Mrunal’s Economy Win22 Updates For UPSC & Other Competitive Exams

30 PILLAR3: BALANCE OF PAYMENT & INTL TRADE

Contents
30 Pillar3: Balance of Payment & Intl Trade...................................................................................................... 109
30.1 What is already covered in Past: 3AB ............................................................................................... 110
30.1.1 Win20: already covered Following in 3AB.................................................................................. 110
30.1.2 Win21: already covered Following in 3AB.................................................................................. 112
31 �🎖🎖Pillar#3A: Balance of Payment (भुगतान सं तुलन) ...................................................................................... 113
31.1.1 Notes about the Data Tables in this Handout Pillar#3A ............................................................ 113
31.2 �🎖🎖 Balance of payment → Current Account → ........................................................................ 114
31.3 �🎖🎖 Top Import and Exports of GOODS for India: ..................................................................... 115
31.3.1 �🎖🎖 Goods Export Before & AFTER Corona: Notable items ................................................. 115
31.3.2 India’s TOP Agriculture Exports ................................................................................................ 115
31.3.3 �🎖🎖 Goods Import Before & AFTER Corona .......................................................................... 115
31.3.4 �🎖🎖 SERVICES Export Before & AFTER Corona (i.e. 2018, 2019) ....................................... 116
31.3.5 �🎖🎖 SERVICES Import Before & AFTER Corona (i.e. 2020, 2021)....................................... 116
31.3.6 � �India’s trade partners: Import / Export........................................................................... 117
31.3.7 India’s trade partners: Trade Surplus / Deficit With Notable Countries ................................. 117
31.4 � � Reports / Indices related to Export & Remittance ............................................................. 117
31.4.1 � �Export Preparedness Index by NITI ( �नयार्त तैयारी सूचकांक) ............................................... 117
31.4.2 � �Global Survey on Digital and Sustainable Trade Facilitation by UNESCAP ............... 118
31.4.3 � �Report: Goods Trade Barometer Index ........................................................................... 118
31.5 �Balance of payment → Current Account → Import of Oil ...................................................... 118
31.5.1 � � � Crude Oil: Russia-Ukraine War (2022) ..................................................................... 118
31.5.2 � �Budget-2022 Announcements to ⏬CAD....................................................................... 118
31.6 �🎖🎖: 🗃🗃 � BoP → Capital Account→ Investment→ FDI / FPI .............................................. 120
31.6.1 🗃🗃🗃🗃🗃🗃🗃🗃 Foreign Portfolio Investment (FPI: पोटर्फ़ो�लयो �वदेशी �नवेश) ........................................ 120
31.6.2 🗃🗃🗃🗃🗃🗃🗃🗃 Foreign Direct Investment (FDI: प्र�� �वदेशी �नवेश)................................................... 121
31.6.3 🗃🗃🗃🗃🗃🗃🗃🗃 FDI in India → Source Nation-wise Top-5 ............................................................. 121
31.6.4 🗃🗃🗃🗃🗃🗃🗃🗃 FDI in → Sector wise Top-5 ..................................................................................... 121
31.7 �🎖🎖: 🗃🗃 � BoP → summing up ................................................................................................... 122
31.7.1 � � RBI’s Forex Reserve: �वदेशी मुद्रा �रजवर्................................................................................... 123
31.7.2 � � Dollar- the Global Currency & ”DE-Dollarization”? (वै��क-आर��त-मुद्रा) .................... 125
31.7.3 Dollar Swap .................................................................................................................................... 126
31.7.4 Rupee Rouble Agreement ............................................................................................................. 127
31.7.5 � � Misc. Concepts: Quantitative Easing and Federal Tapering ........................................ 128
31.8 � �MRUNAL’S ECONOMY COURSE FOR UPSC PRELIMS & MAINS ................................. 129

Mrunal’s Economy Win22 Series Pillar#1A: Money & Monetary Policy → Page 109
32 � � � WORLD TRADE ORGANIZATION: �व� �ापार सं गठन ............................................................. 130
32.1 �TRADE AGREEMENTS TYPES: �ापार समझौते के प्रकार ............................................................... 131
32.1.1 �FTA: India UAE CEPA, 2022 ................................................................................................. 131
32.1.2 �FTA: India Australia ECTA (आ�थक सहकार और �ापार समझौता) ................................................ 132
32.2 � � � BRICS NDB Bank gets NEW MEMBERS..................................................................... 133

