Consumer Price Index (CPI)

The consumer price index, aka. CPI, is the key gauge for inflation; it measures price increases and decreases on common group of consumer goods and services on a monthly basis. The CPI is calculated by taking a weighted average of price change for a pre-determined group of goods. The goods are weighted in order of their importance. The consumer price index is very similar, but not to be confused with, to the cost of living index which allows for substitutions of the items as prices move higher or lower.

____________________

Wholesale Price index
WPI is the index that is used to measure the change in the average price level of goods traded in wholesale market. Wholesale Price index (WPI) is compiled and released on weekly basis at national level by the Ministry of Industry.
The WPI series, on base 1981-82, covered in all 447 commodities. With a view to revise the base year (1981-82) of WPI, a Working Group was set up by the Ministry of Industry. The Working Group submitted its report to the Government and the same has been accepted. The Working Group has recommended for shifting the base year (1981-82) of the series to 1993-94. The Ministry of Industry started releasing the WPI series on base 1993-94 from April, 2000. The series covers in all 435 commodities.
Consumer Price Index
In principle and practice, a Consumer Price Index (CPI) measures changes over time in the general level of prices of goods and services that a reference population acquire, use or pay for consumption. There are four Consumer Price Indices (CPI) released at national level. These are CPI for Urban Non-Manual Employees (UNME), CPI for Industrial Workers (IW), CPI for Agricultural Labourers (AL), and CPI for Rural Labourers (RL)). While the first one is compiled and released by the Central Statistical Organisation (CSO), Ministry of Statistics and Programme Implementation, the rest three are compiled and released by the Labour Bureau, Ministry of Labour.
The Central Statistical Organisation has been compiling Consumer Price Index Numbers for Urban Non-Manual Employees [CPI(UNME)], on monthly basis, since 1961. Using the weights, derived from the data collected through middle class family living survey (MCFLS) conducted during 1982-83, the current CPI(UNME) series on base 1984-85, is being compiled and released since November, 1987. The Index numbers are compiled using Laspeyres' Index formula.
The Labour Bureau compiles Consumer Price Index Numbers for Industrial Workers [CPI(IW)], on monthly basis, using the retail prices collected from 261 markets in 76 centres by the officials of various State Governments, Labour Commissioners, etc. The number of items in the consumption baskets of different centres generally varies between 120 to 160, depending upon the prevailing situation in each centre and the consumption pattern of the centre. The various items of goods and services are classified into six main groups namely: (i) food, (ii) pan, supari, tobacco & intoxicants, (iii) fuel & light, (iv) housing, (v) clothing, bedding & footwear, (vi) miscellaneous. The base year of the index is 1982.
The Labour Bureau also compiles Consumer Price Index Numbers both for Agricultural Labourers [CPI(AL)] and Rural Labourers [CPI(RL)], on monthly basis, using the retail prices in respect of 260 items of goods and services, collected by National Sample Survey Organisation (NSSO) from fixed markets in 600 sample villages in 20 states spread over the country. The base year of both the indices is 1986-87.

The Labour Bureau started releasing CPI(RL) series for all-India and 20 states since November, 1995. The indices for all-India and 20 states are released, on a monthly basis, with a time lag of 3 weeks. The CPI(AL) and CPI(RL) for all-India are based on the respective indices in respect of 20 states only.
Uses of Price Indices
Changes in prices, both absolute and relative, influence a wide range of economic activities, and a constant watch on prices becomes necessary for the operation and regulation of current economic policies as well as for planning and policy formulation. Temporal changes in prices are gauged by using price indices. The WPI helps in understanding the movement of prices relating to bulk transactions or purchases, which are usually for further sale. WPI is used for a wide spectrum of economic management needs, including policy formulation, deflating macroeconomic aggregates, forecasting of variables for which prices are prime indicators, and working out escalation costs of projects. Reserve Bank of India (RBI), Planning Commission, and other government agencies use WPI extensively as a major macroeconomic indicator for varied purposes. In socioeconomic research, the indices find ready use.

