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IMPORTANT POINTS- MACROECONOMICS

1. Features of an underdeveloped economy-

MAIN occupation is agriculture HUGE poverty LOW saving and LOW rate of capital formation HIGH growth in population LOW standard of living LOW productivity of labour HIGH Unemployment LOW level of human well-being HIGH Income inequality LOW participation in foreign trade TRADITIONAL social life

2. At present there are nearly 52% of the population is dependent upon agriculture.
3. There has been INCREASE in ABSOLUTE NUMBER of people engaged in agriculture. 4. There has been DECREASE in PERCENTAGE of people engaged in agriculture. 5. Around 33% of poor live in India 6. NSSO = National Sample Survey Organization

7. Presently around 29% populations live Below Poverty Line (08-09).


8. There has been DECREASE in population living BPL, over the years. 9. India has been facing the problem of population explosion as the death rate is FALLING and there is no corresponding fall in the birth rate.

10. Dependency rate means Percentage of people in Non-working age group.


11. Non-working age group = BELOW 15 years and ABOVE 64 years of age. 12. Presently dependency rate is nearly 40%

13. Indias per capital income = $ 1050 (2010)


14. In India, There is LOW per capita Income & LOW saving therefore Gross Capital Formation rate is LOW.

15. Gross Domestic Savings rate = 40.7% (2008-09) 16. Gross Domestic Capital Formation = 36.9% (2008-09) & 41.1% (2009-10)

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17. Since 1991, there has been increase in Gross domestic Saving and Gross Capital formation rates.

18. In India, techniques of production are backward. Productivity in agriculture as well


as in Industrial sector is low. 19. Over the years, Unemployment Rate has INCREASED. 20. In India, level of human well-being is low. 21. For measuring human well being, Human Development Index is used. 22. HDI = Human Development Index 23. HDI was constructed by UNDP. 24. UNDP = United Nations of Development Programme. 25. The HDI is a composite of three indicators Longevity, Knowledge, and Standard of living.

26. Longevity means Life expectancy at Birth.


27. Standard of Living means REAL GDP per Capita

28. According to latest UNDP report 2009, Indias relative global ranking on HDI index is
132 among 179 countries.

29. HDI in 2010 was 0.609


30. Over the years, HDI has improved which indicates that human well being has improved. 31. In India, distribution of income and wealth is not equitable. 32. GINI index is used to measure inequality of income and wealth. 33. GINI index = 0 (perfect equality), GINI index = 1 (perfect inequality) 34. Gini index lies between 0 & 1.

35. GINI index in 2007 is at 0.668. it has increased over the years.
36. Over a period of time the inequality of income and wealth has increased. 37. Over a period of time, Indias NNP at factor cost (national income) and per capita income have increased.

38. NNP at factor cost in 2008-09 = Rs. 30,64,797 Crore. 39. Per capita income (2009-10) = Rs. 30,295. 40. Average growth in per capita income = 4.2% approximately (since independence)
41. Occupational structure means distribution of work force in difference occupations of the country. 42. Primary sector = agriculture + animal husbandry + forestry + poultry farming 43. Secondary sector includes manufacturing including construction PRASHANT KUMAR Agrawal Classes Contact 099230 62125, 93733 59312

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44. Tertiary sector includes trade, transport, communications, banking and other such services. 45. As economy grows, there is shift of labour force from primary sector to secondary and tertiary sector

46. As economy grows, PROPORTION of working population in agriculture and allied


activities falls and POPORTION of working population in secondary and tertiary sector rises.

As economic development takes place, income increases BUT demand for agriculture goods does not increase proportionately. On the other hand, rise in incomes bring about a large increase in demand for goods and services produced by secondary and tertiary sectors. As an economy develops, better techniques of production become available to the agriculture sector which improve productivity of land and labour in this sector and less demand for labour is in agriculture sector.

47. Occupational distribution of working population:Sector Primary sector Secondary sector Tertiary sector 200 1 59.3 % 18.2 % 22.5 % 201011 49.7% 22.8% 27.5% Tre nd

48. As the economy grows, share of primary sector in GDP also declines and share of
secondary and tertiary sector increases. Contribution of various sectors to GDP in 2009-10:Sector Primary sector Secondary sector Tertiary sector 200910 17% 25.8% 57.2% Tre nd

49. In second plan, huge industrialization took place and main focus was to set up basic industries (iron, steel, heavy chemicals, fertilizers, petroleum products etc) 50. Indian railway has been worlds third largest rail network 51. Indian road network has been one of the largest networks in the world aggregating 3.34 million kilometres.

