Lorenz curve

The Lorenz curve is a graphical representation of the distribution of income or of wealth.

The Lorenz Curve (the actual distribution of income curve), a graphical distribution of wealth developed by Max Lorenz in 1906, shows the proportion of income earned by any given percentage of the population. The line at the 45º angle shows perfectly equal income distribution, while the other line shows the actual distribution of income. The further away from the diagonal, the more unequal the size of distribution of income.

In the below example, the Lorenz Curve, which represents the actual distribution of income in a country, shows how the poorest 20% of the population only earn 5% of the national income in this population. While in a case of perfect equality, the poorest 20% of the population would make 20% of the income. The more bowed out a Lorenz Curve; the higher is the inequality of income in the country.

About Benami Transaction

Topic: money laundering

Benami Act

Context:

The Income-Tax Department is scrutinizing all unexplained credits and investments in personal as well as corporate income-tax filings and is looking to invoke the Benami Act in many cases. Unexplained credits, in the books of a company or bank accounts of individuals, have so far been treated as black money, attracting a higher tax of up to 80%.

About the Benami Act:

The Benami Transactions (Prohibition) Amendment Act, 2016, designed to curb black money and passed by parliament in August, came into effect on November 1, 2016. The new law amends the 1988 Benami Transactions Act.

Highlights of the Act:

• The law provides for up to seven years’ imprisonment and fine for those indulging in such transactions.
• The law prohibits recovery of the property held benami from benamdar by the real owner. As per the Act, properties held benami are liable for confiscation by the government, without payment of compensation.
• An appellate mechanism has been provided under the act, in the form of an adjudicating authority and appellate tribunal. According to the government, the four authorities who will conduct inquiries or investigations are the Initiating Officer, Approving Authority, Administrator and Adjudicating Authority.

What is benami transaction?

A benami transaction is one where a property is held by one person and the amount for it is paid by another person. Therefore, in a benami transaction, the name of the person who paid the money is not mentioned. Directly or indirectly, the benami transaction is done to benefit the one who pays.

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NEW INDUSTRIAL POLICY, 1991

NEW INDUSTRIAL POLICY, 1991

India was faced with severe balance of payment crisis by June 1991. Basically, in early 1990s, there were inter-connected set of events,which were growing unfavourable for the Indian economy:

The New Industrial Policy of 1991 comes at the center of economic reforms that launched during the early 1990s. All the later reform measures were derived out of the new industrial policy. The Policy has brought comprehensive changes in economic regulation in the country. As the name suggests, these reform measures were made in different areas related to the industrial sector.

As the reforms were induced by the crisis of the BoP, the initial phase focussed on macroeconomic stabilisation while the reforms of industrial policy, trade and exchange rate policies, foreign investment policy, financial and tax reforms as well as public sector reforms did also follow soon

As part of the policy, the role of public sector has been redefined. A dedicated reform policy for the public sector including the disinvestment programme were launched under the NIP 1991. Private sector has given welcome in major industries that were previously reserved for the public sector.

Similarly, foreign investment has given welcome under the policy. But the most important reform measure of the new industrial policy was that it ended the practice of industrial licensing in India. Industrial licensing represented red tapism.

Because of the large scale changes, the Industrial Policy of 1991 or the new industrial policy represents a major change from the early policy of 1956.

The new policy contained policy directions for reforms and thus for LPG (Liberalisation, Privatisation and Globalisation). Since 1991, the country’s policy on foreign investment is gradually evolving through the introduction of liberalization measures in a phasewise manner.

Perhaps, the most welcome change under the new industrial policy was the abolition of the practice of industrial licensing. The1991 policy has limited industrial licensing to less than fifteen sectors. It means that to start an industry, one has to go for license and waiting only in the case of these few selected industries. This has ended the era of license raj or red tapism in the country. The 1991 industrial policy contained the root of the liberalization, privatization and globalization drive made in the country in the later period. The policy has brought changes in the following aspects of industrial regulation:

1. Industrial delicensing

2. Deregulation of the industrial sector

3. Public sector policy (dereservation and reform of PSEs)

4. Abolition of MRTP Act

5. Foreign investment policy and foreign technology policy.

6. FERA Replaced by FEMA

7.Compulsion to Convert Loans into Shares Abolished

1. Industrial delicensing policy or the end of red tapism:  The new industrial policy abolishes the system of industrial licensing for most of the industries under this policy no licenses are required for setting up new industrial units or for substantial expansion in the capacity of the existing units, except for a short list of industries relating to country’s security and strategic concerns, hazardous industries and industries causing environmental degradation .the most important part of the new industrial policy of 1991 was the end of the industrial licensing or the license raj or red tapism. Under the industrial licensing policies, private sector firms have to secure licenses to start an industry. This has created long delays in the start up of industries. The industrial policy of 1991 has almost abandoned the industrial licensing system. Reforms regarding the area were further followed and presently there are only five industries which carry the burden of compulsory licencing:

