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ECONOMICS
READERS NOTE
 The study material covers important current affairs topics from July 2016 March 2017
 This is the 'Volume 1’ of the ‘SURE PT’ program
 The study material is the result of unaccountable hours of exhaustive research
 It is presented in the most comprehensive manner required for UPSC prelims
 Most important note: refer the mains study material and the MCQs given in class
 READ and REVISE

1. Taxation
1. GST
(1) The 101th amendment to Constitution introduced the goods and services tax (GST)
(2) Objective
a) GST is one indirect tax for the whole nation, which will make India one unified common market
b) It is essentially a tax only on value addition at each stage
c) It is a destination based tax and will be implemented from July 2017
(3) Taxes subsumed
a) At the Central level, the following taxes are being subsumed:Central Excise Duty,Additional Excise
Duty,Service Tax, Additional Customs Duty commonly known as Countervailing Duty, and Special
Additional Duty of Customs
b) At the State level, the following taxes are being subsumed: State Value Added Tax/Sales Tax,
Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the
Centre and collected by the States),Octroi and Entry tax, Purchase Tax, Luxury tax, and Taxes on lottery,
betting and gambling.
(4) Exemption
a) Alcohol for human consumption has been exempted from the purview of GST.
b) Five petroleum products- crude oil, natural gas, aviation fuel, diesel and petrol — have been excluded
during the initial years
c) Electricity is also outside the purview of GST
d) Education, health care and pilgrimages will continue to be out of service tax net even under the GST
regime
(5) Framework
a) Keeping in mind the federal structure of India, there will be two components of GST – Central GST
(CGST) and State GST (SGST). Both Centre and States will simultaneously levy GST across the value chain
b) In case of inter-State transactions, the Centre would levy and collect the Integrated Goods and Services
Tax (IGST) on all inter-State supplies of goods and services
c) The GST Council has approved a four-rate tax structure of 5, 12, 18 and 28 per cent.
d) Essential food articles will not taxed and those will continue to be zero rated under the GST
(6) GST council
a) The GST Council will recommend rates of tax, period of levy of additional tax, principles of supply,
special provisions to certain states etc.
b) The GST Council will consist of the Union Finance Minister, Union Minister of State for Revenue, and
state Finance Ministers.
c) Every decision of the GST council needs to be taken with a three-fourth majority. While the central
government’s vote will have a one-third weightage, the votes of all the state governments put together
will have a two-third weightage
(7) Compensation
a) It empowers the centre to impose an additional tax of up to 1%, on the inter-state supply of goods for
two years or more. This tax will accrue to states from where the supply originates.
b) Parliament may, by law, provide compensation to states for any loss of revenue from the introduction
of GST, up to a five year period
(8) GSTN
a) The Goods and Services Tax Network (GSTN) is a private limited company floated to aid the rollout of
GST
b) The company will provide IT support to all stakeholders for smooth implementation of the GST across
the country and will be the repository of all information related to taxation and entities registered

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under GST
c) The majority (51%) shareholding in the firm is with private entities.The central government, jointly
with state governments and Union Territories, own 49% in the company
d) Infosys had bagged contract from central govt to build the technology infrastructure for GSTN

2. Project Saksham
(1) Project SAKSHAM, a New Indirect Tax Network (Systems Integration) of the Central Board of Excise and
Customs (CBEC)
(2) It will help in
i. the implementation of GST,
ii. extension of the Indian Customs Single Window Interface for Facilitating Trade (SWIFT) and
iii. other taxpayer-friendly initiatives under Digital India and Ease of Doing Business of Central Board of
Excise and Customs.
3. Tax avoidance and Tax evasion
(1) Tax avoidance is deliberate measures to avoid or reduce tax burden by an individual or a company.Tax
avoidance is not illegal or forbidden by the law as such. The purpose here is to reduce tax burden. Tax evasion,
on the other hand, is entirely illegal. It is where you deliberately break the rules.
4. Project insight
(1) Project Insight' is an initiative of the Finance Ministry. It is aimed at widening the tax base by catching tax
evaders using technology
(2) L&T Infotech will develop the software infrastructure for the project
5. Advance Pricing Agreements
(1) The international transactions are complex and involve more than one country. The sole objective of the APA
is to bring tax certainty in international transactions and overcome the issues due to transfer pricing between
related parties. By related parties, we mean to say that one party is a holding, subsidiary or an associate company
of another party.
6. GAAR
(1) GAAR is General Anti Avoidance Rule and hence it is an anti-tax avoidance regulation
(2) GAAR seeks to prevent companies from routing transactions through other countries to avoid taxes. The rules
are framed mainly to minimize and check avoidance of tax.
7. POEM (place of effective management)
(1) POEM can be said to be Anti Tax Evasion regulation as it will impact shell companies carrying artificial
transactions blatantly and parking of funds in Tax free Jurisdictions
(2) “Place of effective management” is a place where key management and commercial decisions are made.

8. Tax to GDP ratio

(1) It is an indicator that helps to understand how much tax revenue is being collected by govt as compared to
overall size of the economy. A higher ratio will give more room to govt so that it can spend more without
borrowing
(2) Tax to GDP is low because:
a) Low tax to population, Tax exemptions, regressive taxation, Service tax is imposed only on few sectors,
Corporate taxes are hit by eco slowdown, Complex tax structure, Lack of effective and equitable direct
tax system, above all agriculture is not taxed
9. Minimum Alternate tax
(1) MAT is a tax payable by companies and falls under the direct tax category
(2) Those companies which are showing book profits and declaring dividends to their shareholders but were not
paying any tax are popularly known as ‘zero tax’ companies
(3) In order to bring such companies under tax net MAT is charged
(4) A fixed percentage of book profit is charged as MAT(18.5%)
10. Anti dumping duty
(1) Anti-dumping duty is imposed on imports ‘dumped’ in the country - ie sold at a price substantially below their
normal value, usually their domestic market price
(2) The use of anti dumping measure as an instrument of fair competition is permitted by the WTO.
(3) It provides relief to the domestic industry against the destruction caused by dumping.
11. Sin tax
(1) ‘Sin’ taxes are imposed to discourage consumers from using goods or services that are seen as undesirable or

