UPSC Prelims 2024 Special: Revision Checklist for important Economy topics

1. The Indian Economy: A Review by Department of Economic Affairs

(Since there was no Economic Survey this year, this document is important for the exam. Look at the challenges, AMRIT Kaal Vision 2047 etc.)

— Saptarishi

The seven priorities, termed Saptarishi, adopted in the Union Budget for FY 2023-24 to guide the country towards ‘Amrit Kaal’. It aims to provide a blueprint for an empowered and inclusive economy. The seven priorities are:

1. Inclusive Development
2. Reaching the last mile
3. Infrastructure & Investment
4. Unleashing the potential
5. Green Growth
6. Youth Power
7. Financial Sector

—Maritime Amrit Kaal Vision 2047

It is a comprehensive roadmap to transform India’s maritime sector through initiatives under the 11 themes.

Sustainable and Green Maritime Sector: Aims at making all 14 major ports carbon neutral, embracing green fuel and making India a hub for hydrogen production and distribution.

An Inland Vessel Green Transition Program will be launched.

3 ports to set up the green hydrogen bunkers – Paradip Port (Odisha), Deendayal Port(Gujarat) and VO Chidambaranar Port (Tamil Nadu).

(Note: Revise Major and Minor ports of India)

2. National Multidimensional Poverty Index (NMPI)

— The NMPI is a tool to track India’s progress towards the Sustainable Development Goals, particularly the reduction of poverty in all dimensions.

— It uses data from the National Family Health Survey to provide multidimensional poverty estimates for states and union territories

3. Direct Benefit Transfer (DBT)

— DBT aims to transfer subsidies directly into beneficiaries’ bank accounts, reducing malpractices in payment systems.

— It covers various schemes like the National Child Labour Project and LPG subsidy, with a total transfer of ₹ 5,01,827 Cr in FY 2023-24.

4. Lakhpati Didi Scheme (Ministry of Rural Development)

— This scheme aims to create ‘lakhpati didis’ or prosperous sisters by providing them with financial self-reliance tools.

— It focuses on economic empowerment and financial independence among rural women, with an annual household income target of ₹1,00,000 or more.

5. Gig Economy

— The gig economy is based on flexible, temporary, or freelance jobs, often connecting with clients through online platforms.

— It includes various job types like ride-hailing, food delivery, and freelance work, contributing significantly to the U.S. workforce.

6. Transition from LIBOR

— The transition from LIBOR to alternative rates like SOFR is significant for global financial markets.

— The Reserve Bank of India (RBI) asked banks and financial institutions in 2023 to adopt a widely accepted Alternative Reference Rate, such as the Secured Overnight Financing Rate (SOFR), to complete the transition from the scandal-hit London Interbank Offered Rate (LIBOR) and Mumbai Interbank Forward Outright Rate (MIFOR).

— Banks and private companies were using LIBOR as the benchmark rate for raising funds abroad. It was a key benchmark for setting the interest rates charged on adjustable-rate loans, mortgages and corporate debt.

7.Incremental Cash Reserve Ratio (ICRR)

— Context: Discontinuation of incremental cash reserve ratio, in a phased manner, by the RBI.

— ICRR is applied to the incremental increase in deposits or new deposits made by customers within a certain period.

8. Nostro and Vostro Accounts

— A Vostro account is an account that a domestic bank holds for a foreign bank in the domestic bank’s currency — which, in the case of India, is the rupee. The RBI allowed nine such accounts, including IndusInd Bank and Uco Bank.

9. Central Bank Digital Currency vs Cryptocurrency

— According to the RBI, “CBDC is the legal tender issued by a central bank in a digital form. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency. Only its form is different.” The digital fiat currency or CBDC can be transacted using wallets backed by blockchain.

— Though the concept of CBDCs was directly inspired by Bitcoin, it is different from decentralised virtual currencies and crypto assets, which are not issued by the state and lack the ‘legal tender’ status. CBDCs enable the user to conduct both domestic and cross-border transactions which do not require a third party or a bank.

