TAG: GS 3 INDIAN ECONOMY

CONTEXT: The government has reconstituted the ministerial group of the GST Council that was tasked with recommending the simplification of the complex tax structure and a rejig of its multiple rates.

EXPLANATION

• Since the beginning of the introduction of the GST tax regime, there has been a call to rationalize the tax structure.
• The group of ministers (GoM) on GST rate rationalisation, headed by former Karnataka CM Basavaraj Bommai, had been in suspended mode since its formation in 2021.
• The convenor’s role for the seven-member GoM has been assigned to Uttar Pradesh Finance Minister Suresh Kumar Khanna.

CURRENT GST STRUCTURE

• The current GST structure has a total of four tax slabs, including 0%, 5%, 12%, 18%, and 28%.
• There are different forms of taxes levied under GST:

Central GST (CGST)

This tax is imposed on the movement of goods and services within the state but is appropriated by the central govt.

State GST (SGST)

It is the tax levied by the state government and appropriated in the state where the transaction occurs or where the goods are sold and consumed.

ntegrated GST (IGST)

This tax is imposed on all the goods and services between two or more states or union territories.

Union Territory GST (UTGST)

Imposed on supply of goods and services within the Indian Union Territories.

NEED FOR RATIONALISATION

• Ease-of-doing-business is needed as the current structure is quite complicated. For example, there are some items whose tax rates depend on their packaging, like specified food products, or selling prices.
• To reduce the number of litigations arising from classification disputes.
• GST is an indirect tax, which means that it is regressive in nature. Lower tax rates on some of the basic items would ease the pressure on common man.
• The frequent changes in rates for different goods and services in the past have created uncertainty for businesses.
• The 15th Finance Commission had observed that the GST’s revenue neutrality was compromised due to multiple tax rate reductions.

IMPLICATIONS

• Improved compliance: As too many tax rates lead to tremendous compliance-related problems.
• Improved tax collection: Higher tax rates doesn’t always imply higher revenue collection, going by the Laffer curve theory. This is proven by the fact that with reduction in tax rates on some items in the past, tax collection has only increased.

CONCLUSION

• Rate rationalization in the GST regime remains an ongoing challenge.
• There is a need for careful consideration to strike a balance between revenue generation and easing the compliance burden.

Source:https://www.thehindu.com/business/centre-rejigs-gom-to-simplify-gst-rates/article67635249.ece

THE POLITY AND GOVERNANCE

1. CAN NOT FORCE VACCINATION: SUPREME COURT

THE CONTEXT: The Supreme Court has ruled that no individual can be forced to take any vaccination but stated that the government can impose some restrictions in the interest of the community.

THE EXPLANATION:

• The Supreme Court ruled that no individual can be forced to get vaccinated against Covid-19 but added that “as long as there is a risk of spreading the disease, there can be restrictions placed on individuals’ rights in larger public interest”.
• A bench of Justices L Nageswara Rao and B R Gavai delivered the judgement on the plea challenging mandatory Covid-19 vaccine mandates as unconstitutional, “Considering bodily autonomy, bodily integrity is protected under article 21. No one can be forced to get vaccinated. (But) government can regulate in areas of bodily autonomy.”
• Observing that restrictions on unvaccinated individuals imposed through various vaccine mandates by State Governments/Union Territories cannot be said to be proportionate, the court clarified that the suggestion to review the vaccine mandates imposed is limited to the present situation alone.
• The personal autonomy of an individual, which is a recognized facet of the protections guaranteed under Article 21, encompasses the right to refuse to undergo any medical treatment in the sphere of individual health,” said a bench of Justices L Nageswara Rao and B R Gavai in the judgment.
• The bench also reiterated that subject to the protection of privacy of individual subjects, with respect to ongoing clinical trials and trials that may be conducted subsequently for COVID-19 vaccines, all relevant data required to be published under the extant statutory regime must be made available to the public without undue delay.
• The bench said that no data has been placed by the Union of India or the States controverting the material placed by the petitioner in the form of emerging scientific opinion which appears to indicate that the risk of transmission of the virus from unvaccinated individuals is almost on par with that from vaccinated persons.
• In light of this, restrictions on unvaccinated individuals imposed through various vaccine mandates by State Governments/Union Territories cannot be said to be proportionate.
• The bench also approved the vaccination policy for children but directed that the clinical trial data be made public at the earliest.

2. THE DEBATE ON THE NATIONAL LANGUAGE

THE CONTEXT: The “national language” debate came back in focus recently, as Hindi actor Ajay Devgn took to Twitter to react to a comment by Kannada actor Kiccha Sudeep.

