Important Economic Terms and Concepts in News for UPSC Prelims

Why this topic is important for Prelims?

Which one of the following statements appropriately describes the “fiscal stimulus”?(2011)

(a.) It is a massive investment by the Government in manufacturing sector to ensure the supply of goods to meet the demand surge caused by rapid economic growth

(b.) It is an intense affirmative action of the Government to boost economic activity in the country

(c.) It is Government’s intensive action on financial institutions to ensure disbursement of loans to agriculture and allied sectors to promote greater food production and contain food inflation

(d.) It is an extreme affirmative action by the Government to pursue its policy of financial inclusion

Solution (b)

Consider the following actions which the Government can take:

  1. Devaluing the domestic currency.
  2. Reduction in the export subsidy.
  3. Adopting suitable policies which attract greater FDI and more funds from FIIs.

Which of the above action/actions can help in reducing the current account deficit?

(a.) 1 and 2

(b.) 2 and 3

(c.) 3 only

(d.) 1 and 3

Solution (a)

A rapid increase in the rate of inflation is sometimes attributed to the “base effect”. What is “base effect”?(2011)

(a.) It is the impact of drastic deficiency in supply due to failure of crops

(b.) It is the impact of the surge in demand due to rapid economic growth

(c.) It is the impact of the price levels of previous year on the calculation of inflation rate

(d.)None of the statements (a), (b) and (c) ‘given above is correct in this context

Solution (c)

Why is the offering of “teaser loans” by commercial banks a cause of economic concern?(2011)

  1. The teaser loans are considered to be an aspect of sub-prime lending and banks may be exposed to the risk of defaulters in future.
  2. In India, the teaser loans are mostly given to inexperienced entrepreneurs to set up manufacturing or export units.

Which of the statements given above is/are correct?

(a.) 1 only
(b.) 2 only
(c.) Both 1 and 2
(d.) Neither 1 nor 2

Solution (c)

The lowering of Bank Rate by the Reserve Bank of India leads to (2011)

(a.) More liquidity in the market

(b.) Less liquidity in the market

(c.) No change in the liquidity in the market

(d.) Mobilization of more deposits by commercial banks

Solution (a)

Which one of the following is not a feature of “Value Added Tax”? (2011)

(a.) It is a multi-point destination-based system of taxation

(b.) It is a tax levied on value addition at each stage of transaction in the production-distribution chain

(c.) It is a tax on the final consumption of goods or services and must ultimately be borne by the consumer

(d.) It is basically a subject of the Central Government and the State Governments are only a facilitator for its successful implementation

Solution (c)

A “closed economy” is an economy in which (2011)

(a.) the money supply is fully controlled

(b.) deficit financing takes place

(c.) only exports take place

(d.) neither exports nor imports take place

Solution (d)

Microfinance is the provision of financial services to people of low-income groups. This includes both the consumers and the self-employed. The service/services rendered under micro-finance is/are: (2011)

  1. Credit facilities
  2. Savings facilities
  3. Insurance facilities
  4. Fund Transfer facilities

Select the correct answer using the codes given below the lists:

(a.) 1 only

(b.) 1 and 4 only

(c.) 2 and 3 only

(d.) 1, 2, 3 and 4

Solution (d)

Why is the Government of India disinvesting its equity in the Central Public Sector Enterprises (CPSEs)? (2011)

  1. The Government intends to use the revenue earned-from the disinvestment mainly to pay back the external debt.
  2. The Government no longer intends to retain the management control of the CPSEs.

Which of the statements given above is/are correct?

 (a.) I only

(b.) 2 only

(c.) Both 1 and 2

(d.) Neither 1 nor 2

Solution (d)

Under which of the following circumstances may ‘capital gains’ arise? (2012)

  1. When there is an increase in the sales of a product
  2. When there is a. natural increase in the value of the property owned
  3. When you purchase a painting and there is a growth in its value due to increase in its popularity

Select the correct answer using the codes given below :

(a) 1 only

(b) 2 and 3 only

(c) 2 only

(d) 1, 2 and 3

Solution (b)

The basic aim of Lead Bank Scheme is that: (2012)

(a) big banks should try to open offices in each district

(b) there should be stiff competition among the various nationalized banks

(c) individual banks should adopt particular districts for intensive development

(d) all the banks should make intensive efforts to mobilize deposits

Solution (c)

