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SSC CGL Economics · Formula sheet

National Income, Growth and Development Indicators formulas

2 formulas, 9 reference tables and 12 common traps for SSC CGL Economics National Income, Growth and Development Indicators, grouped by subtopic.

Full notes with worked examples

National Income Accounting

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From GDP to national income

National income from GDP

NNPFC=GDPMP+NFIA−Dep−NIT\text{NNP}_{FC} = \text{GDP}_{MP} + \text{NFIA}-\text{Dep}-\text{NIT}
  • NFIANet factor income from abroad
  • DepDepreciation
  • NITNet indirect taxes

Circular flow and the multiplier

Investment multiplier

k=11−MPC=1MPSk = \frac{1}{1-MPC} = \frac{1}{MPS}
  • MPCMarginal propensity to consume
  • MPSMarginal propensity to save

Sectors and how India measured its income

PersonContribution
Dadabhai NaorojiFirst attempt
V. K. R. V. RaoFirst scientific method; primary and secondary sectorsQ
P. C. MahalanobisFirst official estimate
CSO, 2015Gross Value Added adoptedQ

Common traps

Domestic adds nothing from abroad

GDP + net factor income from abroad = GNP. A formula that adds it to get NDP is wrong; NDP = GDP minus depreciation.

Gross is net plus depreciation

Gross investment = net investment + depreciation. So net investment is gross minus depreciation, not plus.

Rao, not Naoroji, split the sectors

It was V. K. R. V. Rao who divided the economy into primary and secondary sectors. A statement giving this to Naoroji is false.

Saving is a leakage

A statement that savings and government spending are both injections is false: saving is a leakage.

Poverty, Unemployment and Human Development

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Poverty lines and the MPI

MeasureFigure
Poverty line 2011-12, ruralRs 816 a monthQ
Poverty line 2011-12, urbanRs 1,000 a monthQ
Poorest State, MPI 2021BiharQ
Urban MPI poverty, 20218.81%Q
Who releases the MPINITI AayogQ

Kinds of unemployment

KindExample
SeasonalFarm work or hill tourism off-seasonQ
DisguisedFive people doing a family farm's work of three
EducatedGraduates without employable skillsQ
CyclicalJobs lost in a slump

Human development and inequality

CountryHDI rank 2021-22
Sri Lanka73
Maldives90
Bhutan127
Bangladesh129
India132

Common traps

MPCE, not MSP

The poverty line uses monthly per capita expenditure. The minimum support price is a farm-price tool and the usual decoy.

Seasonal is rural, educated is urban

Seasonal unemployment is mainly rural and educated unemployment mainly urban. Statements swapping them are false.

A method change is not a cause

India's HDI did rise after 2010, and the method was revised in 2010, but the revision did not cause the rise.

Industrial Policy and Reforms

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Industrial policies, 1948 to 1980

PolicyRemember for
1948The first industrial policy
1956Three schedules; 17 in Schedule A; state-ledQ
1977Tiny sector created (Rs 1 lakh)
1980Tiny-sector limit raised to Rs 2 lakhQ

The 1991 reforms and after

TermMeaning
Licence still needed after 1991Alcohol, cigarettes, explosives
Minority salePart of a public firm sold to private ownersQ
NavratnaPublic enterprise given autonomyQ
Year of reforms1991Q

Ownership, zones and schemes

SchemeFor
Special Economic ZonesTax and duty concessionsQ
Make in IndiaManufacturingQ
PM MITRATextilesQ
MSMED Act, 2006Micro, small and medium enterprisesQ

Common traps

1980 did not seek maximum foreign investment

The 1980 policy's aims were employment, exports, capacity use and consumer protection. Maximum foreign investment belongs to 1991.

Disinvestment is not criticised for monopoly

Disinvestment is criticised as selling public assets, not for creating public-sector monopolies. That reason is the false half.

TISCO is private

TISCO (Tata Steel) is private. BHEL and SAIL are public sector.

Economic Indices and Reports

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Who publishes which index

Index or reportPublished by
Index of Economic FreedomHeritage FoundationQ
World Competitiveness RankingIMD, SwitzerlandQ
Global Gender Gap ReportWorld Economic ForumQ
Travel and Tourism Development IndexWorld Economic ForumQ
Corruption Perceptions IndexTransparency International

What the indices and curves measure

Index or ideaRemember
Corruption Perceptions IndexLow score means more corruption
Ease of Doing Business10 indicators; informal sector left outQ
Phillips curveWage change against unemploymentQ
LPI 2023Big-data trade-speed indicatorsQ

Common traps

The Happiness Report is not the UNDP's

The UNDP publishes the Human Development Index. The World Happiness Report comes from a different UN network.

Starting a business was not given the most weight

Starting a business was one of 10 indicators. A statement that it carried the most weight is false.

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