Government Schemes

Government schemes are initiatives introduced by the central and state governments to achieve specific socio-economic objectives. These schemes are crucial for competitive exams as they reflect the government's focus areas and policy directions. Understanding them involves knowing their objectives, target beneficiaries, key features, funding patterns, and implementation status.

Key Categories of Government Schemes

Government schemes can be broadly categorized based on their objectives:

• Social Welfare: Schemes aimed at improving the living standards of vulnerable sections of society (e.g., women, children, elderly, poor).
• Economic Development: Schemes focused on boosting economic growth, employment, and income generation (e.g., skill development, entrepreneurship, agriculture).
• Infrastructure Development: Schemes for building and improving physical infrastructure like roads, housing, and sanitation.
• Health and Education: Schemes to enhance access to quality healthcare and education services.

Important Government Schemes (Recent and Ongoing)

1. Pradhan Mantri Jan Dhan Yojana (PMJDY)

Objective: To provide access to financial services, namely, banking/ savings & deposit accounts, remittance, credit, insurance, and pension in an affordable manner. It aims to bring the unbanked population into the formal financial system.

Key Features:

• Zero balance accounts.
• RuPay Debit Card with accident insurance cover.
• Life cover of ₹30,000 for accounts opened between August 15, 2014, and January 31, 2015.
• Accidental insurance cover of ₹1 lakh (enhanced to ₹2 lakh for new accounts opened after 28.08.2018).
• Overdraft facility up to ₹10,000 for eligible account holders.
• Scheme extended with focus on opening accounts in rural branches and by women.

Implementation: Department of Financial Services, Ministry of Finance.

2. Pradhan Mantri Mudra Yojana (PMMY)

Objective: To provide loans up to ₹10 lakh to non-corporate, non-farm small/micro enterprises. This helps in funding the 'hitherto unfunded' by providing capital to small businesses.

Categories of Loans:

• Shishu: Loans up to ₹50,000.
• Kishor: Loans between ₹50,000 and ₹5 lakh.
• Tarun: Loans between ₹5 lakh and ₹10 lakh.

Implementation: Implemented through Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks (SFBs), Micro Finance Institutions (MFIs), and Non-Banking Financial Companies (NBFCs).

3. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

Objective: To provide life insurance cover to the common people at an affordable premium. It is a term life insurance scheme.

Eligibility: Age between 18 and 50 years, having a bank account.

Coverage: ₹2 lakh life cover for a premium of ₹330 per annum.

Implementation: Ministry of Finance, implemented through public sector banks and private life insurers.

4. Pradhan Mantri Suraksha Bima Yojana (PMSBY)

Objective: To provide accident insurance cover to the common people at an affordable premium. It is an accident insurance scheme.

Eligibility: Age between 12 and 70 years, having a bank account.

Coverage: ₹2 lakh accidental death cover and ₹1 lakh for permanent total disability, for a premium of ₹12 per annum.

Implementation: Ministry of Finance, implemented through public sector banks and private general insurers.

5. Atal Pension Yojana (APY)

Objective: To provide social security to senior citizens, particularly those in the unorganized sector, by offering a guaranteed minimum pension.

Eligibility: Indian citizens aged between 18 and 40 years, with a bank account.

Features: Subscribers can choose a guaranteed pension amount between ₹1,000 and ₹5,000 per month. The government co-contributes 50% of the subscriber's contribution or ₹1,000 per annum, whichever is less, for eligible subscribers for the first five years.

Implementation: Pension Fund Regulatory and Development Authority (PFRDA).

6. Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY)

Objective: To provide a health insurance cover of ₹5 lakh per family per year for secondary and tertiary care hospitalization to over 10.74 crore poor and vulnerable families. It aims to achieve 'Health for All'.

Key Features: Cover includes pre-hospitalization, hospitalization, and post-hospitalization expenses. It also covers diagnostics and medicines. It is an entitlement-based scheme, and beneficiaries are identified based on deprivation and occupational criteria in the SECC 2011 database.

