Mahatma Gandhi advocated Panchayat Raj, a decentralized form of Government where each village is responsible for its own affairs, as the foundation of India’s political system. The term for such a vision was Gram Swaraj (“village self-governance”). “Panchayat Raj represents true democracy realized. We would regard the humblest and the lowest Indian as being equally the ruler of India with the tallest in the land”. Mahatma Gandhi advocated Panchayat Raj, a decentralized form of Government where each village is responsible for its own affairs, as the foundation of India’s political system. The term for such a vision was Gram Swaraj (“village self-governance”).
Panchayats have been existing in our country from the time immemorial. After many changes developments, in 1992 Government introduced the 73rd and 74th Amendments Bill in Parliament which were passed in 1993. These introduced new Parts IX and IXA in the Indian Constitution containing Articles 243 to 243ZG. Post the 73rd Constitutional Amendment, Panchayats have been established at three levels, the district, block and cluster of villages (Village Panchayat). The number of Village Panchayats in the country as on 31st March 2012 was 2,40,345; of the Intermediate Panchayats 6357 and of the District Panchayats 585. Government had also introduced 50 percent reservation for women in the elected representatives in the local Self Governments. Since 24 years were over the 73rd constitutional amendment, we have to evaluate the performance of Grama Panchayats in India.
Almost all states and union territories claim that they have transferred responsibilities in varying degrees to the panchayats, by enacting laws in conformity with the CAA. However, the functional domain of panchayats pertains only to traditional civic functions in several states. In those states where either the intermediate panchayats or the district panchayats were absent for decades, the functional domain of panchayats does not include adequate developmental responsibilities. States where panchayats have existed for a long time, have repeated the provisions of the old statutes in their new laws with few adjustments. Moreover, many state governments have not framed relevant rules or guidelines as a follow-up measure. A few states realised that the transfer of additional functions requires the transfer of concomitant funds and functionaries to panchayats, enabling them to perform the specified responsibilities. However, panchayats are not very clear about the role they are expected to play in the new federal setup. Almost all of the subjects enumerated in the 11th Schedule are state concurrent, involving duplication and overlapping (Alok, 2006). State Governments are giving different importance to the Local Self governments and the following table shows the development index of decentralization process of India. Maharashtra is the top and Goa is the lowest in the decentralization index. Planning Commission observed that “it is absolutely critical for the inclusiveness of our growth process that these large number of elected representatives in our Panchayat Raj Institutions are fully involved in planning, implementing and supervising the delivery of the essential public services.”(Planning Commission Eleventh Plan document)
One of the major achievements of panchayati raj movement in India is the empowerment of scheduled castes, scheduled Tribes, Women and other vulnerable sections of the society. They got representation in the panchayats through elections. 43.81 percent of the representatives are women, 22.99 percent of the representatives belongs to scheduled Caste and 10.01 representatives of the Grama Panchayats are from vulnerable sections of the society. Empowerment will lead to entitlement.
Panchayats have been implementing various centrally sponsored Schemes through the State Governments. Panchayats are being recognized as implementing institution for the plan schemes of line departments. The important plans are Mahatma Gandhi National Rural Employment Guarentee Act (MGNREA), National rural Health mission , Sarva Shiksha Abhiyan, Indira Awas Yojana etc. Union Budget 2015-16 allocation to rural development programmes was reduced due to the discontinuation of rural development programmes.
Due to the implementation of panchayatiraj and various rural development programmes in India rural areas have benefitted much. During the last two decades the rural economy has grown much faster (7.5 percent per annum) compared to urban (5.6 percent) on the back of strong growth in the rural non farm sector (NCAER) .As a result whereas in 1980-81 the rural sector accounted for 41 percent of GDP, in 2010-11 this proportion has been estimated at 51 percent , ie, rural sector is estimated to have overtaken the urban sector. Growth in per capita income in rural areas has been almost double compared to urban area. Another feature of rural economy is is no more predominantly agrarian. As these developments and achievements have been made due to the implementation of panchayatiraj and rural development programmes in India. The following suggestion will help in many ways to achieve higher rate of inclusive development through Local Self Governments.
Article 243 A gives constitutional recognition to the ‘Grama Sabha’ as a body consisting of persons registered in the electoral rolls relating to a village within the area of the panchayat at the village level. Grama Sabha is the only forum that can ensure direct, participatory democracy. It is very unfortunate that the meetings are not convene regularly and attendance is very thin particularly of women and marginalized groups who need benefits. Grama Sabhas has become only the venue of benefit sharing corners. Grama sabha meetings have to be streghtened and meaningful through the following ways. Grama Sabha can be an effective forum for information sharing on programmes, schemes, good practices and matters of common interests. Grama Sabha can discuss the common social, health and economic issues like gender equality, drug use, alcoholism, female feticide etc. Gramasabha should be fully participate in planning, implementation and evaluation of programmes.
Many state Governments have taken steps to form various subject committess like education, health, finance etc. to discuss the issues and formulate plans in the panchayat level. But the functioning of the subject committees are not satisfactory. Development of capacities of the elected representatives of the subjective committees is required. Grama Panchayat has to have 3 Rs ie, representation, responsibility and responsiveness. Representation fostering responsibility and responsibility leading to responsiveness.
