SWAVALAMBAN SCHEME
The scheme was launched on 26.09.2010 by the Central
Government to encourage the workers of unorganized sector to voluntarily save
for their retirement. The Government (GOI) will contribute a sum of Rs. 1,000 to
each eligible NPS subscriber who contributes a minimum of Rs. 1,000 and maximum
Rs. 12,000 per annum under the Swavalamban Scheme. Workers of unorganized
sector from any part of the country can join this Scheme. The Interim Pension
Fund Regulatory and Development Authority (PFRDA) has been mandated to
implement it all over the country.
UNIVERSAL HEALTH INSURANCE SCHEME
The Universal
Health Insurance Scheme (UHIS) launched by the Government of India w.e.f.
14.7.2003 for persons and families below the poverty line with element of
subsidy from the Government. The scheme has also been extended to unorganized
sector workers such as MNREGA workers, street vendors, beedi & domestic
workers, etc. However, the Planning Commission had constituted a High Level
Expert Group(HLEG) on Universal Health Coverage (UHC) to, inter alia, develop a
blue print and investment plan for achieving 'Health for All by 2020'.
JANASHREE BIMA YOJANA
All the Khadi artisans are covered under centralized
scheme known as Khadi Karigar Janashree Bima Yojana. This scheme was launched
on 15th August, 2003. At the initiative of Khadi & Village
Industries Commission (KVIC), benefits of Janashree Bima Yojana have been
extended to Khadi Karigars at a subsidized premium of only Rs. 12.50 per annum.
The balance premium is shared by Khadi Institution and KVIC and Rs.50 is paid
from social security funds.
AAM AADMI BIMA YOJANA
The scheme is to cover rural landless households which
has no insurance cover at all. The head of the family or one earning member in
the family is insured. The Central Government bears 50 per cent of the premium
of Rs. 200 per year per person.
MICRO FINANCE &
ITS REGULATION IN INDIA
Microfinance is an economic development tool whose
objective is to assist the poor to work their way out of poverty. It covers a
range of services which include, in addition to the provision of credit, many
other services such as savings, insurance, money transfers, counseling, etc.
A microfinance institution acquires permission to lend
through registration. Each legal structure has different formation requirements
and privileges. Microfinance institutions in India are registered as one of the
following entities:
*
Non
Government Organizations engaged in microfinance (NGO-MFIs), comprised of
Societies and Trusts
*
Cooperatives
registered under the conventional state-level cooperative acts, the national
level multi-state cooperative legislation Act (MSCA 2002 ), or under the new
state-level mutually aided cooperative acts (MACS Act)
*
Section
25 Companies (not-for-profit)
*
For-profit
Non-Banking Financial Companies (NBFCs)
TPDS
In 1997 the system
of PDS was changed to a new system called Targeted Public Distribution System
(TPDS). The basic objective of TPDS is to provide foodgrains to the poor
families on subsidised prices. The TPDS has a hidden objective of income
redistribution by providing food cheaper to the poor than to the non-poor. This
means that effective and transparent functioning of TPDS is an important tool
of poverty eradication through increased calorie intake among the poorer
families.
KRISHI VIGYAN KENDRA
Indian council of
Agriculture Research set up KVK (Agriculture Science Centers) as innovative
institution for imparting vocational training to practicing farmers and field
level extension functuionaries. The first KVK was established at Pondichery
in 1974. Authority of the KVK's is vested in the ICAR having it's headquarter
at Krishi Bhawan, New Delhi. The Council is a society registered under the
Societies Registration Act 1860 of India. India has 553 KVKs under the perview
of ICAR.
GREEN GDP
The green gross
domestic product (green GDP) is an index of economic growth with the
environmental consequences of that growth factored in. Green GDP monetizes the
loss of biodiversity, and accounts for costs caused by climate change. Some
environmental experts prefer physical indicators (such as "waste per
capita" or "carbon dioxide emissions per year"), which may be
aggregated to indices such as the "Sustainable Development Index".
