Taxes

What is Tax ?

A tax (from the Latin taxo; "I estimate") is a financial charge or other levy imposed upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many administrative divisions. A tax is a "pecuniary burden laid upon individuals or property owners to support the government,it is a payment exacted by legislative authority." It "is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority" and is "any contribution imposed by government whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name.

Simple definition is , tax is a fee charged ("levied") by a government on a product, income, or activity.

• tax is ‘compulsory.’
• a tax is a ‘contribution’
• all taxation is imposed on ‘persons.’ Taxation of commodities falls on the consumers or other persons connected with the taxed articles, and a similar analysis will apply to other forms of taxation. The truth, though often forgotten, yet always holds good that a tax must ultimately be paid by some one.
• taxation is levied for ‘service’ or ‘benefit.’
• taxation is for the ‘public powers,’ i.e. it has to meet the wants of both central and local governments.

In Montesquieu's opinion, ‘the revenues of the State are the portion of his property that each citizen gives in order to have security for the remainder, or to enjoy it in comfort.’

‘Taxation is an exchange in which the State gives services and the contributor money.’ Hardly distinguishable is the belief that taxation is the insurance premium against the risks of social disorder set forth

In Mirabeau's proposition that ‘Taxation is only an advance to obtain protection for social order.’ 

Types of Taxes :

One of the most widely known and frequently used divisions of taxation is, ‘direct’ and ‘indirect’.Taxes are either direct or indirect. A direct tax is one, which is demanded from the very persons who, it is intended or desired, should pay it. Indirect taxes are those which are demanded from one person in the expectation and intention that he shall indemnify himself at the expense of another.

A natural result has been that practical financiers have adopted a different basis of distinction, and regard those taxes as direct which are levied on permanent and recurring occasions, while charges on occasional and particular events are placed under the category of indirect taxation. On either method the income tax would be ‘direct,’ and the excise and customs ‘indirect’

Another division is that into ‘taxes on revenue’ and ‘taxes on capital,’ or, perhaps better, on ‘property.’ The former are paid out of the annual national production; the latter encroach on the accumulated wealth of the society.

Taxes are often said to be either ‘real’ or ‘personal,’ and attempts have been made to distribute them into two classes on this basis. Personal taxes are those in which the person is taken note of in assessment. They require lists of the tax-payers. Real taxes are assessed on objects other than persons, and without direct reference to the owners or possessors. Capitation and income taxes are ‘personal’; taxes on land,houses, or goods are ‘real.’

In respect to the mode of assessment taxes may be either ‘rated’ or ‘apportioned.’ In the former class the charge per unit is fixed, but the total yield is always uncertain, depending as it does on the number of units that pay. An apportioned tax is one the total amount of which is fixed the shares being apportioned among the objects that are charged.

Further classification of taxes :

A. Taxes on Income

It is a tax on the money people earn or on the profits companies make.Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive.A personal or individual income tax is levied as a percentage of a person's wages and salaries When the tax is levied on the income of companies, it is often called a corporate tax.A capital gains tax is levied on profits from the sale of capital assets (e.g., real estate, machinery, stocks, bonds, art, commodities). 

B.Taxes on Property

(a) imposed on property, real or personal
(b) in proportion to its value or other reasonable method of apportionment Ex. Real estate tax
Many jurisdictions impose estate tax, gift tax or other inheritance taxes on property at death or gift transfer. Some jurisdictions impose taxes on financial or capital transactions.

A property tax (or millage tax) is an ad valorem tax levy on the value of property that the owner of the property is required to pay to a government in which the property is situated.Vehicle and boat registration fees are subsets of this kind of tax.

Wealth tax is a direct tax, which is charged on the net wealth of the assessee. It is a tax on the benefits derived from ownership of property. The tax is to be paid year after year on the same property on its market value, whether or not such property yields any income.wealth(net worth) tax is generally conceived of as a levy based on the aggregate value of all household assets, including owner-occupied housing; cash, bank deposits, money funds, and savings in insurance and pension plans; investment in real estate and unincorporated businesses; and corporate stock, financial securities, and personal trusts.A wealth tax is a tax on the accumulated stock of purchasing power, in contrast to income taxes which is a tax on the flow of assets (a change in stock).

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C.Taxes on goods and services

Value added tax - A type of consumption tax that is placed on a product whenever value is added at a stage of production and at final sale.

Sales tax - A tax imposed by the government at the point of sale on retail goods and services . It is collected by the retailer and passed on to the state.

Difference between VAT and Sales Tax - Click Here

1.VAT is levied on both the producer and consumer while a sales tax is levied on only the end consumer.

2.VAT involves tricky accounting while sales tax involves simpler accounting.

3.VAT is applied at the various stages of production while sales tax is applied on the total value of the purchase.

4.VAT efficiently avoids evasion of taxes while a sales tax is unable to deal with this.

Excises - Unlike an ad valorem, an excise is not a function of the value of the product being taxed. Excise taxes are based on the quantity, not the value, of product purchased.Central Excise duty is an indirect tax levied on those goods which are manufactured in India and are meant for home consumption. The taxable event is 'manufacture' and the liability of central excise duty arises as soon as the goods are manufactured. It is a tax on manufacturing, which is paid by a manufacturer, who passes its incidence on to the customers.It is different from customs which is a tax that a buyer pays when he imports goods from other countries. As such, excise duty is an inland tax. This is an indirect tax which implies that the manufacturer sells it at a higher price than was incurred on production thereby recovering the tax paid on its manufacture. Excise is always in addition to VAT which is paid by the end consumer.

If the manufacturer does not sell and uses the good himself, he does not have to pay any excise duty. But since he sells it as a higher price, he has to pay the excise tax. VAT is not paid by the vendor who purchases the goods from the manufacturer but by the end consumer in the chain. The vendor has already paid excise duty to the manufacturer who deposits it to the government.

Customs duty - Customs Duty is a type of indirect tax levied on goods imported into India as well as on goods exported from India. Taxable event is import into or export from India. Import of goods  means bringing into India of goods from a place outside India. India includes the territorial waters of India which extend upto 12 nautical miles into the sea to the coast of India. Export of goods means taking goods out of India to a place outside India. 

Duty is levied upon goods only, whereas tax is levied on both goods and individuals.Duty is generally a tax levied on good going out or coming inside a country. Duties are sometimes referred to as border taxes.

Excise is a tax levied by the government on goods manufactured inside the country while customs duty is a tax levied by the government on goods produced outside the country and upon arrival in to the country.Excise tax is payable by the manufacturers while custom duty is payable by the importers of goods which means they are just buyers

D. Classification based on-who bears the burden

1) Direct -the tax is imposed on the person who also bears the burden thereof Ex. Income tax, community tax, estate tax,corporate tax,securities transaction tax,etc.
2) Indirect- imposed on the taxpayer who shifts the burden of the tax to another Ex. VAT, specific tax, percentage tax, customs duties.

