Economy notesexpo

  • Economics studies how individual governments, firms and nations make their choices on allocating scarce resources to satisfy their unlimited wants.
  • In academic sense it is the branch of knowledge concerned with the production, consumption and transfer of wealth.
  • Adam smith is regarded as the father of economics; he defines it as the science related to the laws of production, distribution and exchange.
  • Some terms of economics
    • Investment
      • Accumulation of newly produced physical entities such as factories, machinery, houses and goods inventories.
    • Production
      • Act of creating output, goods or services which has value and contributes to the utility of individuals.
    • Distribution
      • Making a product or service available for use or consumption using direct means or using indirect means.
    • Consumption
      • Amount used in a particular time period.
  • Two major approaches in economics
    • Classical
      • As per this approach economists believe that market functions very well and will quickly react to any changes in equilibrium and that a Laissez-fair government policy works best.
    • Keynesian
      • Economist’s gives believe that markets reacts very slowly to changes in equilibrium and that active government intervention is sometimes the best method to get the economy back into the equilibrium.
  • The two chief branches of economics
    • Micro economics
      • Studies economic activities at a micro level.
      • Concerned about how demand and supply interact in individual markets for goods and services.
      • Examines the economic behavior of individual actors such as consumers, businessmen, and households etc to understand how decisions are made in the face of scarcity and what effects they have.
    • Macro economics
      • Concerned with how the overall economy works.
      • Studies things as employment, gross domestic product and inflation.
      • Studies economy as a whole and its feature like national income, employment, poverty, balance of payments and inflation.
  • Law of demand
    • There is inverse relation between price and demand.
    • Provided the condition that other things remain constant.
    • When demand and supply both increases ⇒ equilibrium price and quantity will increase.
    • If increase in demand > increase in supply ⇒ price will increase and equilibrium quantity will also increase.
    • If increase in supply > increase in demand ⇒ price will fall but the equilibrium quantity will be increased.
  • Marginal revenue
    • = Change in total revenue ⁄  Change in output quantity
    • It can remain constant if follows the law of diminishing returns.
    • It slows down as the output level increases.
  • Law of diminishing / Diminishing returns / Principle of diminishing marginal productivity
    • If one input in the production of commodity is increased while all other inputs are held fixed, a point will eventually be reached at which additions of the input yields progressively smaller or diminishing, increases in output.
  • Law of diminishing marginal returns
    • Means that productivity of variable input declines as more is used in short run production, holding one or more input fixed.
    • This law has a direct bearing on market supply, the supply price and the law of supply.
  • Marginal utility
    • Of a good or service is the gain from an increase or loss from a decrease in consumption.
    • Law of diminishing marginal utility.
      • The first unit of consumption yields more utility then second and subsequent unit, with a continued reduction for greater amounts.
      • The law of diminishing marginal utility is similar to the law of diminishing marginal returns i.e the marginal returns (extra output gained by adding an extra unit) decreases.
  • Perfect competition / Pure competition
    • Describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. As its conditions are strict, there are few if any perfectly competitive markets.
  • Monopoly is a market structure where there is only one producer seller for a product.
  • Oligopoly is a market structure where there are only a few firms that make up an industry.
  • Equilibrium in perfect competition
    • Is the point where market demands will be equal to the market supply.
    • A firm’s price will be determined at this point.
    • In a short run ⇒ equilibrium will be affected by demand.
    • In a long run ⇒ both demand and supply of a product will affect the equilibrium in perfect competition.
    • A firm will receive only normal profit in the long run at the equilibrium point.
  • Indian economy is the 10th largest by nominal GDP and 3rd largest by purchasing power parity.
  • Main characteristics of Indian economy
    • Agrarian economy
      • Agricultural activity dominates in both gross national product and employment.
    • Mixed economy
      • Both public and private sector co-exists.
      • This term was coined by J M Keynes.
      • India opted for mixed economy in the industrial policy of 1948.
    • Developing economy
      • Features which shows are
        • Low per capita income.
        • Occupational pattern is biased towards primary sector.
        • Heavy population pressure.
        • Prevalence of chronic unemployment and under employment.
        • Steadily improving rate of capital formation.
        • Low capital per head.
        • Unequal distribution of wealth / assets.
  • The planning commission of India
    • Was setup in 15th March 1950.
    • Chairman was Jawaharlal Nehru.
    • Was formed by a resolution of union cabinet.
    • It was an extra constitutional and non-statutory body.
  • NITI (National institution for transforming India) aayog
    • Came into existence on 1st January 2015.
    • Policy making think-tank of government.
    • Aims to involve states in economic policy making.
    • Will be providing strategic and technical advice to the central and the state governments.
  • Structure of NITI aayog
    • Headed by prime minister.
    • Governing council comprising chief ministers of states and heads of all the union territories.
    • In addition there is regional council comprising of CM’s and Lieutenant governors of UT’s.
      • Are mandated to develop plans that are region specific.
    • It basically comprises of
      • Chairperson.
      • Vice chairperson.
      • Ex-officio members.
      • Special invitees.
      • Full time members.
      • Governing council.
      • And the CEO.
  • National development council
    • Was an extra constitutional and legal body.
    • Was constituted to build cooperation between the states and the planning commission for economic planning.
    • Was setup in 6th August 1952 by government’s proposal.
    • PM was the ex-officio chairman.
    • Members were union cabinet ministers, chief ministers, and finance ministers of all the states, lieutenant governors of UT’s and governors of centrally ruled states.
    • Plans by the planning commission have to be passed by the NDC first.
    • Now the government council has replaced the national development council (NDC).
  • Five year plans
    • 1st (1951-1956)
      • Harrod domar model.
      • Economist K N Ray was the architect.
      • Objective
        • In view of large import of food grains and inflation, agriculture was the highest priority.
        • Agriculture was followed by transport and communication, social services, power and industry.
        • Target growth 2.1%.
      • Achieved
        • Agricultural production increased dramatically.
        • National income went up by 18% and per capita income by 11%.
        • Achieved growth 3.6%.
    • 2nd (1956-1961)
      • Nehru Mahalanobis plan.
      • Objective
        • Rapid industrialization with particular emphasis on the development of basic and heavy industry.
        • Increase rate of investment from 7% to 11% of GDP.
        • Target growth 4.5%.
      • Achieved
        • Durgapur (U.K), Bhilai (USSR) and Rourkela (West Germany) steel plants were setup with foreign help.
        • Atomic energy commission came into existence.
        • Tata institute of fundamental research was setup.
        • Achieved growth 4.1%.
