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ECONOMICS MARATHON
 Economics Syllabus

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Indian Economy and issues relating to planning,
growth, development, employment, poverty
alleviation, resource mobilization, and inflation.
1. ROLLING PLAN
2. NATIONAL INCOME(GDP,NDP,NNP,PER CAPITA INCOME)
3. Scheme(1st ODF state)

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4. Skill Development Scheme
5. Ulta Chhata
6. Insurance Regulator
7. Current Repo Rate
ASO PYQ 2019
8. RTGS Transaction
9. Book Growth and Finance
10. Mercantile Law of India
11. Mutual Fund Regulator
 ASO PYQ 2019

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 ANS-C

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1.Who was the author of the Book 'Planned Economy of India'?
(a) M. Visvesvaraya
(b) Dada Bhai Nairobi

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(c) Bhim Rao Ambedkar
(d) Jawaharlal Nehru
Ans. A

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Explanation: Mokshagundam Visvesvaraya, was Diwan of
Mysore from 1912 to 1918. He received India's highest
honour, the Bharat Ratna, in 1955.He wrote a book
"Planned Economy for India" in 1934.
 Five Year Plan

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 1ST FIVE YEAR PLAN

Aim:- Rapid development of agriculture in order to move forward self sufficiency of food.

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1. It was based on Harrod Domor Model, chief architect of this plan-K N RAJ
2. Agricultuire , irrigation and power projects were given top priority
3. Community development programme(CDP) for the overall development of
rural area
4. It was more than a success because the objective of agriculture , self
sufficiency was achieved according to the target.
 2nd Five year Plan(1956-1961)
Neheru Mahalanobis Model

AIM: Thrust On heavy industries.

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1. 1st emphasis was economic capability
2.Agriculture target fixed in the 1st five plan was almost achieved .
 3rd FIVE YEAR PLAN (1961-1966)

AIM :- Self reliant & Self generation economy

(Agriculture) (Industry)

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• →
Both balanced growth strategy

The reason for the poor performance can be attributed to

following reason
1. Chinese aggression in the year 1967.
2. Indo Pak war 1965.

3. Failure of monsoon in the given year 1965-66. it was the most severe draught in the last
100 year .
ANNUAL PLAN :-
• Annual plans were implemented for 3 years to complete the task
under taken in 3rd plan .
• The annual plan is also called Planned Holiday.

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Norman Borlough—Green revolution in world
M.S Swaminathon-Green revolution in India .
 4th FIVE YEAR PLAN (1969-1974)

PRINCIPAL OBJECTIVE:-

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1. Growth with stability .
2. Progress towards self-reliance .

Reasons for failure :-

1.Instability of prices

2.Indo-Pak war 1971

3. Draughts In the year 1972

 5th FIVE YEAR PLAN(1975-79)

A national level programme of news was introduced. It covers --

1.Elementary Education

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2.Save drinking water
3.Shelter for land
4.Slum development
5.Health care
6. (i) Rural roads (ii) Nutrition (iii) rural electricity

Janta Party terminated the Fifth Five Year Plan

 6th FIVE YEAR PLAN ( 1980-1985):-

→ Direct attack on poverty .By this time the country almost reached self-
sufficiency in the fold grain productive.

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Other objectives :-
→Increase in the national income.
→Molarization of technology
→Ensuring continues decrease in poverty
→Population control through family planning
→Energy was given the higher priority with 27.9 of the total investment
→6th FYP was a success
 7th FIVE YEAR PLAN(1985-1990)

AIM :-

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→ Accelerated growth of food grain Production
→ Increase in employment
→ improvement in productivity level
→ This period saw the beginning of liberalization
→ This programme was a success as it exceed the growth rate
8TH FIVE YEAR PLAN(1985-1990)

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Period of LPG REFORM
9th → Growth with justice and equality

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10th→ Inclusive Growth

11th →Towards Faster and more Inclusive growth

12th→Faster Sustainable and more Inclusive growth

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 RBI

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Scheduled Non-Scheduled

Scheduled Urban Cooperative

Commercial Banks Cooperative Banks

Scheduled State Cooperative

NATIONALIZED BANK
1. Public Sector Banks
STATE BANK OF INDIA
2. Private Sector
3. Foreign Banks
4. Regional Rural Banks
 Where does bank word come from?