52. In 2008-09, the installed electricity generating capacity was 1,49,390 MW. 53. Land under irrigation (2009-10) = 97.2 million-hectares. 54. Literacy rate = 70.6% in 2008-09.
55. RBI was nationalized in 1949. 56. Role of agriculture sector:(a) Providing employment PRASHANT KUMAR Agrawal Classes Contact 099230 62125, 93733 59312

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(b) Share in national income (c) Supporting industries (d) Shares in foreign trade (e) Supplier of food and fodder (f) Savings of capital (g) Contributions to governments revenue (h) Solving problems of urban congestion and brain drain 57. As Indian economy grew, its export increased BUT share of agriculture export in total export fell down.

58. Agriculture export as % of total export = 12.2% (2009-10)


59. Special Agricultural Product Scheme was started to promote export of fruits, vegetables, flowers, dairy product and forest products. 60. Agro imports as % of total import = 3.1% 61. Agro imports have come down over the years. This indicates that India has become self-sufficient in the production of agro-products. 62. Agriculture has LOW capital-output ratio i.e. it needs lower capital per unit of output produced. 63. Over a period of time, production of agro products and productivity has improved.

64. In 2008-09, production of some important agro-products are as follows:


Food grains Sugar cane Cotton Bales) Pulses (m. 230 tons 289.2 tons 23.3 million million

14.2 million tons

65. Green revolution, also known as HYVP (High Yielding varieties Programmes) started in 1966. 66. Focus of HYVP was on use of high-yielding varieties of seeds, proper irrigation facilities, extensive use of fertilizer, pesticides and insecticides. 67. Focus of HYVP was on wheat, rice, bajra, jawar and maize 68. Impact of HYVP/Green revolution was maximum on WHEAT. 69. Green revolution is also known as wheat Revolution. 70. Long-term annual growth of food grains output has been around 2.42% (for 19672003) 71. Per capital availability of foods grains is around 443 gram in 2007. 72. Agriculture productivity is measured in terms of YIELD PER HECTARE.

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73. Agriculture productivity has increased at around 2.06% p.a. during 1967-2003. 74. Over the years, the share of non-crop sectors (fishery, forestry, and animal husbandry) in total agriculture output is INCREASING. 75. Over the years, area under commercial crop like sugar, cotton, oilseeds, etc. is INCREASING.

76. Even within the food grains, are under superior cereals (rice and wheat) is
INCREASING and area under the inferior cereals is DECLINING. 77. Regulation of rent, Security of tenure and Conferment of ownership rights on tenants. 78. Special programmes such as Integrated Rural Development Programme, Jawahar Rozgar Yojana etc. have been started in rural areas to provide employment to the rural people. 79. National Food Security Mission (NFSM) is being implement TO HAVE SELF SUFFICIENCY IN DIFFERENT FOOD CROPS LIKE RICE, WHEAT and PULSES. 80. Rashtriya Krishi Vikas Yojana = It focuses on agricultural mechanisation, improvement of soil health and productivity, development of rain fed farming systems, improvement of agriculture marketing and pest management. 81. India accounted for 21.8% of global rice production and 12% of global wheat production. 82. There are regional imbalances in the spread of agricultural growth. 83. About 60% net sown area is rain fed. 84. Only 40% of the gross cropped area has irrigation facility. 85. In 1975, Regional Rural Banks were established. 86. NABARD = National Bank for agriculture and Rural Development 87. NABARD was set up in 1982. 88. NABARD is the APEX bank to provide rural credit and development. 89. Farm Credit Package was introduced in 2004. 90. Kisan Credit Card started in 1998 (TO Provide adequate and timely support for banking system to the farmers for their cultivation needs. 91. Agricultural Debt Waiver and Debt Relief Scheme was announced in 2008 (to waive the farmers from loans). 92. Problems relating to Agriculture Finance: Agricultural Loans are concentrated in certain regions and states only. The proportion of overdue to demand has been increasing. The major beneficiaries of the agricultural credit have been the large and medium farmers only There is a lack of experienced and skilled staff in these institutions.

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93. Food Corporation of India (FCI) provides storage facilities.


94. APMC = Agriculture Produce Market Committee 95. Eleventh Plan (2007-12) targets agricultural growth rate of 4%. 96. Industrial sector provides employment to 18% of the labour force. 97. Industrial sector contributes 25.8% to GDP.

98. Industrial sector contributes around 2/3rd i.e. 67% of the export earnings.
99. Per Capita income = $ 950 (2007) 100. On the basis of size of the industry there are 3 categories- Mining and quarrying, manufacturing and Electricity, gas and water supply.

