Under the Agreement on Trade-Related Investment Measures of the World Trade Organization (WTO), commonly known as the TRIMs Agreement, WTO members have agreed not to apply certain investment measures related to trade in goods that restrict or distort trade. The TRIMs Agreement prohibits certain measures that violate the national treatment and quantitative restrictions requirements of the General Agreement on Tariffs and Trade (GATT).
Foreign exchange market is the market in which foreign currencies are bought and sold. Being a member of IMF, India followed the par value system of pegged exchange rate system. But when the Breton Woods system collapsed in 1971, the rupee was pegged to pound sterling for four years after which it was initially linked to the basket of 14 currencies but later reduced to 5 currencies of India’s major trading partners. Currently India has adopted the managed exchange rate system.
In the budget of 1997-98, the government had proposed to replace FERA-1973, by FEMA (Foreign Exchange management act). FEMA was proposed by the both house of the parliament in Dec. 1999. After the approval of president, FEMA 1999 has come into force w.e.f. June, 2000. Under the FEMA, provisions related to foreign exchange have been modified and liberalized so as to simplify foreign trade. Government hopes that the FEMA will make favourable development in the foreign money market.
Fiscal policy deals with the taxation and expenditure decisions of the government. Fiscal policy is composed of several parts, i.e. tax policy, expenditure policy, investment or disinvestment strategies and debt or surplus management. Fiscal policy is an important constituent of the overall economic framework of a country and is therefore intimately linked with its general economic policy strategy. Some of the major instruments of fiscal policy are as follows: Budget, Taxation, Public Expenditure, Public Debt, and Fiscal Deficit
India aims to increase India’s export of merchandise and services from US $ 465 bn. in 2013-14 to approximately US$ 900 bn. by the 2019-20 and to raise India’s share in the world export from 2% to 3.5%. Commerce and Industry minister Nirmala Sita Raman unveiled foreign trade policy (FTP) 2015 -20, which seek to provide higher incentive to agriculture industry. FTP also seeks to establish an institutional framework to work with state governments to boost India’s exports.
Basel III or Basel 3 released in December, 2010 is the third in the series of Basel Accords. These accords deal with risk management aspects for the banking sector. So we can say that Basel III is the global regulatory standard on bank capital adequacy, stress testing and market liquidity risk. (Basel I and Basel II are the earlier versions of the same, and were less stringent). Norms to be implemented from March 31, 2015 in phases and would be fully implemented as on March 31, 2018.
The financial system of an economy provides the way to collect money from the people who have it and distribute it to those who can use it best. The financial system enables lenders and borrowers to exchange funds. The global financial system is basically a broader regional system that comprises all financial institutions and borrowers and lenders within the global economy. India has a financial system that is controlled by independent regulators in the sectors of insurance, banking, capital markets and various services sectors.
Financial instruments are tradable assets of any kind. They can be cash, evidence of an ownership interest in an entity, or a contractual right to receive or deliver cash or another financial instrument. Financial instruments can be classified generally as equity based, representing ownership of the asset, or debt based, representing a loan made by an investor to the owner of the asset. Documents (such as a check, draft, bond, share, bill of exchange, futures or options contract) come under this category.
As per the estimation by the Ranjrajan Panel, the number of Below Poverty Line (BPL) declined to 21.9% of the population in 2011-12 from 29.8% in 2009-10 and 37.2% in 2004-05. But as per the Suresh Tendulkar Panel's recommendations in 2011-12, the poverty line had been fixed at Rs 27 spending in rural areas and Rs 33 in urban areas so total poverty is 21.9% at the national level in the current fiscal.
Prior to the First World War the whole world was having gold standard under which the currency in circulation was allowed to get converted either in gold or other currencies based on the gold standard. But after the failure of Bretton woods system in 1971 this system changed. Presently convertibility of money implies a system where a country’s currency becomes convertible in foreign exchange and vice versa. Since 1994, Indian rupee has been made fully convertible in current account transactions.