(i) Aero space and defence related electronics

(ii) Gun powder, industrial explosives and detonating fuse

(iii) Dangerous chemicals

(iv) Tobacco, cigarette and related products

(v) Alcoholic drinks

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Know India Programme

1. Know India Programme is an initiative of the Ministry of External Affairs for the Persons of Indian Origin (PIO) (including NRIs) between the age group of 18 to 30 years to provide them an exposure to the country of their origin (India).
2. The KIP offers a platform for the young PIOs to visit India share their views, expectations andexperiences and forge closer bonds with the India of present times in a three-week orientation  programme.
3. External Affairs Minister has recently launched a portal for the Know India Programme (KIP).  
4. The purpose of the programme is to promote awareness on different facets of life in India and the progress made by the country in various fields such as economic and education. 
5. The Know India Programme (KIP) is a three-week orientation programme for the Indian diaspora. It provides a unique forum for students and young professionals of Indian origin to visit India, share their views, expectations and experiences and develop closer bonds with the contemporary India.

The content of the programme broadly includes the following:

1. • Presentations on the country, political process, developments in various sectors.
   • Interaction with faculty and students at a prestigious University/College/Institute
   • Presentation on the industrial development and visits to some Industries
   • Visit to a village to better understand the typical village life
   • Exposure to Indian media
   • Interaction with NGOs and organizations dealing with women affairs
   • Visit to places of historical importance/Monuments
   • Taking part in Cultural programmes
   • Exposure to yoga
   • Call on high dignitaries, which may include President of India, Chief Election Commissioner of India, Comptroller and Auditor General of India, and Ministers in-charge of The Ministry, Youth Affairs and Sports

About Crypto Currency

Context

Bitcoins were in news recently after a massive global ransom ware attack ‘WannaCry’ hit systems in over 100 countries. The cyber criminals demanded a fee of about $300 in crypto-currencies like bitcoin for unlocking affected devices.

In October this year, billionaire Warren Buffet had described Bitcoin as a “real bubble”, and said that one couldn’t value it considering it was not a value-producing asset.

Why the interest in virtual currencies?

Bitcoin saw its value trading at above $10,000 (about ₹6.43 lakh) per bitcoin, up by about 900% from its value on January 1, 2017. At a time when the Indian government is in the process of determining the legality of crypto currencies, it is important to understand what exactly a virtual currency means for the layman.

How it all started?

The origin of Bitcoin is unclear, as is who founded it. A person or a group of people, that went by the identity of Satoshi Nakamoto are said to be the one/s who conceptualised an accounting system in the aftermath of the 2008 financial crisis. Nakamoto published a white paper about a peer-to-peer electronic cash system, which would “allow online payments to be sent directly from one party to another without going through a financial institution”.

What is blockchain?

The transactions and the value of money would be recorded digitally on a publicly available and open ledger that contains all the transactions ever made, albeit in an anonymous and an encrypted form. This ledger is called blockchain. Considering the public and open nature of the ledger, proponents of this currency system believe, it could help weed out corruption and inefficiencies in the system.

However, in December 2013, the Reserve Bank of India issued a warning that cautioned the users about the potential risks of virtual currencies, including Bitcoin.

What is bitcoin?

Bitcoin is one of many cryptocurrencies that have gained popularity across the world.

• A cryptocurrency is a basically a digital asset that has been created to function as a medium of exchange, like cash.
• It uses cryptography to ensure the security of transactions — authentication and prevention of duplicate transactions — and to control the creation of new units of currency.
• This is different from cash in that cryptocurrencies have no physical form. These blur the boundaries between fiat and non-fiat currencies. They are simply numbers on a screen and there is no central bank that issues new currency. However, bitcoin has emerged as the popular face of cryptocurrencies.

Fiat and Non-fiat currency

A fiat currency is any currency that has no intrinsic physical value, but whose value is established by government decree. For example, most national currencies around the world, including the Rupee and the Dollar, are fiat currencies as their values are dictated by the government.

Non-fiat currencies such as the Gold Standard have more or less been effectively phased out, as they require adequate physical stockpiles to maintain their value.0

 However, the new breed of digital cryptocurrencies such as Bitcoin blurs the boundaries between fiat and non-fiat – they don’t have any physical value as such, but are also not government-controlled. This has created uncertainties about their role in the modern financial system.