    • 3rd (1961-1966)
      • Godgil yojana.
      • Indian economy entered takeoff stage. (words by W W Rostow)
      • Indo-china war (1962) and Indo-Pakistan war (1965) diverted the resources.
      • Two successive year of severe drought.
      • Objective
        • Make India self reliant and self generating economy.
        • Increase national income by 30% and per capita income by 17%.
        • Target growth 5.6%.
      • Achieved –
        • Devaluation of currency by 57%.
        • General rise in prices and erosion of resources.
        • Achieved growth 2.8%.
    • Annual plan (from 1966-1969)
      • Plan holiday.
      • In 1966 Indian money was devaluated by the government with view to increase exports.
    • 4th (1969-1974)
      • Objective
        • Improving condition of underprivileged and weaker sections.
        • Target growth 5.7%.
      • Achieved
        • First two years were successful, with record food grain production on account of green revolution.
        • Achieved growth 3.3%.
    • 5th (1974-1979)
      • Final draft was prepared by D P Dhar.
      • Introduction of minimum needs programme.
      • Plan terminated in March 1978.
      • Highlighted the core problem associated with the coalition government.
      • Objective
        • Garibi hatao.
        • Attainment of self reliance.
        • Target growth 4.4%.
      • Achieved
        • Achieved growth 4.8%.
    • Rolling plan (1979-1980)
      • Gunnar Myrdal.
      • Brought out by Janta party government under Morarji desai in 1978.
      • Objective
        • Enlargement of the employment potential in agriculture and the allied activities to raise the income through the minimum needs programme.
    • 6th (1980-1985)
      • Emphasis was led on greater management, efficiency and monitoring of various schemes.
      • Objective
        • Removal of poverty through strengthening of infrastructure for both agriculture and industry.
        • Involvement of people in formulating schemes of development at local level.
        • Target growth 5.2%.
      • Achieved
        • Economy made an all round progress.
        • Achieved growth 5.7%.
    • 7th (1985-1990)
      • Objective
        • Accelerate food grain production.
        • Increase employment opportunities.
        • Raise productivity.
      • Achieved
        • Indian economy finally crossed the barrier of the Hindu rate of growth. (professor Raj Krishna)
    • Annual plan (1990-1992)
      • Due to fast changing political situation at the centre.
    • 8th (1992-1997)
      • Rao-Manmohan singh model.
      • Process of fiscal reforms and economic reforms initiated by the government in order to prevent another major economic crisis.
      • It was the first indicative plan.
      • Unshackled private sector and foreign investment control was the prime reason for high growth.
      • Objective
        • Human resources development.
        • Target growth 5.6%.
      • Achieved
        • Achieved growth 6.8%.
        • Improvement in trade and current account deficit.
        • Significant reduction in fiscal deficit.
        • Agricultural and industrial growth increased.
    • 9th (1997-2002)
      • Global economic slowdown and other factors led to revision of targeted growth rate.
      • Objective
        • Growth with social justice and equality.
        • Emphasis on seven basic minimum services.
        • Empowerment of women, SC / STs / OBCs.
    • 10th (2002-2007)
      • Objective
        • Improve overall framework of governance.
        • Agriculture was the core element.
        • Target growth 8%.
      • Achieved
        • Increase in gross domestic saving and investment.
        • Increase in foreign exchange reserves to US $ 287 billion.
    • 11th (2007-2012)
      • NDC (National Development Council) noted that the slowdown of the growth could be reversed if the fiscal discipline of the government was strengthened.
      • Objective
        • Ensure electricity connection to all by 2009.
        • Ensure all weather road connection, with population up to 1000 and above (500 and above for hilly areas).
        • Connect every village by telephone and provide broadband connectivity by 2012.
        • Increase forest and tree cover by 5%.
        • Increase energy efficiency by 20% by 2016-2017.
        • Emphasis on inclusive development.
      • Achieved
        • Growth rate 7.9%
        • Service sector growth rate above 10%.
    • 12th (2012-2017)
      • Objective
        • Faster, sustainable and more inclusive growth.
        • 14 key areas to be focused such as energy transportation, natural resources, rural transformation, health, transportation, education and skill development etc.
        • Reduce consumption poverty by 10%.
        • Generate 50 million work opportunities in non farming sector.
        • Reduce infant mortality rate to 25 per 1000 live birth.
        • Reduce maternal mortality rate to 1 per 1000 live birth.
        • Increase gross irrigated area to 103 hectare by 2017.
        • Add renewable energy capacity to 30,000 MW.
  • Census 2011
    • Was the 15th national census.
    • All states and UT’s showed increase in literacy rates during 2001-2011.
    • India has second largest population of older people (60+).
    • Till 2026 older persons to be about 173 million.
    • Top 5 states in sex ratio. (0-6 age group)
      • Mizoram > Meghalaya > Andaman and Nicobar > Pondicherry > Chhattisgarh.
    • Top 5 states with maximum population.
      • Uttar Pradesh > Maharashtra > Bihar > West Bengal > Andhra Pradesh.
    • Top 5 states with minimum population.
      • Goa < Sikkim < Tripura < Nagaland < Mizoram.
    • Top 5 states with highest literacy.
      • Kerala > Mizoram > Goa > Tripura > Himachal Pradesh.
  • UIDAI (unique identification authority of India)
    • In this a 12 digits number is linked with basic biometric information of the person including photograph, iris and the finger prints.
  • Inclusive development
    • Participative type of development and empowers every individual.
    • Its elements are
      • Poverty reduction and increase in quality and quantity of employment.
      • Agricultural development.
      • Reduction in regional disparities.
      • Social sector development.
      • And protecting the environment.
  • Human development report
    • First published by United Nations development programme (UNDP) in 1990.
    • Human development report (HDR) concept was started by Pakistani economist Mahbub-ul-haq and Amartya sen.
    • Human development index (HDI) is an equiweighted average of
      • Life expectancy index (LEI). (at birth)
      • Educational attainment index (EAI)
        • EAI =  ALR (adult literacy rate) +   CER (combined enrollment ratio)
      • Standard of living index (SLI). (concept of purchasing power parity)
    • HDI = 1 ⁄  3 (LEI + EAI + SLI)
    • HDI has four categories
      • Very high human development.
      • High human development.
      • Medium human development. (India, China, Sri Lanka, etc.)
      • Low human development. (Pakistan, Bangladesh, Nepal, etc.)
  • Rural poverty
    • Rangrajan panel report (2014)
      • States that 3 ⁄ 10 people are poor.
