a very good evening aspirants welcome to the hindi news analysis by shankara ace academy for the date second february 2021 we have an announcement for you shankara ace academy is launching a special program called pre-fit this is to help the aspirants to navigate the timeline for the run-up to the upcoming prisms before we describe the program take note of the date of entrance examination for joining this new initiative the entrance examination will be conducted online on 7 february 2021 in this program the academy will provide a micro schedule that is broken into monthly weekly and daily targets the program will provide high intensity interval training for prisms it will help you not only to complete the syllabus but also to enhance your skills in solving questions the program is modeled on the scientific principle of active recall and spaced repetition to ensure maximum output the participants will solve four thousand questions in the period from february 15th to may 16th in the training the participants would be given 50 questions on a daily basis on six days in a week the 50 questions will be based on the study target of the particularity each test will be followed by a daily detailed discussion once a particular subject ADS completed the daily test will be followed by a full test of 100 questions under this program students will develop a daily routine specific to the prisms preparation we have also used gamification principles to incentivize regular test taking and to improve the performance by enrolling in this program aspirants will get a detailed schedule for three months the schedule will cover both micro and macro targets for the preparation you will be getting five weekly half tests from monday to friday for general studies topics and as we have already said one full revision test will be provided upon subject completion after completion of syllabus you will get four gs and four c-sat mock tests in addition to this to ensure that the participants should qualify the c-sat paper in the upcoming prisms the program includes a c-sat test every week also this test will be of 50 questions in addition to this you will be given access to detailed solution and discussion upon completion of each test to understand where you stand there will also be a daily and monthly leaderboard and for the assessment of performance shankarae's propriety test analytics will also be shared the program also covers current affairs briefed divides current affairs of past one year into monthly or weekly and daily targets these targets will be covered across multiple tests here please note that prefit is a totally different program from that of prestorming prisms test series of shankarae's academy if you have already registered in prestorming and if you are also enrolling in prefit then the tests under prefit are in addition to the tests that are taken under prestorming the link for the brochure and detail schedule is given in the description and comment section of this video now how does this prefit work firstly an entrance exam will be conducted on 7th february 2021 as we already saw the syllabus and other details of the examination has already been provided to you the entrance exam will be conducted online and it will have a registration fee of 99 rupees students who secure top 100 ranks will be eligible for prefit prime now under prefit prime the top 100 rankers will be given 50 person subsidized monthly fee structure of rupees 750 plus gst and students other than prefit prime will have a monthly fee structure of rupees 1500 plus gst subsequent months of access to prefit prime will be subject to securing a position in the top 100 in the previous month so students who secure a position in prefit prime will be eligible to avail 25 percentage discount on main storming 2021 upon their qualification of prisms 2021 now for more details please visit the link given in the description box and comment section of this video now with this announcement let us move on to today's hindi news analysis which is going to be a detailed discussion on budget and to cover maximum aspects of budget we have chosen all these news articles and we request the viewers to have patience and listen to all the news articles because this is going to be a lengthy one and here we have also given the page numbers of different editions of hindi newspaper now let us start our first discussion see the focus of our today's hindi news analysis will be on budget so to understand the budget we need to understand many crucial terms so in this context let us take these news articles which talk about the budget presented yesterday by the union finance minister and in these articles you can find the terms such as fiscal deficit expansionist budget etc so today we'll be discussing on major highlights of the budget as well as we'll also discuss about the important terms mentioned in these articles the syllabus relevant for this discussion is given here for your reference so first of all what is budget first know that budget as a topic is part of public finance in the economic subject in general studies see the budget of government of india gives a complete picture of the estimated receipts and expenditure of the government for the upcoming financial year this will be based on the budget figure of the past two years for example see the recent budget presents the budget estimates for the financial year 2022 which is from April 1 2021 to March 31st 2022 then it provides revised estimates for the last financial year 2021 and it also provides the actuals of the financial year 2020 so here you should note one point that is the term budget is nowhere mentioned in the Indian Constitution however article 112 of Indian Constitution deals with the annual financial statement now this annual financial statement is a statement of the estimated receipts and expenditure of the government of India for the upcoming financial year and this is in relation to the estimates for 2020 to 2021 and the actual expenditure for the year 2019 to 20 so here note that the annual financial statement is a vital constitutional part of budget now we all saw that budget deals with revenues and expenditures of the government now this revenues and expenditures are made into and flew out of three types of funds these are the consolidated fund of india the public accounts of india and the contingency fund of india now in this the consolidated fund of india is mentioned under article 266 clause 1 of indian constitution and according to this it says that all revenues received by the government of india and all the loans raised by that government by the issue of treasury bills loans or ways and means advances and all the monies received by the government in repayment of loans shall form the consolidated fund of india and all the expenditure incurred by the government including the repayment of debts and loans given to states or uts is spent out of this consolidated fund of india only now the public accounts of india is mentioned in the article 266 clause 2 of indian constitution it says that all public money received other than those included in the consolidated fund of india goes into the public accounts of india so this account consists of money raised through small