Daily Quiz: UPSC Prelims Marathon – February 19, 2019

Capital account convertibility (CAC) means the freedom to convert local financial assets into foreign financial assets and vice versa at market determined rates of exchange. This implies that Capital Account Convertibility allows anyone to freely move from local currency into foreign currency and back.

Current Account Convertibility allows free inflows and outflows of foreign currency for all purpose including resident Indians buying foreign goods and services (imports), Indians selling foreign goods and services (exports), Indians receiving and sending remittances, accessing foreign currency for travel, study abroad, medical tourism purpose etc.

On the other hand, Capital Account Convertibility is widely regarded as the hallmark of developed countries. It is also seen as the major comfort factor for foreign investors since it allows them to reconvert local currency back into their own currency and move out from India.

Presently, India has current account convertibility. This means one can import and export goods or receive or make payments for services rendered. However, investments and borrowings are restricted. Hence, statement 1 is correct.

Statement 2 is incorrect. The flip side of capital account convertibility is that it can destabilize an economy due to massive capital flows in and out of the country.

Consumer Price Index is a measure of change in retail prices of goods and services consumed by defined population group in a given area with reference to a base year. This basket of goods and services represents the level of living or the utility derived by the consumers at given levels of their income, prices and tastes. The consumer price index number measures changes only in one of the factors; prices. This index is an important economic indicator and is widely considered as a barometer of inflation, a tool for monitoring price stability and as a deflator in national accounts

Consumer price index in its primitive form didn’t have services in CPI (UNML) and CPI (AL). But with revised series all the three indices urban, rural and combined contains services in their basket.

Wholesale Price Index (WPI) is the index is the most widely used inflation indicator in India.  This is published by the Office of Economic Adviser, Ministry of Commerce and Industry. WPI captures price movements in a most comprehensive way.   It is widely used by Government, banks, industry and business circles. Important monetary and fiscal policy changes are linked to WPI movements. It is in use since 1939 and is being published since 1947 regularly.

Some of the major services like trade, hotels, financing, insurance, real estate and business services do not find mention in CPI or WPI.

GDP is the total value of goods and services produced within the country. It is criticized mainly on the ground that:

1. GDP does not take into account the sustainability of future GDP
2. GDP does not take into account the value of non-monetized activity
3. GDP does not differentiate between more or less productive economic activity.
4. It does not take into account work of housewife.
5. It excludes care economy
6. It excludes unpaid charitable work.

A sovereign wealth fund (SWF) or sovereign investment fund is a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as private equity fund or hedge funds. Sovereign wealth funds invest globally.

Industrial solid waste

The major producers of solid waste are:

• Thermal power plants producing coal ash/ fly ash;
• The integrated iron and steel mills producing blast furnace slag;
• Non-ferrous industries like aluminium, copper and zinc producing red mud and tailings;
• Sugar industries generating press mud;
• Pulp and paper industries producing lime mud;
• Fertilizer and allied industries producing gypsum;
• Hospitals producing bio-medical waste

Headquarter of Inland Waterways Authority of India is in Noida. Bhanga–Lakhimpur is National Waterway No. 6. National Waterway No. 5 is Talcher to Paradip.

Supply side economic lays greater emphasis on the point of view of the producer whereas the demand side economics lays. Emphasis on the interest of the consumer.

The economic growth can be effectively generated by lowering barriers to produce goods and service it means reducing government regulation and allowing greater fiexibility in the production process by reducing various direct and indirect taxes. Then finally consumers will be benefitted from a greater supply of goods and services.