Researchers have come forward with some interesting findings on Turmeric.
Turmeric
Turmeric has about 3% of the active component molecule called curcumin, a polyphenol diketone (and not a steroid).
Researchers point out that there is another molecule in turmeric called piperine, which is an alkaloid, responsible for the pungency of pepper that we use every day in our cooking, along with turmeric.
Piperine enhances curcumin absorption in the body. It gives turmeric its multivariate healing and protective power.
Benefits of turmeric consumption
Turmeric has been known for over 4,000 years in the Indian subcontinent, West Asia, Burma, Indonesia and China, and is used as an essential part of our daily food – what the colonials called curry powder.
It has also been known as a medicine for ages, and to have anti-bacterial, anti-oxidant and anti-inflammatory properties.
Herbal medicine experts have used turmeric to treat painful symptoms of arthritis, joint stiffness, and joint pain.
They have also claimed that turmeric helps cure acute kidney injuries. Some of these claims need to be checked using controlled trials.
Against COVID-19
Most recently, an exciting study has recently been published by a group in Mumbai which shows that turmeric aids in the treatment of COVID-19 patients.
The researchers did a trial of about 40 COVID-19 patients and found that turmeric could substantially reduce morbidity and mortality.
Even with a similar syllabus and similar study materials, most candidates fall in one of the following four categories when it comes to their Prelims score:
1) Prelims score 0-40: They need to work on improving their knowledge and learn answering tricks 2) Prelims score 50-70: They have decent knowledge and decent answering tricks. 3) Prelims score 80-100: They have good knowledge but they need to develop answering tricks. 4) Prelims score 120+: They have excellent knowledge and know all the answering tricks.
So, what to do? Clearing Prelims is all about Knowledge + Answering Tricks (Tikdams). And while you are studying hard to improve your knowledge, Sajal sir will help you improve your answering techniques, for absolutely FREE!
Let’s look at a few examples. Sajal sir will explain how you can answer these questions with smart techniques, even if you DON’T know the answer.
A) With reference to ‘fuel cells’ in which hydrogen-rich fuel and oxygen are used to generate electricity, consider the following statements :(UPSC 2016)
If pure hydrogen is used as a fuel, the fuel cell emits heat and water as by-products.
Fuel cells can be used for powering buildings and not for small devices like laptop computers.
Fuel cells produce electricity in the form of Alternating Current (AC).
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
B) In India, under cyber insurances for individuals, which of the following benefits are generally covered, in addition to payment for the loss of funds and other benefits? (UPSC 2020)
1. Cost of restoration of the computer system in case of malware disrupting access to one’s computer.
2. Cost of a new computer if some miscreant willfully damages it, if proved so.
3. Cost of hiring a specialized consultant to minimize the loss in case of cyber extortion.
4. Cost of defense in the court of law if any third party files a suit.
Select the correct answer using the code given below:
(a) 1, 2, and 4 only
(b) 1,3 and 4 only
(c) 2 and 3 only
C) Regarding the taxation system of Krishna Deva, the ruler of Vijayanagar, consider the following statements: (UPSC 2015)
The tax rate on land was fixed depending on the quality of the land.
Private owners of workshops paid an industries tax.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
You can solve these questions with the help of techniques that Sajal sir will teach you in the webinar.
This is your opportunity to learn the tricks that can help you score 120+ in your Prelims. Join Sajal sir for a free webinar and this is what you can learn:
1. 10 Different types of elimination/intelligent guess techniques like (hard to verify facts, For this and NOT for this) through Solving Previous year UPSC questions.
2. How to master the Elimination techniques, used by toppers.
3. Ideal strategy for the Last 50 days for UPSC prelims 2021.
4. How to prepare for 2022 Prelims.
5. Which Topics to focus more upon while preparing for UPSC prelims (eg: Map should be given utmost importance while studying geography for prelims)
6.Open Q&A with Sajal sir
7.The art of Tikdam booklet by Dr V (Rank 20)
We are inviting all the serious aspirants to grab this FREE opportunity to learn the tricks that toppers use to score more than everyone else.
There are limited slots available so we request you to enroll now!