THE EXPLANATION:

• Under Article 343 of the Constitution, the official language of the Union shall be Hindi in the Devanagari script. The international form of Indian numerals will be used for official purposes.
• The Constituent Assembly was bitterly divided on the question, with members from States that did not speak Hindi initially opposing the declaration of Hindi as a national language. Proponents of Hindi were insistent that English was the language of enslavement and that it should be eliminated as early as possible. Opponents were against English being done away with, fearing that it may lead to Hindi domination in regions that did not speak the language.
• There were demands to make Sanskrit the official language, while some argued in favour of ‘Hindustani’. There were differences of opinion over the script too. When opinion veered towards accepting Hindi, proponents of the language wanted the ‘Devanagari’ script to be adopted both for words and numerals. Some advocated that the Roman script be adopted, as it would facilitate faster learning of Hindi. The predominant opinion was in favour of adopting ‘international numerals’ (the Arabic form used and understood throughout the world) instead of Hindi numerals.
• Ultimately, it was decided that the Constitution will only speak of an ‘official language’. And that English would continue to be used for a period of 15 years. The Constitution said that after 15 years, Parliament may by law decide on the use of English and the use of the Devanagari form of numbers for specified purposes.

WHAT IS THE EIGHTH SCHEDULE?

• The Eighth Schedule contains a list of languages in the country. Initially, there were 14 languages in the schedule, but now there are 22 languages. There is no description of the sort of languages that are included or will be included in the Eighth Schedule. There are only two references to these languages in the text of the Constitution.
• One is in Article 344(1), which provides for the formation of a Commission by the President, which should have a chairman and members representing these scheduled languages. The purpose of the Commission is to make recommendations for the progressive use of Hindi for official purposes of the Union and for restricting the use of English.
• The second reference, found in Article 351, says it is the Union government’s duty to promote the spread of Hindi so that it becomes “a medium of expression for all elements of the composite culture of India” and also to assimilate elements of forms and expressions from Hindustani and languages listed in the Eighth Schedule.

WHAT WERE THE 1965 PROTESTS ABOUT?

• The Official Languages Act, 1963 was passed in anticipation of the expiry of the 15-year period during which the Constitution originally allowed the use of English for official purposes. Its operative section provided for the continuing use of English, notwithstanding the expiry of the 15-year period. This came into force from Jan 26, 1965, a date which marked the completion of 15 years since the Constitution was adopted.
• Jawaharlal Nehru had given an assurance in 1959 that english would remain in official use and as the language of communication between the Centre and the States. The Official Languages Act, 1963, did not explicitly incorporate this assurance, causing apprehensions in some States as the January 1965 deadline neared. At that time, Prime Minister Lal Bahadur Shastri reiterated the government’s commitment to move towards making Hindi the official language for all purposes.
• In Tamil Nadu, then known as Madras, the prospect of the use of Hindi as the medium of examination for recruitment to the Union public services created an apprehension that Hindi would be imposed in such a way that the future employment prospects of those who do not speak Hindi will be bleak. With the Congress government in the State taking the view that the people had nothing to fear about, protests broke out in January 1965.
• It took a violent turn after more and more student activists joined the protest and continued even after key Dravida Munnetra Kazhagam (DMK) leaders were arrested. More than 60 people died in police firing and other incidents as the protests went on for days. The agitation died down later, but by then the Congress at the Centre realised the sensitivity of the language issue among Tamil-speaking people. When the Official Language Rules were framed in 1976, it was made clear that the Rules apply to the whole of India, except Tamil Nadu.

WHAT IS THE THREE-LANGUAGE FORMULA? Since the 1960s, the Centre’s education policy documents speak of teaching three languages — Hindi, English and one regional language in Hindi-speaking States, and Hindi, English and the official regional language in other States. In practice, however, only some States teach both their predominant language and Hindi, besides English. In States where Hindi is the official language, a third language is rarely taught as a compulsory subject. Tamil Nadu has been steadfastly opposing the three-language formula and sticks to teaching Tamil and English. It argues that those who need to know Hindi can learn on their own.

THE INTERNATIONAL RELATIONS

3. INDIA-DENMARK TIES

THE CONTEXT: India and Denmark on 3 May 2022, agreed to further strengthen the Green Strategic Partnership with a focus on green hydrogen, renewable energy and wastewater management.

THE EXPLANATION:

• A number of agreements covering sectors such as green shipping, animal husbandry and dairying, water management, energy, cultural exchange were inked after the bilateral talks.
• The two Prime Ministers welcomed the Letter of Intent on the establishment of a Centre of Excellence on Green Shipping, which will further strengthen bilateral maritime cooperation.
• The two leaders also agreed to expand the cooperation on agriculture by a Joint Declaration of Intent establishing among others a Centre of Excellence on Dairy.
• India and Denmark also confirmed their continued collaboration in the field of antimicrobial resistance.
• India conveyed its acceptance of the Danish invitation to join the International Center for Antimicrobial Resistance Solutions (ICARS) as Mission Partner.

