About the International Finance Corporation (IFC):

The International Finance Corporation (IFC) is an international financial institution that offers investment,
advisory, and asset management services to encourage private sector development in developing countries.
 It is a member of the World Bank Group and is headquartered in Washington, D.C., United States.
 It was established in 1956 as the private sector arm of the World Bank Group to advance economic
development by investing in strictly for-profit and commercial projects that purport to reduce poverty and
promote development.
 The IFC is owned and governed by its member countries, but has its own executive leadership and staff that
conduct its normal business operations.
 It is a corporation whose shareholders are member governments that provide paid-in capital and which
have the right to vote on its matters.

About IDA:
The International Development Association (IDA) is the part of the World Bank that helps the world’s poorest
countries. Overseen by 173 shareholder nations, IDA aims to reduce poverty by providing loans (called “credits”)
and grants for programs that boost economic growth, reduce inequalities, and improve people’s living
conditions.
 IDA complements the World Bank’s original lending arm—the International Bank for Reconstruction and
Development (IBRD). IBRD was established to function as a self-sustaining business and provides loans and
advice to middle-income and credit-worthy poor countries. IBRD and IDA share the same staff and
headquarters and evaluate projects with the same rigorous standards.
 IDA is one of the largest sources of assistance for the world’s 771 poorest countries, 39 of which are in
Africa, and is the single largest source of donor funds for basic social services in these countries.
 IDA lends money on concessional terms. This means that IDA credits have a zero or very low interest charge
and repayments are stretched over 25 to 40 years, including a 5- to 10-year grace period. IDA also provides
grants to countries at risk of debt distress.
 In addition to concessional loans and grants, IDA provides significant levels of debt relief through the
Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI).

About Sovereign Gold Bond scheme:

Launched by Prime Minister Narendra Modi in November 2015, the Sovereign Gold Bond scheme aims at cutting
down the huge demand for the precious metal.

Salient features:
 Minimum investment under the Gold Bond scheme is one gm.
 Maximum investment under the Gold Bond scheme is 500 gm.
 Interest to be obtained under the Gold Bond scheme is at a fixed rate of 2.75 per cent payable every six
months.
 The Gold Bond scheme is available in DEMAT and paper form.
 The Gold Bond scheme has a tenure of eight years, with exit options in the 5th, 6th and 7th year.
 At time of exit the bond can be redeemed at market rate of gold.
 The gold bond can be used as collateral to avail a loan.
 Can be used as collateral for loans.
 Capital gain tax will be exempted on redemption.
India slips to 143 in economic freedom index
The Heritage Foundation has released its Index of Economic Freedom report 2017.
About the index:
Economic freedom is measured based on 12 quantitative and qualitative factors, grouped into four broad
categories, or pillars, of economic freedom:
1. Rule of Law (property rights, government integrity, judicial effectiveness).
2. Government Size (government spending, tax burden, fiscal health).
3. Regulatory Efficiency (business freedom, labor freedom, monetary freedom).
4. Open Markets (trade freedom, investment freedom, financial freedom).
Each of the ten economic freedoms within these categories is graded on a scale of 0 to 100. A country’s overall
score is derived by averaging these ten economic freedoms, with equal weight being given to each.

Highlights of the report:

 India is ranked 143, behind its several South Asian neighbours including Pakistan, as progress on market-
oriented reforms has been “uneven”.
 India has been placed in the category of “mostly unfree” economies, as progress on market-oriented
reforms has been “uneven”.
 India’s overall score of 52.6 points is 3.6 points less than that of last year, when India ranked 123rd.
 India is a significant force in world trade, the report noted, but corruption, underdeveloped infrastructure,
and poor management of public finance undermine overall development.
 Hong Kong, Singapore and New Zealand topped the index. Among South Asian countries, only Afghanistan
(163) and Maldives (157) were ranked below India.
 Nepal (125), Sri Lanka (112), Pakistan (141), Bhutan (107), and Bangladesh (128) surpassed India in
economic freedom.
 China with a score of 57.4 points – an increase of 5.4 points compared to previous year – was placed at 111
position. The United States was ranked 17 with 75.1 points.
 The world average score of 60.9 is the highest recorded in the 23-year history of the index.
Forty-nine countries – the majority of which are developing countries, but also including countries such as
Norway and Sweden – achieved their highest-ever index scores.

What are Masala bonds?

Masala bonds are bonds issued outside India but denominated in Indian Rupees, rather than the local currency.
The term was used by IFC to evoke the culture and cuisine of India. Unlike dollar bonds, where the borrower
takes the currency risk, masala bond makes the investors bear the risk.
The first Masala bond was issued by the World Bank backed International Finance Corporation in November
2014 when it raised 1,000 crore bond to fund infrastructure projects in India. Later in August 2015 International
Financial Corporation for the first time issued green masala bonds and raised Rupees 3.15 Billion to be used for
private sector investments that address climate change in India.HDFC raises Rs 500 crore via masala bonds

About NIIF:
The National Investment and Infrastructure Fund (NIIF) was proposed in Union Budget 2015. In the last week of
December, the government has set up this Rs. 40000 crore fund to provide long term capital for infrastructure
projects.
  The objective of NIIF is to maximise economic impact through infrastructure development in viable projects
both greenfield and brownfield, including stalled projects, mainly in the core infra sector.
NIIF has been structured as a fund of funds and set up as Category II Alternate Investment Fund (AIF) under the
Securities and Exchange Board of India (SEBI) Regulations.

The five commodity boards, under the ministry of commerce, are responsible for production,
development and export of tea, coffee, rubber, spices and tobacco.
The Coffee Board is a statutory organisation constituted under the Coffee Act, 1942. Similarly, the
Rubber Board was constituted under the Rubber Act, 1947. Tea Board was set up on 1st April, 1954
under the Tea Act, 1953. The Tobacco Board was constituted in January, 1976, while the Spices Board
was formed in February, 1987.

About Electronics Development Fund (EDF):

The EDF is a ‘fund of funds’ that works with venture capitalists to create funds, known as ‘daughter funds,’
which provide risk capital to companies developing new technologies in the area of electronics, nano-electronics
and IT.
 The fund is an attempt to develop the electronics system design and manufacturing sector in the country to
achieve “net zero imports” by 2020.

 National Productivity Council, an autonomous body under Department of Industrial Policy & Promotion,
Ministry of Commerce & Industry, Government of India was established on 12th February, 1958, with the
objective of stimulating and promoting productivity and quality consciousness across all sectors in the
country. 12th-18th February is celebrated as the ‘National Productivity Week’ every year by the national
Productivity Council. The theme chosen for this year’s observance is “From Waste to Profits-through
Reduce, Recycle and Reuse”.

About Trai:
 It is the independent regulator of the telecommunications business in India.
 It was established in 1997 by an Act of Parliament to regulate telecom services and tariffs in India.
 In January 2000, TRAI act was amended to establish the Telecom Disputes Settlement Appellate Tribunal
(TDSAT) to take over the adjudicatory functions of the TRAI.
The TDSAT was set up to resolve any dispute between a licencor and a licensee, between two or more service
providers, between a service provider and a group of consumers. In addition, any direction, TRAI orders or
decisions can be challenged by appealing to TDSAT.

About TDSAT:
The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) was established to adjudicate disputes and
dispose of appeals with a view to protect the interests of service providers and consumers of the telecom sector
and to promote and ensure orderly growth of the telecom sector.
  Telecom Disputes Settlement Appellate Tribunal (TDSAT) was established in 2000 through an amendment
of the TRAI 1997 act.
 The primary objective of TDSAT’s establishment was to release TRAI from adjudicatory and dispute
settlement functions in order to strengthen the regulatory framework.
Any dispute involving parties like licensor, licensee, service provider and consumers are resolved by TDSAT.
Moreover, any direction, order or decision of TRAI can be challenged by appealing in TDSAT.