      • Dismissed Tendulkar committee suggestions on determining poverty line.
      • States that 29.14% are poor.
    • Some efforts by government to eradicate rural poverty are
      • Legal elimination of bonded labors.
      • Antyodaya plan.
      • Small farmers development programmee. (SFDP)
      • Twenty point programmee.
      • Food for work programmee.
      • Minimum needs programmee. (MNP)
      • Integrated rural development programmee. (IRDP)
      • National rural employment programmee. (NREP)
      • Indra awas yogna. (IAY)
      • Prime minister rojgar yogna. (PMRY)
      • Desert development programmee. (DDP)
      • And drought prone area development programmee. (DPAP)
  • Urban poverty
    • Pace of urbanization is set to increase and with it urban poverty and urban slums are also expected to increase.
    • Some efforts by government to eradicate urban poverty are
      • Emphasis on vocational education.
      • Nehru rojgar yogna. (NRY)
      • Self employment programmee for urban poor. (SEPUP)
      • Financial assistance for constructing houses.
      • Self employment to the educated urban youth programmee. (SEEUY)
      • Prime minister rojgar yojna. (PMRY)
      • National social assistance programmee. (NSAP)
      • And urban basic services for the poor. (UBSP)
  • Unemployment
    • A person working 8 hours a day for 273 days of the year is regarded as employed on a standard person year basis.
    • B Bhagwati committee (1973), setup by planning commission gave three estimates of unemployment
      • Usual principal status (UPS).
        • Employed persons who remains unemployed for a major part of the year, also called open unemployment.
      • Current weekly status (CWS).
        • Unemployed persons who did not find even an hour of work during the survey week.
      • Current daily status (CDS).
        • Persons who did not find work on a day or some days during the survey week.
        • This is comprehensive measure of unemployment including chronic as well as under unemployment.
  • Some flagship programmes of the government of India
Programmee Inaugurated on
T B mission 2020 28th October 2014
Sukanya samridhi yojana 22nd January 2015
Skill India 22nd January 2015
Digital India 20th August 2014
Make in India 26th September 2014
Sansad adarsh gram yojana 11th Oct 2014
Pradhan mantri krishi sinchayee yojana 1st July 2015
Swatch Bharat abhiyan 2nd October 2014
Soil health card scheme for every farmer 17th Feb 2015
Kisan TV 26th May 2015
Deendayal upadhayay gram jyoti yojana 25th July 2015
Van bandhu kalian yojana 28th October 2014
Beti bachao beti padhao yojana 22nd January 2015
Shyama Prasad mukherjee rurban mission 16th September 2014
Housing for all by 2022 1st June 2015
Pradhan mantri jan dhan yojana 28th August 2014
Pradhan mantri awas yojana 25th June 2015
Pradhan mantri mudra yojana 8th April 2015
Pradhan mantri suraksha bima yojana 9th May 2015

 

  • National income of India.
    • It is a flow concept.
    • Financial year is from 1st April to 31st March.
    • According to national income committee (1949) “A national income estimate measures the volume of commodities and service turned out during a given period counted without duplication”.
    • When the national income is measured at the base year price, it is called national income at constant price.
    • When national income is measured at the current year price it is called national income at current year price.
    • NNPFC = NNPMP – indirect taxes + subsidies + government surplus
      • NNP – net national product.
      • FC – fact or cost.
      • MP – market price.
    • NI (national income) = NNP + subsidies – indirect taxes.
    • NI = C + G + I + (X-M) + (R-P) – depreciation – indirect tax + subsidies.
      • C – Total consumption expenditure.
      • G – Total government expenditure.
      • I – Total investment expenditure.
      • X – Import.
      • M – Export.
      • (R-P) – Net fraction income from abroad.
        • R – Received.
        • P – Payments.
      • GNP (gross national product) = depreciation – indirect taxes + subsidies.
      • National income is the measurement of the production power of an economic system in a given time period.
      • National wealth is the measurement of the present assets available at a given time. It is a stock concept.
  • Method of measuring national income
    • Product method.
      • Net value of final goods and services produced is called total final product. It represents GDP.
      • Net income earned in foreign boundaries by nationals is added and depreciation is subtracted from GDP.
    • Income method.
      • Total net income earned by working people in different sectors and commercial enterprises is obtained.
      • Income of both categories of people, paying taxes and not paying taxes are added to obtain national income.
    • Consumption method / Expenditure method.
      • National income is the addition of total consumption and total savings.
  • In India a combination of production method and income method is used for estimating national income.
  • In 1868, first attempt to estimate national income was made by Dadabhai naroji in his book ‘Poverty and un British rule in India’. He estimated per capita income to be 20 Rs.
  • First scientific attempt to estimate national income was made by Prof. V K R V Rao in 1931-32. He divided Indian economy into 13 sectors.
  • In 1949 national income committee was made, chairman was Prof. P C Mahalanobis and other two members were Prof. V K R V Rao and Prof. D R Gadgil. This committee gave its first report in 1951 and its final report in 1954.
  • Monetary sector
    • Is one of the important determining factors of the level of economic development.
    • Sound financial system induces the level of savings and investments.
    • Rapid economic development requires a sound financial system with adequate availability of finance and a strong system of associated financial and investment institutions.
  • Financial market is a place where financial transactions take place.
  • On the basis of short term and long term transactions markets are classified as
    • Money market.
      • Deals with short term securities and loans.
      • Also deals with gold and foreign exchange.
    • Capital market.
      • Market for long term loan-able funds.
      • Loans are used by industry and commerce mainly for fixed investment.
  • Money has a time value and therefore the use of it is brought and sold against payment of interest. Short term money is brought and sold on the money market and long term money on the capital market.
  • Stock exchanges / Share market
    • It plays a dominant role in mobilizing resources for corporate sector.
    • It is a market dealing in shares, debentures, and financial securities.
    • Shares and debentures are bought and sold for investment as well as speculative purposes.
  • Bombay stock exchange (BSE) is one of the oldest (since 1875) and the oldest in Asia.
    • The share sensex of BSE includes 30 listed companies.
    • It has indicies viz.
      • BSE 200.
      • BSE 100.
      • BSE 500.
      • SENSEX.
      • MIDCAP.
      • And SMLCAP.
  • National stock exchange (NSE)
    • Was established in November 1922, on recommendation of Pherwani committee.
    • It became fully fledged stock exchange in 1933 and commenced operations in 1994.
    • In October 1955, it became biggest in India.
    • Its share sensex includes 50 listed companies.
