Economy

Banking- Role of Commercial Banks, Issue of NPA, Financial Inclusion:-

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Table of Content:-

  1. Role of Commercial Banks
  2. Issue of NPA
  3. Financial Inclusion


Role of Commercial Banks

A Commercial bank is a type of financial institution that provides services such as accepting deposits, making business loans, and offering basic investment products

There is acute shortage of capital. People lack initiative and enterprise. Means of transport are undeveloped. Industry is depressed. The commercial banks help in overcoming these obstacles and promoting economic development. The role of a commercial bank in a developing country is discussed as under.

  1. Mobilising Saving for Capital Formation:

The commercial banks help in mobilising savings through network of branch banking. People in developing countries have low incomes but the banks induce them to save by introducing variety of deposit schemes to suit the needs of individual depositors. They also mobilise idle savings of the few rich. By mobilising savings, the banks channelize them into productive investments. Thus they help in the capital formation of a developing country.

  1. Financing Industry:

The commercial banks finance the industrial sector in a number of ways. They provide short-term, medium-term and long-term loans to industry.

  1. Financing Trade:

The commercial banks help in financing both internal and external trade. The banks provide loans to retailers and wholesalers to stock goods in which they deal. They also help in the movement of goods from one place to another by providing all types of facilities such as discounting and accepting bills of exchange, providing overdraft facilities, issuing drafts, etc. Moreover, they finance both exports and imports of developing countries by providing foreign exchange facilities to importers and exporters of goods.

  1. Financing Agriculture:

The commercial banks help the large agricultural sector in developing countries in a number of ways. They provide loans to traders in agricultural commodities. They open a network of branches in rural areas to provide agricultural credit. They provide finance directly to agriculturists for the marketing of their produce, for the modernisation and mechanisation of their farms, for providing irrigation facilities, for developing land, etc.

They also provide financial assistance for animal husbandry, dairy farming, sheep breeding, poultry farming, pisciculture and horticulture. The small and marginal farmers and landless agricultural workers, artisans and petty shopkeepers in rural areas are provided financial assistance through the regional rural banks in India. These regional rural banks operate under a commercial bank. Thus the commercial banks meet the credit requirements of all types of rural people. In India agricultural loans are kept in priority sector landing.

  1. Financing Consumer Activities:

People in underdeveloped countries being poor and having low incomes do not possess sufficient financial resources to buy durable consumer goods. The commercial banks advance loans to consumers for the purchase of such items as houses, scooters, fans, refrigerators, etc. In this way, they also help in raising the standard of living of the people in developing countries by providing loans for consumptive activities and also increase the demand in the economy.

  1. Financing Employment Generating Activities:

The commercial banks finance employment generating activities in developing countries. They provide loans for the education of young person’s studying in engineering, medical and other vocational institutes of higher learning. They advance loans to young entrepreneurs, medical and engineering graduates, and other technically trained persons in establishing their own business. Such loan facilities are being provided by a number of commercial banks in India. Thus the banks not only help inhuman capital formation but also in increasing entrepreneurial activities in developing countries.

  1. Help in Monetary Policy:

The commercial banks help the economic development of a country by faithfully following the monetary policy of the central bank. In fact, the central bank depends upon the commercial banks for the success of its policy of monetary management in keeping with requirements of a developing economy.

 

 


Issue of NPA

A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.According to RBI, terms loans on which interest or installment of principal remain overdue for a period of more than 90 days from the end of a particular quarter is called a Non-performing Asset.

However, in terms of Agriculture / Farm Loans; the NPA is defined as under:

  • For short duration crop agriculture loans such as paddy, Jowar, Bajra etc. if the loan (installment / interest) is not paid for 2 crop seasons , it would be termed as a NPA.
  • For Long Duration Crops, the above would be 1 Crop season from the due date.

The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act has provisions for the banks to take legal recourse to recover their dues. When a borrower makes any default in repayment and his account is classified as NPA; the secured creditor has to issue notice to the borrower giving him 60 days to pay his dues. If the dues are not paid, the bank can take possession of the assets and can also give it on lease or sell it; as per provisions of the SAFAESI Act.

Reselling of NPAs :- If a bad loan remains NPA for at least two years, the bank can also resale the same to the Asset Reconstruction Companies such as Asset Reconstruction Company (India) (ARCIL).  These sales are only on Cash Basis and the purchasing bank/ company would have to keep the accounts for at least 15 months before it sells to other bank. They purchase such loans on low amounts and try to recover as much as possible from the defaulters. Their revenue is difference between the purchased amount and recovered amount.

 


Financial Inclusion

Financial inclusion or inclusive financing is the delivery of financial services at affordable costs to sections of disadvantaged and low-income segments of society, in contrast to financial exclusion where those services are not available or affordable.Financial-inclusion

Government of India has launched an innovative scheme of Jan Dhan Yojna for Financial Inclusion to provide the financial services to millions out of the regulated banking sector.

