The funding and demand for MGNREGA - Chanakya Mandal Pariwar

The funding and demand for MGNREGA



  • The Economic Survey 2022-23 reported that 6.49 crore households demanded work under MGNREGA and of these, 6.48 crore households were offered employment and 5.7 crore availed it.
  • The survey praised the scheme for having a positive impact on household income, agricultural productivity, and Production-related expenditure and for providing income diversification and resilience to rural livelihoods.

Basics of MGNREGA:

  • The MGNREGA was passed in 2005 to improve livelihood security in rural areas by guaranteeing 100 days of work per year for rural households.
  • The scheme covers all districts in the country except those with 100% urban populations and has 15.51 crore active workers
  • Projects such as water conservation, land development, construction, agriculture and allied works are undertaken for employment generation
  • Workers must be given a daily unemployment allowance if work is not provided within 15 days of demand and wages must be paid within 15 days, with compensation required in case of delay

Importance of MGNREGA to rural employment:

  • The MGNREGA not only serves as a safety net for rural households, but also helped migrant laborers during the COVID-19 pandemic.
  • The scheme was ramped up and given a record budget of ₹1.11 lakh crore in 2020, providing a lifeline for 11 crore workers. Studies show that MGNREGA wages compensated for 20-80% of income loss during the lockdown.
  • Demand for work under MGNREGA reached record-high levels during the pandemic, with 8.55 crore households demanding work in 2020-21 and 8.05 crore in 2021-22, compared to 6.16 crore in 2019-20.
  • Demand for work under the scheme has doubled in the past seven years, reaching 3.07 crore households in May 2022 compared to 1.64 in May 2015.

The challenges to its implementation:

  • An analysis by PRS Legislative Research shows that since 2016-17, on average, less than 10% of households completed 100 days of wage employment under the MGNREGA. The average days of employment provided per household also fell to a five-year low.
  • Issues such as delays in wage payments, material costs, and widespread corruption have hindered the implementation of the scheme. The Supreme Court of India ordered the government to ensure timely wage payments in 2016, calling delays “forced labor.”
  • The minimum wage rate is fixed by the Centre based on the Consumer Price IndexAgricultural Laborers and should be based on the Consumer Price Index-Rural, which includes more recent expenditures.
  • Other challenges include fake job cards, late uploading of muster rolls, and inconsistent payment of unemployment allowance. These issues were pointed out by the Rural Development Ministry and a Parliamentary Committee last year

Way Forward

  • Must Ensure Work is Provided: The government must ensure that work is provided notwithstanding the demand. The government should expand the scheme and focus on value addition and multiply community asset works.
  • Strengthening the Scheme: There is a need for better coordination between various government departments and the mechanism to allot and measure the work. This is one of the best welfare schemes in recent years and it has helped the rural poor. However, government officials must take the initiative to implement the scheme and must not block the work.
  • Gender Wage Gap: Some discrepancies in the payouts need to be addressed, too. Women in the sector, on an average, earn 22.24% less than their male counterparts.

UPI Goes Global


  • Recently, The Unified Payments Interface (UPI) of India and PayNow of Singapore have been integrated to allow faster remittances between the two countries.

About the UPI (Unified Payments Interface)

  • UPI is a real-time payment system that facilitates inter-bank transactions in India.
  • It was launched in 2016 by the National Payments Corporation of India (NPCI) as a part of the Digital India campaign.
  • UPI enables users to transfer money between bank accounts instantly using their mobile phones.
  • Users can link their bank accounts to a unique virtual payment address (VPA), created by the customer
  • It eliminates the need for entering account details such as bank account number and IFSC code

Significance of the linkage

  • Singapore is the first country with which cross-border Person to Person (P2P) payment facilities have been launched.
  • According to the ministry of external affairs (MEA) report Population of Overseas Indians (2022), there are presently 6.5 lakh Indians living in Singapore, including non-resident Indians and people of Indian origin.
  • According to the RBI (Reserve Bank of India) Remittance Survey, 2021, Singapore’s portion of the total inward remittances to India in 2020–21 was 5.7%.
  • The initiative is envisioned to have a significant positive impact on the Indian diaspora, particularly migrant workers and students in Singapore.
  • It will enable quicker and more affordable money transfers between the two nations without requiring them to adopt the other payment system.


