A K-shaped recovery occurs when different parts of the economy recover at different rates, times, or magnitudes. For instance, technology and large corporate sectors grew, while MSMEs and contact-intensive sectors struggled.

The Rolling Plan (1978-80) was introduced by the Janata Party government. It involved a plan for the current year, a plan for a fixed number of years, and a perspective plan, which were revised annually.

GVA at Basic Prices = GDP at Market Prices - (Product Taxes - Product Subsidies). Conversely, GDP at Market Prices = GVA at Basic Prices + Net Product Taxes.

Micro: Inv<1Cr, Turn<5Cr. Small: Inv<10Cr, Turn<50Cr. Medium: Inv<50Cr, Turn<250Cr.

Regulation of Capital Markets is the function of SEBI. NITI Aayog is a policy think tank with functions like policy design, cooperative federalism, and monitoring.

RRBs and SFBs have a mandatory PSL target of 75% of their Adjusted Net Bank Credit (ANBC). Domestic commercial banks generally have a target of 40%.

In the BOT-Toll model, the private partner builds, operates, and maintains the infrastructure and recovers the investment by collecting tolls from users. In EPC, the government funds the project.

FDI indicates a long-term interest and control (usually >10% stake), whereas FPI involves buying shares/bonds for shorter-term gains without seeking control.

First generation reforms (1991) focused on product markets (liberalization). Second generation reforms focus on factor markets like labor laws, land acquisition, and legal frameworks.

RODTEP replaced MEIS because MEIS was found to be non-compliant with WTO rules. RODTEP ensures that exporters are refunded embedded taxes/duties that were not previously rebated.

A mixed economy involves both public and private sectors. "Complete state ownership" is a characteristic of a Socialist/Command economy, not a mixed one.

NITI Aayog released the comprehensive national strategy document titled "Strategy for New India @ 75" to define objectives for 2022-23.

The Services sector is the largest contributor to India's GVA, accounting for over 53% of the total economy.

PM-KISAN (Pradhan Mantri Kisan Samman Nidhi) provides direct income support of ?6,000 per year to landholding farmer families.

Within the 18% target for Agriculture, a specific sub-target of 10% of Adjusted Net Bank Credit (ANBC) is mandated for Small and Marginal Farmers.

Social infrastructure refers to structures that support social services like healthcare (hospitals) and education (schools), improving the quality of human capital. Roads and power are "Physical Infrastructure".

Outsourcing involves contracting work out to a third party, often in another country (offshoring), to reduce costs or access specialized skills (e.g., BPO services in India).

While Narasimham-I dealt with deregulation, Narasimham-II focused on "Second Generation Reforms" like stricter prudential norms, capital adequacy (CAR), and cleaning up NPAs.

ECGC Limited is a government enterprise that provides export credit insurance facilities to exporters and banks to protect them from the risk of non-payment by foreign buyers.

The World Bank consists of two institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).

The new composite criteria for Medium Enterprises requires Investment in Plant and Machinery or Equipment does not exceed ?50 crore and Annual Turnover does not exceed ?250 crore. Both conditions must be met. Exports are excluded from the turnover calculation.

The NIP envisages an investment of ?111 lakh crore with a funding share of 39% by the Centre, 40% (revised to 39%) by States, and 21-22% by the Private Sector to boost infrastructure.

India accepted full Current Account Convertibility in August 1994 (adhering to IMF Article VIII). However, Capital Account Convertibility is still partial/managed, with restrictions on debt flows and individual remittances (LRS limits).

While first-generation reforms (1991) focused on product markets and liberalization, second-generation reforms aim at difficult structural changes in factor markets like labor laws, land acquisition, and legal/judicial reforms.

SEZ units enjoy 100% income tax exemption on export income for the first 5 years, 50% for the next 5 years, and 50% of the plowed-back export profit for the next 5 years (Section 10AA of Income Tax Act).

IDA is known as the "soft loan window" of the World Bank. It offers concessional loans with zero or very low interest rates and long repayment periods to the world's poorest developing countries.