Note: We will send you joining links over e-mail by 2 pm today
Dear aspirants,
Even with a similar syllabus and similar study materials, most candidates fall in one of the following four categories when it comes to their Prelims score:
1) Prelims score 0-40: They need to work on improving their knowledge and learn answering tricks 2) Prelims score 50-70: They have decent knowledge and decent answering tricks. 3) Prelims score 80-100: They have good knowledge but they need to develop answering tricks. 4) Prelims score 120+: They have excellent knowledge and know all the answering tricks.
So, what to do? Clearing Prelims is all about Knowledge + Answering Tricks (Tikdams). And while you are studying hard to improve your knowledge, Sajal sir will help you improve your answering techniques, for absolutely FREE!
Let’s look at a few examples. Sajal sir will explain how you can answer these questions with smart techniques, even if you DON’T know the answer.
A) With reference to ‘fuel cells’ in which hydrogen-rich fuel and oxygen are used to generate electricity, consider the following statements :(UPSC 2016)
If pure hydrogen is used as a fuel, the fuel cell emits heat and water as by-products.
Fuel cells can be used for powering buildings and not for small devices like laptop computers.
Fuel cells produce electricity in the form of Alternating Current (AC).
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
B) In India, under cyber insurances for individuals, which of the following benefits are generally covered, in addition to payment for the loss of funds and other benefits? (UPSC 2020)
1. Cost of restoration of the computer system in case of malware disrupting access to one’s computer.
2. Cost of a new computer if some miscreant willfully damages it, if proved so.
3. Cost of hiring a specialized consultant to minimize the loss in case of cyber extortion.
4. Cost of defense in the court of law if any third party files a suit.
Select the correct answer using the code given below:
(a) 1, 2, and 4 only
(b) 1,3 and 4 only
(c) 2 and 3 only
C) Regarding the taxation system of Krishna Deva, the ruler of Vijayanagar, consider the following statements: (UPSC 2015)
The tax rate on land was fixed depending on the quality of the land.
Private owners of workshops paid an industries tax.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
You can solve these questions with the help of techniques that Sajal sir will teach you in the webinar.
This is your opportunity to learn the tricks that can help you score 120+ in your Prelims. Join Sajal sir for a free webinar and this is what you can learn:
1. 10 Different types of elimination/intelligent guess techniques like (hard to verify facts, For this and NOT for this) through Solving Previous year UPSC questions.
2. How to master the Elimination techniques, used by toppers.
3. Ideal strategy for the Last 50 days for UPSC prelims 2021.
4. How to prepare for 2022 Prelims.
5. Which Topics to focus more upon while preparing for UPSC prelims (eg: Map should be given utmost importance while studying geography for prelims)
6.Open Q&A with Sajal sir
7.The art of Tikdam booklet by Dr V (Rank 20)
We are inviting all the serious aspirants to grab this FREE opportunity to learn the tricks that toppers use to score more than everyone else.
There are limited slots available so we request you to enroll now!
Maintaining consistency is one of the biggest issues faced by IAS Aspirants. Streak’s initiative is to help Aspirants in their day-to-day preparation. You can follow the monthly, weekly, and daily timetables and continue this streak until you find yourself on the final list.
The Indian market for corporate debt needs buoyancy and this has been high on the agenda of our regulator
Background
The Reserve Bank of India (RBI) stopped the automatic monetization of the fiscal deficit in 1997 and made the government borrow money from the market.
There are primary dealers or PDs, who pick up the Centre’s bond and provide buy and sell quotes in the secondary market for government bonds and thus help ensure sufficient liquidity.
The PDs came to be known as market makers and are paid a commission for playing that role.
Liquidity challenge in the corporate bond market
Unlike the market for government bonds, in the case of the country’s corporate bond market, the challenge is different.
It’s typically remunerative for a buyer to buy a security and hold on to it till its maturity.
Therefore, insurance companies, provident funds, and pension funds hold such long-term paper, as they can match the tenure of their assets with liabilities.
But this does not add liquidity to the market, and anyone buying a corporate bond today may not find someone to sell it to tomorrow as this market has little trading depth.
Even in the G-Sec market, where we assume plenty of liquidity, it is a thinly-traded market, even though the perception is that it is very liquid.
Why do we need market makers for the corporate bond market
To deal with the lack of depth and liquidity in the corporate debt market, the Securities and Exchange Board of India’s (Sebi) idea of creating market makers holds immense significance.
The fundamental problem here is that a bond is different from a share.
