Agenda for 2017 - 18 is : “Transform, Energize and Clean India” – TEC India


  1. No distinction between plan and non plan expenditure.

  2. Advancing in Budget date of presentation by 1 month to ensure departments get to spend from start of financial year.

  3. Merger of railways and General budget.

Key steps:

  1. Improving FDI in insurance sector and public listing of insurance companies.

  2. New health insurance scheme for protecting against hospitalization expense.

  3. Statutory backing to AADHAR.

  4. Goods and Services tax and Insolvency and bankruptcy code to improve ease of doing business.

  5. Incentivise gas discovery and exploration by providing market based mechanisms.

  6. Re-negotiation of PPP contracts and dispute resolution in PPP projects.

  7. A dedicated Long Term Irrigation Fund will be created in NABARD with an initial corpus of about Rs. 20,000 crore

  8. 850 crore for four dairying projects - ‘Pashudhan Sanjivani’, ‘Nakul Swasthya Patra’, ‘E-Pashudhan Haat’ and National Genomic Centre for indigenous breeds.

  9. Digging of compost pits and farm wells shall be done under MNREGA. Promotion of organic farming under Paramparagat krishi vikas yojana to be done.

  10. Soil health card scheme shall be extended to 14 crore farm holdings.

  11. National Dialysis Services Programme’ to be started under National Health Mission through PPP mode.

RAPID (Revenue, Accountability, Probity, Information and Digitisation)

E-Assessment of tax to be the focus with minimum inconvenience to taxpayers.

  1. All parties can accept cash donation of Rs. 2000 maximum and above this donations shall be in digital mode or cheque/DD.

  2. Political parties must file returns if they wish to avail of tax exemption.

  3. Electoral bonds can be issued by RBI - Under this scheme if a person wishes to donate to a party he will buy bonds of a particular amount and the bonds can be given to any party of his choice and the party can redeem the bonds and get funds.

  4. So donor can be anonymous if he wants. The bonds must be purchased via cheque or DD and must be redeemed within fixed time limit.

Miscellaneous Steps:

  1. No transaction of above Rs. 3 lakh shall be permitted in cash.
  2. To rationalise the number of tribunals and merge tribunals wherever appropriate

  3. A Centralised Defence Travel System has been developed through which travel tickets can be booked online by our soldiers and officer
  4. Proposed to create a Payments Regulatory Board in the Reserve Bank of India by replacing the existing Board for Regulation and Supervision of Payment and Settlement Systems.

  5. Foreign Investment Promotion Board to be abolished in 2017 - 18 and further liberalisation of FDI policy is under consideration

  6. Rashtriya Rail Sanraksha Kosh will be created with a corpus of Rs. 1 lakh crores over a period of 5 years

  7. Coach Mitra’, a single window interface, to register all coach related complaints and requirements to be launched

  8. Proposed to set up strategic crude oil reserves at 2 more locations, namely, Chandikhole in Odisha and Bikaner in Rajasthan.

  9. To foster a conducive labour environment , legislative reforms will be undertaken to simplify, rationalise and amalgamate the existing labour laws into 4 Codes on (i) wages; (ii) industrial relations; (iii) social security and welfare; and (iv)safety and working conditions.

  10. Mahila Shakti Kendra will be set up with an allocation of Rs. 500 crores in 14 lakh ICDS Anganwadi Centres. This will provide one stop convergent support services for empowering rural women with opportunities for skill development, employment, digital literacy, health and nutrition

  11. Skill Acquisition and Knowledge Awareness for Livelihood Promotion programme (SANKALP) to be launched at a cost of Rs. 4000 crores. SANKALP will provide market relevant training to 3.5 crore youth

  12. National Testing Agency to be set up as an autonomous and self Sustained premier testing organisation to conduct all entrance examinations for higher education institutions.

  13. Infrastructure tag given to Low cost housing. This means that Real estate developers can get access to low cost, long term funding for their projects and this shall ensure that the price of construction also comes down.


  1. The twin balance sheet problem of banks and corporates wasn’t considered in the budget.

  2. Twin balance sheet refers to -> Public sector banks have lent to the corporate sector for investing in projects. These projects shall generate revenue for corporates and can be used to repay bank loans.

  3. But due to poor economic situation the projects are failing to generate enough profits and so corporates can pay back loans to banks.

