 No, so today's session we will live through the budget. So what we are planning to do in the next few hours in our study will be, usually when the budget is getting presented, we will have a publication called as economic survey, which will come into volumes. Volume one will have lots of new concepts and volume two will be like your book, the Indian economy book, what we have given to you starting from the national income, moving up to the external sector. But this time, as we all know, we have only an interim budget to study. So the government has not come up with any bigger publication called as economic survey. Instead they have given us some budget highlights and they have also given some concepts in the form of proceeds separately, expenditure separately and about the allocation to the schemes. So this is all is the content which is available with the budget presentation. So then we all must be wondering then why are we studying it through a bigger session. The need is because as we have studied in our basis, the budget is not just the data which we are presenting for the upcoming year. Of course, that is what we call as the budget estimate. When we had studied in our basic class, if you all recall, we have studied something called as the actual value, revised estimate and the budget estimate. So when we are standing in the end of the current financial year, can somebody tell me what is this current financial year? Instead of current financial year, give me a period, March, April 2023 to March 2024. So here for this current financial year, last year they would have given a budget. Is it not? Like this time they would have given a budget. So now it is a time for us to go and revisit what has happened in this one whole year. We are in the end of the current financial year. And you also know that the budget document or the annual financial statement, they start preparing from the month of September of every year because it is not a data which you can just prepare in one or two days or one or two weeks and then come and present. So Nirmala Sita Raman, if she is coming and presenting in the month of Jan end, at least the team has to work for three to four months ahead. So when they have started working in September, it would have been only like half of the year that would have been completed in the current financial year. So they have collated so many data about the current financial year which they will be presenting in the form of revised estimate to remember the words and also the completed financial year. Can you somebody tell me what is the completed financial year? April 2022 to March 2023. So what has actually happened in that previous financial year only would have been the basis for the doing of the budget for the current financial year and the current financial year's data only is going to take you forward towards the budget estimates of the upcoming financial year. So upcoming financial year which is going to start from April 1st of 2024 is going to be dealt a bit differently because the elections have to be completed. But for us we have a routine. We have our prelims in the month of May and when we start preparing for our mains examination in the month of June, we will have only this data set in our hands. Then the government has to come in the place and then they have to give us the details of the budget further only then we will be able to prepare further but for our September mains definitely this database and some of the points what we have in the budget document today will be important for the examination purpose. So therefore whatever is required for the examination purpose that is what we are going to have a look at in today's class. So this is the agenda for today and this class is being section into three things. First what we are going to see is as it is given in the budget highlights we are going to look at all the macroeconomic parameters. They will give you elaborate tables on GDP and everything which is not available in the current budget but they have given some statistics of all. So what we are going to see is we are going to look at the budget highlights as the first part. Secondly they have given certain strategies for the development agenda. How am I going to take it through in the future? See every government will have their own strategies, their own key programs, their own key milestones. So therefore this government is also presenting how they are going to take the development agenda. They make use of the words like sub-casad, sub-cavicas kind of words. So we are going to see some of the details how they are foreseeing to take it forward. Then the government has also presented something called as annual economic review which gives us some basics for us for the examination purpose which will satisfy some of the data starting from the Indian economy, the national income up to the external sector. We are all trained to read macroeconomic parameters in a particular way starting from national income, moving to the public finance, studying about money inflation and banking, ending up with the external sector, having an overview of the different sectors like agriculture, industry, services, social sector. So this is how we complete our economics. So for all of these parameters though we don't directly take it from the budget. If you go to the department of economic affairs you will find certain documents including a white paper which the government has presented recently but we are not getting into the white paper today. We have three sections to cover. First we will talk about the budget highlights. Number two we will talk about the development agenda. Number three we will talk about that annual economic review to certain extent where we can pull out the data for our examination purpose. But after finishing all these things if we are left with some time we will try to do one more thing which will be upon the main's aspect. I will tell you certain topics. It is very systematically presented like how the Indian economy came up to the period of liberalization, a few challenges in it. Then they have presented how it has come through the difficult phase. You all know about the ups and downs which happened with the US, Eurozone, crisis, everything. Then they are presenting how this government has gone from 2014 to till today. So 10 years what they have done and what were the drivers in their particular period and how the challenges can be confronted with the drivers what they have brought in. So that will be one kind of a very good points for us to consolidate for the main's examination. That I will tell once we are done with these three sections of the presentation. So this is the basis with what we are going to go ahead in case if you have any doubts in whatever they are presenting, please raise your hand. And online students you can always do the hand raising if anything is not clear. In the initial section we will go bit slowly, I will try to go back to the basics sometimes if it is required otherwise we will just look at the data. If I just abstractly run through the data it will be difficult. So we need to understand the concepts, get back to the numbers. So that will be the exercise. Most of us are familiar with this, all the classroom program students. You must be familiar with this budget concept. You would have studied the budget under the revenue account, capital account, you would have studied revenue receipts, revenue expenditure, capital receipts, capital expenditure. With the same diagram we would have also studied our concepts on deficits. So all those basics I wish you all recall right now because we are directly getting into the budget related data right now. For every single thing what is written on this slide, say the interest payments subsidies whatever variable you would have studied on this slide we are going to see through the data. Right. That particular diagram is not clear from the PPT, what I will do is I will make use of the PDF to show the diagram so that we don't waste time. If it is downloaded only scroll bar, the side scroll bar I am not able to see from the system. I will go through the system. The diagram clear should I zoom it out, the diagram visible, last way you are able to see the diagram, no okay I will enlarge it as and when it is required. So this diagram is going to start with the concept where does this rupee come from. Basically can you recall in the budget we had the revenue account and the capital account. Under the revenue account we have the revenue receipts. Under the revenue receipts we have two major topics, what are they? Tax receipts and the non-tax revenue receipts right. Under the tax receipts we have two major types, what are they? Direct taxes and indirect taxes. For the non-tax revenue receipts can you tell me at least two non-tax revenue receipts, not the capital. Interest receipts, it is not interest payments right, it is interest receipts and grants in aid which are being received, profits of the public sector enterprises are BI and other banks right fees and other things fines and other things which are getting collected right. So these are some of the topics which we have studied for the non-tax revenue receipts. So in this diagram we are having all the types of receipts, first we will see whatever we said as the direct and the indirect taxes and the non-tax revenue receipts, are you seeing here the income tax right, so that is on the top given the data, I will tell you the data it is like assume that this is 1 rupee coin, you have 19 paisay coming from income tax. Followed by are you seeing goods and services tax, so which is 18 paisay here right, then you have the corporation tax which is your corporate profit tax which is around 17 paisay, you have to write this order for this year's examination, among the tax receipts which is on the top is income tax followed by GST followed by corporate profit tax. Then within the taxes it is union excise duties which is the 5 paisay and customs duty which is the 4 paisay and just summarizing within the tax receipts, so the first thing being the income tax, second thing become the GST, third one the corporate profit tax, then we have the union excise duty then some customs duty and after this if you come and look at the non-tax revenue receipts which is 7 paisay which is obviously after the 3 major types of taxes. So non-tax revenue receipts are very small in amount with in which the interest receipts will be the major variable, so remember printing of coins and printing of currency everything will be included under this but here they have given it as the total value. Now can you tell me about the capital receipts, what are the two major items under it and non-debt creating capital receipts, tell me one major thing under the non-debt creating capital receipts, disinvestments and sometimes the loans and advances are being recovered. So now we look at the capital receipts related data here, you can see non-debt capital receipts is only 1 paisay, can you see that, NDCR is only 1 paisay whereas DCR, what is DCR? Debt creating capital receipts which is 28 paisay. So in the overarching pie actually if you see the dominating value is the DCR which is the borrowings but because we have to talk in terms of earnings, you remember our fiscal deficit formula we will exclude this borrowing. So for us the important thing is from this non-debt creating capital receipts up to this corporate profit tax but the government is presenting how is it managing its expenditure, so if there is 100 rupees expenditure the government has to show 100 rupees as the total money which is available with it from the different sources. So for us very important part is from this blue this particular part of the pie which goes up to the corporate profit tax. So we have given you an order for the types of taxes, we know what is the non-tax revenue receipts and about the DCR and about the NDCR. So the entire receipts part has come into this diagram where we say that where the budget 1 rupee comes from. Is it all clear? Now we will see how the government is spending. Before getting into this diagram I want to recall what you have studied already. In the expenditure side we have revenue expenditure under capital expenditure. Tell me some of the components of the revenue expenditure. Salary, day to day, pensions, subsidies, top most hasn't come out. Interest payments, difference related maintenance things, there are lots of maintenance related to economic services, general services. So these are all the major item will be the interest payments, subsidies, salaries, pensions, then the payments to the general economic services. Coming to the capital expenditure, you tell me some of the expenses. Capital expenditure, giving loans, giving loans to other countries, states and union territories, to public sector enterprises. We also have centrally sponsored schemes, central sector schemes. So whichever is resulting in the creation of the capital assets, all those things we are going to call it as a capital expenditure. So all of those things and also you remember when we say GST, there are two components in it, is it not? Actually three components, but basically two components. What are they? CGST and the SGST. So when we present the GST over there, now they are going to say how much they are going to give it away as the states share of taxes to the states as such. That's one thing. The second thing is you all remember about our study on finance commission, right? So finance commission, the resources of the center will be shared with the states based on a particular criteria, 41 percentage of the total collection of two types of taxes, income tax and the union excise duty would be shared with the states. That sharing will happen on the horizontal devolution formula. Vertical devolution is 41 percentage. You are all familiar with all such words. Vertical devolution, horizontal devolution, horizontal devolution happens with the particular formula based upon the population, demographic performance, tax performance, for us to cover. So there are different criteria which every finance commission will bring in. So those things are also being taken as the money given by the center to the states. So how they have presented borrowing as receipts in the previous one rupee coin. Here also you are going to see all the amount which is shared by the center to the states is also being reported as the expenditure. So now what we will do is first in this pie diagram, we will go and look at the revenue expenditure related details which we have already mentioned. Then we will look at the capital expenditure. Then we will look at the transfer to the states. Now you tell me interest payments where does it fall? Interest payments where does it fall? Revenue expenditure, the top most item under the revenue expenditure will be interest payments which you are seeing as the 25 say here out of the total thing. Actually that will be the most dominating value followed by the difference related. Actually you have a comment here, central sector scheme excluding capital outlay and defense and subsidy. So that difference has been presented here. So this difference is not the maintenance of the difference. This is actually the capital outlay on defense. So let us not take this now. What is the third thing? Subsidies. Is it a part of revenue expenditure? Subsidies is part of revenue expenditure? Yes, it is part of revenue expenditure. So one item which we have mentioned is the interest payments which is 20 paisa. The second item of the revenue expenditure is the subsidies which is 6 paisa. We are not talking about this finance commission share. It is all going to the states. Pensions is it part of revenue expenditure? Yes. So we have 4 paisa here and other expenditure. So 3 obvious items which they have written on this slide is interest payments, subsidies and pensions. These are the 3 major items as part of your revenue expenditure. Now we will come back to the capital expenditure. You can say this central sector scheme which is occupying 16 paisa. Centrally sponsored scheme which is occupying 8 paisa. What is the difference between these 2 words? Central sector scheme means they only will be doing the entire work. Centrally sponsored means there will be a sharing between the center and the states. So you can see the central sector scheme, the allocation is actually higher compared to the centrally sponsored schemes. Then you are seeing that there is a sharing of the tax duties to the state which is around 20 paisa. And finance commission and other transfers which comes around 8 paisa. These are the things which are transferred from the center to the states. So 3 concepts in this diagram, the revenue expenditure, the capital expenditure and the transfers to the states and union territories. But individually if you want to pinpoint one particular item which is dominating the entire expenditure sheet, what would you like to say? Interest payments. So these are the 2 major things which we wanted to say in the first 2 slides. Now we come to the deficit statistics. We are all here with 4 types of deficits. Actually one is not mentioned here. We will study in the class what are the 4 types of deficits which we study. We start with fiscal. This table starts with fiscal but we will start with what is the end thing what we study. First will be revenue deficit, then budget deficit, then fiscal deficit, then primary deficit. And here that is yet