Reserve Bank of India US-China Trade war Impact on India Economic impact of " Covid-19" Union Budget 2020-21 Impact of Technology on Enviroment

1. ENGG. ECONOMICS
Individual Assignment
Name Naresh Kumar
Branch Electrical Engineering
Roll No 2K18/CEEE/30
Subject Engineering Economics
Assignment Assignment-1 / Individual
APRIL 20, 2020
Shahbad Daulatpur

2. TABLE OF CONTENTS
RESERVE BANK OF INDIA...........................................................................................3
US-CHINA TRADE WAR ................................................................................................6
ECONOMIC IMPACT OF “COVID-19” ....................................................................13
UNION BUDGET 2020-21 ..............................................................................................16
IMPACT OF TECHNOLOGY ON ENVIRONMENT..................................................4

3. RESERVE BANK OF INDIA
FOUNDED ON 1st
APRIL 1935
The central bank of the country is the Reserve Bank of India (RBI). It was established in April
1935 with a share capital of Rs. 5 crores on the basis of the recommendations of the Hilton
Young Commission. The share capital was divided into shares of Rs. 100 each fully paid which
was entirely owned by private shareholders in the beginning. The Government held shares of
nominal value of Rs. 2,20,000.
Reserve Bank of India was nationalized in the year 1949. The general superintendence and
direction of the Bank is entrusted to Central Board of Directors of 20 members, the Governor
and four Deputy Governors, one Government official from the Ministry of Finance.
Ten nominated Directors by the Government to give representation to important elements in the
economic life of the country, and four nominated Directors by the Central Government to
represent the four local Boards with the headquarters at Mumbai, Kolkata, Chennai and New
Delhi. Local Boards consist of five members each Central Government appointed for a term of
four years to represent territorial and economic interests and the interests of co-operative and
indigenous bank.
The Reserve Bank of India Act, 1934 was commenced on April 1, 1935. The Act, 1934 (II of
1934) provides the statutory basis of the functioning of the Bank.
The Reserve Bank is fully owned and operated by the Government of India.
The Preamble of the Reserve Bank of India describes the basic functions of the Reserve
Bank as:
 Regulating the issue of Banknotes
 Securing monetary stability in India
 Modernizing the monetary policy framework to meet economic challenges
The Reserve Bank’s operations are governed by a central board of directors, RBI is on
the whole operated with a 21-member central board of directors appointed by the Government of
India in accordance with the Reserve Bank of India Act.
The Central board of directors comprise of:
 Official Directors – The governor who is appointed/nominated for a period of four years
along with four Deputy Governors
 Non-Official Directors – Ten Directors from various fields and two government Official

4. ORGANIZATION STRUCTURE
The Reserve Bank has the sole authority to issue banknotes in India. Reserve Bank, like
other central banks the world over, changes the design of banknotes
From time to time.
The Reserve Bank has introduced banknotes in the Mahatma Gandhi Series since 1996
and has so far issued notes in the denominations of Rs.5, Rs.10, Rs.20, Rs.50,
Rs.100, Rs.200, Rs.500, and Rs.2000 in this series.
MAJOR FUNCTIONS OF RBI
Monetary authority
 Formulating and implementing the national monetary policy.
 Maintaining price stability across all sectors while also keeping the objective of
growth.
Regulatory and Supervisory

5.  Set parameters for banks and financial operations within which banking and
financial systems function.
 Protect investor’s interest and provide economic and cost-effective banking to
the public.
Foreign Exchange Management
 Oversees the Foreign Exchange Management Act, 1999.
 Facilitate external trade and development of foreign exchange market in India.
Currency Issuer
 Issues, exchanges or destroys currency and not fit for circulation.
 Provides the public adequately with currency notes and coins and in good
quality.
Developmental role
 Promotes and performs promotional functions to support national banking and
financial objectives.
Related Functions
 Provides banking solutions to the central and the state governments and also
acts as their banker.
 Chief Banker to all banks: maintains banking accounts of all scheduled banks.
Conclusion: -
By the study we got conclusion if the government print more money than may economy
can trap in inflation and poverty may be increases broadly because, middle classes and
poor people can suffered with inflation because, incomes of the rich have increased and
middle and poor classes have declined with inflation. Inflation brings about shifts in the
distribution of real income from those whose money incomes relatively inflexible to
those whose money incomes are relatively flexible.

