Flash Card

LAKSHYA-75 [Day-55] Static Flash Cards for IAS Prelims 2020

UNCITRAL; Legislative Control over Finances; India Demand Outlook on Farm and Agriculture Equipment Market 2024-2025; European Economic Area; Pradhan Mantri Jan Dhan Yojana; Money Multiplier in India; International Financial Services Centre; Insolvency Law Committee (ILC); Insolvency and Bankruptcy Code; 2nd Report on Cross Border Insolvency; Agri-Market Infrastructure Fund (AMIF); ‘Qualified institutional placement (QPI)’; Basics of Indian currency; Cultivation of coffee in India;
By IASToppers
May 03, 2020

Cultivation of coffee in India is mainly confined to which states?

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Answer:

Cultivation of coffee in India is mainly confined to Karnataka (54%), Kerala (19%) and Tamil Nadu (8%) which form traditional coffee tracts.

Enrich Your learning:

  • Coffee is cultivated in India in about 4.54 lakh hectares by 3.66 lakh coffee farmers and 98% of them are small farmers.
  • India produces some of the best coffee in the world, grown by tribal farmers in the Western and Eastern Ghats, which are the two major bio-diversity hotspots in the world.
  • Coffee is also grown in non-traditional areaslike Andhra Pradesh & Odisha (17.2%) and North Eastern states (1.8%), with main emphasis on tribal development and afforestation.
  • Coffee is predominantly an export oriented commodityand 65% to 70% of coffee produced in the country is exported while the rest is consumed within the country.
  • The two main varieties of coffee viz.,Arabica and Robusta are grown in India.

 

 

 

The responsibility for coinage vests with the Government of India is based on the Coinage Act, 2011. True OR False.

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Answer:

True

Enrich Your Learning:

Basics of Indian currency:

Coins:

  • Coins in India are presently being issued in denominations of one rupee, two rupees, five rupees and ten rupees.
  • Coins in the denomination of 1 Paise, 2 Paise, 3 Paise, 5 Paise, 10 Paise, 20 Paise and 25 Paise have been withdrawn from circulation with effect from June 30, 2011 and are, therefore, no more legal tender.
  • The Government of India is also responsible for the designing and minting of coins in various denominations.

Currency:

  • Banknotes in India are currently being issued in the denomination of Rs 10, Rs 20, Rs 50, Rs 100, Rs 200, Rs 500 and Rs 2000.
  • These notes are called banknotes as they are issued by the Reserve Bank of India (Reserve Bank).
  • The printing of notes in the denominations of Rs 2 and Rs 5 has been discontinued as these denominations have been coinised.  
  • Government of India have withdrawn the Legal Tender status of Rs 500 and Rs 1,000 denominations of banknotes issued by the Reserve Bank of India till November 8, 2016.

Role of RBI:

  • The Reserve Bank derives its role in currency management from the Reserve Bank of India Act, 1934.
  • The Government, on the advice of the Reserve Bank, decides on various denominations of banknotes to be issued.
  • The Reserve Bank also co-ordinates with the Government in the designing of banknotes, including the security features.
  • The Reserve Bank estimates the quantity of banknotes that are likely to be needed denomination-wise and accordingly, places indent with the various printing presses.

Key Facts:

  • The highest denomination note ever printed by the Reserve Bank of India was the 10000 note in 1938 and again in 1954. These notes were demonetized in 1946 and again in 1978.
  • The Indian currency is called the Indian Rupee (INR) and the coins are called paise.
  • In terms of RBI Act, 1934 the design of banknotes is required to be approved by the Central Government on the recommendations of the Central Board of the Reserve Bank of India.
  • There are fifteen languages appearing in the language panel of banknotes.
  • The promissory clause printed on the banknotes i.e., “I promise to pay the bearer the sum of Rupees …” is a statement which means that the banknote is a legal tender for the specified amount.
  • The Reserve Bank offices located at Hyderabad, Kolkata, Mumbai and New Delhi (Mint linked Offices) initially receive the coins from the mints.
  • Banknotes returned from circulation are deposited at the Issue offices of the Reserve Bank.
  • The Reserve Bank subjects these to processing, authenticates banknotes for their genuineness, segregates them into notes fit for reissue and those which are unfit, for cancellation.

