Economic Development and Environment

Economic development without environmental considerations can cause serious environmental damage, in turn impairing the quality of life of present and future generations. Such environmental degradation imposes a cost on the society and needs to be explicitly factored into economic planning, with necessary remedial measures incorporated. The challenge of sustainable development thus requires integration of the country's quest for economic development with its environmental concerns.

Environment management in India has, over the years, recognized these sustainable development concerns. The National Environment Policy 2006 has attempted to mainstream environmental concerns in all our developmental activities. It underlines that “while conservation of environmental resources is necessary to secure livelihoods and well being of all, the most secure basis for conservation is to ensure that people dependent on particular resources obtain better livelihoods from the fact of conservation, than from degradation of the resource”.

A few recent initiatives
The Ministry of Environment and Forests has notified the Wetlands (Conservation and Management) Rules 2010 in order to ensure that there is no further degradation of wetlands. The rules specify activities that are harmful to wetlands, such as industrialization, construction, dumping of untreated waste and reclamation and prohibit these activities in the wetlands. Other activities, such as harvesting and dredging may be carried out in the wetlands but only with prior permission from the concerned authorities.

The National Green Tribunal (NGT) Act, 2010 came into force on October 18, 2010. As per the provisions of the NGT Act 2010, the National Environment Appellate Authority (NEAA), established under the NEAA Act, 1997, stands dissolved and the cases pending before NEAA stand transferred to the NGT. The Act provides for the establishment of a NGT for the effective and expeditious disposal of cases relating to environmental protection and conservation of forests and other natural resources, including enforcement of any legal right relating to environment and giving relief and compensation for damages to persons and property and for matters connected therewith or incidental thereto.

Coastal ecosystems are a critical reservoir of our biodiversity and provide protection from natural disasters such as floods and tsunamis and are a source of livelihood to hundreds of millions of families. Hence, as a major national initiative in this direction, the Coastal Regulation Zone Notification has been published in the gazette of India on January 6, 2011.

The Government of India and World Bank have signed a loan agreement for the implementation of an Integrated Coastal Zone Management Project, which will be implemented at a total cost of Rs 1156 crore. The World Bank will contribute an amount of Rs 897 crore (77.7 per cent), the Government of India Rs 177 Crore (15.4 per cent), and the States Rs 80 Crore (6.9 per cent). This project is for a period of five years and it is estimated that it will benefit 3.56 crore people directly 6.30 crore indirectly.

Climate Change
Climate Change, as a global environmental problem has been receiving intense political attention at domestic and international levels. ‘Climate change’ means a change of climate which is attributed directly or indirectly to human activity, that alters the composition of the global atmosphere and is in addition to natural climate variability observed over comparable time periods. Increasing levels of fossil fuel burning and land use changes have emitted, and are continuing to emit, greenhouse gases (mainly carbon dioxide, methane, and nitrous oxide) into the earth’s atmosphere. This increasing level of emissions of greenhouse gases has caused a rise in the amount of heat from the sun trapped in the earth’s atmosphere, heat that would normally be radiated back into space. This has led to the greenhouse effect, resulting in climate change.

Besides, Global Greenhouse Gas (GHG) emissions have risen sharply since 1945. As per a working paper published by the World Resources Institute, total GHGs were estimated at 44,153 MtCo2 equivalents (million metric tons) in 2005. This is the most recent year for which comprehensive emissions data are available for every major gas and sector. Total global emissions grew by 12.7 per cent between 2000 and 2005, an annual average of 2.4 per cent. CO2 is the predominant gas accounting for 77 per cent of world GHG emissions in 2005, followed by methane (15 per cent) and nitrous oxide (7 per cent). North America accounted for 18 per cent of world GHG emissions, China for 16 per cent, and the EU for 12 per cent in 2005. India's share stood at 4 per cent in 2005.

The issue of climate change is now placed firmly on national and international agendas, subject to scrutiny by public and media, and is even shaping the strategies of a number of businesses.

Internationally, the United Nations Framework Convention on Climate Change (the Convention) was set up in 1992 and entered into force in 1994. This was a crucial step in putting in place the institutions and processes for the world’s Governments to take coordinated and effective action.

The Convention laid the groundwork for concerted international action, which in 1997 led to the adoption of the Kyoto Protocol containing a legally binding quantitative time-bound target for developed countries. The Kyoto Protocol set a target for developed countries (individually or jointly) to reduce overall emissions by at least 5 per cent below 1990 levels in the first commitment period, 2008 to 2012. Recognizing that relying on domestic measures alone to meet the target could be onerous, the Kyoto Protocol offers considerable flexibility through three mechanisms: Clean Development Mechanism (CDM), Joint Implementation (JI), and Emissions Trading (ET). Through the CDM, industrial countries can finance mitigation projects in developing countries contributing to their sustainable development.
Credits received from such projects can be used to meet commitments under the Kyoto Protocol. Through JI, industrialized countries acquire emissions credit by financially supporting projects in other industrialized countries.

Currently, international actions for addressing climate change are being pursued under the Bali Action Plan and the mandate of the Kyoto Protocol. The 15th CoP held at Copenhagen in December 2009 made some advance in the form of the ‘Copenhagen Accord’, which reflects the political understanding reached by a select group of countries. However, this was only ‘noted’ and not adopted by the Parties to the Convention. The recent negotiations held at Cancun during November 29 -  December 11, 2010, have resulted in a set of decisions that cover various areas of action, for example mitigation, adaptation, technology and finance as outlined in the Bali Action Plan, while agreeing to work towards an ambitious target of emissions reduction under the Kyoto Protocol.

India's Greenhouse Emissions
Although India ranks in the top five in terms of GHG emissions, the per capita emissions are much lower compared to those of the developed countries, even if the historical emissions are excluded. Its high level of emissions is due to large populace, geographical size and large economy. The most recent data available for India are the assessment carried out by the Indian Network for Climate Change Assessment (INCCA) in May 2010.

The key results of the assessment are that the total net GHG emissions from India in 2007 were 1727.71 million tons of CO2 equivalent (eq.), of which carbon dioxide emissions were 1221.76 million tons; methane 20.56 million tons; and nitrous oxide 0.24 million tons. In 1994, the total net GHG emissions for India were 1228.54 million tons of CO2 eq. This represents a compounded annual growth rate of 2.9 per cent during the period 1994 to 2007. GHG emissions from the energy, industry, agriculture, and waste sectors in 2007 constituted 58 per cent, 22 per cent, 17 per cent, and 3 per cent of the net CO2 eq. emissions respectively. India's per capita CO2 eq. emissions including land use, land use change, and forestry (LULUCF) were 1.5 tons per capita in 2007.

Impacts of Climate Change in India
Climate change has enormous implications for the natural resources and livelihoods of the people. It will have wide-ranging effects on the environmental and socio-economic and related sectors. Various studies indicate that the key sectors in India such as the agriculture, water, natural ecosystem, biodiversity, and health are vulnerable to climate change. This is happening precisely at a time when it is confronted with huge development imperatives. The Indian Network for Climate Change Assessment (INCCA) released a report in November 2010 on assessment of the impact of climate change on key sectors and regions of India in the 2030s. The assessment covers four key sectors of the Indian economy, namely agriculture, water, natural ecosystems and biodiversity, and health in four climate sensitive regions, namely the Himalayan region, the Western Ghats, the Coastal Area, and the North-east region.

The report warns of impacts such as sea-level rise, increase in cyclonic intensity, reduced crop yield in rain-fed crops, stress on livestock, reduction in milk productivity, increased flooding, and spread of malaria. This calls for urgency of action in reducing vulnerability to adverse impacts of climate change and enhancing adaptive capacity through sector-specific interventions and efforts.

India's Strategies
India’s total CO2 emissions are about 4 per cent of total global CO2 emissions and the energy intensity of India’s output has been falling with improvements in energy efficiency, autonomous technological changes, and economical use of energy. India’s climate modeling studies show that even with 8-9 per cent gross domestic product (GDP) growth every year for the next decade or two, its per capita emissions will be around 3-3.5 tonnes of CO2eq. by 2030, as compared to the present 1-1.2 tonnes. These are well below developed country averages by any estimation.

