Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

me/upscecobyanila

Economic Activities
Production, exchange (distribution), and consumption of goods and services are among the
basic economic activities of life.

Some of the activities may happen in the parallel markets. Parallel markets is an unofficial
market for shares, currencies, etc., which works at the same time as the official market.

Some activities are illegal. Some production happens in the black market. A black market is
an economic activity that occurs outside of government-sanctioned channels. Black markets
trade in legal and illegal goods and services to avoid taxes, or both.

While estimating national income and GDP estimation we only consider the legal market
activities and marketed activities. There are parallel imports or gray market goods .

Parallel imports (or gray market goods) refer to branded goods that are imported into a
market and sold there without the trademark owner’s consent in that market.

In the recent years, the Government has taken a number of measures to counteract against
the black money. The measures are listed below

 The Black Money (Undisclosed Foreign Income and Assets) and Imposition of
Tax Act, 2015.
 Enactment of the Benami Transactions (Prohibition) Amendment Act, 2016 to
effectively deal with domestic black money cases.
 Constitution of the Special Investigation Team (SIT) on Black Money in 2014
under Chairmanship and Vice-Chairmanship of two former Judges of the
Supreme Court.
 Constitution of Multi-Agency Group (MAG) for coordinated and effective
investigation in ‘Panama paper leaks’ cases and Paradise Leaks cases.
 Task Force (TF) on Shell Companies constituted under the joint chairmanship
of Revenue Secretary and Secretary (Ministry of Corporate Affairs) in 2017.
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

Care Economy
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

Most often we are not accounting for the unpaid care economy. Some of the care economy
activities are not marketed and unpaid. The care economy activities are part of purple
[Link] ILO Resolution on Decent Work and the Care Economy was adopted by the
International Labour Conference in 2024. This historic resolution marks the first
international tripartite agreement on this critical issue and highlights the essential links
between the care economy, gender equality, decent work, sustainable development, and
social justice.

Economic Agents
By economic units or economic agents, we mean those individuals or institutions which take
economic decisions.

They can be consumers who decide what and how much to consume.

They may be producers of goods and services who decide what and how much to produce.

They may be entities like the government, corporation, banks which also take different
economic decisions like how much to spend, what interest rate to charge on the credits, how
much to tax, etc

Production
Production is the process of creating goods and services to satisfy human wants.
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

Products
The goods and services got from the production process is known as products.

Producers
Producers tend to optimise the profit given the cost of production constraint. Production
reflects the supply side of the economy.
The law of supply states that when there is higher price producer tend to increase the
quantity supplied and vice versa. But in the long run this increases the supply.
When production is high the supply is more and the price falls. When the production
is less, supply is less and the price increases. So there is an uncertainty in front of the
producers.
Producers produce the goods and service. Production is affected by the cost of the
production. In order to make profits the cost of production shall be low.

With the advent of the climate change and challenges of solid waste management, the
producers are now focusing on the ideas like extended producer responsibility and
circular economy.

Extended producer responsibility (EPR) is an environmental protection strategy aimed

at decreasing total environmental impact from a product and its packaging, by ensuring that
the producers of the product take responsibility for the entire lifecycle of their
products especially in the take-back, recycling, and final disposal of their products, including
its packaging.
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

Question

In India, ‘extended producer responsibility’ was introduced as an important feature

in which of the following?
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

(a) The Bio -medical Waste (Management and Handling) Rules, 1998

(b) The Recycled Plastic (Manufacturing and Usage) Rules, 1999

(c) The e-Waste (Management and Handling) Rules, 2011

(d) The Food Safety and Standard Regulations, 2011

Linear economy

The linear economy, sometimes referred to as the take-make-waste economy, is a system

where resources are extracted to make products that eventually end up as waste and are
thrown away. Products and materials are generally not used to their full potential in a linear
economy and, as the name suggests, always move in one direction – from raw material to
waste. It is a polluting system that degrades natural systems and is the driver of global
challenges, including climate change and biodiversity loss.

