Week I December 2016 UPSC Notes | EduRev

Created by: Abhimanu Ias

UPSC : Week I December 2016 UPSC Notes | EduRev

 Page 1


 
 
Abhimanu 
Weekly current affairs Series 
 
 
 
 
 
Week: I, Dec 2016 
 
 
 
 
 
Abhimanu’s IAS Study Group 
Chandigarh 
 
Page 2


 
 
Abhimanu 
Weekly current affairs Series 
 
 
 
 
 
Week: I, Dec 2016 
 
 
 
 
 
Abhimanu’s IAS Study Group 
Chandigarh 
 
 
 
 
NATIONAL ECONOMIC AFFAIRS 
India crossed the $300 billion foreign direct investment (FDI) milestone 
? India has crossed the $300 billion foreign direct investment (FDI) milestone between April 2000 and 
September 2016, firmly establishing its credentials as a safe investment destination in the world. 
? 33% of the FDI came through the Mauritius route, apparently because the investors wanted to take advantage 
of India's double taxation avoidance treaty with the island nation. 
? India received $101.76 billion from Mauritius between April 2000 and September 2016. The cumulative FDI 
inflows during the period amounted to $310.26 billion. 
? The other big investors have been from Singapore, the US, UK and the Netherlands. 
? India's services sector topped the table, receiving 18 per cent of the cumulative equity FDI inflows followed by 
construction development, computer software & hardware, telecommunication and automobile. 
? India crossed the $300 billion mark at a time when the global economic slowdown has had a dampening 
impact on FDI flows which are expected to fall this year. 
? According to the World Investment Report 2016, global FDI flows rose by 38 per cent to $1.76 trillion, the 
highest level since the global economic and financial crisis began in 2008. 
Analysis: 
? Liberalisation of the FDI policy framework, major national development programmes such as Make in India, 
Digital India and Skill India, besides increasing competitiveness, have made India the preferred choice for 
investors globally. 
? FDI flows have increased significantly and consistently in the last two years and the country would continue 
to remain as one of the most attractive destinations in the foreseeable future 
? Global investor sentiment is positive about India being a safe investment haven, despite the global 
economic climate remaining uncertain. 
? According to United Nations Conference on Trade and Development (UNCTAD) World Investment Report 
2016, India acquired 10th slot in the top 10 countries attracting highest FDI inflows globally in 2015. The 
report also mentioned that among the investment promotion agencies, India has moved up by one rank to 
become the sixth most preferred investment destination. 
? India will require around US$ 1 trillion in the 12th Five-Year Plan (2012–17), to fund infrastructure growth 
covering sectors such as highways, ports and airways. This would require support from FDI flows. India’s 
growth rate, along with competitive location in terms of wages and policies like Stand Up India, is 
expected to boost FDI in the coming future. 
? However, The FDI flows in 2016 are expected to decline by 10-15%, reflecting fragility of global economy, 
persistent weakness of aggregate demand, effective policy measures to curb tax inversion deals. Besides, 
elevated geopolitical risks and regional tensions may further amplify the expected downturn of FDI flows. 
Page 3


 
 
Abhimanu 
Weekly current affairs Series 
 
 
 
 
 
Week: I, Dec 2016 
 
 
 
 
 
Abhimanu’s IAS Study Group 
Chandigarh 
 
 
 