E. Classification of taxes based on - purpose of taxation

1) General, fiscal or revenue - imposed for the general purpose of supporting the government
Ex. Income tax, percentage tax
2) Special or regulatory - imposed for a special purpose, to achieve some social or economic objectives
Ex. Protective tariffs or customs duties on imported goods intended to protect local industries

F. Classification based on method of taxation :

1) Specific tax imposed and based on a physical unit of measurement, as by head, number, weight, length or volume Ex. Tax on distilled spirits, fermented liquors, cigars
2) Ad Valorem - tax of a fixed proportion of the value of property with respect to which the
tax is assessed; requires intervention of assessor. Ex. Real estate tax, excise tax on cars, nonessential
goods

G. Classification of taxes - based on authority imposing the tax

1) National - imposed by the national government Ex. National internal revenue taxes, custom duties
2) Municipal or local - imposed by the municipal corporations or local governments Ex. Real estate tax, occupation tax

H. Classification based on - graduation of rate (Three systems of taxation)

1) Proportional - based on a fixed percentage of the amount of the property, income or other basis to be taxed Ex. Real estate tax, VAT, percentage tax
2) Progressive or graduated - tax rate increases as the tax base or bracket increases
Ex. Income tax, estate tax, donor's tax
3) Regressive - tax rate decreases as the tax base increases
4) Degressive - increase of rate is not proportionate to the increase of tax base

Progressive taxes

A progressive tax is a tax imposed so that the tax rate increases as the amount subject to taxation increases. In simple terms, it imposes a greater burden (relative to resources) on the rich than on the poor. It  can be applied to individual taxes or to a tax system as a whole. Progressive taxes attempt to reduce the tax incidence of people with a lower ability-to-pay, as they shift the incidence disproportionately to those with a higher ability-to-pay. People with higher incomes pay a larger percentage of their incomes in taxes, while people with lower incomes pay a lower percentage in taxes. The result is people with more disposable income pay a higher percentage of that income in tax than do those with less income.Some people argue that progressive taxation is fair, because low-income people cannot afford to pay taxes as much as high-income people can. Others argue that progressive taxation discourages a strong work ethic because people do not want to work hard to become wealthy if they have to give more money away in taxes.

Regressive Taxation

Regressive taxation takes a higher percentage of taxes from low-income people and a lower percentage of taxes from high-income people, according to the IRS. Although it seems intuitively unfair to tax people more when they make less, some people feel that regressive taxation is fair because the actual amount of taxation will be closer to equal across all income levels. It may also encourage people to work harder and move up to higher income brackets. Many people, however, do not think it makes sense or is morally right to tax poor people more.

Proportional Tax

A proportional tax is one that imposes the same relative burden on all taxpayers—i.e., where tax liability and income grow in equal proportion. In simple terms, it imposes an equal burden (relative to resources) on the rich and poor. Proportional taxes maintain equal tax incidence regardless of the ability-to-pay and do not shift the incidence disproportionately to those with a higher or lower economic well-being.

List of taxes

Ad valorem
Capital gains tax
Carbon tax
Carucage
Consumption tax
Corporate tax (including the Excess profits tax, Windfall profits tax)
Corvée
Custom
Danegeld
Development Impact Tax
Direct tax
Duty
Excise (e.g. fuel excise, use tax, blank media tax, natural resources consumption tax)
FairTax
FICA tax
Franchise tax
Gabel
Impost
Income Tax
Indirect tax
Inflation tax
Inheritance tax (cf Allodial, Pigovian tax, Estate tax (United States), Inheritance Tax (United Kingdom).)
Land value tax
Payment in lieu of taxes
Payroll tax
Poll tax
Property tax
Sales tax
Scutage
Seigniorage
Sin tax
Stamp Duty
Subsidy
Tallage
Tariff
Tax Farming
Tithe
Tobin tax
Toll bridge
Toll road
Toll tunnel
Transfer tax
Tribute
Value added tax
Vehicle excise duty
Wealth tax

Indian Railways

The Indian Railways (IR) is the world's largest railway system under single management .Indian Railways is a department owned and controlled by the Government of India, via the Ministry of Railways.It is administered by the Railway Board, which has a financial commissioner, five members and a chairman. Its headquarters are in New Delhi. It is divided into zones, which are further sub-divided into divisions. The number of zones in Indian Railways increased from six to eight in 1951, nine in 1952, and finally 16 in 2003. The Kolkata Metro is owned and operated by Indian Railways, but is not a part of any of the zones. It is administratively considered to have the status of a zonal railway. The State Governments have no authority on Indian Railways.In 2011-2012 Indian Railways earned 104,278.79 crore (US$18.98 billion) which consists of 69,675.97 crore (US$12.68 billion) from freight and 28,645.52 crore (US$5.21 billion) from passengers tickets.

History

A plan for a rail system in India was first put forward in 1832. The first rail line of the Indian sub-continent came up near Chintadripet Bridge (presently in Chennai) in Madras Presidency in 1836 as an experimental line.In 1844, the Governor-General of India Lord Hardinge allowed private entrepreneurs to set up a rail system in India. The East India Company (and later the British Government) encouraged new railway companies backed by private investors under a scheme that would provide land and guarantee an annual return of up to five percent during the initial years of operation.The first train in India had become operational on 22 December 1851 for localised hauling of canal construction material in Roorkee. A year and a half later, on 16 April 1853, the first passenger train service was inaugurated between Bori Bunder in Bombay and Thane.Covering a distance of 34 kilometres (21 mi), it was hauled by three locomotives, Sahib, Sindh, and Sultan.

The idea of a railway to connect Bombay with Thane, Kalyan and with the Thai and Bhore Ghats inclines first occurred to George Clark, the Chief Engineer of the Bombay Government, during a visit to Bhandup in 1843.

In 1854 Lord Dalhousie, the then Governor-General of India, formulated a plan to construct a network of trunk lines connecting the principal regions of India. Encouraged by the government guarantees, investment flowed in and a series of new rail companies were established, leading to rapid expansion of the rail system in India. The next passenger train steamed out of Howrah station destined for Hooghly, a distance of 24 miles, on 15 August 1854. Thus the first section of the East Indian Railway was opened to public traffic, inaugurating the beginning of railway transport on the Eastern side of the sub-continent. In South, the first line was opened on 1 July 1856 by the Madras Railway Company. It ran between Veyasarpandy and Walajah Road (Arcot), a distance of 63 miles. In the North, a length of 119 miles of line was laid from Allahabad to Kanpur on 3 March 1859.

The first section from Hathras Road to Mathura Cantonment was opened to traffic on 19 October 1875. These small beginnings in due course developed into a network of railway lines all over the country. By 1880, the Indian Railway system had a route mileage of about 9000 miles. When India became independent in 1947, there were forty-two rail systems. In 1951, the systems were nationalized as one unit, becoming one of the largest networks in the world. Thus Indian Railways (IR) was born.

Present :

In 2003, the Indian Railways celebrated 150 years of its existence. Various zones of the railways celebrated the event by running heritage trains on routes similar to the ones on which the first trains in the zones ran. The Ministry of Railways commemorated the event by launching a special logo celebrating the completion of 150 years of service.Also launched was a new mascot for the 150th year celebrations, named "Bholu the guard elephant".

