economics

[CHAPTER]IntroductionToEconomics&NationalIncome EconomicsDefinition|StudyOfScarceResources&Choice Microeconomics|IndividualUnits,Firm,Consumer,Price Macroeconomics|AggregateEconomy,Inflation,GDP,Unemployment NationalIncome|TotalValueOfGoods&ServicesProducedIn1Year GDP|GrossDomesticProduct GDPDefinition|MarketValueOfFinalGoods&ServicesProducedWithinDomesticTerritory1Year GNP|GrossNationalProduct GNPDefinition|GDP+NetFactorIncomeFromAbroad NFIA|NetFactorIncomeFromAbroad=FactorIncomeReceived–FactorIncomePaid GNPFormula|GNP=GDP+NFIA NDP|NetDomesticProduct NDPFormula|NDP=GDP–Depreciation NNP|NetNationalProduct NNPFormula|NNP=GNP–Depreciation NNPAtMarketPrice|NNP=GDP+NFIA–Depreciation NNPAtFactorCost|NationalIncome NationalIncome|NNPAtFactorCost=NNPAtMP–NetIndirectTaxes NetIndirectTaxes|IndirectTax–Subsidies PerCapitaIncome|NationalIncome/TotalPopulation DomesticTerritory|IncludesEmbassies,Ships,AircraftsOfCountry NormalResidents|LiveInCountry>1Year,EconomicInterest ValueAddedMethod|ProductMethod,SumOfValueAddedAtEachStage ValueAdded|OutputValue–IntermediateConsumptionValue IncomeMethod|SumOfFactorIncomes=Rent+Wages+Interest+Profit ExpenditureMethod|C+I+G+(X–M) C|PrivateFinalConsumptionExpenditure I|GrossDomesticCapitalFormation G|GovernmentFinalConsumptionExpenditure X–M|NetExports DoubleCounting|CountingValueOfIntermediateGoodsTwice AvoidDoubleCounting|UseValueAddedMethodOrFinalGoodsOnly NominalGDP|GDPAtCurrentYearPrices RealGDP|GDPAtBaseYearPrices BaseYear|YearUsedForComparison,Currently2011–12India GDPDeflator|NominalGDP/RealGDP×100 GDPDeflatorUse|MeasuresInflationInEconomy FinalGoods|UsedForFinalConsumptionOrInvestment IntermediateGoods|UsedAsInputForFurtherProduction ConsumerGoods|DirectlySatisfyHumanWants CapitalGoods|UsedForProducingOtherGoods,Durable DurableGoods|UsedMultipleTimes,Life>1Year NonDurableGoods|UsedOnce,ImmediateConsumption TransferPayments|NotIncludedInNationalIncome,Pension,Scholarship Depreciation|ConsumptionOfFixedCapital,Wear&Tear [CHAPTER]Inflation&BusinessCycles InflationDefinition|PersistentRiseInGeneralPriceLevel Disinflation|DecreaseInRateOfInflation Deflation|NegativeInflation,FallInPriceLevel CreepingInflation|Mild,UpTo3%PerAnnum WalkingInflation|Moderate,3%To10%PerAnnum GallopingInflation|VeryHigh,10%To20%PerAnnum Hyperinflation|Extreme,>50%PerMonth,BreakdownOfMoney DemandPullInflation|ExcessAggregateDemand>AggregateSupply CausesDemandPull|IncreaseMoneySupply,FiscalDeficit,Population CostPushInflation|RiseInProductionCosts CausesCostPush|WagePush,ProfitPush,MaterialCost,RiseInTaxes StructuralInflation|DueToStructuralBottlenecks,AgricultureSupply CPI|ConsumerPriceIndex CPIMeasures|RetailInflation,CostOfLiving CPIPublishedBy|NSO,BaseYear2012 CPIBasket|Food&Bev45.86%,Housing,Clothing,Fuel,Others WPI|WholesalePriceIndex WPIMeasures|ProducerPrice,InflationAtWholesaleLevel WPIPublishedBy|OfficeOfEconomicAdviser,DPIIT,BaseYear2011–12 WPIBasket|PrimaryArticles22.62%,Fuel&Power13.15%,ManufacturedProducts64.23% WPIExcludes|Services DifferenceCPIWPI|CPI=Consumer,WPI=Producer,CPIIncludesServices,WPIExcludesFoodRetail