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Glossary Terms
| Term (EN) | Definition | Exam Relevance |
|---|---|---|
| Comparative Advantage | Specialise where opportunity cost is lowest (Ricardo 1817) | 1817 |
| Absolute Advantage | Produce more with same inputs than another country (Adam Smith) | 1776 |
| Terms of Trade | Ratio of export prices to import prices | — |
| BoP (Balance of Payments) | Systematic record of all international economic transactions | — |
| Current Account | BoP account: goods, services, income, transfers | — |
| CAD (Current Account Deficit) | Imports exceed exports in current account | India: 0.7% GDP 2023–24 |
| Capital Account | BoP account for capital transfers and non-financial assets | — |
| Financial Account | FDI, FPI, ECBs, reserve assets | — |
| FDI | Long-term investment with management control (≥10%) | — |
| FPI / FII | Short-term; stocks and bonds; no management control | — |
| Forex Reserves | RBI-held foreign currency, gold, SDRs | $648B; April 2025 |
| Hot Money | Volatile short-term FPI capital that reverses quickly | — |
| Managed Float | Exchange rate set by market; RBI intervenes selectively | India's current regime |
| EXIM Bank | India's trade finance bank; LOC provider | Est. 1982 |
| LOC (Line of Credit) | Concessional government-to-government loans for projects | $30+ billion |
| ITEC Programme | Indian Technical and Economic Cooperation (training) | Since 1964 |
| FTA (Free Trade Agreement) | Agreement reducing tariffs between countries | — |
| CEPA | Comprehensive Economic Partnership Agreement (FTA+) | — |
| RCEP | Asia-Pacific trade bloc; India exited 2019 | — |
| RODTEP | Refund of embedded taxes on exports | 2021 |
| DGFT | Implements FTP; issues export/import authorisations | — |
| APEDA | Promotes agricultural exports | — |
| SEZ | Zone with tax/customs benefits for export manufacturing | SEZ Act 2005 |
| ECB (External Commercial Borrowing) | Corporate overseas loans; part of financial account | — |
| NIIF | India's sovereign wealth fund for infrastructure | Est. 2015 |