Balance of Payment (BOP) of ac country can be defined as a systematic statement of all economic transactions of a country with the rest of the world during a specific period usually one year. The systematic accounting is done on the basis of double entry book keeping (both sides of transactions credit and debit are included). Economic transaction includes all such transactions that involve the transfer of title or ownership of goods and services, money and assets.
Reserve bank of India defines NBFC-MFI as a non-deposit taking NBFC (other than a company licensed under Section 25 of the Indian Companies Act, 1956) with Minimum Net Owned Funds of Rs.5 crore (for NBFC-MFIs registered in the North Eastern Region of the country, it will be Rs. 2 crore) and having not less than 85% of its net assets as “qualifying assets”. Ultimate goal of microfinance is to give low income people an opportunity to become self-sufficient by providing a means of saving money, borrowing money and insurance.
Reserve Bank of India is the Central Bank of our country. It was established on 1st April 1935 under the RBI Act of 1934. It holds the apex position in the banking structure. RBI performs various developmental and promotional functions. As of now 26 public sector banks in India out of which 21 are Nationalised banks and 5 are State Bank of India and its associate banks. There are total 92 commercial banks in India. Public sector banks hold near about 75% of the total bank deposits in India.
India's external debt stock stood at US$ 475.8 billion at end-March 2015 as against US$ 446.3 billion at end-March 2014. Notwithstanding the increasing external debt stock during 2014-15, crucial debt indicators such as external debt-GDP ratio and debt service ratio remained in the comfort zone. External debt of the country continues to be dominated by the long term borrowings. Government arranges money from deficit financing (borrowing from general public, printing new currency and borrowing from external sources) if its expenditure exceeds revenue.
India is a democratic set up with mixed economy. Here government works for the welfare of the all societies. That is why government launches different programmes every year. These programmes are related to poverty alleviation, employment generation, and availability of safe drinking water, all weather connectivity, and better health and education facilities. Some programmes are like: Antyodaya Anna Yojna, National Gramin Awaas Mission (formerly Indira awas yojna), Bharat Nirman, etc.
India has a well-developed tax structure with clearly demarcated authority between Central and State Governments and local bodies. Central Government levies some direct and indirect taxes on individual and commodities respectively. Direct taxes are, Personal Income Tax, Wealth Tax, and Corporation Tax while indirect tax includes; Sales Tax, Excise Duty, Custom Duty and Service Tax. Currently corporation tax (20% of total tax collection) is the biggest source of income of central government.
Before 1947 there were only few sectors like Railways, the Posts and Telegraphs, the Port Trusts, the Ordnance and Aircraft Factories and a few state managed undertakings like the Government Salt factories, Quinine factories, etc. in called the public sector companies. In India, a public sector company is that company in which the Union Government or State Government or any Territorial Government owns a share of 51 % or more. Currently there are just three sectors left reserved only for the government i.e. Railways, Atomic energy and explosive material.
Those spending over Rs 32 a day in rural areas and Rs 47 in towns and cities should not be considered poor, an expert panel headed by former RBI governor C Rangarajan. As per the estimation by the Ranjrajan panel the number of Below Poverty Line (BPL) declined to 21.9% of the population in 2011-12, from 29.8% in 2009-10 and 37.2% in 2004-05. As per the Suresh Tendulkar panel's recommendations in 2011-12, the poverty line had been fixed at Rs 27 spending in rural areas and Rs 33 in urban areas.
Supplying the money in the market is the sole responsibility of the central bank of the country (Reserve Bank of India in case of India). RBI prints the currency and supplies money in the economy. Coins are minted by the Ministry of Finance but circulated by the RBI in the whole country. Supply of money decides the rate of inflation in the economy. If supply of money increases in the economy then inflation starts rising and vice versa.
The monetary policy refers to a regulatory policy whereby the central bank (RBI in case of India) maintains its control over the supply of money to achieve the general economic goals. Reserve Bank of India (RBI) is the sole authority which prints and supplies the currency in the whole country. Coins are minted by the ministry of Finance but supplied by the RBI. Main instruments of the monetary policy are: Cash Reserve Ratio, Statutory Liquidity Ratio, Bank Rate, Repo Rate, Reverse Repo Rate, and Open Market Operations.