  • Securities and exchange board of India (SEBI)
    • Was initially constituted on 12th April 1988 as a non statutory body through a resolution by the government.
    • It was given statutory status and powers through an ordinance promulgated on 30th Jan 1992.
    • SEBI is managed by six members.
      • Chairman (nominated by central government).
      • 2 members (officers of central ministries).
      • 1 member (from RBI).
      • 2 members (nominated by central government).
    • Office of SEBI is in Mumbai.
    • Regional offices are at Calcutta, Delhi and Chennai.
    • In 1988, initial capital was 7.5 Crore Rs, which was provided by its promoters (IDBI, ICICI, and IFCI).
    • This amount was invested and with its interest amount day to day expanses of SEBI were met.
    • All statutory powers for regulating Indian capital market are vested in SEBI itself.
  • Functions of SEBI
    • Safeguard the interests of investors and to regulate capital market with suitable measures.
    • Regulate the business of stock exchanges and other security markets.
    • Regulate the working of stock brokers, sub brokers, share transfer agents, trustees, merchant bankers, under writers, portfolio managers, etc and also to make their registration.
    • Register and regulate collective investment plans of mutual funds.
    • Encourage self regulatory organizations.
    • Eliminate mal practices of security markets.
    • Supervise the working of various organizations trading in security market and also to ensure systematic dealings.
    • Train person associated with security markets and also to encourage investor’s education.
    • And to check insider trading of securities.
  • Life insurance corporation (LIC)
    • Established on 1st September 1956.
    • Head office is at Mumbai.
    • Zonal offices.
      • Mumbai.
      • Kolkata.
      • Delhi.
      • Chennai.
      • Kanpur.
      • Hyderabad.
      • And Bhopal.
  • General insurance corporation (GIC)
    • Established on 1st Jan 1973.
    • It has four subsidiary companies.
      • National insurance company limited, Kolkata.
      • The new India assurance company limited, Mumbai.
      • The oriental and insurance company limited, New Delhi.
      • United India fire and general insurance company limited, Chennai.
  • Reforms in insurance sector
    • In 1993, Malhotra committee was set up to recommend reforms in the insurance sector.
    • Later reforms started with the enactment of insurance regulatory and development authority act 1999.
    • The act paved the way for the entry of private insurance companies into the insurance market and also constitution of insurance regulatory company limited and development authority.
  • Insurance regulatory and development authority (IRDA)
    • Constituted on 19th April 2000.
    • Was constituted to protect the interest of insurance policies and to regulate, promote, and ensure orderly growth of the insurance industry.
    • Consist of a chairperson, 3 whole time members and four part time members.
    • For regulating the insurance sector it has been issuing regulations regulations covering almost the entire segment of insurance industry.
  • Scheduled banks
    • Are entered in the second schedule of the RBI act, 1934.
    • Have paid up capital and reserves of an aggregate value of not less than 5 lakh.
    • Satisfies RBI that their affairs are carried out in the interest of their depositors.
    • All commercial banks (Indian and foreign), regional rural banks and state cooperative banks are scheduled banks.
  • Non scheduled banks are not included in the second scheduled of the RBI act, 1934.
  • Reserve bank of India (RBI)
    • Is the central bank of the country.
    • Was setup on the basis of Hilton young commission recommendation in April 1935, with the attachment of RBI Act, 1934.
    • First governor was Sir Osborne smith.
    • Main purpose of the existence of RBI was to separate currency and credit from RBI.
    • It was nationalized in 1949.
    • First Indian governor was C D Deshmukh.
    • Headquarter is in Mumbai.
    • There are 14 directors in the central board of directors besides the governor, four deputy governors and one government official.
  • Functions of the RBI
    • Issues currency except coins which are minted by the government.
    • It has the monetary authority.
    • Acts as the banker and debt manager to the central government.
    • Acts as banker of banks.
    • Regulator of banking system.
    • Manager of foreign exchange.
    • Maintains financial stability.
    • Acts as the regulator and supervisor of the payment and settlement system.
    • Since 1952, monetary policy of the RBI emphasis on twin goals. These are as follows
      • Economic growth.
      • Inflation control.
  • Instrument of credit control can be divided into two
    • Qualitative / selective / direct credit control.
    • Quantitative / general credit control.
  • Qualitative / selective / direct credit control
    • These measures are used to make sure that purpose for which loan is given is not misused.
    • It is done through credit rationing and regulating loan to consumption etc.
  • Quantitative / general credit control
    • Used to control the volume of credit and indirectly to control the inflationary and deflationary pressures caused by expansion and contraction of credit.
    • It consists of
      • Bank rate / Rediscount rate.
        • It is the rate at which the RBI gives finance to commercial banks.
      • Cash reserve ratio (CRR)
        • Since 1962, the RBI has been empowered to vary the CRR requirement between 3% and 15% of the total demand and time deposits.
        • The RBI (amendment) bill, 2006 empowers RBI to prescribe CRR cash that banks deposits with the RBI without any floor rate or ceiling rate.
      • Statutory liquidity ratio (SLR)
        • Ratio of liquid asset which all commercial banks have to keep in the form of cash, gold and unencumbered approved securities equal to not more than 40% of their total demand and time deposits liabilities.
      • Repo rate
        • That rate at which RBI lends short term money to the banks against securities.
        • Repo rate injects liquidity to the market.
      • Reverse repo rate
        • Rate at which banks park short term excess liquidity with the RBI.
        • Reverse repo rate withdraws liquidity from the market.
        • This is always 100 base point / 1% less than repo rate.
      • Open market operations (OMOs)
        • When RBI sells government securities in the market, it withdraws money liquidity from the market and thus reduces volume of credit leading to control of inflation.
        • When RBI buys government securities, it injects liquidity into the market and thus increases credit volume leading to higher economic growth.
  • Banking ombudsman scheme
      • It is in operation since 1995 and works under the control and supervision of the RBI.
      • It is applicable to all the commercial banks, RRBs and scheduled primary co-operative banks.
      • At present there are 15 banking ombudsmen in India.
      • There is RBI’s quasi judicial authority for resolving disputes between commercial banks, primary co-operative and RRB’s and their customers.
  • State bank of India (SBI)
    • In 1921, bank of Calcutta (bank of Bengal), bank of Bombay and bank of Madras unified as Imperial bank of India.
    • Imperial bank of India was reconstituted as SBI in 1955.
    • In 1959, the state bank of India (subsidiary banks) act was passed. This made SBI take over eight former state associated banks as its subsidiaries.
  • Arundhati bhattacharya became the first women head of SBI.
