see the screen. All right. Perfect. Thank you so much. All right. Perfect. Is the screen still visible? Oh, my screen went away. Okay. It's all done. It's going to be back in the moment. Yeah. So here we go. Should be visible now. So we'll start. I'll just give you an idea, overview of what we intend to do in the session today. All right. So the plan for the session is we have taken 30 questions to discuss the current events in economics. But I'm sure that all of you guys know that it is not possible to discuss the entire economics current affairs for the year 2022-23 within these 30 questions. It's not possible to have just a single session to cover this as well. So if your expectation is that you have not studied current affairs throughout the year, and this session is going to help you get the current affairs that you require for the exam, unfortunately, that is not going to happen. So there are some key analysis with respect to current events, which is not any information that is available. So I have taken about 15 odd questions, which are like that. So the current affairs, which are not something that you will directly see in the news, but we have to interpret out of various information that is there. So a lot of times the question that comes is, where do we get the data from? So database questions is what is going to be the focus of what we have. Plus there are a couple of, or a few concepts, not a couple of a few concepts, which I have taken up, which there is some relevance to current events. So concepts related to that are included, plus some other often repeated area or something that to my understanding, it is something that has been prominent in the news. Also sometimes, which is confusing in nature to similar kind of things, which creates confusion. So the mechanism that I adopted is most of you guys have my contact information, the telegram ID that is there or my email ID. So if you have been a student of mine, you have that with you. So you guys text me saying, I don't understand the difference between this particular term and this particular term. So based on various questions that have come up. So I have done an analysis of what is a little hard to differentiate between and if there is some relevance of that sort, that is also a logic which I have used. So this is a series of sessions that we have had. You already we are done with a few subjects, but you would have already noticed that no two subjects are actually done in a similar way. It is very individually designed according to the subject and the faculty who is speaking the particular subject. So that is how this session is also going to be. It is going to be a very, very specific area or a set of specific areas that I have picked up. So we have, as I told you, 30 questions. So each question I will display it on the screen, then I will give you a timeline of about 45 seconds. I want you to give me an answer. You can just send the answer to the host, panelists, whatever it is. I will be able to take a look at the answer as well simultaneously as and when you send. And then we will discuss what is the answer, what is the explanation, what is any associated logic that is concerned with it. In addition to that, if you happen to have any doubt with respect to a particular concept, if it is directly related, you can ask me there. I will give you an answer to that as well with respect to explaining the concept itself, I can do that. If it is something completely unrelated to this, I can take it up at the end of the session. So after we finish 30 questions, maybe we will dedicate the last 15 minutes or so to answering areas that I have not taken up, especially concepts, more than current affairs, concepts. If there is anything. So this is the plan that I have. Shall we start with the first question? I am just checking if you are able to answer me the question and answering is working properly. So just to know that shall we start? So that is the question that I am starting with. Okay. So yes, yes, yes, yes. Good. Getting answers properly, which is perfect. Okay. All right. So we will start with the first question then. There is a timer which will run on the top. Okay. So first question. You can see a timer running on the top. Once it runs out, it will stop. You have to send me the answer A, B, C, D. Choose the right one, send it across to me. Okay. So sorry. I didn't realize that we ran out of time. Happens. It takes a little bit of time for me to get used to this as well. All right. So I have a series of answers. So I have people who have answered A, I have people who have answered B, I have people who have answered C, I have people who have answered D. If I were to just glance through and look at what is the most common answer, the most common answer seems to be A. Okay. So this is a question which you can very generically answer. Okay. At least one of the statements. So I am going into the explanation part now. So look at the statement. The tertiary, which of the following statements about the trends in sectoral classification of the Indian economy is or are correct. So trend is what the question is about. It's not one year's current affairs, but it's affairs of the over the last decade because the question itself is over the last decade. Okay. So look at the first statement there. The tertiary sector has been contributing around half of India's GBA consistently over the last decade. If you have been in my class towards the end of the first chapter, we do an analysis of the sectoral classification of the economy. How much does primary sector contribute? How much does secondary and how much does tertiary contribute? So this is a question with respect to the generic trend. Okay. And we have seen in class that roughly 50 percentage of India's GDP or GBA is contributed by the service sector. So the remaining 50 percentage is distributed between your primary sector. In fact, 55 percentage is roughly is what we say with respect to the service sector. The remaining 45 is distributed between your secondary sector, which contributes about 25 and the primary sector, which contributes about 20 roughly is what we say. But the question is this, is that data applicable across the last 10 years? And they are not very specific in the first statement and they are not saying that the tertiary sector has been contributing more than half or anything around half. So 49 percentage is also around half, 47 percentage is also around half, 55 percentage is also around half. So 45 to 55 is arranged that is acceptable for the definition of around half. Okay. So that is the first statement. Okay. The second statement is this is the tricky statement. Primary sector is the only sector which has recorded consistent positive growth rate of GBA over the last decade, which means that every single year over the last 10 years, the rate of growth should have been greater than zero in the sense the rate of growth should have been positive. And this becomes tricky. See, in under other circumstances, it would not be tricky. But with a year of COVID in between where the Indian economy itself went into negative. There was a recession, there was a contraction of GDP, there was a negative GDP growth rate. How realistic is it to imagine that primary sector recorded positive growth? Okay. Now the answer to that you can also apply a little bit of logic. When there is a lockdown, you can shut down an industry. When there is a lockdown, you can shut down an IT firm, you can shut down all other tertiary sectors. But when there is a lockdown, can you shut down the firm? Can you say that okay, the firm sector is going to be shut down? Are you going to tell nature that okay, don't grow because we are shutting down? That's not likely to happen. So one of the bright spots during the COVID itself among the various sectors was that primary sector continued to grow well. In fact, primary sector's contribution, which is usually around 70% of the GDP grew to around 20% of the GDP during COVID because of a drop in the other sectors. Which means primary continued to do well with respect to the nation's GDP. So the second statement is the DIC statement. The second statement is correct. The first statement is also correct. The answer here is see both one and two. Now let's look at the data which substantiates. So this is the data which substantiates. So this is, as you know, I have shown this in class as well. This is the Press Information Bureau where the National Statistics Organization or National Statistics Office, they publish their data. Okay, when I say this, I don't think you are able to see the screen that I'm sharing. You're still seeing the, okay, data is not as great. So I'll have to, in that case, go to PPT, I think. So now I think it should be visible or maybe not. All right, just hold on for a moment. I'll close this. Yeah, I know in IRL, I will share it now. Okay, now it's visible. So this is the usual document that I share in class with respect to Press Information Bureau, their data on the MSPs data on national income accounting. So they have given an introduction. This is quite an elaborate note. This particular note, if possible, I would suggest you to download this and keep it because it's a very unique kind of a document, not like the usual documents that we see previously because the information inside it is very, very limited. The second advanced estimate that was given, the document published on 28th February, 2023, comparatively recent. So this particular document is quite long and has a lot of information that we require. But let's focus on the question at hand right now and let's try to answer that first. So I'm scrolling down, I'm scrolling down all the usual information is done. Now we go to this data. Look at the data, it starts from 2011-12 and it has data order 2021-22. It hasn't added the rate because it is the first revised estimate. Now the question is this, just take a look at the data. One is sector-wise GVA current prices, sector-wise GVA growth rate is what is given. So what matters for us is the first, this in percentage, this is what we are going to look at, not the growth rate because if you just remember the question that was asked, the question was, so the question was tertiary sector has been contributing around half of India's GVA. So it's not the rate of growth, it is the contribution of that particular sector which we focused on. So just going to take a look at the data that we have over here. Tertiary sector 2011, so this is the first one. So 49% H, 50% H, 50.6, 51.8, 52.3, 52.6, 52.5, 53.3, 54.8, 52.4 and 52.5. So this is the data with respect to tertiary sector which means that tertiary sector over the last decade has indeed been contributing around half of India's GVA, GDP. You can look at it either way, doesn't make much of a difference, only the taxation and the subsidies are the difference between them. Still the data will hold true whether it is given as GDP or GVA doesn't matter. The tertiary sector which is contributing around 30% H has actually reduced and brought it to around 25%. So roughly 25, 26% H every year it has been contributing, primary has been contributing roughly 20% H every year. So this is the data based on which we are going. This is the trend that we need to observe. This is the trend based quizzes, not just one year but across the years. So this is the source of the data. Once again, let me see if I probably share the screen itself so that, let's see if this works. It becomes easy for me to shuttle. So that is the answer to the first question. Do you guys have any queries with respect to this? There is a second question that comes, second part that comes in which I didn't address. I'm sorry about that. Primary sector is the only sector which has recorded consistent positive growth rate of GVA. So that is something that needs addressing as well. So the data necessary for that is over here. Again, the second set of columns that we have over here. The first one is the sector-wise share in GVA. But the second statement is with respect to growth in GVA. Now, when it comes to growth in GVA, take a look at it. Primary, secondary, tertiary, all of them are in positive. 2019, we had a recession or we had a sort of a slowdown in growth or reduction in growth in secondary. In 2021, we had a reduction in growth in both secondary as well as tertiary due to COVID. But if you look at the primary sector throughout from 2000, say, 12-13 to 2021-22, every year, you will find a positive sign. Whether it is 1.2% growth or whether it is 4.8% growth or whatever is the rate of growth, it has been a positive rate of growth that we have had for the last decade. So this is again the interpretation from the data just because there is a minus sign over here, it is something that you should be observing. Whenever you find something unique in a list of data, everything is positive, just 1 or 2 are negative. Everything is moving up, something alone is falling down, as you will see subsequently with respect to graphs. Those are worth noting. Service sector throughout it has been positive, but just one year alone, it is showing a negative. And that too, it has been very high positive. So 6, 7, 8% is what it is growing by and there is a drop to minus 4.2%. So this is of significance there. All right. So that is the second part of the statement. All right, great. So please show the document name again. So what I would suggest is I would just suggest you to type, press information bureau. So what I did is I will just show you the way I searched itself. Just search for GDPPIB, I have typed. And the second advance estimates in the PIB website, just click on that, you will get to this particular area. So this has all the information with respect to the data. You can find it in the MOSP website itself, but this is the easier way to access this data. All right. So there is a request that I should be sharing the PPT with respect to this. PPT is just the questions, none of this is PPT. I am just sharing the screen from my laptop. If you look at it, it's a browser that I'm sharing. Let's see. I'll try to share a PDF, I'll tag it somewhere and try to share it with you guys. PDF of the PPT that we have, but there is nothing in the PPT assets. I don't see. Don't assume that these are questions that are going to be asked as it is in the UPC exam. The questions are not the focus here. The information that we take out of is what is the focus over here. So don't get too attached to these questions and think that this is going to appear as it is. I don't have that level of knowledge to predict what is the UPC question going to be. Nowhere close to being close to making such cases. Anyway, moving to the second question, which is again a continuation, Indian economy trends. So we are starting the time or now looking for answers. Okay. So again, sorry, time ran out. I didn't realize. Anyway, so the overwhelming answer, I was looking at the answer. That's why I was not able to, I have the answer on the side in a different device. I'm looking at the chat box over there. So that's the reason why I keep losing track of the fact that time is run out. Anyway, so the overwhelming answer seems to be D one and two. There's one statement which you can reasonably eliminate. The third statement, which says for the first time in a decade, exports outperformed imports, which means exports is greater than imports. If that does happen, just know that it will be all over the news. There is no way that you will miss such a news. Have you seen a news like that? That exports outperformed imports don't have to, you don't even have to think, have I seen it in some remote corner? No, it will definitely be there as a big thing in the news if it happens. It hasn't happened. So you would not have seen it in the news. So third is wrong. Okay, the moment three is wrong, you eliminate C. Now, the question is, is it A? Is it B? Is it D? Which is why most people went for a D? Seems like the answer is actually A. The first statement, quite a few people have answered the correct one as well, have given me the correct answer as well. So once again, we go to the same document for the data that we require. So the data is in a different part of this document. So this is one year. It is not over a decade or anything. It is just one year's data. We will take a look at the current price date. So what is the question about? Now, if you know the aggregate demand formula, so I'm not able to zoom it any further for some reason. So I'm able to zoom out really, really small, but it is not zooming in, sadly. So again, the same data, if you want, you can access it in your device, but I can point it out to you. Let me just see if there is an option for me to zoom it from here. Yeah. So it's not very frequently that my technical skills work. Accidentally, it happened to work now. So good for me. So the question, once again, let's go back to the question. The question states household consumption expenditure contributes more than half of India's GDP. So the moment you see the word expenditure and in the context of GDP, you have to think in your mind expenditure method of calculating GDP, C plus I plus G plus X minus M. C is the household consumption expenditure. I is the investment expenditure and X minus M is what is the third statement about it. G is the only thing which we have not asked over here. So C plus I plus G plus X minus M. Look at the examples that we have used in class. The examples that we have used in class says in the example on the circular flow of income that we discussed in class, the first thing that I use is 60 percentage is household consumption expenditure. 