Context: Lok passed passed the supplementary demand for grants (second Batch for 2020-21).
In addition to budget, various other grants are made by Parliament under extraordinary or special circumstances:
Supplementary demand for grants
It is granted when the amount authorised by the Parliament through the appropriation act for a particular service for the current financial year is found to be insufficient for that year.
It is granted when a need has arisen during the current financial year for additional expenditure upon new service not contemplated in the budget for that year.
It is granted when money has been spent on any service during a financial year in excess of amount granted for that service in the budget for that year.
Vote of Credit
Granted for meeting an unexpected demand upon the resources of India, when on account of magnitude or the indefinite character of the service, the demand cannot be stated with the details ordinarily given in a budget.
For a special purpose and forms no part of the current service of any financial year.
When funds to meet proposed expenditure on a new service can be made available by reappropriation. A demand for grant of a toke sum ( of ₹1 ) is submitted to the vote of Lok Sabha and if assented, funds are made available.
Source: The Hindu
Insurance Amendment bill 2021
Context: Rajya Sabha passes Insurance Amendment Bill 2021.
Features of bill
- The bill increases foreign direct investment limit in the insurance sector to 74% from the current 49%.
- The majority of directors on the board and key management persons would be resident Indians.
- Atleast 50% of directorship to be independent directors
- Specified percentage of profits retained as a general reserve.
- In 2015, foreign investment limit in insurance sector was raised to 49% from 24%.
- Currently, the permissible FDI limit in life and general insurance stands at 49%, with ownership and management control with Indians.
Rationale given by government
- FDI is aimed at supplementing the domestic long term capital.
- Life insurance premium as a percentage of GDP is 3.6% in the country, way below the global average of 7.13%, and in case of general insurance, it is even worse at 0.94% of GDP, as against the world average of 2.88%. Increase in FDI is aimed at improving life insurance penetration in the country.
- Insurance companies are facing liquidity pressure and that is why the government was proposing to increase the FDI limit further.
- The decision was taken after sector regulator IRDAI held detailed consultations with stakeholders.
Source: The Hindu
Comptroller and Auditor General (CAG) of India
Context: The Bombay High Court said it may direct the Comptroller and Auditor General (CAG) of India to look into alleged irregularities in toll collection on the Mumbai-Pune Expressway.
- The Constitution of India (Article 148) provides for an independent office of CAG.
- He is the head of the Indian Audit and Accounts Department.
- Dr. B.R. Ambedkar said that CAG shall be the most important Officer under the Constitutional of India.
- The CAG is appointed by the president of India by a warrant under his hand and seal.
- He holds office for a period of six year or upto the age of 65 years, whichever is earlier.
- He can be removed by the President on same grounds and in same manner as a judge of Supreme Court.
A judge of Supreme Court can be removed by the president on the basis of a resolution passed to that effect by both Houses of Parliament with special majority, either on ground of proved misbehaviour or incapacity.
- CAG audits the accounts related to all expenditure from the Consolidated Fund of India, Consolidated Fund of each state and UT having a legislative assembly.
- CAG audits all expenditure from the Contingency Fund of India and the Public Account of India as well as the Contingency Fund and Public Account of each state.
- CAG audits all trading, manufacturing, profit and loss accounts, balance sheets and other subsidiary accounts kept by any department of the Central Government and the state governments.
- CAG audits the receipts and expenditure of all bodies and authorities substantially financed from the Central or State revenues; government companies; other corporations and bodies, when so required by related laws.
- He ascertains and certifies the net proceeds of any tax or duty and his certificate is final on the matter.
“Go Electric” Campaign
- Ministry of Power, Government of India, launched “Go Electric” Campaign on 19 February, 2021.
- Creating awareness among masses on benefits of adopting Electric Vehicles and Electric Cooking appliances such as Induction cook hobs, Electric pressure cooker etc.
- Encourage consumers to switch over to Electric Vehicles and Electric Cooking in place of currently used conventional modes and appliances, thereby, reducing dependency of the country on imported fuel.
- Promoting adoption of Energy Efficient Electric Vehicles and Electric Cooking appliances and is expected to help the country to achieve energy transition as well as low carbon economic growth in the future.
- These technologies being energy efficient, are expected to scale down mobility and cooking related emissions, securing cleaner and greener future.
- The share of renewables in the energy mix is expected to increase due to integration of more renewable based power generation. Benefits of adopting these electricity based technologies shall be completely realized by enhancing share of renewables in the Grid.
Federal Reserve move and impact on Indian market
- In a reprieve for the debt and equity markets, the Federal Reserve announced that the interest rates are being kept near zero.
- It maintained that it will continue the flow of credit to households and businesses and support the economy.
- It indicated that there may not be any interest rate hike through 2023.
- It boosted investor sentiment and led to a rise in major indices around the world.
- Indian market fell by over 1%, despite opening on a strong note. The weakness continued even as the Fed announcement comes as a positive for equity and debt markets.
- Market may be witnessing some correction on account of concerns over rise in bond yields and domestic factors including rise in Covid-19 numbers over the last week.
Implications for Indian markets
- Fed indication that there may not be a rise in interest rates through 2023 is likely to calm the markets that have been wary of a rate hike earlier than expected.
- If a sudden rise in bond yields raised concern on the continuation of FPI fund flow, the Fed’s announcement that it will continue to provide liquidity for a reasonable period will ensure the equity markets will remain strong.
- If the bond yields in the US keep rising, it will have an impact on the fund flow into emerging market equities.