Economy Terms for UPSC -Part III

1. Documentation Identification Number (DIN) System: for transparency & accountability in indirect tax administration – provides taxpayers a digital facility to verify any communications – by Central Board of Indirect Taxes (CBIC).
2. Bharat 22 is an Exchange Traded Fund (ETF) launched by the government by incorporating shares of different listed companies. It is basically an exchange traded fund (ETF) that can be purchased and sold like shares in the stock market. Bharat 22 is a major part of the government’s disinvestment programme to disinvest the shares of government held companies. It was launched in August 2017.
3. QR Code: Quick Response Code – 2D version of barcode – Applications (Product tracking, item identification, time tracking, document management and general marketing).
4. Bharat QR: Person to Merchant (P2M) mobile payment solution – mutually derived among payment networks (NPCI, Visa & Mastercard) – no sharing of user credentials to merchant
5. ICEDASH: Ease of doing business monitoring dashboard of Indian customs – developed by CBIC with NIC
6. ATITHI: Mobile app for international travelers to file customs declaration in advance – developed by CBIC.
7. HS Code: Harmonised System Code – custom officers use HS code to clear commodities entering or leaving international border – developed by World Customs Organisation.
8. Partial Credit Guarantee Scheme: purchase of high-rated pooled assets from financially-sound NBFCs & Housing Finance Companies by PSBs – scheme’s validity can be extended by Finance Minister – enable NBFCs/HFCs resolve liquity crunch.
9. eBkray: launched by FM — common e-auction platform for attached assets by banks — For improved realization of value.
10. Bharat Bond ETF: First corporate bond ETF in the country — to create additional source of funding for CPSUs, CPSEs, CPFIs and other govt organisations — created by National Stock Exchange (NSE).
11. Vivad Se Vishwas: scheme that aims to resolve direct tax disputes in various appellate forums.
12. Shell company: Corporate entity which don’t have any active business operations & significant assets in their possession — could be used for Money laundering, tax evasion & other illegal activities — laws dealing with it (Benami transaction prohibition amendment act 2016, PMLA 2002, and Companies Act 2013).
13. BEPS Action Plan: Action plan for tackling Base Erosion and Profit Shifting (BEPS) —given by OECD — approved by G20 — Outcomes are MLI and CBC report.
14. MLI – Multilateral Convention to Implement Tax Treaty Related Measures:Outcome of OECD or G20 project to tackle Base Erosion & Profit Shifting (BEPS).
15. e-Kuber is the Core Banking Solution of the RBI which enables each bank to connect their single current account across the country. RBI’s e-kuber system can be accessed either through INFINET or internet.  INFINET (Indian Financial Network) is a Closed User Group Network for the exclusive use of member banks and financial institutions and is the communication backbone for the National Payments System.
16. Unified Payments Interface (UPI) is based on Immediate Payment Service (IMPS) platform – allows money transfer between any two bank accounts by using a smart phone – fund transfer limit Rs. 1 lakh/trasaction – developed by NPCI – available 24X7.
17. A Zombie bank is a bank that is practically insolvent but continues to exist through hiding bad loans on their balance sheet. The bank can continue its operations by rolling over bad loans instead of writing them off. This process is called as forbearance lending or zombie lending.
18. The MOSPI has two important wings – the Central Statistical Office (CSO) and the National Sample Survey Office (NSSO).
19. Central Statistical Office engages mainly with national income data, industrial production data, price index data On the other hand, the National Sample Survey Office (NSSO) is doing tremendous work related to primary data collection and analysis through various NSSO rounds covering large number of socio-economic factors.
20. National Statistical Commission (NSC) was created by the government as an autonomous body on 12th July 2006 through a resolution. All functions of the Governing Council of the National Sample Survey Office (NSSO) were entrusted to the NSC with effect from August 2006. The functions mainly relate to overseeing the conduct of National Sample Surveys (NSS) on various socioeconomic subjects through the NSSO and the State Directorate of Economics and Statistics (in the form of rounds).
21. A gig economy is a work environment where organizations hire temporary workers or freelancers instead of full-time long-term employees. Companies provide temporary positions to workers and the latter reaches independent, short-term contracts with them. The trend is very strong in advanced economies like the US where there is large volume of cases where firms engage in short term contracts with workers. Even the terms – employer/employees cannot be used here as it indicates a rather long-term identity.
22. Input tax credit (ITC) means that when a manufacturer pays the tax on his output, he can deduct the tax he previously paid on the input he purchased. Here, while paying the tax on his output, he can deduct or take credit for the tax he paid while purchasing inputs.
