GS III: Indian Economy and issues relating to planning, mobilisation of resources, growth, development and employment.
Eclectic FPI mix drives Indian Equities
What is Foreign Portfolio Investment?
- Foreign Portfolio Investment (FPI) is investment by non-residents (NOT Non Resident Indians) in Indian securities including shares, government bonds, corporate bonds, convertible securities, infrastructure securities etc.
- Investment by a foreign portfolio investor cannot exceed 10 per cent of the paid up capital of the Indian company. All FPI taken together cannot acquire more than 24 per cent of the paid up capital of an Indian Company.
- While above this the investment will be counted as Foreign Direct Investment (FDI)
- As per SEBI regulations, FPIs are not allowed to invest in unlisted shares and investment in unlisted entities will be treated as FDI.
- Foreign Portfolio Investors includes investment groups of Foreign Institutional Investors (FIIs), Qualified Foreign Investors (QFIs) (Qualified Foreign Investors) and subaccounts etc.
- NRIs don’t comes under FPI.
FP Investment on the basis of countries
- There are nearly 8,000 registered FPIs in India coming from almost 60 different countries across the world.
- U.S. leads the pack with more than 2,700 registered FPIs, followed by Luxembourg (946), Canada (622) and Mauritius (572).
- The number of FPIs domiciled in Mauritius was much higher and began to fall only after the benefits of double tax avoidance started to wean away. FPIs from Mauritius were not required to pay any tax in India before the rules were changed.
- Investors come from inconspicuous parts of the globe such as Malta, Guernsey, Liechtenstein etc.
- This is because Indian stocks have been consistent in generating returns over a longer time frame. Sensex has recorded only 5 losses in the last 17 years.
- While China’s economy is growing, its stock exchanges don’t perform as well.
- Indonesia comes close but its heavy dependence on its natural resources makes its stock risky and the markets maybe subjected to volatility.
Source: The Hindu, http://www.indianeconomy.net/
GS II: Important aspects of governance, transparency and accountability.
- The Sharada Prasad Committee was constituted by the Skill Development & Entrepreneurship Ministry to review, rationalise and optimise the functioning of sector skill councils.
- Its findings are:
- Several instances of conflict of interest in the board’s membership base. Many of the members were not only a part of the Council but were also Promoters of the Training firms as well as that of Assessment agencies that oversee the outcomes achieved on job placements.
- The councils have become a ‘hotbed of crony capitalism’ that have tried to ‘extract maximum benefit from public funds.’
- Recommended that the Centre scrap the existing skill development councils owing to oversight in roles.
- Introduce an oversight mechanism for the NSDC preferably from the Central Bank (Reserve Bank of India) as it is registered as an NBFC (Non Banking Finance Company).
- NSDC has failed to discharge its responsibilities and deviated from its original role:
- meeting the exact skill needs of the industry and
- providing employment to youth.
- Government should review the NSDC’s role and functioning comprehensively with reference to its Memorandum of Association and create a strong oversight mechanism to ensure that such conflicts of interest do not arise in future.
GS III: Effects of liberalisation on the economy, changes in Industrial policy and their effects on industrial growth.
Start-Up Firms may get idle land from PSU’s
- The Union govt plans to divest, sell or lease unutilised lands of PSU’s to start-up companies.
- Instead of transferring land to other public sector units and state governments, it could be utilised to create industrial space for start-up companies.
- The idea is to “create a landscape for ready-to-move-in businesses” so that start-up companies do not have to face hurdles for setting up business and they can start work “immediately on the business opportunity without lag.”
- Till recently, the average time for getting construction permits for businesses was 372 days.
- There are many problems that manufacturing units face such as site selection and land acquisition.
- Eg of Scooters India Limited which is loss making and has 147 acres of land of which 125 acres lay unutilised.
- Win-win: Government will get good value for the land. Most of the PSUs are located in places where land was acquired a long time ago so the appreciation would be substantial.
Source: The Hindu
GS II: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
No invasion of body for UID: Centre
Main argument of Centre: Aadhaar is not an invasion of a citizen’s body as the right of a person to his own body is not absolute.
- SC questions Section 139AA of the Income Tax Act making Aadhar mandatory for filing tax returns and infringing the fundamental rights of an individual i.e. forcing him to part with biometric details without free, informed and voluntary consent.
- State can extinguish a person’s life only after following due process of law.
- The state has the duty to maintain the liberty of an individual. The state has, more
importantly, the obligation to maintain the dignity of an individual. Dignity is an individual right.
- Fingerprint and iris impressions would be used to mount a state surveillance and the “nation would turn into a large concentration camp”
- In response to the govt using the fingerprints to prevent crime, SC asked whether it is right to treat everyone as a suspect.
Union Govt’s stand:
- If one has to live in a collective called the ‘state’, one has to submit to its laws.
- “We part with all kinds of data through our mobile phones. How is an iris scan more intrusive than photos? The argument of so-called privacy and bodily integrity is bogus.”
- There are a large number of people out there who want to be remembered
and included in the welfare schemes of the state.
- Aadhaar ensures empowerment by giving them an identity.
- Proof of Eagerness
- He said the 113.7 crore Aadhaar cards produced so far were proof that people
were eager to enroll.
- He said even in PAN, though 29 crore PAN cards were produced, there were only five crore assessees.
- The rest 24 crore PAN card holders had taken PAN to use it as a unique identity proof.
- He said the 113.7 crore Aadhaar cards produced so far were proof that people
- The mandatory linkage of PAN with Aadhaar was a step towards a “more orderly world”.
- Section 139AA is nothing but a repetition of PAN in the more complicated milieu of today.
- India will unveil a new series of Index of Industrial Production with a base year 2011-12.
- Currently the IIP is calculated on base year of 2004-05.
- Expected to bring in more accuracy in mapping the level of economic activity and calculating other numbers like national accounts.
- What is IIP?
- The index of Industrial Production (IIP) conveys the status of production in the industrial sector of an economy in a given period of time, in comparison with a fixed reference point in the past.
- The IIP figures are generally seen as an important but short-term indicator of whether industrial activity in a country has risen or dipped, till more detailed studies or surveys are available.
- Released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation.
- IIP is compiled using data received from 15 source agencies viz.
- (i) Department of Industrial Policy & Promotion (DIPP);
- (ii) Indian Bureau of Mines;
- (iii) Central Electricity Authority;
- (iv) Joint Plant Committee, Ministry of Steel;
- (v) Ministry of Petroleum & Natural Gas;
- (vi) Office of Textile Commissioner;
- (vii) Department of Chemicals & Petrochemicals;
- (viii) Directorate of Sugar & Vegetable Oils;
- (ix) Department of Fertilizers;
- (x) Tea Board;
- (xi) Office of Jute Commissioner;
- (xii) Office of Coal Controller;
- (xiii) Railway Board;
- (xiv) Office of Salt Commissioner; and
- (xv) Coffee Board.
- The IIP estimate for a given month is always released within six weeks from that month.
- However, given the fact that all the data regarding production may not be available at the time the index for a particular month is being created, a provisional index is first created and released, which is then updated twice in the subsequent months.
- The IIP was first compiled and released using 1937 as the base year and included 15 industries. Subsequently, it has been updated at least seven times, both with regards to the base year as well as the nature of items included, to keep the data relevant.
Source: The Hindu, PIB, Economictimes.com
2. Madhya Pradesh becomes the first state to change financial year to Jan – Dec. Decision comes after the announcement of the Uniion Govt to implement the same in the meeting of the 3rd Governing Council of NITI Aayog.