101.

On the basis of the end-use there are 4 categories- Basic goods industries (minerals, cement, steel, electricity, fertilizers etc), capital goods industries (machinery, machine tools, rail road equipments etc.), intermediate goods (chemicals, rubber, plastic, coal, petroleum products) and consumer goods

102. The industrial production has grown at an annual average rate of 6.2% per annum over the palnnig period. 103. The eleventh plan aims at 8.5% per anuum growth in the GDP. This will require industry to grow at 10% p.a. and manufacturing at 12% during the eleventh plan. 104. Pattern of industrial development:Lop-sided development dominated by too large and too small industries units Capital employed per worker in industry is low

105. In the period 1965-80 there was deceleration and retrogression (the growth of elite-oriented consumption goods such as man-made fibers, beverages, perfumes, cosmetics, watches, clock etc. was considerably higher than the goods which satisfied the needs of mass of the people such as coal, cotton, railways etc.)

106.

The structure of industry has shifted in favour of basic and capital goods and intermediate goods.

107. The programme of industrialization was started on massive scale in the second plan (1956-61) 108. Mahalanbis model emphaiszed on building basic and capital goods industries.

109.

Three plants were set up in public sector at Bhilai, Rourkela, and Durgapur in second plan.

110. There has been a remarkable growth of consumer goods industries over the years. 111. Industrial sector has become broad-based and modernised. The role of traditional like yextiles has REDUCED and role of non-traditional industries like PRASHANT KUMAR Agrawal Classes Contact 099230 62125, 93733 59312

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engineering goods, tremendously.

chemical

goods

and

electrical

goods

has

improved

112. There has been a massive increase in the size and diversification of public sector. 113. In March 2008, the number of public sector units = 242, cumulative investment = Rs. 4,55,000 crores. 114. Classification of Micro, small, medium and large enterprises:-

Enterpri ses Micro Small Medium Large

Manufacturing Up to 25 lakhs 25 lakhs - 5 Crores 5 Crores 10 Crores More than 10 Crores

Service Up to 10 Lakhs 10 Lakhs 2 Crores 2 Crores 5 Crores More than 5 Crores.

115. 116.

The number of registered and unregistered units = 128 lakhs The growth rate of small sector is 10% p.a. in terms of production.

117. Small scale sector contributes around 39% of the gross value of output in the manufacturing sector. 118. Small scale sector represents about 60% of the total industrial employment.

119. Small scale sector contributes over 40% of the MANUFACTURING EXPORT and 33% of the TOTAL EXPORTS. 120. 121. 122. Average underutilization in industrial sector is 40%-50%. ICOR = Incremental capital output ratio ICOR for Industrial sector is rising

123. The accumulated losses of central public units stood at more than Rs. 42,000 Crore in 2005-06. 124. Out of the total sick units, 96% are from small sector units. Share of service in GDP = 67% (2009-10) Service sector employs 22.5% of the working population. (2001) Service accounted for more than 55% of total exports in India (2008-10) In the list of exporters of commercial services, India ranked 9th.

125.
126.

127. 128. 129.

The government of India gave a special status to the service sector in the Export and Import Policy (2007-12) = 9%

130. The average growth rate of service sector during the Tenth Plan approximately

131. The Eleventh Plan aims at an annual growth rate of 9.4 % for the service sector. PRASHANT KUMAR Agrawal Classes Contact 099230 62125, 93733 59312

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132. 133. 134.

India has second largest scientific and technical manpower in the world. BPO = Business Process Outsourcing (growth rate 60%-70%) Income elasticity of demand for services is GREATER THAN ONE.

135. GDP = money value of all FINAL goods and services produced in DOMESTIC TERRITORY in an ACCOUNTING YEAR. 136. Domestic territory includes:-

(a) Territory lying within the political frontier, including territorial water (b) Ships and aircrafts operated by the RESIDENTS of the country between two or more countries (c) Fishing vessels, oil & natural gas and floating plate-forms operated by RESIDENTS (d) Embassies, consulates and military establishments of the country located abroad. 137. 138. 139. GDP (FC) = GDP (MP) IT + S, IT = indirect taxes, S = subsidies NDP = GDP depreciation GNP = GDP + Net Factor Income From Abroad

140. Net Factor Income from abroad = factor income earned by the residents abroad factor income paid to the non-residents 141. 142. NNP = NDP + NFIA NNP at factor cost is known as national income.

