> ## Content Index > Fetch the complete content index at: https://www.upscprep.com/llms.txt > Use this file to discover other available public pages before exploring further. # Previse 2025: Macroeconomic Trends - URL: https://www.upscprep.com/factors-affecting-macroeconomic-trends-in-india-current-affairs-upsc/ - Published: 2024-06-04T18:00:42.000Z - Updated: 2025-05-01T05:43:43.000Z - Description: GS3 | Economic Development - Author: UPSCprep.com - Tags: Previse 2025, Economy, UPSC Prelims, UPSC Mains, #show-toc The UPSC Civil Services Examination demands a comprehensive understanding of the Indian economy. A crucial aspect of this understanding is deciphering **macroeconomic trends**. This introductory section delves into the concept of macroeconomic trends and the key factors influencing them in the Indian context. **Macroeconomics** focuses on the big picture – the overall performance of an economy. Macroeconomic trends encompass broad patterns in areas like: - **Economic Growth:** The rate at which the economy produces goods and services. - **Inflation:** The rise in prices of goods and services over time. - **Unemployment:** The number of people actively seeking work but unable to find it. - **Interest Rates:** The cost of borrowing money. - **Exchange Rate:** The value of a country's currency compared to other currencies. Let's look into these trends important for UPSC Prelims 2024: ### **Loan-Write Offs** ![Loan-Write Offs ](https://lh7-us.googleusercontent.com/docsz/AD_4nXe-gmUWxKOE1pxTvk7n3G3xA2xrqZr4C9WYLbRXLS5X_RuQFSGngQOOxawpYqZXB4B-OQB9neXr5Z-CqgvgDYupqtF9IJerxpQWBl1zCnqTmL2h6MrasfWzwxUFdUNZPzoLhQ-liv4fnhZ7VWM12uQBQnyJ?key=NQdYeKb7yByyZUCIQv40oA) ![Loan-Write Offs ](https://lh7-us.googleusercontent.com/docsz/AD_4nXfz_G8PerMOTOFRKlXNyN6EeARcNEbvmm0OK1vg_mA6D-BZtRXPDnMmq-PtKqkpBbGYfNqrzD2MPiyj43sAdHUDGjhXuKdqUsEpZ-Zw9eCmhSdspHp9xKIJvDv4MajFj3GaIZLS9Ahj5zC9zqzMljFKCSeX?key=NQdYeKb7yByyZUCIQv40oA) - Scheduled commercial banks wrote off non-performing assets worth Rs 9,91,640 crore from 2017-18 to 2021-22. - Writing off loans means it will no longer be counted as an asset and it helps banks reduce the level of non-performing assets. - This is done to reduce the bank’s tax liability because there is a very low chance of recovery. - All loan write-offs are not lost money and many of them continue to be on the birth register of banks. - It is different from farm loan waivers as waivers involve the government taking the outstanding debt of farmers by providing a budgetary allocation to banks. --- ### **Jobless Growth** ![Jobless Growth](https://storage.ghost.io/c/92/07/9207d054-5e99-4b26-b8c8-424994497a07/content/images/2024/06/image-20.png) ![Jobless Growth](https://lh7-us.googleusercontent.com/docsz/AD_4nXcBcV-sGsbwHNiTKxFfIv5I3ZIHtx6ipaY9OzKnVZ4ywJBF_0fmLWspV88a-cOW2_8yEWvX7taGViSSUgVujuQpV3C_RBp8oIyGzl4i_fzbfvlHGuXu34OdEhgEpjU9F7gv85wHby87QKNYQbwoJ3wiHIdv?key=NQdYeKb7yByyZUCIQv40oA) - Jobless growth is a situation where economic growth does not lead to job creation. - The unemployment for below primary educated class was 1.13% while it was 14.73% in 2020–21 for graduates and above. - The decline of LFPR is higher for females as compared to males and the overall female Work Force Participation Rate (WFPR) aged 15–59 in 2020–21 was 32.46% which is 44.55 percentage points below that of men. - It can be due to factors