4. INDIA EXTENDS MORE ASSISTANCE TO SRI LANKA

THE CONTEXT: On 2 April 2022, India had extended its current credit line by a further $200 million to replenish Sri Lanka’s rapidly depleting fuel stocks.

THE EXPLANATION:

• India has committed more than $3 billion to debt-ridden Sri Lanka in loans, credit lines and credit swaps since January this year,as the island nation tries to navigate through its worst economic crisis since independence.
• The ongoing crisis in Sri Lanka is caused in part by a lack of foreign currency, which has meant that the country cannot afford to pay for imports of staple foods and fuel, leading to acute shortages and very high prices.
• A $400-million currency swap with the Reserve Bank of India, extended early this year, was on April 18 extended by another three months. A billion-dollar credit line for essential imports is operational and around 16,000 MT of rice has been supplied under it so far.
• India has helped Sri Lanka defer repayment of loans totalling $1 billion under the Asian Clearing Union. Further, 400,000 MT of fuel has been delivered to Sri Lanka through a $500 million credit facility.
• “Multi-pronged assistance provided by India testifies to the importance Government of India attaches to the welfare of the people of Sri Lanka and is guided by the twin principles of ‘Neighbourhood First’ and S.A.G.A.R (Security and Growth for All in the Region)”.
• Sri Lanka’s economic crash intensified from the beginning of this year, with the country’s foreign reserves plunging to barely a couple of billion dollars, owing to an acute balance of payments crisis in recent years.
• The crisis manifested in severe shortages of food, fuel and medicines, as the country experiences record inflation, that hit nearly 30% in April. Consequently, the ruling Rajapaksa administration’s popularity has plummeted over the last few months, with citizens demanding that President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa quit.
• For almost a month now, demonstrators have been gathering at Colombo’s seafront, protesting every day against the government’s “failed” crisis response. Students, professionals, business people, worker unions, and scores of children, among others, can be spotted at the daily rallies, chanting anti-government slogans.

THE ECONOMIC DEVELOPMENTS

5. GST SIGNALS: ON APRIL GST COLLECTIONS

THE CONTEXT: The first month of the new financial year has yielded a sharp surge in Goods and Services Tax (GST) collections, taking them well past ₹1.67 lakh crore — the highest, by a wide margin, in the five years since the levy was introduced by subsuming myriad State and central duties.

THE EXPLANATION:

• GST revenues have scaled fresh highs in three of the last four months, having hit ₹1.41 lakh crore in January and ₹1.42 lakh crore in March.
• Overall GST revenues had grown 30.8% in 2021-22 to ₹14.9 lakh crore, despite slipping below the ₹1 lakh crore mark for two months when the second COVID-19 wave raged.
• The 20% year-on-year revenue uptick this April could be seen as a comforting signal about 2022-23 revenue prospects for policymakers at the Centre and the States, whose treasuries are fretting about the prospect of income falling off a cliff from this July when the assured compensation for implementing the GST comes to an end.
• Compensation cess levies will persist till at least March 2026, but they will be used to pay off special borrowings of 2020-21 to bridge revenue shortfalls and recompense States.
• The Centre needs a mechanism to expedite the payment of outstanding compensation dues to States (₹78,700-odd crore, or four months of dues). The Finance Ministry has blamed ‘inadequate balance’ in the Compensation Cess fund and promised to pay up ‘as and when’ the requisite cess accrues.
• The Centre, which called the April inflows a sign of ‘faster recovery’, must also state whether these revenue levels warrant a rethink of its concern that the effective GST tax rate had slipped from the revenue-neutral rate envisaged at its launch.
• A clear acknowledgment is needed that the higher revenues are not solely driven by a rebound in economic activity. Persistently higher input costs facing producers for a year and their accelerating pass-through to consumers, seen in higher retail inflation, have contributed too, along with tighter input credit norms introduced in the Union Budget.
• That revenue growth from goods imports has outpaced domestic transactions significantly in recent months, also suggests India’s consumption story is yet to fully resurface. Urgent policy action is needed to rein in the inflation rally and bolster consumer sentiment, so as not to sink hopes of more investments, faster growth and even greater revenues.

6. NO SHORT CIRCUITS: ON ELECTRIC VEHICLES CATCHING FIRE

THE CONTEXT: A spate of incidents related to the burning of electric vehicles (EV) has resulted in the Union government announcing an expert panel to investigate the battery explosions causing them and a few manufacturers recalling batches of electric scooters after some caught fire.