  1. With reference to digital payments, consider the following statements: (2018)
  • BHIM app allows the user to transfer money to anyone with a UPI-enabled bank account.
  • While a chip-pin debit card has four factors of authentication, BHIM app has only two factors of authentication.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Monetary Policy Committee


  • The Reserve Bank of India’s Monetary Policy Committee increased the benchmark lending rate by 25 basis points to 6.5% due to concerns over high core inflation posing a risk to the country’s improving economic outlook.

Highlights of RBI’s 1st bi-monthly monetary policy of FY23

  • The withdrawal of accommodative stance was retained.
  • Reasons – Oil prices & Supply chain disruptions due to Russia-Ukraine War + This forecast is on the assumption of normal monsoon.
  • RBI has also hiked its Consumer Price Index (CPI) based inflation forecast for FY24 to 5.3%. + Inflation is projected at 6.5% in FY23, with Q4FY23 at 5.7%.
  • The MPC raised the repo rate by 25 basis points to 6.50% from 6.25%. So other rates are adjusted as follows:
  • CRR – 4.5% and SLR -18%
  • Policy Repo rate – 6.5 %
  • Standing Deposit Facility – 6.25%
  • Reverse Repo rate – 3.35%
  • MSF Rate – 6.75% + Bank Rate – 6.75%
  • As on January 27, 2023, India’s foreign exchange reserves are at US$ 576.8 billion.
  • The overall liquidity remains in surplus, with average daily absorption under the Liquidity Adjustment Facility (LAF) increasing to Rs 1.6 lakh crore during December 2022-January 2023 from an average of Rs 1.4 lakh crore in October-November, 2022.
  • Purchasing Managers’ Indices (PMIs) for manufacturing and services remained in expansion at 55.4 and 57.2 respectively in January 2023.
  • Global growth is expected to decelerate during 2023.

About MPC

  • Section 45ZB of the amended RBI Act, 1934 allows for the creation of a six-member Monetary Policy Committee (MPC) through a notification in the Official Gazette by the Central Government.
  • The committee consists of three officials from the Reserve Bank of India and three external members nominated by the government of India.
  • The central government nominees cannot be re-appointed and hold office for a period of four years from the date of appointment.
  • The governor of the Reserve Bank of India serves as the ex officio chairperson of the committee.
  • Each member of the committee is required to write a statement outlining their reasoning for voting for or against a proposed resolution.
  • The current mandate of the MPC is to maintain 4% annual inflation until March 31, 2026, with an upper tolerance of 6% and a lower tolerance of 2%.


  1. Q) If the RBI decides to adopt an expansionist monetary policy, which of the following would it not do?

(1) Cut and optimize the Statutory Liquidity Ratio

(2) Increase the Marginal Standing Facility Rate

(3) Cut the Bank Rate and Repo Rate

Select the correct answer using the code given below:

(a)1 and 2 only (b) 2 only

(c) 1 and 3 only (d) 1, 2 and 3

Angel Tax


  • Recently, a senior government official said that the ‘angel tax’ provision in the Finance Bill will not impact start-ups in India.

Angel Tax

  • Angel Tax is a term used to refer to a tax levied on funds raised by start-ups through the issue of shares to angel investors.
  • In India, angel tax was introduced in 2012 as a measure to prevent money laundering, but it has been a controversial issue for start-ups and investors.

