Q

Revised Data of Macro Economics for the examination to be held in June 2014

Chapter - 5 Unit 1 : Nature of Indian Economy

1. Presently the population of India dependent on agriculture is 53%

2. Every third poor person in the world is an Indian.

3. According to the Planning Commission, 29.8 per cent of the population is below poverty line in 2009 -10.

4. The minimum & the maximum age limit of non working (dependent) group is below 15 years & above 64 years i.e. Dependency ratio is nearly 57.5% in India. 5. Indians per capita income in 2011 was $1420.6. The gross domestic savings rate in India in 30.8% in 2011-12. (It was 34% in 2010 11)7. The rate of gross domestic capital formation in India was 35% in 2011-12 and 36.8% in 2010 - 11. 8. According to 66th round of survey by NSSO(National Sample Survey Organisation) , unemployment rate is 6.6 (based on Current Daily Status )9. Human well being is measured by Human Development index (HDI)10. HDI was constructed by United Nation Development Programme (UNDP). 11. Standard of living is measured in terms of real GDP per capita.12. HDI is simple average of three basic indicator namely longetivity, knowledge & standard of living.13. Longevity is measured in terms of life expectancy and knowledge is measured in terms of education. 14. Indias global relative rank as per the latest UNDP report, 2013 on HDI is 136 among 187 countries.15. HDI Index in 2010 is 0.519 and 0.544 in 2012.16. Gini index is used for measuring inequality of income & wealth.17. Gini index of India is 0.368 in 2010. The inequality of incomes in India has increased.18. Net National Product (NNP) at factor cost (Indian National Income) was around Rs.45,72,000 crore (at constant prices) in 2011-12

19. Over a period of Six decades NNP of India has increased by 17 times.20. The per capita income of India in 2011-12 was Rs. 38,037 per annum. 21. The three sectors of India are : Primary sector Agriculture & Related activities, Secondary Sector- manufacturing & construction, etc. Tertiary Sector trade, transport, banking, etc.22. The occupational distribution of working population in Indian of 2009-10 was :

Primary Sector 53.2% Secondary Sector 21.5%, Tertiary Sector 25.3%

23. Contribution of various sectors in the composition of GDP of India. In 2011-12 was Agriculture -14.1%, Industry - 30.2%, Tertiary Sector - 55.7% 24. In the second plan, a high priority was given for the establishment of basic industries. 25. Indian railways is world's fourth largest rail network and covers more than 64,000 kilometers.26. Indian Road Network has become one of the largest in the world aggregating 4.69 million kilometer.27. The installed electricity generating capacity of India in 2011-12 was more than 2,36,000 mega watts.28. Land under irrigation in 2008-09 was 88.4 million hectares. 29. The literacy rate of India in 2011 was 74%30. The number of doctors in 2011 were more than 9.22 lakh.31. The bed population in India is 1.03 per 1000 population.32. RBI was nationalized in 1949.33. Indian economy is a mixed economy.

34. Economic planning has been an integrated part of the Indian Economy.35. The planning in India is only indicative and not compulsive. Chapter - 5

Unit 2 : Role of Different Sectors in India

1. Agriculture contributes 14% of G.D.P at constant price in 2011 - 12.

2. Even today 53% of working population engaged in agriculture.

3. The total share of agriculture in total exports was about 70 per cent.4. In 2011-12 agricultural exports formed about 12 per cent of the national exports.

5. The agro-imports are concerned they constituted less 3 per cent of national imports in 2011-12.

6. Green Revolution was started in 1966 & is also known as Wheat Revolution.

7. Green Revolution stressed on (a) Use of HYV Seeds (b) proper irrigation facilities (c) Extensive use of fertilizers.

8. The adoption of High Yield variety programme (HYVP) led to an increase in production of food grains.

9. HYVP was restricted to wheat, rice, jowar & bajra & maize.

10. The production of Wheat was 3140kg per hectare in 2010-11.11. According to Economic Survey 2011-12, the compound growth rate of food grains production has deteriorated from 2.85 per cent during 1980-81 to 1989-90 to 2.32 during 2000-01 to 2011-12.12. The per capita availability of food grains has improved from about 395 gm in 1951 to 463 gm in 2011.13. The productivity of food grains has improved from 1380 kilogram per hectare in 1990-1991 to 2059 kilogram per hectare in 2011-12.14. The objectives of these land reforms were: (a) Abolition of intermediaries (b) Tenancy Reforms (c) Reorganization of agriculture.

15. Measures taken under the tenancy reforms were: (a) Regulation of rent (b) Security of tenure (c) Conferment of ownership rights on tenants.

16. The Indian Council of Agricultural Research (ICAR) is the apex body for co-ordinating, guiding and managing research and education in agriculture including horticulture, fisheries and animal sciences in the entire country.17. The ICAR has played a pioneering role in ushering Green Revolution and subsequent developments in agriculture in India through its research and technology development that has enabled the country.18. The National Food Security Mission (NFSM) was launched in 2007-08 and aim is to have self sufficiency in different food crops like rice, wheat and pulses19. In order to give special attention to pulses production, an Accelerated Pulses Production Programme (A3P) has been launched as a part of NFSM Pulses.20. Projects like Forecasting Agricultural Output using Space, Agro-meteorology and Land- based Observations (FASAL) and Extended Range Forecasting System (ERFS) have been started to establish a more scientific and reliable basis for forecasting.

21. To enhance food security and to make Indian agriculture more resilient to climate change, National Mission for Sustainable Agriculture (NMSA) was launched in 2011-12.22. During Eleventh Plan, agricultural growth is estimated at a little over 3% against the target of 4%. 23. The poor performance of agricultural sector resulting mainly from deficient and uneven rainfall in the recent years has led to creating inflationary pressure in some primary products and reduction in the potential growth of other sectors by dampening growth.24. Though India is one of the largest producers of most of the agricultural crops but ranks very low in terms of yield.

25. In 1975, the government established Regional Rural Banks (RRBs) to specifically meet the requirements of the farmers and villages.26. Cooperative credit societies were also established to finance rural projects at lower rates of interest.27. The maximum limit of land that a family could hold was 18 acres of wetland of 54 acres of an irrigated land.

28. About 60% of the net sown area is rain fed.

29. 44% of the gross cropped area is covered by HYVP

30. Only 40% of the gross cropped area has irrigation facilities.

31. National Bank for Agricultural and Rural Development (NABARD) set up in 1982, is known as the apex bank for agriculture.32. Introduction of the Farm Credit Package in 2004. As a result of this package the flow of credit to the farm sector has consistenly exceeded the target.

33. Kisan Credit Card scheme was started in 1998 to provide adequate and timely support for the banking system to the farmers for their cultivation needs. A revised and improved Kisan Credit Card Scheme was introduced in 2012.

34. The National Policy for Farmers, 2007 include provisions for assets reforms, water use efficiency, use of technology, inputs and services, good quality seeds, disease free planting material, credit insurance etc

35. To bring about reforms in agricultural marketing, Agricultural Produce Market Committee (APMC) Act is being amended by various states36. Food Corporation of India (FCI) is the nodal agency for procurement, distribution and storage of food grains. It is taking many steps for improving food management in the country.37. The Approach Paper to Twelfth Plan emphasizes the need to enhance our efforts to ensure 4 percent average growth of agriculture in the 12th plan.

38. Industries engage 21.5% of labour force in India.

39. The share of industrial sector in GDP was about 30% in 2011-12.

40. Industrial sector contributes more than two third of national export. Industrial Growth helps the economy to attain self sustaining growth

41. Classification of industries on the basis of end use : (a) Basic Good industries - -minerals, cement, etc. (b) Capital Goods Industries Machinery, equipments, etc (c) Intermediate Goods Industries rubber, plastic, etc. Consumer Goods-watches, cosmetics, etc.

42. The industrial production has grown at a rate of 6.2% over the planning period.

43. The Tenth Plan (2002-2007) overall industrial growth at an average of around 8.7% per annum during this plan has remained well short of the target of 10%.44. The Eleventh Plan aimed at 10 per cent per annum growth in the industrial sector.

45. The industry grew at an annual average rate of about 7.4 per cent as against the target of 10 per cent during this Plan.

46. The programme of industrialisation was started on a massive scale in the Second Plan (1956-61).47. MRTP stands for Monopolies & Restrictive Trade Practices, It is also known as Competition Act,

48. Mahalonobis Model (in the second plan) stressed upon the establishment capital & basic good industries. 49. In the second Plan Public Sector Steel Plants were set up in Bhilai, Rourkela & Durgapur.

