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Current Affairs PDF: May 2015

MACRO ECONOMICS PART 1

1.National Income .............................................................................................................................................. 2
2.Inflation ........................................................................................................................................................... 3
3.Agriculture ...................................................................................................................................................... 5
4.Industries ......................................................................................................................................................... 9
5.Money ........................................................................................................................................................... 11
6.Banking ......................................................................................................................................................... 13
7.Budget ........................................................................................................................................................... 23
8.Taxiation ....................................................................................................................................................... 27
9.Foreign Trade ................................................................................................................................................ 28
10.Economic Survey-Highlights ...................................................................................................................... 31

1.NATIONAL INCOME

NOTE
* National income first time coined by -- Dadabai nauarji -- 1868
* First time scientific national income calcuated by -- V.K.R.V.Rao - 1931

a. National income is a flow not a stock concept
b. In india ,national income estimates are realted with financial year (1st april to 31st march)
c. GNP (Gross national product) - GNP refers to the money value of total output or
production of final goods and service produced by the national income during a given period
,i.e a year
GNP = GDP +(X-M)
* X= export GDP = Gross domestic product M= import
* If export = import or X=M
then GNP = GDP and it is a condition for a closed economy X=M=0
d. GDP(Gross domestic product) - It is the total money value of all goods and service
produced with in the geographical boundaries of the country during a given year
GDP = GNP -(X-M)*
e. NNP net national income _ NNP is obtained by substracting depreciation value from GNP
NNP = GNP - depreciation*
When NNP is obtained at factor cost , it is known as national income
f. NATIONAL INCOME (NI)-- National income is calculated by substracting the net indirect
taxes form NNP at market prices
g. NNP at Factor cost or NI -- NNP at Market prices - indirect taxes + subsidies
h. NNP at Market prices -- NNP at fator cost + indirect taxes - subsidies
i. GNP at Market prices -- GDP at market prices + NET factor income earned from abroad
j. NNP at Market prices -- GNP at market prices - consumption of fixed capital
k. Per capital income _N.I.at constant prices / population*National income estmates by
various departments & established as per time sense

1. Dept of commerce --1945-46
2. National income committee -- p.c.mahalnobis
3. CSO central statstics office --1951
4. ISI - Indian statistical instution-- 1950
5. NSSO -- national sample survey organisation--1956
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6. NCAER-- National council for applied economic research --1956
7. DES -- directorate of economics & statisctics--1956
8. ASI -- annual survey of insustries -- 1980

2.INFLATION

"General increase in prices and fall in the purchasing value of money"
at the time of inflation
• National income > Economy
• Demand > Supply
• Buyers > Sellers
• Moneysupply > Goods & Services
* Note _ It is opposite applicable to Deflation
inflation gap _ short term as well as long term
Deflation gap _ short term as well as long term gap
* Short term _ Will boost for both buyers , sellers benefits for short term inflation
Long term -- faces more problem
Inflation measurement _
* It was measured by ministry of statictics and program implementation --CSO

RATES
0-3% -- Creeping infaltion
3-7% -- Walking inflation
7-9% -- Running inflation
>10% -- Hyper infaltion
*NOTE _ 4% of infaltion called -- comfort zone inflation(CZI)*

Methods to measure inflation

1. METHOD - 1
CPI & WPI -- CPI -- Basket of 576 items __ average of consumer goods
WPI -- Basket of 678 items _ Average of consumer goods + capital goods
2. METHOD - 2
Comparison method or base year method -- comparing the present goods value with the base
year value goods
3. METHOD - 3
Inflation rate method :
(Pin)- (Pin-1)/(PIN-1)
-->(Pin-1)-- previous year (2014-15)--100 value
--> Pin -- present year (2015-16)--200 value
200-100/100*100-- 100% raise
• Deflation--is a decrease in the general price level of goods and services.
• Disflation--is a decrease in the rate of inflation – a slowdown in the rate of increase of the
general price level of goods and services in a nation's gross domestic product over time
• Reflation-- is the act of stimulating the economy by increasing the money supply or by
reducing taxes, seeking to bring the economy,back up to the long-term trend
• Stag flation-- is a situation in which the inflation rate is high, the economic growth rate slows
down, and unemployment remains steadily high.
• Depression --is a sustained, long-term downturn in economic activity in one or more
economies
• Recession--temporary economic decline during which trade and industrial activity are
reduced, generally identified by a fall in GDP in two successive
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• Cost-push Inflation- General prices of goods and services in the economy rises due to an
increase in production cost. Such types of Inflation are caused by three factors (i) an increase
in wages, (ii) an increase in profit and (iii) imposition of heavy tax.
• Demand- pull inflation -The most common cause of inflation is the pressure of ever-rising
demand on a less rapidly increasing supply of goods and services. The expansion in aggregate
demand may be the result of rapidly increasing private investment and/or spending
government money for war or for economic development.

