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

Civilsdaily

Login

Subject: Economics

  • World Economic Outlook (WEO) Report by IMF

    The International Monetary Fund (IMF) has unveiled its 2nd World Economic Outlook (WEO) Report.

    About WEO Report

    • The WEO is a report by the IMF that analyzes key parts of the IMF’s surveillance of economic developments and policies in its member countries.
    • It also projects developments in the global financial markets and economic systems.
    • The report comes out twice every year — April and October.
    • It is based on a wide set of assumptions about a host of parameters — such as the international price of crude oil — and set the benchmark for all economies to compare one another with.

    Key takeaways from the October 2021 WEO

    • The central message was that the global economic recovery momentum had weakened due to the pandemic-induced supply disruptions.
    • It is the increasing inequality among nations that IMF was most concerned about.
    • The dangerous divergence in economic prospects across countries remains a major concern.

    Reasons for the slowdown

    There are two key reasons:

    1. Large disparities in vaccine access
    2. Differences in policy support

    What about Employment?

    Ans. There is a lag.

    • Employment around the world remains below its pre-pandemic levels.
    • This reflects a mix of negative output gaps, worker fears of on-the-job infection in contact-intensive occupations, childcare constraints, labour demand changes due to automation etc.
    • The main concern is the gap between recovery in output and employment which is likely to be larger in emerging markets and developing economies than in advanced economies.
    • Further, young and low-skilled workers are likely to be worse off than prime-age and high-skilled workers, respectively.

    Implications for India

    Ans. Reduce India’s growth momentum

    • IMF has suggested that India’s economic recovery is gaining ground.
    • Some sectors such as the IT-services sectors have been practically unaffected by Covid, while the e-commerce industry is doing brilliantly.
    • However, the recovery in unemployment is lagging the recovery in output (or GDP).
    • This matters immensely for India as it reflects jobless growth.
    • India was already facing a deep employment crisis before the Covid crisis, and it became much worse after it.
    • Lack of adequate employment levels would again drag down overall demand and affect the growth momentum.

    Threats to growth momentum

    • Usual unemployment: Even before the pandemic, India already had a massive unemployment crisis.
    • Sector-wise recovery: India is witnessing a K-shaped recovery. That means different sectors are recovering at significantly different rates.
    • Unorganized sector: A weak recovery for the informal/unorganized sectors implies a drag on the economy’s ability to create new jobs or revive old ones.
    • Contact-based services: Such services which can create many more jobs, are not seeing a similar bounce-back.

    How informal is India’s economy?

    • A NSO report titled ‘Measuring Informal Economy in India’ gives a detailed account of informal Indian economy.
    • It shows the share of different sectors of the economy in the overall Gross Value Added and the share of the unorganised sector therein.
    • The share of informal/unorganised sector GVA is more than 50% at the all-India level, and is even higher in certain sectors.
    • It creates a lot of low-skilled jobs such as construction and trade, repair, accommodation, and food services.

    This is why India is more vulnerable.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • EU food recalled over alleged GM rice exports from India

    The European Union has recalled some packaged food items which were made up of Indian GMO.

    GM crops in India

    The Genetic Engineering Appraisal Committee (GEAC) under Environment Ministry oversees the approval of GM Crops in India.

    • Bt cotton: It is the only GM crop that has been approved for commercial cultivation in 2002.
    • Bt Brinjal: Resistant to brinjal shoot fly, it was approved by GEAC in 2009. However due to 10 years moratorium imposed on GM crops by the Technical Expert Committee (TEC) appointed by the Supreme Court of India, its commercialization has stalled.
    • GM Dhara Mustard Hybrid 11: DMH 11 developed by Delhi University is pending for commercial release as GEAC has advised to generate complete safety assessment.

    However, unauthorized HtBt Cotton and Bt Brinjal are being grown commercially, with hundreds of growers blatantly defying the governmental ban.

    What about GM Rice?

    • GM rice is not grown commercially in India.
    • However, multiple GM rice varieties have been approved for confined field trials.
    • There seems a possibility of cross-contamination from such field trials directly or through seed leakages.

    India’s rice exports

    • India’s annual rice exports amount to 18 million tonnes worth ₹65,000 crore, and reach more than 75 countries.

    What is the EU move?

    • A European candy has recalled several batches of its product from the market due to the use of rice flour with genetically modified (GM) contamination that allegedly originated in India.
    • The EU notification has identified the product as ‘Unauthorised genetically modified (p35S and tNos) rice flour from India’.

