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- CURRENT AFFAIRSFor Prelims: Financial Inclusion, Initiatives to Promote Financial Inclusion, RBI For Mains: Significance of Financial Inclusion Index Why in News? The Reserve Bank of India has released the Composite Financial Inclusion Index (FI-Index) for the year ended 31st March 2022. What are the Findings? • India’s Financial Inclusion Index has improved to 56.4 from 53.9 in the previous year 2021. • The improvement has been seen across all its sub-indices (Access, Usage and Equality). What is the Financial Inclusion Index? • About: • It is a comprehensive index incorporating details of banking, investments, insurance, postal as well as the pension sector in consultation with the government and respective sectoral regulators. • It was developed by the RBI in 2021, without any ‘base year', and is published in July every year. • Aim: • To capture the extent of Financial Inclusion across the country. • The FI-Index is responsive to ease of access, availability and usage of services and quality of services, consisting of 97 indicators. • Parameters: • It captures information on various aspects of financial inclusion in a single value ranging between 0 and 100, where 0 represents complete financial exclusion and 100 indicates full financial inclusion. • It comprises three broad parameters (weights indicated in brackets) viz., Access (35%), Usage (45%), and Quality (20%) with each of these consisting of various dimensions, which are computed based on a number of indicators. • The index is responsive to ease of access, availability and usage of services, and quality of services for all 97 indicators. What is the Significance of FI Index? • Measures Level of Inclusion: • It provides information on the level of financial inclusion and measures financial services for use in internal policy making. • Development Indicators: • It can be used directly as a composite measure in development indicators. • Fulfil the G20 Indicators: • It enables fulfilment of G20 Financial Inclusion Indicators requirements. • The G20 indicators assess the state of financial inclusion and digital financial services, nationally and globally. • Facilitate Researchers: • It also facilitates researchers to study the impact of financial inclusion and other macroeconomic variables. What is Financial Inclusion? • Financial inclusion is defined as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low-income groups at an affordable cost. • In a diverse country like India, financial inclusion is a critical part of the development process. Since independence, the combined efforts of successive governments, regulatory institutions, and civil society have helped in increasing the financial-inclusion net in the country. • Being able to have access to a transaction account is a first step toward broader financial inclusion since a transaction account allows people to store money, and send and receive payments. A transaction account serves as a gateway to other financial services. What are the Initiatives to Increase Financial Inclusion in India? • Pradhan Mantri Jan Dhan Yojana • Digital Identity (Aadhaar) • National Centre for Financial Education (NCFE) • Centre for Financial Literacy (CFL) Project • Expansion of financial services in Rural and Semi-Urban Areas • Promotion of Digital PaymentsLike
- Upsc ExamsWhy in News? • Meeting of the Leaders’ of the G-20 Nations, in Buenos Aires, Argentina. What is G20? • The G20 is an informal group of 19 countries and the European Union, with representatives of the International Monetary Fund and the World Bank. • The G20 membership comprises a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global gross domestic product, 80% of global investment and over 75% of global trade. Origin • 1997-1999 ASIAN Financial Crisis: This was a ministerial-level forum which emerged after G7 invited both developed and developing economies. The finance ministers and central bank governors began meeting in 1999. • Amid 2008 Financial Crisis the world saw the need for a new consensus building at the highest political level. It was decided that the G20 leaders would begin meeting once annually. • To help prepare these summits, the G20 finance ministers and central bank governors continue to meet on their own twice a year. They meet at the same time as the International Monetary Fund and The World Bank. How G20 Works? • The work of G20 is divided into two tracks: • The finance track comprises all meetings with G20 finance ministers and central bank governors and their deputies. Meeting several times throughout the year they focus on monetary and fiscal issues, financial regulations, etc. • The Sherpa track focuses on broader issues such as political engagement, anti-corruption, development, energy, etc. • Each G20 country is represented by its Sherpa; who plans, guides, implements, etc. on behalf of the leader of their respective country. (Indian Sherpa, at the G20 in Argentina, 2018 was Shri Shaktikanta Das) G20 Members • The members of the G20 are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union. • Spain as a permanent, non-member invitee, also attends leader summits. Structure and Functioning of G20 • The G20 Presidency rotates annually according to a system that ensures a regional balance over time. • For the selection of presidency, the 19 countries are divided into 5 groups, each having no more than 4 countries. The presidency rotates between each group. Every year the G20 selects a country from another group to be president. India is in Group 2 which also has Russia, South Africa, and Turkey. • The G20 does not have a permanent secretariat or Headquarters. Instead, the G20 president is responsible for bringing together the G20 agenda in consultation with other members and in response to developments in the global economy. • TROIKA: Every year when a new country takes on the presidency (in this case Argentina 2018), it works hand in hand with the previous presidency (Germany, 2017) and the next presidency (Japan, 2019) and this is collectively known as TROIKA. This ensures continuity and consistency of the group’s agenda. Cooperation • In Toronto in 2010, leaders declared it to be the premier forum for global economic co-operation. • The work of G20 members is supported by several international organisations that provide policy advice. These organisations include: • The Financial Stability Board (FSB). The FSB, which was established by G20 leaders following the onset of the global financial crisis, • The