 

 

 

 

Various program’s for financial inclusion are:-

  • Swabhimaan Scheme: under the Swabhimaan campaign, the Banks were advised to provide appropriate banking facilities to habitations having a population in excess of 2000 (as per 2001 census) by March 2012.
  • Extention of  the banking network in unbanked areas,
  • Expansion of Business Correspondent Agent (BCA) Network
  • Direct Benefit Transfer (DBT) and Direct Benefit Transfer for LPG (DBTL)
  • RuPay, a new card payment scheme has been conceived by NPCI to offer a domestic, open-loop, multilateral card payment system which will allow all Indian banks and financial Institutions in India to participate in electronic payments.
  • Pradhan Mantri Jan-Dhan Yojana (PMJDY) was formally launched on 28th August, 2014. The Yojana envisages universal access to banking facilities with at least one basic banking account for every household, financial literacy, access to credit, insurance and pension. The beneficiaries would get a RuPay Debit Card having inbuilt accident insurance cover of Rs.1.00 lakh. In addition there is a life insurance cover of Rs.30000/- to those people who opened their bank accounts for the first time between 15.08.2014 to 26.01.2015 and meet other eligibility conditions of the Yojana.

 

 

Budgeting- Different types of Budgeting, Budgetary Control, Responsibility Accounting, Social Accounting, Different types of Deficits- Budgetary, Fiscal & Revenue Deficit.

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Table of Content:-

Budgeting-

  1. Different types of Budgeting
  2. Budgetary Control
  3. Responsibility Accounting
  4. Social Accounting

Different types of Deficits-

  1. Budgetary
  2. Fiscal
  3. Revenue Deficit

 


Budgeting

Budgeting is the process of estimating the availability of resources and then allocating them to various
activities of an organization according to a pre-determined priority. In most cases, approval of a budget also
means the approval to various spending units to utilize the allocated resources. Budgeting plays a criucial role in the socio-economic development of the nation.

Budget is the annual statement of the outlays and tax revenues of the government of India together with the laws and
regulations that approve and support those outlays and tax revenues . The budget has two purposes in general :
1. To finance the activities of the union government
2. To achieve macroeconomic objectives.

The Budget contains the financial statements of the government embodying the estimated receipts and expenditure for one financial year, ie.  it is a proposal of how much money is to be spent on what and how much of it will
be contributed by whom or raised from where during the coming year.

 


Different types of Budgeting

Economists throughout the globe have classified the budgets into different types based on the process and purpose of the budgets, which are as follows:-

1- The Line Item Budget

line-item budgeting was introduced in some countries in the late 19th centuary. Indeed line item
budgeting which is the most common form of budgeting in a large number of countries and suffers from
several drawbacks was a major reform initiative then. The line item budget is defined as “the budget in which the individual financial statement items are grouped by cost centers or departments .It shows the comparison between the financial data for the past  accounting or budgeting periods and estimated figures for the current or a future period”In a line-item system, expenditures for the budgeted period are listed according to objects of
expenditure, or “line-items.” These line items include detailed ceilings on the amount a unit would
spend on salaries, travelling allowances, office expenses, etc. The focus is on ensuring that the agencies
or units do not exceed the ceilings prescribed. A central authority or the Ministry of Finance keeps a
watch on the spending of various units to ensure that the ceilings are not violated. The line item budget approach is easy to understand and implement. It also facilitates centralized
control and fixing of authority and responsibility of the spending units. Its major disadvantage is that it
does not provide enough information to the top levels about the activities and achievements of
individual units.

2 – Performance Budgeting

a performance budget reflects the goal/objectives of the organization and spells out performance targets. These targets are sought to be achieved through a strategy. Unit costs are associated with the strategy and allocations are accordingly made for achievement of the objectives. A Performance Budget gives an indication of how the funds spent are expected to give outputs and ultimately the outcomes. However, performance budgeting has a limitation – it is not easy to arrive at standard unit costs especially in social programmes which require a multi-pronged approach.

3- Zero-based Budgeting

The concept of zero-based budgeting was introduced in the 1970s. As the name suggests, every budgeting cycle starts from scratch. Unlike the earlier systems where only incremental changes were made in the allocation, under zero-based budgeting every activity is evaluated each time a budget is made and only if it is established that the activity is necessary, are funds allocated to it. The basic purpose of Zero-based Budgeting is phasing out of programmes/ activities which do not have relevance anymore. However, because of the efforts involved in preparing a zero-based budget and institutional resistance related to personnel issues, no government ever implemented a full zero-based budget, but in modified forms the basic principles of ZBB are often used.

4- Programme Budgeting and Performance Budgeting

Programme budgeting in the shape of planning, programming and budgeting system (PPBS) was
introduced in the US Federal Government in the mid-1960s. Its core themes had much in common with
earlier strands of performance budgeting.
Programme budgeting aimed at a system in which expenditure would be planned and controlled by the
objective. The basic building block of the system was classification of expenditure into programmes,
which meant objective-oriented classification so that programmes with common objectives are
considered together.
It aimed at an integrated expenditure management system, in which systematic policy and expenditure planning would be developed and closely integrated with the budget. Thus, it was too ambitious in scope. Neither was adequate preparation time given nor was a stage-by-stage approach adopted. Therefore, this attempt to introduce PPBS in the federal government in USA did not succeed, although the concept of performance budgeting and programme budgeting endured.