 

 

 

 

What is Qualified institutional placement (QIP)?

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Answer:

Qualified institutional placement (QIP) is a capital-raising tool, primarily used in India and other parts of southern Asia, whereby a listed company can issue equity shares, fully and partly convertible debentures, or any securities other than warrants which are convertible to equity shares to a qualified institutional buyer (QIB).

Enrich Your Learning:

Qualified institutional placement (QPI)’:

  • A qualified institutional placement (QIP) isa way for listed companies to raise capital, without having to submit legal paperwork to market regulators.
  • It is common in India and other southeast Asian countries. The Securities and Exchange Board of India (SEBI) created the rule to avoid the dependence of companies on foreign capital resources.
  • QIPs are helpful for a couple of reasons because their use saves time as the issuance of QIPs and the access to capital is far quicker than through an FPO.
  • The speed is because QIPs have far fewer legal rules and regulations to follow, making them much more cost-efficient.
  • Further, there are fewer legal fees, and there is no cost of listing overseas. 

How does a Qualified Institutional Placement Work?

  • A qualified institutional placement was initially a designation of a securities issue given by the Securities and Exchange Board of India (SEBI).
  • The QIP allows an Indian-listed company to raise capital from domestic markets without the need to submit any pre-issue filings to market regulators. The SEBI limits companies to only raising money through issuing securities.
  • To be allowed to raise capital through a QPI, a firm must be listed on a stock exchange along with the minimum shareholding requirements as specified in their listing agreement. Also, the company must issue at least ten percent of its issued securities to mutual funds or allottees.

Background:

  • The primary reason for developing QIPs was to keep India from depending too much on foreign capital to fund its economic growth.
  • Before the QIP, there was growing concern from Indian regulators that its domestic companies were accessing international funding too readily via American depository receipts (ADRs), Foreign Currency Convertible Bonds (FCCBs) and Global Depository Receipts (GDR)

 

 

Agri-Market Infrastructure Fund (AMIF) is to be created with which body for development and up-gradation of agricultural marketing infrastructure in Gramin Agricultural Markets and Regulated Wholesale Markets?

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Answer:

National Bank for Agriculture and Rural Development (NABARD)

Enrich Your Learning:

Agri-Market Infrastructure Fund (AMIF):

  • Recently, the Cabinet Committee on Economic Affairs (CCEA) have approved a corpus of Rs. 2,000 crores for Agri Market Infrastructure Fund (AMIF) to be created with NABARD for development and upgradation of agricultural marketing infrastructure in rural agricultural markets.
  • AMIF will provide the State/UT Governments subsidized loan for their proposal for developing marketing infrastructure in Agriculture Produce Market Committees (APMCs) and Grameen Agricultural Markets (GrAMs).
  • The scheme was first announced in 2017-18 budget.
  • States may also access AMIF for ‘Innovative integrated market infrastructure’ projects including Hub and Spoke mode and in Public Private Partnership mode.
  • In these Grameen Agricultural Markets (GrAMs), physical and basic infrastructure will be strengthened using ‘Mahatma Gandhi National Rural Employment Gurantee Act’ (MGNREGA) and other Government Schemes.
  • The interest subsidy will be provided by Department of Agriculture Cooperation & Farmers Welfare (DAC&FW) to NABARD up to 2024-25.

 

 

 

Which ministry constituted the Insolvency Law Committee (ILC) to recommend amendments to Insolvency and Bankruptcy Code of India, 2016?

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Answer:

Ministry of Corporate Affairs

Enrich Your Learning:

Insolvency Law Committee (ILC):

  • The Insolvency Law Committee submitted it second report to the Ministry of Corporate Affairs in 2018 recommending amendments in the Insolvency and Bankruptcy Code, 2016 with respect to cross-border insolvency.
  • The Insolvency Law Committee (ILC) was constituted by the Ministry of Corporate Affairs to recommend amendments to Insolvency and Bankruptcy Code of India, 2016.

