ECONOMY by VIVEK SINGH

2023-10-09 14:47:09 Economy Module for UPSC CSE 2024/25 by Vivek Singh will be starting from 17th October 2023.

Course available in both offline and online mode.

Offline course enrollment link: https://bit.ly/3Q4Nlfr

Online course enrollment link: Online Link: https://bit.ly/3RR11vT

For more details, Please visit our Unacademy IAS Centre: Plot 3-B, Third Floor, Pusa Rd, Block B, Karol Bagh, New Delhi, Delhi 110005 Open / Comment

2023-10-05 13:08:36 S Chand has started Publishing and Distributing my Indian Economy 7th edition Book. The book is available all across India in bookstores and online. This book is for UPSC 2024 and other State PSC exams Open / Comment

2023-10-05 07:09:11 Term of the Day: Provisioning

When a bank gives loan, then it needs to keep in reserves certain funds (which it can’t lend) for the safety of the depositors. This is called provisioning against loan and is expressed as a percentage of loan given. For normal/standard loans the provisioning requirement may be very less but for loans which have turned NPAs, the provisioning requirement may be very high. If RBI says provisioning is 1% that means if a bank gives loan of Rs. 100 then it needs to keep Rs. 1 in a separate reserve fund which it cant lend.

Today there is a news in Indian Express regarding changing the framework on how Provisioning will be calculated. 'Expected Loss of Credit approach' from the current practise 'Incurred Loss approach'. These are operational things and not relevant for your exam. Open / Comment

2023-10-04 12:02:20 No relevant Economy news these days. Open / Comment

2023-09-30 08:00:12 A Financial Lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time. Basically, the lessor takes the asset on behalf of the lessee and gets compensated by the rental payments that are paid by the lessee during the days of the lease. The ownership of the asset is with the lessor, but the lessee gets exclusive right to use the asset in the way desired. For accounting purposes, the lease provides the lessee with economic characters of ownership of the asset.

Lessor = Leasing Company = Finance Company = HSBC Unit registered in IFSC which is a deemed foreign entity
Lessee = Air India Fleet Services Ltd.
Asset = Airbus A350-900 aircraft

How a Finance Lease Works?
A finance lease is essentially a commercial rental agreement where the following steps take place:

First: Lessee selects an asset that they require for a business.

Second: Lessor, generally a finance company, purchases the asset.

Third: The lessor and lessee enter into a legal Agreement in which the lessee gets the right to use asset during the agreed upon lease.

Fourth: The lessee makes regular payments for the use of the asset.

Fifth: The lessor recovers the cost of the asset plus interest.

And lastly at the end of the lease agreement, the lessee has the option to acquire ownership of the asset.

Financial Lease is a kind of debt instrument and comes under External Commercial Borrowing (ECB). So, basically Air India Fleet Services Ltd. has taken ECB from HSBC Unit registered in IFSC which is a deemed foreign entity Open / Comment

2023-09-30 07:34:41 Source: Indian Express Open / Comment

2023-09-28 07:03:16 Source: The Hindu
Govt. of India would be for the first time issuing G-Secs with 50 year maturity. Till now maximum maturity period was 40 years. There is a demand of such bonds (50 year maturity) from Insurance firms, provident funds which park their long term funds in such bonds for their asset liability management. For example, an insurance firm receiving insurance premiums today may be required to align proceeds from invested assets (long term G-Secs) with the future policy claims they are contractually obligated to pay. Open / Comment

2023-09-27 06:38:06 Angel Tax:
https://t.me/VivekSingh_Economy/4103

As per todays news, Govt. has changed some rules for non-resident investors. No need to go in detail, just understand the basics of 'Angel Tax' from the above link.


Tax Collected at Source (TCS)
https://t.me/VivekSingh_Economy/4111

As per todays news, If we are spending money abroad (under Liberalized Remittance Scheme) on overseas travel packages which include medial, education, family maintenance etc. then TCS will be applicable. Banks and Credit Card Networks are now ready to implement TCS from 1st October. Jut get the TCS basics from the above link, no need to go in detail. Open / Comment

2023-09-25 06:03:22 Surety Bonds Open / Comment

2023-09-24 06:41:57 Global Debt includes the borrowings of Government, Institutions/businesses and Individuals.

Global Debt has increased to 336% of GDP and in absolute terms its rising. But it may not be a concern as every year the Global GDP is increasing and hence the Global Money Supply. Money supply gets created/increased through savings and then lending (debt) by banks using the concept of 'fractional reserve banking'. So as such its not a concern.

If Govt.'s debt has risen too much then it may default or it can 'Inflate away the Debt'. It means that letting inflation to increase (by borrowing more money from Central Banks) which will result in the drop in real value of money. [Inflation benefits Debtors]. The amount of money that the Govt. has to repay will have less value in real terms due to rising inflation and Govt.'s revenue (taxes and others) are in nominal terms. Open / Comment