143. NNP (FC) = FID + NFIA, FID = factor income earned in the domestic territory of a country

144.
145. 146.

Personal Income (PI) = National income social security contribution corporate income taxes undistributed corporate profits + personal payments Personal Disposal income (PDI) = PI individual income taxes There are 3 methods of measuring national income

(a) Value added method (product/production method) (b) Income method (c) Expenditure method 147. VALUE ADDED METHOD categorizes the whole economy in 3 parts

(a) Primary sector (b) Secondary sector (c) Tertiary sector

148.

Net product/value added = Gross output value of Raw material and intermediate goods & services Depreciation

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149. Result of National Income measured by Value added method is Net Domestic Product 150. Under Net value added the following are included-

(a) Own account production of Fixed Assets by government, enterprises and households (b) Production for self consumption (c) Imputed rent of owner occupied houses (d) Brokerage, Commission paid on sale of second hand goods/assets 151. Sale of second hand machines are not included in the calculation of national income 152. In India, Government services are treated as FINAL

153. Some of the productions are excluded because there is no method to value them in money terms or there is difficulty in securing data. 154. Under Income method, factor incomes of all the factors of production of all the producing units are added to get national income. 155. ONLY, incomes earned by owners of primary factors of production are included in national income. 156. Transfer incomes such as pensions, scholarships, unemployment allowance etc are NOT included. 157. Both Labour and Non-labour income are included in calculating national income by Income method 158. Labour income = Wages & salaries, bonus, Commission, Employers contribution to provident fund, Compensation in kind. 159. Non-labour income = Dividends, Undistributed profits of corporations before taxes, interest, rent, royalties, profits of unincorporated enterprises and of government enterprises. 160. Net Income from abroad is NOT added if national income is calculated by INCOME RECIEVED BY PEOPLE.

161. 162.

Net Income from abroad SHOULD BE ADDED if national income is calculated by INCOME PAID OUT BY PRODUCERS. Expenditure method categorises the whole economy in 3 parts household sector, Business sector and Government sector.

163. Total expenditure made by the above sectors are added to get national income. 164. Expenditure on financial assets PRODUCED & OWNED WITHIN THE COUNTRY is EXCLUDED but expenditure on financial assets of foreign countries is INCLUDED in national expenditure.

165.

ONLY, Net expenditure on financial assets is added.

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166. Net Expenditure on financial asset / Net foreign Investment = Expenditure on foreign financial assets by residents expenditure on countrys financial assets by non-residents or foreigners 167. Goods produced in preceding years, expenditure on raw materials and intermediate goods and services, Government expenditure on pensions, scholarships, unemployment allowance and other transfer payments are EXCLUDED. 168. Net domestic Expenditure = Consumption expenditure + Net domestic investment 169. Net National Expenditure = Consumption expenditure + Net domestic investment + Net foreign Investment 170. Gross National Expenditure = Consumption expenditure + Net Domestic investment + Net foreign Investment + Replacement Expenditure 171. Ideally all the three methods should give the same result but practically it does not happen because of lack of proper and reliable data. 172. In India, in agriculture sector production method, in small scale sector Income method and in Construction sector expenditure method is used.

173.
174. 175.

Generally, Income method is most suitable for Developed countries Problems in measuring National Income:Presence of large non-monetized sector Lack of appropriate and reliable data Problem of double counting Problem of transfer payments Difficulties in classification of working population Unreported illegal income Economic growth rate of 3.5% has been recognized as Hindu rate of growth. Economic growth rate in 2010-11 remained at 5.7% Direct Tax = Income tax, Wealth Tax and Gift tax Income tax was first introduced in 1860. Presently, Indian Income Tax Act of 1961 is applicable.

176.
177. 178. 179.

180. In India, Income tax is PROGRESSIVE in nature i.e. as income increases the rate of tax also increases. 181. At present, the marginal rate of income tax is 30%.

182. Over the years, the degree of progressivity of the Income tax schedule has been considerably reduced. 183. Corporate are taxed at FLAT RATE.

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184. 185. 186.

Estate duty was first introduced in 1953. Wealth Tax was introduced in 1957 Gift tax was abolished in 1998.

187. Gift tax was partially re-introduced in April 2005. (limit = Value more than Rs. 50,000). It is charged under Income from other sources. 188. 189. Indirect tax = Custom duty, Excise duty, Sales tax and Service tax Custom duty is levied on exports and imports.

190. Import duty is levied on the basis of ad valorem i.e. as a % of price of the commodity. 191. sales 192. An excise duty is levied on production and has NO connection with actual

Over the years, excise duty has been reduced.