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detrimental to society
(2) Sin Taxes are intended to serve two objectives.
(3) One, to make the undesirable goods so expensive that rational consumers would be forced to give up the
habit.
(4) Two, to make the industry producing these products pay higher tax, which can be used to fund other welfare
expenditure
(5) Luxury cars, aerated beverages, paan masala, and tobacco products figure in this list.
12. Capital gains tax
(1) Any profit from the sale of a capital asset is deemed as ‘capital gains’. A capital asset is officially defined as
any kind of property held by an assessee, excluding goods held as stock-in-trade, agricultural land and personal
effects.The tax on the capital gains is CGT
(2) Recently, India-Singapore tax treaty was amended under which CGT will be levied at source of investments
with effect from April 1. 2017. As per the amended Mauritius tax treaty, companies have to pay short-term CGT
13. Securities Transaction Tax
(1) It is a tax levied on the sale and purchase of securities on stock exchanges in India
(2) The reason behind introducing this tax was to ensure that profits arising from transactions in securities are
taxed at source and evasion of tax is minimized.
14. BEPS project - Base Erosion and Profit Shifting
(1) The idea is simple. MNCs make profits in one jurisdiction, and shift them across borders by exploiting gaps
and mismatches in tax rules, to take advantage of lower tax rates and, thus, not paying taxes to in the country
where the profit is made
(2) BEPS is an OECD initiated endeavor to tackle the tax evasion
(3) The OECD has considered ways to revise tax treaties, tighten rules, and to share more government tax
information under the BEPS project, and has issued action plans
(4) One of the areas discussed was on addressing tax challenges in the digital economy
(5) OECD states that BEPS is of major significance for developing countries due to their heavy reliance on
corporate income tax, particularly from multinational enterprises
15. Equalisation levy
1) It is to resolve the tax avoidance issues
2) The term Equalisation levy or ‘Google Tax’ refers to charges levied on companies like Google and Facebook
who make revenue on the digital medium in the form of ads
3) The tax ruling is applicable to companies that pay to avail B2B services
4) The said rule is applicable when the payment is made to companies that don't have a permanent
establishment in India
5) The tax policy is part of a BEPS project by the OECD
6) Digital companies in India will have to pay up to 6% of their ad revenues in the form of EL
7) Any person or entity that makes a payment exceeding Rs 1 lakh in a financial year to a non-resident
technology company will now need to withhold 6% tax on the gross amount being paid as an EL

2. Black money and demonetisation

16. Definition of ‘Black Money’
(1) According to a 2012 White Paper brought out by the Ministry of Finance on black money: ‘Black money is a
term used in common parlance to refer to money that is not fully legitimate in the hands of the owner’
17. Money laundering
(1) Money laundering refers to the process of converting money conceived through illegal means to a legitimate
source
18. Tax havens
(1) These places offer an escape from tax. They offer secrecy, in various forms, combined with varying degrees of
refusal to co-operate with other jurisdictions in exchanging information. Another common marker for tax havens
is very low or zero taxes. They attract money by letting people escape tax, legally or illegally
19. Round tripping
(1) Round Tripping refers to money from one country going out through unofficial channels and being invested
back into the same country from outside to avail of tax benefits under the DTAA (Double Taxation Avoidance
Agreement)
20. Layering
(1) This involves the use of several “shell companies” in different tax havens, thereby, hiding, the trail of money

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flows and masking the identity of real owners of the funds

21. Treaty shopping

(1) Treaty shopping generally refers to a situation where a person, who is resident in one country (say the
“home” country) and who earns income or capital gains from another country (say the “source” country), is able
to benefit from a tax treaty between the source country and yet another country (say the “third” country). This
situation often arises where a person is resident in the home country but the home country does not have a tax
treaty with the source country
22. Limit of Benefit Clause
(1) LoB clauses are typically aimed at preventing ‘treaty shopping’ or inappropriate use of tax pacts by
third-country investors
(2) The LoB clause limits treaty benefits to those who meet certain conditions including those related to business,
residency and investment commitments of the entity seeking benefit of a DTAA

23. Transfer Pricing

(1) These are commercial transactions between different companies of a multinational group for a price which is
termed as transfer price. There are chances that transactions between the two arms of the group are not
necessarily based on actual cost and market price and are intended to avoid taxes
(2) Transfer pricing rules in most countries are based on the "arm’s length principle" – that is to establish
transfer prices based on analysis of pricing in comparable transactions between two or more unrelated parties
dealing at arm’s length
24. Hawala
(1) It is an informal way of transferring money based on verbal assurance. It is carried out by a huge network of
brokers mainly located in Middle East, North Africa, The horn of Africa and the Indian Subcontinent.In simple
words it is transfer of money without moving it, the process will have no traces or evidences left.
25. Black Money Act
(1) The Undisclosed Foreign Income and Assets (Imposition of Tax) act, 2015
(2) The Act will apply to all persons residing in India. Provisions of the Act will apply to both undisclosed foreign
income and assets.
(3) Tax on all foreign income will have to be paid at the flat rate of 30 per cent without any exemption, deduction,
set off or carry forward losses that the Income Tax Act permits
(4) Enhanced punishment of jail for 3-10 years for wilful evasion of tax on foreign income along with a penalty
equal to three times the amount of tax evaded or 90 per cent of the undisclosed income or the value of the asset

26. DTAA- Double Taxation Avoidance Agreement

(1) A DTAA is a tax treaty signed between two countries. Its key objective is that tax-payers in these countries can
avoid being taxed twice for the same income. A DTAA applies in cases where a tax-payer resides in one country
and earns income in another.
(2) DTAAs are intended to make a country an attractive investment destination by providing relief on dual
taxation. Such relief is provided by exempting income earned abroad from tax in the resident country or
providing credit to the extent taxes have already been paid abroad. DTAAs also provide for concessional rates of
tax in some cases.
(3) India recently amended the DTAA with Mauritius, Singapore and Cyprus

27. Foreign Account Tax Compliance Act

(1)India has entered into an inter-governmental agreement with the US to implement FATCA. In return, India will
receive reciprocal information from the US regarding assets held by Indian tax assesses in that country
28. Financial Action Task Force
(1) FATF is an inter‐governmental policy making body established in 1989 with ministerial mandate to establish
international standards for combating money laundering and terrorist financing
(2) The FATF was formed at the efforts of the OECD. The Secretariat is located at the OECD Headquarters in Paris
(3) India is a member
29. Income declaration scheme
(1) The government allowed voluntary reporting of black money generated through tax evasion
(2) The scheme extended an opportunity to come clean by paying more than the normal tax and immunity from
prosecution

