SOCIO ECONOMIC DEVELOPMENT OBJECTIVE QUESTIONS

1.RBI’s open market operation transactions are carried out with a view to regulate
(A) Liquidity in the economy
(B) Prices of essential commodities
(C) Inflation
(D) Borrowing power of the banks
(E) All the above

2.When more than one banks are allowing credit facilities to one party in coordination with each other under a formal arrangement, the arrangement is generally known as—
(A) Participation
(B) Consortium
(C) Syndication
(D) Multiple banking
(E) None of these

3.Open market operations, one of the measures taken by RBI in order to control credit expansion in the economy means —
(A) Sale or purchase of Govt. securities
(B) Issuance of different types of bonds
(C) Auction of gold
(D) To make available direct finance to borrowers
(E) None of these

4.The bank rate means—
(A) Rate of interest charged by commercial banks from borrowers
(B) Rate of interest at which commercial banks discounted bills of their borrowers
(C) Rate of interest allowed by commercial banks on their deposits
(D) Rate at which RBI purchases or rediscounts bills of exchange of commercial banks
(E) None of these

5.What is an Indian Depository Receipt?
(A) A deposit account with a Public Sector Bank
(B) A depository account with any of Depositories in India
(C) An instrument in the form of depository receipt created by an Indian depository against underlying equity shares of the issuing company
(D) An instrument in the form of deposit receipt issued by Indian depositories
(E) None of these

6.An instrument that derives its value from a specified underlying (currency, gold, stocks etc.) is known as—
(A) Derivative
(B) Securitisation Receipts
(C) Hedge Fund
(D) Factoring
(E) Venture Capital Funding

7.Fiscal deficit is—
(A) total income less Govt. borrowing
(B) total payments less total receipts
(C) total payments less capital receipts
(D) total expenditure less total receipts excluding borrowing
(E) None of these

8.In the Capital Market, the term arbitrage is used with reference to—
(A) purchase of securities to cover the sale
(B) sale of securities to reduce the loss on purchase
(C) simultaneous purchase and sale of securities to make profits from price
(D) variation in different markets
(E) Any of the above

9.Reverse repo means—
(A) Injecting liquidity by the Central Bank of a country through purchase of Govt. securities
(B) Absorption of liquidity from the market by sale of Govt. securities
(C) Balancing liquidity with a view to enhancing economic growth rate
(D) Improving the position of availability of the securities in the market
(E) Any of the above

10.The stance of RBI monetary policy is—
(A) inflation control with adequate liquidity for growth
(B) improving credit quality of the Banks
(C) strengthening credit delivery mechanism
(D) supporting investment demand in the economy
(E) Any of the above

11. Currency Swap is an instrument to manage—
(A) Currency risk
(B) interest rate risk
(C) currency and interest rate risk
(D) cash flows in different currencies
(E) All of the above

12.‘Sub-prime’ refers to—
(A) lending done by banks at rates below PLR
(B) funds raised by the banks at sub-Libor rates
(C) Group of banks which are not rated as prime banks as per Banker’s Almanac
(D) lending done by financing institutions including banks to customers not meeting with normally required credit appraisal standards
(E) All of the above

13. Euro Bond is an instrument—
(A) issued in the European market
(B) issued in Euro Currency
(C) issued in a country other than the country of the currency of the Bond
(D) All of the above
(E) None of these

14. Money Laundering normally involves—
(A) placement of funds
(B) layering of funds
(C) integration of funds
(D) All of (A), (B) and (C)
(E) None of (A), (B) and (C)

15. The IMF and the World Bank were conceived as institutions to—
(A) strengthen international economic co-operation and to help create a more stable and prosperous global economy
(B) IMF promotes international monetary cooperation
(C) The World Bank promotes long term economic development and poverty reduction
(D) All of (A), (B) and (C)
(E) None of (A), (B) and (C)

16.Capital Market Regulator is—
(A) RBI
(B) IRDA
(C) NSE
(D) BSE
(E) SEBI

17.In the term BRIC, R stands for—
(A) Romania
(B) Rajithan
(C) Russia
(D) Regulation
(E) None of these

18.FDI refers to—
(A) Fixed Deposit Interest
(B) Fixed Deposit Investment
(C) Foreign Direct Investment
(D) Future Derivative Investment
(E) None of these

19.What is Call Money?
(A) Money borrowed or lent for a day or over night
(B) Money borrowed for more than one day but upto 3 days
(C) Money borrowed for more than one day but upto 7 days
(D) Money borrowed for more than one day but upto 14 days
(E) None of these

20.Which is the first Indian company to be listed in NASDAQ?
(A) Reliance
(B) TCS
(C) HCL
(D) Infosys
(E) None of these

21.Which of the following is the Regulator of the credit rating agencies in India?
(A) RBI
(B) SBI
(C) SIDBI
(D) SEBI
(E) None of these

22.Who is Brand Endorsing Personality of Bank of Baroda?
(A) Juhi Chawla
(B) Kiran Bedi
(C) Amitabh Bachchan
(D) Kapil Dev
(E) None of these

23.The branding line of Bank of Baroda is—
(A) International Bank of India
(B) India’s International Bank
(C) India’s Multinational Bank
(D) World’s local Bank
(E) None of these

24.The logo of Bank of Baroda is known as—
(A) Sun of Bank of Baroda
(B) Baroda Sun
(C) Bank of Baroda’s Rays
(D) Sunlight of Bank of Baroda
(E) None of these

25.Which of the following statements(s) is/are True about the exports of China which is a close competitor of India?
(i) China’s economic success is basically on the fact that it exports cheaper goods to rich nations like
the USA, etc.
(ii) In the year 2007 China’s exports became almost 40% of its GDP.
(iii) When compared to India China’s share in the World Exports is more than 30% whereas India’s share is mere 6% of the global exports.
(A) Only (i)
(B) Only (ii)
(C) Both (i) and (ii)
(D) All (i), (ii) and (iii)
(E) None of these

26.One of the major challenges banking industry is facing these days is money laundering. Which of the following acts/norms are launched by the banks to prevent money laundering in general?
(A) Know Your Customer Norms
(B) Banking Regulation Act
(C) Negotiable Instrument Act
(D) Narcotics and Psychotropic Substance Act
(E) None of these

27.Lot of Banks in India these days are offering M-Banking Facility to their customers. What is the full form of ‘M’ in ‘M-Banking’?
(A) Money
(B) Marginal
(C) Message
(D) Mutual Fund
(E) Mobile Phone

28.Which of the following is/are true about the ‘Sub-Prime Crisis’ ? (The term was very much in news recently.)
(i) It is a mortgage crisis referring to credit default by the borrowers.
(ii) Sub-Prime borrowers were those borrowers who were rated low and were high risk borrowers.
(iii) This crisis originated because of negligence in credit rating of the borrowers.
(A) Only (i)
(B) Only (ii)
(C) Only (iii)
(D) All (i), (ii) and (iii)
(E) None of these

29.Which of the following is not the part of the structure of the Financial System in India?
(A) Industrial Finance
(B) Agricultural Finance
(C) Government Finance
(D) Development Finance
(E) Personal Finance

30.Which of the following is not the part of the scheduled banking structure in India?
(A) Money Lenders
(B) Public Sector Banks
(C) Private Sector Banks
(D) Regional Rural Banks
(E) State Co-operative Banks