  • SBI is ranked 292 in fortune 500 companies.
  • Bhartiya mahila bank (BMB)
    • Manmohan Singh and Sonia Gandhi jointly inaugurated India’s first all women bank in Mumbai on 19th Nov 2013 on birth anniversary of Indira Gandhi.
    • Its initial capital was 1000 crore.
    • Its focus is on the banking needs of women and to promote their economic empowerment.
    • Union government on 12th Nov 2013 appointed Usha Anantha Subramanian as its first chairperson and managing director.
    • It is the only and the first public sector bank incorporated through an act of parliament.
    • Its branches are in Mumbai, Kolkata, Chennai, Ahmadabad, Guwahati, Bengaluru and Lucknow.
  • Rupee was first minted in India during the reign of Sher shah suri.
  • India became member of IMF in 1947 and exchange value of rupee came to be fixed by IMF standards.
  • All coins and the one rupee notes are issued by the government. It bears the signature of the finance secretary government of India.
  • Symbol of rupee came into use from 15th July 2010.
    • Designed by D udaya kumar.
    • Is an amalgamation of devnagari “Ra” and the roman “R” without the stem.
  • Devaluation of currency refers to reducing value of the Indian rupee in comparison to the leading currencies in the world market.
    • The history of devaluation of Indian currency is as follows
Devaluation Year By Finance minister
1st June 1949 30.5% Dr. John Mathai
2nd June 1966 57% Sachindra Chaudhary
3rd 1st July 1991 9% Dr. Manmohan Singh
4th 3rd July 1991 11% Dr. Manmohan Singh
  • Basic objective of devaluation is to reduce deficits in balance of trade by making exports relatively cheap and imports costly.
  • Hard currency
    • It refers to that currency which is traded in foreign exchange market for which demand is relative to the supply.
  • Soft currency
    • It refers to that currency which is expected to vary irregularly or decrease in value against other currencies.
  • Inflation
    • Is the state in which prices of goods and services rises on the one hand and value of money falls on the other.
    • When money circulation exceeds the production of goods and services the state of inflation takes plane in the economy.
  • Types of inflation
    • Demands pull inflation.
      • Created and sustained by excess of aggregate demand for goods and services over the aggregate supply.
      • Or when increase in production lags behind the increase in money supply.
    • Costs pull inflation.
      • This is created and sustained by increase in cost of production which is independent of the state of demand.
      • g. trade unions can bargain for higher wages and hence contribute to inflation.
    • Stagflation.
      • There is fall in the output and employment levels.
      • Due to various pressures the entrepreneurs have to raise the price to maintain their margin of profit. But as they only partially succeed in raising the prices, they are faced with declining output and investment.
      • Thus on one side there is a rise in the general price level and on the other side there is a fall in the output and employment.
    • Hyper inflation / Galloping inflation.
      • There is very rapid growth in the rate of inflation in which money loses its value to the point where alternative mediums of exchanges such as barter or foreign currency are commonly used.
  • Measurement of inflation
    • It is measured by the general price index (GPI).
    • GPI measures the changes in average prices of goods and services. A base year is selected and its index is assumed as 100 and on this basis, price index for the current year is calculated.
    • If the index for the current year is below 100, it indicates the state of deflation and on the contrary, if index is above 100 it indicates the state of inflation.
  • Wholesale price index (WPI)
    • It measures the change in wholesale prices on weekly basis.
    • On the basis of weekly indices average annual WPI is worked out.
    • An average annual wholesale price of the base year is assumed as 100.
  • Deflation
    • Value of money rises and the price of goods and services falls.
    • Deflation may occur due to following reasons
      • Government withdraws money from circulation.
      • Government imposes heavy direct taxes or takes heavy loans from the public (voluntary or compulsory or both).
      • When central bank sells the securities in open market (which reduces the quantity of money in circulation).
      • When the central bank increases the bank rates (which curtails the quantity of credit in the economy).
  • Measures to check deflation
    • Increase money supply.
    • Promote credit creation by the banks.
    • Curtailment in taxes so as to increase the purchasing power of people.
    • Increase the public expenditure and to increase the employment opportunities in the economy.
    • Increase money supply in circulation by repayment of old public debts.
    • Provide economic subsidy by the government to the industrial sector of the economy.
  • Money stock measures in India
    • On the recommendation of the second working group on money supply, RBI introduced a series of money stock measures in India since 1970 – 71, which are.
      • M1 – High powered money = monetary base = money with the public + reserves of banks with RBI.
      • M1 – Money with the public (currency notes and coins) + demand deposits of banks (on current and saving bank accounts) + other demand deposits with RBI.
      • M2 – M1 + saving bank deposits with the post offices.
      • M3 – M1 + term deposits with the bank.
      • M4 – M3 + all deposits of post offices.
    • M1 – measure represents the most liquid form of money among the four money stock measures adopted by the RBI.
    • M1 to M4 – liquidity gets reduced (M4 – posses the lowest liquidity among all these measures).
    • M3 – is the most important component, generally termed as “broad money”.
  • Cheap money policy
    • Is that monetary policy in which loans and advances are made available on low interest rate and easy terms to industry, businessmen and consumers.
    • It increases the inflation rate in the economy and it is generally adopted to get rid of deflationary tendencies of the economy.
  • Dear money policy
    • Is adopted to squeeze the credit utilization facility in the economy.
    • Under it interest rate is increased which helps in controlling inflation in the economy.
  • Union budget
    • It is an extension account of the government’s finances, in which revenues from all sources and expanses of all activities under taken are aggregated.
    • Contains the government of India’s revenue and expenditure for one fiscal year, which runs from 1st April to 31st
    • In constitution it is mentioned as annual financial statement under Article 112 comprising the revenue budget, capital budget and also the estimates for the next fiscal year called budgeted estimates.
  • Tax is a compulsory payment by the citizens to the government to meet the public expenditure. It is legally imposed by the government on the tax payer and in no case taxpayer can deny to pay taxes to the government.
  • Direct tax – which is born by the person on whom it is levied. A direct tax cannot be shifted to other person. Some are as follows –
    • Income tax.
      • Levied directly on the income of the people by central government.
    • Corporate tax.
      • Levied on the profit of the companies or corporations.
      • The corporate tax rate is 30%.
      • It is the largest source of revenue.
    • Wealth tax.
      • Levied on the net wealth of the individuals, Hindu undivided family and joint stock companies.
      • Primarily imposed to reduce concentration of wealth in the society.
    • Gift tax.
      • Imposed by the government on all donations and gifts over and above the prescribed limits to the family members.
