Revision Schedule for Prelims 2017

Less than 2 months are left for Prelims 2017. Click here for a Revision Schedule for the next 5 weeks.

Economy Doubts Clearing Forum

Profile photo of Dr V Dr V
  • This thread is dedicated to queries related to economy. Ask any economy related query and get that resolved within 48 hours.  Members are requested to chip in to resolve queries of fellow community members.

    For queries related to other subjects, use this thread for the time being.

    http://www.civilsdaily.com/cdhub/topic/doubts-clearing-forum/

     


You must be logged in to reply to this topic.

  • Profile photo of neha mittal neha mittal @neha-mittal

    //The State govt. will takeover the discom liabilities over 2-5 year period. This will allow discoms to convert their debt into State bond . These bonds will have a maturity period of 10-15 years.//

    How exactly will converting debt into bond help? Bond is used for borrowing money. It will put more burden on gov.

    • Profile photo of Bruce Wayne Bruce Wayne @bruce-wayne

      The overall debt is taken in a phased manner cumulating 75% for 2 years i.e 50% for 1st and 25% for second.
      This part of debt is solely taken by the state govt,without being added to the fiscal deficit leveraging credit agencies.This would brind down the interest cost burden,which is alarmingly high at present for the discoms.
      The remaining part is financed by the DISCOM bonds backed by the State govt and issued by the companies. Thus low risk and enhanced maturity will provide DISCOM companies flexiblity to improve their finacnial management and operational efficiency.
      Bond provides felxiblity with its higher maturity period.

  • Profile photo of neha mittal neha mittal @neha-mittal

    //For the Jan-Dhan Yojana to succeed the following steps should be considered:

    *
    The business correspondent model should be extended to include entities such as kirana shops, corporates and others.//

    How will extending BC model to kirana shops help?

    • Profile photo of Bruce Wayne Bruce Wayne @bruce-wayne

      Jan dhan yojana is all about financial inclusion.
      Banking correspondents are basically providing banking services such as deposit,lending etc in the rural areas,where establishing a branch is not viable for the administrative cost for banks.
      Extentding the model to Kirana shops would increase the coverage under the formal banking channel and thus helps in financial inclusion.

    • Profile photo of neha mittal neha mittal @neha-mittal

      Thanks for your prompt reply.. But aren’t kirana shops for selling groceries. How can they help in banking activities?

    • Profile photo of Bruce Wayne Bruce Wayne @bruce-wayne

      The same way Airtel are telecom company but would act as payment bank.
      Setting bank in the hinterland and rural areas in not always viable and this makes ratio of branches in Urban to rural areas very skewed and so is the availablity of ATM.Thus govt is coming with new models and modifying the existing one,so as to suit the Indian financial climate.
      Kirana shops are grocery stores but can help in micro lending and depositing purpose if comes under a Banking correspondent or telecom company (authorised payment bank). They won’t be taking up complete banking activities,but only a limited one to bring people bridge trust and brind greater people under banking channel.

  • Profile photo of Gabriel Cazotto Gabriel Cazotto @gabrielcazotto

    Hello,
    I have a doubt regarding the producer surplus when the supply is negatively slope. Where I can find both the producer surplus and the consumer surplus when both de supply and demand are have negatives slopes?

    A source for the answer would also help me.

    • Profile photo of Bruce Wayne Bruce Wayne @bruce-wayne

      If preparing for CSE,you dont need an indepth command on Micro economics.
      Other then that,if its the part of your academics,do let me know.

  • Profile photo of Pranav Pranav @pranavce15

    @root, please revive this thread along with the other Doubts clearing forum. Some useful stuff has been discussed here. Will help everybody new to the site and prep.

    Please add a tag if possible on the home page like Target Mains collation

    Thanks

  • Profile photo of Pranav Pranav @pranavce15

    Could somebody explain this

    “Third, the GST would improve — even substantially — tax governance in two ways. The first relates to the self-policing incentive inherent to a valued-added tax. To claim input tax credit, each dealer has an incentive to request documentation from the dealer behind him in the value-added/tax chain. Provided the chain is not broken through wide-ranging exemptions, especially on intermediate goods, this self-policing feature can work very powerfully in the GST.”

    what tax credits are being talked about. I know people used to take stuff “without bill” so as to save service tax/VAT etc. What changes now?

    Thanks

    • Profile photo of Er S Er S @ers

      My understanding of self-policing is as follows

      Im a shopkeeper and I know each year govt will audit 20% of all the shops. I want to make sure that Ive paid all the taxes. In case of VAT, the tax is applied on value addition. Hence I need the items original price(input price) to prove to the govt the value addition and hence justify the tax I paid. Thats why Ill make sure I get a receipt of the input price.
      For all taxes not applicable on value addition, such an input price receipt is not required.

      VAT and GST both being value added taxes are self-policing. The advantage with GST is that it will subsume all the non-value added taxes which were not self-policing to start with.

      The eg. of receipt not being asked can happen even today. In all such cases shopkeepers tend to say its a human error, probably the item got lost, etc etc.

    • Profile photo of Pranav Pranav @pranavce15

      So essentially its increasing the self policing net.
      Thanks for clearing this up @ers

  • Profile photo of neha mittal neha mittal @neha-mittal

    Here is another statement –

    //Primary deficits push up the debt ratio. But nominal growth can bring it down, as long as the growth rate exceeds the interest rate on government debt.

    – The primary deficit has been curbed to less than 1 percent of GDP in 2015-16, far below the nearly 3 percent of GDP recorded in 2011- 12. But nominal growth has collapsed, as the GDP deflator has plunged to minimal levels, virtually eliminating the gap between growth and interest rates.
    //

    How are primary deficit and nominal GDP related?

  • Profile photo of neha mittal neha mittal @neha-mittal

    Can someone explain what does the following statement from economic survey means –

    // Another year of below potential growth will mean that the output gap (reflected for example in the declining capacity utilization) will widen further. As a result, there will be additional downward pressure on underlying inflation, which has already fallen below 5 percent.//

    If output gap increase there should be increase in inflation not decrease, shouldn’t it?

    • Profile photo of Pranav Pranav @pranavce15

      not enough capacity utilization > not enough demand > excess capacity > large inventory > have to sell this stock > will go cheap > inflation comes down
      **************************
      to your 2nd question
      The answer is in the the following statement itslelf
      Primary deficits push up the debt ratio. (aka more debt obligation for govt) But nominal growth can bring it down, as long as the growth rate exceeds the interest rate on government debt (if rapid growth rate> more taxes from corp (corp income tax + excise ) > can use this extra money to pay off debts )

      hope this helped

  • Profile photo of Sathya Sathya @shradhakj

    Does alternative investment funds come under the regulations of SEBI or not?
    please answer

    • Profile photo of Bruce Wayne Bruce Wayne @bruce-wayne

      Yes it does!

  • Profile photo of Sanjoy Biswas Sanjoy Biswas @sanjoy-biswas

    What are FERA & FEMA and their differences?

