Indian Economy

National Income is the total economic output of a country and represents the total purchasing power of a nation.

It is used as an important indicator to measure:

• Economic growth
• Standard of living
• Economic development
• Economic planning

Definition:
National Income is the total money value of all final goods and services produced in a country during a specific period (usually one financial year).

GDP is the total money value of all final goods and services produced within the geographical boundaries of a country during one year.

NDP is GDP after deducting depreciation.

GNP includes income earned by citizens both within India and abroad.

Net Income from Abroad includes:

• Trade Balance (Exports – Imports)
• Interest from foreign investments
• Private remittances

NNP is GNP after deducting depreciation.

It is the income earned by factors of production.

Income received by individuals before paying direct taxes.

Income available for spending and saving after paying direct taxes.

Average income per person.

Income adjusted for inflation.

Measures inflation in the economy.

Measures value added by producers.

Factor Cost: Cost of production.

Market Price: Price paid by consumers.

• Current Price: Includes inflation
• Constant Price: Excludes inflation

PPP compares economic productivity and living standards between countries.

Economic activities are divided into three main sectors based on the nature of activities.

Countries are classified as:

• Agrarian Economy
• Industrial Economy
• Service Economy

This sector involves direct use of natural resources.

Activities include:

• Agriculture
• Fishing
• Mining
• Forestry
• Oil exploration

This sector processes raw materials into finished goods.

Activities include:

• Manufacturing
• Construction
• Electricity production
• Steel industry
• Textile industry
• Automobile industry

This sector provides services.

Activities include:

• Education
• Healthcare
• Banking
• Transport
• Communication
• IT services
• Entertainment

• Primary Sector: Agriculture, fishing, mining
• Secondary Sector: Manufacturing, industries
• Tertiary Sector: Services like banking, IT, education

• Largest source of livelihood
• Employs about 48% population
• Largest unorganized sector
• Major private sector activity
• India is 2nd largest agricultural producer
• India has 2.15% share in global agricultural trade

Government launched seven-point strategy:

• Irrigation expansion (Per Drop More Crop)
• Quality seeds and soil health cards
• Better warehousing and cold storage
• Food processing and value addition
• National Agriculture Market (e-NAM)
• Crop insurance (PMFBY)
• Promotion of fisheries, poultry, beekeeping

• Established on April 1, 1935
• Established under RBI Act, 1934
• Initially headquartered at Kolkata
• Headquarters shifted to Mumbai in 1937
• Nationalized on January 1, 1949
• First Governor: Sir Osborne Smith
• Nickname: Mint Street

Zonal Offices

• New Delhi – North Zone
• Mumbai – West Zone
• Chennai – South Zone
• Kolkata – East Zone

Central Board Composition

• Governor
• 4 Deputy Governors
• 2 Finance Ministry representatives
• 4 Directors from Local Boards

Monetary Policy refers to the use of instruments under the control of the central bank to regulate interest rates, money supply, and credit availability to achieve ultimate economic objectives like price stability and growth.

Objectives

• Price Stability
• Economic Growth
• Exchange Rate Stability
• Full Employment
• Balance of Payments Stability

A. Quantitative Methods

1. Bank Rate

• Long-term lending rate of RBI
• Higher rate → less borrowing
• Lower rate → more borrowing

2. Open Market Operations (OMO)

• Buying securities → increases money supply
• Selling securities → reduces money supply

3. Cash Reserve Ratio (CRR)

• Cash banks keep with RBI
• Higher CRR → less credit
• Lower CRR → more credit

4. Statutory Liquidity Ratio (SLR)

• Liquid assets banks must maintain

5. Repo Rate

• Rate at which RBI lends to banks
• Higher Repo → controls inflation

6. Reverse Repo Rate

• Rate at which RBI borrows from banks

• Overnight loans between banks
• Call Money: 1 day
• Notice Money: 2–14 days

Since 2020, RBI follows:

• April to March Financial Year

Banking sector is the backbone of the economy and supports business, trade, and development.

