Cur Aff FULL 2024
Cur Aff FULL 2024
Cur Aff FULL 2024
Table of Contents
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 1
10.7 💳 🚕 National Common Mobility Card (NCMC, 2019)........................................................16
10.8 🚝💳 SBI’s Nation First Transit Card (2023).............................................................................16
10.8.1 💳 UPAY Cards- International acceptance............................................................................16
10.8.2 💳 Auto-Debit/E-mandates and Additional Factor of Authentication (AFA)...................16
10.9 🕵️♂️ 💳📯 Payments Infrastructure Development Fund (PIDF) by RBI...................................17
10.10 🐯🔗💮 Central Bank Digital Currency (CBDC)...................................................................18
10.11 🚩👶🏻 Zhande-walle Babushono ke liye special instruction: ( अग्रिम सूचना)..............................18
10.11.1 💮 Indian CBDC symbol (e₹).................................................................................................18
10.11.2 💮 (e₹) CBDC wholesale vs Retail.........................................................................................18
10.11.3 💮(e₹) Indian CBDC = no interest earning (नहीं मिलेगा ब्याज।)..............................................18
10.11.4 💮(e₹) Indian CBDC = digital token of legal tender............................................................18
10.11.5 💮 (e₹) → Settlement finality.................................................................................................19
10.11.6 💮 📲 (e₹) CBDC - Interoperability permitted with UPI QR Codes .................................19
10.11.7 💮(e₹) CBDC - programability & offline features................................................................20
10.11.8 💮(e₹): Fungibility of CBDC................................................................................................21
10.12 🔗💮 Crypto-Currency & Blockchain Tech: other dev..........................................................22
10.12.1 💮 Bitcoin ETF allowed in USA but RBI not to allow in India ...........................................22
10.12.2 💮 World Coin Project............................................................................................................22
10.13 🔗💮🥇 Cryptocurrency → global regulations......................................................................22
10.13.1 💮 Global Regulations → MICA regulation by EU (2023).................................................22
10.13.2 💮 Global Regulations → CARF Framework by OECD (2022).........................................22
10.14 🧑🏫 Topics Covered in Past Win## Series for Pill1A1 (Money)..............................................22
10.14.1 🧑🏫 Win20: already covered this in 1A1👇 (हम आगे पढ़ चुके है)................................................22
10.14.2 🧑🏫 Win21: already covered this in 1A1👇 (हम आगे पढ़ चुके है)................................................23
10.14.3 🧑🏫 Win22: already covered this in 1A1👇 (हम आगे पढ़ चुके है)................................................23
10.14.4 🧑🏫 Win23: already covered this in 1A1👇 (हम आगे पढ़ चुके है)................................................24
10.15 🧑🏫📡MRUNAL’S ECONOMY COURSE FOR UPSC EXAM.................................................25
10.15.1 📚 Next Handout.....................................................................................................................25
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 2
• From table given below, you can see that the diversity and variety of economy MCQs
questions has increased/changed in recent Prelims, so it is inevitable that handouts will get
lengthy. जब प्रश्नों की विविधता और जटिलता बढ़ रही है तो ये लाजमी है कि ज्यादा नोट्स लम्बे बनाने पड़ेंगे.
• So, please do not be fooled by the "negative-PR toolkit" circulated by Delhi-offline coaching
mafia against my notes via timepass vloggers and bikaau-royal-entry toppers.
• Black background cell = NOTHING asked from said topic in that year.
Economy Pillar 2023 2022 2021 2020
1A1_Digital
• CBDC & • Blockchain
Payment & • NFT ke features • NOTHING
SWIFT Technology
Bitcoin
• expansionis
• Money
t monetary
multiplier
• Central Banks policy
increases when
1A2_Monetary globally hiking • RBI responsible to • multiplier If
• Indian Bond
policy loan interest control inflation you
Yield
rates withdraw 1
influenced by
00 000 in
what factors
cash
• Lender of last • District
resort means Central
1B1_Classificati • Credit rating
• what Cooperativ
on Bank NBFC agencies
• UCBs e Banks
regulation (DCCBs)
1B2_NPA/Bad • • BBB • Appointment • Interest
Loan Burning of RBI Coverage
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 3
Economy Pillar 2023 2022 2021 2020
Issues Governor Ratio
• InVITS pe
Income Tax &
SARFAESI Act
• Capital markets • Call Money
ke sub-markets • IIB pe Income & other
• Stock Market:
1C_Sharemarke • Beta in Tax instruments
NDS-OM &
t Sharemarket • Convertible • non-
CDSL
• intangible Bonds financial
investments debt
• Capital
Expenditures of
a company
• cyber
1D1_Insurance • • •
insurance
• Causal
1D2_Pension • • Workers get •
EPFO or not
• Kisan
1D3_ Financial
• SHG ko Loans • • Credit Card
inclusion
scheme
• 15th FC
2B_FC • Vodafone indirect • Black Money is
Horizontal •
BlackMoney transfer bad why?
Formula
2D_FRBM • G-Sec and
• FRBM
Deficit • Household •
Docx
Disinvestment Savings
• FDI
Meaning
• India
• Switzerland
import-
Gold export
3A_BoP import • Tea Board ka • FDI types of export data
• India ka global
export FDI/FPI Dubai Office instruments • Indo-
export data &
SriLanka
PLI
Trade
• WTI Oil
Contract
3B_ currency • RBI s • NEER-REER • Devaluation • “Gold
exchange Sterilization • currency Tranche”
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 4
Economy Pillar 2023 2022 2021 2020
(Reserve
exchange and RBI Tranche)
Action • global
• ECB & Fed financial
Tapering crisis- what
NOT to do
• USA-EU Trade
and technology • IMF Loan facility
3C_intl.org Council • G20 Common • TRIMS
•
agreements • EU s Stability Framework Agreement
and Growth • AIIB-MTCR-SCO
Pact
• price of rice
affected y
• Small Farmer • public
Large Field investment
4A_AGRO • •
• Nigerseed pe in
MSP agriculture
• MSP All
NEVER
4B_Mfg Services
• Videshi e-
E-Commerce • MSME & PSL • •
commerce firms
MSME IPR
• Vietnam
• 1991
economy growth
4C_NITI PC economic
results
FYP; • • liberalizatio
• Organisation
unemployment n impact on
looking after
rural area
industry dispute
• Counter-cyclic
• real sector in the policy to
4D_GDP • •
economy combat
recession
• Demand-Pull
inflation
4E_Inflation • • • CPI vs WPI
• Printing money
causes inflation
5A_Infra- • • Coal Controller s • •
Energy Water Organization
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 5
Economy Pillar 2023 2022 2021 2020
(CCO) s
responsibilities
5B_Infra- • Private Port etc
• • •
Transport • Infra Corridors
5C_Infra-Rural • S3i ke Infra • Sanitation
• • MPLADS
Urban sectors Coalition
• Janani
6A_HRD-
Suraksha Yojna • Ayushman Bharat
Health Hunger • •
• Anaemia Mukt Digital Mission
Malnutrition
Bharat
7_Microeconom • substitute &
• • •
ics inferior goods
TOTAL MCQ • 20+ MCQ • 20+ MCQ • 14 MCQ • 20+ MCQ
• Free Download Topicwise PYQ booklet at https://unacademy.com/content/upsc/downloads/
(free unlock code: Mrunal.org)
• For more, watch this youtube video: https://youtu.be/KTag3h_kJoE?si=fTsLxkizxivnFT4y
• Note on above table: Every teacher always wants to show that more number of questions are
asked from his subjects. E.g. Economy teacher will say WTO = economy topic whereas IR
teacher may disagree. No need to get into ‘emotional-fanboy-outrage’ around it.
2019
2020
2021
2022
2023
2018
2019
2020
2021
2022
2023
💳1_Money
Banking, Most useful in Prelims but
7 7 9 6 8 7 0 0 15 15 0 0
Finance & less in Mains
Insurance
🍋2_Budget, Second lowest utility after
FC, GST, 4 1 1 1 3 1 25 25 15 20 0 15
5_Infra
FRBM
💱3_Intl_Tra 4 7 7 2 4 3 30 0 15 15 0 0
Third lowest utility after
de, BoP 2_Budget.
🛒4_Sectors,
GDP,
Useful for both prelims and
Inflation, 3 8 5 5 4 4 50 65 55 60 85 110
Mains.
Microecono
mics
🏗5_Infra 1 3 1 0 2 4 15 15 15 30 20 10
Lowest utility among 6
pillars.
👩🏻🎓6_HRD 6 2 0 0 0 2 60 75 85 45 20 95 more useful in Mains than in
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 6
Prelims.
25 28 23 14 21 21 180 180 200 185 125 230
Total --
Qs Qs Qs Qs Qs Qs m m m m m m
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 7
10.3 💰M ONEY: FIAT MONEY AND LEGAL TENDER
A) Is it in form D) At present, is it E) Is it
C) Result: Is it
of a physical B) Is it issued by legally valid for LEGAL
Fiat money?
coin OR physical Central Bank / transaction in Tender in
ITEM (YES If Both
Note OR Digital Govt / King / India as per India (Yes, IF
Cell A+B give
C+D give
Coin that can
measure ‘value’?
Queen
✅ +✅ ) Coinage Act or
RBI Act? ✅ +✅ )
₹ Indian Rupee:
Coins & Notes,
CBDC
✅ ✅ ✅ ✅ ✅
Demonetized
(विमुद्रीकृ त) ₹500,₹1000 ✅ ✅ ✅ ✋ ✋
Dollar$, Yuan, Yen,
Euro etc ✅ ✅ ✅ ✋ ✋
G-Sec, T-Bill
(what is this-Ans.
explained in video)
✋ ✅ ✋ ✋ ✋
Shares, Bonds, DD,
Cheque, ATM, Cards,
Kirana coin, Casino ✋ ✋ ✋ ✋ ✋
coin, Filmstar-Notes
Marshall Island: SOV
Venezuela: Petro coin ✅ ✅ ✅ ✋ ✋
Bitcoins ✅ ✋ ✋ ✋ ##
✋
##
Bitcoin is not a Fiat money, yet it is legal tender in El-Salvador nation. But it is an exception.
(बिट-कोइन का अल-साल्वाडोर देश में वेधनिक निविदा होना के वल एक अपवाद है, वो पूरी दूनिया के लिए नियम/व्याख्या नहीं है।)
😤 FAQ: we can use cheque / credit card to pay fees. So, why are they not fiat money/legal
tender? Ans. They're not money in themselves. they're tools to use money.
😤 FAQ: I did not understand this thing and/or I want to engage in intellectual debate why “X”
thing is legal tender? Ans. Accept and move to next topic, if you value your time.
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 8
10.3.1 💵
₹2000 WITHDRAWN but continued as legal tender
2016-Nov: RBI introduced ₹2000 note, to meet the currency requirement of the economy in an faster
manner after demonetisation of ₹500 and ₹1000 (नोटों की किल्लत पूरा करने के लिए इसको छापा जा रहा था)
1) 2018–19: printing of ₹2000 banknotes was stopped.
2) 2023-May-23rd: RBI asked people to either any of the following thing by two things
30/Sept/2023.
Option at Bank Limit
Deposit this note in your bank account no limit. Whatever money you have you
अपने बैंक खाते में जमा करवादो can deposit- 2 lakh, 2 crore doesn’t matter
Exchange ₹2000 note with other notes e.g. ₹20,000/- per visit
100/200/500 बदलवा दो
10.3.4 💰🤮 Money Types: Gresham law: good vs bad money | soft vs hard currency
Wait till we reach Pillar 3B: currency exchange. Presently, we’re in Pillar 1A1.
If unable to hold patience, watch https://youtu.be/x7rcf13JGh8?si=rkIwvohe38Gbw_FR
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 9
10.4 💰B ANKING / DIGITAL PAYMENT / E-BANKING RELATED UPDATES
10.4.1 🐷🔖 Cheque → NPCi’s Cheque Truncation System (CTS) & Positive Pay
• As such I had covered this in the earlier lectures in past Win## series, but some weak
students unable to understand simple things / they deliberately want to overcomplicate the
things for themselves. So I had to create bigger diagram.
• 🤔 FAQ: I’ve 500 counter arguments about how James Bond villain can misuse it? Ans.
NOT IMP.#RAFTAAR.
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 10
10.4.2 🪫 LPSS- lightweight payment and settlement system
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 11
10.5.2 🛍️ UPI-Lite (on-device wallet)
User adds money from his bank account to his UPI Lite wallet on his mobile App. (e.g. Google Pay
App, BHIM App)
Usage (NUMBER NOT VERY IMP) UPI-LITE Limit as of 01/Sep/23
Max. Limit PER transaction ₹500
Max. Balance / storage capacity of wallet ₹2,000
🤩 Benefits of UPI-Lite wallet?
🤩Faster. Because No need to provide UPI-PIN number during transaction.
🤩Less chances of transaction failure- even if sender’s bank server is facing technical issues.
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 12
10.5.5 🛍️ Interchange fee by NPCi (2023-March)
Note: There are many more terms and conditions to this, but we will not waste time in PHD.
10.5.6 🛍️
UPI in Srilanka, Mauritius (2024)
• 2024-Feb: UPI facility now available in Sri Lanka, Mauritius.
• This will help Indian tourists travelling to Sri Lanka and Mauritius to pay through mobile
phones.
• UPI also available at Bhutan, Oman, UAE, South Asian nations, Nepal and France etc.
When a banker allows an account holder to borrow upto a predetermined amount of money, without
having to apply for a loan, it is called Pre-Sanctioned Credit Line. (इसका हिंदी करने का मतलब नहीं है. मुख्य
परीक्षा में इस प्रकार की चीजें नहीं पूछते)
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 13
10.5.8 🛍️ UPI: Pre-sanctioned credit line/Overdraft in UPI (2023-Apr)
RBI allowed Pre-Sanctioned Credit Line / overdraft facility extended to UPI. (यूपीआइ में ओवर ड्राफ्ट
की सुविधा)
So, even if a person does not have balance in his bank account, still he can PAY using UPI while
shopping. (and then later, when he gets the salary/pension/income deposited in his bank
account, then the banker will recover the principal and interest.)
10.5.9 🛍️
UPI: Benefits of UPI-overdraft facility?
Help customers in “Buy now pay later (BNPL)” format of shopping. (Ref: Pillar#1B1 for more)
Poor people require small small amount of money/loans during last weeks of a month. They
cannot travel to the city’s bank branch for the paperwork and banker may take many days to pass
application. Consequently, poor villagers borrow from the local moneylender/Shroff/Baniya at
high interest rate. UPI-Overdraft can help overcoming this to some extend. = helps in Financial
inclusion of the poor. (गरीबों के वित्तीय समावेशन में मदद)
(ATM मशीन में बिना CARD डाले, मोबाइल ऐप के ज़रिए पैसा निकाला जा सके ऐसी सुविधा)
Benefit? If physical card not inserted in ATM machine → ⏬ dangers of card cloning, etc scams.
🙋🏼♀️FAQ: How does it work? My bank not giving this facility?! Ans. 1 line word association for
MCQ is enough.
🛍️
10.5.11 India-UAE: LCSS: UPI-IPP linkage (2023-Aug)
2023: Central banks of India and UAE signed Local Currency Settlement System (LCSS)
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 14
agreement.
This will allow importers/exporters/investors/tourists to pay in their respective domestic
currencies i.e. in Indian rupee (INR) and the UAE Dirham (AED). (Without using Dollars.)
Both nations also trying UPI-IPP linkage for easier Local Currency Settlement System (LCSS).
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 15
System 📑More in Pill#6
------
2. It’s also required for Bankmitra-MicroATM system.
Aadhaar-based
Payment System 😤 FAQ: difference between Aadhaar Enabled Payment system (AEPS) VS
(ABPS) Aadhaar-based Payment System (ABPS)? Ans. NOTIMP. It is enough to
know, these are related to money transfer to bank account linked with
Aadhar number.
Mahatma Gandhi National Rural Employment Guarantee Act, 2005: Rural development
Ministry provides 100 days work to villagers. (Ref: Pillar#6 for more)
Presently both NACH and ABPS methods used for giving salaries to MGNREGA workers. Thus,
it’s called Mixed payment mode/hybrid mode for MGNREGA wages.
Government wants to shift completely to ABPS method. But due to operational and technical
issues, deadline keeps getting delayed. Some poor people (without Aadhar card) given
exemption from ABPS.
Opposition party alleged that government is "weaponizing the technology" to deny money to
poor people without Aadhar card.
• ‘One Nation One Card Model’ by Ministry of Housing & Urban Affairs (MoHUA) with the
help of NPCi, Bharat Electronics Limited (BEL Company), and some banks. It helps
developing special cards to pay tickets→ Train station/train gate can open automatically,
upon tapping the card, like in hollywood movies.
It has 3 components: (तीन घटक है इसके )
• 1) NCMC Card: To be issued by banks. Nature can be Debit/Credit/Prepaid. Can be used for
metro, bus, suburban railways, toll, parking, retail shopping etc.
• 2) SWEEKAR: Automatic Fare Collection System. (यात्री किराया वसूलने की स्वचालित प्रणाली)
• 3) SWAGAT: Swachalit / Automated Gate at railway/bus station. (अपने आप खुलने-बं द होने वाले
दरवाजे)
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 16
10.8.1 💳
UPAY Cards- International acceptance
• 2023-June: RBI allowed international use of RuPay cards. That means an Indian travellers in
use them abroad for ATM money withdrawal and shopping. (subject to terms and
conditions)
• 2024: implemented for Mauritius.
₹250cr from RBI + ₹250 cr from (Banks and Card Gateway Operators) → ₹500 cr fund setup.
Objective? Provide funding/ subsidy to encourage merchants in the small towns, villages and
North Eastern states to adopt point-of-sale (PoS) card swiping machines. (भुगतान इंफ्रास्ट्रक्चर के लिए
निधि/कोष: गांव, छोटे शहरों और उत्तर-पूर्वी इलाकों में व्यापारियों को कार्ड मशीन अपनाने के लिए मदद)
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 17
Originally, RBI launched in 2021 for 3 years. Then extended for another 2 years upto Dec, 2025.
Scheme description
PM SVANidhi Govt helps the street vendor to get Biz loan. (Ref: Pillar#1D for more)
Govt helps artisans e.g. carpenter, potter, blacksmith, et cetera. In skill
PM Vishwakarma
training Bank loans. (Ref: Pillar#1D for more)
RBI said we’ll gives PIDF-subsidy to above beneficiaries to adopt PoS devices.
💮
10.11.1 Indian CBDC symbol (e₹)
• Normal rupee = ₹ or INR
• CBDC rupee = e₹ or eINR.
💮
10.11.2 (e₹) CBDC wholesale vs Retail
Presently RBI doing trials/experiment/pilot-studies in two segments:
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 18
Type CBDC-Retail (e₹-R) CBDC-Wholesale (e₹-W)
• Secondary market transactions in
• Person to Person (P2P) government securities
Trial-
• Person to Merchant • Interbank borrowing for short-term
Purpose
(P2M) transactions. loans
• Crossborder payments.
Details given in present handout 1A1 Ref: Pillar#1C to understand these terms.
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 19
🙋🏼♀️
RBI has issued (e₹) on behalf of Government of India. [ FAQ: I have legal arguments against
this. Ans. ACCEPT it- bcoz Government said this in Parliament.]
(e₹) is a liability of the RBI e.g. similar to cash note ” I promise to pay the bearer on demand sum
of ₹100 rupee”.
It is being distributed through financial intermediaries, i.e., banks.
Just like cash, it (e₹) will not earn any savings interest.
It offers features of physical cash like trust, safety and settlement finality.
💮
10.11.5 (e₹) → Settlement finality
“settlement finality” = there is no risk of reversal or cancellation after the financial transaction is
complete. e.g. Cash or CBDC-e₹. (एक बार भुगतान कर दिया तो फिर सामने वाली पार्टी के पास पैसा गया। आप उसको
उलट नहीं सकते।)
Whereas, if a payment is made via Credit card/ cheque-book → customers can later block the
payment by contacting the banker within a time-limit. So they (creditcard / cheque) do not have
instant-settlement finality. (उधर आप बैंक में शिकायत कर के भुगतान को रोक सकते हैं।)
🙋🏼♀️
FAQ: can we say that as mode of payment (UPI/Debit Card/NEFT-RTGS) also has
settlement finality? Ans. I copied only that much which is given in Newspaper/Press-release. I
did not become Sherlock Holmes to do find further info/PhD. Feel free to delay your syllabus
completion by asking ChatGPT.
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 20
App Before AFTER 2023-Sept
Interoperability? ✋🚨Absent/Denied by RBI ✅Present / permitted by RBI
💮
10.11.7 (e₹) CBDC - programability & offline features
• Presently (e₹) can be used for Person to Person (P2P) and Person to Merchant (P2M)
transactions. 2024-Feb: RBI proposed two new experiments:
• (1) Offline functionality (similar to UPI-Lite). in areas with poor or limited internet
connectivity.
• (2) Programability. (given below) 👇
Programability Example
e.g. If Adani allows a company budget of ₹10,000 (e₹) for his employees to
Biz Travel use for buying railway tickets only. → then employees cannot use it for
buying table chairs, IPL tickets, etc.
e.g. The university gives ₹10,000 (e₹) stipend to students to buy books within
1 month of admission.
Expiry/Validity
If student does not buy the books, then the money will be returned back to
the university.
Geographical
e.g. It cannot be used outside these XYZ GPS coordinates.
areas
🙋🏼♀️FAQ: Aren’t these features similar to the e-Rupi gift cards by NPCi?
Ans. Don’t make khichdi of RBI’s product vs NPCi’s product. View them as separate photo frames.
Observe the PYQs. UPSC unlikely to ask you compare/contrast between them two.
🐎✅🐂✋ Be focused on the track like a race horse. Don’t loiter like a street-bull.
10.11.8 💮( ₹): F
E UNGIBILITY OF CBDC
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 21
Item Can it be Is mutual substitution possible in terms of value? Is item
subdivided in fungible?
smaller units?
bar
1Bitcoin 1BTC=10^8 Satoshi Yes 1BTC’s value = 10^8 Satoshi coins. So, ✅Yes
coins theoretically, they buy same quantity of goods
100 gm Bigger single piece diamond considered to be more precious/valuable ✋No
single than small-small pieces diamond. So, 100gm Single_Big_Diamond
Diamond =NOT equal 1gm x 100 small_Diamonds, in terms of value
NFT NOT possible. Explained in Win23 series, last year. ✋No
Doubt: if we program the CBDC currency for specific use - example only for purchasing of books, then
it is no longer fungible! Because we cannot use it for any other purpose e.g. buying Pizza!!
Ans.
In that case, as soon as the book is purchased, the money goes to the bookshop owner → money
again becomes fungible. Because the bookshop owner can use the money for any purpose
If the student doesn’t buy the book, → CBDC-money goes back to the school, and fungibility is
restored (because the school admin can use it for any other purpose).
“Thus, programmability does not violate/destroy fungibility (of Rupee), it is only a specific use
binding.”- said RBI Governor. (भले को शर्ती-प्रोग्रामिंग से CBDC ऐसा सिमित कर दिया जाए, की कु छ ही चीजे उससे
खरीद सकते है. लेकिन फिर भी CBDC-रुपया फं जीबल है. )
10.12 🔗💮 C RYPTO-CURRENCY & BLOCKCHAIN TECH: OTHER DEV
10.12.1 💮 Bitcoin ETF allowed in USA but RBI not to allow in India
wait till we reach Pillar1C: Sharemarket. if can't hold patience, then watch
https://youtu.be/KLLL0EOBPYU?si=zAb7o5zfpzAMB_BK
10.12.2 💮 World Coin Project
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 22
various government schemes benefits /college admission / passport application etc. Time-trouble
saved. (यदि देश विदेश की सरकारें इसे एक आधिकारिक पहचान पत्र के रूप में मान लें तो गरीबों को विविध योजना स्कू ल कॉलेज
दाखिले आदि में काफी सुविधा हो सकती है)
Cons: concerns over privacy / misuse. (निजता का हनन. दुरुपयोग का भय)
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 23
QR Codes: compulsory to implement UPI/Bharat QR from 2022
👨⚖️📜🗓 Perpetual Licence for Payment System Operators?
