Prelims Prelude Economy Last Lap Revision for Prelims 2020 Prelims Prelude Economy 1 As you gear up for the last lap of Preface preparation for Civil Service Prelims 2020, Fortune IAS Academy has pre- pared a revision checklist under the title Prelims Prelude. It has been pre- pared after diligently analyzing the trend of past 9 years’ question papers. Prelims Prelude will ensure that you have not missed out on the most im- portant topics-both static as well as current issues. Your thumbrule for the last lap of prelims preparation should be revision rather than new informa- tion. Prelims Prelude Economy 2 Obscure Factoids Indian Basic Economy Concepts Indian Economy is a dynamic area that keeps on evolving day-by-day. Since it touches the everyday aspects of our life, it has become an indivisible part of compet- itive examinations like Civil Service. Usu- ally, several aspirants find this area a hard nut to crack. To help you out in this, we have come up with an approach to tackle Indian Economy smartly. After analysing past 9 years of Civil Service Preliminary Examination question papers, we have listed out the important topics and how to prepare for the same. Prelims Prelude Economy 3 Economics Prelims Analysis No. Topics 2019 2018 2017 2016 2015 2014 2013 2012 2011 1 External Sector 8 3 6 11 6 2 3 2 5 2 Monetary Policy 6 7 5 3 3 3 7 3 3 3 Fiscal Policy - 3 4 3 1 2 1 - 3 4 Agriculture 3 4 3 5 6 4 2 4 6 5 Inflation - - - - 2 - 3 - 2 6 National Income - 2 - - 2 1 2 - 2 7 Industry 1 - 2 2 2 - 2 2 1 8 Infrastructure 1 1 2 4 1 - - 1 1 9 Capital Market 1 - - 2 - 1 - 1 - 10 Planning 1 - - - - 1 - - - 11 Human Development 3 1 1 1 - - 2 2 1 12 Government Schemes 1 2 4 3 1 - - 4 2 Total 25 23 27 34 24 14 22 19 26 External Approach: Sector Basic understanding and factual analysis. Trend of the question: Basic + Current affairs (2019 - 8 questions, 2018 - 3 questions) Balance of • Current Account: Balance of Trade, Net Invisibles, Net Transfers Payment a. Remittance (largest recipient state, India’s ranking) • Capital Account: 5 components • Balance of payment Account • Deficits/Surplus: Current Account/Capital Account Prelims Prelude Economy 4 • Difference between Balance of Payment Deficit and Balance of Payment Crisis • Adverse BOP and Causes, Step to adopt against BOP Crisis (Global crisis scenario: Crude oil negative price, Corona crisis) • Special Economic zone (What are SEZ? Objective? Fa- cilities and incentives?) • Liberalised remittance scheme Currency • India’s Forex reserve Reserve Foreign • FDI, FPI, FII (Basics) • Foreign Direct Investment (FDI Policy Reform - Coal Investment mining, Relaxation of FDI norms in defence and insur- ance sector, Countervailing duty), Net FDI flow of In- dia • Foreign Portfolio Investment (Relaxation of SEBI’s FPI Norms) • External Commercial Borrowing (Basics) • Analyse the trend of FDI and FII into India in the last decade • Analyse the sources of investment into India Exchange Rate • 4 types of Exchange Rates • REER and NEER Mechanism • Devaluation and Depreciation • Revaluation and Appreciation • Instrument In Support Of Trade Exchanges (What is it?) • Advance Pricing Agreement (what is it? Purpose) • Currency Swap Agreement (SAARC Countries: Signif- icance?)**SAARC based question can be expected from IR Prelims Prelude Economy 5 Multilateral • WTO: (Most important topic; Dispute settlement mech- anism; trade war issue; Principle of WTO; Most Favoured Agencies Nation (MFN) status, National Treatment; Subsidy issue; Developing countries status; Special and differential treatment to Developing Country; Important Agree- ments under WTO)**Refer DNA 59 • IMF (Quota; SDR; Reserve tranche position; SDDS Plus; Objective; Resource; Important reports)**Refer DNA 75. • World Bank (Understand the objective of 5 organisa- tions - IBRD, IDA, IFC, MIGA, ICSID (India not a member); Important reports; Ease of doing business; distance to frontier) • FATF (What is it? Objective? Blacklist Brown list) **Refer DNA 51 • Asia/Pacific Group on Money Laundering (APG) • UNCTAD (What is it? Objective? Reports?) • Multilateral Convention to Implement Tax Treaty Relat- ed Measures to Prevent Base Erosion and Profit Shifting (MLI) • Ease of Doing Business a. Analyse the parameters on which India has improved its ranking. b. Analyse the parameter on which India has the best ranking. Intellectual • National IPR Policy (Achievement and objective) • TRIPS Agreement Property • Basics (Copy Right, Industrial property, Trade Mark, Regime Geographical Indication, Industrial design, Patent) • L2PRO India (Boss? What is it?) • International Union for the Protection of New Varieties of Plants (UPOV Convention) a. Understand the nature of the body, when it got estab- lished and headquarters. b. India’s relation to the