INDIAN ECONOMY

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What are the main features of Indian economy in the Global environment?
Indias economic performance in the post reforms period has many positive features. The average growth rate in the 18 year period from 1992-93 to 2009-10 was around 6.7 percent, which puts India among the fastest growing developing countries. Foreign Direct Investment inflows are spread across a range of economic activities like financial services, manufacturing, banking and construction. Poverty also declined significantly in the postreform period. But percapita income level is much low in India as compared with other developed countries. High degree of dispartiy in income/wealth distribution is also found in India. Land-Labour ratio is not favourable in India because of the heavy population pressure on agriculture. The other features of Indian economy are over-population, unbalanced economic development, lack of capital, lack of industrialization and market imperfections. living of the people. Indias percapita income (nominal) is ranked 127th in the world. In its present stage of development, the Indian economy exhibits a mix of backward and progressive features. It has shed off some of its underdevelopment as it has made forward strides in some of the important areas of the economy. Despite sustained high economic growth rate, approximately 80% of its population lives on less than $ 2 a day (PPP). Because India is an over-populated country. According to 2011 Census, Indias population stands at a high level of 121,01,93,422 which is 17.5% of the worlds total population.

What are the important reasons for faster economic growth in India?
Economic policies and planning after independence helped to improve the living conditions of the common people in India. Per capita income growth rate

India had established itself as the worlds second fastest growing economy. But per capita income is low. Why?
The growth of percapita income at constant prices is an indicator of the change in the standard of

port 20 an Development Re s of its According to Hum in the world in term ogressing country the of the fastest pr s been classified in ic growth. India ha at 119th ra nk exponential econom t category, placed human developmen e aver age medium es HDI va lue abov untries. India scor ong other out 169 co t below average am Asian countries, bu , Sr i amongst South es such as China velopment countri report has been medium human de HDI value in 2010 d Thailand. Indias r med ium Lanka an er age of 0. 59 2 fo mpa re d to the av 0. 51 9, co tries. development coun

e in 2010 Indias HDI valu 10, India is one

declined from a high of 8.1 percent in 2001ranked fourth, in electrical machinery and 08 to 3.7 percent in 2007-08 and then apparatus, it is ranked fifth; sixth in basic metal recovered to 5.3 percent in 2009-10. Fifty category; seventh in chemical products; 10th nine years of economic planning, economic reforms, heavy invest ic development ments in agriculture and dicators of econom Major in es s is mul ti industrial sectors, strong es s and the pr oc opmen t is a pr oc t are D evel banking sector, working of tors of developmen l. The major indica dimensiona large number of small scale oduct (NNP) industries, presence of large 1. Net National Pr number of establishments, me 2. Per capita Inco high rate of saving and er Parity (PPP) 3. Purchasing Pow ) investment, good infra of Life Index (PQLI 4. Physical Quality structure facilities and and ment Index (HDI) implementation of various 5. Human Develop verty Index (HPI) rural development and social 6. The Human Po development schemes by the Central and State Govern in leather, petroleum products and nuclear fuel ments are some of the important reasons for and twelfth in machinery and equipment and this faster economic growth. However as the motor vehicles. However Indias huge result of the financial crisis of 2007-10, population results in per capita income of coupled with a poor monsoon, Indias GDP $4184 at PPP and $ 964 at nominal (2007 growth rate significantly slowed to 6.7% in estimate). The World Bank classifies India as 2008-09, but subsequently recovered to 7.2% a low-income economy. in 2009-10 and 8.2% in 2010-11. ? Compare Indias total population and

Comment on India - a developing economy

its growth rate to that of the world.

India possesses about 2.4 percent of the total land area of the world but she has to support about 17.5 percent of the world population. The UN has estimated that the world population grew at an annual rate of 1.4 percent during 1990-2000. China registered a much lower annual growth rate of population (1 percent) during 1990-2000, as compared to India 1.9 percent during 1991-2001. According to 2011 census population level touched the height of 121.019 crores.

The economy of India when measured in US dollar exchange rate is the twelfth largest in the world, with a GDP of US $1.09 trillion (2007) and third largest in terms of purchasing power parity. India is the second fastest growing major economy in the world with a GDP growth rate of 8.2% for the fiscal year 2010-11. India has the second largest area of arable land, making it one of the worlds largest food producer. Over 230 MT of food grains are produced annually. India is worlds largest producer of milk (100 MT per annum). The credit rating has been raised to investment level in 2007. The Indian Telecom industry registered the highest number of subscriber additions at 15.84 million in March 2009, setting as world record. In textiles, India is

What is the extent of poverty in India?

An expert group of planning commission, defined poverty line on a nutritional norm of per capita daily intake of 2400 calories in rural areas and 2100 calories for urban areas. A person who fails to obtain this minimum level

of calories is treated as being below the poverty line. There has been no uniform measure of poverty in India. The planning Commission has accepted Tendulkar Committee Report which says that 37% people of India live below poverty line.

Indias reforms have followed a gradualist path. Give reason?

An important feature of Indias reform programme is that it has emphasised gradualism and evolutionary transition. One reason for gradualism is simply that the reforms were introduced in June 1991 in the wake of a balance of payments crisis which was certainly severe. Several initiatives were taken in the second half of eighties, it leads to an acceleration in growth in the 1980s, it created a strong presumption in favour of evolutionary change. Gradualism was the inevitable outcome of Indias democratic and highly pluralistic polity in which economic reforms can be implemented only if they are based on a sufficiently wide popular consensus. The favourable experience of liberalisation in the 1980s had created an intellectual climate for continuing in the same direction, and the crisis of 1991 certainly concentrated the mind in favour of bolder reforms.

and to ensure that no individual, community or region is denied the opportunity to participate in and benefit from the development process. The third challenges are to re-energise the government effort and improve delivery mechanisms. Our institutions must provide high quality public services, security and the rule of law to all citizens with transparency and accountability.

What are the main components of (1991-1992) economic liberalisation policy ?

The economic liberalisation policy focus changed from achieving self sufficiency to now achieving self-reliance for the country where increasing the competitiveness of the products were emphasized. The reform package outlined by the former finance minister Dr. Manmohan Singh in 1992 can be distinctly outlined in three components: 1. Fiscal stabilization to check the uncontrolled growth in government expenditures and contain the fiscal deficit to decent percentage. This was sort to be achieved by limiting the public investments. 2. Internal liberalization to increase the competitive pressures and bring the market outcome closer to free market economies.

Briefly explain the three challenges faced by Indian economy

Indian economy is facing primarily three challenges. The first challenge is to lead the economy back to the high GDP growth rate of 9 percent per annum at the earliest. The second challenge is to deepen and broaden the agenda for inclusive development;

which have contrib Economic factors in India are agriculture of villages i. predominance of and predominance banization process ii. slow ur iii. poverty. Social factors y of marriage i. near universalit cial superstitious ii. religious and so m iii. joint family syste n. iv. lack of educatio

irth rate in India Causes of high b rate uted to high birth

3. Integration of the Indian economy with the globalized world economy through trade liberalization, exchange rate and other capital market liberalization. Other regulations like regulating capital inflows and outflows were also eased.

vi. Electronic Hardware Technology Park (EHTP)/Software Technology Park (STP) scheme for building up strong electronic industry to enhance exports and vii. Liberalised policy for Foreign Direct Investment (FDI).

What are the main features of 1991 Industrial Policy?

This policy ushered in a new concept in Indian industrial scene. It has scrapped the industrial licensing and ended the monopoly law. It had liberalised aspect of the procedures and forma lities of industrial sector. The main features of policy include the following. a. to maintain a sustained growth in productivity b. to enhance gainful employment c. to achieve optimum utilization of human resources d. to attain international competitiveness and e. to transform India into a major partner and players in the global arena.

Discuss the policy initiatives for promoting micro, small and medium enterprises.
Initiatives and measures taken by the government during the year to enable micro and small industries enhance their competitive strength, face the challenges of competititon and avail the benefits of the global market include 1. Enactment of the Micro, Small and Medium Enterprises Development (SMED) Act, 2006. 2. Amendment to the Khadi and Village Industries Commission Act, 1956 introducing several new features to facilitate professionalism in the operations of the commission as well as field level formal and structured consultations with all segments of stake holders. 3. A package for promotion of these enterprises has been approved recently to address most of the concerns in the areas such as credit, cluster-based development, infrastructure, technology and marketing. 4. Under the Credit Guarantee Scheme, life insurance cover for chief promoters of units provided guarantee cover by the Credit Guarantee Fund Trust for Small Industries.

What are the policy measures of 1991 Industrial Policy?

This policy had laid main focus on deregulating Indian industry, allowing the industry freedom and flexibility in responding to market forces and providing a policy regime which facilitates and fosters growth of Indian industry. The important policy measures are : i. Liberalisation of Industrial Licensing Policy ii. Introduction of Industrial Entrepreneurs Memorandum (i.e., no industrial approval is required for industries not requiring compulsory licensing) iii. Liberalisation of Locational Policy iv. Liberalised policy for small scale sectors v. Non-Resident Indians Scheme (NRIs are allowed to invest upto 100% equity on non-repatriation basis in all activities except for a small negative list).

Write a short note on Trade Policy reforms in India

Trade policy reform has also made progress. Before the reforms, trade policy was characterized by high tariffs and pervasive import restrictions. The economic reforms sought to phase out import licensing and also

to reduce import duties. Import licensing was abolished relatively early for capital goods and intermediates which became freely importable in 1993, simultaneously with the switch to a flexible exchange rate regime. Quantitative restrictions on imports of manufactured consumer goods and agricultural products were removed on April 1, 2001. Progress in reducing tariff protection, the second element in the trade strategy, has been even slower and not always steady. The weighted average import duty rate declined from the very high level of 72.5 percent in 1991-92 to 16 percent in 2006-07.

2. Manufactured products account for a major share of the increase in aggregate exports over the period 1990-91 to 20062007. 3. Gems and Jewellery was the most important export item in 1990-91 with its share in total export earnings being 16.1%. 4. The second most important export item in 1990-91 was readymade garments, it was soon pushed down to third place by engineering goods. 5. Exports of chemicals and allied products rose to $14,211 million in 2006-07. 6. The share of leather and leather manufactures in export earnings declined steeply during this period. 7. The changes in the structure of Indias exports during the post reform period are more noticeable at the aggregated level. In certain years during this period, exports of rice, tobacco, spices, sugar and molasses, and works of art increased significantly. 8. Another area that is emerging is project of exports.

Briefly explain Indias trade performance during the post-reform period.

Important observations regarding Indias trade performance during the post-reform period are as follows: 1. Reflecting the liberalisation of trade regime and the increasing external openness of the economy. Indias trade GDP ratio rose from 4.6 percent in 1980s to 7.8 percent in 1990s. It rose further to 13.1 percent in 2005-06. 2. The export-import ratio increased substantially from 64.0% during 1980s to 84.9 percent during 1990s. However, it deteriorated thereafter and fell to 68 percent in 2006-07. 3. Both export growth and import growth rates registered an increase in the post reform period.

What are the changes in composition of imports during the post-reform period?
Important changes in Indias imports during the post-reform period are as follows: 1. The most important import item in terms of expenditure is POL (Petroleum, Oil and Lubricants). In fact, for most of the postreform period POL imports have accounted for one-fourth of total import expenditure. 2. The share of pearls and precious and semiprecious stones has remained almost constant at 89 percent of total import expenditure all through the post reform period. 3. As a result of liberalisation and changing

What are the changes in composition of exports during the post-reform period?
The important changes that took place in the composition of exports during the post-reform period are given below: 1. The share of agriculture and allied products in total exports was 19.4 percent in 199091. This fell to 10.3 percent in 2006-07.

consumer tastes, imports of electronic goods and computer goods have increased substantially. 4. There has been a steep fall in the imports of project goods during the recent period. 5. The share of fertilisers, iron and steel in import expenditure also fell during the postreform period. 6. The share of chemical elements and compounds remained stable and percentage share of gold and silver in total import expenditure rose to 8 percent in 2005-06.

Discuss Balance of Payments situation since 1991.

Balance of Payaments accounts consists of two accounts - current account and capital account. Current account includes all the debit and credit entries of invisible items side-byside with trade items, while the capital account is related with the entries of capital transactions in the country. The current account is the important one because it indicates the health of the economy. Indian trade balance has been in adverse state for the last five decades which resulted the deficit in current account of the balance of payments. The current account has followed an inverted U shaped pattern during the period from 2001-02 to 2006-07, rising to a surplus of over 2% of GDP in 2003-04. Thereafter, it has retrimed close to its post 1990s reforms average, with a current account deficit of 1.2% in 2005-06 and 1.1% of GDP in 2006-07.

a. Export target of $ 200 billion set for 20102011 b. Government extended two flagship schemes for exporters, the Export Promotion Capital Goods Scheme (EPCGS) and the Duty Entitlement Passbook Scheme (DEPS). c. Growth target of 15 percent for next two years, 25 percent thereafter. d. Obligation under export promotion capital goods scheme relaxed. e. Permission for tax refund scheme for jewellery sector. f. No fee on grant of incentives to cut transaction costs g. Plan for diamond bourses in the country. h. Single-window scheme for farm exports i. Export units allowed to sell 90% of goods in domestic market. j Provision for state run banks to provide dollar credits k. Zero duty under technology upgraded scheme.

