Here is Part 1 of the transcription, carefully formatted into tables and preserving the exact data, bullet points, and structure as requested. Since the document is very long (54 pages), I have divided the transcription to ensure no data is lost or cut off.

Part 1 (Pages 1 to 20)

AM

Final Lap : Economy : Prelims 2026

Relevant Current Affairs
Core Concepts Interlinked
Thematic Coverage

Themes Covered

Money & Monetary Policy
Banking
Fiscal Policy
Financial Markets
Insurance, Pension, Financial Inclusion
External Sector
Organisations
Growth & Unemployment
Inflation
Labour & Employment
Agriculture
Manufacturing
Services
Mining & Minerals
Infrastructure
Misc

Sources Covered

The Hindu
Indian Express
PIB
Economic Survey
Budget

*Each of these themes along with PYQs have already been covered in 9 lectures as a part of the Magna Carta Prelims Advanced Course for Prelims 2026 www.courses.atishmathur.com | www.tracker.atishmathur.com

Money & Monetary Policy
Digital Payments	NPCI ● It is an umbrella organisation for operating retail payments and settlement systems in India. ● It is an initiative of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007. (not a statutory body) ● It has been incorporated as a “Not for Profit” Company under Section 8 of Companies Act 2013. ● Initiatives: ○ Unified Payments Interface (UPI) - Real-time mobile-based interbank transfer ○ RuPay - Domestic card network ○ Immediate Payment Service (IMPS) - 24×7 instant bank transfer ○ Bharat Interface for Money (BHIM) - UPI-based payment app ○ National Automated Clearing House (NACH) - Bulk payments (subsidies, pensions) ○ Aadhaar Enabled Payment System (AePS) - Aadhaar-based banking ○ Bharat Bill Payment System (BBPS) - Interoperable bill payment system ○ National Electronic Toll Collection (NETC/FASTag) ○ National Financial Switch (NFS) - connects ATMs ○ Cheque Truncation System (CTS) - image-based cheque clearing system that replaces the flow of physical cheques ○ E-Rupi - It is a digital voucher that a beneficiary gets on his phone in the form of an SMS or QR code. It is a pre-paid voucher, which he/she can redeem at any centre that accepts it. Unified Payments Interface (UPI) ● Technology for real-time digital payments, developed by NPCI ● Variants: ○ UPI 123Pay - for feature phones ○ UPI Lite - Small-value offline payments ● Namibia became the first country in Africa to adopt UPI ● UPI accepted in Bhutan, Nepal, Sri Lanka, Mauritius, Singapore, France, UAE, Qatar ● NPCI International Payments Limited (NIPL), a wholly-owned subsidiary of NPCI - incorporated in 2020 to promote UPI and RuPay globally.
UPI–UPU Integration Project	● It connects India’s Unified Payments Interface (UPI) with the Universal Postal Union (UPU) Interconnection Platform (IP) ● It enables fast, secure, low-cost cross-border remittances using UPI through global postal networks. ● It is a collaboration between Department of Posts (India), NPCI International Payments Limited (NIPL), Universal Postal Union (UPU) Universal Postal Union (UPU) ● Specialised UN agency ● HQ: Bern, Switzerland
Payments Regulatory Board	● Recently, the RBI constituted Payment Regulatory Board. ● It has replaced the earlier Board for Regulation and Supervision of Payment and Settlement Systems (BPSS). ● It is a statutory body under Section 3 of Payment and Settlement Systems Act, 2007. ● composition - 6 members: ○ Governor of the RBI–Chairperson, ex officio ○ Deputy Governor of the Reserve Bank in-charge of the Payment and Settlement Systems, ex officio ○ one officer of the RBI nominated by the Central Board, ex officio; ○ 3 persons to be nominated by the Central Government ● Tenure: 4 years, not eligible for re-nomination; resignation allowed with 6 weeks’ notice. ● Disqualifications: Age >70; insolvency; criminal conviction ≥180 days; MPs/MLAs, etc. ● Meetings: At least twice a year with a quorum of 3 members including Chairperson (or Deputy Governor in his absence) and a nominated member. ● Decision-making: Decisions by majority of votes of the members present and voting. Chairperson (or Deputy Governor in his absence) has a casting vote in case of tie.
Digital Payments Index	● Released by RBI to measure the extent of digitisation of payments across the country. ● is published semi-annually and is based on March 2018 as the base period (Index = 100) ● parameters: Payment Enablers; Payment Infrastructure – Demand-side factors & Supply-side-factors; Payment Performance; Consumer Centricity.
Project Nexus	● It is a BIS-led initiative (Bank for International Settlements) to enable instant cross-border retail payments by connecting domestic fast payment systems (like UPI) of different countries. ● Participants: Singapore, Malaysia, Philippines, Thailand, India
Cryptocurrency	Global regulations: ● EU - Markets in Crypto Assets (MiCA) ● OECD - Crypto-Asset Reporting Framework (CARF)
Stablecoins	● A type of cryptocurrency designed to maintain a stable value, usually by being pegged to a reserve asset like USD, Gold etc. ● Ex. USD Tether ● GENIUS Act - U.S. legislation to regulate stablecoins.
Central Bank Digital Currency (CBDC)	Digital Rupee (or e₹) - India's CBDC ● It is the digital form of India's physical currency, the Rupee ● issued by the Reserve Bank of India (RBI) in digital form ● is legal tender and is the liability of RBI ● Non-interest bearing ● finality of settlement ● Fungible ● 2 types ○ Wholesale - for financial institutions and intermediaries ○ Retail - person to person
Project mBridge	● It is a multi-central bank initiative to develop a cross-border payment platform using Central Bank Digital Currencies (CBDCs). ● Participants: led by the Bank for International Settlements (BIS) Innovation Hub, in collaboration with the central banks of China, Thailand, the United Arab Emirates (UAE) and Hong Kong.

Money Concepts Demand of Money = Transaction motive + Speculative motive Supply of Money RBI’s Balance Sheet

Assets	Liabilities
Gold Loans to Commercial Banks Govt Securities (Loans to govt) Foreign exchange	Currency in circulation Banks’ deposits with RBI Other deposits with RBI

M0 (Reserve Money/High Powered Money) = Currency in circulation + Banks’ deposits with RBI + Other deposits with RBI M0 = total liability of RBI

Commercial Bank’s Balance Sheet

Assets	Liabilities
Loans given CRR SLR	Deposits

Measures of Money Supply

Currency in circulation	Commercial Banks	Post Office Savings Bank
Demand Deposit	Time Deposit	Demand Deposit	Time Deposit
Narrow Money	M1	✅	✅
M2	✅	✅	✅
Broad Money	M3	✅	✅	✅
M4	✅	✅	✅	✅	✅

Money Multiplier = M3/M0

Velocity of Money ● measures how quickly money circulates in an economy, reflecting the frequency of monetary transactions. ● tends to rise during economic expansions and falls during contractions, indicating economic health.

Monetary Policy	It is the policy of the central bank to control money supply and credit conditions in the economy. Tools of Monetary Policy Quantitative: CRR, SLR, Repo, MSF, Bank rate, Reverse repo, SDF, OMO (sterilisation, GSAP) Qualitative: PSL, Loan To Value, Moral Suasion
RBI Retail Direct Scheme	allows individual retail investors to open a direct account with RBI and invest in Government Securities (G-Secs) without intermediaries. Launched in 2021

Priority Sector Lending (PSL) norms ● mandatory lending targets set by RBI for banks to ensure credit flows to specific important sectors of the economy. ● PSL guidelines issued under Banking Regulation Act, 1949 ● Loans to NBFCs who lend to PSL categories, i.e., indirect loans to PSL sectors is also counted in banks’ PSL target ● PSL norms apply to only Banks, not NBFCs

Domestic Commercial Banks + FB (>=20 branches)	FB (<20 branches)	RRB	SFB	UCBs
PSL Target	40% of ANBC	40% (32% as Export Credit + 8% any other priority sector)	75%	60%	60%

PSL categories

Weaker sections	12%
Agri: Small & Marginal farmers	10%
Agri: Other farmers	8%
Micro enterprises	7.5%
Others - small and medium enterprises, education, renewable energy, export credit, social infra	2.5%
Total	40%

PSL Certificates ● tradable certificates that allow banks to meet their Priority Sector Lending (PSL) targets. ● A bank that exceeds its PSL target can sell PSLCs to another bank that falls short of its target. ● Does not transfer loan assets or its risk ● Traded through RBI’s eKuber portal

If still unable to meet PSL targets, shortfall to be deposited to RIDF, UIDF etc.

Monetary Policy Committee	● statutory committee responsible for determining the policy interest rate in India to achieve inflation targets. ● It was established under the RBI Act, 1934 (amended in 2016). ● Composition - 6 members ○ 3 from RBI ■ RBI Governor (Chairperson) ■ Deputy Governor (Monetary Policy) ■ One RBI official nominated by the Central Board ○ 3 members appointed by the Government of India ● Meeting quorum 4 persons, incl. Governor. ● Legally required to hold minimum four meetings in a year. ● Decision-making: Decisions by majority of votes of the members present and voting. Chairperson (or Deputy Governor in his absence) has a casting vote in case of tie. ● Inflation target - decided by the Union Government in consultation with the RBI Governor. (CPI-AI 4% ± 2%) ● MPC decides repo rate to keep inflation within target. MPC stance - calibrated tightening, neutral, accomodative
Banks Lending Rate	Administered -> BPLR -> Base Rate -> MCLR -> External Benchmark
Cantillon Effect	phenomenon where increase in the money supply does not affect all individuals and sectors simultaneously, but redistributes purchasing power in favour of those who receive the new money first

Monetary Policy Committee

● statutory committee responsible for determining the policy interest rate in India to achieve inflation targets.
● It was established under the RBI Act, 1934 (amended in 2016).
● Composition - 6 members
○ 3 from RBI
■ RBI Governor (Chairperson)
■ Deputy Governor (Monetary Policy)
■ One RBI official nominated by the Central Board
○ 3 members appointed by the Government of India
● Meeting quorum 4 persons, incl. Governor.
● Legally required to hold minimum four meetings in a year.
● Decision-making: Decisions by majority of votes of the members present and voting. Chairperson (or Deputy Governor in his absence) has a casting vote in case of tie.
● Inflation target - decided by the Union Government in consultation with the RBI Governor. (CPI-AI 4% ± 2%)
● MPC decides repo rate to keep inflation within target.

MPC stance - calibrated tightening, neutral, accomodative

Banks Lending Rate

Administered -> BPLR -> Base Rate -> MCLR -> External Benchmark

Cantillon Effect

phenomenon where increase in the money supply does not affect all individuals and sectors simultaneously, but redistributes purchasing power in favour of those who receive the new money first

Banking
RBI	1926: Hilton Young Commission recommended setting up a central bank 1934: RBI Act enacted 1949: Banking Regulation Act - more powers to RBI to regulate banking sector RBI Governor and Deputy Governors - selected by FSRASC, appointed by Central Government - 3 years tenure, re-appointment is possible RBI Functions: issues currency, controls foreign exchange, lender of last resort to banks, public debt manager, regulates banks RBI Portals: e-Kuber - core banking solution of RBI UDGAM - unclaimed bank deposits PRAVAAH - for issuing license to Banks/NBFCs Daksh - for monitoring and supervision of banks/NBFCs
RBI Economic Capital Framework	● Adopted in 2019 based on recommendations of the Bimal Jalan Committee. ● Defines how much capital buffer RBI must maintain and how much surplus can be transferred to Government of India. 1. RBI earns income from: ● Interest on Government Securities (G-Secs) ● Interest on Foreign Assets (forex reserves) ● Interest on loans to banks (LAF/MSF) ● Seigniorage (profit from issuing currency) 2. From this income, RBI first: ● Pays operational expenses ● Maintains Buffer: Contingent Risk Buffer (CRB): 5.5%–6.5% of balance sheet 3. Remaining surplus: Transferred to Central Government as Dividend (Section 47, RBI Act)
Scheduled Banks	● banks listed in the 2nd Schedule of the RBI Act, 1934 ● 2 Categories: Scheduled Commercial Banks (SCBs), Scheduled Co-operative Banks ● Conditions for inclusion: ○ Minimum paid-up capital and reserves as prescribed by RBI ○ Must not conduct affairs detrimental to depositors ● Benefits: ○ Eligible to borrow from RBI (LAF, MSF, etc.) ○ Eligible for clearing house facilities ○ Greater credibility and regulatory recognition PSBs - 12, FDI - upto 20% PVBs - 21, FDI - 49% (automatic), 74% (govt approval)
One State, One RRB	● Ministry of Finance has notified amalgamation of Regional Rural Banks (RRBs) on the principles of ‘One State One RRB’. ● Now, there 28 RRBs - operating across 26 states and 2 Union Territories. ● Goa and Sikkim - no RRB About Regional Rural Banks (RRBs) ● RRBs are established under RRB Act, 1976 ● Objective: To create an alternative, localized credit channel for the rural sector, reducing reliance on cooperatives. ● Ownership structure: Central Govt (50%), State Govt (15%), Sponsor Bank (35%) ● Regulated by RBI, supervision by NABARD ● CRR, SLR applicable ● PSL target 75%
Small Finance Banks	AU Small Finance Bank received in-principle approval from the RBI in Aug 2025, to transition into a Universal Bank, making it the first Small Finance Bank in India to achieve this milestone. About Small Finance Banks (SFBs) ● Introduced based on Nachiket Mor Committee (2014) recommendations - announced in Union Budget 2014-15 ● Objective: To promote financial inclusion by providing savings and credit facilities to unserved and underserved sections such as small and marginal farmers, micro and small enterprises, and the unorganised sector. ● Recently, PSL target for SFBs reduced from 75% to 60% of ANBC
Payment Banks	● introduced by RBI based on Nachiket Mor Committee (2014) ● Objective: promote financial inclusion by providing small savings accounts and payments/remittance services to low-income households, small businesses, and the unorganized sector. ● 5 PBs active: Airtel Payments Bank, Fino Payments Bank, Jio Payments Bank, NSDL Payments Bank, India Post Payments Bank ● Regulatory Norms ○ CRR: Applicable (as per RBI). ○ SLR-type requirement: 75% of demand deposit balances to be invested in G-Secs/T-Bills (up to 1 year maturity). ○ Remaining 25% → deposits with Scheduled Commercial Banks. ● Cannot give loans - hence no PSL, can’t issue Credit Card ● Can issue Debit Card About India Post Payment Banks (IPPB) ● Established in 2018. ● 100% owned by Government of India (Department of Posts, Ministry of Communications). ● Account Types: Saral, Sugam, Safal
Cooperative Banks	Urban Cooperative Banks (UCBs) ● Co-operative banks operating in urban and semi-urban areas. ● Registered under State Co-operative Societies Act / Multi-State Co-operative Societies Act. ● Banking activities governed by Banking Regulation Act, 1949 (as applicable to co-ops). ● Regulated by RBI ● brought under the Banking Regulation Act, 1949 through an amendment in 1966. Before 1966, co-operative banks were regulated only under Co-operative Societies laws. ● National Urban Co-operative Finance and Development Corporation (NUCFDC) - self-regulatory organisation (SRO) to address the issues faced by UCBs ○ Under Ministry of Cooperation ○ Operates as NBFC regulated by RBI Rural Cooperative Banks ● Registered under State Co-operative Societies Act / Multi-State Co-operative Societies Act. ● Banking functions governed by Banking Regulation Act, 1949 (as applicable to co-ops) (since 1966 amendment). ● Types ○ Short term - to provide short-term & medium-term agricultural credit. ■ State Co-operative Bank (StCB) – Apex at State level ■ District Central Co-operative Bank (DCCB) – District level ■ Primary Agricultural Credit Societies (PACS) – Village level ○ Long term - Long-term agricultural & rural development loans. ■ State Co-operative Agriculture and Rural Development Bank (SCARDB) ■ Primary Land Development Banks (Land Banks) ● Dual Regulation - RBI + State Government ● PACS regulated by only State Govt (Registrar of Cooperative Societies) Note: PACS are not banks under BR Act; they are credit societies.

