Glossary

101st Constitutional Amendment

2016 amendment that introduced GST; added Articles 246A, 269A and 279A.

A2, A2+FL and C2

Cost concepts: A2 = paid-out costs; A2+FL adds the value of family labour; C2 adds the rental value of owned land and interest on owned capital. MSP is at least 1.5 times A2+FL; the Swaminathan Commission suggested C2+50%.

Absolute poverty

Living below a fixed minimum level of income or consumption (the poverty line).

Accommodating transactions

Transactions done to cover a gap, such as drawing down reserves or borrowing from the IMF.

Act East Policy

India's 2014 policy of deeper engagement with Southeast Asia, building on the earlier Look East policy.

AD-AS

Aggregate Demand and Aggregate Supply. Model giving the price level and output; a leftward shift of SRAS causes stagflation.

ADR and GDR

American / Global Depository Receipts. Instruments that let an Indian company list shares abroad: ADRs in the US and GDRs in other foreign markets.

AfCFTA

African Continental Free Trade Area. Trading began 1 January 2021.

Agriculture Infrastructure Fund

2020 fund giving loans for post-harvest infrastructure such as cold storage and warehouses.

AgriStack

Digital farmer registry and data system for services and crop surveys.

AIM

See Atal Innovation Mission.

Alagh Task Force

1979 task force: calorie norms of 2,400 (rural) and 2,100 (urban) per person per day.

Alkire-Foster method

Method for multidimensional poverty measurement by Sabina Alkire and James Foster at OPHI.

AMC

Asset Management Company. Company that manages a mutual fund's investments.

AMFI

Association of Mutual Funds in India. Industry body of mutual funds.

Anchor investors

Large institutions that bid a day before an IPO opens, giving confidence to others.

Anti-dumping duty

Duty on goods sold in India at an unfairly low price; recommended by DGTR.

AoA

Agreement on Agriculture. Rules on market access, domestic support and export competition.

APMC

Agricultural Produce Marketing Committee. State-regulated mandis (agricultural markets).

Appellate Body

WTO appeals court; not functioning since 11 December 2019 because the US blocked appointments.

Appropriation Bill

Bill under Article 114 that allows withdrawal of money from the Consolidated Fund.

AQR

Asset Quality Review. 2015 exercise that forced banks to recognise hidden bad loans.

Arbitrage

Profiting from price differences between markets.

ARC

Asset Reconstruction Company. Company that buys bad loans from banks and tries to recover them.

Article 265

No tax can be levied or collected without the authority of law.

ASBA

Application Supported by Blocked Amount. Money stays in the investor's account until shares are allotted.

ASEAN

Association of Southeast Asian Nations. Set up in 1967 (Bangkok Declaration); secretariat in Jakarta; India's Act East Policy builds on it.

Aspirational Districts Programme

2018 NITI Aayog programme to improve backward districts on health, education and basic infrastructure.

Atal Innovation Mission (AIM)

NITI Aayog initiative to promote innovation and entrepreneurship.

Automatic route

FDI route requiring no prior government approval; investor only informs the RBI afterwards.

Autonomous transactions

Transactions done for their own sake, such as trade and investment.

B-READY

Business Ready. World Bank report (first edition 2024) that replaced Doing Business, which was discontinued in 2021.

Bank rate

Rate for long-term lending to banks without collateral; aligned with the MSF rate and used as a penal rate.

Base effect

A low (or high) price level in the previous year makes this year's inflation look high (or low).

Base Rate

Minimum lending rate introduced in 2010; no loan could be given below it.

Base year

Reference year with index value 100, used for measuring real change. India's GDP base year is now 2022-23; CPI base is 2024; WPI base is 2022-23.

Basel norms

Global capital rules by the Basel Committee on Banking Supervision: Basel I (1988), Basel II (2004) with three pillars, Basel III (after 2008) with better capital and liquidity ratios.

Bear market

Market with falling prices.

Beneficial owner

The person who ultimately owns or controls an investment, even through other entities.

Bharatmala Pariyojana

2017 highway development programme.

Bhoodan and Gramdan

Movement led by Vinoba Bhave from 1951 asking landowners to donate land voluntarily.

BIMSTEC

Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation. 1997 grouping of Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand; secretariat in Dhaka.

BIT

Bilateral Investment Treaty. Treaty protecting investors of each country; India issued a Model BIT in 2016.

Blue Revolution

Growth of fisheries and aquaculture.

Bombay Plan

1944 plan by eight industrialists; stressed state support for industry and infrastructure.

Bond

Loan by an investor to an issuer, paying a fixed coupon and returning the face value at maturity.

Bond price and yield

Move in opposite directions: when market interest rates rise, existing bond prices fall.

Book building

Method of pricing an issue where investors bid within a price band.

BoP

Balance of Payments. Systematic record of all economic transactions between residents of a country and the rest of the world over a period; a flow concept. It always balances in accounting terms.

BOT

Build-Operate-Transfer. Private firm builds and runs a project, collects fees (such as tolls), then hands it to the government.

BoT

Balance of Trade. Value of merchandise (goods) exports minus imports; only one part of the current account.

BPLR

Benchmark Prime Lending Rate. Earlier lending benchmark; not transparent because banks lent below it.

BRICS

Grouping that began as BRIC in 2001 (Jim O'Neill); India chairs in 2026; 11 full members and 10 partner countries.

Brownfield investment

FDI in which an existing business is acquired through merger or acquisition.

BSE

Bombay Stock Exchange. Established 1875; Asia's oldest stock exchange; index is the Sensex.

Bull market

Market with rising prices.

Business cycle

Fluctuation of real GDP around a trend: expansion, peak, recession and trough.

CACP

Commission for Agricultural Costs and Prices. Set up in January 1965 as the Agricultural Prices Commission, renamed in 1985; recommends MSP.

CAD

Current Account Deficit. Excess of payments over receipts on the current account; financed by capital inflows or by drawing down reserves.

Call money

Overnight lending between banks; notice money is for 2 to 14 days and term money for more than 14 days.

Call option

Right to buy an asset at a fixed price.

Canons of taxation

Adam Smith's principles: equity, certainty, convenience and economy.

Capital account

Part of the BoP recording small capital transfers and non-produced assets.

Capital account convertibility

Freedom to move capital in and out; India has partial convertibility. The Tarapore Committees (1997, 2006) suggested a phased approach.

Capital expenditure

Spending that creates assets or reduces liabilities, such as roads, dams and loan repayment.

Capital gains tax

Tax on profit from selling assets such as shares or property; short-term and long-term gains are taxed differently.

Capital goods

Durable goods used to produce other goods, such as machines and tools.

Capital market

Market for long-term funds (more than one year) through equity and debt; has primary and secondary parts.

Capital receipts

Borrowings, recovery of loans and disinvestment proceeds.

Capitalism

System with private ownership of resources, where prices and profit guide production and the state role is small.

CBAM

Carbon Border Adjustment Mechanism. EU charge on carbon-intensive imports; a concern for India's steel and aluminium exports.

CBDC

See e-Rupee.

CBDT

Central Board of Direct Taxes. Administers direct taxes; under the Department of Revenue.

CBIC

Central Board of Indirect Taxes and Customs. Administers GST (central), customs and excise; under the Department of Revenue.

CCI

Competition Commission of India. Set up in 2009 under the Competition Act, 2002.

CCIL

Clearing Corporation of India Ltd. Set up in 2001; clears and settles trades in government securities, forex and money market.

CD

See Certificate of deposit.

CECA and CEPA

Comprehensive Economic Cooperation Agreement / Comprehensive Economic Partnership Agreement. Cover goods, services, investment and other cooperation.