NEW ECONOMIC POLICY 1991
The New Economic
Policy announced on July 24th 1991 by the Congress Government included
structural adjustment measures including the devaluation of rupee, increase in
interest rates, reduction in public investment and expenditure, reduction in
public sector food and fertilizer subsidies, increase in imports and foreign
investment in capital intensive and high-tech activities. New Economic Policy
of 1991 includes globalization, liberalization and privatization
(Disinvestment)
INTEGRATED ENERGY
POLICY
An Integrated Energy Policy has been designed to
ensure energy supply from alternate sources at least costs and produce an
environment that will ensure optimal use while meeting energy need for
rapidly growing economy. The policy also addresses energy efficiency by 20% per
unit of GDP over next ten years. Several initiatives have been taken up by
which power generation plants being mandated to improve efficiency from 30-34%
to 38-40%, specific energy consumption norms have been notified for
industries.
From long term
prospective and keeping in mind the need to maximally develop domestic
supply options, the policy provides adequate emphasis
on renewable and nuclear sources of energy. Solar mission for generating 20 GW
by 2020 have been launched. Several agreements with countries for supply of
uranium and power reactors have been initiated. A National Energy Fund set up
to finance energy R&D. The other forms of renewable energy including
Hydrogen and Fuel Cell have also been provided the necessary thrust.
DTC
The New Direct Tax Code (DTC) is said to replace the
existing Income Tax Act of 1961 in India. The direct tax code seeks to
consolidate and amend the law relating to all direct taxes, namely, income-tax,
dividend distribution tax, fringe benefit tax and wealth-tax so as to establish
an economically efficient, effective and equitable direct tax system which
will facilitate voluntary compliance and help increase the tax-GDP ratio.
Another objective is to reduce the scope for disputes and minimize litigation.
DTC removes most of the categories of exempted income.
Unit Linked Insurance Plans (ULIPs), Equity Mutual Funds (ELSS), Term deposits,
NSC (National Savings certificates), Long term infrastructures bonds, house
loan principal repayment, stamp duty and registration fees on purchase of
house property will lose tax benefits.
LIQUIDITY MANAGEMENT BY
RBI
The Reserve Bank of India (RBI) and its attempt at
managing liquidity, inflation and growth is done through its monetary policy.
There are five main policy tools that RBI uses.
Cash reserve ratio (CRR) is the percentage of a bank's time and demand
liabilities that needs to be kept as cash with RBI. RBI can vary the percentage
up to a limit. A high percentage means banks have less to lend and hence,
curbs liquidity and a low CRR does the opposite. RBI can use the CRR to tighten
or ease liquidity by increasing or decreasing it as the situation demands.
Open market operations refers to buying and selling of government securities
by RBI to regulate the short-term money supply. If RBI wants to induce
liquidity or more funds in the system, it will buy government securities and
inject funds into the system, and if it wants to curb the amount of money out
there it will sell these to the banks thereby reducing the amount of cash that
banks have.
Statutory Liquidity Ratio-Banks are required to invest a percentage of their
time and demand liabilities in government approved securities, this is referred
to as the SLR.
SLR
SLR is Statutory Liquidity Ratio. It's the percentage
of Demand and Time Maturities that banks need to have in any or combination of
the following forms:
i) Cash
ii) Gold valued at a price not exceeding the current
market price,
iii) Unencumbered approved securities (G Secs or
Gilts come under this) valued at a price as specified by the RBI from time to
time.
The maximum limit
of SLR is 40% and minimum limit of SLR is 24%. It's 24% now. This restriction
is imposed by RBI on banks to make funds available to customers on demand as
soon as possible. Gold and G Secs (or Gilts) are included along with cash
because they are highly liquid and safe assets.
The RBI can
increase the SLR to contain inflation, suck liquidity in the market, to tighten
the measure to safeguard the customers' money.
REPO
RATE & REVERSE REPO RATE
The rate at which
the RBI lends money to commercial banks is called repo rate. It
is an instrument of monetary
policy. Whenever banks have any
shortage of funds they can borrow from the RBI.
Reverse Repo rate is the rate at which the RBI borrows
money from commercial banks. Banks are always happy to lend money to the RBI
since their money is in safe hands with a good interest.
An increase in
reverse repo rate can prompt banks to park more funds with the RBI to earn
higher returns on idle cash. It is also a tool which can be used by the RBI to
drain excess money out of the banking system.
