Indian Economy and Current Economic Affairs
This section tests basic economic concepts, Indian economic institutions and current economic affairs. HP Patwari questions often ask definitions, policy tools and scheme-institution links rather than complex calculation.
Core rules
- GDP is the market value of final goods and services produced within a country in a year; GNP adds net factor income from abroad. Nominal GDP uses current prices; real GDP is adjusted for inflation.
- Inflation is measured mainly by CPI and WPI. Fiscal policy is handled by the government through taxation and spending; monetary policy is handled by the RBI through repo rate, CRR and SLR.
- The RBI was established in 1935 and nationalised in 1949. Major banks were nationalised in 1969. GST was launched on 1 July 2017 as a destination-based indirect tax.
- The economy is divided into primary, secondary and tertiary sectors. The 1991 reforms liberalised trade and licensing.
- Himachal's economy relies on hydropower, horticulture, tourism and cement; apple is a major cash crop.
Worked example
If nominal GDP grows by 10% and prices rise by 6%, real growth is about 3.8%. Reason: real growth = (1.10 / 1.06) - 1 = 0.0377, or roughly 4%; subtracting 6 from 10 gives only an approximation.
Traps that cost marks
GDP counts within borders; GNP counts income of residents. Fiscal policy is not the RBI's tool. Do not quote unstable current rates as fixed facts. GST is indirect, not a direct tax.