What are the regulations?

While some of the countries such as Nepal, Bangladesh, Kyrgyzstan have declared Bitcoins as a means of payment illegal and in violation of the state law, a majority are yet to take a stand on it. In December 2013, RBI issued a warning with caution to users, holders and traders of virtual currencies, including Bitcoins, about the potential financial, operational, and legal, customer protection and security related risks that they are exposing themselves to.

Bitcoins are currently unregulated in India. There are no specific legal frameworks for Bitcoins and cryptocurrencies in India yet.

Can you use bitcoin as currency?

At the moment, the Reserve Bank of India has banned transactions in India using cryptocurrencies. In other words, while you can buy and sell cryptocurrencies on online exchanges, you can’t use them to pay for goods and services within the country.

In April, the government had constituted an inter-disciplinary panel to look into the legality of cryptocurrenciesand suggest a way forward, which included a having a regulator if they are legalised.

The panel, which included officials from the Department of Economic Affairs, Department of Financial Services, Department of Revenue, Ministries of Home Affairs and Electronics and Information Technology, the Reserve Bank of India, NITI Aayog, and the State Bank of India, submitted its report in August and it is being examined.

Pros and cons

It is possible to send and receive bitcoins from any part of the world irrespective of traditional hurdles like national borders and banking regulations.

• Bitcoin does away with the need for a regulator.
• By making everything public, bitcoin negates the need for a middleman.
• According to bitcoin.org, no individual or organisation can manipulate Bitcoins because it is cryptographically secure and do not contain customers’ personal information.

However, not being backed by any government entity is Bitcoin’s biggest disadvantage and affects its adoption by people.

• With less Bitcoins in circulation and the number of businesses using Bitcoin still very small, relatively small events, can significantly affect the price.
• One of the biggest problems that cryptocurrencies face is acceptance.

However, many businesses have started accepting Bitcoins. One of the largest PC companies in the US, Dell, started accepting Bitcoin in 2014. Travel website Expedia allows you to pay with Bitcoins. Tech giant Microsoft also embraced bitcoins in December 2014. In India too, the adoption has started. Bengaluru-based exchange Unocoin has a growing list of merchants on its website that includes e-commerce firms, web-hosting companies and even schools.

What do the experts say?

Experts and central banks across the world are slowly arriving at the conclusion — written about in various research papers but not yet implemented in policy — that cryptocurrencies are here to stay.

The only way to regulate their value and quantity is for central banks to issue their own digital currencies. While the value of digital currencies such as bitcoin are market-determined, depending on what somebody is willing to pay, a central bank-backed digital currency will have its value controlled to an extent by the central bank itself, much like any other major currency in the world.

RBI’s research arm Institute for Development and Research in Banking Technology put out a paper in favour of the blockchain technology.

There is still a lot of analysis to be done regarding the effect of such a central bank-backed digital currency on factors such as inflation and price levels.

INDIAN CROPPING Systems and Cropping SEASONS

INDIAN CROPPING Systems and Cropping  SEASONS
Commerce Gurukul

Cropping pattern used on a farm and its interaction with farm resources, other farm enterprises and available technology that determines its make up, is called a cropping system.

Cropping systems of an area are decided by several soil and climatic parameters which determine overall agro-ecological setting for nourishment and appropriateness of a crop or set of crops for cultivation. However, at farmers’ level, potential productivity and financial benefits act as guiding principles while opting for a particular crop/cropping system. These decisions with respect to choice of crops and cropping systems are further narrowed down under influence of several other forces related to infrastructure facilities, socio-economic factors and technological developments, all operating interactively at micro-level.

These factors are:

1. Infrastructure facilities: Irrigation, transport, storage, trade and marketing, post-harvest handling and processing etc.
2. Socio-economic factors: Financial resource base, land ownership, size and type of land holding, household needs of food, fodder, fuel, fibre and finance, and labour availability etc.
3. Technological factors: Enhanced varieties, cultural requirements, mechanization, plant protection, access to information, etc.