Panchayats are heavily depends upon the State Governments and Central Governments for the resources. Own revenue of the Panchayats is only 8.4 percent of the total resources and this has to be increased so as to achieve self reliance. Panchayats should be able to deploy financial resources mobilized by themselves and implement their own programmes of local development instead of depending upon higher authorities for resources and approval. Since Panchayatiraj is a state subject, devolving three Rs, functions, finance and functionaries depends heavily on the political will and determination of the ruling state governments.
Decentralization and panchayatiraj are success only in the states where political will was demonstrated in action. Kerala, Karnataka, West Bengal, Tamil Nadu, Gujarat, Rajastan are some of the states who succeeded in the decentralization efforts. State Governments will have to provide more strength to the Panchayats. Service delivery mechanism in the panchayats has to strengthened to provide services to the people in an efficient manner, with low cost and in a short span of time. Investment and development efforts of the panchayats should be targeted to achieve inclusive growth.
Inclusive development is the motive of our developments efforts and this could be attained only through conscious efforts and active participation of people. Local Self Governments should have adequate functions, functionaries and finance to do their duties as a development catalyst. Since there is a close relationship between decentralization and inclusive growth, inclusive development of India depends heavily on how far we are strengthening Local Self Governments in India.
Even after 70 years of development efforts and implementation of multifaceted rural development and poverty alleviation programmes, about one third of the Indian population is living below poverty line. Insufficient banking facility and bank credit has been continuing as one of the important reasons for this sorry state of affairs. Only 59% of the households are availing banking facilities with 68% in urban and 54% in rural areas (2011 Census). The credit outstanding of the poor with the formal banking sector is stated to be Rs.5000 crore or ten per cent of the total demand estimated by the World Bank in 2002. Lack of good retail outlets offering banking services, lack of assets with the poor that could be used as collaterals and illiteracy of the poor are said to be the reasons for approaching moneylenders and other sources for rural credit. Micro finance is considered as the best semi formal sources of credit and panacea for the eradication of poverty, enhancing current rate of savings, banking inclusion, better investment and improved repayment rate.
Backwardness and colonial rule led rural poor to depend heavily on moneylenders for getting credit to carry out agricultural operations, micro enterprises and for personal purposes. Rural credit survey committee, various committees appointed by Reserve Bank of India and NABARD pointed that rural indebtedness is very heavy and organized credit sector was providing very small portion of credit. By understanding the importance of rural micro credit, Government of India have been giving importance in providing rural credit since independence through various measures. Revamping of Cooperative credit structure, nationalization of banks, establishment of NABARD, starting of Regional Rural banks, implementation of rural development programmes like IRDP,SGSY, PMRY, Rashtriya Mahila Kosh (RMK) , introduction of SHGs, Micro Finance through banks and NGOs, Microfinance Development and Equity Fund (MD & EF), Micro Finance Bill, etc. Statistical figures shows that these efforts were not sufficient enough to solve the problems of rural credit.
Micro finance providers can be broadly classified into three, ie. formal , semiformal and informal sectors. Formal sector includes 105 commercial banks, 196 regional rural banks (RRB), and 12,128 cooperative banks. Semi formal institutions are broadly known as Micro Finance Institutions. Different types of Micro finance institutions have been evolved in India and they are Self Help Groups ( SHGs), Federated Self Help Groups, Grammen Bank Model and Cooperative Model. Self Help Groups were formed by Non Government Organisations and more than 90 percent of the members are women. Normally a SHG will have about 20 members from homogenous class who come for their economic development. Federation of SHGs bring together several SHGs and will have more than 100 members. Federation of SHGs will have three tiers, that is, in lower level, middle level and apex level. Kudumbasree of Kerala, PRADAN, SEWA are the examples of Federation of SHGs. Grammen Bank model is very successful in Bengladesh. Many organizations have adapted Grammen bank model with some modifications. SHARE and CASHPOR Financial and Technical Services Limited are some of the Adapted Grammen bank model micro finance Institutions. Cooperative Development Foundation is the best example for the Cooperative form of Micro Finance Institutions. Mutually Aided Societies Act help to register cooperative societies to register thrift groups promoted by CDF. Informal sector includes friends, family members, moneylenders, landlords and trades.
Micro Finance Institutions : Its relevance in India
Credit plays an important role in rural development and poverty alleviation (Pitt and Khandker 1998 ). Credit availability, which is important for eradication of poverty, self employment, industrialization and cultivation, continuous to be a major hurdle in India from time immemorial. Micro finance is one of the concrete steps in providing sufficient credit to the rural mass who do not have sufficient collateral security and professional qualifications. As per the lattest Rangarajan Committee report 39.29 Crores of people are under the poverty line in India. (As per the t report of Rangarajan Committee report, poverty ratio at all india level for 2011-12 is 29.5 % and Tendulkar Committee estimated the poverty ratio as 29.8 % for the above said period). Role of Micro credit in the eradication of poverty is highlighted in various studies and research. “If we can come up with a system which allows everybody access to credit while ensuring excellent repayment – I can give you a guarantee that poverty will not last long” ( Muhammad Yunus. 1994). Micro finance is considered as the basic requirement for the eradication of poverty.
SHGs intentionally or unintentionally help formal banks by increasing the number of accounts by inculcating banking habits in rural people, especially women.( Mahendra Varman P). and Micro finance is emerging as an important measure in empowering women economically in this development strategy. The poorest households are still not able to access credit and assistance provided by government programmes. They are not able to improve their income earning capacity by acquiring the right kind of assets or selecting the most suitable activity.