OMO
The buying and selling of government securities in the
open market in order to expand or contract the amount of money in the banking
system. Purchases inject money into the banking system and stimulate growth
while sales of securities do the opposite.
The Reserve Bank of India considers Open Market
Operation, or OMO, as its principal tool to manage liquidity. An OMO serves two
primary goals—it infuses liquidity in the banking system without requiring the
central bank to change its monetary policy and it checks yields on government
bonds, the benchmark for overall credit market, from swinging wildly. OMO
becomes even more important in a country like India where the central bank is
also the manager of government debt. An OMO carried out during times of high
inflation, such as in India now, adds to the price rise. An OMO as a tool is
more effective in an economy where there is a spectre of deflation like in the
United States and some western economies.
INFLATION
& ITS TYPES
Inflation is
commonly understood as a situation of substantial and rapid general increase in
the price level and consequent fall the value of money over a period of time.
Inflation means persistent rise in the general level of prices. Inflation is a
long term operating dynamic process. By and large, inflation is also a monetary
phenomenon. It is usually characterized by an overflow of money and credit.
Types
of Inflation.
On different grounds, economists have classified
inflation into various types. According to the rate inflation there are four
types of inflation.
•
Moderate
Inflation
•
Running
Inflation
•
Galloping
Inflation
•
Hyper
Inflation
Moderate inflation is a mild and tolerable form of inflation. It occurs
when prices are rising slowly. When the rate of inflation is less than 10 per
cent annually, or it is a single digit annual inflation rate, it is considered
to be moderate inflation in the present day economy.
When the movement
of price accelerates rapidly, running inflation emerges. Running inflation may
record more than 100 per cent rise
in prices over a decade. Thus, when prices rise by more
than 10 per cent a year, running
inflation occurs.
When prices are
rising at double or triple digit rates of 20,100 or 200 per cent a year, the
situation may be described as galloping
inflation. Galloping inflation is
really a serious problem. It causes economic distortions and disturbances.
In the case of hyper inflation prices
rise is very severe. It is over 1000 per cent per year. There is at least a 50
per cent price rise in a month, so that in a year it rises to about 130 per
cent times. Hyper inflation is a monetary disease.
ROLE
OF SEBI
SEBI is regulator
to control Indian capital market. Since its establishment in 1992, it is doing
hard work for protecting the interests of Indian investors. SEBI gets education
from past cheating with naive investors of India. Now, SEBI is stricter with
those who commit frauds in capital market.
SEBI has power to
make new rules for controlling stock exchange in India.
SEBI has power to
provide license to dealers and brokers of capital market. If SEBI sees that any
financial product is of capital nature, then SEBI can also control to that product
and its dealers.
SEBI sees whether
merger or acquisition is for development of business or to harm capital market.
MUTUAL
FUNDS & ULIPS
ULIPs and mutual
fund are similar type of investment but not same. Mutual funds are more into
investments; whereas ULIPs are into investments as well as insurance.
The
basic difference evolves regarding its regulation. The ULIPs are regulated by
the IRDA, whereas mutual funds are regulated by the SEBI.
The main focus of mutual funds is on
low costs while the main focus for the ULIPs lies in the better performance and
the distribution of its products. The other aspect includes flexibility, in
this case a ULIP allows us to increase our life cover and at the same time are
premiums rates remain the same. This is achieved by reducing our investments.
On the other hand there is not any life cover in mutual funds. The only option
we are left is purchasing a new insurance policy.
The other important
point to be focused involves that even if the costs of the investments in ULIPs
is more compared to Mutual funds, the ULIPs offer better products which are
suited for long term investments, whereas mutual fund products can only be used
for sole purposes or short term returns.
Mutual Funds and
ULIPs both are subject to market risks; if something unfortunate happen to
investor, family or nominee will receive only fund value. On the other hand
ULIPs will give your family guaranteed sum assured in case of death of the
policy holder.
As these
investments are the most preferred investment options to invest. even a small
drawback somewhere makes a strong impression in our minds. So in the case of
ULIPs vs Mutual funds if we notice, ULIPs are more preferable even if both
stand at the same level. Somewhere when we equate both the investment options
ULIPs are more beneficial as well as flexible as per our requirements.