HeadlineInflation|TotalInflation,CPIAllItems CoreInflation|HeadlineMinusFood&Fuel,VolatileItemsExcluded GDPDeflator|NominalGDP/RealGDP×100,BroadestMeasure PPI|ProducerPriceIndex,ProposedReplacementForWPI PhillipsCurve|InverseRelationInflation&Unemployment,ShortRun Stagflation|HighInflation+HighUnemployment+LowGrowth CausesStagflation|SupplyShock,OilPrice,BadPolicy Reflation|InflationAfterDeflation,Stimulus Skewflation|PriceRiseInFewItems,NotGeneral InflationTargeting|RBI,4%With+/-2%Band,Since2016 BusinessCycle|FluctuationsInEconomicActivity Phases|Expansion,Peak,Recession,Depression,Trough,Recovery Expansion|RisingOutput,Employment,Income Peak|MaximumGrowth,Boom Recession|2ConsecutiveQuartersNegativeGDPGrowth Depression|SevereProlongedRecession,>10%GDPFall Trough|LowestPoint,Slump Recovery|UpturnFromTroughToExpansion [CHAPTER]Money&Banking MoneyDefinition|AnythingGenerallyAcceptedAsMediumOfExchange FunctionsOfMoney|Primary=MediumOfExchange,MeasureOfValue;Secondary=StoreOfValue,StandardOfDeferredPayment,TransferOfValue MoneySupply|TotalStockOfMoneyHeldByPublicAtPointOfTime M1|NarrowMoney,HighLiquidity M1Components|CurrencyWithPublic+DemandDepositsWithBanks+OtherDepositsWithRBI M2|M1+PostOfficeSavingsDeposits M3|BroadMoney,M1+TimeDepositsWithBanks M4|M3+TotalPostOfficeDeposits LiquidityOrder|M1>M2>M3>M4 RBI|ReserveBankOfIndia,Est1935,CentralBank RBIAct|1934 NationalisedRBI|1949 RBIHeadquarters|Mumbai RBIHead|Governor FunctionsRBI|BankerToGovt,BankerToBanks,IssuerOfCurrency,ControllerOfCredit,CustodianOfForex MonetaryPolicy|RBIToolToControlMoneySupply&InterestRate MPC|MonetaryPolicyCommittee,6Members,SetUp2016 MPCQuorum|4Members CRR|CashReserveRatio CRRDefinition|%OfNDTLBanksKeepWithRBI,NoInterest SLR|StatutoryLiquidityRatio SLRDefinition|%OfNDTLBanksKeepAsCash,Gold,ApprovedSecurities NDTL|NetDemand&TimeLiabilities,DepositsOfBank RepoRate|RateAtWhichRBI_LendsToBanksAgainstGovtSecurities ReverseRepoRate|RateAtWhichRBI_BorrowsFromBanks BankRate|RateAtWhichRBI_LendsLongTerm,NoCollateral MSF|MarginalStandingFacility,OvernightRate,PenalRate LAF|LiquidityAdjustmentFacility,Repo&ReverseRepo OMO|OpenMarketOperations,Buy/SellGovtSecurities QuantitativeTools|CRR,SLR,Repo,BankRate,OMO QualitativeTools|MarginRequirement,CreditRationing,MoralSuasion BankingStructure|Scheduled&NonScheduled ScheduledBanks|2ndScheduleOfRBIAct1934 TypesScheduled|Commercial&Cooperative CommercialBanks|PublicSector,PrivateSector,Foreign,RRB PublicSectorBanks|MajorityStakeGovt,SBI+12PSBs SBI|StateBankOfIndia,Est1955,NationalisedImperialBank NationalisationBanks|14In1969,6In1980 RRB|RegionalRuralBanks,Est1975,NarasimhamCommittee RRBStake|Centre50%+SponsorBank35%+State15% RRBPurpose|RuralCredit,SmallFarmers CooperativeBanks|3Tier=SCB+DCCB+PACS NABARD|NationalBankForAgriculture&RuralDevelopment,1982 NHB|NationalHousingBank,1988 SIDBI|SmallIndustriesDevelopmentBankOfIndia,1990 EXIMBank|ExportImportBank,1982 NBFC|NonBankingFinancialCompany,NoDemandDeposits,NoCheques PaymentBanks|AcceptDepositsUpTo2Lakh,NoLending,2015 SmallFinanceBanks|LendToSmallBusiness,PrioritySector,2016 BaselNorms|BankingRegulation,CapitalAdequacy