Question of the Day:
Consider the following statements regarding GIFT-SEZ (an International Financial Services Centre):
1. It provides financial services to both residents and non-residents but only in foreign currency
2. GIFT-SEZ units are treated as non-resident in India
3. Overseas Direct Investment (ODI) rules will be applicable on Indian entities investing in GIFT-SEZ
Consider the following statements regarding GIFT-SEZ (an International Financial Services Centre):
1. It provides financial services to both residents and non-residents but only in foreign currency
2. GIFT-SEZ units are treated as non-resident in India
3. Overseas Direct Investment (ODI) rules will be applicable on Indian entities investing in GIFT-SEZ
Select the correct code:
Final Results
6%
(a) 1 only
47%
(b) 2 & 3 only
13%
(c) 1 & 3 only
34%
(d) All of the above
The answer to the above question is (d)
All of the above statements are correct.
For explanation, please read this note: https://t.me/VivekSingh_Economy/3277
A news related to GIFT-SEZ is
https://www.pib.gov.in/PressReleasePage.aspx?PRID=1921755
Just have a look, no need to go in detail.
"NSE International Exchange" and "India INX" are stock exchanges operating as IFSC units in GIFT-SEZ.
All of the above statements are correct.
For explanation, please read this note: https://t.me/VivekSingh_Economy/3277
A news related to GIFT-SEZ is
https://www.pib.gov.in/PressReleasePage.aspx?PRID=1921755
Just have a look, no need to go in detail.
"NSE International Exchange" and "India INX" are stock exchanges operating as IFSC units in GIFT-SEZ.
Above is article from The HINDU. The following are some relevant points.
India's trade deficit with Russia is around $40 billion. So, if Russia accepts payments in 'Indian Rupee' for its exports to India then it will be left with Indian Rupee currency in its coffers. (i.e. Russia will be having this much of extra rupee with it). This will have two major issues because:
First Issue: Since rupee is not fully convertible i.e. if Russia would like to convert this rupee (worth $40 billion) with foreign currency in future through global exchanges then there are restrictions imposed by India (approval is required) on how much can be converted and at what rate. [Any country would like to hold that currency which is fully convertible in any another currency].
Second Issue: India's global exports to the world is just 2%. That means other countries are purchasing very less goods from India. So, if Russia tries to sell this 'Indian Rupee' (worth $40 billion which it is holding due to its trade surplus with India) to other countries then other countries will not be willing to purchase this 'Indian Rupee' (by giving foreign currency to Russia) as their purchase of Indian goods is very less, so they will also be not able to utilize this 'Indian rupee'.
Because of these reasons, Russia feels that 'Rupee' accumulation is not desirable, hence Russia suspended talks to settle trade in rupees.
India's trade deficit with Russia is around $40 billion. So, if Russia accepts payments in 'Indian Rupee' for its exports to India then it will be left with Indian Rupee currency in its coffers. (i.e. Russia will be having this much of extra rupee with it). This will have two major issues because:
First Issue: Since rupee is not fully convertible i.e. if Russia would like to convert this rupee (worth $40 billion) with foreign currency in future through global exchanges then there are restrictions imposed by India (approval is required) on how much can be converted and at what rate. [Any country would like to hold that currency which is fully convertible in any another currency].
Second Issue: India's global exports to the world is just 2%. That means other countries are purchasing very less goods from India. So, if Russia tries to sell this 'Indian Rupee' (worth $40 billion which it is holding due to its trade surplus with India) to other countries then other countries will not be willing to purchase this 'Indian Rupee' (by giving foreign currency to Russia) as their purchase of Indian goods is very less, so they will also be not able to utilize this 'Indian rupee'.
Because of these reasons, Russia feels that 'Rupee' accumulation is not desirable, hence Russia suspended talks to settle trade in rupees.
World Bank has changed the new extreme poverty line to $2.15 per person per day.
The new extreme poverty line of $2.15 per person per day, which replaces the $1.90 poverty line, is based on 2017 purchasing power poverty exchange rate. As per the new poverty line, about 648 million people globally were in extreme poverty in 2019.