another word called as effective revenue deficit. In today's session you are going to hear 2 key words. One is this effective revenue deficit. Then we are going to say something called as effective capital expenditure. They both are going to go hand in hand because what you are going to take out of the revenue deficit here only you are going to put that inside the capital expenditure which is going to make effective in both. We will tell what. First thing is revenue deficit. Can somebody tell the formula for the revenue deficit? Total expenditure. Revenue deficit. Revenue expenditure minus revenue receipts. So you can see that you have to take into account the numbers which are given in the brackets here. So you had around 3.9%. You are all now familiar with these words actual, revised, budget estimates, all those things. But anyways, budget estimate they want to bring it down to 2% in the upcoming year. In the current financial year we have it around 2.8%. Revenue deficit being having such a high number is not at all good. But revenue deficit is having a high number mainly because of what? Interest payments. There is only one straight forward answer to word which is interest payments. Now you are going to see that there is a concept called as effective revenue deficit which looks slightly lesser than the revenue deficit. Is it not? Revenue deficit value either you see in the percentage basis or in the original basis effective revenue deficit is looking smaller than the revenue deficit. Is it not? Why is this suddenly becoming smaller? Interest payments detecting us for the primary deficit concept. Now something is getting detected from it. Grants for creation of capital assets. You have to make use of the word. So now you have the formula here RE minus RR. Here you are going to say RE minus Grants for creation of capital assets. Or you can say revenue deficit minus Grants for creation of capital assets. This is three things. You are removing Grants for creation of capital assets out of the RE and also you have to minus the RR. So that finally will arrive at the effective revenue deficit or you can write it as revenue deficit minus Grants for creation of capital assets. One major thing you have to remember is grant is a word which will go only in the revenue account. Whether the grant is received or the grant is given by budget framework we cannot keep the grants under capital account. When the grants have to be only under the revenue account that is where the challenge comes when the grants are being used for the creation of the capital assets. So the government wants to say it not as a revenue expenditure but it wants to report it as a capital expenditure because it has gone ahead for the creation of a capital asset. This whatever they are minusing here as the GCC will be added to the capital expenditure in the next few slides and it will be shown as the effective capital expenditure which we will see as the data. But are we clear here why this revenue deficit became effective revenue deficit and this is the reason why this revenue deficit is also falling and they are bringing it less than one percentage here hoping that most of the expenses will go for the creation of the capital assets. But as of now we have somewhere around 1.8 percentage. What is the formula for the fiscal deficit? We will come to primary deficit after FD. Yes sir. One second he wants to ask something. Effective revenue deficit we know what is revenue expenditure is it not revenue expenditure factors right. In the revenue expenditure we also have a variable called as grants. This grants we give to states we can give to union territories we can give to other countries like how we said under the non tax revenue receipts grants received. Here we are saying grants given. Assume that I am the central government under the grants given I give you 100 pros you are the Tamil Nadu state. You received the grants and you made use of the grants for laying a road. You didn't make use of it for doing any other running expenses not for the salary not for the pensions. But you decided to make use of the 100 crore for the laying of a road. In such case an asset is getting created right. So as such I want to keep this 100 pros under the capital expenditure which I cannot do. Why I cannot do because grant is a word which I have to keep only under the revenue. But the end use has been resulting in a creation of an asset. I want to combine both the concepts. I want to say that you are all telling that my day to day expenditure is higher but my day to day expenditure has also resulted in creation of a capital asset. I want to prove it somewhere else. So the new concept saying that in the revenue expenditure that 100 crores which he gave us a grant to the states I don't want to show it as my expenditure. See basically this is the deficit. This is right hand assume this is the expenditure. This is my revenue receipts. The gap between the expenditure and the receipt is what I am presenting as the deficit. Now what I am doing is I am removing that 100 crores means my expenditure will come down. So the gap between the receipts and the expenditure will narrow down. So I don't want to show my gap as a bigger one because my end use was very good. You follow? Therefore the GCC is being removed out of the revenue expenditure because revenue expenditure is like running the day to day business of the government. And we are asking why are you spending so much on running the day to day business? Where will you spend for the capital? Then the government has an answer to it. Yes I am doing capital inside revenue itself but I don't have the opportunity to shift it under the capital account itself. So this formula is it clear? So we are calling this as the effective revenue deficit after removal of the GCC. Now we will come back to the fiscal deficit. Anybody formula? Total expenditure minus revenue receipts under non-debt created capital receipts or you can call it as NDR. Please all of you get used to this word NDR. What is it? We have to say total expenditure minus revenue receipts minus NDR. If I put a bracket I can add these two things. Mathematically I can add these two things. When I add these two things I have a substitution of the word to this which is non-debt receipts. It is non-debt creating capital receipts when you write NDCR. I want you all to remember this NDR word because it is frequently used in the budget and in the examination if you ask you a question total expenditure minus NDR is fiscal deficit. Yes it is fiscal deficit. You should not be going and searching for revenue receipts there. You followed what I said total expenditure minus NDR is the correct formula for fiscal deficit. Please don't go and search for further variables into it. So you need to know that revenue receipts plus NDCR is NDR and that is the formula for the fiscal deficit and you can see that fiscal deficit had been on a higher range up to 5.8 percentage now they want to bring it to 5.1 percentage. This is actually very high all because of our covid situation they are controlling it but still it has not come under control. Now you tell me about the primary deficit after fiscal deficit you can tell about primary deficit fiscal deficit minus interest payments. Are you seeing the values being 2.3 percentage, 3 percentage, 1.5 percentage and all? If you say that 5.9 percentage is fiscal deficit and primary deficit is 2.3 percentage how much is the interest payment? 5.9 minus this will be 3.6. Everybody knows this right? If you have primary deficit value becoming higher it means that we are spending on other than interest payments. We followed what we said. If you see that this is becoming 1 percentage, assume this 1.5 percentage is written as 1 percentage, 5 percentage, 4 percentage is going to interest payments. So the lower the primary deficit value you are much into trouble because most of your deficit is going towards interest payments. We followed what we said and what is fiscal deficit? DCR. DCR in our simple words. What is fiscal deficit? DCR. You saw that borrowing as 28 by say in our first diagram is it not? That is DCR, debt-creating capital receipts. That is fiscal deficit. Yes or no? Formula wise we know which is why we want you to always remember about the budget deficit. What is budget deficit formula? Total expenditure minus total receipts is equivalent to 0. If you make that equation 0 only then you will be able to make fiscal deficit into DCR. You want me to write the total deficit formula on the board and make it 0 and show you the formula? You are clear? No need to revisit again? Right. So fiscal deficit is other than nothing but it is DCR. It is the borrowings. It is the 28 by say what you saw on the rupee coin and which is what is the fiscal deficit tune and why I am bringing the point back again about this is if you see this value maybe it is written in some lakh crores of money. This much amount of the government is borrowing. That is the first fact which should be going into your mind. The second fact is most of it is going to repay the interest pay. That is why we want to signify this primary deficit saying that if this primary deficit value is becoming smaller and smaller most of the amount whatever you are borrowing is actually going to repay back the interest payments. Imagine the situation. No. If you want to say it as simple as it, yes. That is the concept here. If you do great things using the borrowings, country will go forward but you are borrowing in order to repay the earlier borrowings which is what is the significance of the word primary deficit. Are we done with all this? This diagram is going to show you the trends in the deficit. All the four variables what you saw in the previous table, they have a trend in it. For the past 10 years please remember most of the diagrams have been given from the year 2014 to show the current government spirit about the achievements and other things. You can see it had been going through a very good phase of downfall. All these deficit numbers in this juncture I want you all to remember about FRBM Act. FRBM Act, you please tell me two major provisions of it related to the revenue deficit and the fiscal deficit. You tell me what should happen to RD? Should reduce the revenue deficit? It need not become 0. It can have some numbers and what should be that number? That number should also be towards the GCC. Fiscal deficit should come down to 3 percentage and anything upon the debt, the total debt. 60% is the ceiling. How much for the central government? How much is for the state government? 20 percentage and what should the government not to do? It should not monetize the deficit, printing the currency. It should not go on ask RBI to monetize the deficit, print the currency towards the tune of the deficit. These are the major things. So are we achieving the FRBM Act? You can have a look at it over a period of time. We were towards the achievement because the revenue deficit, where is the revenue deficit? The red color line. It was slowly coming down not very greatly but still it was coming down and your fiscal deficit was very much coming under control like around 3.4 percentage up to that we were able to achieve. But suddenly there was a spike. The FRBM Act does it allow the spike? It does. In situation of natural calamities and situation of COVID like situations, in that kind of situations, this kind of expansion of the expenditure is all alone. Therefore it has resulted, it has peaked up to 9.2 percentage and it is again coming down. Now you are seeing the fiscal deficit being around 5.1 percentage, revenue deficit being around 2 percentage. Things are coming down but still it has to come under control. Have we achieved FRBM Act? We haven't achieved FRBM Act so far which we should have done long time back. This table again you all know. We would have studied about the ways how the government can go and borrow. First thing we said through the FRBM Act, government please don't go to RBI. We stopped government from going to RBI. So now what we have to do? We had five major sources. You remember the five fingers what we would have studied in the class? What are all the places from where RBI can, the government can borrow? Of course from RBI through some special securities, bonds, compensation schemes, all those things it will borrow. Other than that it can borrow from internationally. Public sector bands it can borrow. It can borrow from the public. Bonds and securities we call it as borrowing from the public which is what we call with the word market borrowing. So we can borrow from other countries, international organizations, RBI, public sector bands and the public. These are the five fingers which you should always remember. What are the five things? International organizations, other countries, RBI, public sector bands and public. All the five things you should always remember these are the sources of deficit financing. We asked government to stop monetizing the deficit but somehow it has to get the money to make that 28 paisay. Who will give this 28 paisay? Who is giving? Are you seeing the topmost item being market borrowings? Topmost means even in the value wise you can see that's the largest number here. So market borrowings being on the top, then you have the short term borrowing which is all through the T bills. This will be within the financial institutions and you would have studied in the class called as internal debt, external debt and other internal liabilities. Yes or no? All these some of the features actually the first two things market borrowings, short term borrowings they all will come under the concept of internal debt. Security is again small savings, state provident funds, other things will be called as the other internal liabilities. External debt is another concept, third thing from where it can borrow. These said from international organizations or from the other countries that is very small. Can you see that the amount is very small when compared to the market borrowings and other things. So external debt is a very small source good for India because we don't have to be depending internationally for our internal expenditure requirements and all but the two other major things is one you can see the market borrowings on the top followed by the securities against the small savings. This we would have written as the borrowings against the NSS of funds, other things which will also be placed under internal debt. As such the national small savings funds will be sitting under the other internal liabilities but if you share security against that and then if you take it will be falling under the internal debt. We recall the basics suddenly sounds Greek and Latin. If you remember our three classification internal debt, external debt, other internal liabilities in the internal debt you would have had certain things. Internal debt means it will be borrowing from RBI, it will be borrowing from the public in the form of short term borrowings or the market borrowings. Other than this there is one particular word securities issued against small savings. So what is this, what is the difference between the internal debt and the other internal liabilities? Assume you are all the people and I am the government of India, you all have put your money into the post office in the form of national small savings fund. Either I can come and sell the securities to you people and take your money which will be called as the internal debt or I go conveniently into the post office take the money from the national small savings funds which will be called as other internal liabilities because you are all voluntarily doing some savings which is placed under the other internal liabilities. The pension funds, the provident funds, national small savings funds all these things are your voluntary behavior. I don't come and ask you directly rather I take your money through the post office which is the other internal liabilities but that national small savings funds against that if I issue some securities and borrow from that that particular segment alone will again become into internal debt. Whenever I issue a security it becomes a debt keep it like that in your mind internal debt otherwise it will be called as other internal liabilities. Practically speaking there will not be much difference in the word between debt and liability. Does it sound different to you? No but economically there is a difference because all the other internal liabilities will be taken from the voluntary savings of the people whereas when I want money I give you securities and borrow that will become into internal debt. All right. Can you say that internal liability is from public account and the giving it back it is different sources different these two things are from consolidated front of India that is from the public accounts of India. But we need to understand that it is a voluntary saving concept. That's right. Have you followed? Right. So this is a internal debt to concept market borrowing. Short term borrowing is also an internal debt. Security is issued against small savings is also an internal debt. Provident funds and other assets are all placed under the other internal liabilities then you have the external debt. So with all these concepts sources of deficit financing we see market borrowings on the top and you also have a diagram for it which will make things more clear in terms of the volume. Are you saying that this green