🕵️️♂️💳📯 Payments Infrastructure Development Fund (PIDF) 2020-Jun
🕵️️♂️💳 📯 Scheme of Offline Retail Payments Using Cards and Mobile Devices
🐯🔗💮 Central Bank Digital Currency (CBDC)
🤫💸👜🥚 Redenomination: drop zeros, change name
🤫💸👜🥚 Iran = Toman to replace Iranian Riyal (2020)
10.14.3 🧑🏫 Win22: already covered this in 1A1👇 (हम आगे पढ़ चुके है)
💸 Digital Payments- RBI’s CPS: PPI also eligible
💸 NPCI: UPI, IMPS, New updates
💸 NPCi’s UPI-IMPS- 2 lakh → ⏫5 lakh
💸 : NPCi’s UPI: International cooperation
💸 :️NPCi's UPMS for bill payment (2022)
💳 PLASTIC Money: New Updates after Win21
💳 MDR: Merchant Discount Rate (व्यापारिक छू ट दर)
💳 📧 Card Tokenization (Fake Gmail ID Bnaao Yojana)
🕵️♂️💳: Offline Retail Payments Using Cards and Mobile Devices
🤳🏻💸👟 Digital Payment: DBT → E-Rupi by NPCi (2021)
💸📡 Digital Payment: New Orgs in News
💸📡: Post office to get CBS- says 👜🥻Budget-2022
💸📡: Digital Payments- (Proposal) Digital Banks by NITI Aayog (2021)
💸📡: Digital Payments- NeoBanks
🔗💮 Bitcoin / Crypto-Currency Updates Since Win21 Series
🔗💮:❄️Hot Wallet vs Cold Wallet
🔗💮:️Crypto-Winter in Bitcoin Prices (भाव गिरा अब उठ नहि रहा है)
🔗💮 🤘🏳️El-Salvador: Bitcoin becomes a legal tender (2021)
🔗💮: Bitcoin Profit pe 30% Tax in 👜🥻Budget-2022
🔗💮: Bitcoin Purchase pe 1% TDS in 👜🥻Budget-2022
🔗💮 : Facebook’s Stablecoin Project DIEM/LIBRA sold to another company
💠≠ ❇️Non-fungible token (NFT: ग़ैर-फ़ं जीबल टोकन)
🔗💮 Blockchain- new updates: DEFI and BalPurskar
🐯🔗💮 Central Bank Digital Currency (CBDC)
📊 Digital Payment related Index / Competitions
📊RBI Digital Payments Index (DPI: डिजिटल भुगतान सूचकांक)
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 24
🐯📈 RBI’s Financial Inclusion Index (वित्तीय समावेशन सूचकांक)
Harbinger Hackathon 2021
10.14.4 🧑🏫 Win23: already covered this in 1A1👇 (हम आगे पढ़ चुके है)
→ NPCI → UPI (Unified Payment Interface)
🕵🏻 NPCI → UPI → 123PAY for FeaturePhones
UPI observations by 📙ES23
UPI single-block-and-multiple-debits functionality (2022-Dec)
UPI facility to foreign tourists coming to India (2023)
QR Code based Coin Vending Machine using UPI (2023-Feb)
rMQR (Rectangular Micro QR Code)
NPCi: Bharat Bill Payment System (BBPS) 2022-Reforms
👨⚖
New Umbrella Entity (NUE) for Retail Payments System (2019)
💳📧 Card Tokenization (from 1/Oct/2022)
🔗💮 Crypto-Currency & Blockchain Technology
Crypto-winter (क्रिप्टो मुद्रा के दामों में भारी गिरावट)
FTX crypto scam (2022-23)
Crypto currency observations by ES23 📙
🐯🔗💮 Central Bank Digital Currency (CBDC)
📚
10.15.1 Next Handout
• Pillar1A2: Monetary Policy - CRR, SLR, Repo etc.
• Missed any downloads/past classes, checkout Mrunal.org/Win24
Mrunal’s Economy Win24 Series Pillar#1A1: Money- Digital Payment, Crypto, CBDC → Page 25
Mrunal's Win24 Pillar1A2: Monetary Policy- CRR, SLR, Repo etc.
Table of Contents
SBI launched Green FD with tenure with three tenures — (A) 1,111, (B) 1,777 and (C) 2,222
days.
If such bank/NBFC unable to find green-borrower in immediately (for giving long term loans)
→ then bank/NBFC can invest such green deposit money into liquid instruments with
maximum maturity upto one year e.g. T-Bill, Commercial Papers etc. (Ref Pillar1C theory for
more.)
If such bank/NBFC accepted green deposit but can’t find green-borrowers, then RBI will not
penalise bank/NBFC for it.
These deposits are covered by Deposit Insurance and Credit Guarantee Corporation (DICGC).
So even if the bank fails/shuts down → depositor will get upto ₹5 lakh refunded by DICGC.
Green deposits must be issued/accepted in rupee currency.
it is not compulsory every Bank/NBFC to raise/accept green deposits. Unki marzi hai. (just like it
is not compulsory for every automobile company to launch a E-Vehicle.)
- If deposits remain unclaimed for 10 years in a bank → banker need to transfer it to “Depositor
Education and Awareness FUND” (DEA) OF RBI.
- 2023: RBI setup UDGAM portal for it. (Unclaimed Deposits Gateway To Access inforMation)
- Beneficiary can easily search unclaimed deposits across multiple banks at one place. (e.g. by
searching the Aadhaar card / PAN Card number of the dead parent etc.)
- How it works in real life? NOTIMP4EXAM. You can satisfy your curiosity by
visiting https://udgam.rbi.org.in/unclaimed-deposits/#/login
FISCAL RESPONSIBILITY AND BUDGET MANAGEMENT ACT 2003 (राजकोषीय उत्तरदायित्व और बजट
प्रबं धन कानून ) Notable provisions:
• Government has to control its fiscal deficit within X% of GDP. (Ref: Pillar#2D) (सरकार ने
अपने घाटे को GDP के कु छ प्रतिशत से ज़्यादा नहीं बढ़ने देना होगा.)
• Government CANNOT borrow from RBI. (In other words, RBI cannot buy
government’s loan instruments for itself from primary market) **Except in TWO
situations:**
• i) Short term Ways and Means Advances (WMA) (Ref: Pillar#1C)
• ii) During war, disaster, agri-crisis, big fall in GDP. (Ref: Pillar#2D)
• RBI can buy/sell government’s loan instruments from secondary market (i.e. from other
investors in OMO/ Open market operations.) (रिज़र्व बैंक आमतौर पे प्राथमिक बाज़ार से सरकार के लोन
कर्ज़ उपकरण नहीं ख़रीद सकती है, किं तु द्वितीयक बाज़ार ले रिज़र्व बैंक उसकी ख़रीद बिक्री कर सकती है. )
🙋🏼♀️FAQ: didn't understand this. Ans. Complete Pillar1C AND pillar2D ke PCB## lectures.
It means RBI printing more currency notes to give as loans to Government. (जब सरकार को उधार देने
के लिए रिजर्व बैंक नया पैसा छापती है)
However, this process is difficult/ not easy due to FRBM Act conditions learned above. (हालाँकि
FRBM क़ानून के चलते ये इतना आसान नहीं है अब.)
Net interest margin (NIM) is difference between Loan interest MINUS Deposit Interest Rate. An
NIM of 3–4% is considered healthy/good for bank’s profitability and growth.
Liquidity overhang refers to a situation in monetary policy where money supply is >> (higher)
than demand for money (loans). [जब मुद्रा आपूर्ति ज़्यादा और मुद्रा/लोन की माँग कम हो]
Result? Loan interest rates become cheaper. This could have negative consequences if there is a
problem of high inflation. (Because cheap loans → more shopping → more demand → inflation
problem worsens) (लोन सस्ते हो जाएँगे, और वे महंगाई की समस्या को जटिल बनायेंगे।)
2000 के नोट चलन हटाने के बाद बैंको में जो अतिरिक्त राशि जमा हुई उसमें
Policy Corridor also known as Liquidity Adjustment Facility (LAF) corridor. (नीति गलियारा / तरलता
सुविधा गलियारा)
BEFORE 2022-April: Policy Corridor = total width between: MSF <—> REPO <—> Reverse
Repo. (इन तीनों उपकरणों के बीच की कु ल चौड़ाई)
After 2022-April: Policy Corridor = MSF (Repo+0.25%) <—> REPO <—> SDF (Repo-0.25%)
Thus total width is 0.25+0.25= 0.50%
11.3.1 🐯📢📐 MonPolicy → Quant Tools → Variable Rate Reverse Repo (VRRR)
(Normal / Fixed)
Type variable rate reverse repo (VRRR)
Reverse Repo
Fixed by RBI. e.g. 3.35% Varies/changes depending on the
Interest Rate?
(2023) auction bids made by clients.
When RBI wants to
Objective? same as left cell.
reduce money supply
Can RBI reject accepting deposits Yes. Depends on RBI
same as left cell.
from clients in this window? discretion/mood
• VRRR is a special method thru which RBI conducts reverse repo rate deals with clients, via
auction. so exact % is not fixed. because % depends on the auction. (नीलामी से तय होता है रिवर्स रिपो
दर। असल में कै से होगा उसमे हम समय बर्बाद नहीं करेंगे)
• How exactly it works? = Technical details not imp.
• RBI conducted VRRR operations during 2023. So term came was in news.
As of 22th Feb 2024, Repo is still unchanged @6.50%. So I’ve not updated above graph.
- Between 2020 to 2023, the repo rate increased from 4% to 6.50% - consequently the EMI burden
increased for the external benchmark rate based loans.
So, RBI wants bankers to give option to borrower after every change in such floating interest loans:
A) Ability to RESET i.e. switch from floating (external) rate to fixed rate loans.
B) Foreclosure of loan. Meaning, full repayment of your remaining loan amount in one single
payment instead of paying multiple EMIs. Benefit? LESS burden of compound interest (byaaj-
pe-byaaj) in monthly instalments.
🙋🏼♀️FAQ: Will this not be misused by the borrower IF he RESETS his fixed/floating loan every
time it becomes unfavourable to him after change in REPO?
Ans. There will be ceiling/limits on how many times ‘reset’ can be done throughout the loan period.
RBI yet to issue guidelines. Further, real-life Phd not important.
Finally
Mrunal’s Economy Win24 Series Pillar1B: Bank-NBFC Classification & Burning Issues → Page 43
10.2.14 👩🏻💻 eBkray auction platform / IBAPI (2019).........................................................................53
10.2.15 👩🏻💻 CEIB’s Unified Automated Search portal for large borrower (2024) ...........................53
12.6 🐅🔪 NPA/Scams: New Regulatory Issues..............................................................................54
10.2.16 🕵️♂️🏦 💸🙇 : 📲 Proposal: DICGC should cover PPIs/Mobile Wallets?............................54
10.2.17 🐯💉👹🦵💬✋🏻 RBI’s Prompt Corrective Action (PCA) for NBFCs................................54
10.2.18 🐅🔪 RBI increasing CRAR on Bank/NBFCs (2023)..........................................................55
10.2.19 🐅 🔪😰 Implications of higher CRAR.................................................................................56
🐅 🔪🤔 RBI’s reasoning behind higher CRAR?...............................................................................56
12.7 👩🏻⚖️👭 FinTech- Self-regulatory organisation (SRO)................................................................56
10.2.1 😍 FinTech SRO-Benefits?........................................................................................................57
12.8 🧹🙊: 👹(🚫🏦) NEGATIVE News related to bank/NBFC.....................................................57
10.2.2 🌐🤒 Silicon Valley bank crisis (SVB), USA 2023.................................................................57
10.2.3 🌐🤒 Credit Suisse Bank, Switzerland (2023)........................................................................57
10.2.4 🤒 Negative News: Paytm Payments Bank (2024).................................................................57
10.2.5 🤳🏻 Third Party Application Providers (TPAPs) license- PayTM wants ..............................58
12.9 What is already covered in Past Win## Series? under Pill#1B................................................59
12.9.1 Win20: already covered Following in 1B12............................................................................59
13 Win21: already covered Following in 1B12..................................................................................59
13.1.1 Win22: already covered Following in 1B12............................................................................60
10.2.6 Win23 : already covered Following in 1B12...........................................................................60
10.2.7 👨🏫📡MRUNAL’S ECONOMY COURSE FOR UPSC...........................................................61
🧑🏫📡MRUNAL’S ECONOMY COURSE FOR UPSC EXAM
STARTED FROM 24TH FEB, THURSDAY NIGHT
JOIN UNACADEMY PLUS TO UNLOCK ALL OF THE FOLLOWING!
Mrunal’s Economy Win24 Series Pillar1B: Bank-NBFC Classification & Burning Issues → Page 44
10 ECONOMY PILL#1B1: BANK-NBFC CLASSIFICATION
We have studied about chart many times. This only to set the mood.
🙋🏼♀️FAQ1: What does this chart mean? Ans. Explained in the video lecture.
🙋🏼♀️FAQ2: How can a bank collect the tax? isn’t it the work of the income tax officers? Ans. Yes, it
Mrunal’s Economy Win24 Series Pillar1B: Bank-NBFC Classification & Burning Issues → Page 45
is the function of income tax Officer. But, Tax money is to be transferred from tax payers’ bank
account to government’s account. Agency banks deal with that aspect of money
collection/storage/transfer work.
10.1.2 🐯🦋
: PRAVAAH Portal for license from RBI (2023)
• Banks/NBFC/ Digital payment related companies need to obtain license from RBI.
• They can apply for such licenses using PRAVAAH Portal (Platform for Regulatory
Application, Validation And AutHorisation)
• 😍 Benefit? Ease of doing business. The entrepreneur does not have to visit RBI office offline
multiple times.
10.1.4 🐯🦋
: E-Kuber Portal
Core banking solution (CBS) portal of RBI.
All bankers have current accounts here.
RBI handles NEFT/RTGS, Repo, OMO & other instruments from here.
Retail Investors can buy G-Secs from here.
Mrunal’s Economy Win24 Series Pillar1B: Bank-NBFC Classification & Burning Issues → Page 46
BEFORE After 2022- Reform
NBFC can issue only co-branded credit cards after tying up with a
This facility is continued.
banker. (e.g. Bajaj Finserve Credit with help of RBL Bank)
NBFC cannot also directly issue credit card in its own capacity (i.e. Henceforth, NBFCs can
without co-branding with a banker) do this also.
NBFC could not directly tie with the card-payment gateway such as
can do this.
MasterCard, visa,Rupay
Mrunal’s Economy Win24 Series Pillar1B: Bank-NBFC Classification & Burning Issues → Page 47
Sr Organization Examples 👨🏻Regulator
by anyone = their App will be shut goonda/mafia ke online mobile illegal.
down. Legal action will be taken. app for giving online loans.
Note: RBI keeps releasing guidelines for digital lending. But daily-commentary not important.
Sufficient to know that such guidelines mostly deal with customer protection.
Mrunal’s Economy Win24 Series Pillar1B: Bank-NBFC Classification & Burning Issues → Page 48
10.2.1 Key ratios of Public Sector Banks (figures in per cent)
Basically under Modi-Raj, there has been improvement: as per Chief Economic Advisor (CEA)
Mrunal’s Economy Win24 Series Pillar1B: Bank-NBFC Classification & Burning Issues → Page 49
12.3 ⚖️🔪🤝 I NSOLVENCY AND BANKRUPTCY (I&B) CODE 2016
शोधन-अक्षमता एवं दिवालियापन सं हिता 2016: कर्जदार का लेनदार के साथ समझौता/मांडवली करवाने के लिए
Mrunal’s Economy Win24 Series Pillar1B: Bank-NBFC Classification & Burning Issues → Page 50
10.2.5 ⚖️🔪🤝 Statutory bodies related to IBC
Org Founded under Law HQ
National Company Law Tribunal (NCLT) Companies Act, 2013 Delhi. With benches in
many cities.
National Company Law Appellate Companies Act, 2013 Delhi
Tribunal (NCLAT)
Insolvency and Bankruptcy Board of India Insolvency and Delhi
(IBBI) Bankruptcy Code, 2016
1. He deliberately does not pay the dues despite adequate cash flow and good net worth;
2. He is siphoning off funds from Company-A to Company B.
3. He did not use the loan money to purchase the asset (vehicle/factory/machine, etc.) as per the
loan agreement; OR he sold such asset and siphoned the money.
4. He disposed/removed securities (collaterals) without the bank's knowledge;
5. He misrepresented/falsified the records;
6. He made fraudulent transactions.
Mrunal’s Economy Win24 Series Pillar1B: Bank-NBFC Classification & Burning Issues → Page 51
Criteria Insolvent /incapable defaulter 😤Wilful Defaulter
(दिवालिया/ असमर्थ बकाएदार) (इरादतन कर्ज न चुकानेवाला)
Govt job/
become a judge?
^^Bankers’ Association has requested the Election Commission that wilful defaulters should not be
allowed to contest election. (However, EC yet to take decision.)
10.2.10 🔪😤 Declare wilful defaulters within 6 months of NPA- says RBI Proposal
2012: Vijay Mallya stopped paying loans to banks. YET SBI didn't declare him wilful defaulter
until 2017. (Meaning five years gone in paperwork / bureaucratic-laziness.).
2023: RBI proposal says banks shouldnot take so long time. Do this exercise within 6 months
AFTER accounts become NPA. (लोन खाता एनपीए की श्रेणी के अंदर आने के बाद भी यदि 6 महीने तक व्यक्ति के पास
पैसा है किं तु वह कर्जा नहीं चुका रहा है. तो बैंकर ने उसे “इरादतन दिवालिया” घोषित करना होगा)
Mrunal’s Economy Win24 Series Pillar1B: Bank-NBFC Classification & Burning Issues → Page 52
Bank can take action against Guarantor for loan-recovery of principal + interest
Bank may confiscate/attach the bank accounts of Guarantor, his property etc. depending on case.
if Guarantor fails to repay the loan, then it will downgrade his credit score/credit-rating also.
**Note:** there is internal legal difference between the two words Guarantor vs Co-Signer, but
we will not do PHD for MCQ
- This portal will collect data from Central and State governments, account aggregators (Ref1B1),
CRA-CICs (Ref1B1) and other organisations.
- This will make loan application approval/rejection faster for the lender.[घर्षण रहित ऋण के लिए सार्वजनिक-
तकनीकी मं च]
🙋🏼♀️FAQ: how is it similar or different than the past projects such as public credit registry or
government’s NFIR? Ans. NOTIMP. Because this is not fully launched yet this is in the pilot study
stage.
👩🏻💻
10.2.14 eBkray auction platform / IBAPI (2019)
• It’s a website for e-auction of assets attached by Public Sector banks.
• Also called: Indian Banks Auctions Mortgaged Properties Information (IBAPI)
• Boss? Indian Banks Association (IBA) with help of Department of Financial Services (DFS,
under FinMin).
• Buyers can use eBkray/IBAPI portal to search and get properties details and participate in
the auction process.
• Website also contains videos and photographs of the attached properties.
👩🏻💻
10.2.15 CEIB’s Unified Automated Search portal for large borrower (2024)
• This website helps the Public Sector Banks to do background verification of the large
borrowers.
• Large borrower = who wants to borrow over ₹50 crores.
• Boss? Central Economic Intelligence Bureau (CEIB- a body under FinMin) with the help of
State Bank of India.
Mrunal’s Economy Win24 Series Pillar1B: Bank-NBFC Classification & Burning Issues → Page 53
• CEIB collects the data related to economic offenses from other regulators/investigating
agencies, e.g. SEBI (Securities and Exchange Board of India), ED (Enforcement Directorate),
CBI (Central Bureau of Investigation), NIA (National Investigation Agency), SFIO (Serious
Fraud Investigation Office), CBDT (Central Board of Direct Taxes), CBIC (Central Board of
Indirect Taxes and Customs) etc.
RBI’s B.P.Kanungo committee on customer services (2022) suggested this. RBI NOT YET taken
final decision. So we will not waste time with further PHD on what/why/how.
Mrunal’s Economy Win24 Series Pillar1B: Bank-NBFC Classification & Burning Issues → Page 54
10.2.18 🐅🔪 RBI increasing CRAR on Bank/NBFCs (2023)
125% ⬆️
5) Banker’s Loans to NBFC (except to Housing-finance companies,
100%
micro finance companies, and Priority sector lending quota)
🙋🏼♀️FAQ: do I have to memorise everything? Yes, if preparing for RBI Grade B Officer. Otherwise, it is
enough to know/understand that some risk weight was increased.
Mrunal’s Economy Win24 Series Pillar1B: Bank-NBFC Classification & Burning Issues → Page 55
10.2.19 🐅 🔪😰 Implications of higher CRAR
• It will make the bank/NBFC more prudent and careful while approving loans. (अंधाधुंध लोन पास
नहीं करेंगे। कोताही रखेंगे।)
• Higher risk weight = higher capital requirement → then accordingly the bank/NBFC will
make the loan expensive to cover the cost of capital. (अतिरिक्त पूंजी लाने के लिए उनकी लागत ख़र्च बढ़ेगी
उस हिसाब से वे लोन के ब्याज दर भी महँगी कर देंगे।)
• It may increase loan interest rate for borrowers by upto 4%.
• It will decrease the profitability of banks/NBFCs (due to cost of additional capital). (अतिरिक्त
पूंजी की लागत ख़र्च के चलते मुनाफ़े में भी कमी आएगी।)
An SRO is a non-governmental organisation that regulates a particular industry. (गैर सरकारी सं स्था जो
किसी औद्योगिक क्षेत्र का स्व-नियंत्रण करती है)
Objective? To enforce transparency, fair competition, ethical practices , protect consumer &
workers, dispute resolution among the companies, training and skill development programs for
workers. (पारदर्शिता, न्यायोचित स्पर्धा, नैतिक आचरण, ग्राहक सुरक्षा, विवाद निपटान, तालीम कौशल वर्धन)
Example from News Industry
News Type Printed Newspapers Digital News Channel (e.g Lallantop, Firstpost),
Private TV News Channels (e.g AajTak)
Regulator? Press Council of India News Broadcasters & Digital Association (NBDA)
Type? Statutory body/regulator Self-regulatory organisation (SRO) created by the
setup by Parliament’s law in private sector players. NBDA is not a government
1978 body, statutory body, constitutional body.
2023: RBI governor has suggested the Fintech companies to create a self-regulatory organisation
(SRO) for themselves. What are Fintech companies? (Ref: Pillar#1B1-classification)
Mrunal’s Economy Win24 Series Pillar1B: Bank-NBFC Classification & Burning Issues → Page 56
10.2.1 😍 FinTech SRO-Benefits?
😍1) Reduce RBI’s workload in supervision.
😍2) Establish a proper link between RBI and the fintech companies.
😍3) setup rules/standards for data-privacy, cyber security, mis-selling, ethical conduct,
complaint/grievance redressal for consumers.
