UPSC Prelims — Economy and Science & Technology
Why This Chapter Matters
Economy and Science & Technology together give 25-30 questions in UPSC Prelims. Budget concepts, economic indicators, government schemes, ISRO missions, and space technology are recurring topics.
Economy
1. National Income Concepts
GDP (Gross Domestic Product): Total value of goods and services produced within India in a year. Measured at market prices.
GNP = GDP + Net factor income from abroad (income of Indians abroad minus income of foreigners in India).
NNP = GNP − Depreciation. Also called Net National Income.
NNP at factor cost = National Income.
GDP measurement methods:
Expenditure method: GDP = C + I + G + (X−M) [Private consumption + Investment + Government spending + Net exports]
Income method: Sum of factor incomes (wages, rent, interest, profit).
Output/Production method: Sum of value added at each stage.
Base year for India's GDP calculation: 2011-12 (changed from 2004-05).
India's GDP growth rate: ~6-7% in recent years (among fastest growing large economies).
2. Inflation Indices
CPI (Consumer Price Index): Measures change in price of basket of goods consumed by households.
RBI uses CPI-Combined as official inflation target (since 2014). Current target: 4% (+/-2 percentage points).
Releases: Ministry of Statistics and Programme Implementation (MoSPI).
WPI (Wholesale Price Index): Measures change in price at wholesale level (before retail).
Used by government/industry for price monitoring. Base year: 2011-12.
Core inflation: CPI excluding food and fuel. More stable measure of underlying price pressure.
Deflation: Fall in general price level. Japan's "lost decade" — classic example.
Stagflation: High inflation + economic stagnation simultaneously. 1970s oil crisis example.
3. Monetary Policy
Set by RBI's Monetary Policy Committee (MPC — 6 members: 3 from RBI including Governor, 3 external appointed by Government).
MPC meets every 2 months (6 times a year) to set policy repo rate.
Key rates (approximate 2023 values — check current):
Repo Rate: ~6.5% | Reverse Repo: ~3.35% | CRR: 4% | SLR: 18%
Quantitative Tightening: RBI withdraws liquidity (raises CRR, sells G-Secs).
Quantitative Easing: RBI injects liquidity (cuts CRR, buys G-Secs — OMO).
4. Fiscal Policy and Budget
Union Budget presented by Finance Minister in Parliament (February 1).
Budget 2024-25 themes: Viksit Bharat 2047, infrastructure push, fiscal consolidation.
Key budget terms:
India's fiscal consolidation path: Fiscal deficit target 5.1% of GDP in FY 2024-25, aiming for 4.5% by FY 2025-26.
Disinvestment: Government selling stakes in PSUs. Department of Investment and Public Asset Management (DIPAM) manages.
5. Banking and Finance
Scheduled Commercial Banks (SCBs): Banks listed in 2nd Schedule of RBI Act. Includes PSBs, Private banks, Foreign banks, RRBs, SFBs, Payments Banks.
NBFC (Non-Banking Financial Company): Provides financial services but not a bank. Cannot accept demand deposits. Examples: Bajaj Finance, HDFC Ltd, Shriram Transport.
Banking reforms:
IBC (Insolvency and Bankruptcy Code, 2016): Time-bound resolution of NPAs (Corporate 330 days, others 180 days). NCLT adjudicates.
SARFAESI Act (2002): Banks can seize and sell collateral without court order.
Bad Bank (NARCL): National Asset Reconstruction Company Limited — takes over bad loans from banks.
Financial Inclusion:
Jan Dhan Yojana (PMJDY): Zero balance accounts, RuPay debit card, Rs 2L accident insurance.
PM Mudra Yojana: Loans to micro enterprises (Shishu ≤50K, Kishore 50K-5L, Tarun 5-10L).
CIBIL Score: 300-900. Used by lenders for credit assessment.
6. International Trade and BoP
Balance of Payments (BoP): Record of all international transactions.
Current Account: Trade in goods (merchandise), services (IT, tourism), income transfers (remittances).
Capital Account: FDI, FPI, loans.
India's current account: Usually in deficit (imports > exports).
India is world's largest recipient of remittances (~$125 billion in 2023).
WTO (World Trade Organization): Governs international trade rules. India is a member.
TRIPS: Trade-Related Intellectual Property Rights.
TRIMS: Trade-Related Investment Measures.
Important trade agreements India is part of:
RCEP: India opted out (2019 — to protect domestic industry).
FTA with UAE, Australia signed (2022). FTA with UK under negotiation.
7. Important Government Economic Schemes
PM Gati Shakti: National Master Plan for multi-modal connectivity (roads, railways, ports, airports integrated).