VARIOUS TYPES OF INFLATION WHICH MAKES ECONOMY UPs/down from various
sector
1. Demand pull inflation
2. Cost push inflation
3. Mixed inflation ->Demand pull inflation+cost push inflation
4. Profit pull inflation
5. Suppressed inflation
6. Open infaltion
7. Partial or semi infaltion
8. Structural inflation or bottle neck inflation or instutuional inflation
9. Mark up inflation
10. Deamnd transfer inflation or sector wise inflation
11. Core inflation or agflation

Reasons for inflation
• Capital Formation
• Defecit Finance
• Devalution
• Problems & Scarcity Of Other Areas
• Future Market
• Balck Money
• Food Inflation
• Easy Money

MACRO ECONOMIC TIME PERIOD
• GDP -- yearly , quarterly , monthly
• Call money -- overnight
• Notice money -- 2-14 days
• Term money-- 15days to 1 year
• Certifcates of deposits--min 7 days - max- 12 months
• Commerical papers -- min 7 days -- max --12 months
• Forward rate aggrements -- contracts are available for maturity 10 years
• Market repo-- 1 day - 1 year
• RBI LAF -- 1 day
• NDTL -- 15 Days basis
• T-bills -- 91, 182, 364 DAYS
• Inter bank participation -- 91 -180 Days
• CBLO Colletral borrowing slending obligation -- 1 day - 1 year
• Capital market -- 1 year and above
• Money market -- less than 1 year
• IIP calulates -- quartely , monthly
TYPES OF money
• MO RESERVE MONEY -- reserve money -- weekly
• M1 NARROW -- fortnight -- 15 days
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• M3 BROAD --fortnight -- 15 days
• L1 -- MONTHLY
• L2--MONTHLY
• L3 -- QUARTERLY -- 3MONTHS

NATIONAL income -- every 1 YEAR
• Measuring methods __ FOR national income
• REVISED ESTIMATE -- 0 % CHANGE
• PROVISIONAL ESTIMATE-- 50 % change
• QUICK ESTIMATE-- 75% change
• ADVANCED ESTIMATE --100% change
* RBI finacial year -- july 1st -- june 30
* BANKS -- April 1st -- MARCH -31st
* General budget -- financial starts from April 1ST

4. ACCOUNTS __ MIN – MAX

• SAVING ------NO
• CURRENT--- no time period
• RECURRING-- 6 months , 10 years
• FIXED -- 7DAYS / NOW 14 DAYS -- 10 YEARS
• FLEXI --6 months upto a maximum of 5 years.
5. NPAs__ 90 DAYS

• BAD LOANS
• Customer does not pay re installments/ repayments called as NPAs
• upto --90 days -- overdue NPAs
• 90 days --1 year -- Substandard NPA
• 1 year -- 3 years -- Doubtful NPA
• >> 3 Years -- confirmed NPA/Bad debt NPA
6. GOVT Securities

• Short term -- 1 YEAR
• Medium-term securities----1-5 years
• Long-term securities-- more than 5 years
• Dated securities -- 30 years
• Long term streching -- 50 Years

7.Agriculture loans time period
• Short -- 6-18 months
• Medium -- upto 18-36 month
• Long -- More then 36 months

3. Agriculture

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Current Affairs PDF: May 2015

Agriculture comes under primary sector like agriculture , forestry , fisheries , farming ,grazing,
extracting of oil & gas , mining , quarrying ,hunting , gathering etc are all comes under primary
sector .
Primary sector contributes --65% labour work force , 21% in earning for indian economy
share of agriculture in national income -- 14.3 % of gdp
Second Green Revolution: It aims at efficient use of resources and conservation of soil, water and
ecology on sustainable basis and in a holistic framework.