saving scheme provident fund etc now next comes the contingency fund it is mentioned under the article 267 of indian constitution this fund is placed at the disposal of the president and its objective is to meet any unforeseen expenditure and here for withdrawing the fund the president can get the approval of the parliament later so these three funds are important from exam perspective now let us discuss the core parts of a budget these core parts are receipts and expenditure now as the name indicates receipts show the amount of money government has received or generated and expenditure is the part which shows how the generated money will be spent for the growth of the economy and in this note that receipts are of two types one is revenue receipts and the other one is capital receipts now revenue receipts are receipts which need not be paid back to the pay by the government hence they are a one-way transaction or one-time settlement now these revenue receipts can be further divided into three types they are tax revenue non-tax revenue another non-tax receipts now in this the tax revenue is the revenue generated by the levy and collection of taxes by the central government and these tax revenue include direct taxes like income tax corporate tax etc and also the indirect tax like gst now next comes the non-tax revenue it includes the revenue generated interest receipts that is interest from loans given by the center it includes dividends from shares held by government in private enterprises and it also includes the profits from government owned enterprises then the other non-tax receipts includes profits from circulation of currency coins and minting it also includes receipts from departments like education health agriculture and transport etc it also includes the grants in aid from foreign countries and other multilateral bodies which need not be repaid now next comes the capital receipts now note that capital receipts are essentially a two-way transaction they are the receipts which either create a liability or they cause a reduction in the assets of the government they are non-recurring in nature and non-routine in nature for example it includes the receipts due to the disposal of permanent assets recovery of loans given to others and the fresh loans that are raised by the government and the capital receipts can be further classified into two one is debt and the other one is non-debt capital receipt now as the name says debt capital receipts creates debt obligation on the government and they include the borrowing or the fresh loans raised by the government and other liabilities now borrowings are further classified into two they are internal borrowings and external borrowings the internal borrowings are the money borrowed from within the country and it includes the market loans raised by the issuing bonds and then the amount raised by issuing treasury bills to rba and other banks and it also includes the ways and means advance by rba here just note that the ways and means advance is the short-term interest bearing advance to the government to meet temporary needs now another classification of borrowing is the external borrowing which includes money borrowed from outside the country from various sources now this includes loans received from multilateral agencies such as IMF and world bank and bilateral loans that are raised now let us see the other liabilities that form the debt capital receipts now this includes money raised through small saving schemes and provident fund and which are kept in the public accounts of India now next comes the second type of capital receipt which is the non-debt capital receipts now note that these do not create further debt obligation on the government they mainly include the recovery of loans given to others and the disinvestment of government shares other than public sector units so with this we have explained the receipt part of the budget now next comes the expenditure part see the public expenditure can be classified into two one is revenue expenditure and the other one is capital expenditure and here note that revenue expenditure is the expenditure incurred to meet day-to-day and regular needs of the government and these expenditure will not yield any revenue in future hence they are a one-way payment and revenue expenditure includes interest paid on borrowings and other liabilities then expenditure towards law and order maintenance then subsidies then grants given to states and utes pensions and salaries and grants to foreign government etc these are all revenue expenditure now next comes the capital expenditure it includes spending which creates permanent assets and they yields periodical income from them and this includes investment in machinery infrastructure such as roads buildings etc and the capital expenditure also includes loans given to states and unit territories as they yield interest rates in the future now this capital expenditure is a two-way payment as money paid is recovered later so that is all about the expenditure part so we have discussed the core parts of the annual financial statement or simply the budget and other important parts or documents of the budget that are presented to the parliament are given here for your reference and these includes the demands for grant financial bill expenditure budget etc etc and the budget also provides where the rupee comes from for the upcoming financial year that is what is the source of the money and it also provides where the rupees goes to that is what are all the areas the rupees actually spent and the other important subjects that are covered in the budget is given here for your reference just have a look at it now here you can see that in addition to providing receipts and expenditure of the government of india budget also presents information on deficit statistics and trends then trends in tax receipts and also the trend of capital expenditure the budget profile with reference to the recently presented budget is also given here see the budget proposals for upcoming financial year rest on six pillars one health and well-being two physical and financial capital and infrastructure three inclusive development for aspirational india for reinvigorating human capital five innovation and research and development and finally the minimum government and maximum governance and today we will see the major highlights the segment wise analysis we will do in the coming days when the related news articles appear in newspaper now with reference to the manufacturing sector the government has committed nearly 1.97 lakh crores for over five years starting from the upcoming financial year 2021 to 22 and this is for the production linked incentive schemes that have been announced for 13 sectors this measure is announced to make our manufacturing sector to grow in double digits on a sustained basis also to make our manufacturing companies as an integral part of global supply chains and to possess core competence and cutting-edge technology now with reference to infrastructure we know that it requires long-term debt financing therefore the budget proposes to set up a professionally managed development financial institution this institution will act as a provider enabler and