onomi on epts and erminolo ies 22.11
guarantors provide in the form of an asset (like
chinese wAll land, building, etc.) while seeking a loan. The
The segregation of the different activities principal/primary security is usually the borrower’s
of a financial institution (such as, jobbing, personal guaranty, or the cash flow of a business.
stockbroking, fund management, etc.) in order to Except for highly creditworthy customers
protect clients’ interest. (who can get loans against their signatures),
lenders always demand a collateral if the primary
circuit limit security is not considered to be reliable or sufficient
enough to recover the loan in case of a default—
A limit of regular fall in share indices of Stock
lenders have the legal right to seize the collateral.
Exchanges around the world after which the
exchange are closed for further trading. For
example, circuit limit decided for the BSE closeD shop
(Bombay Stock Exchange) has been fixed at 10 per The requirement that all employees of a given
cent. The time there is a continuous fall in the BSE firm be members of a specified trade union. It
Sensex and it reaches 10 per cent, the exchange is is a method of restricting labour supply and
closed to further trading. maintaining high wages applied by a powerful
Such a limit/provision prevents the share trade union.
market from crashing down.
collective proDucts
clAssicAl economics
A product which can only be supplied to a
A school of thought in economics based on the group. Many goods and services provided by the
ideas of Smith, Ricardo, Mill, etc. The school governments fall in this category, such as, national
dominated the economic thinking of the world defence, police administration, etc.
until about 1870, when the ‘marginalist revolution’
took place. committeD expenDiture
cleAn coAl The expenditure of the governments from which
they can not deny (as they have already committed
Underground coal gasification and liquefaction them to pay) are known as committed expenditure.
which converts coal into liquid and gaseous The liabilities such as ‘interest’ (of the internal as
fuel alternatives is a recognised ‘clean coal’ well as external loans) and ‘pension’ (of the retired
technology—handy in extraction of energy from personnel of the governments) are examples of
coal seams which connot be mined through such expenditure.
conventional methods.
By the year 2015-16, this expenditure for the
Government of India was 41.5 per cent of the
collAterAl
non-plan expenditure. Non-plan expenditure for
Any item/asset which accompanies/subordinates/ the year was 73.8 per cent of the total expenditure
supplements a primary item is known as collateral. (plan pluc non-plan). The GoI has decided to
The term is used in banking industry while shift to the ‘revenue’ and ‘capital’ classification
providing loans. This is also known as ‘secondary/ for its expenditure from 2017-18 (in place of the
subordinate security’— which borrowers/ existing classification ‘plan’ and ‘non-plan’).