All India Financial Institutions ● AIFIs are not NBFCs. ● They are statutory financial institutions established under separate Acts of Parliament. ● NBFCs are companies registered under the Companies Act and regulated by RBI.

EXIM - 1982	NABARD - 1982	NHB - 1988	SIDBI - 1990
● Provides direct credit to exporters/importers ● 100% owned by GoI	● refinance to RRBs, Co-operative Banks; not direct lending to individuals. ● 100% owned by GoI ● Operates RIDF	● Refinance to Housing Finance Companies (HFCs) and banks. ● 100% owned by GoI ● Operates UIDF	● Primarily refinance to banks/NBFCs; also provides some direct lending to MSMEs. ● Owned by SBI, LIC etc

National Bank for Financing Infrastructure and Development (NaBFID) - 5th AIFI ● Set up by NaBFID Act, 2021 ● Objective: Provide long-term financing for infrastructure projects in India. ● 100% owned by GoI with plans to reduce its shareholding to a minimum of 26% over time.

NBFCs	About NBFCs ● Companies registered under the Companies Act, 2013. ● Regulated and supervised by RBI under the RBI Act, 1934. ● Engaged in financial activities: loans, advances, asset financing, leasing, investment, etc. ● CRR - not applicable ● SLR applicable only on NBFC-D ● Cannot accept Demand Deposit - can’t issue chequebook, can’t issue Debit card ● Can accept Time Deposit ● Deposits not insured under DICGC Act ● Can give loans - can issue Credit Card NBFCs based on regulator: ● RBI - Investment & Credit Company, Core Investment Company, Infrastructure Finance Company, Asset Reconstruction Company, Factoring Companies, Gold Loans companies, Home Loan companies, Micro Finance Institutions, Authorised Dealers, Credit Information Companies ● SEBI - Stock Broker, Mutual Funds, REITs/InvITs, Investment Bank, Venture Capital Fund, Market Infrastructure Institutions - Stock Exchange (BSE/NSE), Depositories (NSDL/CDSL), Clearing House (CCIL) ● IRDAI - insurance related ● PFRDA - pension funds (except EPFO) ● Ministry of Corporate Affairs - NIDHI companies ● State Govt - Chit Funds
RBI’s Scale-based Recognition (SBR) framework	● NBFCs are segregated into four layers based on their size, activity, and perceived level of riskiness. ● Each tier is subject to different regulatory requirements, tailored to its size and risk profile. (Illustration description: Top Layer - NBFCs judged to be extreme in supervisory risk; Upper Layer - Small set of NBFCs requiring tighter regulation; Middle Layer - Non-deposit taking NBFCs with asset size > 1000 crores; Base Layer - Non-deposit taking NBFCs with asset size < 1000 crores)
Self Regulatory Organisation (SRO) for NBFCs	● RBI has recognised Finance Industry Development Council (FIDC) as a SRO for the NBFC sector. ● Representative body of NBFCs, registered with RBI
Non-Performing Assets (NPA)	● Standard Asset - Performing asset; regular repayment. ● SMA (Special Mention Account) - Early stress category before NPA. ○ SMA-0 → 1–30 days overdue ○ SMA-1 → 31–60 days overdue ○ SMA-2 → 61–90 days overdue ● NPA (Non-Performing Asset) - Loan overdue for more than 90 days ● Substandard Asset - NPA for up to 12 months. ● Doubtful Asset - NPA for more than 12 months. ● Loss Asset - Considered uncollectible; identified by bank/auditor/RBI Provisioning - Banks set aside money (provision) to cover expected losses from NPAs. Higher provisioning required as asset deteriorates Interest Coverage Ratio (ICR) - measures a company's ability to pay interest on its outstanding debt from its operating profit. ICR = Earnings/Interest Payments ICR < 1 → Earnings insufficient to pay interest (stress signal)
recovery of NPA	1993 – Debt Recovery Tribunals (DRTs) ● Established under Recovery of Debts and Bankruptcy Act, 1993 ● Purpose: Speedy adjudication & recovery of bank dues. ● Banks/FIs file cases before DRT instead of civil courts. ● Appeal lies with DRAT (Debt Recovery Appellate Tribunal). 2002 – SARFAESI Act ● Allows recovery without court intervention. ● Applicable only for secured loans (NPA condition: > 90 days overdue). ● Bank issues 60-day notice → can seize & sell secured asset. ● Lenders with SARFAESI powers: Banks (commercial and cooperative), Housing Finance Companies, Notified NBFCs (as per RBI) ● Not applicable to: ○ unsecured loans ○ agricultural land ○ Loans < Rs 1 lakh ○ Amount due is less than 20% of principal ● Methods of recovery ○ Securitisation: Banks convert NPAs into marketable securities and sell them to investors. ○ Asset Reconstruction: NPAs sold to Asset Reconstruction Companies (ARCs), which recover dues and issue Security Receipts (SRs). ○ Enforcement of Security Interest: Bank can take possession and sell secured assets without court intervention after 60-day notice. 2016 - Insolvency & Bankruptcy Code (10 years of IBC) ● Time-bound resolution of insolvency for companies, LLPs and individuals. ● Minimum default > 1 crore ● Adjudicating Authority ○ NCLT – Companies & LLPs. ○ DRT – Individuals & partnership firms ● Appellate Authority - NCLAT → Supreme Court ● Insolvency and Bankruptcy Board of India (IBBI) - statutory body to regulate insolvency ecosystem in India ● Under Ministry of Corporate Affairs ● Functions ○ Regulates Insolvency Professionals (IPs). ○ Regulates Insolvency Professional Agencies (IPAs). ○ Regulates Information Utilities (IUs). ○ Frames regulations under IBC.
BAANKNET	● online portal developed by PSB Alliance Pvt. Ltd. (PSBA) ● Objective: e-auction of assets attached by Public Sector Banks.

Bad Bank - NARCL-IDRCL ● Set up in 2021. ● Both are companies registered under the Companies Act, 2013. ● Created to resolve large stressed assets (NPAs). ● Operate under the SARFAESI Act framework (for asset reconstruction).

NARCL	IDRCL
● Registered as an Asset Reconstruction Company (ARC). ● Acquires large NPAs (₹500 crore and above) from banks. ● Ownership: 51% PSBs, 49% PVBs	● Asset management / resolution company. ● Manages and resolves assets acquired by NARCL. ● Ownership: 49% PSBs, 51% PVBs

BASEL Norms	● International banking regulations introduced by Bank for International Settlements (BIS) - Basel Committee on Banking Supervision (BCBS) ● Objective: To strengthen the stability of the global banking system by ensuring banks maintain adequate capital against risks. ● Norms: BASEL I (1988), BASEL II (2004), BASEL III (2010) ● Applies to Scheduled Commercial Banks (excluding RRB, SFB, PB), NBFCs (separate capital adequacy framework) ● BASEL III norms: ○ Capital to Risk-weighted Assets Ratio (CRAR) - min 8% of RWA ○ Capital Conservation Buffer - 2.5% of RWA ○ Countercyclical Capital Buffer - 0-2.5% of RWA ○ Leverage Ratio - 3% ○ Liquidity Coverage Ratio (LCR) ○ Net Stable Funding Ratio (NSFR) Bank for International Settlements (BIS) ● Established in 1930 ● HQ: Basel, Switzerland ● Objective: Promote international monetary and financial stability, Facilitate cooperation among central banks. ● Members: 63 central banks ● RBI became member in 2013
Prompt Corrective Action (PCA)	● a regulatory tool by the RBI to to identify stress in a financial institution before it becomes a crisis, and compel corrective action in a structured, graduated manner. ● Parameters monitored: ○ Capital - CRAR ○ Asset Quality - Net NPA ○ Profitability - Return on Assets ○ Leverage - Leverage Ratio ● Applicable to ○ Banks - PSB, PVB, FB (since 2002) ○ NBFC (all deposit taking, all non-deposit taking in middle, upper, top layers) (since 2022) ○ Urban Cooperative Banks (UCBs) (since 2025) - replaced the earlier mechanism Supervisory Action Framework (SAF)
Measure creditworthiness	Credit Information Companies (CIC) ● Measure credit worthiness of individuals ● Regulated by RBI under Credit Information Companies Act, 2005 ● Ex: CIBIL, Experian, Equifax, CRIF High Mark Credit Rating Agencies (CRA) ● Measure credit worthiness of companies, govt ● Regulated by SEBI ● Ex: CRISIL, CARE, ICRA, Brickworks
Financial Services Institutions Bureau (FSIB)	● set up by the Government in 2022 to replace Banks Board Bureau (BBB) ● role: selects top officials (MD/CEO/Whole-time directors/Chairpersons) in Public Sector Banks and public sector Financial Institutions. Appointment done by Finance Ministry - Deptt of Financial Services
Financial Fraud Risk Indicator	● risk-based metric that classifies a mobile number to have been associated with Medium, High, or Very High risk of financial fraud ● Developed by Department of Telecommunications (DoT)
Reserve Bank - Integrated Ombudsman Scheme, 2021	● Central and State Co-operative Banks have been brought under the ambit of the Reserve Bank - Integrated Ombudsman Scheme, 2021 under the Banking Regulation Act, 1949. ● An Ombudsman is an independent official appointed to resolve complaints by customers against service providers — in this case, financial institutions. ● RB-IOS, 2021 integrated 3 schemes: ○ Banking Ombudsman, 2006 ○ Ombudsman for NBFCs, 2018 ○ Ombudsman Scheme for Digital Transactions, 2019 ● Power to award upto Rs 20 lakh in compensation + Rs 1 for mental harassment. ● It covers: (i) Banks: All commercial banks, including Public Sector Banks, Private Sector Banks, Foreign Banks, Local Area Banks, Small Finance Banks, Payment Banks, Regional Rural Banks, Scheduled Primary (Urban) Co-operative Banks and Non-scheduled Primary (Urban) Co-operative Banks with deposit size of ₹50 Crore and above. (ii) NBFCs registered with RBI. (iii) System Participants: All Payment System Participants. (iv) Credit Information Companies.
SWIFT Messaging Network	● secure messaging network that allows banks and financial institutions across the world to send and receive standardised financial messages — such as payment instructions, trade finance messages, and securities settlements. ● It does not transfer money itself; it transfers the information/instructions that trigger fund transfers between banks. ● become a geopolitical tool — in 2022, several Russian banks were disconnected from SWIFT as part of Western sanctions following the Ukraine invasion. ● BRICS working on an alternative - BRICS Pay About SWIFT ● Founded in 1973, HQ in La Hulpe, Belgium ● It is a cooperative society owned by its member banks. ● It connects over 11,000 financial institutions in 200+ countries.
Co lending norms	● RBI has issued revised guidelines to tighten co-lending arrangements between banks and NBFCs ● Co-lending is a model where two regulated financial institutions jointly finance the same loan to a borrower, sharing the risk and reward in agreed proportions. ● Revised guidelines: ○ All regulated entities (REs) involved in co-lending (banks, NBFCs, etc.) must retain at least 10% of each individual loan on their balance sheet. ○ If one lender classifies a borrower as a Special Mention Account (SMA) or non-performing asset (NPA) due to default, the same status must be adopted by the co-lending partner for its share of the exposure.

Fiscal Policy

Budget Structure

Revenue	Capital
Receipt	Expenditure	Receipt	Expenditure
Tax - direct, indirect Non-tax selling goods & services, dividend, profit, interest received, grants received	Interest paid on loans Grants given Subsidies Salaries, Pension	Non-debt - disinvestment, Recovery of past loans, sale of assets Debt - internal, external	Loans given, capital goods, Investment, repayment of past loans

Budget 2026-27 values (not to memorise)

RR = 35 l cr CR (non-debt) = 1 l cr Total Receipts = 36 l cr	RE = 41 l cr CE = 12 l cr Total Exp = 53 l cr (size of budget)