31.As we all know Govt. of India collects tax revenue on various activities in the country. Which of the following is a part of the tax revenue of the Govt.?
(i) Tax on Income
(ii) Tax on Expenditure
(iii) Tax on Property or Capital Asset
(iv) Tax on Goods and Services
(A) Both (i) and (iii) only
(B) Both (ii) and (iv) only
(C) All (i), (ii), (iii) and (iv)
(D) Only (ii), (iii) and (iv)
(E) None of these

32.We very frequently read about Special Economic Zones (SEZs) in newspapers. These SEZs were established with which of the following objectives?
(i) To attract foreign investment directly.
(ii) To protect domestic market from direct competition from multinationals.
(iii) To provide more capital to agricultural and allied activities.
(A) Only (i)
(B) Only (ii)
(C) Only (iii)
(D) All (i), (ii) and (iii)
(E) None of these

33.Which of the following groups of countries has almost 50% share in global emission of carbon every year?
(A) US, China, India, South Africa
(B) India, China, Russia, Britain
(C) South Africa, Nepal, Myanmar
(D) US, Russia, China & India
(E) None of these

34.Which of the following correctly describes the concept of ‘Nuclear Bank’ floated by International Atomic Energy Agency?
(i) It is a nuclear fuel bank to be shared by all the nations jointly.
(ii) It is a facility to help nations in enrichment of uranium.
(iii) It is an agency which will keep a close vigil on the nuclear programme of all the nations.
(A) Only (i)
(B) Only (ii)
(C) Both (i) and (iii) only
(D) Only (iii)
(E) Both (i) and (ii) only

35.Many times we read about Future Trading in newspapers. What is ‘Future Trading’?
(i) It is nothing but a trade between any two stock exchanges wherein it is decided to purchase the stocks of each other on a fixed price throughout the year.
(ii) It is an agreement between two parties to buy or sell an underlying asset in the future at a
predetermined price.
(iii) It is an agreement between stock exchanges that they will not trade the stocks of each other under any circumstances in future or for a given period of time.
(A) Only (i)
(B) Only (ii)
(C) Only (iii)
(D) All (i), (ii) and (iii)
(E) None of these

36.Inflation in India is measured on which of the following indexes/indicators?
(A) Cost of Living Index (COLI)
(B) Consumer Price Index (CPI)
(C) Gross Domestic Product
(D) Wholesale Price Index (WPI)
(E) None of these
37.As per the reports published in the newspapers a section of society staged a demonstration at the venue of the G-8 Summit recently. What was/were the issues towards which these demonstrators were trying to draw the attention of G-8 leaders?
(i) Food shortage which has taken 50 million people in its grip.
(ii) Inflation which has gone up substantially across the Globe.
(iii) USA’s consistent presence in Iraq.
(A) Only (i)
(B) Only (ii)
(C) Only (iii)
(D) Both (i) and (ii) only
(E) None of these
38.Hillary Clinton formally suspended her campaign to ensure election of who amongst the following for the next President of USA?
(A) George Bush
(B) Barack Obama
(C) John McCain
(D) Bill Clinton
(E) None of these

39.Hugo Chavez whose name was recently in news is the—
(A) President of Congo
(B) Prime Minister of Uganda
(C) President of Venezuela
(D) Prime Minister of Brazil
(E) None of these

40.The Govt. of India has raised the amount of the Loan Waiver to the farmers by 20%. Now the amount is nearly—
(A) Rs. 60,000 crore
(B) Rs. 65,000 crore
(C) Rs. 72,000 crore
(D) Rs. 76,000 crore
(E) Rs. 80,000 crore

41.Delimitation Commission has made a recommendation that next Census should be Panchayat-wise.When is the next Census due?
(A) 2010
(B) 2011
(C) 2012
(D) 2013
(E) 2015

42.The World Health Organisation has urged that advertisements of which of the following should be banned to protect youth from bad effects of the same?
(A) Tobacco
(B) Alcoholic drinks
(C) Junk Food
(D) Soft drinks with chemical preservatives
(E) None of these

43.Which of the following countries has allocated a huge amount of US $ 10 billion to provide relief to its earthquake victims?
(A) Japan
(B) South Korea
(C) China
(D) South Africa
(E) None of these

44.India and Nepal have many agreements on sharing of the water of various rivers. Which of the following rivers is not covered under these agreements?
(A) Kosi
(B) Gandak
(C) Ganga
(D) Mahakali
(E) All these rivers are covered

45.Which of the following names is not closely associated with space programme of India or any other country?
(A) CARTOSAT
(B) NLS - 5
(C) RUBIN - 8
(D) GSLV
(E) SCOPE

46.Vijay Hazare Trophy is associated with the game of—
(A) Hockey
(B) Cricket
(C) Badminton
(D) Football
(E) Golf

47.Which of the following was the theme of the Olympic Torch?
(A) Journey of Harmony
(B) Green World Clean World
(C) Journey of Peace
(D) Journey for Hunger-free World
(E) None of these

48.Which of the following schemes is not a social development Scheme?(A) Indira Awas Yojana
(B) Mid Day Meal
(C) Bharat Nirman Yojana
(D) Sarva Shiksha Abhiyan
(E) All are social schemes

49.Which of the following is not a member of the ASEAN?
(A) Malaysia
(B) Indonesia
(C) Vietnam
(D) Britain
(E) Singapore

50.Which of the following Awards are given for excellence in the field of Sports?
(A) Kalinga Prize
(B) Shanti Swarup Bhatnagar Award
(C) Arjun Award
(D) Pulitzer Prize
(E) None of these


Answers :

1. (E) 2. (B) 3. (A) 4. (D) 5. (C) 6. (C) 7. (D) 8. (C) 9. (A) 10. (E) 11. (D) 12. (D) 13. (C) 14. (D) 15. (D) 16. (E) 17. (C) 18. (C) 19. (A) 20. (D)21. (D) 22. (E) 23. (B) 24. (B) 25. (C) 26. (E) 27. (E) 28. (D) 29. (E) 30. (A) 31. (C) 32. (A) 33. (D) 34. (B) 35. (B) 36. (D) 37. (B) 38. (B) 39. (C) 40. (A) 41. (B) 42. (A) 43. (C) 44. (C) 45. (E) 46. (B) 47. (A) 48. (C) 49. (D) 50. (C)

Direct Tax Code

The direct tax code seeks to consolidate and amend the law relating to all direct taxes, namely, income-tax, dividend distribution tax, fringe benefit tax and wealth-tax so as to establish an economically efficient, effective and equitable direct tax system which will facilitate voluntary compliance and help increase the tax-GDP ratio. Another objective is to reduce the scope for disputes and minimize litigation. It is designed to provide stability in the tax regime as it is based on well accepted principles of taxation and best international practices. It will eventually pave the way for a single unified taxpayer reporting system.
The salient features of the code are:

• Single Code for direct taxes: all the direct taxes have been brought under a single Code and compliance procedures unified. This will eventually pave the way for a single unified taxpayer reporting system.
  
