GS MENTORS 1 GS MENTORS 2 GS MENTORS 3 RECEIPTS

GS MENTORS 4 EXPENDITURES

GS MENTORS 5 GS MENTORS 6 GS MENTORS 7 Tax Proposals For Individuals • Income Tax slabs will remain the same for FY 2019­20. • Tax Rebate Limit under 87A increased from Rs. 3.5 lakhs to Rs. 5 lakhs for taxpayers. The maximum limit of the tax rebate increased to Rs.12,500 from the present limit of Rs. 2,500. • Standard Deduction for the salaried class increased from Rs 40,000 to Rs 50,000. • TDS limit hiked from Rs 10,000 to Rs 40,000 on Post Office Savings and Bank Deposits. • TDS threshold on rent increased from Rs 1,80,000 to Rs 2,40,000 • Section 54 exemption now available on the second house property, provided the capital gains is less than or equal to Rs. 2 crores – to be availed only once in a lifetime. • No tax on notional rent of second Self­occupied House under “Income from House Property” (up to two self­occupied house properties) to be considered for exemption.

GS MENTORS 8 GST • GST led to increased tax base, higher collections and ease of trade • Inter­state movements now faster, more efficient, and hassle free • Most items of daily use now in the 0% or 5% tax slab • Relieving the businesses and service providers­ • Exemptions from GST for small businesses doubled from Rs. 20 lakh to Rs. 40 lakh • Small businesses having turnover up to Rs. 1.5 crore pay only 1% flat rate and file one annual return only • Small service providers with turnover upto Rs.50 lakhs can opt for composition scheme and pay GST at 6% instead of 18% • Soon, businesses comprising over 90% of GST payers to be allowed to file quarterly return • Encouraging GST revenue trends ­ The average monthly tax collection in the current year is Rs. 97,100 crore per month as compared to Rs. 89,700 crore per month in the first year

GS MENTORS 9 MSMEs • SMEs with earnings below Rs 5 Crores will soon file GST returns only once in 3 months. • MSMEs and Traders to note that GST Registered SME units will get 2% interest rebate on an incremental loan of Rs. 1 Crore. • The requirement of sourcing from SMEs by Government enterprises has been increased to 25% with 3% reserved for women­owned SMEs. • A scheme of ‘Business loans up to Rs. 1 crore in 59 minutes’ will be implemented.

GS MENTORS 10 Agriculture Reforms

GS MENTORS 11 PM KISAN Arguments in Favour Arguments Against • Freedom from Money • Exclusions: Tenant lenders Farmers, Landless • Wide Coverage Labourers and Dairy and • Fully Funded by the Poultry Farmers Centre • Exclusion error • Can Boost the Rural • Lack of Land Records Economy • Insufficient amount • Lands left fallow can also • Unintended Use be cultivated • Fragmentation • Low Leakages • Lack of Grievance • Boost Productivity redressal mechanism

GS MENTORS 12 Krushak Assistance for Livelihood and Income Augmentation (KALIA) (not linked to the amount of land owned, benefit ­ sharecroppers and cultivators) • An amount of ₹10,000 per family at the rate of ₹5,000 for Kharif and Rabi shall be provided • Crop loans up to ₹50,000 will henceforth be interest free • unit cost of ₹12,500 to take up activities like small goat rearing units, mini layer units, duck units, fishery kits for fishermen and women, mushroom cultivation and bee keeping. • life insurance cover of ₹2 lakh • personal accident cover of ₹2 lakh

GS MENTORS 13 GS MENTORS 14 Agriculture Reforms • Allocation for Rashtriya Gokul Mission increased to Rs 750 crore. Rashtriya Gokul Mission: • To conserve and develop indigenous bovine breeds, government has launched ‘Rashtriya Gokul Mission’ under the National Programme for Bovine Breeding and Dairy Development (NPBBD). Gokul Grams • act as Centres for development of Indigenous Breeds • self sustaining and will generate economic resources • function as state of the art in situ training centre • maintain milch and unproductive animals in the ratio of 60:40 Rashtriya Kamdhenu Aayog has been established to genetically upgrade cow resources.