Before Independence the railways in India were a group of privately owned companies.Today, Indian Railways has one of the largest and busiest rail networks in the world. It transports 20 million passengers and more than 2 million tonnes of freight daily.Indian Railways operates about 9,000 passenger trains and transports 20 million passengers daily and also provides limited international services to Nepal, Bangladesh and Pakistan. A standard passenger train consists of eighteen coaches, but popular trains can have up to 24 coaches. Coaches are designed to accommodate anywhere from 18 to 108 passengers, but during the holiday seasons and/or on busy routes, more passengers may travel in unreserved coaches. Most regular trains have coaches connected through vestibules. However, 'unreserved coaches' are not connected with the rest of the train via any vestibule.

Indian Railways is one of the world's largest commercial employers, with more than 1.6 million employees.Indian Railways is the country's single largest employer. Staff are classified into gazetted (Group A and B) and non-gazetted (Group C and D) employees. While the recruitment of Group A gazetted employees is carried out by the Union Public Service Commission through exams conducted by it, the recruitment to Group 'C' and 'D' employees is done through 19 Railway Recruitment Boards which are controlled by the Railway Recruitment Control Board (RRCB). The training of all cadres is entrusted and shared between six centralized training institutes.

The railways traverse the length and breadth of the country.It is one of the world's largest railway networks comprising 115,000 km (71,000 mi) of track over a route of 65,000 km (40,000 mi) and 7,500 stations. In terms of rolling stock, IR owns over 200,000 (freight) wagons, 50,000 coaches and over 8,000 locomotives.As of 31 March 2010, Indian Railways had 5,022 diesel locomotives (increased from 17 on 31 March 1951), 3,825 electric locomotives (increased from 72 on 31 March 1951) and 42 steam locomotives (decreased from 8,120 on 31 March 1951)

Indian Railways operates both long distance and suburban rail systems on three gauges: broad gauge (1.676 m), meter gauge (1.000 m) and narrow gauge (0.762 m and 0.610 m).Broad gauge is the predominant gauge used by Indian Railways. Indian broad gauge—1,676 mm (5 ft 6 in)—is the most widely used gauge in India with 105,000 km (65,000 mi) of track length (91% of entire track length of all the gauges) and 56,000 km (35,000 mi) of route-kilometre (86% of entire route-kilometre of all the gauges). Unigauge project is in progress to convert all tracks to broad gauge.However, the total route-kilometre has increased by only 21% (by just 11,500 km from 53,596 route-km in 1951) in the last sixty years or about 200 km per year. This compares very poorly with Chinese railways, which increased from about 27,000 route-km at the end of second world war to about 100,000 route-km in 2011, an increase of more than threefold. More than 28,000 route-km (34% of the total route-km) of Chinese railway is electrified compared to only about 21,500 route-km of Indian railways.

The Narrow gauges are present on a few routes, lying in hilly terrains and in some erstwhile private railways (on cost considerations), which are usually difficult to convert to broad gauge. Narrow gauges have 2,000 route-kilometre. The Kalka-Shimla Railway, the Kangra Valley Railway and the Darjeeling Himalayan Railway are three notable hill lines that use narrow gauge, but the Nilgiri Mountain Railway is a metre gauge track. These four rail lines will not be converted under the Unigauge project.

Railway Zones in India 

IR owns locomotive and coach production facilities

Indian Railways -- Types of  Passenger Services 




Notable trains and achievements

• There are two UNESCO World Heritage Sites on IR – the Chatrapati Shivaji Terminus and the Mountain Railways of India. The latter consists of three separate railway lines located in different parts of India : -

1. Darjeeling Himalayan Railway, a narrow gauge railway in West Bengal.
2. Nilgiri Mountain Railway, a metre gauge railway in the Nilgiri Hills in Tamil Nadu
3. Kalka-Shimla Railway, a narrow gauge railway in the Shivalik mountains in Himachal Pradesh.In 2003 the railway was featured in the Guinness Book of World Records for offering the steepest rise in altitude in the space of 96 kilometre.

• Maharaja Railways (Gwalior Light Railway), a narrow gauge line of just 610mm width from Gwalior to Sheopur of 198 km. in length is world's longest narrow gauge railway line is in the UNESCO world heritage tentative list.
• Neral-Matheran Railway, a narrow gauge railway connecting Matheran is also a historic line.
• Palace on Wheels is a specially designed train, frequently hauled by a steam locomotive, for promoting tourism in Rajasthan. On the same lines, the Maharashtra government introduced the Deccan Odyssey covering various tourist destinations in Maharashtra and Goa, and was followed by the Government of Karnataka which introduced the Golden Chariot train connecting popular tourist destinations in Karnataka and Goa. However, neither of them has been able to enjoy the popular success of the Palace on Wheels.
• Samjhauta Express is a train that runs between India and Pakistan. However, hostilities between the two nations in 2001 saw the line being closed. It was reopened when the hostilities subsided in 2004.
• Another train connecting Khokhrapar (Pakistan) and Munabao (India) is the Thar Express that restarted operations on 18 February 2006; it was earlier closed down after the 1965 Indo-Pak war.
• Lifeline Express is a special train popularly known as the "Hospital-on-Wheels" which provides healthcare to the rural areas. This train has a carriage that serves as an operating room, a second one which serves as a storeroom and an additional two that serve as a patient ward. The train travels around the country, staying at a location for about two months before moving elsewhere.
• Among the famous locomotives, the Fairy Queen is the oldest operating locomotive in the world today, though it is operated only for specials between Delhi and Alwar. John Bull, a locomotive older than Fairy Queen, operated in 1981 commemorating its 150th anniversary. Kharagpur railway station also has the distinction of being the world's longest railway platform at 1,072 m (3,517 ft). The Ghum station along the Darjeeling Toy Train route is the second highest railway station in the world to be reached by a steam locomotive. The Mumbai–Pune Deccan Queen has the oldest running dining car in IR.
• Vivek Express, between Dibrugarh and Kanyakumari, has the longest run in terms of distance and time on Indian Railways network. It covers 4,286 km (2,663 mi) in about 82 hours and 30 minutes.
• Himsagar Express, between Kanyakumari and Jammu Tawi, has the second longest run in terms of distance and time on Indian Railways network. It covers 3,715 km (2,308 mi) in about 69 hours and 30 minutes.
• The Bhopal Shatabdi Express is the fastest train in India today having a maximum speed of 150 km/h (93 mph) on the Faridabad–Agra section. The fastest speed attained by any train is 184 km/h (114 mph) in 2000 during test runs.
• The third longest train in terms of distance on Indian Railways network is Navyug express between Jammu tawi to Mangalore covering a distance of 3609 km.
• Trivandrum Rajdhani is the longest non stop train in on Indian Railways network covering 528 km.
• Double-decker AC trains have been introduced in India. The first double decker train was Pune-Mumbai Sinhagad express plying between Pune and Mumbai while the first double-decker AC train in the Indian Railways was introduced in November 2010, running between the Dhanbad and Howrah stations having 10 coaches and 2 power cars.

