Complete Economic Eng by Sachin Sir and RBE Team With Video

RBE (REVOLUTION BY EDUCATION)
INDIAN
ECONOMY
FOR ALL SSC EXAMS
USEFUL FOR:
SSC : CGL, CHSL, CPO, MTS, Steno,
Selection Post etc.
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UP SI etc.
Shubham Jain Sir

(EX. gst inspector) By:- SACHIN SIR
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Complete Economics by Sachin Sir (RBE)

Contents
1. (GDP/GNP/ National Income) ..................................................................................................................................... 2
2. (Banking Sector)......................................................................................................................................................... 13
3. Capital Market (Share/Stock/Security Market) ........................................................................................................ 20
4. (Various Sectors of Economy) ................................................................................................................................... 24
5. (Classification of Economies)..................................................................................................................................... 26
6. Planning In India/Five Year Plans .............................................................................................................................. 29
7. External Sector of India/Foreign Trade ..................................................................................................................... 34
8. International Financial Institutions ........................................................................................................................... 39
9. (Taxation) ................................................................................................................................................................... 41
10. (Budget) ................................................................................................................................................................... 45
11. (Types of Inflation) .................................................................................................................................................. 49
12. (Unemployment) ..................................................................................................................................................... 52
13. (Poverty) .................................................................................................................................................................. 53
14. (Agriculture in India) ................................................................................................................................................ 55
Complete Course Video link:- https://youtu.be/sZc2f6U8IIA
Course Enquiry 1
1. (GDP/GNP/ National Income)

GDP (Gross Domestic Product)
Total/sum of Final values of Goods & Services Produced by the producers [Indian
or foreigner] with in the domestic Boundary in a financial year is called GDP.
Ø Financial year (1st April - 31st March)
G D P
Gross Domestic Product
Total/Sum of All Goods Services
Final Monetary Value
Within Indian Domestic Boundary
Goods
Production
Services
By Indian Producers By Foreign Producers
Companies Individuals Companies Individuals

Examples:-
(1) India’s GDP Indian Domestic Boundary will be considered.
(2) China’s GDP Chinese Domestic Boundary will be considered
(3) USA’ GDP USA’s Domestic Boundary will be considered
Ø If we talk about GDP of various Indian States.
MH > TN > GJ > KR > UP
GDP of various States is called as
GSDP (Gross state Domestic Product)

Production within this
India’s Domestic Boundary Boundary will be counted in
India’s GDP.
Course Enquiry 2
(1) Land Boundary (28 States + 8 UT) 1982
(2) Water Boundary [According to UNCLOS]
Geograp-
12 Nautical Miles from hical or
the coastline
political
boundary
(3) Air Boundary [Karman line]
of any
country
100 km above the earth
surface
(4) EEZ (exclusive Economic Zone) (200 N-M from the Baseline)
It is an Economic Boundary of any country.
(5) Diplomatic Missions of India in foreign Embassies/Consulates/High commissions
(6) India’s Foreign Assets
Ø Ex:- Military establishments in foreign, Assets on lease (like Chabahar port in Iran)
Karman Line:-
Ø It is an imaginary line which separates earth Atmosphere from space.
If we talk about GDP’s Comparison of Top-5 Countries.

USA > China > Germany > Japan > India
Largest GDP/Eco. 5th Largest

Of the World. GDP/Economy
GNP (Gross National Product)

Total/sum of final values of Goods & Services Produced by Indian Producers (Individuals and companies) in India
or foreign in a financial year is called GNP.
G N P
Gross National Product
Total/Sum of All
Goods Services
In a Financial
year Final Monetary Value
Indian National Producer (Company or Individual)
Production
In India In Abroad
Course Enquiry 3
So, We can Say

Ø GDP Defined by domestic Boundary of any country
Ø GNP Defined by Producer’s Nationality
Examples:-
(1) Air India working at USA’s Airport.
GDP GNP
Production in USA’s domestic boundary Production by Indian company
It will be counted It will be counted

in USA’s GDP in India’s GNP
(2) Google/FB – India
GDP GNP
Production in Production by
India’s domestic American company
boundary
It will be counted
It will be counted in USA’s GNP
in India’s GDP
(3) India citizen “Rahul” – Working in UK
GDP GNP
Production in UK’s Production by
domestic boundary Indian Citizen
It will be counted It will be counted

in UK’s GDP in India’s GNP
Course Enquiry 4
(4) Vivo/Oppo – India
GDP GNP
Production in Production by
India’s domestic China’s Companies
boundary
It will be counted
It will be counted in China’s GNP
in India’s GDP
GNP = GDP + Income inflow from aboard to India Income out flow from India to aboard
Company Company
By Indian Producer By Foreign Producers
Individual Individual
Production/Working Production /Working
in abroad in India
So, GNP = GDP + Net Inflow Income in India From abroad
NDP (Net Domestic Product)
Ø NDP = GDP – Depreciation
NNP (Net National Product)

Ø NNP = GNP – Depreciation
National Income
N.I. = (NNP)FC
FC = Ø Factor cost
Ø Cost of the factors involve in Production (Ex:- Land, Labour,
Capital, M/C, Tech, Raw material, Producer’s Profit etc.)
Ø Or we can say ‘Cost of the Product before Tax’
Relation between market price (MP) and factor cost (FC)

(MP) = FC + Indirect Tax – Subsidy
So, (GDP)MP = (GDP)FC + Indirect Tax – Subsidy
So, (GNP)MP = (GNP)FC + Indirect Tax – Subsidy
So, (NDP)MP = (NDP)FC + Indirect Tax – Subsidy
So, (NNP)MP = (NNP)FC + Indirect Tax – Subsidy
N.I. = (NNP)FC
Or we can say, N.I = (GNP)FC – Depreciation (because, NNP = GNP – Depreciation)
(because, GNP = GDP +
or we can say, N.I = (GDP)FC + Net Inflow Income from abroad to India – Depreciation Net inflow income from
abroad
Course to India)
Enquiry 5
or, N.I. = (NNP)MP – Indirect + Subsidy (because, NNPMP = NNPFC + Indirect tax – Subsidy)
or, N.I. = (GNP)MP – I.T + Subsidy – Depreciation (because, GNPMP = GNPFC + Indirect tax – Subsidy)
or, N.I = (GDP)MP + Net inflow income from abroad to India - I.T. + Subsidy - Depreciation
(because, GDPMP = GDPFC + Indirect tax – Subsidy)
Nominal GDP = (GDP)MP

Ø Impact of inflation is included
Real GDP = (GDP)BP

Ø Impact of inflation is excluded
BP = Base Price
Ø decide on base year

Ø base year of Indian economy (2011-12)
Per Capita Income

𝐆𝐃𝐏
Ø P.C.I. =
𝐏𝐨𝐩𝐮𝐥𝐚𝐭𝐢𝐨𝐧
𝐍𝐨𝐦𝐢𝐧𝐚𝐥 𝐆𝐃𝐏 𝐆𝐃𝐏 𝐚𝐭 𝐌𝐏
Ø Nominal P.C.I. = =
𝐏𝐨𝐩𝐮𝐥𝐚𝐭𝐢𝐨𝐧 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏
𝐑𝐞𝐚𝐥 𝐆𝐃𝐏 𝐆𝐃𝐏 𝐚𝐭 𝐁𝐏
Ø Real P.C.I. = =
𝐏𝐨𝐩𝐮𝐥𝐚𝐭𝐢𝐨𝐧 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏
Methods of counting national Income

1. Production Method
2. Income Method
3. Expenditure Method
Formula = C + G + I + X – M
C = Pvt. Expenditure
Expenditures Expenditures by
by Individuals Pvt. Sector
G = Govt. Consumption/Expenditure
I = Investment
Ø Pvt. Sector Investment

Ø Public Sector Investment
X= Export
Goods Services
M= Import
Goods Services
Course Enquiry 6
Micro Economics Macro Economics

v Individual Person/Company/Small Unit Ø National level
Production/ Economic Activities Production/ Economic Activities
Study Study
v Pillars/Principles/Factors of Micro Economics Ø Pillars/Principles/Factors of Macro Economic
v Producer Behaviour Theory v Fiscal Polity
o It Shows Producer’s point of view v Budget Taxation
o Law of supply v Monetary Policy
o Supply ∝ Price) v Banking Sector
v Consumer Behaviour Theory v Unemployment/Poverty
o It shows consumer’s point of view. v Inflation/deflation/Economic recession
o Law of Demand v BoP A/c
𝟏 v Current A/c
o Price ∝ 𝑫𝒆𝒎𝒂𝒏𝒅
v Cost Theory v Capital A/c
v CAD [Current A/c Deficit]
o Optimum cost of product
v Currency Exchange Rate
v Foreign Trade
v GDP/GNP/NDP/NNP/N.I./P.C.I.
Growth Rate of GDP
2022-23 2023-24
GDP = 100 Rs. GDP = 110/105/102/95
GDP’s G.R = 10 %
GDP’s G.R = 5 % Growth rate = +ve
GDP’s G.R = 2 %
GDP’s G.R = -5 % (G.R. = -ve)
Ø So, If Growth rate is positive. It Means that GDP is increasing. It can increase with High Growth Rate (6-
10%) or Average Growth Rate (4-5%) or Low Growth Rate (0-3%).
Ø If Growth Rate is –ve. It means that GDP is decreasing.
Ø For Developed Countries:-
o They used their Economic potential
o Rich countries
o World class infra. Development Maximum potential of Growth Rate (0-3%)
o At the stage of saturation
o Population Growth = -ve
o Poverty (no)
Ø For, Developing Countries/LDCs (Least or under developed countries)
o Middle Income/Poor Countries
o Have the potential to Grow faster
o Lack of Infra. Development
o High rate of Poverty/Unemployment
o They are not at the stage of saturation
o High rate of Population Growth
Course Enquiry 7
So, for developing/LDCs countries, It is mandatory to achieve Higher GDP’s Growth Rate.
GDP’s Growth rate > 5%
Developing/LDC Nations
If, GDP Growth rate < 5% If, GDP Growth rate = -ve
Low Growth Rate of GDP New industry development (no)

Industrialisation
Old industry
Production
Unemp./Poverty = Peak
Unemployment/Poverty Tax Income of Govt.
Tax Income of Govt. Expenditure on infra. dev.
Expenditure in infra. dev. Situation of Infrastructure Deficit
Infra. dev. This problem is called as
This problem is called as

“Economic Slowdown”
Economic Recession
Deflation
Note:- So, Low Growth Rate of GDP (0-5%) is called as Deflation Problem in Economy & -ve Growth Rate of GDP is
Called as Economic Recession Problem in Economy.
(RBI & Govt.)

