Chapter 1 National Income

Topics to Study:
Basic Concepts
Calculation of national income using Income Method
Calculation of national income
using Expenditure Method

TANETEE
Calculation of national income
using Value Added Method
Precautions of calculating national income
using (3 methods)
Steps of calculating national income(3 methods)
Problem of double counting
Factor and Transfer
Payment
Real and Nominal GDP

GDP and Welfare

Difference between:
-
Stock and Flow
-

Leakages and injections

-

Money and Real Flow

Final and
Intermediate Goods
Items to be included in National Income

Items to be included in Domestic Income

(10 M)
 NATTONAL LNCOME
t Baaic Lontepi

K+De
Deperiualian is alsa komen 2iumphm ixead lapitnp
and Replacement_Lastt
KOcbeuiiathorae Ne
+NEIEAAN
maeatico) Nahana! Cy det ackou-taianu
to buoad is pive
SAFEA Zthen ihange the
eIEA-Net4ac Sanne mAbuoaol
NEIeA=aLameam tbuoad Snname tn Ahead NELFA
tNIT
Ci) tactailest le) Masket_ Paice lAP
soIIL

NIT=Net Aadiyect Tax

NITinclinect Tax-Subsidies
 Masvement dd Natima) atnumme NNt

nLeme ehoa2 pendtug had Nau Addes Mhed

ADfe
DAP
meMethbda(DP
Lonpensatim Openatkg eplus Mixeo tnLame
Employee by aull emloycd
labouu Jnramne abitainLmme
Phagesand Salauies Rerd Jokyesst
(hah and kiad Proli
Employe% tontkihutin LUnditihutl Leicberdhion Oideno
2sodial sicut
Achem2e A let Retained
EaxningL
 xpndie MeHhod laDeMelNDPAp

Lnsunnphon hnal
Expenlihuue NeE Exporl
Cabita! f2)aatae LEputimpeut)
Bisatz Einal Netllzuos Anveatment Ner-Impor giue
ther thange algrto-
ake net Exper
Lmaumphon
txpencl?hwe LugsslsNed Domeshe Iovene4 Invesnent
Chape instpck
rtounment hinal maton cloiag Atock=operin
Lmaumphm2 Ateck
Ppenaliuuue
AUDJA f-Luoss
Keliolentha Buines14 Rablic
teed oeatment
neanoent Aaesgen
Nd tn ecornd ement osa alues ae,giea then the tesult
Expendlinika Mehed a i l b GDnp_and if Nek values axe givn hen he
Hedult uwil be NDPAp
 Value Added Yetho hizuction Metha?
CaDPe GNAme)

Shp1*
Nalue g Orlpst(Vo)=Salatchange a soek
Sep 2
GGD4pCH avAMp Ltess Yallue A Lm= Yalue e oukput-
Ipteinidiatu Lstid
Sales bie x uanliiz
=
Salia omesti Salrs pot
ICincludes onlu kamoiiialApaKes
Tc= hmchasn elz nat fied asstr
smatiuial fsam lemeatic ogauket+ tmpeut
A
 hesuy d National hrrne
EDiaihins do difpuont gguegalz tan b euned
suuies
24tauling Meney value e_all he nal guDde and
PHadiuced

LLounhn9 Yeay_
Incased Natioal by the HeialentA heL0untuy in an
SHia the de euite theLouty in on
In ta4e Donasie
ALLpunhing

YaLe Masket hie

Anaae Yaliedat ater Cot

In Case ps nclusive depsHeciahca-

Eaie bepneciakern

Dameshc inLomå LADPE) Jtis he money value e 1all the 4inal gunds
telbriysty h e Louauy ja an.
and duuuicekpledured uoiHain the dmeaie depieciatina
accounha Yeau lued at-ecteu Las and Eeduaie
NgHonal NPe) t the_mmey yalue d all he inal gnds
duirespbduced bythe sealdera c the_couaby inan accaunhing yea.
and
valued at facto Lst and excluaive depreciatien.
 nme Mehod 44ctelayment mahod
NatianalInnone Can bejned a4 the dtm total dactet 1nLeme
laun by h e numak Hesidentd the countiy dueingan accounisg y e a

nucatis eganding ome Metha2:

Tiansler paymena aHe not inludea e paymenti Like pld-age
pengfonas Hholauhipd, lhauity aa Ahoula bi ignerecl as
docsnat_Contiibdis nanyppaehacivily
Ilegal JneameA au nat nluded daneme juonh illegal actiuisies ike
sduagliag, thetgambliag ad hlacksoney hauld hot b iacuded
i ) Lmmiaim_en dall anapAchagh adicmd hanglgord Ahaugh dalu
and pu4chase adecmd shdgonda aue lot Nluded in natiana!inLame
Lundiu peuoduuchion Methal Lammi pzd a dalsand puushaand
thesugnds dhoud benided as his id seusakd 4or factee dsvites
Agent
Ciu) akuagg baide nlu andpuuchaazd Ahaueslhenda 2 Any InLene
aiag cadal daldghakeshanda et ot ialuded n mioal fnLomi_
buta LmmikAan au brokexage chped by eget _iu_Lonsiduted
a4 i e iacameanalhenceVi iz artuda ia natiaal Inme
v a ai Laaia2 tny capital qain auislog-m he Malu d 4ked sasulá
Lkeouue buildia esheuld ant-_k Tudsdbecausihe ivaluc d
sAuchadeut_haa alueadybun talen. 2ato_accouzt
 dnLume nm_windlall gain Soamewm inaLail qain_like loteres
Inene
dhould he avoicdeá a duch inncme doeanot Veadd o aay pueduuin
atiuity
Ependtue Mhnd lanPue)
Nahamal sdniame_can be delined as he anntnl dexpendhwe m he
Puchaaugfinal genda and auuvices puddieed by jusidenta in he ecanomy
clusing an acaing ea
Zeauutiona Hegaualiag Ependitu Yehod-
()ntmediat Expendiuue twiu not be inlded as in the oationa!
Snuamejt iu alueadyncuided as4ina! expendlituue,iinkumidiaz
Bependihues a then_itueil_leáa o double Louatigq
audi
expeclihuneLshichmay Heault in DveNeabimatiam 4-nationa nLam
handgmdshould npt
LDSegna hiaaondasLbendiuue nade cn secmol
Dmclued i h ë aational iauome d uwLent HeatCs iL hadalneady-
n laldeelin theAationaL inuameq hat yeay in ohiih they_iOeKL
Pchagd
be iauuded Auh
)mpuLA ELpendtu= Un_accauntproduchim aheuld
phoducia del Loatumption, suy LonsumLa sukwies ouone e l -
a4
 L Expenaihuueo ainsespeymena2hia dhoud se exidsded aa thes
aue ulativaL TLanafeus égainst Lhich E n d a n d sLUÍCes uA
pDvided in eun..
Apenditue_mAhauealbmda
bendi= Ependiu buig and sllag
hest_Anly leada wtAanae e ane Pender/instihsim
anothe dd heae expendihbue ahaull ae teicludled.
vi Epndiuve cn tinal 4ewds-Dpe ade
aily buintladedhiaill he on fiaal lenda shauld
le puoblem e ukle
Loiuahng.
Yalue AddedMehacd LadkceimMethad LDPAe
wotiaral dntane Can ocaa2ned aa dhe 2anket value
and svices puoduced bAheuealdená Aiaalgmdu
he Louatiy_dusirq an
attounigg jean lndeshis yekhod, natiomal
aaduiag iaiknae s eaiapatid
eanibiten eachphoduciag urit
ecauhc ueaaiAPA aluAddo Heheg2-E
D yalueina Culput2 Sn sdun ausid he psahlern
Lourt
LAudtn% onli
the valuuaial 4 dauble-
oulput ahauld bs:takea
 piuchasasicmal handqn2da
Li 5ecand hand 900ds= Nalue ddaland
eauned Mdal buuchas 2 inksd
ia Not indudkd, buE commisfra
Amputid luu padiucton
mDutid valuesdgocla s u i e L
imputid valu
gonds zet Ail_Lorsumpim is inctulrelsbz he
Dotintudol aa it ia
pueduchin dssicés ouasl uLes.
no pansiblp_esiatz he val 2h
Impi+hd Reat Ampuid_uuenti oney ocupied housra should ou
zolluded.as all hausu have ental Valut
Value_ddhhumediatundsi a i aot incdded un dhe caialtme
Value_added bicausvalueAiatetmLdial Jerdd i uelleced in
hé
Value aal gmds-Ai
N) Lzmniaaion and biekeuthg Cammissiomand beoketeae euaed_endal
and pwtchasu ucgm handqUmda and prape bucma h e pau
oatonal auoone betause t is a dactei inuanhe.