• First Bank in India: Bank of Hindustan (1770)
• Central Bank of India: Reserve Bank of India (1935)

Phases

• 1969 – 14 Banks Nationalized
• 1980 – 6 Banks Nationalized

Objectives

• Social Welfare
• Support agriculture and small industries
• Reduce economic inequality
• Expand banking services to rural areas

Commercial banks accept deposits and provide loans.

Primary Functions

• Accept deposits (Savings, Current, Fixed)
• Provide loans (Overdraft, Cash Credit)

Secondary Functions

• Collect cheques and bills
• Transfer funds (NEFT, RTGS)
• Issue letters of credit
• Provide debit and credit cards
• Foreign exchange services
• Locker facilities

• Established: 1975
• First RRB: Prathama Grameen Bank
• Legal Act: RRB Act, 1976

Share Capital

Urban Cooperative Banks

• Regulated by RBI
• Managed by Registrar of Cooperative Societies

Rural Cooperative Structure

• State Cooperative Banks (SCBs)
• District Cooperative Banks (DCCBs)
• Primary Agricultural Credit Societies (PACS)

• Launched: April 8, 2015
• Objective: Support small businesses
• Collateral-free loans

Loan Categories

• Registered under Companies Act
• Provide loans and investments
• Cannot accept demand deposits
• Do not issue cheques

• Established: July 12, 1982
• Based on B. Sivaramman Committee
• Supports agriculture and rural development
• Provides refinance to banks

• Launched: August 28, 2014
• Objective: Financial inclusion
• Provides bank accounts to all citizens
• Includes insurance, pension, and credit facilities

Monetary Economics studies the nature, functions, and role of money in the economy.

Definition of Money:
Money is anything generally accepted as payment for goods and services and repayment of debts.

Functions of Money

• Medium of Exchange: Used for buying and selling goods and services.
• Unit of Account: Measures value of goods and services.
• Store of Value: Can be saved for future use.

Barren Money

• Money not earning interest
• Idle cash kept unused
• Example: Cash in locker

Fiat Money

• Declared legal tender by government
• No intrinsic value
• Based on government trust
• Example: Indian Rupee, US Dollar

Money Supply is the total amount of money in circulation in the economy.

Issuance in India

• Currency Notes: Issued by RBI
• Coins: Issued by Ministry of Finance

1. Currency Deposit Ratio (CDR)

• Ratio of cash held by public to bank deposits
• Higher CDR → Lower money supply

2. Reserve Deposit Ratio (RDR)

• Ratio of bank reserves to deposits
• Higher RDR → Lower credit creation

3. Cash Reserve Ratio (CRR)

• Cash banks must keep with RBI
• Higher CRR → Lower money supply

4. Statutory Liquidity Ratio (SLR)

• Liquid assets banks must maintain
• Higher SLR → Lower lending capacity

1. Introduction to Inflation

Inflation is a continuous increase in the general price level of goods and services.

Result: Purchasing power of money decreases.

Measurement of Inflation

• Wholesale Price Index (WPI)
• Consumer Price Index (CPI)

A. Based on Demand and Supply

B. Based on Speed

C. Based on Cause

• Credit Inflation
• Currency Inflation
• Deficit-Induced Inflation
• Tax-Induced Inflation
• Scarcity-Induced Inflation
• Profit-Induced Inflation

• Increase in money supply
• Increase in consumer spending
• Deficit financing
• Black money
• Cheap credit policy
• Increase in exports
• Increase in disposable income

A. Monetary Measures

• Increase Repo Rate
• Increase CRR and SLR
• Sell Government Securities
• Increase Bank Rate

B. Fiscal Measures

• Increase taxes
• Reduce government spending
• Public borrowing

C. Other Measures

• Increase production
• Control prices
• Control wages

Wholesale Price Index (WPI)

• Measures wholesale prices
• Base year: 2011–12
• 697 commodities covered

Consumer Price Index (CPI)

• Measures retail prices
• Used by RBI for inflation targeting
• Includes CPI-IW, CPI-AL, CPI-RL, CPI-UNME

Business cycle refers to fluctuations in economic activity.

