Budget 2024-25

Today Govt. of India presented Interim Budget 2024-25.

Govt. presented the Finance Bill 2024 but as such no change in direct and indirect taxes has been proposed. So, Finance Bill has been presented to continue the existing rates of income-tax for the financial year 2024-2025 and to provide for certain relief to taxpayers (regarding any tax dues) and to make amendments in certain enactments

Govt. also sought ‘vote on account’ approval of the Parliament through the Appropriation Bill for a part [April, May, June, July 2024] of the financial year 2024-25. So, in this budget, Demand for Grants will not be discussed and voted.

This time Economic Survey 2023-24 was not presented. Even the interim budget which was presented, Govt. basically elaborated its achievements of last 10 years. So, nothing relevant for UPSC aspirants in this budget for the May 2024 Prelims exam. If possible, just listen the Budget speech of the Finance Minister. That's all.

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Source: The Hindu
Pradhan Mantri Suryoday Yojana.
The scheme is yet to be launched, so details are not very clear, but you can just have a look at the above article which provides broad features.

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My Indian Economy Book (7th edition) has moved in the top in the best sellers list of amazon. Thanks for your love and support.

This 7th edition book (published by S Chand) is for the May 2024 UPSC Exam. Revise it several times and then practise the MCQ PDF which I will be releasing on 20th Feb. Best of Luck
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Term of the day: Fiscal Consolidation

It is an effort by the Government to bring down fiscal deficit and debt. This is done by bringing down wasteful expenses and raising revenues.

Post Covid, Govt. started spending a lot through higher fiscal deficit and debt. But in the Interim Budget presented on 1st Feb, it is clear that Govt. is now on the path towards fiscal consolidation.

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Question of the Day:

Consider the following statements regarding Price Stabilization Fund (PSF)

1. Govt. provides budgetary support for working capital as well as long term loan
2. The scheme targets intervention in the retail market
3. Sale of 'Bharat Atta' is being done under the PSF scheme

The answer to the above question is (c)

Under Price Stabilization Fund (PSF) Scheme, Govt. provides budgetary support (interest free loan) for working capital and other incidental expenses for procurement and distribution of agri-horticultural commodities. The intervention is expected to regulate price volatility through procurement by State/UT Government and Central agencies/Central PSUs/Cooperative organisations of selected produce, maintenance of buffer stocks and regulated release into the market.

Govt. has launched ‘Bharat Atta’ and ‘Bharat Rice’ ‘Bharat Pulses’ which is available at all physical and mobile outlets of Kendriya Bhandar, National Agricultural Cooperative Marketing Federation of India (NAFED) and National Cooperative Consumers' Federation of India (NCCF) and will be expanded to other retail outlets and e- commerce platforms.

FCI's Open Market Sale Scheme (OMSS) attempts to sale wheat and rice in the wholesale market, the ultimate aim is ofcourse to bring down the prices in the retail market but OMSS intervention is in wholesale market. But Bharat Brand Atta/Rice/Dal is being sold (intervention) in the retail market under PSF scheme.

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One of the functions of RBI is "it regulates and supervises banks". So, under its supervisory function RBI has initiated the actions on 'Paytm Payments Bank' (but not on its App).

Section 35A of the Banking Regulation Act 1949 says that "to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors, RBI may from time to time issue such directions at it deems fit and the bank/banking company shall be bound to comply with such directions."

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Term of the Day: Goldilocks Economy

A Goldilocks economy describes an ideal state for an economy whereby the economy is not expanding or contracting by too much. A Goldilocks economy has steady economic growth, preventing a recession, but not so much growth that inflation rises by too much. Goldilocks economies may be temporary in nature, as seen by the boom and bust cycles.

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Source: RBI

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Source: 2024-25 Budget Documents

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ECO 500 MCQ PDF will be released on 21st Feb.
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Source: Indian Express.

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Primary Agriculture Credit Societies (PACS)
(There is a major focus of Govt. on PACS)

PACS are outside the purview of the Banking Regulation Act, 1949 and hence not regulated by RBI. PACS are regulated by State Government (Registrar of Co-operative Societies appointed by the State). They accept deposits and provide lending facilities at the village level.