About CyAT:
Cyber Appellate Tribunal has been established under the Information Technology Act under the aegis of
Controller of Certifying Authorities (C.C.A.).
 As per the IT Act, any person aggrieved by an order made by the Controller of Certifying Authorities, or by
an adjudicating officer under this Act may prefer an appeal before the Cyber Appellate Tribunal.
 This Tribunal is headed by a Chairperson who is appointed by the Central Government by notification as
provided under Section 49 of the IT Act 2000.
 It was conceived to adjudicate cyber crimes and disputes such as hacking, sending of offensive or false
messages, receiving stolen computer resource, identity theft, cheating by personation, violation of privacy,
domain name disputes and other cyber fraud cases.
 The tribunal has been vested with the same powers as a civil court, the cases requiring punishment instead
of financial penalty are transferred to the magistrate concerned.
 CyAT, however, has been headless since July 2011.
Govt proposes setting up of Payments Regulatory Board under RBI
The government, keen on promoting digital payments, has proposed to form a separate regulator for the
payments industry to resolve disputes, ensure customer protection and check any foul play by dominant players.
Key facts:
Finance minister Arun Jaitley has called for an overhaul of the Payment and Settlements Act 2007 to create the
Payments Regulatory Board.
 The board would be under the Reserve Bank of India (RBI). This is being done to avoid criticism that the
board would dilute the banking regulator’s powers.
 The Payments Regulatory Board will exercise the functions relating to the regulation and supervision of
payments and settlement systems under the Act.
 The board would look at interoperability of digital transactions and facilitate competition and innovation
among financial technology companies in the payments space.
 It will also be responsible for consumer protection, decide on penalties and create appeal mechanisms,
which could ensure faster resolution of disputes over settlement of digital payments.
 The proposed board will have the RBI governor as the chairperson, along with a deputy governor in charge
of payments as member, besides an RBI officer nominated by the RBI Board. It will also have three
members nominated by the central government.

Background:
The payments industry has been crying for attention in the wake of the explosion of financial technology
companies that facilitate transactions. Consumers have embraced their services due to the simplicity they offer.
But there have been allegations that dominant banks have been creating hurdles for such companies to protect
their turf.

What are payment banks?

Payment banks are non-full service banks, whose main objective is to accelerate financial inclusion. These banks
have to use the word ‘Payment Bank’ in its name which will differentiate it from other banks.

Key facts:
 Capital requirement: The minimum paid-up equity capital for payments banks is Rs. 100 crore.
 Leverage ratio: The payments bank should have a leverage ratio of not less than 3%, i.e., its outside
liabilities should not exceed 33.33 times its net worth (paid-up capital and reserves).
 Promoter’s contribution: The promoter’s minimum initial contribution to the paid-up equity capital of such
payments bank shall at least be 40% for the first five years from the commencement of its business.
 Foreign shareholding: The foreign shareholding in the payments bank would be as per the Foreign Direct
Investment (FDI) policy for private sector banks as amended from time to time.
 SLR: Apart from amounts maintained as Cash Reserve Ratio (CRR) with the Reserve Bank on its outside
demand and time liabilities, it will be required to invest minimum 75% of its “demand deposit balances” in
Statutory Liquidity Ratio(SLR) eligible Government securities/treasury bills with maturity up to one year and
hold maximum 25% in current and time/fixed deposits with other scheduled commercial banks for
operational purposes and liquidity management.

What are the scopes of activities of Payment Banks?

 Payments banks will mainly deal in remittance services and accept deposits of up to Rs 1 lakh.
 They will not lend to customers and will have to deploy their funds in government papers and bank
deposits.
 The promoter’s minimum initial contribution to equity capital will have to be at least 40% for the first five
years.
 They can accept demand deposits.
 Payments bank will initially be restricted to holding a maximum balance of Rs. 100,000 per individual
customer.
 They can issue ATM/debit cards but not credit cards.
 They can carry out payments and remittance services through various channels.
Distribution of non-risk sharing simple financial products like mutual fund units and insurance products, etc. is
allowed.

Electoral bonds:
It is expected that RBI will issue such bonds on behalf of the government like any other sovereign bond to which
a donor may subscribe from bank branches and take certificates against it. Later, the bonds can be given to any
political party, which will be able to redeem these securities at its bank account. So, the bearer’s identity is
unlikely to be revealed in the books of the party and the recipient party will also remain unknown.

About FATF:
FATF was established in 1989. Its objectives are to set standards and promote effective implementation
of legal, regulatory and operational measures for combating money laundering, terrorist financing and
other related threats to the integrity of the international financial system.
The Financial Action Task Force (FATF) currently comprises two regional organisations and 35 member
jurisdictions, including India, US, UK, China and the European Commission.
Income Tax Department (ITD) launches Operation Clean Money:
 Income Tax Department (ITD) has initiated Operation Clean Money.
 Initial phase of the operation involves e-verification of large cash deposits made during 9th November to
30th December 2016.
 Data analytics has been used for comparing the demonetisation data with information in ITD databases.
 In the first batch, around 18 lakh persons have been identified in whose case, cash transactions do not
appear to be in line with the tax payer’s profile.

Mission 41k:
 It is a mission launched by Indian Railways to save Rs 41,000 crore on the Indian Railways’ expenditure on
energy consumption over the next 10 years.
 This target will be achieved by taking a slew of measures which include moving 90% of traffic to electric
traction over diesel. Presently, this is at 50 %of the total rail traffic. The Railways ministry plans to achieve
this target by doubling the current pace of electrification.
 The railways also aim to procure more and more electricity at cheaper rates through open market instead
of sourcing it through DISCOMs and thereby hopes to save as much as 25% on its energy expenses.
New technologies are also being explored to bring down electric consumption

About GAAR:
The General Anti-Avoidance Rule was introduced by Finance Minister Pranab Mukherjee in his Budget with the
objective to “counter aggressive tax avoidance schemes.”
 It empowers officials to deny the tax benefits on transactions or arrangements which do not have any
commercial substance or consideration other than achieving tax benefit.
 It contains a provision allowing the government to retroactively tax overseas deals involving local assets. It
could also be used by the government to target participatory notes (P-Notes).

About GAAR:
General Anti-Avoidance Rule (GAAR) was part of the 2012-13 Budget speech of the then Finance
Minister Pranab Mukherjee to check tax evasion and avoidance. However, its implementation was
repeatedly postponed because of the apprehensions expressed by foreign investors. It contains provision
allowing the government to prospectively tax overseas deals involving local assets.

Background:
GAAR was introduced to address tax avoidance and ensure that those in different tax brackets are taxed
the correct amount. In many instances of tax avoidance, arrangements may take place with the sole
intention of gaining a tax advantage while complying with the law. This is when the doctrine of ‘substance
over form’ may apply. ‘Substance over form’ is where real intention of parties and the purpose of an
arrangement is taken into account rather than just the nomenclature of the arrangement. Many countries,
like Canada and South Africa, have codified the doctrine of ‘substance over form’ through a GAAR – type
ruling.

Tax guidelines to target shell companies notified

The Central Board of Direct Taxes (CBDT) has issued guidelines on the ‘place of effective management’, or
POEM, of a company to determine its tax liability. POEM rules target companies that were set up abroad to
retain income outside India but are controlled from India.
What is POEM?
The Place of Effective Management is defined in the Income Tax Act to mean “a place where key management
and commercial decisions that are necessary for the conduct of the business of an entity as a whole are, in
substance, made.”

About Shram Awards:

The Prime Minister’s Shram Awards were instituted in 1985 by the Government of India. This national award is
conferred on workers for outstanding contributions that improve productivity, innovation, and indigenization,
resulting in saving foreign exchange. The award is also given for long-term exceptional dedicated work.
The objective of the Prime Ministers Shram Awards is to recognize the outstanding contributions made by
workmen as defined in the Industrial Dispute Act, 1947 in organizations both in public and private sector and
who have distinguished record of performance, devotion to duty of a high order, specific contribution in the
field of productivity and proven innovative abilities among others.
They are four types of awards:
1. Shram Ratna: Rs. Two lakhs and recognition of their contribution to their field (a Sanad).
2. Shram Bhushan: RS. 100000 and a Sanad.
3. Shram Vir / Shram Veerangana: RS. 60000 and a Sanad.
Shram Devi / Shram Shree: RS. 40000 and a Sanad

India Innovation Index

To make India an innovation-driven economy, the government has launched a mega initiative “India Innovation
Index”.

What is it for?
The index will rank states on Innovations through country’s first online innovation index portal that will capture
data on innovation from all Indian states on innovation and regularly update it in real time.