    Impact of the EU move

    • This has led to the loss of reputation of India and its agricultural market.
    • With such a move by the EU, it is Indian farmers and exporters who have much to lose.

    Threats posed by GM crops

    • It is believed that consumption of genetically engineered foods can cause the development of diseases which are immune to antibiotics.
    • Besides, as these foods are new inventions, not much is known about their long term effects on human beings.
    • Genetically modified rice may potentially cause serious public health and environmental problems.
    • Two major issues about GM rice are their tendencies to provoke allergic reactions and the uncertainty of gene transfers.

    What can be done to reverse this?

    • Ban on field trials of GM crops
    • Slapping liability for illegal release of GMOs into the environment on developers
    • Probe to identify the source of the GM rice contamination

    Try answering this PYQ:

    With reference to the Genetically Modified mustard (GM mustard) developed in India, consider the following statements:

    1. GM mustard has the genes of a soil bacterium that give the plant the property of pest-resistance to a wide variety of pests.
    2. GM mustard has the genes that allow the plant cross-pollination and hybridization.
    3. GM mustard has been developed jointly by the IARI and Punjab Agricultural University.

    Which of the statements given above is/are correct?

    (a) 1 and 3 only

    (b) 2 only

    (c) 2 and 3 only

    (d) 1, 2 and 3

     

    [wpdiscuz-feedback id=”zieaak7yfu” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Lessons from the coal shortage

    Context

    Normally, the power-generating companies maintain around 30 days of inventory of coal, but, currently, this has come down to three days.

    Factors responsible for the crisis

    • Supply side issue: On the supply side, because of low investment, coal cannot be mined more than the capacity which exists today. Hence, the increase in supplies will be gradual.
    • High global prices: The global coal crisis has led to higher prices.
    • Here, too, a sudden resurgence in demand after the pandemic has exposed the supply limitations.
    • The international price has gone up by almost 40 per cent in the last month.
    • China factor: China – a major producer and consumer – has also faced this problem as it has tried to save coal for the future and imposed restrictions on mining to go green.
    • Emphasis on lowering the dependence on import:  In India, coal imports have been traditionally high.
    • Under its atmanirbharta drive, the government has voiced concerns on this issue and asked generators to be more self-reliant.
    • Coal dependency came down over time, which also coincided with a lower phase of economic growth.
    • The same has happened in China where the government has taken the greening concept seriously and asked coal producers to control production and power generators and move over to other greener fuels.
    • This has made coal producers less willing to increase investment.

    Why power companies are reluctant to import coal?

    • Ideally, power companies should import coal.
    • But that increases the cost of power production and power tariffs cannot be revised easily, like in the case of crops.
    • The power sector, however, already has its woes.
    • Distribution companies have been running losses due to their inability to cut down on transmission losses or increase tariffs.
    • As their losses mount, the amount overdue to the generators increases.
    • Therefore, the producers are not willing to increase their costs.

    How it would impact the economy?

    • The economy has been showing signs of recovering and the October-December period is crucial because there are expectations of pent-up demand helping to accelerate growth.
    • Any disruption in the power supply can push back this process.
    • The challenge is that today all the three sectors, agriculture, industry and households, are equally important.
    • A lot of business is being conducted from home after the pandemic, and power disruptions will come in the way of work.
    • If power companies start revising their tariffs, inflation will shoot up.

    Conclusion

    The coal shortage problem is very serious as it affects power supply, which is the backbone of all economic activity. All stakeholders – the Centre, states, miners and power generators – must work together and plan the strategy going ahead.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Improving livestock breeding

    Context

    The revised version of the Rashtriya Gokul Mission and National Livestock Mission (NLM) proposes to bring focus on entrepreneurship development and breed improvement in cattle, buffalo, poultry, sheep, goat, and piggery.

    Livestock breeding and challenges

    • Unorganised in nature: Livestock breeding in India has been largely unorganised.
    • Lack of linkages: Because of this unorganised nature there have been gaps in forward and backward integration across the value chain.
    • Impact on quality: The above scenario impacts the quality of livestock that is produced and in turn negatively impacts the return on investment for livestock farmers.
    • Roughly 80% bovines in the country are low on productivity and are reared by small and marginal farmers.

