The document provides definitions and explanations of various economic terms related to foreign exchange reserves, fiscal policy, monetary policy, privatization, liberalization and globalization efforts undertaken by the Indian government since 1991. Key terms defined include foreign exchange reserves, balance of payments, new economic policy of India, inflation, international monetary fund, liberalization, privatization, fiscal policy, stock exchange, deregulation of industrial sector, foreign institutional investors, direct taxes, indirect taxes, quantitative restrictions, disinvestment, globalization, outsourcing, world trade organization, bilateral and multilateral trade agreements, NITI Aayog, poverty line, head count ratio, de-industrialization, public distribution system, Pradhan Mantri Jan-D

1. Foreign Exchange
Reserves
Forex reserves are assets maintained by monetary authorities to check the balance
of payments, deal with the foreign exchange rate of currency and to maintain
financial market stability.
Deficit Deficit occurs when expenses exceed revenues, imports exceed exports, or
liabilities exceed assets.
New Economic Policy New Economic Policy of India was launched in the year 1991 under the leadership of
P. V. Narasimha Rao. This policy opened the door of the India Economy to global
exposure for the first time. This reduced the import duties, opened a reserved
sector for the private players, devalued the Indian currency to increase exports.
Balance of payments The balance of payments (BOP), is a statement of all transactions made between
entities in one country and the rest of the world over a defined period, such as
a quarter or a year.
Inflation Inflation is a rise in prices, which can be translated as the decline of purchasing
power over time.
International Monetary
Fund (IMF)
The International Monetary Fund (IMF) is an organisation of 190 member
countries, each of which has representation on the IMF's executive board in
proportion to its financial importance.
Liberalisation Liberalisation is the process or means of the elimination of control of the state
over economic activities. It provides a greater autonomy to the business
enterprises in decision-making and eliminates government interference.
Privatisation Privatisation refers to transfer of ownership and control of government or state
assets, firms and operations to private investors. It implies shedding of the
ownership or management of a government owned enterprise. Government
companies are converted into private companies in two ways
(i) by withdrawal of the government from ownership and management of public
sector companies and or
(ii) by outright sale of public sector companies.
Fiscal policy Tax reforms are concerned with the reforms in the government’s taxation and
public expenditure policies, which are collectively known as its fiscal policy
Dereserved Dereservation implies opening up of those industries for the private sector that
were exclusively reserved for the government sector
Stock exchange The stock exchange in India serves as a market where financial instruments like
stocks, bonds and commodities are traded.
Deregulation of
Industrial Sector
Deregulation is the removal or reduction of government regulations in a specific
industry. The goals are to allow industries to operate businesses more freely, make
decisions efficiently, and remove corporate restrictions.
In India, regulatory mechanisms were enforced in various ways
(i) industrial licensing under which every entrepreneur had to get permission
from government officials to start a firm, close a firm or decide the amount of
goods that could be produced
(ii) private sector was not allowed in many industries
(iii) some goods could be produced only in small-scale industries, and
(iv) controls on price fixation and distribution of selected industrial products
Foreign Institutional
Investors (FII)
Foreign Institutional Investors (FII), are investors such as merchant bankers, mutual
funds and pension funds, are now allowed to invest in Indian financial markets.
Direct taxes Direct taxes consist of taxes on incomes of individuals, as well as, profits of
business enterprises
Corporation tax A corporate tax is a tax on the profits of a corporation
Indirect taxes An indirect tax is collected by one entity in the supply chain, such as a
manufacturer or retailer, and paid to the government; however, the tax is
passed onto the consumer by the manufacturer or retailer as part of the
purchase price of a good or service.

2. Quantitative
restrictions
Specific limits on the quantity or value of goods that can be imported (or
exported) during a specific time period.
Disinvestment Privatisation of the public sector enterprises by selling off part of the equity of
PSEs to the public is known as disinvestment
Globalisation Globalisation is the word used to describe the growing interdependence of the
world's economies, cultures, and populations, brought about by cross-border
trade in goods and services, technology, and flows of investment, people, and
information.
Outsourcing In outsourcing, a company hires regular service from external sources, mostly from
other countries, which was previously provided internally or from within the country
(like legal advice, computer service, advertisement, security — each provided by
respective departments of the company).
World Trade
Organisation
Created in 1995, the World Trade Organization (WTO) is an international institution
that oversees the rules for global trade among nations.
Multilateral trade
agreements
Multilateral trade agreements are commerce treaties among three or more
nations. The agreements reduce tariffs and make it easier for businesses to import
and export.
Bilateral trade
agreements
Bilateral trade agreements are agreements between two countries to promote
trade and commerce. They eliminate trade barriers such as tariffs, import quotas,
and export restraints in order to encourage trade and investment.
NITI Aayog National Institution for Transforming India. The Planning Commission which has a
legacy of 65 years has been replaced by the NITI Aayog. It is the country’s premier
policy-making institution that is expected to bolster the economic growth of the
country.
Chronic poor People who are leading constant lives of poverty and who are normally poor but may
have a small amount of money with them (for example, casual workers) are
classified collectively as the chronic poor.
Transient poor The poor who are well off most of the time but may be subject to bad luck or
difficult times at times. They are known as the transient poor.
Poverty Line Poverty line was defined as the per capita. Consumption expenditure level to meet
average per capita daily calorie requirement of 2400 kcal per capita per day in
rural areas and 2100 kcal per capita per day in urban areas.
Per capita expenditure Sum of general government expenditure on health for all countries divided by
sum of population for all countries by relevant group.
Head Count Ratio The Headcount ratio (HCR) is the proportion of a population that exists, or lives,
below the Line of Poverty
De-industrialisation Deindustrialization refers to the process of social and economic change caused
by the removal or reduction of industrial capacity or activity in a country or
region, especially heavy industry or manufacturing industry.
Public Distribution
System
The Public distribution system (PDS) is an Indian food Security System
established under the Ministry of Consumer Affairs, Food, and Public
Distribution.
Pradhan Mantri Jan-
Dhan Yojana
Pradhan Mantri Jan Dhan Yojana (PMJDY) is the National Mission for Financial
Inclusion.
It ensures access to financial services, namely, Banking/ Savings & Deposit
Accounts, Remittance, Credit, Insurance, Pension in an affordable manner.
Pradhan Mantri Gram
Sadak Yojana
The Pradhan Mantri Gram Sadak Yojana was launched on 25th December, 2000.
With an objective to provide connectivity, by way of an all-weather road to
unconnected habitations.

3. Mahatma Gandhi
National Rural
Employment
Guarantee Act
(MGNREGA)
The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has
the following objectives:
● Provide 100 days of guaranteed wage employment to rural unskilled labour
● Increase economic security
● Decrease migration of labour from rural to urban areas
Valmiki Ambedkar
Awas Yojana
The VAMBAY was launched in December 2001 to ameliorate the conditions of the
urban slum dwellers living below the poverty line without adequate shelter.
The scheme has the primary objective of facilitating the construction and up-
gradation of dwelling units for slum dwellers and providing a healthy and
enabling urban environment through community toilets under Nirmal Bharat
Abhiyan, a component of the scheme.