30 percentage is investment expenditure. Then the remaining 10 percentage goes towards government and then we have exports and imports that come in and maybe I have mentioned, maybe I have not mentioned, but that is representative of what is the reality in the economy as well. Take a look at this data. This is the share in GDP, private final consumption expenditure as we see over here. I am not able to choose parts of it, but share in GDP, the column that is highlighted here, you will find a number 57.258.3, 58.5. That is what is C. The one next to it, government final consumption expenditure roughly 10, that is G, C plus G. Then the gross fixed capital formation plus change in stock plus valuables, which technically is referred to as gross capital formation or more commonly referred to as investment. It contributes roughly around 30, 35 percentage roughly because there is exports and imports also or 30 percentage is something that you can assume it as. You cannot expect a perfect 100 as such. It will eventually appear, but there are discrepancies as well. You will notice that exports are lesser, imports are greater. It has been the case as a percentage of GDP or in absolute terms also, you can take a look at the previous one, the table that is given above. But the question is with respect to percentages. This is the source of the information based on which the question is set. Going back to the question, household consumption expenditure contributes more than half of India's GDP. It contributes roughly around 60 percentage of India's GDP. And you don't need to know all of this. You can simply go by the common statements that here you hear India is a consumption oriented economy. You go back to the previous question, you hear India is a service sector oriented economy, tertiary sector contributes around half of India's GDP. Consistently over the decade or not is a different thing. That's a general statement that we know. This is also a general statement that we know. What is a general statement that we know? India is a consumption oriented economy. So more than half of India's GDP is contributed by household consumption, correct? Investment expenditure contributes less than a quarter. Less than a quarter means less than 25 percentage. That is not true. It contributes more than 30 percentage of India's GDP. So always try to remember data in round numbers, 50 percentage greater or lesser, 25 percentage greater than greater or lesser, one third, one fourth. Try to remember the data with respect to some.  Very hard to remember the 28 percentage because remember it as one fourth, greater than one fourth, around one fourth. Some way to remember it. So that is what you should be looking at doing. So the answer here is A, one only. Any queries? Let me know if I can proceed to the next one. Not seeing any response. So I think everyone is waiting for someone else to respond. Moving on then, I'll respond. Okay, so this is the next one. Time starts. We have run out of time for a change. I noticed it. Okay, so I think a lot of people have given me the correct answer. The correct answer here is A, one and two only. So it's good. It's you're familiar with this particular index. The reason why I pick this particular index is it's an index which extends from the first chapter about production, whether production is likely to happen or not. So it is a growth-oriented indicator or index that is there. Not something that we discuss in class. So I thought we'd pick it up so that we can get familiarize, we can familiarize ourselves with it. First question, who publishes it? There is not a standard one globally. There are, this is a global index but calculated regionally in every country. There are multiple organizations which are involved in it. There is an organization called as INS Market Tool. There is S&P Global. There are such different organizations. So in India's case, if I'm not wrong, it is INS Market Tool. So that is the organization that is involved. You also find S&P Global that is mentioned over there. So the first statement, let's take a look at it one by one. It is an indicator of business activity both in the manufacturing and service sectors. So there are three types of purchasing managers index which are actually published. There is a separate purchasing managers index published for the manufacturing sector, manufacturing PMI. There is a separate purchasing managers index published for the service sector, services PMI. And then through a mathematical combination, these two are brought together and a composite purchasing managers index for the entire production is also published, which means it is an indicator of business activity for both manufacturing as well as service sector. The question doesn't specifically say manufacturing PMI. It just gently says PMI. So the first statement is correct. The second statement, PMI is calculated based on sub indices such as new orders, output, employment, suppliers, delivery times, stocks of items purchased. These are some of the indices that are there because we have separate purchasing managers index for manufacturing and services and a composite one. We cannot say specifically these are the exact sub indices that are there. These are some of the sub indices which are used. It is correct. It is a very generic kind of statement. There is nothing obviously wrong about it. So you will have to naturally assume it to be right. Just giving you a logic there. So how exactly does this calculation work? Look at the name of the index. It says purchasing managers index, which means when the survey is conducted, they go to the purchasing managers in these organizations in various manufacturing and service sectors and they go and ask specific questions as to how much of new orders are they placing in the upcoming period. It's a monthly index published every month. So in the upcoming month, how many new orders are you placing? What is the target output that you have? How many people are you employing in the upcoming period? So all these are the information that is quantitatively gathered from the purchasing managers and they are also asked for their subjective opinion as to what they believe is going to be the situation in the next one month in their industry, not in the economy as such in their industry. So their opinion is also something that they provide. So all of this is brought together, weightages are provided for it and finally an index is released where if you get a score of 50, one month it's 50. Next month it is 50. It means that there is no growth or there is no contraction that is going to happen. If the number is greater than 50, it indicates an expansion in the business activity. If the number falls below 50, it is an indication of contraction. That is what is the error of the third statement. A figure of above 50 denotes a contraction in business activity. That's wrong. A figure above 50 denotes an expansion in the business activity. One below 50 indicates a contraction. 50 exactly as it is means that there is no expectation of change that is going to happen. So the answer is A 1 and 2, 1 and 2 only. So let's take a look at the next question. If you do have any questions immediately send it across. So I will take a look at it and address. Okay, great. Moving on. Time is running. Okay, time ran out. Sorry. Again, lost it. All right. Skipped. One person who said skipped. Okay, fair enough. At least you are honest with it. Nothing to lose but still no random guesses. That's good for preparation for your PC. Anyway, so the next five questions including this one, this one and the next four questions are going to be an analysis of the budget. So what are the trends that are observed in the budget? Decadal probably. Decadal is there plus yearly is also there. So this was in the news a lot. Last year also it was in the news. This year also it is in the news because the government has been proclaiming or not just proclaiming. They have made it very obvious that capital expenditure has been significantly increased in the budget, overall budget estimates that are provided. There is a significant increase in capital expenditure compared to previous periods. There is no doubt about it. But the question is only about what is the extent of the increase. Now, I personally don't expect a question or statement like the first one where it says 37% and all those things that is not the UPSC style of questioning. So they might replace it with say roughly one third or whatever is the number that the whatever is the way that they want to represent the data or they may not go for data itself. But this is something that you should be knowing because because look at this is the budget document. All I have done is there is a document called as budget at a glance. You are all familiar with the budget, the government's budget website, Indian budget. Just type Indian budget. You will go to this website. You can download this document called as budget at a glance. Look for the full document. There is a document called as budget at a glance full, complete document, about 26 pages. Just take a look at that. In the first page of the document itself, they have highlighted or the second page, they have highlighted this particular information. So what is the information that they are trying to convey? The total expenditure in the budget estimate for the upcoming year is estimated at 45 lakh crore of which total capital expenditure is 10 lakh crore. You have already got the answer to the second statement in this. Total expenditure is 45 lakh crore. Capital expenditure is 10 lakh crore. What is going to be the remaining 35 lakh crore? The remaining 35 lakh crore is going to be revenue expenditure because total expenditure is equal to revenue plus capital. Capital is only going to be 10, which means the remaining 35 is revenue. The second statement is capital expenditure is greater than revenue expenditure, clearly not true. Now let us look at the following part. Budget of the upcoming year reflects or in our case the present year reflects continuing strong commitment of the union government to boost economic growth by investing in infrastructure development, leading to an increase in capital expenditure of by 37.4 percentage over the revenue or sorry, revised estimates of 2020 to 23. Then they have mentioned something called as effective capital expenditure. I will explain what is effective capital expenditure to you. But this particular paragraph itself conveys to us what is the attempt at conveying the information that is to be conveyed over here. I will run through the budget document entirely after the five questions are over because if I scroll down, I have a feeling that maybe I will give you the answer to one upcoming question, one or two upcoming questions that are there. So I am refraining from doing that. We will take it question by question. So this is the data based on which this particular question is given. What is the difference between budget estimate and revised estimate? I will give you an answer to that as well. Just give me one moment. Let us get back to the question and then we will take it up. So the statement here is capital expenditure and budget estimate 2023-24 is roughly 37 percentage more than revised estimate. That is correct. CapEx in budget for the first time is greater than revenue expenditure, nowhere close. So 43 lakh crore of which 10 lakh crore or 45 lakh crore of which 10 lakh crore is capital, the remaining 35 is still revenue. Revenue still is a huge, huge, huge component of the overall expenditures. So second statement is wrong the first statement is correct. Again, when you have statements like for the first time it is greater, it should have been there prominently in the news. If you have read the news on the days after the publication of the budget or the announcement of presentation of the budget, you should have come across it if you have actively read the news. So the answer here is A1 only. Okay. Moving on to the next question, the fourth question. Time starts. All right. So time has run out. I am still getting varied kind of answers. There are two trickeries in this, two things to observe for in this. First thing to observe is arrange the above in the order of increasing value of deficits, which means the first deficit should be the least deficit. The last deficit should be the highest deficit. You can apply simple logic to eliminate a couple of options. What is the simple logic? Of all deficits, fiscal deficit is going to be the highest deficit without a doubt. Fiscal deficit means total money which the government will have to borrow. That is how much is the total shortfall for the government. That is the maximum deficit. Why do I say so? Because that is the deficit for the entire budget itself. When it comes to revenue deficit, that is budget only for, sorry, deficit only for one part of the budget, which logically has to be lesser than fiscal deficit. If you look at the formula for primary deficit itself, it says fiscal deficit minus interest payments, which means this primary deficit is going to be definitely lesser than fiscal deficit and effective revenue deficit is equal to revenue deficit minus grants for creation of capital assets, which means effective revenue deficit has to be lesser than revenue deficit. If this is the case, then fiscal deficit is going to be the highest value, which means in our options, that should be the last one. If that is the last one, option A is ruled out, option D is ruled out. So two options are ruled out right away. So these are certain logics that you have to know. So if you are going to choose between B and C then you do not have to worry about revenue deficit because in both B and C, 3, 1, 3, 1, that is the last two, which means the highest fiscal deficit, the second highest is revenue deficit. Now the question is, is primary deficit in second place or is primary deficit is the least deficit or is effective revenue deficit the least deficit? This is the only question that needs to be answered. This is not easy. This is not easy at all. Only