MAJOR REFORMS IN PUBLIC DISTRIBUTION SYSTEM (PDS) FOR BETTER TARGETING, TRANSPARENCY & ACCOUNTABILITY?

           India has placed a lot of emphasis on improving the functioning of Public Distribution System in the country through automation of Fair Price Shops, computerization of Supply Chain Management and enforcement of provisions of National Food Security Act (NFSA), 2013 regarding oversight and grievance redressal in partnership with States/UTs.

Steps taken by Government of India for better targeting, Transparency and Accountability.

Automation of Fair Price Shops: Based on the pilots and learnings from the States/UTs, in November 2014 Department of Food & Public Distribution prescribed the guidelines and specifications for use of PoS at FPS. At present 2,04,162 FPSs (as on 15th May 2017) out of 5,26,377 have PoS.

Direct Benefit Transfer (Cash): “Cash Transfer of Food Subsidy Rules, 2015” were notified on August 21, 2015 under which food subsidy is directly credited to the account of the beneficiaries. At present Chandigarh, Puducherry and Dadra & Nagar Haveli (in few urban areas) are implementing this scheme.

.
.

Aadhaar Seeding in PDS: To weed out duplicate/in-eligible/bogus ration cards and to enable rightful targeting 77.56% i.e. about 17.99 crore ration cards (as on 15th May 2017) have been Aadhaar seeded. Under Section-7 of the Aadhaar Act 2016, the Department has notified the use of Aadhaar to receive subsidized foodgrains or Cash transfer on 8th February 2017.

Deletion of ration cards: As an outcome of digitization of Ration Cards/beneficiary records, de-duplication due to Aadhaar seeding, transfer/migration/deaths, change in economic status of beneficiaries and during the run-up to and implementation of NFSA a total of 2.33 crore ration cards have been deleted/cancelled. Based on this the Government has been able to achieve Rightful Targeting of Food Subsidies of about Rs 14,000 Crore per annum.

Digital/Cashless/Less-cash Payments in PDS: To promote the use of less-cash/digital payment mechanisms, the Department has issued detailed guidelines for use of AePS, UPI, USSD, Debit/Rupay Cards and e-Wallets on 7th December 2016. At present in 10 States/UTs a total of 50,117 FPSs are enabled for digital payments.

Automation of Fair Price Shops: On the basis of pilots and learnings from the States/UTs, in November, 2014 Department of Food & Public Distribution prescribed the guidelines and specifications for use of PoS at FPS. 

.
.

New central sector scheme ‘Integrated Management of PDS’ (IM-PDS): The scheme has been approved with an outlay of Rs. 127.3 crore to be implemented during FY 2018-19 and FY 2019-20 for establishing Public Distribution System Network (PDSN) to establish central data repository and central monitoring system of PDS operations and to also enable implementation of national level portability.

          The recent initiative of Village Mall Scheme aimed at improving the viability of Fair Price shops. To set up Village Malls in the FP Shops, the State Government of AP. 

DISCUSS THE POLICY MEASURES TAKEN BY GOVERNMENT TO PROMOTE GROWTH AND EMPLOYMENT GENERATION IN INDIAN ECONOMY?

            Measures to promote growth and employment generation: Tax policy plays an important role in promoting the growth and creation of employment. A number of measures have been taken by this Government in this direction, some of which are as under:

(i) Profit-linked deduction was introduced for start-ups.

(ii) The scope of investment-linked deduction was broadened by including certain new sectors, including infrastructure, which are critical to growth.

(iii) Investment allowance and higher additional depreciation was provided for undertakings set up in backward regions of states of Andhra Pradesh, Bihar, Telangana and West Bengal.

(iv) Incentive for employment generation was broadened and the conditions for eligibility to claim the incentive were relaxed.

 (v) Benefit was provided for computation of MAT liability and carry forward of loss for companies under Insolvency and Bankruptcy Code (IBC).

(vi) Safe Harbour provisions were further liberalised to align with industry standards.

(vii) Scope of domestic transfer pricing provisions was restricted only for transactions between enterprises having profit-linked deductions.

(vii) Pass through status was provided to Category I & II Alternative Investment Funds (AIFs).