      • However a donation given by the charitable institutions and companies is not covered under gift tax.
      • This tax is basically imposed to check the evasion of estate duty and wealth tax.
    • Interest tax.
      • Imposed on the interest income of the commercial banks on their gross loans and advances.
      • Presently it is not in force in India.
    • Land revenue.
    • Profession tax.
    • Stamp duty and registration charges.
    • Securities transaction tax.
    • Banking cash transaction tax etc.
  • Indirect tax – those taxes which have their burden or impact on one person. But that person succeeds in shifting his burden on to others. Some are as follows –
    • Excise duty.
    • Custom duty.
    • Sales tax.
    • Service tax.
    • Value added tax.
    • Passenger tax.
    • Entertainment tax.
    • Electricity duty.
    • Motor vehicles tax etc.
  • Finance commission
    • Is constituted to define financial relations between the centre and the states.
    • Under provision of Article 280, President appoints a finance commission.
  • Financial relations between centre and states
    • Article 264 and Article 293 explains the financial relations between the union and states.
    • Constitution provides residuary powers to the centre.
    • List 1st of the 7th schedule enlists the union taxes.
    • List 2nd of the 7th schedule enlists the taxes which are within the jurisdiction of the states.
    • Apart from taxes levied and collected by the state, the constitution has provided for the revenues for certain taxes on the union list to be allotted partly or wholly to the states.
  • Fourteenth finance commission
    • Besides other things, the commission lays down principles governing the grants in aid to states and other local bodies for five year period beginning 1st April 2015.
    • Chairman was Dr. Y V Reddy.
    • Was asked to suggest on various topics such as
      • Pricing of public utility such as electricity and water, also look into issues like disinvestment, GST compensation, sale of non profit PSUs and subsidies.
      • Measures for maintaining a stable and sustainable fiscal environment consistent with equitable growth.
      • With regard to debt stressed states, was asked to suggest steps for augmenting revenues of states which are lagging.
      • Review the present arrangements as regards financing of disaster management with reference to the funds constituted under the disaster management Act, 2005 and make appropriate recommendations there
  • State finance commission
    • It reviews the financial position of the panchayats.
    • Recommends the distribution of taxes, tolls and fees between the states and the panchayats.
    • Determines taxes, duties, tolls and fees that can be assigned to panchayats.
    • Recommends on principles to determine grant in aid to the panchayats.
  • Some important industries of India
    • Iron and steel industry.
      • First steel industry was set up at Kulti (WB), named “Bengal iron Works Company” in 1870.
      • First large scale steel plant established is “TISCO” in Jamshedpur (1907) followed by IISCO at Burnanpur (1919), both belonged to the private sector.
      • First public sector unit was “Vishvedhvarayya Iron and Steel Works” at Bhadrawati (Karnataka).
      • At present all important steel plants are managed by SAIL except TISCO.
      • Steel authority of India (SAIL) (1974) was made responsible for the development of the steel industry.
      • Some public sector steel plants are as follows
Location Established during five year plan Assistance
Rourkela (Orissa) 2nd Germany
Bhilai (Chhattisgarh) 2nd Russia
Durgapur (west Bengal) 2nd British
Bokaro (Jharkhand) 3rd Russia
Vishakapatnam (AP) 4th Russia
Salem (Tamil Nadu)
Vijay Nagar (Karnataka)

 

  • Top most steel producing countries
    • China > Japan > USA > Russia > India
    • Cotton and textile industry
      • Oldest industry in India and employs largest number of workers.
      • It accounts 4% of GDP, 20% of manufacturing value and 33.33% of the total export earnings.
      • First Indian modernized cotton mill was set up at Fort Gloster near Calcutta (1818), but was not successful.
      • The second mill named Bombay spinning and weaving company was set up at Bombay (1854) by K G N Daber.
    • Cement industry.
      • Production started in 1904 at Madras.
      • Foundation of stable Indian cement industry was laid in 1914, when Indian Cement Company limited started production at Porbandar (Gujarat).
      • At the end of 7th five year plan india started exporting cement.
      • At present cement is one of the most advanced industries in the country.
      • First modernized industrial unit was established at Reshra (WB) in 1955.
    • Petroleum and natural gas.
      • First successful oil well was dug in India in 1889 at Digboi (Assam).
      • For exploration purpose “Oil and natural gas commission” (ONGC) was set up in 1956 at Dehradun.
      • Oil reserve in India is estimated to be about 13 crore tonnes.
      • Currently produces 32 million tonnes against its annual demand of 105 million tonnes meeting only 30.5% of its demand.
  • There are eight core industries having combined weight age of about 37.9%, these are –
    • Cement.
    • Coal.
    • Crude oil.
    • Natural gas.
    • Electricity.
    • Fertiliser.
    • Steel.
    • And the refinery products .
  • Navratnas
    • Originally the title was given to nine “Public sector enterprises” (PSEs) identified by the government of India in 1997 as its crown jewels of the most prestigious PSEs, which allowed them greater autonomy to compete in the global market.
    • Until now the list has been raised to 18.
    • These can invest up to 1000 crore Rupees without explicit government’s approval.
    • List of navratnas is as follows
      • Bharat Petroleum Corporation limited (BPCL).
      • Hindustan Petroleum Corporation limited (HPCL).
      • Bharat electronics limited (BEL).
      • Hindustan aeronautics limited (HAL).
      • Mahanagar telephone nigam limited (MTNL).
      • National mineral development corporation (NMDC).
      • Power finance corporation (PFC).
      • Power Grid Corporation of India limited (PGCIL).
      • Rural electrification corporation (REC).
      • National aluminium company (NALCO).
      • Shipping corporation of India (SCI).
      • Oil India limited.
      • Neyveli Lignite Corporation of India (NLCL).
      • Container Corporation of India limited (CONCOR).
      • Engineers India limited (EIL).
      • National buildings construction corporation (NBCCL).
      • Rashtriya ispat nigam limited (RINL).
      • Coal India limited (CIL).
  • Maharatnas
    • In 2009 government established the maharatna status, which raises the company’s investment ceiling from 1000 crore to 5000 crore rupees.
    • These firms can now decide on investments of up to 15% of their net worth in a project.
    • The six criteria for eligibility as maharatna are
      • Having navratna status.
      • Listed on Indian stock exchange with minimum prescribed public share holding under SEBI regulations.
      • An average annual turnover of more than 20000 crore rupees, during the last three years.
      • An average annual net worth of more than 10000 crore rupees, during the last three years.
