Showing posts with label Definitions (Economy). Show all posts
Showing posts with label Definitions (Economy). Show all posts

Friday, 4 September 2015

GDP deflator Explained

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Why in news?
  • The deflator is in the news because Chief Economic Adviser Arvind Subramanian has referred to it to show that inflation currently is at very low levels. 
    • According to Subramanian, the near-flat GDP/GVA deflators indicate that “we are closer to deflation territory and far, far away from inflation territory”.
     
  • Finance Ministry flagged deflation as a challenge for the economy. 

Saturday, 1 August 2015

Friday, 31 July 2015

Thursday, 30 July 2015

Duty Inversion

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Why in news?
In budget 2015, Finance Minister Arun Jaitley said that "Duty Inversion" will be corrected.

So what is it?
  • -the import tax on finished products is lower than that on parts,
  • -affects the competitiveness of local manufacturers.
    • -for example, importing components of LED TV costlier than importing LED TV.
  • So, domestic industries fail to compete.

Wednesday, 22 July 2015

Swiss Challenge Model For Private Participation

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See this video first by Indian Express and Say Thank you Indian Express. 
What is it?

  • A ‘Swiss Challenge’ is a way to award a project to a private player on an unsolicited proposal. Such projects may not be in the bouquet of projects planned by the state or a state-owned agency, but are considered given the gaps in physical or social infrastructure that they propose to fill, and the innovation and enterprise that private players bring. 
  • The government may enter into direct negotiations with a private player who submits a proposal and, if they cannot agree on the terms of the project, consider calling for bids from other interested players. 
  • In one variant of the Challenge, the government awards bonus points to the project’s ideator; in another, it calls for comparative bids, but gives the first right of refusal to the original player. All this is generally disclosed upfront. 
Is this idea new to India? 

Tuesday, 21 July 2015

Basic Savings Bank Deposit Account (BSBDA)

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What is the definition of “Basic Savings Bank Deposit Account” (BSBDA)?
All the existing ‘No-frills’ accounts

Whether the guidelines issued on ‘no-frills’ account with 'nil' or very low minimum balances will continue even after the introduction of ‘Basic Savings Bank Deposit Account’?

Monday, 13 July 2015

Sunday, 12 July 2015

Floor Space Index (FSI)

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Why in news?
Mumbai’s draft Development Plan (DP) 2034 proposed more than a three-fold increase in the total residential built-up floor area. It has done so by significantly increasing the Floor Space Index (FSI) across the city.

 What is FSI?

  • FSI, also known internationally as FAR (Floor Area Ratio), determines the total built-up area allowed on a certain plot area. 
  • It basically defines the ratio of the 
    • Total covered area of construction : Total plot size
  • Higher FSI allows for more construction, which in case of space-constrained Mumbai, has to be always vertical.
[Sources: Financial Express]

Saturday, 20 June 2015

Sovereign Gold Bonds Scheme

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Why in news?
The government spelt out the broad contours of a scheme involving the issue of sovereign gold bonds that is aimed at partly shifting the estimated 300 tonnes of physical gold bars purchased every year to the demat gold bond format.

 What are Sovereign gold bonds?

Monday, 15 June 2015

Disinvestment and Strategic Sale

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Why in news?

  • In the third week of May, the Cabinet Committee on Economic Affairs (CCEA) headed by the PM gave its approval to the Department of Disinvestment for the sale of government stake in 20 PSUs. 
  • The CCEA’s approval was given anticipating a realisation of nearly Rs.50,000 crore, if disinvestment was to be carried out, at the then ruling prices. 
  • For this, the government might undertake strategic sales of identified units as well as selling some shares in unlisted companies (fresh disinvestment)


 What is disinvestment?

Saturday, 13 June 2015

Sagar Mala Project

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Background
  • Initiative of Vajpayee in 2003 with the objective of achieving rapid capacity expansion and modernization of Ports along India’s East and West Coast
  • Above will be done so that, India’s ports are comparable with the best global ports in terms of infrastructure, efficiency and quality of service, increasing the tonnage capacity, upgrading and creating ship building and ship repair facilities and increase the use of inland waterways for transportation. 
Objective of the project

Friday, 12 June 2015

Goods and Services Tax (GST): Fully Explained

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To understand GST we must first understand VAT as GST is principally same as VAT. 

 What is VAT
  • Suppose the goods are taxable @ 10% and all the goods have been purchased and sold within the State by a VAT-dealer.
  • He will total out tax element in respect of sale vouchers. Suppose it comes to …(A).
  • Similarly he will total out tax element in respect of purchase vouchers. Suppose it comes to …(B).
  • Then VAT payable by the dealer = (A) - (B). 
  • VAT stands for value added tax and “ Value Added” is the difference between sale and purchase of a business.
  • Thus VAT is nothing but a form of sales tax only and is charged at each stage of sale on the value added to goods.
  • Infact, it is nothing but a tax on retail sales collected in stages. 

What is GST?

Thursday, 11 June 2015

Wednesday, 10 June 2015

Special Purpose Vehicles

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Why in news?
It is found in news articles almost every single day. Today, it found mention with reference to steel projects in India. Posco and SAIL are working out to jointly set up a steel project through SPVs in addition to the South Korean firm’s proposed Rs 52,000 crore plant at Jagatsinghpur, Odisha.
Source: ET

So, what is an SPV?
SPV, a Special Purpose Vehicle, is an entity formed for a lawful, single, well-defined and narrow purpose. An SPV is mainly formed to raise funds by collateralising future receivables. 

Wednesday, 3 June 2015

Goldilocks Policy in India

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The crux of  News
Recently RBI Governor summed the scene of rate cut in June 2015 and used the term while delivering the bimonthly credit and monetary policy:
"I would characterise the policy today as neither conservative nor aggressive. It’s in some sense a goldilocks policy. Just right given the current situation."

To understand above statement we need to understand the complete background, which has been discussed as following.
  1. RBI thinks that there is going to be increase in inflation 
  2. But growth is also necessary which is showing poor signs in India
  3. So they gave minor relief of repo rate cut as they felt that inflation would be manageable under target and legal limit of 6%.
Above 3 points have been discussed below in detail after which we will understand the RBI Governor's statement about Goldilocks Policy.

Difference between Centrally Sponsored Schemes and Central Sector Schemes

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  • Nomenclature is based on two things
    • Pattern of funding
    • Modality for implementation
Difference Between Centrally Sponsored Schemes and Central Sector Schemes
S. No.
 Difference
 Centrally Sponsored Scheme
 Central Sector Scheme
1
 Funding
 Certain % is borne by states like: 50:50, 75:25, 90:10

Fund Route:
Consolidated fund of States and/or 
Transferred directly to State/ District Level Autonomous Bodies/Implementing Agencies.
 100% by Union government
2
 Implementation by
 State Government
 Central Government Machinery
3
 Subject of which list under Schedule VII are covered
 State List (List - II)
 Mainly Union List (List -I)
4
 Additional Information
 As pet Baijal Committee report, 1987: Centrally Sponsored Schemes are defined as the schemes which are funded directly by Central Ministries/Departments and implemented by States or their agencies, irrespective of their pattern of financing, unless they fall under the Union List.
 Some schemes directly implemented in States/UTs but resources are not generally transferred to states