    Entrepreneurship development through NLM and Rashtriya Gokul Mission

    • The revised version of the Rashtriya Gokul Mission and National Livestock Mission (NLM) proposes to bring focus on entrepreneurship development.
    • Breed improvement infrastructure: It seeks to provide incentives to individual entrepreneurs, farmer producer organisations, farmer cooperatives, joint liability groups, self-help groups, Section 8 companies for entrepreneurship development and State governments for breed improvement infrastructure.
    • The breed multiplication farm component of the Rashtriya Gokul Mission is going to provide for capital subsidy up to ₹200 lakh for setting up breeding farm with at least 200 milch cows/ buffalo using latest breeding technology. 
    •  Moreover, the strategy of incentivising breed multiplication farm will result in the employment of 1 lakh farmers.
    • The grassroots initiatives in this sphere will be further amplified by web applications like e-Gopala that provide real-time information to livestock farmers.
    • Poultry: The poultry entrepreneurship programme of the NLM will provide for capital subsidy up to ₹25 lakh for the setting up of a parent farm with a capacity to rear 1,000 chicks.
    • Under this model, the rural entrepreneur running the hatchery will be supplying chicks to the farmers.
    • This is expected to provide employment to at least 14 lakh people.
    • Sheep and goat entrepreneurship: In the context of sheep and goat entrepreneurship, there is a provision of capital subsidy of 50% up to 50 lakh.
    • An entrepreneur under this model shall set up a breeder farm, develop the whole chain will eventually sell the animals to the farmers or in the open market.
    • This model is projected to generate a net profit of more than ₹33 lakh for the entrepreneur per year.
    • Piggery: For piggery, the NLM will provide 50% capital subsidy of up to ₹30 lakh.
    •  Each entrepreneur will be aided with establishment of breeder farms with 100 sows and 10 boars, expected to produce 2,400 piglets in a year.
    • This model is expected to generate a profit of ₹1.37 crore after 16 months and 1.5 lakh jobs.

    Conclusion

    The revised scheme of NLM coupled with the Rashtriya Gokul Mission and the Animal Husbandry Infrastructure Development Fund has the potential to dramatically enhance the productivity and traceability standards of our livestock.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • [pib] Geospatial Energy Map of India

    The NITI Aayog has launched the Geospatial Energy Map of India.

    What is the GIS Energy Map?

    • NITI Aayog in collaboration with the Indian Space Research Organisation (ISRO) has developed a comprehensive Geographic Information System (GIS) Energy Map of India.
    • The GIS map provides a holistic picture of all energy resources of the country.
    • It enables visualization of energy installations such as conventional power plants, oil and gas wells, petroleum refineries, coal fields and coal blocks.
    • It also provides district-wise data on renewable energy power plants and renewable energy resource potential, etc through 27 thematic layers.

    Significance of the map

    • The map attempts to identify and locate all primary and secondary sources of energy and their transportation/transmission networks.
    • It is a unique effort aimed at integrating energy data scattered across multiple organizations and presenting it in a consolidated, visually appealing graphical manner.
    • It leverages the latest advancements in web-GIS technology and open-source software to make it interactive and user-friendly.

    Benefits offered

    • The map would provide a comprehensive view of energy production and distribution in a country.
    • It will be useful in planning and making investment decisions.
    • It will also aid in disaster management using available energy assets.
    • This may also help in resource and environmental conservation measures, inter-state coordination on infrastructure planning including different corridors of energy and road transport highways.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • The coal crisis and role of CIL in mitigation

    Context

    In India, coal-based power plants have witnessed rapid depletion of coal stocks from a comfortable 28 days at the end of March to a precarious level of four days by the end of September. Coal India Ltd (CIL) has been unfairly attacked, even as it gears up to play a crucial role in fighting the power crisis.

    Reasons for crisis

    • The reasons for the crisis are structural as well as operational.
    • The Coal Mines Nationalisation Act (CMNA) in 1993 enabled the government to take away 200 coal blocks of 28 billion tons from CIL and allocate them to end-users for the captive mining of coal.
    • These end-users, mostly in the private sector, failed to produce any significant quantity of coal.
    • The cancellation of 214 blocks by the Supreme Court added to the problem.
    • Commensurate to the captive mines allocated to the end-user industries, the coal production today should have been at least 500 million tonnes per annum (mtpa).
    • In reality, this has never exceeded 60 mtpa.
    • On the operational side, power plants are required by the Central Electricity Authority (CEA) to maintain a minimum stock of 15 to 30 days of normative coal consumption.
    • The compliance with this directive by power plants has been severely lacking.
    • This enhances the vulnerability of power plants.
    • The persistent non-payment of coal sale dues by power plants to coal companies has created a serious strain on their working capital position.
    • A spurt in imported coal prices, mainly due to a major increase in coal imports by China, acted as a brake on imports of coal.
    • This escalated the demand for domestic coal.
    • The spurt in demand for coal is being linked to the post-Covid economic recovery.