Key facts:
 The index was launched by NITI Aayog, Department of Industrial Policy & Promotion (DIPP) and
Confederation of Indian Industry (CII).
 The India Innovation Index Framework will be structured based on the best practices followed in Global
Innovation Index (GII) indicators and additionally by adding India-centric parameters those truly reflect the
Indian innovation ecosystem.
 This initiative will be the point of reference for all international agencies to collect India’s up to date data
points for global indices and analytic.
About GII:
The Global Innovation Index (GII), co-published by World-Intellectual Property Organization (WIPO), Cornell
University and INSEAD with CII as a Knowledge Partner since inception, has been ranking world economies
including India since 2007 according to their innovation capabilities and outcomes using 82 indicators among a
host of other important parameters.
 It has established itself as both a leading reference on innovation and a ‘tool for action’ for policy makers.
  India currently ranks 66th out of 128 countries on the Global innovation Index (GII) 2016.

India Innovation Index to measure performance of Indian states

The World Economic Forum, NITI Aayog, the World Intellectual Property Organization and the Cornell University
are working together to develop an India Innovation Index that will provide impetus to Indian states to drive the
innovative spirit.
Key facts:
 This index will encourage states to compete with each other and, in turn, lead to better policies for
inclusive growth.
 Each partnering organisation will nominate a working group member to work on the index. The first ranking
is expected to be released at the India Economic Summit in New Delhi in October 2017.
 The index will be based on key pillars of innovation and sub-indices that together will assist in tailoring
policies that promote inclusive growth. The pillars include the strength of institutions, capacity of human
capital and research, supporting infrastructure and the level of business sophistication, among others.
 The index will measure and rank the innovation performance of all Indian states with the aim of moving
India towards an innovation-driven economy.
 The index will spur competition and ensure progress towards innovation at the local level in India.

Children
 Even though India has a comprehensive legal framework for protection of child rights in the form of
Juvenile Justice (Care and Protection of Children) Act 2015, POCSO Act, 2012 along with RTE Act 2009 and
recently amended Child Labour (Prohibition and Regulation) Amendment Act, 2106, there is limited
awareness of online risks for children, both among parents and guardian and children themselves.

India’s first international stock exchange:

 India’s first international exchange-India INX- was recently inaugurated by PM at International Financial
Services Centre (IFSC) in Gujarat International Financial Tech City (GIFT) located in Gandhinagar.
 India International Exchange (INX), the wholly-owned subsidiary of the Bombay Stock Exchange (BSE),
through its global bourse, will start trading initially in equity derivatives, currency derivatives, commodity
derivatives including Index and Stocks. Subsequently, depository receipts and bonds would be offered once
the required infrastructure for the same is in place.
 India INX is one of the world’s most advanced technology platforms with a turn-around time of 4 micro
seconds. It will operate for 22 hours a day to allow international investors and Non Residents Indians to
trade from anywhere across the globe.
 It will act as a gateway to raise capital for the country’s infrastructure and development needs. In parallel, it
would provide cross-border opportunities of investment with a comparatively low cost of transaction in the
world’s most technologically advanced platform.

About National Trust:

The National Trust is a Statutory Body under Department of Empowerment of Persons with Disabilities
(Divyangjan), Ministry of Social Justice & Empowerment.
 The National Trust has been set up to discharge two basic duties – legal and welfare. Legal duties are
discharged through Local Level Committee (LLC) set up at district level under the chairmanship of the
District Collector / District Magistrate and providing legal guardianship. Welfare duty is discharged through
the schemes and activities.
 The schemes and activities of the National Trust inter-alia include training, awareness and capacity building
programmes and shelter, care giving and empowerment.
 The National Trust is implementing 10 schemes for overall development of persons with disabilities which
have been revised and launched last year.

FIPB clears 6 FDI proposals worth Rs 1,200 crore

Inter-ministerial body Foreign Investment Promotion Board (FIPB) has approved six investment proposals
envisaging foreign investment of Rs 1,200 crore.

Background:
India allows FDI in most sectors through the automatic route, but in certain segments considered sensitive for
the economy and security, the proposals have to be first cleared by FIPB.

About FIPB:
The Foreign Investment Promotion Board (FIPB), housed in the Department of Economic Affairs, Ministry of
Finance, is an inter-ministerial body, responsible for processing of FDI proposals and making recommendations
for Government approval.

Main tasks:
 It considers and recommends foreign direct investment (FDI) which does not come under the automatic
route.
 It provides a single window clearance for proposals on FDI in India.

FIPB comprises of the following Secretaries to the Government of India:

 Secretary to Government, Department of Economic Affairs, Ministry of Finance – Chairperson
 Secretary to Government, Department of Industrial Policy & Promotion, Ministry of Commerce & Industry
 Secretary to Government, Department of Commerce, Ministry of Commerce & Industry
 Secretary to Government, Economic Relations, Ministry of External Affairs
 Secretary to Government, Ministry of Overseas Indian Affairs.

On what basis decisions on FDI are taken by the FIPB?

The extant FDI Policy, Press Notes and other related notified guidelines formulated by Department of Industrial
Policy and Promotion (DIPP) in the Ministry of Commerce and Industry are the bases of the FIPB decisions.

Financial data management body mooted

The Committee, headed by Ajay Tyagi, has submitted its report and a draft bill titled ‘The financial data
management centre bill 2016’.
 The panel has suggested setting up a financial data management centre (FDMC) for managing the
repository of financial regulatory data to ensure stability in the economy.

Key facts:
 The powers of the Financial Data Management Centre (FDMC) will include the establishment, operation
and maintenance of the financial system database along with collecting financial regulatory data and
providing access to it.
 The body will also provide analytical support to the Financial Stability and Development Council (FSDC) on
issues relating to financial stability.

Important recommendations made by the committee:

 Efforts should be concentrated on framing the law, setting up of centre and standardizing processes around
collection of data from central level regulators and entities.
 As the system matures and if it is decided to integrate data of state level financial sector regulators, the
same has to be done with wide consultation with the states, which is a long drawn process.
 Centre should establish an electronic database for financial regulatory information. It should be in-charge
of the day to day operations, maintenance and updating the electronic database, analyse the data
submitted in the database and provide analytical support to FMDC.
 To ensure secrecy and avoid conflict of interest, member, employee or officer of the centre having access
to confidential data should not be allowed to render advice or accept any employment with a financial
service provider for a period specified in the act until the person has taken approval of the centre.
 The committee has also asked the government to grant the status of “public servants” to the members,
officers and employees of the centre.

Government committee lists digital measures to cut cash usage

A committee, headed by former finance secretary Ratan Watal, has suggested ways to encourage digital
payments.

Background:

The government has been pitching for a less-cash economy after it demonetised old Rs 500 and Rs 1,000 notes
on November 8.

The Board for Regulation and Supervision of Payment and Settlement Systems (BPSS) can be given an
independent statutory status within the overall structure of the RBI and called Payments Regulatory Board, the
committee has suggested. The BPSS currently functions as a sub-committee of the Central Board of RBI.
The committee has called for amendments to the Payments and Settlement Systems Act, 2007 to provide for
this board apart from giving an explicit mandate for competition and innovation, open access and
interoperability, consumer protection, regulations on systemic risks and data protection.

It has suggested encouragement to digital payments within the government, a suggestion that has already rolled
out with government prescribing thresholds and waiving charges. A ‘DIPAYAN’ fund is proposed from savings
generated from cashless transactions to expand digital payments along with a ranking of states, government
departments, districts and panchayats to encourage digital payments.

Operations of payment systems like Real Time Gross Settlement (RTGS) and National Electronic Fund Transafer
(NEFT) could be outsourced after a cost benefit analysis. These payment systems should be upgraded to 24×7 in
due course of time, the committee has suggested.

SARFAESI Act:
This act allows banks and financial institutions to auction properties (residential and commercial) when
borrowers fail to repay their loans. It enables banks to reduce their non-performing assets (NPAs) by adopting
measures for recovery or reconstruction.

Key facts:
 Upon loan default, banks can seize the securities (except agricultural land) without intervention of the
court.
 SARFAESI is effective only for secured loans where bank can enforce the underlying security. In such cases,
court intervention is not necessary, unless the security is invalid or fraudulent. However, if the asset in
question is an unsecured asset, the bank would have to move the court to file civil case against the
defaulters.
 The SARFAESI Act also provides for the establishment of Asset Reconstruction Companies (ARCs) regulated
by RBI to acquire assets from banks and financial institutions.
 The Act provides for sale of financial assets by banks and financial institutions to asset reconstruction
companies (ARCs). RBI has issued guidelines to banks on the process to be followed for sales of financial
assets to ARCs.
 The provisions of this Act are applicable only for NPA loans with outstanding above Rs. 1lac. NPA loan
accounts where the amount is less than 20% of the principal and interest are not eligible to be dealt with
under this Act.