hoblem 4ouble Counti

lounhing tne aluei a prdductMue han me in he measuuiaent_OL
uimahom atima! iniome_iaCaAled dauble Louniag.
B he ginalgndgeea nn diferent puocesses AndpaaaatHtagh-
many tagis kd hui is aways a daggeu _drat ik value may be
indhded a t eenyalage_and keauuit nay bu dauble,buible al maniold
Lounhn9
 To avoid dauble couikig, tw0 mehade ane adopkd2
L)JinalLodud Hekhod Aurdigg to thia pehzod valueanl ina
gDds and diwies auefo be consideedphie Latmaligq he èDA
bWale_Adiud Mehod Aczesding thi ajehael, dun tal value
added ty each tiumahaddbetaken le eshimtizgADP
ample-
uandacion
tmens llh to Elouu HU
Nalusduh Vaduueg.snpuk yaluu Adda
Elou U srlls to Bakeu Rs 33ao
Bahen drlla to lozumeHs RA 8aoo
Total suatuelAdded
A20uo
Ccilan Hou
Moneg E Real louo
=

Real Hop
fache
otthhold
Seuures4
epel Svwc
 heusshelda,
duuiea lkand, lakaus, capital, E a p i J u m _
hepauw Hacho and
gemda_an dwicea4 jiu2
d i u i c e s f u mmiuma

niuma dnd_cosareapmdiaq
Haw
o"houauhelds ia knaonas Heal 4How.b h i e l lo
tisalso kaau2nas puoduclauz e
6a
Heue atdium qExchangeie god
#oneu Fou
Kum
Hausrhad
dicke

houshel44
rom_hauuholda
anadinHetiun cametauy paymenta
thenack diuRea
fin gzaîinah the gaods aad uice4.
to
i alokncbnaa Nanina! low
Heernediuna e Pxchange_is m

1hiioeen shk and f

iee
Hou
vasiabl lhich
ua

Ba Stock uaAnyecamamfe
ecmamiL vasiablh which caludatid duuin4 apeuiod.
1MeaningAny
calulalid atapawiala
 -StDck
How-
Brais

Point ime ippe

-Stati LomcepE ynamacmiepE

2 NatuKe dinnend
Theu ik_ro timu lmenaion|houeie imm
Oimendn
Amount monH hlalz in . zen oatiu in
HExamplea
tank etz

_2ypuens bitween kcakagas and kchaas

Baais Aakages jcchems

.AeanisA heauaue thasuzla aniables heat ane hae flouo vaiables

Lwhih hau a nepadie innpac 4ohich cauas an incueaas iathe
m the eo aduitior2
inrzieguinba genwaion-
2. Caah ttuo ioihduaula _money t s addition Many0-
om the iculas flas q he ciuculan tlou ndome
3. Lxaple uiayi,Sepeut, Taxes clz ueamed Epexta, tyoveunmentE
ExpendiHnL"edz
 and angA PEDe
Aeence Bveen acho Aneome
ucteyInlme
Baaia
Heceived wiHov
ueceivedwihouE
E
tA he inLame
u Hhe inianme
1-Meaning-
jsYeaninA elers nfacte intame neceived 4enderiag any dUuie Selliag.
aendzsine
Haseiac poducoa 4 bdoduà
facke siwices e_slligg a pibdtany incyuded inhe Lalcula-
lctotian_e i k nat
2Aaduaimtis induded in the h m naiamal Jnomi.
oationaL Anuime
t 4 eaunina Lniei +ui HeceiptLomept
3. CanepE
4Dhwlame t isalsa kaonad6atual Snuom t t i alao knouonas unilatiralInm=
5Example Rent pue ageetu Oldoge peaaton, chaty granta et
Lxenca buhween eal_and hcminal aDPaDP at Lanstant and LusLnt LUiLL
badis Keal aDP Nominal CadP
1Meani h e alse d cuxaent Oukput Eis he valuuduNrnt_o1alpa
ot hastuea piies a t uHHLnt yeat pLeA
Akuaaive alAn àlan kaaon as _GRP at i n also kaouon as CDP at
Name- Condtant biies Crunt biies
 Keal tDP Nomina 610P
Baaio
3:thange l l inw eass ony when cutprut gat2il Taueau eihu ohen
and suuicea nieasta Qutpuinmeauot_Cument
aciceU.
4. Rlble t conaidlexeol as kelable iadex e 4 not Heliable index d
Sndex cmonzi gAooh ard wellaue Lcanoii uooth.and welaHe
5. Sllee net inluenud by 1 u 1hienud b inlaim
sollahonlL

Lonassia2 Real aDP=AominalhaDP

enent Yean Jalex -

Nomnal aaR Ree_ADP x_lwsent Yeat Index

EGDP Aellaeu2
J+Ahouss changefn tiDe du o charge in puize level. GDP dellatat shox
edpet 4 fallai bDP Dueu a_ pul t i e . G4DP dejlate egual te
Cutneatjeay index.

GDP Delakoy_= NominolGDP x lo

Real_cDP
E Kdatimahi bitweeaGGOP and ueaue
OJen_GDP u_onaideued as an iader d Aocial iolake bjenually an inueass
in aDP imblies inLueaae in the level sodal relyate peapleBatit
Qo alsays tiuu Thene ave exeptiana hiz
s
ORstibutim_dGDP h e intnneoiin he Lounlky iis uAequual
dsteibulid iE.few beiaa hollira B_naximum iuiAduneshea
dodal ving Lamám perarauilnat impraeofh inuucasn
n
aDP. Thegahbcttseen haiedda have noti nay _expand.
6 ) Lozpesitio cDe heLZAzreaar in aDe ia ueo pueduieae
Áoally unsankd puoductaNika dldenne £aiipmeatk, asms liquwra etTs.
theasch intweaa inDP A Aet he inclicadeae_Loelae
NomMonetau kcharad Ja olndian ecanemy,nm:moñetauyexchanges
opakkela,ohe~e-
2ue siEU zeudELag i uutal aueas_and uneeganicud
he baymeata a opadia kind but hesu au net ecetded sa
GADP Hematns undenesimatrd. tenu_GAP doeen't swres as a A
Inder e
dEcebaral uadaiaa 1th vaisu in bDP hesLniL bu uiss in.
ndistzalzagim and Lmbanizatan há uiLL_LaÍe polluäims.
ith aRPtheue 2iLL be ccoeglcal degtadakn whA
will ueduie Loelfane he.peaple
 E t e
nlHea
u a a l i i e
Huus n the bnelita_a dimio an indiuidual
Lau4 tn anotheu_iHanut_any puie toiiiAaa alsn be seleured
bad inpudt an_achiiih4iHhaut a pena/ty Impa
PvhesnaliHe iahat accaurkd in the tndex aoia! obllase
n eumna aDe. tunallea de vahaue any akok in
shich he Canba_boyght osol N

asiti Akunalies Negatie Pteznolties

GaDP i l l undeueatimat. he aDPusiU_aeglect haau
actaal wellae dLounti hauma
Pxanble 12su 4_Publte N brampls2 polluian CHealid
Pauha byumokag.

