Banking Sector

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DeputyCollector Rank File
BANKING SECTOR
The Reserve Bank
of India
 RBI was established on 1st
April 1935 and was
nationalised on 1st J anuary
1949.
 Headquarters: Mumbai
 Present Governor of the RBI is
Duvvuri Subbarao.
 It represents India at the IMF.
 It is the Central Bank of India.
 I t is also known as the
Banker's Bank.
 Its first Governor was Sir
Osbourne Arkall Smith and
its first Indian Governor was
C. D. Deshmukh (1943).
 Bank rate, Open Market opera-
tions, SLR and CRR are the in-
struments of monetary Policy
of RBI.
 RBI has several banking func-
tions like;
1) issue of currency notes
2) act as government’s bank
3) act as Banker’s bank
4) custodian of Foreign Ex
change Reserves
5) to manage public debt
6) to stabilise the value of
money, etc.
 Notes and coins in circulation
– cash with banks + demand
deposits + other deposits with
RBI are called narrow money.
 It is a member bank of the
Asian Clearing Union.
 The Reserve Bank of India has
branch offices at most state
capitals and at a few major cit-
ies in India[total of 18 places].
 The Bank has also two train-
ing colleges for its officers, viz.
Reserve Bank Staff College at
Chennai and College of Agri-
cultural Banking at Pune.
There are also four Zonal
Training Centres at Belapur,
Chennai, Kolkata and New
Delhi.
 The Banking Ombudsman
Scheme has been formulated
by the Reserve Bank of India
(RBI) for effective redressal of
complaints by bank customers.
The State Bank of India
 SBI is the largest public sec-
tor bank in India.
 First Presidency Bank is the
Bengal Presidency Bank
(1806).
 In 1921, the three Presidency
Banks (Bengal, Bombay &
Madras) amalgamated to form
Imperial Bank of India.
 In 1955 Imperial Bank was
nationalised and named as
State Bank of India.
 It is now the largest Commer-
cial Bank in India in terms of
branches. It had seven asso-
ciated banks. But in 2008, State
Bank of Saurashtra and in 2009
State Bank of Indore were
merged with SBI. So now there
are only 5 subsidiary banks for
SBI in 2011.
The first bank of limited liabil-
ity managed by Indians was
Oudh Commercial Bank
founded in 1881.
Punjab National Bank was es-
tablished in 1894.
Commercial Banks
 The modern commercial bank-
ing started in India in the be-
ginning of the 19th century.
 The Bank of Hindustan was
the first bank established in
1770 at calcutta.
 In 1885, saving bank system
introduced in India.
 Nationalised banks with Re-
gional Rural Bank come under
the category of Public Sector
Commercial Banks. The other
commercial banks are private
sector commercial banks.
EXIM Bank
 The Export Import Bank of In-
dia (1982) was set up for fi-
nancing, facilitating and pro-
moting foreign trade in India.
 Exim Policy 2002-2007 was an-
nounced by Government on
March 31, 2002.
IDBI
 The Industrial Development
Bank of India was established
on 1964. It is the apex bank for
industrial finance in India.
SIDBI
 Small Industries Develop-
ment Bank of India is a
wholly owned subsidiary of
IDBI. It was established for
the promotion, financing and
development of industries in
the small scale sector.
SIDBI started its operation
from 2nd April 1990.
Lead Bank Scheme
 Under the Lead Bank Scheme
a bank adopts a district for
DeputyCollector Rank File
13th Finance Commission
 The finance Commission is setup under article 280 (1) of the constitution every five years.
 13th Finance Commission Chairman : Vijay.L.Kelkar.
 The 13th Finance Commission report was tabled in parliament by Finance Minister Pranab Mikherjee
on 25th February 2010.
 The 13th Finance Commission despite the fiscal stress, the states would get 32 percent of its tax
revenue along with Rs. 3.19 lakh crore as grant for the next five fiscal years (2010-15)
 The centre provided for a total of Rs. 1,64,361 crore as the state's share in taxes and duties in the budget
for 2009-10.
 The 13th Finance Commission has targeted fiscal deficit at 3 percent by 2013-14 from the current level.
 The Finance Commission projected that tax receipts would see a compounded annual growth rate of
over 17 per cent between March 2010 and March 2015.
developmental purpose.
 Nariman Committee recom-
mended theLead Bank Scheme.
 Lead Bank of Trivandrum Dis-
trict : Indian Overseas Bank
National Housing Bank
(NHB)
 The National Housing Bank,
the apex institution of hous-
ing finance in India, was set
up as wholly owned subsidi-
ary of the Reserve Bank of
India.
 The bank started its opera-
tions from July 1988.
 The NHB is the regulator and
supervisor of Housing Fi-
nance Companies (HFCs) in
the country.
ICICI
 India’s largest private sector
bank.
 Industrial Credit and Invest-
ment Corporation of India
(ICICI) was started in 1955.
 FIIs: Foreign Institutional In-
vestors
 The term “Plastic Money”
means credit cards.
 Credit card was invented by
Ralph Scheider in 1950.
NABARD
 The National Bank for Agricul-
tural and Rural Development
was set up in July 12, 1982.
 Its primary objective is to pro-
mote agriculture and rural de-
velopment through credit fa-
cilities to farmers. It is the apex
bank for rural credit.
 Its headquarters is in Mumbai.
RRBs
 Regional Rural Banks were set
up to take banking services to
the doorsteps of rural masses
especially in remote rural areas;
which has no access to banking
services.
 North Malabar Grameen Bank
and South Malabar Grameen
Banks are the two RRBs in
Kerala.
 Now 196 RRBs are functioning
in India.
Co-operative banks
 Central co-operative banks
operate at district level, while
state co-operative banks op-
erate at the state level and pri-
mary agricultural credit soci-
eties operate at village level.