Direct Taxes	● Corporate Tax - Tax levied on net profits of companies ● Minimum Alternate Tax (MAT) - Ensures profitable companies (showing zero tax via exemptions/deductions) pay a minimum tax based on Book Profit. ○ Applicable to: Companies only ○ Budget 2026-27 - MAT reduced from 15% → 14% ● Alternate Minimum Tax (AMT) - MAT equivalent for non-corporate entities (LLPs, firms, individuals claiming certain deductions) based on Adjusted Total Income. ○ Applicable to: LLPs, partnership firms, individuals/HUFs claiming deductions ● Income Tax ● Presumptive Tax - Simplified method of taxation where tax is paid on a deemed/presumed income (fixed % of turnover) without maintaining detailed books. ● Capital Gains Tax ● Buyback Tax - Tax levied when a company repurchases its own shares from shareholders (buyback = company buying back its own equity from the market/shareholders at a premium over market price). ○ Budget 2026-27 - All share buybacks are proposed to be taxed as capital gains, with an additional buyback tax ○ for promoters. ● Securities Transaction Tax (STT) - Tax levied on purchase/sale of securities (equity, F&O, ETFs). ○ Budget 2026-27 - STT increased on Options & Futures ● Tax Deducted at Source (TDS) - Tax deducted by the payer at the time of making specified payments (salary, rent, interest, professional fees) and deposited with the government on behalf of the payee. ● Tax Collected at Source (TCS) - Tax collected by the seller from the buyer at the time of sale of specified goods (scrap, minerals, foreign remittance under LRS) and deposited with the government.
Indirect Taxes	Goods & Services Tax (GST) ● Destination based indirect tax on consumption ● Introduced by 101st Constitutional Amendment Act 2016- effective from 1 July 2017 ● GST Council (Art. 279A) - Constitutional body headed by Union Finance Minister with all State FMs as members; recommends rates, exemptions, and GST laws ● GST Network (GSTN) - Not-for-profit, non-government company providing the IT backbone/portal for GST registration, return filing, and tax payment ● GST Composition Scheme - Small taxpayers (turnover below threshold ~₹1.5 cr for goods, ₹50L for services) pay GST at fixed lower rate without ITC benefit and reduced compliance ● Reverse Charge Mechanism (RCM) - Liability to pay GST shifts from supplier to recipient of goods/services (e.g., unregistered dealer supplying to registered dealer). ● E-Way Bill - Mandatory electronic document required for movement of goods worth over ₹50,000; generated on GSTN portal to track inter/intra-state movement Excise Duty - Tax levied on manufacture of goods within India; largely subsumed under GST except on petroleum products, alcohol, and tobacco Customs Duty - Tax levied on import/export of goods at the border; includes Basic Customs Duty (BCD), IGST on imports, and various surcharges Types of Indirect Taxes ● Ad valorem = tax as a % of value. Example: 10% customs duty on a phone worth ₹50,000 = ₹5,000 tax ● Specific = fixed tax per unit regardless of value. Example: ₹500 per kg of tobacco, regardless of whether it is cheap or expensive tobacco
Income Tax Act 2025	Income Tax Act, 2025 to be effective from April 1, 2026. Key Provisions ● Tax Year - replaces 'Previous Year' and 'Assessment Year' with one unified term ● Power to frame schemes - Central Govt can design tech-based administration schemes to eliminate taxpayer-officer interface ● TDS consolidation — all TDS provisions brought under single Section ● Digital definitions — Virtual Digital Space and Virtual Digital Assets formally defined to cover cloud, social media, crypto etc.
GST Reforms	The GST Council approved the Next-Gen GST reform (GST 2.0) in Sep 2025. Key Provisions: ● Simplified two-slab structure (5% & 18%) from earlier four-slab (5% 12% 18% 28%) ● New 40% slab for luxury goods and sin goods ➢ 0% (Exempt) - raw staples like rice, wheat, dal, millets, fresh fruits & vegetables, eggs, milk, paneer, roti/paratha, life insurance, health insurance ➢ 5% (Merit Rate) - packages food items, life saving drugs ➢ 18% (Standard Rate) - most remaining goods and services not covered by other slabs, 2-wheeler, small car, TV, AC ➢ 40% (Sin/Luxury Rate) - sugary drinks, energy drinks, aerated fruit juices, caffeinated beverages, tobacco, pan masala, cigarettes, luxury cars
GST Appellate Tribunal (GSTAT)	Union Finance Minister formally launched the Goods and Services Tax Appellate Tribunal (GSTAT) in Sep 2025. About GSTAT ● statutory appellate body established under CGST Act 2017 to resolve disputes between taxpayers and tax authorities. ● It is the forum of second appeal for taxpayers affected by decisions of GST Adjudicating Authority and First Appellate Authority. (Adjudicating Authority → First Appellate Authority → GSTAT → HC → SC) ● It will function through a Principal Bench in New Delhi and 31 State Benches ● Composition: ○ Principal Bench: President + 1 Judicial Member + 2 Technical Members (one Centre, one State). ○ State Bench: 2 Judicial Members + 1 Technical Member (Centre) + 1 Technical Member (State)
Tax Avoidance	● Base Erosion and Profit Shifting (BEPS) - MNCs artificially shift profits from high-tax countries to low-tax countries, eroding the tax base of high-tax nations. ● Transfer Pricing - Pricing of goods, services, or intangible assets transferred between related entities of the same multinational group across borders. ● Arm’s Length Principle - The price charged between related companies must be the same as what two unrelated independent parties would charge each other in a free market ● Safe Harbour Rule - If a company's transfer price falls within a pre-defined range set by the government, tax authorities will accept it without questioning. Reduces litigation and compliance burden for small/routine transactions. ● Advance Pricing Agreement - A pre-agreed deal between a taxpayer and the tax authority on how transfer prices will be calculated for future transactions — typically valid for 3-5 years. Eliminates uncertainty before it arises. ● Indirect Transfers - Selling a foreign company that owns Indian assets — so Indian assets change hands without any transaction happening in India. India taxes this to prevent tax avoidance.
Financial Secrecy Index 2025	● published by the Tax Justice Network ● measures the degree of financial secrecy and opacity offered by a jurisdiction's laws and regulations, used to identify countries that enable tax evasion, illicit financial flows, and money laundering by hiding ownership and transaction information. ● #1 USA, #2 Switzerland, #3 Singapore, #4 Hong Kong
Tax Collection Estimates (Budget 2026)	Income Tax > Corporate Tax > GST > Excise > Customs
Terms	● Tax:GDP - Share of total tax revenue as % of GDP; measures government's ability to mobilise resources. ○ India = 17% (Centre - 11% + States - 6%) ○ OECD average = 34% ● Tax Buoyancy - % change in tax revenue relative to % change in GDP - measures total responsiveness of tax revenue to GDP growth ● Tax Elasticity - % change in tax revenue relative to % change in tax rates ● Tax Expenditure - Revenue foregone by government due to exemptions, deductions, concessions, and preferential tax treatment given to certain sectors/individuals ● Pigouvian Tax - Tax imposed on activities that generate negative externalities (e.g., pollution, tobacco) to make the producer bear the social cost. ● Tobin Tax - Small tax on financial transactions (especially foreign exchange transactions) to curb speculative short-term capital flows. ● Fiscal Drag - When inflation pushes taxpayers into higher tax brackets without real income growth, increasing government's tax share automatically (also called bracket creep) ● Automatic Stabiliser - Built-in fiscal mechanisms (progressive taxes, unemployment benefits) that automatically reduce economic fluctuations without new policy action ● Laffer Curve - curve showing that beyond an optimal tax rate, further increases reduce total tax revenue as they discourage economic activity

16th Finance Commission Report FC is a constitutional body constituted by the President every five years to make recommendations on centre-state fiscal relations. 16th FC for 5-year period: 2026-27 to 2030-31

Vertical Devolution: share of states in divisible pool

14th FC	15th FC	16th FC
42%	41%	41%

Horizontal Devolution

15th FC	16th FC
Income distance Population (2011) Area Demographic Performance Forest Tax and Fiscal Efforts Contribution to GDP	45% 15% 15% 12.5% 10% 2.5% -	42.% 17.% 10% 10% 10% - 10%

Grants: 16th FC has recommended grants worth Rs 9.47 lakh crore over the five-year period for: ● Urban and rural local bodies ● Disaster management 16th FC has discontinued: ● revenue deficit grants ● sector-specific grants ● state-specific grants.
Subsidies	Food > Fertiliser > Interest subsidy > Fuel
8th Pay Commission	● Temporary Executive Body ● Set up by Cabinet decision, not by Parliament or Constitution. Dissolved after submitting report. ● Objective: To review and recommend changes in pay, allowances, pension, and service conditions of Central Government employees — keeping in view inflation, economic conditions, and fiscal capacity of the government. ● Under Ministry of Finance → Department of Expenditure
Deficits	Revenue Deficit = RR - RE Effective RD = RD - grants to states for capital assets Fiscal Deficit = (RE + CE) - (RR + non-debt CR) = Borrowings Primary Deficit = FD - interest payments Budget 2026-27 RD = 1.5% of GDP FD = 4.3% of GDP PD = 0.7%
Ministry wise allocation	Defence (7.8 l cr) > MoRTH > Railways > MHA > MoCA&FD > MoRD
Government Debt	3 components: 1. Public Debt (against Consolidated Fund of India) a. Internal i. Marketable ii. Non-marketable b. External 2. Other Liabilities (against Public A/c of India) 3. Extra Budgetary Borrowings Internal debt (95%) >> External debt Long term debt >> Short term debt Fixed interest debt >> Variable interest debt
Off budget borrowings/Extra Budgetary Borrowings	● Borrowings made by government-owned entities (PSUs, special purpose vehicles) on behalf of the government — but NOT shown in the government's official budget as borrowing. ● The government gets the money spent, but the debt does not appear in the fiscal deficit calculation. ● Now, the Central Government transparently discloses off-budget borrowing undertaken, through Budget documents (Statement No. 27 of Expenditure Profile)
India’s external debt (govt + private) (as of Sep 2025)	External debt = $746 bn External Debt to GDP ratio = 19.2% components: ● Non-financial corporations – 36%% ● Deposit-taking corporations – 28% ● General govt – 23% ● Other financial corporations – 8% Non-government debt (78%) >> government debt (22%) Long-term debt (80%) >> short-term debt (20%) Acc to instruments: loans (34%) > Currency and Deposits (22%) > Trade Credit and Advances (18%) > Debt securities (17%) Acc to denomination: USD (54%) > INR (31%) > Yen (6%) > SDR (5%) > Euro (3%)
FRBM Act 2003	● Objective: To bring fiscal discipline to government finances by setting legally binding targets on borrowing and debt. ● It mandates the following statements be laid out before the Parliament along with Budget: ○ Medium Term Fiscal Policy Statement — 3-year rolling targets for fiscal indicators ○ Fiscal Policy Strategy Statement — explains current year's fiscal strategy and deviations ○ Macroeconomic Framework Statement — GDP growth, fiscal balance projections ● Original Targets ○ Fiscal Deficit: 3% of GDP ○ Revenue Deficit: 0% ● NK Singh Committee Review (2017) ○ Shift primary anchor from fiscal deficit → Debt-to-GDP ratio ○ Debt target: 60% of GDP (40% Centre + 20% States) by 2023 ○ Fiscal deficit path: reduce to 2.5% by 2023 ○ Create an independent Fiscal Council to monitor compliance ○ Escape clause: Targets can be breached in case of national calamity, war, or structural reforms with fiscal implications Debt-GDP ratio (Mar 2026): Union govt: 56% State govts: 29% The Centre has projected the debt-to-GDP (Union govt) ratio to decline to 50±1% by March 2031.
Fiscal Health Index	● By NITI Aayog ● To highlight fiscal status at the sub-national level and guide policy ● reforms for sustainable and resilient economic growth. ● Ranks states on 5 parameters: ○ Quality of Expenditure ○ Revenue Mobilisation ○ Fiscal Prudence ○ Debt Index ○ Debt Sustainability. ● Top performers: OD > CH > GA > JH > GJ
Ricardian Equivalence	An economic theory suggesting that government borrowing and taxation have equivalent effects on the economy; when the government finances spending through debt, rational individuals anticipate future taxes to repay it and increase savings accordingly, leaving overall demand and economic activity unchanged.
Switch Auction	● A debt management operation in which the Government exchanges an existing government security (bond) for a new government security. ● Objective: to manage the maturity profile of public debt by replacing short-term securities with long-term ones. ● Conducted by RBI on behalf of the government.

Financial Markets

Money Market (< 1 year)	Capital Market (> 1 year)
Regulated by RBI	Regulated by SEBI
Govt: T-Bill, CMB, WMA Company: C-Paper, Promissory Notes, Bill of Exchange Banks: Certificate of Deposit, Call money, Notice money, Repo NBFC: CBLO Trader: Factoring	Debt ● Central Govt: G-sec ● State Govt: State Development Loans (SDL) ● Local bodies: Municipal Bonds ● Company: Bond, Debenture, Hybrid (OFCD, FCCB) ● Cross-border: Masala bond, Maharaja bond, Panda bond ● Special purpose: Green Bond, Blue Bond, Transition Bond, Social Bond, ZCZP bond Equity

Govt	Central Govt: T-Bill - unsecured, sold at discount-repurchased at face value, negotiable, can be traded in secondary market Cash Management Bill (CMB) - similar to T-Bill * State govt can’t issue T-Bill and CMB Ways and Means Advances (WMA): short-term loans given by the RBI to the Central and State Governments to manage temporary mismatches between receipts and payments. State Govt: can’t issue T-Bill and CMB Eligible for WMA
Company	Commercial Paper, Promissory Note, Bill of Exchange ● Short term debt instrument - money market ● Sold at discount, repurchased at face value ● Unsecured - no collateral ● Negotiable - can be transferred to another party ● Can be traded in secondary market
Banks	Repo - short term loan from RBI, collateral - G-Sec Certificate of Deposit (CoD) - Fixed-term deposit issued by banks in marketable/dematerialised form, Issued at discount, redeemed at face value Call Money - Overnight interbank borrowing, unsecured Notice Money - Interbank borrowing for 2–14 days, unsecured Interbank lending rate benchmarks: MIBOR, SOFR, TONAR, SARON, SONIA
NBFCs	CBLO (Collateralised Borrowing and Lending Obligation) Short-term borrowing instrument where NBFCs, mutual funds, insurance companies borrow money by pledging G-Secs as collateral managed by CCIL (Clearing Corporation of India Ltd)
Traders	Factoring ● Sale of trade receivables (unpaid invoices) to a factor at a discount for immediate cash ● Factor can be Bank or NBFC ● Governed by Factoring Regulation Act 2011 ● Regulator: RBI ● Benefits MSMEs - who have long payment cycles with large corporates ● Done on TReDS platform - RBI-licensed digital platform where MSMEs can auction their trade receivables to multiple financiers
Bond Concepts	● Bond holders are creditors to company ● fixed coupon income regardless of profit ● first claim during liquidation before shareholders ● no voting rights ● lower risk lower return Bond types: ● Coupon Bond = pays fixed interest (coupon) periodically throughout tenure + repays face value at maturity — regular income stream ● Zero Coupon Bond = no periodic interest payment, issued at deep discount, redeemed at face value at maturity — entire return comes from price difference
Bond Yield	Face Value → printed value of bond → what issuer promises to repay at maturity → say ₹1000 Coupon Rate → fixed interest rate printed on bond at issuance → never changes → say 8% → so issuer pays ₹80 every year Bond Price → what bond trades for in secondary market → changes based on demand and supply → may be ₹900 or ₹1100 Bond Yield → actual return to current buyer Bond Yield = Coupon rate (fixed) / Bond Price (variable) Higher demand for bond → higher price → lower yield Lower demand for bond → lower price → higher yield
Long-term debt instruments by Govt	Central govt: ● G-Sec - backed by sovereign guarantee, called gilt-edged securities (very low risk) ● Sovereign Gold Bond (SGB) - bond price linked to rate of Gold ● Inflation Indexed Bond (IIB) - coupon rate linked to inflation State govt: State Development Loan (SDL) Both G-Sec and SDL are called Dated securities Local Bodies: Municipal bonds
Long-term debt instruments by Companies	Bonds = secured debt instrument - backed by specific asset/collateral of the company - lower risk to investor Debentures = unsecured debt instrument - backed only by company's creditworthiness and reputation - higher risk to investor Hybrid/Mezzanine financing - middle layer between pure debt and pure equity — has features of both Mezzanine Instruments: ● OFCD (Optionally Fully Convertible Debenture) = debenture with option to convert into equity shares at holder's choice — starts as debt, may become equity ● FCCB (Foreign Currency Convertible Bond) = bond issued abroad in foreign currency with option to convert into Indian equity Convertible bonds offer lower interest than pure bonds as they have option to convert to equity