Certificate of deposit (CD)

Short-term deposit certificate issued by banks and financial institutions.

Cess

Tax levied for a specific purpose; not part of the divisible pool.

CETA

Comprehensive Economic and Trade Agreement. Similar in breadth to CEPA; India-UK CETA signed 24 July 2025 and in force from 15 July 2026.

CGST

Central Goods and Services Tax. Central GST on supply within a State.

CGTMSE

Credit Guarantee Fund Trust for Micro and Small Enterprises. Guarantees collateral-free loans.

Charged expenditure

Expenditure that is discussed but not voted on, such as salaries of the President and judges and debt charges.

Chelliah Committee

1991 Tax Reforms Committee: lower rates, fewer exemptions, simpler customs duties and a move towards VAT.

Chronic and transient poverty

Chronic: lasts for years. Transient: temporary, caused by shocks such as drought or job loss.

Circuit breaker

Temporary halt in trading when prices move too sharply; market-wide limits are 10%, 15% and 20%.

Circular flow of income

Flow of money between households and firms: households sell factors and receive income, then spend it on goods and services.

Club good

Good that is non-rival but excludable, such as cable TV and a toll road.

COICOP

Classification of Individual Consumption According to Purpose. UN classification followed by the new CPI series (12 divisions).

Commercial bank

Bank that accepts deposits and gives loans; public sector, private, foreign, RRBs, small finance banks and others.

Commercial bill

Bill of exchange drawn by a seller on a buyer for goods sold on credit.

Commercial paper (CP)

Unsecured short-term note issued by large, well-rated companies.

Common market

Customs union plus free movement of labour and capital.

Common resource

Good that is rival but non-excludable, such as fish in open seas and groundwater.

Compensation cess

Cess meant to compensate States for GST revenue loss; being phased out.

Complementary goods

Goods used together (pen and ink). If one becomes costlier, demand for the other falls.

Consolidated Fund of India

Main government account (Article 266); all revenues and loans go into it; money is withdrawn only with Parliament's approval.

Consolidation of holdings

Joining scattered small plots into one block to ease farming.

Consumer goods

Goods bought by final users for direct use, such as clothes and food.

Contingency Fund of India

Fund held by the President (Article 267) for urgent, unforeseen expenditure.

Contractionary fiscal policy

Less spending and/or higher taxes to cool demand and control inflation.

Cooperative bank

Bank owned by its members: urban cooperative banks, State and district cooperative banks and PACS.

Cooperative federalism

Approach in which the Centre and States work as partners; the idea behind NITI Aayog's Governing Council.

Core inflation

Headline inflation excluding food and fuel, which are volatile.

Corporation tax

Tax on company profits; concessional rate of 22% for domestic companies (from 2019) and 15% for new manufacturing companies.

Cost-push inflation

Higher input costs (wages, raw materials, oil) push up prices.

Countervailing duty

Duty imposed to offset the effect of a subsidy given by the exporting country.

Coupon

Fixed interest a bond pays.

CP

See Commercial paper.

CPI

Consumer Price Index. Measures retail inflation. CPI (Combined), compiled by NSO, is the RBI's inflation target measure. New base year 2024 (released 12 February 2026), with 358 items.

CPI

Corruption Perceptions Index. Transparency International index on a 0 to 100 scale (higher is cleaner); India 91st of 182 in 2025 (score 39).

CPI-AL and CPI-RL

CPI for Agricultural Labourers and Rural Labourers. Compiled by the Labour Bureau for agricultural and rural labourers.

CPI-IW

CPI for Industrial Workers. Compiled by the Labour Bureau; used for Dearness Allowance of government employees.

CRA

Contingent Reserve Arrangement. BRICS arrangement giving members short-term liquidity support.

CRAR

Capital to Risk-weighted Assets Ratio. Bank's capital as a share of its risk-weighted assets. In India it is at least 9%, plus a 2.5% capital conservation buffer.

Credit rating

Assessment of a borrower's ability to repay, by agencies such as CRISIL, ICRA and CARE.

Credit rationing

Caps on credit given by banks to certain borrowers.

Creeping, walking and running inflation

Creeping: mild, up to about 3%; walking: 3% to 10%; running: double digits.

Cropping intensity

Gross cropped area ÷ net sown area × 100.

Crowding out

Heavy government borrowing raises interest rates and leaves less credit for private investment.

CRR

Cash Reserve Ratio. Share of a bank's Net Demand and Time Liabilities that it must keep as cash with the RBI. No interest is paid on it. Raising CRR reduces liquidity; cutting it increases liquidity.

Currency appreciation

Rise in a currency's value in a market-determined system.

Currency depreciation

Fall in a currency's value in a market-determined (floating) system.

Current account

Part of the BoP recording goods, services, primary income and secondary income.

Current account convertibility

Freedom to buy or sell foreign currency for current transactions; India accepted Article VIII of the IMF Agreement in August 1994.

Current Weekly Status (CWS)

Employment measured over the last 7 days; a person is employed if they worked at least one hour on any day; used in monthly bulletins.

Customs duty

Tax on imports and exports under the Customs Act, 1962.

Customs union

FTA plus a common external tariff against non-members.

Cut motion

Motion to reduce a demand: policy cut (to Re 1), economy cut (by a stated amount) and token cut (by Rs 100).

CWS

See Current Weekly Status.

Cyclical unemployment

Caused by a fall in demand in a recession or slowdown.

Dandekar and Rath

1971 first systematic poverty estimate, based on 2,250 calories per day.

Dated security

Long-term government bond (5 to 40 years) paying a fixed coupon.

DAY-NRLM

Deendayal Antyodaya Yojana-National Rural Livelihoods Mission. 2011 mission that builds women's Self-Help Groups to raise rural incomes; DAY-NULM (2013) is the urban version.

DDA

See Doha Development Agenda.

DDT

See Dividend Distribution Tax.

DDU-GKY

Deen Dayal Upadhyaya Grameen Kaushalya Yojana. 2014 scheme for skills and placement of rural youth.

De minimis

Allowed amber-box support: 5% of the value of production for developed countries and 10% for developing countries.

Decentralised planning

Plans prepared at State, district and local levels, supported by the 73rd and 74th Amendments.

Deflation

Fall in the general price level.

Demand-pull inflation

Total demand rises faster than supply: too much money chasing too few goods.

Demands for Grants

Ministry-wise requests for money that only the Lok Sabha votes on.

Demat account

Account that holds shares in electronic form with a depository.

Demerit good

Good such as alcohol or tobacco that harms society; it is taxed or restricted.

Depreciation

Wear and tear of capital. In foreign exchange, it also means a fall in a currency's market value (see Exchange rate).

Derivative

Contract whose value comes from an underlying asset such as a share, index, currency or commodity.

Destination-based tax

Tax collected where the goods or services are consumed; GST is one.

Devaluation

Deliberate official reduction in a currency's value in a fixed system (rupee devalued in 1966 and in two steps in July 1991).

DFC

Dedicated Freight Corridor. Rail lines for freight only (Eastern and Western), run by DFCCIL.

DGFT

Directorate General of Foreign Trade. Administers India's foreign trade policy under the Commerce Ministry.

DGTR

Directorate General of Trade Remedies. Body that recommends anti-dumping, countervailing and safeguard duties.

DICGC

Deposit Insurance and Credit Guarantee Corporation. RBI subsidiary that insures bank deposits up to Rs 5 lakh per depositor per bank.

DIPAM

Department of Investment and Public Asset Management. Manages disinvestment and strategic sale of government stakes.

Direct tax

Tax charged on income or wealth and paid by the person on whom it is levied, such as income tax.