 
NATIONAL ECONOMIC AFFAIRS 
India crossed the $300 billion foreign direct investment (FDI) milestone 
? India has crossed the $300 billion foreign direct investment (FDI) milestone between April 2000 and 
September 2016, firmly establishing its credentials as a safe investment destination in the world. 
? 33% of the FDI came through the Mauritius route, apparently because the investors wanted to take advantage 
of India's double taxation avoidance treaty with the island nation. 
? India received $101.76 billion from Mauritius between April 2000 and September 2016. The cumulative FDI 
inflows during the period amounted to $310.26 billion. 
? The other big investors have been from Singapore, the US, UK and the Netherlands. 
? India's services sector topped the table, receiving 18 per cent of the cumulative equity FDI inflows followed by 
construction development, computer software & hardware, telecommunication and automobile. 
? India crossed the $300 billion mark at a time when the global economic slowdown has had a dampening 
impact on FDI flows which are expected to fall this year. 
? According to the World Investment Report 2016, global FDI flows rose by 38 per cent to $1.76 trillion, the 
highest level since the global economic and financial crisis began in 2008. 
Analysis: 
? Liberalisation of the FDI policy framework, major national development programmes such as Make in India, 
Digital India and Skill India, besides increasing competitiveness, have made India the preferred choice for 
investors globally. 
? FDI flows have increased significantly and consistently in the last two years and the country would continue 
to remain as one of the most attractive destinations in the foreseeable future 
? Global investor sentiment is positive about India being a safe investment haven, despite the global 
economic climate remaining uncertain. 
? According to United Nations Conference on Trade and Development (UNCTAD) World Investment Report 
2016, India acquired 10th slot in the top 10 countries attracting highest FDI inflows globally in 2015. The 
report also mentioned that among the investment promotion agencies, India has moved up by one rank to 
become the sixth most preferred investment destination. 
? India will require around US$ 1 trillion in the 12th Five-Year Plan (2012–17), to fund infrastructure growth 
covering sectors such as highways, ports and airways. This would require support from FDI flows. India’s 
growth rate, along with competitive location in terms of wages and policies like Stand Up India, is 
expected to boost FDI in the coming future. 
? However, The FDI flows in 2016 are expected to decline by 10-15%, reflecting fragility of global economy, 
persistent weakness of aggregate demand, effective policy measures to curb tax inversion deals. Besides, 
elevated geopolitical risks and regional tensions may further amplify the expected downturn of FDI flows. 
 
 
Eco-Sensitive Zone  
? The Government has issued the final Notification for an Eco-Sensitive Zone area of 59.46 sq kms of which 
19.25 sq km is forest land and 40.21 sq km is non-forest land in Sanjay Gandhi National Park in Mumbai 
suburb.  
About Sanjay Gandhi National Park  
? Sanjay Gandhi National Park is spread over three districts – Palgar, Thane and Mumbai Suburb and falls within 
the Tehsils of Kurla, Borivalli and Thane.  
? The National Park is home to a number of endangered species of flora and fauna and harbours approximately 
800 species of flowering plants, 45 species of mammals, 43 species of reptiles, 38 species of snakes, 12 
species of amphibians, 300 species of birds, 150 species of butterflies. Notable amongst them are large 
mammalian species such as leopard, wild boar, four-horned antelope, black-naped hare, wild cat, jackal and 
porcupine and many bird species such as Lesser grebe, Purple Heron, Smaller Egret, Lesser Whistling Teal, 
Pariah Kite. Many reptiles, including snakes as Indian Cobra and Viper are also found in the National Park. 
 About ESZ: 
? Eco-sensitive zones (ESZs) around Protected Areas are created to prevent ecological damage caused due to 
developmental activities around National Parks and Wildlife Sanctuaries. 
? These areas act as a “shock absorbers” to the protected areas by regulating and managing the activities 
around such areas.  
? Activities, including commercial mining, setting of saw mills and industries causing pollution, commercial use 
of firewood and major hydro-power projects, are prohibited in such areas. 
? It also prohibits tourism activities like flying over protected areas in an aircraft or hot air balloon, and 
discharge of effluents and solid waste in natural water bodies or terrestrial areas. 
? Felling of trees, drastic change in agriculture systems and commercial use of natural water resources, 
including groundwater harvesting and setting up of hotels and resorts, are the activities regulated in the 
areas. 
? Activities permitted in the areas include ongoing agriculture and horticulture practices by local communities, 
rainwater harvesting, organic farming, adoption of green technology and use of renewable energy sources. 
? The Eco-Sensitive Zone has a minimum extent of 100 metres and maximum extent of up to 4 km from the Park 
boundary 
Fifth Bi-monthly Monetary Policy Statement, 2016-17 
? The Reserve Bank of India, in its fifth bi monthly monetary policy statement, kept repo rate unchanged at 6.25 
per cent. 
? Reverse repo rate under the LAF also remains unchanged at 5.75 per cent along with the marginal standing 
facility (MSF) rate and the Bank Rate at 6.75 per cent.  
? Central bank has decided to withdraw the incremental Cash Reserve Ratio (CRR) from December 10. 
? In its policy review, the RBI also lowered GDP growth estimate to 7.1 per cent in 2016-17 from an earlier 
projection of 7.6 per cent. 
Analysis: 
? Global growth picked up modestly in the second half of 2016, after weakening in the first half. Activity in 
advanced economies improved hesitantly, led by a rebound in the US. In the emerging market economies, 
growth has moderated, but policy stimulus in China and some easing of stress in the larger commodity 
exporters shored up momentum. World trade is beginning to emerge out of a trough that bottomed out in 
July-August and shows signs of stabilising. 
? International financial markets were strongly impacted by the result of the US presidential election and 
incoming data that raised the probability of the Federal Reserve tightening monetary policy. 
? On the domestic front, the growth of real gross value added (GVA) in Q2 of 2016-17 turned out to be lower 
than projected on account of a deeper than expected slowdown in industrial activity. Manufacturing 
Page 4