About the Finance Bill, 2023

  • Finance Bill, 2023, has proposed to amend Section 56(2) VII B of the Income Tax Act.
  • Section 56(2) VII B of the Income Tax Act, colloquially known as the ‘angel tax’ was first introduced in 2012 to deter the generation and use of unaccounted money through the subscription of shares of a closely held company at a value that is higher than the fair market value of the firm’s shares.
  • The provision states that when an unlisted company, such as a start-up, receives equity investment from a resident for issue of shares that exceeds the face value of such shares, it will be counted as income for the start-up and be subject to income tax.
  • For example, If the fair market value of a start-up share is Rs 10 apiece, and in a subsequent funding round they offer it to an investor for Rs 20, then the difference of Rs 10 would be taxed as income.

#UPSC PYQ 2014

  1. What does venture capital mean ?
  2. a) Short-term capital provided to industries
  3. b) A long-term start-up capital provided to new entrepreneurs
  4. c) Funds provided to industries at times of incurring losses
  5. d) Funds provided for the replacement and renovation of industries

Domestic share in defense acquisitions raised to 75%


  • Defense minister announced at Aero India 2023, Asia’s biggest military airshow, that India has earmarked 75% of this year’s defense capital procurement budget for buying weapons and systems from local manufacturers — a move aimed at unlocking new opportunities for achieving self-reliance targets and ramping up the country’s defense exports.


  • The share of the domestic sector in the defense budget was never higher. India set aside 68% of the military’s capital acquisition budget for making indigenous purchases in 2022-23, 64% in 2021-22, and 58% in 2020-21.
  • Categories where imports have been almost replaced by domestic products include warships, artillery guns, light combat aircraft, basic trainers, a variety of helicopters, radars, and different types of ammunition.
  • Singh said he was confident that the Indian industry will step forward with enthusiasm and contribute to making the defense sector more robust. India has set a target of achieving defense exports worth $5 billion by 2025.

1.1White Label ATM


  • Recently, The Reserve Bank of India has granted an extension to Vakrangee for the validity of its authorization to establish, possess, and manage White Label ATMs in India.


  • ATMs that are established, owned and operated by non-banks are known as White Label ATMs.
  • Non-bank ATM operators are granted authorization by the Reserve Bank of India (RBI) under the Payment & Settlement Systems Act, 2007.
  • As per the latest audited balance sheet of the financial year, non-bank entities operating White Label ATMs should maintain a minimum net worth of Rs 100 crore at all times.
  • The activity of White Label ATM (WLA) Operations allows for up to 100% Foreign Direct Investment (FDI) under the automatic route.

Other Labels of ATM –

  • Green Label ATMs: Used for agricultural purposes
  • Yellow Label ATMs: Used for e-commerce transactions
  • Orange Label ATMs: Used for share transactions
  • Pink Label ATMs: Specifically for females to help avoid the long queues and waiting time
  • Brown Label Banks: Operated by a third party other than a bank


Which one of the following links all the ATMs in India?

(a) Indian Banks’ Association

(b) National Securities Depository Limited

(c) National Payments Corporation of India

(d) Reserve Bank of India

Primary Agricultural Credit Societies


  • Recently, Govt approves Rs 2,516 cr for computerisation of 63,000 Primary Agriculture Credit Societies


  • PACS are village-level cooperative credit societies that offer short-term loans, mainly for crop-related purposes, and collect repayments from rural (agricultural) borrowers.
  • They are the basic and smallest cooperative credit institutions in India, operating at the grassroots level, i.e., gram panchayat and village level.
  • The State Cooperative Banks (SCB) head PACS at the state level, and the credit from SCBs is transferred to the District Central Cooperative Banks (DCCBs), which operate at the district level.
  • DCCBs work with PACS, which deal directly with farmers.
  • The functions of PACS include promoting savings habits among members, providing agricultural inputs, helping members with marketing facilities, and offering short and medium-term loans.
  • PACS can borrow adequate funds from central financial agencies to carry out their functions effectively.

Organizational Structure

  • General Body of PACS: Exercise the control over board as well as management.
  • Management Committee: Elected by the general body to perform the work as prescribed by the society’s rules, acts, and by-laws.
  • Chairman, Vice-Chairman, and Secretary: Work for the benefit of the members by performing their roles and duties as assigned to them.
  • Office Staff: Responsible for performing day to day work.