#Henu huiweenLtnalo and Snkumediatz lyonda

Basis Hnal qoda nkanedath geeals
LMtanlng ALgmda uehich aue ud das LinalHLgnd sosichaue uaud eltu
adaumpin_o eu fiaal inveatryente usthu PLwductim oufer
L4esal inthe sami yeat
oduhinnal unds do aathasu thHoughSnkumudalk qsodspau ~hogh
buoess ndithm_pueuss odluchon hece
 Basis iaal lycods Iatumediatr God
3tushuThtyaue uud den_final
Vs consiumphicn podactin
H.Inclusim hey aue induded in estimaiion Theaue not iochudedin-
in sNPE4nalenal inte atima m nationa Inume
5Ecarnblesichusdice, milk by th uchanL nik hy Autauwant
LanaumeHá, machîne puulhasie oqachinepuakaaid by uo
e-kal

omesbietuniey nea
indudesi
la) alihtal unatiena da eadt includigg_watuu baunalauies.
(6) Embassies and aumy Alishmenti h the_LoutyAinuatidabuoad
Ldheueas4gnegodie and aumy ahblshments lotatd i that
Louily aie ludid
lOMouing obieeta Lke aiucualk,ship c , Lohih aus apiuahd by-Heaiderii
la)_ishirg wosaela,oiaad natnakgad igs_and tloakigg plafeumsihatd in.
iahunaralatiuand epmatN by aesidonti
Kesideat al outy
A Heidercada LounlHy _doea notalunys Mean the uihzen h a E ounly
A Huidenis dsaíal n u a pekao th odinauily Meside in_a couty
And Ohase ceie aecmomiz inkhealies io ha Lountza
Lut- uukally a
me feau i Yaten hepupas amlning eaiden-=
ialcahua da petac2
This ul 1yean does not abblies to haollouoine QLLo
La)LyounmentEmployees
lb Lempanies Dpekaing Out
Hehiskund Laar in which itis
ODUand Helatid ganisahoma.
le) Employees o 12sd. and Relald TME, WIo, Ltc._
Oaanisalion
Chapter 2 Money and Banking
1
Topicsto Study:
Barter System and its Drawbacks
Meaning of Money
Functions of Money(3m/4m)
How money overcome the limitations of Barter System
Commercial and Central Bank
Functions of Central Bank(3m/4m)
Credit Creation Process(4m)
.MonetaryPolicy

(6M) TH M
 MALRO bconoMICS

MoNEY ANp SANKING

Topis te Andy--
Meaning dmney
Bartd yctim
Quawba o Baritin ayáim
hunions mgne (3/awke)
MoneyAPP#
*Meanung Maney a4 a mean 5
Money_ k anyHfag _Lsaich phagcamman acceptabili
daeieptmone doea. 0R- E ia an instuument
exchnge O
medium exchaage, ine o alue 2 LaAUH
hat aiuueA as a
value and aAardaud d e 4 e u t e d l baymenli

-CEconmyomy) so also knorwn

s a ayatim 7uhih goods ëue excharged (cLc_Econumay)
Las Commdolity Lemmebl 7_excharge ecnemy
****
Econy).
 ** ***** **** **
*********** *** *

Quasbacks Budo syalont

ouble Loinidence 8Hjulty
an Anuage ard Translez
kack o a Lomnan Value
unit dvnlue ti yrei
-

L) Double Lninuidene Laants 2 This a aninheuent diiulty faced in-

Hhis sjalinn It uequiue both Hnepasiein
h e pHocesd exdangi ta
hau a LCmmanneed je_cachothgedgond But ut iu not
diapleer Exanaple fE ik nottolmple tofind a aliday4do
you mobie And at hedameHme has a vatch peudom_Leho and
bu hatyou Luant t o
n) Xack a Lmmanuait value2- In banluu exuharge,theneius n o
Commm unit inLshich 1allhe gioda can be
meaguuement _uit úE bucame en diicul!t measuiid, oihhout_can
pHoptian-tuo96podaaHe o be eohanged. to_detunine that in whatt.
hD 0 uhiÄ Jiise humenti-Htiue ayment
bicorme veluidLlt_rdeu bauetiy dytind Lrned ayment
dakm_hie poyment which i to benade in exchange. Sa baukn
tehma d godnly and. the gualily. 4 pitue aiLU_be ia
Jame he tnd gndamaynot eoaain.the
epaymen
ulty qdtoage sand ans!u Lta/h-n Bortik eschangeylns
hiing
teage gridk biome vey diuit and t inveld ick. n it
puhaatng bowu tot puitiuue mne inthe forem ad and.
veuydiultansten in tuma znde a oldresbuceme veng
expinaiv and ucan alto altpot he gual-

hunckions Mme
Aanale and
Medium a steue 4 value
exchang
Measuiue Standaud
value delened aymerl

MAium dcxchange
uand dLwices. Hamsy
Mamey aet aaiatenmediaug foexchange d gndspuuchase a n d alsn.
a medium ExthangeepLatd the act
hiszends ana h e n helche
uith he help maney a pusan can dell
Can u s u hismone t punchaa Qnothe Lomneoi. warts and
DoublLoinidend d
Momey emoed he puoblem a
and eHp Ajent.in banliu..
Heduted thetime
 *

untte dmny_a_essuntial _Lenduching tandu

Market tconamy.
Measuye d_value _Means that money
Money asia_urit o atcouct c Meadung
'

1actaa a Atardasd unit tet quoting p

4uniarn_snakey_meneya a houee_~diun duconapakingia
90bod and auuices
buaintna Accouns.-
unchion dmoney maku paible the Reping q unlea4
all busitas
uould bu_imperutkle to keenielbuaintss_accounla
tHansauhionA_ aHe expadLd inone

Standaud o_delovud oynent aHe tn bu _made in

eeHedDaymntz e l e t hou aunent shich
thau paymentz ushich ne to bu
puluNeMadey at as 4 dtandaudu
nMaae in f u i .
moadex ya tHouing and lending_aHehouibleonuy_due to thu
n V
unchan oiocneu
has ded e CHeahion o4dinanial inshtuhcn valie
a4 i
Money arcefted au stardand to dejuuned paymst
Human dable, ut u gerevaly acceptd nd t awahle au impaned
to any_thex_genda.
iv Staue dvaluc
MoneaA adteue d value
skod e u s in qutisue
means that money dn and es
nuset And, can

Money can be casily stoud as t Lome. in Lonvenientdencminhons.

MontyCan be caiily exdharged 4e goods atal me
e 9 aue _hely the bunehasi
in shiting poovu pron the pruut to fitae
value. bicaus z
one tonveniert
AeHUeA as amedé h ande q
genta! aecejatablll, Atable valu. an en penishable natiue.

tmeans thetaal stek o all àhe o maney ltpahx manaLzina, demand

olepoiuohih aue_held by bLiat iat and pawhtulan pet time.
Miaue Mayhb
M4 M+ Tataul
MCtDDtop Ma: MA Sauinga M=Mt det tine
depoit wit" past aepasir wlth olepasiawih the
C-CuwwHeny htla by
public T e auTng bank. --
Banka Post oce Aavig
D GtganizaHon.
DD-Semand olepo
OD- Dhey depoit
L ANKING
Jopis to utudy?-
Certal Gank
tunars Leitual ank (oltm)
Montauy
LommerSal Bank
Poliuu t
Ctedit beeaton beocess. GM)

#Certual Bank
us an apex inshturiom shich cthuuatis , contial, diueet and uugulalis
the nmanetauy and
banking stuetiue eacounty. dta main Hepenitbiuly
uto deaign vand ucemlR Caunlus manetauy poliey.
Andia's centual bank Kxan Bank Aidi -

unhions Ceia Bank

Cwwnc Contnelle
Authoriky Honey spey
Bante
the Gqoot
Bankens ank endex d- Clearing tHous -

and upeidoH ...