Cropping season	Major crops cultivated
	Northern States	Southern States
Kharif June-September	Rice, Cotton, Bajra, Maize, Jowar, Tur	Rice, Maize, Ragi, Jowar, Groundnut
Rabi October-March	Wheat, Gram, Rapeseeds and Mustard, Barley	Rice, Maize, Ragi Groundnut, Jowar
Zaid April-June	Vegetables, Fruits, Fodder	Rice, Vegetables, Fodder

There are three distinct crop seasons in the northern and interior parts of country, namely kharif, rabi, and zaid. The kharif season largely coincides with Southwest Monsoon under which the cultivation of tropical crops such as rice, cotton, jute, jowar, bajra and tur is possible. The rabi season begins with the onset of winter in October-November and ends in March-April. The low temperatureconditions during this season facilitate the cultivation of temperate and subtropical crops such as wheat, gram and mustard. Zaid is ashort duration summer cropping season beginning after harvesting of rabi crops, the cultivation of watermelons, cucumbers, vegetables and fodder crops during this season is done on irrigated lands. However, this type of distinction in the cropping season does not exist in southern parts of the country. Here, the temperature is high enough to grow tropical crops during any period in the year provided the soil moisture is available. Therefore, in this region same crops can be grown thrice in an agricultural year provided there is sufficient soil moisture.

These crops are grown sole or mixed (mixed-cropping), or in a definite sequence (rotational cropping). The land may be occupied by one crop during one season (mono-cropping), or by two crops (double-cropping) which may be grown in a year in sequence. Of late, the trend is even more than two crops (multiple-cropping) in a year. These intensive cropping may be done either in sequence or even there may be relay-cropping - one crop under-sown in a standing crop. With wide-rowed slow growing cropping patterns, companion crops may be grown.

CROPPING PATTERNS

Cropping pattern means the proportion of area under various crops at a point of time. This is, however, a dynamic concept as it changes over space and time.

A broad picture of the major cropping patterns in India can be presented by taking the major crops into consideration. With such an approach, the crop occupying the highest percentage of the sown area of the region is taken as the base crop and all other possible alternative crops which are sown in the region either as substitutes of the base crop in the same season or as the crops which fit in the rotation in the subsequent season, are considered in the pattern.

Also these crops have been identified as associating themselves with a particular type of agro-climate, and certain other minor crops with similar requirements are grouped in one category. For example, wheat, barley and oats, are taken as one category.

Certain other crops, such as the plantation crops and other industrial crops are discussed separately. Among the kharif crops, rice, jowar, bajra, maize, groundnut and cotton are the prominent crops to be considered the base crops for describing the kharif cropping patterns. Among the rabi crops, wheat, gram and sorghum or jowar are considered the base crops for explaining the rabi cropping pattern.

PLANTATION AND OTHER COMMERCIAL CROPS

Crops under this category include sugarcane, tobacco, potato, jute, tea, coffee, coconut, rubber and other crops, such as spices and condiments. Some of them are seasonal, some annual and some perennial. Generally, the areas occupied by them are very limited as compared with food and other crops. Nevertheless, they are important commercially. Most of them require specific environmental conditions and from the point of view of cropping patterns, they are concentrated in some particular regions. Besides, certain horticultural crops, such as apple, mango and citrus, are important.

In several sugarcane-growing areas, mono-cropping is practised, and during the interval between the crops, short duration seasonal crops are grown. In U.P., Bihar, Punjab and Haryana, wheat and maize are the rotation crops, rice is also grown in some areas. In the southern states, namely Tamil Nadu, Karnataka and Andhra Pradesh, ragi, rice and pulses are grown along with sugarcane. In Maharashtra, pulses, jowar and cotton are grown.

In the potato-growing region, maize, pulses, wheat are the alternative crops. In the tobacco growing areas, depending on the season and the type of tobacco, jowar, oilseeds and maize are grown in rotation. In the jute-growing areas, rice is the usual alternative crop.

In the case of plantation-crops, intercropping with pulses and fodder crops is common. Spices and condiments are generally grown on fertile soils. Chillies are rotated with jowar, whereas onion, coriander, turmeric and ginger are grown as mixed crops with other seasonal crops.

MIXED CROPPING

Crops mixtures are widely grown, especially during the kharif season. Pulses and some oilseeds are grown with maize, jowar and bajra. Lowland rice is invariably grown unmixed, but in the case of upland rice, several mixtures are prevalent in eastern Uttar Pradesh, with Chotanagpur division of Bihar and in the Chhatisgarh division of Madhya Pradesh. During the rabi season, especially in the unirrigated area of the north, wheat and barley and wheat and gram or wheat + barley + gram are the mixtures of grain crops. Brassica and safflower are grown mixed with gram or even with wheat. Mixed cropping was considered by researchers a primitive practice, but now many researchers regard mixed cropping as the most efficient way of using land. Several new mixtures have recently been suggested. They ensure an efficient utilization of sunshine and land. Breeders are developing plant types in pulses and oilseeds, with good compatibility with row crops.

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