💥Join UPSC 2027,2028 Mentorship (July Batch) + XFactor Notes & Microthemes PDF
Talk to Mentor

Civilsdaily

Login

Archives: News

  • Tax Reforms

    Stamp Duty on Mutual Fund Purchases

    1 July 2020 | PIB | Economics
    Mains GS3: Indian Economy

    The Amendments in the Indian Stamp Act, 1899 has been brought through Finance Act 2019 for Rationalized Collection Mechanism of Stamp Duty across India with respect to Securities Market Instruments.

    Up till now, we knew that stamp duties are levied on property transactions, registrations etc. With the Finance Act 2019, the stamp duties are also levied on Mutual Funds.

    What is Stamp Duty?

    • Stamp duty is a legal tax payable in full and acts as evidence for any sale or purchase of a property. It is payable under Section 3 of the Indian Stamp Act, 1899.
    • The levy of stamp duty is a state subject and thus the rates of stamp duty vary from state to state.
    • The Centre levies stamp duty on specified instruments and also fixes the rates for these instruments.
    • It is usually paid by the buyer with regardless of agreement and in case of property exchange, both seller and the buyer has to share the stamp duty equally.
    • A stamp duty paid instrument/document is considered a proper and legal instrument/document and has evidentiary value and is admitted as evidence in courts.

    What is the move?

    • Beginning July 1, all shares and mutual fund purchases will attract a stamp duty of 0.005 per cent and any transfer of security will attract a stamp duty of 0.015 per cent.
    • The government had introduced changes to the Stamp duty Act last year by introducing a uniform rate of stamp duty on the trading of shares and commodities.
    • All categories of mutual funds (except for ETFs) will attract stamp duty for the first time.
    • Shares purchased by individuals at stock exchanges were charged stamp duty at different rates by respective states.

    Where all will it be applicable?

    • The stamp duty will be applicable on all transactions, including shares, debt instruments, commodities and all categories of mutual fund schemes.
    • As for mutual funds, it will be applicable on all fresh purchases, including the fresh monthly purchases in previously registered Systematic Investment Plans.
    • It will also be applicable if investors switch from one scheme to another and also in case of dividend reinvestment transactions.
    • Transfers of units from one Demat account to another, including market/off-market transfers, will also attract stamp duty.

    How does it impact the investor?

    • The impact on long-term investments by a retail investor is nominal.
    • Since the stamp duty will be charged a one-time charge, if an investor invests Rs 1 lakh in a mutual fund scheme or in stock and holds it for two years, he will have to pay a duty of only Rs 5.
    • In fact, it will be marginally lower as the stamp duty is applicable on the net investment value i.e gross investment amount less than any other deduction like transaction charge.
    • There is no duty at the time of redemption.

    What about big investors?

    • The impact is higher for investors with short-term investment horizons such as banks and corporates who invest in liquid and overnight schemes of mutual funds.

    How much revenue can it generate for the government?

    • In the financial year 2019-20, the mutual fund industry mobilized aggregate funds of over Rs 188 lakh crore.
    • A high portion of that was in overnight funds or liquid funds.
    • A 0.005 per cent stamp duty on this amount works out to Rs 940 crore.
    • If the industry continues to mobilise funds to the tune of Rs 190 lakh crore or higher, it will generate revenues of nearly Rs 1,000 crore for the government from mutual fund transactions itself.

    Back2Basics: Mutual Funds

    • MF is a trust that collects money from a number of investors who share a common investment objective.
    • Then, it invests the money in equities, bonds, money market instruments and/or other securities.
    • Each investor owns units, which represent a portion of the holdings of the fund.
    • The income/gains generated from this collective investment are distributed proportionately amongst the investors after deducting certain expenses, by calculating a scheme’s “Net Asset Value or NAV.
    • It is one of the most viable investment options for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
    • All funds carry some level of risk. With mutual funds, one may lose some or all of the money invested because the securities held by a fund can go down in value.