Disguised unemployment

More people work on a job than needed, so removing some does not reduce output; common in agriculture.

Disinflation

Fall in the rate of inflation; prices still rise, but more slowly.

Disinvestment

Sale of the government's stake in a public sector enterprise; managed by DIPAM.

District Planning Committee

Body under Article 243ZD that consolidates village and municipal plans into a district plan.

Dividend Distribution Tax (DDT)

Tax paid by companies on dividends; abolished in 2020, so dividends are taxed in the receiver's hands.

Divisible pool

Central taxes that are shared with States under Article 270 on the Finance Commission's recommendation; excludes cesses and surcharges.

DMEO

Development Monitoring and Evaluation Office. Office under NITI Aayog that assesses government programmes.

Doha Development Agenda (DDA)

Round launched at Doha in 2001; largely stalled.

Doing Business

World Bank ranking discontinued in 2021 after data concerns; replaced by B-READY.

DRT

Debt Recovery Tribunal. Tribunal set up under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 to recover bank dues.

DSB

Dispute Settlement Body. WTO body (the General Council sitting as DSB) that handles disputes: consultations, panel, appeal.

DTAA

Double Taxation Avoidance Agreement. Agreement between two countries to prevent the same income from being taxed twice.

Dumping

Selling in a foreign market at a price below the home price or cost; countered with anti-dumping duty.

E-commerce moratorium

Ban on customs duties on electronic transmissions, in place since 1998; lapsed for the first time at MC14 (2026).

e-NAM

National Agriculture Market. Online trading portal linking mandis, launched 14 April 2016; SFAC is the nodal agency.

e-Rupee (CBDC)

Central Bank Digital Currency: digital form of the rupee issued by the RBI; in pilot since 2022.

e-Shram

2021 national database of unorganised workers.

EBLR

External Benchmark based Lending Rate. From October 2019; floating-rate retail and MSME loans are linked to an external benchmark such as the repo rate, so policy changes pass through quickly.

ECB

External Commercial Borrowing. Loans taken by Indian companies from foreign lenders; regulated by the RBI.

Economic agents

Units that take economic decisions: households, firms, the government and the external sector.

Economic growth

Rise in the real value of goods and services an economy produces over time.

Economic integration

Process by which countries reduce or remove trade and other economic barriers among themselves.

Economic Survey

Annual report of the Ministry of Finance (Chief Economic Adviser) presented before the Budget; first in 1950-51.

Economic union

Common market plus common economic policy and often a common currency, as in the Eurozone.

Economics

Study of how a society uses limited resources to meet unlimited wants: what, how and for whom to produce.

ECTA

Economic Cooperation and Trade Agreement. India-Australia agreement in force from 29 December 2022.

Educated unemployment

Unemployment among those with school or college degrees.

Effective revenue deficit

Revenue deficit minus grants for creating capital assets.

EFTA

European Free Trade Association. Switzerland, Norway, Iceland and Liechtenstein.

ELSS

Equity Linked Savings Scheme. Tax-saving equity mutual fund with a three-year lock-in.

Employment elasticity

How much employment rises for a one per cent rise in output.

EPCG

Export Promotion Capital Goods scheme. Capital goods imported at reduced duty against an export obligation.

Equilibrium

Point where demand equals supply, giving the market price and quantity.

Escape clause

Provision in the FRBM Act that lets the government exceed fiscal targets in special conditions such as war or calamity; used in 2020-21.

Essential Commodities Act

1955 law that lets the government limit stocks and control prices of essential goods.

Estate duty

Tax on inherited wealth; abolished in 1985.

ETF

Exchange Traded Fund. Fund traded on stock exchanges like a share.

EU

European Union. Formed by the Maastricht Treaty (1993); single market with the euro; the UK left in January 2020.

Evergreen Revolution

Sustainable, environment-friendly increase in productivity; an idea of M. S. Swaminathan.

Exchange rate

Price of one currency in terms of another.

Excludable good

A good from which people can be kept out unless they pay.

Expansionary fiscal policy

More spending and/or lower taxes to raise demand; used in a slowdown; it widens the deficit.

Export Promotion Mission

Approved November 2025 (Rs 25,060 crore, 2025-26 to 2030-31): Niryat Protsahan (trade finance for MSMEs) and Niryat Disha (non-financial support).

External debt

Amount owed by residents to non-residents, to be repaid in foreign currency or goods and services.

Face value

Amount repaid at maturity on a bond.

Faceless assessment

2020 system of tax assessment with no direct contact between taxpayer and officials.

Factor cost (FC)

What factors of production receive; it leaves out indirect taxes and adds back subsidies. GDP at MP = GDP at FC + indirect taxes − subsidies.

Factors of production

Land (reward: rent), labour (wages), capital (interest) and entrepreneurship (profit).

FAR

Fully Accessible Route. 2020 route letting foreign investors buy specified government bonds without limits.

FC

See Factor cost.

FCCB

Foreign Currency Convertible Bond. Bond issued by an Indian company abroad in foreign currency that can be converted into shares.

FCI

Food Corporation of India. Set up in 1965; buys grain at MSP, stores buffer stocks and supplies the PDS.

FCNR(B)

Foreign Currency Non-Resident (Bank) account. NRI deposit held in foreign currency; protects the NRI from exchange rate risk.

FDI

Foreign Direct Investment. Long-term investment giving control or influence; 10% or more of a listed company.

FEMA

Foreign Exchange Management Act, 1999. In force from 1 June 2000; replaced FERA; treats violations as civil offences.

FERA

Foreign Exchange Regulation Act, 1973. Earlier, more criminal law on foreign exchange; replaced by FEMA.

FIFP

Foreign Investment Facilitation Portal. Portal through which FDI proposals are handled; replaced the FIPB.

FII

Foreign Institutional Investor. Institutional investor allowed into the stock market from 1992; merged into FPIs in 2014.

Final goods

Goods meant for final use and not processed further, such as a finished car.

Finance Bill

Bill under Article 117 that gives effect to the Budget's tax proposals.

Finance Commission

Body under Article 280, set up every five years, that recommends how central taxes are shared with States.

Financial account

Part of the BoP recording FDI, portfolio investment, other investment (ECBs, banking capital, trade credit) and reserve assets.

Financial Stability Report

RBI report published in June and December reviewing risks to the financial system.

Financial system

System that moves savings to investment through institutions, markets, instruments and services.

FIPB

Foreign Investment Promotion Board. Body that cleared FDI proposals; abolished in 2017.

Fiscal deficit

Total expenditure minus total receipts excluding borrowings; equals the total borrowing requirement. Stated as a percentage of GDP.

Fiscal policy

Government's use of taxation, public spending and borrowing to influence the economy.

Fisheries Subsidies Agreement

Agreed at MC12 (June 2022); bans subsidies for illegal, unreported and unregulated (IUU) fishing; in force September 2025.

Five Year Plan

Medium-term national plan with targets and outlays. India had twelve (1951-2017); the 12th was the last.

Foreign exchange reserves

Foreign currency assets, gold, SDRs and the reserve tranche position held by the RBI.

Foreign Trade Policy 2023

In effect from 1 April 2023 with no fixed end date; focuses on export hubs, e-commerce exports and ease of doing trade.

FPI

Foreign Portfolio Investor. Buys shares and bonds without taking control; holds less than 10% of a company; regulated by SEBI.

FPO

Follow-on Public Offer. Listed company issues more shares to the public.

FPO

Farmer Producer Organisation. Collective of farmers; scheme for 10,000 FPOs launched in 2020 to give small farmers bargaining power.

FRBM Act

Fiscal Responsibility and Budget Management Act, 2003. Law setting fiscal discipline rules, such as a fiscal deficit target of 3% of GDP and removal of the revenue deficit.