Also called Trade Cycle.

Economic planning is a process by which the government sets targets and formulates policies to achieve economic development.

• Started after Independence in 1947
• Industrial Policy announced in 1948
• Based on Mixed Economy model

• Established: March 15, 1950
• Chairman: Prime Minister
• First Chairman: Jawaharlal Nehru
• Plan Era Started: April 1, 1951
• Replaced by NITI Aayog: January 1, 2015

• Established: January 1, 2015
• Replaced Planning Commission
• Chairperson: Prime Minister
• First Vice Chairman: Arvind Panagariya

Objectives

• Promote cooperative federalism
• Policy making and planning
• Monitor government programs

Functions

• Policy formulation
• Economic planning
• Monitoring and evaluation
• Promoting innovation

A tax is a compulsory payment made by citizens to the government.

• Funds government expenditure
• Supports infrastructure and welfare programs
• Helps reduce income inequality

Merits

• Equitable
• Elastic revenue
• Controls inflation
• Low collection cost

Demerits

• Tax evasion
• Disincentive to work

Merits

• Wide coverage
• Convenient
• Discourages harmful goods

Demerits

• Regressive nature
• Less elastic
• Cascading effect (before GST)

Background

• Introduced by 101st Constitutional Amendment Act, 2016
• Implemented on July 1, 2017
• Replaced Excise, VAT, Service Tax
• Destination-based tax

Structure

• Dual GST Model
• CGST – Central GST
• SGST – State GST
• IGST – Interstate GST

GST Council

• Chairperson: Union Finance Minister
• Members: State Finance Ministers
• Voting: Centre (1/3), States (2/3)

GST Slabs

• 0%
• 5%
• 12%
• 18%
• 28%

Public Finance studies government revenue and expenditure.

• Deals with taxation, expenditure, and borrowing
• Ensures economic stability and development
• Reference found in Arthashastra by Kautilya

Budget is an annual financial statement of government income and expenditure.

• Union Budget: Article 112
• State Budget: Article 202
• Financial Year: April 1 to March 31

Budget Structure

Revenue Receipts

• Tax revenue (Income Tax, GST)
• Non-tax revenue (interest, dividends)

Revenue Expenditure

• Salaries
• Pensions
• Subsidies
• Interest payments

Capital Receipts

• Government borrowings
• Disinvestment
• Loan recovery

Capital Expenditure

• Infrastructure
• Machinery
• Loans to states

Fiscal policy uses taxation and government spending to control economy.

Tools

• Taxation
• Government spending
• Public debt

Objectives

• Economic growth
• Price stability
• Full employment
• Income equality
• Regional development

• Established under Article 280
• First Finance Commission: 1951
• Appointed every 5 years
• Recommends tax distribution

Finance Commissions

The External Sector includes all international economic transactions.

• Exports and Imports
• Foreign Investment
• Foreign Debt
• Balance of Payments

BoP records all transactions between India and rest of world.

Main Components

• Current Account
• Capital Account

Trade Balance Formula

• Surplus: Exports > Imports
• Deficit: Imports > Exports

Exchange rate is price of one currency in terms of another.

Types

• Foreign Currency Assets
• Gold Reserves
• SDRs
• IMF Reserve Tranche

FDI Benefits

• Technology transfer
• Employment generation
• Economic growth

• Lottery
• Gambling
• Chit Funds
• Atomic Energy
• Real Estate (restricted)

Human development focuses on expanding people's opportunities and improving their quality of life.

• Focuses on people, not just economic growth
• Enhances choices and capabilities
• Promotes well-being and dignity

HDI measures overall human development using three dimensions.

HDI Formula

Top Countries (2023-24)

• Switzerland
• Norway
• Iceland

GII measures gender inequality in health, empowerment, and employment.

• India Rank: 122 (2022)
• Measures women's participation and equality

Inclusive growth ensures participation of all sections in development.