Inflation Price of G/S Maximum Profit
By
Economic
Policies G
Inflation (Problem) Producer Supply Satisfaction
S
Inf. Rate > 4%
4%
G
Inf. Rate < 4% Consumer Demand Satisfaction
S
Deflation/Eco. Inflation Price of G/S

Recession (Problem)
(High Purchasing Power)
Optimum Inflation Rate (4%)

Course Enquiry 8
Optimum Inflation Rate:- On which neither the consumer will feel inflation nor the producer will feel the
low price of goods and services (that means producer will get optimum profit). Hence, both the pillars of economy
(consumer and producer) will be satisfied.
There are two types of Problems in Economy:-
Inflation Deflation/Economic
If, (Inflation Rate > 4%)
Recession
GDP of G.R. / -ve &
Unemp./Poverty = Peak
Reasons Behind inflation Problem in Economy:-
Inflation (Inflation Rate > 4%)
Price of G/S
1. Increase in Demand ( ) 2. Decrease in Supply ( )
3. Money Supply
By RBI By Govt.
4. Interest Rate 5. Public Expenditure
6. Tax Rate 7. Subsidy 8. Expenditure In 9. Expenditure In

welfare Scheme Infrastructure Development
Course Enquiry 9
Steps taken by RBI & Govt. to counter inflation problem (inflation rate > 4%) in Economy.
Optimum Inflation Rate (4%)
Inflation
Price of G/S
1. Decrease in Demand 2. Increase in Supply/Production
3. Money Supply
By RBI By Govt.
6. Tax Rate 7. Subsidy 8. Exp. In welfare 9. Exp. In Infra.

Scheme Dev.
Reasons Behind deflation/Economic Recession Problem in Economy.
Deflation/Economic Recession
GDP’s Growth Rate /-ve
Unemployment/Poverty = Peak
1. Demand 2. Supply
3. Money Supply
By RBI By Govt.
Course Enquiry 10
Steps taken by RBI/Govt. to counter deflation/Economic Recession Problem:-

Deflation/Eco. Recession
Solution
1. Demand 2. Supply/Production
3. Money Supply
By RBI By Govt.
6. Tax Rate 7. Subsidy 8. Exp. In welfare 9. Exp. In Infra.

Scheme Dev.
Problems of Economy
Inflation Deflation/Eco. Recession

Interest Rate > 4% G.R. of GDP /-ve
Unemployment/Poverty
Solution by (Govt. and RBI)
Economic Policies
Monetary Policy Fiscal Policy

Ø Formed By RBI Ø Formed By Govt. (Central
Ø Based on Banking Sector Govt. and State Govts.)
(Components of Monetary Ø Based on (Components of
Policy) Fiscal Policy)
o Taxation
o Budget
Course Enquiry 11
Monetary Policy (By RBI)
Interest Rate Interest Rate
Money Supply Money Supply
Demand Demand
Inflation Production
Contractionary MP/Dear MP/Tight MP Deflation/Eco. Recession (Problem Solved)

Or
Hawkish MP Expansionary MP/Cheap MP/Easy MP
Or
Dovish MP
Fiscal Policy (By Govt.)
Public Expenditure Public Expenditure
Demand Demand
Production Inflation
Deflation/Economic Recession (Problem Solved) Fiscal Discipline/ Fiscal Consolidation Policy
Fiscal Stimulus Policy
Note: All the Economic data (GDP/GNP/NDP/NNP/N.I./PCI etc.). Is released by NSO on Quarterly Basis.
NSO (Ministry of statistics and Programme implementation)

Ø National Statistics Office
Ø Founded in 2019
Ø NSO formed by merging (NSSO & CSO)
o NSSO (National Sample Survey Org.)
o CSO (Central Statistics Office)
Financial year (1 April – 31 March) divided into 4 Quarters:-

Ø April – June = 1st Quarter
Ø July – September = 2nd Quarter
Ø October – December = 3rd Quarter
Ø January – March = 4th Quarter
Course Enquiry 12
2. (Banking Sector)
Ø Banking Sector is a part of Monetary Policy.
Deposit
Public Bank Loan distribution/Lending/Asset Creation
@Interest Rate 5-6% @ Interest Rate 9-10%
Creation
Liability/Borrowings of Banks Assets of Banks
Operational Corporate
Margin of Banks Gross Profit Tax Net Profit
Cost (divided into share
holders according to
their share holding)
NPA (Non – Performing Assets)

Ø Problem related to banking sector
Assets of Banks
Ø Distributed loans by banks.
Performing Timely Received by the
Principle Amount + Interest Rate Installment bank
Assets (Loans)
Timely Not Received by

Non-Performing P.A. + I.R.
Installment the bank
After 90 days the loan is

NPA of Banks
declared as NPA by Bank Bank will wait for 90 days
This Situation is
Profit of Banks Balance sheet of Banks = -ve
called as Bank
run/Bankrupt/Liq
uidity crisis
NPAs Bad Loans/Bad Assets
Bad Banks
Are the Banks which deal with NPAs
NPAs buy by
bad bank
Bad Bank Ex:- 100 cr.NPA Banks Ø NPAs
Ø Profit
Ø Balance Sheet = +ve
Will Recover Ø New Asset Creation (Loan distri.)
90 cr. (Money)
the NPAs
By using
Recovery laws.
Course Enquiry 13
India’s latest Recovery Law

Ø IBC 2016 (Insolvency & Bankruptcy code)
Ø Insolvency Means out of the court settlement.
Insolvency & Mediator for insolvency process between creditor and debtor
Bankruptcy
Board of India
(IBBI)
Formed in 2017
Bankruptcy Means dispute settled by court/Tribunal
NCLT/NCLAT DRT/DRAT
(Related to (Related to
Company affairs) Individual Affairs)
NCLT
Ø National Company Law Tribunal
NCLAT
Ø National Company Law Appellate Tribunal
DRT
Ø Debt Recovery Tribunal
DRAT
Ø Debt Recovery Appellate Tribunal
India’s Ist Public Sector (Govt.) Bad Bank licensed by RBI in April 2022
Ø NARCL (National Asset Reconstruction company limited)
Ø 51% Share Holding = Public Sector Banks
Ø 49% Share Holding = Private Sector Banks
India’s Ist Private Sector Bad Bank licensed by RBI in April 2022
Ø IDRCL (Indian Debt Resolution Company Limited)
Ø 51% Share Holding = Private Sector Banks
Ø 49% Share Holding = Public Sector Banks
RBI
Central Bank of India Regulator of Banking Sector (by
Banking Regulation Act 1949)
By RBI Act 1934
Pvt. Banks Public Sector Banks
Ø Makes Rules/Regulations/Guidelines
for banks
Ø Issue/Cancel license of banks
Course Enquiry 14
Facts Related to RBI

Ø Hilton young commission (1926)
On the Recommendation of this commission
Parliament passed
Established
RBI Act 1934 RBI = 1 April 1935
HQ = Calcutta
Ø RBI was private bank at that time
In 1937 HQ = Mumbai
Ø 1949 – Nationalisation of RBI (Now RBI is Govt. Bank)

Ø Banking Regulation Act 1949 passed by parliament
Ø First governor of RBI – Osborne Smith
Ø First Indian governor of RBI – C.D. Deshmukh (in 1943)
Ø 4 regional offices of RBI (Delhi, Mumbai, Kolkata,
Chennai) 4 deputy governors
RBI Act. 1934 As a central Bank.