Last Reáort unchon

 DuuenL4 Autheiy 314 maka
to issueuoenuy i n ndia
Theceniual bank has he golemonopoy
and coins iasued by ttie RBz hdegal tendeu
LHeny nelia
me- undiuiduol ds bound to
uhattmoney Lshich e u
kegal endes meaney means aiices
aicept by lauw un exchang e cnadaland
meHupee ro and chinaue auud by the lgovnnnent and.
In Sadia
allothenptia aue issued by the RBT bhe dubbl
Oui uo this mmopoly uuight, RBTcan iedbuict o enpand
- themney acceiding to utheieguiapenta h e lcononny

agent and aduis 3Mauk)

(ti)Bankey uto the L4peunment anke
Centiual bank aclz aa a banke,ggenB and inancial aduidoy4the
utn the public
govennment ike Cemmeteal bank aue
uthegovchament, RAI ALceives deposita, Duovidea Cashs
AA a ankey to
adiances sheut teum loana uto the goueunment
makes paymenta othe áyment
manages bublicdebt, colleet tax and make
and tcamannic
i aduice he gowunment u a m all inancial -

As Adu te.
matters ouch as udet aaaigg , tade fpolieg
CT) Bankews' Bank ianad Supeuiagt Cash
Lash
Commwtual Plic
Cenlral
bank Zoan= Banks Lean

deposita Hhed pucentag

Lomaeuial banks _aHe ueqiued by la
thein depaitz 2tih he Lenal k. Lestual Bank dct
vtesotLes-
ad a uatidian _LonamenicalBantaCaah
AvA bankeu sto the bankss theseirtkal bank acta a4 the lended-
thelast Hessds in cas he cmeucial banks4ail te meet heiu.
fiacia weguiuementz pronaateau councea, theycan aa a das
eLout, appunach Htentual bankfoiloana and aduances
The ceual ban2he hank a Leibual leaaneu atlernent
and tuanalesk
The centualbank qupeuiauc, egulatu uand tolualk cammekia bank
The Lonto
exdeiud by peliodizinspechön o banks and the
Heiun d them.
v)endey Reseut
hen emmètual banks Jail to meet
he centHal banks ucomek to thein dolgatioma theiu depositoss.
Mescle.
- -.
- -

a uthdendew the daatresout,. the Cetal bark 2siume the erpen

Aibliy meching ail olenands undeu. emerynyond'iora
The cmmenial tank can borow um conttel bark pgainat thel
eligibl dacuuites. ***** ***

y)leaning tHouae tun Hon=

AUhe Commmacial Bank have Hheiu a e siHh Lertak Bank, Ao
Centual Bank ataa a intexnnediay hos tHanaatiens Ohich
invelue hwo one_mte banks.
The Centua)Bank aot_as cdeaingoia A the. emmenial banks a
1 holda Caah Henues he mcial banks
The Certial Bak can_taaikdae the_claima e vaxiouu banka a4airnat
against
each othuu dimbly by brok. ies
Ni Coniuolley_Meneu Saihu and luedi2
Centual bank tancohtnetl elaienag and dellatimag alruation in the
CmcmyhumughMametay polity
Gedit Coiual MeasmeslHaactouy a
uanttaiye Meaauue altat eaduue
Bank *
Rat
Open Mauke
'OpeuaHio ns
CRR Repo
SLRRepo Hagin Kahomig Hoad
.
Rate Requduement Suaac
A. uantitaie Veaaues ovenall_valurne 4 e t In Fe
aue_meanth Hegulatz he it instaumni
insuuminu &
heat
Cemnencial banks. ellowing ané i
Cccnamy huoygh

( Bank Rat at_ehichcealbank lends to lommHu

Stis the nati o, intutt
cala~iual._
banks uoihout any
Cas
ollahr
zlatien
Hmey Subbly (which e
Maney supbly Tluhicb ia taa thbe )
BankRatiT
Bank Rati
Boenoongs tet LmmeHda!
Baruooinga o
bank blcamu Lost Lommeuial bankas
becamcheap.
Kcan Lheahom

nan LutahionT
Honey S4py
HoneySuPp
C Open Mauket OpuatiaA ALátiezanad bonda by he
*ueexs o uthebuulag and silling goveunmerF
Cebeäl bank tuom and tothe qenetalbubleand banks

SalaHem +llati
* ******

Kanchaa_ ecuniHes
Sale AucuiiHes -- *** ****

Keapuurez loromeucal Barks

- -- -- Kesoues lemmeuial Barits

Mectt Lucaton Cuedit_Leeatn

Memey subbly.
Honey Spp
CLaah_Reauue atioiLRR) i.
t weeue o ha minimmina peLMLentagL_a
a banks total dlepesita, Lohich
-
neguiuiol tokeepsvo1hleabtal_BXnk.
depositaebankk ús ls tao, hen ik will
Joi Eample CAR Li l o , Total be.
have to keep aa CER uwihCercbual Bankand Hest l s o can
uaLd o aa loans
 ~**~***

* ***********

(akaz Mneysupbly CRRt >laszunda koan

Lushih a f Laith ommenuo
educedy. Bank
Cases
****

. -

llain Mmey
Lehin Subbly CRR
CRR He4unds doan T
mmencial
inHcasud) Banks

(Statutety iauidikaia L5tR)

Banks audauequiued to maintain
tptal depositz in he aun casn peciiel Cfired) pencentage hen ne
ottiey Lquid asaetz wfth Hhemselus.
nlahion+Money suphly T kesfunds oan
Lehich iHh Lemmuias
Cases edueid ants

ManeySuphluy
Luehich iwbi
SLR Mgte unda
oith lomnmeHia
nucaaa) Banks ****

(v) Repo Rat

Keso Kat us he uali at shich carmmendal barks. bouuow money
***

cenlical bank otahart puool by alliag thiufinanuia! dicusinoa com he

to
w*S . :
the centical bank.
latan Repo Motz. 1 > lommuial oan Hon
Bank uwill not uPp
Bonow

Allatron Kepo viat Cemnenial Koan T Honey

Bank 0lp
Bovrd

KevesaL Repo Ratn- sthe va shich theRBI boAcur mGmey or

harnmerual bank.
Lammexdial bank u n higheu pan
Snllain Ruewws Repe
taicnes
Rat e thein jund
Caals to RAI

Llatian keueseRepo Commeuial ban

lerding towe
Rat keep theis fanda

B.Qual alie enauues cuedit. iu indunen

I aimu at eontuelllg sptcizie tupes ollouoieg axe

Mouoin kenuiusennz value

A mbygin i he diyerenu blwen the amount loan and mauket
Stcuiliaened by the bouowes ggainat he loan. RBE ha thp_ught to
smaxgin al.
nlatto emint
nllatm7Maxgin Penple get less ANony aupP
Cases Requbuenrint T CHedit
latton Haugin feople g Honey sPPH
Reguhumeat CHea