if you know, you will be able to answer. Why do I say so? Because of the data that I am going to show right now to you, I am looking for this particular graph. So what does this graph say? This graph says the darker line, which is on top, that is the fiscal deficit. Clearly fiscal deficit is greater. Logically, it has to be greater. Fiscal deficit is a percentage of GDP. Fiscal deficit in absolute terms, it will not matter. It will still be the same because everything is a percentage of GDP, which means that in absolute terms also the pattern will hold true. Followed by it comes revenue deficit in the reverse order is what I am saying. If you notice carefully, till 2021-22, effective revenue deficit was in that reverse order in third place, which means the second highest deficit and primary deficit was the least deficit. Sorry, second lowest deficit was effective revenue deficit and primary deficit was the least deficit that our budget had that was there as per the budget. But you will notice that from 2021-22, there has been a change in trend and the green line has come down. Whatever is the other color that that line has actually gone up, which means that effective revenue deficit since 2021-22 is the least deficit that is there. The ideal value of effective revenue deficit is actually zero because look at the formula, effective revenue deficit is equal to revenue deficit minus grants used for asset creation. Ideal situation, the entire revenue deficit should be used for asset creation. It should be in the form of grants used for asset creation, which means if we have a revenue deficit, the entire money is used indirectly but productively. It becomes an effective capital expenditure. Now, in that case, it is a good trend to notice that effective revenue deficit is going down because effective revenue deficit should ideally be zero. When it comes to primary deficit, primary deficit is equal to fiscal deficit minus interest payments, which means if primary deficit is equal to zero, it is a bad situation to be in because when will it be zero when the fiscal deficit and interest payments are equal, which means every single money that is borrowed is being used for paying interest itself, which means primary deficit being zero is a bad situation to be in. So, in a way you can say in terms of arranging it in terms of logic, this is a better scenario that we are in. It is an observation of something which can be interpreted acoustically. You cannot say you cannot make such judgments just because there is a change in positioning, but I am trying to explain the logic that is associated. Okay? So, this is what you take away if you see a graph like this. Now, what is observable here? If let us say all the graphs throughout the journey has been in the way where fiscal is highest, revenue is next, effective revenue is next, primary is next, there is nothing to observe but in 2020-22, there has been a change in trend. It is worth observing, it is worth making a note. Okay? So, this is the concept that is there. Now comes another part which I told you earlier, I told you I will answer it. What has been the effective capital expenditure? So, there is this component called as which based on which your effective revenue deficit concept itself works. Effective revenue deficit is what? Revenue deficit minus grants used for asset creation. Similarly, effective capital expenditure is equal to capital expenditure plus grants used for asset creation because effectively those grants are being used as capital expenditure. Though not by the union government, the union government is ensuring that that fund is used for capital expenditure purposes. So, that is what is called as effective capital expenditure. We came across that earlier in the introduction when which I showed you in this paragraph towards the end, you will notice that this part, effective capital expenditure at 13,70,949 shows an increase of 30.1 percentage over the revenue expenditure. Okay? So, that 30 point more than 30.1, the point is the government is trying to convey a concept called as effective capital expenditure, you may come across that concept as well, effective capital expenditure. Okay? Moving on then, I still have an answer. One of the questions which was asked earlier about what is the difference between RE and BE, I will take it up after the series of questions on the budget is over. Okay? Because I don't want to show any question without intention. Yeah. So, I noticed that. I noticed your question earlier itself. Okay? So, once more about effective capital expenditure. Yes. Effective capital expenditure is nothing but capital expenditure plus grants for asset creation. If you remember the formula for effective revenue deficit, effective revenue deficit is equal to revenue deficit minus grants for asset creation. That same terminology because you are subtracting it from revenue expenditure, you need to add it somewhere. So, you are adding it as part of capital expenditure and the government is claiming it to be effective capital expenditure because that grant is used for asset creation. So, effective capital expenditure is that effective revenue deficit, effective capital expenditure. Okay? This year, all deficits are showing grants used for state assets. Mithilesh, it is not explicitly said that it is for state asset creation, but it is simply said grants used for asset creation. The government class visit that way. Effective capital, I will repeat, effective capital expenditure is equal to capital expenditure plus grants used for asset creation. Grants are usually part of revenue or grants are always part of revenue expenditure. There is no doubt about it, but there is a component of revenue expenditure which is indirectly resulting in asset creation and the central government is ensuring that asset is getting created as a result of those grants because it is a conditional expenditure. The central government gives it to the states and says you must use it for creating assets. Otherwise, we will take the money back from you, which means central government is ensuring that assets are getting created for the money that is being provided. All right? So, that is why it is called as effective capital expenditure. I repeat, effective capital expenditure is equal to capital expenditure, the usual capital expenditure plus grants provided for creating assets, grants for asset creation. Okay? Great. Moving on to the next question. Time starts. We are out of time. Let us take a look at the answers. Okay. Okay. The previous one, I think I did not give the answer. The previous one, the answer was B4231. Okay, 4231. Now, coming to this one. Okay. So, market borrowings contribute the most towards total borrowing. So, what are market borrowings? Borrowings of the government in the form of GSEC, in the form of T-bills, in the form of all everything else that conventionally that they borrow within India. So, that is market borrowing. Okay? So, what else is there other than market borrowing? The government borrows from RB in the form of Ways and Means Advances. The government borrows from your state governments in the form of treasury bills. Then the government borrows from, say, your small savings fund and all those things. Those are outside of market borrowings. Okay? Market borrowings contribute the most towards total borrowing. Without a doubt, you should be knowing that this is to be knowing this to be true. So, that is correct. Then external borrowing contribute more than one fourth of the total borrowings. We have discussed this in class that external borrowing is not a major contributor to India's borrowing. India's, no, advantage you could say with respect to borrowings is that most of our liabilities are internal in nature. So, the second statement is wrong. The first statement, one only is correct. So, let us take a look at the data to substantiate this. So, this is the data. Okay? Sources of financing fiscal deficit. So, what is meant by market borrowing? Market borrowing refers to look at the number two over here. Market borrowing, Vijay Shree, you can take a look at it now. This is what I am explaining the first point. The market borrowings is GSEC plus T-bills. GSEC plus T-bills. Okay? So, this is market borrowing. The total debt receipts in the budget estimates is this much. So, roughly 18 lakh crore, roughly 18 lakh crore. Of 18 lakh crore, 12 crore or 12.3 lakh crore is in the form of market borrowings, which is close to 70 percentage, close to, because assume it to be 18 lakh and 12 lakh. 12 lakh out of 18 lakh is two-third. So, two-third is 66.5 percentage. So, roughly 70 percentage of the total borrowing that the government does is in the form of market borrowings. Okay? In terms of borrowing, that is a major source. Look at external debt. It is not even in lakhs. It is 22,000 crore, which is actually roughly only 1 percentage, 1.2 percentage or something like that. So, that is all that the government is borrowing from external sources. What did the question say? The question said one-fourth. What did the question say? The question said external borrowings contribute more than one-fourth. More than one-fourth mean 25 percentage. This is nowhere close to 24 percentage. Only around 1 percentage that is the borrowing from external sources. So, this is the data to be observed. What else are the other sources? Securities against small savings. So, there is a lot of small savings that people deposit in post office funds and all those things. So, those are what are called as small savings. So, how does the government, how is interest provided on that? The government, so people put it in the small savings account. The government issues securities to them, to those organizations like post office and all those things and the government borrows money from there, not directly from the public, not from the market, but from the small savings organizations, post office deposits and all those things. That is the second biggest source of borrowing. Then you have other receipts, which is internal debt from other organizations, government owned organizations itself, any internal borrowing that comes in or borrowing from the public account of India. All of that contributes around 5,402,000. State profit and fund money is a very, very comparatively, again, a very small percentage less than the external debt. So, it's a very interesting question. When did my math skills improve? What can I say? A little bit of preparation probably helped. I'm still not sure my math skills have improved. So, you don't know how much of calculation goes on in my mind before I actually utter something. Thank you for that. Anyway, I think I'll have a sleepless night tonight because someone appreciated my math skills. Anyway, moving on. So, that is the source of this particular question that is the area from which we asked the question. So, one only is the correct answer. The second one is wrong. Moving on to the next question. I think two more questions from budget. They start. Time starts. All right. So, we ran out of time. Okay. So, what is the answer here? Net tax revenue accounts for less than half of the total receipts. Debt receipts account for around 40% of the total receipts. Which of the statements are correct? Let's take a look at the data. Okay. So, there are some round round things that you will see. This is rupee goes to this expenditure. This is the receipt part. So, rupee comes from, which means where is the money coming from? They have given a compilation over here. Data is not exactly the precise one that we want, but take a look at it. Corporation tax contributes 15% of the overall receipts of the government, including capital and revenue, both of them, because you will find borrowings also as a part of the same thing. Rupee comes from overall in the budget. So, this is revenue receipt plus capital receipt. So, corporation tax 15%. Income tax 15%. Roughly is what they are saying. Customs duty 4%. Union excess duty 7%. Goods and services tax 17%. Take a look at, add all of them up. 30, 34 plus 7. Okay. I think 41. Thank you. 41, 48, 58. So, roughly 60%. Thank you, Rajasthri Mohan. I was looking for someone to help me out with respect to the addition. But yeah, 58% is contributed by purely tax receipts. But please note, this is gross tax receipts, not the net tax receipts. The question is about net tax receipts. But even if it comes to net tax receipts, what is the difference between gross and net tax receipts? Out of the gross, some amount of money, although the center collects it, it has to give it to the state. It collects it on behalf of the state. I'm not talking about the devolution of funds, certain taxes like IGST, half of IGST belongs to the states. So, that part has to go towards the states. So, even when it comes to net tax revenue, it is still more than 50%. That is why the first statement is correct. When that happens, borrowings and liabilities become close to 40% because that is what the statement says. It does not, here it says borrowings and liabilities are 34%. And the statement says roughly account for 40% of the total receipts. So, just to take a look at that data, let's go to some numbers. So, here it is, of the total receipts of 45 lakh crore, which is given over here, 45 lakh crore. So, 23 lakh crore is in the form of net tax receipts, which is greater than 50%. 46 lakh, half of it is 23. So, 45 more than 23 is there, which means more than half is in the form of tax receipts. Borrowings and other liabilities are roughly 18 lakh crore, which is again around that roughly 40% mark. So, that is why the data given there is right. So, the reason why this data is important is because, look at it, 50% is contributed by tax revenue receipts, 40% is contributed by borrowing, DCR. Look at the components of receipts, there is tax revenue receipts, non-tax revenue receipts, non-debt capital receipts and debt capital receipts, where tax revenue receipts and DCR itself contributes 90% of the total receipts of the government, which means your non-tax revenue receipts and non-debt capital receipts are a very negligible part of the overall money that the government receives. Cumulatively, it accounts for only 10%, that is an important observation that tax and borrowing contributes 90% of the government's receipts. So, that is a very important cumulatively, roughly 90% of the receipts, more than 90% is actually. So, it shows the comparative insignificance of non-tax revenue receipts and non-debt capital receipts, comparative, I am not saying it is insignificant, but in the context of the other receipts, it loses its significance. So, that is the basis of the question that we had. The answer here is the first statement is wrong, the second statement is correct, B2 only is the answer. Moving to the next question, time starts, almost run out of time. So, we have run out of time. What is the answer? Let me take a look at the choices that have been given. It is a bit of a tricky question to guess. So, let me see if there is anyone who has given the correct answer, not initially, okay. So, there is Ignesh Babu, Rospin-Mignesh Babu, one person, what? Only one person has given the correct answer? Okay, fine. Finally, someone else too. So, the answer here is C, 2 and 3 are the correct statements. 