Financial Intermediaries
Industrial Finance Corporation of
India (IFCI)
 Government of India set up the
IFCI in July 1948. The IDBI,
Scheduled bank, Insurance
Companies, Investment Trust,
Co-operative banks etc. are the
shareholders of IFCI.
 It grants loans and advances
to industrial concern and sub-
scribes to the debentures
floated by them.
BANKING REFORMS
 M. Narasimham was the chair-
man of the Committee on Bank-
ing Sector Reforms.
 In 1992-93 banking reforms
started in India with the rec-
ommendation of Narasimham
Committee. The reforms were
the part of New Economic
Policy started in 1991.
 Second Generation Reforms :
The reform measures started in
1991 helped in the growth of In-
dian economy. But continuous
new reforms arerequired.
The Second generation re-
forms refer to major steps
which are yet to be taken in the
path of structural adjustments
to kick start and revitalize In-
DeputyCollector Rank File
dian economy.
 NPA : Non Performing Assets.
The credit given by Banks are
classified into two.
First is performing Assets and
the second is Non Performing
Assets.
 An NPA is a loan which is in
default for more than 3 months.
Indian Currency System
 The rupee is the monetary unit
of India and is based on the
decimal system.
 The rupee coin is a token coin
made of nickel and its face
value is higher than its metal-
lic value.
 Rupee was first minted in In-
dia during the reign of Sher
Shah Suri.
 Paper currency in India was in-
troduced for the first time in
1883.
 Indian rupee became an inde-
pendent currency with the es-
tablishment of RBI in 1935.
 India became a member of the
IMF and exchange value of
the rupee came to be fixed by
IMF standards in 1947.
 Decimal System of Coinage
was introduced in India in
1957.
 Currency notes are printed at
Currency Note Press (Nasik)
and the Bank Note Press at
Dewas in Madhya Pradesh.
 Paper for making currencies
and other security papers are
manufactured by Security Pa-
per Mill (Hoshangabad, MP).
 Indian Security Press (Nasik)
prints postal and judicial
stamps, cheques and bonds.
 Money accumulated by way of
illegal transactions without
declaring it for tax purposes is
called black money.
 According to the National In-
stitute of Public Finance and
Policy (NIPFP) study in 1985
the black money is 20% of
GDP.
 Government has been declar-
ing amnesty through volun-
tary disclosure schemes in
1951, 1968, 1975 and 1997.
VDIS 1997 had been very suc-
cessful.
 Note issue is based on Mini-
mum Reserve System adopted
in 1957. Under this system RBI
has to maintain the minimum
of gold and foreign exchange
against note issue. The reserve
must be to an extent of Rs. 200
crore of which gold should be
to the value of Rs. 115 crore
and the rest in foreign cur-
rency.
Nationalisation of
Banks
 The first nationalisation of
banks took place on J uly 19,
1969 during thetenure of Prime
Minister Indira Gandhi. 14
banks were nationalised.
 The second nationalisation
took place in 1980 and six
banks were nationalised.
 In 1993, theNew Bank of India
was merged with the Punjab
National Bank. So at present
there are only 19 nationalised
banks in the country besides the
Reserve Bank of India and State
Bank of India and its six subsid-
iaries.
 Providing banking credit to
rural people was the main aim
of Nationalisation of banks.
Indira Gandhi was the Prime
Minister of India during the
two nationalisation drives in
1969 and 1980.
 The Nedungadi Bank was
merged with Punjab National
First in India
 First Indian Bank of New York Stock Exchange - ICICI
 First credit card and by Indian Bank - Central Card (introduced by
Central Bank of India in 1980)
 First Insurance Company
- The calcutta Insurance Company
 First Public Sector housing development institutions
- Housing and Urban Development Corporation Ltd (HUDCO)
 First Indian Life Insurance Company
- Bombay Mutual Life Assurance Society
 First Private Sector Life Insurance Company
- HDFC standard Life Insurance Company Ltd.
 First public sector undertaking unit in India to be disinvested -
Modern Food Industries.
 The National Agricultural Insurance Scheme is managed by GIC
 'Suvidha' deposit scheme has been launched by IDBI
DeputyCollector Rank File
Non Banking Financial Intermediaries
 Unit Trust of India
 UTI was the first mutual fund set up in India in 1964.
 UTI Bank Ltd, the first private sector bank set up under RBI
guidelines in 1994.
 Headquarters : Ahammadabad
 Now it was named as Axis bank
 It is associated with Investment Trust
Bank in 2003 due to acute fi-
nancial problem.
 Lord Krishna Bank was merged
in 2006 with the Centurian
Bank of Punjab.
 Centurian Bank was merged
with HDFC Bank.
Insurance Sector
Life Insurance Corporation
 The Life Insurance Corpora-
tion of India (LIC) is the larg-
est state-owned life insur-
ance company in India, and
also the country's largest in-
vestor.
 Life Insurance Corporation
was set up in 1956.
 I ts headquarters is in
Mumbai.
 LIC is the largest insurance
company in the world in
terms of number of policies
covered.
 The Life Insurance Corpora-
tion of India currently has 8
zonal Offices and 101 divi-
sional offices located in dif-
ferent parts of India, and also
2048 branches.
ISI
 Indian Standard Institution
was set up in 1946. Now it is
named Bureau of Indian Stan-
dards (BIS).
 VABAL is Value Based Ad-
vanced Licence Scheme.
R.N. Malhotra was the head
of the Insurance Sector Re-
forms Committee.
 IRDA – Insurance Regulatory
and Development Authority.
 IRDA was established in
place of Insurance Regula-
tory Authority.
 LIC has a strong social secu-
rity scheme which is funded
by the Social Security Fund
(SSF) set up and adminis-
tered by it since 1988-89.
 This scheme (SSF) has been
replaced by Janashree Bima
Yojana from August 2000.