Frictional unemployment

Short-term unemployment while people move between jobs or enter the job market.

FRP

Fair and Remunerative Price. Price for sugarcane fixed by the government on CACP's recommendation.

FSDC

Financial Stability and Development Council. Set up in 2010 and chaired by the Union Finance Minister; coordinates among financial regulators.

FTA

Free Trade Area. Tariffs removed on most trade among members, but each keeps its own tariffs on outsiders; examples: SAFTA, USMCA.

Full employment

Everyone who wants a job at the going wage can get one; some frictional unemployment remains.

Futures

Contract in which both buyer and seller must complete the deal at a fixed price on a future date.

FVCI

Foreign Venture Capital Investor. Foreign investor in unlisted start-ups and venture funds, registered with SEBI.

G-secs

See Government securities.

G20

Forum of major economies; India held the Presidency in 2023 and the African Union became a permanent member.

GAAR

General Anti-Avoidance Rules. 2017 rules that stop arrangements whose main purpose is to avoid tax.

Gadgil formula

Formula for sharing central plan assistance among States, adopted in the 4th Plan.

Gandhian Plan

1944 plan by Shriman Narayan focused on village industries and a decentralised rural economy.

Garibi Hatao

Slogan and aim of the 5th Plan (1974-79): removal of poverty and self-reliance.

GATS

General Agreement on Trade in Services. WTO agreement on services through four modes: cross-border supply, consumption abroad, commercial presence and movement of persons.

GATT

General Agreement on Tariffs and Trade. Signed 1947 by 23 countries and in effect from 1 January 1948; replaced by the WTO.

GDI

Gender Development Index. UNDP index comparing HDI of women and men.

GDP

Gross Domestic Product. Total market value of all final goods and services produced within a country's borders in a year.

GDP deflator

(Nominal GDP ÷ Real GDP) × 100. A broad measure of price change across the whole economy.

GeM

Government e-Marketplace. 2016 online platform for public procurement.

Gender budgeting

Tracks how much of the budget benefits women; introduced in 2005-06.

GHI

Global Hunger Index. Concern Worldwide and Welthungerhilfe index using undernourishment, child stunting, wasting and mortality; India 102nd of 123 in 2025 (score 25.8, "serious").

Giffen good

Rare inferior staple whose demand rises as its price rises, because it is a poor household's main food. Its demand curve slopes upward. Named after Robert Giffen.

GII

Gender Inequality Index. UNDP index of reproductive health, empowerment and labour market; India 102nd of 166 in HDR 2025 (not to be confused with the Global Innovation Index).

GII

Global Innovation Index. WIPO index (with Cornell and INSEAD) of 139 economies; Switzerland first; India 38th in 2026.

Gini coefficient

Measure of inequality from 0 (perfect equality) to 1 (perfect inequality); Gini = A ÷ (A + B) on the Lorenz diagram.

Global Economic Prospects

World Bank report published in January and June.

Global Gender Gap Index

WEF index (since 2006) of economic participation, education, health and political empowerment; India 131st of 145 in 2026.

GNP

Gross National Product. GDP plus Net Factor Income from Abroad; counts income earned by a country's residents anywhere.

Golden Quadrilateral

Highway link between Delhi, Mumbai, Chennai and Kolkata under NHDP (1998).

Golden Revolution

Growth in horticulture and honey.

Government route

FDI route requiring prior government approval through the concerned ministry.

Government securities (G-secs)

Debt instruments issued by the government; carry no default risk. T-bills are short term and dated securities long term.

Green bond

Bond raising money for environment-friendly projects; India issued sovereign green bonds in 2023.

Green Revolution

From 1966-67: high-yielding seeds, fertilisers and irrigation raised wheat and rice output, first in Punjab, Haryana and western UP. Norman Borlaug (world) and M. S. Swaminathan (India).

Green, amber and blue box

Agricultural subsidy categories: green (non-distorting, allowed), amber (trade-distorting, capped by de minimis) and blue (production-limiting).

Greenfield investment

FDI in which a new venture is set up.

Gross cropped area

Total area sown, counting every crop, including repeats on the same land.

Gross investment

Total spending on capital goods in a year.

Gross NPA

Total of all non-performing assets.

GST

Goods and Services Tax. Single, destination-based tax on supply of goods and services, in force from 1 July 2017 (101st Amendment). Rates since 22 September 2025: 5%, 18% and 40%.

GST Council

Body under Article 279A chaired by the Union Finance Minister; decisions need a three-fourths weighted majority.

GSTN

Goods and Services Tax Network. IT backbone for GST registration, returns and payments.

GVA

Gross Value Added. Value of output minus the value of intermediate consumption. In India, GVA at basic prices = GDP at market prices − (product taxes − product subsidies).

HAM

Hybrid Annuity Model. Government pays part of the project cost during construction and the rest as annual payments, so the private partner carries less risk.

Harrod-Domar model

Growth depends on the savings rate and capital-output ratio; basis of the 1st Plan.

HCES

Household Consumption Expenditure Survey. NSO survey on household spending; used for CPI weights and poverty analysis.

HDI

Human Development Index. UNDP index (since 1990, Mahbub ul Haq and Amartya Sen) of health, education and standard of living. India: 130th of 193, HDI 0.685 (HDR 2025).

Headcount ratio

Share of the population living below the poverty line.

Headline inflation

Inflation based on the full basket of goods and services.

Hedging

Using derivatives to reduce risk.

Hindu rate of growth

Term coined by Raj Krishna for India's low growth (about 3.5% a year) from 1950 to about 1980.

Hot money

Volatile portfolio capital that can leave a country quickly.

Hyperinflation

Extremely rapid price rise, as in Germany in the 1920s and Zimbabwe in the 2000s.

IBBI

Insolvency and Bankruptcy Board of India. Regulator under the IBC.

IBC

Insolvency and Bankruptcy Code, 2016. Time-bound resolution of insolvency through the NCLT, with a limit of about 330 days.

ICI

Index of Core Industries. Tracks core industry output (compiled by DPIIT); new series base 2022-23 released 20 July 2026, with nine industries including iron ore.

IDRA, 1951

Industries (Development and Regulation) Act. Introduced industrial licensing.

IFD

Investment Facilitation for Development. Plurilateral agreement; India blocked it at MC14.

IFSCA

International Financial Services Centres Authority. Regulator of financial services in International Financial Services Centres such as GIFT City (set up 2020).

IGST

Integrated Goods and Services Tax. GST on inter-state supply and on imports; collected by the Centre and shared with the destination state.

IHDI

Inequality-adjusted Human Development Index. HDI discounted for inequality.

IIFCL

India Infrastructure Finance Company Ltd. Government-owned infrastructure lender, set up in 2006.

IIP

Index of Industrial Production. Monthly index of the volume of industrial output, compiled by NSO; new base year 2022-23.

IIP

International Investment Position. Stock of a country's external financial assets and liabilities at a point of time (not to be confused with the Index of Industrial Production).

IMEC

India-Middle East-Europe Economic Corridor. Announced at the G20 New Delhi Summit (September 2023); links India, the Gulf, Israel and Europe.

Impact and incidence of tax

Impact is on the person who first pays the tax; incidence is on the person who finally bears the burden.

Imperative planning

State gives orders and targets that must be followed, as in the former Soviet Union.

Imperial Bank of India

Formed in 1921 by merging the three Presidency Banks; became the State Bank of India in 1955.

Import cover

Foreign exchange reserves expressed in months of imports; a measure of adequacy.

Imported inflation

Price rise caused by costlier imports such as crude oil, or a weaker rupee.