• Pradhan Mantri Jan Dhan Yojana (PMJDY)
• RuPay Card System
• Access to banking, insurance, pension

The Union Budget for 2026-27 was presented in Parliament on February 1, 2026, by Finance Minister Nirmala Sitharaman. Framed as a "Yuva Shakti" (youth power)-driven budget, its central theme is to harness India's demographic dividend to fuel long-term, "Aatmanirbhar" (self-reliant) growth through investments in manufacturing, infrastructure, and skilling.

• Biopharma SHAKTI: A ₹10,000 crore scheme to establish India as a global biopharma manufacturing hub by promoting domestic production of biologics and biosimilars.
• Electronics & Semiconductors: Allocation increased to ₹40,000 crore; India Semiconductor Mission (ISM 2.0) launched.
• Critical Minerals: Rare Earth Corridors to be established in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu.
• Chemical & Textile Parks: Support for three new chemical parks and integrated textile programme.
• MSMEs: ₹10,000 crore SME Growth Fund created to support Champion SMEs.

• Capex Outlay: ₹12.2 lakh crore allocated for infrastructure development.
• Urban Development: City Economic Regions (CERs) to receive ₹5,000 crore per region over five years.
• Connectivity:
  • Seven new High-Speed Rail corridors planned.
  • 20 new National Waterways to be operationalised.

• Mental Health: New super-speciality mental health institutes to be established.
• Pharmaceutical Education: Three new NIPER institutes and upgrade of seven existing ones.
• Cancer & Chronic Diseases:
  • Network of accredited clinical trial sites.
  • Customs duty exemption on 17 cancer drugs.

• AI Integration: AI-enabled advisory for agriculture and education.
• Data Centres: Tax holiday until 2047 to attract investment.
• AVGC Sector:
  • AVGC labs in 15,000 schools.
  • AVGC labs in 500 colleges.

₹20,000 crore allocated over five years for Carbon Capture, Utilisation and Storage (CCUS) technologies targeting power, steel, and cement sectors.

• Trade Agreements: New agreements with US and EU expected to boost exports.
• International Aid Budget: ₹5,685.56 crore allocated.
• Bhutan: Largest beneficiary receiving ₹2,288.56 crore.
• Bangladesh: Aid reduced to ₹60 crore.
• Chabahar Port Project: Zero allocation due to geopolitical tensions.

The Economic Survey 2025-26, tabled in Parliament on January 29, 2026, presents a detailed and ambitious roadmap for India's economic future. It goes beyond a simple report card, offering a strategic vision for navigating a complex global environment while accelerating domestic growth. Here is an elaborated summary of its key themes and findings.

The Survey's preface sets a powerful philosophical tone, arguing that India must adopt "entrepreneurial policymaking under uncertainty". This means the state must be agile, capable of acting before complete certainty emerges, and willing to learn from experimentation.

A central paradox highlighted is that despite India's strongest macroeconomic performance in decades, the global system is no longer predictable. To address this, the Survey presents three possible global scenarios for 2026:

• Managed disorder
• Disorderly multi-polar breakdown
• Systemic shock cascade

In this context, the Survey argues India's strategy must be to "run a marathon and sprint simultaneously"—maximizing growth while strengthening buffers, liquidity, and shock absorption capacity.

The ultimate goal is to build "strategic resilience" and move towards "strategic indispensability" in global systems.

• PLI schemes attracted ₹2 lakh crore investment.
• Generated ₹18.7 lakh crore production.
• Created 12.6 lakh jobs.
• Electronics sector emerged as flagship success.

• Capex-led growth strategy: Public investment improved productivity.
• Improved fiscal credibility: Capital spending increased significantly.
• Warning on populism: Cash transfers may crowd out productive investment.
• Tax base expansion: ITR filings increased from 6.9 crore to 9.2 crore.
• GST formalisation: E-way bills increased by 21%.

• Total exports reached USD 825.3 billion.
• Services exports USD 387.5 billion.
• PLI improved trade performance.
• India received USD 135.4 billion remittances.
• Strong forex reserves ensure stability.