Discuss Indias reforms in Foreign Direct Investment (FDI).

The policy allows 100 percent foreign ownership in a large number of industries and majority ownership in all except banks, insurance companies. Procedures for obtaining permission were greatly simplified by listing industries that are eligible for automatic approval upto specified levels of foreign equity (100%, 74% and 51%). Potential foreign investors investing within these limits only need to register with the Reserve Bank of India. In 1993, foreign institutional investors were allowed to purchase shares of listed companies, opening a window for portfolio investment in existing companies.

Discuss the salient highlights of new foreign trade policy 2009-14?

The new foreign trade policy clearly gives the message to double Indias exports of goods and services by 2014 and double its share in global trade by 2020. The salient highlights of new foreign trade policy 2009-14 are as follows:

Critically evaluate the main features of FDI.

The policy changes were expected to generate faster industrial growth and greater penetration

of world markets in industrial products. Indian companies have upgraded their technology and expanded to more efficient scales of production. But performance in this respect has been disappointing, industrial growth increased sharply in the first five years after the reforms, but then slowed to an annual rate of 4.5% in the next five years but in last decade it is double in digits. Indias share in world exports, which had declined steadily since 1960, increased slightly from around 0.5% in 1990-91 and by the end of 2006-07, it is more than one percent.

After 1991, Indian foreign exchange reserves have rapidly increased due to various reasons which are as follows: 1. Devaluation of rupee 2. Availability of loans from international institutions and availability of foreign exchange from NRIs under various schemes. 3. Increased foreign investment and full convertibility of rupee on current account. 4. Absorption of dollar supplies by central bank and easy access to external commercial borrowing.

What is the significance of FDI inflows into India?

During 2005-06 to 2008-09, FDI flows assumed greater significance. High inflow indicate India as an attractive investment destination as a consequence of its liberalised investment climate stable and sound economic and political base, opportunities for economic growth, while capital investment abroad reflects the growing competitiveness of the Indian corporate sector. FDI inflows into India increased from US $22.8 billion in 2006-07 to US $33.4 billion in 2007-08. FDI inflows are spread across a range of economic activities like financial services, manufacturing, banking services, information technology services and construction.

Explain the recent trends and concerns in Indian agriculture.

During the past decade, the share of the agriculture sector in GDP had fallen from 25.8% in 1999-2000 to 16.3% in 2009-10. Recent trends that have raised concern regarding food security, farmers income, and poverty are: widening economic disparities between irrigated and rain-fed areas. increased vulnerability to world commodity price volatility following trade liberalization. This had an adverse effect on agricultural economics of regions growing crops. slow down in growth. uneven and slow development of technology. Degradation of natural resource base. increased non-agricultural demand for land and water.

Name the two agencies that help to promote FDI in India?

i. Foreign Investment Promotion Board and ii. Foreign Investment Implementation Authority.

Briefly explain Indias foreign exchange resources since 1991.

The foreign exchange reserves of the country include three important components 1. Foreign exchange assets of RBI 2. Gold Stock of RBI and 3. SDR holdings of the government.

What are the objectives of food management in India?

Food management in India has three basic objectives i. procurement of foodgrains from farmers at remunerative prices ii. distribution of foodgrains to the consumers

particularly the vulnerable sections of the society at affordable prices, National Commission of Farmers 2007 and Government of India has approved the National Policy for iii. maintenance of Farmers, 2007. The broad areas of its coverage include: food buffers for food security and 1. Focus will be on the economic well-being of the farmers price stability. The in addition to production and productivity. instruments for food 2. Soil health enhancement management are the 3. Irrigation water supply management Minimum Support 4. Credit and Insurance the financial services would be Price (MSP) and adequate and easy reach to the farmers at reasonable Central Issue Price interest rates. (CIP). The nodel 5. New technologies like bio-technology, information and agency for the distri communication tech nology (ICT), renewable energy bution and storage of technology, space applications and nano technology would foodgrains is the Food be encouraged for productivity. Corporation of India. 6. Provision of market facilities. Comment on

Agricultural Credit
Three types of loans are provided to Indian farmers to meet their financial requirements i. Short term loans are provided for less than 15 months ii. Medium term loans are provided for a period of 15 months to 5 years and iii. Long term loans for more than 5 years. Agricultural credit is disbursed through a multiagency network consisting of Cooperatives, Commercial banks and Regional Rural Banks (RRBs). NABARD lays policies concerned with RRBs. The Farm Credit Package announced in June 2004 stipulated doubling the flow of institutional credit. transport and efficient ports. The electric power sector, was the first area opened for private investment. Private investors were expected to produce electricity for sale to the State Electricity Boards, which would control the transmission and distribution. Reforms in telecommunications have been much better and this is an important factor underlying Indias success in information technology. Several private sector service providers of both fixed line and cellular services, many in partnership with foreign investors, are now operating and competing with the pre-existing public sector supplier.

Describe the features of the means of transport in the Post-reform period.

Civil aviation and ports are two other areas where reforms appear to be succeeding. Two private sector domestic airlines, which began operations after reforms, now have more than half the market for domestic air travel. In the case of ports, 17 private sector projects are being implemented. Indias road network is

State the role of infrastructure development in the global environment.

Rapid growth in a globalized environment requires a well-functioning infrastructure including especially electric power, road and rail connectivity, telecommunications, air

extensive, but most of it is low quality. In 1998, a tax was imposed on gasoline, the preceeds of which are earmarked for the development of the national highways, state roads and rural roads. The railways are a potentially important means of freight transportation but this area is untouched by reforms yet.

What are the measures taken by stock market in the post-reform period?
Reforms in the stock market were accelerated by a stock market scam in 1992 that revealed serious weakness in the regulatory mechanism. Reforms include establishment of a statutory regulator; promulgation of rules and regulations governing various types of participants in the capital market and also activities like insider trading and takeover bids; introduction of electronic trading to improve transparency in establishing prices; and dematerialization of shares to eliminate the need for physical movement and storage of paper securities. Indias stock market is much better regulated today than in the past.

What is meant by financial sector reforms?

Financial sector reforms include reforms in the banking system, capital markets and insurance sector. Reforms in the banking system and the capital markets relatively early in the process with reforms in insurance introduced at a later stage.

What are the factors included in the banking sector reforms?

Banking sector reforms included: a. measures for liberalization, like dismantling the complex system of interest rate controls, eliminating prior approval of the Reserve Bank of India for large loans, and reducing the statutory requirements to invest in government securities; b. measures designed to increase financial soundness, like introducing capital adequacy requirements and other prudential norms for banks and strengthening banking supervision. c. measures for increasing competition like more liberal licensing of private banks and freer expansion by foreign banks.

Describe the policies of insurance sector reforms.

The insurance sector was a public sector monopoly at the start of the reforms. The need to open the sector to private insurance companies was recommended by the Malhotra Committee in 1994, but there was strong political resistance. In 2000, the law was finally amended to allow private sector insurance companies, with foreign equity allowed upto 26%, to enter the field. An independent Insurance Development and Regulatory Authority has now been established and ten new life insurance companies and six general insurance companies, many with wellknown international insurance companies as partners, have started operations.

Describe merits of banking sector reforms in India.

In India, there has been a sharp reduction in the share of non-performing assets in the portfolio and more than 90 percent of the banks now meet the new capital adequacy standards. Indias banking reforms differ from other developing countries and that its policy towards public sector banks dominate the banking system.

What is privatisation?
Privatisation indicates introduction of private ownership in publicly owned and managed enterprises. Privatisation broadly includes three types of measures i. Ownership measures: is transferring of ownership of public enterprise either fully or partially leading to its privatisation. ii. Organisational measures: for limiting state control through restructuring.

iii. Operational measures: for improving efficiency of organi 2012) ve year plan (2007- oad sation by injecting rgets of eleventh fi Growth ta which ensures br the spirit of commer velopment process cially enth plan trigger a de Elev e of the people espe cialisation through in the quality of lif t en. The focus is based improvemen the granting of inorities and wom SCs/STs, OBCs, m rgets are as the poor, autonomy to public growth. Growth ta d more inclusively on faster an sectors under follows: takings, permiting annum P : 9.0 percent per Growth rate of GD them to raise loans tes: from capital markets, Sectoral growth ra per annum etc. to reduce govern Agriculture 4% r annum ment control. In 1998, Industry 10% pe per annum the government annou Services 9 - 11% nced its willing ness to reduce its shareholding 3. Restructuring agriculture planning to 26 percent and to transfer management 4. Tackling the problems of poor control to private stakeholders purchasing infrastructure and skill deficit for better a substantial stake in all central public industrial growth sector enterprises except in strategic areas. 5. Making laws flexible What was the performance of the public 6. Providing more credit to small scale sector and what was the rationale enterprises

behind privatisation in India?

The public sector undertakings totally supported by the government did not perform well as expected. They have suffered from heavy centralisation in direction and management, vested political interest which resulted in low efficiency and low productivity. With the growing large scale fiscal deficit, the Government of India has considered the issue of privatisation in 1990. New Industrial policy 1991, took measures like abolition of licensing in all industries excepting 15 industries, reducing the number of industries research for public sector, free entry of foreign investment, etc.

7. Increasing investment in infrastructure from 5% of GDP in 2006-07 to 9% by 2011-12. 8. Adoption of public-private partnership in physical and social infrastructure. 9. Commitment to pursue a development process which is environmentally sustainable.

What is a public sector undertakings?

Enterprises or firms owned by the state i.e., central government or State Government or Local Self Government are known as public sector undertakings eg. ONGC, FACT etc.

What are the main strategies of eleventh plan?

The main strategies of eleventh plan are 1. Fostering inclusiveness of farmers through a group approach 2. Improving efficiency of investment

What is Liberalisation? Liberalisation means following a liberal policy towards industry. It involves two things. The first thing was that the private sector was allowed to undertake those industrial activities which were previously reserved for the public sector. Secondly, all such rules and regulations

were relaxed which previously restricted the growth of the private sector. Define Per Capita Income Per Capita Income of a country may be defined as average earning of an individual in a particular year. It refers to the income received by an individual in a certain year in a country. Generally, the concept of per capita income refers to the measurement of income at current prices and at prices of base year. The formula for the calculation of per capita income is as under: Per Capita Income =
National income of a country Population of a country

brings to the concept of NNP ie GNP Depreciation = NNP. Net National Product thus excludes the depreciation. b) NNP at factor cost (NNPFC) NNP at Factor Cost = NNP - Indirect taxes + Subsidies, i.e., the indirect tax should be deducted and subsidies should be added to Net National Product to get the NNP at Factor Cost. This is the real National Income.

Define National Income

National Income is defined as the money equivalent to the volume of goods and services counted without duplication i.e., the money value of all the final goods and services during an accounting year. It is also referred to as Net National Product at factor Cost (NNPFC). In India, an accounting year is from 1st April to 31st March in the next year. Thus, a total of national income measures the flow of goods and services in an economy and reflects the progress of economy.

Write short notes on NNP and NNP at factor cost

a) Net National Product (NNP)

Define non-renewable resources These resources once mined and used cannot be regenerated. For eg., coal, mineral oil, iron ore etc. Brief description on SIDO The Small Industries Development Organisation (SIDO) was set up in 1954 under the ministry of Small Scale Industry and Agro and Rural Industry. It functions as an apex body in the formulation of policies and coordination of institutional activities at the centre and State level for sustained and organised growth of Small Scale Industries [SSIs] What is MPLADS? Member of parliament Local Area Development Scheme [MPLADS] was announced in the parliament on 23 December 1993. Under the scheme, each MP has a choice

NNP is a derivation from the Gross National Product (GNP). GNP is the aggregate of the total output of consumers goods and investment goods. But in course of the year, there is wear and tear of the capital goods. So deduction or depre ciation from the GNP

ently f render ed perman get rid of the staf With a view to kers are allowed l factors of its wor to any of the severa d inducement surplus due e compensation an ying them handsom is known to retire by pa gratuity benefits. It provident fund and solving in addition to the icable method of ent. This is an am The workers get as voluntar y retirem rendered surplus. ms of the workers m amount so the pr oble vest the lump su they ca n ei ther in e business te mpt ed for ng or may start som e financial undertaki curtail received with som ntageous for it can mpany finds it adva of their own. The co re. recurring expenditu

ake Golden Hand Sh

to suggest to the concerned District Collector, works to the tune of Rs. one crore per year to be taken up in his/her constituency. Define Inflation Inflation is an increase in the quantity of money in circulation without the corresponding increase in goods and, therefore, it leads to abnormal rise in price level. During the last few years, Indian economy has been facing record inflation.

duals on the basis of sheer needs and efficiency. The economy is controlled by the state. Mixed Economy Mixed economy is the mixed form of the capitalistic and socialistic economy. In a mixed economy, private and public sectors are found side by side. They work under the guidelines of an economic planning. The state does not control all economic activities. India is an example for mixed economy. Mixed Economy works through controlled price system. It reduces the inequality of income. The poor get economic benefit on account of an increase expenditure on public utilities and services. Mixed economy leads to rational economic development, lesser inequality of income, balance regional growth and safeguards the interests of the general masses of the country. Describe the significance of Service Sector It is the sector of economy that provides various services to the people employed in primary and secondary occupations. These services increase their efficiency and also provide them with necessary information and knowledge. These services includes transport, communication, health, banking, insurance, administration etc. Define Foreign Trade When different countries of the world produce different types of goods and services, and exchange those goods and services among themselves, it is called foreign trade. There are two basic components of foreign trade,viz., export and import. Write short notes on Imperative Planning, Indicative Planning and Perspective Planning Imperative Planning It is a type of planning where the Central

