Class Notes 4 You

As per article 112 of the Constitution, the budget must distinguish the expenditures on revenue account from other expenditures (capital account). Therefore, the budget of Govt. of India is divided into Revenue Budget and Capital Budget, which are further divided into receipts budget and expenditure budget. The following are major differences between revenue budget and capital budget.  REVENUE BUDGET Revenue Receipts : Those receipts of the government which neither creates a liability nor reduces the assets (physical or financial) of the government. Example: Various direct and indirect tax receipts and interest, fee, dividend from PSUs  Revenue Expenditure : Those expenses of the government which neither creates any asset (physical or financial) nor reduces any liabilities of the Government. Example: Salary, pension, subsidy, interest payment etc.  CAPITAL BUDGET Capital Receipts : Those receipts of the government which either creates liability or reduces the assets (phys...

Organisation for Economic Co-operation and Development (OECD) defines Inclusive growth as the economic growth that is distributed fairly across society and creates opportunities for all. It refers to ‘broad-based’, ‘shared’, and ‘pro-poor growth’. Inclusive growth meets the objectives of inclusiveness and sustainability together : 1. Demand led growth: Inclusive growth leads to a wider distribution of wealth which creates a demand in a country and hence leads to domestic demand-driven growth.  2. Environment friendly: With better wealth distribution people move away from polluting sources of energy such as wood, cow dung, etc and adopt more environment-friendly sources such as LPG which further improves environmental sustainability (SDG 7, 14). 3. Gender equality: Inclusive growth addresses the structural and fundamental problems in society and the economy. E.g.: current strategy to empower women (SDG 5). These strategies build strong foundations that are more sustainable for long ...

Inclusive growth is economic growth that creates opportunity for all segments of the population and distributes the dividends of increased prosperity to every section of the society. Intra-generational equity represents availability of opportunities regardless of their economic class, gender, sex, disability and religion. Sustainable development seeks to promote human well-being, in the senses of both economic growth and social well-being, while simultaneously protecting and conserving the environment. Following are the major intra-generational issues: 1. Lack of healthcare facilities 2. Lack of quality education leading to difference in capabilities 3. Lack of job opportunities in remote areas of the country like North-east and hilly state. 4. Exclusion of women from various employment categories Inter-generational equity represents providing for the preservation of natural resources and the environment for the benefit of the future generations. Following are the major inter-generatio...

According to the Economic Survey 2018-2019, Indian economy has witnessed a gradual transition from a period of high and variable inflation to a more stable and low level of inflation along with steady GDP growth in the past five years. Steady growth rate and low inflation been good for the Indian economy : 1. Low inflation has helped to promote stability, confidence, security and therefore encourages investment. 2. Steady growth also provided for better revenue prospects which assisted the government to increase the contribution in various social sector schemes for example 17 percent hike in allocation to Women and Child Development Ministry. 3. Low inflation allowed the RBI to reduce the repo rates which provided capital for industrialists at cheaper rates. 4. Low inflation increases disposable income and therefore increases demand and investment in the economy. High inflation eats up the earnings of people which decreases demand in the economy. 5. Steady growth rate made it possible...

Goods and service tax introduced in 2017 for subsuming of following indirect taxes:  Central 1. Central and additional Excise Duties 2. Service Tax 3. Countervailing Duty 4. Special Additional Duty of Customs  State 1. State Value Added Tax 2. Entertainment Tax 3. Central Sales Tax 4. Octroi and Entry tax 5. Purchase Tax 6. Luxury tax Revenue Implications of GST since 2017: Tax Revenue: 1. Gross revenue collection in FY 2019- 20 soared by 42% from FY 2016-17. 2. Actual GST revenues decreased with an effective tax rate slipping to 11.6%. 3. Compensation fund’s burden increased the Centre’s borrowing (1 lakh crore, 2020-21). Tax Base : 1. Doubled from 66.25 lakhs to 1.28 crores (2017- 2021). Tax Buoyancy 1. Expected an increase of 1.2% but, tax buoyancy of GST shows volatility. 2. Growth rate in GVA is less than that of GST collection. Tax Compliance 1. Improved indirect tax compliances 2. Tax evasion and frauds resulted-losses in revenue (70,000 crores). Even after 4 yea...

