GST in India
The policy of Domestically Manufactured Iron & Steel Products: led to the reduction of 20,000 crore Rs. in Steel Import.
Vodafone & Idea: renamed their joint venture as “VI”.
EASE 2.0 reforms: are related to the banking sector.
Apple Inc.: Apple tops Saudi Aramco as the most valuable publicly listed co,
Future Brand Index 2020: Apple tops the list while Indian Company Reliance Industries secured the 2nd place.
Indian Economy turned 3rd largest Economy in 2017 after China(16.4%%) & the USA(16.3%) with 6.7% with respect to Purchasing Power Parity(PPP).
Indian forex reserve touch highest point:
The Forex Reserves of India are increasing and are to hit 500 billion USD soon. In May 2020, the Indian Forex Reserves touched an all-time high of 493 billion dollars.
What is Foreign Exchange Reserve?
The Foreign Exchange Reserves are the reserve assets that are held by the central bank in foreign currencies. It is used to back the liabilities faced by a currency due to the influence of monetary policy.
Why are the Forex Reserves rising?
The Forex Reserves of India are increasing mainly due to a fall in crude oil prices. Also, the rise is because of the increase in investment in Foreign Direct Investments (FDI) and Foreign Portfolio Investors (FPI).
Significance The Forex Reserves are held by the GoI to maintain liquidity in the country. It also helps to absorb shocks where access to borrowing is curtailed. The Forex Reserves are an important component of the Balance of Payment and also an essential element to analyze the external position of the economy.
Components of Foreign Reserves of India?
The Foreign Exchange Reserve of India comprises of the following SDR (Special Drawing Rights) in International Monetary Fund. The SDR is the reserve Currency with the IMF.
RTP is Reserve Tranche Position in International Monetary Fund. It is the reserve capital with the International Monetary Fund.
· Contribution of Agriculture Sector in Indian Economy: is decreasing
· Nation Development Council: was set up in 1952.
· Economic Survey is published by: Ministry of Finance.
· Shri V.T.Krishnamachari: was the 1st Deputy Chairman Of the Planning Commission of India.
· India had a “Plan holiday”: After the draught of 1966.
· Steel Plant at Durgapur, Bhilai & Rourkela were established during the period of: 2nd Five Year Plan.
· Expenditure on Agriculture was maximum during: 4th Five-year Plan.
· Recommendations of this committee are followed for estimating the Poverty line in India: Lokdawala Committee.
· A serious efforts to tackle the problem of Poverty began with: 4th Plan.
· The “Slack Season” in the Indian Economy is: January to June.
· Type of Unemployment which occurs when workers move from one job to another job is: Frictional unemployment.
· Type of Unemployment mostly found in India is: Disguised Unemployment.
· Cyclical Unemployment is: unemployment during the recessionary phase of a trade cycle.
· Minimum Calorie intake prescribed by Planning Commission for Rural & Urban areas: Rural Areas- 2400; Urban Areas-2100
· The cause of Inflation is: increase in money supply & fall in production.
· Debtors: are benefitted most from Inflation.
· Creditors: suffer most from Inflation.
· Stagflation: is the period of high inflation & low economic growth.
· Inflation can be contained by: Surplus Budget, Increase in Taxation & reduction in Public Expenditure.
· Increase in Indirect Taxation: leads to Cost-Push Inflation
· The Country Experiences Inflation at present: Cost-Push Inflation.
· Overvaluation: is lowering the value of one currency in comparison to some foreign Currency.
· Monetary Policy is regulated by: Central Bank.
· One Rupee Currency Notes bears the signature of: Finance Secretary Of India.
· The decimal System of Currency was introduced in: 1957.
· The bank press, Dewas: prints currency notes of denomination of 100.
· The special paper needed for printing currency notes by security press is manufactured at: Hoshangabad.
· Convertibility of the Rupee implies: freely permitting the conversion of Rupee into other major currencies & vice versa.
· Devaluation is resorted to: promote of import substitutions & Expansion of Export Trade.
· The 1st bank established in India: Bank of Hindustan.
· A scheduled bank is one which is included in: II schedule of Banking Regulation Act.
· Panther: is the animal on the insignia of the RBI.
· Bank of the Banker is: RBI.
