Please just keep on following the news............ I am preparing a detailed PDF notes (and MCQs)........... which will be provided to you by end of March 2020. For ur doubts...u can reach directly to me @viveksingheconomy on telegram
Nothing relevant today for economy. I will be in Bangalore from tomorrow i.e. 29th Feb till 5th March.
The above is news from HINDU. let us discuss some points:
1) Under Pradhan Mantri Fasal Bima Yojana (PMFBY)......... suppose the insurance company charges premium of 40% then farmers were supposed to pay 2% (fixedfor kharif crop) and the rest 38% premium is shared by Centre and State equally means centre will pay 19% and State also 19%. And in case premium charged by insurance company is more then Farmers burden always remain fixed at 2% and Centre and States equal share the burden.
2) Now, one week back there was a news that centre will comply with above formula only if the premium is max 30% which means that if an insurance company charges 30% premium then Farmers will pay 2% and Centre will pay 14% and States 14%.
But if a company charges 40% then also centre will pay only 14% ( which is the premium burden of Centre in case of premium charged by company is 30% as in above case). This raised a doubt that whether States burden will increase i.e. States pay 24% and farmers pay 2% (14% + 24% + 2% = 40%) OR states will also pay only 14% (equal to Centre) and Farmers burden will increase from 2% to 12% (14% + 14% + 12% = 40%). And in case premium charged by company is higher Farmers/States burden will further increase.
3) In todays news Centre has clarified that in the above case where preimum charged by company is more than 30%.............States will have to incur the burden and Farmers burden will not increase.
1) Under Pradhan Mantri Fasal Bima Yojana (PMFBY)......... suppose the insurance company charges premium of 40% then farmers were supposed to pay 2% (fixedfor kharif crop) and the rest 38% premium is shared by Centre and State equally means centre will pay 19% and State also 19%. And in case premium charged by insurance company is more then Farmers burden always remain fixed at 2% and Centre and States equal share the burden.
2) Now, one week back there was a news that centre will comply with above formula only if the premium is max 30% which means that if an insurance company charges 30% premium then Farmers will pay 2% and Centre will pay 14% and States 14%.
But if a company charges 40% then also centre will pay only 14% ( which is the premium burden of Centre in case of premium charged by company is 30% as in above case). This raised a doubt that whether States burden will increase i.e. States pay 24% and farmers pay 2% (14% + 24% + 2% = 40%) OR states will also pay only 14% (equal to Centre) and Farmers burden will increase from 2% to 12% (14% + 14% + 12% = 40%). And in case premium charged by company is higher Farmers/States burden will further increase.
3) In todays news Centre has clarified that in the above case where preimum charged by company is more than 30%.............States will have to incur the burden and Farmers burden will not increase.
The above is link from HINDU (a general news which u may ignore): U just follow the below points.
1) Oct to Dec 2019-20 (3rd Quarter) REAL GDP GROWTH (as measured from Oct to Dec 2018-19) has been decleared as 4.7% . GDP data is published with a lag/delay of 2 months i.e. 60 days
2) Q1 growth revised to 5.6% and Q2 to 5.1%. Actually NSO publishes first advance estimates in Jan and then second advance estimate in Feb.
3) So, as of now the growth rates in Q1 is 5.6%, Q2 is 5.1% and Q3 is 4.7% . Now govt is saying that the next quarters growth will not go below 4.7% and it will be higher than that means the growth has BOTTOMED OUT.
Thats all for today.
1) Oct to Dec 2019-20 (3rd Quarter) REAL GDP GROWTH (as measured from Oct to Dec 2018-19) has been decleared as 4.7% . GDP data is published with a lag/delay of 2 months i.e. 60 days
2) Q1 growth revised to 5.6% and Q2 to 5.1%. Actually NSO publishes first advance estimates in Jan and then second advance estimate in Feb.
3) So, as of now the growth rates in Q1 is 5.6%, Q2 is 5.1% and Q3 is 4.7% . Now govt is saying that the next quarters growth will not go below 4.7% and it will be higher than that means the growth has BOTTOMED OUT.
Thats all for today.
