External Sector Flashcards
(67 cards)
What is Fiat Money? What determines its value?
Government-issued currency not backed by a physical commodity (like gold) but by the issuing government’s stability and faith [source: 8, 9, 11]. Value derived from supply/demand relationship and government stability [source: 10].
Are US Treasury Bonds backed by hard assets? What happens if the US government defaults?
No, they are based on the faith in the government [source: 12]. If the government defaults, bondholders might not be able to exercise their claims to receive payment [source: 7, 12]. Raising the debt ceiling becomes necessary when the US govt needs to borrow more than federally authorized to pay its debts [source: 5].
Why did India impose retaliatory tariffs on US apples in 2019? What is the recent status (as of Feb 2024 context)?
India imposed tariffs in retaliation for the Trump administration revoking India’s trade benefits under the Generalised System of Preferences (GSP) [source: 15]. India dropped the 20% retaliatory tariff in late 2023/early 2024, leading to a significant increase in US apple exports to India [source: 14].
What approvals are needed for importing Genetically Modified (GM) food into India?
Prior approval from the Genetic Engineering Approval Committee (GEAC) under MoEFCC is required [source: 16]. Indian Customs also requires approval/NOC from the Food Safety and Standards Authority of India (FSSAI) under the FSS Act, 2006 [source: 17].
What was India’s approximate share in global merchandise and service exports/imports in 2018 (as per WTO data)?
Merchandise: Exports 1.7%, Imports 2.6% [source: 18]. Services: Exports 3.5%, Imports 3.2% [source: 19].
What is the Production Linked Incentive (PLI) scheme? What are its primary objectives?
An initiative by GoI to boost domestic manufacturing, promote India as a global manufacturing hub [source: 21], encourage local companies to set up/expand units [source: 20]. Objectives: Attract investment, enhance production capabilities, generate employment, promote exports [source: 22, 23].
Which country was the leading gold exporter by value in 2021?
Switzerland [source: 24], exporting $86.7B worth [source: 25].
Which country holds the largest gold reserves? Which has the second largest?
Largest: U.S. (8,133.5 tons) [source: 26]. Second largest: Germany (3,359.1 tons) [source: 26, 27].
What is the UNOPS S3i initiative? What are its focus areas?
Sustainable Investments in Infrastructure and Innovation (S3i) is a UNOPS unit engaging public/private investors to scale up infrastructure investments [source: 30, 31, 32]. Focus areas: Affordable housing, renewable energy, health infrastructure [source: 33].
What are the Rapid Financing Instrument (RFI) and Rapid Credit Facility (RCF)? Which organization provides them?
Lending facilities provided by the International Monetary Fund (IMF) [source: 34]. RFI provides rapid financial assistance to all member countries facing urgent Balance of Payments (BoP) needs, without a full program [source: 35, 36, 38]. RCF provides rapid concessional financial assistance specifically to Low-Income Countries (LICs) facing BoP crisis [source: 39, 42].
What is the Common Framework for Debt Treatment?
An initiative endorsed by G20 and Paris Club, going beyond the Debt Service Suspension Initiative (DSSI), to provide structural support to Low-Income Countries with unsustainable debt [source: 43]. Aims to ease financing constraints post-COVID-19 [source: 44].
What are Non-Fungible Tokens (NFTs)? How do they differ from cryptocurrencies?
NFTs are unique cryptographic tokens on a blockchain that cannot be replicated, representing digital items like drawings, videos, music, etc. [source: 45, 46, 47]. Unlike fungible cryptocurrencies (like Ethereum, where one token equals another), each NFT is unique and not interchangeable, so cannot be used as a medium for commercial transactions [source: 48, 49, 51, 52].
What is the ‘reserve tranche’ position with the IMF?
The component of a member country’s IMF quota held in gold or foreign currency [source: 53]. It’s an emergency account accessible anytime without service fees or conditions [source: 53, 54], considered a facility of first resort before seeking formal credit [source: 55].
What is Currency Convertibility? What is the status of the Indian Rupee’s convertibility?
The ease with which a country’s currency can be converted into gold or another currency via global exchanges [source: 63, 211]. India’s Rupee is partially convertible; allowed at market rates for current account transactions (trade, services, remittances) [source: 64, 66, 142, 213], but restrictions/approval needed for capital account transactions [source: 64, 215, 216].
What was the trend in India-Sri Lanka bilateral trade between 2000-01 and 2018-19?
Increased around 9 times overall [source: 67], but the increase was not steady, with slumps observed in some years like 2012-13 and 2016-17 [source: 69].
What are major items of textile trade between India and Bangladesh? Who was India’s largest South Asian trading partner (2016-17 data)?
Major Indian exports: cotton fibre/yarn, man-made fibres/filaments. Major imports from Bangladesh: apparel/clothing, fabric, made-up textile articles [source: India-Bangladesh Trade]. Bangladesh was India’s largest trading partner in South Asia (followed by Nepal, Sri Lanka) as per 2016-17 data [source: Bangladesh as India’s largest South Asian trading partner (as per 2016-17 data)].
What is West Texas Intermediate (WTI)?
A specific grade of crude oil, one of the three main global benchmarks (along with Brent, Dubai Crude) [source: 70]. Known as light (low density) and sweet (low sulfur content - 0.24%-0.34%) [source: 70]. Sourced mainly from inland Texas, high quality, easy to refine [source: 71].
What is the TRIMS Agreement under WTO? What does it cover?
Agreement on Trade-Related Investment Measures. Members agree not to apply investment measures related to trade in goods that restrict/distort trade [source: 72]. Prohibits measures violating GATT Article III (national treatment) and Article XI (quantitative restrictions) [source: 73, 76]. Does not apply to services [source: 74] or regulate foreign investment directly [source: 75].
Which organization publishes the Global Competitiveness Report (GCR)? What index is used?
World Economic Forum (WEF) [source: 77]. Since 2004, it ranks countries based on the Global Competitiveness Index (GCI) [source: 78].
What are the 12 main drivers (‘pillars’) of productivity assessed by the GCI 4.0 framework?
Institutions, Infrastructure, Technological readiness, Macroeconomic context, Health, Education and skills, Product market, Labour market, Financial system, Market size, Business dynamism, and Innovation [source: 80, 81].
What is External Debt?
A portion of a nation’s debt borrowed from foreign lenders like commercial banks, governments, or international financial institutions [source: 166]. Repayment is usually made in the currency used for the loan [source: 167]. Failure to repay can lead to a debt crisis [source: 168].