RBI
Banking Regulation Act 1949 As a Regulator of Banking Sector.
Functions of RBI as a Central Bank RBI Act 1934

(A) Formation & Implementation of Monetary Policy:-
Tools/Instruments of MP
Quantitative Qualitative
Tools Tools
Quantitative Tools of MP
(1) Bank Rate (BR):- Interest Rate
Provides For long term

RBI To Banks
Loans/Lending Period (> 1 year)
(2) Repo Rate (RR):-

Interest Rate
Provides For short term

RBI To Banks
Loans/Lending Period (≤ 1 year)
Course Enquiry 15
(3) Reverse Repo Rate (RRR):-

Interest Rate
Provides For short term

Banks To RBI
Loans/Lending Period (≤ 1 year)
BR/RR/RRR Interest Rate
Interest Rate Interest Rate
BR/RR/RRR BR/RR/RRR
Loans became expensive Loans became Cheaper
Money supply in economy Money supply in economy
Demand in Economy Demand in Economy
Price of G/S Production/Industrialisation
Inflation GDP’s Growth Rate
To solve the problem of Unemployment/Poverty

Inflation
To solve the problem of
Deflation/ economic
recession
(4) CRR (Cash Reserve Ratio):-
Liquidity/Money Emergency Ratio of

Fund Amount
Decided by RBI
Ratio of Amount
It is mandatory for every bank (Private banks and public sector banks) to keep this reserve amount in
RBI
Objective:-
Ø To Counter Banking Crisis OR To Protect Banks from Bankrun/Bankruptcy/Liquidity Crisis situation.
Ø This CRR will be hold in terms of cash/gold (HQLA-High Quality Liquid Assets).
Ø No Interest Rate will be paid by RBI to banks on this amount because it is an emergency fund (inactive
assets).
Course Enquiry 16
CRR (Amount of CRR increased by RBI)

Ø Liquidity flow/Money Supply in Economy
Ø Demand Price of G/S Inflation
Ø Solution of inflation problem
CRR (Amount of CRR decreased by RBI)

Ø Liquidity flow/Money Supply
Ø Demand Production/investment flow GDP’s G.R. Unemployment/Poverty
Ø Solution of deflation/Economic Recession problem
(5) SLR (Statutory Liquidity Ratio):-
Legal (means related to Money Ratio of

Govt.) Amount
Decided by RBI
Ratio of Amount
Requires to hold By Every Bank By itself
Pvt. Bank Public Sector Bank
Objective:-
Central Government
Ø This amount is used to provide loans to Govt.
State Govts.
SLR (Amount of SLR increased by RBI)

Ø Liquidity flow
Ø Demand Inflation
Ø Solution of inflation problem
SLR (Amount of SLR decreased by RBI)

Ø Liquidity flow
Ø Demand Production/investment flow GDP’s G.R. Unemployment/Poverty
Ø Solution of deflation/Economic Recession problem
Course Enquiry 17
(6) OMO (Open Market Operations)

RBI
Govt. Securities (G-Sec.)
Sale Purchase
Demand Demand
Inflation Deflation/Eco. Recession (problem solved)
Other Quantitative Tools:-

(7) LAF (Liquidity Adjustment Facility)
Ø Adopted in 2000.
Ø Background:- LPG Reforms 1991 (New industrial/Economic policy 1991)
Ø LAF is the Additional Liquidity Facility of RBI to Banks
Ø For a very short term period (15 days, 1/2/3/4/5……months)
Ø @ RR/RRR (Interest rate)
(8) MSS (Market Stabilisation Scheme):-

Ø Adopted in 2004
Ø Objective:- To counter foreign currency/Investment induced inflation in economy
Ø CRR/SLR Liquidity flow Demand Inflation
(9) MSF (Marginal Standing Facility):-

Ø Adopted in 2011.
Ø Background:- Global Economic Recession (2007-08)
Soln.
Money supply
will have to Demand
increased
Ø MSF is an additional liquidity facility of RBI to Banks
For an overnight period (Overnight lending facility; 1-7 days)
@RR/RRR (interest rate)
Qualitative Tools:-
(1) MR (Marginal Requirement)
Ø For Producer
Ø Minimum Required value of Assets to take loans as a producer.
Course Enquiry 18
(2) CR (Collateral Requirement)/Control of consumer credit

Ø For Consumers
Ø Minimum Required value of Assets to take loans as a consumers.
(3) Rationing of Credit

(4) Direct Actions
(5) Moral Suasions
MPC (Monetary Policy Committee)

Ø Formed in 2016 (on the recommendation of Urjit R. Patel committee) by RBI amendment act 2016.
Ø MPC is a statutory body.
Before 2016
Monetary Policy Formation or
Implementation By RBI Governor According to RBI Act 1934
After 2016
Monetary Policy Formation or
By MPC According to RBI
Implementation
(Amend.) Act 2016
Structure of MPC
6 Members
3 From RBI 3 From Central Government

Ø RBI Governor (Chairperson of MPC) Ø Appointed by Central Government
Ø Deputy Governor
Ø RBI Officer
Ø Decision of MPC Majority (4 – 2)

Ø Target for MPC
o FIT (Flexible inflation Target) = 4% ∓ 2%
o 4% (Optimum inflation rate)
Max. 6% Min. 2%
Other Functions of RBI

(B) Bank of Banks RBI is called as lender of last resort.
(C) Bank of Govt./Banker or Agent or Advisor or Representative of Govt.
(D) Currency Printing/Issue/Mgmt.
(E) Forex Reserve Hold/Mgmt./Regulation
Course Enquiry 19
(F) Currency Exchange Rate Mgmt./Regulation
(G) Overall RBI Plays important role in Economic/GDP Growth and Economic development of the nation.
Call Money Rate/Call Money Mkt.

Ø Inter-Bank Interest Rate/Lending Rate is called as call money rate.
Ø The Place Where transaction between two banks take place is called as call money market.
Ø It is the overnight Lending Rate (1 – 7 days)
Earlier this rate was determined by LIBOR (London Interbank offered rate) but now by MIBOR (Mumbai inter-Bank
offered rate).
3. Capital Market (Share/Stock/Security Market)

Financial Market
Money Market Capital Market
Ø Example: Banking Sector Ø Example: Share/Stock/Security

Ø Regulator: RBI Mkt.
Ø Short Terms financial Mkt. (≤ 1 Ø Regulator: SEBI
year) Ø Long Terms financial market (> 1
Ø Small amount of money transacts year)
in this type of market Ø Huge amount of money transacts
in this type of market
SEBI Ø
Ø Securities Exchange Board of India
Ø Established: 1988
Ø Regulated by SEBI Act 1992
Ø Head Quarter: Mumbai
Ø Chairperson: Madhabi Puri Buch
Course Enquiry 20
Security
Share Security Debt Security
Money Money
Company Investor Company Investor
Share Sec. Debt Sec.
Transfer of Ownership Rights Fixed Interest Rate = Return

Or (Company borrows money from investor)
Share Holdings
Risk ∝ Profit / Loss

Risk ∝ Profit / Loss
Share Security
Preferential Share Equity Share
Ø Shares hold by Promoters Ø Share hold by common/Retail

of Company Investors or other than
Ø They have Primary Right promoters
in dividend (Net Profit) Ø Secondary Right in dividend
Ø No voting rights for Ø All Voting Rights are reserved
preferential share holders for equity share holder
Nominated BODs by Promoters

Decision Making
Company Board of Directors
Body Elected BODs by Equity Share
Holders
Course Enquiry 21
Debt Security
Bond/Debenture Bills/Commercial Paper
Ø Long term debt Sec. (> 1 year) Ø Short term debt Sec. (< 1 year)
Ø Commercial Papers for 35 days.
Note:- T-Bill Short term debt Sec. Issued by Govt. Entity (G-Sec.)
Treasury Bill
Investors
Bull Bear
Investors Investors
They think, in Near Future share Mkt. will rise They think, in Near Future share Mkt. will down fall
Demand of Share Value of Share Value of share/Demand of share
Share market
Share market
Bombay Stock Exchange (BSE) National Stock Exchange (NSE)

Ø Established in 1875. Ø Established in 1992.
Ø Asia’s/India’s first stock Exchange Index:- NIFTY
Index:- SENSEX o Index of Top-50 Listed Companies
o Index of Top-30 Listed Companies
SENSEX NIFTY
Up Down Up Down
Same as Same as
Effe Effe
Bull type c tiv Bear
e type Bear type c tiv Bull
e type SENSEX SENSEX
Investors Investors Investors Investors
Course Enquiry 22
Security Market
Primary Mkt. Secondary Mkt.
Money Money
Company Investor Investor ‘A’ Investor ‘B’
Security (Share/debt)
Security (Share/debt)
After Maturity
After Maturity
Money + Return Company

Security (Share/Debt)
Security (Share/Debt)
Money + Return
Types of Investment
1. Private Placements
Ø Placement of Shares
Ø For Limited Investors
Ø Ex:- Big investors, Investment companies, Mutual Fund etc.) – They have Market Expertise.
2. IPO (Initial Public Offering/Offer)
Company First Time (For Common/Retail Offer of Shares

Investors)
Ex:- LIC, JIO, Paytm etc.
3. FPO (Follow on Public Offer/Offering)
Company (2nd , 3rd , (For Common/Retail Offer of Shares

4th , 5th , --- Investors)
------)
Course Enquiry 23
Other Important Terms

Angel Investors
Ø Invest in Start-ups/New companies.
Ø Long Term Investment.
Ø Risk ∝ Profit /Loss
Venture Capitalist/Venture Capital Investor

Ø Invest in well-established/profitable companies.
Ø They are opportunistic Investor.
Ø Short Term Investment.
4. (Various Sectors of Economy)