Agricultural crops divided based on seasons
• KHARIF -- sown around April & harvesting begins October
• KHARIF Crops:millet and rice Maize ,Mung bean (green gram) ,Urad bean (black gram)
• RABI --sown around mid-November & harvesting begins in April/May
• Rabi Crops: Wheat, mustard,barley,Maize ,Gram ,Onion ,Tomato Potato ,Oat
Agricultural crops divided into 2 groups
• Food grains _ Wheat, rice , jowar , bajra, maize, pulses
• Non- food grains _include cash crops like oil seeds , sugar cane cotton , jute etc
*Commerical crops -- cotton , sugar , jute , tea, coffee

various crops and largest producing states _ Top-3 states 2014-15
1.Food grains
RICE westbengal,uttarpradesh,andhrapradesh
wheat -- uttarpradesh, punjab , harayana
Maize -- karnataka , andhrapradesh , maharastra
Cereals -- rajasthan , karnataka , maharastra
Pulses -- madhyapradesh , uttarpradesh , rajsthan
*Total food grains production -- Uttarpradesh , punjab, ,madhyapradesh
2.Oil seeds
Ground nut-- Gujarat , tamilnadu , andhrapradesh
Rapeseed & mustard -- rajsthan , madhya pradesh , harayana
Soyabean-- madhyapradesh , maharastra, rajasthan
Sunflower -- karnataka, andhrapradesh, maharastra
*Total oilseeds_ madhyapradesh , rajsthan, gujarat

various crops and largest producing states _ Top-3 states 2014-15

1. Food grains
RICE -- westbengal,uttarpradesh,andhrapradesh
wheat -- uttarpradesh, punjab , harayana
Maize -- karnataka , andhrapradesh , maharastra
Cereals -- rajasthan , karnataka , maharastra
Pulses -- madhyapradesh , uttarpradesh , rajsthan
*Total food grains production -- Uttarpradesh , punjab, ,madhyapradesh
2. Oil seeds
Ground nut-- Gujarat , tamilnadu , andhrapradesh
Rapeseed & mustard -- rajsthan , madhya pradesh , harayana
Soyabean-- madhyapradesh , maharastra, rajasthan
Sunflower -- karnataka, andhrapradesh, maharastra
*Total oilseeds_ madhyapradesh , rajsthan, gujarat
3. Cash crops
Sugarcane -- uttarpradesh, maharastra, tamilnadu
Cotton --Gujarat, maharastra,andhrapradesh
Jute & mesta---westbengal, bihar, assam
Potato-- westbengal, uttarpradesh, bihar
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Onion-- maharastra , karnataka, gujarat

*(MSP)Minimum support price
To protect farmers interest by ensuring them in minimum price for their crops in the situation of
a price fall in the market.

MSP of crops 2014-15
KHARIF CROPS _
• Paddy --1350
• Jowar-- 1530
• Bajra --1250
• Maize -1310
• Cotton -3750
• Soyabeen -2500
RABI CROPS _
• Wheat --1450
• Barley-- 1150
• Jute -- 2400
• Sugar cane--2500
* MSP was decided by CCEA ( cabinet committe on economic affairs)
* Prices in agriculture production _
MRP- maximum retail price -- Decided by open market by govt of india
PP -- procurement price -- Decided by FCI to -- miller*
MSP -- Minimum support price -- millers & market yard under govt rates to-- farmers
IP -- issue price -- FPS ( fair price shops ) DEALERS under PDS system to -- public