  • Profile photo of Vikram Vikram @vikramadityamalik

    Dr. V, many congratulations on acing the exam! Not sure if this is the correct forum for this question: Would you be coming out with write ups on the remaining chapters of the Economic Survey (Volume 2)? If yes, is it possible to indicate a timeline? It would be really helpful in planning. Thank you!

  • Profile photo of Ayushi Mahapatra Ayushi Mahapatra @ayushimahapatra

    I came across an article that shows GDP growth in India is 7.9 % while the industrial production growth rests as 0.1 %. The difference is not so stark in say China where the GDP being 6.7% & Industrial production growth is 6%. What might be the reason for this? Is it because India’s GDP mostly relies on service sector? Or the change in base year has anything to do with it?Should this be a reason for worry for economists? Kindly clarify 🙂

    • Profile photo of Dr V Dr V @dr-v

      many reasons

      Base years of two are different

      IIP is a volume indicator where as GDP a value addition indicator

      That’s also the reason, dependent on services sector but there is mismatch even in IIP and Industrial sector GDP growth

  • Profile photo of Sathya Sathya @shradhakj

    does inflation increase or decrease direct tax collection?

    -Saw that as we have progressive tax, with inflation tax collection increases
    -In another source inflation -> less demand for consumer durables ->corporate tax and IT decreases
    please answer…

    • Profile photo of Dr V Dr V @dr-v

      Yess so in the short term tax collection woukd increase as people would come under higher income tax bracket but prolonged high inflation would lead to scenario two you mentioned

    • Profile photo of Sathya Sathya @shradhakj

      so if a question comes like this without mentioning short term or long term what will be the ans?

      thanks

    • Profile photo of Dr V Dr V @dr-v

      normally they wouldn’t ask such question but if they do, you should consider direct effects only i.e. people and corporations coming under higher income tax bracket and tax collection rising

    • Profile photo of rajiv shaw rajiv shaw @rj6095

      There is no such relation between inflation and direct tax collection.
      If there is high inflation in the economy then to counter it GoI may increase d tax rates so as to reduce the amount liquidity in the market. Or we can say the disposable income of the people reduces hence demand get reduced. Then we may say that direct tax Collection has increased.

      On the otherhand RBI may raise d rr, rrr, crr and slr to tackle high inflationary conditions in the economy.

    • Profile photo of Sathya Sathya @shradhakj

      thanks…both can happen. please refer to Dr. V’s ans

    • Profile photo of rajiv shaw rajiv shaw @rj6095

      Great!!..thnks 🙂 …I got it….So as I undrstood…in case 2 as u mentioned…..due to prolonged inflation i.e. prolonged price rise –> demand for goods decreases –> corporates cut short production as demand is less –> less profit for corporates –> so they pay less corporate tax –> direct tax collection decreases
      kindly correct if i m wrong.

    • Profile photo of Sathya Sathya @shradhakj

      right 🙂
      also less profit for corporates => job loss => IT also decreases

  • Profile photo of neha mittal neha mittal @neha-mittal

    In the following statement, what do we mean by actuarial basis?

    //the premium for commercial and horticulture crops was calculated on an actuarial basis, meaning premiums could be as high as 25%, depending on the risk involved.//

    • Profile photo of Rahul Koppati Rahul Koppati @rahulkoppati

      Actuary means risk. Premium is the amount needed to cover risk.

      Here actuarial basis means as the risk in horticulture is high, higher premium is charged.

  • Profile photo of neha mittal neha mittal @neha-mittal

    What does this statement about TDS mean-

    //at the end of the year, when you file your Income tax Return, you are entitled to claim TDS amount deposited for paying your taxes. if your taxes are low, then the Govt. refunds you the extra deducted amount & leftover TDS amount for that year is refunded with interest//

    TDS is income tax which is to be given to government, then why is person entitled to claim TDS amount?

    • Profile photo of Rahul Koppati Rahul Koppati @rahulkoppati

      TDS is tax deduction at source. It is both for convenience and compliance. It is paid during transaction itself. When your employer pays you salary, tax calculations are done and deducted. If there is no TDS, one will have declare income at the end of the year which is inconvenient to tax payers and can result in less compliance also.

      TDS is advance tax and deducted based on income estimates at the start of year. But one is ideally required to pay tax at end of year. In the year tax payers can make investment in tax free bonds, insurance, etc. So taxable income will reduce as well as tax. The government will return the additional advance tax it took as part of TDS along with interest. Because it kept your money for that period.

  • Profile photo of neha mittal neha mittal @neha-mittal

    Can anyone explain what is interest cost and why its reduction is beneficial?

    //What are thrust areas of UDAY to turnaround discoms?
    3.Reduction in the interest cost of discom.//

    • Profile photo of Dr V Dr V @dr-v

      Interest cost si interest rate you pay or interest in proportion to your revenues and profit. So if to start a comoany, you pay 10% interest rate and somebody else 8%, your interest cost is high and common sense would suggest you would have less debt to service and thus helpful.

      For more read this

      UDAY scheme for financial turnaround of Power Distribution Companies

  • Profile photo of neha mittal neha mittal @neha-mittal

    How will UDAY scheme help banks in managing their bad loans?

  • Profile photo of rajiv shaw rajiv shaw @rj6095

    One question/doubt friends..(Beggar thy neighbour wala bloq)….. as per my understanding….if one goes for devaluation ONCE it will be neutralised by trade balancing after somtime… so to keep domestic goods competitive in d intl. market we got to go for successive rounds of devaluation OR not allow the nominal xchng rates to change as per market forces…is this correct??….kindly reply friends

    • Profile photo of Dr V Dr V @dr-v

      Yess. It’s only short term measure and even then domestic consumers suffer as foreign goods become costlier. Govts/ central banks hope to stimulate the economy in the short term and think animal spirits will take over after that.

      or the idea is that once you capture the market abroad and drive out their industries, they would have no choice but to buy from you. That’s why dumping and other things

    • Profile photo of rajiv shaw rajiv shaw @rj6095

      sory mistyped…. ‘OR’ nahi ‘i.e.’

  • Profile photo of Debasmita Nayak Debasmita Nayak @debasmita-nayak

    Sir,
    Is the following statement true or false:
    “Public borrowing does not affect the money supply in market”.

    If true, then should I assume that everything including the government that lies outside the central bank comprises the market? As only in this case, money going from the public to the government would still remain within the market and thus not affect the money supply.

    • Profile photo of Dr V Dr V @dr-v

      Money supply is total stock of money available in the economy ie amount of currency issued by rbi.

      In case of public borrowings money is just moving from public to govt. No new money is created so no increase in money supply.

      When govt borrows from rbi, rbi creates new money. It’s not borrowing actually it’s monetizing deficits. As total money supply increases it leads to inflation and the practice has been discontinued

    • Profile photo of Gaurav Kumar Gaurav Kumar @abhi431991

      “Public borrowing does not affect the money supply in market”. Yes. True. Its the exchange of money among the public.
      What government procures is called Gov borrowing, to finance debt, projects etc which is different from public borrowing.

