Foreign Institutional Investment (FII) and FDI (Foreign Direct Investment), both, are important forms of foreign investment in a host country. However, there are several key differences between the two:

• Nature of investment: FII refers to investment by an institution established or incorporated outside a country, which invests in share market, hedge funds, pension funds, mutual funds etc. in another country. On the other hand, FDI refers to investment in the form of controlling ownership by a foreign company in an already existing company of another country or by setting up a subsidiary. As per SEBI guidelines, a threshold of 10% of equity ownership is required to qualify as a ‘foreign direct investor’.
• Role played: FDI targets a specific enterprise and aims to increase the enterprises’ capacity and productivity or change its management control. Thus, capital inflow is translated into additional production. FII helps in increasing capital availability in general rather than enhancing the capital of a specific enterprise.
• Stability: FDI is considered to be more stable than Fll, as it is a long-term and productive investment. FII is referred to as ‘hot money’ due to the short term nature of investment. It is also speculative, volatile and involves higher risk of capital flight.
• Ease of entry and exit: FIl can easily enter and withdraw as they mostly invest in the secondary market. However, FDI cannot enter and exit easily due to the nature of investment. Further, the investment flows from FDIs are mostly in primary markets.

Role of FDI in the economic development of India:

• FDI is a non-debt financial resource, which helps to meet the capital requirements of a country for economic growth and capital formation. It also stimulates domestic investment and human capital formation in the country.
• FDI allows bridging of the technology gap between foreign and domestic firms to boost the scale of production which is beneficial for the betterment Indian economy.
• FDI increases employment opportunities in India, which is critical for utilizing our demographic dividend.
• FDI contributes to integration into the global economy by boosting foreign trade flows through their broad international marketing network. They also promote export oriented activities that improve the export performance of the country.
• FDI is a major source of foreign exchange inflow in the country which allows the government to generate adequate resources which help to stabilize the Balance of Payment.
• FDI has the potential to bring social and environmental benefits to India through the dissemination of good practices and technologies within multinational enterprises, and through their subsequent spillovers to domestic enterprises.

To attract FDI in India, the government has increasingly liberalized its FDI regime in various sectors including finance, defence, insurance etc. FDI inflow has seen growth in the last decades owing to these reforms. However, more reforms on subjects like land and labour as well as policy stability in terms of taxation etc.is required to make the economy more attractive for FDIS.

The GDP deflator is the ratio of the value of goods and services an economy produces in a particular year at current prices, to that, at prices prevailing during any other reference (base) year. GDP deflator = (Nominal GDP/Real GDP)*100 This ratio basically shows to what extent an increase in GDP in an economy has happened on account of higher prices, rather than increased output. Hence, it is a good measure of inflation. For example: if an economy has a nominal GDP of $100 billion and has a real GDP of $80 billion, the economy’s GDP price deflator can be calculated as ($100 billion / $80 billion) x 100, which equals to 125. This means that the aggregate level of prices have increased by 25 percent from the base year to the current year. Other than GDP deflator, there are various indices such as Wholesale Price Index (WPI), Consumer Price Index (CPI), Producer Price Index (PPI), Commodity Price Index, Cost of Living Index, Capital Goods Price Index etc. that are used to measure inflation. But WPI and CPI are widely used indices to calculate inflation all over the world.

Differences between the GDP deflator, CPI and WPI are as follows:

• The GDP deflator covers the entire range of goods and services produced in the economy as against the fixed and limited commodity baskets for the WPI (no representation of the services sector) or CPI (based on only a basket of selected goods and services).
• Changes in consumption patterns or the introduction of new goods and services are automatically reflected in the deflator because it includes a ‘changing basket’. CPI reflects changes to a consumer’s cost of living and WPI captures price changes at the factory/wholesale level, but they do not reflect new expenditure patterns because of the ‘fixed basket’.
• GDP deflator includes only those goods which are produced domestically. Imported goods do not form the part of GDP and hence are not reflected in the GDP deflator. While both WPI and CPI consider import in their calculations.
• GDP deflator is available only on a quarterly basis along with GDP estimates, whereas CPI and WPI data are released every month. This is the another reason behind using CPI/WPI rather than GDP deflator.