· RBI was taken over by Government in: 1948.
· RBI is responsible for the collection & Publication of Monetary & Financial Information.
· RBI issues: all the currency notes except the one Rupee note.
· Bank rate is the rate at which: RBI gives credit to commercial banks.
· EXIM Bank was set up in: 1980.
· Debenture holders of a company are: its creditors.
· Head Quarter of Unit Trust of India: Mumbai.
· Land Development Bank: gives long term loans to farmers.
· Mumbai Stock Exchange: is the oldest stock exchange of India.
· Direct tax: is a tax that is paid by the person on whom the tax is incident.
· The standard of living in a country is represented by its: Per Capita Income.
· GNP: is taken as the best measure of the economic growth of a country.
· Via Finance bill: The Government makes arrangements for the collection of revenue for the coming year.
Ad Valorem Duty: is a tax based on the prices of a commodity.
· The budget was 1st presented during: Canning
· Surcharge: is a temporary tax levied to obtain additional revenue.
· Per Capita Income has been low in India: because of high Population Growth.
· Most Important Non-plan Expenditure is: Interest Payment.
Deficit financing -excess public expenditure loan funded by RBI through printing new currency
· Deficit Financing: Spending in excess of Revenue.
· National Income is compiled by: Central Statistical Organisation.
· Sales Tax: is the principal source of revenue to the State Government
· Value-Added tax is: an Ad Valorem Tax on Domestic final Consumption collected at the manufacturing level.
· ‘Gift-Edged’ market deals in: bullion
· Octroi is levied & collected by: Local Bodies.
· Tea Industry: was the 1st industry started in India.
· Indian Railways earn maximum revenue from: Freight
· India earns maximum foreign Exchange from: Gems & Jewelry.
· India earns the 2nd maximum Foreign Exchange from: Engineering Goods Industry.
· “Dumping” in the context of international trade refers to: Exporting goods at prices below the actual cost of production.
“ World Bank” consists of: 1) International Bank of Reconstruction & Development 2) International Finance Commission 3) International Development Association.
· Head-Quarter of IMF & World Bank: IMF: Washington DC, World Bank: Washington DC.
· “World Development Report” is an annual Publication of: International Bank of Reconstruction & Development.
· Human Development Index comprises of: Literacy Rates, Life Expectancy at Birth & Gross Domestic Product per head at real purchasing power.
The “Year of Great Divide” refers to: Rapid growth rate in population after 1921, so the year of 1921 is called "The Year Of Great divide”.
· Types of Unemployments: Some of the most important types of unemployment are: 1. Frictional Unemployment, 2. Seasonal Unemployment, 3. Cyclical Unemployment, 4. Structural Unemployment, 5. Technological Unemployment and 6. Disguised Unemployment!
Unemployment in India - disguised and structural, Structural unemployment
Structural Employment: occurs when there is a shifting of resources from one sector to another sector.
Details of Five Year Plans:
A. First Five Year Plan:
It was made for the duration of 1951 to 1956.
II. It was based on the Harrod-Domar model.
III. Its main focus was on the agricultural development of the country.
IV. This plan was successful and achieved a growth rate of 3.6% (more than its target)
B. Second Five Year Plan:
I. It was made for the duration of 1956 to 1961.
II. It was based on the P.C. Mahalanobis Model.
III. Its main focus was on the industrial development of the country.
IV. This plan was successful and achieved a growth rate of 4.1%
C. Third Five Year Plan:
I. It was made for the duration of 1961 to 1966.
I This plan is called ‘Gadgil Yojna’ also.
III. The main target of this plan was to make the economy independent and to reach the self-active position of take-off.
I D.Due to china war, this plan could not achieve its growth target of 5.6%
****. The duration of the plan holiday was from 1966 to 1969.
I I. The main reason behind the plan holiday was the Indo-Pakistan war & failure of the third plan.
III. During this plan, annual plans were made and equal priority was given to agriculture its allied sectors, and the industry sector.