THE EXPLANATION:

• EVs have increasingly become a viable transportation device, with more than 11 lakh electric/battery-operated vehicles registered in India (Vahan database, April 2022).
• The increase in the utilisation of EVs has also been largely helped by the significant reduction in costs of lithium-ion batteries that have fallen by an estimated 89% since 2010. With climate change concerns driving governments, including India’s, to incentivize the shift to EVs, their manufacture for commercial use has undergone an acceleration with an increase in indigenous companies in the Indian market as well.
• The enhanced use of EVs and utilization of the underlying technology is welcome as, despite the institution of fuel emission norms and building these into fossil fuel-driven vehicles, the shift to EVs from petrol and diesel ones is expected to gain significant net environmental benefits. But it must also be remembered that the Li-ion battery packs that form the core of the technology, are sophisticated devices and there should be no compromise on the inbuilt safeguards.
• Battery fires occur due to the convergence of heat, oxygen and fuel, and the controlled manufacturing of devices is specifically required to prevent these.
• Engineering higher safety into EVs can result in higher costs but the smooth functioning of Li-ion batteries without accidents is reliant on the absence of “shoddy engineering” and “cutting corner approaches”.
• With long-term device changes in Li-ion batteries such as the use of solid-state electrolytes, special safety switches, etc. still some time away in implementation, the onus is on manufacturers and regulators to ensure that testing and certification standards related to battery management systems such as devices that prevent accidental shorting of the cells, and thermal management solutions among others are met in existing EV systems and supply chains.
• The Ministry of Road Transport will issue guidelines for EVs which would include tests for compliance with specific safety norms. While the regulation of a fledgling albeit growing sector that has shown a lot of promise but requires adequate safety norms to be put in place is an imperative, manufacturers and other companies in the EV supply chain should also proactively work in recalling defective batches of vehicles and ensuring safety compliance to prevent the recurrence of mishaps.

THE SCIENCE AND TECHNOLOGY

7. NASA TO SHUT DOWN SOFIA TELESCOPE

THE CONTEXT: NASA and the German Aerospace Center are permanently shutting down the Stratospheric Observatory for Infrared Astronomy (SOFIA), a telescope on an airplane that has been scrutinized for years for its high cost and low scientific output.

THE EXPLANATION:

The organisation announced April 28, 2022, it would shut down the operations of the Stratospheric Observatory for Infrared Astronomy (SOFIA) mission by September 30, 2022.

ABOUT SOFIA –

• SOFIA is a 2.7-meter infrared telescope sitting inside a Boeing 747 SP airplane, flying at an altitude of 38,000-45,000 feet above the surface.
• It’s the second-most expensive astrophysics mission, according to NASA’s Financial Year 2023 budget estimates report. The document mentioned a 2020 decadal survey report, which concluded that SOFIA’s science productivity did not justify its operating costs.
• SOFIA is a collaboration between NASA and the German Space Agency (DLR). “SOFIA is globally unique and, with the start of regular operations in 2014, has been successfully used for scientific research during a total of approximately 800 flights.
• Since its inception in 2014, SOFIA has been collecting data to understand star birth and death and the formation of new solar systems. It has also been keeping a close eye on planets, comets and asteroids in our solar system, nebulas and galaxies, celestial magnetic fields and black holes at the centre of galaxies.
• SOFIA was designed to observe cosmic objects in far-infrared wavelengths. This allows researchers to watch star formation by looking through huge, cold clouds of gas, according to NASA.
• NASA’s decision to shut down SOFIA closely follows the White House’s 2023 federal budget request released on 28 March 2022, which did not allocate money to SOFIA.

IMPORTANT DISCOVERIES:

• The project has generated 309 scientific studies, according to information on SOFIA’s website. In 2020, NASA announced that SOFIA discovered water molecules (H2O) on the sun-facing side of the Moon.
• The site is the Clavius Crater, located in the Moon’s southern hemisphere. The telescope’s data suggested that the site contained water in concentrations of 100 to 412 parts per million — roughly equivalent to a 12-ounce bottle [355 millilitres] of water, according to NASA.
• India’s Chandrayaan-1 mission and NASA’s ground-based Infrared Telescope Facility found evidence of hydration in the sunnier regions, they couldn’t confirm whether hydrogen was in the form of H2O or OH, the report stated.
• In 2019, SOFIA also discovered helium hydride — the first molecule formed in the Universe almost 14 billion years ago, the German space agency said.

THE PRELIMS PRACTICE QUESTIONS

QUESTION OF THE DAY

Q.Consider the following statements:

1. Even if the bill after reconsideration is passed by the state legislature with or without amendments, the governor is not bound to give his assent to the bill.
2. Constitution does not lay down any time frame for the Governor to take action on the bill passed by the state legislature.

Which of the statements given above is/are correct?