30.1 WHAT IS ALREADY COVERED IN PAST: 3AB

�न� चीज़� हम पहले ही पढ़ चुके ह�. आपने नहीं पढ़ा तो उसम� से देख लेना

30.1.1 Win20: already covered Following in 3AB👇👇

LINKs to Previous Video Lectures at https://mrunal.org/download

⇒ �
BoP-Classification: RBI’s (Actual) method
⇒ Budget-2020: Medieval Dictionary terms for trade/commerce
⇒ 🎖🎖 Terms of Trade (आयात-�नयार्त ���त)
�
⇒ Net Terms of Trade (NTT) or Commodity terms of trade
⇒ Gross (Barter) Terms of Trade (GTT, �सफर् �प्र�लम के �लए, अत: िहंदी अनाव�क)
⇒ Income terms of trade (ITT)
⇒ ES20 DATA: Top Import and Exports
⇒ � (IYB20 Ch7): Largest importer and exporter in world
⇒ � Remittance: Global migration report 2020 (अंतररा��ीय प्रवास)
⇒ � Remittance: Sidetopic → Pravasi Bharatiya Diwas (PBD)
⇒ �Balance of payment → Current Account → Import of Oil
⇒ � �BoP: Current → Fall of Crude oil prices in negative figure
⇒ � �BoP: Current → Petrol & Diesel Prices in India
⇒ 🎖🎖Balance of payment → Current Account → Import of Gold
⇒ 🎖🎖🎖🎖: Gold price in Corona
⇒ �BoP → Current → Export → Geographical Indication (GI)
⇒ � � �BoP → Current: Exports → Foreign Trade Policy (2015-2020)
⇒ �
�Tax Credit for Exporters: MEIS/SEIS
⇒ Tax Credit for Exporters: RoDTEP?
⇒ �
Port Logistics: Authorised Economic Operator (AEO)
⇒ ES20: “Assemble in India”
⇒ �🎖🎖: 🗃🗃 � BoP → Capital Account→ Investment→ FDI / FPI
⇒ 🖱🖱🖱🖱 India’s new rules for E-Commerce (2020-Jul)
⇒ 🗃🗃🗃🗃🗃🗃 BoP: Capital → Chinese FDI need Govt approval
⇒ 🕵🕵🏻🏻 Related Topic: Cabinet Committees

Mrunal’s Economy Win22 Series Pillar#1A: Money & Monetary Policy → Page 110
⇒ * � � � International Financial Services Centre (IFSC)
⇒ � � �: 🕵🕵🏽🏽 IFSC Authority Act, 2019
⇒ � � BoP → Capital Account → Misc. Concept: NIIP
⇒ � � BoP → Capital Account → Composition of India’s external debt
⇒ � � RBI’s Forex Reserve: �वदेशी मुद्रा �रजवर्
⇒ ( �🎖🎖>🗃🗃 �) � Disequilibrium in BoP: Factors responsible
⇒ � Currency Exchange Rate: मुद्रा �व�नमय दर
⇒ � �Currency Exchange Rate → Attracting Dollars: VRR and FAR
⇒ � � � Currency Exchange Rate in Corona-Crisis
⇒ � Exchange Rate → Misc. → Purchasing Power Parity (PPP)
⇒ � � �Pillar3B: International Org
⇒ � � �Bretton Woods → IMF, Washington, 1945, Dec
⇒ � � � �IMF gives loan to Pakistan (2019)
⇒ � � � (Non-Bretton Woods) → Multilateral Development Banks
⇒ � � Theories of International Trade
⇒ Mercantilist Theory: �ापारी �सद्धांत
⇒ Adam Smith’s Theory of Absolute Cost Advantage (1776)
⇒ David Ricardo’s Theory of Comparative/Relative Cost Advantage (1817)
⇒ Heckscher and Ohlin’s Factor - Proporations Theory (1919)
⇒ � � � World Trade Organization: �व� �ापार सं गठन
⇒ � � Kazakhstan Summit cancelled (2020-June)
⇒ � � �: Tariff Barriers against international trade: Dumping
⇒ � � � � WTO Disputes : India’s export incentive schemes
⇒ �⛷ �Free Trade agreements → TPP11, RCEP
⇒ �⛷ � TPP-11 or CPTPP
⇒ �⛷ � Trade agreements → USMCA & AFCFTA
⛷ � Regional Comprehensive Economic Partnership (RCEP)
⇒ �
⇒ Budget-2020: FTA ‘rules of origin’ (उ��� के �नयम)
⇒ �⛷ �India’s trade agreements
⇒ � � � Burning issues in International trade
⇒ � � �Protectionism, Trade war: सं र�णवाद, �ापार युद्ध
⇒ � � � �: � �Protectionism → Medicine and Defence
⇒ * � � � �: � � Protectionism → Indian Govt procurement (सरकारी खरीद)
⇒ � � � �USA’s Generalised System of Preferences (GSP) list
⇒ � �USA Reciprocal Trade Bill/Act (पार��रक �ापार �वधेयक / अ�ध�नयम)
⇒ � � � India-USA limited trade deal (सी�मत �ापार सौदा)
⇒ � � � �Groupings: Indian subcontinent → SAARC

Mrunal’s Economy Win22 Series Pillar#1A: Money & Monetary Policy → Page 111
⇒ � � �Groupings led by Gora → G20 (Group of 20)
⇒ � �⛷ G20: Osaka Declaration
⇒ � �⛷ � �Osaka declaration: why India refused to sign
⇒ � � �Groupings led by Gora → G7 and D10
⇒ � �G7 - Group of Seven (1975)
⇒ � � � D10: 5G club proposed by UK (2020)
⇒ � �BREXIT = BRITAIN EXIT
⇒ � � �Groupings / Issues: Middle East
⇒ � ⛴ � Vande Bharat Mission 2020- Indians ki watan-waapsi
⇒ � � �: � �Kuwait Expat Bill (�वदेशी मजदू रों क� सं �ा ⏬ का �वधेयक)
⇒ � � � Export control / Non-Proliferation regimes
⇒ � � �USA Exit from Arms Treaties (श� सं �ध)