thing is on the top? What is this green diagram? Market borrowing. So that is the major source by which the government is mobilizing the money. Then you have the short term borrowing short term borrowings are actually lesser only others and securities issued against the small savings. This is the most other important thing which you have to realize. Right. So market borrowing they will directly come to you securities issued against NSSF they will just give it to the post office and then borrow that money. Right. So the impact of these two things are different. How is it going to be different Assume that you are the population. This is the country. I come and sell the security. You are giving your savings to me in the form of the security which is like absorption of the liquidity into the system for my expenditure. Right. I determine the value. I take it out of your hands. So your money availability towards the private sector may go down. But national small savings funds and other things which you are keeping inside the post office which is a voluntary activity. You decide how much you want to save. You know what is your earning capability. You decide the frequency and you do it on your own. But that is one big largest chunk. So your savings only either I take directly or I take indirectly when I take indirectly the impact on the economy will be slightly lesser than coming directly to you. Right. So there are concepts which are being called as crowding out of the private sector. Have you heard about the words. So those things and all will not happen when I go to the NSSF asking for the money instead of coming directly to you and then selling the government securities. And this is central government. State government also has its capability to come and sell the securities. But if the central government and the state government both of you come and stand in front of you. You will prefer central government. So it is not only the private sector which is taking a toll. Also the state government has to space out the bonding sale in such a way that they will be able to take the savings out of your hands. So how do you generate the money itself is a concept and that anyways we can see that one major direct rate and one another indirectly. Now coming on to the tax receipts which is the known concept for all of us. Two major types of taxes direct taxes indirect taxes and gross tax receipts. So you are seeing which color to be dominating yellow or green yellow. So yellow dominating is good for the country because progressive taxes. Direct taxes are progressive in nature indirect taxes are regressive in nature. Country has to be more progressive than being regressive. So this diagram gives us that confidence that we are having more direct taxes than indirect taxes and also the data which is around 11.7 percentage are you seeing in the last that line which is being represented. This is actually called as the tax to GDP ratio which is also a macroeconomic variable for the country. Many other developed countries they have the data like around 14 to 15 percentage sometimes up to 18 percentage but India still has around 11 to 12 percentage which is actually lesser only but we are slowly improving all that. So 11.7 percentage is the tax to GDP ratio. Now we are talking about the center's receipt what we have already studied we have put it in a different perspective. Are you seeing the blue thing being the major thing which is called as net center's tax revenue. While this word tax revenue suddenly got the word in net we have to give some amount of the money to the states. So after giving to the states whatever is left with the center will be called as the net center's tax revenue. So the words what we already know as tax revenue non tax revenue receipts these two things will be making the RR is it not right and this NDCR this is the part of the capital receipts which we are going to take this is a real earning for the country beyond this only comes the DCR which we will be calling it as a borrowing. So capital receipts in that that NDCR plus the revenue receipts is this diagram the known concept for us here you can see that the country's real earning is actually coming mostly only from the taxes right all the types of direct taxes and the indirect taxes have been given together here and the most important observation what you have to make here is that the taxes collections are increasing right mainly because of GST right income tax corporate profit tax they always used to rule the list of the taxes if you put in a descending order they'll be always on the top but these days GST is trying to sandwich between income tax and the corporate profit tax that's what is the data which we saw is it not right if it goes on the top above income tax country will become regressive we are right now somewhere about progressiveness but the moment GST is going to be on the top GST is not very far away from your direct taxes collection though they say that there are lots of controversial data presentations I'll tell you about it though they say that the monthly collections of the GST tax has increased to a very greater extent but direct taxes have tripled and all and then they change the income tax threshold as 7 lakhs all of these things actually don't go hand in hand right income tax being called as tripled but the threshold being increased they don't go actually hand in hand but that's how the data is being presented so we'll see about them but the lesson from this particular graph is we have our taxes collection significantly increasing in the previous years and but the worrisome factor is you can see that NDCR you see the NDCR which is the proceedings from the disinvestment which is stagnating somewhere less than this one percentage only this is not a healthy feature actually they should be raising enough resources from it so that the overall receipts for the government will improve and your requirement to do this DCR will come down you can't be putting pressure more and more on the people in the form of tax collection somewhere the government should learn how to earn money on its own right so one of the ways how we can do is either recover the loans and advances or do the disinvestment process wherever it is required non-tax revenue receipts also has increased which is a good thing usually it will be only around three percentage for the first time they are also projecting it to go up to four percentage so here again they have given the diagram in the form of revenue receipts and the capital receipts revenue receipts we know that this is increasing mainly because of the taxes collections this is all given in the lab growth capital receipts of course it is having ups and downs it is going up and it is coming down mainly because inside the capital receipts you have your borrowings and the NDCR NDCR is very less which you know from the previous diagram also so but one good thing what we can see is if the borrowings are coming down it's good for the country because later you don't have to pay much on the interest payments this is about the revenue expenditure and about the effective capital expenditure that's the word which we wanted to bring in with the GCC here so revenue expenditure we know like it is all about your interest payments pensions salaries subsidies and all the payments given to the general economic services whereas effective capital expenditure will be towards the schemes generation of the capital assets giving out of the loans and other things but here the word effective comes CE plus GCC right the one which we deleted out of the effective revenue deficit gets added here there are more diagrams to that particular variable of effective capital expenditure which are upcoming so this is about the composition of the expenditure there are different colors here the first the lowest bar is about the establishment expenditure this graph is not written in the form of revenue expenditure or capital expenditure it is presented as the way how the government spends right from the establishment expenditure then the central sector schemes then they put other central sector expenditure under which your subsidies and interest payments and all will come so they have given in a different type of a heading but major thing what you can notice the centrally sponsored schemes which is this orange color the central sector schemes which is this a low color they are good in number or in the magnitude which is what we want it to happen and finance commission grants that is according to the percentage and the formula other grants and the loans is also on the top so we can see that to certain extent the centrally sponsored schemes and the central sector schemes are good in volume which is encouraging because that's what they want to say that the government is going on increasing the capital expenditure this is that formula which I told you for the effective capital expenditure you can see the word grants in aid for the creation of capital assets which is what we called as the GCC so you have the capital expenditure plus the GCC coming out as the concept of effective capital expenditure the data which is there in the previous table they have presented here as the diagram you can see that the capital expenditure is also increasing the grant in aid for the creation of capital assets is also increasing and therefore the effective capital expenditure is having a good jump from 10.5 percentage and all to 12.5 and they expect it to go up to around 15% capital expenditure there are all the departments and which are all the schemes that they have spent they have another graph to show but the fact is there is a good increase multiple percentage increase happening in the capital expenditure this is that particular diagram which shows that where exactly this expenditure is being spent across different departments the first what is the biggest one whatever may be the department our first department is interest payments then you have the transportation then you have the defense any bigger subsidies then we can say transport to the states then the rural development pension and the tax administration these are all the establishment expenditure establishing different departments then agriculture and allied activities education home affairs energy is all small health is can also say health social welfare is all small so whatever may be the list of the expenditure we have interest payments being always on the top we are seeing so much value here know that our capital expenditure is all increasing and grant in aid for the capital assets are all increasing right these are all actually the which value lacks and crores of money and what is given on the top only we can say it is all like that is also actually the addition of these two things value only when you go in terms of percentage to GDP it will be only the interest payments which will be on the top so when you write the total expenditure of the government you will write RE and then you will write the CE though these are all looking like very big from this diagram one component of the RE only will dominate and then only all your departmental allocation everything will come and that's the magnitude which is always represented through the primary deficit right so this is the diagram and putting those sectors across the different years they are trying to show so transportation department you can see that it is going on increasing the allocation rural development also is increasing agriculture and allied activities though it was shown as a smaller diagram here there were lots of commons which came immediately after the budget presentation that the agriculture sector was not given much of allocation so this diagram is actually trying to show that slowly the agriculture related thing is increasing education and health that is always a query or a comment which is passed on the health that not even one percentage of the GDP we are spending upon the health related so we haven't still touched one percentage of the GDP but education of course we have slowly crossed one percentage we are up to 1.25 percentage of it so social welfare energy they are all still much down the lane so this is about the total transfers to states and union territories here you have to also recall one concept when did GST come into picture 20 17 june july time we got the thing and five years from then the government agreed for the compensation right says using the says so five years from then means by 2023 mostly the things who should have been compensated after which if there is any shortfall with the GST the states should be managing on their own right so there were lots of commons and queries which were posted that the central government is not sharing that compensation to the states for the downfall of the GST collections right but the government wants to show that enough of transfers were made to the states and union territories over the period and they have also shown one particular data which is saying that after that particular period of five years the states have to manage the GST on their own so at that time whatever collections they made was less but the amount to which the central government gave to the states and made them to be in a particular buoyancy you all know the word of meaning of the word buoyancy so as the income increases the tax collections should also correspondingly increase so that buoyancy was maintained better by the states when it was giving the money to the states but when they manage on their own they are not able to do so very well so it is not that they didn't do the responsibility they have done it which is what they actually want to show it in the form of this particular diagram that the tax collections were shared in a increasingly progressive way to the states and to the union territories and delete the grants or is it through the finance commission or is it the sharing of the tax receipts to the states everything has been done in a proper way so they want to show this diagram as a progressive one in terms of sharing of money with the states. Now this is one particular value which you can look at the budget size is 47.66 lakh crores that's the total amount which the see internationally governments will be looking at different different governments how much are they budgeting every year in that place India is standing somewhere closer to 50 lakh crores of money being spent on the country. The same 47.66 we are going to tally here when it comes to expenditure we will be saying it has transfers establishment and other expenditure and scheme expenditure if you add this 27.70 on 19.96 that's going to come for that 47.66 so this is the total budget which the country has presented first in this 47.66 you can see that I am just putting this particular part of the graph I am just doing gross tax revenue receipts we remember revenue receipts non-tax revenue receipts NDC these are the three major things apart from the borrowings you can see that the values here income tax corporate profit tax corporate profit tax and your GST GST is the second largest then the corporation tax customs duties all the things what we mentioned and are you also seeing the diagram is going with outside arrow this is two for the disaster relief fund and for the share of the taxes for the states this is non-tax this is net tax receipts after removing the share of the taxes for the states and you have small small other thing for the non-tax revenue receipts interest receipts dividends and profits and others so interest receipts will be actually the bigger but you can also see that the dividends and the profits being higher then you have your capital receipts in this you are also including the debt receipts this is your DCR this is your NDCR and finally you have the budget size being 47.66 lakhs right in this capital receipts debt receipt is the major item non-debt capital receipt is very small value and you add the capital receipts net tax receipts and non-tax revenue receipts adding this one two and three you get the total budget size so the entire picture of the budget has been presented in this particular way this is to show you the volume of the budget presentation okay so this is about your expenditure which they have presented in a different way transfers establishment and other expenditure so under the other central expenditure you have the interest payments the way how you would have studied in the class would be like revenue expenditure and the capital expenditure those are the two major ways how we have been always tuned but here the government presented under the other central expenditure the interest payments and can you see that the subsidies are placed somewhere here under the central sector basically we study revenue and capital and our assumption will be all the central sector schemes will be placed under the capital centrally sponsored schemes will be placed under capital but here one thing is they put this interest payment under the other central expenditure in the establishment expenditure they bring in the salary and pension and transfers to states it is fine finance commissions and the grants which are transferred to the local bodies and in the central sector schemes we have for the general services economic services and social services but the subsidy part is also being brought under the central sector schemes so the presentation here in the final graph is bit different from what we actually study in the thing so