• Unemployment declined to 4.8%.
• Female LFPR increased to 35.3%.
• 31 crore workers registered under e-Shram.
• 40% gig workers earn below ₹15,000.
• Improvement in healthcare, education, and rural development.

• Economic Survey presented on January 29, 2026
• GDP Growth: 7.4%
• Inflation lowest at 1.7%
• Forex reserves: USD 701 billion
• Exports: USD 825 billion
• Unemployment: 4.8%
• Female LFPR: 35.3%
• Focus on Capex-led growth
• Vision: Strategic resilience and Viksit Bharat

1. Economics: Study of production, distribution, and consumption of goods and services.

2. Microeconomics: Study of individual economic units like households and firms.

3. Macroeconomics: Study of economy as a whole including GDP, inflation, unemployment.

4. Economic System: Structure for organizing economic activities.

5. Capitalism: Private ownership and market-driven economy.

6. Socialism: Government ownership of economic resources.

7. Mixed Economy: Combination of capitalism and socialism.

8. GDP: Value of goods and services produced within country.

9. GNP: GDP + Net income from abroad.

10. NNP: GNP – Depreciation.

11. National Income: NNP at factor cost.

12. Personal Income: Income received by individuals.

13. Per Capita Income: National income divided by population.

14. Money: Medium of exchange, unit of account, store of value.

15. Money Supply: Total money circulating in economy.

16. Credit Creation: Bank process of creating loans.

17. Monetary Policy: RBI policy to control money supply.

18. Bank Rate: Long-term lending rate of RBI.

19. Repo Rate: Short-term lending rate of RBI.

20. Reverse Repo Rate: RBI borrowing rate.

21. CRR: Cash reserve banks keep with RBI.

22. SLR: Liquid assets banks maintain.

23. Call Money: Overnight loan between banks.

24. Inflation: Increase in price level.

25. Deflation: Decrease in price level.

26. Disinflation: Slowing inflation.

27. Stagflation: Inflation + unemployment + low growth.

28. Purchasing Power: Buying capacity of money.

29. Budget: Government income and expenditure statement.

30. Balanced Budget: Income = Expenditure.

31. Deficit Budget: Expenditure > Income.

32. Surplus Budget: Income > Expenditure.

33. Zero Based Budget: Budget from zero base.

34. Fiscal Policy: Government tax and spending policy.

35. Public Expenditure: Government spending.

36. Public Debt: Government borrowing.

37. Direct Tax: Paid directly.

38. Proportional Tax: Same tax rate.

39. Progressive Tax: Higher income, higher tax.

40. Regressive Tax: Higher burden on poor.

41. Tobin Tax: Tax on international currency transactions.

42. Foreign Exchange: Foreign currency.

43. Exchange Rate: Currency price.

44. Fixed Exchange Rate: Government controlled.

45. Floating Exchange Rate: Market controlled.

46. Devaluation: Government lowers currency value.

47. Balance of Trade: Exports – Imports.

48. Balance of Payments: All foreign transactions.

49. FDI: Foreign investment with control.

50. SDR: IMF reserve asset.

51. Free Trade Area: Trade without tariffs.

52. Demonetisation: Removing legal tender status.

53. Economic Growth: Increase in production.

54. HDI: Measure of development.

55. Nationalisation: Government ownership.

56. Globalization: Global economic integration.

57. Liberalization: Removing restrictions.

58. SEZ: Special economic zone.

59. Unemployment: Lack of jobs.

60. Full Employment: Everyone employed.

61. Poverty: Lack of basic needs.

62. Value: Exchange power.

63. Price: Value in money.

64. Consumption: Use of goods.

65. Capital Market: Market for shares and bonds.

66. Laissez-faire: No government intervention.

• Adam Smith is called the father of modern Economics and Capitalism.
• John Maynard Keynes is considered the father of macroeconomics.
• The terms 'micro economics' and 'macro economics' were first used by Ragnar Frisch in 1933.
• The father of Socialism is Karl Marx.
• Micro-economics is also called Price theory.
• Macroeconomics is the study of aggregates like national output, inflation, and unemployment.
• The General Theory of Employment, Interest and Money was published by Keynes.
• Theory of opportunity cost was given by Gottfried Haberler.
• 'Capital and Growth' was written by John Richard Hicks.
• 'Planned Economy for India' was a book written by M. Visvesvaraya in 1934.