Cross-border bonds	Masala Bonds Context - ED investigation on Kerala govt for violation of FEMA provisions regarding use of funds obtained through Masala bonds ● Rupee denominated — bond is issued and repaid in Indian Rupees, not foreign currency ● Currency risk lies with foreign investor — if rupee depreciates, foreign investor gets less in their home currency — Indian issuer is fully protected ● Issued in foreign/international market ● launched by International Finance Corporation (IFC) [part of WB group] in 2014 ● Regulated by RBI (under External Commercial Borrowing framework) and SEBI norms Other types - borrowing by foreign entity from: India in INR - Maharaja bond China in Chinese Renminbi - Panda bond Australia in Aus Dollar - Kangaroo bond US in USD - Yankee bond Japan in Yen - Samurai bond
Special purpose bonds	● Green Bond - Proceeds exclusively used for environmentally beneficial projects — renewable energy, clean transport, energy efficiency ● Blue Bond - Proceeds exclusively used for ocean/water-related sustainable projects — fisheries, marine conservation, clean water ● Transition Bond - Proceeds used by carbon-intensive companies to fund their shift toward cleaner operations ● Social Bond - Proceeds used for projects with positive social outcomes - affordable housing, healthcare, education, food security ● Zero Coupon Zero Principal (ZCZP) bond: ○ Issued by Non-Profit Organisations (NPOs) listed on Social Stock Exchange (SSE) ○ No interest, no principal paid to investor → effectively a donation ○ Proceeds used exclusively for social/developmental projects of the NPO ○ Trading is not permissible in ZCZP, but they can be transferred to legal heirs. ● Catastrophe Bond (Cat Bond) - issued by insurance companies to raise funds - investor receives regular interest as long as no disaster occurs - if catastrophe strikes, investor loses principal which is used by insurer to pay claims - investor takes disaster risk in exchange for high interest returns
Buffer reserves for bond repayment	State govts maintain Consolidated Sinking Fund (CSF) with RBI Company: Debenture Redemption Reserve (DRR) - not mandatory for listed companies, NBFCs
Equity concepts	● Equity/share holders are owners of the company ● Receive a portion of company’s profits in the form of dividend ● During liquidation, equity holders have the last claim on assets, receiving whatever remains after secured creditors, unsecured creditors, and preference shareholders have all been paid ● have voting rights ● higher risk higher returns if the company performs well
Type of shares	● Ordinary shares - standard ownership share - have voting rights, dividend is not fixed, last claim during liquidation ● Preference shares - fixed dividend, no voting rights, lower risk than ordinary share, during liquidation - repaid before ordinary shareholders Special type Sweat Equity - shares issued to employees or directors in recognition of their non-cash contribution - their intellectual property, technical know-how, or value addition - instead of paying them cash.
Company type	Listed - shares traded on stock exchange Unlisted - shares of the company are traded on stock exchange
Investor type	● Angel Investor - High net-worth individual who invests personal money in early-stage startups in exchange for equity — often first external investor, also provides mentorship ● Venture Capitalist (VC) - Professional fund that invests in high-growth startups at early-to-growth stage in exchange for equity - invests others' pooled money unlike angel ● Private Equity (PE) - Fund that invests large capital in mature unlisted companies or buys out listed companies - focuses on restructuring and value creation before exit ● Retail Investor - Ordinary individual investing personal savings in stocks, mutual funds, bonds through stock exchange - small ticket, protected by SEBI regulations ● Institutional Investor - Large organisations like mutual funds, insurance companies, pension funds investing pooled money
Issuing shares	IPO (Initial Public Offering) - Company enters stock market for first time by offering shares to general public — fresh capital comes to company, promoter's ownership dilutes FPO (Follow-on Public Offer) - Already listed company issues fresh shares to public again — raises additional capital from market Rights Issue - Existing shareholders offered new shares in proportion to current holding at discounted price — their "right" to maintain ownership percentage Private Placement - Shares offered to small group of identified sophisticated investors without public offer — faster, less regulatory compliance QIP (Qualified Institutional Placement) - Listed company raises capital from qualified institutional buyers like mutual funds, insurance companies, pension funds etc Offer for Sale (OFS) - Existing promoters sell their own shares to public — no fresh capital to company, only ownership transfer from promoter to public Bonus Issue - Free additional shares to existing shareholders by capitalising reserves — no new money, just conversion of reserves into share capital Share Pledging - Promoter borrows money by pledging shares as collateral
Raising equity capital from foreign markets	Direct Listing on Foreign Exchange - Indian company directly lists its shares on foreign stock exchange — foreign investors buy actual shares, no intermediary depository receipt structure needed ADR (American Depository Receipt) – Indian company’s shares are deposited with a domestic custodian bank; a U.S. depository bank issues receipts representing those shares, which are traded on U.S. stock exchanges in dollars. GDR (Global Depository Receipt) – Indian company’s shares are deposited with a custodian; an international depository bank issues receipts that are traded on foreign exchanges (commonly Europe), allowing global investors to invest without direct listing.
Market Infrastructure Institutions (MIIs)	entities that provide the core infrastructure for securities market to function - regulated by SEBI ● Stock Exchange (NSE/BSE) - Platform where buyers and sellers meet to trade listed securities ● Depository (CDSL/NSDL) - Holds securities in electronic/dematerialised form on behalf of investors ● Clearing Corporation - Stands between buyer and seller after every trade — guarantees settlement even if one party defaults — eliminates counterparty risk
Stock Exchange	BSE (Bombay Stock Exchange) - 150 years of BSE ● Oldest stock exchange in Asia, 10th oldest in world - established in 1875 ● Benchmark index - SENSEX (Sensitive Index) - comprises 30 most actively traded companies ● BSE's trading platform called BOLT (BSE Online Trading System) NSE (National Stock Exchange) ● Established 1992 ● Benchmark index - NIFTY 50 - comprises 50 most actively traded companies ● NSE's trading platform called NEAT (National Exchange for Automated Trading)
Depository	NSDL (National Securities Depository Limited) Established in 1996 Promoted by NSE + IDBI Bank + HDFC + UTI CDSL (Central Depository Services Limited) Established in 1999 Promoted by BSE + HDFC + LIC etc * regulated by SEBI under Depositories Act 1996
Investment Funds	Investment Fund (IF) is a pooled investment vehicle where money from multiple investors is collected and professionally managed to invest in securities or assets. Types: conventional, alternative Conventional IF - heavily regulated, open to retail investors, low minimum investment ● Mutual Fund - Pool money to invest in equity, debt, hybrid assets. ● ETF (Exchange Traded Fund) - similar to mutual fund ● REIT (Real Estate Investment Trust) - Pools money to invest in income-generating real estate. ● InvIT (Infrastructure Investment Trust) - Invests in infrastructure assets (roads, power transmission, pipelines). Recently, SEBI reclassified REITs as equity instruments to boost participation by mutual funds and SIFs, while retaining InvITs under hybrid category.
Alternative Investment Fund (AIF)	lighter regulation, open to only high net worth investors (Indian or foreign), high minimum investment Regulated under SEBI (AIF) Regulations 2012 Category I - invest in areas considered socially or economically desirable like startups, SMEs etc. Ex. Venture Capital Fund, SME Fund, Social Venture Fund, Infrastructure Fund Category II - not in category I or III Category III - invest in risky, complex instruments. Ex. Hedge Fund
Derivatives	A derivative is a financial contract whose value is derived from an underlying asset like shares, bonds, commodities, or currencies - parties trade the contract, not the asset itself. ● Forward: private agreement between two parties to buy/sell an asset at a fixed price on a future date ● Futures: standardised forward contract traded on stock exchange - clearing corporation eliminates counterparty risk ● Option: contract giving buyer the right but NOT obligation to buy/sell asset at fixed price (strike price) on future date - buyer pays premium for this right, only seller is obligated. ○ Call Option = right to BUY underlying asset at strike price — buyer profits when price rises above strike ○ Put Option = right to SELL underlying asset at strike price — buyer profits when price falls below strike ● P-Note (Participatory Note): derivative instrument issued by SEBI-registered FPI to allow foreign investors to invest in Indian markets without direct registration with SEBI. ● Credit Default Swap (CDS): contract where protection buyer pays periodic premium to protection seller who compensates if underlying bond/borrower defaults - effectively credit risk insurance ● Currency Swap: agreements between two parties to trade one currency for another at a preset rate over a given period
Securities and Exchange Board of India (SEBI)	● constituted as a non-statutory body in 1988 ● Given statutory status through SEBI Act, 1992 ● Replaced the Controller of Capital Issues (CCI) ● Mandate: to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. ● HQ: Mumbai ● Under Deptt of Economic Affairs, Ministry of Finance ● SEBI chairperson - appointed by Central govt based recommendations of Financial Sector Regulatory Appointments Search Committee (FSRASC) ● Appeals against SEBI order → SAT (Securities Appellate Tribunal) → SC
Securities Markets Code Bill 2025	It seeks to repeal and replace the: (i) Securities Contracts (Regulations) Act, 1956, (ii) SEBI Act, 1992, and (iii) Depositories Act, 1996 Increase number of SEBI members from 9 to 11 not yet passed*
SEBI SWAGAT-FI framework	SEBI framework to give verified low-risk foreign investors a single-window, streamlined route to access Indian securities markets, reducing repeated documentation/compliance.
Corporate Governance	Companies Act 2013 ● Objective: To improve transparency, accountability, investor protection, and corporate governance in Indian companies. ● Administered by Ministry of Corporate Affairs ● Establishes 4 statutory bodies: ○ NCLT (National Company Law Tribunal): Quasi-judicial body that adjudicates company law disputes, mergers and insolvency matters. ○ NFRA (National Financial Reporting Authority): Regulates auditors ○ IEPFA (Investor Education and Protection Fund Authority): Protects investor interests and manages unclaimed dividends and shares. ○ SFIO (Serious Fraud Investigation Office): Investigates complex corporate fraud cases. CSR Provision (Corporate Social Responsibility) Mandated under Section 135 of the Companies Act, 2013 Companies must spend 2% of the average net profits of the last 3 years on CSR activities if they meet any of the following: Net worth ≥ ₹500 crore Turnover ≥ ₹1000 crore Net profit ≥ ₹5 crore Competition Commission of India (CCI) ● Statutory Body under Competition Act, 2002 to promote and sustain competition in Indian markets. ● It replaced the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969 ● Functions under Ministry of Corporate Affairs ESG Framework ESG - Environmental, Social, and Governance - a framework used to evaluate a company’s sustainability, ethical impact, and governance practices beyond financial performance. BRSR Report (Business Responsibility and Sustainability Report) mandatory ESG disclosure framework prescribed by SEBI for the top 1000 listed companies (by market capitalisation)
International Standards of Accounting and Reporting (ISAR)	India secured an uncontested position in ISAR for the 2025–2027 term. ISAR is a UN global forum under UNCTAD that assists member states in improving the quality and international comparability of financial reporting and non-financial disclosures (environmental, corporate governance, CSR) for enterprises.
Terms	Frontrunning ● It is a trading practice where a broker executes a trade based on advance, non-public information about an upcoming large transaction that is expected to impact the market price. ● It is illegal in India as per SEBI Regulations. Insider Trading It refers to using non-public, material company information by insiders (company executives, employees) to trade. Reverse Flipping When an Indian startup that previously shifted its holding company abroad (commonly to Singapore or the US) moves its legal domicile back to India.

Insurance, Pension, Financial Inclusion

Unified Pension Scheme	Effective from April 2025
OPS	NPS	UPS
Type	Defined benefit	Defined contribution	Assured pension
Pension amount	50% of last drawn basic pay	Depends on market returns	50% of avg last 12 months basic pay
Employee contribution	none	10% of basic pay	10% of basic pay
Govt contribution	Full burden	14%	18.5%

Insurance Amendment Act 2025	● Raises the cap on FDI in Indian insurance companies from 74% to 100% to attract global capital and technology. ● Relaxed ownership & governance norms: Eases residency and board composition requirements for insurers with foreign ownership.
Financial Inclusion Index	Published by: RBI It is a composite index measuring extent of financial inclusion across 3 parameters: Access, Usage, and Quality — on a scale of 0 (complete exclusion) to 100 (full inclusion), without any base year.
PM MUDRA - 10 years	Launched in 2015 Objective: Provide collateral-free loans to small/micro non-farm enterprises Loan categories: Shishu (up to ₹50,000), Kishor (₹50,000 to ₹5 lakh), Tarun (₹5 lakh to ₹10 lakh), Tarun Plus (₹10 lakh to ₹20 lakh) MUDRA functions as a refinancing agency, providing funds to banks, NBFCs, MFIs and other lending institutions. About MUDRA Set up in 2015 as a subsidiary of SIDBI
Terms	Insurance penetration - Ratio of total insurance premiums to a country’s GDP. It indicates the importance of insurance sector in the economy. Insurance Density - Ratio of total insurance premiums to a country’s population.

External Sector

Balance of Payments	Current Account	Capital Account
● Goods ● Services ● Income ○ Wages ○ Interest ○ Dividend ○ Profit ● Transfers ○ Remittance ○ Gift ○ Donation	● Investment ○ FDI ○ FPI ● Loans ○ Govt ○ Private ● Bank Deposit

Trade data	Merchandise Exports: $437 bn (1.8% of global goods exports)<br>Service Exports:$ 387 bn (4.3% of global services exports)	Merchandise Imports: $702 bn (2.8% of global imports)<br>Services Imports:$ 195 bn (2% of global imports)

Trade Partners	Top Trading Partners (total trade in billion $): US (132) > China (127) > UAE (100) > Russia (68) > Saudi (41) Top Destination of India’s Exports: US (86) > UAE (36) > Netherlands (22) > UK (14) > China (14) Top Source of India’s Imports: China (113) > Russia (64) > UAE (63) > US (46) > Saudi (30) Most Trade deficit with: China (99) > Russia (59) > UAE (26) > Iraq (25) > Swiss (20) > Saudi (18) > Indonesia (17) > S Korea (15) > HK (13) Most Trade Surplus with: US (40) > Netherlands (17) > Bangladesh (9) > Nepal (6) > SL (3)
Major Items of Import	Crude Oil, Gold, Electronics & Semiconductors, Machinery & Capital Goods, Active Pharmaceutical Ingredients (API), Vegetable Oils, Fertilisers, Pulses
Major Items of Export	Refined Petroleum Products, Engineering goods, Gems & Jewellery, Drugs and pharmaceuticals, Textiles, Marine products (fish, shrimp), Rice
Crude Oil	Largest reserves: Venezuela > Saudi > Iran > Canada > Iraq Largest producers: US > Saudi > Russia > Canada > China Largest exporters: Saudi > Russia > Iraq > US Largest importers: China > US > India India imports over 85% of its oil needs. Source of India’s crude oil imports: Russia, Saudi, Iraq, UAE, US Grades of Crude Oil: ● Density - Light, Medium, Heavy ● Sulfur content - Sweet (low sulfur), Sour (high sulfur) Most valuable: Light Sweet; Least valuable: Heavy Sour Crude benchmarks - Brent crude, West Texas Intermediate (WTI), Dubai crude, Russia Urals Venezuelan oil - heavy sour
Gold	Largest producers: China > Russia > Australia > Canada > US Largest exporters: Switzerland > UK > HK > UAE > US Largest importers: Switzerland > China > UK > UAE * Switzerland - major global hub for gold refining Largest consumers of gold: China > India Schemes to curb Gold imports in India: Sovereign Gold Bond (SGB) scheme, Gold Monetisation scheme About SGB scheme ● Context: Budget 2026-27 - Capital gains tax exemption is now available to only original buyers who hold SGB till redemption not to those who buy it in the secondary market. ● Launched in 2015 by the GoI. ● Issued by the RBI on behalf of the Government. ● Aim: Reduce physical gold demand and mobilize household savings into financial assets. ● Denominated in grams of gold ● Tradable on stock exchange ● Fixed interest of 2.5% per annum on initial investment amount ● Capital gains tax - exempted
Steps to promote exports	Foreign Trade Policy 2023 goal to take India's exports to $2 trillion by 2030. Four Pillars of FTP 2023: ● Incentive to Remission — shifting from direct incentives to duty/tax remission on exports ● Export promotion through collaboration — with Exporters, States, Districts, and Indian Missions ● Ease of doing business — reduction in transaction cost and e-initiatives ● Emerging Areas — E-Commerce, Districts as Export Hubs, and streamlining SCOMET policy RoDTEP (Remission of Duties and Taxes on Exported Products) ● Exporters pay multiple indirect taxes/levies during the production chain that are not rebated under any other scheme — electricity duties, mandi taxes, fuel used in transport/generation, state cesses. RoDTEP refunds these embedded, unreimbursed tax costs. ● Mechanism: Not cash payment. Exporters get a transferable electronic scrip (credit certificate) loaded in their ICEGATE account. This scrip can be used to pay Basic Customs Duty on imports OR transferred/sold to other importers. Administered by DGFT. ● It is WTO-compliant because it remits only actual taxes paid — it does not provide a net subsidy. Advance Authorisation Scheme (AAS) Duty-free import of inputs (raw materials, components, intermediates, consumables) that are physically incorporated in the export product. The exporter gets upfront exemption from Basic Customs Duty, IGST on imports — before production and export happen. Authorised Economic Operator (AEO) ● A trade facilitation programme where businesses that voluntarily demonstrate high standards of compliance, security, and reliability in their supply chain are granted trusted trader status — and in return receive quicker customs clearance. ● Governed by: World Customs Organization (WCO) SAFE Framework of Standards
Remittance	India is the world's highest recipient of remittances ($130 bn) Top countries: India > Mexico > Philippines > France > Pakistan Key sources of Indian remittance: US > UAE > UK > Singapore > Saudi Countries with highest outward remittance: US > Saudi
Foreign Portfolio Investment (FPI)	● investment by foreign entities in financial securities of another country — primarily stocks, bonds, and other financial instruments — without acquiring significant control or ownership over the enterprise. ● they seek returns (capital gains, dividends, interest) but do not participate in management of investee companies. ● Also called hot money due to high volatility ● Regulated by SEBI - SEBI (FPI) Regulations 2019 ● Permissible investments and their limits ○ Listed companies equity shares - up to 10% ○ G-Sec - 6% ○ State Developmental Loans (SDLs) - 2% ○ Corporate Bonds - 15% ○ Others - T-Bills, Commercial Papers, Listed REITs/InvITs, ETFs * Investment limits in debt market prescribed by RBI under FEMA Fully Accessible Route (FAR) - investment route introduced by RBI to enable non-residents to invest in specified Government of India dated securities without being subject to any investment limits. Voluntary Retention Route (VRR) - route introduced by RBI to allow FPIs to invest in India’s debt market provided they hold their investments for a certain period.
Foreign Direct Investment (FDI)	● investment made by a person resident outside India through equity instruments in an unlisted Indian company, or in 10% or more of the equity of a listed Indian company. [no FDI in debt market] ● It seeks management control and long-term association in the company. ● It is a non-debt creating capital flow. ● FDI in India is governed by FDI Policy 2020 and FEMA (Non-debt Instrument) Rules, 2019. ● Primary regulator: DPIIT, Ministry of Commerce & Industry, secondary → RBI Prohibited sectors: 1. Lottery Business 2. Chit Funds 3. Gambling and betting 4. Manufacturing of Cigars, cheroots, cigarillos, and cigarettes 5. Trading in Transferable Development Rights (TDR) 6. Nidhi Company 7. Real Estate Business or Construction of Farm Houses 8. Sectors not open to private sector investments – atomic energy, railway operations (other than permitted activities mentioned under the consolidated FDI Policy) private sector allowed after SHANTI Act 2 routes - automatic, government approval More than 90% of the FDI inflow is received under the automatic route. Updates: Insurance sector 100% FDI allowed Source of India’s FDI: Singapore (30%), Mauritius (17%), US (11%) FDI inflows: $70 bn (2023-24) →$ 80 bn (2024-25)
External Debt
Banking Deposits	Types: ● Non-Resident External (NRE) - Foreign earnings parked in India in INR ● Non-Resident Ordinary (NRO) - India-earned income (rent, pension) parked in INR ● Foreign Currency Non-Resident (Bank) Account (FCNR(B)) - Foreign earnings in foreign currency itself
Cross-border interbank accounts	● Nostro - our account with you - An Indian bank’s account held in a foreign bank (in foreign currency). ● Vostro - your account with us - A foreign bank’s account held in an Indian bank (usually in INR).
Overall BOP	Current Account + Capital Account + Official Reserve Transaction = 0 So if Current Account + Capital Account together show a net surplus → RBI absorbs that extra foreign currency (forex reserves go up). If they show a net deficit → RBI releases foreign currency to fill the gap (forex reserves go down).
RBI’s Forex Reserves	Components:

Currency exchange rate	exchange rate = price of one currency in terms of another Nominal exchange rate = price of foreign currency in domestic currency Real exchange rate = relative price of foreign goods in terms of domestic goods Types of Exchange Rate System ● Fixed Exchange Rate – Government/central bank fixes rate ● Flexible (Floating) – Determined by market forces ● Managed Float – Market determined but central bank intervenes India follows: Managed float (intervention by RBI when needed) Exchange rate depends on supply and demand of $<br>Demand of$ : imports, foreign travel, FPI outflows, External debt repayment Supply of $: Exports, FDI/FPI inflows, Remittances
India’s Currency Convertibility	Fully convertible on Current Account Non-fully convertible on Capital Account
RBI’s Liberalised Remittance Scheme	Under this scheme, all resident individuals, including minors, are allowed to freely remit up to USD 2,50,000 per financial year for any permissible current or capital account transaction or a combination of both. The Scheme is not available to corporates, partnership firms, HUF, Trusts etc.
Internationalisation of Rupee	It means promoting the use of INR in cross-border trade, investments, and financial transactions without mandatory conversion into a dominant foreign currency like the USD. The long-term goal is to position INR as a global reserve currency. Steps: local currency settlements, Special Rupee Vostro Accounts, Currency swap agreements etc
Exhorbitant Privilege	It refers to the benefits the USA derives from the fact that the world demands and holds US dollars as a reserve currency — allowing the US to borrow cheaply, run persistent deficits, and finance consumption without facing the constraints other countries face.

Organisations

World Bank	It is a multilateral development bank (MDB) HQ: Washington, US Established: 1944, Brettonwoods Conference World Bank = ● International Bank for Reconstruction and Development (IBRD) ● International Development Association (IDA) World Bank Group (5 Institutions): [WB Group - specialised UN agency] ● International Bank for Reconstruction and Development ● International Development Association ● International Finance Corporation (IFC) ● Multilateral Investment Guarantee Agency (MIGA) ● International Centre for Settlement of Investment Disputes (ICSID) Reports - World Development Report, Remittance & Migration Report, Global Economic Prospects Report Other MDBs - BRICS Bank, AIIB, African Development Bank, Asian Development Bank, European Bank for Reconstruction & Development (EBRD)
IMF	ensures international monetary stability Specialised UN agency HQ: Washington, US Established: 1944, Brettonwoods Conference 3 functions: 1. Surveillance 2. Lending 3. Capacity Development Key Lending facilities: Stand-By Arrangement (SBA), Extended Fund Facility (EFF), Rapid Financing Instrument (RFI), Rapid Credit Facility (RCF), Poverty Reduction & Growth Trust (PRGT) IMF Quota System - Every member contributes funds to IMF proportional to its economic size — this contribution (quota) determines voting power, borrowing limits, and SDR allocation. Special Drawing Rights (SDR) It is an international reserve asset — not a currency. Its value is based on a basket of five currencies: USD (43%) > Euro (29%) > Chinese Renminbi (12%) > Yen (7.5%) > Pound Sterling (7.4%) Individuals and private entities cannot hold SDRs.
WTO	Established: 1995 (replaced GATT 1947) HQ: Geneva, Switzerland Structure ● Ministerial Conference — Highest decision-making body; meets every 2 years; all members represented ● General Council — Day-to-day work between Ministerial Conferences; also functions as: ○ 3 councils: Goods, Services, IPR ○ Dispute Settlement Body (DSB) — resolves trade disputes between members ○ Trade Policy Review Body (TPRB) — reviews trade policies of members periodically WTO Principles: ● MFN (Most Favoured Nation): Any trade advantage given to one WTO member must be given to ALL members equally. Exception: FTAs/RTAs allowed under GATT. ● National Treatment: Imported goods must be treated the same as domestically produced goods once they enter the market (no discriminatory domestic taxes/regulations). ● Special & Differential Treatment (S&DT): Developing countries get longer transition periods and flexibilities — India frequently invokes this. Important Agreements: ● Tariff Barriers ○ Goods: GATT ○ Services: GATS (Mode 1, 2, 3, 4) ● Non-tariff Barriers ○ Quality control ■ Food: Sanitary & Phytosanitary (SPS) measures ■ Non-food: Technical Barriers to Trade (TBT) ○ Subsidies ■ Food: Agreement on Agriculture (AoA) [Green, Blue, Amber box subsidies] - Peace clause ■ Non-food: Subsidies & Countervailing measures (SCM) ● IPR: TRIPS ● Investment: TRIMS
Trade Agreements	PTA → FTA → CEPA/CECA → Customs Union → Common Market → Economic Union India concluded 8 Trade deals since 2021: Mauritius CECPA (2021) - India’s first ever trade deal with Africa UAE CEPA (2022) Australia ECTA (2022) EFTA TEPA (2022) UK CETA (2025) Oman CEPA (2025) New Zealand FTA (2025) EU FTA (2026) - “mother of all trade deals”
Generalised System of Preferences (GSP)	Under the GSP, developed countries offer non-reciprocal preferential treatment (such as zero or low duties on imports) to products originating in developing countries.
Special 301 Report 2025	Annual report by the US to identify countries that do not provide adequate protection of intellectual property rights. Categories: Priority Watch List, Watch List India placed under Priority Watch List.
Pax Silica	A US-led strategic initiative to build a secure and resilient supply chain for semiconductors and related technologies — spanning critical minerals, clean energy, chip manufacturing, AI infrastructure, and logistics. India recently joined Pax Silica at India AI Summit 12 Members (as of Feb 2026): USA, Australia, Greece, Israel, Japan, Qatar, Netherlands, Singapore, South Korea, UAE, United Kingdom, India

Growth, Inflation, Unemployment

Gross Domestic Product (GDP)	Market value of all final goods and services produced within the domestic territory of a country during a given time period (usually one year). included in India's Domestic Territory: Indian ships/aircraft operating internationally, Indian embassies abroad, Oil rigs operated by India in international waters, Indian military establishments abroad
Methods	Expenditure method GDP (market price) = C + I + G + X-M C - Consumption - Private Final Consumption Expenditure (PFCE) I - Investment - Gross Fixed Capital Formation (GFCF) + Changes in Stocks (CIS) G - Govt Expenditure - Government Final Consumption Expenditure (GFCE) X - Exports M - Imports Largest component in India’s GDP - PFCE (56%) Production method GDP (basic price) = GVA of all sectors % share in GVA = Tertiary (55%) > Secondary (25%) > Primary (20%) 1. Primary Sector 1.1 Agriculture, Livestock, Forestry & Fishing 1.2. Mining & Quarrying 2. Secondary Sector 2.1. Manufacturing 2.2. Electricity, Gas, Water Supply & Other Utility Services 2.3. Construction 3. Tertiary Sector 3.1 Trade, Hotels, Transport, Communication & Services related to Broadcasting 3.2 Financial, Real Estate & Professional Services 3.3 Public Administration, Defence & Other Services* Income method GDP (factor cost) = sum of all factor payments = Wages + Interest + Profit + Rent
Production Tax and Product Tax	Factor cost —[+ Net Production Taxes] —> Basic price —[+ Net Product Taxes] —> Market price Net Production Tax = Production Tax - Production Subsidy Net Product Tax = Product Tax - Product Subsidy Net Production Taxes + Net Product Taxes = Net Indirect Taxes Production Tax — Tax levied on a firm for the act of producing (owning/using assets), regardless of output volume. Example: Property tax on factory, stamp duty. Product Tax — Tax levied per unit of a good/service produced or sold. Example: GST, excise duty, customs duty.
Nominal vs Real GDP	Nominal GDP = GDP at current market prices ● Value of all final goods measured at prices prevailing in the current year ● Rises even if actual production doesn't increase — just because prices rose Real GDP = GDP at constant market prices ● Value of all final goods measured at prices of a fixed base year ● Removes the effect of inflation - reflects actual/physical increase in production ● India's current base year = 2011-12 GDP Deflator = [ Nominal GDP / Real GDP ] x 100 ● Measures economy-wide inflation ● Broader than CPI/WPI — covers all goods & services
Data (not to be memorised)	FY 2024-25
BN Goldar Committee	Advisory Committee on National Accounts Statistics (ACNAS) ● to revise the base year from 2011-12 to 2022-23.
Base effect	● the impact of the previous year's economic data (the "base") on current growth rate calculations ● If the previous year had an unusually low GDP due to a recession, the current year’s growth will appear artificially high, whereas a high base makes growth look subdued.
Top 5 Economies (Nominal GDP)	US ( $30T) > China ($ 20T) > Germany ( $5T) > India ($ 4.2T) > Japan ($4T) India recently overtook Japan to become 4th largest economy.
Top 5 Economies (GDP - PPP)	China > US > India > Russia > Japan GDP (PPP) = GDP measured at a common set of international prices (usually USD) that equalizes purchasing power across countries.
Gross National Product (GNP)	GNP (market price) = GDP (market price) + Net Factor Income from Abroad GNP (mp) –[-depreciation]—> NNP(mp) –[-net indirect taxes]—> NNP (fc) NNP (factor cost) is called National Income

Inflation

Terms	Inflation - sustained increase in the general price level of goods and services in an economy over a period of time Aggregate Demand > Aggregate Supply Deflation - sustained decrease in general price level Disinflation - Inflation rate is falling but still positive; prices rising, just slower. Reflation - Deliberate policy action to stimulate the economy and reverse deflation by increasing money supply or government spending.
Inflation Types	● Demand-pull — Excess demand over supply due to more money supply; "too much money chasing too few goods." ● Cost-push — Rising input costs (oil, wages) push prices up from the supply side. ● Skewflation — Inflation concentrated in only a few specific commodities, not economy-wide. (Example: only food prices rising while other prices stable) ● Shrinkflation — Companies reduce product quantity/size instead of raising price to hide real price increase. (Example: biscuit pack shrinks from 100g to 90g at same price) ● Imported inflation — Inflation caused by rise in prices of imported goods, especially crude oil and commodities, transmitted into domestic economy. ● Stagflation — High inflation + stagnant growth + high unemployment occurring simultaneously - exception to Phillip’s curve [Phillip’s curve - Inverse relationship between inflation and unemployment; higher inflation → lower unemployment]
Combating Inflation	Combat inflation → reduce money supply Monetary Policy measures: increase repo rate, reverse repo rate, CRR, SLR, MSF rate, sell G-Sec (contractionary policy) Fiscal Policy measures: reduce govt expenditure, increase taxes, reduce subsidies * to combat deflation - do inverse
Impact of Inflation	Borrowers — Benefit, as they repay loans in cheaper money; real value of debt falls. Lenders, Bondholders, Fixed Income Groups — Hurt, as they receive back money with lower purchasing power; real returns erode. Currency Exchange Rate — Domestic currency depreciates making it less valuable relative to low/stable inflation currencies. Exports — Hurt; domestic goods become costlier abroad, losing price competitiveness in international markets.
Inflation Indices	● By National Statistics Office (NSO), MoSPI ○ CPI-Combined ○ CPI-U ○ CPI-R ○ CFPI (Consumer Food Price Index) ● By Economic Advisor to DPIIT, Min of Commerce ○ WPI ● By Labour Bureau, Min of Labour & Employment ○ CPI-IW (Industrial Workers) - used for deciding Dearness Allowance (DA) of central govt employees ○ CPI-RL (Rural Labour) ○ CPI-AL (Agricultural Labour) - used for updating MGNREGA wages ○ Wage Rate Index ● By CBDT, Min of Finance ○ Cost Inflation Index
Consumer Price Index (CPI)	● Base revised from 2012 to 2024 using Household Consumption Expenditure Survey 2023-24 (for CPI-Combined, CPI-U, CPI-R) ● New Additions: Rural housing, Online media service provider/Streaming services, value added dairy products, Barley & its product, Pen-drive & External Hard disk, Attendant, Babysitter and Exercise equipment ● Items Removed: VCR/VCD/DVD player and hiring charges, Radio, Tape recorder, Clothing second-hand, CD/DVD audio/video cassettes and Coir/rope Weightage (CPI-C) - previous Group-wise weights of CPI 2012 ● Food and Beverages: 45.86% ● Miscellaneous: 28.32% ● Housing: 10.07% ● Fuel and Light: 6.84% ● Clothing and footwear: 6.53% ● Pan, Tobacco & Intoxicants: 2.38% Weightage (CPI-C)- updated Weights of CPI 2024(%) ● Food and beverages: 36.75 ● Housing, water, electricity, gas and other fuels: 17.67 ● Transport: 8.80 ● Clothing and footwear: 6.38 ● Health: 6.10 ● Personal care, social protection and miscellaneous goods and services: 5.04 ● Furnishings, household equipment and routine household maintenance: 4.47 ● Information and communication: 3.61 ● Restaurants and accommodation services: 3.35 ● Education Services: 3.33 ● Paan, tobacco and intoxicants: 2.99 ● Recreation, sport and culture: 1.52 CPI ● includes goods as well as services ● includes indirect taxes ● does not include capital goods ● Used for setting inflation target by Central govt → 4±2 %
Wholesale Price Index (WPI)	Base year - 2011-12 Ramesh Chand panel formed to revise the base year of WPI from 2011-12 to 2022-23 and recommend a roadmap for transition from WPI to Producers Price Index (PPI) WPI weightage: Manufactured products (64%) > Primary articles (23%) > Fuel & Power (13%)
Cost Inflation Index	index notified annually by CBDT that provides indexation benefit by adjusting the purchase price of a long-term capital asset upward for inflation, thereby reducing taxable capital gains to reflect only real profit, not inflationary gain.
Production Indices	Index of Industrial Production (IIP) ● Released by NSO, MoSPI monthly ● Base year 2011-12 ● Measures short-term changes in volume of industrial production ● Components ○ Use-based: Primary good (34%) > Intermediate goods (17%) > Consumer non-durables (15%) > Consumer durables (13%) > Infra/construction goods (12%) > Capital goods (8%) ○ Sector-based: Manufacturing (77%) > Mining (14%) > Electricity (7%) ● Excludes construction, gas, water supply Index of Eight Core Industries ● Released by DPIIT, Min of Commerce monthly ● Base year 2011-12 ● These 8 industries have 40.27% weight in IIP ● Components: Refinery products (28%) > Electricity (19%) > Steel (17%) > Coal (10%) > Crude Oil (9%) > Natural Gas (6%) > Cement (5%) > Fertilisers (2%) Purchasing Manager’s Index (PMI) ● Not a govt index, released by private agency S&P Global monthly ● Indicator of business activity ● 2 PMIs - manufacturing PMI, services PMI ● Above 50 - expansion - business activity growing ● Below 50 - contraction - business activity shrinking

