ECONOMY Classroom Study Material (Vision IAS)

A set of vocabulary flashcards covering banking, monetary policy, taxation, financial markets, external sector, agriculture, labour, and infrastructure based on the 2025 Vision IAS Economy material.

Economic Capital Framework (ECF)

A methodology adopted by the RBI in 2019, based on the Bimal Jalan Committee recommendations, for determining the appropriate level of risk provisions and profit distribution.

Realized Equity

A component of the Economic Capital Framework consisting of the RBI’s Capital, Reserve Fund, Contingency Fund (CF), and Asset Development Fund (ADF).

Contingent Risk Buffer (CRB)

A component of the RBI’s realized equity designed to provide for monetary and financial stability, credit, and operational risks.

Foreign Currency Assets (FCA)

Components of foreign exchange reserves maintained in currencies like the US dollar, euro, pound sterling, Australian dollar, and Japanese yen.

Reserve Tranche Position (RTP)

The difference between an IMF member’s quota and the IMF’s holdings of that member’s currency, which is readily available for withdrawal without strict conditions.

Reserve Bank - Integrated Ombudsman Scheme, 2021

A mechanism adopting a ‘One Nation One Ombudsman’ approach to provide customers of regulated entities a speedy and cost-effective alternate grievance redressal mechanism.

Standing Deposit Facility (SDF)

A monetary tool that absorbs overnight liquidity from commercial banks without collateral; it replaced the Fixed Rate Reverse Repo as the Liquidity Adjustment Facility corridor’s floor.

Variable Rate Reverse Repo (VRRR)

A method used by the RBI where the interest rate is decided by the market to absorb excess money from banks for a short period.

Ways and Means Advances (WMA)

Temporary advances given by the RBI to the central and state governments to cover mismatches in receipts and payments; interest is charged at the RBI’s repo rate.

Unified Lending Interface (ULI)

A Digital Public Infrastructure (DPI) that aggregates data from multiple sources to facilitate better credit assessment by lenders.

Regional Rural Banks (RRBs) Ownership

Banks jointly owned by the Government of India ($50\%$ stake), the concerned State Government ($15\%$), and the sponsoring commercial bank ($35\%$).

Universal Banking Licence

A permit allowing a financial institution to offer a wide array of banking services, including commercial and investment banking, under a single umbrella.

Adjusted Net Bank Credit (ANBC)

The base for calculating Priority Sector Lending (PSL) targets, comprising Net Bank Credit and a bank's investments in non-statutory liquidity ratio (non-SLR) bonds.

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002

An act enabling banks to recover Non-Performing Assets (NPAs) through securitisation and asset reconstruction without initially requiring judicial approval.

Asset Reconstruction Company (ARC)

A financial institution incorporated under the Companies Act and registered with the RBI that buys bad assets (NPAs) from banks to clean their balance sheets.

SWIFT (Society for Worldwide Interbank Financial Telecommunication)

A secure messaging network founded in 1973, headquartered in Belgium, facilitating global financial transactions between over 11,000 institutions.

Prompt Corrective Action (PCA) Framework

An RBI framework used to monitor Capital Adequacy Ratio (CAR), Asset Quality, and Profitability to implement remedial measures for banks and NBFCs.

Fiscal Deficit

The difference between the government’s total expenditure and its total receipts excluding borrowing.

Primary Deficit

The value calculated as the Fiscal deficit minus interest payments.

Effective Revenue Deficit

The difference between the revenue deficit and grants provided for the creation of Capital Assets.

Fiscal Slippage

A situation where a government’s actual fiscal performance deviates from its planned targets, resulting in higher budget deficits or increased public debt.

Minimum Alternate Tax (MAT)

A tax designed to bring 'zero tax companies' into the tax net if they have earned substantial book profits but pay no tax due to concessions.

Advance Pricing Agreement (APA)

An agreement between a tax authority and a taxpayer specifying pricing methods for determining the arm's length price of international transactions for up to 5 years.

Arm's Length Principal of Pricing

The principle stating that the price agreed in a transaction between two related parties must match the price agreed between two unrelated parties.

Securities Transaction Tax (STT)

A direct tax levied on transactions of securities, including equity, derivatives, and mutual fund units, conducted through a recognized stock exchange.

Anti-Dumping Duty

A protectionist tariff imposed on foreign imports that are exported at a price lower than the price normally charged in the home market.

SWAGAT-FI Framework

SEBI's 'Single Window Automatic & Generalised Access for Trusted Foreign Investors' framework for Foreign Portfolio Investors (FPIs) and Foreign Venture Capital Investors (FVCIs).

Alternative Investment Funds (AIFs)

Privately pooled investment vehicles in India (regulated by SEBI) categorized into three types based on investment strategy and leverage use.