catalyst for infrastructure financing 20 000 crores will be provided to capitalize this institution the budget also proposes a lending target of five lakh crore rupees now the next important highlight is the budget outlay for health and well-being the budget estimate for financial year 2021 was 94 000 crores but for financial year 2022 this outlay has been increased and it is close to 2.24 lakh crores so there is an increase of 137 percentage for financial year 2021 next the finance minister has also proposed to amend the insurance act of 1938 for two purposes one is to increase the permissible fdi limit that is the foreign direct investment limit from 49 percentage to 74 percentage in the insurance companies second to allow foreign ownership and control with adequate safeguards and under the new structure the majority of directors on the board and the key management persons would be resident indians and among them at least 50 percentage of directors will be independent directors now in the field of insurance the government has also decided to privatize a general insurance company now as we approach the 75th independence day in august this year the compliance burden on our senior citizens who are 75 years of age and above is to be reduced that is for senior citizens who only have pension and interest income they are to be exempted from filing their income tax returns the banks that are paying will deduct the necessary tax on their income and they need not file it returns now with reference to the public sector banks in order to further consolidate their financial capacity recapitalization of 20,000 crores is proposed in 2021-22 and here the banking experts opine that this amount of 20,000 crores is lower than the expectations along with this two public sector banks are said to be privatized in the coming financial year now the next important aspect is about the fiscal deficit see when the government's non-borrowed receipts fall short of its total expenditure it has to borrow money from the public to meet the shortfall so the excess of total expenditure over total non-borrowed receipts is called as the fiscal deficit in other words fiscal deficit is the difference between the revenue receipts plus non-debt capital receipts and the total expenditure here note that fiscal deficit is reflective of the total boring requirement of the government see here the news reports that the original fiscal deficit target for financial year 2020-21 was 3.5 percentage however in reality the deficit actually rose to 9.5 percentage of the gdp because of the impact of COVID-19 pandemic now this deficit was funded through government borrowings multilateral borrowings small saving funds and short-term borrowings now the government needs another 80 000 crores so for this it would be approaching the markets in February and March and that is why the fiscal deficit for financial year 2021-22 is estimated to be 6.8 percentage of gdp see here know that due to the economic challenges the government intends to reach a fiscal deficit level lesser than 4.5 percentage of gdp by the year 2020-26 only this is to be achieved by increasing the sustainable realization of tax revenue through improved compliance and by increased receipts from monetization of assets and this include public sector enterprises and land also the finance minister has proposed to increase the contingency fund of India from 500 crores to 30 000 crores through the finance bill now another important takeaway is that out of 34.83 lakh crores which the government has planned to spend in the next financial year 5.54 lakh crores is year marked for capital expenditure now this estimate for capital expenditure is reported as an increase of 34.5 percentage over the budget estimate figure of capex for financial year 2020-21 now the budget has also considered housing for all and affordable housing has priority areas now for the purpose of purchasing an affordable house the government earlier allowed additional deductions of interest which amounted to 1.5 lakh for loans taken for the purchase of affordable house this facility is now extended for such loans which are taken up till 31st march 2022 now the government also seeks to promote supply of affordable rental housing for migrant workers for this purpose finance minister has proposed to allow tax exemption for notified affordable rental housing projects now these are some of the major highlights we will discuss other important aspects in next news articles now one of the news articles mentioned that the recently presented budget is an expansionist or an expansionary budget so what does this mean see a budget is an expansionary budget if it uses budgetary instruments to either increase the expenditure or to cut taxes and in this regard a covid says was much expected from the government but government did not want to burden the public amidst the fight against pandemic so despite the challenges there is proposal to increase the overall expenditure of the government and this is also evident in increase in the capital expenditure now for various eligible individuals and firms tax exemptions and tax holidays are announced or extended for example in the budget it is announced that affordable housing projects can avail a tax holiday for one more year that is till 31st march 2022 these are some of the reasons why the budget is described as an expansionary budget so with this we come to the end of this discussion in which we saw major highlights of the budget about fiscal deficit and also about expansionary budget now let's move on to the next discussion our next discussion is based on this news article which talks about the budget proposal regarding the shipping industry a significant provision in the budget for the shipping industry is to double India's ship recycling capacity by 2024 from the current 4.5 million light displacement ton here just note that light displacement ton age is a term which expresses the dead weight of the ships that is it is the mass of the ship excluding the cargo fuel stores passengers and crew etc so a country aims to double its ship recycling capacity our country also aims to grab at least 50 percentage of the global ship recycling business currently note that India's involvement in the global ship recycling business is 30 percentage along with this budget also envisages boosting of recycling of ships at the along coastal town in gujarat here note that along in gujarat is one of the world's biggest ship recycling yards where around 30 percent of the global ships are recycled annually this 30 percentage amounts to 250 to 280 ships and along also provides employment to over more than 30 thousand people from various states and it supports 3.5 lakh people indirectly through other business activities so in this context let us discuss about ship recycling related news in India and we'll also see about the Hong Kong convention the syllabus relevant to this discussion is given here for your reference first let us understand what is meant by ship recycling see ship recycling is the activity of complete or partial dismantling of a ship so why is it done it is done to recover components and materials for reprocessing and reuse at the same time for taking care of the hazardous