    Get an IAS/IPS ranker as your 1: 1 personal mentor

  • Global Geological And Climatic Events

    The lost continent of Zealandia

    1 July 2020 | | Environment
    Mains GS1: GS1-15.Geographical features and their location- Changes in critical geographical features (including water-bodies and ice-caps) and in flora and fauna and the effects of such changes.

    A new map has revealed the lost continent of Zealandia.

    The ocean relief can be divided into various parts such as Continental Shelf, Continental Slope, Continental Rise or Foot, Deep Ocean basins, Abyssal plains & Abyssal Hills, Oceanic Trenches, Seamounts and Guyots.

    Revise these ocean bottom relief features from your basic references.

    Also revise India’s Deep Ocean Mission.

    About Zealandia

    • Zealandia — or Te Riu-a-Māui, as it’s referred to in the indigenous Māori language — is a 2 million-square-mile (5 million square kilometres) continent east of Australia, beneath modern-day New Zealand.
    • Scientists discovered the sprawling underwater mass in the 1990s, then gave it formal continent status in 2017.
    • Still, the “lost continent” remains largely unknown and poorly studied due to its Atlantean geography.

    Its formation

    • It is a group of submerged pieces of crust that separated from the ancient supercontinent Gondwana about 85 million years ago.
    • Gondwana was formed when Earth’s ancient supercontinent, Pangea, split into two fragments.
    • Laurasia was transformed into North America, Asia, and Europe, while Gondwana became Africa, South America, Australia, and Antarctica.
    • But land masses continued to be rearranged afterwards, with Zealandia breaking off Gondwana.

    Data revealed by the new map

    • The new maps reveal Zealandia’s bathymetry (the shape of the ocean floor) as well as its tectonic history, showing how volcanism and tectonic motion have shaped the continent over millions of years.
    • Data for the bathymetric map was provided by the Seabed2030 project — a global effort to map the entire ocean floor by 2030.

    Why call it a continent?

    • Zealandia was classified as a “microcontinent,” as the island of Madagascar, until 2017.
    • But according to Mortimer, it has all the requirements to be classified as a continent.
    • It has defined boundaries; it occupies an area of over one million square kilometres and is elected above the ocean crust.

    Also read: https://www.civilsdaily.com/news/seabed-2030-project/

    Get an IAS/IPS ranker as your 1: 1 personal mentor

  • Animal Husbandry, Dairy & Fisheries Sector – Pashudhan Sanjivani, E- Pashudhan Haat, etc

    G4 Flu virus and it’s pandemic potential

    1 July 2020 | Prelims Only | Governance
    Mains GS2: GS2-13.Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.

    In new research, scientists from China – which has the largest population of pigs in the world – have identified a “recently emerged” strain of influenza virus that is infecting Chinese pigs and that has the potential of triggering a pandemic.

    Practice question for mains:

    Q.What are zoonotic diseases? Why China has emerged as the epicentre of global outbreaks of zoonotic disease?

    G4 Flu

    • Named G4, the swine flu strain has genes similar to those in the virus that caused the 2009 flu pandemic.
    • The scientists identified the virus through surveillance of influenza viruses in pigs that they carried out from 2011 to 2018 in ten provinces of China.
    • They also found that the G4 strain has the capability of binding to human-type receptors (like, the SARS-CoV-2 virus binds to ACE2 receptors in humans).
    • The virus was able to copy itself in human airway epithelial cells, and it showed effective infectivity and aerosol transmission.

    Swine industry is the new hotspot for zoonoses

    • The scientists report that the new strain (G4) has descended from the H1N1 strain that was responsible for the 2009 flu pandemic.
    • Pigs are intermediate hosts for the generation of pandemic influenza virus.
    • Thus, systematic surveillance of influenza viruses in pigs is a key measure for pre-warning the emergence of the next pandemic influenza.