 
 
Abhimanu 
Weekly current affairs Series 
 
 
 
 
 
Week: I, Dec 2016 
 
 
 
 
 
Abhimanu’s IAS Study Group 
Chandigarh 
 
 
 
 
NATIONAL ECONOMIC AFFAIRS 
India crossed the $300 billion foreign direct investment (FDI) milestone 
? India has crossed the $300 billion foreign direct investment (FDI) milestone between April 2000 and 
September 2016, firmly establishing its credentials as a safe investment destination in the world. 
? 33% of the FDI came through the Mauritius route, apparently because the investors wanted to take advantage 
of India's double taxation avoidance treaty with the island nation. 
? India received $101.76 billion from Mauritius between April 2000 and September 2016. The cumulative FDI 
inflows during the period amounted to $310.26 billion. 
? The other big investors have been from Singapore, the US, UK and the Netherlands. 
? India's services sector topped the table, receiving 18 per cent of the cumulative equity FDI inflows followed by 
construction development, computer software & hardware, telecommunication and automobile. 
? India crossed the $300 billion mark at a time when the global economic slowdown has had a dampening 
impact on FDI flows which are expected to fall this year. 
? According to the World Investment Report 2016, global FDI flows rose by 38 per cent to $1.76 trillion, the 
highest level since the global economic and financial crisis began in 2008. 
Analysis: 
? Liberalisation of the FDI policy framework, major national development programmes such as Make in India, 
Digital India and Skill India, besides increasing competitiveness, have made India the preferred choice for 
investors globally. 
? FDI flows have increased significantly and consistently in the last two years and the country would continue 
to remain as one of the most attractive destinations in the foreseeable future 
? Global investor sentiment is positive about India being a safe investment haven, despite the global 
economic climate remaining uncertain. 
? According to United Nations Conference on Trade and Development (UNCTAD) World Investment Report 
2016, India acquired 10th slot in the top 10 countries attracting highest FDI inflows globally in 2015. The 
report also mentioned that among the investment promotion agencies, India has moved up by one rank to 
become the sixth most preferred investment destination. 
? India will require around US$ 1 trillion in the 12th Five-Year Plan (2012–17), to fund infrastructure growth 
covering sectors such as highways, ports and airways. This would require support from FDI flows. India’s 
growth rate, along with competitive location in terms of wages and policies like Stand Up India, is 
expected to boost FDI in the coming future. 
? However, The FDI flows in 2016 are expected to decline by 10-15%, reflecting fragility of global economy, 
persistent weakness of aggregate demand, effective policy measures to curb tax inversion deals. Besides, 
elevated geopolitical risks and regional tensions may further amplify the expected downturn of FDI flows. 
 