Front Running

The illegal practice of purchasing a security based on advanced non-public information regarding an expected large transaction that will affect the price.

Special Rupee Vostro Account (SRVA)

A foreign bank's account held in an Indian bank in local currency (Rupees) to enable exporters and importers to settle trade in Indian Rupees.

Real Effective Exchange Rate (REER)

A measure of a country’s currency value against a basket of trading partners’ currencies, adjusted for relative inflation ($REER = NEER \times \frac{\text{Domestic Price Index}}{\text{Foreign Price Index}}$).

Liberalised Remittance Scheme (LRS)

An RBI scheme allowing resident individuals to freely remit up to $USD 250,000$ per financial year for permissible current or capital account transactions.

Producer Price Index (PPI)

A proposed index measuring the average change in the price a producer receives for goods/services, excluding taxes, intended to replace the WPI.

Multidimensional Poverty Index (MPI)

An index released by UNDP and OPHI measuring poverty across 10 indicators of health, education, and standard of living; a score of $33.3\%$ or higher identifies the multidimensionally poor.

Gini Index

A measure of income or wealth distribution ranging from 0 (perfect equality) to 100 (absolute inequality).

Palma Ratio

The ratio of the share of national income going to the top $10\%$ divided by the income share of the bottom $40\%$.

Financial Inclusion Index (FI-Index)

An RBI-developed index (0 to 100) comprising three parameters: Access ($35\%$), Usage ($45\%$), and Quality ($20\%$).

Capital Expenditure (CAPEX)

Government spending on the development of machinery, buildings, health facilities, and repayment of loans, which creates assets or reduces liabilities.

Human Development Index (HDI)

The geometric mean of normalized indices for three dimensions: Long & Healthy Life (Life Expectancy), Access to Knowledge (Schooling), and Standard of Living (GNI per Capita).

Pradhan Mantri Matsya Sampada Yojana (PMMSY)

A flagship scheme launched in 2020 by the Department of Fisheries to enhance fish production, productivity, and post-harvest infrastructure.

M.S. Swaminathan

The architect of the Green Revolution in India who advocated for the 'Evergreen Revolution' to link livelihood security with ecological security.

Makhana (Foxnut)

An aquatic flowering crop botanically known as $Euryale\,ferox$, also called 'Black Diamond,' primarily produced in the Mithila region of Bihar.

Sericulture

The cultivation of silkworms for silk production; India produces all four major varieties: Mulberry, Tussar, Eri, and Muga.

Fixed-Term Employees (FTE)

Workers employed for a fixed duration based on a contract, where employment lapses upon completion without requiring notice for retrenchment.

Labor Force Participation Rate (LFPR)

The percentage of persons in the labor force (working, seeking, or available for work) within the population.

Universal Minimum Wages

A statutory right established under the Code on Wages, 2019, for all employees across organized and unorganized sectors.

Pradhan Mantri MUDRA Yojana (PMMY) Categories

Loan categories including Shishu (up to $₹ 50,000$), Kishor ($₹ 50,000$ to $5$ lakh), Tarun ($₹ 5\,lakh$ to $10\,lakh$), and Tarun Plus ($10\,lakh$ to $20\,lakh$).

Creative Destruction

An economic theory by Aghion and Howitt describing how new, better products make older products obsolete, driving innovation-led growth.

Geographical Indication (GI)

Rights given to goods bearing unique characteristics due to geographical linkage, provided for a term of 10 years and renewable.

Sagarmala Programme

A 2015 initiative by the Ministry of Ports, Shipping, and Waterways to harness India's $11,098\,km$ coastline and navigable waterways for economic development.

International Civil Aviation Organization (ICAO)

A UN agency established in 1944 by the Chicago Convention to help countries develop mutually recognized technical standards for aviation.

National Logistics Policy (NLP), 2022

A policy aimed at reducing the cost of logistics in India to be comparable to global benchmarks and improving the Logistics Performance Index (LPI) ranking.

Index of Industrial Production (IIP)

A monthly composite indicator (base year 2011-12) measuring short-term volume changes in mining, manufacturing, and electricity production.

India Semiconductor Mission (ISM)

A 2021 initiative providing fiscal support for setting up semiconductor wafer fabrication (fab) units, display fabs, and design-linked incentives.

District Mineral Foundation (DMF)

A non-profit statutory trust for every district affected by mining operations, funded by mining leaseholders as a percentage of royalty.

PM Mega Integrated Textile Region and Apparel (PM MITRA)

A scheme targeted at integrating the textile value chain (5F vision: Farm to Fibre to Factory to Fashion to Foreign) through large-scale manufacturing parks.