MFIs promote an individual ethic of savings, repayment of loans, separation of private from public economic spheres and even the ideology of winners, with the inevitable concomitant of losers too DN (2005). SHGs intentionally or unintentionally help formal banks by increasing the number of accounts by inculcating banking habits in rural people, especially women.( Mahendra Varman P, Economic and Political Weekly April 23, 2005) (Referencing system should be uniform across the states. Varman, 2005 is the style to be used in the text. While listing references at the end, the style should be Varman, Mahendra(2005. Economic and Political weekly, vol. no. pages… This style should be followed in the case of all references.
4. Financial Inclusion
The word financial inclusion was used specifically and the policy was elaborated in the October 2005 policy statement of the RBI (paragraph 57). Mahendra Varman (2005) found that SHGs help formal banks by increasing the number of accounts by inculcating banking habits in rural people, especially the women. Microfinance was that microcredit is a small part of microfinance, and microfinance is a small part of financial inclusion, and financial inclusion is closely related to economic inclusion. (Y Venugopal Reddy,2011)
5. Mobilization of Savings
Number of studies ( Rajasekhar (2000), Kumaran (2001), Hashemi (1996), Lathif (2001), Kaladhar (1997), Majumdar ( 1997), NABARD( 2002)) found that SHGs have increased savings habits of the poor. Khandkar (2000) while estimating the impacts of microfinance on savings and borrowings found that micro-credit not only increases involuntary savings, but also induces voluntary savings.
6.Higher repayment rate.
Group lending is far more efficient than conventional bank lending to individuals (Ghatak 2000, Aghion and Gollier et al 2000. Group lending will help higher level of repayment. Repayment of loan in SHG is high in many studies. “Repayment of loans was found to be quite satisfactory. More than 96.0 per cent of SHG households were found to have repaid their loans on time at the all India level. The percentage of households reporting regularity in repayment was highest in Andhra Pradesh (100 per cent), followed by Assam (99.9 per cent), Karnataka (99.8 per cent), Maharashtra (96.9 per cent), Uttar Pradesh (92.9 per cent) and Odisha (88.7 per cent) Madhusudan Ghosh (2012)”The poor themselves can create a poverty-free world. Credit can create self-employment instantaneously. Why wait for others to create a job for you?” (Yunus 2005)
Micro credit progress in India
Micro Finance sector in India is the largest micro finance sectors in the World. Micro credit is being postulated in India as an important scheme for eradication of poverty and women empowerment. Microfinance evolved in India in the early 1980s with the formation of informal Self Help Group (SHG) for providing access to financial services to the poor people. The MFIs are organized under three models: SHGs, Grameen model/Joint liability groups and Individual banking groups as in cooperatives. Over the past few decades, this innovative scheme has attracted a range of non-governmental and state-sponsored institutions. Leading financial institutions are the Small Industries Development Bank of India (SIDBI), the National Bank for Agriculture and Rural Development (NABARD) and the Rashtriya Mahila Kosh (RMK). A few NGOs like PRADAN, ICECD, MYRADA,SEWA have played a significant role in promoting micro-credit. With micro-credit becoming financially viable, even commercial banks like ICICI Bank, ABNAMRO,HDFC Bank, UTI Bank and international banks like Citibank have also entered the field. Non-banking corporates are also participating in the micro credit activities. P.Balamurugan and A.Selvaraj (2014) “Indian experience in the case of Micro-finance and SHG is shown that this strategy is suitable strategy for developing and underdeveloped countries against poverty.” There are two main models of micro credit in the country and they are ‘banking model’ and the ‘MFI model’.In the case of the banking model Self Help Groups are formed and financed by banks. In some cases SHGs are formed by formal agencies/NGOs and financed by banks. In the ‘MFI model’ SHGs are formed and financed by the MFIs that obtain resource support from various channels. In India, majority of mirco credit activity is under the ‘Banking model’(NABARD’s Bank-SHG Linkage) and 10-15% of the activity is through ‘MFI model’.
Micro finance sector has to be strengthen further for the economic development of India. The following suggestions will help. 1.Micro finance institutions need proper control, regulation and supervision. 2.Existing rate of interest is high due to many reasons. But the rate of interest has to reduced. 3.ICT has to be introduced in the operation of Micro finance units.4. Regional disparity in the MFIs has to be addressed with suitable policies and initiatives.5.National data base on MFIs has to be created 6.Capacity training has to strengthened to members as well as officials of MFIs.6.Proper auditing has to be carried out regularly and NABARD has to be issued accounting guidelines.7. MFIs may be allowed to mobilise savings at least from their members 8. Involvement of corporates in MFIs has to be increased 9. Transparency has to be maintained in the activities of MFIs. Financial inclusion is one of the important objectives of Twelfth Five year plan. In order to achieve this objective bank facility and credit facility has to be made available to all irrespective of caste, region, economic or social backwardness. Microfinance institutions have had good potential to reach the rural poor and to solve the basic problems of rural development where the formal Financial Institutions have not been able to make remarkable contribution. Existing institutions for the MFIs has to be strengthened as well as more has to be established in order to alleviate poverty, increase employment, women empowerment etc. It is the duty of the Government, NGOs, financial institutions etc. to strengthen micro finance institutions in India. Economic development of downtrodden depends heavily upon the how far we are able to provide sufficient credit and facilities to overcome their shortcomings.
