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Budget 2015 - 16 & Economic Survey 2014 - 15

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Budget 2015 - 16 & Economic Survey 2014 - 15

PREFACE

UNION BUDGET 2015 - 16

Introduction

Vision 2022

Rural Development

Weaker Sections

New Schemes/Plans

10

Skill India

12

Agriculture

13

Banking and Finance

14

Infrastructure and Investment

15

Tourism & Green India

17

Tracking Black Money

18

Tax Proposals

20

Analysis of Budget 2015 - 16

25

ECONOMIC SURVEY 2014 - 15

26

Introduction

26

State Of The Economy-An Overview

28

Public Finance

35

Prices And Monetary Management

39

Agriculture

42

External Sector

46

Climate Change And Sustainable Development

49

Industrial And Corporate

53

Infrastructure Performance

56

Services Sector

62

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Budget 2015 - 16 & Economic Survey 2014 - 15

Social Infrastructure, Employment, And Human Development

71

Analysis of Economic Survey 2014 - 15

80

RAILWAY BUDGET 2015 - 16

83

Introduction

83

Railway Budget 2015-16 on Quality of Life in Journeys

84

Major Initiatives in Railway Budget 2015-16

87

Statistical Highlights of Railway Budget 2015-16

91

14TH FINANCE COMMISSION

94

Fourteenth Finance Commission and its implication for Fiscal Federalism

94

STATE BUDGET 2015 - 16

97

Uttar Pradesh Budget 2015-16: Highlights

97

Madhya Pradesh Budget 2015-16: Highlights

98

MULTIPLE CHOICE QUESTIONS

101

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Budget 2015 - 16 & Economic Survey 2014 - 15

PREFACE
The Budget 2015-16 & Economic Survey 2014-15 eBook covers the Finance Bill 2015, Railway Budget 2015-16,
14th Finance Commission Report and State Budget of Uttar Pradesh and Madhya Pradesh.
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Budget 2015 - 16 & Economic Survey 2014 - 15

UNION BUDGET 2015 - 16


Introduction
Union Finance Minister, Arun Jaitley on 28 February 2015 presented the first full year
Union Budget 2015-16 of NDA government in the Lok Sabha. Jaitely presenting his
second budget laid out the roadmap for accelerating growth, which has improved in
recent past, enhancing investment and passing on the benefit of the growth process
to the common man, woman, youth and child: those, whose quality of life needs to
be improved.

The Union Budget 2015-16 enumerated four major challenges facing the Indian
economy and that needs to be addressed. These major challenges are:
1. Increasing Agricultural incomes which are under stress

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Budget 2015 - 16 & Economic Survey 2014 - 15

2. Increasing investment in infrastructure through stepping up public investment


3. Manufacturing has declined from 18% to 17% of GDP as per new GDP data; and
manufacturing exports have remained stagnant at about 10% of GDP
4. Manage fiscal discipline
In order to grasp the Union Budget 2015-16 comprehensively, we provide the section
wise details of the Union Budget 2015-16.

Vision 2022
Vision 2022 enumerated in the Union Budget aims at achieving certain things by 2022,
the 75th Year of Indias independence, which will be observed as Amrut Mahotsav.
The aim is to make India a prosperous country and responsible global power.

The Vision 2022 will be led by State and guided by the Union Government.
The vision includes following things:
Housing for All by 2022: A roof for each family in India requiring construction of 2
crore houses in Urban areas and 4 crore houses in rural areas
24 7 Basic Facilities: Each house of the country will be provided the basic facilities
like 24-hour power supply, clean drinking water, toilet and connection to a road
Access to means for livelihood and employment: At least one member of each
family will be provided access to means for livelihood and employment or economic
opportunity to improve his or her lot
Substantial reduction of poverty: Envisions eliminating absolute poverty by shifting
the focus of all schemes to pro-poor
Electrify remaining 20000 villages by 2020: To be achieved through different
process including off-grid solar power generation
Connecting 178000 unconnected habitations with all weather roads: This requires
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Budget 2015 - 16 & Economic Survey 2014 - 15

completion of 1 lakh kilometer of roads, which are under construction and an


additional 1 lakh kilometer road will be sanctioned for construction
Each village and city to have Medical services: Aims at providing good health to
people, which is necessary for the quality of life as well as persons productivity
and ability to serve his or her family.
Employment to every youth: For this purpose, a senior secondary school is
required within 5 kilometer reach of each child, thus 80000 secondary schools will
be upgraded and or 75000 junior or middle schools will be upgraded to the senior
secondary level.
Welfare of Rural Areas: There is a need to boost agricultural productivity and
ensure reasonable prices for agricultural production. For this purpose, irrigated
area will be increased and efficiency of existing irrigation system will be improved.
Apart from this, agro-based industry will be promoted for value addition and farm
incomes will be increased, and reasonable prices for farm produce will be given.
Ending Rural-Urban Digital Divide: It will be ensured that connectivity to all villages
is provided
Making Skill India and Make in India complementary to each other: Aims to
provide jobs to two-thirds of Indias population which is below 35 and make India
a manufacturing hub of the world.
Turning India into job-creator from job-seekers: For this purpose spirit of
entrepreneurship in India will be encouraged and new start-ups will be supported
Bringing North-eastern states on par with Rest of India

Rural Development
79526 crore rupees has been allocated for rural development activities including
MGNREGA
To develop 4 crore houses in rural areas by 2022, the Amrut Mahotsav, the 75th

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Budget 2015 - 16 & Economic Survey 2014 - 15

year, of Indias independence, this will be achieved under scheme roof for each
family in India.
By 2020, remaining 20000 villages in India will be electrified; electrification process
will include off-grid solar power generation.
178000 unconnected habitations will be connected by all weather roads
Medical services will be provided in each village
Agricultural productivity will be increased for the welfare of rural areas, for this
purpose, the irrigated area will be increased through improving the efficiency of
existing irrigation systems, promoting agro-based industry for value addition and
increasing farm incomes, and reasonable prices for farm produce
In terms of communication, the rural and urban divide will be ended and connectivity
to all villages will be ensured
Effective and hassle-free agriculture credit will be provided to support the agriculture
sector and will have a special focus on small and marginal farmers
25000 crore rupees was allocated to the corpus of Rural Infrastructure Development
Fund (RIDF) set up in NABARD
15000 crore rupees allocated for Long Term Rural Credit Fund
45000 crore rupees allocated for Short Term Cooperative Rural Credit Refinance
Fund
15000 crore rupees allocated for Short Term RRB Refinance Fund
For the welfare of 10.5 crore senior citizens of rural areas and BPL category, a new
scheme for Physical Aids and Assisted Living Devices for senior citizens has been
proposed
1500 crore rupees allocated for Deen Dayal Upadhyay Gramin Kaushal Yojana
to enhance the employability of 70 percent of Indias population living in rural
population
For rural development activities including MGNREGA, a sum of 79526 crore rupees
was allocated
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Budget 2015 - 16 & Economic Survey 2014 - 15

Weaker Sections
Being sensitive to the needs of the poor, under-privileged and the disadvantaged,
Union Government made following allocations for the Scheduled Castes (SC),
Scheduled Tribes (rain) and Women and Children
Scheduled Castes: 30851 crore rupees
Scheduled Tribes: 19980 crore rupees
Women: 79258 crore rupees
Integrated Child Development Scheme (ICDS) by 1500 crore rupees
Integrated Child Protection Scheme (ICPS) by 500 crore rupees
Besides, an allocation of 68968 crore rupees has been made to the education sector
including mid-day meals, 33152 crore rupees to the health sector and 10351 crore
rupees to women and child development
Women Security: In order to support programmes for women security, advocacy and
awareness, government announced to provide 1000 crore rupees to the Nirbhaya
Fund.
Financial Inclusion: It is proposed to utilize the vast Postal network with nearly 154000
points of presence spread across the villages of the country with an aim to accelerate
the process of financial inclusion and contribute to Pradhan Mantri Jan Dhan Yojana.
Girl Child & their Education: Union Government also launched the Beti Bachao-Beti
padhao campaign nationwide to protect girls and ensure their education.
Senior Citizens: For the welfare of 10.5 crore senior citizens of rural areas and BPL
category, a new scheme for Physical Aids and Assisted Living Devices for senior
citizens has been proposed.
Also, a Senior Citizen Welfare Fund by utilizing the unclaimed deposits of about
3000 crore rupees in the Public Provident Fund (PPF), and approximately 6000 crore
rupees in the Employee Provident Fund (EPF) corpus.

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Budget 2015 - 16 & Economic Survey 2014 - 15

New Schemes/Plans
In the budget speech, the Union Government announced some new schemes for
creating a functional social security system for all Indians, specially the poor and the
under-privileged.

New Schemes in Agriculture Sector


Soil Health Card Scheme: The scheme was launched on 19 February 2015
nationwide to help farmers to scientifically analyse the soil of farms in the country.
Pradhanmantri Gram Sinchai Yojana: It is aimed at irrigating the field of every
farmer and improving water use efficiency to provide Per Drop More Crop.
Paramparagat Krishi Vikas Yojana: This is Union Agriculture Ministrys initiative
and Budget proposes to support it.

Schemes for Social Security


A large proportion of Indias population is without insurance of any kind - health,
accidental or life. For creating a universal social security system for all Indians,
especially the poor and the under-privileged, following schemes will be launched:
Pradhan Mantri Suraksha Bima Yojna: It will cover accidental death risk of 2 lakh
rupees for a premium of just 12 rupees per year.
Atal Pension Yojana: It will provide a defined pension depending upon the
contribution and its period. The Union Government will contribute 50 percent of
the beneficiaries premium limited to 1000 rupees each year for five years in the
new accounts opened before 31 December 2015.
Pradhan Mantri Jeevan Jyoti Bima Yojana: It will cover both natural and accidental
death risk of 2 lakh rupees. The premium will be 330 rupees per year or less than
one rupee per day for the age group of 18-50 years.
Senior Citizen Welfare Fund: There are unclaimed deposits of about 3000 crore

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Budget 2015 - 16 & Economic Survey 2014 - 15

rupees in the Public Provident Fund (PPF), and approximately 6000 crore rupees
in the Employee Provident Fund (EPF) corpus. This fund will be used to subsidize
the premiums of vulnerable groups such as old age pensioners, BPL card-holders,
small and marginal farmers.
Scheme of Physical Aids and Assisted Living Devices: This new scheme will
be launched for providing Physical Aids and Assisted Living Devices for senior
citizens, living below the poverty line.

Scheme for education and livelihood


Nai Manzil Scheme: It will be launched this year to enable Minority Youth who do not
have a formal school-leaving certificate to obtain one and find better employment.
Self-Employment and Talent Utilisation (SETU): It will be a Techno-Financial,
Incubation and Facilitation Programme, to support all aspects of start-up
businesses, and other self-employment activities, particularly in technologydriven areas. 1000 crore rupees have been initially earmarked in NITI Aayog for
this purpose.
Exhibition The Everlasting Flame: To show-case civilization and culture of the
Parsis community
National Skills Mission: The Mission will consolidate skill initiatives spread across
several Ministries and allow us to standardize procedures and outcomes across
our 31 Sector Skill Councils.
Pradhan Mantri Vidya Lakshmi Karyakram: Fully IT based Student Financial
Aid Authority to administer and monitor Scholarship as well Educational Loan
Schemes

Other Schemes
Gold Monetisation Scheme: It will replace both the present Gold Deposit and
Gold metal Loan Schemes. The new scheme will allow the depositors of gold to
earn interest in their metal accounts and the jewelers to obtain loans in their metal

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account.
Sovereign Gold Bond: To be developed as an alternative to purchasing metal
gold. The Bonds will carry a fixed rate of interest, and also be redeemable in cash
in terms of the face value of the gold, at the time of redemption by the holder of
the Bond
Scheme for Faster Adoption and manufacturing of Electric Vehicles (FAME): An
initial outlay of 75 crore rupees has been proposed for this Scheme in 2015-16

Skill India
Proposed to set up a fully IT based Student Financial Aid Authority to administer
and monitor Scholarship as well Educational Loan Schemes, through the Pradhan
Mantri Vidya Lakshmi Karyakram.
Proposed to launch a National Skills Mission through the Skill Development and
Entrepreneurship Ministry. The Mission will consolidate skill initiatives spread
across several Ministries and allow us to standardize procedures and outcomes
across our 31 Sector Skill Councils.
To set up a fully IT based Student Financial Aid Authority to administer and monitor
Scholarship as well Educational Loan Schemes, through the Pradhan Mantri Vidya
Lakshmi Karyakram.
In the fiscal year 2015-16, it is proposed to set up All India Institutes of Medical
Sciences in Jammu & Kashmir (J&K), Punjab, Tamil Nadu, Himachal Pradesh and
Assam.
Proposed to set up an Indian Institute of Technology (IIT) in Karnataka, and upgrade
Indian School of Mines, Dhanbad into a full-fledged IIT.
It also propose to set up a Post Graduate Institute of Horticulture Research and
Education in Amritsar.
Indian Institute of Managements (IIMs) will be setup in J&K and Andhra Pradesh.
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In Kerala, the existing National Institute of Speech and Hearing will be upgraded
to a University of Disability Studies and Rehabilitation.
Three new National Institutes of Pharmaceutical Education and Research: in
Maharashtra, Rajasthan, and Chattisgarh proposed
An Institute of Science and Education Research in Nagaland and Odisha is
proposed.
Propose to set up a Centre for Film Production, Animation and Gaming in Arunachal
Pradesh, for the North-Eastern States; and Apprenticeship Training Institute for
Women in Haryana and Uttrakhand

Agriculture
An ambitious Soil Health Card Scheme has been launched to improve soil fertility
on a sustainable basis.
Proposed to support Union Agriculture Ministrys organic farming scheme
Paramparagat Krishi Vikas Yojana.
Proposed the Pradhanmantri Gram Sinchai Yojana which is aimed at irrigating the
field of every farmer and improving water use efficiency to provide Per Drop More
Crop.
5300 crore rupeeswas allocated to support micro-irrigation, watershed development
and the Pradhan Mantri Krishi Sinchai Yojana
25000 crore rupees in 2015-16 to the corpus of Rural Infrastructure Development
Fund (RIDF) set up in NABARD
15000 crore rupees for Long Term Rural Credit Fund
45000 crore rupees for Short Term Cooperative Rural Credit Refinance Fund
15000 crore rupees for Short Term Regional Rural Bank (RRB) Refinance Fund
34699 crore rupees for quality and effectiveness of activities under Mahatma

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Gandhi National Rural Employment Guarantee Act (MGNREGA)


An ambitious target of 8.5 lakh crore rupees of credit during the year 2015-16
To increase the incomes of farmers, Union Government has proposed to create
Unified National Agricultural Market, which will have the incidental benefit of
moderating price rises.

Banking and Finance


Proposed to create a Micro Units Development Refinance Agency (MUDRA) Bank
with a corpus of 20000 crore rupees, and credit guarantee corpus of 3000 crore
rupees. MUDRA Bank will refinance Micro-Finance Institutions through a Pradhan
Mantri Mudra Yojana. In lending, priority will be given to SC/ST enterprises.
Establishing an electronic Trade Receivables Discounting System (TReDS) financing
of trade receivables of MSMEs, from corporate and other buyers, through multiple
financiers
Proposed Comprehensive Bankruptcy Code to meet global standards and provide
necessary judicial capacity.
Bankruptcy law reform that brings about legal certainty and speed has been
identified as a key priority for improving the ease of doing business. SICA
(Sick Industrial Companies Act) and BIFR (Bureau for Industrial and Financial
Reconstruction) have failed in achieving these objectives.
Also, it is proposed to utilize the vast Postal network with nearly 154000 points of
presence spread across the villages of the country with an aim to accelerate the
process of financial inclusion and contribute to Pradhan Mantri Jan Dhan Yojana.
To bring parity in regulation of Non-Banking Financial Companies (NBFCs) with
other financial institutions in matters relating to recovery, it is proposed that NBFCs
registered with RBI and having asset size of 500 crore rupees and above will be
considered for notifications as Financial Institution in terms of the SARFAESI Act,
2002.
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Setting up a Public Debt Management Agency (PDMA) which will bring both Indias
external borrowings and domestic debt under one roof.
Proposed to merge the Forwards Markets Commission with SEBI to strengthen
regulation of commodity forward markets and reduce wild speculation. Enabling
legislation, amending the Government Securities Act and the RBI Act is proposed
in the Finance Bill, 2015.
Proposed to create a Task Force to establish a sector-neutral Financial Redressal
Agency that will address grievances against all financial service providers.
Introduced a Gold Monetisation Scheme, which will replace both the present Gold
Deposit and Gold metal Loan Schemes. The new scheme will allow the depositors
of gold to earn interest in their metal accounts and the jewelers to obtain loans in
their metal account.
Proposed to develop a Sovereign Gold Bond as an alternative to purchasing metal
gold. The Bonds will carry a fixed rate of interest, and also be redeemable in cash
in terms of the face value of the gold, at the time of redemption by the holder of
the Bond.
Proposed to commence work on developing an Indian Gold Coin, which will carry
the Ashok Chakra on its face. Such an Indian Gold Coin would help reduce the
demand for coins minted outside India and also help to recycle the gold available
in the country.
In order to improve the Governance of Public Sector banks, the Government
intends to set up an autonomous bank Board Bureau. The Bureau will search and
select heads of Public Sector banks and help them in developing differentiated
strategies and capital raising plans through innovative financial methods and
instruments.

Infrastructure and Investment


Increased outlays on both the roads and the gross budgetary support to the

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railways, by 14031 crore rupees and 10050 crore rupees respectively


Proposed to establish a National Investment and Infrastructure Fund (NIIF), and
find money to ensure an annual flow of 20000 crore rupees to it.
Proposed to permit tax free infrastructure bonds for the projects in the rail, road
and irrigation sectors
To revisit and revitalised the PPP mode of infrastructure development. The major
issue involved is rebalancing of risk.
Proposed to establish the Atal Innovation Mission (AIM) in NITI Aayog. AIM will
be an Innovation Promotion Platform involving academics, entrepreneurs and
researchers and draw upon national and international experiences to foster a
culture of innovation, R&D and scientific research in India. The platform will also
promote a network of world-class innovation hubs and Grand Challenges for India.
Initially, a sum of 150 crore rupees will be earmarked for this purpose.
Budget also proposed to set up 5 new Ultra Mega Power Projects, each of 4000
MWs in the plug-and-play mode.
Ports in public sector will be encouraged, to corporatize, and become companies
under the Companies Act.
Proposed to appoint an Expert Committee for examining the possibility and
prepare a draft legislation where the need for multiple prior permissions can be
replaced with a pre-existing regulatory mechanism. This will help in improving
Ease of Doing Business.
To do away with the distinction between different types of foreign investments,
especially between foreign portfolio investments and foreign direct investments,
and replace them with composite caps
In order to catalyze investments from the Indian private sector in this region, a
Project Development Company will, through separate Special Purpose Vehicles
(SPVs), set up manufacturing hubs in CMLV countries, namely, Cambodia,
Myanmar, Laos and Vietnam.
Earmarked an initial sum of 1200 crore rupees for accelerating the completion of
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Delhi Mumbai Industrial Corridor (DMIC)

Tourism & Green India


To boost tourism, the Budget proposed to upgrade the facilities and restoration
work for 9 Cultural World Heritage Sites. These are:
I.

Churches & Convents of Old Goa

II.

Hampi, Karnataka

III.

Elephanta Caves, Mumbai

IV.

Kumbalgarh and other Hill Forts of Rajasthan

V.

Rani ki Vav, Patan, Gujarat

VI.