There are 3 Sectors of Economy on the Basic of Nature of Industry.
Primary Sector Secondary Sector Tertiary Sector
It is also called as
“Service Sector
Sectors Related to
Production of
Goods Sectors Related to
Production of
Services
Tertiary Sector
Ø Services Sector
Ø Example:- Transportation/Distribution/Logistics, Human Resources/Labors, Education, Health,
Capital/Financial Services, Science & Tech, Telecom Sector, Internet/Media/Social Media/T.V. Media, ICT
(Information and communication technology)/ Software Industry, Tourism, Hospitality (Hotel/Restaurant.
Etc.)
Capital/Financial Services
Banking Sector Insurance Sector Pension/Social Security Sector
On the basic of skill/standard of Human Resources.
Service Sector
Tertiary Sector Quaternary Sector Quinery Sector
Course Enquiry 24
Tertiary Sector
Ø Lower level of skill
Ø Unskilled/semiskilled Human Resources
Ø Blue collar jobs
Ø Low menial jobs
Ø Lower level of expertise
Ø Field jobs
Ex:- District/session court lawyers or Judges, district level Admin/Police, Labour/Technician/Junior engineer,
Primary Teachers, Zomato/Swiggy delivery Boy Etc.
Quaternary Sector
Ø Medium level of skill/expertise
Ø Skilled labour
Ø White collar jobs
Ø Middle Menial jobs
Ø A.C. rooms jobs or office jobs
Ex:- HC level lawyers or Judges, commissioner level admin./Police, Engineers, MBA professionals, Banking
professionals, Secondary education Teachers.
Quinery Sector
Ø High level of skill/expertise
Ø Very high skilled labour
Ø Gold collar jobs
Ø High Menial jobs
Ex:- SC level lawyers or judges, secretary level, Admin./Police, Professors, Company’s
CEOs/MDs/VPs/MP/MLA/Ministers, Scientists, Economists.
Primary Sector Secondary Sector

Ø Production of Goods Ø Production of Goods
Ø We use Natural Resources as an Ø We use Natural Resources/output of primary
output/Product sector as an input/raw material
Ex:- (1) Agriculture & allied Sector

Ø Crop Production We get Artificial/Manmade products
Ø Animal Husbandary
Ø Agro-Forestry
Ø Cotton/Jute/Sugarcane production Ø Ex:- Manufacturing Industry
Ø Raw meat Industry (1) Textile Industry
(2) Mining & Minerals Industries. (Coal, Metal/Non- (2) Leather Industry
metal etc. (3) Food Processing Industry
(3) Exploration/Excavation Industry (4) Dairy Industry
Ø Crude oil (5) Sugar Industry
Ø Natural Gas (6) Automobile Industry
Note:- Primary Sector is also called as ‘Agriculture (7) Heavy Metal Industry
Sector’ (8) Furniture Industry
Ø Construction Industry
Ø Cement/Bricks Industry
Ø Electricity/Power Production Industry
Ø Water supply Industry
Ø Refinery Industry
Note:- Secondary sector is also called as “Industrial
Sector”
Course Enquiry 25
5. (Classification of Economies)
On the Basic of Govt. Intervention/control in Economy:
Capitalist Socialist Mixed

Economy Economy Economy
Capitalist Economy/Capitalism Example:- USA, Western Europe, Canada, Aus. Etc.
Ø Father of Capitalism/ Economics:- Adam Smith
Book
“Laissez Faire “Wealth of the Nation”

Policy”
Non – intervention No Intervention of

Policy Govt. in Economy
“Free Economy”
Ø 100% Private Sector (Privatisation)

Not under Govt. control
Ø Resources
Free to use
Supply
Ø Mkt. Factor Free from Govt. control
Demand
Ø Concept of private property.

Ø 100% Economic freedom
v Economic Activities GDP’s Growth Rate unemp./Poverty
v Innovation/Startup culture
v Monopoly (Not present)
v Healthy Competition between producers
o Quality of G&S
o Price of G&S
Ø Economic/Income inequality
o Rich – Poor divide
Socialist Economy/Socialism Example:- USSR (Soviet Union)
Ø Father of socialism/socialist Economy – Karl Marx

Ø 100% Public sector (100% Govt. controlled Economy)
Course Enquiry 26
o No Pvt. Sector
Ø Resources Under Govt. Control.
Supply
Ø Mkt. Factor
Demand
Ø No concept of pvt. Property
Ø Concept of Public/Collective property

Ø No Economy Freedom
Economic Activities
GDP’s Growth Rate
Unemploy/Poverty
Ø Innovation/Startup culture
Quality of G/S
Ø Monopoly
Price of G/S
Ø Healthy Competition (Not present)
Ø Economic/Income Equality
o Rich – Poor divide (Not present)
Mixed Economy Example:- India
Ø Father of Mixed Economy:- John Maynard Keynes
“Pump Priming Theory” Indirect Intervention of

Govt. in Economy
Ø Pvt. Sector + Public (Govt.) Sector

Ø Resources-
o Under indirect control of Govt.
o “Invisible Hand of Govt. in Economy”
o For the Welfare/Betterment of depressed class or sections of Society.
Supply
Ø Mkt. Factor Free
Demand
Ø Concept of Pvt. Property

Ø Economic freedom
o Economic Activities
GDP’s Growth Rate Unemp./Pov.
Course Enquiry 27
Ø Innovation/Startup Culture
Ø Monopoly (Not present)
Quality of G/S
Ø Healthy Competition q
Price of G/S
q
Ø Economic/Income inequality
o Rich – Poor divide
On the Basic of contribution of various Sectors in Economy:-
Agri. Economy Industrial/ Service Economy

Manufacturing
Economy
Contribution in GDP + Contribution in employment Structure
Agri. Economy Agri. Sector > Industrial Sector > Service Sector
Industrial Economy Industrial Sector > Service Sector > Agri. Sector
Service Economy Service Sector > Industrial Sector > Agri. Sector
Indian Economy
On the Basic of On the Basic of

Contribution in GDP Contribution in
Employment Structure
Service Sector > Industrial Sector > Agri. Sector

Agri. Sector > Industrial Sector > Service Sector
(55-57%) (26-28%) (15-17%)
India is a Agri. Economy

India is a Service Economy
Course Enquiry 28
On the Basic of Stage of Development.
Developed Economy Developing Economy Least/under developed

country (LDCs)
High per capita
income/Rich Country
P.C.I > 12236 USD Middle P.C.I. Countries Low P.C.I. Countries
Lower Middle Income Poor Countries

Upper Middle Income
Countries Countries
P.C.I. < 1005 USD

P.C.I. = 3956 - 12235 P.C.I. = 1006 - 3955 USD
USD
Note:- World Bank Decides Weather a country/economy is developed/developing/LDCs on the basic of Per Capita
Income (P.C.I)
6. Planning In India/Five Year Plans

Planning in India before Independence
• Indian National Congress formed this
National Planning Committee committee
(1938) • Subhash Chandra Bose was Congress president
and was chaired by Jawaharlal Nehru
• Aim was to release detailed blueprint of an
economic plan for independent India.
• Industrialists of Bombay including Mr. JRD
Tata, GD Birla, Purshot tamdas Thakurdas, Lala
Shriram, Kasturbhai Lalbhai, AD Shroff,
Bombay Plan Ardeshir Dala, & John Mathai prepared this
(1944) plan.
• It was neglected by the political parties and by
the business class due to various reasons.
• By MN Roy.
People’s Plan • This plan gave greatest priority to Agriculture.
(1944) • This plan was for ten year.
• It recommended nationalization of all
agriculture and production.
• By Sri Shriman Narayan who was principal of
Gandhian Plan Wardha Commercial College.
(1944) • Plan emphasized economic decentralization
with primacy to rural development by
developing cottage industries.
Course Enquiry 29
• By Jaiprakash Narayan inspired by Gandhian
Sarvodaya Plan plan as well as Sarvodaya Idea of Vinoba
(1950) Bhave.
• It emphasized on small and cotton industries
and agriculture as well.
• Plan also stressed upon land reforms and
decentralized participatory planning.
Post Independence Planning in India

Planning Commission NITI Aayog
(National Institute for Transforming India)
15 March (1950) – 13 August (2014) 1 January 2015 – Till Now
Executive Body Executive Body
Advisory in Nature Advisory in Nature
Structure Structure
Ø Chairperson – PM Ø Chairperson – PM
Ø Vice Chairperson – Any Economist Ø Vice Chairperson – Any Economist
Ø Secretary – Retd. IAS Ø CEO (Chief executive officer) – Retd. IAS
Ø Members – Expert Members + Cabinet Min. of Ø Members of Governing Council of NITI Aayog –
GoI CM of All States + CM of 3 UTs (J&K, Delhi,
Puducherry) + L.G./Administrator of other 5
Uts + Expert Members + Central Cabinet
Ministers
Note:- Note:-
Ø 1st Chairperson of Planning Commission – J.L. Ø 1st Chairperson of NITI Aayog – Narendra Modi
Nehru Ø 1st Vice Chairperson of NITI Aayog – Arvind
Ø Last Chairperson of Planning Commission – Pangaria
Manmohan Singh Ø Current Vice Chairperson of NITI Aayog – Dr.
Ø 1st Vice Chairperson of Planning Commission – Suman Beri
Gulzari Lal Nanda Ø 1st CEO of NITI Aayog – Sindhu Shri Kullar
Ø Last Vice Chairperson of Planning Commission Ø Current CEO of NITI Aayog – BVR
– Montek Singh Ahluwalia Subramanyam
Central Body (No Representation of States) Federal Body (Representation of Both State Govt. &
Central Govt.)
Five year Planning Ø 3 years action plan
Ø 7 years Strategy
Ø 15 years vision document
Approach (Top to Bottom) Approach (Bottom up Approach)
Financial Rights No Financial Rights
Note:- Best example of cooperative/competitive federalism in India NITI Aayog