Kerala state have become a yet another model to the national and International community for its achievement in population control. Kerala have reached third stage of demographic transition which characterizes low birth rate and low death rate. Low decadal growth rate, declining trend of the population, high rate of male and female literacy, favourable sex ratio, child female ratio etc. are the peculiarities of the demographic condition of Kerala for a long period of time. Kerala was the first state in India to reach the replacement level of fertility and total literacy in the early 1990s. These remarkable achievements have been made possible because of the family welfare measures, high literacy rate , efforts of the successive Governments , health facilities and after all initiative of the people at large. These demographic features increasing our concern in some areas which are unavoidable but to be tackled with concrete efforts .
The first complete Census of population was conducted in 1881, on a uniform basis throughout India providing the most complete and continuous demographic record for any comparable population. Since then the Census is being regularly conducted after every ten years. The first census after Independence was taken in 1951. 2011 census is the fifteenth census and seventh after independence. Census 2011 covered 35 States/Union Territories, 640 districts , 5924 Sub districts, 7933 Towns and 6,40,930 villages.
As per Census 2011, the total population of India at 0.00 hours of 1st March 2011 is 121,08,54,977. Out of this , rural Population is 83.37 Crores and the urban population is 37.71 Crores. In absolute numbers, out of the total increase of 182 million added in the last decade, the contribution of rural and urban areas is equal (91.0 million each). Uttar Pradesh has the largest rural population of 155.3 million(18.6% of the country’s rural population) whereas Maharashtra has the highest urban population of 50.8 million (13.5% of country’s urban population) in the country.
The growth rate of population in India in the last decade is 17.67 % . In rural areas the population growth rate is 12.3 % and in urban areas the growth rate is 31.8 %. Meghalaya ( 27.2 %) has recorded the highest decadal growth rate in rural population and Daman & Diu (218.8 %) the highest decadal growth rate in urban population during 2001-2011.
Density of Population (persons per sq. km.)
Population density in Census 2011 works out to be 382 showing an increase of 57 points from 2001. Delhi ( 11,320) turns out to be the most densely inhabited followed by Chandigarh (9,258), in all States/UTs, both in 2001 and 2011 Census. Among the states , Bihar occupies the first position with a density of 1106, surpassing West Bengal which occupied the first position during 2001. The minimum population density works out in Arunachal Pradesh ( 17) for both Census.
Sex Ratio (Number of females per 1,000 males) : The Sex Ratio in the country which was 933 in 2001 has increased by 10 points to 943 in 2011. In rural areas the sex ratio has increased from 946 to 949. The corresponding increase in urban areas has been of 29 points from 900 to 929. Kerala has recorded the highest sex ration in respect of Total population (1084), Rural population (1078) and Urban population (1091). The lowest sex ratio in rural areas has been recorded in Chandigarh (690). The corresponding value in urban areas has been returned in Daman & Diu (551). Seven States namely Jammu & Kashmir, Himachal Pradesh, Uttarakhand, Bihar, Jharkhand, Chhattisgarh, Maharashtra, and one Union Territory (UT) Lakshadweep show fall in the sex ratio in rural areas. Two UTs, namely, Daman & Diu and Dadra & Nagar Haveli have shown a similar trend in urban areas
Child Population (0-6 years) : As per Census 2011, the child population in the age group of 0-6 years stands at 164.5 million. Of this, 121.3 million were returned in rural areas and 43.2 million in urban areas compared to Census 2001, the child population has increased by 0.7 million in the country. There has been a decline of 5.2 million in rural areas and an increase of 5.9 million in urban areas. In terms of proportion of child population to the total population, there has been a decline of 2.4 percentage points in rural areas and 1.6 percentage points in urban areas. The growth rate of Child population works out to 0.4% in the last decade. However, there has been a decline of 4.1% in rural areas and an increase of 15.6% in urban areas.
Child Sex Ratio
Child Sex Ratio (0-6 years) (Girls per thousand Boys) : Census 2011 marks a considerable fall in child sex ratio (0-6 years) from 927 to 919 during 2001-2011. This is the lowest sex ratio since 1961. In rural areas, the fall has been to the tune of 11 points(934 to 923) and in urban areas, the decline has been to an extent of 1 point (906 to 905) over the last decade. Delhi ( 814) has recorded the lowest and Chhattishgarh (977) the highest child sex ratio in urban areas.
Scheduled Caste Population
The total Scheduled Caste population returned in Census 2011 is 201.4 million. Of this, 153.9 million Scheduled Caste -2011 are in rural areas and 47.5 million in urban areas. In terms of proportion, the Scheduled Caste population constitutes 16.6 % of the total population. The proportion during the last Census was 16.2%. There has thus been an increase of 0.4%
during the last decade. The highest proportion of Scheduled Castes has been recorded in Punjab (31.9 %) and the lowest in Mizoram (0.1%). The Scheduled Castes population in absolute numbers has increased by 34.8 million. This constitutes a decadal growth of 20.8 per cent. The highest number of Scheduled Castes has been recorded in Uttar Pradesh (41.4 million) and the lowest in Mizoram ( 1218). In terms of gender composition , there are 103.5 Million male Scheduled Castes and female Scheduled castes numbered 97.8 million.
