Economic & Social Development

1GDP, GNP and GVA

GDP is the market value of final goods and services produced within a country. GNP starts from that domestic product and adds net factor income from abroad — income residents earn abroad minus income non-residents earn here.

Since the 2015 revision India uses base year 2011–12 and Gross Value Added (GVA) at basic prices as the production-side workhorse. The bridge identity is: GVA at basic prices plus product taxes minus product subsidies equals GDP at market prices.

Figure. GDP is domestic product; add net factor income from abroad to reach GNP. GVA is the value-added companion identity — definitions in the four-row table, not a goods-flow map.

2Fiscal, revenue and primary deficits

Fiscal deficit is total expenditure minus total receipts excluding borrowings — the government's borrowing requirement. Revenue deficit is revenue expenditure minus revenue receipts: borrowing that is not creating capital assets on the revenue account.

Primary deficit strips interest payments out of the fiscal deficit (fiscal deficit minus interest payments). That isolates the current year's fiscal stance from the deadweight of past debt service — a distinction Prelims recycles often.

Figure. Three deficit labels as schematic magnitudes for revision order: fiscal (borrowing need), revenue (dissaving), primary (fiscal minus interest). Exact identities live in the deficit table — bar heights are not Budget numbers.

3Inflation targeting and the MPC

The RBI (established 1935) operates a flexible inflation-targeting framework under the 2016 amendment to the RBI Act: CPI inflation at 4% with a tolerance band of ±2%. The six-member Monetary Policy Committee sets the policy repo rate toward that target.

The toolkit around that rate includes repo and reverse repo, CRR, SLR and open market operations. Teach direction and instrument identity here — not a stale 'current repo percent' that will rot in the peg list.

Figure. Flexible inflation-targeting band: 4% CPI with ±2% tolerance (2–6%). The six-member MPC sets the policy stance — corridor instrument names sit in the table, not invented repo history.

What raising the repo is meant to do

1. Policy rate upThe MPC raises the repo rate when inflation is running too hot relative to the target band.
2. Borrowing costlierBanks' marginal funding from the RBI becomes more expensive, and lending rates tend to firm.
3. Demand coolsCostlier credit weighs on interest-sensitive spending, which is the intended disinflation channel — not a one-line identity.

4FRBM discipline and GST

The FRBM Act (2003) is the statutory frame for fiscal discipline — targets and reporting that constrain how large deficits may stay. It is about rules for the deficit path, not a single magic number to memorise as 'current'.

On the tax side, the 101st Amendment created GST, rolled out on 1 July 2017 as 'one nation, one tax' — replacing a stack of central and state cascading levies with a destination-based value-added tax across most goods and services.

Figure. Two fiscal redesign pegs: FRBM (2003) for deficit discipline rules, GST (2017) for the indirect-tax overhaul. Years and features lock in the FRBM/GST peg table.

51991 LPG reforms

The 1991 reforms — Liberalisation, Privatisation, Globalisation — opened the economy after a balance-of-payments crisis. Licensing was cut back, trade and investment barriers were lowered, and the private sector's role expanded.

Read 1991 as a regime shift, not as a single Act number. Prelims stems that say 'crisis → LPG package' want that causal frame; details of every delicensed industry are secondary to knowing what LPG stands for and why it happened.

Figure. 1991 LPG package as three equal reform pillars after the balance-of-payments crisis. Licensing cutback and openness details stay in the prose — the figure is the three-letter spine.

6From Planning Commission to NITI Aayog

The Planning Commission (1950) and the Five-Year Plans were the post-Independence planning machinery. In 2015 that Commission was replaced by NITI Aayog — a policy think-tank meant to promote cooperative and competitive federalism rather than allocate Plan funds in the old style.

The exam contrast is institutional: Planning Commission / Five-Year Plans versus NITI Aayog (2015) as think-tank. Do not invent a current 'Plan number' after the Five-Year Plan era ended.

Figure. Institutional replacement: Planning Commission (1950) and Five-Year Plans give way in 2015 to NITI Aayog as a policy think-tank for cooperative/competitive federalism.

7Poverty measurement

Poverty lines in India have been repeatedly re-estimated. Tendulkar (2009) and Rangarajan (2014) are the two committee pegs for revised methodology. Multidimensional Poverty Index work in the NITI Aayog frame uses twelve indicators spanning health, education and living standards.

Also keep the UNDP Human Development Index in the same neighbourhood — a broader development scoreboard, not a poverty line. When a stem says 'which committee', answer with Tendulkar/Rangarajan; when it says 'MPI indicators', answer with the twelve-indicator NITI frame.

Figure. Three poverty-measurement pegs: Tendulkar (2009), Rangarajan (2014), and multidimensional poverty (twelve indicators in the NITI frame). Committee years — not a deprivation map.

8Inclusion and social-sector schemes

Inclusive growth in the syllabus is operationalised through a few flagship instruments: MGNREGA for rural employment guarantee, PM-JAY (Ayushman Bharat) for health cover, PMJDY for financial inclusion, and the National Food Security Act 2013 for legal food entitlements.

JAM (Jan Dhan–Aadhaar–Mobile) is the delivery plumbing often named with PMJDY. The examinable content is scheme↔function pairs — not beneficiary headcounts that go stale before the next exam cycle.

Figure. Four flagship inclusion instruments as equal bars. Pair each to its function in the schemes table — employment, health, finance, food — rather than memorising slogans.