    • Profile photo of Debasmita Nayak Debasmita Nayak @debasmita-nayak

      I beg to differ. In my understanding, public borrowing is public debt- that which government borrows from the public by issuing bonds, etc. The question asked as to why government prefers public borrowing over borrowing from RBI. And the statement I posted as query was one among the options- “public borrowing does not affect the money supply in the market.”

    • Profile photo of Gaurav Kumar Gaurav Kumar @abhi431991

      Well there are several reasons for that

      1. the magnitude and tenure of the bonds/G-sec issued and the financial requirement
      2. RBI will give through its FOREX reserves. Not a good idea. Healthy FOREX helps in lots of ways – Keeping rupee stable, Emergency liquidity requirements, Improving GDP/SDR etc. Gov doesn’t prefer risking its FOREX reserves by depleting it via borrowings through RBI
      3. Issuing bonds/G-Sec and financing debt is preferred via public rather than RBI – Attracting large investments – domestic/international through bonds like NHAI-Infra, UDAY-Power etc, here long term clause helps, more stable and gives time to gov to pump investments in specific sector and get returns in long term.
      4. Also stronger bonds improve Indian Rupee and Bond ratings which will further boost investments. Good for Indian economy.
      5. rather than pushing and pressing RBI to fulfill its debt requirements, better to use market forces and stakeholders to fund the projects.RBI also has limitations to allot funds, keeping in mind monetary policy responsibility and maintaining inflation, BoP.
      6. Suppose RBI allots fund via FOREX, FOREX depletes, Huge $$ demands, FEMA $$ bag gets empty, RBI to come to rescue, FOREX limited and less, BoP crisis – Inflation, Rupee devaluation, Lesser investments, Lower GDP etc

    • Profile photo of Dr V Dr V @dr-v

      Rbi doesn’t give money from its forex kitty. RBI can print notes mint money. So no impact on forex. Only problem is that it creates high inflation as total stock of money increases without any increase in goods and services

    • Profile photo of Gaurav Kumar Gaurav Kumar @abhi431991

      Hmm. Correct Dr V.

      Because in a situation where Gov want to borrow from market to finance its debt and market refuses, doesn’t show interest because of weak credit ratings, low returns, high risk etc. the Gov anyway has to go to the RBI, and RBI then has to print currency in-order to augment gov requirements. Of course it will increase inflation. Also RBI can’t guarantee to lend gov through its FOREX as it has many -ve impact.

    • Profile photo of Debasmita Nayak Debasmita Nayak @debasmita-nayak

      Thanq Gaurav!
      My only query was about the statement though..
      🙂

  • Profile photo of Gaurav Kumar Gaurav Kumar @abhi431991

    Sir. Does Income Tax comes under Article 270 – Taxes levied & Collected by the Union and distributed b/w union and states ?

  • Profile photo of Gaurav Kumar Gaurav Kumar @abhi431991

    Sir,

    Who Levies, collected and uses Service Tax in India? Kindly provide the authority at each of the 3 stages with required articles pl. Thanks

    • Profile photo of Dr V Dr V @dr-v

      Laxmikant centre state relations financial relations wala chapter padh lo

  • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

    Sir,
    It says that,one of the factor of falling gold prices is the global low in crude oil prices as it increases the ability of gold to buy oil.
    Could you please explain me the mechanism here?
    As i took it like falling crude oil prices increased savings in india,which in turn would increase the demand for gold,owing to increase in their investment potential.But my assumption was wrong.

    • Profile photo of Dr V Dr V @dr-v

      Itni complicated baaton mein dimag naa laga bandhu.. Nobody will ask you this.

      Okays it actually goes like this. Oil and gold both are negatively correlated to dollar. As dollar strengthens, you can buy more amount of oil from Same number of dollars right, so oil prices fall in dollar terms.

      Similarly you can buy more gold in same amount of dollar so gold prices fall.

      This both gold and oil are positive correlated that is generally rise and fall together but this does not always hold true as there are intrinsic demand and supply factor also.

      Hope it helps.

      Your logic was correct. Only problem was that gold prices are not determined by india.

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Sir,How to go for Sriram Economy for now?

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Thank you Sir.Simplfied.
      The last sentence made all the difference.

  • Profile photo of Gaurav Kumar Gaurav Kumar @abhi431991

    How the fiscal deficit number in Table 2.6 page no. 44 (public finance) of the economic survey has been calculated? Can anyone kindly explain how the number is calculated ? Thanks.

    • Profile photo of Dr V Dr V @dr-v

      Photo laga do, page ki.. vaise fiscal deficit par ek article haI. . Read that samjh aa jaega..

      Search types of budget deficit

    • Profile photo of Gaurav Kumar Gaurav Kumar @abhi431991

      ,

  • Profile photo of Gaurav Kumar Gaurav Kumar @abhi431991

    Are G-Sec & Bonds both fixed income instruments? What’s the major differences b/w the two? Pl give few common recent examples of G-Sec?

    • Profile photo of Dr V Dr V @dr-v

      Yess.

      Treasury bills are securities of maturity less than a year or 52 weeks

      Treasury bonds/ notes etc longer maturity

    • Profile photo of Gaurav Kumar Gaurav Kumar @abhi431991

      SIR,

      Do T-Bills forms major chunk of G-Sec? What are other G-Sec examples in India?

  • Profile photo of sam sam @sam-r1o

    Hi, Dr.V
    I was reading Constitutional Amendments mase till now,In that Resident’s rule is imposed in Punjab again and again, and 68th amendment permits Resident’s rule upto 5 years in Punjab. Why it is so? What was problem? Or to check issue of Khalistan it was imposed?

  • Profile photo of Baleel Ahamed Baleel Ahamed @baleel-ahamed

    Sir, why subscription to international bodies and penalties chearged by international financial bodies are considered as revenue receipts.should it be considered as revenue expenditure right ? Please clarify me

  • Profile photo of Baleel Ahamed Baleel Ahamed @baleel-ahamed

    Sir can you illustrate how expected years of schooling in HDI calculation is calculated with sample values..

    • Profile photo of Focus Ias Focus Ias @focusias

      Dude, which exam are you preparing for! You will never get such question from UPSC. You re supposed to be a generalist not a specialist…

    • Profile photo of Baleel Ahamed Baleel Ahamed @baleel-ahamed

      Dude . Thanks for reply. Sorry to say this. This question is asked by my friend. He instantly happened to see and asked me to explain. Thats why i got involved into these kind of research. Okk sorry for the disturbance

  • Profile photo of Baleel Ahamed Baleel Ahamed @baleel-ahamed

    How earning from foreign national is considered as positive. As this amounts to injecting more money without producing goods and service in home country. So more remittance means more inflation right?whether my understanding is correct or not?please explain

    • Profile photo of Dr V Dr V @dr-v

      This is the problem when we start thinking too much economics.

      Dost expats remit hard dollars not rupees. Hard dollars they earn is the result of value addition, goods they produce and services they deliver in those countries hence it’s not more money and no goods.