 (viii) The time period for carry forward of MAT credit was increased from 10 to 15 years.  

.
.

Enumerate measures taken by government  to enhance the sources of capital for infrastructure financing in India?

            Ease of compliance for small businesses: Small businesses constitute the backbone of our economy. In order to reduce the compliance burden of small businesses and professionals, following measures have been taken by this Government: (i) Threshold for presumptive taxation of businesses was raised from Rs. 1 crore to Rs. 2 crore. (ii) For maintenance of books of accounts by individuals and HUFs, (a) income threshold was raised from Rs. 1.20 lakh to Rs. 2.5 lakh; and (b) turnover threshold was raised from Rs. 10 Lakh to Rs. 25 Lakh. (iii) Presumptive taxation was introduced for professionals having receipts up to Rs. 50 lakh. 5. Measures to incentivise affordable housing and real estate:

            Measures to incentivise affordable housing and real estateHousing has been an area of concern for middle and lower-middle class. Further, real estate sector plays a significant role in generating employment in the economy. Considering the importance of housing sector, this Government has taken the following measures to promote this sector: (i) Deduction of interest on loan taken to purchase selfoccupied house property was increased from Rs. 1.5 lakh to Rs. 2 lakh. (ii) 100% deduction was provided for the income of affordable housing projects. (iii) The base year for computation of long term capital gains was shifted from 1981 to 2001. (iv) Holding period for long-term gain on immovable property was reduced from 36 months to 24 months. (v) Safe harbour of 5% on stamp duty value was provided for the purpose of computation of capital gains on immovable property. 

.
.

            Incentives for start-ups: The condition for carry forward and set off of losses in cases of eligible start-ups is proposed to be relaxed enabling them to carry forward their losses on satisfaction of any one of the two conditions, i.e. continuity of 51% shareholding/voting power or continuity of 100% of original shareholders. Further, the provision which allows exemption of capital gains from sale of residential property on investment of net consideration in equity shares of eligible start-up shall be extended by 2 years. Thus the benefit shall be available for sale of residential property on or before 31st March, 2021. The condition of minimum holding of 50% of share capital or voting rights in the start-up is proposed to be relaxed to 25%. The condition restricting transfer of new asset being computer or computer software is also proposed to be relaxed from the current 5 years to 3 years.

FEATURES OF CODE WAGE BILL 2019

·       The Code on Wages, 2019 was introduced in Lok Sabha by the Minister of Labour, Mr. Santosh Gangwar on July 23, 2019. It seeks to regulate wage and bonus payments in all employments where any industry, trade, business, or manufacture is carried out.  The Code replaces the following four laws: (i) the Payment of Wages Act, 1936, (ii) the Minimum Wages Act, 1948, (iii) the Payment of Bonus Act, 1965, and (iv) the Equal Remuneration Act, 1976.

·       Coverage: The Code will apply to all employees.  The central government will make wage-related decisions for employments such as railways, mines, and oil fields, among others.  State governments will make decisions for all other employments.

·       Wages include salary, allowance, or any other component expressed in monetary terms. This does not include bonus payable to employees or any travelling allowance, among others.

·       Floor wage: According to the Code, the central government will fix a floor wage, taking into account living standards of workers.  Further, it may set different floor wages for different geographical areas.  Before fixing the floor wage, the central government may obtain the advice of the Central Advisory Board and may consult with state governments.  

·       The minimum wages decided by the central or state governments must be higher than the floor wage. In case the existing minimum wages fixed by the central or state governments are higher than the floor wage, they cannot reduce the minimum wages.

·       Fixing the minimum wage: The Code prohibits employers from paying wages less than the minimum wages.  Minimum wages will be notified by the central or state governments.  This will be based on time, or number of pieces produced.  The minimum wages will be revised and reviewed by the central or state governments at an interval of not more than five years.  While fixing minimum wages, the central or state governments may take into account factors such as: (i) skill of workers, and (ii) difficulty of work.

·       Overtime: The central or state government may fix the number of hours that constitute a normal working day.  In case employees work in excess of a normal working day, they will be entitled to overtime wage, which must be at least twice the normal rate of wages.  