IMPS

Immediate Payment Service. Instant interbank transfer through mobile, available 24x7.

Income-tax Act, 2025

New direct tax law replacing the Income-tax Act, 1961, in force from 1 April 2026; uses a single "tax year" and has 536 sections.

India VIX

Index of expected market volatility; called the "fear index".

Indicative planning

State sets broad goals and guides the private sector through incentives. India moved towards this after 1991.

Indirect tax

Tax whose burden can be passed on to the consumer, such as GST and customs duty.

Indradhanush

2015 seven-point plan to revive public sector banks: Appointments, Bank Board Bureau, Capitalisation, De-stressing, Empowerment, Accountability and Governance reforms.

Industrial corridor

Planned industrial zone along transport routes, such as the Delhi-Mumbai Industrial Corridor.

Industrial licensing

Government permission to set up or expand an industry; now needed for only a few industries such as alcohol, tobacco and defence electronics.

Industrial Policy Resolution, 1956

Called the "economic constitution" of India; Schedules A (State monopoly), B (State leads, private joins) and C (private).

Inferior good

Good whose demand falls when income rises, such as coarse grains.

Inflation

Sustained rise in the general price level that reduces the purchasing power of money.

Inflation targeting

Framework since 2016 where the RBI aims at 4% CPI inflation with a band of ±2%. Retained for 1 April 2026 to 31 March 2031.

Infrastructure

Basic physical systems supporting production and daily life: economic (transport, energy, communication) and social (schools, hospitals, housing).

Insider trading

Trading on unpublished price-sensitive information; banned and punished by SEBI.

INSTC

International North-South Transport Corridor. Shortens routes between India, Iran, Russia and Central Asia.

Intermediate goods

Goods used up as inputs to make other goods, such as rubber used for tyres.

Internal debt

Government borrowing within India through securities, treasury bills and small savings.

International Poverty Line

World Bank line of $3.00 a day (2021 PPP) since June 2025, replacing $2.15 (2017 PPP).

Invest India

National investment promotion and facilitation agency, set up in 2009 under DPIIT.

Invisibles

Services, income and transfers in the current account; not physical goods.

InvIT

Infrastructure Investment Trust. Trust regulated by SEBI (since 2014) that lets investors put money in completed infrastructure projects.

IPO

Initial Public Offer. Company offers shares to the public for the first time.

IRDAI

Insurance Regulatory and Development Authority of India. Regulator of the insurance sector.

ITC

Input Tax Credit. Seller can set off tax paid on inputs against tax on output, so tax is charged only on the value added.

ITO

International Trade Organisation. Planned in the Havana Charter (1948); never set up.

J-curve

After depreciation, the trade deficit may first widen and then improve.

Jal Jeevan Mission

2019 mission to provide tap water to every rural household.

Jobless growth

Economy grows but few new jobs are created.

KCC

Kisan Credit Card. 1998 scheme giving short-term crop loans at subsidised interest; collateral-free limit raised to Rs 5 lakh in Budget 2025-26.

Kelkar Task Force

2002 task force that recommended a broad VAT and later a national GST.

Kharif

Crops sown with the monsoon (June to July) and harvested September to October: rice, maize, cotton, groundnut and others.

Kuznets curve

Inverted-U: inequality first rises and then falls as income grows (Simon Kuznets).

KYC

Know Your Customer. Norms to verify customer identity and prevent money laundering and fraud.

Labour Codes

Four codes in force from 21 November 2025 merging 29 central labour laws: Wages, Industrial Relations, Social Security, and Occupational Safety, Health and Working Conditions.

Labour force

Persons who are employed plus those who are unemployed (seeking or available for work).

LAF

Liquidity Adjustment Facility. Introduced in 2000; manages day-to-day liquidity through repo and reverse repo.

Laffer curve

Inverted-U showing tax revenue rising with the tax rate and then falling; revenue is zero at 0% and 100%.

Lakdawala Committee

1993 committee: state-specific poverty lines, updated using CPI-AL and CPI-IW.

Land ceiling

Limit on the area one family can own; surplus land goes to the landless.

Lead Bank Scheme

1969 scheme assigning each district to a bank to coordinate credit and banking services.

Leakages and injections

Leakages (savings, taxes, imports) take money out of the circular flow; injections (investment, government spending, exports) add money back.

Lender of last resort

Role of the central bank in giving emergency funds to banks facing a liquidity crisis.

LERMS

Liberalised Exchange Rate Management System. March 1992 dual exchange rate system; unified into a market-determined rate in March 1993.

LFPR

Labour Force Participation Rate. Labour force ÷ population × 100.

Local Area Bank

Small bank working within a few districts; introduced in 1996.

Lorenz curve

Plots the cumulative share of income against the cumulative share of population; the farther from the line of equality, the greater the inequality.

LPG reforms

Liberalisation, Privatisation and Globalisation. Economic reforms begun in 1991 after the balance of payments crisis.

LPI

Logistics Performance Index. World Bank index; India ranked 38th in 2023 (44th in 2018).

Luxury good

Good whose demand rises more than proportionately as income rises.

M0 (Reserve money)

Currency in circulation + bankers' deposits with the RBI + other deposits with the RBI. Also called high-powered money.

M1 (Narrow money)

Currency with the public + demand deposits with banks + other deposits with the RBI.

M2

M1 plus savings deposits with Post Office Savings Banks.

M3 (Broad money)

M1 plus time deposits with banks; the most commonly used measure of money supply.

M4

M3 plus all deposits with Post Office Savings Banks (excluding National Savings Certificates).

Macroeconomics

Branch dealing with the economy as a whole: GDP, inflation, unemployment and policy.

Mahalanobis model

Priority to capital goods and heavy industry to build a base for long-run growth; basis of the 2nd Plan.

Make in India

Launched 25 September 2014 to make India a manufacturing hub; target of 25% manufacturing share in GDP not yet reached.

Managed float

Market sets the exchange rate and the RBI steps in only to reduce volatility; India's system since 1993.

Margin requirement

Difference between the value of a loan's security and the loan amount.

Market price (MP)

Price actually paid, including indirect taxes and net of subsidies.

Marshall-Lerner condition

Depreciation improves the trade balance only if the sum of export and import demand elasticities is greater than one.

Masala bond

Rupee-denominated bond sold to investors abroad (from 2014); exchange rate risk is borne by the investor.

MAT

Minimum Alternate Tax. Companies with low taxable profit must still pay a minimum tax on book profits.

MCLR

Marginal Cost of Funds based Lending Rate. Lending benchmark from April 2016 linked to banks' own cost of funds.

Merit good

Good such as education or health that gives society benefits beyond the buyer's own; the state encourages or provides it.

MFN

Most Favoured Nation. A trade benefit given to one WTO member must be given to all members.

MGNREGA

Mahatma Gandhi National Rural Employment Guarantee Act, 2005. Gave a legal right to 100 days of wage employment to rural households; demand-driven; replaced by VB-G RAM G.

MIBOR

Mumbai Interbank Offer Rate. Benchmark short-term rate in the interbank market.

Microeconomics

Branch dealing with decisions of individual units such as a household, a firm or a single market.

Minimum Reserve System

System followed since 1957 under which the RBI must hold at least Rs 200 crore of assets (Rs 115 crore gold and Rs 85 crore foreign securities) as backing for notes.

Ministerial Conference

WTO's highest decision-making body; meets at least once every two years. MC14 (Yaounde, March 2026) ended without consensus.

Mission for Aatmanirbharta in Pulses

Six-year mission (outlay Rs 11,440 crore) aiming at 350 lakh tonnes of pulses by 2030-31.

Mixed economy

Public and private sectors exist together; the state regulates and provides public goods. India follows this model.