 


Budgetary Control

Budgetary control refers to how well managers utilize budgets to monitor and control costs and operations in a given accounting period. In other words, budgetary control is a process for managers to set financial and performance goals with budgets, compare the actual results, and adjust performance, as it is needed.

Budgetary control involves the following steps :

(a) The objects are set by preparing budgets.

(b) The business is divided into various responsibility centres for preparing various budgets.

(c) The actual figures are recorded.

(d) The budgeted and actual figures are compared for studying the performance of different cost centres.

(e) If actual performance is less than the budgeted norms, a remedial action is taken immediately.

The main objectives of budgetary control are the follows:

1. To ensure planning for future by setting up various budgets, the requirements and expected performance of the enterprise are anticipated.

3. To operate various cost centres and departments with efficiency and economy.

4. Elimination of wastes and increase in profitability.

5. To anticipate capital expenditure for future.

6. To centralise the control system.

7. Correction of deviations from the established standards.

8. Fixation of responsibility of various individuals in the organization.

 

 


Responsibility Accounting

Responsibility accounting is an underlying concept of accounting performance measurement systems. The basic idea is that large diversified organizations are difficult, if not impossible to manage as a single segment, thus they must be decentralized or separated into manageable parts.

These decentralized parts are divided as : 1) revenue centers, 2) cost centers, 3) profit centers and 4) investment centers.

  1. revenue center (a segment that mainly generates revenue with relatively little costs),
  2. costs for a cost center (a segment that generates costs, but no revenue),
  3. a measure of profitability for a profit center (a segment that generates both revenue and costs) and
  4. return on investment (ROI) for an investment center (a segment such as a division of a company where the manager controls the acquisition and utilization of assets, as well as revenue and costs).

Advantages:-

  1. It provides a way to manage an organization that would otherwise be unmanageable.
  2. Assigning responsibility to lower level managers allows higher level managers to pursue other activities such as long term planning and policy making.
  3. It also provides a way to motivate lower level managers and workers.
  4. Managers and workers in an individualistic system tend to be motivated by measurements that emphasize their individual performances.

In India the budget is prepared from top to bottom approach and responsible accounting would not only improve the efficiency of Indian budgetary system but also will help in performance analysis.

Social Accounting

Social accounting is concerned with the statistical classification of the activities of human beings and human institutions in ways which help us to understand the operation of the economy as a whole.

Social accounting is the process of communicating the social and environmental effects of organizations’ economic actions to particular interest groups within society and to society at large

The components of social accounting are production, consumption, capital accumulation, government transactions and transactions with the rest of the world.

The uses of social accounting are as follows:

(1) In Classifying Transactions

(2) In Understanding Economic Structure

(3) In Understanding Different Sectors and Flows

(4) In Clarifying Relations between Concepts

(7) In Explaining Movements in GNP

(8) Provide a Picture of the Working of Economy

(9) In Explaining Interdependence of Different Sectors of the Economy

(10) In Estimating Effects of Government Policies

(11) Helpful in Big Business Organisations

(12) Useful for International Purposes

(13) Basis of Economic Models

 


Budgetary Deficit

Budgetary Deficit is the difference between all receipts and expenditure of the government, both revenue and capital. This difference is met by the net addition of the treasury bills issued by the RBI and drawing down of cash balances kept with the RBI. The budgetary deficit was called deficit financing by the government of India. This deficit adds to money supply in the economy and, therefore, it can be a major cause of inflationary rise in prices.

Budgetary Deficit of central government of India was Rs. 2,576 crores in 1980-81, it went up to Rs. 11,347 crores in 1990-91 to Rs. 13,184 crores in 1996-97.

The concept of budgetary deficit has lost its significance after the presentation of the 1997-98 Budget. In this budget, the practice of ad hoc treasury bills as source of finance for government was discontinued. Ad hoc treasury bills are issued by the government and held only by the RBI. They carry a low rate of interest and fund monetized deficit. These bills were replaced by ways and means advance. Budgetary deficit has not figured in union budgets since 1997-98. Since 1997-98, instead of budgetary deficit, Gross Fiscal Deficit (GFD) became the key indicator.

 


Fiscal Deficit
  • The difference between total revenue and total expenditure of the government is termed as fiscal deficit. It is an indication of the total borrowings needed by the government and thus amounts to all the borrowings of the government . While calculating the total revenue, borrowings are not included.
  • The gross fiscal deficit (GFD) is the excess of total expenditure including loans net of recovery over revenue receipts (including external grants) and non-debt capital receipts. The net fiscal deficit is the gross fiscal deficit less net lending of the Central government.
  • Generally fiscal deficit takes place either due to revenue deficit or a major hike in capital expenditure. Capital expenditure is incurred to create long-term assets such as factories, buildings and other development.
  • A deficit is usually financed through borrowing from either the central bank of the country or raising money from capital markets by issuing different instruments like treasury bills and bonds.

