Structure of Indian Economy

l The word ‘economics’ is derived from two Greek words, ‘eco’ meaning home and ‘nomos’
meaning account, which refers to household management.
l Economics is a social science that focuses on the production, distribution and consumption of
goods and services. It also analyses the choices that individuals, businesses, governments
and nations make to allocate resources.
l India is an example of a low-income developing economy. The main features of Indian
economy are low per capita income, unemployment, low efficiency of money, faulty wealth
distribution, high dependency rate, low rate of capital formation, low standard of living of most
of the population.
l India is a developing economy but it has features of an underdeveloped economy like low
per capita income, low levels of living, rapid growth of population, unemployment, poor quality
of human capital, etc. The above features point out that India is an underdeveloped country.
l Indian economy is a mixed economy because private and public sector co-exist and both
work under the general guidance of economic planning.

l High dependency on primary sector (54% population)

l Huge population, low per capita income
l Unemployment (labour surplus)
l Poverty
l Lack of infrastructure
l Unequal distribution of resources
l Unskilled labour force etc
l The role of the private and public sector is closely related in a mixed economy. Most mixed
economies are market economies, based on strong regulatory control and government
provision of public goods.
l India classified as a labour surplus economy because in India there is disguised
unemployment along with under employment, which means that a qualified, skilled workforce
willing to work is available, but there are not enough employment opportunities.
l According to the latest figures of the International Monetary Fund (IMF), the world’s 5 largest
economies in the year 2022 are America, China, Japan, Germany and India. (India surpasses
UK)
l A closed economy refers to a country that produces all of its own goods and services and
doesn’t participate in international trade.
l An open economy is one that interacts freely with other economies around the world.
l A liberal economy or a capitalist economy is an economy, where the state has minimal
control over economic activities and the private sector is highly influential and completely
independent.
l Socialist economy is an important force of the state. The state controls and directs all
economic activities for example—Cuba, China and North Korea.
l Primary sector predominate in almost all rural settlements. Agriculture and allied activities
come under the primary sector. About 54% of India’s population is engaged in agricultural
activities, living in rural settlements.
l The primary sector also includes animal husbandry, forestry, fisheries and mining activities, in
which almost a large community is employed. Natural resources are directly used in the
primary sector.
l Secondary sector consists of processing, manufacturing and construction companies. The
secondary sector produces goods from the natural products within the primary sector.
l Secondary economic activities involve the processing of raw materials (primary products) i.e.,
would include turning timber into furniture and turning iron-ore into steel.
l Tertiary sector covers with a wide range of activities from commerce to administration,
transport, financial and real estate activities, business and personal services, education,
health and social work, etc.
l The correct sequence in descending order on the basis of their contribution to the Gross
Value Added (GVA) of India are the service industry and agriculture sectors.
l The economies that have high per capita income and support a high standard of living are
referred to as developed economies.
l The economies that have low per capita income resulting in a low standard of living is
referred to as an underdeveloped economy.
l A developed country also called an industrialised country has a mature and sophisticated
economy, usually measured by Gross Domestic Product (GDP) and/or average income per
household.
l Developed countries have advanced technological infrastructure and have diverse industrial
and service sectors.
l Micro-economics is the study of individuals, households and firms’ behaviour in decision
making and allocation of resources. It generally applies to markets of goods and services and
deals with individual and economic issues.
l Micro-economic analysis offers insights into such disparate efforts as making business decisions
or Formulating Public Policies (FPP).
l Macro-economics is the branch of economics that deals with the structure, performance,
behaviour and decision making of the whole or aggregate, economy.
l Examples of macro-economic factors include economic outputs, unemployment rates and
inflation. These indicators of economic performance are closely monitored by governments,
businesses and consumers alike.
l In economics, a demand curve is a graph depicting the relationship between the price of a
certain commodity and the quantity of that commodity that is demanded at that price.
l Demand curves can be used either for the price quantity relationship for an individual
consumer or for all consumers in a particular market.
l Law of equi-marginal utility explains the relation between the consumption of two or more
products and what combination of consumption these products will give optimum satisfaction.
Marginal utility is the additional satisfaction gained by consuming one more unit of a
commodity.
l Purchasing Power Parity (PPPs) are simply price relatives that show the ratio of the prices in
national currencies of the same good or service in different countries. PPPs are also
calculated for product groups and for each of the various levels of aggregation up to and
including Gross Domestic Product (GDP).
l Adam Smith was a Scottish political economist and philosopher. He has become famous by
his influential book The Wealth of Nation.
l David Ricardo was a classical british economist best known for his theory on wages and
profit, labour theory of value, theory of comparative advantage and theory of rents.
l John Kenneth Galbraith was a Canadian-American economist, diplomat. He best known for
his support of public spending and for the literary quality of his writing on public affairs.
 Economic Growth and Development

l Economic growth is measured by quantitative factors such as increase in real Gross

Domestic Product (GDP) or per capita income. The qualitative measures such as Human
Development Index (HDI), Gender-Related Index (GRI), Human Poverty Index (HPI), infant
mortality, literacy rate, etc. are used to measure economic development.
l Economic growth is a conservative concept and it denotes the rise in a nation’s actual level of
output, whereas economic development is comparatively a normative concept and it denotes
economic growth with enhancement in the standards of living.
l In 2010-2011, the Indian economy achieved the highest growth rate. It was around 10.78% of
growth.
l Economic development is defined as an increase in a country’s wealth and standard of
living. i.e., improved productivity, higher literacy rates and better public education are all
consequences of economic development in a country.
l Real per capita income is a measure of a country’s economic output. The overall economic
production of a country is the same as the country’s revenue. Real Gross Domestic Product
(RGDP) per capita is a real GDP divided by the number of people.
l The Limit to Growth model was based on the work of Jay Forrester of Massachusetts
Institute of Technology (MIT), as described in his book World Dynamics.
l The Limits to Growth (LTG) is a 1972 report on the exponential economic and population
growth with a finite supply of resources, studied by computer simulation. It was commissioned
by the Club of Rome.
l Inclusive growth means economic growth that creates employment opportunities and helps
in reducing poverty.
l It includes providing equality of opportunity, empowering people through education and skill
development.
l Increase in absolute and per capit real Gross National Product (GNP) (i.e., economic growth)
do not connote a higher level of economic development, if poverty and unemployment
increases.
l Non-economic environment includes the political system, government policies, legal
framework, social system, cultural values, demographic factors, technological development
and the natural environment of the country. In fact, all these factors are very relevant to
economic growth and development.
l Neemrana is a model of sustainable economic development. It is located in Rajasthan.
l Rajasthan State Industrial Development and Investment Corporation Limited (RIICO) has
developed industrial zones in various stages in Neemrana in Alwar district.
l Capital Output Ratio (COR) is a measure of the percentage increase in capital formation
required to obtain a percentage increase in Gross Domestic Product (GDP).
l It is the relationship between investment and resulting output over a period of time. Capital
Output Ratio is a measure of capital required for producing one unit of output.
l A District Planning Committee (DPC) is the committee created as per Article 243(ZD) of the
Constitution of India at the district level for planning at the district and below.
l Mid day meal scheme refers to the government of India programme introduced in all
government elementary schools to provide children with cooked lunch. It was launch from
15 August, 1995.
l Tamil Nadu was the first state in India to introduce this scheme. The first school which had the
scheme since 1925 was Sourashtra Boys Higher Secondary School, Madurai.
l Self Help Groups (SHGs) are groups of rural poor people (especially women). The idea is to
help them to organise themselves, help them financially, provide them work, help them in
other matters including domestic issues.
l Government provides such groups loans at very low interests and provides help to market the
products of SHG. The best index of economic development is provided by growth in per capita
real income from year to year.
l It can be derived by dividing the Gross National Product (GNP) of a country by its population.
The higher the level of per capita income, the higher is the economic development.
l Malthusian Theory It explained population growth in a geometrical fashion.
l Three factors of Mathusian theory which controls population are war, famine and disease
(given in 1798).

l The Human Development Index (HDI) measures each country’s social and economic
development by focusing on the following four factors, mean years of schooling, expected years
of schooling, life expectancy at birth and Gross National Income (GNI) per capita.
l Pakistani economist Mahbub ul Haq created Human Development Index (HDI) in 1990 which
was further used to measure the country’s development by the United Nations Development
Programme (UNDP).
l Life expectancy in India is 69.7 years in 2019. This has fallen to 67.2 in 2021 as per Human
Development Report (HDR) in 2021 and 2022.
l Human Poverty Index (HPI) was developed by the United Nations and released its First
Report in 1997. The Human Poverty Index (HPI) was an indicator of the poverty of community
in a country.
l The Multi-dimensional Poverty Index (MPI) is published by the United Nations Development
Programme (UNDP’s) Human Development Report Office (HDRO) and tracks deprivation
across three dimensions and 10 indicators i.e., health (child mortality, nutrition), education
(years of schooling, enrollment) and living standards (water, sanitation, electricity, cooking
fuel, etc).
l Indian Human Development Report does provided for each same village as in
Unemployment Related Index (URI).
l It calculates the education, health and other aspects like infrastruture and amenities to
calculate the development of economy and calculating the poverty in the country.
l The first Indian state to have its Human Development Report (HDR) prepared and released by
Amartya Kumar Sen in Delhi is Madhya Pradesh.
l The Physical Quality of Life Index (PQLI) is an attempt to measure the quality of life or well
being of a country.
l The value of PQLI is average of three statistics i.e., basic literacy rate, infant mortality and life
expectancy at age one, all equally weighted on a 1 to 100 scale.
l Gross National Happiness (GNH), sometimes called Gross Domestic Happiness (GDH), is a
philosophy that guides the government of Bhutan.
l It includes an index which is used to measure the collective happiness and well being of a
population.
l Human capital allows an economy to grow. When human capital increases in areas such as
science, education and management. It leads to increases in innovation, social well being,
equality, increased productivity, improved rates of participation, all of which contribute to
economic growth.
l The development of skills can contribute to structural transformation and economic growth by
enhancing employability and labour productivity and helping countries to become more competitive.
l In the context of any country, the level of mutual trust and harmony in the society would be
considered as part of its social capital.
l Social capital refers to connections among individuals, social networks and norms of
reciprocity and trustworthiness that arises from them, that is the level of mutual trust and
harmony in the society.
l As per Education Development Index (EDI) released in February 2011, the top four states
were Kerala, Tamil Nadu, Punjab and Delhi.
l The report was released by the Ministry of Human Resource and Development with the
National University of Educational Planning and Administration.
l Right to education, right to equal access to public service and right to food are all human rights
under Universal Declaration of Human Rights (UDHR).

l The Sustainable Development Goals (SDGs) or Global Goals are a collection of 17

interlinked global goals designed to be a ‘shared blueprint for peace and prosperity for people
and the planet, now and into the future’.
l The Sustainable Development Goals (SDGs) were set up in 2015 by the United Nations
General Assembly (UNGA) and are intended to be achieved by 2030.
l The 17 Sustainable Development Goals (SDGs) to transform our world

GOAL 1 No Poverty
GOAL 2 Zero Hunger
GOAL 3 Good Health and Well being
GOAL 4 Quality Education
GOAL 5 Gender Equality
GOAL 6 Clean Water and Sanitation
GOAL 7 Affordable and Clean Energy
GOAL 8 Decent Work and Economic Growth
GOAL 9 Industry, Innovation and Infrastructure
GOAL 10 Reduced Inequality
GOAL 11 Sustainable Cities and Communities
GOAL 12 Responsible Consumption and Production
GOAL 13 Climate Action
GOAL 14 Life Below Water
GOAL 15 Life on Land
GOAL 16 Peace and Justice Strong Institutions
GOAL 17 Partnerships to achieve the Goal

l The base of sustainable development is social approach, economic approach and

environmental approach.
l The Economic and Social Council (ECOSOC) operates at the centre of the United Nations
(UN) system’s work on all three pillars of sustainable development economic, social and
environmental.
l It is a practical, implementable toolkit that tailors strategies to work for local people,
businesses, and institutions.
l The main responsibilities of sustainable tourism include, protecting the environment, natural
resources and wildlife, providing socio-economic benefits for communities who live in tourist
destinations, conserving cultural heritage and creating authentic tourist experiences.
l The environmental Kuznets curve suggests that economic development initially leads to a
deteroration in the environment, but after a certain level of economic growth, a society begins
to improve its relationship with the environement and levels of environmental degradation
reduces.
l This curve is in U shape which suggests that economic growth is good for the environment.
l Frank Notestein propounded the concept of “Demographic transition” in 1945. It explains the
relation between birth rates and death rates.
 National Income
l The value of final goods and services produced in an economy in a given financial year is
called national income. In India, it is calculated by the Central Statistical Organisation
(CSO) which was established in the year 1951
l Income earned by the residents within and outside the domestic border of a country is called
Gross National Income (GNI).
l Gross Domestic Product (GDP) is the sum of the monetary value of all final goods and
services produced within a country’s domestic territory in a year from 1st April to 31st March.
l It can also include goods and services produced by foreigners within the geographical limits of
the country.
l The service sector is the main source of National Income of India. National income is defined as
the total monetary value of all goods and services produced within a country during a given period
of time.
l It is an important indicator of the economic activities that are taking place within a nation.
l National income is the Net National Product (NNP) at factor cost. This income is obtained at
market prices by deducting depreciation and indirect taxes from the Gross National Product
(GNP) and adding subsidies.
l Non-monetised use is a major problem in the problems of calculation of National Income in
India. The national income of an open economy includes consumption, investments,
government purchase and net exports.
l The national income of the economy in an open economy expressed as
Y = C + I + G (X - M)

l Y = National income
l C = Consumption expenditure
l I = Investment expenditure,

l G = Government expenditure,

l X = total exports - total imports

l The Net National Product (NNP) at market prices occurs when depreciation is deducted from

the Gross National Product (GNP) at market prices.

l National income includes sales of a firm, salaries of employees, exports of information technology

sector, transport, banking, insurance, real estate, manufacturing, agriculture, mines and forests.
l The economy is divided into three sectors i.e., primary, secondary and tertiary and 14

sub-sectors for the purpose of estimating national income by the Central Statistical
Organisation (CSO).
l In National Income Accounting (NIA) the base year means the year in which the prices are

used to calculate the real Gross Domestic Product (GDP).

l The first estimate of national income in India was published by the Central Statistical

Organisation (CSO) in the year 1956.

l The value of national output is measured through Net National Product (NNP) and Gross

National Product (GNP).

