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Causes and Measures of

Disequilibrium (Balance of
Payment)
Overall account of BOP is always in equilibrium. This
balance or equilibrium is only in accounting sense
because deficit or surplus is restored with the help of
capital account.
In fact, when we talk of disequilibrium, it refers to
current account of balance of payment. If autonomous
receipts are less than autonomous payments, the balance
of payment is in deficit reflecting disequilibrium in
balance of payment.
There are several factors which cause disequilibrium in
the BOP indicating either surplus or deficit.
Such causes for disequilibrium in BOP are listed
below:
(i) Economic Factors:
(a) Imbalance between exports and imports. (It is the
main cause of disequilibrium in BOR), (b) Large scale

development expenditure which causes large imports, (c)


High domestic prices which lead to imports, (d) Cyclical
fluctuations (like recession or depression) in general
business activity, (e) New sources of supply and new
substitutes.
(ii) Political Factors:
Experience shows that political instability and
disturbances cause large capital outflows and hinder
Inflows of foreign capital.
(iii) Social Factors:
(a) Changes in fashions, tastes and preferences of the
people bring disequilibrium in BOP by influencing
imports and exports; (b) High population growth in poor
countries adversely affects their BOP because it increases
the needs of the countries for imports and decreases
their capacity to export.
Measures to correct disequilibrium in BOP:
Following remedial measures are recommended:
(i) Export promotion:

Exports should be encouraged by granting various


bounties to manufacturers and exporters. At the same
time, imports should be discouraged by undertaking
import substitution and imposing reasonable tariffs.
(ii) Import:
Restrictions and Import Substitution are other measures
of correcting disequilibrium.
(iii) Reducing inflation:
Inflation (continuous rise in prices) discourages exports
and encourages imports. Therefore, government should
check inflation and lower the prices in the country.
(iv) Exchange control:
Government should control foreign exchange by ordering
all exporters to surrender their foreign exchange to the
central bank and then ration out among licensed
importers.
(v) Devaluation of domestic currency:
It means fall in the external (exchange) value of domestic
currency in terms of a unit of foreign exchange which

makes domestic goods cheaper for the foreigners.


Devaluation is done by a government order when a
country has adopted a fixed exchange rate system. Care
should be taken that devaluation should not cause rise in
internal price level.
(vi) Depreciation:
Like devaluation, depreciation leads to fall in external
purchasing power of home currency. Depreciation occurs
in a free market system wherein demand for foreign
exchange far exceeds the supply of foreign exchange in
foreign exchange market of a country (Mind, devaluation
is done in fixed exchange rate system.)

Goods and Services Tax Bill


The Goods and Services Tax Bill or GST Bill, officially known as The
Constitution (One Hundred and twenty second Amendment) Bill, 2014,
proposes a national Value added Tax to be implemented in India[1] from 1 April
2017.
"Goods and Services Tax" would be a comprehensive indirect tax on
manufacture, sale and consumption of goods and services throughout India, to
replace taxes levied by the central and state governments. Goods and Services
Tax would be levied and collected at each stage of sale or purchase of goods or
services based on the input tax credit method.
This method allows GST-registered businesses to claim tax credit to the value of
GST they paid on purchase of goods or services as part of their normal
commercial activity. Taxable goods and services are not distinguished from one

another and are taxed at a single rate in a supply chain till the goods or services
reach the consumer.

Public-private partnership (PPP)


Public-private partnership (PPP) is a funding model for a
public infrastructure project such as a new
telecommunications system, airport or power plant. The
public partner is represented by the government at a local,
state and/or national level. The private partner can be a
privately-owned business, public corporation or consortium of
businesses with a specific area of expertise.
PPP is a broad term that can be applied to anything from a
simple, short term management contract (with or without
investment requirements) to a long-term contract that
includes funding, planning, building, operation, maintenance
and divestiture. PPP arrangements are useful for large
projects that require highly-skilled workers and a significant
cash outlay to get started. They are also useful in countries
that require the state to legally own any infrastructure that
serves the public.
Private entities in PPP model have suffered losses in several cases. Some of
the problems that are present in design of existing PPP model are:1. Bidding of projects is based on revenue generation and not on service
provision criteria. Eg- project is awarded to those who can guarantee more
revenue from a project.
2. Ineffective allocation of risks - example - financial risk should be with
government while operational and construction with private sector. Also,
construction and management should be combined for better quality of
services.
Secondly, in cases of non utilisation of projected revenue from user charges,