Insolvency and Bankruptcy Code:

  • Insolvency and Bankruptcy Code, 2016 is considered as one of the biggest insolvency reforms in the economic history of India.
  • This was enacted for reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of the value of assets of such persons.
  • The Code provides a time-bound 180-day process to resolve insolvency of companies and individuals. 

2nd Report on Cross Border Insolvency:

  • The ILC has recommended the adoption of the UNCITRAL (United Nations Commission on International Trade Law)Model Law on Cross-Border Insolvency, 1997, as it provides for a comprehensive framework to deal with cross-border insolvency issues.
  • The Committee has also recommended a few carve outs to ensure that there is no inconsistency between the domestic insolvency framework and the proposed Cross Border Insolvency Framework.

Key features of UNCITRAL Model Law:

  • Precedence given to domestic proceedings and protection of public interest.
  • Greater confidence generation among foreign investors
  • Adequate flexibility for seamless integration with the domestic Insolvency Law
  • Robust mechanism for international cooperation.

About UNCITRAL:

  • The United Nations Commission on International Trade Law (UNCITRAL) was established by the United Nations General Assembly to promote the progressive harmonization and unification of international trade law.
  • UNCITRAL carries out its work at annual sessions held alternately in New York City and Vienna.

Key Facts:

  • The UNCITRAL Model Law has been adopted in 44 countries and, therefore, forms part of international best practices in dealing with cross border insolvency issues.

 

 

Where is the International Financial Services Centre in India located? a) Gandhinagar b) Mumbai c) Delhi d) Gurugram

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Answer:

  1. a) The International Financial Services Centre in India located in Gandhinagar, Gujarat.

Enrich Your Learning:

What is the International Financial Services Centre?

  • International Financial Services Centre (IFSC) is set up at Gujarat International Finance Tec-City (GIFT City) near Gandhinagar. The aim is to establish a Global Financial Hub in India. It caters to customers outside the jurisdiction of the domestic economy, dealing with flows of finance, financial products and services across borders.
  • London, New York and Singapore are examples of Global Financial Hubs.
  • The Special Economic Zone (SEZ) Act 2005 allows setting up an IFSC in an SEZ or as an SEZ after approval from the central government.

What are the Location factors for an IFSC?

  • The rational legal regulatory framework, Sustainable local economy, Stable political environment, Developed infrastructure, Strategic location and Good quality of life.

What are the services an IFSC can provide?

  • Fund-raising services for individuals, corporations and governments.
  • Asset management and global portfolio diversification undertaken by pension funds, insurance companies and mutual funds.
  • Wealth management.
  • Global tax management and cross-border tax liability optimization, which provides a business opportunity for financial intermediaries, accountants and law firms.
  • Global and regional corporate treasury management operations that involve fund-raising.
  • Liquidity investment and management and asset-liability matching.
  • Risk management operations such as insurance and reinsurance.
  • Merger and acquisition activities among trans-national corporations.

GIFT-IFSC found a place in the top 15 emerging Global Financial Centres across the world. In September 2017 edition of Global Financial Centres Index 22 (GFCI) – London, GIFT-IFSC was featured at the tenth place.

The government announced a Unified Regulator for IFSC in India.

 

 

 

Since the inception of Pradhan Mantri Jan Dhan Yojana, money multiplier has decreased? a) True b) False

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Answer:

False, since the inception of Pradhan Mantri Jan Dhan Yojana, money multiplier has increased. Money Multiplier is the amount of money the banking system generates with each rupee of reserves.

Enrich Your Learning:

What is Money Multiplier in India?

  • Money Multiplier is the amount of money the banking system generates with each rupee of reserves.

Factors affecting Money Multiplier:

  • A country’s money multiplier depends on two factors—how much individuals (and businesses) hold in cash and how much banks hold as reserves.
  • The more individuals hold cash in hand, the less the banking system will be able to create money and hence a lower value for the multiplier.
  • Reserves that banks hold with the central bank also reduces the money multiplier.

