Daily Quiz: UPSC Prelims Marathon – February 26, 2020

The year 1980 saw the return of the same political party at the Centre. The new government revised the Industrial Policy of 1977 with few exceptions in the Industrial Policy Resolution, 1980. The major initiatives of the policy were as given below:

(i) Foreign investment via the technology transfer route was allowed again (similar to the provisions of the IPS, 1973).

(ii) The ‘MRTP Limit’ was revised upward to Rs. 50 crore to promote setting of bigger companies.

(iii) The DICs were continued with.

(iv) Industrial licensing was simplified.

(v) Overall liberal attitude followed towards the expansion of private industries.

Doing Business report, an annual publication (since 2004) of the World Bank Group ranks the countries of the world on the basis of their ‘regulations that enhance business activity and those that constrain it’. Popularly known as the ‘ease of doing business report’, it measures regulations affecting 11 areas of the life of a business:

1. Starting a business,
2. Dealing with construction permits,
3. Getting electricity,
4. Registering property,
5. Getting credit,
6. Protecting minority investors,
7. Paying taxes,
8. Trading across borders,
9. Enforcing contracts,
10. Resolving insolvency, and
11. Labour market regulation.

If investments have been done in a well-managed MF, the advantages outweigh disadvantages in the long term, which is 10 years or more. There is a very high probability for investors of making more money than by investing in other risk-free investments such as FDs, public provident fund etc. Advantages of investing in MFs include:

(a) Diversification of portfolio,

(b) Good investment management services,

(c) Liquidity,

(d) Strong government-backed regulatory help,

(e) Professional service, and

(f) low cost for all the benefits.

Foreign portfolio investment (FPI) refers to investing in the financial assets of a foreign country, such as stocks or bonds available on an exchange. This type of investment is at times viewed less favorably than direct investment because portfolio investments can be sold off quickly and are at times seen as short-term attempts to make money, rather than a long-term investment in the economy. Portfolio investment typically has a shorter time frame for investment return than direct investment. As with any equity investment, foreign portfolio investors usually expect to quickly realize a profit on their investments. Unlike direct investment, portfolio investment does not offer control over the business entity in which the investment is made.

It is the international currency in which the highest faith is shown and is needed by every economy. The strongest currency of the world is one which has a high level of liquidity. Basically, the economy with the highest as well as highly diversified exports that are compulsive imports for other countries (as of high-level technology, defence products, life saving medicines and petroleum products) will also create high demand for its currency in the world and become the hard currency. It is always scarce. Up to the Second World War, the best hard currency was the Pound Sterling (£) of the UK, but soon it was replaced by the US Dollar. Some of the best Hard currencies of the world today are the US Dollar, the Euro(€), Japanese Yen (¥) and the UK Sterling Pound (£). Meanwhile, by late 2015, the IMF allowed the SDR to be denominated in the chinese ‘Yaan’–paving the way for a new hard currency to be implemented in 2016.