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Italian Merchant

The word bank comes from an Italian word banco, meaning a bench, since
Italian merchants in the Renaissance made deals to borrow and lend money
beside a bench. They placed the money on that bench
 Modern banking

Originated

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18th century

1st bank in INDIA → Bank of Hindustan(established in 1770)

Largest and oldest bank in India → SBI

Origin – Bank of Calcutta(1806)

Renamed in 1809 as Bank of Bengal

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Bank of Madras Bank of Bombay Bank of Bengal

Imperial bank of India(1921)

In 1955 renamed as SBI as per SBI act 1955

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 RBI

Formed in 1935 as per RBI act of 1934

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Nationalization in 1949

Acted as banker of banks

What is Nationalisation?
Nationalization is an act of taking an industry or assets into the public
ownership of a national government
 Why Nationalization?

Private bank had narrow

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reach to masses

Planned
development Greater public
required certain benefit could take
degree of place
government control
1960 → SBI given control of 8 associated banks

Under SBI act 1959

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These are now called its associate banks

1969

14 major private banks (Got nationalized by GOI)

With deposits more than 50 crore

 1980

6 more bank nationalized

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Deposits more than 200 crore

To open a
private bank Money
needed

500 CRORE ₹
Functions of RBI
1.RBI is known as lender of the Last Resort

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2.It provides clearing house facility to banks – settlements of
claims of one bank on other banks is done by RBI by the
means of following facilities:
NEFT (National Electronic Funds Transfer)
RTGS (Real Time Gross Settlement System)
3.Supervisor of Banks and Non-banking finance institutions
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Demand DEMAND AND SUPPLY

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 How it can be controlled?

By regulating money supply

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How is it possible?

By
Fiscal Policy
Government
Two policy
Monetary
By RBI
policy
 Monetary Policy

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Quantitative Tools Qualitative Tools
1. Reserve Ratio(CRR,SLR) 1. Direct action
2. Repo Rate, Reverse Repo 2. Moral suasion
3. LAF,MSF ,Bank rate 3. Credit rationing
4. Open market operation 4. Etc
5. etc
 Inflation and Deflation

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Rs 12000
Inflation

Rs 16000
Rs 12000 Rs 12000 Rs 12000 Rs
12000
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Statutory liquidity ratio ( ) Cash Reserve Ratio(4.50%)
CRR

With RBI

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Cash reserve ratio

Banks in India are required to hold a certain proportion of the

deposits in the form of cash
SLR
With Self
Statutory liquidity ratio

It is the minimum percentage of deposits that the bank has to

maintain in form of gold, cash or other approved securities.
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Combat inflation Combat Deflation
1. Reduce money supply 1. Increase money supply
2. Tight money 2. Easy money
policy/Dear money policy/Cheap money
policy policy
 100 Crore 100 Crore

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Deposit
Loans

Depositor Interest
Borrower
Interest

4% 10%

Loan → On a time basis

But deposits can be demand deposit
Rumor → People panic → If no money with Bank → This is called Bank run

To avoid Bank run situation → Bank need to maintain CRR and SLR

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100 Crore 100 Crore

Deposite
Loans

Depositor Interest 0 Borrower

Interest

4% 10%
 On which amount bank has to maintain CRR and SLR?

Upon NDTL(Net Demand Time Liability)

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Liabilities of bank
Demand Time What is NDTL? Usually seen that
Current account Fixed Deposit Time deposit > Demand Deposit
Savings Account Recurring Deposit
Demand Draft

150 Crore

Deposite
NDTL
Depositor Remaining amount
100 Crore

Withdraw

50 Crore
CRR Upon NDTL 100 CRORE on current rate of CRR → 3 Crore(In form
of Cash)

With RBI and no Interest from RBI

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Have to maintain all the banks excluding RRB
SLR Upon NDTL 100 CRORE on current rate of SLR → 18 Crore (In
form of Cash, Gold and other approved securities)

With itself and can gain some profit from this asset

Have to maintain all the banks excluding RRB

 How RBI can use CRR and SLR to manage liquidity in market?

CRR and SLR rate

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Bank will have less money and will interest rate will be high to earn same profit

People will take less loan due to increase in interest rate

Can control Inflation and control money supply

What happens when CRR is increased?