Railway links to adjacent countries

Existing rail links:

1. Nepal – Break-of-gauge – Gauge conversion under uni-gauge project
2. Pakistan – same Broad Gauge. Thar Express to Karachi and the more famous Samjhauta Express international train from Lahore, Pakistan to Amritsar (Attari).
3. Bangladesh – Same Broad Gauge. The Maitri Express between Dhaka and Kolkata started in April 2008 using the Gede-Darsana route, in addition to a Freight Train service from Singhabad and Petrapole in India to Rohanpur and Benapole in Bangladesh A second passenger link between Agartala, India and Akhaura Upazila, Bangladesh was approved by the Government of Bangladesh & India in September 2011.

Under construction / Proposed links:

Bhutan – railways under construction – Same gauge
Myanmar – Manipur to Myanmar (under construction)
Vietnam – On 9 April 2010, Former Union Minister of India, Shashi Tharoor announced that the central government is considering a rail link from Manipur to Vietnam via Myanmar.
Thailand - possible if Burma Railway is rebuilt.

More Info - Click Here

Some Facts : 

India's longest scheduled single continous train journey can be experienced on the weekly Vivek Express, connecting Kanyakumari (southern tip of India) with Dibrugarh in Assam. The route distance of 4,286 kms covered in 82 hours as per schedule.

It runs about 14,300 trains daily.The total distance covered by the 14,300 trains on the Indian Railways everyday, equals three & half times the distance to moon

Railway Station with all the Three Gauges is Siliguri Railway Station

The longest platform in the world is at Kharagpur and is 2,733 ft. in length

Nehru Setu on Sone River is the longest Railway bridge

42 Railway companies operated in the country before independence

What the Ancients Did for Us - The Indians

India is one of the oldest and richest civilizations in the world. It is home to the world’s first planned cities, where every house had its own bathroom and toilet five thousand years ago.Harappan cities, like the 4,000 year old Dholavira were built to a grid-plan and boasted the world’s first sewage system. Herbal remedies, using ingredients such as cocoa butter, ginseng and ginger, invented by Indians have been adopted into Western medicine. Surgery, including early plastic surgery, was developed by Indians.Two thousand years ago the Indians pioneered plastic surgery, reconstructing the noses and ears on the faces of people who had been disfigured through punishment or warfare. They performed eye operations such as cataract removal and invented inoculation to protect their population from Smallpox, saving thousands of lives. Inoculation against smallpox emerged centuries before Edward Jenner. The Ancient Indians have not only given yoga, meditation and complementary medicines, but have furthered the knowledge of science, maths – and invented Chaturanga, which became the game of chess. Chess is a simplified version of the ancient Indian game of military strategy chaturanga.Indians invented easy numerals to count, they are the numbers 1-9 and ‘zero’, without which there would be no computers or digital age. Unfairly we call this system of counting Arabic numbers – a misplaced credit.

To create images of their gods they invented a technique of casting bronze called 'Lost Wax', a five-millennia old process still in use today. India was one of the first civilizations to successfully extract Iron from ore and they quickly learnt how to cast huge structures with it - some of them surviving. Their metallurgists went on to invent steel which they called Wotz.This metal working resulted in wonders like the iron pillar of Mehrouli. It would take the British until the 19th century to rediscover same substance.In 1790 the Indians defeated the British Army in the battle of Pollilur with a secret invention – the rocket. The British eventually stole the idea and used it against Napoleon's fleet.

Perhaps the most important invention the Indians have given is cotton. 3500 years ago whilst others were lumbering around in animal skins and itchy wool they were cultivating a plant and weaving it into a material that would revolutionise the west. They also pioneered the printing and dyeing of cotton in a staggering array of colours and invented the spinning wheel - something Europe wouldn't catch up with until the Middle Ages. The mechanisation of this simple device by Hargreaves and Arkwright led to the industrial revolution and turned Britain into a superpower.

This is the documentary , "What the Ancients Did for Us - The Indians".This episode features reports from Darling in India and demonstrations from Hart-Davis, Jopson and other experts that examine the ideas and inventions that emerged from Ancient India.

Treasure Seekers - Empires of India

“Discover the incredible history of India - as shaped by Babur, father of the Moghul Empire, and Clive, father of the British Raj in India”

India, a land of seductive riches, land of the Koh-i-noor diamond, the priceless gem.Famed for its wealth, cultural treasures,exoticism and spirituality, India has for centuries beckoned the outsider.For centuries India has seemed to outsiders an alluring, pliant world ripe for conquest and control. Many have vied for control of this fabled and diverse land.Among those were two great empires, one established by invading Moguls, the other by the British,both flourished on this vast subcontinent.One stormed south across the mountains. One came from across the seas. Both were hungry for wealth and dominion. In the 16th century the Turkaman warlord Babur stormed out of Central Asia and made the country his own. The Moghul Empire he founded became one of the most opulent and sophisticated in human history. As it faded, a new conqueror and a new colonial power emerged on the scene. Robert Clive, a strange and self-destructive character took hold of the country in the 18th century and delivered it into the hands of the British. This documentary is part of the highly acclaimed ‘Treasure Seekers’ series, produced for National Geographic.This is the story of India and its conquerors.

Parliamentary Questions

Parliamentary Questions are one of the important procedural devices that empower Members of Parliament to elicit factual information from the Government on a matter of public interest. Parliamentary Question is a unique mechanism to exercise surveillance over the administration, it is an important instrument in the hands of the members to ensure answerability or accountability of the administration for its acts of omission or commission to the Parliament and the people. The entire range of governmental activities comes under the scrutiny of Parliament by this procedure. Very often, members are able to pinpoint the administrative lapses and extract certain information and assurances or even commitments from the Government.

Generally, the first hour of every sitting of Lok Sabha, known as the “Question Hour”, is available for asking and answering of questions. In very exceptional cases, the  ‟Question Hour‟ is dispensed with to take up some other urgent business only if the House unanimously agrees.

Asking of questions is an inherent and unfettered parliamentary right of members. It is during the Question Hour that the members can ask questions on every aspect of administration and Governmental activity. Government policies in national as well as international spheres come into sharp focus as the members try to elicit pertinent information during the Question Hour.

The Government is, as it were, put on its trial during the Question Hour and every Minister whose turn it is to answer questions has to stand up and answer for his or his administration’s acts of omission and commission. Through the Question Hour the Government is able to quickly feel the pulse of the nation and adapt its policies and actions accordingly. It is through questions in Parliament that the Government remains in touch with the people in as much as members are enabled thereby to ventilate the grievances of the public in matters concerning the administration. Questions enable Ministries to gauge the popular reaction to their policy and administration. Questions bring to the notice of the Ministers many an abuse which otherwise would have gone unnoticed. Sometimes questions may lead to the appointment of a commission, a court of enquiry or even legislation when matters raised are grave enough to agitate the public mind and are of wide public importance.

The Question Hour is an interesting part of the Parliamentary proceedings. Although a question mainly seeks information and tries to elicit facts on a particular subject, there are many a time lively and quicksilver repartees between the Members asking the questions and the Ministers answering them. These repartees are sometimes coupled with flashes of wit and humour. That is why the public galleries and the press galleries are packed to capacity during the Question Hour.

Types of Questions

Questions are of four types:—

Parliamentary questions are categorized as Starred, Unstarred and Short Notice Questions.