Circular Economy
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

The circular economy is a production and consumption model involving sharing,

leasing, reusing, repairing, refurbishing and recycling existing materials and products
as long as possible. In this way, the life cycle of products is extended.
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

History of the High-Level Regional 3R and Circular Economy Forum in Asia and
the Pacific

The Regional 3R and Circular Economy Forum in Asia and the Pacific was launched in
2009 to promote sustainable waste management, resource efficiency, and circular
economy principles across the region. Recognizing the environmental challenges
posed by rapid economic growth, resource depletion, and rising waste generation, the
Forum has served as a key platform for policy dialogue and capacity building. A major
milestone was the adoption of the Hanoi 3R Declaration (2013-2023), which outlined
33 voluntary goals for shifting towards a more resource-efficient and circular
economy. Over the years, the Forum has played a crucial role in aligning regional
efforts with global sustainability commitments, including the UN Sustainable
Development Goals (SDGs), the Paris Agreement, and the UN Decade on Ecosystem
Restoration (2021-2030).
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

Building on the momentum of past initiatives, the new 3R and Circular Economy
Declaration (2025-2034) aims to catalyze transformational changes in resource and
waste management. The Forum continues to support multi-stakeholder
collaboration, particularly in tackling plastic pollution through initiatives such as the
negotiations for a Global Plastics Treaty. With Asia-Pacific accounting for the largest
share of global material use, the Forum emphasizes the region’s pivotal role in
achieving carbon neutrality, environmental sustainability, and economic resilience.
P-3 (Pro Planet People) Approach: India’s PM advocated the P-3 approach for
sustainable lifestyles and eco-friendly behavior.
Cities Coalition for Circularity (C-3): The C-3, a global alliance for city
collaboration, knowledge-sharing, and private sector partnerships, was launched.
CITIIS 2.0: A key MoU for CITIIS 2.0 (City Investments to Innovate, Integrate and
Sustain) was signed that focuses on integrated waste management and climate action.

Question

Consider the following statements:

Statement I: Circular economy reduces the emissions of greenhouse gases.

Statement II: Circular economy reduces the use of raw materials as inputs.

Statement III: Circular economy reduces wastage in the production process.

Which one of the following is correct in respect of the above statements?

(a) Both Statement II and Statement III are correct and both of them explain Statement I

(b) Both Statement II and Statement III are correct but only one of them explains Statement
I

(c) Only one of the Statements II and III is correct and that explains Statement I

(d) Neither Statement II nor Statement III is correct

Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

With reference to the Circular Economy, consider the following statements:

[Link] a circular economy, the primary goal regarding resource use is to achieve a balance
between resource extraction and replenishment.

[Link] to a linear economy, a circular economy emphasizes disposal of waste in

landfills and incineration.

[Link] materials into new products aligns with the principles of a circular economy.

Which of the statements given above is/are correct?

(a) 1,2 and 3

(b) 2 and 3 only
(c) 1 and 2 only
(d) 3 only

Consider the following statements about Circular Economy:

1. It involves sharing, leasing, reusing, repairing, refurbishing and recycling existing

materials and products as long as possible.

2. India has more than 50 % recycling rate of PET.

Which of the statement/s given above is/are correct?

a) 1only

b) 2only

c) Both 1 and 2

d) None of these

Consumers

Consumers participate in the market when they purchase goods and services that they need.
These are the final goods that people as consumers use.
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

Consumers tend to optimize the utility (happiness) of consumption.

Consumers represent the demand side of the economy. But they cannot buy everything they
want due to the budget and their income. The purchasing power determines the consumer's
consumption and the economy's demand. When consumers demand more, the price
increases. When the consumers demand less, the price will fall. The demand depends on the
income . A person gets factor income , transfer income and some times also avails credit.
There should be desire to buy a product. The major factors affecting the demand is the price,
income and psychological factors like taste, preference etc.

When the price increases the quantity demanded will reduce and vice versa. It is
known as the law of demand.

Inflation

 Inflation is the sustained rise in the price level.

 Inflation can be due to rise in demand or due to fall in supply.
 Retail and wholesale inflation refer to the rate at which prices of goods and services
increase at the consumer and business levels, respectively.
 Retail inflation, measured by the Consumer Price Index (CPI), reflects price changes
for goods and services purchased by consumers. The CPI inflation is nothing but the rate
of inflation that consumers face. It is different from the major inflation indicator — the
wholesale price index-based inflation rate. According to the Ministry of Statistics and
Programme Implementation (MoSPI), which releases the data, the consumer price index
measures “changes over time in general level of prices of a basket of selected goods and
services that households acquire for the purpose of consumption”. At an all-India level, the
current CPI basket comprises 299 items.
 Apart from an aggregate index, consumer price indices are constructed for both rural
and urban consumers as well. The “base year” for the current series of indices is 2012.
In other words, the price index is given a value of 100 for 2012 and changes from
these price levels are then calculated to arrive at inflation rates for each good or
service.
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