India’s determination in addressing climate change is evident from the fact that an indicative target of increasing energy efficiency by 20 per cent by 2016-17 is already included in the Eleventh Five Year Plan. This has now been supplemented with the domestic mitigation goal of reducing emissions intensity of the GDP by 20-25 per cent of the 2005 level by 2020 through proactive policies. The resources for the measures required to achieve this objective will need to be mobilized from various sources, including the national planning process. Studies in respect of a low carbon strategy for development aimed at ensuring inclusive growth are being conducted with the aim of including this as one of the key pillars in the Twelfth Five Year Plan.

Second, India is taking conscious steps to diversify the energy fuel mix such as setting up of 20,000 MW of solar power-generating capacity by 2022, doubling the present share of 3 per cent of nuclear power in the energy mix over the next decade, putting in place a major market-based programme to stimulate energy efficiency, imposing clean energy cess on coal for funding research and development (R&D) of clean energy technologies, even though coal will continue to play a key role in our future energy strategy, and aggressively expanding the use of natural gas in power production.

Third, India has been pursuing aggressive strategies for forestry and coastal management to increase the quality and quantity of forest cover and has launched a major new programme on coastal zone management to address the adaptation challenges facing over 300 million people in our country who live in vulnerable areas near our coast.

As part of its international obligations under the United Nations Framework Convention on Climate Change (UNFCCC) India periodically prepares the National Communication (NATCOM) that gives an inventory of the GHG emissions in India, assesses the vulnerability and impacts, and makes appropriate recommendations regarding social, economic and technological measures for addressing climate change.

India's strategy for enhancing its adaptive capacity to climate variability is reflected in many of its social and economic development programmes. For developing countries like India, adaptation ultimately boils down to assisting the vulnerable population during exigencies and empowering them to build their lives and cope with uncertainties in the long run. Several of India's social-sector schemes, with their emphases on livelihood security and welfare of the weaker sections, aim to do just that. India implements a series of Central sector and centrally sponsored schemes under different Ministries/Departments aimed at achieving social and economic development. Many of these schemes contain elements (objectives and targets) that are decidedly geared to adaptation. In other words, there is substantial adaptation orientation in many of the sectoral schemes currently under operation. An exercise has been carried out to measure the expenditure on adaptation-related programmes with critical adaptation components: (a) crop improvement and research, (b) poverty alleviation and livelihood preservation, (c) drought proofing and flood control, (d) risk financing, (e) forest conservation, (f) health, and (g) rural education and infrastructure. It has been found that India's expenditure on these adaptation-oriented schemes has increased from 1.45 per cent of GDP in the year 2000-01 to 2.84 per cent during 2009-10. This is a fairly impressive level of spending and is an obvious reflection of the multiplicity of economic and social welfare programmes under implementation in India.

India has announced a National Action Plan on Climate Change (NAPCC) in June, 2008 which incorporates its vision of sustainable development and the steps it must take to realize it.

Climate Change Financing
Climate change is a complex policy issue with major implications in terms of finances for addressing mitigation of GHG emissions, on the one hand, and coping with the adverse impacts of climate change on the community and population, ecosystem, economy and livelihood, on the other.

All actions to address climate change ultimately involve costs. Funding is vital in order for countries like India to design and implement adaptation and mitigation plans and projects.

Lack of funding is a large impediment to implementing adaptation plans. Article 4 of the Convention states that developed countries shall provide financial resources to assist developing country Parties in addressing climate change. The funds that are currently available under the Convention and the Kyoto Protocol are small compared to the magnitude of the need assessed by many studies. The UNFCCC has estimated a requirement of US$ 200-210 billion in additional investment in 2030 to return GHG emissions to current level. Further, additional investment needed worldwide for adaptation is estimated to be US$ 60-182 billion in 2030 by UNFCCC, inclusive of an expenditure of US$ 28-67 billion in developing countries. As various estimates point to the enormity of funds to address climate change, developing countries including India have been arguing that a global mechanism for generating and accounting for additional resources, mainly from public sources, is essential for meeting the long-term finance requirements for adaptation and mitigation. There should be a multilateral financial mechanism under the Convention that should be set up with resources provided by developed countries on the basis of assessed contributions.

One of the important outcomes of the Cancun Agreements from the finance point of view is the decisions on ‘fast start finance, long-term finance, and Green Climate Fund’. At Cancun, it was decided to set up a ‘Green Climate Fund’, to be designated as an operating entity of the Financial Mechanism of the Convention under Article 11. The Green Climate Fund is accountable to and functions under the guidance of the CoP. The Fund will support environment-related projects, programmes, policies, and other activities in developing countries.

While the outcomes in Cancun on Climate Fund, Technology Mechanism, and Adaptation Framework and Forestry (REDD+) are welcome, further work is needed on strengthening of weak mitigation pledges by developed countries, preventing unilateral trade actions in the name of climate change, and continuing a dialogue on intellectual property rights as part of technology development and transfer efforts. Moreover, a successful global effort for addressing climate change must be built on sound principles of equity and common but differentiated responsibilities. Equity in terms of equitable access to global atmospheric resources should define the pathway to attainment of a long-term goal in line with the broad findings of science.

Besides, the increasing importance of climate-related issues should not shake the foundations of our inclusive growth strategy. Careful planning and customized policies are needed to ensure that the green growth strategies do not result in a slow growth strategy.

Eight National Missions:
Jawaharlal Nehru National Solar Mission (JNNSM): The government has launched the JNNSM in January 2010 with a target of 20,000 MW grid solar power (based on solar thermal power- generating systems and solar photovoltaic [SPV] technologies), 2000 MW of off-grid capacity by 2022. The Mission will be implemented in three phases. The first phase will last three years (up to March 2013), the second till March 2017, and the third till March 2022. The Government has also approved the implementation of the first phase of the Mission (up to March 2013) and the target to set up 1100 MW grid-connected solar plants including 100 MW of rooftop and small solar plants and 200 MW capacity-equivalent off-grid solar applications and a 7 million sq.m solar thermal collector area in the first phase of the Mission, till 2012-13.

Energy Conservation and Efficiency: The objective of the National Mission for Enhanced Energy Efficiency (NMEEE) is to achieve growth with ecological sustainability by devising cost-effective strategies for end- use demand-side management. The Ministry of Power and Bureau of Energy Efficiency have been entrusted with the task of preparing the implementation plan for the NMEEE and up-scaling the efforts to create and sustain market for energy efficiency to unlock investment of around Rs 74,000 crore. The Mission is likely to achieve about 23 million tons oil-equivalent of fuel savings—in coal, gas, and petroleum product—by 2014-15, along with an expected avoided capacity addition of over 19,000 MW. The carbon dioxide emission reduction is estimated to be 98.55 million tons annually.

National Mission on Strategic Knowledge for Climate Change (NMSKCC): The NMSKCC has been launched with the broad objectives of mapping of the knowledge and data resources relevant to climate change and positioning of a data-sharing policy framework for building strategic knowledge among the various arms of the Government, identification of knowledge gaps, networking of knowledge institutions after investing critical mass of physical, intellectual, and policy infrastructure resources, creation of new dedicated centres within the existing institutional framework, building of international cooperation on science and technology for climate change agenda through strategic alliances and assistance for the formulation of policies for a sustained developmental agenda.

National Mission for Sustaining Himalayan Ecosystem (NMSHE): The broad objectives of the NMSHE include: understanding the complex processes affecting the Himalayan ecosystem and evolving suitable management and policy measures for sustaining and safeguarding it, creating and building capacities in different domains, networking of knowledge institutions engaged in research and development of a coherent data base on the Himalayan ecosystem, detecting and decoupling natural and anthropogenic-induced signals of global environmental changes in mountain ecosystems, studying traditional knowledge systems for community participation in adaptation, mitigation, and coping mechanisms inclusive of farming and traditional health care systems, and developing regional cooperation with neighbouring countries, to generate a strong data base through monitoring and analysis so as to eventually create a knowledge base for policy interventions.

National Water Mission: The objectives of the National Water Mission are 'conservation of water, minimizing wastage and ensuring its more equitable distribution both across and within States through integrated water resources management'. The goals of the Mission are a comprehensive water data base in the public domain, assessment of the impact of climate change on water resources, promotion of citizen and State actions for water conservation, augmentation and preservation, focused attention to overexploited areas, increasing water use efficiency by 20 per cent, and promotion of basin-level integrated water resources management.