General Insurance
Corporation (GIC)
 It was formed in 1972 and
nationalised on Jan. 1, 1973.
 After delinking from GIC in
2000, the four General Insur-
ance Companies, namely
 National Insurance Company
Ltd, New India Assurance
Company Ltd, Oriental Insur-
ance Company Ltd and
 United India Insurance Com-
pany Ltd formed an associa-
tion known as GIPSA (Public
sector General Insurance As-
sociation of India) with head-
quarters in Delhi.
Nationalised Banks &
Headquarters
Allahabad Bank.............. Kolkata
Andhra Bank............. Hyderabad
Bank of Baroda...........Vadodhara
Bank of India................. Mumbai
Canara Bank ............... Bangalore
Corporation Bank ...............Udipi
Central Bank of India..... Mumbai
Dena Bank..................... Mumbai
Indian Bank................... Chennai
Indian Overseas Bank.... Chennai
Oriental Bank of Commerce. Delhi
Punjab National Bank . New Delhi
Punjab & Sind Bank............ Delhi
Syndicate Bank ..........................
Manipal, Karnataka
Union Bank of India....... Mumbai
Vijaya Bank ................ Bangalore
State Bank of Travancore............
Thiruvananthapuram
DeputyCollector Rank File
Economic Committees
 Narasimhan I & II ...................................... Banking Sector reforms
 Raja Chelliah.............................................................. Tax Reforms
 Venkataswami ...................... Deals with the enquiry of tehalka.com
tape exposure of bribery in defence deals.
 Vijay Kelkar ................................ Direct and Indirect Tax Structures
 Indira Goswami ................................................ Industrial Sickness
 R.S.Sarkaria.............................................Central State relationship
 Swaminathan.................................................. Agricultural reforms
 Asoka Mehta........................................ Reforms in Panchayati Raj
 Prof.Sukhamony Chakravarthy ........ Studied to review the working
of Indian Monetary System.
 Sen........ Decentralisation of powers to Panchayati Raj Institutions
 L.C. Gupta.......................................................... Trading of shares
 G.V. Ramakrishna ................................. Disinvestment Commission
 Malhotra Committee...................................Insurance Privatisation
Printing Securities and
Minting in India
1. India Security Press
(Nasik Road)
2. Security Printing Press
(Hyderabad)
3. Currency Notes Press
(Nasik Road)
4. Bank Notes Press (Dewas)
5. Security Paper
(Hoshangabad)
Commerce
 Trade is the lifeblood of com-
merce.
 Foreign trade involves inter
country flow of commodities
services and financial re-
sources.
 It enables the country to earn
foreign exchange.
 Foreign trade consists of two
activities viz, export and import.
 India has trade relation with
America, Europe, Asia,
Occeania and Africa.
 Presently, USA is the largest
trading partner of India.
 The EU has emerged as India's
largest trading block.
 Exports during April 2010 were
valued at US$ 16887 million
(Rs. 75147 crores) which was
36.2 percent higher in dollar
terms (21.1 percent in rupee
terms) than the level of us $
12397 million (Rs. 62064 crore)
during April 2009.
 Imports during April 2010 were
valued at US$ 27307 million
(Rs. 121517 crore) representing
a growth of 43.3 percent in dol-
lar terms (27.4 percent in Ru-
pee terms) over the level of
imports valued at us$ 19052
million in April 2009.
 Foreign trade has increased at
almost three times the growth
of GDP during the last four
years.
 The commodities whose ex-
ports has been increasing over
the last few years include agri-
culture and allied products,
ores and minerals, gems and
jewellery, chemical and allied
products, engineering goods
and petroleum products.
 Bulk imports registered a
growth of 18.5% in rupee
terms during 2007-08 and ac-
counted for 46.76% of the to-
tal imports.
 European countries account
for about 22.5% of India's to-
tal trade.
 India's export to Europe re-
corded a growth of 17% and
India's import from Europe
grew by 33%.
 The top five items of India's
exports to Europe are ready-
DeputyCollector Rank File
made garments including ac-
cessories gems and Jewellery,
machinery and instruments,
petroleum (crude and prod-
ucts) and transport equip-
ments.
 The top five items of India's
imports from Europe are ma-
chinery, pearls, precious,
semi-precious stones, elec-
tronic goods, transport
equipments and iron and steel.
 Trade between India and
countries of African continent
has a growth of 32.34%.
 MMTC Ltd is India's No.1 trad-
ing Company.
 MMTC Ltd is the largest ex-
porter of minerals ores from
India, leading exporter/im-
porter of agro commodities,
single largest importer/sup-
plier of bullion and one of In-
dia's largest buyers of fin-
ished fertilizers and fertilizer
raw materials.
 The company commands ex-
tensive market coverage in
over 65 countries.
 The domestic network of
MMTC in I ndia spreads
across 76 offices.
 The multi-crore security
scam was first investigated
by theJanaki Raman Commit-
tee. Later a Joint Parliamen-
tary Committee (JPC) under
the chairmanship of Ram
Nivas Mirdha enquired
about it. Harshad Mehta is
the chief accused in the case.
 Maximum number of partners
in a partnership firm is 20.
 A private company must have
at least 2 members.
 Minimum number of share
holders necessary for a pub-
lic company is 7.
 Break - even - point in a busi-
ness means no profit and loss.
 Goodwill of a firm represents
intangible asset.
 The excess of current assets
over current liability is called
working capital.
SPECIAL
ECONOMIC ZONES
 India was one of the first in
Asia to recognise the effec-
tiveness of the Export
Processing Zone (EPZ) mod-
els in promoting exports.
 Asia's first EPZ was set up in
Kandla in 1965. Seven more
zones were setup thereafter.
 But EPZ had many shortcom-
ings:
 The shortcomings of the EPZ
model were corrected and
some new features were added
to form theSpecial Economic
Zones (SEZ) in April 2000. In-
dia passed special economic
zone act in 2005.