MMRP

Mixed Modified Reference Period. Method of collecting consumption data used in HCES since 2022-23.

MODVAT

Modified Value Added Tax. 1986 scheme giving credit for tax paid on inputs and reducing the cascading effect of taxes.

Monetary policy

RBI's management of money supply and interest rates to achieve price stability and support growth.

Monetary Policy Report

RBI report published twice a year (April and October) with the inflation and growth outlook.

Monetised deficit

Deficit financed by borrowing from the RBI; automatic monetisation ended in 1997.

Money

Anything generally accepted in payment: medium of exchange, unit of account, store of value and standard of deferred payment.

Money market

Market for short-term funds with maturity up to one year; regulated by the RBI.

Money multiplier

M3 ÷ M0; shows how a bank deposit lent out again and again creates a multiple of reserve money.

Moral suasion

Persuasion, advice and informal requests by the RBI to banks.

MP

See Market price.

MPC

Monetary Policy Committee. Six-member statutory body (Finance Act, 2016; Section 45ZB of the RBI Act) that sets the policy rate; Governor has a casting vote; meets at least four times a year.

MPI

Multidimensional Poverty Index. Counts overlapping deprivations in health, education and living standards; MPI = H × A (headcount ratio × intensity). Global MPI is by UNDP and OPHI (10 indicators); India's National MPI by NITI Aayog has 12 indicators.

MPIA

Multi-Party Interim Appeal Arbitration Arrangement. 2020 workaround to the Appellate Body used by the EU and some others; India is not part of it.

MRTP Act, 1969

Monopolies and Restrictive Trade Practices Act. Controlled concentration of economic power; replaced by the Competition Act, 2002.

MSF

Marginal Standing Facility. Overnight borrowing by banks from the RBI against their SLR holdings in an emergency; rate is above repo and sets the upper end of the corridor.

MSME

Micro, Small and Medium Enterprises. Classified by investment and turnover (from 1 April 2025): micro up to Rs 2.5 crore and Rs 10 crore; small Rs 25 crore and Rs 100 crore; medium Rs 125 crore and Rs 500 crore.

MSP

Minimum Support Price. Floor price for farm produce, announced by the CCEA on CACP's recommendation for 22 mandated crops. Kharif 2026-27: common paddy Rs 2,441 per quintal.

MSS

Market Stabilisation Scheme. Started in 2004; RBI sells special government bonds to absorb excess liquidity.

Mutual fund

Pool of money from many investors, invested in securities by an Asset Management Company.

NABARD

National Bank for Agriculture and Rural Development. Apex body for agricultural and rural credit, set up in 1982.

NaBFID

National Bank for Financing Infrastructure and Development. 2021 development finance institution for infrastructure.

NAPS

National Apprenticeship Promotion Scheme. 2016 scheme supporting employers who train apprentices.

Narasimham Committee

Banking reform committees: I (1991) cut SLR/CRR, freed interest rates and set prudential norms; II (1998) raised capital adequacy to 9% and advised merging strong banks.

NARCL

National Asset Reconstruction Company Ltd. The "bad bank" set up in 2021 to take over large stressed loans.

National income

NNP at factor cost: total income earned by a country's factors of production.

National Logistics Policy

September 2022 policy to cut logistics costs; includes the Unified Logistics Interface Platform (ULIP).

National Monetisation Pipeline (NMP)

2021 plan to lease government infrastructure assets to private players for a fixed period.

National treatment

Imported goods must be treated no less favourably than domestic goods once they enter the market.

Nationalisation of banks

14 major banks nationalised on 19 July 1969 (deposits above Rs 50 crore) and 6 more on 15 April 1980 (deposits above Rs 200 crore).

Natural rate of unemployment

Rate at which frictional and structural unemployment exist even at full employment.

NAV

Net Asset Value. Price per unit of a mutual fund: (assets − liabilities) ÷ number of units.

Navratna and Maharatna

Special status for large, profitable public sector companies giving them more financial freedom; Miniratna is the lower category.

NBFC

Non-Banking Financial Company. Company that lends and invests but is not a bank; cannot accept demand deposits; regulated by the RBI.

NBS

Nutrient Based Subsidy. Since 2010, subsidy on phosphatic and potassic fertilisers fixed per nutrient.

NCLT

National Company Law Tribunal. Tribunal that handles company insolvency cases under the IBC.

NCS

National Career Service. 2015 portal matching job seekers with employers.

NDB

New Development Bank. BRICS bank headquartered in Shanghai, set up by the Fortaleza Summit (2014).

NDC

National Development Council. Non-constitutional body set up in 1952, chaired by the Prime Minister; approved the Five Year Plans and linked the Centre and States.

NDI Rules, 2019

Foreign Exchange Management (Non-Debt Instruments) Rules. Rules governing foreign investment in equity in India.

NDP

Net Domestic Product. GDP minus depreciation.

NDTL

Net Demand and Time Liabilities. Total demand and time deposits of a bank (net of interbank items); the base on which CRR and SLR are applied.

Neem-coated urea

Compulsory since 2015 to reduce diversion of urea to industry and improve nitrogen use.

NEER

Nominal Effective Exchange Rate. Rupee's value against a basket of currencies, weighted by trade.

NEFT

National Electronic Funds Transfer. Electronic fund transfer in batches; available 24x7.

Negative consensus

A ruling is adopted unless every member votes against it.

Net errors and omissions

Balancing item for mistakes and missing data in the BoP.

Net investment

Gross investment minus depreciation.

Net NPA

Gross NPA minus provisions made by the bank.

Net sown area

Area sown counting each piece of land once.

NFHS

National Family Health Survey. Health survey by the Ministry of Health and IIPS Mumbai; NFHS-5 (2019-21) is widely used.

NFIA

Net Factor Income from Abroad. Income earned by residents abroad minus income earned by foreigners in the country.

NFSA

National Food Security Act, 2013. Covers up to 75% of rural and 50% of urban population with 5 kg of foodgrain per person a month; Antyodaya households get 35 kg per household.

Nifty 50

NSE index of 50 companies, base November 1995 = 1000.

NIIF

National Investment and Infrastructure Fund. 2015 fund to attract domestic and foreign long-term capital.

NIP

National Infrastructure Pipeline. December 2019 pipeline of projects worth over Rs 100 lakh crore for 2020 to 2025.

NITI Aayog

National Institution for Transforming India. Policy think tank formed on 1 January 2015 by a Cabinet resolution; promotes cooperative federalism; does not allocate funds.

NMP

See National Monetisation Pipeline.

NNP

Net National Product. GNP minus depreciation. NNP at factor cost is national income.

Nominal GDP

GDP measured at current prices, so it is affected by inflation.

Normal good

Good whose demand rises when income rises.

NPA

Non-Performing Asset. Loan whose interest or principal is overdue for more than 90 days.

NPCI

National Payments Corporation of India. Umbrella organisation for retail payments in India; runs UPI and RuPay.

NSAP

National Social Assistance Programme. 1995 programme giving pensions to the elderly, widows and persons with disabilities among the poor.

NSDL and CDSL

National Securities Depository Ltd (1996) and Central Depository Services Ltd (1999). India's two depositories, under the Depositories Act, 1996.

NSE

National Stock Exchange. Set up 1992; trading began 1994; first fully electronic, demutualised exchange; index is the Nifty 50.

NSO

National Statistics Office. Body under MoSPI that compiles national accounts, CPI, IIP and surveys such as PLFS.

ODI

Overseas Direct Investment. Investment by Indian entities in foreign firms, under the Overseas Investment Rules, 2022.

OFS

Offer for Sale. Existing promoters or large shareholders sell shares through the exchange.

