Knowledge Track

Stagflation Meaning A period of slow economic growth and high unemployment (stagnation) while prices rise (inflation) or Stagflation is an economic situation where the growth rate slows down, unemployment levels remain steadily high & inflation also stays high. In economics, the English word Stagflation refers to a situation when both the inflation rate and the unemployment rate remain high. This is a financially difficult situation for a country, since, at the moment both inflation and economic stability problems arise simultaneously and no macroeconomic policy can simultaneously focus on these problems at the same time can. The origin of the word stagflation consisting of two-word sounds is generally attributed to British politician Len McLeod, who coined the term in 1965 during one of his speeches in the parliament there. This concept is also notable partly because, in the post-war macro-economic theory, Inflation and recession were considered to be mutually exclusiv...

Difference between Gross Domestic Product at Market Price(MP) and Gross Domestic Product at Factor Cost(FC) In the previous article, we learned what GDP is and how to calculate it. If you didn't seen my previous article then click this link What is GDP and GNP and Methods to calculate it . But at the end of that article, I said to be continued so I am writing this article. You must have read about GDP at market price (MC) and GDP at factor price (FC) many times. But the clean language of economics overwhelms us. I do not know why they serve things in books, but some terms of economics are very easy to understand. Take GDP (mp) and GDP (fc) only. Gross Domestic Product at Market Price It is clear from the name itself that there is talk of market price here. The price / price of a product or service that we buy from the market. Suppose you and we go to the hotel and eat tandoori roti. When the food starts to rise, the waiter comes and stops the bill. Then we both start argu...

What is GDP and GNP and Methods to Calculate it In this article we will know what is GDP and how it is calculated. In the next parts of this article we will discuss about how NNP, NDP, GNP, GDP, NNPFC, NNPMP are different from each other. We will also discuss what the GDP at constant price and GDP at current price are. By the way, all the notes related to Economics are being added on this page, which you cannot afford to miss. By the way, you can find all the notes of Economics on this page. Gross Domestic Product  All those things which are produced inside the country or within the country economic value. Here, Domestic means within the country and all things means both goods and services. Gross National Product (GNP) All those things which are produced inside the country PLUS income which have come from outside, their economic value. Suppose, a person named 'A' brought the money abroad to America, to our country India = counted in GNP. On the other hand, '...

Goods and Services Tax(GST) The Rajya Sabha passed the Goods and Services Tax(GST) Bill unopposed on 3 August 2016. This bill has already been passed by the Lok Sabha. Thus, this bill has got the approval of both the houses. It is being described as a historical event. Economists say that since 1947, this is a step of India's economic reform. The third meeting of the GST Council was held on 19/10/2016 . In this, it was considered to determine the rate for GST. It was attended by Finance Minister of the Central Government and representatives of various states. No final decision on GST rate could be reached in the meeting. Most states objected to the imposition of additional cess on demerit goods. Now this meeting will again be held on 3-4 November 2016 in which the final decision will be taken on the tax structure of GST. To understand GST (Good and Services Tax) first we have to first understand the tax structure of India. Let's first understand the tax structure o...

Budget Facts and Types of Budgets Budget Facts and Types of Budgets 1. The financial year in India is from 1 April to 30 March. 2. In the Budget , the government presents the details of these items - income and information, loans, advances, etc. 3. Earlier only one Budget was presented in India. Railway budget was not presented separately before. From 1921, the budget was divided into two parts- General Budget,  Second Rail Budget . 4. The Railway Budget is presented by the Railway Minister to the Lok Sabha on a day in the third week of February every year and the General Budget is usually presented by the Finance Minister on the last working day of February month at 5:00 p.m. 5. The Finance Minister has a speech while presenting the budget. After this, a copy of the budget is laid on the table of the Rajya Sabha. After this, the minister presents the finance bill or budget and the house is adjourned. 204. (2) The Budget shall be presented to the House in...

