Economy Basics – 30-Minute Revision Sheet for RRB
1. Must-Know Terms (1-liners)
- GDP = Total value of goods & services made inside India in 1 year
- GNP = GDP + Indians’ income from abroad – Foreigners’ income from India
- NDP = GDP – Depreciation
- NNP = GNP – Depreciation (National Income)
- Per-capita income = NNP ÷ Population
- Fiscal Deficit = Total expenditure – (Revenue receipts + Non-debt capital receipts)
- Revenue Deficit = Revenue expenditure – Revenue receipts
- Primary Deficit = Fiscal Deficit – Interest payments
- Current Account Deficit (CAD) = (Import goods + Import services + Income & transfers paid) – (Export goods + Export services + Income & transfers received)
- Base Effect: Low last-year price → High current inflation even if price rise is small
| Term | Formula | Exam Trick |
|---|
| GDP at Market Price | GDPmp = C + I + G + (X – M) | CIG(X-M) – “Smoke a CIG with e(X)tra (M)asala” |
| GDP at Factor Cost | GDPfc = GDPmp – Indirect Taxes + Subsidies | T-S (Tax minus Subsidy) |
| National Income (NNPfc) | NNPfc = NNPmp – Net Indirect Tax | Remember “NNPfc = NI” |
| Inflation Rate (CPI) | [(CPIthis year – CPIlast year) ÷ CPIlast year] × 100 | Always current minus base |
| Tax Buoyancy | (% change in tax revenue) ÷ (% change in GDP) | >1 = Elastic tax system |
| Engel’s Law | Poor families spend larger share on food as income rises % on food falls | Engel < Food |
3. Planning-Policy Pointers
- Five-Year Plans: 1951-2017 (12th last); NITI Aayog from 1-Jan-2015
- NITI = National Institution for Transforming India; Chairperson = PM
- Gadgil Formula (1969) – Higher weight to population (60%) for plan assistance
- 12th Plan target growth = 8% (actual ≈ 6.9%)
- Green GDP = GDP – Natural resource depletion cost
4. Banking & Money Mega-Tricks
- CRR – Cash kept at RBI (no interest)
- SLR – Cash + Gold + Govt securities kept with itself (pays interest)
- Repo – Bank borrows from RBI (Repurchase agreement)
- Reverse Repo – RBI borrows from bank
- MSFR – Marginal Standing Facility Rate = Repo + 0.25% (banks use at end of day)
- Bank Rate – RBI lends without repurchase (longer term)
Mnemonic:
“CRR SLR Repo Reverse MSF Bank” – Come See Really Rich Money Bank
- Priority Sector Lending (PSL) – 40% of ANBC for domestic banks
– Agriculture 18%, weaker sections 10%, micro-enterprises 7.5%
5. Inflation & Indices – Cheat Codes
| Index | Items | Base Year (current) | Published by | Use |
|---|
| CPI Combined | 448 | 2012 | CSO (MoSPI) | Inflation target (RBI) |
| WPI | 697 | 2011-12 | Office of Economic Adviser (DIPP) | Wholesale prices |
| IIP | 407 | 2011-12 | CSO | Industrial growth |
- RBI inflation target = 4% ± 2% (2021-26)
- Dearness Allowance linked to CPI-IW (2001=100)
6. Budget & Deficit Limits
- Fiscal Deficit FRBM target = 3% of GDP (achieve by 2025-26)
- Revenue Deficit target = 0% (effective revenue deficit removed from FRBM 2018)
- Effective Revenue Deficit = Revenue Deficit – Grants for capital assets
7. Quick-Facts Table (Last-Day Glance)
| Fact | Data (FY23/22) |
|---|
| India’s GDP rank (nominal) | 5th (after US, China, Japan, Germany) |
| Per-capita income (current price) | ₹1,96,983 (provisional) |
| Share of Services in GDP | >53% |
| Share of Agriculture | ~18% |
| Largest tax item | GST (≈29% of total) |
| Direct tax : Indirect tax ratio | ~1 : 1.2 |
| External debt to GDP | ≈20% (safe <60%) |
| Forex reserves (June 24) | >US $650 bn |
8. Common Exam Q&A
Q1. Which of the following is not included while estimating national income by income method?
Answer: Transfer payments (pensions, gifts) – No productive service.Q2. If GDPmp is ₹200 cr, depreciation ₹20 cr, net indirect tax ₹30 cr, then National Income = ?
Answer: NNPfc = 200 – 20 – 30 = ₹150 cr.Q3. The minimum & maximum limits of CRR are:
Answer: 3% & 20% of NDTL (RBI Act).Q4. Which index is used to measure core inflation?
Answer: CPI excluding food & fuel.Q5. The slogan “Garibi Hatao” was given in which Five-Year Plan?
Answer: 4th Plan (1969-74).9. One-Word Memory Hooks
- GDPmp → CIGarette (C+I+G+X-M)
- GNP → “G” = Global Indians (add their income)
- Fiscal → “Fis-cal” = Fish-scale (expense > income scales up debt)
- CAD → “See-A-Dollar” going out (imports > exports)
10. 60-Second Rapid Recall
- NI = NNPfc
- Fiscal Deficit > Revenue Deficit always
- Repo ↑ → Loan rates ↑ → Inflation ↓
- Agriculture is in Primary sector, Railways in Services
- FRBM escape clause = 0.5% extra deficit in severe stress (war, natural calamity)
Revise → Sleep → Score!
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