postUpdated Jun 12, 2026

Economic Terms & Concepts: Complete Static GK Notes for UPSC, SSC, Banking, RRB and PSU Exams 2026

This article is a complete, exam-focused guide to Economic Terms & Concepts Static GK covering fiscal deficit, monetary policy tools, GDP, inflation, taxation and external sector concepts. It includes clean definitions, comparison tables, easy memory tricks, frequently confused facts and 60+ one-liners that aspirants can use for quick revision before UPSC, SSC, IBPS, RRB, Insurance and State PCS exams.

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Introduction to Economic Terms & Concepts
Core Concept Explanation
Major Economic Terms & Concepts (Topic-Wise)
Memory Tricks and Mnemonics for Economic Terms
Additional Notes
One-Liners for Quick Revision

Introduction to Economic Terms & Concepts

Economic Terms & Concepts form one of the most frequently tested portions of the General Awareness and Economy sections in nearly every Indian government exam. Whether you are preparing for UPSC Prelims, SSC CGL, IBPS PO/Clerk, RRB NTPC, Insurance, or State PCS, a solid grip over terms like fiscal deficit, repo rate, GDP, inflation and balance of payments is non-negotiable. These terms also help in interpreting the Union Budget, the Economic Survey and RBI monetary policy statements that drive a large share of current-affairs questions.

For Banking and Insurance aspirants in particular, Economic Awareness is closely linked with Banking Awareness, since most monetary policy tools and rate-related questions flow directly from RBI's regulatory framework. Candidates can supplement this article with the regularly updated banking awareness study material to strengthen their understanding of how these terms operate in real-world banking.

This guide brings together every major economic term in one place, with clear definitions, structured tables, memory tricks, and ready-to-revise one-liners. The aim is to give competitive exam aspirants a single resource that covers both the conceptual depth needed for UPSC Mains and the factual precision needed for objective papers like SSC, Railways, and IBPS.

Core Concept Explanation

Economics studies how individuals, firms, governments and nations allocate scarce resources to satisfy unlimited wants. The subject is broadly divided into microeconomics (also called Price Theory) and macroeconomics, and Indian government exams test both branches through static and dynamic questions.

Microeconomics deals with individual units such as consumers, firms and prices of specific goods.
Macroeconomics deals with aggregates like national income, employment, inflation and overall price levels.
Fiscal Policy is formulated by the Ministry of Finance and deals with taxation, government spending, deficits and public debt.
Monetary Policy is operated by the Reserve Bank of India (RBI) and deals with money supply, credit conditions and interest rates.
Economic Growth refers to a quantitative rise in Real GDP, while Economic Development is a broader qualitative concept covering health, education, equity and living standards.

The terms in the following sections appear regularly in UPSC Prelims, SSC GK, Insurance GK, Railways GK and Banking Awareness papers. Every definition is written in exam-ready language so that aspirants can use them directly in answer writing as well as MCQ elimination.

Major Economic Terms & Concepts (Topic-Wise)

1. Fiscal & Budget-Related Terms

Term	Definition & Key Features
Fiscal Deficit	Excess of total government expenditure over total receipts excluding borrowings. It indicates the government's borrowing requirement in a financial year and directly impacts public debt, inflation and interest rates. A sharp rise in capital expenditure or revenue deficit can widen it.
Revenue Deficit	Excess of revenue expenditure over revenue receipts. Shows that current income is insufficient to cover salaries, subsidies, interest payments and routine administration, reducing funds for asset creation.
Primary Deficit	Fiscal Deficit minus interest payments on previous borrowings. Reflects fresh borrowing needs of the government, excluding past debt obligations. A better measure of current fiscal stance.
Gross Primary Deficit	Difference between current year's fiscal deficit and interest payments on previous borrowings. Indicates how much the government must borrow purely to meet new expenditure, excluding old interest.
Budget Deficit	Situation where total government expenditure exceeds total revenue collected in a financial year. It is the broadest measure of fiscal imbalance.
Government Expenditure	Total spending by the government, comprising revenue expenditure (routine administration, salaries, subsidies, interest) and capital expenditure (asset creation). Strongly influences aggregate demand.
Capital Expenditure	Spending on creating long-term assets such as infrastructure, machinery and public projects. Builds productive capacity and supports long-term growth.
Revenue Expenditure	Spending on salaries, subsidies, interest payments and administrative costs. It does not create new assets but is essential for day-to-day government functioning.
Minimum Support Price (MSP)	Pre-announced price at which the government purchases agricultural produce from farmers to ensure income security and prevent distress sales.
Subsidy	Government financial assistance to reduce the cost of goods or services. Supports agriculture, food, fuel and energy sectors to achieve social and economic objectives.
Sin Goods	Commodities considered harmful to society or health, such as tobacco, alcohol and sugary drinks. Taxed heavily to discourage consumption.