      Think of it like exports, we export something get paid in hard currency like dollar, we don’t complain right.

      We can buy as many ipads as we want from.those dollars. Problem arise when central bank increases money supply that is amount of rupees increase in economy without any increase in production.

      Or take it as International aid. We don’t even have to return that. Though with more dollars coming in there would be appreciation of currency as demand for Indian rupees increases bit rbi can manage that.

      So it will not be inflationary, in fact if anything it would be deflatuonary. Think of it, instead of remiting dollars, they start remitting equivalent amount of food grain. Now more grain same amount of money, prices would fall.

      Hope its clear

    • Profile photo of Baleel Ahamed Baleel Ahamed @baleel-ahamed

      Thanks a lot sir..

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      I think it depends whether the remittances are institutional i.e govt or non institutional i.e by means of trade or salary.

      Institutional remittances as well as those received by large trade firms rarely have any effect on the economy as foreign denominated currency is kept (without exchanging) for future transaction or security against local instablity.

      Whereas non institutional remittances small firms or incoming salary do increases the spending ability causing INFLATION,but the large size of the Indian economy neutralises the effect,also it could be easily countered by RBI increasing interest rates.
      So,the overall effect comes as positive.

      If I am anywhere wrong with it,please correct me Dr.V.

    • Profile photo of Dr V Dr V @dr-v

      Read my explanation above. There should not be any confusion. Govt or non govt

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Yes Sir,no confusion now..:)
      But I read that remittances from expats are resposible for local inflation,that too indirectly..as it increases their ability to spend..and it is deflationary in theory..but you made it more clear.
      Thanks..:)

  • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

    Dr.V,

    Can you please explain the concept of prive level?low price level increases real value of money aand reduces the household demands?can you please explain this..

    • Profile photo of Dr V Dr V @dr-v

      Dost ye to inflation wale article mejn examina kiya naa. Suppose 10 apple cost 100 rs, we can say 1 rupee is equivalent to .1 apple right.

      Suppose now prices fall and 10 apples are now worth 50 bucks so one rupee is equivalent to .2 apple. So real value of money has increased or purchasing power of money has increased.

      I think you are referring to deflationary Spiral. As the real value of money has increased, you and I will think that prices would fall further. We would think prices could fall to 40 tomorrow so we would defer consumption in the future in the hope of reduced prices. Now everyone deferring consumption, no one to buy apples, prices would fall even further# even more demand reduction.

      Economics | Inflation explained with real life examples

      Deflation padh lena ismen se..

      Hope its clear.

    • Profile photo of Focus Ias Focus Ias @focusias

      Do you have economics as an optional bro?

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Why did you ask that?:D..seeing my doubts..:P

    • Profile photo of Focus Ias Focus Ias @focusias

      Yessir! Yohan pe economics ke doubts dekh ke to humein khud preparation pe shake ho jata hai

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Hahaha,haan iss page me mere hi doubts rehte hai zyada..:P
      Actually we rarely get someone like Dr.V to be with us in our preparation,so better to make full use of this oppurtunity.
      BTW,he replies rarely nowadays..:/

  • Profile photo of Sathya Sathya @shradhakj

    who is a promoter?

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      In what context?can you elaborate

    • Profile photo of Sathya Sathya @shradhakj

      In local area banks, it requires a min paid up capital of 5 cr. The promoter should contribute a min. of 2 cr.
      is he a shareholder?

    • Profile photo of Dr V Dr V @dr-v

      So promoters start the company. It’s mostly their idea that eventually leads to formation of a company. They raise initial capital/ finances.

      So if I start a LAB, I have to contribute 2 cr to equity capital.

    • Profile photo of Sathya Sathya @shradhakj

      Thank You

  • Profile photo of Sathya Sathya @shradhakj

    how does large Govt. borrowing leads to higher interest rate?

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      With increase in market borrowing,increases the nervous market sentiments for the ability of the govt to repay the debt.So,higher interest rates are offered.

    • Profile photo of Sathya Sathya @shradhakj

      Thank You!!!

  • Profile photo of John Nash John Nash @johnnash

    what is credit to gdp ratio and how is it calculated?

  • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

    Sir,
    What is self liquidating?Treasury bills are not self liquidating..what is inferred by this?

    • Profile photo of Dr V Dr V @dr-v

      Self liquidating mean an an asset, project, etc. that earns sufficiently over a fixed period to pay for its cost.

      For instance, if you buy a house to put it on rent and EMI is lesser than the annual rent received by you, you will able to refinance the whole loan through the income received only and the loan becomes self liquidating.

      Though it’s not a correct example as this term is used only for short term loans/ bills but you get the point right.

      How can treasury bills be self liquidating. On the other hand generally commercial bills are self liquidating as buyer resells the goods and payment received is used to repay the loan amount mentioned in the bill

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Thank You,Sir
      That means,anything that can be resold even at a discounted price is self liquidating?

    • Profile photo of Ankur Yarazarvi Ankur Yarazarvi @ankuryarazarvi

      Aise kaise? “Self liquidating mean an an asset, project, etc. that earns sufficiently over a fixed period to pay for its cost.” – Dr.V. So now coming to your Q, If you sell at a discounted price , will you be able to recover the invested money?

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      My bad,i thought recovering a part of sum can also be considered the same.
      Like that of self liquidating bonds,issued separately by companies.

    • Profile photo of Ankur Yarazarvi Ankur Yarazarvi @ankuryarazarvi

      Self liquidation bonds too completely liquidate themselves , not partially 🙂

  • Profile photo of Vishnu Gowtham Vishnu Gowtham @vishnu4066

    what is tax rate??

  • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

    Dr.V,
    An unconventional one,but need your guidance..
    Shankar IAS for environment,should be read from cover to cover,or selected reading?

    • Profile photo of Dr V Dr V @dr-v

      nhi padhni dost line to line.. padhega to bhi yaad nhi rahegi..1st read NCERTs and basic stuff.. fir kaam kaam ki baaten dekh le Shankar se

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Thank You Sir..:)

  • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

    One side,banks are asked to lend at MCLR and another side we see Indradhanush and other bank recapitalisation programme,doesn’t this contradict each other?

    • Profile photo of Dr V Dr V @dr-v

      If I understood your point correctly, you mean to say that by forcing banks to apply mclr, we are interfering with their autonomy.

      If thats the case then no. MCLR is only a guideline on the basis of which rates are to be calculated. It’s only natural to ask banks to compute rates based on the cost of funds, no?
      After that banks are free to add cost of business etc. That would be the new base rate. On top of it banks would add their margin, risk associated with lending to different businesses.
      So for isntance if cost of funds is 6%, adding wages, rents etc it comes to 8%. It would become the base rate.

      Now banks can’t lend below this rate. If they are to lend me say 1 b dollars for starting a hospital, they would 1st take their margin say 2% , then would add some risk percentage say 6% and would then lend me at 16%.

      On the other hand same bankers feel mallya is a worthy customer and there is zero risk, they would lend him at just 8 plus 2%margin that is 10%.