International Labour Organization (ILO). • The International Monetary Fund (IMF). • The Organisation for Economic Co-operation and Development (OECD) • United Nations (UN) • World Bank • The World Trade Organization (WTO) • The G20 also regularly engages with non-government sectors. Engagement groups from business (B20), civil society (C20), labour (L20), think tanks (T20) and youth (Y20) are holding major events during the year, the outcomes of which will contribute to the deliberations of G20 leaders. Issues Addressed by G20 • The G20 focuses on a broad agenda of issues of global importance, although, issues pertaining to the global economy dominate the agenda, additional items have become more important in recent years, like: • Financial markets • Tax and fiscal policy • Trade • Agriculture • Employment • Energy • Fight against corruption • Advancement of women in job market • 2030 agenda for Sustainable development • Climate Change • Global Health • Anti-terrorism • Inclusive entrepreneurship India's Priorities in G20 Summits • Checking tax evasion to fight corruption • Choking terror funds • Cutting the cost of remittances • Market access for key drugs • Reforms in the World Trade Organisation to improve its functioning • “Full implementation” of the Paris Agreement Achievements • Flexible: With only 20 members, the G20 is agile enough to make prompt decisions and to adapt to new challenges. • Inclusive: The inclusion every year of invited countries, international organizations and civil society organization through engagement groups allow for a broader and more comprehensive perspective when assessing global challenges and building consensus to address them. • Coordinated action: The G-20 has also played a crucial role in strengthening the international financial regulatory system, including better coordination across countries. • Facilitated an increase in lending from multilateral development banks of US$235 billion at a time when private sector sources of finance were diminished. • Major achievements of the G20 include quick deployment of emergency funding during the 2008 global financial crisis. • It also works for reforms in international financial institutions by improving oversight of national financial institutions. Such as G20 driven reforms to the international tax system, through the G20/OECD Base Erosion and Profit Shifting (BEPS) project and implementation of tax transparency standards. • G20 played a critical role in the ratification of the Trade Facilitation Agreement, with the WTO estimating it could contribute up to somewhere between 5.4 and 8.7% to global GDP by 2030 if the agreement were fully implemented. • Better Communication: G20 bring World’s top developed and developing countries together to bring consensus and reasoning into decision making through discussion. Challenges • No Enforcement mechanism: The G20’s toolkit ranges from simple exchanges of information and best practices to agreeing common, measurable targets, to coordinated action. None of this is achieved without consensus, nor is it enforceable, except for the incentive of peer review and public accountability. • Not legally binding: the decisions are based on discussions and consensus which culminates in the form of declarations. These declarations are not legally binding. It’s just an advisory or consultative group of 20 members. Way Forward • The G20 cannot be a panacea for the world’s problems. But over the past 10 years, the G20 has been an important forum for international cooperation. • Effective global governance, like the G20, is essential as rising powers seek opportunities to influence and contribute to the global order.Like
- Official StatisticsThe government announced three initiatives to take banking to the last mile comprising a financial inclusion index, geographical mapping of banking services and hassle-free online loans for Micro, Small and Medium Enterprises (MSMEs). • The initiatives were announced by the Finance Minister after reviewing the annual performance of public sector banks. Financial Inclusion Index • Annual Financial Inclusion Index (FII) will measure access and usage of a basket of formal financial products and services that includes savings, remittances, credit, insurance and pension products. • It would rate states on their performance on last-mile banking services availability. • The index will have three measurement dimensions, viz. (i) access to financial services; (ii) usage of financial services; and (iii) the quality of the products and the service delivery. These are also the G20 Financial Inclusion Indicators. • FII will be released by January, 2019 by the Department of Financial Services (DFS), Ministry of Finance. • Importance of FII- • Provide information on the level of financial inclusion, • Measure financial services for use of internal policy making, • It can be used directly as a composite measure in development indicators, • It enables fulfilment of G20 Financial Inclusion Indicators requirements. • It will also facilitate researchers to study the impact of financial inclusion and other macro-economic variables. Loans for MSMEs • Launch of web portal www.psbloansin59minutes.com to enable in principle approval for MSME loans up to Rs. 1 crore within 59 minutes from SIDBI and 5 Public Sector Banks (SBI, Bank of Baroda, PNB, Vijaya and Indian Bank). • The Portal sets a new benchmark in loan processing and reduces the time from 20-25 days to 59 minutes. Subsequent to in principle approval, the loan will be disbursed in 7-8 working days. • The loans will be undertaken without human intervention till sanction and or disbursement stage. The MSME borrower is not required to submit any physical document for in-principle approval. • The portal uses sophisticated algorithms to read and analyse data points from various sources such as IT returns, GST data, bank statements, MCA21 etc. in less than an hour while capturing the applicants basic details. Jan Dhan Darshak • It is a banking services infrastructure locator app, which aims to bring banking within reach of every citizen through over 500,000 "banking touch points". • Banking touch points are bank branches, banking correspondents, ATMs, common service centres and post offices. • The GIS (Geographic Information System) mapping of banking services will enable any person to find the nearest banking touch point. • The app comes with feedback mechanism and will also complement the government's initiative of having banking services available within five kilometres of every household.Like