Indian Economics an overview

Economics objective type

Important Committees

Ghosh Committee: Bank Frauds
Omkar Gosami Committee: Industrial Sickness and Corporate restructuring
Jhanakiraman Committee: To Enquire into the Securities and transaction of the banks and financial institutions
Jilani Committee: Loan System
Goiporia Committee: Customer Service
Malhothra Committee: Insurance Sector Reforms
Dr. Mehta Committee: Integrated rural Development Programme
Narasimham Committee: Financial Sector Reforms
Nayak Committee: Credit to SSS Sector
Rangarajan Committee: Public Sector disinvestment
Raj Committee: Agricultural holding tax
Khusro Committee: Agricultural Credit
Ram Nivas Mirdha Committee: To Enquire into the Securities Scam.
Bhagawati Committee: Public Welfare
Raja Chellaiah Committee: Tax reforms

Five Year Plans

First Five Year Plan: 1951-56
Second Five Year Plan: 1956-61
Third Five Year Plan: 1961-66
Fourth Five Year Plan: 1969-74
Fifth Five Year Plan: 1974-79
Sixth Five Year Plan: 1980-85
Seventh Five Year Plan: 1985-90
Eighth Five Year Plan: 1992-97
Ninth Five Year Plan: 1977-2002
Tenth Five Year Plan: 2002-2007

Tenth Five Year Plan Targets

Reduction of poverty ratio to 20 per cent by 2007 and to 10 percent by 2012.
Gainful employment to the addition to the labor force over the Tenth Plan period.
Universal access to primary education by 2007.
Reduction in the Decadal rate of population growth between 2001 and 2011 to 16.2%.
Increase in literacy to 72% by 2007 and to 80% by 2012.
Reducing of IMR - infant mortality rate to 45 per 1000 live births by 2007 and to 28 by 2012.
Reduction of maternal mortality ratio (MMR) to 20 per 1000 live births by 2007 and to 10 by 2012.
Increase in forest and tree cover to 25% by 2007 and 33 per cent by 2012
All village to have access to potable drinking water by 2012
Cleaning of all main polluted rivers by 2007 and other notified stretches by 2012