 


Revenue Deficit
  • Revenue deficit is concerned with the revenue expenditures and revenue receipts of the government. It refers to excess of revenue expenditure over revenue receipts during the given fiscal year.
  • Revenue Deficit = Revenue Expenditure – Revenue Receipts
  • Revenue deficit signifies that government’s own revenue is insufficient to meet the expenditures on normal functioning of government departments and provisions for various services.
  • In India social expenditure like MNREGA is a revenue expenditure though a part of Plan expenditure.
  • Its targeted to be 2.9% of GPD in the year 2014-15, though the fiscal revenue and budget management act specifies it to be zero by 2008-09

 

 

Foreign Trade Policy 2009-14

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Highlights of Policy 2009-14

Higher Support for Market and Product Diversification
1. Incentive schemes expanded by way of addition of new products and markets.

Foreign Trade Policy 2009-14” class=”read-more content-read-more” href=”https://Sikkim.pscnotes.com/prelims-notes/economy/foreign-trade-policy-2009-14/#more-792″>Read moreForeign Trade Policy 2009-14

Food Security & Public Distribution System(PDS)

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WHO Defines Food security to exists when all people, at all times, have physical, social and economic access to sufficient, safe and nutritious food which meets their dietary needs and food preferences for an active and healthy life.
food securityFood security has three interlinked contents such as :-

  1. Availability of food,
  2. Access to food and
  3. absorption of food.

Food security is a multidimensional concept covering even the  micro level household food security,energy intakes and indicators of malnutrition.

 

Major components of food security are:-

  1. Production and Procurement
  2. Storage
  3. Distribution

Indian Agriculture is rightly called as a gamble with Monsoon, variability in food production and rising population creates food insecurity in the nation and worst effected are the downtrodden section of the society.

While India has seen impressive economic growth in recent years, the country still struggles with widespread poverty and hunger. India’s poor population amounts to more than 300 million people, with almost 30 percent of India’s rural population living in poverty. The good news is, poverty has been on the decline in recent years. According to official government of India estimates, poverty declined from 37.2% in 2004-05 to 29.8% in 2009-10.

Need for Self-Sufficiency:

India suffered two very severe droughts in 1965 and 1966. Food Aid to India was restricted to a monthly basis by USA under the P.L. 480 programme.  The Green Revolution made a significant change in the scene. India achieved self-sufficiency in food grains by the year 1976 through the implementation of the seed- water-fertilizer policy adopted by the Government of India.

Food grain production increased four-fold during 1950-51 and 2001-2002 from 51 million tons to 212 million tones. The country is no longer exposed to real famines. But the regional variation in the success of Green Revolution which was chiefly limited to northern- Western states has lead to the divide in the nation. Evergreen revoloution and Bringing green revolution to eastern India is the need of the hour.

Green revolution was focused on wheat and rice and thus the production of pulses was stagnant.

National Food Security Mission comprising rice, wheat and pulses to increase the production of rice by 10 million tons, wheat by 8 million tons and pulses by 2 million tons by the end of the Eleventh Plan (2011-12). The Mission is being continued during 12th Five Year Plan with new targets of additional production of food grains of 25 million tons of food grains comprising of 10 million tons rice, 8 million tons of wheat, 4 million tons of pulses and 3 million tons of coarse cereals by the end of 12th Five Year Plan.
The National Food Security Mission (NFSM) during the 12th Five Year Plan will have five components

(i) NFSM- Rice;

(ii) NFSM-Wheat;

(iii) NFSM-Pulses,

(iv) NFSM-Coarse cereals and

(v) NFSM-Commercial Crops.

Government through Public Distribution System has tried to counter the problem of food insecurity by providing the food grains through fair price shops.

The central Government through Food Corporation of India has assumed the responsibilities of  procurement,storage,transfer and bulk allocation of food grains to state governments.

pdsThe public distribution system (PDS) has played an important role in attaining higher levels of the household food security and completely eliminating the threats of famines from the face of the country, it will be in the fitness of things that its evolution, working and efficacy are examined in some details.

PDS was initiated as a deliberate social policy of the government with the objectives of:

i) Providing foodgrains and other essential items to vulnerable sections of the society at resonable (subsidised) prices;

ii) to have a moderating influence on the open market prices of cereals, the distribution of which constitutes a fairly big share of the total marketable surplus; and

iii) to attempt socialisation in the matter of distribution of essential commodities.

 

The focus of the Targeted Public Distribution System (TPDS) is on “poor in all areas” and TPDS involves issue of     35 Kg of food grains per family per month for the population Below Poverty Line (BPL) at specially subsidized prices. The TPDS requires the states to Formulate and implement :-

  1. foolproof arrangements for identification of poor,
  2. Effective delivery of food grains to Fair Price Shops (FPSs)
  3. Its distribution in a transparent and accountable manner at the FPS level.

