Saturday, March 28, 2015

Int'l Development Banks - ADB, WB, IMF, NDB, AIIF

There are several development banks in the world with the principal goal of development among others. From India's point of view, the most notable among those development banks are the followings -

  • Asian Development Bank (ADB)
  • World Bank (WB)
  • International Monetary Fund (IMF)
  • New Development Bank (BRICS-NDB)
  • Asian Infrastructure Investment Bank (AIIF), etc.
Here we shall discuss each of them in brief. Note that NDB (click me) and AIIF (click me) were already discussed in previous articles.

Asian Development Bank (ADB)
ADB is a regional development bank, headquartered in Metro Manila, Philippines. It was established on Aug 22, 1966, to facilitate economic development in Asia, with the motto 'Fighting poverty in Asia and the Pacific'.

President - Takehiko Nakao
Membership - 67 countries

ADB invests in -  
  • Infrastructure
  • Health care services
  • Financial system
  • Public administration system
  • Preventing Climate change
  • Managing natural resources, etc.

Devices for ADB's assistance -
  • Loans
  • Grants
  • Policy Dialogue
  • Technical assistance
  • Equity Investments, etc.

ADB recently released its Asian Development Outlook (ADO) with the title 'Financing Asia's Future Growth'. It forecasted that India will overtake China in terms of growth rate in fiscal years 2015 and 2016

Below is a comparative chart published by ADB -

World Bank (WB)
World Bank is a financial institution of United Nations (UN), established on July 1944, headquartered in Washington D.C., USA. It provides loans to developing countries for their capital programs. The official goal of WB is the reduction of poverty, and the motto is 'Working for a World Free of Poverty'.

President - Jim Yong Kim
Membership - IBRD (188 countries), IDA (172 countries)

Note that World Bank is a component of World Bank Group (WBG), which is a family of 5 international organizations that make leveraged loans to poor countries -
  • International Bank for Reconstruction and Development (IBRD) - lends to governments of middle-income and creditworthy low-income countries
  • International Development Association (IDA) - provides interest-free loans, called credits, and grants to governments of the poorest countries
  • International Finance Corporation (IFC) - is the largest global development institution focused exclusively on the private sector (not governments)
  • Multilateral Investment Guarantee Agency (MIGA) - promotes foreign direct investment (FDI) into developing countries to support economic growth, reduce poverty and improve people's lives. It fulfills this mandate by offering political risk insurance (guarantees) to investors and lenders.
  • International Center for Settlement of Investment Disputes (ICSID) - provides international facilities for conciliation and arbitration of investment disputes.

Note that, together, IBRD and IDA make up the World Bank, whereas all these 5 institutions form the World Bank Group.

International Monetary Fund (IMF)
IMF is an international financial organization, established on December 27, 1945, headquartered in Washington D.C., USA

President - Christine Lagarde
Membership - 188 countries

IMF work area -
  • promotes international monetary cooperation
  • promotes exchange rate stability
  • facilitates balanced growth of international trade
  • provides resources to help members in balance of payments (BOP) difficulties
  • assist with poverty reduction

Devices of IMF's assistance -
  • Keeps track of the economic health of member countries, it alerts them to risks on the horizon
  • provides policy advice
  • lends to countries in difficulty
  • provides technical assistance
  • training to help countries improve economic management

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Friday, March 27, 2015

SSC CGL 2014 Tier 1 Marks

SSC CGL 2014 Tier 1 Marks

NWR, NR & CR regions (Direct Link)
ER, NER, MPR, WR, SR & KKR regions (Direct Link)
Click Me

Alternative Download for NWR, NR and CR Regions

Alternative Download for ER, NER, MPR, WR, SR and KKR Regions

If you have problems downloading the files, you can contact us with your email id and roll number - Click Me

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Thursday, March 26, 2015

PRAGATI Platform

Pro-Active Governance And Timely Implementation (PRAGATI) platform

Prime Minister Shri Narendra Modi has launched his ambitious multi-purpose and multi-modal PRAGATI platform. It aims at addressing the common man's grievances and monitoring and reviewing important government programmes and projects (including state government projects)

  • As the name suggests, it is aimed at starting a culture of Pro-Active Governance and Timely Implementation
  • It is also a robust system for bringing e-transparency and e-accountability with real-time presence and exchange among the key stakeholders.

