QUIZ – 2020: INSIGHTS STATIC , 5 August 2021 – Economy

Solution: b)

Public debt is the total liabilities of the central government contracted against the Consolidated Fund of India. It is further classified into internal & external debt. Internal debt is categorised into marketable and non-marketable securities.
Marketable government securities include G-secs and T-Bills issued through auction. Non-marketable securities include intermediate treasury bills issued to state government’s, special securities issued to national Small Savings Fund among others.
The debt-to-GDP ratio indicates how likely the country can pay off its debt. Investors often look at the debt-to-GDP metric to assess the government’s ability of finance its debt. Higher debt-to-GDP ratios have fuelled economic crises worldwide.
The NK Singh Committee on FRBM had envisaged a debt-to-GDP ratio of 40 per cent for the central government and 20 per cent for states aiming for a total of 60 per cent general government debt-to-GDP.
Source

Solution: d)

A balance of payments (BOP) surplus results in accretion of forex reserves.

Bop surplus is more probable when there is positive trade balance, higher remittances or high FPI. BoP deficit (and hence drain of forex) is more likely when there is trade deficit, FPI outflows and reduction in the receipt of remittances.

Solution: a)

Duties that are imposed in order to counter the negative impact of import subsidies to protect domestic producers are called countervailing duties.

Therefore, countervailing duty is a customs duty on goods that have received government subsidies in the originating or exporting country.

An anti-dumping duty (ADD) is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value. Dumping is a process wherein a company exports a product at a price that is significantly lower than the price it normally charges in its home (or its domestic) market.

It is possible to have both ADD and countervailing duty on a product, but they are different duties. 

ADD is chargeable in addition to, and independent of, any other duty to which the imported goods are liable.

Solution: a)

High and volatile inflation: is not a good investment condition since firms will incur increasing costs and will be unsure about their profitability.

High CAD: is not good because it creates external imbalances and there is always a chance of BoP crisis.

High fiscal deficit: is not preferred since it crowds out private investments by increasing the interest rates in the market.

High GDP growth is preferred because it gives investors better returns on their investment.

Solution: c)

Most favoured nation (MFN) clause ensures non-discrimination between WTO member states in matters of trade.

Anti-dumping and export subsidies are related to trade measures and trade protection that come under WTO.

Providing financial support to the countries having deficit balance of payments comes within the ambit of IMF.

Reduction of trade barriers within regional groupings comes under the Regional trade agreements under WTO.