The Act provides three alternative methods for recovery of non-performing assets, namely:
 Securitisation
 Asset Reconstruction.
 Enforcement of Security without the intervention of the Court.

India’s first Humsafar train:

 The Indian Railways has launched India’s first AC III tier Humsafar Express. The first Humsafar Express, with
16 AC III tier coaches and two power cars, would run between Anand Vihar in Ghaziabad to Gorakhpur in
Uttar Pradesh.
  Humsafar would be fully air-conditioned third AC service with an optional service for meals. The
announcement was made in the Railway Budget.
 The train has been facilitated with numerous features meant to provide luxury to middle-class passengers
such as CCTV, Global Positioning System (GPS)-based passenger information system, mobile and laptop
charging points, integrated braille display for the visually impaired, smoke detection and suppression
system and a high quality exterior and interior design among others.
 The fares of the train are set to be higher than the regular AC III tier coaches as the cost of building one
Humsafar coach is Rs2.58 crore as compared to Rs 2.39 crore of a regular AC III coach.

Country’s first Antyodaya Express:

 Minister of Railways recently flagged off Country’s first Antyodaya Express running between Ernakulam –
Howrah.
Antyodaya Express: It is a long-distance, fully unreserved, super-fast train service for the common man. It will
operate on dense routes

RBI opposes proposal to set up separate payments regulator

The Reserve Bank of India (RBI) has opposed a move to establish a separate entity to regulate payments
and settlements, a function that is currently under the central bank’s purview.

Background:
In September, the Centre had set up a 11-member committee on Digital Payments headed by Finance
Secretary Ratan Watal. One of the panel’s terms of reference was to study and recommend changes in
the regulatory mechanism under various acts such as the Payments and Settlement Act, the RBI Act, and
the Information Technology Act among others.
The panel had recommended that the RBI will be the regulator for SIPS (systemically important
payment system) and a separate board (Payments Regulatory Board) for retail payments will be created
under RBI.

What the RBI says?

The global experience, by and large, has been that both the SIPS and retail payment systems are under
the central bank for a variety of reasons including issues of inter-connectivity between the systems and
the role of the central bank as the lender of last resort (LOLR). Therefore, a separate entity for this
purpose should not be created.
Taxation Laws (Second Amendment) Act, 2016 comes into force

The Taxation Laws (Second Amendment) Act, 2016 has come into force on 15th December, 2016. The
government has also said that the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana,
2016 (the Scheme) introduced vide the said Act will commence on 17th December, 2016 and shall remain open
for declarations up to 31st March, 2017.

The salient features of the Scheme are as under:

 Declaration under the Scheme can be made by any person in respect of undisclosed income in the form of
cash or deposits in an account with bank or post office or specified entity.
  Tax @30% of the undisclosed income, surcharge @33% of tax and penalty @10% of such income is payable
besides mandatory deposit of 25% of the undisclosed income in Pradhan Mantri Garib Kalyan Deposit
Scheme, 2016. The deposits are interest free and have a lock-in period of four years.
 The income declared under the Scheme shall not be included in the total income of the declarant under the
Income-tax Act for any assessment year.
 The declarations made under the Scheme shall not be admissible as evidence under any Act (eg. Central
Excise Act, Wealth-tax Act, Companies Act etc.). However, no immunity will be available under Criminal
Acts mentioned in section 199-O of the Scheme.

Way ahead:
Non declaration of undisclosed cash or deposit in accounts under the Scheme will render such undisclosed
income liable to tax, surcharge and cess totaling to 77.25% of such income, if declared in the return of income.
In case the same is not shown in the return of income a further penalty @10% of tax shall also be levied
followed by prosecution.

NITI Aayog announces launch of the schemes – Lucky Grahak Yojana and Digi-Dhan Vyapar Yojana – for
incentivising digital payment

NITI Aayog has announced the launch of the schemes Lucky Grahak Yojana and the Digi-Dhan Vyapar Yojana to
give cash awards to consumers and merchants who utilize digital payment instruments for personal
consumption expenditures.

Key facts:
 The primary aim of these schemes is to incentivize digital transactions so that electronic payments are
adopted by all sections of the society, especially the poor and the middle class.
 It has been decided that National Payment Corporation of India (NPCI) shall be the implementing agency
for this scheme.
 The schemes have been designed keeping in mind all sections of the society and their usage patterns. For
instance, the poorest of poor will be eligible for rewards by using USSD. People in village and rural areas
can participate in this scheme through AEPS.
 The scheme will become operational with the first draw on 25th December, 2016 (as a Christmas gift to the
nation) leading up to a Mega Draw on Babasaheb Ambedkar Jayanti on 14th April 2017.
 To ensure that the focus of the scheme is on small transactions (entered into by common people),
incentives shall be restricted to transactions within the range of Rs 50 and Rs 3000.

The announcement comprises of two major components, one for the Consumers and the other for the
Merchants:
1. Lucky Grahak Yojana [Consumers]:
 Daily reward of Rs 1000 to be given to 15,000 lucky Consumers for a period of 100 days.
  Weekly prizes worth Rs 1 lakh, Rs 10,000 and Rs. 5000 for Consumers who use the alternate modes of
digital Payments.
 This will include all forms of transactions viz. UPI, USSD, AEPS and RuPay Cards but will for the time being
exclude transactions through Private Credit Cards and Digital Wallets.
2. Digi-Dhan Vyapar Yojana[ Merchants]:
 Prizes for Merchants for all digital transactions conducted at Merchant establishments.
 Weekly prizes worth Rs. 50,000, Rs 5,000 and Rs. 2,500.

What is algorithmic trading?

Algorithmic trading refers to the use of software programmes to execute trading strategies at a much
faster pace. On the National Stock Exchange (NSE), algo trades accounted for close to 16% of all trades.
On the BSE, it was 8.56% in January.

Administration of trade marks in India:

The Trade Marks Registry was established in India in 1940 and presently it administers the Trade Marks Act,
1999 and the rules made thereunder. It acts as a resource and information Centre and is a facilitator in matters
relating to trademarks in the country.
 The objective of the Trade Marks Act, 1999 is to register trademarks applied for in the country and to
provide for better protection of trademark for goods and services and also to prevent fraudulent use of the
mark.
 The main function of the Registry is to register trademarks which qualify for registration as per provisions
of the Trade Marks Act and Rules, and to maintain the Register of trademarks.
 After accession to the Madrid Protocol, a treaty under the Madrid System for international registration of
trademarks, the Trade Marks Registry also functions as an office of origin in respect of applications made by
Indian entrepreneurs for international registration of their trademarks and as an office of the designated
Contracting party in respect of international registrations in which India has been designated for protection
of the relevant trademarks.
 Apart from the above, the Registry has to discharge various other functions like offering preliminary advice
as to registrability; causing a search to be made for issue a certificate under Section 45(1) of the Copyright
Act, 1957 to the effect that no trademark identical with or deceptively similar to such artist work as sought
to be registered as a copyright has been registered as a trademark; providing public information and
guidance to the public on the subject; providing information to various government agencies including
Police, Central Excise personnel, Public Grievance Redressal, maintenance of top class IP library, the
production of annual statistical report, production of official Trade Marks Journal in electronic form and
submit an Annual Report to Parliament.
 The Controller General of Patents, Designs and Trade Marks heads the TRADE MARKS Registry offices and
functions as the Registrar of TRADE MARKS. He, from time to time, assigns functions of the Registrar to
other officers appointed by the Central Government and such officers also function as Registrar in respect
of matters assigned to them.

What is a trademark?
Trade mark means a mark capable of being represented graphically and which is capable of distinguishing the
goods or services of one person from those of others and may include shape of goods, their packaging and
combination of colours.

About NIIF:
The National Investment and Infrastructure Fund (NIIF) was proposed in Union Budget 2015. In the last week of
December, the government has set up this Rs. 40000 crore fund to provide long term capital for infrastructure
projects.
 The objective of NIIF is to maximise economic impact through infrastructure development in viable projects
both greenfield and brownfield, including stalled projects, mainly in the core infra sector.
 NIIF has been structured as a fund of funds and set up as Category II Alternate Investment Fund (AIF) under
the Securities and Exchange Board of India (SEBI) Regulations.