Key Features of PRAGATI Platform
Pro-Active Governance And Timely Implementation (PRAGATI) platform has the following key features -
  • It is a 3-tier system - Prime Minister's Office (PMO), Union government Secretaries, and Chief Secretaries of the states.
  • PM will hold a monthly programme where he will interact with the (above mentioned) Secretaries and Chief Secretaries through Video-conferencing enabled by data and geo-informatics visuals
  • The first such programme was launched on March 25, 2015 (Wednesday) at 3:30 PM. Now onwards, it will be held once in every month on 4th Wednesday at 3:30 PM to be known as 'PRAGATI Day'
  • Issues to be flagged before the PM are picked up from the available database regarding Public grievances, on-going Programmes, and pending Projects
  • The design is such, that when PM reviews the issue, he should have on his screen the issue as well as the latest updates and visuals regarding the same
  • etc. 

Designed by
The PRAGATI system has been designed in-house by the PMO team with the help of National Informatics Center (NIC)

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Wednesday, March 25, 2015

Beti Bachao, Beti Padhao Initiative

Child Sex Ratio (CSR)
Child Sex Ratio is the number of females per thousand males in the age group of 0 - 6 years (under 7 years). Ratio greater than 1 means, there are more boys than girls in the population. Note that this trend of imbalance, if allowed, will follow in older ages (in future years).

According to the decennial (10 year) census of India, the CSRs in different census are -
  • 1991 census - 945 girls per 1000 boys
  • 2001 census - 927 girls per 1000 boys
  • 2011 census - 918 girls per 1000 boys

Note the drastically declining figure of girl child. This is a major indicator of women dis-empowerment. There may be several practical reasons, but the most important is our patriarchal mindset, which needs to be changed.

Therefore, the need of the hour is to educate people and start campaigns to save the girl child. We should remember, 'The Happiness of a Nation lies in the Dignity of its Daughters'.

PM's message - "Bete ki aash mein beti ki bali maat chadhaiye"

Beti Bachao Beti Padhao Initiative
To ensure the survival, protection and empowerment of the girl child, government has launched a commendable initiative - 'Beti Bachao Beti Padhao'. This is a joint initiative of 3 ministries of government of India -
  • Ministry of Women and Child Development
  • Ministry of Health and Family Welfare
  • Ministry of Human Resource Development
This initiative will be implemented through a national campaign and focused multi-sectoral action in 100 selected districts, that are low in CSR.

  • Prevention of gender-biased sex selective elimination - enforcement of laws, especially the implementation of Pre-Conception & Pre-Natal Diagnostic Techniques (Prohibition of Sex Selection) Act, 1994 (PC&PNDT Act) with stringent punishments for violations.
  • Ensuring survival and protection of the girl child - the access to various entitlements, changes in patriarchal mind-set, etc. are to be addressed in order to ensure equal value, care for and survival of the infant and young girl child.
  • Ensuring education and participation of the girl child - access and availability of services and entitlements during the various phases of the life cycle of the girl child - related to nutrition, health care, education, etc.

  • Budgetary allocation - Rs. 100 crore
  • Fund will be mobilized from 'Care and Protection of Girl Child - A Multi Sectoral Action Plan' - Rs. 100 crore
  • Corporate Social Responsibility - for additional resources

Sukanya Samriddhi Account
Sukanya Samriddhi account can be opened in the name of girl child, before she attains 10 years age. Some important points about this special account scheme -
  • Minimum deposit - Rs. 1,000
  • Maximum deposit in a year - Rs. 1.5 lakh
  • Interest rate - 9.1 % per year for the savings accounts
  • Full income tax exemption (no tax)
  • Partial withdrawal, maximum up to 50 % balance can be withdrawn by the girl child after attaining 18 years
  • Account will remain operative till the girl attains - 21 years
  • A legal guardian / natural guardian can open account in the name of girl child
  • A guardian can open only one account in the name of one girl child and max. 2 accounts in the name of two different girl children
  • Account can be opened up to age of 10 years from date of birth (initially 1 year grace period has been given)

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Tuesday, March 24, 2015

Section 66A of IT Act, 2000

The Supreme Court (SC) of India, on March 24, 2015, struck down the Section 66A of Information Technology (IT) Act, 2000, by terming it as 'unconstitutional'. A bench of Justices J.Chelameswar and Rohinton F.Nariman passed this judgment by pronouncing "Section 66A of the IT Act is struck down in its entirely".