While many developed nations target 2050, India has committed to achieving Net Zero emissions by 2070, balancing its development needs with climate responsibility. Other targets like 500GW non-fossil capacity apply to 2030.

NITI Aayog, in partnership with the Institute of Competitiveness, releases the Export Preparedness Index to evaluate states' readiness and performance in exports, promoting competitive federalism.

Cyclical unemployment is directly related to the business cycle. When demand falls (recession), businesses fire workers; when demand rises (expansion), they hire. It implies a lack of aggregate demand.

Under the MCLR system, banks were slow to pass on Repo Rate cuts to customers. EBLR links lending rates directly to an external benchmark (like Repo), ensuring that any policy rate change by RBI is immediately reflected in the borrower's interest rate.

The 14th FC recommended 42%. The 15th FC adjusted this to 41%, accounting for the reorganization of the state of Jammu & Kashmir into two Union Territories (J&K and Ladakh), which are now funded by the Centre.

The RBI Act was amended in 2016 to provide a statutory basis for this framework. The target is 4% Consumer Price Index (CPI) inflation, with an upper limit of 6% and a lower limit of 2%.

Mudra loans have three categories: Shishu (up to ?50k), Kishore (?50k to ?5L), and Tarun (?5L to ?10L) for funding the non-corporate, non-farm small/micro enterprises.

MFN status means that if a country grants a trade advantage (like lower tariffs) to one WTO member, it must immediately grant the same advantage to all other WTO members. It prevents discrimination.

Sovereign Green Bonds are issued by the government to mobilize resources for green infrastructure projects (like renewable energy, clean transport) that help reduce carbon intensity.

Industrial licensing is kept only for 5 specific sectors related to security, strategic, and environmental concerns: Electronic Aerospace/Defence, Industrial Explosives, Hazardous Chemicals, Tobacco products, and Alcohol for consumption.

The GST Council, a constitutional body (Article 279A), is chaired by the Union Finance Minister. It includes the Union Minister of State for Finance and Finance Ministers of all States.

The Suresh Tendulkar Committee moved away from calorie-based estimation to a broader consumption basket including health and education expenditure, adopting the MPCE method.

The Clean Note Policy ensures the supply of good quality banknotes to the public and prevents writing on notes, enhancing their life and usability.

Nidhi companies are governed by the MCA under the Companies Act. However, the RBI has powers to issue directions regarding their deposit acceptance activities to protect depositors.

Trade Balance specifically refers to the difference between exports and imports of physical goods. If Exports > Imports, it is a Surplus.

PSLCs are traded on the RBI's CBS platform (e-Kuber). Banks buy/sell these certificates to meet their PSL targets without physically transferring the loans.

The Eight Core Industries are: Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, and Electricity. Textiles is not part of this group.

SATH aims to identify and build three 'role model' states for the Health and Education sectors to improve service delivery.

NEER is the weighted average of bilateral nominal exchange rates of the home currency in terms of foreign currencies. REER (Real Effective Exchange Rate) adjusts NEER for inflation.

M3 (Broad Money) = M1 + Time Deposits with banking system. It captures the total money supply available in the economy. M1 is Narrow Money. M0 is Reserve Money.

The automatic monetization of the fiscal deficit through the issuance of ad-hoc Treasury Bills to the RBI was abolished to check inflation and ensure RBI autonomy. It was replaced by Ways and Means Advances (WMA).

The Gig Economy involves temporary, flexible jobs where companies tend to hire independent contractors and freelancers instead of full-time employees (e.g., Uber, Zomato workers).

Kerala has consistently topped the SDG India Index due to its strong performance in health, education, and gender equality goals.

BRBNMPL was established by RBI in 1995 to manage the currency note printing presses at Mysore and Salboni.

The **SEBI Act, 1992** provides the statutory framework for the establishment, powers, and functions of the Securities and Exchange Board of India. It explicitly mandates SEBI to protect the interests of investors in securities, promote the development of the securities market, and regulate it to ensure market integrity, transparency, and fair practices.

