Indian Economy by Rajendra

Indian Economy @ Rajendra

1. History of Planning in India
First of all the idea of planned economy was crystallized in 1930s when our national leaders came under the influence of socialist philosophy. India’s Five year plans were very much impressed by the rapid strides achieved by the USSR through five years plans.
In 1934, Sir M. Visvesvaraya had published a book titled “Planned Economy in India”, in which he presented a constructive draft of the development of India in next ten years. His core idea was to lay out a plan to shift labor from agriculture to industries and double up National income in ten years. This was the first concrete scholarly work towards planning. The economic perspective of India’s freedom movement was formulated during the thirties between the 1931 Karachi session of Indian National Congress, 1936 Faizpur session of India National Congress.
National Planning Committee
The first attempt to develop a national plan for India came up in 1938. In that year, Congress President Subhash Chandra Bose had set up a National Planning Committee with Jawaharlal Nehru as its president. However the reports of the committee could not be prepared and only for the first time in 1948 -49 some papers came out.
Bombay Plan
In 1944 Eight Industrialists of Bombay viz. Mr. JRD Tata, GD Birla, Purshottamdas Thakurdas, Lala Shriram, Kasturbhai Lalbhai, AD Shroff , Ardeshir Dalal, & John Mathai working together prepared “A Brief Memorandum Outlining a Plan of Economic Development for India”. This is known as “Bombay Plan”. This plan envisaged doubling the per capita income in 15 years and tripling the national income during this period. Nehru did not officially accept the plan, yet many of the ideas of the plan were inculcated in other plans which came later.
People’s Plan
People’s plan was drafted by MN Roy. This plan was for ten years period and gave greatest priority to Agriculture. Nationalization of all agriculture and production was the main feature of this plan. This plan was based on Marxist socialism and drafted by M N Roy on behalf of the Indian federation of Lahore.
Gandhian Plan
This plan was drafted by Sriman Nayaran, principal of Wardha Commercial College. It emphasized the economic decentralization with primacy to rural development by developing the cottage industries.
Sarvodaya Plan
Sarvodaya Plan (1950) was drafted by Jaiprakash Narayan. This plan itself was inspired by Gandhian Plan and Sarvodaya Idea of Vinoba Bhave. This plan emphasized on agriculture and small & cottage industries. It also suggested the freedom from foreign technology and stressed upon land reforms and decentralized participatory planning.
Planning and Development Department
In August 1944, The British India government set up “Planning and Development Department” under the charge of Ardeshir Dalal. But this department was abolished in 1946.
Planning Advisory Board
In October 1946, a planning advisory board was set up by Interim Government to review the plans and future projects and make recommendations upon them.
Planning Commission
Immediately after independence in 1947, the Economic Programme Committee (EPC) was formed by All India Congress Committee with Nehru as its chairman. This committee was to make a plan to balance private and public partnership and urban and rural economies. In 1948, this committee recommended forming of a planning commission. In March 1950, in pursuance of declared objectives of the Government to promote a rapid rise in the standard of living of the people by efficient exploitation of the resources of the country, increasing production and offering opportunities to all for employment in the service of the community, the Planning Commission was set up by a Resolution of the Government of India as an advisory and specialized institution. Planning Commission was an extra-constitutional body, charged with the responsibility of making assessment of all resources of the country, augmenting deficient resources, formulating plans for the most effective and balanced utilization of resources and determining priorities. Jawaharlal Nehru was the first Chairman of the Planning Commission.
National Development Council
Government of India could take the initiative to set up the planning commission only by virtue of provision in the constitution which made Economic & Social planning an item in Concurrent list. The Resolution to set up a planning commission was actually based upon the assumption that the roots of Centre- State cooperation should be deeper. Later, in 1952, the setting up of the National Development Council was in fact a consequence of this provision.
2. Decentralised Planning In India
In this essay we will discuss about Decentralised Planning in India. After reading this essay you will learn about:
1. Introduction to Decentralised Planning in India
2. Importance of Decentralised Planning in India
3. Objectives
4. Performance.
Introduction to Decentralised Planning in India:
Decentralised planning is a kind of percolation of planning activities or process from the Centre to the sub- state levels, i.e., district, sub-division, block and village level. Since the inception of First Plan, the importance of decentralised planning was emphasised in order to achieve active people’s participation in the planning process.
In 1957, the Government appointed Balwant Rai Mehta Committee which recommended constitution of elected statutory local bodies with its required resources, power and authority along with a decentralised administrative system operating under its control. Accordingly, the Panchayati Raj System was introduced in India.
Since then the process of decentralisation in the planning and developmental activities was continued. In 1969, the Planning Commission issued some guidelines on the introduction of district planning. Again in 1977; M.L. Dantewala working group recommended specific guidelines for the introduction of block-level planning. After that Ashok Mehta Committee has also submitted its report on Panchayati Raj in 1978.
Moreover, the Economic Advisory Council to the Prime Minister, finally presented its Report on Decentralisation of Development Planning and its implementation in the states in 1983. Finally, in 1984, the Group on District Planning submitted its report and this was considered as the basis of proposals on decentralised planning under the Seventh Plan.
Accordingly, the Planning Commission of India introduced the decentralised planning in the country for the first time during the Seventh Plan. From the very beginning, India has adopted the system of centralised planning with little variation.
But with the passage of time there has been radical departure in the planning process in India from a centralised to a decentralised one where the decision making in the planning process has been reversed from top-to-bottom type to a system of bottom-to-top type.
Thus the decentralised planning is a kind of planning at the grass-root level or planning from below. Planning process in a country is having various tiers, viz., centre, state, district, sub-division, block and village. Under decentralised planning emphasis has been given on the introduction of district planning, sub-divisional planning and block-level planning so as to reach finally the village level planning successfully.
In India, Governmental activities are being performed right from the central to states and then to local, i.e., to the districts level (Zilla Parishads), taluk level (Panchayat Samities) and also to the village level (Gram Panchayats). But it now being observed that this type of centralised planning process is not at all conducive to optimum utilisation of plan resources.
Thus in order to realise a better response, the Planning Commission of India introduced the decentralised planning since the Seventh Plan. Although in most of the states of India, the decentralised planning was extended to district level but in some states like Assam, West Bengal etc. the same plan was decentralised up to sub-division level.
Accordingly, in order to conduct the planning activities at the sub-divisional level, the Sub­division Planning and Development Council was formed in every sub-division of some states with public representatives from different levels.
This council prepares various developmental plans for agriculture, irrigation, elementary education, road building, social afforestation, fishery, industrialisation, community development etc. of different sub-divisions of various states. These Councils are then entrusted to submit the required estimates of developmental works of different departments and then prepare and implement sub-divisional plan as per the approved outlay.
Decentralised planning is very much important in a country like India, where majority of our population live in rural areas. These types of plans raise the involvement of the people in implementing the plan.
Moreover, decentralised planning is being prepared in the light of local problems and on the basis of local resources potential. Thus under the present economic scenario, the decentralised planning is considered as most important strategy in respect of planning for economic development.
Importance of Decentralised Planning in India:
Following are some of the important functional factors responsible for adoption of decentralised planning in the present context in India:
(i) Better Linkages between the Villages and Small Towns:
Considering the huge size and proportion of rural population in India, it is felt that proper linkages must be established between dispersed small villages and also between such villages and adjacent small towns by developing appropriate infrastructural facilities such as feeder roads, improved transport facilities, marketing and storage facilities, health and sanitation facilities and other welfare centres. Under decentralised planning better linkages between villages and small towns can be developed under local conditions, priorities and resources.
(ii) Planning Becomes Realistic and Flexible:
Decentralised planning is considered as more realistic as it maintains a close coordination between locally available resources, local skills, local manpower and local requirements. It is considered as a flexible one as it is easily adjustable and adaptable under the changing local conditions and requirements.
Moreover, it is considered as the practical one as it can fulfill the normal requirements of the rural population. Adaptation and flexibility of planning largely depends upon the environment prevailing in each region and sub-region. Thus decentralised planning can achieve the best result in implementing plan projects at the local level.
(iii) Development of Agriculture:
Decentralised planning is suitable for the development of agricultural and allied activities such as animal husbandry, horticulture, fisheries, forestry along with development of village and cottage industries.
(iv) Promote People’s Participation:
Decentralised planning can promote active participation of local people in implementing various local plans and programmes. Thus it can enhance the involvement of local communities in such development activities.
(v) Minimising Wastage of Resources:
Under decentralised planning, wastage of resources can be reduced to a minimum level as the people participating in these developmental activities keep a close watch over the utilisation of fund as well also on the implementation of plan projects.
(vi) Trickle Down Effects:
Decentralised planning can show more trickle down or percolation effects in respect of poverty alleviation programmes and employment generation in rural areas as in this type of planning, various projects are selected for generating huge productive employment opportunities in the rural areas.
Moreover, this can help in building up of various types of community assets, viz., panchayat house, village roads, schools, tanks etc. which can supplement rural income and also can enhance the levels of living of the rural people.
(vii) Social Services:
Decentralised planning is helpful in raising the level of social services by launching various programmes of health, nutrition, drinking water, education etc. in a more effective, quicker and sustainable manner.
(viii) Use of Non-conventional Energy Sources:
Decentralised planning is more helpful in utilizing the various non-conventional energy sources such as solar power, wind, animal and plant wastes etc. in rural areas. Such utilisation of non-conventional energy sources requires various agencies which can work in close association with communities in villages and small towns and also can provide necessary technical and financial support from such agencies. Decentralised planning can pave the way for utilisation of such resources.
(ix) Simple Planning Process:
Decentralised planning process is more simple and transparent and thus it has a close link with democracy, co-operation and development. It has a vast scope for the active involvement of political and social forces at the appropriate level.
Objectives of Decentralised Planning:
Decentralised planning is introduced in India with certain definite objectives.
Following are the three important objectives of decentralised planning:
1. Effective implementation of poverty eradication programme;
2. Ensuring balanced regional development for meeting minimum needs of the people, and
3. Ensuring active public participation in the development process of different sectors.
Thus the main objective of the decentralised planning is to attain balanced development throughout the country with active participation of the people and to eradicate poverty.
Performance of Decentralised Planning in India:
In India, the process of decentralized planning and its performance is depending upon the activities of Panchayati Raj Institutions established at the district, block and village levels. At the district level there are Zila Parishads or Councils, at the block level there are Panchayat Samitis and at the village level a number of Gram Pachayats are working for the implementation of various plan projects.
In India, under decentralised planning, plans are formulated at the grass root level with the help of elected representatives of Panchayati Raj Institutions, state administration at the district and block levels and financial institutions. In order to have a successful decentralised planning, the planning machinery in the country must be suitably developed both at the district, sub-division and block level.
In India, various states like Maharashtra, Gujarat, West Bengal, Assam, Karnataka, Jammu and Kashmir etc. have already adopted decentralised planning seriously. But there are large deviation in respect of adoption of decentralised planning among the various states of the country.
While the bigger states like Bihar, Uttar Pradesh, Madhya Pradesh and Rajasthan could not achieve much success in respect of decentralised planning and states like Punjab and Haryana did not even feel necessity but the states like Maharashtra, Gujarat, West Bengal, Assam and Karnataka have already adopted decentralised planning in a more vigorous manner.
Among these various states, the experiences of Maharashtra, Gujarat, West Bengal and Karnataka in respect of decentralised planning are providing useful lessons to other states of the country. Moreover, effects of decentralised planning in West Bengal percolate to the village level. But the overall performance of decentralised planning in India is not at all commensurate to its expectations.
Causes of Dismal Performance of Decentralised Planning in India:
Following are some of important factors which are responsible for dismal performance of decentralised planning in India:
(i) Unsuccessful Land Reforms:
The success of decentralised planning depends much on the implementation of land reform measures viz., imposition of land ceiling and the redistribution of surplus lands, tenancy reforms, consolidation of holdings etc.
Under the semi-feudal conditions, land reforms in India could not be carried upon as per its true spirit. The Panchayati Raj institutions are dominated by landed interests and naturally they failed to show much interest in the implementation of beneficiary oriented programmes in rural areas of the country.
(ii) Lack of Proper Administrative Bodies:
In India, decentralised planning could not achieve much success due to lack of adequate administrative bodies at the local level for the implementation of its various programmes. Till today, various state governments failed to develop proper administrative bodies at the district and block level representing the local people having adequate norms.
(iii) Lack of Adequate Resource Transfer:
The government machinery has also failed to develop adequate managerial structures for also to finalize the modalities of decentralised planning in detailed form.
(iv) Ad-Hocism:
State governments are often following the path of ad-hocism as the regular elections of village panchayats and other local bodies are not being held. Thus the decentralised planning has not became effective and thus failed to become a powerful instrument of social change in India.
(v) Absence of Effective Organization:
In the absence of effective organisation of marginal and small farmers, agricultural labourers, artisans, scheduled castes, scheduled tribes and other backward sections, there is no proper representation of these sections in the local bodies for serving their economic interests.
(vi) Regional Disparities:
Various states of India adopting decentralised planning could not make much headway in reducing regional disparities in respect of development. Among various states, disparities have been accentuated in respect of Rayalaseema in Andhra Pradesh, Maratha Wada and Vidarbha in Maharashtra, Uttarakhand and Northern parts of West Bengal etc.
District planning machineries have failed to stem the problem of regional backwardness in various states. This has raised a disincentive factor against the popularity of decentralised planning among the non-implementing states.
(vii) Use of Inferior Resources:
In the rural area, superior resources are under the effective control of elite section of rural society and the productive resources like forests, minerals etc. are also under the control of rich urban located groups having adequate financial resources.
Thus under such circumstances, decentralised planning machinery has been dealing with inferior type of resources having low potential return factor. Thus due to its involvement with inferior resources only, the performance of decentralised planning as an instrument of development and change is not at all satisfactory.
Thus in India, decentralised planning has shown dismal performance due to these above mentioned factors.
Improving Performance of Decentralised Planning in India:
In India, economists, social scientists and political thinkers consider the decentralised planning as the sole machinery for the control and solution of country’s serious economic problems like poor growth rate, poverty, inequality, unemployment, unbalanced growth, regional inequalities etc. During the last forty years of centralised planning, the country has failed to tackle all these economic problems in appropriate manner.
Thus, in order to tackle these problems effectively, the planning process in India should be decentralised at the grass root or local level in an appropriate manner. Although the Seventh Plan has introduced the decentralised planning process in a serious manner but the Eighth Plan (1992-97) has given special emphasis on the decentralised planning process for local area planning.
Following are some of important measures which are to be adopted for the improvement of performance of decentralised planning in India:
1. Panchayati Raj Institutions of the country should be strengthened for the effective implementation of decentralised planning.
2. Proper organisations of marginal and small farmers, landless agricultural labourers, artisans, scheduled castes and scheduled tribe community and other backward classes should be developed for their proper representation in local bodies.
3. Land reforms and other institutional reforms must be introduced for the successful implementation of decentralised planning in India.
4. For wiping out regional disparities in respect of economic development, decentralised planning should be adopted simultaneously among all the states of the country. In order to have a proper shift from centralised planning process to decentralised planning process, the country should adopt a uniform policy throughout the country.
5. State governments should make necessary arrangement for devaluation of funds in adequate quantity for Panchayati Raj Institutions along with mobilisation of local private capital.
6. In order to have successful implementation of decentralised planning at the district level, district planning bodies should be formed taking various experts from different discipline like economies, agriculture, statistics, banking, sociology, animal husbandry etc.
7. In order to have successful implementation of decentralised planning, modalities of its implementation have to be sorted out systematically. Role of such agencies and functionaries needs to be clearly defined and demarcated.
Moreover, government administrative machinery, elected people’s representatives and banks should co-operate effectively for proper implementation of decentralised planning in India. Thus, in order to have proper implementation of economic planning, decentralisation of the planning process throughout the country is the need of the hour.
2.1 Sarkaria Commission Recommendations
In view of the growing pressure for the greater autonomy, in June 1983 the Union Government appointed a commission under the chairmanship of Justice R.S. Sarkaria to review the question of centre state relations. The commission submitted its report to the then prime minister Rajiv Gandhi  on 27 October 1987.
Sarkaria Commission went at considerable length into the justification for establishing a permanent Inter-State Council as an independent national forum for consultation with a mandate well defined in accordance with article 263.
The Commission recommended that for coordination of policies and implementation in a dual polity especially in view of large areas of common interest and shared action requires a sustained process of contact, consultation and interaction, for which a proper forum is necessary.
The Commission observed that executive powers of the Union and States overlap in many areas and as such division of matters in Union List and State List is not absolute. Several entries overlap.
Then in implementation of its laws and policy Union is largely dependent on State administrations. Union and States can entrust their executive functions to each other. States are dependent on Union for fiscal resources and in many administrative matters.
Interdependence is indispensable in a diverse and developing society. Institutionalized and sustained consultation is indispensable in view of this interdependence. The Commission recommended setting up of a Council under article 263 of the Constitution for this purpose.
Commission observed that there has been a pervasive  trend  towards greater centralization  of powers over the years and narrow personal interests have been given priority over larger national interest. It did not favour limiting  of the powers  of the union  or transfer of various subjects to state or concurrentlists. However, it recommended  a process of consultation by the centre on al concurrent subjects, which is not being done at present. The important recommendations of the commission included :
Formation of an inter-governmental council consisting of the prime minister and chief ministers of states to decide collectively on various aspects of governance that cause friction between centre and states.
Sparing use of article 356 of the constitution should be made and all possibilities of formation of an alternative government must be explored before imposing presidential rule in the state. the state assembly should not be dissolved unless the proclamation is approved by the parliament.
It rejected the demand for the abolition of office of governor as well as his selection from a panel of names given by the state governments. However, it suggested that active politicians should not be appointed governors. When the state and the centre are ruled by different political parties, the governor should not belong to the ruling party at the centre. Further, the retiring governors should be debarred from accepting any office of profit.
The judges of high courts should not be transferred without their consent.
The three-language formula should be implement in its true spirit in all the states in the interest  of unity and integrity of the country.
The work of the union and the state governments, which directly affects the local people must be carried out in the local language.
Central control over radio and television should be relaxed and the individual  Kendra’s  should be free to decide about the timing for the relay of national hook-up programmes.
It favored amendments for sharing certain taxes between the centre and the states, even though it generally opposed the curtailment of the center’s powers.
In the financial sphere it did not favor any drastic changes in the basic scheme of division of taxes but favored sharing of corporation tax and levy of consignment tax.
It did not favor disbanding of all-India services in the interest of the country’s integrity. Instead, it favored new all-India services.
It made a strong case for inter-state councils but insisted that these should be used only for the purpose mentioned  in article 263 of the constitution.
It favored retention of the national development council and suggested activation of the zonal councils.
It found the present division of functions between the finance commission and the planning commission as reasonable  and favored continuance of this arrangement.
It favoured determination of terms of reference of the finance commission in consultation with the state governments. It also suggested setting  up of similar expert bodies  at the state level.
We can see that Sarkaria Commission did not suggest any drastic changes in the existing scheme. However, it favoured several constitutional and functional changes to remove irritants in the centre-state relations. Neither the congress (I) government under Rajiv Gandhi, nor the national front government under V.P. Singh, accepted the recommendations of the Sarkaria commission.
The Government under P.V. Narasimha Rao decided to implement some recommendations but the United Front government under H D Deva Gowda, soon after assumption of power in June 1996, announced its intention to fully implement  the Sarkaria  commission.
Accordingly, it activated the inter-state council after a gap of six years, and decides to set up a panel to examine in depth the contentious issues relating to centre-state relations.
To promote healthy centre-state relations, the united front government favoured a system of decisions-making. This policy was also continued by the BJP led coalition government. In January 1999, the inter-state council decided  to accept  124 recommendations  of the sarkaria  commission. In 2001 the interstate council decided that the governor, after demitting office, would be banned from returning to active politics that chief ministers on the appointment of governors, the governor can, however, become vice-president or president.
The inter-state council covered 59 recommendations of the sarkaria commission, which touched upon the role of the governors, legislative relations, inter-governmental council, mines and minerals, all-India services, mass media and languages.
Further it was decided that :
Taxation power, which were so far in the union list, should be shifted to the concurrent  list in view of the need for  states to mobilize  more resources.
For all legislations in respect of subject on the concurrent list, there should be active consultation with the state government, except  in emergent cases.
States should be allowed to impose local or municipal taxes on industrial or commercial  properties owned by the centre.
Regarding institution of a commission of inquiry against a minister  in a state,  it was decided to build appropriate  safeguards in the commission of inquiry  act to prevent  its misuse by centre.
The issue of centre-state relations again came up for consideration before the inter-state council at its meeting held at Srinagar in august 2003. The council  insisted on incorporation  of certain  safeguards in the constitution  so that president’s rule could not be imposed in the state under article 356 it insisted  that article 356 should be used only as a last resort.
3. Poverty
As long as poverty, injustice and gross inequality persist in our world, none of us can rest.
Poverty in India
Meaning
Poverty means that people who are situated by deprived of basic necessities of life.  Those people not have basic needs like food, cloth, and shelter i.e. poverty. There is lack of essential needs in life for subsistence in all state privation.
Most of the people are not getting essential needs and them also not getting two meals a day. In India, one of the largest poverty place of countries. There are so much people are poor in India. They are not getting the proper house for live and his children are not getting the proper schooling.
Over the 65th year of our independence day, there are so much poverty in India. Some poor people become so depressed and deprived class just because they have not proper food and nutrition.  In India, their poor people condition is not sufficiently improved.
Urban poverty in India
Most of the people are living in the urban area because of the poverty. The most growing and developing countries. But there is day by day population is increasing. Urban population has so much poverty.
Poor people migrate from rural areas to cities and towns in search of employment/financial activity.
In addition to this, there are around 4.5 crore urban people whose income level is on borderline of the poverty line.
The revenue of more than eight crore urban people is estimated to fall below poverty line (BPL).
Banks and Financial institutions are reluctant to provide them the loan because of the unstable income.
An income of urban poor is highly unstable. A large number of them are either casual workers or self-employed.
Five states that constitute around 40% of all urban poor people of India are Uttar Pradesh, Bihar, Rajasthan, Odisha, and Madhya Pradesh.
A large portion of people living in slums is illiterate.
Around 35% of the total population of the four metro cities (Delhi, Kolkata, Chennai and Mumbai) consists of slum population.
The initiatives taken to deal with the problem of urban poverty has not yielded the desired results.
Rural poverty in India
Rural India is a heart of India, but in reality the rural people also not satisfied with his place. In rural India, there is severe poverty and people are living in rural area. The condition of poor people is far from satisfactory. The report on Socio-Economic and Caste census is follows that:
There are 18.46% people are belongs to scheduled cast and around 10.97% belongs to schedule tribes. It is the all rural households to become a Schedule cast and scheduled tribes.
Manual causal labor jobs and cultivation are the primary sources of income for rural people. Nearly 51 percent of all households are economically engaged in casual manual labour, and nearly 30 percent of them are involved in cultivation.
According to the census, there are around 48.5% of rural households are deprived.
Around 29.69% rural families have much of the vehicles included the (Two wheelers, Boat, etc.). There are some families are using his refrigerator while they have all vehicles.
In rural India, some of the people are paying tax, such as 4.58% rural households are paying tax.
Most of the people have his land in the rural area, but around 56% of the people have not any land for his homes.
The houses of around 54 percent rural families consist of either one or two-rooms. Out of them, around 13 percent lives in a one-room house.
Causes of poverty
Poverty makes the unequal distribution of wealth. At the growing population inflates the problem of poor techniques. There are rich person are exploiting to the poor people for increase his own wealth. This is resulted in India; the poverty main reason is rising populations, vast gap between rich and poor, corruption and black money. This all activity effects to the India and it became poverty.
Lack of facilitate agriculture
The poverty of India is mainly depending upon the agriculture but this is not doing well in this country. There are 80% of the people are depend on the agriculture. But our agriculture is in a bad way. Farmers are poor and uneducated. They do not know the modern methods of farming. They have no real facilities of irrigation. They do not get seeds and fertilizers in time. Thus, the yield reduced. Agriculture is not profitable today. We face the shortage of food. We have to import it. So, poor agriculture is one of the causes of India’s poverty.
Increase population
In our country the population is growing rapidly. But whatever resources are not available here for growing population. There is shortage of everything. The growth in population creates problems for us. Today, our population is 1.20 billion; tomorrow we will be 1.21 billion and so on. We need more food, more houses, and more hospitals for them. So we have no money to spend on development projects. The ever-growing rate of population must be checked. If not, we may not be able to remove India’s poverty.
Wide gap between rich and poor
Poverty overcome wide gap between rich and poor in India. This is the main reason of poverty. The rich are growing richer and the poor are becoming poorer. This economic gap between the two must be reduced. Our social system should be changed. The poor people must get all help to reap the fruits of Independence.
Corruption and black money
Poverty has corruptions in every walk of life. There is inefficiency in offices. People have become selfish. They neglect the national interests. Black money causes the problem of rising prices. Some people have all the privileges. But many others are suffering. Black money affects our economy. It creates poverty.
Effects of poverty
Illiteracy
In Poverty of India, the people are not growing, therefore, the illiteracy. Poor people are becoming primary reason illiteracy. They do not get any education, and it is tough for poor individuals who have not the necessity of life.
Child labour
In India, there are most of the boys and girls are uneducated and doing work as a child labour. They became the victim of child labour reason is poverty.
Problem in living condition
Poverty makes the people for the insufficient place to be live. They have not a proper place to live there. Most of the low-income families are living in houses with one room only.
Less of nutrition
Poverty is the leading cause of inadequate diet and insufficient nutrition. The resources of poor people are very limited, and its effect can see in their food.
Unemployment
Poor people move from villages to towns and form one city to another in search of employment/work. Since they are mostly illiterate and un-skilled, there are very few job opportunities open to them. Due to unemployment, many poor people are forced to live an unfulfilled life.
Awareness towards sanitation
A poverty person has a mere knowledge about hygiene, and they are very careless about this all.  They are not aware of the harmful consequences of not maintaining proper hygiene. The government is taking initiatives to make available clean and safe water, and proper sanitation system to them.
Feminization of poverty
Poverty effects on most of the women compare then man. Women are the worst victim of poverty. The total of poor women outnumbers the total population of poor people. The causes include low income, gender-inequality, etc. They deprived of proper-diet, medicines and health treatment.
Concentration in social disparity
The poverty is the reason for a number of people is distributed between rich and poor people. Concentration of wealth in the hands of few rich people leads to social disturbances and revolts. Fair or even distribution of wealth leads an overall improvement in general standard of living of individuals. There are the income disparity and unequal distribution of national wealth between the wealthy and poor people.
Prevention of Poverty
We should solve the poverty with all make a unity in this country. It will be very encouraged and helpful for all.
There are farmers must get all facilities for irrigation to solve his agriculture problem.
Farmers should take an excellent training and education of the better farming.
Agriculture will become so much profitable when all training and teaching provide to them.
An every year the rising population should check by a census.
Family planning schemes should introduce at everywhere.
There should not be any corruption in India. Everyone should do his work efficiently in his offices.
For developing country, more and more industries should be set up to meet the needs of the country.
Conclusion
Poverty is the very big problem for country. It should solve on a war footing. Our government is taking a step to step for developing a country. Eradication of poverty would ensure a sustainable and inclusive growth of economy and society. We all should do everything possible and within our limits to help alleviate poverty from our country.