2 and 3 C is the correct answer. So, let's again, okay, after I gave answer, I am getting an answer saying C, which is very interesting. I did not know you could do that. Okay, anyway, considering the following statements about the trends of tax receipts over the last decade based on the union budget of 2023-24, last decade based on the latest data, tax-to-GDP ratio has been consistently increasing. What is this concept of tax-to-GDP ratio? Are you familiar with the concept called as tax buoyancy? There is a term called as tax buoyancy, which is nothing but increase in the rate, increase in tax revenue, percentage increase in tax revenue as a proportion of percentage increase in GDP, tax revenue growth rate divided by GDP growth rate. So, that is what is called as tax buoyancy. In a system where taxation is buoyant, buoyant means floating, doing well. The tax revenue grows by a greater extent than the GDP itself grows. So, that is tax buoyancy. That is what is tax-to-GDP ratio. Let's take a look at the data. Okay, let's also take a look at the other two statements. Net tax receipts have been greater than indirect tax receipts during most years. It's a very generic statement during most years. And centers net tax revenue has been consistently increasing. So, two words to focus in the first statement, one or three words to focus in the first statement, tax-to-GDP ratio has been consistently increasing. So, there are two things that you could be asked in the exam. Over the last decade, tax-to-GDP ratio has increased. If they have simply said tax-to-GDP ratio has increased over the last decade, it means that 10 years ago versus today. If today, the value is greater than what was 10 years ago, then you can say it has increased over the decade. But it says consistently increasing, which means not only should it be greater now when compared to 10 years ago, every intervening year should have had an increase in trend. Every year, first year, second year should be greater, third year should be greater, fourth should be greater, 10 years should be greater than ninth year and so on. So, that is consistently increasing. In the third statement also, you will find consistently increasing. So, that's a very important information. Usually in UPC exams, when you come across the term consistently increasing, the likelihood of such a statement being correct is very, very low because something, an economic information being consistently high. The chances are very low, except if you are talking about absolute numbers. Absolute numbers are likely to increase because take governments borrowing. Fiscal deficit, although as a percentage of GDP, it may decrease from one year to another because the GDP is increasing, the actual amount borrowed itself is going to increase, is most likely going to increase, although fiscal deficit is a percentage of GDP may have decreased. So, if the question is about fiscal deficit as a percentage of GDP or growth rate or something like that, the chances of consistent increase are less. So, the first statement being correct is less likely, whereas the third statement is not about growth rate, it's not about percentage, it's an absolute value. Centres, net tax, revenue, amount of money has been consistently increasing. The chances of such a statement being correct are quite high and the next important word to focus is direct tax receipts have been greater than indirect tax receipts during most years. It means every single year over the last decade, it doesn't matter what has happened. More than five years over the decade, over the last decade, if it's greater than, direct tax is greater than indirect tax, that's good enough. Most means majority, more than half, that is all that is necessary. So, let's take a look at the data now. All right. So, before I answer this, there's a question about I have doubts regarding subject, how can I communicate? I couldn't contact the telegram. So, don't ask me these sort of questions during the session that is happening. Ask me at the end of it when I ask you, is there something else? Make a note of it and ask me later.  Even if I've read it, I forget it by the time we come back, because all the people are answering over here, a hundred answers per question. It means that your query will get lost. So, keep this aside and ask me this in the end when I ask you if you have any further questions. We'll find a way. I don't know what is the solution, but we'll find a solution. Okay. So, tax to GDP ratio. Let's crawl down. I think this is the last question from budget. So, I can freely show you the entire graph. Okay. This is deficit trends. I think it's on. No. I'm sorry. I will take a look at the data. Here it is. Okay. Trends and tax receipts. Okay. This is a percentage of GDP. This is what is called as tax to GDP ratio, because look at what is given over here. Tax receipts as a percentage of GDP. Tax to GDP ratio. How much is the tax to GDP ratio is given over here roughly around 10 percentage. Tax to GDP ratio. We know that already remember in the government expenditure part, you remember your consumption expenditure is, consumption expenditure is 60 percentage, investment expenditure is 30 percentage, 10 percentages in the form of government expenditure. So, if the government has to spend, they have to get money in the form of taxes. So, only through taxes they'll be able to spend. So, how much should be the taxes of percentage of GDP roughly around 10 percentage? That will hold to. But the question is, has it been increasing? Take a look at the red line. Is it a straight upward moving line? No. It is not a straight upward moving line. It is moving in all directions. 10.1, 10, 10.6, 11.2, 11.2, 10.9, 9.8, 10.3. It is moving all over the place. As a percentage, the likelihood of a consistent change is very, very low. Okay. So, the first statement is negated. First statement is wrong. What was the second statement? The second statement said direct tax receipts have been greater than indirect tax receipts during most years. Now, this data is not about the direct tax receipts itself. It's as a percentage of GDP. But because it's both as a percentage of GDP, we can take a look at this data itself and we can come in. I will show you the other data also. So, in, let's say 2013, 14, 5.6, 4.4 direct tax. The yellow one is the direct tax. Direct tax is greater. Next year, 5.2, 4.4, greater. 2015, 5.4, 5.2, greater. But 2016, 5.6, 5.5, which means indirect tax is greater than direct tax. There is one year where indirect tax is greater than direct tax. Then it comes back to normalcy, 2017, 18, 18, 19, 19, 20 is normal. 2021 again. Direct tax is 4.8, indirect tax is 5.5 percentage in terms of percentage of GDP, which is applicable throughout also. Then once again, normalcy is restored 2021-22, 6.4, 5.5, or 6.1, 6.1. But 8 out of 10 years, direct tax is greater than indirect tax. The statement says direct tax receipts have been greater than indirect tax receipts during most years. Statement is correct. 8 out of 10 is most. There is no question about. So, you can also take a look at absolute numbers here, rupees in lakh crore. How much is the lakh crore? You will notice that this is just direct tax. They have not split it as direct and indirect. Total tax. So, third statement. Centres, net tax revenue has been consistently increasing. Look at the blue with every passing year. Is there any year where the blue is lesser than the previous year? No. 8.2 lakh, 9 lakh, 9.4 lakh, 11 lakh, 12.4 lakh, 13.2, 13.6, 14.3, 18.19, 20, 23. Every year in absolute terms, it has been increasing. As a percentage of GDP, it would not consistently increase. But the question is not as a percentage of GDP. The question is in absolute terms. Net, centres, tax, revenue has been consistently increasing. Correct. So, that is how we can look at it. But take a look at the other receipts also, other than borrowing everything they have given. Non-tax revenue, there is no consistent increase. 2, 2.5, 2.7, 1.9, 2.4, 3.3, 2.1, it is varying. Look at non-dead capital receipts, 0.4, 0.5, 0.6, 0.7, 1.2, but in 1.1, 0.7, 0.6. So, it keeps varying. So, there is no consistent trend. But with tax revenue receipts, there is a consistent trend that is there. Again, something to be observed. So, when you come across data like this, this is what you need to observe. Patterns, trends are what you have to observe. Okay. So, now I will take up any question that you have with respect to budget document, because I finished all the questions that is there with respect to budget document. So, there is a question which Arun is asking. Nowadays, GST revenue has been increasing. How can I infer it there? So, GST, I mean with respect to direct tax revenues higher than indirect taxes. Yeah. So, I don't understand the connection that you are trying to ask Arun. Can you make some connection and ask me that question, rephrase that question? Very open-ended what you are saying. What will be the correct statement for the first option? First option, what will be the correct statement? Tax GDP ratio has been consistently increasing. You can't say. So, that is wrong itself. What do you mean? How can we put it into a correct statement? Tax GDP ratio has been growing inconsistently over the last decade. That's probably correct, if you want it to be. Kirti, that document I don't need to share. Government shared it with me. The government has shared it with you also. Everyone can access the document. I just go to, okay, I'll show you what I do. So, let's take Pro, okay. I'll just, you're able to see what I'm doing, right? Okay. So, what am I doing? I'm simply typing, okay, Indian budget, Indian budget. What's the first website that I get? Indian budget, indiabudget.gov.in. Open. I'm teaching you how to download a document. Okay, budget at a glance. You'll notice right in the center, budget at a glance, budget at a glance full. That's it. Download the document. This is the document that we have been referring to. Okay. I hope that helps. This is the same place from which you can download the economic survey as well, if you want. So, economic survey, you can either go click over this over here. There is a field here. Great. Or you can just simply type economic survey. It will take you to the exact economic survey. It will take you to this page where you can download the chapters. You can download a list of tables and charts, statistical appendix, everything that you require. You have it over here. Okay. All right. Moving on to the budget document itself. I have a few queries. I'll answer it one by one. We'll fill a boil.deck.gov.in.gsk because once it you're asked in a test series, I don't know. I don't know. I don't have that information ready with me. Sorry. Okay. Arun, I'm just wondering if you have rephrased. Yes, you have rephrased the question. I'm taking a look at it. In that question, second option is mentioned about direct tax revenues higher than indirect tax revenue. Nowadays, GST revenue has been increasing. Okay. So, GST revenue has been increasing without doubt. That's the case. But if you have been noticing the news, your income tax revenue has also been increasing. Corporate tax revenues has also been increasing. Okay. It has been the case. Now, how do we know that? So, there is a table here. I'm just checking if what I'm showing is visible. Yes, what I'm showing is visible. Arun, so take a look at this. Look at the trends that are witnessed over here. Corporation tax. Look at the trend. So, this is the estimates. Taxes on income, which is taxes on income other than corporate tax. So, it is also showing an increasing trend. GST is showing an increasing trend. All of these are showing an increasing trend. Okay. So, that answers your question. So, GST has been increasing. But why is GST making so much of a news? Because GST was recently introduced. Then I say recently, 2017, five, six years ago, it was introduced. But in the larger scheme of things, it is still a new concept. We still haven't completely stabilized with respect to GST. There are still states claiming that give us support, give us compensation because we are getting used to the new system. Okay. Which is why GST is frequently in the news, not because it has overtaken corporate tax or other sources of taxes of income. I hope that answers your question, Arun. Okay. So, let me take a look at some other, yeah, I will, I will, I will come, I'll come to it. That's the next thing that I want to discuss. RE versus BE. So, it is here, here itself. Take a look at it. Rospin, Vignesh, Babu, I don't know, that's, that's your name. Okay. So, every year when the government announces the budget, okay, this is very basic information. Every year when the government announces the budget, the government says, what is going to be the expenditure pattern on February 1, 2023, few months ago, when the government announced the budget, their main budget that they announced is for what is going to happen in the upcoming year, what is going to be the taxes, how much is going to be the borrowing. So, that is for the financial year starting from April 1, 2023, which will go till March 31, 2024, that is what is called as budget estimates. You will notice that the government announced a very similar budget estimate for 2020 to 2023, one year ago, on February 1, 2023, the government had announced the budget estimate, sorry, 2022, February 1, 2022, the government had announced the budget estimate for 2023 on February 1, 2022, for the upcoming year, that is budget estimate. So, these are, this is budget estimate from one year ago, this is budget estimate at present. Okay. This is budget estimate at present. Okay. Now, coming to what is revised estimate. Now, when the budget is presented for the year 2020 to 2020, sorry, 23, 24, which is the upcoming year, they also have to say how they have done with respect to the last budget. So, they had announced their budget one year ago, right? Did they do well, did they stick to the budget because remember, budget estimate is a prediction for the future. It is not a fact, it is what is likely to happen. You are saying that next month I am going to spend this much. Towards the end of April, now you will sit and create a budget for May. But towards the end of May, you have to know whether you stuck to your budget or not. Otherwise, there is no accountability there. So, what do they do? They want to find out what actually happened. But unfortunately, the year is going to end, 2022-23 is going to end only on March 31, 2023. But they are already presenting the budget on February 1st, which means they don't have the complete information. So, what do they do? They look at the half-year data from April to September or maybe till December and they publish a revised estimate for the last year, for the present year. Present year in the sense, February 1 when they present, they are still in the year 2022-23. They revised the budget presented one year ago and they re-present it. So, that is the revised estimate and then they will present the actual data for one year before that. So, there are three data that is given there, a data for the upcoming year budget estimate, a data which revises the current estimate which is revised estimate and a data for the last year which is actual estimates or actuals. I hope that clarifies your question. Perfect. All right. So, let me take a look at a couple of other questions as well. I don't, I'm not going to take up, I have got a bold answer to the bold question but I don't know authentically. So, I think I'll have to leave it to you. Please figure it out because I don't know that very specific information. Sir, this long document of a budget at glance is not showing the Google search kind. Yes, sir. I think I have shown it to you, Saskata. I have not watched video of economic analysis of budget documents. So, okay, I didn't say this budget. Yes, that is enough. Kirtik, I think you analyze this particular document. I think that should be enough in the question second option. Okay, done regarding tax buoyancy. Does tax collection, will tax collection increase with better buoyancy? An increase in tax collection as a proportion of GDP is an indication of tax buoyancy. When the GDP increases by, let's say, 6%, if the tax revenue increases by more than 6%, that is buoyant tax. But if the GDP increases by 6%, but the tax revenue increases, but only by 3%, taxation system is not buoyant. So, just because