6. US-CHINA TRADE WAR
SINCE 2018
The global economy has witnessed a series of trade disputes between China and the US
since
January 2018, when the US government imposed safeguard tariffs on large residential
washing machines, as well as solar cells and modules. These conflicts have engendered a
full-fledged trade war.
Against the backdrop of threats of further tariffs and retaliation, the tension between
China and the US, the top two trading countries in the world, inevitably intensifies. The
International Monetary Fund (IMF) (2018) simulates the economic consequences of
mounting China-US trade tensions and warns that should these trade threats
materialise, the GDP of the US and China will be reduced by 0.9% and 0.6%, respectively,
leading to a 0.4% fall in long-term world GDP.
FROM TRADE TENSIONS TO TRADE WAR
As President Trump ignored the needs of his constituencies, he paved the way to
Democratic recapture of the House of Representatives in the 2018 mid-term election.20
At the same time, the U.S. tariff war with China began to multi-lateralize. The ultimate
objective of the Trump administration seems to be targeted at America’s deficit
partners, in particular China, Mexico, Japan and Germany (Figure 4). Thus, when
President Trump threatened to impose steep tariffs against the EU, German Chancellor
Angela Merkel warned him not to unleash an all-out trade war.
In mid-August 2017, President Trump asked United States Trade Representative (USTR)
Robert Lighthizer to open an investigation into China’s intellectual property (IP)
practices 25A veteran trade hawk, Lighthizer seized Section 301 of the Trade Act of
1974, which was used against the rise of Japan in the 1980s. Washington saw this effort
presumably as an effort to restore “fair and free trade,” and to “save” American
innovation from “Chinese IP theft.” This view united the White House’s Goldman Sachs
globalists and steel-industry protectionists. It was also supported by both Republicans
and Democrats in the Congress.
TRADE DEFICIENT OF US
U.S. goods and services trade with China totalled an estimated $737.1 billion in 2018.
Exports were $179.3 billion; imports were $557.9 billion. The U.S. goods and services
trade deficit with China was $378.6 billion in 2018. China is currently our largest goods
trading partner with $659.8 billion in total (two way) goods trade during 2018. Goods
exports totalled $120.3 billion; goods imports totalled $539.5 billion. The U.S. goods

7. trade deficit with China was $419.2 billion in 2018. Trade in services with China (exports
and imports) totalled an estimated $77.3 billion in 2018. Services exports were $58.9
billion; services imports were $18.4 billion. The U.S. services trade surplus with China was
$40.5 billion in 2018. China was the United States' 3rd largest goods export market in
2018. The U.S. goods trade deficit with China was $419.2 billion in 2018, a 11.6%
increase ($43.6 billion) over 2017. The United States has a services trade surplus of an
estimated $41 billion with China in 2018, up 0.8% from 2017
The trade tariff spat between China and the United States has been a “lose-lose”
situation for both countries and the wider world and it is likely to deteriorate unless a
deal is reached

8. Fig-1 How the US-China war escalated
After Donald Trump took office, a tough stance on trade policies was taken by the White
House, even before the outbreak of the China-US trade war. In June 2017, Trump
initiated a ‘Section 232 investigation’, for reasons of national security, on the import of
steel and aluminium. Considering the huge production capacity of steel and aluminium
in China, the investigation and the following additional tariff are believed to be targeting
China.
Entering 2018, trade disagreements between the US and China have increased in scale
and frequency. Since the start of the year, the US has repeatedly imposed anti-dumping
duties or tariffs on Chinese imports. Trade tensions escalated in March 2018, when US
President Donald Trump signed an executive memorandum launching a ‘Section 301
investigation’ into China’s intellectual property practices and threatened extra tariffs on
Chinese imports.
In retaliation, China promptly issued a similar statement the next day, reciprocating the
threats with warnings of additional tariffs on American imports. On 4 April 2018, the US
detailed a list of 1,333 Chinese goods, valued at US$ 50 billion that would be subject to
an additional 25% tariff. China hit back immediately with reciprocal tariffs on a list of
American goods of equal value, matching US threats on a dollar-for-dollar basis.
Led by Liu He, the vice premier of the People’s Republic of China, a Chinese delegation
went to the US on 17 May. After meeting with the US president, Donald Trump, and