UPOV convention. c. Objective of the convention. Prelims Prelude Economy 6 Trade • Export and Import (India’s trading partners, top export destinations and import sources, trend in export and import of commodities and services in news) • Department for Promotion of Industry and Internal Trade (DPIIT) (Role? Boss?) • National Time Release Study (Stakeholders involved? Objective?) • Special Economic Zone (New Amendments to the SEZ Act,2005, Distri- bution of SEZ) • The International Financial Services Centres Authority Act, 2019 (IFSC; Changes brought in IFSC through the Act) Miscellaneous • Base Erosion and Profit Shifting • Fugitive Economic Offenders • Nirvik Scheme • Duty-Free Import Authorisation (DFIA) Scheme • Overseas Bond • Index of Industrial Production (Published authority? Basket?) 1. The Protection of Plant Varieties and Farmers’ Rights Act (PPVFRA) [PepsiCo issue, what are the plant breeders’ rights and farmers rights] Hot 2. International Union for the Protection of New Varieties of Plants (UPOV Convention): Topics [What is India’s stand?] 3. Generalised System of Preferences (GSP) 4. Nirvik Scheme 5. Biosimilar medicine 6. Patent Prosecution Highway (PPH) Prelims Prelude Economy 7 Example of a Question from Hot Topic 1 Consider the following statements (2019) 1. According to the Indian Patents Act, a biological process to create a seed can be patented in India. 2. In India, there are no Intellectual Property Appellate Board. 3. Plant varieties are not eligible to be patented in India. Which of the statements given above is/are correct? (a) 1 and 3 only (b) 2 and 3 only (c) 3 only (d) 1, 2 and 3 Source: https://www.thehindu.com/opinion/op-ed/protect-patents/article23750971.ece Monetary Approach: Policy Basic understanding is important. Trend of the question: Definitions + New reforms in policies (UPSC’s favourite area). Most of the options look similar so understand the concept thoroughly. Monetary 1. Quantitative tools: CRR, SLR, Repo, Reverse Repo, Bank Rate, MSF, OMO Policy Tools • Difference between MSF and Repo 2. Qualitative tools: Variation of Marginal Requirement, Rationing of Credit, Moral Suasion etc. 3. Sterilization: Market Stabilization Scheme, Standing Deposit Facility, OMO 4. Money Supply: M0, M1, M2, M3, M4, Money Multiplier, Velocity of Money 5. Classification of Money: Fiat Money, Fiduciary Money etc. 6. Bond Yield Prelims Prelude Economy 8 Indian • RBI (Major functions; Public Debt Management Cell) • Classification of Indian Banking System: (Understand Banking System the basic classifications but Regional rural bank, Coop- erative bank, Payment bank, Small Financial bank are most important. **Refer DNA 102 • NBFC: (Classification of NBFCs, Difference between Banks and NBFC, Liquidity norms on NBFC by RBI) a. Core Investment Companies (Tapan Ray Committee) • Basel Norms: CRAR, Liquidity Coverage Ratio • Development Banks: SIDBI, NABARD, Exim Bank, Na- tional Housing Bank (What is it? Objective? Regulating body?) • External Benchmarking rate vs MCLR • Domestically Systemic Important Banks (D-SIBS) • Priority Sector Lending, Differential interest Rate Scheme, Lead Bank Scheme, Service Area Approach Banking • Mission Indradhanush • EASE 3.0 (Enhanced Access and Service Excellence) reforms • Inflation targeting • Twin balance sheet Problem • Helicopter Money • Insolvency and Bankruptcy Code (Objective? Features?) • Merchant Discount Rate • Infrastructure Investment Trust • Mani App • e-Bkray • Project Sashakt Frequently asked MCQ Statement • What is it? • Objective? • Features? Prelims Prelude Economy 9 Financial • National Startup advisory Council • Financial Stability and Development Council Inclusion and (What is it? Chairman and Members? Objective?) Literacy • National Broadband Mission (NBM) • Chit Funds (Chit Funds (Amendment) Bill, 2019, Difference with Ponzi scheme) Banking Crisis • Non-Performing Asset (Trend in India, Basics: Stressed asset and NPA, Special Mention Account (SMA)) • Steps towards NPA: Partial Credit Guarantee scheme, Insolvency and Bankruptcy Code (Amendment) Act, 2019, SARFAESI Act (Supreme court ruling on cooper- ative Banks), Fugitive Economic Offenders Act, Bank- ing Regulation (Amendment) Bill, 2020, Public Sector Asset Rehabilitation Agency (PARA) Prudential Frame- work for Resolution of Stressed Assets, Prompt Cor- rective Action (PCA), Supervisory Action Framework (SAF) on UCBs. • IL&FS Crisis (What is it? Regulating agency?) Digital Most of the questions are based on current affairs. • NPCI (What is it? Objective? Initiatives?) Payment • RuPay, National Common Mobility Card, Unified Pay- ments Interface, BHIM, National Financial Switch, Bharat Bill Payment System, • Data Security Council of India (What is it?) • Digital Payment Index, Digital Competitive