 Kandla, Surat, Santa Cruz
(Maharashtra), Kochi,
Chennai, Visakhapatnam,
Falta (West Bengal) and
Noida (UP) have been con-
verted into Special Economic
Zones.
 As of 2007, more than 500
SEZs have been proposed,
220 of which have been cre-
ated.
 The states in which the SEZs
have been approved are fac-
ing intense protests, from the
farming community, accusing
the government of forcibly
snatching fertile land from
them, at heavily discounted
prices as against the prevail-
ing prices in the commercial
real estate industry.
 The category ‘SEZ’ covers a
broad range of more specific
zone types, including Free
Trade Zones (FTZ), Export
Processing Zones (EPZ), Free
Zones (FZ), Industrial Estates
(IE), Free Ports, Urban Enter-
prise Zones and others.
 The SEZ policy was first in-
troduced in India in April 2000,
as a part of the Export-Import
(“EXIM”) policy of India.
Government of India enacted
the SEZ Act, which received
the assent of the President of
India on June 23, 2005. The
SEZ Act and the SEZ Rules,
2006 (“SEZ Rules”) were no-
tified on February 10, 2006.
 As to these policies, the Gov-
ernment has set up SEZ’s in
the public, private, joint sec-
tor or by State Governments.
In this regard some of the ex-
isting Export Processing
Zones were converted in to
Special Economic Zones.
 There are 13 functional SEZs
and about 61 SEZs, which
have been approved and are
under the process of estab-
lishment in India. Today there
are approximately 3,000 SEZs
operating in 120 countries.
Taxes
 Taxes can be broadly divided
into two
(i) Direct Taxes (ii) Indirect
Taxes.
 Personal Income tax, corporate
tax, estate duty, gift tax and
wealth tax come under direct
taxes.
 Sales tax, excise duty, customs
DeputyCollector Rank File
duty and service taxes come
under indirect taxes.
 Union Excise Duties are the
chief source of revenue of the
Central Government.
 Excise duties, customs duties,
income tax, service tax and
corporation tax are levied by the
Central Government.
 Sales tax is the major source
of revenue to the State Gov-
ernment.
 Land revenue, stamp duties and
registration fees are collected
by the states.
 Estate duty on property other
than agricultural income is col-
lected by the central govern-
ment.
 The agricultural income has
been exempted from the Union
Income Tax. But the states
have the statutory powers to
do that.
 Taxation is a part of fiscal
Policy
 Interest is a taxable income
 Octroi is the tax imposed on
articles coming into a city; it
simply means city tax.
 The most important source of
revenue for the government -
taxes.
 PPP - Purchasing Power Parity
 The form of market structure
where the produce has total
control over the price - Mo-
nopoly
 Kelkar Committee is the new
committee which suggested
reforms in direct and indirect
Tax.
 Raja. D. Chelliah was theChair-
man of the Tax Reforms Com-
mittee.
 Direct Tax: It is levied directly.
In India, two types of direct
taxes are mainly : (1) Personal
Foreign Investment
Flows
 Globalisation leads to a greater
flow of foreign investment.
 It takes two forms - Foreign
Direct Investment (FDI)
and Foreign Portfolio Invest-
ment (FPI)
 The priority sector which re-
ceives highest FDI in Energy.
 The general process of involv-
ing the private sector in the
ownership or operation of a
state owned enterprise is called
privatisation.
 A partial introduction of pri-
vate ownership is called Joint
Venture.
 When a complete transfer of
ownership of a public enter-
prise to private hands take
place it is called denationaliza-
tion.
 The retaining ownership of a
public enterprise to a private
bidder for a specific period for
use is called leasing.
 VRS stands for Voluntary Re-
tirement Scheme.
Trade Balance
 Thetrade deficit for April 2010-
April 2011 was estimated at us
$10420 million which was
higher than the deficit of us $
6654 million during April 2009-
April 2010.
 Foreign currency which has a
tendency of quick migration is
called Gold Currency.
Budget
 The word 'budget' has been
derived from the French word
'bougette' which means a small
bag. It symbolizes a bag con-
taining the financial proposals.
 A budget is the anticipated
income tax (2) Corporation tax.
 Personal Tax: It is levied on in-
dividuals.
 Corporation Tax: It is the tax on
the income of the companies.
 The government imposed
Minimum Alternative Tax
(MAT) since 1996-97.
 Expenditure Tax: It is the tax
imposed on expenditure in-
curred in hotels where room
charges for a residential ac-
commodation were Rs. 400 or
more per day per person.
 It began to impose in 1987.
 It was recommended by Kaldor.
 Wealth Tax: The tax imposed
on accumulated wealth or prop-
erty of every individual, Hindu
undivided family and closely
held companies.
 Indirect Taxes
(1) Central Excise Duty: It is
imposed on commodities
which are produced within the
country.
(2) Customs duty: It deals with
both import and export duties.
 Permanent Account Number
(PAN) relate to income tax ad-
ministration.
 Incometax exemption limit upto
Rs.1,60,000.
 New Implementing Tax Policy
on 2012 - Good and Service Tax
(GST).
MODVAT
MODVAT is Modified Value Added
Tax. MODVAT has been in place
from April 1, 1986. This was intro-
duced to avoid double taxation of
both the raw materials and finished
goods. From April 1, 2000 MODVAT
has been renamed CENTVAT. Since
April 1, 2005 VAT (Value Added Tax)
replaced Sales Tax.
DeputyCollector Rank File
Economic Offences
 Black money is money accu-
mulated by evading tax.
 Hawala Transaction means
the illegal way of bringing for-
eign currency to India. Usu-
ally the foreign currency will
be collected from outside In-
dia and its equivalent amount
will be given here. The chief
accused in the Hawala case is
S.K. Jain.