Implementation: National Health Authority (NHA).

7. Pradhan Mantri Kisan Samman Nidhi (PM-KISAN)

Objective: To supplement the efforts of farmers to enhance their income by providing financial assistance. It aims to provide income support to all landholding farmer families.

Coverage: ₹6,000 per year in three equal installments, directly transferred to the bank accounts of beneficiaries.

Eligibility: All landholding farmer families are eligible, subject to exclusion criteria for institutional landholders and government employees.

Implementation: Ministry of Agriculture & Farmers Welfare.

8. Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY)

Objective: To provide free of charge 5 kg of food grains per person per month to all eligible families under the National Food Security Act (NFSA), both below poverty line (BPL) and above poverty line (APL), to ensure no one sleeps hungry during the COVID-19 pandemic and beyond.

Implementation: Ministry of Consumer Affairs, Food & Public Distribution.

9. MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act)

Objective: To enhance the livelihood security of people in rural areas by guaranteeing 100 days of wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work.

Key Features: Focus on providing employment, rural development, and poverty reduction. It also aims to empower rural communities and promote sustainable development.

Implementation: Ministry of Rural Development.

10. Swachh Bharat Abhiyan (SBA) / Swachh Bharat Mission (SBM)

Objective: To make the streets, public places, and infrastructure clean and clean. It aims to achieve a clean India by 2019, the 150th anniversary of Mahatma Gandhi.

Key Features: Focus on solid waste management, sanitation, and behavioral change. It includes components like construction of toilets, cleanliness drives, and awareness campaigns.

Implementation: Ministry of Housing and Urban Affairs (for urban areas) and Ministry of Drinking Water and Sanitation (for rural areas).

Union Budget

The Union Budget of India, also known as the Annual Financial Statement, is a comprehensive report presented by the Finance Minister on behalf of the government. It outlines the government's financial performance for the past year and its proposals for the upcoming fiscal year. It details government revenue, expenditure, fiscal deficit, and allocation of funds across various sectors.

Key Components of the Union Budget

• Revenue Receipts: Income generated from taxes (direct and indirect) and non-tax sources (like dividends, interest, fees).
• Capital Receipts: Funds raised through borrowing, recovery of loans, and disinvestment.
• Revenue Expenditure: Expenses incurred on the day-to-day running of government departments and services, not creating assets.
• Capital Expenditure: Expenses incurred on creating long-term assets like infrastructure, machinery, and investments.
• Fiscal Deficit: The difference between the government's total expenditure and its total revenue (excluding borrowings). It indicates the extent of government borrowing.
• Revenue Deficit: The difference between government's revenue expenditure and revenue receipts.
• Primary Deficit: Fiscal deficit minus interest payments.

Budget Presentation and Process

The Union Budget is typically presented in Parliament on the first day of February by the Finance Minister. Previously, it was presented on the last working day of February. The budget speech consists of two parts: Part A deals with the overall economic review and policy initiatives, and Part B contains proposals for taxation and expenditure.

Recent Budget Highlights (Focus on Key Sectors and Initiatives)

Exam questions often focus on the budget's allocations and announcements for critical sectors:

• Agriculture: Allocations for irrigation, credit, technology, and farmer welfare schemes.
• Infrastructure: Capital expenditure on roads, railways, ports, airports, and digital infrastructure.
• Healthcare: Funding for health insurance schemes, medical research, and public health infrastructure.
• Education: Investments in skill development, digital education, and institutional reforms.
• MSMEs (Micro, Small, and Medium Enterprises): Support measures, credit facilities, and ease of doing business initiatives.
• Defence: Budgetary allocations for modernization and procurement.
• Fiscal Management: Targets for fiscal deficit and debt management.