Write short notes on a) Capitalist Economy b) Socialist economy and c) mixed economy The capitalist economy is the economy in which the means of production are owned by private individuals. Economic activities are guided by self-interest and profit is the main motive in the economy. Individuals have the right to earn income, acquire assets and to retain it. Consumer is the supreme in the capitalist economy. He has full freedom in the choice of consumption of goods and services. Competition occupies an important part in this economy and encourages technical progress. Inequality of income and class struggles are other important features of this kind of economy. In modern societies, the government does interfere to control profit motive and protect the interest of consumers and labourers. Socialist Economy The socialist economy is the economy which is owned and controlled by the society. In this system, the economic resources are owned by the society. These resources are used for the welfare of the society. Competitive pricemechanism does not play any role in this system of economy. Private ownership of property is not allowed. Economic powers are concentrated in the hands of the state. There is absence of inequality of income under this system. Income is distributed among indivi-

Planning Authority decides upon every aspects Indirect Taxes: An indirect tax is levied and of the economy and set the targets and the collected from a person who manages to pass process delineated to achieve them are to be it to some other persons to whom the real strictly followed. This type of planning is burden of the tax falls. Hence in the case of mainly practiced in the socialist economies. indirect taxes, the tax payer is not the tax bearer. Indicative planning eg: Commodity taxes or sales tax, excise duties It is a planning where the State regulates the customs duties etc. broad parameters and goals for the economy. ? What is meant by MODVAT Unlike centralised planning, the state broadly indicates the targets to be achieved. It was It stands for Modified Value Added Tax. It is adopted in the Indian economy since the a modified form of VAT which has been in Eighth Plan. operation in many countries since long. India introduced VAT in the modified form in 1986. Perspective planning The modification consists of the following. It is a planning for a long period of time, The inputs remain taxed. But the tax is usually 15-20 years. As a highly specialised reimbursed to the producer of the final product task, it is operationlised through the Five Year who uses these taxed inputs. Plan and the Annual Plans. The planners ? Write short notes on a) Equity Shares, formulate a perspective plan that broadly b) Right issue and c) Debentures. defines the direction desired to be taken by Equity Shares: These are ordinary shares, the economy. the holders of which take the maximum risk What is Rolling plan with no guarantee of dividend but also earn Here, there are three different steps. First, a maximum returns when there is profit in a plan for the current year which includes the company, because they are the real owners annual budget. Second, a plan for a fixed of the business. Equity shares are the number of years, say three to five. it is revised ownership securities - while debentures are every year as per the requirements of the creditorship security. economy. Third, a perspective plan for 10, b) Right issue: The issue offers new shares 15 or 20 years. to existing shareholders in a company in What are the different types of taxes? proportion to their existing shareholding. The The taxes can be classified into two on the shares are normally offered at a small basis of form as: 1. Direct taxes & 2. Indirect taxes Direct Taxes: A tax Tax) VAT (Value Added which is paid by a ted 1954 as a restric person as shown it is opted in Fr ance in goods and VAT was first ad id by the sellers of legally imposed and the T is a tax to be pa r respective scale. The VA lue added by thei burden of which cannot e ba sis of the va les tax, services, on th tter alternative to sa be shifted to any other introduced as a be r. The concerns. VAT was caused by the latte persons is called a direct onomic distortion ec service. VAT is since it avoids the d to a commodity or tax. x in the value adde sold, but on VAT is a ta e commodity being eg: Income tax, Wealth e total value of th not a tax on th de. tax, Property tax, Estate it by the to last tra the value added to duties etc.

discount, but have the advantage to the company of avoiding the heavy costs of a public offer.

Debentures: Debenture is a company certificate to its creditors promising payment of a stated sum after a specific Paper Gold ar y Fund twenty period of time at fixed ternational Monet e functioning of In In th ium of payment rate of interest. a new form of med inception, in 1969 ts. It was years after its ecial Drawing Righ Explain the in the shape of Sp gain it. was introduced rs who agreed to development of Life ven to the membe d gi the added facility tions are maintaine Insurance counts and transac F ac rmed as Pa per These da ys the IM Corporation of India These ar e also te ted in SD R units. and conduc The life insurance sector Gold. was nationalised in 1956 into LIC. Life Insurance 1. To strengthen and mobilise the resources; is a very important form of long term 2. To promote common economic policies in contracted savings. Savings through life all the vital fields/sector; insurance policies is tax free. LIC promotes 3. To ensure balanced and rapid development saving and results in the institutionalisation of of the parts of country; mobilisation. LIC is the second largest share 4. To review the working of the national plan holders in the securities market. from time to time; and What is meant by Laissez-faire? 5. To recommend measures for the achievement of target set out in the It is a french term meaning let alone. It is National Plan. the policy of non-interference by the ? Human Development Index (HDI) Government in the economic activities of the citizens and entrepreneurs. The leading It is a composite measure for judging the advocate of laissez-faire was the English overall socio-economic achievements of economist, Adam Smith, who held that if the different countries of the world. By state allowed the economic forces a free play, introducing such a measure, the United the invisible hand of supply and demand Nations Organisation was able to judge the would guide individual economic behaviour development of different countries of the towards the collective interests of all. world so that proper care can be taken of the most deserving cases. The United Nations Explain the structure and functions of Development Programme (UNDP) in its first National Development Council (NDC) Human Development Report in 1990 The National Development Council was set introduced the Human Development Index up in 1952 as an adjunt to the Planning (HDI) as a composite measure for measuring Commission to associate the states to over-all socio-economic achievements of formulate plans. The NDC is an extra-constidifferent countries of the world. tutional and extra legal body today. It is a very It is a composite of three indicators. comprehensive body, consisting of the Prime 1. Life Expectancy Index Minister, Chief Ministers of the State, and the members of the Planning Commission. In the 2. Education Attainment Index

year 1967, even the members of the Union Cabinet and Administrators of Union Territories are included. Following are the functions of the NDC:

3. Standard of Living Index i.e, per capita income The first two indicators are the social indicators. The per capital income, an economic indicator, is used as a proxy measure for satisfaction derived from a bundle of basic goods and service. Write a short note on PQLI Physical Quality of Life Index (PQLI) for the country was calculated by averaging the three ratings, giving equal weights to each. These are: i. Life expectancy, ii. Infant mortality iii. Basic literacy Most of the countries with low per capita GNP tend to have a low PQLI while countries with high per capita GNP tend to have a high PQLI, though the correlation between the GNP and PQLI is substantially close. The most recent index of development in use since 1990, is the Human Development Index (HDI), prepared by the UNDP.

ment is declining the contribution of agriculture to Net National Product.

In 1950-51, the share of agricultural sector to the domestic product was 48.2%, and in 2009-10 it was only 12.3%.

The output in the secondary sector comprising industries, construction electricity etc., accounted for 10.6% of the GDP in 1950-51.

In the year 2007-08 its share to GDP increased by 19.2%.

The tertiary sector includes, trade, transport, communications and service.

During the five decades of economic planning the share of the tertiary sector has increased from 34% in 1950-51 to 63% in 2007-08.

Mention structural changes in Indian economy? Structural changes in Indian economy include the following: 1. Changing sectorial contribution to domestic product. 2. Changes in the occupational distribution of population 3. Expansion in Social overhead capital 4. Progress in banking and financial sector and 5. growth of basic capital goods Globalisation the world industries. rating our economy with Globalisation means integ can sell their s ducers of other countrie What are the economy. As a result, pro ise India can also sell its ia and likew changes in the goods and services in Ind of globalisation, sectorial contribution er countries. As a result s and services in oth good mically interto domestic product? the world become econo the different countries of The important dependent on each other. indicator of develop

Explain the changes in the occupational distribution of population in India? During the period 1951, the agriculture accounted for 69.7% of the work force. During the period 1991-2001, there has been a substantial fall in the share of agriculture in the total employment from about 67.4% in 1991 to about 57.3% in 2001 as per Census. The share of the secondary sector has improved from 12.7% to 17.6% during the decade. Similarly in the tertiary sector to about

25.2% in 2001 as against only 20.4% in 1991.

Briefly explain the growth of Basic Capital Goods Industries

Write a short note on Social Overhead Capital

Under the second plan, high priority was

accorded to capital goods industries,

Social over head

capital comprises transport facilities, irrigation system, energy production units, educational system and organisation and health facilities.
mensions of in the three base di easures deprivations thy life The HPI m I: A long and heal captured in the HD t by the human developmen age, as measured at a relatively early ath wledge - Exclusion vulnerability to de ing at age 40. Kno at birth of not serv easured by the probability munications, as m of reading and com access to from the world of living - lack of A decent standard . ghted adult illiteracy rate red by the unwei isioning, as mea su out onomic pr ov the population with The transport system over all ec , the percentage of e percentage of two indicators water source and th in India has grown average ss to an improved able acce five. both in capacity and sustain t for age less than ildren under weigh of ch modernisation. as their development was considThe Indian road netered a pre-requisite to overall growth of work is now one of the largest in the world the economy. as a result of spectacular development of Among the large number of industries roads under various plans. which have developed during the planning The total road length comprising national period on a big scale, iron and steel, heavy highways, state highways and other roads chemicals, nitrogenous fertilizers, heavy was 3.3 million kms in 2003. engineering, machine tools, locomotives, heavy electrical equipments, aluminium, Irrigation facilities in the country have inpetroleum products of strategic imporcreased raising irrigated area from 2.26 tance. These industries now account for crore hectares in 1950-51 to 8.5 crore more than fifty percent of the industrial hectares in 2003 - 2004. production.

d Human Poverty In

ex (HPI)

U NEMPLOYMENT
?

Explain recent trends in unemployment in India. The unemployment rate (number of person unemployed per 1000 persons in the labour force), according to usual status, was 17 in the rural areas and 45 in the urban areas. The unemployment rates for females are found to be higher than that for males and highest among urban females. In both rural and urban areas, unemployment rate among the educated (secondary and above) was higher than that among those whose education level was lower. The unemployment rate was much higher among the youth (15-29) as compared to that in the overall population. The projected increase in total labour force during the Eleventh Five Year Plan is estimated at 45 ? million. It is also projected that 58 million employment opportunities would be created in the Eleventh Five Year Plan period. What are the major initiatives in the social sector? Major initiatives in the social sector are the following: ? 1. Aam Admi Bima Yojana (AABY): Under the new scheme called Aam Admi Bima Yojana launched on October 2, 2007, insurance to the head of the family of rural landless households in the country will be provided against natural death as well as accidental death and partial/permanent disability. The premium to be charged under the scheme is Rs. 200 per annum per member, 50 percent of which is to be contributed by central government and remaining by loyment state governments. Seasonal unempined to agricultural sector 2. Rashtriya Swasthya ment is conf mand for Seasonal unemploy Bima Yojana: This ri culture . Th e de pr edominat e in ag rvesting be ca us e na ture e of sowing and ha scheme was formally incr ea se at the tim r the agriculture labour ght months and fo launched on October 1, ment for six to ei ploy w or ke rs re mai n which provides em 2007. All workers in the th e ag ri cu ltu ra l pe ri od mos t of re mai ni ng unorganized sector who unemployed. come in the category of

Below Poverty Line (BPL) and their families will be covered under the scheme. The scheme also has a provision of smart card to be issued to the beneficiaries to enable cashless transaction for health care. 3. National Old Age Pension Scheme (NOAPS): Under the scheme, the central government provides Rs. 200 per month of financial assistance per beneficiary. The eligibility criteria for NOAPS has been recently modified from Who is 65 years or above and a destitute to one who is 65 years and above and belonging to a household below the poverty line. 4. Ujjwala Scheme: The scheme was launched on December 4, 2007, it has five components namely prevention, rescue, rehabilitation, reintegration and repatriation. What is unemployment Rate The unemployment rate is a measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labour force. Types of Unemployment Economists distinguish between various overlapping types of and theories of unemployment, including cyclical or Keynesian unemployment, frictional unemployment, structural unemployment and classical unemployment. Some additional types of unemployment that are occasionally mentioned are seasonal unemployment, hardcore unemployment, and hidden unemployment.