and other materials in the ship this ship recycling also includes associated operations such as storage and treatment of components and materials on site but it does not include such components processing or disposal in separate facilities and this is done at a particular facility known as ship recycling facility and here along which we saw in the beginning is an example of ship recycling facility now here you should note that India is the leader in the global ship recycling industry with a share of over 30 percentage of the market as we saw already and as per United Nations conference on trade and development report on the review of maritime transport 2018 India had demolished around 6300 tons of known ship scraping across the world in the year 2017 here you should also note that the ship recycling industry is a labor intensive sector but it is susceptible to concerns on environmental safety because it also includes handling of hazardous and other materials now this is where the relevance of Hong Kong convention comes Hong Kong convention is an international convention of international maritime organization the full name of Hong Kong convention is international convention for safety and environmentally sound recycling of ships 2009 now this convention covers the design construction operation and maintenance of ships to ensure that they can be recycled safely and they can be recycled in an environment friendly way at the end of their lives this convention also deals with how ships should be prepared for their final voyage to a recycling facility and they should be done without compromising their safety or operational efficacy now under this convention ships sent for recycling are required to carry an inventory or complete list of all hazardous materials on board along with this ship recycling facilities are also required to provide a ship recycling plan now this plan should specify how each ship will be recycled based on its particular characteristics and its inventory of hazardous materials and here note that India acceded to this Hong Kong convention very recently only in November 2019 now from exam perspective let us also see about an Indian legislation in this context which is the Recycling of Ships Act of 2019 now this act provides for the regulation of recycling of ships by setting certain international standards and by laying down this territory mechanism for enforcement of such standards now this act restricts and prohibits the use or installation of hazardous materials and this restriction and prohibition applies irrespective of whether a ship is meant for recycling or not also note that under this act for the new ships such restriction on use of hazardous materials is immediate that is it has to be implemented from the date the legislation came into force but the existing ships they have a period of five years for compliance but here note that this will not be applied to warships and non-commercial ships that are operated by the government so that means in 2019 India took two major steps to maintain its leadership in ship recycling one is acceding to Hong Kong convention and also enactment of Recycling of Ships Act of 2019 so these two things have raised the profile of our ship recycling industry as being environment-friendly and safety-conscious and based on this only now the government has envisaged to grab at least 50 percentage of the global ship recycling business so these are some of the points that you should know with respect to this news article now let's move on to the next discussion our next discussion is based on these two news articles this first one talks about the developments in port sector it mentions that seven major ports will be privatized in the year 2021 to 2022 now this other news article talks about the government's plan to generate around 1.7 lakh crore rupees through disinvestment of public sector enterprises now for this purpose a disinvestment policy or strategic disinvestment policy was unveiled by the government in which four sectors would be strategic sectors and these four sectors are first one is atomic energy space and defense second one is transport and telecommunication sector third one is power petroleum coal and other minerals and fourth one is banking insurance and financial services now in these strategic sectors there will be bare minimum presence of the public sector enterprises along with this the remaining central public sector enterprises in the strategic sectors will be privatized or they will be merged or they will be subsidized with other cpsc's or they will also be closed but in case of non-strategic sectors either the central public sector enterprises will be privatized or they shall be closed so here on one hand government says it wants to disinvest and on the other hand it wants to privatize so what do these terms actually mean in this discussion let us understand what is disinvestment and what is privatization the syllabus relevant to this discussion is given here for your reference and before understanding disinvestment we should know what is meant by investment see investment refers to the conversion of money or cash into securities debentures bonds or any other claims on money so what is disinvestment now disinvestment involves the conversion of money claims or security into money or cash it can also be defined as the action of an organization or even the government of selling or liquidating an asset or subsidiary and this disinvestment is also referred to as divestment or divestiture so simply disinvestment refers to the sale from the government of a government owned enterprise either partly or fully now why this disinvestment is done see a company or government organization will typically disinvest an asset either as a strategic move for the company or for raising resources to meet the general needs or specific needs now here note that there are primarily three different approaches to disinvestments from government's perspective the first one is minority disinvestment now under this the government retains a majority stake in the company and government typically retains stake of more than 51 percentage so here government ensures the management control of the company now the example of this minority disinvestment is the power grid corporation of india then rural electrification corporation of india etc now the second type of disinvestment is majority disinvestment in which the government after the disinvestment retains a minority stake in the company that is the government sells off a majority stake now it is to be noted that historically majority disinvestments have been typically made to strategic partners and these partners could be other cpsc's themselves or they could also be private entities now the example for partners being cpsc's could be the merger of bongai gong refinery and petrochemicals limited to the indian oil corporation and like that example for private entities as partners could be the sale of modern foods to hindustan lever so this is about the second type of disinvestment which is majority disinvestment now comes the third type it is the complete privatization see complete privatization is a form of majority disinvestment where 100 percentage control of the company is