 The CPI has six main components, each with differing weights and many more sub-
components within them. The main components are—Food and beverages, Pan,
tobacco and intoxicants, Clothing and footwear, Housing, Fuel and light and
Miscellaneous (services such as education, health care etc.)
 Among these, food articles currently weigh 45% of the total index. The second-
biggest component is that of miscellaneous services. Within the food category, cereal
prices are the biggest factor — they account for 9.67% of the total CPI. This means
that a spike in prices of food articles like cereals, vegetables, milk and pulses tends to
have the biggest impact in raising consumer inflation. And the reason why food
articles have been given such a high weightage is that most Indian consumers tend to
spend a considerable portion of their income towards meeting their food demand.
 Wholesale inflation, measured by the Wholesale Price Index (WPI), tracks price
changes at the wholesale level, primarily for goods traded between businesses.
 Headline inflation represents the overall rate of inflation within an economy,
encompassing the increase in prices of all goods and services consumed by
households. It's often measured using the Consumer Price Index (CPI) and includes
commodities like food and energy.
 While core inflation excludes volatile food and energy prices to provide a more stable
measure of inflation, headline inflation provides a broader view of the overall
inflationary pressures in the economy.
 Refined core inflation is a specific calculation of inflation that excludes certain items,
particularly volatile fuel items, from a general measure of core inflation. This
refinement aims to provide a clearer picture of underlying inflationary pressures by
removing the impact of price fluctuations in fuels, food, and beverages. A ‘refined’
core inflation was constructed by excluding main fuel items viz., ‘petrol for vehicle’,
‘diesel for vehicle’ and ‘lubricants and other fuels for vehicles’,vin addition to ‘food
and beverages’ and ‘fuel and light’ from the headline retail inflation which were part
of the miscellaneous group.
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

Questions

The relation of ______ is by the law of demand.

(a) the quantity and price of commodity

(b) the price and income of commodity
(c) demand quantity and demand-supply of commodity
(d) income and demand quantity of a commodity

Out of these scenarios, which will lead to an increase in the demand for the product?

(a) Lower income of the people

(b) Higher price of the good
(c) Higher tax on the product
(d) None of the above

Indian Context : Consumer is the King

India, besides World Consumer Rights Day on March 15 , observes the National Consumer
Day on 24 December every year. On this day the Consumer Protection Act, 1986 had
received the assent of the president.A consumer is defined as anyone purchasing goods or
availing services for personal use, excluding those for resale or commercial purposes. The
Act expands its scope to include all modes of transactions:

1. Offline and online platforms.

2. Teleshopping, multi-level marketing, and direct selling.

Consumer rights
The Consumer Protection Act guarantees six basic rights to consumers.

[Link] to be Protected

The right to be protected protects consumers against marketing products, goods or services
that are hazardous to property and life.
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

[Link] to be Informed

The right to be informed provides that the customers must be informed about the quantity,
quality, standard, purity, potency and price of products, goods or services to protect the
consumers against unfair trade practices.

[Link] to Choose

The right to choose gives consumers the right to access various products, goods or services
at competitive prices.

[Link] to be Heard

The right to be heard assures the consumer’s interests will be heard and considered at the
appropriate forum.

[Link] to Redressal

Consumers have the right to seek redressal against restrictive trade practices, unfair trade
practices or unscrupulous exploitation of consumers

[Link] to Consumer Education

The right to consumer education means consumers should be aware of their rights to avoid
exploitation

Functions of CCPA
 Investigate violations of consumer rights and prosecute offenders.
 Order the recall of hazardous goods, reimbursement, or discontinuation of unfair
practices.
 Regulate misleading advertisements and impose penalties.
 Issue safety notices to consumers.
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

Consumer Empowerment
The Indian government has launched various initiatives to empower consumers including
digital initiatives which are saving consumers time and simplifying the grievance redressal.
These include