Green India Mission: The Mission aims at responding to climate change through a combination of adaptation and mitigation measures. These measures include enhancing carbon sinks in sustainably managed forests and other ecosystems, adaption of vulnerable species/ecosystems to the changing climate, and adaptation of forest-dependent communities. The objectives of the Mission are increased forest/tree cover on 5 million ha of forest/non-forest lands and improved quality of forest cover on another 5 million ha (a total of 10 million ha), improved ecosystem services including biodiversity, hydrological services, carbon sequestration as a result of treatment of 10 million ha), increased forest-based livelihood income for about 3 million households living in and around the forest, and enhanced annual CO2 sequestration by 55 million tonnes in the year 2020.

National Mission on Sustainable Habitat (NMSH): The NMSH seeks to promote sustainability of habitats through improvements in energy efficiency in building and urban planning, improved management of solid and liquid waste including recycling and power generation, modal shift towards public transport, and conservation. It also seeks to improve ability of habitats to adapt to climate change by improving resilience of infrastructure, community- based disaster management, and measures for improving advance warning systems for extreme weather events.

National Mission for Sustainable Agriculture: The National Mission for Sustainable Agriculture (NMSA) seeks to address issues regarding 'sustainable agriculture' in the context of risks associated with climate change by devising appropriate adaptation and mitigation strategies for ensuring food security, enhancing livelihood opportunities, and contributing to economic stability at national level. Under this Mission, the adaptation and mitigation measures would be mainstreamed in research and development activities, absorption of improved technology and best practices, creation of physical and financial infrastructure and institutional framework, facilitating access to information and promoting capacity building. While promotion of dry-land agriculture would receive prime importance by way of developing suitable drought- and pest-resistant crop varieties and ensuring adequacy of institutional support, the Mission would also expand its coverage to rain-fed areas for integrating farming systems with livestock and fisheries so that agriculture continues to grow in a sustainable manner.

Solar developers want ‘visibility' of future projects

Land acquisition and clarity on project pipeline are the biggest challenges that developers of solar power projects face today, even as finding financiers and skilled manpower still remain issues.

These difficulties were highlighted in a panel discussion at Solarcon India 2011, an international conference of the solar power industry, here on Thursday.

Clarity on how many solar projects would be put up for bidding each year in the coming few years is something that the developers find important. “Visibility for (even) 2012 is just not there,” said Mr Pasupathy Gopalan of SunEdison, a US-based company that has a clutch of projects in Gujarat and Rajasthan. “We have recruited over 200 people,” he said, wondering what the company would do with them after the on-hand projects are completed.

Agreeing with co-panelist, Mr Alan Rosling of Kiran Energy, Mr Gopalan said project visibility was crucial to attract investors.

Mr Gopalan said while the Government had done a “fantastic job of managing subsidies”, ensuring that the outgo from the exchequer was kept at the minimum, he would urge the policy makers to think in terms of the next 3-5 years.

Land acquisition was flagged as a major issue that requires policy intervention. SunEdison has nine projects underway in India. “Each of the nine projects has enormous land issues,” Mr Gopalan said.

It is a sore point with the developers that while there is a deadline for completion of the projects, with stiff penalties for failure, there are issues, such as land and linkage to the grid, over which they have no control.

Mr Srini Nagabhairava of AES Solar recalled that he had raised these points at Solarcon India 2009, and pointed out that over the two years the challenges haven't changed.

While agreeing that land was a big issue, Mr Vish Palekar of Mahindra Solar, struck a different chord saying the issue could be tackled by “social and local inclusiveness”.

Beside securing funding and finding and keeping talent, some developers noted that the credibility of the engineering, procurement and construction contractor was crucial in convincing bankers to fund projects.

At the question-and-answer session, a participant suggested a renewable energy finance obligation to be put on banks to enable funding to solar projects even if they exceed sector limits.

Banks should lead the war on poverty

At BANCON (annual bankers' conference) 2011 in Chennai, financial institutions explored avenues for greater participation in agriculture and rural development. There are a few areas in need of additional attention and investment.

Green Revolution technologies are scale-neutral but not resource-neutral. Inputs are needed for output; therefore market-purchased inputs become important in providing soil and plant healthcare for higher yields. Social scientists point out that small and marginal farmers will be excluded from the benefits of the Green Revolution since they would not have the financial resource to buy inputs. The Government of India initiated a Small and Marginal Farmers Programme specially to provide credit and other inputs. After bank nationalisation, provision of credit to small and marginal farmers got priority. Without this, the wheat revolution would not have covered all farmers. The smaller the farm, the greater is the need for marketable surplus, so that the family will have cash income to meet their needs.

The emerging phase in agriculture will be based on integrating the principles of ecology and equity in technology development and dissemination. This is the path to an ever-green revolution leading to sustained increase in productivity without associated environmental harm. In recent years, the government has stepped up credit for agriculture. However, the burden of indebtedness is still high in rural India, and the rural masses are exploited in the credit market. Much of the credit intended for farmers goes through indirect channels, and not directly to them.

Problems in the supply of credit to rural families include inadequate supply of formal credit on the whole, imperfect and fragmented rural credit markets, and unequal distribution of credit, particularly with respect to region, class, caste and gender. In spite of the dominant role played by women in both farming, they are denied credit as they lack land titles. Only a small percentage of Kisan Credit Cards goes to them. Consequently, the major source of credit to rural households, particularly income-poor working households, continues to be the informal sector. Many of the farmer suicides, particularly in the drought-prone areas, are attributed to lack of access to formal credit at reasonable interest rates.

If farmers have to take their lives, then there is something wrong in our economic and social structure. Unfortunately, this issue is being dealt with in statistical terms and not from the point of view of the real state of farming.

Financial inclusion

Apart from the initiatives taken by banks, some of which are commendable, the most important instrument to reach the unreached in terms of access to credit is microcredit. A number of non-banking finance companies have entered the rural microcredit market. Many microcredit agencies have been charging interest rates not very dissimilar to those charged by moneylenders. Borrowing then becomes more to meet pressing consumption needs, rather than for farming or small-scale enterprises. There are examples of micro-enterprises organised by women's Self-Help Groups with the help of microcredit. Production-oriented SHGs become sustainable if they have backward linkages with technology and credit and forward linkages with the market. The rationale for microcredit is to strengthen the livelihood security of the economically underprivileged sections, and its impact should be measured in terms of reduction achieved in poverty and hunger. Formal financial institutions should provide funds to non-banking finance companies only on the basis of a well-defined code of conduct that will help promote a win-win situation for the lending institution and the SHGs operating market-driven micro-enterprises.

The pervasive nature of malnutrition in India is evident from national and international surveys. International price volatility is high, both due to a continuous rise in petroleum prices, and unfavourable weather conditions. For the poor, including small and marginal farmers, food inflation increases their vulnerability to hunger. India's food inflation is now over 12 per cent. The Reserve Bank of India has raised interest rates 13 times in 19 months. They are up from 4.75 per cent in March 2010 to 8.5 per cent in October 2011. The inflation rate has been steady since March 2010, despite RBI interventions. A fresh approach is needed, going beyond merely altering interest rates to contain inflation. In measures to contain food inflation, a disaggregated approach is needed. Look at a few commodities:

• Vegetables: Prices have gone up by 63.95 per cent in the last six months. The National Horticulture Mission with an outlay of about Rs. 20,000 crore, meant to increase production of vegetables and fruits, puts emphasis on commercial vegetables, including for export, rather than on malnutrition. For every nutritional malady there is a horticultural remedy. The nutrition and food inflation containment dimensions in the Horticulture Mission should be mainstreamed. Mapping the hot-spots with reference to the gap between demand and supply and planning the production and distribution strategy will help check inflation.

• Pulses: Budget 2011 provided funds to establish 60,000 Pulses Villages. If the programme is implemented holistically, price rise can be halted. Banks can help establish Pulses Seed Villages to provide seeds, as Indian Overseas Bank did over 10 years ago in Tamil Nadu.

• Potato and onion: In a report on managing the prices of perishable commodities submitted to Indira Gandhi in 1982, a detailed strategy for the management of output and prices in the case of crops such as onion and potato was dealt with. The approach suggested was similar to what was done in the case of milk by Dr. V. Kurien and the National Diary Development Board, where the emphasis was on post-harvest infrastructure and management. Unfortunately, the National Horticulture Board has not been able to play a similar role. It is time we developed a mechanism that can ensure remunerative prices.