A Starred Question is one to which a member desires an oral answer on the floor of the House. Answers to such questions may be followed by Supplementary Questions by Members. Starred Questions derive their name from the fact that they are always distinguished by an asterisk.Only 20 questions can be listed for oral answer on a day.

An Unstarred Question is so named because it does not carry an asterisk mark. Answers to such questions, unlike a Starred Question, is not given orally, but, in a written form. Only 230 questions can be listed for written answer on a day. In addition to this, 25 more questions can also be included in the Unstarred List relating to the States under Presidential Rule and the total number of questions in the list of Unstarred Questions for a day may not exceed 255 in relaxation of normal limit of 230 questions.

A Short Notice Question is one which is related to a matter of urgent public importance and can be asked with shorter notice than the period of notice prescribed for an ordinary question.

A question may also be addressed to a Private Member provided the subject matter of the question relates to some Bill, Resolution or other matter connected with the business of the House for which that Member is responsible. No supplementary can be asked on such a question. Similarly, no short notice question can be addressed to a Private Member.

Besides, members may raise Half-an-Hour Discussion on matters arising out of questions recently answered in the House and which needs elucidation on a matter of fact. Such discussion is limited to half-an-hour and generally held in the last half-an-hour of the sitting on three days in a week, namely Monday, Wednesday and Friday. During the Budget Session, no half-an-hour Discussion is normally held till the transaction of financial business is completed.

In the Lok Sabha, the list of Starred Questions is printed on green paper, the list of Unstarred Questions on white paper, the list of Short Notice Questions on pink paper and the list of Questions to Private Members on yellow paper, so that Members can distinguish these lists easily.

Period of Notice

A Member is required to give not less than ten and and not more than twenty-one clear days notice in writing in the prescribed form to table a question(The normal period of notice of a question is not more than twenty-one and not less than ten clear days). Members can give notices of questions from the day following the day on which the summons for a session are issued. Such notices are addressed to the Secretary-General, Lok Sabha, and specify the official designation of the Minister to whom the question is addressed.

A short notice question can be asked with a notice shorter than ten days, but the member has to state briefly the reasons for asking the question at short notice.

Limits on the number of Questions

There is no restriction on the number of notices of Starred and Unstarred Questions which a member can give under the rules. But not more than five questions are admitted in the name of a member for each sitting, out of which not more than one is entered in the Starred list for oral answer. Admitted Notices of Questions in excess of Five are returned to members for revival for another date. Normally, not more than twenty questions are placed on the list of Questions for oral answer on any one day. The number may rise on account of postponed Questions. Questions in excess of twenty are transferred to the List of Questions for written answer. Not more than one Short Notice Question is put down for answer on any one day. Further, not more than 230 Questions are normally included in the list of Questions for written answer on any one day. However, the overall limit of 230 Questions may exceed by the number of Questions pertaining to a State or States under President's Rule, subject to the maximum limit of 25. Questions in excess of 230 in a day's list of Questions are re-examined for inclusion in the list of Unstarred Questions for subsequent available dates. All those notices of questions which could not be included in lists of questions lapse at the end of the Session. While compiling the list of Unstarred Questions, it is ensured that one question of each member is picked up in each round, till the list of Questions of a date is finalised.

After the Starred Questions have been answered, Short Notice Questions, if any for that day, is taken up and disposed of in the same way as the questions for oral answers.

Allotment of Days for Answer to Questions

As soon as the dates of sittings of a session of Lok Sabha are fixed, days are allotted to different Ministries/Departments of the Government of India for answering of questions relating to them. For this purpose, the Ministries/Departments are divided into five Groups, viz. Groups A,B,C,D and E and fixed days of the week are allotted to Groups of Ministries/Departments for answering questions. There is no Question Hour on a Saturday even if a sitting of the House is fixed on that day for any special reason. Similarly, no question time is usually allotted when a session is extended by a day or a few days beyond the originally scheduled date of termination of the session unless the condition of ten clear days for giving notices of the questions is satisfied.

The classification of Ministries into groups for the purpose of answering questions is done in such a way that each group of Ministries has, as possible, approximately the same number of questions. It is also ensured
allotment of Ministries does not clash with the allotment decided for answering questions in the Rajya Sabha so that the Ministers are able to be present in both Houses on the respective days allotted for answering questions.

Mode of Asking Questions

The member whose question has been admitted and which is included in the list of questions for oral answers for a particular day, rises in his/her seat when the turn of his/her question comes and asks his/her question by reading out its number on the list of questions. The Minister concerned answers the question. Thereafter the member who had asked the question can ask only two supplementary questions. After him/her the second member whose name is clubbed on the question is allowed to ask one supplementary question. Thereafter, the Speaker allows one supplementary each to members who are able to catch his eye. The number of such members depends on the importance of the question. Then the next question is taken up. The replies to questions not reached for oral answer during the Question Hour are deemed to have been laid on the Table of Lok Sabha.

At the end of the Question Hour, i.e. after the questions for oral answer have been answered, Short Notice Question, if any, for that day is taken up and disposed of in the same way as the questions for oral answers.

Conditions of Admissibility of Questions

A question is primarily asked for the purpose of obtaining information on a matter of public importance within the special cognizance of the Minister to whom it is addressed. However, the right to ask a question is governed by certain conditions. Questions which are vague or are too general or roving in nature or give information instead of seeking it are not admitted. Questions which are not the primary concern of the Government of India are disallowed. Questions that contain arguments, inferences or defamatory statements or otherwise refer to the character or conduct of any person, except in his official or public capacity, are not admitted. Questions which are covered by answer to a question given in the recent past or in regard to which information is available in accessible documents or in reference works, are also not admitted. Besides, if the subject matter of a question is pending for judgment before any court of law, or any other tribunal or body set up under the law, or is under consideration before a Parliamentary Committee, the same is not permitted to be asked. Questions making discourteous references to foreign countries with whom India has friendly relations are disallowed. Similarly, questions raising larger issues of policy are not allowed for it is not possible to enunciate policies within the compass of an answer to a question. Questions seeking information regarding matters exclusively within the jurisdiction of the Speaker are also not admitted.

Answers to Questions

Notices of Questions which have been admitted are segregated. Separate lists are prepared for Starred and Unstarred Questions. Admitted notices of questions are entered in the Lists of Questions for the day for oral or written answers, as the case may be, in the order or priority obtained in the ballot.

Answers to questions orally given in the House on any date are printed in the day's proceedings. In the case of Unstarred Questions, written answers thereto are laid on the Table by the Ministers concerned. Further, if any question placed on the list of questions for oral answer on any day is not called for answer within the time available for answering questions on that day, the Minister to whom the question was addressed lays on the Table a written reply to the question. Written answers to questions are not formally laid by the Ministers, but are deemed to have been laid on the Table at the end of the Question Hour. In the event of the Question Hour having been dispensed with or where questions are not taken up for oral answer owing to disorder and continuous interruptions, all Starred Questions for the day are treated as Unstarred and their answers, together with answers to the Unstarred Questions, if any, are printed in the debate of that day. When the Question Hour is dispensed with owing to cancellation of one or more sittings of the House or adjournment without transacting any business, the Questions entered in both Starred and Unstarred lists of Questions for the days are deemed to be Unstarred Questions for the next sitting and such Questions along with their answers are deemed to have been laid on the Table and are included in the Debates of the next date of sitting.