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30. Benami Property Transaction(Prohibition) Act 2016
(1) A Benami transaction is one in which property is held by one person but amount for the same is provided by
another.
(2) A property that is held in the name of spouse or child for which the amount is paid out of known sources of
income is not Benami. Similarly, joint property of brothers, sisters or other relatives for which amount is paid out
of known resources of income and Property held by someone in a fiduciary capacityis also not Benami.
(3) Benami property may include assets of any kind including movable, immovable, tangible, intangible, and also
includes Gold and financial security.
(4) The Act does not allow the re-transfer of benami property to the actual owner; any such transfer will be
termed null and void. Any benami property will be confiscated by the government.
(5) An Initiating Officer (assistant commissioner of deputy commissioner of income tax), after getting a go ahead
from the Approving Authority (additional commissioner or joint commissioner of income tax) can investigate
alleged benami transactions

31. Demonetisation
(1) Demonetisation is a monetary step in which a currency unit’s status as a legal tender is declared invalid.
(2) Rs 500 and Rs 1000 seized to be a legal tender from 8th November 2016
(3) The objectives of the scheme was to curb
a) corruption;
b) counterfeiting;
c) the use of high denomination notes for terrorist activities; and
d) accumulation of “black money”, generated by income that has not been declared to the tax authorities
(4) Previous Instances of demonetisation- in 1946, and 1978.
(5) In India, section 22 of the Reserve Bank of India Act, 1934 gives the RBI the sole right to issue banknotes.
(6) Currency Chests : Currency chests are storehouses where bank notes and rupee coins are stocked on behalf of
the Reserve Bank. The currency chests have been established with State Bank of India,nationalized banks, private
sector banks, a foreign bank, a state cooperative bank and a regional rural bank.
(7) Locations of Note Printing Presses: The Security Printing and Minting Corporation of India Limited (SPMCIL)
prints the notes. It is a wholly owned company of the Government of India. Its printing presses are located at
Nasik (Maharashtra) and Dewas (Madhya Pradesh). Apart from that, the Bharatiya Reserve Bank Note Mudran
Pvt. Ltd. (BRBNMPL), a wholly owned subsidiary of the Reserve Bank, also has set up printing presses. The presses
of BRBNMPL are located at Mysore in Karnataka and Salboni in West Bengal. Security Printing and Minting
Corporation of India Limited (SPMCIL) has 4 mints for coin production located at Mumbai, Noida, Kolkata and
Hyderabad
(8) The distribution of Coins is undertaken by RBI as an agent of the Government, (coins are minted by the
Government and not by RBI)
(9) Languages on Currency Notes: The amount of a banknote is written on it in 17 languages out of 22 official
languages of India. The languages are Assamese, Bengali, Gujarati, Kannada, Kashmiri, Konkani, Malayalam,
Marathi, Nepali, Oriya, Punjabi, Sanskrit, Tamil, Telugu and Urdu

(10) Refer M1,M2,M3,M4

32. PMGKY- Pradhan Mantri Garibi Kalyan Yojana

(1) It seeks to attract more people to disclose their unaccounted cash and also to put in a framework in place to
use that for the welfare of the people especially in the rural areas
(2) It also ensures that tax defaulting assessees and black money holders are subjected to tax at a higher rate and
stringent penalty provision.
(3) Mandatory for black money declarants to deposit 25% of amount disclosed in PMGKY for a 4 year lock-in
period without interest.
(4) Those who choose to declare their ill-gotten wealth stashed till now in banned Rs. 1,000 and Rs. 500 currency
notes under the PMGKY scheme will have to pay a tax at the rate of 30% of the undisclosed income.Additionally,
10% penalty will be levied on the undisclosed income and PMGK Cess (surcharge) at the rate of 33% of tax (33% of
30%).
(5) The money from PMGK will be used for projects in irrigation, infrastructure, primary education, primary
health, housing, toilets and livelihood so that there is justice and equality
3. Cashless economy

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33. Cashless economy
(1)A cashless economy is a system where any type of money transactions are done through digital means like
debit cards, electronic fund transfer, mobile payments, internet banking, mobile wallets, and other newly
evolved payment channels, this will leave very little scope for flow of hard cash in economy
34. Major digital transactions
(1) NEFT (National Electronic Funds Transfer) and RTGS(Real Time Gross Settlement) are the two main fund
settlement mechanisms used by banks in India to conduct one to one transactions. These transfer protocols are
maintained by the Reserve Bank of India
(2) IMPS (Interbank Mobile Payment Service/Immediate Payment Service) on the other hand is a mobile based
payment mechanism introduced in 2010 by the National Payments Corporation of India to allow customers to
transfer money instantly, facilitating instant remittance across multiple platforms.
35. UPI
(1) UPI is a payment system that allows money transfer between any two bank accounts by using a smartphone
(2) UPI allows a customer to pay directly from a bank account to different merchants, both online and offline,
without the hassle of typing credit card details, IFSC code, or net banking/wallet passwords
(3) It is developed by NPCI and will be based on IMPS
(4) The per transaction limit is Rs.1 lakh
36. BHIM app
(1) BHIM, short for Bharat Interface for Money, enables its users to transfer money using their mobile phone
(2) BHIM app will let you send and receive money to other UPI accounts or addresses.you can also send money
via IFSC and MMID to users that do not have UPI, Additionally there is the option of scanning a QR code and
making a direct payment
(3) BHIM is also supposed to support Aadhaar-based payments, where transactions will be possible just with a
fingerprint impression
(4) Under the Referral bonus scheme both the existing user who refers BHIM and the new user who adopts BHIM
would get a cash bonus credited directly to their account. Under the Cashback scheme the merchants will get a
cash back on every transaction using BHIM. Both schemes are to be administered by MEITY and implemented by
NPCI
(5) Around 2MB in size, it allows users to transfer amounts up to a maximum of Rs 20,000 per day. However,
there's also a cap of Rs 10,000 for a single transaction.
(6) It is developed by National Payments Corporation of India, the umbrella organisation for all retail payments
systems in India
37. Bharat QR code
(1) BharatQR code, the world's first interoperable payment acceptance solution .It is developed by National
Payments Corporation of India (NPCI),and will support payment terminals of rupay, visa, master card and
american express
(2) QR code or Quick Response code is a two-dimensional machine-readable code made up of black and white
squares and are used for storing URLs or other information. These can be read by the camera of a smartphone