GS MENTORS 15 Agriculture Reforms Minimum Support Price (MSP) • Fixed at 50% more than the cost (A2 + FL) for all the 22 crops C2 = A2 + FL + Interest on value of owned capital assets + Rental value of owned land Interest Subvention • The amount of interest subvention has been doubled and crop loans to farmers increased to Rs 11.68 lakh crore. • Under Kisan Credit Card scheme, farmers pursuing animal husbandry and fisheries will get 2% interest subvention. An additional 3% interest subvention will be provided for timely loan repayment. • Under National Disaster Relief Fund (NDRF), farmers affected by natural calamities will get 2% interest subvention. A prompt repayment incentive of 3% will be given for the entire loan reschedulement period.

GS MENTORS 16 Banking Reforms and Insolvency and Bankruptcy Code (IBC) • The IBC has institutionalized a resolution­friendly mechanism • Government adopted 4Rs approach of recognition, resolution, re­capitalization & reforms • Government has already recovered Rs. 3 lakh crore in favor of banks and creditors • Government has invested Rs. 2.6 lakh crore for recapitalization of public sector banks • 3 banks namely Bank of India, Bank of Maharashtra and Oriental Bank of Commerce are out of Prompt Corrective Action (PCA) • 8 public sector banks still remain within PCA framework which imposes restrictions on lending and expansion. • Amalgamation of banks in place to avail economies of scale, better capital and wider geographical coverage.

GS MENTORS 17 Pension Sector Pradhan Mantri Shram Yogi Maandhan scheme • Rs 3000 per month after 60 years of age with an affordable contribution of only Rs 100/55 per month • Benefits to 10 crore workers in the unorganised sector

OROP: Over Rs 35,000 crore has been allocated under the ‘One Rank One Pension’ scheme for Defence personnels.

NPS rules amended in December are implemented – with increased Government contribution from 10% to 14%

Others: Rs. 500 crore allotted for pension schemes for individuals in other sectors

GS MENTORS 18 Women Empowerment • Providing cleaner fuel for rural women – out of the 8 crores promised free LPG connections, 6 crores are already delivered under Ujjwala Yojana and remaining will be delivered in the coming year. • Over 7,000 beneficiaries of PM Mudra Yojana are women. 15.56 crore loans of ₹7.23 lakh crore disbursed under MUDRA Yojana. • Benefits of maternity leave of 26 weeks have provided support to women.

GS MENTORS 19 GS MENTORS 20 Ten dimensions of Vision for India of 2030 India would be a modern, technology driven, high growth, equitable and transparent society 1. To build physical as well as social infrastructure and to provide ease of living 2. To create a Digital India, digitize government processes with leaders from youth 3. Making India pollution free by leading transport revolution with Electric Vehicles and focus on Renewables 4. Expanding rural industrialisation using modern digital technologies to generate massive employment 5. Clean Rivers, safe drinking water to all Indians and efficient use of water through micro­irrigation 6. Besides scaling up of Sagarmala, Coastline and Ocean waters powering India’s development and growth 7. Aim at our space programme – Gaganyaan, India becoming the launch­pad of satellites for the World and placing an Indian astronaut into space by 2022 8. Making India self­sufficient in food, exporting to the world to meet their food needs and producing food in the most organic way 9. A healthy India via Ayushman Bharat with women having equal rights and concern for their safety and empowerment 10. Transforming India into a Minimum Government Maximum Governance nation with pro­active and responsible bureaucracy

GS MENTORS 21 Poor and Backward Classes • 25% additional seats in educational institutions to meet the 10% reservation for the poor • Free electricity connection to every household under Saubhagya Yojana • World’s largest healthcare programme, Ayushman Bharat, for nearly 50 crore people • Aspirational Districts Programme for development in 115 most backward districts • 143 crore LED bulbs provided in mission mode with the cooperation of private sector • Jan Aushadhi Kendras providing medicines at affordable prices to poor and middle class • 14 out of 21 AIIIMS operating presently have been announced since 2014 • Government tripled rural roads’ construction under the PMGSY • 1.53 crore houses built under PM Awas Yojana during the 2014­18

GS MENTORS 22 State of the Economy

• India universally recognized as a bright spot of the global economy during last five years • Country witnessed its best phase of macro­economic stability during 2014­19”, says FM • India is now the 6th largest economy in the world from being the 11thlargest in 2013­14 • Annual average GDP growth during 2014­19 higher than any government since 1991 • Average inflation down to 4.6%, lower than during any other Government • CAD likely to be only 2.5% of GDP this year against a high of 5.6% six years ago • India attracted massive amount of FDI, worth $239 billion, during the last 5 years • India becomes the fastest growing major economy in the world