Procedure in Lok Sabha Secretariat

On receipt of the notice of a question it is scrutinised to see that the designation of the Minister and date of answer have been correctly mentioned in the notice. A preliminary ballot of identical questions is held and the member who obtains priority is deemed to have tabled the question. A ballot is then held in respect of notices received in this Secretariat at the same time to determine their inter se priority. Separate ballots are held for starred and unstarred questions. Starred, unstarred and short notice questions are numbered separately and entered in separate diaries on computer software.

The next stage is to examine the question as to whether or not it is admissible under the rules and past precedents. A question is primarily asked for the purpose of obtaining information on a matter of public importance. Questions that contain arguments, inferences or defamatory statements or otherwise refer to the character or conduct of any person except in his official or public capacity, are not admitted. Questions which are in substance repetitions of those that have been answered previously or in regard to which information is available in accessible documents or in ordinary works of reference are also not admitted. Besides, if the subject matter of a question is pending for judgement before any court of law or any other tribunal or body set up under law or is under consideration before a Parliamentary Committee, the same is not permitted to be asked. Questions making discourteous references to foreign countries with whom India has friendly relations are disallowed. Similarly, questions raising larger issues of policy are not allowed for it is not possible to enunciate policies within the limited compass of an answer to a question. Questions containing more than 150 words or relating to a matter which is not primarily the concern of the Government of India are not admitted. Questions going into minor details of administration and day-to-day working of the Government/Organisations are also not admitted.

Keeping the above rules and precedents in view, a question is admitted or disallowed. Typed copies of the admitted and edited questions are then made out on a standard form. An advance copy of the admitted question is informally collected by the Ministry/Department concerned so that they may on their side initiate the action for collection of information asked for in the question to prepare a reply.

A Short Notice Question which is of wide public importance is first referred to the Ministry concerned if necessary for furnishing factual information in the matter and also for indicating whether the Minister concerned accepts the short notice and, if so, what date will be convenient to him to answer the question. If the Minister accepts the short notice and the matter sought to be raised is considered by the Speaker, urgent, the Short Notice Question is admitted and printed in a separate list on the light pink paper in order to distinguish from lists of ordinary questions. The Short Notice Question is taken up after the Question Hour.

Sports in India

 The history of sports in India dates back to the Vedic era. Physical culture in ancient India was fed by a powerful fuel: religious rights.There were some well-defined values like the mantra in the Atharva-Veda, saying, "Duty is in my right hand and the fruits of victory in my left". In terms of an ideal, these words hold the same sentiments as the traditional Olympic oath: "For the Honour of my Country and the Glory of Sport."

Badminton probably originated in India as a grownup's version of a very old children's game known in England as battledore and shuttlecock, the battledore being a paddle and the shuttlecock a small feathered cork, now usually called a "bird."Games like chess, snakes and ladders, playing cards, and polo had originated as sports in India and it was from here that these games were transmitted to foreign countries, where they were further modernized.

Sports in India - Details  

Traditional Sports in India

	Asol Aap	Boat Race
Dhopkhel	Gella-Chutt	Hiyang Tannaba
Inbuan	Insuknawr	Kabaddi
Kang Shanaba	Kho Kho	Khong Kangjei
Kirip	Lamjei	Mallakhamb
Mizo Inchai	Mukna	Nagaland Arunachal Games
Sagol Kangjei	Yubee-Lakpee Archery

More Info. -- Click Here

Sports Awards in India 

Sports Awards in India are bestowed by the Sports Ministry, Government of India to various sports personalities in different fields for their accomplishments and outstanding performances. These awards include the Arjuna Award, the Maulana Abul Kalam Azad (MAKA) Trophy, the Rajiv Gandhi Khel Ratna Award, the Dronacharya Awards and the Dhyan Chand Award. Initially, the Government used to confer these awards to the sportspersons for their performances in all types of competitions. However, from the year 2001, the Sports award is given only in those disciplines that fall under the categories like the Olympic Games or the Asian Games or Commonwealth Games or the World Cup or World Championship disciplines and also in Cricket. These awards are also given for the Indigenous competitions and for the Sports for the Physically Challenged.

Some of the most reputed and popular Sports Awards in India:

Arjuna Awards

The Government of India established the Arjuna Awards in India in the year of 1961 for the outstanding performance from the sportspersons in sports and games. The Government has modified the format of Arjuna Award very recently and as per the revised schematic guidelines a sportsperson must have very good consistent performances for the previous 3 years at the international level to be considered as eligible for the Award. The person should also have excellence in his or her respective field of sport for the year for which the Award is recommended he or she should show some extraordinary qualities like the leadership, sportsmanship and a sense of discipline in his or her own field throughout his or her career. The Government gives a statuette of the legendary warrior Arjuna, a scroll of honour, a ceremonial dress and also a cash award of an amount of Rs.3 lakhs to the Awardees.

MAKA Award

The Maulana Abul Kalam Azad (MAKA) Award is given primarily to the top overall winners in the Inter-University Tournaments, as these tournaments are a very much integral and important part of games and sports in the universities and colleges and they also play a very important role in supplying the talents to the country. This is actually a rolling trophy and a small replica of the Trophy is also awarded to the University for Retention. A Committee that is constituted by the AIU recommends the award of the MAKA Trophy. They usually send their recommendation to the Ministry of Youth Affairs and Sports of India each year. They recommend the names of 4 Universities according to the order of merit mentioning their score and also giving the calculation sheet.

Dronacharya Award

There is another award in India that is named as the Dronacharya Award and the Government of India instituted this honourable award in the year of 1985. The award is named after the very famous archery coach, mentioned in the epic of India known as the Mahabharata. This very award is not related with the sports persons who are still playing in the field; instead this is related to those eminent coaches of any particular sport. These Coaches are selected by their performance of being successful to train the sportspersons or teams and also help them to achieve the outstanding results in the international competitions. The person, who gets the award, receives a statuette of the great Guru Dronacharya, a scroll of honour, a ceremonial dress and also a cash prize.

Dhyan Chand Award

The award that is given to the veteran sportspersons of India for their lifetime achievement in their respective field of sport is named as the Dhyan Chand Award for Life Time Achievement in Sports and Games. This is new award that is instituted by the Government of India in the year of 2002. The main objective of the award is to show honour to those sportspersons who have contributed a lot to their respective sports by their performance and still continue to contribute to the promotion of sports even after their retirement from the active sporting career.

Rajiv Gandhi Khel Ratna Award

The Rajiv Gandhi Khel Ratna is the highest honour bestowed to a sportsperson for his/her achievements in India. The award was instituted in the year 1991-92 to provide honour a supreme national accolade to various achievers in the field of sports. The words Khel Ratna, literally mean Sports Gem in English. The award is named after the former Prime Minister of India, late Rajiv Gandhi. The award comprises a medal, a scroll of honour and a substantial cash component.