In India, in the overall Index of Industrial Production, the Indices of Eight Core Industries have a combined weight of 37-90%. Which of the following are among those Eight Core Industries? (2012)

  1. Cement
  2. Fertilizers
  3. Natural gas
  4. Refinery products
  5. Textiles

Select the correct answer using the codes given below :

(a) 1 and 5 only

(b) 2, 3 and 4 only

(c) 1, 2, 3 and 4 only

(d) 1, 2, 3, 4 and 5

Solution (c)

The balance of payments of a country is a systematic record of (2012)

 (a) all import and transactions of a during a given period normally a year

(b) goods exported from a country during a year

(c) economic transaction between the government of one country to another

(d) capital movements from one country to another

Solution (a)

An increase in the Bank Rate generally indicates that the: (2013)

(a) market rate of interest is likely to fall

(b) Central Bank is no longer making loans to commercial banks

(c) Central Bank is following an easy money policy

(d) Central Bank is following a tight money policy

Solution (d)

In India, deficit financing is used for raising resources for (2013)

(a) economic development

(b) redemption of public debt

(c) adjusting the balance of  payments

(d) reducing the foreign debt

Solution (a)

Which of the following constitute Capital Account? (2013)

  1. Foreign Loans
  2. Foreign Direct Investment
  3. Private Remittances
  4. Portfolio Investment

Select the correct answer using the codes given below.

(a) 1, 2 and 3

(b) 1, 2 and 4

(c) 2, 3 and 4

(d) 1, 3 and 4

Solution (b)

In the context of Indian economy,Open Market Operations’ refers to: (2013)

(a) borrowing by scheduled banks from the RBI

(b) lending by commercial banks to industry and trade

(c) purchase and sale of government securities by the RBI

(d) None of the above

Solution (c)

Priority Sector Lending by banks in India constitutes the lending to: (2013)

(a) agriculture

(b) micro and small enterprises

(c) weaker sections

(d) All of the above

Solution (d)

 The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to (2014)

  1. banking operations
  2. communication networking
  3. military strategies
  4. supply and demand of agricultural products

Solution (a)

What is/are the facility/facilities the beneficiaries can get from the services of Business Correspondent (Bank Saathi) in branchless areas?(2014)

  1. It enables the beneficiaries to draw their subsidies and social security benefits in their villages.
  2. It enables the beneficiaries in the rural areas to make deposits and withdrawals.

Select the correct answer using the code given below.

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Solution (c)

In the context of Indian economy which of the following is/are the purpose/purposes of ‘Statutory Reserve Requirements’?

  1. To enable the Central Bank to control the amount of advances the banks can create
  2. To make the people’s deposits with banks safe and liquid
  3. To prevent the commercial banks from making excessive profits
  4. To force the banks to have sufficient vault cash to meet their day-to-day requirements

Select the correct answer using the code given below.

  1. 1 only
  2. 1 and 2 only
  3. 2 and 3 only
  4. 1, 2, 3 and 4

Solution (b)

 What does venture capital mean?

  1. A short-term capital provided to industries
  2. A long-term start-up capital provided to new entrepreneurs
  3. Funds provided to industries at times of incurring losses
  4. Funds provided for replacement and renovation of industries

Solution (b)

With reference to Balance of Payments, which of the following constitutes/constitute the Current Account?

  1. Balance of trade
  2. Foreign assets
  3. Balance of invisibles
  4. Special Drawing Right

Select the correct answer using the code given below.

  1. 1 only
  2. 2 and 3
  3. 1 and 3
  4. 1, 2 and 4

Solution (c)

India is regarded as a country with “Demographic Dividend”. This is due to: (2011)

(a.) Its high population in the age group below 15 years

(b.) Its high population in the age group of 15-64 years

(c.) Its high population in the age group above 65 years

(d.) Its high total population

Solution (b)

Which one of the following best describes the term “Merchant Discount Rate” sometimes seen in news? (2018)

(a) The incentive given by a bank to a merchant for accepting payments through debit cards pertaining to that bank.

(b) The amount paid back by banks to their customers when they use debit cards for financial transactions for purchasing goods or services.

(c) The charge to a merchant by a bank for accepting payments from his customers through the bank’s debit cards.

(d) The incentive given by the Government to merchants for promoting digital payments by their customers through Point of Sale (PoS) machines and debit cards.