 COFEPOSA - Conservation of
Foreign Exchange and Preven-
tion of Smuggling (Activities)
Act.
Economic Crimes Acts of Legislation Enforcement Authorities
Tax Evasion Income Tax Act Central Board of Direct Taxes
Illicit Trafficking in Contraband Customs Act 1962 Collectors of Customs
Goods (Smuggling) COFEPOSA, 1974 Collectors of Customs
Evasion of Excise Duty Central Excise and Salt Act, 1944 Collectors of Central Excise
Cultural Object’s Theft Antiquity and Art Treasures Act, 1972 Police/CBI
Money Laundering Foreign Exchange Regulations Act, 1973 Directorate of Enforcement
Foreign Contribution Foreign Contribution (Regulation) Police/CBI
Manipulations Act, 1976
Land Hijacking/Real Estate Fraud IPC Police/CBI
Trade in Human Body parts Transplantation of Human Organs Police/CBI
Illicit Drug Trafficking Narcotics Drugs and Psychotropic NCB /Police/CBI
Substances Act 1985 & NDPS Act, 1988
Fraudulent Bankruptcy Banking Regulation Act, 1949 CBI
Corruption and Bribery of Prevention of Corruption Act, 1988 State/Anti Corruption
Bureaux/
Public Servants Vigilance Bureaux/CBI
Bank Fraud IPC Police/CBI
Insurance Fraud IPC Police/CBI
Racketeering in Employment IPC Police/CBI
Illegal Foreign Trade Import & Export (Control) Act, 1947 Directorate General of
Foreign Trade/CBI
Racketeering in False Travel Passport Act, 1920/IPC Police/CBI
Documents
FERA by FEMA
FERA (Foerign Exchange
Regulating Act) implemented in
1973. FERA has been replaced by
FEMA in June 4, 2000.(Foreign
Exchange Management Act)
FEMA represents the changing
reality of the era of globalization
to which the authorities have
finally woken up to.
annual estimate of expenditure
and revenue of a country or a
subordinate authority like a
corporation.
 According to Palkiwalah, The
budget need not be a secret
affair".
 Article 112 of the constitution
of India deals with budget or
annual financial statement.
 Financial year in India is April
1 to March 31.
 Indian budget consists of three
heads.
1. Consolidated Fund in India
It consists of all revenue and
loans received by the govern-
ment.
2. Contigency Fund
The fund comprises the sum
placed at the disposal of the
president to meet unforeseen
expenditure.
3. Public Account: It consists of
all receipts and payments
which are in the nature of a de-
posit account with the govern-
ment.
The budget consist of two parts.
 Revenue Budget: This contain
current receipts such as taxa-
tion, dividends of public sec-
tor units and expenditure of
government.
 Capital budget: This contains
all the capital receipts and ex-
penditure.
DeputyCollector Rank File
 Dumping of goods means
sinding goods to a foreign
market for sale below marginal
cost.
 China is the largest dumper of
the Indian market.
 Nepal dumps vanspati oil in the
Indian Market.
Patents
 Intellectual property means the
products or creation of the
mind.
 A patent is a legal protection
given by the state to an inven-
tion.
 India amended the Patent Act
1970 in 1999 as the TRIPS
agreement under WTO regime.
Exclusive Marketing Right (EMR)
 It provides an international
company, an exclusive right to
market a product in the field of
pharmaceutical and agricul-
tural chemical products in the
Indian market.
 EMRs are granted for five
years.
 Mail box system: It is a box to
receive all the applications for
the patenting of pharamace
utical and agricultural chemi-
cal products.
Stock Exchange
 India has the second largest
share holding population, next
to United States of America.
 A stock exchange is an
organised market for buying
and selling shares and other
securities.
 There are 23stock exchanges
in the country.
21 are regional and 2 are na-
tional.
 National Stock Exchange
(NSE), Over The Counter Ex-
change of India (OTCEI) are
the 2 National Stock Ex-
changes.
 OTCEI incorporated under the
provisions of the Companies
Act 1956, is a public limited
company.
 OTCEI is promoted by the Unit
Trust of India, the Industrial
Credit and Investment Corpo-
ration of India, the Industrial
Development Bank of India,
the Industrial Finance Corpo-
ration of India and others and
is a recognised stock exchange
under the SCR Act.
 National Stock Exchange
(NSE) was established in the
year 1992 in Mumbai.
 NSE is the third largest Stock
Exchange in the world in terms
of the number of trades in eq-
uities. It is the second fastest
growing stock exchange in the
world with a recorded growth
of 16.6%.
 Bombay Stock Exchange (BSE)
is a regional stock exchange.
 The first stock exchange was
established in Mumbai in 1875.
 In the early days, BSE was
known as "The Native Share
& Stock Brokers Association."
Bombay Stock Exchange
Index is SENSEX
National Stock Exchange
Index is NIFTY
It was established in the year
1875 and became the first stock
exchange in the country.
 Dalal Street is the place where
the Bombay Stock Exchange
operates.
 Cochin Stock Exchange (CSE)
was established in 1978
 SEBI – Securities and Exchange
Board of India was set up in
1988. It was made a statutory
body in 1992.
 SEBI overseas the working of
the Stock Exchange.
 Unit Trust of India, established
in 1964, was the first mutual
fund in India.
 CRISIL - Credit Rating Invest-
ment Services of India Limited.
 CARE - Credit Analysis and
Research Limited.
 Blue Chip Share is a high val-
ued share.
 Bulls and Bears are terms as-
sociated with share market.
 Profit from shares is called
dividend while profit from de-
bentures is called interest.
Co-operative Sector
 Co-operatives are the means by
which people with limited re-
sources can pool physical and
material resources to achieve
social ends and that would be
attainable it efforts were to be
made in an individual capac-
ity.