50. The growth rate of industrial goods in Eleventh Plan was : (a) Basic Goods- 6.1% (b)Capital Goods-18% (c) Intermediate Goods-5.6% (d) Consumer Goods 9.8%51. FMCG stands for Fast Moving Consumer Goods.

52. Manufacturing sector which was targeted to grow at 12 per cent could grow at only 7.7 during the Eleventh Plan.53. The share of manufacturing sector in Indias GDP is only 15 per cent, compared with 34 per cent in China.54. The government released a National Manufacturing Policy (NMP) in November, 2011.55. Micro Small & Medium enterprises Development Act 2006 has broadly classified the enterprise in those engaged in (i) Manufacturing (ii) Providing services

56. There were 30 million Micro Small & Medium enterprises in the country in 2009-10.

57. Classification of enterprises based on Micro, Small and Medium Enterprises Development (MSMED) Act, 2006-

In case of manufacturing sector:

Investment up to 25 lacs

micro enterprises

25 Lacs - 5 crores small enterprises

5 crores -10 crores medium enterprises.

In case of service sector;

Investment up to 10 lacs

micro units

10acs - 2 crores small units

2 crores - 5 crores medium units.

58. MSMEs contribute about 45% of the gross value of output in the manufacturing sector.59. The MSME sector employed more than 73 million persons in 2010-11.60. MSMEs contributes over 40 per cent of the total exports.61. The average industrial growth rate during 1951 to 2011-12 has been around 6.2 per cent relative to the target of 8 per cent per annum.62. The average under utilization of capacity in the industrial sector is 40% to 50%.

63. In March 2010, number of public sector industries increased to 248 with cumulative investment of about Rs. 6,66,800 crores. Out of 220, 158 earned profits and 62 earned losses in 2010-11.64. The net loss of the loss making enterprises (62 in number) stood at more than about `22,000 crore in 2010-11 compared with `14,600 crore in 2008-09.65. ICOR stands for Incremental Capital Output Ratio.

66. SEZ stands for Special Economic Zones

67. Over the planning period, the share of tertiary or services (at current prices) sector has increased from about one third of GDP in 1950-51 to around 56 per cent in 2011-12.68. In 2009-10, around 25 per cent of working population was dependent on service sector for occupation.

69. Indias share of services exports in the world exports of services increased from about 1 percent in 2000 to 3.3 percent in 2011. Services account for over one third of total exports of India (2011-12).

70. Indian services exports recorded a growth of more than 23 per cent per annum during 2001-11. However, due to uncertainty in the global economy and weak growth in advanced economies, services export showed a lower growth of less than 15 percent in 2011-12.

71. The average growth rate of service sector during the Tenth Plan turned out to be around 9 per cent per annum. The Eleventh Plan aimed at an annual average growth rate of 9.4 per cent for the service sector.72. India has the third largest scientific & technical manpower in the world.

73. Financing, insurance, real estate and business services recorded an average growth of 8% during 2000-07. During 11th Plan there average growth rate was around 11%74. Indias Medicine system Ayurveda, Unani, Nature care

75. IT enabled services such as BPO (business process outsourcing) have been growing rapidly @ 60-70%.

Chapter - 5

Unit 3 : National Income in India

1. National income is the money value of all the final goods and services produced by the residents of a country during a period of one year. The common measure is money.

2. Gross domestic product is the money value of all final goods and services produced in the domestic territory of a country during an accounting year.

3. GDP at current price is estimated on the basis of the prevailing price.

4. GDP at constant price is estimated on the basis of some fixed prices or the price prevailing at a point of time or in some base year.

5. GDP at factor cost is estimated as the sum of net value added by the different producing units and the consumption of fixed capital.

6. GDP at market price includes indirect taxes and excludes the subsidies given by the Government.

7. When depreciation allowance is subtracted from Gross Domestic Product we get net domestic product.

8. Gross National Product is defined as the sum of the Gross Domestic Product and net factor income from abroad.

9. Net National Product is derived by subtracting depreciation allowance from GNP.

10. NNP at factor cost is the volume of commodities and services turned out by the residents of a country during an accounting year, counted without duplication.

11. Personal income is the sum of all income actually received by individuals during a given year.

12. After the deduction of personal taxes from personal income of the individuals, personal disposable income is obtained. (Personal Disposable Income =Consumption + Savings)13. In India, the national income is estimated by using value added method (or product method), income method and expenditure method.

14. The various problems in estimating the national income are presence of non-monetized sector, lack of reliable data, double counting, income from illegal activities, problems of transfer payments etc.

15. Value Added Method is also known as Product Method.

16. The most important problem in calculating national income is of Double Counting.

17. Transfer payments are not included while computing national income

18. GNP at market price - depreciation = NNP at market price.

19. GNP at market price - net income from abroad = GDP at market price.

20. GNP at market price - net indirect taxes = GNP at factor cost.

21. NNP at market price - net income from abroad = NDP at market price.

22. NNP at market price - net indirect taxes = NNP at factor cost.

23. GDP at market price - net indirect taxes = GDP at factor cost.

24. GNP at factor cost - depreciation = NNP at factor cost.

25. NDP at market price - net indirect taxes = NDP at factor cost.

26. NNP = NDP when NFIA =0

27. GDP at factor cost - depreciation = NDP at factor cost.28. Gross national expenditure = Consumption expenditure + net domestic investment + net foreign investment + replacement expenditure 29. Net national expenditure = Consumption expenditure + net domestic investment + net foreign investment. NNE = GNE Replacement Expenditure30. Net domestic expenditure = Consumption expenditure + net domestic investment.31. Growth rate in different period (GDP Growth)

1950-1981 3.2%

1980-2010 6.6%

1991-1992 to 2009-2010 7.3%

32. Indian economy with rate of growth falling to 6.2 per cent and 5 per cent respectively in 2011-12 and 2012-13.33. The real national income of India has increased at an annual average rate of 4.9% during the 60 years of economic planning.

34. Indias per capita net national product during the last 60 years of planning has increased at a rate of 3% per annum.

35. GDP of India at current prices in 2009-10 was 6550271 crores.

36. The real National Income in India has increased at an annual average rate of 4.9% during six decades economic growth.

37. Eleventh Plan kept a target of 9% p.a. growth rate. Expected growth rate of GDP is 7.8%.

38. Per capita income increased at an average rate of 6.3 per cent per annum during the 11th plan.Chapter - 5

Unit 4 : Basic Understanding of Tax System in India

1. A tax is a compulsory contribution from a person to the expenses incurred by the state in common interest of all without reference to specific benefit conferred on any individual.

2. Taxes are generally classified into direct taxes and indirect taxes.

3. Direct taxes means taxes which are not shifted. The incidence and the impact are on the same person. For e.g. income tax.

4. Indirect tax is that where the burden can be shifted to others. The tax payer is not a tax bearer. For e.g. sales tax, custom duty.

5. Direct Taxes are progressive in nature and indirect taxes are regressive or differential in nature.

6. Income tax was introduced in I860, abolished in 1873 and reintroduced in 1886.

7. Corporate tax is levied on the income of registered companies and Corporations.

8. The marginal rate of income tax (i.e., tax for the highest slab) is 30 per cent.9. Agricultural incomes is wholly exempted from Income Tax.

10. Wealth tax was introduced in 1957.

11. Estate duty (levied on total property passing to the heirs on the death of a person) was introduced in 1953 and was abolished in 1985.

12. Gift tax was introduced in 1958 and abolished in 1998 & re-introduced via( Income tax Act) in April 2005.

13. An efficient, effective and equitable direct tax system, the Direct Tax Code (DTC) Bill, 2010 was introduced in Parliament.14. Custom duties are levied on exports and imports.The maximum rate of custom duty is 10%.

15. An excise duty is levied on production and has absolutely no connection with its actual sale.16. Excise duties are mostly levied by the central Government in India and are known as Central Excise duties.17. Import and Excise duties are generally levied on the basis of ad valorem (as a % of the price of the commodity)

18. MODVAT (Modified Value Added Tax) was introduced in 1986-87 and was replaced by CENVAT.

19. CEN VAT (Centralised Value Added Tax) was introduced in 2000-01.

20. Service tax is a form of indirect tax imposed on services. Introduced in the year 1994- 95, service tax network has expanded to cover almost all services except a negative list of services.

