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Petroleum and Natural Gas Regulatory Board (PNGRB)

The Petroleum and Natural Gas Regulatory Board (PNGRB) was constituted under The Petroleum and Natural Gas Regulatory Board Act, 2006.
The Act provides for the establishment of Petroleum and Natural Gas Regulatory Board to protect the interests of consumers and entities engaged in specified activities relating to petroleum, petroleum products and natural gas and to promote competitive markets and for matters connected therewith or incidental thereto.
Further as enshrined in the act, the board has also been mandated to regulate the refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petroleum products and natural gas excluding production of crude oil and natural gas so as and to ensure uninterrupted and adequate supply of petroleum, petroleum products and natural gas in all parts of the country.

Vision of PNGRB

To create a vibrant energy market with rapid and orderly growth, we aim to facilitate the flow of investments into basic infrastructure. This infrastructure supports the efficient transportation and distribution of petroleum, petroleum products, and natural gas at minimum cost.

Additionally, we are committed to a high level of protection of consumer interests. This is achieved through fair trade practices and fostering competition amongst entities. Our goal is to ensure the enhanced competitiveness of the Indian economy and achieve high customer satisfaction.

Powers regarding complaints and resolutions of disputes by the Board

The Board shall have jurisdiction to:
- Adjudicate upon and decide any dispute or matter arising amongst entities or between an entity and any other person on issues relating to refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petroleum products and natural gas, unless the parties have agreed for arbitration.
- Receive any complaint from any person and conduct any inquiry and investigation connected with the activities relating to petroleum, petroleum products and natural gas on contravention of:
  - Retail service obligations;
  - Marketing service obligations;
  - Display of retail price at retail outlets;
  - Terms and conditions subject to which a pipeline has been declared as common carrier or contract carrier or access for other entities was allowed to a city or local natural gas distribution network, or authorisation has been granted to an entity for laying, building, expanding or operating a pipeline as common carrier or contract carrier or authorisation has been granted to an entity for laying, building, expanding or operating a city or local natural gas distribution network;
  - Any other provision of this Act or the rules or the regulations or orders made there under.
While deciding a complaint, the Board may pass such orders and issue such directions as it deems fit or refer the matter for investigation.

Functions of Board: The Board shall

Protect the interest of consumers by fostering fair trade and competition amongst the entities;
Register entities to:
- Market notified petroleum and petroleum products and, subject to the contractual obligations of the Central Government, natural gas;
- Establish and operate liquefied natural gas terminals;
- Establish storage facilities for petroleum, petroleum products or natural gas exceeding such capacity as may be specified by regulations;
Authorise entities to: lay, build, operate or expand a common carrier or contract carrier or expand city or local natural gas distribution networks;
Declare pipelines as common carrier or contract carrier;
Regulate, by regulations:
- Access to common carrier or contract carrier so as to ensure fair trade and competition amongst entities and for that purpose specify pipeline access code;
- Transportation rates for common carrier or contract carrier;
- Access to city or local natural gas distribution network so as to ensure fair trade and competition amongst entities as per pipeline access code;
In respect of notified petroleum, petroleum products and natural gas:
- Ensure adequate availability;
- Ensure display of information about the maximum retail prices fixed by the entity for consumers at retail outlets;
- Monitor prices and take corrective measures to prevent restrictive trade practice by the entities;
- Secure equitable distribution for petroleum and petroleum products;
- Provide, by regulations, and enforce, retail service obligations for retail outlets and marketing service obligations for entities;
- Monitor transportation rates and take corrective action to prevent restrictive trade practice by the entities;
Levy fees and other charges as determined by regulations;
Maintain a data bank of information on activities relating to petroleum, petroleum products and natural gas;
Lay down, by regulations, the technical standards and specifications including safety standards in activities relating to petroleum, petroleum products and natural gas, including the construction and operation of pipeline and infrastructure projects related to downstream petroleum and natural gas sector;
Perform such other functions as may be entrusted to it by the Central Government to carry out the provisions of this Act.

National Horticulture Board

About National Horticulture Board (NHB):

The NHB was set up by the Government of India in 1984 as an Autonomous organisation under the administrative control of the Ministry of Agriculture and Farmers Welfare.
It is registered as a society under Societies Registration Act with its headquarters at Gurugram.
Presently, NHB has 29 field offices located all over the country.

Aims & Objectives of NHB Schemes:

The main objectives of the NHB are to improve integrated development of the Horticulture industry and to help in coordinating, sustaining the production and processing of fruits and vegetables. Detailed objectives of the Board are as under:-

Development of hi-tech commercial horticulture in identified belts and make such areas vibrant with horticultural activity, which in turn will act as hubs for development of horticulture.
Development of modern post-harvest management infrastructure as an integral part of area expansion projects or as a common facility for clusters of projects.
Development of integrated, energy efficient cold chain infrastructure for fresh horticulture produce.
Popularisation of identified new technologies / tools / techniques for commercialization / adoption, after carrying out technology and need assessment.
Assistance in securing availability of quality planting material by promoting setting up of scion and rootstock banks / mother plant nurseries and carrying out accreditation / rating of horticulture nurseries and need based imports of planting material.
Promotion and market development of fresh horticultural produce.
Promotion of field trials of newly developed/imported planting materials and other farm inputs; production technology; PHM protocols, INM and IPM protocols and promotion of applied R&D programmes for commercialization of proven technology.
Promotion of Farm Mechanization in Horticulture through demonstration and its uses at farmers field level to reduce labour cost and increase the productivity of Horticulture crops.
Promotion of applied R & D for standardising PHM protocols, prescribing critical storage conditions for fresh horticulture produce, benchmarking of technical standards for cold chain infrastructure etc.
Transfer of technology to producers/farmers and service providers such as gardeners, nurserymen, farm level skilled workers, operators in cold storages, work force carrying out post harvest management including processing of fresh horticulture produce and to the master trainers.
Promotion of consumption of horticulture produce and products.
Promoting long distance transport solutions for bulk movement of horticulture produce through rail etc.
Carrying out studies and surveys to identify constraints and develop short and long term strategies for systematic development of horticulture and providing technical services including advisory and consultancy services.

Power Sector in India

Power is among the most critical components of infrastructure, crucial for the economic growth and welfare of nations. The existence and development of adequate power infrastructure is essential for sustained growth of the Indian economy.
The fundamental principle of India’s power industry has been to provide universal access to affordable power in a sustainable way.
The Government has made significant efforts over the past few years to turn the country from one with a power shortage to one with a surplus by establishing a single national grid, fortifying the distribution network, and achieving universal household electrification.
India’s power sector is one of the most diversified in the world. Sources of power generation range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power, to viable non-conventional sources such as wind, solar, agricultural and domestic waste.
Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required.

