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ECONOMICS SHORT NOTES:

1. Public goods (such as national defence, roads, government administration), as distinct from private goods (like clothes, cars, food items), cannot be provided through the market mechanism, i.e. by transactions between individual consumers and producers and must be provided by the government. Public goods are non-rival in consumption

. 2. Credit Information Bureau (India) Limited (CIBIL) score is a three-digit numerical summary of one’s credit history, which involves an individual’s credit payment history across loan types and credit institutions over a period of time. Ranging from 300 to 900, the CIBIL score is provided by the Credit Information Bureau (India) Ltd., a credit rating agency which is authorized by the Reserve Bank of India (RBI).

3.India’s growth’s story from the eve of Independence to the liberalization phase is largely termed as ‘Hindu rate of growth’. It refers to phenomenon of sluggishness in growth rate of Indian economy (3.5 per cent observed persistently during 1950s through 1980s). The term, which owes to Professor Raj Krishna, Member, Planning Commission, captured popular imagination and was used synonymously to describe inadequacy of India’s growth performance  

4. Nominal GDP is nothing but the total market value of all the goods and services produced in India in a financial year. For purposes of analysing the economy one often uses the “real” GDP but for preparing the budget, it is the nominal GDP that matters. The real GDP is “derived” from the nominal GDP by removing the effect of inflation. Once the government knows the nominal GDP of the current financial year, it uses this number to project the likely nominal GDP in the next financial year for which the budget is being made. Typically in India, as indeed is the case with most developing economies, the governments are forced to spend more than they earn. That means they have to borrow money from the market. But overtime India instituted strict rules limiting how much the Union government can borrow. These limits are set by the Fiscal responsibility and Budget Management (FRBM) Act. The FRBM Act stipulates that the total borrowings (fiscal deficit) cannot be more than 3% of the (nominal) GDP.

 5. High public debt is not a problem when it is being used for creation of infrastructure, employment and other productive areas. Inflation is needed for any economy to grow because inflation suggests that the demand for goods has outstripped the supply. In this case more production is required which leads to higher growth. A positive trade balance has little relation with a criterion of development. USA has a large trade deficit, yet it is a developed country. However, having a positive trade balance is good for the economy because it means we are competitive in the world export mar