4. Land Reforms in India
1. MEANING OF LAND REFORMS
2. OBJECTIVES OF LAND REFORMS
3. MEASURES
4. OVERALL APPRAISAL
5. IMPACT.
Meaning of Land Reforms:
Land reform is a broad term. It refers to an institutional measure directed towards altering the existing pattern of ownership, tenancy and management of land.
It entails “a redistribution of the rights of ownership and/or use of land away from large landowners and in favour of cultivators with very limited or no landholdings.”
Thus, in a broad sense, land reform refers to an improvement in agro-economic institutions. It includes measures and policies relating to redistribution of land, regulation of rent, improving the conditions of tenancy, cooperative organisation, agricultural education, and so on.
Objectives of Land Reforms:
Land reform is a part of heritage of the country’s freedom movement since the agrarian structure that we inherited from the British at the time of independence was of the feudalistic exploitative character. Zamindars- intermediaries-moneylenders played a big role in exploiting the masses.
It is in this background that we have to examine the objectives of land reform policy in India. Land reform measures aim not only at raising agricultural productivity. It is also viewed as a tool for social uplift.
The major objectives of land reform package, as identified in the Eighth Plan, are:
i. Restructuring of agrarian relations to achieve an egalitarian structure;
ii. Elimination of exploitation in land relations;
iii. Actualization of the goal of “land to the tiller”;
iv. Improvement of socio-economic conditions of the rural poor by widening their land base;
v. Increasing agricultural production and productivity;
vi. Facilitating land-based development of rural poor; and
vii. Infusion of a great measure of equality in local institutions.
In fine, growth and social justice are the basic objectives of land reform measures.
Measures of Land Reforms:
The comprehensive land reform policy that evolved so far after independence consisted of:
i. Abolition of intermediaries between the State and tenants;
ii. Tenancy reforms that provide (a) security to tenants, (b) rationalisation and regulation of rent, and (c) conferment of ownership rights on tenants;
iii. Fixation of ceiling on landholdings;
iv. Consolidation of holdings; and
(i) Abolition of intermediaries:
Abolition of zamindari and similar intermediary tenures during 1950-55 essentially involved removal of intermediary levels or layers of various amorphous and parasitic groups in land between the State and the actual cultivators. However, such abolition of intermediaries involved compensation to the owners of land.
As a result of this measure, about 2.5 crore farmers were brought into direct relationship with the State. This facilitated distribution of 61 lakh hectares of land to landless farmers. Large areas of privately-owned forests and wasteland now vested in the State.
Despite abolition of intermediary rights, poor peasantry continued to be exploited in various ways. It led to large-scale ejectment of poor tenants from land. While landlordism has been abolished, absentee landlordism now continues to flourish. The legislation conferred ownership rights not upon the actual cultivator, but on the statutory tenant, who himself was an intermediary with a chain of sub-tenants under him.
All this happened because:
(i) The law permitted the intermediaries to retain their home farms,
(ii) No limit was put on the area of land they could retain,
(iii) The term ‘personal cultivation’ was ill-defined, and
(iv) No protection was given to sharecroppers and other tenants-at-will.
Thus, the abolition of intermediary rights on land has not been an unmixed blessing. “Not every Y was crossed and every ‘i’ was dotted, but the job was done.” Undoubtedly, this zamindari abolition has paved the way for a remarkable shift in the balance of power. But the goal of “land to the tiller” is yet to be achieved.
(ii) Tenancy Reforms:
Tenancy legislations have taken three forms:
(i) Regulation of rent,
(ii) Providing security of tenure, and
(iii) Conferring rights of ownership for tenants.
Rent payable to the landowners should not exceed one-fifth to one-fourth of the gross produce of land. In the light of this guideline, all the states have enacted laws for fixation of rent. However, large inter-state variations exist in the fixation of land rent rates. Further, one notices inter-state differences in land rents.
Even the tenancy reforms have failed to regulate rent. Owing to the weak position of tenants, demand for fair and just rent from landowners occasionally lead to ejectment from land.
Tenancy Legislations have made it clear that in no case the tenants can be evicted except only in the situation where landlords themselves want to resume cultivation. Even in the event of resumption of cultivation by the owners, tenancy legislations have made it obligatory to leave a minimum area for the tenant.
Avery important aspect of land reform is the conferment of ownership rights to tenants in respect of non-resumable land. As a result of this measure, by 2000, only around 124.2 lakh tenants operating no more than 4 p.c. of the cultivated area have been benefited from this ownership rights or their rights have been protected on 63.2 lakh hectares of land.
On the eve of tenancy reforms, the area under tenancy was around 50 p.c. As a result of this action, this area has been reduced to 15 p.c. of the operated area by 2000.
Overall impact of tenancy reforms has been rather limited. Firstly, tenancy laws have been violated. For instance, in Bihar, the maximum limit of rent was kept at 25 p.c. of the gross produce. But tenants are required to pay even more than 50 p.c. as their social standing is abominably low. Secondly, as regards the security of tenant- cultivator, escape clauses have been misused against the interest of tenants.
Tenancy laws that have been framed in different states contained a provision for the resumption of land by the landowners for ‘personal cultivation’ with the object of protecting the interests of landowners, rather than tenants.
Due to a loose definition of the term personal cultivation, landowners continued to resume land for self-cultivation. The law also permitted the voluntary surrender of tenancies. Informal or concealed and oral tenancies are still prevalent.
Thus, the right of resumption of land for self-cultivation has rendered all tenancies insecure. Finally, there is no legal provision for conferring ownership rights in the tenancy laws of some states. In reality, legislation for conferment of ownership rights could not yield good results because many tenants are incapable of buying land from the landowners and many of them are unwilling to do so.
(iii) Ceiling on Landholdings:
To reduce the existing disparities in the pattern of land-ownership and make some land available for distribution to landless agricultural workers, the Second Plan (1956-1961) recommended the imposition of ceilings on agricultural holdings.
It was envisaged that land above a certain limit would be acquired by the State and redistributed among the landless workers and small farmers so as to meet their hunger for land and, thus, to enable them to create economic holdings.
Land ceiling laws were passed in two phases. In the first phase—which lasted up to the end of 1972— ‘landholder’ was treated as the unit of the cultivation. This ceiling unit was changed to ‘family’ after 1972. The ceiling limits have also been lowered in the second phase with differences varying as between irrigated land with two crops, irrigated land with one crop, and dry land. But exemption for orchards, grazing land, cattle- breeding farms, religious/charitable/educational trusts, sugarcane plantations, tank, fisheries have made the ceiling laws virtually redundant.
Up to end September 2001, the total amount of land declared surplus was 73.67 lakh acres, 64.95 lakh acres of land have been taken over by the states. A total of 53.79 lakh acres of land have been distributed among 54.84 lakh tenants. This amounts to saying that about 12 lakh acres of land could not be distributed because of variety of reasons, of which litigation is considered to be the most inhibiting factor.
The operations of the ceiling law made virtually no impact on the agrarian structure. The enforcement of the ceiling law was preceded by a public debate spread over several years. This enabled landowners to manipulate land records leading to fictitious (benami) and fraudulent partitions of lands among their relations, friends, fictitious trusts, etc.
We have seen that the extent of area declared surplus is much less than the estimated surplus, mainly due to a wide range of exemptions provided in the ceiling laws, shortcomings and loopholes in the laws and inefficient implementation of the laws.
As a result, only the small landowners were caught in the net and most of the big landowners or jotedars circumvented it and, even if the land was taken from them, it was not redistributed among the landless peasants. Lack of political will is considered to be the greatest stumbling block for its speedy implementation.
(iv) Consolidation of Landholdings:
Fragmented and subdivided landholdings as well as small-sized holdings have made Indian agriculture un-remunerative. So consolidation of these lands is necessary to boost efficiency and economy in India’s agriculture. It has been completed in the states of Punjab, Haryana and Uttar Pradesh.
Till December 2001, nearly, 163.3 lakh acres of land or 1 /3rd of the total cultivated area have been consolidated. Thus, the success story in this regard is rather disappointing. One of the reasons for the tardy progress of this aspect of land reforms is that small farmers have a strong fear that consolidation favours large farmers. That is why the threat of eviction of tenants from land out of consolidation is the greatest.
An Overall Appraisal of Land Reforms:
After more than 60 years of independence, one notices some achievements in the sphere of land reforms. At the same time, our efforts in this direction have not yielded desired results. Most of the planks of land reform measures are ambivalent and there are large gaps between policy and legislation and between legislation and implementation. And “land reform measures were conceived boldly but were implemented badly”—observed an expert.
The laws for the abolition of intermediaries had been implemented fairly well. As a result, 20 million cultivators were brought into direct relationship with the State. But this reform led to large-scale ejectment of tenants from land which they had been cultivating for generations as the laws failed to offer any protection to these masses.
Thus, the slogan “land to the tiller” virtually remained unfulfilled. A class of neo-zamindars or absentee landlords has sprung up in rural India who grabs the produce of the earth as well as the land!
It was hoped that tenancy reforms would ensure better results as far as the lot of tenants and sharecroppers were concerned. Tenancy reforms devised so far have not brought to an end of the system of absentee ownership of land nor have led to disappearance of tenancies.
Everywhere the immediate consequence was the ejectment of tenants on a massive scale. The consequence of the tenancy policy was to push tenancies underground. Most of the tenancies that still exist take the form of informal or concealed crop- sharing arrangements.
Again, there are reports of large-scale evasion of ceiling laws because of non-implementation of the laws. For instance, in the district of Purnea of Bihar “there are several landowners who own, and effectively control, at least 1,000 acres each, a few of them owning as many as 5,000 acres…………….. But land records show them to be owning not more than 15 acres—the upper limit according to the ceiling laws—the rest of land being transferred to mostly benamis (fake owners).” [C. H. H. Rao]
To sum up, land reform programmes implemented since 1948 have not led to any radical distribution of land or removal of some of the obstacles to raising agricultural productivity. Nevertheless, it should not be written off as a non- event’. It brought great changes. It did away with the numerous layers of parasitic intermediaries in almost all the states.
All the measures listed above, however, have left untouched the bottom layer of the agrarian structure consisting of agricultural labourers, sharecroppers, except in the states of West Bengal and Kerala where left-wing political parties changed the destiny of the poor peasantry vis-a-vis the jotedars, are poor customers.
Impact of the Land Reform Policy:
Land reforms are being attempted for two­fold reason: to improve production and productivity and the distribution of income/asset. Land reform measures are costless methods of increasing production in the agricultural sector. It serves the purpose of social justice too. Let us see how far land reform measures have improved productive efficiency of the agricultural sector and ensured social justice.
i. On productive Efficiency:
So far as productive efficiency is concerned, the land reform measures adopted in recent years have not made any significant impact. The probable reason is that the reforms have not been effectively implemented.
The ownership of land has not yet been fully transferred to the tillers. The actual rents still rule high. The consolidation of holdings has not been completed. Cooperative farming has not made much headway. In the- absence of economical holding being in actual possession of the tiller, in which he has a permanent interest, the modern techniques cannot be applied to land. Naturally, productivity continues to be low.
ii. On Social Justice:
The objective of social justice has, however, been achieved to a considerable degree. The intermediary rights have been abolished. India no longer presents a picture of feudalism at the top and serfdom at the bottom. The tenancy laws have given the tillers protection from exploitation by providing them security of tenure and fixing maximum chargeable rents.
It is true that the pace of implementation of land reform measures has been slow. Moreover, there is a marked unevenness in respect of progress in various states. This does not, however, mean that there has been no achievement at all in the sphere of land reform since independence.
But the progress has been slow and it needs to be accelerated. The manifold problems of our land are to be solved through the introduction of a suitable land policy.