Key Terms and Concepts in Budget Analysis

• Consolidated Fund of India: All revenues received by the government, loans raised, and money received from the sale of assets. All expenditure is to be met from this fund.
• Contingency Fund of India: A fund created for unforeseen expenditure, operated by the executive.
• Public Account of India: Transactions relating to provident funds, small savings schemes, etc.
• Vote on Account: An interim budget passed by Parliament to allow the government to spend money for a part of the financial year until the full budget is approved.
• Demands for Grants: Proposals presented to Parliament for expenditure.

Banking Updates

The banking sector is dynamic, with frequent updates regarding policies, regulations, mergers, new products, and technological advancements. Staying updated on banking news is vital for the General Financial Awareness section.

Key Regulatory Bodies and Their Roles

• Reserve Bank of India (RBI): The central bank of India, responsible for monetary policy, regulation and supervision of the banking and financial system, and management of foreign exchange.
• SEBI (Securities and Exchange Board of India): Regulates the securities market.
• IRDAI (Insurance Regulatory and Development Authority of India): Regulates the insurance sector.
• PFRDA (Pension Fund Regulatory and Development Authority): Regulates pension funds.

Recent Developments in the Indian Banking Sector

1. Monetary Policy Updates

The RBI announces its Monetary Policy Statement every two months. Key policy rates are crucial:

• Repo Rate: The rate at which the RBI lends money to commercial banks.
• Reverse Repo Rate: The rate at which the RBI borrows money from commercial banks.
• Marginal Standing Facility (MSF) Rate: A penal rate at which banks can borrow overnight funds from the RBI.
• Bank Rate: The rate at which the RBI buys or sells securities.
• Cash Reserve Ratio (CRR): The percentage of a bank's total deposits that must be kept with the RBI.
• Statutory Liquidity Ratio (SLR): The percentage of a bank's deposits that must be maintained in liquid assets like cash, gold, or government securities.

Changes in these rates affect lending and borrowing costs in the economy.

2. Banking Sector Reforms and Policies

Digital Banking Initiatives:

• UPI (Unified Payments Interface): A real-time payment system developed by NPCI.
• BHIM (Bharat Interface for Money): A mobile app for UPI payments.
• IMPS (Immediate Payment Service): An instant inter-bank electronic fund transfer service.
• NEFT (National Electronic Funds Transfer): A nationwide electronic fund transfer system.
• RTGS (Real-Time Gross Settlement): A system where the settlement of fund transfer transactions takes place on a continuous basis in real time.

Financial Inclusion Measures: Schemes like PMJDY, doorstep banking services, and simplified KYC norms.

Non-Performing Assets (NPAs): Measures taken by the RBI and government to resolve NPAs, including the Insolvency and Bankruptcy Code (IBC) and asset reconstruction companies.

3. Bank Mergers and Acquisitions

The Indian government has undertaken several mergers of Public Sector Banks (PSBs) to create stronger, more competitive entities and improve efficiency. For example, the merger of Dena Bank and Vijaya Bank with Bank of Baroda, and the merger of several other PSBs.

4. New Products and Services

Banks continuously introduce new products like fixed deposits with novel features, digital loan facilities, specialized credit cards, and wealth management services. Fintech collaborations are also increasing.

5. Basel Norms

Basel III: A set of international banking regulations issued by the Basel Committee on Banking Supervision (BCBS) that sets standards for capital requirements, risk management, and liquidity for banks. India has progressively adopted Basel III norms.

Key Concepts:

• Capital Adequacy Ratio (CAR): A measure of a bank's capital relative to its risk-weighted assets. Higher CAR indicates a stronger financial position.
• Tier 1 Capital: Core capital, including common stock and retained earnings.
• Tier 2 Capital: Supplementary capital, including hybrid capital instruments and loan-loss reserves.

6. Financial Inclusion Fund (FIF) and Financial Inclusion Fund II (FIF-II)

These funds, managed by NABARD, support initiatives aimed at deepening financial inclusion across the country.

7. RBI's Regulatory Actions

Updates on RBI's pronouncements on lending norms, deposit rates, cybersecurity guidelines, customer service standards, and penalties imposed on banks for non-compliance.