 

 

12 Finance Commission of India

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The Twelfth Finance Commission  was appointed under the chairmanship of C. Rangarajan on November 1, 2002 to make recommendations regarding the distribution between the Union and the States of net proceeds of shareable taxes, the principles which should govern the grants- in-aid of the revenues of States from the Consolidated Fund of India and the measures needed to augment the Consolidated Fund of a State to supplement the resources of local bodies in the State on the basis of the recommendations made by the Finance Commission of the State.

 

Recommendations of the Twelfth Finance Commission

Restructuring public finances

  • Centre and States to improve the combined tax-GDP ratio to 17.6 per cent by 2009-10.
  • Combined debt-GDP ratio, with external debt measured at historical exchange rates, to be brought down to 75 percent by 2009-10.
  • Fiscal deficit to GDP targets for the Centre and States to be fixed at 3 per cent.
  • Revenue deficit of the Centre and States to be brought down to zero by 2008-09.
  • Interest payments relative to revenue receipts to be brought down to 28 per cent and 15 per cent in the case of the Centre and States, respectively.
  • States to follow a recruitment policy in a manner so that the total salary bill, relative to revenue expenditure, net of interest payments, does not exceed 35 per cent.
  • Each State to enact a fiscal responsibility legislation providing for elimination of revenue deficit by 2008-09 and reducing fiscal deficit to 3 per cent of State Domestic Product.
  • The system of on-lending to be brought to an end over time. The long term goal should be to bring down debt-GDP ratio to 28 per cent each for the Centre and the States.

Sharing of Union tax revenues

  •  The share of States in the net proceeds of shareable Central taxes fixed at 30.5 per cent, treating additional excise duties in lieu of sales tax as part of the general pool of Central taxes. Share of States to come down to 29.5 per , when States are allowed to levy sales tax on sugar, textiles and tobacco.
  • In case of any legislation enacted in respect of service tax, after the notification of the eighty eighth amendment to the Constitution, revenue accruing to a State should not be less than the share that would accrue to it, had the entire service tax proceeds been part of the shareable pool.
  • The indicative amount of overall transfers to States to be fixed at 38 per cent of the Centre’s gross revenue receipts.

Local bodies

  • A grant of Rs.20,000 crore for the Panchayati Raj institutions and Rs.5,000 crore for urban local bodies to be given to States for the period 2005-10.
  • Priority to be given to expenditure on operation and maintenance (O&M) costs of water supply and sanitation, while utilizing the grants for the Panchayats. At least 50 per cent of the grants recommended for urban local bodies to be earmarked for the scheme of solid waste management through public-private partnership.

Calamity relief

  •  The scheme of Calamity Relief Fund (CRF) to continue in its present form with contributions from the Centre and States in the ratio of 75:25. The size of the Fund worked out at Rs.21,333 crore for the period 2005-10.
    The outgo from the Fund to be replenished by way of collection of National Calamity Contingent Duty and levy of special surcharges.
  • The definition of natural calamity to include landslides, avalanches, cloud burst and pest attacks.
    Provision for disaster preparedness and mitigation to be part of State Plans and not calamity relief.

Grants-in-aid to States

  •  The present system of Central assistance for State Plans, comprising grant and loan components, to be done away with, and the Centre should confine itself to extending plan grants and leaving it to States to decide their borrowings.
  • Non-plan revenue deficit grant of Rs.56,856 crore recommended to 15 States for the period 2005-10. Grants amounting to Rs.10,172 crore recommended for the education sector to eight States. Grants amounting to Rs.5,887 crore recommended for the health sector for seven States. Grants to education and health sectors are additionalities over and above the normal expenditure to be incurred by States.
  • A grant of Rs.15,000 crore recommended for roads and bridges, which is in addition to the normal expenditure of States.
  • Grants recommended for maintenance of public buildings, forests, heritage conservation and specific needs of States are Rs. 500 crore, Rs.1,000 crore, Rs.625 crore, and Rs.7,100 crore, respectively.

Fiscal reform facility

  •  With the recommended scheme of debt relief in place, fiscal reform facility not to continue over the period 2005-10.

Debt relief and corrective measures

  •  Central loans to States contracted till March,2004 and outstanding on March 31, 2005 amounting to Rs.1,28,795 crore to be consolidated and rescheduled for a fresh term of 20 years, and an interest rate of 7.5 per cent to be charged on them. This is subject to enactment of fiscal responsibility legislation by a State.
  • A debt write-off scheme linked to reduction of revenue deficit of States to be introduced. Under this scheme,
    repayments due from 2005-06 to 2009-10 on Central loans contracted up to March 31,2004 will be eligible for write- off.
  • Central Government not to act as an intermediary for future lending to States, except in the case of weak States,
    which are unable to raise funds from the market.
  • External assistance to be transferred to States on the same terms and conditions as attached to such assistance by external funding agencies.
  • All the States to set up sinking funds for amortization of all loans.
  • States to set up guarantee redemption funds through earmarked guarantee fees.