Gross National Product (GNP) refers to the aggregate value of final goods and services produced
within or outside the domestic limits by ordinary citizens of a country during a period of 1 year.
Nominal Gross Domestic Product (NGDP) is calculated at current prices and not at fixed prices
but on the valuation of production for different years.
l Real Gross Domestic Product (GDP) is a measure of a country’s (GDP) that has been

adjusted for inflation.

l Contrast this with nominal GDP, which measures GDP using current prices, without adjusting

for inflation.
l Per capita Real Gross Domestic Product (RGDP) is the ratio obtained by dividing real GDP by
population.
l When a national product is calculated at market prices, it includes both indirect taxes and
subsidies.
l Indirect taxes are expenses which increase the value and hence are subtracted to reach the
national product at factor cost whereas, subsidies reduce the value of the product, and hence
are added to calculate the true value. As such
National product at factor cost = National product at market
price - Indirect taxes + Subsidies.

l The methods of calculating Gross Domestic Product (GDP) in India are Production Method,
Income Method and Expenditure Method.
l When there is a reduction in the value of machinery and capital used in the process of
production is deducted from the Gross National Product, it is called Net National Product
(NNP).
l The effect of government surplus above the equilibrium level of Net National Product (NNP).
Net National Product is exactly the same as the increase in the budget.
l Gross National Product (GNP) is the total measure of the flow of final goods and services into
current production at market prices in a year. In which net income received from abroad is
included.
l Gross National Product (GNP) includes four types of final goods and services i.e., consumer
goods and services, gross private domestic investment, government produced goods and
services, the price difference between exports and imports of goods and services.
l The rate of growth of per capita income at current prices is relatively higher than the rate of
growth of per capita income at constant prices.
l The rate of growth of per capita income at constant prices takes into account the rate of
growth of the price level.
l Real Gross Domestic Product (RGDP) per capita is a measurement of the total economic
output of a country divided by the number of people and adjusted for inflation.
l It’s used to compare the standard of living between countries and over time.
l According to the National Income Accounts, the secondary sector includes business like
manufacturing, construction gas and water supply, etc.
l The secondary sector mainly accounts for the manufactured goods of the economy.
l Agriculture and industry are the main pillars of the economy, both are linked to each other.
l The contribution of the services sector to the Indian economy is estimated to be 53% in the
year 2021 to 2022. As an economy develops, the share of the tertiary sector in Gross
Domestic Product (GDP) increases.
 Economic Planning in India

l Economic planning is the process through which we can take the decisions of what and how it
is to be produced through controlling and managing the economic activity.
l Dadabhai Naoraji first estimated National Income in 1867-68. 20 ` was then estimated national
Income.
l It is an economic programme speculated for the development of the regional economic
system.
l The book Planned Economy of India was published by Sir M Visvesvaraya in the year 1934,
in the context of the need for planning in India.
l The proposal for national reconstruction and social planning was approved by the Congress
Working Committee in the Wardha meeting in August, 1937.
l Subhash Chandra Bose had formed the National Planning Committee (NPC) in the Haripura
session of the Indian National Congress (INC) in the year 1938 to consider the need and
possibility of planning in India. The Chairman of this committee was Pandit Jawaharlal Nehru.
l The Gandhian Plan was propounded by Shriman Narayan in the year 1944. Its basic
objective is to raise the physical level as well as the cultural level of the people.
l The Jan Yojana was presented by MN Rai in the year 1945 and the Sarvodaya Yojana by
Jayaprakash Narayan in the year 1950.
l India Vision 2020 is a vision document prepared by S P Gupta Commission (He was the
Chairman of Planning Commission).
l This vision document was inspired by APS Abdul Kalam’s 1998 published book “India 2020 : A
“Vision for the New Millennium”.
l The following are the goals of economic planning in India i.e., promotion of economic
development, establishment of social justice, attainment of full employment, attainment of
self-reliance, poverty alleviation and creation of employment opportunities.
l Imperative planning, the power is vested in an administrative machinery to give orders to
various economic units to implement decisions related to investment and production.
l Indicative planning, the goals are set by the central planning body and it is used to
coordinate the investment and production plans of the private and public sector.
l The core sector represents the capital base of the economy. These eight industries have a
combined share of above 40.27% in the Index of Industrial Production (IIP).
l The descending order of 8 core industries according to their weightage :
(I) Refinery Products Industry (28.04%)
(II) Electricity (19.85%)
(III) Steel Industry (17.92%)
(IV) Coal Industry (10.33%)
(V) Crudeoil (8.98%)
(VI) Natural Gas (6.88%)
(VII) Cement (5.37%)
(VIII)Fertilisers (2.63%)
l The IIP gives the growth rates of different industry groups of the economy over a specified
period.
l The eight core sector industries in decreasing order of their weightage are refinery products,
electricity, steel, coal, crude oil, natural gas, cement, fertilisers.
l The Planning Commission is a Government Agency in India that was established in 1950 to
oversee the country’s economic and social development, primarily through the development of
five year plans.
l The Planning Commission was concerned with the transfer of funds from the centre to the
states.
l The Secretary of the Planning Commission is also the Secretary of the National Development
Council. The Planning Commission used to recommend the sources of funding for the plan.
l The Nature of the Planning Commission was centralised. The Planning Commission prepared
Twelve Five Year Plans.
l The National Institute for Transforming India (NITI) Aayog was constituted on 1st January,
2015, giving a new look and name to the 65-year-old Planning Commission.
l In this commission, the chief ministers of the state and experts from the private sector were
given a more important role, which would strengthen the federal structure.
l The main role of NITI Aayog will be to provide necessary strategic and technical advice to the
Central and State Governments on various policy issues of national and international
importance.

l The main objectives of NITI Aayog is to develop mechanisms to formulate credible plans at
the village level and aggregate these progressively at higher levels of government.
l NITI Aayog aims to improve the investment scenario of the country so as to achieve an
efficient, sustainable and modern energy system.
l It is envisaged to improve the policy framework through effective partnerships with all
stakeholders including academia, think-tanks and foreign governments.
l The National Development Council (NDC) or Rashtriya Vikas Parishad is the apex body for
decision creating and deliberations on development matters in India, presided over by the Prime
Minister.
l It was setup on 6th August, 1952 to strengthen and mobilise the effort and resources of the
nation in support of the Five Year Plans made by the Planning Commission.
l The Council of National Development Council (NDC) comprises the Prime Minister, the Union
Cabinet Ministers, Chief Ministers of all states or their substitutes, representatives of the
Union Territories (UTs) and the members of the NITI Aayog (Planning Commission).
l Gadgil Formula It was named after Dhananjay Ramchandra Gadgil. It was evolved in 1969
for allocation of central assistance for state plans.
l Third Five Year Plan (1961-66) is known as Gadgil Yojana.
l Under Gadgil formula weightage were
(I) 60% to population
(II) 25% to per capita income
(III) 7.5% to performance
(IV) 7.5% to special needs/problems

l The main objective of the Indian five year plans was self-reliance and reducing dependence
on foreign aid.
l National Development Council (NDC) is the final approval authority for the five year plans. It is
presided over by the Prime Minister and constitutes the Union Cabinet Ministers, Chief
Ministers as representatives of all states and Union Territories and members of the NITI
Aayog.
l The First Five Year Plan model was based on the Harrod Domar Model. It was launched by
the Government of India in the year of 1951.
–
 – The First Five Year Plan mainly focused on the development of the primary sector of the economy. It was
presented before the Parliament of India by Former Prime Minister Pandit Jawaharlal Nehru.
– In this scheme the highest share 39.1% of the total expenditure was given to agriculture and allied sectors.
l The Second Five Year Plan in 1956 to 1961 was based on an economic model developed by
PC Mahalanobis. He was a chairman of National Income Committee.
– The plan focused on the development of the public sector and rapid industrialisation.
– Under the Second Five Year Plan, a resolution was taken to establish a socialist structure of society.
– The objective of this plan was to establish heavy industries, which were capital intensive.
– The strategy of the Nehru Mahalanobis model was implemented for the first time in the Second Five Year
Plan.
– The main objective of this plan was to establish a socialist society. In this plan, definite emphasis was
given towards the replacement of basic and capital goods industries.
l The Third Five Year Plan in 1961 to 1966 introduced the concept of import substitution as a
strategy for industrialisation.
– The main goal of this plan was to make the Indian economy self-reliant as well as reach a self-sustaining
state.
– Agriculture showed negative growth in the Third Five Year Plan.
l The Fourth Five Year Plan in 1969 to 1974 was based on the open consistency model
formulated by Ashok Rudra and Allan S Manne.
– The main objective of the Fourth Five Year Plan was development with stability and attainment of economic
self-reliance.
– The objective of self-sustaining development in India was first adopted in the Fourth Five Year Plan. A
buffer stock was created to stabilise the prices.
–
The utmost priority of the Fourth Five Year Plan was to control inflation and bring stability in the economic
situation.
–
The plan resulted in a reduction in the price level. During the Fourth Five Year Plan in July, 1969
commercial banks were nationalised.
l The Fifth Five Year Plan in 1974 to 1979 was based on Leontic’s Input-Output Model.
–
The basic objective of this scheme was poverty alleviation and self-reliance.
–
During this plan a 20 Point Programme was started in 1975.
–
National Minimum Needs Programne (NMNP) and Food for Work Programme were also implemented in
this plan.
–
The main objective of this five year plan was to achieve self-reliance and zero foreign aid.
l Sixth Five Year Plan in 1980 to 1985 was undertaken for the period between 1980 to 1985.
–
The main aim of attaining objectives like speedy industrialisation, rise in the employment level, poverty
reduction and acquisition of technological self-reliance.
l The Seventh Five Year Plan in 1985 to 1990 was to emphasise liberalisation with emphasis
on long-term development strategies.
–
Indira Awas Yojana, Jawahar Rozgar Yojana, Nehru Rozgar Yojana were implemented under this scheme.
–
The main slogan of the Seventh Plan was Food, Work and Productivity.
l Eighth Five Year Plan in 1992 to 1997 was the first one implemented after liberalisation.
–
The plan was based on the model of John W Muller. Human resource development was given top priority in
this plan.
–
The largest source of funding for the public sector outlay of the Eighth Five Year Plan was government debt,
which was the highest among all other sources of financing.
–
In the Eighth Five Year Plan, the target of industrial growth was set at 7.3%, while in agriculture it was
4.72%.
l The main goal of the Ninth Five Year Plan in 1997 to 2002 was to develop with equitable
distribution and equity.
–
In this five year plan, the economic growth rate was fixed at 6.5%, while the actual realisation was 5.7%.
–
Capital Output Ratio (COR) estimated at 4.0% during the Ninth Five Year Plan.
l The Tenth Five Year Plan in 2002 to 2007 was based on a comprehensive Input-Output
model.
–
The highest growth target of this scheme 9.44% was set for business.
 – The target growth rate in the scheme was 7.9% about 8%, while the actual realisation was 7.6%.
– The rate of economic growth of the Tenth Five Year Plan was the highest compared to the First, Fourth and
Sixth Five Year Plans.
– The National Horticulture Mission (NHM) was implemented in the Tenth Five Year Plan.
– The investment rate was higher than the savings rate in the Tenth Five Year Plan.
l The objective of the Eleventh Five Year Plan in 2007 to 2012 was to move towards
development by accelerating and accelerating the pace of development towards a more
complete and inclusive economic growth.
– The inclusive growth envisaged in this plan is to reduce poverty, expand employment opportunities and
reduce gender inequality.
– The main focus of the Eleventh Five Year Plan was faster and more inclusive development.
– According to the draft of the Eleventh Five Year Plan, the real income of an average Indian would double in
10 years if the target growth rate was achieved and the population grew at 1.5% per annum.
– Eight Indian Institutes of Technology will be established under this five year plan.
– The theme of the Eleventh Five Year Plan for the education sector was compulsory elementary education
– Under the Eleventh Five Year Plan, the maximum amount was allocated for physical infrastructure.
– The per capita growth rate has been the highest in the Eleventh Five Year Plan.
– In the Twelfth Five Year Plan, the maximum amount was allocated for social services.
– Under this plan, a target was set to increase infrastructure investment to 9.0% of Gross Domestic Product
(GDP).
– The government had set a target of 1000 billion dollars (dollars) of investment required for infrastructure.
– The objective of the Twelfth Five Year Plan in 2012 to 2017 was faster, sustainable and more inclusive
growth.

l It is a graphical representation of the distribution of Income or wealth within a population.

l The shape of Lorenz curve is convex.

l It shows the relationship between price elasticities of demand for export and imports and its
effect on the country’s Balance of Payment (BOP) situation. Example of ‘J’ curve is population
growth and time, etc.

l This shows relationship between tax rates and total tax revenue.
l It analyses the impact of tax rates from 0% to 100%.
 Poverty and Unemployment

l Poverty is a state or condition in which a person or community lacks the financial resources
and essentials for a minimum standard of living.
l Poverty means that the income level from employment is so low that basic human needs can’t
be met.
l When a household’s income falls below the level required to sustain basic living standards
(food, shelter, housing).
l This condition allows comparisons between countries as well as throughout time.
l Relative Poverty is defined from a social perspective as a living standard that is lower than
the economic standards of the surrounding population. As a result, it is a measure of income
disparity.
l Poverty levels are defined as a level of income or spending below which it is reasonable to
conclude that someone is poorer than the rest of society.
l It is a measure of income or consumption spending that distinguishes the poor from the rest of
the population.
l The Tendulkar Committee proposed a poverty level of ` 29 per person per day in urban areas
and ` 22 per person per day in rural areas.
l Poverty estimation in India is done by the National Instute for Transforming India (NITI) Aayog
task force using data from the National Sample Survey Office under the Ministry of Statistics
and Programme Implementation to calculate a poverty line (MoSPI).
l In India, poverty lines are calculated primarily on consumption expenditure rather than income
levels.
l Consumer expenditure surveys conducted by the National Sample Survey Organisation are
used to determine poverty. A poor household is defined as one that spends less than a certain
amount each month.
l The poverty ratio, which is the ratio of the number of poor to the total population stated as a
percentage, is used to determine the prevalence of poverty. It’s also referred to as the
Head-Count Ratio (HCR).
l The Alagh Committee (1979) established a poverty level based on an adult’s daily calorie
requirement of 2400 and 2100 calories, respectively, in rural and urban areas. Following that,
the poverty estimation was done by other committees, including the Lakdawala Committee
(1993), Tendulkar Committee (2009) and Rangarajan Committee (2012).
l According to the Rangarajan Committee report (2014), the poverty line is set at ` 1407 per
capita in urban areas and Rs. 972 in rural regions (monthly consumption).
l As per the Census report, the percentage of population living Below Poverty Line (BPL) is
27.5%. After independence, the study of poverty in India was first done by BS Minhas. The
concept of the Vicious Circle of Poverty is related to Ragnar Nurkse.
l Based on the formula of VM Dandekar and Neelkanth Rath, the poverty line was determined
in the year 1971. According to these, the average calorie intake for both rural and urban was
fixed at 2250 calories per person.
l The Lakdawala Committee determined the poverty line in which people from urban and rural
areas could afford food, shelter and clothing at 2100 and 2400 calories respectively.
l Income inequality is measured by the Lorenz curve, the Lorenz curve was developed by Dr.
Max O. Lorenz in 1905.
l The Planning Commission constituted an Expert Group under the Chairmanship of Professor
SR Hashim recommended the detailed methodology for identification of families living Below
Poverty Line (BPL) in urban areas.
l According to the data released by the Planning Commission in the year 2013 (based on the
Tendulkar formulas), 21.9% of the people in the year 2011 to 2012 are poor.
l The Rangarajan Committee used the Methodology formula in the determination of poverty.
This report said that 3 out of every 10 people in India are poor.
l In the Engel curve, household expenditure on a particular good or service varies with
household income. There are two types of Engel curves.
l The Laffer curve shows the relationship between the revenue receipt and the tax rate.
l The Phillips curve is an economic concept that states that inflation and unemployment has a
stable and inverse relationship.

