Economics Mock Sippets

• Deposit Insurance & Credit Guarantee Corporation DICGC

  • provides deposit insurance
  • foreign banks branch
  • payments bank
  • RRB
  • SFB
  • except 1° cooperative societies
  • max limit ➡️ 5 lac
  • premium by Banks

• Shadow Pricing

  • monetary value assigned ➡️ item
  • not bought/sold in marketplace

• Additional Tier-1 bond

  • unsecured
  • perpetual
  • issued by banks ➡️ meet capital req. u/ Basel III Norms
  • IP(interest payment) to investor can be ➡️ skipped

• Urban Cooperative Banks

  • licensed by RBI
  • CRR & SLR
  • RBI announced ➡️ 4 tier
    • by Vishwanathan committee
  • regulatory framework
    • not PCA, but ➡️ SAF

• RRB

  • can open branches in tier 3 to 6
    • w/o perm ➡️ BBI
  • no obligation to offer concessional loans
  • Govt contributes ➡️ 50% of share capital

• SARFAESI Act 2002

  • 75% dues pending ➡️ 60 days notice
  • for secured loans only
  • Asset Reconstruction Companies to help

• FATF

  • by G7, 1989
  • HQ: Paris
  • independent, inter-govt body
  • India became member in 2010

• MPLADS

  • central sector scheme
  • guidelines by MoSPI
  • funds ➡️ non-lapsable

• First Loss Default Guarantee System (FLDG)

  • b/w FI & other parties
    • if borrower defaults, then some compensation
    • third parties ➡️ can’t collect fee from borrowers
      • FI’s will pay them

• Engel's Law

  • household income ⬆
    • % of income spent on food declines

• Fisher Effect

  • relⁿ b/w inflation and both - real & nominal interest rates

• Effective Capital Expenditure

  • sum of capital expenditure & grants in aid ➡️ creation of capital assets

• Pigou Effect

  • deflation ➡️ value of wealth ⬆

• ==Credit Gap==

  • credit:GDP
  • long term based
  • formal channels only
  • early warning indicator
  • ability of economy to repay debt ➡️ smaller ratio

• IIP

  • only financial assets of nation’s BoP
  • external financial assets - liabilities
  • creditor / debtor nation

• Flipping

  • Indian company turning into 100% subsidiary of a foreign entity

• Bluewashing

  • deceptive marketing techniques
  • overstating ➡️ commitment to responsible social practices

• Factoring

  • selling receivables to a third party ➡️ for immediate funds

• CAGR

  • Compound Annual Growth Rate
  • long term
  • mean annual growth rate

• New Development Bank

  • BRICS bank
  • Fortaleza Declaration

• Revenue receipts of Gov. neither create liability or asset on the govt

  • dividends and profits from PSU’s ➡️ non-tax revenue receipt of gov
  • cash grants-in-aid from foreign

New Method for GDP calculation

• by NSO, MoSPI
• at market price (rather than factor cost)
• base yr ➡️ 2011-12
• based on UN Systems of National Accounts
• improved ➡️ coverage of financial corps. by including
  • MF’s
  • PF’s
  • stock brokers & exchange
  • asset management
  • SEBI, IRDA, PFRDA
• data sourced from ➡️ Ministry of Corp. Affairs
  • earlier from Annual Survey of Industries
    • shift from factory lvl pic ➡️ enterprise lvl.

Monetary policy of RBI

• ==Accommodative==

  • expansionary
    • ⬇ interest rates
  • growth needs policy support
    • inflation ➡️ not immediate concern

• ==Hawkish==

  • tight
  • to keep inflation low
    • ⬆ interest rates

• ==Neutral==

  • interest rates ➡️ unchanged
  • policy priority ➡️ equal to both
    • inflation == growth

• ==Calibrated==

  • RBI not go for rate change in every meeting
  • not rapid

Types of Trading

• Intraday trading / day trading
  • buying & selling of stocks on same day
• Delivery trading
  • long term, most secured
• Swing trading
  • capitalizing on the changes ➡️ stock prices
• Dabba trading / box trading
  • informal
  • outside ➡️ purview of stock exchanges