30.1.2 Win21: already covered Following in 3AB👇👇

LINKs to Previous Video Lectures at https://mrunal.org/download
⇒ Top Import and Exports During Corona April-Nov-2020 as per ES21
⇒ � � � Crude Oil prices & OPEC (क�ा तेल)
⇒ �Report: World Bank report: Migration and Development Brief 2021
⇒ �Report: Remittance: Global migration report 2020 (अंतररा��ीय प्रवास)
⇒ �Report: Export Preparedness Index by NITI (2020,Aug: �नयार्त तैयारी सूचकांक)
⇒ �Report: UNCTAD's World Investment Report 2020 (�व� �नवेश �रपोटर्)
⇒ � � � BoP → Capital Account (चालू खाता → पूंजी खाता)
⇒ � �:FDI inflow in Corona (�वदेशी प्र�� �नवेश)
⇒ � �Foreign Investment limits ⏫ in recent times
⇒ � � Golden Visa (�नवेशकों और प्र�तभावान लोगों को आक�षत करने के �लए �णर् वीज़ा)
⇒ � Currency Exchange Rate: मुद्रा �व�नमय दर
⇒ � � �: � � Mundell-Fleming Trilemma (मं डल �े�मंग क� �त्र-आयामी दू �वधा)
⇒ � � RBI’s Forex Reserve: �वदेशी मुद्रा �रजवर्
⇒ � �International Orgs, Agreements & Summits
⇒ � � � World Trade Organization: �व� �ापार सं गठन
⇒ � � � WTO’s New Director General
⇒ � � � WTO’s Next Summit
⇒ � � � � � WTO’s Appellate Body (AB) Crisis
⇒ � � � � � WTO Multiparty Interim Arbitration (MPIA) mechanism
⇒ * � � � �: � � Protectionism → Indian Govt procurement (सरकारी खरीद)
⇒ � � � Groupings: ASEAN & SCO New Summits
⇒ � �Groupings: BRICS, G20: New Summits

Mrunal’s Economy Win22 Series Pillar#1A: Money & Monetary Policy → Page 112
⇒ � � G7 Summits 2021: Global Minimum Tax
⇒ � � BIMSTEC charter (घोषणापत्र)
⇒ �
� India UK Roadmap 2030
⇒ India Mauritius FTA/CECPA (मॉ�रशस के साथ मु� �ापार समझौता)
⇒ � � �Abraham Accords (2020-Sept)

31 ⛽🎖🎖PILLAR#3A: BALANCE OF PAYMENT (भुगतान सं तुलन)

Economy: 6 Prelims P1 (GS 100 🔠🔠❓MCQs) Mains GSM-1-2-3 (750 Marks)
Remarks
PillarsTM 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021
Among 6 pillars, Third
💱💱3_Intl_Trade, 11 4 4 7 7 2 25 0 30 0 15 15 lowest utility after
BoP Pill2_Budget.

31.1.1 📊📊Notes about the Data Tables in this Handout Pillar#3A

- In most of the tables, I’ve used data of a stable/normal year 2018-19 to explain theory basics.
Because subsequent years’ data trends have some abnormal trends due to economy slowdown
(in 2019), Corona (in 2020 & 21).
- if I have not mentioned the data of Corona-2020 or 2021 in a particular segment= means latest
economic survey 2022 has not bothered to talk about it loudly, so I’ve not bothered to do self-
google search. अगर िकसी भाग म� म�ने लेटे� डाटा नहीं िदया तो मतलब िक इकनो�मक सव� ने उसे बताने क� जहमत नहीं क�.
- Data for Financial Year 2021-22 (Ending on 31/3/2022) is NOT yet published by RBI.

Mrunal’s Economy Win22 Series Pillar#1A: Money & Monetary Policy → Page 113
31.2 ⛽🎖🎖 BALANCE OF PAYMENT → CURRENT ACCOUNT →
Component NET Amount in billion dollars 2018-19 2019-20 2020-21
Visible Trade in Goods -180 -157 -102
दशर्नीय
Invisible Trade in Services +82 +85 +88
अ��
Primary Income: Wages, Profit, Interest, -28 -27 -36
Dividend.
Secondary Income/Transfer: Remittance, +70 +75 +73
Gift, Grants, Donations.
Net Current Account Balance (if negative: “Deficit”) 😰😰-57 Bn 😰😰-24 Bn 🤩🤩+24 Bn
(Deficit) (Deficit) (+0.9% GDP)
1) From 2001-04: We had Current Account Surplus (चालू खाता अ�धशेष) because, it was a time
before the USA’s subprime crisis when global economy boom had ⏫ our exports). But then
we started to have deficit. India’s current account deficit averaged -2.2% GDP in the last 10
years.
2) 2020-21: Corona- imports⏬ compared to export (and we managed to export decently in
the Pharmaceutical and IT sector). So, India witnessed a Current Account surplus for the
first time (2020-21) after last 17 years! कोरोना महामारी व तालाबं दी के चलते आयात म� भारी �गरावट के चलते
�पछले 17 सालों म� पहली बार चालू खाता घाटा नहीं, चालू खाता अ�धशेष �आ!
Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020-21 2021-22 2022-23
CAD as - - - - - - - - - +0.9% CAD CAD
% of 4.3% 4.8% 1.7% 1.3% 1.1% 0.6% 1.8% 2.1% 0.9% (Reality) DEFICIT DEFICIT
GDP possible. possible.
1._%# 2._%#
#
Final data yet to release, but these are projection (2021-22 & 2022-23) from theHindu columnists.