Leh Palace, Ladakh, Jammu & Kashmir

VII. Varanasi Temple town, Uttar Pradesh


VIII. Jalianwala bagh, Amritsar, Punjab
IX.

Qutub Shahi Tombs, Hyderabad, Telengana

Besides, it is proposed to increase the VISAS on Arrival Scheme to 150 countries


in stages.
The Union Ministry of New Renewable Energy has revised its target of renewable
energy capacity to 175000 MW till 2022, comprising 100000 MW Solar, 60000
MW Wind, 10000 MW Biomass and 5000 MW Small Hydro
It has been proposed to launch Scheme for Faster Adoption and manufacturing of
Electric Vehicles (FAME) with an initial outlay of 75 crore rupees in 2015-16.
4173 crore rupees has been allocated for Water Resources and Namami Gange

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Tracking Black Money


To track down and bring back the black money, the Union Budget 2015-16 proposed
to introduce a new law in the Budget Session of the Parliament.

Key features of the proposed law on black money


I.

Concealment of income and assets and evasion of tax in relation to foreign


assets will be prosecutable with punishment of rigorous imprisonment up to 10
years. Further,

this offence will be made non-compoundable;

the offenders will not be permitted to approach the Settlement Commission; and

penalty for such concealment of income and assets at the rate of 300% of tax
shall be levied.

II. Non filing of return or filing of return with inadequate disclosure of foreign assets
will be liable for prosecution with punishment of rigorous imprisonment up to 7
years.
III. Income in relation to any undisclosed foreign asset or undisclosed income from
any foreign asset will be taxable at the maximum marginal rate. Exemptions
or deductions which may otherwise be applicable in such cases, shall not be
allowed.
IV. Beneficial owner or beneficiary of foreign assets will be mandatorily required to
file return, even if there is no taxable income.
V.

Abettors of the above offences, whether individuals, entities, banks or financial


institutions will be liable for prosecution and penalty.

VI. Date of Opening of foreign account would be mandatorily required to be specified


by the assessee in the return of income.
VII. The offence of concealment of income or evasion of tax in relation to a foreign
asset will be made a predicate offence under the Prevention of Money-laundering
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Act, 2002 (PMLA). This provision would enable the enforcement agencies to
attach and confiscate unaccounted assets held abroad and launch prosecution
against persons indulging in laundering of black money.
VIII. The definition of proceeds of crime under PMLA is being amended to enable
attachment and confiscation of equivalent asset in India where the asset located
abroad cannot be forfeited.
IX. The Foreign Exchange Management Act, 1999 (FEMA) is also being amended
to the effect that if any foreign exchange, foreign security or any immovable
property situated outside India is held in contravention of the provisions of this
Act, then action may be taken for seizure and eventual confiscation of assets of
equivalent value situated in India. These contraventions are also being made
liable for levy of penalty and prosecution with punishment of imprisonment up
to five years.
As regards curbing domestic black money, a new and more comprehensive Benami
Transactions (Prohibition) Bill will be introduced in the budget session of the Parliament.
This law will enable confiscation of benami property and provide for prosecution,
thus blocking a major avenue for generation and holding of black money in the form
of benami property, especially in real estate.
Besides, it is proposed to amend the Income-Tax Act, 1961 to prohibit acceptance or
payment of an advance of 20000 rupees or more in cash for purchase of immovable
property.
Quoting of PAN is being made mandatory for any purchase or sale exceeding the
value of 1 lakh rupees.
The third party reporting entities would be required to furnish information about
foreign currency sales and cross border transactions.
Provision is also being made to tackle splitting of reportable transactions.
To improve enforcement, Central Board of Direct Taxes (CBDT) and Central Board of
Excise and Customs (CBEC) will leverage technology and have access to information
in each others database.

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Tax Proposals
The proposed direct and indirect taxes proposed in Union Budget 2015-16 will result
in the revenue loss of 8315 crore rupees and 23383 crore rupees, respectively. The
net impact of all tax proposals would be revenue gain of 15068 crore rupees.

These tax proposals were finalised on the basis of certain broad themes and
they are:
Measures to curb black money
Job creation through revival of growth and investment and promotion of domestic
manufacturing and Make in India
Minimum government and maximum governance to improve the ease of doing
business;
Benefits to middle class taxpayers;
Improving the quality of life and public health through Swachch Bharat initiatives;
and
Stand alone proposals to maximise benefits to the economy.

Direct Tax Proposals


Reduction of the rate of Corporate Tax from 30 percent to 25 percent over the next
4 years
Exemptions have been given to individual taxpayers as the step will facilitate
savings which will get transferred to investment and economic growth
Tax pass through was proposed for both Category-I and Category-II Alternative
Investment Funds, so that tax is levied on the investors in these Funds and not on
the Funds per se
Proposal to rationalise capital gains regime for the sponsors exiting at the time of
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listing of the units of REITs and InvITs, subject to payment of Securities Transaction
Tax (STT). The rental income of REITs from their own assets will have pass through
facility.
Permanent Establishment (PE) norms will be modified to the effect that mere
presence of a fund manager in India would not constitute PE of the offshore funds,
which would result in adverse tax consequences
It has been decided that GAAR before implementation would apply prospectively
to investments made on or after 1 April 2017
Rate of income tax on royalty and fees for technical services was reduced to 10
percent from previous 25 percent
Benefit of deduction for employment of new regular workmen to all business
entities has been extended. Thus, the eligibility threshold of minimum 100 regular
workmen is being reduced to fifty
Wealth tax has been abolished and replaced with an additional surcharge of 2
percent on the super-rich with a taxable income of over 1 crore rupees.
To reduce the associated hassles to smaller taxpayers and the compliance costs
in domestic transfer pricing, the threshold limit increased from 5 crore rupees to
20 crore rupees.
Minimum Alternate Tax (MAT) provisions for FIIs was rationalised and the profits
corresponding to their income from capital gains on transactions in securities
which are liable to tax at a lower rate, shall not be subject to MAT
To improve the administration in the Tax Departments, number of recommendations
was given for Tax Administration Reform Commission (TARC). These
recommendations are in advanced stage of examination and will be appropriately
implemented during the course of 2015-16.
100 percent deduction was granted for contributions other than by way of CSR
contributions, to the Swachh Bharat Kosh. This was proposed as cleanliness of
households and clean environment are very important social causes.
Tax treatment is also proposed for the Clean Ganga Fund. The taxation proposals
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which relates to initiatives for the Swachh Bharat Abhiyan were termed as the
fourth pillar of taxation proposals.
Yoga was included within the ambit of charitable purpose under Section 2(15) of
the Income-tax Act.

Benefits to middle class tax payers


The extension of benefits for the middle class tax payers were termed as the fifth
pillar of taxation proposals. The proposals in regard the fifth pillar includes
a) Increase in the limit of deduction in respect of health insurance premium from
15000 to 25000 rupees

For senior citizens the limit will stand increased to 30000 rupees from the existing
20000 rupees

For very senior citizens of the age of 80 years or more, who are not covered by
health insurance, deduction of 30000 rupees towards expenditure incurred on
their treatment will be allowed

b) The deduction limit of 60000 rupees towards expenditure on account of specified


diseases of serious nature is proposed to be enhanced to 80000 rupees in case
of very senior citizens
c) Additional deduction of 25000 rupees will be allowed for differently-able persons
under Section 80DD and Section 80U of the Income-tax Act.
d) The limit on deduction on account of contribution to a Pension Fund and the
New Pension Scheme is proposed to be increased from 1 lakh rupees to 1.5 lakh
rupees.
e)

To provide social safety net and the facility of pension to individuals, an additional
deduction of 50000 rupees is proposed to be provided for contribution to the
New Pension Scheme under Section 80CCD. This will enable India to become
a pensioned society instead of a pensionless society.

f) Investments in Sukanya Samriddhi Scheme are already eligible for deduction

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Budget 2015 - 16 & Economic Survey 2014 - 15

under Section 80C. All payments to the beneficiaries including interest payment
on deposit will also be fully exempt.
g) Transport allowance exemption is being increased from 800 rupees to 1600
rupees per month.
h) For the benefit of senior citizens, service tax exemption will be provided on
Varishta Bima Yojana.
The individual tax payer will get tax benefit of 444200 rupees

Indirect Taxes Proposals


The role of indirect taxes is also very important in the context of promotion of domestic
manufacturing and Make in India. The proposals in indirect taxes are expected to
yield 23383 crore rupees.

In indirect taxes, the government proposed following modifications:


Clean Energy Cess to be increased from 100 rupees to 200 rupees per metric
tonne of coal to finance clean environment initiatives.
Excise duty on sacks and bags of polymers of ethylene other than for industrial
use was increased from 12 percent to 15 percent.
It was also proposed to have an enabling provision to levy Swachh Bharat Cess at
a rate of 2 percent or less on all or certain services if need arises. This Cess will
be effective from a date to be notified.
It was also proposed to exempt services by common affluent treatment plants
from service tax.
The concessions from customs and excise duties on specified parts for manufacture
of electrically operated vehicles and hybrid vehicles were extended by one more
year up to 2016.
Increase in basic custom duty on Metallergical coke from 2.5 percent to 5 percent.
Tariff rate on iron and steel and articles of iron and steel increased from 10 percent
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to 15 percent.
Tariff rate on commercial vehicle increased from 10 percent to 40 percent.
Basic custom duty on digital still image video camera with certain specification
reduced to nil.
Artificial heart exempted from basic custom duty of 5 percent.

Proposals on Service Tax


Service-tax to be levied on service provided by way of access to amusement
facility, entertainment events or concerts, pageants, non recognized sporting
events etc.
Service-tax exempted on services of ripening of fruits and vegetables; Life
insurance services provided by way of Varishtha Pension Bima Yojana; ambulance
services; admission to museum, zoo and national park; transport of goods for
export by road from factory to land customs station.
Service-tax exemption to construction, erection, commissioning or installation of
original works pertaining to an airport or port withdrawn.

Goods and Services Tax (GST)


Budget proposed to implement Goods and Services Tax (GST) in 2016. GST is
expected to play a transformative role, it will add buoyancy to the economy by
developing a common Indian market and reducing the cascading effect on the
cost of goods and services.
As part of the GST, the Education Cess and the Secondary and Higher Education
Cess in Central Excise duty will be subsumed. In effect, the general rate of Central
Excise Duty of 12.36 percent including the cesses is being rounded off to 12.5
percent.
GST is proposed to increase the present rate of service tax plus education cesses
from 12.36 percent to a consolidated rate of 14 percent.

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Analysis of Budget 2015 - 16


The Union Budget 2015-16 sends some positive signals to revive the economic
growth and rein in fiscal deficit as structural reforms are implicit in the budget.
Firstly, the outlay for infrastructure has gone up by 70000 crore rupees which is a
37 percent jump over what was spent by the Union government in 2014-15. If one
adds a 34 percent increase in the internal and extra budgetary resources of public
sector undertakings, the total increase in the Central Plan Outlay goes up by 35 per
cent. Compare this with a 30 percent drop seen in 2014-15, and one sees how more
money hopefully in investment projects is likely to spur economic activity.
Secondly, there is a nine percent cut proposed in the overall subsidies bill for 201516. The cut seems to have come largely from savings on fuel subsidies, more on
account of lower international crude oil prices, and perhaps less due to the impact of
direct benefit transfer schemes in operation for cooking gas. Also, there is no benefit
to be seen on the food subsidy front.
So, what could have been a year of major savings on the subsidies front, the actual
cut proposed is quite small at only 8.6 percent. But still the subsidies spend as
percentage of Indias gross domestic product should come down to 1.7 percent,
compared to 2.1 per cent in the 2014-15. The gain on this front should be noted.
Thirdly, there are some signs of improved tax administration - an attempt at
rationalising some of the problematic tax laws that had cast an adverse impact on
foreign investment, in particular, plus a promise to postpone the implementation of
the General Anti-Avoidance Rules (GAAR) for taxation by two years.
Besides, budget also intends to move towards implementing several tax administrationrelated procedural changes improve the ease of paying taxes, as recommended by
the Tax Administration Reforms Commission (TARC) headed by P Shome.
Moreover, the tax-GDP ratio, after declining to a single digit for the last couple of
years at least, has now moved up once against to double digits - or a little over ten
percent of GDP.

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ECONOMIC SURVEY 2014 - 15


Introduction
Union Finance Minister Arun Jaitely on 27 February 2015 presented Economic Survey
of India 2014-15 in the Parliament.
The Economic Surveya reviews the developments in the Indian economy over the
previous 12 months, summarises the performance on major development programmes
and highlights the policy initiatives of the government and the prospects of the
economy in the short to medium term.

Three pronged strategy suggested in Economic Survey 2014-15


To improve the investment climate and reduce the backlog of stalled projects,
Economic Survey 2014-15 suggested a three-pronged strategy, namely
Revival of public investment in short term, to act as an engine of growth in
infrastructure sector. It argues that public investment cannot be a substitute for
private investment; but is required as a complement and to crowd it in.
Need of creative solutions to strengthen institutions relating to bankruptcy.
This will ensure that exit options are available. This will also ameliorate overindebtedness that lowers the capacity to generate new investments. Towards this
end, it contemplates setting up of a high-powered Independent Renegotiation
Committee.
Economic Survey highlights the need for reorientation and restructuring of the
PPP model. This is expected to make them more viable in future.

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Medium-Term Strategy to create fiscal space


The Survey advocates a medium-term fiscal strategy to create fiscal space. The
space, it says, is necessary to insure against future shocks. The recommended
strategy would also take India closer in fiscal performance, to that of its emerging
market peers.

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Two pillars of this medium-term strategy


1.

Reduce deficits

a.

Reduce fiscal deficit over the medium term to the established target of 3% of
GDP

b. Move towards the golden rule of eliminating the revenue deficit


c.

Ensure thereby that borrowing over the cycle is only for capital formation

2.

Expenditure Control and Expenditure Switching

a.

Maintain a firm control on expenditures, in order to achieve the above targets

b. Improve quality of public expenditure; shift away from public consumption (by
reducing subsidies) towards investment
The medium-term fiscal strategy is based on fundamental principles of fiscal policy,
as well as on the need to maintain fiscal credibility.
Implementing the medium-term fiscal strategy outlined above would lead to a
comfortable attainment of the medium-term targets. India can thus balance the shortterm imperative of boosting public investment to revitalize growth with the need to
maintain fiscal discipline.

State Of The Economy-An Overview


Using the new estimate for 2014-15 as the base, GDP growth at constant market
prices is expected to accelerate to between 8.1 and 8.5 percent in 2015-16.
Inflation declined by over 6 percentage points since late 2013 which is likely to
remain in the 5-5.5 percent range in 2015-16, creating space for easing of monetary
conditions.
The current account deficit declined from a peak of 6.7 percent of GDP in Quarter
3 of 2012-13 to an estimated 1.0 percent in the fiscal year 2015-16.
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After a nearly 12-quarter phase of deceleration, real GDP has been growing at
7.2 percent on average since 2013-14, based on the new growth estimates of the
Central Statistics Office.
Foodgrains production for 2014-15 is estimated at 257.07 million tonnes, which
will exceed average food grain production of last five years by 8.5 million tones
Foreign portfolio flows have stabilized the rupee, exerting downward pressure
on long-term interest rates which is reflected in yields on 10-year government
securities and surge in equity prices.
From a cross-country perspective, a Rational Investor Ratings Index (RIRI) which
combines indicators of macro-stability with growth illustrates that India ranks
amongst the most attractive investment destinations.
It ranks well above the mean for its investment grade category (BBB), and also
above the mean for the investment category above it (on the basis of the new
growth estimates).
In the short run, growth will receive a boost from the cumulative impact of reforms,
lower oil prices, likely monetary policy easing facilitated by lower inflation and
improved inflationary expectations, and forecasts of a normal monsoon in 201516.
Growth in medium-term prospects will be conditioned the balance sheet syndrome
with Indian characteristics that has the potential to hold back rapid increases in
private sector investment.
In the long-run, private investments will be the engine of growth. However, there is
a case for reviving targeted public investment as an engine of growth in the short
run to complement and crowd-in private investment.
Expenditure control and expenditure switching from consumption to investment
will be the key to growth in the short-run
It calls for complementing Make in India initiative with Skill India initiative to enable
a larger section of the population to benefit from the structural transformation that
such sectors will facilitate.

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The Survey emphasizes on creation of a National Market for Agricultural


Commodities in place of thousands of agricultural markets.
The Model APMC Act, 2003 should
be amended along the lines of
the Karnataka Model that has
successfully introduced an
integrated
single
licensing
system.
The latest indicators emerging
from the recently revised
estimates of national income
brought out by the Central
Statistics Office, point to the fact
that the revival of growth had
started in 2013-14 and attained
further vigour in 2014-15.
Factors like the steep decline in oil prices, plentiful flow of funds from the rest of
the world, and potential impact of the reform initiatives of the new government
at the centre along with its commitment to calibrated fiscal management and
consolidation bode well for the growth prospects and the overall macroeconomic
situation
Brighter prospects in India owe mainly to the fact that the economy stands largely
relieved of the vulnerabilities associated with an economic slowdown, persistent
inflation, elevated fiscal deficit, slackening domestic demand, external account
imbalances, and oscillating value of the rupee in 2011-12 and 2012-13.
Encouraged by the greater macro-economic stability and the reformist intent and
actions of the government, coupled with improved business sentiments in the
country, institutions like the IMF and the World Bank have presented an optimistic
growth outlook for India for the year 2015 and beyond.
The possible headwinds to such promising prospects, however, emanate from
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Budget 2015 - 16 & Economic Survey 2014 - 15

factors like inadequate support from the global economy saddled with subdued
demand conditions, particularly in Europe and Japan, recent slowdown in China,
and, on the domestic front, from possible spill-overs of below normal agricultural
growth and challenges relating to the massive requirements of skill creation and
infrastructural upgradation.

Revision of Base Year to 2011-12


The current base year revision follows the revision undertaken in January 2010.
The following are the major changes incorporated in the just-concluded base-year
revision:
(i) Headline growth rate will now be measured by GDP at constant market prices,
which will henceforth be referred to as GDP, as is the practice internationally.
Earlier, growth was measured in terms of growth rate in GDP at factor cost at
constant prices.
(ii) Sector-wise estimates of gross value added (GVA) will now be given at basic
prices instead of factor cost.
(iii) Comprehensive coverage of the corporate sector both in manufacturing and
services by incorporation of annual accounts of companies as filed with the
Ministry of Corporate Affairs (MCA) under their e-governance initiative, MCA21.
Use of MCA21 database for manufacturing companies has helped account for
activities other than manufacturing undertaken by these companies.
(iv) Comprehensive coverage of the financial sector by inclusion of information from
the accounts of stock brokers, stock exchanges, asset management companies,

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mutual funds and pension funds, and the regulatory bodies including the Securities
and Exchange Board of India (SEBI), Pension Fund Regulatory and Development
Authority (PFRDA) and Insurance Regulatory and Development Authority (IRDA).
(v) Improved coverage of activities of local bodies and autonomous institutions,
covering around 60 percent of the grants/transfers provided to these institutions.

Effect of these changes


Owing to these changes, estimates of GVA both at aggregate and sectoral levels
have undergone changes. The sector-wise shares in aggregate GVA have undergone
significant revision especially in the case of manufacturing and services (Figure 1).
Changes have also been observed in the growth rates in GVAs of individual sectors
and contribution of each sector to overall GVA due to use of sales tax and service tax
data for estimation in the years 2012-13 and 2013-14.