 
Eco-Sensitive Zone  
? The Government has issued the final Notification for an Eco-Sensitive Zone area of 59.46 sq kms of which 
19.25 sq km is forest land and 40.21 sq km is non-forest land in Sanjay Gandhi National Park in Mumbai 
suburb.  
About Sanjay Gandhi National Park  
? Sanjay Gandhi National Park is spread over three districts – Palgar, Thane and Mumbai Suburb and falls within 
the Tehsils of Kurla, Borivalli and Thane.  
? The National Park is home to a number of endangered species of flora and fauna and harbours approximately 
800 species of flowering plants, 45 species of mammals, 43 species of reptiles, 38 species of snakes, 12 
species of amphibians, 300 species of birds, 150 species of butterflies. Notable amongst them are large 
mammalian species such as leopard, wild boar, four-horned antelope, black-naped hare, wild cat, jackal and 
porcupine and many bird species such as Lesser grebe, Purple Heron, Smaller Egret, Lesser Whistling Teal, 
Pariah Kite. Many reptiles, including snakes as Indian Cobra and Viper are also found in the National Park. 
 About ESZ: 
? Eco-sensitive zones (ESZs) around Protected Areas are created to prevent ecological damage caused due to 
developmental activities around National Parks and Wildlife Sanctuaries. 
? These areas act as a “shock absorbers” to the protected areas by regulating and managing the activities 
around such areas.  
? Activities, including commercial mining, setting of saw mills and industries causing pollution, commercial use 
of firewood and major hydro-power projects, are prohibited in such areas. 
? It also prohibits tourism activities like flying over protected areas in an aircraft or hot air balloon, and 
discharge of effluents and solid waste in natural water bodies or terrestrial areas. 
? Felling of trees, drastic change in agriculture systems and commercial use of natural water resources, 
including groundwater harvesting and setting up of hotels and resorts, are the activities regulated in the 
areas. 
? Activities permitted in the areas include ongoing agriculture and horticulture practices by local communities, 
rainwater harvesting, organic farming, adoption of green technology and use of renewable energy sources. 
? The Eco-Sensitive Zone has a minimum extent of 100 metres and maximum extent of up to 4 km from the Park 
boundary 
Fifth Bi-monthly Monetary Policy Statement, 2016-17 
? The Reserve Bank of India, in its fifth bi monthly monetary policy statement, kept repo rate unchanged at 6.25 
per cent. 
? Reverse repo rate under the LAF also remains unchanged at 5.75 per cent along with the marginal standing 
facility (MSF) rate and the Bank Rate at 6.75 per cent.  
? Central bank has decided to withdraw the incremental Cash Reserve Ratio (CRR) from December 10. 
? In its policy review, the RBI also lowered GDP growth estimate to 7.1 per cent in 2016-17 from an earlier 
projection of 7.6 per cent. 
Analysis: 
? Global growth picked up modestly in the second half of 2016, after weakening in the first half. Activity in 
advanced economies improved hesitantly, led by a rebound in the US. In the emerging market economies, 
growth has moderated, but policy stimulus in China and some easing of stress in the larger commodity 
exporters shored up momentum. World trade is beginning to emerge out of a trough that bottomed out in 
July-August and shows signs of stabilising. 
? International financial markets were strongly impacted by the result of the US presidential election and 
incoming data that raised the probability of the Federal Reserve tightening monetary policy. 
? On the domestic front, the growth of real gross value added (GVA) in Q2 of 2016-17 turned out to be lower 
than projected on account of a deeper than expected slowdown in industrial activity. Manufacturing 
 