Literates (Age 7 years and above)
The number of literates in India is 76.35 Crores in Census 2011. Of this 48.27 crores literates are in rural areas and 280.8 million literates in urban areas. Out of an increase of 202.8 million literates during the decade 2001-2011, rural areas accounted for 120.8 million and urban areas 82.0 million. The highest number of rural literates has been recorded in Uttar Pradesh (85.3 million). Maharashtra (40.1 million) has recorded the highest number of literates in urban areas. Male literates numbered 43.47 crores ( 56.9 % of the total literates). The highest number of male literates in rural areas are returned in Uttar Pradesh (51.8 million), while the lowest are returned in Lakshadweep (5,949). In urban areas, the lowest number of male literates are returned in Lakshadweep ( 22,074) and the highest number in Maharashtra ( 2.19 Crores). Female literates numbered 32.88 crores (43.1% of the total literates). The highest number of female literates in rural areas are returned in Uttar Pradesh (3.35 crores), while the lowest are returned in Lakshadweep (5,339). In urban areas, the lowest number of female literates are returned in Lakshadweep (19,191) and the highest number in Maharashtra (18.2 million).
The effective literacy rate in India works out to 73.0 percent ( Rural – 67.8 %, Urban – 84 .1 %). There has been an increase of 8.2 percentage points in the effective literacy rate (9.1 percentage points in rural areas and 4.2 percentage points in urban areas) during the last decade. The male literacy rate works out to 80.9 percent ( Rural – 77.2 percent, urban – 88.8 percent). The highest male literacy rate in rural areas is returned in Kerala (95.4 percent), while the lowest is returned in Arunachal Pradesh ( 67.4 percent). In urban areas, the lowest male literacy rate is returned in UttarPradesh ( 80.4 %) and the highest in Mizoram ( 98.0 %). Female literacy rate works out to 64.6 % ( Rural – 57.9 % , Urban – 79 .1 %). The highest female literacy rate is in Kerala ( 90.8 percent), while the lowest is returned in Rajasthan (45.8 percent).
All most all the countries of the World regulated by the Government budget decisions and public policy.Policies of the Government on Taxation, expenditure, borrowing and the working of the public sector enterprises influences private production, consumption, employment, price movements, saving and investment. The economic rationale of imposing taxes are to bring about optimum and efficient resource allocation, to help increased rate of saving and investment, to reduce inequalities in consumption, income and wealth, to check price rise and to promote employment opportunities. Taxation and public spending have been existing in India from long period of time.
Taxes in various forms have been existing in India from long period of time. There are references of different types of taxes in the legendry works of Manu Smriti and Arthasastra. Historical evidence shows Taxes were introduced even from the times of Mauryan period. Mughals were collected tax from salt, liquor, cloth, leather and dairy products. Britishers implemented many direct and indirect taxes and enacted many tax laws including Income Tax Act of 1922. India after independence depends upon heavily on the taxes as a main source of revenue to the exchequer. Taxes can be broadly divided into direct taxes and indirect taxes.
India is a federal country and Central, State governments and Local bodies haverevenue powers. The SeventhSchedule to the Constitution specifies revenue sources of the centre and the states respectively in the union and state lists. The major tax powers of the Central Government consist of taxes on non-agricultural income and wealth, corporate profits,excise duties except those on alcohol and customs duties. The states, on the otherhand, can levy taxes on agricultural land, incomes and wealth, excises on alcohol,sales taxes, taxes on motor vehicles and goods and passengers, stamp duties andregistration fees. The 72nd and 73rd Constitutional amendments also specify some taxsources to urban and rural local governments. The two important taxes assigned tothe local bodies are property taxes and taxes on the entry of goods into a local area for consumption, use or sale. The combined expenditure of the Centre ,State and Union Territories has increased from Rs.918 Crores in 1950-51 to Rs.35,37,504 Crores in 2014-15 which shows an increase of 3853 times. Aggregate revenue of the Centre ,State and Union Territories has increased from Rs. 627 Crores in 1950-51 to 22,38,115Crores in 2014-15. Revenue increased by 4230 times in 2014-15 over the 1950-51. This shows that aggregate revenue increased than the aggregate expenditure in India.
Composite income of the Central Government and State Governments has been increased manifold. Composite tax revenue in 1950-51 was Rs.627 Crores. Total income increased to Rs.1350 Crores in 1960-61, Rs.4756 Crores in 1970-71, Rs. 19844 Crores in 1980-81, Rs. 87722 Crores in 1990-91, Rs. 3,05,322 Crores in 2000-01, Rs. 12,71,665 Crores in 2010-11 and to Rs. 22,38,115 Crores in 2014-15. Revenue from direct tax and indirect tax are increasing year by year. Direct tax increased from Rs. 231 Crores in 1950-51 to Rs. 7,48,643 Crores in 2014-15. Indirect tax increased from Rs.396 Crores in 1950-51 to Rs.14,89,472 Crores in 2014-15.
The trend in Tax GDP shows that there has been steady increase from 1950-51 to 1990-91. The tax GDP ratio increased from 6.03 In 1950-51 to 14.96 In 1990-91. Economic crisis of 1990 and subsequent reduction in tariff rates, tax GDP was decreased from 14.96 in 1990-91 to 14.08 in 2000-01. From 2000-01 the tax GDP ratio has been increasing in India. Tax GDP is low in India compared to other nations.