The Consumer Price Index (CPI) plays an important role in national policy making, both in the economic and in the social sphere. It is used for a wide variety of purposes. The CPI is the best and most well known indicator of inflation. It is the barometer of the performance of the economy and a key indicator in evaluating the results of the monetary and fiscal policy in a country. A popular function is the use of CPI for indexation of wages and social security allowances like dearness allowance. CPI for Industrial Workers is utilised mainly for Wage & Dearness allowance regulation of workers and employees. CPI is also important for formulation of social policy measures and in the area of social security and welfare allowances. Beside these, CPI is used as a deflator in national account estimates for converting values at current prices to values at constant prices.
CPI(UNME) is one of the primary indicators of price movement in the urban segment of population in India. The users of CPI(UNME) are many and varied including public, private and governmental agencies. Specifically for regulating Dearness Allowance (DA), CPI(UNME) series are used by State Governments & Public/Private Sector Undertakings/Agencies/Companies.
The official measure of inflation in the Indian economy is based on WPI. WPI measures the general level of price changes at the level of either the wholesaler or the producer; and does not take into account retail margins. As such, WPI can be said to essentially measure price changes from the production side, and not from the consumption side. Moreover, price changes in the service sector are not duly accounted for in WPI, even though they are largely influenced by inputs from the industrial sector. In contrast to a CPI, the WPI thus measures price changes at an early stage of the distribution system. This difference makes the WPI a flexible price index, and one that signal changes in the general price level. From the viewpoint of a consumer, inflation concerns the purchasing power of his money. Inflation estimates given by a CPI are considered more representative of temporal changes in consumer prices.
There are many structural differences in the WPI and CPIs released at national level, which account for the difference in the point-to-point inflation rate. These are as given below:
(i) The WPI is designed to measure the temporal price changes of wholesale transactions of all the commodities in the country whereas the CPI measures the changes in consumer (retail) prices in respect of items in the consumption basket of goods and services, on which an average family of industrial worker/urban non-manual employee/household of agricultural/rural labourer spends its budget. While the former is production/output oriented, the latter has orientation towards the family/household budget of the target population.
(ii) Not only the composition of the baskets of the WPI and the CPI is different, but the weights of items in the basket are also different. The weights of items in the WPI have been assigned in proportion to their share in the total value of transaction (output) in the economy. In case of CPI, weights are in proportion to their share in the total consumption expenditure of the family of industrial worker/urban non-manual employee/household of agricultural/ rural labourer in a selected centre/state.
(iii) The WPI is a single national index compiled at the national level. The basis of inclusion of items in the basket for WPI, is their importance in the national economy. The basis of selection of items in the consumption basket for CPI is their relative consumption expenditure and their popularity among the families of industrial workers/urban non-manual employees/households of agricultural/rural labourer in a selected centre/village.
(iv) CPIs take into account the retail margins which have a direct bearing on retail price movements.
(v) The services like health, education etc. are not included in the WPI. As such, the WPI leaves out of its scope yet another area where consumers are increasingly spending more money.
(vi) Housing is one of the broad groups both in CPI(IW) and CPI(UNME), for which the data on shelter cost (rent cost) is collected regularly from a fixed sample of tenements. A chain base index are compiled on half-yearly basis for this group, which, in turn, is integrated into the general CPI. No such group exists in WPI, CPI(AL) and CPI(RL).

__________________________

India on Friday adopted the new Consumer Price Index (CPI) that will reflect the actual movement of prices at the micro-level. As per the new series, the CPI has increased to 106 in January from a base of 100 in 2010 (inflation of 6 per cent), but the government has chosen not to mention the inflation figure, pointing out that the exact level could be arrived only next year.
The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, has introduced the new series of consumer price indices for all-India, and States and union territories separately for rural, urban and combined for the purpose of intra temporal price comparison with effect from January, 2011, with 2010 as the base year.
“Indices for some States/UTs are not being released since adequate number of schedules for these States/UTs could not be received. These indices will be revised at the time of release of provisional indices for March 2011. Therefore, for one year this practice will be continued till the series gets stabilised and adequate timely receipt of price data is achieved. Since these indices are being introduced for the first time, annual inflation rates have not been compiled,” an official statement said.
The initial data showed that retail inflation stood at 6 per cent in January this year. However, inflation, as measured by the Wholesale Price Index — which remains the top benchmark — stood at 8.23 per cent in January. India is one of the few countries in the world using the WPI as benchmark. Experts say the new CPI is likely to help policymakers like the Reserve Bank of India in better framing of decisions.
The consumer indices have been released for five major groups — food, beverages and tobacco; fuel and light; housing; clothing, bedding and footwear; and miscellaneous.
As per the new data, food, beverages and tobacco went up to 108 on a national basis in January, while fuel and light were at 106. Clothing, bedding and footwear in the month under review stood at 107 while housing remained constant at 100. The miscellaneous items went up by six points to 106.
As per the new data, inflation has been the most in Kerala, Orissa and Meghalaya, where CPI overall stood at 108 in January from a base of 100 in 2010 (inflation of 8 per cent). Even richer states like Maharashtra, Gujarat, Haryana, Delhi and Punjab reported a rise of only 4-6 per cent in CPI on an annual basis during the month under review.