9. having rounds of negotiations with trade officials on the US side, including Steven
Mnuchin, Wilbur Ross, and Robert Lighthizer, a joint declaration was announced,
reflecting a cooperative attitude from both sides and a temporary easing of trade
tensions. However, on 16 June, the Office of the United States Trade Representative
(USTR) announced a US$ 50 billion tariff list, covering over 1,000 Chinese goods. China’s
Customs Tariff Commission of the State Council immediately issued a notice,
announcing tariffs on 659 locally-manufactured American goods valued at US$ 50
billion. At the same time, the Ministry of Commerce declared that previous negotiation
attempts with the US had failed, marking the official start of the China-US Trade War.
In the following months, neither of the two countries were willing to make a concession.
By 23 August 2018, the US has already followed through with its threat of 25%
additional tariff on US$ 50 billion worth of Chinese commodities. China also retaliated
against US measures by levying an additional 25% tariff on American goods, also valued
at US$ 50 billion. For further aspects of US- China trade war see Diagram above.
After rounds of ministerial-level negotiations, Xi Jinping, the general secretary of the
Communist Party of China, meet with Donald Trump at the 2018 G20 Summit in Buenos
Aires. Both parties agree on suspending new trade tariffs for 90 days to allow talks. The
ceasefire is believed to be a temporary truce, as further actions may be taken by both
sides should no substantive agreements be reached during the negotiation window. At
the time of writing, no remarkable progress has been reported, and the future of the
trade conflict is still unclear.
THE PHASE-1 DEAL
In January 2019, finally the US and China have signed an agreement aimed at easing a
trade war that has rattled markets and weighed on the global economy.
WHAT CHINA GAVE AWAY IN THE DEAL
So far, the US has imposed tariffs on more than $360-370bn (£268bn) of Chinese goods,
and China has retaliated with tariffs on more than $110 billion of US products. China, in
turn, has set tariffs on US$185 billion worth of US goods.
A USTR fact sheet refers to this part of the deal as the Expanding Trade chapter.
According to the US China has agreed to increase its total purchases of US goods and
services by at least $200 billion over the next two years. Also included is a commitment
by China to increase its buying of US agricultural products to $40 billion to 50 billion in
each of the next two years.
WHAT USA GAVE AWAY IN THE DEAL

10. A statement issued by the office of the United States Trade Representative (USTR) said
that the US will be maintaining 25 per cent tariffs on approximately $250 billion of
Chinese imports, along with 7.5 per cent tariffs on approximately $120 billion of Chinese
imports. So China will get relaxation of just 9 billion dollars
OTHER ASPECTS
The agreement addresses unfair currency practices by committing to refrain from
competitive devaluations and exchange rate targeting "This approach will help reinforce
macroeconomic and exchange rate stability and help ensure that China cannot use
currency practices to unfairly compete against U.S. exporters" it says
US-CHINA TRADE WAR’s BENEFITS TO THE INDIA
However, despite the substantial tariffs, due to the competitiveness of Chinese firms,
China maintained 75% of their exports to the US. Chinese firms have also recently
started absorbing part of the costs of the tariffs by reducing the prices of their exports.
Trade diversion benefits to Korea, Canada and India were smaller but still substantial,
ranging from USD 0.9 billion to USD 1.5 billion," it said. The remainder of the benefits
were largely to the advantage of other South East Asian countries.
India gained USD 755 million in additional exports to the US in the first half of 2019 by
selling more- Chemicals (USD 243 million), Metals and ore (USD181 million), Electrical
machinery (USD 83 million), Various machinery (USD 68 million).

11. Exports have also increased in areas such as- Agricultural-food, Furniture, Office
machinery, Precision instruments, Textiles and apparel, Transport equipment, UNCTAD
said.
China is the largest buyer of US crude and gas in Asia. But its biggest trading house has
already stopped buying US crude and Beijing looks set to slap retaliatory tariffs on US
crude and LNG. A boycott of US oil indicates Beijing's continued purchase of Iranian oil,
keeping Tehran in play in the global oil market.
If Indian exports can successfully capture the US' share of the trade pie, the massive
bilateral trade gap with China will also come down. In the last fiscal, India's exports to
China stood at Rs 86,015 crore, while Chinese imports totalled Rs 4.91 lakh crore. In
other words, the trade deficit was well over Rs 4 lakh crore.
The good news for India is that while China has imposed tariffs of 15-25% on these
goods coming from the US, other countries are subject to only 5- 10% duty - the most
favoured nation (MFN) rate applicable for members of the World Trade Organization.
Moreover, India has been granted additional 6-35% duty concessions on the MFN under
the Asia Pacific Trade Agreement, which makes Indian exports all the more competitive
at present.
Interestingly, Union Minister of Commerce & Industry Suresh Prabhu had chaired a
meeting of different exports stakeholders and ministry officers to discuss a strategy for
doubling India's exports by 2025. The study could serve as a blueprint to getting there.
SHORT TERM
China's share in total US trade dropped to 15.7% in 2018 from 16.4% in 2017.
Simultaneously, total trade between India and the US increased to $87.5 billion in 2018
from $74.3 billion in 2017, raising India's share in total US trade to 2.1% in 2018 from
1.9% in the previous year. The trend continues in 2019, too, as seen in trade data.
For some Asian countries, including India, American tariffs on imports of Chinese metals
have given a boost to exports of some commodities, such as aluminium and steel. As
the US imposed tariffs on Chinese steel and aluminium, India's bauxite and aluminium
exports saw an increase of 61.1% in 2018 over 2017, while iron and steel exports to the
US surged 9.1% during the same period
Meanwhile, China has turned to India for meeting its demand for cotton. In March 2019,
Indian traders signed contracts to ship 800,000 cotton bales to China as demand surged
from the world's biggest consumer.