    Back2Basics: 2009 swine flu pandemic

    • The WHO declared the outbreak of type A H1N1 influenza virus a pandemic in 2009 when there were around 30,000 cases globally.
    • It was caused by a strain of the swine flu called the H1N1 virus, which was transmitted from human to human.
    • Influenza viruses that commonly circulate in swine are called “swine influenza viruses” or “swine flu viruses”.
    • Like human influenza viruses, there are different subtypes and strains of swine influenza viruses. Essentially, swine flu is a virus that pigs can get infected by.
    • The symptoms of swine flu include fever, cough, sore throat, body aches, headaches, chills and fatigue.

    Get an IAS/IPS ranker as your 1: 1 personal mentor

  • New Species of Plants and Animals Discovered

    Species in news: Assam keelback snake

    1 July 2020 | | Environment
    Mains GS3: GS3-18.Conservation, Environmental Pollution and Degradation, Environmental Impact Assessment.

    More than a century after it was first seen, the Assam keelback — a snake species endemic to the region — was rediscovered in 2018 at the Poba Reserve Forest (RF) by a team from Wildlife Institute of India (WII).

    Try this question from CSP 2018:

    Q.In which one of the following State Pakhui Wildlife Sanctuary is located?

    (a) Arunachal Pradesh (b) Manipur (c) Meghalaya (d) Nagaland

    Assam Keelback Snake

    • The species is small — about 60 cm long, brownish, with a patterned belly.
    • This particular keelback does not belong to the generalized keelback snake of India but is rather a unique genus (Herpetoreas).
    • It was discovered 129 years ago by Samuel Edward Peel, a British tea planter based in Upper Assam.
    • The snake’s ‘lost’ status has a lot to do with the habitat it occupies — in this case, a lowland evergreen forest.
    • These forests have been selectively degraded during the last 100 years: tea plantations have been made, selective logging has taken place, and many other activities such as oil exploration and coal mining.

    Is the snake under threat?

    • Most snakes and other reptiles are categorised as ‘data deficient’ in the IUCN list.
    • There is practically no information available about it and it is difficult to determine its status.

    Get an IAS/IPS ranker as your 1: 1 personal mentor

  • New Species of Plants and Animals Discovered

    Species in news: Globba Andersonii Plant

    1 July 2020 | Species | Environment
    Mains GS3: GS3-18.Conservation, Environmental Pollution and Degradation, Environmental Impact Assessment.

    A team of researchers have “rediscovered” a rare species called Globba andersonii from the Sikkim Himalayas near the Teesta River valley region after a gap of nearly 136 years.

    Try this question from CSP 2016:

    Q.With reference to ‘Red Sanders’, sometimes seen in the news, consider the following statements:

    1. It is a tree species found in a part of South India.
    2. It is one of the most important trees in the tropical rain forest areas of South India.

    Which of the above statements is/are correct?

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

    Globba Andersonii

    IUCN status: Critically Endangered

    • Globba andersonii is characterised by white flowers, non-appendaged anthers (the part of a stamen that contains the pollen) and a “yellowish lip”.
    • The plant, known commonly as ‘dancing ladies’ or ‘swan flowers’ was thought to have been extinct until its “re-collection”, for the first time since 1875.
    • The earliest records of the collection of this plant were dated between the period 1862-70 when it was collected by Scottish botanist Thomas Anderson from Sikkim and Darjeeling.
    • Then, in 1875, the British botanist Sir George King, had collected this taxon from the Sikkim Himalayas.

    Get an IAS/IPS ranker as your 1: 1 personal mentor

  • Digital India Initiatives

    Share the public data with public

    30 June 2020 | | Governance
    Mains GS2: Governance, Transparency & Accountability, Citizens Charters

    Open access to public data is essential for policy analysis and evidence-based policymaking. Policy framework for sharing of public data by the government is also looked into in this article. 

    How Open Data Charter came about

    • Open-source software enthusiasts and civil society activists in the U.S. and U.K. came with a demand to unlock the data gathered by governments for unfettered access and reuse by citizens.
    • Data collected at public expense must belong to the people. This is the principle for the Open Data Charter adopted by 22 countries since 2015.
    • It calls upon governments to disseminate public data in open digital formats.
    • In return, the Charter argues, governments can expect “innovative, evidence-based policy solutions”.