Facts Associated with Power Sector in India:

India was ranked 4th in wind power, 5th in solar power and 4th in renewable power installed capacity, as of 2020.
India is the only country among the G20 nations that is on track to achieve the targets under the Paris Agreement.
As of October 31, 2022, India’s installed renewable energy capacity (including hydro) stood at 165.94 GW, representing 40.6% of the overall installed power capacity.
- Solar energy is estimated to contribute 61.62 GW, followed by 41.84 GW from wind power, 10.70 GW from biomass, 4.92 GW from small hydropower, and 46.85 GW from hydropower.

The peak power demand in the country stood at 210.79 GW on June 9, 2022.

Why is India at an Advantage:

Growing Demand:
- India is the third-largest producer and consumer of electricity worldwide, with an installed power capacity of 408.71 GW as of October 31, 2022.
- Growing population along with increasing electrification and per-capita usage will provide further impetus. Power consumption is estimated to reach 1,894.7 TWh in 2022.

Attractive Opportunities:
- Under the Union Budget 2022-23, the government announced the issuance of sovereign green bonds, as well as conferring infrastructure status to energy storage systems, including grid-scale battery systems.
- In the same budget, Rs. 19,500 crore (US$ 2.57 billion) was allocated for a PLI scheme to boost manufacturing of high-efficiency solar modules.
Policy Support:
- 100% FDI allowed in the power sector has boosted FDI inflow in this sector.
- Schemes such as Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS) are expected to augment electrification across the country.
Higher Investments:
- As per the National Infrastructure Pipeline 2019-25, energy sector projects accounted for the highest share (24%) out of the total expected capital expenditure of Rs. 111 lakh crore (US$ 1.4 trillion).
- Total FDI inflow in the power sector reached US$ 16.39 billion between April 2000-June 2022.

Issues Associated with Power Sector

Challenges in fuel supply: include unequal contractual provisions, inadequate supply, and poor transport logistics. Coal is transported over long distances through railways, but such long haulage leads to increased delivery costs, thefts and life-cycle energy consumption
Challenges to open access: While all states in India have notified open access, only 19 have determined all the charges (cross-subsidy charges, wheeling charges, transmission charge) on open access.
Poor financial health of DISCOMS: The main causes of which include unmetered consumption, low collection efficiency, and high technical losses due to insufficient capital expenditure on up-gradation of existing infrastructure. The extent of commercial losses of DISCOMS across India increases by over 50% in the absence of subsidy.
High Transmission & Distribution Losses: averaging about 22.3% of electricity which is very high as compared to those of the developed countries (6-11%).
Under-procurement of power by states - cancelling out costlier Power Purchase Agreements (PPAs) in favour of newer and cheaper agreements.
Coordination Issues: Multiple ministries and agencies are currently involved in managing energy-related issues which presents challenges of coordination and optimal resource utilisation, thus undermining efforts to increase energy security.

Government Policies & Initiatives

The Government of India has identified the power sector as a key sector of focus to promote sustained industrial growth. Some initiatives by the Government to boost the Indian power sector are as below:

In the Union Budget 2022-23, the government allocated Rs. 19,500 crore (US$ 2.57 billion) for a PLI scheme to boost manufacturing of high-efficiency solar modules.
As of August 24, 2022, over 36.86 crore LED bulbs, 72.18 lakh LED tube lights and 23.59 lakh energy-efficient fans have been distributed across the country, saving around 48,411 million kWh per year and around Rs. 19,332 crore (US$ 2.47 billion) in cost savings.
As of November 2022, over 51.62 lakh smart metres have been deployed under the National Smart Grid Mission (NSGM), with a further 61.13 lakh to be deployed.
Electrification in the country is increasing with support from schemes like Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY), Ujwal DISCOM Assurance Yojana (UDAY), and Integrated Power Development Scheme (IPDS).
In order to meet India’s 500 GW renewable energy target and tackle the annual issue of coal demand supply mismatch, the Ministry of Power has identified 81 thermal units which will replace coal with renewable energy generation by 2026.
In February 2022, a parliamentary standing committee recommended the government to take steps to increase the loan limit for the renewable energy sector under priority sector lending. The current limit stands at Rs. 30 crore (U$ 3.93 million).
In November 2021, the government announced future plans to increase the funding under the PLI scheme for domestic solar cells and module manufacturing to Rs. 24,000 crore (US$ 3.17 billion) from the existing Rs. 4,500 crore (US$ 594.68 million) to make India an exporting nation.
In November 2021, Energy Efficiency Services Limited (EESL) stated that it will partner with private sector energy service companies to scale up its Building Energy Efficiency Programme (BEEP).
The Pradhan Mantri Sahaj Bijli Har Ghar Yojana, “Saubhagya”, was launched by the Government of India with an aim of achieving universal household electrification. As of March 2021, 2.82 crore households have been electrified under this scheme.

Road Ahead

In the current decade (2020-2029), the Indian electricity sector is likely to witness a major transformation with respect to demand growth, energy mix and market operations.
India wants to ensure that everyone has reliable access to sufficient electricity at all times, while also accelerating the clean energy transition by lowering its reliance on dirty fossil fuels and moving toward more environmentally friendly, renewable sources of energy.
Future investments will benefit from strong demand fundamentals, policy support and increasing government focus on infrastructure.
The Government of India is preparing a 'rent a roof' policy for supporting its target of generating 40 GW of power through solar rooftop projects by 2022. It also plans to set up 21 new nuclear power reactors with a total installed capacity of 15,700 MW by 2031.
The Central Electricity Authority (CEA) estimates India’s power requirement to grow to reach 817 GW by 2030. Also, by 2029-30, CEA estimates that the share of renewable energy generation would increase from 18% to 44%, while that of thermal energy is expected to reduce from 78% to 52%.
The government plans to establish a renewable energy capacity of 500 GW by 2030.

WPI and CPI

Inflation based on the Wholesale Price Index (WPI) moderated to a two-year low of 3.85% in February from 4.73% in January, with manufactured products’ inflation cooling from 3% to a little under 2%, and primary articles, food and fuel and power recording milder downturns in the pace of inflation from a month earlier. The base effect also contributed as February 2022 saw a 13.4% pace.