• Milk: Nearly 80 per cent of the price of milk is accounted for by the cost of feed and fodder. We are exporting concentrates like the soyabean meal while we have nearly one billion farm animals to feed. Often, common grazing grounds are diverted for other uses. Seeds of good fodder varieties are not available. In areas where there are large numbers of dairy cattle, SHGs can organise fodder and feed banks with support from banks.

• Rice, wheat and nutri-cereals: Prices of these staples have remained relatively stable largely because of procurement and public distribution policies. This has a lesson for other crops: food inflation can be contained if a disaggregated commodity-centred approach based on a clear understanding of the causes for price rise is adopted.

Over 60 per cent of India's population is engaged in agriculture. Our greatest challenge is the technological upgradation of small-farm operations to improve small-farm productivity, profitability and sustainability. There is a growing gap between scientific know-how and field-level do-how. Indian Overseas Bank is helping to organise Farm Schools in the fields of outstanding farm women and men to bring those from other areas to stay for a few days with the farmer-achievers, helping multiply successes. Members of the banking family could take up such activities under their corporate social responsibility programme.

There is a need for greater credit and insurance literacy among farm families. Financial institutions interested in increasing their lending for food security could locate a staff member in Krishi Vigyan Kendras. I initiated the KVK pathway of knowledge and skill empowerment in 1974 with the first one located at Puducherry. Now there are over 500 KVKs operated by the Indian Council of Agricultural Research, agricultural universities and non-government institutions that can provide locations for financial institutions to launch a credit and insurance literacy movement.

If agriculture goes wrong, nothing else will have a chance to go right in India. With a National Food Security Bill on the anvil, we must redouble our efforts to increase farm production on an environmentally sustainable basis. The banking community played an important part in enabling the Green Revolution. It should now play such a role in ushering in the era of freedom from hunger.

IBPS GENERAL AWARENESS QUESTIONS

1. The Central Government in June 2011 declared the Kawal Wildlife Sanctuary in Andhra Pradesh a tiger reserve. It is
(A) 32nd tiger reserve
(B) 34th tiger reserve
(C) 40th tiger reserve
(D) 42nd tiger reserve
Ans : (D)

2. The premier rating agency, "Standard & Poor's", downgraded the US credit ratings from AAA in August 2011, which had been enjoyed by the US since
(A) 1910
(B) 1917
(C) 1927
(D) 1942
Ans : (B)

3. As per figures presented by National Rural Health Mission in August 2011, to meet the UN Infant Mortality Rate targets for 2012, India will need another
(A) 4 years
(B) 8 years
(C) 12 years
(D) 15 years
Ans : (C)


4. The Government of India gave in principle approval to strengthening of the Line of Actual Control (LAC) demarcating China-India border. The LAC is
(A) 2,000-km long
(B) 2,057-km long
(C) 3,057-km long
(D) 4,057-km long
Ans : (D)

5. "India: A Portrait" has been written by
(A) Khuswant Singh
(B) Kuldip Nayar
(C) Patrick French
(D) J.M. Keynes
Ans : (C)

6. In which one of the following is a great dark plain called "Maria" found ?
(A) Earth
(B) Mars
(C) Jupiter
(D) Moon
Ans : (D)

7. Which among the following elements (metals) pollutes the air of a city having large number of automobiles ?
(A) Cadmium
(B) Lead
(C) Chromium
(D) Nickel
Ans : (B)

8. The international airport in Tamil Nadu is
(A) Palam
(B) Dum Dum
(C) Santa Cruz
(D) Meenambakkam
Ans : (D)

9. The 'Cannes Award' is given for excellence in which of the following fields ?
(A) Literature
(B) Films
(C) Journalism
(D) Economics
Ans : (B)

10. The term 'Tee' is connected with
(A) Polo
(B) Golf
(C) Bridge
(D) Billiards
Ans : (B)

11. Norman Ernest Borlaug, who is regarded as the father of the Green Revolution in India, is from which country ?
(A) USA
(B) Mexico
(C) Australia
(D) New Zealand
Ans : (A)

12. Which one of the following cities is nearest to the equator ?
(A) Colombo
(B) Jakarta
(C) Manila
(D) Singapore
Ans : (D)

13. Who among the following rejected the title of Knighthood and refused to accept a position in the Council of the Secretary of State for India ?
(A) Moti Lal Nehru
(B) M.G. Ranade
(C) G. K Gokhale
(D) B. G. Tilak
Ans : (C)

14. During the time of which Mughal Emperor did the English East India Company establish its first factory in India ?
(A) Akbar
(B) Jahangir
(C) Shahjahan
(D) Aurangzeb
Ans : (B)

15. Which one of the following suggested the reconstitution of the Viceroy's Executive Council in which all the portfolios including that of War Members were to be held by the Indian leaders ?
(A) Simon Commission
(B) Simla Conference
(C) Cripps Proposal
(D) Cabinet Mission
Ans : (C)

16. Which one of the following is a spacecraft ?
(A) Apophis
(B) Cassini
(C) Spitzer
(D) TecSar
Ans : (B)

17. Which one of the following is also called Stranger Gas ?
(A) Argon
(B) Neon
(C) Xenon
(D) Nitrous oxide
Ans : (C)

18. In the context of the Indian defence, what is 'Dhruv' ?
(A) Aircraft-carrying warship
(B) Missile-carrying submarine
(C) Advanced light helicopter
(D) Intercontinental ballistic missile
Ans : (C)

19. Elizabeth Hawley is well-known for her writings relating to which one of the following ?
(A) Historical monuments in India
(B) Regional dances in India
(C) Himalayan expeditions
(D) Wildlife in India
Ans : (C)

20. The name of the first cloned sheep was
(A) Jolly
(B) Dolly.
(C) Roly
(D) Molly
Ans : (B)

21. Which of the following is not a Public Sector Unit/Undertaking/Agency ?
(A) ECGC
(B) SEBI
(C) SIDBI
(D) Axis Bank
Ans : (D)

22. Which of the following awards is given for excellence in the field of sports ?
(A) Kalidas Samman
(B) Dhyanchand Award
(C) Shram Vir Award
(D) Shanu Swarup Bhatnagar Award
Ans : (B)

23. Heavy Water is normally used by which of the following industries ?
(A) Nuclear Power generation pi
(B) Pharma Industry
(C) Paper Industry
(D) Sugar plants
Ans : (A)

24. Which one of the following sites of the Indus Valley Civilisation had an ancient dockyard ?
(A) Kalibangan
(B) Lothal
(C) Rangpur
(D) Harappa
Ans : (B)

25. Who amongst the following is author of the book 'Namesake' ?
(A) Vikram Seth
(B) Jhumpa Lahiri
(C) Kiran Desai
(D) Shobha De
Ans : (B)

UBI P.O. General Awareness Exam Paper

1Q. Very often we see in the advertisements published by Financing Institutes/Agencies stating that their products are given high or average Ratings. These Rating Agencies classify bonds/investments in how many categories ?
1. Low Risk
2. Average Risk
3. High Risk
(A) Only 1
(B) Only 2
(C) Only 3
(D) All 1, 2 and 3
(E) None of these
Answer : (D)

2Q. As per the reports published in various newspapers/journals etc. the economic map of the world is being redesigned. What is/are the new emerging trends of this new economic map of the world ?
1. With India and Asia at the forefront the centre of economic gravity has shifted to East.
2. Emerging markets, with India among the leaders, are growing faster than old established markets.
3. Central banks of the countries have recognized that case-by-case liquidity solutions are not the answers and a market wide and globally synchronized approach is needed to solve the present crisis.
(A) Only 1
(B) Only 2
(C) Only 3
(D) All 1, 2 and 3
(E) None of these
Answer : (A)

3Q. As per the decision taken by the Govt. of India, the exporters of which of the following products to USA and European countries will get an incentive of 2% on their exports ?
1. Leather goods
2. Garments
3. Software
(A) Only 1
(B) Only 2
(C) Only 3
(D) Both 1 and 2 only
(E) All 1, 2 and 3
Answer : (D)