      • An average annual net profit after tax of more than 2500 crore rupees, during the last three years.
      • Should have significant global presence / international operations.
    • The six maharatnas are as follows
      • Indian Oil Corporation limited (IOCL).
      • National thermal power corporation limited (NTPC).
      • Oil and Natural Gas Corporation limited (ONGC).
      • Steel authority of India limited (SAIL).
      • Bharat heavy electrical limited (BHEL).
      • Gas authority of India limited (GAIL).
  • Miniratnas
    • Can also enter into joint ventures, set subsidiary companies and overseas offices, but with certain conditions.
    • There are two categories of miniratnas.
      • Category-1 miniratna.
        • PSEs that have earned profit continuously for the last three years or earned a net profit of 30 crore rupees or more in one of the three years.
        • These are granted certain autonomy like incurring capital expenditure without government approval of up to 500 crore rupees or equal to their net worth, whichever is lower.
        • Currently these are 51 in numbers.
      • Category-2 miniratna.
        • PSEs which have made profit for the last three years continuously and should have a positive net worth.
        • These have autonomy to incur the capital expenditure without government approval up to 300 crore rupees or up to 50% of their net worth, whichever is lower.
        • Currently these are 14 in numbers.
  • Foreign trade policy
    • Union commerce ministry (government of India), announces integrated foreign trade policy every five years also called EXIM policy.
  • Balance of trade (BOT)
    • It is the most important element of the balance of payments.
    • Balanced BOT i.e. exports = imports.
    • Adverse BOT i.e. exports < imports.
    • Favorable BOT i.e. exports > imports.
  • Balance of payment (BOP)
    • It is the record of all the economical transactions between the residents of a country and the rest of the world in the particular period.
    • These transactions are made by individuals, firms and the government bodies.
    • The current account might include
      • Trade – buying and selling of goods and services.
      • Exports – a credit entry.
      • Imports – a debit entry.
      • Trade balance – sum of exports and imports.
      • Factor income – repayments and dividends from loans and investments.
      • Factor earnings – a credit entry.
      • Factor payments – a debit entry.
      • Factor income balance – the sum of earnings and payments.
  • Foreign direct investment (FDI)
    • It is an investment in a foreign country through the acquisition of a local company or the establishment of an operation on a new Greenfield site.
    • Direct investment implies control and managerial and perhaps technical input.
    • Since 1st April 2010, in India FDI has been regulated by the consolidated FDI policy issued by the “Department of industrial policy and promotion” (DIPP).
  • Brownfield investment is when a company or government entity purchases or leases existing production facilities to launch a new production activity.
  • International organizations are the cooperation forums of the sovereign states. These are further classified into –
    • Economic organizations.
    • And political organizations.
  • Economic organizations
    • International labour organization (ILO)
      • Emerged from the treaty of Versailles in 1919.
      • Established on 11th April 1919.
      • Got associated with UNO on 14th December 1946.
      • Member countries – 185.
      • Headquarter is in Geneva.
      • Founded to give expressions to the growing concern for social reform after world war 1st and the conviction that any reform had to be conducted at an international level.
      • ILO has generated such hallmarks of industrial society such as.
        • The eight hour working day.
        • Maternity protection.
        • Child labour laws.
        • And a range of policies which promotes workforce safety and peaceful industrial relations.
      • Received Nobel peace prize in 1969.
    • Bank for international settlement (BIS)
      • Headquarter is in Basel (Switzerland central banks).
      • It has 58 central banks members.
      • Established in 17th May 1930 in Rome.
      • Founding states were – Germany, Belgium, France, great Britain, northern Ireland, Italy, Japan, and Switzerland.
      • It has two regional offices.
        • The representative office for Asia and the pacific, Hong Kong.
        • The representative office for the Americas, Mexico City.
      • Main objective is to serve central banks in their pursuit of monetary and financial stability, to foster international cooperation in those areas and to act as a bank for central banks.
    • Bretton woods conference.
      • Officially known as the United Nations monetary and finance commission.
      • Was the gathering of the delegates from 44 nations from 1st to 22nd July, 1944 at Bretton woods, New Hampshire (USA).
      • To agree upon a series of new rules for the post (World War 2) International monetary system.
      • The two major accomplishments were the creation of the International monetary fund (IMF) and the International bank of reconstruction and development (IBRD) also known as the World Bank.
        • IBRD / World bank
          • Since its inception in 1944, it has expanded to closely associated group of five development institutions.
          • Their mission evolved as the facilitator of post war reconstruction and development to the present day mandate of worldwide poverty alleviation, in close coordination with the international development association and other members of the World Bank group.
          • At today’s World Bank poverty reduction through an inclusive and sustainable globalization remains their overarching goal of their work.
        • IMF
          • Came into formal existence in December 1945, when its first 29 member countries signed its article of agreement.
          • Begins its operations from 1st March 1947.
          • At present 188 nations are the members of IMF.
          • Its primary purpose is to ensure the stability of the International monetary system (the system of exchange rates and international payments) that enables countries and their citizens to transact with one another.
    • Organization of the petroleum exporting countries (OPEC)
      • Headquarter is in Vienna (Austria).
      • Member countries – 12.
      • Established in 1960.
      • These nations accounts for 2/3 rd of the world’s oil reserves and 1/3 rd of the oil production.
      • Its objective is to determine the best means for safeguarding the organizations interests, individually and collectively.
      • It pursues ways and means of ensuring the stabilization of prices in international oil markets with a view to eliminate harmful and unnecessary fluctuations.
      • To provide an efficient and regular supply of petroleum to consuming nations and a fair returns on their capital to those investing in the petroleum industry.
      • OPEC fund was set up in 1976 to provide financial aid on advantageous terms to developing countries and international development agencies.
      • In 1980 the OPEC fund was transformed into a permanent autonomous international agency.
    • Asian development bank (ADB)
      • Established following the recommendations of the United Nations economic and social commission for Asia and the pacific.
      • Formed to foster economic growth and cooperation in the region of Asia and the pacific and to accelerate the economic development of the developing countries in the region.
      • Established in 1966.
      • Member countries – 67.
      • Headquarter is in Manila, Philippines.
    • Asian pacific economic cooperation (APEC)
      • Is the premier forum for facilitating economic growth, cooperation, trade and investment in the Asia pacific region.
      • It is the only inter governmental grouping in the world operating on the basis of non binding commitments, open dialogue and equal respect for the views of all participants.
      • Established in November 1989, in Canberra (Australia).
      • Headquarter is in Singapore.