Relationship between GVA at factor cost, GVA, at basic prices, and GDP at
market price
The relationship between GVA at factor cost, GVA, at basic prices, and GDP (at
market prices) is given below:
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GVA at basic prices = CE + OS/MI + CFC + production taxes less production subsidies
GVA at factor cost = GVA at basic prices - production taxes less production subsidies
GDP = GVA at basic prices + product taxes - product subsidies
(where, CE : compensation of employees; OS: operating surplus; MI: mixed income;
and, CFC: consumption of fixed capital. Production taxes or production subsidies
are paid or received with relation to production and are independent of the volume
of actual production. Some examples of production taxes are land revenues, stamps
and registration fees and tax on profession. Some production subsidies are subsidies
to Railways, input subsidies to farmers, subsidies to village and small industries,
administrative subsidies to corporations or cooperatives, etc. Product taxes or
subsidies are paid or received on per unit of product. Some examples of product
taxes are excise tax, sales tax, service tax and import and export duties. Product
subsidies include food, petroleum and fertilizer subsidies, interest subsidies given to
farmers, households, etc. through banks, and subsidies for providing insurance to
households at lower rates).

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Outlook for 2015-16


The macroeconomic situation in India has improved significantly during the current
year. The release of the new series of national accounts revealed that the economy
has been performing much better than what was being depicted earlier. The steady
acceleration in services and manufacturing growth in the face of subdued global
demand conditions point to the strengthening of domestic demand. Most of the
buoyancy in domestic demand can be traced to consumption. Investment activity,
which is slowly picking up, needs to be grounded on a stronger footing.
The savings-investment dynamics will be crucial for the growth to strengthen further
in the coming years, in addition to reversal of the subdued export performance
being currently witnessed. The key will be the response of savings to improved
price and financial market stability, and of investment, particularly in the crucial
infrastructure sector, to reform efforts of the Government that are underway.
On the supply side, there are concerns about tentative growth patterns in
construction and mining activities that need to be addressed to. This is particularly
important in view of the strong inter sectoral linkages that these sectors have. The
farm sector suffered from a relatively poor monsoon, but there are no indications
of its spillover to be next year. The improving rate of value addition in the economy,
represented by the ratio of value added to output, and the falling incremental
capital output ratio indicate better resource use in production.
In the light of the Governments
commitment to reforms, along with the
improvements in the price and external
sector
scenarios
including
the
possibility of international oil prices
remaining generally benign, the outlook
for
domestic
macroeconomic
parameters is generally optimistic,
notwithstanding the uncertainties that
could also arise from an increase in the
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Budget 2015 - 16 & Economic Survey 2014 - 15

zone. Given the above, and assuming normal monsoons better prospects in the
world economy that could provide impetus to higher exports for Indian products
and services, a growth of around 8.5 per cent is in the realm of possibility in 201516

Public Finance
In 2013-14, proactive policy decisions
of the government with firm
commitment to the policy of fiscal
rectitude improved the year-end
performance of the fiscal deficit
target set for theyear
As per provisional accounts, the
fiscal deficit for 2013-14 worked out
at 4.5 per cent of GDP as opposed
to the Budget Estimate (BE) of 4.8
per cent. Fiscal deficit and revenue
deficit were budgeted at 531177
crore rupees (4.1 per cent of GDP)
and 378348 crore rupees (2.9
percent of GDP) respectively in 2014-15.
The Budget Estimate for 2014-15 aimed at achieving tax to GDP and non-debt
receipt to GDP ratios of 10.6 per cent and 9.8 per cent respectively as against a
13.9 per cent total expenditure to GDP ratio.
The envisaged growth for gross tax revenue was 17.7 per cent over the Revised
Estimates (RE) for 2013-14 and 19.8 per cent over the Provisional Actuals (PA)
2013-14.
On the expenditure side of Union Government accounts, the notable trends
during April-December 2014 include a shortfall in growth in Plan and non-Plan

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expenditure vis--vis the corresponding period of the previous year.


Major subsidies during April-December 2014 have increased by 12.5 per cent
compared to April-December 2013 due to increase in food subsidy (21807 crore
rupees) and fertilizer subsidy ( 6620 crore rupees). A significant positive outcome
in 2014-15 so far is a decline in petroleum subsidy by 4908 crore rupees compared
to the corresponding period in 2013-14 due to fuel pricing reforms and fall in the
global prices of petroleum products. Total expenditure was estimated to increase
by 12.9 per cent and 14.8 per cent in BE 2014-15 over RE 2013-14 and PA 201314 respectively.

An Expenditure Management Commission has been constituted to look into


various aspects of expenditure reforms to achieve the goal of fiscal consolidation.
It will review the allocative and operational efficiencies of government expenditure
to achieve maximum output.
Fiscal deficit at 100.2 per cent of BE in 2014-15 (April-December) is much higher
than the five-year -average of 77.7 per cent. The revenue deficit for April-December
2014 is estimated at 106.2 per cent of BE and is significantly higher than the fiveyear -average of 81.4 per cent.

Goods and Services Tax (GST)


The introduction of the GST would be a significant step in the field of indirect tax

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Budget 2015 - 16 & Economic Survey 2014 - 15

reforms in India. The broad features of the proposed GST model are as follows:
(i)

GST would be applicable on supply of goods or services as against the present


concept of tax on the manufacture or on sale of goods or on provision of services.

(ii) GST would be a destination-based tax as against the present concept of originbased tax.
(iii) It would be a dual GST with the
centre and the states simultaneously
levying it on a common base. The
GST to be levied by the centre
would be called central GST (CGST)
and that to be levied by the states
would be called state GST (SGST).
(iv) An integrated GST (IGST) would
be levied on inter-state supply
(including stock transfers) of goods
or services. This would be collected
by the centre so that the credit chain
is not disrupted.
(v) Import of goods or services would be treated as inter-state supplies and would
be subject to IGST in addition to the applicable customs duties.
(vi) A non-vatable additional tax, not exceeding 1 percent on inter-state supply of
goods would be levied by the centre and retained by the originating state at
least for a period of two years.
(vii) CGST, SGST, and IGST would be levied at rates to be recommended by the
Goods and Services Tax Council (GSTC) which will be chaired by the Union
Finance Minister and will have Finance Ministers of states as its members.
(viii) GST would apply to all goods and services except alcohol for human
consumption.
(ix) GST on petroleum products would be applicable from a date to be recommended

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by the GST Council.


(x) Tobacco and tobacco products would be subject to the GST. In addition, the
centre could continue to levy central excise duty.
(xi) A common threshold exemption would apply to both CGST and SGST. Taxpayers
with a turnover below it would be exempt from GST. A compounding option
(i.e.to pay tax at a flat rate on turnover without credits) would be available to
small taxpayers below a certain threshold. However, a taxable person falling
within the limit of threshold or compounding could opt to pay tax at the normal
rate in order to be part of the input tax credit chain.
(xii) The list of exempted goods and services would be kept to a minimum and it
would be harmonized for the centre and states as far as possible.
(xiii) Exports would be zero-rated.
(xiv) Credit of CGST paid on inputs may be used only for paying CGST on the output
and the credit of SGST paid on inputs may be used only for paying SGST. In
other words, the two streams of input tax credit (ITC) cannot be cross utilized,
except in specified circumstances of inter-state supplies, for payment of IGST.

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Advantages of introducing GST


Over the past four decades, the value added tax (VAT) has been an important
instrument of indirect taxation, with 130 countries having adopted it, resulting in onefifth of the worlds tax revenue.
i. By subsuming a large number of central and state taxes into a single tax, it would
mitigate cascading or double taxation in a major way and pave the way for a
common national market.
ii. From the consumers point of view, the biggest advantage would be in terms of
a reduction in the overall tax burden on goods, which is currently estimated at 25
percent-30 percent.
iii. Introduction of the GST is also expected to make Indian products competitive in
domestic and international markets.
iv. Studies show that this would instantly spur economic growth.
v. Because of its transparent character, it is expected that the GST would be easier
to administer.
vi. Implementation of a comprehensive GST in India is expected, ceteris paribus, to
lead to efficient allocation of factors of production thus bringing about gains in
GDP and exports
The successful implementation would translate into enhanced economic welfare and
higher returns to the factors of production, viz. land, labour, and capital. However, in
the near term, as GST replaces a number of state-level and central taxes, revenue
gains may not be significant.

Prices And Monetary Management


Headline inflation measured in terms of the Wholesale Price Index (WPI) (base year
2004- 05=100) which remained persistently high at around 6-9 per cent during

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2011-13 moderated to an average of 3.4 per cent in 2014-15 (April-December) on


the back of lower food and fuel prices.
As fuel has larger weight in the WPI, the decline in fuel prices led to a sharper
reduction in the WPI as compared to the Consumer Price Index (CPI). Inflation in
manufactured products has remained within a narrow range since 2013-14.
Retail inflation as measured by the CPI (combined) (base year 2010=100) had
remained stubbornly sticky around 9-10 per cent during 2012-13 and 2013-14.

Reasons for decline in Inflation:


The decline in inflation during the year turned out to be much faster than was
anticipated in the initial months of the year. Global factors, namely persistent decline
in crude prices, soft global prices of tradables, particularly edible oils and even coal,
helped moderate headline inflation. The tight monetary policy was helpful in keeping
the demand pressures contained, creating a buffer against any external shock, and
keeping volatility in the value of the rupee under check.
During the last one year, the rupee remained relatively stable vis--vis the major
currencies, which too had sobering influence on inflation. Moderation in wage
rate growth reduced demand pressures on protein based items. Base effect also
contributed to the decline in headline inflation.

Monetary Developments
The RBI kept policy rates unchanged during the year till January 2015. With the easing
of inflationary conditions, the RBI has signalled softening of the monetary policy
stance by cutting policy repo rates by 25 basis points to 7.75 percent in January
2015. Subsequently, the RBI also reduced the statutory liquidity ratio (SLR) by 50
basis points from 22.0 per cent of net demand and time liabilities (NDTL) to 21.5
per cent. The RBI adopted the new CPI (combined) as the measure of the nominal
anchor - for policy communication from April 2014.

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Major Initiatives in the Banking Sector in 2014-15


a) The RBI issued guidelines for licensing of new banks in the private sector on 22
February 2013, and in April 2014 two applicants have been granted in principle
approval to setup new banks in the private sector within a period of eighteen
months.
b) Pursuant to the Budget 2014-2015 announcement for setting up of differentiated
banks serving niche interests such as local area banks and payment banks, the
RBI has formulated and released guidelines in November 2014 for licensing of
payments banks and small finance banks in the private sector. Subsequently the
RBI has invited applications for setting up of small banks and payments banks.
c) Payment and Settlement Systems (Amendment) Bill 2014: The Payment and
Settlement Systems Act 2007 (PSS Act) was enacted with a view to providing
sound legal basis for the regulation and supervision of payment systems in India
by the RBI. For establishing a legal framework for regulation of trade repositories
and legal entity identifier issuer, amendments have been considered necessary to
make the PSS Act more effective. The proposed amendments will provide finality
to the determination of the payment obligations and settlement instructions
between a central counter party (the system provider) and system participants
in the event of insolvency, dissolution, or winding up of a central counter party.
The Bill has been passed by the Lok Sabha in the winter Session of 2014 and is
currently pending in the Rajya Sabha.
d) Capital requirement of PSBs: The Union Cabinet, on 10 December 2014 has
approved a proposal allowing PSBs to raise capital from public markets through
FPO (follow on public offer) or QIP (qualified institutional placement) by diluting
Government of India holding up to 52 percent in a phased manner based on their
capital requirement, stock performance, liquidity, market appetite and subject to
certain conditions.

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Agriculture
During the Tenth Plan, the contribution of agriculture and allied sectors to the GDP (at
2004- 05 prices) of the country was 19 per cent and it declined to 15.2 per cent during
the Eleventh Plan. This is in accordance with the typical past pattern of structural
transformation of the economies in transition. Agriculture and allied sectors registered
a growth of 2.5 per cent in the Ninth Plan, 2.4 per cent in Tenth Plan, and 4.1 per cent
in the Eleventh Plan.
For the year 2013-14, total food grain production has been estimated at 265.6 million
tonnes, which is higher by 8.5 million tonnes than the previous years production and
22.1 million tonnes than the average production of food grains during the last five
years.
As per the second AE released by the Ministry of Agriculture on 18 February 2015,
total production of food grains during 2014-15 is estimated at 257.1 million tones

The following are some of the challenges and policy recommendations for
Indian agriculture:
Agriculture and food sectors need huge investment in research, education,
extension, irrigation, fertilizers, and laboratories to test soil, water, and commodities,
and warehousing and cold storage. Rationalization of subsidies and better targeting
of subsidies would generate part of the resources for public investment.
There are wide differences in yields between states. Even the best of states have
much lower yield in different crops when compared to the best in the world. This
provides ample opportunity to increase production by bridging the yield gap to the
extent feasible within the climatic zone.
Providing irrigation can improve yield substantially, as vast cropped area is still
unirrigated. For a shift in production function, investment in basic research would
be necessary.
Recommendations of the Shanta Kumar Committee provide useful suggestions
for the future road-map of food policy. Every effort should be made to bring states
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Budget 2015 - 16 & Economic Survey 2014 - 15

on board for creating a national common market for agricultural commodities.


Distortions emerging from various policies, including exempting user charges for
electricity and water should be removed.
For providing efficient advance price discovery to farmers and enabling them to
hedge price risk, the Forward Markets Commission should be strengthened and
empowered to regulate the market more effectively.

Recommendations of High Level Committee on restructuring Food Corporation of India (FCI)


On procurement related issues:
The FCI should hand over all procurement operations of wheat, paddy, and rice
to states that have gained sufficient experience in this regard and have created
reasonable infrastructure for procurement. The FCI will accept only the surplus (after
deducting the needs of the states under the NFSA) from these state governments
(not millers) to be moved to deficit states. The FCI should move on helping those
states where farmers suffer from distress sales at prices much below MSP and
which are dominated by small holdings.
Centre should make it clear to states that in case of any bonus being given by
them on top of MSP, it will not accept grains under the central pool beyond the
quantity needed by the state for its own PDS and OWS.
The statutory levies including commissions need to be brought down uniformly to
3 percent, or at most 4 percent of MSP, and this should be included in the MSP
itself (states losing revenue due to this rationalization of levies can be compensated
through a diversification package for the next three-five years);
The Government of India must provide better price support operations for pulses
and oilseeds and dovetail their MSP policy with trade policy so that their landed
costs are not below their MSP.
Cash transfers in PDS should be gradually introduced, starting with large cities

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with more than 1 million population; extending it to grain surplus states; and then
giving deficit states for the option of cash or physical grain distribution.

On PDS- and NFSA-related issues:


Given that leakages in the PDS range from 40 to 50 percent, the GoI should defer
implementation of the NFSA in states that have not done end to end computerization;
have not put the list of beneficiaries online for anyone to verify; and have not set
up vigilance committees to check pilferage from PDS.
Coverage of population should be brought down to around 40 percent.
BPL families and some even above that they be given 7kg/person.
On central issue prices, while Antyodya households can be given grains at Rs.
3/2/1/kg for the time being, but pricing for priority households must be linked to
MSP.

On stocking and movement related issues:


FCI should outsource its stocking operations to various agencies.
Covered and plinth (CAP) storage should be gradually phased out with no grain
stocks remaining in CAP for more than 3 months. Silo bag technology and
conventional storages wherever possible should replace CAP.

On Buffer Stocking Operations and Liquidation Policy:


DFPD/FCI have to work in tandem to liquidate stocks in OMSS or in export markets,
whenever stocks go beyond the buffer stock norms. A transparent liquidation
policy is the need of hour, which should automatically kick-in when FCI is faced
with surplus stocks than buffer norms.
Greater flexibility to FCI with business orientation to operate in OMSS and export
markets is needed.

On direct subsidy to farmers:


Farmers be given direct cash subsidy (of about Rs 7000/ha) and fertilizer sector
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can then be deregulated.

On end to end computerization:


The HLC recommends total end-to-end computerization of the entire food
management system, starting from procurement from farmers, to stocking,
movement, and finally distribution through the TPDS.

On the new face of the FCI:


The new face of the FCI will be akin to an agency for innovations in the food
management system with the primary focus of creating competition in every
segment of the foodgrain supply chain, from procurement to stocking to movement
and finally distribution under the TPDS, so that overall costs of the system are
substantially reduced and leakages plugged and it serves a larger number of
farmers and consumers.

Recent Initiatives in Agricultural Marketing


(i) The Department of Agriculture (DAC) has issued a comprehensive advisory to
states to go beyond the provisions of the Model Act and declare the entire state
a single market with one licence valid across the entire state and removing all
restrictions on movement of agricultural produce within the state.
(ii) In order to promote development of a common national market for agricultural
commodities through e-platforms, the department has approved 200 crore
rupees for a central-sector scheme for Promotion of National Agricultural Market
through Agri-Tech Infrastructure Fund (ATIF) to be implemented during 2014-15
to 2016-17. Under the scheme, it is proposed to utilize the ATIF for migrating
towards a national market through implementation of a common e- platform for
agri-marketing across all states.
(iii) On the request of the central government, a number of state governments
have exempted the marketing of fruits and vegetables from the purview of the
APMC Act. The NCT of Delhi has taken the initiative in this direction by issuing a
notification on 2 September2014 , ending the regulation of fruits and vegetables

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outside redefined market yard/ sub-yard area of the APMC, MNI, Azadpur, APMC,
Keshopur, and APMC Shahdara.
(iv) The Small Farmers Agribusiness Consortium (SFAC) has taken the initiative for
developing a kisan mandi in Delhi with a view to providing a platform to FPOs for
direct sale of their produce to prospective buyers totally obviating or reducing
unnecessary layers of intermediation in the process .They plan to scale their
activities in other states based on the outcome of the experience of the Delhi
kisan mandi.

External Sector
Following the global crisis of 2008, the global economy came under a cloud
of uncertainty and the prolonged weakness in the euro area, particularly since
2011, led to the International Monetary Fund (IMF) often revising global growth
downwards in its World Economic Outlook (WEO).
On 20 January 2015, the IMF projected the global economy to grow from 3.3 per
cent in 2014 to 3.5 per cent in 2015 and further to 3.7 per cent in 2016.
The United States is the only major economy for which growth projections have
been raised by 0.5 percentage point to 3.6 per cent for 2015.
The WEO Update projects Indias GDP growth at market prices to be 6.3 per cent
in 2015 and for the year 2016, projected growth is 6.5 per cent surpassing the
projection of 6.3 per cent for China.
As per the IMF WEO Update, January 2015, world trade volume growth projections
have been placed at 3.8 per cent and 5.3 per cent, respectively for 2015 and
2016lower by 1.1 percentage points and 0.2 percentage point respectively.
As per the World Trade Organization (WTO), Indias share in global exports and
imports increased from 0.8 per cent and 1.0 per cent respectively in 2004 to 1.7
per cent and 2.5 per cent in 2013.
On the Issue of Indias Merchandise Trade, over the last ten years, Indias
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Merchandise Trade increased manifold from US 195.1 billion dollar in 2004-05


to US 764.6 billion dollar in 2013-14 helping in improving Indias share in global
exports and imports from 0.8% to 1.0% respectively in 2004 to 1.7% and 2.5%
in 2013.
The Economic Survey says the overall trade performance signals an opportune
time for withdrawal of restrictions on gold.
The financial inflows in excess of the financial requirements helped shore up
foreign exchange reserves (US 328.7 billion dollar at the end of January 2015).
These have helped lessen the vulnerability concern that led to serious stress last
year. Reconciling the benefits of the financial inflows with their impact on exports
and the current account remains an important challenge going forward.
In 2013-14, Indias trade deficit declined to US 135.8 billion dollar from a high level
of 190.3 billion in 2012-13 mainly on account of a decline in the growth of imports
even though growth in exports was sluggish at 4.7%.
The decline in imports owed to lower growth in oil imports (0.4%) and negative
growth in gold and silver imports.