The RBI uses two types of credit control: Quantitative and Qualitative. **Quantitative tools** (like **CRR, SLR, Repo Rate**) affect the overall *volume* of credit in the economy. **Qualitative (Selective) tools** (like Moral Suasion, Margin Requirements, Rationing) affect the *distribution* or direction of credit to specific sectors. Therefore, changing CRR/SLR is a quantitative, not qualitative, tool.

The **3-Year Action Agenda** is a dynamic document designed to respond to changing economic conditions. Unlike the rigid Five-Year Plans, the Action Agenda is aligned with the government’s financial planning and is meant to be reviewed and updated **Annually** to ensure that the targets remain relevant and the implementation is on track with the annual budget allocations.

**Transfer Payments** involve the government giving money to individuals (like pensions, scholarships, subsidies) without receiving any goods or services in return. Since these payments do not create any physical or financial asset for the government and do not reduce any liability, they are strictly classified as **Revenue Expenditure**. They are essentially redistribution of income.

The term **"Hindu Rate of Growth"** was coined by economist Raj Krishna to describe the slow, sluggish, and stagnant annual growth rate of the Indian economy, which averaged around **3.5%** from the **1950s to the 1980s**. This period was characterized by the License Raj, inward-looking policies, and low capital formation, before the acceleration seen after the 1991 reforms.

Within the Tertiary (Services) Sector, the sub-segment comprising **Financial, Real Estate, and Professional Services** is consistently the largest contributor to India's GDP. This segment reflects the high value-added activities of banking, insurance, IT services, and corporate real estate, which have grown faster than traditional services like trade or transport.

The **Reserve Bank of India (RBI)** is the sole authority vested with the power to grant licenses for commencing banking business in India. This power is derived from **Section 22 of the Banking Regulation Act, 1949**. No company can carry on banking business in India without a license issued by the RBI, ensuring strict regulatory oversight.

The **Reverse Repo Rate** is the interest rate at which the RBI absorbs liquidity from banks against the collateral of eligible government securities. When there is **excess liquidity** in the system (which could fuel inflation), the RBI increases the Reverse Repo Rate or conducts VRRR auctions to encourage banks to park their surplus funds with the central bank, thereby removing money from circulation.

The structure of **NITI Aayog** mandates that the **Prime Minister of India** serves as its **Chairperson**. This high-level leadership ensures that the think tank's strategic policy directions have the highest political backing and can effectively coordinate between the Central Ministries and State Governments. The NDC is effectively defunct, and MPC is chaired by the RBI Governor.

**Disinvestment** is the specific term used for the government action of selling or liquidating its assets, usually shareholding in Central Public Sector Enterprises (CPSEs). When the government sells a minority stake (less than 50%) but retains control, it is disinvestment. If it sells a majority stake and transfers control to a private entity, it becomes **Strategic Disinvestment** or Privatization. All disinvestment proceeds are treated as Capital Receipts.

Economic activities are broadly grouped into three sectors: Primary (Agriculture/Extraction), Secondary (Manufacturing/Construction), and **Tertiary (Services)**. The Tertiary sector involves the provision of intangible goods or services to consumers and businesses, such as banking, education, healthcare, tourism, and transport. It is currently the largest contributor to India's GDP.

The **1991 Economic Crisis** was triggered by a severe **Balance of Payments (BOP) crisis**. India’s foreign exchange reserves had fallen to critically low levels (barely enough to cover 3 weeks of imports), and the country was on the verge of defaulting on its external debt obligations. This crisis forced the government to approach the IMF for a bailout, which came with conditionality that led to the structural LPG reforms.

The **Insurance Regulatory and Development Authority of India (IRDAI)** is the statutory body formed under the IRDA Act, 1999. Its preamble explicitly states its mission: "to protect the interests of the holders of insurance policies, to regulate, promote and ensure **orderly growth of the insurance industry**." It covers life, non-life, and health insurance sectors.

