LAWprep/Sample Notes/CLAT 2009

Concept: National Income

 National income (NI) is calculated by CSO (Central Statistical

Organisation). Base Year is taken as 1999-2000 (From 2005-06). (Earlier
1993-94)
 GDPMP: - Sum total of the market value of all final goods and services
produced within the domestic territory of a country during an accounting
year (counted without duplication)
 GNPMP : - GDPMP + Net factor income earned from abroad (In India,
GDP>GNP)
 Depreciation value of consumption of fixed capital = GDP-NDP
(NDPMP: - GDP – Depreciation)
 NNPMP: - GNP – Depreciation (NNP = NDP + Net factor income from abroad).
 GDPFC: - GDPMP – Net direct Taxes
(Net direct taxes = Indirect taxes paid = Subsidies received).
 Therefore GDPPFC = GDPMP – Indirect taxes + Subsidies
 When NNP is obtained at factor cost, it is known as “National Income”.
NI = NNPFC. Therefore NNPFC = NNPMP – Indirect taxes + Subsides
 NI at current Prices: Goods and services are valued at prices prevailing in
the current year for which NI is calculated.
 NI at constant Prices: If goods and services are valued at constant prices
i.e. with reference to some base year in past. It eliminates the effect of
rising prices. Therefore known as real NI.

Per capita income = Total income

Total population of the country

 Purchasing power party: PPP Index is constructed by taking into account

what a unit of currency can purchase in its own country as compared to
what a dollar can purchase in the US of a certain representative
internationally traded basket of good s or services. Introduced by
International Comparison Program of U.N.

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GNPMP = GDPMP – Net Factor income from abroad

NDPMP – GDPMP – Depreciation
NNPMP = GNPMP – Depreciation
GDPFC = GDPMP – Indirect taxes + subsidies
= GDPMP – Net Indirect Taxes
NI = NNPFC – NNDFGF
Note: Gross Domestic product (GDP), Gross National Product (GNP), Net National
Product (NNP), Net domestic product (NDP), Market Prices – MP, Factor cost – FC

Important Legislations

 1951: IRDA (Industries Development and Regulation Act)

 1969: MRTP (Monopolies and Restrictive Trade Practices Act)
 1973: FERA (Foreign Exchange Regulation Act)
 2000: FEMA (Foreign Exchange Management Act) came into force (Sun – set
Clause)
 2002: FEMA became fully operational. It differed from FERA in that the
violation under FERA comes under criminal act while FEMA violations are civil
offence.

COMPETITION ACT 2002

 By S.S. Raghvan committee

 Establishment of a Competition Commission of India (CCI)
 OTHER PROVISIONS
1. Establishment of a commission to prevent practice having adverse
effect on competition.
2. To promote and sustain competition in markets in India
3. To protect the interests of consumers.
4. To ensure freedom of trade carried on by participate in market in
India for related matters.
 Area Covered
1. Prohibition of anti – competitive agreements
2. prohibition of abuse of dominance
3. Regulation of Mergers and Acquisitions

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Important Reports With The Institutions That Issue Them

Title Issuing Institution

World Development Report World Bank
World Economic Outlook United Nations
World Trade Report WTO
World Investment Report UNCTAD
Human Development Report World Economic Forum (WEF)
Global Environment Outlook UNEP: United Nations Environment
Programme
Asian Development Report Asian Develop Bank
Economic Survey (India) Ministry of Finance
National Human Development Report Planning Commission
Currency and Finance Report Reserve Bank of India

Economy: Points to Remember

 Bank rate is the rate at which the RBI extends credit to the Commercial
Banks.

 Disinvestment refers to sale of share holding to raise cash.

 In the Economics the Law of demands means when price rises, demand
falls.

 Scheduled Bank is a bank included in the second schedule of RBI.

 Signatures on a hundred rupee note is of Governor, Reserve Bank of India.

 Signatures on a one rupee note is of Finance Secretary.

 The National Income in India is estimated by the Central Statistical

Organization (CSO).

 White paper is a government’s statement on the policy matters.

 Zero Based Budgeting (ZBB) lays emphasis on both preparing new budget
right from the scratch and preparing the budget neglecting the history of
expenditure.

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 “Know – Customer” Scheme launched by RBI relates to improving the

relationship between the Banker and Customer.

 Adam Smith is known as the father of Economics

 Arthashastra a book on Indian Economics was written by Kautilya.

 Money Bill is always presented first in Lok Sabha and then in Rajya Sabha.

 Bombay Samachar is the oldest existing Newspaper in India.

 First Asian games were held in New Delhi.

 J. R. D. Tata is also known as the Father of Civil Aviation in India.

Important Books on Economics:

Author Work

Karl Marx Das Capital

Adam Smith Wealth of Nations

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