Daily Quiz: UPSC Prelims Marathon (Economy) | November 10,2020

The Sustainable Development Solutions Network for the United Nations released the World Happiness Report on 20th March, 2020.
•The World Happiness Report ranks 156 countries by how happy their citizens perceive themselves to be.
•The rankings are based on polling (Gallup World Poll) which looks at six variables: GDP per capita, social support, healthy life expectancy, freedom, generosity, and absence of corruption.
•The 2020 Report for the first time ranked cities around the world by their subjective well-being and looked into how the social, urban and natural environments combine to affect happiness.
Source: The Hindu

Eight countries in East Asia–Japan, South Korea, Taiwan, Hong Kong, Singapore, Thailand, Malaysia, and Indonesia–have become known as the “East Asian miracle” because of their economies’ dramatic growth.
•In these eight countries real per capita GDP rose twice as fast as in any other regional grouping between 1965 and 1990.
•Even more impressive is their simultaneous significant reduction in poverty and income inequality.
Source: Ramesh Singh

The credit of proposing the first blueprint of Indian planning is given to the popular civil engineer and the ex-Dewan of the Mysore state, M. Visvesvaraya.
In his book The Planned Economy of India, published in 1934, he outlined the broad contours of his plan proposal.
Source: Ramesh Singh

Insolvency and bankruptcy code 2016 was introduced to resolve the bankruptcy crisis in corporate sector.
•Under IBC, either the creditor (banks) or the loaner (defaulter) can initiate insolvency proceedings.
•It is done by submitting a plea to the adjudicating authority, the National Companies Law Tribunal (NCLT).
•According to IBC, a financial creditor holds an important role in the corporate insolvency process.
•The Committee of Creditors (CoC) under IBC includes all financial creditors of a corporate debtor.
•The CoC will appoint and supervise the Insolvency Professional.
•It has the power to either approve or reject the resolution plan to revive the debtor, or to proceed to liquidate the debtor.
Source: Ramesh Singh

Government e-Marketplace (GeM) is the Commerce Ministry‘s online marketplace.
•It procures goods and services by various Ministries and government bodies.
•Products sold on the portal range from stationery used by government officials to medical products that are used on patients.
•The government made it mandatory for sellers on the GeM portal to clarify the country of origin of their goods when registering new products.
Source: The Hindu

Monetization of fiscal deficits involves the financing of such extra expenses with money, instead of debt to be repaid at some future dates.
So, it is a form of “non-debt financing”. As a result, under monetization, there is no increase in net (not gross) public debt.
It can occur only through one of two modalities:
•Direct Monetization (DM): Under this method, RBI prints new currency and purchases government bonds directly from the primary market (from the government) using this currency. As a result, this supports the spending needs of the government.
•Indirect monetization (IM): In this method, deficits are monetized as the government issues bonds in the primary market and the RBI purchases an equivalent amount of government bonds from the secondary market in the form of Open Market Operations (OMOs).
Monetization of deficit was in practice in India till 1997, whereby the central bank automatically monetized government deficit through the issuance of ad-hoc treasury bills
•In 1994 and 1997, two agreements were signed between the government and RBI to completely phase out funding through ad-hoc treasury bills.
•Later on, with the enactment of Fiscal Responsibility and Budget Management (FRBM) Act, 2003, RBI was completely barred from subscribing to the primary issuances of the government.
•The FRBM Act as amended in 2017 contained an escape clause which permits monetization of the deficit under special circumstances.
Source: The Hindu

Reserve Money (M0): also called High Powered money, monetary base, base money etc.
•M0= Currency in Circulation+ Bankers’ Deposits with RBI + Other Deposits with RBI.
•Narrow Money (M1) = Currency with public + Demand deposits with the Banking system (current account, saving account) + other deposits with RBI.
•M2 = M1 + Savings deposits of post office savings banks.
•Broad Money (M3) = M1 + Time deposits with the banking system.
•M4 = M3 + All deposits with post office savings banks
Source: Ramesh Singh

ICP is worldwide data-collection initiative that is managed by World Bank under auspices of UN Statistical Commission.
•The main objective of the ICP is to produce comparable volume measures of GDP and its expenditure components based on Purchasing Power Parities (PPPs).
•India has participated in ICP rounds since its inception in 1970.
•Ministry of Statistics and Programme Implementation is National Implementing Agency for ICP in India.
•India was co-Chair of the ICP Governing Board along with Austria for the ICP 2017 cycle.
•Next ICP comparison will be conducted for reference year 2021.
Source: The Hindu

Simply put, side pocketing is a framework that allows mutual funds to segregate the bad assets in a separate portfolio within their debt schemes.
•The Securities and Exchange Board of India (SEBI) introduced the framework in December — primarily triggered by the IL&FS fiasco — after it emerged that many fund houses have huge exposure to the beleaguered entity and could potentially take a huge hit on their net asset value thereby affecting investor returns.
•If a debt instrument is downgraded to default rating by credit rating agencies, then the fund house has the option to create a side pocket so that good assets can be ring-fenced.
•Side pocketing segregates the bad assets from the good ones.
•All existing investors in the scheme are allotted equal number of units in the segregated portfolio as held in the main portfolio and no redemption or subscription is allowed in the segregated portfolio.
•Thereafter, the units have to be listed on a stock exchange within 10 days to facilitate exit of the unit holders.
•Effectively, this makes the price discovery of the bad assets a transparent procedure with investors having the freedom of either selling it at prevailing price or holding it if they expect the value to recover in future.
Source: The Hindu