In India, WPI was used as a key measure of inflation for a long time, but now CPI is ation for being used for the same, as it covers services and also measures inflation from consumers’ end instead of manufacturers’ end.

A government budget is an annual financial statement which outlines the estimated government expenditure and expected government receipts or revenues for the forthcoming fiscal year. The Budget in India comprises the following (a) Revenue Account and (b) Capital Account. Differences between them are:

• Revenue Accounts: It shows the revenue receipts and revenue expenditure of the government.

• Revenue receipts: Revenue receipts are non-redeemable receipts of the government i.e. they cannot be reclaimed from the government. They consist of tax and non-tax revenues. Tax revenues consist of the proceeds of taxes and other duties levied by the central government. Non-tax revenue mainly consists of Interest receipts on account of loans, dividends and profits on investment made by the government, fees and other receipts for services rendered by the government and cash grants in aid from foreign countries or institutions.
• Revenue Expenditure: Generally this expenditure neither creates any physical/financial asset nor reduces the liability of the government. It is expenditure incurred for the normal functioning of the government departments and various services, interest payments on debt incurred by the government and grants given to states even though some of the grant may be for creation of assets.

• Capital Accounts: It consists of capital receipts and capital expenditure of the government.

• Capital Receipts: These are such receipts of the government that either create liability or reduce financial assets. They include loans raised by the government from the public which are called market borrowings by the government from the RBI and commercial banks and financial institutes through sales of treasury, bills, loans received from foreign international organizations and recoveries of loans granted by the central government. Other items include small savings, provident funds and receipts obtained from the sale of shares in PSUs.
• Capital Expenditure: There are expenditures of the government which result in creation of physical or financial assets or reduction in financial liabilities. This includes expenditure on the acquisition of land, building, machineries, equipment, investment in shares and loans and advances by the central government to state and UTs.

Significance of increasing Capital Expenditure in an economy:

• Capital Expenditure is that part of the government spending which goes into the creation of assets like schools, colleges, hospitals, roads, bridges, dams, railway lines, airports and seaports. This infrastructure and asset creation is crucial for rapid economic growth.
• Increased capital expenditure helps in employment generation and brings about a structural shift in employment profile in the economy.
• Increased capital expenditure, in a way, also helps in income distribution and bridging economic inequality in the society as the infrastructure created benefits every section of the society.
• Capital expenditure also includes investment by the government that yields profits and dividends in future.

In India, both the Union government and state governments have been criticized for spending too little on creating assets. For e.g. 85-90 percent of the Union government’s spending goes into the revenue account. High revenue expenditure of the Union government has often been blamed for low economic growth. Thus increasing capital expenditure and capacity building are much needed in a country like India.

The Bhopal Gas tragedy of 1984 is the amongst the worst chemical disaster in history, where over 2000 people died due to the accidental release of the toxic gas Methyl Isocyanate. Recently, the Vizag gas leak at LG Polymers plant in Visakhapatnam killed 12 people and sickened hundreds. Chemical disasters, though low in frequency, have the potential to cause significant immediate or long-term damage, like injuries, permanent disabilities, loss of lives, damage to property and environment. India is amongst the very few countries, which have enshrined the right to live in a clean and wholesome environment as a fundamental right. After the Bhopal disaster in 1984, Chemical Disaster Management (CDM) received greater emphasis and following steps have been taken to prepare the mechanism to deal with any such disaster:

• Regulatory framework: There are various legislations, which take into account CDM. For, example, Indian factories Act, 1948, The Manufacture, Storage and Import of Hazardous Chemicals Rules 1989, The Chemical Weapons Convention Act 2000, CAEPPR Rules 1996, Public Liability Insurance Act 1991, Explosives Act-1884, Insecticide Act-1968, Environment (Protection) Act-1986, and Disaster Management (DM) Act-2005. These regulatory frameworks deal with various issues like working conditions, regulating the usage of chemicals, mitigation efforts etc.
• Institutional framework: A separate Ministry of Environment, Forests and Climate Change (MoEF&CC), has been earmarked as the nodal ministry for management of chemical disasters to ease coordination amongst other ministries, institutions and agencies to manage these disasters. Besides, research institutes like IITs, NEERI, etc. are also working in this domain.
• NDMA guidelines to ministries/departments and states for preparing DM plans: The guidelines focus on all aspects of the DM cycle including prevention, mitigation, preparedness, relief, rehabilitation and recovery.
• Other technical efforts: Installation of major accident Hazard Control System, GIS-based Emergency Management System, Environment Risk Reporting and Information Systems (ERRIS), etc.
• Capacity building: Financial assistance has been provided for capacity development in CDM to various disaster management training institutes.

