- Foreign Direct Investment
- Growth of Core Sector
Foreign Direct Investment
Focus: GS-III: Indian Economy (Growth and Development of Indian Economy, External Sector)
Why in News?
Foreign Direct Investment inflows (FDI) has shown a continuous increase from US$ 45.15 billion in 2014-15 to US$ 81.97 billion in 2020-21.
- During the last five financial years, Foreign Direct Investment (FDI) inflows worth US$ 339.55 billion have been reported into India.
About Foreign Direct Investment (FDI)
- Foreign Direct Investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a Foreign Portfolio Investment by a notion of direct control.
- FDI may be made either “inorganically” by buying a company in the target country or “organically” by expanding the operations of an existing business in that country.
- Broadly, FDI includes “mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations, and intra company loans”. In a narrow sense, it refers just to building a new facility, and lasting management interest.
FDI in India
- Foreign Direct Investment (FDI) is a major driver of economic growth and an important source of non-debt finance for the economic development of India.
- It has been the endeavor of the Government to put in place an enabling and investor friendly FDI policy. The intent all this while has been to make the FDI policy more investor friendly and remove the policy bottlenecks that have been hindering the investment inflows into the country.
- The steps taken in this direction during the last six years have borne fruit as is evident from the ever-increasing volumes of FDI inflows being received into the country. Continuing on the path of FDI liberalization and simplification, Government has carried out FDI reforms across various sectors.
FDI Routes in India
- Foreign investment was introduced in 1991 under Foreign Exchange Management Act (FEMA), driven by then FM Manmohan Singh.
- There are three routes through which FDI flows into India. They are described in the following table:
|100% FDI permitted through Automatic Route
|Up to 100% FDI permitted through Government Route
|Up to 100% FDI permitted through Automatic + Government Route
- Automatic route: By this route, FDI is allowed without prior approval by Government or RBI.
- Government route: Prior approval by the government is needed via this route. The application needs to be made through Foreign Investment Facilitation Portal, which will facilitate the single-window clearance of FDI application under Approval Route.
- Global Depository Receipts – GDR
- Foreign Depository Receipts – FDR
- Foreign Currency Convertible Bonds – FCCB
- Foreign institutional investors – FII
Government Measures to Promote FDI
- Factors such as favourable demographics, impressive mobile and internet penetration, massive consumption and technology uptake, played an important role in attracting the investments.
- Launch of Schemes attracting investments, such as, National technical Textile Mission, Production Linked Incentive Scheme, Pradhan Mantri Kisan SAMPADA Yojana, etc.
- The government has elaborated upon the initiatives under the Atmanirbhar Bharat to encourage investments in different sectors.
- As a part of its Make in India initiative to promote domestic manufacturing, India deregulated FDI rules for several sectors over the last few years.
Growth of Core Sector
Focus: GS III-Indian Economy
Why in News?
The growth rate of Core Sector in the country increased by 3.4% (provisional) in November 2021 compared to November, 2020. Overall growth rate of core sector for April-Dec 2021 is 12.6%.
- The Core Sector comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP), thus, it has an impact on the Index of Industrial Production.
About Index of Eight Core Industries:
- The Eight Core Industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).
Released by: The Office of the Economic Adviser, Department for Promotion of Industry and Internal Trade
Base year: 2011-12
Below image attached Eight Core Industries based on their weightage.
Index of Industrial Production (IIP):
- The Index of Industrial Production (IIP) is an index that shows the growth rates in different industry groups of the economy in a fixed period of time.
- It is compiled and published monthly by the Central Statistical Organization (CSO), Ministry of Statistics and Programme Implementation (MOSPI).
- The Central Statistics Office (CSO) revised the base year of the all-India Index of Industrial Production (IIP) from 2004-05 to 2011-12 on 12 May 2017.
- IIP is a composite indicator that measures the growth rate of industry groups classified under broad sectors, namely, Mining, Manufacturing, and Electricity.
- Use-based sectors, namely Basic Goods, Capital Goods, and Intermediate Goods.
Significance of IIP:
- IIP is the only measure on the physical volume of production.
- It is used by government agencies including the Ministry of Finance, the Reserve Bank of India, etc., for policy-making purposes.
- IIP remains extremely relevant for the calculation of the quarterly and advance GDP estimates.
Focus: Government Policies and Interventions
Why in News?
So far 29 States, including State of Uttar Pradesh, have signed MoU with SoI.
- SVAMITVA (Survey of Villages and Mapping with Improvised Technology in Village Areas) scheme is a collaborative effort of the Ministry of Panchayati Raj, State Panchayati Raj Departments, State Revenue Departments and Survey of India.
- It is a Central Sector Scheme
- Aim: To provide the ‘Record of Rights’ to village household owners possessing houses in inhabited areas in villages with issuance of legal ownership rights (Property cards/Title deeds).
- It is a scheme for mapping the land parcels in rural inhabited areas using drone technology and Continuously Operating Reference Station (CORS).
- The mapping will be done across the country in a phase-wise manner over a period of four years – from 2020 to 2024.
- It is being implemented with the collaborative efforts of the Ministry of Panchayati Raj, Survey of India (SoI), State Revenue Department, State Panchayati Raj Department and National Informatics Centre.
- States need to sign Memorandum of Understanding (MoU) with SoI for implementation of the scheme
- The scheme will help in streamlining planning and revenue collection in rural areas and ensuring clarity on property rights.
- The scheme will enable creation of better-quality Gram Panchayat Development Plans (GPDPs), using the maps created under this programme.
- The Gram Panchayats are constitutionally mandated for preparation of Gram Panchayat Development Plans (GPDP) for economic development and social justice.
- The GPDP is based on a participatory process in convergence with schemes of all related Central Ministries/Line Departments related to 29 subjects listed in the Eleventh Schedule of the Constitution.
- Present Coverage Area: The program is currently being implemented in six states – Haryana, Karnataka, Madhya Pradesh, Maharashtra, Uttar Pradesh and Uttarakhand.