GS MENTORS 23 Steps against corruption

• RERA and Benami Transaction (Prohibition) Act have brought transparency in real estate • The Fugitive Economic Offenders Act, 2018 to help confiscate economic offenders • Government conducted transparent auction of natural resources such as coal & spectrum

GS MENTORS 24 Fugitive Economic Offenders Act, 2018 • The fugitive economic offenders’ law came into force in August 2018. • A person can be named an offender under this law if there is an arrest warrant against him or her for involvement in economic offences involving at least Rs. 100 crore or more and has fled from India to escape legal action. • The investigating agencies have to file an application in a Special Court under the PMLA, 2002 containing details of the properties to be confiscated, and any information about the person’s whereabouts. • The Special Court will issue a notice for the person to appear at a specified place and date at least six weeks from the issue of notice. • Attachment of the property of a fugitive economic offender • Proceedings will be terminated if the person appears. • The person who is declared as a Fugitive Economic Offender can challenge the proclamation in the High Court within 30 days

GS MENTORS 25 GS MENTORS 26 Prompt & Corrective Action (PCA) • PCA is a framework under which the RBI puts banks with weak financial metrics under watch. • The PCA is invoked when certain risk thresholds are breached. • 1. Capital (CRAR – regulatory capital to risk­ weighted assets ratio – and Leverage ratio), • 2. Asset quality (NNPA – net non­performing assets to advances ratio), and • 3. Profitability (ROA – return on assets)

GS MENTORS 27 PCA: Two types of restrictions are imposed on such banks:

• Mandatory restrictions include restrictions on dividend, branch expansion, higher provisioning requirement, directors compensation, restrictions on management compensation, etc. • Discretionary restrictions could include curbs on lending, accepting deposits, restrictions on the bank on borrowings from interbank market.

Obligations of Banks • Banks will also have to launch a special drive to reduce the stock of NPAs and contain generation of fresh NPAs. They have to take steps to increase their fee­based income.

GS MENTORS 28 PCA

• The 11 banks under the PCA were: • Allahabad Bank, United Bank of India, Corporation Bank, IDBI Bank, UCO Bank, Bank of India, Central Bank of India, Indian Overseas Bank, Oriental Bank of Commerce, Dena Bank and Bank of Maharashtra. • Currently, four banks are remaining under PCA. • They have to improve on seven parameters to get the government's support

GS MENTORS 29 AREAS OF CONFLICT BETWEEN THE RBI AND THE GOVERNMENT 1. Transfer of RBI Surplus to the Government • Rs. 3.6 lakh crore of capital reserves 2. Shadow Banking • a dedicated liquidity window for these lenders similar to the one allowed during the 2008­2009 global financial crises. 3. Relaxing the Lending Restriction • to relax its lending restrictions on 11 state­run banks, under the Prompt Corrective Action 4. Encroaching • proposing to set up an independent payments regulator

GS MENTORS 30 AREAS OF CONFLICT BETWEEN THE RBI AND THE GOVERNMENT 5. Board Influence • The government appointed S Gurumurthy, a BJP supporter and an affiliate of the RSS and Satish Marathe, a former banker with ties to the RSS.

6. Section 7 of the RBI Act • Section 7 of RBI Act 1934 states that the Union government can “from time to time give such directions to the (central) bank as it may, after consultation with the governor of the bank, considered necessary in the public interest”. • Further, Section 7 (2) gives the government powers to entrust the business of RBI to its central board of directors.

GS MENTORS 31 RESERVES OF THE RBI Components of the Capital Reserve 1. Contingency Fund (CF) – for meeting the unforeseen contingencies, including depreciation in the value of securities, – risks arising out of monetary/exchange rate policy operations, – systemic risks – any risk arising on account of the special responsibilities

2. Asset Development Fund (ADF) – for investment in subsidiaries/associates and internal capital expenditure.

• From 2014 onwards, both CF and ADF are financed through provisioning. Income is estimated after making the provisioning to the DF and ADF.