Balance of payments
The CAD was placed at 17.9 billion US dollars in 2014-15 (April-September 2014)
as against 26.9 billion US dollars in the same period of 2013-14. As a proportion
of GDP, the CAD declined from 3.1 percent in the first half of 2013-14 to 1.9 per
cent in the first half of 2014-15.
Net financial flow was at 36.0 billion US dollars in the first half of 2014-15 compared
to 16.3 billion US dollars in the first half of 2013-14. Net foreign investment surged
from 7.8 billion US dollars in 2013-14 (April-September 2014) to 38.4 billion US
dollars in 2014-15 (April-September 2014)
With net capital flows remaining higher than the CAD, there was net accretion of
18.1 billion US dollars to Indias foreign exchange reserves (on BoP basis) in H1 of
2014- 15 as against a drawdown of 10.7 billion US dollars in H1 of 2013-14.

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Indias foreign exchange reserves at 330.2 billion US dollars as on 6 February


2015 mainly comprised foreign currency assets amounting to 305.0 billion US
dollars, accounting for about 92.5 per cent of the total.
The rupee has depreciated by 3.3 per cent from the level of 60.10 per US dollar on
28 March 2014 to ` 61.76 per US dollar on 13 February 2015.
Some of the Trade Policy Measures Taken by the Government as per the Economic
Survey
To promote domestic manufacturing capabilities different schemes namely FPS,
FMS, VKGUY, MLFPS, Served from India Scheme, Agriculture Infrastructure
Incentive Scheme (AIIS) for import of goods can be utilized for payment of excise
duty for domestic procurement.
Similarly scrips issued under the FPS, FMS, Vishesh Krishi and Gram Udyog
Yojana(VKGUY) schemes can be utilized for payment of service tax.
To diversify Indias export, seven new markets (Algeria, Aruba, Austria, Cambodia,
Myanmar, Netherlands, Antilles and Ukraine) have been added to FMS and 7 new
markets(Belize, Chile, El Salvador, Guatemala, Honduras, Morocco and Uruguay)
to Special FMS, 46 items to MLFPS and 12 new markets for first time and 100 new
products to FPS list.
Indian trade portal (www.indiantradeportal.in) was launched on 8th December,
2014.
Even though 2013-14 witnessed a sharp depreciation of the rupee in the initial part
of the year with significant reserve drawdown, steps taken by the government and
the Reserve Bank of India (RBI) resulted in a rise in the stock of foreign exchange
reserves which was placed at US 304.2 billion dollar at end-March 2014 as against
US 292 billion dollar at end-March 2014.
In the first half of 2014-15, Indias foreign exchange reserves increased by 18.1
billion US dollar on BoP basis.
Economic Survey says among the major economies with current account deficit,
India is the second largest foreign exchange reserve holder after Brazil.
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Post 1991 BoP crisis Indias prudent external debt policy and management with a
focus on sustainability, solvency and liquidity have helped contain the increase in
size of external debt to moderate level.
Indias total external debt stock at end March 2014 stood at 442.3 billion US dollar
(8.0 per cent) over the end-March 2013 level.
The rise in the external debt during the period was due to long term debt particularly
NRI deposits and commercial borrowings.
At the end of September, 2014, a long term debt accounted for 81.1% of the total
external debt vis-a-vis 79.8 per cent at the end of March, 2014 and short term
debt accounted for 18.9% of the total external debt vis--vis 20.2% at the end of
March, 2014.
The net external commercial borrowing has also increased from 2.4 billion US
dollar in 2013-14 to 3.4 billion US dollar in 2014-15.

Climate Change And Sustainable Development


Indias contribution to cumulative global CO2 (1850-2011) was a meager 3 per cent
as against 21 per cent by the USA and 18 per cent by the EU.

State Action Plans on Climate Change: Subsequent to the NAPCC, in 2009 all the
state governments were requested to prepare State Action Plans on Climate Change
(SAPCC). So far, 31 states have prepared and submitted SAPCC documents. The
SAPCCs have both adaptation and mitigation components to address climate change
impacts, though adaptation has been identified as the more important element.

Progress in Expanding the Share of Renewable Energy in India: On 31 December


2014, the total installed capacity of renewable power of India was 33.8 GW, this
included (wind energy with 66 percent is followed by biomass, small hydro power,

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and solar power. Census of Indian 2011 showcased that 1.1 million households used
solar energy to meet their lighting needs and similar number of met cooking energy
needs from biogas plants.

Clean Energy Cess on Coal: To deal with the climate change, carbon taxes was
introduced, which is used by very few countries of the world. India introduced a clean
energy cess on coal in 2010, which feeds the National Clean Energy Fund (NCEF).
It has been increased from 50 to 100 per tonne in Budget 2014-15 and it helped
in collecting 17084.45 crore rupees (Budget EstimatesBE) and 46 clean energy
projects worth 16511.43 crore rupees have been recommended for funding out of
the NCEF till September 2014.
Progress in Adaptation Actions: India is implementing the action on adaptations
through creation of adaptation fund in NABARD which is the National Implementing
Entity (NIE) for the fund.

Domestic Carbon Market Mechanisms: To create carbon markets, number of


actions was taken on the domestic front and one of the actions included is the
Perform, Achieve & Trade (PAT) scheme, which was implemented for designated
industries under the National Mission on Enhanced Energy Efficiency. The activities
under the PAT scheme provide opportunities for new markets as it devises cost
effective energy efficient strategies for end-use demand-side management leading
to ecological sustainability.

International State of Negotiations: Twentieth Session of the Conference of


Parties to the UNFCCC: The twentieth session of the Conference of Parties to the
UNFCCC (COP20) concluded in December 2014 in Lima, Peru, was an important
milestone as it came out with a Lima Call for Climate Action. Indias main concern
in the negotiations was to protect its long term interests and emphasize the need
for growth and development space to tackle the problem of eradicating poverty,
providing energy access to all and address other developmental priorities. Indias
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stand in the negotiations was guided by the principle of Equity and Common but
Differentiated Responsibilities (CBDR).

International Climate Finance Flows: UNFCCC placed the responsibility of


providing climate finance to the developing countries on the developed countries.
For this purpose a financial mechanism for the provision of financial resources on
a grant or concessional basis, including for the transfer of technology, has been
defined in Article 11 of the Convention. The Global Environment Facility (GEF) is one
of the two operating entities under the financial mechanism as per Article 11. India
has received an allocation of 130.58 million US dollars under this, of which 87.88
million US dollars is for climate change mitigation focal area. Till date, India has
accessed 477.3 million US dollars of GEF grant of which 284.2 million US dollars is
for climate change mitigation projects and 10 million US dollars is for climate change
adaptation projects.

International Carbon Markets: India has been proactive in its approach to the
carbon market and represents a significant component of the global market of the
Clean Development Mechanism (CDM) established under the Kyoto Protocol. As on
1 December 2014, 1541 of the total 7589 projects registered by the CDM Executive
Board are from India. This so far is the second highest in the world with China leading
with 3763 registered projects.

Sustainable Development: As per a McKinsey report, India is at the threshold of an


urban flare-up. The population of Indian cities will increase from 340 million in 2008
to 590 million by 2030. In the 2030s Indias largest cities will be bigger than many
major countries. As population increases, demand for every key service will increase
five to sevenfold.

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Sustainable Development Goals


End poverty in all its forms everywhere
End hunger, achieve food security and improved nutrition, and promote sustainable
agriculture
Ensure healthy lives and promote well-being for all at all ages
Ensure inclusive and equitable quality education and promote life-long learning
opportunities for all
Achieve gender equality and empower all women and girls
Ensure availability and sustainable management of water and sanitation for all
Ensure access to affordable, reliable, sustainable, and modern energy for all
Promote sustained, inclusive and sustainable economic growth, full and productive
employment, and decent work for all
Build resilient infrastructure, promote inclusive and sustainable industrialization,
and foster innovation
Reduce inequality within and among countries
Make cities and human settlements inclusive, safe, resilient, and sustainable
Ensure sustainable consumption and production patterns
Take urgent action to combat climate change and its impacts
Conserve and sustainably use the oceans, seas, and marine resources for
sustainable development
Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably
manage forests, combat desertification, and halt and reverse land degradation
and halt biodiversity loss
Promote peaceful and inclusive societies for sustainable development, provide
access to justice for all, and build effective, accountable and inclusive institutions

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at all levels
Strengthen the means of implementation and revitalize the global partnership for
sustainable development

Key Lima Outcomes


The UNFCCC negotiations focused on the finalization of elements of the draft
negotiating text for the 2015 Paris agreement, identification of information to be
submitted by Parties under the Intended Nationally Determined Contributions (INDCs),
and enhancement of pre 2020 actions. Some of the important outcomes of the Lima
Conference are the following:
The Lima Conference has decided that the new agreement will be under the
UNFCCC and will reflect the principle of CBDR in the light of different national
circumstances. It also addresses all elements, i.e. mitigation, adaptation, finance,
technology development and transfer, capacity building, and transparency of
action and support in a balanced manner.
The draft text has to be finalized by May 2015 in order to be placed for consideration
and adoption of Parties at COP 21.
Another key decision was that countries should not backslide from current
pledges under the INDCs and their contribution has to be more than their current
commitments. The final decision successfully ensured that.

Industrial And Corporate


For India to achieve faster and sustainable economic growth manufacturing and
services sectors plays a key role. During the past couple of years due to various
domestic and international reasons like less demand, rise in Non Performing Assets,
policy inefficiencies, etc. the industrial sector under performed. However, according
to the recent economic survey this sector is showing signs of resurgence. The findings
of the survey related to the industry, infrastructure and service sectors are as follows:

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Industrial performance
-- Industries registered 2.1% growth during April-Dec 2014 based on IIP (Index of
Industrial Production) compared to the same period during the financial year 201314.
--The Advance Estimates (AE) for the year 2014-15 show industrial growth of 5.9 per
cent as per 2011-12 base year.
Recovery in the mining sector and impressive growth in the power sector are the
reasons for reversing the declining trend in the industrial production during 2011-14.
However the growth is not on the expected lines. Reasons for low growth are: high
rate of interest, infrastructure bottlenecks and low domestic and external demand.
-Manufacturing Sector registered 1.2% growth during April-Dec 2014 compared to
that of -0.4% registered during the same period in 2013-14 financial year. Indias
share in the global manufacturing output is 1.8%. The improved performance in
manufacturing is attributed to the change in methodology and use of new data
sources.

Performance in core industries


The overall growth in eight core industries during April-December 2014-15 has
improved marginally to 4.4 per cent compared to 4.1 per cent in the same period last
year. Electricity (9.7 per cent), coal (9.1 per cent), and cement (7.9 per cent) boosted
the performance, while natural gas (-5.1 per cent), fertilizers (-1.4 per cent), crude oil
(-0.9 per cent), refinery products (0.2 per cent), and steel (1.6 per cent) accounted for
moderation in growth.
The improved performance in electricity is due to high growth in thermal generation;
in coal mining to higher production by Coal India Ltd. and captive mining; and in
cement to capacity addition. Natural gas and crude oil production have declined
because of no major discoveries and problems with old oilfields. Domestic steel
production is affected by slowdown in domestic demand and cheaper imports.
Fertilizer production has contracted mainly because of non-availability of gas and no
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significant capacity addition in the past few years.

Corporate sector performance


For manufacturing companies in the private sector, although growth in sales has
been stagnant for the last two years, net profit has started rising from the last quarter
of 2013-14, showing improved efficiency of the companies, which is a positive sign
for growth of the manufacturing sector in India.
The rate of growth of Gross Capital Formation has declined from 37.2 per cent in 201213 to 33.4 per cent in 2013-14. GCF refers to the additional accumulation of capital
assets like plant, machinery, buildings and other similar infrastructure necessary to
produce goods and services in a given period.

Credit flow to the industry


Growth of credit flow to the manufacturing sector at 13.3 per cent in 2014-15 is lower
than the growth of 25.4 per cent in 2013-14, reflecting the tepid growth in the sector.
Chemicals, food processing, and textiles have seen a sharp decline in growth of
credit in 2014-15.

Micro Small and Medium Enterprises Sector


The 3.61 crore MSMEs, contributing 37.5 per cent of the countrys GDP, have a
critical role in boosting industrial growth and ensuring the success of the Make in
India programme.
A number of schemes are being implemented for the establishment of new MSMEs
and growth and development of existing ones. These include:
Prime Ministers Employment Generation Programme
Micro and Small Enterprises Cluster Development Programme
Credit Guarantee Fund Scheme for Micro and Small Enterprises
Performance and Credit Rating Scheme

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Assistance to Training Institutions


Scheme of Fund for Regeneration of Traditional Industries.

Central Public Sector Enterprises


In total 290 CPSEs exist under the administrative control of various departments/
ministries. In 2013-14, net profit of the 163 profit-making CPSEs was 149164 crore
rupees and net loss of the 71 loss-making CPSEs was 20055 crore rupees.
The contribution of CPSEs to the central exchequer by way of divided payment,
interest on government loans, and payment of taxes and duties increased from 163207
crore rupees in 2012-13 to 220161 crore rupees in 2013-14. This was primarily due
to increase in contribution towards dividend payment, excise duty, customs duty,
corporate tax, and dividend tax.

Foreign Direct Investment


During April-November 2014-15, total FDI inflows were 27.4 billion US dollars, while
Cumulative FDI inflows from April 2000 to November 2014 were 350.9 billion US
dollars.

Recent initiatives to boost FDI


FDI up to 100 per cent is permitted under the automatic route in most sectors/
activities.
FDI up to 49 per cent through the government route has been permitted in the
defence industry.

Infrastructure Performance
Power
Objective: To provide round the clock power supply across the country by 2019.

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Steps taken
To meet the objective the government is considering the following measures:
Increasing power generation
strengthening of transmission and distribution
separate feeder lines for agriculture and non-agriculture purposes
metering of power to consumers.
To facilitate the above reforms the Electricity (Amendment) Bill 2014 has been
introduced in the Lok Sabha.
With a target of 765.39 billion units (BU) and achievement of 793.73 BU, electricity
generation by power utilities has exceeded the target for April-December, 2014.
As against the capacity-addition target of 17,830.3 MW in 2014-15, 11,610.41 MW
(including 1,000MW nuclear capacity commissioned) has been added till 31December
2014.
To give further boost to the intended reforms in the power sector reforms the
government is implementing the following schemes.

Integrated power development scheme


The scheme was launched to reduce aggregate technical and commercial (AT &
C) losses, establish IT-enabled energy accounting/auditing, and improve collective
efficiency by subsuming the Restructured Accelerated Power Development and
Reforms Programme (R-APDRP). The outlay for the IPDS is 32612 crore rupees.
Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY)

The programme has been launched with the following objectives:


separating agriculture and non-agriculture feeders to facilitate distribution
companies (discoms) in the judicious rostering of supply to agricultural and
nonagricultural consumers
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Strengthening and augmentation of sub-transmission and distribution infrastructure


in rural areas; (c) metering in rural areas.
The existing Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) is subsumed under
the DDUGJY. Under the new scheme all discoms including private sector discoms
are eligible for availing of financial support.

Oil and Natural Gas:


Domestic annual production of crude oil has been stagnant at around 38 million
tonnes in the last four years.
Gas production during April-December 2014-15 was 25.320 BCM against 26.698
BCM during the corresponding period of 2013-14, showing a decline of 5.1 per cent.

Recent Policy Initiatives for enhancing Crude Oil and Natural Gas production:
New Gas Pricing Formula: The Government approved the New Gas Pricing formula
on 18 October, 2014 and released New Gas Pricing Guidelines, 2014. The increase
in price of domestically produced natural gas strikes a fine balance between the
expectations of investors and interests of consumers.
Reforms in Production-Sharing Contracts to push Investment in Exploration: The
government has ironed out a number of rigidities in production- sharing contracts
to instil confidence among investors and ensure that work, which was stuck in a
number of blocks, takes off in right earnest and without further delay.
Reassessment of Hydrocarbon Potential: An elaborate plan has been rolled out to
reassess hydrocarbon resources in Indias sedimentary basins which will provide
greater clarity to future investors on the prospects of the basins.
Project for Survey of Un-appraised Sedimentary Basins of India: A project has been
undertaken to appraise about 1.5 million sq. km area in twenty-four sedimentary
basins where scanty geo-scientific data is available. Data generated under the
project shall be stored, maintained, validated in a National Data Repository (NDR)
which is being set up in the Directorate General of Hydrocarbons (DGH).
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Data Acquisition through Non Exclusive Multi-Client Model: A policy for acquisition
of geo-scientific data through a non-exclusive multi-client model is being
implemented. This model replaces the earlier fiscal term of profit sharing after cost
recovery with the payment of a one- time project fee.
Level Playing Field for Gas operations in the North East Region: For incentivizing
exploration and production in the North East region, a 40 per cent subsidy on gas
operations has been extended to private companies operating in the region.
Gas Grid Infrastructure: In addition to the existing 15,000 km gas pipeline network,
another 15,000 km has been planned for completion of the gas grid.

Coal bed methane


The estimated CBM resources in the country are about 92 trillion cubic feet (TFC), of
which only 9.9 TCF has so far been established. Commercial Production of CBM in
India has now become a reality with current production of about 0.60 million metric
standard cubic metre per day (MMSCMD).

Solar energy
To provide a big push to solar energy, two new schemes, viz., Scheme for Development
of Solar Parks and Ultra Mega Solar Power Projects and Pilot-cum-Demonstration
Project for Development of Grid Connected Solar PV Power Plants on Canal Banks
and Canal Tops were rolled out in December, 2014. Supplementary guidelines were
issued under the existing Solar Pumping Programme for Irrigation and Drinking
Water scheme to solarize the targeted one lakh such pumps throughout the country
during the current year.

Railways
New initiatives by Indian Railways during 2014-15:
Completion of Udhampur-Katra broad gauge line: The Udhampur-Katra broad
gauge line in Jammu and Kashmir, bringing the state closer to the rest of the nation,
is an engineering marvel by IR. Four train services up to Katra have commenced
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from July 2014.


Meghalaya gets rail connectivity: Meghalaya got its first rail connectivity with the
completion of the new Dubhnoi-Mendipathar line in August 2014. A new route
from Mendipathar in Meghalaya to Guwahati in Assam, got connected by rail in
November, 2014.
High speed Bullet Trains: Steps are under way for introduction of High Speed
Bullet Trains in the country on the Mumbai-Ahmedabad corridor, as part of the
Diamond Quadrilateral network of high speed rail, connecting major metros and
growth centres of the country.
Next Generation e-ticketing(NgeT) application: The newly launched NgeT,
developed by the Central Railway Information Centre (CRIS) has enabled sharp
increase in online ticket booking capacity, number of enquiries per minute, as well
as the capacity to handle concurrent sessions.
Premium special trains: To make sufficient berths available to passengers, and to
earn additional revenue, as compared to trains operating on normal fares, IR has
introduced premium special trains under the dynamic fare system.
Harnessing solar energy: The Rail Coach Factory, Rae Bareli is presently functioning
completely on solar power. A 30 kw solar plant has been commissioned, on the
roof top of Rail Bhawan at New Delhi and provision of solar plants at other Railway
buildings is being expedited , preferably under the public-private partnership (PPP)
model.
Wi-Fi Broadband service at select railway stations: Bengaluru and New Delhi
Railway Stations have been provided Wi-Fi broadband facilities.
e-catering service in trains: Indian Railways Catering and Tourism Corporation,
has been entrusted the task of implementation of e-catering service in trains.
Cooperation with China: An MoU and an Action Plan have been signed between
the Government of India and Peoples Republic of China, for enhancing technical
cooperation in the railway sector. The potential cooperation areas in the MoU
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existing routes, iii) station re-development, iv) high speed rail, and v) setting up of
a Railway University.
Early completion of coal transportation projects: Three rail connectivity projects
for coal movement in Jharkhand, Odisha, and Chhattisgarh have been put on fast
track

Civil aviation
During April - December 2014-15, 101.34 million domestic passengers and 36.74
million international passengers were handled at Indian airports. Domestic passenger
traffic throughput increased by 7.1 per cent and international passengers increased
by 10.3 per cent during April-December 2014-15 as compared to the same period in
2013- 14.

