Nationalisation of Banks

Nationalisation of banks means It is an act of taking a bank and its assets owned by the private sector into the public ownership of a national government by purchasing a majority stake that is more than 50% owned by the government.

Reason of Nationalisation of Banks

After the Independence, the Government took several plans on Planned economic development. As a result, Five Year plans came into existence in 1951.

The goal of economic planning is social welfare. The commercial bank was Private before the Independence and these were a failure in helping the Government’s objective on social welfare and planning.

Shortly it can be said that to “Improve credit facility“.

Due to that, the Union Government decided to Nationalize the 14 major commercial banks and were Nationalised on 19 July 1969.

Again the Union Government, Nationalized 6 commercial banks in 1980.

Objectives of Nationalization

The main objective is to attain social welfare. The small business sectors such as agriculture, small, and village industries need funds for their growth and for further economic development.

To curb the private monopolies and to ensure a supply of credit to social backward sections.

To encourage the rural people to have the banking habit, as nearly 70% of the population living in rural areas.

The nationalization of banks was an answer to reduce the regional imbalances, as now it can be expanded to all the areas of the country.

Earlier the number of banks was inadequate, but after the Nationalization, new branches were opened in both rural and urban areas.

14 Nationalised banks in 1969

Allahabad Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Central Bank of India, Canara Bank, Dena Bank, Indian Bank, Indian Overseas, Punjab National Bank, Syndicate Bank, UCO Bank, Union Bank, United Bank of India

Advantages of Nationalisation of Banks

To provide credit facilities to the priority sector and to reduce the regional imbalance.

To check monopoly in getting a loan and to keep the people’s money is technically safe with Nationalised banks.

Disadvantage

Low performance of banks. Again, monopoly of certain industries and people only getting loans due to their political influence. Also, there is bad Management and low recovery.

Problems faced by farmers in India

Problems faced by farmers in India are uncertainty in water supply, Lack of mechanization, small and fragmented land holdings, High cost of inputs, infertile soil, Agricultural marketing, lack of transport and storage facilities, etc.

Small and Fragmented Land Holding

Land fragmentation is a serious issue as it reduces agricultural productivity and decreases economic opportunities. Fragmented landholding is an issue since India got its independence. The arable land is decreasing with each generation due to inheritance law.

The land owned by the parent gets divided into fragments and given to his/her wards. Over time these land become economically unviable for farming purposes.

This issue is serious in densely populated areas. About 67% of operational land holding is marginal land which is less than one hectare. That is current only 0.2 hectares of land per person in rural is available.

The number of farms doubled from 70 million in 1970 to 145 million in 2015, as per the latest census. This gives us an inference that there is a greater number of people in shrinking land holdings. This leads to population pressure and underemployment.

The small and fragmented landholding is a serious issue in densely populated states such as UP, Bihar, West Bengal etc, where the average landholding is very low.

Having a very small landholding, usually produces very small that is just enough for the farmer and his family’s needs. To produce, an excess amount of product to sell to the market, the farmer has to invest in proper infrastructure.

Also, the return on investment to such farmers is very low and drives those farmers of small landholding into losses. Even if there is excess produce in that farmland, the farmer losses the profit due to middlemen and transportation.

High Cost of Inputs

Good quality HYV seed is costly, poor farmers cannot afford such seeds.

Infertile Soil

Thousand of years of agriculture made soil lose its fertility, resulting in low productivity.

Irrigation

Insufficient water is a serious problem. Irrigated land is only one-third and in order to make agriculture much more reliable, an irrigation facility needs to be developed.

Mechanization

Agriculture in most parts of the country follows trading methods, manual labor, etc. The usage of advanced tools is necessary.

The disadvantage of Mechanization is a lot of people depend on Manual labour agriculture work, so the effect of mechanization is job loss.

Soil Erosion

Large fertile land is lost through erosion caused by wind and water and such areas much be treated and restored to it fertile again.

Agricultural Marketing

Agricultural marketing is one of the critical problems faced by Indian farmers.

Local farmers need traders and middlemen to sell the products. This makes the loss of revenue to the farmers and fluctuation in prices makes things worse. Proper marketing is necessary to increase the profit.

Inadequate Storage Facilities

Farmers are forced to sell the products immediately after harvest due to inadequate or no storage facilities.

Lack of Transport

Cheap modes of transport such as railways are not available in most parts of the countries.

Scarcity of capital

Agriculture requires lots of capital, loans to buy seeds, machinery, and transport to market.

Intensive Farming

Continuous farming and high usage of chemical fertilizers and pesticides make the soil lose its fertility and the land becomes barren after some years.

Failure of Monsoons

The most important problem faced by Indian farmers is the failure of Monsoons. States like Tamil Nadu, lack water resources, and their drinking and agriculture fail if the monsoon failed.

The monsoon is an important factor in agriculture in India.

Lack of Irrigation

Due to improper irrigation facilities, farmers face storage of water for crops. This forces farmers to spend lakhs of rupees, to dug, bore wells, and tube well. This also exploits groundwater resources.

Irrigated crops require several tons of water to produce one ton of product. This actually creates loss to the farmer in the form of electricity charges.

Some states in India, provide free electricity. This is a relief to the farmers. But this causes exploitation of groundwater resources.

Solution Problems faced by farmers in India

References

1. https://www.businessworld.in/article/Land-Fragmentation-The-Core-Issue-In-Agriculture/16-12-2020-354418/

US human development index is 0.926.

US human development index State Wise

Main objectives of planning commission of India

Increasing Production, Income and Employment Guarantee

The main objectives of the planning commission are to increase the production at the national level, and Per capital income. Also, it planned an employment guarantee.

The narrowing gap between Rich and Poor

The second objective is to minimize the gap between the rich and poor. The planning commission’s other main aim is to establish an egalitarian society.

