[Mission 2023] Insta– QUED ( Questions from Editorials ) 18 June 2022

Solution: a)

Marginal Standing Facility:

• MSF is a window for scheduled banks to borrow overnight from the RBI in an emergency situation when interbank liquidity dries up completely.
• Under interbank lending, banks lend funds to one another for a specified term.

Under MSF, banks are also allowed to use the securities that come under Statutory Liquidity Ratio (SLR) in the process of availing loans from RBI.

Solution: b)

Monetary Policy Committee (MPC)

• Under RBI Act, 1934, the central government is empowered to constitute a six-member Monetary Policy Committee (MPC).
• It shall determine the Policy Raterequired to achieve the inflation target”.
• The decision of the Monetary Policy Committee shall be bindingon the Bank.
• Composition: consists of 6 members:

1. RBI Governor as its ex officio chairperson,
2. Deputy Governor in charge of monetary policy,
3. An officer of the Bank to be nominated by the Central Board,
4. Three persons to be appointed by the central government.

• This category of appointments must be from “persons of ability, integrity and standing, having knowledge and experience in the field of economics or banking or finance or monetary policy”.

Solution: c)

National income is not the sum of all incomes earned by all citizens, but only those incomes which accrue due to participation in the production process.

Gross Value Added (GVA):

GVA is the sum of a country’s GDP and net of subsidies and taxes in the economy.

It calculates the national income from the supply side by looking at the value added in each sector of the economy.

GVA is defined as the value of output minus the value of intermediate consumption and is a measure of the contribution to growth made by an individual producer, industry or sector.

It provides the rupee value for the number of goods and services produced in an economy after deducting the cost of inputs and raw materials that have gone into the production of those goods and services.

Gross Value Added = GDP + subsidies on products – taxes on products.

Solution: d)

What does new GDP data shows:

• The money spent by people in their private capacity. It typically accounts for 56 percent of all GDP and is called “private final consumption expenditure” (PFCE).
• Money spent by companies and government towards making investments such as building a new office, building a new road etc. It accounts for 32 percent of total GDP and is called Gross Fixed Capital Formation (GFCF).
• Money spent by the government in its day to day expenses such as paying salaries. It accounts for 11 percent and is called Government Final Consumption Expenditure (GFCE).
• Money spent by Indians on foreign goods(imports) subtracted from the money spent by foreigners on Indian goods(exports). As India imports more than it exports, Net Export (NX) is small and negative.

GDP=PFCE+GFCF+GFCE+NX

Solution: c)

HFCs are on average several thousand times more potent than carbon dioxide.

Kigali Amendment is a legally binding agreement designed to create rights and obligations in international law.

While HFCs do not deplete the stratospheric ozone layer, they have high global warming potential, which has an adverse impact on climate.