Telecommunications
Overall teledensity (number of telephone connections for every 100 people) has
increased from 75.23 per cent at the beginning of April 2014 to 77.12 per cent at
the end of November 2014, while total broadband connections have touched 82.22
million.

National optical fiber network project


In order to ensure equity in access and to accelerate socio-economic growth in
rural areas, the Department of Telecommunications (DoT) has planned to connect all
250000 Gram Panchayats in the country with minimum 100 Mbps bandwidth under
this project. Cable laying has been completed in about 5000 villages and the project
is likely to be completed by 31 December 2016.

Urbanization
The level of urbanization has increased from 27.78 per cent in 2001 to 31.18 per cent
in 2011. According to Census 2011, as many as thirty-five cities in India had a million
plus population. At current rates of growth, urban population in India is projected to

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reach 575 million by 2030

New schemes for the development of urban infrastructure are:


Swachh Bharat Mission (SBM)
All statutory towns will be covered under the SBM which will be in force till 2 October
2019. The objectives of the SBM are elimination of open defecation, eradication of
manual scavenging, modern and scientific solid waste management, and generating
awareness about sanitation and its linkage with public health.

Heritage City Development and Augmentation Yojana (HRIDAY)


The objective of HRIDAY is to preserve the character of a heritage city and facilitate
inclusive heritage-linked urban development by exploring various avenues including
involvement of the private sector.

Smart city scheme


It is proposed to develop 100 smart cities identified on the basis of stipulated criteria
.These cities will have smart (intelligent) physical, social, institutional, and economic
infrastructure to improve public services.

Services Sector
Services in India are emerging as a prominent sector in terms of contribution to
national and states incomes, trade flows, FDI inflows, and employment.
The services sector accounting for 51.3 per cent of Indias gross value added
(GVA) at basic prices (current prices) in 2013-14, grew by 9.1 per cent compared
to 6.6 per cent total GVA growth and 6.9 per cent GDP growth at market prices.
The sector has grown rapidly in the last decade with almost 72.4 per cent of the
growth in Indias GDP in 2014-15 coming from this sector.

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Services imports of India fell by 2.7 per cent.


Among the worlds top 15 countries in terms of GDP, India ranked 10th in terms of
overall GDP and 11th in terms of services GDP in 2013.
Indias FDI rose by around 26 per cent to an estimated 35 billion US dollars also
due to inflows in the top services sector.
As per the Advance Estimates (AE) in 2014-15, growth of the services sector
accelerated further to 10.6 per cent as compared to 9.1 per cent in 2013-14. This
is mainly due to growth acceleration in financial, real estate, and professional
services to 13.7 per cent from 7.9 per cent and public administration, defence,
and other services to 9.0 per cent from 7.9 per cent in the previous year.
However, on the flip side Indias services sector has a high share in income and
relatively low share in employment.

Service sector in states:


The services sector is the dominant sector in most states of India with a share
of more than 40 per cent in the gross state domestic product (GSDP) in 2013-14
except for Arunachal Pradesh and Sikkim.
Chandigarh is at the top with a share of 88.4 per cent followed by Delhi with 87.7
per cent.
The major services in most of the states with high share are trade, hotels, and
restaurants followed by real estate, ownership of dwellings and business services.
Banking and insurance has an important share only in a few states/ union territories
(UT) like Delhi, Maharashtra, and Chandigarh. In 2013-14, Bihar had the highest
services growth of 17.3 per cent and Uttarkhand the lowest of 5.5 per cent.

FDI in Service Sector:


This share is 43.7 per cent of the cumulative FDI equity inflows during the period
April 2000- November 2014.

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If the shares of some other services or service-related sectors like trading,


information and broadcasting, construction (infrastructure) activities, consultancy
services, hospital and diagnostic centres, ports, agriculture services, education,
air transport including air freight, and retail trading are included, then the total
share of cumulative FDI inflows to the services sector would increase to 53.8 per
cent.
In 2013-14, FDI inflows to the services sector (top five sectors including
construction) declined sharply by 37.6 per cent to US$ 6.4 billion, though overall
FDI inflows grew by 8.4 per cent. However, during 2014-15 (April to November),
the FDI inflows to services grew by 105.8 per cent compared to 22.2 per cent
growth in overall FDI inflows.
The total FDI inflows to the top five services in the first eight months of this year are
higher than for the whole of 2013-14 owing to major inflows in telecommunications.
Indias Services Trade:
Indias share in global exports of commercial services increased to 3.2 per cent in
2013 from 1.2 per cent in 2000. Its ranking among the leading exporters in 2013
was sixth.
In the first half of 2014-15, services exports grew by 3.7 per cent to 75.9 billion
US dollars and import of services grew by 5.0 per cent to 39.9 billion US dollars,
resulting in net services growth of only 2.4 per cent.
Net services has been a major source of financing Indias trade deficit in recent
years. Surplus on account of services exports financed 49.4 per cent and 49.3 per
cent of merchandise trade deficit in 2013-14 and H1 of 2014-15 respectively.
The survey further elaborates that there are many market access barriers and
domestic regulations in Indias services sector. Given the potential of Indias services
sector, removal of many of these barriers both domestically and internationally is
of vital importance. Services sector negotiations both at multilateral and bilateral/
regional levels are therefore of special significance to India.

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WTO Negotiations: Indias Stand


The post Bali work programme has to be within the mandate of the Doha
Development Agenda (DDA) and valuable milestones such as the Annex C on
Services of the Hong Kong Ministerial Declaration (HKMD) which contains the
roadmap for conclusion of the Doha Round.
India does not support any cherry picking of issues or sectors of interest to
certain economies in the name of concluding the Doha Round and the level of
ambition across the negotiating pillars including in services would be governed by
agriculture.
Since development is the central theme of the Doha negotiations, commitments
in areas of export interest to developing countries and least developed countries
(LDCs) is crucial for the success of the round. In the past, India has been dismayed
by the negligible progress in Mode 4 offers.
Preferential treatment for the LDCs in the World Trade Organization (WTO): At the
High Level Meeting of the WTO services council on 5 February 2015, discussions
were held to operationalize the Bali decision on LDC services waiver. India has been
a generous partner for LDCs and offered market access for contractual services
suppliers and independent professionals under Mode 4 in sectors like engineering
services, integrated engineering services, computer and related services, etc.
management India has signed Comprehensive Bilateral Agreements with the
Governments of Singapore, South Korea, Japan, and Malaysia. A Free Trade
Agreement (FTA) in services and investment was signed with the Association of
South East Asian Nations (ASEAN) in September 2014.
India has joined the Regional Comprehensive Economic Partnership (RCEP)
plurilateral negotiations and is continuously engaged in the bilateral FTA negotiations
including Trade in Services with Canada, Israel, Thailand, the European Free Trade
Association (EFTA), Australia, New Zealand, and the EU. Negotiations with Canada
and Australia have not progressed much and modalities for the negotiations are
still being discussed. Negotiations with Thailand are at an advanced stage and
with EFTA are more or less over. India is also engaged in bilateral trade dialogues
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with the US under the India-US Trade Policy Forum (TPF), with Australia under the
India-Australia Joint Ministerial Commission (JMC), with China under the IndiaChina Working-Group on Services, and with Brazil under the India-Brazil Trade
Monitoring Mechanism (TMM).

Indias Services Employment:


Services share in employment at 28.5 per cent in 2011-12 is higher than in industry
at 24.4 per cent. Among services, employment elasticity was the highest in
financial, insurance, real estate, and business services and transport, storage, and
communication.
Sector-wise performance

Tourism
Indias share in International Tourist Arrivals is a paltry 0.6 per cent compared to 7.8
per cent in France and 6.4 per cent in the US. However, in terms of ITRs, Indias share
is at 1.5 per cent.
As per the Second Tourism Satellite Account of India (TSA), the contribution of tourism
to total GDP during 2012-13 was 6.9 per cent (3.7 per cent direct and 3.1 per cent
indirect) and to total employment 12.4 per cent (5.3 per cent direct and 7.0 per cent
indirect).
In Budget 2014-15, the government announced several measures for boosting
tourism like streamlining of some service tax bottlenecks and focused effort for the
development of a global scale Buddhist circuit and cleaning of the Ganga along
with creation of world class amenities to enhance the spiritual experience along the
holy river. Further, easing of the Indian tourism visa regime through the execution of
tourist visa on arrival enabled by electronic travel authorization (ETA) for forty-three
countries will provide a major boost to tourism.

Shipping
Around 95 per cent of Indias trade by volume and 68 per cent in terms of value is
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transported by SEA.
As on 31 December 2014, India had a fleet strength of 1209 ships with gross
tonnage (GT) of 10.3 million, with the public-sector Shipping Corporation of India
(SCI) having the largest share of around 31 per cent.
India continues to be a leading ship breaking destination. It topped the list of ship
recycling countries in 2014 (January to October) with a world share of 32 per cent,
scrapping 234 ships of 7.98 million DWT as per the ISL Shipping Statistics and
Market Review.
India is also a major supplier of seafarers to the world. According to BIMCO/
ISF Manpower Update 2010-2014, India supplied 60000 crew (fresh seamen) and
44500 officers in 2014

Port Services
In the Maritime Agenda, a target of 3130 million tonnes (MT) port capacity has been
set for the year 2020 with around 296000 crore rupees investment. FDI up to 100 per
cent under automatic route is permitted for construction and maintenance of ports.

IT and ITeS
(ITeS) including business process management (BPM), software engineering R & D
services and product development has emerged as one of the most dynamic and
vibrant sectors in Indias economy.
It is the single largest contributor to services exports.
The sector continues to be one of the largest employers in the country, directly
employing nearly 3.5 million people as per the National Association of Software and
Service Companies (NASSCOM).
As per the Central Statistics Office (CSO), computer and related services with a share
of 3.3 per cent in Indias GDP grew by 14.4 per cent in 2013-14.
As per NASSCOMs estimate the revenue of the IT-BPM industry at 119 billion US
dollars grew by 12 per cent in 2014-15, while the export market at 98 billion US
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dollars grew by 12.3 per cent over the previous year.


Software products and services revenues for 2015-16 is projected to grow at 1214 per cent to reach 133-136 billion US dollars as per NASSCOM. Export revenues
are projected to grow by 12 to 14 per cent to reach 110-112 billion US dollars and
domestic revenues by 10-15 per cent to reach 23-24 billion US dollars during 201516.

Initiatives to boost the IT and ITes sector


Recognizing the need for greater penetration of IT services domestically, in Budget
2014-15 Digital India has been envisioned as an ambitious umbrella programme to
prepare India for knowledge-based transformation. This would ensure broadband
connectivity at village level, improved access to services through IT-enabled
platforms, greater transparency in government processes and increased indigenous
production of IT hardware and software. One of the important components of this
programme is peoples empowerment through availability of entitlements on the
cloud, coupled with Aadhaar Authentification Platform.
A National Rural Internet and Technology Mission for services in villages and
schools and E-Kranti for government service delivery are other initiatives.
Recognizing the importance of IT, the governments Make in India mission has
included IT and BPM among the twenty-five focus sectors.

Consultancy Services
Indias outsourcing and consulting industry is estimated at 86.4 billion US dollars in
2014, accounting for almost 20 per cent of global consulting industry revenue, and is
projected to reach 99.0 billion US dollars in 2015.
Indias emergence as one of the fastest growing consultancy markets worldwide
is largely attributable to increased investment activities due to liberalization of FDI,
entry of many new players into the Indian market and low cost sourcing. Indian
consultants have good expertise particularly in engineering consultancy which could
be leveraged to enhance consultancy exports.
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Real Estate and Housing


Real estate and ownership of dwelling constitute 7.8 per cent of Indias GDP in
2013-14. Both domestic and global slowdown affected this sector with growth
decelerating from 7.6 per cent in 2012-13 to 6.0 per cent in 2013-14 and FDI in
the real estate sector falling to 703 million US dollars in the period April-November
2014.
House prices have increased over the years in many cities and towns as per the
National Housing Banks RESIDEX index of residential prices in India. In 2014, out
of 26 cities, 17 witnessed increase in prices over 2013 with the maximum increase
observed in Chennai (17 per cent) followed by Ahmedabad (15 per cent ), while 7
saw decline, with the maximum fall witnessed in Meerut (-16 per cent ) followed
by Chandigarh (-8 per cent).
The widening gap between demand and supply of housing units and affordable
housing finance solutions is a major policy concern for India. At present urban
housing shortage is 18.8 million units of which 95.6 per cent is in economically
weaker sections (EWS) / low income group (LIG) segments and requires huge
financial investment to overcome. Institutional credit for housing investment is
well below.
According to the World Banks Doing Business 2015, India ranked 184th (out
of 189 economies) in terms of construction permits, requiring on an average 27
procedures to get permits as compared to an average of 14 in South Asia and 12
in OECD (Organization for Economic Cooperation and Development) countries.

Recent policy initiatives


The amendment of the FDI policy, thereby reducing the minimum floor area to 20000
sq. m from the earlier 50000 sq.m and bringing down the minimum capital requirement
to 5 million US dollars from 10 million US dollars.
Budget 2014-15 also announced setting up of Real Estate Investment Trusts (REITs)
and SEBI has approved the REITs regulation.

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In order to encourage savings, the deduction limit on housing loan interest for selfoccupied property was also increased to 2 lakh from the earlier 1.5 lakh in Budget
2014-15. In order to push development of affordable housing and achieve the target
of housing for all by 2022, the Reserve Bank of India (RBI) relaxed norms for issue of
long-term bonds by banks for financing affordable housing.

Internal Trade
The 1147274 crore rupees trade and repair services sector with a share of 11.0 per
cent in GDP grew by 14.3 per cent in 2013-14. The retail sector was affected in 2013
by high consumer price inflation, currency fluctuations, and strict FDI policies.
However, India remains an attractive long-term retail destination for several reasons,
including its large population, 58.3 per cent of which is below 30 years and 31.1 per
cent of which lives in urban areas with rising disposable incomes. Migration from
traditional stores to modern retail continues, though the latter accounts for only 8 per
cent of the total market.

Media and Entertainment Services


The Indian media and entertainment industry comprises various segments which
include television, print, films, radio, music, animation, gaming and visual effects,
and digital advertising. According to a report by FICCI-KPMG, the Indian media and
entertainment industry grew by 11.8 per cent to 918 billion rupees in 2013 and is
projected to grow at a CAGR of 14.2 per cent to reach 1786 billion rupees by 2018.
Digital advertising and gaming are projected to drive the growth of this sector in the
coming years.
The Government has embarked on an ambitious exercise of digitizing its cable
network in four phases leading to complete switch off of analog TV services by 31
December 2016. India also has a liberalized FDI regime for the broadcasting sector
where 26 per cent FDI is allowed in content and 74 per cent in various carriage
services like DTH, HITS.
India is emerging as the new favourite of international studios, with 100 per cent FDI
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permitted in the film sector. Disney, Fox, Sony, and Warner Brothers have entered
into coproduction and distribution deals with domestic production houses.
To sum up, the performance of the services sector in recent years has been reasonably
good, despite the unfavourable international and domestic situation.

Social Infrastructure, Employment, And Human Development


The net addition (between 2001-2011) is less than that of the previous decade by
0.86 million. At present a little more than one out of every six persons in the world
is an Indian.
As per Sample Registration System (2013) data, there has been a gradual decline
in the share of population in the age group 0-14 from 41.2 to 38.1 percent during
1971 to 1981 and from 36.3 to 28.4 percent during 1991 to 2013.
The proportion of economically active population (15-59 years) has increased from
53.4 to 56.3 percent during 1971 to 1981 and from 57.7 to 63.3 percent during
1991 to 2013.
The percentage of elderly (60+) has gone up from 5.3 to 5.7 percent and 6.0 to 8.3
percent respectively in 1971 to 1981 and 1991 to 2013.
According to an Indian Labour Report (2007), 300 million youth will enter the labour
force by 2025 and 25 percent of the worlds workers in the next three years will be
Indians.
Population projections indicate that in 2020, the average age of Indias population
will be the lowest in the world around 29 years compared to 37 years in China and
the United States of America, 45 years in West Europe and 48 years in Japan.

Educational Challenges
While only 73 per cent literacy has been achieved as per Census 2011, there has
been marked improvement in female literacy.

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Male literacy at 80.9 per cent is still higher than female literacy at 64.6 per cent but
the latter has increased by 10.9 percentage points compared to 5.6 percentage
points for the former.
The Right of Children to Free and Compulsory Education (RTE) Act, 2009 was
enacted by the centre to increase the quality as well as accessibility of elementary
education in India in April 2010.
Sarva Shiksha Abhiyan (SSA) is the designated scheme for implementation of the
RTE Act.
Between 2007-08 and 2013-14, according to the District Information System for
Education, total enrolment in primary schools increased from 134 million to 137
million in 2011- 12 and then declined to 132 million in 2013-14 while upper primary
enrolment grew from 51 million to about 67 million.
However, the overall standard of education is below the global standards, as per
Programme for International Student Assessment 2009+ results. It ranked Tamil
Nadu and Himachal Pradesh 72 and 73 out of 74 participants, higher only than
Kyrgyzstan.
ASER (Annual Status of Education Report) findings reported low levels of learning
amongst the 5 to 16 age group in rural India since 2005.
Concurrently, to build capacity in secondary schools, several schemes like MidDay Meal (MDM) scheme, Rashtriya Madhyamik Shiksha Abhiyan (RMSA), Model
School Scheme (MSS), and Saakshar Bharat (SB) have been implemented.
The number of colleges and universities have gone up from 350 universities and
16982 colleges in 2005-06 to 713 universities, 36739 colleges and 11343 diplomalevel institutions in 2013-14.
The gross enrolment ratio (GER) in higher education has nearly doubled from
around 11.6 percent in 2005-06 to 21.1 percent in 2012-13.

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School Education Outcomes: Critical Inputs for tapping the Demographic


Dividend
The single most significant ASER finding is that learning levels across the country,
whether in public or private school, have not improved.
Another important finding is regarding school enrolmentfrom only 16 percent
children enrolled in private schools in 2005, enrolment has gone up to nearly 30
percent. Present trends indicate that this number will increase to 50 percent by the
end of the current decade.
During 2007-08 and 2013-14, enrolment in government schools (both primary and
upper primary) declined by about 11.7 million, from 133.7 million to 121 million, while
enrolment in private schools increased by 27 million, from 51 million to 78 million.

Some highlights of the survey of rural children conducted in 16497 villages


in 557 districts (569229 children surveyed), are listed below:
Marginal improvement in basic reading levels: The percentage of children in
Standard V who are able to read a Standard II-level text increased from 47.0
percent in 2013 to 48.1 percent in 2014.
Decline in arithmetic levels: The percentage of Standard III children able to solve
simple two-digit subtraction problems fell from 26.1 percent in 2013 to 25.3 percent
in 2014. The percentage of children in Standard II who cannot recognize numbers
up to 9 has increased over time, from 11.3 percent in 2009 to 19.5 percent in 2014.
Better provision of girls toilets: The proportion of schools without toilets (girls +
boys) declined from 7.2 percent in 2013 to 6.3 percent in 2014. The proportion of
separate girls toilets (unlocked and useable) in schools has improved from 32.9
percent in 2010 to 53.3 percent in 2013 and further to 55.7 percent in 2014.
Increase in libraries in schools: The proportion of schools without libraries has
declined only one percentage point from 22.9 percent during 2013 to 21.9 percent
during 2014.