Section 66A - Information Technology Act, 2000
As per this section, sending offensive message through electronic means, which includes sending any information through an electronic message that is grossly offensive or has menacing character and might cause insult, injury, criminal intimidation, enmity, hatred or ill will, etc. or sending such mail intended to deceive or to mislead the addressee or recipient about the origin of such messages is considered offensive.

Punishment includes imprisonment up to 3 years and with fine.

Supreme Court's observation
Section 66A is violative of Article 19(1)(a), not saved by Article 19(2), hence unconstitutional.
The court said that terms like 'illegal', 'grossly offensive' and 'menacing character' were vague expressions and these words were likely to be misunderstood and abused.

It violated the Fundamental Right of Freedom of Speech and Expression (under Article 19(1)(a)). Hence this Section has struck down entirely.

Public Interest Litigation (PIL) and Issues

  • First PIL on this issue was filed in 2012 by a law student Shreya Singhal, who sough amendment to this section, after two girls - Shaheen Dhada and Rinu Shrinivasan - were arrested in Palghar, Thane district as one of them posted a comment against the shutdown in Mumbai following Shiv Sena leader Bal Thackeray's death and the other 'liked' it.
  • Jadavpur University (JU) professor Ambikesh Mahapatra was arrested by West Bengal police for sharing cartoons on CM Mamata Banerjee. Subsequently Calcutta High Court asked the state government to provide a compensation of Rs. 50,000 to A.Mahapatra.
  • An activist Aseem Trivedi was arrested for drawing cartoons which were critical of the Parliament and Constitution
  • Businessman Ravi Srinivasan was arrested for tweeting offensive remarks against the son of a politician, etc.

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International Financial Services Centers

International Financial Services Center (IFSC)
Capital Market regulator Securities and Exchange Board of India (SEBI) approved a new set of norms for setting up of capital market infrastructure in India's first International Financial Services Center (IFSC) in Gujarat's GIFT City (Gujarat International Finance Tec-City)

Capital Market Infrastructures
The followings are the financial services infrastructure to be build -

SEBI (International Financial Services Center) Guidelines, 2015
SEBI approved the guidelines as follows -
  • Stock Exchange - A stock exchange can be set up with Rs. 25 crore capital, instead of Rs. 100 crore (normal requirement). However, the stock exchange need to raise Rs. 100 crore within 3 years of establishment.
  • Clearing Houses - A clearing corporation can be set up with Rs. 50 crore capital, instead of Rs. 300 crore (normal requirement). It need to raise Rs. 300 crore within 3 years of establishment.
  • Depository Receipts Scheme - Issue of Depository receipts (e.g., ADR, GDR, etc.) and other securities by foreign issuers under the Foreign Currency Depository Scheme, 2014 will also be allowed.
  • Special Economic Zones (SEZ) - IFSC will be set up under the SEZ Act, 2005.
  • Eligibility - Non-Residential Indians (NRI), Foreign Institutional Investors (FII), residential Indians are eligible under the Foreign Exchange Management Act (FEMA) to participate in IFSC.

GIFT City - first IFSC in India
Gujarat International Finance Tec-City (GIFT City) would be India's first IFSC, with which top bourses Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) have already signed Memorandum of Undertakings (MoU) for setting up international stock exchanges.

Expected trading
This move is expected to capture an estimated Rs. 1,334 crore / day or Rs. 2 lakh crore / year worth of trading in Rupee derivatives that currently goes out of India. Indian IFSC would be on lines of global financial centers of Singapore and Dubai.

Note -
GIFT City chief executive - Shri Ramakant Jha
SEBI chairman - Shri U.K.Sinha

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Sunday, March 22, 2015

Issuance of Currency

According to RBI Act 1934, Section 22, RBI has the sole right to issue bank notes of all denominations. RBI is responsible for the design, production and management of the currency of India, with the goal of ensuring an adequate supply of clean and genuine notes.

The responsibility for coinage vests with the Government of India on the basis of The Coinage Act, 2011. RBI acts as an agent of government which merely distributes the coins in the market.