  4. The banks now have Non performing assets that are not generating income for it, so the bank has to increase provision for such assets and it has less money to lend. So the corporate sector cannot borrow from banks for future projects.

The budget did not allocate finances for recapitalizing banks nor did it create any Asset reconstruction company or a “Bad Bank”that can take such toxic assets from banks.

Fiscal deficit: When a government can’t meet its expenditure from its income it has to borrow and this borrowing is the fiscal deficit. As per FRBM Act, Fiscal deficit should be restricted to 3.2% of the GDP in 2017-18 and 3% in the following year.

Gross Domestic Product - GDP is the value of all goods and services produced in the country in a year and so is called the “size of the economy”. India’s GDP is $2 trillion dollars.

The Twin Balance Sheet [TBS] problem - over leveraged corporates and bad loans plagued banks has hurt India since the Global financial crisis. One of the solutions offered is the creation of a ‘bad bank’ or an Asset reconstruction agency or as the budget had suggested a “Public Sector Asset Rehabilitation Agency”. This centralised agency would take the toughest cases and make politically tough decisions to reduce bad debts.

It was believed that the TBS problem could be solved through economic recovery but that wasn’t the case. Therefore now the major corporates had to take more and more debt to continue their operations and banks had to face more bad loans. The result was that banks now faced a shortage of cash for lending to borrowers and private companies reduced their investments in new projects. This led to further decline in growth rates.

Reasons why we need a PARA:

  1. Banks usually solve the bad loan problem by lending the debtor company with more money to overcome the current problem. This leads to further increase in bad debt and higher recapitalization bill for government.

  2. The reason for bad loans is not always due to diversion of funds to other work but even genuine reasons exist like changes in the economic environment.

  3. Asset reconstruction companies are too small to solve large cases.

  4. Bankruptcy code isn’t yet fully in place.

  5. Since large borrowers have many lenders there is a coordination problem between them and a centralized agency needed.

How a PARA would help:

  1. The agency would buy the bad loans from the banks and then work to resolve them. The bad loans once off their books the banks can focus on giving new loans. Their resources can thus be channelled to productive work.

  2. PARA shall allocate the responsibility for the losses and take action.

  3. Bad loan problem shall be solved as effectively as possible.

East Asian countries when faced with a TBS resolved it by creation of a PARA. This helped them overcome the crisis in two years. Thus this tried and tested solution could work for India too.

Contract farming

The budget aims to integrate farmers better with the market by circulating a model “Contract farming” law with the states. The law if enacted shall allow farmers to enter into long term contracts for production and marketing arrangements with big retailers, processors and retail chains.

The current APMC laws although allow contract farming but only for marketing and have undue interference of APMC officials. Hence they haven’t excited the retailers or the farmers. The new law shall protect the interests of both farmers and the retailers and shall aim to keep transaction costs reasonable.

Integration of e-NAM with the Derivatives [Futures and Options] markets.

The e-National Agriculture Market is currently a spot exchange market and commodities can be sold by farmers to buyers from around the country. This helps in price discovery and reduces the risk of cartelization that is seen in APMC’s.

The futures and options market provide a good alternative to farmers to reduce their risks in the event of the price volatility. The integration of both types of agriculture produce markets can help in the reduction of farmer poverty. However there are constraints in the current derivatives markets based on volumes.

Basics of Futures and Options

This means that small producers can enroll on these as their produce is below the minimum volume limit set for trading on the commodity market. Hence Producer companies can work on behalf of farmers. Producer companies have a group of farmers who pool their produce together.

The idea behind integration shall face heavy opposition from the APMC’s as they want to maintain their monopolies over agriculture trade. The APMC’s are also responsible for the failure of the e-NAM too.

Q.The main objective of the 12th Five-Year Plan is (UPSC CSAT 2014)

  • inclusive growth and poverty reductions

  • inclusive and sustainable growth

  • sustainable and inclusive growth to reduce unemployment

  • Faster, sustainable and more inclusive growth.

Ans . D

Q.What does venture capital mean? (UPSC CSAT 2014)

  • A short-term capital provided to industries

  • A long-term start-up capital provided to new entrepreneurs

  • Funds provided to industries at times of incurring losses

  • Funds provided for replacement and renovation of industries

Ans . B

  1. Angel investors, incubators, accelerators, venture capitalists and seed funding are all associated with startups at different stages of its growth.

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