Measurement of Inflation in India

Criteria	Wholesale Price Index	Consumer Price Index
Level	Measures Inflation at Wholesale level	Measures Inflation at Retail Level
Who Calculates?	Office of Economic Advisor, Ministry of Commerce, and Industry	National Statistical Office, Ministry of Statistics and programme Implementation
Base year	2011-12	2012
Categories	Primary Articles Manufactured products Fuel and Power	Food and beverages Pan, Tobacco, and Intoxicants Clothing and Footwear Housing Fuel and Light Miscellaneous- Education, Healthcare, Transportation etc.
Highest Weightage	Manufactured products	Food and Beverages
Impact of increase in Food items	Less impact on WPI as compared to CPI since WPI provides higher weightage to manufactured products and lower weightage to Food items.	Larger impact on CPI as compared to WPI since it gives more weightage to food products.
Services included	No	Yes
Indirect Taxes Included?	No	Yes
Targeted by RBI?	No	Yes. The RBI is required to maintain CPI rate of inflation of 4% with a deviation of 2%.

Headline and Core Inflation

The headline inflation simply refers to the inflation in the CPI (or WPI) covering all the categories of goods and services. On the other hand, the core inflation excludes the volatile categories such as food and fuel in order to measure the increase in the prices of goods and services. Hence, a drastic fall in the food and fuel prices can bring down the headline inflation by a to a large extent. However, the core inflation may remain unaffected.

Note: Presently, the RBI is targeting the CPI headline rate of inflation (and not Core Inflation)

Base Effect: To calculate the rate of Inflation, the prices of Goods and services in the current month are compared with the prices in the corresponding month of the previous year.

The rate of inflation in the current month is calculated as

(Prices of Goods in Current Month- Prices of Goods in Corresponding month of Previous year)/ Prices of Goods in Corresponding month of Previous year * 100

As can be seen in the above formula, the denominator (base) is the prices of Goods in the corresponding month of previous year. So, the if the denominator (base) value is lower, the rate of inflation in the current year would be higher. Similarly, if the denominator (base) value is higher, the rate of inflation in the current year would be lower. This can be understood as seen below:

Reasons for the rising Inflation in India

Imported Inflation: Increase in global commodity prices such as Crude oil, Edible oil etc.
Increase in certain food items such as Egg , Edible oils, Fruits, Pulses.
Increase in services such as Health, Transport and Communication etc.
Low Base effect as the prices of some of the Goods had declined last year due to the pandemic.

What to Target: Headline or Core Inflation?

Presently, the RBI targets CPI headline rate of inflation and not the Core Inflation. In this regard, the Economic Survey 2020-21 has highlighted that sole focus on CPI headline rate of Inflation may not be appropriate on account of number of reasons. Accordingly, it has recommended that a greater focus on core inflation is warranted.

Reasons:

Firstly, Headline inflation may take place due to volatility in prices of Crude oil and Food commodities, over which RBI has no control. For example, failure of monsoons, lack of cold chain infrastructure, supply side bottlenecks etc. usually lead to increase in Food prices.

Secondly, most of the time inflation in Food commodities is transitory and may not require any policy action by the RBI

Thirdly, if the RBI tries to control inflation due to volatility in prices of food commodities, it can prove to be counter productive. For example, to control inflation, rate of interest would increase--> Decline in Investment and Consumption Expenditure--> Economic Slowdown.

Fourthly, to measure inflation correctly, weightage must be assigned to different categories of commodities depending upon their share in the household expenditure. Higher the share, higher should be weightage. The share of food commodities in the household expenditure has declined since 2011-12, yet the CPI gives a weightage of almost 45% to the food commodities.

Need to expand India’s refining capacity

India is aiming to add 200 million tonnes (MT) of refining capacity, or around 4 million barrels a day, in the next 10 years to meet the growing demand for fuel. This is important for India’s energy security as India’s oil demand will double to 11.1 million barrels a day (550 MT) by 2045, according to OPEC’s World Oil Outlook. However, the achievement of target is facing challenges

Oil refining in India

Oil refining in India is a significant industry that plays a crucial role in meeting the country's energy needs. India is one of the largest consumers of petroleum products in the world and imports more than 80% of its crude oil requirements. As a result, oil refining has become an important activity in the country.

India has several oil refineries, both public and private, located in different parts of the country. These refineries process crude oil and produce a variety of petroleum products such as petrol, diesel, aviation fuel, liquefied petroleum gas (LPG), kerosene, and others. The Indian oil refining industry has been growing steadily over the years, driven by the increasing demand for petroleum products.

The largest oil refinery in India is located in Jamnagar, Gujarat, and is owned by Reliance Industries. The refinery has a capacity of 1.24 million barrels per day and is one of the largest refineries in the world. Other major refineries in India include the Indian Oil Corporation refineries in Panipat, Gujarat, and Mathura, and the Bharat Petroleum Corporation refinery in Mumbai.

The Indian government has also taken several steps to encourage investment in the oil refining sector. The government has liberalized the sector, allowing private players to enter and operate in the market. It has also set up several Special Economic Zones (SEZs) to promote oil refining and attract foreign investment.

Challenges to addition of refining capacity

State-run refiners, which account for 65% of the domestic business, are proving slow to act, with IOC’s Paradip the last greenfield project to be commissioned in 2016 after a long delay.
Indian refiners need to add 20 MT of capacity per year to meet the target, but the growth in refining capacity has stalled, expanding by only 17 MT over the past five years, compared to 21 MT in the previous five years.
Over the next few years, only around 50 MT of capacity may come up with state-owned refiners sitting on decisions for the past six years to build new projects, despite government backing.
Exports leave India with less fuel for domestic use. Earnings from oil product exports accounted for 15% of India’s gross exports by value in April-January FY23. Reliance and Nayara account for the bulk of exports with state oil companies catering to the domestic market.
The upcoming capacity of 50 MT may yield only around 30 MT of fuels because around 25% of the capacity from new refineries will be dedicated to petrochemicals, and another 10% used to run the refinery, according to a former chairman of a state refiner.
State refiners slowed capacity addition fearing an exodus to EVs, yet EV sales next fiscal will trail state targets by half, according to a Business Standard report.
While the current impetus on decarbonisation is expected to cast a shadow over long-term consumption growth, a significant decline in consumption of petroleum products remains unlikely.

In order to solve the challenges, following measure can be suggested.