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Compliance on pupil-teacher ratio: There has been a consistent rise in the


proportion of schools complying with RTE norms on pupil-teacher ratio, from 45.3
percent in 2013 to 49.3 percent in 2014.
Improvement in drinking water facility: The proportion of schools with no provision
for drinking water declined from 17.0 percent in 2010 to 15.2 percent in 2013 and
further to 13.9 percent in 2014 but the proportion of schools with useable drinking
water facility improved only marginally from 73.8 percent in 2013 to 75.6 percent
in 2014.
Stagnant enrolment in rural India: Over one year the enrolment of 6-14-year old
children in rural India remained dormant at 96.8 percent, with the proportion not
enrolled also unchanged at 3.3 percent.
Rising private school enrolment: Private school enrolment of 6-14-year olds has
risen marginally from 29.0 percent in 2013 to 30.8 percent in 2014. Among the
major States which have higher private enrolment are Kerala followed by Haryana,
UP, Punjab, and Rajasthan.
Decline in classroom-teacher ratio (CTR): The steady decline in the percentage of
schools meeting the RTE norm for CTR continued; from 73.8 percent in 2013 the
ratio further declined to 72.8 percent in 2014.
Decline in attendance: Childrens attendance in both primary and upper primary
schools shows a steady downward trend. In 2009, attendance was at 74.3 percent
in primary schools and 77 percent in upper primary schools as compared to 71.4
percent and 71.1 percent respectively in 2014.
Same classroom for different classes: In 2014, Standard II students in about 63
percent of schools and Standard IV students in about 57 percent of schools were
reported to be sitting with one or more other classes; the percentages have been
increasing over the years.

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Examples of Good Practices


Mundla Village of Icchawar Block in Sehore district 100 per cent sanitized
village
Before the launch of the Global Water, Sanitation and Hygiene for All (WASH) campaign
in Mundla village on in February 2014, there were four functional toilets in the village.
As of 2 October 2014, the village has been declared an ODF village. The efforts of
villagers have converted it into a hygienic and 100 per cent sanitized village.

Asias Cleanest Village


Mawlynnong in Meghalaya is a model that showcases how collective effort can help
a village find a place on the tourism map. The village has 80 households, of which
29 are below poverty line (BPL). Being awarded the Asias Cleanest Village award
has resulted in an increase in the number of tourists to this village. The villagers
have also constructed two tree houses with eco-friendly materials such as bamboo,
which provide a magnificent birds-eye view of the beautiful and clean village and a
panoramic view of Bangladesh villages, a few miles away.

Employment Matters
As per the Labour Bureau Report 2014, the current size of Indias formally skilled
workforce is small, approximately 2 percent.
At all-India level, around 6.8 percent people aged 15 years and above are reported
to have received or will be receiving vocational training.
As per National Skill Development Corporation (NSDC), there is an incremental
requirement of 120 million skilled people in the non-farm sector.
Some recent initiatives have been undertaken in the area of higher and vocational
education including Rashtriya Uchchatar Shiksha Abhiyan (RUSA), Technical
Education Quality Improvement Programme (TEQIP), and National Skill Qualification
Framework (NSQF).
A total of 51956 candidates have been skilled under the Deen Dayal Upadhyaya

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Grameen Koushalya Yojana (DDU-GKY), of which 28995 have been placed till
November during 2014-15.
Compound annual growth rate (CAGR) of employment during 2004-05 to 2011-12
to 0.5 percent from 2.8 percent during 1999-2000 to 2004-05 as against CAGRs of
2.9 percent and 0.4 percent respectively in the labour force for the same periods.
As per the National Sample Survey Office data during 1999-2000 to 2004-05,
employment on usual status (US) basis increased by 59.9 million persons from
398.0 million to 457.9 million.
Based on current daily status (CDS), CAGR in employment was 1.2 percent and
2.6 percent against 2.8 percent and 0.8 percent in the labour force respectively for
the same periods.
Employment in the secondary and tertiary sectors increased to 24.3 percent
and 26.8 percent respectively in 2011-12 from 18.1 percent and 23.4 percent
respectively in 2004-05.
Self-employment continues to dominate, with a 52.2 percent share in total
employment.
Data from the sixty-eighth NSSO round (2011-12) indicates a revival in employment
growth in manufacturing from 11 percent in 2009-10 to 12.6 percent in 2011-12.
The number of unemployed people (under US) declined from 11.3 million during
2004-05 to 9.8 million in 2009-10 but again increased to 10.8 million in 2011-12.
The man-days lost on account of strikes and lockout have been steadily declining
from 17.6 million in 2009 to 14.46 million in 2011, and further to 3.65 million
(Provisional) during 2013 and 1.79 million (Provisional) from January 2014 to 9
December 2014.

Towards A Healthy India


Indias total fertility rate (TFR) has been steadily declining and is now at 2.3; while
state wise disparities exist, a declining trend is recorded across states, explaining
the declining growth rate of population.
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India is set to reach the UN Millennium Development Goals (MDG) with respect
to maternal and child survival. The MDG for maternal mortality ratio (MMR) is 140
per 100000 live births, while India had achieved 178 by 2010-12 and is estimated
to reach 141 by 2015.
The under-5 mortality rate (U5MR) MDG is 42, while India has an U5MR of 52 and
is expected to reach 42 by 2015.
The Swachh Bharat Mission launched on 2 October 2014 aims at attaining an
open defecation free (ODF) India by 2 October 2019 by providing access to toilet
facilities to all rural households and initiating Solid and Liquid Waste Management
activities.
In order to improve the availability of drinking water in rural areas, 20000 solar
power based water supply schemes have been approved under the National Rural
Drinking Water Programme (NRDWP) across all the states.
Mission Indradhanush was launched on 25 December 2014 with the aim of
covering all those children who are either unvaccinated or are partially vaccinated
against diphtheria, whooping cough, tetanus, polio, tuberculosis, measles, and
hepatitis B by 2020.
With the goal of providing holistic health solutions, the erstwhile Department of
AYUSH (Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy) was
elevated to a full-fledged ministry from 9 November 2014.
Over a span of seven years the incidence of poverty declined from 37.2 per cent
to 21.9 percent in 2011-12 for the country as a whole, with a sharper decline in
the number of rural poor.

Human Development: International Comparison


Indias Human Development Index (HDI) value for 2013 is 0.586, positioning the
country at 135 out of 187 countries and territories.
Indias life expectancy at birth (LEB) increased by 11.0 years, mean years of
schooling increased by 2.5 years, and expected years of schooling increased by

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5.3 years while gross national income (GNI) per capita increased by about 306.2
percent.
In terms of gender equality, the HDR ranks India 127 out of 152 countries with a
Gender Inequality Index (GII) of 0.563.
The female HDI value for India is 0.52 as compared to 0.63 for males, resulting in
a GDI value of 0.828.
A new scheme, Beti Bachao Beti Padhao (BBBP) Programme, for promoting
survival, protection, and education of the girl child was launched on 22 January
2015 at Panipat, Haryana, a state that is noted for the lowest CSR 835 (SRS
2013).

Fostering Inclusive Growth


The Pradhan Mantri Jan Dhan Yojna (PMJDY) launched on 28 August 2014 and the
RuPay Card, which is a payment solution, are important schemes in this regard.
The government has launched the Sansad Adarsh Gram Yojna (SAGY) which
will be implemented through the convergence and implementation of existing
government programmes.
In addition, the Vanbandhu Kalyan Yojna will be implemented in one block each of
ten states that have Fifth Schedule areas.

Demographic Dividend And Related Policy Interventions


A declining 0-14 population will impact both elementary (5-14 age group) and
higher education (15-29 age group).
The dependency ratio for India is expected to fall from 54 per cent in 2010 to 49
percent in 2020.
The projected average age of 29 years in 2020 has already been surpassed in
some states like Kerala (33 years), Goa (32.3), Tamil Nadu (31.3), Himachal Pradesh
(30.4), Punjab (29.9), Andhra Pradesh (29.3), and West Bengal (29.1).

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This lag in demographic transition among states in India could turn out to be
a great blessing from the point of view of coping with the problem of declining
population.

Trends In Indias Social-Sector Expenditure


As a percentage of the GDP, expenditure on social services has declined from 6.9
percent in 2009-10 to 6.7 percent in 2014-15 (BE), with expenditure on education
increasing from 3.0 percent to 3.1 percent and on health declining from 1.4 percent
to 1.2 percent.
Government spending on healthcare in India is only 1.2 percent of GDP which
is about 4 percent of total government expenditure, less than 30 percent of total
health spending.

Problems plaguing the Social Infrastructure, Employment, and Human Development in India
Poverty remains a pressing problem, no nation can become great when the life
chances of so many of its citizens are benighted by poor nutrition.
Economic growth has historically been good for the poor both directly because
it raises incomes and indirectly because it gives the state resources to provide
public services and social safety.
Price subsidies have formed an important part of the anti-poverty discourse in
India and the governments own policy toolkit.
Rice, wheat, pulses, sugar, kerosene, LPG, naphtha, water, electricity, diesel,
fertiliser, iron ore, railways are just a few of the commodities and services that the
government subsidises.
The estimated direct fiscal cost of this illustrative subset of subsidies is about `
378,000 crore or about 4.24 percent of GDP.
Price subsidies are often challenging for the state to implement because they offer
large rent-seeking opportunities to black marketers.
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The Jam Number Trinity Solution


The JAM Number Trinity solutions like Jan Dhan Yojana, Aadhaar and Mobile
numbers allow the state to offer this support to poor households in a targeted and
less distortive way.
As of December 2014, over 720 million citizens had been allocated an Aadhaar
card.
Linking the Aadhaar number to an active bank account is key to implementing
income transfers. To this effect, the government seeded over 100 million bank
accounts with Aadhaar numbers by 2014.
With the introduction of Jan Dhan Yojana, the number of bank accounts is expected
to increase further and offering greater opportunities to target and transfer financial
resources to the poor.

Two alternative financial delivery mechanisms:


Mobile Money: With over 900 million cell phone users and close to 600 million
unique users, mobile money offers a complementary mechanism of delivering
direct benefits to a large proportion of the population.
Post Offices: India has the largest Postal Network in the world with over 155015
Post Offices of which (89.76 percent) are in the rural areas.
If the JAM Number Trinity can be seamlessly linked and all subsidies rolled into
one or a few monthly transfers, real progress in terms of direct income support to
the poor may finally be possible.

Analysis of Economic Survey 2014 - 15


To achieve the ambitious double digit economic growth investment climate plays a
key role. However, according to the survey, Indias investment has been much below
potential over the last few years. From a peak of 24 percent in the last quarter of 200910 financial year, the rate of growth of GCF now languishes around zero. Stalling of
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projects, a term synonymous with large economic undertakings in infrastructure,


manufacturing, mining, power, etc., is widely accepted to be a leading reason behind
this decline.
Unfavourable market conditions, lack of non-environmental clearances, raw material
supply problem and lack of promoter interest are identified as primary reasons for the
huge volume of stalled projects. The stock of stalled projects at the end of Dec. 2014
stood at 8.8 lakh crore rupees or 7 per cent of GDP.
The survey also identified Debt Overhang as another unhealthy development in the
Indian economy. It refers to the alarmingly high rate of Debt to Equity. Debt to Equity
is a measure of financial leverage that indicates the proportion of debt and equity
used by the company to finance its assets. The survey further elaborated that though
every economy is prone to such trend there is something fundamentally Indian about
this phenomenon.
First, the debt overhang of the corporate sector is accompanied by a relatively
high growth of around 6 to 7 per cent.
Second, it has been accompanied by high inflation (instead of the price deflation
in the Japanese example).
Third, the public sector is exposed to corporate risk in the form of public private
partnerships, and lending by the public sector banks.
Fourth, unlike many other countries with high debt to equity ratios currently, Indias
debt is almost exclusively financed by public sector banks. This has translated
into high and rising non-performing assets (NPAs) for these banks.

To remedy the situation the survey suggested the following policy initiatives.
Combining the situation of Indian public sector banks and corporate balance
sheets suggests that the expectation that the private sector will drive investment
needs to be moderated. In this light, public investment may need to step in to
recreate an environment to crowd-in private sector investment in the short term.
Efforts must be made to revitalise the public-private partnership model of

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investment, albeit in a different manner (specific details are offered in Box 4.1).
In addition, serious consideration must be given to setting up an Independent
Renegotiation Committee. In the presence of weak mechanisms for bankruptcy and
exit, we have to think creatively about distributing pain amongst the stakeholders
from past deals gone sour.
Restructuring the existing modalities to operationalize Public Private Partnerships
to make them financially accountable and viable.

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RAILWAY BUDGET 2015 - 16


Introduction
Railway Minister Suresh Prabhu on 26 February 2015 presented the Railway Budget
2015-16 in the Lok Sabha. In his first Railway Budget, Prabhu outlined a plan to
invest over 8 lakh crore rupees over 5 years.
The size of the Plan Budget has gone up by 52 percent from 65789 crore rupees in
2014-15 to 100011 crore rupees in 2015-16.

9 thrust areas of the Budget includes


Indian Railway to become prime mover of economy once again
Resource Mobilization for higher Investments
Decongestion of heavy haul routes and speeding up of trains: emphasis on gauge
conversion, doubling, tripling and electrification
Project Delivery
Passenger Amenities
Safety
Transparency & System Improvement
Railways to continue to be the preferred mode of transport for the masses
Sustainability

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Four goals for Indian Railways to transform over next five years
To deliver a sustained and measurable improvement in customer experience.
To make Rail a safer means of travel.
To expand Bhartiya Rails capacity substantially and modernise infrastructure: for
this purpose daily passenger carrying capacity will be increased from 21 million
to 30 million. Track length will also be increased by 20 percent from 114000 km
to 138000 km. Annual freight carrying capacity will be grown from 1 billion to 1.5
billion tonnes.
To make Bhartiya Rail financially self-sustainable.

Railway Budget 2015-16 on Quality of Life in Journeys


In the budget, Suresh Prabhu gave 11 thrust areas to improve quality of life in train
journeys which also includes Swachh Rail - Swachh Bharat drive. The 11 thrust areas
include

Cleanliness
Swachh Rail - Swachh Bharat campaign
New department for cleanliness
Integrated cleaning by engaging professional agencies and training our staff
Waste to energy conversion plants
New toilets covering 650 additional stations compared to 120 stations in 2014
Bio-toilets to be fitted in the coaches

Bed linen
National Institute of Fashion Technology (NIFT), Delhi to design bed linen
The facility of online booking of disposable bedrolls at select stations will be
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extended to all passengers through the IRCTC portal on payment basis

Help-line
Start a 24X7 helpline number 138 and a toll-free number 182 for security related
complaints

Ticketing
Operation Five Minutes to ensure Speedy Purchase of Tickets for Unreserved
Class Passengers.
Provision of modified hot-buttons, coin vending machines and single destination
teller windows will be launched to reduce the transaction time.
For the differently-abled travellers, a special initiative will be launched whereby
they can purchase concessional e-tickets after one-time registration.
Proposal to work towards developing a multi-lingual e-ticketing portal
Some other facilities include introduction of integrated ticketing system on the
lines of rail-cum-road tickets on Jammu Srinagar route will be expanded.

Catering
Integrate Best Food Chains for E-Catering
Railway passengers to order their food through IRCTC website at the time of
booking tickets

Leveraging technology
Introduce hand-held terminals to Travelling Ticket Examiners (TTEs) for verification
of passengers and downloading charts.
Extending facility of SMS on mobiles as a valid proof of travel for PRS tickets
SMS Alert service to inform passengers in advance of the updated arrival/departure
time of trains at starting or destination stations

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Surveillance
Surveillance cameras will be provided on a pilot basis in selected mainline coaches
and ladies compartments of suburban coaches without intruding into privacy

Entertainment
Project for introducing on-board entertainment on select Shatabdi trains on license
fee basis
Mobile phone charging facilities will be provided in general class coaches & its
numbers will be increased in sleeper class coaches

Station facilities
200 more stations to come under Adarsh Station scheme
Wi-Fi will be provided at B category station
Facility of self-operated lockers to be made available at stations
Provision of concierge services will be introduced through IRCTC at major stations
Online booking of wheel chair on payment basis for senior citizens, patients and
the differently-abled passengers will be available through IRCTC on select stations

Train capacity
Capacity in identified trains will be augmented to run with 26 coaches
More General class coaches will be added in identified trains

Comfortable travel
NID to design user friendly ladders for climbing to the upper berths
Quota of lower berths for senior citizens will be increased
Middle bay of coaches will be reserved for women and senior citizens
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NID will develop ergonomically designed seats


Provision of 120 crore rupees for Lifts and escalator has been made
The newly manufactured coaches will be Braille enabled
Entrances will be widened to ease of differently-abled passengers
Corporate houses & MPs requested to invest in improving passenger amenities at
Railway stations through CSR & MPLAD funds

Major Initiatives in Railway Budget 2015-16


In this regard, Rail Budget 2015 16 unveiled certain initiatives ranging from
cleanliness drive to development of infrastructure to improving the overall quality of
life in train journeys.

The major initiatives undertaken in the Railway Budget 2015-16

Station Redevelopment
Zonal and Divisional offices to be empowered for quicker decision making
Development of 10 Satellite Railway terminals in major cities with twin purpose of
decongesting the city and providing service to suburban passengers

Network expansion
Fast-track sanctioned works on 7000 kms of double/third/fourth lines
Commission of 1200 km of network in 2015-16 at an investment of 8686 crore
rupees

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Expansion of freight handling capacity


Transport Logistics Corporation of India (TRANSLOC), to be set up for developing
common user facilities to provide end-to-end logistics solution at select Railway
terminals through Public Private Partnerships.
Policy for Private Freight Terminals (PFT) to be revised.
Automatic Freight Rebate Scheme for traffic to be expanded
Long haul freight operations to be used extensively and construction of long loop
lines to be expedited.

Improving train speed


Speed of 9 railway corridors to be increased from existing 110 and 130 kmph to
160 and 200 kmph respectively.
Average speed of freight trains in empty and loaded conditions will be enhanced
to 100 kmph for empty freight trains and 75 kmph for loaded trains.

Bullet train
Feasibility study for High Speed Rail between Mumbai-Ahmadabad is in advanced
stage.

Upgrading manufacturing capability


Creation of job opportunities by upgrading the manufacturing capability and review
of functioning of Indian Railways Production Units.
Workshops for technological upgradation and enhancing productivity be
undertaken to make them self-sustaining.

Safety
RDSO to develop a suitable device with reliable power supply system based
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on theft-proof panels/batteries in consultation with Indian Space Research


Organization using geo-spatial technology.
Train Protection Warning System and Train Collision Avoidance System to be
installed on selected routes at the earliest.
Better welding techniques being promoted and digital type machines to replace
analogue type machines.

Technology upgradation
Constitution of an innovation council called Kayakalp for business re-engineering.
Technology portal being constituted to invite innovative technological solutions.
Research Centers to be set up in selected universities for fundamental research.

Partnerships for development


PPP cell to be revamped to make it result oriented. Foreign Rail Technology
Cooperation scheme to be launched.
Joint ventures to be set up with States for focused project development, resource
mobilization, land acquisition and monitoring of critical rail projects.

Improvements to Management Processes and Systems


Systems audit to be conducted for review of all processes and procedures.
Constitution of a working group to modify present system of accounting, to ensure
tracking of expenditure to desired outcomes and Train operations to be audited.
Paperless working in material management system to be expanded and Vendors
to be integrated through Vendor Interface Management System.

Resource Mobilisation
Support from the Central Government for 41.6 percent of the Plan and Internal

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generation of 17.8 percent for setting up of a Financing Cell in the Railway Board.
Setting up an infrastructure fund, a holding company and a Joint Venture with an
existing NBFC of a PSU with IRFC for raising long term debt from domestic as
well as overseas sources.
Digitized mapping of land records and responsibility fixing for encroachments.
New strategy to tap latent advertising potential including offering stations and
trains for corporate branding.
Railways in partnership with ports will deliver rail connectivity to Nargol, Chharra,
Dighi, Rewas and Tuna. Scrap disposal policy to be reviewed for speedier scrap
disposal.