Answer – c

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Note:

  • These terms are made in the format of one-liners for quick digestion of info. Hyphen or dash symbols are used to separate different points.
  • Source of these terms are – Prelims CA Mindmaps and Mains CA Articles
  • Other compilation of important topic areas such as indexes/reports, schemes, etc. can be covered in  Prelims CA mindmaps itself.
  • Any leftout economic terms can be covered in Economy Static Mindmaps >> Chapters (Inflation, Business cycle, Financial market, banking, security market, external sector, taxation, public finance and investment models).

RBI’s income sources:

  • Open Market Operations (OMOs): the RBI may buy government bonds from the public and earn interests on it from the issuer i.e. government.
  • Interest on loans.
  • Interests on overseas deposits.
  • Forex market operations: the RBI buys and sells foreign currency like the dollar by speculation.
  • Sovereign Seigniorage: this is the income that the central bank earns by printing currency.

Types of RBI’s reserve:

  • Currency and Gold Revaluation Account (CGRA): Value of gold and forex assets owned by RBI on behalf of Indian govt – major portion of RBI’s reserve – it is the revaluation eserve.
  • Continengency Fund (CF): reserve held as a safety measure against any unforeseen risk/crisis – it is the realized equity or contingency risk buffer (CRB).

Economic Capital Framework (ECF):  Realized equity + Revaluation reserve. capital that must be held in reserve by the RBI to sustain its stability in times of an unforeseen crisis or risks.

Liquidity Adjustment Facility (LAF): It is a monetary policy instrument used by the RBI for managing the liquidity needs of the commercial banking system. The LAF works through various instruments devised by the RBI to inject liquidity into the banking system when the system/institutions need cash as well as to absorb liquidity when the banking system has excess money. The components of LAF are:

  • Repo (overnight fixed repo or the ‘popular’ repo)
  • Reverse Repo (Overnight fixed reverse repo or the ‘popular reverse repo’)
  • Term repo (auction)
  • Overnight variable rate repo (auction)
  • Overnight variable rate reverse repo (auction)

Repo Rate: Also known as repurchase rate – it is the key monetary policy instrument of the RBI – It is the rate of interest at which the RBI lends short-term money to banks to control credit availability, inflation and economic growth.

Reverse Repo Rate: It is the rate at which the RBI borrows money from the commercial banks within India – It is a monetary policy instrument used to control the money supply in the country.

Cash Reserve Ratio (CRR): It is the ratio of total deposit that banks need to keep as a reserve with the RBI in the form of cash instead of keeping the amount with them – to control the flow of money in the market.

Statutory Liquidity Ratio (SLR): It is the ratio of the deposit that the commercial bank has to maintain in the form of liquid cash, gold, other securities prescribed by the RBI – It is a percentage of net time and demand liability (NTDL) kept by the bank – The SLR is maintained so that the bank will have an amount in the form of liquid assets, which can be used to handle a sudden increase in demand for the amount from the depositor – RBI uses this to limit credit facilities offered by banks to borrowers to ensure the stability of banks.

Marginal Standing Facility (MSF): It is overnight liquidity support provided by the RBI to commercial banks – The interest rate for MSF borrowing is decided by the RBI from time to time and it was originally set at 1% higher than the repo rate – Subsequently, with the gradual reduction of the repo rate, the MSF rate has been brought closer to the repo rate. It is used by the bank after it exhausts its eligible security holdings for borrowing under other options like the LAF repo – Under MSF, banks can borrow funds from the RBI by pledging government securities within the limit of the SLR.

Corridor: It is determined by the MSF rate and the reverse repo rate for the daily movement of Weighted Average Call-money Rate (WACR).

Open Market Operations (OMOs): One of the monetary policy tool used by the RBI to control money supply in the economy by selling or purchasing government securities.

Market Stabilisation Scheme (MSS): introduced in 2004 – to withdraw excess liquidity by selling short-dated government securities in the economy – the issued securities are government bonds called Market Stabilisation Bonds.

Utkarsh 2022: 3 year roadmap to improve RBI functions

GoAML: UNODC’s Anti-money laundering platform

Sahaj & Sugam: GST return system for small taxpayers

Gafa tax: France’s tax on sales generated by non-tax paying online giants such google, facebook, apple, amazon.

