Budget & Banking – CTET Study Notes
(General Awareness & Current Affairs)
1️⃣ Simple Explanation
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Budget
- An annual financial plan prepared by the government.
- Shows how much money will be collected (revenues) and how much will be spent (expenditure).
- Aims to strike a balance between revenue and expenditure, keep deficits under control, and promote economic growth.
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Banking
- The system of financial intermediaries (banks, NBFCs, credit institutions).
- Provides services such as deposits, credit, money transfer, and financial advisory.
- Plays a pivotal role in mobilising savings, allocating credit, and supporting the economy.
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Why they matter for CTET
- Teachers must know how the budget shapes education policies, scholarships, and infrastructure.
- Banking reforms affect school finances, student loans, and teacher salaries.
2️⃣ Key Points
| Topic | Details |
|---|---|
| Budget Process | 1. Preparation by the Ministry of Finance 2. Presentation in Parliament (Budget Speech) 3. Parliamentary Debate & Amendments 4. Enactment & Implementation |
| Main Sections of the Budget | Revenue (taxes, non‑taxes) Capital (debt, equity) Expenditure (all government spending) |
| Fiscal Indicators | • Fiscal Deficit – (Expenditure – Revenue) • Debt‑to‑GDP Ratio – Total debt / GDP • Primary Deficit – Fiscal deficit minus interest |
| Budgetary Priorities for Education | • Infrastructure (schools, labs) • Teacher salaries & training • Digital learning & e‑education initiatives |
| Banking Basics | • RBI – Central bank, regulates money supply, sets repo & reverse repo rates. • Commercial Banks – Accept deposits, issue loans. • Public Sector Banks (PSBs), Private Sector Banks, NRO, NPA |
| Recent Banking Reforms (2023‑24) | • RBI’s Digital Payment Policy – Promote UPI, BHIM, e‑wallets. • Credit Scoring & KYC – Simplified KYC for micro‑loans. • Bank‑Run‑Risk Mitigation – RBI’s “One‑Day‑Exit” policy for stressed banks. |
| How Budget Affects Banking | • Capital Requirements – Banks must maintain certain capital buffers (CRR, SLR). • Interest Rate Policy – Repo & reverse repo rates influence lending rates. • Taxation & Incentives – Preferential tax regimes for banks. |
| Current Affairs Highlights (2024‑25) | • 2024‑25 Union Budget – ₹30 lakh crore allocation to education, ₹12 lakh crore to digital India. • RBI’s 2024 Repo Rate – 6.5% (unchanged). • Digital Payments – 150% YoY growth in UPI transactions. |
3️⃣ Worked Example
Scenario:
The Union Budget 2024‑25 allocates ₹3,00,000 crore to the National Education Mission (NEM) for upgrading school infrastructure. The mission’s runway is 5 years.
Step‑by‑step calculation of annual spending & impact
| Year | Allocation (₹ crore) | Cumulative Allocation (₹ crore) | % of Total Budget |
|---|---|---|---|
| 1 | 60,000 | 60,000 | 12% |
| 2 | 60,000 | 120,000 | 24% |
| 3 | 60,000 | 180,000 | 36% |
| 4 | 60,000 | 240,000 | 48% |
| 5 | 60,000 | 300,000 | 60% |
Interpretation
- 12% of the total 2024‑25 budget is committed to NEM in the first year, ensuring a steady flow of funds.
- By the 5th year, the mission has spent the entire allocated amount, leading to complete infrastructure upgrade across target schools.
Impact on Teachers & Students
- Infrastructure: 100% of targeted schools will have modern classrooms, labs, and Wi‑Fi.
- Teacher Training: 25% of the fund will be earmarked for digital teaching workshops.
- Student Outreach: 10% of the budget will support scholarship programs for under‑privileged students.
4️⃣ Quick Revision Summary (Flashcards)
| Question | Answer |
|---|---|
| What does the fiscal deficit represent? | The gap between total government expenditure and total revenue before interest payments. |
| Which central bank regulates India’s monetary policy? | Reserve Bank of India (RBI). |
| What is the repo rate? | The rate at which RBI lends to commercial banks; influences all lending rates in the economy. |
| How many sections are in the Union Budget? | Three: Revenue, Capital, and Expenditure. |
| What does “SLR” stand for? | Statutory Liquidity Ratio – the minimum proportion of deposits banks must keep in cash or securities. |
| What is the main goal of digital payment policies? | To promote financial inclusion, reduce transaction costs, and curb cash‑based economy. |
| In the 2024‑25 budget, how much was allocated to education? | ₹30 lakh crore. |
| What is the “One‑Day‑Exit” policy? | RBI’s mechanism to quickly lift a bank from a stressed status. |
| What does “NPA” mean in banking? | Non‑Performing Asset – a loan that has not been repaid for 90 days or more. |
| Which RBI tool is used to control liquidity in the market? | Reverse Repo |