12. Following the US-China trade war, India's cotton textile exports to China surged to 69%
between April 2018 and February 2019, to $1.55 billion, compared to the same period
the previous year.
BUT WHEN IT COMES TO LONG TERM WE FAILS
India has yet to reap long term benefits of trade-war. Long term benefits means shifting
of manufacturing companies leaving from China & coming to India.
But businesses in India face some challenges, including the need for land and labour
reforms, as well as the lack of infrastructure
Apple has called on major suppliers to consider moving 15% to 30% of iPhone
production out of the country. American PC makers HP and Dell are thinking of moving
up to 30% of their notebook production in China to Southeast Asia and elsewhere.
Japan's Nintendo will also shift a portion of its Nintendo Switch game system
production from China to Vietnam.
NEGATIVE IMPACTS:
As a general rules Trade also have negative impacts.
1. A fully-fledged trade war is bad news as it leads to inflation and low growth scenario.
2. When a country decides to levy high taxes, the production cost if an item is imported
rises and which causes cascading inflationary impact on the US economy itself. Higher
tariffs lead to higher consumer prices, caused by importers passing on their increased
costs of raw materials, which could lead to higher interest rates causing problems in the
economy.
3. We all know that the Indian economy is grappling with cases of bad loans, the Indian
economy will need to brace for significant alterations and stress from combined effects
of global and domestic challenges.
KEYs FOR INDIA
Businesses in India face two key challenges: land laws and labour regulations.
Current land laws make it difficult for the private sector to obtain space for
manufacturing units, he said. That’s because land ownership is fragmented across
several states, and companies need extended periods of time to obtain land, or bypass
legal issues that may crop up.

13. Another problem is that labour laws in India are “extremely complex”. They comprise
about 40 acts and companies are required to adhere strictly to all of them. This makes it
difficult for manufacturers.
Land and labour reforms are two of the “most important factors of production” needed
As India is a big country, a lot of laws are controlled by the state government — not by
the central government. “The changes need to be not just ... top down from the central
government, but also bottom up from different state governments.”
India needs to move fast, through innovative policies and clear focus on infrastructure
development
Many Indian freight trains travel at speeds of less than 30 kilometres per hour. There are
too few ports. In recent years there’ve been massive road-building projects but the
speed of construction, although vastly improved, is still way behind rival nations in
south-east Asia.
More changes to existing laws are needed before India can reap the full benefits of
these investments to boost the economy.
CONCLUSION
The International Monetary Fund has said the US-China trade war is dragging on global
growth. Last month it said the conflict would cut growth by 0.1 percentage points in
2019 and 2020 from its April forecasts, at 3.2% and 3.5% respectively. International trade
growth has stalled and business investment has been paused because of the uncertainty
over trade. Factory output has stalled in several countries including the UK, Germany
and Italy, with a knock-on impact on growth. Central banks including the US Federal
Reserve and European Central Bank are under pressure to cut interest rates as a
consequence.

14. ECONOMIC IMPACT OF “COVID-19”
SINCE DECEMBER 2019
The Coronavirus outbreak is having a negative impact on the various sectors of the economy.
The Covid-19 situation has impacted millions of livelihoods in India, forcing the government and
central bank to take drastic measures to provide relief. Following the RBI's slashing of repo rate,
the government has announced sharp interest rate cuts for small savings schemes for the first
quarter (April-June) of 2020-21.
Moody's Investors Service on 27 March slashed its estimate of India's GDP growth during the
2020 calendar year to 2.5%, from an earlier estimate of 5.3% and said the Corona virus
pandemic will cause unprecedented shock to the global economy. In its Global Macro Outlook
2020-21, Moody's said India is likely to see a sharp fall in incomes, further weighing on
domestic demand and the pace of recovery in 2021.
The Covid-19 pandemic will shrink world output by 3% in 2020, IMF said in the April update of
its World Economic Outlook (WEO) released previously.
The global economy could shrink by up to one per cent in 2020 due to the coronavirus pandemic,
a reversal from the previous forecast of 2.5 per cent growth, the United Nations (UN) said,
warning that it may contract even further if restrictions on the economic activities are extended
without adequate fiscal responses.
The analysis by the UN Department of Economic and Social Affairs (DESA) said the Covid-19
pandemic is disrupting global supply chains and international trade. With nearly 100 countries
closing national borders during the past month, the movement of people and tourism flows have
come to a screeching halt.
The governments of India (Baa2 negative) and South Africa (Baa3 negative) have announced 21-
day lockdowns. We expect these measures to dampen economic growth in both countries this
year. For India, we are now projecting growth rates of 2.5% in 2020 followed by 5.8% next
year,"
Moody's said in its Global Macro Outlook for India we are now projecting growth rates of
2020 in 2.5% in followed by 5.8% next year Moody’s said in its ,“ Global Macro Outlook .
The International Monetary Fund (IMF) further slashed India’s growth estimate for FY21 to
1.9% from 5.8% estimated in January, warning that the “worst recession since the Great
Depression” will dwarf the economic damage caused by the global financial crisis a decade back.
It also said that India and China would be the only two major economies likely to register
growth, with all others contracting.
Moody's now expects real GDP in the global economy to contract by 0.5% in 2020, followed by
a pickup to 3.2% in 2021.In November last year, before the emergence of the coronavirus, the
rating agency was expecting the global economy to grow by 2.6% this year.