if you recall back in the class when we study the capital and the revenue side we always used to say if there is a difference capital there will also be a difference revenue right if there is a creation of the asset if there is a maintenance of the asset they both will be split I think you should take this also in such a way that the subsidies are being placed under the central sector schemes and the interest payments and other things kept under the other capital expenditure under the establishment expenditure this is a word which we have to understand from the budget under the establishment expenditure they give you the salary pension and travel advances HRR and other things which are coming under the establishment expenditure this is another cross cutting layer which the government wants to present other than what we have studied we used to also study about the plan expenditure on the non-plan expenditure we don't have any plan and non-plan any further but three layers revenue expenditure capital expenditures one way otherwise you have the establishment expenditure centrally sponsored schemes kind of things central sector schemes kind of things under which they are presenting the different types of expenditure here but anyways the total is being tallied between that receipts and the expenditure including your DCR so far whatever we have seen is all about the core data from the budget in the next few minutes we will see some development agenda and then we will have a small fight and minute spray then we will come back for the annual economic review right Paul Hindi was now we are getting used to learning Hindi there is no option left for us because if you become a central government servant you have to speak right learn Hindi so let us so development mantra is all your comprehensive development which they want to say there are some two three years which they want to specify 2047 maybe they are with that 1947 so therefore by then at least we should become into a developed country so that's the agenda what we have so SAPCAS is comprehensive development of all Vishwas is they say the basic is the trust right and there is also yet another major claim by the government that within the 10 years we were the 10th largest economy which became into fifth largest economy so we are on the right path of development this exactly is the budget highlights what you would have seen from the websites after the presentation of budget okay so interesting graph where we are saying that anybody knows what is the percentage of growth which they have projected nominal GDP real GDP nominal GDP what is the percentage more than 10 percentage 10.5 percentage or so for the real GDP they have presented 7.2 percentage or so so 7 percentage is like one of the fastest growing economy in the world so they keep saying we were part of fragile five fragile and all means we were very weak economy now we are slowly becoming the fastest to growing economy we were the 10th largest economy now we are the fifth largest economy in the world right so we are also part of that emerging economies these are all the alternative words you can remember while writing so here they want to show that again you can see that the period is being referred from 2014 till today or they are even giving projection still up to financial year 2029 whereas India's growth dollar GDP growth is actually higher than the world's growth this is basically to say that India's GDP's growth rate is higher than the world's growth rate so which is a very good situation for India now they have said actually in the budget speech finance minister has referred to this four as four costs right there are only four costs in India which they want to mention as Garibo, Mahilao, Yuva and Anna Dutta so poor women, youth, farmer they are the four people of focus and these are referred to as the four costs in the by the present government so how they have Garibo right so how they have reduced the poverty we are all familiar with the multi-dimensional poverty index of UNDP right so can somebody say some of the variables inside the multi-dimensional poverty first to define it then you tell me health education and what is the third one which is all part of what first to the HDI then we had the IHDI then we had the GDI then we had the what is it gender equality index gender development index multi-dimensional now you tell okay dimension wise it is okay education help and standard of living instead of calling it as standard of living we have to call it as access to resources do we have access to resources or not right so do we have basic education or not enrollment or not have we reduced our infant mortality rate have we reduced our malnourishment right and have we access to resources like the basic bed, the cot, the fan, the pukka house some electricity, some safe drinking water, a sanitation facility, a better fuel without having a dirty fuel in the house bank bank accounts is not given in that list it's all basic access to the resources so when we say education health and the access to the resources according to that a few years back India was having 40 to 50 percentage as the multi-dimensional poor people in the country which now they are presenting as we can see from 55 percentage coming down to 11 percentation according to the head counter on the income level you know that there is an income poverty measurement in the country yes or no based on one particular day's earning this much one dollar per day kind of evaluations we still say that there is 20 percentage of poverty which is also coming down but this multi-dimensional poverty head count has come down drastically from 55 percentage to 15 percentage at least we can say 11 percentage in the previous year because there is lot of electrification happening in the country houses being given pukka houses sanitation facilities so based upon all such programs and the schemes we are trying to say that the access to resources is actually improving as well as our IMR, MMR everything is coming down but based on the global hunger index you remember something based on the malnourishment thing we are still not very good that's still under trouble but access to resources and the education wise the gross enrollment ratio all such things are all improving so therefore we can see that the multi-dimensionally poor people are coming down and this DBT which they are doing is also helping the poor right and they are in terms of the total volume they are saying 25 both people have moved out credit assistance so basically you have to give people more money either in the form of credit or in the form of UBI you're all familiar with the word UBI universal basic income so they give to farmers they give to pregnant women they give to women of Tamil Nadu for no reason they will give so when it is being just being given to you because you are a citizen of the country there need not be any other qualification for that if you are a citizen of the country that's actually the original concept of UBI of course when you talk about the PM Kisan scheme or when you're talking about the Mahila and the whatever they give for the pregnant women and other things there is a situation but UBI comes without any situation you just get money that's what is happening in Tamil Nadu for all women they are putting 1000 rupees into the account so these are all raise and measures to reduce poverty so poor we have address the second thing is you are which is the youth for the youth the major question is employment generation so you have to either give them skill or you have to give them loans to do the entrepreneurial activity so the PM Mudra Yojana is a way how they can take without any security unsecured loans and all you can take here and this is basically for the schools and the presentation of more number of teachers and all they have given so the education system is also improving so the evidence is shown in terms of the crores of money so about the you are then we come to the Nari Shakti which is the women's empowerment you can see here these women are also getting the Mudra Yojana loans so that they'll become into entrepreneurs the first major indication what they have given here is female labour force participation rate which has gone from 23 percentage to 37 percentage right so which is a very good jump first you tell me what is labour force participation rate numerator denominator workforce is the denominator labour force is the numerator what do you mean by workforce particular age say some age actually they start from 15 up to 64 so let's say it has 15 to 58 or you want to put it as 15 to 64 in some cases so that is the total work force in the workforce how many of the people are in the labour right when you say the labour don't assume that assume that you are all in that particular age group you are all in the particular age group but this is the total country but some of you are working some of you are not working you know what is unemployment again I would go into that what is unemployment eligibility eligibility to work as well as willing to work right so you all have the ability to work but you don't have willingness to work you won't be called as unemployed so I have you're all employed assume that you're all wanting to get employed but you have not bought employment all of you put together is what is labour force you followed what I said those who are employed those who are not employed both will make labour force but the working age group is in the denominator they will also be including those people who didn't actually want to work you understood what I said yes or no no assume that this is the country there are three types of people this first half of the class they are having the age eligibility and they have got to work this part of the class they have the eligibility but they didn't get the work that part of the class they didn't want to work okay they have the eligibility they have the qualification but they didn't want to work entire class will be the work force because you're all belonging to the age group of 15 to 50 64 or 58 but who will be sitting in the numerator this will be the denominator the people who are employed plus people who are not employed everybody together will make the labour force because you're all readily available for the labour and it is the responsibility of the government to give the jobs to you so you are and the women they should be given the jobs right so the entire workforce being in the denominator you employed plus unemployed that particular ratio is actually increasing not just because that the unemployed are actually increasing because they have another data to show that the unemployment rate is decreasing right in the labour force the unemployment rate is decreasing that data is also being presented so therefore we understand that the labour force is working and that percentage is actually increasing and in this definition they have gone into a bit of a detail which you should learn from the annual economic review urban understood we are talking about the female okay urban female rural female urban female they get educated they get the qualification they come forward what about the rural female that ratio is also increasing how is that increasing feminization of agriculture because men are coming out and women are getting involved in the form activity in a better way because they are getting more skills so all of those things are being represented in this rise in labour force participation which is appreciable and female enrollment in the higher education is actually increasing and they are studying very good science and technology engineering medicine courses and they are also being getting into lack pati these scheme many of them are being encouraged here crores and crores of women are being benefited now comes our another thought where we are seeing the major thing what you can do to the farmer is the MSP and procurement of the food grains from them so that also they are trying to say that the procurement is actually increasing that's what is given in this graph the rise in the wheat but we can see for the rise the procurement has increased for the wheat slowly it is increasing after 21-22 there was a dip but now it is again increasing leave alone all the politics which is happening in Delhi but let us assume that the graph is true and happening right and they are also giving the 6000 assistance right to the farmers through the PM Kisan scheme yearly annually and you have lots of insurance scheme going on to the farmers in the form of Kisan Bhima Fasal Bhima Yojana and the e marketing is also eliminating lot of intermediaries and helping the farmers to reap the benefits of the sales or the trade whatever they do so that is giving them a good trading volume now comes the other Hindi word which you must know amrita kalam amrita kalam is coming for the entire India and there are five strategies for the amrita kalam the major things you can remember like this and then you can write most of the schemes what you know under it for them they are projecting some schemes under the each of it the first thing being the sustainable development we know whenever we mention sustainable development we have to talk about the resources we should be getting away from the fossil fuels we should move towards the renewable energy sources so they are saying by 2070 we should become a zero emission country they have a target 2070 and then they are talking about all this roof solar roof on the top then electric vehicles electric buses and hydrogen related utilization of the fuels so moving away from the fossil fuels is the major idea there the second thing is about the infrastructure and the investment they are trying to bring in the foreign investment bilateral investments fdi's they have opened up 100% fdi in many automatic routes in space sector right so then they are also wanting to work upon the infrastructure in terms of the railroad and air networks right sagarmala barat mala then they will also have the udon programs right lots of new airports so all that investment related things are coming here under the inclusive development they have given two types of it one they want to talk about the health another one about the housing tourism and other things so here they are trying to talk about the aspirational district programs also under it aspirational district program will also be covering your education health social kind of indicators so they want to do everybody inclusive development is basically bringing everybody into the concept of development regarding the health they have this newer vaccines coming for the women ocean nutrition based improvement in the country they want to do more of vaccinations through the indra dhanosh scheme they want to include all the low-level workers like the health workers asha sanghanwadi workers into the aish nirman that health insurance scheme so larger benefits basically to say the last level worker is also getting included into the development process inclusive development in the housing they are showing about the avas yojana pradhan mantri avas yojana how many number of houses they have constructed and how is it benefiting including the sanitation facility they are presenting it there when we then there are some data on the tourism also where they want to say that india should identify spots where to attract the things states are being given with encouragement to bring in the newer tourist spots right so basically they are encouraging the states to do the tourism in a better way employment opportunity attracting the investments everything is being part of the tourism coming to the agriculture and the food processing the first thing is after the harvest how public and private can come into partnership in order to make the post harvest process into a better way then they want to make this nano fertilizers application and all DAP so that for every aggro climatic zone the application offered will become better and the crop production will become better then they have this dairy development marzia sambhada yojana and all and in between there is a tractor we should find out what scheme is so most of it is basically to improve the agriculture and the food processing I think this is basically for the oil seeds promotion so now that they are done with the cereals and the pulses they are focusing upon the oil seeds right so these are all the strategies for the amrith call so whatever the programs you would have learned across the social sector welfare schemes you can recall them and then write but remember the five major headings to summarize it as an answer so amrith call is coming through the strategies so after this we'll have the economic review I think we'll have a 10 minutes break and come back for this no no no I have some more things to say about resilience then only we go for the review this resilience diagram has been presented in the budget with the different combinations I have changed it with my own combination mainly to say that two good things first declining CAD what is CAD current account deficit what is in current account what is the major title balance of payments current account capital account under the current account we have goods account services account under the capital account we again have the short term and the long term accounts so this person page what is given here is only about current account deficit in the current account we have the goods and the services services