4. Banking
38. Classification of banks assets
(1) Standard Asset: -If the borrower pays his dues regularly and on time; bank will call such loan as its “Standard
(2) Classification of the NPAs:- Banks are required to classify nonperforming assets further into three main
categories (Sub-standard, doubtful and loss) based on the period for which the asset has remained non
performing
(3) This is as per transition of a loan from standard loan to loss asset as follows: If the borrower does not pay
dues for 90 days after end of a quarter; the loan becomes an NPA and it is termed as “Special Mention Account”. If
this loan remains SMA for a period less than or equal to 12 months; it is termed as Sub-standard Asset
(4) If sub-standard asset remains so for a period of 12 more months; it would be termed as “Doubtful asset”
(5) If the loan is not repaid even after it remains sub-standard asset for more than 3 years, it may be identified as
unrecoverable by internal / external audit and it would be called loss asset
39. Willful defaulter
(1) The RBI defines a wilful defaulter as an entity that defaults on its payment obligations even if it has the
capacity to pay back debts

40. Twin balance sheet syndrome

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(1) The public sector banks are burdened with the high non-performing assets (NPAs) while some of the
corporate houses are also under stress due to sluggish global demand. This has been called the “TBS problem” or
“Twin Balance Sheet Syndrome”
41. Steps taken by RBI to address TBS
(1) The 5/25 refinancing infrastructure scheme: As per the 5:25 the banks are allowed to extend period for loans
to projects in the infrastructure and core industries sector, for say 25 years, with interest rates adjusted every 5
years
(2) Strategic Debt Restructuring - SDR: it is to help banks recover their loans by taking control of the distressed
companies
(3) Asset Quality Review- AQR: it is to verify that banks are assessing loans in line with RBI loan classification
rules
(4) Scheme for Sustainable structuring of Stressed Assets-S4A :an independent agency hired by the banks will
decide on how much of the stressed debt of a company is ‘sustainable’. The rest (‘unsustainable’) will be
converted into equity and preference shares. Unlike the SDR arrangement, this involves no change in the
ownership of the company
42. PARA
(1) The Public Sector Asset Rehabilitation Agency or PARA will be an independent entity that will identify the
largest and most vexatious NPA accounts held by banks, and then buy these out from them
(2) It is recommended by economic survey 2017
43. Indradhanush plan
(1) Indradhanush Plan addresses seven major issues of banking sector: Appointments, Banks Board Bureau,
Capitalisation, De-stressing PSBs, Empowerment, Framework of accountability, Governance reforms.
44. Gyan Sangam
An annual conference of banks and financial institutions
45. Payment Banks
(1) Payments banks were introduced by the RBI to widen financial inclusion to small savings account holders,
low-income households, unorganised sector, migrant workers and small businesses
(2) NBFCs, corporate business correspondents, mobile phone firms, supermarket chains, public sector entities
and others can set up payment banks meeting the minimum capital requirement of Rs 100 crore
(3) Payment banks restrict activities to acceptance of demand deposits, remittance services, Internet banking and
other specified services but cannot undertake lending services
(4) A payment bank can accept only savings and current deposits of up to Rs 1 lakh per customer. They can issue
ATM/debit cards but not credit cards
(5) They can distribute non-risk sharing simple financial products like mutual funds and insurance products.
(6) Govt launched the India Post Payments Bank (IPPB). IPPB will offer three distinct accounts to its customers:
Safal, the regular account; Sugam, a basic savings bank deposit account (BSBDA); and Saral, BSBDA-Small.
46. Small finance banks
(1) The objectives of setting up of small finance banks will be to further financial inclusion
(2) The bank shall primarily undertake basic banking activities of accepting deposits and lending to small
farmers, small businesses, micro and small industries, and unorganised sector entities
(3) There will not be any restriction in the area of operations of small finance banks
(4) The minimum paid-up equity capital for small finance banks shall be Rs 100 crore
(5) Jalandhar-based Capital Small Finance Bank Ltd, India’s first small finance bank, has commenced operations
47. Mudra Banks
(1) Mudra Bank stands for Micro Units Development Refinance Agency (MUDRA)
(2) It is a new institution setup by the GoI for development of micro units and refinance of MFIs to encourage
entrepreneurship in India & provide the funding to the non corporate small business sector
(3) MUDRA Bank will need two type of product like refinance for the micro units having loan requirement and
support of Micro Finance Institutions (MFI)
(4) MUDRA will refinance to micro business under the scheme of Pradhan Mantri MUDRA Yojana
(5) Under the guideline of Pradhan Mantri MUDRA Scheme, MUDRA Bank has launched its three initiative
product and its name is SHISHU, KISHOR & TARUN to signify the stage of growth and funding needs of the micro
units or entrepreneur.
(6) Sishu - Under Mudra Shishu Yojana banks are providing loan upto 50,000/-
(7) Kishore - Under Mudra Kishor Yojana bank are providing loan upto 5,00, 000/-
(8) Tarun -Under MUDRA Tarun Scheme applicant can apply loan between 5,00,001 to 10,00,000/-