(1)kaianing o Cdit
t eeha ito fiatan ud a s dediHeuent Aictks h e ecmary
nllabon R6atuaarea Rationing q_ed in cudeu
Cosus peieuieht cessiue tlow uel
lation R Bithduaas Rationigacredi and make
ete to enteunage chealit
Citi MsualSua4ion
_involueMequest, aduice and suggesttond bythe RB1 to lommerial
banks to oopiuali with genmal
mmeilanypalie
Caats ako Ra ppeals fo ered+ contaachion
N Allaln RBz appeals do Cedit expansiorn.
 Lommeucial Bank
tis a
{inancial inatirution othich peytms uhe functera 2Lcepi7deypeit
omhe publi1Ond gxantin udoand, uih he oheeaunieg
Girediteakingoriess t
Cammetial banks accelpt_deposis eor ha bl2The depositona ican2
withdnaw foatheiu depoitá byoing ohegueaThe baok uses the_
mmey in thess depaik tgeantoans. hunckizn he_cemereuial
bank aue the basis q adiposit kea tian

depasit Aan
La kh
LRR
Let us assiume uthat the entiye eornmeeial_banklag stimscne unit, all
ket
ecetpla and baypaeäla iin the eeonamyane thudigd bankapny ae who
akes ayment by LAsilisg_chedue The ane ho Heceiue hayment
deposit thedameig his ecant.
Suppou,peatpledepo Ka looo.it usdegally Compulao 4eu the banks o
kiep a Certaia pinimua Z hese dposika.. ak Lashoih themaelues and
i Lectain minioau hastdepeitzto RAzogethex they both Lonstt
kegal Rese Raho LRR) Awhih is zrad y kez..
 **

kop a2 Lzo) as LKR-

Sucou the LRR us 1o , the bank uill keep
and det Lgiue lean Hemaining l eI a o saauned thas
paumeni
Thas sho bimow ua theiuMarnay jee_matis
Leto uecein baymenke taut the marey bact in ha ka h thz ay bank
c e i e ash depeiz 4 e an
The Ban again keep e h thia depsai- 2o Cand Im) a LRRe
and lerd 8lo The money a9ain anebacko he bank
o a uesh depeit k& 2i8
leadg
in th mme goe an multibingan4 inaatily total mene
mbney
Lweatam uil
Mmay Heaha = InttaL lepesit x ,
.2RR
kalo x L
when the_puima iash depaiin the banking uaem leadeto multpe expansn
inthe total depa, it Knor as uedi MulHBeL
Lepasit Heatien 4Lemmeeal Bank
Depoik Loans Cash Resenes
Anitial
Kound I 8le
Kound TC 810 729 81

7otal lo, ood Z,ovD

Chapter 3 AD and AS
Topics to Study:
AD and its Components(4m)
Consumption function
Saving Function
APC and APS
MPC and MPS
TITI
AS and its Components
investment
Investment Multiplier(6m)
AD and AS approach of Equilibrium
S andl approach of
Equilibrium
Ex-ante saving and Investment
Ex-post saving and Investment
Excess Demand and Deficient Demand
Inflationary Gap and Deflationary Cap
Full Employment and Underemployment Equilibrium
Fiscal and Monetary Measures to correct Excess and Deficient Demand
Parametric Shift
Paradox to thrift
Numerical Questions(6m/4m)

(12 M) HE
 Aagucgal
WV
Aeanand 1anddesegali S
Agaucgati Amaad/Tata Expenditue)
eleses o Semanad t gonds andsuuices in anranny by all the Lana-
-umena n an acccunti yeau.Thexe uane soueooapementá egat emand:-
D enetzHnal Lansunblzn Bypendit a relea ute the expendrcse
made by houhala an þuuechaas duablaad nm dusabl gamdu ia aa
accouihag yeat
inh daustnent Apeoditwe t Hle ta ihe dprdituve_rade
byþetialz_inueatesA_on þunha cpital gmda and suica in an
aiccuntiag yea
(IT) (roveunment inal pendtuUeL)-* Meea to the epencliture yade
yhe zoveunmert m putchasu e corumes a"ellas_tabital gand 4e
ial Lanein mliaccountind yeat
N t Bne -M
leuso apenu butiweeneapost anal npast4gvda ana suutea
unhinea
 AD= C+T+G+ x-M LOpen Ecanamy)
AD = Ct].
CélssuadlEcmiy
y I AD
O 5o co |15D|
200
200 50 loo 25
3 l20 0o 30
I
H0o 25o| 0o Bsol

AD Ataui uum D kewe nwme a4 uthe Aemandis aluaye theue

unan ecanom4 en
otomeds ZHD
onSumbHom unhom
.
unhenal Helabomship buttweenoinioe and
onaumphm
Audina athdogical dawgin by keyaca, AniemenLuaas
thenondlumphonalaoInuraau butth u&tz _daneas o lnLame
4aduH thanui gAnuuezsu Lmaumblion
LoñumpHon ceuaim,ie Thene_is lineau
***** *

*
 Aukonmous Cansumbiam _AtZeuo kevelsc honne , minimum
ConumabHon ia heue 4o A vival q_huos~a
# MPe-Moyginal ohonaly te Lnaume E dt e Hatia btiveen cange
in_cesumplTaa Hhe change
MPC= AC-
MP Can't be gneatis t2qn

meaa Ayul_aluay yeye than Ac

AY2 AC

APC Aveuage empenAilg #n mupae

t seleua_to VHhe aba btrween total cmsumbhinanadl total intame.
APc=

n e APC carn gucs than 1 bcausa_at aaital stagesooaaLnaump-

haa dhme.
_usher YTAPC
vesnent (I
mean4inckaasc in dhe Atek dcapitalt is helblanned expenditue
byuDducins to acquiua new capitadgad
7
Lnvestment

AnducedSneatmtnt utanomous Inetmen

t Amade by_puivati oan4 i made y joveuornent
St is dependeon sncemê t isipdependent inimme-
5o l o
2oo

bly Tetz) InLanne) As = Y

ja gnds anad duuukesia san _eccnany byall the produce

i t ganeunlijeat. It a alo knecen ad dcnie Zenealid eneratid.
Thed aue huel Lntpahenk_df aguegali dupply 8-
(a)Londuumphcm
 The Gne 4As
-Cgualliy

y
50 -SD
As
quuwatais.
osmed iat +5" bicaust Aupply cnd unane inaneauu

200 9 5 0 20
2om

#5aving tunhon Ael

t in sunkara! selahonshipNhten Aauing and intzme.

Linca dauing Eauotiam

-C+MPs(1)
#MPS-Mayaiaal peaady tn xMaue_ t eerd ve the atio bileen
change in sauink to the'chaage in incame
 MPs=AS
AY

Ara MPS can t bi negative as chagge la saegicant bineqate

EAPS Avuage arpenaiz to save

n tota!_inceme.
APs
i APscan be neqatie bicauas aanijalatage nLae anaumphan.