passed on to the buyer now after knowing all these you should understand one more thing that is disinvestment and privatization are often loosely used interchangeably but there is a vital difference between the two it is that disinvestment may or may not result in privatization now to understand this better let us take one example let us suppose that the government retains 26 percentage of the shares of a company and it carries the voting powers while selling the remaining to a strategic buyer now in this case now the government has disinvested or divested but here the government did not privatize it is because with 26 percentage government can still take vital decisions for which generally a special resolution is required so what are the benefits of such disinvestment first benefit is that it helps in raising valuable resources for the government second the government can focus more on core activities such as infrastructure defense education healthcare etc third such disinvestment will result in a leaner government with the reduction in the number of ministries and bureaucrats see this is the actual motto of the current government if you see because the current government aims for minimum government and maximum governance now next disinvestment also benefits the markets and economy because it brings about greater efficiency for the economy and markets as a whole because here many private players will be involved then it also benefits the taxpayers see because letting go of the assets is best in long-term interest of the taxpayers as the current yield on these investments is quite very low then it also benefits the employees of such organization or company because they may get monetary gains through employee stock ownership plans they may get pay rises greater opportunities and they will have more avenues for career growth and finally it also benefits the public sector undertakings because disinvestments provide greater autonomy which leads to higher efficiencies but beyond this there are also many drawbacks of disinvestment the first drawback is the loss of public interest see we know that the PSUs are resources of the nations and they belong to the people but by selling them to private companies government is seriously affecting the welfare of the people because we cannot ensure that the private companies will work for the welfare of the people and secondly there is always a fear of foreign control over the divested assets it is because when the stakes are sold it could be acquired by a foreign private company also so a foreign private company could have hold on our strategic sectors now the third drawback is the issue with workers for example we saw that employees will have greater opportunities they will have more avenues for career growth but there is also a risk of job loss because jobs of lakhs of workers in the PSUs will fall in danger due to privatization and the fourth drawback is less number of bidders for the stake that is even the government plans to disinvest there are actually less number of people who are willing to participate in this disinvestment so these are some of the points that you should know with respect to disinvestment and privatization so now let's move on to the next discussion now this news article talks about the budget proposals regarding the security market now during the budget the finance minister has announced setting up a single security market code now this code will consolidate the provisions of CB act of 1992 then depositories act of 1996 then securities contract regulation act of 1956 and government securities act of 2007 so it will consolidate these four acts now let us see in brief about these four acts first note that securities and exchange board of India act of 1992 is an act to provide for the establishment of a board and this board is to protect the interests of investors in securities and also to promote the development of securities market and to regulate the securities market so in accordance with the provisions of this act only CB was established in April 1992 now next comes the depositories act of 1996 see it is an act to provide for regulation of depositories in securities and for matters related to it so what is a depository according to the act depository means a company formed and registered under the companies act of 1956 and which has been granted a certificate of registration under the CB act of 1992 so in simple terms depository is defined as the party of the institution which could be either bank or trust company receiving a deposit the next act is the securities contract regulation act of 1956 it is an act to prevent undesirable transactions in securities by regulating the business of dealing in securities now to understand it simply this act aims to provide for the regulation of stock exchanges and it aims to provide for the regulation of transactions in securities that are dealt in such exchanges and this is done with the view to prevent undesirable speculation in such securities now the final one is the government securities act of 2007 it is an act to consolidate and amend the laws related to government securities and its management by the RBI now this act applies to government securities created and issued by the central government or a state government and here as you know government security or GSEC is a security created and issued by the government mainly for the purpose of raising a public loan so it is clear that all the four acts discussed above are related to securities so their consolidation into a rationalized single securities market code is a step in the right direction now this move is expected to improve ease of doing business in the country's financial markets it is also expected to reduce cost and it will do away with the friction between the various stakeholders now another important budget proposal in the finance sector is to create a permanent institutional framework to purchase investment grade debt securities so when we say investment grade it means a rating that signifies that a bond presents a relatively low risk of default so now government aims to create a permanent institutional framework to purchase investment grade debt securities and this will be done both in stressed and normal times and it will help in the development of the bond market so these are some of the points that you should take note from this news article now let's move on to the next discussion now this news article talks about the increase in food subsidy bill in the budget now it has been increased from 1.15 lakh crores to 4.22 lakh crores it is because of the additional cost incurred by the distribution of food grains during the pandemic by the food corporation of India and it is also due to the government's decision to pay fci loans and also mainly because now government wants to return to budgetary transfers to fund the food subsidy bill and for this the union finance minister has also announced to discontinue the national small savings fund has also announced the nss of loan that is the national small savings fund loan to the fci for food subsidy see so far the government used to give loans from nssf to fci but these loans did not account for government's expenditure so in this regard let's see