      Where are we interfering with their autonomy.

      Earlier method was similar but was based on avg cost of funds rather than marginal cost. The new method only makes base rate calcukation more transparent.

      Hope its clear.

      PS. Busy with some personal stuff. Will be back very soon.

      Best luck.

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Thanks for an awsome explaination Sir.

      Yes,do return soon.:)

  • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

    Dr.V where are you?
    Please can you give a brief idea about inventory based and marketplace mode on ecommerce?

  • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

    Dr.V where are you?
    Can you please give a brief description about marketplace and inventory based model in e-commerce?
    Any difference with the indian definitions?

    • Profile photo of Sumer Shah Sumer Shah @sumer

      I think this difference has been written in the e-comm article and story. Search kar lo…

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Arey sab karke hi I asked doubt,nahi mila mujhe..
      Can you please send me the link?

  • Profile photo of Vishnu Gowtham Vishnu Gowtham @vishnu4066

    what is interest coverage ratio & return on assets

  • Profile photo of Vishnu Gowtham Vishnu Gowtham @vishnu4066

    Before celebrating PAHAL’s success,
    it is important to check that reduced sales
    of domestic cylinders do not merely reflect
    exclusion errors – lower consumption by
    genuine beneficiaries who do not have bank
    accounts and therefore cannot access the
    subsidy under the JAM arrangement. Figure 8
    plots the number of LPG cylinders purchased
    in the year before DBT introduction against
    the percentage in each group who were
    receiving the DBT. If exclusion was high
    among the poor, groups who consume the
    least LPG should have the lowest DBT
    compliance rates. But in fact the lowest
    compliance rates are for those with the largest prior consumption of LPG cylinders. These
    are likely to be ghost households now denied
    the subsidy…………….Please explain above paragraph

  • Profile photo of Parmar Pradyumansinh Parmar Pradyumansinh @pradyumansinh1434

    What is P-Notes?

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Offshore derivative instruments,these are the investors who invest in India without registering to SEBI.

      Foreign Institutional investor(FII) registered with SEBI issues P notes granting them access to stock exchange market,without getting registred with SEBI.

  • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

    Sir,
    Doubt regarding the working of Double taxation avaidance agreement?please explain the working..

  • Profile photo of Baleel Ahamed Baleel Ahamed @baleel-ahamed

    What is inventory based e-commerce?why india does not allow fdi in this sector

  • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

    National Stock exchange is a order driven market,not quote driven.
    Sir,what is the difference in order and quote driven?Also please explain Permitted Shares.

    • Profile photo of Dr V Dr V @dr-v

      Very well explained here
      http://www.investopedia.com/ask/answers/06/quoteorderdrivenmarket.asp

      I don’t think, it’s required for UPSC exam purpose. where did you read all this?

    • Profile photo of Ashutosh Pandey Ashutosh Pandey @ashutosh-pandey

      Dr. Saheb…. ye google tax kya hota hai??? jugaad bhasha me explain kijiyega…..

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Local advertising comanies pays tax as they have their permanent establishment in India.(Tax increases their cost)

      Ecommerce digital advertising firms such as google,facebook don’t have to pay taxes as they don’t have permanent establishment in India.

      So google tax,i.e equalisation levy is imposed on non resident digital ecommerce firm i.e do not have permanent establishment in India @6%.
      Here equalisation happens as it forms a level playing field for both the local as well as foregn non resident advertising firm.

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Is it irrelevant for UPSC?

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      MCQ on Indian Economy.

      Consider the statement about Nationa Stock Exchange.

      1) Setup in 1992
      2)quote driven market
      3)deals with listed shares only

    • Profile photo of Dr V Dr V @dr-v

      Where did you get this question? I don’t think you need do to go this deep. Only basic concepts are required.

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Here goes the story,
      A friend of mine has some 2-3 test series of CST,question from one of the copy.I went through 2 test only,and now confused whether to continue or seek another source..:/..please help

    • Profile photo of Dr V Dr V @dr-v

      There’s no harm in attempting tests from any and all the test series but I would suggest you go through past year question papers going backward from 2015 to 2009 to know what’s relevant and what’s not.

      At least you would know what’s most important and how much you need to know to be safe in prelims I. E. 120 plus score in 2015 like paper and 100 plus in tougher papers.
      After a point return on investment on a particular topic would fall and you would do better if you could devote same time to other topics.

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Yes Sir,BTW,I already did what you told,but still couldn’t prepare a strategy as how to proceed?Seeing the papers,I think no one source is enough..and in case of multiplicity i ends up wandering sometimes.That’s in my case.Would appreciate your guidance.
      Thanks.:)

    • Profile photo of Dr V Dr V @dr-v

      Where did you get this question? I don’t think you need do to go this deep. Only basic concepts are required.

  • Profile photo of Baleel Ahamed Baleel Ahamed @baleel-ahamed

    Why there is a simultaneous taxation on steel import. Like customs duty,safeguard duty and antidumping duty. Also there is minimum import prize.why cant govt use anyone of the above to protect domestic players…?

    • Profile photo of Sneha Sodhi Sneha Sodhi @snehasodhi

      Simple because only one doesn’t work. Govt can’t increase custom duty beyond a limit. WTO caps the ceiling on custom duty. Before imposing anti dumping duty, govt has to clearly establish that goods are being dumped and causing injury. Safeguard duty is only temporary.
      Am i right in my understanding?

    • Profile photo of Baleel Ahamed Baleel Ahamed @baleel-ahamed

      Thank you.Right.then what about minimum import prize?

  • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

    Sir,can you explain the basel 3 norms,and the overall idea?
    Sorry if its already explained,as I am not getting the topic,can you pls post me the link.
    Thanks.

    • Profile photo of Rohit Pande Rohit Pande @rohit

      The idea of BASEL norms was to standardize the banking practice across all countries. This means that the classification of risks, assets etc could be done under some standard rules. Think of this as a normal day practice coz international banks should have some standard procedures right?

      Anyway, In 1988, the Basel Committee on Banking Supervision (BCBS) in Basel, Switzerland, published a set of minimum capital requirements for banks. These were known as Basel I. It focused almost entirely on credit risk (default risk) – the risk of counterparty failure. It defined capital requirement and structure of risk weights for banks.

      Subsequently we had Basel 2 norms but when 2008 crisis happened – a lot of criticisms went on the point that Basel Norms were not upto the game yet.

      Basel III was introduced in December 2010. As of now, it’s implementation has been extended to 31st March 2019.

      so, now in layman terms there are more stricter rules around how we classify capital and put them in various risk tiers according to which we put aside a default capital to meet the issues of emergency…

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Thanks a lot Sir.:)

  • Profile photo of Rajesh Badavath Rajesh Badavath @rajesh-badavath

    Additional revenue measures? Means

  • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

    Sir,

    Repo operations are used
    A)Absorb liquidity from system
    B)inject liquidity in system
    C)control hedge funds
    D)increase investment in banking system

    Correct one?