PYQs (2009)

  1. Q) The farmers are provided credit from a number of sources for their short and long term needs. The main sources of credit to the farmers include-
  • Primary Agricultural Cooperative Societies, commercial banks, RRBs and private money lenders
  • The NABARD, RBI, commercial banks and private money lenders
  • District Central Cooperative Banks (DCCB), the lead banks, IRDP and JRY
  • The Large Scale Multi-purpose Adivasis Programme, DCCB, IFFCO and commercial banks

Global Investors Summit


  • PM Modi Inaugurated Global Investors Summit 2023 in Lucknow.


  • The summit is a flagship investment event organized by the Uttar Pradesh government.
  • Its aim is to bring together policymakers, industry leaders, academia, think tanks, and leaders from across the world to explore business opportunities in the state.
  • The summit seeks to attract investment from both domestic and foreign investors.
  • Partner countries in the summit include Singapore, Denmark, Japan, UAE, Australia, and the UK.
  • During the event, the Prime Minister also inaugurated the Global Trade Show and launched Invest UP 2.0.

Securities and Exchange Board of India


  • Recently, SC has called for SEBI response over Adani stock fall.


  • It is the regulatory body for securities and commodity markets in India.
  • It comes under the ownership of the Ministry of Finance.
  • Establishment Of SEBI ➔ Securities and Exchange Board of India was constituted as a non-statutory body or executive body on April 12, 1988 through a resolution of the Government of India.
  • It was established as a statutory body in the year 1992 and the provisions of the Securities and Exchange Board of India Act, 1992 came into force on January 30, 1992.
  • SEBI regulates the Indian financial market through its 20 departments.
  • SEBI is a quasi-legislative and quasi-judicial body which can draft regulations, conduct inquiries, pass rulings and impose penalties.
  • Headquarters ➔ Mumbai, Maharashtra.
  • Basic functions ➔
  • to protect the interests of investors in securities and
  • to promote the development of and to regulate the securities market and for matters connected to it.
  • Appeal Process ➔
  • Though SEBI is powerful, there is an appeal process to create accountability.
  • There is a Securities Appellate Tribunal which is a three-member tribunal
  • A second appeal lies directly to the Supreme Court.
  • Composition ➔
  • The chairman is nominated by the Union Government of India.
  • Two members, i.e Officers from the Union Finance Ministry.
  • One member from the Reserve Bank of India.
  • The remaining five members are nominated by the Union Government of India, out of them at least three shall be whole-time members.
  • Note ➔ Madhabi Puri Buch is the first woman chairperson of SEBI.

Punjab’s shrimp farming push: Why, and what are the farmers’ demands?


  • Punjab is set to see its first state-level ‘shrimp mela’ (shrimp fair). While shrimp farming began in the state in 2016-17, the mela is a state government push to create more awareness about it.


  • Shrimp farming is an aquaculture-based activity in marine or freshwater environments to produce shrimp for human consumption.
  • South-west Punjab has saline underground water not fit for agriculture.
  • Also, waterlogging is a perennial issue in this belt.
  • Therefore, shrimp farming was proposed as a solution for farmers whose land was lying unutilised.

International Intellectual Property Index


  • India ranks 42nd among 55 leading global economies on the International IP Index released by the U.S. Chambers of Commerce

About the International IP Index

  • The Index assesses each economy’s IP framework using 50 distinct indicators that the industry thinks represent the most effective IP systems.
  • The indicators provide a snapshot of an economy’s total IP ecosystem and cover nine categories of protection: patents, copyrights, trademarks, design rights, trade secrets, commercialization of IP assets, enforcement, systemic efficiency, membership and ratification of international treaties.
  • According to the International Intellectual Property (IP) Index 2023 India is poised to become a leader for emerging markets looking to transform their economies through IP-driven innovation.