    Steps toward making data accessible-NDSAP

    •  The National Data Sharing and Accessibility Policy (NDSAP) was adopted in 2012.
    • It was a step towards making non-sensitive government data accessible online.
    • The main thrust of the policy is to “promote data sharing and enable access to Government of India owned data for national planning, development and awareness”.
    • The implementation guidelines for NDSAP include ideals such as “openness, flexibility, transparency, quality” of data.
    • It aims to facilitate “access to Government of India shareable data in machine-readable form”.
    • The guidelines prescribe open digital formats suitable for analysis and dissemination.
    • Opaque formats such as the portable document format and the image format are discouraged.
    • As part of the Open Government Data (OGD) initiative, data.gov.in was launched in 2012.
    • However, the implementation has lagged far behind its stated objectives.

    How data could have helped policy making in Covid pandemic

    • The district-wise, demographic-wise case statistics and anonymous contact traces released in the public domain would have proved useful.
    • Reliable model forecasts of disease spread and targeted regional lockdown protocols could have been generated.
    • Model forecasts have limitations, but models without inputs from empirical data are even more unreliable.

    Violation of OGD in data shared for pandemic

    • Principles of OGD notwithstanding, sufficiently granular infection data are not available.
    • Violating the data format guidelines, OGD portal provides COVID-19 data only as a graphic image unsuitable for any analysis.
    • The Indian Council of Medical Research and mygov.in fare no better.
    • They too do not publish district-wise statistics, and the available data are not in usable formats.

    Examples from other countries

    • The data portals of Canada, the U.K. and the U.S. present district-wise COVID-19 cases data.
    • These countries also provide data about the emergent effects on mental health, jobs and education.
    • According to the latest report of the Open Data Barometer, an independent group measuring the impact of open data, these nations lead the pack.
    • India is a contender to reach the top bracket and not a laggard.

    Way forward

    • The government must provide the impetus and incentive to exploit this voluminous data by invigorating the dated national data portal.
    • Every department must be mandated to share substantive data respecting privacy concerns.
    • The government should look within for examples of creative outcomes of opening up the database.
    • Start-ups have built novel applications using Indian Railways data to provide ticket confirmation prediction and real-time train status.

    Consider the question “Examine the provisions for data sharing and accessibility in India. Also, elaborate how the sharing of public data could help in policymaking.”

    Conclusion

    Sharing public data is a way to create beneficial social impact. So, the government must ensure the implementation of policy measures and encourage the analysis of public data to come at the informed policy decision.

    Get an IAS/IPS ranker as your 1: 1 personal mentor

  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

    Why spending on infrastructure matters

    30 June 2020 | op-ed snap | Economics
    Mains GS3: Indian Economy

    Spending on infrastructure can help kickstart the economy. This article highlights the importance of spending on infrastructure and suggests ways to find resources.

    Gloomy prospects for Indian economy

    • The IMF estimates the global economy to contract by -4.9 per cent this year.
    • It could still contract should the virus not recede in the latter half of 2020.
    • As for the Indian economy, growth has been decelerating for the past eight quarters.
    • Indications by the RBI suggest that growth is contracting for the first time in four decades.
    •  We must address the elephant in the room — the need to further aid a demand recovery as the economy begins to reopen.

    Components of Indias growth

    • Growth in the Indian economy has been dominated by the following components respectively-
    • 1) Consumption.
    • 2) It is followed by investments.
    • 3) Government expenditure.
    • 4) Net exports.
    • However, consumption and investment demand have been subdued for the past few quarters, dragging down overall growth.
    • Keynesian theory suggests that for aggregate demand to increase, at least one of the components of GDP needs to expand.

    Declining consumption demand

    • These two components were perhaps casualties of a sharp deceleration in credit supply.
    •  The IL&FS debacle in September 2018 only made matters worse.
    • The NBFC sector, suffered from funding crunches leading to a further squeeze in credit supply.
    • Freeze in credit supply impacted consumption demand.
    • This deceleration is likely to exacerbate going forward.