·       Payment of wages: Wages will be paid in (i) coins, (ii) currency notes, (iii) by cheque, (iv) by crediting to the bank account, or (v) through electronic mode.  The wage period will be fixed by the employer as either: (i) daily, (ii) weekly, (iii) fortnightly, or (iv) monthly.

.
.

·       Deductions: Under the Code, an employee’s wages may be deducted on certain grounds including: (i) fines, (ii) absence from duty, (iii) accommodation given by the employer, or (iv) recovery of advances given to the employee, among others.  These deductions should not exceed 50% of the employee’s total wage.

·       Determination of bonus: All employees whose wages do not exceed a specific monthly amount, notified by the central or state government, will be entitled to an annual bonus.  The bonus will be at least: (i) 8.33% of his wages, or (ii) Rs 100, whichever is higher.  In addition, the employer will distribute a part of the gross profits amongst the employees.  This will be distributed in proportion to the annual wages of an employee.  An employee can receive a maximum bonus of 20% of his annual wages.

·       Gender discrimination: The Code prohibits gender discrimination in matters related to wages and recruitment of employees for the same work or work of similar nature.  Work of similar nature is defined as work for which the skill, effort, experience, and responsibility required are the same. 

·       Advisory boards: The central and state governments will constitute advisory boards.  The Central Advisory Board will consist of: (i) employers, (ii) employees (in equal number as employers), (iii) independent persons, and (iv) five representatives of state governments.  State Advisory Boards will consist of employers, employees, and independent persons.  Further, one-third of the total members on both the central and state Boards will be women.  The Boards will advise the respective governments on various issues including: (i) fixation of minimum wages, and (ii) increasing employment opportunities for women.

·       Offences: The Code specifies penalties for offences committed by an employer, such as (i) paying less than the due wages, or (ii) for contravening any provision of the Code.  Penalties vary depending on the nature of offence, with the maximum penalty being imprisonment for three months along with a fine of up to one lakh rupees. 

.
.

NATIONAL STRATEGY FOR FINANCIAL INCLUSION FOR INDIA 2019-2024

Definition of financial inclusion?

            Financial inclusion has been defined as “the process of ensuring access to financial services,

timely and adequate credit for vulnerable groups such as weaker sections and low-income groups

at an affordable cost.

Why financial inclusion?

            Financial inclusion is increasingly being recognized as a key driver of economic growth

and poverty alleviation the world over.

            Access to formal finance can boost job creation, reduce vulnerability to economic shocks and increase investments in human capital. Without adequate access to formal financial services, individuals and firms need to rely on their own limited resources or rely on costly informal sources of finance to meet their financial needs and pursue growth opportunities.

            At a macro level, greater financial inclusion can support sustainable and inclusive socio-economic growth for all.

.
.

            There has been a growing evidence on how financial inclusion has a multiplier effect in  boosting overall economic output, reducing poverty and income inequality at the national level. Financial inclusion of women is particularly important for gender equality and women’s economic empowerment.

            With greater control over their financial lives, women can help themselves and their families to come out of poverty; reduce their risk of falling into poverty; eliminate their exploitation from the informal sector; and increase their ability to fully engage in measurable and productive economic activities.

            An inclusive financial system supports stability, integrity and equitable growth. Therefore,financial exclusion because of several barriers likephysical, socio-cultural and psychological, warrants attention from the policy makers. Some of the key reasons resulting in involuntary exclusion are:

Why financial inclusion strategy?

1)seeks to address the inherent barriers of access to a gamut of financial products and services. 

.
.

2)financial inclusion as a key enabler for achieving sustainable development worldwide by improving the quality of lives of poor and marginalized sections of the society.

3)An inclusive financial system (ably supported through sound financial inclusion policies, focus on financial education and customer protection) is not only pro-growth but also pro-poor with the potential to reduce income inequality and poverty, promote social cohesion and shared economic development.

Status of financial inclusion in India :

            India began its financial inclusion journey as early as in 1956 with the nationalisation of Life Insurance companies. This was followed by nationalisation of banks in 1969 and 1980. The general insurance companies were nationalised in 1972. A review of the status of financial inclusion in India indicates that a host of initiatives have been undertaken over the years in the financial inclusion domain.

