Economies of the world are open in three ways: Consumers/firms have the opportunity to choose b/w domestic & foreign goods. Due to international trade. Investors have opportunities to choose b/w domestic & foreign assets. Constitutes financial market linkages. Factor market linkage: Firms choose where to locate production & workers to work. Labour market linkages have…
We have already understood that Taxation in India is the main way for the government to gain revenue. In this chapter, we will understand India’s taxation system and ways to make it efficient, in a way that promotes growth. India’s tax-to-GDP ratio The Tax-to-GDP ratio measures a country’s total tax revenue as a percentage of…
Goods & Services Tax (GST) is a Value added tax, that includes both goods and services. In India, it is imposed at four uniform rates. In GST all the old taxes that were levied on most of the products have been subsumed since 2017, simplifying the tax structure.; GST Taxation is performed only at only…
“Lord, give me chastity and continence but not yet ” – St. Augustine. Chastity means the power of self-control. The Economic Survey of 2017 used this phrase to summarise the feelings of every government. They want to control their expenditures by creating rules and legislation, such as the FRBM Act. Despite this, governments are reluctant…
Government deficit refers to the shortfall between a government’s total expenditures and total revenues in a given fiscal year. It indicates higher spending than earnings, requiring borrowing or monetary adjustments. Persistent deficits can lead to inflation, increased debt, and economic instability if not managed effectively. Types of Deficits We can understand the deficit in various…
The government is the highest institution in society, and therefore, the role of government in an economy is immense. Functions of government In any economy, the government performs various functions: Provide public goods: Those goods which the market cannot provide, the government steps in to provide. For example, security, rail network, public parks etc. Distribution…
India’s Payment system consists of several bank-to-bank transfers of payment technologies as well as payments through mobile banking systems. We shall study these systems in this chapter in detail. Payment in Cash Banknotes and coins as a share of GDP in India currently in India is at an all-time high of 14.5%. It is comparable…
Regional Rural Banks (RRBs) Regional rural banks are established under the RRB Act, 1976. The aim behind the establishment of RRBs was to take banking services to the doorsteps of the rural masses, especially in remote areas with no access to banking services. Two duties: To provide credit to the weaker sections of the society…
Niche banking are those banks that target a specific market or specific type of project and bridge the needs of banks tailored to the specific needs of certain categories of customers. Why do we need such a banking system? What is the problem with the banking system that is run under the Scheduled commercial banks?…
Financial inclusion has been defined as “the process of ensuring access to financial services, timely and adequate credit for vulnerable groups such as weaker sections and low-income groups at an affordable cost”. – Dr. Rangarajan (Chairman: committee on financial inclusion). Elements of Financial Inclusion Financial inclusion essentially means access to the Banking system. This includes…