• Use of simple language: with the expansion of the economy, the number of taxpayers can be expected to increase significantly. The bulk of these taxpayers will be small, paying moderate amounts of tax. Therefore, it is necessary to keep the cost of compliance low by facilitating voluntary compliance by them. This is sought to be achieved, inter alia, by using simple language in drafting so as to convey, with clarity, the intent, scope and amplitude of the provision of law. Each sub-section is a short sentence intended to convey only one point. All directions and mandates, to the extent possible, have been conveyed in active voice. Similarly, the provisos and explanations have been eliminated since they are incomprehensible to non-experts. The various conditions embedded in a provision have also been nested. More importantly, keeping in view the fact that a tax law is essentially a commercial law, extensive use of formulae and tables has been made.
  
• Reducing the scope for litigation: wherever possible, an attempt has been made to avoid ambiguity in the provisions that invariably give rise to rival interpretations. The objective is that the tax administrator and the tax payer are ad idem on the provisions of the law and the assessment results in a finality to the tax liability of the tax payer. To further this objective, power has also been delegated to the Central Government/Board to avoid protracted litigation on procedural issues.
  
• Flexibility: the structure of the statute has been developed in a manner which is capable of accommodating the changes in the structure of a growing economy without resorting to frequent amendments. Therefore, to the extent possible, the essential and general principles have been reflected in the statute and the matters of detail are contained in the rules/schedules.
  
• Ensure that the law can be reflected in a Form: for most taxpayers, particularly the small and marginal category, the tax law is what is reflected in the Form. Therefore, the structure of the tax law has been designed so that it is capable of being logically reproduced in a Form.
  
• Consolidation of provisions: in order to enable a better understanding of tax legislation, provisions relating to definitions, incentives, procedure and rates of taxes have been consolidated. Further, the various provisions have also been rearranged to make it consistent with the general scheme of the Act.
  
• Elimination of regulatory functions: traditionally, the taxing statute has also been used as a regulatory tool. However, with regulatory authorities being established in various sectors of the economy, the regulatory function of the taxing statute has been withdrawn. This has significantly contributed to the simplification exercise.
  
• Providing stability: at present, the rates of taxes are stipulated in the Finance Act of the relevant year. Therefore, there is a certain degree of uncertainty and instability in the prevailing rates of taxes. Under the Code, all rates of taxes are proposed to be prescribed in the First to the Fourth Schedule to the Code itself thereby obviating the need for an annual Finance Bill. The changes in the rates, if any, will be done through appropriate amendments to the Schedule brought before Parliament in the form of an Amendment Bill.
  

Value Added Tax (VAT)

One of the important components of tax reforms initiated since liberalization is the introduction of Value Added Tax (VAT). VAT is a multi-point destination based system of taxation, with tax being levied on value addition at each stage of transaction in the production/ distribution chain. The term 'value addition' implies the increase in value of goods and services at each stage of production or transfer of goods and services. VAT is a tax on the final consumption of goods or services and is ultimately borne by the consumer. It is a multi-stage tax with the provision to allow 'Input tax credit (ITC)' on tax at an earlier stage, which can be appropriated against the VAT liability on subsequent sale. This input tax credit in relation to any period means setting off the amount of input tax by a registered dealer against the amount of his output tax. It is given for all manufacturers and traders for purchase of inputs/supplies meant for sale, irrespective of when these will be utilised/ sold. The VAT liability of the dealer/ manufacturer is calculated by deducting input tax credit from tax collected on sales during the payment period (say, a month). If the tax credit exceeds the tax payable on sales in a month, the excess credit will be carried over to the end of next financial year. If there is any excess unadjusted input tax credit at the end of second year, then the same will be eligible for refund. VAT is basically a State subject, derived from Entry 54 of the State List, for which the States are sovereign in taking decisions. The State Governments, through Taxation Departments, are carrying out the responsibility of levying and collecting VAT in the respective States. While, the Central Government is playing the role of a facilitator for the successful implementation of VAT. The Ministry of Finance is the main agency for levying and implementing VAT, both at the Centre and the State level.
The Department of Revenue, under the Ministry of Finance, exercises control in respect of matters relating to all the direct and indirect taxes, through two statutory Boards, namely, the Central Board of Direct Taxes (CBDT) and the Central Board of Customs and Central Excise (CBEC). The Sales Tax Division, of Department of Revenue, deals with enactment and amendment of the Central Sales Tax Act; levy of tax on sales in the course of inter-State trade or commerce; levy of VAT; etc. The Central Board of Excise and Customs (CBEC) deals with the tasks of formulation of policy concerning levy and collection of customs and central excise duties, allowing of Central Value added Tax (CENVAT) credit, etc. While, the decision to implement State level VAT has been taken in the meeting of the Empowered Committee (EC) of State Finance Ministers, held on June 18, 2004, where a broad consensus was arrived at to introduce VAT in all States/ Union Territories (UTs).

The entire design of VAT with input tax credit is crucially based on documentation of tax invoice, cash memo or bill. Every registered dealer, having turnover of sales above an amount specified, needs to issue to the purchaser serially numbered tax invoice with the prescribed particulars. This tax invoice is to be signed and dated by the dealer or his regular employee, showing the required particulars. For identification/ registration of dealers under VAT, the Tax Payer's Identification Number (TIN) is used. TIN consists of 11 digit numerals throughout the country. Its first two characters represent the State Code and the set-up of the next nine characters can vary in different States.
In India's prevalent sales tax structure, there have been problems of double taxation of commodities and multiplicity of taxes, resulting in a cascading tax burden. For instance, in this structure, before a commodity is produced, inputs are first taxed, and then after the commodity is produced with input tax load, output is taxed again. This causes an unfair double taxation with cascading effects. Hence, the VAT has been introduced to replace such sales tax structure. Moreover, it seeks to phase out the Central Sales Tax (CST) and several efforts are being made in this regard.
The main motive of VAT has been the rationalisation of overall tax burden and reduction in general price level. Thus, it seeks to help common people, traders, industrialists as well as the Government. It is indeed a move towards more efficiency, equal competition and fairness in the taxation system. The main benefits of implementation of VAT are:-

• Minimizes tax evasion as VAT is imposed on the basis of invoice/ bill at each stage, so that tax evaded at first stage gets caught at the next stage;
• A set-off is given for input tax as well as tax paid on previous purchases;
  
• Abolishes multiplicity of taxes, that is, taxes such as turnover tax, surcharge on sales tax, additional surcharge, etc. are being abolished;
• Replaces the existing system of inspection by a system of built-in self-assessment of VAT liability by the dealers and manufacturers (in terms of submission of returns upon setting off the tax credit);
• Tax structure becomes simpler and more transparent;
  
• Improves tax compliance;
• Generates higher revenue growth;
• Promotes competitiveness of exports; etc.

At the Central level, there is Central Value Added Tax (CENVAT) which pertains to the rationalisation of Central excise duty structure in India. At present, there is a uniform rate of CENVAT of 16 per cent on most of the inputs and final products. The CENVAT has been introduced to end all the disputes that were taking place due to classification of various types of inputs as rates were different on different varieties. Accordingly, the CENVAT Credit Rules have been notified and amended, from time to time, which are as follows:-

• The Cenvat Credit Rules, 2004
• The Cenvat Credit Rules, 2002
• The Cenvat Credit Rules, 2001
  

Under these, a manufacturer or producer of final products and a provider of output service is allowed to take credit (known as CENVAT credit) of the duty of excise, as mentioned in the Rules, paid on specified inputs and capital goods used in or in relation to the manufacture of specified final products. The CENVAT credit so allowed can be utilized for payment of :- (i) any duty of excise on any final product; or (ii) an amount equal to CENVAT credit taken on inputs, if such inputs are removed as such or after being partially processed; or (iii) an amount equal to the CENVAT credit taken on capital goods, if such capital goods are removed as such; or (iv) service tax on any output service, as per the conditions laid down in the rules. In the latest budget, it is proposed to reduce the general CENVAT rate on all goods from 16 per cent to 14 per cent in order to give a stimulus to the manufacturing sector.