Human Resources
Human Resource Audit to be undertaken; Separate accounting head for HRD;
ERP based Human Resource Management System.
Setting up a full-fledged University during 2015-16 and Improved delivery of
health services to employees

Energy and sustainability


Environment Directorate to be constituted in Railway Board to give increased
focus on environment management.
Initiative likely to save at least 3000 crore rupees in next few years will be taken up.
1000 MW solar plants will be set up by the developers on Railway/private land.
Water conservation mission will include water audit and expansion of water
harvesting systems. 100 DEMUs to be enabled for dual fuel- CNG and diesel.
Noise levels of locos to be at par with international norms and concerns related to
wildlife will be addressed.

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Transparency and Governance initiatives


System of on-line applications introduced for two categories of recruitment as a
pilot project.
All possible solutions be explored to address menace of corruption. E-procurement
value chain to be expanded.

Social initiatives
Infrastructure like stations and training centers to be made available for skill
development.
Promotion of products made by Self Help Groups, consisting mainly of women
and youth on the model of Konkan Railway.

Tourism
Incredible Rail for Incredible India to be launched and Promotion of training of autorickshaw and taxi-operators as tourist-guides on the model of Konkan Railway.
Coaches in selected trains connecting major tourist destinations to travel agencies
may be offered on a revenue sharing model.
IRCTC to work on promoting the Gandhi circuit to attract tourists to mark the
occasion of 100 years of the return of Mahatma Gandhi to India from South Africa.
IRCTC will work on Kisan Yatra, a special travel scheme for farmers for farming &
marketing technique centres.

Statistical Highlights of Railway Budget 2015-16


The major statistical highlights of the Budget encompassing Financial Performance
2014-15, Budget Estimates 2015-16 and Plan outlay 2015-16 are given below:

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Financial Performance in 2014-15


In 2014-15, there was a net reduction in Gross Traffic Receipts by 917 crore rupees
compared to the Budgeted Estimate (BE) of 160165 crore rupees
Growth in Ordinary Working Expenses (OWE) scaled down to 11.7 percent. The
budgeted OWE of 112649 crore rupees decreased in the Revised Estimate (RE) of
2014-15 to 108970 crore
Appropriation to the Pension Fund increased to 29540 crore rupees in the RE
2014-15
Internal resource generation also improved and accordingly the appropriation to
Depreciation Reserve Fund (DRF) was scaled up to 7975 crore rupees in RE from
the BE 2014-15 provision of 7050 crore rupees
Excess of receipts over expenditure stood at 7278 crore rupees in RE 2014-15
reflecting better financial management
Plan size for 2014-15 increased from 65445 crore rupees in the Budgeted Estimates
to 65798 crore rupees in the Revised Estimates

Budget Estimates for 2015-16


Passenger earnings growth pegged at 16.7 percent and target budgeted at 50175
crore rupees
Freight traffic is pegged at an all time high incremental traffic of 85 million tonnes,
anticipating a healthier growth in the core sector of economy
Goods earnings proposed at 121423 crore rupees which includes rationalisation
of rates, commodity classification and distance slabs
Other coaching and sundries are projected at 4612 crore rupees and 7318 crore
rupees respectively
Gross Traffic Receipts estimated at 183578 crore rupees, a growth of 15.3 percent
Ordinary Working Expenses proposed to grow at 9.6 percent over RE 2014-15.
Traction fuel bill is anticipated to shrink further
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Lease charges, interest component of the current and previous market borrowings
are pegged at a growth of 21 percent
Appropriation to Pension Fund is proposed at 35260 crore rupees and appropriation
to DRF at 8100 crore rupees
Appropriation of 7616 crore rupees is proposed to be made to Capital Fund for
payment of principal component of lease charges to IRFC

Plan Outlay 2015-16


Gross Budgetary Support of 40000 crore rupees for the Railways annual Plan
Total Plan Outlay is 100011 crore rupees, an increase of 52 percent over RE 201415
1645.60 crore rupees has also been provided as Railways share of diesel cess
from the Central Road Fund
Market borrowing under Extra Budgetary Resources (EBR) projected at 17655
crore rupees, an increase of about 46.5 percent
Balance Plan outlay includes 17793 crore rupees from Internal Resources and
5781 crore rupees from PPP
A new financing approach to expand EBR has been projected. This EBR, presently
named EBR (Institutional Finance) is projected at 17136 crore rupees and is aimed
at accelerating completion of capacity augmentation projects

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14TH FINANCE COMMISSION


Fourteenth Finance Commission and its implication for Fiscal
Federalism
Fourteenth Finance Commission (FFC) was appointed on 2 January 2013 in
accordance with the Article 280 of the Constitution of India under the chairmanship
of former Governor of Reserve Bank of India (RBI) YV Reddy.
The FFC has submitted its recommendations for the period 2015-16 to 2020-21.
They are likely to have major implications for center-state relations, for budgeting by,
and the fiscal situation of, the center and the states.

Some of the major recommendations of the Commission


The FFC has radically enhanced the share of the states in the central divisible pool
from the current 32 percent to 42 per cent which is the biggest ever increase in
vertical tax devolution
The FFC has also proposed a new horizontal formula. The FFC has incorporated
two new variables: 2011 population and forest cover; and excluded the fiscal
discipline variable
Several other types of transfers have been proposed including grants to rural and
urban local bodies, a performance grant along with grants for disaster relief and
revenue deficit. These transfers total to approximately 5.3 lakh crore for the period
2015-20
The FFC has not made any recommendation concerning sector specific-grants
unlike the Thirteenth Finance Commission

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Impact of FFC
All states stand to gain from FFC transfers in absolute terms
The major gainers in per capita terms turn out to be Kerala, Chhattisgarh and
Madhya Pradesh for General Category States (GCS) and Arunachal Pradesh,
Mizoram and Sikkim for Special Category States (SCS)
The FFC recommendations are expected to add substantial spending capacity
to states budgets. In terms of the impact based on NSDP, the benefits of FFC
transfers are highest for Chhattisgarh, Bihar and Jharkhand among the GCS and
for states like Arunachal Pradesh, Mizoram and Jammu & Kashmir among the
SCS.
While in terms of states own tax revenues, the largest gains accrue to GCS of
Bihar, Jharkhand and Chhattisgarh and SCS of Arunachal Pradesh, Mizoram and
Nagaland.
The FFC transfers have more favorable impact on the states (only among the GCS)
which are relatively less developed which is an indication that the FFC transfers
are progressive i.e. states with lower per capita NSDP receive on average much
larger transfers per capita.
The correlation between per capita NSDP and FFC is transfer per capita is -0.72.
This indicates that the FFC recommendations do go in the direction of equalizing
the income and fiscal disparities between the major states. However, FFC transfers
are less progressive compared to the transfers of Thirteenth Finance Commission
(TFC).
The significant impact due to increase in the divisible pool is on states like Uttar
Pradesh, Bihar, Madhya Pradesh, West Bengal and Andhra Pradesh (United) while
states like Arunachal Pradesh, Chhattisgarh, Madhya Pradesh, Karnataka and
Jharkhand are the major gainers due to a change in the horizontal devolution
formula which now gives greater weight to a states forest cover.

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Balancing Fiscal Autonomy and Fiscal Space


The spirit behind the FFC recommendations is to increase the automatic transfers to
the states to give them more fiscal autonomy and this is ensured by increasing share
of states from 32 to 42 per cent of divisible pool. Assuming the recommendations
of FFC were to be implemented as it is, there is concern that fiscal space or fiscal
consolidation path of the Centre would be adversely affected.
One immediately noteworthy fact is that Central Assistance to States (CAS) transfers
per capita are only mildly progressive): the correlation coefficient with state per capita
NSDP is -0.29. This is a consequence of plan transfers moving away from being
Gadgil formula-based to being more discretionary in the last few years.
A corollary is that implementing the FFC recommendations would increase
progressivity because progressive tax transfers would increase and discretionary
and less progressive plan transfers would decline.

Horizontal Devolution Formula in the 13th and 14th Finance Commissions


Variable Weights accorded 13th 14th
Population (1971) 25 17.5
Population (2011) 0 10
Fiscal capacity/Income distance 47.5 50
Area 10 15
Forest Cover 0 7.5
Fiscal discipline 17.5 0
Total 100 100

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STATE BUDGET 2015 - 16


Uttar Pradesh Budget 2015-16: Highlights
Uttar Pradesh Chief Minister Akhilesh Yadav on 24 February 2015 presented the
State Budget 2015-16 of 302687 crore rupees. In the budget, state government has
given main thrust on agriculture, education, power, health, roads and infrastructure
development.
The budget size of 2015-16 is 10.2 percent more than the budget of 2014-15.

Key facts of Uttar Pradesh Budget 2015-16


Based on the 2013-14 projections, the growth rate of the state is expected to be
5 percent, which is more than the national growth of 4.7 percent.
The budget targets to contain the fiscal deficit at 2.96 percent of the total State
GDP and the states debt is targeted at around 27.5 percent of State GDP.
51516 crore rupees have been earmarked for roads, bridges, irrigation and
development and strengthening schemes for power.
There is a provision of 26231 crore rupees in the budget for Scheduled Tribes,
Scheduled Castes, OBCs, physically challenged and poor people of the general
category.
To assimilate 45 lakh beneficiary families 2727 crore rupees has been sanctioned,
2776 crore rupees has been sanctioned for minority welfare and 300 crore rupees
for eight thousand homeless families.
25764 crore rupees have been allocated for power upgradation and line
maintenance in the state. UP in its annual budget 2015-16 aims at generating

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2100 megawatt electricity.


Allocated 854 crores rupees to build state of the art cancer Institute at Lucknow
and the medical teachers will now retire at the age of 65.
It allocated a total of 17871 crore rupees for roads and bridges. 3000 crore rupees
were allocated for the Lucknow-Agra Expressway and 425 crore rupees allocated
for Lucknow Metro Rail project.
Budget declared year 2015-16 as the Year of the Farmer. In this regard, Budget
states to develop 1000 Agri Junctions to promote agriculture as a good mean of
livelihood among young farmer entrepreneurs. Also, youth will be given subsidy at
a loan of 5 percent interest.
For payments of arrears to cane growers by sugar mills, 1152 crore rupees were
allocated along with 442 crore rupees for reimbursement of society commission
of Ganna Samitis.
Provision for 250 crore rupees has been made for a new sugar mill of 3500 TCD
capacity at Azamgarh and Aswaani plant in place of the closed cooperative mill
at Sathiaon.
For farmers Accident Insurance Scheme, 600 crores rupees have been allocated.
The budget has included new schemes of over 9388 crores rupees in the budget.
For women empowerment, 100 crore rupees Mahila Samman Kosh has been
created. 300 crore allocated for Kanya Vidya Dhan, 2727 crore for Samajwadi
pension Scheme and 100 crore for free laptop for meritorious students scheme.
Under the Lohia Grameen Parivahan Service, 100 crore rupees are proposed for
linking villages to blocks, tehsil and district headquarters.

Madhya Pradesh Budget 2015-16: Highlights


Madhya Pradesh Budget 2015-16 was presented by the Finance Minister Jayant
Malaiya on 25 February 2015.
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State Budget of 2015-16 is inspired by the aim to realise Make in Madhya Pradesh
by increasing employment opportunities for youth of the state and by increasing
production capacities.

The salient features of the budget estimates of 2015-16 are as follows:


Fiscal Deficit estimated at 2.99 percent of Gross State Domestic Product (GSDP).
Target to set up 9 seeds quality, 6 fertilisers quality laboratories for input quality
control
Target to increase the area of horticulture crops by approximately 75 thousand
hectare in 2015-16
100 fish markets proposed to be set up in 2015-16. 500 houses are proposed to
be given free under the Fishermen Housing
Target to establish Polyclinics and Disease Research Laboratories in all districts
for the purpose of providing veterinary treatment and remedies through modern
techniques
Target of construction of 7575 roads of total length of 19386 km for linking 9109
villages under Mukhyamantri Gram Sadak Yojana
Ambitious Narmada Gambhir Link Project sanctioned with estimated cost of 2000
crore rupees. Under this project, along with irrigation of 50 thousand hectare land
of Malwa region in the basin of river Gambhir, availability of water for daily use will
also be ascertained. Along with this, Lift Irrigation schemes for Sihada in Khandwa
district and Dabri in Alirajpur are proposed.
Providing employment and livelihood under the Mahatma Gandhi National Rural
Employment Guarantee Programme by providing work for 22 crore man days
Target to eradicate open defecation by the year 2018
Target of construction of 150000 houses in 2015-16 under Mukhya Mantri Gramin
Awas Mission, considering the problem of housing in rural areas
Target to provide 5 lakh houses in city areas by year 2018

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Provision of 300 crore rupees for Simhastha-2016 to be held in Ujjain


Resolution to construct toilets in all schools in the state under the Swachch Bharat
Swachch Vidyalaya campaign
Proposal to make all Government Engineering Colleges and 10 Divisional Industrial
Training Institutes as Centre of Excellence in specific sectors
Projects worth 450 crore rupees are proposed for super speciality health services
in Medical Colleges in Jabalpur, Gwalior and Rewa.
Provision of 1398 crore rupees for Laadli Lakshmi Yojana scheme
Second phase of Tejasvini Women Empowerment Scheme is proposed to be
started from 2015-16 for entrepreneurship development and providing better
opportunities of self-employment for rural women.
Kshamata Yojana is proposed to be started for developing skilled and competent
community leadership capacity at rural level.
New Scheme initiative for providing free coaching in reputed coaching centres for
national level entrance examination for medical and engineering courses with two
years coaching to 100 students and one year coaching to 25 students
Child care leave for 730 days is proposed to be given to women government
employees during their entire service period.
10 percent increase proposed in honorarium and diet allowance of Company
Commander Major, Company Quarter Master, Self-Service Platoon Commander,
Self Service Company Commander, Hawaldar, Naik, Lance Sainik, Sainik of Home
Guards.
Sarva Seva Project with 300 crore rupees is proposed for extension of CM Helpline
and linking it with other services. Single service delivery gateway, back end office
automation in Collectorates, legacy data digitisation of certificates of different
kinds of services etc. will be undertaken under the scheme.

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MULTIPLE CHOICE QUESTIONS


1. Union Finance Minister, Arun Jaitley while presenting the Union Budget 2015-16
in the Lok Sabha on 28 February 2015 termed something as Amrut Mahotsav.
What is Amrut Mahotsav?
a) 75th Year of Indias independence
b) 150 years of birth of Mahatma Gandhi
c) Centenary year of return of Mahatma Gandhi to India
d) Final outcome of Swachh Bharat Mission

2. Which one of the below given visions does not form the part of Vision 2022 that
was enumerated by the Union Finance Minister, Arun Jaitley on 28 February
2015 while presenting the Union Budget 2015-16 in the Lok Sabha?
I. A roof for each family in India
II. At least two members from each family will have access to the means for livelihood
and employment
III. Electrification by 2020
IV. Spirit of entrepreneurship in India will be encouraged
a) Only I
b) Only II
c) Only I and III
d) Only II and IV

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3. Which one of the following is/are part of the proposals for rural development
made in Union Budget 2015-16?
I. One crore houses will be developed in rural areas by 2022, under scheme roof
for each family in India
II. By 2022, each house will receive basic facilities like 24-hour power supply, clean
drinking water, a toilet, and connection to a road
III. By 2020, remaining 5000 villages in India will be electrified; electrification process
will include off-grid solar power generation
a) Only I
b) Only II
c) Only III
d) Only I and II

4. How much amount was allocated for Scheduled Castes (SC) in the Union Budget
2015-16 that was presented on 28 February 2015?
a) 30851 crore rupees
b) 19980 crore rupees
c) 79258 crore rupees
d) 28800 crore rupees

5. How much amount was allocated for Women in the Union Budget 2015-16 that
was presented on 28 February 2015?
a) 30851 crore rupees
b) 19980 crore rupees
c) 79258 crore rupees
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d) 28800 crore rupees

6. Which scheme was announced by the Union Government in the Union Budget
on 28 February 2015 to utilise unclaimed deposits to help vulnerable groups
such as old age pensioners and BPL card-holders?
a) Nai Manzil Scheme
b) Pradhan Mantri Jeevan Jyoti Bima Yojana
c) Atal Pension Yojana
d Senior Citizen Welfare Fund

7. In his Budget speech on 28 February 2015, Union Finance Minister Arun Jaitley
announced the Atal Pension Yojana. Consider the following statements in this
context:
I.

The scheme will provide a defined pension depending upon the contribution of
the person and its period

II. The scheme will cover accidental death risk of 2 lakh rupees

Which statement(s) is /are correct?

a) Only I
b) Only II
c) Both I & II
d) Neither (i) nor (ii)

8. Union Finance Minister Arun Jaitely on 27 February 2015 presented Economic


Survey of India 2014-15 in the Parliament. Which one of the following highlighted
point(s) in the context of climate change is not correct?

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I. 31 states have prepared and submitted State Action Plans on Climate Change
(SAPCC) documents
II. On 31 December 2014, the total installed capacity of renewable power of India
was 50 GW, this included (wind energy with 66 percent is followed by biomass,
small hydro power, and solar power
III. To deal with the climate change, carbon taxes was introduced, which is used by
very few countries of the world
a) Only I
b) Only II
c) Only III
d) All I, II and III

9. As per the Economic Survey 2014-15 presented in the parliament on 27 February


2015 to which regime India has shifted from carbon subsidy?
a) Carbon Tax
b) Carbon Shift Tax
c) Carbon Price
d) None of the above

10. Union Finance Minister Arun Jaitely on 27 February 2015 while presenting
Economic Survey of India 2014-15 said that India represents a significant
component of the global market of the Clean Development Mechanism (CDM)
defined in Article 12. CDM was established through which protocol?
a)

Geneva protocol

b)

Firearms Protocol

c)

Kyoto protocol

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d)

Vienna Protocol

11. Consider the following statements in the context of Railway Budget 2015-16:
I.

Total plan outlay of Railway Budget 2015-16 is pegged at 100011 crore rupees,
an increase of 52 percent over Revised Estimates of 2014-15.

II. Plan size for 2014-15 increased from 65445 crore rupees in the Budgeted
Estimates to 65798 crore rupees in the Revised Estimates.

Which statement(s) is/are correct?

a) Only I
b) Only II
c) Both I and II
d) Neither I nor II

12. The Economic Survey of 2014-15 presented in the Parliament on 27 February


2015 suggested some recommendations to improve the investment climate and
reduce the backlog of stalled projects. Consider the following statements:
1. The survey has recommended setting up of a high-powered Independent
Renegotiation Committee to make suggestions over-indebtedness that lowers
the capacity to generate new investments.
2.

It suggested the need for reorientation and restructuring of the PPP model.

3.

The total stock of stalled projects stands at Rs. 8.8 lakh crore or 7% of GDP.

Which of the following statement(s) is/are correct?

a)

Only 1

b)

1 and 2

c)

1 and 3

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d)

All of the above

13. The Union Government introduced the term JAM in the Economic Survey 201415 presented in the Parliament on 27 February 2015. What is JAM?
a)

Jan Dhan Yojana, Aadhaar, Mobile

b)

Janani Suraksha Yojana, Aadhar, Mobile

c)

Jan Dhan Yojana, Aadhaar, MGNREGA

d)

Jan Dhan Yojana, Apki beti humari Beti, Mobile

14. What was the Fiscal target of Union Government for 2014-15 enumerated in the
Economic Survey presented in the Parliament on 27 February 2015?
a)

5% of GDP

b)

4.1% of GDP

c)

3.5% of GDP

d)

3% of GDP

15. In the Economic Survey of 2014-15 presented in the Parliament on 27 February


2015, Non plan expenditure constituted around 68% of the total expenditure.
What are the prime components of Non plan expenditure?
1.