 
 
slowed down both sequentially and on an annual basis, with weak demand conditions and the firming up 
of input costs dragging down the profitability of corporations. Gross fixed capital formation contracted for 
the third consecutive quarter. Although government final consumption expenditure slowed sequentially, it 
supported private final consumption expenditure, the mainstay of aggregate demand. The contribution of 
net exports to aggregate demand remained positive, but on account of a sharper contraction in imports 
relative to exports. 
? Industrial activity remains very weak. Among the core industries in the index of industrial production (IIP), 
the output of coal contracted in October due to subdued demand, while the production of crude oil and 
natural gas shrank under the binding constraint of structural impediments.  
? The production of cement, fertilisers and electricity continued to decelerate, reflecting the sluggishness in 
underlying economic activity. On the other hand, steel output has recorded sustained expansion following 
the application of countervailing duties.  
? Services sector, the outlook is mixed with construction, trade, transport, hotels and communication 
impacted by temporary SBN effects, while public administration, defence and other services would 
continue to be buoyed by the 7th Central Pay Commission (CPC) award and one rank one pension (OROP).  
A Step toward Cashless economy 
? In a bid to make Indian economy cashless, Indian government has planned a series of steps to increase the 
awareness of people in this regard . These include incentives for digital payments, day to day financial 
transactions like buying or selling goods/services, transferring money etc. 
These incentives/measures are following:  
? The Central Government Petroleum PSUs shall give incentive by offering a discount at the rate of 0.75% of the 
sale price to consumers on purchase of petrol/diesel if payment is made through digital means. Nearly 4.5 
crore customers buy petrol or diesel at such petrol pumps per day who can take benefit of this incentive 
scheme.  It is estimated that petrol/diesel worth Rs.1800 crore is sold per day to the customers out of which 
nearly 20% was being paid through digital means.  In the month of November 2016 it has increased to 40% 
and the cash transaction of Rs.360 crore per day have got shifted to cashless transaction methods.  The 
incentive scheme has the potential of shifting at least 30% more customer to digital means which will further 
reduce the cash requirement of nearly Rs. 2 lakh crore per year at the petrol pumps. 
? To expand digital payment infrastructure in rural areas, the Central Government through NABARD will extend 
financial support to eligible banks for deployment of 2 POS devices each in 1 Lakh villages with population of 
less than 10,000.  These POS machines are intended to be deployed at primary cooperative societies/milk 
societies/agricultural input dealers to facilitate agri-related transactions through digital means. This will 
benefit farmers of one lakh village covering a total population of nearly 75 crore who will have facility to 
transact cashlessly in their villages for their agri needs.  
? The Central Government through NABARD will also support Rural Regional Banks and Cooperative Banks to 
issue “Rupay Kisan Cards” to 4.32 crore Kisan Credit Card holders to enable them to make digital transactions 
at POS machines/Micro ATMs/ATMs. 
? Railway through its sub urban railway network shall provide incentive by way of discount upto 0.5% to 
customers for monthly or seasonal tickets from January 1, 2017, if payment is made through digital means. 
Nearly 80 lakh passengers use seasonal or monthly ticket on suburban railways, largely in cash, spending 
worth nearly Rs.2,000 crore per year.  As more and more passengers will shift to digital means the cash 
requirement may get reduced by Rs.1,000 crore per year in near future. 
? All railway passengers buying online ticket shall be given free accidental insurance cover of upto Rs. 10 lakh. 
Nearly 14 lakh railway passengers are buying tickets everyday out of which 58% tickets are bought online 
through digital means.  It is expected that another 20% passengers may shift to digital payment methods of 
buying railway tickets.  Hence nearly 11 lakh passengers per day will be covered under the accidental 
insurance scheme. 
Page 5


 
 
Abhimanu 
Weekly current affairs Series 
 
 
 
 
 
Week: I, Dec 2016 
 
 
 
 
 
Abhimanu’s IAS Study Group 
Chandigarh 
 
 
 
