Indian Economy

In the competitive exams like IBPS, SBI, SBI associates RRB and other bank, UPSC exams the below information will be very important. This information will be very handy in IBPS and SBI interviews also.

Union budget 2016-17 Highlights

Reserve Bank of India (RBI)

·         It is the central bank and supreme monetary authority of India.

·         It was established in April 1935 with its central office at Calcutta under RBI Act 1934. Now it has its head quarters at Mumbai and four local boards at Kolkata, Delhi, Chennai and Mumbai.

·         It was established with 5 crore as its capital as a private shareholder bank.

·         It was nationalized on January 1, 1949.

·         It’s financial year is from July 1 to June 30.

Functions of RBI

·         It acts as the central bank of India.

·         It acts as the banker to the Central and State Governments.

·         RBI manages the currency of India while the responsibility of coinage vests with Government of India.

·         Presently Indian currency system is based on the minimum reserve system, i.e. if RBI is willing to print additional currency, then after from considering technical front, it has to keep only a minimum amount of reserve which will allow it to print  as much currency as it is willing to print.

·         Since 1957, minimum reserve shall be of Rs 200 crore which shall include Gold worth Rs. 115 crore and Forex worth 85 crore.

PLANNING COMMISSION

It was set up in March 1950, and consists of a chairman, deputy chairman, and other members. 

Prime Minister is its chairman.

Main Functions:

•          Assessment of material, capital and human resource of the country.
•          Formulation of plans for the most effective and balanced utilisations of the country’s resources.
•          Definition of stages in which the plan should be carried out.
•     Determination of the nature of the machinery necessary for the implementation of the plan in all its aspects.
•         Appraisal from time to time of the progress achieved in the execution of each stage of the plan.
•         Perspective planning.
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NATIONAL DEVELOPMENT COUNCIL

It comprises chief ministers of all the states and is headed by the Prime Minister.

Main Functions:

•          To prescribe guidelines for the formulation of National Plan, including assessment of resources for the plan.
•          To consider National Plan as formulated by the Planning Commission.
•          To consider important questions of social and economic policy affecting national development.
•          To review working of the plan from time to time.

It includes measures to

•       Secure active participation and co-operation of the people.
•       Improve efficiency of the administrative services.
•       Ensure fullest development of the less advanced regions and sections of the community.

NATIONAL INCOME

·         It means total value of goods and services produced annually in the country.

·         According to National Income Committee, A national income estimate measures volume of commodities and the services turned out during a given period, counting it without duplication.

·          It measures flow of goods and services in the economy i.e., it measures production power of an economy.

In 1956, Government established Central Statistical Organization (CSO) which has been annually publishing National Income and related aggregates in a document titled National Accounts Statistics (NAS).

CSO estimates National Income taking 1999-2000 prices as base year prices. Since 2006, base year has been taken as 1999-2000. Prior to this, 1993-94 was the base year which was adopted in 1999.

Concepts in the National Income:

·         Gross Domestic Product (GDP): It is the sum of the value of all final commodities and services produced within the geographical boundary of the country during a given period of time. The sum total is to be calculated by counting the values without duplication.

·         Gross National Product (GNP):

GNP = GDP +  Net Factor Income Abroad (NFIA)

         = GDP + Export – Import

Since India has more imports than exports, its GNP figure is less than that of GDP.

·         Net National Product (NNP):

                   NNP = GNP – Depreciation

                            = GNP – Capital Consumption Allowance

                            = GDP + NFIA – Depreciation

                            = NDP + NFIA

·         Net Domestic Product (NDP):

                   NDP = GDP – Depreciation

 ·        Per capita income:

                  Per capita income = national income / total population