The above is news from HINDU. Few relevant points follows:
1) When India does trade (export/import) then most of its invoices/bills are expressed in dollars. Thats why the news say "India is among the most dollarised countries as far as invoicing is concerned". Some trade also takes place in Euro/Pound/Yen and few other currencies. You should keep in mind that "There is no international agency which says that trade should happen only in dollar or some specifific currency......Every country is free to trade in whatever currency they want.....its just that it should be mutually acceptable to both the countries" But still most of the trade happens in dollar as countries still TRUST dollar. This TRUST is basically that DOLLARS will not loose value
2) The news also say that majority of the loan/ debt (tradable)/forex reserves are dollar denominated
3) Since people trust DOLLARS more than any other currency (trust that it will not loose value), so in case of any crisis they want to sell out the other currencies (if they are holding) and they convert into dollars........leading to appreciation of dollars.... In that sense US is acting as an INSURER.
4) And then the term "SEIGNIORAGE" has been used. Lets take this opportunity to explain this dreaded term with which most of the students are confused.
1) When India does trade (export/import) then most of its invoices/bills are expressed in dollars. Thats why the news say "India is among the most dollarised countries as far as invoicing is concerned". Some trade also takes place in Euro/Pound/Yen and few other currencies. You should keep in mind that "There is no international agency which says that trade should happen only in dollar or some specifific currency......Every country is free to trade in whatever currency they want.....its just that it should be mutually acceptable to both the countries" But still most of the trade happens in dollar as countries still TRUST dollar. This TRUST is basically that DOLLARS will not loose value
2) The news also say that majority of the loan/ debt (tradable)/forex reserves are dollar denominated
3) Since people trust DOLLARS more than any other currency (trust that it will not loose value), so in case of any crisis they want to sell out the other currencies (if they are holding) and they convert into dollars........leading to appreciation of dollars.... In that sense US is acting as an INSURER.
4) And then the term "SEIGNIORAGE" has been used. Lets take this opportunity to explain this dreaded term with which most of the students are confused.
The above image is from page No. 29 of the 4th Edition of the newly released Indian Economy Book. Seigniorage inlcudes 3 types of income. And lets understand each one step by step and dont mix it otherwise you will get confused. And the source which i have used for the above text is "RBI itself". So lets under SEIGNIORAGE...
1) Suppose you gave RBI "One gram" gold and RBI gave you Rs. 100 (according to value of one gram of gold). Now there is a promise on RS. 100 note that whenever u will bring it back RBI will give you something worth RS. 100. Now suppose you went again to RBI after one year, in which the inflation was 10%, and you asked your gold back. Now because of inflation the price of "One gram" of gold is Rs. 110. Now, when you will reproduce the RS. 100 note to RBI, RBI will give you gold only worth RS. 100 (which will be 100/110) i.e. 0.9 gram of gold. And 0.1 gram of gold will become RBI's gold, which is a kind of earning for RBI. This is the third income expressed in the book image.......which is also called inflation tax.
2) SUPPOSE there is no INFLATION. You gave RBI "One gram gold" and RBI gave you Rs. 100. And after one year you came back asking for your gold back (assume no inflation)..............So still the price of "One gram" of gold is Rs. 100 and hence RBI will have to return the entire "One gram" gold to you. BUT.........RBI was HOLDING that gold for one year.............and RBI can earn money by giving this gold to someone for one year.... This income is called INTEREST income.......... and expressed as FIRST kind of income in the book image.
3) When you kept "one gram" gold with RBI and RBI gave you Rs. 100........and this Rs. 100 you deposited in bank. NOW RBI asks bank that out of the RS. 100 deposited by public............... banks should keep Rs. 4 (CRR) with RBI. So basically what is happening..................... You gave "one gram" gold to RBI and RBI gave you Rs. 100 to you............ And then RBI is FORCING you/bank to KEEP Rs. 4 out of the Rs. 100 you got. (Ideally you/bank should not keep this Rs. 4 with RBI, because you have got RS. 100 in return of the "One gram" gold which you already gave to RBI" And even if you are keeping ideally RBI should pay interest on it, but RBI does not pay). So, on this RS. 4.............. RBI invests and earns INTEREST, SO if RBI is not paying interst on this RS. 4 or paying less than market interest then in both cases RBI is earning........... this is the second kind of income expressed in book image.
I hope you would have understood. This term was used in newspapers this year a lot of times. Thats all for today.
Seigniorage is quite technical ............... if you guys did not understand....... dont worry......... will make video some time and share
https://indianexpress.com/article/business/economy/fm-nirmala-sitharaman-direct-benefit-transfer-gst-being-talked-about-as-silent-revolution-6294711/
The above is article from Express. A general article which you may read or ignore. But there is a term "Public Finance Management System" which has been used several times...... so you must understand that. Nothing relevant in HINDU.