Mrunal’s Economy Win24 Series Pillar1B: Bank-NBFC Classification & Burning Issues → Page 57
Same PAN number used for activating multiple accounts, and these accounts were conducting
crores of rupees of transactions. (एक ही पैन कार्ड नंबर द्वारा कई बैंक खातों को खोला गया था और वहां धन शोधन यानी
काले धन को सफे द करने का गैर कानूनी काम चल रहा था ऐसे आरोप.)
Allegations of Money laundering (converting black money into white)
RBI’s inspection revealed that there was no separation in servers or physical space occupied by
the Paytm bank and other One97 group entities e.g. Paytm Insurance, PayTM Mall, Paytm
Games, etc. = data security issue, possible spams/marketing offers by misusing the user data.
✅ However, RBI has allowed Paytm to continue its UPI/App related activities e.g. Paytm QR, Paytm
Soundbox, and Paytm Card Machine; financial services, such as loan agent work, insurance agent
work, and equity (share) broking etc.
Mrunal’s Economy Win24 Series Pillar1B: Bank-NBFC Classification & Burning Issues → Page 58
🙋🏼♀️FAQ: How can NPCi give license? it is not a statutory body unlike RBI.Ans. Don’t mix the word
‘license’ with sarkaari type licenses (Gun /vehicle/bank etc.) Here, the word 'license' is in context of
getting permission from a company. Example, If you want to use Photoshop software, you have to
“buy” license from Adobe company.
Mrunal’s Economy Win24 Series Pillar1B: Bank-NBFC Classification & Burning Issues → Page 59
13.1.1 Win22: already covered Following in 1B12
निम्न चीज़ें हम पहले ही पढ़ चुके हैं. आपने नहीं पढ़ा तो उसमें से देख लेना. URL: Mrunal.org/Win23
• 🏦 RBI Governor gets re-appointment
• 🏦 👨⚖️ Bank Classification: New Developments
• Scheduled Banks Status to Airtel, Paytm
• 🏦 👨⚖️ 🌎🚫🚗📜 Unity Small Finance Bank (SFB) gets license (2021)
• 🏦 PMC Scam resolution (2021-22)
• 🏦 👨⚖️ NBFC Classification: New Types- BNPL, P2P
• 📙📙ES22 observations on NPA
• ⚖️🔪🤝:🤫 IBC Pre-Packs (पर्दे के पीछे जल्दी से के स सुलटा लेते है!)
• (⚖️🔪🤝)🈶🌐 Cross-border Insolvency (सीमा-पार का दिवालियापन)
• (⚖️🔪🤝) Voluntary Liquidation of Companies
• 🕵️♂️👩🔧(🏦 🔪💀): 🧬 Bad Bank Structure
• 🏦 💸🙇 DICGC (Amendment) Bill 2021
• 🐯💉👹🦵💬✋🏻 RBI’s Prompt Corrective Action (PCA) for NBFCs
• 🐯: 🦋Regulations Review Authority (RRA 2.0)- for Ease of implementing RBI rules
• 🤦🏻♂️👮:🛡Staff Accountability Framework for PSB-NPA
• 📞Financial Messaging Systems: SWIFT- Russia gets banned
10.2.6 Win23 : already covered Following in 1B12
निम्न चीज़ें हम पहले ही पढ़ चुके हैं. आपने नहीं पढ़ा तो उसमें से देख लेना. URL: Mrunal.org/Win23
• Classification of cooperative banks
• MULTI-STATE COOPERATIVE SOCIETIES (AMENDMENT) BILL, 2022
• RBI’4-tiered regulatory framework for urban cooperative banks (2022-Dec)
• NABFID, the 5th AIFI (2022-Mar)
• DFI Status sought by PFC under Power ministry (2022-Nov)
• 💸📡 : Digital Banking Units in Budget 2022
• 💸📡 : Digital Payments- NeoBanks (चिकने चुपड़े शब्द)
• Pillar-1B2: Bad Loans
• NPA observations by ES23 📙
• Loan Write-off
• “IBC bahut Mahaan” says ES23 📙
• 📙
ES23 suggested 4R’s approach to fix banking sector i.e.
• 🔪📡👿 Digital Lenders
• Digital lending norms by RBI (2022-Nov)
• Digital lending → FIRST LOSS DEFAULT GUARANTEE (FLDG) norm by RBI
• 🚫🏦👨⚖️ Credit Information Companies (CIC) versus Credit Rating Agencies (CRA)
Mrunal’s Economy Win24 Series Pillar1B: Bank-NBFC Classification & Burning Issues → Page 60
• Credit Rating / Monitoring- various org/initiatives
• National Financial Information Registry (NFIR) in Budget-2023👛
• 🐯🦋 : RBI supervision: Utkarsh-2022” roadmap
• 🐯🦋 : RBI supervision: Daksh web system 2022
• Financial Stability Report (FSR)
• Bad Loans: Tools/Instruments in Negative News
• AT1 Bond controversy
• 📞 Financial Messaging Systems: SWIFT- Russia gets banned
• Personnel Selection → Bank Board Bureau (BBB), 2016
• 🤦🏻♂️
Personnel Selection → FSIB replaces BBB (2022)
• 🤦🏻♂️
Enhanced Access and Service Excellence (EASE) Agenda 2018
Mrunal’s Economy Win24 Series Pillar1B: Bank-NBFC Classification & Burning Issues → Page 61
Mrunal's Win24 Free Updates Pillar#1C: Shares / SENSEX / Mutual Fund/ etc.
Table of Contents
10 🐮📈🐻Pillar#1C: Sharemarket in UPSC....................................................................................... .64
10.11.1 🚩👶🏻
Boycott Notice for PHD in Sharemarket handout......................................................................................65
💰
10.11.2 Capital / Funding Arrangement: Types............................................................................................................ 65
💰
10.11.3 Capital (पूंजी)- types Fixed vs Working............................................................................................................... 65
💰
10.11.4 Capital Arrange → Trade Credit (Short Term)............................................................................................. .66
💰
10.11.5 Account Receivable / Payable........................................................................................................................... . 66
💰
10.11.6 Capital Arrange → Lease Financing (Medium Term).................................................................................. .66
10.11.7 → Capital Arrange → Retained Earnings (Long Term) ......................................................................................... .66
10.14 🔪🗃🗓 Long Term Debt Instruments (दीर्ध-अवधि ऋण- उपकरण)................................................................ .67
10.14.1 📈🔎 Global Bond Indices & inclusion of Indian G-Sec......................................................................................67
10.15 🥇🗃🗓 Bonds issued by Companies?...................................................................................................68
10.15.1 🐸 Hybrid financing / Mezzanine Financing....................................................................................................... .68
10.15.2 🐸 Hybrid: OFCD: Sahara Refund portal (2023)................................................................................................. .68
10.15.3 🐸 Hybrid: Foreign Currency Convertible Bonds (FCCBs):.............................................................................. .69
10.15.4 🐸 Hybrid: Contingent convertible bond (CoCo)/ enhanced capital note (ECN).......................................... .69
10.16 🔪🗃🗓 Bonds Types : Based on Issuer.................................................................................................69
10.16.1 🔪🗃🗓 Bonds Types : Based on Issuer → ULB (Urban Local Bodies).............................................................69
10.17 🔪Long Term Debt Instruments: Special purpose Bonds- Misc..........................................................70
10.17.1 💦🔪
Long Term Debt → Special → 💦🔪
NABARD Social Bonds (2023).................................................. .70
10.17.2 → → Long Term Debt → Special → Zero coupon zero principal instrument ................................................70
- We will only grab low hanging fruits / 1-liner-GK and move. If I have not covered something =
that means I do not find it important for exam or I find it to have poor cost:benefit.
- I boycott unnecessary translation into Hindi for every term: because sharemarket-topic does not
have much utility in the mains written exam, and it is easier to explain/understand it in English.
💰
10.11.3 Capital (पूंजी)- types Fixed vs Working
Capital required to meet financial needs of a company.
🐸
10.15.1 Hybrid financing / Mezzanine Financing
• It has elements of both debt (loan) and equity (partnership).
• Lender gets a right to convert the debt (bond) to an equity (share).
• it is done via instruments such as Optionally fully convertible debentures (OFCD).
• Venture Capitalists usually do it in the start-up companies.
Traditional Bonds / Non-convertible
Instrument OFCD Share (Equity)
debenture (NCD)
Interest/ Return on Investment 12% 8% uncertain
Rights/ Claim during last/residual
first right middle
liquidation of company claim
^^ Numbers only for illustration that OFCD normally pay less interest than traditional
bonds(NCD).
🐸
10.15.4 Hybrid: Contingent convertible bond (CoCo)/ enhanced capital note (ECN)
Its features are hybrid Mix of i) AT1 Bonds (Ref 1B2) and iii) OFCD.
we’ll pay u “A%” interest rate But
- If Condition “B” happens, we’ll convert it into Shares
- If Condition “C” happens, we’ll write-off principal + Interest and will not even convert it into
share.
10.16 🔪🗃🗓 B ONDS TYPES : BASED ON ISSUER
10.16.1 🔪🗃🗓 Bonds Types : Based on Issuer → ULB (Urban Local Bodies)
Year Event
Ahmedabad Municipal Corporation was the first urban local body to raise funds through
1996#
municipal bonds (₹100 cr); without state govt guarantee.
Bangaluru Mahanagar Pallike (BMP) was to issue municipal bonds for ₹ 125 crore. (=
1997#
Matlab ki this much large size ₹ 125 cr krne walla first ULB was Bangaluru.)
Lucknow Municipal Corporation (LMC) issued bonds worth ₹ 100 cr. it is the first
2020
municipal bond from North India.
Muni.Bonds?” Ans. I've copy pasted from Prof. Bharati Pathak’s book on financial market & PIB.
10.17.2 🌈 🔪 Long Term Debt → Special → Zero coupon zero principal instrument
• issued by Not for Profit Organization (NPO), Non-governmental organization (NGO) for
social service.
• They repay NEITHER principal NOR interest.
• Zero Coupon Zero Principal (ZCZP) Bonds do not give any interest or principal to the
investor.
• They can't be re-sold in the secondary market.
• They can be transferred to legal heirs. (E.g. Amitabh Bacchan to his son Abhishek)
• ZCZP is akin to a donation made to a charity. But it gives greater
transparency/accountability because the issuer will have to disclose all the financial details to
SEBI & investors.
• The minimum issue size for the issue of ZCZP instruments is set at ₹50 lakh, and the
minimum subscription/application size is ₹10,000.
• 2023-Nov: Unnati is a not-for-profit organization formed in issued bonds at NSE-social
stock exchange for the skill development of youth.
Announce in Budget 2017 → Notified by Dept. of Economic Affairs, Finance Ministry (आर्थिक
मामलों का विभाग). Only SBI can issue at present, and in multiples of Rs.1,000, Rs.10,000,
Rs.1,00,000, Rs.10,00,000 and Rs.1,00,00,000.
Controversy about the SBI’s commission, printing cost and GST on sale of electoral bonds. But
not much imp for exam. Enough to know Government pays [Commission + GST] to SBI for
selling these bonds.
When to buy? For ten days at the start of each quarter. (January, April, July and October).
However, during Lok Sabha election year, can sell for another 30 days.
Who can buy? Only an Indian Citizen or Company registered in India → deposit money in
their bank account → use that ₹₹to buy Electoral Bond, after giving certain KYC-documents. So,
Electoral Bond can’t be bought anonymously or directly with cash.
Electoral Bonds can be donated only to a political party registered under Representation of the
People Act 1951 (RPA: लोक-प्रतिनिधित्व अधिनियम) and which has secured 1% /> votes polled in last
Lok Sabha or Vidhan Sabha elections.
🗓Validity (वैधता अवधि)? Only 15 days from date of purchase. Within that time, buyer must
donate, and political party must deposit in its SBI (current) bank account. No interest payable.
Characteristics of electoral bonds? (विशेषताएँ)
○ Paper / Physical format (not DEMAT / electronic format).
○ Bearer instrument (Donor or Recipient’s name not mentioned),
○ Promissory Note (promises to transfer money in bank account)
○ Interest Free banking instrument (zero interest payable to anyone).
○ Can’t sell it to third party, can’t pledge it for loans. (गिरवी नहीं रख सकते)
🤩Benefits of electoral bonds?
○ Transparency in political funding. (राजनीतिक चंदे में पारदर्शिता)
○ Reducing influence of cash and black money in election, (काले धन का प्रभाव)
10.18.3 🗳👨🏻⚖️
Electoral Trusts (ET) Scheme (2013)
• 2013: UPA/Congress govt launched it. It allows a company to create an electoral trust.
• Such Electoral Trusts (ET) can receive donations from other (persons/companies) → ET
donates it to various political parties. e.g.
Donors → Electoral Trust → Recipient Parties
DLF, GMR, Bharti Airtel, etc. Prudent Electoral
Congress, BJP, regional parties
companies Trust
• Here, it is difficult to trace how much of Bharti Airtel’s donation went to BJP. Thus, it
provides anonymity to the donors. This scheme is not yet banned by courts (2024).
10.19.2 🔪🔖
Bonds: Misc. Types → Strip bond / Stripped bond
• When the bond has principal and interest repayment stripped into separate compartments.
• Suppose a 3 year bond (₹100) with 10% annual simple interest.
Normal Bonds Strip Bond
Year Principal Interest Principal Interest repaid
Year1 33.33 10 0 15
Year2 33.33 10 0 15
Year3 33.33 10 100 0
Total 100 30 100 30
• Lucknow Municipal Corporation had issued this type of municipal bond.
• Benefits? Helps the players to create new type of short-term securities out of such long-term
instrument. How? Not imp.
10.20.2 🪣🤵♂️🔪 Debenture Redemption Reserve (DRR) Fund of Companies issuing Bonds
11.11.1 👩🏻💼📦
Private equity (PE) funds and Venture Capital Funds
• Private equity is a type of investment fund where wealthy individuals park their money into
private unlisted companies.
• Unlisted companies = whose shares are not traded in the stock exchange like BSE/NSE) e.g.
Byjus, Parle (1929).
• Venture capital fund (VCF) is a subtype of PE fund - which invests in startup companies.
e.g. Jio 10% fixed dividend Preference Share on face value of ₹100. That means person is entitled to a
FIXED ₹10 dividend (if company makes profit.)
Preference Share Ordinary Share
Parameter
अधिमान्य शेयर: साधारण शेयर:
Dividend payout’s rate fluctuates
Dividend payout’s rate
depending on how much money LEFT
Rate of dividend is fixed e.g. NIRMA
AFTER giving dividend to pref.share
10%.
holders
if company makes ZERO No. जब मुनाफा हुआ ही नहीं तो
profit, does this investor have तंबुरे का डिविडेंड मिलेगा!!? कु छ No.
a right to get dividend? नहीं मिलेगा
they’ll get money
Rights upon liquidation of the they’ll get money AFTER
BEFORE ordinary
company pref.shareholders
shareholders
Do not enjoy voting Yes have voting rights in company
Voting rights
rights. decisions.
Preferred stocks can be
Convertibility converted into ordinary Equity stocks cannot be converted.
shares
It is not mandatory for A registered companies must issue equity
Issuance company to issue shares. (More Refer to Pillar1C2:
preference shares. Company Types)
Risk to investor? lower higher
11.11.3 🐲 Shares for Employees / VIPs / Special investors : ESOP, Equity Warrents
Note: In above chart- there are many finer aspects/differences between ESOP and Equity warrants.
But we’re doing only 1 liner GK.
Shares sold @discount to directors & employees for their value addition to company
Sweet [Amount is regulated under Companies Act]
Equity 🙋🏼♀️FAQ: How is Sweet Equity similar / different than ESOP/Equity Warrant
Ans. NOTIMP. 1 liner GK. थोड़ा-पढ़ो-आगे-बढ़ो.
🎓✋ - 1)What is this? NOT IMPORTANT.
- 2) How different from Sweet Equity? NOT IMPORTANT.
Sweat
Equity 🚩👶🏻FAQ: I’m a commerce graduate / hot-shot MBA-walla and I’ve 500 jaat ke
इसका कु छ Counter arguments. Ans. Good. Plz Keep it with yourself. This course for teaching
काम नहीं some basic one liners for MCQ. We are not preparing for your semester exams.
परीक्षा में
11.13.4 🍺🫧 Market Froth & Asset bubble in Small-cap & Mid-cap (बाजारू झाग और सं पत्ति गुब्बारा)
• During market froth, investors begin to ignore fundamentals (e.g. a company’s profit-loss
balance sheet) and buy its shares rapidly → demand rise → share price increases in a rapid-
unsustainable manner.
• This ultimately results in an asset bubble that can lead to a collapse, e.g. Dotcom bubble in
the USA (2001) and the Subprime crisis (2007–08).
• 2024: SEBI felt that small-cap and mid-cap companies were experiencing market froth →
SEBI issued some technical directives on mutual funds to reduce their investments/exposure
in small cap and cap.
🌷
11.13.5 Tulip Mania (किसी निवेश के पीछे सामूहिक पागलपन)
mid-1600s: Tulip flower was introduced in Holland/Netherlands.
some people started buying Tulips in high quantity, with the hopes of re-selling it to customers at
If the prices of a share changes rapidly in a short time span → we say it has “high volatility”. e.g.
Adani after Hindenburg report.
Mathematically expressed thru an indicator called “ViX”
🐾
11.13.7 Price-to-Earnings (P/E) Ratio and EPS (Earnings per Share)
Note: If I’ve not covered a particular ratio e.g. Price to Book Ratio (PB) = means I feel it is poor cost
benefit for the exam.
Note: real formulas/ real interpretations are more complex. this is for basic understanding for MCQ.
🙋🏼♀️FAQ: When FPO is issued, is it primary market or secondary market? Ans. It is ultimately a
Petipack/brand new share = primary market. However, this pedantry NOTIMP4EXAM.
🙋🏼♀️FAQ: How is OFS different than IPO/FPO? Ans. Motives are different. IPO/FPO is when owner
wants money for the company by selling fresh shares. OFS is when owner wants money for himself
by selling his own shares. But this pedantry is NOTIMP.
🙋🏼♀️FAQ: now I'm confused between OFS vs Open offer? Ans. Khichdi mtt karo. Their objectives are
different. Observe the photos carefully.
11.14.7 🍃Share Selling: Equity dilution
Share issuing company → Deposits his company’s shares in That bank issues -- in local
a bank of → market in – currency
Note: This topic is still developing. It is allowed via Gift-City (Gujarat). (Ref: Pillar#3A)
Scamster Rupal Panchal (2005) opened multiple fake DEMAT accounts to increase the chances
of getting share allocations in IPO. Then she’d sell such shares in stock-exchange for higher
prices.
Subsequently, SEBI made PAN Card (issued by Income Tax Dept) compulsory for opening
DEMAT Accounts. SEBI also introduced ASBA (Application Supported by Blocked Amount)- it
allows the underwriter to block the amount in IPO-investor-applicant’s bank account, but only
IF shares allotted to the applicant, his bank money will be deducted. ASBA-Benefits:
o only serious investors with sufficient bank balance can apply.
o investor continues to earn bank interest on his blocked amount until the process of IPO-
share allotment is over.
Solution
- CENTRAL COUNTERPARTIES (CCPS) act as intermediary between the buyers and sellers in
financial market. E.g. G-Sec, T-bill, shares, bonds, derivatives, forex, commodities
- They act as a central counter-party to every trade i.e. CCP becomes seller to the buyer, and
simultaneously CCP becomes buyer to the seller. This process is called “novation”. (HOW? Ans.
Observe the chart carefully.)
- so, if one of the party does not honour the agreement → CCP will take care of it. Thus, CCP
prevents system failure.
- 😭Controversy? Indian CCPs also deal with international financial trades e.g. in Europe. But,
European Securities and Markets Authority (ESMA) is planning to cancel their license/
registration/ entry. What exactly is the matter? NOTIMP4Exam. Enough to know in 1 line ke
Indian CCPs facing some problem in Europe.
β<1 This company moves slower than SENSEX. Low risk, Low return.
⚱️
11.19.5 DEMAT Portfolio: Meaning, Types, Portfolio Diversification
Portfolio means the collection of assets held by an investor.
In financial market, “Portfolio” means the list of shares/bonds/ETF you’re keeping in your DEMAT
account.
• SEBI has designed business continuity plan (BCP) for market infrastructure institutions
(MIIs) — i.e. (1) stock exchanges, (2) depositories, (3) clearing corporations.
• MII need to have a disaster recovery site (DRS). So when there is disruption in their server at
the primary site (PR) → they’ll move data/operations to the server at DRS site.
• 2024-March: Bombay Stock Exchanges (BSE) and the National Stock Exchanges (NSE)
carried out mock drill / special trading sessions for this.
Figure 2: swag से करेंगे 'middle-class' का 'स्वागत'। Observe colors in logo, meant for attracting ordinary crowd
Mutual Fund is an Asset Management Company (AMC-NBFC) that pools savings of (retail)
investors and gives them “Units”.
MF Manager parks this money in securities & builds his ‘portfolio’.
Whatever dividend/ interest is generated from the portfolio, it is distribute among investors in
the proportion of their units.
Investor pays Entry Load (= fees for joining), Exit Load (= fees while quitting). SEBI regulates
these fees.
11.22.4 📦 🤹🏻 👴🏻
♂️ Mutual fund → ESG, Shariya Mutual Funds
ESG Mutual Funds= These mutual funds will invest clients’ money in companies that have good
performance on Environmental, Social, And Governance (ESG) aspects.
Shariya Mutual Fund= These mutual funds will invest clients’ money in companies that are
compliant with Islamic Shariya law. E.g. They will not invest in alcohol, pork, gambling etc
related companies.
They collect client money and invests in the companies in a proportion to the stock-exchange weight
assigned to those companies.
Fund Index-ETF Mutual Fund
Passively. Manager will Actively. Manager will apply the brain before
mechanically invest money into an investing clients money. e.g. a mutual fund
Managed external indicator/index/asset manager will decide whether to invest in
without applying Brain. e.g. Index- Adani or reliance after checking their balance
ETF (see next section). sheet and future expected profits.
Fees charged
less more
by Manager
Liquidity higher/easier lower/slower
Can be resold
difficult for close-ended MF with fixed
in secondary Yes
maturity period e.g. 3 years.
market?
MCQ. Find wrong about Exchange Traded Fund (ETF) (CDS-2018-I)
(a) It is a marketable security. (b) It experiences price changes throughout the day.
(c) It typically has lower liquidity and higher fees than mutual fund shares.
(d) An ETF does not have its net asset value calculated once at the end of every
🚩👶🏻 FAQ: (1) can we say Bitcoin-ETF is an example of passive funds? Ans. Yes but waste of time
preparing a Mendeleev’s periodic chemistry table ki kaunsa fund is example of active/passive.
🚩👶🏻 FAQ:(2) can we also say XYZ is also a pros/cons of Bitcoin-ETF? Ans. AskChatGPT, my
syllabus-finisher-bus can’t wait for you. थोड़ा-पढ़ो-आगे-बढ़ो.
11.24.3 Gold-ETF
• Investors give money → manager buys gold for safekeeping and trades it depending on
price movements → returns are divided among the unit-holders.
12.0 🍋😍 T AX RELIEF GIVEN ON (निम्न चीजो पे टैक्स में रियायत/छू ट दी जाती है)
CATEGORY Examples
Bank FD (sp.type) - - 5-Year Tax Saving Fixed Deposit (FD) with Banks
13.3 🤞 D -M
E ERGER WHEN A COMPANY SUBDIVIDED INTO MULTIPLE COMPANIES.
BEFORE AFTER De-merger
1) ITC (Hotel, Cigarettes, FMCG^^) 1) ITC ( Cigarettes, FMCG) 2) ITC (Hotel)
1) TATA Motors planning to divide into (1) truck (2) cars & EV
^^ FMCG = Fast Moving Consumer Goods e.g. soap, shampoo, toothpaste, potato-chips etc.
