Economy

Indian Economy is one of the most scoring subjects in SSC CGL. Every year 4 to 8 questions come directly from this section. Topics like National Income, Banking, Taxation, Planning, Poverty, Inflation, and Government Schemes are tested repeatedly. A student who understands the basic concepts and remembers key facts, names, and years can score full marks in this section.

1. MAJOR PRINCIPLES OF ECONOMICS

1.1 Basic Economic Concepts

Cooperative (सहकारिता):

• When many individuals or organisations work together to achieve a common goal, it is called cooperative
• Cooperative societies are included in the formal sources of deposits

Comparative Advantage:

• David Ricardo was the first economist to argue that people save more in situations of high deficit
• He developed the concept of Comparative Advantage — a country exports what it produces most efficiently and at the lowest opportunity cost
• His book "On the Principles of Political Economy and Taxation" was written in 1817
• The Heckscher-Ohlin Model states that a country exports goods it produces efficiently and in abundance — developed by two Swedish economists Eli Heckscher and Bertil Ohlin

Real Cost:

• The monetary expression of money spent on goods actually issued is called Real Cost
• The value of all tangible resources used in the production process (raw material, labour) is called Real Cost

Variable Cost:

• When output is zero, variable cost is zero
• Variable costs change with the level of production (Example: electricity bill)
• Fixed costs remain even when production is zero (Example: rent, salary)

Opportunity Cost:

• The famous economist Gottfried Haberler presented the theory of opportunity cost as an alternative to the real cost theory
• According to this theory, the comparative prices of goods are determined by their cost dimensions; the meaning of cost is not the quantity of labour inherent in goods but the sacrifice of alternative production

Laissez-Faire:

• The Laissez-Faire principle believes that the economic system should be free from government control
• Scottish economist Adam Smith gave the name "Invisible Hand" to government intervention in the 18th century

Backward-Bending Supply Curve:

• Related to the Labour Market
• This curve shows that when wages increase beyond a certain level, workers prefer leisure over work — so supply of labour actually decreases

Macro Economics:

• The term "Macro Economics" was first used by Ragnar Frisch
• Macro Economics deals with growth, inflation, and unemployment at the aggregate level
• Micro Economics deals with individual units — persons, families, and firms

Joint Sector:

• In the concept of the Joint Sector, cooperation between Public Sector and Private Sector industries is essential
• New industries can be established through the partnership of government and private institutions

General Equilibrium Analysis:

• Walras developed the General Equilibrium Analysis in 1870
• He was a French economist
• General Equilibrium explains the behaviour of prices of supply, demand, and an entire economy

Pareto-Optimum:

• Wilfredo Pareto — Italian engineer, sociologist, economist, and philosopher
• According to him, if everyone's welfare can be improved without harming anyone, economic welfare can be improved
• This situation is called Pareto-Optimum

Innovation Theory of Profit:

• Joseph Schumpeter propounded the Innovation Theory of Profit
• According to this theory, when any new change (innovation) is made, the profit from it will be received as its reward
• Schumpeter also served as Austrian Finance Minister in 1919

Mackintosh Principle:

• According to Mackintosh principles of economics, a country's human living standard depends on the country's ability to produce goods and services

Trickle Down Theory:

• The Trickle Down Theory (Percolation Theory) ignores the effect of economic growth on income distribution
• Investment, saving, and consumption affect economic growth
• This theory tries to reduce inequalities in income and wealth distribution in society

Market Economy:

• A Market Economy is one where prices are determined by market forces (demand and supply)
• It is free from government control
• Capitalist economy can be called a market economy

Important One-Liners — Economics Principles

• Comparative Advantage theory: David Ricardo
• Opportunity Cost theory: Gottfried Haberler
• Macro Economics term first used: Ragnar Frisch
• "Invisible Hand" term: Adam Smith
• General Equilibrium Analysis: Walras (1870)
• Pareto-Optimum: Wilfredo Pareto
• Innovation Theory of Profit: Joseph Schumpeter
• Backward-Bending Supply Curve: Labour Market
• Trickle Down Theory ignores: Income Distribution
• Laissez-Faire: economy free from government control

2. NATIONAL INCOME AND MEASUREMENT

2.1 Key Concepts

Personal Income:

• Personal Income represents the total income earned by individuals from all sources before deduction of personal income taxes

National Income:

• India's national income and per capita income calculation was first attempted by Dadabhai Naoroji in the year 1867–68
• According to him, per capita income in 1868 was ₹20, while in 2020 it was ₹1,08,620
• National Income = Personal Income / Total Population (gives per capita income)
• India's national income is compiled by the Central Statistical Organisation (CSO) — now called MoSPI
• Personal Income = National Income – Undistributed corporate profits – Corporate taxes – Social security contributions + Government transfer payments + Security business transfer payments

GDP Deflator:

• GDP Deflator = (Nominal GDP / Real GDP) × 100
• It measures changes in the prices of all goods and services produced in the economy
• Also known as the Implicit Price Deflator

