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Bad Bank A bad bank is an Asset Reconstruction Company (ARC) or an Asset Management Company (AMC) that takes over the bad loans of commercial banks, manages them and finally recovers the money over a period of time. ARC are companies registered under companies act and regulated by RBI. SARFAESI Act 2002 provides the legal basis for the setting up of ARCs in India. Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act(SARFAESI Act) 2002- protects financial creditors, who are mostly/bank banks and other non-bank financial institutions IBC 2016-  protects interests of all forms of creditors(Financial and Operational Creditors) and other stakeholders. It improved the ranking of India in Ease of doing business by protecting the interest of non banks creditors(FDI, FPI inflow increased). In case of conflict with other acts including SARFAESI Act 2002, the provision of IBC 2016 prevails over other act.  After introduction of SARFAESI Act 2002 many A

  Poverty Poverty is a state in which an individual is deprived of basic essential needs to sustain minimum standard of living.  Types of Poverty Poverty is of two types: 1. Absolute Poverty 2. Relative Poverty 1. Absolute Poverty:  Measured by scarcity of resources in absolute term.  1990- World Bank defined absolute poverty as 1$ a day.  2015- as per World Bank, absolute poverty is income of less than 1.90$ per day 2. Relative Poverty:  Measured by relative living standard with respect to regional living standard.  In developed countries, the concept of relative poverty prevail. While in developing countries, absolute poverty is used to measure the poverty level.  Poverty Gap(Poverty Gap index)   The concept was given by World Bank.  The poverty gap is the average shortfall from the poverty line. It quantifies the severity of poverty by measuring how much the individual income is less than poverty line income.  Avg poverty gap*number of total poor people= money required to eliminate

  Self Help Group Informal associations of people who choose to come together for better living conditions by their collective efforts towards common issues.  SHG is a vehicle of change for the poor and marginalized section of society. It encourage self employment and poverty alleviation.  History of SHG 1972- Ela Bhatt, lawyer of a formal group Textile Labour Association(TLA, formed in 1918 at Ahmedabad by Gandhiji) founded Self-Employed Women's Association(SEWA), an informal group of textile female workers.  SEWA- first SHG of modern India.  1992- SHG Bank Linkage Project was launched by NABARD.  SHG was allowed to open bank accounts. This helped the SHG to get formal credit from banks at reasonable intrest rate, rather then getting trapped in the hands of moneylenders.  1999-  Swarn Jayanti Gram Swarozgar Yojana(SGSY) was introduced to promote SHG.  2011-  SGSY was replaced by National Rural Livelihoods Mission(NRLM) Objectives of SHG Leadership quality promotion Collective de

  Lecture 4 Evolution of Indian Rupee In Ancient times, the Sanskrit word Rupya was used to denote Silver.  Rupya(Astadhyayi) → Rupyarupa(Arthshastra) → Rupaka(Gupta Age coin) → Rupiya(Suri Empire Coin) → Rupee(Modern Currency) With the colonization of India, England-India trade was on rise. And to facilitate this trade various banks were established by European people. Some of the early Banks of India The Madras Bank(1683-1843), Chennai- 1st Bank of Modern India by European traders Bank of Bombay(1720-1770), Bombay- established by EICo. Bank of Hindostan(1770-1832), Calcutta- General Bank of Bengal and Bihar(1773-1775)- Bengal Bank(1784-1791)- Establishing bank was the first step, but the transportation of large silver from India to England via ship was still a big problem with lots of risk between England-India trade. To overcome this issue earliest paper currencies were issued by Bank of Hindostan, General Bank of Bengal and Bihar, Bengal Bank. Because of frequent failure of

  5 Year Plans of India History 1928- Joseph Stalin Introduced 1st five year plan in USSR.  1934- Sir M. Visvesvaraya published a book titled “ Planned Economy in India ”. He proposed the idea to double the national income in next 10 years.  1938-   National Planning Committee was established by Subhash Chandra Bose under the Chairmanship of Jawahar Lal Nehru 1944- Bombay Plan(Sir Purshottamdas Thakurdas, Mr. J.R.D. Tata + 6 others) , Various Industrialists came together and drafted a joint proposal for setting up a planned economy in India.  1944-   Gandhian Plan(Sriman Nayaran, principal of Wardha Commercial College) , focused on economic decentralization with primacy to rural development by developing the cottage industries. 1944-   Planning and Development Department(Incharge- K. C. Neogy) , under the executive Council of Viceroy was established. Later in 1946, this department was abolished.  1945 - People’s Plan by M. N. Roy for 10 year time period with chief emphasis on agri