2. Monetary Policy & Banking Tools (RBI)

Term	Definition & Key Features
Monetary Policy	Regulation of money supply and credit conditions by the central bank (RBI in India) to maintain price stability and support economic growth.
Repo Rate	Short-term rate at which RBI lends funds to commercial banks against government securities. An increase makes borrowing costlier and helps control inflation.
Reverse Repo Rate	Rate at which commercial banks park surplus funds with RBI. It absorbs excess liquidity from the banking system and is generally lower than the Repo Rate.
Bank Rate	Long-term rate at which RBI provides loans to financial institutions and governments. Unlike repo, it does not carry a fixed percentage limit on liabilities.
Cash Reserve Ratio (CRR)	Percentage of a bank's total deposits that must be maintained as cash reserves with RBI. Directly impacts lending capacity and liquidity in the economy.
Statutory Liquidity Ratio (SLR)	Minimum percentage of deposits banks must hold in liquid assets such as cash, gold and approved government securities, in their own vaults. Ensures solvency. Determined by the RBI.
Marginal Standing Facility (MSF)	Facility allowing banks to borrow overnight funds from RBI against approved securities. Borrowing under MSF is capped at 2% of Net Demand and Time Liabilities (NDTL).
Open Market Operations (OMO)	Purchase or sale of government securities by RBI to regulate money supply. Buying injects liquidity; selling withdraws excess money from the system.
Capital to Risk-Weighted Assets Ratio (CRAR)	Measures a bank's capital adequacy relative to its risk exposure. Safeguards depositors and ensures banks maintain sufficient buffers against financial instability.
High Powered Money (M0)	Also called Reserve Money. Represents total liabilities of RBI including currency in circulation and bankers' deposits. Forms the monetary base of the economy.
Broad Money	Total money supply including currency, demand deposits and time deposits. Closely monitored to forecast inflation and credit expansion trends.
Currency Deposit Ratio	Proportion of currency held by the public relative to bank deposits. Indicates liquidity preference and impacts the money multiplier.
Reserve Deposit Ratio	Portion of deposits kept as reserves, including vault cash and balances with RBI. Incorporates both CRR and SLR components.