Measures Suggested

Encourage private investment: The government could create a more conducive environment for private companies to invest in the oil refining sector. This could include offering tax incentives, reducing regulatory hurdles, and simplifying the approval process for new projects.
Streamline decision-making: The government could work to streamline the decision-making process for state-owned refiners. This could help reduce delays and ensure that new projects are approved and completed more quickly.
Improve efficiency: The government could work with refiners to identify opportunities to improve efficiency and increase output from existing refineries. This could help address the current shortfall in refining capacity and reduce the need for new projects.
Increase exports: The government could encourage refiners to increase exports of refined petroleum products. This could help generate additional revenue to fund new projects and reduce the impact of lower domestic demand.
Develop alternative fuels: The government could invest in research and development of alternative fuels, such as biofuels or hydrogen. This could help reduce India's dependence on fossil fuels and provide new opportunities for refiners to diversify their businesses.
Address the issue of petrochemicals: The government could work with refiners to address the issue of petrochemicals. This could include developing policies to incentivize investment in petrochemical production and reducing the amount of refining capacity dedicated to petrochemicals to free up more capacity for fuel production.
Focus on domestic demand: The government could prioritize meeting domestic demand for refined petroleum products over exports. This could help ensure that India has sufficient capacity to meet its growing energy needs and reduce dependence on imports.

MSME Competitive LEAN Scheme

About Lean Manufacturing:

Lean Manufacturing or Lean Production, which is often known simply as LEAN, is a production practice that considers the expenditure of resources for any goal, other than the creation of value for the end customer, to be wasteful, and thus, a target for elimination.
- Lean manufacturing includes a set of principles that lean thinkers use to achieve improvements in productivity, quality, and lead-time by eliminating waste through kaizen.
- Kaizen is a Japanese word that essentially means "change for the better" or "good change." The goal is to provide the customer with a defect free product or service when it is needed and, in the quantity, it is needed.

Why the need for such a Scheme?

MSMEs form an integral part of almost every value chain and there is a symbiotic relationship between the large corporations and relatively small sized suppliers.
- As domestic & global competitiveness becomes intensive, there is a need for MSMEs to transition to a new business environment especially with the disruption in the global supply chains and convergence of multiple sourcing as a methodology in vendor development.
- Recognizing the importance of overall economic growth of a country and the need for enhancing its productivity, competitiveness and employment generation besides resource optimization, many countries have initiated institutional mechanisms for a national approach on improving the quality of manufacturing & services.

Objective:

The objective of the scheme is to enhance the Domestic and Global Competitiveness of MSMEs through the application of various Lean Techniques that inter-alia includes:
- Reduction In: Rejected rates, product and raw material movements, product cost.
- Optimization Of: Space utilisation, Resources like water, energy, natural resources etc.
- Enhancement Of: Quality in process and product, production & export capabilities, workplace safety, knowledge & skills sets, innovative work culture, social & environmental accountability, profitability, introduction & awareness to industry 4.0, digital empowerment.

Scheme Components:

Industry Awareness Programmes/Workshop: MSMEs will be made aware of the Scheme through Nation-wide awareness programmes (online and/or face-to-face, as appropriate) with the assistance of stakeholders like Industry Associations, Implementing Agencies, MSME-DFOs, District Industries Centres (DICs), Large Enterprises/OEMs.
- Training Programmes: Stakeholders like the MSME Officers, Assessors and Consultants will be trained on the MSME Competitiveness (Lean) Scheme to enable an effective implementation by Implementing Agencies like QCI, NPC.
- Handholding: MSMEs will be provided handholding towards the implementation of Lean Tools and Techniques at three different levels – Basic, Intermediate, and Advanced. Completion of each stage is verifiable end term assessment or assessment by Implementation Agency along MSME -DFOs as the case may be.
- Benefits/Incentives: Graded incentives will be announced by the Ministry of MSME for MSMEs for encouraging MSME units’ participation under the scheme. Implementation of Lean (Generation of Lean ID) Lean Pledge & Undertaking (Generation of Lean Pledge Level) Implementation of Lean (Basic, Intermediate, Advanced).
- PR campaign, Advertising & Brand Promotion: For popularising the Lean Scheme, a Nation-wide publicity will be done.
- Digital Platform: Lean Scheme process will be e-enabled through a single window digital platform which will be utilised for the implementation of the scheme.

Coverage and Eligibility:

All MSMEs registered with the UDYAM registration portal (of the MoMSME) will be eligible to participate in MSME Competitive (Lean) Scheme and avail related benefits/incentives.
- Scheme is also open to Common Facilities Centres (CFCs) under SFURTI (Scheme of Fund for Regeneration of Traditional Industries) and Micro & Small Enterprises - Cluster Development Program (MSE-CDP) Schemes.

Financial Assistance for MSME Units:

To support MSMEs, the government will contribute 90% of implementation cost for handholding and consultancy fees. There will be an additional contribution of 5% for the MSMEs which are part of SFURTI clusters, owned by women/SC/ST and located in NER.
- In addition to the above, there will be an additional contribution of 5% for MSMEs registering through Industry Associations/Overall Equipment Manufacturing (OEM) organisations after completing all levels.
- There is a unique feature to encourage Industry Associations and OEMs to motivate their supply chain vendors to participate in this scheme.

Scheme Levels: MSME Competitive (Lean) Scheme can be attained in THREE Levels after registering and taking the Lean Pledge:

Retail Inflation

What is Inflation?

Any inflation rate essentially tells us the rate at which prices have been rising in an economy. As such, an inflation rate is expressed as a percentage. If the prices of onions rose from Rs 10 a kg last year to Rs 15 a kg this year, the inflation rate will be 50%. That’s because a kg of onion is Rs 5 — that is, 50% — more than the base price (Rs 10) in this example.
For every month, inflation rates are calculated both on a year-on-year basis — how prices have changed over the past year — as well as on a month-on-month basis — how prices have changed over the past month.
The two most-often used inflation rates in the country are the year-on-year
- Wholesale Price Index (WPI) based inflation rate
- Consumer Price Index (CPI) based inflation rate
The former is called the wholesale inflation rate and the latter is called the retail inflation rate. These are two different baskets of goods and services.
The government assigns different weights to different goods and services based on what is relevant for those two types of consumers.

Difference between WPI and CPI
Criteria	Wholesale Price Index	Consumer Price Index (CPI)
Level	Measures Inflation at Wholesale level	Measures Inflation at Retail level
Who Calculates?	Office of Economic Advisor, Ministry of Commerce and Industry	National Statistical Office, MoSPI
Base year	2011-12	2012
Released on	14^th of Every Month	12^th of Every Month
Number of Items covered	697	299
Categories and their respective weightages	Primary Articles: (22.6%)Manufactured products (64.2%)Fuel and Power (13.2%)	Food and beverages (45.86%)Pan, Tobacco and Intoxicants (2.38%) Clothing and Footwear (6.53%)Housing (10%)Fuel and Light (6.84%): Electricity, LPG, Kerosene etc. (Does not include Petrol and Diesel)Miscellaneous- Education, Healthcare, Transportation and Communication etc. (28.32%)
Weightage given to Food Articles	WPI-Food Index (24%): Food articles from "Primary Articles" and "Manufactured Food Product".	Consumer Food Price Index (CFPI): (39%): Out of 12 sub-groups contained in 'Food and Beverages' group, CFPI is based on ten sub-groups, excluding 'Non-alcoholic beverages' and 'Prepared meals, snacks, sweets etc. (For Details, refer to Rau’s Economic Survey Video)
Impact of increase in Food items	Less impact on WPI as compared to CPI	Larger impact on CPI
Weightage of Fuel and Power	Included in separate category of Fuel and Power (13.2%)	Weightage (~8%): Included in (a) category of Fuel and light and (b) Category of Transportation and Communication (Fuel for Transportation)
Highest Weightage	Manufactured products (64.2%)	Food and Beverages (45.9%)
Services included	No	Yes
Indirect Taxes Included?	No	Yes
Targeted by RBI?	No	Yes. The RBI is required to maintain CPI rate of inflation of 4% with a deviation of 2%.