Commercial Bill v/s Commercial Paper ⤵️

Bill	Paper
- unsecured debt	- unsecured debt
- sale to take place	- not dependent on sale
- short term debt instrument	- short term debt instrument
- issued by FI	- issued by Corps

Cash Management Bill (CMB)

• short term financial instrument
• maturity pd: 91 days
• as SLR for banks
• tradable
• bonds of govt. issued to the market

Ways and Means Advances

• loan to govt, short term
• gov pays interest @ repo+
• not tradable
• loan from RBI

Future v/s Open Contracts in Stock Market ⤵️

Future Contract	Open Contract
- on specific future date only	- no compulsion, tho date is there but not mandate
- no intrinsic value	- no intrinsic value
- derives value from underlying securities	- derives value from underlying securities
- under SEBI	- under SEBI

DMEO ⤵️

Development Monitoring & Evaluation Office

• NITI Aayog
• apex monitoring & evaluation office in country
• evaluation of public policies
• separate budgetary allocations & manpower
• complete functional autonomy

Waterfall Approach	Agile Approach
- detailed initial assessment	- rapidly based assessment
- making rigid upfront plan - FYP’s	- adjusted incrementally

Index	Responsible Ministry
WPI	Office of Economic Advisor (MoCI)
CPI	NSO (MoSPI)
CPI (IW)	Labour Bureau (MoL&E)

WPI

• WPI basket is based on “Domestic production of that item plus Net imports” which is also called Net traded value
• highest weight to manufactured products

FTA v/s PTA

free v/s preferential

FTA	PTA
- not necessary elimination of trade tariffs - lowering / elimination	- lowering
- reciprocity needed	- can be unilateral
- 13	- 6

Investment Models

• EPC model
  • gov pays ➡️ pvt to do the work
  • maintenance, ownership, toll collection by GOV
• BOT - build, operate & transfer
  • conventional PPP
  • pvt responsible for everyone (till contract pd.)
• HAM - hybrid of EPC & BOT
  • 40% EPC (by gov)
  • BOT- annuity: 60% (by developer)

Jogighopa, Assam

first international Multimodal Logistics Park

Offshore Funds

• mutual funds scheme
• investment in overseas / international markets
• Indians can invest in ₹
• u/ RBI & SEBI

Forum Shopping

• choosing specific court by litigants
• to obtain a favourable outcome

Renewable Energy Certificates

• traded u/
  • IEX
  • PXIL

NAMASTE

• u/ MoSJ&E
• 100% mechanisation of sewer work
• central sector scheme
  • fully funded by Union
• provisions
  • prohibits only untrained workers
  • trained workers to deal w/ hazards

Invisibles of BoP

• travel & transportation account
• remittances from abroad
• investment income

GNI

GNI does not include the income earned by Non-Resident Indians (NRIs)

Central Government employee’s salary (dearness allowance) is linked with

CPI – Industrial Workers

Agriculture Infrastructure Fund ( AIF)

• Central Sector scheme
• u/ MoA&FW
• med-long term
• APMC eligible
• monitoring ➡️ online MIS

Lead Bank Scheme

• Gadgil committee
• banking the unbanked
• all districts allotted to some bank
• Usha Thorat Committee
  • review, recommendation

Poverty Reduction & Growth Facility

lending u/ IMF

• other credit facilities:
  • rapid credit facility
  • extended fund facility
  • stand by-credit facility
  • stand by arrangements

IMF

• first join IMF, then WB
• promotes fin. stability & intl. trade
• unequal voting rights

Asian Development Bank

• observer in UN
• 49/68 ➡️ Asian countries
• assist pvt & pub.
• max. shares w/ USA & Japan

Services Trade Restrictiveness Index

by OECD

Compulsory Licensing

govt allowing patented prod. or process w/o consent of patent owner

National Infra. Pipeline ( NIP)

• Rs. 100 lakh Cr.
• 2020-2025
• roadmap
• center & state ➡️ 39% each contri
  • 22% ➡️ pvt.
    • sole player to implement renewable energy projects