3. National Income Aggregates: GDP, GNP, NDP & NNP

Term	Definition, Formula & Key Features
Gross Domestic Product (GDP)	Total market value of all final goods and services produced within a country's geographical boundaries in one year. Formula: GDP = Consumption + Government Expenditure + Investment + Exports − Imports. The new GDP series in India calculates GDP at market price.
Gross National Product (GNP)	Total output produced by residents of a country, irrespective of location. Formula: GNP = GDP + (X − M), where X = income from abroad and M = income paid to foreigners.
Net Domestic Product (NDP)	GDP minus depreciation. NDP = GDP − Depreciation. Measures net output produced within national boundaries after accounting for capital consumption.
Net National Product (NNP)	GNP minus depreciation. NNP = GNP − Depreciation. Reflects net production by residents, including income earned abroad.
Per Capita Income	National Income divided by total population. Indicates average income per person; widely used to compare living standards across countries and regions.
Real GDP vs Nominal GDP	Nominal GDP measures output at current prices; Real GDP adjusts for inflation using a base year. Real GDP gives a true picture of economic growth by removing the effect of price changes.
Gross Investment	Total expenditure on acquisition of capital goods without deducting depreciation. Reflects expansion of productive capacity in an economy.
Depreciation	Decline in value of fixed assets due to wear and tear over their useful life. Deducted to compute net measures like NDP and NNP.
Capital Goods	Man-made durable items such as machinery and equipment used to produce consumer goods. Growth in capital goods strengthens long-term industrial expansion.
Capital Formation	Increase in the stock of physical assets like machinery, tools and infrastructure. Higher capital formation boosts production capacity and long-term economic growth.
Consumer Durables	Non-perishable goods designed to last at least three years, such as appliances and vehicles. Typically priced higher than non-durables.
Green GDP	Adjusts traditional GDP by subtracting the economic cost of environmental degradation and natural resource depletion. Promotes sustainability-aware growth.
Economic Growth	Sustained increase in real national output over time, measured by annual percentage rise in Real GDP. Indicates expansion of productive capacity.
Economic Development	Goes beyond growth; includes improvements in living standards, education, healthcare and income distribution. Reflects qualitative and quantitative progress.
Human Development Index (HDI)	Composite index using income, education and life expectancy to measure development. Highlights qualitative progress beyond mere economic growth.

4. Inflation & Price Indices

Term	Definition & Key Features
Inflation	Sustained increase in general price levels, reducing the purchasing power of money. Measured in India using CPI and WPI.
Consumer Price Index (CPI)	Measures changes in retail prices of a basket of goods and services consumed by households. Released monthly by the Central Statistics Office (CSO).
Wholesale Price Index (WPI)	Tracks average price changes at the wholesale level. Compiled by the Office of the Economic Adviser, Ministry of Commerce and Industry.
GDP Deflator	Measures price changes of all domestically produced goods and services. Compares current year prices with base year prices to isolate the inflation impact on output.
Purchasing Power Parity (PPP)	Compares currencies based on the relative price levels of identical baskets of goods across countries. Helps assess living standards and real income differences.

5. External Sector: Trade, Currency & Foreign Investment

Term	Definition & Key Features
Balance of Payments (BoP)	Records all economic transactions between residents and the rest of the world over a period. Includes current account and capital account components.
Balance of Trade (BoT)	Difference between a country's exports and imports of goods. Forms part of the current account; reflects trade competitiveness.
Foreign Direct Investment (FDI)	Investment by a company or individual from one country into business operations of another country, establishing lasting interest and managerial control.
Free Trade Agreement (FTA)	Pact between nations to reduce or eliminate tariffs and non-tariff barriers. Enhances trade flow and integrates economies into global markets.
Tariff	Tax imposed on imported goods. Raises cost of foreign products, protects domestic industries and influences trade balances and revenue.
Exchange Rate	Value of one currency expressed in terms of another. Influences trade competitiveness, foreign investment flows and BoP stability.
Devaluation	Deliberate reduction in the value of a country's currency by the central bank under a fixed exchange rate system. Makes exports cheaper and imports costlier.
Revaluation	Official increase in the value of a currency relative to foreign currencies. Reduces export competitiveness but lowers cost of imports and foreign debt servicing.
Foreign Exchange Reserves	Foreign currencies, gold and Special Drawing Rights (SDRs) held by the central bank. Provide stability against external shocks and support exchange rate management.
Special Economic Zone (SEZ)	Designated area with relaxed trade laws and tax incentives to attract investment, boost exports and generate employment opportunities.

6. Taxation Concepts

Term	Definition & Key Features
Direct Tax	Tax levied directly on the income or wealth of individuals and corporations. Examples: income tax and corporate tax. The burden cannot be shifted to others.
Indirect Tax	Tax imposed on goods and services rather than income. The burden can be shifted to consumers through higher prices.
Progressive Taxation	Tax structure where higher income groups pay higher tax rates. Promotes equity and supports redistributive policies. Indian income tax is direct and progressive.
Corporate Tax	Tax levied on net profits of companies under the Income Tax Act, 1961. A major source of direct tax revenue for the government.
Carbon Tax	Environmental levy on carbon-intensive products. Aims to reduce greenhouse gas emissions and promote cleaner production technologies.