MLI – Multilateral Convention to Implement Tax Treaty Related Measures: Outcome of OECD or G20 project to tackle Base Erosion & Profit Shifting (BEPS).

CIC Core Investment Company: specialised NBFC with main business of acquiring shares and securities – Asset size of Rs. 100 crore or more – Tapan Ray panel to review CIC’s regulatory framework.

Fair and Remunerative Price (FRP): Minimum price at which sugarcane is to be purchased by sugar mills from farmers – fixed by central govt on recommendation of CACP (under MoA).

Revised Fit & Proper Regime: RBI’s Criteria for disqualification of directors in PSBs.

Monetary Policy Committee: To ensure price stability, financial stability & credit flow – in 2015 by amending RBI act – 6 members (3 members from RBI, 3 members nominated by govt) – each member has 1 vote – RBI governor (chairperson) casts vote in case of tie.

Insolvency and Bankruptcy Code (IBC): to recover bad debts by making resolution process easier and less time-consuming – either creditor or defaulter initiate proceedings – Debt recovery tribunal (adjudicates individuals & unlimited partnership firms) – National company law tribunal (adjudicates companies & limited liability firms) – cases should be resolved within 14 days – resolution process should be completed in 180 days (can be extendable by 90 days) – Insolvency and Bankruptcy Board of India (IBBI) is the nodal regulator.

National Electronic Fund Transfer (NEFT): Transactions are processed in batches – minimum amount can be Rs. 1 – no maximum limit – 24X7 available.

Real Time Gross Settlement (RTGS): Transactions are processed continuously and in real-time – minimum amount can be Rs. 2 lakhs – no maximum limit – available btwn 8 AM to 6 PM.

Immediate Payment Service (IMPS): Transactions processed in real-time – only online transaction – no mimimum limit – max limit is Rs. 2 lakhs – available 24X7.

E-mandate: Enable automated recurring payments  –  with Additional Factor Authentication (AFA) during registration – using debit/credit cards & wallets – max limit is Rs. 2000 – governed by individual banks  –  RBI permitted it.

E-NACH: Enable automated recurring payments – governed by NPCI – RBI permitted it.

C-KYC (Central Know Your Customer): centralized depository of KYC records of customers engaged in various financial markets – managed by CERSAI (Central Registry of Securitization and Asset Reconstruction and Security Interest in India) – accessed by authorised institutions under PMLA or rules framed by govt of India or any regulator (RBI, SEBI, IRDA, etc).

CERSAI: Central online security interest registry of India – a govt company registered under companies Act, 2013 – to check frauds in lending against equitable mortgages.

Asset Redevelopment Fund (ARF): to meet internal capital expenditure and investments.

Advisory Board of Banking Frauds (ABBF): established by CVC – to examine bank fraud of over 50 crore and recommend action – cases involving General Manager and above in PSBs – CBI can also refer case regarding PSBs concerned.

Development banks – click me

National Time Release Study (NTRS): to measure international trade efficiency – advocated by World Customs Organization (WCO).

Nutrient Based Subsidy (NBS): Subsidy fixed by govt (CCEA) on P&K fertilizers based on nutrient content – allows manufacturers, marketers & importers to fix MRP of P&K fertilizers at reasonable levels.

Capital Output Ratio (COR): Amount of capital needed to produce one unit of output.

Incremental Capital Output Ratio (ICOR): Additional amount of capital needed to produce additional unit of output – explains relationship between Investment and GDP increase.

Marginal Cost of Funds based Lending Rate (MCLR): Minimum interest rate of a bank below which it cannot lend – Set by individual bank itself – components [Negative carry on account of CRR, Operating costs, Tenor premium & Marginal cost of funds (marginal cost of borrowings + return on net worth)]

Transfer pricing: Setting of the price for goods and services sold between controlled (or related) legal entities (may be situated in different countries) within an exterprise.

Advanced Pricing Agreements (APA): allows taxpayer and tax authority entering into agreement to avoid future transfer pricing disputes.

Dividend Distribution Tax: Tax imposed on dividend distributed by the corporate to its shareholders – introduced by finance act 1997 – DDT is at 15% of dividend distributed.

Capital Gains Tax: Tax imposed on income earned from the sale of capital assets or investments – Capital assets are farms, shares, bonds, businesses, art and home – Short term assets (sold within 36 months of holding) – Long term assets (sold after 36 months of holding).