4Q. Which of the following is/are the key features of Indian Economy which were highlighted during the presentation of the Interim Budget 2009-10 ?
1. Despite global financial crisis the GDP growth rate in current financial year has been 7•1 per cent.
2. Indian economy was adjudged as second fastest growing economy in the world
3. A provision of Rs. 100 crores is made in the annual plan 2009-10 for setting up Unique Identification Authority of India.
(A) Only 1
(B) Only 2
(C) Only 3
(D) All 1, 2 and 3
(E) None of these
Answer : (D)

5Q. Many a times we read a term in financial news papers ‘SEPA’. What is the full form of the term ?
(A) Single Exchange Processing Agency
(B) Single Euro Payments Area
(C) Single Electronic Processing Agency
(D) Super Electronic Purchase Agency
(E) None of these
Answer : (B)

6Q. As per the newly launched ‘Indira Gandhi National Widow Pension Scheme’ a monthly pension will be given to the widows. What will be the amount of the pension ?
(A) Rs. 200
(B) Rs. 400
(C) Rs. 600
(D) Rs. 800
(E) None of these
Answer : (A)

7Q. As per the decision taken by the Govt. of India all the Public Sector Banks (PSBs) will be recapitalised over the next two years so that they can maintain a Capital Adequacy Ratio (CAR) of ……….
(A) 9%
(B) 12%
(C) 11%
(D) 22%
(E) None of these
Answer: (B)

8. As per the Industrial Development Report 2009 India’s rank in Industrial Development was 54 on the Development Index. Which of the following organizations/agencies compiles Industrial Development Index of the world ?
(A) International Labour Organisation
(B) United Nations’ Industrial Development Organisation
(C) World Bank
(D) World Trade Organisation
(E) The Economic and Social Council of UNO
Answer : (B)

9Q. As per the news published in major news papers/magazines the International Finance Corporation has offered a loan for providing clean drinking water to 30 lakhs people in rural India. What is the amount of the loan ?
(A) 5 million US $
(B) 10 million US $
(C) 15 million US $
(D) 20 million US $
(E) None of these
Answer : (C)

10Q. The merger of which of the following two Indian companies took place in recent past which is termed as “Largest ever merger in India’s Corporate History” ?
(A) Nuclear Power Corporation and National Thermal Power Corporation
(B) State Bank of India and its seven associate banks
(C) Hind Aluminium Company and Century Mills
(D) Tata Motors and Ashok Leyland
(E) Reliance Industries and Reliance Petroleum Ltd.
Answer : (E)

11Q. As per the agreements signed by the Nuclear Power Corporation of India Ltd. (NPCL) and National Thermal Power Corporation (NTPC) a joint Venture will be launched for setting up various Nuclear Power Plants in India. If this is materialized all these establishments will be required to function necessarily under the framework of which of the following existing acts ?
1. Industrial Disputes Act
2. Monopolies and Restrictive Trade Practices Act
3. Atomic Energy Act
(A) Only 1
(B) Only 2
(C) Only 3
(D) All 1, 2 and 3
(E) None of these
Answer : (C)

12Q. As we all know more and more countries/organizations are now going for Non-Cash Transactions and accordingly Banks have launched many new products in the market for the same. Which of the following products is a non-cash transaction product ?
(A) Only ATM Card
(B) Only Credit Card
(C) Only Prepaid Card
(D) Only Debit Card
(E) All are non-cash transaction products
Answer : (E)

13Q. The Prime Minister of India while addressing a meeting of top industrialists of India in March 2009 advised the RBI to further cut interest rates. Which of the following is/are the reasons owing to which the Prime Minister who himself is an economist gave this advise to RBI ?
1. All major economies of the world are passing through a crisis situation. Prime Minister wants RBI to take preventive measures to save Indian economy.
2. In India ample liquidity is available in the market but there are no takers.
3. Inflation is at a comparatively low level at present in the country
(A) Only 1
(B) Only 2
(C) Both 2 and 3 only
(D) Only 3
(E) None of these
Answer : (A)

14Q. As per the reports published in the newspapers India has signed an agreement to supply its Dhruv Advanced Light Helicopter (ALH) to ……….
(A) Mauritius
(B) Bangladesh
(C) Nepal
(D) Zimbabwe
(E) Vietnam
Answer : (A)

15Q. Which of the following is/are TRUE about the present situation of Sugar Market in India which has undergone a dramatic change in last 12 months ?
1. From being a major exporter of sugar, India is desperately looking for imports today to meet its domestic needs.
2. Domestic prices have spurted by 60-70 per cent with no sign of respite.
3. The present situation is largely due to sharp contraction in cane acreage in the country.
(A) Only 1
(B) Only 2
(C) Only 3
(D) All 1, 2 and 3
(E) None of these
Answer : (D)

16. As per the recent reports, the per capita Income of the country has gone up during 2008-09. What is the per capita income at present ?
About ……….
(A) Rs. 15,000
(B) Rs. 33,000
(C) Rs. 40,000
(D) Rs. 23,000
(E) Rs. 53,000
Answer : (C)

17Q. A major Financial Newspaper while writing about the present status of economy in India wrote “the outlook in the agricultural sector gives room for optimism”. What does it really mean ?
[Pick up most appropriate statement(s)]
1. Agricultural Sector which was not playing any significant role in Indian economy is now growing very fast and significantly.
2. Agricultural sector is not going to play any major role in economy as its progress is still very slow.
3. Govt. will not require to provide any boost up package to agricultural sector as it is likely to be satisfactory this year.
(A) Only 1
(B) Only 2
(C) Only 3
(D) Either 1 or 3
(E) None of these
Answer : (C)

18Q. While addressing a conference of Bankers and top Industrialists, the Prime Minister made a statement that “Domestic Credit Flow for Productive Needs had to be maintained at a reasonable Cost”. What does it really mean ?
(Pick up the most appropriate statements).
1. Banks should further raise their deposit base and provide very low cost credit to Industry which is badly in need of the same.
2. Banks should neither reduce their lending rates further nor increase the rates on deposits as this may create a critical imbalance in the financial/money market of the country.
3. Banks should see that ample credit is provided to the industries at an affordable cost without diluting the credit norms.
(A) Only 1
(B) Only 2
(C) Only 3
(D) Both 1 and 2 only
(E) None of these
Answer : (C)

19. A major financial newspaper recently published a report wherein it is said that “the Govt. was aware of the problems in certain sectors, particularly where Export Dependence was High.’ Keeping general trend of India’s present economic situation in mind how would you interpret the above statement ?
[Pick up the most appropriate statement(s)].
1. The industry which produces mainly for export purposes is not doing well at present and needs Govt. support.
2. The industry which imports raw material and exports processed goods is in very bad shape these days. Govt. wishes to help them so that they can come out of it.
3. Indian exports were never in comfortable situations and this year they are in their worst situation. Govt. knows it but cannot help.
(A) Only 1
(B) Only 2
(C) Only 3
(D) Both 1 and 3 only
(E) None of these
Answer : (A)

20Q. Who amongst the following is an Economist of international fame and was in news recently ?
(A) John Key
(B) Paul Krugman
(C) Nicolas Sarkozy
(D) Mohamed Elbaradei
(E) Mohamed Nasheed
Answer : (B)

21Q. Which of the following taxes is not levied by the Union Govt. ?
(A) Customs
(B) Corporate Tax
(C) Land Revenue
(D) Income Tax
(E) Surcharge on Income Tax
Answer : (C)

22Q. Service Tax was introduced in India for the first time in the year ……….
(A) 1990-91
(B) 1991-92
(C) 1994-95
(D) 1980-81
(E) 2000-01
Answer : (C)

23Q. Which of the following countries launched world’s first satellite for monitoring Greenhouse Gases ?
(A) USA
(B) Britain
(C) Japan
(D) China
(E) India
Answer : (C)

24Q. Which of the following countries launched its indigenous Satellite ‘Omid’ in February 2009 ?
(A) Spain
(B) Australia
(C) Turkey
(D) China
(E) Iran
Answer : (E)

25Q. The Govt. of India allowed the Income Tax Department to set up its centralized IT processing centre in ……….
(A) Bangalore
(B) Chennai
(C) Mumbai
(D) Kolkata
(E) Hyderabad
Answer : (A)

26Q. As per news reports MTNL recently launched it “3G Services” and became the first telecom operator to launch the same in India. What is the full form of ‘G’ in 3G ?
(A) Global
(B) Generation
(C) Growth
(D) Gravity
(E) None of these
Answer : (B)