📑Next Handout: Pillar2: Budget Taxation GST FRBM Fiscal Deficit etc.
Missed previous classes / handouts? Visit Mrunal.org/win24
10.12 ⚰️💀 🦁 Life Insurance → public sector (सार्वजनिक क्षेत्र के जीवन बीमा सं स्थान)...................................................102
10.12.1 ⚰️💀📮 Post Office Life Insurance (डाक जीवन बीमा)................................................................................................ .102
10.12.2 Post Offices Services: G2C and B2C.................................................................................................................... . 102
10.12.3 LIC is regulated under following acts................................................................................................................... 103
10.12.4 🧔⚰️
PM schemes for Life Insurance & Accidental (Gen) insurance (2015) ................................................. .103
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 100
12 ( 👨🏻🌾👨🏼🔧:💰)→💳Financial Inclusion ( वित्तीय समोवेशन)........................................................................ .115
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 101
Insurable interest- If “risk-x” not happen, client remains in same position, “risk-x” happens
client in bad position. (e.g. I didn’t win lottery= Is not insurable interest. )
MCQ. The principle of subrogation in insurance allows (EPFO-2023) (a) investment of policy
amount (b) refund for insured and insured’s insurance company (c) auto-renewal of policy. (d)
indemnification of the insured.
10.12 ⚰️💀 🦁 L IFE INSURANCE → PUBLIC SECTOR (सार्वजनिक क्षेत्र के जीवन बीमा सं स्थान)
10.12.1 ⚰️💀 📮 Post Office Life Insurance (डाक जीवन बीमा)
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 102
National Pension Scheme;
- PAN card eKYC, Election Card Printing
- e-Stamp (i.e. buying stamp-paper for
property registration etc.)
10.12.4 🧔⚰️PM schemes for Life Insurance & Accidental (Gen) insurance (2015)
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 103
- In both scheme, premium money auto-debited from bank account, after person applies. (बैंक खाते
में अपने आप फ़ीस का पैसा कट जाता है)
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 104
10.13.2 🦁(💉👨🔧) Employees' State Insurance Corporation
- 1948: Employees' State Insurance Act → 1952: ESIC corporation (ESIC) setup under Labour
Ministry. (कर्मचारी राज्य बीमा निगम, श्रम मंत्रालय)
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 105
10.13.4 💊♿️IRDAI ordered companies to launch policies for HIV patients/PWD
2022 Many insurance companies don’t have any scheme/policies for for HIV/PWD. then Delhi
HC ordered IRDAI to do solve it.
2023 IRDAI made it mandatory for general insurance companies to launch health insurance
policies to cover people with mental illness, physical disability, and HIV/AIDS.
PM-JAY Sub-schemes
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 106
10.15 ⚰️ 💊🚕🌽 G ENERAL INSURANCE → OTHER THAN HEALTH INSURANCE
- 1996: IRDA setup→ given statutory status in 1999 (वैधानिक सं स्था बनी)
Org - 2014: Its name changed to Insurance Regulatory and Development
सं गठन Authority of India (IRDAI: भारतीय बीमा विनियामक एवं विकास प्राधिकरण)
- HQ: @Hyderabad, Telangana. (Whereas RBI & SEBI HQs @Mumbai.)
Structure 1 Chairman: Dr. Debasish Panda (Ex-IAS) (5/65),
सं रचना 9 members (5/62) = Total 10. They can be re-appointed. (पुनर्नियुक्ति सं भव है)
IRDAI gives separate licenses for life, general & re-insurance companies.
Prescribes norms for insurance companies for accounting, solvency, audit,
Function commission to agents etc. It can penalize companies, suspend or cancel
s registration. Appeal → Securities appellate Tribunal (SAT) (More in Pillar#1C) 📑
कार्य Norms for agents & brokers, banks selling products (Bancassurance), Surveyor/
Loss Assessor, and Third-Party Administrators (e.g. Hospital)
Consumer grievance redressal via Insurance Ombudsman (शिकायत निवारण अधिकारी).
IRDAI is member of Financial Stability & Development Council (FSDC). Ref: 📑1C
10.16.1 ⚰️🕵️
IRDAI Reforms → 30 day free-look period rule
- This feature will allow the client to review/try the insurance policy for 30 days.
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 107
- The client can seek a refund of the premium within this 30-day period.
- The client will not have to pay a penalty (called ‘surrender charges’) during this 30-day period, if
he cancels subscription.
10.16.2 ⚰️🕵️ IRDAI Reforms → Bima Vahak - Village level salesmen (2023–24)
- An individual person or company can register as a Bima Vahak.
- They will sell various insurance policies at the gram Panchayat level, especially with the help of
women.
- One Bima Vahak can become a salesman for multiple insurance companies at the same time
(e.g., selling both LIC and ICICI-ki insurance policies).
- Bima Vahak will also help insurance companies to collect know-your-customer (KYC)
documents and assist clients with claims/compensation.
10.16.3 ⚰️🕵️
IRDAI Reforms → Bima Vistaar: All-in-1 Policy
- Bima Vistaar will be an all-in-one standard insurance product.
- It will provide life, health, and property coverage in a single policy.
- March 2024: It is yet to be launched. IRDAI is working on the guidelines.
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 108
- Presently, there are private sector websites like policybazaar.com, helping the people to compare
& buy insurance policies from various companies.
- IRDAI planning to set up a similar sarkaari website with better features.
- Bima Sugam will be a single website connected with all insurance companies. So you can
compare / buy / renew policies, and file compensation-claims online (=in paperless mode).
- Online-KYC with the help of Aadhaar card. No need to visit branch-office.
- Target: “Insurance for all by 2047”
- Bima Sugam will be set up as a company. Share-capital will be provided by life, general and
health insurance companies. But none of the shareholders will be given majority shareholding.
- Bima Sugam company will have chairman, CEO, board members. Board members will include
two members nominated by IRDAI.
10.16.5 ⚰️🕵️🌻
Insurance for all at Gram Panchayat Level - IRDAI (2024)
• 2024: IRDAI launched draft Rural, Social Sector, Motor Third Party Obligations Regulations.
• Applicable on : Life insurance, health, insurance, and motor vehicle insurance.
• It requires the Insurance companies to cover Minimum X% population in Y number of
Gram Sabha in Z years. For example- for life insurance companies
Year Min. % people covered in Gram Panchayats Min. Gram Panchayats Targeted
Year1 30% 25,000
Year2 40% 50,000
Year3 50% 75,000
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 109
Insurance Agent Insurance Broker
insurance agent. e.g Policybazaar.com
10.18.2 👨🏻💼 Direct Broker, Reinsurance Broker & Composite Broker
Type Meaning
1) Direct Broker sells life/general/health policies of multiple companies.
2) Reinsurance Broker sells reinsurance of multiple companies.
3) Composite Broker doing both (1) + (2)
10.18.3 👨🏻💼 Bancassurance (French Word): when banker becomes Insurance agent
11.11 👴🏻🦁 P ENSION→ EMPLOYEE PROVIDENT FUND ORG. (कर्मचारी भविष्य निधि सं गठन)
- 1951-52: EPFO was setup initially by ordinance & then Act.
- Nodal: Labour Ministry (श्रम मंत्रालय).
- EPFO governed by Tri-partite “Central Board of Trustees” त्रिदलीय के न्द्रीय न्यास बोर्ड -
I. Government (Union + state) – 15 nominees (मनोनीत सदस्य)
II. Employers (industrialists) - 10 nominees
III. Employees (workers) – 10 nominees
- They make policy decision about where to invest money (usually G-sec>C-Bonds>Shares; with
minimum and maximum slabs) and they decide how much interest should be paid to
subscribers.
YEAR Scheme (Tech. norms not written here as they’re not imp4IASexam)
1952 Employee Provident Fund (EPF)
Principal + interest returned upon retirement age/ death.
Interest Rate: 8.5%(2020-21) → Reduced to 8.1%(2022-23, lowest in last 40 yrs.) →
increased to 8.25% (2023-24)
Partial withdrawal upto “X%” allowed for education, marriage, illness and house
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 110
construction. (अवधि से पहेले आंशिक रूप से पैसा निकालना)
👻
2020: ATMANIRBHAR → PM Garib Kalyan Package→ labour ministry allowed
EPFO subscribers’ to withdraw upto “X%” of EPF fund to help the workers in
lockdown. (कोरोना में ज़रूरतमं द मज़दूर अपने खाते से परिपक्वता से पहेले आंशिक रूप से पैसा निकाल सके )
1976 Employees Deposit Linked Insurance Scheme (EDLI)
Boss pays Premium. If worker dies → family gets insurance.
2020-Reform: if worker died of Corona family member will be given insurance (min
2.5 lakh to max 7 lakh). कोरोना मृतक श्रमिक के परिजनो को बीमा राशि
1995 Employee Pension Scheme (EPS)
Monthly pension on retirement (once they attain the age of 58 years old) / permanent
disability (वय-निवृति/स्थायी विकलांगता में पेंशन मिलेगा).
- Note1: Different websites give different formulas. Formula is not imp, but sufficient
to know that it is not linked with SHAREMARKET performance (unlike NPS
scheme.)
- Note2: If the worker dies before retirement (=while in job) → the minimum
guaranteed pension to the spouse = ₹ 1,000 per month.
- EPFO covers both permanent employees & casual/temporary employees (= employed only for a
few days/weeks/months.) स्थायी कर्मी और अस्थायी/अयाथवधि कर्मी दोनो को लाभ मिलता है।
- EPFO Act doesn’t apply to cooperative society with less than 50 workers, if such cooperative
society not using power (electricity, coal etc). [Why? Ans. NOTIMP.]
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 111
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 112
11.12 👨🏻→👴🏻P ENSION FOR GOVT EMPLOYEES & MIDDLE CLASS? = NPS
🪙
11.12.1 NPS : penny drop verification mandatory (2023)
• “Penny drop test” means a pension company transferring a small amount of money, e.g., ₹1,
to the subscriber’s bank account as a test before crediting the entire amount.
• If there is an error, the remaining money will not be sent until the details are corrected (e.g.,
bank account number/branch IFSC code).
• In 2023, PFRDA made “penny drop verification” compulsory for NPS.
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 113
✋
11.12.2 Old Pension Scheme (OPS) in Non-BJP States
Union Govt believes 1) we don’t have enough money to sustain OPS. 2) better to use tax payers’
money for poor.
However some non-BJP states such as Rajasthan reverting to OPS.
Experts argue that OPS is unsustainable because State govts don’t have enough money to run it
forever. More elaboration / bolbachchan = shifted to Mains. #Raftaar-for-Prelims.
👨🏻 👴🏻
11.12.4 → Pension: NPS: Minimum Assured Return Scheme (MARS)
PFRDA yet to release the guidelines so for the sake of simple example ….
suppose you contribute ₹100 & PFRDA gave MARS of 8% on the NPS account
Then if NPS unable to give u 8% return on ₹60 of subscription then whatever loss- will be paid by
😍
PFRDA/other org to subscriber. Benefit? It’ll attract more people to join NPS.
न्यूनतम सुनिश्चित वापसी योजना (MARS) - मान लीजिए PFDRA कहता है कि कम से कम 8% सालाना मुनाफ़ा दिया जाएगा और
अगर शेयर /बोंड बाज़ार सिर्फ़ 7% दे पाता है तो 1% नुक़सान की भरपाई PFRDA या कोई और अन्य सं स्था द्वारा की जाएगी। असल में
नियम बनने बाक़ी है, इसलिए ये तो एक काल्पनिक उदाहरण दिया है)
👨🏻 👴🏻
11.12.5 → Pension: NPS: T V Somanathan committee (2023)
Finance Ministry has setup T V Somanathan to review the NPS pension scheme for government
employees and suggest any changes, if needed.
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 114
11.13.1 Pension types: Defined Contribution vs Defined Benefit
Pension Type Defined Contribution Defined Benefit
Pension is fixed or Pension depends on Pension is fixed. Doesn’t matter what happens
not? performance of in sharemarket.
sharemarket
Example - NPS - EPS (a scheme of EPFO),
- Private pension - OPS (Old Pension Scheme for govt
companies investment employees),
plans - Atal Pension Scheme (APY), Sharm Yogi
Maan-dhan, NSoAP
Boss? Ministry of Housing and Urban Affairs (MoHUA)- आवास और शहरी मामलों का मं त्रालय
Loan Tenure: 1 year. Repayment to be done on a monthly basis.
Loan Interest? approx @7.25% & if vendor repays in timely fashion → govt will give 7% interest
subsidy in his bank account. (फे रीवाला ने रुण अदायगी नियमित रूप से की तो ब्याज में सरकार राहत/सब्सिडी देगी)
If vendor repays the loan on time, then he can apply for more loans, as follow:
Cycle 1st cycle 2nd cycle 3rd cycle
Loan Amt ₹10,000 ₹20,000 ₹50,000
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 115
12.11.3 🤑👨🏭 SVANidhi → Rashtriya Udyamita Vikas Pariyojana (2024)
• Also called PM Svanidhi National Entrepreneurship Development Project.
• Boss? Ministry of Skill Development and Entrepreneurship.
• PM-Svanidhi Wall Street vendors will get 22 weeks of entrepreneurship training on how to
expand their business.
• Training Mode? Offline, online, and hybrid (both online + offline).
• Trainees will get a stipend and certificate.
Training partners/org: (1) Flipkart, (2) Indian Institute of Entrepreneurship (IIE), Guwahati, (3)
National Institute for Entrepreneurship and Small Business Development (NIESBUD), Noida.
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 116
Matter %
Total interest earned by banker (A+B) = 13%
🚩👶🏻 FAQ: isn’t this illogical if the 5% paid by beneficiaries and 8% paid by govt ? Ans. PIB not
bothered to explain “why” part in the scheme document. My take is that Bankers may be charging
around 13–16% or more interest rate on businessman (depending on credit rating of the customer).
So if the government did not offer 8% from its pocket, then bankers will suffer losses/bankers may
not pass the loan-applications very easily. That’s why.
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 117
🚩👶🏻 FAQ: Most of these schemes are low-profile / outdated / merged → then why government not
updating the law with latest schemes’ list? Ans. Send suggestion to PM.
MCQ. Which one of the following schemes is not a Social Security Scheme under the Unorganised
Workers’ Social Security Act, 2008? (EPFO-2023) (a) National Family Benefit Scheme (b) Janshree
Bima Yojana (c) Employees’ Pension Scheme (d) Rashtriya Swasthya Bima Yojana
🌤️ W
Some facts may get changed later on.
13 HAT IS ALREADY COVERED IN PAST: 1D:
Red highlight.= I find them less important for the 2024-25 prelims.
Missed previous classes / handouts? Visit Mrunal.org/win24
13.11 🌤️ W IN20: ALREADY COVERED FOLLOWING IN PILLAR#1D
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 118
3) Ayushman BHARAT Funding
4) PM-JAY Funding pattern after removal of Art 370
5) 💼Budget-2020: 5% Health CESS
6) 🧔⚰️🌽 PM Fasal Bima Yojana: Norms changed in 2020
7) ⛴🔪(👨💼🏦) Insurance to Banks on Exporters’NPA → NIRVIC Scheme (2019)
8) ⚰️🏗📜Title Insurance (जमीन / इमारत का टाइटल बीमा)
9) 🌬🌪 (Proposed) Catastrophe Insurance (आपदा बीमा)
10) Insurance progress indicators (बीमा प्रगति सं के तक)
11) FDI in Insurance Sector changed by Full Budget-2029
12) 👨🔧 👴🏻 💰🗓
→ ( ) PENSION (पेंशन)
13) EPF Commutation (2020)
14) Old Pension Scheme (OPS) will not be re-introduced
15) 👨🌾 👴🤲💰 🧔
→ : Pension: Three Maan Dhan Yojanas
16) Separation of PFRDA and NPS Trust
17) 🛫👨🔧Social Security for Overseas Indians (Pension / Insurance)
18) 🛫👨🔧Mahatma Gandhi Pravasi Suraksha Yojana, 2012 to 2017
19) 🛫👨🔧Pravasi Bharatiya Bima Yojana, 2017
20) 🏍️🍴🚕 Gig Workers’ social security code (गिग कर्मी की सामाजिक सुरक्षा सं हिता)
21) (👨🏻🌾👨🏼🔧:💰)→💳Financial Inclusion (वित्तीय समोवेशन)
22) RBI’s Lead Bank Scheme (1969)
23) (Full) Budget-2019: JANDHAN Overdrafts to women in SHG
24) 🤳🏻 Jan Dhan Darshak App (2018)
25) (👨🏻🌾👨🏼🔧:💰)→ 📦 Chit Funds and Prize Chits
26) (👨🏻🌾👨🏼🔧:💰)→ 📦 Chit Funds (Amendment) Act, 2019
27) Banning of Unregulated Deposit Schemes Act, 2019
13.12 🌤️ W IN21: ALREADY COVERED FOLLOWING IN PILLAR#1D
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 119
9) 🔥🌪🏡🏭 Bharat Griha Raksha & other: Standardized home/factory insurance policies
10) 👿💻General Insurance → Cyber Insurance (साइबर बीमा)
11) 💻eIA: e-Insurance account
12) Insurance progress indicators (बीमा प्रगति सं के तक)
13) FDI limits in Insurance sector? (बीमा क्षेत्र मे प्रत्यक्ष विदेशी निवेश की सीमा)
14) Should we ⏫ FDI beyond 49% in insurance companies? (क्या सीमा बढ़ाए?)
15) 👨🔧 → 👴🏻 (💰🗓) PENSION (पेंशन)
16) 👻ATMANI Reforms in EPFO 🧔👨🔧👴🏻 (March to August)
17) 👻Atmanirbhar Bharat Rozgar Yojana= Subsidy from Central Govt in EPFO contribution
18) 🧔👨🔧👴🏻 EPF Provident Fund Interest Rate
19) (👨🏻🌾👨🏼🔧:💰)→💳Financial Inclusion (वित्तीय समोवेशन)
20) 🧔(👨🏻🌾👨🏼🔧:💰)→💳 Pradhan Mantri Jan Dhan Yojana (प्रधान मंत्री जन धन योजना)
21) 👨🏻🌾👨🏼🔧 ←(💰🔪) Financial inclusion: Credit (Loans: ऋण)
22) 👻 👶🏻🏭 MSME: Definition changed in ATMANIRBHAR (2020)
23) 👻🔪 👶🏻🏭 MSME Non-NPA borrower → ECLGS 1.0 and 2.0.
24) 👻🔪👶🏻🏭 MSME NPA borrower → Subordinate Debt (गौण ऋण)
25) 👻🔪👶🏻🏭 MSME Loans: FM tells Bankers not to fear 3C
26) 👻🗃👶🏻🏭 MSME → Equity infusion via Fund of Funds (निधियो की निधि)
27) 🚫🏦👨⚖️🚫👨🌾 NBFC → Mudra (2015, 100% SIDBI subsidiary)
28) 👻🔪 👶🏻🏭 Mudra Loans → Shishu Loans pe 2% Interest subvention
29) 🙋♀️Stand Up India Scheme, 2016 (उत्तिष्ठ भारत)
30) 👭Self-help group (स्व-सहायता समूह) → Credit
31) 🤑👨🏭Street vendors’s AtmaNirbhar Nidhi Scheme (SVANidhi)
32) 👻ATMANIRBHAR → 👷♂️Workers’ Social security (2020)
13.13 🌤️ W IN22: ALREADY COVERED FOLLOWING IN PILLAR#1D
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 120
8) Employee Provident Fund (EPF)
9) 👨🏻→👴🏻Pension for Govt Employees & Middle Class? = NPS
10) ✋Old Pension Scheme (OPS) will not be re-introduced says Govt in Lok Sabha
11) (👨🏻🌾👨🏼🔧:💰)→💳FINANCIAL INCLUSION (वित्तीय समोवेशन)
12) 👻🔪 👶🏻🏭 Fin Inclusion → MSME Non-NPA borrower → ECLGS loan
13.14 🌤️ W IN23: ALREADY COVERED FOLLOWING IN PILLAR#1D
1. Insurance sector opportunities and challenges in ES23 📙
2. Bancassurance is very great says ES23 📙
3. 🦁 💉👨🔧
( ) ESIC: 15% share investment
4. ESIC-Nirman Se Shakti
5. De-tariffication in insurance sector ( ES23)📙
6. ️Insurance progress indicators (बीमा प्रगति सं के तक)
7. EPFO : Higher pension rule
8. 👨🏻👴🏻 Pension: NPS vs OPS
9. OPS: Old Pension Scheme in Non-BJP States
10. NPS: Union not to return Chhattisgarh money from NPS
11. NPS: Andhra Guaranteed Pension Scheme (GPS)
12. 👨🏻 👴🏻
→ Pension: NPS vs OPS: Minimum Assured Return Scheme (MARS)
13. Pradhan Mantri Vaya Vandana Yojana (2017-DFS, LIC)
14. Financial Inclusion: Small Savings Scheme
15. (👨🏻🌾👨🏼🔧 💰 📮
: )→ Fin inclusion: Investments other than Bank
16. 👛👩🦰 Small Savings: Mahila Samman Bachat Patra (2023)
17. 👛👴 Small Savings: Senior Citizen Savings Scheme limits hiked
18. Financial inclusion: Credit Guarantee Fund for Education Loans (CGFEL):
19. 🤳🏽 Jan Samarth Portal (2022)
Mrunal's Economy Win24 Series Pillar1D: Insurance, Pension, Financial Inclusion → Page 121
PILLAR #2: BUDGET, TAXATION, Subsidies, Disinvestment, Deficit, Public Finance
Table of Contents
20 💼🍋 Pillar #2: Budget: Relevance in UPSC?................................................................................ .123
20.1 ( 🤴🗳🧔)=🥛💼 Interim Budget (अंतरिम बजट)..........................................................................................124
20.1.1 👜🥻Budget’s THEME ( बजट की विषयवस्तु).................................................................................................................... . 124
22.1 →GST → Lottery / Online Gaming → GST on full bet value (gross value)?.................................... .132
20.1.11 🎲GST → Lottery / Online Gaming → on ‘entry bets’ but not on ‘winnings’.............................................. .132
20.1.12 🥂GST on Extra Neutral Alcohol (ENA)?.......................................................................................................... . 132
20.1.13 🌾GST on Millets? (2023)...................................................................................................................................... 133
22.2 📈 Tax Collection Figures: जीएसटी राजस्व प्राप्ति के आंकड़े....................................................................................133
20.1.14 📈GST Collection.................................................................................................................................................. . 133
22.3 📈All Tax Collection: Highest to Lowest...............................................................................................134
23 🍋 (🧔⚖️👨🦲👳🏻♀️👳🏻) Taxation → Finance Commission.................................................................. .135
23.1 Introduction to Finance Commission (वित्त आयोग).................................................................................. .135
23.2 🕵️♂️(🍋 🧔⚖️👨🦲) 15th vs 16th FC - Membership................................................................................... .135
20.1.15 🕵🏻 15th vs 16th FC - timelines ............................................................................................................................ . 135
20.1.16 🕵🏻 FC not setup ‘every five years’ in reality........................................................................................................ .136
20.1.17 🕵🏻 15th vs 16th FC - Terms of Reference (TOR: )?............................................................................ .136
विचारार्थ विषय
Mrunal's Economy Win24 Series Pillar2: Budget, Taxation, GST, 16thFC, Deficit → Page: 122
20.1.22 → Budget → Capital Part → Effective Capital Expenditure........................................................................143
20.1.23 🗓📤Capital expenditure for a Company.......................................................................................................... . 143
Mrunal's Economy Win24 Series Pillar2: Budget, Taxation, GST, 16thFC, Deficit → Page: 123
20.1 ( 🤴🗳🧔)=🥛💼 I NTERIM BUDGET (अंतरिम बजट)
Our constitution does not define or require interim budget. (अंतरिम बजट का सं विधान में जिक्र नहीं है)
But, during election year or extreme situation (E.g. when coalition government may collapse
before its term) then it’s considered unethical for such Govt. to make drastic/populist changes in
budget like “2gm gold for the marriage of every BPL-girl.”