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

ANSWER FOR 1 & 2 MAY 2022

Answer: B

Explanation:

World Meteorological Organization (WMO)

• It is an intergovernmental organization with a membership of 193 Member States and Territories.
• It originated from the International Meteorological Organization (IMO), the roots of which were planted at the 1873 Vienna International Meteorological Congress.
• Established by the ratification of the WMO Convention on 23 March 1950, WMO became the specialized agency of the United Nations for meteorology (weather and climate), operational hydrology and related geophysical sciences a year later.
• The Secretariat, headquartered in Geneva, is headed by the Secretary-General.
• Its supreme body is the World Meteorological Congress.

THE INTRODUCTION: Global Industrial activity continued to be affected by the disruptions caused by the COVID-19 pandemic. While the Indian industry was no exception to these disruptions, its performance has improved in 2021-22. Gradual unlocking of the economy, record vaccinations, improvement in consumer demand, continued policy support towards industries by the government in the form of Atma Nirbhar Bharat Abhiyan, and further reinforcements in 2021-22 have led to an upturn in the performance of the industrial sector. The introduction of the production linked incentive scheme (PLI) to encourage scaling up of industries and a major boost provided to infrastructure-both physical as well as digital– combined with continued measures to reduce transaction costs and improve ease of doing business, would support the pace of recovery.

INDEX OF INDUSTRIAL PRODUCTION (IIP)

• The impact of the pandemic on the industrial sector is reflected in the negative growth of 8.4 percent in 2020-21. From April-November 2021-to 22 the IIP grew by 17.4 percent as compared to (-15.3) percent in the corresponding period of the previous year.
• The supply-side measures as also steps to bolster demand, taken to address the contraction, are responsible for the significantly improved performance of the industrial sector in 2021-22.
• In November 2021 the IIP index grew by 1.4 percent with the mining sector recording a growth of 5.0 percent followed by electricity at 2.1 percent and manufacturing at 0.9 percent.

EIGHT CORE INDEX (ICI)

• The monthly Index of Eight Core Industries (ICI) measures the collective and individual performance of production in selected eight core industries like Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, and Electricity. This is an index of the eight most fundamental industrial sectors of the Indian economy and comprises 40.27 percent of the weight in IIP.
• The growth rate of the ICI index during the period of April-November 2021-22 was 13.7 percent as compared to (-)11.1 percent in the corresponding period of the last financial year. This acceleration in ICI is mainly driven by improved performance in steel, cement, natural gas, coal, and electricity. Fertilizers and crude oil registered a negative growth of 0.6 percent and 2.7 percent respectively.

GROSS FIXED CAPITAL FORMATION

• Gross fixed capital formation (GFCF) is the gross addition to fixed assets like machinery and equipment, intangible assets and indicates the state of investments in the economy. During 2019-20, the share of the industrial sector in total GFCF in the economy (at current prices) was recorded at 30.1 percent, which is slightly lower than 31 percent in the previous financial year.
• Within the industrial sector, the share of manufacturing in GFCF was 51 percent, followed by electricity at 23 percent, construction at 21 percent, and mining with 5 percent. While aggregate GFCF (at constant prices) grew by 9.9 percent and industrial GFCF grew by 12.4 percent in 2018-19, it grew by 5.4 percent and 3.7 percent respectively in 2019-20.
• During 2019-20, GFCF in the mining and electricity sectors registered a negative growth of 12.9 percent and 6 percent respectively, but the GFCF grew by 10.2 and 4.4 percent in the manufacturing and construction sectors respectively on a yo-y basis.

CREDIT IN INDUSTRY

• Gross bank credit to the industrial sector, recorded a growth of 4.1 percent in October 2021 (Y-o-Y basis) compared to a negative growth of 0.7 growth in October 2020.
• The share of industry in non-food credit stood at 26 percent in October 2021. Certain industries such as mining, textiles, petroleum, coal products and nuclear fuels, rubber, plastic, and infrastructure have shown consistent improvement in credit growth.

FDI IN INDUSTRIES

• India registered its highest-ever annual FDI inflow of US$ 81.97 billion (provisional) in 2020-21 reflecting a growth of 10 percent as compared to the previous year.
• The increase has been on the back of growth of 20 percent in 2019-20. In the year 2021-22, FDI inflow grew by 4 percent in the first six months to reach US$ 42.86 billion as compared to US$ 41.37 billion for the same period of last year.
• Over the last seven financial years (2014-21), India received FDI inflow worth US$ 440.27 billion which is nearly 58 percent of the FDI received by the country in the last 21 years(US$ 763.83 billion).