Combined revenue of the Central Government and State Government shows that there are uneven share of direct and indirect taxes in the Tax system. Direct Tax contribution was 36.84 percent in the year of 1950-51 and it decreased to 29.78 percent I 1960-61, to 21.23 percent in 1970-71,to 16.47 in 1980-81, to 13.98 percent in 1990-91, to 23.50 percent in 2000-01. Contribution of direct tax increased to 35.45 percent in 2010-11 and it decreased to 33.45 in 2014-15. Direct Tax figures show that there are considerable decrees in the contribution and is less than indirect tax contribution. Indirect tax contribution in the composite tax income of Central and State Governments was increasing from 1950-51 to 1990-91. In 1950-51 indirect tax contribution was 63.16 percent and it increased to 70.22 in 1960-61, 78.77 in 1970-71, to 83.53 in 1980-81 and to 86.02 in 1990-91. Indirect tax contribution was increasing from 2010 -11 to 2014-15. Contribution of indirect tax was 64.55 in 2010-11 and 66.55 percent in 2014-15. This shows that there has been a gradual shift away from direct taxes towards indirect taxes in India.
Recent trends in Tax collection
Total tax revenue as per the 2017-18 Union Budget is Rs. 19,11,579.46 Crores. Rs. 538744.73 Crores is expected from Corporation Tax, Rs. 441255.27 Crores is expected from Income tax, Rs. 245000.00 Crores is expected from Customs duty, Rs. 406900.00 Crores is expected from Union Excise Duties and Rs. 275000.00 Crores is expected from sales Tax. Total tax revenue in in the year 2015-16 was 14,55,648.11 Crores and in Rs. 16,30,887.81 Crores in 2016-17 and Rs.17,03,242.94 Crores in the year of 2016-17. In the 2017-18 Union budget Rs. 6,74,565.45 Crores is to be shared with the States. Thus net ret tax revenue of the Central Government during the 2017-18 would be 12,27,014.01 Crores. Tax revenue is not at all sufficient to carry out the developmental and other expenditures. Government has to either increase non tax revenue or to borrow either from internal or external markets. Debt must be repaid with interest. But Government expenditure is increasing like anything year by year. There is little scope for the reduction of Government expenditures and Fiscal deficit will increase if we are able to collect revenue from revenue sources. Tax GDP is very low in India compared to other nations of the World. Income tax payees is also very less in India. Tax evasion and Tax avoidance is very high and these should be reduced by strong action and punishments. Government officials , general public and politicians are responsible for the massive tax evasion. Government has to come forward to increase tax collection by various efforts to find resources for the developmental and welfare activities to make India a developed country in near future.
Reserve Bank of India’s announcement to kept repo rate unchanged and hiked reverse repo rate by 25 points to 6 % in the first bi-monthly monetary policy statement for the year 2017-18 is a welcome step to control inflation. Repo is the rate at which RBI loans short term funds to banks, and reverse repo is the rate at which RBI borrows from banks. This reflects the neutral stance of the RBI. A neutral stance means the bank is neither willing to step up money supply in the economy nor it intends to cut the same to curb growth.
Main observations of the Monetary Policy Committee (MPC) are; 1. Keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.25 per cent. 2. Since the MPC met in February 2017, indicators of global growth suggest signs of stronger activity in most advanced economies (AEs) and easing of recessionary conditions in commodity exporting large emerging market economies (EMEs). 3. For EMEs, the outlook is gradually improving, with indications that the slowdown characterising 2016 could be bottoming out. 4. Inflation is edging up in AEs to or above target levels on the back of slowly diminishing slack, tighter labour markets and rising commodity prices. 5. International financial markets have been impacted by policy announcements in major AEs, geo-political events and country-specific factors. 6. On the domestic front, the Central Statistics Office (CSO) released its second advance estimates for 2016-17 on February 28, placing India’s real GVA growth at 6.7 per cent for the year, down from 7 per cent in the first advance estimates released on January 6. 7. Several indicators are pointing to a modest improvement in the macroeconomic outlook. Foodgrains production has touched an all-time high of 272 million tonnes, with record production of rice, wheat and pulses. 8. Industrial output, measured by the index of industrial production (IIP), recovered in January from a contraction in the previous month, helped by a broad-based turnaround in manufacturing as well as mining and quarrying. 9. Activity in the services sector appears to be improving as the constraining effects of demonetisation wear off. 10. After moderating continuously over the last six months to a historic low, retail inflation measured by year-on-year changes in the consumer price index (CPI) turned up in February to 3.7 per cent. 11. Excluding food and fuel, inflation moderated in February by 20 basis points to 4.8 per cent, essentially on transient and item-specific factors. 12. With progressive remonetisation, the surplus liquidity in the banking system declined from a peak of Rs 7,956 billion on January 4, 2017 to an average of ‘6,014 billion in February and further down to Rs 4,806 billion in March. 13. Merchandise exports rose strongly in February 2017 from a subdued profile in the preceding months. Growth impulses were broad-based, with major contributors being engineering goods, petroleum products, iron ore, rice and chemicals. 14. Balance of payments data for Q3 indicate that the current account deficit for the first three quarters of the financial year narrowed to 0.7 per cent of GDP, half of its level a year ago. 15. Since the February bi-monthly monetary policy statement, inflation has been quiescent. Headline CPI inflation is set to undershoot the target of 5.0 per cent for Q4 of 2016-17 in view of the sub-4 per cent readings for January and February. 16. Risks are evenly balanced around the inflation trajectory at the current juncture. There are upside risks to the baseline projection. 