Consumer Dispute Redressal Commissions (CDRCs):The Act mandates the

establishment of CDRCs at district, state, and national levels. These bodies
address complaints regarding unfair trade practices, defective goods or
services, and overpricing.
The e-Jagriti portal for dispute resolution and grievance [Link] e-
Jagriti platform has case filing, online fee payment, case monitoring modules
for seamless disposal of cases by all the Commissions, has Smart search facility
on archived consumer complaints / cases / judgements using AI technology
for metadata and keyword creation, and Voice-to-text conversion of
judgements, case history and other details using AI / ML technology. The
portal is integrated with a Virtual court facility for a convenient and accessible
resolution of consumer complaints, reducing the time of disposal, multiple
hearings and physical court appearances bringing effective and fast decisions
& disposals in all Consumer Commissions.e-Jagriti portal provides simple, fast
and a more cost-effective consumer disputes redressal software solution at all
levels. It is envisaged to integrate consumer grievance platforms, namely,
Online Case Monitoring System (OCMS), E-Daakhil, NCDRC Case Monitoring
System, CONFONET website, mediation application, in a single platform.
Virtual court facilities for the National Consumer Disputes Redressal
Commission (NCDRC) to expedite cases
Online dispute resolution platforms offer convenient solutions for e-
commerce [Link] Dispute Resolution (ODR) utilizes technology
to resolve disputes outside of traditional courtrooms, providing a digital
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

extension of Alternate Dispute Resolution (ADR). It offers convenience,

transparency, and speed in dispute resolution. ODR can involve online
mediation, arbitration, or negotiation, facilitated by digital platforms.
Alternative Dispute Resolution (ADR) refers to methods of resolving
disputes outside of traditional court proceedings, such as through mediation,
arbitration, or conciliation. ADR aims to provide faster, more cost-effective,
and less adversarial solutions than litigation, often involving a neutral third
party to facilitate a resolution
 Mediation: A neutral third party (mediator) facilitates discussions
between parties to help them reach an agreement.
 Arbitration: Parties agree to have a neutral third party (arbitrator)
make a binding decision on their dispute.
 Conciliation: A neutral third party (conciliator) assists parties in
reaching a settlement, often through informal discussions.
 Negotiation: Parties directly negotiate a resolution to their dispute,
potentially with the help of a neutral third party.
National Consumer Helpline
E DAAKHIL: E-Daakhil is a nationwide online portal that allows consumers to
file complaints and track the status of their cases with consumer courts. It was
launched by the National Consumer Disputes Redressal Commission (NCDRC)
on September 7, 2020. The portal aims to provide a convenient and efficient
way for consumers to resolve their grievances online.
CONFONET: This ensures the consumer fora on all the three tiers would be
fully computerized and is by the NIC.
Jago Grahak Jago campaign encourage consumers to be informed and
assertive.
Central Consumer Protection Authority (CCPA) has been established under
section 10 of the Consumer Protection Act, 2019 to address the myriad and
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

constantly emerging vulnerabilities of the consumers and to promote, protect

and enforce the rights of the consumers. CCPA is an executive agency .
Consumer Protection (E-commerce) Rules, 2020 include provisions like
mandatory display of seller details, grievance redressal mechanisms, and
restrictions on flash sales.
Information Technology (Intermediary Guidelines and Digital Media
Ethics Code) Rules, 2021 mandates due diligence by e-commerce
intermediaries.
Guidelines for Prevention of Misleading Advertisements and
Endorsements for Misleading Advertisements, 2022 aims to curb
misleading advertisements and protect the consumers, who may be exploited
or affected by such advertisements.
CCPA has issued guidelines to strengthen the legislative framework
against unethical business practices in the form of Guidelines on
Prevention of Dark Pattern 2023
Guidelines for the Prevention and Regulation of Greenwashing, 2024
focus on regulating the use of terms like "eco-friendly" and "sustainable,"
requiring evidence-based certifications, and penalizing misleading
advertisements. The guidelines also encourage consumer awareness about
greenwashing
Guidelines for Prevention and Regulation of Misleading Advertisement
in Coaching Sector 2024.

Questions

Under which Ministry is the e-Jagriti Portal ?

a) Ministry of Finance
b) Ministry of Commerce and Internal Trade
c) Ministry of Consumer Affairs, Food & Public Distribution
d) Ministry of Statistics and Programme Implementation
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

Consider the following statements about CONFONET scheme –

[Link] this scheme, the consumer fora on all the three tiers would be fully computerised.