 Co-operative Credit Society in
I ndia was established by
Frederick Nicholson in 1904 as
Nasdaq was the
world's first electronic
stock market. Created in
1971. The term "Nasdaq"
used to be capitalized
"NASDAQ" as an acronym
for National Association of
Securities Dealers Auto-
mated Quotation.
DeputyCollector Rank File
a source of credit to counter
the moneylenders in villages.
 Co-operative institutions have
been financially aided by RBI,
SBI, large Commercial Banks
and other institutions.
 Co-operative credit societies
one organised into a three-tier
structure. Primary Agricultural
Credit Societies (PACS's) at the
village level, Co-operative
Central Bank at district level
and State Co-operative Bank at
the state level.
 Consumer co-operatives pro-
vide the essential goods to the
common man. The super Bazar
network was set up in 1966 to
supply the needs of consum-
ers in Delhi.
 Co-operative marketing was
initiated in the second plan.
 Marketing Co-operative has a
three tier structure. Primary
Marketing Societies at the vil-
lage level, Central Federations
at the district level and Na-
tional Agricultural co-opera-
tive Marketing Federation at
the National level.
 NAFED is the apex co-opera-
tive marketing organisation
dealing in procurement, distri-
bution, export and import of
selected agricultural commodi-
ties.
 Co-operative Farming has been
one of the major objective of
the land reform programme in
India.
 The Congress Agrarian Re-
forms Committee headed by
J.C. Kumarappa, which was
formed to study the problems
related to land reforms con-
cluded in its report in 1949.
 The state famous for ‘Dairy
Co-operatives’ in India is
Gujarat.
 The only ‘Scheduled Bank’ in
the co-operative sector is
Kerala State Co-operative
Bank.
 Jawaharlal Nehru gave impor-
tance to co-operative move-
ment in the Five year Plans of
the country.
 The ‘Birthplace’ of land mort-
gage banks is Germany.
 The report of All India Rural
Credit Survey Committee is
known as ‘Magnacarta’ of the
Co-operative movement in In-
dia.
 The name of retail stores
started in 1997-98 by Govern-
ment of Kerala under the di-
rect supervision of Kerala Co-
operative Consumer Federa-
tion is Neethi.
 The head of the Co-operative
Department is Registrar of Co-
operative Societies.
 Supermarket run by the Kerala
State Co-operative Consumer
Federation is Thriveni.
 There are 14 district Co-opera-
tive Banks in Kerala.
 ‘CAMPCO’ is a Co-operative
Institution registered as a joint
venture of Karnataka and
Kerala government.
 The headquarters of ‘Coirfed’
is at Alappuzha.
 The headquarters of
‘MATSYAFED’ (Kerala State
Co-operative Federation for
Fisheries Development) is in
Trivandrum.
 Central Co-operative banks
function at the district level.
MISCELLANEOUS
 Eco-mark is given to environ-
mentally friendly products
by the Bureau of Indian Stan-
dards (BIS), Agmark is given
to agricultural products.
Rugmark is given to child
labour free carpets.
 CAPART - Council for Ad-
vancement of Peoples' Ac-
tion and Rural Technology.
 To promote voluntary action
in rural development
CAPART was launched in
1986.
 MSY - Mahila Samridhi
Yojana. I t is a savings
scheme for rural women.
 AVARD - Association of Vol-
untary Agencies for Rural
Development.
New Economic Policy (NEP)

New Economic Policy (NEP) was an economic policy proposed by
Vladimer Lenin to prevent the Russian economy from collapsing.

The Economic reform under 'Perestroika' started in USSR.

The new Economic Liberalisation Policy was launched in India
in July 1991.

Liberalisation, Privatisation and Globalisation are the three steps
in NEP.

LERMS means Liberalisation Exchange Rate Money System.

Under LERMS, 16% of the foreign exchange reserve could be
converted into market.
DeputyCollector Rank File
 CRISP - Computerised Rural
Information System Progra
mme. It was started in 1985.
 NSAP - National Social As-
sistance Programme, an-
nounced on August 15, 1995.
 Midday meal programme was
launched by the Prime Min-
ister on August 15, 1995.
 ISO-International Organisa-
tion for Standardisation.
Cochin Shipyard has re-
cently been given ISO cer-
tificate.
 SSI - Small Scale Industry.
An industrial unit with a capi-
tal investment of not more
than Rs. 1 crore is treated as
a small scale industry.
 National Extension service
was launched in 1953.
 Twenty Point Programme
was launched in 1975.
 The National Co-operative
Consumer’s Federation of
India Limited was registered
in 1965.
 Nirmithi movement was
started in Kerala in 1985.
 Command Area Development
Programme was (CADP)
launched in 1974-75.
 BPL census - Below Poverty
Line census- was held in
Kerala in 1998. Theaimof the
census was to find out the
families living under poverty
in Kerala. Earlier this census
was called IRDP survey.
 The State Institute of Rural
Development is at Kottara
kkara.
 The National Institute of
Rural Development is in
Hyderabad.
 Kerala Institute of Local
Administration (KILA) is
located at Mulamkunnathu
kavu (Thrissur)
 The poverty alleviation
programme launched by
Kerala government with the
help of NABARD and
Panchayat Raj Institutions in
the state is Kudumbhasree
 ATM was invented by
Donwetzel in 1968.
 Bangladesh Grammeen Bank
was set up by Mohammad
Yunus. He won the 1998
Indira Gandhi International
Award.
 COSTFORD is the Centre for
Science and Technology for
Rural Development. It is
engaged in low cost house
building. It is located at
Thrissur.
 Lakdawala Committee is
associated with poverty line.
According to the committee
report 35.97% of people live
under poverty line in India.
 The Housing & Urban
Development Corporation
Limited (HUDCO) was set up
in April 1970.