India is known for Economic inequality, that is there is a wide gap between the rich and poor. Also, there are disparities in income, wealth, etc.

The planning commission had planned to give a broader role to the state in narrowing the gap between the rich and poor. This could be done in a rational way and address the issue related to income distribution. Thereby socio-economic justice and development could be achieved.

Resource Allocation

The Planning Commission has the job of allocating and assessing the resources of the country. This is very important, as these resources could be used for the future needs of the nation.

These resources are Capital, Human resources, Natural resource, etc. Planning resources allocation is the primary duty of the planning commission, as these resources could be used effectively and balanced manner in the future.

The Human and Natural resources are allocated by the planning commission among various sectors based on priorities. And also by needs, stages of progress.

Also, the resources are allocated to various Government programmes such as poverty alleviation, Industrial, agricultural development, etc.

Identifying the Factors that Hinders development

The Planning commission has an aim at finding the factors that are responsible for the poor state of development in-country. Also, everyone is different and it is difficult to identify the factors that affect the countries economy.

Since 1945, the UN (United Nations) has established a number of global obligations to address the economic and social well-being of common people.

The commission needs to identify the conditions and issues that would be a hindrance to the development. It had to examine the ways by which the plan could be effectively implemented in the prevailing conditions of the nation.

It also determined the stage-by-stage execution of the plan.The planning process had to be assessed periodically so that the right strategies could be used to implement the plans.

In the process, the planning commission had the function of advising the central and state government with regard to the appropriate strategies of planning.The commission also had to analyze particular issues and advice the government.

It was the role of the planning commission to determine the rate of growth of the economy specifying the targets of the plan period for every sector.

To include all the states in the planning process so that the Central government along with the State governments could identify developmental priorities and strategies.

This would foster cooperative federalism as the states would be a part of the planning process. To formulate credible plans at the village level and aggregate them progressively.

To ensure that the interests of national security are incorporated in economic strategy and necessary checks on indiscriminate tampering with ecology and environment policy and to check whether all sections of the population are benefitted from economic progress.

Long-term policy and programme frameworks to be designed and their progress would be monitored by the Aayog and innovative improvements would be made.

The partnership between key stakeholders, like-minded think tanks, educational and policy research institutions to be encouraged and knowledge, innovation and entrepreneurial support system to be created through a community of national and international experts, practitioners, and other partners.

The Commission also offers a platform for the resolution of inter-sectoral and inter-departmental issues so that the developmental programmes can be accelerated.

It maintains a state-of-art resource centre that will work for research on good governance and best practices in sustainable and equitable development.

It will monitor and evaluate the implementation of the programmes so that the needed resources could be identified.

Value added tax in India or VAT

VAT is introduced in India in April 2005. It replaced the existing sales tax with VAT Act 2005.

Earlier some states such as Gujarat, Tamil Nadu, Rajasthan, Madhya Pradesh, Chhattisgarh, Jharkhand, Uttarakhand, and Uttar Pradesh have opted out of VAT but adopted later.

It is a method of tax collection as well as the name of a state-level tax in India. It is collected at every level of value-added during production and distribution.

This addition of value continues till it reaches the final consumer. From production to sale the value is added at many points.

The vat does not have a cascading effect on the prices of goods and also does not increase inflation because the tax is imposed and collected at different points of the value addition chain.

It kind of tax is highly suitable for the Indian economy.

Objectives of value added tax in India

One of the important objectives is to improve the purchasing capacity and living standard of the poor. Due to Single point tax, indirect tax collection methods lead to Cascading effect and an increase in Price which impacts a lot of poor people.

But VAT does not create Cascading Effect nor increase inflation which is good for the poor.

Another objective is to bring uniformity at the state level tax, as India is a federal nation that enabled both the states and Centre to impose and collect taxes. Yes, there Centre taxes are uniform throughout the country and state taxes such as Sales Taxes, State Excise, Entertainment taxes, etc are non-uniform between the states.

In order to bring uniformity among the state taxes and also Single Market, VAT was imposed.

Also to a large-scale Tax evasion, VAT is applied at several points till it reaches the final consumer, and also the complexity of Taxation was minimized as many indirect taxes of the Centre were merged as Single VAT.

Value-added tax examples are CENVAT, State VAT, and also GST.

Finally, GST was introduced in July 2017 merging 17 of already existing central and states indirect taxes when VAT collection was growing at a rate of 15% per annum.

Minimum Support Price (MSP)

It is a pre-announced price, where the farmers are paid for their crops. It is set by the Government of India to procure crops directly from the farmers.

It is not enforceable by law. MSP rate is only to safeguard the farmer to get at least minimum profit for their harvest.

The government of India set the price for 23 commodities twice a year based on the recommendation of the Commission for Agricultural Cost and Prices (CACP) since 2009.

Msp calculation upsc

The MSP is calculated based on the cost of production, demand, supply, price fluctuation, market price trends, different cost and international market prices and agricultural wage rate.

23 Commodities Under Msp

1. Rice
2. Wheat
3. Maize
4. Sorghum
5. Millet
6. Barley
7. Ragi
8. Tur
9. Moong
10. Chickpea
11. Urad
12. Lentil
13. Peanut
14. Rapeseed
15. Sesame
16. Sunflower
17. Safflower
18. Niger seed
19. Copra
20. Sugarcane
21. Cotton
22. Jute
23. Soybean

Cacp Upsc

Cacp full form is Commission for Agriculture Costs and Price. It was set up in 1965 and it is a decentralised agency of the Central Government. It is a statutory body that is part of the Ministry of Agriculture & Farmers Welfare.

Its current chairmen was Vijay Paul Sharma.

This agency is the body that recommends the MSP (Minimum Support Price). CACP recommends MSP of 23 commodities.