Goods and Services Tax

GST
Goods and Services Tax (GST) is a part of the proposed tax reforms that center round evolving an efficient and harmonized consumption tax system in the country. Presently, there are parallel systems of indirect taxation at the central and state levels. Each of the systems needs to be reformed to eventually harmonize them.
In the Union Budget for the year 2006-2007, Finance Minister proposed that India should move towards national level Goods and Services Tax that should be shared between the Centre and the States. He proposed to set April 1, 2010 as the date for introducing GST.
World over, goods and services attract the same rate of tax. That is the foundation of a GST.
The first step towards introducing GST is to progressively converge the service tax rate and the CENVAT rate. The goods and service tax (GST) is proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at a national level.
Integration of goods and services taxation would give India a world class tax system and improve tax collections. It would end the long standing distortions of differential treatments of manufacturing and service sector.
The introduction of goods and services tax will lead to the abolition of taxes such as octroi, Central sales tax, State level sales tax, entry tax, stamp duty, telecom licence fees, turnover tax, tax on consumption or sale of electricity, taxes on transportation of goods and services, and eliminate the cascading effects of multiple layers of taxation.
GST will facilitate seamless credit across the entire supply chain and across all states under a common tax base.
In 1954, GST was introduced for the first time in France. Today this tax has spread across 140 countries.
Benefits of GST
Many indirect taxes in state and central level subsumed by GST, need to pay a single GST instead of all.
Uniformity of tax rates across the states.
Ensure better compliance due to aggregate tax rate reduces.
By reducing the tax burden the competitiveness of Indian products in international market is expected to increase and there by development of the nation.
Prices of goods are expected to reduce in the long run as the benefits of less tax burden would be passed on to the consumer.
Overall tax compliance cost will reduce for government and can concentrate on GST.
Indirect taxes subsumed under GST
The following indirect taxes from state and central level is going to integrated with GST
State taxes; VAT/Sales tax; Entertainment Tax ( unless it is levied by local bodies); Luxury tax; Taxes on lottery, betting and gambling; State cesses and surcharges in so far as they relate to supply of goods and services; Entry tax not on in lieu of octri; Purchase tax ( This is not sure still under discussion ); Central Taxes; Central Excise Duty; Additional Excise Duty; The Excise Duty levied under the medical and Toiletries Preparation Act; Service Tax; Additional Customs Duty, commonly known as countervailing Duty ( CVD); Special Additional duty of custums-4% ( SAD); Surcharges; Cesses.
The above taxes dissolve under GST; instead only CGST & SGST exists.
The GST model in India
Many countries are following single GST. But it is proposed that dual CST is suitable for federal country like India.
Dual GST
Dual GST means, the proposed model will have two component called
CGST – Central goods and service tax levied by central Govt.
SGST – State goods and service tax levied by state Govt.

________________________________

Implement it at the central level
THOSE who cannot remember the past are condemned to repeat it, said philosopher George Santayana. The goods and services tax reform, like the value-added tax reform that took over 10 years to complete, is stalled like a bullock cart stuck in mud. Restarting the reform is a challenge but an opportunity for the finance minister to secure a place in history as a statesman.
A two pronged strategy is needed to re-start the reform process. First, the FM can simply implement GST at the manufacturing stage at the central level in the forthcoming Budget itself and this does not require a constitutional amendment. It only requires the Centre to revisit the exemption list, unify the Cenvat rates and extend the tax to all services. With a common threshold and rate on both goods and services, the GST at the manufacturing stage becomes a reality. The threshold for both goods and services could be fixed at . 50 lakh of the manufacturing turnover and sales turnover respectively, and the tax may be levied at a uniform rate of 10%. A separate sumptuary tax can be levied on cigarettes.
The second strategy comprises motivating the states to restart the reform process. This implies making compromises on the design and implementation. In fact, even some bad features may be included in the design to get the reform process moving. Thus, the states could tax at two rates instead of one and levy the tax at floor rates instead of fixed rates. Broadly, they may start with the floor rates of 5% and 10%, which is broadly the revenue-neutral rate. On sumptuary items, tobacco products, motor spirit, high speed diesel and a few items of luxury consumption, in addition to GST, the states may levy a special excise at the floor rates decided collectively.
The Centre should fully compensate any shortfall in revenue estimated at the floor rates, including revenue from central sales tax, for the first three years. The reform could be implemented from April 2012. The progress in revenue collections should be monitored and in 2015, the rate structure could be realigned, if necessary.

