Category: Financial inclusion


Why is it in News?

  • The monetary policy committee of the Reserve bank of India for the second consecutive time cut the benchmark lending rate to 6%, and lowered GDP forecast to 7.2%.

What is Benchmark lending rate?

  • Also called base interest rate, it is the minimum interest rate investors will demand for investing in a non-Treasury security. Base rate is the minimum interest rate of a bank, below which it cannot lend, except for DRI allowances, loans to bank’s own employees and loans to bank’s depositors against their own deposits.

GDP forecast:

  • Forecast is based on an assessment of the economic climate in individual countries and the world economy, using a combination of model-based analyses and expert judgement. This indicator is measured in growth rates compared to previous year.
  • The central bank lowered the GDP forecast to 7.2%. It also said output gap remained negative and the domestic economy was facing headwinds, especially in the global front.

What is GDP:

  • Gross domestic product is the total value of everything produced in the country. It doesn’t matter if it’s produced by are citizens or foreigners. If they are located within the country’s boundaries, their production is included in GDP.
  • To avoid double-counting, GDP includes the final value of the product, but not the parts that go into it.

What is output gap:

  • Output gap refers to the difference between the actual output of the economy and its maximum potential.

Monetary policy committee:

  • MPC is a six-member committee constituted by the Central Government. The MPC is required to meet at least four times in a year.
  • Each member of the MPC has one vote, and in the event of an equality of votes, the Governor has a second or casting vote.
  • Once in every six months, the Reserve Bank is required to publish a document called the Monetary Policy Report to explain:
  • the sources of inflation and
  • the forecast of inflation for 6-18 months
  • The Reserve Bank of India (RBI) is vested with the responsibility of conducting monetary policy. This responsibility is explicitly mandated under the Reserve Bank of India Act, 1934.

Main goal of monetary policy Committee:

  • The primary objective of monetary policy is to maintain price stability. To maintain price stability, inflation needs to be controlled. The government of India sets an inflation target for every five years. RBI has an important role in the consultation process regarding inflation targeting. The current inflation targeting framework in India is flexible in nature.
  • When the total money supply is increased rapidly than normal, it is called an expansionary policy while a slower increase or even decrease of the same refers to a contractionary policy.


Why in News:

  • Almost every willing household in India now has a legitimate electricity connection and a target to achieve 24*7 electricity objective.


  • The household electrification scheme, Pradhan Mantri Sahaj Bijli Har Ghar Yojana, or Saubhagya, has been implemented and more than 45,000 households were electrified every day over the last 18 months.
  • The enactment of the Electricity Act, in 2003, and the introduction of the Rajiv Gandhi Grameen Vidyutikaran Yojana, in 2005, have expanded electrification infrastructure to most villages
  • The Access to Clean Cooking Energy and Electricity Survey of States (ACCESS) report by the Council on Energy, Environment and Water (CEEW), has highlighted the gap between a connection and reliable power supply.

Pradhan Mantri Sahaj Bijli Har Ghar Yojana, or Saubhagya

  • Saubhagya’ was launched in September, 2017.
  • Under Saubhagya, free electricity connections to all households both APL and poor families in rural areas and poor families in urban areas will be provided.
  • Rural Electrification Corporation (REC) has been designated as nodal agency for the Saubhagya scheme.
  • The scheme aims to achieve universal household electrification in all parts of the country.
  • All DISCOMs including Private Sector DISCOMs, State Power Departments and RE Cooperative Societies shall be eligible for financial assistance under the scheme in line with Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY).


  • The prospective beneficiary households for free electricity connections under the scheme would be identified using Socio Economic Caste Census (SECC) 2011 data.
  • However, un-electrified households not covered under SECC data would also be provided electricity connections under the scheme on payment of Rs. 500 which shall be recovered by DISCOMs in 10 instalments through electricity bill.

Scope of the scheme:

  • Providing last mile connectivity and electricity connections to all un-electrified households in rural areas. Providing Solar Photovoltaic (SPV) based standalone system for un-electrified households located in remote and inaccessible villages, where grid extension is not cost effective. Providing last mile connectivity and electricity connections to all except economically poor un-electrified households in urban areas. Non-poor urban households are excluded from this scheme.


  • If implemented successfully, Saubhagya can improve education, fuel economic activity and create more job opportunities across villages.
  • The use of kerosene for lighting purposes could also be eliminated, and impact on the environment could be reduced. Power generating and distributing companies, currently saddled with excess capacity, are expected to benefit through an increase in the demand for power. Power distribution companies who are in financial distress may be able to recover some of their costs through the new household connections and added demand.
  • Electrification has direct positive impact on the quality of all aspects of daily life, especially to the women and children.
  • With deeper penetration of electricity network, significant improvement is expected in delivery of other essential services like health, communication etc. Thereby more opportunities for economic activities leading to employment generation, increase in income and poverty alleviation.