Recent Developments:

The RBI’s target inflation rate is 4% with a leeway of two percentage points either side. But as the chart shows, since November 2019, inflation rate has rarely touched 4% — it has never fallen below 4% — and has often stayed outside the 6% mark.

Ordinarily a single month’s inflation data would not be any more (or any less) important that any other month but, given the fact that India’s monetary policy is balanced on a knife-edge at present, February’s data has gained significance.
Retail inflation inched lower to 6.44% in February from 6.52% in January, even as it remained above the upper band of the 6% medium-term target of the Reserve Bank of India (RBI) for the second consecutive month.
While food inflation eased marginally to 5.95% in February from the revised level of 6% in January (earlier 5.94%), inflation for cereals, milk and fruits picked up.
Among the sub-groups, while vegetables continued to remain in deflationary mode for the fourth consecutive month at (-)11.61% in February, cereals inflation increased to 16.73% in February, the sixth consecutive month of double-digit inflation. Inflation rate for milk and products increased to 9.65% in February from 8.79% a month ago, while that for fruits rose to 6.38% from 2.93% a month ago.

Measures taken by RBI to control Retail Inflation:

Since May 2022, however, the RBI has been rapidly raising interest rates in a bid to contain high inflation. As a result, the repo rate — or the interest rate that the RBI charges banks when it lends money to them — has gone up by 250 basis points since May. It was 4% in May and stands at 6.5% today. Since repo is the rate at which banks get money, a hike in repo implies higher interest rates for all concerned in the Indian economy.
While on paper the RBI’s central responsibility is to maintain price stability, it often also concerns itself with boosting economic growth. It can be argued that over the past four years, the RBI has been more concerned about growth than inflation.
These two concerns pull the RBI in opposite directions. Boosting economic growth requires maintaining low interest rates while containing inflation demands high interest rates.
However, after retail inflation hit an eight-year high in April 2022, however, the RBI has prioritised containing inflation. But doing this is starting to hurt growth.

Way Forward:

Though the government’s measures to cool off wheat inflation through open market sales in February and reduction in reserve price is likely to show an impact on inflation with a lag, sticky core inflation and onset of summer may push perishable products prices higher. Also, higher prices of milk and prepared meals are a cause of concern.
As the core inflation (non-food, non-fuel component) has continued to remain above 6% for the fourth consecutive month, it has prompted expectations of another rate hike of 25 basis points by the RBI in its upcoming policy review in April.
However, excessive front-loading of rate hikes carries the risk of over-shooting because raising real policy rates to reduce demand has a stronger effect on growth than it does on inflation.
Also, Inflation print above 6% level for the second straight month indicates a lag in the impact of monetary policy, under which the RBI has increased the repo rate by a cumulative 250 basis points to 6.50% since May last year. That is to say that it takes a few months, sometimes quarters, before a hike in repo rate results in higher interest rates across the board in the economy and in denting consumption and investment demand.

As the headline inflation print is expected to ease March onwards due to a significant base effect, the MPC should wait for a while to let past repo rate hikes take effect.

Index for Industrial Production (IIP)

What is Index for Industrial Production

Measures the quantum of changes in the industrial production in an economy.

The current base year for the IIP series in India is 2011-12.

It is compiled and published every month by the National Statistical Office (NSO) under the Ministry of Statistics and Program Implementation (MoSPI).

The Quick Estimates of Index of Industrial Production (IIP) are released on 12th of every month (or previous working day if 12th is a holiday) with a six weeks lag and compiled with data received from source agencies, which in turn receive the data from the producing factories/ establishments.

Categorization Of IIP:

Sectoral Classification: Mining, Manufacturing and Electricity. Highest weightage has been assigned to Manufacturing. The sectoral composition of the IIP is as follows:

Use-Based Classification:

Primary goods: Goods directly obtained from natural sources and used for further processing and consumption E.g.: Ores and Minerals and Electricity.Capital goods: Plants, machinery and goods used for further investments. E.g.: Boilers, Air & Gas Compressors, Engines including Internal Combustion and Diesel Engine.Infrastructure/ construction goods: Finished goods which are primarily used in the infrastructure industry or construction industry as an input. E.g.: paints, cement, cables, bricksIntermediate goods: Any good/product produced as an incomplete product, or which goes as input in production for further finishing or forming a part of a product. E.g.: Cotton yarn, Plywood etc.Consumer durables: Products directly used by consumers and having a longer durability (more than 2/3 years). E.g.: Pressure Cooker, Air Conditioners, Tyres etc.

Consumer non-durables: Products that are directly used by consumers and can’t be preserved for long periods. E.g.: Soybean Oil, Full cream/ Toned/ Skimmed milk etc.

Index Of Eight Core Industries:
- In India there are eight core sectors comprising coal, crude oil, natural gas, petroleum refinery products, fertilisers, steel, cement and electricity.
- The eight core industries constitute 40.27% of the total IIP.
- This index is prepared by the Office of the Economic Advisor, Ministry of Commerce and Industry and is published monthly with the base year as 2011-12.
- Weightage of different sectors in the Index:

Sector	Weight (in %)
Coal	10.33
Crude Oil	8.98
Natural Gas	6.88
Refinery Products	28.04
Fertilisers	2.63
Steel	17.92
Cement	5.37
Electricity	19.85

Note: It is noted that IIP is published by CSO, MoSPI while Index of Eight core Industries is published by Office of Economic Advisor, Ministry of Commerce and Industry.