Labour & Employment

Terms	Labour Force — persons currently working + seeking working (unemployed) Labour Force Participation Rate (LFPR) - measures how many people are willing to work out of working age population. LFPR = [ Labour Force / Working Age Population ] x 100 Unemployment Rate (UR) = Percentage of labour force that is actively seeking work but cannot find it UR = [ unemployed / labour force ] x 100 Worker Population Ratio (WPR) = [ employed persons / total population ] x 100
PLFS	Periodic Labour Force Survey (PLFS) Released by NSO, MoSPI Launched in 2017 3 approaches to measure unemployment rate: ● Current daily status ● Current weekly status - based on activity during the preceding week. ● Usual status - based on the activity they spent majority of the year doing.
Labour Codes	Labour - concurrent list under 7th schedule All four Labour Codes were made effective from November 2025 ● Code on Wages - Statutory right to minimum wages and timely payment extended to all workers (organised and unorganised); equal pay for equal work; floor wage set by Central Government. ● Code on Industrial Relations - Threshold for lay-off/retrenchment/closure raised from 100 to 300 workers; Re-Skilling Fund created where employer contributes 15 days' last drawn wages credited to retrenched worker's account within 45 days; Trade Union with 51% membership recognised as sole Negotiating Union with statutory collective bargaining rights; work-from-home permitted in service sectors by mutual consent. ● Code on Social Security - Social security (PF, pension, health, maternity) extended to gig and platform workers for the first time; aggregators to contribute 1–2% of annual turnover to social security fund; gratuity eligibility after one year. ● Code on Occupational Safety, Health and Working Conditions (OSH&WC) - mandatory appointment letters for all workers; women permitted to work night shifts across all establishments with consent; working hours capped at 8 hours/day
VB-GRAM-G	VB-GRAM-G Act, 2025 replaces MGNREGA with a new statutory framework VB-GRAM-G - Viksit Bharat- Guarantee for Rozgar and Ajeevika Mission (Gramin) Ministry of Rural Development Eligible beneficiaries: Every rural household whose adult members volunteer to undertake unskilled manual work (only rural areas)

Agriculture

Contribution to: GDP: 16% Employment: 45%
Inputs	Production
Seeds	Seed sector regulated by Seeds Act, 1966; Seeds Control Order 1983; National Seed Policy 2002 Seed Replacement rate - percentage of total crop area sown with certified seeds purchased from external sources (govt, private, cooperatives) instead of farm-saved seeds from the previous harvest. Ideal SRR ● self-pollinated crops (wheat, rice, pulses): 25-33% ● Hybrids: 100% (seeds cannot be reused - do not retain their yield potential in the next generation)

Contribution to:
GDP: 16%
Employment: 45%

Inputs

Production

Seeds

Seed sector regulated by Seeds Act, 1966; Seeds Control Order 1983; National Seed Policy 2002

Seed Replacement rate - percentage of total crop area sown with certified seeds purchased from external sources (govt, private, cooperatives) instead of farm-saved seeds from the previous harvest.
Ideal SRR
● self-pollinated crops (wheat, rice, pulses): 25-33%
● Hybrids: 100% (seeds cannot be reused - do not retain their yield potential in the next generation)

Protection of Plant Varieties and Farmers' Rights Act (PPVFRA), 2001 ● Seeds, plant varieties and biological processes excluded from patents in India under Patents Act, 1970 ● TRIPS Agreement (WTO) mandated all member countries to protect plant varieties — either through patents, or through sui generis system. ● India enacted PPV&FR Act, 2001 as its sui generis mechanism to comply with TRIPS agreement ● Rights Under the Act ○ Breeders' Rights — Exclusive right to produce, sell, market, import, export a registered variety; duration: 15 years (18 years for trees and vines) ○ Researchers' Rights — Any researcher can freely use a protected variety for further breeding and research ○ Farmers' Rights — Farmers can save, use, sow, re-sow, exchange and share seeds from their own harvest; they CANNOT sell seeds under the registered brand name of the variety ● PPVFR Act aligns with UPOV ● PPV&FR Authority - statutory body under PPVFR Act ○ Under the Ministry of Agriculture & Farmers' Welfare ○ Registers four types: New variety, Extant variety, Essentially Derived Variety (EDV), Farmers' variety ○ Maintains the National Register of Plant Varieties ○ Administers the National Gene Fund — receives benefit-sharing payments when farmers' plant genetic resources are used commercially International Union for the Protection of New Varieties of Plants (UPOV) ● Established in 1961 ● HQ: Geneva ● Objective: To promote the development of new plant varieties by granting breeders exclusive rights to produce, sell, and market seeds. ● India is NOT a member. Landraces - traditional crop varieties developed and conserved by farmers over generations through informal selection, genetically diverse and locally adapted
Water	PM Krishi Sinchai Yojana (PMKSY) ● Launched in 2015 ● Centrally Sponsored Scheme → Core scheme ● Implementing Ministries: Multi-ministry — Ministry of Jal Shakti (AIBP + HKKP), Ministry of Rural Development (Watershed Development) ● 3 Components: ○ Accelerated Irrigation Benefits Programme (AIBP) - Completion of long-pending irrigation projects ○ Har Khet Ko Pani (HKKP) - 4 sub-components ■ CAD&WM — Command Area Development & Water Management ■ SMI — Surface Minor Irrigation ■ RR — Repair, Renovation & Restoration of Water Bodies ■ Groundwater Development ○ Watershed Development Component (WDC) - Soil + water conservation, rainwater harvesting, farm ponds, check dams Per Drop More Crop (PDMC) - improve water use efficiency through micro-irrigation - no longer part of PMSKY - shifted under Rashtriya Krishi Vikas Yojana (RKVY) - implemented by Min of Agriculture Recently, Union Cabinet approved Modernization of Command Area Development and Water Management (M-CADWM) as a sub-scheme of PMKSY for the period 2025-26 ● Objective: Modernize the irrigation water supply network — deliver water from existing canals/sources to designated farm clusters through underground pressurized piped irrigation up to the farm gate (up to 1 hectare) ● Technology used: SCADA and Internet of Things (IoT) ● CAD&WM originally launched in 1974
Fertiliser	ES26: N:P:K ratio deteriorating (2009 - 4:3:1 → 2019 - 7:2.8:1 → 2023 - 11:4:1) N - urea; P - Di-Ammonium Phosphate (DAP) ; K - Muriate of Potash (MOP) Import dependence: Urea - 20% imported, DAP - 60% imported, MOP - 100% imported Fertiliser subsidy: (Deptt of Fertilizers, M/o Chemicals & Fertilizers) ● Urea subsidy ○ Statutory price control - government fixes MRP of urea ○ Market price - MRP is the subsidy paid by the govt ● Nutrient-based subsidy (NBS) ○ fixed subsidy per kg of nutrient, not per bag - Manufacturers allowed to fix the MRP at market rates, govt provides fixed amount of subsidy ○ Urea is explicitly excluded from NBS Soil Health Card ● Launched in 2015, Ministry of Agriculture & Farmers' Welfare ● Merged into RKVY as a component under the name 'Soil Health & Fertility' from 2022-23 ● Objective: Issue soil health cards to all farmers every two years to provide a basis for addressing nutrient deficiencies ● 12 key parameters: ○ Macronutrients: N, P, K ○ Micronutrients: Fe, Cu, Bo, Mn, Zn ○ Secondary nutrients: S ○ Physical parameters: pH, Electrical conductivity, organic carbon PM PRANAM - incentive mechanism to reduce fertilizer subsidy burden and promote sustainable farming practices.
Insurance	PM Fasal Bima Yojana (PM FBY) ● Launched in 2016 ● Central Sector Scheme ● Ministry of Agriculture & Farmers' Welfare ● Objective: Provide financial support to farmers for crop loss from natural calamities, pests, diseases, adverse weather. ● Voluntary for all farmers since 2020; earlier mandatory for loanee farmers ● Maximum premium paid by farmer: ○ Kharif crops - 2% of sum insured ○ Rabi crops - 1.5% ○ Commercial/horticulture - 5% ● Covers losses in pre-sowing, harvest and post-harvest stages WINDS (Weather Information Network and Data System) — a network of automatic weather stations and rain gauges set up under PMFBY to provide localised, real-time weather data for insurance claim assessment, reducing dependence on manual weather records and improving transparency in crop loss estimation.
Technology	Digital Agriculture Mission ● Approved in September, 2024 ● Ministry of Agriculture & Farmers' Welfare ● Umbrella scheme to build a robust Digital Public Infrastructure (DPI) for agriculture — create farmer-centric digital solutions, make timely and reliable crop-related information available to all farmers, and enable seamless scheme and service delivery ● 3 components: ○ AgriStack ("Kisan ki Pehchaan") — Farmer-centric DPI comprising three registries: ■ Farmers' Registry (Farmer ID linked to land, livestock, crops, schemes) ■ Geo-referenced Village Maps ■ Crop Sown Registry (recorded via Digital Crop Survey each season). ○ Krishi Decision Support System (Krishi-DSS) — Comprehensive geospatial system integrating remote sensing data on crops, soil, weather, and water resources ○ Soil Profile Mapping — Detailed soil profile maps at 1:10,000 scale for ~142 million hectares of agricultural land; 29 million hectares already mapped.
Rice	Largest producer — India (1st), China (2nd) [India overtook China in Jan 2026] Largest consumer — China (1st), India (2nd) Largest exporter — India (1st) — accounts for ~30% of global rice exports, Thailand (2nd) Top producing states: UP > TL > WB
Wheat	Largest producers - China > India > Russia > US > Aus Largest consumer - China > India Largest exporters - Russia > Australia > Canada Top producing states: UP > MP > PB
Pulses	Grown in both Rabi and Kharif season Gram(chickpea) – most dominant pulse (40% share in pulses) Top producers – MP, MH, RJ, UP, KN India is the largest producer, consumer and importer of pulses. Canada – largest exporter of pulses. Mission for Atmanirbharta in Pulses ● Announced in Budget 2025-26 ● Ministry of Agriculture ● Objective: Boost domestic production, reduce import dependence, achieve self-sufficiency in pulses by 2027 ● Focus crops: Tur (Arhar), Urad (Black Gram), Masoor (Red Lentil) ● Mechanism: ○ Seed — 126 lakh quintals certified seeds distributed; 88 lakh seed kits free of cost for rice-fallow areas; quality tracked via SATHI portal ○ Area Expansion — +35 lakh ha by targeting rice fallow lands + intercropping; cluster-based approach (10+ ha per cluster) ○ MSP Procurement — 100% assured procurement of Tur, Urad, Masoor by NAFED & NCCF under PM-AASHA
Vegetable Oils	Agri commodity with largest import bill India – largest importer of palm oil Indonesia – largest exporter
Potato	Union cabinet approved establishment of International Potato Centre (CIP)’s South Asia Regional Centre at Agra, UP International Potato Centre (CIP) Founded: 1971, HQ: Lima, Peru Works on: Potato, sweet potato, Andean tuber crops Objective: To improve food and nutrition security, increase farmer incomes, and support climate-resilient agriculture through research and innovation in potato, sweet potato, and other root and tuber crops. Largest producers - China > India Potato - native to S. America
Spices	India is the world’s largest producer, consumer and exporter of spices. Chilli, cumin, turmeric, ginger and coriander makeup about 76% of the total production The largest spice-producing states - MP, RJ, GJ, AP, TL, KN SPICED Scheme Launched by Spices Board (under Ministry of Commerce) aims to significantly enhance the export of spices and value added spice products, as well as improving the productivity of cardamom and upgrading the post-harvest quality of spices across India for export.
Turmeric	Native to India and Southeast Asia Perennial herbaceous plant Rhizome (underground stem) of the plant is used as a culinary spice and traditional medicine. India is the world's largest producer & exporter of turmeric. The largest producing states of Turmeric are Maharashtra, Telangana, Karnataka and Tamil Nadu. National Turmeric Board HQ: Nizamabad, TL Under Ministry of Commerce
Sugar	Largest producer: Brazil> India Largest exporters: Brazil > Thailand > India
Tea	Largest producers: China > India > Kenya Largest exporters: China > India > Kenya > Sri Lanka Tea Board - Min of Commerce
Coffee	Coffee Cultivation 2 major species — Coffea Arabica (Arabica) and Coffea Canephora (Robusta). Climate: Hot and humid climate for its growth. Rainfall:150 to 250 cm. Temperature: Ranging between 15°C and 28 °C. It is generally grown under shady trees. Dry weather is necessary at the time of ripening of the berries. It is grown on hill slopes at elevations from 600 to 1,600 metres above sea level. Coffee growing states in India: Karnataka, Kerala, Tamil Nadu, Andhra Pradesh and Odisha, among which, Karnataka produces the most with over 70% of the total output. Coffee Board of India Statutory body under the Coffee Act, 1942 Ministry of Commerce and Industry functions from Bangalore
Cotton	India – largest cotton producing country, 2nd largest consumer of raw cotton US – largest exporter of raw cotton The cultivation of cotton requires at least 210 frost-free days to grow properly. Largest cotton producing states in India: GJ > MH > TL
Silk	Producer: China > India Exporter: China > India Silk varieties: mulberry (90% of India’s silk production), tassar, eri (ahimsa silk), muga Silk Board - Ministry of Textiles
Jute	Producer: India > Bangladesh Exporter: Bangladesh > India Jute Packaging Materials Act, 1987 - Mandates packing of 100% foodgrains and 20% sugar production in jute bags Jute Board - Ministry of Textiles
Rubber	Native to South America Conditions required for Plantation Tropical climate with annual rainfall of 200 – 450 cm is suited for cultivation. Minimum and maximum temperature should be ranged from 25 to 34°C with 80 % relative humidity is ideal for cultivation. Regions prone to heavy winds should be avoided. Propagated by green budding, brown budding and crown budding. Kerala is the highest rubber-producing state in India, accounting for nearly 90% of the country's total rubber production, followed by Tamil Nadu and Karnataka Rubber Board - Min of Commerce
Makhana	Budget 2025-26 announced the establishment of a Makhana Board in Bihar About Makhana ● Scientific name: Euryale ferox (water lily family) ● Common names: Fox nut, Lotus seed ● Grows in stagnant freshwater ponds, wetlands, and flood plains ● native to South-East Asia and China ● India accounts for 90% of world's makhana exports ● Bihar accounts for 90% of India’s production ● Nutritional value: Low Glycemic Index, Gluten-free, Rich in antioxidants ● GI Tag: "Mithila Makhana" (2022)
Tobacco	Native to S. America Introduced in India by Portuguese in 1508 It belongs to the "New World" crops — domesticated in the Americas and introduced to the Old World. hardy, drought-tolerant crop with a short growing period Largest producers: China > India Indian states: GJ > AP Tobacco board - Min of Commerce
Opium	India is one of the few countries that legally cultivates opium poppy and is the only country that legally produces opium gum. India is a signatory to the UN Single Convention on Narcotic Drugs, 1961, under which this licit production is authorised. Governing act: NDPS Act, 1985 (Narcotic Drugs and Psychotropic Substances Act) 11 other countries cultivate opium poppy, but do not extract gum Licensing authority: Central Bureau of Narcotics (CBN) Opium gum is source of Morphine (used as analgesic - pain relief), Codeine (cough syrups), Thebaine Poppy seeds (khus-khus) are edible - used in food; distinct from opium gum
Milkweed Fiber	natural fiber extracted from the seed pods of milkweed plants native to North America In India, it is found as a wild plant in RJ, KN & TN
Fisheries	India – 3rd largest fish producing country Inland fish production > marine fish production Largest fish producing state – Andhra Pradesh PM Matsya Sampada Yojana ● Launched in 2020 ● Ministry of Fisheries, AH & Dairying ● Nodal agency: National Fisheries Development Board (NFDB) ● Objective: sustainable development of fisheries sector ● 2 components ○ Central Sector Scheme (100% Centre-funded) ○ Centrally Sponsored Scheme (60:40/90:10)
PM Dhan Dhanya Krishi Yojana	● Announced in Union Budget 2025-26, launched in October 2025 ● Ministry of Agriculture & Farmers' Welfare ● Duration: 6 years (2025-26 to 2030-31)
Agriculture Infrastructure Fund (AIF)	Loan target of AIF recently doubled to Rs 2 lakh crore About AIF Launched in 2020 Centre Sector scheme Ministry of Agriculture Objectives: ● to mobilize medium and long-term debt financing for the development of post-harvest management infrastructure and community farming assets ● To strengthen agri-logistics, reduce post-harvest losses, promote modern storage, processing and value-addition facilities and improve farm-gate level infrastructure for efficient supply chains.
Storage	WDRA — Statutory authority under Warehousing (Development & Regulation) Act 2007; under Ministry of Consumer Affairs; regulates warehouse registration and negotiability of warehouse receipts to promote scientific storage and rural credit flow. eNWR — Electronic Negotiable Warehouse Receipt issued by WDRA-registered warehouses; farmer deposits produce → gets eNWR → pledges to bank → avoids distress sale. CWC — Central Warehousing Corporation; Navratna CPSE under Ministry of Consumer Affairs; established 1957; operates 700+ warehouses; stores 400+ commodities; key role in PMGKAY and PM-AASHA. Bhandaran 360 - platform built by CWC for real time monitoring of warehouses
Minimum Support Price (MSP)	● MSP is the pre-announced price at which the Government of India procures certain crops from farmers to ensure them a minimum assured return. ● Recommended by: Commission for Agricultural Costs and Prices (CACP) ● Approved by: Cabinet Committee on Economic Affairs (CCEA) ● Announced for 22 crops (14 Kharif + 6 Rabi + 2 commercial crops); plus FRP for sugarcane (separate mechanism) ● Announced: Twice a year — before Kharif sowing and before Rabi sowing ● Kharif (14) - Paddy, Jowar, Bajra, Maize, Ragi, Tur (Arhar), Moong, Urad, Groundnut, Sunflower, Soybean, Sesamum, Nigerseed, Cotton ● Rabi (6) - Wheat, Barley, Gram, Rapeseed-Mustard, Lentil (Masur), Safflower ● Commercial (2) - Jute, Copra ● MSP = at least 1.5 times of A2+FL (A2: input cost + rent for leased land; FL: imputed value of family labour)
Food Corporation of India (FCI)	Statutory corporation under FCI Act, 1964 Ministry of Consumer Affairs, Food & Public Distribution Objectives: ● Effective price support operations for farmers ● Distributing foodgrains through PDS for food security ● Maintaining satisfactory operational and buffer stocks
Exports	Agricultural & Processed Food Products Export Development Authority (APEDA) ● Statutory body under APEDA Act, 1985 ● Ministry of Commerce & Industry ● objective: promotion and development of export of scheduled agricultural and processed food products from India. ● Recently, APEDA launched BHARATI initiative with objectives: ○ Empower 100 agri-food and agri-tech startups — accelerate their export journey, promote innovation, create new export opportunities for young entrepreneurs. ○ Achieve $50 billion in agri-food exports by 2030. Marine Products Export Development Authority (MPEDA) ● Statutory body under MPEDA Act, 1972 ● Ministry of Commerce & Industry ● Objective: Development and regulation of export of marine products from India ● Shaphari certification: voluntary, online aquaculture certification program by MPEDA