GS MENTORS 32 Components of the Capital Reserve

3. Currency and Gold Revaluation Account (CGRA) – to compensate RBI’s loss in the value of gold and foreign exchange reserve – Increase in gold price and depreciation of the rupee increases the CGRA fund (It registered an increase in 2018 mainly due to depreciation of rupee against US dollar and rise in the international price of Gold.)

4. Investment Revaluation Account (IRA) – to compensate losses and to accommodate gains in (i) foreign securities and (ii) domestic securities.

5. Foreign Exchange Forward Contracts Valuation Account (FCVA) – The FCVA measures marked to market gains and losses for the RBI from foreign exchange forward contracts.

GS MENTORS 33 GS MENTORS 34 Total reserve Rs.9.5 lakh crores or 26.25% of the total assets as on end June 2018.

GS MENTORS 35 RESERVES OF THE RBI

The Subrahmanyam Committee (1997) • Contingency Funds ­12 % The Usha Thorat Committee (2004) • Total reserves ­ 18 percent The Malegam committee (2013) • Contingency Funds need to be enhanced • (but left the quantum to RBI management to decide)

• CF – 9.2% in 2014 and 7% in 2018 • Total Reserves – 26.5% in 2018 (World median – 16%)

GS MENTORS 36 COMMITTEE ON ECONOMIC CAPITAL FRAMEWORK

• Set up in December 2018 by RBI • Report in May/June 2019 • Headed by its former governor Bimal Jalan

• It will also review global best practices • Suggest – suitable profits distribution policy – adequate level of risk provisioning – Adequate level of reserves

GS MENTORS 37 PAYMENTS REGULATORY BOARD (PRB) • In the Finance Act of 2017, the government amended the Payment and Settlement System Act, 2007 (PSSA) and provide for a PRB to be headed by the RBI Governor as ex­offico chairperson. Payment and Settlement Systems Act, 2007 • Act provide necessary statutory backing to the Reserve Bank of India for undertaking the Oversight function over the payment and settlement systems in the country. These systems include inter­bank transfers such as the National Electronics Funds Transfer (NEFT) system, the Real Time Gross Settlement (RTGS) System, ATMs, credit cards, etc. Board for Regulation and Supervision of Payment and Settlement Systems • It's a statutory body as per Payment and Settlement Systems Act 2007. • It is empowered to authorize, prescribe policies and set standards to regulate and supervise all the payment and settlement systems in the country. • The Department of Payment and Settlement Systems of the RBI serves as the Secretariat to the Board and executes its directions.

GS MENTORS 38 PAYMENTS REGULATORY BOARD (PRB) Inter­Ministerial Committee Headed by Economic Affairs Secretary Subhash Chandra Garg • In September 2018, put forward a draft of the Payment and Settlement System Bill 2018 for consideration by the Cabinet. • Recommendations of the committee: • setting up an Independent Payments Regulatory Board. • It’s chairperson to be appointed by the government in consultation with the RBI. • It has suggested that the head comes from within the central bank itself and have a controlling vote. • Securities Appellate Tribunal (SAT) should resolve the cases with respect to the payments. • It provides for the PRB to make reference to the RBI in relation to making regulations for designated payment systems. • It also provides the RBI with the powers to make a reference to the PRB to consider any matter, in the context of the monetary policy,

GS MENTORS 39 PAYMENTS REGULATORY BOARD (PRB)

Objectives of the PRB • strengthen competition • consumer protection • systemic stability • resilience in the payments industry Ratan Watal Committee 2016 also recommended for the creation of an independent payments regulator within the framework of the RBI

GS MENTORS 40 PAYMENTS REGULATORY BOARD (PRB) RBI is opposing the recommendations on following grounds: • RBI argues that payments systems are a sub­set of currency • There is a huge impact of monetary policy on payment and settlement systems and vice­versa. • Besides, the activities of the payments banks come under the purview of the traditional banking system. • Regulation of the banking systems and payment system by the same regulator provides synergy. • RBI also held that it would prefer the Payments Regulatory Board to function under the purview of the RBI governor.

GS MENTORS 41 Public Credit Registry (PCR) • Recommendations of a committee, headed by Y.M. Deosthalee. • A public credit registry is an information repository that collates all loan information of individuals and corporate borrowers. • Data on borrowings from banks, non­banking financial companies, corporate bonds or debentures from the market, ECBs, foreign currency convertible bonds (FCCBs), masala bonds, and inter­corporate borrowings GSTN IBBIto enable the banks and financial institutions to get 360 degree profile of existing and prospective borrowers on a real­time basis. • Currently, there are multiple granular credit information repositories in India, with each having somewhat distinct objectives and coverage.