    Declining rate of investment

    • Broad-based utilisation levels, as represented by the RBI, dropped to 68.6 per cent in Q3FY20.
    • This is well below the 75 per cent benchmark for new capacity addition, implying suboptimal levels of fresh investments.
    • A higher rate of investments is essential for sustainable economic growth.
    • The deteriorating economic scenario and increasing levels of debt with rating downgrades for industries are likely to aggravate existing problems.

    Importance of expenditure on spending on infrastructure

    • Government expenditure is the only exogenously determined element in a Keynesian framework.
    • The positive push required to aid a demand recovery has to come through the government.
    • However, with sparse resources that India has, we must deploy funds that yield a higher return.
    • One key area that can provide the necessary support is infrastructure investment.
    • A study by S&P Global estimates 1 per cent of GDP spend on infrastructure can boost real growth by 2 per cent while creating 1.3 million direct jobs.
    • Historically, countries have used infrastructure to provide counter-cyclical support to the economy.
    • Notably, infrastructure has strong links to growth and with both supply and demand-side features that help generate employment and long-term assets.
    • India already has an upper hand here.
    • Front-loading key projects with greater visibility from the recently announced National Infrastructure Pipeline (NIP) could aid in a quicker recovery.

    Special infrastructure bond

    •  India already has several institutions for infrastructure development purposes from the likes of IIFCL, IRFC to more recently NIIF.
    • Taking a cue from China, floating special infrastructure bonds through this organisation to accelerate the funding of the NIP could aid a speedier recovery.
    • Further, taking a page from the New Deal and its Reconstruction Finance Corporation, this institution’s ability for greater leverage can be used to make amends to our credit channels.
    • This ability could also be used for the development of state government and urban local body bond markets.
    • This could help businesses and bankers overcome risk aversion and bring back trust in the system while financing new paths for growth.

    Consider the question “Highlight the role of consumption and investment as the two largest contributors to India’s growth and explain how spending on the infrastructure could help revive the economy hit hard by the pandemic”

    Conclusion

    The exogenous component in the form of spending by the government could step-in in a greater way, perhaps because, it is the only one that can.

    Get an IAS/IPS ranker as your 1: 1 personal mentor

  • Foreign Policy Watch: India-China

    Resistance to China is going to be definitive moment for India

    30 June 2020 | op-ed snap | International Relations
    Mains GS2: India & Its Neighborhood – Relations

    How India overcomes the challenge posed by China would have far-reaching effects. Role of Russia and the U.S. is important for India. This article discusses these factors and the significance of the outcome of the conflict started at Galwan. 

    Two takes on India’s China policy

    • Following Galwan encounter, there are two views about the future of India’s China policy.
    • Some say that structural constraints would limit dramatic changes in policy once the heat of the moment dissipates.
    • While others say that the Galwan clash comes amidst the deepening crisis in bilateral relations over the last decade.
    • Stalled boundary talks, a widening trade deficit, the clash of national interests in the region, and Chinese opposition to India’s global aspirations have together strained Sino-Indian relations.
    • Galwan is the last straw, the argument goes, that broke the camel’s back.

    So, what will be the outcome

    •  The relationship is likely to depend on how the current military confrontation in Ladakh is resolved.
    • If it ends with a quick return to the status quo that prevailed in April, inertia is likely to limit radical policy departures.
    • If the Ladakh crisis ends in a setback for India, the pressure on Delhi to radically reorient its China policy will mount.

    What if the standoff continues?

    • In that case strengthening India’s military and political hand against China is the immediate objective of Delhi’s post-Galwan diplomacy.
    • The long term steps suggested include the construction of a military alliance with the US and other Western partner.
    • As as well as economic decoupling and diversification.
    • Short term steps are about being able to stare down the Chinese in the current military confrontation and hold its ground.