account are always in positive which is surplus goods account is mostly negative and in deficit overall current account the deficit is happening because though we have positive services account we have a bigger negative goods account so this therefore negative plus positive actually results in negative that is why we have the current account deficit so leave the services account for a few minutes just look at the goods account in the goods account why is it ending up in the negative because imports of the goods are higher than the exports of the goods so if somebody is telling you that the current account deficit is declining either the services account positive could have increased or exports of the goods would have increased or imports of the goods would have decreased these are the interpretations of it so here we are seeing that there is a trend exports of the goods decreased imports of the goods also decreased you understood what I said services apathy pace la restrict your mind only with the goods the trend is exports and the imports imports is higher exports is lower which is why the deficit and current account has happened what we will say decline in the current account deficit means either the imports of the commodities have come down or the exports of the commodities has increased now the interpretation is different imports have come down exports have also come down but the falling of the imports is greater than the fall in the exports therefore decline in current account don't assume see export imports we can have a control because what we want we know if we have money we import certain things we must import we import otherwise we can have a controlling but exports is not under our control because global countries should import for us to export right so if there is a global demand shrinkage then we won't be able to export so that is not exactly in our hands so because of the global economic and the political situation being grim we had a decline in the exports also but still our CAD is sometimes declining because our imports are falling faster than the fall in the exports so there are different interpretations to this but overall we can say that there is a decline in the CAD as percentage of GDP right so then there was a decline and then there was a spike again they expected to decline but overall it is shrinking this is about the NPAs what do we know about NPA non-performing assets so bad debts if we are not repaying any loans it becomes into NPAs that is also declining in the recent past for the scheduled commercial banks we are talking about the scheduled commercial banks here the decline is very good and this is actually showing that you are all familiar with the balance sheet syndrome twin balance sheet syndrome and basically this is about the banks balance sheet it was getting into trouble because the NPAs were accumulating now that it is coming down it is becoming a better scenario this is all to show that we will be able to give out more loans more amount for investment and other things which is becoming it another good factor for resilience of Indian economy what is the meaning of resilience after covid we are trying to bounce back to bounce back we should have good capacity in terms of good features so the banks are also becoming good with reducing NPAs the resilience is continuing with unemployment rate and inflation you remember the combination of these two variables elsewhere why stagflation only okay stagflation phillips curve stagflation yes one more even before coming to inflation class we will study these two things laurence curve is income inequality one student basic class second chapter where is my batch four batch four please uh vishya cycle along there what happened one index any index goes with laurence curve you're coming to the chapter i uh i appreciate you but i want still the answer when i mention about the inflation rate and the unemployment rate i repeatedly mentioned it goes forever throughout the concept you remember mystery index you said it very good mystery index if you add unemployment rate and inflation rate the mystery of the country will increase remember anything like that we know we don't know you tell me at least that we don't know we have not heard of author oakons oakons mystery index batch four i will not accept uh we did a concept clarity sheet or net if you remember mystery index given by author oakons sometimes that's also called as oakons index the same two variables only will come for phillips curve also right stagflation also but stagflation the relationship will change in the phillips curve what is the concept of phillips curve unemployment rate falls inflation rate increases unemployment rate increases inflation rate increases is what is your stagflation unemployment rate increases plus inflation rate that directly proportional inversely proportional you see your phillips curve under stagflation but this plus dot inflation rate is assumed that it is five percentage unemployment rate estimate is four percentage a country's mystery is measured as five plus four which is nine percentage which was proposed by oakons sometimes in the question they can ask you as author oakons index or the mystery index so that is why we wanted to place both of these things together in a slide our unemployment rate is declining usually a country will have four percentage as the natural unemployment rate we are even lesser than that amrita call is coming so we are from 4.1 percent to 3.2 percentage as the unemployment rate declining and fall in headline inflation you can see that headline inflation is basically including all your sensitive nonsensitive all the items put together into it that is your food energy and the core manufacturing everything put together will be your headline inflation what is the range which the government expects you to have the inflation as four plus or minus two percentage so up to six percentage but we are not really happy about this because still up to 20-23 financial year we had a 6.7 percentage mainly because of food inflation mainly mainly because of food inflation so core inflation was all under control I will show you that data also this is furthering of the resilience of Indian economy where you can see that monthly GST collections are crossing 1.5 lakh crores every month which they say it's a very good level of collections every year you remember we had a VAT before GST value at a taxation and service taxes was given separately and all we had different percentages at that time anybody remembers any percentage over there service tax was all around like 10% then it became 12% then it became 15% and now we pay GST as 18% for this kind of services so there is one particular average value which they try to achieve you know there are different concepts for the luxuries they go up to 28% for the essentials they keep it as a zero percentage so on an average it should touch a 15 15 percentage is the average which they want to achieve in terms of the indirect taxes aiming towards that they are doing these collections so that is moving towards it which is what they want to show that one and a half lakh crores every month is a very good data which they want to increase further to 1.7. Rising value of digital transactions this we all know mainly because of UPI we are reaching this and India is becoming as an example for other countries to pick up this kind of financial digital transactions right so these are all given as a reasons for resilience of Indian economy according to the budget highlights and they've also mentioned some of the tax reforms which is where I already mentioned income tax has troubled remember but the threshold has become into 7 lakhs and corporate profit tax also they are reducing from 30 percentage to 22 percentage for then some of the newer manufacturing companies they are setting it as 15 percentage and GST collections as I told you that has also more than doubled in the in terms of the base that is many people have come into the GST paying on the returns filing thing and states S GST revenue including compensation this is what I wanted to tell you the transfer to the states I told you it has reached the buoyancy of 1.22 right so for one it is becoming 1.22 so to that extent the buoyancy has increased mainly because center was very appropriately transferring the amount to the states all statements so and they're also talking about the merit of the GST where they say that the prices of the commodities and the services have come down particularly through the logistics for which also they have a graph to show that for every kilometer the percentage of the transportation cost has come from like 15 percentage to around 10 percentage and a smaller relaxation also the government has given for the taxpayers who had like a demand of 25,000, 10,000 and all small small pennings which they had kept from 20, 10 and all so they have tried to weigh it off and therefore that is expected to release like more than a crore taxpayers 1 crore taxpayers are getting benefited you all know like above the threshold if you go you have to pay the tax assume that you have to pay a tax of like 50,000 in a year which you didn't pay so then they would have kept as a demand from you for very long time it is being as a pending now they are relaxing all such things and they are allowing people to get out of the payment so that they are saying it's going to benefit 1 crore taxpayer people so these are all basically to put the money back into the hands of the people this is the evidence where they want to say that from the 15 percentage it is coming closer to the 10 percentage logistic cost that is mainly because of the GST which has come into the picture unified GST states plus the central GST together right so from here we'll have to see the economic review which is actually the survey kind of a presentation they have given only two major chapters in it so we have also picked up only what is essential for the examination purpose go recharge yourself with the chai and come back we will continue with the sabkavikas right I'm here what we are going to see is though it's written here as monthly economic review which is a document again from the department of economic affairs this has been integrated with the another document which is annual economic review so it's not purely the monthly presentation it is going to have one year's data tables and charts into it so what we are going to see is bit more than the budget values we are going to see the GDP related things we're going to see about the external sector we are going to also see about the sectoral presentations a few more expanded view than what the budget as such focused so let's continue from the first slide which actually talks about stronger private final consumption expenditure these are all you can again consider that how India has bounced back or the resilience of Indian economy is happening we saw some six different graphs and diagrams to have an evidence on it now if you recall back in our national income calculation we had different types of methods to calculate national income income method expenditure method and the product method right what you're going to see here is mostly upon the expenditure method can somebody tell the expenditure methods formula c plus i plus g plus x minus m plus r minus b if it is international or national so basically i'm going to talk about the c and i in the first two slides so c is the consumption expenditure which they say the stronger bounce back of the consumption pattern of Indian economy had been the real hero who has actually put us into the resilience of Indian economy assume that if you people don't demand then the production will be into a glut it won't happen it will be backlogging everything will come to a standstill if there is no people buying the commodities that's the major thing so other people are buying lots and lots of commodities this is the very strong feature of Indian economy we are a consumption based economy though we want to become an investment based economy so far we are in the feature of consumption based economy so the evidence is all coming here you can see that they have stretched a bit more before 14 but if you see from the last 10 years the consumption after particularly after 20 slowly it is now increasing and this is also being reflected in the rising volume growth and the fast-moving consumer goods sales here you can see that sometimes it was in negative in the rural but now everything is becoming positive in the current financial year and here also you can see to what extent it has happened is increase in domestic air passenger traffic which was very much affected during the covid situation so now they have given from April 22 to December 2023 so many crores and crores of people have started traveling which shows that the economy is bouncing back so this is a very strong estimate for the economy's resilience and again our per capita national income is also improving which also will be leaving the money in the hands of per person in a good way so that you will be able to consume more basically our standard of living the poverty estimates everything is based on this per capita income so that is also improving slowly there was a slump in 2020 after 19 you can see that but now again it has started increasing and latest bar is even higher than the pre covid situation so this is also taken as a good sign for the improvement of the Indian economy this is what we said as that investment expenditure we said about c plus i plus g plus x minus m g which is the government's expenditure which we saw in the first part of the class now we are talking about the private consumption expenditure private investment expenditure and other things so one of the evidences here is so they are taking a very longer period here this was a boom situation period but it ended up with all the unsustainable credit book we know about the subprime crisis which happened in us which resulted in again slumping of all the economic parameters so india also underwent this balance sheet syndrome companies were getting into trouble therefore bank's balance sheet was also getting into trouble you remember we had a surface sea act then we moved towards the insolvency and bankruptcy code we created so many ways by which the companies can exit out of the industry so with all such repass and other things so what we are talking here is about the lending lending just you remember our simpler flow of income savings will come into the financial sector from there it will go as the investment expenditure which is basically the loans given to the companies so when the loans are being given in a better way which means that the economy is bouncing back so for that the companies should also be performing well the bank should also be performing well so banks performance depends upon the company's repayment so it is all interlink but we can see that slowly now the lending has started increasing which we want to call it as the recovery of the investment expenditure so consumption expenditure is good investment expenditure is also improving with all these positive factors india is becoming better in the gdp's good here this graph is not so very positive but still it is becoming into positive two things you can see that red colored line which is the current situation index and the surveys are also being done from the people about the future expectations mostly about the output the prices right the prospects of the business based upon this you will have all these future expectation index which will all be computed by rbi you can't see that the green is actually higher than the red dotted line which is actually the expected thing if you have the future expectations higher slowly now the consumption investment everything will improve very fastly but though it is not higher than that it was higher than that in certain period now there are some lows but slowly the increase is happening so in the recent past you can see that our future expectations index is slowly increasing right so this is also showing that the consumer is getting into confidence about the indian economy this title is again showing very precisely how much loans are being given for the investment purposes if you get into the bank you can have a personal loan you can have an education loan you can have an agricultural loan you can have a home loan there are varieties of loans which they give here they want to say that net of personal loans non food bank credit so it's not for the food or for the personal things it is basically for the credit purposes the bank credit is being given focusing upon the investment which is what they want to narrow down the graph is very much similar to the investment expenditure graph what we saw slide before so here again they say that unsustainable credit boom all such period after which we had balance sheet repairing period and now the lending is actually increasing like how we said investment expenditure is increasing in parlance with that we are saying here the credit by in a very precise way is increasing towards the capital expenditure or towards the investment expenditure that is by the banks now we also have this when we say about the investment expenditure please remember this formula this is also given by the mospy investment rate is the ratio of nominal gfcf over nominal gdp you remember our gcf concept through our national income class gross capital formation