PERFORMANCE OF CENTRAL PUBLIC SECTOR ENTERPRISES

• CPSEs are an important constituent of the Indian industry. As of 31.03.2020, 256 CPSEs were operational. The overall net profit of operating CPSEs during 2019-20 stood at Rs. 93,295 crore Contribution of all CPSEs to the central exchequer by way of excise duty, GST, corporate tax, dividend, etc. stood at Rs. 3,76,425 crore.
• The CPSEs across sectors employed 14,73,810 persons, of which 9,21,876 were regular employees.
• By Union Budget 2021-22 announcement, the government has approved a policy of strategic disinvestment of public sector enterprises that will provide a clear roadmap for disinvestment in all non-strategic and strategic sectors.
• The non-strategic CPSEs will be privatized or otherwise shall be closed. Thus, the policy on public sector enterprises provides a clear path for disinvestment in all nonstrategic and strategic sectors and strengthens the idea of Minimum Government – Maximum Governance.

CORPORATE PERFORMANCE

• With economic recovery, concomitant improvement in demand and improved business sentiments have had a positive effect on the performance of the corporate sector.
• In response to the favorable base effect, sales of 1,687 listed manufacturing companies recorded steady and broad-based growth of 34.0 percent in Q2: FY22 as compared to (-)4.3 percent growth in Q2: FY21, on an annual (y-o-y) basis.

SECTOR-WISE PERFORMANCE AND ISSUES IN THE INDUSTRY

Steel: The performance of the steel industry is pivotal for the growth of the economy. Despite being hit by COVID-19, the steel industry has bounced back with cumulative production of crude and finished steel in 2021-22(April-October) at 66.91 MT and 62.37 MT, an increase of 25.0 percent and 28.9 percent respectively.

Coal: Coal is the most important and abundant fossil fuel in India and accounts for 55 percent of the country’s energy needs. Coal production increased by 12.24 percent in April-October 2021 as compared to (-) 3.91 percent in April-October 2020. Overall production of raw coal in India during the year 2020-21 was 716.08 million tonnes (provisional) as compared to 730.87 million tonnes achieved in the previous year 2019-20.

Micro Small Medium Enterprise: Micro, Small & Medium Enterprises(MSMEs) contribute significantly to the economic and social development of the country by fostering entrepreneurship and by generating employment opportunities. The relative importance of MSMEs can be gauged from the fact that the share of MSME GVA in total GVA (current prices) for 2019-20 was 33.08 percent. The CHAMPIONS portal is an ICT-based technology system for making the smaller units big by helping and hand-holding them.

The key features of the portal include:

• Information dissemination: Regular updates on recent development in the MSME sector.
• To resolve the grievances in a fast track manner, all Nationalised Banks, a good number of Private/Regional Rural Banks, State Financial Corporations, Central Government Ministries/ Departments, State Governments, and CPSEs have been boarded on the portal.
• Scheme/Programme-wise mapping of officials of the Ministry for fast-track responses to grievances.
• Integration with various portals such as MSME Samadhaan, Udyam Registration, CPGRAM, etc.

Textiles: Textile industry is the second-largest employment generator in the country, next only to agriculture. In the last decade, close to Rs. 203,000 crores have been invested in this industry with direct and indirect employment of about 105 million people, a major part of which is women. Despite the industry being deeply affected by the lockdown, it has shown a remarkable recovery with a positive contribution to growth, as reflected by IIP, of 3.6 percent from April-October 2020.

Electronics Industry: Government accords high priority to electronics hardware manufacturing. The government has therefore notified the National Policy on Electronics 2019 (NPE 2019) on 25.02.2019 to position India as a global hub for Electronics System Design and Manufacturing (ESDM) by encouraging and driving capabilities in the country for developing core components, including chipsets. Additionally, NPE 2019 attempts to catalyze the growth of the Indian electronics ecosystem through the

• Production Linked Incentive (PLI) Schemes for Large Scale Electronics Manufacturing
• PLI Scheme for IT Hardware
• Scheme for Promotion of Manufacturing of electronic components and Semiconductors (SPECS)
• Modified Electronics Manufacturing Clusters 2.0 (EMC 2.0).

Recently, the government has approved an outlay of Rs. 76,000 Crore (>US$ 10 Bn) for the development of the Semiconductors and Display Manufacturing Ecosystem. The government’s intervention to boost this industry has come at a time when the global economy is facing an acute shortage of semiconductors due to severe disruptions in supply chains.

Pharmaceuticals: Indian Pharmaceutical industry ranks third in the world in pharmaceutical production by volume. During 2020-21, total pharma export US$ 24.4 Bn against the total pharma import of US$7.0 Bn. The initiatives taken by the government to address the requirement of the pharmaceutical and medical devices industry are as follows:

• Bulk Drug Parks that envisages the creation of world-class infrastructure facilities.
• Bulk drugs have been approved for the promotion of domestic manufacturing of 53 critical APIs.
• Production linked incentive (PLI) scheme for Pharmaceuticals.
• Promoting Domestic Manufacturing of Medical Devices was approved on 20th March 2020.