GST stands for Goods and services tax. It’s an indirect tax, imposed on the sale of goods and services. In India, GST model will be dual GST, having both central and state GST. All the services except a few will be brought into GST base. There will be no distinction between goods and services for the purpose of taxation. GST will be a destination-based tax. This implies that all State GST collected will ordinarily accrue to the State where the consumer of the goods or services sold resides.
In June 1991, Narsimha Rao government took over the charge, a wave of reforms in the form of Liberalization, Privatization and Globalization (also known as LPG Model) observed in the whole country. Under this new industrial policy government opened up so many sectors for private players which were reserved for government sectors earlier. Import duties reduced and import become cheaper while several export promoting measures also adopted. The main reason behind the commencement of this new economic policy was the continuous negative Balance of Payment (BOP) situation.
Since independence India has been a 'Mixed Economy'. India's large public sectors were responsible for rendering the country a 'mixed economy' feature. Indian economy is basically based in the contribution of service sector (currently provides 60% share of GDP) and near about 53% of its population is dependent on the Agriculture. As soon as the time is passing, the share of Agriculture is decreasing and share of service sector is increasing. Currently India is called a developing economy of the world.
The National Food Security Bill was passed by the parliament in 2013. As per the provisions of the Bill, it is proposed to provide 7 kg. of food grains per person per month belonging to priority households at prices not exceeding Rs. 3 per kg of rice, Rs. 2 per kg of wheat, and Rs. 1 per kg of coarse grains and to general households not less than 3 kg of food grains per person per month . It will benefit up to 75 per cent of rural population.
It is the apex banking institution to provide finance for Agriculture and rural development. National Bank for Agriculture and Rural Development (NABARD) was established on July 12, 1982 with the paid up capital of Rs. 100 cr. by 50: 50 contribution of government of India and Reserve bank of India. The paid up capital of NABARD stood at 2000cr. as on March 2010. It is an apex institution in rural credit structure for providing credit for promotion of agriculture, small scale industries, cottage and village industries, handicrafts etc.
Micro, Small and Medium Enterprises (MSME) contribute nearly 8 percent of the country’s GDP, 45 percent of the manufacturing output and 40 percent of the exports. They provide the largest share of employment after agriculture. They are the nurseries for entrepreneurship and innovation. They are widely dispersed across the country and produce a diverse range of products and services to meet the needs of the local markets, the global market and the national and international value chains. Currently MSMEs are defined as per the MSME Act 2006.
At the time of independence ownership of land was concentrated in the hands of a few. This led to the exploitation of the farmers and was a major hindrance towards the socio-economic development of the rural population. Land reforms programmes in India includes: Abolition of Intermediaries, Tenancy reforms, consolidation of holdings and determination of holdings per family and to distribute surplus land among landless peoples.
Jargons are subject specific words in all the subjects. So is the case with Indian Economy because it helps the students in understanding the meaning of articles/publications/reports etc. If any student is unable to understand these economics word, he/she will not be able understand the meaning of the article/ paragraph/report. We picked some of the most important words to enhance your knowledge of Indian Economy.
Jargons are special words or expressions used by professionals or group that are difficult for others to understand. Terminology used in the economics is of very much Importance, because it helps the students in understanding the meaning of articles/publications/reports etc. We picked some of the most important words to enhance your knowledge of Economics.
After independence the first industrial policy was declared on the April 6, 1948 by then union industry minister Shyama Prasad Mukherjee. This policy established a base for mixed and controlled economy in India. Before the commencement of new industrial policy the Indian economy was trapped in the Hindu rate of growth of 3.5%. Economic scenario of the country was as follows: fiscal deficit was increasing, inflation was rocketing, and balance of payment condition was adverse. Hence the overall condition of the economy was very pitiable.