    Also mark the ques in terms of difficulty level.
    Thanx

  • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

    Sir,are regulatory subsidies are also within the purview of WTO?

    • Profile photo of Dr V Dr V @dr-v

      As such specifically to kuch mentioned nhi.. Which regulatory subsidies are you talking about.

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Regulatory Subsidies
      Fixation of price of goods produced by public sector,less then the market price by the government,so as to provide helping hand to the industries and others.
      Ex Cheap electricity to Industries etc.

      Does this infringes WTO provision?

  • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

    Good Evening Sir,
    Can you please explain what are horizontal and vertical price fixation in restrictive practises?

  • Profile photo of Baleel Ahamed Baleel Ahamed @baleel-ahamed

    Sir can you explain what are the advantage in inking APA with UK. What are the concern for transfer pricing mechanism. Please explain in ènglish sir

    • Profile photo of Dr V Dr V @dr-v

      With APA, tax authorities and companies will have mutually agreed formula/ methodology to calculate taxes on transfers within group companies. It provides certainty to businesses about their tax liability and thus improving investment climate. There would be less number of litigation, good for everyone.

      Transfer pricing is simply transfer within group companies. But it can be used to avoid paying taxes. Understand this with general example. Suppose, you are a doctor and your brother is an architect. You charge 1 lakh rupees for surgery but you have to pay some service tax and thus overall costs come down to 1 lakh plus service tax. Similarly your brother charges similar amount for building the plan of your house. Now to avoid paying taxes, you two decide to charge each other just 10k. Govt will get less taxes, good for you.

      Similarly MNC can shift profit to places where there is least tax rate. for instance if your company made profits here but have to pay 30% corporate tax and so under the pretext of consultation fees shift all the profits to sister company in cayman island where they have to pay zero taxes. Govt will get no taxes. To prevent this govt tax transfer prices at arm’s length i.e. what would have been the price if transaction were to happen between unrelated parties.
      Read a bit, you would be crystal clear or we would do an article some time when we take up BEPS project but whatever I have written is enough for general understanding

    • Profile photo of Baleel Ahamed Baleel Ahamed @baleel-ahamed

      Thank you sir, i will wait for it definitely

  • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

    Good evening Sir,
    Can you please explain Nominal and real exchange rate,as well as the concept of NEER and REER?
    Thanks.

    • Profile photo of Dr V Dr V @dr-v

      Blog sare nhi padh rhe ho tum dhang se.. isse padh lo. Exchange rate ki sari samasyaen jeevan se chali jaengi.. aur haan apne dost logon ko bhi padhao…maanav kalyaan and hamara kalyaan.http://www.civilsdaily.com/blog/beggar-thy-neighbours/

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      🙁 sorry..

    • Profile photo of Dr V Dr V @dr-v

      doubt clear ho gya naa..

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Why CD isn’t coming with app in iOS appstore?

    • Profile photo of Dr V Dr V @dr-v

      resource crunch.. Aapke liye economics basics ka ek bahut awesome article taiyaar hai.. kal aa jaega, Abhi aap web se kaam chalaiye… or freedom251 order kar dijiye

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Thankyou Sir,freedom 251 ki booking band ho chuki hai:/.

      Sir,please provide article explaining capital marketing,a request.

    • Profile photo of Dr V Dr V @dr-v

      Capital market or marketing? Marketing toh aati nhi mujhe..

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Shabdon me kya rakha hai,bhavnao ko samajhiye Sir..:P
      Don’t you think,market ke sath,thodi bohot marketing ka bhi idea ho jaega..

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Yes Sir,absolutely:)

  • Profile photo of Kiruthika Rajendiran Kiruthika Rajendiran @kiruthikarajendiran

    In 7th March Hindu Editorial – ‘Review the fiscal consolidation path’ it is mentioned,” The suggestion that fiscal expansion or contraction should be aligned with credit contraction or expansion, as mentioned in the Budget speech, is worth exploring.” I couldn’t understand what is being conveyed there. Could you please explain?

    • Profile photo of Dr V Dr V @dr-v

      Yeah sure
      Fiscal expansion means govt. running higher fiscal deficit while credit contraction means demand for credit being low. Majority of the credit offtake is by private corporations so credit contraction implies weak appetite among corporate to borrow and invest as is the case at present. When private sector investment is tepid, govt needs to step in by investing more and thus creating demand in the economy as well as provide basic infrastructure.
      But at present FRBM act has fixed target of below 3% i.e. even if private sector credit offtake is zero, govt can’t increase deficit beyond 3%. In this context jaitley announced in the budget to review whole FRBM framework along these lines so that govt could increase it’s fiscal deficit if credit offtake is poor or there is credit contraction, a proxy of corporate sector investment demand.
      And dear Kiruthika, please post original links of the article when you ask doubts. Save the trouble of google search. Hope, your query has been resolved.

    • Profile photo of Kiruthika Rajendiran Kiruthika Rajendiran @kiruthikarajendiran

      Yes, doubt cleared! Thank you Dr.V. Sure, I’ll keep that in mind when I post queries in the future.

  • Profile photo of Rajesh Badavath Rajesh Badavath @rajesh-badavath

    when we have a gdp deflator as a best tool, covering all the goods price,to calculate inflation or deflation, why do government separately calculate CPI or WPI to measure inflation?

    • Profile photo of Dr V Dr V @dr-v

      Importance of CPI has been explained in the article on inflation http://www.civilsdaily.com/blog/economics-inflation-explained-with-real-life-examples/
      GDP deflator is best in the sense that it captures price rise in what a country produces thus totally in your control for GDP is the final value of goods and services produced in domestic economy
      But the problem is that as with GDP data is released quarterly not monthly and that too with 2 months time lag which is a very long time to formulate effective monetary policies.

  • Profile photo of PAVAN KUMAR PAVAN KUMAR @pavan-kumar

    Sir,can u plz explain me the GVA at basic prices as well as at factor cost .as well as expressing GDP with the help of GVA

  • Profile photo of Nishant Chiluar Nishant Chiluar @golu942nc

    This recent WTO ruling about the solar panels. Is it fair? Do we really have a case for applying to the appellate board?

    Also one more point, US has done the same thing for pharma industry, that APIs should be manufactured domestically. Why aren’t we complaining against that.

    • Profile photo of Dr V Dr V @dr-v

      I think you know the background that USA complained that India violated the WTO Agreement on Trade-Related Investment Measures (TRIMs) by its local content requirement. India’s case is that it is government procurement which is not covered under WTO requirements, argument junked by WTO panel which stated that govt procurement is of electricity while content requirement is for solar panels.
      API issue is similar with drugs being procured by US govt i.e. govt procurement principle. not much india can do except at bilateral diplomatic level

  • Profile photo of Vinod Patil Vinod Patil @hvinodpatil

    Budget has mentioned Code on Resolution of financial firms will be introduced in parliament? Then what is Insolvency and Bankruptcy code?