7. Other Key Economic Concepts

Term	Definition & Key Features
Liquidity Trap	Situation where interest rates are extremely low and individuals prefer holding cash instead of investing. Monetary policy becomes ineffective in such recessionary conditions.
Balanced Budget Multiplier	An equal rise in government spending and taxation can still raise national income by the same amount due to the multiplier effect.
Externalities	Unintended costs or benefits affecting third parties not directly involved in a transaction. Governments intervene to internalise such social costs or benefits.
Barter System	Direct exchange of goods without using money. Suffers from the problem of double coincidence of wants and lacks a standard measure of value.
Transaction Demand for Money	Cash required for daily business and personal expenses. Depends largely on income level and frequency of transactions.
Autonomous Expenditure	Spending independent of current income levels, such as certain government investments. Can stimulate overall output through multiplier effects.
Monopsony	Market condition with one buyer and many sellers. Mirror image of monopoly, where there is one seller and many buyers.
Closed Economy	An economy with no trading activity with outside economies. The opposite of an open economy.
Consumer Surplus	Difference between what consumers are willing to pay and what they actually pay. An increase in price reduces consumer surplus.
Golden Handshake Scheme	Scheme associated with voluntary retirement, where employees are offered attractive monetary benefits to leave service early.

Memory Tricks and Mnemonics for Economic Terms

Trick 1: GDP Formula — "CIGS minus M"

Remember GDP using the catchy phrase "Cats In Garden, Smoke minus Mosquito":

C — Consumption
I — Investment
G — Government Expenditure
S — Exports (sales abroad)
M — Imports (subtract)

So GDP = C + I + G + (X − M).

Trick 2: Three Deficits — "FRP Chain"

Use FRP — Fiscal contains Revenue, Primary is Fiscal minus Interest:

Fiscal Deficit = Total Exp − Total Receipts (excl. borrowings)
Revenue Deficit = Revenue Exp − Revenue Receipts
Primary Deficit = Fiscal Deficit − Interest payments

If asked which deficit is the "purest" measure of new borrowing — it is always Primary Deficit.

Trick 3: Monetary Tools of RBI — "R-R-C-S-M-B-O"

"Rohit Runs, Cricket Stops, Match Begins Outside" — covers the seven major tools:

Repo Rate
Reverse Repo Rate
CRR (Cash Reserve Ratio)
SLR (Statutory Liquidity Ratio)
MSF (Marginal Standing Facility)
Bank Rate
OMO (Open Market Operations)

Trick 4: CPI vs WPI — "Customer = CSO, Wholesale = Commerce"

The Customer (CPI) is served by CSO; the Wholesaler (WPI) gets it from the Ministry of Commerce.

CPI → released by Central Statistics Office (CSO).
WPI → compiled by Office of Economic Adviser, Ministry of Commerce and Industry.

Trick 5: NDP vs NNP — "Depreciation Subtraction Trick"

Always subtract Depreciation. Just check whether you start with GDP or GNP.

Start with GDP → subtract Depreciation → get NDP.
Start with GNP → subtract Depreciation → get NNP.

Trick 6: Devaluation vs Depreciation — "Government vs Market"

Devaluation is Decided (by government, fixed system); Depreciation just happens (in market, floating system).

Devaluation → deliberate, by central bank, in fixed exchange rate.
Depreciation → market-driven, in floating exchange rate.

Trick 7: Direct vs Indirect Tax — "Burden Shift Rule"

If the burden cannot be shifted, it is Direct. If it can be shifted, it is Indirect.

Direct Tax: Income Tax, Corporate Tax — paid by the person on whom it is levied.
Indirect Tax: GST, Customs — burden shifted to the consumer.

Trick 8: Money Aggregates — "M0 is the Base"

M0 is the smallest (High Powered Money), Broad Money is the biggest.