tax collection increases, you cannot claim the taxation system to be buoyant. Rajeshree, I hope that clarifies your question. All right. I think I have answered all the questions that are there. Is it necessary to tally with the previous budget estimate and revenue expenditure? See, there is a concept, please make a note of this. There is a concept called as fiscal marksmanship. Marksmanship, M-A-R-K-S, M-A-N-S-H-I-P, marksmanship. So, in general English, what is the meaning of the word marksman? Who is a marksman? Marksman is someone who looks at a target and either shows or bow and arrow. So, that is the person who is called as a marksman, someone who aims at a target and hits it. That's a good marksman. Fiscal marksmanship means that whatever is the fiscal data presented by the government, for example, for in on February 1, 2023, the government has presented the data for the upcoming year. Fiscal marksmanship means the government being accurate with respect to their projection. They have projected the data. If the actual, the reality is as close to their projection, the government is a good marksman or their budgeting is as good marksmanship associated with it. It need not always be the case. A lot of times, there are variations. Take a look at the variation here. The budget estimate for gross tax revenue was 27,000 crore. But the actual data was greater than that. So, take a look at the size of the budget itself. So, total receipts, the projection was only 39 lakh crore. The reality 41, not even the reality because we will only know the reality one year later. So, it need not always be the same. It need not always tally. Ideally, it should. If it does, that's what is called a fiscal marksmanship. If it doesn't, we are deviating from the fiscal targets that we have. Slightly deviating, which is not ideal. Lack of fiscal prudence is something that you might come across. Tables is one type of GSEC. Then, why in the document they say GSEC and Tables separately because what they refer to as GSEC is data GSEC. For convenience, when they are generally referred to as GSEC, they might be referring to data GSECs. That is the reason why they separately refer to GSEC and Table like that. In general conversation, colloquially, when you use the word GSEC, they are referring to data GSECs, long-term. Tables is short-term in nature. That's why. Okay. Hope that is clear. Satish Kumar, it's actually a very, very important relevant question that you asked. Technically, Table is a GSEC. It doesn't make sense. If you look at any RBA document, they will not randomly use the word GSEC. When they say GSEC, they include all borrowings of the government through instruments, but the government uses it more gently. That's why. Satish, the word actual means, what is the actual data for the previous year? Previous year, present year, upcoming year. Upcoming year is an estimation of the budget. What is likely to happen? Present year is a revision of the budget. Past year alone, you can present the actual data. Next year, you will find that the actuals next year, February 1, 2024, you will find actuals for 2022-23. You will find the revised estimates for 2023-24. You will find budget estimates for 2024-25. That's what you will see in next year's document. They don't need to give this data. They are giving it so that we can look at it side by side and compare. This data is not new. This data is already there in last year's budget. This data was presented here in last year's budget. They need not present it. They have presented it so that you can read the budget estimate and revise the estimate side by side for easy understanding. Hope that is clear. Okay. Perfect. I think we can proceed. Moving on. Next question. Take a look at it. Time starts. All right. We are out of time. Not a very easy kind of question because it's not very common knowledge. There is a specific report called State Finances, a study of budgets. Consider the following observations and choose the correct ones as per the report. Okay. It's not very common. There is a reason why I ask this because this is something that has been in the news center, state fighting with each other, state center telling the states you are not doing a good job with respect your finances. Only if you meet these targets will provide you loan. All those things that the center is saying. The RB itself flagged the financial position of many states. RB said these, these, these states are in trouble. It was there in the news. In the exam, you may get a very simple statement saying state finances, a study of budgets is published by which of the following organizations Ministry of Finance Reserve Bank of India. So it may be something I'm just making up a question. It may be something as simple as that based on current affairs, but we don't know. So I have just taken up a random thing from the document just to convey to you that the document is important. Okay. Just a couple of interesting observations. Okay. So states own tax is the major source of receipts and the aggregate receipts of all states and new days. That's one statement. Second, more than half the states failed to attain 14% GST revenue growth. What is the significance of 14% that is a cutoff which was kept by the GST council and said, if you fail to attain 14, whatever you fail by will provide compensation to that extent. Okay. That is what the GST council had promised. That is where the 14% cutoff is important. So I need to take the document now. So I'm doing it right in front of you so that you don't have to, I mean, again, ask me where to find the document from. So what was the name of the report? It said a study of budgets, right? State finances, aid finances, a study of budgets, the most recent data, RBA directly go to whoever publishes it. RBA data, go to the document itself. This is where you get the document from RBA's website. You have the entire document here, state finances, a study of budgets. Okay, you have overview, you have forward, you have all of those things. Why bother about anything else? Just download, get the entire document, taking a little bit of time to load, as you can see. So this is the document. Now, there's a very interesting part. Sometimes such questions are asked, what is the theme? Capital formation in India, the role of states, that is the tagline associated, but not sure UPC will go for that role of capital formation. So here is the one. So we have major sources of receipts, right? So we have introduction, key fiscal indicators, receipts and expenditures, both the statements here are about receipts. So let's go to page number four. So that is where it's a big document. I'm not going to look at all of them. Oh, you don't have to look at all of it either. So this is gross fiscal deficit of, I think, all states and UTS with legislature. What is it for the entire states, all states put together? Deficit indicators for individual states, you don't have to worry about this. If there is something unique, that is what you need to. So this is the table based on which that particular question is asked. So there is revenue receipts of the revenue receipts, the biggest share. It is not given in percentage. It's given in absolute terms. It is given in lack proof. And what exactly was the statement? The statement is states own tax is the major source of receipts in the aggregate receipts. So you have the entire receipts over here. So revenue receipts separately, non-capital receipts separately is given, of which you will notice that revenue receipts is this much, 23.1 or you look at the most recent one, 38.57 of that 38.57. You will notice that 21.11 is states own revenue. But our question is specifically about states own tax revenue. States own tax revenue is still 17.87, not percentage lack proof. Look at any other number that is there. Central transfer is overall, but inside central transfer, there is shareable taxes, which is actually the state's own money and then grants in aid. Individually, it's only 8 and 9 percentage. But if you look at states own tax, it is a major source. This is an important data because conventionally, we think state has very less in the form of source of collecting taxes. So their source of money in the form of taxes is going to be very, very minimal, not true. In fact, states own taxes is a big part of their own revenue, their own receipts. So to convey that, which goes against our conventional knowledge, which goes against our conventional knowledge, so that is what is important over here. Everything else is very, very small. I told you a term earlier, fiscal marksmanship, you find the term over here. And what are the two data which is compared? Budget estimate, revised estimate. So this is a measurement of statistically but not important for us. This is a measurement of how far away they are from their projections. So a lot of information like this is given. Then you have again receipts itself. There is GST data which is given. Let me see where I can find it. So maybe I will go for the simpler option and look for quite a lot of references. So we have it here. So 10 states are expected to fall short of 14 percentage GST growth as per their budget estimates. The data is given here. So why is that important? Because look at this. There is an image that is associated with it. States with less than 14 percentage growth in GST in 2022-23. So all that you need to know, again don't memorize how many states and all those things. Look at it. Is it all the states in the country? Most of the states in the country? No, it is less than half of the states that are there. So only 10 states out of not only but it is still not more than half. So 10 states out of 28 are falling short. 18 states are meeting the GST target that is there. Now let me reiterate. This is not the specific data that is important. We can't guess what UPC asks from. I have just taken two readily available information which is in the news as well. States, center state conflict that is there. States feeling that they are not getting enough money from the center. So we ask a question. So what is the major source of state revenue? Then the GST compensation is something that is again frequently in the news. So how many states are actually benefiting out of the GST compensation? 10 states out of 28 are. Now imagine that 20 states out of 28 were having GST revenue less than 14 percentage. It makes no sense to cancel the GST compensation and it makes all the sense to provide GST compensation for the further period of time because majority of states in that case assuming that let's say 20 out of 28 states were having a GST growth rate of less than 14 percentage. Then it makes sense to extend that. Now the center has not extended it. Why? What is the logic associated with it? Because 10 states out of 28 are the ones which are required. So this is again certain observations. It's a very big document, 312 pages. I don't expect you to go through or affect but take a look at the heading that is given over here. The index that is there. Take a look at the index and ask yourself with a little bit of experience and preparation, you will be able to give yourself certain parameters as to what you think is important. So take a look at the entire heading just two or three pages. Look at what might be important among this. 99 percentage of this document is going to be useless. Which means of 300 pages, 90 percentage would be let's say three pages. Other than three pages, everything else is fairly useless. So what are those three or maybe 99 percentage is too much. Say 10 pages out of 312 might be important for you to go through. But the question is which are those 10 pages? Take a look at the index. Certain parts of the document may interest you. Just go through, see if there is any graph or image or data associated with it. Only when that is there, it makes sense. Although I have shown you inside paragraph, everything I show inside paragraph has a picture or an image associated with it. So that becomes important. How much is states borrowing? How much is the cumulative deficit that they have? Those might be the major things that you need to know. So that is with respect to this particular question. That actually ends our entire part with respect to public finance. I think that's a little bit more is there. So we'll move on then. Bharath Kumar, you have sent something which I'm not able to see. I'm only seeing it as a box. So I told you the answer here is 8. One only. Moving on then. Time starts. How come only two people have answered for very, very less response? Time is out. Now I'm getting a lot of answers. Still very less. Only about 10 or 12 have answered. These are more like the current affairs that we expect from UPC. Great. So one statement you should blindly assume it to be right. Look at the second statement. Look at the heading sovereign green bonds. Green bond. That name is enough. The proceeds have to be deployed in public sector projects which will help reduce economy's carbon intensity. Reduce economy's carbon intensity. Carbon intensity reduction means greening that there should be no doubt about it. The next question is, is it going to be used in public sector projects? Look at the name sovereign. Sovereign means government. Government is borrowing. Government is going to use the money for public sector projects. Most likely. So that is a logical guess. I don't think you should consider there is any logic for you. Tell me if there is any, but I don't think there is any logic by which the second statement can be considered as wrong. I don't know. Some people have answered A, not a lot. A few people have given A as answer, which is surprising for me. So 2 has to be correct. Now comes the type of trickery which UPC sometime follows. SGB, sovereign green bonds amounting to 1600 floor are to be issued as a part of government's overall market borrowing in the fiscal year 2022-23. If you apply a little bit of logic, you would know that 1600 floor is a very, very small sum. It's actually 16,000 crore. And this is precisely the type of mistakes that UPC makes in their question. Instead of 100, they'll give 1000. Instead of 10,000, they'll give 100. Instead of 10,000, they'll give 1000. So these are the kind of errors that they tend to make. And that is precisely why I removed from some 10 and put it over there. Everything else about it is correct. 1600 is not the correct one. 16,000 crore is what is the correct one. So other than that, everything else is correct. So sovereign green bonds, the intention of the government is to borrow money to be used for public sector projects, which are green initiators. So anything that has green initiative associated with it, that is what the intention for the government is. And this happened very recently. Only in 2023, January, they actually issued it, although it was announced in the last budget. So it is very recent current affairs as well. So please read up a little bit. There is a framework on sovereign green bonds as well. I am not going to go through the entire document, but there is something like that. There is something called as sovereign green bonds. There is a framework. Look at it, Department of Economic Affairs, the government document to survive. I am not expecting you to go through this 21 pages. It's not much, but just the introduction of something like that you can read to get an idea. So what they have given insight is not necessarily related to green bond itself. They have given up about nationally determined contribution goals and all those things and say that ultimately, the objective is to meet some of these targets. So that is all of the context. This is where the actual document starts from here. So this is what it starts and they have said what are the core components of green bond principles? How are they going to use it? Don't memorize any of this, please. It's not worth it. Just know, have a general idea. What is the amount? What is the general philosophy that they are going to adopt? That is enough. And without even studying all these things, you can understand green means it has to be some ecologically or environmentally friendly objective. Only thing, just do a normal Google search. You will know the amount of money that they are trying to raise and all those things. Just some basic information is enough. You don't have to come to this document and just showing you because there is an official source. Nothing wrong with coming here. Always rely on the best source, but you can also rely on PIB also. Let's see if there is a PIB document. I'm not sure. Green bonds. Yeah. So PIB sovereign green bonds, 16,000 crore. What more do you need? Everything is there. Amounted to 16,000 crore. 