Mrunal’s Economy Win22 Series Pillar#1A: Money & Monetary Policy → Page 114
31.3 ⛽🎖🎖 TOP IMPORT AND EXPORTS OF GOODS FOR INDIA:

31.3.1 📤📤⛽🎖🎖 Goods Export Before & AFTER Corona: Notable items
Before Corona (i.e. 2018, 2019) �AFTER Corona (i.e. 2020, 2021)
1) �Petroleum Products (e.g. paint, polish, asphalt) 1) �Petroleum Products
2) Pearl & Precious Stones 2) �Drug & Biologicals
3) �Drug & Biologicals 3) Pearl & Precious Stones
4) �Gold Silver jewellery 4) Iron and Steel Metal
5) Iron and Steel Metal 5) Electric Machinery
6) Electric Machinery 6) Chemicals
7) Chemicals 7) �Gold Silver jewellery
8) Products of Iron and Steel 8) Products of Iron and Steel
9) �Marine Products 9) �Marine Products
10) Aluminium 10) Aluminium

31.3.2 📤📤🍊🍊 India’s TOP Agriculture Exports

� (1)Marine Products, (2) NON-Basmati Rice (3) Spices, (4) Sugar, (5) Buffalo Meat, (6) Basmati-
Rice, (7) Cotton, (8) Wheat, (9) Castor Oil, (10) Misc. Processed Food

31.3.3 📥📥⛽🎖🎖 Goods Import Before & AFTER Corona

Import Before Corona (i.e. 2018, 2019) �AFTER Corona (i.e. 2020, 2021)
1) 🛢🛢Crude oil 1) 🛢🛢Crude oil
2) Gold 2) Gold
3) �Petroleum Products 3) �Petroleum Products
4) Pearl & Precious Stones 4) Pearl & Precious, Stones
5) Coal 5) Coal

Mrunal’s Economy Win22 Series Pillar#1A: Money & Monetary Policy → Page 115
 Import Before Corona (i.e. 2018, 2019) AFTER Corona (i.e. 2020, 2021)
�
6) Electronics Components 6) Electronics Components
7) Organic Chemicals 7) Organic Chemicals
8) Plastic Raw Materials 8) �Vegetable Oils
9) �Vegetable Oils 9) �Computer Hardware, Peripherals
10) �Computer Hardware, Peripherals 10) Plastic Raw Materials

31.3.4 📤📤⛽🎖🎖 SERVICES Export Before & AFTER Corona (i.e. 2018, 2019)
Export Before Corona (i.e. 2018, 2019) �AFTER Corona (i.e. 2020, 2021)
1. �Telecom, computer, and 1) �Telecom, computer, and
information services information services
2. business services -research 2) business services -research
development, consultancy services etc.) development, consultancy services etc.)
3. 🏖🏖Travel of persons 3) �Transport of goods
4. �Transport of goods 4) 🏖🏖Travel of persons (Passengers
5. Financial services coming to India.)
6. Construction Services 5) Financial services
6) Construction Services

31.3.5 📥📥⛽🎖🎖 SERVICES Import Before & AFTER Corona (i.e. 2020, 2021)
Import Before Corona (i.e. 2018, 2019) �AFTER Corona (i.e. 2020, 2021)
1. business services -research 1) business services -research
development, consultancy services etc.) development, consultancy services etc.)
2. 🏖🏖Travel of persons (Indians going to 2) �Transport of goods(e.g. Indian
foreign trip using foreign airline) using American Cargo Shipping
3. �Transport of goods (e.g. Indian company’s service to deliver goods)
using American Cargo Shipping 3) �Telecom, computer, information
company’s service to deliver goods) services
4. intellectual property (Patent, 4) 🏖🏖Travel of persons (e.g. Indians going
Trademark) to foreign trip using foreign airline)
5. �Telecom, computer, information 5) intellectual property (Patent,
services Trademark)
6. Financial services 6) Financial services
� �FAQ: Why not given Top-10, why gave only Top-6 services? Ans. Feel free to waste time
sorting data from Statistical Appendix of ES21: Indiabudget.gov.in/economicsurvey/doc/Statistical-
Appendix-in-English.pdf

Mrunal’s Economy Win22 Series Pillar#1A: Money & Monetary Policy → Page 116
 �FAQ: Why “X” item’s rank ⏫/⏬ before and after Corona? Ans. May be due to Corona /
�
May be some factor happened in our competitor nations. Economic Survey did not bother to
comment, I did not bother to google.

31.3.6 🛒🛒🛒🛒India’s trade partners: Import / Export

Top Destination of Indian Exports Top Sources of Indian Import
(भारत के कु ल �नयार्त म� �ादातर िह�ा) (भारत के कु ल आयात का �ादातर िह�ा)
1. USA 1) China
2. UAE 2) UAE (Gold, Crude Oil)
3. China 3) USA
4. Bangladesh 4) Saudi
5. Hong Kong 5) Iraq
6. Singapore 6) Switzerland
7. Netherland 7) Hong Kong (Diamonds)
8. Britain 8) Indonesia (due to Palm Oil)
9. Belgium 9) Singapore
10. Germany 10) South Korea

31.3.7 India’s trade partners: Trade Surplus / Deficit With Notable Countries
Trade Deficit (i.e. India imports more but exports Trade Surplus (i.e. India imports LESS but
less to these nations) exports MORE to these nations)
We’ve large Trade Deficit: �ापार घाटा with We’ve Trade Surplus: �ापार अ�धशेष with
⇒ China (cheap electronics, toys etc.) over 50 - USA (Chemicals, textile, services etc.),
billion$ - Britain, Netherlands, Turkey (Tea,
⇒ Middle Eastern nations (Oil import esp Iraq, Spices, textile etc.),
Saudi, Qatar). - Bangladesh, Nepal (Food, medicine,
⇒ Switzerland (Gold, Luxury items), vehicles etc)

⇒ S. Korea (mobile, TV, electronics)

- India’s top five trading partners are USA, China, UAE, Saudi Arabia and Hong Kong (with
whom we’ve largest value of import & export relations)

31.4 💌💌💌💌 REPORTS / INDICES RELATED TO EXPORT & REMITTANCE

31.4.1 💌💌💌💌Export Preparedness Index by NITI ( �नयार्त तैयारी सूचकांक)
⇒ It ranks the Indian states based on State government policies, infrastructure, transport
connectivity, ease of doing business etc. (रा� सरकार क� नी�तयां, बु�नयादी अवसं रचना, प�रवहन, �ापार म� सुगमता)
⇒ Overall, most of the Coastal States are the best performers. (तटीय रा� सवर्श्रे� प्रदशर्न)
⇒ Top-3 (2020): Gujarat > Maharashtra > Tamil Nadu.