l Unemployment occurs when a person who is actively searching for employment is unable to
find work. Unemployment is often used as a measure of the health of the economy.
l The estimates of unemployment and poverty in India are based on the National Sample
Survey Organisation’s survey of consumption expenditure of households.
l Rapid population growth, lack of skill development and lack of manpower planning are
considered mainly responsible for problems like Unemployment.
l Under normal condition, if a person does not work for more than 50% of the days (up to 183
days) in a year, then this normal condition is called unemployed.
l The number of persons who remain unemployed for most part of the year in India is termed as
normal state unemployment.
l According to John Maynard Keynes, employment depends on effective demand. John
Maynard Keynes presented a systematic and systematic theory of employment in his book
The General Theory of Employment, Interest and Money published in the year 1936.
l For the measurement of unemployment in India (Year 1973) three assumptions i.e., normal
status, current weekly status and current daily status are used. This measurement method is
based on the concept suggested by the Bhagwati Committee.
l Structural unemployment occurs when certain industries decline because of long term
changes in market conditions. Structural employment is a natural outcome of economic
development, technological advancement and innovation that are taking place rapidly all over
the world in every sphere
l Classical unemployment is caused when wages are ‘too’ high. This explanation of
unemployment dominated economic theory before the 1930s, when workers themselves were
blamed for not accepting lower wages, or for asking for too high a wage classical
unemployment is also called Real wage unemployment.
l Seasonal unemployment exists because certain industries only produce or distribute their
products at certain times of the year. Industries where seasonal unemployment is common
include farming, tourism and construction
l Frictional unemployment also called search unemployment, occurs when workers lose their
current job and are in the process of finding another one.
l There may be little that can be done to reduce this type of unemployment, other than provide
better information to reduce the search time.
l Voluntary unemployment is defined as a situation when workers choose not to work at the
current equilibrium wage rate.
l For one reason or another, workers may elect not to participate in the labour market.
l Disguised unemployment is a situation in which more people are doing work than actually
required.
l If unemployment continues to be a long term feature of a country, it is called Chronic
unemployment.
l Rapid growth of population and inadequate level of economic development on account of
vicious circle of poverty are the main causes for chronic unemployment
l According to a report released by the International Labour Organisation, the labour participation
rate for women in India has declined sharply in recent years. The rapid decline in labour
participation rate for women in India is attributed to dual responsibility of household and office
responsibilities, lack of employment opportunities, occupational segregation and gender
inequality etc.
 Social Programmes and Schemes

l India was the first country to officially adopt the family planning programme. In the year 1952,
India launched the world’s first National Family Planning Programme (NFPP).
l The Khadi and Village Industries Commission (KVIC) launched and initiated the Rural
Employment Generation Programme (REGP) scheme on 1st April, 1995.
l They generated job opportunities for around 2 million job seekers under the Khadi and Village
Industries (KVI) sector in the rural areas of the country.
l The Union Government launched the Development of Women and Children in Rural Areas
(DWCRA) as a sub-scheme of the Integrated Rural Development Programme (IRDP) in 50
districts in 1982 and 1983.
l The government subsequently extended it to cover all the districts across the country by 1994
and 1995.
l The Rural Landless Employment Guarantee Programme (RLEGP) was launched on 15th
August, 1983 by Prime Minister of India Indira Gandhi during the Sixth Five Year Plan.
l Jawahar Rozgar Yojana (JRY) was launched on 1st April, 1989 by merging National Rural
Employment Programme (NREP) and Rural Landless Employment Guarantee Programme
(RLEGP). At the end of Seventh Five Year Plan.
l It was largest National Employment Programme (NEP) of India at that time with a general
objective of providing 90 to 100 days employment per person particularly in backward districts.
People Below Poverty Line (BPL) were the main targets.
l Support to Training and Employment Programme (STEP) scheme aims to provide skills
that give employability to women and to provide competencies and skill that enable women to
become self-employed /entrepreneurs. The scheme is intended to benefit women who are in
the age group of 16 years and above across the country.
l Mahatma Gandhi National Rural Employment Guarantee Act of 2005 (MREGA), earlier
known as the National Rural Employment Guarantee Act (NREGA).
l It is an Indian labour law and social security measure that aims to guarantee the right to
work. This act was passed in 23rd August, 2005.
l Swarnjayanti Gram Swarozgar Yojana (SGSY) was enacted in the dawn of the financial
year of 1999 and 2000 as a replacement of six other affiliated schemes.
l The initiative was designed as an integrated programme that caters to the self-employment of
the rural poor.
l It is funded by the centre and the state in a 75:25 ratio and is implemented by commercial
banks, regional banks and cooperative banks.
l Deendayal Antyodaya Yojana (DAY) is one of the Government of India scheme for helping
the poor by providing skill training. It replaces Aajeevika.
l The Government of India has provisioned ` 500 crore for the scheme. The objective of the
scheme is to train 0.5 million people in urban areas per annum from 2016.
l The National Rural Health Mission (NRHM) was launched by the Hon’ble Prime Minister on
12th April, 2005, to provide accessible, affordable and quality healthcare to the rural
population, especially the vulnerable groups.
l National Food Security Mission (NFSM) is a centrally sponsored scheme launched in 2007
based on the recommendations of the agriculture sub-committee of National Development
Council (NDC).
l It was implemented to increase the production of rice, wheat and pulses through area
expansion and productivity enhancement, restoring soil fertility and productivity, creating
employment opportunities and enhancing farm level economy.
l Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is a skill development initiative scheme of
the Government of India for recognition and standardisation of skills.
l The aim of the PMKVY scheme is to encourage aptitude towards employable skills and to
increase working efficiency of probable and existing daily wage earners, by giving monetary
awards and rewards and by providing quality training to them.
l As per Skill India Mission, 76 lakh youth have acquired skill training upto March, 2016. Out of
which 26 lakh have entered the job market.
l Skill India Mission was launched by the Central Government in 2015 as an Umbrella Scheme
with many schemes and programmes under it.
l Its main objective is to empower the youth of the country with skills relevant to industries that
will facilitate employment of the youth.
l National Career Service (NCS) is a career service in India launched on 20th July, 2015 and it
is operated by the Ministry of Labour and Employment.
l The career centres are thus a modified version of employment exchanges, intended to
address a wider range of career related needs of youth and students.
l The aim of Apna Gaon, Apna Kam scheme is to remove poverty by creating employment for
everyone in the village. This scheme was started by the Government of Rajasthan in January,
1991.
l Its objectives are construction of public properties in rural areas for daily usage, creation of
employment opportunities, promotion of self-dependence in the local communities, and
improving the living-standard in rural areas.
l The main objective of Apna Gaon Apna Kaam Yojana is to remove poverty by generating
employment for everyone in the village. This scheme was started by the Government of
Rajasthan in the year 1991.
l Swarnajayanti Shahari Rozgar Yojana (SSRY) was set up in 1997. It provided employment
to the unemployed and under-employed urban poor through self-employment and wage
employment.
l Shabri Sankalp Abhiyan (SSA) is associated with the National Nutrition Mission. The State
Government has now given the gift of Shabri Sankalp Yojana on the lines of Hausla Poshan
Yojana.
l This scheme is being implemented in 29 districts of the state. Shabri Sankalp Abhiyan was
launched in Uttar Pradesh to eradicate malnutrition.
l Under this scheme, the amount was directly transferred to the beneficiary’s account.
l Pradhan Mantri Jan Arogya Yojana (PMJAY) was recognised as the world’s largest
insurance scheme launched in India in September, 2018.
l It aims at providing a health cover of 5 lakh per family every year for secondary and tertiary
care hospitalisation to over 10.74 crore poors and vulnerable families.
l Pradhan Mantri Jan Arogya Yojana (PMJAY) is the world's largest health insurance/assurance
scheme fully financed by the government. It provides a cover of 5 lakhs per family per year for
secondary and tertiary care hospitalisation across public and private empanelled hospitals in
India.
l National Initiative for Development and Harnessing innovations (NIDHI) is an umbrella
scheme of Department of Science and Technology (DST) for fostering ideas and innovations
into startups.
l Pradhan Mantri Garib Kalyan Yojana (PMGKY) was launched by the Government of India
and came into effect in 2016.
l It allows individuals to deposit money that has not been taxed.
l Under the scheme, 50% of the untaxed amount must be paid. The scheme was initially valid
from December 2016 to March 2017.
l In order to promote the self-employment opportunities to the educated but unemployed youth, the
Government of Uttar Pradesh has announced the scheme of Mukhyamantri Yuva Swarozgar
Yojna.
l The Pradhan Mantri Suraksha Bima Yojana (MPSBNY) policy helps to stay prepared in
cases of unforeseen emergencies i.e., accidental death, personal accident and permanent
disability etc.
 – PMSBY is a government backed accident insurance scheme that covers accidental death, permanent disability
and partial disability.
– Individuals between 18 to 70 years are eligible to apply for this scheme. It was formally launched by the
Prime Minister Narendra Modi on 8th May in Kolkata, West Bengal.
l The E-Shram portal was launched by the Government of India, whereby any person employed
in unorganised sectors is entitled to get an accidental insurance cover of 2 lakh under the
PMSBY.
l Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) is a one-year life insurance scheme
renewable from year to year offering coverage for death due to any reason.
l Under PMJJBY, a cumulative number of 12.76 crore persons have enrolled since inception for
life cover and families of 576121 persons have received claims for ` 11522 crores under the
scheme.
l National Pension System (NPS) is a voluntary, defined contribution retirement savings
scheme.
l It is designed to enable the subscribers to make optimum decisions regarding their future
through systematic savings during their working life.
l NPS seeks to inculcate the habit of saving for retirement amongst the citizens.
l Schemes like the old age pension scheme, health insurance scheme, personal accident insurance
scheme etc. were started for the purpose of social security for the workers of the unorganised
sector. In 2008, the Unorganised Workers Social Security Act was passed. It came into force
on 16th May, 2009.
l Atal Pension Yojana formerly known as Swavalamban Yojana is a government-backed
pension scheme, primarily targeted at the unorganised sector.
l The Aam Aadmi Bima Yojana (AABY) was launched in India by LIC in order to provide social
security along with health and financial aid to the rural population of India who do not have any
access to healthcare and medicine.
l Accessible India Campaign (AIC) is the nationwide flagship campaign of the Department of
Empowerment of Persons with Disabilities (DEPwD), Ministry of Social Justice and
Empowerment.
l The aim of the campaign is to make a barrier-free and conducive environment for
Divyangjans (Persons with Disabilities) all over the country.
l Rashtriya Vayoshri Yojana (RVY) is scheme for providing physical aids and Assisted-living
Devices for senior citizens belonging to BPL category.
l This is a central sector scheme, fully funded by the Central Government. The expenditure for
implementation of the scheme is being met from the Senior Citizens Welfare Fund.
l National Social Assistance Programme (NSAP) was launched on 15th August, 1995. It is a
social security and welfare programme to provide support to aged persons, widows, disabled
persons and bereaved families on death of primary breadwinner, belonging to Below Poverty
Line (BPL) households.
l The PM Kisan Maan Dhan Yojana for the purpose of pension to small and marginal farmers
was launched on 12th September, 2019.
l This scheme provides financial assistance to small and marginal farmers, who have less than
4.9 acres of land.
l Under this scheme, all the farmers are getting ` 6000 per year as minimum income support.
This scheme implemented from 1st December, 2019 is proving to be a boon for the farmers.
l Rajiv Awas Yojana (RAY) targets to make India slum free.
–
This scheme was started by the Government of India to get rid of slums in urban areas and help the poor to
fulfill their dream of home.
–
The first phase of the scheme was approved on 2nd June, 2011.
l Rajiv Awas Yojana (RAY) scheme ran between 2009 and 2014 as a central sector scheme
focusing on slum free India. This scheme is now succeeded by Pradhan Mantri Awas Yojana
(Urban).
l Surendra Kumar Dey is the main architect of community development in India. The first
community development project was started in Etawah Uttar Pradesh (UP) in the year 1948.
l The Community Development Programme (CDP) was launched on 2nd October, 1952. It
was done for the purpose of economic development and social improvement of the villages.
l TRYSEM stands for Training to Rural Youth for Self Employment. TRYSEM is a centrally
sponsored programme that was started on 15th August 1979.
l The main objective of this scheme was to provide technical and business expertise to rural
BPL people who are in the 18-35 age group.
l Pradhan Mantri Gramin Awas Yojana (PMGAY), was a sub-scheme of the Rural Landless
Employment Guarantee Programme (RLEGP) and a social welfare programme that was first
launched by Rajiv Gandhi in 1985.
l Gokul Gram Yojana (GGY) is related to Gujarat. The scheme aims to establish integrated
cattle development centres, Gokul Grams for developing indigenous breeds including up to
40% non-descript breeds.
l The purpose of the employment assurance scheme was to provide 100 days employment for
unskilled manual worker.
l Employment is provided to those persons who are willing to work, but could not find it.
Employment assurance scheme aims to provide gainful employment.
l Pradhan Mantri Gramodaya Yojana (PMGY) seeks to achieve the objective of sustainable
habitat development at the village level. It was started in 2000.
l Swayamsiddha is the flagship programme of Ministry of Women and Child Development for
holistic empowerment of women.
l Swayamsidha is an integrated programme, seeks to empower women through awareness
generation, achievement of economic independence through micro-level income-generating
activities.
–
The scheme for the empowerment of women was launched in 2001-women empowerment year. It’s an
Integrated Women Empowerment Programme (IWEP).
l Atal Innovation Mission is a flagship programme launched by the government of India to
provide a platform for new entrepreneurs and boost the culture of new technology and
innovations.
l The aim of the Atal Innovation Mission is to develop new programmes that help to increase the
economic growth of the country
l Atal Mission for Rejuvenation and Urban Transformation (AMRUT) was launched in June
2015 by PM Narendra Modi under the Government of India.
l The AMRUT scheme is an initiative to provide basic civic amenities to the urban areas to
improve the quality of life with major focus to the poor and the disadvantaged.
l The Ministry of Urban Development, Government of India, launched the National Heritage City
Development and Augmentation Yojana (HRIDAY) scheme on 21st January, 2015, with a
focus on holistic development of heritage cities.
l National Smart Cities Mission is an urban renewal and retrofitting programme by the
Government of India with the mission to develop smart cities across the country, making them
citizen friendly and sustainable.
l The Union Ministry of Urban Development is responsible for implementing the mission in
collaboration with the state governments of the respective cities.
l The mission initially included 100 cities, with the deadline for completion of the projects set
between 2019 and 2023.
l One-Stop Centre (OSC) and Women Helpline (WH) are being implemented to facilitate
access to an integrated range of services including medical aid, police assistance, legal aid/
case management, psychosocial counselling and temporary support services to women
affected by violence.
l Ujjawala is a comprehensive scheme for the prevention of trafficking and for rescue,
rehabilitation, reintegration and repatriation of victims of trafficking for commercial sexual
exploitation.
l Rashtriya Mahila Kosh (RMK) to provide micro-credit to poor women for various livelihood
support and income-generating activities at concessional terms.
l Pradhan Mantri Mahila Shakti Kendra (MPMSK) scheme to promote community
participation through the involvement of student volunteers for the empowerment of rural
women.
l Tejaswini Scheme is providing financial assistance to the young women of Jammu and
Kashmir for setting up gainful self-employment ventures, suited to their skills, training,
aptitude and local conditions.
l Swa Shakti aims at establishment of more than 16000 self-reliant women Self Help Groups
(SHGs) having 15 to 20 members each and thereby enhance women’s access to and control
over resources for betterment of their lives.
l Swadhar Scheme aims to provide basic necessities to marginalised women and girls who are
living in difficult circumstances without any economic or social support.
l Under this scheme women are provided with emotional support and the target group is mainly
women who are victim of violence.
l Survivors of natural disaster, trafficked women, and women without no families.
l Integrated Child Development Services (ICDS) is a government programme in India, which
provides nutritional meals, preschool education, primary healthcare, immunisation, health
check-up and referral services to children under 6 years of age and their mothers.
l Operation Blackboard is a centrally funded programme that was launched in 1987 soon after
the 1986 Rajiv Gandhi National Education Policy was released to provide all primary schools
in the nation with the minimum required necessary services.
l The purpose of the scheme is to provide the requisite institutional equipment and educational
material for students studying in primary organisations to improve their education.
l District Primary Education Programme (DPEP) intends to make primary education
accessible to all, through formal primary schools or alternative methods.
l The primary objectives of DPEP to reduce the school dropout rate at primary schools below 10
percent.
l Sarva Shiksha Abhiyan (SSA) is a comprehensive and integrated flagship programme of
Government of India to attain Universal Elementary Education (UEE).
–
It lays emphasis on covering the entire country in a mission mode.
–
SSA was launched in 2001 to 2002 in partnership with the State Governments and Local Self
Governments.
l The Kasturba Gandhi Balika Vidyalaya (KGBV) is a residential girls’ secondary school run
by the Government of India for the weaker sections in India. It was launched in 2004.
l The special emphasis of Saakshar Bharat is on female literacy. The Saakshar Bharat Mission
or programme in India was started in the year 2009 on the occasion of International Literacy
Day (8 September).
l Inclusive Education for the Disabled at Secondary Stage Scheme was implemented in the
year 2009 to 2010 under Rashtriya Madhyamik Shiksha Abhiyan (RMSA).
l The Nalanda Project, is an education-technology solution for low-income schools.
–
It focuses on implementing low cost, scalable, blended learning solutions in classrooms.
–
Teachers can leverage to provide personalized learning to their students and reduce the gap in student
learning levels.
l Beti Bachao Beti Padhao was launched in January 2015 with the aim to address sex
selective abortion and the declining child sex ratio which was at 918 girls for every 1000 boys
in 2011.
–
This is a joint initiative of the Ministry of Women and Child Development, Ministry of Health and Family
Welfare and Ministry of Human Resource Development.
–
The programme is being implemented across 405 districts in the country.
–
It’s main objective are prevention of gender-biased sex-selective elimination, ensuring survival and
protection of the girl child, ensuring education and participation of the girl child and protecting rights of girl
children.
l Vidyanjali is an initiative taken by the Ministry of Education, Government of India with the aim
to strengthen Schools through community and private sector involvement in schools across
the country.
l Mid Day Meal Scheme was started in India from 15th August 1995 under the name of
‘National Programme of Nutritional Support to Primary Education (NP-NSPE)’.
– In October 2007, NP-NSPE was renamed as ‘National Programme of Mid Day Meal in Schools’, which is
popularly known as Mid-Day Meal Scheme.
– Mid day meal that is provided to all children enrolled in government schools, government-aided schools,
local body schools, Special Training Centres (STCs), Madrasas and Maktabs supported under Sarva
Shiksha Abhiyan (SSA).
l In September 2021, the Mid-Day Meal Scheme was renamed ‘PM Pradhan Mantri Poshan
Shakti Nirman (POSHAN).
– PM POSHAN will extend the hot cooked meals to students studying in pre-primary levels or Bal Vatikas of
government and government-aided primary schools, in addition to those already covered under the
mid-day cheme.
l ASHA will provide information to the community on determinants of health such as nutrition,
basic sanitation and hygienic practices, healthy living and working conditions, information on
existing health services and the need for timely utilisation of health and family welfare
services.
l National Rural Health Mission seeks to provide equitable, affordable, and quality health care
to the rural population, especially the vulnerable groups.
l Under the NRHM, the Empowered Action Group (EAG) States, as well as the North Eastern
States, Jammu and Kashmir and Himachal Pradesh, have been given special focus.
l Mission Indradhanush is a health mission of the Government of India. It was launched by
Union Health Minister Jagat Prakash.
– Nadda on 25th December, 2014. The scheme this seeks to drive towards 90% full immunisation coverage
of India and sustain the same by year 2022.
l Ayushman Bharat Pradhan Mantri Jan Arogya Yojana is a national public health insurance
fund of the Government of India that aims to provide free access to health insurance coverage
for low income earners in the country.
l Mothers Absolute Affection (MAA) is a nationwide programme of the Ministry of Health and
Family Welfare in an attempt to bring undiluted focus on promotion of breastfeeding and
provision of counselling services for supporting breastfeeding through health system.
l Vision 2020 envisages collaboration between governments, WHO, IAPB, funding agencies,
international and private non-governmental organisations (NGOs) that collaborate with the
WHO in the prevention and control of blindness
l The Jawaharlal Nehru National Solar Mission (JNNSM), or the National Solar Mission, is an
initiative of the Government of India and State Governments to promote solar power in India.
l The Ministry of New and Renewable Energy (MNRE) launched the Atal Jyoti Yojana (AJAY)
to illuminate dark regions through establishment of solar street lights.
l It is a sub scheme under off .grid and decentralized solar application scheme of Ministry of
New and Renewable Energy (MNRE), Govt. of India.
l Pradhan Mantri Jan Dhan Yojana (PMJDY), the biggest financial inclusion initiative in the
world, was announced by the Hon'ble Prime Minister Shri Narendra Modi on 15th August,
2014.
l Pradhan Mantri Kisan Urja Suraksha Evam Utthaan Mahabhiyan Yojana was launched by
the Government of India to increase the income of farmers and provide sources for irrigation
and de-dieselisation the agricultural sector.
l Nai Roshni Scheme is a central sector scheme, which aims to empower and enhance
confidence in women by providing knowledge, tools and techniques for Leadership
Development of Women.
l The District Development Coordination and Monitoring Committee (DDCMC) was set up by
the Union Government of India.
l The purpose behind the formation of the committee was to work on the effective
implementation and control over the programs launched by the government of India.
 Indian Agriculture