193. MODVAT (Modified Value added tax ) was introduced in 1986-87 (now it does not exist) 194. CENVAT (Central Value Added Tax) was introduced in 2000-01. CENVAT considers only one basic excise duty of 8% and some special excise

195.
duty. 196. 197.

Sales tax is levied on business transactions. Sales tax is higher on luxury goods and less or nil in necessities.

198. Value Added tax (VAT) is a multistage sales tax with credit for taxes paid on business purchases. 199. VAT is non-cascading in nature

200. VAT was introduced in 1999 and was implemented in April 2005 in some states. 201. 202. 203. 204. 205. At present 33 states / UTs have implemented VAT. Service tax was introduced in 1994-95. Present rate of service tax is 10%. Total tax revenue forms about 20% of the total national income. The share of DIRECT TAX in gross tax revenue = 40%, INDIRECT TAX = 60% Only about 2.5% of the population is liable to pay income tax in India. Indirect taxes are DIFFRENETIAL and REGRESSIVE in nature. The agriculture income is exempt from the income tax. Population in 2008-09 = 115 crores

206.
207. 208. 209.

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210. India has only 2.4 % of the total world area, less than 1.2% of the worlds income and around 16.7 % of the worlds population. 211. 212. 213. 214. 215. 216. 217. 1921 is known as Year of Great Divide for Indias population. Birth rate/death rate = number of birth/death per thousand of population Both birth rate and death rate have declined over the years Birth rate (2007) = 23.1, Death rate (2007) = 7.4 Kerala has lowest birth rate; West Bangal has lowest death rate Population density = Number of persons per square kilometre Population density has increased over the years

218. Population density in India = 324 per Sq Km, West Begal mostly dense = 904 persons per Sq Km, AP- least dense = 13 persons per Sq Km. 219. Sex ratio = number of females per 1000 males

220.
221. 222.

Sex ratio in India = 933 females per thousand of males; Kerala has most favourable sex ratio; Haryana has the lowest female sex ratio (861) Life expectancy at birth = mean expectation of life at birth Life expectancy at birth has improved over the years.

223. Life expectancy at Birth = 63.8 years. FOR MALES = 62.3 and FOR FEMALES = 65.3 years 224. 225. 226. Kerala has the highest life expectancy at birth. Literacy ratio = number of literates as a percentage of total population Literacy ratio has improved over the years.

227. Literate persons are more responsive to family planning programme than illiterate ones. 228. Literacy is higher among urban population than rural population.

229.

Literacy Ratio = 65.38, Males = 75.85% and Females = 54.16% KERALA = HIGHEST LITERACY RATE = 90.86%

230. Population generally increases because of high birth rate, relatively lower death rate and immigration

231.

3 stages of demographic theory: 1st stage= Both BR and DR are very high i.e population remains stable, 2nd stage (STAGE OF POPULATION EXPLOSION) = BR comes down slightly BUT DR comes down heavily, 3rd stage = Both BR and DR are low Till now, national income rose by more than 12 times since independence Per capita food grains availability = 443 gm A full-fledged department of family planning was created in 1966

232. 233.
234.

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235. 236.

National Population Policy was introduced in 2000 with a view to encourage two-child norm and stabilizing population by 2046. Xth Plan targeted reduction in IMR to 45 per 1000 by 2007 and 28 per 1000 by 2012; reduction in MMR to 2 per 1000 live birth rates by 2007 and 1 per 1000 live births by 2012.

237. When poverty is NOT related to the income or consumption expenditure distribution, it is absolute poverty. 238. When poverty is related to the income or consumption expenditure distribution, it is relative poverty. 239. The concept of absolute poverty is more relevant for the less-developed countries 240. The concept of relative poverty is more relevant for the developed countries. 241. A person is below poverty line if his daily consumption of calories is less than 2400 in rural area and 2100 in urban area. 242. The tenth plan had set a target of reduction in poverty ratio to 19.3% by 2007 and to 11% by 2012. 243. Pradhan Mantra Gram Sadak Yojana = launched in December 2000, to provide road connectivity in rural areas. 244. India Awas Yojana = Financial assistance to be given to poor living in rural areas for construction of houses. 245. Swarna Jayanti Gram Swarozgar Yojana = Introduced in 1999, aims at bringing the self employed above the poverty line by providing them income generating assets. 246. Voluntary Unemployment- those who are unwilling to work at the prevailing wage rate or need not work due to already getting inherited income. 247. Frictional Unemployment- Temporary out of work while changing the job UnemploymentUnemployment occurring due to short-term