Interest payment, subsidies

2.

Defence service, pension

3. Infrastructure

Choose the correct options

a)

Only 1

b)

1 and 2

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c)

2 and 3

d)

All of the above

16. What is the fiscal deficit target of the Union Government for 2015-16 announced
in the Union Budget 2015-16?
A) 3% of GDP
B) 4% of GDP
C) 2% of GDP
D) 3.5% of GDP

17. In the Economic Survey 2014-15 presented on 27 February 2015, out of the
following sectors, which of the following sector has largest share of employment?
a) Agriculture
b) Construction
c) Hospitality
d) Tourism

18. Consider the following statements in context of social infrastructure enumerated


in the Economic Survey 2014-15 presented on 27 February 2015:
1.

India is set to reach the UN Millennium Development Goals (MDG) with respect
to maternal and child survival.

2.

The MDG for maternal mortality ratio (MMR) is 140 per 100000 live birth

3.

India had achieved 178 by 2010-12 and is estimated to reach 141 by 2015

Which of the following is/are correct?

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a)

Only 1

b)

1 and 2

c)

2 and 3

d)

All of the above

19. What is aim of the Mission Indradhanush as per the Economic Survey 2014-15
presented on 27 February 2015?
a)

Attaining an open defecation free (ODF) India

b)

providing access to toilet facilities to all rural households

c)

to improve the availability of drinking water in rural areas

d) Vaccinating all those children who are either unvaccinated or are partially
vaccinated by 2020

20. What is the rate of literacy for the year 2014-15 as per Economic Survey 201415 presented on 27 February 2015?
a)

73 percent

b)

85 percent

c)

70 percent

d)

78 percent

21. What is the under-5 mortality rate (U5MR) of India as per the Economic Survey
2014-15 presented on 27 February 2015?
a) 52
b) 42

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c) 48
d) 49

22. Which statements is/are correct in context of Economic Survey 2014-15 that
was released on 27 February 2015?
I.

There has been a gradual decline in the share of population in the age group
0-14 from 36.3 to 28.4 percent during 1991 to 2013.

II.

The percentage of elderly (60+ age) has gone up from 6.0 to 8.3 percent during
1991 to 2013.

a)

Only I

b)

Only II

c)

Both I and II

d)

Neither I nor II

23. Union Finance Minister Arun Jaitely on 27 February 2015 presented Economic
Survey 2014-15 in the Parliament. Which of the statement is correct in context
of Employment matters mentioned in the Economic Survey 2014-15?
I.

As per National Skill Development Corporation (NSDC), there is an incremental


requirement of 120 million skilled people in the non-farm sector.

II.

The number of unemployed people declined from 11.3 million during 2004-05 to
9.8 million in 2009-10 but again increased to 10.8 million in 2011-12.

a)

Only I

b)

Only II

c)

Both I and II

d)

Neither I nor II

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24. Which of the statement is correct in context of Human Development Index (HDI)
as per the Economic Survey 2014-15?
I.

Indias Human Development Index (HDI) value for 2013 is 0.586, positioning the
country at 135 out of 187 countries and territories.

II.

The female HDI value for India is 0.63 as compared to 0.52 for males.

a)

Only I

b)

Only II

c)

Both I and II

d)

Neither I nor II

25. Which scheme fostered inclusive growth in the year 2014 as per Economic
Survey 2014-15?
A. Sansad Adarsh Gram Yojna (SAGY)
B. Pradhan Mantri Jan Dhan Yojna (PMJDY)
C. Vanbandhu Kalyan Yojna
D. Deen Dayal Upadhyaya Grameen Koushalya Yojana

26. As per the Economic Survey 2014-15, what is/are the solutions for improving
social infrastructure, human development and employment in India?
1.

Pradhan Mantri Jan Dhan Yojna (PMJDY)

2.

Allocated of Aadhaar cards

3.

Linking the Aadhaar number to bank accounts

a)

1&2

b)

2&3

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c)

3&1

d)

1, 2 & 3

27. Which of the statement is true in context of Goods and Services Tax (GST) in
Economic Survey 2014-15?
I.

The Union Government decided to implement Goods and Services Tax (GST) in
2018.

II. GST is proposed to increase the present rate of service tax plus education
cesses from 12.36 percent to a consolidated rate of 14 percent.

Which statement(s) is /are correct?

a)

Only I

b)

Only II

c)

Both I and II

d)

Neither I nor II

28. Railway Minister Suresh Prabhu on 26 February 2015 presented the Railway
Budget 2015-16 in the Lok Sabha. In his first Rail Budget, Prabhu highlighted
four goals for Indian Railways to transform over next five years. Which of the
mentioned goals is correct?
I.

To deliver a sustained and measurable improvement in customer experience

II.

To make Rail a safer means of travel.

III. To expand Bhartiya Rails capacity substantially and modernise infrastructure


IV. To make Bhartiya Rail financially self-sustainable
a)

Only I and III

b)

Only II and III

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c)

Only II, III and IV

d)

All I, II, III and IV

29. Railway Minister Suresh Prabhu on 26 February 2015 presented the Railway
Budget 2015-16 in the Lok Sabha. In his first Rail Budget, Prabhu 11 thrust
areas to improve quality of life in train journeys which will be a part of Swachh
Rail - Swachh Bharat.

Which of the following is/are not part of the thrust areas?

I.

Railways will introduce hand-held terminals to Travelling Ticket Examiners (TTEs)


for verification of passengers and downloading charts

II. Surveillance cameras will be provided on a pilot basis in selected mainline


coaches and ladies compartments of suburban coaches without intruding into
privacy
III. Project for introducing on-board entertainment on select Shatabdi trains and
Gareeb Raths on license fee basis has been launched
IV. National Institute of Foundry and Forge Technology will design bed linen
a)

Only I

b)

Only III

c)

Only II and III

d)

Only III and IV


30. Union Finance Minister Arun Jaitely on 27 February 2015 presented Economic
Survey of India 2014-15 in the Parliament. Which of the following is/are a correct
statement/s in context of the survey?
I.

The Economic Survey highlighted the need for balance between Make in India
and Skilling India

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II.

Major Reform Initiatives Undertaken by Government in Banking, Insurance and


Financial Sector

III. Wiping Every Tear from Every Eye: The Jan Dhan Yojana, Aadhaar and Mobile
Numbers Provide the Solution
a)

Only I

b)

Only II

c)

Only III

d)

All I, II and III

31. Union Finance Minister, Arun Jaitley while presenting the Union Budget 2015-16
in the Lok Sabha on 28 February 2015 termed something as Amrut Mahotsav.
What is Amrut Mahotsav?
a)

75th Year of Indias independence

b)

150 years of birth of Mahatma Gandhi

c)

Centenary year of return of Mahatma Gandhi to India

d)

Final outcome of Swachh Bharat Mission

32. Union Finance Minister, Arun Jaitley on 28 February 2015 presented Union
Budget 2015-16 in the Lok Sabha and announced the Vision of Budget aimed
at achieving certain things by 2022. Which of the following is/are not part of the
vision that was announced in the budget?
I.

A roof for each family in India

II. At least two members from each family will have access to the means for
livelihood and employment
III. Electrification by 2020
IV. Spirit of entrepreneurship in India will be encouraged
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a)

Only I

b)

Only II

c)

Only I and III

d)

Only II and IV

33. Union Finance Minister, Arun Jaitley on 28 February 2015 presented Union
Budget 2015-16 in the Lok Sabha and highlighted some Macro Economic
Indicators. Which of the following statements in relation to the Macro Economic
Indicators is/are false?
I.

Based on the new series, the real GDP growth is expected to accelerate to 8.4
percent

II.

Consumer Price Index (CPI) inflation rate is 5.1 percent and Wholesale Price
Inflation (WPI) inflation is negative

III. Current Account Deficit for 2014-15 is expected to be below 0.3 percent of GDP
IV. Rupee has become stronger by 6.4 percent against the broad basket of currencies
a)

Only I

b)

Only III

c)

Only I and III

d)

Only II and IV


34. Union Finance Minister, Arun Jaitley on 28 February 2015 presented first full
year Union Budget 2015-16 of NDA government in the Lok Sabha. Jaitley in his
second budget proposed certain direct taxes proposal. Which of the following
is true?
I.

Reduction of the rate of Corporate Tax from 30 percent to 25 percent over the
next 4 years

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II.

Tax pass through was proposed for both Category-I and Category-II Alternative
Investment Funds, so that tax is levied on the investors in these Funds and not
on the Funds per se

III. Increase in basic custom duty on Metallergical coke from 2.5 percent to 5
percent.
IV. Tariff rate on iron and steel and articles of iron and steel increased from 10
percent to 15 percent.
a)

Only I and III

b)

Only II and IV

c)

Only I and II

d)

Only III and IV

35. Union Finance Minister, Arun Jaitley on 28 February 2015 presented first full
year Union Budget 2015-16 of NDA government in the Lok Sabha. Jaitley while
presenting his second budget proposed certain direct taxes proposal based
on certain broad themes. Which of the following theme was followed while
proposing the taxes?
I.

Measures to curb black money

II.

Job creation through revival of growth and investment and promotion of domestic
manufacturing and Make in India

III. Minimum government and maximum governance to improve the ease of doing
business;
IV. Benefits to middle class taxpayers
a)

Only I and III

b)

Only II and IV

c)

Only I II and III

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d)

All I, II, III and IV

36. In the Union Budget 2015-16 presented on 28 February 2015 by which year it
has been proposed to provide Housing for All?
a) 2020
b) 2022
c) 2021
d) 2019

37. As on 31 December 2014 what was total installed capacity of renewable power
in India as per Economic Survey 2014-15 presented on 27 February 2015?
a)

33.8 Giga Watt

b)

35 Giga Watt

c)

40 Giga Watt

d)

32.8 Giga Watt

38. How many States and Union Territories (UTs) have implemented State Action
Plan on Climate Change (SAPCC) according to Economic Survey 2014-15
presented on 27 February 2015?
a) 29
b) 31
c) 30
d) 28

39. Arrange the given below form of energy in descending order with respect to their
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15 presented on 27 February 2015?


I.

Biomass II. Small Hydro

Select the correct code

a)

II, I, III, IV

b)

I, II, III, IV

c)

III, I, II, IV

d)

I, II, IV, II

III. Wind Energy

IV. Solar Power

40. Union Finance Minister, Arun Jaitley on 28 February 2015 presented Union
Budget 2015-16 in the Lok Sabha. Which of the following statement/s in context
of the Budget is/are true?
I.

Corporate tax was reduced to 25 percent over next four years from existing 30
percent

II.

Service tax hiked by 14 percent

III. GARR will be deferred by 5 years


IV. Benami transactions in property deals will be curbed
a)

Only I

b)

Only II

c)

Only III

d)

All I, II, III and IV

41. Union Finance Minister, Arun Jaitley on 28 February 2015 presented Union
Budget 2015-16 in the Lok Sabha. Which of the following statement/s in context
of the Budget is/are false?
I.

7-year imprisonment for non-filing of return on foreign asset

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II.

At least 1 member of each family to have job by 2022

III. Electrification of remaining 20000 villages by 2022


IV. GST will be rolled out on 1 April 2015
(a) Only III and IV
(b) Only II and III
(c) Only I and IV
(d) Only II

42. As per the Economic Survey 2014-15 released on 27 February 2015, what is the
Medium term Fiscal Deficit target of the Indian Government?
a)

2.5 %

b) 3.25%
c) 3%
d)

None of these

43. As per the Economic Survey 2014-15 released on 27 February 2015, from which
year the Goods and Service Tax will come in effect?
a) 2015-16
b) 2016-17
c) 2017-18
d) 2018-19

44. What is the number of Taxable Services that falls under the Service Tax Net as
per Economic Survey 2014-15 released on 27 February 2015?

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a) 52
b) 98
c) 120
d) 100

45. What is debt-dynamic wedge enumerated in Economic Survey 2014-15 released


on 27 February 2015?
a)

It is the difference between the rate of real debts and the rate of real borrowings

b)

It is the cost of borrowing loans

c)

The difference between the real rate of economic growth on the one hand, and
the real cost of borrowing

d)

None of these

46. The stalling rate of projects has been increasing at an alarmingly high rate.
According to Economic Survey 2014-15 released on 27 February 2015, in which
type of projects it is highest in the last five years?
a) Private Sector Projects
b) Union Government Projects
c) Public-Private Partnership (PPP) Projects
d) State Government Projects

47. What is carbon tax according to Economic Survey 2014-15 released on 27


February 2015?
a) It is a direct tax
b)

It is an indirect tax

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c)

It is a tax on the carbon content of fuels

d) Both (b) and (c)

48. Consider the following statements with respect to carbon emissions in India:
1. India has cut subsidies and increased taxes on fossil fuels (petrol and diesel)
turning a carbon subsidy regime into one of carbon taxation.
2. This has significantly increased petrol and diesel price while reducing annual
CO2 emissions.

Which of the statement(s) given above is/are correct?

a) 1 only
b) 2 only
c) 1 and 2
d) None of the above

49. What is the new target of Solar Power under the Jawaharlal Nehru National
Solar Mission according to Economic Survey 2014-15 released on 27 February
2015?
a) 50000 MW
b) 40000 MW
c) 80000 MW
d) 100000 MW

50. According to Economic Survey 2014-15 released on 27 February 2015, what is


the percentage contribution of wind energy in the Indias total renewable power
installed capacity as on 31 December 2014?
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a) 44 %
b) 55 %
c) 66 %
d) 33 %

51. Consider the following statements with respect to 14th Finance Commission
report:
1. The Fourteenth Finance Commission enhanced the share of the states in the
central divisible pool from the current 32 percent to 42 per cent.
2. The Fourteenth Finance Commission has not made any recommendation
concerning sector specific-grants unlike the Thirteenth Finance Commission.

Which of the statement(s) is/are correct?

a)

1 Only

b)

2 Only

c) Both 1 and 2
d) Neither 1 nor 2

52. According to the Economic Survey 2014-15 released on 27 February 2015,


Fourteenth Finance Commission submitted its recommendations for the period
a)

2015-16 to 2020-2021

b) 2016-17 to 2021-2022
c) 2017-18 to 2022-2023
d) None of these

53. According to the Economic Survey 2014-15 released on 27 February 2015, the
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Special Category States concept was first introduced in India by


a) Third Finance Commission
b) Fourth Finance Commission
c) Fifth Finance Commission
d) Sixth Finance Commission

54. According to an Indian Labour Report contained in Economic Survey 2014-15,


what percentage of the Worlds total work force will be Indians in the next three
years?
a) 20 %
b) 25 %
c) 30 %
d) 35%

55. Consider the following Statement with respect to human development in India
as per Economic Survey 2014-15:
1. Indias HDI value for 2013, positioning the country at 135 out of 187 countries
and territories is the lowest among the BRICS countries.
2.

The incidence of poverty declined from 37.2 per cent to 21.9 per cent in 201112 for the country as a whole, with a sharper decline in the number of rural poor.

Which of the statement(s) is/are correct?

a)

1 only

b)

2 only

c)

Both 1 and 2

d)

Neither 1 nor 2

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56. Consider the following statements with respect to agriculture in the Economic
Survey 2014-15:
I.

The contribution of agriculture sector to the national GDP was 19% during the
tenth five year plan.

II.

The contribution of agriculture sector to the national GDP was 15.2% during the
eleventh five year plan.

Which of the above statements is/are true?

a)

Only I

b)

Only II

c)

Both I and II

d)

None of the above

57. Consider the following statements regarding the financial year 2014-15 given in
the Economic Survey 2014-15 released on 27 February 2015:
I.

Fiscal deficit of the Union government was 4.1%

II.

Revenue deficit of the Union government was 2.9%

Which of the above statements is/are incorrect?

a)

Only I

b)

Only II

c)

Both I and II

d)

None of the above

58. Consider the following statements about macro-economic indicators given in


Economic Survey 2014-15

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I.

The Current Account Deficit was registered as US $17.9 billion during AprilSeptember 2014.

II.

As a proportion of GDP, the CAD declined from 3.1 per cent in the first half of
2013-14 to 1.9 per cent in the first half of 2014-15.

Which of the above statements is/are true?

a)

Only I

b)

Only II

c)

Both I and II

d)

None of the above

59. Which one of the following is not a reason for decline in inflation in recent times
as per Economic Survey 2014-15 released on 27 February 2015?
a)

Decline in global crude oil prices

b)

Tight monetary policy

c)

Stable rupee vis--vis major currencies

d)

None of the above

60. According to the Economic Survey 2014-15 of the Union government the
incidence of poverty came down to what percentage in 2011-12?
a) 21.9%
b) 31.9%
c) 41.9%
d) 11.9%

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61. According to the census 2011 how many households used solar energy for
lighting needs?
a)

1.5 million

b)

1.1 million

c)

3.2 million

d)

4.2 million

62. Consider the following statements related to the Economic Survey 2014-15
I.

Indias foreign exchange reserves were at 330.2 billion US dollars as on 6


February 2015.

II.

The RBI formulates and implements the monetary policy of the country.

a)

Only I

b)

Only II

c)

Both I and II

d)

None of the above

ANSWERS
1.

Answer. (a) 75th Year of Indias independence

2.

Answer. (b) Only II

3.

Answer. (b) Only II

4.

Answer: (a) 30851 crore rupees

5.

Answer: (c) 79258 crore rupees

6.

Answer: (d) Senior Citizen Welfare Fund

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7.

Answer: (a) Only I

8.

Answer. (b) Only II

9.

Answer. (a) Carbon Tax

10. Answer. (c) Kyoto protocol


11. Answer: (c) Both I and II
12. Answer: (d) All of the above
13. Answer: (a) Jan Dhan Yojana, Aadhar, Mobile
14. Answer: (b) 4.1% of GDP
15. Answer: (b) 1 and 2
16. Answer: (a) 3% of GDP
17. Answer: (b) Construction
18. Answer: (d) All of the above
19. Answer: (d)
20. Answer: (a) 73 percent
21. Answer: (a) 52
22. Answer: (c) Both I and II
23. Answer: (c) Both I and II
24. Answer: (a) Only I
25. Answer: (b) Pradhan Mantri Jan Dhan Yojana (PMJDY)
26. Answer: (d) 1, 2 & 3
27. Answer: (b) Only II
28. Answer. (d) All I, II, III and IV
29. Answer. (d) Only III and IV

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30. Answer. (d) All I, II and III


31. Answer. (a) 75th Year of Indias independence
32. Answer. (b) Only II
33. Answer. (c) Only I and III
34. Answer. (c) Only I and II
35. Answer. (d) All I, II, III and IV
36. Answer. (b) 2022
37. Answer: (b) 33.8 Giga Watt
38. Answer: (b) 31 States
39. Answer: (c) III, I, II, IV
40. Answer. (c) Only III
41. Answer. (a) Only III and IV
42. Answer: (c) 3%
43. Answer: (b) 2016-17
44. Answer: (c) 120
45. Answer: (c)
46. Answer: (a) Private Sector Projects
47. Answer: (d) Both (b) and (c)
48. Answer: (c) Both 1 and 2
49. Answer: (d) 100000 MW
50. Answer: (c) 66%
51. Answer: (c) Both 1 and 2
52. Answer: (a) 2015-16 to 2020-2021

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2015 | www.jagranjosh.com

Budget 2015 - 16 & Economic Survey 2014 - 15

53. Answer: (c) Fifth Finance Commission


54. Answer: (b) 25%
55. Answer: (c) Both 1 and 2
56. Answer: (c) Both I and II
57. Answer: (d) None of the above
58. Answer: (c) Both I and II
59. Answer: (d) None of the above
60. Answer: (a) 31.9%
61. Answer: (b) 1.1 million
62. Answer: (c) Both I and II

2015 | www.jagranjosh.com

128

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