A company’s share can be exchanged seamlessly because every share in the market is the same slice of ownership.
Lack of quotes for different bonds of different tenure: In the case of bonds, however, there are several issuances of a company.
A single financial institution or non-bank financial company could have as many as 10 issuances a year of varying maturities and interest rates, making each of them a unique instrument.
Company XYZ may have issued in October 2015 a bond with a face value of ₹100 that pays 6% interest and is due for redemption in 2030, which will be quoted on exchanges for trading (if it’s being traded).
But, in 2021, it is no longer a 15-year bond, but a 9-year paper.
Therefore, the security loses importance, as the market normally uses benchmarks like 5 or 10 or 15 years; and every bond drops in the pecking order once it crosses these thresholds.
Therefore, we need to have market makers who will offer quotes for all major securities and thereby ensure that critical bonds are still available for trading.
Suggestions
Provide waivers: Playing market maker will involve a cost and hence there should be certain waivers provided to them on trading fees.
Preferential access: They can be given preferential access to new issuances, so as to build up an inventory.
Waiver of mark-to-market: The mark-to-market (MTM) rules could be waived for a specified period, as valuation differences can affect their profit and loss accounts.
Capital at lower cost: Capital can be made available at a lower cost to market makers, as they require funding for the same.
Fifth, trade among market makers can be awarded benefits in terms of fees or easier taxes on gains made.
Create bond index: We need to have tradable-bond indices that reflect the price movements of a basket of bonds that they track.
Made public, such indices will provide appropriate arbitrage opportunities for investors to come in, and this should generate liquidity in the market for these bonds.
Consider the question “Why bond market in India lacks the depth as compared to equity markets. What are the factors responsible for this? Suggest the way forward.”
Conclusion
Market makers are a way out. While success cannot be guaranteed, the idea should be adopted nonetheless, as with credit default swaps. It’s a work-in-progress. Let’s speed it up.
The monetization of deficit was in practice in India till 1997, whereby the central bank automatically monetized government deficit through the issuance of ad-hoc treasury bills.
Two agreements were signed between the government and RBI in 1994 and 1997 to completely phase out funding through ad-hoc treasury bills.
And later on, with the enactment of the FRBM Act, 2003, RBI was completely barred from subscribing to the primary issuances of the government from April 1, 2006.
Even with a similar syllabus and similar study materials, most candidates fall in one of the following four categories when it comes to their Prelims score:
1) Prelims score 0-40: They need to work on improving their knowledge and learn answering tricks 2) Prelims score 50-70: They have decent knowledge and decent answering tricks. 3) Prelims score 80-100: They have good knowledge but they need to develop answering tricks. 4) Prelims score 120+: They have excellent knowledge and know all the answering tricks.
So, what to do? Clearing Prelims is all about Knowledge + Answering Tricks (Tikdams). And while you are studying hard to improve your knowledge, Sajal sir will help you improve your answering techniques, for absolutely FREE!
Let’s look at a few examples. Sajal sir will explain how you can answer these questions with smart techniques, even if you DON’T know the answer.
A) With reference to ‘fuel cells’ in which hydrogen-rich fuel and oxygen are used to generate electricity, consider the following statements :(UPSC 2016)
If pure hydrogen is used as a fuel, the fuel cell emits heat and water as by-products.
Fuel cells can be used for powering buildings and not for small devices like laptop computers.
Fuel cells produce electricity in the form of Alternating Current (AC).
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
B) In India, under cyber insurances for individuals, which of the following benefits are generally covered, in addition to payment for the loss of funds and other benefits? (UPSC 2020)
1. Cost of restoration of the computer system in case of malware disrupting access to one’s computer.
2. Cost of a new computer if some miscreant willfully damages it, if proved so.
3. Cost of hiring a specialized consultant to minimize the loss in case of cyber extortion.
4. Cost of defense in the court of law if any third party files a suit.
Select the correct answer using the code given below:
(a) 1, 2, and 4 only
(b) 1,3 and 4 only
(c) 2 and 3 only
C) Regarding the taxation system of Krishna Deva, the ruler of Vijayanagar, consider the following statements: (UPSC 2015)
The tax rate on land was fixed depending on the quality of the land.
Private owners of workshops paid an industries tax.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
You can solve these questions with the help of techniques that Sajal sir will teach you in the webinar.
