Banking Awareness of 1 and 2 February 2024

Topic: Banking/Financial/Govt Schemes

1. Union Cabinet has extended refund scheme for garments and made-ups exports till 31 March 2026.

• The cabinet has extended Rebate of State and Central Taxes and Levies (RoSCTL) scheme for garment exports by two years.
• The cabinet had first approved the scheme up to 31 March 2020. After this, it further approved the scheme till 31 March 2024.
• The extension to the scheme will help in improving export competitiveness.
• ₹9,246 crore is the Budget allocation for the scheme this year.
• Benefits under the Remission of Duties and Taxes on Exported Products (RoDTEP) are available for the majority of other products that are not covered by the RoSCTL.
• RoSCTL scheme is a Ministry of Textiles scheme for exports under Chapters 61, 62 and 63 of Customs Tariff.
• The scheme rebates various Central, State and local duties/taxes/levies which were not refunded under other duty remission schemes. It is a budgeted scheme.

Topic: Agriculture

2. Union Cabinet has approved the continuation of AHIDF until financial year 2025-26.

• AHIDF is to be implemented under the Infrastructure Development Fund (IDF) with a total outlay of ₹29,610.25 crore up to 2025-26.
• Government said it would incentivise investments for dairy processing and product diversification, meat processing and product diversification, and animal feed plant.
• As per the government, it would also incentivise breed multiplication farm, animal waste to wealth management (agri-waste management), veterinary vaccine and drug production facilities.
• Animal Husbandry Infrastructure Development Fund (AHIDF) was launched in 2020-21.
• Under AHIDF, 3% interest subvention is provided by the centre for eight years including two years of moratorium for loan up to 90%.
• This loan can be from any scheduled commercial bank and National Cooperative Development Corporation (NCDC), NABARD and NDDB.
• Individuals, private companies, farmer producer organisations (FPOs), micro, small and medium enterprises (MSMEs) and dairy cooperatives can get the credit at subsidized interest rate.
• The funding is aimed at modernisation and strengthening of the dairy plants.
• So far, AHIDF has created additional 141.04 lakh litre per day (LLPD) of milk processing capacity.
• It has also created 79.24 lakh tonnes (lt) of feed processing capacity and 9.06 lt of meat processing capacities.

Topic: Reports and Indices

3. Manufacturing sector has registered four month high growth in January.

• The four-month high growth has been seen due to sharper increase in new orders according to a monthly survey.
• Marketing efforts and demand buoyancy improved new orders placed with Indian goods producers.
• Goods producers recorded the fastest rise in outstanding business volumes in 15 months.
• The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) increased from an 18-month low level of 54.9 in December to 56.5 in January.
• This highlights the strongest improvement in the manufacturing sector since last September.

Topic: Indian Economy/Financial Market

4. Finance and Corporate Affairs Minister Smt Nirmala Sitharaman presented the Interim Union Budget for 2024-2025.

• Union Minister Nirmala Sitharaman presented the sixth consecutive budget.
• She equalled the record of Minister Morarji Desai, who as finance minister had presented five annual budgets and one interim budget between 1959 and 1964.
• Finance Minister Smt Nirmala Sitharaman announced that the capital expenditure outlay for the next year will be Rs 11,11,111 crore, which would be  3.4 per cent of the GDP.
• The capital expenditure outlay has been increased by 11.1 per cent as compared to the previous year.
• The First Advance Estimates of National Income of FY 2023-24 projected that India’s Real GDP is projected to grow at 7.3 per cent.
• GST collection stood at ₹1.65 lakh crore in December 2023. This is the seventh time that gross GST revenues have crossed ₹1.6 lakh crore.
• The tax receipts are estimated to be Rs 26.02 lakh crore. The total receipts other than borrowings and the total expenditure are estimated at Rs 30.80 and 47.66 lakh crore respectively.
• The fiscal deficit in 2024-25 is estimated to be 5.1 per cent of GDP. It will reduce to below 4.5 per cent by 2025-26.
• The gross and net market borrowings through dated securities during 2024-25 are estimated at Rs14.13 and 11.75 lakh crore respectively.
• The FDI inflow during 2014-23 was USD 596 billion. It is twice of inflow during 2005-14.
• Finance Minister said that the government is committed to making India a ‘Viksit Bharat’ by 2047.
• Pradhan Mantri Kisan Sampada Yojana benefitted 38 lakh farmers and generated 10 lakh employment.
• Three major economic railway corridor-energy, mineral and cement corridors, port connectivity corridors, and high traffic density corridors will be implemented.
• 40000 normal rail bogies will be converted to the Vande Bharat standards. It will enhance the safety, convenience and comfort of passengers.
• The government will also form a high-powered committee to tackle challenges arising due to fast population growth and demographic changes.
• 1 crore households will obtain 300 units of free electricity every month through rooftop solarization.
• Healthcare cover under the Ayushman Bharat scheme will be extended to all ASHA workers, Anganwadi Workers and Helpers.
• Finance Minister Nirmala Sitharaman announced that a ₹1 lakh crore corpus will be established with a 50-year interest-free loan for long-term financing research and innovation in domains including deep defence technology for defence purposes.