8,000 has already been issued 6th of February, 2023. Very recent news. Okay. Resources, governments overall borrowing, deployed in public sector. Okay, verbatim whatever I have asked. Reduce economies, carbon intensity. Okay. Maybe I should not have shown the source. I got caught using the same words. Okay. Let's move on quickly from this area. I think that answers the question. The first statement alone is wrong. Okay. Next question. External sector. Which is correct? Let me see. A lot of people have said A, A, A, A, A, A. Okay. Since so many people are saying A, I have to go with A. A is the correct answer. India has so far concluded 13 free trade agreements and 6 preferential trade agreements. That's correct. It's a factual thing. Second and third is almost correct because you have heard news that India has signed an agreement. UAE, India has signed an agreement with Australia. Both are free trade agreements. The only error is it is interchanged. The SEPA has been signed with UAE, Comprehensive Economic Partnership Agreement and ECT, Economic Cooperation and Trade Agreement has been signed with Australia. CEPA, from my understanding, has a much wider scope because it includes investment, it includes mobility of workers. All those things are included. Services are included inside that with the UAE one, which was in the news much more than what was with respect to Australia. So that does interchange. CEPA is with UAE and ECTA is with Australia. So both the statements, because they are interchanged, they are wrong. A1 only is the correct answer over here. The correct answer is A1 only. Now, where do we get this particular data from? Again, the same logic that you apply is don't go looking for this data. Just look for let's say trade agreements. And why are we looking for it? Because UAE agreement was signed because the Australia agreement was signed looking for PAB. So FTA is referring to here it is heading itself as in 2022, July, which is still part of our information. India has signed 13 RTAs, Regional Trade Agreements or Free Trade Agreements with various countries that is given over here. At least it does not go back. So what are the various countries with which we have trade agreements? It is given over here. So we have trade agreements with these entities. We have trade agreements that list is given over here. What are the 13 countries? So as of the publishing of this, this was not implemented. So with UAE and Australia, but subsequently it's been. In addition, India also signed six preferential trade agreements, including Asia Pacific trade agreement. So that is also given there. So you will have another other places where you have the entire data that is given there. Now, look at this CEPA, Comprehensive Economic Partnership Agreement is with United Arab Emirates and ECTA, Economic Cooperation and Trade Agreement is with Australia. So this one itself conveys all the information that is necessary for us. PAB has all the data that is necessary. Let's also take a look at this. So here is the 13 plus 6. The 13 is given over here. What are the various countries with which we have? And the 6 is given over here with which we have preferential trade agreements. So I am not waiting for you to make notes or anything because you can find the source on your own. So what is the difference between free trade and preferential trade agreement? So preferential trade agreement means it's much limited in scope. So if you are going into economic theory, preferential trade agreement is the starting point. Building upon top of that, we'll get to free trade agreements. Then we have common markets, customs union and so on, economic integration and all those things that happen later. But more commonly, you will find preferential trade and free trade agreements. What is the difference? When two countries enter into preferential trade agreement, they agree that on certain commodities alone, they will have free trade. So restricted free trade agreement. So let's say India and some countries signs a preferential trade agreement. They say on these five commodities, these five commodities or these 10 commodities alone, we will do the trading. So this is what is called as creating a positive list. So preferential trade agreements are associated or have a positive list associated with them. What is a positive list? A list of items on which preferential trade or free trade would happen. On all other items, it is normal. No free trade, no preferences. On these select items alone, there will be preferential trade or free trade between the two countries. Whereas when it comes to a free trade agreement, their agreement is like this. On all the goods and services that the goods and services, it depends. Sometimes it's goods only, sometimes it's services also. Like we saw with SIPA and ECT. So on all the commodities, there will be free trade except a list of items. On these items, we are not going to allow because we want to protect our domestic industry. So that is what is called as a negative list where everything is under free trade except this list of items. So negative list, preferential trade agreement has a positive list associated with it. Free trade agreement has a negative list associated. So conceptually, this is something for us to note as well. The answer here is A1 only. Moving to the next question. So we are going to have a series of external secret questions. Time starts. Time out. A lot of people have given me the correct answer. The correct answer here is B. 2 only. B is correct. Not C. B. So let's take a look at the data associated with it. Economic survey, external sector and made a few markings which is... So how did I get to this? I showed you earlier. I went to just type external sector, scroll down. You will find the external sector chapter over there. So you will find the document over there. So first basic information that you have is during this fiscal, India's exports have displayed resilience on the back of record levels of exports. What are the key export items that we have? Petroleum products, gems and dwellers, organic and inorganic chemicals, drugs and pharmaceuticals were among leading export items. Please make a note. What are the leading export items of India? Similarly, do we have anything about imports? Apart from elevated crude oil prices, the revival of economic activity contributed to increase. Petroleum crude and imports, petroleum crude and products, electronic goods, coal, coke and briquettes, et cetera, missionary, electrical, non-electrical gold were among the top import items. Please make a note of that as well. Very generally, balance of payments encountered pressures during the year under review, which means balance of payments did not do particularly well. Sharp rise in oil prices resulted in widening current account deficit, not cushioned by invisible receipts, policy tightening by federal reserve. We are going to discuss that and strengthening of US dollar led to FPA outflows. As a result, surplus in capital account was lower than current account deficit, leading to depletion of forex on BOP basis. Forex has been reducing. We have been seeing that in the news as well. So this is just from the first page, the italicized one, all our key information has taken up. That's it. You don't have to go any deeper into the economic survey in general. But let's take a look at what is given over here as well with respect to trade, the merchandise trade. What exactly is the question that we have asked? The question is exports of petroleum oil and lubricants constitutes, lubricants constitute about half of the total exports in terms of value. Petrol, oil and lubricants exports constitute around 20 percentage and non-POL exports, petroleum oil lubricants constitute around 80 percentage of exports during that particular year. It continued to be the most exported commodity moving to the rise in global crude prices. Petroleum products continue to be the most exported commodity in India's context, followed by gems and jewelers, organic chemicals, drugs and pharmaceuticals. But still to say that it contributes half of India's exports is an exaggeration. So we know petroleum oil lubricants is a significant part. It is the highest. It occupies the number one position when it comes to exports also. Crude oil we import, refined petroleum we export, petroleum products we export. We also import petroleum products, some kinds of petroleum products, but it's not half. Half is an exaggeration, half is too much. So that is what makes the first statement wrong. Second statement is correct. It contributes one-third or it accounts for one-third of the value. Energy demand may be pushing India's imports. Yes. So petroleum energy demand may be pushing India's imports for fuel, including coal and petroleum oil lubricants who share rows to 37.1 percentage. It says more than one-third, more than 33 percentage. Other principal imports included electronic goods, coal, coke, briquettes, machinery, whatever we saw earlier. Okay. So that is what is of significance roughly. So look at how the question is framed one-third, not 37 percentage, around one-third, more than one-third. So that is how the question is looked at. So petroleum we know you would have heard of a concept called as windfall taxes which was in the news that is again in the context of the same thing. Now because of the global rise in fuel prices, when we bought, we bought at a lower price before the war broke out. We bought at a lower price. Then we were refining. When we sold, the petroleum prices have gone so high that the petroleum companies were making huge profits. This unexpected, unanticipated, sudden gains is what is called as windfall gains. W-I-N-D-F-A-L windfall. Windfall means something that is unexpected and huge. Okay. Sudden huge gains is windfall, windfall gains, windfall profits. When the petroleum companies got those windfall profits, the government introduced a new tax called as windfall gains tax or windfall tax, which means you are making unexpected gains. On those unexpected gains, I am going to tax you more than what I usually do. But once your gains normalize, we will not collect those taxes anymore. Only because you are getting windfall gains, we are collecting windfall tax. Windfall tax is also something that you saw in the news. In the context of that, they may not ask a question about windfall tax. They may ask a question about the data that is related to it. Or they may ask a windfall gains or tax question itself. We don't know. But that is how we interpret data. That is why P-O-L becomes very important. Because there is global, there is war with Russia or sorry, not war with Russia. Russia and Ukraine, war is going on. Russia has become the major supplier of petroleum products or petroleum, crude petroleum for India, replacing other your Gulf nations and some other nations that were there. So, all these are of significance. This is what you see in the news. The question may be about any of this. So, let me take a look at if there is any question that is left or left unanswered. Moving on. So, the answer here is first one is wrong. Second one is right. Two only B is the answer. Moving to the next one. Time starts. I have got only two answers out of 100 odd people. Now, it is four answers. Slowly increasing. Time has run out. We wait for a few more seconds. So, I know at this point some of you are thinking why are all the questions so much about data and all those things. I told you in the beginning of the session itself, my intention is not to cover everything that is there in current affairs. My intention is to cover those areas which you may otherwise miss out on. You may not focus on these areas. Not only those areas, those are some of the areas which I picked up and this interpretation of data or collecting data is something that you may not be readily available with you, which is why I am picking these areas and I am explaining it to you. Do not think that this is what, see some of you, especially if you are preparing for the first time, you would have prepared so much of concepts and then now you come here in the session and everything is all data. Is that how UPC is going to ask? No, that is not how UPC is going to ask. These are just to help you fill in those areas which you may not have covered already. This one session is not sufficient to cover the entire current affairs. I told you that in the beginning itself. So, I am picking on areas which I feel that you might have missed out on. Anyway, so the answer here is, let us take a look at the following statements about external debt of India based on the data from Economic Survey. Short-term debt accounts for around one-fifth of the total debt. So, that is again a very data-driven question. Short-term debt means debt that we have to repay in a period of one year, within one year. So, it is an external debt analysis kind of question. UPC has asked such questions in the past in what currency is most of India's dollar denominated, those kinds of questions. Short-term versus long-term, something that is asked. Then second, India's total external debt obligations is in excess of foreign exchange reserves, which is very hard to believe, but that is true. In fact, both the statements here are true. 13, the answer is C. Both one and two, we will take a look at the data that is associated with it. Same external sector, chapter, Economic Survey. We will go to debt. Capital account is where we have debt. So, we have reached debt. All the debt, don't focus on debt alone. You have FDI. Net FDI is it showing an increasing trend, decreasing trend. You have capital account balance. You have composition of capital account. What is the direction? All those are observations that you can make. Net FDI, it is showing a negative trend during certain parts, but all of these are quarterly. Just make a note of this. All these are also important. I just happened to have picked up about, this is forex resource about debt. That's all. Did I cross debt? I think I might have crossed debt. No, external debt is here. External debt. There are two data, two tables. This is the table based on which the question is. This is how much our external debt is. This is the table, external debt in US a billion. That is how usually it is denominated, not in rupees. Usually it is in US dollars. So, somewhere around US$600 billion, ratio of external debt to GDP roughly around 20%. Debt service ratio, our capability to service and the amount that we have to pay during a given period of time, ratio of forex resource to external debt. So, 96.5 or 87.3 or 98. There's only one period where you will find a number greater than 100. What does greater than 100 mean? Look at the heading ratio of forex to total debt. Forex on top, total debt at the bottom. Only when forex is greater than total debt, will it be greater than 100. Based on the latest data, the most recent data that we have, it is lesser than 100. For most years, you will notice that it is lesser than 100. Which means most of the times, forex is lesser than what is our total debt. Which means we don't have enough money in our reserves to repay all our loan. However, look at this. This is where the first statement becomes important. Ratio of short-term debt to forex reserves. Ratio of short-term debt is only around 20%. Ratio of short-term debt to total debt is only around 20%. Which means our immediate repayment obligations, we have enough money in our forex reserves. Even if nothing else works, we can take our forex reserves. 