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48. White label ATMs
(1) Non-bank entities that set up, own and operate ATMs, are known as "White Label ATM Operators"
(WLAO).Such ATMs would be called "White Label ATMs" (WLAs)
(2) They will provide the banking services to the customers of banks in India, based on the cards
(debit/credit/prepaid) issued by banks
(3) Govt allowed 100% FDI in WLAs
49. Merger of Banks
(1) SBI merged its five associate banks - State Bank of Bikaner & Jaipur (SBBJ), State Bank of Hyderabad (SBH),
State Bank of Mysore (SBM), State Bank of Patiala (SBP) and State Bank of Travancore (SBT), and the
relatively-newer Bharatiya Mahila Bank (BMB) with itself
(2) Earlier too, SBI has merged two of its erstwhile associate banks with itself - Bank of Saurashtra in 2008 and
State Bank of Indore in 2010
(3) With this merger, SBI joins the league of top 50 banks globally in terms of assets
(4) SBI chairperson- Arundhati Bhattacharya
50. D- SIBS
(1) RBI retained State Bank of India and ICICI Bank as Domestic Systemically Important Banks (D-SIBs).
Systemically Important Banks (SIBs) are perceived as banks that are 'Too Big To Fail'
51. Venture capital
(1) Start up companies with a potential to grow need a certain amount of investment
(2) Wealthy investors like to invest their capital in such businesses with a long-term growth perspective.
(3) This capital is known as venture capital and the investors are called venture capitalists
(4) Venture Capital is invested by firms or companies
52. Angel Investors
(1) They will be individuals, often successful business people, who are investing their own personal funds into a
potentially rewarding business opportunity
53. Seed funding:
(1) The initial capital used to start a business. Seed capital often comes from the company founders' personal
assets or from friends and family
54. Crowd funding
(1) It is the practice of funding a project or venture by raising monetary contributions from a large number of
people, today often performed via internet-mediated registries
55. Peer - to- peer Lending
(1) P2P lending platforms act as an intermediary between borrowers and lenders (investors) and charge a fee for
the service. As an investor, they allow you to disburse loans to borrowers from the comfort of your home or office
and earn interest income
(2) The borrowers are individuals seeking loans for medical emergencies, home improvement, weddings or for
setting up or expanding new businesses. The lenders are usually small businessmen and professionals.The loans,
usually unsecured, are given for just 1 to 3 years.
56. Ponzi scheme
(1) It is a fraudulent investment operation where the operator, an individual or organization, pays returns to its
investors from new capital paid to the operators by new investors, rather than from profit earned through
legitimate sources
57. Pyramid scheme
(1) In the classic "pyramid" scheme, participants attempt to make money solely by recruiting new participants
into the program. The hallmark of these schemes is the promise of sky-high returns in a short period of time for
doing nothing other than handing over your money and getting others to do the same

5. Monetary policy
58. Inflation targeting
(1) Inflation targeting refers to the monetary policy strategy where an inflation target is set and policy
formulation is done in such a way so as to achieve that specified target
(2) India adopted an inflation(CPI based) target of 4%(plus or minus 2%) for next five years under the monetary
policy framework
59. Monetary Policy Committee
(1) The MPC would be entrusted with the task of fixing the benchmark policy rate (repo rate) required to contain
inflation within the specified target level

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(2) It will feature three members from the RBI — the Governor, a Deputy Governor and another official — and
three independent members to be selected by the Government.
(3) The MPC replaces the previous arrangement where the RBI Governor along with a Technical Advisory
Committee took decisions on monetary policy including repo rate. TAC had only advisory functions as the central
bank governor enjoyed veto power over the committee.
(4) Under MPC, the governor has a casting vote and doesn’t enjoy veto power. Decisions will be taken on the basis
of majority vote.

6. Fiscal policy
60. FRBM
(1) The Fiscal Responsibility and Budget Management Act, 2003 (FRBMA) is an Act of the Parliament of India to
institutionalize financial discipline, reduce India’s fiscal deficit, improve macroeconomic management and the
overall management of the public funds by moving towards a balanced budget and strengthen fiscal prudence. In
recent year there have been persistent calls for review of the same
(2) the government has set a fiscal deficit target of 3.2% of GDP in 2017-18, marginally better than the 3.5%
clocked last year. The FRBM law enacted in 2003 had originally envisaged attaining a fiscal deficit of 3% of GDP
by 2008-09, but amendments over the years had revised the year for achieving the same target to 2017-18
(3) The FRBM Review Committee chaired by former Revenue Secretary N.K. Singh has recommended an Escape
clauses
(4) The panel has introduced escape clause triggers that can allow the government to skip the fiscal deficit target
for a particular year, in situations that include national security concerns, acts of war, national calamities, a
collapse of the agriculture sector and far-reaching structural reforms with unanticipated fiscal implications.
(5) It also recommended that deviations from the stipulated fiscal targets should not be more than 0.5%
(6) The Economic Survey has called for modifying the FRBM Act

61. PDMA
(1) In its effort to move towards an independent Public Debt Management Agency (PDMA) in about “two years”,
the Ministry of Finance has set up a Public Debt Management Cell (PDMC) to help streamline government
borrowings and cash management for separation of debt management functions from the Reserve Bank of India
(2) The PDMC shall be upgraded to a statutory PDMA, in about 2 years
(3) The setting up of the PDMA has been a top priority for the government and a pending financial sector reform,
as it would help divest the RBI of its dual and often conflicting roles as the banker and manager of the Centre’s
borrowing

62. PFMS
(1) The government has decided to universalise the use of Public Financial Management System (PFMS) for all
transactions or payments under the Central Sector Schemes, as it looks to facilitate just-in-time releases and
monitor the usage of funds including information on its ultimate utilization.
(2) PFMS, administered by the department of expenditure, is an end-to-end solution for processing payments,
tracking, monitoring, accounting, reconciliation and reporting.

7. Securities market

63. India INX

(1) India's first international exchange-India INX- inaugurated at International Financial Services Centre (IFSC)
in Gujarat International Financial Tech City (GIFT) located in Gandhinagar
(2) India International Exchange (INX), the wholly-owned subsidiary of the Bombay Stock Exchange (BSE),
through its global bourse, will start trading initially in equity derivatives, currency derivatives, commodity
derivatives including Index and Stocks.
64. Anchor investors
(1) Anchor investors are institutional investors who are offered shares in an IPO a day before the offer opens. As
the name suggests, they are supposed to ‘anchor’ the issue by agreeing to subscribe to shares at a fixed price so
that other investors may know that there is demand for the shares offered. Each anchor investor has to put a
minimum of ₹10 crore in the issue
(2) Anchor investors or cornerstone investors are invited to subscribe for shares ahead of the IPO to boost the