4.1 Rural Credit in India:
Problems of Rural Credit in India:
1. Insufficiency:
In spite of expansion of rural credit structure, the volume of rural credit in the country is still insufficient as compared to its growing requirement arising out of increase in prices of agricultural inputs.
2. Inadequate Amount of Sanction:
The amount of loan sanctioned to the farmers by the agencies is also very much inadequate for meeting their different aspects of agricultural operations. Considering the amount of loan sanctioned as inadequate and insignificant, the farmers often divert such loan for unproductive purposes and thereby dilute the very purpose of such loan.
3. Lesser Attention of Poor Farmers:
Rural credit agencies and its schemes have failed to meet the needs of the small and marginal farmers. Thus, lesser attention has been given on the credit needs of the needy farmers whereas the comparatively well-to-do farmers are getting more attention from the credit agencies for their better credit worthiness.
4. Growing Over-dues::
The problem of over-dues in agricultural credit continues to be an area of concern. The recovery of agricultural advances to various institutions is also not at all satisfactory. In 1997-98, the recovery of agricultural advances of commercial banks, co-operative banks and regional rural banks were 63 per cent, 66 per cent and 57 per cent respectively. Such growing over-dues has also been resulted from poor repaying capacity of farmers. As a result of that, the credit agencies are becoming wary of granting loan to farmers.
5. Inadequate Institutional Coverage:
In India, the institutional credit arrangement continues to be inadequate as compared to its growing needs. The development of co-operative credit institutions like Primary agricultural credit societies, land development banks, commercial banks and regional rural banks, have failed to cover the entire rural farmers of the country.
6. Red Tapism:
Institutional agricultural-credit is subjected to red-tapism. Credit institutions are still adopting cumbersome rules and formalities for advancing loan to farmers which ultimately force the farmers to depend more on costly non-institutional sources of credit.
MEASURES TAKEN TO IMPROVE CREDIT FLOW TO AGRICULTURE:
In order to improve the flow of credit to agriculture, the Government has introduced the following measures in 1998-99:
(i) Procedural simplification for credit delivery has been made (as per R.V. Gupta Committee Report) through rationalization of internal returns of banks.
(ii) More powers have been delegated to branch managers to raise the credit flow to agriculture.
(iii) Introduction of composite cash credit limit to farmers, introduction of new loan products with saving components, cash disbursement of loans, dispensation of no due certificate and discretion to banks on matters relating to margin security requirements for agricultural loans above Rs. 10,000.
(iv) Introduction of at least one specialized agricultural bank in each state to cater to the needs of high tech.
(v) Introduction of cash credit facility.
(vi) Insuring Kisan Credit cards to farmers to draw cash for their production needs on the basis of the model scheme prepared by NABARD.
(vii) The Government has made arrangement for hassle free settlement of disputed cases of over dues.:
(viii) To augment Rural Infrastructural Development Fund (RIDF) with a corpus of Rs. 10,000 crore with NABARD to finance rural infrastructure development projects by states.
Thus, the flow of institutional credit for agriculture and allied activities which was Rs. 31,956 crore in 1997-98 is estimated to have increased to Rs. 64,000 crore in 2001-02. The total credit now from all agencies is projected to reach the level of Rs. 82,073 crore by 2002-03. The total credit now to agriculture during the period 1997-2002 is likely to be of the order of Rs. 2,33,700 crore which is close to the Ninth Plan projection of Rs. 2,29,750 crore.
For the Tenth Plan period (2002-07) the credit flow into agriculture and allied activities from all banking agencies is projected at Rs. 7,36,570 crore, which is more than three times the credit flow during the Ninth Plan.
Farm Credit Package:
The Government of India announced the “Farm credit package” in June 2004 which aimed at doubling the flow of institutional credit for agriculture in the ensuing three years. Accordingly, the credit to the farm sector got doubled during two years, i.e., from Rs. 86,981 crore in 2003-04 to Rs. 1,80,486 crore in 2005-06, as against the stipulated time period of three years. The credit flow continued to increase at Rs. 2,29,400 crore in 2006-07 and then to Rs, 2,64.455 crore in 2008-09.
Farm Loan Waiver Scheme, 2008-09 and Farmers’ Debt Relief Fund:
The Government of India, in its budget 2008-09, has introduced a complete debt waiver scheme for small and marginal farmers to the extent of Rs. 50,000 crore of loans overdue from commercial banks, RRBs and cooperative credit institutions as on 31st December, 2007 and a onetime debt relief scheme at the rate of 25 per cent for large farmers to the extent of Rs. 10,000 crore.
Initially, the Government was silent over the matter that how this big amount of loan waiver will be financed. Later on, on March 27, 2008, the Government decided to setup a Farmers’ Debt Relief Fund (FDRF) with an initial corpus of Rs. 10,000 crore to implement the farm loan waiver scheme announced in the budget to help about four crore peasants.
The government will initially provide Rs. 10,000 crore to the Fund, which has been earmarked in the supplementary demands for grants for 2007-08. This fund would be augmented by another Rs. 50,314 crore in the next four years to compensate the banks and other lending institutions on account of losses resulting from farm loan waiver scheme.
This loan waiver scheme will be implemented by June 30. This debt waiver and debt relief scheme will benefit 3 crore small and marginal farmer and 2 crore other farmers.
Again on May 23, 2008, the government brought large farmers in the ambit of its farm loan waiver scheme by expending the package by nearly 20 per cent to Rs. 71,680 crore. Under the modified scheme, all farmers, including big ones, in 237 identified districts will get a deft relief of 25 per cent of the outstanding amount or Rs. 20,000 whichever is higher. The scheme will benefit over four crore small, marginal and other large farmers and will cost the exchequer a total of Rs. 71,680 crore.
In addition to Rs. 10,000 crore that has been earmarked in 2007-08 for funding the scheme, the government will provide Rs. 15,000 crore each in 2008-09 and 2009-10, Rs. 12.000 crore in 2010- 11 and Rs. 8,314 crore in 2011-12. It has also been stressed that “Upon being granted the debt waiver or signing an agreement for debt relief under the One Time Settlement (OTS), the farmer would be entitled to fresh loans from their banks.”
As per the scheme, all farm loans disbursed by banks and co-operatives up to March 31, 2007 to an estimated three crore small and marginal farmers will be waived. Here marginal farmers are defined under the scheme as those holding up to one hectare of land, while small farmers are those who have 1 to 2 hectare under their possession.
Under the OTS scheme for the farmers, they will get a rebate of 25 per cent on their farm loan if they pay the balance 75 per cent of their outstanding loan. About 3.68 crore farmers have been benefitted from this debt waiver and debt relief scheme involving debt waiver and debt relief of Rs. 65,318 crore.
Criticism:
However, the farm loan waiver scheme has also been questioned on various grounds:
(i) The full waiver of loan only applies to losses taken by farmers from commercial bank’s, RRBs and cooperatives owning 2 hectares (5 acres) or less but completely ignores the distress of other farmers who have taken loan from private money lenders;
(ii) This 2 hectare ceiling is reasonable for fertile irrigated land but the same is again unreasonable for un-irrigated low quality land with small yields such as the “suicide belt” of Vidarbha in Saurashtra, Andhra’s, Rayalaseema or south Karnataka;
(iii) Such bonanza or doling out money will also discourage bank-finance on the part of bank and similarly may raise expectation of future waiver of such loan and more so the banks will also try to increase, “risk premium” that is built into its loan system.
(iv) The scheme is also criticized on the ground that instead of doling out such a big account of fund, it would have been better to utilize this fund for developing permanent infrastructures for small and marginal farmers to make it much more productive.
It has been observed that our past experience of such loan waiver policy did not give much relief to the poor farmers. Thus it is felt that the country’s agriculture policy needs to be redressed thoroughly through rational principle rather than doling out of huge amount of money with uncertain prospect, raising the increasing burden on the tax payer and also raising fiscal deficit of the future governments.

4.2 Marketing of Agricultural Produce
Overview
Agricultural marketing comprises all the activities involved in the supply of farm inputs and output – including all those operations which are related to the procurement, collecting, grading, storing, food and agro-processing, transportation, financing and selling of the agricultural produce.  In effect, marketing includes all overarching aspects of agribusiness, while it excludes the core activity of cultivation.

The agricultural marketing  system  also  relates  to economic  growth  of  the  agriculture sector  and ensuring safe and affordable food  to consumers, both of which are directly linked  to the food security of the country.

Objectives of Efficient Agri-Marketing
As per the report of the National Commission of Agriculture (1976), the objectives of an efficient agri-marketing system, are :
To enable the farmers as primary producers to reap the best possible benefits;
To provide facilities for lifting all the produce the farmers are willing to sell, at a price incentive;
To reduce the price spread between the primary producer and ultimate consumer; and
To make available all products of farm origin to consumers at reasonable price without impairing the quality of the produce.
A new addition to the objectives of agricultural marketing, is to contribute to the doubling the farmers’ income by 2022-23.

Advantages of good Marketing System
A good marketing system helps in the following ways:
Monetising the Produce: It helps the farmers to get the due value of their produce.
Demand Signal Platform: Marketing systems balances the demand with supply. The bridge in the form of agri-logistics, function to execute this purpose.
Market growth: India’s agriculture is transitioning from a state of deficit towards a status of surpluses. Agri-logistics technologies have also modernised to allow farm produce to connect with demand further afield. An aware and competitive marketing system, will adjust itself to suit this transformation of Agriculture in India. Further this can open up new market avenues. The opening up of the markets to promote competition and long term growth as a desired outcome.
Capital formation and investment in technology: Marketing leads to investment in Modern Supply Chain infrastructure and Information and Technology applications to increase the Produce or enhance the value of Produce.

Effective Marketing System and Its advantages
Marketing  effectiveness  in a  measure  of  expanding the  market  system  to  generate larger revenue  streams and  competitiveness.  Market  channel efficiency  depends  on  reduction  of marketing cost,  adoption of technology  in grading, packaging,  transportation, storage,  value addition, wholesaling, retailing and exploring economies of scale through aggregation. An effective Marketing system provides farmers their due share in the Production process and ensures timely delivery of goods and services.
The effectiveness of an agricultural marketing system varies depending on the situation of the target  regions, consumer,  product and  technologies in hand.
The various advantages of Effective Marketing System are-
Gives demand signals to supply side –An Effective Marketing System uses Market Intelligence in order to predict the demand. An effective marketing system  will strive  to minimise the  blind push  into markets  and instead promote a pull mode from markets.
Increase in revenue generation –  A well organised  marketing system will  increase the sum  total  of  revenue  generated  in  the agricultural  value  chain    An  effective marketing system will also aim to persuade that there is more equitable sharing of  the net revenue generated, among all the stakeholders in the value chain system.
Help in Market expansion – The effective marketing system will always promote the expanding of the market range of the producer/supplier  and provide  a choice  of purchase  for the  Market expansion also boosts vibrancy in domestic agricultural trade.
Unified market –  a  well   organised  domestic   marketing  system  will   integrate  by developing extensive connectivity across a network of demand centres and supply regions, creating uniformity in  the market arena.
Increased competitiveness  –  Competitiveness also leads  to improved  resource  optimisation and  brings  about cost  efficient

Government  Policy instruments in Agricultural Marketing
India’s main policy goals remained with focus to attain food self-sufficiency, to ensure remunerative prices to farmers, and to maintain stable prices  for consumers.  To meet these goals, India continues to rely on following policy instruments:

Regulation of markets
The Agricultural Produce Market Committee (APMC) Act requires that farm produce be sold only at regulated markets through registered intermediaries. The Essential Commodities Act (ECA), allows central and state governments to place restrictions on the storage and movement of commodities deemed essential by governments. {APMC Act and recently proposed APLM Act have been discussed in this module}

Input subsidies
Concerns on food insecurity, necessitated provision of  subsidies on  fertilizer,  electricity, fuel  and  irrigation. Intensive farming and production growth were motivators for policy interventions.

Minimum support prices
Government of India (GoI) supports  producers by  announcing  minimum prices  for certain commodities considered  key to its  agriculture. The MSP are set on recommendations of the Commission for Agricultural Costs and Prices (CACP), based on cost of production and other factors. There are other associated schemes such  as  the  Price  Stabilisation  Scheme  and  Market Intervention Scheme that also come into play as minimum support systems for farmers.

Food subsidies
India has enacted the National Food Security Act 2013, to  protect and  assure low  income consumers of access to affordable food.

Various Platforms for Marketing of Agricultural Produce
Agriculture is a state subject and various states have enacted their laws based on Model APMC Act 2003 and Model Rules 2007. These make Mandis or APMCs as main platform for farmers to sell their produce. Apart from that, there are some alternative marketing platforms also that can be utilised by farmers to sell their produce. These are as follows:
Direct Marketing
In direct marketing, the farmers directly sell with the produce consumers. These operate in two basic formats:
Farmers’ Markets, and
Direct sourcing from farmer’s field by processors (primary consumers).
These markets have helped in mitigating the problems of fragmented supply chain.  Along with it, the quick movement of produce from farmer to consumer saves losses considerably. In these markets no market fee is charged but service charges are collected from sellers. About 488 such farmers’ markets are operating across different States in the name of Apnamandis in Punjab, Haryana,  Rythu bazaars in Andhra Pradesh and Telangana, Uzhavar Sandhai in Tamil Nadu, Shetkari Bazaars in Maharashtra and Raitha Santhe in Karnataka.
Direct marketing allows farmers to  skip  multiple  layers  in  their  transactions  and  benefits  by  skipping  of intermediary margins. Though recommended in the Model APMC  Act & Rules, very  few of States have issued such licenses for direct sourcing.
Contract farming
Contract farming can address lack of market connectivity, long chain of market intermediaries,  ignorance about the buyer demands, etc. Contract farming has  a constraint from  farmers’ perspective, in  that they are limited  in their production to the direct demand and their growth is linked to the contractor’s capacity to grow the market share.  Though  contract farming is not an entire solution for problems  in agricultural marketing, it can  very well be leveraged in certain  regions and for specific crops for increasing farmers’ income. {We have discussed this in current module}
Private wholesale markets
These have not yet developed in India and states need to liberalise the marketing regulations to promote development of private markets.
Organised retailing
Organised retailing on the lines of SAFAL (the fruit & vegetable marketing  subsidiary   of  Mother   Dairy) which   is   an   example  of indigenously organised retailing network. SAFAL operates in Delhi out of approximately 400 retail outlets, and sells about 350 tonnes of fresh produce daily in Delhi-NCR markets.
Farmer Producer Organisations (FPOs)
Organising producers into formal management practices help to take collective decisions on  cultivation to make  the best use  of market intelligence,  as well creates opportunities for producers to get involved in value adding decisions and activities such  as input  supply, credit,  pre-conditioning,  processing, marketing  and  distribution. The aggregation  of  farmer  into  FPOs  (cooperatives/SHGs/FIGs/Producer  company),  helps  their integration into the supply chain.
Cooperatives in agricultural marketing
Cooperatives are organised to aggregate farmers for establishing scale in their production and marketing activities, besides easing access to credit and other services. Notable example is in the dairy sector – AMUL.

Major Challenges to Agriculture Marketing
A report of the “Committee of State Ministers, in charge of Agriculture Marketing to Promote Reforms” was published in January, 2013. This Committee highlighted that agricultural marketing is posed challenges due to fragmented supply chain with inadequate marketing infrastructure, long intermediation and lack of accurate and timely market information/intelligence system. Various challenges to agricultural marketing are as follows:

Market Licensing barriers
The compulsory requirement   of owning a shop/godown for licensing of commission agents/traders in the regulated markets has led to the monopoly of the licensed traders and  it has proved as a barrier for new entries.

Market Infrastructure  in  Agricultural  Markets is very poor
Lack of Covered and open auction platforms, common  drying yards, Electronic weigh-bridges poses serious challenges. Cold storage units also very scarce. High  Incidence of  Market Charges:  APMCs  are authorized  to collect  market  fee ranging between  0.50  to 2.0  percent  of the  sale  value of  the produce. But  In some States, total charges are about 15 per cent which is excessive.

Less farmers’ price realisation
The share of farmer in consumer’s price  is very low particularly in perishables due to a number of intermediaries, lack of infrastructure and poor holding capacity.

Huge Number  of marketing  channels with  long  supply chain
Traditionally, the normal agricultural marketing chain in the country is fairly long with a large number of intermediaries between the producers  and the  consumers,  adding up  more  of costs without adding significant value.
High marketing cost affects small and marginal farmers

Lack of grading and standardization
Different varieties of agricultural produce are not graded properly. The practice usually prevalent is the one known as “dara” sales wherein heap of all qualities of produce are sold in one common lot thus the farmer producing better qualities is not assured of a better price. Hence there is no incentive to use better seeds and produce better varieties.

Inadequate transport facilities
Very few villages are joined by railways and pucca roads to mandies. Produce has to be carried on slow moving transport vehicles like bullock carts. Obviously such means of transport cannot be used to carry produce to far-off places and the farmer has to dump his produce in nearby markets even if the price obtained in these markets is considerably low. Situation is even worse with Perishable items.
Further, the high wastages in supply chain, long gestation period of   infrastructure  projects   and  seasonality   of  agri. Produce and lack of national integrated market are other challenges you may cite in your answers.