So, while they’ll present a budget in the regular fashion i.e. 3 documents (AFS, FinBill,
Appro.Bill) & 6 Stages of Passing. But it (should) not have grand populist announcements. (ऐसी
परिस्थितिमे लोक-लुभावन की योजनाओ के साथ बजट प्रस्तुत करना नैतिक नहीं होगा, वरना विपक्षी नेता जीत नहीं पाएं गे चुनाव)
Such budgets are called Interim Budgets, and were presented in 2004 (Yashwant S.), 2009
(Pranab M.), 2014 (Chidambaram P.) and 2019 (Piyush G.)
Just like a Regular General Budget, an Interim budget is valid for the whole financial year,
however in between if new government is formed, they may present another budget to change
the provisions. (वैसे तो पूरे वर्ष के लिए वैध होता है)
E.g. 2014-Feb: FM Chidambaram presented (interim) budget in 15th Lok Sabha, but then
UPA/Congress defeated in general election→ 2014-July: BJP’s FM Arun Jaitley presented (Full)
General Budget in 16th Lok Sabha.
2019-Feb: FM Piyush G. presented Interim budget in 16th Lok Sabha → 2019-May: Modi won
General Election → 2019-July: FM Nirmala S. presented (Full) Gen Budget in 17th Lok Sabha.
2024- Similar scene.
✋Note: throughout the handout, I’ve used the term “Full” budget to
differentiate it from “Interim” Budget for easier revision & visualization. But in
Mains, you should use the word ‘General Budget’(सामान्य बजट)
20.1.1 👜🥻 Budget’s THEME (बजट की विषयवस्तु)
Constitution doesn’t require, but sometimes FM will do it to create media-hype:
Budget Year Did FM Speech mention a specific theme (विषयवस्तु)?
2023 (Full) ‘Saptarishi’ (7 priority) for Amrit Kaal, namely:
Paperless 1) Inclusive Development , 2) Reaching the Last Mile, 3) Infrastructure and
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Investment, 4) Unleashing the Potential, 5) Green Growth, 6) Youth Power , 7)
Financial Sector
• Due to general election, Interim budget was presented in 2024-Feb. No
2024-Feb
changes in the taxes made. Very few new schemes announced.
Interim
• Separately, Finance Minister also presented a 'White Paper' comparing the
Paperless
UPA/Congress Govt vs 10 years of Modi govt. (श्वेतपत्र)
20.2 📘📘 E CONOMIC SURVEY (आर्थिक सर्वेक्षण)
- A document prepared by (usually) by the Chief Economic Adviser (CEA) in FinMin.
- ✋No constitutional obligation to prepare or present it but usually it’s tabled in the parliament a
day before the Union Budget. (सं विधानिक रूप से ऐसा करना अनिवार्य नहीं)
20.3 🕵🏻F INANCE MINISTRY AND ITS DEPARTMENTS: (वित्त मंत्रालय और उसके विभाग)
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20.1.2 🕵🏻IAAD-OIOS by CAG (विभिन्न मं त्रालयों की लेखा परीक्षण के लिए डिजिटल पोर्टल)
- One Indian Audit & Accounts Department (IAAD) One System (OIOS)
- Made by CAG- for paperless administration.
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21 🍋🤷♀️D IRECT TAXES: TYPES (प्रत्यक्ष करों के प्रकार)
Direct Taxes 🧔 of Union Govt. * Means Abolished 👩🦲🕉 Of State Govt.
👜On income - Corporation Tax, Minimum Alternate 1. Agriculture Income tax
(आय पर) Tax (MAT) 2. Professional Tax
- Income Tax on income except agri. (Constitutional ceiling of
- Capital Gains Tax (CGT) max ₹2500 per year)
- ❌ *Dividend Distribution Tax (DDT)
🏠On assets, - Securities Transaction Tax (STT) 1. Land Revenue (भू राजस्व )
transactions & Commodities Transaction Tax (CTT) 2. Stamp/Registration duty
(सं पत्ति, लेनदेन पर) - ❌ *Wealth Tax (सं पत्ति कर) 3. Property tax in urban areas
- ❌ *Estate Duty
🛒On ❌ *Hotel Receipt Tax, *Gift Tax #Road Tax (although debatable
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- Indexation benefit = adjusting the profit as per changes inflation. So that person has to pay less
amount of Long term Capital Gains tax. (This is not available in short-term capital gains tax)
Indexation benefits on capital gain tax? BEFORE AFTER 1/APRIL/2023
profits made from Debt mutual funds (they
invest the clients money in Company bonds/ G- Yes given Stopped
sec/debt instruments.)
Normal shares / bonds NO NO
Sovereign gold bonds (Ref#1C) Yes Yes
real estate (building/property) Yes Yes
Bitcoin/cryptocurrency profit NO NO
🙋🏼♀️FAQ: is Indexation benefit given in XYZ other instrument? Ans. I don’t know. We are not here
for Chartered Accountant exam.
21.1 🍋🤷♀️: 👪 I NCOME TAX ON INDIVIDUALS (व्यक्तिक आयकर)
You can use any ONE of the given system OTR or NTR.
Sr Matter OTR NTR-2023
Sr.1 (Non-Agriculture) Gross Income of salaried employee aged 7,50,000 7,50,000
less than 60YR
Sr.2 minus Standard deduction -50000 -50000
Sr.3 minus NPS deduction -50000# N/A*
Sr.4 minus LIC, ELSS (Ref#1C), Home Loan etc deduction -150000# N/A*
Sr.5 Taxable Income: (Sr.1-2-3-4) 500000 700000
Sr.6 Income Tax on taxable income (Sr.5) 12500 25000
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Sr.7 REBATE on Income Tax (Sr.6) -12500** -25000**
Sr.8 Income tax to be paid (Sr.6-7) 0 0
Sr.9 surcharge on IT if taxable income >Rs.50 lakh 0 0
Sr.1 4% health & Education Cess on (Sr8+9) (0+0)x4%=0 (0+0)x4%=0
0
Total Tax to be paid 0 0
# These are max deduction limits. So if u invest more money in LIC/NPS beyond these limits,
still you’ll NOT get more deduction than this. (इससे ज्यादा पैसा डालोगे तो भी ज्यादा माफ़ी नहीं मिलेगी)
*in NTR-2023, whether person saves money in LIC/NPS etc or not, he’ll not get any deduction
benefit (except 50k Std deduction). So N/A = not applicable.
**Tax rebate allowed only if taxable income upto Rs.5 lakh in OTR OR Rs.7 lakh in NTR. So if
Akshay Kumar having 200 crore income = he’ll not GET REBATE. See next table.
Interim budget-2024: No changes in above system/slabs.
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20.1.7 GST Rates
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Actionable claims are subjected to GST. But SOME OF THEM may have separate calculation
methods.
Matter Amount GST
(A) Loan given / credit card spending
₹10 lakh N/A
limit given
(B) Application processing fee of Bank
₹500 18% GST
loan/credit card
(C) Late fees / penalty fee
₹100 18% GST
(if/when applicable)
GST only on the application fees (₹500)
Total A+B= ₹10,00,600
and penalty ( ₹100)
🚩👶🏻 FAQ: How is GST counted on rent and unpaid invoices etc? Ans. We are not here for C.A.
exam. 🐎Be a race-horse. Only focus on the track. 🐂Don’t loiter like a street-bull.
🎲
20.1.10 GST on Actionable Claims → Lottery / Online Gaming
Casino and online gaming apps owner had started court-litigation regarding the definition itself - to
avoid paying taxes. Their argument is as follows:
🧛♂️Casino/Gaming Owners’ demand 👩🏻⚖️GST council decision
🙏Lottery/online gaming is not actionable claim. Because ✋It is an actionable claim and we
there is no guarantee of winning. So don’t ask for GST. will demand GST.
🙏ok then plz have 18% GST on game of skill (e.g. Chess) ✋28% GST on everything. We
and 28% GST on 🎲 game of luck (e.g.Roulette, Dice) don’t care if it is a game of skill or
game of luck.
🙏still if u want to charge GST on it → then GST should be ✋We’ll charge 28% GST on entire
only on the fees. Plz don’t ask GST on the entire amount amount. See next section 👇
(=full bet value).
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22.1 🎲GST → L OTTERY / ONLINE GAMING → GST ON FULL BET VALUE (GROSS
VALUE)?
20.1.11 🎲GST → Lottery / Online Gaming → on ‘entry bets’ but not on ‘winnings’
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ENA has neutral smell and taste. (कोई स्वाद/सुगंध नहीं)
ENA is colourless liquid, it has no impurities. (रंगहीन. कोई अशुद्धि नहीं)
ENA is used as raw material in cosmetics, medicines, ink, and liquor.
Earlier there was confusion about taxes on ENA. But 2023-Oct: GST Council has given above
clarification. That’s why news-headlines saying “GST Council cedes right to states on taxing ENA used
in liquor for human consumption” (जीएसटी परिषद ने मानव उपभोग के लिए बनाई जाने वाली दारु/मदिरा में इस्तेमाल होने
वाले ईएनए पर कर लगाने का अधिकार राज्यों को सौंप दिया)
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22.3 📈A LL TAX COLLECTION: HIGHEST TO LOWEST
Note: Service Tax (Legacy) = service tax is discontinued. But old court-cases se recovery.
👜🥻 Int.Budget-2024 👨🏻 🛒 🏢 ⛽️ ⚓️
IT > GST > Corporation> Excise> Customs > Service Tax
👜🥻Budget-2023 🛒GST> 🏢 Corporation>👨🏻IT >⛽️Excise> ⚓️ Customs
👛Budget-2022 Same as above (2023)
Budgets from 2019, Sometimes Corporation tax was #2, sometimes income tax was #2 but
2020, 2021 poor cost benefit memorizing all that so I am deleting.
Budgets Before 2019 🏢 Corporation> 🛒GST>👨🏻IT >⛽️Excise> ⚓️ Customs
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23 🍋 (🧔⚖️️👨🦲👳🏻♀️👳🏻) T AXATION → FINANCE COMMISSION
23.1 INTRODUCTION TO FINANCE COMMISSION (वित्त आयोग)
1. Fiscal Federalism refers to the division of responsibilities of i) taxation and ii) expenditure
between the different levels of the government. (राजकोषीय सं घवाद: कें द्र और राज्यों के बीच कराधान और खर्च की
जिम्मेदारियों का आवंटन/बटवारा/विभाजन)
2. While the 7th schedule assigns many responsibilities to the States but their taxation power is
relatively lower than Union’s. So, Finance Commission plays a key role in transferring union’s
revenue resources to the state.. (राज्य की कराधान शक्तियां कम है इसलिए वित्त आयोग कें द्र के करो से हिस्सा दिलाता है)
3. Article 280: President of India forms a Finance Commission (a quasi-judicial body) every 5th
Year or earlier, with 1 chairman and 4 members. Eligible for re-appointment. Recommendations
are not binding on the government but usually not rejected.
📔Further self-study & HINDI TERMS@ M.Laxmikanth’s Indian Polity ch.45. or Unacademy Notes.
23.2 🕵️♂️(🍋 🧔⚖️️👨🦲) 15 TH VS 16TH FC - MEMBERSHIP
Matter 15th FC 16th FC
Economist Dr.Arvind Panagariya, former Vice-
Chairman IAS N. K. Singh
Chairman, NITI Aayog
Full Time
Dr.Anoop Singh, Economist Mr. Ajay Narayan Jha, ex-member, 15th FC
Member
Full Time Mrs. Annie George Mathew from Indian Audit and
Ajay Narayan Jha (Ex-IAS)
Member Accounts Service (IA & AS)
Dr. Niranjan Rajadhyaksha (org: Artha Global).
Full Time Dr. Ashok Lahiri (Bandhan
Update 2024-Feb: He resigned from 16th FC job.
Member Bank)
Govt looking for his replacement.
Part Time Prof.Dr. Ramesh Chand Dr. Soumya Kanti Ghosh, Group Chief Economic
Member (Agri-Economist) Advisor, State Bank of India
Member
IAS Arvind Mehta IAS Ritvik Pandey
secretary
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🕵🏻
20.1.16 FC not setup ‘every five years’ in reality
• Finance Commission normally takes about two years to study the situation and make their
recommendations.
• Article 280(1): FC is to be constituted every fifth year or earlier.
• But in reality sometimes it is not done every five years: e.g.
FC Formed in Comment Report Covered
10th FC 1992 1995–00 (5 yrs)
11th FC 1998 gap of 6 years between 10FC-11FC. 2000–05 (5 yrs)
15th FC 2017 6 yrs via two reports.
16th FC 2023 gap of 6 years between 15FC-16FC. 2026–31 (5 yrs)
🕵🏻
20.1.17 15th vs 16th FC - Terms of Reference (TOR: विचारार्थ विषय)?
President of India has ordered them to study and recommend following:
15th FC 16th FC
- Union Taxes’ vertical devolution to the states, and its horizontal distribution
among the states. (except cess, surcharge and IGST).
- Union’s grant-in-aids to the states. (कें द्र द्वारा राज्यों को अनुदान)
Same as 15th FC
- How to augment State Govts’ Consolidated funds to help their Panchayats
and Municipalities
- Give suggestion for disaster management funds
Reward the States for controlling population, improving tax collection etc. 🤐 N/A. Silent
✅ Ans. Yes done. Observe the horizontal devolution formula parameters. on it.
propose performance based incentives/grants for States. 🤐 N/A. Silent
✅
Ans. Yes it is done. on it.
should we give less money to States, bcoz Union ke Kharche (expenses) bahut hai
for defence, internal security, infrastructure, railways, climate change, and Union
also has to run UTs without legislature?
🤐
Silent / Not
✅ Ans. Yes that’s why reduced from 42% (14th FC) to 41% (15 FC) saying union
mentioned.
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e.g. asking State governments to stop populist schemes like Free TV/Mixer
Grinder/Free electricity to voters. (लोकलुभावन योजनाएं )
✅ Ans. While 15th FC Chairman NK Singh as spoken against the Revdi-culture,
but no hardcore % or formula type recommendation given.
suggest ways for allocation of non-lapsable funds for defence and internal 🤐 Silent / Not
security. (रक्षा और आंतरिक सुरक्षा बिनव्यपगत निधि) mentioned.
Award for the UT of J&K. (This terms of reference required under Jammu and 🤐 Silent / Not
Kashmir Reorganisation Act, 2019. जम्मू कश्मीर पुनर्गठन अधिनियम) mentioned.
🔠 MCQ. For the horizontal tax devolution, the Fifteenth Finance Commission used how many of
the above as criteria other than population area and income distance? (Prelims-2023)
1. Demographic performance 2. Forest and ecology 3. Governance reforms
4. Stable government 5. Tax and fiscal efforts
Codes: (a) Only two (b) Only three (c) Only four (d) All five
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23.4 (🍋👺)🕵🏻B LACK MONEY → NOTABLE ORGANISATIONS
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OECD (1961: Organisation for Economic Co-operation and Development
HQ@Paris. Works for International cooperation in the matters of economy and
आर्थिक सहयोग तथा विकास taxation. Known for Base erosion and profit shifting (BEPS) Norms.
सं गठन)
India is not a member of OECD, yet. HQ@Paris.
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1.
2.
🕊️
20.1.19 Interim-Budget-2024 : Amnesty for Small Tax Payers / Case withdrawal
To give relief to small tax payers, Govt will withdraw small cases IF
Case Year if direct tax case is not more than _ _ _ Rupees
1962 to 2009–10 ₹25,000
2010–11 to 2014–15 ₹10,000
This will help about 1 cr tax payers.
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Year 2021-22 2022-23
No. of ITRs filed 5.83 crores 6.77 crores
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23.7 📤⏰(🌽⛽️️) R EVENUE EXPENDITURE → SUBSIDIES
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20.1.22 🗓📤 Budget → Capital Part → Effective Capital Expenditure
🙋🏼♀️What does above chart mean? Ans. Explained in the video lecture. 👩🏻🏫
20.1.23 🗓📤 Capital expenditure for a Company
Capital Expenditures of a company = the amount of money invested by the company in (income
generating) assets such as:
🏭Tangible Assets भौतिक सं पत्तियां 💿 Intangible Assets अमूर्त सं पत्तियां
Patents for vaccines, copyright for
Land, Buildings, Vehicles,
books/music/movies/softwares, Brand-logo, Trade secret
Equipment
formulas (e.g. KFC burger, Cocacola),
Raw material and Unsold inventory License fees (e.g Software, mining, telecom etc) (Ref:
(finished goods) Pillar#5- Infra)
Investments made in the
Clients’ database / mailing list
shares/bonds of other companies.
Accounts receivable (Ref#1C) Goodwill (Ref: Pillar#1C - eg Byjus buying Whitehall jr.)
Cash & deposits in bank account Website domain name
We can further sub-divide these assets into current assets, financial assets, fixed assets. More of that
in Pillar7: Microeconomics.
🔠 MCQ. With reference to the expenditure made by an organisation or a company, which of the
following statements is/are correct ? (कं पनी द्वारा किए गए ख़र्च के बारे में सही वाक्य ढूँढो) (Prelims-2022)
1. Acquiring new technology is capital expenditure. (नई प्रौद्योगिकी को ख़रीदना पूंजीगत ख़र्च है)
2. Debt financing is considered capital expenditure, while equity financing is considered revenue
expenditure. (ऋण-द्वारा वित्तपोषण को पूं जीगत ख़र्च माना जाता है जबकि इक्विटी/शेयर वित्तपोषण को राजस्व ख़र्च माना जाता है।)
Codes: (a) 1 only (b) 2 only. (c) Both 1 and 2. (d) Neither 1 nor 2
🔠 MCQ. How many of the above are considered intangible investments? (Prelims-2023)
1. Brand recognition 2. Inventory 3. Intellectual property 4. Mailing list of clients
Codes: (a) Only one (b) Only two (c) Only three (d) All four
20.1.24 💼🤲🏻
Types of Budget- Surplus, Deficit, Balanced
- If government’s income >> its expenditure it will have a surplus budget/ अधिशेष बजट
- If government’s expenditure == its income, it will be a balanced budget/ सं तुलित बजट
- If government’s expenditure >> its income, it’ll be a deficit budget/ घाटे का बजट
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20.1.25 🐘 Yudhishthir Disclaimer on Deficit Formulas
Budget Deficit refers to the excess of total expenditure (both revenue and capital) over total receipts
(both revenue and capital).
From the 1997-98 budget, Govt has stopped the practice of showing budget deficit.
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20.1.28 💼🤲🏻Fiscal Deficit - formula NCERT Textbook (two formulas)
- 1) FD = Total expenditure – (Revenue receipts +Non-debt creating capital receipts).
- 2) FD = difference between the govt’s total expenditure & its total receipts excluding borrowing
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20.1.29 💼🤲🏻 Gross Fiscal Deficit (GFD) vs NET fiscal Deficit
➔ Gross Fiscal Deficit = Net borrowing at home + Borrowing from RBI + Borrowing from
abroad (सकल राजकोषीय घाटा)
➔ Net Fiscal Deficit = Gross Fiscal Deficit (GFD) minus the net lending of the central
government. (शुद्ध राजकोषीय घाटा)
🚩👶🏻 FAQ: RBI is also ‘at home in India’ so why show it separately in formula? Ans. NCERT given it
like that. so u’ve to prepare. NCERT didn’t bother to explain “WHY” so I didn’t bother to PHD.
• PD = Fiscal Deficit minus interest to be paid on previous loans (राजकोषीय घाटे में से पुराने ऋण/कर्ज
पर जो ब्याज चुकाना है उसे हटा दीजिए.)
• 1993: Finance Minister Manmohan Singh’s budget speech mentioned it.
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• If the government continues to borrow year after year, it leads to accumulation of debt and
the government has to pay more and more interest. These interest payments themselves add
more burden to borrow next year. (पुरानी लोन पर जो ब्याज चुकाना है उस रकम को घाटे की गिनती में नहीं लेना
चाहिए)
• So, to get a clearer picture of how much is the government borrowing for new programs,
they look at another indicator: (ताकि नए वर्ष में विकास के काम के लिए इतना वास्तविक कर्ज लिया जा रहा है
उसका पता चले)
🚩👶🏻
- FAQ : 1) Formula for net primary deficit? Ans. Similar to above. i.e. = Net Fiscal Deficit
minus net interest liabilities = Net Primary Deficit.
🚩👶🏻
- FAQ : 2) difference between Primary Deficit vs Gross Primary Deficit. Ans. Read Yudhisthir
disclaimer on deficit formulas.
🚩👶🏻
- FAQ : 3) Shouldn't "X" thing have Plus sign or Minus sign? Ans. Accept & memorize.
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25.2 🔀💸A UTOMATIC STABILIZERS (स्वचालित-स्थिरीकारी)
Automatic stabilizers are mechanisms built into govt budget to address economic slowdown
automatically- by automatically increasing govt’s spending and/or decrease public’s tax liability.
[“स्वचालित-स्थिरीकारी’ - आर्थिक मं दी के दौरान अपने आप सरकारी ख़र्च को बढ़ाता है या जनता की कर-देयता को कम करता है]
Automatic stabilizer does not require any change in the existing tax law or voting in the
Parliament- because it starts working automatically during slowdown. [उन्हें क्रियान्वित करने के लिए
अलग से नया क़ानून/ सं सद की अनुमति लेने की ज़रूरत नहीं होती. वो अपने आप ही क्रियान्वित हो जाता है]
Examples of Automatic Stabilisers: Income tax, Corporation tax, unemployment allowance,
food subsidy and other Government schemes that are meant only for poor /lower middle class
people. [आयकर, निगम कर, गरीब के लिए लक्षित खाद्य सब्सिडी और दूसरी कल्याणकारी योजनाएं - “स्वचालित-स्थिरीकारी’ है]
Mrunal's Economy Win24 Series Pillar2: Budget, Taxation, GST, 16thFC, Deficit → Page: 148
Note: Countercyclical fiscal policy / fiscal stimulus = it requires the government to pass a new
budget / new law / permission of Parliament for some new initiatives. So, they are not automatic
stabilisers. They are discretionary stabilisers. [प्रति चक्रीय राजकोषीय नीति तथा राजकोषीय प्रोत्साहन पैके ज के लिए
सरकार ने अलग से विशेष रूप से नए बजट में ज़िक्र करना होगा कोई क़ानून पास करवाना होगा इसलिए वे विवेकाधीन स्थिरीकारी है।]
🔠❓MCQ. Which one of the following functions as an automatic stabilizer in the context of fiscal
and monetary policies of an economy? (UPSC-CAPF-2021)
(a) Personal income tax (b) Reverse repo rate of bank (c) Open market operation (d) Bond price.
🍋
20.1.33 Disposable income & marginal propensity to consume (MPC)
• Disposable income = Personal income -minus Personal income taxes.
• Disposable income means the money that is available for consumption (spending) and
saving after paying the direct taxes (e.g. Income tax).