Mrunal’s Economy Win22 Series Pillar#1A: Money & Monetary Policy → Page 117
⇒ 2022-March: NITI Aayog released “Export Preparedness Index 2021”. Gujarat rank#1. Further
sub-rankings for categories -‘Coastal’, ‘Landlocked’, ‘Himalayan’, and ‘UTs/City-States’). But
poor cost benefit preparing the whole list.

31.4.2 💌💌💌💌Global Survey on Digital and Sustainable Trade Facilitation by UNESCAP

⇒ By United Nations Economic and Social Commission for Asia Pacific’s (UNESCAP).
⇒ It gives % score based on Govt’s efforts for Transparency, ⏬Formalities, Institutional
Cooperation, Cross-Border Paperless Trade.
⇒ India’s score improved from 78.5% (2019) to 90.3% (2021)

31.4.3 💌💌💌💌Report: Goods Trade Barometer Index

⇒ by World Trade Organization (More in �Pillar#3B: International Orgs.)
⇒ This index signals changes in world goods trade growth.
⇒ If Index value > 100: �
. But less than 100 = �. Current value is 99.5% (as of 2021-Sept)

31.5 ⛽BALANCE OF PAYMENT → CURRENT ACCOUNT → IMPORT OF OIL

Figure 1: Oil Barrel Prices in U$D

31.5.1 ⛽📈📈📈📈 Crude Oil: Russia-Ukraine War (2022)

⇒ Oil prices has skyrocketed in February 2022 due to Russia Ukraine were but 2022-March: OPEC
producers UAE and Iraq ⏫ the oil production → oil prices fell by 17% (UAE तथा इराक़ ने कहा िक
हम अपने अपने क�े तेल क� उ�ादन/आपू�त को बढ़ाएं गे इसके बाद क�े तेल क� क़�मतों म� �गरावट)
⇒ India’s STATE-OWNED OIL marketing companies (OMCs) are set to procure crude oil from
Russia at a discount, to the Russia-Ukraine conflict, Russia wants money urgently. (भारतीय सरकारी
तेल कं प�नयों को �स से स�े म� क�ा तेल �मलेगा।)

31.5.2 👜👜👜👜Budget-2022 Announcements to ⏬CAD

⇒ ⏫ Customs duties on imported daily use items such as umbrellas, headphones, earphones,

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 loudspeakers, and imitation jewellery ( आयात होने वाले छतरी हेडफ़ोन लाउड�ीकर और नक़ली गहनों पर आयात-
कर काफ़� बढ़ाया गया है।)
⇒ ⏬Tax benefits given to Bizmen for buying imported capital goods machineries e.g. textile
machine, bulldozer, mining equipment etc. (So they'll be forced to buy India-made machines)
⇒ Banned the import of Drone except for defense and research development. (आया�तत ड�ोन पे प्र�तबं ध)
⇒ 68% Defense purchase will be made from India made products (earlier 58% last year).
⇒ Unblended fuel shall attract an additional differential excise duty of Rs. 2/ litre (To encourage
blending of bio-ethanol.) → �this will help ⏬ import of crude oil.
⇒ Hackers are releasing the data of Indian importers/exporters price details and client details then
Chinese importers and exporters may connect with those foreign clients offering better
deals/prices than Indians. This is harming Indian exporters. So Budget-2022 proposed new
provision in Customs Act for penalising illegal sharing of export-import data (कभी कभी हैकसर् भारतीय
�नयार्तकों का डेटा डाकर् नेट पे बेच देते ह� �जसक� मदद से चीन के �ापारी उन �वदेशी ग्राहकों का सं पकर् कर उ�� भी स�ा बार िदखाकर
अपना माल बेच देते ह� तो यह भारत के हक़ म� नहीं है। इस�लए नए बजट म� सीमा-शु� क़ानून म� सं शोधन: अवैध तरीक़े से आयात
�नयार्त का डेटा साझा करने पर दंड के प्रावधान।)
⇒ Special Economic Zones Act will be replaced with a new law for ‘Development of Enterprise and
Service Hubs (DESH)’. HOW? Ans. let Govt release the law, then we'll see! (SEZ के �लए नया क़ानून)

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31.6 ⛽🎖🎖: 🗃🗃🤲🤲 BOP → CAPITAL ACCOUNT→ INVESTMENT→ FDI / FPI

31.6.1 🗃🗃🗃🗃🗃🗃🗃🗃 Foreign Portfolio Investment (FPI: पोटर्फ़ो�लयो �वदेशी �नवेश)

Mrunal’s Economy Win22 Series Pillar#1A: Money & Monetary Policy → Page 120
31.6.2 🗃🗃🗃🗃🗃🗃🗃🗃 Foreign Direct Investment (FDI: प्र�� �वदेशी �नवेश)

31.6.3 🗃🗃🗃🗃🗃🗃🗃🗃 FDI in India → Source Nation-wise Top-5

2019 2020
1. Singapore 1. Singapore
2. Mauritius 2. U.S.A.
3. Netherlands 3. Mauritius
4. U.S.A. 4. Netherlands
5. Japan 5. Japan