    CIL’s role in mitigating the shortage crisis

    • Growth in production in short duration: Despite many constraining factors, it is to the credit of CIL that it has achieved a growth of 14 million tonnes (mt) or 5.8 per cent in coal production during the first half of 2021-22.
    • Yet, the offtake was higher than the preceding year by 52 mt or 20.6 per cent.
    • This was possible by drawing down on the opening inventory of coal from 100 mt to 42 mt during April to September.
    • With the monsoons behind us and the onset of a good productive season, CIL has already stepped up coal offtake to more than 1.5 mt per day.
    • With efforts on the part of the railways in moving the coal, the crisis should dissipate in the near future, at least for power plants that pay timely for coal supplies.
    • Besides meeting the growing coal demand of power plants, CIL has been able to significantly replace the import of highly expensive thermal coal.
    • Cheaper coal: Even after bearing the highest tax and transport cost globally, the landed cost of CIL coal continues to be much cheaper than imported coal at almost all destinations.
    • Saving of foreign exchange: The resultant benefits are savings of foreign exchange, and generation of power at affordable tariffs.
    • The coal price charged by CIL, expressed in energy units, is at a deep discount of 60-70 per cent of imported coal.

    Conclusion

    In brief, CIL has been unfairly blamed for the coal crisis. It has played a stellar role, standing like a solid rock between light and darkness. It is striving to build comfortable stocks at the power plants, not in default of payment.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Issues with RBI’s microfinance proposals

    Context

    In June 2021, the Reserve Bank of India (RBI) published a “Consultative Document on Regulation of Microfinance”. The likely impact of the recommendations is unfavourable to the poor.

    Background of microfinance in India

    • Microfinance lending has been in place since the 1990s.
    • In the 1990s, microcredit was given by scheduled commercial banks either directly or via non-governmental organisations to women’s self-help groups.
    • But given the lack of regulation and scope for high returns, several for-profit financial agencies such as NBFCs and MFIs emerged.
    • The microfinance crisis of Andhra Pradesh led the RBI to review the matter, and based on the recommendations of the Malegam Committee, a new regulatory framework for NBFC-MFIs was introduced in December 2011.
    • A few years later, the RBI permitted a new type of private lender, Small Finance Banks (SFBs), with the objective of taking banking activities to the “unserved and underserved” sections of the population.
    • Today, as the RBI’s consultative document notes, 31% of microfinance is provided by NBFC-MFIs, and another 19% by SFBs and 9% by NBFCs.
    • These private financial institutions have grown exponentially over the last few years.

    What are the recommendations in the document?

    • The consultative document recommends that the current ceiling on rate of interest charged by non-banking finance company-microfinance institutions (NBFC-MFIs) or regulated private microfinance companies needs to be done away with.
    • The paper argues that the interest rate ceiling is biased against one lender (NBFC-MFIs) among the many: commercial banks, small finance banks, and NBFCs.
    • It proposes that the rate of interest be determined by the governing board of each agency, and assumes that “competitive forces” will bring down interest rates.

    Comparison of rate of interest

    • According to current guidelines, the ‘maximum rate of the interest rate charged by an NBFC-MFI shall be the lower of the following: the cost of funds plus a margin of 10% for larger MFIs (a loan portfolio of over ₹100 crores) and 12% for others; or the average base rate of the five largest commercial banks multiplied by 2.75’.
    • A quick look at the website of some Small Finance Banks (SFBs) and NBFC-MFIs showed that the “official” rate of interest on microfinance was between 22% and 26% — roughly three times the base rate.
    • How does this compare with credit from public sector banks and cooperatives?
    • Crop loans from Primary Agricultural Credit Societies (PACS) in Tamil Nadu had a nil or zero interest charge if repaid in eight months.
    • Kisan credit card loans from banks were charged 4% per annum (9% with an interest subvention of 5%) if paid in 12 months (or a penalty rate of 11%).
    • Other types of loans from scheduled commercial banks carried an interest rate of 9%-12% a year.
    • As even the RBI now recognises, the rate of interest charged by private agencies on microfinance is the maximum permissible, a rate of interest that is a far cry from any notion of cheap credit.
    • The actual cost of microfinance loans is even higher for several reasons.
    •  An “official” flat rate of interest used to calculate equal monthly instalments actually implies a rising effective rate of interest over time.
    • In addition, a processing fee of 1% is added and the insurance premium is deducted from the principal.

