QUIZ – 2020: Insights Current Affairs Quiz, 27 April 2021

Solution: a)

As an alternative dispute resolution tool, Lok Adalats are regularly organised to help parties reach a compromise. Motor-accident claims, disputes related to public-utility services, cases related to dishonour of cheques, and land, labour and matrimonial disputes (except divorce) are usually taken up by Lok Adalats.

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Solution: b)

Afghanistan is a member of WTO, SAARC, Economic Cooperation Organization (ECO), and OIC. It holds an observer status in SCO.

South Asian Free Trade Area (SAFTA) is an agreement reached on January 6, 2004, at the 12th SAARC summit in Islamabad, Pakistan. It created a free-trade area in Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka.

Solution: b)

The RBI Governor unveiling the secondary market G-sec acquisition programme – G-SAP – in the recent monetary policy had many experts pointing out that this move is very similar to the quantitative easing programmes initiated by central banks of advanced economies.

But while the programme is styled like QE of advanced economies, the RBI has not gone that path entirely. It’s QE is very short-term in nature, is restricted to G-secs and the intention is not to stimulate the economy.

The announcement of G-SAP 1.0, which promised to buy government bonds worth ₹1 lakh crore from secondary market in the first quarter of 2021-22 was done mainly to calm bond markets. Yields of 10-year bond yields, that had hovered around 5.90 per cent prior to the Union Budget had shot higher past 6.20 per cent since then, mainly due to the large central government borrowing of ₹12.03 lakh in FY22. If the State government borrowings are to be added, the total borrowings could near ₹20 lakh crore.

The other reason behind the G-SAP was to help the government borrowing sail through smoothly. 

While the G-SAP looks like a QE programme, it is not entirely so. One, the RBI has given visibility about the purchases in just one quarter. The quantum of purchases can be much lower/higher in the subsequent quarters. Typical QE programmes of other countries promise purchase of specified value of bonds for an extended period.

Two, the QE programmes promise purchases of variety of securities such as mortgage backed securities and real estate bonds in order to provide liquidity to specific sectors. RBI’s program is limited to government bonds.

The aim of the QE programmes in other countries is to impart liquidity in to the system to promote growth. The aim of the G-SAP is not to infuse liquidity. 

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Solution: b)

Depreciation in the rupee impacts all expenditure in dollar terms— imports, foreign education, travel, investments abroad, medical treatment etc. On the other hand, if you are an exporter or an NRI sending money back home, depreciation would fetch you more rupees per dollar.

A depreciating rupee increases the cost of crude import, which accounts for almost 20% of India’s imports. A rise in cost of crude raises fuel prices and inflation. That, in turn, leads to a rise in interest rates, which increases our borrowing cost.

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Solution: c)

The Baltic Sea is an arm of the Atlantic Ocean, enclosed by Denmark, Estonia, Finland, Latvia, Lithuania, Sweden, northeast Germany, Poland, Russia and the North and Central European Plain.