21. In India, sales tax was in two forms state sales tax and central sales tax.

22. State sale tax levied on intrastate sales (i.e. tax on transactions within a state) is being replaced by Value Added Tax in all states.

23. Central sales tax is levied on inter-state sales tax..At present, CST Rate is 2%

24. Vat (Value added tax) was introduced in 1999 and implemented in April 2005.

25. The indirect tax regime in India is being replaced by a comprehensive dual Goods and Services Tax (GST)26. Tax revenue forms about 16% of total national income of India in 2011-1227. Tax revenues collected by the centre & state have been more than Rs. 14,60,000 crores in 2011-12.

28. In 2011-12, the most important contributor to tax revenue is corporation tax (36 per cent) followed by excise duties (18.9 per cent), personal income tax (18.6 per cent) and custom duties (17 per cent).29. At present, the ratio of direct taxes to indirect taxes is 41: 59

30. In India in 2006-07, the % of direct taxes in GNP is 9.5%.

31. The service sector accounts for about 56 per cent of GDP, service tax (2011-12) contributes just 11 per cent towards tax revenues and about 1.2 per cent towards GDP.32. The cost of tax collection has increased to more than 7100 crore in 2011-12.

33. Black Money is generated @ 50% of countrys GDP34. Direct tax is progressive but indirect taxes are generally regressive in nature.35. Direct taxes contributed 7% of the GDP in 2011-12.Chapter - 6

Unit 1 : Population.1. In 2011 the population was more than 121 crores.2. Indias population is concerned India ranks second in the world after China.3. India covers about 2.4% of worlds area & less than 1.2 % of the worlds income.

4. India accommodates about 17.5% of the worlds population.5. At present, a little more than one out of every six persons in the world is from India6. Amongst the states and union territories, Uttar Pradesh continues to be the most populous state, followed by Maharashtra.7. Year 1921 is known as the Year of Great Divide for Indias population.

8. According to the provisional figures of Census 2011, the growth rate of population during 2001-2011 decade was 1.64 per cent per annum.9. Amongst the states, Bihar has the highest decadal (2001-11) growth rate of population, while Kerala has the lowest rate.10. West Bengal has the lowest death rate of 6.3 and Orissa has the highest death rate of 9.2 in 2007.11. Bihar is the most densely populated state in the country with 1102 persons living per sq. km. followed by West Bengal with 880.12. Sex ratio is favourable to males in all the States except Kerala. In Kerala, ratio of females to males in 2011 was 1084. Haryana has the lowest female sex ratio of 877 (2011) among states.13. Kerala has the highest life expectancy at birth at 71.4 & Madhya Pradesh has the lowest life expectancy at birth at 58 in 2006.14. Kerala has the lowest birth rate of 14.7(2007) & UP has the highest birth rate 29.5 (2007).15. West Bengal has the lowest death rate of 6.3 & Orissa has the highest rate of 9.2 (2007)

16. Haryana has the lowest female sex ratio of 877 (2011)

17. Total labour force will increase by 45 million in 11th plan.

18. Birth Rate & Death Rate is measured in per thousand was 7.1.19. The growth rate of population became negative in India in 1911-1921.

20. West Bengal is followed by Bihar with 880 persons living per s. km.

21. Density is measured in terms of number of persons living per square kilometer.

22. In 2001, density of population was 325 persons per square kilometer 382 in 2011.

23. Kerela, West Bengal, Bihar & U.P have density higher than the average density.

24. Sex ratio is measured in terms of females per thousand males. Sex ratio in 2011 was 940.25. In Kerela, the sex ratio for females is favorable i.e. 1084 in 2011. Haryana had 877 in 2011.

26. If death rate is high, life expectancy will be low.

27. In 2011 life expectancy rate was 63.5.

28. In India, only 1 /4th of males & 1/ 12th of females are literate in 1951.

29. In India 74% of, the worlds population was literate in 2011. [Males 82.1% & Females 65.5%]

30. Kerela has the highest literacy rate in India i.e. of 92%

31. Causes of rapid growth of population are (a) high birth rate (b) relatively lower death rate (c) immigration32. Literacy rate in 2001 was Males (Urban) S6%, Female (Urban) 73%; Male (Rural) - 71% & Female (Rural) - 46%.

33. Literacy rate in Kerela 92%, Goa-82%, Tamil Nadu 74% and 75% in Maharashtra & Himachal Pradesh 76%.

34. In India, around 63% of the population is in the age group of 15-64 years and 37% of population is below 15 years & above 64 years. This has come to be known as demographic dividend.35. The projected decline in the dependency ratio (ratio of dependents to working age population) from 0.8 in 1991 to 0.59 in 2011.36. NPP stands for National Population Policy which started in 2000.

37. ISM stands for Indian System of Medicines.

38. Infant mortality rate in India is highest for Madhya Pradesh (62) and lowest for Kerala (13).39. Tenth Plan aims to reduce infant mortality rate to 45 per thousand by 2007 and 28 per thousand by 2012.

40. Tenth Plan aims to reduce maternal mortality rate to 2 per thousand live births by 2007 and 1 per thousand live births by 2012.

41. The Eight Plan aimed at complete eradication of illiteracy in the age group of 15-35.

42. Ratio between growth of population and growth of capital formation to maintain existing standard of 1 is 4:143. Family planning was organized in 1966.

44. National population Policy 2000 was adopted to encourage two child norm and stabilizing population 2046 A.D.

45. Population explosion is a transitory phase according to the theory of demographic transition. It occurs in the second stage. India is passing through the II stage or phase of demographic transition.I stage High Birth rate and Death rate

II stage High Birth and Low Death rate

III stage Low Birth and Low Death rate

Chapter - 6

Unit 2 : Poverty1. Poverty which is not related to the income or consumption expenditure or distribution is called Absolute poverty.

2. Poverty which is related to the income or consumption expenditure or distribution is called relative poverty.

3. Absolute Poverty is relevant for less developed countries whereas relative poverty is relevant for develop countries.

4. Gini Index is often used for measuring poverty.

5. In 2004-05 about 37.2% of the people were below poverty line. Percentage of population below poverty line is 41.8% in rural areas and 25.2% in urban areas.

6. The minimum daily consumption of calories in urban areas is 2100 calories and in rural areas is 2400 calories.

7. As per 2005 census, a person having an income of less than Rs 446.68p.m (rural areas) & Rs. 578.80p.m (urban areas) and consuming less than 2400 cal. per day (rural) & 2100 cal. per day (urban) are considered to below poverty line,

8. Poverty lines at all India level as an monthly per capita expenditure (MPCE) of RS 673 for rural area and Rs 860 for urban areas in 2009-10.9. The percentage of people below the poverty line declined from 37.2 per cent in 2004-05 to 29.8 per cent in 2009-10..

10. The Human Development Report (HDR) 2010 measures poverty in terms of a new parameter namely Multidimensional Poverty line (MPI). 11. The MPI shows the share of population which is multi dimensionally poor in terms of living standards, health and education. According to MPI parameter, India has a poverty index of 0.283.The following schemes are operational in India to reduce poverty:12. The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS): During 2012-13 4.39 crores household were provided employment. The MGNREG Act was notified in 2006, aims at enhancing livelihood security of households in rural areas of the country by providing at least 100 days of guaranteed wage employment in a financial year to every household whose adult members.

13. Swaran Jayanti Gram Swarozgar Yojana (SGSY), 1999- aims at bringing the self employed above the poverty line by providing them income generating assets by combining the Integrated Rural Development Programme (IRDP) and allied programmes and Million Wells Scheme (MWS). 14. The SGSY had been restructured as the National Rural Livelihoods Mission (NRLM) and now has been renamed as Aajeevika. The NRLM aims at reducing poverty by enabling poor households to access gainful self-employment and skilled wage employment opportunities.15. Swam Jyanti Shahkari Rozgar Yojna(SJSRY) December, 1997 = Nehru Rozgar Yojna (NRY)+ Urban Basic Services Programme +P Ms Integrated urban Poverty Eradication Programme(PMIUPEP). The scheme which was revamped in 2009, aims to provide gainful employment to the urban unemployed or underemployed poor by encouraging the setting up of self-employment ventures or provision of wage employment. A total of more than 4,00,000 in 2012-13.