27Q. India recently signed an agreement with which of the following countries so that it can import Uranium from it ?
(A) China
(B) Tunisia
(C) Brazil
(D) Taiwan
(E) None of these
Answer : (E)

28Q. The annual meeting of the world Economic Forum was organized in January–February 2009 in ……
(A) Davos
(B) Brasilia
(C) Washington DC
(D) London
(E) Tokyo
Answer : (A)

29Q. What is the minimum support price announced by the Govt. of India for Rabi crops of wheat ?
(A) Rs. 900 quintal
(B) Rs. 950 quintal
(C) Rs. 1,000 quintal
(D) Rs. 1,080 quintal
(E) Rs. 1,200 quintal
Answer : (D)

30Q. Which of the following is/are the highlights of the ‘project Snow Leopard’ launched in recent past ?
1. It is launched to safeguard and conserve India’s unique natural heritage and high altitude wild life.
2. The project is launched to make another hitech permanent Lab on South pole.
3. It is nothing but a project to protect snow leopards found in Himalayan region which is facing the fear of extinction.
(A) Only 1
(B) Only 2
(C) Only 3
(D) Both 1 and 3 only
(E) None of these
Answer : (A)

31Q. Which of the following has now became the Third Largest Economy of the World ?
(A) Brazil
(B) India
(C) China
(D) Japan
(E) Russia
Answer : (C)

32Q. Ms. Johanna Sigurdardottir has taken over as the first women Prime Minister of ……
(A) Brazil
(B) Iceland
(C) Peru
(D) New Zealand
(E) Tunisia
Answer : (B)

33. Govt. of India has decided to set up two more All India Institute of Medical Sciences (AIIMS) like institutes in near future. These new institutions would be established in ……….
(A) West Bengal and Uttar Pradesh
(B) Haryana & Punjab
(C) Punjab & Tamil Nadu
(D) Tamil Nadu and Andhra Pradesh
(E) Gujarat and Maharashtra
Answer : (A)

34Q. Duleep Trophy is associated with the game of ……….
(A) Hockey
(B) Badminton
(C) Football
(D) Lawn Tennis
(E) Cricket
Answer : (E)

35Q. Who amongst the following is the winner of Saraswati Samman 2008 ?
(A) Gulzar
(B) Nida Fazli
(C) Srilal Shukla
(D) Govind Mishra
(E) Lakhmi Nandan Bora
Answer : (E)

36. Who amongst the following is the New Prime Minister of Israel after the general election held there in recent past ?
(A) Lieberman
(B) Tzipi Livini
(C) Shimon Peres
(D) Benjamin Netanyahu
(E) None of these
Answer : (D)
37Q. Who amongst the following is the highest Wicket taker in the history of cricket ?(Both ODI and Test Cricket)
(A) Wasim Akram
(B) Anil Kumble
(C) Stephan Fleming
(D) Shane Warne
(E) Muttiah Muralidharan
Answer : (E)

38Q. Which of the following commissions set up by the President of India decides the distribution of tax incomes between the Central and State Govts. ?
(A) Central Law Commission
(B) Pay Commission for Govt. Employees
(C) Administrative Reforms Commission
(D) Planning Commission
(E) Finance Commission
Answer : (E)

39Q. Who amongst the following became the first Indian to win ‘Golden Globe Award 2009’ ?
(A) Shivkumar Sharma
(B) Anu Malik
(C) Zakir Hussain
(D) A. R. Rahman
(E) None of these
Answer : (D)

40Q. Sania Mirza won the Mixed Doubles of which of the following tennis matches alongwith Mahesh Bhupati ?
(A) US Open 2009
(B) Australian Open 2009
(C) South Africa Tennis Open 2009
(D) ATP Challenger Tennis Championship 2009
(E) None of these
Answer : (B)

41Q. We very frequently read about the activities of the Foreign Exchange Market in newspapers/magazines. Which of the following is/are the major functions of the same ?
1. Transfer of purchasing power from domestic to foreign market.
2. Providing credit for financing foreign trade.
3. Power to purchase gold from foreign countries as most of the nations still work on Gold Standards.
(A) Only 1
(B) Only 2
(C) Only 3
(D) Both 1 and 2 only
(E) Both 2 and 3 only
Answer : (D)

42Q. Who amongst the following players won the National Shooting Championship held in January 2009 ?
(A) Abhinav Bindra
(B) Omkar Singh
(C) Gurpreet Singh
(D) Anjali Bhagwat
(E) None of these
Answer : (E)

43Q. Who amontst the following is the author of the book “Termites in the Trading system” ?
(A) M. S. Swaminathan
(B) Jagdish Bhagwati
(C) Jaswant Singh
(D) M. Chelapati Rao
(E) None of these
Answer : (B)

44Q. The Govt. of India recently introduced Money Laundering Bill 2009. Under the bill which of the following agencies is empowered to search the premises after the offence is committed and a case is filed ?
(A) Income Tax Department
(B) Vigilance Department of the Reserve Bank of India
(C) Enforcement Directorate
(D) Central Bureau of Investigation
(E) None of these
Answer : (C)

45Q. Which of the following is/are the components of the Fiscal Deficit ?
1. Budgetary Deficit
2. Market Borrowings
3. Expenditure made from Pradhan Mantri Rahat Kosh
(A) Only 1
(B) Only 2
(C) Only 3
(D) All 1, 2 and 3
(E) None of these
Answer : (A)

46. Which of the following is the Trophy/Cups associated with the game of Hockey ?
(A) Derby
(B) Agha Khan Cup
(C) Merdeka
(D) Vizzy Trophy
(E) Rovers Cup
Answer : (B)

47Q. Which of the following is not a Welfare scheme launched by the Govt. of India ?
(A) Village Grain Bank Scheme
(B) Sampoorna Gramin Rozgar Yojana
(C) Annapurna Scheme
(D) Midday Meal Scheme
(E) Bharat Nirman Yojana
Answer : (E)

48Q. Which of the following are the instruments of Credit Control in the hands of the RBI ?
1. Lowering or raising the discount and interest rates.
2. Raising the minimum support price of the major agro products.
3. Lowering or raising the minimum cash reserves maintained by the commercial banks.
(A) Only 1
(B) Only 2
(C) Only 3
(D) Both 1 and 3 only
(E) Both 2 and 3 only
Answer : (C)

49Q. Who amongst the following is the author of the Book “Dreams from My Father : A Story of Race and Inheritance” ?
(A) Barack Obama
(B) John Evans Aatta Mills
(C) Nelson Mandela
(D) Danny Boyle
(E) None of these
Answer : (A)

50Q. Which of the following programmes was launched to further improve the facilities of irrigation in rural India ?
(A) National Social Assistance programme
(B) Construction of Kiosks for poors
(C) Sampoorna Grameen Rozgar Yojana
(D) Annapurna Scheme
(E) National Watershed Development Programme
Answer : (E)