E. Fourth Five Year Plan:
I. Its duration was from 1969 to 1974.
II. There were two main objectives of this plan i.e. growth with stability and progressive achievement of self-reliance.
III. During this plan, the slogan of “Garibi Hatao” is given during the 1971 elections by Indira Gandhi.
IV. This plan failed and could achieve a growth rate of 3.3% only against the target of 5.7%.
F. Rolling Plan: This plan was started with an annual plan for 1978-79 and as a continuation of the terminated fifth-five year plan.
G . Sixth Five Year Plan:
I. Its duration was from 1980 to 1985.
II. The basic objective of this plan was poverty eradication and technological self-reliance.
III. It was based on investment Yojna, infrastructural changing and trend to the growth model.
IV. Its growth target was 5.2% but it achieved 5.7%.
H. Seventh Five Year Plan:
I. Its duration was from 1985 to 1990.
II. The objectives of this plan include the establishment of a self-sufficient economy, opportunities for productive employment.
III. For the first time, the private sector got priority over the public sector.
IV. Its growth target was 5.0% but it achieved 6.0%.
Annual Plans: Eighth five Plan could not take place due to the volatile political situation at the center. So two annual programs are formed in 1990-91& 1991-92.
I. Eighth Five Year Plan:
I. Its duration was from 1992 to 1997.
II. In this plan, the top priority was given to the development of human resources i.e. employment, education, and public health.
III. During this plan, Narasimha Rao Govt. launched the New Economic Policy of India.
IV. This plan was successful and got an annual growth rate of 6.8% against the target of 5.6%.
J. Ninth Five Year Plan:
I. Its duration was from 1997 to 2002.
II. The main focus of this plan was “growth with justice and equity”.
III. It was launched in the 50th year of independence of India.
I IV. This plan failed to achieve the growth target of 7% and grow only at the rate of 5.6%.
K. Tenth Five Year Plan:
I. Its duration was from 2002 to 2007.
II. This plan aims to double the Per Capita Income of India in the next 10 years.
III. It aims to reduce the poverty ratio of 15% by 2012.
IV. Its growth target was 8.0% but it achieved only 7.2%.
L. Eleventh Five Year Plan:
IIts duration was from 2007 to 2012.
II. It was prepared by the C. Rangarajan.
III. Its main theme was “faster and more inclusive growth”
IV. Its growth rate target was 8.1% but it achieved only 7.9%
M Twelfth Five Year Plan:
I. Its duration is from 2012 to 2017.
II. Its main theme is “Faster, More Inclusive and Sustainable Growth”.
III. Its growth rate target is 8%.
THAT WAS THE LAST FYP IN India.
· Planning In India:
First of all the idea of the planned economy was crystallized in the 1930s when our national leaders came under the influence of socialist philosophy. India’s Five-year plans were very much impressed by the rapid strides achieved by the USSR through five years plans.
· Visvesvarya Plan
In 1934, Sir M. Visvesvaraya had published a book titled “Planned Economy in India”, in which he presented a constructive draft of the development of India in the next ten years. His core idea was to lay out a plan to shift labor from agriculture to industries and double up National income in ten years. This was the first concrete scholarly work toward planning. The economic perspective of India’s freedom movement was formulated during the thirties between the 1931 Karachi session of the Indian National Congress, 1936 Faizpur session of India National Congress.
· National Planning Committee:
The first attempt to develop a national plan for India came up in 1938. In that year, Congress President Subhash Chandra Bose had set up a National Planning Committee with Jawaharlal Nehru as its president. However, the reports of the committee could not be prepared, and only for the first time in 1948 -49, some papers came out.
· Bombay Plan:-
In 1944 Eight Industrialists of Bombay viz. Mr. JRD Tata, GD Birla, Purshottamdas Thakurdas, Lala Shriram, Kasturbhai Lalbhai, AD Shroff, Ardeshir Dalal, & John Mathai working together prepared “A Brief Memorandum Outlining a Plan of Economic Development for India”. This is known as the “Bombay Plan”. This plan envisaged doubling the per capita income in 15 years and tripling the national income during this period Nehru did not officially accept the plan, yet many of the ideas of the plan were inculcated in other plans
· People’s Plan:
People’s plan was drafted by MN Roy. This plan was for ten years period and gave the greatest priority to Agriculture. Nationalization of all agriculture and production was the main feature of this plan. This plan was based on Marxist socialism and drafted by M N Roy on behalf of the Indian federation of Lahore.