Chapter - 6

Unit 3 : Unemployment

1. In India most of the unemployment is of Structural & Cyclical type.

2. About 1 /3rd portion of Indias workforce is disguisedly unemployed.

3. Tenth Plan aims at creating 50 million jobs.

4. Labour Force Participation rate is defined as the number of persons in the labour force per 1000 population.

5. Employment & unemployment can be measured through: (a) Current Daily Status(CDS) (b) Current We Status (CW3) (c) Usual status (US)

6. Usual status gives us the lowest measure of unemployment.7. The current unemployment rate according to the above status are: US -2%, CWS 3.6%, CDS 6.6%8. MTA stands for Mid Term Appraisal.

9. Unemployment problem gained attention after the 5th Plan.

10. According to UPS 40% of the population is belong to labour force.

11. Work Force Participation rate (WFPR) is defined as the number of persons, person days employed per 1000 person/ person days.

12. The latest round of NSSO (66th round) was conducted in 2009 -2010.

13. About 40 per cent of the population was employed according to usual status. The worker population ratio (WPR) was women comprises 48.3% but have 26% share in person employed.14. 8.3% of the labour force is unemployed.

15. Low dependency ratio gives India a comparative cost advantage.

Chapter - 6

Unit 4 : Infrastructure Challenges

1. India ranked 5th largest energy producer contributes about 4% of the worlds total energy production & 4th largest energy consumer consumes about 6% of the worlds total energy consumption.

2. 3% rise in Industrial Production in the world is accompanied by 2% increase in energy consumption.

3. Firewood and Dung Cakes are the most important non commercial traditional source of energy. About 23% of the energy consumed is obtained from non commercial sources.

4. The major users of commercial energy are the industries (37%) Domestic (25%) Agricultural (21%) & Commercial (10%).

5. In 2011-12 the total installed capacity of generating power is 2,36,000 MW. Over 60 years, nearly 85 times increase in the installed capacity by adding 4000 to 5000 MW.

6. OPEC stands for Organization of Petroleum Exporting Countries.

7. POL stands for petrol, oil & lubricants which contributes about 35% of the import bill. Oil import in 2010-11 is worth Rs. 6,00,000 crore.

8. National average of transmission & Distribution losses are 20%.

9. Plant Load Factor measures the operational efficiency of a thermal plant.

10. PLF in 2011-12 is lowest in Eastern Region (62%) and highest in Southern Region (81%).

11. The percentage of PLF (in 2012-13) in various sectors are: SEB-65%; Central Sector-79%; Private sector 79%.

12. Electricity Act was passed in. 2003, and Electricity Amendment Bills was passed in 2007.

13. Partnership in Excellence Programme was launched by Ministry of Power to improve generation of power

14. All India Power Grid is also known as the National Grid being developed to even out supply demand mismatches.

16. Rajiv Gandhi Grameen Vidhyutikaran programme was started in 2005 to provide access to electricity to all areas including villages.

17. Rural Electrification Corporations is the nodal agency for the Scheme provides for free electricity connections to below poverty line (BPL) households.

18. Nine sites with a capacity of 4000 MW each, were identified for the development of Ultra Mega Power Plants(UMPP).

19. Accelerated Power Development and Reforms Programme (APDRP) was initiated in 2002-03 to bring down the Aggregate Technical and Commercial (AT&C) losses.

20. Compact Fluorescent Lamps (CFLs) and Bureau of Energy Efficiency (BEE) are the steps for encourages energy conservation.

21. Asias largest and worlds second largest rail network under a single management.

22. The total route length of railways is 64,600 kilometers. Out of which about 21 thousand kilometers is electrified During 2009-10 it carried more than 8200 million of passengers and about 970 million tonnes of freight traffic. 23. The Railway freight segment accounts for about 70 per cent of revenues and passengers 30 per cent of revenues.

24. Some of the steps taken by the government to improve railways performance are rational price policy, increased wagon load, faster turnaround time, public private partnerships(PPP), double line freight corridor: etc.

25. The Indian road network is one of the largest network in the world.

26. Roads occupy a crucial position in the transportation matrix of India as they carry nearly 60 per cent of freight and 87 per cent of passenger traffic.

27. India had about 4,00,000 kms of total road length out of which 1,57,000 kms was surfaced road. India has a network of 4.69 million kilometer.

28. The National Highways which comprise only about 2 per cent of total length of roads now encompass a road length of 76,800 kms. and carry more than 40 per cent of the total road traffic.29. In order to connect all major cities by four-lane highways, a new scheme called Pradhanmantri Bharat Jodo Pariyojana was started.30. Roads occupy a crucial position in the transportation matrix of India as they carry nearly 60 per cent of freight and more than 80 per cent of passenger traffic.31. Undertaking the National Highways Development Project (NHDP) which involves developing Golden Quadrilateral (Mumbai, Delhi, Chennai and Kolkata)

32. India has about 14500 km of navigable waterways which comprise rivers, canals, backwaters creeks and etc. About 50 million tonnes of cargo is being annually moved by inland water transport.

33. India has a long coastline of 7,517 kms, 12 major ports and 200 minor ports and a vast hinterland.

34. Coastal Shipping is the cheapest mode of transport for carrying bulk goods like iron and steel for long distance.

35. Almost 95 per cent of Indias global merchandise trade is carried through the sea route.

36. The fleet at the beginning of March 2011 was 1071 vessels (1 per cent of world fleet).

37. India ranks 20th in the worlds shipping tonnage.

38. The total traffic carried by the major ports was about 560 million tonnes during 2011-12.

39. The 12 major ports carry about 64% of the total traffic, with Kandla as the top traffic handler in each of the last 5 years.

40. Air Transport is the preferred mode of transport especially for long distance travel, business travel, accessing difficult terrains and for transporting high value and perishable commodities.

41. In the civil aviation sector, there are three parts operational, infrastructural and developmental.

42. There are 10 scheduled passenger operators (three in public sector - Air India Ltd., Air India Charters Ltd. and Air Lines Allied services and seven in private sector)43. Airport Authority of India (AAI) is the main organization managing 125 airports across the country.44. The Airport Economic Regulatory Authority (AERA) was established in the Eleventh Plan to safeguard the interests of users and service providers at Indian airports.45. India has become the ninth largest civil aviation market in the world46. Domestic Air services are provided by Indian Airlines Ltd and International Air Services are provided by Air India Ltd. Both the company were amalgamated with National Aviation Company Ltd. With effect from November 2010, the name of National Aviation Company Ltd has been changed to Air India Ltd.

47. Private Sector market share in the domestic traffic during 2012 reached 82 per cent.

48. Delhi, Mumbai, Kolkata, Chennai & Thiruvanandpuram have International airports.

49. Green Field airports of international standards are constructed at Hyderabad and Bangalore.

50. Domestic and international traffic grew by 20 per cent and 16 per cent respectively in the 11 plan.

51. It is estimated that international and domestic passengers would increase by 12 and 8 percent respectively in the 12th plan. International and domestic cargo traffic is expected to grow at the rate 12 and 10percent respectively in the 12th Plan. 52. GPS-aided GEO augmented Navigation (GAGAN) project is being implemented for seamless navigation of civil aircrafts.

53. Indian postal network is the largest network in the world. Out of a total of 1.55 lakhs post offices in India, 90% are in rural area.

54. On an average one post office serves 7814 person & 21.23 sq. km area55. With a view to improve the speed and volume of transactions, a range of e-enabled services such as electronic money order (eMO), e-payment and Instant Money Order (IMO) have been started.

56. Automatic mail processing centers (AMPC) have been set up at various places for faster processing of mails.57. The Department of Posts has launched a pilot project Project Arrow with the aim of providing fast and reliable postal services to the consumers.

58. E-post services were started in 2001 in some states. Under e-bill post, customers are able to pay multiple utility bills at post office counters.59. The 12th plan aims at expansion of post office network, setting up of Post Bank of India, modernisation of post offices to facilitate quicker postal services and contribute more towards financial inclusion.60. Indias telephone network is the second largest in the world (after China) with a tele density (number of phones per 100 persons) of 76.75 per cent. While tele density in rural areas is 40.6 per cent, the urban tele density shot up to 159 per cent in October, 2012.61. The growth of telecommunications has gained momentum after Independences and by October 2012 India had more than 935 million connections and more than 5.8 lakh i.e 98% villages were connected using a village public telephone (VPT).