    • Profile photo of Dr V Dr V @dr-v

      Financial firms are treated differently than general firms for they are all interconnected. If one bank fails,all others could also fail.That;s why separate insolvency code for both. Insolvency and bankruptcy code for general corporations such as Mallyas kingfisher, budget announcement for financial firms like HDFC, insurance etc. FSLRC recommended resolution corporation, read it;s recommendation.

  • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

    Sir,please provide complete economy bases for prelims,as I just hate reading Ramesh Singh..:/,please suggest some alternative as well..relying on you for much

    • Profile photo of Dr V Dr V @dr-v

      Yess, we will try to cover fundamentals in detail. Read the latest articles daily and bookmark them. We have pushed a new article on inflation. Do attempt questions as well.

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Do you recommend Ramesh Singh for indian economy?

    • Profile photo of Dr V Dr V @dr-v

      No I don’t, we don’t. Economy strategy coming your way shortly.

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Desperately waiting for it,although I was reasonable enough in economy,but I lost hell lot of concept,and not willing to go through Ramesh Singh,so my economy is over you now.?

    • Profile photo of shivam singhal shivam singhal @shivamsinghal18

      Ramesh Singh economy will work for prelims only but some questions can be asked out of the box also. If you live in delhi, you can get sriram economy(one stop solution). However it is bit boring and bulky and do read civilsdaily for further concept clarification

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      Sir,even I doubt a part of economy which was not earlier resolved.
      Compulsory licensing v/s voluntary licensing?
      I mean I know the difference that Govt allows companies to produce generics of patentable product and bla bla..
      But in voluntary licensing it is the companies which acts as the agents of the foreign producer companies?how does it adversley effects the drug pricing?and also the working of complisory licensing,how both differs in affordablity of the consumers?

    • Profile photo of Dr V Dr V @dr-v

      In comoylsoru licensing,pricing is on the generic manufacturer and govts terms while in voluntary one,patenT holder would decide royalty amount payable to it this indirectly pricing.
      In this way compulsory licensing makes drugs cheaper but runs the risk of investors not bringing their novel drugs to the Indian market at all

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      This is where I got this concept.Thanx a lot.

      BTW,its said said Provison of volunatry licensing would also make affordable drugs?And its clause its detrimental for investors?

      Where is that coming from?

    • Profile photo of Dr V Dr V @dr-v

      Can you please provide the url of that article.?

    • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

      I am really Sorry Sir,I don’t actually remember where i read it from.
      I will try to find it out,but its mentioned in my notes..:/

      Is the point itself wrong?Voluntary agreement favours investors?

    • Profile photo of Dr V Dr V @dr-v

      voluntary would be on their own terms. So i don’t know it favours then but it certainly won’t harm them much.

    • Profile photo of Sneha Sodhi Sneha Sodhi @snehasodhi

      Please do that sir.

  • Profile photo of Dr V Dr V @dr-v

    Ayushi BASEL norms are for capital adequacy ratio for banks.copy pasting from our blog
    Banks lend against capital and Basal committee on banking supervision prescribes norms for capital adequacy.

    Capital Adequacy Ratio (CAR) = Total Capital/ Total risk weighted assets

    This ratio has to be maintained for soundness of banking system. It’s clear from the above that to expand asset base, banks need more capital and for PSBs government has to infuse more capital.

    Read this blog

    [Video] Rajan’s solution for NPAs: Deep surgery not Band aid

  • Profile photo of Keshav Ram Keshav Ram @keshavkaviti

    Sir, the government can allocate in a budget only from the revenues it collects through tax and non- tax means. It may also borrow some amount through various channels. Anyway, the sum of total allocations would be much less than the actual GDP of a nation.
    If above presumption is correct, my question is,
    1.Why do we always calculate allocations in terms of % of GDP. For eg. Intellectuals often criticize state for allocating <3% to health etc..
    2. Why do politicians promise to allocate a certain percentage of GDP to a particular sector over a certain period, when the GDP per se is not their revenue.
    3. What is the significance of Tax to GDP ratio. Does it have any bearing on the health of an economy?

    • Profile photo of Dr V Dr V @dr-v

      1.Answering 3rd question first, tax to gdp ratio indicates govt’s revenues (non tax revenues are peanuts) and a govt can only spend as much as it earns (Borrowings can’t cross a certain threshold) so essentially it reflects governments spending power. Govt would need to spend to provide basic services like law and order, roads, social services, subsidies etc. It needs revenue for that, higher the said ratio, better for the govt.

      2. Calculation of allocation in this form allows inter country comparison, even of countries at different stages of development. Rich countries would spend more but proportionately poorer countries should also spend similar amount.
      But expenditure is presented both as %of GDP and %of total expenditure. Read the budget or economic survey, you will see it.

      3.Similar reason as for 1st question. It reflects priority as well as willingness to tax more to spend on important services.
      hope it helps, do write back.

    • Profile photo of Keshav Ram Keshav Ram @keshavkaviti

      Thank you sir.

  • Profile photo of Anurag Dixit Anurag Dixit @anurag-dixit

    Can you please explain the terms and differences between compulsory licensing and voluntary licensing?And their impact on Indian Pharma.Also in consumers.

    • Profile photo of Sneha Sodhi Sneha Sodhi @snehasodhi

      It has been explained ..scroll down anurag

  • Profile photo of Nishant Chiluar Nishant Chiluar @golu942nc

    What are Intellectual Property rights and Compulsory Licensing? And what is the current issue going on ? Some countries reluctant to invest in India because of its lax rules.

    • Profile photo of Dr V Dr V @dr-v

      Intellectual property (IP) is a term referring to creations of the intellect for which a monopoly is assigned to designated owners by law.[1] Some common types of intellectual property rights (IPR) are trademarks, copyright, patents, industrial design rightsetc.

      Basically to protect your idea, product etc in the same way as private phsysical property is protected.

      Compulsory licensing is a provision in the law which allows a country to allow generic manufacturers to produce and market the drug for which patent has not expired if in the opinion of state, drug is too costly to be afforded by majority of the population. Now since generics are allowed, original company which did all R&D loses and they are thus reluctant to invest in India

  • Profile photo of chiku Chauhan chiku Chauhan @chiku-chauhan

    2013 mains question. paper 3 . what do you understand by umpire decision review system in cricket? Discuss its various components. Explain how silicon tape on the edge of a bat may fool the system?
    how does it is relatedt to paper three topics? It is adviced to skip sports related news but how to know if something is important to exam point of view. And under which topic umpire review decision come? please clarify. really confused o.O

    • Profile photo of Dr V Dr V @dr-v

      see as such they can ask anything. If you analyse past papers in 2012 they had asked the meaning of various colour flags associated with formula 1, reason being f1 being held in India for the first time

    • Profile photo of Dr V Dr V @dr-v

      technology.. it was very much in news due to controversy over kevin pieterson applying some jelly over bat to decrease friction and thus heat signature which led to edges being missed by hot spot.
      It was easiest question of that paper. Don’t worry about such chiller topics

  • Profile photo of Chayan Jain Chayan Jain @chayanjain

    Increase in liquidity in market leads to
    a.CAD will narrow down
    b.Appreciation
    c.Forex reserve increase
    D.importer will get benefit

    • Profile photo of shivam singhal shivam singhal @shivamsinghal18

      Option D

  • Profile photo of Ashima Banerjee Ashima Banerjee @ashimabane

    Why do stock markets behave so irrationally? Are they any good or poora satoriya bazar hi hai which has nothing to do with real economy.