Ghosting: Illegal practice whereby two or more market makers collectively attempt to influence a stock’s price by sudden increase of buying or selling of a stock.

Insider trading: Illegal practice whereby market makers collects information from insiders of a company to get an unfair advantage allowing them to buy or sell the concerned stock before the public learns the new information.

Side pocketing: Type of account used in hedge funds to differentiate between illiquid and liquid investments – SEBI introduced it in the wake of IL&FS crisis.

Exchange Traded Fund (ETF): Index Funds that are listed and trade on stock exchanges — track indexes like Nifty, Sensex and Banking index.

Bharat-22 ETF: Exchange Traded Fund (ETF) that will track the performance of 22 stocks the govt plans to pare its stake in – Span six sectors (Basic materials, energy, finance, FMCG, industrials & utilities) – second ETF launched by govt – first ETF was CPSE ETF (launched in 2014).

National Investment and Infrastructure Fund (NIIF): investor owned fund manager anchored by GOI + leading global and domestic investors – to invest in infra related sectors in India – Rs. 40,000 crore corpus (49% by govt) – operated by three Alternative Investment Funds (AIFs).

Merchant Discount Rate (MDR): Payment by merchants to banks for availing payment infrastructure (Point of Sale Machine PoS) – applicable to all debit card, BHIM UPI, Aadhaar enabled payment system (AePS) transactions – not applicable to payments made to establishments with a turnover of over 50 crore INR.

Current Account Savings Account (CASA) Ratio: Ratio of deposits in CASA to total deposits – to determine bank’s profitability – Higher CASA ratio = Higher Profit + Lower cost of funds.

Participatory Guarantee System (PGS): Organic products certification through particpatory approach (producers, consumers, retailers,traders, NGOs, gram panchayats, and govt organisations & agencies).

BHIM 2.0: UPI based payment interface app – allows real time fund transfer – developed by NPCI – additional features in 2.0 (supports additional languages – increased transaction limits (upto Rs. 1 lakh) – donation gateway – linking multiple bank accounts – merchant offers – Applying in IPO – Gifting money).

Unified Payments Interface (UPI): based on Immediate Payment Service (IMPS) platform – allows money transfer between any two bank accounts by using a smart phone – fund transfer limit Rs. 1 lakh/trasaction – developed by NPCI – available 24X7.

Minimum Alternate Tax (MAT): Alternative minimum tax imposed on book profit of companies – Why? Companies had substantial book profits but paid no tax – Applies to zero tax companies, foreign companies with income source in India, and companies with normal tax less than MAT – Exemptions (Infrastructure companies, power companies, venture capital investments, income from charitable activities, income from free trade zones).

Deferred tax: form of tax levied on companies – arise as a result of timing difference or temporary difference in accounting.

Fiscal Deficit: Total Expenditure – Total Receipts except Borrowings

Gross Fiscal Deficit: (Total expenditure + Loan servicing) – (Revenue receipts + Non-debt capital receipts).

Primary deficit: Fiscal deficit – Interest payments.

Universal Service Obligation Fund (USOF): statutory under Indian Telegraph (amendment) Act, 2003 – non-lapsable fund – deposited into Consolidated Fund of India – to provide universal access to telecom services in rural & remote areas – by collecting Universal Service Levy (USL) from service providers – Under MoC&IT.

Adjusted Gross Revenue: Usage and licensing fee charged by DoT – Paid by telecom operators.

Sovereign Gold Bond (SGB): Govt secs/bonds denominated in multiples of grams of gold with basic unit of 1 gram – issued by RBI on behalf of Govt – Issued through scheduled commercial banks (except small finance banks and payment banks), Stock holding corporation of India Ltd (SHCIL), Designated post offices, Recognised stock exchanges (NSE & BSE) – Issued to Resident individuals, HUF, Universities, Trusts & Charitable institutions – 8 years tenure – exit option after 5 years – Interest rate is 2.50%/year – payment in cash, DD, cheque and electronic banking.

Index of Industrial Production (IIP): Records growth of industrial sectors – Prepared by CSO under MoS&PI – Weightage (Manufacturing 77% -> Mining 14% -> Electricity 7%) – Compares industrial products’ volume in a given period Vs base period.