BRIEF HISTORY OF BANKING IN INDIA

1. From the ancient times in India, an indigenous banking system has prevailed. The businessmen called Shroffs, Seths, Sahukars, Mahajans, Chettis etc. had been carrying on the business of banking since ancient times. These indigenous bankers included very small money lenders to shroffs with huge businesses, who carried on the large and specialized business even greater than the business of banks.
• The origin of western type commercial Banking in India dates back to the 18th century.
2. The story of banking starts from Bank of Hindusthan established in 1779 and it was first bank at Calcutta under European management.
• In 1786 General Bank of India was set up.
3. Since Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, it became a banking center.
• Three Presidency banks were set up under charters from the British East India Company- Bank of Calcutta, Bank of Bombay and the Bank of Madras. These worked as quasi central banks in India for many years.
• The Bank of Calcutta established in 1806 immediately became Bank of Bengal.
• In 1921 these 3 banks merged with each other and Imperial Bank of India got birth. It is today’s State Bank of India.
• The name was changed after India’s Independence in 1955. So State bank of India is the oldest Bank of India.
4. In 1839, there was a fruitless effort by Indian merchants to establish a Bank called Union Bank. It failed within a decade.
5. Next came Allahabad Bank which was established in 1865 and working even today.
• The oldest Public Sector Bank in India having branches all over India and serving the customers for the last 145 years is Allahabad Bank. Allahabad bank is also known as one of India’s Oldest Joint Stock Bank.
6. The Oldest Joint Stock bank of India was Bank of Upper India established in 1863 and failed in 1913.
7. The first Bank of India with Limited Liability to be managed by Indian Board was Oudh Commercial Bank. It was established in 1881 at Faizabad. This bank failed in 1958.
8. The first bank purely managed by Indian was Punjab National Bank, established in Lahore in 1895. The Punjab national Bank has not only survived till date but also is one of the largest banks in India.
9. However, the first Indian commercial bank which was wholly owned and managed by Indians was Central Bank of India which was established in 1911.
• Central Bank of India was dreams come true of Sir Sorabji Pochkhanawala, founder of the Bank. 
• Sir Pherozesha Mehta was the first Chairman of this Bank. 
10. Many more Indian banks were established between 1906-1911. This was the era of the Swadeshi Movement in India. Some of the banks are Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India. 
• Bank of India was the first Indian bank to open a branch outside India in London in 1946 and the first to open a branch in continental Europe at Paris in 1974. 
• The Bank was founded in September 1906 as a private entity and was nationalized in July 1969. Since the logo of this Bank is a star, its head office in Mumbai is located in Star House, Bandra East, Mumbai. 
11. There was a district in Today’s Karnataka state called South Canara under the British empire. It was bifurcated in 1859 from Canara district , thus making Dakshina Kannada and Udupi district. It was the undivided Dakshina Kannada district. It was renamed as Dakshina Kannada in 1947. Four banks started operation during the period of Swadeshi Movement and so this was known as “Cradle of Indian Banking. 
• This was the first phase of Indian banking which was a very slow in development. This era saw many ups and downs in the banking scenario of the country. 
12. The Second Phase starts from 1935 when Reserve bank of India was established. 
• Between the period of 1911-1948, there were more than 1000 banks in India, almost all small banks. The Reserve Bank of India was constituted in 1934 as an apex Bank, however without major government ownership. Government of India came up with the Banking Companies Act 1949. This act was later changed to Banking Regulation (Amendment) Act 1949. 
• The Banking Regulation (Amendment) Act of 1965 gave extensive powers to the Reserve Bank of India. The Reserve Bank of India was made the Central Banking Authority. 
13. The banking sector reforms started immediately after the independence. These reforms were basically aimed at improving the confidence level of the public as most banks were not trusted by the majority of the people. Instead, the deposits with the Postal department were considered safe.
14. The first major step was Nationalization of the Imperial Bank of India in 1955 via State Bank of India Act. 
• State Bank of India was made to act as the principal agent of RBI and handle banking transactions of the Union and State Governments. 
15. In a major process of nationalization, 7 subsidiaries of the State Bank of India were nationalized by the Indira Gandhi regime. In 1969, 14 major private commercial banks were nationalized. These 14 banks Nationalized in 1969 are as follows: 
o Central Bank of India
o Bank of Maharastra
o Dena Bank
o Punjab National Bank
o Syndicate Bank
o Canara Bank
o Indian Bank
o Indian Overseas Bank
o Bank of Baroda
o Union Bank
o Allahabad Bank
o Union Bank of India
o UCO Bank
o Bank of India.
16. The above was followed by a second phase of nationalization in 1980, when Government of India acquired the ownership of 6 more banks, thus bringing the total number of Nationalised Banks to 20. The private banks at that time were allowed to function side by side with nationalized banks and the foreign banks were allowed to work under strict regulation. 
17. After the two major phases of nationalization in India, the 80% of the banking sector came under the public sector / government ownership. 
18. Please note the following sequence of events: 
 Creation of Reserve bank of India: 1935 
 Nationalization of Reserve Bank of India : 1949 (January ) 
 Enactment of Banking Regulation Act : 1949 (March) 
 Nationalization of State Bank of India : 1955 
 Nationalization of SBI Subsidiaries : 1959 
 Nationalization of 14 major Banks : 1969 
 Creation of Credit Guarantee Corporation: 1971 
 Creation of Regional Rural Banks : 1975 
 Nationalization of 7 more banks with deposits over Rs. 200 Crore: 1980 
19. The result was outstanding. The public deposits in these banks increased by 800% , as the government ownership gave the public faith and trust. 
20. The third phase of development of banking in India started in the early 1990s when India started its economic liberalization.

Government Schemes

Bharat NirmanBharat Nirman was launched on december 16 2005.This scheme aims at developing the rural infrastructure. The duration of implementing this scheme is 4 years.The major 6 sectors and their targets for the next 4 years:

Roads
To link all the villages of 1000 population with roads and also to link all the St and Hill villages upto 500 population with roads.
Irrigation
Create 1 crore hectare of irrigation potential. 6 million hectare from major and medium projects, 3 million hectare for ground water development and 1 million hectare for minor irrigation projects
Water Supply
Cover of 55,067 uncovered habitations. Provide additional coverage to 2.8 lakh habitations that have slipped back from full coverage. Provide potable water in 2,16,968 villages affected by poor water quality.

Housing
Provide 60 lakh houses at the rate of 15 lakh houses each year to be built by funds allocated to the homeless through Panchayats.
Electricity
Provide electricity to 1,25,000 villages by grid based supply or in remote and inaccessible areas through alternative technologies.
Telephone Connections
Provide telephone connection to 66,822 number of villages without a telephone and replace presently dysfunctional systems.


Pradhan Mantri Gram Sadak Yojana
Government has launched the Pradhan Mantri Gram Sadak Yojana on 25th December, 2000 to provide all-weather access to unconnected habitations. The Pradhan Mantri Gram PMGSY is a 100% Centrally Sponsored Scheme. 50% of the Cess on High Speed Diesel (HSD) is earmarked for this Programme. to provide connectivity to unconnected rural Habitations as part of a poverty reduction strategy.
In the first phase, habitations (hamlets) of population of 1000 (500 in the case of Hill States, tribal and Desert areas) and above will be covered. In the second phase habitations of population of 500(250 in the case of Hill States ,tribal and Desert areas ) will be covered.

Sarva Shiksha Abhiyan
The 'Sarva Shiksha Abhiyan' (Hindi: The 'Education for All' Movement, sometimes referred to as "each one teach one") is a flagship programme of the Government of India launched in 2001 for achievement of universalization of elementary education in a time bound manner, as mandated by the 86th amendment to the Constitution of India making free and compulsory education to children of ages 6-14 (estimated to be 205 million in number in 2001) a fundamental right. The programme aims to achieve the goal of universalization of elementary education of satisfactory quality by 2010.

Rashtriya Swasthya Bima Yojana
Rashtriya Swasthya Bima Yojana was formally launched on October 1, 2007. The objective of RSBY is to protect below poverty line (BPL) households from major health shocks that involve hospitalization. Specifically, BPL families are entitled to more than 700 in-patient procedures with a cost of up to 30,000 rupees per annum for a nominal registration fee of 30 rupees. Pre-exisiting conditions are covered and there is no age limit. Coverage extends to the head of household, spouse and up to three dependent children or parents.Government contributes 75% of the annual estimated premium while state government contributes 25%.
National Rural Health Mission
National Rural Health Mission (NRHM) was launched by the Prime Minister, Dr. Manmohan Singh in New Delhi on 12th April 2005.. NRHM seeks to provide effective healthcare to rural and urban population throughout the state with special focus on the backward districts with weak human development and health indicators especially among the poor and marginalized groups like women and the vulnerable sections of the society.
Jawaharlal Nehru National Urban Renewal Mission
JNNURM was launched by the Govt. of India in December 2005 to encourage creation of financially sustainable inclusive cities. The objective of the Mission is to give focused attention to planned development of identified cities including peri-urban areas, outgrowths and urban corridors to foster dispersed urbanization, ensure adequate funds to meet the deficiencies in urban infrastructural services, provide basic services to the urban poor including security of tenure at affordable prices, improved housing, water supply and sanitation, ensure delivery of other existing universal services of the Government for education, health and social security and establishment of linkages between asset-creation and asset-management.
The Basic Services for Urban Poor (BSUP) and Integrated Housing and Slum Development Program (IHSDP) under JNNURM are dealt by the Ministry of Housing and Urban Poverty Alleviation.
Aam Aadmi Bima YojanaThe Government on October 2, 2007 launched the ‘Aam Aadmi Bima Yojana’ (AABY) through Life Insurances Corporation to provide death and disability cover to rural landless households. Under the scheme, the head of the family or one earning member in the family will be insured. The benefits under the scheme include Rs.30,000 in case of natural death; Rs. 75,000 in case of death due to accident or total permanent disability due to accident. In case of partial disability due to accident, the insurance cover would be Rs. 37,500.