            Under PMJDY, 34.01 crore2 accounts have been opened with deposits amounting to ₹89257 crore upto January 30, 2019 within a short span of five years.

            Under Pradhan Mantri Suraksha Bima Yojana (PMSBY) a renewable one- year accidental death cum disability cover of ₹2 lakhs is offered to all subscribing bank account holders in the age group of 18 to 70 years for a premium as low as ₹12/- per annum per subscriber.

            Under APY, a subscriber (in the age group of 18 to 40 years) will receive fixed monthly pension in the range of ₹1,000 to ₹5,000 after completing 60 years of age, depending on the contributions made by the subscriber.

Also various measures that have been undertaken by various stakeholders in strengthening financial inclusion in the country, there are still critical gaps existing in the usage of financial services that require attention of policy makers through necessary co-ordinationand effectivemonitoring. 

.
.

1.     Inadequate Infrastructure: Limited physical infrastructure, limited transport facility, inadequately trained staff etc., in parts of rural hinterland and far flung areas of the Himalayan and North East regions create a barrier to the customer while accessing financial services.

2.     Poor Connectivity: With technology becoming an important enabler to access financial services, certain regions in the country that have poor connectivity tend to be left behind in ensuring access to financial services thereby creating a digital divide. Technology could be the best bridge between the financial service provider and the last mile customer. Fintech companies can be one of the best solutions to address this issue. The key challenge that needs to be resolved would be improving tele and internet connectivity in the rural hinterland and achieving connectivity across the country.

3.     Convenience and Relevance: The protracted and complicated procedures act as a deterrent while on-boarding customers. This difficulty is further increased when the products are not easy to understand, complex and do not meet the requirements of the customers such as those receiving erratic and uncertain cash flows from their occupation.

4.     Socio-Cultural Barriers: Prevalence of certain value system and beliefs in some sections of the population results in lack of favourable attitude towards formal financial services. There are still certain pockets wherein women do not have the freedom and choice to access financial services because of cultural barriers.

5.     Product Usage: While the mission-based approach to financial inclusion has resulted in increasing access to basic financial services including micro insurance and pension, there is a need to increase the usage of these accounts to help customers achieve benefits of relevant financial services and help the service providers to achieve the necessary scale and sustainability. This can be undertaken through increasing economic activities like skill development and livelihood creation, digitising Government transfers by strengthening the digital transactions’ eco-system, enhancing acceptance infrastructure, enhancing financial literacy and having in place a robust customer protection framework.

6.     Payment Infrastructure: Currently, majority of the retail payment products viz., CTS, AEPS, NACH, UPI, IMPS etc. are operated by National Payments Council of India (NPCI), a Section (8) Company promoted by a group of public, private and foreign banks. There is a need to have more market players to promote innovation & competition and to minimize concentration risk in the retail payment system from a financial stability perspective.

.
.

National Strategy for Financial Inclusion for India 2019-2024

            The vision for financial inclusion as, “convenient access to a basket of basic formal financial products and services that should include savings, remittance, credit, government-supported insurance and pension products to small and marginal farmers and low-income households at reasonable cost with adequate protection progressively supplemented by social Cash transfers, besides increasing the access of small and marginal enterprises to formal finance with a greater reliance on technology to cut costs and improve service delivery.

.
.

Pillars of National Strategy for Financial Inclusion for India 2019-2024:

 

Measuring Finacial inclusion :

HISTORY OF PLANNING IN INDIA

           First of all the idea of planned economy was crystallized in 1930s when our national leaders came under the influence of socialist philosophy. India’s Five year plans were very much impressed by the rapid strides achieved by the USSR through five years plans.

        In 1934, Sir M. Visvesvaraya had published a book titled “Planned Economy in India”, in which he presented a constructive draft of the development of India in next ten years. His core idea was to lay out a plan to shift labor from agriculture to industries and double up National income in ten years. This was the first concrete scholarly work towards planning. The economic perspective of India’s freedom movement was formulated during the thirties between the 1931 Karachi session of Indian National Congress, 1936 Faizpur session of India National Congress.