private entity calls for viability gap funding. This leads to decrease in Govt.
leverage over them, for effective implementation.
3. Renegotiating contracts - there's no effective mechanism for
renegotiation of projects and presently is done in ad hoc manner.
ex- if a project becomes unviable - there is no mechanism and body where
private party can go to exit the project.
Thus, an independent renegotiation commission(IRC) can help in this.
Further, there is need for greater liquidity in market through REITs,
Infrastructure investment funds apart from pension and insurance funds.
Modification suggested
Both construction and maintenance are combined to one responsibility
for better quality.
Risk management should be assigned to those who can handle it.
Direct collection of user charges should be made accountable by financial
reports.
Attracting pension and insurance funds for long term infrastructure
projects.
Rewards and recognition for efficient work contributed by employees.
Contracts should be made less depended on market driven ideals.
Like a Chinese saying An overcrowded chicken farm produce fewer eggs .
Public private partnership should concentrate on efficient, effective and
accountable contacts and projects than the more number of projects.

Indian economic census


Indian economic census is the census of the Indian economy through counting
all entrepreneurial units in the country which involved in any economic activities
of either agricultural or non-agricultural sector which engaged in production

and/or distribution of goods and/or services not for the sole purpose of own
consumption.[1]
The economic census provides detailed information on operational and other
characteristics such as number of establishments, number of persons employed,
source of finance, type of ownership etc. These information used for micro level/
decentralized planning and to assess contribution of various sectors of the
economy in the gross domestic product (GDP).
In 1976, Government of India launched a plan scheme called Economic Census
and Surveys. In 1977 Central Statistical Organisation conducted First economic
census in collaboration with the Directorate of Economics & Statistics (DES) in
the States/Union Territories.

What is 'Disguised Unemployment'


Disguised unemployment exists where part of the labor force is either left
without work or is working in a redundant manner where
worker productivity is essentially zero. It is unemployment that does not
affect aggregate output. An economy demonstrates disguised
unemployment when productivity is low and too many workers are filling too
few jobs.

External and Internal Causes of


Industrial Sickness in India
Industrial sickness is defined in India as "an industrial company (being a
company registered for not less than five years) which has, at the end of
any financial year, accumulated losses equal to, or exceeding, its entire net
worth and has also suffered cash losses in such financial year and the financial
year immediately preceding such financial year"

The various external and internal causes of Internal Sickness in India


have been discussed below:

1. External causes
Recession in the Market: Sometimes recession hits the whole
industry as a result of which individual units are unable to sell their
products. The availability of credit is also restricted during such times
which jeopardize the production activities of such units. Hence, the
work of these units comes to a standstill.
Decline in Market Demand for the product: A product may reach a
stage of maturity and ultimately a stage of decline. This happens when
new better products invade the market and make the old product
redundant.
Excessive competition in the Market: Excessive competition in the
market will justify the survival of only the fittest firm. The high cost
units over time will become weak and fall sick.
Erratic supply of Inputs: Erratic and insufficient supply of inputs like
raw-materials, power, skilled manpower, finance, credit and transport
at reasonable prices could cause disturbance in the production
schedule and ultimately result in sickness of the firm.
Government Policy: Excessive govt., control and restrictions on
capacity utilisation, location, product mix, product quality, prices,
distribution etc. come in the way of smooth functioning of the firms and

often result in sickness of the firm. Further, frequent changes in


government policy relating to industrial licensing, import, exports,
taxation, credit can make healthy units sick overnight.
Unforeseen circumstances: Natural calamities such as droughts,
floods earthquakes, accidents and wars etc. may turn some units sick
and enviable.