l Agriculture is the primary sector of the Indian economy. The importance of agriculture in the
Indian economy is known by its contribution to national income and employment, industrial
development and international trade and food supply.
l Community development in India was initiated by the Government of India through the
Community Development Programme (CDP) in 1952. The focus of CDP was on rural
communities.
l Agriculture is considered as a means of earning a living in India. This is because food crops
are grown exclusively here.

l Coarse cereals and rice crops are mostly grown under subsistence oriented agriculture.
l Golden rice has been made richer in Vitamin A. Golden rice is a variety of rice produced
through genetic engineering produce beta-carotene, which is not normally present in rice.
l Black soil of India is very suitable for cotton crop. Urad is cultivated in both Kharif and Rabi
crops.
l Uttar Pradesh is the largest producer of wheat in India. West Bengal is the largest producer of
jute in India.
l India is the only country in the world which produces all the five known business silks.
l The Acland Mill was the first jute mill established in India. The mill was established in 1855 by
British entrepreneur George Acland and Bengali Financier Babu Bishambar Sen in Rishra,
Bengal. Kerala is the largest rubber producing state in India.
l 97% of India’s natural rubber demand is met by domestic production.
l India does not export natural rubber.
l The favourite variety of mango for export in India is Alphonso and its major producing state in
India is Maharashtra.
l Kerala is the largest producer of coconut in India. The state contributes 35.52% to the total
coconut production of India.
l Kerala is the largest producer of cardamom and black pepper in India. India produces more
tea than it needs.
l Karnataka is the largest producer of coffee (Kahwa) in India. The state contributes 56.5% to
the total production of coffee.
l Kashmir is the largest producer of saffron in India. Iran is the world’s largest producer of
saffron.

l In agriculture, multiple cropping or multi-cropping is the practice of growing two or more crops
in the same piece of land during one growing season, instead of just one crop.
l When multiple crops are grown simultaneously, this is also known as inter-cropping.
l The industries involved in the activities of rearing and breeding of living organism i.e., birds, plants,
animals etc. are known as a genetic industry. Its examples are rearing of cattle for milk, dairy
farms, poultry farms, rearing of plants in the nursery, growing fish in ponds, etc.
l Green undecomposed material used as manure is called green manure. The plants that are
grown for green manure known as green manure crops.
l The most important green manure crops are sunnhemp, dhaincha, pillipesara, clusterbeans
and sesbania rostrata.
l The Agmark Act is legally implemented in India by the Agricultural Produce (Grading and
Marking) Act of 1937 amended, 1986.
l Agmark is a certification mark employed on agricultural products in India, assuring that they
conform to a set of standards approved by the directorate of marketing and inspection, an
agency of the Government of India.

l The Green Revolution in India was initiated in the 1960s by introducing High-Yielding Varieties
(HYV) of rice and wheat to increase food production in order to alleviate hunger and poverty.
l The term Green Revolution was first used by William Gaud and Norman Borlaug is the
Father of the Green Revolution.
l In the year 1965, the Government of India launched the Green Revolution with the help of a
geneticist, MS Swaminathan.
l MS Swaminathan is now known as the Father of the Green Revolution (India). Green
Revolution is known as Seed Fertiliser and Irrigation Revolution in India.
l The Green Revolution in India refers to a period when Indian Agriculture was converted into
an industrial system due to the adoption of modern methods and technology such as the use
of High-Yielding Varieties (HYV) seeds, tractors, irrigation facilities, pesticides and fertilisers.
l The Green Revolution led to high productivity of crops through adapted measures, such as
increased area under farming, double-cropping, which includes planting two crops rather than
one, annually, adoption of HYV of seeds, highly increased use of inorganic fertilisers and
pesticides.
l The biggest impact of the Green Revolution realised in the production of wheat.
l The Blue Revolution in agriculture is associated with advances in the production of fish and
marine products.
l Former Prime Minister Dr. Manmohan Singh initiated the second Green Revolution.
l The second Green Revolution is concerned with the integration of crop production with animal
husbandry, social forestry and fisheries.
l The second Green Revolution was started in the year 2006, in which more food grains
production, investment and services provided to farmers expanded.
l The revolution associated with a sharp increase in milk production in the country is called the
White Revolution in India also known as Operation Flood.
l White Revolution period intended to make India a self-dependent nation in milk production.
l Padma Vibhushan award Dr. Verghese Kurien was the Father of White Revolution in India.
l The various colours of the Rainbow Revolution indicate various farm practices such as Green
Revolution (Foodgrains), White Revolution (Milk), Yellow Revolution (Oil seeds) and Blue
Revolution (Fisheries). Golden Revolution (Fruits), Silver Revolution (Eggs), Round
Revolution (Potato), Pink Revolution (Meat), Grey Revolution (Fertilisers).
l National Food Security Mission is a centrally sponsored scheme launched from the year
2007 to 2008 .
l National Horticulture Mission is being implemented in the country from the year 2005 to
2006.
l Pantnagar (Uttarakhand) is the birthplace of the Indian Green Revolution. Govind Ballabh
Pant University of Agriculture and Technology is the first Agricultural University in India.

l Balanced Fertiliser Programme is one which provides for adequate, but not excessive,
supplies of all plant nutrients in the soil system.
l Minimum Support Price (MSP) is the minimum price set by the government for certain
agricultural products, at which the products would directly be bought from the farmers if the
open market prices are less than the cost incurred.
l The objective of raising the prices on food grains distributed in the Public Distribution
System (PDS) is to reduce the burden of subsidies contained in this scheme.
l Animal husbandry, cottage industries and availability of good equipment contribute
significantly to the rural economy.
l Agricultural Price Commission was established in the year 1965 to determine the support price
of agricultural produce.
l In 1985, the name of this commission was changed to Agricultural Costs and Prices
Commission.

l The market for agricultural products in India is regulated by the Agricultural Produce Marketing
Committee Act, enacted by the states. The objective of the nationwide Soil Health Card
Scheme is to prevent overuse of fertilisers in agricultural land.
l Accelerated Irrigation Benefit Programme was launched in the year 1996 to 1997 to provide
credit assistance to such states.
l The National Agricultural Technology Project is a World Bank assisted scheme. It is being
implemented by the Indian Council of Agricultural Research and the Department of Agriculture
and Cooperation since November, 1998.
l Kisan Credit Card Scheme was launched in the year 1998 to 1999 by a joint effort of
NABARD and Reserve Bank of India (RBI). The purpose of Kisan Credit Card is to provide
short-term credit to the farmers.
l Keeping in mind the problems faced in agricultural production, the Ministry of Agriculture
started the National Agricultural Insurance scheme in the year 1999 to 2000.
l Agricultural Workers Social Security scheme provides pension and insurance benefits. This
scheme was started on 1st July, 2001.
l Hariyali Yojana is related to water management. This scheme was launched in the year 2003.
l The National Horticulture Mission was launched in May, 2005 during the Tenth Five-Year
Plan and the year 2012 was declared as the year of horticulture. The objective of the National
Horticulture Mission is to achieve high growth in the horticulture sector, to make arrangements
for post-harvest and human resource development.
l The National Agricultural Innovation scheme was launched in 2006. Neeru-Meeru was a Water
Harvesting Mission initiated in the year 2000 in the state of Andhra Pradesh in India.
l The Pradhan Mantri Fasal Bima Yojana was launched by the Government of India on 13th
January, 2016.
l Pradhan Mantri Fasal Bima Yojana insures post-harvest losses due to cyclones, off-season
rains.
l The National Agricultural Market scheme was launched by the Government of India on 14th
April, 2016. This scheme provides nationwide market (electronic platform) to the farmers.