Other Sports Awards in India

Apart from the awards that have been discussed so far, there are some other special awards from the Indian Government that are being given to the medal winners in the international sports events. In this category of the award, the Government gives away some cash awards. These cash awards are given for winning medals in the international championships like the Olympic Games or the World cup or World Championships or the Asian and Commonwealth Games or Championships. The players who become victorious in the game of Chess and Billiards or Snooker as well as the junior sportspersons who win medals in the World, Asian and Commonwealth Championships, are also given these awards.

Sports awards in India are bequeathed by the Government of India to honour the players who have performed very well in their field of sport. It is organised and conducted to enhance the spirit of players and recognise their skills and achievements.

Sports - Number of players and Grounds ( arena for recreation or spectating)

Sports in India - Cups/Trophies

Terms associated with Sports -- Click Here

Microfinance in India

What is Microfinance ?

Microfinance is the provision of savings accounts, loans, insurance, money transfers and other banking services to customers that lack access to traditional financial services, usually because of poverty.

Microfinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services.

What is Microcredit ?

Microcredit is one component of microfinance, which also includes other financial services such as savings accounts, insurance and money transfers.Microcredit is the extension of very small loans (micro loans) to impoverished borrowers who typically lack collateral, steady employment and a verifiable credit history. It is designed not only to support entrepreneurship and alleviate poverty, but also in many cases to empower women and uplift entire communities by extension.Microcredit is a variation on traditional credit service that involves providing small loans to people who would otherwise be unable to secure credit, typically because of poverty. Related barriers may include unemployment or underemployment and a lack of collateral and credit history.Microcredit is sometimes provided to fund a business initiative by the recipient. The entrepreneurs involved are sometimes referred to as “micro-entrepreneurs” because the scope of their projects and the sums required to fund them are very modest.

Microfinance is a much broader concept than microcredit and refers to loans, savings, insurance, money transfers, and other financial products targeted at poor and low-income people. Microcredit refers more specifically to making small loans available to poor people, especially those traditionally excluded from financial services, through programmes designed specifically to meet their particular needs and circumstances. 

Loans under micro credit are usually relatively short term, less than twelve months in most instances and often even six months or less, and generally for working capital with immediate regular weekly or  monthly repayments – they are also disbursed quickly after approval. Loans are usually quite small to begin with. As borrowers regularly repay their loans and demonstrate their creditworthiness, they become eligible for larger loans. The traditional lender’s requirements for physical collateral such as property are usually replaced by a system of collective guarantee (or solidarity) groups whose members are mutually responsible for ensuring that their individual loans are repaid. Alternatively, borrowers may be requested to find one or two personal guarantors – often these are respected local community leaders.Loan application and disbursement procedures are designed to be helpful to low income borrowers – they are simple to understand, locally provided and quickly accessible with minimal paperwork.

Microfinance is not just about giving micro credit to the poor rather it is an economic development tool whose objective is to assist poor to work their way out of poverty. It covers a wide range of services like credit, savings, insurance, remittance and also non-financial services like training, counseling etc.

Salient Features of Microfinance :

• Borrowers are from the low income group
• Loans are of small amount – micro loans
• Short duration loans
• Loans are offered without collaterals
• High frequency of repayment
• Loans are generally taken for income generation purpose

What are Microfinance institutions ?

 A number of organizations with varied size and legal forms offer microfinance service.Those institutions which have microfinance as their main operation are known as micro finance institutions.MFIs are an extremely heterogenous group comprising NBFCs, societies,trusts and cooperatives. They are provided financial support from external donors and apex institutions including the Rashtriya Mahila Kosh (RMK), SIDBI Foundation for micro-credit and NABARD and employ a variety of ways for credit delivery.These institutions lend through the concept of Joint Liability Group (JLG). A JLG is an informal group comprising of 5 to 10 individual members who come together for the purpose of availing bank loans either individually or through the group mechanism against a mutual guarantee. 

Definition given by Malegam Committee :

MFI is a company (other than a company licensed under Section 25 of the Companies Act, 1956) which provides financial services pre-dominantly to low-income borrowers with loans of small amounts, for short-terms, on unsecured basis, mainly for income-generating activities, with repayment schedules which are more frequent than those normally stipulated by commercial banks and which further conforms to the regulations specified in that behalf.

The reason for existence of separate institutions i.e. MFIs for offering microfinance are as follows:

• High transaction cost – generally micro credits fall below the break-even point of providing loans by banks
• Absence of collaterals – the poor usually are not in a state to offer collaterals to secure the credit
• Loans are generally taken for very short duration periods
• Higher frequency of repayment of installments and higher rate of default

History of Microfinance in India :

The first thing to remember is that in India the history of rural credit, poverty alleviation and microFinance are inextricably interwoven. Any effort to understand one without reference to the others, can  only lead to a fragmented understanding.The policy response of the then British Government to this problem of rural indebtedness was to initiate the process of organization of cooperative societies as alternative institutions for providing credit to the farmers as also to ensure settled conditions in the rural areas, so necessary for a colonial power to sustain itself.

In the development strategy adopted by independent India, institutional credit was perceived as a powerful instrument for enhancing production and productivity and for alleviating poverty. The formal view was that lending to the poor should be a part of the normal business of banks.

To achieve the objectives of production, productivity and poverty alleviation, the stance of policy on rural credit was to ensure that sufficient and timely credit was reached as expeditiously as possible to as large a segment of the rural population at reasonable rates of interest.

The strategy devised for this purpose comprised :

· Expansion of the institutional structure,
· Directed lending to disadvantaged borrowers and sectors and
· Interest rates supported by subsidies.

The institutional vehicles chosen for this were cooperatives, commercial banks and Regional Rural Banks (RRBs).

Between 1950 & 1969, the emphasis was on the promoting of cooperatives. The nationalization of the major commercial banks in 1969 marks a watershed inasmuch as from this time onwards the focus shifted from the cooperatives as the sole providers of rural credit to the multi agency approach. This also marks the beginning of the phenomenal expansion of the institutional structure in terms of commercial bank branch expansion in the rural and semi-urban areas. For the next decade and half, the Indian banking scene was dominated by this expansion. However, even as this expansion was taking place, doubts were being raised about the systemic capability to reach the poor. Regional Rural Banks were set up in 1976 as low cost institutions mandated to reach the poorest in the credit-deficient areas of the country. In hindsight it may not be wrong to say that RRBs are perhaps the only institutions in the Indian context which were created with a specific poverty alleviation - microfinance – mandate.

During this period, intervention of the Central Bank (Reserve Bank of India) was essential to enable the system to overcome factors which were perceived as discouraging the flow of credit to the rural  sector such as absence of collateral among the poor, high cost of servicing geographically dispersed customers, lack of trained and motivated rural bankers, etc.The policy response was multi dimensional and included special credit programmes for channeling subsidized credit to the rural sector and operationalising the concept of “priority sector”. The latter was evolved in the late sixties to focus attention on the credit needs of neglected sectors and under-privileged borrowers.inadequate attention was paid to the qualitative aspects of lending leading to loan defaults and erosion of repayment ethics by all categories of borrowers. The end result was a disturbing growth in overdues, which not only hampered the recycling of scarce resources of banks, but also affected profitability and viability of financial institutions. This not only blunted the desire of banks to lend to the poor but also the development impact of rural finance.