4.3 Subsidies
Definition
• Subsidy has been defined as the “money granted by state, public body, etc., to keep down the prices of commodities, etc.”
• A subsidy is a grant or other financial assistance given by one party for the support or development of another.
• Subsidies affect the economy through the commodity market by lowering the relative price of the subsidized commodity, thereby generating an increase in its demand.
• Taxes appear on the revenue side of government budgets, and subsidies appear on the expenditure side.
• While taxes reduce disposable income, subsidies inject money into circulation.
• Subsidies have been advocated for redistributive objectives, especially to ensure minimum level of food and nutrition to all sections of society.
• Subsidies are justified in the presence of positive externalities (social benefits above private benefits), because in these cases consideration of social benefits would require higher level of consumption than what would be obtained on the basis of private benefits only.
• Primary education, preventive health care, and research and development are prime examples of positive externalities. In these cases, private valuation of the benefits from such goods or services is less than their true value to society.
Types of subsidies1. Direct Subsidies – Direct subsidies are given in terms of cash grants, interest-free loans and direct benefits. For example- Direct farm subsidies are the kinds of subsidies in which direct cash incentives are paid to the farmers in order to make their products more competitive in the global markets. Direct farm subsidies are helpful as they provide a purchasing power to the farmer and can significantly help in raising the standards of living of the rural poor.
2. Indirect subsidies – Indirect subsidies are provided in terms of tax breaks, insurance, low-interest loans, depreciation write-offs, rent rebates. For example- Indirect farm subsidies: These are the farm subsidies which are provided in the form of cheaper credit facilities, farm loan waivers, reduction in irrigation and electricity bills, fertilizers, seeds and pesticides subsidy as well as the investments in agricultural research, environmental assistance, farmer training etc.
The benefits of subsidy as a policy are:
1. Inducing higher consumption/production.
2. Achievement of social policy objectives including redistribution of income, population control etc.
3. It helps in controlling the prices to maintain stability.
4. Especially in case of agriculture where food is basic right of all, you cannot leave everything to market.
5. Offsetting market imperfections including internalization of externalities.
SUBSIDIES TO AGRICULTURE SECTOR(1) Input Subsidies: Subsidies can be granted through distribution of inputs at prices that are less than the standard market price for these inputs. The magnitude of subsidies will therefore be equal to the difference between the two prices for per unit of input distributed. Naturally several varieties of subsidies can be named in this category
(a) Fertilizer Subsidy:
• It includes Distribution of cheap chemical or non-chemical fertilizers among the farmers. It amounts to the difference between price paid to manufacturer of fertilizer (domestic or foreign) and price, received from farmers.
• This subsidy ensures:
– Cheap inputs to farmers,
– Reasonable returns to manufacturer,
– Stability in fertilizer prices, and
– Availability of fertilizers to farmers.
• In some cases this kind of subsidies are granted through lifting the tariff on the import of fertilizers, which otherwise would have been imposed.
(b) Irrigation Subsidy:
• Subsidies to the farmers which the government bears on account of providing proper irrigation facilities.
• Irrigation subsidy is the difference between operating and maintenance cost of irrigation infrastructure in the state and irrigation charges recovered from farmers.
• This may work through provisions of public goods such as canals, dams which the government constructs and charges low prices or no prices at all for their use from the farmers.
• It may also be through cheap private irrigation equipment such as pump sets.
(c) Power Subsidy:
• The electricity subsidies imply that the government charges low rates for the electricity supplied to the farmers. Power is primarily used by the farmers for irrigation purposes. It is the difference between the cost of generating and distributing electricity to farmers and price received from farmers.
(d) Seed Subsidies:
• High yielding seeds can be provided by the government at low prices. The research and development activities needed to produce such productive seeds are also undertaken by the government, the expenditure on these is a sort of subsidy granted to the farmers.
(e) Credit Subsidy:
• It is the difference between interest charged from farmers, and actual cost of providing credit, plus other costs such as write-offs bad loans. Availability of credit is a major problem for poor farmers. They are cash strapped and cannot approach the credit market because they do not have the collateral needed for loans. To carry out production activities they approach the local money lenders.
(2) Price Subsidy
• It is the difference between the price of food-grains at which FCI procures food-grains from farmers, and the price at which PCI sells either to traders or to the PDS.
• The market price may be so low that the farmers will have to bear losses instead of making profits. In such a case the government may promise to buy the crop from the farmers at a price which is higher than the market price.
• The difference between the two prices is the per unit subsidy granted to the farmers by the government. The price at which the government buys crops from the farmers is called the procurement price.
• Such procurement by the government also has a long run impact. It encourages the farmers to grow crops which are regularly procured.
(3) Infrastructural Subsidy
• Private efforts in many areas do not prove to be sufficient to improve agricultural production. Good roads, storage facilities, power, information about the market, transportation to the ports, etc. are vital for carrying out production and sale operations.
• These facilities are in the domain of public goods, the costs of which are huge and whose benefits accrue to all the cultivators in an area.
• The government takes the responsibility of providing the public goods and given the condition of Indian farmers a lower price can be charged from the poorer farmers.
(4) Export Subsidies
• This type of subsidy is not different from others. But its purpose is special. When a farmer or exporter sells agricultural products in foreign market, he earns money for himself, as well as foreign exchange for the country. Therefore, agricultural exports are generally encouraged as long as these do not harm the domestic economy. Subsides provided to encourage exports are referred as export subsidies.
Objectives of Agricultural Subsidy• Economic objectives:
– Stimulate agricultural production.
– Compensate for high costs of transport from port or factory to farms that raise costs of inputs.
– Improve soil quality and combat soil degradation (in the case of fertilizer).
– Make inputs affordable to farmers who cannot buy them, owing to poverty, lack of access to credit, and inability to insure against crop losses.
– Learning — to allow farmers to try novel inputs and become familiar with their advantages.
• Social objectives:
– Social equity – to transfer income to farmers who are poor, live in remote disadvantaged areas, or both
WTO and Agricultural SubsidiesThe WTO Agreement on Agriculture (AoA), 1995 permitted the developed countries to continue to provide farm subsidies, but under certain restrictions. In WTO terminology, agricultural subsidies have been segregated into various ‘boxes’:
1. Green Box subsidies – It includes amounts spent on research, disease control, and infrastructure and food security. These also include direct payments made to farmers such as income support that do not stimulate production. These are not considered trade distorting and are encouraged.
2. Blue Box subsidies – It includes direct payments to farmers to limit production and certain government assistance to encourage agriculture and rural development in developing countries. Blue Box subsidies are seen as being trade distorting.
3. Amber Box subsidies – It includes all agricultural subsidies that do not fall into either blue or green boxes. These include government policies of Minimum support Prices (MSP) for agricultural products or any help directly related to production quantities (e.g. power, fertilizer, seeds, pesticides, irrigation, etc.). These are subject to reduction commitment to the de-minimus level of agricultural outputs- to 5% for developed and 10% for developing countries. India insisted that developed countries should first dismantle their agricultural subsidy structure before asking developing countries to open up their market for farm imports.
FERTILIZER SUBSIDY• Urea is highly subsidized for Indian Farmers.
• However, the skewed subsidy regime, resulting in farmers paying lesser for urea compared to phosphorus and potassium, had led to urea overuse.
• India purchases about 50 lakh metric tonnes of excess urea, leading to farmers and the government wastefully spend Rs. 2,680 crore and Rs. 5,860 crore respectively, further putting constraint on government’s resources.
• The distorted policy has also led to stagnation of private investment in the sector, especially in urea, and increased reliance on imports. The fertilizer subsidy hurts everyone — farmers, firms, taxpayers and consumers.
FUEL SUBSIDIES IN INDIA• Selling fuel at less than market prices result in under-recoveries for Oil Marketing Companies (OMCs) like Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL).
• Govt compensates these OMCs by directing upstream oil companies like Oil and Natural Gas Corporation Ltd (ONGC), Oil India Ltd (OIL), GAIL India Ltd to provide discount on crude oil purchases by these companies and issuing oil bonds. The government has over the years ensured that OMCs remain profitable and honour their financial obligations.
• Subsidies on kerosene have increased from Rs. 12.92/litre to Rs. 34.80/litre and LPG cylinders from Rs. 175.04/cylinder to Rs. 522.10/cylinder during the same period. Diesel accounts for 45%, LPG 33% and kerosene 22% of the total under-recoveries. To rein in subsidies, petrol prices were de-controlled in June 2012. However, it did not have a significant impact on under recoveries because petrol accounts for only 10% of total petroleum product consumption in the country.
FOOD SUBSIDY – NATIONAL FOOD SECURITY ACT• To ensure food security at the individual or household level, the Government of India implements various schemes in partnership with State Governments and Union Territory Administrations.
• The Government is implementing the Targeted Public Distribution system (TPDS) under which food-grains at subsidized rates are provided to Below Poverty Line and Above Poverty Line Households through a network of more than 5 lakh fair price shops spread across the country.
• Currently, allocations of subsidized food-grains is being made for about 6.5 crore BPL households.
• Besides, Government is also implementing schemes to specifically address the concerns related to malnutrition, especially among women and children, through schemes like Integrated Child Development Services, Mid-Day Meal, Annapurna, etc.
Some of the major highlights of the Food Security Bill are:
• Up to 75% of the rural population (with at least 46% from priority category) and up to 50% of urban population (with at least 28% from priority category) are to be covered under Targeted Public Distribution System.
• 7 kg of food-grains per person per month to be given to priority category households which include rice, wheat and coarse grains at Rs. 3, 2, and 1 per kg, respectively.
• At least 3 kg of food-grains per person per month to be given to general category households, at prices not exceeding 50% of Minimum Support Price.
• Women to be made head of the household for the purpose of issue of ration cards.
• Maternity benefit to pregnant women and lactating mothers.
• End-to-end computerization of Targeted Public Distribution System.
• Three-tier independent grievance redressal mechanism.
• Social audit by local bodies such as Gram Panchayats, Village Councils etc.
• Meals for special groups such as destitute, homeless persons, emergency/disaster affected persons and persons on the verge of starvation.
Targeted Public Distribution System (TPDS)
• In June 1997, the Government of India launched the Targeted Public Distribution System (TPDS) with focus on the poor.
• India’s Public Distribution System (PDS) with a network of 4.78 Lakh Fair Price Shops (FPS) is perhaps the largest retail system of its type in the world.
• The objectives of PDS are:
– Providing food grains and other essential items to vulnerable sections of the society at reasonable (subsidized) prices
– To put an indirect check on the open market prices of various items and
– To attempt socialization in the matter of distribution of essential commodities
• Under the TPDS, States are required to formulate and implement foolproof arrangements for identification of the poor for delivery of food grains and for its distribution in a transparent and accountable manner at the FPS level.
• The TPDS system today supports over 40 Crore Indians below the poverty line with monthly supply of subsidized food grains. The system also provides gainful employment for 4.78 Lakh Fair Price Shops Owners, their employees and hired labour who work at the FCI and state ware housing godowns.
• PDS also has become a cornerstone of government development policy and is tied to implementation of most rural development programs.
• PDS is also a key driver of public sentiment and is an important and very visible metric of government performance.
• Apart from supplying food grains under the TPDS, other welfare schemes related to food are also executed. They are:
– Mid-Day Meal Scheme
– Wheat Based Nutrition Program (WBNP)
– Scheme For Supply of Foodgrains to SC/ST/OBC Hostels/Welfare Institutions
– Annapurna Scheme
– Sampoorn Gramin Rozgar Yojna (SGRY)
– National Food For Work Program (NFFWP)
– Foodgrains To Adolescent Girls , Pregnant And Lactating Mothers ( AGPLM)
– Village Grain Banks Scheme
– World Food Program
There are many systemic challenges that plague the PDS system today1. PDS Leakages
a. A large number of families living below the poverty line have not been enrolled and therefore do not have access to ration cards
b. A number of bogus ration cards which do not correspond to real families, exist in the BPL & AAY categories.
c. A number of instances where benefits are being availed in the names of rightfully entitled families without their knowledge.
d. Errors in categorization of families that lead to BPL families getting APL cards and vice versa.
2. Scale and Quality of Issue – The scale of issue and the quality of food grains delivered to the beneficiary is rarely in conformity with the policy. Many FPS are open only for a few days in a month and beneficiaries who do not visit the FPS on these days are denied their right.
3. System Transparency and Accountability –The most serious flaw plaguing the system at present is the lack of transparency and accountability in its functioning.
4. Grievance Redressal Mechanisms – There are numerous entities like Vigilance Committee, Anti-Hoarding Cells constituted to ensure smooth functioning of the PDS system. Their impact is virtually non-existent on the ground and as a result, malpractices abound to the great discomfiture of the common man.
DIRECT CASH TRANSFER• Recent studies by the Planning Commission have shown that the Public Distribution System has become so inefficient that 58% of the subsidized grains do not reach the targeted group and almost a third of it is siphoned off the supply chain. According to the Finance Ministry the inefficiencies of the PDS ensure that the Government is forced to spend Rs.3.65 for transferring of Rs. 1 to the poor.
• The idea behind the Direct Cash Transfer is to cut down wastage, duplication and leakages and also to enhance efficiency. The idea is to move to a completely electronic cash transfer system for the entire population.
Launch of the programme
• The programme is now called direct benefit transfer (DBT).
• On January 01, 2013, the government of India rolled out the DBT covering seven welfare schemes in 20 districts in 16 states.
• The programme covers schemes like educational scholarship for the Scheduled Castes and the Scheduled Tribes and pensions to widows. Food, fertilizers, LPG, diesel and kerosene have been kept out for the present.
• Among other objectives like better delivery, more accurate targeting, giving broader choice to the beneficiaries, reducing pilferage and corruption, the programme is also  aimed at cutting the massive subsidy bill of Rs 1,64,000 crore .
Scope of DBT
• The DBT program aims that entitlements and benefits are transferred directly to the beneficiaries. The beneficiaries could include widows, students and pension takers. This would be done through biometric-based Aadhaar-linked bank accounts. This would reduce several layers of intermediaries and delays in the system.
Advantages of DBT system
• The use of Aadhaar or other biometric based systems would dissolve problems like duplicates or ghosts. Duplicates are when the name of the beneficiary is repeated and Ghosts is when the name of a nonexistent beneficiary is mentioned.
• It helps in the quick and direct cash transfer to the intended beneficiary.
• The cash transfer happens through a dense Business Correspondent system on the ground with micro ATM’s.
• This ensures that the poor get the same level of service that the rich and the middle classes in the society receive.
• The financial inclusion offered by the DBT infrastructure can also be used by internal migrants to send their remittances.
• The Aadhaar-based micro-ATM network could ensure that remittances take place instantly and at much lower cost to migrants.
Subsidies and Export Promotion
• As a part of export promotion strategy, besides various other measures, various types of export incentives have been evolved. These have been altered and modified from time to time to meet varying conditions. Broadly, these incentives can be classified into three categories, viz.
• Fiscal Incentives – Under fiscal incentives, the important measures that have been in vogue are income tax concessions, customs draw-backs, refund of excise duty,- exemption from sales tax, provision for export undertaken, and facility for manufacture under bond.
• Financial Incentives – These incentives refer to the provision of cash assistance for specified export promotional efforts and export facilities.
• Special Incentive Schemes – Besides the recent reforms in the export incentive structure, export profitability was sought to be improved through a variety of fiscal concessions, and explicit and implicit subsidies. These measures were considered necessary to neutralise the negative financial impact of high administered prices of inputs and differential tax incidence that exporters suffer vis-a-vis ‘across the border’ competitors.

4.4 Issues and Challenges to Urban Infrastructure in India

It has been observed that the growth of urban infrastructure does not match with the growth of urban population. Some striking facts about the challenges of urban infrastructure are as follows:
Status of drinking water supply, public transportation, sewage and solid waste management is much lower than desired.
No city has fully covered 24×7 water supplies.
Only 74% of the house-holds are served by piped water.
Only 65 of 423 class I cities have a formal city bus service in 2012.
Only 30% cities have sewage treatment as against desired 100%.
7% urban population has access to the piper sewer system.
6% urban population still defecates in the open.
Only 72% of the solid waste is collected and only 30% is segregated. Scientific treatment and disposal is non-existent.
24% urban population lives in slums.

Major Infrastructure Bottlenecks in India
There are various bottlenecks which act as impediments for growth of infrastructure. The major ones are summed up below:

Financing
Infrastructure projects are highly capital intensive and funding is considered as a major impediment in achieving the infrastructure goals. The infrastructure broadly can be divided into two types, one which is very essential for the public at large and have no or very little revenue potential and other which has handsome revenue potential. The first kind of infrastructure must be totally government financed whereas the later can be developed on PPP mode. Since resource constraints will continue to limit public investment in infrastructure, PPP-based development needs to be encouraged wherever feasible.

Land Acquisition
Another significant challenge in achieving the infrastructure goal is the way land acquisition is done for infrastructure projects. Compensation fixed in terms of registered value is always the bone of contention. There is always a substantial difference between the compensation offered and the actual value of the land. The land owners always feel aggrieved which results in dispute and litigation.
However, The Land Acquisition and Rehabilitation & Resettlement Bill would be able to tackle this issue of land acquisition favourably.

Clearances from numerous agencies
Most of the infrastructure projects in India suffer from delays in completion. This is mainly due to an inadequate regulatory framework and inefficiency in the approval process. Infrastructure projects require multiple sequential clearances at various levels of government. There are various approvals needed at every stage which definitely delay the infrastructure projects.

Environmental Impact Assessment (EIA)
Environmental safeguards and guidelines have proven to be one of the major reasons for delay in infrastructure projects, especially in the power sector. While new projects need to comply with these regulations, even a project under construction may need to comply with revised standards midway through the execution stage.

Poor pre-construction planning
Due to the already adverse effect of various impediments like land acquisition, statutory approvals, delayed financial closure, etc. the pre-construction phase of infrastructure projects is pretty long. Therefore, there is delayed commissioning and completion of projects.

Suggestions and Way Forward
It must be noted that India’s Infrastructure which is an essential and most important component of Urban Development, is in a poor shape and needs an immediate attention and redress both from Government and Industry. Following are some of the ways to surpass the challenges faced by infrastructure development:
There must be a more conducive environment for potential concessionaire. There is always a worry of early clearances and investors are stuck in the bureaucratic cycle.
There is a necessity for improvements in the investment climate.
Migration of large population to urban centres is causing new cities to emerge and existing ones to expand. This is causing rapid urbanization. Therefore, India needs to develop satellite cities for which the need is of mass-transport systems.
There must be Single window statutory clearance which even includes Environmental clearance to projects.
There are good competent people working in different departments of government, however they are working in silos, we need better and effective coordination for a fast project roll out.
There is no doubt that fiscal support is the dominant factor for infrastructure development but equally important is enabling policies from the governments end. Then only the world class infrastructure dream of India can be realized and place India’s economy on a high growth trajectory.