 
NATIONAL ECONOMIC AFFAIRS 
India crossed the $300 billion foreign direct investment (FDI) milestone 
? India has crossed the $300 billion foreign direct investment (FDI) milestone between April 2000 and 
September 2016, firmly establishing its credentials as a safe investment destination in the world. 
? 33% of the FDI came through the Mauritius route, apparently because the investors wanted to take advantage 
of India's double taxation avoidance treaty with the island nation. 
? India received $101.76 billion from Mauritius between April 2000 and September 2016. The cumulative FDI 
inflows during the period amounted to $310.26 billion. 
? The other big investors have been from Singapore, the US, UK and the Netherlands. 
? India's services sector topped the table, receiving 18 per cent of the cumulative equity FDI inflows followed by 
construction development, computer software & hardware, telecommunication and automobile. 
? India crossed the $300 billion mark at a time when the global economic slowdown has had a dampening 
impact on FDI flows which are expected to fall this year. 
? According to the World Investment Report 2016, global FDI flows rose by 38 per cent to $1.76 trillion, the 
highest level since the global economic and financial crisis began in 2008. 
Analysis: 
? Liberalisation of the FDI policy framework, major national development programmes such as Make in India, 
Digital India and Skill India, besides increasing competitiveness, have made India the preferred choice for 
investors globally. 
? FDI flows have increased significantly and consistently in the last two years and the country would continue 
to remain as one of the most attractive destinations in the foreseeable future 
? Global investor sentiment is positive about India being a safe investment haven, despite the global 
economic climate remaining uncertain. 
? According to United Nations Conference on Trade and Development (UNCTAD) World Investment Report 
2016, India acquired 10th slot in the top 10 countries attracting highest FDI inflows globally in 2015. The 
report also mentioned that among the investment promotion agencies, India has moved up by one rank to 
become the sixth most preferred investment destination. 
? India will require around US$ 1 trillion in the 12th Five-Year Plan (2012–17), to fund infrastructure growth 
covering sectors such as highways, ports and airways. This would require support from FDI flows. India’s 
growth rate, along with competitive location in terms of wages and policies like Stand Up India, is 
expected to boost FDI in the coming future. 
? However, The FDI flows in 2016 are expected to decline by 10-15%, reflecting fragility of global economy, 
persistent weakness of aggregate demand, effective policy measures to curb tax inversion deals. Besides, 
elevated geopolitical risks and regional tensions may further amplify the expected downturn of FDI flows. 
 
 
Eco-Sensitive Zone  
? The Government has issued the final Notification for an Eco-Sensitive Zone area of 59.46 sq kms of which 
19.25 sq km is forest land and 40.21 sq km is non-forest land in Sanjay Gandhi National Park in Mumbai 
suburb.  
About Sanjay Gandhi National Park  
? Sanjay Gandhi National Park is spread over three districts – Palgar, Thane and Mumbai Suburb and falls within 
the Tehsils of Kurla, Borivalli and Thane.  
? The National Park is home to a number of endangered species of flora and fauna and harbours approximately 
800 species of flowering plants, 45 species of mammals, 43 species of reptiles, 38 species of snakes, 12 
species of amphibians, 300 species of birds, 150 species of butterflies. Notable amongst them are large 
mammalian species such as leopard, wild boar, four-horned antelope, black-naped hare, wild cat, jackal and 
porcupine and many bird species such as Lesser grebe, Purple Heron, Smaller Egret, Lesser Whistling Teal, 
Pariah Kite. Many reptiles, including snakes as Indian Cobra and Viper are also found in the National Park. 
 About ESZ: 
? Eco-sensitive zones (ESZs) around Protected Areas are created to prevent ecological damage caused due to 
developmental activities around National Parks and Wildlife Sanctuaries. 
? These areas act as a “shock absorbers” to the protected areas by regulating and managing the activities 
around such areas.  
? Activities, including commercial mining, setting of saw mills and industries causing pollution, commercial use 
of firewood and major hydro-power projects, are prohibited in such areas. 
? It also prohibits tourism activities like flying over protected areas in an aircraft or hot air balloon, and 
discharge of effluents and solid waste in natural water bodies or terrestrial areas. 
? Felling of trees, drastic change in agriculture systems and commercial use of natural water resources, 
including groundwater harvesting and setting up of hotels and resorts, are the activities regulated in the 
areas. 
? Activities permitted in the areas include ongoing agriculture and horticulture practices by local communities, 
rainwater harvesting, organic farming, adoption of green technology and use of renewable energy sources. 
? The Eco-Sensitive Zone has a minimum extent of 100 metres and maximum extent of up to 4 km from the Park 
boundary 
Fifth Bi-monthly Monetary Policy Statement, 2016-17 
? The Reserve Bank of India, in its fifth bi monthly monetary policy statement, kept repo rate unchanged at 6.25 
per cent. 
? Reverse repo rate under the LAF also remains unchanged at 5.75 per cent along with the marginal standing 
facility (MSF) rate and the Bank Rate at 6.75 per cent.  
? Central bank has decided to withdraw the incremental Cash Reserve Ratio (CRR) from December 10. 
? In its policy review, the RBI also lowered GDP growth estimate to 7.1 per cent in 2016-17 from an earlier 
projection of 7.6 per cent. 
Analysis: 
? Global growth picked up modestly in the second half of 2016, after weakening in the first half. Activity in 
advanced economies improved hesitantly, led by a rebound in the US. In the emerging market economies, 
growth has moderated, but policy stimulus in China and some easing of stress in the larger commodity 
exporters shored up momentum. World trade is beginning to emerge out of a trough that bottomed out in 
July-August and shows signs of stabilising. 
? International financial markets were strongly impacted by the result of the US presidential election and 
incoming data that raised the probability of the Federal Reserve tightening monetary policy. 
? On the domestic front, the growth of real gross value added (GVA) in Q2 of 2016-17 turned out to be lower 
than projected on account of a deeper than expected slowdown in industrial activity. Manufacturing 
 