Mrunal's Economy Win24 Series Pillar2: Budget, Taxation, GST, 16thFC, Deficit → Page: 149
• GDP = C+I+G+X-M (Will understand this formula in pillar4D)
• now suppose, I = 0, X = 0 and M = 0. Then GDP = Consumption + Govt expenditure
Matter Consumption (C) + Govt expenditure (G) C+G =GDP
BEFORE 200 100 300
100 ↓ (reduced due tax multiplier ki 200 ↑ (increased by govt 300
AFTER
negative effect) Expenditure) (unchanged)
in the above, example, GDP has increased by how much times? Ans 300/300 = 1X times only!
• Above problem will come in balance budget because,
• if government wants to increase expenditure (while keeping the budget balanced, without
borrowing) → Govt will have to increase the taxes → will reduce the consumption (due to
negative tax multiplier)
Mrunal's Economy Win24 Series Pillar2: Budget, Taxation, GST, 16thFC, Deficit → Page: 150
20.1.37 💼🤲🏻 Effects of Budget/Fiscal policy on Demand & Savings
Mrunal's Economy Win24 Series Pillar2: Budget, Taxation, GST, 16thFC, Deficit → Page: 151
25.4 📯🧔T YPES OF SCHEMES (योजनाओं के प्रकार)
For any Union Territory without Legislature: 100% funding by Union for any scheme in any
category. ✋We will look at the schemes’ features in the respective pillars.
To disburse scheme ₹ & monitor it effectively, FinMin →Dept of Expenditure Controller
General of Accounts (CGA) → Public Financial Management System (PFMS) webportal.
Mrunal's Economy Win24 Series Pillar2: Budget, Taxation, GST, 16thFC, Deficit → Page: 152
20.2.1 Win20: already covered Following in Pillar#2
• 📘📘 Economic Survey (आर्थिक सर्वेक्षण)
• 🍋🤷♀️Taxation → Direct Taxes updates after Prelims-2019
• 🍋🤷♀️: 🏦 Corporation Tax Cut in 2019-Sep
• 🍋🤷♀️: 🏦🌱 Corporation Tax on Startups
• 🍋🤷♀️: 🗃 Dividend Distribution Tax (DDT: लाभांश वितरण कर)
• 🍋🤷♀️: 🗃🛒 Buyback Tax (शेयर की वापसी-खरीद पर कर)
• 🍋🤷♀️: 🏠🎨💍Capital Gains Tax (CGT: पूंजीगत लाभ कर)
• 🍋🤷♀️: 👪 Income Tax on Individuals (व्यक्तिक आयकर)
• (Optional) New slabs for Income Tax in Budget-2020
• 🍋🕵🏻🌱Direct Tax Code (DTC) Task Force (2017-2019)
• 🍋👨🏫✂️Tax Deducted at Source (TDS): (स्रोत पर कर कटौती)
• 🍋🏎✂️Tax Collected at Source (TCS): (स्त्रोत पर सं गृहीत कर)
• 🍋🤧🔨Taxation Ordinance 2020 (कराधान अध्यादेश)
• 🍋🛒 Taxation → Indirect Taxes updates after Prelims-2019
• 🍋🛒: 🧔👩🦲🕉 GST Council: Composition? जीएसटी परिषद
• 🍋🛒 GST on J&K
• 🍋🛒:⚖️🕵️♂️Goods and Services Tax Appellate Tribunal (GSTAT)
• 📈 GST Revenue Collection Figures: जीएसटी राजस्व प्राप्ति के आंकड़े
• 🚛🧾 E-Invoice System
• 🧔 → 🤑(👩🦲👳♀️) Compensation to States → Controversy
• 🍋 [🧔⚖️(👨🦲👳🏻♀️👳🏻)] 15th Finance Commission’s First report
• 🍋 [👨🦲⚖️👳🏻♀️⚖️👳🏻]15th FC: Horizontal devolution: States’ share in ⬇ order
• 🧕Finance Commissions & the fate of UTs of J&K & Ladakh
• 🧔 → 💸🤲🏼 (👨🦲👳🏻♀️) Grants from Union to States (सं घ से राज्यों को अनुदान)
• 💸🤲🏼🏕15th FC: Local Bodies Grants (स्थानीय निकाय अनुदान, 90k cr)
• 💸🤲🏼🤦🏼♂️Post-Devolution Revenue Deficit Grants (74kcr)
• 💸🤲🏼🌬🌪15th FC: Disaster Management Grants (आपदा प्रबं धन अनुदान: 41kcr)
• 💸🤲🏼🍽15th FC: Sector Specific Grants (क्षेत्र-विशिष्ट अनुदान, ~7700cr)
• 💸🤲🏼🙋🏿15th FC: Special Grants: (विशेष अनुदान , ~6700kcr)
• 💸🤲🏼💪🏿 15th FC: Performance-based incentives (निष्पादन-आधारित प्रोत्साहन)
• 15th FC: Other recommendations to Govt
• 15th FC Report for 2020-21: conclusion
• 🍋👺)💼 Tax Evasion → Full-Budget-2019 Announcements
(
• 🍋🛒👺🙌 Sabka Vishwas L.D.S Scheme 2019
Mrunal's Economy Win24 Series Pillar2: Budget, Taxation, GST, 16thFC, Deficit → Page: 153
• 🍋👺🙌 Vivad se Vishwas Scheme for Direct Taxes (Budget-2020)
• 🍋👋🤵 Tax Avoidance through Non-Resident Status
• 💼 (Full) Budget-2019: Ease of paying taxes & reducing tax-terrorism
• 🍋🕵🏻:🧾 Document Identification Number (DIN: दस्तावेज़ पहचान सं ख्याक)
• 📯📜 Taxpayers’ Charter in 💼 Budget-2020 (करदाताओ का अधिकारपत्र)
• 📘📘 ES19: “Use Behavioural Economics to improve Tax Compliance”
• 📤⏰(🌽⛽️️) Budget → Revenue Expenditure → Subsidies
• Subsidies in budget 2020
• 📘📘 ES19: Use ‘Behavioural economics (व्यवहार अर्थशास्त्र)’ to ↓ subsidy bill
• 🏃🏻♀️✍🏻🕵️♂️National Recruitment Agency (NRA: राष्ट्रीय भर्ती एजेंसी)
• 💼🤲 Budget → Capital Reciepts → Borrowing
• 💼🤲🎅Full Budget-2019: Foreign Borrowing in Foreign Currency
• 🧔🗃 ♐️🤵 Budget → Capital Receipts → Disinvestment: विनिवेश
• 📔📔ES20 Vol1 Ch9 Privatization and Wealth Creation
• 💼🤲🏻 Budget → Fiscal Deficit (राजकोषीय घाटा)
• 💼🤲🏻👜🤲🏻 Extra-Budgetary Resources (बजटेतर सं साधन)
• 💼💉 🧔 Modi’s Fiscal Stimulus (2019-)
• 🙌 FRBM: Trigger Mechanism (to) Escape (Deficit control) Clause
• 💼🤲🏻🔨 🗂 FRBM Act: 3 Documents (दस्तावेज़)
• 💼🤲🏻⏬ Fiscal Consolidation (राजकोषीय एकत्रीकरण)
• 👻ATMANIRBHAR Bharat
• 🧔🗃 → 👨💼 Strategic Disinvestment of CPSE in 👻ATMANI
• 🧔🕉👨🦲Fiscal Federalism: Helping the States in 👻ATMANI
• 🧔🕉👨🦲Helping States → Tax devolution and grants
• 🧔🕉👨🦲Helping States → States’ Fiscal deficit limits ⏫
• 💼🤲🏻 Fiscal Deficit: new developments
• 💼🤲🏻 Fiscal Deficit ⏫= India sovereign rating ⭐️⭐️⏬
• 🤧🤲Donation Funds: PMNRF vs PM CARES (दान)
• 🔪🗃♾ (Suggestion) Consol Bonds to mobilize funds for Corona revival
• 👿ATMANIRBHAR: Criticism (आलोचना)
• ✍️👴🧔 Conclusion: 👿ATMANIRBHAR Self Reliance: Nehru vs Modi
Mrunal's Economy Win24 Series Pillar2: Budget, Taxation, GST, 16thFC, Deficit → Page: 154
• 🍋 Net Tax Revenue of the Govt (शुद्ध कर राजस्व)
• 🍋 Revenue Shortfall (राजस्व में कमी)
• 🍋🤷♀️: 🏦 Direct Tax → Corporation Tax (निगम कर)
• 🍋🤷♀️: 🏦🌱: 🤓 Corporation Tax: Exemption from audit for small companies
• 🍋🤷♀️: 👪 Direct Tax → Income Tax on Individuals (व्यक्तिक आयकर)
• 🍋🕵🏻🌱Income Tax Slabs in Budget-2021, Compliance relief to Senior Citizen👴
• 🍋🛒💊Indirect Tax → Customs Duty (सीमा शुल्क) in Budget-2021
• 🍋🛒🏋🏻♀️Excise & Customs Cess and Surcharges in recent years
• 🍋🛒Indirect Tax → ⛽️️Petrol & Diesel price⏫ because
• 🍋🛒Indirect Tax → Goods & Services Tax (GST)
• 🍋🛒Indirect Tax → 💊GST Rate ⏬ on Corona Related Items (2021-Jun)
• 🍋🛒Indirect Tax → 📈 GST Revenue Collection Figures: जीएसटी राजस्व प्राप्ति के आंकड़े
• 🍋🛒⏰🗓 GST Mechanism: Quarterly Returns and Monthly Payment of Tax (QRMP)
• 🍋🛒: 💸🤏(😈) 1% GST deposit in cash for controlling fake ITC claims
• 🧔 → 🤑(👩🦲👳♀️) Compensation to States: HOW?
• 🤧😷:🧔 → 🤑(👩🦲👳♀️) GST Compensation & Back2Back Loans
• ✍️Conclusion : GST compensation (निष्कर्ष)
• 🍋 (🧔⚖️👨🦲👳🏻♀️👳🏻) Taxation → Finance Commission
• 🍋 [👨🦲⚖️👳🏻♀️⚖️👳🏻] Tax Devolution among States, Horizontal Devolution Formula
• 🍋 [👨🦲⚖️👳🏻♀️⚖️👳🏻]15th FC: Horizontal devolution: GRANTS to States
• 💸💣🧨15th FC recommends Defence and Internal Security Fund for Union
• 🤏 15th FC: Other recommendations to Govt (सरकार के लिए अन्य सिफारिशें)
• 🍋👺🕵🏻 Taxation → Black Money & Allied Issues
• 🍋👺🥛 Tax: GDP: 15th Finance Commission on how to improve it?
• 🍋👋🤵 Global Minimum Tax: G7 framework (वैश्विक न्यूनतम कर)
• 🍋🍋🍋🕵🏻: 🙇🏻 Reforms to reduce Tax Terrorism / Harassment
• 🍋👺🙌 Dispute Resolution Committee (DRC) in Budget-2021
• 🍋🍋🍋🕵🏻: 🙇🏻: ️Cash Transaction Limit Relaxed for Corona
• 🍋🍋🍋🕵🏻:🧾 Faceless interaction between Tax payers and Tax official
• 🍋🍋🍋🕵🏻:🧾⏰ Time limit on opening of past cases
• 📯🍋📜 Taxpayers’ Charter in 💼 Budget-2020 (करदाताओ का अधिकारपत्र)
• 📯🍋📜 (Indian) Tax Payers' Charter released in 2020-Aug
• ✍️📯🍋📜 Conclusion: Tax Payers' Charter
• 🍋🙇🏻: 🧜♂️🦸♂️Tax Ombudsman in Economic Survey 2021
• 📤⏰ Budget → Revenue Expenditure (राजस्व खर्च/ व्यय)
Mrunal's Economy Win24 Series Pillar2: Budget, Taxation, GST, 16thFC, Deficit → Page: 155
• 📤⏰(🌽⛽️️) Revenue Expenditure → Subsidies
• 👻📤⏰👨💼🥳 Revenue xpdr → Salaries→ Atmanirbharat 2.0 (Oct 2020)
• 👻⏰👨💼🥳 Atma-Nirbhar 2.0: Festival Advance Scheme (त्योहारों में एडवांस रकम)
• 👻⏰👨💼🥳 Atma-Nirbhar 2.0: LTC Cash Voucher Scheme
• (📥<📤)⏰⚠️Revenue Deficit (राजस्व घाटा: 5.1% of GDP)
• 📥🗓 Budget → Capital → Receipts
• 💼🤲🎅Budget-2021: Foreign Borrowing
• 👻🧔🗃 → 👨💼 Disinvestment- New Policy in Budget-2021
• 👻🧔🗃 → 👨💼: Disinvestment Target Amount vs Achievement
• 👻🧔🔪👨🦲🏗Atmanirbharar 2.0 (2020-Oct) → State CAPEX Loans
• 💼🤲🏻Fiscal Deficit: राजकोषीय घाटा
• 💼🤲🏻Debt Composition: Amount-wise and type wise
• 💼🤲🏻👜🤲🏻 Extra-Budgetary Resources (बजटेतर सं साधन)
• 💼🤲🏻 Financing the deficit: its negative consequences on economy:
• 💼🤲🏻 ⏫:🛒⏬Ricardian Equivalence invalid for India says ES21
• 💼🤲🏻 Financing the deficit: “Crowding Out” of private borrowers
• 💼🤲🏻 Fiscal Deficit ⏫= sovereign rating ⭐️⭐️⏬ =don’t worry says ES21
• ⭐⭐️ ️Rating downgrade: conclusion or way forward
• 💼💉💸💸Countercyclical policy (प्रतिचक्रीय राजकोषीय नीति)
• 💼💉💸💸Countercyclical: IRGD & Debt Sustainability
• 💼📤🤺 Fiscal Consolidation / Prudence: राजकोषीय एकत्रीकरण / विवेक
• 👻💼💉 🧔 Modi’s Atma-Nirbhar Bharat Economic Stimulus Package (2020)
• 👻🧔🕉👨🦲Fiscal Federalism: Helping the States in ATMANIRBHAR
• 🧔🕉👨🦲Helping States → States’ Fiscal deficit limits ⏫
• 🧔🕉👨🦲Fiscal Deficit target for States by 15th FC & Budget-2021
• 💼🤲🏻🔨🕵🏻 Fiscal Responsibility: NK Singh’s 15th Finance Commission
• 💼🤲🏻🔨🕵🏻 :🎯 Budget marksmanship is Poor, says 15th FC
• 💼 Budgeting: बजट बनाने की क्रिया
• 📯🧔Ministry-wise Highest Allocation in Budget-2021
• 💼🖋Treasury Single Account (TSA) System
20.2.3 Win22: already covered Following in Pillar#2
• 💼 Fiscal Policy (राजकोषीय नीति): Meaning & significance
• 🔐Three Funds related to Budget (Self-Study= Laxmikanth chapter on Parliament)
• 👜🥻Budget’s THEME (बजट की विषयवस्तु)
Mrunal's Economy Win24 Series Pillar2: Budget, Taxation, GST, 16thFC, Deficit → Page: 156
• 📘📘 Economic Survey (आर्थिक सर्वेक्षण)
• 📙📙ES22 - WHY Single Volume instead of two volumes?
• 📙📙ES22 – WHY prepared by Principal Economic Adviser?
• 📙📙🕵🏻Chief Economic Advisor (CEA: मुख्य आर्थिक सलाहकार)
• 🕵🏻Finance ministry and its departments: (वित्त मंत्रालय और उसके विभाग)
• 🕵🏻🏭FinMin#6: DPE → National Land Monetization Corporation (NLMC-2022)
• 🍋🤷♀️: 🏦 Direct Tax → Not much updates
• 🍋🤷♀️: 🏦 Direct Tax → Corporation Tax (निगम कर)
• 🍋🤷♀️: 🏦🐷 Minimum Alternate Tax (MAT: न्यूनतम वैकल्पिक कर)
• 🍋🤷♀️: 🏦🐷 Cooperative Societies: Alternative Minimum Tax (AMT)
• 🍋🤷♀️: 👪 Income Tax on Individuals (व्यक्तिक आयकर)
• 🍋🤷♀️: 🏠🎨💍Capital Gains Tax (CGT: पूंजीगत लाभ कर)
• 🍋👨🏫✂️Tax Deducted at Source (TDS): (स्रोत पर कर कटौती)
• Other Taxes- Google tax, Buyback Tax, etc.
• 💼BUDGET→ ⏳REVENUE PART→ 📥RECEIPTS→ 🍋TAX →🛒 Indirect Taxes
• 🍋🛒⛽️Indirect Tax → additional differential excise duty on Unblended Petrol
• 🍋🛒⛽️: GST on Petrol Diesel Electricity: NITI Aayog 6 year roadmap
• ⛽️Petrol-Diesel: Dynamic Fuel Pricing System & oil bond repayment
• 🍋🛒🏋🏻♀️↗️🏋🏻♀️Cascading Effect of Indirect Taxes & GST reform
• 🍋🛒🤑 GST Input Tax Credit (ITC: इनपुट कर प्रत्यय)
• 🍋🛒↩️Inverted Duty Structure Problem in GST on Textile
• 💿GST: Exempt vs ZERO RATED
• 💉Vaccine GST can’t be 0% ZERO RATED or “EXEMPTED” because
• 🍋🛒🧔🌬 Centre’s Indirect Taxes subsumed in CGST
• 🍋🛒(👩🦲🕉)🌬 States’ Indirect Taxes subsumed in SGST
• 📈 GST Revenue Collection Figures: जीएसटी राजस्व प्राप्ति के आंकड़े
• 🕵♂️(🍋 🧔⚖️👨🦲) Fifteenth FC Composition (setup in 2017-Nov)
• 🧔 → 💸🤲🏼 (👨🦲👳🏻♀️) Grants from Union to States : 15th FC
• 🍋👺🕵🏻 Taxation → Black Money & Allied Issues
• 🍋👋🤵 Double Taxation Avoidance Agreement (DTAA) & Round Tripping
• (🍋👋🤵:⌛️) 🕵🏻 Retrospective Tax: Vodafone
• (🍋👋🤵:⌛️) 🕵🏻 Retrospective Tax: Cairn Energy
Mrunal's Economy Win24 Series Pillar2: Budget, Taxation, GST, 16thFC, Deficit → Page: 157
• 🍋👋🌐:🤵 Global Minimum Tax: G7 Framework
• 🍋👋🌐:🤵 G7-OECD “Two” Pillar Solution for Global Minimum Tax
• 🍋👋🌐:🤵 Conclusion- Global Minimum Tax: निष्कर्ष
• 🍋🍋🍋🕵🏻: 🙇🏻 Reforms to reduce Tax Terrorism / Harassment
• 🍋🍋🍋🕵🏻:🧾Updated Return Form to correct errors- in 👜🥻Budget-2022:
• 🍋🥛 Tax: GDP – DATA GRAPH
• 🍋 Net Tax Revenue of the Govt (शुद्ध कर राजस्व)
• 🍋 Revenue Shortfall (राजस्व में कमी)
• 📥🚆📮 Budget → Revenue Part → Receipts → Non-Tax Receipts
• 📤⏰ Budget → Revenue Expenditure (राजस्व खर्च/ व्यय)
• 📤⏰(🌽⛽️) Revenue Expenditure → Subsidies
• (📥<📤)⏰⚠ Revenue Deficit & ERD (राजस्व घाटा)
• 📥🗓 Budget → Capital → Receipts (पूँजीगत प्राप्तियाँ)
• 💼🤲🎅Budget-2022: Foreign Borrowing (विदेशी क़र्ज़)
• 🧔🗃 ♐️🤵 disinvestment
• 🧔🗃 ♐️🤵 Strategic disinvestment of Air India
• 🧔🗃 ♐️🤵 Disinvestment targets in budgets:
• 🗓📤Budget → Capital Part → Expenditure (पूंजीगत व्यय)
• 💼🤲🏻Types of deficits: घाटे के प्रकार
• 💼🤲🏻🔨 Fiscal Responsibility & Budget Management Act, 2003
• 💼🤲🏻Debt Composition: Amount-wise for Union
• 💼💉💸💸Countercyclical policy (प्रतिचक्रीय राजकोषीय नीति)
• 🧔🕉👨🦲Fiscal Deficit target for States by 15th FC & Budget-2021
• 📯🧔Types of schemes (योजनाओं के प्रकार)
• 👜🥻Budget-2022: CSS rationalisation
• 📯🧔Ministry-wise Highest Allocation
20.2.4 Win23 covered following topics in Pillar2
• 💼🍋 Pillar #2: Budget: Relevance in UPSC?