2. Internal Causes
Faulty planning: At the planning stage itself, weak foundations may
be laid, which may ultimately result in downfall of the unit.
Incompetent Entrepreneurs: Many persons starting new business
lack technical knowledge of the product they want to manufacture. It is
the normal case with small scale entrepreneurs. They sometimes
plough into production activity, without bothering to find out the
marketing potential of their product or sometimes they start production
without properly calculating the ultimate cost. Poor maintenance of
plant and machinery, constant technical problems with maintenance of
production volume, quality, time schedule and cost limits may
ultimately spell doom for the firm.
Problems relating to Management: Since Production, marketing,
finance, etc. are in the hands of management, any wrong decision by
them in regard to these fields may ultimately ruin a firm. The

management may lack business acumen to make demand


projections, to push the product in the market, to build up market
image and customer loyalty, to face competition and so on.
Improper level and use of working capital can also ruin the firm.
Similarly, poor industrial relations, lack of human resources planning,
faulty wage and promotional policies can cause problems for the
existence of the firm. So, incompetent management is the most
important reason behind industrial sickness.
Financial problems: These problems are generally faced by small
units. Often the financial base of the small units is very weak. They
generally borrow from their own known sources or banks, rather than
approaching market. Generally, they are unable to meet their debt
obligations in time and these debts accumulate. Banks normally do
not help at this stage when symptoms begin to show the problem and
sickness becomes chronic.
Labor unrest: Labor unrest for a long period may ultimately spell
doom for the firm.
The above causes are general causes of sickness. A firm could get
sick because of one or more of the above causes. However, it has
been found that industrial sickness results more due to faulty, careless
behaviour and attitude of management, than due to any other reason.
In many cases, irresponsible and callous behaviour of the managers

has been found to be the most important cause of sickness for the
firm.

Steps Taken for Revival of Sick Industrial Units


The Government of India has taken a number of steps for the revival
of sick industrial units. Important among these are:1. Setting up of Industrial Reconstruction Bank of India (IRBI) for
rehabilitating sick units.
2. Introduction of margin money scheme for sick units.
3. Instructing banks and financial institutions to detect sickness in
the incipient stage and to take corrective measures in time.
4. Close monitoring of sick units by the Reserve Bank of India.
5. Setting up of the BIFR under SICA for determining preventive
ameliorative and remedial measures.
6. Introduction of the scheme of excise loan to sick units.
7. Instructions to banks to actively participate in rehabilitating the
units which have turned sick to whom they had earlier given
finance under consortium agreement.

Human Development Index

The Human Development Index (HDI) is a composite statistic of life


expectancy,education, and per capita income indicators, which are used to rank
countries into four tiers of human development. A country scores higher HDI
when the lifespan is higher, the education level is higher, the GDP per capita is
higher, the fertility rate is lower, and the inflation rate is lower. The HDI was
developed by the Pakistani economist Mahbub ul Haq working alongside Indian
economist Amartya Sen, The HDI was created to emphasize that people and
their capabilities should be the ultimate criteria for assessing the development of
a country, not economic growth alone.

Per capita income or average income


Per capita income or average income measures the average
income earned perperson in a given area (city, region, country, etc.)
in a specified year. It is calculated by dividing the area's
total income by its total population.

China Pakistan Economic


Corridor CPEC Explained
China Pakistan Economic Corridor, popularly known as CPEC, is an
ambitious infrastructure development project of Pakistan in
partnership with China. It is a part of Chinese One-Belt-One-Road
initiative. It includes country-wide rail-road and gas-pipeline network
and development of other transit corridor facilities. The project
includes development of a port in Gwadar region, known as Gwadar
port; construction of power plants which will generate 4500 MW of
electric power.

What is Budget? What are its characteristics?

A budget is a financial document or an action plan which is prepared and


used to project future income and expenses. It outlines an organisations
financial and operational goals. It can also include non- monetary
information with the monetary information. They need to be made and
approved in advance of the year in which they are to be used or
implemented.
Following are the characteristics of a good budget:
- It is expressed in quantitative or monetary terms.
- It is prepared for a fixed period of time It is prepared before the period in
which it commences.
- Practical to implement.
- It spells out the objects and the policies to be pursued in order to achieve
the objective of the organisation.
- Many people are involved in drawing up a budget.
- Flexible enough to allow changes in the changing environment.
- Prepared on the basis of established standards of performance.
- Analysis of cost and revenues.

Forward exchange(currency) market


The forward exchange market is a market for contracts that ensure
the future delivery of a foreign currency at a specified exchange rate.
The price of a forwardcontract is known as the forward rate.Forward
rates are usually negotiated for delivery one month, three months, or one year
after the date of the contract's creation. They usually differ from the spot rate and
from each other.