31.6.4 🗃🗃🗃🗃🗃🗃🗃🗃 FDI in → Sector wise Top-5

2019 2020
1. Services Sector 1. �Computer Software & Hardware
2. �Computer Software & Hardware 2. Services Sector
3. Trading 3. Trading
4. �Telecommunications 4. Automobile Industry
5. Automobile Industry 5. �Telecommunications

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31.7 ⛽🎖🎖: 🗃🗃🤲🤲 BOP → SUMMING UP

Sr. Approx Bn. USD 2018-19 😷😷2020-21 2021: April to

Sept
1 Current Account Deficit: चालू खाता घाटा - 57 +24 -3
2 Capital Account Surplus: पूंजी खाता + 54 +64 +66
अ�धशेष
3 Errors & Omissions: त्रुिटयां और चूक -0.486 -0.3 0.5
4 Overall Balance: समग्र सं तुलन/ शेष (-) 3 bn +87 +63
5 Official Reserve Transactions or (+) 3 bn (-)87 [Meaning (-)63
Monetary Movements in RBI's [Meaning RBI bought this
Foreign Exchange Reserves** RBI sold much $$ from
(�रज़वर् ब�क फॉरे� बाजार से डॉलर क� खरीदी या $$ from its market]
�बक्र� करेगी तािक �व�नमय दर म� ��रता रहे) reserves]
NET Balance of Payment for India 0 (ZERO) 0 (ZERO) 0 (ZERO)

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31.7.1 🐯🐯🐯🐯 RBI’s Forex Reserve: �वदेशी मुद्रा �रजवर्
The Forex Reserve component(s) are =
1) Foreign Currency Assets (includes foreign currencies & G-Sec/bonds of foreign Govts)
2) Gold (�णर्)
3) Reserve Tranche Position (RTP) in the IMF. (What is RTP = NOT IMP)
4) Special Drawing Right (SDR) of International Monetary Fund (IMF)

 Largest forex reserves: 1) China ($3 Trillion)> 2) Japan > 3) Switzerland > 4) India (As of 2021)
 USA is not in the top-10 list, it barely keeps ~$250 billions in reserve.
 2021: RBI forex Reserves crossed $600+ billions. because of following reasons:

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⇒ Corona: imports ⏬⏬ → Capital Account surplus. आयात म� �गरावट के चलते चालू खाता अ�धशेष
⇒ Corona: USA/EU ke Central banks cheap/dovish/expansionary monetary policy → Flow of
dollars in euros increased towards Indian share market (Particularly In the pharma/IT-Tech
companies). FPI/FDI ⏫ → so, inflow of Dollar$/Euro etc⏫⏫ कोरोना के दौरान अमे�रक� यूरोपीय
क� द्रीय ब�कों द्वारा �व�ार वादी मौिद्रक नी�त के चलते ढेर सारा �वदेशी पैसा भारतीय बाजार म� आया है.
⇒ then rupee will become stronger → exchange rate will not remain stable & exporters will suffer
due to stronger rupee. �पया �वदेशी मुद्राओं के सामने मजबूत होगा जो िक भारत के �नयार्तकों के �लए अ�� बात नहीं होगी
⇒ So RBI bought dollars/Euro etc foreign currencies & sold rupees → $$/Euro etc accumulation in
the RBI forex reserve. इस�लए भारतीय �पया को मजबूत होने से रोकने के �लए, �रजवर् ब�क ने �पया देकर बाजार से �वदेशी
मुद्रा को खरीदना शु� िकया. और ऐसी �जतनी �वदेशी मुद्रा �रजवर् ब�क ने खरीदी → उससे फॉरे� �रजवर् तो बढ़ना �ाभा�वक है.

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31.7.2 💱💱💱 Dollar- the Global Currency & ”DE-Dollarization”? (वै��क-आर��त-मुद्रा)

⇒ Foreign exchange reserves of 150 nations- internal composition is: 55% US dollars, 30% euros,
2% Yuan (Renminbi, Chinese currency) and 13% Misc. other currencies. That shows majority of
the nations keep large % of their forex reserve in US dollar. �व� के �ादातर देशों के �वदेशी आर��त �न�ध
कोष म� ब�तायत �प से डॉलर मुद्रा म� इन पैसों को रखा जाता है।
⇒ Thus US dollar is presently the “Global Reserve Currency”. (डॉलर को वै��क-आर��त-मुद्रा माना जाता है।)
⇒ “de-dollarisation” = Attempts to ⏬ the domination of $ in forex reserve and in international

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 transactions. e.g. 2021: Russian Central Bank reduced dollar-denominated assets to 16% in its
forex reserve. (�वदेशी मुद्रा भं डार म� तथा अंतरार्��ीय लेनदेन म� अमरीक� डॉलर का प्रभु� कम करना)
⇒ Can Indian rupee become global reserve currency? Ans. In a very long future yes if, India adopts
full capital account convertibility, keeps inflation, fiscal deficit, currency exchange rates under
control and becomes a sizeable exporter and global economic superpower. (�पया-मुद्रा ऐसा दजार् हा�सल
कर�गी जब यिद पूँजी-खाते म� सं पूणर् �प से प�रवतर्नीयता दी जाए, महँ गाई क़ाबू म� रहे, राजकोषीय घाटा क़ाबू म� रहे, मुद्रा �व�नमय दर
क़ाबू म� रहे, और भारत एक बड़ा �नयार्तक और आ�थक महास�ा बनकर िदखाए- तो िफर एसा हो सकता हे।)

31.7.3 Dollar Swap

1. 2020-March: RBI starts Dollars Swap with Indian banks. i.e. A bank shall buy US Dollars from
the Reserve Bank and simultaneously agree to sell the same amount of US Dollars at the end of
the swap period (“X” Months/Years). It is done through auctioning, so, RBI to earn some % of
profit. How it works NOT IMP.