The international poverty line is periodically updated to reflect changes in prices across the world. The rise in the international poverty line reflects an increase in the costs of basic food, clothing, and shelter needs in low-income countries between 2011 and 2017, relative to the rest of the world. In other words, the real value of $2.15 in 2017 prices is the same as $1.90 was in 2011 prices.
The new extreme poverty line of $2.15 per person per day, which replaces the $1.90 poverty line, is based on 2017 purchasing power poverty exchange rate. As per the new poverty line, about 648 million people globally were in extreme poverty in 2019.
The international poverty line is periodically updated to reflect changes in prices across the world. The rise in the international poverty line reflects an increase in the costs of basic food, clothing, and shelter needs in low-income countries between 2011 and 2017, relative to the rest of the world. In other words, the real value of $2.15 in 2017 prices is the same as $1.90 was in 2011 prices.
Why RBI is purchasing Gold?
1. Negative Interest Rate: When RBI has foreign currency (dollars) in its reserves then it invests these dollars to purchase US Govt. bonds on which it earns interest. The REAL interest on these bonds has turned negative due to higher inflation in US. For example: Suppose US govt. bonds are offering 5% interest but if inflation in US is 6% then the real interest rate is negative (-1%).
2. Weakening of the dollar: Depreciation of dollar against other currencies. If RBI holds dollars and it depreciates/weakens with respect to other currencies then its a loss for RBI
3. Geopolitical uncertainty: Russia-Ukraine war, Conflicts with China etc.
4. RBI is trying to diversify its forex reserves.
While RBI maintains Forex Reserves, it keeps three things in mind: Safety & security, liquidity and returns.
1. Negative Interest Rate: When RBI has foreign currency (dollars) in its reserves then it invests these dollars to purchase US Govt. bonds on which it earns interest. The REAL interest on these bonds has turned negative due to higher inflation in US. For example: Suppose US govt. bonds are offering 5% interest but if inflation in US is 6% then the real interest rate is negative (-1%).
2. Weakening of the dollar: Depreciation of dollar against other currencies. If RBI holds dollars and it depreciates/weakens with respect to other currencies then its a loss for RBI
3. Geopolitical uncertainty: Russia-Ukraine war, Conflicts with China etc.
4. RBI is trying to diversify its forex reserves.
While RBI maintains Forex Reserves, it keeps three things in mind: Safety & security, liquidity and returns.
Source: RBI
Earlier Banks and Companies were using London Interbank Offered Rate (LIBOR) as a benchmark rate (like in India banks use 'Repo Rate' or "G-Sec Yield' for benchmarking lending rates) for raising funds from abroad. But LIBOR was getting manipulated, so RBI has asked banks/companies to shift to 'Secured Overnight Financing Rate (SOFR) or Modified Mumbai Interbank Forward Outright Rate (MMIFOR).
No need to go in detail. Just have a look.
Earlier Banks and Companies were using London Interbank Offered Rate (LIBOR) as a benchmark rate (like in India banks use 'Repo Rate' or "G-Sec Yield' for benchmarking lending rates) for raising funds from abroad. But LIBOR was getting manipulated, so RBI has asked banks/companies to shift to 'Secured Overnight Financing Rate (SOFR) or Modified Mumbai Interbank Forward Outright Rate (MMIFOR).
No need to go in detail. Just have a look.
Term of the Day: 'Debt Overhang'
Debt overhang is a situation of a company where it is so overburdened with debt that it cannot borrow more money for future projects. The debt overhang problem leads to a company not receiving funding for future projects. Banks and investors are not willing to fund the company even if the company is capable of earning profit from a new project. This is because the profit made will be used to repay the company’s existing debts. As a result, the investors would suffer losses.
Debt overhang is a situation of a company where it is so overburdened with debt that it cannot borrow more money for future projects. The debt overhang problem leads to a company not receiving funding for future projects. Banks and investors are not willing to fund the company even if the company is capable of earning profit from a new project. This is because the profit made will be used to repay the company’s existing debts. As a result, the investors would suffer losses.