· Gandhian Plan:
This the plan was drafted by Sriman Nayaran, principal of Wardha Commercial College. It emphasized the economic decentralization with primacy to rural development by developing the cottage industries.
· Sarvodaya Plan:
Sarvodaya Plan (1950) was drafted by Jaiprakash Narayan. This plan itself was inspired by the Gandhian Plan and the Sarvodaya Idea of Vinoba Bhave. This plan emphasized agriculture and small & cottage industries. It also suggested the freedom from foreign technology and stressed upon land reforms and decentralized participatory planning.
· Planning and Development Department:
In August 1944, The British India government set up the “Planning and Development Department” under the charge of Ardeshir Dalal. But this department was abolished in 1946.
· Planning Advisory Board:
In October 1946, a planning advisory board was set up by the Interim Government to review the plans and future projects and make recommendations upon them.
· Planning Commission:
Immediately after independence in 1947, the Economic Programme Committee (EPC) was formed by the All India Congress Committee with Nehru as its chairman. This committee was to make a plan to balance private and public partnerships and urban and rural economies. In 1948, this committee recommended the forming of a planning commission. In March 1950, in pursuance of declared objectives of the Government to promote a rapid rise in the standard of living of the people by efficient exploitation of the resources of the country, increasing production and offering opportunities to all for employment in the service of the community, the Planning Commission was set up by a Resolution of the Government of India as an advisory and specialized institution. Planning Commission was an extra-constitutional body, charged with the responsibility of making an assessment of all resources of the country,
augmenting deficient resources, formulating plans for the most effective and balanced utilization of resources, and determining priorities. Jawaharlal Nehru was the first Chairman of the Planning Commission.
· National Development Council:
The government of India could take the initiative to set up the planning commission only under a provision in the constitution which made Economic & Social planning an item in the Concurrent List. The Resolution to set up a planning commission was actually based upon the assumption that the roots of center-state cooperation should be deeper. Later, in 1952, the setting up of the National Development Council was, in fact, a consequence of this provision.
· Ongoing Finance Commission: is the 14th one. It is for 2015-2020. Its C.M. is V.Venugopal Das.
· Ginni Index: plots inequalities in Income
· Green Revolution: took place during the 4th Five year Plan.
· MSP( for 24 crops) is given by: commission for Agricultural Cost & Price [CACP].
· Tamilnadu: Has maximum no. of Enterprises & Small-Scale Industries.
· FERA: was led in 1973, was turned into FEMA in 1994.
· Golden Triangle: connects Bengaluru, Chennai & Trivandrum.
· Deccan Odyssey: a luxury Express, from Goa to Maharastra.
· North Railway Zone: has the largest Railway Route in India.
· Poverty line: is decided by NASSO
· “Garibi Hatao”: 1st came in the 5th Five-year plan.
· Five-year plan: India adopted from Russia.
· Calorie is used as a scale, Since: 6th plan.
· 1st Budget was presented during: Lord Canning
· 1st Zero-based budget was led during : Rajiv Gandhi.
· Bank of Hindustan: 1770, Awadh Bank: 1831, Ahmedabad Bank: 1865
· Narsimha committee: recommended of Banks of the Private Sector.
· Inflation is measured on: WPI
· ISO9000: for quality standard. ISO14000: for Environment Conservation Management.
· SLR: the rate at which commercial banks provide credit to the Government.
· Participatory Notes: for FDI.
· Economy planning: is mentioned in 7th Schedule & is in the Concurrent List.
· Five-year Plans & their Target:
Five Year Plan
Five Year Plan
Community Development Program
Expansion of Basic Industries
Self reliance & Growth for Stability
· Lorentz Curve: gives of Inequalities. It shows inequalities in the distribution of either wealth or income.
· Gini Coefficient: it is derived from the Lorentz Curve, measures the degree of equality across a given Population, Here, ‘O’ implies a perfect Equality as O % & ‘1’ shows perfect inequality as 100%.
· Eagel’s Law: Food expenditure starts declining as the Income starts rising.
· Loffer’s Curve: gives a relation between Tax Revenue & its Corresponding tax rates.