 
 
slowed down both sequentially and on an annual basis, with weak demand conditions and the firming up 
of input costs dragging down the profitability of corporations. Gross fixed capital formation contracted for 
the third consecutive quarter. Although government final consumption expenditure slowed sequentially, it 
supported private final consumption expenditure, the mainstay of aggregate demand. The contribution of 
net exports to aggregate demand remained positive, but on account of a sharper contraction in imports 
relative to exports. 
? Industrial activity remains very weak. Among the core industries in the index of industrial production (IIP), 
the output of coal contracted in October due to subdued demand, while the production of crude oil and 
natural gas shrank under the binding constraint of structural impediments.  
? The production of cement, fertilisers and electricity continued to decelerate, reflecting the sluggishness in 
underlying economic activity. On the other hand, steel output has recorded sustained expansion following 
the application of countervailing duties.  
? Services sector, the outlook is mixed with construction, trade, transport, hotels and communication 
impacted by temporary SBN effects, while public administration, defence and other services would 
continue to be buoyed by the 7th Central Pay Commission (CPC) award and one rank one pension (OROP).  
A Step toward Cashless economy 
? In a bid to make Indian economy cashless, Indian government has planned a series of steps to increase the 
awareness of people in this regard . These include incentives for digital payments, day to day financial 
transactions like buying or selling goods/services, transferring money etc. 
These incentives/measures are following:  
? The Central Government Petroleum PSUs shall give incentive by offering a discount at the rate of 0.75% of the 
sale price to consumers on purchase of petrol/diesel if payment is made through digital means. Nearly 4.5 
crore customers buy petrol or diesel at such petrol pumps per day who can take benefit of this incentive 
scheme.  It is estimated that petrol/diesel worth Rs.1800 crore is sold per day to the customers out of which 
nearly 20% was being paid through digital means.  In the month of November 2016 it has increased to 40% 
and the cash transaction of Rs.360 crore per day have got shifted to cashless transaction methods.  The 
incentive scheme has the potential of shifting at least 30% more customer to digital means which will further 
reduce the cash requirement of nearly Rs. 2 lakh crore per year at the petrol pumps. 
? To expand digital payment infrastructure in rural areas, the Central Government through NABARD will extend 
financial support to eligible banks for deployment of 2 POS devices each in 1 Lakh villages with population of 
less than 10,000.  These POS machines are intended to be deployed at primary cooperative societies/milk 
societies/agricultural input dealers to facilitate agri-related transactions through digital means. This will 
benefit farmers of one lakh village covering a total population of nearly 75 crore who will have facility to 
transact cashlessly in their villages for their agri needs.  
? The Central Government through NABARD will also support Rural Regional Banks and Cooperative Banks to 
issue “Rupay Kisan Cards” to 4.32 crore Kisan Credit Card holders to enable them to make digital transactions 
at POS machines/Micro ATMs/ATMs. 
? Railway through its sub urban railway network shall provide incentive by way of discount upto 0.5% to 
customers for monthly or seasonal tickets from January 1, 2017, if payment is made through digital means. 
Nearly 80 lakh passengers use seasonal or monthly ticket on suburban railways, largely in cash, spending 
worth nearly Rs.2,000 crore per year.  As more and more passengers will shift to digital means the cash 
requirement may get reduced by Rs.1,000 crore per year in near future. 
? All railway passengers buying online ticket shall be given free accidental insurance cover of upto Rs. 10 lakh. 
Nearly 14 lakh railway passengers are buying tickets everyday out of which 58% tickets are bought online 
through digital means.  It is expected that another 20% passengers may shift to digital payment methods of 
buying railway tickets.  Hence nearly 11 lakh passengers per day will be covered under the accidental 
insurance scheme. 
 