This is your opportunity to learn the tricks that can help you score 120+ in your Prelims. Join Sajal sir for a free webinar and this is what you can learn:
1. 10 Different types of elimination/intelligent guess techniques like (hard to verify facts, For this and NOT for this) through Solving Previous year UPSC questions.
2. How to master the Elimination techniques, used by toppers.
3. Ideal strategy for the Last 50 days for UPSC prelims 2021.
4. How to prepare for 2022 Prelims.
5. Which Topics to focus more upon while preparing for UPSC prelims (eg: Map should be given utmost importance while studying geography for prelims)
6.Open Q&A with Sajal sir
7.The art of Tikdam booklet by Dr V (Rank 20)
We are inviting all the serious aspirants to grab this FREE opportunity to learn the tricks that toppers use to score more than everyone else.
There are limited slots available so we request you to enroll now!
The fall of Kabul in the wake of the American withdrawal from Afghanistan will prove to be a defining moment for the region and the future shape of its geopolitics.
Implications of the US withdrawal for India
1) Increase in threat from China
The manner in which the United States withdrew from Afghanist created the regional power vacuum in the Eurasian heartland.
An axis of regional powers such as China, Pakistan, Iran, Russia, and the Taliban, have already started filling this power vacuum.
Advantageous for China: The post-American power vacuum in the region will be primarily advantageous to China and its grand strategic plans for the region.
BRI expansion: Beijing will further strengthen its efforts to bring every country in the region, except India, on the Chinese Belt and Road Initiative bandwagon, thereby altering the geopolitical and geoeconomic foundations of the region
The much-feared Chinese encirclement of India will become ever more pronounced.
Even in trade, given the sorry state of the post-COVID-19 Indian economy, India needs trade with China more than the other way round.
Unless India can find ways of ensuring a rapprochement with China, it must expect Beijing to challenge India on occasion, and be prepared for it.
2) Terror and extremism
The U.S. presence in Afghanistan, international pressure on the Taliban, and Financial Action Task Force worries in Pakistan had a relatively moderating effect on the region’s terror ecosystem.
There is little appetite for a regional approach to curbing terrorism from a Taliban-led Afghanistan.
This enables the Taliban to engage in a selective treatment towards terror outfits present there or they have relations with.
It is unlikely that the Taliban will proactively export terror to other countries unless of course for tactical purposes, for instance, Pakistan against India.
The real worry, however, is the inspiration that disgruntled elements in the region will draw from the Taliban’s victory against the world’s sole superpower.
3) Impact on India’s regional interests and outreach to Central Asia
The return of the Taliban to Kabul has effectively laid India’s ‘mission Central Asia’ to rest.
India’s diplomatic and civilian presence as well as its civilian investments will now be at the mercy of the Taliban, and to some extent Pakistan.
Had India cultivated deeper relations with the Taliban, Indian interests would have been more secure in a post-American Afghanistan.
4) Impact on India’s foreign policy choices
Shift to Indo-Pacific: Given the little physical access India has to its north-western landmass, its focus is bound to shift more to the Indo-Pacific even though a maritime grand strategy may not necessarily be an answer to its continental challenges.
Improving relations with neighbours: India might also seek to cultivate more friendly relations with its neighbours.
India has already indicated that it would not challenge the junta on the coup and its widespread human rights violations.
The last thing India needs now is an angry neighbour rushing to China.
Stability in relations with Pakistan: The developments in Afghanistan could nudge India to seek stability, if not peace, with Pakistan.
Both sides might refrain from indulging in competitive risk-taking unless something dramatic happens which is always a possibility between the two rivals.
That said, stability between India and Pakistan depends a great deal on how politics in Kashmir plays out, and whether India is able to pacify the aggrieved sections in the Valley.
Consider the question “What would be the fallout of the Taliban’s return in Afghanistan for India? What steps India needs to take to mitigate the impact on its interests?”
Conclusion
The lesson for India in the wake of these developments is clear: It will have to fight its own battles. So it must make enemies wisely, choose friends carefully, rekindle flickering friendships, and make peace while it can.
The Chairman of the Rajya Sabha is reportedly contemplating action against MPs who, he thinks, were involved in the fracas in the House.