    Violations of RBI guidelines

    • In line with RBI regulations, all borrowers had a repayment card with the monthly repayment schedules.
    • This does not mean that borrowers understood the charges.
    • Further, contrary to the RBI guideline of “no recovery at the borrower’s residence”, the collection was at the doorstep.

    Conclusion

    The proposals in the RBI’s consultative document will lead to further privatisation of rural credit, reducing the share of direct and cheap credit from banks and leaving poor borrowers at the mercy of private financial agencies. This is beyond comprehension at a time of widespread post-pandemic distress among the working poor.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Electricity (Amendment) Bill 2020

    Context

    Most discoms are deep into the red as high aggregate technical and commercial (AT&C) losses are chipping into their revenues. Against this backdrop, the Electricity (Amendment) Bill of 2020 is a game-changing reform.

    Why the Electricity (Amendment) Bill of 2020 is a game-changing reform

    • De-licensing power distribution: This will provide the consumers with an option of choosing the service provider, switch their power supplier and enable the entry of private companies in distribution, thereby resulting in increased competition.
    • In fact, privatisation of discoms in Delhi has reduced AT&C losses significantly from 55% in 2002 to 9% in 2020.
    • Open access for purchasing power: Open access for purchasing power from the open market should be implemented across States and barriers in the form of cross-subsidy surcharge, additional surcharge and electricity duty being applied by States should be reviewed.
    • Issue of tariff revision: The question of tariffs needs to be revisited if the power sector is to be strengthened.
    • Tariffs ought to be reflective of the average cost of supply to begin with and eventually move to customer category-wise cost of supply in a defined time frame.
    • This will facilitate a reduction in cross-subsidies.
    • Inclusion in GST: Electrical energy should be covered under GST, with a lower rate of GST, as this will make it possible for power generator/transmission/distribution utilities to get a refund of input credit, which in turn will reduce the cost of power.
    • Use of smart meters: Technology solutions such as installation of smart meters and smart grids which will reduce AT&C losses and restore financial viability of the sector.
    • The impetus to renewable energy: The impetus to renewable energy, which will help us mitigate the impact of climate change, is much needed.
    • Despite its inherent benefits, the segment has shown relatively slow progress with an estimated installed capacity of 5-6 GW as on date, well short of the 2022 target.
    • The Bill also underpins the importance of green energy by proposing a penalty for non-compliance with the renewable energy purchase obligations which mandate States and power distribution companies to purchase a specified quantity of electricity from renewable and hydro sources
    • Strengthening the regulatory architecture: This will be done by appointing a member with a legal background in every electricity regulatory commission and strengthening the Appellate Tribunal for Electricity.
    • This will ensure faster resolution of long-pending issues and reduce legal hassles.
    • Authority for contractual obligation: Provision in the Bill such as the creation of an Electricity Contract Enforcement Authority to supervise the fulfillment of contractual obligations under power purchase agreement, cost reflective tariffs and provision of subsidy through DBT are commendable.

    Conclusion

    Early passage of the Bill is critical as it will help unleash a path-breaking reform for bringing efficiency and profitability to the distribution sector.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • PM GatiShakti — National Master Plan

    The PM has inaugurated the GatiShakti — National Master Plan for infrastructure development aimed at boosting multimodal connectivity and driving down logistics costs.

    GatiShakti — National Master Plan

    • PM GatiShakti is a digital platform that connects 16 ministries — including Roads and Highways, Railways, Shipping, Petroleum and Gas, Power, Telecom, Shipping, and Aviation.
    • It aims to ensure holistic planning and execution of infrastructure projects.
    • The objective is to ensure that every department now has visibility of each other’s activities providing critical data while planning and execution of projects.
    • Through this, different departments will be able to prioritize their projects through cross-sectoral interactions.

    Notable features

    • Geospatial data: The portal will offer 200 layers of geospatial data, including on existing infrastructure such as roads, highways, railways, and toll plazas.
    • Protected areas management: It would also geographic information about forests, rivers, and district boundaries to aid in planning and obtaining clearances.
    • Realtime monitoring: The portal will also allow various government departments to track, in real-time and at one centralized place, the progress of various projects.