like global economic slowdown, dominant Informal sectors, lack of skills and under utilization of resources - Jobless growth means underutilization of human capital which increases poverty, lower per capita income and malnutrition. --- ### **RBI Autonomy** ![RBI's autonomy an 'essential and accepted' governance requirement: Finance Ministry - The Hindu](https://th-i.thgim.com/public/business/Economy/it3hz1/article25383282.ece/alternates/FREE_1200/RBIcol) ![RBI Autonomy](https://lh7-us.googleusercontent.com/docsz/AD_4nXfS_JRVxWN5x2LghUKyiTfO2SgHdHJieTQwXDVS8BK0dl4nAv115hIAhYLEHupM3emAnL-ErBgNl1XVvkDUwqP5kyufpgPUhMV1g_tRPsoDijBmbhKe6cKF4AJCflWe6ymcT2dsnV3B7NXrOI_gNFZUlM0E?key=NQdYeKb7yByyZUCIQv40oA) - ‘Autonomous’ word is not mentioned in the Reserve Bank of India Act, 1934 but it is commonly accepted that the principle of Central Bank autonomy is important. - The Central government may give such directions to the RBI as it may consider necessary in the public interest under Section 7 of the Act. - This power was exercised when the RBI announced a surplus transfer of 991.22 billion rupees for the 9 months from July 2020 to March 2021. - Also, the departure of RBI governors Mr Raghuram Rajan and Mr Urjit Patel raised questions about increasing government control. - Also, the exercise of demonetisation was questioned as there was no mention of RBI in this decision. - Money supply is an integral aspect of monetary policy, and the Monetary Policy Committee was excluded for some time from decision-making on monetary policy - Central banks work on long-term financial stability and growth, which requires autonomy and limited interference by the government. --- ![](https://storage.ghost.io/c/92/07/9207d054-5e99-4b26-b8c8-424994497a07/content/images/2024/06/1.-UPSCprep-Banner-6.png) [Join Now](https://courses.upscprep.com/products?ref=upscprep.com) --- ### **Income Inequality** ![Income Inequality](https://lh7-us.googleusercontent.com/docsz/AD_4nXfScM8rxqnNRjTeaZ_n93ptOauYxbvMB2rC-oe3piA1WAFi05gs8cElxtWJnZnWEz-FXlMVJWHqbiUw5jA6DKppfupqT8V90F1D2c9jh6QmiD_mXxM6ax1OKY4kGIvICRNqX5rtLTtim5Siwbu3EPnlQC0j?key=NQdYeKb7yByyZUCIQv40oA) ![Income Inequality](https://lh7-us.googleusercontent.com/docsz/AD_4nXe59_h8E8OU0Q6EvguV0SoHt78Z9osEX3L_XXDBK8lf3H4wDSZ8oFBdaaZpZ5MC5jf8chuPxuUg7ad3CBnDE3E5cVbKsKpDp6YF7Vy-OCbkkTPESeO9sXKls2aX7Arioc7ziVYDRaWX6gxlX0bW20FBkB8t?key=NQdYeKb7yByyZUCIQv40oA) - Income inequality means unequal distribution of income among individuals or households within a population. - It can be measured using Gini coefficient, Lorenz curve or the ratio of income shares between different percentiles of the population. - Top 10% of the population holds 77% of the total national wealth, the richest 1% owns 53% of the country’s wealth while the poorer half has merely 4.1% of national wealth. - Geographical divide is also visible when per capita State Domestic Product is compared with the national average. - The per capita SDP of the higher-income states was 1.7 times that of the lower-income states during 1990-91 which increased to 2.5 times by 2019-20. --- ### **Household Savings** ![Rising debt strains household savings - The Hindu](https://th-i.thgim.com/public/news/national/j94fpx/article68209017.ece/alternates/FREE_1200/Fresh%2024%20Surplus%20surprise.jpg) ![Household Savings ](https://lh7-us.googleusercontent.com/docsz/AD_4nXfgSM_kCvwJ-jDnKrTwUVuQY18ZAoeHAaYR9IS5zxM81oM4hXUTJdYczHPy25izbYg_bcQJ7ENtfiRofvFaHcuapstZ-V18qUnKsdy3mSGkSsTq0nUDWFB97v6i9Ekn2vNEVsMpagngix3bvr24uHiCVrA?key=NQdYeKb7yByyZUCIQv40oA) ![Household Savings ](https://lh7-us.googleusercontent.com/docsz/AD_4nXc7ZUcxHcPkl4wgxmOAQKUutUfQXpvrDGg-dt37r4d51Yo0lxBCEa3kC1EPCdA1AEldvQgFL6NsYB04D5OdILVJC136E015EO7URF7Hup39VMPpcwie7XOEoYNkf2zYM38ag_-F_Gp9cmixnyQER3SPjJsm?key=NQdYeKb7yByyZUCIQv40oA) - The household savings to GDP ratio is the sum of its physical savings to GDP ratio, net financial savings to GDP ratio and gold and ornaments. - A huge fall in household net financial savings to GDP ratio was seen during 2022-23 due to a higher borrowing to GDP ratio which is driven by a need to finance interest payments. - Net financial savings to GDP ratio declined by 2.5 percentage points and the physical savings to GDP ratio increased by 0.3 percentage points. - The household borrowing to GDP ratio increased by 2 percentage points. --- ### **Per-Capita Income** ![Per-Capita Income](https://lh7-us.googleusercontent.com/docsz/AD_4nXcu7d-mzuRe4n80u6xbxDgNtFQ7fsr2birU6u56s-EQhQBv0DKT0cBlkA9Gxidt-5D8Cm_E-NHgQtjSmZrvgS7oO8XGy-FNQ2TbU--PuwCSmUCrzc9oV3__TmiBurDAxssKof1ETu2VkzZuOGc0qKzT07-l?key=NQdYeKb7yByyZUCIQv40oA) ![Per Capita Income of Indian States 2023-24: A Comprehensive List](https://www.cheggindia.com/wp-content/uploads/2024/05/Per-Capita-Income-24.png) ![Gross national income (GNI) per capita, 2022](https://ourworldindata.org/grapher/thumbnail/gross-national-income-per-capita.png?imType=og) - All India annual per capita Net National Income (NNI) for 2014-15 and 2022-23 at current prices are Rs. 86,647 and Rs. 1,72,000 respectively illustrate achievement in this regard. - When calculating a country's PCI, every individual is taken into account. The calculation includes men, women, children, and babies. This is mainly because the measurement considers the entire country's population or specific geographical location. - PCI is used to calculate Gross Domestic Product Per Capita, Gross National Income Per Capita, conduciveness of business etc. - But there are some limitations also like Per Capita Income doesn't account for an economy's inflation, inclusion of non-earning individuals, not considering every individual's savings and welfare indicators like quality of working conditions. --- ### **Inflation** ![Inflation - UPSC](https://edurev.gumlet.io/ApplicationImages/Temp/661880_19a4543e-8a2f-4090-9cfd-42901d46c5c7_lg.png?w=400&dpr=2.6) ![Inflation in India 2029 | Statista](https://www.statista.com/graphic/1/271322/inflation-rate-in-india.jpg) ![State-wise Inflation in India](https://cdn.finshots.app/images/2024/05/Inflation.png) - Inflation involves general rise in price of commodities due to demand and supply constraints. Its impacts are multidimensional- - High inflation undervalues the stock prices, reduces purchasing power and value of gold increases. - It results in higher Interest rates thus higher lending rates. - High inflation can result in decreased international competitiveness. - Creditors are affected as the value of the money received from debtors decreases. - Also, there is ‘Wage-Price Spiral’ in which there is a cycle of rising wages and prices. ## Sign up for UPSCprep.com Simplify your UPSC journey Subscribe Email sent! Check your inbox to complete your signup. No spam. Unsubscribe anytime.