The **Bank Rate** is defined in Section 49 of the RBI Act as the "standard rate at which the Bank is prepared to buy or re-discount bills of exchange." In modern practice, it acts as a penal rate (aligned with the MSF rate) charged by the RBI on banks for shortfalls in meeting reserve requirements (CRR/SLR) or for long-term lending. Unlike Repo, it does not necessarily involve the sale/repurchase of securities.

The fundamental shift from Planning Commission to **NITI Aayog** was to move away from the "command and control" approach of centralized planning to a **knowledge-based** approach. NITI Aayog acts as a **"Think Tank"** and a "Knowledge and Innovation Hub," providing research, data, and strategic advice to the Centre and States to foster competitive and cooperative federalism, rather than just allocating funds.

**Corporate Tax** (or Corporation Tax) is a direct tax imposed on the net income or profit of corporate entities (companies). It is one of the largest sources of revenue for the Central Government in India. Unlike Income Tax (levied on individuals) or GST (levied on supply of goods/services), Corporate Tax specifically targets the earnings of businesses.

The **Industrial Policy Resolution of 1956** is often called the "Economic Constitution of India." It classified industries into three schedules, with Schedule A (17 industries) reserved exclusively for the State. This policy cemented the **Public Sector's (PSUs)** role as the prime mover of industrial development, relegating the private sector to a supplementary role, subject to strict licensing (License Raj).

The **Human Development Index (HDI)**, published by the UNDP, measures development using a composite statistic of three dimensions: 1. **Health**: Measured by **Life Expectancy at Birth**. 2. **Education**: Measured by Mean Years of Schooling and Expected Years of Schooling. 3. **Standard of Living**: Measured by **Gross National Income (GNI) per capita** (PPP). Therefore, "All of the above" covers the key components.

Although the Pension Fund Regulatory and Development Authority (PFRDA) was initially established through an executive order in 2003 to oversee the National Pension System (NPS), it received its full **statutory status** and legal powers only after the passage of the **PFRDA Act, 2013**. This Act empowers PFRDA to regulate, promote, and ensure the orderly growth of the National Pension System.

The amended RBI Act (2016) specifies the mandate of the Monetary Policy Committee (MPC). Its primary objective is to maintain **price stability** (controlling inflation within the 2-6% band). However, the Act explicitly states that this must be done **"while keeping in mind the objective of growth."** This dual mandate acknowledges that extremely tight monetary policy to control inflation could harm economic growth, so a balance must be struck.

The **Planning Commission** operated as a central authority that dictated plans and funding. **NITI Aayog** was established to serve as a **Knowledge and Innovation Hub**. Its role is to accumulate best practices from across the world and within India, disseminate this knowledge to states, and provide technical expertise for policy formulation, thereby acting as a strategic resource center rather than a funding authority.

This is the technical definition of **Fiscal Deficit**. Formula: Fiscal Deficit = Total Expenditure - (Revenue Receipts + Non-Debt Capital Receipts). Non-debt capital receipts include recovery of loans and disinvestment proceeds. The Fiscal Deficit represents the **total borrowing requirement** of the government from all sources to bridge the gap between its spending and its non-borrowed income.

A **Mixed Economy** is an economic system that combines elements of both capitalism (market economy) and socialism (planned economy). It ensures the **coexistence of both the Private Sector and the Public Sector**. In India, this model was adopted to allow the government to control strategic industries (public welfare) while allowing private enterprise to drive other sectors (efficiency and innovation).

Developing economies share certain common characteristics. India is classified as such primarily due to its **low per capita income** (compared to developed nations) and a continued heavy **dependence on agriculture** for employment (even though the service sector contributes more to GDP). Other features include high poverty levels, income inequality, and infrastructural challenges.

The **Securities and Exchange Board of India (SEBI)** is the designated regulator for the **Capital Market** (Securities Market). Its statutory mandate includes three key objectives: to protect the interests of investors in securities, to promote the development of the securities market, and to regulate the securities market to ensure it functions in an orderly and healthy manner.