Cooperative Federalism
Ø Healthy friendly relation b/w states & centre.
Competitive Federalism
Ø To promote Healthy competition for progress & development among states.
Ø Example:- Various Indexes released by NITI Aayog.
Course Enquiry 30
Five Year Planning in India

(1) 1st Five Year Plan (1951 – 56)
Ø Model:- Harrod Domar Model
Ø Focus:- Agriculture Sector Development
Ø Growth rate of GDP
o Target – 2.1%
o Achieved – 3.6%
Ø Prime Minister – J.L. Nehru
(2) 2nd Five Year Plan (1956 – 61)

Ø Model:- Mahalanobis Model
Ø Focus:- Industrial Sector Development
o Target – 4.5%
o Achieved – 4.1%
Note:- P.C. Mahalanobis

Ø Architect of Indian Planning
Ø Prepared 2nd Five Year Plane
Ø Founder of Indian statistical Institute (Kolkata) in 1931.
Ø Called as Father of Statisties in India.
(3) 3rd Five Year Plan (1961 – 66)

Ø Model:- Godgil Plan
Ø Focus:- Agriculture & Industrial Sector Development
Ø This FYP was completely failed
Important Facts:-
Ø 1962 = India – China war
Ø 1965 = India – Pakistan war Economic & food crisis
Ø 1964-65 = Severe drought/famine
Ø 1964 = Death of J.L. Nehru
Political crisis
Ø 1966 = Death of L.B. Shastri
Ø 1964/1966 = Gulzari lal Nanda appointed as “Acting PM of India” After the death of Nehru Ji & Shastri Ji.
Ø 1965 = Tashkent Agree. (India –Pakistan Peace Agree.)
Note:- 1st Planning Holiday (1966 – 69)

Ø PM = India Gandhi
Ø 3 Annual Plans were introduced
o 1st Annual Plan (1966 – 67)
v Op. Green Revolution was launched
nd
o 2 Annual Plan (1967 – 68)
o 3rd Annual Plan (1968 – 69)
Ø Focus of 3 Annual Plans Self-Reliance
Course Enquiry 31
(4) 4th Five Year Plan (1969 – 74)

Ø Focus:- Growth with stability & Self-Reliance
o Targeted – 5.7%
o Achieved – 3.3%
Ø PM = Indira Gandhi
Important Facts:-
Ø 1969 = Nationalisation of 14 Pvt. Bank by Indira Gandhi
Ø 1970 – 71 = Operation flood
o Related to “White Revolution”
o To Promote Milk Production
o Father of white Revolution - Verghese Kurien
Ø 1971 = India – USSR friendship treaty
Ø 1971 = Ending of previ purse
Ø 1971 = India – Pakistan war
Ø 1972 = Shimla Agreement
o India – Pakistan peace Agree.

Ø Focus:- Poverty Alleviation, Self-Reliance & Family Planning (Population Control)
o Targeted – 4.4%
o Achieved – 4.8%
Ø PM – Indira Gandhi
Important Facts:-
Ø 1974 = Operation smiling/laughing Buddha
o India’s 1st peaceful nuclear test
Ø 1975 – 76 = Indira Gandhi imposed Article 352 (National Emergency)
Note:-
Ø 1977-78 = General elections (Lok Sabha) were held – Janta Party won this election
Ø PM = Morar ji Desai
Ø 5th FYP was terminated by Morar ji Desai in 1978
Rolling Plan (1978 – 83)

Ø By PM Morar ji Desai
Ø Terminated in 1980

Ø Focus:- Poverty Eradication & employment generation
o Targeted – 5.2%
o Achieved – 5.7%
Ø PM – Indira Gandhi

Ø Focus:- Rapid food grain production + employment creation
Course Enquiry 32
o Targeted – 5%
o Achieved – 6%
Ø PM – Rajiv Gandhi
Note:-
Ø 1990 = BoP Crisis (USD Crisis)
o Economic Crisis
o LPG Reforms 1991/New industrial or economic policy was adopted.
2nd Planning Holiday = 1990 – 92

Ø 2 Annual Plans
o 1990 – 91
o 1991 – 92

Ø Focus:- Human Resources Development (Education, Public, Health, Employment & Skill Dev.)
o Targeted – 5.6%
o Achieved – 6.8%
Ø PM – P.V. Narsimha Rao
Important Facts:-
Ø 1996 = Op. Pokhran – I
o India’s Nuclear test to become Nuclear Powered
o Unsuccessful
o PM = Atal Bihari Vajpayee
(9) 9th Five Year Plan (1997 – 2002)

Ø Focus:- Growth with Justice and Equity
Ø It was launched in the 50th year of Independence of India
o Targeted – 7%
o Achieved – 5.6%
Ø PM – Atal Bihari Vajpayee
Important Facts:-
Ø 1998 = Op. Pokhran – II
o India’s became a Nuclear powered country
o PM = Atal Bihari Vajpayee
(10) 10th Five Year Plan (2002 – 2007)

Ø Focus:- Doubling per capita Income in next 10 yrs.
o Targeted – 8%
Ø PM – Atal Bihari Vajpayee
Course Enquiry 33
Important Facts:-
Ø 2005 = NREGA (National Rural Employment Guarantee Act.)
o Scheme was launched by PM Manmohan Singh.
o Ojective:- To reduce poverty in Rural Area & to counter migration related to employment from
Rural India to Urban India.
(11) 11th Five Year Plan (2007 – 2012)

Ø Focus:- Faster and Inclusive Growth
Ø PM = Manmohan Singh
Important Facts:-
Ø 2009 = NREGA scheme renamed as MGNREGA (Mahatma Gandhi National Rural Employment Guarantee
Act.)
(12) 12th Five Year Plan (2012 – 2017)

Ø Last five year plan
Ø Focus:- Faster, More Inclusive & Sustainable Growth
o Target @ 9%
Ø PM – Manmohan Singh
7. External Sector of India/Foreign Trade

Economic Relation
India’s with Rest World
Economic Transaction
BoP A/c
Ø Balance of payment A/c
Ø Forex reserves A/c
Ø Foreign Currencies A/c
Ø USD A/c
Ø BoP A/c managed or hold by RBI
Course Enquiry 34
Impact of BoP Crisis on Economy

BoP Crisis
Forex Reserve Crisis
USD Crisis
Import of Goods & Import of RAW Material and Foreign Debt/Loan

Services Energy
Ø Supply of Goods & Ø Crude Oil & Natural Gas Import Ø Government will fail to
Services Decreases. Decreases. payment of loan
Ø Inflation Increases Ø Domestic Production of Goods & Services Ø Situation of
Decreases. Defaulter/Bankruptcy
Ø GDP’s Growth Rate /-ve Ø Soverign Credit Rating of
Ø Unemployment/Poverty Increases. that country or economy
Ø Problem of Deflation/Economic will Decrease.
Recession Occurred in Economy
Ø Latest Example: Pakistan, Sri Lanka, Bangladesh etc. Faced BoP Crisis.
Ø India Faced BoP crises Situation in 1990.
Ø NOTE: BoP Crisis (USD Crisis) – Solution: - Done by IMF by issuing “Bailout Package (USD package)”
Parts of Forex Reserve of any Country:

Ø Gold Reserve
o Under Government
o Under RBI
Ø Reserve of Foreign Currencies (Majorly in USD)
Ø Foreign Assets of RBI & Govt.
Ø Movable Assets:
o External Debt
o Share Holdings in various International Institutions
o RBI’s Investment in foreign markets
Ø Non-Movable Assets:
o Embassy/India’s Diplomatic Mission or High Commission
o Other Assets: Example- Lease Assets of India in foreign.
Ø India’s Emergency Reserve in IMF
SDR (Special Drawing Rights)
USD Euro Pound Yen Yuan/Reminbi
Course Enquiry 35
BoP A/c
Inflow of USD Outflow of USD
BoP A/c
Current A/c or Trade A/c Capital A/c
A/c of Import & Export Financial Transaction

Of Goods & Services
Current A/c or Trade A/c
Inflow of USD
Export Outflow of Goods & Services
Inflow of Goods & services

Import Outflow of USD
Merchandise/visible items Export & Import of Goods
Invisible Items Export & Import of Services
Situations of Current A/c

CAS (Current A/c Surplus) CAB (Current A/c Balance) CAD (Current A/c Deficit)
Ø Inflow of USD > Outflow of USD Ø Inflow of USD = Outflow of USD Ø Inflow of USD < Outflow of USD
Ø Export Bill > Import Bill Ø Export Bill = Import Bill Ø Export Bill < Import Bill
Ø Export Economy Ø It is an ideal situation that Ø Import Economy
Ø Ex: China can not be possible Ø Ex: India
Note:-
Ø India’s top-3 largest trade partners (Exports/Imports)
o USA > China > UAE
Ø India’s largest CAD with which country
o China
Ø India’s largest CAS with which country
o USA
Course Enquiry 36
Capital A/c
Components
Foreign Investment External/Foreign Debt or External Grant/Aid External Deposit
loans
Ø FDI (Foreign Direct Ø Govt. Debt/loans (Inflow Ø Govt. Grant/Aid Ø NRI Deposit.
Investment). & Outflow of loans) (Inflow & Outflow)
Ø FPI (Foreign Portfolio Ø Private Sector Debt/loans Ø Private Sector or Ø Remittance.
Investment). (Inflow & Outflow of NGOs Grand/Aid
loans) (Inflow & Outflow)
Private sector external

borrowings/loans are called
as ECBs (external commercial
borrowings)
Difference Between FDI & FPI