l National Bank for Agriculture and Rural Development (NABARD) is the apex level bank
providing agriculture refinance.
l National Agricultural Cooperative Marketing Federation of India Limited (NAFED), an apex
Organisation under the Ministry of Agriculture, Government of India deals with marketing
cooperatives for agricultural produce in India.
l National Institute of Agricultural Marketing is located in Jaipur. It was established in the year
1988 in memory of Chaudhary Charan Singh.
l Indian Veterinary Research Institute is located in Bareilly, Uttar Pradesh. It was established
in 1889 AD.
l Uttar Pradesh Agricultural Research Council is located in Lucknow. It was established in
the year 1989.
l National Academy of Agriculture Reserve Management is located in Hyderabad.
l Central Food Technological Research Institute is located in Mysore.
 Indian Industry

l Industrialisation and industrial development are mostly considered as indicators and engines
of economic growth.
l The development of the industrial sector creates employment in the economy through income
generation.
l It also helps in laying the foundation for rapid and self-reliant economic development of the
country.
l The cotton textile industry is the oldest and the largest industry in India.
l The first modern cotton mill was established in 1818 AD at Fort Gloster near Kolkata
(Calcutta).
l Maharashtra is the largest producer of factory made cloth in India. It also has the largest
number of cotton textile mills. Mumbai is known as the capital of cotton textiles in India.
l In the case of co-operative units, the cotton textile industry has got a high rate of development.
l Jute industry in India is mainly concentrated in West Bengal.
l Jute is also called golden fibre. First jute factory in India was established in Rishra in West
Bengal in 1859 AD.
l Nepanagar is known for its newsprint industry. National Newsprint and Paper Mills Limited is
located here.
l Yamunanagar (Haryana), Guwahati (Assam) and Ballarpur (Maharashtra) are famous for the
paper manufacturing industry.
l In the year 1903, the first sugar mill of India and Asia was established at Pratappur in Deoria
district of Uttar Pradesh.
l Digital India is a campaign launched by the Government of India.
l It is launched to ensure the Government’s services are made available to citizens
electronically by improved online infrastructure and by increasing internet connectivity.
l The Index of Industrial Production (IIP) is an index for India which details the growth of various
sectors in an economy such as mineral mining, electricity and manufacturing.
l In the year 2020, the Ministry of Labour and Employment released the new series of
Consumer Price Index for Industrial Worker (CPI-IW) with base year 2016.
l Handloom industry is the second largest employment generating sector after agriculture.
l The largest industry in Uttar Pradesh in terms of employment is the handloom industry.
l The Western region of Uttar Pradesh is the most developed in terms of industrial
development.

l The first Industrial Policy in India was announced post-independence in 1948. It was
presented by Dr. Shyama Prasad Mukherjee.
l After India’s first Industrial Revolution many important changes took place in the country, due
to which the new industrial policy was passed on 30th April, 1956. This policy is also known as
the Economic Constitution of India.
l Under this policy, for the next few years, the existing industrial units were not to be
nationalised and new industrial units were to be established under government ownership.
l The idea of joint sector for industrial development in India was put forward in the industrial
policy proposal of 1956.
l The 1956 policy emphasised the need to expand the public sector, to build up a large and
growing co-operative sector and to encourage the separation of ownership and management
in private industries and above all, prevent the rise of private monopolies.
l The basis of the licensing system for enterprises in India was the Industries Development and
Regulation Act of 1951.
l The Government of India announced its New Industrial Policy 1991 on 24th July, 1991, with
the goal of correcting the distortions and weaknesses in the country’s industrial structure.
l The New Industrial Policy, of 1991 had the main objective of providing facilities to market
forces and increasing efficiency.
l The bigger roles in this policy were played by LPG. L as Liberalisation (Reduction in
Government Control), P as Privatisation (Increasing the Private Sector’s Role and Scope.), G
as Globalisation (Economic Integration between India and the rest of the world).
l Government monopoly was reduced by decreasing the number of industries reserved for the
public sector from 17 (as per 1956 policy) to 8 industries.
l The Industrial Licensing Policy abolished the industrial licensing given to all industries except
for the 18 industries, which was further reduced to 6 industries in 1999.
l These included drugs and pharmaceuticals, hazardous chemicals, explosives such as
gunpowder and detonating fuses, etc.
l It allowed foreign companies to have a majority stake in India. For example, in 47 high-priority
industries, up to 51% of Foreign Direct Investment (FDI) was allowed.
l The criteria for a tiny unit was changed to a unit having an investment limit of less than ` 5
Lakh. The role of the public sector was decreased and two sectors were reserved for the
public. The process of disinvestment was started in Public Sector Undertaking (PSUs).
l By removing restrictions it enabled the entry of multi-national companies, privatisation,
removal of asset limits on Monopolies and Restrictive Trade Practices (MRTP) companies,
liberal licensing policy, etc.
l Increased efforts were undertaken to increase exports such as Export Oriented Units (EOU),
Export Processing Zones (EPZ), Agri-Export Zones (AEZ), etc. emerged.
l To better resolve the issues of Ministry of Micro, Small and Medium Enterprises (MSMEs) in
2006 a new act and Separate Ministry were established.
l Small and cottage industries are important because they provide employment to many people.
Small and cottage industries generate more employment opportunities for developing countries.
l Major problems faced by the small scale industries are Finance, Raw Material, Idle Capacity,
Technology, Marketing, Infrastructure, Under Utilisation of Capacity and Project Planning.
l Karve Committee was setup in the year 1955 for the growth of small scale industries.
l The Abid Hussain Committee on Small Scale Industries (SSIs) in 1997 examined the
problems of the SSI sector.
l The Abid Hussain Committee Report on Trade Policy Reform and the Abid Hussain
Committee Report on Small Scale Industries have been regarded as milestones in India’s
economic reforms.
l The PJ Nayak Committee or officially the Committee to Review Governance of Boards of
Banks in India was setup by the Reserve Bank of India (RBI).
l It was established to review the Governance of the Board of Banks in India. The committee
was setup in January, 2014.
l The scheme of Mega Food Park 2008 aims at providing a mechanism to link agricultural
production to the market by bringing together farmers, processors and retailers so as to
ensure maximizing value addition.
l This scheme also helps in minimising wastage, increasing farmers income and creating
employment opportunities particularly in the rural sector.
l The Industrial Revolution first started in Britain. Industrial Revolution started with the
mechanisation of the textile industry. This was the first phase of the industrialisation
revolution.
l The steam engine had emerged in the second phase of the Industrial Revolution.
l The technology of making iron and refined coal started in the third phase of industrial
production. Steel, chemical power industries emerged in the third phase.
l In the fourth stage the Industrial Revolution saw the rise of petrochemicals, jet aircraft and
computers.
l The Minimum Wages Act of 1948, is an Act of Parliament concerning Indian Labour Law that
sets the minimum wages that must be paid to skilled and unskilled labourers.
l The Industries Development and Regulation Act (IDRA), came into force from 8th May,
1952.
l The act extends to the whole of India including the state of Jammu and Kashmir with a view to
being under central and regulation of a number of important industries.
l The Monopolies and Restrictive Trade Practices (MRTP) bill was passed in 1969.
l After independence, at that time these companies had very little competition and they tried to
monopolise the market, to safeguard the rights of consumers, the government passed the
MRTP bill.
l Foreign Exchange Regulation Act (FERA) was promulgated in 1973 and it came into force on
1st January, 1974.
l The Pradhan Mantri Mudra scheme is aimed at bringing the small entrepreneurs into the
formal financial system.
l Under this, the loan can be availed from any commercial bank, regional rural bank,
co-operative banks, small finance banks and financing institutions like NBFCs or
micro-finance institutions.
l The scheme covers various industries including non-corporate, non-farm and medium industry
types.
l The SAMPADA scheme is being implemented by the Ministry of Food Processing Industries
(FPI). This umbrella scheme has now been renamed as the ‘Pradhan Mantri Kisan Sampada
Yojana’ (PMKSY) and to be implemented by the Ministry of Food Processing Industries
(MoFPI).
l Information Technology Policy (ITP) was introduced in the year 2000. The main objective of
this policy was to create IT awareness among the officers and employees and also to
encourage use of computers in day-to-day use.
l National Mineral Policy (NMP) of 2011 aims to bring better regulation that can help to
improve sustainable mining sector development. It also aims to bring transparent and
balanced enforcement that helps the people (focus on the population of tribal areas) who get
affected by mining projects.
l Hotel Policy was implemented in 2006. Hotels are well established businesses which provide
lodging facilities for the general public.

l Index of Eight Core Industries (ICI) refers to a production volume index that measures the
collective and individual production performances of eight selected core industries.
l These industries are natural gas, coal, refinery products, crude oil, cement, electricity, steel
and fertilisers.
l The compilation and releasing of the index are done by the Office of the Economic Adviser
(OEA), Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and
Industry.
l Public sector organisations are owned, controlled and managed by the government or other
state-run bodies.
l Private sector organisations are owned, controlled and managed by individuals, groups or
business entities.
l National Thermal Power Corporation Limited (NTPC), Oil and Natural Gas Corporation
(ONGC), Steel Authority of India (SAIL), Bharat Heavy Electricity Limited (BHEL), Indian Oil
Corporation Limited (IOCL), Hindustan Petroleum Corporation Limited (HPCL), Coal India
Limited (CIL), Gas Authority of India Limited (GAIL) and Bharat Petroleum Corporation Limited
(BPCL). India has 11 Maharatnas, 13 Navratnas and 73 Miniratnas companies.
l Tata Steel Limited (TSL) is an Indian multi-national steel-making company, based in
Jamshedpur, Jharkhand and headquartered in Mumbai. It was started in 1907.
l Coal India Limited (CIL) is an Indian central Public Sector Undertaking (PSU) under the
ownership of the Ministry of Coal, Government of India
l CIL is headquartered at Kolkata.It is the largest government owned coal producer in the world.
It was established in 1975
l IREDA stands for Indian Renewable Energy Development Agency. It was established in 1987.
The main role of IREDA is to provide financial assistance to schemes and projects with an
innovative approach to producing energy using new and renewable resources, ensuring
conservation of energy.
l Rashtriya Ispat Nigam Limited (RINL), also known as Vizag steel, is a central public sector
undertaking based in Visakhapatnam, India. It is under the ownership of the Ministry of Steel,
Government of India. It was founded in 1982.
l Metals and Minerals Trading Corporation of India is one of the two highest earners of foreign
exchange for India and India’s largest public sector trading body.
l Hindalco Industries Limited (HIL) an Indian aluminium and copper manufacturing company,
is a subsidiary of the Aditya Birla Group. Its headquarters are at Mumbai, Maharashtra, India.
It was founded in 1958.
l National Aluminium Company Limited (NALCO), abbreviated as, is a government company
having integrated and diversified operations in mining, metal and power under the ownership
of the Ministry of Mines and Government of India. It was established in 1981.

l Make in India is an initiative by the Government of India to encourage companies to develop,

manufacture and assemble products made in India and incentivise dedicated investments into
manufacturing. It was launched in September, 2014.
l The Stand-up India scheme aims at promoting entrepreneurship among women and
Scheduled Castes (SCs) and Scheduled Tribes (STs).
l The scheme is anchored by the Department of Financial Services (DFS), Ministry of Finance,
Government of India.
l Domestic Content Requirement (DCR) mandates the use of both solar cells and modules
manufactured domestically as per specifications and testing requirements fixed by the Ministry
of New and Renewable Energy (MNRE).
l Industrial Finance Corporation (IFC) of India function as a development bank. It was
established in 1948, the Industrial Finance Corporation of India was converted into a public
company on 1st July, 1993 and is now known as Industrial Finance Corporation of India.
l The main aim of setting up this development bank was to provide assistance to the industrial
sector to meet their medium and long-term financial needs. The Head Office of the Industrial
Finance Corporation of India is in New Delhi.
l The All India Khadi and Village Industries Board was setup during the second plan. It is a
statutory body formed in April, 1957, by the Government of India, under the Act of Parliament
Khadi and Village Industries Commission Act of 1956.
l The Board for Industrial and Financial Reconstruction (BIFR) is related to reconstruction and
financing of side units. It was an Agency of the Government of India, part of the Department of
Financial Services of the Ministry of Finance.
l It was setup in January, 1987 by the Rajiv Gandhi Government, its objective was to determine
sickness of industrial companies and to assist in reviving those that may be viable and
shutting down the others.
l Indian Diamond Institute (IDI) has been established at Surat. Indian Diamond Institute was
formed in 1978 by the Government of India to enhance the learning facilities in the fields of
diamond, gems and jewellery. It is a Government of India sponsored autonomous higher
school of learning in the fields of diamonds, gems and jewellery in India.
 Currency

l Currency is originated through exchange. Therefore, any commodity which acts as a medium
of exchange is called money.
l Legal currency is the currency that a lender is obliged to accept in settling its claims.
l The Indian Rupee (INR) is the official currency of India. The rupee is subdivided into 100 paise
(Paisa), though as of 2019, coins of denomination of ` 1 are the lowest value in use.
l In India, the currency multiplier is defined as the reserved currency. The money multiplier in an
economy often increases with the increase in the banking habits of the people.
l Expensive currency refers to high interest rates. When interest rates are high, it is more
expensive to borrow money but, when interest rates are low, it is less expensive to borrow
money.
l Black currency means currency on which income tax has not been paid.
l Special Drawing Right (SDR) is an artificial currency, which is used by the International
Monetary Fund (IMF) as a form of accounting for transactions.
l The foreign currency which has the tendency of quick migration is called hot currency.
l Indian currency is printed in Nashik (Maharashtra) Printing Press.
l The Reserve Bank of India (RBI) is authorised to issue coins in India.
– The responsibility of making coins, under the Coinage Act of 2011 belongs to the Government of India.
– The Indian note of ` 1 bears the signature of the Secretary of Ministry of Finance, while the notes of ` 2 to `
2000 bears the signature of the Governor of the Reserve Bank of India (RBI).
–
The Reserve Bank got the right to print currency notes upto ` 10000.
l In India, in the year 1966, the Minimum Corpus System (MCS) was adopted in place of the
proportional treasury system for note issuance.
l Paper currency was first introduced in India in 1862 AD. Four industries for minting coins in
India are located at Mumbai, Kolkata, Hyderabad and Noida.
l The second working group on money supply in 1977, setup by the Reserve Bank of India
(RBI), which presented four measures of the overall monetary stock based on the share of
liquidity.
l The formula of money supply are
M1 = Money with the public, deposits of banks + other deposits
with the Reserve Bank.
M2 = M1 + Savings deposits with post office savings banks.
M3 = M1 + Net time deposits of commercial banks.
M4 = M3 + Total deposits with Post Office savings organisations
(excluding National Savings Certificates

l The wide range of money in India includes money with the public, demand deposits with
banks, time deposits. M3 itself is also called broad or gross currency.
l In India, soft currency refers to the liquid currency, which includes currency (coins) notes
available with the public, demand deposits, deposits and other deposits with the Reserve
Bank of India (RBI).
l The increase in the money supply in the economy is done by the central bank by purchasing
government securities from the people and by the government taking loans from the central
bank.
l In general, money supply refers to the amount of currency in circulation in a country.
l Blockchain technique is a public ledger, in which every transaction is recorded. Through
blockchain technology bitcoins and other cryp to currencies operate.
l In the context of bitcoins, online payments can be made without the identification of either
side. Anyone with a bitcoins address can send and receive bitcoins to anyone else with a
bitcoins address.
l The main objectives of demonetisation are to curb the accumulation of black money, curb
corruption, promote the tax base, reduce the amount of cash in the economy and stop the
circulation of counterfeit notes, etc.