OMO

Open Market Operations. RBI buying or selling government securities. Buying adds liquidity; selling removes it.

OMSS

Open Market Sale Scheme. FCI sells grain from its stocks in the open market to ease prices.

Open unemployment

Able-bodied people willing to work but with no job at all.

OPHI

Oxford Poverty and Human Development Initiative. Research centre that co-publishes the global MPI with UNDP.

Opportunity cost

Value of the next best alternative given up when a choice is made.

Options

Contract giving the buyer a right, not an obligation, to buy or sell; the buyer pays a premium.

Organised sector

Formal sector registered with the government and covered by labour laws; workers get regular wages and social security.

Outcome budgeting

Shows the outcomes expected from each scheme; presented from 2005-06.

P-Notes

Participatory Notes. Issued by registered FPIs to overseas investors not directly registered with SEBI.

PACS

Primary Agricultural Credit Society. Village-level cooperative credit society at the base of the rural cooperative credit structure.

Palma ratio

Income share of the top 10% divided by that of the bottom 40%.

Paramparagat Krishi Vikas Yojana

2015 scheme promoting organic farming in clusters.

Payments Bank

Bank that accepts deposits (limit Rs 2 lakh per customer) and offers payment services but cannot lend. First: Airtel Payments Bank (2016).

PCA

Prompt Corrective Action. RBI restrictions on weak banks, triggered by low capital, high NPAs or poor profitability.

PCR

See Provision Coverage Ratio.

Peace clause

Interim 2013 Bali decision that protects food stockholding programmes from legal challenge until a permanent solution.

People's Plan

1945 plan by M. N. Roy based on socialist ideas and priority to agriculture.

Per capita income

National income divided by population.

Performance budgeting

Links money allotted to the work and results expected.

PFRDA

Pension Fund Regulatory and Development Authority. Regulator of the pension sector, including the National Pension System.

Phillips curve

Short-run trade-off between inflation and unemployment (A. W. Phillips, 1958); vertical in the long run.

Plan holiday

1966-69, when three Annual Plans were followed after the failure of the 3rd Plan.

Planning

Deliberate use of state power to set economic goals, estimate resources and decide how to use them over a fixed period.

Planning Commission

Body set up in March 1950 by a government resolution (neither constitutional nor statutory) to prepare Five Year Plans. Replaced by NITI Aayog on 1 January 2015.

PLFS

Periodic Labour Force Survey. NSO survey launched in April 2017; method changed from January 2025; monthly bulletins since April 2025; covers persons aged 15 and above.

PLI

Production Linked Incentive. 2020 incentive schemes paying manufacturers on extra sales to boost output, exports and jobs; 14 sectors; outlay about Rs 1.97 lakh crore.

Plurilateral agreement

Agreement among a subset of WTO members; India opposes bringing such deals into the WTO without consensus.

PM GatiShakti

Launched 13 October 2021; digital master plan bringing many ministries together for multimodal connectivity.

PM Kisan SAMPADA Yojana

Scheme to build cold chains and processing units to cut post-harvest losses.

PM Mudra Yojana

2015 scheme giving collateral-free loans to micro enterprises in three stages: Shishu, Kishore and Tarun.

PM Ujjwala Yojana

2016 scheme giving free LPG connections to women from poor households.

PM-DDKY

Pradhan Mantri Dhan-Dhaanya Krishi Yojana. Launched 11 October 2025; aims to lift 100 low-productivity districts, bringing together 36 existing schemes.

PM-JAY

Ayushman Bharat Pradhan Mantri Jan Arogya Yojana. 2018 health cover of up to Rs 5 lakh per family per year.

PM-KISAN

2019 income support of Rs 6,000 a year in three instalments to farmer families; fully funded by the Centre.

PM-VBRY

Pradhan Mantri Viksit Bharat Rozgar Yojana (ELI scheme). Effective 1 August 2025: first-time employees registered with EPFO get one month's EPF wage up to Rs 15,000; employers get up to Rs 3,000 a month per additional employee.

PMAY

Pradhan Mantri Awas Yojana. 2015 housing for all scheme in urban (PMAY-U) and rural (PMAY-G) areas.

PMFBY

Pradhan Mantri Fasal Bima Yojana. 2016 crop insurance scheme; premium 2% (kharif), 1.5% (rabi) and 5% (commercial and horticultural crops).

PMGKAY

Pradhan Mantri Garib Kalyan Anna Yojana. Free foodgrain to NFSA beneficiaries; extended for five years from January 2024.

PMJDY

Pradhan Mantri Jan Dhan Yojana. 2014 financial inclusion scheme: zero-balance accounts, RuPay card, accident insurance and overdraft facility.

PMKSY

Pradhan Mantri Krishi Sinchayee Yojana. 2015 irrigation scheme: "Har Khet Ko Pani" and "Per Drop More Crop" (micro-irrigation).

PMKVY

Pradhan Mantri Kaushal Vikas Yojana. Flagship skill training scheme of the Skill India Mission.

PMMSY

Pradhan Mantri Matsya Sampada Yojana. 2020 scheme supporting fish production, cold chains and fishers' welfare.

Poverty

Condition of being unable to meet basic needs such as food, clothing, shelter, health and education.

Poverty gap

Average distance by which the poor fall below the poverty line.

Poverty line

Minimum consumption expenditure needed to meet basic needs.

PPF

Production Possibility Frontier. Curve showing the maximum combinations of two goods an economy can produce; points inside show unused resources; growth shifts it outward.

PPI

Producer Price Index. Measures prices received by producers; launched in 2026 alongside the new WPI (output, input and service PPIs).

PPP

Purchasing Power Parity. Exchange rate that equalises the price of a basket of goods across countries.

Press Note 3 (2020)

Requires prior government approval for FDI from countries sharing a land border with India (or with beneficial owners there); eased for minority investments by Press Note 2 (March 2026).

Price ceiling

Maximum price set below equilibrium; creates a shortage.

Price floor

Minimum price set above equilibrium (like MSP); creates a surplus.

Price Stabilisation Fund

2014-15 fund used to buy pulses and onions in bulk to stabilise prices.

Primary deficit

Fiscal deficit minus interest payments.

Primary income

Compensation of employees plus interest, dividends and profits earned from abroad.

Primary market

Market where new securities are issued to raise money.

Primary sector

Extracts natural resources and raw produce: farming, fishing, mining and forestry.

Primary surplus

Situation where the government's current spending is covered even before interest payments.

Priority sector lending (PSL)

Domestic banks must lend 40% of their credit to priority sectors, including agriculture (18%) and weaker sections (12%).

Private good

Good that is rival and excludable, such as bread or a car.

Private placement

Shares or bonds sold directly to a small group of selected investors.

Progressive tax

Tax rate rises as income rises.

Proportional tax

Same tax rate for everyone.

Provision Coverage Ratio (PCR)

Share of NPAs covered by provisions.

PSH

Public Stockholding for food security. India's grain procurement at MSP; WTO measures it against 1986-88 reference prices; India wants a permanent solution.

PSL

See Priority sector lending.

PTA

Preferential Trade Area. Lower tariffs on selected goods among members; example: APTA.

Public Account of India

Fund for money held by the government as a trustee, such as provident funds and small savings (Article 266(2)).

Public good

Good that is non-rival and non-excludable, such as national defence and street lights.

Put option

Right to sell an asset at a fixed price.

QIP

Qualified Institutional Placement. Listed company raises money quickly from institutional buyers.

Quad

Strategic grouping of India, the US, Japan and Australia.

Quantity theory of money

MV = PT: more money in the system tends to push prices up.

Quaternary sector

Knowledge-based activities such as research, IT and education.