Airtel launches India’s first payments bank

Airtel Payments Bank Ltd has become the first payments bank to start operations, offering services in Rajasthan
in a limited scale.

Key facts:
 The pilot will run at 10,000 Airtel retail outlets where basic banking services will be provided. Customers
will be offered an interest rate of 7.25% on deposits in savings account, higher than the 4-6% commercial
banks are offering.
 Bank accounts can be opened by customers without documents using Aadhaar based e-KYC. The
subscriber’s mobile number would function as a bank account number and transfer from Airtel to Airtel
phone numbers would be free.
 The retail outlets, which will act as banking points, will offer account opening services, cash deposit and
withdrawal facilities.
 As a payments bank it cannot perform lending activities, except while giving loans to its employees on
approval of the board. The bank can, however, accept deposits of as much as Rs1 lakh.
 The bank was the first applicant to receive the final licence from the Reserve Bank of India (RBI) in April.
Kotak Mahindra Bank holds 19.9% in the Airtel Payments Bank.

Nabard:
It is an apex development and specialized bank established on 12 July 1982 by an act by the parliament of India.
Its main focus is to uplift rural India by increasing the credit flow for elevation of agriculture & rural non farm
sector.
 It was established based on the recommendations of the Committee set up by the Reserve Bank of India
(RBI) under the chairmanship of Shri B. sivaraman.
  It replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve
Bank of India, and Agricultural Refinance and Development Corporation (ARDC).
 It has been accredited with “matters concerning policy, planning and operations in the field of credit for
agriculture and other economic activities in rural areas in India”.
 NABARD is active in developing financial inclusion policy and is a member of the Alliance for Financial
Inclusion.

The Bank has been given certain roles as follows:

 It Serves as an apex financing agency for the institutions providing investment and production credit for
promoting the various developmental activities in rural areas
 It takes measures towards institution building for improving absorptive capacity of the credit delivery
system, including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions,
training of personnel, etc.
 Co-ordinates the rural financing activities of all institutions engaged in developmental work at the field
level and maintains liaison with Government of India, State Governments, Reserve Bank of India (RBI) and
other national level institutions concerned with policy formulation
 It Undertakes monitoring and evaluation of projects refinanced by it.
 NABARD refinances the financial institutions which finances the rural sector.
 It regulates the institution which provides financial help to the rural economy.
 It provides training facilities to the institutions working the field of rural upliftment.
 It regulates the cooperative banks and the RRB’s, and manages talent acquisition through IBPS CWE.
NABARD is also known for its ‘SHG Bank Linkage Programme’ which encourages India’s banks to lend to SHGs.

Insights into Editorial: Review of FRM Act

The government appointed five member committee to review the working of FRBM Act has submitted its report
to the government.

Background:
It was over a decade after the Fiscal Responsibility and Budget Management (FRBM) Act kicked in both at the
Centre and in the states, the government had announced a five-member committee to review the law in
keeping with its budget promise.
Besides reviewing the working of the FRBM, the committee was also mandated to examine the feasibility of
having a fiscal deficit range rather than a fixed number as a percentage of the GDP, as is the case now.

What is FRBM Act?

Fiscal Responsibility and Budget Management (FRBM) Act was enacted by Parliament in 2003 to progressively
cut fiscal deficit to 3% levels by 2008.
 FRBM Act put limits on the fiscal and revenue deficit of the country by setting targets for both. These
targets were to be monitored through the year by setting mid-year targets.
 The government was to provide make a medium-term fiscal policy statement, fiscal policy strategy
statement and macro-economic framework statement to Parliament.
  The Act, however, provides exception to government in case of natural calamity and national security.

Performance of the FRBM Act:

The FRBM Act, 2003 (notified in July 2004) envisaged an annual 0.3 percentage point reduction in the fiscal
deficit and a 0.5 percentage point reduction in the revenue deficit to bring the former down to 3% of GDP and
the latter to nil by 2008-09. In reality, the fiscal deficit doubled to 6% of GDP during 2008-09, driven largely by
the desire to distribute largesse on the eve of the 2009 general elections, and remains close to 5%. Meanwhile,
the revenue deficit is nowhere near being eliminated.

Highlights of the report:

 The committee has recommended major changes in the 13-year-old Fiscal Responsibility and Budget
Management (FRBM) Act and suggested ways to ensure responsible and higher growth, sources said.
 The committee says, “a new FRBM Act is critical to create better conditions for co-ordination between
monetary and fiscal policy and also usher in a low interest rate regime.”
 The Committee had recommended debt-to-GDP ratio of 60% by 2023 and fiscal deficit at 3% for next three
years.
 There is also a suggestion that fiscal expansion or contraction should be aligned with credit contraction or
expansion respectively in the economy.

India’s first digital village:

 Akodara has earned the tag of India’s first digital village that uses a cashless system for payments of goods
and services.
 Akodara is a tiny village around 90 km away from Ahmedabad, located in Sabarkantha district of Gujarat.
 The village was adopted by ICICI Bank in 2015 and made cashless by adopting digital technology.
Income-Tax Amendment Bill tabled in LS

The Government has sought to bring to tax all unaccounted money that was flowing into the banking system
following the demonetisation announcement on November 8. In this regard, Finance Minister Arun Jaitley has
introduced a Bill in Lok Sabha.
 The Taxation Laws (Second Amendment) Bill, 2016 proposes to amend Section 115BBE of the Income Tax
Act to provide for a punitive tax, surcharge and penalty on unexplained credit, investment, cash and other
assets.

Key facts:
 Against current provision of 30% flat tax rate plus surcharge and cesss, a steep 60% tax will be levied on
unaccounted income together with 25% surcharge of tax (15% of such income). So total incidence of tax
will be 75% with no expense, deductions or set-off allowed.
 Also, the assessing officer can levy an additional 10% penalty, taking the total tax incidence to 85%.
  The current provisions for penalty in cases of search and seizure are proposed to be amended to provide
for a penalty of 30% of income if it is admitted, returns filed and taxes paid. In all other cases, 60% will be
the penalty.
 Currently, the penalty is 10% of the income, if the income is admitted, returned and taxes are paid. Penalty
is at 60% in all other cases.

Pradhan Mantri Garib Kalyan Yojana, 2016’ (PMGKY):

An alternative Scheme namely, ‘Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016’
(PMGKY) has been proposed in the Bill.
 Under this, besides 50% tax, surcharge and penalty, a quarter of the declared income will be to be
deposited in interest free deposit scheme for four years.
 The scheme enables people with undisclosed income to come clean. However, they would have to fork out
a tax of 30% and penalty of 10%. A surcharge in the form of cess of 33% will have to be paid on the tax.
 In addition to tax, surcharge and penalty, the declarant will have to deposit 25% of undisclosed income in a
deposit scheme to be notified by the Centre in consultation with the RBI.
 This amount is proposed to be utilised for programmes of irrigation, housing, toilets, infrastructure,
primary education, primary health, livelihood etc, so that there is justice and equality.
 A 75% tax and 10% penalty in case Income Tax authorities detect undisclosed wealth deposited post
demonetisation has also been proposed.
 The current provisions of penalty on under-reporting of income at 50% of the tax, and misreporting (200%
of tax) will remain and no changes are being made to them.

Artificial intelligence by BSE:

 BSE has introduced a data analytics-based solution that relies on artificial intelligence to track news related
to listed companies on digital media using social media.
 The objective of the tool is to detect and mitigate potential risks of market manipulation and rumours, and
to reduce information asymmetry arising from it on digital media platforms.
 It would provide accurate information involving listed companies and the BSE through the exchange
website for the benefit of investors. The solution employs an advanced level combination of statistical
modeling and big data analytics.

RBI proposes ‘Islamic window’ in banks

The Reserve Bank of India (RBI) has proposed the opening of “Islamic window” in conventional banks for
“gradual” introduction of Sharia-compliant or interest-free banking in the country.
 In this regard, both the Centre and the RBI have been exploring the possibility of introduction of Islamic
banking for a while now to ensure financial inclusion of those sections of society that remain excluded due
to religious reasons.

What is Islamic banking?