5. Urbanization

• Urbanization and economic development have a strong positive correlation which is indicated by the fact that a country with a high per capita income is also likely to have a high degree of urbanization. The economic advantages provided by urban areas are many.
• Generally, the industrial, commercial and service sectors tend to concentrate in and around urban areas. These areas provide a larger concentration of material, labour, infrastructure and services related inputs on the one hand and also the market in the form of consumers, on the other. But the situation is different for India.
• Urbanization in India has become an important and irreversible process, and an important determinant of national economic growth and poverty reduction.
• The process of urbanization is characterized by a dramatic increase in the number of large cities, although India may be said to be in the midst of transition from a predominantly rural to a quasi urban society.
• In Census of India, 2011 two types of town were identified:
a) Statutory towns: All places with a municipality, corporation, Cantonment board or notified town area committee, etc. so declared by state law.
b) Census towns: Places which satisfy following criteria:-
i) A minimum population of 5000;
ii) Atleast 75% of male working population engaged in non agricultural pursuits; and
iii) A density of population of atleast 400 persons per sq km.
• At current rate of growth, urban population in India will reach a staggering total of 575 million by 2030 A.D. According to Census 2011, as many as 52 Cities in India had population of a million plus. Over successive decades, the number of urban areas and towns has increased.
BASIC FEATURE OF URBANIZATION IN INDIA
a) Lopsided urbanization induces growth of class I cities.
b) Urbanization occurs without industrialization and strong economic base.
c) Urbanization is mainly a product of demographic explosion and poverty induced rural – urban migration.
d) Rapid urbanization leads to massive growth of slum followed by misery, poverty, unemployment, exploitation, inequalities, degradation in the quality of urban life.
e) Urbanization occurs not due to urban pull but due to rural push.
f) Poor quality of rural-urban migration leads to poor quality of urbanization.
g) Distress migration initiates urban decay.
ISSUES RELATED TO URBANIZATION IN INDIA
1. Rural Urban Migration
• Migration and urbanization are direct manifestations of the process of economic development in space, particularly in the contemporary phase of globalization.
• A large part of migration and urbanization in India have been linked to:
a) Stagnation and volatility of agriculture.
b) Lack of sectoral diversification within agrarian economy.
c) Low growth rates in agricultural production and income.
d) Unstable and disparate across regions over the past several decades.
e) A low rate of infrastructural investment in public sector in the period of structural adjustment.
• This has led to out-migration from several backward rural areas, most of the migrants being absorbed within urban informal economy.
• But the capacity of the cities and towns to assimilate the migrants by providing employment, access to land, basic amenities etc. are limited.
2. Emergence of Slums
• Due to lack of housing, in every city almost fifty percent population lives in slums. Slums have few characteristics in common:
a) Poor structural quality and durability of housing
b) Insufficient living areas (more than three people sharing a room)
c) Lack of secure tenure
d) Poor access to water
According to the Census data, 1.37 crore households, or 17.4% of urban Indian households lived in a slum in 2011. The new data is difficult to compare with previous years, because the 2011 Census covers all 4,041 statutory towns in India, as compared to 2001 when only statutory towns with population over 20,000 were covered.
Among all million-plus cities, Vishakhapatnam has the highest proportion of slums (44.1% of households). However, Census authorities were treating with skepticism the unexplained spurt in slum populations across cities in Andhra Pradesh.
There are various reasons for creation of slums of which the most important are as follows:
a) Increased urbanization leading to pressure on the available land and infrastructure, especially for the poor.
b) Natural increase in the population of urban poor and migration from rural areas and small towns to larger cities.
c) Inappropriate system of urban planning which does not provide adequate space for the urban poor in the City Master Plans.
d) Sky-rocketing land prices due to increasing demand for land and constraints on supply of land.
e) Absence of programmes of affordable housing for the urban poor in most States.
f) Lack of availability of credit for low income housing.
g) Increasing cost of construction.
3. Urban Transport
• India is transiting from a developing to developed country with high pace of economic development. Urbanization is too increasing at high pace as mega cities, cities and towns are providing better economic opportunities.
• The major objective of urban transport initiative is to provide efficient and affordable public transport.
• Urban transport problems
a) Traffic injuries and fatalities
Causes can be poor conditions of roads, burgeoning fleet of motor vehicles, unsafe drinking behavior, overcrowding of buses, autos etc.
b) Environmental pollution
Both noise and air pollution is occurring on a major level.
c) Roadway congestion
The most visible immediate transport problem plaguing Indian cities on a daily basis.
d) Lack of funding
The huge amount of funding required to increase more number of buses, provide improved technology etc is missing.
4. Waste Disposal
• Removing garbage, cleaning drains and unclogging sewers are the main jobs of municipalities and municipal corporations in Indian cities.
• In most cities, the municipal service for the collection and transportation of urban solid wastes comprises three separate functions as follows: sweeping, curbside and domestic waste collection from garbage bins; Transportation by handcarts to large or road collection points, which may be open dumps and Transportation by vehicles to the disposal sites.
• The weaknesses of the existing system of solid waste management are:
a) the professional and managerial capacities of the municipal bodies are limited and this is more pronounced in case of smaller cities;
b) no charges are levied for garbage collection or disposal, nor are there any incentives for reducing garbage generation or recycling waste;
c) no separate costing is done for this function;
d) indiscriminate use of plastic bags and goods;
e) recourse to modern technology is rare and;
f) segregation of garbage at the source is not enforced.
• Thus, Indian waste management system is starved of resources to tackle the increasing demands associated with growing urbanisation. Due to budgetary constraints, inadequate equipment and poor planning, house-to-house collection is very rare in India, particularly in certain low-income areas where waste is not collected at all. It is estimated that upto 30-40 per cent of disposed solid wastes are left uncollected.
5. Water Supply, Drainage and Sanitation
• According to the 2011 Census, amenities available with the households has been listed as follows: 87% of households are using tap, tube well, hand pump and covered well as the main source of drinking water while 43.5 percent use tap water. Only 47% of households have source of water within the premises while 36% of households have to fetch water from a source located within 500 m in rural areas/100 m in urban areas and 17% still fetch drinking water from a source located more than 500 m away in rural areas or 100 m in urban area.
• Thus, government has come out with Swatchch Bharat Mission which would attempt to banish open defecation within a decade.
• Further a new technology “Bio-toilets” have been introduced which is suitable for any area/ application in India.
6. Electronic Waste
• E-waste consists of all waste from electronic and electrical appliances which have reached their end- of- life period or are no longer fit for their original intended use and are destined for recovery, recycling or disposal.
• It includes computer and its accessories monitors, printers, keyboards, central processing units; typewriters, mobile phones and chargers, remotes, compact discs, headphones, batteries, LCD/Plasma TVs, air conditioners, refrigerators and other household appliances.
• The main sources of electronic waste in India are the government, public and private (industrial) sectors, which account for almost 70 per cent of total waste generation. The contribution of individual households is relatively small at about 15 per cent; the rest being contributed by manufacturers. Though individual households are not large contributors to waste generated by computers, they consume large quantities of consumer durables and are, therefore, potential creators of waste.
• In India E-waste management system in India most of the activities right from the collection, transportation, segregation, dismantling, etc., are done by unorganized sectors manually. Being a rich source of reusable and precious material, E-waste is also a good source of revenue generation for many people in India.
• The big portion (rag pickers) of the Indian population earn their livelihood by collecting and selling the inorganic waste-like plastics, polythene bags, glass bottles, cardboards, paper, other ferrous metals, etc. In absence of the  adequate technologies and equipment, most of the techniques used for the recycling/treatments of E-waste are very raw and dangerous.
• Improper recycling and disposal operations found in different cities of India often involve the open burning of plastic waste, exposure to toxic solders, dumping of acids, and widespread general dumping.
7. Urban Poverty
• Urban poverty is a major challenge before the urban managers and administrators of the present time. Though the anti-poverty strategy comprising of a wide range of poverty alleviation and employment generating programmes has been implemented but results show that the situation is grim. Migration alone accounts for about 40 per cent of the growth in urban population, converting the rural poverty into urban one.
• Thus with the objective of putting in place a uniform criterion to identify the BPL households in urban areas so that objectivity and transparency is ensured in delivery of benefits to the target groups, the Planning Commission constituted an Expert Group under the Chairmanship of Professor S.R. Hashim.
8. Haphazard Growth of Real Estate Sector
• The real estate sector is a critical sector of India economy. It has a huge multiplier effect on the economy and therefore, is a big driver of economic growth. It is the second-largest employment-generating sector after agriculture. Growing at a rate of about 20% per annum and this sector has been contributing about 5-6% to India’s GDP. Not only does it generate a high level of direct employment, but it also stimulates the demand in over 250 ancillary industries such as cement, steel, paint, brick, building materials, consumer durables and so on.
• The Real Estate (Regulation and Development) Bill, 2013 has been introduced to curb the issues related to unsustainable urban real estate sector. It aims to provide a uniform regulatory environment in the real estate sector which is laced with black money, corruption, red tapism, land mafias and corruption.
GOI INITIATIVES RELATED TO URBAN DEVELOPMENT
• National Urban Transport Policy.
– The National Urban Transport Policy (NUTP) was formulated in 2006, to integrate land use and transport planning in cities, and to bring about comprehensive improvements in urban infrastructure.
– While urban transport is a State responsibility under the Constitution, there is a need to guide State-level action plans, particularly linked to land use planning, in order for transport plans to best support the key social and economic activities of its resident.
– Key objectives:
a) Incorporate urban transport as an important parameter in urban planning
b) Bring about more equitable allocation of road space with people rather than vehicles as the main focus
c) Encourage greater use of public transport and non-motorized modes of transport
• Atal Mission for Rejuvenation and Urban Transformation and Smart Cities Mission
– The Smart Cities Mission and the Atal Mission for Rejuvenation and Urban Transformation of 500 cities (AMRUT) with outlays of Rs. 48,000 crore and Rs. 50,000 crore respectively has been launched by government of India.
– Under the Smart Cities Mission, each selected city would get central assistance of Rs.100 crore per year for five years.
– Smart City aspirants will be selected through a ‘City Challenge Competition’ intended to link financing with the ability of the cities to perform to achieve the mission objectives. Each state will shortlist a certain number of smart city aspirants as per the norms to be indicated and they will prepare smart city proposals for further evaluation for extending Central support.
– This Mission of building 100 smart cities intends to promote adoption of smart solutions for efficient use of available assets, resources and infrastructure with the objective of enhancing the quality of urban life and providing a clean and sustainable environment. Special emphasis will be given to participation of citizens in prioritizing and planning urban interventions.
– It will be implemented through ‘area based’ approach consisting of retrofitting, redevelopment, pan-city initiatives and development of new cities.
– Under smart cities initiative, focus will be on core infrastructure services like: Adequate and clean Water supply, Sanitation and Solid Waste Management, Efficient Urban Mobility and Public Transportation, Affordable housing for the poor, power supply, robust IT connectivity, Governance, especially e-governance and citizen participation, safety and security of citizens, health and education and sustainable urban environment.
– Smart City Action Plans will be implemented by Special Purpose Vehicles(SPV) to be created for each city and state governments will ensure steady stream of resources for SPVs.
– Atal Mission for Rejuvenation and Urban Transformation (AMRUT) has a wider reach in terms of the number of cities covered and therefore the funds available for each city would be proportionately less. The mission takes a project approach in working towards improving existing basic infrastructure services like extending clean drinking water supply, improving sewerage networks, developing septage management, laying of storm water drains, improving public transport services and creating green public spaces like parks etc, with special focus on creating healthy open spaces for children.
• Housing for All by 2022’ Mission
– Around one third of the human population in urban as well as rural areas in the country are deprived of adequate housing facilities. Out of the estimated 200 million families in India, approximately 65 to 70 million families do not have adequate housing facilities. They are not able to procure a house for want of financial resources. The situation of the Scheduled Tribes, Scheduled Castes and the other socially and economically backward class families is worst affected by poor housing conditions.
– Hence government has launched Housing for All Scheme.
– Salient Features of the Programme are:
a) Central grant of Rs. one lakh per house, on an average, will be available under the Slum Rehabilitation Programme.
b) A State Government would have flexibility in deploying this slum rehabilitation grant to any slum rehabilitation project taken for development using land as a resource for providing houses to slum dwellers.
c) State Government or their parastatals like Housing Boards can take up project of affordable housing to avail the Central Government grant.
d) The scheme will be implemented as a Centrally Sponsored Scheme except the credit linked subsidy component, which will be implemented as a Central Sector Scheme.
e) The Mission also prescribes certain mandatory reforms for easing up the urban land market for housing, to make adequate urban land available for affordable housing. Houses constructed under the mission would be allotted in the name of the female head of the households or in the joint name of the male head of the household and his wife.
f) The scheme will cover the entire urban area consisting of 4041 statutory towns with initial focus on 500 Class I cities and it will be implemented in three phases as follows, viz. Phase-I (April 2015 – March 2017) to cover 100 Cities to be selected from States/UTs as per their willingness; Phase – II (April 2017 – March 2019) to cover additional 200 Cities and Phase- III (April 2019 – March 2022) to cover all other remaining cities. However, there will be flexibility in covering number of cities in various phases.

5.1 Migration
• Migration (human) is the movement of people from one place in the world to another for the purpose of taking up permanent or semipermanent residence, usually across a political boundary. An example of “semipermanent residence” would be the seasonal movements of migrant farm laborers. People can either choose to move (“voluntary migration”) or be forced to move (“involuntary migration”).
• Migrations have occurred throughout human history, beginning with the movements of the first human groups from their origins in East Africa to their current location in the world.
• Migration occurs at a variety of scales:
a. Intercontinental (between continents),
b. Intracontinental (between countries on a given continent), and
c. Interregional (within countries).
• One of the most significant migration patterns has been rural to urban migration—the movement of people from the countryside to cities in search of opportunities.
Types of migration
a) Internal Migration: Moving to a new home within a state, country, or continent.
b) External Migration: Moving to a new home in a different state, country, or continent.
c) Emigration: Leaving one country to move to another (e.g., the Pilgrims emigrated from England).
d) Immigration: Moving into a new country (e.g., the Pilgrims immigrated to America).
e) Population Transfer: When a government forces a large group of people out of a region, usually based on ethnicity or religion. This is also known as an involuntary or forced migration.
f) Impelled Migration (also called “reluctant” or “imposed” migration): Individuals are not forced out of their country, but leave because of unfavorable situations such as warfare, political problems, or religious persecution.
g) Step Migration: A series of shorter, less extreme migrations from a person’s place of origin to final destination—such as moving from a farm, to a village, to a town, and finally to a city.
h) Chain Migration: A series of migrations within a family or defined group of people. A chain migration often begins with one family member who sends money to bring other family members to the new location. Chain migration results in migration fields—the clustering of people from a specific region into certain neighborhoods or small towns.
i) Return Migration: The voluntary movements of immigrants back to their place of origin.
This is also known as circular migration.
j) Seasonal Migration: The process of moving for a period of time in response to labor or climate conditions
PULL AND PUSH FACTORS OF MIGRATION
There are a number of reasons why people choose to migrate to another country.
Globalisation has increased the demand for workers from other countries in order to sustain national economies. Known as “economic migrants,” these individuals are generally from impoverished developing countries migrating to obtain sufficient income for survival.This income is usually sent home to family members in the form of remittances and has become an economic staple in a number of developing countries.  People also move or are forced to move as a result of conflict, human rights violations, violence, or to escape persecution.
Another reason people move is to gain access to opportunities and services or to escape extreme weather. This type of movement is usually from rural to urban areas and is known as “internal migration.”  Socio-cultural and geo-historical factors also play a major role. In North Africa, for example, being an immigrant in Europe is considered a sign of social prestige. Moreover, there are many countries which were former European colonies. This means that many have relatives that live legally in Europe, who often constitute an important help for immigrants who have just arrived in a European country. Relatives might help with job research and accommodation. The geographical proximity of Africa to Europe and the long historical ties between Northern and Southern Mediterranean countries also prompt many to migrate.
Push factors are those that force the individual to move voluntarily, are in many cases, they are forced because the individual risk something if they stay. Push factor may include conflict, drought, famine-natural disaster, war, few jobs or extreme religious activity.
Poor economic activity and lack of job opportunities are also strong push factors for migration. Other strong push factors include race and discriminating cultures, political intolerance and persecution of people who question the status quo.
Pull factors are those factors in the destination country that attract the individual or group to leave their home. Those factors are known as place utility, which is the desirability of a place that attracts people. Better economic opportunities, more jobs, and the promise of a better life often pull people into new locations. Sometimes individual haves ideas and perception about places that are not necessarily correct, but are strong pull factors for that individual. As people grow older and retire, many look for places with warm weather, peaceful and comfortable locations to spend their retirement after a lifetime of hard work and savings. Such ideal places are pull factors too.
Very often, people consider and prefer opportunities closer to their location than similar opportunities closer to their location than similar opportunities farther away. In the same vein, people often like t move to places with better cultural, political, climatic and general terrain in closer locations than locations farther away. It is rare to find people move over very long distances to settle in places that they have little knowledge of.

Impacts of migration
Human migration affects population patterns and characteristics, social and cultural patterns and processes, economies, and physical environments. As people move, their cultural traits and ideas diffuse along with them, creating and modifying cultural landscapes.
a) Diffusion: The process through which certain characteristics (e.g., cultural traits, ideas, disease) spread over space and through time.
b) Relocation Diffusion: Ideas, cultural traits, etc. that move with people from one place to another and do not remain in the point of origin.
c) Expansion Diffusion: Ideas, cultural traits, etc., that move with people from one place to another but are not lost at the point of origin, such as language.
d) Cultural markers: Structures or artifacts (e.g., buildings, spiritual places, architectural styles, signs, etc.) that reflect the cultures and histories of those who constructed or occupy them.
Measuring migration
In-migration: people moving into one place from another place within a nation (internal migration).
Out-migration: people moving out of one place to another place within a nation (internal migration).
Gross migration: total number of in-migrants and out-migrants (internal migration).
Net internal migration: the difference between in-migration and out-migration.
Movers from abroad: people coming into a nation from another country or part of the world.
Net migration: the difference between net internal migration and movers from abroad.

6. Industries in india

Cotton Textile Industry in India
Most important industry in terms of employment and production of export goods. In Maharashtra (Mumbai, Sholapur, Pune, Kolhapur, Satara, Wardha, Hajipur), Gujarat (Ahmedabad, Vododara, Rajkot, Surat, Bhavnagar), Tamil Nadu (Coimbatore-Manchester of South India). Tamil Nadu has the largest number of cotton textile mills in India.
Silk Textile Industry in India
The location of silk industry is governed by two factors- prevalence of sericulture practices and availability of skilled labour. Karnataka is the leading producer, followed by West Bengal, Bihar, etc.
Woolen Textile Industries
In Punjab (Dhariwai, Amritsar, Ludhiana, Ferozpur), Maharashtra (Mumbai), UP (Kanpur, Mirzapur, Agra, Tanakpur), etc.
Jute Industries India
India manufactures the largest quantity of jute goods in the world. Mainly located in West Bengal, followed by Andhra Pradesh, Bihar, UP, MP.
Iron and Steel Industries
Located near the sources of raw materials and fuel (coal). In Jamshedpur (Jharkhand), Durgapur, Burnpur (W.B.), Bhadrawati (Karnataka), Bokaro (Jharkhand), Rourkela (Orissa), Bhilai (Chhatisgarh), Salem (T.N.), Vishakhapatnam (A.P.).
Aluminium Smelting in India
Located mainly near the sources of raw materials, means of transport and cheap electricity. In Hirakud, Koraput (Orissa), Renukoot (UP), Korba (MP), Ratnagiri (Maharashtra), Mettur (TN), Alwaye
Copper Smelting Industry
In Khetri, Alwar, Jhunjhunu (Rajasthan), Singhbhum (Jharkhand), Agnigundala (A.P.).
Heavy Machinery Industry
In Ranchi, Vishakapatnam, Durgapur, Tiruchirapalli, Mumbai, Kami.
Machine Tools Industry
It forms the basis for the manufacturing of industrial, defence equipments, automobiles, railway engines and electrical machinery.
In Bangalore, Pinjore (Haryana), Kalamassery (Kerala), Hyderabad, Secunderabad, Srinagar, Ajmer.
Heavy Electrical Equipments
Power generation equipments. In Bhopal, Tiruchirapalli, Jammu, Ramchandrapuram (Hyderabad), Hardwar, Bangalore and Jogdishpur (UP).
Railway Equipments
Locomotives in Indian Railways: In Chittaranjan (WB), Varanasi, Jamshedpur, Bhopal. Coaches: Perambur (TN), Kapurthala (Punjab), also at Bangalore and Kolkata.
Ship Building India
Hindustan Shipyard at Vishakhapatnam, Cochin Shipyard, Mumuai (Mazgaon Dock) and Kolkata (Garden Reach Workshop). For Indian Navy, only at Mazgaon.
INDIAN TOWNS ASSOCIATED WITH INDUSTRIES
TownStateIndustries
AhmedabadGujarat Cotton Textiles
AgraU.PLeather, Marble, Carpet
AligarhU.PLocks, Cutlery
AnkleshwarGujaratOil Fields
AmbernathMaharashtraMachine Tools
AmritsarPunjabWoolen Clothes
AnandGujarat Milk and its Products
Alwaye KeralaFertilizer, Monazite Factory
AmbalaHaryanaScientific Instruments
Bokaro JharkhandSteel Plant
BangaloreKarnatakaTelephones, Aircrafts, Motors, Cotton Textiles, Toys
BatanagarWest BengalShoes
Bareilly U.PResin Industries, Match Factory
BhilaiChhattisgarhSteel Plant
BarauniBiharChemical Fertilizer
BurnpurWest BengalSteel Plant
BhurkundaJharkhandGlass Industries
BhagalpurBiharSilk industries
BhandaraMaharashtraExplosives
BhadravatiKarnatakaIron & Steel
BongaigaonAssamPetroleum
BhadoiU.PCarpets
ChurkM PCement
CyberabadAndhra PradeshElectronics, Computers, Information technology
ChitranjanWest BengalLocomotive
KolkataWest BengalJute, Leather, Electric goods
CochinKeralaShip building, coconut oil, rubber
CalicutKeralaCoffee, coconut
CoimbatoreTamil NaduCotton industries
DhariwalPunjabWoolen clothes
DurgapurWest BengalSteel
DigboiAssamPetroleum
DelhiDelhiTextiles, Electronics, D.D.T
DalmianagarBiharCement
DarjeelingW. BengalTea
DindigulTamil NaduCigar, Tobacco
FrozabadM.PBangle works
GunturAndhra PradeshCotton industries
GwaliorMadhya PradeshPottery, Tobacco
GomiaJharkhandExplosives
HardwarUttarakhandHeavy electricals
HatiaJharkhandHeavy Engineering Corporation
HaldiaW. BengalChemical fertilizer
HaziraGujarat Artificial Rayon
JamshedpurJharkhandIron & Steel, Locomotives, Railway coaches
JallundhurPunjabSurgical goods and sports articles
JaipurRajasthanCloth Printing, Brass
JhariaJharkhandCoal mines
JabalpurMadhya PradeshBidi industry
JainakotJammu & KashmirH.M.T watch
JaplaJharkhandCement
KanpurU.PCotton and Woollen mills, Leather, Sugar
KatniM.PCement
KorbaChattisgarhAluminium factory, Thermal plant
KoynaMaharashtraAluminium factory
KoyaliGujarat Petrochemical industries
KolarKarnatakaGold mining centre
KotaRajasthanAtomic power plant
KanchipuramTamil NaduSilk clothes
KarnalHaryanaDairy product
KandlaGujarat Chemical fertiliser, famous port
KhetriRajasthanCopper industries
LudhianaPunjabHosiery
LucknowU.PEmbroidery work, Chicken work
ChennaiTamil NaduLeather, cigarette, Integral coach factory
MaduraiTamil NaduCotton and Silk Weaving
MirzapurU.PCarpet, Pottery, Brass industries
MuradabadU PBrassware, cutlery
MathuraU.POil refinery
MysoreKarnatakaSandalwood oil, Silk goods
MeerutU.PPublication work, Sports goods, Scissors making
MumbaiMaharashtraCinema industries, Cotton textiles
ModinagarU.PNylon thread
MoorieJharkhandAluminium
MajhagaonMaharashtraShip building
NagpurMaharashtraCotton mills, Oranges
NepanagarMadhya PradeshNewsprint
NasikMaharashtraSecurity Printing Press
Neyveli Tamil NaduLignite industries
NunamatiAssamOil refineries
NaroraU.PAtomic Power Plant
Nangal PunjabFertilisers
PannaM.PDiamond mining
PinjoreHaryanaHindustan Machines Tools
PeramburTamil NaduIntegral coach factory
PimpriMaharashtraPenicillin factory
RaniganjW. BengalCoal mining
RourkelaOrissaSteel plant, Chemical fertiliser
Rana Pratap SagarRajasthanHydro Power Plant
RenukooteU.PAluminium Plant
RoopnarayanpurW. BengalCables
RishikeshUttarakhandAntibiotic Plant
SaharanpurU.PCigarette factory, News print
SindriJharkhandChemical fertilizers
SrinagarJammu & KashmirWoolen shawls, Silk, Woodwork
SuratGujaratCotton textiles, Diamond Cutting
SurajpurHaryanaCement factory
SuratgarhRajasthanAgriculture implements
SinghbhumJharkhandCopper, Iron
SingreniAndhra PradeshCool mining
SalemTamil NaduIron and Steel
SamastipurBiharJute, Paper, Tobacco, Sugar
TarapurMaharashtraAtomic Power Plant
TitagarhW. BengalPaper & Jute
ThiruvananthapuramKeralaCoir matting
TrombayMaharashtraOil refinery
TiruchirapalliTamil NaduCigar
TirupatiAndhra PradeshScooter
TanjoreTamil NaduSilk clothes
ThumbaKeralaRocket launching Station
VijaypurM.PFertilizers
ViiaynagarKarnatakaSteel Plant
VishakhapatnamA.PShip building, Iron and Steel, Oil refinery
VaranasiU.PRail Engines and Saari industries
WorliMaharashtraBaby food
ZainkotJ & KHMT Watches