248. Casual contracts 249. 250.

Seasonal Unemployment Unemployment created due to season Structural unemployment Due to structural change in economy

251. Technological unemployment Unemployment created due to introduction of new technology 252. 253. 254. 255. Cyclical unemployment Unemployment created due to trade cycles Chronic unemployment when unemployment tends to be long-term Disguised unemployment No actual contribution of employed persons MOST of the unemployment in India is STRUCTURAL

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256. Urban employment type is generally industrial unemployment and educated unemployment 257. 258. Rural Unemployment is seasonal and disguised in nature. X th Plan had target of creating 50 million jobs BUT 47 millions were created

259. Labour Force Labour Force Participation Rate (LFPR) is defined as number of persons in the labour force per 1000 persons 260. Work Force- No of persons / persons days employed per 1000 persons / persons days 261. days Unemployed rate No of persons unemployed per 1000 person / Person

262. USUAL STATUS measures no of persons who may be said to be chronically unemployed 263. Current Weekly status a person is said to be employed for a week if he is employed for a day in that week

264.

Current daily status It counts every halfs day activity status of the respondents over the week

265. A 3 % increase in industrial production in the world is accompanied by a 2% increase in energy consumption

266. 267.
268.

India currently ranks as the worlds 7th largest energy producer accounting for about 2.49% of the worlds total energy production. It is worlds 5th largest energy consumer accounting for about 3.45 % of the worlds total energy consumption. Indias per capital energy consumption is one of the lowest in the world.

269. Nearly 50% of population does not have purchasing power to enter the market for commercial energy

270. 271.
272.

27% of the energy consumed is obtained from non-commercial sources or traditional sources Use wise Industry = 38%, domestic = 24%, commercial establishment = 9% Electricity production 1,75,000 MW in 2008-09 agriculture = 22% and

273. Sources of electricity Water Hydel, Coal , gas thermal and radio active elements- Atomic energy

274.
others

CAPACITY WISE- thermal = 62 %, Hydel = 21 % and Nuclear = 2.5%, rest

275.
276. 277.

In terms of generation of power Thermal = 73%, Hydel & Wind = 13.5% and Nuclear = 2.0%, others = 11.5% NTPC = National Thermal Power Corporation OPEC = Organization of Petroleum Exporting Countries

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278.
279. 280. 281. plant

OIL Import Bill at Rs. 320,000 crores in 2005-06. Petroleum, Oil and Lubricants constitute approx 30-33% of Import Bill 23% loss of electricity in Transmission and Distribution (T & D) Plant load Factor (PLF) measures the operational efficiency of a thermal

282. Plat Load factor is lowest in North Eastern region and highest in Southern Region.

283.
284.

Nearly 19% villages are NOT electrified. Electricity Act was passed in 2003

285.

The focus of electricity Act was improved investment in power sector and fixing of power tariffs on the basis of competition, efficiency, economical use of resources, commercial principles and consumers interest.

286. Partnership In excellence Programme to set up 26 thermal stationswith PLF less than 60% 287. In 2002, power sector was privatized in Delhi.

288. ALL INDIA POWER GRID (NATINAL GRID) is envisaged to be developed by the year 2012. 289. RAJIV GANDHI GRAMEEN VIDHYUTIKARAN PROGRAMME started in 2005 INDIAN RAILWAYS- ASIAs Largest and WORLDs 3rd largest network 67% of rail revenue from Freight and 33% from Passengers segment Railway Route is 63.5 thousand kilometres.

290.
291.

292.

293. Indian road network is one of the worlds largest network with 3.34 million kilometre

294. 295.
296.

Roads carry nearly 61% of freight and 87% of the passengers traffic India has a long coast line of 7517 Km, 12 major ports and 200 minor ports Vishakhapatnam is the top traffic handler. The 12 major ports carry about three fourth of the total traffic.

297.

298. Private sector market share in the domestic traffic is around 78.5% with jet airways emerged as market leader. 299. Airport Authority of India manages 92 airports

300. Department of Civil Aviation (DCA) is responsible for regulatory and developmental aspects of airport 301. Indian postal system dates back to 1837, presently we have more than 1.55 lakh post offices. Out off 8000 post offices are computerised

302.

1 post office serves 7174 persons and approx 21 sq km

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303. 304. 305. 306. 307. 308. 309. 310.

