National Capital Goods Policy


The earlier FDI policy on pharmaceutical sector provides for 100% FDI under automatic route in greenfield Pharma and FDI up to 100% under government approval in brownfield pharma. With the objective of promoting the development of this sector, 74% FDI under automatic route has been permitted in brownfield pharmaceuticals. FDI beyond 74% would be permitted through Government approval route.

Civil Aviation Sector

The earlier FDI policy on Airports permitted 100% FDI under automatic route in Greenfield Projects and 74% FDI in Brownfield Projects under automatic route. FDI beyond 74% for Brownfield Projects is under government route. Now 100% FDI under automatic route has now been permitted in Brownfield Airport projects.

As per the earlier FDI policy, foreign investment up to 49% was allowed under automatic route in Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline and regional Air Transport Service. s limit has now been raised to 100%, with FDI upto 49% permitted under automatic route and FDI beyond 49% through Government approval. For NRIs, 100% FDI will continue to be allowed under automatic route.

Private Security Agencies

The earlier policy permitted 49% FDI under government approval route in Private Security Agencies. FDI up to 49% is now permitted under automatic route in this sector. FDI beyond 49% and upto 74% is permitted through Government approval route.

Animal Husbandry

FDI in Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture and Apiculture is allowed 100% under Automatic Route without satisfying any other conditions.

National Capital Goods Policy

The National Capital Goods Policy was announced in M ay 2016 with a clear objective of increasing production of capital goods from Rs.2,30,000 crore in 2014-15 to Rs.7,50,000 crore in 2025 and raising direct and indirect employment from the current 8.4 million to 30 million.

The policy envisages increasing exports from the current 27 percent to 40 percent of production. It will increase the share of domestic production in India�s demand from 60 percent to 80 percent thus making India a net exporter of capital goods. e policy also aims to facilitate improvement in technology depth across sub-sectors, increase skill availability, ensure mandatory standards and promote growth and capacity building of MSMEs.

Public Finance


Public expenditure is incurred on goods and services provided by the public sector, on payment of wages and salaries of public sector employees, and on social security payments like pensions, unemployment benefits etc. Public revenue on the other hand refers to income of the government from different sources like taxes, borrowing, profits of public undertaking s, deficit financing and foreign aid Public Finance is concerned with the income and expenditure of the Government. It studies the effects of budget on the economy. Public Finance consists of two aspects: public expenditure and public revenue.

Classification of Public Expenditure

Functional Classification

Public expenditure may be classified on the basis of functions for which they are incurred. The government performs various functions like defence, social welfare, agriculture, infrastructure and industrial development. The expenditure incurred on such functions fall under this classification. These functions are further divided into subsidiary functions. Functional classification provides a clear idea about how the public funds are spent.

Revenue and Capital Expenditure

The current or consumption expenditures incurred on civil administration, defence forces, public health and education, maintenance of government machinery are known as revenue expenditure. This type of expenditure is of recurring type which is incurred year after year.

On the other hand, the expenditures incurred on building durable assets, like highways, multipurpose dams, irrigation projects, buying machinery and equipment are called capital expenditures. These are non-recurring type of expenditures in the form of capital investments. Such expenditures are expected to add to the productive capacity of the economy.

Productive and Unproductive Expenditure

Expenditure on infrastructure development, public enterprises or development of agriculture increases productive capacity in the economy and adds to national income and revenue to the government over a period of time. Thus they are classified as productive expenditure.

Expenditures in the nature of consumption such as defence, interest payments, expenditure on law and order, public administration, do not create any productive asset and therefore, cannot generate a flow of national income or returns to the government. Such expenses are classified as unproductive expenditures.

Development and Non-Development Expenditure

All expenditure that promote economic growth and develop- is termed as development expenditure. Development expenditure is the same as productive expenditure.

The expenditure that does not promote any economic growth and development is termed as non-development expenditure. Unproductive expenditure is also termed as non-development expenditure.

Written by princy

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