62. Indias telephone network is the second largest in the world with a Tele density of 76.86 % While Tele density in rural areas is 37.5%, the urban Tele density shot up to 167.4% in November, 2010.

63. The two PSUs in the telecom sector - Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) have been losing their market shares from 98.65% in 2001-02 to 14% in Dec 11 in fixed telephony.

64. The internet connections increased from 0.01 million in 1995 to around 23 million in 2011 and broadband subscribers have increased from 0.49 lakh in December 2004 to more than 15 million in October, 2012.

65. Regulatory framework and functions are carried out by Telecom Regulatory Authority of India (TRAI) and now the National Internet Exchange of India (NIXI) has been set up to ensure that internet traffic originated and destined for India, is routed within India.

66. New developments in the field of telecommunications includes, ushering of third generation (4G)/(3G) telecom services, mobile number portability (MNP), manufacturing of complete range of wireline telecom equipments using state of art technology in India.

67. Foreign Direct Investment ceiling has been raised to 74% from 49% earlier.

68. National Telecom Policy (NTP) was announced in 2012.69. Twelfth Plan aims at Provision of 1,200 million connections by 2017. Mobile access to all villages and increase rural tele - density to 70 per cent by 2017. Broadband connection of 175 million by 2017. Commissioning of National Optical Fibre Network (NOFN) Making India a hub for telecom equipment. Provide preferential market access for indigenously manufactured products. To increase domestic manufactured products in telecom network to the extent of 60 per cent with value addition of 45 per cent by 2017. Adoption of green policy in Telecom and incentivize use of renewable energy sources.70. For good health, two things are essential: (1) balanced and nutritional diet and (2) medical care.

71. The National Rural Health Mission was started in 2005 to provide accessible, affordable and quality health services to rural areas.

72. Accredited Social Health Activists (ASHAs) have been selected and trained in health care for various villages.

73. Janani Suraksha Yojana was started to bring down maternal mortality rate in India and under the scheme nearly increase 90 lakhs to 109 lakhs women have been covered so far.

74. Pradhan Mantri Swasthiya Yojana has been launched with the objectives of correcting regional imbalances in the availability of reliable health care services in the country.

75. Janani Shishu Karyakaram (JSSK) is a new initiative launched in 2011 for mother and child care.76. National Vector borne Disease control Programme is being implemented for prevention and control of vector borne diseases such as malaria, filarsis, kala-azar, dengue, etc.77. Rogi Kalyan Samitis, Village Health and Sanitation Committees Mobile Medical Units, AYUSH services and many other schemes for improving the health services in India.

78. The 12th Plan emphasizes the need to have a Universal Health Coverage (UHC) for all in the country.79. UHC broadly means ensuring equitable access to affordable and quality health services for all Indian citizens in any part of the country, regardless of income level, social status, gender, caste or religion.80. Education plays an important role in the overall development of a human being and a society.

81. Stress on imparting Elementary Education has been given in our Constitution which says education should be free for children below 14 years of age.

82. India was the one of the largest education systems in the world. 84% of rural habitation in India have a primary school located within a distance of 1 kilometre.

83. NPE stands for National Policy on Education. It was made in 1986& further modified in 1992. NPE had set a goal of expenditure on education at 6 per cent of the GDP. As against this target, the actual expenditure of central and state governments was 4 per cent of GDP in 2011-12.

84. Right of Children to Free and Compulsory Education Act (RTE Act) 2009, has made free education for all children between the age of 6 and 14 years, a fundamental right.

85. GER stands for Gross Enrollment Ratio. The GER has increased to 115 in 2011. 86. Indias educational inequality, measured in terms of the Gini co-efficient for number of years of education, has decreased from 0.71 in 1983 to 0.49 in 2010, indicating a large reduction in inequality.87. The main vehicle for providing elementary education to all children is Sarva Shiksha Abhiyan(SSA) launched in 2001-02. It aimed at having all children in school by 2005 and universal retention by 2010.

88. National Programme for Education of Girls at Elementary Level (NPEGEL) is an important component of SSA. This programme concentrates on education of girl child.

89. Another important component of SSA is the Education Guarantee Scheme and Alternative and Innovative Education (EGS + AIE). This is specially designed to provide access to elementary education to children in school-less habitations and out of school children.

90. Mid-day meal scheme, Kasturba Gandhi Balika Vidyalaya (KGBV), Parambhik Shiksha Kosh (PSK) are other schemes for encouraging people for elementary education.

91. Secondary education prepares students in the age group of 14-18 years for entry into higher education and employment.

92. In order to enhance access to secondary education and improve its quality, Rashtriya Madhyamik Shiksha Abhiyan was launched in 2009. It envisages raising the enrolment at secondary stage from 52.26 per cent in 2005 to 75 per cent within five years.

93. The National Literacy Mission (NLM) was launched in 1998 as a Technology Mission for Adult education and aims to achieve literacy of 75% by 2007.

94. Total Literacy Campaign is the principle strategy of NLM and priority for the promotion of female literacy.

95. NLM was recast into Saakshar Bharat(SB) in 2009. SB as a flagship scheme of adult education would be continued in Twelfth Plan as well.96. During the Twelfth Plan, Saakshar Bharat will give special focus on young adults and Out of School adolescents (1519 years). SB shall strive to raise the literacy rate to 80 per cent and reduce the gender gap to less than 10 per cent.Chapter - 6

Unit 5 : Inflation

1. Inflation refers to a persistent upward movement in the general price level. It results in a decline of the purchasing power.

2. According to most economists inflation does not occur until price increase averages less than 5% per year for a sustained period.3. There are 3 types of inflation (a) Demand pull inflation (b) Cost push inflation (c) Stagflation

4. When demand for goods and services is more than their supply, their prices rise. Such price rise is called demand pull inflation.

5. Inflation occurring because of increased money expenditure is called Demand pull inflation.

6. Cost push inflation refers to a situation where prices persistently raise because of growing factor costs.7. Cost push inflation may result in an inflationary spiral.

8. The combined phenomena of demand pull inflation & cost push inflation is called stagflation.

9. During 1991, Stagflation in India has been interpreted to mean that the economy is growing slowly or stagnating (i.e. GNP is either increasing slowly or remaining constant or even declining) and at the same time experiencing a high rate of inflation.

10. Deflation is a state in which the prices are falling and thus the purchasing power of money is increasing. Deflation is just the opposite of inflation.

11. The Wholesale Price Index (WPI) is the price of a representative basket of wholesale goods and focus on the price of goods in the wholesale market.12. WPI measures headline inflation i.e. it includes the entire set of commodities and does not include services and non-tradable commodities.13. A consumer price index (CPI) measures changes in the price level of consumer goods and services purchased by households. It reflects the cost of living for a homogeneous group of consumers.14. CPI measures changes in the price level of goods purchased by the ultimate consumers, it shows the real inflationary pressure on consumers and is, thus a more realistic measure than WPI.15. There are 4 CPI indices in India. These are CPI for industrial workers, CPI for agricultural labour, CPI for rural labour and CPI for urban non-manual employees.16. The year 1966-67 has marked the maximum inflation at 14%17. A new Wholesale Price Index (WPI) series with 2004-05 base year has more items and is more representative of the prices prevailing in the wholesale market was released in 2010. According to the new series, the ten year average of headline WPI inflation was around 5.3 per cent from 2000-2010.

18. In the current year 2010-11 9.6% and 2011 -12 9.1%19. The Central Statistics Office (CSO) has come out with a new series on Consumer Price Index (CPI) to reflect the actual movement of prices at the micro-level.

20. Consumer Price Index combined for urban and rural was 7.65%, CPI (urban) was 7.38% and CPI rural was 8.25% in January 2012.21. Average headline inflation moderated to 7.55 in 2012.22. Increase in public expenditure, deficit financing, and rapid growth of population can be mentioned as demand factors which have led to inflationary price rise in India.

23. Erratic agricultural growth, agriculture price policy, inadequate rise in industrial production and upward revision of administered prices etc. can be mentioned as supply factors which have led to inflationary price rise in India.

24. Public expenditure has been increased to 28% in 2012- 13.

25. Approximate 40% of the government expenditure in India is on non developmental activities.

26. Two ways of deficit financing are (a) Borrowings from bank (b) printing more currency.

27. Inflation can be checked with the use of monetary measures (quantitative and qualitative measures), fiscal measures (tax, expenditure and debt) and investment control.