R SEKAR

Former Jt Secy Ministry of Finance
Continue dialogue with states
ACONSENSUS on the goods and services tax continues to be elusive, despite the first discussion paper on the new regime. But the scope for any incremental change or transitional measures such as a GST at the central level is limited. At present, goods and services are taxed at 10%. Input credit is also available across goods and services. A tax on all services at this stage without any corresponding relief will only increase the tax incidence on goods. Lowering the small-scale threshold exemption from . 1.5 crore will hurt the small scale sector.
The scope for incorporating GST features at the state level has become limited after the implementation of VAT. Many states, though, are agreeable to subsuming a number of state levies and harmonising tax rates and procedures. States may have some psychological comfort to move forward if they have the option to raise the floor rate within an agreed band. A flexible approach on exemptions may also be needed to start with.
What is feasible at this stage is the adoption of procedural changes that are required for a national-level GST. Common registration, electronic filing of returns, e-payment, electronic monitoring of inter-state movement of goods, standard classification and so on should be done in the near term. A consensus is also needed on a common IT platform and the infrastructure should be in place ahead of the transition. The revenue impact of GST also needs to be assessed properly. Definite numbers are a must to convince stakeholders to switch to GST. This exercise has to be done in a transparent way in coordination with states and experts in the field. An assessment of the revenue implications will also be helpful.
The Centre must keep the process of dialogue on with the states and respond to their concerns including apprehensions over the infringement of their autonomy. New Zealand, for instance, announced a relief package for sectors that would be impacted by GST, ahead of its introduction. Identifying and finding agreeable responses to issues through a dialogue is the only way forward.

Inflation in India

Inflation is caused due to several economic factors:

• When the government of a country print money in excess, prices increase to keep up with the increase in currency, leading to inflation.
• Increase in production and labor costs, have a direct impact on the price of the final product, resulting in inflation.
• When countries borrow money, they have to cope with the interest burden. This interest burden results in inflation.
• High taxes on consumer products, can also lead to inflation.
• Demands pull inflation, wherein the economy demands more goods and services than what is produced.
• Cost push inflation or supply shock inflation, wherein non availability of a commodity would lead to increase in prices.

Problems

The problems due to inflation would be:

• When the balance between supply and demand goes out of control, consumers could change their buying habits, forcing manufacturers to cut down production.
• The mortgage crisis of 2007 in USA could best illustrate the ill effects of inflation. Housing prices increases substantially from 2002 onwards, resulting in a dramatic decrease in demand.
• Inflation can create major problems in the economy. Price increase can worsen the poverty affecting low income household,
• Inflation creates economic uncertainty and is a dampener to the investment climate slowing growth and finally it reduce savings and thereby consumption.
• The producers would not be able to control the cost of raw material and labor and hence the price of the final product. This could result in less profit or in some extreme case no profit, forcing them out of business.
• Manufacturers would not have an incentive to invest in new equipment and new technology.
• Uncertainty would force people to withdraw money from the bank and convert it into product with long lasting value like gold, artifacts.

Inflation in India Economy
India after independence has had a more stable record with respect to inflation than most other developing countries. Since 1950, the inflation in Indian economy has been in single digits for most of the years

Between 1950-1960
The inflation on an average was at 2.00%

Between 1960-1970
The inflation on an average was at 7.2%

Between 1970-1980
The inflation on an average was at 8.5%.

Inflation At Present
Inflation in India a menace a few years ago is at a 30 year low. The inflation ended at a low of 0.61% in the week ended May 9, 2009 this after reaching a 16 year high of 12.91 % in August 2008, bringing in a sigh of relief to policymakers.