FDI (Foreign Direct Investment) FPI (Foreign Portfolio Investment)
Ø Green Field Investment Ø Brown Field Investment
Ø Investment used to develop new Ø Investment used to increase the production
Industry/Infrastructure capacity of old/existing Industry or Infrastructure
Ø Large Scale employment creation Ø Small Scale employment creation
Ø Long-term Investment Ø Short-term Investment
Currency Exchange Rate

1 Rupee = ? USD
1 Rupee = ? Euro
1 Rupee = ? Yen
1 Rupee = ? Pound
Floating Exchange Rate Fixed/Rigid Exchange Rate
Depend on Market Regulated by central Bank
Devaluation Appreciation Depreciation Re-valuation
Value of Currency Value of Currency Value of Currency Value of Currency

Decreases Increases Decreases Increases
Course Enquiry 37
Impact of Devaluation/Appreciation of Currency on Export-Import

Devaluation Appreciation
• Export Increases • Export Decreases
• Import Decreases • Import Increases
Example:
1 USD = 80 Rupees (Current Situation)
1 USD = 85 Rupees 1 USD = 75 Rupees

(De-valuation of Rupee) (Appreciation of Rupee)
Foreign/External Trade
Ø Export – Import of Goods and Services
Ø Regulated by DGFT (Ministry of Commerce & Industry)
Trade Barriers
Tariff Barrier Non-Tariff Barrier
Custom Duty on Export & Import Barriers other than Tariff
Example: Example:
Production of Goods & Services Ø Child Labour.
Ø Carbon Emission.
Ø Sanitary/Phyto-Sanitary
Surplus Deficit Standards.
Export Import Export Import
Custom Duty Custom Duty Custom Duty Custom Duty

Decreases on Increases on Increases on Decreases on
Export Import Export Import
WTO (World Trade Organization)

Objective:
Ø To Promote Free Foreign Trade (Barrier Free Trade)
Ø To Promote Globalisation
Course Enquiry 38
8. International Financial Institutions

1. IMF (International Monetary Fund).
2. World Bank.
3. Asian Development Bank.
4. NDB (New Development Bank)/BRICS Bank.
5. AIIB (Asian Infrastructure Investment Bank).
After II world War (1939-1945)
Cold War (1945-1989/1990/1991)
Brettonwoods Conference (1944)
Outcome
IMF IBRD/World Bank GATT
Ø General Agreement on
Ø International Financial Institutions
Tariffs & Trade
Ø These are called as “Brettonwood Twins.”
GATT Uruguay Round Dialogue Marrakesh Agreement

(1986 – 1993) (1994)
WTO (World Trade Organisation)

Ø Establishment: 1 Jan 1995
Ø Head Quarter: Geneva
(Switzerland)
Ø Objective/Function:
o To promote Free Trade.
o To promote Globalisation.
Course Enquiry 39
Difference Between IMF & World Bank/IBRD

IMF World Bank/IBRD
Ø 1944 (Brettonwoods Conference). Ø 1944 (Brettonwoods Conference).
Ø HQ: Washington DC (USA). Ø HQ: Washington DC (USA).
Ø Objective/Function: To provide financial Ø Objective/Function: To provide financial
assistance/Loan to member countries during BoP assistance/Loan to developing and LDCs nations to
crisis. eliminate Poverty (to promote Infrastructure
o (BOP crisis: Balance of Payment crisis or Development).
USD Crisis).
Ø IMF Chief: Always from European Union. • W.B. President: Always from USA.
Ø Current Chief: Kristalina Georgieva. • Current President: Ajay Banga.
Ø India’s Quota in IMF: Ø Parts/Organs of W.B.
o 2.76% (8th Largest Stake Holder). o IBRD (International Bank for
o USA- 17% (Largest Stake Holder). Reconstruction & Development).
o IFC (International Finance Corporation).
o IDA (International Development
Association).
o MIGA (Multilateral Investment Guarantee
Agency).
o ICSID (International Centre for settlement
of Investment disputes).
Ø Currency of IMF: Ø Note: India is not the Member of ICSID.
o SDR (Special Drawing Rights).
o SDR is a Basket of five currencies
o USD, Euro, Pound, Yen, Yuan or Renminbi.
ADB (Asian Development Bank)

Ø Established in 1966.
Ø Head Quarter: Manila (Philippines)
Ø Stake Holders:
o Japan (15.6%) > USA (15.6%) > China (6.4%) > India (6.3%) 4th largest stakeholder in ADB
NDB/BRICS Bank
Ø Established on 2014 (Fortaleza Declaration)
Ø Head Quarter: Shanghai (China)
Ø Stake Holders:
o Brazil = Russia = India = China = South Africa = 20% each
Course Enquiry 40
AIIB
Ø Established on 2015
Ø Head Quarter: Beijing (China)
Ø Stake Holders:
Ø China (26.6%) > India (7.6% 2nd Largest Stake holder) > Russia (6%)
9. (Taxation)
Economic Policies
Monetary Policy Fiscal Policy

Ø Formed by RBI. Ø Formed by Government: (GOI &
Ø Components: Banking Sector State Govts.)
Ø Components: Taxation & Budget
So, Taxation is a part of Fiscal Policy.
Public/Govt. Authorities can only impose taxes
GOI State Govt. Local Bodies
PRIs (Panchayati Urbon Local Bodies

Raj Institutions)
Nagar Panchayat Nagar Palika Nagar Nigam
Gram Panchayat Block Panchayat Zila Panchayat
Course Enquiry 41
Tax
Direct Tax Indirect Tax
Tax Pay Tax Pay
Tax Tax
Govt. Govt.
Payer Payer
Burden
Burden of Tax
of Tax
Note:- Min. of Finance
Both are different entities.

Dept. of Revenue
Ex:- Govt.
GST = 500 Rs.

CBDT CBIC Tax Payer
Central Board Central Board Producer

of Direct Tax of Indirect Tax Or
& Customs Company
CBDT is
responsible CBIC is Tax 6000 Rs. Involve in
for all direct responsible Shift Production of
tax affairs. for all indirect Goods/Services
tax affairs.
Whole sale distributer
(Profit = 500 Rs.) Input Cost = 5000 Rs.
Profit = 500 Rs.
6500 Rs.
Tax Shift
Consumer Retailer (Profit = 500 Rs.)

7000 Rs.
Burden of Tax Shift
Tax
Course Enquiry 42
Note: Before 2016, CBIC was named CBEC (Central Board of Excise & Customs).
Types of Direct Tax

v Income Tax:
o Tax on Individual’s personal annual Income.
o TDS – Tax Deduction at Source
o ITR – Income Tax Return
v Corporate Tax:
o Tax on Company’s annual Profit.
─ Input/Operational ─ Corporate Tax

Turnover Gross Profit Net Profit
Cost
Long Term Capital Gain Tax (> 1 year)
v Capital Gain Tax:

Short Term Capital Gain Tax (≤ 1 year)
o Tax on Return on Investment (ROI)
o Ex: Investment in Shares/Bonds/Bank deposit/FD Etc.
v STT (Securities Transaction Tax):
o Tax on Transaction of Securities – Transactions related to DEMAT A/c
o Ex: Shares/Bonds
v MAT (Minimum Alternative Tax):
o Tax on zero tax companies.
v Professional Tax:
o Tax on various professions like – lawyers, Teachers, Doctors, Engineers etc.
o Note: It is the only Direct Tax which is imposed by State Govt. while as other direct taxes are
imposed by income tax department (Govt. of India)
v AMT (Alternate Minimum Tax):
o It is same as MAT, But it is imposed on LLPs (Limited Liability Partnership).
Other Direct Taxes:

v Gift Tax:
o Abolished in 1998.
v Wealth Tax:
o Repealed in 2015.
v Fringe Benefit Tax:
o Abolished in 2009.
Types of Indirect Tax

v GST (Goods & Service Tax)
v Custom Duty on Export-Import
Course Enquiry 43
Goods and Service Tax

Ø Introduced in 2016 (101 constitutional amendment 2016)
Ø One Nation One Indirect Tax
Ø Nature: Consumption & Destination Based Tax
Ø Enforcement Date: 1 July 2017
Ø GST Collection: Government of India (GOI)
Ø Platform for GST-filing:
GST-N (Network)
Private Entity
51% Ownership 49% Ownership

Hold by Private Entity Hold by Govt.
24.5% by 24.5% by
GOI State Govt.
Types of GST
• CGST (Central GST) GOI’s share in GST.
• SGST (State GST) State Govt. share in GST.
• IGST (Integrated GST) on Export – Import & Inter-state Trade
Major Indirect Taxes merged/included in GST