15. Moody’s said the A n G20 economies will unprecedented shock contract in 2020 in the
experience first half of this year and will as a whole, before picking up in 2021.
IMPACT ON INDIAN ECONOMY
GDP GROWTH RATE
The Organisation for Economic Co-operation and Development (OECD) has slashed India’s
growth forecast for 2020-21 by 110 basis points (bps) to 5.1%.
Business confidence, financial markets and the travel sector, including disruption to supply
chains.
PHARMACEUTICALS
Pharmaceutical industry has deep linkages to China- the supply chain of raw materials of drugs
has taken a hit.
The production facilities in Himachal Pradesh — largest pharma hub of Asia — have warned of
suspension.
Active Pharmaceutical Ingredients (APIs), also called bulk drugs, are significant ingredients in
the manufacture of drugs. The Hubei province of China, the epicentre of the coronavirus, is the
hub of the API manufacturing industry.
India is heavily import-dependent for APIs from China. India’s API imports stand at around $3.5
billion per year, and around 70%, or $2.5 billion, come from China.
AUTOMOBILE INDUSTRY
China is one of the leading suppliers of auto components in India, accounting for 27% of the
total imports.
The coronavirus is expected to have an impact on the Indian automotive industry and therefore
also on the automobile component.
Already low production rate due to the market conditions and on account of the impending
change over to BS-VI emission norms from BS-IV from April 2020.
STOCK MARKET
On 28th February, the Indian stock market registered one of its worst crashes in a single day.
Indian indices fell over 3.5%, marking the second biggest fall in Sensex history.
The Sensex's worst fall in history was on 24th August, 2015, when the indices fell 1,624 points
on the back of a slump in the Chinese markets and rising crude oil prices.

16. CURRENCY
The month of March is typically good for the Indian currency as remittances, from both overseas
citizens and companies, tend to boost the exchange rate.
Rupee’s sharp drop to 73.25 per dollar on 3rd March, 2020.
One of the reasons is an increase in the number of reported cases of coronavirus in India.
GLOBAL SCENARIO
GLOBAL GROWTH
The world's economy could grow at its slowest rate since 2009 this year due to the coronavirus
outbreak, according to the Organisation for Economic Cooperation and Development (OECD).
The OECD has forecast growth of just 2.4% in 2020, down from 2.9% in November 2019.
FALL IN CUSTOMER DEMAND
Some people are choosing to avoid activities that might expose them to the risk of infection, such
as going out shopping. Restaurants, car dealerships and shops have all reported a fall in customer
demand.
TRAVEL INDUSTRY
The number of cases diagnosed is increasing around the world every day.
Many countries have introduced travel restrictions to try to contain the virus's spread, impacting
the travel industry massively.
FALL IN CUSTOMER DEMAND
Some people are choosing to avoid activities that might expose them to the risk of infection, such
as going out shopping. Restaurants, car dealerships and shops have all reported a fall in customer
demand.
•TRAVEL INDUSTRY
The number of cases diagnosed is increasing around the world every day. Many countries have
introduced travel restrictions to try to contain the virus's spread, impacting the travel industry
massively.

17. CONCLUSION
Nearly 25 million jobs could be lost worldwide due to the coronavirus pandemic, but an
internationally coordinated policy response can help lower the impact on global unemployment.
Advance economies will have a output change of -6.1% (i.e., a contraction) in 2020 followed by
4.5% in 2021. The U.S. is projected to contract by 5.9% this year and grow by 4.7% next year,
while the Euro area, will contract by 7.5% this year and grow by 4.7% next year. Apart from
India’s modest 1.9% in 2020, Indonesia is expected to grow at 0.5%, while others in the region
experience contractions. Necessary measures to reduce contagion and protect lives will take a
short-term toll on economic activity but should also be seen as an important investment in long-
term human and economic health. Many countries will face multi-layered crises, including health
shocks, domestic economic disruptions, reversal of capital flows, plummeting external demand,
and a collapse of commodity prices. Strong multilateral cooperation is essential to overcome the
effects of the pandemic, including to help financially constrained countries facing twin health
and funding shocks, and for channelling aid to countries with weak healthcare systems