The above is article from Express. A general article which you may read or ignore. But there is a term "Public Finance Management System" which has been used several times...... so you must understand that. Nothing relevant in HINDU.
The Indian Express
Nirmala Sitharaman: Direct benefit transfer, GST being talked about as silent revolution
Sitharaman said PFMS has saved Rs 1 lakh crore for the country and left a real and lasting impact on public service delivery system.
Public Finance Management System (PFMS)
The Public Finance Management System (PFMS) is a software platform providing end-to-end solution for processing payments, tracking, monitoring, accounting, reconciliation and reporting. It is implemented by Controller General of Accounts and administered by the Department of Expenditure, both under Ministry of Finance. Various ministries/departments utilise this platform to monitor utilisation of funds provided to the implementing agencies and state governments. For example, PFMS is being used for various DBT payments like MGNREGA, PM-KISAN and other notified schemes of the Centre.
The Centre has integrated the treasuries of almost all states into the PFMS to track fund utilization up to the last mile as well as transfer funds “just-in-time” for central schemes. Integration of State treasuries has virtually wiped out indefinite parking of central funds at the state level. The biggest strength of PFMS is its integration with the Core banking system in the Country. As a result, PFMS has the unique capability to push online payments to almost every beneficiary/vendor. At present, PFMS is having interface in addition to the Core Banking System (CBS) of all Public Sector Banks, Regional Rural Banks, major private sector banks, Reserve Bank of India, India post and Cooperative Banks.
The Public Finance Management System (PFMS) is a software platform providing end-to-end solution for processing payments, tracking, monitoring, accounting, reconciliation and reporting. It is implemented by Controller General of Accounts and administered by the Department of Expenditure, both under Ministry of Finance. Various ministries/departments utilise this platform to monitor utilisation of funds provided to the implementing agencies and state governments. For example, PFMS is being used for various DBT payments like MGNREGA, PM-KISAN and other notified schemes of the Centre.
The Centre has integrated the treasuries of almost all states into the PFMS to track fund utilization up to the last mile as well as transfer funds “just-in-time” for central schemes. Integration of State treasuries has virtually wiped out indefinite parking of central funds at the state level. The biggest strength of PFMS is its integration with the Core banking system in the Country. As a result, PFMS has the unique capability to push online payments to almost every beneficiary/vendor. At present, PFMS is having interface in addition to the Core Banking System (CBS) of all Public Sector Banks, Regional Rural Banks, major private sector banks, Reserve Bank of India, India post and Cooperative Banks.
Term of the day:
Tax Base: Tax base is defined as the total value of the financial streams or assets on which tax can be imposed by the government. For example, in case of income tax, the tax base is all the income that can be taxed by the government (taxable income). If the minimum amount/threshold of the income on which tax is imposed is lowered, this will automatically increase (widen) the tax base; if it is raised, the tax base will be narrowed. For exmple, if Govt. says that all those people whose income is more than Rs. 5 lakh they need to pay tax. In this case tax base will be all the income which is above Rs. 5 lakh. But if it is lowered to Rs. 2.5 lakh then more people and more income will come under tax net or we say that tax base will increase.
In case of service tax (now GST), tax base is the value of services on which service tax is imposed. For example if CCD sells tea/coffee worth Rs. 10 crore and ofcouse it collects service tax/GST on 10 crore, so tax base will be Rs. 10 crore. In case of property tax, tax base is the value of property on which property tax is imposed. Because the size of the tax base influences the taxable revenues that are available to a government, the size and growth of the tax base is crucial to the planning efforts of any government.
Tax Base: Tax base is defined as the total value of the financial streams or assets on which tax can be imposed by the government. For example, in case of income tax, the tax base is all the income that can be taxed by the government (taxable income). If the minimum amount/threshold of the income on which tax is imposed is lowered, this will automatically increase (widen) the tax base; if it is raised, the tax base will be narrowed. For exmple, if Govt. says that all those people whose income is more than Rs. 5 lakh they need to pay tax. In this case tax base will be all the income which is above Rs. 5 lakh. But if it is lowered to Rs. 2.5 lakh then more people and more income will come under tax net or we say that tax base will increase.
In case of service tax (now GST), tax base is the value of services on which service tax is imposed. For example if CCD sells tea/coffee worth Rs. 10 crore and ofcouse it collects service tax/GST on 10 crore, so tax base will be Rs. 10 crore. In case of property tax, tax base is the value of property on which property tax is imposed. Because the size of the tax base influences the taxable revenues that are available to a government, the size and growth of the tax base is crucial to the planning efforts of any government.