Chapter-8 : Finance

Short Notes or Revision Notes 

GIST of India Year Book 2024

Ministry of Finance: Managing India’s Finances

  • Oversees economic policy, expenditure, revenue, and resource mobilization.
  • Departments: Economic Affairs, Expenditure, Revenue, Investment & Public Asset Management, Financial Services, Public Enterprises.

Department of Economic Affairs (DEA)

  • Formulates economic policies and budget.
  • Manages macro-economic policies, infrastructure financing, and external relations.

Budgetary Process

  • Annual Financial Statement:Presented as per Article 112, details government receipts and expenditures.
  • Demands for Grants (DGs):Specify ministry-wise spending estimates (voted upon by Lok Sabha under Article 113).
  • Finance Bill:Outlines tax proposals.
  • Appropriation Bills:Allow fund withdrawal after DGs approval.
  • Supplementary Demands:Address unforeseen expenses.

Revenue Sources

  • Central taxes (CGST, income tax) are the main source.
  • Distribution between center and states is guided by Finance Commission recommendations.

Public Debt Management

  • Categories:Internal (loans, treasury bills), external (foreign sources), other liabilities (savings schemes).

Budget Highlights (BE 2023-24)

  • Focus on Vulnerable Sections:
    • ₹88,044.21 crore allocated for 100% women-specific programs.
    • ₹1,35,175.54 crore for schemes with at least 30% allocation for women.

Economic Performance (2022-23)

  • Real GDP growth: 7.2%, surpassing projections.
  • Industrial sector growth: 4.4%.
  • Banking sector credit growth: 19.7% YoY (July 2023).

Financial Market Regulations

  • SEBI mandates sustainability reporting for top 1,000 companies (from 2022-23).

Financial Sector Cybersecurity

  • CSIRT-Fin under CERT-In (established 2020) strengthens cybersecurity.

Inflation Trends

  • CPI-C inflation for 2022-23: 6.7%.
  • CFPI inflation for 2022-23: 6.6%.

Fiscal Responsibility and Budget Management (FRBM) Framework

  • Ensures fiscal responsibility through transparent operations, effective monetary policy, and limits on borrowing, debt, and deficits.

Institutional Mechanisms for Financial Stability

  • Financial Stability and Development Council (FSDC):Established in 2010.
  • Infrastructure Finance System (IFS):Unifies infrastructure policies and promotes private investments.
  • Public-Private Partnerships (PPPs):Models like BOT and HAM encourage private participation with streamlined approvals and Viability Gap Funding (VGF).

Holistic Infrastructure Development

  • National Monetisation Pipeline (NMP):Aims to unlock ₹6.0 lakh crore through government asset leasing.
  • National Infrastructure Pipeline (NIP):Targets ₹111 lakh crore investment across 8,964 projects.
  • National Logistics Policy (NLP):Aims to cut logistics costs to 8% of GDP by 2030.
  • PM GatiShakti National Master Plan:Facilitates real-time coordination and enhances connectivity.

National Investment and Infrastructure Fund (NIIFL)

  • Manages over USD 4.9 billion across four funds, strategically investing in India’s growth sectors.

