Economics and Social Welfare Schemes
Economics and Social Welfare Schemes blends elementary economics with working knowledge of government programmes, and it matters in Kerala because the state’s development model rests on welfare delivery. Expect definitions, indicator arithmetic, banking terms, budget concepts, and scheme identification by ministry, year and benefit.
Core concepts
- GDP is output within borders; GNP adds net factor income from abroad.
- Nominal values use current prices, real values use constant prices; the GDP deflator links them.
- Inflation is measured by the Consumer Price Index at retail level and the Wholesale Price Index, which excludes services.
- The RBI was established in 1935 and nationalised in 1949. The repo rate is what the RBI charges banks; the reverse repo absorbs liquidity; CRR and SLR are reserve requirements.
- Deficits: revenue deficit is revenue expenditure minus revenue receipts; fiscal deficit is total expenditure minus total receipts excluding borrowings; primary deficit is fiscal deficit minus interest payments.
- GST arrived through the 101st Constitutional Amendment in 2016 and was rolled out on 1 July 2017, administered by the GST Council under Article 279A.
- Schemes: MGNREGA 2005 guarantees 100 days of work; PM Jan Dhan Yojana 2014 covers bank accounts; PMAY 2015 housing; Ujjwala 2016 cooking gas; Ayushman Bharat 2018 health cover; Atal Pension Yojana 2015 pensions.
- Kerala: Kudumbashree from 1998 with its NHG, ADS and CDS tiers; the Nava Kerala Mission covering Life, Haritha Keralam, Aardram and public education.
Worked example
Nominal GDP grows 10 per cent while inflation is 4 per cent. Find real growth. Reasoning: real growth = (1.10 ÷ 1.04) − 1 = 0.0577, about 5.8 per cent, not 6 per cent. Simply subtracting inflation is an approximation that fails when rates are large.
Traps
- Confusing GDP with GNP, or repo with reverse repo direction.
- Mixing fiscal, revenue and primary deficits.
- Confusing PMSBY accident cover with PMJJBY life cover.
- Labelling a centrally sponsored scheme as a purely state scheme.