Islamic or Sharia banking is a finance system based on the principles of not charging interest. The charging of
interest is prohibited under Islam.
Way ahead:
Initially, a few simple products similar to conventional banking products may be considered for introduction
through the Islamic window of conventional banks after necessary notification by the government. Introduction
of full-fledged Islamic banking with profit-loss sharing complex products may be considered at a later stage on
the basis of experience gained in course of time.

PM Launches “Housing for All” in Rural Areas

Prime Minister Shri Narendra has formally launched “Housing for All” in rural areas under which the
Government proposes to provide an environmentally safe and secure pucca house to every rural household by
2022.

About the scheme:

Named the Pradhan Mantri Awaas Yojana (Gramin), in its first phase the target is to complete one crore houses
by March 2019.
 The unit cost for these houses has been significantly increased and now through convergence a minimum
support of nearly Rs. 1.5 lakh to Rs. 1.6 lakh to a household is available. There is also a provision of Bank
loan upto Rs. 70,000/-, if the beneficiary so desires.
 The selection of beneficiaries has been through a completely transparent process using the Socio Economic
Census 2011 data and validating it through the Gram Sabha.
 PMAY-G is also a major step forward in bringing together Skill India, Digital India, Make In India, IT/DBT
Aadhaar platform and Pradhan Mantri Jan Dhan Yojana (PMJDY).
 The programme provides for skilling 5 lakh Rural Masons by 2019 and allows over 200 different housing
designs across the country based on a detailed study of housing typologies, environmental hazards and the
households’ requirements.
 A large scale use of local materials is envisaged along with a complete home with cooking space, electricity
provision, LPG, toilet and bathing area, drinking water etc through convergence.
 The programme targets the poor households and uses ICT and space technology to further confirm correct
selection of beneficiaries and progress of work. The entire payments are through IT/DBT mode with
Aadhaar linked Bank accounts with consent, to ensure complete transparency and accountability.
 There is a provision for orientation of beneficiaries. A 45 days on site hands-on skill training of Rural
Masons helps poor households to move up the skilling ladder.

Hunar haat

It was recently inaugurated at New Delhi. The exhibition is aimed at promoting and supporting artisans from
Minority communities and providing them domestic as well as international market for display and sell their
products.

Key facts:
  It is being organised for the first time at India International Trade Fair (2016). Union minority affairs
ministry has organized the market.
 The market provides artisans from minority communities a chance to display their products and skills at an
international platform.
 The special feature of this unique market is that besides providing free of cost stalls to artisans and
craftsmen, the Union minority affairs ministry will also make arrangements for their transport and will help
in their daily expenses so that these expert artisans can reach Delhi easily and display their arts and skills at
an international platform.
 Over 184 master artisans will showcase their traditional art at this special crafts bazaar.

Government rolls out Pradhan Mantri Yuva Yojana for entrepreneurs

The Ministry of Skill Development and Entrepreneurship has announced launch of Pradhan Mantri Yuva Yojana
to scale up an ecosystem of entrepreneurship for youngsters.

Highlights of the scheme:

 The scheme spans over five years (2016-17 to 2020-21) with a project cost of Rs 499.94 crore.
 It will provide entrepreneurship education and training to over 7 lakh students in 5 years through 3,050
institutes.
 It will also include easy access to information and mentor network, credit, incubator and accelerator and
advocacy to create a pathway for the youth.
 The institutes under the PM’s Yuva Yojana include 2,200 institutes of higher learning (colleges, universities,
and premier institutes), 300 schools, 500 ITIs and 50 entrepreneurship development centres through
Massive Open Online Courses (MOOCs).
MSDE has plans to disburse around Rs 7,000 crore to states to help align them with the Centre’s skill
development agenda.

About TIES:
The objective of the proposed scheme is to enhance export competitiveness by bridging gaps in export
infrastructure, creating focused export infrastructure, first mile and last mile connectivity for export-oriented
projects and addressing quality and certification measures.
 The Central and State Agencies, including Export Promotion Councils, Commodities Boards, SEZ Authorities
and Apex Trade Bodies recognised under the EXIM policy of Government of India; are eligible for financial
support under this scheme.
 The Central Government funding will be in the form of grant-in-aid, normally not more than the equity
being put in by the implementing agency or 50% of the total equity in the project. (In case of projects
 located in North Eastern States and Himalayan States including J&K, this grant can be upto 80% of the total
equity). The grant in aid shall, normally, be subject to a ceiling of Rs 20 Cr for each infrastructure project.
 The implementing agencies shall provide details of the financing tie-ups for the projects which will be
considered before approval of the project. Disbursement of funds shall be done after financial closure is
achieved.
 The scheme would provide assistance for setting up and up-gradation of infrastructure projects with
overwhelming export linkages like the Border Haats, Land customs stations, quality testing and certification
labs, cold chains, trade promotion centres, dry ports, export warehousing and packaging, SEZs and
ports/airports cargo terminuses.

India slips in human development index

The 2016 Human Development Report has been released by the UNDP. HDI is also released as part of the report.

About HDI:
The Human Development Index is based on assessing progress on three dimensions of human development.
First, a long and healthy life measured through life expectancy of the population. Second, access to knowledge
measured by mean years of education among the adult population, and access to learning and knowledge
measured by expected years of schooling for children of school-entry age. And last, standard of living measured
by the country’s per-capita gross national income (GNI).

Performance of India:
 India slipped down one place from 130 to 131 among the 188 countries.
 India’s human development index (HDI) value of 0.624 puts it in the “medium human development”
category, alongside countries such as Congo, Namibia and Pakistan.
 It is ranked third among the SAARC countries, behind Sri Lanka (73) and the Maldives (105), both of which
figure in the “high human development” category.
 India’s public health expenditure is lower, at 1.4% of the GDP. However, it did make some gains between
1990 and 2015, improving life expectancy by 10.4 years in this period. Child malnutrition also declined by
10 percentage points from 2015, and there was a modest gain in infant and under-five mortality rates.
 The report praised India’s reservation policy, observing that even though it “has not remedied caste-based
exclusions”, it has “had substantial positive effects”.
 The HDR also hailed the national rural employment guarantee programme as a “prime example” of
“combining social protection with appropriate employment strategies”.
 While India’s HDI value increased from 0.428 in 1990 to 0.624 in 2015, it still had the lowest rank among
BRIC nations. However, its average annual growth in HDI (1990-2015) was higher than that of other
medium HD countries.

Global scenario:
 The world’s top three countries in HDI are Norway (0.949), Australia (0.939) and Switzerland (0.939).
 The report says 1.5 million people worldwide still live in multidimensional poverty, 54% of them
concentrated in South Asia. While poverty fell significantly from 1990 to 2015, inequalities sharpened in the
region.
 South Asia also had the highest levels of malnutrition in the world, at 38%, and the lowest public health
expenditure as a percentage of the GDP (1.6%, 2014).
 Noting that women, on an average, have lower HDI than men across the world, the report pointed out that
the largest gender disparity in development was in South Asia, where the female HDI value is 20% lower
than the male value.
 In South Asia, gender gaps in entrepreneurship and labour force participation caused an estimated income
loss of 19%. “Between their first and fifth birthdays, girls in India and Pakistan have a 30% to 50% greater
chance of dying than boys,” the report noted.

About FFS:
The Union Cabinet in 2016 had approved the proposal to establish a Fund of Funds for Start-ups (FFS) with a
total corpus of Rs.10000 crore, with contribution spread over the 14th & 15th Finance Commission cycles based
on progress of implementation and availability of funds. It was decided that the FFS shall contribute to the
corpus of Alternative Investment Funds (AIFs) for investing in equity and equity linked instruments of various
start-ups at early stage, seed stage and growth stages.
 The FFS is being managed and operated by Small Industries Development Bank of India (SIDBI). FFS
contributes to SEBI registered Alternative Investment Funds (AIFs) that may go up to a maximum of 35% of
the corpus of the AIF concerned.
 The Cabinet has decided that the corpus of Fund of Funds along with counterpart funds raised by the AIFs
in which FFS takes equity would be invested entirely in Start-ups.


competition Commission of India (CCI) selected to host ICN 2018 Annual Conference

Recognising the growing stature of Competition Commission of India (CCI) in the world, International
Competition Network (ICN) has accepted the proposal and decided that Competition Commission of India would
host the 2018 ICN Annual Conference. This will be held at Delhi in March –April 2018.
 By virtue of this event, CCI has also been inducted as an ex-officio member of the steering group member
of the ICN for a period of 3 years.