WPI and CPI

Wholesale Price index

WPI is the index that is used to measure the change in the average price level of goods traded in wholesale market. Wholesale Price index (WPI) is compiled and released on weekly basis at national level by the Ministry of Industry.

The WPI series, on base 1981-82, covered in all 447 commodities. With a view to revise the base year (1981-82) of WPI, a Working Group was set up by the Ministry of Industry. The Working Group submitted its report to the Government and the same has been accepted. The Working Group has recommended for shifting the base year (1981-82) of the series to 1993-94. The Ministry of Industry started releasing the WPI series on base 1993-94 from April, 2000. The series covers in all 435 commodities.

Consumer Price Index

In principle and practice, a Consumer Price Index (CPI) measures changes over time in the general level of prices of goods and services that a reference population acquire, use or pay for consumption. There are four Consumer Price Indices (CPI) released at national level. These are CPI for Urban Non-Manual Employees (UNME), CPI for Industrial Workers (IW), CPI for Agricultural Labourers (AL), and CPI for Rural Labourers (RL)). While the first one is compiled and released by the Central Statistical Organisation (CSO), Ministry of Statistics and Programme Implementation, the rest three are compiled and released by the Labour Bureau, Ministry of Labour.

The Central Statistical Organisation has been compiling Consumer Price Index Numbers for Urban Non-Manual Employees [CPI(UNME)], on monthly basis, since 1961. Using the weights, derived from the data collected through middle class family living survey (MCFLS) conducted during 1982-83, the current CPI(UNME) series on base 1984-85, is being compiled and released since November, 1987. The Index numbers are compiled using Laspeyres' Index formula.

The Labour Bureau compiles Consumer Price Index Numbers for Industrial Workers [CPI(IW)], on monthly basis, using the retail prices collected from 261 markets in 76 centres by the officials of various State Governments, Labour Commissioners, etc. The number of items in the consumption baskets of different centres generally varies between 120 to 160, depending upon the prevailing situation in each centre and the consumption pattern of the centre. The various items of goods and services are classified into six main groups namely: (i) food, (ii) pan, supari, tobacco & intoxicants, (iii) fuel & light, (iv) housing, (v) clothing, bedding & footwear, (vi) miscellaneous. The base year of the index is 1982.

The Labour Bureau also compiles Consumer Price Index Numbers both for Agricultural Labourers [CPI(AL)] and Rural Labourers [CPI(RL)], on monthly basis, using the retail prices in respect of 260 items of goods and services, collected by National Sample Survey Organisation (NSSO) from fixed markets in 600 sample villages in 20 states spread over the country. The base year of both the indices is 1986-87.

The Labour Bureau started releasing CPI(RL) series for all-India and 20 states since November, 1995. The indices for all-India and 20 states are released, on a monthly basis, with a time lag of 3 weeks. The CPI(AL) and CPI(RL) for all-India are based on the respective indices in respect of 20 states only.

Uses of Price Indices

Changes in prices, both absolute and relative, influence a wide range of economic activities, and a constant watch on prices becomes necessary for the operation and regulation of current economic policies as well as for planning and policy formulation. Temporal changes in prices are gauged by using price indices. The WPI helps in understanding the movement of prices relating to bulk transactions or purchases, which are usually for further sale. WPI is used for a wide spectrum of economic management needs, including policy formulation, deflating macroeconomic aggregates, forecasting of variables for which prices are prime indicators, and working out escalation costs of projects. Reserve Bank of India (RBI), Planning Commission, and other government agencies use WPI extensively as a major macroeconomic indicator for varied purposes. In socioeconomic research, the indices find ready use.

The Consumer Price Index (CPI) plays an important role in national policy making, both in the economic and in the social sphere. It is used for a wide variety of purposes. The CPI is the best and most well known indicator of inflation. It is the barometer of the performance of the economy and a key indicator in evaluating the results of the monetary and fiscal policy in a country. A popular function is the use of CPI for indexation of wages and social security allowances like dearness allowance. CPI for Industrial Workers is utilised mainly for Wage & Dearness allowance regulation of workers and employees. CPI is also important for formulation of social policy measures and in the area of social security and welfare allowances. Beside these, CPI is used as a deflator in national account estimates for converting values at current prices to values at constant prices.

CPI(UNME) is one of the primary indicators of price movement in the urban segment of population in India. The users of CPI(UNME) are many and varied including public, private and governmental agencies. Specifically for regulating Dearness Allowance (DA), CPI(UNME) series are used by State Governments & Public/Private Sector Undertakings/Agencies/Companies.