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popularity of the issue and provide confidence to potential IPO investors
65. Green Bond
(1) A bond is a debt instrument with which an entity raises money from investors
(2) The issuer of a green bond publicly states that capital is being raised to fund ‘green’ projects, which typically
include those relating to renewable energy, emission reductions and so on
(3) Thus these are bonds that collect money to be used towards environmentally positive projects
(4) Green bonds are issued by multilateral agencies such as the World Bank and also Govt and Local agencies
(5) India has embarked on an ambitious target of building 175 gigawatt of renewable energy capacity by 2022,
from just over 30 gigawatt now. This requires a massive $200 billion in funding
66. Masala Bond
(1) Masala bonds are Indian rupee denominated bonds issued in offshore capital markets
(2) International Finance Corp. (IFC), an investment arm of the World Bank, will convert bond proceeds from
dollars into rupees and use the rupees to finance private sector investment in India
(3) Indian Railway Finance Corporation, which recently approved the raising of $1 billion through the issue of
Masala bonds
(4) HDFC Ltd, the country’s largest private sector mortgage lender, plans to raise Rs.3,000 crore through synthetic
bonds, the first ever by an Indian company. These are in the nature of rupee denominated bonds i.e. Masala bond
as per applicable RBI guidelines.
67. Sovereign gold bonds
(1) SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold.
Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity.
(2) The Bond is issued by Reserve Bank on behalf of Government of India.
(3) Investors are assured of the market value of gold at the time of maturity and periodical interest. SGB is free
from issues like making charges and purity in the case of gold in jewellery form
(4) Eligible investors include individuals, HUFs, trusts, universities, charitable institutions, etc
(5) The Bonds are issued in denominations of one gram of gold and in multiples thereof. Minimum investment in
the Bond shall be one gram with a maximum buying limit of 500 grams per person per fiscal year (April – March).
In case of joint holding, the limit applies to the first applicant
(6) Bonds are sold through scheduled commercial banks (excluding RRBs), SHCIL offices and designated Post
Offices either directly or through their agents.
68. AT1 bonds - Additional Tier 1 (AT1) Bonds
(1) In an attempt to comply with Basel III norms to have higher tier I capital by financial year (FY) 2019, many
public sector banks have raised capital through perpetual bonds, better known as AT1 bonds or additional tier 1
bonds
(2) These bonds have no maturity date. Technically they can continue to pay the coupon forever. The issuing
bank has the option to call back the bonds or repay the principal after a specified period of time. The attraction
for investors is higher yield than secured bonds issued by the same entity
(3) The defining characteristic of AT1 bond is that it may be converted into shares when certain conditions are
met

8. Govt Initiatives
69. Insolvency and bankruptcy code
(1) The bankruptcy law aims to improve the ease of doing business in India by facilitating smoother and
time-bound settlement of insolvency and faster turnaround of businesses, apart from creating a database of
serial defaulters
(2) When a firm defaults on its debt, control shifts from the shareholders/promoters to a Committee of
Creditors.The Committee would have 180 days in which to evaluate proposals from various players about
reviving the company or taking it into liquidation. An insolvency resolution plan has to be approved by 75% of
voting-share creditors. Once the plan is approved, it would also require the sanction of the adjudicating authority
(3) It proposes to do this by creating a host of new institutions. These would include:
a) Insolvency Professionals, who will conduct the insolvency resolution process, take over the
management of a company, assist creditors in the collection of relevant information, and manage the
liquidation process,
b) Insolvency Professional Agencies, who will examine and certify these professionals,
c) Information Utilities, which will collect, collate and disseminate financial information related to
debtors, and

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d) Insolvency and Bankruptcy Board of India, a regulator that will oversee these new entities.
(4) The adjudicating authority would be the National Company Law Tribunal (NCLT) for companies and limited
liability partnerships, and the Debt Recovery Tribunal (DRT) for individuals and partnership firms.
(5) Insolvancy and bankruptcy board has been setup under MCA
(6) The IBBI, chaired by M.S. Sahoo, will act as the regulator of an ecosystem including insolvency professionals,
agencies, and information utilities. It is a 10-member board

70. TREAD Scheme

(1) Ministry of Micro, Small and Medium Enterprises (MSME) is operating a scheme titled “Trade Related
Entrepreneurship Assistance and Development (TREAD)” to promote women entrepreneurs. The scheme
envisages economic empowerment of women through trade related training, information and counseling
activities related to trades, products, services, etc.
71. ZED scheme
(1) Zero Defect, Zero Effect (ZED) aims to rate and handhold all MSMEs to deliver top quality products using clean
technology
(2) Under the scheme, the MSME companies which follows the guidelines and meet the standards set by the ZED
will be awarded ZED certification along with several benefits
72. Infrastructure Status
(1) Centre recently approved infrastructure status to Sports and Affordable housing
73. FDI norms
(1) The Centre govt eased FDI norms for various sectors to give impetus to job creation and ease of doing
business in the country
(2) Defence sector
a) Under the new reforms FDI in defence sector beyond 49% (and upto 100%) has been permitted through
the government approval route, in cases resulting in access to modern technology in the country or for
other reasons. Previously FDI limit in defence sector was 49%.
(3) Pharmaceutical Sector
a) 100% FDI in greenfield pharmaceutical projects and 74 % FDI in brownfield pharmaceutical firms both
under automatic route
b) 100% FDI in brownfield through govt approval
c) Previous policy: 100 %FDI under automatic route in greenfield pharma and up to 49% FDI in
brownfield pharma
(4) Food products
a) 100% FDI under government approval route has been approved. It will include trading in food products
including through e-commerce, in respect of food products manufactured or produced in India.
(5) Aviation Sector
a) Airlines - Overseas entrepreneurs, other than airlines, can bring in up to 100% FDI to set up an airline
in India However, foreign airlines will be permitted to invest only up to 49% in an airline
b) Airports- 100% FDI will be allowed for existing airports under the automatic route..100% FDI is now
allowed in ground handling, flying training institutes and MRO units
c) Previous policy - Air transport FDI is permitted up to 49%.
(6) Prohibited sectors - Atomic energy, Lottery, Gambling, Real Estate and Real Estate Investments Trusts (REIT)
and Railways Operations.
74. Funds of Funds
(1) Centre established of Fund of Funds for funding support to Start-ups
(2) It will be setup at Small Industries Development Bank of India (SIDBI) for contribution to various Alternative
Investment Funds (AIF), registered with SEBI which would extend funding support to startups in line with the
‘Startup India Action Plan’
75. National IPR policy
(1) Centre approved a new National Intellectual Rights Policy to outline the future road map for IPR in India
(2) The Policy lays down the following seven objectives:
a) To increase public awareness about IPR and their economic, social and cultural benefits.
b) To stimulate creation of IPR in the country.
c) To create a strong legal and legislative framework around IPR.
d) To modernize administration and management of IPR To promote commercialisation of IPR.
e) To strengthen enforcement and adjudication mechanism around IPR