BaselIII|MinCapital8%+CCB2.5%,IndiaImplemented2013 [CHAPTER]PublicFinance&Budget PublicFinance|StudyOfGovtRevenue&Expenditure&Debt UnionBudget|Article112,AnnualFinancialStatement BudgetPreparedBy|DeptOfEconomicAffairs,MinistryOfFinance BudgetPresentedBy|FinanceMinister BudgetDate|1stFebruary,ChangedFrom2017 RailwayBudgetMerged|2017 Receipts|TotalIncomeOfGovt RevenueReceipts|NeitherCreateLiabilityNorReduceAsset RevenueReceiptsTypes|TaxRevenue+NonTaxRevenue TaxRevenue|IncomeTax,CorporateTax,GST,Customs,Excise NonTaxRevenue|Interest,Dividends,Fees,Fines,Grants,PSUProfits CapitalReceipts|CreateLiabilityOrReduceAsset CapitalReceiptsTypes|Borrowings,Disinvestment,LoanRecovery,SmallSavings Expenditure|TotalSpendingOfGovt RevenueExpenditure|NeitherCreateAssetNorReduceLiability RevenueExpExamples|Salaries,Interest,Subsidies,Pensions,DefenceRevenue CapitalExpenditure|CreatesAssetOrReducesLiability CapitalExpExamples|Infra,LoanRepayment,LoanToStates,ShareCapital PlanExpenditure|RemovedSince2017–18 NonPlanExpenditure|RemovedSince2017–18 FiscalDeficit|TotalExpenditure–TotalReceiptsExcludingBorrowings FiscalDeficitFormula|FD=Borrowings=RevExp+CapExp–RevReceipt–NonDebtCapReceipt FiscalDeficitTarget|FRBMAct2003,3%OfGDP RevenueDeficit|RevenueExpenditure–RevenueReceipts EffectiveRevenueDeficit|RevenueDeficit–GrantsForCapitalAssets PrimaryDeficit|FiscalDeficit–InterestPayments MonetisedDeficit|RBIPrintingMoneyToFinanceDeficit DirectTax|BurdenCannotBeShifted,IncomeTax,CorporateTax IndirectTax|BurdenShifted,GST,Customs,Excise IncomeTax|LeviedOnIndividuals&HUF,Progressive CorporateTax|LeviedOnCompanies,FlatRate GST|Goods&ServicesTax,101stAmendment2016,1July2017 GSTTypes|CGST,SGST,IGST,UTGST GSTCouncil|Article279A,Chair=UnionFM GSTSlabs|0%,5%,12%,18%,28% Cess|TaxOnTax,ForSpecificPurpose,EducationCess,HealthCess Surcharge|AdditionalTaxOnHighIncome,PartOfTax FinanceCommission|Article280 FCConstitutedBy|President,Every5Years FCWork|DivisionOfTaxesBetweenCentre&States,GrantsInAid 15thFC|ChairNKSingh,Period2021–26 15thFCShare|41%ToStates,1%ForJ&K,Ladakh FRBMAct|FiscalResponsibility&BudgetManagement2003 FRBMAim|ReduceFiscalDeficit,EliminateRevenueDeficit Ways&MeansAdvances|WMA,RBILendsToGovtShortTerm TreasuryBills|ShortTermGovtBorrowing<1Year DatedSecurities|LongTermGovtBorrowing>1Year [CHAPTER]MarketStructures Market|ArrangementWhereBuyers&SellersExchangeGoods PerfectCompetition|TheoreticalMarket,ManyBuyers&ManySellers FeaturesPerfectComp|HomogeneousProduct,FreeEntryExit,PerfectKnowledge,NoSellingCost,PriceTaker PriceTaker|FirmAcceptsMarketPrice,DemandCurvePerfectlyElastic FirmEquilibrium|MR=MC&MC_CuttingMR_FromBelow LongRunEquilibrium|P=AR=MR=MC=AC,NormalProfitOnly ExamplePerfectComp|AgricultureProducts,StockMarketNear Monopoly|SingleSeller,NoCloseSubstitutes FeaturesMonopoly|PriceMaker,BlockedEntry,UniqueProduct PriceMaker|FirmHasControlOverPrice DemandCurveMonopoly|DownwardSloping,AR>MR MonopolyEquilibrium|MR=MC,Price>MC SourcesMonopoly|LegalPatent,NaturalResource,OwningKeyInput,NaturalMonopoly NaturalMonopoly|EconomiesOfScale,SingleFirmCheapest,Railways PriceDiscrimination|SameGoodSoldDifferentPrices,ByMonopolist