• Central Excise Duty
• Additional Excise Duty
• Service Tax
• Central Sales Tax
• Additional Custom Duty (CVD/ADD)
o CVD: Counter vailing duty
o ADD: Anti-dumping Duty
• Special Custom Duty
• State VAT (Value Added Tax)
• Entry Tax
• Luxury Tax
• Entertainment Tax
• Taxes on Lottery, Botting, Gambling
• Octroi & Purchase Tax
Items excluded from GST:

• Petroleum Products
• Alcohol
• Real Estate/Property
• Electricity
Course Enquiry 44
GST Council
Ø Formed in 2016 (101th Constitutional Amendment 2016)
Ø Highest Decision-Making Body Related to GST Affairs.
Ø Appointed by President of India.
Ø Chairperson: Minister of Finance (Government of India)
Ø Vice-Chairperson: Minister of Finance of Any State.
Ø Member:
o Minister of Finance of all states + Minister of Finance of 3 UTs (Delhi, Puducherry & Jammu & Kashmir)
+ MoS (Finance, Govt. of India)
Ø Voting Rights:
§ 1/3 – Related to Govt. of India
§ 2/3 – Related to State Governments.
Ø Decision Majority: 3/4
Ø GST Slabs: 0%, 5%, 12%, 18%, 28%
10. (Budget)
Income Expenditure
Govt.
Article-112:-
• Govt. of India will propose “Annual financial Statement every year before Parliament.
• There is no use of ‘Budget’ word in the constitution.
Budget
• Is a money bill.
• Article 110 related to money bill.
• Only Lok Sabha has the power on money bill.
Money Bill
• Can only proposed in Lok Sabha
• Lok Sabha can only vote on Money Bill.
• Pre consent of President.
• Discussion on budget in both the house (Lok Sabha, Rajya Sabha)
Course Enquiry 45
Note:-
Ø First time in India, Budget was proposed by James Wilson on 7th April 1860 during the time period of
viceroy Lord canning.
Ø First time in Independent India, Budget was proposed by India’s first finance Minister R.K. Shanmukham
Chetty on 26th Nov. 1947.
Fin. Year 2024-25
Budget 1 April 2024 - 31 March 2025
Ø Proposed on 1 Feb. 2024
2022-23 2023-24 2024-25

(1 April 2022 to (1 April 2023 to (1 April 2024 to
31 March 2023) 31 March 2024) 31 March 2025)
Budget Budget Budget
Income Expenditure Income Expenditure Income Expenditure
Real Data Estimated Data Estimated Data
Ø It means, every year (on 1 Feb.) Govt. Proposes the data [Income/Exp.] of 3 years.
Ø i.e. [year which is going on 2023-24], [year which will start 2024-25], [year which has passed 2022-23]
Ø It shows that Budget is futuristic in Nature. [For example, on 1 Feb. 2024, Govt. of India proposed Budget
of financial Year 2024-25 which is yet to start.]
On 31th Jan. every year Min. of Finance
Launches Economic
Survey (2023-24)
Economic Survey 2023-24

Ø Prepared by chief Economic Advisor (Govt. of India)
Ø It shows current Economic Situation.
Current Economic Situation
Sector which are Sector which are well

underperforming performing
Problems/Reasons Solution for

For underperforming improvement
Course Enquiry 46
Note:- So we can say the provisions of budget mainly based on Economic survey
Ø That means Budget provisions/Allocated of funds mainly depends on the suggestions or
Recommendations of Economic Survey.
A/c of Govt. of India
Consolidated fund Public A/C Contingency fund

of India
• Art. 266 (1) • Art. 266 (2) • Art. 267

• Authority:- Min. of Fin. • Authority:- President of
• Authority:- Parliament
To get permission • This A/C is related to long India
Budget [Fin. Bill] term Borrowings of GoI • Emergency fund of 30,000
has to be passed in • Ex:- PF, LIC, Post office cr. is maintained for
Parliament. deposit, etc. emergency situations.
Budget
Revenue Budget Revenue No Liability Capital Budget

On Income/Exp.
Interest Loan will
will be Liability on be part of
part of Income capital
Revenue Expenditure.
Revenue Revenue
Income/Receipts Expenditure
• Tax Revenue • Subsidies Capital Capital

• Expenditure in welfare Income/Receipts Expenditure
schemes
Direct Taxes Indirect Taxes • Scholarship, widow • Disinvestment ex:- • Investment or
pensions, old age Air India expenditure in
• Non-Tax Revenue
pensions, allowance etc. • Loan Receipts infra.
• Interest Payment • Loan Recovery development
• Grant/Aid to foreign (Ex:- Road,
Interest Profit of Lic fees/ countries Railway, Ports,
Receipts PSUs Challan/Ec. • GoI’s Grant to state Airports, etc.)
Fines/ Govt. • Loan distributors
Punishment • GoI’s employees • Loan Payment
/Minister/offices/
Grant/Aid received from Salary/Parks/Allowances
foreign /Expenditure on Govt.
Machinery Law &
order/Police/Admin in
Expenditure.
• Defence expenditure Course Enquiry 47
•
Type of Deficits of Govt. of India

(1) Budget Deficit = Total Exp. Total Income or Receipts
Revenue Capital Revenue Capital

expenditure expenditure Receipts Receipts
(2) Fiscal Deficit = Total Exp. Total Receipt [Except Net Borrowings of GoI]
Budget Deficit
FD = BD - Net Borrowings of Govt. of India
(3) Primary Deficit = FD - Net Interest Payment by Govt.
PD = FD - Net Interest Payment
(4) Revenue Deficit = Revenue Exp. - Revenue Receipts.
RD = Revenue Exp. - Revenue Receipts
(5) Effective Revenue Deficit = Primary Deficit - GoI’s Grant to state Govts.
ERD = PD - GoI’s Grant to State Govts.
Note:- FRBM Act 2003 [Fiscal Responsibility & Budget mgmt.]
To Promote Fiscal
Discipline/To control the deficit of Govt.
Course Enquiry 48
11. (Types of Inflation)

Inflation
Ø High inflation Rate (>4%) in Economy causes the problem of inflation in Economy.
Deflation
Ø Low inflation Rate (<4%) in Economy causes the problem of deflation in Economy.
Sol.
High inf. Rate Try to reduce the
Both are the Inflation (>4%) inf. Rate upto
problems of RBI Govt. Balance Point (4%)
Economy Low inf. Rate
Deflation With the help of
(>4%)
Economic Policies This process of
solving the problem
of Inflation is called
RBI
With the help “Dis-inflation”
of Economic
Govt. policies
Try to increase the
inflation Rate upto
Balance point (4%)
This process of solving the problem of

Deflation is called “Re-flation”
Note: Inflation & Deflation are the problems and Dis-inflation & Re-flation are the solutions of these problems.
Skew-flation
Ø Price of some Goods/services are Decreasing & at the same time price of some Goods/Services are
increasing.
Price of Seasonal fruits

Ex: Fruits
Price of off-season fruits
During summer, price of woolem clothes
Cloths
During winter, price of woolem clothes
Stag – Flation:- Flation means “Inflation Problem” (Inflation due to Economic Recession/decrease in supply in Economy).
Stagnant
GDP’s Growth Rate /-ve

Deflation/Economic Recession
Unemp./Poverty
Supply of G/S Price of G/S Inflation
Course Enquiry 49
Phillips Curve
Ø It shows the relation b/w unemployment Rate & inflation Rate.
𝟏
Ø Inflation ∝
𝒖𝒏𝒆𝒎𝒑𝒍𝒐𝒚𝒎𝒆𝒏𝒕 𝑹𝒂𝒕𝒆
It Shows-
Higher the inflation Rate
Inflation G/S of Price

Rate
G/S of Demand
Unemp. Rate Money Supply in Economy
Employment Generation
Unemp. Rate
Types of inflation on the Basis of inflation Rate:-

(1) Creeping Inflation
Ø Inflation Rate in b/w 0-3%.
Ø Characteristic of Developed Nations.
(2) Walking Inflation

Ø Characteristic of Developing Nations/LDCs.
(3) Running Inflation

(4) Galloping/Jumping/over Inflation

(5) Hyper Inflation

Ø Inflation Rate >100%.
Headline Inflation
Ø Total/overall inflation in Economy on the basis of whole sale price Index.
Core Inflation
Ø Inflation other than food & fuel inflation.
Core inflation = Total/overall inflation – Food & fuel inflation
Note:- Price of food & fuel is very much volatile in nature . It also depends on external factors.
Course Enquiry 50
Cost push inflation

Ø Inflation due to increase in the cost of production.
Ex:- Land/Labour/Machinery/Tech./Capital/Electricity/Internet etc. (Means or factors of production)
Demand pull inflation

Ø Inflation (Price Hike) due to increase of demand of G/S.
Shrink-flation or Hidden inflation

Ø At a constant/same price
Ø Quality/Quantity of G/S
Ø Ex:- Soap, Biscuits, Chips, etc.
Indicators of Inflation in Economy

(1) CPI – Consumer Price Index
Ø Price Hike of G/S for consumers i.e. MRP.
Ø Base year = 2011-12
Ø Includes both Goods & Services.
Ø Released by NSO (National Statistics office) on monthly basis
(2) WPI (Wholesale Price Index