    Monitoring mechanism

    • The National Master Plan has set targets for all infrastructure ministries.
    • A project monitoring group under the Department for Promotion of Industry and Internal Trade (DPIIT) will monitor the progress of key projects in real-time.
    • It would report any inter-ministerial issues to an empowered group of ministers, who will then aim to resolve these.

    Need for such Project

    • Avoiding poor infrastructure planning: Examples of poor infrastructure planning included newly-built roads being dug up by the water department to lay pipes.
    • Creating a multi-modal network: The government expects the platform to enable various government departments to synchronize their efforts into a multi-modal network.
    • Timely completion of infra projects: It is also expected to help state governments give commitments to investors regarding timeframes for the creation of infrastructure.
    • Inefficient connectivity: Currently, a number of economic zones and industrial parks are not able to reach their full productive potential due to inefficient multi-modal connectivity.
    • Easy clearance: The portal allows stakeholders to apply for these clearances from the relevant authority directly.

    Logistics costs in India

    • Studies estimate that logistics costs in India are about 13-14% of GDP as against about 7-8% of GDP in developed economies.
    • High logistics costs impact cost structures within the economy by making it more expensive for exporters to ship merchandise to buyers.

    Benefits offered by PM-GatiShakti

    • Collaborative planning: It would incorporate infrastructure schemes under various ministries and state governments, including the Bharatmala and inland waterways schemes, and economic zones.
    • Logistics boost: It would boost last-mile connectivity and thus bring down logistics costs with integrated planning and reducing implementation overlaps.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • [pib] Maharatna status accorded to Power Finance Corporation Ltd (PFC)

    The Centre has accorded ‘Maharatna’ status to the state-owned Power Finance Corporation Ltd (PFC), thus giving PFC greater operational and financial autonomy.

    About PFC Ltd.

    • Power Finance Corporation Ltd. (PFC) is an Indian financial institution under the ownership of Ministry of Power.
    • Established in 1986, it is the financial backbone of Indian Power Sector.
    • PFC is the 8th highest profit making Central Public Sector Enterprise (CPSE) as per the Department of Public Enterprises Survey for FY 2017–18.
    • It is India’s largest NBFC and also India’s largest infrastructure finance company.

    Benefits of Maharatna Status

    • This new status will enable PFC to offer competitive financing for the power sector, which will go a long way in making available affordable & reliable ‘Power For All 24×7’.
    • This will also impart enhanced powers to the PFC Board while taking financial decisions.
    • It can make equity investments to undertake financial joint ventures and wholly-owned subsidiaries and undertake mergers and acquisitions in India and abroad.
    • It can also structure and implement schemes relating to personnel and Human Resource Management and Training.
    • It can also enter into technology Joint Ventures or other strategic alliances among others.

    Back2Basics: Central Public Sector Enterprises

    • The CPSEs are run by the Government under the Department of Public Enterprises of Ministry of Heavy Industries and Public Enterprises.
    • The government grants the status of Navratna, Miniratna and Maharatna to them based upon the profit made by these CPSEs.
    • The Maharatna category has been the most recent one since 2009, other two have been in function since 1997.

     

    Maharatna Navratna Miniratna Category-I Miniratna Category-II
    Eligibility Three years with an average annual net profit of over ₹2,500 crore

    OR

    Average annual Net worth of ₹10,000 crore for 3 years

    OR

    Average annual Turnover of ₹20,000 crore for 3 years

     

    		 A score of 60 (out of 100), based on six parameters which include net profit, net worth, total manpower cost, total cost of production, cost of services, PBDIT (Profit Before Depreciation, Interest and Taxes), capital employed, etc.,

    AND

    A company must first be a Miniratna and have 4 independent directors on its board before it can be made a Navratna

    		 Have made profits continuously for the last three years or earned a net profit of ₹30 crore or more in one of the three years Have made profits continuously for the last three years and should have a positive net worth.
    Benefits for investment ₹1,000 crore – ₹5,000 crore, or free to decide on investments up to 15% of their net worth in a project  

    Up to ₹1,000 crore or 15% of their net worth on a single project or 30% of their net worth in the whole year

    		 Up to ₹500 crore or equal to their net worth, whichever is lower Up to ₹300 crore or up to 50% of their net worth, whichever is lower

     

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)