Cash Reserve Ratio

Refers to the ratio which banks have to maintain with the RBI as a certain percentage of their holdings of cash and their time liabilities.

Deflation

Decline in the general price level of goods and services leading to rise in the value (purchasing power). A method of statistical conversion of a series of data to compensate for the general rise in prices.

Direct Tax

Tax that cannot be shifted. The burden of the direct tax is borne by the person on whom it is initially fixed. Examples: Personal income tax, Social Security tax paid by employees.

Indirect Taxes

Taxes levied on goods purchased by the consumer (and exported by the producer) for which the tax payer’s liabilities vary in proportion to the quantity of particular goods purchased or sold.

Excise Tax

Tax imposed on the manufacture, sale or consumption of different commodities, such as taxes on textiles, fabric, cloth, liquor etc.

Inflation

A sustained and an appreciable increase in the price level over a considerable period of time.

Recession

Recession is a slowdown or a massive contraction in economic activities. A significant fall in spending generally leads to a recession.

Stagflation

Stagflation is a condition of slow economic growth and relatively high unemployment, or economic stagnation, accompanied by rising prices, or inflation. It can also be defined as inflation and a decline in gross domestic product (GDP).

Committee to Measure the Poverty Line

• The Rangarajan committee has put those spending less than Rs 972/month in rural areas & those spending less than Rs 1,407/ month in cities below the poverty line
• Whereas the Tendulkar Committee had fixed this amount at Rs 1,000/month.

Per Capita Income

Total GNP of a country divided by the total populace. Per capita income is often used as an economic indicator of the standard of living and development. The best index of economic development can be derived from per capita income, however, it can be a biased index because it takes no account of the income distribution.

Statutory Liquidity Ratio

The SLR is the ratio of cash in hands, exclusive of cash balance maintained by ranks to meet required CRR, but no excess reserves.

Value Added Tax (VAT)

This form of tax has been in operation in some countries. It brings a value-added tax, a tax levied on the value that is added to goods and services turned out by the producers during stages of production and distribution.

Small Industries Development Bank of India (SIDBI)

Small Industries Development Bank of India (SIDBI) set up on 2nd April 1990 Under An Act of Indian Parliament, acts as the Principal Financial Institution for Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector as well as for coordination of functions of institutions engaged in similar activities. It is headquartered in Lucknow.

** NPL 

A non-performing loan (NPL) is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 90 Days, but this can depend on the contract terms.

MSF

Definition: Marginal standing facility (MSF) is a window for banks to borrow from the Reserve Bank of India in an emergency situation when interbank liquidity dries up completely.

Description: Banks borrow from the central bank by pledging government securities at a rate higher than the repo rate under the liquidity adjustment facility or LAF in short. The MSF rate is pegged 100 basis points or a percentage point above the repo rate. Under MSF, banks can borrow funds up to one percent of their net demand and time liabilities (NDTL).

Bitcoin

**Each Bitcoin is basically a computer file which is stored in a ‘digital wallet’ app on a smartphone or computer. People can send Bitcoins (or part of one) to your digital wallet, and you can send Bitcoins to other people. Every single transaction is recorded in a public list called the blockchain. It’s a virtual currency.

Zero Based Budgeting

The practice of justifying the utility in cost-benefit terms of each government expenditure on projects. The ZBB technique involves a serious review of every scheme before a budgetary provision is made in its favour. This form of financial planning is with an objective to ensure that every rupee spent is result oriented. If ZBB is properly implemented it could help to reverse the trend of large deficits on the revenue account of the Union Government.

Credit Rating

It is an estimate of the ability of a person or organization to fulfil their financial commitments, based on previous dealings.

Big Three Credit Rating Agencies

• Moody – Headquarters 7 World Trade Center New York City, United States
• S&P (Standard & Poor’s) – Headquarters New York City, New York, United States
• Fitch – Headquarters New York City, New York, U.S. London, England, U.K.
• On 31 January 2012, the Finance Ministry of India also launched CRIS (Comparative Rating Index for Sovereigns) to make comparative assessment of credit rating of countries. Its method is similar to Moody.

How is the Rating Done?

• “AAA” and “AA” (high credit quality) and
• “A” and “BBB” (medium credit quality) are considered investment grade. 
• Credit ratings for bonds below these designations (“BB,” “B,” “CCC,” etc.) are considered low credit quality, and are commonly referred to as “junk bonds.”
• The C rating shows substantial risk.
• Obligations rated Ba2 are judged to have speculative elements and are subject to substantial credit risk. Rating one notch higher is Ba1. Rating one notch lower is Ba3.

** Ayushman Bharat Yojana or PMJAY

• ** Date of Launch: 23 September 2018
• ** Location: Ranchi, Jharkhand
• Who started: Prime Minister Mr. Narendra Modi
• Main Goal: It will offer a benefit cover of Rs 5 lac per family per year (approx. 50 crore beneficiaries)

Paytm

• Paytm is an Indian e-commerce payment system and digital wallet company, based in NOIDA SEZ, India.
•  Paytm was established in 2010 and its founder is Vijay Shekhar Sharma. Currently the value of Paytm is around 16 billion dollars.
•  Paytm stands for “Pay through mobile”.

7th Pay Commission Facts

The composition of the 7th Pay Commission was done on 25 September 2013 under the chairmanship of Justice A.K. Singh Mathur.

The recommendations of the Seventh Pay Commission were implemented on January 1, 2016.

1. Minimum Pay

As per the “Aykroyd formula”, the minimum pay in government jobs is recommended to be set at Rs 18,000 per month.

2.  Maximum Pay

Rs 2.25 lac per month for Apex Scale and Rs 2.5 lac per month for Cabinet Secretary and others presently at the same pay level.

3.  House Rent Allowance

• The Commission recommends that HRA be paid at the rate of 24%, 16% and 8% of the new Basic Pay for Class X, Y and Z cities respectively.
• The Commission also recommends that the rate of HRA will be revised to 27%, 18% and 9% respectively when DA crosses 50 percent.

4. Pension

• The Pay Commission has recommended a revised pension formula for civil employees including CAPF personnel as well as for Defence personnel, who have retired before 1st January, 2016.

5. Gratuity

• **Enhancement in the ceiling of gratuity from the existing Rs 10 lakh to Rs 20 lakh. The ceiling on gratuity may be raised by 25% whenever DA rises by 50%.

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