Index of 8 Core Industries: Lead indicator of monthly industrial production of 8 core sectors represents 40.27% of IIP – Prepared by MoC&I – Weightage breakup in descending order: Refinary products > Electricity > Steel > Coal > Crude oil > Natural Gas > Cement > Fertilizers (RESCC NCF).

Minimum Support Price (MSP): Guaranteed price for the farmers’ produce – announced at beginning of sowing season – 22 crops covered (14 kharif, 6 Rabi, 2 commercial) – announced by govt on recommendations of CACP (under MoA) – CACP suggestion not binding – CACP is statutory body – MSP objectives (insure agricultural producers against sharp price fall, prevent distress sales & procure food grains for public distribution).

Documentation Identification Number (DIN) System: for transparency & accountability in indirect tax administration – provides taxpayers a digital facility to verify any communications – by Central Board of Indirect Taxes (CBIC).

QR Code: Quick Response Code – 2D version of barcode – Applications (Product tracking, item identification, time tracking, document management and general marketing).

Bharat QR: Person to Merchant (P2M) mobile payment solution – mutually derived among payment networks (NPCI, Visa & Mastercard) – no sharing of user credentials to merchant

ICEDASH: Ease of doing business monitoring dashboard of Indian customs – developed by CBIC with NIC

ATITHI: Mobile app for international travelers to file customs declaration in advance – developed by CBIC.

HS Code: Harmonised System Code – custom officers use HS code to clear commodities entering or leaving international border – developed by World Customs Organisation.

Government e Marketplace (GeM): Portal where common user goods and services can be procured by govt (govt ministries & depts, PSUs and other apex autonomous bodies of central govt) – developed by Directorate General of Supply and Disposal (under MoC&I).

Disinvestment: dilution of a stake of the govt in a public enterprise.

Normal disinvestment: If the govt is selling minority shares in a PSE (less than 50%) = it will continue to be the PSE owner.

Strategic disinvestment: Sale of majority stake of govt (50% or more) + Transfer of management control to some other entity – Dept of Investment and Public Asset Management (DIPAM) under MoF identify PSUs for S.disinvestment with help of NITI Aayog – CCEA approves it.

Commercial Paper (CP): An unsecured loan raised by firms in money markets through instruments in the form of a promissory note – issued by Corporates, Primary dealers and All-India Financial Institutions, Issued by scheduled banks – investment in CPs by Individuals, Banking companies, other corporate bodies, unincorporated bodies, NRIs, and FIIs.

Payment bank: to extend deposit and payment services to unbanked and underbanked Indians — cannot lend and cannot provide credit card — Can take deposits upto 1 lakh — can issue debit cards — can be a business correspondent (BC) of another bank — can issue MF, pension and insurance products — can hold max 25% in current and fixed deposits with other banks – can provide remittance service — need to (maintain CRR, minimum paidup equity capital at Rs. 100 cr, invest minimum 75% of demand deposits in SLR eligible gsecs or treasury bills with upto 1 year maturity) — Eligbility (card issuers, finance companies, business correspondents, telecom companies, retailers, etc).

Small Finance Banks (SFBs): to provide basic banking services to un-banked and underbanked sections — scheduled bank status — minimum paidup equity capital at Rs. 200 cr – can accept deposit of any amount – can lend but largely (75%) to priority sector including agri and small business – can provide remittance service — can issue MF, pension and insurance products — PB can also become SFB — SFB can be converted into a full-fledged bank — Eligbility (10 yrs of experience in financial services).

Partial Credit Guarantee Scheme: purchase of high-rated pooled assets from financially-sound NBFCs & Housing Finance Companies by PSBs – scheme’s validity can be extended by Finance Minister – enable NBFCs/HFCs resolve liquity crunch.

Open Market Operations (OMOs): One of the monetary policy tool used by the RBI to control money supply in the economy by selling or purchasing government securities.

Operation Twist: Central bank’s special OMO by which it uses the proceeds from the sale of short-term securities for buying the long-term securities — leading to ease of interest rates on long term securities — first used by US in 1961 to strengthen USD & stimulate cash flow.

eBkray: launched by FM — common e-auction platform for attached assets by banks — For improved realization of value.

Gross Budgetary Support (GBS): Govt’s support to central plan — includes govt’s revenue sources + Tax collection — Finance Commission fixes the GBS amount after collecting requirement of all ministries – Split into Revenue and Capital Budget.