Anti-Poverty & Employment Generation Programmes (Rural) launched in Five Year Plans
Schemes/Programmes FOURTH FIVE YEAR PLAN 1. Crash scheme for Rural Employment (CSRE) 2. Pilot Intensive Rural Employment Programme 3. Drought-Prone Areas Programme (DPAP) FIFTH FIVE YEAR PLAN 4. Food for Work Programme (FWP) 5. Antyodaya Yojana SIXTH FIVE YEAR PLAN 6. National Rural Employment Programme (NREP) 1971-72 For rural development through the generation of new employment. 1972-73 Construction work in villages. 1973-74 To develop natural resources in drought prone rural areas. 1977-78 To provide food for work in development process 1977-78 To give economic assistance to families living below poverty line. 1980-81 Helping that segment of population which depend largely on wage employment by providing gainful employment. 1983-84 To expand the employment opportunities for the rural handless. 1979-80 To generate self-employment of the poor households through the transfer of productive assets. 1980-81 To promote self-employment of the poor house holds through the transfer of productive assets. 1988-89 To provide open irrigation wells, free of cost, to poor small and marginal farmers belonging to SCs/ STs and free bonded labourers. 1989-90 Generation of gainfull employment for the unemployed and under-employed, men and women to rural areas 1992-93 To make rural women self-reliant by organizing them in groups 1993-94 Providing assured employment of 100 days of unskilled manual work to the rural poor. 1994-95 To provide self-employment to educated unemployed by setting up of seven lakh microenterprises. Year Main Objectives

7. Rural Landless Employment Guarantee Programme (RLEGP) 8. Training of Youth for Self Employment 9. Integrated Rural Development Programme (IRDP) (TRYSEM) SEVENTH FIVE YEAR PLAN 10 Million Wells Scheme (MWS)

11.Jawahar Rojgar Yojana (JRY)

EIGHTH FIVE YEAR PLAN 12 Development of women and children in Rural areas (DWCRA) 13.Employment Assurance Scheme (EAS) 14 Prime Minister Rojgar Yojana (PMRY)

NINTH FIVE YEAR PLAN 15 Jawahar Gram Samridhi Yojana (JGSY)

1999-2000 To create employment and durable assets in rural areas. 16 Swarnajayanti Gram Swarozgar Yojana (SGSY) 1999-2000 Promoting micro-enterprises and helping the rural poor in self-help groups. 17 Swarnajayanti Shahari Rojgar Yojana 1997-98 To provide gainful employment to the urban, unemployed or under-employed poor by

18 Pradhan Mantri Gramodaya Yojana (PMGY) 19 Sampoorna Grameen Rozgar Yojana (SGRY)

encouraging the setting up of self-employment ventures or provision of wage employment. 2000-01 Improving the quality of life of people in the rural areas. 2001-02 To generate employment opportunities by emphasizing the growth of drought-proofing watershed development aforestation and construction of school buildings. 2002-03 To provide employment guarantee to the unemployed in the most distressed districts of the country. 2004-05 To intensify the generation of supplementary wage employment. 2006 To entitle the rural poor to guaranteed employ ment for hundred days. It expanded from 200 districts to all 614 rural districts of India, effective from April 2008.

TENTH FIVE YEAR PLAN 20 Jai Prakash Rojgar Guarantee Yojana (IPRGY)

21 National Food for Work Programme (NFWP) ELEVENTH FIVE YEAR PLAN 22 National Rural Employment Guarantee Act (NREGA)

What is meant by regional imbalance?

The co-existence of relatively developed and economically backward states and even regions within each state are known as regional imbalance. This problem of extreme regional imbalance is very acute in India. Some states are economically advanced and some are backward.

What are the factors responsbile for regional imbalance?

The following factors indicate the regional disparities. i. Industrially developed states have high per capita income compared to the backward states. ii. The areas where there are more people below poverty line indicate regional imbalance. iii. The industrialised states like Punjab and Haryana have progressed in agricultural production. In industrially backward areas like Assam and Orissa even the agricultural

production techniques and yields are worsened than that in advanced states. iv. The percentage of urban population is higher in industrially developed states. v. Electrification in the backward state is still limited. vi. States like Punjab, Haryana, Maharashtra have better transport and communication systems, banking, insurance, public health etc compared to backward regions. What are the measures to remove regional disparities? The Planning Commission of India sought to tackle the problem of regional disparities and backwardness in three ways : (1) The recognition of backwardness as a factor to be taken into account in the transfer of financial resources from the centre to the states. (2) Special area development programmes directed at the development of backward areas and (3) Measures to promote private investment in the backward areas.

INDIAN AGRICULTURE
?

What are the main objectives of RKVY? The main objectives of schemes are 1. To incentivise the states to increase public investment to achieve 4% growth in agricultre and allied sectors during 11th plan. 2. To provide flexibility and autonomy to the states in planning and executing agriculture and allied sector schemes. 3. To ensure the preparation of plans for the districts and the states based on agroclimatic conditions, availability of technology and natural resources. 4. To ensure that the local needs crops priorities are better reflected. 5. To achieve the goal of reducing the yield gaps in important crops, through focused interventions. 6. To maximize returns to the farmers. What are the different types of cultivation? 1. Depending on the environment, different types of cultivation systems operate in various parts of the world. Some important agricultural practices are: Sedentary Cultivation: Also called settled cultivation, it is the practice of continued use of land year after year. This is Yojana (RKVY) iya Krishi Vikas the states to increase the Rashtr the normal practice e to incentivise ccordingly, This is a programm in most parts of the their state plans. A ent in agriculture in Krishi world, including share to investm oved the Rashtriya e government appr , th India. crores for on August 16, 2007 cation of Rs. 25,000 KVY) with an allo Shifting Culti annual Vikas Yojana (R eving the 4 percent RKVY aims at achi e vation: This system Year Plan the Eleventh plan. Th g the Eleventh Five works on the oppo riculture sector durin allied growth in the ag t of agriculture and site principle. Land is holistic developmen a period by ensuring used for a few years se ct or s. until the fertility level

drops. The farmer then moves on to a new plot of land. This is practiced by less advanced societies in the tropical regions. In India, it is practiced mostly by tribals. It is called jhum in Assam, podu in Andhra Pradesh and Orissa, and bewar, masha, penda and bera in various parts of Madhya Pradesh. Other areas of shifting cultivation are South East Asia, Africa and parts of Latin America. Terrace Cultivation: In mountainous areas, cultivation is done on terraced fields in a manner not very different from settled cultivation in terms of the land use. This method is adopted to conserve soil on steep slopes. Wet or Irrigated Cultivation: This is the practice of farming with the help of irrigation in regions where rainfall is not adequate or where it is highly seasonal. Rice and sugarcane are crops typical of this system of cultivation in India. Dry Cultivation: Dry farming is done in areas where there are no irrigation facilities and the rainfall is also limited in amount. Crops grown here are resistant to dry conditions. In some areas, crops grown normally by irrigated cultivation are also grown without irrigation facilities. Large areas of Russia, South West Asia, North America, Australia and India come under this type of farming.

Write short notes on Intensive and Extensive Farming. tion Intensive farming or Rainbow Revolu , has been described as 00 cultivation is the icultural Policy 20 tions. New National Agr system under which a udes various revolu hich incl ow Revolution w Rainb small area of land is Foodgr ains Green Revolution Milk cultivated intensively White Revolution Oilseeds and the input of manual Yellow Revolution labour, manure, fertili Fisheries Blue Revolution sers etc., per unit area is Meat and Tomato Red Revolution Fr uits very high. This system Golden Revolution Fertilizer is thus, labour intensive gy sources Grey Revolution and is practiced in areas conventional Ener lution Non Black/Brown Revo Egg of high population density Silver Revolution Potato and per hectare yields are Round Revolution higher, as the emphasis is on increasing productivity. Kharif crops: Major kharif crops are rice, Rice cultivation in West jowar, bajra, maize, cotton, sugar cane, sesame Bengal is an example of intensive farming. and groundnut. These crops are also known Under this system of cultivation, farmers try as summer crops. They are sown before the to raise as many crops as possible from the onset of the rainy season, from May to July, same plot of land. Farming in countries like and harvested after the rains in September. China, Japan, India, East Asian countries and Rabi crops: Major rabi crops are wheat, most countries of Western Europe is typically jowar, barley, gram, linseed, rapeseed and intensive. mustard. They are also called winter crops. Extensive Farming is just the opposite. It is They are sown in the beginning of winter practiced on large farms with the help of season, from October to December, and machines. The input of labour and animal harvested before the summer season, from power is less. As much of the land is possible February to April. only in areas of lower density of population. Zaid crops: Zaid crops are grown in the Per hectare production and the use of short periods after the harvest of the kharif fertilisers are both low. An example of this and rabi crops, before the next major cropping type of farming is the cultivation of wheat in season. Green vegetables mainly sown in North America and Australia. Specialisation of February to April after the harvest of rabi crops crops is the hallmark of extensive farming. and harvested by June and July are called zaid However, with increasing demand for rabi crops. Similarly, after the harvest of agricultural products, the character of Kharif crops in September ,crops like oil seeds extensive farming has changed in recent and some pulses are grown. They are called years. Use of chemical fertilisers and irrigation zaid kharif crops. are now adopted to increase per hectare yields. ? What is drip irrigation? Why is it What are the three main crop seasons considered the most efficient method of of India? irrigation? In India, there are three main crop seasons, namely kharif, rabi and zaid. Drip irrigation also called trickle irrigation

is a method by which water is conveyed to plants through a series of plastic tubes either on the ground or laid underground. Water is transmitted through tubes with diminishing diameter till it reaches the openings called emitters at points near the location of plants. The water flow is controlled and only the soil directly around the plants receives moisture. Thus there is no wastage of water which makes for the efficiency of the system. Drip irrigation can be used on all types of soils and crops. It can cover any sort of terrain also. It is an ideal method in water scarce areas. However, because of its high cost, it is generally used for high value crops like fruits and vegetables.

Write a short note on sericulture in India Sericulture is the art of rearing silk worms. The silk worm requires large quantities of leaves for feeding. The mulberry is one of the important trees which can provide a huge supply of leaves to this worm. Silk may be collected from the cocoons of moths. The cocoons are put into hot water to remove the gummy coating and the filaments are then reeled. The process may be carried out by hand but it is also done in small factories called filatures. The filament from several cocoons, are unwound and twisted together to give a stronger thread. Explain the importance of irrigation in India. What are the sources of irrigation and their general distribution? The distribution of rainfall in India indicates three major rainfall regions according to water sufficiency (1) rainfall sufficient region with more than 100 cm per year; (2) medium rainfall region between 75-100 cm and (3) rainfall deficient regions with less than 75 cm. While irrigation is necessary in the rainfall sufficiency regions during the dry season, it is absolutely essential for agricultural operations in the other two regions. Major

sources of irrigation are canals, tanks and wells. 91 % of agricultural land in Punjab is under irrigation, 60% in Haryana, 49% in UP and 48% in Tamil Nadu. Well irrigation accounts for 48% of irrigation in India largely in Gujarat, Rajasthan and UP. Tank irrigation is about 8% and the all India average canal irrigation is 40%. Horticulture Horticulture is the cultivation of flowers, fruits and ornamental plants. India with its wide variability of climate and soil, has good potential for growing wide range of horticultural crops such as fruits, vegetables, potato, tropical tuber crops and mushrooms, ornamental crops, medicinal and aromatic plants, spices and plantation crops like coconut, cashewnut, cocoa etc. India is the largest producer of fruits in the world and the second largest producer of vegetables. India enjoys the unique distinction of being the single largest producer, consumer and exporter of spices in the world. India is also the leading producer and exporter of the cashew in the world. Describe the functions of NABARD (National Bank for Agricultural and Rural Development) NABARD is the apex institution for providing credit facilities to agricultural and rural areas and it was established in July 1982. Since then it has taken over the agricultural credit functions of RBI. It provides credit to cooperative banks, RRBs and other financial institution approved by RBI. It is also associated with policy planning, operational and even monitoring levels for providing agricultural credit. Further NABARD provides assistance for non-farm sectors to promote integrated rural development. Operation Flood yielded positive results. Justify the statement. Operation Flood was launched by the

Government of India in 1970 to raise the milk production. It has been implemented in three phases. During the first phase (1970-75). Operation Flood was launched in four metros, ie. Delhi, Mumbai, Kolkata and Madras. In the second phase (1978-85), it was launched in Uttar Pradesh, Madhya Pradesh, Punjab, Rajasthan, Gujarat, Tamil Nadu, Haryana, Bihar, West Bengal, Maharashtra, Karnataka and Andhra Pradesh. The third phase (198794) was launched with a difference. The main objective this time was to increase production of milk with the help of village cooperative societies. During all the three phases, Operation Flood yielded positive results. At the time of its launching, in India per person consumption of milk was 105 grams. India today has become world's biggest producer of milk with the annual milk production reaching 108.5 million tonnes in 2008-09. What is the difference between food crops and cash crops? Food crops are foodgrains grown to meet the essential food demand of the population and include rice, wheat, coarse grains and pulses. Under subsistence agriculture, only food crops are generally grown to cover the requirements of the local community in a region. Cash crops are those cultivated for commercial purposes and sold in a semi-finished form with a view to improving the financial position rather than meeting community needs. What are coarse grains? The term coarse grains is applied to a number of foodgrains (other than rice and wheat) which are consumed by the poorer people. These include millets such as jowar, bajra, ragi etc. The byproducts from these grains are useful as cattle fodder. They are chiefly grown in Madhya Pradesh, Andhra Pradesh, Tamil Nadu, Uttar Pradesh, Karnataka, Orissa, Bihar, Maharashtra and Gujarat.