Net National Product (NNP):

• NNP = GNP – Depreciation
• NNP is also called Net National Income

Gross Investment:

• Net Investment + Depreciation = Gross Investment
• Total addition to the capital stock of an economy in a specified period is called Gross Investment

GNP:

• GNP = Gross National Product (सकल राष्ट्रीय उत्पाद)
• GNP = GDP + (X – M)
• Where X = income earned by residents abroad; M = income earned by foreigners in the country
• (X – M) = Net factor income from abroad

Per Capita Income:

• Per capita income = National Income / Total Population
• Also called Average Income

Depreciation:

• Depreciation is an annual allowance for the wear and tear of capital goods (machines, buildings)
• It is not applicable to current work, land, or finished goods

Intermediate Goods:

• Goods that are sold between industries for resale or for producing other goods
• They are used to make final goods — not directly consumed
• Example: Steel used to make cars

Three Methods of National Income Calculation:

1. Income Method — Sum of all incomes
2. Expenditure Method — Sum of all expenditures
3. Output/Value Added Method — Value added at each stage

2.2 Industrial Sector Contribution

• In 1950–51, the industrial sector's contribution to GDP was approximately 11.8%
• As per Economic Survey 2022–23:
  • Service Sector: 53.66%
  • Industrial Sector: 29.02%
  • Agriculture Sector: 17.32%
• In 2020–21, the highest share of exports in GDP was Engineering Goods

Important One-Liners — National Income

• NNP = GNP – Depreciation
• GNP = GDP + Net Factor Income from Abroad
• Per capita income = National Income ÷ Population
• First attempt at calculating national income: Dadabhai Naoroji (1867–68)
• National income compiled by: CSO / MoSPI
• GDP Deflator = (Nominal GDP / Real GDP) × 100
• Industrial sector share in GDP (1950–51): 11.8%
• Three methods: Income, Expenditure, Value Added
• Intermediate goods are used to produce: Final goods

3. POVERTY AND UNEMPLOYMENT

3.1 Definition and Measurement

Main Worker:

• According to the standard census definition, a person who works for at least 183 days (6 months) in a year is classified as a Main Worker in India
• A person who works for less than 183 days is called a Marginal Worker

Types of Unemployment:

• Seasonal Unemployment — mainly found in rural areas (agriculture is seasonal)
• Educated Unemployment — mainly found in urban areas — educated people cannot find jobs matching their qualifications
• Disguised Unemployment — mainly found in the agriculture sector — people appear employed but marginal productivity is zero (concept given by Joan Robinson)
• Cyclical Unemployment — occurs during economic downturns
• Frictional Unemployment — when people are between jobs

3.2 Poverty Line

• The National Poverty Line for 2011–12 was estimated by the Tendulkar Committee
  • Rural areas: ₹816 per person per month
  • Urban areas: ₹1,000 per person per month

National Multidimensional Poverty Index (MPI) 2021:

• Published by NITI Aayog in November 2021
• Three dimensions: Health, Education, Standard of Living
• 12 indicators: nutrition, child and adolescent mortality, maternal health, school years of education, school attendance, cooking fuel, sanitation, electricity, housing, drinking water, assets, bank accounts
• Bihar emerged as the poorest state as per MPI 2021
• 8.81% of urban population lives in poverty (MPI 2021)

Dearness Allowance:

• The basis for determining Dearness Allowance (DA) for government employees in India is the Consumer Price Index (CPI)
• CPI is published by the Labour Bureau under the Ministry of Labour and Employment

Lorenz Curve:

• The Lorenz Curve shows income distribution in an economy
• It shows the inequality between total income and income recipients
• Gini Coefficient is derived from the Lorenz Curve — measures inequality

Important One-Liners — Poverty and Unemployment

• Main Worker works minimum: 183 days per year
• Disguised unemployment concept: Joan Robinson
• Disguised unemployment mainly in: Agriculture
• Seasonal unemployment mainly in: Rural areas
• Educated unemployment mainly in: Urban areas
• Tendulkar Committee rural poverty line (2011–12): ₹816/month
• MPI 2021 poorest state: Bihar
• DA basis: Consumer Price Index (CPI)
• Lorenz Curve shows: Income Distribution
• MPI published by: NITI Aayog

4. DEMAND AND ELASTICITY OF DEMAND

4.1 Key Demand Concepts

Budget Line:

• The Budget Line is the graph that shows all combinations of two goods that a consumer can spend within a specific income level at given market prices

Substitute Goods:

• When the price of a substitute good increases, the demand curve for the other good shifts outward (increases)
• Example: Tea and Coffee, Jaggery and Sugar

Cross Price Elasticity:

• D = f(Pr) — This is called Cross Price Elasticity of Demand

Break-Even Point:

• Break-even quantity = 2,400 units; Variable cost per unit = ₹15; Selling price = ₹24
• Total variable cost = 2,400 × 15 = ₹36,000; Total revenue = 2,400 × 24 = ₹57,600
• Fixed Cost = Revenue – Variable Cost = ₹57,600 – ₹36,000 = ₹21,600

Effect of Demand Decrease and Supply Increase:

• When demand decreases and supply increases → equilibrium price falls

Derived Demand:

• When demand for one product generates demand for another product or service, it is called Derived Demand
• Example: mobile battery, lithium-ion battery (derived from demand for mobiles)

Superior/Normal Goods:

• When demand for a good increases as income increases — called Superior (Normal) Goods
• Inferior goods have an inverse relationship with income

Effect of Demand Increase:

• When demand for a good increases → equilibrium price rises and equilibrium quantity rises

4.2 Dumping

• Dumping means selling goods in a foreign market at a price below their marginal cost (below the domestic market price)
• It is a standard technical definition of under-pricing
• Often referred to as selling below fair value

4.3 Currency Devaluation

• If a country devalues its currency → exports become cheaper and imports become expensive
• Export and investment are boosted
• Government deliberately reduces exchange rate to boost exports
• Example: China devalued its currency to prevent its export decline

4.4 Purchase Power Parity (PPP)

• The PPP (Purchasing Power Parity) theory is used to make long-term predictions about exchange rates in a flexible exchange rate system
• Example: If 1 dollar can buy 50X and 1 rupee can buy 1X → PPP: 1 dollar = 50 rupees

Important One-Liners — Demand

• Budget line shows: combinations of two goods within income
• Derived demand example: Mobile battery (from demand for mobile)
• When demand falls and supply rises: equilibrium price falls
• Superior goods: demand rises with income
• Dumping = selling below: marginal cost in foreign market
• Devaluation makes: exports cheaper, imports expensive

5. ECONOMIC DEVELOPMENT AND SECTORS

5.1 Three Sectors of Economy

Key Point: Bee-keeping (मधुमक्खी पालन) belongs to the Primary Sector — NOT the tertiary sector.

Trading (व्यापार) is a tertiary activity — import-export is trade.

Agriculture provides employment to the most people in India — approximately 40% of the working population.

HDI — Human Development Index:

• HDI is a measure of development in three areas: Health, Education, and Income (Per Capita)
• Started in 1990 by Pakistani economist Mahbub ul Haq and Indian economist Amartya Sen
• A country's HDI is higher when health, education, and per capita income are higher

Fourth Sector:

• The Fourth Sector includes information-based and research and development activities
• It includes collection, production, and distribution of information

Important One-Liners — Economic Development

• Bee-keeping belongs to: Primary Sector
• Trading belongs to: Tertiary Sector
• Most employment in India: Agriculture (~40%)
• HDI measures: Health, Education, Per Capita Income
• HDI started by: Mahbub ul Haq and Amartya Sen (1990)
• Tertiary sector's share in India's GDP: ~55%

6. TAXATION

6.1 Types of Taxes

Direct Tax:

• Tax levied directly on individuals or organisations and paid directly to the government
• Examples: Income Tax, Corporate Tax, Wealth Tax, Capital Gain Tax, Gift Tax

Indirect Tax:

• Tax NOT collected directly from people — burden shifted to others
• Examples: Goods and Services Tax (GST), Customs Duty, Production Duty, Sales Tax
• Goods and Services Tax (GST) is an indirect tax

GST (Goods and Services Tax):

• GST was implemented through the 101st Constitutional Amendment Act, 2016
• GST Council was formed by inserting Article 279A in the Constitution
• Chairperson of GST Council: Union Finance Minister
• Vijay Kelkar Committee recommended GST
• GST tax slabs fixed by GST Council: 0%, 5%, 12%, 18%, and 28%

Value Added Tax (VAT):

• VAT was first implemented in France in 1954
• In India, VAT was implemented from 1 April 2005
• First implemented in Haryana; last in Uttar Pradesh

Octroi:

• Octroi is a tax levied by local bodies (municipal corporations) on goods brought into a city for consumption
• Octroi from the 1960s is still levied in Pakistan
• In Mumbai (India) it was abolished in 2013 but reinstated in 2014 due to revenue loss

CENVAT:

• CENVAT = Central Value Added Tax — related to Central Production Duty
• Implemented in April 2000–2001
• It replaced MODVAT

Centre and State Taxes:

Progressive Tax:

• Progressive Tax is helpful in reducing economic inequality in India
• Progressive taxation means as taxable income increases, the tax rate also increases progressively

Redistribution of Income:

• Income redistribution in a country is done through Progressive Taxation + Progressive Expenditure

Important One-Liners — Taxation

• GST is a/an: Indirect Tax
• GST implemented through: 101st Constitutional Amendment, 2016
• GST implemented from: 1 July 2017
• GST Council chairman: Union Finance Minister
• VAT first in India: 1 April 2005 (first in Haryana)
• Tax to reduce economic inequality: Progressive Tax
• Central taxes examples: Income Tax, Customs Duty, Corporate Tax
• CENVAT = Central Value Added Tax
• GST tax slabs: 0%, 5%, 12%, 18%, 28%