About ICN:
ICN is an international body comprising 132 members from 120 competition jurisdictions exclusively devoted to
international competition enforcement.
 ICN provides competition authorities with a specialised yet informal platform for addressing practical
competition concerns, sharing experiences and adopting international best practices.
 Its members are national competition authorities and NGA (Non-governmental Advisers) which include
reputed law firms, eminent persons, and think tanks of international repute.
 The ICN holds an Annual Conference which is hosted by a member competition agency. The last such
Conference was hosted by Competition Commission of Singapore in April 2016 and Portuguese
Competition Authority is hosting the next conference in May 2017.
 CCI is a member of the ICN since 2003.

About CCI:
Competition Commission of India is a body responsible for enforcing The Competition Act, 2002 throughout
India and to prevent activities that have an adverse effect on competition in India. It was established on 14
October 2003. It became fully functional in May 2009.
 CCI consists of a Chairperson and 6 Members appointed by the Central Government.
 The duty of the Commission is to eliminate practices having adverse effect on competition, promote and
sustain competition, protect the interests of consumers and ensure freedom of trade in the markets of
India.
The Commission is also required to give opinion on competition issues on a reference received from a statutory
authority established under any law and to undertake competition advocacy, create public awareness and
impart training on competition issues.

About FSSAI:
FSSAI was set up in August 2011 under the Food Safety and Standard Act, 2006.
 It has powers to lay down standards for food articles and to regulate their manufacturing, storage,
distribution, sale and import.
 Some of its activities include licencing and surveillance of food and beverages outlets, enforcement of
safety regulations across registered food vendors and ensuring safety of imported food items, their
standards and labelling.

About NDB:
It is a multilateral development bank operated by the BRICS states (Brazil, Russia, India, China and South Africa).
It is seen as an alternative to the existing US-dominated World Bank and International Monetary Fund.
 The New Development Bank was agreed to by BRICS leaders at the 5th BRICS summit held in Durban, South
Africa in 2013.
 The bank is set up to foster greater financial and development cooperation among the five emerging
markets.
 The bank will be headquartered in Shanghai, China.
 Voting: Unlike the World Bank, which assigns votes based on capital share, in the New Development Bank
each participant country will be assigned one vote, and none of the countries will have veto power.

What it does?
The New Development Bank will mobilise resources for infrastructure and sustainable development projects in
BRICS and other emerging economies and developing countries, to supplement existing efforts of multilateral
and regional financial institutions for global growth and development.

The government has withdrawn incentives given to mild hybrid vehicles under FAME India scheme.

What is a mild hybrid vehicle?

A mild hybrid vehicle has an electric motor, which on its own cannot run a vehicle but assists normal engine by
using recovered energy stored in a battery and helps save fuel.

How mild hybrid vehicles operate?

Mild hybrid technology is different from plug-in or conventional hybrid vehicles. Mild hybrid vehicles use the
energy generated while applying the brakes and turns it into electric energy that is then stored in a battery. This
energy can then be used to turn the starter motor when the car’s start stop system needs it.
In most cases, a mild hybrid will turn its engine off when at idle or when it comes to a halt at a traffic signal for
instance. Research shows that mild-hybrids are only 7-15% more fuel efficient as compared to conventional
hybrid systems that can run on pure electric power for short distances too.

About FAME India scheme:

With an aim to promote eco-friendly vehicles, the government had launched the FAME India scheme in 2015
offering incentives on electric and hybrid vehicles of up to Rs 29,000 for bikes and Rs 1.38 lakh for cars.
 FAME India – Faster Adoption and Manufacturing of Hybrid and Electric vehicles in India – is a part of
the National Electric Mobility Mission Plan. The scheme envisages Rs 795 crore support in the first two
fiscals starting with the current year.
 It is being administered by the Heavy Industries Ministry.

CAG:
 The Comptroller and Auditor General (CAG) of India is an authority, established by the Constitution of India
under article 148.
 CAG audits all receipts and expenditure of the Government of India and the state governments, including
those of bodies and authorities substantially financed by the government.
 The CAG is also the external auditor of Government-owned corporations and conducts supplementary
audit of government companies, i.e., any non-banking/ non-insurance company in which the state and
Union governments have an equity share of at least 51% or subsidiary companies of existing government
companies.
 The reports of the CAG are taken into consideration by the Public Accounts Committees (PACs) and
Committees on Public Undertakings (COPUs), which are special committees in the Parliament of India and
the state legislatures.
 The CAG enjoys the same status as a judge of Supreme Court of India in Indian order of precedence.
 Appointment: CAG is appointed by the President of India following a recommendation by the Prime
Minister. On appointment, he/she has to make an oath or affirmation before the President of India.
 Removal: The CAG can be removed only on an address from both house of parliament on the ground of
proved misbehaviour or incapacity. The CAG vacates the office on attaining the age of 65 years age even
without completing the 6 years term.
Benami Property Transactions Prohibition Act comes into force
The Benami Transactions (Prohibition) Amendment Act, 2016, designed to curb black money and passed by
parliament in August, has come into effect on November 1.

Highlights of the Act:

 The new law amends the 1988 Benami Transactions Act.
 The law provides for up to seven years’ imprisonment and fine for those indulging in such transactions.
 The amendments aim to strengthen the Act in terms of legal and administrative procedure.
  The law prohibits recovery of the property held benami from benamdar by the real owner. As per the Act,
properties held benami are liable for confiscation by the government, without payment of compensation.
 An appellate mechanism has been provided under the act, in the form of an adjudicating authority and
appellate tribunal. According to the government, the four authorities who will conduct inquiries or
investigations are the Initiating Officer, Approving Authority, Administrator and Adjudicating Authority.

What is benami transaction?

A benami transaction is one where a property is held by one person and the amount for it is paid by another
person. Therefore, in a benami transaction, the name of the person who paid the money is not mentioned.
Directly or indirectly, the benami transaction is done to benefit the one who pays.

What isn’t a benami transaction?

 Property held under the name of spouse or child, for which the amount is being paid through a known
source of income.
 A joint property with brother, sister or other relatives for which the amount is paid out of known sources of
income.
 Property held by someone in a fiduciary capacity; that is, transaction involving a trustee and a beneficiary.

What falls under benami transaction?

Assets of any kind — movable, immovable, tangible, intangible, any right or interest, or legal documents. As
such, even gold or financial securities could qualify to be benami.

How it affects the people?

It is being done to curb on black money. People with unaccounted income will sure have a tough time ahead. As
for the general public, it won’t be much of an issue if their transactions are legal.

About AIBP:
Central Government launched the AIBP in the year 1996-97 to provide Central Assistance to major/medium
irrigation projects in the country, with the objective to accelerate implementation of such projects which were
beyond resource capability of the States or were in advanced stage of completion.
 Priority was given to those projects which were started in Pre-Fifth and Fifth Plan period and also to those
which were benefiting Tribal and Drought Prone Areas. From the year 1999-2000 onwards, Central Loan
Assistance under AIBP was also extended to minor surface irrigation projects (SMI) of special category
States.
 Later, during 2015-16, PMKSY was conceived amalgamating ongoing schemes viz. Accelerated Irrigation
Benefit Programme (AIBP) of the Ministry of Water Resources, River Development & Ganga Rejuvenation
(MoWR,RD&GR), Integrated Watershed Management Programme (IWMP) of Department of Land
Resources (DoLR) and the On Farm Water Management (OFWM) of Department of Agriculture and
Cooperation (DAC).
 The scheme will be implemented by Ministries of Agriculture, Water Resources and Rural Development.
 The major objective of PMKSY is to achieve convergence of investments in irrigation at the field level,
expand cultivable area under assured irrigation, improve on-farm water use efficiency to reduce wastage of
water and enhance the adoption of precision-irrigation and other water saving technologies (More crop per
drop).
What are small banks?
The small finance bank will primarily undertake basic banking activities of acceptance of deposits and lending to
unserved and underserved sections including small business units, small and marginal farmers, micro and small
industries and unorganised sector entities.