Revision of base year

The IIP is an index which shows the growth rates in different industry groups of the economy in a stipulated period of time. The IIP index is computed and published by the Central Statistical Organisation (CSO) on a monthly basis.
The Central Statistics Office (CSO) revises the base year of the macroeconomic indicators, as a regular exercise, to capture structural changes in the economy and improve the quality and representativeness of the indices. The base year of the all-India Index of Industrial Production (IIP) was revised from 2004-05 to 2011-12 to not only reflect the changes in the industrial sector but to also align it with the base year of other macroeconomic indicators like the Gross Domestic Product (GDP), Wholesale Price Index (WPI).
Revisions in the IIP are necessitated to maintain representativeness of the items and producing entities and also address issues relating to continuous flow of production data.
With the release of the new series of IIP (base 2011-12), an institutional mechanism has been established for facilitating dynamic revision of the item list of products and the panel of factories, through a Technical Review Committee, chaired by Secretary, MoSPI. This Committee will meet at least once a year for identifying new items that need to be included in the item basket and removing those that have lost their relevance in the industrial sector or are no longer being produced.
IIP in the revised series will continue to represent the Mining, Manufacturing and Electricity sectors. The revised series uses the National Industrial Classification (NIC) 2008 for the purpose of classification of industrial production. The unit coverage of IIP will, as before, cover entities in the organised sector units registered under the Factories Act, 1948.
At the broad level, the new series has a total of 809 items occurring in the manufacturing sector in the item basket (405 item groups), where 149 new items like Steroids and hormonal preparations, Cement clinkers, Medical/ surgical accessories, Prefabricated concrete blocks, refined Palm Oil have been added and 124 items such as Biaxially Oriented Polypropylene (BOPP) Films, Calculators, Colour TV picture tubes, Gutka have been deleted from the 2004-05 series which had 620 items (397 item groups) in the manufacturing sector.
To reflect the increasing significance of electricity generation from renewable sources, it has been decided to include data on electricity generation figures from these sources in the new series.
The number of source agencies reporting data for compilation of IIP in the new series will be 14 as compared to 15 in the outgoing series.

IREDA gets 'Infrastructure Finance Status' by RBI

Reserve Bank of India has granted 'Infrastructure Finance Company (IFC)' status to Indian Renewable Development Agency (IREDA). Earlier, IREDA was classified as 'Investment & Credit Company (ICC)'.

About Infrastructure Finance Company Status (IFC)

Infrastructure loan means a credit facility extended by NBFCs to a borrower for exposure in the following infrastructure sub-sectors, listed by the Harmonised Master List of Infrastructure sub-sectors.
IFC is a non-deposit accepting loan company with following features:
- Minimum 75%o of total assets of an IFC-NBFC should be deployed in infrastructure loans.
- Company should have minimum net worth of Rs 300 crore.
- Minimum credit rating of IFC should be 'A' or equivalent.
IFCs may exceed concentration of credit norms.

About Harmonised Master List of Infrastructure Sub-Sectors

Department of Economic Affairs under Ministry of Finance notifies the Harmonised Master List of Infrastructure Sub-Sectors.

Category	Infrastructure Sub-Sectors
Transport & Logistics	Roads & bridges Ports & their dredging Shipyards Inland Waterways Airport Railways (Track, Rolling Stock and Terminal Infrastructure) Urban Public Transport (except rolling stock in case of urban road transport) Logistics Infrastructure including Multimodal Logistics Park comprising Inland Container Depot Bulk Material Transportation Pipelines (Oil, Gas, Slurry, Water Supply & Iron Ore pipelines)
Energy	Electricity Generation, Transmission, Distribution Oil/Gas/LNG storage facility & strategic crude storage Energy Storage Systems
Water & Sanitation	Solid Waste Management Water treatment plants Sewage collection, treatment & disposal system Irrigation (dams, channels, embankments etc.) Storm Water Drainage System
Communication	Telecommunication (Fixed Network) Telecommunication towers Telecommunication & Telecom Services Date Centres
Social & Commercial Infrastructure	Education institutions (Capital Stock) Sports Infrastructure Hospitals (Capital Stock), Medical Colleges, Para-Medical Training institutes & Diagnostics Centres. Tourism Infrastructure (i) Thee-star or higher category outside cities with population of more than 1 million (ii) Ropeways & Cable Cars Common infrastructure for Industrial Parks and other parks with industrial activity such as food parks, textile parks, SEZs, tourism facilities and agriculture markets. Post-harvest storage infrastructure for agriculture and horticulture produces including cold storage. Terminal markets Soil-testing laboratories Cold Chain Affordable Housing Affordable Rental Housing Complex Exhibition-cum-Convention Centre

Benefits of Infrastructure Finance Company Status (IFC)

Help IREDA to access wider investor base for fund mobilisation, resulting in competitive rates for fund raising.
Allow IREDA to take higher exposure in Renewable Energy financing.
Increase investor's confidence in IREDA.
Enhance brand value of IREDA.
Generate positive outlook in market towards IREDA.

About Indian Renewable Energy Development Agency (IREDA)

IREDA is a Mini Ratna (Category-1) enterprise under administrative control of Ministry of New & Renewable Energy (MNRE).
It is a public limited government company established as a Non-Banking Financial Institution in 1987.
Functions: Promoting, developing and extending financial assistance for setting up projects related to new & renewable sources of energy and energy efficiency/conservation.
Motto of IREDA: Energy for Ever.

Sectors to which IREDA lends:

Solar Energy
Wind Energy
Hydro Power
Biomass Power & Cogeneration & Biomass (Briquetting, Gasification & Bio-methanation from industrial, Effluents)
Energy Efficiency & Cogeneration
Wate to Energy
National Clean Energy Fund (NCEF)
Miscellaneous (Loan to government bodies, Bridge Loan, GECL)
Others like Energy Access, Ethanol, Transmission, Hybrid and Electric Vehicle

Wheat output and food inflation

Wheat production will not drive food inflation in India. The reason is the world has overcome, if not shrugged off, the effects of the Ukraine war. The supply situation has changed from deficit to, perhaps, surplus in most agri-commodities.

Reasons to support the contention that ‘wheat production will not drive food inflation in India:

Grain filling in wheat crop occurs at temperatures up to 35 degrees Celsius. The maximum shouldn’t cross 37 degrees before March-end. Last year, maximum temperatures breached the 35-degrees mark in the northern plains by mid-March and 40 degrees before the month-end. Last year the mercury spiked, leading to a marginal dip in India’s wheat output. This year, record February temperatures raised concerns about the current crop, but so far, the crop looks fine, with maximum temperatures hovering at 30-33 degrees in March.
Global prices of urea and di-ammonium phosphate has fallen from recent peaks is quite steep.
The UN Food and Agriculture Organization’s (FAO) food price index hit a historic high of 159.7 points in March 2022, the month that followed Russia’s invasion of Ukraine. But since then, the FAO index has fallen every month to touch 129.8 points in February 2023.
Wheat prices at the Chicago Board of Trade futures exchange have more than halved since March 2022, and the US Department of Agriculture has projected all-time-high exports of wheat by Russia, Australia, and Kazakhstan.
Palm oil prices in Malaysia have also retreated from an unprecedented high in March 2022, and record production and exports are expected of palm oil from Indonesia, soybean from Brazil and sunflower from Russia, alongside increased rapeseed supplies from Canada and the European Union.
The decline in international food prices will help ease food inflation pressures in India caused by weather shocks and supply disruptions last year.
The world has overcome the effects of the Ukraine war, with the supply situation changing from deficit to surplus.
The falling international prices will also enable the Indian government to import wheat and other food items to meet domestic demand, if needed.