2. 2020-later months: Current account surplus, FPI,FDI ⏫ → so, inflow of Dollar$⏫⏫ →

then rupee will become stronger → exchange rate will not remain stable & exporters will suffer
due to stronger rupee. Stronger rupee will be bad for exporters → RBI purchased dollars & sell
rupees �वदेशी मुद्रा के भारत म� अ�धक मात्रा म� आने से �पया मजबूत होता है जो �नयार्तकों के �लए अ�� बात नहीं. इस�लए �पया
बेचकर डॉलर खरीद�
3. 2022-March: RBI done $5 bn dollar-swap with Indian Bank/NBFCs to ⏫dollar supply in
Indian market, to prevent weakening of Rupee.

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4. 📙📙📙📙ES22 has identified following challenges: 1) Fed Tapering: risks of global liquidity
tightening 2) Inflation in global commodity prices 3) high freight costs 4) Geo-political crisis in
Ukraine 5) New variants of COVID-19 with new variants

31.7.4 🤝🤝💰💰Rupee Rouble Agreement

⇒ 2018-Dec: India signed pact with Iran to pay crude oil bill in rupee currency. National Iranian
Oil Co (NIOC) will open a bank account in India’s UCO Bank (a PSB). Indian oil companies will
make payments there in ₹ currency. Then Iran used this ₹ income to pay for Indian Tea & Rice
purchase → helps ⏬ the demand of dollars. ( �However later, due to American pressure,
govt of India stopped this arrangement).
⇒ 2022: Russian banks banned from the SWIFT messaging system that enables international
financial transactions. (Ref: Pillar1B2)
⇒ So, Russia proposed “Rupee-rouble trade agreement”. (‘Rouble’ sometimes also spelled as
‘Ruble’. 1 Ruble = 100 kopeks. Just like ₹1= 100 paisa)
⇒ In such agreement, India pays for Russian imports in rupee currency and then Russian
companies will use that money to import goods from India.
(भारत �स से क�ा तेल आयात करेगा तब भुगतान �पया मुद्रा म� कर� → उन �पयों से �सी सरकारी क��नयां- भारत से अनाज-
दवाइयां इ�ािद ख़रीदे. �स पर ��फ़्ट �व�ीय सं देश प्रणाली क� पाबं िदयों के चलते वो एसा समझौता करने को बेताब है। एक ज़माने म�
भारत ने ईरान के साथ भी कु छ ऐसा ही समझौता िकया था।)

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31.7.5 💱💱⚔ Misc. Concepts: Quantitative Easing and Federal Tapering

⇒ 2007-08: Subprime crisis in USA → Borrowers unable to repay home loans → American Banks
NBFCs’ bad loans / NPA / toxic assets increased → to help them, US Federal Reserve printed

Mrunal’s Economy Win22 Series Pillar#1A: Money & Monetary Policy → Page 128
 new dollars & used $ to buy those toxic assets/bonds (also known as mortgage-backed securities
(MBS) → ⏫ dollar supply in the system. Known as “Quantitative Easing (मात्रा�क आसानी)”.
⇒ 2013: American Central Bank (US Federal Reserve) gradually cut down its toxic asset purchasing
program → less quantity of dollars issued → called “Fed Tapering (सं घीय टे�पंग)”.
⇒ Result?= (perceived) shortage of dollars in USA → Loans% become more expensive in USA→
American investors began selling shares/bonds in other countries, and took their dollars back to
USA (to lend to local businessmen). This phenomenon was called “Taper Tantrum”. It resulted
into weakening of other currencies against USD. [गैर अमे�रक� देशों क� मुद्राएं ब�त कमजोर हो गई थी]
⇒ 2020: During Corona, American Central Bank again started purchase of Bonds to increase
money supply in market. (कोरोना म� अथर्तंत्र को पुनज��वत करने के �लए वापस ये तमाशा शु� िकया था)
⇒ 2021-22: With Corona unlockdown/Economic-recovery, American Central Bank may gradually
cut down this program so again columnists worried about repeat of 2013’s Taper-Tantrum
episode. However 📙📙📙📙ES22 has noted that India need not worry from taper-tantrum (2022),
because foundations of Indian economy are stronger, and RBI has enough forex reserve to
handle any crisis arising from it. (कोरोना महामारी काबू म� आने पर जब अथर्तंत्र वापस पटरी पर आ जाएगा तो अमे�रक�
क� द्रीय ब�क वापस से अपना बॉ� खरीद कायर्क्रम थोड़ा कम कर देगा, तो वापस से 2013 के घटनाओं का पुनरावतर्न होने का डर,
हालाँिक आ�थक सव��ण का मानना है िक हम� �सफ़र् �ादा डरने क� ज़�रत नहीं. हमारी अथर्तंत्र क� बु�नयादी पहले से ब�त �ादा
मज़बूत है और �रज़वर् ब�क के पास पहले से ब�त �ादा �वदेशी मुद्रा आर��त भं डार है।)

31.8 �📡📡MRUNAL’S ECONOMY COURSE FOR UPSC PRELIMS & MAINS

🕰🕰Course Timing (कब होगी �ास)

⇒ Live classes @9PM Night
⇒ Recording available, if class missed
⇒ Access via Mobile, Tablet, Laptop!
⇒ Weekly Quiz with RANKING
💬💬Course Medium (मा�म)
⇒ Teaching: English + Hindi
⇒ PPT & PDF: English. With important terminologies in Hindi to save time of
vernacular medium mains-candidates
⇒ 🔖🔖Coupon Code: Mrunal.org for 10% discount🤩🤩
URL
⇒ 📡📡Registration Link: https://unacademy.com/@mrunal.org