At the State level, the Empowered Committee of State Finance Ministers have finalized a design of VAT to be adopted by all the States/ UTs. This basic design of VAT retains the essential features of VAT and keep them common for all the States/ UTs, like, the rates of VAT on various commodities are kept uniform for all. At the same time, it provides a measure of flexibility to the States/ UTs so as to enable them to meet their local requirements.
At present, there are 2 basic rates of VAT, namely, 4 per cent and 12.5 per cent, besides an exempt category and a special rate of 1 per cent for a few selected items. The items of basic necessities and goods of local importance (upto 10 items) have been put in the zero rate bracket or the exempted schedule. Gold, silver and precious stones have been put in the 1 per cent schedule. There is also a category with 20 per cent floor rate of tax, but the commodities listed in this schedule are not eligible for input tax rebate/set off. This category covers items like motor spirit (petrol, diesel and aviation turbine fuel), liquor, etc. Some of the other features of VAT in the State (as finalized by the Empowered Committee) are:-

• As per provision for eliminating the multiplicity of taxes, all the State taxes on purchase or sale of goods (excluding Entry Tax in lieu of Octroi) are required to be subsumed in VAT or made VATable.
• A provision has been made for allowing 'Input Tax Credit (ITC)' which is the basic feature of VAT. However, since the VAT being implemented is intra-State VAT only and does not cover inter-State sale transactions, ITC is not to be available on inter-State purchases.
• Exports to be zero-rated, with credit given for all taxes on inputs/purchases related to such exports.
• There are provisions to make the system more business-friendly. For instance, provision for self assessment by the dealers; provision of a threshold limit for registration of dealers in terms of annual turnover of Rs. 5 lakhs; and provision for composition of tax liability up to annual turnover limit of Rs. 50 lakhs.
• Regarding the industrial incentives, the States have been allowed to continue with the existing incentives, without breaking the VAT chain. Further, no fresh sales tax/ VAT-based incentives are permitted.

Haryana became the first State in the country to introduce Value Added Tax (VAT). Till 2007, VAT has been introduced by more than 30 States/UTs, including Tamil Nadu (implemented VAT from January 1, 2007) and the UT of Puducherry (implemented VAT from April 1, 2007). From January 01, 2008, the Government of Uttar Pradesh has made VAT effective in the State. Some of the other States/ UTs which have implemented VAT are:-

• Andhra Pradesh
• Chhattisgarh
• Delhi
• Goa
• Gujarat
• Jammu and Kashmir
• Jharkhand
• Karnataka
• Kerala
• Maharashtra
• Meghalaya
• Orissa
• Rajasthan
• West Bengal

Over the years, the experience of implementing VAT in India has been very encouraging, with the Empowered Committee constantly reviewing the progress of implementation. The revenue performance of VAT-implementing States/UTs has also been very significant. During 2006-07, the tax revenue of the 31 VAT States/UTs had collectively registered a growth rate of about 21 per cent over the tax revenue of 2005-06. During 2007-08, the tax revenue of 32 VAT States/UTs showed a further growth of 14.6 per cent during the first six months of 2007-08 (April-September) as compared to the corresponding period of last year.
Besides, the Central Government had announced a compensation package under which the States are compensated for any revenue loss on account of VAT introduction at the rate of 100 per cent of revenue loss during 2005-06, 75 per cent during 2006-07 and 50 per cent during 2007-08. Further, the technical and financial support are being provided to the States/ UTs for VAT computerization, publicity and awareness and other related aspects.

Service Tax

Service tax is a tax levied on services rendered by a person and the responsibility of payment of the tax is cast on the service provider. It is an indirect tax as it can be recovered from the service receiver by the service provider in course of his business transactions. Service Tax was introduced in India in 1994 by Chapter V of the Finance Act, 1994. It was imposed on a initial set of three services in 1994 and the scope of the service tax has since been expanded continuously by subsequent Finance Acts. The Finance Act, extends the levy of service tax to the whole of India, except the State of Jammu & Kashmir.
The Central Board of Excise & Customs (CBEC) under Department of Revenue in the Ministry of Finance, deals with the task of formulation of policy concerning levy and collection of Service Tax. In exercise of the powers conferred, the Central Government makes service tax rules for the purpose of the assessment and collection of service tax. The Service Tax is being administered by various Central Excise Commissionerates, working under the Central Board of Excise & Customs. There are six Commissionerates located at metropolitan cities of Delhi, Mumbai, Kolkata, Chennai, Ahmedabad and Bangalore which deal exclusively with work related to Service Tax. Directorate of Service Tax at Mumbai over sees the activities at the field level for technical and policy level coordination.

Excise Duty

Central Excise duty is an indirect tax levied on those goods which are manufactured in India and are meant for home consumption. The taxable event is 'manufacture' and the liability of central excise duty arises as soon as the goods are manufactured. It is a tax on manufacturing, which is paid by a manufacturer, who passes its incidence on to the customers. The term "excisable goods" means the goods which are specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 , as being subject to a duty of excise and includes salt.
The term "manufacture" includes any process,

1. Incidental or ancillary to the completion of a manufactured product and
2. Which is specified in relation to any goods in the Section or Chapter Notes of the First Schedule to the Central Excise Tariff Act, 1985 as amounting to manufacture or
3. Which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer.

As incidence of excise duty arises on production or manufacture of goods, the law does not require the sale of goods from place of manufacture, as a mandatory requirement. Normally, duty is payable on 'removal' of goods. The Central Excise Rules provide that every person who produces or manufactures any 'excisable goods', or who stores such goods in a warehouse, shall pay the duty leviable on such goods in the manner provided in rules or under any other law. No excisable goods, on which any duty is payable, shall be 'removed' without payment of duty from any place, where they are produced or manufactured, or from a warehouse, unless otherwise provided. The word 'removal' cannot be necessarily equated with sale.

The removal may be for:-

1. Sale
2. Transfer to depot etc.
3. Captive consumption
4. Transfer to another unit
5. Free distribution

Thus, it can be seen that duty becomes payable irrespective of whether the removal is for sale or for some other purpose.

Wealth Tax

Wealth tax is a direct tax, which is charged on the net wealth of the assessee. It is a tax on the benefits derived from ownership of property. The tax is to be paid year after year on the same property on its market value, whether or not such property yields any income. Wealth tax, in India, is levied under Wealth-tax Act, 1957. The Income tax department under the Department of Revenue in the Ministry of Finance administers the Wealth Tax Act, 1957 as well as the Wealth Tax Rules framed there under.

Under the Act, the tax is charged in respect of the wealth held during the assessment year by the following persons :-

• Individual
• Hindu Undivided Family(HUF)
• Company

Chargeability to tax also depends upon the residential status of the assessee same as the residential status for the purpose of the Income Tax Act.