Topic: Indian Economy/Financial Market

5. No change has been proposed in tax rates in the interim budget.

• The government has not made any changes in the direct and indirect tax rates in the interim budget for 2024-25.
• In the interim budget, it has been proposed to withdraw the outstanding direct tax demands up to Rs 25,000 relating to the period up to 2009-10 and up to Rs 10,000 relating to the financial year 2011 to 2014-15.
• In the last 10 years, the direct tax collections have more than trebled and return filers have increased 2.4 times.
• The average processing time of tax returns has been reduced from 93 days in the year 2013-14 to 10 days this year.
• In FY 2023-24, the tax base of GST more than doubled and the average monthly gross GST collection has almost doubled to Rs 1.66 trillion.
• In the post-GST period of 2017-18 to 2022-23, States’ SGST revenue achieved a buoyancy of 1.22.
• The scheme of fifty-year interest-free loans for capital expenditure to states will be continued this year with a total outlay of Rs 1.3 lakh crore.
• A provision of Rs.75,000 crore rupees as a fifty-year interest-free loan is proposed to support reforms by the State Governments.
• Union Finance Minister said that corporate tax rates have been reduced from 30 per cent to 22 percent for existing indigenous companies and to 15 percent for some new manufacturing companies.

Topic: Indian Economy/Financial Market

6. In Budget 2024, the biggest allocation is for defence and the lowest for agriculture.

• On 1 February, Finance Minister Nirmala Sitharaman tabled the Interim Budget for 2024-25.
• Nirmala Sitharaman said India's capital expenditure for 2024-25 has been increased by 11% to ₹11.11 lakh crore or 3.4% of GDP.
• She said the tripling of capital expenditure in the last four years has had a manifold impact on economic growth and employment generation.
• Furthermore, she said that a new scheme will be launched to strengthen the technology-intensive approach for the defence sector.
• According to the interim budget documents, the Defense Ministry has been given the highest allocation.
• The government will promote public and private investment in post-harvest agricultural activities.
• Every year, through the Pradhan Mantri-Kisan Samman Yojana, direct financial assistance is provided to 11 crore 80 lakh farmers, including marginal and small farmers.
• Under the Crop Insurance Scheme, crop insurance has been provided to four crore farmers.
• Apart from these, many other programs are being helped in producing food grains for the entire country and the world.
• 1361 mandis have been connected to the electronic national agricultural market, and this is helping one crore 80 lakh farmers.
• She said that the number of airports in the country has also increased in the last ten years. At present, 149 airports are operating in the country.
• The allocation for specific ministries is as follows:

Topic: Indian Economy/Financial Market

7. The fiscal deficit is estimated to be 5.1% of GDP in 2024-25.

• This complies with the fiscal consolidation path to reduce the fiscal deficit to below 4.5% by 2025-26.
• The Finance Minister said that states will be encouraged to comprehensively develop iconic tourism centers, branding and marketing them globally.
• For rating the centers based on the quality of facilities and services, a framework will be established.
• Long-term interest-free loans will be provided to the States on an equitable basis to finance such development.
• Over the last ten years, the government has helped 25 crore people escape multidimensional poverty.
• The 'direct benefit transfer' of Rs 34 lakh crore to PM-Jan Dhan accounts has resulted in a saving of Rs 2.7 lakh crore to the government.
• Under the PM-SVANidhi Yojana, loan assistance has been provided to 78 lakh street vendors.
• PM-Janman Yojana has been launched specifically for vulnerable tribal groups, who have been kept out of the scope of development till now.
• The government has initiated a PM-Vishwakarma Yojana, which provides support to artisans and craftspeople engaged in 18 trades.

Topic: Indian Economy/Financial Market

8. According to the Finance Minister, rooftop solarization will enable one crore households to receive up to 300 units of free electricity each month.