Others

  •  The Centre should share ‘profit petroleum’ from New Exploration and Licensing Policy (NELP) areas in the ratio of 50:50 with States where mineral oil and natural gas are produced. No sharing of profits in respect of nomination fields and non-NELP blocks.
  • Every State to set up a high level committee to monitor the utilization of grants recommended by the TFC.
    Centre to gradually move towards accrual basis of accounting.

Source:Ministry of Finance

economy

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here are the books, articles and notes for following topics

  • Indian Economy and issues relating to planning, mobilization of resources, growth,
  • development and employment.
  • Inclusive growth and issues arising from it.
  • Government Budgeting.
  • Effects of liberalization on the economy,changes in industrial policy and their effects
  • on industrial growth.
  •   Infrastructure: Energy, Ports, Roads,Airports, Railways etc.
  •   Investment models.

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Impacts of Privatization

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Privatization in generic terms refers to the process of transfer of ownership, can be of both permanent or long term lease in nature, of a once upon a time state-owned or public owned property to individuals or groups that intend to utilize it for private benefits and run the entity with the aim of profit maximization.
ADVANTAGES OF PRIVATIZATION
Privatization indeed is beneficial for the growth and sustainability of the state-owned enterprises.
• State owned enterprises usually are outdone by the private enterprises competitively. When compared the latter show better results in terms of revenues and efficiency and productivity. Hence, privatization can provide the necessary impetus to the underperforming PSUs .
• Privatization brings about radical structural changes providing momentum in the competitive sectors .
• Privatization leads to adoption of the global best practices along with management and motivation of the best human talent to foster sustainable competitive advantage and improvised management of resources.
• Privatization has a positive impact on the financial health of the sector which was previously state dominated by way of reducing the deficits and debts .
• The net transfer to the State owned Enterprises is lowered through privatization .
• Helps in escalating the performance benchmarks of the industry in general .
• Can initially have an undesirable impact on the employees but gradually in the long term, shall prove beneficial for the growth and prosperity of the employees .
• Privatized enterprises provide better and prompt services to the customers and help in improving the overall infrastructure of the country.

DISADVANTAGES OF PRIVATIZATION
Privatization in spite of the numerous benefits it provides to the state owned enterprises, there is the other side to it as well. Here are the prominent disadvantages of privatization:
• Private sector focuses more on profit maximization and less on social objectives unlike public sector that initiates socially viable adjustments in case of emergencies and criticalities .
• There is lack of transparency in private sector and stakeholders do not get the complete information about the functionality of the enterprise .
• Privatization has provided the unnecessary support to the corruption and illegitimate ways of accomplishments of licenses and business deals
ADVANTAGES AND DISADVANTAGES OF PRIVATISATION IN INDIA

• Privatization loses the mission with which the enterprise was established and profit maximization agenda encourages malpractices like production of lower quality products, elevating the hidden indirect costs, price escalation etc..
• Privatization results in high employee turnover and a lot of investment is required to train the lesser-qualified staff and even making the existing manpower of PSU abreast with the latest business practices .
• There can be a conflict of interest amongst stakeholders and the management of the buyer private company and initial resistance to change can hamper the performance of the enterprise .
• Privatization escalates price inflation in general as privatized enterprises do not enjoy government subsidies after the deal and the burden of this inflation effects common man

 

Animal husbandry of Sikkim

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Animal husbandry of Sikkim

  • Livestock sector in Sikkim is highly livelihood intensive, agriculture along with livestock is the single largest employer in the state, over 80 per cent of the rural households in the state own livestock and earn supplementary incomes from them, distribution of livestock holdings is less iniquitous – over 85 per cent of all species of livestock are owned by the marginal and small holders.
  • For this reason, income from livestock is more equitably distributed. Livestock sector contribution to Sikkim’s Gross Domestic Product in 2002 was over 6 per cent.
  • In the Sikkim context, livestock has immense potential for diversification in agriculture, offering gainful employment and incremental incomes to tens of thousands of landless, marginal and small farmers.Animal husbandry of Sikkim

Livestock wealth of Animal husbandry of Sikkim

  • Livestock production in Sikkim is predominantly the endeavour of the small producers.
  • Marginal and small farmers own nearly 85 per cent of all species of livestock and poultry, even though they own or operate less than 55 per cent of the farmland in Sikkim.
  • Even the tiny organised poultry industry in Sikkim is made up of small broiler farms.
  • Over 80 per cent of all rural households own livestock (often a mix of several species) as part of the traditional mixed crop-livestock farming system: earning substantial incomes and enriching family diets with nutrient rich animal products.

Contribution of livestock to Sikkim economy

  • Contribution of LS to State economy- 8.16%GSDP
    • Employment in LS 4.5% growth rate per annum
    • Milk is the second largest agriculture produce next to maize
    • 70 % main workforce
  • The Sikkim LSRE Sector Analysis however shows that over 60 per cent of the rural household income in Sikkim comes from livestock farming.