Difference between Green Box subsidies


and Blue Box subsidies
In WTO terminology, subsidies in general are identified by Boxeswith different
colours:

green (permitted subsidies)

amber (slow down i.e. subsidies to be reduced),

red (forbidden subsidies)

But the Agreement on Agriculture AoA is an international treaty of WTO andhas


the following boxes:

Amber (de-minimis)

Green

Blue (for subsidies that are tied to programs that limit production)

S&D (exemptions for developing countries)

There are three categories of support measures that are not subject to reduction under
the Agreement, and support within specified de-minimis level is allowed.
1.

Measures which have a minimum impact on trade i.e. Green Box criteria

Ex: Government of India assistance on general services like


1.

research, pest and disease control, training, extension, and advisory services;

2.

public stock holding for food security purposes;

3.

domestic food aid; and

4.

direct payment to producers like governmental financial participation in income


insurance and safety nets, relief from natural disasters, and payments under
environmental assistance programmes.

2.

Developing country measures otherwise subject to reduction i.e. S&D Box

criteria Examples
1.

investment subsidies which are generally available to agriculture in developing


countries; and

2.

agricultural input services generally available to low income and resource


poorproducers in developing countries.

3.

Direct payments under production limiting programme i.e. Blue Box criteria

These are relevant from the developed countries point of view only.
1.

Green Box

1.

Green subsidy is allowed in terms of support example: MSP or Subsidies

2.

Measures with minimal impact on trade can be used freely

3.

They include government services such as research, disease control,


infrastructure and food security.

4.

They also include payments made directly to farmers that do not


stimulate production, such as certain forms of direct income support, assistance to
help farmers restructure agriculture, and direct payments under environmental and
regional assistance programmes.

2.

Blue Box

Subsidy is also permitted

Cover certain direct payments to farmers where the farmers are required to
limit production called blue box measures.

Covers certain government assistance programmes to encourage agricultural


and rural development in developing countries

Also covers other support on a small scale (de minimis) when compared
with the total value of the product or products supported (5% or

less=developedcountries &10% or less=developing countries).

Privatization vs Disinvestment
Though privatization and disinvestment are terms that are used
interchangeably there is a difference between them with regard to the
ownership. Disinvestment may or may not be an outcome of
privatization. When it comes to defining the term privatization, it
usually involves transforming the ownership of a public sector

business to the private sector known as a strategic buyer. In


disinvestment, the same transformation process happens while
retaining 26% or in some contexts 51% percent of share right (i.e. the
voting power) with the public sector organization. The rest is
transferred to the desired partner. In this 26% of holding of the voting
stake, all the vital decisions remain with the public sector organization.

FUNCTIONS OF SEBI:
The Securities and Exchange Board of India (SEBI) is the regulator for
the securities market in India. It was established in the year 1988 and
given statutory powers on 12 April 1992 through the SEBI Act, 1992.
We can classify the functions of SEBI in three categories :-

1. Protective functions
2. Developmental functions
3. Regulatory functions.

1. Protective Functions:
As the name suggests, the main focus of this function of SEBI is
to protect the interest of investor and security of their investment
As protective functions SEBI performs following functions:

(i) SEBI checks Price Rigging:

Price Rigging means some people manipulate the prices of


securities for inflation or depressing the market price of
securities. SEBI prohibits such practice to avoid fraud and
cheating which can happen to any investor.

(ii) SEBI prohibits Insider trading:


Any person which is connected with company such as directors,
promoters, workers etc are called Insider. Due to working in the
company they have sensitive information which affects the prices
of the securities.Such information is not available to people at
large but Insider get this key ful knowledge by working in such
company. Insider can use this information for their personal
benefits or make profit from it, such process is known as Insider
Trading.

(iii) SEBI prohibits fraudulent and Unfair Trade Practices:


SEBI always restricts the companies which make misleading
statements which are likely to induce the sale or purchase of
securities by any other person.
(iv) SEBI some times educate the investors so that become able
to evaluate the securities and always invest in profitable
securities.
(v) SEBI issues guidelines to protect the interest of debenture
holders.

(vi) SEBI is empowered to investigate cases of insider trading


and has provision for stiff fine and imprisonment.
(vii) SEBI has stopped the practice of allotment of preferential
shares unrelated to market prices.

2. Developmental Functions:
Under developmental categories following functions are
performed by SEBI:
(i) SEBI promotes training of intermediaries of the securities
market.
(ii) SEBI tries to promote activities of stock exchange by
adopting flexible and adoptable approach in following way:
(a) SEBI has permitted internet trading through registered
stock brokers.
(b) SEBI has made underwriting optional to reduce the cost of
issue.
(c) Even initial public offer of primary market is permitted
through stock exchange.