M0 = Reserve Money / High Powered Money — currency in circulation + bankers' deposits with RBI.
Broad Money = currency + demand deposits + time deposits.

Additional Notes

Frequently Confused Facts

Fiscal Deficit vs Revenue Deficit → Fiscal Deficit measures total borrowing requirement; Revenue Deficit measures excess of revenue expenditure over revenue receipts.
Repo Rate vs Bank Rate → Repo Rate is short-term and backed by collateral securities; Bank Rate is long-term and has no specified percentage limit.
CRR vs SLR → CRR is kept in cash with the RBI; SLR is kept in liquid assets (cash, gold, government securities) by the bank itself.
GDP vs GNP → GDP is geographical (within India's borders); GNP is national (by Indian residents, anywhere in the world).
Economic Growth vs Economic Development → Growth is quantitative (Real GDP rise); Development is qualitative + quantitative (HDI, equity, healthcare).
Devaluation vs Revaluation → Devaluation lowers currency value (boosts exports); Revaluation raises it (cuts import costs).
CPI vs WPI → CPI tracks retail prices, released by CSO; WPI tracks wholesale prices, released by the Office of Economic Adviser.
Direct vs Indirect Tax → Burden of direct tax stays with the payer; burden of indirect tax is shifted to consumers.

Repeating PYQ Patterns

UPSC Prelims regularly asks definition-based MCQs on fiscal deficit, primary deficit, GDP deflator, PPP, BoP and HDI.
SSC CGL / CHSL focuses on author-concept pairs (e.g., Theory of Opportunity Cost → Gottfried Haberler) and full forms (RTGS, FDI, GATT, IMF).
IBPS PO / Clerk and SBI exams heavily test Repo Rate, Reverse Repo, CRR, SLR, MSF, CRAR and Bank Rate concepts.
RRB NTPC / Group D features one-liner style questions on Five Year Plans, GST launch date, New Economic Policy 1991, and base years (IIP base year 2011-12).
Insurance & PSU exams ask about banker's cheque (DD), Golden Handshake, Khadi & Village Industries Commission Act 1956 and MSME Act 2006.

For up-to-date concept refreshers and recent economy news connected to these terms, aspirants can regularly visit the daily current affairs page and pair the reading with the static GK collection to lock in retention.

Quick Insight

The Economic Survey 2025-26, tabled in Parliament by Finance Minister Nirmala Sitharaman in late January 2026 just before the Union Budget, projects Indian growth at around 7% for FY 2025-26 and highlights themes like AI governance, climate risk, MSMEs and agriculture. The terms covered in this article — fiscal deficit, monetary policy, inflation indices, GDP, and BoP — form the basic vocabulary needed to read the Survey and the Budget intelligently. UPSC Prelims 2026 is expected to feature multiple MCQs linking these static terms with figures and themes from the Survey.