GS MENTORS 42 PCR Benefits of having a PCR • A credit repository helps banks distinguish between a bad and a good borrower and accordingly offer attractive interest rates to good borrowers and higher interest rates to bad borrowers. • PCR will address issues such as information asymmetry, improve access to credit and strengthen the credit culture among consumers. • It can also address the bad loan problem staring at banks, as corporate debtors will not be able to borrow across banks without disclosing existing debt. • A PCR may also help raise India’s rank in the global ease of doing business index. • With satisfactory payment history and validated debt details made available, it will increase the credit availability to micro, small and medium enterprises along with deepening of the financial markets. This will support the policy of financial inclusion. • Further, it can help supervisors, regulators and banks in early intervention and effective restructuring of stressed bank credits. Consequent to the publication of expression of interest (EOI) on October 27, 2018, the Reserve Bank had received responses from several vendors for implementation of end­end solution for PCR. The Reserve Bank of India has shortlisted six major IT companies, including TCS, Wipro and IBM India, to set up a wide­based digital Public Credit Registry (PCR).

GS MENTORS 43 Financial Data Management Centre (FDMC)

• FDMC was proposed by Ajay Tyagi Committee • RBI had given reason that FSDC is not a statutory body and sharing such data would be a breach of confidentiality • To resolve this issue, Budget 2016­17 announced setting up of statutory FDMC Functions • Standardise data from all financial sector regulators in a single database and provide analytical insights based on the data to ensure stability in the economy. • Take measures to standardise data from regulators, enable financial service providers to submit data in a standardised electronic format, analyse data and maintain a financial system database. • Establish, operate and maintain the financial system database along with collecting financial regulatory data and providing access to it. • Provide analytical support to the Financial Stability and Development Council (FSDC) on issues relating to financial stability.

GS MENTORS 44 DOLLAR/RUPEE SWAP AUCTION BY RBI • Conducted by RBI on 26th March and 23rd April 2019 • The RBI purchased $5 billion from banks in exchange for rupees. • At an average spot rate of 70 per dollar, the RBI will able to infuse about₹35,000 crore into the syst em through this auction process. • Simultaneously, the banks will agree to buy­back the same amount of dollars from the RBI after three years • The participating banks have to bid in the auction by quoting a forward premium in terms of paisa that they will pay to buy back the dollars.

GS MENTORS 45 Objectives of the Dollar/Rupee Swap Auction • The RBI will able to infuse about₹35,000 • By supplying a large amount of forwards, RBI wants to pull premia down. – incentives for borrowers in foreign currencies to hedge their positions – attract foreign flows into domestic markets, • The auction is meant to give RBI greater flexibility in managing banking system cash while helping absorb any potential large dollar inflows, which could make the rupee rise sharply. • Boost forex reserves by another $5 billion. RBI received an overwhelming response to its dollar swap window on 26th March 2019, Banks offered $16.31 billion for the proposed swaps of up to $5 billion. The RBI accepted $5.02 billion at a cut­off premium of Rs 7.76 for three­year dollars

GS MENTORS 46 SUNIL MEHTA COMMITTEE • June 2018: The committee recommended five prolonged strategy to resolve NPAs (Project Sashakt) • 1. Small loans(upto 50 crores): such loans/NPA’s should be resolved by banks through steering committee. • 2.Mid size(50­500 crore):. Banks/FI have to designate a bank as a lead lender for preparation of resolution plan, which should be approved by at least 66% of the creditors as per the Inter creditor agreement (ICA). • 3. Large loans (>500 crore): Resolved through Asset Management Company (AMC). • Sashakt India asset management Ltd • 4. The fourth approach is to go to National Company Law Tribunal (NCLT) for insolvency and bankruptcy. • 5.The panel also suggested an Asset Trading Platform for stressed assets, which will allow smaller public sector banks to offload large corporate exposures.