What they can do:

 Take small deposits and disburse loans.
 Distribute mutual funds, insurance products and other simple third-party financial products.
 Lend 75% of their total adjusted net bank credit to priority sector.
 Maximum loan size would be 10% of capital funds to single borrower, 15% to a group.
 Minimum 50% of loans should be up to 25 lakhs.

What they cannot do:

 Lend to big corporates and groups.
 Cannot open branches with prior RBI approval for first five years.
 Other financial activities of the promoter must not mingle with the bank.
 It cannot set up subsidiaries to undertake non-banking financial services activities.
 Cannot be a business correspondent of any bank.
The guidelines they need to follow:
 Promoter must contribute minimum 40% equity capital and should be brought down to 30% in 10 years.
 Minimum paid-up capital would be Rs 100 cr.
 Capital adequacy ratio should be 15% of risk weighted assets, Tier-I should be 7.5%.
 Foreign shareholding capped at 74% of paid capital, FPIs cannot hold more than 24%.
 Priority sector lending requirement of 75% of total adjusted net bank credit.
 50% of loans must be up to Rs 25 lakh.

Anchor investors are institutional investors that can bid for shares ahead of the IPO and have a lock-in of
30 days. This rule ensures that investors who want to flip shares on listing, do not use the ‘anchor’ route.
 Anchor investors or cornerstone investors are invited to subscribe for shares ahead of the IPO to boost the
popularity of the issue and provide confidence to potential IPO investors.
 The benefit for institutional investors applying in anchor quota is that they get guaranteed allotment.
Allotment to investors applying in an IPO depends on the number of times the issue gets subscribed.
A subsidy is a form of financial aid or support extended to an economic sector (or institution, business, or
individual) generally with the aim of promoting economic and social policy.[1] Although commonly extended
from government, the term subsidy can relate to any type of support –

The most common forms of subsidies are those to the producer or the consumer. Producer/production
subsidies ensure producers are better off by either supplying market price support, direct support, or payments
to factors of production.[4] Consumer/consumption subsidies commonly reduce the price of goods and services
to the consumer. For example, in the US at one time it was cheaper to buy gasoline than bottled water.[5]
Whether subsidies are positive or negative is typically a normative judgment. As a form of economic
intervention, subsidies are inherently contrary to the market's demands. However, they can also be used as
tools of political and corporate cronyism.

Types[edit]
Production subsidy[edit]
A production subsidy encourages suppliers to increase the output of a particular product by partially offsetting
the production costs or losses.[2] The objective of production subsidies is to expand production of a particular
product more so that the market would promote but without raising the final price to consumers. This type of
subsidy is predominantly found in developed markets.[4] Other examples of production subsidies include the
assistance in the creation of a new firm (Enterprise Investment Scheme), industry (industrial policy) and even
the development of certain areas (regional policy). Production subsidies are critically discussed in the literature
as they can cause many problems including the additional cost of storing the extra produced products,
depressing world market prices, and incentivizing producers to over-produce, for example, a farmer
overproducing in terms of his land's carrying capacity.
Consumer/consumption subsidy[edit]
A consumption subsidy is one that subsidises the behavior of consumers. This type of subsidies are most
common in developing countries where governments subsidise such things as food, water, electricity and
education on the basis that no matter how impoverished, all should be allowed those most basic
requirements.[4] For example, some governments offer 'lifeline' rates for electricity, that is, the first increment of
electricity each month is subsidised.[4]
Export subsidy[edit]
An export subsidy is a support from the government for products that are exported, as a means of assisting the
country's balance of payments.[2] Usha Haley and George Haleyidentified the subsidies to manufacturing
industry provided by the Chinese Government and how they have altered trade patterns.[6] Traditionally,
economists have argued that subsidies benefit consumers but hurt the subsidizing countries. Haley and Haley
provided data to show that over the decade after China joined the World Trade Organizationindustrial subsidies
have helped give China an advantage in industries in which they previously enjoyed no comparative advantage
such as the steel, glass, paper, auto parts, and solar industries.[6]
Export subsidy is known for being abused. For example, some exporters substantially over declare the value of
their goods so as to benefit more from the export subsidy. Another method is to export a batch of goods to a
foreign country but the same goods will be re-imported by the same trader via a circuitous route and changing
the product description so as to obscure their origin. Thus the trader benefits from the export subsidy without
creating real trade value to the economy. Export subsidy as such can become a self-defeating and disruptive
policy.
Employment subsidy[edit]
An employment subsidy serves as an incentive to businesses to provide more job opportunities to reduce the
level of unemployment in the country (income subsidies) or to encourage research and development.[2] With an
employment subsidy, the government provides assistance with wages. Another form of employment subsidy is
the social security benefits. Employment subsidies allow a person receiving the benefit to enjoy some minimum
standard of living.
Tax subsidy[edit]
Government can create the same outcome through selective tax breaks as through cash payment.[3] For
example, suppose a government sends monetary assistance that reimburses 15% of all health expenditures to a
group that is paying 15% income tax. Exactly the same subsidy is achieved by giving a health tax deduction. Tax
subsidies are also known as tax expenditures. Tax subsidies are one of the main explanations for why the
American tax code is so complicated.[7]
Tax breaks are often considered to be a subsidy. Like other subsidies, they distort the economy; but tax breaks
are also less transparent, and are difficult to undo.[8]
Transport subsidies[edit]
Some governments subsidise transport, especially rail and bus transport which decrease congestion and
pollution compared to cars. In the EU, rail subsidies are around €73 billion and in China they reach $130
billion.[9][10]
Publicly owned airports can be an indirect subsidy if they lose money. The European Union for instance criticizes
Germany for its high number of money losing airports that are used primarily by low cost carriers, characterizing
the arrangement as an illegal subsidy.[citation needed]
In many countries roads and highways are paid for through general revenue rather than tolls or other dedicated
sources only paid by road users creating an indirect subsidy for road transportation. For instance the fact that
long distance buses in Germany do not pay tolls has been called a subsidy by critics pointing to track access
charges for railways.
Environmental externalities[edit]
As well as the conventional and formal subsidies as outlined above there are myriad implicit subsidies principally
in the form of environmental externalities.[5] These subsidies include anything that is omitted but not accounted
for and thus is an externality. These include things such as car drivers who pollute everyone's atmosphere
without compensating everyone, farmers who use pesticides which can pollute everyone's ecosystems again
without compensating everyone, or Britain's electricity production which results in additional acid rain in
Scandinavia.[5][11] In these examples the polluter is effectively gaining a net benefit but not compensating those
affected. Although they are not subsidies in the form of direct economic support from the Government, they are
no less economically, socially and environmentally harmful.
A 2015 report studied the implicit subsidies accruing to 20 fossil fuel companies and found that, while highly
profitable, the hidden economic cost to society was also large.[12][13] The report spans the period 2008–2012 and
notes that: "for all companies and all years, the economic cost to society of their CO2 emissions was greater than
their after‐tax profit, with the single exception of ExxonMobil in 2008."[12]:4 Pure coal companies fare even
worse: "the economic cost to society exceeds total revenue (employment, taxes, supply purchases, and indirect
employment) in all years, with this cost varying between nearly $2 and nearly $9 per $1 of revenue."[12]:4–5

Categorising subsidies[edit]
Broad and narrow[edit]
These various subsidies can be divided into broad and narrow. Narrow subsidies are those monetary transfers
that are easily identifiable and have a clear intent. They are commonly characterised by a monetary transfer
between governments and institutions or businesses and individuals. A classic example is a government
payment to a farmer.[11]
Conversely broad subsidies include both monetary and non-monetary subsidies and is often difficult to
identify.[11] A broad subsidy is less attributable and less transparent. Environmental externalities are the most
common type of broad subsidy.

The currency deposit ratioshows the amount of currency that people hold as a proportion of aggregatedeposits.
Description: An increase in cash deposit ratio leads to a decrease in money multiplier.

Subdued consumption: less cash in hand & more at banks

Gross capital formation is equal to investment made

As a part of financial sector reforms, the Reserve Bank has deregulated interest rates on deposits, other than
savings bank deposits. The interest rateon savings bank deposits has remained unchanged at 3.5 per cent per
annum since March 1, 2003.

credit default swap

a financial contract whereby a buyer of corporate or sovereign debt in the form of bonds attempts to eliminate
possible loss arising from default by the issuer of the bonds. This is achieved by the issuer of the bonds insuring
the buyer’s potential losses as part of the agreement. Merit : increase investment