Chapter - 6

Unit 6 : Budget and Fiscal Deficit in India

1. Every year the Government of India prepares budget which shows the expected receipts and expenditure of the government in the coming financial year.

2. If receipt are equal to the expenditure the budget is balanced.

3. If receipt are higher than the expenditure the budget is said to be surplus.

4. If receipts are lower than the expenditure, the budget is said to be deficit one.

5. Budget deficit is thus the difference between total receipts and total expenditure.

6. Fiscal deficit is the sum of budget deficit plus borrowings and other liabilities.

7. Fiscal deficit is the difference between total expenditure and total revenue receipts and capital receipts but excluding borrowings and other liabilities.8. Budget deficit does not show the true picture of government liabilities.9. Budgets now show fiscal deficits to show the overall shortfalls in the public revenue.

10. The practice of RBI lending to government through ad- hoc treasury bills was given up in 1997.

11. The government now taps 91 days treasury bills from the market and shows it as part of the capital receipts under the headingborrowings and other liabilities.

12. Fiscal deficit is a more comprehensive measure of the imbalances. It focuses on/measures the total resource gap and as such fully reflects the impact of the fiscal operations of the indebtedness of government.13. FRBM stands for fiscal responsibility & budget management.

14. FRBM bill was passed in 2000 & FRBM Act was passed in 2003.

15. FRBM Act aims at reducing gross fiscal deficit by 0.5% of GDP in each financial year.

16. In the year 2007-08 the fiscal deficit was 2.5 per cent which increased to 6.5 percent in 2009-10 and 5.7 per cent in 2011-12.

Chapter - 6

Unit 7 : Balance of Payments

1. Balance of payment (BOP) refers to the balance of all economic transactions between two countries whereas Balance of Trade refers to the balance of export & imports of goods between two countries. BOP is regarded as the statistical statement of any country.

2. Balance of payments = Balance of current account + Balance of capital account.

3. Balance of current account = Balance of Trade + Balance of services + Balance of Unrequired transfers. It can be positive, negative or Zero.

4. Balance of payments on capital account includes balance of private direct investments, private portfolio investments and government loans to foreign governments.

5. India experienced surplus in the BOP in the fifth plan.

6. The year 2001-2004 witnessed the surplus in the current account.

7. Indias exports growth decelerated in 2011-12 to 21 per cent and Imports recorded a growth of 32 per cent in 2011-12.8. Moderate Exports growth coupled with high import growth led to the highest ever trade deficit in India resulting in a high current account deficit of 4.2 per cent of GDP.9. Current account deficit as percentage of GDP in 2010-11 was almost the same at 2.8 as in 2009-10.10. In 2011-12, the net FDI recovered and reached the level of US $22 billion.11. In 2009-10, Asia & ASEAN continued to be the major source of Indias imports accounting for nearly 60%.

12. The UAE continued to be the top most destination of Indias export in 2009-10 with an exports share of 13.4 per cent. The USA with 11.6 per cent share and China with 6.5 per cent share occupied respectively second and third places in Indias Exports.

13. Foreign exchange reserves increased to US $ 252 billion at the end of March 2009.

14. Indias foreign exchange reserves comprise foreign exchange assets (FCA), gold, special drawing rights (SDRs) and reserve tranche position (RTP) in the International Monetary Fund (IMF).15. The Special Drawing Rights (SDRs) were created in 1969 by the IMF, to supplement a shortfall of preferred foreign exchange reserve assets, namely gold and the US dollar.16. The SDR today is redefined as a basket of currencies, consisting of the euro, Japanese yen, pound sterling, and U.S. dollar.17. The primary means of financing the International Monetary Fund is through members quotas. Each member of the IMF is assigned a quota, part of which is payable in SDRs or specified usable currencies and part in the members own currency. 18. The difference between a members quota and the IMFs holdings of its currency is a countrys Reserve Tranche Position (RTP). RTP is accounted among a countrys foreign-exchange reserves.19. Asia and ASEAN (Association of South East Asian Nations) have become Indias major trade partners and accounts nearly 60 per cent of Indias exports and imports.

20. Indias foreign exchange reserves declined to U.S. $ 294 billion at end March 2012.Chapter - 6

Unit 8 : External Debts

1. Forms of external assistance are grants & loan.

2. Grants do not involve any repayment obligation.

3. Loan carries an obligation to pay interest and the principal.4. About 90% of external assistance received by India has been in the form of loans.

5. Amount of external debt in March, 2012 stood at more than Rs. 17,50,000 crores.

6. Indias external debt was 20 % of GDP in March 2011.

7. Concession on loans is @ 25% and total concessional loan is 13% of total loans.

8. According to the World Bank, India ranks 4th among the top 15 debtors of the country.

9. About 16.5% of GDP is constituted by exports of goods. (2011 - 12)

10. Debt service ratio i.e. the ratio of gross debt service payments (principal and interest) to external current receipts was 6% in 2011-12.

Chapter - 7Unit 1 : Economic Reforms in India

1. The available foreign exchange reserves were sufficient to finance for 3 weeks in 1991.

2. National Debt constituted 60 percent of the GNP in 1991.3. The wholesale prices increased at an annual average rate of 12 percent in 1991.4. The sectors in which economic reforms were introduced were: (a) Industrial sector (b) Financing sector (c) External Sector (d) Taxation.

5. At present, there are 6 industries for which licensing compulsory are 1) Alcoholic drinks, 2) Cigarettes, 3) Defense Equipment, 4) Industrial Explosives, 5) Hazardous Chemicals and 6) Drugs and Pharmaceuticals.

6. At present, only three industries are reserved for public sector. These are (a) atomic energy (b) atomic energy substances (c) Rail Transport.

7. In 2001, the defence production was dereserved & opened to private participation and maximum limit for foreign investment is 26% is being allowed.

8. According to the New Industrial policy, 1991, the mandatory convertibility clause in no longer applicable for term loans, from the financial institutions for new projects.

9. DGTD stands for Director General of Trade Development.10. In 2002, the Competition Act, 2002 was enacted to replace MRTP(Monopolistic and Restrictive Trade Practice) Act, 1969. The Act was amended once in 2007 and again in 2009.11. Competition Commission of India was established to prevent activities that have an adverse impact on competition in India.12. Financial sector reforms mainly relate to three categories as (a) banking sector reforms (b) capital reforms (c) Insurance sector reforms.

13. CRR was gradually lowered from its peak at 15 per cent during pre-reforms year to 4 per cent in July 2013.14. SLR was reduced from its peak of 38.5% during 1990-1992 to 23 per cent in July 2013.15. Bank Rate was reduced from 8 per cent to 6 per cent in April, 2003. At present (July, 2013, it is 10.25 per cent)16. With effect from April 2001, PLR (Prime Lending Rates) has been converted into a benchmark rate for banks rather than treating it as the minimum rate and not set by the RBI.

17. Rate of interest on saving deposits of commercial banks was reduced from 4.5 per cent in 1980s to 4 per cent 18. Basel III (introduced in 2013) is supposed to strengthen bank capital requirements by increasing bank liquidity and decreasing bank leverage.19. The Basel II framework, which lays down norms to be followed by banks to ensure financial stability has been operationalised by banks since 2008.20. Devaluation means lowering the external value of the countrys currency undertaken by the Government.21. The rupee was devalued twice in July, 1991 amounting to a cumulative devaluation of about 19 per cent.22. The RBI used to control the foreign exchange in accordance with the Foreign Exchange Regulation Act, 197323. Foreign investment may take the form of direct investment or portfolio investment.24. 100 per cent FDI is now allowed in Drugs and pharmaceuticals, hotels and tourism, courier services, oil refining, mass rapid transport system, airports, business to business e- commerce, special economic zones industries, electronic mail and voice mail, advertising film sector, tea and certain telecom industries and internet services providers, etc .25. 100 per cent FDI is now allowed (up to 49 per cent through automatic route, above that after getting Foreign Investment Promotion Board (FIPB) permission in Asset reconstruction companies, single brand retail trading, and basic and cellular services26. 74 per cent FDI is allowed in private sector banking (up to 49 per cent through automatic route, above that after getting FIPB permission)27. FDI ceiling was increased from 49% to 74% in Telecom sector in certain services, service providers like Direct to Home (DTH) in broadcasting sector and credit Information companies.28. 51 per cent FDI is now allowed in multi-brand retail29. 49 per cent in the domestic carriers (by foreign airlines)30. 26 per cent FDI is allowed in defence production, insurance, and print media.31. FDI is prohibited in certain sectors as retail trading, atomic energy, lottery business, gambling and betting, business of chit fund, Nidhi companies, trading in transferable development rights and activities/sectors not opened to private sector investment.