20% of our forex reserves, we pay, our short-term debt is done. Short-term debt means within one year, what we have to repay. Everything else is long-term obligation. So, we have signed a contract with Japan, let's say, where they are giving us money, which we have to repay over 30 years. They cannot come next year and suddenly say, no, no, we need money, give it back. No, loan agreement is signed. There is no way that they can ask us the money before time. It is not possible. Which means that having long-term debt is good. It is sustainable debt. Having high short-term debt is troublesome. So, what was our question here? Our question was short-term debt accounts for around 1% of the total debt, 20% is the total external debt that is there. The question itself is about external debt. So, 1% of the 20% is correct. See, the question is considering the following statements. So, what is Kirthik's question here? Here, short-term debt accounts for around 1% of the total debt. The question is, is the total debt of the country as a whole or is it total external debt alone? You don't have to worry about that because look at the question. The question says, consider the statements about external debt of India, which means both the statements are about external debt, which means what they refer to as total debt. Here is total external debt of the country. If it is am because, this is how you have to make sense of it. Okay, so I will answer. There is one more question that has come in. I will answer that also. So, this is short-term debt accounts for around 1% of the total debt. That is correct. India's total external debt obligation is an excess of 4x reserves. That is also correct. We just saw, as per the data from the economics way, most recent data. So, both the statements are correct. Now, there is a question which Rajasekharan also, now I think that clarifies your question. The question itself says about external debt of India. So, it is about external debt. Even when we say total debt, the question, larger question is about external debt. Okay, hope that clarifies that particular inquiry. And now Satish Kumar's question. Sir, but our external debt is only 10% we saw before. No, it is not 10% it is 1% Satish Kumar, not 10% of the total borrowing of the government of India. Governments borrowing from outside India was only 1%. That is governments borrowing. Governments external debt is different. Our country's external debt is different. Again, to convey that point, take a look at this table, the table that is given before. What are the sources of or who is the one who is borrowing external debt outstanding? As the total outstanding external debt, general government borrowing between center plus state. How can state borrow? Center borrows on behalf of the states for these developmental projects, metro construction, all those things, central bank borrowing, corporations. But if you look at it, the most important contributor towards this borrowing is financial corporations, private entities, entities external commercial borrowings. That is what is a big, big percentage of the borrowing. So, the question Satish Kumar earlier was about governments internal and external debt. This question is about external debt in general. What is the difference between governments external debt and countries external debt? If you as an individual happen to borrow from a foreign bank, if it is possible, then that was also a part of external debt in the balance of payments transaction. Look, see for all of these things, what you have to understand is the definition of balance of payments. So, how do we define balance of payments? Balance of payments is a record of transactions of all residents of India with the rest of the world and vice-versa, all residents of India, not only the government. So, in the balance of payments, we have current account and capital account. And in the capital account is what we have loans. That loan is what is the external debt over here. Who all could be borrowing? Government could be borrowing, but private corporations could also be borrowing. Sometimes it is easier to raise money from a foreign country. Why? Because we know this particular logic. Most of you know this logic. We have discussed this in class many times. Same logic that I have discussed before, I will ask you a question. Which country is likely to have a higher rate of growth, developed country or developing country? We have discussed this previously. The answer is developing country is likely to have a higher rate of growth or has the potential to have a higher rate of growth. Why? Because a lot of untapped potential, correct Rajasekaran Mithilesh, correct. So, they are the ones who are likely to have a higher rate of growth. And because the rate of growth is going to be higher in developing countries, the demand for money is going to be greater in developing countries because more businesses need money. When the demand for money is higher, the rate of interest is also going to be higher. So, if an Indian company wants to borrow from India, they have to pay a higher interest. What is the report rate in India? Somewhere around 6%, 6.5%. What is the equivalent of the report rate in European countries and in America? Somewhere around 1% or 2% which means borrowing from foreign countries is much, much cheaper. So, a lot of corporations in India, there is, I agree, there is a risk of depreciating Indian currency because the profits made by the Indian companies in Indian rupees. When they have to repay, they have to repay in foreign currency. There is an exchange rate risk that is associated with it. But if the exchange rate risk is not major, then it is quite possible that a lot of Indian corporations will try to borrow from foreign sources because the rate of interest is very, very low. So, private corporations borrow, external commercial borrowings, government borrowing, NRA deposits that come into banks are also treated as loans. All of these are other than government sources of borrowing. So, that is where external debt is different. External debt is a much bigger concept. Government borrowing from outside India is a much smaller concept within it. Hope that clarifies it. Thus, government external borrowing is lesser than forex. Government external borrowing is lesser than forex. Yes, Satish Kumar, that is correct. All right. Got it. Great. I think I have answered the, if there is any pending question, please let me know. Moving on to the next question. Time starts. Okay. Why is the time not running out? Maybe I clicked something which made the time not run out. Okay. Time to run out. Okay. So, I happened to, there is a Q and A part here which where I happened to miss looking at the answers. Sorry about that. Right from the beginning, I happened to have missed out on that. Okay. So, let us take a look at what is given. Consider the following statements about effective exchange rate. Effective exchange rate is summary indicator of movements of the home currency against the basket of currencies of trading partners. Rear is the near adjusted by relative prices captured by inflation differentials between home country and trading partners. OEA, Office of the Economic Advisor compiles and disseminates both the trade and export weighted indices of near and rear. Okay. So, a lot of answers. It says B, A. A is the dominant answer. Okay. Fair enough. C is also given as an answer. Do you mug up the country names? Tamil, I don't, regarding the earlier question, I don't think you need to mug up as such but you have a general idea with respect to so neighboring countries. If you happen to have an agreement with the neighboring country, it becomes important. So, don't just blindly memorize it but have a general idea about it. Okay. So, the answer to this particular question now coming to the question at hand, EER. So, the reason why we have this question as significant and last year also, UKC had asked a question. It's because the RBI recently a year back made a change with respect to the countries which are included in this basket of currencies. So, first of all, there is a concept called as exchange rate. Exchange rate in general means the value of Indian rupee in the Indian context, the value of Indian rupee against one particular foreign country's currency. A comparison of two currencies is the conventional exchange rate that we have. What is effective exchange rate? So, India wants to understand the competitiveness of the Indian currency, trade competitiveness or export competitiveness of Indian rupee. So, what do we do? We look at our major trading partners. Okay. So, Indian rupee is compared with every single major trading partner, let's say 40 countries. I think the recent list has 40 countries inside it. Okay. Indian rupee versus the 40 major trading partners of India. Now, each trading partner has their own relative importance, right? Some countries more important, some countries less important. So, Indian rupee versus US dollar and USA is given, assigned a certain weightage. So, based on that weightage, their value will be a proportion of that weightage. Let's say 50% is the, assume 50% is the weightage given for US dollar, then value US dollars value will be reduced to half. Just like how our price index, CPA, WPA, just like how those are calculated, weightages are seen for the various trading partners of India and accumulative values arrived as 1 rupee is equal to this much value. Okay. So, that is what is called as effective exchange rate. It is a summary indicator of movements of the home currency against the basket of trading partners. The first statement is correct. Okay. Second one. Rear is near adjusted for relative prices, adjusted by relative prices captured by inflation differential between home country and trading partners. It is something that you should be answering without even knowing what is near and because it's only a question of real versus nominal. Real is equal to nominal adjusted for inflation is general logic that you should be knowing. Whenever you come across real and nominal, what is the difference? Inflation is the difference. Nominal is adjusted for inflation, you will get real value in inflation. So, the second statement is also correct. Okay. So, one and two are correct. The only question is this day or is it D, office of the economic advisor is not the one which compiles and disseminates the data. It is a reserve bank of India which disseminates both the data. Okay. So, that is the error over there. So, third statement is wrong. One and two are correct. Okay. Hope that answers this particular question. Some people had answered C. I don't know why you think a first statement is wrong logically. Okay. Explain near and real. Oh, I just did that. No. So, Indian rupee is there. So, Indian rupee compared to a basket of currencies. Okay. So, this is what is effective exchange rate. This effective exchange rate is what is called as near nominal effective exchange rate. When see Indian rupee versus US dollar inside that basket, if you take into account Indian rupees, sorry, India's inflation versus the foreign countries, USA's inflation and calculate that. And similarly for every single country, if you take India's price index versus their price index, that will be called as rear. Near and rear is different simply that in rear inflation is taken into consideration. In near, that is not taken into consideration. Okay. For, it is not very important to go into the mathematical details of this. Okay. Weightage is not assumed. Weightage is actually calculated. RBA does the calculation of weightage. Okay. Just take a look at this. Near, EER, EER, RBA. So, there is, this is how you search for things. Okay. Effective exchange rate of the Indian rupee. This was in January 21, 2021. A couple of years ago now, existing basket is expanded from 36 to 40 countries with the inclusion of 8 new currencies and exclusion of 4 currencies. That is why it was in the news. Okay. So, what are the weightages that are assumed? Export trade-based weightage. The weightage is given over here. This is to answer Sudarshan. Export weight-based weightage is given over here. Okay. In the previous and the present, so the two things are given over here. What are the 40 currencies that are there? Eventually a value. The formula for calculating near normal effective exchange rate. So, this is how it is calculated. Let us take one particular country. Let us take USA. So, E is the exchange rate of, let us say what is given as E over here. So, E is Indian currencies exchange rate in comparison to, so it is always a comparison. So, what they are using as the reference point is IMF's currency. IMF has a currency called as special drawing rights. It is almost like a currency for them. So, E is the exchange rate of rupee against the SDR divided by the exchange rate of the foreign currency against the SDR. So, it is between that E by EI and then there is a square root in terms of the weightage that is assigned to that particular country. This mathematics is not important. I am just trying to convey to you. It is a comparison between two currencies and a basket of that. Look at this. It is given as I is equal to 1 to n. 1 to n refers to the 40 countries. I is equal to 1 to 40. For every single country, we do this and cumulatively everything is added and that is what is referred to as NIR. Now, what is the difference between NIR and RIR? The formula is almost identical. We only have P. P is the price index in India. PI is the price index in the foreign country. So, when you take that also into consideration, the comparison of the prices in the two countries, then that becomes RIR, real effective exchange rate. So, if you want, if you are mathematically oriented, it is not important for UPC exam. If you want to really, really understand this concept, you can probably go through this or just simply read up the basics of it and that should be enough. So, someone is asking without any name U. S. E. U. P. C. The recent news on moving away from US dollar being global exchange currency and looking at the agenda of countries like Russia and China being pro-U1 and Bangladesh agreeing to get on to trade with Russia in U1 for new plant installation. If at all there is a predominant shift considering exchange currency and relationship with China, Russia with respect to India as contrasting one is a close friend and another is a close aggressive neighbor. How will India's position of stance be in the case? How will it affect our global trade? Yeah. So, we don't I'll give you a one line answer. So, the question is essentially if US dollar ceases to be a global currency and if Russian currency or Chinese currency becomes a global currency, what is its implications on India? Simple answer is we don't know. We can't guess what might happen. We don't know whether we will continue to have a poor relationship with China forever. Yesterday, you saw news India and China have agreed to sort out the differences. Once our border agreements or disagreements are sorted out if and there is nothing which cannot be sorted. If it is sorted out, then India and China may not be aggressive enemies. Once again, it could become Indo-Chinese bye bye like we believed it was prior to the 1961 war. You never know there are never permanent allies or enemies. USA tried to negotiate with North