7.1 Poverty

The UN Human Rights Council has defined poverty as “A human condition characterized by the sustained or chronic deprivation of the resources, capabilities, choices, security and power necessary for the enjoyment of an adequate standard of living and other civil, cultural, economic, political and social rights”.
Poverty manifests itself in the form of both absolute poverty as well as relative poverty.
Absolute Poverty: This concept is based on absolute needs of the people and people are defined as poor when some absolute needs are not sufficiently satisfied. It is also defined in terms of insufficiency of basic needs. In India, these basic needs are measured in terms of calorie intake of 2400 in rural areas per person per day and 2100 in urban areas. The corresponding monetary yardstick for calorie intake is based on per capita monthly household expenditure.
Relative Poverty: This concept is related to the general standard of living in a society. Thus, according to this concept, people are poor because they are deprived of the opportunities, comforts and self-respect regarded as normal in the community to which they belong. In relative poverty, poor are defined as, a person or family whose incomes are less than the average income of the community. Thus relative poverty relates to inequalities in a society. India is characterised by both in extreme measures, i.e., absolute and relative poverty.
CAUSES OF POVERTY
The extent of poverty in an economy is due to a wide range of factors as follows:
(i) Underdeveloped nature of economy.
(ii) Rapid growth of population in an overpopulated country; even if the national income increases, the per capita income remains the same due to increase in population.
(iii) Large inequalities in the ownership of earning assets such as land, buildings, industry etc.
(iv) Low level of productivity in agriculture and industry.
(v) Large scale unemployment and under-employment.
(vi) Inequality of opportunity in acquiring education and skills.
(vii) State Policies.
(viii) Regional disparities

PROGRAMMES FOR POVERTY ALLEVIATION
Salient features of various employment generation of poverty alleviation programme are given below:

1. MGNREGA
This flagship programme of the Government of India aims at enhancing livelihood security of households in rural areas of the country by providing at least 100 days of guaranteed wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work. It also mandates 1/3rd participation for women. The primary objective of the scheme is to augment wage employment. This is to be done, while also focusing on strengthening natural resource management through works that address causes of chronic poverty like drought, deforestation, soil erosion and thus encourage sustainable development.
2. Deendayal Upadhyay Antyodaya Yojana (DAY)
To reduce poverty and vulnerability of the urban poor households by enabling them to access gainful self employment and skilled wage employment opp-ortunities, resulting in an appreciable improvement in their livelihoods on a sustainable basis, through building strong grassroots level institutions of the poor. The mission would aim at providing shelters equipped with essential services to the urban homeless in a phased manner. In addition, the mission would also address livelihood concerns of the urban street vendors by facilitating access to suitable spaces, Institutional credit, social security and skills to the urban street vendors for accessing emerging market opportunities.
3. National Health Mission
The National Health Mission (NHM)with its two Sub-Missions, namely the National Urban Health Mission (NUHM) and National Rural Health Mission (NRHM) covering both the rural and urban areas came into effect with Cabinet approval of 1st May,2013.
The main programmatic components of NHM include Health System Strengthening in both rural and urban areas, Reproductive-Maternal- Neonatal-Child and Adolescent Health (RMNCH+A) interventions, and control of Communicable and Non-Communicable Diseases.
4. Pradhan Mantri Suraksha Bima Yojna
Pradhan Mantri Suraksha Bima Yojana is available to people between 18 and 70 years of age with bank accounts. It has an annual premium of Rs. 12 (18¢ US) excluding service tax, which is about 14% of the premium. The amount will be automatically debited from the account. In case of accidental death or full disability, the payment to the nominee will be Rs.2 lakh (US$3,000) and in case of partial Permanent disability Rs.1 lakh (US$1,500). Full disability has been defined as loss of use in both eyes, hands or feet. Partial Permanent disability has been defined as loss of use in one eye, hand or foot.
This scheme will be linked to the bank accounts opened under the Pradhan Mantri Jan Dhan Yojana scheme. Most of these account had zero balance initially. The government aims to reduce the number of such zero balance accounts by using this and related schemes
5. Atal Pension Yojana
Under the Atal Pension Yojna Scheme (APY), the subscribers, under the age of 40, would receive the fixed monthly pension of Rs. 1000 to Rs. 5000 at the age of 60 years, depending on their contributions. To make the the pension scheme more attractive, government would co-contribute 50% of a subscriber’s contribution or Rs. 1,000 per annum, whichever is lower to each eligible subscriber account for a period of 5 years from 2015-16 to 2019-20. The benefit of government’s co-contribution can be availed by those who subscribe to the scheme before December 31, 2015.
6. Pradhan Mantri Jeevan Jyoti Bima Yojana
Pradhan Mantri Jeevan Jyoti Bima Yojana is low cost life insurance policy provided by government of India. Maximum sum offered under this scheme is Rs. 2 Lakh Premium payable for this insurance scheme is Rs. 330 per year or less than 1 rupee per day.
It is Available to people in the age group of 18 to 50 and having a bank account. People who join the scheme before completing 50 years can, however, continue to have the risk of life cover up to the age of 55 years subject to payment of premium.
7. Pradhan Matri Awaas Yojana
The Mission will be implemented during 2015-2022 and will provide central assistance to Urban Local Bodies (ULBs) and other implementing agencies through States/UTs for:
• In-situ Rehabilitation of existing slum dwellers using land as a resource through private participation
• Credit Linked Subsidy
• Affordable Housing in Partnership
• Subsidy for Beneficiary-led individual house construction/enhancement.
Credit linked subsidy component will be implemented as a Central Sector Scheme while other three components will be implemented as Centrally Sponsored Scheme (CSS).

7. Unemployment

Unemployment is a situation when a capable and willing to do job workforce does not get work.
‘Types of Unemployment’
a) Cyclical Unemployment: It is caused due to business cycle. This kind of an unemployment occurs when all those who want to work cannot be employed because there is not enough demand in the market for their work. It is called as, cyclical unemployment because it varies with the trade cycle. For example, when the economy is doing well there would be greater demand for the goods, pressure on the forces of production and therefore greater demand for working hands but exactly the opposite is true for the years when the economy slows down.
b) Frictional Unemployment: This kind of unemployment occurs when a person leaves/loses a job and starts looking for another one. This search for a job may take a considerable amount of time resulting in frictional un-employment. Frictional unemployment tends to be on a high when an economy is not doing so well and low otherwise; because during good times it will be easier for people to find jobs that match their skills and requirements easily. This kind of unemployment may also be high in an economy if people change jobs frequently due to high level of dissatisfaction with the working conditions in the economy.
c) Seasonal Unemployment: This kind of unemployment is expected to occur at certain parts of the year. For example, the jobs at a hill station may experiences seasonal un-employment during the winter months because less people will visit these areas during this time. Another case could be the seasonal unemployment in agriculture depending upon the success of monsoon. Failure of monsoon may result in widespread unemployment in the agricultural sector of the economy. Getting laid off due to a recession is the classic case of cyclical unemployment. This is why the unemployment rate is a key economic indicator.
d) Structural Unemployment: This kind of unemployment happens when the structure of an industry changes. For example, as the country is tending to move from use of bicycles to motorbikes and cars, the demand for labor in the cycle industry has continuously fallen in the country. It essentially occurs when the industry is unable to provide jobs for those who are seeking employment because there exists a mismatch of skills between the skills of the unemployed and the skills needed for the job. Changes in technology and changes in tastes are two big reasons for the occurring of structural unemployment in the economy. One of the reasons why 12th plan focuses on skill development is to address the problem of structural unemployment in the country.
e) Full Employment: Employment would be full literally, when every able-bodied adult works the number of hours considered normal for a fully employed person.
f) Under Employment: This term can be used in multiple connotations but one of the primary usage is to showcase a situation where a person with high skills works in low wage and low skills job. It can also be used to reflect a situation when the people employed in a job are not giving their services fully or not putting in the man-hours which can be extracted from them. For example, if someone works for just 10 hours a week, it would be a case of under-employment.
g) Disguised Unemployment: Such type of unemployment is quite common in the agri-cultural sector in India. It occurs when people are employed in a job where their presence or absence does not make any difference to the output of the economy. Because of large families in the rural areas several people work on farms and at times the work of 2-3 people is done by 4-5 people because otherwise it would result in unemployment. But in reality this is nothing but a case of disguised unemployment. It refers to the situation of employing surplus labours whose marginal productivity is zero.
Different Approaches for Measuring Labour Force
In a country where majority of the workers are employed in the unorganized sector and pursuing multiple activities, no single measure is appropriate to estimate the labour force parameters precisely. Labour Force related parameters may be derived by the following 4 different approaches based on different reference periods.
i) Usual Principal Status (UPS) Approach – The major time criterion based on the 365 days is used to determine the activity pursued by a person under the usual principal status approach. Accordingly, the major time spent by a person (183 days or more) is used to determine whether the person is in the labour force or out of labour force. A person found unemployed under this approach reflects the chronic unemployment.
ii) Usual Principal & Subsidiary Status (UPSS) Approach – This approach is a hybrid one which takes into consideration both the major time criterion and shorter time period (30 days or more in any economic activity). A person who has worked even for 30 days or more is considered as employed.
iii) Current Weekly Activity Status (CWS) – If a person is found employed or seeking/available for work even for 1 hr. during the reference week, he/she is considered to be part of labour force. It is used to determine the seasonal fluctuations in the labour force. In India, where majority of the labour force is engaged in the unorganised sector of the economy, current weekly and current daily status approaches may reflect the employment-unemployment situation in a more appropriate manner.
iv) Current Daily Activity Status (CDS) – In a day, if a person has worked for 4 hr. or more in any activity, he/she will be considered as employed for full day and a full intensity of 1.0 will be recorded. If a person has worked for less than four hour but more than 1 hr. in a day, he/she will be considered as employed for half day and an intensity of 0.5 will be recorded.
Schemes for Skill Development
• Pradhan Mantri Kaushal Vikas Yojana (PMKVY)
Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is the flagship outcome-based skill training scheme of MSDE. It is also India’s largest skill certification scheme with the objective to enable and mobilize a large number of Indian youth to take up outcome-based skill training and become employable and earn their livelihood. Owing to its successful first year of implementation, the Union Cabinet has approved the scheme for another four years (2016-2020) to impart skill training to 10 million youth of the country with an outlay of Rs 12,000 crores. It is being implemented through the National Skill Development Corporation (NSDC).
• National Apprentice Promotion Scheme
National Apprenticeship Promotion Scheme (NAPS) is a new scheme of Government of India to promote apprenticeship training and increase the engagement of apprentices from present 2.3 lakh to 50 lakh cumulatively by 2020. The scheme focuses on sharing of 25% of prescribed stipend subject to a maximum of Rs. 1500/- per month per apprentice to all apprentices with the employers. It was notified on August 19, 2016. Government supports Rs. 7500 for a maximum of 500 hours for basic training.
The target under the scheme is 5 lakh, 10 lakh, 15 lakh and 20 lakh apprentices respectively in 2016-17, 2017-18, 2018-2019 and 2019-20. The engagement of fresher apprentices shall be 20% of total annual target. As on today, one lakh apprentices are undergoing training under NAPS.
• USSTAD scheme
Union Government has launched the Upgrading the Skills and Training in Traditional Arts/Crafts for Development (USTAAD) Scheme. The Scheme aims at upgrading Skills and Training of minority communities by preservation of traditional ancestral Arts and Crafts.
It also envisages boosting the skill of craftsmen, weavers and artisans who are already engaged in the traditional ancestral work. Under the scheme, assistance will be provided to traditional artisans to sell their products in order to make them more compatible with modern markets.
• Deen Dayal Upadhyay Grameen Kaushal Yojana
The Yojana aims at training 10 lakh (1 million) rural youths for jobs in three years, that is, by 2017; The minimum age for entry under the Yojana is 15 years compared to 18 years under the Aajeevika Skills Programme; Skill development training centres to be launched so as to address the unemployment problem in the rural area; The skills imparted under the Yojana will now be benchmarked against international standards and will complement the Prime Minister’s Make In India campaign and The Kaushalya Yojana will also the address the need for imparting training to the differently-able persons and chip in private players including international players to impart the skills to the rural youths. A sum of Rs. 1500 crore has been allocated for this scheme, for which disbursement will be through a digital voucher directly into qualified student’s bank account.
• Skill Development Initiative Scheme
Implemented by Directorate General Training (DGT) under Ministry of Skill Development and Entrepreneurship, SDIS aims at providing skill training to early school leavers & existing workers. The certifications provided under this scheme are nationally and internationally recognized.
SDIS focuses on providing vocational training on the basis of Modular Employable Skills (MES) to school drop outs, ITI graduates, existing workers etc.
• Seekho aur Kamao
Seekno Aur Kamao is a special scheme for Minorities under which it runs courses as per Modular Employable Skills (MES) as per the guidelines of National Council for Vocational Training (NCVT).
Implemented by Ministry of Minorities affairs, the scheme focuses skilling and upskilling of youth from minorities so that that can earn their livelihood. The age of trainees should be between 14 to 35 years of age.
• Hunar se Rozgar
The Govt. of India, Ministry of Tourism has launched a Training Programme, christened Hunar Se Rozgar Tak, to create employable skills in the interested youth who are in the age group of 18-25 years and who are minimum 8th pass. The upper age limit has been raised to 28 with effect from 11th November, 2010. The HSRT initiative is being implemented through expert institutions including the Indian Institute of Tourism and Travel Management, Institutes of Hotel Management, Food Craft Institutes and India Tourism Development Corporation. The State Governments/Union Territory Administrations have also been authorised to implement the initiative through Institutes selected by them for purpose. It is also mandatory for certain star-classified hotels to train a prescribed minimum number of persons.
• UDAAN
Under the scheme, 40,000 youth will be trained in five years. Companies which show interest in the scheme and enter into the agreement with the National Skill Development Corporation (NSDC), will screen and select students from the State. After assessing the skill gap of the trainees, a training module, its duration and nature of training will be designed by the companies. Trainees will be relocated to the training facility. After completion of the training, they will be interviewed for a job with the company and will be placed as far as possible.
The scheme targets youth who are educated, but do not have marketable skills. It includes graduates, postgraduates, three year engineering diploma holders and youth with professional degrees.
• Himayat Scheme
It is a training-cum-placement programme for unemployed youth in Jammu and Kashmir. Youth will be provided short-term training for at least 3 months, in a range of skills for which there is good demand. At the end of the training, the youth are assured of a job and there is one year post-placement tracking to see how they are faring. The scheme aims to target 1,00,000 youth in 5 years.

7.2 Child labour in India

India is home to the largest child population in the world. ‘Child Labour’, as defined by the International Labour Organization, refers to work that leads to the deprivation of one’s childhood and education opportunities. Effects include a loss of potential and dignity in self, which is harmful to a child’s physical and mental development. The term child labour is defined as ‘the work that deprives children of their childhood, their potential, and their dignity and, that is harmful to their physical and mental development’.

The definition of a child as given under Child Labour (Prohibition and Regulation) Act of 1986defines, ‘child means a person who has not completed his fourteen years of age’, however, mere defining this can’t solve the issue. The Union Cabinet has approved a proposal for amending the Act, to ban employment of children aged up to 14 in any form of industry. It will be an offence to employ such children not only in factories or industries, but also in home or farms, if their labour is meant to serve any commercial interest. The Cabinet also approved another amendment to define those children aged 14-18 as ‘adolescents’ and prohibit their employment in mines, explosive industries, chemical and paint industries, and other hazardous establishments. The government’s decision is in line with the convention of the International Labour Organization (ILO), which prohibits any form of child labour until the age of 14.

According to HAQ(meaning Rights in Urdu): Centre for child rights, child labour is most prevalent among schedule tribes, Muslims, schedule castes, and OBC children. The persistence of child labour is due to the inefficiency of the law, administrative system, and because it benefits employers who can reduce general wage levels. HAQ argues that distinguishing between hazardous and non-hazardous employment is counter-productive to the elimination of child labour. Various growing concerns have pushed children out of school and into employment such as forced displacement due to development projects, such as Dam construction at Narmada and Tihri; loss of jobs of parents due to economic slowdown, farmers' suicide; armed conflict, and high costs of health care. Girl child is often used in domestic labour within her own family. There is a lack of political will to outlaw the child labour.

Following are the conditions, under which an activity shall be recognized as child labour:

• is mentally, physically, socially, or morally dangerous and harmful to children; and
• interferes with their schooling by:

I. depriving them of the opportunity to attend school;
II. obliging them to leave school prematurely; or
III. Requiring them to attempt to combine school attendance with excessively long and heavy work.