Prelims Pointer: Condition for wheat production

Wheat is a staple crop that is grown in many parts of the world. The conditions required for wheat production include:

Climate: Wheat requires a temperate climate with moderate rainfall. It grows best in areas with an average temperature of 15-20°C during the growing season and a rainfall of 500-600 mm.
Soil: Wheat can grow in a wide range of soils, but it prefers well-drained loamy soils with a pH range of 6.0-7.5. The soil should be rich in organic matter and have adequate nitrogen, phosphorus, and potassium.
Sunlight: Wheat requires plenty of sunlight for photosynthesis and growth. It grows best in areas with at least 6 hours of direct sunlight per day.
Water: Wheat requires adequate moisture throughout its growing season. Irrigation may be necessary in areas with low rainfall or prolonged dry spells.
Pests and diseases: Wheat is susceptible to various pests and diseases, including aphids, armyworms, rusts, and smuts. Appropriate measures should be taken to prevent and control these pests and diseases.

Overall, the conditions required for wheat production vary depending on the variety of wheat being grown, the location, and the agricultural practices used. However, the above-mentioned factors are the key requirements for successful wheat production.

Purple Revolution

Lavender farmers in Jammu and Kashmir are bringing ‘Purple Revolution’

About ‘Purple Revolution’:

Doda in Jammu and Kashmir is the birthplace of India’s Purple Revolution.
The Purple Revolution or Lavender Revolution, launched by the Ministry of Science & Technology, aims to promote the indigenous aromatic crop-based agro-economy through the ‘aroma mission’ of the Council of Scientific and Industrial Research (CSIR).
The mission aims to increase the income of the farmers and promote lavender cultivation on commercial scale. Lavender oil, which sells for, at least, Rs. 10,000 per litre, is the main commodity.
Other popular products include medicines, incense sticks, soaps, and air fresheners.
Lavender has been designated by the central government as a "Doda brand product" to promote the rare aromatic plant and boost the morale of farmers, entrepreneurs, and agribusinesses involved in its cultivation as part of this Aroma Mission.
Jammu and Kashmir’s climatic conditions are conducive to lavender cultivation since the aromatic plant can withstand both chilly winters and pleasant summers.

Benefits of Purple Revolution:

The market for lavender oil in India will expand at a CAGR (Compound Annual Growth Rate) of 5.5 percent, while trade is expected to touch $1 billion per year.
The cultivation of lavender is very cost-effective as it yields revenue immediately. It is a low maintenance crop, which can be used from its second year of plantation and blossoms for fifteen years.
In its entirety, lavender production gives better returns when compared to other traditional crops.
Modernised farming: value addition to lavender, Oil from lavender flowers and manufacturing of aromatic products thereby givens an opportunity for starting a startup and sparking entrepreneurship. This will help in creating additional employment.
The “purple revolution” has also helped women's empowerment in a big way- For example (Jammu and Kashmir): After harvesting season of traditional crops, they used to remain without work for five months during winters, but lavender farming has given them a new lease of life and they get round the year work in lavender fields.

About Aroma Mission:

The CSIR Aroma Mission is envisaged to bring transformative change in the aroma sector through desired interventions in the areas of agriculture, processing and product development for fuelling the growth of the aroma industry and rural employment.
Aroma Mission is drawing entrepreneurs and farmers from all across the country. CSIR assisted in the cultivation of 6000 hectares of land in 46 Aspirational districts across the country during Phase I. In addition, almost 44,000 employees were trained.
The CSIR has started Phase-II of the Aroma Mission, which will include over 45,000 skilled human resources and help over 75,000 farming families.
An additional 700 tonnes of essential oil is expected to be produced annually for perfumery, cosmetics and pharmaceutical industries, and use of these oils in value addition and herbal products would generate a business of at least 200 crores.
The activities of the Mission will improve the availability of quality material on a sustainable basis for a boom in the herbal industry based on essential oils.
The income of the farmers through such cultivation is expected to increase by Rs. 30,000 to 60,000/ha/year. About 45,000 skilled human resources capable of multiplying quality planting material, distillation, fractionation and value addition will be developed.
More than 25,000 farming families would be directly benefitted and employment of more than 10-15 lakh mandays will be generated in rural areas.
The scientific interventions made under the mission project would provide assured benefits to the growers of Vidarbha, Bundelkhand, Gujarat, Marathwada, Rajasthan, Andhra Pradesh, Odisha and other states where farmers are exposed to frequent episodes of weather extremes and account for maximum suicides.
The mission will put a mechanism in place for timely agro-advisory, ensuring optimal productivity and fair price of the produce to the farmers and reducing the import of essential oils and enabling India to become a leading exporter of at least some essential oils.

Banking regulation in India

Failure of Silicon Valley Bank in the United States has brought about attention on Banking Regulations in India.

Banking Sector in India:

The Reserve Bank of India (RBI), India’s central bank, issues various guidelines, notifications and policies from time to time to regulate the banking sector.
The RBI supervises and is responsible for managing the operation of the Indian financial system. In addition to issuing regulations and guidelines for banking operations, it also administers the provisions of the RBI Act, the BR Act and FEMA. It has wide discretionary powers and is authorised to inspect and investigate the affairs of banks and to impose penalties in the event of non-compliance.
India has both private sector banks (which include branches and subsidiaries of foreign banks) and public-sector banks (ie, banks in which the government directly or indirectly holds ownership interest). Banks in India can primarily be classified as:
- Scheduled commercial banks (commercial banks performing all banking functions).
- Cooperative banks (set up by cooperative societies for providing financing to small borrowers).
- Regional rural banks (RRBs) (for providing credit to rural and agricultural areas).
- Recently, the RBI has also introduced specialised banks such as payments banks and small finance banks that perform only some banking functions.