which will be including three components into it gross picture capital formation changes in inventories and stocks and bullion market there are the three things inside the gcf gcf is gross capital formation in that gross fixed capital formation will be the 90 percent page of the gross capital formation what is inside this fixed capital formation there will be construction there will be machineries and equipments all the capital things in this diagram they are taking into account only that particular part of the gross fixed capital formation it's not the gcf right it doesn't include the changes in the stocks and the inventories or the bullion market the 90 percent which is dominating the gcf that is the gfcf alone is taken in the numerator and denominator is our gdp so here we can say that if we are earning 100 percentage 30 percentage 29.8 percentage is going towards the investment that's the meaning of this particular ratio right what investment in the construction in the machineries and the equipments this data is being supported by the banks also where they try to show that the credit giving nature of the bank has actually recovered a lot in the similar period that's the other graph what we saw you are able to appreciate this formula investment rate is ratio of nominal gfcf over nominal gdp numerator and the denominator this is by the private non-financial companies in the circular flow of income we would have shown that the households are doing the savings savings is what is going as the investment expenditure the government will also do some investment but the financial companies actually the business sector is there to which this thing they can also do some investments so here it is basically to show you in lakhs and crores how the non-financial companies the real business companies are actually improving in their volume of the investments this is all getting reflected in index of industrial production we know the IAP the core eight industries which are in it the steel the cement the fertilizers those kind of industries which we would have studied this kind of investment is all being improved among the core industries in the IAP index so this data has been pulled out of such kind of a presentation so again we are trying to show that the investment is actually increasing h1 is all half financial year capacity utilization of the manufacturing sector so if there is an existing stock in the financial year they should if they have the raw materials they should be able to maximum utilize the capacity which they are saying up to 75 percentage now they are utilizing the capacity so this should actually improve and it should become 100 percentage but slowly we were like less than 50 percentage in June 2020 but slowly the percentage kept varying and now we are getting closer to 75 percentage in the existing capacity utilization of the manufacturing sector so manufacturing sector its utilization its performance everything again will get reflected in the IAP index as well as it will get reflected in the inflation as well as it will get reflected in the national income everywhere this will be reported you remember secondary sector in our national income primary sector secondary sector tertiary sector so all these performance will be countered under the secondary sector of the national income we are all familiar with this purchasing managers index measuring about the expansion or contraction or how are we perform s and p global they are the people who give such index for every index please remember the source who is actually putting up the index for the manufacturing sector they do such pma index for the services also they do such index what do they do that in case of purchasing managers index we should see how much raw materials are being bought how much output is going and how much selling prices happening how much cost prices happening so all these kinds of new orders employment everything will be involved in this particular survey and whenever we get the data above 50 we are going to say that the manufacturing sector is in the expansionary zone if it is less than 50 it is not expanding it's in the contractionary zone 50 is the normal thing it's not high or low so here we are seeing that it is above 50 it is fluctuating but it is recovering and it is slightly expanding so this is also showing that the business sector is actually trying to expand its own production related activities so we are gathering the information from different corners to explain that the economy is becoming better off and right side is what is your growth in the index of industrial production you can see that year on year growth of course there was a slump after the financial year 20 and then slowly now it is recovering what is it all going down in 23 22 23 20 we understand 22 23 mainly because of the war situation as well as the supply blood and the inflation across the countries in the world right so supply chain got disrupted mainly because of the war situation which resulted in lack of commodities raw materials which resulted in inflation across the global level it's not just the manufacturing sector thing even the food inflation across the world kept on a higher level so with all these situations we couldn't do better in terms of the economy so therefore there was we are also importing a country therefore there was a slump in the year slowly now the things are becoming better so purchasing manager's index shows that we are on an expansionary zone this is one of the core industries which comes under the index of industrial production for the construction activity the cement and the steel iron and steel production here also you're seeing that there were ups and downs but slowly now it is recovering and surge in the housing sales when we say that gross fixed capital formation you should look at this fixed capital formation for the household sector the private sector and for the government sector for everybody for all of them for household sector what will be the gfcf it will be the house construction for business it will be the industrial construction for services also they can do the construction so everywhere the construction is becoming a part of the gfcf if you want to look at it in another perspective you can look it at as agriculture the primary the secondary the tertiary sector everywhere you can talk about the construction related activities as the gross fixed capital formation so housing sales why is it taken so much into consideration because it is the households gross fixed capital formation so that is also seeming to be increasing so mainly because of the prices all coming under control for the manufacturing sector also because of the income level which is better with the people which gives them the affordability to purchase more houses or more assets into the picture now we are talking about the services in an expansionary zone like what we had for the manufacturing sector there are a set of services can you give some example of the services sector education it sector health transportation banking loans providing top most sector tourism it even above it i want one more telecommunication that's the top most service industry today telecommunication so these are the sectors which you can give us the example and here we are remaining in a expansionary zone 5g 6g 7g you come up to 7g 8g no 7g okay so all of such services will be put into this again here also they will see about the selling cost market cost employment status output proceedings everything but this is you can see that it is even higher than 60 and all whereas the purchasing manager's index for manufacturing sector it was around 50 55 here it's going closer to 60 65 so services sector expansionary zone is much better than the manufacturing sector zone and one of the hospitality industry is your hotel industry where you can see that the hotel occupancy rate is actually becoming better this was all very worst hit in the covid situation which is actually recovering now like how we saw the domestic air transportation is all increasing like that we are seeing this variable for the service industry and revenue per available room average daily rate everything is actually becoming better only in the recent past we can see them improving this is a real estate prices which is again to indicate that the housing sector is actually booming after our 2021 slowly the prices are picking up this is across all the major urban cities we can mention this is a recovery of global economy you can't find the presentation of india into it you just have to look at the other countries and then find out that everybody is recovering better who is recovering the best india is not there is no india in this graph please don't search for india can you just look at brazil is becoming the best according to the recent jan china is on the second level us japan eurozone is still slumping china is having slow moderation ups and downs are there us had a very low in 2023 and then it's becoming better now eurozone and us are almost traveling in the same fashion that is uk uk alone is they don't have data for the recent months but it is slowly improving so they want to say in the recent past everybody had a slump but they are slowly increasing except for the eurozone which is still on the same stabilized level other people are improving this is composite pmi this is for the global level you have to put to one dotted line like 50 here and then you can you can see the interpretation then actually eurozone is still in the contractionary zone if you want to put that 50 line and then see the countries performing you will still still see that eurozone is lesser than that 50 mark who are seeing composite pmi on the access right this is very important because as long as global trade is not improving we won't be able to get the merit out of the export whatever we are doing so global output world output is there but they have started trading the trading is higher than the global output which means that exports imports are all slowly improving which is very much essential for India to benefit out of it there are two key words which they want to mention in the survey one geoeconomic fragmentation then slowing down of the hyper globalization these are the two words geoeconomic fragmentation is happening and slowing down of hyper globalization there was too much of globalization but now it is slowing down economy is also fragmented because groups of countries are being formed and it is all getting localized instead of becoming globalized so these are all issues which are restricting the world trade output but now it's becoming better this is about the improvements in the external sector we saw about the current account deficits or decline the data is all evidenced from here the blue colored line is all exports the green colored one is the import you can see that there had been fluctuations in India with the green and the blue first to pick up this blue color which is the exports you can see that exports was having a fluctuation here and there but in the recent past after this December or so there was a slight lesser picture than the January in the January there is a lesser picture than the December part whereas in case of exports also there is a decline exports there is a decline imports also there is a decline this is what we wanted to say that there is a shrinkage of both the imports and the exports but the fall in the imports is greater than the fall in the exports which is why there is a decline in the current account deficit right so this case was observed in many places whenever there was a fall in the import you would have also observed only in one or two places you can see that the exports are increasing and the imports are declining all the trends are there but generally this is what the government has presented that there is a decline in the merchandise exports and imports you can see the title going in the decline way on both the words decline in the exports and the imports but we said resilient Indian economy by showing declining card so you have to understand this and rise in net services receipts services we know that we are exporting and we are importing but a receipt is actually higher than the payment you have to replace the word receipts and the payments with exports and the imports so service exports are higher than the service imports do we understand the graph here service exports are higher than the service imports so payment is lesser receipts is higher we are having a positive side net service surplus is there but this is all not just the service receipts I hope you also remember our other part which will come into our services account income there will be transfers right under the income you will have what are the three things can somebody tell me what is there inside services account balance of payment title I'll start from the balance of payment as the title current account capital account under the current account we have goods account services account under the services account we have services income transfers what is the other name for the transfer unilateral transfers we receive the gifts foreign remittances grant in aid contributions everything under it services is what is here we export the services we import the services we have a surplus in the services so it is a surplus unilateral transfers also we receive mostly gifts and contributions we keep it as positive but investment three components under the investment FDI FPI will all come under capital account you tell me the items under the current account so the concept is correct but towards it what do we give back or what do we receive dividends we hardly have two two-and-a-half months for the examination where are we we have only 80 days to go ahead dividends profit interest dividends and profits for the FDI and FII interest for the borrowings what we take under the capital account so these things will be negative that is not being talked in see whenever we say something we are trying to relate it to the overall picture because we need to know what we are studying interpreting a graph is not just looking at the numbers increasing decreasing when I say rise in net services receipts this is being talked only about the services under the services account don't assume that they have given you the entire picture of the services account because in the entire picture the spoiler is that income account you remember our unilateral transfers under services will be in positive but this fellow alone will pull down otherwise if you just leave the services like this as positive this fellow will be able to handle that the CAD the negativity in the current account through the trade account can be reduced if the services are positive but services positive itself will go down because of the negativity of the investment account because we give back more dividends we give back more profits we pay back more interest than we want we get as a dividends interest on the profits therefore we are studying here only one part of that bigger services account it's not the total services what I have presented here services means under the services account in the balance of payment only the exports and imports of services are presented if I add those two variables into this unilateral transfer may be increasing the services positive but the investment will definitely pull down the positivity in this so this is not a total picture what we are sharing here and there is no graph given from the government regarding that I have only limited graphs to explain so understand what we are studying do we remember now under the services there is a services account in income account and one transfer circle so that is about the goods and the services now comes your FDI FII on the foreign exchange reserves are related to data FDI they have not shown through the graph but they are saying that there is a lot of automatic route 100 person being allowed in different strategic sectors new sectors and therefore we are getting more investments into it whereas FPI I think in the recent past yesterday day before yesterday news they said like in February there was a heavy FPI inflow inside the country I am who I am very clear your with the words capital flight capital inflow they're all you're all familiar with such words so here there is a lot of capital inflows into the country whenever you see the negative side it is all to be considered as a capital flight so depending upon the economic situation if there is a dollar shortage if there is a war if there is a inflation condition in the elsewhere country people will withdraw all the investments which they have made in our country which will be taken as the capital flight where your foreign portfolio investment will fly away but in the recent past we can see in the current the financial year it is slowly becoming positive and we are getting lots of foreign portfolio investment which also shows that the global level investors are having very good confidence in Indian economy and the business sector which is why they are coming forward to do the investment in India which is also because our inflation is under control which is also because our current account deficit is coming under control which is also because of our fiscal deficit being under control there are very many economic parameters by which they look at it and then they come into our country right fiscal deficit current account deficit are defined as the twin