• National income estimation in India is the responsibility of the Central Statistical Organisation (CSO).
• The new GDP series in India calculates GDP based on Market price (since January 2015).
• GDP is an indicator of the financial health of a country.
• Rate of growth of an economy is measured in terms of National income.
• India's GDP is the 3rd largest in the world in terms of Purchasing Power Parity (PPP).
• India's GNP is always lower than its GDP due to negative net income from abroad.
• NNP at Factor Cost is the purest form of a nation's income (National Income).
• GVA (Gross Value Added) = GDP + Subsidies – (Direct Taxes + Sales Taxes).

• The agricultural sector is the largest employer in the Indian economy, with about 48% of the workforce.
• However, the agriculture sector accounts for only about 16.5% of India's GDP.
• The service sector (tertiary) is the largest contributor to India's GDP, at around 53%.
• India is the 2nd largest producer of agricultural products globally.
• The Khadi and Village Industries Commission Act was passed in the year 1956.
• The Micro, Small and Medium Enterprises Development Act was passed in the year 2006.

• The Reserve Bank of India (RBI) was established on April 1, 1935, and nationalized on January 1, 1949.
• The Banking Regulation Act was passed in India in 1949.
• The first Governor of RBI was Sir Osborne Smith.
• The only Prime Minister who was the Governor of RBI was Dr. Manmohan Singh.
• The central banking functions in India are performed by the Reserve Bank of India.
• SLR (Statutory Liquidity Ratio) and CRR (Cash Reserve Ratio) are determined by the RBI.
• SLR is the amount a bank has to maintain in the form of cash, gold, or approved securities.
• CRR is the amount of cash that banks have to keep with the RBI.
• Bank Rate is the rate at which the RBI charges on its long-term lendings.
• Repo Rate is the rate at which the RBI lends short-term money to commercial banks.
• Reverse Repo Rate is the rate at which the RBI borrows from commercial banks.
• Repo Rate is always greater than Reverse Repo Rate in India.
• Variable Cash Reserve Ratio as a monetary policy objective was first suggested by J.M. Keynes.
• The Monetary Policy Committee (MPC) determines the policy interest rate in India.
• Call money is lent for one day; notice money is for 2-14 days.
• RTGS full form is Real Time Gross Settlement.
• DD is called a banker's cheque.
• Export-Import Bank of India (EXIM Bank) was established in 1982.
• Small Industries Development Bank of India (SIDBI) was set up on April 2, 1990.
• On July 12, 1982, the ARDC was merged into NABARD.

• The first bank of India was the Bank of Hindustan (1770).
• 14 major commercial banks were nationalized on July 19, 1969.
• 6 more commercial banks were nationalized in 1980.
• The first Regional Rural Bank (RRB) was Prathama Grameen Bank (1975).
• RRBs were established based on the recommendations of the Narsimham Committee.
• Payment Banks were based on the recommendations of the Nachiket Mor Committee.
• MUDRA Bank scheme was launched on April 8, 2015, with loan categories: Shishu, Kishor, Tarun.
• NABARD was established on July 12, 1982, based on the B. Sivaramman Committee.
• Pradhan Mantri Jan-Dhan Yojana (PMJDY) was launched on August 28, 2014.
• The symbol of the Indian rupee (₹) was designed by Udaya Kumar.

• The two main indicators of inflation in India are the Wholesale Price Index (WPI) and the Consumer Price Index (CPI).
• The current base year for WPI in India is 2011-12.
• The first index of wholesale prices in India commenced in January 1942.
• Hyperinflation refers to large and accelerating inflation (million or trillion percent).
• Stagflation is the co-existence of high unemployment and high inflation.
• Disinflation is the slowing down of the rate of inflation.
• An increase in price will decrease consumer surplus.
• Brent Index is associated with the price levels of light crude oil.