18. UNION BUDGET-2020-21
Nirmala Sitharaman - First Full time female finance minister. The longest budget speech at 2
hours and 41 minutes. (Still she could not complete it due to ill health). The last General Budget
2019-20 was presented on 5th July 2019.The word "Budget" originates from the French
"bougette" or leather bag.
On 1st February 2020, Nirmala Sitharaman, the Finance Minister presented the union budget
2020.This budget focused on three themes – Aspirational India, Economic Development for all
& Building a caring society.
The theme of Budget “Ease of Living”
The budget is woven around three prominent themes:
1. Aspirational India in which all sections of the society seek better standards of living, with
access to health, education and better jobs.
2. Economic development for all - “Sabka Saath, Sabka Vikas, Sabka Vishwas”.
3. Caring Society that is both humane and compassionate, where Antyodaya is an article of faith
GOVERNANCE
STRUCTURAL REFORMS
20 per cent reduction in turnaround time for trucks.
Benefit to MSMEs through enhanced threshold and composition limits.
Savings of about 4 per cent of monthly spending for an average household.

19. In last 2 years, 60 lakh new taxpayers added and 105 crore e- way bills generated.
Honorable exit through IBC for companies.
DIGITAL REVOLUTION
Shift to DBT - During 2018- 19, `7 lakh crore transferred through DBT.
Next wave of Digital revolution
• Digital Governance
• Improve physical quality of life through National Infrastructure Pipeline
• Social Security through Pension and Insurance penetration.
INCLUSIVE GROWTH
Governance guided by “Sabka Saath, Sabka Vikas, Sabka Vishwas” with focus on:
• Preventive Healthcare: Provision of sanitation and water
• Healthcare: Ayushman Bharat
• Clean energy: Ujjawala and Solar Power
• Financial Inclusion, Credit support and Pension
• Affordable Housing
• Digital penetration
FINANCIAL SECTOR
• Deposit Insurance Coverage to increase from Rs.1 lakh to Rs.5Lakh per depositor.
• Eligibility limit for NBFCs for debt recovery under SARFAESI Act proposed to be
reduced to asset size of Rs.100 crore or loan size of Rs.50 Lakh.
• Proposal to sell balance holding of government in IDBI Bank.
• Separation of NPS Trust for government employees from PFRDAI
• Specified categories of government securities would be opened for non-resident
investors.

20. • FPI Limit for corporate bonds to be increased to 15 per cent.
• New debt ETF proposed mainly for government securities.
TAX PROPOSALS
• Concessional corporate tax rate of 15 per cent to new domestic companies in
manufacturing and power sector.
• Tax concession for sovereign wealth fund of foreign governments and other foreign
investments.
• Tax benefits to Start-ups by way of deduction of 100 per cent of their profits are
enhanced by increasing turnover limit and period of eligibility.
• Concessional tax rate for cooperatives proposed.
• Turnover threshold for audit of MSMEs increased.
• Extension of time limits pertaining to the tax benefits for affordable housing.
• Issuance of Unique Registration Number to all charity institutions for easy tax
compliance.
• Health cess to be imposed on imports of medical equipment given these are made
significantly in India.
• Dividend Distribution Tax removed and classical system of dividend taxation adopted.
• Simplified and New Income Tax
Regime as an option to the old regime.
• Simplified GST return shall be
implemented from 1st April 2020.
Refund process to be fully automated.
INCOME TAX
• Concessional corporate tax rate of 15 per cent to
new domestic companies in manufacturing and
power sector.
• Tax concession for sovereign wealth fund of
foreign governments and other foreign investments

21. ASPIRATIONAL INDIA
The three components of Aspirational India are-
• Agriculture, Irrigation and Rural Development
• Wellness, Water and Sanitation
• Education and Skills
AGRICULTURE, IRRIGATION AND RURAL DEVELOPMENT
Agriculture credit:
• Rs. 15 lakh crore target set for the year 2020-21.
• PM-KISAN beneficiaries to be covered under the KCC scheme.
• NABARD Re-finance Scheme to be further expanded.
Blue Economy:
• Rs. 1 lakh crore fisheries’ exports to be achieved by 2024-25.
• 200 lakh tonnes fish production targeted by 2022-23.
• 3477 Sagar Mitras and 500 Fish Farmer Producer Organizations to involve youth in
fisheries extension.
• Growing of algae, sea-weed and cage culture to be promoted.
• Framework for development, management and conservation of marine fishery resources.
Kisan Rail to be setup by Indian Railways through PPP:
• To build a seamless national cold supply chain for perishables (milk, meat, fish, etc.)
• Express and Freight trains to have refrigerated coaches.
Krishi Udaan to be launched by the Ministry of Civil Aviation:
• Both international and national routes to be covered.
• North-East and tribal districts to realize Improved value of agri-products