  Business Cycle Fluctuations in the aggregate economic activities of a nation. It includes expansion, recession, depression and recovery.  It shows increase and decrease in a nation's GDP over time.  The sequence of change is recurrent and Aperiodic.  But for better understanding, let's have a look on recurrent and periodic business cycle.  Expension- Increase in GDP(decrease in unemployment)  Peak- Turning Point of business cycle after which GDP start decreasing Technical Recession- When there is decrease in GDP for 2 consecutive quarter Recession-  Decrease in GDP for more than 2 consecutive quarter Depression-  Extreme recession, severe and prolonged downturn of economic activities(recession for more than 2 years)  Trough-  Turning Point of business cycle, end of recession and start of recovery Recovery-  Increase in GDP after a decline period.  Potential Output(Full Employment Output)  Level of GDP that would be produced with efficient/optimum utilization of all resourc

  Lecture 3 Economic indicators are statics about economic activities.  The economic indicators(macroeconomics indicators) allows analyzing the different aspects of national economy. Types of Economic Indicators Economic indicators are classified into 3 group based on time prospective 1. Leading Indicators- Analysis of future prospect of economy(PPI- future price of commodities) 2. Coincident Indicators- Analysis of current prospect of economy(GDP, IIP) 3. Lagging Indicators- analysis of past prospect of economy(WPI) Economic indicators can be classified into different group based on its nature Production indicators-  GDP, GNP, GNI Infrastructure & Innovation indicators- Global innovation index, Ease of Doing business index, Network Readiness index Employment indicators- unemployment rate, LFPR, Misery index, Philip curve Inflation Indicators- CPI, WPI, Monetary policy(Interest rate) Stable Governance indicators- Balance and Payments, Budget(Fiscal deficit), Credit rating, Co

  Basic Terminology Inflation- Rise in the price of goods and services(decrease in the purchasing power of currency)  Deflation- Fall in the price of goods and services(increase in the purchasing power of currency) Disinflation- decrease in the inflation rate Reflation-  inflation post deflation Stagflation-  Condition of high unemployment + high inflation Skewflation-  Variations in inflation rate across sectors Shrinkflation-  Hidden inflation, reducing the size of product but selling at same price(part of Greedflation)  Shadow inflation-  Hidden inflation, no change in inflation index(CPI) because of no change in price, but quality of product/service will be reduced Greedflation-  Inflation fueled by corporate greed. It is based on profit-price spiral rather than wage-price spiral(price increase with increase in wages). Companies exploit the situation and inflationary pressure falls on consumers. This situation badly affects the economy of a country by eroding consumer trust. 

  Gross Domestic Production(GDP)- Production within a definite region by anyone(for 1 year period)  Gross National Production(GNP)- Production by nationals(Citizens) of a country at anywhere(for one year period)  GNP= GDP+ Net Factored Income Abroad Net Factor Income from abroad = income earned by Indian resident in foreign countries – Income earned by foreign resident in India. Terms of Trade(TOT)-  Represent the ratio between a country's export prices and its import prices. A TOT over 100% or that shows improvement over time can be a positive economic indicator as it can mean that export prices have risen as import prices have held steady or declined. GDP Calculation-  There are various ways to calculate GDP including expenditure and income method. The formula for GDP calculation through expenditure method is as follows GDP= C + I + G + (X-M) C→ Consumer spending,      I → business investment G → government spending,        (X-M) → net exports GDP Nominal vs Real Nominal GDP

  Lecture 1- Introduction An economy is a system of interrelated production, trade, exchange and consumption activities that determines allocation of resources.  Economy Word(Origin) oikonomos(Greek) → oeconomia(Latin) → yconomie(French) → economy(English)   Oikonomos/Oikonomia(oikos → house, nomia → manage)  Adam Smith(18th century Scottish economist)- Father of economy Major work: 1. The Theory of Moral Sentiments(1759)- free market economy(laissez-faire economic)  2. The Wealth of Nations(1776)- wealth is not the will of god, but was factored by natural, social, political, economical and technological parameters.  It was Smith who gave the concept of gross domestic product(GDP).  Lionel Robbins(1935) → Economy: science of scarcity Central Problem of Economy Scarcity of Resources → Choice Problem Basic Economic Activities There are numerous economic activities(trading, exchange, etc.), but 3 major economic activities that form the base of economy- Production, Consumption and Ca