NEW LIVESTOCK SECTOR POLICY (GOALS)

On the basis of the detailed Sector Analysis carried out by the State Livestock Review Exercise in 2003-04, and in the light of the facts placed above, it appears that the following will be the most appropriate policy considerations for the growth of livestock sector in Animal husbandry of Sikkim:

  • Use the livestock sector as a growth engine for the social and economic development of the rural population, increasing rural selfemployment opportunities, enabling steady growth of rural household income and improved quality of life in the Sikkim villages.
  • Enable the small producers to actively participate in the process of development by equipping them with appropriate skills and technologies to transform the growing challenges of the market place into opportunities to build comparative and competitive advantages through improved livestock quality and higher productivity.
  • Ensure the ecological and environmental sustainability of the livestock sector growth and modernisation; constantly monitoring the environmental impact of the growth process and designing policies and programmes to effectively mitigate their adverse impact

Department of Animal Husbandry Livestock, Fisheries and Veterinary Services, Government of Sikkim

Main Objectives:

Major objectives and strategies followed for livestock development during the years are as under:

  • Expand and strengthen infrastructure for artificial insemination, which improve its efficiency and effectiveness using frozen semen technology for crossbreeding purposes.
  • Create a seed stock of qualitatively superior bulls, which would form the nucleus germ-plasm pool to build milch herd of high production cattle.
  • Bring about genetic improvement of important livestock breeds through selective breeding and crossbreeding of low production non-descript stock, both for milk and for draught purposes. Steps are taken to conserve important indigenous breeds of the State.
  • Establish linkage between rural milk producers and urban consumers by replicating the “Anand Pattern” dairy cooperatives in the State and lessen the adverse impact of seasonal imbalances in milk production and marketing.
  • Improve the productivity of pasture lands by introducing improve fodder seeds and increased use of wasteland for fodder production.
  • Optimise the use of crop residue through provision of appropriate supplements and conservation of green fodder.
  • Promote stall-feeding in order to reduce overgrazing and degradation of village grazing lands.
  • Develop adequate animal health services for protection of livestock, with special emphasis on eradication of most prevalent diseases in the State
  • Explore the marketing avenues for sale of livestock products like wool, meat, eggs and day old chicks, cheese and utilize by-products of slaughter waste as well as to find export-oriented programmes of the State livestock products.

 

Goat Farming of Animal husbandry of Sikkim

  • Goat is known as ‘Poor man’s cow’ in India and is a very important component in dry land farming system.
  • Marginal or undulating lands unsuitable for other types of animals like cow or buffalo, goat is the best alternative.
  • With very low investments goat rearing can be made in to a profitable venture for small and marginal farmers.

Sheep farming of Animal husbandry of Sikkim

  • Few countries in the world have no sheep.
  • They are found in tropical countries and in the arctic, in hot climates and in the cold, on the desert and in humid areas.
  • There are over 800 breeds of sheep in the world, in a variety of sizes, shapes, types and colours.
  • Sheep were domesticated long before the dawn of recorded history.
  • Wool fibres have been found in remains of primitive villages of Switzerland that date back an estimated 20000 years.
  • Egyptian sculpture dating 4000-5000 B.C. portrays the importance of this species to people.
  • Much mention is made in the Bible of flocks, shepherds, sacrificial lambs, and garments made of wool.
  • The Roman empire prized sheep, anointed them with special oils, and combed their fleece to produce fine quality fibres that were woven into fabric for the togas of the elite.
  • Perhaps the first ruminants domesticated by man along with goats, sheep are a very valuable and important asset to mankind.
  • Domesticated sheep : phylum Chordata (backbone), class Mammalia (suckle their young), order Artiodactyla (hooved, even-toed), family Bovidae(ruminants), genus Ovis (domestic and wild sheep), and species Ovisaries

Emu rearing

  • Emus belong to ratite group and have high economic value for their meat, eggs, oil, skin and feathers.
  • These birds are adaptable to varied climatic conditions.
  • Although emu and ostrich were introduced in India, emu farming has gained much importance.
  • Ratite birds have poorly developed wings and include emu, ostrich, rhea, cassowary and kiwi.
  • Emu and ostrich are reared commercially in many parts of the world for their meat, oil, skin and feathers, which are of high economic value.
  • The anatomical and physiological features of these birds appear to be suitable for temperate and tropical climatic conditions.
  • These birds can be well maintained on extensive (ranches) and semi intensive rearing systems with reasonably high fibrous diets.
  • United State, Australia and China are leading in emu farming. Emu birds are well adapted to Indian climatic conditions.

Features of Emu

  • Emu has long neck, relatively small naked head, three toes and body covered with feathers Birds initially have longitudinal stripes on body (0-3 months age) then gradually turn to brown by 4-12 months age.
  • Mature birds have bare blue neck and mottled body feathers. Adult bird height is about 6 feet with a weight of 45-60 kg. Legs are long covered with scaly skin adaptable to hardy and dry soil.
  • Natural food of emu is insects, tender leaves of plant and forages. It also eats different kinds of vegetables and fruits like carrot, cucumber, papaya etc. Female is the larger of the two, especially during breeding season when the male may fast.
  • The female is the dominant member of the pair.
  • Emus live for about 30 years.
  • It may produce eggs for more than 16 years.
  • Birds can be maintained as flock or pair.