GS MENTORS 47 GS MENTORS 48 Financial resolution and deposit insurance bill, 2017 (FRDI) • The Bill establishes a Resolution Corporation (RC) to monitor financial firms, anticipate risk of failure, take corrective action, and resolve them in case of such failure. • It will subsume Deposit Insurance and Credit Guarantee Corporation (DICGC) and also provide deposit insurance up to a certain limit, in case of bank failure. • The Resolution Corporation or the appropriate financial sector regulator may classify financial firms under five categories, based on their risk of failure. These categories in the order of increasing risk are: (i) low, (ii) moderate, (iii) material, (iv) imminent, and (v) critical. • Provision of bail­in: rescued by internally restructuring its debt • rescued by internally restructuring its debt. This method is known as bail­in. • The FRDI Bill, 2017 referred to Joint Parliamentary Committee • The government in August 2018 withdrew the FRDI Bill from the Lok Sabha

GS MENTORS 49 UNEMPLOYMENT DATA

ILO: World Employment and Social Outlook Trends – 2018 • As per the report, it is projected that the number of unemployed persons in India is expected to rise from 18.3 million in 2017 to 18.6 million in 2018 and 18.9 million by 2019. Centre for Monitoring Indian Economy (CMIE) • According to CMIE, the unemployment rate in India has reached the highest levels at 7.2% in February 2019. • Moreover, the labor participation rate fell from 43.2% in January 2019 to 42.7% in February. It had stated that 1.5 million jobs were lost just in the first four months of 2017 ­­ immediately after demonetization of old 500­ and 1000­rupee notes. NSSO on Unemployment • The country's unemployment rate stood at a 45­year­high of 6.1 per cent in 2017­18, according to NSSO's periodic labor force survey (PLFS). • According to latest reports, male labor participation rate was 74.5% in 2016. This dropped to 72.4% in 2017 and then to 71.7% in 2018. In contrast, female labor participation was as low as 15.5% in 2016, which dropped to 11.9% in 2017, and then 11% in 2018.

GS MENTORS 50 POVERTY As per, International poverty line to $1.90 a day ­ May 2018 No. of Poors 1. Nigeria ­ million people in extreme poverty, 2. India’s 73 million ( about 5.6 % of total populattion) If present trends continue, India could drop to No. 3, with Democratic Republic of Congo taking the number 2 spot.

GS MENTORS 51 ESTIMATES OF NATIONAL INCOME, 2018­19 On 28th February, 2019, the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation released the Second Advance Estimates of National Income

GS MENTORS 52 GDP BACK SERIES DATA • The back series data released provided the earlier years’ data using the new calculations. • The government in November 2018 released the GDP growth estimates for previous years based on the new method of calculation and base year it had adopted in 2015. • The new data release shows that GDP growth during the UPA years averaged 6.7% during both UPA­I and UPA­II, compared with the 8.1% and 7.46%, respectively, estimated using the older method. • In comparison, the current government has witnessed an average GDP growth rate of 7.35% during the first four years of its term, based on the new method. • The Sudipto Mundle committee set up by the National Statistical Commission released the economic growth data in August, 2018. It estimated average GDP growth at 8.37% during UPA­I (2004­05 to 2008­09), and 7.69% during UPA­II (2009­10 to 2013­14).

GS MENTORS 53 GDP BACK SERIES DATA Reasons for the discrepancy • MCA­21 database became available since 2011­12. • It required a splicing of new and old data in the relevant proportions • The current series is based on company data, MCA­21, which is the balance sheet data, whereas the back series is based on volume data. • The financial data captures changes in quality which the volume approach does not. So the volume approach would underestimate the growth.” • In the communication sector, telecom subscriber growth was used earlier, but has been replaced by minutes of usage. • For unorganised trade sector, sales tax (notoriously underestimated) has been used, instead of the GTI (Gross Trading Income) Index used in the 2004­05 series. Shadow of Doubt • Corporate sales, profit and investment numbers, direct tax revenue, credit growth, exports and imports, the performance during the UPA period was much better than in the NDA period Former Chief Statistician of India Pronab Sen pointed out that the fact that the data was released by Niti Aayog led to questions over the credibility of the method chosen.