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f) To expand Human Capital Development.
(3) Designate DIPP as nodal agency for coordination, guidance and regulatory works
76. First titanium project
(1) The first titanium project of India being established by Saraf Group in Ganjam district of Odisha started its
test production
(2) Its raw material, ilmenite would be procured from Odisha Sands Complex (OSCOM), a unit of Indian Rare
Earths Limited (IREL) in Ganjam Dt
77. National Capital goods Policy
(1) The govt introduced a NCGP to spur capital goods sector and the Make in India initiative
(2) It is the first-ever policy for the country’s capital goods sector
(3) The objectives of the NCGP are to create an ecosystem for a globally competitive capital goods sector and to
increase domestic employment
(4) The key policy recommendations
a) Enhancing export of Indian made capital goods through a ‘Heavy Industry Export and Market
Development Assistance Scheme (HIEMDA)
b) It has also made provision for introducing a Technology Development Fund,
c) upgrading existing and setting up a new testing and certification facility,
d) making standards mandatory in order to reduce sub-standard machine imports
e) unveiling scheme for skill development for capital goods sector
78. NIIF
(1) National Investment and Infrastucture Fund ( NIIF) was proposed in Union Budget 2015.
(2) The government has set up this Rs. 40000 crore fund to provide long term capital for infrastructure projects
(3) NIIF would be to maximize economic impact mainly through infrastructure development in commercially
viable projects, both greenfield and brownfield,including stalled projects
(4) It will support non-banking finance companies and financial institutions involved in infrastructure financing,
and to nationally important projects in the core sector.
(5) Thus NIIF is a fund of funds
79. Swiss challenge
(1) Swiss challenge method is a new process of giving contracts
(2) Any person with credentials can submit a development proposal to the government
(3) That proposal will be made online and a second person can give suggestions to improve and beat that
proposal
(4) An expert committee will accept the best proposal and the original proposer will get a chance to accept it if it
is an improvement on his proposal
(5) In case the original proposer is not able to match the more attractive and competing counter proposal, the
project will be awarded to the counter-proposal

80. E-commerce
(1) Categories of e-commerce
a) B2B (Business to Business), B2C (Business to Consumer), C2B (Consumer to Business), C2C (Consumer to
Consumer)
(2) Models
a) Marketplace model - Marketplace model of e-commerce as defined by DIPP means providing of an IT
platform by an e-commerce entity on a digital and electronic network, to act as a facilitator between
buyer and seller
b) The inventory-based model - The Inventory based model of e-commerce means an e-commerce activity
where inventory of goods and services is owned by e-commerce entity and is sold to consumers directly
81. Rail safety
(1) Linke Hofmann Busch (LHB) coaches are the passenger compartments of Indian Railways that have been
developed by LHB of Germany and produced by Rail Coach Factory in Kapurthala, India
(2) Kakodkar committee recommended that the railways should completely switch to the LHB coaches that do
not witness higher casualties in case of derailments as the coaches do not pile upon each other
(3) ICF stands for "Integral Coach Factory" which is one of the railways' main coach production plants. It is
located in Perambur near Chennai
(4) Tri-Netra
a) Tri-Netra stands for "terrain imaging for diesel drivers infrared, enhanced optical and radar assisted

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system". The system provides a locomotive pilot a clear view of up to one kilometre on a straight track, even
during inclement weather. This helps in maintaining high speed in poor visibility and avoid delay in
arrivals.
b) This will help reduce train accidents by keeping a record of the track maintenance and will also provide
better visibility during foggy days.
c) Tri-Netra system is made up of a high-resolution optical video camera, high-sensitivity infrared video
camera and a radar-based terrain mapping system.
82. Digilocker
(1) It is introduced as part of the prime minister’s Digital India initiative
(2) The objective is to provide a secure dedicated personal electronic space for storing the documents of resident
Indian citizens.
(3) To begin with, the government gave every citizen 10 MB of space in the cloud and created a DigiLocker linked
to an Aadhaar number
(4) This can be utilised for storing personal documents like University certificates, PAN cards, voter id cards, the
URIs of the e-documents issued by various Government departments
(5) There is also an associated facility for e-signing documents
83. TAMRA - Portal
(1) TAMRA (Transparency, Auction Monitoring and Resource Augmentation) portal and Mobile Application of
ministry of mines
(2) The sole objective is to enhance transparency and accountability as a part of the Ease of Doing Business in the
Mining sector.

9. Agriculture
84. Agro irradiation
(1) In irradiation, food products are subjected to a low dosage of radiation to treat them for germs and insects,
increasing their longevity and shelf life
(2) India and Russia are collaborating to set up integrated irradiation centres in India to reduce agricultural
losses.
85. ARYA
(1) Arya (Attracting and Retaining Youth in Agriculture),
(2) It is launched by the Indian Council of Agricultural Research
(3) The scheme envisages the increasing participation of youth, to sustain agriculture and allied
activities through scientific methods. The programme is planned to be implemented through Krishi Vigyan
Kendras
86. Soil Health Card Scheme
(1) SHC scheme would be providing to the farmers the assessment report of soil health and its needs based on
scientific lab tests.
(2) It will help in identifying the type of fertilizer required for the soil and the crops and thus increase
productivity of the land and individual farm
(3) A mobile mini lab named‘Mridaparikshak’ has been developed that can assess the soil health and can be used
in the preparation of soil health cards
(4) Objectives
a) To provide a basis to address nutrient deficiencies in fertilization practices
b) To strengthen functioning of Soil Testing Laboratories (STLs) through capacity building
c) To diagnose soil fertility related constraints with standardized procedures.
d) To develop and promote soil test based nutrient management
e) Dissemination of soil testing results through SMSs will be enabled.
87. SENSAGRI
(1) The Indian Council of Agricultural Research (ICAR) through the Indian Agricultural Research Institute (IARI)
has formulated a collaborative research project entitled “SENSAGRI: SENsor based Smart AGRIculture”
(2) The major objective is to develop indigenous prototype for drone based crop and soil health monitoring
system using hyperspectral remote sensing (HRS) sensors. This technology could also be integrated with
satellite-based technologies for large scale applications.