Economics Notes

The Gross National Product (GNP) is the money value of all the final goods and services produced annually in the economy.
The difference between GNP at market prices and GNP at factor cost is equal to net indirect taxes.
The term 'National Income' commonly refers to NNP at factor cost.
National income doesn’t include interest on unproductive national debt
The national income of India is estimated mainly through production and income methods.
The expenditure method is used to estimate the government's final consumption expenditure, exports & imports of goods and service and change in inventories.
In India, the national income is estimated by the Central Statistical Organisation (CSO)
The 'Primary Sector' of Indian economy includes agriculture, livestock and allied activities, forestry, logging, fishing, mining and quarrying.
The 'Secondary Sector' includes manufacturing, Building construction, electricity, gas and drinking water supply.
The 'tertiary sector' of an economy refers to the service sector.
Indian economy is the ideal model of a 'mixed economy'.
For the mixed economy Hansen used the term 'dual economy' and Lerner 'controlled economy'.
The 1st effort to initiate economic planning in India was made by M. Visvesvarya in 1934 through his book entitled 'Planned Economy for India'.
The 'Garibi Hatao (eradicate poverty) slogan was coined during the Fourth Plan.
In 1938, the Indian National Congress set up the National Planning Committee (NPC) chaired by
Jawaharlal Nehru.
'Gandhian Plan' which was prepared by Sriman Narayan.
The people's plan was formulated by M.N. Roy, almost at the same time.
Planning Commission was set up in 1950 under the Chairmanship of Prime Minister.
Dadabhai Naoroji wrote the book 'Poverty and Un-British Rule in India’.
The Planning Commission of India: An advisory body.
The Prime Minister of India is the Ex-officio Chairman of the Planning Commission.
First and Second Plan were based on the Harod-Dornar growth model and Mahalnobis Model respectively.
Agricultural targets in the First Plan.
Second Plan was on the development of basic and heavy industries .
A plan formulated (by Janta Govt.) for the Period (1978-83) was referred to as the Rolling Plan.
The second plan saw the setting up of the three steel plants at Durgapur, Bhilai and Rourkela and the expansion of the Chitteranjan Locomotive Works etc.,
Maharashtra Government introduced the Employment Guarantee Scheme (EGS) in 1972-73.
The scheme was the first of its kind to give recognition to the 'right to work' enshrined in the constitution.
The food for work programmer was launched in 1977 with the objective of generating employment opportunities, improving the level of income and consumption and strengthening the rural infrastructure.
National Rural Employment Programme (NREP) from October 1980
The Integrated Rural Development Programme (IRDP) was initiated on October 2nd of 1980.
The Rural Landless Employment Guarantee Programme (RLEGP) was launched on the 15th August 1983.
Training of Rural Youth for Self-Employment (TRYSEM) was started in 1979.
28th April. 1989 the Jawahar Rozgar Yojana (JRY) was launched by the then Prime Minister RajivGandhi.
The poverty line has been defined by the Planning Commission on the basis of an average daily intake of 2400 calories per person in rural areas and 2100 calories in Urban areas.
Inflation is caused by increase in money supply, decrease in production.
The main problem in India is the high level of birth rate coupled with a declining death rate.
First the Reserve Bank was nationalized in 1949.
Thereafter in 1955 the Imperial Bank of India, a top Commercial Bank of that time, was nationalized and renamed the State Bank of India.
In 1969 fourteen big commercial banks were nationalized.
The fifth plan was prepared and launched by D.O . Dhar.
The three main harvesting seasons are Kharif, Rabi and summer.
Agriculture is-the backbone of Indian Economy.
1969. Commercial Banks are broadly classified into nationalized or public sector banks and private sector banks. The SBI and its associate banks along with another 20 banks are the public sector banks.
April 15, 1980 six more commercial banks were nationalized.
ICICI - The Industrial Credit & Investment Corporation of India was setup in 1955 as a private sector development bank.
The Export Import (EXIM) Bank of India was established on January 1st 1982.
The National Bank for Agricultural and Rural Development (NABARD) was established in July 1982 to oversee and develop the entire rural credit system including agricultural credit.
The Life Insurance sector was nationalized in 1956 into Life Insurance Corporation (LIC); and the non-life sector was nationalized in 1972 as the General Insurance Corporation (GIC).
The RBI was inaugurated in April 1935 with a share of capital of Rs.5 Crore. It was nationalized in 1949.
SEBI was accorded statutory status by an act of Parliament effective from Mar 31st, 1992.
Inflation in India has been both a demand pull and a cost push type.
GNP - Gross National Product refers to the money value of total output or production of final goods and services produced by the nationals of a country during a given period of time.
GDP - Gross Domestic Product is the total money value of all final goods and services produced within the geographical boundaries of the country during a given period of time,
NNP: Net National Product. (NNP = GNP – Depreciation)
NDP: Net Domestic Product. (NDP = GDP – Depreciation)
National Income calculated by National Product at factor cost.
In India combination of production method and income method is used for estimating national income.
CSO - Central Statistical Organisation.
CSO regularly publishes national income data .
World population has touched the level of 6 billion on day of October 12th 1999.
UNO has declared October 12 as 'Day of 6 billion'.
Inflation is that state in which the prices of goods and service rise on the one hand and value of money falls on the other.
Demand pull inflation is that inflation when prices rise due to higher demand for goods and services over the available supply.
Cost push inflation is another type of inflation in which prices rise due to increased input costs.
Deflation is the state in which the prices of goods and services fall and the value of money rises.
Deflation takes place when increase in money circulation loss behind the increase in production.

