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Education Marks Proper Humanity

Showing posts with label ECONOMY. Show all posts
Showing posts with label ECONOMY. Show all posts

Wednesday, June 2, 2021

Direct Benefit Transfer (DBT) - Indian Economy

Direct Benefit Transfer (DBT)

In 2015, 

  • The new government in the Centre introduced the game-changing potential of technology-enabled Direct Benefit Transfer (DBT), namely the JAM (Jan-Dhan-Aadhar-Mobile) Number Trinity solution. 

Direct Benefit Transfer (DBT) - Indian Economy

  • It offers possibilities for effectively targeting public resources to those who need them most, including all those deprived in multiple ways. 

  • Under it, the beneficiaries will get the money 'directly' into their bank or post-office accounts linked to their 12-digit biometric identity number (Aadhar) provided by the Unique Identification Authority of India (UIDAI).

  • The idea was first initiated by the GoI in 2013 (UPA-II) on a pilot basis with seven schemes in 20 districts of the country.

Part of the technological platform- Digital India- is expected to provide, integration of various beneficiary databases with Aadhar and appropriate process re-engineering. It would result in:

Meanwhile, the Aadhar (Targeted Delivery of Financial and Other Subsidies, Benefits and Sevices) Bill, 2016. This is a transformative piece of legislation that will benefit the poor and the vulnerable. The statutory backing to Aadhar will address the uncertainty surrounding the project after the Supreme Court restricted the use of the Aadhar number until a Constitution Bench delivers its verdict on a number of cases challenging the mandatory use of Aadhar in government schemes, and rules on the issue of privacy violation.

To ensure targeted disbursement of government subsidies and financial assistance to the actual beneficiaries is a critical component of 'minimum government and maximum governance' of the Government of India. 

After the successful introduction of DBT in LPG, the government in 2016-17 introduced it on a pilot basis for fertilizer in few districts. Similarly, the government has also started the automation facilities of the 5.35 lakh FPS (Fair Price Shops) which come under the PDS (Public Distribution System).

As per the Union Budget 2017-2018, the country has made a strong beginning with regard to DBT with regard to LPG and kerosene consumers- Chandigarh and 8 districts of Haryana have become kerosene free. Besides, 84 Government schemes have also been bordered on the DBT platform. The idea of DBT will also be key to India's transition to a cashless economy-as pointed by the Economic Survey 2015-16 and vindicated in the post-demonetization period.

The Economic Survey 2015-16 suggested the DBT solution for farm loans and interest subvention schemes availed by the farmers. It further advised replacing the existing system of MSP/procurement-based PDS with DBT which will free the market of all controls on domestic movement and import. The present system distorts the concept of a market and needs to be discontinued to enhance productivity in agriculture, as per the survey.

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Tuesday, June 1, 2021

Net Domestic Product (NDP) - Indian Economy

Net Domestic Product (NDP) 

Net Domestic Product (NDP) is the GDP calculated after adjusting the weight of the value of 'depreciation'. This is, basically, a net form of the GDP, i.e., GDP minus the total value of 'wear and tear' (depreciation) that happened in the assets while the goods and services were being produced. All assets (except human beings) go for depreciation in the process of their uses, which means they are 'wear and tear'. The government of the economies decides and announces the rates by which assets depreciate (done in India by the Ministry of Commerce and Industry). A list is published, which is used by different sections of the economy to determine the real levels of depreciation in different assets. For example, a residential house in India has a rate of 1% per annum depreciation, an electric fan has 10% per annum, etc., calculated in terms of the asset's price.

Net Domestic Product (NDP) - Indian Economy

This is one way how depreciation is used in economics. 

The second way it is used in the external sector while the domestic currency floats freely as against the foreign currencies. 

If the value of the domestic currency falls following the market mechanism in comparison to a foreign currency, it is a situation of 'depreciation' in the domestic currency, calculated in terms of loss in value of the domestic currency.

Thus, NDP = GDP - Depreciation.

This way, the NDP of an economy has to be always lower than its GDP for the same year, since there is no way to cut the depreciation to zero. But mankind has developed several techniques and tools such as 'ball-bearings, 'lubricants', etc. to cut the loss due to depreciation.

The different uses of concepts of NDP are as given below:

  • For domestic use only: to understand the historical situation of the loss due to depreciation to the economy. Also used to understand and analyze the sectoral situation of depreciation in industry and trade in comparative periods.