17. GVA growth is projected to strengthen to 7.4 per cent in 2017-18 from 6.7 per cent in 2016-17, with risks evenly balanced18. Several favourable domestic factors are expected to drive this acceleration. First, the pace of remonetisation will continue to trigger a rebound in discretionary consumer spending. Activity in cash-intensive retail trade, hotels and restaurants, transportation and unorganised segments has largely been restored. Second, significant improvement in transmission of past policy rate reductions into banks’ lending rates post demonetisation should help encourage both consumption and investment demand of healthy corporations. Third, various proposals in the Union Budget should stimulate capital expenditure, rural demand, and social and physical infrastructure all of which would invigorate economic activity. Fourth, the imminent materialisation of structural reforms in the form of the roll-out of the GST, the institution of the Insolvency and Bankruptcy Code, and the abolition of the Foreign Investment Promotion Board will boost investor confidence and bring in efficiency gains. Fifth, the upsurge in initial public offerings in the primary capital market augurs well for investment and growth. 19. The global environment is improving, with global output and trade projected by multilateral agencies to gather momentum in 2017. Accordingly, external demand should support domestic growth. 20. Overall, the MPC’s considered judgement call to wait out the unravelling of the transitory effects of demonetisation has been broadly borne out. 21. Against this backdrop, the MPC decided to keep the policy rate unchanged in this review while persevering with a neutral stance. This is the fourth bi-monthly policy based on the recommendations of the 6-member MPC. Earlier RBI Governor is responsible to frame monetary policy. But on September 29 of 2016 Government of India appointed six member committee to frame monetary policy . a)The Governor of the Bank—Chairperson, ex officio;
(b) Deputy Governor of the Bank, in charge of Monetary Policy—Member, ex officio;
(c) One officer of the Bank to be nominated by the Central Board—Member, ex officio;
(d) Shri Chetan Ghate, Professor, Indian Statistical Institute (ISI) —Member
(e) Professor Pami Dua, Director, Delhi School of Economics (DSE) — Member
(f) Dr. Ravindra H. Dholakia, Professor, Indian Institute of Management (IIM), Ahmedabad— Member.
With the establishment of NITI Aayog at the Centre in 2015, Planning Commission which was very powerful in the Indian economy and planning came to end. Planning Commission was established in the year of 1950 and First five year plan was started in 1951. Economic development through five year plans had been strategy of Indian Government for the last 60 years. Five year plans, which was a part of Nehruvian socialist ideology, were part and parcel of Indian economy from 1951 to 2017 and twelve five year plans were formulated and implemented successfully. Though concept and strategy of planning ,which originated in then USSR, is a socialist approach Congress Government headed by Pandit Jawaharlal Nehru was very much interested and accepted it as India’s development strategy. Narendra Modi Government abandoned Planning Commission and replaced the NITI Aayog (National Institution for Transforming India) in 2015. This is one of the notable and important economic policy changes which took place after assuming the present Narendra Modi Government in New Delhi. One can find out many similarities and differences in between the Planning Commission and NITI Aayog in many aspects including in its organization, approach to planning and the role it plays.
Planning Commission was functioning as a fund distriuting wing of Government of India to ministries and State Governments. This funs allocation role created many problems and doubts about the impartiality in the allocation of funds to various States and Union Territories. NITI Aayog is only a think tanker and doesn’t have the responsibility of allocation of plan fund. NITI Aayog is a collaborative federal body whose strength is in its ideas, rather than in administrative or financial control .Quit naturally this will remove the fears of NITI Aayog favours some states and disfavours some other States in plan fund allocation.
Five year plan approach had not only long term objectives but also plan wised short term objectives. When higher economic growth, self reliance, social justice and modernization were the long term objectives , agriculture growth, self sufficiency in food production, infrastructure development, industrial growth, social welfare etc. as some of the short term plan wise objectives. Plan wise objectives were depended on the prevailing economic situation of the Country.
Planning Commission policy was Centre –to-State which was a one way flow of policy and NITI Aayog was said to be a genuine and partnership of states. NITI Aayog will provide the Centre and State Government with relevant strategic and technical advice across the spectrum of key elements of policy.
Both the Planning Commission and NITI Aayog were established as a advisory body of the Central Government and there are seldom provision in Indian Constitution regarding these institutions . Number of Full time as well as part time members in the Planning Commission was higher than the members of NITI Aayog. The last Planning Commission had eight full time members whereas in NITI Aayog has have only two. Secretaries or member secretaries were appointment through the usual process in Planning Commission but in NITI Aayog Secretaries to be known as the Chief Executive Officer ( CEO) and to be appointed by the Prime Minister. Planning Commission had Deputy Chairperson, a member secretary and full-time members but in NITI Aayog posts of CEO, of secretary rank, and Vice-Chairperson.
Role of States in the Five year plans was limited in the planning era but in the existing process the responsibility is with the State Government. NITI Aayog is governed by Governing Council in which all the Chief Ministers and administrators of UT as members. Top down was the approach in the five year plans but in NITI Aayog ,bottom top approach is envisaged.
National security was not in consideration of the Five year plans but in the NITI Aayog national ecurity is also included as one of the important items of consideration.