l Due to inflation, the value of goods increases and the value of money falls. The rise in the
price level is due to an increase in any component of the cost of production such as wage
cost, profit margin or raw material cost.
l Therefore, an increase in wages causes a fall in the aggregate supply curve.
l A zero rate of inflation obtains necessarily in a year where the annual rate of inflation is both
falling and rising in a year.
l Inflation harms all levels in society like
l Debtors and creditors are the gainers during inflation while the creditors are the losers.
l Wages and salary earners are the losers because their salaries do not rise in the same
proportion as the rise in the cost of living. Thus, their purchasing power and spending capacity
falls too.
l Fixed income groups suffer most during inflation. Their money income remains fixed while
the prices of goods are increasing.
l Entrepreneurs are the gainers because the cost of production does not rise as rapidly as
prices of the products. Thus, they produce at low costs and their revenue and profit increases.
l Farmers are the gainers because the farmers are generally debtors and they repay less
purchasing power to the creditors.
l Investors who invest in equity shares are the gainers but those who invest in fixed interest
yielding bonds and debentures are the losers.
l When a situation arises in an economy where growth is accompanied by slow inflation, it is
called an inflation related stagnation or stagflation.
l Control over demand, control over the supply of money and rationing of goods are the
methods of controlling inflation.
l Core inflation refers to inflation based on the Consumer Price Index (CPI), covering the
inflation of all the goods and services except the volatile food and fuel prices, excise duties,
income tax and other financial investments.
l Core inflation guides the governments in forecasting long-term inflation trends for a country.
l Phillips curve, graphic representation of the economic relationship between the rate of
unemployment (or the rate of change of unemployment) and the rate of change of money
wages.
l Due to the high growth rate in any economy, the economic prosperity of the people increases,
that is, their income increases.
l People spend more of this increased income on their consumption. When the demand for
goods increases, their prices increase, a continuous increase in prices leads to inflation.
l A fall in the rate of inflation implies that prices are rising more slowly than in the past (the
same period of the previous year) or that the rate of increase has decreased.
l Inflation in India is measured on the basis of Wholesale Price Index (WPI). This index is used
to find the change in the average price level of these products.
l Currency in circulation refers to coins and banknotes used by the public to transact, settle and
buy goods and services.
l The figure is calculated by deducting cash from banks from the currency in circulation.
l Inflation was measured on a week to week basis, but from January 2012 onwards, inflation
data based on the Wholesale Price Index (WPI) is required to be done on a monthly basis.
l An inflationary gap exists when the demand for goods and services exceeds production due to
factors such as higher levels of overall employment, increased trade activities, or elevated
government expenditure.
l Against this backdrop, the Real Gross Domestic Product (RGDP) can exceed the potential
GDP, resulting in an inflationary gap.
l The Producer Price Index (PPI) is a collection of indexes that calculates and represents the
average change in selling prices from domestic production over time.
l In other words, PPI is an index that measures the average price change of goods and services
as they leave the place of manufacture or enter the manufacturing process.
l Wholesale Price Index (WPI) measures the average change in the prices of commodities for
bulk sale at the level of early stage of transactions.
l The index basket of the WPI covers commodities falling under the three major groups namely,
primary articles, fuel and power and Manufactured products.
l The Consumer Price Index (CPI) is a measure of the average change over time in the prices
paid by urban consumers for a market basket of consumer goods and services.
l To measure the rate of inflation in India RBI has mandated the use of the Consumer Price
Index (CPI) since April 2014.
l The Consumer Price Index (CPI) is used by the Reserve Bank of India (RBI) while making
monetary policy.
l Headline inflation is a measure of the total inflation within an economy, including
commodities such as food and energy prices (e.g., oil and gas), which tend to be much more
volatile and prone to inflationary spikes.
l In India, there is no single measure of inflation which captures economy wide inflationary
pressures in the economy.
l It is the year on year percentage change in Wholesale Price Index (WPI), which is used as an
indicator of headline inflation.
l Demand pull inflation is caused due to an increase in aggregate demand in the economy.
Causes of Demand-Pull Inflation (DPI).
l A growing economy or increase in the supply of money. When consumers feel confident, they
spend more and take on more debt.
 Banking

l Reserve Bank of India (RBI) was established on 1st April, 1935 with an authorised capital of
` 5 crore under the RBI Act, 1934.
l It established on the recommendation of the Central Banking Inquiry Committee (1931).
l The Reserve Bank of India was nationalised on 1st January, 1949. Its first Governor was Sir
Osborne Smith.
l The Hilton Young Commission (1926) was the first commission that recommended the
name of the Reserve Bank of India (RBI) as the Central Bank.
l The Governor of the Reserve Bank of India is appointed by the Central Government.
l The highest bank in the banking system of India is the Reserve Bank of India.
l It plays an important role as the apex institution and custodian of the monetary and banking
structure in the country.
l CD Deshmukh was the third governor as well as the first Governor of independent India. He
was the Governor of the Reserve Bank of India from 11th August, 1943 to 30th June, 1949.
l The headquarter of Reserve Bank of India (RBI) is located in Mumbai, while there are local
head offices which are located in New Delhi,Kolkata, Mumbai and Chennai.
l The financial year of the Reserve Bank of India was from July 1st to 30th, but in the year
2021, the Reserve Bank of India has shifted its financial year from 1st April to 31st March.
l The Reserve Bank of India regulates foreign commercial borrowing in India.
l The Reserve Bank of India controls the commercial banks in respect of liquidity of assets,
branch expansion, merger and acquisition of banks, winding up of banks, etc.
l The Minimum Reserve System (MRS) is followed by the Reserve Bank of India in
issuing notes.
l The main functions of the Reserve Bank of India are to act as a central and state
government’s bank.
l It also formulates and conducts monetary policy, and represents India in the International
Monetary Fund as an agent of the government, to support the lending programs of the
Government of India.
l It helps in operation and regulation of currency and credit in India.
l RBI helps in maintenance of foreign funds of the country. Credit and Monetary Policy is the
macro-economic policy laid down by the Central Bank.
l It involves management of money supply and interest rate and is the demand side economic
policy used by the government of a country to achieve macro-economic objectives like
inflation, consumption, growth and liquidity.
l The monetary policy in India is carried out under the authority of the Reserve Bank of India.
l The Monetary Policy Committee is responsible for fixing the benchmark interest rate in India.
l The meetings of the Monetary Policy Committee are held at least four times a year and it
publishes its decisions after each such meeting.
l The decision of the Monetary Policy Committee shall be binding on the Bank. The 6 tools of
monetary policy are, Reverse Repo Rate, Open Market Operations, Bank Rate Policy
(discount rate), Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR).
l The Bank Rate is the rate of interest which is charged by a Central Bank while lending loans
to a commercial bank.
l In the event of a fund deficiency, a bank can borrow money from the Central Bank of a
country. In India’s case that would be the Reserve Bank of India.
l It is used to lend money for the long term.
l The borrowing is done as per the basis of the monetary policy of that country.
l It is also the standard rate at which the RBI will buy or discount bills of exchange and other
such commercial instruments.
l So now if the RBI were to increase the bank rate, the commercial banks would also have to

increase their lending rates.

l Repo Rate is the rate at which the central bank (Reserve Bank of India) lends to other banks

by buying the securities with an agreement that the bank will buy back on a certain date.
l Repo rate is used for the short term.

l Repo lending is a short-term lending option to meet the liquidity open market operation are

the main monetary policy instrument, through which central bank buys or sells securities with
financial institutions thereby influencing the amount of money in circulation and/or interest
rates requirements of commercial banks.
l Reverse Repo Rate is the rate of interest at which the RBI borrows funds from other banks in

the short term.

l This is done by RBI selling government bonds/securities to banks with the commitment to buy

them back at a future date. The banks use the reverse repo facility to deposit their short-term
excess funds with the RBI and earn interest on it.
l Cash Reserve Ratio (CRR) is a specific part of the total deposit that is held as a reserve by

the commercial banks and is mandated by the Reserve Bank of India (RBI).
l This specific amount is held as a reserve in the form of cash or cash equivalent which is stored

in the bank’s vault or is sent to the RBI. CRR ensures that the banks do not run out of money.
l Cash Reserve Ratio in India is decided by the Monetary Policy Committee (MPC) under the

periodic Monetary and Credit Policy.

l It is computed as a percentage of the net demand and time liabilites of each bank.

l CRR aims to ensure that banks do not run out of cash to meet their depositives payment

demands.
l If the CRR is low, the liquidity with the bank increases, which in turn goes into investment and

lending and vice-versa.

l Higher CRR creates a negative impact on the economy and also lowers the availability of

loanable funds.
l As a result, it slows down the investment and reduces the supply of money in the economy.

l Statutory Liquidity Ratio (SLR) is a minimum percentage of deposits that a commercial bank

has to maintain in the form of liquid cash, gold or other securities.

l It is basically the reserve requirement that banks are expected to keep before offering credit to

customers. These are not reserved with the Reserve Bank of India (RBI), but with banks
themselves.
l The SLR is fixed by the RBI. CRR and SLR have been the traditional tools of the central

bank’s monetary policy to control credit growth, flow of liquidity and inflation in the economy.
l The SLR was prescribed by Section 24 (2A) of Banking Regulation Act, 1949.

l The Lead Bank Scheme, introduced in year 1969, envisages assignment of lead roles to

individual banks for the districts allotted to them.

l The lead bank acts as a leader for coordinating the efforts of all credit institutions in the

allotted districts.
Increase the flow of credit to agriculture, small-scale industries and other economic activities
included in the priority sector in the rural and semi-urban areas, with the district being the
basic unit.

l A commercial bank is a financial institution which accepts deposits from the public and gives
loans for the purposes of consumption and investment to make profit.
l The general role of commercial banks is to provide financial services to the general public and
business, ensuring economic and social stability and sustainable growth of the economy.
l Oudh Commercial Bank or Awadh Commercial Bank was an Indian bank established in 1881
in Faizabad and operated until 1958 when it failed.
l It was the first commercial bank in India having limited liability and an entirely Indian board of
directors. SBI is the largest commercial bank of India. SBI stands for State Bank of India. It is
a public sector bank. Its headquarter is situated in Mumbai, Maharashtra.
l An act was accordingly passed in Parliament in May 1955 and the State Bank of India was
constituted on 1st July, 1955. More than a quarter of the resources of the Indian banking
system thus passed under the direct control of the State.
l All nationalised banks in India operate as per the norms provided by the Reserve Bank of
India. Achieving financial inclusion in India includes nationalisation of banks, adoption of
villages by bank branches and formation of regional rural banks, etc.
l The first Regional Rural Bank was established in 1975. Regional Rural Banks and Land
Development Bank provide direct credit facilities for agricultural work.
l The first Land Development Bank in India was established in the year 1920 in Punjab. The
Land Development Bank is a part of the cooperative credit structure.
l Land Development Bank provides loans to farmers for permanent improvement in
agriculture, the loan provided by Land Development Bank is of long term nature.
l NABARD is India’s apex development bank . National Bank for Agriculture and Rural
Development with headquarters in Mumbai, NABARD has branches across India.
l Small Industries Development Bank of India (SIDBI) is the apex regulatory body for overall
licensing and regulation of micro, small and medium enterprise finance companies in India.
l It is under the jurisdiction of Ministry of Finance under Government of India headquartered at
Lucknow and having its offices all over the country.
l The SIDBI was established on 2nd April, 1990 by the Government of India, as a wholly owned
subsidiary of IDBI Bank .
l It was delinked from IDBI with effect from 27th March, 2000. Its purpose is to provide
refinance facilities to banks and financial institutions and engage in term lending and working
capital finance to industries.
l It serves as the principal financial institution in the Micro, Small and Medium Enterprises
(MSME) sector.
l EXIM Bank or Export-Import Bank of India is India’s leading export financing institute that
engages in integrating foreign trade and investment with the country’s economic growth.
l Founded in 1982 by the Government of India.
l It operations are governed by the Export-Import Bank of India Act, 1981.
l HDFC became the first Indian company to issue masala bond in July 2016.
l EXIM Bank is a wholly-owned subsidiary of the Indian Government. It is headquartered in
Mumbai, Maharashtra.
l SBI SimplyCLICK Credit Card is an entry-level credit card that is best suited for frequent
online shoppers.
l This credit card offers extra rewards and benefits on online transactions at different partner
brands like Amazon, BookMyShow, Cleartrip, etc.
l Masala Bonds are rupee-denominated bonds issued outside India by Indian entities.
l They are debt instruments which help to raise money in local currency from foreign investors.
l Both the government and private entities can issue these bonds.
l Allahabad Bank was an Indian nationalised bank with its headquarters in Kolkata, India. It
was founded in Allahabad in 1865 and nationalised by the Government of India in 1969.
l It provided banking and financial services for 155 years until it was merged with Indian Bank
in 2020.
l It was the oldest still running joint stock bank in India until it’s merger.
l The shadow banking system is a group of financial intermediaries which facilitate the
creation of credit across the global financial system, but whose members are not subject to
regulatory oversight.
l These companies are often known as Non-Bank Financial Companies (NBFCs).
l Investment banks, hurtage lenders, money market funds, insurance companies hedge funds,
private equity fund are all examples of NBFCs.
l Core Banking Solution (CBS) is the networking of bank branches, which allows customers to
manage their accounts, and use various banking facilities from any part of the world.
l In simple terms, there is no need to visit your own branch to do banking transactions.

l The most common types of plastic money are debit cards, credit cards, ATM cards, and
charge cards.
l This payment card deducts funds directly from a consumer's bank deposit account to either
electronically pay for goods and services or to withdraw from an ATM.
l Debit cards are also known as bank cards or check cards.
l The merchant discount rate is a price that merchants must take into consideration when
calculating their company’s overall costs.
l it is the rate levied on debit and credit card transactions to a merchant for the payment
processing services.
l Most retailers will expect to pay a fee of 1% to 3% for each transaction’s payment processing.
l The National Payments Corporation of India is the specialised division of Reserve Bank of
India which is under the jurisdiction of Ministry of Finance, Government of India.
l It was created by the RBI for operating retail payments and settlement systems in India.
l RuPay (Portmanteau of Rupee and Payment) is an Indian multinational financial services and
payment service system, conceived and launched by the National Payments Corporation of
India (NPCI) on 26th March, 2012.
l It has acceptance at any point of sale (POS) devices, automated teller machines (ATMs) and
e-commerce platforms.

l Non-Banking Financial Company (NBFC) is a company registered under the Companies