One-Liners for Quick Revision

Fiscal Deficit → Total Expenditure − Total Receipts (excluding borrowings) → indicates government's borrowing need.
Revenue Deficit → Revenue Expenditure − Revenue Receipts → shows shortage in routine income.
Primary Deficit → Fiscal Deficit − Interest Payments → reflects fresh borrowing requirement.
Budget Deficit → Total Expenditure exceeds Total Revenue → broadest measure of fiscal gap.
Monetary Policy → controlled by RBI → aims at price stability and growth.
Repo Rate → rate at which RBI lends to banks → short-term, against G-secs.
Reverse Repo Rate → rate at which banks park funds with RBI → absorbs liquidity.
Bank Rate → long-term lending rate of RBI → no fixed % limit on liabilities.
CRR → cash reserve with RBI as % of deposits → impacts lending capacity.
SLR → liquid assets with banks themselves → determined by RBI → ensures solvency.
MSF → overnight borrowing facility → capped at 2% of NDTL.
OMO → RBI buys/sells G-secs → regulates money supply.
CRAR → capital adequacy of banks → protects depositors.
Balance of Payments → record of all external transactions → current + capital account.
Balance of Trade → Exports − Imports of goods → part of current account.
FDI → Foreign Direct Investment → lasting interest + managerial control.
FTA → Free Trade Agreement → reduces tariff and non-tariff barriers.
Tariff → tax on imports → protects domestic industries.
Progressive Tax → higher income, higher rate → promotes equity.
Corporate Tax → on company profits → under Income Tax Act, 1961.
Carbon Tax → on carbon-intensive products → cuts emissions.
Direct Tax → on income/wealth → burden non-shiftable.
Indirect Tax → on goods and services → burden shifted to consumer.
Inflation → sustained price rise → measured via CPI and WPI.
CPI → retail price index → released monthly by CSO.
WPI → wholesale price index → by Office of Economic Adviser, Ministry of Commerce.
GDP Deflator → ratio of nominal to real GDP → measures economy-wide inflation.
PPP → Purchasing Power Parity → compares living standards across countries.
High Powered Money (M0) → Reserve Money → currency + bankers' deposits with RBI.
Broad Money → currency + demand deposits + time deposits.
Currency Deposit Ratio → public currency vs bank deposits → affects money multiplier.
Reserve Deposit Ratio → reserves with banks/RBI vs deposits → includes CRR + SLR.
Gross Investment → capital expenditure without subtracting depreciation.
Depreciation → fall in asset value over useful life.
NDP → GDP − Depreciation.
NNP → GNP − Depreciation.
GDP → C + G + I + (X − M) → total output within country.
GNP → GDP + Net Factor Income from Abroad.
Per Capita Income → National Income / Population → living standard indicator.
Real GDP → output at base year prices → removes inflation effect.
Nominal GDP → output at current year prices.
Liquidity Trap → very low interest rates → monetary policy ineffective.
Balanced Budget Multiplier → equal rise in tax & spending raises income by same amount.
Externalities → spillover costs/benefits on third parties.
Barter System → goods-for-goods exchange → needs double coincidence of wants.
Transaction Demand for Money → cash for daily expenses → depends on income.
Autonomous Expenditure → spending independent of income → triggers multiplier effect.
Capital Goods → machinery/equipment used to make consumer goods.
Capital Formation → rise in stock of physical assets.
Economic Growth → rise in Real GDP → quantitative measure.
Economic Development → growth + welfare improvements → qualitative.
HDI → based on income, education, life expectancy → UNDP indicator.
Government Expenditure → Revenue Exp + Capital Exp.
Capital Expenditure → asset creation → long-term productive capacity.
Revenue Expenditure → salaries, subsidies, interest → no asset creation.
Exchange Rate → price of one currency in terms of another.
Devaluation → deliberate fall in currency value → under fixed exchange rate.
Revaluation → deliberate rise in currency value.
Foreign Exchange Reserves → foreign currency + gold + SDRs → held by RBI.
SEZ → Special Economic Zone → tax incentives + relaxed laws.
MSP → pre-announced procurement price for farmers.
Subsidy → government financial aid to reduce cost.
Consumer Durables → goods lasting 3+ years → higher priced.
Sin Goods → alcohol, tobacco → taxed heavily.
Green GDP → GDP adjusted for environmental cost.
Monopsony → one buyer, many sellers.
Closed Economy → no trade with outside economies.
Banking Regulation Act → passed in 1949.
Adam Smith → Father of Modern Economics.
Microeconomics → also called Price Theory.
Hire and Fire → policy of capitalist economy.
RTGS → Real Time Gross Settlement.
DD (Demand Draft) → also called banker's cheque.
France → first country to implement GST in 1954.
GST in India → launched on 1 July 2017 by PM Narendra Modi.
New Economic Policy → announced in India in 1991.
One Rupee Note → signed by the Finance Secretary of India.
Indian Rupee Symbol → designed by Udaya Kumar.
Economic Survey → prepared by the Ministry of Finance.
Union Budget → presented by Finance Minister in Lok Sabha.
Fiscal Policy in India → formulated by the Ministry of Finance.
National Income Estimation → responsibility of Central Statistical Organisation (CSO).
New GDP Series → calculated at Market Price.
IIP Base Year → 2011-12 (since May 2017).
Agriculture Sector → largest employer in India, contributes about 17% of GDP.
Gender Budget Statement (GBS) → first introduced in Indian Budget 2005-06.
First Five-Year Plan → based on Harrod-Domar Model.
Second Five-Year Plan → based on Mahalanobis Model.
Third Five-Year Plan → also known as Gadgil Yojana.
Fourth Five-Year Plan → objective of self-reliance and zero net foreign aid.
Khadi and Village Industries Commission Act → passed in 1956.
MSME Development Act → passed in 2006.
Export-Import Bank of India → established in 1982.
SIDBI → set up on 2 April 1990.
ARDC merged into NABARD → on 12 July 1982.
RBI → performs the central banking functions in India.
GATT → earlier name of the WTO.
IMF → organisation of 189 countries.
Brent Index → linked to price of light crude oil.
Golden Handshake Scheme → associated with voluntary retirement.
Short-term Finance → usually up to 12 months.
Theory of Opportunity Cost → given by Gottfried Haberler.
'Capital and Growth' → written by John Richard Hicks.
'Planned Economy for India' → written by M. Visvesvaraya.
Software Industry → not affected by seasonal unemployment.
Variable Cost → becomes zero when output is zero.
GDP → key indicator of the financial health of a country.
Income Inequality → major determinant of poverty in both developed and developing nations.