23. Leverage ratio is the ratio of debt to assets. It shows a company’s debt levels. A high financial leverage ratio shows that the company is using debt to finance its assets.  Common types of leverage ratio are debt-equity ratio and debt ratio. Deleveraging is the act of reducing debt by selling own assets ore by using internally available funds. In this sense, deleveraging is the opposite of leveraging. Deleveraging is the act of reducing the amount of debt by using internal resources. It is thus paying back the debt. Here, cash should be generated internally. Own funds or selling off assets like building, real estate, stocks, bonds, divisions, subsidiaries, etc.  are methods for deleveraging.
24. The Goods and Services Tax Network (GSTN) is a non-government non-profit private limited company created for providing the front end and back end IT and infrastructural support for the working of GST. It is registered as a non – profit Company under the New Companies Act in March 2013.
25. Special Mention Accounts are those assets/accounts that shows symptoms of bad asset quality in the first 90 days itself. Remember that NPA has a duration of 90 days. On the other hand, the worst type of special mention account (SMA – 2) has less than 90 days’ duration. 
26. State Development Loans (SDLs) are dated securities issued by states for meeting their market borrowings requirements. The SDL securities issued by states are credible collateral for meeting the SLR requirements of banks as well as a collateral for availing liquidity under the RBI’s LAF including the repo. SDLs are basically securities and they are auctioned by the RBI through the e-Kuber which is dedicated electronic auction system for government securities and other instruments. RBI holds SDL auctions once in a fortnight. The rate of interest or yield of SDL securities are determined through auction. Still the interest rate will be slightly higher than that of Central Government securities (G-secs) of matching tenure.
27. A counter-cyclical fiscal policy refers to strategy by the government to counter boom or recession through fiscal measures. It works against the ongoing boom or recession trend; thus, trying to stabilize the economy. Understandably, countercyclical fiscal policy works in two different direction during these two phases.
28. RBI’s Prompt Corrective Action (PCA) Framework is a set of guidelines for banks that are weak in terms of identified indicators including – poor asset quality, insufficient capital and insufficient profit or losses. The PCA is an early intervention package or resolution guideline by the RBI when a bank turns weak in terms of the identified indicators. The Reserve Bank of India initiated the Scheme of Prompt Corrective Action (PCA) in 2002 to discipline banks when they report poor and risky financial performance.
29. Tri-Party repo is a financial market instrument where a repo transaction between two parties is administered by a triparty agent which is a licensed financial institution. According to the RBI, “Tri-party repo is a type of repo contract where a third entity (apart from the borrower or lender), called a Tri-Party Agent, acts as an intermediary between the two parties to the repo to facilitate services like collateral selection, payment and settlement, custody and management during the life of the transaction.”
30. Poverty is measured in terms of the Head Count Poverty Ratio (HCPR) as in several other countries. The HCPR is the percentage of the population under the poverty line. This means that it is the absolute poverty that is estimated in India. Poverty ratio is measured in terms of per capita consumption expenditure over a month.
31. Angel investors are basically individuals making investments in newly established business entities or startups. Their expectation is that the startups will grow at high rate, rewarding rich dividends in future. Angel investors encourage entrepreneurship by financing small startups at the early stage. Usually, angel investors are individuals who make relatively small volume of investment in new ventures. On the other hand, the Venture Capital Funds, who are another category of investors for start ups are institutions registered in the form of trusts.
32. Real Time Gross Settlement (RTGS)-Transactions are processed continuously and in real-time – minimum amount can be Rs. 2 lakhs – no maximum limit – available between 8 AM to 6 PM.
33. Immediate Payment Service (IMPS): Transactions processed in real-time – only online transaction – no minimum limit – max limit is Rs. 2 lakhs – available 24X7.
34. e-NACH stands for Electronic National Automated Clearing House. It is recommended by the NPCI i.e. the National Payments Corporation of India and regulated by the Reserve Bank of India under the Payment and Settlement Systems Act 2007. It is reliable, done through secure banking-channels and is far cheaper than other payment-models.
35. Ghosting is anillegal practice whereby two or more market makers collectively attempt to influence a stock’s price by sudden increase of buying or selling of a stock.
36. Important Indicators: CPI (Combined) – CSO, CPI (Rural) – CSO, CPI (Urban) –CSO, Consumer Food price Index – CSO, IIP – CSO, GDP Deflator – CSO, WPI – Economic Advisor, DIPP, CPI (Agricultural Labour) – Labour Bureau, CPI (Industrial worker) – Labour Bureau, CPI (Rural Labourer) – Labour Bureau.