    Role of Russia

    • Three decades after the collapse of the Soviet Union, India’s dependence on Russian arms remains substantive.
    • Rajnath Singh’s visit to Moscow amidst the crisis with China underlines the weight of the past in India’s security policy.
    • India is also pressing other major defence suppliers, including France and Israel, to accelerate deliveries on contracted defence equipment.
    • There have been reports from Russia, that China is pressing Moscow not to sell the new fighter aircraft to India.
    • Russia and China are strong strategic partners today.
    • While the past suggests India has a special claim to Russian affections, there is a Sino-Russian strategic cohabitation today in opposition to America
    • How Russia responds to India’s request will have a major bearing on the future evolution of Delhi’s ties with Moscow.

    Role of the U.S.

    • Unlike Russia’s public stance of neutrality between India and China, Washington has come out in favour of Delhi.
    • There was vocal public support of the US defence and foreign policy establishment against Chinese aggression at Galwan.
    •  Media reports from Delhi say the US is already supplying valuable real-time military intelligence of value to the Indian armed forces.
    • Washington is apparently willing to do more but is letting Delhi decide the pace and intensity of that cooperation.

    Challenges in the U.S. cooperation

    • The uncertain political moment in the US amidst the general election scheduled for early November can’t be underestimated.
    • A change of guard in Washington will certainly slow things down as the new administration settles down and reviews its priorities.
    • America’s stakes in China are far higher than Russia’s.
    • Profound economic interdependence of the U.S. and China is a significant political constraint on the US’s options.
    • On deeper military cooperation with Washington, Delhi would want to move with care rather than rush into it as it did in 1962.

    How will outcomes of the crisis matter for India

    • If Delhi comes out of this crisis wounded, its troubles at home and the world will mount significantly.
    • A weakened India will find recasting its China policy even harder.
    • But victorious India will find its international political stock rising and its options on China expanding.
    •  Successful Indian resistance to China’s expansionism would be a definitive moment in the geopolitical evolution of Asia.
    • The stakes for India and the world, then, are far higher today than in 1962.

    Consider the question “Examine the issues that introduce friction in India-China relations. Also, elaborate on the scope of India’s alliance with the U.S to counter the challenges posed by China.”

    Conclusion

    Outcomes of the resistance will have a profound impact on India’s standing and India’s destiny.

    Get an IAS/IPS ranker as your 1: 1 personal mentor

  • Primary and Secondary Education – RTE, Education Policy, SEQI, RMSA, Committee Reports, etc.

    What is the STARS Project?

    30 June 2020 | | Governance
    Mains GS2: GS2-13.Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.

    The World Bank has approved a $500 million Strengthening Teaching-Learning and Results for States Program (STARS) to improve the quality and governance of school education in six Indian states.

    Try this question:

    Q. The STARS Project recently seen in news is an initiative of:

    World Bank/ Bill and Melinda Gates Foundation / UNECOSOC/ UNICEF

    STARS Project

    • The STARS project will be implemented through the Samagra Shiksha Abhiyan, the flagship central scheme.
    • The six states include- Himachal Pradesh, Kerala, Madhya Pradesh, Maharashtra, Odisha and Rajasthan.
    • It will help improve learning assessment systems, strengthen classroom instruction and remediation, facilitate school-to-work transition, and strengthen governance and decentralized management,
    • Some 250 million students (between the age of 6 and 17) in 1.5 million schools and over 10 million teachers will benefit from the STARS program.
    • STARS will support India’s renewed focus on addressing the ‘learning outcome’ challenge and help students better prepare for the jobs of the future – through a series of reform initiatives.

    Reform initiatives under STARS

    • Focusing more directly on the delivery of education services at the state, district and sub-district levels by providing customized local-level solutions towards school improvement.
    • Addressing demands from stakeholders, especially parents, for greater accountability and inclusion by producing better data to assess the quality of learning.
    • Equipping teachers to manage this transformation by recognizing that teachers are central to achieving better learning outcomes. The program will support individualized, needs-based training for teachers that will give them an opportunity to have a say in shaping training programs and making them relevant to their teaching needs.
    • Investing more in developing India’s human capital needs by strengthening foundational learning for children in classes 1 to 3 and preparing them with the cognitive, socio-behavioural and language skills to meet future labour market needs.