Wealth tax is not levied on productive assets, hence investments in shares, debentures, UTI, mutual funds, etc are exempt from it. The assets chargeable to wealth tax are :-

• Guest house, residential house, commercial building
• Motor car
• Jewellery, bullion, utensils of gold, silver etc
• Yachts, boats and aircrafts
• Urban land
• Cash in hand(in excess of 50,000), only for Individual & HUF

The following will not be included in Assets :-

• Any of the above if held as Stock in trade.
• A house held for business or profession.
• Any property in nature of commercial complex.
• A house let out for more than 300 days in a year.
• Gold deposit bond.
• A residential house allotted by a Company to an employee, or an Officer, or a Whole Time Director ( Gross salary i.e. excluding perquisites and before Standard Deduction of such Employee, Officer, Director should be less than Rs. 5,00,000).

The Assets exempt from Wealth tax are :-

• Property held under a trust.
• Interest of the assessee in the coparcenary property of a HUF of which he is a member.
• Residential building of a former ruler.
• Assets belonging to Indian repatriates.
• One house or a part of house or a plot of land not exceeding 500sq.mts,for individual & HUF assessee.

Wealth tax is chargeable in respect of Net wealth corresponding to Valuation date.(Net wealth means all assets less loans taken to acquire those assets. Valuation date means 31st March of immediately preceding the assessment year). In other words, the value of the taxable assets on the valuation date is clubbed together and is reduced by the amount of debt owed by the assessee. The net wealth so arrived at is charged to tax at the specified rates. Wealth tax is charged @ 1% of the amount by which the net wealth exceeds Rs. 15 Lakhs.

MODVAT and CENVAT

Taxation of inputs, like raw materials, components and other intermediaries had a number of limitations. In production process, raw material passes through various processes stages till a final product emerges. Thus, output of the first manufacturer becomes input for second manufacturer and so on. When the inputs are used in the manufacture of product `A', the cost of the final product increases not only on account of the cost of the inputs, but also on account of the duty paid on such inputs. As the duty on the final product is on ad valorem basis and the final cost of product `A' includes the cost of inputs, inclusive of the duty paid, duty charged on product `A' meant doubly taxing raw materials. In other words, the tax burden goes on increasing as raw material and final product passes from one stage to other because, each subsequent purchaser has to pay tax again and again on the material which has already suffered tax. This is called cascading effect or double taxation. This very often distorted the production structure and did not allow the correct assessment of the tax incidence. Therefore, the Government tried to remove these defects of the Central Excise System by progressively relieving inputs from excise and countervailing duties. An ideal system to realize this objective would have been to adopt value added taxation (VAT). However, on account of some practical difficulties it was not possible to fully adopt the value added taxation. Hence, Government evolved a new scheme, `MODVAT' (Modified Value Added Tax). MODVAT Scheme which essentially follows VAT Scheme of taxation. i.e. if a manufacturer A purchases certain components(raw materials) from another manufacturer B for use in its product. B would have paid excise duty on components manufactured by it and would have recovered that excise duty in its sales price from A. Now, A has to pay excise duty on product manufactured by it as well as bear the excise duty paid by the supplier of raw material B. Under the MODVAT scheme, a manufacturer can take credit of excise duty paid on raw materials and components used by him in his manufacture. It amounts to excise duty only on additions in value by each manufacturer at each stage. The modvat scheme is regulated by Rules 57A to 57U of the Central Excise Rules and the notifications issued there under (The Central Excise Rules, 2002 (Section 143 of the Finance Act, 2002). Modvat Scheme ensures the revenue of the same order and at same time the price of the final product could be lower. Apart from reducing the costs through elimination of cascade effect, and bringing in greater rationalization in tax structure and also bringing in certainty in the amount of tax leviable on the final product, this scheme will help the consumer to understand precisely the impact of taxation on the cost of any product and will, therefore, enable consumer resistance to unethical attempts on the part of manufacturers to raise prices of final products, attributing the same to higher taxes. Subsequently, MODVAT scheme was restructured into CENVAT( Central Value Added Tax) scheme. A new set of rules 57AA to 57AK , under The Cenvat Credit Rules, 2004, were framed and whatever restrictions restrictions were there in MODVAT Scheme were put to an end and comparatively, a free hand was given to the assesses. Under the Cenvat Scheme, a manufacturer of final product or provider of taxable service shall be allowed to take credit of duty of excise as well as of service tax paid on any input received in the factory or any input service received by manufacturer of final product. The term "Input" means: - All goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production All goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service; Explanation 1 : The light diesel oil, high-speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever. Explanation 2 : Inputs include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer;" The term "Input service" means any service: - Used by a provider of taxable service for providing an output service; or Used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, And includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;" Manufacturer and service providers can avail Cenvat credit of capital goods used by them. The plant and machinery and allied items are purchased by a manufacturer. Such goods known as capital goods may be duty paid. The capital goods shall be used in manufacture of final products or for providing output service. The CENVAT credit in respect of duty paid on capital goods shall be taken only for an amount not exceeding fifty percent of the duty paid in the same financial year and the credit of balance amount can be take in any financial year subsequent to the financial year in which the capital goods were received. Duty Paying Documents against which CENVAT credit can be availed are:- Invoice issued by A manufacture of inputs or capital goods. An importer An importer from his depot or premises of consignment agent, Provided the depot/ premises is registered with central excise A first/second stage dealer. A supplementary invoice A bill of entry. A certificate issued by appraiser of customs An invoice/bill/challan issued by providers of input service. A challan evidencing payment of service tax. Credit of duty is allowed only if all the conditions given below are met:- The basic criteria for availment of credit of duty paid on inputs or capital goods is that the goods shall be used in manufacture of final products. The goods shall be accompanied with proper prescribed documents. The final products shall not be exempt from whole of duty or chargeable to nil rate of duty.

All India Consumer Price index Numbers for Industrial Workers on base 2001=100 for the Month of March, 2011

All India Consumer Price Index Number for Industrial Workers (CPI-IW) on base 2001=100 for the month of  March, 2011 remained stationary at 185 (one hundred and eighty five).

        During March, 2011, the index recorded decrease of 4 points in Chennai centre, 3 points each in Warrangal, Tiruchirapally, Vadodara and Quilon centres, 2 points in 12 centres and 1 point in 17 centres. The index increased by 6 points in Srinagar centre, 5 points in Hubli Dharwar centre, 3 points each in Bhilai, Sholapur and Mysore centres, 2 points in 5 centres, 1 point in 13 centres, while in the remaining 21 centres the index remained stationary.

                 The maximum decrease of 4 points  in  Chennai centre is mainly on account of decrease in the prices of Rice, Onion, Garlic, Vegetable items, Flower/Flower Garlands, etc. The decrease of 3 points each in Warrangal, Tiruchirapally, Vadodara and Quilon centres is due to decrease in the prices of Rice, Arhar Dal, Onion, Garlic, Vegetable items, etc. The increase of 6 points in Srinagar centre is the outcome of increase in the prices of Rice, Poultry (Chicken), Vegetable & Fruit items, Bus Fare, Tailoring Charges, Utensils Copper, etc. The increase of 5 points in Hubli Dharwar centre is due to increase in the prices of Rice, Goat Meat, Fish Fresh, Milk, Tea (Readymade), Pan Leaf, etc. whereas, the increase of 3 points each in Bhilai, Sholapur and Mysore centres  is due to increase in the prices of Rice, Wheat, Milk,  Coffee Powder, Firewood, etc.