37. Annual Periodic Labour Force Survey (PLFS) on employment and unemployment is conducted by National Statistical Office (NSO), Ministry of Statistics and Programme Implementation since 2017.
38. CAMELS: An international rating system used by regulatory banking authorities to rate financial institutions, according to the six factors represented by its acronym. Acronym stands for “Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity.”
39. Committee on Payments and Market Infrastructures (CPMI): An international standard setter that promotes, monitors and makes recommendations about the safety and efficiency of payment, clearing, settlement and related arrangements, thereby supporting financial stability and the wider economy. Serves as a forum for central bank cooperation in related oversight, policy and operational matters, including the provision of central bank services.
40. Red Data Book: The Bank for International Settlements (BIS) publishes statistics on payments and financial market infrastructures (FMIs) in member jurisdictions of the Committee on Payments and Market Infrastructures (CPMI). Widely known as the Red Book statistics, they complement the descriptions of payment and settlement systems in CPMI jurisdictions.
41. The Medium-term Fiscal Policy Statement, presented to Parliament under Section 3(2) of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, sets out three-year rolling targets for four specific fiscal indicators in relation to gross domestic product (GDP) at market prices —(i) Revenue Deficit, (ii) Fiscal Deficit, (iii) Tax to GDP ratio and (iv) Total outstanding Debt at the end of the year.
42. Gross Value Added (GVA) is basically GDP net of all indirect taxes and subsidies on goods and services. GVA is the value of output less the cost of all inputs and raw materials that go into the production of any good.
43. Price Deficiency Payment Scheme (PDPS): Proposed to cover all oilseeds for which MSP is notified. In this direct payment of the difference between the MSP and the selling/modal price will be made to pre-registered farmers selling his produce in the notified market yard through a transparent auction process. All payment will be done directly into registered bank account of the farmer. This scheme does not involve any physical procurement of crops as farmers are paid the difference between the MSP price and Sale/modal price on disposal in notified market. The support of central government for PDPS will be given as per norms.
44. In Price Support Scheme (PSS), physical procurement of pulses, oilseeds and Copra will be done by Central Nodal Agencies with proactive role of State governments. It is also decided that in addition to NAFED, Food Cooperation of India (FCI) will take up PSS operations in states /districts. The procurement expenditure and losses due to procurement will be borne by Central Government as per norms.
45. Tax Shelter: A financial vehicle that an individual can use to help them lower their tax obligation and, thus, keep more of their money. Legal way for individuals to “stash” their money and avoid getting it taxed. Entirely different from a tax haven because the latter exists outside the country and its legality can, at times, be questionable. Tax shelter, is entirely legal and keeps all monies within an individual’s home country.
46. Retrospective Taxation allows a country to pass a rule on taxing certain products, items or services and deals and charge companies from a time behind the date on which the law is passed. Countries use this route to correct any anomalies in their taxation policies that have, in the past, allowed companies to take advantage of such loopholes.
47. A Bilateral Netting agreement enables two counterparties in a financial contract to offset claims against each other to determine a single net payment obligation that is due from one counterparty to the other, meaning that the payables and receivables are netted off.
48. In India, there are four consumer price index numbers, which are calculated, and these are as follows: CPI for Industrial Workers (IW), CPI for Agricultural Labourers (AL), CPI for Rural Labourers (RL) and CPI for Urban Non-Manual Employees (UNME). While the Ministry of Statistics and Program Implementation collects CPI (UNME) data and compiles it, the remaining three are collected by the Labour Bureau in the Ministry of Labour.
49. The Standard for Automatic Exchange of Financial Account Information, developed by the OECD with G20 countries, represents the international consensus on automatic exchange of financial account information for tax purposes, on a reciprocal basis.
50. Financial Sector Regulatory Appointment Search Committee (FSRASC): Set up based on the recommendation of the Financial Sector Legislative Reforms Commission. “Standing committee”. “Recommend suitable persons for selection of Chairperson and Whole Time and Part Time Members of the financial sector regulators. Headed by- Cabinet Secretary. Appointment would be made by the central government on the recommendation. Free to identify and recommend any other person also, on the basis of merit, who has not applied for the post.
