Daily Quiz: UPSC Prelims Marathon – July 4

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Exp:

Statement 1 is correct.

Statement 2 is incorrect. China is the largest shareholder with 26.06% voting shares. India is the second largest shareholder with 7.5% voting shares followed by Russia 5.93% and Germany with 4.5%.

More about AIIB

• AIIB is a multilateral development bank backed by China and is seen as a rival to the World Bank and Asian Development Bank (ADB).
• The bank started to function in January 2016.
• The bank was established to fund various infrastructure projects including energy, transportation, urban construction and logistics as well as education and healthcare in Asia-Pacific region.

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The report is presented by United Nations.

In the report titled, World Economic Situation and Prospects, the UN has projected a 7.3% growth for India in 2017. Earlier in the report, UN had forecasted a growth of 7.7% for the year. The revised report also has predicted an impressive 7.9% GDP growth for the year 2018 which is an increase from its January estimate of 7.6%.

According to the report, despite India’s growth being revised downward, India remains one of the fastest growing developing economies which is ahead of China. China is projected to grow at 6.5% in 2017 and 2018.

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Exp:

Only Statement 2 is correct.

The components of India’s Foreign Exchange Reserves include: Foreign currency assets (FCAs), Gold, Special Drawing Rights (SDRs), RBI’s Reserve position with International Monetary Fund (IMF).

Statement 1 is incorrect. FCAs constitute the largest component of the Forex Reserves. It also comprises of investments in US Treasury bonds, bonds of other selected governments, deposits with foreign central and commercial banks.

Statement 2 is correct.

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Exp:

The correct answer is a.

About Open market operations:

• Open market operations are conducted by the RBI by way of sale or purchase of government securities (g-secs) to adjust money supply conditions.
• The central bank sells g-secs to suck out liquidity from the system and buys back g-secs to infuse liquidity into the system.
• These operations are often conducted on a day-to-day basis in a manner that balances inflation while helping banks continue to lend.
• The RBI uses OMO along with other monetary policy tools such as repo rate, cash reserve ratio and statutory liquidity ratio to adjust the quantum and price of money in the system.

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Exp:

Both the statements are correct.

About Masala Bonds:

• The Masala bonds refer to rupee-denominated bonds through which Indian entities can raise money from foreign markets in rupee, and not in foreign currency.
• Basically, they are debt instruments that are typically used by corporates to raise money from investors.
• The issuance of rupee denominated bonds, Indian entity is protected against the risk of currency fluctuation, typically associated with borrowing in foreign currency.
• Masala bonds also help in internationalization of the rupee and in expansion of the Indian bond markets.

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Exp:

Option d is the correct answer.

India has topped the global remittance-receiving list of 2016, as per latest UN report “One Family at a Time”.

India has topped the global remittance-receiving list of 2016, as per the latest United Nations report ‘One Family at a Time’. The study is the first-ever of a 10-year trend in migration and remittance flows over the period 2007-2016. The report has made several recommendations for improving public policies and outlines proposals for partnerships with the private sector to reduce costs and create opportunities for migrants and their families to use their money more productively.

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US is not a founding member of Asian Infrastructure Investment Bank (AIIB).

About Asian Infrastructure Investment Bank (AIIB):

• The Asian Infrastructure Investment Bank (AIIB) is an multilateral development bank that aims to support the building of infrastructure in the Asia-Pacific region.
• The Asian Infrastructure Investment Bank (AIIB) is a new multilateral financial institution founded to bring countries together to address the daunting infrastructure needs across Asia.
• By furthering interconnectivity and economic development in the region through advancements in infrastructure and other productive sectors, we can help stimulate growth and improve access to basic services.