10. Core sector

88. National steel policy

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(1) Ministry of Steel released National steel policy
(2) It proposed setting up greenfield steel plants along India’s coastline to tap cheap imported raw materials such
as coking coal and export the output in a more cost-effective manner
(3) The policy, which envisages to more than double India’s domestic steel production capacity to 300 million
tonnes by 2030-31
(4) The objectives are
a) Increasing crude steel capacity to 300 metric tonne (MT) by 2030-31.
b) Increasing per capita steel consumption to 160 kg by 2030-31 (currently 61 kg)
c) Increasing domestic availability of washed coking coal and reducing import of coking coal to 50% by
2030-31
d) Becoming a net exporter of steel by 2025-26.
89. HELP
(1) Hydrocarbon Exploration and Licensing Policy (HELP)
(2) It is the new auction policy regime for exploration and production (E&P) of oil and gas
(3) HELP replaces the New Exploration Licensing Policy (NELP), which has been in existence for 18 years
(4) Features of HELP
a) Uniform licence
b) Open acreage
c) Revenue Sharing Contract
d) Marketing and Pricing freedom, subject to a ceiling price limit
90. Coal mitra
(1) The Ministry of Coal has launched ‘Coal Mitra’ Web Portal to facilitate flexibility in utilization of domestic coal.
The government has now allowed swapping of coal between PSUs and the Private Sector
91. Garv app
(1) GARV is a website and a mobile application developed by the Rural Electrification Corporation (REC) of India
to provide real time data of the electrification work of 600 000 villages in the country

11. Nuclear sector

12. Nuclear Power reactors in India
(1) Tarapur - Maharashtra
(2) Kaiga - Karnataka
(3) Kakrapar -Gujrat
(4) Kalpakam- Tamil Nadu
(5) Narora - UP
(6) Rawatbatha - Rajasthan
(7) Kudankulam- Tamil Nadu
(8) The utility electricity sector in India has a National Grid with an installed capacity of 319.60 GW (as of 31
March 2017)
(9) Sources of electricity in India- Coal -59.5%,Renewable energy sources- 15.2%, Hydro power -15.1%, Natural
gas-7.8% and Nuclear 2.1%, Diesal 0.3%

13. CSC
(1) India ratified the Convention on Supplementary Compensation (CSC)
(2) CSC Seeks to establish a uniform global legal regime for compensation to victims in the unlikely event of a
nuclear accident
(3) It was adopted on 12 September 1997
(4) It has been framed in consistent with the principles of:
a) Vienna Convention on Civil Liability for Nuclear Damage (1963) and the
b) Paris Convention on Third Party Liability in the Field of Nuclear Energy (1960)

14. CLNDA
(1) Civil Liability for Nuclear Damage Act aims to provide a civil liability for nuclear damage and prompt
compensation to the victims of a nuclear incident
(2) There are two contentious clauses of CLNDA
a) Sections 17(b): It incorporates “ legal channeling” and “Right of Recourse”
b) Under Section 17(b), liability for a nuclear accident can be channeled from the operator, which is the

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Nuclear Power Corporation of India, to suppliers of nuclear material, specifically if the accident is due
to an act of the supplier or his employee, which includes supply of equipment or material with patent
or latent defects or sub-standard services
c) Section 46 will expose suppliers to unlimited liability
92. Nuclear Insurance
(1) India’s first insurance policy covering public liability to an atomic power plant operator has been issued to
Nuclear Power Corporation of India Ltd (NPCIL)
(2) The policy complies with all the provisions of the Civil Liability for Nuclear Damage Act (CLND).

15. International economics

93. SARTTAC
(1) The International Monetary Fund (IMF) has opened a first-of-its-kind South Asia Training and Technical
Assistance Centre (SARTTAC) in New Delhi for economic capacity building in South Asia.
(2) It will work to support local member countries of South Asia viz. India, Bangladesh, Bhutan, Maldives, Nepal
and Sri Lanka to build human and institutional capacity and implement policies for growth and poverty
reduction
94. World Trade Outlook Indicator
(1) The WTO has launched a new World Trade Outlook Indicator (WTOI) designed to provide “real time”
information on trends in global trade

95. Investor state dispute settlement

(1) Investor-state dispute settlement (ISDS) or investment court system (ICS) is a system through which individual
companies can sue countries for alleged discriminatory practices
(2) The ISDS mechanism has become contentious as it permits companies to drag governments to international
arbitration without exhausting the local remedies and claim huge amounts as compensation citing losses they
suffered due to reasons, including policy changes

96. Trade Facilitation Agreement

(1) India ratified the WTO Trade Facilitation Agreement (TFA)
(2) The TFA is intended to simplify customs rules, speed up the release of goods from ports, and decrease
transaction costs
(3) TFA is part of “Bali Package”since was agreed by WTO members at a ministerial conference in Bali in
December 2013
(4) It is the first multilateral trade agreement to be concluded in the history of the WTO
(5) The Government of India has constituted an inter-ministerial NCTF, a body headed by the cabinet secretary to
oversee the implementation of the WTO's Trade Facilitation Agreement (TFA) ratified in April 2016.

97. BRICS Bank

(1) The New Development Bank (NDB), formerly referred to as the BRICS Development Bank, is a multilateral
development bank established by the BRICS states
(2) The initial subscribed capital of the bank was equally distributed among the founding members.
(3) The Agreement on the NDB specifies that the voting power of each member will be equal to the number of its
subscribed shares in the capital stock of the bank.
(4) NDB is headquartered in Shanghai, China.The first regional office of the NDB will be opened in Johannesburg,
South Africa
(5) NDB issued its first Yuan-denominated bonds to finance sustainable development project.
98. BRICS - CRA
(1) The Contingent Reserve Arrangement (CRA) of BRICS nations was declared operational
(2) It is a framework that aims at providing support through additional liquidity and other means to BRICS
countries at a time of economic crisis.
(3) The initial total committed resources of the CRA will be 100 billion dollars
(4) Both CRA and NDB were announced as part of BRICS Fortaleza Declaration in 2014.

99. Five different types of PTA

1) Partial Scope Agreement (PSA): A PSA is only partial in scope, meaning it allows for trade between countries
on a small number of goods

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2) Free Trade Agreement (FTA): A free trade agreement is a preferential arrangement in which members reduce
tariffs on trade among themselves, while maintaining their own tariff rates for trade with non-members.
3) Customs Union (CU): A customs union (CU) is a free-trade agreement in which members apply a common
external tariff (CET) schedule to imports from non-members.
4) Common Market (CM): A common market is a customs union where movement of factors of production is
relatively free amongst member countries.
5) Economic Union (EU): An economic union is a common market where member countries coordinate
macro-economic and exchange rate policies
100. BIT
(1) A bilateral investment treaty (BIT) is an agreement establishing the terms and conditions for private
investment by nationals and companies of one state in another state

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