MPs+ MPC L APC EAPS =]L

AS
A9 AY

45+AC CtS
49
4
4Y

e Cts

*
 S APS APC MPs MPC_

15
20 20
30 25 s
Ho 30 40 D-2s4F1 o.So os|
50 35 15 SD0:3
L60 20 P%o =033 % ho = os1o =0s
Sai Luwe LnAumbhan uuL

-S

O
YElo
 ***

m
Hvaion Maing dund~im 2 LoaLumpho inchon

Sauing tunclin is clsuly _telalid aith Canssuoibinuntiom honn-

-2Do&icnaunap~iaon at ~uo inLamna__ul belo uto ithenegaitiedaung-

C
Bexiuahon4 saiag funchim ftm lcnonepli unom inuoluea
4allauiagips i
( Peten Lensumphn u e
) Duaun a 4S ine pasiagezm tHhe egi2 uehich kalso tnoon a2
inLezne Ene, usheneue iafeiauck_Lonsumphon Lutve, 0gask that pcin
aA B.
L ushateueu 4 dhe disan btueen Oand he Mame distonu karta
beut belatia.an axiaandMauk that palat au .
L) umBpoini ue willduaur adtaight Line touiasel isy
whueveu atusud it, mach Haat potnt as oe.
wih thehalp 2poiati, ae Aodsaur adtreazs ine
hia une dA Molingue Ve

S-+MPs(Y
-
 AsEY

lensumbian sunchien s dasuly elatd with dauing 4unttion tutooamus

dauing at Zetolevel aainLeiS u egual'totutonomeus Lossumpian-
at zyuoleuel iamelay
=(-E
Eesivatiam _ccnaumphan uume fuonn Aauing Luue invelues fallawing

Pot given soin tuwe e -

S
ils alao kacon
Ln uao a uslne passing uorn Hhe atgin which as

TnLoTne line.
 hateyey u utine dislane bieen- o_and -c,the wapie oliatanu haa tn bi
Ln)
Lut abave the yaxid and mauk hat point aa
Vauiae Lutre _inkusseE A axi4 mah t_as D Point bem
Li)LhueLeu he
that duau adtiaght line 14pakd apd aheeue itinteuseet he inru
LEne, MaLk it as B poiat
kncwn as
ith the halp a tuapainti Eand Gda a a lne_ushith ud
Consumphi bne i s
CEZtMR)

9/EJ%

EKelaionshih bhee2onumhl2n and nueme

L) nLcame inaueaas, Lonsumptm also inuaas but the kai 2 iaLseQAL
interL N than _Lnsuaphan
CT) Bhen lonsumbtim us afaye thanintome, itmeana bepl aue dpenaling
r o n theinpastaauinga Thenelotue, Hhe aneo ui denáted by dawia
n) Lhen inuzme dis egual to_Conaunpon that pointus oban as Ueak
Sen bointand_at trat point'dauigg idZup
() Lhenineme u mg2_Hian consumblion thenbeobilatastAauiggThee
Letee, the aLea is oezated hy Mauis
+Sauin

O
ln-co
looIsD -50 -Sauy
2oD2om o
3n l2o50
O
lElo
anliaving
t means_what the daeu d e tconzy fplanaing to dau at the
byaianingthe yeat-
E-_pauInvestment
means shatitha nyigata iasthe tcmomy inueatiag at he end
the yea
EB-ante1nvetnentE
meain_ahat he Inueste_in the econong is blanaiago ineat_at
h e begioning h e yea
 ngeara ulhaY he Mauein the Lcmamy_is ailualysaing at he
Lnd he yea

usstment Mulliplieu (k)

KE A = Changein Jnconne
Lhadge in lnvAAmenF

-MP

CAm Theue ui positiauelatm bitween M and k

Th Value dk dies bitueen 1 and o

Dekiaq sdlnvestment mulhpley_

Ac 44 4c = 4y
The Leetkig d inieatrmenmultiple is baatd.on the aasumbhan that Lhangt
1n LAE) IniestmentF lead o change
inlay Snummechagqe in Sn tame
lead to hange ina) longunyphan.
 lt
The Lonsumptioa expernduKe one peruoni inome 4anathe penar.
uu

it will lead
duppeubzovenmént has iniueasld inuaatrnend- byPalpróe
MP 40necana
ocranpe in inuene d1person by lalaD Liy oe and huutF
s D:s then 1pekson wl Lonume gonde wodh s v
Aotll beno sMUl THe Lonsumpion d uGuE,uollead inueau in inuom
pta y R SD Lee. he 2no paanill ala Lznumt
2s u e añd aue h e vted, ushich w o a u h e innome 3perArn

byKa 25 u e Sothiu woy, the peockaa nucme finuwahan ulllzi m

ald n till ~otal_change inibLome u upn i m usHL.
Round AI
50
4z
50 25
5 12:5 ka 202
lco

k =2
200 leo

Backued Ariien
AI >41
AIt
 Gouwand1 Backwad
AS

AD
AD
AD

YlEl 8,

heunioaion ail?haiu leue/ ancanae/Dutput/Eooplasunmeat

AD AS DAUDAch SLFApoach
ApE AS S=I

E AD Aod As A2puaach
Lquilibum Yeusta 2ahional InLame_Dulput) Enplayaer iadekurained s4
hen
Inhsochin9 egett daonand and dajegati. suhy, 2qeana
AD=AS
 AD AS
AD
200
150|-5o 1co 250 AD2AS
2o0 200 3 2ov essdennund
3c 250 5 3SD 3D
aco Equilibiuo O /El
5o 35o 15o HS
5(0 Eke upbly
althuiun leel ia attained utheà Snane is g saa at hi leul to=AS
4 hen AD us-3D andena 20,_Meana theue i excesd
Otmand l nik in #he econoy heneueh thene iz exceas derand i2
ecanemy Hoduceu Lo_ InLHeanpnduchiaata Lops up exas 2eomnd ehich
ecomm
will Tuca As, Atlaata A AS ioally ha eccnamy i l sa
Eaibufunn
shen AD i use_and As a SD unilLmcan4 theue ia Lkad Saply e
50 Uni, heneiip theniis ertca dubbly Pkodueey uoiladneaalpradiuuho
to Lope u uithtris Atuaten,hua náme wd dioneaa, s ieil
deneáa 4laatD =As Linally the ecaznemy l & at eguillbniiro
 Resieuatiam 4 Equiibriim i2 Las AD And sDpeoalk
AD As AD AS5
Desiued strck Available Stock ed atock Avalabestock

Zxcess blemand Excess 770

uPpy-
nduchon huodutiam

Y=As T y=As
AD ASS AD=As

aving and hvestreH 4ppunach

iklibuium leyel taremeltmppymet Dupu deeumined by InkHaion
daving an hestment Lohee dauing= nvearent Th dihuahen id
attainee hen nicme iu teo let us _dyppaie u2hea niame is 2en
hen 4auestment LOD and Aaving is O,t méand esitedntnck dk
than Avalabl teck,
pdu.cou ail dnueaat the produchan, ncomemsKe
will_Jaueas and htns_Aauing uill also olhuHersu t i l 5 EL.
 .

Ket us diupposu ashen cinuestned i lao uaila and Aouicgis 2r0 uniaIt
Meanathéxe is excess subply Loo in theemnýA thePnduce
w_decKeaseþroduskom Shich uatl/ Jeacd tn diuaze Aname
and suing Thiu pucssa_wil Lontinue tilhsEz

Keatouaion Eaiium kz ucasr d5ard T Aennack

ExLesAcemand eess Supply

Lodieka oduter wll
Inea punduchon dexease puaduchom
nuonae some
Sain Saving
- - ~------ --- S -I
 Excess Denaard
Lhen astiual demand is meue than anicpatid denzand m he þoint_e
u emblayment us koan ad_eLcessdenand
demand and
Snyatiana Lnap The vexical distan4 baed aitual
antiipatiddeniand naon as Alaa Gaap

E . AD
. AD

Cauais d EAess deraang

aT xf M

mpliioon d u demand

nLome nployment uput ices

No change No thange la change
Jncaaas
 Meaauues to cULAt eNceaA demand1

Bacal Magues ManekauuMeasus

Expenditse
ax Ruantitadive Masuuea Qual'telie Maauu
subeidy Bank Ratt N Magin Reguiueoaent T
pen Mowkeroortation Kegulaiom d uedit
sal `ties EMzt, Tme hriod
SLR T Meual Suasiani RAZ
CKR 1 diursth lemmerial Bank.
t decseasi leana

Deicient Aemand
heh atual denand_ia deas an anticipatud 2nsand ues the paiat
ll cmpleyaneat, 1tis Annion aa dejiént demaad
eklaticnauy lnab he ab bihueen actiua! cemand and vanticiptid cemand
a knahas flaHoa_Ctap.
Laussd Acliint demanad
C I G X M 1
 /E
snplicain AGeliient emand
Snme A
Emploiomeaf Orutput Bices
Zeorease Seereapa LLALaaL QLcHeaas

