Google Tax

  • It’s an equalization levy
  • It’s only for B2B transactions
  • India became first country in the world to impose equalization levy

Small Finance Banks

The small finance bank will primarily undertake basic banking activities of acceptance of deposits and lending to unserved and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganized sector entities.

What they can do:

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

What they cannot do:

  • Lend to big corporates and groups.
  • Cannot open branches without prior RBI approval for first five years.
  • Other financial activities of the promoter must not mingle with the bank.
  • It cannot set up subsidiaries to undertake non-banking financial services activities.
  • Cannot be a business correspondent of any bank.

Paramparagat Krishi Vikas Yojana (PVKY)

Organic Farming : – Paramparagat Krishi Vikas Yojana (PVKY):

  • It is one of the schemes under NMSA (National Mission for Sustainable Agriculture) to promote organic farming.
  • Under PKVY, Organic farming is promoted through cluster approach and local quality assurance systems.
  • It is proposed to develop 10,000 clusters with a size of 20 hectare so as to increase the area 2 lakh hectare in 3 years.
  • The assistance under the scheme is under different components such as: Mobilization of farmers, training, quality control, soil sample analysis, conversion practice to transit from current practices to organic farming, Custom Hiring Centres (CHCs) to hire agricultural implements, Labeling and Packaging assistance & Transport assistance; Marketing through organic fairs.

(Source: Annual Report, Ministry of Agriculture & Farmers’ Welfare)

Invasive Species: Seemai Karuvelam tree

  • Native to west Africa
  • Sucks water leading to ground water depletion
  • Invasive species
  • No other species of plant can co exist along with it
  • Used for fuel wood
  • Scientific name : prosopis julifora

Electoral Reforms : NOTA

NOTA – None of the Above

NOTA is designed to allow the voter to indicate disapproval of all of the candidates in a voting system. It is based on the principle that consent requires the ability to withhold consent in an election, just as they can by voting no on ballot questions.

  • The Supreme Court had upheld the right of voters to reject all candidates contesting the elections, saying it would go a long way in cleansing the political system of the country.
  • The court had directed the Election Commission to have an option of ‘None Of The Above’ (NOTA) on the electronic voting machines (EVMs) and ballot papers in a major electoral reform.
  • The EVMs have the NOTA option at the end of the candidates’ list. Earlier, in order to cast a negative ballot, a voter had to inform the presiding officer at the polling booth. A NOTA vote doesn’t require the involvement of the presiding officer.
  • In the Indian general election, 2014, NOTA polled 1.1% of the votes, counting to over 6 million.

Before NOTA:

  • Before the NOTA option came in existence, people casting negative votes were required to enter their names in a register and cast their vote on a separate paper ballot.
  • Under Section 49 (O) of the Conduct of Elections Rules, 1961, a voter could enter his electoral serial number in Form 17A and cast a negative vote. The presiding officer would then put a remark in the form and get it signed by the voter. This was done to prevent fraud or misuse of votes.
  • This provision was, however, deemed unconstitutional by the SC as it did not protect the identity of the voter.

India’s First Coastal Corridor

Vishakhapatnam – Chennai Costal Corridor

  • The Visakhapatnam-Chennai Industrial Corridor section of the East Coast Economic Corridor, connecting four economic hubs and nine industrial clusters, will mark the first industrial corridor developed along India’s coast.
  • The East Coast Economic Corridor will ultimately extend from Kolkata to Tuticorin
  • The Indian government is keen to encourage manufacturing, including through its “Make in India” initiative, to maintain strong economic growth over the longer term and to create productive, well-paying jobs for a labor force that is growing by around 12 million people per year.
  • The program will also focus on increasing women’s participation in the industrial workforce.
  • Skills training for 25,000 male and female workers, entrepreneurs, and students along with an investor promotion plan is expected to help develop businesses along the corridor.

Economy Curves- Very Important

  • Philips curve shows the tradeoff between unemployment and inflation. It indicates that to reduce unemployment, an economy has to adjust with higher level of inflation.
  • Kuznet curve explain the relationship between growth and equality. During the initial stages of development inequality increases with economic growth.
  • Laffer curve shows the relationship between tax revenue and tax rate. Its message is that if the tax is fixed at an optimum (reasonably low levels), tax revenue will be maximum.
  • Lorenze curve indicate inequality in an economy.

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About Ease of Doing Business Index

  • Word Bank releases Doing Business reports and it review business regulations and their enforcement across countries.
  • It was introduced in 2004.
  • A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm.
  • The rankings are determined by sorting the aggregate distance to frontier scores on 10 topics, each consisting of several indicators, giving equal weight to each topic. These are:
    1. Starting a business – Procedures, time, cost and minimum capital to open a new business
    2. Dealing with construction permits – Procedures, time and cost to build a warehouse
    3. Getting electricity – procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse
    4. Registering property – Procedures, time and cost to register commercial real estate
    5. Getting credit – Strength of legal rights index, depth of credit information index
    6. Protecting investors – Indices on the extent of disclosure, extent of director liability and ease of shareholder suits
    7. Paying taxes – Number of taxes paid, hours per year spent preparing tax returns and total tax payable as share of gross profit
    8. Trading across borders – Number of documents, cost and time necessary to export and import
    9. Enforcing contracts – Procedures, time and cost to enforce a debt contract
    10. Resolving insolvency – The time, cost and recovery rate (%) under bankruptcy proceeding

Viability Gap Funding

Viability Gap Funding

  • There are many projects with high economic returns, but the financial returns may not be adequate for a profit-seeking investor.
  • For instance, a rural road connecting several villages to the nearby town.
  • This would yield huge economic benefits by integrating these villages with the market economy, but because of low incomes it may not be possible to charge user fee.
  • In such a situation, the project is unlikely to get private investment.
  • In such cases, the government can pitch in and meet a portion of the cost, making the project viable.
  • This method is known as viability gap funding.

Liquidity trap

  • The liquidity trap is the situation in which prevailing interest rates are low and savings rates are high, making monetary policy ineffective. In a liquidity trap, consumers choose to avoid bonds and keep their funds in savings, because of the prevailing belief that interest rates will soon rise. This reduces the Bond yield and makes them less attractive.
  • Liquidity trap is a situation when expansionary monetary policy (increase in money supply) does not increase the interest rate, income and hence does not stimulate economic growth