• 💼 Budget Presentation (बजट प्रस्तुति)
• 👜🥻 Budget’s THEME (बजट की विषयवस्तु)
• 📘📘 Economic Survey (आर्थिक सर्वेक्षण)
• Budget → Revenue Part →
• 🍋🤷♀️ 🏦
: Budget → Revenue Part → Direct Tax
Mrunal's Economy Win24 Series Pillar2: Budget, Taxation, GST, 16thFC, Deficit → Page: 158
• 🍋🤷♀️: 🏦 Direct Tax → Corporation Tax (निगम कर)
• 🍋👋🤵 Angel Tax on Startup Investments (2012)
• 🍋🤷♀️: 👪 Income Tax on Individuals (व्यक्तिक आयकर)
• Revenue Forgone / Tax Expenditure (परित्यक्त राजस्व/कर खर्च)
• Income Tax: no tax upto ₹7 lakh after 👛Budget-2023 = Boosting Economy
• Income Tax: switching between NTR vs OTR after 👛Budget-2023
• Surcharge on Income Tax
• Effective Tax on super-rich person earning >5 cr
• 👱🏻👴🏻 Income Tax Slabs -> old tax regime -> senior citizens
• 💼 ⏳ 📥
BUDGET→ REVENUE PART→ RECEIPTS→ TAX → Indirect Taxes 🍋 🛒
• 🛒 Indirect Taxes → Customs Duty in Budget-2023👛
• 🛒 Indirect Taxes → ⛽️🛳 Windfall Tax on export of petrol/diesel/ATF fuel (2022)
• 🛒 Indirect Taxes → NCCD Tax on tobacco products
• 🍋🛒🤑 Indirect → Goods and Services Tax (GST)
• 🍋🛒🍋 GST Rates on Goods : 0% removed
• 🍋🛒🕵️♂️ GST Related Organizations (सं स्थाए)
• ⚖️🕵️♂️🍕 National Anti-Profiteering Authority (NAA/NAPA)
• 🕵️♂️ 🕵️♂️ 🕵️♂️
GST tribunal (GSTAT) (2023)
• 🕵️♂️
GST Fitment Committee (जीएसटी फिटमेंट समिति)
• ️GST Ease of Doing Biz (EoD): decriminalisation of certain offences
• ️GST-EoD: criminal prosecution threshold
• ️GST-EoD: obstructing officers
• 🍋 🧔⚖️👨🦲👳🏻♀️👳🏻
( ) Taxation → Finance Commission
• 🍋👺🕵🏻 Taxation → Black Money & Allied Issues
• 🍋 Tax : GDP
• 🍋 Tax Collection Numbers
• Revenue Shortfall
• ️Tax buoyancy (कर उत्प्लावकता):
• Black Money – Minor development
• Financial Action Task Force (FATF-1989: HQ@Paris
• PMLA Reporting Norms to apply on Crypto-exchanges (2023)
• TDS on influencers / influencer tax
• 💸 Black Money → Demonetisation SC verdict
• → Budget → Revenue Expenditure (राजस्व खर्च/ व्यय)
• 📤⏰ 🌽⛽️( ) Revenue Expenditure → Subsidies
• 📥🗓 Budget → Capital → Receipts
• 💼🤲🎅 Budget-2023: Foreign Borrowing
• 🧔🗃 ♐️ 🤵 Disinvestment & Privatization in the Modi Raj
• 👻🧔🔪👨🦲🏗 State CAPEX Loans
• 🗓📤 Budget → Capital Part → Effective Capital Expenditure
• 💼🤲🏻 Types of deficits: घाटे के प्रकार
• Fiscal glide
• 💼🤲🏻 Debt Composition: Type-wise
• 🧔🕉👨🦲 Fiscal Deficit target for States
• 💼🤲🏻👜🤲🏻 Extra-Budgetary Resources (बजटेतर सं साधन)
Mrunal's Economy Win24 Series Pillar2: Budget, Taxation, GST, 16thFC, Deficit → Page: 159
• 💼💉💸💸Countercyclical: IRGD & Debt Sustainability
• ️Frontloading of Stimulus and Overheating in Economy
• 📯🧔Types of schemes (योजनाओं के प्रकार)
• 📯🧔Ministry-wise Highest Allocation (amt in ₹ lakh crore)
• Gender Budget
• Govt Schemes: Result Based Financing instead of input based financing
Mrunal's Economy Win24 Series Pillar2: Budget, Taxation, GST, 16thFC, Deficit → Page: 160
Mrunal's Win24: PILLAR#3 : Balance of Payment , Currency Exchange, Intl. Org
Table of Contents
30 Pillar#3A: Balance of Payment ( ⇥⇤⌅⇧⌃ ⌥⌅⇥ ⌃)................................................................... .164
30.1 Academic Disclaimer........................................................................................................ .164
30.2 Bene/ts of International Trade.................................................................................... .164
30.2.1 Types of Economies..................................................................................................... .164
30.2.2 Circular Flow of Income & Import Export............................................................... .165
30.2.3 Entry into international business - various modes/types.............................................. .165
30.2.4 Documents related to Import/export.............................................................................. .166
30.2.5 Docx related to Loans - Bill of Exchange........................................................................ .167
30.2.6 Docx related to Loans - others......................................................................................... .167
31.1.1 Bank Docx → E-BRC/ Bank Realisation Certi.cate (BRC) for exporters ..............168
31.1.2 Bank Docx → Foreign Inward Remittance Certi.cate (FIRC) for recipients .............168
30.3 BoP- meaning / de/nition................................................................................................. .168
30.4 Export Problem → Canals in Negative News.............................................................. .169
30.4.1 Export Problem → Red Sea Attacks by Houthi Rebels (2023-Dec)........................169
30.4.2 Export Problem → Panama Canal Drying (2023).................................................... .170
30.4.3 FDI: Inward vs Outward Direct Investment (ODI)..........................................170
30.4.4 Foreign Direct Investment (FDI: ⌦↵क्ष ✏⇣⌘✓ ◆⌃ ⇣⌘)..................................... .171
30.4.5 → Foreign Investment Limits in some sectors................................................ .171
30.4.6 FDI in Space Sector (2024-Feb reforms).............................................................................. .172
30.4.7 Commerce Ministry: Export Inspection Council (EIC)............................................... .172
30.5 RBI<s Forex Reserve: ✏⇣⌘✓ ⇥द्र⇧ ⌫⇠ .⇡.......................................................................... .172
30.5.1 Forex Reserve: goes up or down: when / how:............................................... .173
30.5.2 Signi.cance of Foreign Exchange Reserves (⇢त्व)................................................... .173
31 Currency Exchange Rate: ⇥द्र⇧ ◆⌃⌧ ✏⌫................................................................................. .174
31.1 Currency Exchange →Factors a=ecting........................................................................ .175
31.2 Bad Money drives out good money / Tughluq / Gresham................................................175
31.2.1 Bad Money vs good money - Modern examples- Zimbabwe Gold Coin.....................176
31.2.2 → Fixed / Pegged System Challenges: Study of SriLanka (2022)...................... .177
31.2.3 Afghan Currency is the Best Performing Currency in the world: (2023)....................177
31.3 SoA vs Hard Currency....................................................................................................... .178
31.3.1 So> currency - factors a?ecting....................................................................................... .178
31.3.2 So> Dollars vs Hard Dollars........................................................................................ .178
31.4 Liberalisation of currency exchange (⇥द्र⇧ ◆⌃⌧ ें ✏⇧⌫✓ ⌫ )...................................... .179
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 161
31.4.1 Runaway in@ation and Runaway depreciation.............................................................. .180
31.5 LRS: TCS on Foreign: trip / shopping / investment (2023-Oct)...........................180
31.5.1 TCS Rates from 1/October/2023..................................................................................... .181
31.5.2 TCS on LRS: Objectives.................................................................................................... .181
31.1.1 (Prepaid) Forex Card:...................................................................................................... .181
31.1.2 ZERO Forex Cards........................................................................................................ .182
31.6 RBI's Currency Swaps (⇥द्र⇧ !"#/$✏ ⇧%✏ ✓ ⌥&'⌅⇧)......................................................182
31.1.1 RBIBs Currency Swap Agreement with Japan ( ⇥द्र⇧ !"#/$✏ ⇧%✏ ✓ ⌥&'⌅⇧)............182
31.1.2 RBI Currency Swap with Indian Bankers....................................................................... .182
31.6.1 Overseas ETF ban by SEBI (2024)........................................................................................ .184
31.7 Dollarisation - meaning and examples........................................................................ .184
31.7.1 Dollarisation- Pros....................................................................................................... .184
31.7.2 Dollarisation- Cons...................................................................................................... .185
31.7.3 Dollarisation- suitable for what type of nations:...................................................... .185
31.7.4 Strong dollars squeezes global credit..................................................................... .185
32 3C: International Organisation..................................................................................................... .186
32.1.1 BRICS Bank - Royal entry of new members........................................................................ .186
32.1.2 IMF LOAN WINDOWS: RFI, SBA EFF........................................................... .187
32.2 Trade Ceories Bullionism and mercantilism.................................................................. .187
32.2.1 Bullionism.......................................................................................................................... . 187
32.2.2 mercantilism Ieory: (⇧#⇧⌫✓ )⌥*⇧⌅............................................................................... .187
32.3 WTO ministerial conferences (MC)- notable list............................................................ .187
32.4 → WTO-2024 Summit Fish Subsidies Agreement (+ ⌥,-.✓ #⌫ ⌥&'⌅⇧)............... .188
32.4.1 Signing vs rati.cation(⇢/⇧क्ष⌫ %⌃⇧ $⌃⇥⌥0⇡⌃)........................................................ .188
32.4.2 Rati.cation : Fisheries Agreement.............................................................................. .188
32.4.3 → WTO-2024 investment facilitation agreement (IFD) REJECTED..........189
32.4.4 Food Subsidy: Iailand opposed India..................................................................... .189
32.4.5 Women Exporters in the Digital Economy (WEIDE) Fund by WTO (2024).......189
32.5 Free Trade Agreements.......................................................................................................... .189
32.5.1 India-EFTA Trade and Economic Partnership Agreement (TEPA) 2024-Mar.....189
32.5.2 U.S.-E.U. Trade and Technology Council (TTC) (2021)............................................ .190
32.5.3 Atlantic Declaration - USA-UK (2023-June)................................................................. .190
32.6 Groupings: BRICS - Royal Entry of new members................................................. .191
32.7 G20 Summit at India pe PHD.................................................................................. .191
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 162
32.7.1 G20: 3 tracks............................................................................................................. . 191
32.7.2 G20 Summit- 2023: 18th Summit @New Delhi, India: theme and logo......................192
32.7.3 G20 Summit- India's priorities (SIX:6)........................................................................... .192
32.7.4 G20 Summit-2023: Outcomes / New Delhi declaration (2023).................................. .192
32.7.5 G20 2023 Outcome India-Middle East-Europe corridor (IMEC)......................192
32.7.6 G20 2023 Outcome Global Biofuel Alliance (GBA)............................................ .192
32.7.7 G20- Truckload of PYQs - 1⇠⌥ 2 34 5⌅⇢⇧ ⌃⇢6.......................................................... .193
32.8 Tech Related Alliance................................................................................................... .193
32.8.1 Bletchley Declaration o AI Safety (UK-2023)........................................................... .193
32.8.2 D10: 5G club proposed by UK (2020)................................................................... .193
32.9 Minerals related groupings.................................................................................. .194
32.9.1 RISE by World Bank and Japan......................................................................... .194
32.9.2 Minerals Security Partnership (MSP: $ ⌅ ⇢त्व#7 ⇡8◆⌃⇠9 ⇣ : ;
⇧⇤✓✏⇧⌫✓/⌥⇢⌧3⇤)................................................................................................................................. . 194
32.10 Infrastructure related notable groups/initiatives...................................................194
32.11 Misc groupings / organizations : Misc....................................................................... .195
32.12 Russia related org/agreements........................................................................................ .195
32.12.1 Black Sea Grain Initiative (2022)......................................................................... .195
32.12.2 CTBT Nuke Treaty: Putin Exit (2023)..................................................................... .195
32.12.3 Self-study............................................................................................................................... . 195
32.12.4 What is already covered in Past: 3AB................................................................................. .195
32.12.5 Win20: already covered Following in 3AB12.................................................................... .196
32.12.6 Win21: already covered Following in Pillar3.................................................................... .198
32.12.7 Win22: already covered Following in Pillar3.................................................................... .198
32.12.8 Win23: already covered Following in Pillar3.................................................................... .199
32.12.9 Mock Tests ka Maha-Parv............................................................................................. .201
unacademy.com/goal/upsc-optional/KSCGY/subscribe:plan_type=plus&referral_code=mrunal.org
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 163
30 PILLAR#3A: BALANCE OF PAYMENT (STUVWX YZVT[X)
Year 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
MCQs 4 4 7 7 2 4 3
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 164
30.2.2 Circular Flow of Income & Import Export
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 165
countries e.g. Canada/USA arrested Huawei top
o\cial then China started taking action against
American companies in China (2019–21).
• FAQ1: what is the di?erence between contract manufacturing and licensing and joint
venture: Ans. Academic disclaimer on top of HDT3A. `abW-cda-eUf-gda.
• FAQ2: you mentioned the challenges, but what are the bene.ts: Ans. Apply common sense
around how such partnerships or deals cud help in the capital/investment, risk-taking, innovation &
Idea exchange etc.
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 166
30.2.5 Docx related to Loans - Bill of Exchange
FAQ: How are above two terms (export credit guarantee versus letter of credit) similar to
di?erent: CanBt we say X is a sub-topic of Y: Ans. If you are intelligent enough, then you will .nd out
that one of the product is primarily targeting importer and other is meant for exporter. But anyways
thatBs Not imp4exam. `abW-cda-eUf-gda.
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 167
31.1.1 Bank Docx → E-BRC/ Bank Realisation Certi/cate (BRC) for exporters
• BRC is documents that shows rate at which foreign currency is converted into the Indian
rupee.
• BRC is mandatory for exporters for applying for tax bene.t / duty reimbursement for various
schemes which we learnt under Foreign Trade Policy.
• If the BRCs are issued electronically → faster tax bene.ts to exporters.
• So, RBI & Commerce ministry are working with the help of bankers towards Electronic Bank
Realisation Certi.cate (E-BRC)
31.1.2 Bank Docx → Foreign Inward Remittance Certi/cate (FIRC) for recipients
• FIRC is a document that provides proof that an individual / company, who has received
payment in foreign currency from outside the country.
• FIRC are issued by authorised dealers (AD = Bank/NBFC), who provide currency exchange
service to their clients. (jkXflcXfmWnZo pa nVXq rstfuq kTvW cwxsyVV pxpf tq jz{YW |kW} c~ )
• FIRC helps RBI, Tax o\cials, ED etc to combat money laundering, and other illegal
activities.
• 2016 onwards these certi.cates are issued digitally, called electronic FIRC (e-FIRC).
• FAQ: similarity and di=erence between BRC vs FIRC = Notimp.
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 168
- BoP is a systematic record of all economic transactions made between the residents and non-
residents of a country for a speci.c time period, usually a year. ÄpYq tfu pf rXsWÅYÇaZÉx Uzx-rXsWÅYÇaZpf
gqÑ ÄpÖ UÖ YSq eÜ`p [fXtfX pW Öp wxpáàâjz
- Central Banks of each country prepare BoP records as per the format given in IMFBs BPM-6
manual, all the .gures are expressed in Dollar$.
- Since any countryBs debit (outgoing money) is a credit (incoming money) for another country →
WorldBs NET Balance of Payment is ZERO.
- BoP is further sub classi.ed into two parts → Current Account (ÑW[ãåWVW) and Capital Account
(cãZçq åWVW), based on the nature of transactions.
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 169
30.4.2 Export Problem → Panama Canal Drying (2023)
• 1914: Panama Canal connects the Paci.c and Atlantic Oceans.
• 2023: Shipping via the Panama Canal has dropped by over 50% due to drought conditions/
shortage of water.
• Consequently, ships may have to travel via South America.
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 170
30.4.4 Foreign Direct Investment (FDI: PQR STUVWX SYTVW)
FDI is the (more than 10% equity / share) investment made by a foreign entity into an Indian
company, with the objective to get involved in the management / production of that Indian
company. SWxVqÇ pZcXq pf YZÑW[X/ éèWtX kêuWëk[ jaXfpf éífì Yf10% ÇW éYYfîWtW ufÇx åxqtXW
(e.g. 2018: Walmart-USA bought 77% stakes in Flipkart @$16 billion.)
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 171
Sector → Foreign Investment limits Automatic With Govt
pTï ÄpñaZkêóÑWò[V kWUâYf. pTï ÄpñaZkêpêv YxpWx pô lXTkrV [fXq çöxq uptoZ approvalZ
Note: this limit is not applicable on LIC.
1) Defense (2020-Sept: FDI in Defense limit from 49% to 74%) Upto 74% ABOVE 74%
2) Brown/eld projects in Pharma, Biotech, Healthcare
Space Sector / Satellite operation refer to next section
For future updates, refer to https://www.investindia.gov.in/foreign-direct-investment
30.4.6 FDI in Space Sector (2024-Feb reforms)
Previously, Space/Satellite FDI permitted ONLY a>er Govt approval. But now liberalized:
Space Sector → Foreign Investment limits Automatic With Govt
uptoZ approvalZ
Space-ports, launch vehicles upto 49% beyond 49%
Satellites-Manufacturing & Operation, Satellite Data Products upto 74% beyond 74%
and Ground Segment & User Segment.
Manufacturing components/systems for satellites, ground upto 100% no need
segment and user segment.
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 172
Largest forex: 1) China ($3 Trillion) 2) Japan 3) Swiz >> 6) India (As of 2022-Nov as per ES23)
USA is not in the top-10 list, it barely keeps ~$250 billions in reserve. Because USA has @oating
exchange rate so USA central bank doesnBt worry about currency exchange.
30.5.1 Forex Reserve: goes up or down: when / howZ
Factor / Variable Forex Reserve goes up when Forex goes down when
When RBI has to sell dollars to
in situation when RBI has to buy dollars
BoP accommodating get net BoP=0. e.g. when
to get net BoP =0. e.g. when Both current
transaction Current account de.cit number
account and capital account are surplus.
is very high.
RBI interventions when RBI has to buy dollars to keep when RBI has to SELL dollars to
mnoTcpqi ir Ust rupee stable. keep rupee stable.
when the market value of the forex assets reverse. Refer to the chart for
Valuation E=ect
increases (çg wxçsâgùp pô ûáxfü YZc†°ÇaZpW fall in value of gold and Euro
(uvwxybzviV j{| ir `un)
gWçWx k㢠gd çWÖ) during 2023-Oct-Week1.
30.5.2 Signi/cance of Foreign Exchange Reserves (jd})
To maintain the exchange rate stability (kTvW tx k꣧xVW pf ò[Ö rstfuq kTvW SZàWx •öxq)
To absorb external-shocks (gW¶ szß®p ©opaZYfSWxVqÇ l`âVZ~ pa YZSW[XW)
To help economy in situations where foreign loans are very expensive/unavailable e.g. in
situations similar to Pakistan/SriLanka. (çg rstfuq ™aVaZYfp•âX ëk[ xjW ja)
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 173
31 CURRENCY EXCHANGE RATE: kTvW rsrXkÇ tx
Currency Exchange Rate Indian Exporter of Tea Indian Importer of Dell Laptops
Weaker ~ = Stronger $ (assuming no . kfxf pa eÇWV pxVfspV ´WtW
($1=60 → 80) change in in+ation) ç¨fkêczYW tfXW jaUW!
Stronger ~ = Weaker $ kfxf pa rXÇWâV pxVfsÆ
($1=60 → 40) pk ç¨fkêczYW ëk[fUW
(De.nition) Ie price of one currency in terms of the other currency is called exchange rate. E.g. $1
= Ø 70. Meaning, it costs Ø 70 to buy one dollar (or $0.014 to buy Ø 1).
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 174
31.1 CURRENCY EXCHANGE → FACTORS AFFECTING
What does this mean: How does it work: Ans. Watch Video Lecture.
FAQ: arenBt these two laws contradictory- one says good money drive bad money whereas
other statement says bad money drives out good money: Ans. Depends on the context/MCQ
Statement.
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 175
31.2.1 Bad Money vs good money - Modern examples- Zimbabwe Gold Coin
2008: Zimbabwe ki local public prefers to use American dollars over their local currency
due to heavy in@ation. Once the price of a loaf of bread = 10 million Zimbabwe dollar
currency units. So, it was more convenient to carry American dollars in pocket (=good
money), than Zimbabwe currency in a truck/cart (=bad money). → hGood money drives
out bad moneyi Adolphe IiersBs law (France)
2022: Zimbabwe launched Gold coin currency called ÅMosi-oa-Tunya< (priced at 1 coin =
$1,800) because their public doesn't trust the local paper currency due to hyper-in@ation.
2022: Foreigners DONOT ACCEPT the FIXED exchange rate of Srilankan Rupee Because
Sri-Lankan Rupee at .xed exchange rate (Dollar=200) is BAD MONEY for them. xxx
FAQ: I've 500 jaat ke counter argument / doubts ke why X didn't happen in YZ and why "A"
should be called "B": or can we say "C" also is example of "D" : Ans. NOTIMP4exam / waste ur time
in chatGPT & mere ko maaf karo. I'm .nished from exam point of view.
FAQ: Why doesn<t Srilankan Central bank supply dollars from its Forex ReserveZ Ans. Bhai Iey
donBt have enough forex. Iey're begging to IMF. More in Mains HDT- Debt Trap Diplomacy.
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 176
31.2.3 Afghan Currency is the Best Performing Currency in the worldZ (2023)
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 177
in above chart, Who is the paying purple box commission to the brokerZ
- if Mutual fund is paying from his own pro.t / own pocket called Hard Dollars
- if Investor is paying it (via hidden charges imposed by Mutual Fund) called SoA
Dollars.
Note: Iis concept is from American Sharemarket, and not Indian Sharemarket. I've used
Indian brand photos/logos for easier visualization. now plz don't come to ask me IF there
is similar concept of "Hard Rupee vs SoA Rupee" in India's Mutual fund = waste your time
in ChatGPT.
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 178
31.4 LIBERALISATION OF CURRENCY EXCHANGE (jkla STSYjb jÉÑUanXinÖ)
To address the 1991's balance of payment crisis- following currency exchange system reforms done:
Year Event
1991- RBI (Govt)^^ o\cially devalued Indian rupee against dollar by 18–19%
July ≤cÇfpW lskã¢X ÄpÇW UÇW/ àá[x pf kT≥Wg[fpk•ax ÄpÇW UÇW
Dual exchange rate regime. Importers can buy 1) some dollars at free-market rate and
1992
2) some dollars at RBI determined .xed exchange rate. (tajxq rsrXkÇ XqrV)
India o\cially moved from hFixedi to ¥Managed @oat exchange rateB regime. In other
1993 words, 1992Bs ¥dual exchange rateB regime was discontinued, so this new system also
called ¥uni.ed the exchange rateB because there is single exchange rate. (Öp[ rsrXkÇ XqrV)
IndiaBs exports improved with weakening of rupee. SWxVqÇ ≤cÖ pf lskã¢X/pkçax jaXfYf,
Result
SWxV pf rXÇWâV kêsµë∂ ∑∏
^^ FAQ: isn<t it the role of RBI to do thisZ Why have you written governmentZ Ans. Yes,
RBIBs role.But when UPSC examiners make MCQs related to devaluation, they use the word
RBI/Govt interchangeably- as evident from the PYQs and o\cial answerkeys related to this topic in
Ref: Pillar#3B)
MCQ. [Prelims-2000] Assertion (A) : Ce rate of growth of India<s exports has shown an
appreciable increase aAer 1991.
Reason (R) : Ie Govt. of India has resorted to devaluation.
(a) Both A and R are true and R is the correct explanation of A
(b) Both A and R are true but R is not a correct explanation of A
(c) A is true but R is false (d) A is false but R is true
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 179
31.4.1 Runaway ináation and Runaway depreciation
hrunawayi is a word to describe a situation in which something increases or develops very
quickly and cannot be controlled.
Term Meaning
Runaway When prices of goods & services rise at an extremely fast and uncontrollable rate.
ináation kjZUW∏ g∑V Vfçq Yfgd çWÖ.
Runaway When local currency faces an extremely rapid and big decline in value relative to
depreciation other currencies. e.g. $ 1= 175 Pakistani rupees (2022) to 300 Paki Rupees (2023)
Under the RBIBs LRS scheme, an individual can remit up to USD 2.5 lakh annually
overseas without approval of the RBI. (2.50 lakh Dollars= 2.07 crore Rupees; when
1Dollar=83Rs)
Remittances beyond the USD 2.5 lakh or its equivalent in foreign currency require
approval from the RBI.
If Indian resident spending money abroad, his banker/NBFC/Forex supplier in India is
required to collect TCS in following rates:
Foreign Payment Debit Card/ Forex Card/
Credit Card
Method Bank-transfer
No. Money spent via credit card is not Yes. Rates given below in next
TCS applicable
counted under LRS quota table:
31.5.1 TCS Rates from 1/October/2023
Type of transaction upto ~7 lakh beyond ~7 L
Foreign tour package, foreign shopping 5% 20%
overseas investments in foreign companies< shares, bonds,
0% 20%
real estate etc.
Education / medical treatment 0% 5%
Any other purpose e.g. donation, pilgrimage, giAing etc. 0% 20%
Note: there are many terms-conditions here e.g. medical trip ke liye separate rules, education
loans ke liye separate TCS rules but weBre not for Chartered Accountant exam, basic is enough.
Mrunal's Economy Win24 Series Pillar3: Intl. Trade, Currency Exchange, Intl. Orgs → Page: 180
31.5.2 TCS on LRS: Objectives
Discourage Indians from too much shopping abroad (because more foreign shopping =
higher CAD= not good for BoP/ exchange rate stability).
Data surveillance on Tax evaders.
Note: TCS is not additional tax. - it is adjusted against the income tax liability- just like
TDS. (Ref: Pillar#2A1 for more)
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31.1.2 RBI Currency Swap with Indian Bankers
2022-March: RBI done $5 bn dollar-swap with Indian Bank/NBFCs to dollar supply in Indian
market, to prevent weakening of Rupee.
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FAQ: will this change in money supply - not cause XYZ problem- in ináation, loan interest rate
etcZ Ans. look at one photo frame at a time. Do not make Birbal Khichdi unnecessarily.
• Dollarisation = non-USA nations accepting dollar as their legal tender.- e.g. Panama,
Ecuador, El Salvador and Guatemala, Marshal Islands etc.
• Euroization = Vatican and Monaco accept Euro as their legal tender, even though theyBre not
members of EU union.
• 2023: ArgentinaBs new Prez. Javier Milei (an economist) advocating Dollarisation. Reason:
High .scal de.cit → monetization of de.cit (printing new currency) → In@ation 140% in
Argentina.