10. Card Tokenization

— Tokenization is the process of replacing a card’s 16-digit number on the plastic card with a unique alternate card number, or ‘Token’ which shall be unique for a combination of card, token requestor and device.

11. Tier-1 and Tier 2 Bonds, Vanilla Debts

12. Stock Market

—IPO vs FPO, Insider trading, FINTECH

13. Cross-Border Payments

— These payments involve transactions between different countries for international trade, investments, and remittances.

— The process includes currency conversion, international regulations, and the involvement of banks or digital platforms.

14. De-Dollarization

— De-dollarization refers to reducing reliance on the U.S. dollar as a reserve currency and for international transactions.

— It involves substituting the dollar in various financial transactions like trading oil, foreign exchange reserves, and bilateral trade agreements.

15. Tax to GDP ratio

— Tax to GDP ratio is the ratio of the tax revenue (direct & indirect tax) of a country compared to the country’s GDP. Tax to GDP ratio is about 11.1% in FY23 which includes Direct Taxes at 6% and Indirect taxes at 5.1%.

— It is useful measure of a country’s capacity to generate tax revenue with rest to the size of its economy. A decrease in tax to GDP ratio of a country may indicate a slowing economic growth rate.

16. The Mines and Minerals (Development and Regulation) Amendment Act, 2023

— Introduces reforms like exploration licenses for critical minerals and auction-based allocation of mining rights.

— Aims to provide a conducive legal environment for attracting FDI and junior mining companies.

17. Offshore Area Mineral (Development and Regulation) Amendment Act, 2023

— Amends the Offshore Areas Mineral (Development and Regulation) Act, 2002, to introduce auction-based allocation of operating rights.

— Encourages public and private sector participation to explore and mine mineral resources in India’s Exclusive Economic Zone.

18. National Logistics Policy

— Aims to enhance logistics efficiency and reduce logistics costs in India.

— Focuses on all-inclusive growth of all actors, including MSMEs and farmers.

— Implemented through the Comprehensive Logistics Action Plan (CLAP).

— Integrates with the PM GatiShakti National Master Plan for multimodal connectivity.

19. PM Gati Shakti Initiative

— Launched to provide multimodal connectivity infrastructure to various economic zones.

— Driven by 7 engines: Railways, Roads, Ports, Waterways, Airports, Mass Transport, and Logistics Infrastructure.

— Utilizes technology and clean energy for sustainable development.

— Aims for seamless multimodal connectivity and logistics efficiency.

20. PLI Scheme

— The Production Linked Incentive Scheme aims to attract investments in 14 key sectors and cutting-edge technology, ensure efficiency and bring economies of size and scale in the manufacturing sector and make Indian companies and manufacturers globally competitive.

21. Semiconductor industry in India

— Semicon India Programme, Design Linked Incentive Scheme.

22. Regional Rapid Transit System (RRTS) Project

— Provides high-speed, high-capacity commuter services in the National Capital Region.

—Trains designed to travel at 160 kmph, reducing journey times significantly.

— Ensures multi-modal integration with other transport systems.

— The Delhi-Ghaziabad-Meerut RRTS corridor will connect Delhi to Meerut in less than an hour.

23. Competition (Amendment) Act 2023

— Introduces a limitation period of 3 years for filing information on anti-competitive agreements.

— Broadens the scope of anti-competitive agreements and cartel prosecution.

— Reduces the time limit for M&A reviews from 210 days to 150 days.

— Establishes a settlement and commitment framework for faster market correction.

24. National Turmeric Board

— Established to promote turmeric growth and development, aiming to increase turmeric exports from India to US$ 1 Billion by 2030.

— The board will focus on research, market development, increasing consumption, and value addition for turmeric.

25. Committees for Determining Poverty Methodology

— V N Dandekar and N Rath (1971): Consumption Expenditure to provide 2,250 daily calories.