The **Repo Rate** (Repurchase Rate) is the key policy rate signaled by the RBI. It is the rate at which the RBI lends money to commercial banks for the short term against government securities. Being the benchmark policy rate, changes in the Repo Rate directly influence the cost of funds for banks, which in turn affects the lending and deposit rates for the entire economy. It anchors the money market interest rates.

Within the NITI Aayog's planning framework, the **3-Year Action Agenda** serves as the short-term planning document. It is designed to be actionable and details specific policy changes and programs to be implemented within a three-year timeframe. This timeframe allows for better alignment with the government’s expenditure planning and political cycle, offering more flexibility than the rigid Five-Year Plans.

In economics, variables are classified as Stock or Flow. A **Stock** variable is measured **at a specific point in time** (e.g., Wealth, Public Debt, Money Supply as on 31st March). In contrast, a **Flow** variable is measured **over a period of time** (e.g., GDP, Income, Deficit during the year 2023-24). Understanding this distinction is fundamental to fiscal and monetary analysis.

While the RBI sets KYC/AML guidelines and FIU-IND analyzes suspicious transactions, the **Directorate of Enforcement (ED)** is the specialized financial investigation agency under the Ministry of Finance. It has the primary statutory power to investigate and prosecute cases of Money Laundering under the **Prevention of Money Laundering Act (PMLA), 2002**, including the attachment and confiscation of property derived from crime.

The **Reverse Repo Rate** is the rate banks earn when they deposit surplus funds with the RBI. By **increasing** this rate, the RBI makes it more attractive and profitable for banks to keep their money with the central bank rather than lending it out in the market. This action effectively **absorbs liquidity** from the banking system, reducing the money supply available for lending, which helps in controlling inflation.

The Standing Deposit Facility (SDF) was operationalized in April 2022 to act as the floor of the LAF corridor, replacing the Fixed Rate Reverse Repo Rate. Unlike Reverse Repo, the SDF allows banks to park excess liquidity with the RBI without the need for the RBI to provide collateral (government securities) in return. This empowers the RBI to absorb unlimited liquidity without being constrained by its holding of government securities.

Tax Buoyancy explains the relationship between the changes in the government's tax revenue growth and the changes in GDP. A buoyancy greater than 1 implies that tax revenues are growing faster than the GDP (economy), indicating a robust and efficient tax system. It accounts for both automatic growth in revenue due to economic growth and discretionary changes in tax policies.

The PLI scheme offers financial incentives to companies based on the incremental sales of products manufactured in India. It aims to create global manufacturing champions in India across strategic sectors (like electronics, pharma, auto, textiles), create jobs, and reduce the reliance on imports, thereby strengthening the "Atmanirbhar Bharat" initiative.

IFSCA is a unified authority established to regulate all financial services in International Financial Services Centres (IFSCs) in India. Prior to its establishment, domestic regulators like RBI, SEBI, PFRDA, and IRDAI regulated business in IFSCs. The first IFSC in India has been set up at GIFT City, Gandhinagar, Gujarat.

Operation Twist is a special Open Market Operation (OMO) where the RBI buys long-term government securities and simultaneously sells short-term securities. The goal is to lower long-term interest rates (yields) to spur investment and growth, while keeping short-term liquidity largely unchanged.

Contrary to what one might expect from private industrialists (like JRD Tata and GD Birla), the Bombay Plan argued that the Indian economy could not grow without significant government intervention, protectionism, and a central planning authority to build infrastructure and heavy industries, as private capital was insufficient at that time.

Foreign banks with < 20 branches have a total PSL target of 40% of Adjusted Net Bank Credit (ANBC). However, they are treated differently regarding sub-targets; they can fulfill up to 32% of this target through Export Credit, which is not the case for domestic banks where export credit limits are much lower/specific.