Meaaatnnloset Llitient Demang

Hal Meass Monlauy Measuea
Expenditaue
Tax uanhtative leoauHeg Rualihatice lrasuus
Subsidy Bank Kai Maxgin Reguiuement
Opn Masuket Dpesatia Kegulahcn d cxedi
-

Rachast scuritie4 EMI , Time eried1

CRR
Mocal suadion - RAI dixeets
SLR L Lmasercial Bonka toInexese loams
****
 u l Embloymant auilbuimi
HHelexa do_uthe diruatton whene aggnegati okonant! iaagiegal suppg
and iall thesu usho aue able to k and uilligo bor gut ude
SLdoesnat mean 3euo unemploymenE as thoaa Vuho aue nbt wilg
LDat abl to wLrk mau Hehaam uaeployeA
A ud Employment level theuema
unembleymet
Kllbuwing uthne
Hpa 4
a) k2tizal unemploymn t i s heempeay unemblnyment which ua
Causid duu e stkea er lockeul changen joh ci Th L unconteollable
do 1fisugneredin he _Lalyean lemplogonentt Luel
DYoluntaHuunemplnyment8 Abtutauihen pLoplé aue not wlg to
wEk atall ea they aue neknag o_uwerk at Hhe exiskng
OStuctiva nemblasmest dahouu doesn't change with agi uali
he
atuctia! changd heaeil/ nat buabl talt emplaymerts Such
uDemplayaent pun sutiucay unemblament
hil emplaymen eguilibeium Lenesponda to the hiheat_ posailu level
Output in hecomomy ndy the qiua ciuuumatänces
Atempt n a a uoductin biymd jill emplaymen equilihiura
nustsinlakemg gaba-
E Undesembleyament_qu~ibuiin_i

Undeurahleynment uilihuiumwelera to heSalin wheue AD=AS

but all tesu whn aHe iLlfng and abe toaeu de net get_wck.
tdoes t crenespand to the highe bauik Level oulputinthe ccaned
Atenpth inuueas pundiuchon byond hie9uilbriim doea nat tuu
inlladionau ap
aua'matu Shit
Ohen theve uis changg în panamabde values dike aukenomeus Lonu2phan
Oand MRdhe to that canGLumptim Cuuechangea, t i s kaown
4 paamaluic dhy
Slape T nteucept() 1 eH
c S Dt + o - 8 { t

Clento-8(
c t0-8C1

y/El y/Elo
 Faxadax_Ahd4
Meana uhenpeafple xae yaue un delaion to inomé shen þeotole
bicme nmose hizty,then tatal dauing in h e tcanany umainAamu
aleceasu
Plannia SaueT.
MPS 1

MPC

Congu Dpensesv

qilhuium leusl a incenae

Adual Sauings

***
Chapter 4 Government Budget I P O
Topics to Study:-

Meaning of Government Budget

Objectives of Government Budget(4m) rill
Capital Budget (Receipts and Expenditure)
Revenue Budget (Receipts and Expenditure)
Deficit budget and its Consequences(imp)
1.Revenue Deficit
2.Fiscal Deficit
3.Primary Deficit

(6 M)
 ToVERNMENTKUDGET
Tpis to shudyi
Meanicg yoveunmentt_Budge
ObjecHiveGgoveunment Bldpet ltmarka)
Capita Budpet- (Receipta and Exbendite)
Kevenuu Budget Ckecelpts_andEpendu
Delicit budget_and 'izConuguime
Retnueeftit
Hacal OeficiE
petit
bimauyeia
#Mcaning o ljovanmenBudge esimalid ueceipta
annuaHanial atalinert e dthe
yoveuninent buaget us an
Apit to 3P Mavh.
and expendittuwe the goveunnaéA vey he iscal,yea,ise
ObjechiverGpvunment BydgstE

Kedistibution nLene and wetlh

Reallocation4Keaouwcas
concmic PManaing Rubli Enkrpries
Ecanmic qoisth
 -

(DRedllztuibuion sane and Wealthi

Inegualities oinneme and wealthdeflect asuctin ociety being debried
taxatioon and
even baaic necessites. Lzaueunment usis {~scal instiument
aubaidiz uih a vio impuouln9 the distuibatom inLame anal
wealH

in the econemy-
4oveunment deduces ihe inequaLity byipoiatxes he tich ad
iirgAubsidies to the par Taxm u educes then intome and subsdics
Spa xakes the Uing standaathus leadi _couitable dictibuian
Expendihe n special_antimu and emploanet schemasuoill be snuALad,
hablte Octuibusionsystena oiU b n p a d 'ahd incgualiHes sillxedude.
quitabledistuibutien c incam 2ndwealthuu a dign adodal juaice
Lushich the puincipal oojece any wellare\dala in dno
Ci) Reallocabion Kanuue
KealocatonRedounce dlene do that the gaak o woiak_uel ane and
HOt maximiaatonLvebalaned.
Kaiiati entevp whio
gluaya uiantfo_maxint theiu psefit but thene _ane
kome enhkpiis1a n puemat Aoual wellaue..
dion ushich aueiaunious ë hialhLigauettes, whiskyete)
disowdgedhuough heaug taxaten..mthe ehu hand,produci
Aoially usehul geodd leleetóuli7, khadl)d enouwagid thuough dubsidies.
 ditte ntuvest
Theue aue gools and
Ceetairn suices in uhich. dhe piali slchAhetu
urduutake
duu to invesm nt vneguiuement and lexweu puelilz, tovnmentcon
huge phivati.
uthe bduchon d hes gods_and uvices and it canalolncounag2
Aicn uingtax doncessina and dubsidliss.

) Ecamanic tahilly
Hee play d maket feucos Ldemand and subbl und to genuwat utiahene
Lohith nerds to be alabalicud
playa a vuy imputat Mele l
The goveunment Mavisg he_tcencmy em buainéa
ycdekBudget iu uasd aa an _umpotant þoliyinstuument tadahve the
tuaion innlatiom and delation disposa
Gjoueunmen can u a u the taraion a n dubsidica palieyte inlluence
l incorne and buigg_down ablaz unthe-Lounty
uthe Latz dLOwh
Ecanemic atabiy kada to moteiimueatment vand uncteaaes
and developmen -

( Managing Pulie etoiphseat edablish

lyovetnent undtakedConmeudal achviHes. Kailways, whieh aue

- ed and managedade Aoial welaue the publle. ACale

A natuwa monepol aAituaHon usheHe thene aue LConmitd
OveH a vasge ar utputa
- -
 -

*****
***
" *

indusÜas.
bjoveunment_can make vauidus Hoviaierna tomanage tha
onhebudgt

Vconenmie Gowth
Ecamamic buouth Helekd lo a_LincueaaL in,ueal G4DP the LConay
kmmy
Lwon7
Net únHeass in the total vouume dgaodk and suwfrea puodued by ar
t c a n tL athieuead uuekalzineaatudusal atiudattonei.
puouioling tax
Siude o Gponent Budget
Audget Reeip 6Bge Expenditune

Revenue Receipta. Capital Recelpia KevenueExpendiku Capitea) Eepenalhun

dpeRepeiptz
Keveruie Keceipia CapitadKceia
Tax Kevenue en-Toix Kevenue Bowousings) (Recove
DirecA PFec Koans
fnis and Pnalie
Tax Eschea Osinvestmenta Snall
enst and Puumik
rndivecF
Gihta and Gpunt
*
Savig
Anuome
A) Budgt Receipts
ELeleus to eskmatid nceipta a the Lyoueunment uornalaiDua dOuLRA d u g a
acadHeau.