2. It is being executed by the National Informatics Centre.

Which of the statement given above is / are correct?

a) 1 only b) 2 only c) Both 1 and 2 d) Neither 1 nor 2

Which platform allows allows consumers to file complaints and track the status of
their cases with consumer courts?

a) E Daakhil
b) E Jagriti
c) E Shram
d) E NAM

What right does a consumer have against unfair trade practices and exploitation?

(a) Right to Equity

(b) Right to Equality
(c) Righ to seek redressal
(d) None of the above

Which of the following rights has not been provided by the Consumer Protection Act
1986 ?

(a) Right to safety

(b) Right to be informed
(c) Right to choose
(d) Right to replace

Consider the following

1. Investigate violations of consumer rights and prosecute offenders.

Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

2. Order the recall of hazardous goods, reimbursement, or discontinuation of unfair

practices.

3. Regulate misleading advertisements and impose penalties.

4. Issue safety notices to consumers.

How many of the above given is a function of CCPA ?

a)Only one b) Only two c) Only three d) All the four

Consider the following

1. Mediation
2. Conciliation
3. Negotiation
4. Arbitration

How many of the above given is an example of ADR ?

a)Only one b) Only two c) Only three d) All the four

The answer is d)All the four

What is the process where companies make false or misleading claims about the
environmental benefits of their products ?

a) Greenwashing
b) Evergreening
c) Green products
d) Greenshoe options

Something more about the PET Plastics

Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

The Plastic Waste Management Rule 2021 banned the use of single-use plastics covering
19 categories in 2022. Single-use plastic refers to plastic items that are used once and
discarded. Single-use plastic has among the highest shares of plastic manufactured and used
— from packaging of items, to bottles (shampoo, detergents, cosmetics), polythene bags, face
masks, coffee cups, cling film, trash bags, food packaging etc.

According to the Plastic Waste Management Rules, 2016, there are 7 categories of plastics on
the basis of their recyclability.

Symbol Scientific name Used in

Polyethylene Terephalate
1 Water bottles, PET bottles, etc.
(PET)

High Density Polyethylene Milk/detergent bags, carry bags, containers,

2
(HDPE) etc.

3 Poly Vinyl Chloride (PVC) Pipes, Cables, Floorings, etc.

Low density polyethylene

4 Carrybags, Films, etc.
(LDPE)

5 Polypropylene (PP) Medicine bottles, cereal liners, etc.

6 Polystyrene resins (PS) Foam packaging, Ice cream cups, tea cups, etc.
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

Thermoset plastics, Multilayer & Laminated

7 Others (O) Plastics, PUF, Bakelite, Polycarbonate,
Melamine, Nylon etc.
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

The global plastic treaty is a legally binding agreement aimed to combat plastic pollution in
land and marine [Link] aims to end plastic pollution by 2040 by creating a circular
economy for plastics.

Some UPSC PYQs based on the class taken . Kindly try to solve this from the content
taught in class.

With reference to the Indian economy, demand-pull inflation can be caused/increased

by which of the following? (2021)

1. Expansionary policies

2. Fiscal stimulus

3. Inflation-indexing wages

4. Higher purchasing power

5. Rising interest rates

Select the correct answer using the code given below.

a) 1, 2 and 4 only

b) 3, 4 and 5 only

c) 1, 2, 3 and 5 only

d) 1, 2, 3, 4 and 5

Consider the following statements : (2020)

(1) The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale
Price Index (WPI).
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

(2) The WPI does not capture changes in the prices of services, which CPI does.

(3) The Reserve Bank of India has now adopted WPI as its key measure of inflation and to
decide on changing the key policy rates.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 2 only

(c) 3 only

(d) 1, 2 and 3

With reference to inflation in India, which of the following statements is

correct? (2015)

(a) Controlling the inflation in India is the responsibility of the Government of India only

(b) The Reserve Bank of India has no role in controlling the inflation

(c) Decreased money circulation helps in controlling the inflation

(d) Increased money circulation helps in controlling the inflation

A rise in general level of prices may be caused by (2013)

(1) an increase in the money supply

(2) a decrease in the aggregate level of output

(3) an increase in the effective demand

Select the correct answer using the codes given below.

(a) 1 only
Economy Notes by Dr Anila Remadevi (iamrealveda@[Link]) [Link]

(b) 1 and 2 only

(c) 2 and 3 only

(d) 1, 2 and 3