Bharat Bond ETF: First corporate bond ETF in the country — to create additional source of funding for CPSUs, CPSEs, CPFIs and other govt organisations — created by National Stock Exchange (NSE).

Follow on Public Offer (FPO): Issuance of additional shares to investors by a company listed on a stock exchange  after an initial public offering (IPO).

At-the-Market Offering (ATM): Type of FPO by which a company can offer secondary public shares depending on a prevailing market price.

Bond price: Present values of all likely coupon payments + Present value of the par value at maturity of bonds.

Microdot identifiers: Text/image substancially reduced in size to prevent detection by unintended recipients — around 1mm in diameter — made from polyester or metal — prevents vehicle/part thefts.

InvIT (Infrastructure Investment Trusts): under Indian Trust Act, 1882 and SEBI (InvIT) Regulations, 2014 — Union cabinet approves proposal to setup InvIT as per SEBI guidelines — invest primarily in infrastructure projects (as defined by MoF) – may hold assets directly or through SPV or through a holding.

Anti-dumping duty: Protetionist tariff imposed by govt on foreign imports which it believes to be priced below fair market value — WTO does not regulate dumping — WTO only allows govts to act against dumping where there is genuine (material) injury to competing domestic industry.

Input tax credit (ITC): Reducing the tax already paid on inputs at the time of paying tax on output— to prevent cascading effect of taxation (tax on tax) — can be claimed by person registered under GST.

National Infrastructure Pipeline (NIP): GOI’s investment plan to enhance infrastructure in select sectors for a period of 5 years (2020-25) — Rs. 103 lakh crore allocated — Sectors selected (Afffordable & clean energy, Digital services, High-quality education, Convenient & effective transportion and logistics, Universal housing & water supply, doubling farmer’s income, disaster-resilient public infra, health & wealth being, sustainable & smart cities, technology for public good).

Deposit Insurance Scheme: to provide insurance protection to depositor’s money if a bank fails after receiving a premium — DICGC implements it — covers all commercial and cooperative banks — only primary cooperative societies are not insured.

Financial year: of RBI — Currently July-June.

Fiscal year: of central govt — currently April-March.

Masala bonds: Rupee denominated bond issued by an Indian entity in foreign markets — exchange rate risk falls on investors, not affect issuers — high interest rate (2-3% than LIBOR) = benefits investors — helps in rupee internationalisation — first issued by world bank backed IFC — 3 years minimum tenure — can be issued by any corporate or body corporate in India — can be purchased by any investor from FATF complaint jurisdiction outside India.

EASE: Enhanced Access and Service Excellence — PSB reforms agenda — EASE 1.0 (ranks PSBs on several parameters) — EASE 2.0 (Liquidity in PSBs, reconstituting management committee & possible mergers) — EASE 3.0 (Palm banking & banking on go)

Vivad Se Vishwas: scheme that aims to resolve direct tax disputes in various appellate forums.

SPICe+ form: an integrated web form — offer 10 services of 3 central govt ministries & depts (MoCA, MoL and Dept of Revenue of MoF) and of 1 state govt (Maharashtra) — part of GOI’s EODB initiatives — notified by Ministry of Corporate Affairs (MoCA)

Shell company: Corporate entity which don’t have any active business operations & significant assets in their possession — could be used for Money laundering, tax evasion & other illegal activities — laws dealing with it (Benami transaction prohibition amendment act 2016, PMLA 2002, and Companies Act 2013).

Base Erosion and Profit Shifting (BEPS): Companies shift their profits to other tax jurisdictions (where there is low/no tax, and little/no economic activity) through tax planning strategies resulting in little or no corporate tax being paid.

BEPS Action Plan: Action plan for tackling Base Erosion and Profit Shifting (BEPS) —given by OECD — approved by G20 — Outcomes are MLI and CBC report.

MLI – Multilateral Convention to Implement Tax Treaty Related Measures: Outcome of OECD or G20 project to tackle Base Erosion & Profit Shifting (BEPS).

CBC report: Country-By-Country Report — all large MNCs to prepare this report under the BEPS Action Plan.

Circuit Breaker: trigerred by SEBI to prevent markets from crashing — it brings about a trading halt in all equity and equity derivative markets — implemented in 2001.

India VIX: a measure of market expectation of volatility in near term – implemented in 2010.