            The indices in respect of the six major centres are as follows :

1. Ahmedabad	177		4. Delhi	169
2. Bangalore	188		5. Kolkata	178
3. Chennai	163		6. Mumbai	183

            The All-India (General) point to point rate of inflation for the month of March, 2011 remained static at 8.82% in comparison with the level of February, 2011. Inflation based on Food Index is 8.29% in March, 2011 as compared to 7.65% in February, 2011.

Census 2011: Population pegged at 1.21 billion

India's most backward and populous States slowed down their rate of population growth, helping the country register its sharpest decline in population growth since Independence. India's population grew to 1.21 billion, according to provisional results of the decadal headcount declared by Census Commissioner C. Chandramouli on March 30, 2011.

The absolute addition of about 181 million people is slightly less than the population of Brazil—the world fifth most populous country—but the slower decadal growth rate of 17.64% has offered hope to policy makers. This is the first time since 1921 that the country has actually added lesser people in a decade compared to the previous decade.

Eight States, including India's most backward States—Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh—broke the jinx to reduce their percentage decadal growth to 20.9%. This is a significant achievement since the growth rates of these States had frozen at 24-25% since 1971.
The absolute number of children in the 0-6 age group also recorded decline, from 163 million in the 2001 census to 158 million in 2011, signalling a fall in fertility. But worryingly, this decline is sharper in case of females than males.

The figures broadly indicate a drop in fertility across the country except in Jammu & Kashmir, where the proportion of children has in fact increase to 16.01%, compared to 14.65 in 2001.

There are 57 more Indians for every square kilometer in addition to those already jostling for space in the country. Census 2011 shows that from 325 per square km in 2001, the average density of population has increased to 382 in 2011—up by 17.5%. While the cow-belt and West Bengal continues their dominance, the density spread is more in the urban areas, pointing to the pressure on the natural resources, infrastructure and government aid.

India accounts for a meager 2.4% of the world surface area of 135 million sq km and supports 17.5% of the world’s population. In contrast, the US accounts for 7.2% of the surface area with only 4.5% of the population.

At 11,297 people for every sq km, Delhi tops the list of States and Union Territories in terms of density. Chandigarh comes next, with 9,252 people.

Among States, however, the top slot goes to Bihar with 1,102 people/ sq km. West Bengal is the only other State to have a density in excess of 1,000. Uttar Pradesh, otherwise the most populous State, has a density of only 828.

Andaman and Nicobar and Arunachal Pradesh are the least densely populated territories, with 46 and 17 people, respectively, in every sq km.

Dibang valley of Arunachal has only one person in a sq km, while Samba in J&K has two.

Nagaland is the only State that has statistically demonstrated a negative growth rate and a marginal decline in density.

Women steal literacy lead over men: More Indian women gained literacy over the past decade than men, according to the 2011 census. A total of 110 million additional women have become literate since 2001, as opposed to 107 million men over the same period. Never before have women outdone men in numbers gaining literacy over any decade.

India’s overall literacy rate has risen from 64.8 % in 2001 to 74.04% — but the surge in women literates means the gap between male and female literacy has shrunk.

While male literacy has increased from 75.2% in 2001 to 82%, female literacy has jumped from 53.6% to 65.4% over the same period.

The literacy increase—overall and for women—follows a decade in which successive governments have focused on school education like never before since Independence.

The Sarva Shiksha Abhiyaan launched in 2001, along with the universalisation across government schools of the mid-day meal scheme, are credited by most experts as critical interventions that have helped India achieve near universal enrollment in primary education.

Bihar and Uttar Pradesh—traditional laggards in education—have shown maximum improvement both in improving overall literacy and in their female literacy rate.

Bihar’s overall literacy has gone up from 47% in 2001 to 63.8% in 2011, while UP’s overall literacy has risen from 42.2% to 59.3% over the same period. The female literacy rate of Bihar has jumped a startling 20%—from 33.1% in 2001 to 53.3% now. UP has a seen a rise from 42.2% to 59.3% in female literacy.

Kerala remains at the top of the pile in overall, male and female literacy.

Child sex ratio of India, as per Census 2011, is 914 females against 1000 males. This is lowest since independence. The overall sex ratio has risen by 7 points to 940 females per 1000 males.

Five most populated States of India are (as per 2011 Census): Uttar Pradesh, Maharashtra, Bihar, West Bengal and Andhra Pradesh. Five least populated States/UTs are: Lakshadweep, Daman & Diu, Dadar & Nagar Haveli, Andaman & Nicobar and Sikkim.

India now accounts for 17.5% of the world’s population. China accounts for 19.4%.

India’s total population, as per the 2011 Census is 12102.2 million. Out of this 586.5 are females and 623.7 are males.

Literacy rate of India, as per Census 2011 has gone up to 74.04% from 64.83% a decade ago. 82.4% is male literacy and 65.46 is female literacy.

The decadal growth rate of population in 2001-11 was 17.64%. It was 21.54% in the previous decade.

The density of population of India (as per Census 2011) is 382 persons per sq km. Delhi (11,297) is the densest State, followed by Chandigarh (9,252). Arunachal Pradesh is the least dense State with a density of 17.

FDI policy liberalised

Relaxing the rules for foreign direct investment (FDI) in the country, the Union government, on March 31, 2011, decided to permit the issuance of equity to overseas firms against imported capital goods and machinery. Furthermore, the norms for overseas investment in production and developments of seeds have been liberalised.

The measure which liberalises the conditions for conversion of non-cash items into equity, is expected to significantly boost the prospects for foreign companies doing business in India.

In the agriculture sector, FDI will now be permitted in the development and production of seeds and planting material without the stipulation of having to do so under 'controlled conditions'.

The government has further decided to abolish the condition of prior approval in case of existing joint ventures and technical collaborations in the 'same field'. It is expected that this measure will promote the competitiveness of India as an investment destination and be instrumental in attracting higher levels of FDI and technology inflows into the country.

Further, companies have now been classified into only two categories—'companies owned or controlled by foreign investors' and 'companies owned and controlled by Indian residents'.

The earlier categorisation of 'investing companies', 'operating companies' and 'investing-cum-operating companies' has been done away with.

Primer on Goods and Services Tax (GST)

The nationwide Goods and Services Tax (GST) roll-out has entered the final stage with the Union government introducing the Constitution Amendment Bill. It is a uniform national tax to be levied across the country on all goods and services.

The current indirect tax system in India is mired in a maze of multi-layered taxes levied by the Centre and States at different stages of the supply chain such as excise duty, octroi, central sales tax, value-added tax and service tax. Under GST, all these will be subsumed under a single tax.

The plan is to roll out the regime on April 1, 2012.

The Finance Commission estimates prices of agricultural goods will increase between 0.61% and 1.18%, while prices of manufactured items would fall by 1.22-2.53%.

A corpus of about Rs 50,000 crore is likely to be set up to compensate States for any loss of revenue due to GST implementation.

A GST council will be created, which will act as a joint forum for the Centre and States. It will be headed by the Finance Minister and will have Finance Ministers of each State as members. The council will decide on tax rates, exemptions and threshold limits.

There will be a dual GST structure—one for Centre and the other for States. The proceeds of the central GST would be shared between Centre and States on basis of the devolution formula recommended by the Finance Commission.