3. Regulatory Functions:
These functions are performed by SEBI to regulate the business
in stock exchange. To regulate the activities of stock exchange
following functions are performed:
(i) SEBI has framed rules and regulations and a code of conduct

to regulate the intermediaries such as merchant bankers,


brokers, underwriters, etc.
(ii) These intermediaries have been brought under the regulatory
purview and private placement has been made more restrictive.
(iii) SEBI registers and regulates the working of stock brokers,
sub-brokers, share transfer agents, trustees, merchant bankers
and all those who are associated with stock exchange in any
manner.
(iv) SEBI registers and regulates the working of mutual funds
etc.
(v) SEBI regulates takeover of the companies.

Open Market Operations


Open Market Operations refer to the purchase and sale of the Government securities (G-Secs)
by RBI from / to market. The objective of Open Market Operations is to adjust the rupee liquidity
conditions in the economy on a durable basis.
Thus, in the case of excess liquidity, RBI resorts to sale of G-secs to suck out rupee from
system. Similarly, when there is a liquidity crunch in the economy, RBI buys securities from the
market, thereby releasing liquidity.

All you need to know about Finance


Commission
What is a Finance Commission?
It is a body set up under Article 280 of the Constitution. Its primary job is to
recommend measures and methods on how revenues need to be distributed
between the Centre and states.
What else is its job?

Besides suggesting the mechanism to share tax revenues, the Commission also
lays down the principles for giving out grant-in-aid to states and other local
bodies. In the case of 14th Commission, these principles will apply for a five-year
period beginning April 1, 2015.
What kind of work a Finance Commission has to do?
The commission has to take on itself the job of addressing the imbalances that
often arise between the taxation powers and expenditure responsibilities of the
centre and the states, respectively. Primarily, it has to ensure a sense of equality
in public services across the states.
Who is the head of the latest i.e. 14th Finance Commission?
Former Governor of the Reserve Bank of India, Mr. Y.V. Reddy, is the Chairman.
What is the key recommendation of the 14th Finance Commission?
It has recommended an increase in the share of states in the centre's tax revenue
from the current 32 per cent to 42 per cent. This is indeed the single largest
increase ever recommended by a Finance Commission.

Recommendations of the 14th Finance


Commission
1)The 14th Finance Commission is of the view that tax devolution should be the
primary route for transfer of resources to the States.
2)In understanding the States needs, it has ignored the Plan and non-Plan
distinctions
3) According to the Commission, the increased devolution of the divisible pool of
taxes is a ``compositional shift in transfers from grants to tax devolution
4)In recommending an horizontal distribution, it has used broad parameters
population (1971), changes in population since then, income distance, forest
cover and area, among others.

5)It has recommended distribution of grants to States for local bodies using 2011
population data with weight of 90 per cent and area with weight of 10 per cent
6)Grants to States are divided into two
7)One, grant to duly constituted gram panchayats
8)Two, grant to duly constituted municipal bodies
9)And, it has divided grants into two parts
10) A basic grant, and a performance one for gram panchayats and municipal
bodies

What is plan and non-plan expenditure?


There are two components of expenditure - plan and non-plan.
Of these, plan expenditures are estimated after discussions between each
of the ministries concerned and the Planning Commission.
Non-plan revenue expenditure is accounted for by interest payments,
subsidies (mainly on food and fertilisers), wage and salary payments to
government employees, grants to States and Union Territories
governments, pensions, police, economic services in various sectors, other
general services such as tax collection, social services, and grants to
foreign governments.
Non-plan capital expenditure mainly includes defence, loans to public
enterprises, loans to States, Union Territories and foreign governments.

adverse balance of trade

Occurs when the value of a country's imports of goods and services are greater than the value of
its exports.

A trade deficit, which is also referred to as net exports, is an economic


condition that occurs when a country is importing more goods than it is
exporting. The deficit equals the value of goods being imported minus the
value of goods being exported, and it is given in the currency of the country
in question.