Indian Ministry of Finance: Key Functions & Initiatives

  • G20 Presidency (2023): Focused on “Vasudhaiva Kutumbakam” (world is one family), citizen engagement through Jan Bhagidari activities, hosted over 200 meetings across 50 cities.
  • International Cooperation:
    • BRICS Expansion (2024): Invited Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, UAE as full members.
    • Collaborates with IMF, World Bank (IBRD & IDA), New Development Bank (NDB) for sustainable development.
    • SAARC: Promotes regional cooperation, offers Currency Swap Arrangement for balance of payments issues.
  • Department of Economic Affairs:
    • Security Printing and Minting Corporation of India Ltd. (SPMCIL): Sole PSU for currency printing, coin minting, and security paper manufacturing.
  • Department of Expenditure:
    • Oversees public financial management.
    • Manages Finance and Pay Commissions, Central Government Accounts.
    • Implements financial rules and regulations.
  • Financial Management Initiatives:
    • Public Financial Management System (PFMS) for efficient fund transfer.
    • Bharatkosh for online deposits of Non-Tax Receipts to the Government.
    • e-Bill Processing System for online claim submission and real-time tracking (launched in 2022).
    • Single Nodal Agency (SNA) and Central Nodal Agency (CNA) Models for streamlined fund allocation.
    • Treasury Single Account (TSA) and SNA-TSA Model for optimized fund flows.
  • Budget Highlights (2023-24):
    • Three-fold increase in capital expenditure to ₹10 lakh crore.
    • Interest-free loans to states.
  • Finance Commission: Provides grants-in-aid to states as per recommendations.
  • Tax Administration:
    • Central Board of Direct Taxes (CBDT): Apex body for direct tax laws (voluntary compliance, non-adversarial administration).
    • Strong Direct Tax Collections (FY 2023-24): Growth of 20.66% at ₹1 crore.
    • Abolition of Dividend Distribution Tax to boost equity market.
    • Central Board of Indirect Taxes and Customs (CBIC): Formulates policies for customs, excise, GST, and border controls.

Indian Ministry of Finance: Boosting Financial Services

  • GST and Technology Adoption:
    • CBIC uses technology to streamline GST, improve collection, and combat evasion.
    • Customs modernization initiatives like Turant Customs promote transparency and efficiency.
  • Enforcement and Financial Intelligence:
    • Directorate of Enforcement (ED) tackles economic offenses.
    • Financial Intelligence Unit-India (FIU-IND) combats money laundering and terror financing.
    • Central Bureau of Narcotics (CBN) regulates opium cultivation and enforces drug laws.
    • Customs, Excise and Service Tax Appellate Tribunal (CESTAT) facilitates dispute resolution.
  • Government Agencies:
    • Department of Financial Services (DFS) manages financial programs and social security schemes.
    • Reserve Bank of India (RBI): Central bank for issuing currency, regulating monetary policy, and enhancing banking sector resilience.
  • Banking Sector Reforms:
    • Insolvency and Bankruptcy Code (IBC) and CRILC for improved lending practices and governance.
    • Improved asset quality, credit growth, and profitability in the banking sector.
    • NARCL resolves stressed assets, NaBFID facilitates infrastructure financing.
  • Digital Initiatives in Banking:
    • Digital Banking Units (DBUs) for promoting digital banking and financial inclusion.
    • Account Aggregator (AA) framework for user-controlled financial data sharing.
    • e-DRT project for online case-related information and e-filing in Debts Recovery Tribunals (DRTs).
    • EASE 5.0 reforms focus on digitalization, big data, and customer offerings in Public Sector Banks (PSBs).
  • Rural Banking Initiatives:
    • Regional Rural Banks, NABARD, Ground Level Agriculture Credit, and Kisan Credit Card scheme support rural development and agriculture.
  • Atma Nirbhar Bharat Abhiyan Initiatives:
    • Promotes agriculture, animal husbandry, and INR invoicing for international trade.
  • Covid-19 Relief Measures:
    • Emergency Credit Line Guarantee Scheme (ECLGS) provides financial support to MSMEs and businesses during the pandemic.
  • Insurance Sector Reforms:
    • Increased FDI cap to 74% for attracting investment and fostering growth.
  • Social Security Schemes:
    • Pradhan Mantri Vaya Vandana Yojana (PMVVY) offers assured pensions for senior citizens.
    • PMJJBY and PMSBY provide life and accident insurance coverage.
    • Atal Pension Yojana (APY) offers pension benefits for unorganized sector workers.
    • Pension Fund Regulatory and Development Authority (PFRDA) regulates National Pension System (NPS) for orderly growth.
  • Government Initiatives for Micro-Enterprises:
    • PM Mudra Yojana (PMMY) offers collateral-free credit up to ₹10 lakh.
    • Stand-Up India promotes entrepreneurship among SC/ST and women.
  • Disinvestment and Economic Growth:
    • Strategic disinvestment and new PSE policy aim to unlock economic potential of Public Sector Enterprises (PSEs).


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