Aspirants can solidify these concepts further through topic-specific quizzes such as the static GK quizzes and the banking awareness quizzes, and stay updated on relevant openings through the latest government jobs notifications page.

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Frequently Asked Questions

What is the difference between fiscal deficit and revenue deficit?

Fiscal deficit is the total borrowing requirement of the government when expenditure exceeds receipts excluding borrowings. Revenue deficit occurs when revenue expenditure exceeds revenue receipts and does not involve asset creation.

Who controls monetary policy in India and what are its main tools?

Monetary policy in India is controlled by the Reserve Bank of India. Its main tools include the Repo Rate, Reverse Repo Rate, Cash Reserve Ratio, Statutory Liquidity Ratio, Marginal Standing Facility, Bank Rate and Open Market Operations.

What is the difference between GDP and GNP?

GDP measures the total value of goods and services produced within a country's geographical boundaries. GNP measures total production by residents of the country including income earned abroad, calculated as GDP plus net factor income from abroad.

How is NDP different from NNP?

Net Domestic Product is GDP minus depreciation while Net National Product is GNP minus depreciation. Both adjust for the consumption of fixed capital but NDP is restricted to domestic output and NNP includes income earned by residents abroad.

What is the difference between CPI and WPI?

Consumer Price Index measures changes in retail prices of goods and services consumed by households and is released monthly by the Central Statistics Office. Wholesale Price Index tracks price changes at the wholesale level and is compiled by the Office of the Economic Adviser under the Ministry of Commerce and Industry.

What is the difference between direct tax and indirect tax?

Direct tax is levied on the income or wealth of individuals and corporations and its burden cannot be shifted, such as income tax and corporate tax. Indirect tax is imposed on goods and services and the burden is shifted to consumers through higher prices.

What is meant by devaluation of currency?

Devaluation is a deliberate reduction in the value of a country's currency by the central bank under a fixed exchange rate system. It makes exports cheaper and imports costlier and is used to correct trade imbalances.

What is Marginal Standing Facility and what is its limit?

Marginal Standing Facility allows banks to borrow overnight funds from the Reserve Bank of India against approved securities. The borrowing under MSF is capped at two percent of a bank's Net Demand and Time Liabilities.

Who designed the Indian Rupee symbol and who prepares the Economic Survey?

The Indian Rupee symbol was designed by Udaya Kumar. The Economic Survey is prepared by the Ministry of Finance and is tabled in Parliament just before the Union Budget every year.

What is the difference between economic growth and economic development?

Economic growth is a quantitative concept measured by sustained increase in Real GDP over time. Economic development is broader and includes qualitative improvements in living standards, education, healthcare and income distribution along with output growth.

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