Swarnjayanti Gram Swarozgar Yojana
Swarnjayanti Gram Swarozgar Yojana (SGSY) was launched on 1st April, 1999 with a holistic view to cover all the aspects of self employment such as organization of the poor into self-help groups, training, credit, technology, infrastructure and marketing. This programme was started after restructuring the erstwhile Integrated Rural Development Programme (IRDP) and its allied programmes namely Training of Rural Youth for Self Employment (TRYSEM), Development of Women and Children in Rural Areas (DWACRA), Supply of Toolkits in Rural Areas (SITRA), Ganga Kalyan Yojana (GKY) and Million Wells Scheme (MWS).

Swarnajayanthi Gram Swarojgar Yojana
SGSY targets rural families below poverty line (BPL) with the basic objective to bring the assisted families above the poverty line. Within the target population, the programme in particular focuses on the vulnerable groups i.e. scheduled castes, scheduled tribes, women and disabled with the inherent aim to mobilize them into establishing small rural enterprises based on their own potential.

Rural Infrastructure Development FundThe Rural Infrastructure Development Fund (RIDF). The RIDF is the main instrument to channel bank funds for financing rural infrastructure, through State Governments. The corpus of RIDF was increased from Rs.5,500 crore in 2003-04 to Rs.14 thousand crore for the year 2008 .

Project Arrow.The Department of Posts has launched “Project Arrow” to revitalize its core operations and to provide new technology enabled services to both rural and urban Indians. So far this has been successfully implemented in 500 post offices in the country. This Project will receive full government support as it will enhance the services offered to India and will also lay the foundation for a vibrant delivery mechanism for many social sector schemes such as Pensions, and the National Rural Employment Guarantee Scheme (NREGS).

Rajiv Gandhi Grameen Vidyutikaran YojanaRajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) was launched in April-05 by merging all ongoing schemes.Under the programme 90% grant is provided by Govt. of India and 10% as loan by REC to the State Governments. REC is the nodal agency for the programme.
The RGGVY aims at:
· Electrifying all villages and habitations as per new definition
· Providing access to electricity to all rural households
· Providing electricity Connection to Below Poverty Line (BPL) families free of charge.

Budget Terminology

AD-VALOREM DUTIES: These are the duties determined as a certain percentage of the price of the product.
APPROPRIATION BILL: This Bill is like a green signal enabling the withdrawal of money from the Consolidated Fund to pay off expenses. These are instruments that Parliament clears after the demand for grants has been voted by the Lok Sabha.
BUDGETARY DEFICIT: Such a situation arises when the expenses exceed the revenues. Here the entire budgetary exercise falls short of allocating enough funds to a certain area.
BUDGET ESTIMATES: These estimates contain an estimate of Fiscal Deficit and the Revenue Deficit for the year. The term is associated with the estimates of the Center's spending during the financial year and the income received as proceeds of tax revenues.
CAPITAL GOODS: Capital Goods are those goods that are used in the manufacturing of finished products.
CAPITAL BUDGET: The word, capital, is long-term in nature. Capital Budget keeps track of the government's capital receipts and payments. This accounts for market loans, borrowings from the Reserve Bank and other institutions through the sale of Treasury Bills, loans acquired from foreign governments and recoveries of loans granted by the Central government to state governments and Union Territories.
CAPITAL PAYMENTS: Expenses incurred on acquisition of assets are termed capital payments.
CENVAT: This is a replacement for the earlier MODVAT scheme and is meant for reducing the cascade effect of indirect taxes on finished products. The scheme is a more extensive one with most goods brought under its preview.
CURRENT ACCOUNT DEFICIT: This deficit shows the difference between the nation's exports and imports.
CUSTOM DUTIES: These duties are levied on goods whenever they are either brought into the country or exported from the country. The importer or the exporter pays custom duties.
COUNTERVAILING DUTIES: This is levied on imports that may lead to price rise in the domestic market. It is imposed with the intention of discouraging unfair trading practices by other countries.
CONSOLIDATED FUND: This is one big reservoir where the government pools all its funds together. The fund includes all government revenues, loans raised and recoveries of loans granted.
CONTINGENCY FUND: It is more or less similar to that extra little bit of savings that all mothers set aside in case of an emergency. Likewise, the government has created this fund to help it tide over difficult situations. The fund is at the disposal of the President to meet unforeseen and urgent expenditure, pending approval from Parliament. The amount that is withdrawn from the fund is recouped.
CAPITAL EXPENDITURE: Long-term in nature they are used for acquiring fixed assets such as land, building, machinery and equipment. Other items that also fall under this category include, loans and advances sanctioned by the Center to the State governments, union territories and public sector undertakings.
CAPITAL RECEIPT: Loans raised by the Center from the market, government borrowings from the RBI & other parties, sale of Treasury Bills and loans received from foreign governments all form a part of Capital Receipt. Other items that also fall under this category include recovery of loans granted by the Center to State governments & Union Territories and proceeds from the dilution of the government’s stake in Public Sector Undertakings.
CENTRAL PLAN: It refers to the government’s budgetary support to the Plan and, the internal and extra budgetary resources raised by the Public Sector Undertakings.
DIRECT TAXES: Taxes imposed directly on the customers such as the Income Tax and the Corporate Tax fall under this category.
DISINVESTMENT: The dilution of the government’s stake in Public Sector Undertakings is called as disinvestment.
DEMAND FOR GRANTS: It is a statement of estimate of expenditure from the Consolidated Fund. This requires the approval of the Lok Sabha.
EXCISE DUTIES: These duties refer to duties imposed on goods manufactured within the country.
FISCAL DEFICIT: It is the difference between the Revenue Receipts and Total Expenditure.
GROSS DOMESTIC PRODUCT: Total market value of the goods and services manufactured within the country in a financial year.
GROSS NATIONAL PRODUCT: Total market value of the finished goods and services manufactured within the country in a given financial year, plus income earned by the local residents from investments made abroad, minus the income earned by foreigners in the domestic market.
INDIRECT TAXES: Taxes imposed on goods manufactured, imported or exported such as Excise Duties and Custom Duties.
MODVAT: It stands for Modified Value Added Tax and is a way of giving some relief to the final manufacturers of goods on Excise Duties borne by their suppliers.
MONETIZED DEFICIT: Measures the level of support the RBI provides to the Centre’s borrowing program.
PEAK RATE: It is the highest rate of Custom Duty applicable on an item.
PERFORMANCE BUDGET: It is a compilation of programs and activities of different ministries and departments.
PUBLIC ACCOUNT: It is an account where money received through transactions not relating to consolidated fund is kept.
PLAN EXPENDITURE: Consists of both Revenue Expenditure and Capital Expenditure of the Center on the Central Plan, Central Assistance to States and Union Territories.
PRIMARY DEFICIT: Fiscal Deficit minus Interest payments.
REVENUE DEFICIT: It is the difference between Revenue Expenditure and Revenue Receipts.
REVENUE SURPLUS: Opposite of Revenue Deficit, it is the excess of Revenue Receipts over Revenue Expenditure.
REVISED ESTIMATES: Usually given in the following budget, it is the difference between the Budget Estimates and the actual figures.
REVENUE BUDGET: Consists of Revenue Receipts and Revenue Expenditure of the government.
REVENUE RECEIPT: Consists of duties imposed by the Centre, interest and dividend on investments made by the government.
REVENUE EXPENDITURE: Expenditure incurred for the normal functioning of the government departments and various other services such as interest charges on debt incurred by the government.
SUBSIDIES: Financial aid provided by the Center to individuals or a group of individuals to be competitive. The grant of subsidies is also aimed at improving their skills of those who benefit from the subsidies.
NON-PLAN EXPENDITURE: Consists of Revenue and Capital Expenditure on interest payments, Defense Expenditure, subsidies, postal deficit, police, pensions, economic services, loans to public sector enterprises and loans as well as grants to State governments, Union territories and foreign governments.
FINANCE BILL: Consists the government’s proposals for the imposition of new taxes, modification of the existing tax structure or continuance of the existing tax structure beyond the period approved by the Parliament.
VALUE ADDED TAX: It is based on the difference between the value of the output over the value of the inputs used.