US Debt Ceiling Issue
US Govt. has by law put (accumulated) debt ceiling at $31.4 Trillion which US Govt. hit in January 2023. After that, US Govt was somehow managing the situation through taxes inflows and rollovers. US lawmakers have said that they will suspend the debt ceiling or increase it only if US Govt. promises spending cuts. But Mr. Biden has refused it as it will cripple the economy. If Debt ceiling is not raised then US Govt. may default on its (domestic) payments to military, social security, medicare and other services. The default may lead to:
1. Will raise interest rates in economy leading to increase in debt further by $850 billion
2. Loss of millions of jobs
3. One-tenth of the economic activity will halt
4. US dollar is a reserve currency. That means over half of the the world's foreign currency reserves are held in US dollars. Like India (RBI) also holds dollars in Forex Reserves. And this dollars RBI has invested to purchase US Govt. bonds. Now if US defaults on its payments then investors (and countries) will loose confidence in US economy and they will start selling US Govt. bonds and this would weaken the dollars (i.e. dollar would depreciate). This would make debt denominated in other currencies more expensive and could lead some countries in debt crisis. A weaker dollar would actually be beneficial for countries pushing for 'De-Dollarization'
5. If US economy suffers then it will impact global financial markets and emerging economies.
This (debt ceiling issue) has happened previously (2011, 2013) also but US has never defaulted. This ceiling (in absolute value) is American peculiarity. Debt Ceiling punishes the current Govt. for sins of overspending, debt accumulation over the years. Govt. of India has put its debt ceiling in percentage terms (40% of GDP as per FRBM Act) and Lok Sabha can easily amend it whenever needed.
When we are borrowing (Fiscal deficit) every year, so our Debt is increasing. Fiscal Deficit/Borrowing is a 'flow' concept, but (accumulated) Debt is a 'stock' concept.
US Govt. has by law put (accumulated) debt ceiling at $31.4 Trillion which US Govt. hit in January 2023. After that, US Govt was somehow managing the situation through taxes inflows and rollovers. US lawmakers have said that they will suspend the debt ceiling or increase it only if US Govt. promises spending cuts. But Mr. Biden has refused it as it will cripple the economy. If Debt ceiling is not raised then US Govt. may default on its (domestic) payments to military, social security, medicare and other services. The default may lead to:
1. Will raise interest rates in economy leading to increase in debt further by $850 billion
2. Loss of millions of jobs
3. One-tenth of the economic activity will halt
4. US dollar is a reserve currency. That means over half of the the world's foreign currency reserves are held in US dollars. Like India (RBI) also holds dollars in Forex Reserves. And this dollars RBI has invested to purchase US Govt. bonds. Now if US defaults on its payments then investors (and countries) will loose confidence in US economy and they will start selling US Govt. bonds and this would weaken the dollars (i.e. dollar would depreciate). This would make debt denominated in other currencies more expensive and could lead some countries in debt crisis. A weaker dollar would actually be beneficial for countries pushing for 'De-Dollarization'
5. If US economy suffers then it will impact global financial markets and emerging economies.
This (debt ceiling issue) has happened previously (2011, 2013) also but US has never defaulted. This ceiling (in absolute value) is American peculiarity. Debt Ceiling punishes the current Govt. for sins of overspending, debt accumulation over the years. Govt. of India has put its debt ceiling in percentage terms (40% of GDP as per FRBM Act) and Lok Sabha can easily amend it whenever needed.
When we are borrowing (Fiscal deficit) every year, so our Debt is increasing. Fiscal Deficit/Borrowing is a 'flow' concept, but (accumulated) Debt is a 'stock' concept.
Consider the following statements regarding millets: 1. India is the largest producer of millets in the world 2. Among states, Rajasthan is the largest producer of millets Select the correct code:
Final Results
24%
(a) 1 only
15%
(b) 2 only
55%
(c) Both 1 and 2
6%
(d) None of the above
The answer to the above question is (c).
You can look at the below official link regarding statistics on millets.
https://apeda.gov.in/milletportal/Production.html#:~:text=India%20is%20the%20largest%20producer%20of%20millets%20in%20the%20world.
You can look at the below official link regarding statistics on millets.
https://apeda.gov.in/milletportal/Production.html#:~:text=India%20is%20the%20largest%20producer%20of%20millets%20in%20the%20world.
apeda.gov.in
Indian Millets
Agricultural and Processed Food Products Export Development Authority (APEDA)