Infrastructure in the
Indian Economy
 The infrastructure of an
economy and the development
and expansion of all the facili-
ties in the economy are an es-
sential pre condition for in-
creasing agricultural and in-
dustrial production in a coun-
try.
 Infrastructure facilities often
referred as economic and so-
cial overheads and consist of
1. Energy-coal, electricity, oil and
non-conventional sources.
2. Transport - Railways, roads,
shipping and civil-aviation.
3. Communication - Post and Tele-
graph, telephone, telecommu-
nications etc.
4. Banking, finance, insurance
5. Science and technology
6. Social overhead - health, hy-
giene and education
Energy
 Energy is an essential input
for economic development
and improving the quality of
life.
 Power development in India
started at the end of the 19th
century with the commission-
ing of electricity supply in
Darjeeling during 1897.
 Then in 1902, hydro power
station at Sivasamudram in
Karnataka was commis-
sioned.
 In the Pre-Independence era,
the power supply was mainly
in the private sector that too
restricted to the urban areas.
 With the formation of State
Electricity Boards during Five-
Year Plans, the power supply
industry all over the country
had a systematic growth.
 The construction and opera-
tion of generation and trans-
mission projects in the central
sector are entrusted to central
sector power corporations viz
the National Thermal Power
Corporation (NTPC), the Na-
tional Hydro electric Power
Corporation (NHPC), the
DeputyCollector Rank File
North-Eastern Electric Power
Corporation (NEEPCO), and
the Power Grid Corporation of
India Ltd (PGCIL).
 The power grid is responsible
for all the existing and future
transmission projects in the
central sector and also for the
formation of the National
Power Grid.
 Sutlej Jal Vidyut Nigam (SJUN)
(formerly known as NTPC) is
responsible for the execution
of the Nathpa Jhakri Power
Project in Himachal Pradesh.
 Tehri Hydro Development
Corporation (THDC) is re-
sponsible for the execution of
projects of Tehri Hydro Power
Complex in Uttaranchal.
 The installed power genera-
tion capacity in the country
has increased from 1,400 MW
in 1947 to 124287.17 MW as
on 31st March 2006.
 The Rural Electrification Cor-
poration Limited (REC) was
set up with the main objective
of financing rural electrifica-
tion schemes in the country.
 The current mission of REC is
to facilitate availability of elec-
tricity for accelerated growth
and for enrichment of quality
of life of rural and semi urban
population.
 A scheme Rajiv Gandhi
Grameen Vidyutikaran
Yojana for rural electricity in-
frastructure and household
electrification was launched in
April 2005 through the Rural
Electrification Corporation
(REC) for the attainment of the
National Common Minimum
Programme of providing ac-
cess to electricity to all rural
household in five years.
 Non-Conventional En-
ergy sources
India is blessed with plenty of
responsible energy sources
such as solar, wind, hydro and
biomass. Over 12,800 MW of
grid-connected renewable
power capacity (upto 2008)
has been installed mainly
through wind, small hydro
and bio-energy which ac-
count for around 8 percent of
the total installed capacity in
the country.
Conventional forms
of Energy
 Coal, oil, natural gas, nuclear
material and water power are
at present major sources of
conventional forms of energy.
 Electricity produced from
these conventional forms of
energy is used by many in-
dustries. Per capita consump-
tion of electricity is often con-
sidered as an indicator of eco-
nomic development.
 Of the total installed capacity
of 12,4287 MW
• Thermal power ac-
counted for 67%
• Hydel power accounted
for 26%
• Nuclear power and oth-
ers accounted for3%
• Renewable Energy Re-
sources Constitute
about 4%
Thermal power
 In the case of thermal power,
supply of coal, oil and natural
gas is the limiting factor.
 Super thermal power stations
are set up near coal fields like
Korba in Madhya Pradesh,
Obra in Uttarpradesh, Talcher
in Orissa and Kothagudem in
Andhra Pradesh.
Nuclear Power
 In the case of nuclear power,
disposal of waste and hazards
of radio activity are the prob-
lems.
 Nuclear Power Stations
(i) Kota in Rajasthan
(ii) Tarapur in Maharashtra
(iii) Kalpakkam near Chennai
in Tamil Nadu.
(iv) Narora in Uttar Pradesh
(v) Kakrapara in Gujarat
(vi) Kudangulamin Tamil Nadu
Rajiv Gandhi Akshay Urja Diwas
To create greater awareness on new and renewable energy
Rajiv Gandhi Akshay Urja Diwas is celebrated on 20th August
(birthday of former Prime Minister late Shri Rajiv Gandhi) every
year since 2004 all over the country. Public awareness programmes
are organised on a mass scale on this day at the National, State,
District and Block/Taluk levels.
Akshay Urja Shops are being set up to cover every district in the
country to create awareness about the benefit of using these
devices and reducing the burden on conventional electricity in
cities/towns. So far 269 Akshay Urja shops have been opened.
DeputyCollector Rank File
Hydel Power
 Among the various sources of
electricity, water is perhaps
the best in the sense that it is
renewable and pollution free.
The water used for generat-
ing power can be again used
for irrigation.
 The first hydro electric power
plant: Siva samudram across
Cauvery in Karnataka (1902).
 Damodar Valley Project,
which included generation of
electricity as one of its
multipurposes, is the earliest
of its kind.
 Damodar Valley is associated
with the Damodar river. Bihar
and West Bengal are the ben-
eficiary states of the project.
 Bhakra - Nangal project, a
project which consists of
Bhakra Dam is associated with
Sutlej river. Punjab, Himachal
Pradesh, Haryana and
Rajasthan are the beneficiary
states of the project.
 Tungabhadra project is asso-
ciated with river Tungabhadra.
Andhra Pradesh and
Karnataka are the beneficiary
states of the project.
 Hirakud Dam project is asso-
ciated with Mahanadi river.