Mrunal’s Economy Win22 Series Pillar#1A: Money & Monetary Policy → Page 129
32 🌐🌐🌐🌐🌐 WORLD TRADE ORGANIZATION: �व� �ापार सं गठन

Mrunal’s Economy Win22 Series Pillar#1A: Money & Monetary Policy → Page 130
32.1 🤝🤝TRADE AGREEMENTS TYPES: �ापार समझौते के प्रकार

32.1.1 🤝🤝FTA: India UAE CEPA, 2022

UAE to⏬ taxes on Indian products India to⏬ taxes on UAE products
Indian electronic goods, chemicals and 90% of the goods/services from UAE to India.
petrochemicals cement, ceramics and
machinery

Mrunal’s Economy Win22 Series Pillar#1A: Money & Monetary Policy → Page 131
 UAE to⏬ taxes on Indian products India to⏬ taxes on UAE products
gems and jewelry, textiles, leather, footwear,
sports goods, engineering goods, and
pharmaceuticals.
⇒ � Agreement covers rules of origin, government procurement, intellectual property rights, and
e-commerce etc. (उ��� के �नयम, सरकारी ख़रीद, बौ�द्धक सं पदा अ�धकार, इ-वा�ण�)
⇒ � India-UAE CEPA marks the first time India has included a chapter on e-commerce/ digital
trade in an FTA. (ये भारत का पहला ऐसा �ापा�रक समझौता है जहाँ पर िड�जटल �ापार क� भी बात �ई है)
⇒ � This will give big market access to Indian exports to UAE → further towards not only in
UAE, but also in Middle East and Africa.

32.1.2 🤝🤝FTA: India Australia ECTA (आ�थक सहकार और �ापार समझौता)

India-Australia Economic Cooperation and Trade Agreement (IndAus ECTA-2022)

�Aussie to⏬ taxes on � �India to⏬ taxes on Aussie �India kept these sensitive
Indian products products items OUT
Engineering goods, gems 0% customs duty on Coal, sheep Australian Dairy products,
and jewellery, leather, meat, wool, LNG, alumina, wheat, rice, sugar,
textiles, apparel, footwear- metallic ores,Avocados, onions, chickpeas, beef, apples, toys,
total 96% of India’s exports pistachios, blackberries, cashews, iron ore .
to Australia. blueberries, raspberries. Indian govt will not⏬
⏬Customs duty on – wine, taxes on above Aussie items.
almond, cotton, orange, lenthil etc
�This create 1 million+ �This will help Indian for energy �This will protect the
jobs in India security, cheap raw material local Indian industry
(रोज़गार सृजन /नौकरी �नमार्ण) (ऊजार् सुर�ा और स�ा क�ा माल भारत को (भारत सरकार ने ऑ��े�लया से आने
�मले) वाले कु छ ऐसे सं वेदनशील चीज़� जैसे िक
दू ध गे�ँ चावल चीनी इ�ािद को इससे
बाहर रखा है तािक भारत के िकसानों का
नुक़सान न हो)
⇒ � � Australian govt relaxed Work-visa norms for Indian graduates from STEM (Science,
Technology, Engineering and Mathematics).
⇒ � � faster approval to Indian medicines in Australian market (if such medicine is already
approved in Canada / European Union) (यिद भारत क� दवाई को कै नेडा/ यूरोपीय सं घ ने अनुम�त �मल चुक� है तो
ऑ��े�लया म� उसे ज�ी से अनुम�त दी जाएगी।)
⇒ � � double taxation avoidance agreement for specific category of IT companies. (More in
�Pillar#2B: Tax Avoidance) (सूचना प्रौद्यो�गक� से जुड़ी कं प�नयों पर दोहरे कराधान से मु�� इ�ािद)
⇒ � bilateral trade will ⏫ to $50 billion within 5 years and generate 1 million+ jobs in India.

Mrunal’s Economy Win22 Series Pillar#1A: Money & Monetary Policy → Page 132
32.2 🌐🌐🌐🌐🌐 BRICS NDB BANK GETS NEW MEMBERS
BRICS Bank: New Development AIIB: Asian Infrastructure Investment
Bank (NDB) नई �वकास ब�क Bank ए�शयाई अवसं रचना �नवेश ब�क
Started in 6th BRICS Summit in Fortaleza 2015-16
(2014) members signed treaty
Members Founding members: Brazil, Russia, China, India, UK, Switzerland, >100 nations
India, China, South Africa as of 2020.
originally each of above founding
members had 20% shareholding,
later diluted to 19.42% after
addition of some new members.
Voting power March 2022: new shareholding Based on share capital contributed:
Shareholding pattern to be- ⇒ China largest shareholding ~27%,
pattern - Brazil Russia India China South ⇒ India second largest shareholding~7%.
Africa (19.42% each)
⇒ Asian countries control about 75%
- + Bangladesh (1.83%)
- + UAE (1.08%) shareholding
- + Uruguay and Egypt: added as ⇒ 25% with non-Asian nations.
prospective members but not
yet have shareholding.
All member countries of the United
Nations can become members of
the bank, but BRICS founding
nations' voting power can never be
less than 55%.
HQ Shanghai, China Beijing, China
🔪🔪🔪🔪 Corona $1 billion. (2020-Apr) $750 million (2020-June)
loan2India

NEXT Handout: Pillar4: Sectors of Economy- Agriculture, Mfg, Serviecs

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