Korea. It almost seemed like there was some result that was going to happen. It did not happen but you can never know. So, you can never guess what can happen. It's a very hypothetical question which won't lead us anywhere. Don't be worried about the time. I know the time is late o'clock. I know we have finished only half. The number of remaining questions doesn't go into this much of detailed analysis and all those things. Much simpler questions are in store. Welcome, nameless person. Moving on, next question. Time starts, has started. So, we are out of time. What is Nostro in the news because of precise issue that the person was addressing? The answer here is D. All three statements given here are correct. It is just an explanation concept. I wanted you to know what it is. So, this is how it works. Imagine two banks are there. There is State Bank of India and let's say there is an equivalent bank in Australia or let's take Russia itself. There is a Russian bank because Russia and India is where the context of the news is. So, what is a Nostro account? It is one that a domestic bank holds. SBA in India holds an account for a foreign bank. The Russian bank holds an account in India. In Indian rupee, for example, an Indian oil company buys oil from Russia. So, we have to pay them. But now US dollar is not allowed. USA is saying that we won't allow anyone to transact with Russia in US currency. So, we are in an advantageous position. We tell Russia we will pay in Indian rupee. Russia says, okay, fine. As long as you buy, it's okay. So, what will Russia do with Indian rupee? Absolutely nothing. So, Russia says, you keep it in your account in India. Later, when we buy something from you, you can take that money from there. Rather than Russia paying it separately, the LZ deducted from this account. So, SBA holds an account for the Russian bank, okay, where the Russian money is kept inside SBA's account. That is a Vostro account. A Vostro account is one that a domestic bank holds for a foreign bank in domestic bank's currency. We call this account as Vostro. What will the Russian bank call this account as? The Russian bank will call the same account as a Nostro account. Now, look at the same account from the Russian bank's perspective. Nostro account is one that a foreign bank, for Russia, SBA is foreign bank. Agreed from Russian perspective. From Russian perspective, the same account that SBA is holding is SBA is a foreign bank now held for a domestic bank. The Russian bank is the domestic bank. In the foreign bank's currency, Indian rupee, it is maintained. So, the same account is what is referred to as Vostro as well as Nostro. From the account holder's perspective, Indian bank holds the account, India will call it as a Vostro account. The same account, Russia will refer to it as a Nostro account. Let's say we buy something from Russia and sorry, Russia buys something from us and instead of paying in US dollar, they are saying, we will pay in Russian currency. What will we do with Russian currency? No other country may accept it. So, we say, keep the money with them yourself. So, then we will call that account to be Vostro. They will call it, sorry, Nostro, they will call it to be Vostro. So, it is just interchange. It's the same account when we call it, we refer to as Vostro and they refer to the same account, they will call it as Nostro. Okay. So, the first two statements are explanations. In the Indian context, more usage of Vostro account helps in internationalization of rupee. More Vostro means that more and more people or more and more countries are okay with transacting in rupee. Look at the first statement, Vostro account, foreign bank holds an account in the domestic bank in domestic bank's currency. So, if more Vostro account is opened in India, it means that more and more countries are accepting Indian currency for transactions, which means greater international use of rupee, that is what we refer to as internationalization of rupee or usage of rupee in international transactions. So, all three statements are correct. In a very similar sense, we have one more question coming up. Take a look at it. Time starts. So, time done. Let's take a look at it. It is a process, internationalization of rupee. It is a process that involves increasing the use of local currency in cross-border transactions. Correct? It increases the exchange rate risk on domestic traders. In fact, it is the opposite. When does the exchange rate risk come in when we are dealing in foreign currency? If there is a depreciation of Indian currency, then payment in foreign currency becomes that much harder. Okay? So, the exchange rate risk on domestic traders is greater if you are dealing in foreign currency. Whereas if you are dealing in Indian currency, the risk is reduced to a large extent. So, second statement is wrong. It decreases the exchange rate risk on domestic traders is the correct answer. Then 16, it may limit, sorry, third statement, it may limit India's ability to anchor monetary policy to its domestic economic landscapes. Now, this is a problem which a country like USA also faces. Their currency is internationally used for transactions. They cannot arbitrarily reduce or increase the money supply without considering international implications. So, similarly, if Indian currency becomes broadly used outside or widely used outside, then we have to not just look at the domestic conditions. We have to look at the international impact of changing our money supply as well. Okay? Because it will have a great impact globally. So, it limits our ability to anchor monetary policy to domestic landscapes because international aspects will also come into the picture. Third statement is correct. Answer is B1 and 3 only. Second statement is wrong. Okay? So, it's an extension of the previous question in that sense. Okay? So, earlier there was a question that near is equal to rear minus inflation, I may write. It does not minus inflation. Adjusted for inflation is the right anonymous attendee. Hope that clarifies. I know I'm answering it a little late still. Okay? So, 17th question. Time starts. We are moving on to the last, I think, in exchange rate. Okay? We have run out of time. So, if I didn't mention the answer to the previous one, 16th one, the answer is B1 and 3. Second one is wrong, I had said. Okay? Anyway, 17. Now, again, a very conceptual kind of a question but based on current affairs, US Federal Reserve had actually increased interest rates. What would happen? You saw that in the external sector document that I showed as well, the economic survey document on external sector also had this in the paragraph, highlighted paragraphs. So, US Federal Reserve increases the interest rate. So, foreign investors are thinking, we came to India thinking India is providing higher returns. Now, US itself is providing comparatively higher returns. Let's go back to USA. Capital flight happens. So, when they take their foreign currency outside, there is a greater demand for foreign currency because they are asking, they are investing and doing everything in Indian currency. When they go back, they want their foreign currency back. So, there is an increased demand for foreign currency within India. When the demand for foreign currency is greater than the supply, what happens? Indian currency starts depreciating. Previously, people were willing to pay only 80 rupees to get a dollar but because of the high demand, they are having to pay 80 or 90 or 95 rupees, depreciation of Indian rupees happens. To prevent this situation, what is RB's likely reaction when Federal Reserve raises the interest rates? India has to offer an even higher return for the investors to prevent the capital flight. So, RB is also likely to raise the report rate as a reaction to the Federal Reserve's action. So, all four are possibilities over here. Most people have given the correct answer for 17, which shows that you have good hold over the concept. All four are correct. 16, sorry, 18, we are moving on to inflation. Very good. Salai, give us a cigarette. May be Salai, are you? I wonder. Great, I have a friend from there. Okay, so 18, yeah. So, time out. 18, the answer is correct. A, again, most people have answered it. I think you guys are quite strong. Most of you are attending are quite strong with your concepts because concept questions, we are getting it right. It is part of liquidity adjustment facility. Yes, there are two main tools of liquidity adjustment in India right now. Reporate and standing deposit facility. But as a corridor, when you look at it, there is a third thing also which is added, which is the marginal standing facility. Okay. So, if you are looking at it as a corridor, there is a reporate in the middle, 0.25 percentage points greater than that is the marginal standing facility, 0.25 percentage points lesser than that is the standing deposit facility. If reporate is 6 percentage, MSF is 6.25, SDF is 5.75. That's how it is linked. So, it acts as the floor of the LAF corridor, MSF acts as the ceiling of it. Reporate is in the middle, it is the anchor. Okay. So, it is a part of the framework, access flow is correct. It is a collateral based tool for absorbing excess liquidity from the economy. Reverse reporate was a collateral based tool. But because this is the standing facility, which means RBI says it is available at any time you want. Whenever you want, you can come and deposit money with RBI, RBI says we will not give any collateral to you. So, it is a collateral free tool, not collateral based. It is a tool without collateral, as someone has rightly explained as well, Aravind has rightly explained does not need collateral. Correct. Its regular operation will be at the discretion of RBI. Reporate, reverse reporate works on the discretion of RBI. Reverse reporate is not used anymore. MSF, SDF, look at the word standing. Standing means available at all times. RBI doesn't have to explicitly make it available. So, it's a standing facility. Both the standing facilities are not at the discretion of RBI. It's because RBI is the one which introduces it. But once it introduces it, it is available for the banks at any point of time till the RBI makes any change to this. So, it's a standing facility. It's a regular operation will not be at the discretion of RBI. Banks decide whether to deposit money or not. Only the first statement is correct. So, A1 only. Moving on, 19 time starts. SDF recently shabas replace reverse reporate as the floor. SDF replace reverse reporate. Repos still there, right in the middle. If I said something wrong, please forgive me. In a flow, I might have said, if I said SDF replace repor, that is a mistake from my part during brief at all. Time of monetary transmission mechanism. So, what is monetary transmission mechanism? So, still getting answers. First one, the introduction of external benchmark-based lending rate was aimed at improving the transmission of monetary policy through the economy. Reporate is a better tool at regulating economy, white money supply while OMO helps in immediate regulation of money supply. So, the answer here is both the statements are correct. C is the answer. A lot of people initially answered it. Some people later said B is correct and I have got one person. No, all the answers are either C or B. So, C is the correct answer. So, let's look at what is monetary transmission mechanism. RBI introduces monetary policy, which is reporate. But what is reporate? It is a rate of interest at which RBI lends money to banks. So, it's a relationship between RBI and bank. Through it, we think RBI can only adjust the money supply in the banking system. That is not cool. Because when the reporate changes, the rate of interest at which banks borrow from other places, including from the public also raises, the rate of interest at which bank lends money to the people also increases. When RBI reduces the reporate, all the other interest rates are also likely to go down. This is called as transmission of monetary policy to the rest of the economy. So, when monetary transmission mechanism, monetary policy is transmitting properly to the economy, then RBI's policies are a success. The whole idea of reporate is to transmit the monetary policy to the economy. When that was not happening properly prior to 2019, the RBI, it was there in the economic survey as well, the RBI had reduced the reporate by 135 basis points. But the banks had only reduced their lending rate by 40 basis points or something like that. That is poor monetary transmission. To overcome that, RBI said, we have a system called as marginal cost of funds based lending rate MCLR. For certain kinds of loans, RBI replaced MCLR with EBLR, external benchmark based lending rate. MCLR was based on internal factors of the bank, like their cost of borrowing and all those things, their operational cost and all those things. External benchmark is based on the reporate and a couple of other external factors like that. So, once it is based on reporate, when reporate changes, external benchmark based lending rate also raises by the same extent. Reporate falls by the same extent, EBLR also falls. So, it was aimed at improving the transmission of monetary policy through the economy. So, first statement is correct. Linking the rate at which banks give loan to the common people with an external factor like reporate was intended to improve the monetary policy, transmission of monetary policy. Second, open market operation, RBI announces, next week, Friday, we are going to borrow 10,000 rupees from the market or sell GSEX worth 10,000 crores from the market. Immediately, they can reduce the money supply or increase the money supply in the economy through open market operation. But most of the people who deal with securities are limited. Very few people are actually dealing with it. So, commercial banks deal with it or non-banking financial companies deal with it. Very few people deal with government securities, which means that they can immediately reduce the money supply, but only from select segments of the economy, not an economy-wide change. For an economy-wide change, reporate changes, reporate increases, banks lending rate increases, banks deposit rate also increases. As a result, more people deposit, common people also deposit more money into the banks. They borrow less money from the bank. So, a greater economy-wide impact can be seen through reporate. So, the second statement is also correct. That's why both the statements here are correct. I hope that answer is clear. Moving to the 20th question, EVLR, MCLR is confusing. So, Satish Kumar, the idea is very simple. EBLR, external benchmark-based lending rate, could be a typo, I think. So, EBLR is very simple. So, MCLR, bank looks at their internal factors. So, at what rate did I borrow? How much salary do I have to pay for my staff? How much is their rent on the building? All those are the factors which determine MCLR, internal factors of bank. You can also understand MCLR as internal benchmark-based lending rate. But now, RB is saying, if I leave it to you to decide what is the lending rate, you are not doing it properly. You are not passing on the monetary policy properly. So, we are going to do something.  This much more you want. You fix that margin and after that, the interest rate will change according to reporate. So, reporate becomes the indicator. Whatever is the reporate plus 4% will be the lending rate. Reporate increases, lending rate also increases the same way. Reporate decreases, lending rate also decreases the same way. That is external benchmark. For a bank, reporate is external. For a bank, their cost is internal. That is the external and internal concept over here. Satish Kumar, hope that is clear. Next question, 20. Time starts. Simple question for most people. Late Satish. All right. So, sur