GS MENTORS 54 SDG India Index: Baseline Report 2018 • The SDG India Index is developed by NITI Aayog in collaboration with the MoSPI, Global Green Growth Institute and United Nations in India. • The SDG India Index embodies the five Ps of the global SDG movement – people, planet, prosperity, partnership and peace. • The SDG India Index tracks progress of all States and UTs on 62 Priority Indicators selected by NITI Aayog, which in turn is guided by MoSPI’s National Indicator Framework comprising 306 indicators. • A composite score was computed between the range of 0­100 for each State and UT based on their aggregate performance across 13 SDGs. • If a State/UT achieves a score of 100, it signifies that it has achieved the 2030 national targets. • Classification Criteria based on SDG India Index Score is as follows: 1. Aspirant: 0­49 2. Performer: 50­64 3. Front Runner: 65­99 4. Achiever: 100

GS MENTORS 55 GS MENTORS 56 ANGEL TAX

• Angel tax is a term used to refer to the income tax payable (@ 30%) on capital raised by unlisted companies via issue of shares where the share price is seen in excess of the fair market value of the shares sold. • In the end of December 2018, several startups are receiving income tax notices on angel funding they received few years ago. • The excess realisation is treated as income and taxed accordingly. The tax was introduced in the 2012 Union Budget by then finance minister Pranab Mukherjee to arrest laundering of funds. New Rules • According to February 2019 notification, investments of up to ₹25 crore in an eligible company will be exempt from the angel tax. • In addition, investments made by a listed company of a networth of at least ₹100 crore or a turnover of at least ₹250 crore would also be exempt. • Investments made by non­residents will also be exempt. • incorporated for less than 10 years, and has a turnover that has not exceeded ₹100 crore over that period. •

GS MENTORS 57 STRATEGY FOR NEW INDIA @75 • The NITI Aayog in December 2018, unveiled its comprehensive national Strategy for New India, which defines clear objectives for 2022­23. • It is a detailed exposition across forty­one crucial areas, that recognizesthe progress already made, identifies binding constraints, and suggests the way forward for achieving the clearly stated objectives. Objective • The government’s goal is for India to be a USD 4.0 trillion economy when we celebrate the platinum jubilee of our independence. Participative Approach • NITI Aayog followed an extremely participative approach in preparing the strategy. Each area vertical in NITI Aayog had in­depth consultations with all three groups of stakeholders, viz., business persons, academics including scientists, and government officials. Development Strategy • Development must become a mass movement, • Development strategy should help achieve broad­based economic growth to ensure balanced development across all regions and states and across sectors. • Putting in place a ‘development state’ in place of the ‘soft state’. Sections Of The Strategy Document

GS MENTORS 58 Sections The forty­one chapters in the document have been disaggregated under four sections: Drivers, Infrastructure, Inclusion and Governance, as follows. I. Drivers It focuses on the engines of economic performance with chapters on growth and employment, doubling of farmers’ incomes; upgrading the science, technology and innovation eco­system; and promoting sunrise sectors like fintech and tourism. • Steadily accelerate the economy to achieve a GDP growth rate of about 8% on average during 2018­23. Increase the investment rate as measured by gross fixed capital formation (GFCF) from the present 29% to 36% of GDP by 2022. • In agriculture, shift the emphasis to converting farmers to ‘agripreneurs’ by further expanding e­National Agriculture Markets and replacing the Agricultural Produce Marketing Committee Act with the Agricultural Produce and Livestock Marketing Act. • Give a strong push to ‘Zero Budget Natural Farming’ techniques that reduce costs, improve land quality and increase farmers’ incomes. This has emerged as a tested method for putting environment carbon back into the land. • To ensure maximum employment creation, complete codification of labor laws and a massive effort must be made to upscale and expand apprenticeships. • Launch a mission “Explore in India” by revamping minerals exploration and licensing policy.

GS MENTORS 59 II. Infrastructure • Expedite the establishment of the Rail Development Authority (RDA), which is already approved. RDA will advise or make informed decisions on an integrated, transparent and dynamic pricing mechanism for the railways. • Double the share of freight transported by coastal shipping and inland waterways. Initially, viability gap funding will be provided until the infrastructure is fully developed. Develop an IT­enabled platform for integrating different modes of transport and promoting multi­modal and digitized mobility. • With the completion of the Bharat Net programme in 2019, all 2.5 lakh gram panchayats will be digitally connected. Aim to deliver all government services at the state, district, and gram panchayat level digitally by 2022­ 23.