— Y K Alagh Task Force (1979): Consumption expenditure Rural-2,400 calories Urban- 2,100 calories (Per day)

— D T Lakdawala Expert Group’s (1993): Consumption expenditure based on calorie consumption.

(Also, look for Tendulkar Expert Group (2009) and Rangarajan Committee (2014))

26. Important Curves

— Gini Coefficient: It is an inequality indicator that measures the income distribution across a population. The coefficient ranges between 0 and 1, 0 denoting perfect equality and 1 representing perfect inequality.

— Lorenz Curve: It is a graphical representation of income or wealth inequality.

— Kuznets Curve: It is used to demonstrate the hypothesis that economic growth initially leads to greater inequality, followed later by the reduction of inequality. The idea was first proposed by American economist Simon Kuznets.

— Laffer Curve: It states that if tax rates are increased above a certain level, then tax revenues can actually fall because higher tax rates discourage people from working.

— Phillips Curve: It states that inflation and unemployment have a stable and inverse relationship. The theory claims that with economic growth comes inflation, which in turn should lead to more jobs and less unemployment.

— Engel curve: It describes how the spending on a certain good varies with household income. The shape of an Engel curve is impacted by demographic variables, such as age, gender, and educational level, as well as other consumer characteristics.

— L–shaped recovery: It is a type of recovery characterized by a slow rate of recovery, with persistent unemployment and stagnant economic growth.

27. Widening the Tax Base and  Angel Tax

28. Currency valuation, OMO, Sanitisation by RBI,

— Gresham’s law — In Fixed Exchange Rate “Bad money drives out good money”. Thiers’ law – “Good money drives out bad money”.

29. Marking 90 years of the Reserve Bank of India

— The first Governor of the RBI was the Australian Sir Osborne Arkell Smith, one of the two managing governors of the Imperial Bank of India.

— Sir C D Deshmukh was the first Indian to become Governor.

30. FTA by India with other Countries (Look at the recent developments)

31. Peace clause at the World Trade Organization (WTO) 

— Under the Peace Clause, WTO members agreed to refrain from challenging any breach of the prescribed ceiling by a developing nation at the dispute settlement forum of the WTO. This clause will be there till a permanent solution is found to the food stockpiling issue.

32. Digital Payments

— UPI vs UPI Lite- It is an ‘on-device wallet’ feature by the National Payments Corporation of India (NPCI) that offers one-click single-factor authentication or UPI transactions of value less than ₹ 500.

— UPI 123PAY: It is an instant payment system for feature phone (non-smartphone) users. However, multiple bank accounts cannot be linked.

— e-RUPI: It is a pre-paid digital voucher that a beneficiary gets on his phone in the form of an SMS or QR code.

33. Bima Trinity

— It comprises 3 components namely Bima Vistaar, Bima Sugam and Bima Vaahaks.

34. SATHI

— Seed Authentication, Traceability and Holistic Inventory(SATHI) is a user-oriented centralized portal for farmers’ welfare conceived and created by the Ministry of Agriculture in partnership with the National Informatics Center (NIC).

35. ONDC and Startups

— ONDC is an interoperable network based on the BeckN protocol that anyone can piggyback on. It seeks to break down silos in digital commerce by enabling platforms of varying configurations (big or small) to connect and operate seamlessly on it.

— It comprises different entities called ‘Network Participants’, including Buyer Applications, Seller Applications, and Gateways that perform the search and discovery function. Imagine a scenario where all the large e-commerce platforms, from food delivery to clothing and fashion to conveyance, are accessible in one place, along with your neighbourhood start-ups, shops, and kirana stores.

— Also, have a brief idea about Unicorn, Soonicorn, Decacorns etc.

(Note: Read more on ‘External Sector Growth’ – Record Exports: India’s overall exports cross an all time high of US$ 750 Billion in the 75th year of independence. Also, on basics of GDP, NDP, NNP — Cover the basics of Gross Domestic Product (GDP️ potential, GDP Gap. Who calculates GDP? Base Year ? GDP Deflator; Real vs Nominal GDP etc.)

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