Manufacturing

Contribution to GDP: 17% Employment: 11%
National Manufacturing Policy 2011	Nodal ministry: Ministry of Commerce & Industry Aim: Raise manufacturing's share in GDP from 16% → 25% by 2022
National Manufacturing Mission	Announced in Union Budget 2025-26 5 focal areas - ease and cost of doing business; future ready workforce for in-demand jobs; a vibrant and dynamic MSME sector; availability of technology; and quality products. Special focus on Clean Tech manufacturing — solar PV cells, EV batteries, electrolyzers, wind turbines, grid-scale batteries
Production Linked Incentive (PLI)	● Launched in 2020 ● Initially covered 3 sectors: Mobile Manufacturing, Bulk Drugs/APIs, Medical Devices, later expanded to 14 sectors ● Nodal Agency: DPIIT, Ministry of Commerce ● Offers financial incentives on incremental sales (above base year) for goods manufactured in India ● Incentive rate: 4%–6% of incremental sales (sector-specific) ● Duration: 5 years from base year (sector-specific) ● Eligible: Indian companies + foreign companies registered and manufacturing in India ● Sectors covered: 1. Large-Scale Electronics (Mobiles), 2. IT Hardware, 3. Bulk Drugs/APIs, 4. Medical Devices, 5. Pharmaceuticals, 6. Telecom & Networking, 7. White Goods (ACs & LEDs), 8. Specialty Steel, 9. Textiles (MMF & Technical), 10. Food Processing, 11. Solar PV Modules, 12. Advanced Chemistry Cell (ACC) Batteries, 13. Automobiles & Auto Components, 14. Drones & Drone Components ● Success (ES 2025-26) ○ Actual investment realised: ₹2.0 lakh crore ○ Incremental production/sales generated: ₹18 lakh crore ○ Employment generated (direct + indirect): 12 lakh jobs ○ Exports under PLI: ₹8 lakh crore
Startups	Revised startup recognition framework (Feb 2026) General Startup ● Not older than: 10 years from date of incorporation ● Annual turnover: Not exceeding ₹200 crore in any financial year (revised from earlier ₹100 crore) ● Must be working in: Innovation, improvement of products/processes/services, OR a scalable business model with high potential for wealth and employment creation Deep Tech Startup (New Category — February 2026) ● Not older than: 20 years from date of incorporation ● Annual turnover: Not exceeding ₹300 crore in any financial year ● Must be working in: Solutions based on new knowledge/advancements in science or engineering, with high R&D intensity, long gestation periods, and capital-intensive development cycles Cooperative Societies (New Inclusion — February 2026) ● Multi-State Cooperative Societies (under Multi-State Cooperative Societies Act, 2002) and State/UT registered Cooperative Societies now eligible for startup recognition ● Aim: Boost innovation in agriculture, rural development, and allied sectors
MSME	MSME definition
Electronics	● National Policy on Electronics (NPE) 2019: Overarching policy that envisions India as a global hub for Electronics System Design and Manufacturing (ESDM); target of $400 billion revenue from ESDM by 2025 ● PLI for Large Scale Electronics Manufacturing / Mobile Manufacturing (April 2020): Incentive of 4%–6% on incremental sales over base year for mobile phone and specified electronic component manufacturers for 5 years; India became world's 2nd largest mobile manufacturer under this scheme ● SPECS — Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (April 2020): 25% financial incentive on capital expenditure for electronic components, semiconductor/display fabrication units ● India Semiconductor Mission (ISM) (December 2021): ₹76,000 crore incentive framework; 50% fiscal support for semiconductor fabs, display fabs, compound semiconductors Electronics Components Manufacturing Scheme (ECMS) (April 2025) Objective: integrate India’s electronic industry with global value chains by encouraging production of essential components, sub-assemblies, and raw materials within the country. Incentives on incremental sales, capital investment or both Budget 2026-27 ECMS outlay raised: ₹22,000 crore → ₹40,000 crore ISM 2.0 (India Semiconductor Mission 2.0) launched - focus on: producing semiconductor equipment and materials, designing full-stack Indian IP, fortifying supply chains, industry-led R&D and training centres for skilled workforce Minister for Electronics launched Qualcomm's 2nm chip at Bengaluru - a chip designed (not manufactured) by Qualcomm's India engineering team Govt aims for domestic 3nm production by 2032 and 2nm capabilities by 2035 under the India Semiconductor Mission 2.0
Textile	India’s Textile Sector 2nd largest mfg capacity after China 6th largest textiles exporter 2nd largest employment generator after agriculture PM MITRA Park Scheme Recently, foundation stone laid for PM MITRA Park in Dhar, MP Launched by: Ministry of Textiles, with an outlay of ₹4,445 crore from 2021-22 to 2027-28. Objective: To establish large-scale textile manufacturing hubs with world-class infrastructure and facilities, facilitating the total value-chain of the textile industry including spinning, weaving, processing, garmenting, textile manufacturing, and processing & printing machinery — all at one place. Vision — 5F: Farm → Fibre → Factory → Fashion → Foreign 7 Sites Approved: Tamil Nadu (Virudhnagar), Telangana (Warangal), Gujarat (Navasari), Karnataka (Kalaburagi), Madhya Pradesh (Dhar), Uttar Pradesh (Lucknow), and Maharashtra (Amravati)
Sunrise sectors	Industries in early stages of development, expected to experience rapid growth, drive future economic output, employment, and innovation.

Services

Contribution to GDP: 55% Employment: 30%
Global Capability Centre	Global Capability Centres are wholly-owned offices that big multinational companies (like Google, JPMorgan, Walmart) set up in India to do their own internal work — like software development, R&D, finance, and analytics — using India's skilled workforce. Unlike traditional IT outsourcing (where Indian companies like TCS/Infosys serve foreign clients), in GCCs the MNC itself owns and runs the centre — so India provides the talent, but the work, decisions, and IP belong to the foreign company.
India AI Impact Summit 2026	Held at Bharat Mandapam, New Delhi from February 16–21, 2026 Organised under the IndiaAI Mission by MeitY It is the fourth in a series of global AI summits following Bletchley Park AI Safety Summit (2023), AI Seoul Summit (2024), and AI Action Summit in Paris (2025) — and the first summit in this series to be hosted by a Global South nation. Major Declarations: ● New Delhi Declaration on AI Impact: AI's benefits must be equitably shared. ● MANAV Framework: India presented the MANAV Vision — Moral, Accountable, National Sovereignty, Accessible, Valid — a human-centric framework to guide AI ● Sovereign AI Models Launched: Three indigenous LLMs launched — Sarvam AI 30B & 105B, Gnani Vachana TTS/STT, and BharatGen Param2 17B MoE ● India joined Pax Silica Initiative

Contribution to
GDP: 55%
Employment: 30%

Global Capability Centre

Global Capability Centres are wholly-owned offices that big multinational companies (like Google, JPMorgan, Walmart) set up in India to do their own internal work — like software development, R&D, finance, and analytics — using India's skilled workforce.
Unlike traditional IT outsourcing (where Indian companies like TCS/Infosys serve foreign clients), in GCCs the MNC itself owns and runs the centre — so India provides the talent, but the work, decisions, and IP belong to the foreign company.

India AI Impact Summit 2026

Held at Bharat Mandapam, New Delhi from February 16–21, 2026
Organised under the IndiaAI Mission by MeitY
It is the fourth in a series of global AI summits following Bletchley Park AI Safety Summit (2023), AI Seoul Summit (2024), and AI Action Summit in Paris (2025) — and the first summit in this series to be hosted by a Global South nation.
Major Declarations:
● New Delhi Declaration on AI Impact: AI's benefits must be equitably shared.
● MANAV Framework: India presented the MANAV Vision — Moral, Accountable, National Sovereignty, Accessible, Valid — a human-centric framework to guide AI
● Sovereign AI Models Launched: Three indigenous LLMs launched — Sarvam AI 30B & 105B, Gnani Vachana TTS/STT, and BharatGen Param2 17B MoE
● India joined Pax Silica Initiative

Mining & Minerals

| Mining Sector in India | ● Entry 54 — Union List (List I) - Regulation of mines and mineral development as declared by Parliament by law to be expedient in the public interest.
● Entry 23 — State List (List II) - Regulation of mines and mineral development subject to the provisions of List I
● Entry 23 (list II) is expressly subject to Entry 54 (list I) — meaning Parliament's declaration of Union control displaces State jurisdiction to that extent.
● Parliament exercised Entry 54 by enacting the MMDR Act, 1957 - for regulation of mines and mineral development
● MMDR Act, 1957 - applicable to all minerals except minor minerals and atomic minerals.

Minor minerals
Defined under Section 3(e) of MMDR Act
examples: sand, gravel, brick earth, murrum, road metal, marble, sandstone, quartzite, kankar.

Major minerals
whatever is NOT declared a minor mineral is treated as major mineral.
Listed in First Schedule of MMDR Act - Part A (Hydrocarbons — Coal, Lignite), Part B (Atomic Minerals — Uranium, Thorium, etc.), Part C (Metallic and Non-metallic), Part D (Critical and Strategic Minerals — 24 minerals added in 2023)

Jurisdiction
| | Major minerals | Minor minerals |
| :— | :— | :— |
| Grant of lease | State govt (with central govt approval) | State govt |
| Rule making for concessions | Central govt | State govt |
| Royalty rates | Central govt sets rates | State govt sets rates |
| DMF contributions | State govt oversees | State govt oversees |
| Critical minerals | Central govt exclusively | - | | | Mines and Minerals (Development and Regulation) Act, 1957 | MMDR Amendment 2015 — Replaced first-come-first-serve system with mandatory e-auction of mineral blocks; introduced District Mineral Foundation (DMF) and NMET.
MMDR Amendment 2021 — Removed end-use restrictions on captive mines; allowed 50% surplus mineral sale; enabled transfer of captive mining leases; extended leases for govt PSUs without fresh auction.
MMDR Amendment 2023 — Introduced list of 24 critical & strategic minerals (Part D, Schedule I); empowered Central Govt exclusively to auction their MLs & CLs; introduced Exploration Licence (EL) for critical and deep-seated minerals.