While considerable progress has been made in the management of chemical disasters, critical gaps still exist in certain areas

• Complex web of laws: Regulatory frameworks have numerous laws for various aspects under different ministries thus making it more difficult in terms of synchronizing the policies and have various issues at implementation levels and making it even more difficult for regulations.
• Gaps in codes of practices, procedures and standards: There is a lack of national level risk assessment criteria and acceptable risks for chemical plants. Also, there are lacunae in procedure for conduct of safety audit and departmental inspections.
• Untrained professionals: There is a lack of knowledge amongst the government officials, medical staff, as well as staff of the industry on CDM. Also, there is a shortage of clear accessible information on potential chemical hazards and their management.
• Infrastructural gaps: Institutional framework for providing technical support at various levels is a key requirement for sustaining proper development and implementation of an effective disaster management system. These have not been fully identified.
• Gaps in post disaster management: Mechanisms to deal with social and economic impacts of chemicals on human health, society and the environment, including liability, compensation and redress are not streamlined and strengthened to take adequate care of post disaster mitigation.

Although good efforts have been made to minimize such accidents and to improve emergency preparedness at all levels, more needs to be done. One step in this regard can be preparing a database of all potential chemicals used in industries. Substantial efforts are still required to predict the potential occurrence of disasters, assess the damage potential, issue warnings, and to take other precautionary measures to mitigate their effects.

Deforestation and forest degradation have significant impacts on both local and global ecosystems:

Local Ecosystem Impacts:

1. Habitat Loss and Fragmentation:
   • Clearing forests destroys the habitats of a wide range of species, leading to biodiversity loss and the disruption of ecological processes.
   • Fragmentation of remaining forests isolates populations, hindering gene flow and increasing the risk of local extinctions.
2. Soil Degradation and Erosion:
   • Removal of vegetation exposes the soil to erosion, leading to the loss of nutrient-rich topsoil and increased sedimentation in nearby water bodies.
   • This can negatively impact soil fertility, water quality, and aquatic ecosystems.
3. Disruption of Hydrological Cycles:
   • Forests play a crucial role in regulating local and regional water cycles, including precipitation patterns and groundwater recharge.
   • Deforestation can disrupt these cycles, leading to changes in water availability, increased risk of floods and droughts, and the drying of streams and wetlands.
4. Microclimate Changes:
   • Forests create their own unique microclimates, with higher humidity, lower temperatures, and reduced wind speeds.
   • Deforestation can lead to changes in temperature, humidity, and wind patterns, affecting the local climate and the survival of species adapted to the original forest conditions.

Global Ecosystem Impacts:

1. Carbon Sequestration and Climate Change:
   • Forests act as significant carbon sinks, absorbing and storing large amounts of atmospheric carbon dioxide.
   • Deforestation and forest degradation release this stored carbon back into the atmosphere, contributing to global climate change and exacerbating the greenhouse effect.
2. Biodiversity Loss:
   • Forests harbor a vast array of biodiversity, including a wide range of plant and animal species.
   • Deforestation and fragmentation threaten global biodiversity, leading to the extinction of species and the disruption of complex ecological interactions.
3. Disruption of Nutrient and Biogeochemical Cycles:
   • Forests play a crucial role in regulating global nutrient and biogeochemical cycles, such as the nitrogen, phosphorus, and water cycles.
   • Deforestation can disrupt these cycles, leading to imbalances in the distribution and availability of essential nutrients, with far-reaching consequences for ecosystems worldwide.
4. Increased Vulnerability to Natural Disasters:
   • Forests can act as natural buffers against natural disasters, such as floods, landslides, and storm surges.
   • Deforestation can increase the vulnerability of communities and ecosystems to the impacts of these events, particularly in the context of climate change.