CDS Economics · Formula sheet
Indian Economy formulas
2 formulas, 8 reference tables and 13 common traps for CDS Economics Indian Economy, grouped by subtopic.
Planning and Farm Policy
Learn this subtopic in the notesThe Five Year Plans and NITI Aayog
| Plan | Years | Theme |
|---|---|---|
| First | 1951 to 1956 | Agriculture (Harrod-Domar model) |
| Second | 1956 to 1961 | Heavy industry (Mahalanobis model) |
| Third | 1961 to 1966 | A self-reliant, self-generating economy |
| Plan holiday | 1966 to 1969 | Three annual plansQ CDS 2017 (II): Mahalanobis model, then plan holiday, then rolling plan. |
| Fourth | 1969 to 1974 | Growth with stability and self-reliance |
| Fifth | 1974 to 1979 | Removal of poverty and self-reliance |
| Rolling plan | 1978 to 1980 | Janata government |
| Seventh | 1985 to 1990 | Food, work and productivity |
| Ninth | 1997 to 2002 | Growth with social justice and equality |
| Eleventh | 2007 to 2012 | Faster and more inclusive growth |
| Twelfth (the last) | 2012 to 2017 | Faster, more inclusive and sustainable growthQ |
Minimum support price and the food system
| Item | Who or what | Key fact |
|---|---|---|
| MSP | CACP recommends | Cost of production, price trends, inter-crop parity; not a cost of living indexQ |
| Procurement and storage | Food Corporation of India | Moves grain to the States |
| Identifying beneficiaries | State governments | Not a joint task with the Centre |
| Food Security Act | 2013 | About 67 per cent of the population; all States and UTs since 2016 |
Farm schemes
| Scheme | Year | Aim |
|---|---|---|
| PMKSY | 2015 | Irrigation and water use efficiencyQ CDS 2018 (I): protecting farmers against crop failure is not a PMKSY aim. |
| PKVY | 2015-16 | Organic farming |
| PMFBY | 2016 | Crop insurance; continued, not discontinuedQ Asked twice: CDS 2025 (II) and 2026 (I). The ₹2 lakh death cover belongs to a different scheme. |
| Oil palm mission | 2021 | Edible oil; North-East and Andaman and NicobarQ |
| Ethanol blending | 10 per cent reached in 2022 | Helps the sugar industryQ |
| PM SVANidhi | 2020 | Loans to urban street vendors; not for farmingQ |
Livestock and fisheries
| Scheme or initiative | What it does |
|---|---|
| National Livestock Mission | Output, entrepreneurship and insurance in livestock |
| Fisheries Startup Grand Challenge | Finds startups with solutions for productivity, sustainability and market accessQ |
| Matsya Manthan | Lecture series to build innovation in fisheries |
| Pradhan Mantri Matsya Sampada Yojana | Fisheries production and infrastructure, from 2020 |
Common traps
NITI Aayog advises, it does not fund
Unlike the Planning Commission, NITI Aayog does not allocate money; transfers to States go through the Finance Ministry and the Finance Commission. It does not impose policy on States either.
Plan holiday before rolling plan
The plan holiday was 1966 to 1969; the rolling plan came later, 1978 to 1980. The Mahalanobis model (Second Plan, 1956) came before both.
CACP recommends, it does not decide
The CACP only recommends the MSP; the government announces it. And a cost of living index is not among the factors the CACP weighs.
Insurance is PMFBY, not PMKSY
PMKSY is about irrigation; protection against crop failure is PMFBY. Two similar names, two different jobs.
Accident cover is not crop insurance
A ₹2 lakh cover for death or total disability belongs to Pradhan Mantri Suraksha Bima Yojana, an accident insurance scheme, not to PMFBY.
Livestock schemes now include insurance
The National Livestock Mission covers risk management and livestock insurance as well as output and jobs. An option leaving insurance out is incomplete.
Balance of Payments and Foreign Capital
Learn this subtopic in the notesThe current account and the capital account
Current account balance
FDI, portfolio money and the reserves
The IMF, the WTO and the dates
| Event | Year |
|---|---|
| GATT signed | 1947 |
| Nasdaq opens | 1971 |
| SWIFT founded | 1973 (live in 1977)Q CDS 2018 (I): SWIFT dated to 1985 was the wrong pair. |
| Uruguay Round concluded | 1994 |
| WTO begins | 1995 |
Common traps
Invisibles are current account
Services, income and transfers are invisibles, and they sit in the current account. FDI, borrowing and aid sit in the capital account.
Buying listed shares is portfolio, not direct
A foreign fund, bank or company buying shares on a stock exchange is portfolio investment, whoever the buyer is. Direct investment means building or controlling a business.
SWIFT is older than it looks
SWIFT was founded in 1973 and carried its first live message in 1977, not in the 1980s.
Exchange Rates and Trade Policy
Learn this subtopic in the notesWhat a weaker rupee does
Rupee price of a foreign good
- exchange rate: rupees per dollar
Exchange rate systems
| System | Rate set by | Period |
|---|---|---|
| Gold standard | Fixed in terms of gold | Up to 1914 |
| Bretton Woods | Pegged to the dollar, the dollar to gold | 1944 to the early 1970s |
| Floating | The market alone | Major currencies since 1973 |
| Managed float | The market, with central bank smoothing | India since 1993 |
Trade agreements and export schemes
| Item | Key fact |
|---|---|
| What FTA export gains depend on | Tariff cut, rules of origin, SPS rules, home infrastructure, partner incomeQ |
| RCEP | ASEAN plus five partners; India withdrew in 2019 |
| Trade surplus partner | USA, India's largest export marketQ |
| Niryat Bandhu | Mentoring first-generation exportersQ |
| Districts as Export Hubs | Every district, not a chosen few; 2019Q CDS 2025 (II): limiting DEH to selected districts was the wrong statement. |
Common traps
Floating means no intervention
If governments buy and sell their currency to hold a rate, the rate is fixed or managed, not floating. And under the gold standard, rates were fixed in terms of gold, not the dollar.
A falling rupee makes imports dearer
Depreciation raises the rupee price of imports. It helps net exports by making exports cheaper abroad, not by making imports cheaper.
Every district, not a few
Districts as Export Hubs covers every district. A statement that it boosts only selected districts is wrong.
Surplus with the USA, deficit with China
India sells more to the USA than it buys, but buys far more from China and Saudi Arabia (manufactures and crude oil) than it sells.