Key statutes and regulations that govern the banking industry in India:

Reserve Bank of India Act 1934 (RBI Act): was enacted to establish and set out functions of the RBI. It grants the RBI powers to regulate the monetary policy of India and lays down the constitution, incorporation, capital, management, business and functions of the RBI.
Banking Regulation Act 1949 (BR Act): provides a framework for supervision and regulation of all banks. It also gives the RBI the power to grant licences to banks and regulate their business operation.
Foreign Exchange Management Act 1999 (FEMA): is the primary exchange control legislation in India. FEMA and the rules made thereunder regulate cross-border activities of banks. These are administered by the RBI
Other key statutes:
- The Negotiable Instruments Act 1881;
- The Recovery of Debts Due to Banks and Financial Institutions Act 1993;
- The Bankers Books Evidence Act 1891;
- The Payment and Settlement Systems Act 2007;
- The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002; and
- The Banking Ombudsman Scheme 2006.
- Public sector banks are regulated by the BR Act and the statute pursuant to which they have been nationalised and constituted. These include:
  - Banks constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 or the Banking Companies (Acquisition and Transfer of Undertaking Act) 1980; and
  - The State Bank of India and subsidiaries and affiliates of the State Bank of India constituted and regulated by the State Bank of India Act 1955 and the State Bank of India (Subsidiary Banks) Act, 1959 respectively.
  - While the GOI has not made any moves for further nationalisation of banks, the BR Act gives the GOI the power to acquire undertakings of an Indian bank in certain situations, such as breach of banking policy by the bank.
- Government deposit insurance: The deposits placed with various banks are insured by the Deposits Insurance and Credit Guarantee Corporation (DICGC), which is a subsidiary of the RBI and is governed by the Deposits Insurance and Credit Guarantee Corporation Act 1961. The DICGC insures all deposits such as savings, fixed, current, recurring, etc, except the following:
deposits of foreign governments;
deposits of central and state governments;
inter-bank deposits;
deposits of the state land development banks with state cooperative banks;
any amount due on account of any deposit received outside India; and
any amount that is specifically exempted with prior RBI approval.

Recent Measures to Improve Regulation of Financial Institutions:

With a view to providing a greater measure of protection to depositors in banks, DICGC raised the limit of insurance cover for depositors in insured banks from the earlier level of ₹1 lakh to ₹5 lakh per depositor.
- Accordingly, the number of fully protected accounts at end-March 2022 constituted 97.9% of the total number of accounts. In terms of amount, the total insured deposits as at end- March 2022 stood at ₹81,10,431 crore and constituted 49.0% of assessable deposits (₹1,65,49,630 crore).
- This is higher than the guidance of the International Association for Deposit Insurance (IADI) which recommends coverage of the number of accounts up to 80% and 20-30% in value terms.
Banking Regulations Act - Amendment (2020) for Cooperative Banking:
Issuance of shares and securities by cooperative banks - increase capital base
Supersession of Board of Directors - to address management issues
Allowed RBI to initiate a scheme for reconstruction or amalgamation of a bank without placing it under moratorium - boost public confidence
Changes introduced to the PCA Framework:
PCA applicability and criteria:
- PCA Framework would apply to all banks operating in India including foreign banks operating through branches or subsidiaries based on breach of risk thresholds of identified indicators
- However, payments banks & SFBs have been removed from the list of lenders where PCA can be initiated
Parameters for PCA:
- Capital, Asset Quality and Leverage are 3 parameters which will be the key areas for monitoring in the revised framework and there are three risk threshold, from 1 to 3, in the increasing order of severity
- The revised framework has removed return on assets as an indicator
A bank will be placed under PCA Framework based on the Audited Annual Financial Results and the ongoing Supervisory Assessment made by RBI
RBI may impose PCA on any bank during the course of a year (including migration from one threshold to another) in case the circumstances so warrant
Exit from PCA and Withdrawal of Restrictions under PCA:
- If no breaches in risk thresholds in any of the parameters are observed as per 4 continuous quarterly financial statements, one of which should be Audited Annual Financial Statement (subject to assessment by RBI);
  - Based on Supervisory comfort of the RBI, including an assessment on sustainability of profitability of the ban
Corrective actions prescribed after a bank is placed under PCA:
- Risk Threshold 1:
  - Restriction on dividend distribution/remittance of profits
  - Promoters/Owners/Parent (in the case of foreign banks) to bring in capital
  - Risk Threshold 2:
  - In addition to mandatory actions of Threshold 1
  - Restriction on branch expansion; domestic and/or overseas
  - Risk Threshold 3:
  - In addition to mandatory actions of Threshold 1 & 2
  - Appropriate restrictions on capital expenditure, other than for technological upgradation within Board approved limits
  - Discretionary Actions:
  - Special Supervisory Actions
  - Strategy related
  - Governance related
  - Capital related
  - Credit risk related
  - Market risk related
  - HR related
  - Profitability related
  - Operations/Business related
  - Any other
Consumer Protection Measures:
- Banks in India are subject to consumer protection laws that act as an alternative and speedy remedy to approaching courts, a process that can be expensive and time-consuming.
- The Consumer Protection Act 1986 (the Consumer Protection Act) is the primary legislation governing disputes between consumers and service providers. The relationship between a bank and its customer is regarded as that of a consumer and service provider, therefore bringing them under the ambit of the Consumer Protection Act. A three-tier mechanism has been established to deal with complaints:
  - District forum: this operates at the district level and deals with consumer complaints of a value not exceeding 2 million rupees.
  - State commission: this operates at the state level and deals with consumer complaints of a value between 2 million rupees and 10 million rupees. It also hears appeals against the orders passed by the district forum and
  - National commission: this operates at the national level and deals with consumer complaints of a value exceeding 10 million rupees. It also hears appeals against the orders passed by the state commission. An appeal from the order of the national commission can be directed to the Supreme Court of India.
- Banking Ombudsman Scheme: for the purpose of adjudication of disputes between a bank and its customers.
  - The scheme provides for a grievance redressal mechanism enabling speedy resolution of customer complaints in relation to services rendered by banks.
  - The banking ombudsman is a quasi-judicial authority appointed by the RBI to deal with banking customer complaints relating to deficiency of services by a bank and facilitate resolution through mediation or passing an award.
  - A complaint under the scheme has to be filed within one year of the cause of action having arisen.

Measures taken for sound health of NBFCs:

RBI has proposed to move from a general approach of light touch regulation to one that monitors larger players almost as closely as it does banks. To enable this idea, it has proposed following changes:
- Creation of a 4-layer regulatory framework which includes a Base layer, a Middle layer, Upper layer and a Top layer. The degree of regulation in each sector is proportional to the perception of risk in that sector.
- Classification change for NPAs of base layer NBFCs from 180 to 90 days overdue.