7. MONEY AND BANKING

7.1 Reserve Bank of India (RBI)

• The establishment of a central bank was recommended by the Hilton Young Commission in 1926
• Then in 1931, the Indian Central Banking Enquiry Committee also recommended the establishment of RBI
• Based on these, the Reserve Bank of India Act, 1934 was passed
• RBI was established on 1 April 1935
• RBI was nationalised on 1 January 1949
• Headquarters: Mumbai
• First Indian Governor of RBI: C. D. Deshmukh (11 August 1943 to 30 June 1949)
• First Governor (European): C. Osborne Smith
• Current (25th) Governor: Shaktikanta Das

Key Functions of RBI:

1. Formulating and implementing monetary policy
2. Managing foreign exchange
3. Acting as banker to Government of India and other banks
4. Controlling Indian currency's credit
5. Issuing and regulating currency; destroying unfit notes

RBI's Accounting Year: 1 July to 30 June (changed to 1 April–31 March from 31 March 2021)

7.2 Monetary Policy Tools

Repo Rate:

• The rate at which commercial banks borrow money from RBI
• If RBI increases Repo Rate → inflation decreases
• If RBI decreases Repo Rate → more credit creation

Reverse Repo Rate:

• The rate at which RBI borrows from commercial banks
• Increasing Reverse Repo Rate → reduces liquidity in the economy → controls inflation

To discourage credit/borrowing:

• Central Bank can increase bank rate
• Can decrease SLR
• Can sell securities in open market
• Can increase CRR

SLR (Statutory Liquidity Ratio):

• Banks must keep a certain percentage of their demand and time liabilities in cash, gold, or approved government securities
• This ratio is called Statutory Liquidity Ratio (SLR)
• Reducing SLR → banks have more money to lend
• RBI can increase SLR up to maximum 40%

CRR (Cash Reserve Ratio):

• Amount banks must compulsorily keep with RBI
• Calculated as a percentage of Net Demand and Time Liabilities
• If RBI reduces CRR → more credit creation

Repo Rate vs Reverse Repo Rate:

• Repo = Banks borrow from RBI (RBI lends)
• Reverse Repo = RBI borrows from banks (banks lend to RBI)

7.3 NABARD

• NABARD = National Bank for Agriculture and Rural Development
• Established on 12 July 1982 on recommendation of the Shivaraman Committee
• Headquarters: Mumbai
• Purpose: Provide credit for agriculture and rural development

7.4 Functions of Money

Money performs the following functions:

• (A) Used as a store of value
• (B) Used as a measure of value
• (C) Used as a medium of exchange
• All three — A, B, and C — are functions of money

7.5 NBFC-MFI

• RBI presented a comprehensive regulatory framework for NBFC-MFI (Non-Banking Financial Company - Microfinance Institution) on 2 December 2011
• Malegam Committee recommended the formation of NBFC-MFI as a new category

7.6 Measures of Money Supply

7.7 Other Banking Facts

Regional Rural Banks (RRBs):

• Central Government's share: 50%; Sponsor banks: 35%; State Government: 15%
• Established under Regional Rural Banks Act 1976 on the recommendation of the Narasimham Committee
• Operate in all states except Sikkim and Goa

RBI's Central Board:

• Appointed for a term of 4 years

Scheduled Banks:

• Banks with paid-up capital and reserves of at least ₹5 lakh qualify as Scheduled Banks under RBI Act 1934

Nationalisation of Banks:

• First phase: 17 July 1969 — 14 large commercial banks nationalised
• Second phase: 15 April 1980 — 6 more banks nationalised
• Currently: 12 nationalised banks (2022); 9 private banks

Prime Lending Rate (PLR):

• Interest rate charged by banks on short-term loans to their best, most creditworthy customers

RBI adopted Rupee Symbol (₹):

• In the year 2010 (designed by D. Udaya Kumar)

India's First Development Bank:

• IDBI (Industrial Development Bank of India) — established 1 July 1964
• Headquarters: Mumbai

Bank of Baroda merger:

• Vijaya Bank and Dena Bank merged with Bank of Baroda from 1 April 2019
• BOB became India's third largest bank

BSE (Bombay Stock Exchange):

• India's oldest and Asia's oldest stock exchange
• Established in 1875 by Premchand Roychand as "Stock Exchange Mumbai"
• Renamed BSE in 2002; received permanent recognition under Securities Contract Regulation Act 1956
• NSE (National Stock Exchange) established in 1992

Lender of Last Resort:

• Central Bank is called "The Lender of Last Resort"
• It provides credit to banks or institutions facing financial difficulty
• In India: RBI is the lender of last resort

Open Market Operations:

• The simplest monetary policy to maintain liquidity ratio
• Under this: Central Bank buys and sells government securities from/to other banks and financial institutions
• Purpose: If Central Bank wants to increase market liquidity → buys securities from banks → banks get currency → money supply increases

Important One-Liners — Money and Banking

• RBI established: 1 April 1935
• RBI nationalised: 1 January 1949
• RBI headquarters: Mumbai
• First Indian Governor of RBI: C. D. Deshmukh
• NABARD established: 12 July 1982 (Shivaraman Committee)
• Bank nationalisation Phase 1: 17 July 1969 (14 banks)
• Bank nationalisation Phase 2: 15 April 1980 (6 banks)
• RBI accounting year (current): 1 April to 31 March
• BSE established: 1875
• NSE established: 1992
• Rupee symbol adopted: 2010
• Repo rate = banks borrow from RBI
• CRR computed on: Net Demand and Time Liabilities
• M3 = M1 + Net time deposits of commercial banks
• Lender of Last Resort in India: RBI

8. INFLATION

8.1 Types of Price Changes

Inflation (मुद्रास्फीति):

• Continuous rise in the general price level of an economy is called Inflation
• During inflation: value of money falls; prices of goods rise
• Limited and controlled inflation is beneficial for underdeveloped economies as it encourages production
• But excessive inflation is harmful

Deflation (अस्फीति):

• Continuous fall in the general price level

Stagflation (मुद्रास्फीतिजनित मंदी):

• Combination of inflation and recession

Currency Devaluation:

• When a country's currency value is deliberately reduced relative to another country's currency or internationally accepted currency
• Example: Exchange rate goes from ₹55 = $1 to ₹60 = $1 → Indian Rupee has been devalued

Important One-Liners — Inflation

• Continuous rise in price level: Inflation
• Continuous fall in price level: Deflation
• Value of money falls during: Inflation
• Controlled inflation is beneficial for: underdeveloped economies
• ₹55 → ₹60 per dollar = Indian rupee has: Devalued

9. INSURANCE AND CAPITAL MARKET

9.1 IRDAI

• IRDAI = Insurance Regulatory and Development Authority of India
• Established as a statutory body under the IRDAI Act, 1999
• Key objectives: protecting policyholders' interests, rapid development of insurance industry, effective grievance redressal

9.2 Stock Market

BSE:

• Oldest stock exchange in India and Asia (1875)
• Received permanent recognition under Securities Contract Regulation Act 1956

NSE:

• National Stock Exchange — established 1992

Reliance Industries:

• First Indian company to touch market capitalisation of ₹10 lakh crore (November 2019)
• Crossed TCS which was earlier the largest by market cap

Gilt Securities:

• Gilt Securities are securities issued by the government

Wall Street Crash (1929):

• When share prices on Wall Street fell drastically → Great Depression in America
• Period 1929–1939 is known as the Great Depression
• About 13 million people became unemployed; about half of American banks went bankrupt

Important One-Liners — Insurance and Capital Market

• IRDAI established: 1999 under IRDAI Act 1999
• BSE established: 1875 (oldest in Asia)
• NSE established: 1992
• Gilt Securities = issued by: Government
• First ₹10 lakh crore market cap company: Reliance Industries (2019)
• Great Depression period: 1929–1939 (Wall Street crash)

10. FIRM AND MARKET

10.1 Market Structures

Monopsony:

• Economic situation with many sellers but only one buyer
• Prices are very low due to excessive competition

Full Competition — Price Control:

• In a perfect competition market, a single firm is unable to control prices
• Reason: 'individual firms' are absent from 'medium opposition'

Dumping:

• Selling goods in a foreign market at a price below their marginal cost
• Not limited to one country or market

Currency Devaluation:

• If a country devalues its currency → exports cheaper + imports expensive
• Used to boost exports

Flexible Exchange Rate:

• PPP (Purchasing Power Parity) is used to predict exchange rates in the long term

Foreign Direct Investment (FDI) vs Portfolio Investment:

• Portfolio Investment — investment in financial assets (shares, bonds) through FIIs — considered unsecure/unstable
• FIIs must register with SEBI
• Portfolio investment is temporary in nature — risk of capital flight during market turbulence

Current Account Deficit:

• When government expenditure on current account exceeds government revenue → Deficit Budget (घाटा बजट)

Important One-Liners — Firm and Market

• Monopsony: one buyer, many sellers
• Perfect competition: many buyers, many sellers
• Perfect competition: firm cannot control prices
• Portfolio investment (FIIs) is: unsecure/unstable
• Deficit Budget: when government expenditure > revenue

11. PLANNING IN INDIA AND GOVERNMENT SCHEMES

11.1 Five Year Plans

Key Planning Facts:

• First Five Year Plan started: 1 April 1951
• Main objective of First Plan: Agriculture development
• Second Plan gave emphasis to Industries and Industrial base — based on Mahalanobis Model; P. C. Mahalanobis conceptualised the framework of the 2nd Plan
• P. C. Mahalanobis is considered the Father of Statistics in India
• D. P. Dhar Model — framed the Fifth Five Year Plan
• Harrod-Domar Model (saving and investment model) — First Plan was based on this
• Jawahar Rozgar Yojana started in: 7th Five Year Plan
• NITI Aayog replaced Planning Commission from 2015 — 5-year plans were replaced with 15-year Vision Documents (with 7-year strategy and 3-year action agenda)
• Eighth Five Year Plan (1992–97) adopted Liberalisation, Privatisation, and Globalisation (LPG) under PM P. V. Narasimha Rao

Industrial Policy Resolution 1956:

• Industries classified into 3 categories (schedules):
  • Schedule A — Public Sector (17 industries)
  • Schedule B — Mixed Sector (12 industries — public + private)
  • Schedule C — Only Private Sector

11.2 Important Government Schemes

PM MUDRA Yojana:

• Started: 8 April 2015
• Maximum loan amount: ₹10 lakh
• Three types of loans:
  • Shishu — up to ₹50,000
  • Kishore — ₹50,001 to ₹5 lakh
  • Tarun — ₹5,00,001 to ₹10 lakh

PM Jeevan Jyoti Bima Yojana (PMJJBY):

• Started: 9 May 2015 by Central Government
• Eligible age: 18 to 50 years
• Annual premium: ₹330
• Insurance cover: ₹2 lakh (on death due to accident or natural causes)

PM Jan Dhan Yojana:

• Started: 28 August 2014
• Related to: Financial Services (banking/savings accounts, remittance, credit, insurance, pension)
• A national financial inclusion mission

Ayushman Bharat Yojana:

• Started: 14 April 2018
• Health insurance cover: ₹5 lakh per family per year
• Beneficiaries: 10.74 crore rural and urban families
• World's largest government-funded health service programme
• Effective in all listed (government and private) hospitals

PM AASHA (Pradhan Mantri Annadata Aay SanraksHan Abhiyan):

• 3 components for ensuring fair price for government farm produce:
  1. Price Support Scheme
  2. Price Deficiency Payment Scheme
  3. Private Procurement and Stockist Scheme

AMRUT (Atal Mission for Rejuvenation and Urban Transformation):

• Started: 2015
• Priority area: Water supply after sewerage

PM Kaushal Vikas Yojana:

• Started: July 2015

Jawaharlal Nehru National Urban Renewal Mission (JnNURM):

• Started in 2005 to address structural deficiencies in urban India

PM Rozgar Srijana Karyakram (PMEGP):

• Started by: Ministry of Micro, Small and Medium Enterprises (MSME)

Mission Indradhanush:

• Started: 25 December 2014 by Ministry of Health and Family Welfare
• A booster immunisation programme — represents 7 diseases with 7 vaccines: Tuberculosis, Polio, Hepatitis B, Diphtheria, Pertussis, Tetanus, and Measles
• Later added Rubella, Rotavirus, Haemophilus, Influenza type-B, Polio vaccines → total 12 vaccines
• Mission Indradhanush 2.0: 2 December 2019 — covering 272 districts across 27 states and UTs

Kutir Jyoti Yojana:

• Started in 1988–89 by Central Government
• Objective: Provide electricity to rural families below the poverty line

Swarna Jayanti Gram Swarozgar Yojana:

• Restructured and became: National Rural Livelihoods Mission
• Started in Banswara district, Rajasthan on 3 June 2011

Jawahar Gram Samridhi Yojana:

• Started in 7th Five Year Plan

Mid-Day Meal Scheme:

• Started: 15 August 1995 by the Ministry of Human Resource Development (now Ministry of Education)
• Nationwide from 2004
• First state to start Mid-Day Meal Scheme: Tamil Nadu

PM Shram Yogi Maandhan Yojana:

• Official launch: 15 February 2019 (Ahmedabad, Gujarat) by PM Narendra Modi
• Eligible age: 18 to 40 years
• For: unorganised sector workers with monthly income ≤ ₹15,000

PM Shram Yogi Maandhan — Income Limit:

• Monthly income: up to ₹15,000

UDAN:

• UDAN = Ude Desh ka Aam Nagrik (उड़े देश का आम नागरिक)
• Started: October 2016 by Ministry of Civil Aviation
• Regional air transport connectivity scheme at affordable prices

National Investment Fund (NIF):

• Announced in Central Budget 2015–16
• Established in November 2005 to manage income from disinvestment of Central public sector enterprises
• 75% of annual income used for education, health, and employment promotion

'Hindu Rate of Growth':

• Term coined by Prof. Raj Krishna for Indian economy
• In first three decades after independence (1950–1980), Indian economy's growth rate was about 3.5%
• After 1991 economic liberalisation, this improved

Make in India:

• Started: 25 September 2014
• Objective: To make India a global hub for investment and manufacturing
• Implemented by: Ministry of Commerce and Industry (as of 2020)

Industy 4.0:

• A complex cyber-physical system that integrates digital technologies with production
• Railway Ministry and Department of Science & Technology partnered with IIT Kanpur for a unique Industry 4.0 project
• Known as the Fourth Industrial Revolution

Sankalp Project:

• Started to eradicate AIDS (HIV) — run by ESIC and Hindustan Latex Family Planning Promotion Trust

Himayat Scheme:

• Training and placement programme for unemployed youth in Jammu & Kashmir (started 2011)
• Aim: Employment for 1 lakh youth in 5 years

Khadi and Village Industries Commission (KVIC):

• KVIC Act passed in: 1956
• Headquarters: Mumbai
• Under Ministry of MSME
• First silk processing plant opened in Surendranagar, Gujarat

National Rural Health Mission:

• Approved in: 2005

National Urban Health Mission:

• Approved in: 2013

Important One-Liners — Planning and Schemes

• First Five Year Plan started: 1 April 1951
• 2nd Plan based on: Mahalanobis Model
• 1st Plan based on: Harrod-Domar Model
• LPG reforms started in: 8th Five Year Plan (1992–97)
• Planning Commission replaced by: NITI Aayog (2015)
• PM MUDRA maximum loan: ₹10 lakh
• PM Jan Dhan Yojana: 28 August 2014
• Ayushman Bharat: ₹5 lakh per family per year
• First Mid-Day Meal state: Tamil Nadu
• PM Jeevan Jyoti cover: ₹2 lakh (annual premium ₹330)
• UDAN: Ude Desh ka Aam Nagrik (October 2016)
• Make in India: 25 September 2014
• Mission Indradhanush: 25 December 2014
• KVIC Act: 1956
• Jawahar Rozgar Yojana: 7th Plan

12. POPULATION AND URBANISATION

12.1 Census 2011 Key Data

• India's population in 2011: 1.21 billion (121 crore)
• Males: 51.47%; Females: 48.53%
• Sex Ratio: 943 females per 1000 males (per 1000 पुरुष)
• Infant Sex Ratio: 919 (Rural: 923; Urban: 905)
• Literacy Rate: 73% (Male: 80.9%; Female: 64.6%)
• Decadal Growth Rate (2001–2011): 17.64%
• Slogan of 2011 Census: "Hamari Janganana, Hamara Bhavishya"
• 2011 Census was India's 15th Census
• Sex ratio in India is calculated as number of females per 1000 males

State-wise Rankings (2011):

Among UTs (2011):

• Lowest density UT: Andaman & Nicobar (46/sq km)
• Highest density: Delhi

Year of Great Divide:

• Year 1921 is called the "Year of Great Divide" in India's demographic history
• From 1921 onward, India's population increased every decade
• Between 1911–1921, population declined by 0.31%

Sex Ratio Formula:

• SR = (Total Female / Total Male) × 100

Malthusian Theory:

• Robert Malthus propounded population theory in his essay "An Essay on the Principle of Population" in 1798
• Population grows in geometric progression; food supply grows in arithmetic progression
• This leads to a state called population explosion

Population Growth Characteristics in India:

• Rising birth rate with declining death rate
• Not just the elderly, but working-age and young population growing

Census:

• India's first census: 1872 (under Lord Mayo)
• First official census: 1881 (under Lord Ripon)
• Since 1901: census every 10 years

Tribal groups NOT identified in national census — only Ethnic (racial) groups are not identified; Religious groups, SCs, and STs are identified.

Important One-Liners — Population

• India's population (2011): 1.21 billion
• Sex ratio (2011): 943 females per 1000 males
• Most populous state: Uttar Pradesh
• Highest literacy state: Kerala (94%)
• Lowest literacy state: Bihar (61.80%)
• Lowest sex ratio state: Haryana (879)
• Year of Great Divide: 1921
• First Census in India: 1872 (Lord Mayo)
• Malthus' theory: population grows: geometrically; food: arithmetically
• Census interval in India: every 10 years
• 2011 Census slogan: "Hamari Janganana, Hamara Bhavishya"
• In India sex ratio: females per 1000 males

13. REPORTS AND INDICES

13.1 Important Indices

AMFFRI Index:

• In 2016, NITI Aayog launched the Agriculture Marketing and Farmer Friendly Reforms Index (AMFFRI)

SDG India Index:

• SDG (Sustainable Development Goals) India Index was developed by NITI Aayog
• Purpose: help states identify obstacles and choose priorities for development; encourage states to cooperate

Consumer Price Index (CPI) for Workers:

• CPI for industrial workers is published by the Labour Bureau under Ministry of Labour and Employment

Important One-Liners — Reports and Indices

• AMFFRI launched by: NITI Aayog (2016)
• SDG India Index developed by: NITI Aayog
• CPI for workers published by: Labour Bureau

14. PUBLIC FINANCE

14.1 Fiscal Year and Budget

Fiscal Year:

• A fiscal year is the year that indicates the financial reporting period for the government
• In India: 1 April to 31 March

Government Revenue Receipt:

• GST collected by government is an example of Government Revenue Receipt

Budget:

• Annual statement of government's estimated receipts and expenditure for a fiscal year
• Estimated expenditure and estimated receipts are shown in the government budget
• Three main components of Central Budget: Expenditure, Receipts, and Deficit
• Budget is prepared by the Budget Division of the Ministry of Finance
• Presented in Lok Sabha by Finance Minister on the date directed by the President

First Indian Budget:

• India's first budget was presented on 26 November 1947 by India's first Finance Minister R. K. Shanmukham Chetty

First Economic Survey:

• India's first Economic Survey presented in 1950–51
• Published by Ministry of Finance
• Prepared under the guidance of the Chief Economic Adviser
• Current Chief Economic Adviser: V. Anantha Nageswaran (17th CEA)

National Investment and Infrastructure Fund (NIIF):

• India's first Sovereign Wealth Fund — announced in Union Budget 2015–16

Child Budget:

• Madhya Pradesh presented its first Child Budget in March 2022

PM Atmanirbhar Swasth Bharat Yojana:

• Announced in Union Budget 2021–22

14.2 Types of Deficits

Gross Fiscal Deficit:

• Gross Fiscal Deficit = Total Expenditure – (Revenue Receipts + Non-debt capital receipts)
• Largest component of India's budget deficit: Fiscal Deficit
• Fiscal Deficit is financed by borrowing from RBI (Reserve Bank) or through capital market (bonds)

Capital Expenditure:

• Expenditure on machinery, equipment, buildings, health facilities, education = Capital Expenditure
• Pension and salary payments = Revenue Expenditure
• Building a school = Capital Expenditure
• Budget 2023–24: Capital expenditure estimate = ₹10 lakh crore (37.4% increase)

14th Finance Commission:

• Constituted on 2 January 2013 under the chairmanship of former RBI Governor Y. V. Reddy
• Recommended increasing states' share from 32% to 42% of Centre's tax revenue — which the Centre accepted

Fiscal Policy:

• Fiscal Policy deals with taxation, public debt, and public expenditure
• Primary objective of fiscal policy in India: NOT increasing liquidity in the economy (that is Monetary Policy's objective)
• Fiscal Policy's objectives: price stability, reducing inequality, promoting employment

Important One-Liners — Public Finance

• India's fiscal year: 1 April to 31 March
• First Indian Budget: 26 November 1947 (R. K. Shanmukham Chetty)
• First Economic Survey: 1950–51
• Largest deficit in India's budget: Fiscal Deficit
• Capital expenditure example: Building schools, buying machinery
• Revenue expenditure example: Salary, Pension
• 14th Finance Commission chairperson: Y. V. Reddy
• States' share recommended by 14th FC: 42%
• NIIF announced in: 2015–16 budget
• Child Budget first presented by: Madhya Pradesh (2022)

15. MISCELLANEOUS

15.1 Various Economic Terms and Facts

Stabilisation Function:

• Government intervention — whether to expand or reduce demand — is called Stabilisation Function

Insolvency and Bankruptcy Code 2016:

• Companies must complete the insolvency resolution process within 180 days

Microfinance:

• Credit is provided to the poor through Self-Help Groups (SHGs)
• In India, maximum tenure for microfinance credit: 36 months

Piggybacking:

• In IT: Sending outgoing acknowledgement in delayed form is called Piggybacking

Rangajan Committee:

• Established by Government of India
• Suggested removing complete control over the sugar industry
• Recommended linking cane prices with market value of sugar and sugarcane by-products

Green Field Project:

• Project where there is no previous work/project precedent
• Projects made on unused land where there is no existing structure to rebuild or demolish

India's Wheat Import:

• Under PL-480 scheme, India imported wheat from the USA
• PL-480 = Public Law 480; a food supply agreement between India and America
• US President John F. Kennedy named it "Food for Peace"

Public Goods:

• Public goods are goods or services provided by the government to citizens where the government gains no benefit
• Examples: Government hospitals, government schemes
• Food items are NOT public goods

World's Largest Wheat Producer:

• China is the world's largest producer of wheat
• China is followed by India and Russia

Muhammad Yunus:

• Nobel Prize winner known as the "father of microfinance systems"

Socialst Economy:

• In socialist economies, all production resources are under government ownership and control
• In capitalist economy: government has no special role in controlling markets

Important One-Liners — Miscellaneous

• Insolvency resolution in: 180 days (IBC 2016)
• Microfinance credit through: Self-Help Groups (SHGs)
• PL-480 wheat imported from: USA
• Father of microfinance: Muhammad Yunus
• China = world's largest: Wheat producer
• Food items: NOT public goods
• Piggybacking: delayed sending of outgoing acknowledgement in IT
• Rangajan Committee: removing control over Sugar industry

CHAPTER SUMMARY — QUICK REVISION TABLE