    • World trade organization (WTO)
      • Commenced under the Marrekech agreement in 1995 and replaced GATT.
      • Most of the issues it deals with have been derived from the Uruguay round of negotiations.
      • It is the only international organization which deals with the global rules of trade between the nations, helps producers of goods and services, exporters conduct their business.
      • Rules regarding to trade, tariff, patent, and intellectual property rights are framed by the WTO.
      • The members agree to accord “most favored nation” (MFN) status to each other. Exceptions allowed for preferential treatment of developing countries, regional free trade areas and custom unions.
      • Over 75% of WTO members are developing countries.
      • WTO membership allows access to developed markets at lower tariff rates.
      • The WTO’s agreement on “Trade related aspects of intellectual property right” (TRIPS), was negotiated in 1986-1994 Uruguay round.
        • In 1995 TRIPS agreement provided for both product patents and process patents.
        • Agreement gave developing countries 10 years to enact laws to protect intellectual property. (India enacted its patent (amendment) act in 2005 to confirm the agreement)
        • Under the agreement protection to patents had to be provided for 20 years.
        • TRIPS agreement is administered by WTO.
  • Political organizations
    • Common wealth nations
      • Established on 28th April 1949.
      • Headquarter is in Marlborough house, London, UK.
      • Member states – 54.
      • Member states cooperate within a frame work of common values and goals, as outlined in the Singapore declaration. These include promotion of –
        • Democracy.
        • Human rights.
        • Good governance.
        • The rule of law.
        • Individual liberty.
        • Egalitarianism.
        • Free trade.
        • Multi literalism.
        • And world peace.
      • All members except Mozambique and Rwanda were part of British Empire.
    • The non aligned movement (NAM)
      • Is the group of states which are not aligned formally with or against any major power block.
      • Founded in 1961 in Belgrade.
      • Headquarter is in Jakarta, Indonesia.
      • Member states – 120 and 17 observer countries.
      • Founder states were India, Yugoslavia, Indonesia, Egypt and Ghana.
    • Association of south east Asian nations (ASEAN)
      • Was established on 8th Aug 1967, in Bangkok, Thailand.
      • With the signing of ASEAN declaration (Bangkok declaration).
      • Founding members were Indonesia, Malaysia, Philippines, Singapore and Thailand.
    • South Asian association for regional cooperation (SAARC)
      • Founded on December, 1985.
      • Dedicated to economic, technological, social and cultural development emphasizing collective self reliance.
      • 7 founding members are Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.
      • Its secretariat is based in Kathmandu, Nepal.
      • SAARC secretariat coordinates and monitors implementation of activities, prepares for services meetings and serves as channel of communication between the association and its member states as well as other regional organizations.
      • The secretariat is headed by the secretary general who is appointed by the council of ministers from member states in alphabetical order for a three year term.
      • The secretary general is assisted by eight directors on deputation from the member states.
      • The SAARC secretariat and member states observes 8th December as the “SAARC charter day”.
    • European union (EU)
      • Is an economic and political union.
      • Founded on 1st Nov 1993.
      • Member countries – 28.
      • Members are primarily located in Europe.
      • Received Nobel peace prize in 2012.
    • Indian ocean rim association for regional cooperation (IOR-ARC)
      • Founded in 1995.
      • Headquarter is in Ebene city, Mauritius.
      • Member countries – 20.
      • Main objective is to promote balanced growth and sustainable development of the region and member states.
    • South Asian preferential trading agreement (SAPTA)
      • In Dec 1991, the sixth SAARC summit held in Colombo approved the establishment of an Inter governmental group (IGG) to formulate an agreement to establish a SAPTA by 1997.
      • The agreement was signed on 11th April 1993 and entered into force on 7th Dec 1995.
    • Bay of Bengal initiative for multi sectoral technical and economical cooperation (BIMSTEC)
      • Established on 6th June, 1997.
      • Headquarter is in Dhaka, Bangladesh.
      • Member states are Bangladesh, India, Myanmar, Bhutan, Sri Lanka, Thailand and Nepal.
      • Main objective is to promote multi sectoral cooperation for economic and social progress of the Bay of Bengal region.
      • Member countries agreed to create the BIMSTEC free trade area framework agreement in order to promote international trade and investment in the region.
    • Free trade agreement (FTA)
      • India and Sri Lanka have FTA for more than a decade.
      • Agreement was signed on 28th Dec,1999.
      • India has emerged as Sri Lanka’s biggest importing source with 18%, followed by china 16% and Singapore 9% of the total imports.
    • Shanghai cooperation organization (SCO)
      • Headquarter is in Beijing, China.
      • Member countries – 8.
      • Founded in 2001 in Shanghai, as an extension of Shanghai five.
      • It is an inter government mutual security organization.
    • India, Brazil, South Africa (IBSA)
      • Established on 2003.
      • To promote south – south cooperation.
      • Facilitating the trilateral exchange of information, technologies and skills to complement each other’s strengths.
      • And to promote international poverty alleviation and equitable development.
    • South Asian free trade area (SAFTA)
      • It is an agreement reached on 6th Jan, 2004 at the 12th SAARC summit in Islamabad.
      • It created a free trade area of 1.6 billion people in Bangladesh, Bhutan, india, Maldives, Nepal, Pakistan and Sri Lanka.
      • It comprises of Brazil, Russia, India, china and South Africa.
      • Founded on June 2006.
      • Are all deemed to be at similar stage of newly advanced economic development.
      • RSA formally became member on 24th December 2010, after being formally invited by the BRIC countries..
  • Multilateral summits
    • G-15.
      • Established in 1989.
      • Headquarter is in Geneva, Switzerland.
      • Member states – 17.
      • Objective is to act as catalyst for greater cooperation’s between leading developing countries.
    • G-8.
      • In 1997 after the addition of Russia, G-7 became G-8.
      • Objective of G-8 is discussing and evolving strategies to deal with the major economic and political international issues.
      • No formal institutional structure or permanent secretariat. Head of state member nations and EU representatives hold meetings annually.
    • G-20.
      • Established on 26th Sept, 1999.
      • It is the extensions of G-7 (France, Germany, Italy, Japan, UK, USA and Canada) .
      • To establish an informal mechanism for dialogue among systematically important countries including the industrialized countries and the big emerging markets within the framework of the Bretton Woods institutional system.
      • And to enhance international financial stability.
      • It does not have a permanent secretariat.
      • The secretariat chair rotates between the members selected from different five regional grouping of countries each year.
      • To harness the considerable potential for greater and mutually beneficial cooperation among developing countries.

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