The official measure of inflation in the Indian economy is based on WPI. WPI measures the general level of price changes at the level of either the wholesaler or the producer; and does not take into account retail margins. As such, WPI can be said to essentially measure price changes from the production side, and not from the consumption side. Moreover, price changes in the service sector are not duly accounted for in WPI, even though they are largely influenced by inputs from the industrial sector. In contrast to a CPI, the WPI thus measures price changes at an early stage of the distribution system. This difference makes the WPI a flexible price index, and one that signal changes in the general price level. From the viewpoint of a consumer, inflation concerns the purchasing power of his money. Inflation estimates given by a CPI are considered more representative of temporal changes in consumer prices.

There are many structural differences in the WPI and CPIs released at national level, which account for the difference in the point-to-point inflation rate. These are as given below:

(i) The WPI is designed to measure the temporal price changes of wholesale transactions of all the commodities in the country whereas the CPI measures the changes in consumer (retail) prices in respect of items in the consumption basket of goods and services, on which an average family of industrial worker/urban non-manual employee/household of agricultural/rural labourer spends its budget. While the former is production/output oriented, the latter has orientation towards the family/household budget of the target population.

(ii) Not only the composition of the baskets of the WPI and the CPI is different, but the weights of items in the basket are also different. The weights of items in the WPI have been assigned in proportion to their share in the total value of transaction (output) in the economy. In case of CPI, weights are in proportion to their share in the total consumption expenditure of the family of industrial worker/urban non-manual employee/household of agricultural/ rural labourer in a selected centre/state.

(iii) The WPI is a single national index compiled at the national level. The basis of inclusion of items in the basket for WPI, is their importance in the national economy. The basis of selection of items in the consumption basket for CPI is their relative consumption expenditure and their popularity among the families of industrial workers/urban non-manual employees/households of agricultural/rural labourer in a selected centre/village.

(iv) CPIs take into account the retail margins which have a direct bearing on retail price movements.

(v) The services like health, education etc. are not included in the WPI. As such, the WPI leaves out of its scope yet another area where consumers are increasingly spending more money.

(vi) Housing is one of the broad groups both in CPI(IW) and CPI(UNME), for which the data on shelter cost (rent cost) is collected regularly from a fixed sample of tenements. A chain base index are compiled on half-yearly basis for this group, which, in turn, is integrated into the general CPI. No such group exists in WPI, CPI(AL) and CPI(RL).

NBFC and MFI

NBFC is Non-Banking Financial Company, a company registered under the Companies Act, 1956 of India.

What it does?

Engaged in the business of loans and advances, acquisition of shares, stock, bonds, debentures and securities issued by government or local authority, or other securities of a marketable nature, leasing, hire-purchase, insurance business, or chit business:

What it does not?

Does not include any institution whose principal business is that includes agriculture or industrial activity; or the sale, purchase or construction of immovable property

Banks Vs NBFC

1. Cannot accept demand deposits

2. Not a part of the payment and settlement system

3. cannot issue cheques drawn on itself

MFI

Microfinance institutions, also known as MFIs^[3], offer financial services to undeserved and impoverished communities.

MFIs of India

Forbes magazine named seven microfinance institutes in India in the list of the world's top 50 microfinance institutions.

Bandhan, as well as two other Indian MFIs—Microcredit Foundation of India (ranked 13th) and Saadhana Microfin Society (15th) – have been placed above Bangladesh-based Grameen Bank (which along with its founder Mohammed Yunus, was awarded the Nobel Prize). Besides Bandhan, the Microcredit Foundation of India and Saadhana Microfin Society, other Indian entries include Grameen Koota (19th), Sharada's Women's Association for Weaker Section (23rd), SKS Microfinance Private Ltd (44th) and Asmitha Microfin Ltd (29th).^[9][10]

Criticisms

Recently, microfinance has come under fire in the state of Andhra Pradesh due to allegations of MFIs using coercive recollection practices and charging usurious interest rates. ^[11] These charges resulted in the state government's passing of the Andhra Pradesh Microfinance Ordinance on October 15, 2010. The Ordinance requires MFIs to register with the state government and gives the state government the power, suo moto, to shut down MFI activity.^[12] A number of NBFCs have been affected by the ordinance, including sector heavyweight SKS Microfinance. ^[13]