Quinary sector

Top-level decision making in government and corporations.

Rabi

Crops sown October to December and harvested March to April: wheat, barley, gram, mustard.

Rangarajan Committee

2014 committee: higher lines of about Rs 972 (rural) and Rs 1,407 (urban); poverty 29.5% in 2011-12; not adopted.

Rate corridor

Band of rates around the repo rate: SDF < Repo < MSF.

RBI

Reserve Bank of India. Central bank, set up on 1 April 1935 under the RBI Act, 1934; nationalised on 1 January 1949; headquartered in Mumbai.

RBI Integrated Ombudsman Scheme

2021 scheme giving customers a single place to make banking complaints.

RBI Retail Direct

2021 scheme letting small investors buy government securities directly.

RCEP

Regional Comprehensive Economic Partnership. Asia-Pacific trade bloc in force from 1 January 2022; India withdrew in November 2019.

Real GDP

GDP measured at base-year prices; shows true output growth.

Real interest rate

Nominal interest rate minus inflation rate.

REER

Real Effective Exchange Rate. NEER adjusted for inflation differences; a rising REER means the rupee is overvalued and exports less competitive.

Reflation

Deliberate policy to raise prices after deflation.

Regressive tax

Burden is heavier on lower incomes.

Relative poverty

Having much less than others in the same society.

Remittances

Money sent home by workers abroad; India is among the world's largest recipients.

Repo rate

Rate at which the RBI lends short-term funds to banks against government securities; the main policy rate.

Report on Currency and Finance

RBI's annual theme-based study on a major economic issue.

Retrospective tax

2012 law taxing past transactions; withdrawn in 2021 to restore investor confidence.

Revaluation

Deliberate official increase in a currency's value in a fixed system.

Revenue deficit

Revenue expenditure minus revenue receipts; shows the government borrows even for running costs.

Revenue expenditure

Day-to-day running costs: salaries, subsidies, interest and pensions.

Revenue receipts

Receipts that do not create a liability or reduce assets: tax revenue and non-tax revenue.

Reverse repo rate

Rate at which the RBI borrows from banks; lower than the repo rate.

Rights issue

New shares offered to existing shareholders first, in proportion to what they hold.

Rival good

A good that one person's use reduces the amount available to others.

RoDTEP

Remission of Duties and Taxes on Exported Products. Refunds embedded taxes on exports that are not otherwise returned.

Rolling plan

Plan revised every year with targets extended forward; introduced by the Janata government (1978-80).

Round-tripping

Indian money going out and returning as foreign investment to gain tax or other benefits.

RRB

Regional Rural Bank. Bank set up in 1975 (RRB Act, 1976) for rural areas; owned 50% Centre, 15% State and 35% sponsor bank.

RTGS

Real Time Gross Settlement. Real-time settlement for large payments; minimum Rs 2 lakh.

RTP

Reserve Tranche Position. India's quota deposit at the IMF that it can draw on without conditions.

Rules of origin

Rules deciding whether a good was made in a member country and so qualifies for tariff benefits.

S&DT

Special and Differential Treatment. Extra flexibility and longer time for developing and least developed countries.

SAARC

South Asian Association for Regional Cooperation. Founded 1985; eight members; secretariat in Kathmandu; largely inactive since 2016.

Safeguard duty

Temporary duty to protect domestic industry from a sudden surge of imports.

SAFTA

South Asian Free Trade Area. In force from 1 January 2006.

Sagarmala

2015 programme for port-led development.

SARFAESI Act

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Lets banks take over and sell a defaulter's security without going to court; does not apply to agricultural land.

Sarvodaya Plan

1950 plan by Jayaprakash Narayan, inspired by Gandhi and Vinoba Bhave.

SAT

Securities Appellate Tribunal. Hears appeals against SEBI orders; further appeal lies to the Supreme Court.

Scheduled bank

Bank listed in the Second Schedule of the RBI Act, 1934; others are non-scheduled banks.

SCO

Shanghai Cooperation Organisation. Formed 2001; India became a full member in 2017.

SDF

Standing Deposit Facility. Introduced in 2022; lets banks park surplus funds with the RBI without collateral; sets the lower end of the rate corridor.

SDL

State Development Loan. Bond issued by a State government.

SDR

Special Drawing Rights. International reserve asset created by the IMF; valued by a basket of US dollar, euro, Chinese yuan, Japanese yen and British pound.

SDR

Sustainable Development Report. SDSN ranking on the 17 SDGs; India 94th of 167 in 2026. (Not Special Drawing Rights.)

Seasonal unemployment

Work available only in certain seasons, as in farming and tourism.

SEBI

Securities and Exchange Board of India. Regulator of the securities market; set up in 1988, statutory since the SEBI Act, 1992; appeals go to SAT.

Secondary income

Transfers such as remittances.

Secondary market

Market where existing securities are traded, such as stock exchanges.

Secondary sector

Turns raw materials into finished goods: manufacturing, construction and power.

Selective credit control

Limits on credit for specific sectors or commodities.

Sensex

BSE index of 30 companies, started in 1986 with base 1978-79 = 100.

Service tax

Tax on services introduced in 1994; subsumed in GST.

SEZ

Special Economic Zone. Zone with tax and duty benefits to promote exports; governed by the SEZ Act, 2005. Asia's first EPZ was at Kandla (1965).

SFB

See Small Finance Bank.

SGB

See Sovereign Gold Bond.

SGST

State Goods and Services Tax. State GST on supply within a State (UTGST in Union Territories).

Shortage

Situation where demand exceeds supply at the going price.

Shrinkflation

Pack size is reduced while the price stays the same.

Silver Revolution

Growth in poultry and eggs.

SIP

Systematic Investment Plan. Investing a fixed amount at regular intervals.

Skewflation

Prices of only some commodities rise sharply while others stay stable.

Skill India Mission

Launched 15 July 2015 (World Youth Skills Day) with the PMKVY as its flagship scheme.

SLR

Statutory Liquidity Ratio. Share of NDTL that banks must keep with themselves in cash, gold or government securities. It cannot exceed 40% under the Banking Regulation Act.

Small Finance Bank (SFB)

Bank serving small borrowers and unserved groups; at least 75% of credit must go to the priority sector.

Socialism

System where the state owns or controls the main resources, aiming at equality and welfare.

SOFI

State of Food Security and Nutrition in the World. FAO-led annual report on hunger and nutrition.

Soil Health Card

2015 card giving farmers the nutrient status of their soil and fertiliser advice.

Sovereign Gold Bond (SGB)

2015 scheme letting investors hold gold in paper form and earn interest.

Spaghetti bowl effect

Confusion from overlapping trade agreements with different rules; term linked to Jagdish Bhagwati.

Special Rupee Vostro Account

From July 2022, accounts through which trade can be invoiced and settled in rupees.

Speculation

Betting on price movements to make profit.

SPS and TBT

Sanitary and Phytosanitary / Technical Barriers to Trade. Agreements on food safety, animal and plant health, and technical standards.

SRAS

Short-Run Aggregate Supply. Aggregate supply curve in the short run, shifted by input costs.

SSM

Special Safeguard Mechanism. Proposed tool for developing countries to raise tariffs temporarily if imports surge or prices fall.

Stagflation

High inflation together with high unemployment and slow growth.

Stand-Up India

2016 scheme of bank loans for women and SC/ST entrepreneurs to start new businesses.

Start-up India

2016 initiative offering tax benefits, funding support and easier rules to new firms.

Strategic disinvestment

Sale that transfers management control, as with Air India (to Tata Group, January 2022).

Structural inflation

Caused by supply bottlenecks and poor storage, transport or marketing, especially for food.