In what way could replacement of price subsidy


with direct benefit transfer (DBT) change the
scenario of subsidies in indea?
A blanket subsidy does not differentiate between economically well off
people and guys who might need a helping hand. Though subsidies are
aimed at economically weaker sections, we often end up generalising. For
example, in India, we think farmers are the most vulnerable. But even
among Indian farmers, there are quite a few who are well off and whose
production, if subsidized, would be a rip- off for the entire tax paying
citizens.
Positive change:
1.Middlemen will be eliminated. Hence leakages will be reduced.
2.The scheme is Aadhar card based which is based on biometric
identification, thus fake & duplicate beneficiaries will be eliminated.
3.DBT scheme allows time-bound transfers hence avoids delays in
transferring money, which is one of the biggest problems beneficiaries are
facing.
4.This scheme eliminates intermediaries and rents for fair price shops as
subsidies and benefits of welfare schemes are transferred directly. This will

help Indian economy in the long run as the structural expenditure will be
reduced.
5.As everyone can purchase goods at market price, there will be healthy
competition between the sellers in the market. The problem of middlemen
diverting subsidized grains to markets will be eliminated.
Negative change:
1.Many rural & tribal areas, dont have banking facility and road
connectivity.
2.Most of the banks appoint Business Correspondents to enrol
beneficiaries in rural areas. They may open more than one account for
each beneficiary for incentive. And there are many complaints that they are
not giving passbooks to the beneficiaries making them unaware of the
scheme. Illiterate beneficiaries are more vulnerable in this case.
3.Direct cash may not be used for intended purpose and can be used in
unhealthy ways. For example, the cash instead of food subsidy may be
spent on drinking and smoking as most of beneficiaries families heads are
men. This will be a disadvantage to women as there is no guarantee that
they will get their share of the cash.

India has recently signed to become founding a New


Development Bank (NDB) and also the Asian Infrastructure
Investment Bank (AIIB) .How will the role of the two Banks be
different? Discuss the significance of these two Banks for
India.
The NDB and the AIIB are both international financial institutions that are in the early
stage of their existence. While the NDB is formed and will lend to only the members of the
emerging countries grouping BRICS, which stands for Brazil, Russia, India, China and South
Africa, the AIIB currently has 21 founding members which are all Asian nations. Membership to
the AIIB is still open, and other countries may join provided they are accepted by the founding
members. The NDB, however, is restricted to only the BRICS nations, and aims to also further
the agenda of BRICS by fostering cooperation among the member nation along with performing
other banking functions. Both banks will focus on financing the infrastructure needs of its fast
growing members. In addition to that, the NDB will seek to provide protection and assistance
against global liquidity pressures and volatility. Significantly, all countries in the NDB will have

equal voting share despite differences in contribution, and no country will have the power to
veto. While the NDB is to be an alternative to the WB and IMF, the AIIB will operate more in the
area now occupied by the ADB.

Normally countries shift from agriculture to industry and


then later to services, but India shifted directly from
agriculture to services. What are the reasons for the huge
growth of services vis-a-vis industry in the country? Can
India become a developed country without a strong industrial
base?
The natural economic progression of a nation goes from agrarian economy, to industrial
economy to a service economy. India leap-frogged from an agrarian economy to a service
economy. India has immense human resources, that are well-educated and fluent in English,
and labour is also cheap, thus propelling the service sector. The license Raj, restrictions on
foreign investment, lack of measures to promote private industry, import of cheap manufactured
goods all contributed to the lack of substantial growth in the manufacturing sector. Indias
economy faces certain distortions due to the unique development of Indias economy. These
anomalies can be corrected only by focussing on growth of industrial base. The service sector
contributes to 60% of GDP but employs only 24% of the workforce. This is why a large pool of
able labour has not been absorbed in India. The manufacturing sector tends to be labour
intensive, hence renewed emphasis on the manufacturing through programmes like Make in
India will serve to correct this anomaly and raise employment in proportion with growth in GDP.
An industrial economy sees a spurt in exports. Since India skipped this step, its exports are still
not high, even though it has potential. Boost to the manufacturing sector, large-scale production
of goods at competitive prices, creation of new SEZs, easier clearances and a relaxed tax
regime will eventually lead to rise in exports. Since India skipped the manufacturing stage, its
heavy industries sector is relatively under-developed. Through NIMZs and other innovative
ventures, foreign investment in Indias domestic manufacturing sector must be encouraged. This
will also lead to a growth in infrastructure and production abilities of the country.

