Professional Documents
Culture Documents
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 doesnt 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.,
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
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 favour. 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
India
of
Major
Financial
Institutions
in
Established
Ahmedabad
1994
Pune
1994
Vadodara
1994
Secunderabad
1994
Mumbai
1995
Panaji (Goa)
1995
Chandigarh
1995
Faridabad
1995
Indore
1995
Mumbai
1995