INFRASTRUCTURE

NATIONAL INFRASTRUCTURE PIPELINE (NIP)

• To achieve a GDP of $5 trillion by 2024-25, India needs to spend about $1.4 trillion over these years on infrastructure. During FYs 2008-17, India invested about US$1.1 trillion in infrastructure. However, the challenge is to step up infrastructure investment substantially.
• Keeping this objective in view, National Infrastructure Pipeline (NIP) was launched with a projected infrastructure investment of around Rs. 111 lakh crore (US$ 1.5 trillion) during FY 2020-2025 to provide world-class infrastructure across the country and improve the quality of life for all citizens.
• It also envisages improving project preparation and attracting investment, both domestic and foreign in infrastructure.

NATIONAL MONETISATION PIPELINE (NMP)

• A robust asset pipeline has been prepared to provide a comprehensive view to investors and developers of the investment avenues in infrastructure. The pipeline includes a selection of de-risked and brownfield assets with a stable revenue generation profile (or long rights) which will make for an attractive investment option.
• Total indicative value of NMP for core assets of the Central Government has been estimated at Rs 6.0 lakh crore over 4 years (5.4 percent of total infrastructure investment envisaged under NIP).

ROAD TRANSPORT

• The road network of the country consists of National Highways(NH), State-Highways (SH), District Roads, Rural Roads, Urban Roads, and Project Roads of over 63.71(Provisional) lakh km of roads as of 31 March 2019, which is the second-largest in the world, after the United States with 66.45 lakh km of roads.
• There has been a consistent increase in the construction of National Highways/roads since 2013-14 with 13,327 km of roads constructed in 2020-21 as compared to 10,237 km in 2019-20, indicating an increase of 30.2 percent over the previous year.

RAILWAYS

• Being the third-largest network in the world under single management and with over 68,102 route km IR strives to provide a safe, efficient, competitive, and world-class transport system.
• An average of 1835 track km per year of new track length has been added through new-line and multi-tracking projects during 2014-2021 as compared to the average of 720 track km per day during 2009-14.
• To strengthen the agriculture sector, as of 31st December 2021, IR has operated 1,841 Kisan Rail services, transporting approximately 6.0 lakh tonnes of perishables including fruits and vegetables.
• To provide better amenities IR has embarked on providing Wi-Fi internet services at all stations (excluding halt stations). As of 5th December 2021, a total of 6,087 Railway Stations has been equipped with a Wi-Fi facility.

CIVIL AVIATION

• India has emerged as one of the fastest-growing aviation markets in the world. The domestic traffic in India has more than doubled from around 61 million in 2013-14 to around 137 million in 2019-20, registering a growth of over 14 percent per annum.
• Till the launching of UDAN in 2016, India had 74 airports have scheduled operations. But, within 4 years under UDAN, four rounds of bidding under RCS-UDAN have taken place and 153 RCS airports including 12 water aerodromes & 36 Helipads have been identified for the operation of RCS flights.

PORTS

• Port performance in an economy is crucial for the trade competitiveness of that economy. Expansion of port capacity has been accorded the highest priority by the Government through the implementation of well-conceived infrastructure development projects. The capacity of 13 major ports which was 871.52 million tonnes per annum (MTPA) at the end of March 2014, has increased by 79 percent to 1,560.61 MTPA by the end of March 2021.
• Many initiatives have been taken by the government to improve port governance, augment capacity utilization, enhance port efficiency and connectivity. The measures include the following among others:
• Sagarmala is a National Programme aimed at accelerating economic development in the country by harnessing the potential of India’s 7,500 km long coastline and 14,500 km of potentially navigable waterways.
• The Major Port Authorities Act 2021 was notified on 18.2.2021. This act provides for inter alia regulation, operation, and planning of major ports in India and vests the administration, control, and management of such ports upon the Boards of Major Port Authorities.
• A new Captive Policy for Port Dependent Industries has been prepared to address the challenges of renewal of the concession period, the scope of expansion, and the dynamic business environment.

INLAND WATERWAYS

• Regulatory amendment through the Inland Vessels Act, 2021, replaced the over 100 years old Inland Vessels Act, 1917 (1 of 1917) and ushered in a new era in the inland water transport sector.
• Augmentation in navigation capacity of National Waterway-1 (NW-1) is being implemented since 2018 through the Jal Marg Vikas Project from Varanasi to Haldia stretch of the Ganga-Bhagirathi-Hooghly River System to enable large barge movements.
• Construction of multi-modal terminals at Varanasi and Sahib Ganj has been completed and that of the multimodal terminal at Haldia and the Navigational Lock at Farakka has achieved substantial progress. The other projects such as the comprehensive development of NW-2 and NW-16 &Indo-Bangladesh Protocol (IBP) route are proposed to be undertaken for 5 years for Rs. 461 crores and Rs.145.29 crores respectively, from 2020-21 to 2024-25.