deficits for a country if we keep both of these things under control people will come forward from any country to come and invest in us I am repeating fiscal deficit and current account deficit nobody is going to look at your balance of payment whether it is in deficit or in surplus though that is the overarching topic BOP you have current account you have capital account not many people are bothered about the capital account as such in detail but they look at only at the CAD which is the current account deficit so fiscal deficit and current account deficit for a country should be very much under control remember these two things like your unemployment rate and the inflation rate they are called as the twin deficits for a country so we have said that there is a positive business environment in India which is also being reflected in the use of doing business which is also being reflected in becoming the largest economy and they talk about the sufficiency of the forex reserves to cover the imports I hope you know why India ended up in the balance of payment crisis right we didn't have even to cover next 15 days of the import so now we have to see whether we have enough resources to cover the imports which we call as the one is to one ratio so that's how the economy evaluates itself whether we have one year's coverage of the import do we have enough foreign exchange reserves or not so we have sufficiency for more than 10 months of imports and this is another external sector's important indicator to be kept in mind here we are talking about the external debt I am not talking about the external debt of the government I am talking about the external debt of the country we heard what we said in the earlier table when we studied about the budget we said internal debt other internal liabilities and external debt in that point I told you external debt is only a small quantity government doesn't borrow much from the outside but now I am going to show you the data that the external debt of the country which means the companies can borrow private sector can borrow NGOs can borrow and the government can borrow RBI can borrow everybody's total borrowing of the country is what is being represented as the external debt so you can see on the left hand side it is all presented in the US dollar billion you are actually observing that our external debt is continuously increasing except for one year 2017 most of the other years we have one increasing bar and you are seeing one triangle green color triangle positioned here on there right that is your foreign exchange reserves to the external debt now I will tell you a number imagine that and then look at the table the graph assume that external debt is hundred dollar so you should have foreign exchange reserves at least hundred dollar to meet with the external debt did you have it or not so if we look at with that interpretation 2013 we had 14 we didn't have 15 we didn't have they are all partial coverage right then 16 also we had only three fourths of it getting covered 17 we were in a good position foreign exchange reserves was higher external debt was slow lower but 2021 again we had 22 then in the recent past again our external debt is higher whereas we are not able to cover the external debt completely with the foreign exchange reserves so that is the how much percentage is what is given on the right hand side you can see that if we are external debt on the right hand side there is a as percentage of GDP so you can see that whether we are able to cover or not in the recent past we are not still covering an external debt to GDP this is one of the criteria which the country takes to see whether we are undergoing a balance of payment crisis or not okay so you will see that it is creeping around 15 percentage 16 percentage but this is not a good indicator for India because the the ratio is written as external debt to GDP is it not so GDP is the denominator and external debt is in the numerator external debt will be in dollars and GDP will be in in what Indian rupee this will be in US dollars so whether we will be maybe we are becoming a trillion economy and all we are expanding in terms of GDP and all but whether we will be able to repay back the external debt making use of the GDP what we have we won't be able to do do you understand can i take 1 lakh rupees in my bag and go to us and ask them to give me US dollars see something can i take 5 lakh rupees 10 lakh rupees all the money what i have go there ask them to give me dollars can you go to an exchange here and then just give them the rupees and ask them for dollars you go to rba and ask they'll give you when will they give you you have to tell that i am going for education tourism or i am going to visit some relatives i have to give a reason unless and until it is classified under any economic activity you cannot purchase even one single dollar from any country you all agree with me you cannot convert your money into a foreign exchange unless and until there is one particular economic activity it could be consumption it could be investment it could be travel it could be tourism it could be education it could be hospitalization but you need to have an economic activity otherwise there is no possibility of converting so how will you cover the external debt with the GDP what you have you have a salary in your hand but you cannot pay it in dollars then how will it matter this will matter to countries like us because the numerator and the denominator will be in the same us can say yes of course i have this much of external debt but my GDP is in dollars therefore i can meet my external debt with the GDP what i have but for India this data is not much of relevance but it shows one kind of a magnitude to say that i have only very little external debt as percentage of GDP when we had a balance of payment crisis in which year which year 1991 this external debt to GDP ratio at that time was 18 percentage or 21 percentage only you heard the word only with the rest of the 80 percentage of the GDP we could have overcome the crisis no why we were not able to do then because we didn't have dollars we didn't have foreign exchange right so this is a ratio only to understand the magnitude it's not useful for India as such what is useful for India is all the green ones because that shows the ability of India in terms of accumulating the foreign exchange resource in meeting with the external debt right so that is and the most important thing is short term external debt to the total external debt where is that the blue line right this is a very important parameter again because the total external debt assumed that it is 100 US dollar out of which how much should you pay back in short term what is short term for India less than one year is short term so for the short term if i say that 16 percentage of the external debt or 17 percentage of the external debt is short term in nature out of the 100 US dollars i will be losing the 17 US dollars immediately within less than one year if this a short term ratio is going on increasing it is very very dangerous to India which is why we always say when you borrow you borrow with the time we follow what we say whenever you do the borrowing don't borrow it on a short term basis you borrow with the time because we don't have enough resources to give it back in a short time so this percentage is actually dangerous to the country and it has kept us less than 20 percentage which is considered fine so this is about the external debt positions and the vulnerability indicators we have some indicators on the inflation now inflation you are seeing one blue colored area marked here what will be this 2 to 6 percentage which is the expected range what is under the expectation completely under the expectation you have your core inflation what does the core inflation mean which is corresponding to the stabler sector manufacturing sector in wpa if you take it as having food energy and the manufacturing so only the manufacturing in wpa will be taken as a core inflation in the cpi you will have food everything the household budget type including the services including the energy including the transportation which will be reflecting your fuel and diesel related things in that all the fuel and the food related if you remove the rest of the thing will be considered as the core inflation for the cpi so apart from the sensitive items whatever is being taken in the wpa and the cpi will be taken as the core inflation so that is being very much under control or it is even coming down closer between 2 to 3 percentage but what is fluctuating out of the way headline inflation mainly because of the reflection of the food inflation so food inflation it has still not come under control you would have seen 5.1 percentage as the headline inflation that was because this is pulling it down but it is on the higher range mainly because of the food inflation food inflation is not under 6 percentage it's still around 7 percentage so we haven't still got it back into the range where we want it to be right why the food inflation is happening now I will hear 10 answers yes monsoon monsoon failed this year what is your opinion on the monsoon amrit call no it didn't fail we had excess rainfall at times oil crude oil prices food inflation crude oil transportation costs yes hoarding issues speculation and hoarding edible oil into getting into problem because we import 70 percentage of our edible oil pulses system is not integrated with what marketing different places processing is a problem we don't have cold storage facilities we have surplus in one monsoon we can't save store commodities global wheat shortage okay so varieties of reasons food inflation mainly because of vegetables milk oil transportation got into trouble so food inflation is still not under control trying to bring it under control right so I hope you all know the ways and means of calculating inflation comparing it with the base year choice of the base year how the commodities were there in the base year will always have an impact on inflation estimation of the current year so when you see the monthly presentation you what is the base year yeah so back data 70 50 60 all years oh cpa wpa where is the batch four oh that is my batch four 2011 2015 two years so when you say that comparison on the month of that particular year will also have a say upon the inflation in this particular month base effect you remember have we heard about base effect right so anyways the lesson from this previous slide is to say that food inflation still has not come under control but overall the inflation seems to be under control core inflation is very much under control this is one macro vulnerability index which was introduced several years before in one economic survey first please memorize the definition of the macro vulnerability index it will be including rate of inflation current account deficit fiscal deficit three things into it I told you current account deficit fiscal deficit will be the twin deficit for any country you add the rate of inflation into it so all the three things put together will be called as macro vulnerability index so they are looking at the macro vulnerability index and the retail inflation through the cpa inflation we had a very bad inflationary condition in the subprime crisis that particular period heightened macro vulnerability macro stability in the 14 to 20 period again pandemic then slowly now we are coming to a control under control for the macro vulnerability index which is a combination of the three different macro economic indicators so recently they are measuring it as 15.6 it's actually declining here mainly because inflation is coming under control the government also wants to talk about the social services sector where it says that the percentage of the total expenditure has come up to the 26 percentage which is on the right hand side and lakhs and crores in the left hand side you can see that consistently there is a social services spending when you see the word general government assume that both the central government and the state governments are put together in the word general government so you are seeing that it is increasing what exactly in that we can see that the student enrollment is increasing number of teachers are increasing in the higher education institutes you also saw the female enrollment in the higher education is increasing so education sector it has also become 1.25 25 percentage of gdp health of course it is still less than 1 percentage so these are all indication for social services becoming better here they talk about the quality health care for all so this yellow color line is showing that out of pocket expenditure of the total health expenditure so this is coming down why mainly because the insurance schemes which the government is giving to the people this out of pocket expenditure can push families into poverty because everything if they have to spend out of their pocket mostly they won't be ending up only with the government hospitals they will also go to the private hospitals but the insurance is also covering the patients who go to the private hospital through the empanelment procedure so they bring in many hospitals into the list so wherever they go they will be able to do a cashless payment or reimbursement will be given to them therefore the government's health expenditure is actually increasing they are saying as percentage of GDP in the totality we didn't see that it was more than 1.3 percentage maybe it was there in financially or 2020 mainly because the covid was there beyond that if you see again that percentage of the GDP would have actually come down right so but out of pocket expenditure is actually coming down decline in infant mortality rate is a very appreciable data for us to look at we were in a very difficult position of having 78 who are the infants less than age of why this five i am hearing five did we say five no no it is age of one infant means you remember i know here the cumulative remember i that is one remember like that don't ever get into the data of five if you say five it will be under five mortality that's how you have to call it as child mortality infant means less than one year age so this infant mortality rate is declining which is a very good proportion for India it should become less than 30 that's the aim Kerala Tamil Nadu we all have achieved it already but in the country wise it is coming down so with that we are done with that annual economic review and i have a small note to tell you are willing to write i will tell you are willing to browse i will show on the screen let me see the workforce participation rate now you write the notes i will dictate one main transfer 15 to 20 minutes resistance no no good children okay i will tell the topic and points you can write them as a smaller bullet points and then expand as you go into the mains answer i'll tell you the title first write the title then write two three points only under everything but it should take a shape once you finish writing i'll show you how it should look like so let's do the thing all from the Indian economic review annual review document but if we write once it'll be definitely helpful for us to summarize or finish doing this particular class the first point is in 10 years India has moved from the 10th largest economy of the world to the fifth largest economy of the world so you have to remember this statistics 10 years amrit call 2014 say abutak 10th largest economy say largest economy that's my hindi we are moved from the 10th largest economy to the fifth largest economy of the world that's the first thing second they have summarized our economies experience growth experience from independence till 2014 that's a large chunk but we do it in three points indian economy the title is growth experience from independence till 2014 that's a second point below that you write three sub points growth experience from independence till 2014 first point indian economy transition from a closed economy to open economy second we moved from dominance of public investment to the coexistence of public and private investment dominance of public investment to the coexistence of public and private investment third technology began to be identified as the key growth driver technology began to be identified as the key growth driver this was the second point three sub points that is over third is technology first is we move from closed economy to open economy two from public to the coexistence of public and private three technology as the growth driver if you want to write it shortly that's the thing now I am telling you the third point structural issues in Indian economy structural issues which are not going away from us for any reason I am going to poke away my time there was lack of ease of doing business first point under that I still believe it is continuing lack of ease of doing business subsidies favoring public sector that's the second point subsidies are favoring the public sector lack of capital to strengthen manufacturing sector that's the third thing we don't have enough capital to strengthen the manufacturing sector yet fourth we have a very large informal sector and the fifth major is we have very low agricultural productivity so they are all the structural issues in Indian economy now you write the fourth major point which is decadal transformation from 2014 till now we had changes we had structural issues now