Rabbit Farming of Animal husbandry of Sikkim

Why Rabbit Farming?

  • With available small investment and in a small place rabbit farming gives more income
  • Rabbits eat ordinary feed and convert them into a protein rich high quality meat
  • Apart from meat production they can also be reared for hide and fur.

Rabbit Farming is for whom?

  • For landless farmers, uneducated youth and women, rabbit farming gives an additional income as a part time job

Advantages of Rabbit Farming of Animal husbandry of Sikkim

  • By rabbit rearing one can produce a quality protein rich meat for his own family
  • Rabbits can be fed with easily available leaves, waste vegetables, grains available in the home
  • Growth rate in broiler rabbits is very high. They attain 2 kgs at the age of three months
  • Litter size (Number of young ones born/ kindling) in rabbits is high (around 8-12)
  • When compared to the other meats rabbit meat contain high protein (21%) and less fat (8%). So this meat is suitable for all age groups from adults to children

 

Quail Farming of Animal husbandry of Sikkim

Advantages of quail farming

  • Requires minimum floor space
  • Needs low investment
  • Quails are comparatively sturdy birds
  • Can be marketed at an early age ie. five weeks
  • Early sexual maturity – starts laying eggs in about six to seven weeks of age
  • High rate of egg laying -280 eggs per year
  • Quail meat is tastier than chicken and has less fat content. It promotes body and brain development in children.
  • Nutritionally, the quail eggs are on par with that of chicken eggs. Moreover, they contain less cholesterol.
  • Quail meat and eggs are a nutritious diet for pregnant and nursing mothers.

 

 

Turkey farming of Animal husbandry of Sikkim

Breeds of turkeys in India

The varieties are as follows

  1. Board breasted bronze:The basic plumage color is black and not bronze. The females have black breast feathers with white tips, which help in sex determination as early as 12 weeks of age.
  2. Board breasted white:This is a cross between Board breasted bronze and White Holland with white feathers. White plumage turkeys seems to be suitable Indian-Agro climatic conditions as they have better heat tolerance and also good and clean in appearance after dressing.
  3. Beltsville small white: It closely resembles the Board breasted white in color and shape but smaller in size. Egg production, fertility and hatchability tend to be higher and broodiness tends to be lower than heavy varieties.
  4. Nandanam turkey 1: This variety is a cross between the black desi variety and exotic Beltsville small white variety. It is suited for Tamil Nadu climatic conditions

Marketing of turkeys

The body weight of adult male and adult female turkey at the 16th week is 7.26 kg and 5.53kg. This is optimum weight for marketing the turkeys.

Turkey egg:

  • The turkey will start lay from the 30th week of age and its production period is 24 weeks from the point of lay.
  • Under proper feeding and artificial lightening management turkey hens lay as much as 60-100 eggs annually.
  • Nearly 70 percent of the eggs will be laid in the afternoon.
  • The turkey eggs are tinted and weigh about 85 gms.
  • Egg is noticeably pointed at one end with strong shell.
  • The protein, lipid carbohydrate and mineral content of turkey egg are 13.1%, 11.8%, 1.7% and 0.8% respectively. The cholesterol is 15.67-23.97 mg/gm of yolk

Turkey meat:

  • People prefer turkey meat because of its leanest nature.
  • The protein, fat, energy value of turkey meat are 24%,6.6%, 162 Calories per 100 gm of meat.
  • Mineral like potassium, calcium, magnesium, iron, selenium, zinc and sodium are present.
  • It is also rich in essential amino acids and vitamins like niacin, vitamin B6 and B12.
  • It is rich in unsaturated fatty acids and essential fatty acids and low in cholesterol.
  • A market study shows that a male turkey sold at 24 weeks of age weighing 10 to 20 kg with expenditure of Rs.300 to 450 will give a profit of Rs. 500 to 600.
  • Likewise a female will give a profit of Rs.300 to 400 in a span of 24 weeks time. Besides, the turkey can be reared in scavenging and semi-scavenging conditions also.

 

PIG FARMING of Animal husbandry of Sikkim

Advantages of pig rearing

  • Pigs convert inedible feeds, forages, certain grain byproducts obtained from mills, meat by products, damaged feeds and garbage into valuable nutritious meat. Most of these feeds are either not edible or not very palatable to human beings
  • Pig grows fast and is a prolific breeder, farrowing 10 to 12 piglets at a time. It is capable of producing two litters per year under optimal management conditions
  • The carcass return is quite high ie. 60-80 percent of live body weight
  • With a small investment on building and equipment, proper feeding and sound disease control programme the farmer can profitably utilize his time and labour in this subsidiary occupation
  • The faeces of pigs is used as a manure to maintain soil fertility

Pig farming- for whom?

  • Small and landless farmers
  • Part time earning for educated youth having agriculture as occupation
  • Uneducated / Unemployed youth
  • Farm women

Breeds

The indigenous pig has been the basis used for pig production for a long period of time. It is small in size. Improved breeds are now being used for grading up the form the basis for pig production in the rural areas.