GDP (Gross Domestic Product) is the total monetary value of all goods and services produced within a country's borders in a specific time period (usually one year). It is the primary indicator of a nation's economic performance.
GDP = C + I + G + (X − M) where C=Consumption, I=Investment, G=Government spending, X=Exports, M=Imports.

Inflation is the sustained rise in the general price level of goods and services in an economy over a period of time, resulting in a decrease in the purchasing power of money. Measured by CPI (Consumer Price Index) and WPI (Wholesale Price Index). Causes: demand-pull, cost-push, monetary expansion.

The Green Revolution (1960s-70s) refers to the transformation of agriculture through use of high-yielding variety (HYV) seeds, chemical fertilizers, irrigation, and pesticides. In India it was led by Dr. M.S. Swaminathan and Norman Borlaug. Wheat production in Punjab/Haryana increased dramatically. Made India self-sufficient in food grains.

The Human Development Index (HDI) is a composite measure of human development published annually by UNDP. It measures three dimensions: (1) Health – life expectancy at birth; (2) Education – mean years and expected years of schooling; (3) Standard of living – GNI per capita (PPP). HDI ranges from 0 to 1. India's HDI rank: 134 (2023).

India adopted Five Year Plans (1951–2017) for planned economic development, modelled on Soviet Union. Planning Commission (now NITI Aayog) formulated plans.

• 1st Plan (1951–56): Agriculture, irrigation, power. Balanced approach.
• 2nd Plan (1956–61): Mahalanobis model; heavy industry focus.
• 3rd Plan (1961–66): Failed due to wars (1962, 1965) and drought.
• Plan Holidays (1966–69).
• 4th–6th Plans: Poverty alleviation, Garibi Hatao (Indira Gandhi).
• 8th Plan (1992–97): LPG reforms – Liberalization, Privatization, Globalization.
• 12th Plan (2012–17): "Faster, Sustainable and More Inclusive Growth".

Replaced by NITI Aayog in 2015; 3-year Action Plan, 7-year Strategy, 15-year Vision.

The Balance of Payments (BoP) is a systematic record of all economic transactions between residents of a country and the rest of the world during a period.

Components:

• Current Account: Trade in goods (visible), services (invisible), income, transfers.
• Capital Account: FDI, FII, loans, banking capital flows.
• Financial Account: Reserve changes, monetary gold.

BoP surplus: more inflows; BoP deficit: more outflows → pressure on exchange rate.

• Poverty line: Tendulkar Committee (2009) – ₹816/month rural, ₹1000/month urban. Rangarajan Committee (2014): ₹972 rural, ₹1407 urban.
• India's poverty rate: Declined from ~50% (1990) to ~10% (2021-22 NFHS data).
• Causes: Low income, unemployment, lack of education, health issues, caste discrimination.
• Government measures: MGNREGS, PM-KISAN, PMAY (housing), PDS (food), Ayushman Bharat (health), Jan Dhan Yojana.

• Agriculture contributes ~17-18% to GDP (2023) and employs ~45% of workforce.
• Major crops: Kharif (rice, maize, cotton, soybean), Rabi (wheat, mustard, gram).
• Challenges: Small land holdings, monsoon dependence, low mechanization, soil degradation.
• Reforms: MSP (Minimum Support Price), e-NAM (online market), PM-KISAN (₹6000/year direct transfer), Soil Health Card, PM Fasal Bima Yojana.

In 1991, India faced a severe BOP crisis – forex reserves fell to just 2 weeks of imports. PM Narasimha Rao and FM Dr. Manmohan Singh introduced LPG Reforms:

Liberalization:

• Abolished industrial licensing (License Raj).
• Reduced import duties, opened trade.
• Abolished MRTP Act restrictions.

Privatization:

• Disinvestment of PSUs (public sector undertakings).
• Private sector entry in telecom, aviation, banking.

Globalization:

• FDI allowed in multiple sectors.
• India joined WTO (1995).
• Rupee made convertible on current account.

Impact:

• GDP growth from 1.1% (1991) to 8-9% (2000s).
• IT/BPO sector boom.
• Forex reserves increased massively.
• Criticism: widened inequality, farmer distress.

Role of Banking in India:

• Mobilizing savings: Banks collect deposits and make credit available.
• Credit creation: Through fractional reserve banking.
• Priority sector lending: RBI mandates 40% of ANBC to agriculture, MSMEs, education, housing.
• Financial inclusion: Jan Dhan Yojana – 50 crore+ accounts opened.
• Monetary policy transmission: RBI uses repo rate to control inflation and growth.
• Government securities: Banks fund government deficit through G-sec purchases.

Structure:

• RBI (central bank) → Scheduled Commercial Banks (SBI, HDFC, ICICI) → RRBs → Co-operative Banks → NBFCs.