we are going to tell in the 10 years period how we became better off first point GDP growth rate is improving unemployment rate is declining formal sector is increasing as per employee provident fund subscription they say 55 percentage in the age group of 18 to 25 have registered under EPFO EPFO is one way how do you how do you measure the formalization of the sector formal sector is increasing as per EPF subscription which is in the bracket you can write 55 percentage subscribed in the age group 18 to 25 55 percentage of the population in the 18 to 25 age group they have applied for the EPFO which means formalization is increasing 80 crore citizens as soon as I tell this data you should be able to tell the poverty gharib kalyan nojina they are giving food for 80 crore citizens to ensure food security pradhan mantri gharib kalyan nojina for 80 crore citizens till december 2028 when is the next finance commission starting 2026 who is the chairman of the 15th finance commission match for singh okay who is the chairman of the 16th finance commission aravin hanigarya that's how i pronounce so you can remember remember aravin right 16th finance commission they have already given them terms of reference they will work on it right we are in 24 two years before they'll give the terms of reference chairman three members one part time member so there will be five people who will be working on what is the article for finance commission okay so now we come back to this pradhan mantri gharib kalyan nojina for 80 crore citizens till december 2028 to ensure food security that's a fourth point then increase in the road rail and air networks they are working on it so that's a decadal transformation increase in road rail and air networks the next is women are more in higher education than men gross enrollment ratio for women has gone up to 27.9 percentage from 12 percentage in 2010 from 2010 to 2020 is they say i'll repeat the statement women are more in higher education than men g or gross enrollment ratio for women has gone up to 27.9 percentage in the bracket you can write it as 2020 year from 12.7 percentage which was in 2010 so that's a phenomenal increase for the women to come into the higher education now we have to say the help given to states seventh point government gave 50 year interest free loan of 1 lakh crore to states in the financial year 2023 interest free loan for 50 years 1 lakh crore rupees were given to states in the year 2023 and another 1.3 lakh crores of 50 year interest free loans to the states in 2024 and at 23 nairi 1 lakh crore 24 nairi 1.3 lakh crore this is all for special assistance to states for capital investment special assistance to states for capital investment so these are all decadal transformation which they say it continues now you have to write the title drivers of india's growth in the last decade last decade is again you have to start from the period 2014 till now they did some achievement they said i gave food very kalyanojana everything women assistance state assistance everything is done so now i am going to tell you the fifth point of the major title is drivers of india's growth in the last decade again in the 10 years period first point is getting the financial sector back on track getting the financial sector back on track there are two sub points to it from recapitalization and merger of public sector banks how did they get that financial sector back on track was one from recapitalization and merger of public sector banks two from amendment of the surface he acted to enacting insolvency and bankruptcy code they amended surface at river surface here but it's not very efficient so they came up to iBC insolvency and bankruptcy code in 2016 so that's all taken into the account from 2014 so it's there that's the first thing second thing is simplification of regulatory framework they have given only one example under it i'll tell you that simplification of regulatory framework like enacting real estate regulation and development act 2016 enacting real estate regulation and development act 2016 yes first point what i told was getting financial sector back on track under that there were two points from recapitalization and merger of public sector banks number two amendment of the surface he acted to enacting iBC code then i told the second major point simplification of regulatory framework under which enacting real estate regulation and development act 2016 so two things over now the third thing is taxation ecosystem has undergone substantial changes taxation ecosystem has undergone substantial changes there are four changes which they have mentioned one is adoption of GST 0.1 you remember in our slide we said the GST tax payers base has increased that they are saying from 66 lakhs to 1.4 crores have come into the tax base unified GST adoption that's the first point tax base has increased from 66 lakhs to you know when it got introduced within a very short period they brought in up to 1.4 crores of companies and individuals coming and paying GST second point reduced corporate and income tax both corporate profit tax was also reduced income tax for individuals was also reduced so reduced corporate and income tax third exemption of sovereign wealth fund and pension fund from taxes exemption of sovereign wealth funds and pension funds from taxes they were given exemption fourth is they removed the dividend distribution tax this is all very encouraging for us to go and do the stock market investments dividend distribution tax was removed so taxation ecosystem has undergone substantial changes i've told you four points under it GST adoption GST tax base increasing reducing corporate and income tax exemption of sovereign wealth fund and pension funds from taxes removing the dividend distribution tax now 0.4 under the drivers engagement of the government with the private sector for the development agenda engagement of the government with the private for the development agenda they brought in first point under that there are four points under it and telling you the first new public sector enterprise policy was brought in new public sector enterprise policy for Atma Nirbhaar Bharat for public sector enterprises in a few strategic sectors so it restricted the public sector's participation in a few strategic sectors so you can remember the keyword new public sector enterprise policy for Atma Nirbhaar Bharat the second point under is production linked incentive to attract domestic foreign investments this is for the encouragement of the private sector production linked incentive pli to attract domestic under foreign investments make in india program to enhance manufacturing sector's capabilities and exports make in india program to enhance manufacturing sector's capabilities and exports fourth was fda policy was liberalized with most sectors open for hundred percent under automatic route so fda policy got liberalized with most of the sectors having hundred percent under automatic route now you have to come out of that point engagement of the government with the private sector you have to write the fifth major point getting financial sector back on track simplification of regulatory framework taxation ecosystem has undergone substantial changes engagement of the government with the private sector for the development agenda now i am telling fifth point under the dry drivers growth drivers decriminalization of minor economic offenses decriminalization of minor economic offenses under the company's act of 2013 decriminalization is a nice of being business and i'm proven it's so more than 1400 cases they have decided without resorting to court i'm just telling numbers four lakh companies willingly rectified their past defaults and 1400 archioc laws which means like very difficult laws to handle they have been repealed well they dropped right so companies came forward to finish off their past defaults difficult laws like around 1400 laws have been repealed this all happened under the decriminalization of minor economic offenses you remember they let out one crore people out of that small small payment of the income tax so like that they are giving some allowances so that people will come forward to do the business sixth major point drivers promotion of ms me's redefinition of ms me says one of the major points under it i hope you all know this classifications which kept on changing in the recent past we have investment turnover everything for ms me means it includes both the industries as well as the services together earlier we had separate for manufacturing and services now we have combined everything and then we have certain slabs you may have to remember this data for the examination purpose so this redefinition also gave the status for the micro small medium enterprises that's the first point then they introduced a platform called as treads treds what is that platform it was giving financing help for the buyer and seller assume you are the buyer and i am the seller and i have yet another person who is called as a financier all three of us will be on a particular platform which is a treads right i will be selling the commodity to you i generate a invoice based upon that invoice i can generate some finance from that person you will be buying from me with a credit period so until that credit period i won't be getting the money from you till then i can present the invoice to the financier and then take the amount from them so you can also buy things based upon the financing which is being given by the financing agent so there are some facilities which are being made for the buying and the selling mainly for this ms me so introduction of treads treds let's put a right third point under the promotion is inclusion of wholesale and retail trade as ms me many of them they wouldn't have proper registrations and all as companies and all but they brought in a kirana shop a small tea shop wholesale and retail traders they were all brought under the ms me if you are being brought under the ms me you will have the facility of taking the credit easily that's the reason why they want to bring them under the ms me and fourth they have given a good data number of recognized startups increased from 452 in 2016 to more than 98000 in 2023 this is about the startups under the ms me 452 in 2016 to more than 98000 in 2023 so these are all the things which they have taken as drivers of ms me's seventh point large-scale public spending to address infrastructure and logistics bottlenecks large-scale public spending to address infrastructure and logistic bottlenecks large-scale public spending to address the infrastructure and logistics bottlenecks there are 4.5 points under it simply small points first is load connectivity they increased through barat mala port infrastructure second point through sagarmala lots of electrification and railways upgradation they brought in lot many airports through udanski new airports these are all the key points under it large-scale spending road connectivity port infrastructure electrification railways upgradation new airports port infrastructure only i called it as sagarmala eight major point very boasting point of the government digital platforms and use of technology lots of digital platforms and use of technology technology was identified as a driver earlier also there are benefits out of this smaller points below this five smaller points under this greater formalization because of the digital platforms number two higher financial inclusion everybody came into this small small transactions hash list third thing is access to markets all the e-platforms including your amazon and clip card everything you started making use reduced the transaction cost including the farmers everybody got benefited reduced the transaction cost that was the fourth benefit fifth is improved tax collection so i repeat the five points greater formalization of the economy higher financial inclusion access to markets reduced the transaction cost and improved tax collection finally under the drivers of growth there is one inclusive growth policy inclusive growth policy under it they have given four main points free gas connections to the people kha houses for the poor including toilets akha houses for the poor including toilets jandan accounts fourth one is hospital admissions under aishman barat scheme hospital admissions under aishman barat scheme so in the 10 years they say that four points under inclusive growth free gas connections akha houses for the poor with the toilets jandan accounts hospital admissions under aishman barat schemes so these are all the nine things which they say as the major growth drivers in the last 10 years but they are now presenting the next major point two more only with that we'll finish challenges confronting the indian economy as of now challenges confronting indian economy india's growth outlook in that first point india's growth outlook is not just depending on domestic performance it also includes global so domestic performance plus global performance you write india's growth outlook is equivalent to domestic performance plus global performance you put an arrow mark on the global performance and write it is affected by i told you two keywords geo economic fragmentation slow down or hyper globalization these are two things which are affecting the global performance so this is the first challenge which india is facing our domestic performance is good our consumption is bouncing back our investment is good and all but global performance is affected by geo economic fragmentation and slow down of hyper globalization the second challenge which the country is facing is energy security versus economic growth energy security versus economic growth when i want to do the energy transition transition energy security means we want to move towards the renewable energy sources but that is being affected by five factors geo political technological fiscal economical social all the five factors are affecting my energy transition how am i going to meet this and travel towards the economic growth so this is the second challenge which the country is confronting i'm repeating the second point energy security versus economic growth when i want to do the energy transition there are five factors which are affecting me geo political technological fiscal economical social all these factors are affecting me to move towards the renewable energy sources you remember they are 20 70 they have said that as the benchmark to achieve the zero percent emission third is a very important point advent of artificial intelligence now what has come into picture advent of artificial intelligence 40 percentage of the global employment is exposed to ai now 40 percentage of the global employment 40 percentage of the global employment is exposed to ai so similarly to india also it will be there so how are we going to meet this challenge and give the employment to the ua and women and all four to one creating healthy educated skilled population to augment economically productive workforce i'm repeating creating healthy educated and skilled population to augment economically productive workforce so these are the four major challenges one is growth outlooks another second one is the energy security third one is the artificial intelligence fourth one is creating economically productive workforce we have these challenges in front of us the chapter is completed by saying we have a track record of overcoming the challenges three points under it track record of overcoming challenges first thing is pradhan mantri kaushal vikas yojana it is training the indian youth so we hope that we'll be able to overcome this artificial intelligence problems and all and also the fourth point to bring in the economically productive workforce pradhan mantri kaushal vikas yojana training indian youth the second point is focus on renewable energy we are focusing we have to wait and say how it goes but we are having some track record on it the third is the most important point internet in india there is a very high level of penetration of internet in india so this is also going to help us become technologically skilled that's all we have for the total points i'll show you if you have written it completely i will share this again into the thing if needed so we have written the points growth experience structural issues decadal transformation drivers of india growth in the last decade i don't want to waste your workforce and efficiency you would have written in your own handwriting at least two points you will remember for the mains right and i would run through it and then you will browse and nothing will sink at times so i we have made some efforts in 20 minutes to understand this will augment definitely skill india so we have up to challenges and track record of overcoming challenges that's it so tomorrow's class i'm done with the class now tomorrow's class if i know there are lots of optional classes and other things there will be challenges for some time only not all the four hours one or two hours we look at the previous year budget related questions alone so if you wish to participate and listen about the questions and the discussion you can come concepts related to the budget highlights and the indian economic review whatever i wanted to give you as the concepts i'm done with the today's class tomorrow we look at the questions from 10 to 11 or 10 to 12 kind of thing we'll post the message into the group thank you everyone