ORDER OF PRICES ---MRP> PP> MSP> IP
Source of finance
there are two types of financial sources available to agriculture sector
1.Instituational finance-- governemnt,co-opertaive socities,commerical banks & land
development banks
2.Non institutional finance-- Money lenders , relatives , commission agents , traders etc.
Credit coopertative :
3-tier strcuture _
1.Primary Agriculture Credit Socities (PACS)
2.Central Cooperative Banks(CCB)
3.State Cooperative Banks (SCB)
• The flow of loans is from SCB- CCB -- PACS
• Co-operative fiance is the best source & chepeast of rural credit
• Commercial banks -- finance to urban and rural areas
• RRB s-- credit to week & poor farmers and to rural community
• NABARD -- associated with policy planning and even monitoring levels for providing
agricultural credit & and also assistance to non-farm sectors to promote intergrated rural
development
KISAN CREDIT CARD scheme
Kisan Credit Card is a credit card to provide affordable credit for farmers in India. It was started
by the Government of India, Reserve Bank of India (RBI), and National Bank for Agriculture and
Rural Development (NABARD) in 1998-99 to help farmers access timely and adequate credit.
Eligible
• All farmers-individuals/Joint borrowers who are owner cultivators.
• Tenant farmers, Oral lessees and Share Croppers etc.
• SHGs or Joint Liability Groups of farmers including tenant farmers, share croppers etc.,
Loan amount Features
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• Short term credit limit is fixed for the first year depending upon the crops cultivated as per
proposed cropping pattern & scale of finance
• post-harvest/ household / consumption requirements
• Maintenance expenses of farm assets, crop insurance, Personal Accident Insurance Scheme
(PAIS) and Asset insurance.
• For every successive years (2nd, 3rd, 4th, and 5th year), the limit will be stepped up
@10%.(short term credit limit sanctioned for 5th year will be about 150% of the first year
limit allowed to farmers).
• Investment credit requirement of small value in the nature of farm implements/
equipments etc (like sprayer, plough etc.,) and repayable within a period of one year will
be included while fixing KCC limit (This portion of the credit will not be included for
automatic step up during 2nd year to 5th year but credit requirement for this portion in
each year will be reckoned for arriving at the maximum drawal limit for the respective
year).
• The short term loan limit arrived for the 5th year as in (iv) plus estimated investment loan
requirement as in (v) (highest among the five years) above will be the Maximum
Permissible Limit (MPL) and sanctioned as the Kisan Credit Card Limit.
• Short term loan limit assessed for the first year or for the 2nd to 5th year plus the
estimated investment credit limit required, as in (iv) and (v) above, will be the Maximum
Drawal Limit (MDL) allowed in the account, for the particular year.
• KCC borrowers shall be issued an ATM cum Debit card to enable them to withdraw from
KCC accounts from ATMs and PoS terminals.
• KCC will be in the nature of revolving account. Credit balance in the account, if any, to
fetch interest at Savings bank rate.
• Processing charges waived for KCC limit up to Rs.3 lacs.
• Collateral security is waived for
a. limit of up to Rs.1 lac
b. limit up to Rs.3 lacs for loans with tie-up arrangement for recovery.
• KCC accounts should be renewed annually, well before the above due dates, every year to
continue the limit during the KCC validity period of 5 years. Branches shall, therefore,
ensure to obtain revival letters before expiry of 3 years wherever applicable, as per the
Limitation Act.
• For the purpose of renewal, branches should obtain a simple declaration as per the extant
guidelines (about crops raised/ proposed to raise) from the borrowers. The assessment of
revised MDL requirement of the KCC borrower will be made based on proposed cropping
pattern and area declared by him.
• Eligible crops shall be covered under Crop Insurance Scheme - National Agricultural
Insurance Scheme (NAIS)
• Disbursement of the Loan--As per the cultivation requirements of the crop, the loan will
be disbursed in cash.
Repayment
• Kharif (mono) --(1st April to 30th September) - 31st Jan
• Rabi crop (mono)--(1st October to 31st March) - 31st July
• Double /Multiple Crops--(Kharif & Rabi seasons) - 31st July
• Long term Crops--(All round the year) - 12 months (from the date of first disbursement)
Borrowers are required to route their farm proceeds or other credits into the KCC
account, with a minimum of loan amount plus interest and other charges, if any, within the
repayment due date.