Brownfield projects involve purchasing or leasing existing production facilities/infrastructure to launch a new production activity. This contrasts with Greenfield investments, which involve building new facilities from the ground up. Brownfield is often faster but may come with legacy issues.

When the government borrows heavily from the market to fund its deficit, it competes with the private sector for limited funds. This increased demand for loanable funds drives up interest rates (cost of borrowing), making it expensive for private companies to invest, thus "crowding them out" of the market.

The CWMI creates a sense of cooperative and competitive federalism among states. By ranking states on various water management parameters (like irrigation, restoration of water bodies, etc.), it encourages them to improve their water security practices based on data-backed performance.

A Cess (e.g., Health and Education Cess) is levied for a specific predetermined purpose and cannot be used for anything else. A Surcharge is an additional charge on tax for general revenue purposes. Crucially, proceeds from both Cess and Surcharge are NOT shared with state governments (they are not part of the divisible pool).

Legal Tender is money that cannot be refused in settlement of a debt. Currency notes and coins are legal tender. Cheques are "fiduciary money" because they can be refused (e.g., if bounces) and represent a claim rather than cash itself.

The Regional Rural Banks were established under the provisions of an Ordinance passed in September 1975 and the RRB Act 1976, based on the recommendations of the Narasimham Working Group, to improve rural credit delivery.

Demographic Dividend is the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the non-working-age share of the population (14 and younger, and 65 and older). India is currently passing through this phase.

NaBFID was established by an Act of Parliament in 2021 as a specialized Development Financial Institution (DFI) to support the country's infrastructure sector, bridging the gap for long-term non-recourse finance.

Launched in 2015, the Smart Cities Mission aims to promote cities that provide core infrastructure and give a decent quality of life to its citizens, a clean and sustainable environment, and application of 'Smart' Solutions.

The Phillips Curve suggests that lower unemployment is associated with higher inflation (trade-off). When employment is high (unemployment low), demand rises, pushing up prices.

As the Lender of Last Resort, RBI provides financial assistance to commercial banks when they face temporary liquidity crises and have exhausted all other sources. It also provides Ways and Means Advances (WMA) to State Governments.

The 101st Constitution Amendment Act, 2016 inserted Article 279A, empowering the President to constitute the GST Council, which is the governing body for GST implementation.

The EPCG scheme allows exporters to import capital goods (machinery) at zero customs duty, provided they fulfill an export obligation equivalent to 6 times the duty saved within 6 years.

The International Monetary Fund (IMF) and the World Bank (IBRD) were both created at the Bretton Woods Conference in 1944, hence the name.

The reforms introduced the LERMS (Liberalized Exchange Rate Management System) in 1992, moving towards a market-determined exchange rate where demand and supply decide the Rupee's value.

GFCF measures the value of new or existing fixed assets (infrastructure, machinery, etc.) acquired by the government and private sector. It is the standard indicator for Investment in the GDP calculation.

Basel III is a global regulatory framework that mandates banks to maintain higher capital (CAR), leverage ratios, and liquidity (LCR/NSFR) to withstand financial stress and prevent systemic failure.

WMA is a temporary liquidity support given by the RBI to the government (Central & State) to bridge short-term gaps between their revenue receipts and expenditures. It must be repaid within 90 days.

Udyam Registration is the new, simplified, online, and paperless process for registering MSMEs in India, replacing the Udyog Aadhaar Memorandum (UAM).

Primary Deficit = Fiscal Deficit - Interest Payments. It shows how much the government needs to borrow to meet its current year's expenses, excluding the obligation of interest on old loans.

ESG is a framework used to assess the sustainability and ethical impact of an investment in a company, focusing on Environmental impact, Social responsibility, and Corporate Governance.

Supply-side (or Cost-Push) inflation occurs when the cost of production increases (e.g., raw material shocks like oil) or supply is constrained, forcing prices up, independent of demand.

M1 is known as Narrow Money because it includes the most liquid assets: Currency with public + Demand Deposits with banking system + Other deposits with RBI.