National Planning Committee

        The first attempt to develop a national plan for India came up in 1938. In that year, Congress President Subhash Chandra Bose had set up a National Planning Committee with Jawaharlal Nehru as its president. However the reports of the committee could not be prepared and only for the first time in 1948 -49 some papers came out.

Bombay Plan

         In 1944 Eight Industrialists of Bombay viz. Mr. JRD Tata, GD Birla, Purshottamdas Thakurdas, Lala Shriram, Kasturbhai Lalbhai, AD Shroff , Ardeshir Dalal, & John Mathai working together prepared “A Brief Memorandum Outlining a Plan of Economic Development for India”. This is known as “Bombay Plan”. This plan envisaged doubling the per capita income in 15 years and tripling the national income during this period. Nehru did not officially accept the plan, yet many of the ideas of the plan were inculcated in other plans which came later.

People’s Plan

          People’s plan was drafted by MN Roy. This plan was for ten years period and gave greatest priority to Agriculture. Nationalization of all agriculture and production was the main feature of this plan. This plan was based on Marxist socialism and drafted by M N Roy on behalf of the Indian federation of Lahore.

Gandhian Plan

         This plan was drafted by Sriman Nayaran, principal of Wardha Commercial College. It emphasized the economic decentralization with primacy to rural development by developing the cottage industries.

Sarvodaya Plan

         Sarvodaya Plan (1950) was drafted by Jaiprakash Narayan. This plan itself was inspired by Gandhian Plan and Sarvodaya Idea of Vinoba Bhave. This plan emphasized on agriculture and small & cottage industries. It also suggested the freedom from foreign technology and stressed upon land reforms and decentralized participatory planning.

Planning and Development Department

        In August 1944, The British India government set up “Planning and Development Department” under the charge of Ardeshir Dalal. But this department was abolished in 1946.

Planning Advisory Board

        In October 1946, a planning advisory board was set up by Interim Government to review the plans and future projects and make recommendations upon them.

Planning Commission

          Immediately after independence in 1947, the Economic Programme Committee (EPC) was formed by All India Congress Committee with Nehru as its chairman. This committee was to make a plan to balance private and public partnership and urban and rural economies. In 1948, this committee recommended forming of a planning commission. In March 1950, in pursuance of declared objectives of the Government to promote a rapid rise in the standard of living of the people by efficient exploitation of the resources of the country, increasing production and offering opportunities to all for employment in the service of the community, the Planning Commission was set up by a Resolution of the Government of India as an advisory and specialized institution. Planning Commission was an extra-constitutional body, charged with the responsibility of making assessment of all resources of the country, augmenting deficient resources, formulating plans for the most effective and balanced utilization of resources and determining priorities. Jawaharlal Nehru was the first Chairman of the Planning Commission.

National Development Council

        Government of India could take the initiative to set up the planning commission only by virtue of provision in the constitution which made Economic & Social planning an item in Concurrent list. The Resolution to set up a planning commission was actually based upon the assumption that the roots of Centre- State cooperation should be deeper. Later, in 1952, the setting up of the National Development Council was in fact a consequence of this provision.

GROUP I MAINS ECONOMY

THE GREAT DEPRESSION (1929 -1934) WAS ATTENDED BY MOMENTOUS CONSEQUENCES IN THE ECONOMIC AS WELL AS IN THE POLITICAL SPHERE. EXPLAIN.

         In 1929, The great world depression started with the wall Street crisis, had remarkable impact on the Economy and political order of the world. Economic impact led to the problem of poverty and unemployment.

        Many of masses economically they became unemployed as the industries stopped manufacturing of the goods. This also lead to Financial deficit to governments of Germany, U.S.A, France and England. To make better this situation british government had to give up the gold standard and to adopt the policy of devaluation of sterling in 1931.Later All the countries of Europe adopted policy of protection and imperial preference. In American policy of New deal was adopted to face the new economic challenges.

        The problems which was generated by the economic crisis of 1929, was not able to solve by the democracatic form governments, so in some of the Europeancountries dictatorial rule emerged.

       In the political sphere most important change was, the labour government fall in England. People started slogans against capitalism and supporting socialism. Because of this crisis a kind of very practical nationalism emerged in Europe which lastly resulted in both political cum economic rivalry which was the most important cause of the second world war in 1939.