Provisions in House Rules of Rajya Sabha for punishing members
1) For conduct inside the House
Ground for punishment: Rule 256 of the Rajya Sabha’s Rules of Procedure specifies the acts of misconduct: Disregarding the authority of the chair, abusing the rules of the council by persistently and willfully obstructing the business thereof.
However, the power to suspend a member is vested in the House, not in the chairman.
Under the rule, the maximum period of suspension is for the remainder of the session.
By convention, a suspended member loses his right to get replies to his questions.
Thus, suspension from the service of the House is regarded as a serious punishment.
But, surprisingly, the rules do not spell out the disabilities of a suspended member.
These are imposed on them as per conventions or precedent.
Suspension for the remainder of the session makes sense only when they are suspended immediately after the misconduct has been noticed by the chair.
The rules of the House do not empower Parliament to inflict any punishment on its members other than suspension for creating disorder in the House.
2) Misconduct outside the House
For the acts of misconduct by the MPs outside the House, which constitute a breach of privilege or contempt of the House, usually the privilege committee investigates the matter and recommends the course of action and the House acts on it.
A special committee is appointed usually when the misconduct is so serious that the House may consider expelling the member.
Special committee was appointed in 2005 to inquire into the issue of MPs accepting money for raising questions in Parliament.
So, special ad-hoc committees are appointed only to investigate serious misconduct by MPs outside the House.
Issue in the present context
It appears that the Rajya Sabha secretariat has prepared a report on the incident in the Rajya Sabhi, which accuses some MPs of assaulting security personnel.
But special ad-hoc committees are appointed only to investigate serious misconduct by MPs outside the House.
No special committee is required to go into what happens before the eyes of the presiding officer inside the House.
As per the rules of the House, they need to be dealt with then and there.
The rules do not recognise any punishment other than suspension for a specific period and in this case, the Session is already over.
Article 20 of the Constitution prohibits a greater penalty than what the law provided at the time of committing the offence.
Conclusion
Punishing the MPs for their misconduct in the House is restricted by the provision in the House rules. These restrictions need to be looked into in the face of growing disruption by the members.
The Supreme Court has held that merely because the law allows arrest does not mean the State can use the power indiscriminately to crush personal liberty.
What is an Arrest?
An arrest is a procedure in a criminal justice system.
It is the act of apprehending and taking a person into custody (legal protection or control), usually because the person has been suspected of or observed committing a crime.
After being taken into custody, the person can be questioned further and/or charged.
Distinction between arrest and detention
There exists a distinction between an investigatory stop or detention and an arrest.
The distinction tends to be whether or not the stop is “brief and cursory” in nature, and whether or not a reasonable individual would feel free to leave.
Article 21 of the Indian Constitution guarantees the protection of life and personal liberty to every individual and states that, “No person shall be deprived of his life and personal liberty except according to procedure established by law.”
Logic behind arresting
The Supreme Court has noted that:
The occasion to arrest an accused during investigation arises when the custodial investigation becomes necessary.
Or it is a heinous crime or where there is a possibility of influencing the witnesses or accused may abscond.
The court was emphatic that a distinction must be made between the existence of the power to arrest and the justification for the exercise of this power.
Sanctions for arrest as outlined by the Supreme Court
The Supreme Court clarified that:
(A) Avoiding arrests
Arrest isn’t a compulsion: Merely because an arrest can be made because it is lawful does not mandate that arrest must be made.
Justification for arrest: A distinction must be made between the existence of the power to arrest and the justification for the exercise of it, it noted.
Dignity of the undertrial: If an arrest is made routine, it can cause incalculable harm to the reputation and self-esteem of a person.
Evidence protection: There should not be a compulsion on the officer to arrest the accused since many times there is no apprehension that an accused would abscond or tamper with evidence.
(B) Broad implications of Sec. 170 CrPC
Narrow interpretation: Section 170 of the Code of Criminal Procedure (CrPC) has been wrongly interpreted by the police and trial courts to make an arrest of the accused mandatory at the time of filing of the charge sheet.
Custody, not arrest: The word “custody” in Section 170 had been wrongly interpreted as ‘arrest’.The word ‘custody’ appearing in Section 170 does not contemplate either police or judicial custody.
Applications for foreign direct investment in an insurance company promoted by a private bank would be cleared by the RBI and IRDAI to ensure that the 74% limit of overseas investment is not breached.
What does one mean by Insurance?
Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.
The company pools clients’ risks to make payments more affordable for the insured.
Insurance is a capital-intensive business so has to maintain a solvency ratio. The solvency ratio is the excess of assets over liabilities.
Simply put, as an insurance company sells more policies and collects premiums from policyholders, it needs higher capital to ensure that it is able to meet future claims.
In addition, insurance is a long gestation business. It takes companies 7-10 years to break even and start becoming profitable.
Types of Insurance
Insurance sector of India
The insurance regulator, the Insurance Regulatory and Development Authority of India (IRDAI), mandates that insurers should maintain a solvency ratio of at least 150 percent.
The insurance industry of India has 57 insurance companies 24 are in the life insurance business, while 34 are non-life insurers.
Among the life insurers, Life Insurance Corporation (LIC) is the sole public sector company.
In addition to these, there is a sole national re-insurer, namely the General Insurance Corporation of India (GIC Re).
Other stakeholders in the Indian Insurance market include agents (individual and corporate), brokers, surveyors, and third-party administrators servicing health insurance claims.
In India, the overall market size of the insurance sector is expected to be $280 billion in 2020.
Recent developments
The chronological order of events:
Nationalization of life (LIC Act 1956) and non-life sectors (GIC Act 1972)
Constitution of the Insurance Regulatory and Development Authority of India (IRDAI) in 1999
Opening up of the sector to both private and foreign players in 2000
Increase in the foreign investment cap to 26% from 49% in 2015
Increase in FDI limit from 49% to 74% in March 2020
Issues with India’s insurance sector
Insurance is considered a sensitive sector as it holds the long-term money of people. Various attempts were made in the past to open up the sector but without much success.
Lower insurance penetration due to various economic reasons such as poverty, etc.
Domination of the Public Sector ex. LIC
Trust issues in private insurances due to insolvency of private players
Saving habits of the public
Significance of the recent amendment
The current amendment is an enabling amendment that gives companies access to foreign capital if they need it.
It is an important shift instance as the increase in the FDI cap means insurance companies can now be foreign-owned and -controlled as against the current situation wherein they are only Indian-owned and -controlled.
The move is expected to increase India’s insurance penetration or premiums as a percentage of GDP, which is currently only 3.76 percent, as against a global average of more than 7 percent.
What does this mean for Indian insurance companies?
India has more than 60 insurance companies specializing in life insurance, non-life insurance, and health insurance.
The number of state-owned firms is only six and the remaining are in the private sector.
A higher FDI limit will help insurance companies access foreign capital to meet their growth requirements.
How does this impact Indian promoters of insurance companies?
Most of the Indian promoters of insurance companies are either Indian business houses or financial institutions like banks.
Many entered into the insurance space when they were financially strong but are now struggling to cater to the constant need to infuse capital into their insurance joint ventures.
Over the years, the sector has seen large-scale consolidation and exits of many promoters.
A higher FDI cap will mean that more promoters could now completely exit or bring down their stakes in their insurance joint ventures.
What higher does FDI mean for policyholders?
Higher FDI limits could see more global insurance firms and their best practices entering India.
This could mean higher competition and better pricing of insurance products.
Policyholders will get a wide choice, access to more innovative products, and a better customer service and claims settlement experience.
An FDI is an investment in the form of controlling ownership in a business in one country by an entity based in another country.
It is thus distinguished from a foreign portfolio investment by a notion of direct control.
FDI may be made either “inorganically” by buying a company in the target country or “organically” by expanding the operations of an existing business in that country.
Broadly, FDI includes “mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations, and intra company loans”.
In a narrow sense, it refers just to building a new facility, and lasting management interest.
FDI in India
Foreign investment was introduced in 1991 under Foreign Exchange Management Act (FEMA), driven by then FM Manmohan Singh.
There are two routes by which India gets FDI.
1) Automatic route: By this route, FDI is allowed without prior approval by Government or RBI.
2) Government route: Prior approval by the government is needed via this route. The application needs to be made through the Foreign Investment Facilitation Portal, which will facilitate the single-window clearance of the FDI application under the Approval Route.
India imposes a cap on equity holding by foreign investors in various sectors, current FDI in aviation and insurance sectors is limited to a maximum of 49%.
In 2015 India overtook China and the US as the top destination for Foreign Direct Investment.