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A. It decreases money supply
B. It increases demand for money
C. It decreases inflation
D. All of the above
Which
Which of the
of the following
following counts
counts under SLR? under SLR?
Cash
A. Cash in Hand
in Hand

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Gold
B. Goldowned
owned byby the the
bankbank
Balance with
C. Balance with RBIRBI
All
D. Allof
ofthe above
the above
Q-IF CRR increased by RBI , what will be effect on market ?
1.Bank will have to maintain more money as cash or deposits with RBI
hence will have less money to lend or invest , thus increasing the liquidity in

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the market
2. Bank will have to maintain more money as cash or deposits with RBI
hence will have less money to lend or invest , thus reducing the liquidity in
the market
3. Both 1 and 2
4. None of the above
Bank rate()
The rate at which RBI give loan to Banks

For long term

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Without collateral/collateral free
Main tool
Repo Rate
Liquidity adjustment

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Facility(LAF) Reverse
Repo Rate
 The rate at which RBI give loan to Banks
Repo rate()
For Short term

With collateral(Government Security→ G-SEC)

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With agreement of repurchase of G-SEC
MSF(Marginal standing Facility)

If emergency occurs

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And no Government securities

RBI give freedom to use G-SEC of SLR

As collateral

This is known as Marginal Standing Facility

 REPO RATE BANK RATE

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Short term(< 90 days) Long term(>90 days)

All RBI client Only Scheduled Commercial bank

G-SEC→ Collateral must Collateral free

Reverse Repo rate()
The rate at which RBI take loan from Banks

Will sell government security to banks

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And give some interest rate in return of money

Why to take loan? To adjust Liquidity

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 Bank will give loan quickly

Cause money is safe

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Basis Point
100 basis point = 1 percent
25 basis point = 0.25 percent
50 basis point = 0.50 percent
Q-What is the meaning of Repo Rate?
(A) When a bank is in need of cash it can it can discount bills of exchange and avail loan

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facilities from the Reserve Bank of India.
(B) When a bank has excess cash, they buy securities from RBI against cash on the
condition that they resell the securities to RBI on a pre fixed day and price
(C) It is the rate at which RBI allows temporary loan facilities to commercial banks against
government securities on the condition that the bank will repurchase the securities within
a short period.
(D) It is a rate that is offered by banks to their most valued customers or prime
customers.
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 INFLATION

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 2012

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Inflation is the state in which ..............................
(a) The value of money decreases
(b) The value of money increases

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(c) The value of the money increases first and then decreases
(d) The value of money decreases first and increases later
 Answer a

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When there is high inflation in the economy, how will it affect the
supply of money in the economy?
(a) No effect on the money supply

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(b) Supply of money decreases
(c) Supply of money increases
(d) None of the above
 Answer c

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What is a stagflation?
(a) A situation in which the economy experiences recession.
(b) A situation in which the economy have inflation and

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recession altogether
(c) An economy where unemployment is high
(d) Both b and c
 Answer d

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Who wrote the book "How to pay for Money"?
(a) Amartya Sen
(b) Adam Smith

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(c) Karl Marx
(d) Professor Keynes
 Answer d

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Which of the following measure is adopted to reduce inflation?
(a) Reduction in bank rate
(b) Reduction in Repo rate

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(c) Increase in government expenditure
(d) Cuts in government spending
 Answer d

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 ANS-D

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 ANS-B

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 ANS-A

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 ANS-B

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1. GDP =measures the monetary value of final goods and services—
that is, those that are bought by the final user—produced in a
country in a given period of time (say a quarter or a year).

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2. NDP(Net Domestic Product) = GDP - Depreciation

3. GNP = the total value of all finished goods and services produced by
a country's citizens in a given financial year, irrespective of their
location.

4. NNP(Net National Product) = NDP - Depreciation

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TYPES OF UNEMPLOYMENT
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Balance of payments
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Thanks to CLEAR IAS
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WHY
EXCHANGE
RATE SYSTEM?
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GOVERNMENT SCHEMES
Midday Meal Scheme

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1. It is the largest school feeding programme of its kind in the world, covering students

enrolled in government schools from Classes 1 to 8.

2. Basic objective of this scheme is to enhance enrolment in schools.

3. Nodal Ministry: Ministry of Education.

Pradhan Mantri Suraksha Bima Yojana (PMSBY)(February 2015)

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Ministry: Ministry of Finance

1. It is a one-year accidental insurance scheme renewable from year to year offering

coverage for death or disability due to accident.
2. Individuals in the age group of 18-70 years having a savings bank or a post office
account are entitled to enroll under the scheme.
3. Accidental death cum disability cover of Rs.2 lakh (Rs.1 lakh in case of partial
disability) for death or disability due to an accident.
Atal Pension Yojana (APY) (2015)

Ministry: Ministry of Finance

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• To create a universal social security system for all Indians, especially the poor, the
under-privileged and the workers in the unorganized sector.
• for the people in the unorganized sector.
• Administered By: Pension Fund Regulatory and Development Authority
(PFRDA) through the National Pension System (NPS).
• Open to all bank account holders in the age group of 18 to 40 years
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Thank You

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All the Best