? What are the important cash crops in

India and where are they grown? Cash crops are divided into plantation crops and field crops. Important cash crops, along with the areas where they are largely grown are given below: (1) Plantation Crops: The important ones are coffee, tea, rubber, coconut and spices. Coconut is both a plantation and a field crop. Coffee is grown on the hill slopes of the three southern states, Karnataka, Kerala and Tamil Nadu; tea in Assam, West Bengal, Himachal Pradesh, Tamil Nadu, Karnataka and Kerala. Rubber is grown only in Kerala. Coconut is grown in Kerala, Karnataka, Tamil Nadu, Goa, Maharashtra and coastal areas of Andhra Pradesh, Orissa and West Bengal. (2) Field Crops: Important ones are cotton, jute, sugarcane, oilseeds and tobacco. Cotton is largely grown in Maharashtra, Gujarat, Tamil Nadu, Karnataka, Andhra Pradesh and Punjab. Jute is grown in Assam, West Bengal and to some extent in Orissa and eastern States. Sugarcane is produced mainly in Uttar Pradesh, Maharashtra, Tamil Nadu, Punjab, Haryana, Andhra Pradesh, Karnataka. Important states where oilseeds grown are Gujarat, Tamil Nadu, Andhra Pradesh, Maharashtra, Karnataka, Madhya Pradesh and Uttar Pradesh. Tobacco is mainly produced in Andhra Pradesh, Gujarat, Tamil Nadu and Karnataka. What is crop rotation? Explain it with an example. Crop rotation is used for maintaining soil fertility. Continuous cropping drains away soil nutrients. Crop rotation involves growing of different crops in a definite sequence on a piece of land to preserve its fertility. The most common crop rotation includes growing legumes in one season, which help fixation of nitrogen in the soil followed by growing such crops as cereals, cotton, etc., in the next season, which remove nitrogen from the soil. By rotating different types of crops in

successive years, soil fertility can be naturally maintained. Attack by insects and fungi is minimized. Weeds are kept down because there is no fallow period.

? What is meant by leguminous crops?

Which are the important leguminous crops? Leguminous crops are those whose growth rejuvenates the soil. These plants belong to the legume family, characterised by irregular sweet-pea shaped flowers. Leguminous plants have the capacity to synthesise atmospheric nitrogen and return it to the soil, thereby increasing its fertility. Another advantage is that they are generally drought resistant and do not require large quantities of water for cultivation. The most important leguminous crops in India are pulses and oilseeds. Pulses are rotated with other crops like sugarcane and rice to maintain soil fertility. Discuss the productivity of Indian agriculture in relation to the quality and quantity of its input. The direct inputs in agriculture are (1) water, (2) quality seeds, (3) manure and fertilisers. Machinery, pesticide, credit availability and fixed land tenure are indirect inputs but equally important. Use of inputs in India is not uniform. States like Punjab and Haryana have made great advances in the use of proper inputs and ushered in the Green Revolution and have gone in for mechanisation on a larger scale. Other states like Bihar and Orissa remain comparatively poor and stick to traditional methods of agriculture. A steady improvement in the quality and quantity of inputs together with improvement in irrigation facilities and land reform laws has enabled the country to achieve a production of 190 million tonnes of foodgrains by the end of the 9th Five Year Plan. What is meant by sustainable agriculture? How is it to be achieved? Sustainable agriculture refers to the ability of a farm to produce food indefinitely without causing irreversible damage to ecosystem health. Sustainable agriculture aims at achieving optimum results by linking modern technology

? Describe the following types of cropping:

mixed, double, multiple and relay cropping.
Mixed Cropping: In mixed cropping, crops are grown mixed in such a way that soil nutrients removed by some are replaced by other, at least partly. Since the different crops mature in different time period, the practice of mixed cropping enables growing two crops which are sown together but harvested at different times. They are so combined that the total output is larger than what it would be if only one crop was sown. Double Cropping: Double cropping involves growing of two crops in a year in sequence (as in crop rotation). It is mainly practised in areas where irrigation facilities are available or where rain is heavy enough for adequate soil moisture to be retained. In regions of perennial water supply, even three crops are taken if resources permit. Multiple Cropping: With the introduction of short duration varieties and water management practices, the trend of growing more than two crops in a year is called multiple cropping. Relay Cropping: Besides cropping done in sequence there is another type of intensive cropping called relay cropping in which one crop is undersown in a standing crop.

? What do you understand by agro

forestry? Agro-forestry consists of planting trees at the periphery of agricultural lands for improving productivity and economic returns in the form of tree produce. Planting of trees sustain the nitrogen in the soil, and also meet fodder requirement.

to the informal traditional system in India. This and small enterprises in rural areas; ie. non farm would ensure gains in production and activities. productivity without harm to the environment ? Write short note on agricultural prices. or the social organisation. According to Dr a) Minimum Support Prices: These prices M.S. Swaminathan, sustainable agriculture is are generally announced before the start of the determined by appropriate technology, sowing season. These prices are fixed for economic feasibility, environment friendliness, major agricultural commodities. This form of resource use efficiency and long run stability commitment is made by the government to the and social acceptability. Planning has to take farmers. In case of surpluses or glut in the into account these factors. market the government promises to buy the What is meant by Biofertilizers agricultural products at the announced price Biofertilizers are natural fertilizers. They are so that the farmers do not suffer due to very on the preparation of efficient strains of microlow prices. organisms capable of fixing atmospheric b) Procurement Prices: The prices at which nitrogen into available form, solubilising government buys surpluses from the farmers insoluble phosphate, producing growthcoming in the market. The minimum support promoting substances like vitamins and price and procurement price may be the same. hormones and also play considerable role in c) Issue Prices: These are the prices at which the decomposition of organic materials and fair price shops (public distribution system) enrichment of compost. Though biofertilizer sell cereals like wheat, rice etc. This is intended cannot replace chemical fertilizer, it can to safeguard the interests of low income group supplement it considerably. Biofertilizers consumer, although there is no bar on any one, enhance soil structure and texture waterincluding rich consumers, to buy from these holding capacity, supply of nutrients and help distribution depots. This is to mitigate proliferate beneficial micro-organism. fluctuations in prices. Explain the role of Land Development ? Agriculture Census Banks (LDBs) The first agriculture census was conducted Land development banks were set up for in 1970-71 and the seventh one which was providing long-term credit for: (i) effecting launched in 2001-02 is nearing completion. permanent improvements in land (eg. making The census is being carried out in three phases. wasteland fit for cultivation, digging wells or During the phase I a list is made of tubewells etc.); (ii) purchasing agricultural implements; and AGM AR K (iii) repaying old debts. redients of tion are the important ing Starting with pure land Grading and standardisa and ultura l produce (Grading mortgage banking in rketing. Unde r the Agric ma ding vernment ha s set up gra 1919, the LBDs have eting) Act 1937, the Go Mark ur, edible produce such as eggs, flo now become agricultural stations for agricultural for 15 1 ve als o be en lai d do wn and rural development oil , etc . St anda rds ha the sea l ods are sta mped wi th banks and their role and mmodities . Gr aded go co the goods. es ready acceptability of participation in providing AGMARK, which ensur Nagpur with a control Laboratory at assistance has increased. There is a central quality quality. labs to check and ensure LDBs now also grant large number of regional credit for fulfilling needs of rural cottage industries

all operational holding and their primary majority of small and marginal farmers. Lack characteristics such as location, area, gender of proper credit facilities, marketing outlets, and the social group of the holder. During the and scientific agriculture management have phase II detailed data on tenure, tenacy, land alienated farming community in the state. use irrigation, crop area are collected. phase ? Suggest a few effective measure to save III popularly called input survey, relates to agriculture in Kerala collection of data on agriculture inputs (seeds, Since agriculture is the backbone of Kerala fertilizers, pesticides etc.). economy, revival and rejuvenation of agriculture NAFED is a prerequistie for the development of the The National Agricultural Marketing Federation state. Co-operative farming should be (NAFED) of India Ltd. was set up in October 2, 1958. It functions as the coun Green Revolution wheat, trys national apex body duction, more specifically The spurt in agricultural pro Green of co-operative market popularly referred to as the latter half of the 1960s is in the HYV seeds of ing. NAFED promotes ed by the introduction of Revolution. It was achiev e of practices co-operative marketing lyan etc.,) and a packag whea t (Sarba ti Sona , Ka plementary of agricultural produce of chemical fertilizers, sup wheat which include application for the benefit of farmers es. It was first felt in the tion and chemical pesticid irriga it spread to the through its own branches rth-west. Subsequently, growing areas of the no its present and the co-operative West Bengal. India owes ea st and most notably to on. marketing network in the iciency to this phenomen position of food self-suff entire length and breadth of the country. encouraged among the small and marginal farmers so that their share of input Major Problems faced by Agriculture will be less and output become profitable. By sector in Kerala proper legislation convertion of agricultural land Kerala economy is heavily depending on for other purposes should be checked. agriculture. Therefore the ups and down in the Government should ensure adequate credit field of agriculture front in the state influences flow to the farming community with the help our economy. Recently Kerala faces great of financial institutions, banks, NABARD and challenges due to various factors such as liberal co-operative societies. Agricultural marketing import policy of central government, should be revitalised so that the middlemen convertion of agricultural fields to nonare eliminated and fair price will be guaranteed agricultural and construction purposes. To add to the cultivations. Disaster management fuel to the fire vagarious of monsoon and services should be kept into action to face the unexpected flood takes its toll. State opting for vagarious of nature. Scientific and cash crops due to the high expense of the technological solution should be put into action production food crops has created the precarious situation of depending to our when unexpected diseases are spread to crops neighbours for day today food requirements. like coconut, rubber, paddy etc. Effective Fragmentation of agricultural lands, high cost measures like providing subsidies to prices of of inputs such as seeds, fertilizers, pesticides inputs such as seeds, fertilizers and pesticide and high cost of labour and farming have made should be taken to help the genuine farmers to agriculture in Kerala a profitless enterprise for continue agricultural practices.

Application of bio-technology, genetic engineering, intensive and extensive farming licy 2000 National Agriculture Po ure policy was announced in practices, diversifi ricult The first ever National Ag cation of crops, d potential of tua lise the vast untappe July 2000. It seeks to ac cultivation of medicinal promote value then rural infrastructure, Indian agriculture, streng cre ate plants suitable to the owth of agro-b us ine ss, ion , ac ce ler ate the gr ad dit climatic condition of the of living for as, secure a fair standard employment in rural are state can definitely boost s and face the rkers and their familie far mers, agricultural wo agriculture in the state. and globalisation. challenges of liberalisation Micro Irrigation To enable judicious use of its 53rd meeting held on 29th May, 2007 the water and available adopted a resolution to launch a Food Security resources, a new scheme on Micro Irrigation Mission comprising rice, wheat and pulses to was launched during the Tenth Plan with a increase the production of rice by 10 million target to bring 6.2 lakh under micro irrigation. tons, wheat by 8 million tons and pulses by 2 Micro irrigation has helped in conserving water million tons by the end of the Eleventh Plan with added benefits of increased yield and (2011-12). Accordingly, a Centrally Sponsored improved quality, particularly of horticultural Scheme, National Food Security Mission, has crops. Micro Irrigation has been launched by been launched from 2007-08 to operationalise the Department of Agriculture and co-operation the above mentioned resolution. with the approval of cabinet on 29 December 2005. ? Components of NFSM Second Green Revolution: XIth Plan The National Food Security Mission has three Strategy. components The XIth Five year plan formulated a strategy National Food Security Mission - Rice to enhance agricultural production to 4%. Main (NFSM-Rice) focus areas are: National Food Security Mission - Wheat Doubling the growth of irrigated area. (NFSM-Wheat); and Improving water management, rain water National Food Security Mission - Pulses harvesting (NFSM-Wheat) Reclamation of waste lands and improving Mission Objectives soil fertility. Increasing production of rice, wheat and Promotion of animal husbandry and fishery. pulses through area expansion and Easy access to credit to cheaper rates productivity enhancement in a sustainable Refocusing on land reforms. manner in the identified districts of the Improving incentive structure and country; functioning of markets. Restoring soil fertility and productivity at Diversifyng into high quality outputs, fruits, the individual farm level; vegetables, flowers, herbs, spices etc. Bringing the knowledge gap. Creation of employment opportunities; and Comment on National Food Security Enhancing farm level economy (i.e., farm Mission profits) to restore confidence amongst the The National Development Council (NDC) in farmer.

INDUSTRY
?
Comment on Micro, Small and Medium Enterprise Development Act 2006.