SLR (Statutory Liquidity Ratio) SLR (Statutory Liquidity Ratio) is used by RBI like Repo Rate, Reverse Repo Rate, CRR etc . Does The only difference between Cash Reserve Ratio(CRR) and Statutory Liquidity Ratio(SLR) is that the CRR remains in the cash form with the RBI and the bank has to keep it in the form of SLR gold or government approved securities. Keeping more gold by the bank will reduce the bank's credit and keeping it low will increase its credit. When the RBI increases the SLR, the bank will have less money to lend us. Currency in the market will decrease. Inflation will decrease. But in exams it is often asked what is the effect on interest rate due to increase or decrease of SLR, CRR. So understand this with an example. Suppose you have Rs. 100 crores. AAP Manmohan Singh Rs. 100 crores, saying that after a month I get Rs. Returning 101 crores because I take interest at the rate of 1% (1% of Rs. 100cr = 1 crore — 100cr + 1cr = Rs. 101cr) Mannohan j...

Repo Rate, Bank Rate, Reverse Repo Rate The terms glossary of repo rate, bank rate, reverse repo rate (reverse rate, bank rate and reverse repo rate) are very similar to each other. And the definitions given in books, internet, make it difficult to understand anything. (I will try to make you understand these stuffs in a simple way, in a layman language) Commercial banks often require large sums of money for daily economic operations. For this, the most common option that commercial banks adopt is to borrow from the central bank (Reserve Bank of India). On this loan, the Reserve Bank has to pay some special interest to them. Do you understand? Okay, let's tell you again. Commercial banks are in need of a short-term loan whenever there is a shortage of funds or if they need another short-term loan. (Reserve Bank of India). When the Reserve Bank of India lends money to these banks, it wants some securities from the banks in exchange for cash, so that if there is any futur...

Non-Performing Asset(NPA) Non-Performing Asset(NPA)     In simple words, when the bank gives a loan to a person, sometimes it happens that the person taking the loan is not able to make regular payment to the bank. Then the bank sends him a notice that brother, you see your own, otherwise the legal action will be taken against you… yet the man does not pay or is able to make it. Now, what action did the bank take against him?But we are going to talk about NPA, so we will talk about NPA. When that man fails to repay the money / interest to the bank, the bank declares that loan as Non-Performing Asset (NPA) (= Bad Loan). You will be surprised to know that as of now there is more than 1 lakh crore NPAs in India. Debt Recovery Tribunals Before the 90s, the bank had to face a lot of difficulties in recovering bad loans. Because most of the loan-taking banks had some reaction, before that they used to put the cases on the reverse banks that I was unfair, the loan was g...

Balance of Payment(BoP) Balance of Payment(BoP) If you want to see the cash coming in and going to a company, then you have to look at the account book of that company. Similarly, if we want to know the flow of cash coming in and going out of the country, then for this we have to see the account balance sheet of the country. The Balance of Payment (BoP) has two parts.  Current Account and  Capital Account According to the IMF, there are three parts of the balance of payments -  Current Account,  Capital Account and  Financial Account.  Without getting into the technical aspects of this topic, let's try to understand it simple. Current account 1. The details of imports and exports remain (it is always negative because we import more than exports; Import> Export = trade deficit). 2. Details of income coming from abroad (amount of interest paid to Indian investor, interest received from FDI / FDI). 3. Transfer (gift, money sent ...

Section 7 of RBI Act - RBI Act Explained Role (Section 7 of the RBI Act) At the time of hearing an appeal in the Allahabad High Court, a case of use of Section 7 (Section 7) of the Reserve Bank of India Act emerged. The suit was filed by the Independent Power Producers Association of India and challenged a circular issued by the Reserve Bank of India (RBI) on 12 February. In the course of hearing, the High Court had made a comment in August that the government may give directions (directions) to the Reserve Bank of India under Section 7 of the RBI Act. In view of this order of the court, the Government had given a letter to the Governor of the Reserve Bank of India, asking him his intention regarding the exemption given to the energy companies in the context of the circular dated February 12. Apart from this, on October 10, the government had also asked the Governor of the Reserve Bank of India to use the RBI's capital reserves to bring in liquidity. What is SECTION 7 O...