 

European Economic Area is an example of a Fiscal Union. True OR False?

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Answer:

  • European Economic Area is an example of a Common Market. Common Market is an agreement between two or more countries that permits the free movement of capital and labour as well as goods and services

Enrich Your Learning:

Meaning of terms: Monetary Union or currency union, Free Trade Agreement (FTA), Customs Union (CU), Common Market (CM), Economic Union (EU), Fiscal Union

 

According to the India Demand Outlook on Farm and Agriculture Equipment Market 2024-2025, Public investment in India with respect to agriculture largely focussed on the creation of irrigation infrastructure. a) True b) False

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Answer:

  1. b) False. The Government did not do enough to complement private investment in agriculture, particularly in irrigation.The economies of scale that come out of public investment in irrigation serve to both boost production and partially mitigate the investment risks of farmers. Instead of public investment, a policy was oriented towards enhancing spending in subsidies riding on inefficient delivery mechanisms, which left farmers vulnerable to calamities.

Enrich Your Learning:

Key Facts from India Demand Outlook on Farm and Agriculture Equipment Market 2024-2025:

  • From 56.5% in 1950-51 to ~17% in 2016-17, Share of Agriculture in India’s GDP has been on a continuous decline.The decline in growth of agricultural GDP was primarily due to the fall in the production of agricultural crops such as oilseeds, cotton, jute and Mesta, and sugarcane.
  • In 2009-10, despite experiencing the worst south-west monsoon since 1972 and subsequent significant fall in Kharif food grain production, the growth marginally recovered to 4 per cent primarily due to a good Rabi crop.
  • Agriculture plays a vital role in India’s economy. Over 58 per cent of the rural households depend on agriculture as their principal means of livelihood.
  • Agricultural markets remained fragmented even as attempts were made to integrate markets for goods and services. Individual farmers increased investment in irrigation and labour saving devices. Simultaneously, they also increased cropping intensity.
  • However, from a national standpoint, the government did not do enough to complement private investment in agriculture, particularly in irrigation. The economies of scale that come out of public investment in irrigation serve to both boost production and partially mitigate the investment risks of farmers. Instead of public investment, the policy was oriented towards enhancing spending in subsidies riding on inefficient delivery mechanisms, which left farmers vulnerable to calamities.

 

Which among these is not involved in the Legislative Control over Finances?

a) Comptroller and Auditor General b) The Committee on Public Undertakings

c) Estimates Committee d) Reserve Bank of India.

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Answer:

  1. d) The Reserve Bank of India is not involved in the Legislative Control over Finances

Enrich Your Learning:

What is Legislative Control over Finances?

  • Legislative control over finances is exercised mainly in two stages.  The first stage is at the time of policy-making. This is exercised at the time of the presentation of the annual budgetor the annual financial statement.
  • In the second stage, the legislature reviews the implementation of the policy.  There are three financial committees, which are set up under the Rules of Procedure and Conduct of Business in the Lok Sabha/Vidhan Sabhas of the States.

Committees

Roles

Estimates Committee

 

· The Estimates Committee is entrusted with the responsibility of undertaking detailed examinations of budget estimates put forth by the Government in respect of each administrative department.

The Public Accounts Committee (PAC),

 

· The PAC examines the Appropriation Accounts and Report of the CAG as well as the annual Finance Accounts of the Government and any other accounts placed before the House.

· In a State where there is no separate CoPU, the PAC also examines the accounts and considers Reports relating to Public Sector Undertakings.

 

The Committee on Public Undertakings (CoPU)

· The CoPU considers the Audit Reports relating to commercial enterprises.

· The PAC and the CoPU examine the expenditures incurred by the executive to assess whether the moneys disbursed were available and applicable to the services to which they had been applied, that the expenditures conform to the authority that governed it and that the rules of financial propriety and economy in expenditure were duly observed.

· These committees also examine the efficiency of the implementation of projects and schemes and whether their objectives were attained or not.

 

The Comptroller and Auditor General plays a key role in the functioning of the financial committees of Parliament and the State Legislatures. 

 


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