 
? For paid services e.g. catering, accommodation, retiring rooms etc. being offered by railways through its 
affiliated entities/corporations to the passengers, it will provide a discount of 5% for payment of these 
services through digital means. 
? All the passengers travelling on railways availing these services may avail the benefit. 
? Public sector insurance companies will provide incentive, by way of discount or credit, upto 10% of the 
premium in general insurance policies and 8% in new life policies of Life Insurance Corporation sold through 
the customer portals, in case payment is made through digital means. 
? The Central Government Departments and Central Public Sector Undertakings will ensure that transactions 
fee/MDR charges associated with payment through digital means shall not be passed on to the consumers 
and all such expenses shall be borne by them.  State Governments are being advised that the State 
Governments and its organizations should also consider to absorb the transaction fee/MDR charges related 
to digital payment to them and consumer should not be asked to bear it. 
? Public sector banks are advised that merchant should not be required to pay more than Rs. 100 per month as 
monthly rental for PoS terminals/Micro ATMs/mobile POS from the merchants to bring small merchant on 
board the digital payment eco system. 
? Nearly 6.5 lakh machines by Public Sector Banks have been issued to merchants who will be benefitted by the 
lower rentals and promote digital transactions.  With lower rentals, more merchants will install such 
machines and promote digital transactions.  
? No service tax will be charged on digital transaction charges/MDR for transactions upto Rs.2000 per 
transaction. 
? For the payment of toll at Toll Plazas on National Highways using RFID card/Fast Tags, a discount of 10% will 
be available to users in the year 2016-17. 
Ratan Watal committee 
? Ratan watal committee has submitted its report on the digital payments infrastructure to the government.  
? This committee has representatives from the Reserve Bank of India (RBI), Unique Identification Authority of 
India (UIDAI), the tax department and various industry bodies in the payments space. 
Terms of Reference for this committee: 
? To study and recommend need for charges, if any, in the regulatory mechanism and any legislation, relevant 
for the purpose of promotion of payments by digital modes. 
? To study and recommend ways for leveraging Unique Identification Number or any other proof of identity for 
authentication of card/digital transactions and setting up of a Centralised KYC Registry; 
? To study introduction of single window system of Payment Gateway to accept all types of Cards/ Digital 
Payments of Government receipts; 
? To study feasibility and framing rules for creating a payments history of all Digital Payments and create 
necessary linkage between payments transaction history and credit information; 
? To study and recommend various measures to incentivize transactions through cards and digital means. 
? To study global best practices in payments including initiatives taken by various Governments/ Government 
Agencies 
? To identify market failure (s), if any, along with suitable interventions that may be implemented to promote 
payment by card/digital means 
? To identify regulatory bottlenecks, if any, and suggest changes to promote payment by card/ digital means 
? To study and make recommendations on any other matter related to promotion of payments through Cards 
and Digital Means 
Recommendations of the report: 
? In its Report, the Committee has recommended the medium term strategy for accelerating growth of Digital 
Payments in India with a regulatory regime which is conducive to bridging the Digital divide by promoting 
competition, open access & interoperability in payments.  
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