51. Sin tax applied on goods that adversely affect health, most notably tobacco and alcohol. goods which consider harmful to society and levied on specific goods and services at the time of purchase. Example: Alcohol and Tobacco, Drugs, Soft drinks, Fast foods, Coffee, Sugar, Gambling and Pornography.
52. Investment Revaluation Account Foreign Securities (IRA-FS) are unrealized gains or losses on revaluation in foreign dated securities are recorded.
53. Investment Revaluation Account-Rupee Securities (IRA-RS) unrealized gains or losses on revaluation is accounted.
54. NORMLEX a new information system which brings together information on International Labour Standards (such as ratification information, reporting requirements, comments of the ILO’s supervisory bodies, etc.) as well as national labour and social security laws. It is designed to provide comprehensive and user friendly information on these topics and includes the NATLEX database as well as the information which was previously contained in the former APPLIS, ILOLEX and Libsynd databases.
55. Neobanks a kind of digital bank without any branches. Rather than being physically present at a specific location, neobanking is entirely online. Called fintech firms that provide digital and mobile-first financial solutions payments and money transfers, money lending, and more. 15 neobanks in the country, including digital-only brands of banks such as State Bank of India’s YONO and Kotak Mahindra Bank’s 811, while many are still under development.
56. Bharat Bond Exchange Traded Fund’s (ETF): India’s first corporate debt ETF. A basket of debt papers of Central Public Sector Undertakings, Central Public Sector Enterprises, Central Public Financial Institutions and includes bonds of any other government organisation. Invests in constituents of the Nifty Bharat Bond Indices, consisting of AAA rated public sector companies, implying highest security.
57. A Pigovian tax is a tax which is placed on any good which creates negative externalities. For example, Pollution, Alcohol etc. Externality means impact of one person’s action on the well-being of an outsider. Carbon tax is one example of Pigovian Tax which discourages the uses of fossils fuels and encourages renewable soures due to climate change threat.
58. The Tobin tax developed with the intention of penalizing short-term currency speculation, and to place a tax on all spot conversions of currency. The aim is to check speculative flows. Long term investment e.g. FDI does not suffers from the imposition of tobin tax.
59. Redenomination is the process whereby a country’s currency is revalued due to significant inflation and currency devaluation, or when a country adopts a new currency and needs to exchange the old currency for a new one at a fixed rate. In simpler words, it is exchanging old currency for new currency, or changing the face value of existing notes in circulation. In New: Recently Iran’s national currency will be changed from the rial to the Toman, which is equal to 10,000 rials.
60. Stamp Duty is set to be levied and collected on financial securities transactions at the national level from July 1, 2020. Stamp Duty is well known in property transactions, but according to the Indian Stamp Act, 1899, the Duty is levied on every financial instrument at the time of issue at the primary market. Stamp Duty would be levied on both equity and debt instruments at the time of issue for the first time or making transactions with the depository of the company.
61. Initial Public Offering is a process by which a privately held company becomes a publicly-traded company by offering its shares to the public for the first time. Offering an IPO is a money-making exercise. Every company needs money, it may be to expand, to improve their business, to better the infrastructure, to repay loans, etc. A private company, that has a handful of shareholders, shares the ownership by going public by trading its shares. Through the IPO, the company gets its name listed on the stock exchange.
62. In WTO terminology, subsidies are identified by ‘boxes’ — Green for ‘permitted’, Amber for ‘slow down; needs to be reduced’, and Red for ‘forbidden’.
63. Adjusted Gross Revenue (AGR) is the usage and licensing fee that telecom operators are charged by the Department of Telecommunications (DoT). It is divided into spectrum usage charges (around 3-5% and licensing fees (around 8%). Charges are calculated based on all revenues earned by a telco – including non-telecom related sources such as deposit interests and asset sales. (As per DoT and Supreme Court judgement).
64. Border Adjustment tax is a duty that is imposed on imports in addition to the customs levy. It is charged on goods or services in accordance with the destination principle of taxation. It seeks to promote “equal conditions of competition” for foreign and domestic companies.
65. Central Board of Indirect Taxes and Customs launches its flagship programme ‘Turant Customs’ at Bengaluru & Chennai. It is a giant leap forward to leverage technology for faster Customs clearance of imported goods. Importers will now get their goods cleared from Customs after a faceless assessment is done remotely by the Customs officers located outside the port of import.
66. The Spaghetti Bowl Effect is an interesting phenomenon in trade economics where the increasing number of Free Trade Agreements (FTAs) between countries slows down trade relations between them. This term (spaghetti bowl) makes an analogy between the tangling of spaghetti in a bowl with the tangling of different FTAs in a region. Spaghetti bowl phenomenon was first discussed by Jagdish Bhagwati in 1995.