about fci and nssf as you know food corporation of india is a central agency it manages the procurement storage and transportation of rice and wheat for distribution mainly under the national food security act and other welfare schemes it was set up under the food corporation act of 1964 in order to fulfill the objectives of food quality and this includes effective price support operations distribution of food grains through public distribution system and to ensure national food security through maintenance of buffer stocks now the fci procures the grains from farmers at 27 rupees per kg for wheat and 37 rupees for rice and it provides these grains at subsidized rates for example it gives wheat at rupees 2 per kg and rice at 3 per kg and this is given to the public through the public distribution system now as you can see here this is a huge revenue gap because government is spending more but in turn it is getting very less but for several years the budgetary allocation for pds has not been sufficient to cover the fci's subsidy cost so to bridge this gap fci used to borrow from nssf and it resulted in continuous drawing of loans from nssf at a rate of about eight percentage and know that presently fci's outstanding loans are over 2 lakh crores and moreover the covid 19 relief measures of additional free grains under the pds and for the migrants without ration cards this has further increased the borrowings from nssf by the fci so in this context you should know about nssf see before april 1999 the payment and the repayment of loans made against small savings to the state were recorded in the capital account of consolidated front of india money lended to state from the small savings collections was treated as part of central government's expenditure and they were added to the central government's fiscal deficit therefore an increase in small savings collections led to an increase in the fiscal deficit hence to mitigate this effect nssf was established it was established in the public account of india in which all small savings collections are credited similarly all withdrawals under the small savings schemes by the depositors are made out of the accumulations in this fund and now the government has decided to do away with nssf so that means again the fiscal deficit will widen and this may be one of the reasons why the fiscal deficit target is estimated to be 6.8 percentage of GDP for the financial year 2021 to 2022 so these are some of the points that you should note from this news article now let's move on to the next discussion now our next discussion is based on these two news articles this news article talks about the proposal to tax the income on provident fund contributions of more than 2.5 lakh a year which was previously exempted from taxation and here it is to be noted that the tax exemptions will remain along with guaranteed returns for contributions up to 2.5 lakh a year to the employee's provident fund that is cpf and a similar tax exemption which was previously offered to investors in unit linked insurance plans has also been capped now this has been done in order to ensure that the maturity benefits accruing from premium payments of more than 2.5 lakh a year will be subjected to capital gains tax see this is done because under existing provisions of income tax act there is no cap on the amount of annual premium paid by any person during the term of the policy so high net worth individuals are using this clause to claim exemption and this is done by investing in ulip with huge premium and the budget notes that allowing such exemption in policy or policies with huge premium defeats the legislative intent which is to provide benefit to small and genuine cases of life insurance so now the unit linked insurance plans for which the annual premium paid is over 2.5 lakh rupees it would be treated as equity oriented funds see equity oriented fund is a type of mutual fund scheme that invests predominantly in equity stocks so in this context let us have a brief understanding about provident fund and ulip first let us hear about provident fund or PF see a PF is a government managed mandatory retirement saving scheme used in India and also in some other developing nations here a worker gives a portion of her salary to the provident fund and an employer should make a contribution on behalf of the employees now the money in the fund is then kept and handled by the government and it is ultimately withdrawn by the retirees or by their surviving families now in certain cases a provident fund even pays out to the disabled people who are not in condition to work here just note that there are mainly three different types of PFs the first one is general PF which is maintained by governmental bodies including local authorities railways and other such bodies then the second one is recognized PF it is the one which applies to all privately owned organizations that contain more than 20 employees now here in India you should note that we have a EPF that is employees provident fund as the main scheme now this EPF comes under the employees provident funds and miscellaneous provisions act of 1952 and the scheme is managed under the ages of EPFO that is employees provident fund organization and you should note that the employee will be given a universal account number this account enables the employee to transfer her PF funds from one employer to another whenever the employee moves from one occupation to another now the third type of PF is the public PF it is the voluntary nature of investment on the part of the employee so now what about ULIPs or unit linked insurance plans see this ULIP is a type of insurance which combines the benefits of protection and saving in a single plan the major advantage that a ULIP has over the traditional wealth creation tools is the benefit of a life cover so as a result of this life cover the money of the employee can grow and at the same time his family's future is protected from life's unexpected turns now here you should note that ULIP is both an insurance policy and also an investment the policy specifies a death benefit that is the amount the nominee will be paid if the policyholder passes away during the term of ULIP in addition to this if the policyholder survives the term of the ULIP then she can also get the maturity value of the ULIP and this will be the amount generated by the ULIP investments in the equity and debt instruments so these are some of the points that I should know with respect to PF and ULIP now let's move on to the next discussion now this news article mentions that in the budget an amount of 50 000 crore rupees has been earmarked for five years and this is for the creation of national research foundation and this has been done as per the announcement made about the national research foundation in the budget speech of 2019 so let us see some details about this proposed national research foundation this foundation will be set up through an act of parliament and it will be an autonomous body of the government of India and this national research foundation will have an objective to catalyze and energize research and innovation across the country in all academic disciplines and it will also have a special focus on developing