Gross Domestic Product (GDP) is the final value of goods and services produced within the domestic territory of an economy in a particular financial year. In India, economic growth is measured as change in GDP at constant prices.  The Central Statistical Office (CSO), in 2015, changed its methodology to calculate GDP as recommended by the United Nations System of National Accounts. The following were the major changes introduced in 2015 : 1. In 2015, the Central Statistics Office (CSO) did away with GDP at factor cost and adopted the international practice of GDP at market price and the Gross Value Addition (GVA) measure to better estimate economic activity. GDP at market price = GDP at factor cost + Indirect Taxes – Subsidies 2. Sector-wise wise estimates of Gross Value Added (GVA) would be provided at basic prices from 2015 onwards instead of factor cost which was the earlier norm. GVA at basic prices = GVA at factor cost + (Production Taxes – Production Subsidies) 3. Broadening ...

The Constitution (One Hundred and First Amendment) Act, 2016, was the law which created the mechanism for levying a nationwide GST. The adoption of the GST was made possible by the States ceding almost all their powers to impose local-level indirect taxes and agreeing to let the prevailing multiplicity of imposts be subsumed under the GST. Written into this law was a provision to compensate the States for loss of revenue arising out of implementation of the GST. Rational behind GST (Compensation to states) Act 2017: 1. Fixed revenue growth: The centre assured a 14% year to year growth on GST revenues for a period of five years. If such an amount was not available, the centre assured states to compensate states for such deficiency. 2. Raising new revenue sources: State governments lost their power to raise revenue from alternative indirect sources after GST. This deficiency was fulfilled by the union government by compensating them with a fixed amount regardless of the situation. 3. Cre...

In the very start of 2020, the whole world faced a once in a century crisis in the form of Covid-19 outbreak. It plunged most of the economies into recession and there was a major impact on the Indian economy too. In Q1 of 2020-21, the economy contracted by 24% and other macro-economic parameters also showed negative growth. All this led to the Indian economy moving into recession. Although after contracting for two consecutive quarters in 2020-21, the economy turned around and moved into positive territory in the third quarter. The Economic Survey of 2020-21 and Ministry of Finance reiterated several times that the recovery of the Indian economy is V shaped although certain critics have termed the recovery as W shaped and K shaped also. In my view, the recovery of the Indian economy is V shaped due to the following reasons:  • If we see the annual GDP growth data (Y-o-Y) in the graph, it clearly represents V shape recovery. • Even if we faced a severe 2nd Covid wave in the first ...

Current Affairs  Important Newspaper Highlights for UPSC Civil Services Examination. 02 August 2022 The HINDU   🟠 (Page 6): Language as barrier 🟢 (Page 6): Using a rupee route to get around a dominating dollar 🟠 (Page 7): Government’s own ‘gig workers’ 🟢 (Page 8): The dwindling strength of IAF 🟠 (Page 8): AlphaFold: A tour de force in science   The Indian EXPRESS 🟢 (Page 11): A fresh start at 75 🟠 (Page 11): Taking on Tatmadaw 🟢 (Page 13): Civil code and govt stance 🟠 (Page 13): Over 59 lakh cases pending in High Courts, and where 96 women judges are serving 🟢 (Page 13): 3 reasons why GST collections continue to surge 

The UN Educational, Scientific, Cultural Organisation was founded in 1945 and is a catalyst for far-reaching and important environmental and sustainable development initiatives. Too much Politics in UNESCO: ● The US has long used UNESCO as a stage for political gestures. However, the recent major issue which made the US leave the UNESCO was when UNESCO designated the old city of Hebron in the West Bank, with its Tomb of the Patriarchs, a Palestinian World Heritage site. ● According to the US when UNESCO voted to recognize the Palestinians as full members, it undermined an important U.S. policy goal.  ● Israel has regularly complained over resolutions about cultural sites in the West Bank and Jerusalem, arguing that they are worded to delegitimize Israel. US announcement to withdraw from this cultural body has once again highlighted the politicisation of its activities and limitation of funds: ● The absence of U.S. funding makes it increasingly difficult to meet the challenges that...