22. PM-KUSUM to be expanded:
• 20 lakh farmers to be provided for setting up stand- alone solar pumps.
• Another 15 lakh farmers to be helped to solarize their grid-connected pump sets.
• Scheme to enable farmers to set up solar power generation capacity on their fallow/barren
lands and to sell it to the grid.
Village Storage Scheme:
• To be run by the SHGs to provide farmers a good holding capacity and reduce their
logistics cost.
• Women, SHGs to regain their position as Dhaanya Lakshmi.
Livestock:
• Doubling of milk processing capacity to 108 million MT from 53.5 million MT by 2025.
• Artificial insemination to be increased to 70% from the present 30%.
• MNREGS to be dovetailed to develop fodder farms.
• Foot and Mouth Disease, Brucellosis in cattle and Peste Des Petits ruminants (PPR) in
sheep and goat to be eliminated by 2025.
Deen Dayal Antyodaya Yojana:
• 0.5 Crore households mobilized with 58 lakh SHGs for poverty alleviation.
WELLNESS, WATER AND SANITATION
Healthcare and Wellness:
• More than 20,000 hospitals already empanelled under PMJAY. (Rs. 69,000 crore
allocated for overall Healthcare sector. Rs. 6400 crore for PM Jan Arogya Yojana
PMJAY)
• Viability Gap funding window proposed for setting up hospitals in the PPP mode.

23. • Aspirational Districts with no Ayushman empanelled hospitals to be covered in the first
phase.
• Targeting diseases with an appropriately designed preventive regime using Machine
Learning and AI.
• Jan Aushadhi Kendra Scheme to offer 2000 medicines in all districts by 2024.
• TB Harega Desh Jeetega campaign launched - commitment to end Tuberculosis by 2025.
Sanitation:
• Rs.12,300 crore allocation for Swachh Bharat Mission in 2020-21:
• Commitment to ODF-Plus in order to sustain ODF behavior.
• Emphasis on liquid and grey water management.
• Focus also on Solid-waste collection, source segregation, and
processing.
EDUCATION AND SKILLS
• Degree level full-fledged online education program by Top- 100 institutions in the
National Institutional Ranking Framework.
• Up to 1-year internship to fresh engineers to be provided by Urban Local Bodies.
• Budget proposes to attach a medical college to an existing district hospital in PPP mode.
• Encourage large hospitals with sufficient capacity to offer resident doctors, DNB courses
under the National Board of Examinations.
• Special bridge courses to be designed by
the Ministries of Health, and Skill
Development:
• To fulfil the demand for teachers, nurses,
para-medical staff and care-givers abroad.
• To bring in equivalence in the skill sets of
the workforce and employers’ standards.

24. • 150 higher educational institutions to start apprenticeship embedded degree/diploma
courses by March 2021.
• External Commercial Borrowings and FDI to be enabled for education sector.
• Ind-SAT proposed for Asian and African countries as a part of Study in India program.
ECONOMIC DEVELOPMENT
The three components of Economic Development are-
• Industry, Commerce and Investment
• Infrastructure
• New Economy
INDUSTRY, COMMERCE AND INVESTMENT
• Rs. 27,300 crore allocated for 2020-21 for development and promotion of Industry and
Commerce.
• Investment Clearance Cell proposed to be set up:
• To provide “end to end” facilitation and support.
• To work through a portal.
• Scheme to encourage manufacturing of mobile phones, electronic equipment and semi-
conductor packaging.
• National Technical Textiles Mission for a period of 4 years.

25. • NIRVIK Scheme for higher export credit disbursement launched.
– Higher insurance coverage
– Reduction in premium for small
exporters
– Simplified procedure for claim
settlements.
• A scheme to provide subordinate debt
for entrepreneurs of MSMEs
• Scheme anchored by EXIM Bank and SIDBI to handhold MSMEs in exports markets
• Turnover of Government e-Marketplace (GeM) proposed to be taken to Rs 3 lakh crore.
• Scheme for Revision of duties and taxes on exported products to be launched.
• Exporters to be digitally refunded duties and taxes levied at the Central, State and local
levels, which are otherwise not exempted or refunded.
• “Zero Defect-Zero Effect” manufacturing.
INFRASTRUCTURE
Power:
• Efforts to replace conventional energy meters by prepaid smart meters
• Rs.22, 000 crore proposed for power and renewable energy sector in 2020-21.
• Expansion of national gas grid from the present 16200 km to 27000 km proposed.
• Further reforms to facilitate transparent price discovery and ease of transactions.
Railways 5 measures:
• Large solar power capacity to be set up alongside rail tracks, on land owned by railways.

26. • Four station re-
development projects and
operation of 150 passenger
trains through PPP.
• More Tejas type trains to
connect iconic tourist
destinations.
• High speed train between
Mumbai and Ahmedabad
to be actively pursued.
• 148 km long Bengaluru
Suburban transport project
Ports & Water-ways:
• Corporatizing at least one major port and its listing on stock exchanges to be considered.
• Governance framework keeping with global benchmarks needed for more efficient sea-
ports.
• Economic activity along river banks to be energized as per Arth Ganga concept.
Airports:
• 100 more airports to be developed by 2024 to support Udaan scheme.
• Air fleet number expected to go up from present 600 to 1200 during this time.
Roads:
• Accelerated development of Highways.