    • Profile photo of shivam singhal shivam singhal @shivamsinghal18

      There can be many reasons for this such as:-
      1. easy exit route for FII
      2. Black money can be invested easily( through p- notes)
      3. Political factors such as unstable government or government policies
      4. Trust in companies and their goodwill
      5. Cascading affect of global factors(oil prices, yuan devaluation)
      It depends on various factors and economic growth is one of them. But it has little to do with stock markets and hence in complete sense don’t show holistic view of real economic growth

  • Profile photo of NANDAN DAGA NANDAN DAGA @ndd6892

    What is evergreening of loans?

  • Profile photo of shivam singhal shivam singhal @shivamsinghal18

    For example 1 dollar is equal to 50 rupees but when currency is devaluated then 1 dollar will be equivalent to 70 rupees(assumption). Hence currency devaluation will lead to dollar inflow and hence more forex, cheap exports etc.

  • Profile photo of Chayan Jain Chayan Jain @chayanjain

    Not a consequence of currency devaluation
    A.increase in exports
    B.preventing dollar outflow from country
    C.making country financial system more mkt. Oriented
    D.none

    • Profile photo of Dr V Dr V @dr-v

      This question in all likelihood is wrt yuan devaluation. Devaluation lead to capital flight so option 2 is obviously wrong. Option 3 is right as this was the justification given by Chinese central bank but as a standalone option, it would be incorrect.

    • Profile photo of shivam singhal shivam singhal @shivamsinghal18

      It can be C or D. But my best guess will be c
      Actually devaluation is done by central bank as an intervention for more forex, foreign investments, exports etc.

    • Profile photo of Chayan Jain Chayan Jain @chayanjain

      How devaluation will help in bringing more foreign investment?a strong economy attract more fdi??last post u told currency devaluation leads to inflation nd expensive raw material and volatile economy

    • Profile photo of shivam singhal shivam singhal @shivamsinghal18

      Due to currency devaluation imports become expensive and exports are cheap. FDI in a country requires setting up manufacturing unit and using raw materials within territory of that country. That’s why less FDI

    • Profile photo of Chayan Jain Chayan Jain @chayanjain

      So ans.can be option b??overall less foreign investment as it becomes less attractive to invest in such economy

    • Profile photo of shivam singhal shivam singhal @shivamsinghal18

      I think you are confused between FDI and FPI. currency devaluation can attract FPI but not FDI
      difference between FDI and FPI-
      1. FDI requires physical infrastructure, following labour laws, manufacturing unit etc while FPI can invest money in Stock exchanges.
      2. FDI projects requires permission of concerned ministry with inspection from government officials while FPI requires registration with SEBI
      3. exit route of FDI is difficult while FPI can exit anytime leading to fragile economy ( in case of recession)
      4. For FDI there are SEZ and NMIZ while FPI can also invest through participatory notes
      5. FDI leads to employment generation and overall growth of an economy but this is not the case with fpi

    • Profile photo of shivam singhal shivam singhal @shivamsinghal18

      Currency devaluation is independent of market forces and is done by central bank. It may/may not lead to inflation. Foreign investment are of 2 types – FDI and FPI. FPI can exit easily from volatile economy because they invest in Stock Exchange and it depends on global economy(like Chinese devaluation and political factors). investors can also invest through p notes without registering with SEBI. Other options include trading in currency derivatives etc.

  • Profile photo of Ashutosh Pandey Ashutosh Pandey @ashutosh-pandey

    some terms not fitting clearly… what is stressed assets, what do ARC in restructuring of bad loans?

    • Profile photo of shivam singhal shivam singhal @shivamsinghal18

      Stressed assets are like NPA(non performing assets) or loss incurring assets(no return of principle amount and interest). In case they become NPA(principle amount is due for more than 180 days) then it is handed over to asset reconstruction and management companies which can sell it to recover the specified amount(like that of reliance)

    • Profile photo of Dr V Dr V @dr-v

      If interest is not repaid for 90 days, account become npa. BuT sometimes bank restructure the loan such as extending the total duration, repay in say 15 years from 10 year presently. Such loans are not classified as npa but restructured loan. But they are also stressed. Npa plus restructured loans together are known as stressed assets.

  • Profile photo of Ashutosh Pandey Ashutosh Pandey @ashutosh-pandey

    What is meaning and use of NEER & REER???

    • Profile photo of shivam singhal shivam singhal @shivamsinghal18

      NEER and REER are forms of exchange rates used for determining purchasing power parity against hard currencies(like dollar, pound, yen etc)
      REER is adjusted against inflation( real effective exchange rate) and varies from country to country. It depicts competitiveness of Indian goods against global economy. NEER is nominal effective exchange rate

    • Profile photo of Dr V Dr V @dr-v

      An article coming very soon. After that you won’t have any problem with exchange rate NEER REER devaluation etc.

  • Profile photo of Chayan Jain Chayan Jain @chayanjain

    How chinese currency devaluation hurting other export major economies?also why capital outflow risk if currency of a country depreciates too much?

    • Profile photo of Dr V Dr V @dr-v

      Will soon be publishing an article on Chinese devaluation . How that affects other exporters and how is that linked to capital outflow ..will be out very soon.

    • Profile photo of Chayan Jain Chayan Jain @chayanjain

      Thank u dr.v and shivam

    • Profile photo of shivam singhal shivam singhal @shivamsinghal18

      Chinese currency devaluation is leading to cheaper imports to other countries which is affecting some economies such as India which also has trade balance deficit with China but in my opinion economies such as OPEC countries are not affected much due to exporting specific item (crude oil) at much lower rate.
      Currency depreciation leads to inflation and subsequently expensive raw material. Hence there will be less FDI in such volatile economies and more capital outflow

  • Profile photo of Dr V Dr V @dr-v

    Value addition is nothing but value of output minus the value of intermediate consumption. Take the example of sugarcane juice, value addition by the juice maker will be value of juice- value/ cost of sugarcane and other inputs.
    GDP at market price is sum total of all GVA at basic prices + product taxes (indirect txa) – Subsidies i.e. you summate value addition across the economy.
    Earlier GDP used to be calculated at factor cost.
    We have discussed all this in detail in our economy quiz on national income accounting.

  • Profile photo of shivam singhal shivam singhal @shivamsinghal18

    new method of GDP calculation inculcates gross value added and takes into consideration value addition. Please explain as it was in today’s newspaper (hindu) article

This topic contains 213 replies, has 37 voices, and was last updated by Profile photo of Bruce Wayne Bruce Wayne 1 day, 20 hours ago.



Highest Rated App. Over 3 lakh users. Click to Download!!!