32. The process of liberalisation was given a push with the announcement of EXIM Policy in 1992. The policy allowed free trade of all items except a negative list of imports and exports.33. Quantitative Restrictions (QRs) were removed on 714 items in EXIM Policy of 2000-01 and on remaining 715 items in EXIM Policy of 2001-02.34. India has lowered its average tariff rate from 125 per cent in 1990-91 to 10 per cent in 2007 0835. A special scheme known as Export Promotion Capital Goods (EPCG) scheme originally introduced in 1990 was liberalised in April 1992 to encourage imports of capital goods.36. Foreign Trade Policy of India was made restrictive from Second Plan.

37. EOU Export Oriented Units.

38. EPZ - Export Processing Zones

39. EHTP- Export & Hardware Technology Park STP- Software Technology Park.

40. India is moving towards fuller capital account convertibility in a phased manner.

41. Export Processing Zone model for promoting exports was not much a successful instrument for export promotion. Therefore, a new policy called Special Economic Zones (SEZs) Policy was announced in 2000. 42. SEZ Act, supported by SEZ Rules, came into effect in 2006.

43. Foreign Exchange Management Act (FEMA), 2000 was enacted to replace Foreign Exchange Regulation Act (FERA), 1973.44. FEMA sets out its objective as facilitating external trade and payment and promoting the orderly development and maintenance of foreign exchange market in India.45. Vishesh Krishi Upaj Yojana was started to promote agricultural exports.

46. Duty Free Export Credit (DFEC) scheme was revamped and recast into the Served from India scheme to accelerate growth in exports of services.

47. FTP stands for Foreign Trade Policy. It was started in 2004-09.

48. The Foreign Trade policy of 2009-14 aims at reviving exports and to double Indias share in global trade by 2020.

49. Cash Compensatory Scheme, was abolished in July, 1991

50. EXIM Scrip Scheme was replaced by Dual Exchange Rate Scheme.

51. Fiscal Policy means policy relating to public revenue and public expenditure and allied matters thereof.

52. In August 1991, the Government of India constituted a Tax Reforms Committee (TRC) to recommend a comprehensive reform of both direct and indirect tax laws.

53. GST stands for Goods and Service Tax and DTC for Direct Tax Code.

54. Government of India constituted the Tax Reform Committee in August 1991.

55. The Tax rate for Domestic Companies- 30%, Foreign Companies 40% & 50% on royalty.

56. Dematerialization of TDS certificate will take place from April,2008.

57. Industrial licensing was abolished for all projects except for 18 industries related to strategic and security concerns.

Chapter - 7

Unit 2 : Liberlisation, Privatisation and Disinvestment

1. Essential pre-requisites for privatization are Liberalization & Deregulation

2. An exchequer is a person who collects taxes.

3. Liberalization refers to relaxing of previous government restrictions.

4. Privatization refers to the transfer of assets, functions, services from public to private ownership.

5. Privatisation can be achieved in many ways-franchising, leasing, contracting and divesture.6. Divesture through equity sale is the most significant, since ownership is transferred to public/corporate entities.7. Disinvestments means disposal of public sector units equity in the market or selling of a public investment to private entrepreneur.

8. Disinvestments is a method of privatization.9. Capital markets should be sufficiently developed to be able to absorb the disinvested public sector shares.

10. Privatisation in India generally is in the form of disinvestment of equity.11. Minority Disinvestment: The government retains a majority stake in the company, typically greater than 51%, thus ensuring management control.12. Examples of minority sales in India are Andrew Yule & Co. Ltd., CMC Ltd., Power Grid Corp. of India Ltd., Rural Electrification Corp. Ltd., National Thermal Power Corporation (NTPC) Ltd., National Hydroelectric Power (NHPC) Ltd. etc.13. Majority Disinvestment: The government retains a minority stake in the company i.e. it sells off a majority stake.

14. Examples of Majority disinvestment: Madras Refineries Limited (MRL) and Bongaigaon Refinery and Petrochemicals (BRPL) to Indian Oil Corporation (IOC), and Kochi Refinery Limited (KRL) to Bharat Petroleum Corporation (BPCL). Alternatively, these can be private entities, like the sale of Modern Foods to Hindustan Lever, Bharat Almunium Company (BALCO) to Sterlite, Computer Maintenance Corporation (CMC) to Tata Consultancy Services (TCS) etc.15. Complete privatisation is a form of majority disinvestment wherein 100% control of the company is passed on to a buyer.16. Examples of Complete privatisation include 18 hotel properties of India Tourism Development Corporation (ITDC) and 3 hotel properties of Hotel Corporation of India Limited (HCI).17. A close perusal of the 39 PSUs which had been chosen for disinvestment/privatisation revealed out of them only 3 PSUs posted losses but in all other 36 cases (e.g. BPCL, EIL, GAIL, HMT, BEL, etc.) the divested PSUs had been earning profits.18. The process of disinvestment has been referred privatisation of the profits of the profit-making enterprises and the nationalisation of losses of the loss-making enterprises.Chapter - 7

Unit 3 : Globalisation

1. Globalization means integrating domestic economy with worlds economy.2. Globalisation got the real thrust from the new economic policy of 1991 and it was further pushed forward by the coming up of the World Trade Organisation (WTO).3. Globalisation would eventually mean being able to manufacture in the most cost effective way anywhere in the world.4. The most important measure for integrating the economy of any country is to make its currency fully convertible i.e., allow it to determine its own exchange rate in the international market without any official intervention.5. Current account convertibility means freedom to buy or sell foreign exchange for the following transactions (i) all payments due in connection with foreign trade, other current account business, including services and normal short term banking and credit facilities,

(ii) payment due as interest on loans and as net income from other investments (iii) payments of moderate amount of amortisation of loans or for depreciation of direct investment and (iv) moderate remittances for family living expenses.6. India achieved full convertibility in current A/C in August, 1993-947. Capital Account Convertibility (CAC), any Indian or Indian company is entitled to move freely from the Rupee to another currency, to convert Indian financial assets into foreign financial assets and back, at an exchange rate fixed by the foreign exchange market and not by RBI.8. Tarapore Committee was set up which recommended full CAC by the year 2000.9. A five year plan frame work (2007-2011) has been given for full convertibility of capital account.10. Agreement on Trade Related Intellectual Property Rights (TRIPs), the Patents (Amendments) Act, 1999, was passed in 1999 to provide for Exclusive Marketing Rights (EMRs).11. Indias share in the world exports is 1.6 per cent in 2012.12. Indias export growth rate of 33.8 per cent in 2011 is one of the highest in the world.13. Exports now finance more than 80 per cent of imports of goods and services.14. In 2011-12 the current account deficit reached () 4.2 of GDP.15. International Monetary fund was organized in 1946 & commenced its operation in March, 1947.

16. The Fund is an autonomous organisation affiliated to the UNO.(United Nation Organization).

17. IMF, a short term credit institution, has 188 countries as its members18. The following are major functions of the IMF: It functions as a short-term credit institution. It provides machinery for the orderly adjustment of exchange rates. It is a reservoir of the currencies of all the member nations who can borrow the currency of other nations. It is a sort of lending institution in foreign exchange. However, it grants loans for financing current transactions only and not capital transactions.

It also provides machinery for altering sometimes the par value of currency of a member country. It also provides machinery for international consultations. It monitors economic and financial developments of its members and provides policy advice aimed at crisis preventions.

19. World Bank is also called International Bank for Reconstruction & Development. (IBRD). It was formed 1945 in Bretten Woods & has 188 countries as its members.

20. World Bank consist of: (a) International Development Association (IDA) (b) International Finance Corporation (IFC) (c) Multilateral Investment Guarantee .Agency (MIGA) (d) International Centre for settieme of Investment Disputes (ICSID)

21. IDA is also called soft lending arm of the World Bank since it gives interest free loans to the poor countries.22. IFC provides investments and advisory services to build the private sector in developing countries.23. MIGA helps encourage foreign investment in developing countries by providing guarantees to foreign investors against loss caused by non commercial risks.24. ICSID was founded in 1966. It is an autonomous body which facilitates the settlement of disputes between foreign investors and their host countries.25. World Trade Organization gave a real push to Globalization.