NITI Aayog is advocating for 15 year long vision accompanied by a 7-year strategy and a 3-year action agenda for to transform India in place of five year plans. And that there were over 300 specific action points that had been identified, covering a whole gamut of sectors. The period of the ‘action agenda’ coincides with the period of the 14th Finance Commission’s award and will give stability to the funding estimates of both the centre and states. The main difference in between the earlier plans and current approach is that latter plan included internal security and defence in the approach. The vision document projects the economy to grow more than three-fold to Rs469 lakh crore by 2031-32, from Rs137 lakh crore in 2015-16, assuming an 8% annual growth. The long-term national development agenda up to 2031-32 extend the traditional plan mandate to include internal security and defence. By 2031-32, the country should be “highly educated, healthy, secure, corruption-free, energy abundant, environmentally friendly and globally influential. Changes are good if it gives speedy economic development and welfare of the people. Economic impact over the changes from Planning Commission to NIITI Aayog could be evaluated only after some time. Let us hope for the best from NIITI Aayog.
Indian Population 2011 – Highlights
Population: As per the Provisional Population Totals of Census 2011, the total population of
India was 1210.2 million. Of this, the rural population stands at 833.1 million and the urban
population 377.1 million. In absolute numbers, the rural population has increased by 90.47
million and the urban population by 91.00 million in the last decade. Uttar Pradesh has the
largest rural population of 155.11 million (18.62% of the country’s rural population) whereas
Maharashtra has the highest urban population of 50.83 million (13.48% of country’s urban
population) in the country.
Growth Rate: The growth rate of population for India in the last decade was 17.64%. The growth
rate of population in rural and urban areas was 12.18% and 31.80% respectively. Bihar (23.90%)
exhibited the highest decadal growth rate in rural population.
Proportion of Population: In percentage terms, the rural population formed 68.84% of the total
population with the urban population constituting 31.16% (increase of 3.35%). Himachal
Pradesh (89.96%) has the largest proportion of rural population, while Delhi (97.50%) has the
highest proportion of urban population. The EAG States have a lower percentage of urban
population (21.13%) in comparison to non EAG States (39.66%).
Sex Ratio: The Sex Ratio in the country which was 933 in 2001 has risen by 7 points to 940 in
2011. The increase in rural areas has been 1 point from 946 to 947. The same in urban areas has
been 26 points from 900 to 926. Kerala has the highest sex ratio in total (1084), rural (1077) and
urban (1091). In rural, Chandigarh (691) and in urban, Daman & Diu (550) show the lowest sex
ratio in the country respectively. Eight states namely Jammu & Kashmir, Himachal Pradesh,
Uttarakhand, Bihar, Jharkhand, Chhattisgarh, Maharashtra, Karnataka and 1 UT Lakshadweep
show fall in the sex ratio in rural area and 2 UTs Daman & Diu and Dadra & Nagar Haveli in
Child Population (0-6 years): Out of the child population of 158.8 million in the age group of 0-6
in the country the rural child population stands at 117.6 million and urban at 41.2 million in
2011. The Child population has declined by 5.0 million in the country – decline of 8.9 million in
rural areas and increase of 3.9 million in urban areas. The Country has observed a decline in the
percentage of child population in the age group 0-6 years by about 3 percentage points over the
decade – rural areas show a decline of about 3 % and urban a decline of 2%. The growth rate of
Child population has been -3.08% in the last decade (Rural- (-)7.04%; Urban- (+)10.32%).
Child Sex Ratio (0-6 years): Census 2011 marks a considerable fall in child sex ratio in the age
group of 0-6 years and has reached an all time low of 914 since 1961. The fall has been 13 points
(927-914) for the country during 2001-2011. In rural areas, the fall is significant – 15 points (934-
919) and in urban areas it has been 4 points (906-902) over the decade 2001-2011. Delhi (809)
has recorded the lowest and Andaman & Nicobar Islands (975) the highest child sex ratio in rural
areas. Haryana (829) has recorded the lowest and Nagaland (979) the highest child sex ratio in
Number of Literates: As per the Provisional Population Totals of Census 2011, the number of
literates in India was 778.5 million. Of this, 493.0 million literates were in rural areas and 285.4
million literates in urban areas. Out of an increase of 217.8 million literates over the decade
2001-2011, rural areas accounted for 131.1 million and urban areas 86.6 million. The highest
number of rural literates has been recorded in Uttar Pradesh (88.4 million). Maharashtra (40.8
million) has recorded the highest number of literates in urban areas.
Literacy Rate: The Literacy Rate of India as per the Provisional Population Totals of Census 2011
is 74.04. In rural areas the Literacy Rate is 68.91 and in urban areas it is 84.98. The decadal
change works out to 9.21 points – 10.17 points in rural areas and 5.06 points in urban areas
respectively. The male Literacy Rate which is 82.14 (Rural- 78.57; Urban-89.67) is higher than
the female Literacy Rate of 65.46 (Rural- 58.75; Urban-79.92). The increase in female literacy
rate is significantly higher in all areas i.e. total (11.79 points), rural (12.62 points) and urban
(7.06 points) in comparison to corresponding male literacy rates – total (6.88 points), rural (7.87)
and urban (3.40 points) over the decade. It is significant to note that the gap in literacy rate
among males and females has reduced to 16.68 in the country. The gap is 19.82 points in rural
areas and 9.75 points in urban areas. Kerala (92.92) ranks first in rural areas whereas Mizoram
(98.1) ranks first in urban areas. As far as Male literacy rate is concerned, Kerala (95.29) ranks
first in rural areas whereas Mizoram (98.67) ranks first in urban areas. Rajasthan (46.25) has
recorded lowest female literacy rate in rural areas, whereas, Jammu & Kashmir (70.19) has the
lowest female literacy rate in urban areas.