Balanced budget: A budget is said to be a balanced budget when current income is same as current expenditure.
Balance of Trade: Refers to the relationship between the values of country's imports and its export, i.e., the visible balance. These items only form part of the balance of payments which are (a) invisible items and (b) movements of capital.
Budget Deficit: When the expenditure of the Govt. exceeds the revenue, the balance between the two is the budget deficit.
Call Money: Is a loan that is made for a very short period of a few days only or for a week. It sanctions with a low rate of interest. In case of stock exchange, the duration length of the call money may be for a fortnight.
Cash Reserve Ratio: Refers to the ratio which banks have to maintain with the RBI as certain percentage between their holdings of cash and their time liabilities.
Deflation: Decline in the general price level of goods and services leading to rise in the value (purchasing power). A method of statistical conversion of a series of data to compensate for the general rise in prices.
Devaluation: Official reduction in the foreign value of domestic currency. It is done to encourage the country's export and discourage imports.
Direct Tax: Tax that cannot be shifted. The burden of direct tax is borne by the person on whom it is initially fixed. Examples: Personalincome tax, Social Security tax paid by employees.
Elasticity: The degree of responsiveness of quantity demanded or supplied to a change in price.
Excise Tax: Tax imposed on the manufacture, sale or the consumption of different commodities, such as taxes on textiles, fabric, cloth, liquor etc.
Fiscal policy: Government's expenditure and tax policy, an important means of moderating the upswings and downswings of the business cycle.
Foreign Exchange: Claims on a countries by another, held in the form of currency of that country. Foreign 'exchange system enables one currency to be exchanged for another thus facilitation trade between countries.
Foreign Exchange Rate: Prices of the domestic currency in terms of foreign currencies.
Indirect taxes: Taxes levied on goods purchased by the consumer (and exported by the producer) for which the tax payer's liabilities varies in proportion to the quantity of particular goods purchased or sold.
Inflation: A sustained and appreciable increase in the price level over a considerable period of time.
Laissez Faire: The principle of non-intervention of government in economic affairs.
National Income (at factor cost): Total of all incomes earned or imputed to factors of manufacturing, used in economic literature to represent the output or income of an economy in a simple fashion.
Per Capita Income: Total GNP of a country divided by the total populace. Per capita income is often used as an economic indicator of the levels of living and development. If however, can be a biased index because it takes no account of income distribution.
Statutory Liquidity Ratio: The SLR is the ratio of cash in hands, exclusive of cash balance maintained by ranks to meet required CRR, but no excess reserves.
Tariff (ad Valorem): A fixed percentage tax on the value of an imported product, tax levied at the point of entry into the importing country.
Tobin tax: Named after James Tobin, the Nobel prize winner for economics in 1981, a global tax on capital transfers, which could raise possibly $250 billion from financial markets worldwide. And this huge sum could be used to support the developing economies of the third world. The revenue from the Tobin tax can also be used to write off the third world countries debts.
Value Added Tax (VAT): This form of tax has been in operation in some countries. If brings a value added tax, a tax levied on the values that is added to goods and services turned out by the producers during stages of production and distribution.
Zero Based Budgeting: The practice of justifying the utility in cost benefit terms of each government expenditure on projects. The ZBB technique, involves a serious review of every scheme before a budgetary provision is made in its favor. This form of financial planning is with an objective to ensure that every rupee spent is result oriented. If ZBB is properly implemented it could help to reverse the trend of large deficits on the revenue account of the Union Government.

Formation years of Major Financial Institutions in India

Imperial Bank of India - 1921
Reserve Bank of India (Nationalisation of RBI took place on Jan 1, 1949) - 1935
Industrial Finance Corporation of India - 1948
I CI CI - 1955
State Bank of India - 1955
Unit Trust of India - 1964
lOBI - 1964
NABARD – 1982
IRBI (Now it has been renamed as IIBIL since 1997) - 1985
SIDBI - 199O
EXIM BANK - 1982
National Housing Bank -1988
Life Insurance Corporation (LIC) - 1956
General Insurance Corporation (GIC) - 1972
Regional Rural Banks -1975
RCTF - Risk Capital and Technology Finance Corporation Ltd - 1975
Technology-Development & Information Co. of India Ltd - 1989
IL & FS - Infrastructure Leasing and Financial Services Ltd - 1988
HDFC - Housing Development Finance Corporation Ltd – 1977

Important Private Banks	Registered Office	Established
UTI Bank Ltd	Ahmedabad	1994
Indus Ind. Bank Ltd	Pune	1994
ICICI Bank Ltd	Vadodara	1994
Global Trust Ltd	Secunderabad	1994
HDFC Bank Ltd	Mumbai	1995
Centurian Bank Ltd	Panaji (Goa)	1995
Bank of Punjab Limited	Chandigarh	1995
Times Bank Limited	Faridabad	1995
lOBI Bank Ltd	Indore	1995
Development Credit Bank Ltd	Mumbai	1995