VSAT = Very small Aperture terminals AMPC = Automatic Mail Processing centers Project arrow is related to department of posts Village Public Telephone (VPT) Indias telephone network is the third largest in the world. Tele density = 35.65% BSNL = Bharat Sanchar Nigam Limited MTNL = Mahanagar Telephone Nigam Limited

311.

Regulatory framework and functions are carried out by Telecom Regulatory Authority of India (TRAI)

312. National internet Exchange of India has been set up to ensure that internet traffic originated and destined for India is routed within India. 313. National Policy on Education was launched in 1986. It had set a goal of expenditure on education at 6% of the GDP

314.

Sarva Shiksha Abhiyan (SSA) was launched in 2001. Aiming all children in school by 2005 and universal retention by 2010

315. National Programme for Education of Girls at Elementary Level (NPEGEL) is an important of SSA.

316.

National Literacy Mission (NLM), also known as Adult Education and Technology mission. It aimed at imparting functional literacy to non-literates in the country in the age group of 15-35 years. Demand Pull Inflation = More money chases few goods

317.

318. Cost Push inflation = Price rise due to increase in cost of factors of production 319. Stagflation = Combination of Demand Pull + Cost push.

OR when aggregate demand increase at a fast rate due to high public expenditure and expansion of credit money OR Economy is growing slowly with high rate of inflation 320. Deflation = opposite of Inflation

321. Inflation rate in 2006-07 has been on a general upward trend with intermittent decrease 322. The long term Inflation for 2001-06 comes to be 4.7 %.

323. Causes of Inflation in India- Increase in public expenditure, Deficit financing, erratic agricultural growth, agricultural price policy of the government, inadequate rise in industrial production, upward revision of administered prices etc. 324. Public Expenditure is approx 35% of NNP in 2007-08

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325. Approx 45% of developmental activities

the

government expenditure in

India

is

on

non-

326. MONETARY MEASURES to check Inflation BY RBI Sell GOI securities / Increase CRR/ Increase Bank rate/ Increase SLR.

327.
328. 329.

FISCAL MEASURES to check Inflation BY GOI Increase tax rate, Control over public expenditure, launch of new type of taxes etc Budget Deficit = Total Receipt Total expenditure Fiscal Deficit = Budget Deficit + Borrowings and other Liabilities

330. To restore Fiscal Deficit, FRBM (Fiscal Responsibility and Budget management) Act was passed in 2003. It aims at reducing Gross Fiscal Deficit by 0.5% of the GDP every year

331.

Fiscal Deficit as % of GDP in 2006-07 = 3.5%, in 2007-08 = 2.7%

332. Sixth pay commission recommendations led to an upsurge in the fiscal deficit to 6.2% of GDP. 333. Balance of trade = Value of goods sold to outside Value of goods purchased from outside 334. Balance of Current account = Balance of Trade + balance of services + Balance of Unilateral Transfers

335.

Balance of Payment on Capital account = Includes balances of private direct investments, Private portfolio investments, government loans to foreign governments

336. Balance of payment = Balance of current account + Balance of Capital account 337. 338. BOP always balances BOP surplus adds to external reserves, BOP deficit reduces external reserves

339. In the Eleventh Plan exports are projected to grow at about 20% per year and imports 23%.

340. 341.
342.

The share of concessional debt has been decreased over a period of time. Presently it is 20% of total debt. Indias External debt = Rs. 9, 00,000 crores at the end of 2008. Indias External Debt = 19% of GDP at the end of March 2008. India ranks 6th in top ten debtor countries Indias exports of goods = 14% of GDP At present there are 6 industries which need industrial licensing At present there are 3 industries reserved for public sector

343. 344.
345. 346.

347. Foreign investment in Defense production is allowed up to 26%. A minimum capital of Rs. 100 crore is required. PRASHANT KUMAR Agrawal Classes Contact 099230 62125, 93733 59312

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348.

FDI: (Under Automatic Route): BANKING = 74%, AIR TRANSPORT SERVICES = 49%, TELECOM = 74%, Distillation of alcohol/ industrial explosives/manufacture of hazardous chemicals, laying of natural gas lines = 100% The New Industrial Policy was launched in 1991.

349.

350. Prime Lending rate (PLR) of banks for commercial credit are now entirely within the perview of the banks and not set by the RBI. The rate of saving accounts and rates of interest on export credit are still subject to regulation by RBI. 351. 352. 353. 354. Rate of interest on saving deposits of commercial banks is 3.5%. NPA = Non-performing assets NPA is related to banking sector. EOU = Export Oriented Units; EPZ = Export promotion Council

355. BASEL II framework is related to Banking sector = was to be operationalized from March, 2008 356. Rupee was DEVALUED twice in July 1991; CUMULATIVE DEVALUATION 19%

357. EXIM Policy was announced in 1992- to allow free trade of all items except a negative list of imports and exports 358. IMPORT TARIFF lowered to 10%

359.
360.