• To .ght in@ation → tight monetary policy → expensive loan interest rates in Argentina
• Domestic central bank cannot trade currency at whim. Monetization of the de.cit not
possible.
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• Little scope for Revdi / populist schemes to win elections. So, Automatic budgetary discipline
/ .scal de.cit controlled.→ In@ation should get controlled automatically.
31.7.2 Dollarisation- Cons
• Supply of money and interest depends on actions of USA.
• Domestic Central Bank loses the monetary sovereignty / independence.
• Domestic central bank cannot act as bankersB bank, lender of last resort.
31.7.3 Dollarisation- suitable for what type of nationsZ
• Suitable for (1) Small sized nation (e.g Marshal Islands) (2) nations with huge exports to
USA who can earn dollars. (3) nations with large number of migrant workers sent USA to
earn remittance (e.g. Ecuador)
• Argentina is a big nation population wise. It will need $40 billion - even to start this
experiment.
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(c) Statement I is correct but II is incorrect (d) Statement I is incorrect but II is correct
FAQ: If Bangladesh is not a member of the BRICS group, then how could it became the member
in the new development bankZ¬ Ans. it is not compulsory for a country to be member of the
BRICS group to become member of the BRICSBs new development bank (NDB). Any country who is
a member of the United Nations can join the NDB.
FAQ:Total 6 new members were added in BRICS in 2023- Argentina, Egypt, Iran, Saudi Arabia,
Ethiopia, and UAE. Yet above NDB Bank table is not showing the names of all of those membersZ
Ans. I have taken the data on 11_Apr_24 ¬from o\cial website. Perhaps some of the new
members of BRICS group are yet to join the bank.
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32.1.2 IMF LOAN WINDOWS: RFI, SBA EFF
• International Monetary Fund (IMF) helps in global currency exchange stability, helps
against balance of payment crisis. (lZVxWâ√ƒ≈Ç kTvW pa∆: kTvW rsrXkÇ tx £§xVW STUVWX YZVT[X YZpo kêktt )
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Notable Place Year Comment / notable outcome if any
Kazakhstan
1) Fisheries subsidy agreement.
MC12 Geneva, Switzerland 2022
2) patent waiver for corona vaccines.
(1) 2 new members added. (2) food subsidy & .sheries
MC13 Abu Dhabi, UAE 2024 issue not resolved. (3) fund to help women exporters in
digital economy.
WTOBs Agreement on Fisheries Subsidies (AFS) signed in WTO Sumit/ Ministerial Conference 2022
at Geneva.¬AFS prohibits three kinds of subsidies:¬(rX Äp¿ pô ktt YfYÀÃàq cx cWgZtq)
(1) illegal, unreported, or unregulated (IUU) .shing¬
(2) .shing of already over-exploited species/stocks¬
(3) .shing on unregulated high seas.
FAQ: What do above things mean, how are they di?erent from each others: ANS. NOTIMP.
Su\cient to know ke WTO wants to stop over-.shing.
India wants special and di?erential treatment (S&DT).¬(SWxV pa ÕWY Éx ºSŒpx ïão ÑWÄjÖ):
32.4.1 Signing vs rati/cation(dëaRn pYaj `YkujícY)
• step1: A country signs a global agreement.
• step2: Ie countryBs government needs to ratify it, i.e., taking approval from the CountryBs
Cabinet/President/King/Parliament, depending on the nature of the agreement and the
nature of the polity/constitution in a given country.
Nation India USA
recti/cation requires → Cabinet Approval Parliament (=Congress) approval.
Note: Above table from¬IndianExpress. ChatGPT¬giving double-dholki (=ambivalent) answers.
32.4.2 Rati/cation : Fisheries Agreement
• 2/3rds of WTO members need to formally accept (=ratify) the agreement before it becomes
binding. (ta rVjW∏ Ytœ tfuaZpf lXTYk`âX pf gWt jq pa∏ WTO pW Yk©–VW pWXãXq öc YfgW— gXVW jz. )
• 2024-Feb: 70 nations rati.ed. (Target quota approx 110 members)
• So, the Fisheries Agreement is NOT YET come into force. (as of 2024-Apr).
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32.4.3 → WTO-2024 investment facilitation agreement (IFD) REJECTED
• WTO allows member countries to form a group and have agreements among themselves-
even if all members do not sign it. Such agreements are called plurilateral agreements/ Annex
4 Agreement.
• 2017: China proposed Investment Facilitation for Development Agreement (IFD)-to
promote transparency of investment measures; streamlining and speeding-up investment-
related authorisations procedures; enhancing international cooperation, information
sharing, and the exchange of best practices.
• 2024: China and 100+ out of 160+ member-nations proposed IFD to be added as a
plurilateral agreement at the WTO-2024 Conference.
• But, India and S.Africa opposed to IFD proposal, stating that it is a non-trade issue and falls
outside the mandate of the WTO.
• IFD agreement requires national government to consult (foreign) investors on policy
matters. India doesnBt like this, bcoz it a?ects countriesB sovereignty.
• (rspWY pf ò[Ö rXsfu YTrs“W Yk©–VW. ÑqX nYfsao kê[WXfpô spW[V px xjW jzÄpZVTSWxV Éx tº«} l”qpW rsxa“ kê
‘aZÄp Äûx YxpWxaZXfrsrs“ XqrV rXkWâ} kêrXsfup pô Sq xWÇ [fXq jaUq - Va tfu pô YZ|SãVW cfça’åk )
32.4.4 Food Subsidy: Cailand opposed India
• Iailand is the second largest rice exporter in the world, a>er India.
• WTO-2024 Conference: Iailand accused India of exporting rice at very low prices due to
government subsidies. but this matter is not resolved, YET.
32.4.5 Women Exporters in the Digital Economy (WEIDE) Fund by WTO (2024)
• Boss: WTO and the International Trade Centre (ITC, a joint-agency made by UN+WTO)
• Fund size: $ 50 million. (UAE was .rst to donate $ 5 million to it)
• Launched on the sidelines of the 13th WTO Conference @Abu Dhabi, UAE (2024)
• Objective: To help women entrepreneurs in 3rd world and LDC to adopt digital technologies
and expand the online presence of their enterprises. (kÄj[W é÷ëkÇaZ/rXÇWâVpaZpa YjWÇVW tq çWÖUq
VWÄp sf◊X[WnX lZVxWâ√ƒqÇ ¡WcWx kêçTb Ypf)
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• 1960: European Free Trade Association (EFTA) organization with 4 nations viz. Switzerland,
Iceland, Norway & Liechtenstein. (ÇãxacqÇ kTÆ ¡WcWx YZÿ (∏ÖûoqÖ))
• 2024: EFTA-India signed Trade and Economic Partnership Agreement (TEPA) (¡WcWx Éx
eÜ`p YW©ftWxq Yk©–VW)
• with following features:
• EFTA will do FDI of USD 100 billion in India in the next 15 years → and this (FDI) will help
creating 1 million direct jobs in India. Ie investments do not cover foreign portfolio
investment (FPI). (nX ÇãxarcÇX tfuaZXfSWxV kê100 rgò[ÇX àá[x pW |Ÿ« rstfuq rXsfu Éx Öp ëkò[ÇX
X–pwxÇWZrX⁄kV pxXq jaUq - lU[f15 YW[aZkê)
• First time in the history of FTAs, a legal commitment is made to FDI and job creation.
(nrVjWY pW YgYfcj[fkTÆ ¡WcWx Yk©–VW ßçYkêrXsfu Éx xaçUWx YµçX pô gWVêpWXãX öc YfgW— jaZUq)
• Tax reduction on import/export of more than 90% of items.
• However, gold, dairy, soya, coal and sensitive agricultural products are kept in exclusion list
(= no tax reduction on them). (nXpf eÇWV rXÇWâV kêozü/pxa kêpa∏ ïão XjqZtq çWÖUq)
• Mutual Recognition (of college degrees) in Professional Services like nursing, chartered
accountants, architects etc. (Öp t€Yxf pô ¡sYW‹Çp ctsq/Äàë›ÇaZpa kWfiVW tq çWÖUq)
32.5.2 U.S.-E.U. Trade and Technology Council (TTC) (2021)
2021: Started by President Biden to coordinate technology and trade policy between the United
States and European Union - with 5 areas of cooperation
- 1) Export controls - 2) Foreign direct investment screening
- 3) Secure supply chains (especially semiconductors)
- 4) Technology standards & Arti.cial Intelligence - 5) Global trade challenges
MCQ. Statement-A: Recently, the United States of America (USA) and the European Union
(EU) have launched the ÅTrade and Technology Council<. [Prelims23-SET-A-Q087]
Statement-R: Ie USA and the EU claim that through this they are trying to bring technological
progress and physical productivity under their control.
A) Both A and R are true and R is the correct explanation of A.
B) Both A and R are true but R is not the correct explanation of A.
C) A is true but R is false. D) A is false but R is true.
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32.6 GROUPINGS: BRICS - ROYAL ENTRY OF NEW MEMBERS
Year Event
2001 Economist Jim OBNeill coined the term BRIC
2009 First summit by Brazil, Russia, India, China and South Africa.
2011 S.Africa joined as member
2014 BRICS New Development Bank (NDB) formed
Summit @Johannesburg, S.Africa. Ieme: hBRICS and Africa: Partnership for Mutually
2023
Accelerated Growth, Sustainable Development and Inclusive Multilateralismi.
New members to join: Argentina, Egypt, Iran, Saudi Arabia, Ethiopia, and UAE.
2024
(Meanwhile, Argentina was invited but refused to join)
2024 Summit @Kazan (Russia)
Role of secretariat is played by its pro tempore presidency. e.g. 2022: China, 2023: S.Africa
BRICS aims for 3 pillars of cooperation:
o - (1) Political and Security Cooperation
o - (2) Financial and Economic Cooperation
o - (3) Cultural and People-to-People Cooperation
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Track Objectives
t Groups Urban20, Women20, and Youth20.
32.7.2 G20 Summit- 2023: 18th Summit @New Delhi, India: theme and logo
G20 Summit is held annually with a rotating presidency
G20 does not have a permanent secretariat and is supported by the previous, current, and future
holders of the presidency, known as the troika. e.g. 2023's troika consists of Indonesia (past-
summit 2022), India (present summit-2023) and Brazil (future summit in 2024)
Ceme:- hVasudhaiva Kutumbakami or hOne Earth One Family One Futurei - is drawn from
the ancient Sanskrit text of the Maha Upanishad
Logo:- globe/earth resting on a lotus
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32.7.7 G20- Truckload of PYQs - ïouir izñ óväda YdXv
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Huawei- for data security and data privacy. (5G écpx} Éx |–÷aëUÄpÇaZpf ò[Ö ecãyV ʵZå[W= ÑqXq
pZcrXÇaZÁWxW àWoW Ñaxq pW åVxW pk ja)
32.9 MINERALS RELATED GROUPINGS
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32.11 MISC GROUPINGS / ORGANIZATIONS : MISC.
NB8 - Nordic 8 nation from Nordic-Baltic region: Denmark, Estonia, Finland, Iceland, Latvia,
Group Lithuania, Norway and Sweden.
Paci/c Alliance Chile, Colombia, Mexico, and PeruBs regional level free trade agreement (2016)
Visegrád Group 4 Central European countries: the Czech Republic, Hungary, Poland, and Slovakia.
(also known as V4 European Quartet)
Organization of cooperation among Azerbaijan, Kazakhstan, Kyrgyzstan, Turkey and Uzbekistan.
Turkic States
World - is a global non-pro.t organisation started in 2013.
Government - Annual summit at Dubai, United Arab Emirates.
Summit - Focus areas: Global collaboration for humanity.
32.12.3 Self-study
• CTBT, NPT: NCERT Class12 Political Science ch4: India's external relations
• For more intl.org/agreements: Unacademy Monthly Current Magazine OR Unacademy's
PT730 available at https://unacademy.com/content/upsc/downloads/
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32.12.5 Win20: already covered Following in 3AB12
BoP-Classi.cation: RBIBs (Actual) method
Budget-2020: Medieval Dictionary terms for trade/commerce
Terms of Trade (eÇWV-rXÇWâV £§rV)
Net Terms of Trade (NTT) or Commodity terms of trade
Gross (Barter) Terms of Trade (GTT, ÅYûâ r|ò[k pf ò[Ö, lV: ÄjtZ q lXWsìp)
Income terms of trade (ITT)
ES20 DATA: Top Import and Exports
(IYB20 Ch7): Largest importer and exporter in world
Remittance: Global migration report 2020 (lZVxxW√ƒqÇ |sWY)
Remittance: Sidetopic → Pravasi Bharatiya Diwas (PBD)
Balance of payment → Current Account → Import of Oil
BoP: Current → Fall of Crude oil prices in negative .gure
BoP: Current → Petrol & Diesel Prices in India
Balance of payment → Current Account → Import of Gold
: Gold price in Corona
BoP → Current → Export → Geographical Indication (GI)
BoP → Current: Exports → Foreign Trade Policy (2015-2020)
Tax Credit for Exporters: MEIS/SEIS
Tax Credit for Exporters: RoDTEP:
Port Logistics: Authorised Economic Operator (AEO)
ES20: hAssemble in Indiai
: BoP → Capital Account→ Investment→ FDI / FPI
IndiaBs new rules for E-Commerce (2020-Jul)
BoP: Capital → Chinese FDI need Govt approval
Related Topic: Cabinet Committees
Ë International Financial Services Centre (IFSC)
: IFSC Authority Act, 2019
BoP → Capital Account → Misc. Concept: NIIP
BoP → Capital Account → Composition of IndiaBs external debt
RBIBs Forex Reserve: rstfuq kTvW wxçsâ
( > ) Disequilibrium in BoP: Factors responsible
Currency Exchange Rate: kTvW rsrXkÇ tx
Currency Exchange Rate → Attracting Dollars: VRR and FAR
Currency Exchange Rate in Corona-Crisis
Exchange Rate → Misc. → Purchasing Power Parity (PPP)
Pillar3B: International Org
Bretton Woods → IMF, Washington, 1945, Dec
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IMF gives loan to Pakistan (2019)
(Non-Bretton Woods) → Multilateral Development Banks
Ieories of International Trade
Mercantilist Ieory: ¡WcWxq ÅY∂WZV
Adam SmithBs Ieory of Absolute Cost Advantage (1776)
David RicardoBs Ieory of Comparative/Relative Cost Advantage (1817)
Heckscher and OhlinBs Factor - Proporations Ieory (1919)
World Trade Organization: rs® ¡WcWx YZUÈX
Kazakhstan Summit cancelled (2020-June)
: Tari? Barriers against international trade: Dumping
WTO Disputes : IndiaBs export incentive schemes
Free Trade agreements → TPP11, RCEP
TPP-11 or CPTPP
Trade agreements → USMCA & AFCFTA
Regional Comprehensive Economic Partnership (RCEP)
Budget-2020: FTA ¥rules of originB (é膰 pf rXÇk)
IndiaBs trade agreements
Burning issues in International trade
Protectionism, Trade war: YZx«}sWt, ¡WcWx ÇT∂
: Protectionism → Medicine and Defence
Ë : Protectionism → Indian Govt procurement (YxpWxq åxqt)
USABs Generalised System of Preferences (GSP) list
USA Reciprocal Trade Bill/Act (cWxÍwxp ¡WcWx rs“fÇp / lÅ“rXÇk)
India-USA limited trade deal (YqëkV ¡WcWx Y–tW)
Groupings: Indian subcontinent → SAARC
Groupings led by Gora → G20 (Group of 20)
G20: Osaka Declaration
Osaka declaration: why India refused to sign
Groupings led by Gora → G7 and D10
G7 - Group of Seven (1975)
D10: 5G club proposed by UK (2020)
BREXIT = BRITAIN EXIT
Groupings / Issues: Middle East
⇥Vande Bharat Mission 2020- Indians ki watan-waapsi
: Kuwait Expat Bill (rstfuq kçt€xaZpô YZÎW pW rs“fÇp)
Export control / Non-Proliferation regimes
USA Exit from Arms Treaties (uÏ YZÅ“)
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32.12.6 Win21: already covered Following in Pillar3
Top Import and Exports During Corona April-Nov-2020 as per ES21
Crude Oil prices & OPEC (pÌW Vf[)
Report: World Bank report: Migration and Development Brief 2021
Report: Remittance: Global migration report 2020 (lZVxxW√ƒqÇ |sWY)
Report: Export Preparedness Index by NITI (2020,Aug: rXÇWâV VzÇWxq YãÑpWZp)
Report: UNCTAD's World Investment Report 2020 (rs® rXsfu wxcaoâ)
BoP → Capital Account (ÑW[ãåWVW → cãZçq åWVW)
:FDI in@ow in Corona (rstfuq |Ÿ« rXsfu)
Foreign Investment limits in recent times
Golden Visa (rXsfupaZÉx |rVSWsWX [aUaZpa epy∆V pxXfpf ò[Ö ó}âsq•W)
Currency Exchange Rate: kTvW rsrXkÇ tx
: Mundell-Fleming Trilemma (kZà[ ÓfëkUZ pô ë~-eÇWkq t€rs“W)
RBIBs Forex Reserve: rstfuq kTvW wxçsâ
International Orgs, Agreements & Summits
World Trade Organization: rs® ¡WcWx YZUÈX
WTOBs New Director General
WTOBs Next Summit
WTOBs Appellate Body (AB) Crisis
WTO Multiparty Interim Arbitration (MPIA) mechanism
Ë : Protectionism → Indian Govt procurement (YxpWxq åxqt)
Groupings: ASEAN & SCO New Summits
Groupings: BRICS, G20: New Summits
G7 Summits 2021: Global Minimum Tax
BIMSTEC charter (ÿa∆}Wc~)
India UK Roadmap 2030
India Mauritius FTA/CECPA (káwxuY pf YW` kTÆ ¡WcWx Yk©–VW)
Abraham Accords (2020-Sept)
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SERVICES Import Before & AFTER Corona (i.e. 2020, 2021)
IndiaBs trade partners: Import / Export
IndiaBs trade partners: Trade Surplus / De.cit With Notable Countries
Reports / Indices related to Export & Remittance
Export Preparedness Index by NITI ( rXÇWâV VzÇWxq YãÑpWZp)
Global Survey on Digital and Sustainable Trade Facilitation by UNESCAP
Report: Goods Trade Barometer Index
Balance of payment → Current Account → Import of Oil
Crude Oil: Russia-Ukraine War (2022)
Budget-2022 Announcements to CAD
: BoP → Capital Account→ Investment→ FDI / FPI
Foreign Portfolio Investment (FPI: caoâ·aò[Ça rstfuq rXsfu)
Foreign Direct Investment (FDI: |Ÿ« rstfuq rXsfu)
FDI in India → Source Nation-wise Top-5
FDI in → Sector wise Top-5
: BoP → summing up
RBIBs Forex Reserve: rstfuq kTvW wxçsâ
Dollar- the Global Currency & iDE-Dollarizationi: (szß®p-exº«V-kTvW)
Dollar Swap
Rupee Rouble Agreement
Misc. Concepts: Quantitative Easing and Federal Tapering
WORLD TRADE ORGANIZATION: rs® ¡WcWx YZUÈX
TRADE AGREEMENTS TYPES: ¡WcWx Yk©–Vfpf |pWx
FTA: India UAE CEPA, 2022
FTA: India Australia ECTA (eÜ`p YjpWx Éx ¡WcWx Yk©–VW)
BRICS NDB Bank gets NEW MEMBERS
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➢ Export: Foreign Trade Policy 2023
➢ 4 pillars of FTP-2023
➢ FTP-2023 Pillar#1: Incentive to Remission (<⇣= ⇧>2 )
➢ FTP-2023 Pillar#2: Ease of Doing Biz ((⇧#⇧⌫ ें⌥⇥⇤⌅⇧)
➢ FTP-2023 Pillar3: Emerging Areas ( ⌫⌅⇣क्ष⇣?)
➢ FTP-2023 Pillar4: Collaboration of Stakeholders (@⇢⌅A⇧⌫ 9 ⇧ ⌥⇢⌧3⇤)
➢ ÔConclusion (Summarise - yes itBll greatly help)
➢ Export: ES23 observation on Export Improvement
➢ Current Account De.cit
➢ Capital Account: FDI and FPI
➢ Foreign Direct Investment (FDI: ⌦↵क्ष ✏⇣⌘✓ ◆⌃ ⇣⌘)
➢ FDI in India → Source Nation and sector-wise as per ES23
➢ International Financial Services Centre (IFSC)
➢ Budget-2023 on IFSCA Authority
➢ Foreign University @ Gi> City
➢ Data Embassy @Gi> city in Budget-2023
➢ External Debt : currency wise as per ES23
➢ External Debt : Composition Govt vs Pvt. As per ES23
➢ BoP → Capital Account → Misc. Concept: NIIP
➢ Asset liability ratio
➢ : BoP → summing up
➢ RBIBs Forex Reserve: ✏⇣⌘✓ ⇥द्र⇧ ⌫⇠ ⇡
➢ Signi.cance of Foreign Exchange Reserves (⇢त्व)
➢ Pillar3B: Currency Exchange Rate: ⇥द्र⇧ ◆⌃⌧ ✏⌫
➢ Fall of Indian Ø & Remedies
➢ Challenges to IndiaBs BOP by ES22 and ES23
➢ RBI-GovtBs measures to prevent fall of Rupee (2022-Jul-Aug)
➢ Ø Convertibility → RBI reforms (2004-2019)
➢ FEMA Rules for Indian residentBs overseas investment (2022-Aug)
➢ FCRA Act
➢ FCRA on donations
➢ FCRA on remittance
➢ Rupee Rouble Agreement
➢ Nostro Vostro Accounts- settlements with Russia and SriLanka
➢ Internationalisation of Indian rupee ( ⇧⌫⌅✓⌧ B#⌧⇣ ⇧ $⌅⌫⌫⇧C✓⌧ ⌫ )
➢ IMF Special Drawing Rights (SDR: ⌘⇣D E⇢⌫ $)A ⇧⌫)
➢ IMF SDR Formula weightage reforms 2022
➢ Misc. Concepts: Quantitative Easing and Federal Tapering
➢ Exchange Rate → Miscellaneous Terminologies
➢ NEER and REER: (Hindi not imp because only prelim relevant)
➢ Pillar #3C: Intl. Organizations
➢ World Bank President:
➢ IMF bailout loans to Pakistan (2019) and SriLanka (2022)
➢ World Trade Organization: F (⇧#⇧⌫ ⌥⇤G⌃
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➢ WTO Summits a>er 2015
➢ WTO Summit 2022 @Geneva→ Notable Outcomes
➢ WTO Fish Subsidies (+ ⌥,-.✓ #⌫ ⌥&'⌅⇧)
➢ Conventional Gravity Model (#⇧⌫# ⌫ ⇤⇥Bत्व⇧ D⇡ H. )
➢ Free Trade Agreements in Recent Times
➢ FTA: India UAE CEPA, and India Australia ECTA
➢ Interim (early harvest) trade agreement (⌘⇧✏✓ ⌥⇣#⇢⇣ ⇣⌥⇤⇧4)
➢ Indo-Paci.c Economic Framework (IPEF)
➢ Why FTA increasing as per ES23
➢ International grouping
➢ G20 2023 Summit theme and logo
➢ Minerals Security Partnership (MSP: $ ⌅ ⇢त्व#7 ⇡8◆⌃⇠9 ⇣ : ; ⇧⇤✓✏⇧⌫✓/⌥⇢⌧3⇤)
unacademy.com/goal/upsc-optional/KSCGY/subscribe:plan_type=plus&referral_code=mrunal.org
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