Small and Medium Enterprise Development Act, 2006, has become effective from October 2, 2006. This Act makes a different category for medium level enterprises. Salient features of the Act are following 1. It provides the first ever legal framework for recognition of the concept of enterprise and integrating the three-tiers ? of these enterprises, viz, micro, small and medium. An industry growing quickly and expected to 2. Under the act, enterprises have been be increasingly important in future is termed as sunrise industry. And the industry growing categorized broadly into two and have slowly or declining is called sunset industry. further classified into three. They are The sunrise industries consists of high i. Manufacturing enterprises technology manufacturing industries featuring Micro enterprises - investment upto Rs. 25 automated and computerised processes. On lakh. Small Enterprises - investment above Rs. these industry, it is said that the economic sun 25 lakh and upto 5 crores. Medium Enterprises is rising. - investment above Rs. 5 crore and upto Rs. 5 crore. ? What is National Productivity Council ii. Service enterprises (NPC) Micro Enterprises - Investment upto Rs. 10 NPC is an autonomous body formed to lakh. Small Enterprises - Investment above inculcate productivity consciousness in Rs. 10 lakh and upto Rs. 2 crores. Medium Enterprises investment above Rs. 2 crore and tion of Standardisation) - (International Organisa ISO upto Rs. 5 crores. though veloper of standards. Al is the worlds largest de ISO 3. The Act provides standards, ISO velopment of technica l ISOs activity is the de for a statutory repercussions. rtant economic and social standards also have impo consultative mecha manufactu making the development, standards contribute to safer ISO nism at the national ser vices more efficient, supply of products and ring and level with wide ier and fairer. des between countries eas and cleaner. They make tra representation of all 148 countries, nal standards institutes of ISO is a network of natio sections of stake l secretariat per country, with a centra the basis of one member on holders. . that coordinates the system in Geneva, Switzerland, 4. The other features include

i. establishment of specific funds for the promotion, development and enhancement of competitiveness of these enterprises, ii. notification of schemes/programmes for this purpose iii. progressive credit policies and practices, iv. preference in Government procurements to products and services of the micro and small enterprises, v. more effective mechanisms for mitigating the problems of delayed payments to micro and small enterprises and vi. simplification of the process of closure of business by all three categories of enterprises. Distinguish between Sunrise and Sunset Industries

industries. It was established in 1958. There are regional offices throughout the country and it endeavours to create productivity consciousness in the country by applying modern methods and techniques for increasing production.

What are the differences between smallscale and cottage industries? ? The difference between the smallscale and cottage industries are basically two: The organised cotton textile industry is one (i) While small scale industries are mainly of the oldest and the most firmly established located in urban centres as separate establisindustries in India. India is the leading exporter hments, the cottage industries are generally of cotton fabrics and ready made garments. associated with agriculture and provide Textile sector provides 14% of total industrial subsidiary employment in rural areas and production in India. It has given direct (ii) While small scale industries produce goods employment to about 35 million people. with partially or wholly mechanised Together with agriculture it gives 90% of total equipment employing outside labour, the employment. In India the largest number of cottage industries involve operations mostly workers are employed. In the cotton textile by hand which are carried on primarily with industry the most important small scale the help of the members of the family. industry is Handloom industry. Iron and Steel Industry ? Write short note on Navratna, Maharatna and Miniratna. Iron and Steel is the backbone of modern Navratna title has given to the most successful industrial civilization. It is one of the most nine Public Sector Enterprises (PSEs) of India important basic materials not only in industry in the year 1997. but in all phases of life. The first Iron and Steel unit of India on modern lines was erected at dards (BIS) Bureau of Indian Stan uti on for drawi ng up Porto Novo (Tamil ental ins tit Nadu) in 1930. The BI S is a quasi governm s established of Indian industry. It wa credit for the production standards for the products ducts, known as ty marks to va rious pro of steel goes to Shri J.N. in 1947 and allots quali ntally friendly s Ecomark to environme Tata who set up and ISI mark. BIS also issue Institute. own as Indian standards cts. BIS was earlier kn registered Tata Iron and produ Steel Company (TISCO) Now the number of Navratna at Jamshedpur in 1907. companies have risen to 19. These Navratna This was followed by the establishment of companies are profit making and globally the Indian Iron and Steel Company (IISCO) competent companies of India. These at Burnpur on 1919. After Independence, the industries and companies are the pride of India, second five year plan gave top priority to the have their mark of presence in the global development of Iron and Steel industry. The economy. Navratna status allowed them three steel plants were set up at Bhilai (1959), greater autonomy to compete in the global Rourkela (1962) and Durgapur (1956). A market.

number of steel plants were set up under 3rd and 4th plans. In 1973, the government set up the Steel Authority of India Ltd. (SAIL). It is now the main integrated steel company. The Iron and Steel Industry is mainly located in Jharkhand, Chattisgarh, Orissa and West Bengal, besides one plant in Karnataka (South India). Textile Industry

PSU companies are divided into following PBDIT (Profit Before Depreciation, Interest categories. and Taxes) to capital employed, PBDIT to Maharatna, Navratna, Miniratna CPSEs, turnover, EPS (Earning Per Share) and interCategory I and Category II. sectoral performance. Additionally, a company Maharatna Status must first be a Miniratna and have four In 2009, the government established the independent directors Maharatna status, which raises a companys investment ted Companies ceiling from Rs. 1000 Public Sector Disinves public sector undertakings has four crore to Rs. 5000 crore. The Ministry of Mines l Aluminium tra tive contr ol; Na tiona The Maharatna firms (PSUs) under its adminis CL) and Bharat Hindustan Copper Ltd (H would now be free to Company Ltd (NALCO), mining and operating in the field of decide on investments Ltd ld Mines Ltd (BGML) are Go Exploration Corporation upto 15% of their net processing, and Mineral mineral . The BGML field of mineral exploration worth in a project. Earlier, (MECL) is operating in the the Government March 2001. In addition the Navaratna companies however is closed since (BALCO) t Aluminium Company Ltd could invest upto Rs. lds 49% equity in Bhara ho er the ir tan Zi nc Lt d (H ZL) aft 1000 crore without 29 .54 % eq uit y Hi nd us an d government approvals. disinvestment. Maharatna CPSEs as on 01-02-2011 on its board before it can be made a Navratna. 1. Indian Oil Corporation Ltd. Miniratna Status 2. NTPC Limited 3. Oil and Natural Gas Corporation Ltd 4. Steel Authority of India Ltd. Navratna Status The Navratna status is offered to PSEs, which gives a company enhanced financial and operational autonomy and empowers it to invest upto Rs. 1000 crore or 15% of their net worth on a single project without seeking government approval. In a year, these companies can spend upto 30% of their net worth not exceeding Rs. 1000 crore. They will also have the freedom to enter joint ventures, form alliances and float subsidiaries abroad. Criteria: Navratna status is conferred by Department of Public Enterprises. To be qualified as a Navratna, the company must obtain a score of 60 (out of 100). The score is based on six parameters which include net profit to net worth, total manpower cost to total cost of production or cost of services. The government created another category called Miniratna. Miniratnas can also enter into joint ventures, set subsidiary companies and overseas offices but with certain conditions. In 2002, there were 61 government enterprises that were awarded Miniratna status. However, at present, there are 42 government enterprises that are awarded Miniratna status. Category I: This designation applies to PSEs that have made profits continuously for the last three years or earned a net profit of Rs. 30 crore or more in one of the three years. These miniratnas granted certain autonomy like incurring capital expenditure without government approval upto Rs. 500 crore or equal to their net worth, whichever is lower. Category II: This category include those PSEs which have made profits for the last three years continuously and should have a positive networth. Category II miniratnas have autonomy to incuring the capital expenditure

without government approval upto Rs. 300 crore or upto 50% of their net worth whichever is lower. What are the important centres of the leather goods industry in India? Leather industry is of ancient origin but the modern leather industry in India began about 200 years ago, when the East India (EI) tanning process was developed in Madras. The bulk of the hides (buff & kips) is obtained from fallen cattle. Kolkata, Kanpur, Chennai and Coimbatore are large markets for hides and are centres of the leather industry. Leather goods are fashioned from tanned products. The leather industry is highly labour oriented and has a large export market. It is therefore a major factor in the Indian Economy. What is meant by mineral-based industries and agro-based industries? Give two examples of each. Industries using mineral raw materials are mineral based such as iron and steel (from iron ore) and aluminium (from bauxite). Those using agricultural products as raw materials are agrobased like sugar (from sugarcane) and textile (from cotton).

responsible for industrial sickness?

1. Lack of management expertise 2. Non-observance of the basic principles of business management. 3. Under-utilisation of capacity 4. Easy approval of small-scale units by state RBIs statement about sickness, a unit is considered sick if it has incurred cash losses for one year and in the judgement of the financing bank, is likely to incur cash losses for the current as well as following year. Write a short note on Disinvestment Commission. In August 1996, a five member disinvestment Commission was set up under the Chairmanship of G.V. Ramakrishna, former Planning Commission member and a former Chairman of SEBI, with an aim to introduce mass ownership and promoting workers shareholding. The process was expected to eventually transform the existing state-owned enterprises into truly public - owned companies. The detailed disinvestment strategy were : a. to draw a long-term disinvestment programme with 5-10 years for the PSUs referred to it. b. to determine the extent of disinvestment in each PSUs . c. to priorities PSUs reformed to it by the

State the role of Pharmaceutical Industry in India. This is one of the oldest industries in India. Antibiotics are produced at Pimpri and Rishikesh. The Hindustan Antibiotics plant at Rishikesh is one of the largest in the world. Another important plant produ strial Sickness cing the pharma Signals of Induuid funds to meet short-term financial liq ceuticals is the Indian obligations. a) Shor ta ge of so to meet statutory ns of creditors as al Drugs and Pharma obligatio s cessive inventorie ceuticals Ltd unit at b) Growth of ex term loans of interest on Hyderabad. India is now c) Non-payment n of capacity recognised as one of the d) Under-utilisatio stment leading global players in e) Return on inve ratios of certain financial this industry. f) Maintenance What are the factors

core group in terms of the overall disinvestment Zones (SEZs) programme. Special Economic essing area where alone the d. to recommend the d into a proc where the Every SEZ is divide n-processing area preferred mode of e set up and a no SEZ units ar ted. disinvestment. ucture is to be crea port. supporting infrastr a major boost to ex ed to e. to supervise the special zones intend governing These are d regulations overall sale process free of all rules an They are operated units. and take decisions on ey produce is import and export everything that th the instrument, as well rtant thing is that The impo as pricing. erated in this exported. and banking are op s relating to labour f. to select the financial Only law t up SEZs. advisors for the zones. orate entity can se government or corp tal goods and Any state specified PSUs to free import of capi ld be allowed duty SEZs wou facilitate the raw materials. disinvestment process. g. to ensure that appro priate measure are taken ? ASSOCHAM during the disinvestment process to protect the interest of the affected employees. The Associated Chambers of Commerce and Industry of India (ASSOCHAM) is the What are the main objectives of SEZ premiere body of chamber of commerce in Act? India. Established in 1920. It currently has a The SEZ Act, 2005, supported by SEZ Rules, membership of over 100,000 companies came into effect on February 10, 2006. The across the country. The organisation main objectives of SEZ Act are generation of represents the interests of trade and additional economic activity, promotion of commerce in India, and interacting with the exports of goods and services, promotion of Government of India on policy issues, and investment from domestic and foreign liaisoning with their international counterparts sources, creation of employment opportunities to promote trade between India and other and development of infrastructure facilities. nations. Write a note on Export Processing Zones (EPZs). ? Confederation of Indian Industry

It was set up to promote the exports. They are intended to provide an

internationally competitive duty -free environment for export promotion of low cost. These zones are enclaves, separated from domestic tariff area by fiscal barriers. The product of EPZs are competitive both in terms of quality and quantity in the international market.

The Confederation of Indian Industry (CII) is a non-government, not-for-profit, industryled and industry-managed organisation, playing a proactive role in Indias development process. The organisation works to create and sustain an environment conducive to the growth of industry in India, partnering industry and government alike through advisory and consultative processes. The confederation is headquartered in New Delhi.

Major Industries and their specialities

TEXTILE 1. Contribution of about 14% of the value addition in the manufacturing sector. 2. 4% of the GDP 3. Employment to about 35 million persons. 4. Contribution of about 16.63% in gross export earnings, while adding only 2-3 per cent of the gross import bill. 5. Two schemes of textile industry, namely Technology Upgradation Fund Scheme (1999) (TUFS) and the Scheme for integrated Textile Parks (SITP) launched in 2005, have been approved for continuation in the XIth plan. JUTE 1. India tops in production of raw jute and jute goods and second in export of jute goods. SERICULTURE (SILK) 1. India is the second largest producer (18% of total production) of raw silk. 2. Labour intensive, and hence employment oriented, provides employment to 6 million. AUTOMOTIVE INDUSTRY 1. 100% FDI is permissible under automatic route. 2. During the last couple of years, the export in this sector has considerably grown owing mainly to the exports of car, two/three wheelers. STEEL 1. India is the third largest crude steel producing country in the world; largest producer in sponge iron. 2. India imports hot rolled coils, cold rolled coils, and semis, and exports finished steel. 3. For the year 2009-10, estimated steel production is 54.52 MT FERTILIZERS 1. India is the third largest producer of nitrogenous fertilizers in the world. 2. To make available fertilizers to farmers to affordable prices, the Government provides subsidy on urea, which is the only fertilizer at present under statutory price control, and concession on decontrolled phosphatic and potassic fertilizers (P & K). For the year 200809, fertilizer Subsidy Bill is around Rs. 49,980 crore. 3. Public sector has been playing a dominant role in the fertilizer industry. CHEMICALS 1. It accounts for about 17.6% of the manufacturing sector and also 14% in total exports of the country and 9% in imports. 2. India ranks 12th in the world and 3rd in Asia by volume in the world production, and contributes to the national revenue by about 20% of custom and excise duties. SUGAR INDUSTRY 1. Largest consumer and second largest producer of sugar in the world. Accounts for 15% world sugar production. 2. Second largest agro based industry. PAPER INDUSTRY 1. Ranked among 15 top global paper producing countries. 2. Contributes Rs. 2500 crore to national revenue. 3. Paper Industry was completely delicenced in 1997. GEMS & JEWELLERY 1. This sector contributes 12% and Indias total merchandise exports. 2. India is the largest cutting & polishing centre of diamonds in world both in terms of quantity and value. PETROLEUM INDUSTRY 1. The domestic refining capacity in 2006-07 was 148.97 million tonnes/year. 2. In 2005-06 petroleum imports was valued at Rs. 197277 crores while exports and petroleum products was valued at Rs. 46,785 crores. LEATHER 1. Provides employment mainly to people from disadvantaged sections. 2. 30% of workforce in the sector is remaining. 3. 10% of worlds leather supply produced in India. CEMENT 1. India ranks second in the production of cement. There are 159 large cement plants with an installed capacity of 11.10 MT per annum.