What are pros and cons by allowing FDI in defence


sector in India?
Pros:
1. India is a country, which spends lot of money on defence
equipment procurement from Russia, France. If FDI is allowed in

defence, we can set up defence equipment manufacturing zones in


our country itself, which eventually give boost to MAKE IN
INDIA, there by improving countrys economic situation.
2. Technology transfer: Indian defence sector is still grappling with
old technology. If we allow FDI, we can use state-of-art
technology of developed countries.
3. Revitalizing PSUs: It will give boost to DRDO, HAL.
Cons:
1. There is a chance of revealing Indias defence secrets to rival
countries.
2. There is a chance that, Indias interest should comply with FDI
investing countries interests, when it comes to international
disputes.
3.

what is the difference between a patent, a


trademark and a copyright?
Intellectualpropertyreferstotheownershipofintangibleandnonphysicalgoods.
Sinceintellectualpropertyisintangible,itismoredifficulttoprotectthanothertypesof
property.
Patents:protectfunctionalexpressionsofanideanottheideaitself.A
machines,method/process,manufacture,compositionsofmatter,andimprovementsof
anyoftheseitemscanbepatented.Thus,Icanpatentadesignforthenozzleonarocket,
orthemethodofmakingtherocket,orthemethodofmakingtherocketfuel,orthemetal
inwhichtherocketfuelisstored,oranewwayoftransportingtherocketfueltothe
rocket.ButIcannotpatentthebroadideaofarocket.

Copyrights:protectthespecificcreativeexpressionofanideathroughany
mediumofartistic/creativeexpressioni.e.,paintings,photographs,sculpture,writings,
software,etc.Acopyrightprotectsyourpaintingofahaystack,butitwouldnotprohibit
anotherpainterfromexpressingtheirartistryorviewpointbyalsopaintingahaystack.
Likewise,whileIanFlemingwasabletoreceiveacopyrightonhisparticularexpression

oftheideaofasecretagent(i.e.,adebonairEnglishsecretagent),hecouldnot
preventRichWilkesfromreceivingacopyrightonhisexpressionoftheideaofasecret
agent(i.e.,atattooedbaldextremeathleteturnedreluctantsecretagent).

Trademarks:protectanysymbolthatindicatesthesourceororiginofthegoods
orservicestowhichitisaffixed.Whileatrademarkcanbeextremelyvaluabletoits
owner,theultimatepurposeofatrademarkistoprotectconsumersthatis,thefunction
ofatrademarkistoinformtheconsumerwherethegoodsorservicesoriginate.The
consumer,knowingtheoriginofthegoods,canmakepurchasingdecisionsbasedon
priorknowledge,reputationormarketing.

FRBM Act 2003


Under the Fiscal Responsibility and Budget Management Act (FRBMA) 2003, both the Centre
and States were supposed to wipe out revenue deficit and cut fiscal deficit to 3% of GDP by
2008-09, thus bringing much needed fiscal discipline. Originally, the FRBM bill had given annual
numerical targets as well. But in the process of making it a law, the annual targets were
dissolved and the act simply said that the Centre will take appropriate measures to eliminate
revenue deficit by March 31, 2008. The act left the annual numerical targets to be formulated by
the Central Government in the form of FRBM rules under the FRBM Act 2000.
The key provisions of the Act as well as FRBM rules are as follows:
Every year the government will bring down revenue deficit by 0.5% and eliminate it by 2007-08.
Every year, the government will bring down fiscal deficit by 0.3% and bring it down to 3% by
2007-08.
Total liabilities of the Union Government should not rise by more than 9% a year.

NITI Aayog vs Planning Commission


Parameter

NITI Aayog

Planning Commission

Financial clout

To be an advisory body, or a think-tank. The


Enjoyed the powers to allocate funds to minis
powers to allocate funds might be vested in the
and state governments
finance ministry

Full-time
members

The number of full-time members could be


fewer than Planning Commission

The last Commission had eight full-time mem

Parameter

NITI Aayog

Planning Commission

States' role

State governments are expected to play a more States' role was limited to the National
significant role than they did in the Planning
Development Council and annual interaction
Commission
during Plan meetings

Member secretary

To be known at the CEO and to be appointed


by the prime minister

Secretaries or member secretaries were


appointment through the usual process

Part-time
members

To have a number of part-time members,


depending on the need from time to time

Full Planning Commission had no provision f


part-time members