EPCG (EXPORT PROMOTION OF CAPITAL GOODS) was introduced in 1990 to encourage imports of capital goods. SEZ = Special Economic Zones

361.

SEZ policy was announced in 2000; main objectives = generation of additional economic activity, promotion of exports of goods and services, promotion of investment, creation of employment opportunities and development of infrastructure facilities. Presently Foreign Exchange reserve is approximately US $ 280 Billion Vishesh Krishi Upaj Yojana has been started to promote agricultural exports. Duty Free Export Credit (DFEC) = SERVED FROM INDIA SCHEME

362. 363. 364.

365. Liberalization = Relaxation of previous government restrictions usually in areas of social and economic policies 366. Privatisation = Transfer of assets or service functions from public to private ownership or control and opening of closed areas to private sector entry. 367. Disinvestments = Disposal of public sectors units equity in the market or private people 368. Various methods of Disinvestments: Equity Offering followed by Issue of GDR (Global Depositary Receipt) Cross-holding = selling part of shares in one PSU to other PSU

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Warehousing = Governments own financial institution buying governments stake in select PSU and holding them until any third buyer emerged and retaining golden share (26%) Strategic Sale = selling small portion of govt stake to a strategic buyer and also gives over the management control Differential Pricing method = sale of shares of PSUs to public sector financial institutions and banks

369. Disinvestment programme had started in 1991-92 370. By 2006-07, total collection from disinvestment = Rs. 49,214 Crore

371. Convertibility of Rupee = allowing to determine its own exchange rate without
official interventions

372. India achieved full convertibility on current account in August 1994


373. As a first step towards full convertibility of rupee, rupee was devalued against major currencies in 1991. This was followed by introduction of dual exchange rate system in 1992-93 and full convertibility on trade account in 1993-94. 374.Full Convertibility of CAPITAL ACCOUNT = TARAPORE COMMITTEE II 375.A FIVE year Framework (2007-2011) has been given for full convertibility on capital Account 376.TRIPs = Trade Related Intellectual Property Rights

377.

Indias share in World EXPORT = 1.1 % in 2007-08

378.In the 10 years period, 1996 2006, EXTERNAL DEBT GREW BY US$ 3 BILLION every year 379.IMF provides short term credit to member countries

380. 381.

IMF has 186 member countries

World Bank (IBRD = International Bank for Reconstruction and Development) was established in 1945. It provides Long-term loans to member countries. It has 186 members WTO was established on 1st Jan 1995. Member countries = 153. Its aims at making the whole world a big village

382.

383.M1 = Currency + Demand Deposits + Other deposits with RBI 384.M2 = M1 + Time liabilities portion of saving deposits with banks + CD + Term deposits maturing within a year 385.M3 = M2 + term deposits with banks with maturity over one year + call/term borrowings of the banking system

386. 387.

At present there are 19 nationalized banks. Only 5000 villages are being served by commercial banks. Population per bank office is 15000. % of rural branches bank is about 41%.

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388.

Agriculture, SSI and Small retail trade credit = 44% of total credit

389. Bank Rate = The rate at which the RBI discounts the bills of commercial banks. 390. Open Market Operation = Sell/Buy of GOI securities

391. CRR = That portion of total deposits which a commercial bank has to keep with the RBI. 392. SLR = that portion of total deposits which a commercial bank has to keep with itself in the form of liquid assets viz- cash, gold or approved government securities. 393. To discourage investment/Control credit/control inflation = sell securities/ Increase bank rate/Increase CRR/Increase SLR 394. To encourage investment / in recession = buy securities/ decrease bank rate, CRR, SLR 395. 396. 397. 398. 399. 400. Repo rate = the rate at which our banks borrow rupees from RBI Reverse Repo Rate = the rate at which RBI borrows money from banks. Decrease in Repo rate = will help banks to get money at cheaper rate Increase in Repo Rate = Borrowing from the RBI will be more expensive. Increase in Reverse Repo rate = Less money available with banks Decrease in Reverse Repo Rate = More money available with banks.
CRR Bank Rate Repo Rate Reverse Repo Rate SLR Foreign Exchange Reserve 6% 6% 6.25% 5.25% 24% US $ 295 Billion

ALL THE VERY VERY BEST!!!!!!!!!

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