67. Mezzanine financing is defined as a financial instrument which is a mix of ‘debt and equity’ finance. It is a debt capital that gives the lender the rights to convert to an ownership or equity interest in the company. It is listed as an asset on company’s balance sheet. As it is treated as equity in a company’s balance sheet, it allows the company to access other traditional sources of finance.
68. Girmitiyas, is a term for indentured Indian labourers who were shipped in hordes to Fiji, Mauritius, South Africa, and the Caribbean Islands. This was a form of exploitation by the colonial powers. This was a form of exploitation by the colonial powers.
69. “Operation Greens” run by Ministry of Food Processing Industries (MOFPI) will be extended from tomatoes, onion and potatoes to ALL fruit and vegetables.
70. The Tribal Cooperative Marketing Development Federation of India (TRIFED) came into existence in 1987. It is a national-level apex organization functioning under the administrative control of Ministry of Tribal Affairs. TRIFED has its Head Office located in New Delhi and has a network of 13 Regional Offices located at various places in the country. The ultimate objective of TRIFED is socio-economic development of tribal people in the country by way of marketing development of the tribal products such as metal craft, tribal textiles, pottery, tribal paintings and pottery on which the tribals depends heavily for major portion of their income. TRIFED acts as a facilitator and service provider for tribes to sell their product.
71. The Agricultural and Processed Food Products Export Development Authority (APEDA) was established by the Government of India under the Agricultural and Processed Food Products Export Development Authority Act, 1985. It functions under the Ministry of Commerce and Industry. The Authority has its headquarters in New Delhi. APEDA is mandated with the responsibility of export promotion and development of the scheduled products. APEDA has been entrusted with the responsibility to monitor import of sugar.
72. An open-ended MSP aims to ensure and encourage the production of crops, the government adopts a liberal procurement policy known as open-ended MSP. Open-ended MSP does not have any procurement targets, instead, the government allows procurement agencies like the FCI, to buy whatever is offered by the farmers for sale at MSP.
73. State excise is levied mainly on liquor and other alcohol-based items. Revenue receipts from state excise come mainly from commodities such as Country Spirits; Country Fermented Liquors; Malt Liquor; Liquor; Foreign Liquors and Spirits; Commercial and Denatured Spirits and Medicated Wines; Medicinal and Toilet Preparations containing Alcohol, Opium etc; Opium, Hemp and other Drugs; Indian Made Foreign Liquors; Spirits, and Sales to Canteen Stores Depots. Besides, a substantial amount comes from licences, fine and confiscation of alcohol products.
74. Under the Minimum Reserve System, the RBI has to keep a minimum reserve of Rs 200 crore comprising of gold coin and gold bullion and foreign currencies. Out of the total Rs 200 crores, Rs115 crore should be in the form of gold coins or gold bullion. The purpose of shifting to MRS was to expand money supply to meet the needs of increasing transactions in the economy. The minimum reserve is a token of confidence and doesn’t have any practical connection with amount new currencies issued by the RBI. Under the Minimum Reserve System, RBI can issue unlimited amount of currency by keeping the reserve. But RBI follows some principle or rule for issuing new currencies based upon economic growth and transaction needs of the people.
75. A reserve tranche position implies a portion of the required quota of currency each member country must provide to the International Monetary Fund (IMF) that can be utilized for its own purposes. The reserve tranche is basically an emergency account that IMF members can access at any time without agreeing to conditions or paying a service fee.
76. Bharatkosh-The Non-Tax Receipt Portal (NTRP) is the initiative of Controller General of Accounts to provide one-stop services to deposit any fees/fine/other money into the Government Account. The portal provides a one-stop platform to citizens /corporates/other users for making online payment of Non-Tax Receipts to the Government of India.
77. The government had introduced the concept of significant economic presence (SEP) in line with its plan to tax digital companies in the Finance Act, 2018. SEP was defined to mean, among other things, systematic and continuous soliciting of business activities or engaging in interaction with such number of users as may be prescribed in India through digital means.
78. A collateralized borrowing and lending obligation (CBLO) is a money market instrument that represents an obligation between a borrower and a lender as to the terms and conditions of a loan. Collateralized borrowing and lending obligations allow those restricted from using the interbank call money market in India to participate in the short-term money markets.

Economy Terms for UPSC –Part I

Economy Terms for UPSC –Part II

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