Act, 1956 of India.
l It is engaged in the business of loans and advances, acquisition of shares, stock, bonds,
hire-purchase insurance business or chit-fund business.
l But NBFC does not include any institution whose principal business is that of agriculture,
industrial activity, purchase or sale of any goods (other than securities) or providing any
services and sale/purchase/construction of immovable property.
l Banking Ombudsman is a quasi judicial authority created in 2006, and the authority was
created pursuant to a decision made by the Government of India.
l It was made to enable resolution of complaints of customers of banks relating to certain
services rendered by the banks.
l The Banking Ombudsman Scheme was first introduced in India in 1995, and was revised
in 2002.
l The services provided by the Banking Ombudsman are free of cost.
l An appeal can be made against the order passed by it to the Appellate Authority constituted
under the chairmanship of the Deputy Governor of the Reserve Bank.

l The Bimal Jalan committee was constituted by RBI under the chairmanship of Bimal Jalan in
October, 2013.
l RBI had constituted the committee to examine the criteria, business plans and corporate
governance practices of applicants applying for new bank licenses.
l The Board of Directors of the Reserve Bank of India, formed a Sub-Committee of the Board to
study matters and concerns in the microfinance sector in so far as they are related to the
entities regulated by the bank. The sub-committee was under the chairmanship of YH
Malegam.
l This committee recommended that the draft offer document submitted to SEBI needs to be
approved and signed by the Board of Directors of the company.
l The Reserve Bank of India (RBI) has accepted the proposal to set up a Payments Bank for
Financial Inclusion in India, the establishment of these banks has been recommended by the
Nachiket More Committee, a member of the Reserve Bank of India Board.
l RBI appointed a committee on digital payments, headed by Nandan Nilekani. The
committee has made recommendations for strengthening the digital payments ecosystem in
India.
l In the year 1991, a high level committee was constituted by the Central Government under the
chairmanship of Raja J Chellaiya to examine the tax structure of the country.
l Dantwala committee led by Mohanlal Lallubhai Dantwala recommended in 1978 that RRB’s
should become an integral part of rural credit structure. It also recommended block level
planning.
l The Neeraj Kumar Gupta committee has been constituted by the Union Government and the
Reserve Bank of India (RBI) to boost cashless transaction.
l The purpose of the 7 member committee is to increase card acceptance infrastructure and fix
interchange fee for credit cards.
l The taskforce will also work at ways in which card payers needn’t pay a surcharge for fuel,
utility bills and railway bookings.
 Money Market and Capital
Market (Financial Market)

l Market is a composition of systems, institutions, procedures, social relations or infrastructures

whereby parties engage in exchange. While parties may exchange goods and services by
barter, most markets rely on sellers offering their goods or services to buyers in exchange for
money.
l Money markets include markets for such instruments as bank accounts, including term
certificates of deposit, inter-bank loans (loans between banks), money market mutual funds,
commercial paper, treasury bills and securities lending and repurchase agreements.
l Capital market is a place where buyers and sellers indulge in trade (buying/selling) of
financial securities like bonds, stocks, etc. The trading in capital market is undertaken by
participants such as individuals and institutions. Capital market trades mostly in long-term
securities.
l Perfect competition is an economic term that refers to a theoretical market structure in which
all suppliers are equal and overall supply and demand are in equilibrium. i.e., if there are
several firms producing a commodity and no individual firm has a competitive advantage,
there is perfect competition.

l The Securities and Exchange Board of India (SEBI) is the regulatory body for securities
and commodity market in India under the ownership of Ministry of Finance within the
Government of India.
l It was established on 12th April, 1988 as an executive body and was given statutory powers
on 30th January, 1992 through the SEBI Act of 1992.
l In India, mergers and acquisitions of firms are regulated by the Securities and Exchange
Board of India (SEBI).
l In India, the Securities and Exchange Board of India regulates the Consortium Funds.
l Dalal street is a street in downtown Mumbai, India.
l Bombay Stock Exchange (BSE), the largest stock exchange in India and other reputable
financial institutions.
l The Head Office of Bombay Stock Exchange (BSE) is located at Dalal Street in Mumbai,
which established in 1875 by cotton merchant Premchand Roychand.
l National Stock Exchange (NSE) was incorporated in the year 1992 to bring about
transparency in the Indian equity markets.
l National Stock Exchange of India Limited (NSE) is the leading stock exchange under the
ownership of various group of domestic and global financial institutions, public and privately
owned entities and individuals. It is located in Mumbai, Maharashtra. It is the world’s largest
derivatives exchange in 2021.
l Speculators are primary participants in the futures market. A speculator is any individual or
firm that accepts risk in order to make a profit. Speculators can achieve these profits by
buying low and selling high. Bull, bear, lameduck and stag are four types of speculators.
Investors are often categorised as bulls and bears.
l A bull by definition is an investor who buys shares because they believe the market is going to
rise. A bear will sell shares as they believe the market is going to turn negative.
l A credit rating is an evaluation of the credit risk of a prospective debtor, predicting their ability
to pay back the debt and an implicit forecast of the likelihood of the debtor defaulting
l The Credit Information Bureau (India) Limited (CIBIL) is the most popular of the four credit
information companies licensed by Reserve Bank of India (RBI).
l Unit Trust of India (UTI) was established in 1963 by an Act of Parliament. It was setup by the
Reserve Bank of India (RBI) and functioned under the Regulatory and Administrative Control
of the Reserve Bank of India (RBI).
l Unit Trust of India is the oldest mutual fund in India, while ICICI Predential is India’s largest
mutual fund.
l India Brand Equity Foundation (IBEF) is a Trust established by the Department of
Commerce, Ministry of Commerce and Industry, Government of India in 2003.
l IBEF was made with an objective of promoting and creating international awareness of the
Made in India label in markets overseas and to facilitate dissemination of knowledge.
l Sensex is an index to measure volatility in the stock market. The number of companies
included in this index is 30.
l The Amsterdam Stock Exchange (ASF) of Netherlands is the oldest organised stock
exchange in the world. It was established in 1602 AD.
l The stock price index of Singapore is Singapore International Monetary Exchange
(SIMEX). The United States stock price index is New York Stock Exchange (NYSE),
National Association of Securities Dealers Automated Quatations (NASDAQ). The price
index of Hong Kong is Hong Kong Stock Exchange (HANGSENG). These are some world’s
leading stock exchanges by their capital shares.
l Life Insurance Corporation of India (LIC) was established under the Life Insurance
Corporation Act of 1956.
l Bank insurance is a composite financial service that provides products to both banks and
insurance. At present, banks are providing insurance facility to their customers.
l The service of insurance (composite financial services) facility is also being provided along
with such banking services.
l The National Investment Fund was formed in the year 2005. National Insurance Company
was formed on 6th December, 1906.
l United India Insurance Company is a central public sector undertaking under the ownership
of Ministry of Finance, Government of India.
l It is headquartered in Chennai, India, it was incorporated on 18th February, 1938 and
nationalised in 1972.
l The Employees Provident Fund Organisation (EPFO) is one of the two main statutory
social security bodies under the Government of India’s Ministry of Labour and Employment
and is responsible for regulation and management of provident funds in India.
l The EPFO administers the mandatory provident fund. It also manages social security
agreements with other countries.

l The first Chairman of the Disinvestment Commission of India was GV Ramakrishna.

l Narasimham Committee was constituted for reforms in banking sector.
l C Rangarajan was the Chairman of the Financial Committee created for financial inclusion in
January 2005.
l Micro-finance institutions were established in the year 2011 on the recommendation of
Malegam Committee.
l Financial Sector Reforms means to improve the allocative efficiency of resources and ensure
financial stability and maintain confidence in the financial system by enhancing its roundness
and efficiency.
 Public Finance

l Public finance is the management of a country’s revenue, expenditures and debt made
through various government, quasi-government institutions, policies and tools.
l Public finance is the set of fiscal activities of the government, including its income, spending
and budgeting.
l The first component of Public Finance is public expenditure, which is the monetary spending
by the government.
l The cost of maintaining the government represents a small portion of public expenditure.
l All the financial resources of the Central Government are called Public finance. Under this,
all the public revenue and expenditures are included.
l Such public receipts, which neither increase the liability of the government nor decrease the
assets of the government, are called revenue receipts.
l Revenue receipts have two sub-categories i.e., tax revenue and non-tax revenue.
l Revenue receipts are current income receipts from all sources such as taxes, profits of public
enterprises, grants, etc.
l Capital receipts are receipts that create liabilities or reduce financial assets. They also refer
to incoming cash flows.
l Capital receipts can be both non-debt and debt receipts. Loans from the general public,
Foreign Governments and the Reserve Bank of India (RBI) form a crucial part of capital
receipts.
l Revenue receipts neither create any liability nor causes any reduction in the assets of the
government.
l Revenue expenditure is the part of government spending that does not result in the creation
fo any assets.
l Salaries, wages, pensions, subsidies and interest payments are all instances of revenue
expenditures.
l Capital expenditure is the money spent by the government on the development of
machinery, equipment, building, health facilities, education, etc.
l It also includes the expenditure incurred on acquiring fixed assets like land and investment by
the government that gives profits or dividend in future.
l Fiscal policy is the use of government spending and taxation to influence the economy.
Government typically use fiscal policy to promote strengthen and sustainable growth and
reduce poverty.
l Tools of Fiscal policy regulations are
–
Government spending can have an impact on economic output. Government spending is also called
government expenditure.
–
Government expenditure can be classed as Government Final Consumption Expenditure (GFCE) since it
comprises the acquisition of goods and services for the benefit of the community.
–
Transfer payments to individuals through social welfare programmes, student subsidies and social
security are referred to as transfer payments.
–
Taxes are a fiscal policy tool since they allow for changes in the economy.
l 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.
l Budgets are prepared for the economic and financial policy of the coming year, i.e., taxation
proposals, prospects of revenue, spending programme and introduction of new schemes or
projects.
l James Wilson, the British economist, presented the first ever budget in India in 1860.
– He is credited with introducing a financial budget in India framed upon the English model.
– Wilson was appointed to find a solution to India’s financial crisis caused by the mutiny of 157.
– The first budget of the Republic of India was presented by John Mathai on 28th February, 1950.

l The Union Budget of India, also referred to as the Annual Financial Statement (AFS) in
Article 112 of the Constitution of India, is the annual budget of the Republic of India.
l The government presents budget on the first day of February so that it could be materialised
before the beginning of new financial year in April.
l In the performance budget, it is the compulsion of the government to tell that what is done,
how much is done by it for the betterment of the people. In India, the performance budget is
also known as the outcome budget.
l The Government of India has launched Outcome budgeting from 2005 and 2006.
l Gender budgeting is a powerful tool for achieving gender mainstreaming so as to ensure that
benefits of development reach women as much as men.
l It is not an accounting exercise but an ongoing process of keeping a gender perspective in
policy/programme formulation, its implementation and review.
l Zero Base Budgeting (ZBB) in India first experimented from April 1987. It is a technique for
determining an expenditure budget in which all expenses for the new period must be zero or
scratch.
l There is no reference to previous year budgets. It was initiated under the Department of
Science and Technology in 1983.
l A budget surplus is when extra money is left over in a budget after all expenses are paid.
l A budget deficit occurs when the Federal Government spends more money that it collects in
revenue.
l An interim budget is presented by a government which is going through a transition period or
is in its last year in office ahead of general elections.
l An interim budget is a complete set of accounts that includes both expenditure and receipts,
whereas a vote-on-account just covers the government’s budget’s expenditure.
l Traditionally, an incumbent government cannot present a full union budget in the election
year.
l Supplementary budget is the request for additional funds by Ministries and Departments
during the course of the year.
l It is needed when the amount authorised by the parliament through the appropriation act for a
particular service for the current financial year is found to be insufficient for that year.
l This grant is presented and passed by the parliament before the end of the financial year.

l Budgetary deficit It is referred as the situation in which the overall expenditure of the
government is more than overall collection of revenue.

l Fiscial deficit It is defined as the excess of overall expenditure over that total receipts,
excluding the borrowings in a year

Fiscal deficit = Total expenditure - Total receipts (excluding borrowings)

l Revenue deficit It is defined as the excess of total revenue expenditure over total revenue
receipts.

Revenue deficit = Total revenue expenditure - Total revenue receipts

l Primary deficit It is said to be the fiscal deficit of the current year subtracted by the intrest
payments on borrowings.

Primary deficit - Fiscal deficit - Interest payment

l A fiscal deficit is a shortcoming in the income of a government as compared to its spendings.

l It is the difference between the total income of the government and the total expenditure
incurred by it. This difference is filled by government borrowings.
l The following are the various types of fiscal deficits and their formula
l Budget deficit = Total expenditure – Total receipts
l Revenue deficit = Revenue expenditure – Revenue receipts
l Fiscal Deficit = Total expenditure – Total receipts except borrowings
l Primary Deficit = Fiscal deficit – Interest payments
l Effective revenue deficit = Revenue deficit – Grants for the creation of capital assets
 Foreign Trade and Investment
(Balance of Payment)

l International trade is referred to as the exchange or trade of goods and services between
different nations. This kind of trade contributes in development of world economy.
l Imports lead to an outflow of funds from the country since import transactions involve
payments to sellers residing in another country.
l Exports are goods and services that are produced domestically, but then sold to customers
residing in other countries.
l An Export Processing Zone (EPZ) is a customs area, where one is allowed to import plant,
machinery, equipment and material for the manufacture of export goods under security,
without payment of duty. Asia’s and India’s first Export Processing Zone was established in
1965 in Kandla.
l The first private sector export processing sector in India was established in the year 2000 in
Surat.
l The purpose of the Special Economic Zone is to attract foreign investment, create additional
employment opportunities, use new technologies, create additional activities and develop
infrastructure facilities.
l The Ministry of Commerce and Industry of the Government of India is concerned with the
Foreign Trade Policy of India.
l The Reserve Bank of India (RBI) allows the trader to exchange the goods for imports. The
process of import begins with an indent. The importer first applies to RBI for the foreign
exchange required for import.
l Free Trade Zones were established in India to promote the export industry. Organisations in
the Mineral and Metals Trading Corporation (1963), Import-Export Bank (1952), State Trading
Corporation (1956) and Food Corporation of India (1964) influence the Import-Export of India.
l Import substitution industrialisation is a trade and economic policy that advocates replacing
foreign imports with domestic production. Imports are controlled by the imposition of tariff and
quotas which protects the domestic firms from foreign competition.
l It is based on the premise that a country should attempt to reduce its foreign dependency
through the local production of industrialised products.
l There has been a relative increase in India’s export rate after the year 1991, the main reason
for the increase in the export rate is the devaluation of currency done by the Government of
India.
l The items imported by India are petroleum, capital goods, chemicals, pearls and precious
stones and iron-steel. The largest items of India’s exports are ready-made items like clothes
and jewels and jewellery.