26. WTO came into existence on 1st, Januaryl995. It has 159 countries as its members.27. The WTO is a powerful body which broadly aims at making the whole world a big village where there is free flow of goods and services and where there are no barriers to trade.28. PTA- Plurilateral Trade Agreements

29. MTA-Multi lateral Trade Agreements

30. GATT- General Agreement on Trade & Tariff.

31. The WTO handles trade disputes.32. The WTO monitors national trade policies.33. The three economic pillars of economic dimensions are IMF, World Bank, WTO.

34. The predecessor of WTO is GATT.

35. India is a member of WTO since April, 2001.

Chapter - 8

Unit 1 : Money1. Money being a permanent abode of purchasing power holds command over goods and services all the times-present and future.

2. Any thing which performed the following three functions (i) served as medium of exchange (ii) served as a common measure of value and (iii) served as a store of values, was termed as money.

3. While clustering financial assets as money they have laid down certain criteria: (i) stability of the demand function, (ii) high degree of substitutability, and (iii) feasibility of measuring statistical variations in real economic factors influenced by the monetary policy.

4. The crucial function of money is that it serves as a store of value.

5. In 1979, the RBI classified money stock into 4 categories as follows:

M1 = Currency with public i.e. coins and currency notes +Demand deposits of the public known as narrow money.

M2 = M1 + Post Office saving deposits.

M3 = M2 + Time deposits of the public with banks called broad money.

M4 = M3 + Total post office deposits.6. The basic distinction between narrow money (M1) and broad money (M3) is in the treatment of time deposits with banks.7. Narrow money excludes time deposits of the public with the banking system while broad money includes it.8. The third RBI working group (1998) redefined its parameters for measuring money supply and introduced new monetary aggregates (NM).

NM1 = Currency + Demand deposits + Other deposits with RBI

NM2 = NM1+ Time liabilities portion of saving deposits with banks + Certificate of deposit issued by bank+ Tern, deposits maturing within a year excluding FCNR(B) Deposits.

NM3 = NM2 + Term deposits with banks with maturity over one year + call/ term borrowings of the banking system.9. NM4 has been excluded from the scheme of monetary aggregate. Liquidity aggregates L1, L2, L3 have been introduced.10. FCNR(B) Account stands for Foreign Currency Non Resident Bank depositsChapter - 8

Unit 2 : Commercial Banks1. The banking system has capacity to add to the total supply of money by means of credit creation.

2. Banks play a very useful and dynamic role in the economic life of every modern state.

3. Deposits constitute the main resources of a bank.

4. Deposits which are withdrawable on demand are called demand or current deposits, others are called time deposits.

5. Deposits withdrawable after the expiry of an agreed period are known as fixed deposits.

6. The interest rate is highest for fixed deposits and lowest or even NIL for current deposits.

7. Important tools of modern banking are Automatic Telling Machine (ATM), Real Time Gross Settlement (RTGS) and the National Electronic Funds Transfer (NEFT).8. An automated or automatic teller machine (ATM) also known as an automated banking machine (ABM).9. Using ATB and ATM card, customers can access their bank accounts in order to make cash withdrawals and check their account balances10. Transactions which are bulk and repetitive in nature are routed through electronic clearing service (ECS).11. India has two main electronic funds settlement systems for one to one transactions: the Real Time Gross Settlement (RTGS) and the National Electronic Funds Transfer (NEFT) systems.12. Core Banking enabled banks and branches are assigned an Indian Financial System Code (IFSC) for RTGS and NEFT purposes. This is an eleven digit alphanumeric code and unique to each branch of bank.13. The nationalisation of 14 major commercial banks with effect from July, 1969. Six more banks were nationalised in 1980.14. Two banks were merged in 1993, so at present there are 19 nationalised banks.15. Scheduled banks which are included in the Second Schedule of RBI Act 1934.16. Scheduled banks are further divided into public sector banks and private sector banks.17. State Bank of India and its associates are public sector banks but they are not nationalized.18. The population per bank office has reduced from 55,000 in 1969 to around 12,500 in 2012.19. The number of branch office of scheduled commercial banks in 2012 has increased to 98 591.20. The percentage of rural branches bank improved to about 37 per cent in June, 2012.21. The aggregate deposits of scheduled commercial banks have increased to more than Rs.60,00,000 crore in 2012.22. Maharashtra leads all other states and accounts, for around 23% of the aggregate deposits received by the bank.

23. Scheduled commercial banks lending has gone up to about Rs.50,00,000 crore in December, 2012 and the percentage of Priority Sector credit has gone up to 41% in March 2012.

24. This is specially so with regard to rural areas who have just 37 per cent of the bank branches but where more than 70 per cent of the population of the country reside.

25. Bad and doubtful debts of scheduled commercial banks, called non-performing assets (NPAs). As a percentage of gross advances, they have fallen from 10.5 per cent to 2.94 per cent in 2011-12.Chapter - 8

Unit 3 : The Reserve Bank of India (RBI)

1. A Central Bank is one which constitutes the apex of the monetary and banking structure of a country. The Reserve Bank of India (RBI) is the Central Bank of India.

2. A central bank has three objectives, namely monetary stability, including stability of domestic price levels, maintenance of the international value of the nations currency and issue of currency.

3. The Central Bank acts as the organ of the State. The ultimate responsibility of framing and executing economic policies4. The RBI is the sole authority for the issue of currency in India other than one rupee coins and notes and subsidiary coins.5. It also sells Treasury Bills on behalf of the Central Government in order to wipe away excess liquidity in the economy.

6. The RBI makes advances to the Central and State Government which are repayable within 90 days from the date of advance.

7. The RBI has been vested with extensive power to control and supervise commercial banking system under the Reserve Bank of India Act, 1934 and the Banking Regulation Act 1949.

8. It also administers exchange control of the country and enforces the provisions of Foreign Exchange Management Act.

9. Credit plays an important role in the settlement of business transactions and affects the purchasing power of people.

10. EXIM stands for Export and Import bank and SIDBI stands for Small Industrial Development Bank of India.

11. It has also been entrusted with the task of collection and compilation of statistical information relating to banking and other financial sectors of the economy.

12. Monetary Policy is usually defined as the Central Banks policy pertaining to the control of the availability, cost and use of money and credit.

13. Generally two types of instruments are used to control credit. These are (i) quantitative or general measures and (ii) qualitative or selective measures.

14. The quantitative measures are directed towards influencing the total volume of credit in the banking system.

15. Selective or qualitative instruments of credit control, are directed towards the particular use of credit.

16. Quantitative measures of credit control include Bank Rate Policy, Open Market Operations and variable Reserve Requirement.

17. The Bank Rate is the rate at which the Central Bank discounts the bills of commercial banks. It is the traditional weapon of credit control used by a Central Bank. At present, 10.25 per cent in 2013 18. Open market operations imply deliberate direct sales and purchases of securities and bills in the market by the Central Bank on its own initiative to control the volume of credit.

19. The Statutory Liquidity Ratio (SLR) refers to that portion of total deposits which a commercial bank has to keep with itself in the form of liquid assets.

20. The Cash Reserve Ratio (CRR) refers to that portion of total deposits which a commercial bank has to keep with the Central Bank in the form of cash reserves.21. At present, (July 2013) CRR. 4%, & SLR = 23%

22. Repo rate is the rate at which Commercial banks borrow rupees from RBI

23. Reverse Repo rate is the rate at which RBI borrows money from banks.

24. At present, RBI Fixes Repo rate 7.25% Reverse repo rate- 6.25% (July. 2013.)

25. Qualitative measures consist of fixation of margin requirements, consumer credit regulation, issue of directives, rationing of credit, moral suasion, direct action etc.

26. Fixation of margin requirements is a very effective selective control device to control credit and inflation in certain sensitive spots of the economy without influencing the other sectors.

27. Consumer credit regulation consists of laying down rules regarding down payments and maximum maturities of installment credit for the purchase of specified durable consumer goods.

28. Moral suasion implies persuasion and request made by the Central Government to the Commercial Banks to Co-operate with General Monetary Policy of the RBI.

29. Moral suasion is a psychological means of controlling credit; it is a purely informal and milder form of selective credit control.EFFORTS NEVER FAILS THE BEST IS YET TO COME.

ALL THE BEST

SELECT ASPECTS OF INDIAN ECONOMY

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