OKevenue Keccipts hasu ALceida_uthichinelhe teatza liabi% n ueducea

any assit. Revenus erejp ade cladailzd Via tuoi
a) Tox Reuenue Tax isa cambuseyament tn_Gyoueunnendt_ueithot
iuest aN_anq dadiuectE .
Baals Andizeot Tax
1.Heania9 impatt d theta amon he dmpatt d the taxand liabil4
dame pbeuaanldhoik pasyigqtheaHe on dilLeHenEpusm
tax
2. Scape dmposidmunpeuty andnumempaudom Ounduhim ad Salk
3Shit+ Burden Buden tax canna brshiltd|Buudeacan heshikol thucuah
inueas in puie
4. Alatue PuDguLocive in naliuue koperanal ia naliue
5.Exompe Sadme tax_wealth tax e LGST, exciss duh ete
b)INan ax Reskniue t ueeuA tD goveunmentiHeuenue kam all AauuLes OheL
than teNes. Thes aHe innemesahich the govunmer ea bu
ay s
genda and deutestendured dieuengaveunnen cepaatnjeai.
 santax teuenue_indudec the following
Dee2Stueleua tpa payneat rdade to the gaueunerEHtheawires1
that dtpuouideto the
ciHzend Eh2-pasdpefeis, totfeenelt
Sas apenalieThey uase ihpoud etLao Breakeus tas tueakieg.
daw.
CD Echeatt uelens tohe clai ouunmeat an the buepeui 4a
HAm usho diea Loithat hautngaeegal heiu o uwihaa leauthail
Pena/ and Aumits Thegu auepat thos ta whma Govuuomehtzranz
the peumisun adbing Cedain thing e4 _activlhesa
yaiand Guantz-Nlutoeycoatutbutionu ushich aue uweeved bs the
Lyoueunrnernt zuan Abioadinkunahona! etganixaBins and titizeis4 the
Count
ViAnkubltinkueat eakprd bygoueunmen om uauinua laana guen to
loral and Alail eiuennentVouiuat snkubuises andgenua
nicrag publia
Hh EatPupukus Revenue iecelund by the gaueuoment bg
4clling
the gondaand AuLiLeA punduced hy gaveunbnent
agenies
T ) labital Riph2 Ihou ueceiptz that
eitheu ealis liabiliti2a H Neduce244ek..
tinludes noo Hepcitiue_ancl nam- uoukiae Iemk
(a) on_HoLDin4
(Lueatz iahlitz)
BewuDuing bue made to rneet he
firaniaul tequtemert o he Leuñiy. Agouenmert
an hatu2 muney mKest g the_ulatld Gyenuual Hihlic
Snstihuthons ,
tatinata
**
 L) kecay Leansand ddanues Rrduues Auch1
stal Goenned, fouuig
Kecavey loans uand aduansu dened tngoueimonentauad
lompanies et. hen loons t u
itouenment, puintt
EN_Aeduceu the 24u
ueatid as assut but 'hen loania slcovckeac
)Aisfnvestme ReducesJAsActzy
selligo a the shaues dthbiubledcheu entupuitus th priva
means
AcelBygllinq dhaluesaovunmek A Meceles opney thatu
hand uet i uedue
Ohy it i uzept and onhe olh
Hat is_why i# i tueaid_as labitaKeceipz
(d)imall Souigs Leati Linh1i,)
Vkas_btiua etz
Hincludaa mallsauingaZike pput f e depositz, kidan

Budoet pendhuue
duuinag
t Mejena tothe eatimatid expendihuie tn be inuned hy Gqoueunnent
gheh 4acalytaH
aaei ne Heduce
T KeLenue Expindhe_Thase.expendihuue_which ndthey CHeatis
UecuMent natiune shich is dme yeau aku yeak
any diab2L4.Jt uis
mblek&salanier, fenaianaJntuest paymensdubsidies, iguank to the
toueunent etc
7hosu_eupendituue that eithe CHeatasets Heduce4
T)apial pendithue
liabilty.H NM uHeuuiing p expendihuve
 Warablea Constuucon c unads, puschasi land and building haues, Hpaymnt
lans etz.

TI) ghey upes Eependlhuue

Planned Aypendthuwe Alm planned nndzue epnentEpeoduln-Deelapmall
EyerahiLe
Anuued by the goil. i Expendihuesauhich aue ApendituHe on actiities lExpendihuue mpuo-
tn pultul tz platatd ibujand the dcpt-dplan-Lohich aue-diucctly selati-iding tasintial
deuelopmént_ e d delVelopaneh -d o ecamamic ad doualdeuices by he
pHDLAmmes ougmammea deuelopment Lounny Lepounment
xarobleApendihue 2xamblesotest Puymeata,Bamhle-Bpendhudm ExampeLolleca
on publizulltiea,healtSubkidlienet health, edutaHon induciid Tax, delence
and educaHon dz
-e4,aguiultue et. Sntuestn loanetz.

lReccipa=peodihuue) CRecelpta#pendituee)
Balanadug UnbalaniudBudge
DeliitiBudgetlR<E)_ uplusBudgetk>E)
Kevenue
uima
 KudaotAAii
Expenaliuseaue gieatue than budjet ecaptz d hup
hen_Gudset
Keaenue Aii
uiznay lii_
to the exceds d t u e t delined as Cxctas dtatlependitug ItA he dHenc
Heleua
goutun-||Bxp toBal ueceipk exdudn boenouwigg.btween scal delie
-nuecxpendituye o) he and intut paynerlh
ueuenueseceiptzBaseuawing=isA D4i
-ment_aueu iz
Tatal pendi~uMA LReceipu fscal Lelft=
Total Keuenue.Expeadthune
Anteueataymenta.
lotal Reuenue Recelptz otheu than Bappinga
Tdplcothe Tablzatins84 Tmplica ti
disaauisas an_ qoveunment koeunwing
useAInlloion t shauzs hou
dndicals
accouayit meansncludes bikadoding kem RAT which wiu |mueh Bcctauwing
geEunment
IA iniuenas he goutunoitnt
Soueunmet iu spending mare HeAuln delliinancing.
mamey dHlation and caua iallatim AHe Heguiucd to
han 1z uHHeat inLaie
n timblies that Ltaut. ha aueade Ieuegn dependenu lzot. aloeet z existing
tst a he uedd uishich epenaLa 2thu tan
Lovey hia aab psem labithl beuwbuD ptann
othuicounteneuest PatorentE
HeceiptzCBouiunas oue nsuthe_depenalence am
C2HnaneialBudlona FitKe_Lienuuaton2 euiouu loan
leadto llabiena Hoti heianiial buuden dBetseuziggs Like_
iv)Kauge Beuuoug oillueauttpayment, intupat etz_wilU hliam tiluue t neanuimy delit-
Lohich-uil! iazpact jiliuHe that the
in inudnd npe geruiatiors
quruoth and deuelepoment q he _Louaty taeunimeat has to
-use ntuast asmentz
Heaauyes o Keduce Keunue
Hscal delit T Bouowinga Tatuteony to mvet 2z
Bouxousigos LabiütT (Anhuet) Keueue Epl |intuueat payment m
T7)invecmentE takuet Broui Keuenue pubia dst. Ir not
L) CuEin Expendikuue aymertT_ gt it7addig to the esting
loand.
EHauen laveunmeat dipAity,Hgh
scal delidt ekades Luediblt he 2evt
in dauesti Authelld inkunaiora qaket.

Keenye
keuenue Kevenue
Keuenue KeMenue ExpendihHe Receipla - arueias
Expeadihwue Receipt +
ablta Labitel
Ekperditre Keceipta
Budpp Budget
Expendihye Keczip