research at universities and college apart from this it will also aim to create a conducive ecosystem for research through competitive peer reviewed funding mentoring and facilitation and as per the proposal nrf will be given an annual grant of 20 000 crore rupees which is approximately 0.1 percentage of GDP and this amount will be increased progressively over the next decade as the country's capacity for quality research is developed so now let us see the proposed primary functions of this nrf it will be funding research in all disciplines across the academic landscape through a competitive peer review based process it will also build research capacity at academic institutions across the country it will create beneficial linkages between researchers government and industry to ensure that the most urgent national issues are researched and also to ensure that the latest breakthroughs are implemented for the public good it will also recognize outstanding research through special prizes and seminars and as per the proposal the national research foundation at the start will begin with four major divisions which includes science technologies social sciences arts and humanities so we will know more about nrf when it is established so these are some of the points that you may take note of regarding this news article now let's move on to the next discussion so far we have discussed what is budget what constitutes a budget and what are the important highlights of the new budget now let us see what are the shortcomings that is where the budget is lacking enough measures from these news articles see the gdp is expected to decline by 7.7 percentage in the current financial year as compared to the previous year now the contraction is one of the worst among the world's major countries as we know the novel coronavirus pandemic and the resultant lockdown has led to massive job and livelihood losses also but unlike most advanced countries and emerging market economies india's response to address the distress of the masses has been me garungi as we know the gdp contraction in 2020-21 has come on top of a slowdown in the gdp growth that led to fall in employment the decline in real wages horizon number of people in poverty and hence an expected rise in the proportion of undernourished children and much of the decline in the growth rate is on the account of an unprecedented fall in fixed investment rate as a ratio of gdp especially this is in the infrastructure sectors so in this context the present budgets focus on stepping up public investment by 34.5 percentage in the coming fiscal year is quite huge further the government will borrow an additional 80 000 crore rupees for this purpose in the next two months and because of this the fiscal deficit is expected to widen and the estimated fiscal deficit for financial year 2021-22 is 6.8 percentage of gdp for the central government and even states are allowed a higher fiscal deficit if the expenditure is on the capital investment but realization of these investments would crucially depend on tax revenue realizations it depends on ambitious disinvestment proceeds and the government's ability to raise resources from the market but without raising the interest rates for the private sector see when the government borrows money from the market lenders that as banks prefer to give money to the government compared to the private entities because the money given to government is relatively safe and as a result of this private players find it difficult to get loans and even if they get it it will be at higher interest rates this is also called as crowding out effect so in this context government also proposed development finance institution and one of the reasons for poor industrial infrastructure investment during the last decade in our country was a lack of long-term credit for infrastructure see as the deposits of commercial banks are for short to medium term they find it difficult to lend for long-term and moreover as banks are in deep trouble with rising and non-performing assets due to poor corporate sector performance during the last decade the banks ability to make fresh loans was also adversely affected further experience also shows that most successful industrializing economies have relied on development finance institutions for providing long-term credit so establishing a development finance institution is a welcome move but the issue is how they will be financed according to the budget the proposed dfis will be financed by foreign portfolio investments and this is a cause for concern see by definition as you know foreign portfolio investments represents short-term inflows with exchange rate risks but just now we saw that infrastructure investment is for long term whose revenues will be mostly in rupees so such an investment will inevitably lead to currency and maturity mismatch and this in turn will raise the cost of capital so there is a need to consider alternative long-term sources and these sources could be preferably from domestic sources or even from international development agencies that have less currency volatility and low cost of finance now coming to the health infrastructure the recent nfh's data that is the national family health survey data for 2019 to 20 for select states show that just constructing toilets under swachh baharat mission in the household premises is actually of little use because there is inadequate access to water and sewage facilities see we're talking about such swachh baharat mission because in the budget it has been proposed that urban swachh baharat mission 2.0 will be implemented with a total financial allocation of more than 140 crores over a period of five years from 2021 to 26 but no other measures have been taken to ensure access to water and sewage facilities and that is why authors are criticizing that without providing these complementary facilities of access to water and sewage facilities effectiveness of these investments such as in the swachh baharat mission will be minimal only now then comes the hunger problem see the partial national family health survey 5 has showed that child malnutrition levels in 2019 were higher than in 2016 in most states and the fall in the incomes in the last one year would have made the situation even worse the pandemic and then economic slowdown have hit households food security very hard data even show that even before COVID-19 nutritious diets for most Indians were unaffordable so in this context direct nutrition programs such as Anganwadi programs and school midday meals make a crucial contribution to the diets of children and pregnant and lactating women here you should note that according to the 2020-21 revised estimates for Anganwadi services the amount was around 17,000 crores as compared to the budget estimate of 20,000 crores so this shows that the Anganwadi services have been badly affected by the closure of Anganwadi centers along with this two other important nutrition related interventions of the Ministry of Women and Child Development have also saw major underspending these interventions are poshana bhyana and the Pradhan Mantri Matruvantana Yojana the underspending could be seen in the revised estimates for 2020-21 compared to a