TYPES OF REVOULTIONS IN AGRICULTURE
• Black Revolution – Petroleum Production
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• Blue Revolution – Fish Production
• Brown Revolution – Leather/non-conventional(India)/Cocoa production
• Golden Fibre Revolution – Jute Production
• Golden Revolution – Fruits/Overall Horticulture development/Honey Production
• Green Revolution – Food grains
• Grey Revolution – Fertilizer
• Pink Revolution – Onion production/Pharmaceutical (India) /Prawn production
• Red Revolution – Meat & Tomato Production
• Round Revolution – Potato
• Silver Fiber Revolution – Cotton
• Silver Revolution – Egg/Poultry Production
• White Revolution (In India--Operation Flood) – Milk/Dairy production
• Yellow Revolution – Oil Seeds production
• Evergreen Revolution – Overall development of Agriculture
Rainbow Revolution
• Over 4% annual growth rate in agriculture.
• Greater private sector participation through farming
• Price protection for farmers
• National Agriculture Insurance Scheme to be lowered for all farmers and all crops.
• Dismantling movement and agriculture commodity throughout the country.
• Accelerated Irrigation Benefit Programme: It is started in 1995 by government of India to
complete incomplete projects of states in which central funds flow on.
*NOTE--India 1st in the production of --black pepper,banana,coconut,cashew nuts,grapes
ginger,mango,milk,sapota,sugarcane,pulses,tea,turmeric

4.INDUSTRIES

INDUSTRIAL SECTOR COMPRISES OF --
manufactruing,infrastructure,construction gas&electricity, watersupply, engineering, automobiles,
textile production, ship buliding, cement.
Industrial sector has important role in the economic growth and development
• Industrlisation leads to an increase in the per capita income.
• Increase employement to new skilled labour.
• Diversified production base.
• It provides infrastrcuture facilities like railways , power generation , also helps in earning
foreign exchange reserves.
New industry policy -1991
• To maintian sustainbailty growth
• To enhance gainful employment
• To achieve optimum utilisation of human resources
• To attain international competativeness
• To transform india into a major partner and players in the global areas
Maharatna CPSEs_
1. Bharat Heavy Electricals Limited
2. Coal India Limited
3. GAIL (India) Limited
4. Indian Oil Corporation Limited
5. NTPC Limited
6. Oil & Natural Gas Corporation Limited
7. Steel Authority of India Limited
Navratna CPSEs
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1. Bharat Electronics Limited
2. Bharat Petroleum Corporation Limited
3. Container Corporation of India Limited
4. Engineers India Limited
5. Hindustan Aeronautics Limited
6. Hindustan Petroleum Corporation Limited
7. Mahanagar Telephone Nigam Limited
8. National Aluminium Company Limited
9. National Buildings Construction Corporation Limited
10. NMDC Limited
11. Neyveli Lignite Corporation Limited
12. Oil India Limited
13. Power Finance Corporation Limited
14. Power Grid Corporation of India Limited
15. Rashtriya Ispat Nigam Limited
16. Rural Electrification Corporation Limited
17. Shipping Corporation of India Limited
Miniratna Category - I CPSEs-- 56
Miniratna Category-II CPSEs-- 17
* note --
MAHARATNA -- Investment level without approval -- 5000 crores
Navaratna -- 3000 crores
mini ratna -- 1000 crores

Source of industrial finance
• Share capital
• Debentures
• Commerical banks
• Instutional finance ( IDBI , ICICI, IFCI,SIDBI)
• Foreign capital
• Nabard & exim bank
• UTI & LIC & GIC
Industries -- Organisation -- Year
• MIcro -- NEF(National equity fund) -- 1987
• SMALL -- SIDBI -- 1990
• LARGE -- IDBI -- 1964
• SICK --IIBIL -- 1997
COTTON & TEXTILES
• Maharastra & tamilnadu, gujarat in top-3 positions
• First appearel part in india -- tirupur ( tamilnadu)
• Mega handloom clusters -- varanasi (UP), sivnagar (Assam) , murshidbad (WB) ,
virudhanagar (TN)
• TUFS ( technology upgrade fund scheme)-- 12th plan -- 15404 crores
IRON & STEEL
In 2nd five year plan
*Bhilai -- USSR , *Durgapur -- UK , *ROURKELA -- germany
Steel Authority of India--SAIL -- PSU
• POSCO -- phong steel company --south korea -- odisha
• Rashtriya Ispat Nigam-- vishapatnam
private listed
• Tata Steel
• JSW Steel Ltd
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