• The concept of Five Year Plans in India is derived from Russia (Soviet Union).
• The Planning Commission was set up on March 15, 1950.
• The plan era began on April 1, 1951, with the launch of the First Five-Year Plan.
• The First Five-Year Plan (1951-56) was based on the Harrod–Domar model.
• The Second Five Year Plan (1956-61) was based on the P.C. Mahalanobis Model.
• The Third Five Year Plan is also known as "Gadgil Yojana".
• The objective of self-reliance and zero net foreign aid was declared in the Fourth Five Year Plan.
• Plan Holiday (Three Annual Plans) was from 1966 to 1969.
• The Rolling Plan concept was implemented during 1978-80.
• The Eighth Five Year Plan (1992-97) introduced the New Economic Policy.
• The Twelfth Five Year Plan's theme was "Faster, More Inclusive and Sustainable Growth".
• The Planning Commission was replaced by NITI Aayog on January 1, 2015.
• The first Vice-Chairman of NITI Aayog was Arvind Panagariya.

• Article 265 of the constitution states that "No tax shall be levied or collected except by the authority of law."
• Direct tax is progressive in nature (e.g., Indian Income Tax).
• Indian income tax is both Direct and Progressive.
• GST (Goods and Service Tax) Act was passed on 29th March 2017 and came into effect on 1st July 2017.
• France was the first country to implement GST in 1954.
• Prime Minister Narendra Modi launched GST on the midnight of 1 July 2017.
• The motto of GST is "One Nation, One Market, One Tax".
• CGST is collected by the Central Government on intra-state sales.
• SGST is collected by the State Government on intra-state sales.
• IGST is collected by the Central Government for inter-state sales.
• One Rupee note bears the signature of the Finance Secretary of India.
• The Union Budget of India is presented by the Finance Minister in the Lok Sabha.
• Economic Survey is prepared by the Ministry of Finance.
• In India, Fiscal Policy is formulated by the Ministry of Finance.
• A fiscal deficit occurs when a government's total expenditures exceed the total revenue it generates, excluding money from borrowings.
• A situation where the expenditure of the government exceeds its revenue is called Budget Deficit.
• A substantial increase in capital expenditure or revenue deficit leads to Fiscal Deficit.
• Gender Budget Statement (GBS) was first introduced in the Indian Budget in 2005-06.
• Revenue deficit = Revenue expenditure – Revenue receipts.
• Primary deficit = Fiscal deficit – Interest payments.
• The 16th Finance Commission (2026-31) is chaired by Dr. Arvind Panagariya.

• Foreign Direct Investment (FDI) is an investment in a business by an investor from another country involving control.
• FII (Foreign Institutional Investment) is investment by institutions like hedge funds and pension funds.
• Balance of Trade (BOT) includes only visible items (goods).
• Balance of Payments (BoP) includes both visible and invisible items (goods and services).
• Devaluation is the official reduction in the value of a currency by the government.
• Depreciation is the fall in currency value due to market forces.
• Special Drawing Rights (SDRs) is an international reserve asset created by the IMF.
• GATT (General Agreement on Tariffs and Trade) was the earlier name of the WTO.
• The International Monetary Fund (IMF) is an organization of 190 countries.
• Free Trade Area (FTA) involves cooperation between countries to reduce trade barriers.

• A closed economy is one that has no trading activity with outside economies.
• An economic condition when there is one buyer and many sellers is called Monopsony.
• An economic condition when there is one seller and many buyers is called Monopoly.
• Hire and Fire is a policy of a capitalist economy.
• Software industry is not affected by seasonal unemployment.
• When the output is equal to zero, the variable cost is zero.
• Short-term finance is usually for a period ranging up to 12 months.
• A Golden Handshake Scheme is associated with voluntary retirement.
• The base year for the All India Index of Industrial Production (IIP) is 2011-12.
• Income inequality is the major determinant of poverty in both developed and developing countries.
• A Balance Sheet shows the assets and liabilities.
• Laissez-faire is the principle of non-intervention by the government in the economy.