MonopolisticCompetition|ManySellers,DifferentiatedProducts FeaturesMonopolisticComp|ProductDifferentiation,FreeEntry,SomePriceControl,SellingCost SellingCost|Advertisement,PromotesProductDiff DemandCurveMonoComp|DownwardSloping,MoreElasticThanMonopoly ShortRun|SuperNormalProfitPossible LongRun|NormalProfit,EntryRemovesExtraProfit ExcessCapacity|NotProducingAtMinAC,LongRunFeature ExamplesMonoComp|Soap,Toothpaste,Restaurants,HairSalon Oligopoly|FewLargeFirms,Interdependent FeaturesOligopoly|MutualInterdependence,PriceRigidity,NonPriceCompetition,EntryBarriers KinkedDemandCurve|ByPaulSweezy,ExplainsPriceRigidity Cartel|FormalCollusion,OPEC,IllegalInIndia PriceLeadership|DominantFirmSetsPrice,OthersFollow ExamplesOligopoly|Telecom,Auto,Cement,AirlinesIndia Duopoly|SpecialCaseOfOligopoly,TwoFirmsOnly ComparisonPriceControl|PerfectComp=None,Monopoly=High,Oligopoly=Some,MonoComp=Limited ComparisonProfitLongRun|PerfectComp=Normal,Monopoly=SuperNormal,MonoComp=Normal,Oligopoly=SuperNormalPossible [CHAPTER]FiveYearPlans&EconomicReforms PlanningCommission|Est1950,ByResolution,Chair=PM PlanningCommissionAbolished|2014 NITIAayog|NationalInstitutionForTransformingIndia,Est1Jan2015 NITIFullForm|NationalInstitutionForTransformingIndia NITIChairman|PrimeMinister NITIViceChairman|AppointedByPM NITICEO|SecretaryRank,AppointedByPM NITIDifference|PlanningCommission=TopDown,NITI=CooperativeFederalism,ThinkTank NITIAim|BottomUpApproach,NoFinancialPower 1stPlan|1951–56 1stPlanModel|HarrodDomarModel 1stPlanFocus|Agriculture,Irrigation,Power 1stPlanTarget|2.1%Growth,Achieved3.6% 2ndPlan|1956–61 2ndPlanModel|MahalanobisModel 2ndPlanFocus|HeavyIndustry,RapidIndustrialization 2ndPlanArchitect|PCMahalanobis 2ndPlanProjects|Bhilai,Durgapur,RourkelaSteelPlants 3rdPlan|1961–66,Failed,Drought&Wars PlanHoliday|1966–69,AnnualPlansDueToCrisis 4thPlan|1969–74 4thPlanAim|GrowthWithStability,SelfReliance 4thPlanEvents|BankNationalisation1969,GaribiHatao 5thPlan|1974–79 5thPlanFocus|PovertyRemoval,SelfReliance 5thPlanTerminated|1978ByJanataGovt RollingPlan|1978–80,ByJanataParty 6thPlan|1980–85 6thPlanFocus|NREP,PovertyAlleviation 7thPlan|1985–90 7thPlanFocus|Food&Employment,Productivity 8thPlan|1992–97,After1991Reforms 8thPlanModel|JohnWMLittle,IndicativePlanning 8thPlanFocus|LPG,HumanDevelopment 9thPlan|1997–2002,GrowthWithEquity 10thPlan|2002–07,Target8%,Achieved7.6% 11thPlan|2007–12,Faster&SustainableGrowth,Target9% 12thPlan|2012–17,LastPlan,FasterSustainableInclusiveGrowth 12thPlanTarget|8%Growth,Achieved6.8% 1991Reforms|EconomicCrisis,BoP&FiscalDeficit PM1991|PVNarasimhaRao FM1991|DrManmohanSingh LPG|LibralisationPrivatisationGlobalisation Liberalisation|ReduceGovtControl,Dereservation,Deregulation Privatisation|Disinvestment,TransferToPrivateSector Globalisation|IntegrationWithWorld,FDI,FII NewIndustrialPolicy|24July1991 Abolished|IndustrialLicensingExcept18,Now4 MRTPAct|ReplacedByCompetitionAct2002 FDIAllowed|AutomaticRoute,UpTo100%ManySectors RupeeDevalued|1991ToBoostExports WTO|Est1995,IndiaMember Disinvestment|SaleOfGovtEquityInPSUs DeptOfDisinvestment|NowDIPAM