27. National Infrastructure Pipeline:
• Rs. 103 lakh crore worth projects; launched on
31st December 2019.
• More than 6500 projects across sectors, to be
classified as per their size and stage of
development.
Infrastructure Financing:
• A National Logistics Policy to be released soon
• Rs.100 lakh crore to be invested on infrastructure over the next 5 years.
• National Skill Development Agency to give special thrust to infrastructure-focused skill
development opportunities.
• Project preparation facility for infrastructure projects proposed.to actively involve young
engineers, management graduates and economists from Universities.
• Rs.1.7 lakh crore proposed for transport infrastructure in 2020-21.
NEW ECONOMY
• Knowledge Translation Clusters for emerging technology sectors
• Scaling up of Technology Clusters harbouring test beds and small scale manufacturing
facilities.
• National Mission on Quantum Technologies and applications with an outlay of Rs.8000
crore proposed.
CARING SOCIETY
The three components of Caring Society are-
• Women & child, social Welfare
• Culture and Tourism
• Environment and Climate Change

28. WOMEN & CHILD, SOCIAL WELFARE
• Allocation of Rs. 35,600 crore for nutrition-related programmes proposed for the
FY2020-21.
• Rs.28,600 crore proposed for women specific programs.
• 6 lakh Anganwadi workers equipped with smart phones
• Issue about age of a girl entering motherhood - proposed to appoint a task force to present
its recommendations in six months’ time.
• Financial support for wider acceptance of technologies, identified by Ministry of Housing
and Urban Affairs to ensure no manual cleaning of sewer systems or septic tanks, to be
provided.
• Rs. 85,000 crore proposed for 2020-21 for welfare of Scheduled Castes and Other
Backward Classes.
• Rs. 53,700 crore provided to further development and welfare of Scheduled Tribes.
• Enhanced allocation of Rs. 9,500 crore provided for 2020-21 for senior citizens and
Divyang.
CULTURE AND TOURISM
• Knowledge Translation Clusters for emerging technology sectors
• Scaling up of Technology Clusters harbouring test beds and small scale manufacturing
facilities.
• National Mission on Quantum Technologies and applications with an outlay of Rs.8000
crore proposed.
ECONOMIC SLOWDOWN
This budget did not even mention the major problem India is facing right now, which is the economic
slowdown. Without acknowledging the problem, it is very difficult to solve it.
Banks have the capability to uplift the economy if they are properly supported by the government. But
this budget has done nothing to help banks in reviving the economy.

29. Welfare schemes such as PMKISAN got less money than the previous budget. And MGNREGA got
only a marginal increase in the budget allocation. Thereby people will not have much disposable
money to spend. And hence it can worsen the economy.
EMPLOYMENT OPPORTUNITIES
This budget reiterated
the focus on
infrastructure projects.
This has the potential to
create a significant
number of jobs.
A new program was
announced, which
enabled urban local
bodies to provide
internships to engineers
for one year. This is a
very good move. It helps
engineering graduates to
gain skills and practical
knowledge.
It is very important to
mention the problems to set the direction to
the budget. But the issue of unemployme nt
was not at all mentioned in this budget.
AGRICULTURE
16 action points – making farming
competitive, integrating agriculture with
technology, a scheme to set up solar power
generation capabilities in barren lands etc.
were announced to improve agriculture
sector, which is very good to uplift the
agricultural economy.
If these steps are implemented effectively, agricultural productivity can be improved and also farmers’
incomes. But there is a need to increase investment in agriculture research to bring innovative science-
backed methods in agricultural practices.
EDUCATION

30. A degree level full-fledged online education programme will be offered by institutions that are ranked
in the top 100. This is a great move. It can increase the number of graduates in India.
To improve the quality of education, more investment will be brought through FDI to attract talented
teachers, innovative & better labs. It’s a good step because there is a need to improve the quality of
education in India.
OTHER IMPORTANT POINTS
New tax Regime was announced, which reduced tax rates for certain tax slabs. But if taxpayers choose
these new tax rates, they cannot claim tax exemptions. So, this is not beneficial for many.
Customs duty was raised for some of the imports to restrict the import of goods that are a threat to
domestic industries. This step protects and encourages domestic industries.
CONCLUSION
Budget 2020 did not bring any effective steps to tackle economic slowdown and unemployment. There
is a need to increase consumption & investment to revive growth. But there are no effective steps
towards this in the budget 2020. However, focus on infrastructure & the transformation of rural India
and agriculture sector is laudable.