

o Launched in 1222o Protects farmers a#ainst losses due to natural calamities suc, as floodC drou#,tC

.estilence etco Sc,eme is im.lemented 2y t,e A#riculture Insurance %om.any 6AI%7o ',e Sc,eme is availa2le to all farmers irres.ective of t,e siDe of t,eir land ,oldin#s

o ',e Sc,eme covers all food cro.s and oil seeds3"t also covers some commercial andhorticultural crops

o 0he scheme has until now covered more than 1.5 million farmers and +11 million hectares of land


35/38

Pilot !eat,er "ased %ro. Insurance Sc,eme 6!"%IS7

o Launched in +774# on a pilot basiso ',e !"%IS aims to cover farmers a#ainst antici.ated cro. failure due to adverse weat,er

conditionso 0he scheme is based on the fact that weather parameters can affect crop yield even when the

farmer has ta=en all care to ensure a good harvesto 0he payouts are based on historical data that determine weather thresholdsCtriggers beyond

which crop losses are expectedo ',e !"%IS is im.lemented 2y t,e AI%

o 0he scheme is currently being implemented on 57 ma?or crops including horticultural cropso 'urrently the scheme covers more than 117#777 farmers and 1.A million hectares of land

F;R(I$) 'RA*( I) I)*IA;verview

o "n 1237# "ndia>s share in total world trade was 1.46 9. $y +77+ this had dropped to 7.6 9o India ,as a total forei#n trade of around &S* A @&>% A%>@

( -3 9>& &@>A A1>%

) $S2 @1>1 1%>/ &9>7

4 Saudi 2rabia />1 19>9 @/>0

* 'ermany 6>& 1@>0 1%>&

S.ecial (conomic Zones 6S(Z7

o "ndia was one of the first countries in sia to recognize the effectiveness of Export &rocessing!ones (E&!

o ',e first (G.ort Processin# Zone 6(PZ7 in Asia was esta2lis,ed in andla 6$uarat7 in 195


36/38

o ',e S.ecial (conomic Zone 6S(Z7 Policy was announced in 4///o ',e main o2ectives of S(Zs are

o Generation of additional economic activityo &romotion of goods and serviceso &romotion of investment from domestic and foreign sourceso 'reating of employment opportunities

o


37/38

India, Sout

Borea, Sri an*a

ompreensi#eEconomic ooperation

2reement

beteen te 3epublic ofIndia and te 3epublic of

Sinapore

India, Sinapore

India ile -referential?rade 2reement (-?2)

India, ile

Sined @00/

India offers tariff preference of 10/0 F

on 17% tariff lines (includin meat, fis,salt, iodine,

opper, cemicals, leater, nesprint,

paper, ool, ood etc)

ile offers preference of 10100 F on

@96 tariff lines (includes aricultural

products, cemicals,

parmaceuticals, dyes and resins, plastic,rubber, leater, tetiles, footear,

industrial products)

India 2fanistan -?2India,

2fanistan

2fanistan rants preferential tariff to %products from India includin blac* tea,

ayur#edic and

Homeopatic medicine, oter medicine,

suar, cement

India rants preferential tariff to &%products from 2fanistan, mainly

aricultural products li*e

dry fruits

India !utan ?rade

2reementIndia, !utan

India Borea E-2India, SoutBorea


38/38

India ME3+S$3 -?2India,ME3+S$3

ME3+S$3 is a tradin bloc in atin

2merica tat comprises !ra

Documents

Outline Indian Economy I