• When presenting the Interim Budget 2024–2025 to Parliament on February 1, 2024, the Finance Minister made this statement. 
• As a result of receiving free solar electricity and selling the excess to distribution firms, households are expected to save up to fifteen to eighteen thousand rupees a year. 
• This is expected to provide entrepreneurship opportunities to vendors for supply and installation.
• It is expected that this will also give young people with technical abilities in manufacturing, installation, and maintenance work opportunities. 
• Finance Minister Nirmala Sitharaman also proposed viability gap funding for harnessing offshore wind energy potential for initial capacity of one giga-watt.
• Additionally, FM suggested setting up a 100 MT coal liquefaction and gasification capacity by 2030.
• FM also proposed phased mandatory blending of CBG (Compressed Bio Gas) in CNG (Compressed Natural Gas) for transportation and PNG (Piped Natural Gas) for domestic uses.
• FM further proposed that financial help be given for purchase of biomass aggregation machinery to facilitate collection.
• Additionally, she proposed a new scheme of bio-manufacturing and bio-foundry.
• This scheme will make available environment friendly alternatives like biodegradable polymers, bio-plastics, bio-pharmaceuticals and bio-agri-inputs.

Topic: Banking System

9. RBI directed Paytm Payments Bank to stop credit transactions.

• The Reserve Bank of India (RBI) has directed Paytm Payments Bank to halt all deposits and credit transactions after February 29, 2024.
• RBI directed Paytm Payments Bank to stop deposits or credit transactions or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc.
• However, customers can still withdraw funds from their accounts but certain facilities including fund transfers and UPI facilities will be stopped.
• Users can still use the Paytm app and the UPI channel without restrictions. The Paytm app is owned by the parent company and is not associated with Paytm Payments Bank.
• No credits or top-ups into Paytm Payments Bank account or wallet will be allowed from March 1, 2024.
• Paytm Payments Bank also cannot onboard new customers after restrictions come into force.
• The RBI has taken this step after a comprehensive system audit report and subsequent compliance validation report conducted by external auditors.
• The non-compliance issues were first raised against the Paytm Payments Bank in 2022.
• Paytm Payments Bank is an Indian payments bank. It was founded in 2017. It is headquartered in Noida. In 2021, it received a scheduled bank status from the RBI.

Topic: Committees/Commissions/Taskforces

10. The four members of the Sixteenth Finance Commission (SFC) appointed by the Government, which includes three full-time members.

• On 30 January, the government announced this in a gazetted notification.
• Former Expenditure Secretary and member of the 15th Finance Commission, A N Jha, former Special Secretary in the Department of Expenditure Annie George Mathew, and Niranjan Rajadhyaksha, Executive Director, Earth Global, have been appointed as whole-time members of the SFC.
• In addition, the government has appointed the State Bank of India's group chief economic advisor Soumya Kanti Ghosh as a part-time member of the commission.
• In December, the government had appointed former NITI Aayog vice-chairman Arvind Panagariya to lead the SFC.
• SFC will decide the formula to share a major part of the Centre's tax revenue with the states for five years from FY 2027.
• The Chairman and other members of the Commission will hold office respectively from the date of assumption of charge till the date of submission of the report or 31 October 2025, whichever is earlier.
• The SFC is tasked with defining the distribution of the Centre's tax revenue to the states for the next five years, starting from FY 2027.
• SFC will also ensure that states have efficient systems and measures for financing local bodies as advised by the State Finance Commissions.
• The SFC will suggest steps to increase the consolidated funds of states for panchayats and municipalities and review the national and state disaster management funds.

Topic: Appointments

11. Anil Kumar Lahoti has been appointed as the new chairman of TRAI.

• Former Railway Board chairman and CEO Anil Kumar Lahoti became the new chairman of the Telecom Regulatory Authority of India (TRAI).
• After PD Vaghela's retirement on September 30, the post was vacant for four months.
• Anil Kumar Lahoti will assume the charge for three years from the date of assumption of charge of the post or until he attains the age of 65 years or until further orders, whichever is earlier.
• Department of Financial Services (DFS) proposal to post Sanjay Vinayak Mudaliar as Executive Director (ED) at Bank of Baroda has been approved by the Appointments Committee of the Cabinet (ACC).
• Sanjay Vinayak Mudaliar is presently the Executive Director at Indian Overseas Bank.
• Mudaliar will served as ED at Bank of Baroda from the day he assumes charge for the remainder of his term, i.e. up to December 31, 2025, or until further orders, whichever is earlier.
• DFS proposal to post Joydeep Dutta Roy, ED, Bank of Baroda, as ED in the Indian Overseas Bank has also been approved by the ACC.

Read Banking Awareness PDF - 1 and 2 February 2024