TELECOM

• The relevance of the telecom sector has increased immensely. This can be gauged from the fact that the total telephone subscriber base in India has increased from 933.02 million in March 2014 to 1200.88 million in March 2021. In March 2021, 45 percent of subscribers were based in rural India and 55 percent in urban areas.
• Internet penetration in the country is increasing steadily with internet subscribers increasing from 302.33 million in march 2015 to 833.71 million in June 2021. While 67.2 percent of internet subscribers had narrowband connections and 32.8 percent had broadband connections in 2015, the composition had reversed by June 2021 with only 4 percent of subscribers having a narrow band and 96 percent with broadband connections.
• The number of mobile towers has also increased substantially reaching 6.93 lakhs towers in December 2021, reflecting that the telecom operators have well realized the potential in the sector and seized the opportunity to build up an infrastructure that will be fundamental in boosting the Government’s Digital India campaign.

PETROLEUM, CRUDE, AND NATURAL GAS

• Crude oil and condensate production during the year 2020-21 was 30.49 million metric tonnes (MMT), lower than the production level of 32.17 MMT in 2019-20 and 94.3 percent of the target of 32.32 MMT for 2020-21. India depends on imports to meet more than 80 percent of its requirements.
• Natural Gas production during the year 2020-21 was 28.67 billion cubic meters (BCM) as against the production of 31.18 BCM in 2019-20 and 85.4 percent against the target of 33.57 BCM for 2020-21.
• The production of petroleum products was 233.51 MMT in 2020-21 as against 258.18 MMT in 2019-20, showing achievement of 90.2 percent of the target of 259.02 MMT for 2020- 21.

ELECTRICITY

• India has witnessed a significant transformation from being an acute power deficit country to a situation of demand being fully met.
• India has also made remarkable strides to ensure universal access to electricity for every household.
• The total installed power capacity and captive power plant was 459.15 GW on 31.03.2021 as compared to 446.35 GW on 31.03.2020 registering a growth of 2.87 percent. Installed capacity in utilities was 382.15 GW on 31.03.2021 as compared to 370.11 GW on 31.03.2020 – increasing by 3.25 percent.
• Thermal sources of energy make the largest – 61.42 percent share of total installed capacity in utilities followed by renewable energy resource (RES) with 24.7 percent and hydro with 12.09 percent.
• The total electricity generated including that from captive plants during the year 2020-21 was 15.73 lakh GWh as compared to 16.23 lakh GWh during the year 2019-20, of which 13.73 lakh GWh was generated by utilities and 2 lakh GWh in captive plants.

Renewable energy – Solar, Wind, Biomass, and small hydro energy

• India has witnessed the fastest rate of growth in renewable energy capacity addition among all large economies, during the last 7.5 years with renewable energy capacity growing by 2.9 times and solar energy expanding by over 18 times.
• To facilitate renewable power evacuation and reshape the grid for future requirements, the Green Energy Corridor (GEC) projects have been initiated. The GEC Project aims at synchronizing electricity produced from renewable sources, such as solar and wind, with conventional power stations in the grid.

THE CONCLUSION: The Government has charted out a comprehensive program for industrial transformation. With an emphasis on supply-side measures, the reforms address long known bottlenecks of insufficient infrastructure, tardy business processes, and labour market reforms. The introduction of the production-linked incentive schemes intends to encourage the scaling up of industries that are strategic in nature or are technology-intensive. The objective is to create the capacity to integrate with the global value chains. Several measures have been taken to reduce transaction costs, especially for the small and medium enterprises as well as facilitate the inflow of capital, technology, and international best practices into the industries. The new CPSE policy provides a road map for disinvestment, opening up avenues for further growth and improvement in efficiency while enabling the government to focus its resources on the developmental needs of the country. The recovery of the industrial sector, positive business expectations propelled by extensive reforms, and improved consumer demand, suggest that further improvements in industrial performance can be expected.

HIGHLIGHTS

• Index of Industrial Production (IIP) grew at 17.4 percent (YoY) during April-November 2021 as compared to (-)15.3 percent in April-November 2020.
• Capital expenditure for the Indian railways has increased to Rs. 155,181 crores in 2020-21 from an average annual of Rs. 45,980 crores during 2009-14 and it has been budgeted to further increase to Rs. 215,058 crores in 2021-22 – a five times increase in comparison to the 2014 level.
• Extent of road construction per day increased substantially in 2020-21 to 36.5 Km per day from 28 Km per day in 2019-20 – a rise of 30.4 percent.
• Net profit to sales ratio of large corporates reached an all-time high of 10.6 percent in the July-September quarter of 2021-22 despite the pandemic (RBI Study).
• Introduction of Production Linked Incentive (PLI) scheme, the major boost provided to infrastructure-both physical as well as digital, along with measures to reduce transaction costs and improve ease of doing business, would support the pace of recovery.