Financial Sector Legislative Reforms Commission

The Financial Sector Legislative Reforms Commission (FSRLC) has been set up by the Union government to re-write and clean-up financial laws of India. It is headed by Justice B.N. Srikrishna

India’s per capita income

India’s per capita income, often used to measure a country's standard of living, increased by 14.5 per cent during 2009-10 to Rs 46,492. The per capita income at factor cost is estimated as Rs 46,492 at current prices. As per the base year 2004-05, the per capita income in rural areas was Rs 16,327, while in the urban areas it stood at Rs 44,223.

Business transparency dominates CREDAI meet

Laser-like focus on “business transparency” dominated a conference of India's real estate leaders at Singapore on April 28. Union Urban Development Minister Kamal Nath commended them for addressing the “image deficit” in this critical sector.

Thematic documents on “Mission transparency,” prepared by the Confederation of Real Estate Developers' Associations of India (CREDAI), were presented to the Minister at its 11th national convention. Receiving the “transparency” papers, Mr. Nath said they fully reflected the conference theme of “igniting change in Indian realty”.

The papers were formally handed over after CREDAI Chairman Pradeep Jain emphasised the need for proactive policies by the Indian authorities to support the growth of the real estate sector. CREDAI President Lalit Kumar Jain also drew attention to the current “policy vacuum” and its impact on the business practices in the real estate sector. The solution, in Mr. Jain's view, was to facilitate single-window clearances.

Highlighting how important these documents were for the industry, CREDAI Secretary T. Chitty Babu, who is also the Chairman and Chief Executive Officer of Akshaya Homes, said: “CREDAI's Mission Transparency will bring in a revolutionary change in the Indian real estate business. This will lead to ethical business practices by which the supply of homes could be increased through the single-window approvals. Ethical practices will also reduce costs”.

Commenting on the importance of such economic imperatives, Mr. Nath, in his inaugural address, pointed out that India had emerged in recent years as “the largest aspirational society on this planet”. The Government would, therefore, have to look at public-private partnership and other new models of economic growth.

While the micro-level transaction costs in India's real estate sector should be addressed, it was commendable that CREDAI was now engaging itself in some “inward thinking”. The “image deficit” in this sector was sought to be set right by “steps which are not imposed upon you [CREDAI],” said Mr. Nath.

India at present accounted for 3.3 per cent of the global market share in the realty domain. Viewed differently, India today constituted the ninth largest construction market in the world. In the related big picture, India's current challenges were those of sustaining and managing overall economic growth. Within this framework, sub-urbanisation, as distinct from urbanisation, had also emerged as a new challenge in recent years, said Mr. Nath.

Availability of Fertilizers for Kharif 2011-12 and Revision in the NBS for 2011-12

The Union Cabinet today accorded approval for the proposals for revision in the benchmark prices for Nutrient Based Subsidy (NBS) 2011-12, w.e.f 1st April, 2011 for Phosphatic and Potassic (P&K) fertilizers.

This will enable the manufacturers and importers to import fertilizers and fertilizer inputs and undertake domestic production and make fertilizers available to the farmers in 2011-12. The farmers in the country will be able to buy fertilizers at subsidized rates at Maximum Retail Prices (MRPs).

Budgetary provision for P&K fertilizers for 2011-12 is Rs.33,500 crore. However, the total subsidy outgo for P&K fertilizers for 2011-12 will depend on the overall sale of fertilizers in 2011-12.

Background :

The Department of Fertilizers announced NBS for 2011-12 w.e.f 1sf April 2011 in March 2011 to enable the importers and manufacturers of fertilizers to enter into supply contracts and make fertilizers available to the farmers in the country in 2011-12. However, given the prevailing international situation of tight availability of fertilizers and their spiraling prices in the international market, fertilizer companies reported their inability to finalize supply contract at the prices benchmarked for NBS 2011-12. The matter was examined by an Inter-Ministerial Committee, which recommended a revision in the benchmark prices for NBS 2011-12 to enable availability of fertilizers. Accordingly, the Department of Fertilizers submitted a Note containing proposal for revision in the benchmark prices for NBS 2011-12, w.e.f. 1st April 2011 for approval of the Government.

Revised Cost Estimate and implementation schedule for National Automotive Testing and R&D Infrastructure Project

The Cabinet Committee on Economic Affairs has approved the revised cost estimate of Rs.2288.06 crore for the National Automotive Testing and R&D Infrastructure Project (NATRIP) in place of the original approved cost estimate of Rs.1718 crore.  The budget escalation of Rs.570.96 crore, includes Rs.427.29 crore by way of grant and Rs.142.77 crore as loan as a part of the revised cost estimate of Rs.2288.06 crore.  The revised cost estimate of Rs.2288 crore includes the additional loan component of Rs.95.51 crore to be provided to offset the lower recovery of the user charges from Rs.118 crore (originally envisaged) to Rs.22.49 crore during the project period.

          The CCEA has revised the completion date as 31^st December, 2012 from the earlier approved completion date of 30^th September, 2011.

         The CCEA further approved the following:

a.      The additional loan sanctioned to the project will be interest free, with moratorium of seven years and to be repaid in eight annual installments thereafter.

b.      Reallocation of Rs.510 crore, originally under Grant from Auto Cess to Grant from Plan fund, without any additional financial implications.

c.         The Governing Council, NATRIP Implementation Society / GB National Automotive Board (proposed) will prioritize the allocation, centre wise, during 2011-12 and 2012-13 taking into account the availability of budgetary provision and the pace of ongoing works and also decide 'the allocation of user charges, as also the apportionment of loan to the various centers. Further, Vehicle Research & Development Establishment’s (VRDE) portion of the user charges may be offset against VRDE's share of loan repayment.

          The completion of project will ensure that full bouquet of automotive testing and R&D facilities are available for introduction of higher emission and safety norms by 2015.  This will contribute to lowering of vehicular emissions and improve vehicle safety.  The Project will also lead to manifold increase in the growth of the automotive sector and its contribution to national economy.

Background:

NATRIP, the flagship project of Department of Heavy Industry (DHI), was approved by the CCEA in July, 2005, with a total investment of Rs.1718 Cr, for up-gradation of three existing automotive testing and R&D centers viz. (VRDE) at Ahmednagar, Automotive Research Association of India (ARAI) at Pune and International Centre for Automotive Technology (ICAT) at Manesar and for setting up of four greenfield centers at Chennai, Indore, Silchar and Rae Bareilly for automotive testing, homologation and R&D. Once completed these centres would house 'state of the art' facilities and enable ushering in latest automobile regulations; both for safety and emissions. The project faced initial hurdles, mainly on account of delays in acquisition of land at various sites, delays in clearances, shifting of utilities etc. These factors have necessitated revision in the scheduled completion dates and cost escalation. Most of these hurdles have now been resolved and the project is expected to be completed by December 2012.

World Bank Assistance to National Ganga River Basin Authority for abatement of pollution of River Ganga

The Cabinet Committee on Economic Affairs has approved the Project for cleaning of River Ganga to be implemented by the National Ganga River Basin Authority (NGRBA) at an estimated cost of Rs. 7000 crore. The share of Government of India will be Rs 5100 crore and that of the State Governments of Uttarakhand, Uttar Pradesh, Bihar, Jharkhand and West Bengal will be Rs 1900 crore. The World Bank has agreed in-principle to provide a loan assistance of US $ 1 billion (approx. Rs 4600 crore) to the Government of India for the NGRBA project, which will form part of the central share of the project. The duration of the project will be eight years.