MMDR Amendment 2025
● NMET renamed to National Mineral Exploration and Development Trust (NMEDT); scope expanded to fund exploration and development both within India (including offshore) and overseas.
● Mineral Exchanges introduced — Central Govt empowered to register and regulate electronic trading platforms for minerals, concentrates, and metals (including derivatives).
● Captive mines — 50% surplus sale cap removed; unrestricted sale of surplus minerals allowed post end-use requirement; State Govts empowered to allow sale of stacked mineral dumps up to a CG-specified date.
● Inclusion of additional minerals in existing leases - lease holders can apply to state govt for adding other minerals | | District Mineral Foundation (DMF) | ● Created under MMDR Amendment Act, 2015
● Objective: Welfare of persons and areas affected by mining operations in the district.
● Non-profit statutory body established by State govt in every district where mining leases exist.
● Funding: Lessees pay a % of royalty to DMF — up to 30% for leases granted after 2015; up to 10% for leases granted before 2015.
● Scheme for utilization: Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY) — notified by Central Government under Section 20A of MMDR Act — prescribes how DMF funds must be spent (health, education, infrastructure, environment in mining-affected areas). | | Coal | Largest reserves: US > Russia > Aus > China > India
Largest producers: China > India > US
Largest exporters: Indonesia > Aus > Russia
Largest importers: China > India > Japan

4 types: Anthracite, Bituminous, Peat, Lignite

Indian states: JH, CH, OD, WB, MP, TL | | Crude Oil | Largest reserves: Venezuela > Saudi > Iran > Canada > Iraq
Largest producers: US > Saudi > Russia
Largest exporters: Saudi > Russia > Canada > US > UAE
Largest importers: China > (EU) > US > India > Japan

Indian states: AS, GJ, RJ, Mumbai High, KG Basin | | Natural Gas | Largest reserves: Russia > Iran > Qatar
Largest producers: US > Russia > Iran
Largest exporters: US > Qatar > Aus
Largest importers: China > (EU) > Japan > India

India:

Petroleum and Natural Gas Regulatory Board (PNGRB)
● Statutory body under PNGRB Act, 2006
● Ministry of Petroleum & Natural Gas
● Regulate downstream activities: Refining, processing, storage, transportation, distribution, marketing, and sale of petroleum products & natural gas
● Authorises City Gas Distribution (CGD) networks, Natural gas pipelines, Petroleum product pipelines
● Does NOT regulate upstream — i.e., production/exploration of crude oil & natural gas
● Appeals against decisions of PNGRB: Appellate Tribunal under Electricity Act, 2003 | | Iron & Steel | Largest reserves of iron ore: Aus > Brazil > Russia > China
Largest steel producers: China > India > Japan

Imp iron ores: Hematite, Magnetite, Limonite, Siderite

Indian states: Odisha, JH, CH, KN, GA | | Aluminum | Largest reserves: Guinea > Aus > Vietnam > Indonesia
Imp ores: Bauxite, Cryolite, Corundum

Indian states: Odisha, AP, JH, MH, CH, MP | | Copper | Largest reserves: Chile > Peru > Aus > Russia > DRC
Imp ores: Chalcopyrite, Malachite, Cuprite

Indian states: RJ (43% of total reserves), MP, JH, BH | | Titanium | Largest reserves: China > Aus
Imp ores: Ilmenite, Rutile | | Atomic Minerals | Uranium
Largest reserves: Aus > Kazakhstan > Canada > Russia
Largest producers: Kazakhstan > Canada > Aus
Largest exporters: Kazakhstan (40% of world supply) > Canada > Aus > Namibia
Largest importers: France > China > US > S. Korea > Japan

Imp ores: Pitchblende, Carnotite, Torbernite

Thorium
Largest reserves: India (25% of world) | | Battery Minerals | Lithium
Largest reserves: Chile > Aus > Argentina > China
Ores: Lepidolite, Petalite, brine deposits

Cobalt
Largest reserves: DRC > Aus > Cuba

Nickel
Largest reserves: Indonesia > Aus > Brazil > Russia | | Precious | Gold
Largest reserves: Aus > Russia > S. Africa
Indian states: KN, JH, AP

Silver
Largest reserves: Peru > Aus > Russia

Diamond
Largest reserves: Russia > Botswana
Indian states: Panna (MP) | | Rare Earth metals | ● Rare-earth metals are a set of 17 nearly-indistinguishable lustrous silvery-white soft heavy metals. Despite their name, rare-earth elements are relatively plentiful in Earth's crust, with cerium being the 25th most abundant element at 68 parts per million, more abundant than copper.
● Rare earths are abundant in the Earth’s crust but mineable concentrations are less common, making reserves very valuable and strategic.
● 17 rare earth elements are: lanthanum (La), cerium (Ce), praseodymium (Pr), neodymium (Nd), promethium (Pm), samarium (Sm), europium (Eu), gadolinium (Gd), terbium (Tb), dysprosium (Dy), holmium (Ho), erbium (Er), thulium (Tm), ytterbium (Yb), lutetium (Lu), scandium (Sc), and yttrium (Y).
● China provides more than 85 % of world’s rare earths
● Applications: consumer and industrial electronics, permanent magnets, catalysts, battery etc | | Rare Earth Permanent Magnet (REPM) Manufacturing Scheme | Scheme launched in Nov 2025
REPMs are amongst the strongest types of permanent magnets
Key elements: Neodymium (Nd), Praseodymium (Pr), Samarium (Sm)
Applications: EV motors, Wind turbine generators, Consumer and industrial electronics, Aerospace and defence systems, Precision sensors and actuators

Rare Earth Corridors (Budget 2026-27):
dedicated integrated zones for mining, processing, R&D, and manufacturing of rare earth elements to be set up in 4 mineral-rich coastal states — Odisha, Kerala, Andhra Pradesh, and Tamil Nadu.
Builds on the ₹7,280 crore REPM Manufacturing Scheme (Nov 2025).
Aim: reduce China dependence, support EVs, defence, and clean energy supply chains. | | Critical minerals | Minerals crucial for modern tech, economy & national security, with high supply disruption risk
Criticality = High Economic Importance + High Supply Risk

30 Critical Minerals identified by Ministry of Mines Committee (Nov 2022)
24 included in Part D, Schedule I of MMDR Act → Centre has exclusive auction authority
6 are atomic minerals (regulated under Atomic Energy Act)

Key minerals
● Lithium, Cobalt, Nickel, Graphite → EV Batteries (graphite in anode)
● Neodymium, Dysprosium (REEs) → Wind Turbines
● Silicon, Tellurium, Indium, Gallium → Solar Panels
● Titanium, Vanadium → Defence
● Silicon, Gallium, Germanium → Semiconductors

India’s challenges
100% import dependent on Lithium, Cobalt, Nickel, REEs; 60% on Graphite
China dominates 60–90% processing capacity for 20+ critical minerals

National Critical Minerals Mission (launched in Jan 2025)
Objective: To secure India’s critical mineral supply chain by ensuring mineral availability from domestic and foreign sources and strengthening the value chains

International partnerships: Minerals Security Partnership, Quad, IPEF, Pax Sillica |

Infrastructure

| India’s Energy mix | Total installed capacity - 520 GW
● Fossil fuel - 48% (250 GW)
○ Coal (217 GW) > Gas (20 GW)
● Non-fossil fuel - 52%
○ Solar (132 GW) > Hydro (55 GW) > Wind (54 GW) > Bio (11 GW) > Nuclear (8 GW)

Energy generation ownership
Private sector (55%) > Central govt (23%) > State govt (22%) | | Solar power | Largest production: China > US > India > Germany > Japan

States with highest potential: RJ > J&K > GJ
States with highest installed capacity: RJ > GJ > KN

Largest solar park in India - Bhadla - Jodhpur, RJ | | Wind power | Largest production: China > US > Germany > India > Brazil

States with highest potential: GJ > TN > RJ
States with highest installed capacity: GJ > TN > KN

Largest wind park in India - Muppandal - Kanyakumari, TN | | SHANTI Act 2025 | Background
India's nuclear sector was governed by two outdated laws:
● Atomic Energy Act 1962 (gave government absolute monopoly, barred private sector) and
● Civil Liability for Nuclear Damage Act 2010 (CLNDA — supplier liability clause under Section 17 deterred US/French vendors from entering India despite the 2008 India-US 123 Civil Nuclear Agreement)
SHANTI Act 2025
● Repeals Atomic Energy Act 1962 and CLNDA 2010 — replaces both with a single comprehensive statute covering generation, safety, liability, and regulation.
● Indian private companies and government-private joint ventures can now build, own, operate, and decommission nuclear power plants under a Central Government licence.
● Foreign-incorporated companies are excluded from being direct operators — they can only participate through Indian-incorporated joint ventures.
● FDI cap: 49%
● Sensitive activities reserved for Central govt - Enrichment and isotopic separation of radioactive substances beyond a threshold, Reprocessing and management of spent fuel and high-level radioactive waste, Production of heavy water, All activities with national security implications
● The Atomic Energy Regulatory Board (AERB), set up in 1983 by Presidential order, was a non-statutory body. SHANTI makes it a statutory body.
● Graded liability structure: linked to reactor size — ranges from ₹100 crore (for <150 MW) to ₹3,000 crore (for >3.6 GW)
○ Strict liability (No-fault) retained for operators
○ Supplier liability removed — operator can seek recourse against supplier only if (a) expressly written in contract, or (b) supplier acted with specific intent to cause damage. This was the key change that unlocks US/French nuclear vendor participation. | | Roadways | National Road Safety Board (NRSB)
● SC questioned the Central govt for failing to constitute NRSB.
● Motor Vehicles (Amendment) Act, 2019 — mandates the Central Government to constitute the Board via notification.
● Functions: Advises Central and State Governments on vehicle standards (design, weight, construction, maintenance), registration & licensing norms, road safety & infrastructure standards, traffic control, and promotion of new vehicle technology.

Recent road infra project:
Sonamarg Tunnel (Z-Morh) inaugurated - connects Gagangir–Sonamarg in J&K
Banihal bypass completed - highway stretch on NH 44 in J&K

Golden quadrilateral
N-S corridor connects Srinagar and Kanyakumari
W-E corridor connects Porbandar and Silchar | | Railways | National Rail Plan 2030
● Launched to create a "future-ready" railway system by 2030
● Key targets: Increase freight modal share from ~29% → 45% | Freight train average speed → 50 kmph | 100% electrification | Net-zero carbon by 2030

Important projects
● Dedicated Freight Corridors (DFC) - EDFC (Ludhiana–Dankuni, 1,337 km) + WDFC (JNPT–Dadri, 1,506 km)
● Kavach - Indigenous Automatic Train Protection (ATP) system
● Amrit Bharat Station Scheme - 1,337 stations selected for redevelopment, airport-like facilities | | Aviation | Institutional framework
| Body | Functions |
| :— | :— |
| DGCA (Directorate General of Civil Aviation) - statutory regulator | Safety regulation, licensing (pilots, engineers, ATCs), airworthiness certification, air operator permits, ICAO coordination |
| AAI (Airports Authority of India) - statutory body | Develops, manages, maintains airports and air navigation infrastructure; provides Air Traffic Services (ATS) |
| BCAS (Bureau of Civil Aviation Security) | Sets and enforces aviation security standards at airports; surprise checks; implements ICAO Annex 17 |
| AERA (Airports Economic Regulatory Authority) | Determines aeronautical tariffs, development fees, and passenger service fees at major airports; monitors service quality |
| AAIB (Aircraft Accident Investigation Bureau) | Investigates aviation accidents/incidents independently of DGCA; issues safety recommendations; decodes black box data |

Black Box - orange-colored device consisting of
● Flight Data Recorder (FDR): Records technical parameters of the aircraft — altitude, airspeed, heading, engine performance, control inputs, etc. Stores last 25 hours of flight data. Used to reconstruct what the aircraft was doing before an accident.
● Cockpit Voice Recorder (CVR): Records all audio in the cockpit — pilot conversations, ATC communications, engine sounds, alarms. Stores last 2 hours of audio. Used to understand crew decisions and warnings.

International Civil Aviation Organization (ICAO)
● Specialised UN agency; established by Chicago Convention 1944
● Sets international standards for aviation safety, security, efficiency, and environmental protection
● manages CORSIA (carbon offsetting scheme for international aviation) | | Ports | India - 11,000 km coastline
Maritime trade: 95% of trade by volume, 68% by value

12 major ports (13th upcoming - Vadhavan port, MH)

| West coast | East coast |
| :— | :— |
| Deendayal port - Kandla, GJ | SP Mukherjee port - Kolkata, WB |
| Mumbai port - MH | Paradip port - OD |
| JNPT - MH | Visakhapatnam port - AP |
| Mormugao port - GA | Kamarajar (Ennore) port - TN |
| New Mangalore port - KN | Chennai port - TN |
| Cochin port - KL | VO Chidambaranar (Tuticorin) - TN |

Indian Ports Act, 2025
● Replaces Indian Ports Act 1908
● State Maritime Boards — given statutory recognition; administer non-major ports; functions: planning, licensing, fixing tariffs, safety/environmental compliance.
● Maritime State Development Council (MSDC)
○ Chaired by: Union Minister for Ports, Shipping and Waterways
○ Members: State ministers in-charge of ports + secretaries of Indian Navy, Coast Guard (coastal security) + Secretary of Union Ministry
○ Functions: Issues guidelines on port data collection, tariff transparency; advises Centre on National Perspective Plan
● Tariffs
○ Major ports: fixed by Board of Major Port Authority or Board of Directors (if registered as company)
○ Non-major ports: fixed by State Maritime Board or authorised concessionaire
○ Must be published electronically (30 days prior to implementation per other sources)
● Environmental compliance — mandatory MARPOL + Ballast Water Management Convention compliance

Vizhinjam International Seaport
India’s first deep-water container transshipment port | | Logistics | Logistics Performance Index
Published by World Bank biennially (once every 2 years)
Measures country’s efficiency in logistics
India - #54 (2014) → #38 (2023)

Logistics Ease Across Different States (LEADS) Index
Published by DPIIT, Min of Commerce
to assess logistics performance and ease of logistics across states/UTs
4 Pillars (LEADS 2024): Logistics Infrastructure, Logistics Services, Operating & Regulatory Environment, Sustainable Logistics |

Misc

Nobel Prize in Economics 2025

Awarded to Joel Mokyr, Philippe Aghion, Peter Howitt
for their research on how technological innovation drives sustained economic growth and the role of creative destruction in long-term prosperity.

Curves

Phillips Curve – Inverse relationship between inflation and unemployment.
Preston Curve – Relationship between per capita income and life expectancy.
Laffer Curve – Relationship between tax rates and tax revenue.
Lorenz Curve – Graphical representation of income inequality.
Kuznets Curve – Inverted-U relation between income inequality and development.
Environmental Kuznets Curve – Inverted-U relation between income and environmental degradation.
Beveridge Curve - Inverse relation between unemployment rate and job vacancy rate