Credit from the State Cooperative Banks (StCBs) is transferred to the district central cooperative banks (DCCBs), that operate at the district level. The DCCBs work with PACS, which deal directly with farmers. Since these are cooperative bodies, individual farmers are members of the PACS, and office-bearers are elected from within them.

StCB
DCCB
PACS

Government is computerizing 18000 PACS across the country (ERP based national software) ensuring seamless integration and connectivity. By linking these PACS with NABARD through StCBs and DCCBs, the project aims to enhance the operation efficiency & governance of PACS, thus benefiting crores of small & marginal farmers.

PACS generally provide facilities to their members like:
* Input facilities in form of cash or kind component
* Agriculture implements on hiring basis
* Storage facility
* Help farmers to adopt latest technology

In order to enable PACS to provide more services to their members and generate income for themselves, an initiative has been taken to develop PACS as Multi Service Centers. This will enable PACS to provide ancillary services to their members and diversify their activities. Maharashtra (20,788) has the maximum number of registered PACS.

Present storage capacity

FCI: 36 MT (owned: 14.6 & hired 21.4)
State Govt. agencies: 40 MT
Total : 76 MT

Govt. is planning to set up another 70 MT in the next five years through PACS (world's largest agriculture storage infrastructure)
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Source: Indian Express

National Payment Corporation of India (a non bank entity) is a 'Payment System Operator' and holds a license provided by RBI under the Payment and Settlement Systems Act 2007 to operate the payment/settlements. NPCI has developed Unified Payment Interface (UPI) and it owns and operates it.

Any entity which is using the UPI infrastructure for payments requires a "Third Party Application Provider (TPAP)" approval from NPCI (as NPCI owns UPI). A TPAP is an entity that provides UPI compliant apps to the end user customers to facilitate UPI based payment transactions. Earlier "Paytm Payments Bank" (a group company of Paytm) was approved as TPAP by NPCI but RBI has asked Paytm Payment Bank to shut its operations. (Actually when we were using Paytm app and transferring money through UPI, so it was basically the Paytm Payment Bank which was acting as TPAP)

So, now Paytm (One97 Communication) has applied for TPAP license from NPCI. Once Paytm gets TPAP approval, '@paytm' handles will be migrated from Paytm Payment Bank to some other banks which will act as Payment Service Provider (PSP).
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Source: The Hindu
Read carefully the below explanation.

National Sample Survey (NSS)
The National Sample Survey (NSS) is a national socioeconomic survey conducted by National Statistical Office (NSO) in annual rounds with a cycle of rotating topics. For example, the purpose of the 71st round of the National Sample Survey (NSS) conducted in 2014 was to develop indicators on health and education. The purpose of the 68th round (July 2011 – June 2012) of National Sample Survey was Household Consumption Expenditure.

The Household Consumption Expenditure Survey (HCES), generally comes after every five years (quinquennial) during these annual rounds of NSS.

HCES generates estimates of household Monthly Per Capita Consumer Expenditure (MPCE) and the distribution of households and persons over the MPCE classes. It is designed to collect information regarding expenditure on consumption of goods and services (food and non-food) consumed by households. The results, after release, are also used for:

1) Rebasing/base revision of the GDP
2) Base revision of the CPI (i.e. weights of various items in CPI),
3) Measuring estimates of poverty levels; and
4) Other macro-economic indicators

The 75th round of NSS was also on Household Consumption Expenditure from the period July 2017 – June 2018 which reported that the consumer expenditure in the period 2011-12 – 2017-18 has fallen, but the government did not release the report as it noticed that there was divergence in the data.

79th Round of NSS which wad conducted from July 2022- June2023 was again on Household Consumption Expenditure (HSCE) whose complete findings/data will be released after the elections. Now, NSS has again started the 80th round on Household Consumption Expenditure (HSCE) from August 2023 to July 2024 (its ongoing). So, back to back two consecutive years of houshold consumption expenditure data will better and more accurate in revising the base year of GDP, CPI and other macor indicators.
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