    Issues with the project

    • First, it fails to address the basic capacity issues: major vacancies across the education system from District Institutes of Education and Training (DIETs), district and block education offices, to teachers in schools, remain unaddressed.
    • Without capable and motivated faculty, teacher education and training cannot be expected to improve.
    • Second, the Bank ignores that decentralizing decision-making requires the devolution of funds and real decision-making power.
    • Greater decentralisation can allow accountability to flow to the people rather than to supervising officers.
    • It requires not just investment in the capacity of the front-line bureaucracy but also in increasing their discretionary powers while fostering social accountability.

    Get an IAS/IPS ranker as your 1: 1 personal mentor

  • Food Processing Industry: Issues and Developments

    PM Formalization of Micro Food Processing Enterprises (PM FME) Scheme

    30 June 2020 | PIBSchemes | Economics
    Mains GS3: GS3-10.Food processing and related industries in India-scope’ and significance, location, upstream and downstream requirements, supply chain management

    The Ministry for Food Processing Industries (MoFPI) has launched the PM Formalization of Micro Food Processing Enterprises (PM FME) as a part of “Atmanirbhar Bharat Abhiyan”.

    Practice question for mains:

    Q.What is the PM FME Scheme? Discuss its potential to neutralize various challenges faced by India’s unorganized food industries.

    PM FME Scheme

    • It aims to provide financial, technical and business support for upgradation of existing micro food processing enterprises.
    • It is a centrally sponsored scheme to be implemented over a period of five years from 2020-21 to 2024-25 with an outlay of Rs 10,000 crore.
    • The expenditure under the scheme would to be shared in 60:40 ratios between Central and State Governments, in 90:10 ratios with NE and the Himalayan States, 60:40 ratio with UTs with the legislature and 100% by Centre for other UTs.

    Features of the scheme

    • The Scheme adopts One District One Product (ODODP) approach to reap the benefit of scale in terms of procurement of inputs, availing common services and marketing of products.
    • The States would identify food product for a district keeping in view the existing clusters and availability of raw material.
    • The ODOP product could be a perishable produce based product or cereal-based products or a food product widely produced in a district and their allied sectors.
    • An illustrative list of such products includes mango, potato, litchi, tomato, tapioca, kinnu, bhujia, petha, papad, pickle, millet-based products, fisheries, poultry, meat as well as animal feed among others.
    • The Scheme also place focus on waste to wealth products, minor forest products and Aspirational Districts.

    Credit facility provided

    • Existing Individual micro food processing units desirous of upgradation of their unit can avail credit-linked capital subsidy @35% of the eligible project cost with a maximum ceiling of Rs.10 lakh per unit.
    • Seed capital @ Rs. 40,000/- per SHG member would be provided for working capital and purchase of small tools.
    • FPOs/ SHGs/ producer cooperatives would be provided a credit-linked grant of 35% for capital investment along the value chain.
    • Support for marketing & branding would be provided to develop brands for micro-units and groups with 50% grant at State or regional level which could benefit a large number of micro-units in clusters.

    Why need such a scheme?

    • The unorganized food processing sector comprising nearly 25 lakh units contribute to 74% of employment in the food processing sector.
    • Nearly 66% of these units are located in rural areas and about 80% of them are family-based enterprises supporting livelihood rural household and minimizing their migration to urban areas.

    Challenges faced

    • The unorganised food processing sector faces a number of challenges which limit their performance and their growth.
    • These challenges include lack of access to modern technology & equipment, training, access institutional credit, lack of basic awareness on quality control of products; and lack of branding & marketing skills etc.
    • Owing to these challenges; the unorganised food processing sector contributes much less in terms of value addition and output despite its huge potential.

    Get an IAS/IPS ranker as your 1: 1 personal mentor

Join the Community

Join us across Social Media platforms.