INFRASTRUCTURE
?
Explain the term infrastructure. Discuss the different types of infrastructure. The infrastructure of an economy and the development and expansion of all the facilities in the economy are an essential pre-condition for increasing agricultural and industrial production in a country. Infrastructure facilities often referred as economic and social overheads and consist of i) Energy - coal, electricity, oil and non-conventional sources. ii) Transport - Railways, roads, shipping and civil aviation. iii) Communication - Post and Telegraph, telephone, telecommunications etc. iv) Banking, finance, insurance v) Science and technology vi) Social overhead-health, hygiene and education. Describe the importance of the means of transport in the economic life of India. Transport system of a country refers to the different means which carry men and materials from one place to the other. It consists of railways and road transport on land, water transport, shipping and air transport. The transportation system plays an important role in the economic life of India. The expansion of market for any commodity solely depends upon the transportation network. In India, before the development of railways agriculture was largely subsistence oriented. Railways have commercialised it. This has increased market supply of agricultural goods. Extension of roadways has made the remote corners of India accessable. Because of extensive water transport system the volume of Indias foreign trade is quite

large. By proper transportation network the benefits of specialisation of labour and proper mobilisation of resources can be achieved. Explain the development of railways since independence. From a modest beginning in April 1853, when the first railway train steamed off from Mumbai to Thana, a stretch of 34 km, the Indian railways, with a route kilometrage of more than 63,221 comprising broad gauge (46,807 km) 81.62%, metre gauge 15.2% (13,290 km) and narrow gauge 3.21% (3450 km) have now grown into Asias largest and worlds fourth largest railway system. It is also the biggest public undertaking in the country. About 28% of the route km, 36% of the running track km and 39% of the total track km is electrified. During the 11th plan Railways will also undertake a major initiative, in shifting to PPPs for building and operation of selected rail infrastructure. In the freight segment, the capacity of the rolling stock needs to be improved through appropriate changes in design of wagons and making them lighter to increase pay load to fare ratio.

Describe the development of road transport system in India. The countrys road network consists of national highways, state highways, major district roads, other district roads and village roads. Out of the total length of national highways, about 30 percent length is single lane/intermediate lane, about 53 percent is twolane standard and the remaining 17 percent is four-lane or more standard. Though national highways comprise only about 2% of the total length of roads, they account for about 40% of the total traffic. During 2008-09, an amount of Rs. 9,329.85 crore has been provided for the national highways and for state roads out of the same. Of this Rs. 6,972.47 crore is for national highways and Rs. 2,171.64 crore for

the state roads. An amount of Rs. 185.74 crore has also been allocated during 2008PPP model rac tive 09 for development of elf is be comi ng an att ia the inf ras tructure its In Ind state roads. Investment ment). In this Is (Foreign Direct Invest investment area for FD give a best during the Eleventh for government alone to aspect, it is not possible the publicPlan is likely to be Rs. the government adopted uir ed quality. Therefor e, req ipation 180,000 crore in NHDP l. The private sector partic partnership (PPP) mode privatecovering 7 phases re. A large share al gap in the infrastructu helps to reduce the region partnerships spanning to be covered ia have been public-private of transport projects in Ind dels can be by 2012. ay system. The PPP mo expand the national highw to categories: State the classified into five broad projects development of ent contracts, 2. Turkey 1. Supply and Managem rship of assets and 5. Private owne ports in India. 3. Lease , 4.Concessions The ports act as tranship ment point between water ? Briefly discuss the development of transport and service transport and conventional sources of energy. therefore, play a crucial role in the trans Coal, oil, natural gas, nuclear material and portation system for facilitating international water power are at present major sources of trade. There are 13 major ports and 187 minor/ conventional forms of energy. Electricity produced from these conventional forms of intermediate ports along Indias 5600 km energy is used by many industries. Per capita coastline. The major ports handle about 75 consumption of electricity is often considered percent of the port traffic of the country and as an indicator of economic development. Of remaining 25 percent is handled by minor/state the total installed capacity of 12,4287 MV, ports. thermal power accounted for 67%, hydel power accounted for 26%, nuclear power Briefly discuss the development of and others accounted for 3% and renewable power sector. energy resources constitute about 4%. The growth in electricity generation by power ? Write a short note on Jawaharlal Nehru utilities during 2008-09 at 2.7% fell much National Urban Renewal Mission short of the targeted 9.1%. Despite the sharp (JNNURM) decline in hydro and nuclear generation in JNNURM launched by the Prime Minister 2008-09, the growth in total electricity on December 3, 2005 to encourage cities generation was positive due to the 5% plus to initiate steps to bring about growth in thermal generation. In keeping with improvement in the existing service levels the target set by the National Electricity Policy in a financially sustainable manner. (NEP), 2005 to raise per capita availability The objectives of the mission, inter alia, from 704 units in 2007-08 to 1000 units per include planned development of identified annum by the end of 2012, a capacity addition cities including semi-urban areas, of 78,700 MW has been set for 11th Five Year outgrowth and urban corridors and Plan, of which 19.9% is in the hydel sector, improved provision of basic services to 75.8% thermal and the rest nuclear. the urban poor.

 The duration of the mission

would be seven ct Sagar Mala Proje years begin ning infuse a ensional project to from 2005-06. oject is a multi-dim Sagar Mala pr of water tra nsport neglected sectors The mission has into some of the well as making new life coastal shipping as subsumed the follond waterways and an shipping such as inla r so as to make indi wing on-going scheof world class orde cr or e the large parts w or ld . 1, 00 ,0 00 mes of the Ministry: mpe ti tiv e in the ports, in du st ry mos t co e sector, including Infrastructure Devecets of the maritim e fa l as maritime encompasses all th water ways as wel lopment in Mega ip building, inland shipping, sh Cities, Integrated ing. education and train Development of Small and Medium Towns fiscal deficit and control in the expansion and Accelerated Urban Water Supply of money supply. Programme. This was helpful to the poorer section of The admissible components under the the society because some items of mass mission include urban renewal, water consumption like cereals, pulses, edible oil supply (including de-salination plants) and registered a drop in their price during sanitation, sewerage and solid waste 1993-94 from 1992-93. management, urban transport, develop The double digit inflation continued for the ment of heritage areas, preservation of better part of 1994-95. water bodies etc. The total food inflation declined from A provision of Rs. 50,000 crores has been 20.2% in February 2010 to less than half agreed to as Central Assistance for at 9.3% in January 2011, it still remains a Jawaharlal Nehru National Urban Renewal principal concern. Mission (JNNURM) for a period of 7 ? Describe the measures of inflation in years beginning for 2005-06. India?

PRICE POLICY
?
Comment on Price situation during the Nineties and Later The price rise during 1990s was almost governed by govt; through administered price and rise in indirect taxes. The inflationary pressure was in primary commodities such as food grains, vegetables, sugar and edible oil. Average annual rate of inflation was 10.3 percent and 13.7 percent respectively. The inflation rate was controlled by the government through macro-economic corrections, including reduction in the

There are broadly two measures of inflation: 1. Wholesale Price Index and 2. Consumer Price Index. Wholesale Price Index (WPI) measures the mean of the changes of goods and services price on the basis of wholesale price. It explains the market economy as well as the economy growth. In India, it is the most popular price index used in the business industry and policy market. The new index, with 2004-05 as the base year, will have 240 new items and is expected to provide a more realistic picture of price rise and its impact on people. Consumer Price Index (CPI) relates to increase or decrease in retail prices. This has

a direct bearing on the living standard of a consumer. There are ce Index (WPI) different types of consew Wholesale Pri Govts N 240 items umer price indexes. 2004-05 and extra WPI has base year They are New series of in the list. er, with base year 1. Consumer Price nst 435 items earli have 676 items agai It will Index for Agricul base years 1993-94. tural (CPIAL) troducing the new have taken place in cking Five revisions o new CPIs for tra 2. Consumer Price Index cted to introduce tw Government expe for Industrial Workers y 2011 inflation by Januar (CPIIW) 3. C onsume r Pr ic e Index for Urban Non-Manual Employee (CPI UNME).

? Briefly explain the provisions of

Indian tax structure. To avoid any dispute between the centre and state in the field of taxation, the following constitutional provisions have been made. 1. Division of powers to levy taxes between the Centre and the States is quite unambigous. After 80th Constitutional Amendment was passed in March 2000, revenues from customs duties and the corporation tax are to be shared between the centre and the states along with other central taxes and duties. 2. The states also have the power to levy taxes and the revenue collection from them may be spent on their activities. The important taxes falling in this category are value added tax (VAT), states excise duties, land revenue, agricultural income tax and entertainment tax. 3. Union excise duties and taxes on income other than agricultural income constitute a central pool of tax revenue, which is shared between the centre and the states in accordance with the recommendations of the Finance Commission. 4. The power to levy and collect certain taxes is vested in the centre, where as their revenue proceeds are to be distributed among the states. e.g., Estate duty on property other than agricultural land. 5. Some taxes are levied by the central government, the responsibility to collect them is of the state governments. e.g., stamp duties

What are the different measures to control inflation? Important measures to control inflation are 1. Monetary Policy The central banks monetary management methods, the devices for decreasing or increasing the supply of money and credit for monetary stability is called monetary policy. Central banks generally use the three quantitative weapons, namely; i) Bank Rate Policy ii) Open Market operations and variable reserve ratio to control the volume of credit in an economy. 2. Fiscal Policy Fiscal Policy is budgetary policy in relation to taxation, public borrowing and public expenditure. To combat inflation, fiscal measures would involve increase in taxation and decrease in government spending. During inflation the government is supposed to counteract an increase in private spending. 3. Direct Controls It refer to the regulatory measures undertaken to convert an open inflation into a repressed one. Such measures involve the use of direct control on prices and rationing of scarce goods.

other than included in the union list and excise duties on drug etc. (DTC) Write a short Direct Tax Code ust, 2010. note on tax Parliament in Aug ll was introduced in 61, is Bi come-Tax Act, 19 Direct Taxes Code burden in India is to replace the In is is again a case w legislation which from April 2012. Th The easiest way to The ne me into force only shift to DTC scheduled to co al schedule was to know the tax es, since the origin ion ta x on of missed deadlin vy 30% corpor at burden is to find TC pr oposes to le es ent D inst ea d of the pr fr om Apr il 2011 . ss and surcha rge, out the Tax-GDP ing ce mpanies would be compa nies, incl ud rate for foreign co ratio. When the of 33.2%. The tax ying minimum combined levy the corporations pa tic companies. For process of econoe system of same as the domes continuation of th ther e is relief as ) e gross mic planning began alternate ta x (MAT rlier to link it to th its as proposed ea rate prof in India in 1950-51, d for 15 years, the assessment on book n be carried forwar credit ca d surcharge. the tax-GDP ratio assets. While MAT , including cess an to 20% from 19.93% is being increased was as low as 5.9 percent. Since then it ? What are the main recommendations of rose steadily upto the Kelkar Committee? 1991 and thereafter declined. In Indias tax structure there is a greater reliance on indirect taxes for revenue collection which shows that the canon of equity is not strictly followed. The agricultural income is still out of the income tax net. Kelkar Committee headed by Vijay Kelkar has recommended that fiscal consolidation should be revenue-led rather than based on reduction in expenditures. This report has also argued that the government should enhance capital expenditures in order to counter-balance the contractionary effects of fiscal consolidation. Following are the main recommendations: 1. New proposal with states on goods and service tax (GST) 2. Reduction in corporate tax to 30 percent for domestic companies 3. Reduction in general depreciation rate from 25 to 15 percent. 4. Existing tax incentives for corporate units to be grand fathered for existing units, but removed for new units. The report favoured revenue mobilization through low and few tax rates, along side widening of the tax base and shifting the incidence of taxation upon consumption. What is CENVAT? Central Value Added Tax is the rechristened MODVAT. The government introduced

What are the objectives of tax reforms in India?

The tax reform committee under the chairmanship of Raja J Chelliah (1991) has recommended far reaching changes in the tax system. The main objectives of tax reform were i) to remove loopholes from the system that lead to evasion to simplify and rationalize the tax structure. ii) To make the tax structure efficient and transparent from the point of revenue collection. In brief the proposals of the tax reform committee are related with simplification, rationalization and efficiency in the tax structure.