budget estimate of 3,700 crore only 600 crore was spent and for the maternity benefits under Matruvantana Yojana which includes a cash transfer of 5,000 rupees for pregnant women the revised estimate is only 1,300 crore compared to the budget estimate of 2,500 crores so this shows there is an underspending in these crucial schemes now if you take the current budget the allocation for the midday meal scheme for 2021-22 is just 11,500 crores which is lower than the revised estimate of 12,900 crore for 2020-21 and unfortunately the nutrition schemes which have been already suffering from poor budgetary support for many years didn't get any greater allocations despite the increasing prevalence of malnutrition as we saw already now next comes the food subsidy if you take the food subsidy it has increased by more than three times but here you should note that this does not reflect higher distribution of subsidized grades it is because the government is just paying back the food corporation of India areas as we have already seen in other discussion and here the author highlights that there is no provision for an expanded or universal public distribution system which have been under recommendation for a long time and next if we come to the health sector even the health budget has not been increased the allocation for health this year is lower than the revised estimate for 2020-21 despite the pandemic the only increase is in the allocation for the COVID-19 vaccine but this is a one-time expenditure and it will not contribute to the strengthening of the health system which is the need of the hour and it has been already realized by the government in the wake of the pandemic but still health has not been given much importance then if we take employment though the budget recognize the growth of job laws and migration crisis due to pandemic unfortunately there is very little acknowledgement and response to the crisis in the budget because there is no targeted employment program to alleviate this immediate crisis and if we take inequality there is also no mention of this extreme rise in economic inequality during the last year see in our past discussions we have already seen that the poor lost their jobs and livelihoods in 2020 but the corporate's profits have skyrocketed we have also discussed on 30th january that in the last one year the rich have appropriated most of the wealth created while the poor have become even more poorer so here the authors ask why budget didn't consider a special tax on the super rich as many countries are now moving in that direction other than this the other disappointing thing about the budget is the continuation of the protectionist trend see in the name of self reliance we seem to be returning to the pre-1991 days the budget seeks to remove exemptions on several items and interest rates on some others including some agricultural products such as cotton raw silk and silkion and that is also a broad-based infrastructure says so here authors opine that this is surely a retrograde step and it may hamper the growth environment so on a whole the issues range from rich to poor economy to social sector foreign capital to inequality and the authors have suggested various measures to immediately elevate the problem and provide bare necessities to everyone in the country so these are some of the points that I should note from these opid articles and editorial now let's move to the next discussion now we have come to the last session the practice questions discussion session now this first question is the two statement question first statement is the term annual financial statement is nowhere mentioned in the Indian constitution now this statement is incorrect because it is mentioned in article 112 for the government of India and it is also mentioned in article 202 of Indian constitution in the context of states but actually the term budget is not mentioned anywhere in the constitution now the second statement is demand for grants and finance bill are part of budget documents now the statement is correct and as you can see here these are the list of budget documents that are presented to the parliament along with finance minister's budget speech and this includes demands for grants annual financial statement and also the finance bill and here the question asks for the correct statement so the correct answer is option b 2 only now this next question is with reference to disinvestment disinvestment is the process of conversion of money or cash into securities debentures bonds or any other claims on money the first statement is incorrect because this definition is the definition of investment not disinvestment disinvestment involves the conversion of money claims or securities into the money or cash it is the other way around now the second statement is in India minority disinvestment is a process under which the government always retains a stake greater than 80 percentage in the disinvested company now the statement is also incorrect because in the minority disinvestment government retains a majority stake in the company which is typically greater than 51 percentage only it is not always 80 percentage and here the question asks for the correct statements but both the statements are incorrect so the correct answer to this question is option d neither one nor two now this next question asks the hong kong international convention recently seen in news is related to and the correct answer is option d safe and environmentally sound recycling of ships now this next question is a previous sir question which was asked in prince 2020 and the question asks along with the budget the finance minister also places other documents before the parliament which include the macroeconomic framework statement they force a document is presented because this is mandated by and the correct answer is option d because as you can see here the statements mandated under FRBM act includes macroeconomic framework statement and also medium-term fiscal policy come fiscal policy strategy statement and this FRBM act is the fiscal responsibility and budget management act of 2003 so the correct answer is option d now this next question is based on food corporation of india first statement is it was set up under the national food security act this statement is incorrect because it was set up under food corporations act second statement is it manages the procurement and stocking of grains that supports a vast public distribution system this statement is correct now the third statement is the lack of sufficient budgetary allocation has increased the loan borrowings of fci this statement is also correct it used to borrow loans from nssf and here the question asks for the correct statements so the correct answer is option c 2 and 3 only now let us take one main question based on gsp 3 you can answer this question which is based on single security market code you have to answer this in 150 words you may post your answers in the comment section with this we come to the end of an extensive hindi news analysis on budget if you like this video don't forget to like comment and share and do subscribe to shankar ias academy youtube channel for more updates related to civil service examination preparation