Deferred Counter Cyclical Capital Buffer (CCyB): Capital to be kept by a bank to meet business cycle risks and protect banking sector — as per Basel III norms

SAFE PLUS loans: SIDBI’s loan assistance to facilitate emergency response against coronavirus  – loan to MSMEs manufacturing products dealing with covid such as sanitizers, masks, etc.

Ways and Means Advances (WMAs): Temporary loan given by RBI to government (centre/state) — to meet mismatches in receipts and payments — limits are periodically decided mutually by govt and RBI — introduced in 1997 — given at repo rate 4.4% — govt has to return the amount within 90 days — in case not returned then it becomes overdraft and govt pays additional 2% interest after 90 days.

Targeted Long Term Repo Operation (TLTRO): lets banks borrow funds (1-2 years) from RBI at repo rate by providing g-secs as collateral — can get total Rs. 50,000 crore under this — funds for investment in investment grade bonds, commercial bonds and non-convertible debentures of NBFCs — at least 50% of fund should be invested in small NBFCs, Mid-sized NBFCs and Micro-financie institutions (MFIs).

PM CARES Fund Vs PM Relief Fund: Click me

Rights Issue: Offering of shares to existing shareholders in proportion to their existing shareholding — often offered at a discount on the market price.

CHAMPIONS portal: by MSME ministry — provide ICT tools for assisting Indian MSMEs.

Bharatmarket: National e-commerce marketplace — effective way to get essential commodities to consumers during the lockdown within containment zones — integrate capabilities of technology companies — by Confederation of All India Traders — Support from MoC&I — will be run by traders.

E-NAM: online trading platform for agriculture produce — aiming to help farmers, traders, and buyers with online trading and getting a better price by smooth marketing — launched by the Centre in 2015 — SFAC (under MoA&FW) is implementing it.

PM SWANidhi: Special micro-credit facility of up to Rs. 10,000 — to street vendors affected by COVID-19 to resume their livelihoods — repayable in monthly installments in a 1 year tenure — under Ministry of Housing & Urban Affairs — to be implemented by SIDBI.

SATYABHAMA: Science and Technology Yojana for Aatmanirbhar Bharat in Mining Advancement (SATYABHAMA) — R&D portal for S&T program scheme — Launched by Ministry of mines — Developed by National Informatics Centre (NIC)

Indian Gas Exchange (IGX): India’s first gas exchange — Digital trading platform for imported natural gas — allow buyers and sellers of natural gas to trade in Spot market and Forward market.

International Comparison Program: Largest worldwide data collection initiative — to produce indices on purchasing power parities (PPP) and Price Level Index (PLI) — managed by World Bank – under UN Statistical Commission – MoS&PI is the implemeting agency in India – started in 1970.

Purchasing Power Parity (PPP): Measure of what an economy’s local currency can buy in another country — calculated based on price of a common basket of goods and services.

Price Level Index (PLI): Ratio of a PPP to its corresponding market exchange rate — to compare the price levels of economies.

Standing Deposit Facility (SDF): first recommended by the Urjit Patel committee report in 2014 — SDF is a collateral-free liquidity absorption mechanism that aims to absorb liquidity from the commercial banking system into the RBI [Like reverse repo but without collateral (typically g-secs)].

Took 2 days to make this compilation. If it is useful, kindly mention it in the comments so that we’ll come up with more such value-added initiatives. All the very best!

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thomas
thomas
1 year ago

very useful, please make more of these kind on different topics focusing on prelims.

SEYYID MUHAMMED
SEYYID MUHAMMED
1 year ago

You IAS express team are doing much more to our aspirants by making everything easy with utmost quality as well as clarity with little quantity. Thank you😍

Arjun Singh
Arjun Singh
1 year ago

You really did a wonderful job , Thanks a million

ritesh
ritesh
1 year ago

A nice mug-up before prelims

Kalla Prudhvi
Kalla Prudhvi
1 year ago

Indeed very helpful.

Vaibhav
Vaibhav
1 year ago

this is one of the best initiative thank you helps alot..

Vedprakash
Vedprakash
1 year ago

very useful … thank you IASEXPRESS team

Abhishek
Abhishek
1 year ago

Plz do sir all the prelims facts of all subjects as soon as possible…Always regards to ias express team…

Manisha
Manisha
11 months ago

Pls add the recent terms

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