Articles related to Child labour in India

1. Article 14 (No child below the age of 14 years shall be employed to work in any factory or mine or engaged in any other dangerous employment.
2. Article 39-E ( The state shall direct its policy towards securing that the health and strength of workers, men and women, and the tender age of children are not abused, and that they are not forced by economic necessity to enter vocations unsuitable to their area and strength.
3. Article 39-F (Children shall be given opportunities and facilities to develop in a healthy manner and in conditions of freedom and dignity, and that childhood and youth shall be protected against moral and material abandonment.
4. Article 45 (The state shall endeavor to provide within a period of ten years from the commencement of the constitution, for free and compulsory education for all children until they complete the age of fourteen years. The main legislative measures at the national level are The Child Labour Prohibition and Regulation Act – 1986 and The Factories Act – 1948.

Causes of child labour in India

POVERTY:

Poverty can be termed as the main reason for child labour in India. Though the country has achieved commendable progress in industrialization, the benefits of the same have not been effectively passed on to the lower strata of society. In order to keep costs down, even large companies employ unorganized workers through contractors, who get uneducated and unskilled and semi-skilled people at very low wages.

This helps the industries to keep their labour costs down at the cost of the poor labourers. In effect, what happens is that, the children of these poor unorganized labourers have to find some work to help run the family. They cannot afford to go to school when they do not have food to eat, and when their other brethren go hungry. Hence, children from such deprived families try to work as domestic servants, or in factories that employ them, and remain uneducated and grow up that way becoming perennial victims of this vicious cycle of poverty and suppression.

HIGH COMPETITION FOR JOBS

The industrialists in India have been successful in taking advantage of this disadvantage faced by job seekers. Due to high population, the job seekers are not in a position to bargain a higher wage. As a result, the poor remain poor working for low wages.

ILLETERACY AND LACK OF EDUCATION

Illiteracy is a situation when a person is not able to read and/or write. This is when the person is not in a position to get even primary education. Lack of education is another aspect which is a result of illiteracy and lack of information. An uneducated person is one, who is generally unaware of things which an average person is required to know. Such people are normally unaware of their human rights and the rights of their children too. The children of such people normally become child labourers around their homes.

IRRESPONSIBLE ATTITUDE OF EMPLOYERS

A general sense of irresponsibility towards society is seen among the employers in India, who are least bothered as to how their employees survive. In spite of being aware of the high cost of living and inflation, they are least bothered and least ashamed to pay wages, which are much below sustenance levels. Also, if the employers were responsible, they in the first place would not employ children at all.

The following are some of the situations in which children are engaged in work:

• Agriculture- children working long hours, and under severe hardships on the fields. They are also exposed to the hazards of working with modern machinery and chemicals;
• hazardous  industries/  occupations-  like glass making, mining, construction, carpet-weaving, zari-making, fireworks, and others, as listed under the Child Labour Act;
• small industrial workshops and service establishments;
• on the streets-  rag-pickers, porters, vendors etc;
• Domestic work- largely invisible and silent, and hence face higher degree of exploitation and abuse in the home of employees.

The steps taken for eradication of Child Labour

Prevention:

According to the Child Labour Prohibition and Regulation Act, children of any age may be employed, provided employers adhere to restrictions, including a maximum of 6-hour workday with a 1-hour rest period, at least 1 day off per week, and no night or over-time work. The Child Labour Prohibition and Regulation Act bars children from age 14 to 18, from hazardous occupations and 65 hazardous processes, such as handling pesticides, weaving carpets, breaking stones, working in mines, and domestic service. The Factories Act bars children under age 14 from working in factories. Employing children under age 14 in a hazardous occupation or process can lead to fines and imprisonment. Additionally, the government must either compensate the family of the child, or find employment for an adult member of the family. State governments also have the authority to pass legislation establishing a minimum age for work. In 2012, the State of Rajasthan passed legislation establishing a legal minimum working age of 18 years.

However, gaps remain in legal protections for working children. The lack of a national minimum age for employment increases the likelihood that very young children may engage in activities that jeopardize their health and safety.

The Juvenile Justice (Care and Protection of Children) Act prohibits employers from exploiting juvenile employees under age 18, through practices such as keeping them in bonded conditions or garnishing their wages. Violators may be fined or imprisoned.

The Bonded Labour System (Abolition) Act outlaws bonded labour in India and provides for district-level vigilance committees to investigate allegations of bonded labour, and release anyone found in bondage. The Act also provides for rehabilitation assistance payments for released bonded labourers. Persons found using bonded labour may be fined and face imprisonment. In April 2013, the Criminal Law (Amendment) Act was passed, which amended the Indian Penal Code to protect children and adults from being trafficked into exploitative situations, including forced labour situations. Penalties include fines and up to lifetime imprisonment. In 2012, the government passed the Protection of Children from Sexual Offence Act. The law protects children from sexual assault, sexual harassment, and pornography and establishes special courts for trials of these crimes. The amendment includes penalties for those who employ children or adults who have been trafficked. Penalties include fines and up to lifetime imprisonment. The Information Technology (Amendment) Act of 2008 includes penalties of fines and imprisonment for any person, who publishes, collects, seeks, or downloads child pornography in electronic form. The Narcotic Drugs and Psychotropic Substance Act No. 61 makes it illegal to cause any person, including children, to produce or deal in narcotic or psychotropic substances; punishment consists of fines and imprisonment.

Education is free and compulsory up to age 14. The Right of Children to Free and Compulsory Education Act (RTE) lays out the country’s commitment to provide universal access to primary education with a focus on children from disadvantaged social groups. The RTE provides for free and compulsory education to all children aged 6 to 14. The Act prohibits denying admission to children who lack a birth certificate, allows children to transfer schools, requires local authorities to identify out-of-school children, forbids discrimination against disadvantaged groups, and prescribes quality education standards. In 2012, the RTE was amended to include children with disabilities. Research has shown that disabled children, who face barriers to education, may be at greater risk of working in hazardous occupations.

Government is taking various proactive measures towards convergence of schemes of different Ministries like Ministries of Human Resource Development, Women & Child Development, Urban Housing & Rural Poverty Alleviation, Rural Development, Railway, Panchayati Raj Institutions etc. so that child labour and their families get covered under the benefits of the schemes of these Ministries. Some are listed below:

• Ministry of Women and Child Development; for supplementing the efforts of this Ministry in providing food and shelter to the children withdrawn from work through their schemes of Shelter Homes, etc.
• Ministry of Human Resource Development, for providing Mid-day meal to the NCLP school children, teachers training, supply of books, etc under Sarva Shiksha Abhiyan and mainstreaming of NCLP children into the formal education system.
• Convergence with Ministries of Rural Development, Urban Housing and Poverty Alleviation, Panchyati Raj, for covering these children under their various income and employment generation scheme for their economic rehabilitation.
• In each State one officer from the State Department of Labour has been nominated as Anti Human Trafficking Unit (AHTU) to act as link officer for co-coordinating with Ministry of HRD in that state, for prevention of trafficking of children. CBI is the nodal anti-trafficking agency.
• Convergence with Ministry of Railways for generating awareness and restricting trafficking of children.   Further the Ministry is implementing a pilot Project Converging against child labour – support for India’s Model in collaboration with International Labour Organization, SRO Delhi funded by US Department of Labour, with the objective to contribute to the prevention and elimination of hazardous child labour, including trafficking and migration of children for labour. The Project is covering two districts each in Bihar, Jharkhand, Gujarat, Madhya Pradesh, and Orissa for duration of 42 months.

Rescue & Repatriation:

• During inspections and raids, children identified are rescued, and rehabilitative measures are set forth in motion by way of repatriation, in case of migrant child labour, and providing bridge education with ultimate objective of mainstreaming them into the formal system of education. Besides pre-vocational training is also provided to the rescued children.

Rehabilitation:

• With regard to educational rehabilitation, the government is implementing National Child Labour Project Scheme (NCLP) in 266 child labour endemic districts in 20 States. Objectives of the Scheme are:

I. This is the major Central Sector Scheme for the rehabilitation of child labour.
II. The Scheme seeks to adopt a sequential approach with focus on rehabilitation of children working in hazardous occupations & processes in the first instance;
III. Under the Scheme, survey of child labour engaged in hazardous occupations & processes has been conducted;
IV. The identified children are to be withdrawn from these occupations & processes and then put into special schools in order to enable them to be mainstreamed into formal schooling system;  and
V. Project Societies at the district level are fully funded for opening up of special schools/Rehabilitation Centres for the rehabilitation of child labour.

• Under the Scheme, children found working in hazardous occupations are withdrawn from work and put into bridge schools, where they are provided with formal/non-formal education, vocational training, health care, mid-day meal, and stipend of Rs.150 per month, with ultimate objective of mainstreaming them into formal educational system.
• At present, 7311 special schools are in operation with enrolment of 3.2 lakh children. Under the Scheme, about 8.52 lakh children have been mainstreamed into formal system since inception.

Institutional Mechanisms for eliminating child labour

The National Authority for Elimination of Child Labour is a high-level governmental body, chaired by the Ministry of Labour and Employment (MOLE). It reviews, monitors, and co-ordinates policies and programs on child labour. The National Steering Committee on Child Labour is a tripartite committee, that guides and monitors child labour policy, with members representing government agencies, employers, and workers. The Secretary of Labour and Employment chairs the Central Monitoring Committee, which is responsible for reviewing the prevalence of child labour and monitoring the actions taken to eliminate child labour. The Core Group on Child Labour, which is composed of eight ministries and chaired by MOLE, co-ordinates the convergence of social protection schemes to reduce child labour.

The National Human Rights Commission (NHRC) is charged with monitoring implementation of the Bonded Labour System (Abolition) Act. The NHRC monitors state level action against bonded labour, through its review of quarterly reports by state governments on bonded labour, and through exploratory and investigative missions. The NHRC maintains an office to monitor the progress of cases involving bonded labour and child labour that are pending with authorities throughout the country. Despite the rescue and rehabilitation of bonded labourers, prosecutions have not always taken place.

The Ministry of Women and Child Development (MWCD) is charged with co-coordinating anti-trafficking policies and programs for women and children. The Ministry of Home Affairs (MHA) Anti-Human Trafficking Cell continues to implement the Government’s nationwide plan to combat human trafficking by co-coordinating with states to establish Anti-Human Trafficking Units (AHTUs), and training thousands of officials to combat human trafficking. During the reporting period, 194 AHTUs have been established, and the MHA provided an additional $1.5 million to establish 110 more AHTUs. In January 2012, the Central Bureau of Investigation established an AHTU with a mandate to conduct operations to arrest traffickers of women and children.

The National Commission for the Protection of Child Rights (NCPCR) investigates cases that may involve a violation of a child’s rights or a lack of proper implementation of laws relating to the protection and development of children, including those related to child labour.

While MOLE provides oversight and co-ordination regarding the country’s labour laws, state governments employ labour inspectors to enforce these laws. Between January and August 2012, the Ministry of Labour reported that 25,040 child labour inspections took place. During this same period, there were 589 prosecutions and 167 convictions. During the reporting period, children were rescued from hazardous work during raids in several areas, including Delhi, Gujarat, and Karnataka. When child labour prosecutions are launched, it may take years before a case is resolved, because the judicial system is back-logged and over-burdened.

Eight state governments adopted State Action Plans for the elimination of child labour. In 2012, the Jharkhand State Action Plan became the latest of these. The Jharkhand plan calls for stronger enforcement mechanisms as well as the rescue and rehabilitation of children. Complaints about hazardous child labour can be made through a toll-free helpline, Child Line, which operates in 193 cities across India. In 2012, Child Line expanded to 68 additional cities. Complaints are then given to the police to investigate and rescue children.

Under India’s federal structure, state and local police are also responsible for enforcing laws pertaining to human trafficking. The Government of India has invested more than $400 million to establish the Crime and Criminal Tracking and Networking System to connect all of India’s 15,000 police stations. This will enable police to better monitor trends in serious crimes, including trafficking. As of 2012, this system was still in the process of being completed. It is not known whether the tracking system will disaggregate its data to include child trafficking victims, and this data is not currently being collected or made public through other mechanisms.

Possible Solutions:

• Elimination of poverty, free and compulsory education, proper and strict implementation of the labour laws, abolishment of child trafficking, among others, can go a long way in solving the problem of child labour.
• After the 86th Amendment of the Constitution in the year 2002, the provision for free and compulsory education between the age group of 6 to 14 years has been included as fundamental right under Article 21A. Children irrespective of their race, caste, sex, economic condition, religion, place of birth, and parents to whom they are born of, need to know how to read and write.  They need social and professional skills that only a school and nurturing environment can provide.
• The NGOs also have a big role to play in this regard. Various NGOs are working for the cause of child labour. MVF in Andhra Pradesh is a striking example. They have been working for the welfare of children in various respects.
• Compulsory education can help eradicating the problem of child labour up to a large extent. Statistics also show that education has helped in reducing child labour in western countries up to a large extent.
• Organizing literacy and awareness programme to prevent children from employment.
• Amendment and Modification into Social Security Legislation governing Child Labour.
• Control on Population growth to eliminate Poverty, which is the basic cause of Child Labour.
• Mandatory on industrialists for equal pay without discrimination as to age, status, religion etc.
• Adequate health services for children at large, living in the society.
• Need to provide training and education to the child workers during their free time.

8.3 India’s Merchandise Imports Basket

Around one fourth of India’s imports are POL (Petrol, Oil and Lubricants) products. Food is a small fraction in the imports and out of the total 3.5%, 2% is occupied by vegetable oils which are India’s largest agricultural import item.

8.2 Composition of India’s merchandise export Basket

The merchandise exports of India are broadly classified into four categories viz. manufactured goods, Ores & minerals, Farm Products, Crude Oil and Petroleum products. We note here that manufactured goods are backbone of India’s Merchandise exports. In Merchandise exports too, the share of Gems and Jewellery is maximum.

8. India’s Foreign Trade: Balance of Trade, Export and Import Baskets

Prior to 1947, India’s trade was a typical colonial trade, in which we used to supply raw materials to our colonial master and imported the manufactured goods. So, naturally the industrialization at home was not permitted. The indigenous handicrafts suffered because of the competition from the British manufactured products as well as British traders located in India as well as abroad.

The colonial pattern of trade was to be changed after independence.
·         The first major challenge was the increase in the production capacity of the country. So, this led to import of the heavy plants and machinery which was called the “developmental Imports”.
·         To maintain the productive capacity of the country, the objects such as machines were imported and this was called “maintenance imports”.
The above two similar kinds of imports were vital for a developing country like ours which just embarked on the path of the economic development.
Apart from that, India needed to import lots of food grains in the beginning. Since, the food grain production in the country was so less to fulfil needs. The import of food grains was also necessary to contain the inflation in these consumer goods.
India when became independent was heavily dependent upon the imports. The higher imports and negligible exports mean a pressure on the balance of trade. The result is pressure on the economy. So, there was need to encourage the exports. The imports were inelastic, and to fight with the pressure of the foreign debt, the country needed to boost its exports.

Balance of Trade
Balance of Trade is the difference between the monetary value of exports and imports of output in an economy over a certain period. A positive balance is known as a trade surplus if it consists of exporting more than is imported; it is also known as favourable trade balance. A negative balance is referred to as a trade deficit.

Factors that can affect the balance of trade include:
·         The cost of production (Land, Labour, Capital, Taxes, Incentives, etc.) in the exporting and importing countries
·         The cost and availability of raw materials, intermediate goods and other inputs;
·         Exchange rate movements;
·         Multilateral, bilateral and unilateral taxes or restrictions on trade;
·         Non-tariff barriers such as environmental, health or safety standards;
·         The availability of adequate foreign exchange with which to pay for imports; and
·         Prices of goods manufactured at home (influenced by the responsiveness of supply)
·         The stage in business cycle such as recession, boom, stagnation etc.

Historical Trends in Trade Balance
In 1949-50, India’s exports were worth Rs. 485 Crore and the imports were worth Rs. 617 Crore. Thus, the country started with negative trade balance of Rs. 132 Crore. Both exports and imports increased and the trade deficit also increased. India has a continuous trade deficit except only two years viz. 1972-73 & 1976-77 in which there were more exports than imports and a positive trade balance.
Post liberalization, the devaluation of Rupee and convertibility of Indian Rupee in current account tried to create a favourable environment but in the subsequent years, the trade deficit increased.

8.1 India’s Merchandise Trade: Key Facts

During the current financial year (April-January), India’s total export was $217.7 billion while total import during the same period was $324.5 billion. In 2015-16, both imports and exports have been on declining trend mainly due to global slowdown. The trade deficit stands at $106.8 billion. Some important current facts are as follows:
·         The merchandise trade (trade in commodities) had a 13.9% share in India’s GDP in 1991-92. It stood at 27% in 2004-05, and further went up to 41% in 2013-14. In 2014-15, merchandise trade is 37.1% of GDP.
·         In 2013, India’s exports share in world merchandise exports was 1.7 per cent. The objective of taking it to a respectable figure of at least 4% of world trade in next five years still seems to be a distant dream. We note here that China’s share in world trade is around 11%.
·         Gujarat and Maharashtra are two export dominating states of India.
·         China and UAE are India’s largest trade partners.