l The Foreign Trade Policy (FTP) was launched on 1st April, 2015.
l It provides a framework for increasing exports of goods and services, job creation and
increasing value addition in India.
l Free trade is a trade policy that does not restrict imports or exports. It can also be understood
as the free market idea applied to international trade.
l It occurs, when goods and services can be bought and sold between countries or sub-national
regions without tariffs, quotas or other restrictions being applied.
l Free trade zone is a grouping of countries within which tariffs and non-tariff trade barriers
between the members are generally abolished but with no common trade policy toward
non-members.
l Kandla (Gujarat), Mumbai (Maharashtra) and Visakhapatnam (Andhra Pradesh) are Free
Trade Zones (FTZ) in India.
l International liquidity relates to international reserves of particular countries, who participate
in the world monetary and trading system. It is linked with international payments which
appear international.

l Balance of trade is the difference in value over a period of time between a country’s imports
and exports of goods and services, usually expressed in the unit of currency.
l According to the Reserve Bank of India (RBI) the balance of trade is only related to the
import-export of goods. The Balance of Payments (BoP) is the method by which countries
measure all of the international monetary transactions within a certain period.
l The Balance of Payments consists of three main accounts i.e., the current account, the capital
account and the financial account.
l The current and capital accounts are two components of a nation’s Balance of Payments.
l The current account is the difference between a country’s savings and investments. A
country’s capital account records the net change of assets and liabilities during a certain
period of time.
l A current account deficit occurs, when the value of imports (of goods, services and investment
income) is greater than the value of exports. If the currency is overvalued, imports will be
cheaper, and therefore there will be a higher quantity of imports and vise-versa.
l The sources of income in the current account are corporation tax, excise tax and sale of
National Savings Certificates (NSC).
l Capital accounts include those entries, which represent the financial flow of capital. A deficit in
the capital account means money is flowing out of the country and it suggests the nation is
increasing its ownership of foreign assets.
l The term capital account is used with a narrower meaning by the International Monetary
Fund (IMF) and affiliated sources.

l Foreign exchange reserves are also known as reserve assets and it includes foreign
banknotes, foreign bank deposits, foreign treasury bills and short and long-term Foreign
Government securities.
l It also includes gold reserves, Special Drawing Rights (SDRs) and International Monetary
Fund (IMF) reserves.
l India’s Foreign Exchange Reserves (FER) consist of foreign currency assets, gold held by
the Reserve Bank of India (RBI) and the Special Drawing Rights (SDR) with Statutory
Liquidity Ratio (SLR). It is also called Forex Reserve.
l Capital Account Convertibility of Indian Rupees means that Indian Rupees can be
exchanged for any currency for the purpose of trading in financial assets.
l Tarapore Committee 2006 was concerned with full capital account convertibility.
l Currently in India, full convertibility of rupee is applicable on current account. Whereas
permission is mandatory on capital account.
l The Reserve Bank of India (RBI) allows foreign exchange for the import of goods. Foreign
currency, which has a tendency to migrate quickly, is called hot currency.
l The Foreign Exchange Management Act (FEMA) came into effect from 1st June, 2000,
replacing the Foreign Exchange Act (FERA-Foreign Exchange Regulation Act).
l Its objective is to facilitate trade and payments and promote orderly development of the
foreign exchange market in the country.
l The share of foreign exchange in India’s Foreign Exchange Reserves is the largest.
l The reason for the steady growth of foreign exchange funds in India is the increase in inflow of
Foreign Direct Investments (FDI) prevailing in the country at high rate of interest and bringing
in funds by foreign institutional investors as well as funding by Indians working abroad.
l The Reserve Bank of India (RBI) has facilitated the infusion of funds by Exim Bank into foreign
trade.
l EXIM Bank (Export-Import) is a Central Government owned bank. The inflow of foreign
investment can increase the value of the local currency, which can lead to an increase in the
prices of the exported goods.
l Foreign investment affects the export performance of a country. A foreign investor can bring
capital without the approval of the Foreign Investor Promotion Board (FIPB) and then he has
to inform the Reserve Bank of India within one month of bringing in his investment.
l The Foreign Investment Promotion Board (IFIPB) is a single window for approval of
proposals relating to Foreign Direct Investments (FDI). It was abolished in the year 2017.
l The Investment Commission was constituted in December 2004, its main objective was to
attract an investment of $150 million over 10 years. currently the commission is abolished.
 International Organisations

l The World Bank was established on 27th December, 1945. At present there are 189 member
countries in the World Bank.
– Its headquarters are located in Washington DC.
– The World Bank was created during the Bretton Woods Conference.
l The International Bank for Reconstruction and Development, the International Finance
Corporation and the International Development Association together form the World Bank.
l The World Bank Group has set goals to eliminate poverty from the world by the year 2030.
l The World Bank provides grants to developing countries for human development, agriculture,
rural development, environmental protection, governance and other basic needs.
l Loans and grants are given by the World Bank for the improvement of the states in India.
l The Green Index is developed by the World Bank. The Green Index is an eco-friendly stock
market index, developed for investors to know about the carbon efficiency of the companies
doing business in the economies.
l The International Development Association is a related financial institution of the World Bank.
l It provides long-term loans to the world’s poorest nations for poverty alleviation. It is also
called liberal credit window.
l World Bank is run by a President and 25 Executive Directors as well as 29 various
Vice-Presidents.

l The International Monetary Fund (IMF) was established under the Bretton Woods Conference
Agreement.
l It was inaugurated on 27th December, 1945 and its headquarter is located in Washington DC.
l The United Nations Monetary and Financial Conference, in which agreements were signed to
establish the International Bank for Reconstruction and Development, the General Agreement
on Tariffs and Trade (GATT) and the International Monetary Fund is called the Bretton Woods
Conference.
l The main function of the International Monetary Fund is to assist member countries in solving
Balance of Payments problems.
l International Monetary Fund (IMF) provides financial assistance to only those countries
which are its members.
l Special Drawing Rights (SDR) are supplementary foreign exchange reserve assets defined
and maintained by the International Monetary Fund.
l The International Monetary Fund (IMF) is the designated agency of the United Nations. India
is a founding member of the International Monetary Fund.
l The International Monetary Fund regularly reviews the economic condition of India under
Article IV. The objective of the International Monetary Fund is to stabilise currency exchange
rates and expand international liquidity.
l The International Monetary and Finance Committee (IMFC) was established on the
suggestion of the International Monetary Fund and the Board of Governors, it consists of 24
members.
l The IMF lends money to member nations with Balance of Payments concerns in order to
replenish international reserves, stabilise currencies and improve economic growth
conditions. Countries must implement structural adjustment programmes under the
supervision of the IMF.
l The World Trade Organisation (WTO) officially commenced on 1st January, 1995 under the
Marrakesh Agreement, signed by 123 nations on 15th April, 1994 replacing the General
Agreement on Tariffs and Trade (GATT) which commenced in 1948.
l The WTO has 164 members (including European Union) and 23 observer governments (like
Iran, Iraq, Bhutan, Libya etc).
l The World Trade Organisation is the world’s main monetary body, which issues guidelines for
world trade. This organisation is the main security cover of international trade. The purpose of
establishing the World Trade Organisation is to protect intellectual property rights.
l The goal of the WTO is to assist producers, exporters and importers of goods and services in
their business conduct.
l The WTO is known as the third pillar of international economic cooperation. India became a
member of the World Trade Organisation on 1st January, 1995.
l The provision of the highest priority nation under the WTO regime is based on the principle of
non-discrimination among nations.
l Trade Related Investment Measures (TRIMS) is a World Trade Organisation agreement. It
explains the removal of foreign barriers, which hinder free trade and prohibits consequential
restrictions on imports by foreign investors.
l Business related investment measures include patents, geographical indications, copyrights,
Integrated circuit designs, trademarks, labour standards and industrial models etc. are
protected under WTO.
l The National Intellectual Property Rights Policy was approved by the Government of India
on 12th May, 2016 to protect and promote intellectual property in India.
l The World Intellectual Property Organisation was established in the year 1967 in Stockholm
with the signing of 51 countries. Its headquarter is in Geneva. It currently has 193 member
countries. It became an important agency of the United Nations in the year 1970.

l European Union is an economic and political union of 27 countries that actively promote
democratic values.
l Out of 27, 19 countries share the euro as their official currency.
l The European Union (EU) originally consisted of 28 countries however, the United Kingdom
exited in 2020.
l The EU has developed an internal single market through a standardised system of laws that
apply in all member states in matters, where members have agreed to act as one.
l EU’s law and regulation is meant to create a cohesive economic entity of its countries. The
European Commission is the EU’s politically independent executive arm. It is alone
responsible for drawing up proposals for new European legislation.
l It implements the decisions of the European Parliament and the Council of the EU.
l The European Stability Mechanism is a European Union agency that provides financial
assistance in the form of loans, to euro zone countries or as new capital to banks in difficulty.
l It is a permanent agency, based in Luxembourg and has replaced the temporary European
Financial Stability Facility (EFSF).

l Asia Pacific Economic Cooperation (APEC) was established in 1989 to further enhance
economic growth and prosperity for the region and to strengthen the Asia-Pacific Community.
l It is the premier forum for facilitating economic growth, co-operation, trade and investment in
the Asia-Pacific region.
l Since, its inception, APEC has worked to reduce tariffs and other trade barriers across the
Asia-Pacific region, creating efficient domestic economies and dramatically increasing
exports.
l APEC is the only inter-governmental grouping in the world operating on the basis of
non-binding commitments, open dialogue and equal respect for the views of all participants.
l APEC has 21 members referred to as Member Economies, which account for approximately
40.5% of the world's population, approximately 54.2% of world GDP and about 43.7% of world
trade.
l Key to achieving APEC’s vision are, what are referred to as the Bogor Goals of free and open
trade and investment in the Asia-Pacific by 2010 for industrialised economies and 2020 for
developing economies.
l These goals were adopted by leaders at their 1994 meeting in Bogor, Indonesia.
l Association of South-East Asian Nations (ASEAN) was established in 1967 in Bangkok,
Thailand by Indonesia, Malaysia, Philippines, Singapore and Thailand.
l It was formed to promote active collaboration and mutual assistance on matters of common
interest in the economic, social, central, technical, scientific and administrative field.
l BRICS is the acronym for an association of 5 major emerging national economies i.e., Brazil,
Russia, India, China and South Africa.
l The BRICS first summit was held in Yekaterinburg, Russia on 16th June, 2009 and the term
was coined by economist Jim O'Neill.
l BRICS does not exist in form of organisation, but it is an annual summit between the supreme
leaders of five nations.
l The Chairmanship of the forum is rotated annually among the members, in accordance with
the acronym B-R-I-C-S.
l BRICS cooperation in the past decade has expanded to include an annual programme of over
100 sectoral meetings.
l The BRICS seeks to deepen, broaden and intensify cooperation within the grouping and
among the individual countries for more sustainable, equitable and mutually beneficial
development.
l BRICS takes into consideration each member’s growth, development and poverty objectives
to ensure relations are built on the respective country’s economic strengths and to avoid
competition where possible.
l The New Development Bank (NDB) formerly referred to as the BRICS Development Bank, is a
multilateral development bank established by the BRICS states (Brazil, Russia, India, China
and South Africa).
l The bank is headquartered in Shanghai, China. The first regional office of the NDB will be
opened in Johannesburg, South Africa.
l The idea for setting up the bank was proposed by India at the 4th BRICS summit in 2012 held
in Delhi.
l The creation of a new development bank was the main theme of the meeting. BRICS leaders
agreed to set-up a development bank at the 5th BRICS summit held in Durban, South Africa
on 27th March, 2013.
l Asian Infrastructure Investment Bank (AllB) is a Multilateral Development Bank (MDB)
conceived for the 21st century.
l Chinese President Xi Jinping and Premier Li Keqiang announced the AIIB initiative during their
respective visits to South-East Asian countries in October 2013.
l Asian Development Bank (ADB) was established following the recommendations of the
United Nations Economic and Social Commission for Asia and the Pacific.
l It was formed to foster economic growth and co-operation in the region of Asia and the Pacific
and to contribute to the acceleration of economic development of the developing countries of
the region.
l The Asian Development Bank (ADB), an international partnership of 68 member countries was
established in 1966 with its headquarter is at Manila, Philippines. India is a founder member.
l The bank is engaged in promoting economic and social progress of its developing member
countries in the Asia and the Pacific region.
l Eurasian Development Bank facilitate the development of market economies, economic
growth and the expansion of trade its member states through investments.
l The bank’s objectives also include financing projects that support Eurasian integration. The
bank has provided financing totaling more than $4.5 billion to investment projects in its
members states.
l The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation
(BIMSTEC) is an international organisation of seven South Asian and South-East Asian
nations, housing 1.73 billion people and having a combined Gross Domestic Product of
US$4.4 trillion (2022).
l OPEC is an acronym for the Organisation of the Petroleum Exporting Countries. It is a
permanent, intergovernmental organisation, created at the Baghdad Conference in September
1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Currently it has 13 members.
l OPEC’s main objectives are unification and coordination of petroleum policies among member
countries, in order to achieve just and stable prices for petroleum producers.
l OPEC membership is open to any country that is a substantial exporter of oil and which
shares the ideals of the organisation.
l The Group of Seven (G7) is an informal grouping of industrialised democracies. The group
meets once a year to address topics such as global economic governance, international
security and energy policy.
l The G7 nations are the United Kingdom, Canada, France, Germany, Italy, Japan and the
United States.
l The Group of Eight (G8) was an intergovernmental organisation that met periodically to
address international economic and monetary issues.
l The G8 is now referred to as the G7 because Russia, one of the original eight, was suspended
from the group in 2014 after annexing Crimea.
l The group hold an annual meeting to foster consensus on global issues like economic growth
and crisis management, global security, energy and terrorism.
l The Group of Twenty (G20) was formed in 1999 and was originally a meeting of the Minister
of Finance and the Governor of the Central Bank in an effort to broaden the discussion of
policies that are beneficial for resolving the global economic and financial crisis.
l The G20 or Group of Twenty is an intergovernmental forum comprising 19 countries and the
European Union (EU).
l It works to address major issues related to the global economy, such as international financial
stability, climate change mitigation and sustainable development.
l The G20 is composed of most of the world’s largest economies including both industrialised
and developing nations.
l It accounts for around 80% of Gross World Product (GWP).
l The members of the G20 are Argentina, Australia, Brazil, Canada, China, France, Germany,
India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa,
Turkey, the United Kingdom, the United States and the European Union.
l The Shanghai Cooperation Organisation (SCO) is a Eurasian political, economic and
security organisation. The SCO, a Eurasian political, economic and security forum founded in
2001 is comprised of eight member states i.e., China, India, Kazakhstan, Kyrgyzstan, Russia,
Tajikistan, Pakistan and Uzbekistan.
l It is the world’s largest regional organisation in terms of geographic scope and population,
covering approximately 60% of the area of Eurasia, 40% of the world population and more
than 30% of global GDP.
l The SCO is the successor to the Shanghai five, which is formed in 1996 between the
people’s Republic of China, Kazakhstan, Kyrgyzstan, Russia and Tajikistan.
l The SCO is governed by the Heads of State Council (HSC), its supreme decision-making
body, which conducts once in a year.
l SAARC stands for South Asian Association for Regional Cooperation, is an
inter-governmental organisation for the development of economic and regional integration.