The financial sector reforms motivated policy planners to search for products and strategies for delivering financial services to the poor – microfinance - in a sustainable manner consistent with high  repayment rates.The search for these alternatives started with internal introspection regarding the arrangements which the poor had been traditionally making to meet their financial services needs. It was found that the poor tended to – and could be induced to - come together in a variety of informal ways for pooling their savings and dispensing small and unsecured loans at varying costs to group members on the basis of need.This is the beginning of the story of the Bank-SHG Linkage Programme.

Models of Microfinance in India

1. Self Help Group (SHG) Bank Linkage Model:

The microfinance movement started in India with the introduction of the SHG-Bank Linkage Programme in the 1980s by NGOs that was later formalized by the Government of India in the early 1990s. Pursuant to the programme, banks, which are primarily public sector regional rural banks, are encouraged to partner with SHGs to provide them with funding support, which is often subsidized.A self help group, or SHG, is a group of 10 to 20 poor women in a village who come together to contribute regular savings to a common fund to deposit with a bank as collateral for future loans. The group has collective decision making power and obtains loans from the partner bank. The SHG then loans these funds to its members at terms decided by the group. Members of the group meet on a monthly basis to conduct transactions and group leaders are responsible for maintaining their own records, often with the help of NGOs or government agency staff.

NABARD is presently operating three models of linkage of banks with SHGs and NGOs.

2. Micro Finance Institution (MFI) Model:

The MFI model has gained significant momentum in India in recent years and continues to grow as the viable alternative to SHGs. In contrast to an SHG, an MFI is a separate legal organization that  provides financial services directly to borrowers.MFIs have their own employees, record keeping and accounting systems and are often subject to regulatory oversight. MFIs require borrowers from a village to organize themselves in small groups, typically of five women, that have joint decision making responsibility for the approval of member loans. The groups meet weekly to conduct transactions.MFI staff travel to the villages to attend the weekly group meetings to disburse loans and collect repayments. Unlike SHGs, loans are issued by MFIs without collateral or prior savings.MFIs now exist in a variety of legal forms, including trusts, societies, cooperatives, non-profit NBFCs registered under Section 25 of the Companies Act, 1956, or Section 25 Companies, and NBFCs registered with the RBI. Trusts, cooperatives and Section 25 companies are regulated by the specific act under which they are registered and not by the RBI.

Problems & Need for Regulation 

With financial inclusion emerging as a major policy objective in the country,  the concept of MFI has grown over the past two decades. Microfinance has occupied centre stage as a promising conduit for extending financial services to unbanked sections of  population. At the same time, practices followed by certain lenders have subjected the sector to greater scrutiny and need for stricter regulation.Although the microfinance sector is having a healthy growth rate, there have been a number of concerns related to the sector, like grey areas in regulation, transparent pricing, low financial literacy etc. In addition to these concerns there are a few emerging concerns like cluster formation, insufficient funds, multiple lending and over-indebtedness which are arising because of the increasing competition among the MFIs. 

Over the years, major commercial banks and multinational corporations have decided to sponsor it.However, this type of financing has a darker  side too. Most of studies are qualitative which tell that more than 90 per cent of the people who receive micro credit are poor and most of them succeed in businesses started with these loans.But the suicides committed by Indian farmers after being harassed by the microfinance institutions (MFIs) for their inability to repay the debt have raised serious moral and ethical issues against the institutions.The aggressive debt-collection tactics of these MFIs have left us wondering if the government has been playing ignorant to the modus operandi of MFIs.Moreover, the interest rates charged by micro financing institutions are usurious.Today, MFIs pay little attention to the core concerns of the poor. For them the critical concern is to sustain services against emerging odds.We’ve seen a major mission drift in micro finance, from being a social agency first, to being primarily a lending agency that wants to maximise its profit.Thus, there is a great need to set out rules limiting interest rates and stipulating legal consequences for the MFIs who badger/ harass borrowers for payments.

Malegam Committee recommends regulation of MFIs for following reasons : 

1.All NBFCs are currently regulated by Reserve Bank under Chapters III-B, III-C and V of the Reserve Bank of India Act. There is, however, no separate category created for NBFCs operating in the Microfinance sector.
2. First, the borrowers in the Microfinance sector represent a particularly vulnerable section of society. They lack individual bargaining power, have inadequate financial literacy and live in an environment which is fragile and exposed to external shocks which they are ill-equipped to absorb. They can, therefore, be easily exploited.
3. Second, NBFCs operating in the Microfinance sector not only compete amongst themselves but also directly compete with the SHG-Bank Linkage Programme. The practices they adopt could have an adverse impact on the programme. In a representation made to the Sub-Committee by the Government of Andhra Pradesh,it has been argued, that the MFIs are riding “piggy-back” on the SHG infrastructure created by the programme and that JLGs are being formed by poaching members from existing SHGs. About 30% of MFI loans are purportedly in Andhra Pradesh.The Microfinance in India- A State of Sector Report 2010 also says that there are many reports of SHGs splitting and becoming JLGs to avail of loans from MFIs.The A.P. Government has also stated that as the loans given by MFIs are of shorter duration than the loans given under the programme, recoveries by SHGs are adversely affected and loans given by the SHGs are being used to repay loans given by MFIs.
4. Fourth, over 75% of the finance obtained by NBFCs operating in this sector is provided by banks and financial institutions including SIDBI. As at 31stMarch 2010,the aggregate amount outstanding in respect of loans granted by banks and SIDBI to NBFCs operating in the Microfinance sector amounted to 13,800 crores. In addition, banks were holding securitized paper issued by NBFCs for an amount of 4200 crores. Banks and Financial Institutions including SBIDBI also had made investments in the equity of such NBFCs. Though this exposure may not be significant in the context of the total assets of the banking system, it is increasing rapidly.
5. Finally, given the need to encourage the growth of the Microfinance sector and the vulnerable nature of the borrowers in the sector, there may be a need to give special facilities or dispensation to NBFCs operating in this sector, alongside an appropriate regulatory framework. This will be facilitated if a separate category of NBFCs is created for this purpose. 

Major recommendations of Malegam Committe :

The Malegam committee has said that NBFCs with microfinance operations should be classified as an NBFC-MFI, and said that bank loans to these NBFC-MFI should be included in the priority sector. An  NBFC-MFI will be a company that provides loans largely to low-income borrowers and gives small amount, short-term loans on unsecured basis. The report says that an NBFC MFIs cannot give more than Rs 25,000 as loan to single borrower and can provide loans only to families with income less than Rs 50,000.The Malegam Committee recommends a interest rate cap of 24% on individual loans and a margin cap of 10-12% depending on the size of the MFI. The report also attempts to address concerns about multiple-borrowing by placing restrictions on the number of MFIs an individual may borrow from (maximum of 2) and maximum number of groups to which an individual may belong(The report has recommended to disallow more than two microfinance companies to lend to one borrower.).It recommended setting up of a microfinance credit information bureau .The committee proposed to set up an ombudsman for the MFI sector. It also called for the Reserve Bank of India to draft a customer protection code for MFIs. 

More Info :

The Microfinance Institutions (Development and Regulation) Bill details  - Click Here