Legal Framework
Umbrella Acts Reserve Bank of India Act, 1934 governs the Reserve Bank functions. Banking Regulation Act, 1949 governs the financial sector
Acts governing specific functions Public Debt Act, 1944/Government Securities Act (Proposed) governs government debt market. Securities Contract (Regulation) Act, 1956: Regulates government securities market. Indian Coinage Act, 1906 governs currency and coins. Foreign Exchange Regulation Act, 1973/Foreign Exchange Management Act, 1999 governs trade and foreign exchange market. Acts governing Banking Operations Companies Act, 1956 governs banks as companies Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980: Relates to nationalisation of banks. Bankers Books Evidence Act. Banking Secrecy Act Negotiable Instruments Act, 1881 Acts governing individual institutions State Bank of India Act, 1954 The Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003 The Industrial Finance Corporation CENTVAT in lieu of central excise taxes in 2000-01 budget and it plans to extend the CENVAT to the customs duties in due course. Initially the CENVAT was introduced as an experiment on a limited basis, but later it was extended to all sectors of the economy. Write short note on Goods and Services Tax (GST) The goods and services tax (GST) is a comprehensive Value Added Tax (VAT) on goods and services. France was the first country to introduce this system in 1954. Through a tax credit mechanism, GST is collected on value added goods and services at each stage of sale or purchase in the supply chain. GST paid on the procurement of goods and services can be set off against that payable on the supply of goods or services. But being the last person in the supply chain, the end consumer has to bear this tax and so, in many respect GST is like a last point retail tax.

Discuss the merits of goods and services tax (GST) After the introduction of GST prices of commodities are expected to come down in the long run. Imports would be subject to GST. Exports, however, will be zero-rated, meaning exporters of goods and services need not pay GST on their exports. GST paid by them on the procurement of goods and services will be refunded.

MONEY & BANKING

?
What is meant by monetary policy? What are the instruments of monetary policy? Monetary policy of a country means the set of measures adopted by the government for monetary management of that economy.

Instruments of monetary policy are 1. Bank Rate The rate at which the RBI lends to commercial banks. 2. Open Market Operation This measure, is used by RBI either to pump more money into market or to lessen the flow of money in the market. Pump money by buying securities from public. Absorb the excess liquidity in the market by selling securities. 3. Statutory Liquidity Ratio Every commercial bank is required to keep a certain percentage of the net demand and time liabilities (NDTL) as assets in the form of cash, gold or approved securities. 4. Cash Reserve Ratio It is the ratio at which commercial banks is required to keep a certain percentage of its demand and time liabilities with the RBI.

What is a commercial bank? Explain the functions of modern commercial banks. The commercial banks except deposits from public, provide short term loans and performs various agency functions which are as followsi. The commercial bank accepts deposits from the public ii. Advancing loans to businessmen or others iii. Banks perform agency functions like remittance of fund, sale and purchase of securities acting as trusty, as executor, collecting dividend of the shares of the customers etc. iv. Credit creation is another important function of the commercial banks v. Financing internal and external trade vi. Purchase and sale of foreign exchange.

Co. at Calcutta under European Management. Other banks which were set up under the East India Company are - Bank of Bengal (1806), Bank of Bombay (1840) and Bank of Madras (1843). All were Presidency Banks. In 1921, the Imperial Bank was created by the amalgamation of these Presidency Banks. The first purely Indian Bank was Punjab National Bank. In 1860, the Government of India under the British rule passed Joint Capital Company Act under which Banks can be established under Limited Liability. Under this the first three banks were established Allahabad Bank (1865), Alliance Bank of Shimla (1881) and Awadh Commercial Bank (1881). The period between 1913-1917 is known as Banking Crisis - because of World WarI the pace of banking development reduced

Major Financial Institutions

Financial Institution Date of Starting Imperial Bank 1921 Reserve Bank of India April1, 1935 Industrial Finance Corporation of India 1948 State Bank of India July 1, 1955 Unit Trust of India Feb. 1, 1964 IDBI July 1964 NABARD July 12, 1982 SIDBI 1990 EXIM Bank January 1, 1982 National Housing Bank July 1988 Life Insurance Corporation September 1956 General Insurance Corporation Nov. 1972 Regional Rural Banks Oct.2, 1975 Risk Capital and Technology Finance Corporation Ltd. March 1975 Technology Development & Information Co.of India Ltd. 1989 Infrastructure Leasing & Financial Services Ltd 1988 Housing Dev.Finance Corp. Ltd 1977

History of Indian Banking

The Bank of Hindustan was the first bank to be established in 1770 by Alexander and

leading panic withdrawal which resulted Core Banking in the failure of many banks. Core Banking solution provides centralized What are the main Functions of RBI? system which provide The Reserve Bank of India, the Symbol of financial India (RBI) sovereignity and stability The Reserve Bank of of our country performs India. RBI is the central Bank of India in monetary system. three main functions, of It is the apex institution the financial system of India. namely sition in It has a pivotal po serve (a) Central Banking ril 1, 1935 under the Re It was established on Ap Function . Bank of India Act, 1934 (b) Supervising Function uary 1st 1949. It was nationalised in Jan . and I is known as Governor The executive head of RB ty Governors and other (c) Promotional pu Governor is assisted by De Function. executive officers. The main functions of the RBI can be broadly centralized accounting, customer information grouped as under management and transaction processing 1. The note-issuing agency. functions. Once full migration to CBS is 2. The banker to the state. achieved Branch banking will become 3. The bankers bank. irrelevant. 4. The guardian of the money market through Real Time Cross Settlement (RTGS) control of credit. This technological initiative was launched by 5. The lender of the last resort. RBI in 2004 for faster settlement of payment. 6. Undertakes to maintain the external value As transfers through RTGS can be effected of the domestic currency. instantaneously, this is one of the fastest mode 7. Ensures the stability of the internal value of transfer. of the currency i.e., the price level. ? Write short notes on RRBs, IDBI, 8. Undertakes exchange control operations, SIDBI, UTI and ICICI. and Regional Rural Banks (RRBs) 9. Fights economic crises and fluctuation and ensures economic stability of the country. It was established on October 2, 1975.

Write notes on Internet Banking, Core Banking and RTGS

Internet Banking Banks have started offering services of Internet Banking. Customers can view their accounts, print statement of accounts, request for cheque book, transfer funds etc. sitting in the easy comfort of their home/office or cyber cafe.

RRBs are working in all states of country except Sikkim and Goa. Since April 1987, no new RRB has been opened keeping in view the recommendations of Kelkar Committee. The share of RRBs in agricultural credit supplied by institutions is 10.5%. The government initiated the process and amalgamation of RRBs were amalgamated bringing down their number 85 to 196.

Industrial Development Bank of India

It was established under IDBI Act 1964. It is a principal financial institution for providing credit and other facilities for development institution. Till 1976, it was subsidiary bank of RBI but in 1976 it was separated from RBI and Government of India took over its charge. This bank performs two basic functions i. to provide financial assistance to industrial enterprises and ii. to promote institutions engaged in industrial development. IDBI mobilises its funds mostly from the following resources i. loans from capital market by issuing bonds ii. loans from National Industrial Credit Fund of RBI.

Small Industries Development Bank of India (SIDBI)

Established as wholly owned subsidiary of

IDBI and SIDBI act 1989.

Its headquarter is in Lucknow. It has 5

regional and 21 branch offices across the country. It is the principal financial institution for promotion, financing and development of industries in the small scale sector. It also co-ordinates the agencies which provides finance to small enterprises.

Industrial Credit and Investment Corporation of India (ICICI)

It was established in 1955 as public limited

company under Indian Company Act.

It was established for developing medium

and small industries of private sector. It grants medium and long term loans on debenture basis. Since 1973, ICICI entered into international capital market for obtaining loans in foreign currency.

Unit Trust of India (UTI) To mobilise the savings of the middle and lower income groups UTI was established in 1964 with an initial capital of Rs. 5 crores. The UTI schemes enable the people to share the benefit of industrialisation of our country. It was the first mutual fund in India The UTI launched the first Indian off-shore funds, The India Fund in 1986. UTI Bank Ltd (1994), the first private sector bank set up under RBI guidelines. Now it was renamed as Axis Bank. What is meant by Co-operative Banking? Co-operatives are supposed to be associations of economically weak and poor people who pool their resources for mutual credit. They supplement their loanable fund by borrowing from State Governments, NABARD and SBI. To finance agricultural credit co-operative bank provides short, medium and longterm loans. Short and medium term loans are provided through 3-tier co-operative structure State Co-operative Bank (SCB) at the apex level in each state, the Central Co-operative Banks (CCB) at the district level and the Primary Agriculture Co-operative Societies (PACS) at village level. Differentiate between Scheduled Bank and Non Scheduled Bank Scheduled banks which have been included in the second scheduled of RBI Act, 1934. They must fulfill two conditions - i) The paid up capital and collected funds of banks should not be less than Rs. 5 lakhs. ii) Any activity of bank will not adversely affect the interest of depositors. Non Scheduled Banks which are not

included in the list of scheduled banks are called non-scheduled bank. They have to follow CRR condition. But they can have these funds with themselves i.e., no compulsion to deposit it with RBI. Not eligible for having loans from RBI for meeting day to day general activities, but under emergency conditions these banks can be granted loans by RBI.

Write short notes on LIC and GIC.

Life Insurance Corporation of India The LIC was established in 1956 by nationalising all the life insurance companies in India. The LIC is a heavy investor of funds in government dated securities. It is also a capital investor in the government bonds. The LIC is required to invest at least 50 percentage of its accruals in the form of premium income in government and other approved securities subject to a minimum 25% in Central Government Securities.

The demand for long-term funds comes mainly from the private companies, agriculture and government. They require funds for economic over heads and basic industries. Supply of funds mainly comes from individual savings and insurance companies. What are the components of capital market? The main component of the Indian Capital Market are Gilt- Edged Market, Securities Market, Financial Institution, Financial Intermediaries. Gilt - Edged Market This is the market of government securities or the securities guaranteed by the Govt. These securities are issued by local authorities and autonomous government undertaking like banks, electricity board etc. The terms gilt- edged means of the best quality. Government securities are highly liquid as they can be sold in the market at the ongoing market price. RBI plays a dominant role in the gilt- edged market through its open market operation to regulate price fluctuation.

General Insurance Corporation These insurances are against specified risks such as loss from fire, accident to property of various kinds. It covers the risk of personal accident and sickness. GIC in India was nationalised with effect from January 1, 1973, i.e. many small companies became one holding company by the name General Insurance Corporation of India.

CAPITAL MARKET
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What is meant by Capital Market? Capital market is the market for long term funds. It includes all facilities and institutional arrangements available for borrowing and lending of long term funds. It is concerned with the raising of funds for investments.

Securities Market Securities market is the market for shares and debentures of companies. It is divided into new issue market and old issue market. The New Issue Market (NIM) It is also called primary market. It is the market for raising of new capital in the form of equity shares, preference shares or debentures. A new company or an existing company becoming a public limited company (going to public) can approach new issue market. Guaranteeing purchase of a new issue at a fixed price (underwriting) has been

done by ICICI, LIC, IDBI etc.

Old Issue Market Shariah Index This is the secondary Advisory ange (BSE) and Taqwaa The Bombay Stock Exch market of securities. BSE TASIS utions have launched the d Shariah Investment sol It deals securities an e index is the December 27, 2010. Th ARIAH 50 Index since SH idelines and already issued by India utilizing the strict gu st shariah index created in fir . The index companies. c Shariah Advisory Board al expertise of a domesti loc pliant stocks It aims at that the easy d most liquid shariah-com mprises the 50 largest an co convertibility of within the BSE 500. securities into cash. It has two segments : strative feat of the Ministry of Finance. 1. Stock Exchange With the repeal of the Capital Issues Control 2. Over the Counter Exchange. Act and the enactment of the SEBI Act in Explain the role of Stock Exchange 1992, the regulation of the primary market It is an institute for orderly buying and has become the preserve of SEBI. selling of listed securities. Further, the Ministry of Finance has Listed Securities are those that appear on transferred a number of powers under the the approved list of a stock exchange. Securities Contracts (Regulation) Act 1956 A stock exchange includes an association also to SEBI. of persons or firms to regulate and Functions supervise all transaction. The SEBI Act armed SEBI with statutory It has an exchange floor where stock powers. brokers or the authorised agents meet It has entrusted SEBI with the during fixed business hours to buy and sell responsibility of dealing with various securities. matters relating to the capital market. At present, there are twenty four stock Principal tasks are to exchanges in India. Write a short note on Over The Counter Exchange of India (OTCEI) These deals with the securities that are not listed on stock exchanges. Such type of securities price are determined through direct negotiation between stock brokers and not by bidding as in stock exchange. These securities are mainly securities of small companies. The minimum market capitalisation for listing on OTCEI is Rs. 5 crores. Explain the functions and principal tasks of Securities and Exchange Board of India (SEBI).

Regulate the business in stock exchanges

and any other securities markets. Register and regulate the working of capital market intermediaries (brokers, merchant bankers, portfolio managers and so on). Register and regulate the working of mutual funds. Promote and regulate self-regulatory organizations. Prohibit fraudulent and unfair trade practices in securities markets. Promote investors education and training of intermediaries of securities market. Prohibit insider trading in securities Regulate substantial acquisition of shares and take-over of companies.

In 1988, SEBI was created by an admini