Cabinet NOD to panel on United nations Sustainable Development goals

Why in News?

  • The Union Cabinet gave its nod for the constitution of a high-level steering committee to review and monitor the progress on sustainable developmental goals (SDGs

Work of the Panel:

  • By setting up of a high-level steering committee, which is chaired by the Chief Statistician of India and Secretary to the Ministry of Statistics and Programme Implementation (MoSPI) is to review if India was on track to achieving the United Nations Sustainable Development Goals (SDG). Currently, the NITI Aayog coordinates work of various departments in taking steps to achieve the targets set for the millennial sustainable development goals spearheaded by the United Nations.
  • The panel would also decide if there was a need to “refine” indicators by reviewing the National Indicator Framework (NIF) periodically, according to a press release announcing the Cabinet decision.
  • The SDGs are a list of 17 goals, which include the elimination of poverty, ending hunger, ensuring provision of quality education, clean water and sanitation, that countries, including India, must achieve by 2030. The steering committee would recommend measures to “mainstream” SDGs into ongoing national policies, programmes and strategic action plans to address the developmental challenges.
  • Statistical indicators of the NIF would be the backbone for monitoring of SDGs at the national and State levels and would scientifically measure the outcomes of the policies to achieve the targets under different SDGs. Based on statistical indicators, the MoSPI would produce national reports on implementation of the SDGs. Data source Ministries / Departments will be responsible for providing regular information to MoSPI on these indicators at required intervals and disaggregation for national and sub-national reporting of SDGs.
  • Advanced IT tools will be used for close and effective monitoring.


  • At the Millennium Summit held in 2000 at the UN Headquarters in New York, eight development goals known as the ‘Millennium Development Goals’ (MDGs) were adopted, which formed the blueprint for countries to pursue their national development strategies from 2000 to 2015.
  • The MDGs, which addressed various development issues, were unevenly achieved across the countries and the Centre wanted to start fresh discussions to assess the usefulness of the MDGs and to explore a possible successor to guide development cooperation in the world beyond 2015.
  • The UN General Assembly in its 70th Session, in 2015, considered and adopted the SDGs for the next 15 years. The 17 SDGs came into force with effect from January 1, 2016. Though not legally binding, the SDGs have become de facto international obligations and have the potential to reorient domestic spending priorities of the countries during the 15-year-period.

India Post-Life Insurance

The Department of Posts plans to build on its life insurance, which can be seen as part two of the government’s flagship Jan Dhan Yojana for financial inclusion.


The Department of Post has two life insurance schemes Postal Life Insurance (PLI) and Rural Postal Life Insurance (RPLI).

Postal Life Insurance (PLI):

Postal Life Insurance (PLI), the oldest insurer in the country was introduced under the Queen Empress of India in 1884.The scheme at the time was intended as welfare scheme to benefit Postal service employees. It was later extended to employees of Telegraph department.


  • This policy is offered by the Government of India, to employees of Central and State Public Sector Enterprises, Central and State Governments, Government Aided Educational Institutions, Universities, Government aided Educational Institutions, Autonomous Bodies, Local Bodies, Cooperative Societies, Joint Ventures having a minimum of 10% Government/ PSU stake, etc and later extended to professionals.
  • The minimum age limit for entry is 19 years and maximum age limit for entry is 55 years.


  • Postal Life Insurance Scheme offers Life Insurance cover with high returns on premium.
  • The maximum sum assured offered under this scheme is Rs. 50 Lakhs minimum 20,000.
  • Loan facility is available against this policy.
  • The insured can avail income tax exemption as provided under Sec. 88 of the Income Tax Act.
  • The policy can be transferred to any Circle within India, at no additional charges.
  • Name of nomination can be changed by the insured at any given time.
  • Government of India, guarantees Postal Life Insurance.

Rural Postal Life Insurance:

Rural Postal Life Insurance (RPLI) came into being as a sequel to the recommendation of the Official Committee for Reforms in the Insurance Sector (Malhotra Committee RPLI is the only insurance provider in the country to give the highest returns to customers at the lowest premium amount.


  • Customers who come within a rural area can only apply for schemes under RPLI.
  • The minimum age limit for entry is 19 years and maximum age limit for entry is 55 years.
  • Government and private employee are eligible.


  • Sum assured Rs10.000 to maximum of 10 lakhs.
  • Policyholders of rural postal insurance schemes can avail credit by pledging their schemes as collateral for security.
  • Insurance policies can be converted from one scheme to another under rural postal insurance. So if a customer is not satisfied with features and benefits of one scheme, he/she can get it converted to another as per rules set by postal insurance department.
  • Government of India, guarantees Postal Life Insurance.
  • Name of nomination can be changed by the insured at any given time.


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