However, NDP is not used in comparative economics, i.e., to compare the economies of the world. This is due to different rates of depreciation which are set by different economies of the world. Rates of depreciation may be based on logic (as it is in the case of houses in India-the cement, bricks, sand and iron rods which are sued to build houses in India can sustain it for the coming 100 years, thus the rate of depreciation is fixed at 1% annum). But it may not be logical all the time, for example, up to February 2000 the rate of depreciation for heavy vehicles was 20% while it was raised to 40% afterward- to boost the sales of heavy vehicles in the country. There was no logic in doubling the rate. Basically, depreciation and its rates are also used by modern governments as a tool of economic policymaking, which is the third way how depreciation is used in economics. 

👉 Previous Page:Gross Domestic Product (GDP) - Indian Economy

👉 Next Page:Direct Benefit Transfer (DBT) - Indian Economy


Sunday, May 30, 2021

Gross Domestic Product (GDP) - Indian Economy

Gross Domestic Product (GDP) 

Gross Domestic Product (GDP) is the value of all final goods and services produced within the boundary of a nation during one year period. For India, this calendar year is from 1st April to 31st March.

It is also calculated by adding;

Gross Domestic Product (GDP) - Indian Economy

The use of the exports-minus-imports factor removes expenditures on imports not produced in the nation and adds expenditures on goods and services produced which are exported but not sold within the country.

The different uses of the concept of GDP are given below:

  • Per annum percentage change in it is the 'growth rate' of an economy. For example, if a country has a GDP of Rs.107 which is 7 rupees higher than the last year, it has a growth rate of 7%. When we use the term ' a growing ' economy, it means that the economy is adding up its income.

  • This is the most commonly used data in comparative economics. The GDPs of the member nations are ranked by the IMF at purchasing power parity (PPP). India's GDP is today 3rd largest in the world at PPP (after China and the USA). While at the prevailing exchange rate of Rupee (into the US dollars) India's GDP is ranked 6th largest in the world.


Monday, November 9, 2020

Tax System Indian Economy

Tax System - Indian Economy

  •  A compulsory contribution given by a citizen or organization to the Governments is called Tax, which is used for meeting expenses on welfare work.

  • The distribution of tax between Centre & State has been clearly mentioned in the provisions of the Indian Constitution (Centre-State Financial Relations, Article 264 - 293)
  • For rationalizing it from time to time, the Finance Commission (Article 280) has been constituted.
Tax System has been divided into two parts:

There are two types of taxes:

Direct Tax

  • The taxes levied by the central government on incomes and wealth are important to direct taxes.
  • The important taxes levied on incomes are- 1.) Income Tax, 2.) Corporation Tax.
  • Taxes levied on wealth are- wealth tax, gift tax, property tax, etc.

Indirect Tax:
  • Indirect tax is not paid by someone to the authorities and it is actually passed on to the other in the form of increased cost.
  • They are levied on goods & services produced or purchased.
  • The important taxes levied are- Excise Tax, Sales Tax, Vat, Entertainment Tax, etc.
  • The main forms of Indirect Taxes are customs & excise duties and sales tax.
Taxes imposed by the Central Government- 
  • Income Tax, Corporate Tax, Property Tax, Succession Tax, Wealth Tax, Gift Tax, Customs Duty, Tax on Agricultural wealth, etc.
Taxes imposed by the State Government-
  • Land revenue tax, Sales tax, Agricultural income tax, Agricultural land revenue, State excise duty, Registration fee, Entertainment tax, Stamp duty, Road tax, Motor vehicle tax, etc.

Important Taxes Imposed in India:

  • Tax on Income & Wealth: The central government imposes different types of tax on income & wealth, i.e., income tax, corporate tax, wealth tax, gift tax. Out of the income tax & corporate tax are more important from the revenue point of view.
  • Personal Income Tax: It is imposed on an individual, combined with Hindu families & total income of people of any other communities. In addition to tax, separate surcharges have also been imposed on some items.
  • Income from Agriculture in India is free from Income Tax.
  • Corporate Tax: It is imposed on Registered Companies & Corporations. The rate of corporate tax on all companies is equal. However, various types of rebates (discounts) and exemptions have been provided.
  • Custom Duties: As per the Constitutional provisions, the central government imposes import duty & export duty both. Import & Export duties are not the only provenances (source) of income but with the help of it, the central government regulates the foreign trade.
  • Import Duties: Import duties are ad-Valorem in India. It is imposed on the taxable item on a percentage (%) basis.
  • Export Duties: It is more important, compared to Import duties in terms of revenue & regulation of foreign trade.
  • Excise Duties: This is commodity tax as it is imposed on the production of an item & it has no relevance with its sale. This is the largest pedigree of revenue for the Central Government. 
  • Except for liquor, opium & other drugs, the production of all the other items is taxable under Central Excise Duties.




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