National Infrastructure Pipeline (NIP): Rs 111 lakh crore investment in infrastructure (2019-25).
PLI (Production Linked Incentive) Scheme: Incentive to manufacturers on incremental production. 14 sectors including mobile phones, semiconductors, pharma, textiles, solar modules.
National Monetisation Pipeline (NMP): Monetise existing government assets (roads, airports, railways, telecom towers) to fund new infrastructure.
Science and Technology
1. Space Technology (ISRO)
ISRO (Indian Space Research Organisation): Founded 1969. Headquarters: Bengaluru. Chairman: S. Somnath.
Recent missions:
Chandrayaan-3 (2023): Vikram lander + Pragyan rover. Successfully landed at lunar south pole (23°S) on August 23, 2023. India became 4th country to achieve soft landing on Moon, 1st at south pole.
Aditya-L1 (2023): India's first solar observatory mission. Studies Sun from Lagrange Point 1 (1.5 million km from Earth).
Gaganyaan: Upcoming human spaceflight mission. Will carry 3 astronauts. Testing underway.
OneWeb satellites: ISRO's LVM3 (formerly GSLV Mk-III) commercially launched OneWeb satellites.
Launch vehicles:
PSLV (Polar Satellite Launch Vehicle): Workhorse. 59+ successful launches.
GSLV Mk II: Geosynchronous. Cryogenic engine (indigenous).
LVM3 (Launch Vehicle Mark-3, formerly GSLV Mk-III): Heaviest. Used for Chandrayaan-2, OneWeb, Gaganyaan.
SSLV (Small Satellite Launch Vehicle): New. For small/nano satellites.
Key satellite programmes:
INSAT (Indian National Satellite System): Communication, weather.
IRS (Indian Remote Sensing): Earth observation.
NavIC: India's regional navigation satellite system (alternative to GPS). 7 satellites.
2. Defence Technology
DRDO (Defence Research and Development Organisation): Develops indigenous defence systems.
Key programmes:
Tejas: Light Combat Aircraft (LCA). Indigenous fighter jet. HAL-built. Mark 2 in development.
Brahmos: Supersonic cruise missile (India-Russia joint venture). Mach 2.8 speed. Range 300+ km (recently extended to 500km).
Agni missiles: Ballistic missiles. Agni-V (ICBM range: 5000+ km). Agni-P (new generation, canister-based).
K-series: Submarine-launched ballistic missiles. K-15 (Sagarika), K-4.
INS Vikrant: India's first indigenous aircraft carrier. Commissioned August 2022. 45,000 tonnes.
FGFA/AMCA: Advanced Medium Combat Aircraft (India's 5th gen fighter — under development).
Nuclear:
India declared itself nuclear weapons state after Pokhran-II tests (1998).
Nuclear doctrine: No First Use (NFU) + Credible Minimum Deterrence.
India-specific safeguards agreement with IAEA (2008 — after Indo-US nuclear deal/123 Agreement).
Nuclear Suppliers Group (NSG): India seeks membership (China blocking).
3. Biotechnology and Health
Genome India Project: Sequence 10,000 Indian genomes for disease research. Analogous to Human Genome Project.
COVID-19 vaccines:
Covaxin (Bharat Biotech, BBV152): Inactivated virus vaccine. WHO EUL granted.
Covishield (SII-AstraZeneca): Oxford AstraZeneca's viral vector vaccine. Made in Pune by Serum Institute.
ZyCoV-D (Zydus): World's first DNA vaccine for COVID. Needle-free.
AIIMS/Medical infrastructure:
15 new AIIMS approved under PM-AYUSHMAN BHARAT (Pradhan Mantri Jan Arogya Yojana — PM-JAY): Health cover Rs 5 lakh per family per year for 50 crore beneficiaries.
4. IT and Cyber
Digital India:
UPI (Unified Payments Interface): Managed by NPCI. 10+ billion transactions per month (2023).
DigiLocker: Digital document storage linked to Aadhaar.
ONDC (Open Network for Digital Commerce): Open e-commerce network (like UPI for commerce).
Aadhaar: 1.3 billion enrolled. Largest biometric ID system in world. Managed by UIDAI.
Data Protection:
Digital Personal Data Protection Act (DPDPA) 2023: India's first comprehensive data privacy law. Requires consent for data collection, data localisation provisions, penalties.
Semiconductor:
India Semiconductor Mission: Rs 76,000 crore incentive for chip manufacturing. Tata Electronics + Powerchip (Taiwan) setting up fab in Gujarat. Micron's testing facility in Sanand.