Orissa is the main beneficiary
state of Hirakud project.
 Kosi project is a multipurpose
project which is associated
with the Kosi river, was built
by India in association with
Nepal.
 Rajasthan Canal project is
associated with River Sutlej,
Beas and Ravi. Rajasthan,
Punjab and Haryana are the
beneficiary states of the
project. It is also called the
Indira Gandhi Canal Project.
 Kakrapara Project is associ-
ated with Tapti river. Gujarat
is the main beneficiary state
of the project.
 Koyna project is associated
with river Koyna. Maharashtra
is the main beneficiary state
of the project.
 Farakka project is associated
with Ganges and Bhagirathi.
West Bengal is the main ben-
eficiary state of the project.
 Tehri Dam project is associ-
ated with rivers Bhagirathi and
Bhilangana. Uttaranchal is the
main beneficiary state of the
project.
 Kahalgaon project is a joint
venture of NTPC and a Rus-
sian company.
 Nagarjunasagar dam located
on Krishna river is situated in
Andhra Pradesh.
 Parambikulam - Aliyar
project is a joint venture of
Tamil Nadu and Kerala.
 Ranjit Sagar Dam (Thein
Dam) is a multipurpose dam
project in the country, built on
the river Ravi. Punjab,
Haryana & Jammu and Kash-
mir are the main beneficiary
states of this project.
 Sardar Sarovar project on
the Narmada river in Gujarat
is an inter-state project ben-
eficiary to Gujarat, Madhya
Pradesh and Rajasthan.
 Alamatti Dam located in the
Krishna river is a bone of con-
tention between Karnataka
and Andhra Pradesh. The Dam
is in Karnataka.
 Mullaperiyar Dam exists as a
controversial factor between
Kerala and Tamil Nadu.
 Rihand Project It has created
the largest man made lake in
India.
 Tehri Hydel Project
•Is a joint project of Govt. of
India and Uttaranchal.
•The project has failed to
make any headway due to
environmental controversy.
•The goal of the project is to
generate 2,400 MW of
power annually besides
providing irrigation to 2,700
hectares.
 Chukla Project in Bhutan
•It is a very big hydel power
project at Chukla in Bhutan.
•The project was financed by
India.
•It feeds power to the north
eastern parts of the coun-
try including West Bengal.
 Seven states including Kerala,
Himachal Pradesh, Jammu &
Kashmir, Meghalaya etc de-
pend completely on hydel
power.
 Draw - backs of hydel genera-
tion
•Fluctuation between rainy
and dry periods.
•Production cannot be ma-
nipulated to suit the de-
mand.
 Development of conventional
forms of energy for meeting
the growing energy needs of
society at a reasonable cost
is the responsibility of minis-
tries of power, coal petroleum
and natural gas.
DeputyCollector Rank File
 The Economic Survey (2009-10) was tabled in
Parliament by Finance Minister Pranab Mukherjee
on 25th February 2010.
 The Economic survey argues for a gradual roll
back of stimulus measures while projecting a ro-
bust GDP expansion of upto 8.75 percent in 2010-
11 on the back of a remarkable recovery growth
expected at 7.2 percent for the current fiscal.
 C. Rangarajan is the head of the Prime Minister's
Economic Advisory Council (PMEAC).
 The Economic Survey called for 'serious' policy
initiatives to achieve the targeted 4% growth in
agriculture.
 The Union finance ministry's Economic Survey
of financial year economic and governance re-
form to create as the survey says "an enabling
Economic Survey 2009-10
government".
 In fiscal year 2008-09, the gross domestic saving
rate is 32.5%.
 In fiscal year 2008-09 the gross domestic capital
formation rate is 34.9%.
 The Economic Survey forecasts a national in-
come growth rate of 8.5% growth in 2010-11.
 Nuclear energy development
is being controlled up by the
department of Atomic Energy.
 Electricity is a concurrent
subject at entry 38 in list III of
the seventh schedule of the
Constitution of India.
 The construction and opera-
tion of generation and trans-
mission projects in the central
sector are entrusted to central
sector corporations; They are
•National Thermal Power
Corporation (NTPC) (set up
on 1975)
•National Hydro Electric
Power Corporation (NHPC)
(set up on 1975)
•North Eastern Electric Power
Corporation (NEEPCO)
•Power Grid Corporation of
India Ltd. (PGCIL) which is
incorporated on 23 october
1989.
Non Conventional
Forms of Energy
 Sources: Solar Energy, Wind
Energy, Bio-mass power, Geo-
thermal Energy.
 The Ministry of Non-Conven-
tional Energy Source (MNES)
created in 1992 is the nodal
agency of the Govt. of India
for all matters relating non con-
ventional / renewable energy.
 India has one of the world's
largest programme for renew-
able energy.
 India has now recognised that
renewable energy sources can
provide the basis for sustain-
able energy development on
account of their inexhaustic
nature and environment
friendly features.
 The greatest advantage of
Non Conventional energy
sources is their inexhaustible
condition.
Solar Energy
 Sun is the main source of non
conventional energy though it
may not be available during
night and cloudy days.
 India receives 5,000 trillion kwh
of solar radiation per year.
 In India, solar energy is being
utilised through two different
routes.
(1) Solar thermal routes
(2) Solar photo voltaic route
 India is the third largest pro-
ducer in the world of solar cells
and photovoltaic cell.
Crude Oil and Natural Gas Production
Oil and Natural Gas Corporation Limited, ONGC Videsh Ltd, Oil India Ltd and GAIL India Ltd are
engaged in the exploration and production of oil and natural gas in the country.
Year (2009-10) Percent
GDP growth 7.2
Income in growth 5.3
Revenue deficit 5.2
Fiscal deficit 9.7
Gross Fiscal deficit 6.5
Foreign Trade (exports-imports) -20.3 & -23.6

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