Ø Base year = 2011-12
Ø It includes only Goods (Total 697 Goods)
Ø Price Hike in whole sale of Goods.
Ø Released by office of Economic Advisor (Min. of Commerce Industry) on monthly basis
Note:- CPI divided into 4 Categories
CPI (Combined = Rural CPI – IW (Industrial Worker) CPI – RL (Rural Labour) CPI – AL (Agri. Lab.)
+ Urban)
Released by labour bureau Released by labour bureau Released by Lab.
Released by NSO Bureau.
(National Statistics
office)
(3) GDP Deflator

(𝑮𝑫𝑷) 𝒂𝒕 𝑴𝑷 𝑵𝒐𝒎𝒊𝒏𝒂𝒍 𝑮𝑫𝑷
GDP deflator = (𝑮𝑫𝑷) 𝒂𝒕 𝑩𝑷 = 𝑹𝒆𝒂𝒍 𝑮𝑫𝑷
MP = Market Price
BP = Base Price
Course Enquiry 51
12. (Unemployment)
Types of unemployment
(1) Rural Unemployment
Disguised unemployment Seasonal unemployment

Ø In Agri. Sector. Ø In Agri. Sector.
Ø Marginal Productivity = 0
No. of labour = No change

in Productivity.
(2) Urban Unemployment
Industrial unemployment Educated unemployment

Ø Skilled/Semi Skilled workers Ø Educated people but no employment
But not employed
(3) Cyclical unemployment

Ø Unemployment causes due to cyclic Nature (ups – downs) of Economy.
GDP of
G.R.
GDP of G.R. GDP of G.R.
(4) Frictional unemployment

Ø Unemployment Causes due to switching the jobs. Or to improve skill dev./diploma/any course.
(5) Under unemployment

Ø A person is employed for some time in a year or for some time unemployed.
(6) Voluntary unemployment

Ø A person is unemployed for some specific Job/salary.
Ø Ex: unemployed student preparing for govt. exams.
Course Enquiry 52
(7) Open unemployment

Ø A person is continuously trying for Job but he does not get employment.
(8) Structural unemployment

Ø Unemployment due to structural problems in Economy.
Ø Ex:- Corruption, Political instability, Laws & order problem etc.
13. (Poverty)
Absolute Poverty Relative Poverty
Ø Very low Income families Ø Rich – Richer – Richest
Ø Characteristic of
developed/Rich Countries.
Basic Needs
Bread Cloth House etc.
Not Fulfilled
Ø Ex:- BPL (Below Poverty

line) families in India.
Ø Characteristic of
developing Nations & LDS
Multidimensional Poverty Index: MPI

Ø Released by UNDP
Ø There are 10 Indicators of MPI
Health Education Living Standard
Child Under Year of Enrollment

Water Sanitation Electricity Cooking House Assets
Mortality Nutrition Schooling Ratio Fuel
Rate
Course Enquiry 53
Committees Related to Measuring Poverty in India

(1) Dr. Y.K. Alagh Committee:-
Ø Formed by planning commission in 1977.
Ø Submitted the report in 1979.
Based on Calorie
Rural India Urban India

2400 cal./day/person 2100 cal./day/person
Any person, Below this level, will be counted in BPL.
(2) Lakdawala Committee:-

Ø Submitted it’s reports in 1993.
(3) Suresh Tendulkar Committee:-

Ø Submitted it’s reports in 2009.
Based on Per day Income

27 Rs./day/person 33 Rs./day/person
(4) C. Rangarajan Committee:-

Ø Formed by Planning commission in 2012.
Ø Submitted it’s report in 2014.
Based on Monthly Income

972 Rs./month/person 1407 Rs./month/person
Course Enquiry 54
(5) Arvind Panagariya Task Force:-

Ø Formed by NITI Aayog in 2015.
14. (Agriculture in India)

Ø Contribution of Agri. Sector in India’s GDP during Independence = ~ 50%
Ø Currently contribution of Agri. Sector in India’s GDP = ~ (15-17%)
Ø Contribution of Agri. Sector in employment structure = ~ (48-49%)
MSP (Minimum Support Price)

Min. Price Govt. Procures Farmer’s Production
At which
Govt. Procures 23 Crops under MSP.
22 Crops Sugar Cane
Ø Min. Price is called as “MSP” Ø It is called as “FRP” (Fair &

Ø 7 cereal crops Remunerative Price)
o Wheat, Paddy, Maize, Bajra,
Ragi, Jowar, Barley
Ø 5 Pulses
o Tur(Arhra), Chana Masur, Urad,
Moong
Ø 7 Oilseeds
Ø Mustard, Soyabeen, Groundnut,
Sunflower, Niger seed,
Safflower, Sesame
Ø 3 Cash Crops
Ø Raw Jute, Cotton, Copra
Note:- MSP is decided by CACP (Commission for Agri. Cost & Price) & announced by CCEA (Cabinet
Committee on Economic Affairs).
Contract Farming Legal contract for

Agri. Production
Company Farmer
Ø Farmer will produce according to the demand of company
Ø All the inputs will be provided by company.
Ø Price of production will be pre-defined & no impact of mkt. Price on the price of production.
Cooperative Farming
Farmers will
Company Group of Farmers form a
cooperative
Cooperative Society Society
Contract farming
Course Enquiry 55
Cooperative Society
Ø Group of Farmers
Ø Problem of small land Holding will solve.
Orgainic Farming
Ø Chemical free farming
Ø Bio-fertilisers & Bio-pesticides are used in place of chemical fertilisers & chemical pesticides.
Ø In 2016, Sikkim became the first orgainic state to adopt orgainic farming.
Green Revolution
Ø Related to Agri./food production
Ø Started in 1966-67
Ø This program is known as HYVS Program. (High yield varity seeds).
In India – M.S. Swaminathan
Ø Father of Green Revolution
Norman E. Borlaug (In world)
Ø Focused on Wheat/paddy Production.
Ø Focused Area:- PB, HR, Western UP, RJ (Shri ganga Nagar, Hanumangarh)
Op. Flood (White Revolution)

Ø Related to Milk Production.
Ø Started in 1970-71
Ø Father of white Revolution in India – Verghese Kurien
Agriculture Revolutions Related Area

1. Blue Revolution Marine/Water Resources
2. Red Revolution Meat & Tomato Production
3. Golden Revolution Horticulture/Honey/Fruits Production
4. Pink Revolution Onion/Pharmaceuticals Production
5. Silver Revolution Eggs/Poultry Production
6. Evergreen Revolution Organic Farming
7. Silver Fibre Revolution Cotton Production
8. Round Revolution Potato Production
9. Rainbow Revolution Related to Production of all Agri. Sector Pro.
10. Green Gold Revolution Bamboo Production
Course Enquiry 56
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RBE (REVOLUTION BY EDUCATION)

Shubham Jain Sir

For SSC Exams Complete Preparation (Download RBE Application)

Complete Economics by Sachin Sir (RBE)

Complete Course Video link:- https://youtu.be/sZc2f6U8IIA

1. (GDP/GNP/ National Income)

or foreigner] with in the domestic Boundary in a financial year is called GDP.

Ø Financial year (1st April - 31st March)

Total/Sum of All Goods Services

Final Monetary Value

Within Indian Domestic Boundary

By Indian Producers By Foreign Producers

Companies Individuals Companies Individuals

(2) China’s GDP Chinese Domestic Boundary will be considered

(3) USA’ GDP USA’s Domestic Boundary will be considered

Ø If we talk about GDP of various Indian States.

MH > TN > GJ > KR > UP

GDP of various States is called as

GSDP (Gross state Domestic Product)

It is an Economic Boundary of any country.

(5) Diplomatic Missions of India in foreign Embassies/Consulates/High commissions

(6) India’s Foreign Assets

If we talk about GDP’s Comparison of Top-5 Countries.

Largest GDP/Eco. 5th Largest

GNP (Gross National Product)

Indian National Producer (Company or Individual)

So, We can Say

It will be counted It will be counted

(2) Google/FB – India

(3) India citizen “Rahul” – Working in UK

It will be counted It will be counted

NNP (Net National Product)

Relation between market price (MP) and factor cost (FC)

(because, GDPMP = GDPFC + Indirect tax – Subsidy)

Nominal GDP = (GDP)MP

Real GDP = (GDP)BP

Ø decide on base year

Per Capita Income

Methods of counting national Income

Ø Pvt. Sector Investment

Micro Economics Macro Economics

Production/ Economic Activities Production/ Economic Activities

Growth Rate of GDP

Low Growth Rate of GDP New industry development (no)

Infra. dev. This problem is called as

This problem is called as

(RBI & Govt.)

Inf. Rate > 4%

Deflation/Eco. Inflation Price of G/S

Optimum Inflation Rate (4%)

There are two types of Problems in Economy:-

Reasons Behind inflation Problem in Economy:-

Inflation (Inflation Rate > 4%)

1. Increase in Demand ( ) 2. Decrease in Supply ( )

6. Tax Rate 7. Subsidy 8. Expenditure In 9. Expenditure In

Optimum Inflation Rate (4%)

1. Decrease in Demand 2. Increase in Supply/Production

6. Tax Rate 7. Subsidy 8. Exp. In welfare 9. Exp. In Infra.

Reasons Behind deflation/Economic Recession Problem in Economy.

GDP’s Growth Rate /-ve

Steps taken by RBI/Govt. to counter deflation/Economic Recession Problem:-

6. Tax Rate 7. Subsidy 8. Exp. In welfare 9. Exp. In Infra.

Inflation Deflation/Eco. Recession

Solution by (Govt. and RBI)