GS MENTORS 60 III. Inclusion The three themes in this section revolve around the dimensions of health, education and mainstreaming of traditionally marginalized sections of the population. • Successfully implementing the Ayushman Bharat programme including the establishment of 150,000 health and wellness centres across the country, and rolling out the Pradhan Mantri Jan Arogya Abhiyaan (PM­JAY). • Upgrade the quality of the school education system and skills, including the creation of a new innovation ecosystem at the ground level by establishing at least 10,000 Atal Tinkering Labs by 2020. • Conceptualize an electronic national educational registry for tracking each child’s learning outcomes. • As already done in rural areas, give a huge push to affordable housing in urban areas to improve workers’ living conditions and ensure equity while providing a strong impetus to economic growth.

GS MENTORS 61 IV. Governance It delves deep into how the governance structures can be streamlined and processes optimized to achieve better developmental outcomes. • Implement the recommendations of the Second Administrative Reforms Commission as a preludeto appointing a successor for designing reforms in the changing context of emerging technologies andgrowing complexity of the economy. • Set up a new autonomous body, viz., the Arbitration Council of India to grade arbitral institutions and accredit arbitrators to make the arbitration process cost effective and speedy, and to preemptthe need for court intervention. • Address the backlog of pending cases ­ shift part of workload out of regular court system. • Expand the scope of Swachh Bharat Mission to cover initiatives for landfills, plastic waste and municipal waste and generating wealth from waste.

GS MENTORS 62 Year End Review 2018-NITI Aayog

INITIATIVES AND PROGRAMMES: • (i) Measuring performance and ranking States on outcomes in critical sectors • NITI finalized indices to measure incremental annual outcomes in critical social sectors like health, education, water and Sustainable Development Goals (SDG). • Indices developed by the NITI Aayog: – Healthy States, Progressive India’ Report also known as the ‘Health Index’ in February 2018. – The District Hospital Index was developed to measure and monitor the performance of hospitals with a focus on outputs and outcomes. – Composite Water Management Index was also launched in June 2018 • Indices being developed: • School Education Quality Index (SEQI) • SDG India Index • Digital Transformation Index (DTI)

GS MENTORS 63 (ii) Sustainable Action for Transforming Human Capital (SATH) • technical support to States for improving education and health • selection of states through challenge method • school consolidation and integration programme 26,000 schools merged for better efficiencies and utilisation of resources. • Uttar Pradesh, Assam, and Karnataka were selected to improve their healthcare delivery and key health indicators. • In education, Madhya Pradesh, Odisha, and Jharkhand were selected.

GS MENTORS 64 • (iii) Ek Bharat Shrestha Bharat • EBSB was conceptualized to make our country united, strong and promote excellence in all walks of life by means of long­term inter­state engagements through cultural exchanges and education. •(iv) Development Suppor t Services to States (DSSS) for Development of Infrastructure • To establish a Centre­State partnership model and reignite and establish Private Public Partnership across infrastructure sectors,

GS MENTORS 65 EXTERNAL COMMERCIAL BORROWINGS (ECB) ECBs are commercial loans raised by eligible resident entities from recognised non­ resident entities and should conform to parameters such as minimum maturity, permitted and non­permitted end­uses, maximum all­in­cost ceiling, etc. The ECB Framework enables permitted resident entities to borrow from recognized non­resident entities in the following forms: Loans including bank loans; Securitized instruments (e.g. bonds, preference shares / debentures); Buyers’ credit; Suppliers’ credit; Foreign Currency Convertible Bonds (FCCBs); Financial Lease; and Foreign Currency Exchangeable Bonds (FCEBs). Liberalisation of ECB Norms • All eligible borrowers can now raise ECB up to $750 million or equivalent per financial year under the automatic route replacing the existing sector wise limits. • "Tracks I and II under the existing framework are merged as 'Foreign Currency denominated ECB' and Track III and Rupee Denominated Bonds framework are combined as 'Rupee Denominated ECB' to replace the current four­tiered structure. • The minimum average maturity period (MAMP) has been reduced fromf 5 to three years • The list of eligible borrowers has been expanded to include all entities eligible to receive FDI. • Additionally, port trusts, units in SEZ, SIDBI, EXIM Bank, registered entities engaged in micro­finance activities, registered societies/trusts/ cooperatives and non­ government organisations can also borrow under the new framework.

GS MENTORS 66