Currently, RBI has issued currency notes in the denomination of Rs. 10, 20, 50, 100, 500 and 1000. However, it can issue notes with denomination up to Rs. 10,000, as per the provision of RBI Act, 1934.

Coins are presently being issued by the government in the denomination of 50 paise, Re. 1, Rs. 2, 5, and 10. Coins up to 50 paise are called 'Small coins' and Rupee 1 and above are called 'Rupee coins'. Coins can be issued up to the denomination of Rs. 1000 in terms of The Coinage Act, 2011.

  • Small and Rupee Coins - Government of India
  • Rupee One banknote - Government of India (signed by Finance Secretary)
  • Banknotes above Rupee One - Reserve Bank of India (signed by RBI Governor)

Minimum Reserve System to issue currency
India adopted Minimum Reserve System in the tenure of RBI governor Sir Benegal Rama Rau in 1957. In this system, RBI is required to maintain a minimum reserve of Rs. 200 crore in gold and forex, of which at least Rs. 115 crore should be in gold form (earlier India followed Proportional Reserve System) to issue currency in India

(Note that the above figure may be outdated!)

Determination of volume and value of banknotes to be printed
RBI based on the demand requirement indicates the volume and value of banknotes to be printed each year to the government which get finalized after mutual consultation.

The quantum of banknotes to be printed depends on the followings -
  • Requirement for meeting the demand of banknotes
  • GDP growth
  • Inflation rate
  • Replacement of Soiled and Mutilated notes
  • Reserve Stock requirements, etc.

Notes and Coins production
  • Notes are printed at 4 Printing Presses, located at - Nashik, Dewas, Mysore and Salboni
  • Coins are minted at 4 Mints, located at - Mumbai, Noida, Kolkata and Hyderabad

Currency circulation
RBI currently manages the currency operations through its -
  • 19 Issue Office located at - Ahmedabad, Bengaluru, Belapur, Bhopal, Bhubaneswar, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Jammu, Kanpur, Kolkata, Lucknow, Mumbai, Nagpur, New Delhi, Patna, Thiruvananthapuram
  • A wide network of Currency chests
The Issue offices receive fresh banknotes from the printing presses of RBI, and then send the notes to the designated branches of commercial banks.

Currency Chest - RBI has authorized select commercial bank branches to establish currency chests, which would act as storehouses for banknotes and rupee coins on behalf of RBI. These chest branches are expected to distribute banknotes and rupee coins to other bank branches in their area of operation.

Small Coin Depot - Some bank branches are authorized by RBI to establish Small Coin Depot to store Small coins (i.e., below Rupee 1 coins), which will distribute the coins in their area of operation.

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Purchasing Power Parity (PPP)

PPP Theory
It states that the exchange rate of a currency with another (currency) is in equilibrium when their domestic purchasing power are equivalent at that exchange rate.

It means that a good should cost same in India and USA after considering the exchange rate of Indian Rupee (INR) and US Dollar (USD).

Suppose, the current exchange rate of Indian rupee to US Dollar is Rs. 60 per USD (i.e., 1 USD = Rs. 60). Now suppose a laptop costs Rs. 60,000 in India.

According to the PPP theory, the laptop should cost USD (60,000 / 60) = USD 1,000 (considering the current exchange rate of these two currencies) to maintain parity in purchasing power of these two currencies.

But, it may happen that the actual market price of the laptop in USA is USD 800 (say) (equivalent to Rs. 48,000 in India). Therefore, there is an advantage of buying the laptop in USA at much less price than India (Rs. 12,000 less) (it means that the purchasing power is not in parity between these two currencies)

What happens if not in parity?
Indian consumers will go to the exchange office and sell their INR and buy USD, and then buy the laptop from USA. It will cause the Indian currency less valuable than the US dollar.

The demand of laptop sold in India will decrease (since high price), and the price of laptop will go down. In contrast, the demand of laptop in USA will increase, and the price will rise accordingly.

These factors will cause the exchange rate (of the currencies) and the prices (of laptops) to change such that there is purchasing power parity in both the currencies.

Long term effect
PPP theory tells us that the price differences between countries are not sustainable in the long run, as market forces will equalize prices between the countries and change the exchange rates accordingly.

(Relate the above example with companies that can buy goods in much less price from foreign countries and sell in much less price in India than its counterparts. For this reason, there are several laws or restrictions on imports and a provision of levying customs duty, etc.)

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