NGRBA was constituted in February, 2009 as an empowered planning, financing, monitoring and coordinating authority for the Ganga River under the Environment (Protection) Act, 1986. The objective of the Authority, which is chaired by the Prime Minister, is to ensure conservation of the river Ganga and to maintain environmental flows by comprehensive planning and management, adopting a river basin approach.

The project is envisaged as the first phase in a long-term programme of World Bank support to NGRBA. The project will support NGRBA's objective of Mission Clean Ganga. The project has been designed keeping in view the lessons learnt from the previous Ganga Action Plan and International River clean-ups. The project will have three components relating to (a) institutional development for setting up dedicated institutions for implementing the NGRBA program, setting up Ganga Knowledge Centre, strengthening environmental regulators (Pollution Control Boards) and local institutions (ULBs, etc) (b) infrastructure investments including for municipal sewage, industrial pollution, solid wastes and river front management, and (c) project implementation support.

Revised cost estimates of National Institute of Food Technology, Entrepreneurship and Management

The Cabinet Committee on Economic Affairs has approved the revised cost estimates from Rs.244.60 crore to Rs.479.91 crore with a foreign exchange component of US $ 8.1 million for setting up of the National Institute of Food Technology, Entrepreneurship and Management (NIFTEM) at Kundli, Haryana.

NIFTEM will be a global centre of excellence integrating all facets of food science, technology, entrepreneurship, research and management and will be recognized as the focal point for catalyzing the growth of the food processing industries in India in the global context. The Institute will cater to the needs of various stakeholders such as entrepreneurs, industry, exporters, policy makers, the government and existing institutions. It will develop world-class managerial talent and entrepreneurship with advanced know-how in food science and technology, increase the importance of food hygiene and safety standards, facilitate business incubation services, collect and disseminate information on national and international market trends for food products.

Bharat Nirman: Rural drinking water

Backgrounder

Ensuring the availability of potable drinking water in rural areas has been a major challenge. Keeping this in mind Rural drinking water has been one of the six components of Bharat Nirman, a major initiative by the Government of India to build rural infrastructure since  2005. Phase I of  Bharat Nirman was implemented in the period 2005-06 to 2008-09 while the Phase II is being implemented from 2009-10 to 2011-12.

Status of Rural Drinking Water :

During Bharat Nirman Phase – I period, 55,067 un-covered and about 3.31 lakh slipped-back habitations were to be covered with provisions of drinking water facilities.Water quality problems in 2.17 lakh quality-affected habitations was to be addressed. While prioritizing the water quality problem, arsenic and fluoride affected habitations have been accorded priority followed by iron, salinity, nitrate and other contaminants.

Measures undertaken:

In order to ensure that habitations once provided with drinking water supply infrastructure do not slip back and face drinking water problem, sustainability of drinking water sources and systems has been accorded high priority. To achieve drinking water security at village/ habitation level, conjunctive use of water i.e. judicious use of rainwater, surface water and ground water is promoted. In order to enable the rural community to shoulder responsibility in management, operation and maintenance of water supply systems at village level, decentralized, demand-driven, community-managed approach has been adopted. To further strengthen community participation in the drinking water sector the National Rural Drinking Water Quality Monitoring & Surveillance program was launched in February, 2006 under which 5 persons in each Gram Panchayat are to be trained to carry out regular surveillance of drinking water sources for which 100% financial assistance including water testing kits, are provided.

Physical Progress:

i) Uncovered habitations:

Against 55,067 un-covered habitations to be covered during the Bharat Nirman period, 54,440 habitations have been covered during Phase-I. During 2009-10, 377 habitations out of the 586 targetted habitations were covered . In 2010-11, 183 habitations have been reported as covered upto 31.12.2010 against the target of 376 habitations. The strategy adopted under the National Rural Drinking Water Program (NRDWP) is to cover all uncovered habitations to ensure that the rural population gets at least 40 lpcd (and additional 30 lpcd for cattle in DDP areas) of potable water from sources lying within the village or nearby.

ii) Quality-affected habitations:

More than 85% of the sources in rural drinking water supply schemes are ground-water based. Under the NRDWP, chemical contaminants which are sought to be tackled are excess arsenic, fluoride, iron, salinity and nitrate. Except for nitrate, all others occur naturally. Nitrate occurs in drinking water due to leaching of chemical fertilizers and sewerage. The strategy of the Department is to prioritize addressing the problems of arsenic and fluoride in drinking water through alternative surface water sources. The treatment technologies that are available for removal of excess arsenic and fluoride are still not foolproof in respect of reject management and operation & maintenance issues. Though a target of 2.17 lakh quality affected habitations was identified at the beginning of Bharat Nirman, the States submitted an action plan for covering only 1,95,813 such habitations.

Arsenic & Fluoride :

As on 1.04.2006, there were 7,067 habitations reported to be afflicted with arsenic and 29,070 habitations with fluoride contamination. Priority has been given to address the problems in these habitations. However, that due to expansion of testing, more areas are getting identified as having problems of quality.

Iron :

At the beginning of Bharat Nirman period there were 1,04,437 rural habitations affected with excess iron in drinking water sources. The focus is to tackle excess iron problem through aeration based technology or low-cost terra-cotta based filtration technique. States such as Karnataka and Orissa have already taken up the challenge of tackling this contamination through low-cost terracotta based filtration technology.

Salinity :

In respect of salinity, 12,425 habitations were having a problem at the beginning of Bharat Nirman period. Although there are a number of technologies like distillation, ion-exchange, reversible osmosis , electro-dialysis etc., these being expensive solutions the focus of the Department is to tackle this problem through dilution of groundwater through artificial recharge of groundwater.

Nitrate :

The strategy adopted to tackle excess nitrate in the drinking water is by improving the sanitary conditions. At the beginning of Bharat Nirman period, 19,387 habitations were afflicted with excess nitrate. As reported by the States, 3,10,698 quality affected habitations were addressed by sanctioned projects and of these 50,168 habitations have been fully covered with completed projects to provide safe water supply during Phase-I.

Status of Quality Affected Habitations : 

As on 1.4.2009 at the beginning of Bharat Nirman phase-II states reported that 1,79,999 quality affected habitations were remaining to be covered.  Of these during 2009-10,32,734 and during 2010-11 upto 31.12.2010, 10,783 habitations have been reported as covered. Thus, in all during Bharat Nirman phase-I and II, 93,685 quality affected habitations have been fully covered with completed schemes. The goal of the Department is to cover all remaining water quality affected habitations with safe drinking water by the end of Phase-II (2009-12).

Financial Progress:

For the rural water supply, component of Bharat Nirman, it was envisaged that Rs.25,300 crores would be required as Central share during 4 years. Accordingly in 2005-06, Rs. 4,098 crores and in 2006-07 Rs. 4,560 crores were utilized. In the 11thPlan period, in 2007-08 , Rs.6,442.76 crores, in 2008-09 ,Rs. 7,298.79 crores and in 2009-10 , Rs. 7,989.72 crores have been utilized. Out of the total budget of Rs 9000 crore for rural drinking water in 2010-11 , amount worth Rs 6692.92 crore was utilized upto 31.12.2010.

It is expected that with the focus on reaching out to households, involvement of community and adopting technologies that are people friendly the objective of ensuring access to potable drinking water in rural areas under the National Rural Drinking Water Program (NRDWP) can be achieved.