9. Money And banking

Banking System of India
Bank of Hindustan (1770) was the first bank to be established in India (Alexander and Co.) at Kolkata under European management. Other banks set-up was Bank of Bengal (1806), Bank of Bombay (1840) and the Bank of Madras (1843) - these were called Presidency Banks.
First bank with limited liability managed by an Indian board was Oudh Commercial Bank, founded in 1881. The first purely Indian bank was the Punjab National Bank (1894).
RESERVE BANK OF INDIA
It is the Central Bank of the country.
It was established on Apr 1, 1935 with a capital of Rs.5 crore. This capital of Rs.5 crore was divided into 5 lakh equity shares of Rs.100 each. In the beginning, the ownership of almost all the share capital was with the non-government share-holders.
It was nationalized on Jan 1, 1949 as govt., acquired the private share holdings.
Administration: 14 directors in Central Board of Directors besides the Governor, 4 Deputy Governors and one Government official. The Governor is the Chairman of the board and Chief Executive of the Bank.
Governors:
1st Governor-Sir Smith (1935-37)
1st Indian Governor : CD Deshmukh (1948-49)
RESERVE BANK OF INDIA AND ITS FUNCTIONS
Issue of Notes: Regulates issue of bank notes above 1 rupee. It acts as the only source of legal tender money because the one rupee notes issued by Ministry of Finance are also circulated through it.
The Reserve Bank has adopted the Minimum Reserve System for the note issue. Since 1957, it maintains gold and foreign exchange reserve of Rs.200 crore, of which at least 115 crore should be in gold.
Banker to the Government: Acts as the banker, agent and advisor the Govt., of India. It also manages the public debt for the Government.
Banker's Bank: The Reserve Bank performs the same function for other banks as the other banks ordinarily perform for their customers.
Controller of Credit: The Reserve Bank undertakes the responsibility of controlling credits created by the commercial banks. To achieve this objective, it makes extensive use of quantitative and qualitative techniques to control and regulate the credit effectively in the country.
Custodian of Foreign Reserves: For the purpose of keeping the foreign exchange rates stable, the Reserve Banks buys and sells the foreign currencies and also protects the country's foreign exchange funds.
It formulates and administers the monetary policy.
Acts as the agent of the Government of Indian in respect to India's membership of the IMF and the World Bank.
No personal accounts are maintained and operated in RBI.
RESERVE BANK OF INDIA AMENDMENT BILL 2005 APPROVED
The Reserve Bank of India (Amendment) Bill 2005 has been approved. This bill amends the Reserve Bank Act for providing flexibility to the Central Bank in fixing the cash reserve ratio (CRR) and statutory liquidity ratio (SLR). CRR is the cash that banks deposit with RBI and is one of the key instruments used by the Central Bank to inject or suck out liquidity from the market.
SLR specifies the minimum amount that banks must invest in government securities. This bill is to arm RBI with greater autonomy and authority to deal with subjects (mainly CRR and SLR) under the Act. This bill also allows the Central Bank to regulate derivatives, repo instruments (overnight rates used to regulate liquidity) and securities.
The amendments also seek to end the ambiguity about the legal validity of derivatives as it was seen to inhibit the growth of the market.
IMPERIAL BANK OF INDIA
It was created in Jan 1921 by amalgamation of 3 presidency banks, viz., Bank of Bengal, Bank of Bombay and Bank of Madras.
After nationalization in 1955, its name was changed to State Bank of India (SBI).
It is the biggest commercial bank in the public sector of India.
It has the largest number of branches in the world.
State Bank of India - SBI
SBI has 7 subsidiaries. These are:
State Bank of Bikaner and Jaipur
State Bank of Hyderabad
State Bank of Indore
State Bank of Mysore
State Bank of Patiala
State Bank of Saurashtra
State Bank of Travancore
NATIONALIZATION OF BANKS IN INDIA
In order to have more control over the banks, 14 large commercial banks, the reserves of which were more than Rs.50 crore each, were nationalized on July 19, 1969.
The banks were:
The Central Bank of India
Bank of India
Punjab National Bank
Canara Bank
United Commercial Bank
Syndicate Bank
Bank of Baroda
United Bank of India
Union Bank of India
Dena Bank
Allahabad Bank
Indian Bank
Indian Overseas Bank
Bank of Maharashtra
On April 15, 1980, those 6 private sector banks whose reserves were more than Rs.200 crore each were nationalized.
These banks were:
Andhra Bank
Punjab and Sindh Bank
New Bank of India
Vijaya Bank
Corporation Bank
Oriental Bank of Commerce
In Sept 1993, the New Bank of India was merged with the Punjab National Bank.
These nationalized banks, together with Regional Rural Banks (RRBs), come under the category of Public Sector Commercial Banks.
The other kind of commercial banks are private Sector Commercial Banks.
At present there are 20 nationalized banks besides the RBI.
REGIONAL RURAL BANKS IN INDIA
Set up in 1975. Their main objective is to develop the rural economy by providing credit and encouraging other productive activities in the rural areas.
The paid-up capital of each rural bank is Rs.25 lakh, fifty percent of which is contributed by the Central Government, 15 percent by the State Governments and 35 percent by the sponsoring public sector commercial banks which are responsible for the actual setting up of the RRBs.
The Reserve Bank of India Act, 1934 has classified the banks as Scheduled Banks and non-Scheduled Banks.
Note:
The Scheduled banks are those which have a paid-up capital and reserves of an aggregate value of not less than Rs.5 lakh and which satisfy RBI that their affairs are carried out in the interests of their depositors.
These banks have been entered in the Second Schedule of the RBI Act, 1934. All commercial banks-Indian and foreign, RRBs and State Co-Operative Banks are Scheduled banks.
MONETARY AND CREDIT POLICY
It is the policy with the help of which the Government through its Central Bank regulates money supply and achieves price stability. The broader objectives of the monetary and credit policy are to promote investment to bring about greater rate of economic growth with the result that the accompanying benefits of employment generation; inflation management, exchange rate stabilization etc also accrue.
The RBI announced the credit policy traditionally twice a year— the lean season policy in April and busy season policy in October. In 1998, it became once a year, the October intervention being a review. From 1999, it is being announced only in April.
Bank and Other Financial Institutions
Industrial Credit and Investment Corporation of India Bank (ICICI Bank)
Established in 1955 as a public limited company to encourage and assist industrial units of the nation. It has been converted into a bank with effect from May 3, 2002.
SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI)
Established in 1990; promotes small scale sector.
NATIONAL BANK OF AGRICULTURE AND RURAL DEVELOPMENT (NABARD)
Established on Now 5, 1982; gives credit facilities to farmers.
EXPORT-IMPORT BANK OF INDIA (EXIM)
Set-up on Jan 1, 1982; grants deferred credit to Indian exporters in order to operate in the international market.
INDUSTRIAL DEVELOPMENT BANK OF INDIA (IDBI)
The IDBI which was established as Development Finance Institution under IDBI Act, 1964 has been converted as a banking company. Parliament passed the Act so as to cancel out IDBI Act 1964 and to open the way for the registration of this new banking company.
IDBI got the certificate of commencement of business on Sept 28, 2004 and the IDBI was transformed into IDBI Ltd. on Oct 1, 2004, a company under the Companies Act, 1956 and a Scheduled Bank (on Oct 11, 2004) under the RBI Act, 1934.
INDUSTRIAL FINANCE CORPORATION OF INDIA LTD. (IFCI)
Industrial Finance Corporation of India Ltd. was established in 1948 under a special Act on the recommendations of Central Banking Enquiry Committee.
The basic aim of IFCI is to arrange medium and long term credit for various industrial enterprises of the country. Since July 1, 1993 this corporation has been converted into a company and it has been given the status of a Ltd. company with the name Industrial Finance Corporation of India Ltd.
INDUSTRIAL INVESTMENT BANK OF INDIA LTD. (IIBIL)
Formerly known as IRBI
IRBI was established on Mar 20, 1985 under Indian Industrial Reconstruction Bank Act, 1984 as a result of reconstituting Indian Industrial Reconstruction Corporation Ltd.
The basic aim of establishing IRBI was to revive sick and closed industrial units and to act as a prime loan and reconstruction agency. IRBI grants loans and advances to industrial institutions. It accepts stocks, shares, bonds and debentures and also provides guarantee on deferred payments.
UNIT TRUST OF INDIA (UTI)
The Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 enacted in Dec 2002 provides, inter-alia, that erstwhile Units Trust of India shall be bifurcated, and the "specified undertaking", viz., UTI-I, comprising of US-64, Assured Return Schemes and Development Reserve Fund (appearing in the Schedule-I to the Act) will be transferred and vest in a government appointed Administrator, and the 'undertaking', viz, UTI-II, comprising of Net Asset Value (NAV) based schemes (appearing in the Schedule-II to the Act), will vest in a specified company from an Appointed Day, which is Feb 1, 2003.
UTI-I has been named as "Administrator of the Specified Undertaking of the Units Trust of India."
For the UTI-II, the State Bank of India, Punjab National Bank, Bank of Baroda and the Life Insurance Corporation of India have set up a mutual fund, named, UTI Mutual Fund, UTI Trustee Company and the UTI Asset Management Company as per SEBI (Mutual Fund) Regulations.
UTI Trustee Company has been notified as the specified company. Employees have been transferred to the UTI Asset Management Company keeping in view practice in the mutual fund industry.
NATIONAL HOUSING BANK (NHB)
National Housing Bank was established in July 1988 as wholly owned subsidiary of RBI. NHB is the apex banking institution providing finances for houses.
A major" activity of NHB includes extending financial assistance to eligible institutions in the housing sector by way of refinance and direct finance.
NON-BANKING FINANCIAL COMPANIES (NBFCS)
Non-Banking Financial entities comprise NBFCs, mutual benefit financial companies (Nidhi Companies), and mutual benefit companies (potential nidhi companies). Department of Company Affairs regulates the mutual benefit financial companies and mutual benefit companies leaving the regulation of NBFCs with the RBI.

NARASIMHAN COMMITTEE (1991)
Recommendations on Financial Reforms
The Government of India constituted a 9-member committee under the chairmanship of Mr M Narasimhan, retired RBI Governor, on 14lh August 1991 for making recommendation on the existing financial system and to give suggestions for improving structure. Its recommendations were as follows:
There should be no bar to new banks being set up in the private sector, provided they conformed to the start-up capital and other requirements prescribed by the RBI.
The Government should indicate that there would not be further nationalisation of banks and there should not be any difference in treatment between public sector banks and private sector banks.
The banking should evolve towards a broad pattern consisting of three or four large banks, including the. SBI which would become international in character; eight to ten national banks with the network of branches throughout the country engaged in universal banking; local bank whose operations would be generally confined to a specified region and lastly rural banks to cater to rural areas.
There should be an Assets Reconstruction Fund (ARF) which could take over, from the banks and financial institution (FIs), a portion of their bad debts at a discount. The level of discount being determined by independent auditors on the basis of clearly defined guidelines. The ARF, according to committee should be provided with special powers for recovery, somewhat broader than those contained in sections 29 to 32 of the state financial act 1951. The capital of ARF should be subscribed by the public sector banks and financial institutions.
The banks and the financial institutions should be authorised to recover bad debts through special tribunals and based on the valuation given in respect of each asset by a panel of at lest two independent auditors.
The public sector banks with profitable operations should be allowed to tap the capital market for enhancement of their share capital. Subscribers to such issues could be mutual funds, profitable public sector undertakings and the employees of the institutions beside the general public.
Licensing should be abolished and the option of opening of branches for the present should be left to the commercial judgement of individual banks. Further, the internal organisation of banks is best left to judgement of the management of the individual bank.
There should be phased reduction Of CRR and SLR.
A liberal view should be adopted for allowing foreign banks in the country. Both foreign and domestic banks should be treated at par.
Primary targets for credits should be redefined and such credit should not be more than 10% of total credit.
Computerisation of banks should be promoted.
The dual control of RBI and Finance Ministry on banks should be abolished and RBI should function only as regulatory authority for banking system in the Economy.
RBI representatives should not be included in the management boards of banks, only government representative should be there.
Granting resources to developmental financial institutions on concessional rates of interest should be abolished in phase within next 3 years. These institutions should be allowed to mobilize resources from open market on competitive rates.
Review of recruitment procedures, training and remuneration policies in public Sector Banks.
Threat of action by vigilance and other investigative authorities, even in the case of commercial decisions create low morale. The committee wants this issue to be addressed.
Need for professionalising and depoliticising the bank boards.
NARASIMHAN COMMITTEE-II (1998)
Banking Sector Reforms
The major recommendations of the committee are:
Merger of strong banks which have a multiplier effect on industry. It has cautioned against merger of strong banks with weak banks as this will adversely affect the asset quality of strong banks.
Concept of narrow banking should be tried out to rehabilitate weak banks. If this was not successful the issue of closure should be examined.
Two or three large Indian banks should be given international character.
Small and local banks should be combined to states or clusters of districts in order to serve local trade, small industry and agriculture.
The committee has also commented on the governments’ role in Public Sector Banks by observing that government ownership has become an instrument of management. Such micro-management of banks is not calculated to enhance autonomy and flexibility.
Functions of the board and management need to be reviewed so that boards remain responsible for enhancing shareholder’s value through corporation or corporate strategy.
Need to review minimum prescriptions for capital adequacy. RBI Act, Bank Nationalisation Act, Banking regulation Act and State Bank of India Act are in urgent need of review.
Integration of NBFC’s lending activities into the financial system.
Review of recruitment procedures, training and remuneration policies in public Sector Banks.
Threat of action by vigilance and other investigative authorities, mishandling the case of commercial decision screate low morale. The committee wants this issue to be addressed.
Need for professionalising and depoliticising the bank boards.

9.1 COMMERCIAL BANKS
• Commercial Banks are created for profit motive.
• Scheduled Commercial Banks (SCBs) are grouped under following categories:
– Nationalized Banks
– Foreign Banks
– Regional Rural Banks
• Nationalized Banks
– State Bank of India and its associates along with the nationalized banks such as the IDBI Banks, Indian Bank, Dena Bank etc. are all public sector banks.
– Other scheduled commercial banks include private banks such as ICICI, Axis, HDFC bank etc. operating in the country.
• Foreign Banks
– Operating in the country include Deustche Bank, Bank of America, Citibank, HSBC, and Royal Bank of Scotland etc.
• Regional Rural Banks
– Regional rural banks came into being in the 1970s with the objective of providing deposit and credit facilities to the people in rural areas especially the small and marginal farmers, agricultural labourers, and small entrepreneurs.
– Even though these banks count as the scheduled commercial banks but their focus and reach is generally limited to a district or two.
– Some of the examples of Regional Rural Banks are Assam GraminVikash Bank, Allahabad UP Gramin Bank, Baroda Gujarat Gramin Bank etc.
– At present there are 91 RRBs functioning in India.

9.2 CO-OPERATIVE BANKS

• It is an institution established on the basis of cooperative principles and dealing in ordinary banking business with ‘No Profit No Loss Basis’.
• These banks are controlled, owned, managed and operated by cooperative societies and came into existence under the Cooperative Societies Act in 1912.
• These banks are located in the urban as well in the rural areas. Although these banks have the same functions as the commercial banks, but their rate of interest is low in comparison to other banks.
• At present, there are 170 scheduled commercial banks in the country, which includes 91 Regional Rural Banks (RRBs), 19 Nationalized Banks, 8 Banks in State Bank of India Group and the Industrial Development Bank of India Limited (IDBI Ltd).
There are three types of cooperative banks in India, namely
• Primary Credit Societies: These are formed in small locality like a small town or a village. The members using this bank usually know each other and the chances of committing fraud are minimal.
• Central Cooperative Banks: These banks have their members who belong to the same district. They function as other commercial banks and provide loans to their members. They act as a link between the state cooperative banks and the primary credit societies.
• State Cooperative Banks: these banks have a presence in all the states of the country and have their presence throughout the state.

9.3 NON-SCHEDULED BANKS

• Banks not under 2nd Schedule of the Reserve Bank of India Act, 1934. These are also known as Local Area Bank.
• Non-scheduled banks are also subject to the statutory cash reserve requirement. But they are not required to keep them with the RBI; they may keep these balances with themselves.
• They are not entitled to borrow from the RBI for normal banking purposes, though they may approach the RBI for accommodation under abnormal circumstances.
There are 5 Non-Scheduled Urban Cooperative Banks in India
• AkhandAnand Co-Operative Bank Ltd.
• Alavi Co-Op Bank Ltd.
• Amarnath Co-operative Bank Ltd.
• AmodNagrikSahakari Bank Ltd.
• AmreliNagrikSahakari Bank Ltd.
Along with this 4 local area banks in India which, forms under non-scheduled list of Banking as per RBI
• Coastal Local Area Bank Ltd.
• Capital Local Area Bank Ltd.
• Krishna BhimaSamruddhi Local Area Bank Ltd.
• Subhadra Local Area Bank Ltd.

9.4 FUNCTIONS OF SCHEDULED COMMERCIAL BANKS

The primary business of any commercial bank is to accept deposits and give short term loans. Apart from this, a scheduled commercial bank performs a number of other useful functions to the society such as:
a. Collection of Deposits
b. Advancing Loans
c. Utility Services
d. Agency Services
Collection of Deposits: Most important function of commercial bank. These deposits can be of various forms:
• Fixed Deposits: These are the deposits for a fixed period to earn interest by the customers of a bank. Such deposits have high interest rate than the other types of deposits. In case the customer withdraws money before the end of stipulated term of deposit, s/he has to pay penalty.
• Saving Bank Deposit: These are deposits made by persons out of their expenditure. These banks function with the intention to culminate saving habits among people, especially those who belong to low income groups or those who are salaried.
• The money these people deposit in the banks are invested in securities, bonds etc. These days, many commercial banks perform the dual functions of savings bank. The postal department is also in a way a saving bank.
• Current Account Deposits: Also known as demand deposit. The bank opens this account on an initial deposit of Rs. 100 but certain conditions have to be met to prove credit worthiness of the customer. There are no limitations on the amount of deposit and number of withdrawals. Generally, no interest is paid on current deposits.
Advancing loans: Commercial banks also play an important role in the economy by providing loans to industries, individuals, businesses, agriculture etc. They also provide loans for export and import trade.
Utility services: Commercial banks perform various services useful to the customer. Some of them have been listed below:
• Locker facility: Banks provide locker facility to customers to keep their valuables, such as securities, jewellery, documents etc.
• Draft facilities: Banks issue drafts to customers and enable them to transfer funds from place to place.
• Letters of credit: Banks issue letters of credit to their customers. These are useful to traders to buy goods from foreign countries on credit.
Agency Services: Commercial banks also perform several activities on behalf of their customers.
• Collections: Commercial banks take up collection of promissory notes, cheques, bills, dividends, subscriptions, rents, etc., on behalf of their customers as agents. The bank charges ‘service charges’ for rendering these services to its customers.
• Payments: Banks also accept the responsibility to pay insurance premium, rents, taxes, electricity bills, etc. periodically on behalf of its customers for whom they charge commission.
• Sale and purchase of securities: Customers sometimes approach the bankers for sale and purchase of their securities. For these services the banks charge commission.

9.5 CENTRAL BANK – RBI

RBI is an apex institution in the banking and financial structure of the country which plays a crucial role in organizing, running, supervising, regulating and developing the banking and financial structure of the economy. India’s Central Bank is known as the Reserve Bank of India.
Historical Background of RBI
• In 1926, the Royal Commission on Indian Currency and Finance which is also known as the Hilton-Young Commission recommended the creation of a central bank.
• The idea was twofold
– To separate the control of currency and credit from the government.
– To augment banking facilities throughout the country.
• The Reserve Bank of India Act of 1934 established the Reserve Bank as the banker to the central government and set in motion a series of actions culminating in the start of operations on April 1, 1935.
• RBI was nationalizedin 1949.
• It has four Zonal offices at Delhi, Kolkata, Chennai and Mumbai for four regions: Northern, Eastern, Southern and Western regions respectively. RBI has 19 offices, which are located in state capitals and a few major cities in India. In addition, there are 9 sub-offices of RBI.
Functions of Central Bank (RBI)
• Bank of Issue: It has a sole authority to issue currency notes and coins through the issue department, which is solely responsible for the issue of notes and coins.
• Banker to Banks and Government: As the Banker’s bank, RBI acts as the custodian of cash reserves of commercial and other Banks.
• Commercial banks are under statutory obligation to keep a part of their deposits as reserves with the central bank.
• The central bank provides credit, mainly short-term credit, to the commercial banks. It provides them guidance and direction and regulates their activities.
• Commercial banks are required to shape their policy in accordance with these directions and guidance of the central bank.
• As the banker and financial adviser to the government the central bank receives the deposits of cash, cheques, drafts etc. from the government.
• It provides cash to the government for paying salaries and wages and other cash disbursements. It makes payments on behalf of the government.
• It gives short-period loans to the government. It buys and sells foreign currencies on behalf of the government.
• Lender to Last Resort: RBI helps commercial banks when they have exhausted their resources and are in financial need. In its capacity as the lender of the last resort, the central bank provides, directly or indirectly all reasonable financial assistance to commercial banks.
• Controller of Credit: RBI controls the credit creation by the commercial banks which are regarded as the most important function of Central Bank.
• At present, Credit Money or Bank Money is the dominant form of money and essentially requires the supply of credit to be regulated so as to ensure the smooth functioning of the economy.
• For this, the central bank adopts quantitative and qualitative methods of credit control. Quantitative methods aim at controlling the cost and availability of credit, while the qualitative method influences the use and direction of credit.
How is Central Bank different from Commercial Banks?
• On the basis of Profit: A central bank does not aim at making profits like a commercial bank and hence is not a profit making institution. It acts in the public interest so as to control and regulate the banking and financial system of the country.
• On the basis of functions performed: A central bank does not perform ordinary commercial banking functions such as accepting deposits from the general public of the country.
• Ownership: A central bank is an organ of the government and, therefore, is owned by the government and managed by the government officials. But a commercial bank is generally maybe owned by both, private individuals as shareholders and by the government.
• Issuer of Currency: A central bank has sole monopoly of note issue, but commercial banks cannot issue notes.