Few more points:
1). Unbalanced growth model -Mahalanobis model adopted during the second plan in India for development
2). Monterey policy now named as monetary and credit policy
3). Deficit financing is one of the major reasons for an inflation in India.
4) the main source of savings - about 70% savings comes from the household sector
5) one word in stagflation- fall in employment with inflation
6) in India till now the only current account is fully convertible but in the capital account, there is controlled conversion of currency is allowed
7).FEMA - foreign exchange management act is related to currency conversion
· Poverty Line: 1st time introduced in India in – 1971.
· Poverty Alleviation program, since: 5th FYP.
· Inflation is measured from: WPI.
· GDP Deflector: = GDP (output)/GDP (Base Year)
· Consumer Price Index: measured on 1) Industrial Workers 2) Rural Workers & 3)Agricultural Labour.
· Base Years: for WPI- 2011-12 & for CPI- 2011-12.
· Headline Inflation: Headline inflation is the raw inflation figure reported through the Consumer Price Index (CPI) that is released monthly by the Bureau of Labor Statistics. 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.
· Core Inflation: Core inflation is the change in the costs of goods and services but does not include those from the food and energy sectors. This measure of inflation excludes these items because their prices are much more volatile. It is most often calculated using the consumer price index, which is a measure of prices for goods and services.
· Inflation: Inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time. It is the rise in the general level of prices where a unit of currency effectively buys less than it did in prior periods. Often expressed as a percentage, inflation thus indicates a decrease in the purchasing power of a nation’s currency. Inflation can be contrasted with deflation, which occurs when prices instead of decline.
· Poverty Gap Index: The poverty gap index is a measure of the intensity of poverty. It is defined as the average poverty gap in the population as a proportion of the poverty line. The poverty gap index is an improvement over the poverty measure headcount ratio which simply counts all the people below a poverty line, in a given population, and considers them equally poor. The poverty gap index estimates the depth of poverty by considering how far, on average, the poor are from that poverty line.
· The Planning Commission: gives an estimate of Poors on NSSO, since 1991.
· Rangarajan Committee was on: Financial Inclusion.
· The committee was on Poverty: Lakdawala Committee, Prof. Suresh Tendulkar Committee, N.C. Saxena Committee, S.R. Hasim Committee.
· Meera Seth Committee: Recommended of Development of Handlooms.
· Backwash Effect: given by Gunnar Myrdal. Backwash occurs if the adverse effects dominate and the level of economic activity in the peripheral communities declines. The idea of backwash originated in the international-trade theory in a book by Gunner Myrdal (1957). Backwash occurs if the adverse effects dominate and the level of economic activity in the peripheral communities declines.
· Gresham’s Law: Gresham's law is a monetary principle stating that "bad money drives out good." It is primarily used for consideration and application in Currency Markets.
=>Agriculture Pattern in India:
=>Leading Producers of Various Crops in India:
· Agriculture Income is calculated by: Expenditure Method.
· Paper Gold: Special Drawing Rights.
· The base year for National Income: 2011-12.
· Secretary of Planning commission is: Ex-officio Secretary of NDC, too.
· Break-Even Point: when the firm starts getting a normal profit.
· Head Quarter of SIDBI: Lucknow,
· Bhandari Committee: recommended of Regional Rural Banks.
· Tobin Tax: the flow of capital across the globe.
· Phillips Curve: gives the relation between Inflation & Unemployment.
· Bretton Woodschild: IMF & World Bank.
NABARD was set up on the recommendation of: Sivaraman Committee.
World Bank Head Quarter: Washington.
FDI in India: Mauritius has the highest FDI inflow (31% of the total Indian FDI) in India From April 2000 To December 2019. The Indian economy is composed of the three major sectors like i.e., the Services sector, Industry sector, and Agriculture sector. The contribution of the Services sector in the Indian economy is around 54.30%.
The Value of India's Export stood at US$ 356.96 billion in between April-November 2019.
Status of Indian Economy In the world: India's economy has become the 5th largest economy (in terms of nominal GDP) in the world.
The size of major economies of the world is as follows; (in terms of Nominal GDP-IMF Estimates 2019)
1. U.S.A - $21.43 trillion. 2. China - $14.14 trillion.
3. Japan - $5.15 trillion. 4. Germany - $3.86 trillion.