Doubt Clearance Thread: UPSC 2021
"When in doubt, observe and ask questions. When certain, observe at length and ask many more questions."
Created this thread as a one stop solution for all members so that all the doubts wherein any conceptual clarification is required can be solved here.
Consider the following statements with respect to land reforms and Green Revolution undertaken by government after 1950s:
1. Both reforms promoted the consolidation of land-holdings.
2. They were largely opposed by the land-owning caste lobbies and the tenants.
3. Unlike Green revolution, the land reforms had limited impact on the rural agrarian structure of India.
Which of the statements given above is/are correct?
My answer: a.
As Land consolidation was among the objectives of both land reforms and Green Revolution.
Statement 3 can be wrong considering GR was limited to certain areas and could not change rural agrarian structure of India.
Can any one explain why C is correct?
You can see the data to substantiate. From the green revolution to now, we became a net exporter of grains from net importers of food grains. Small, marginal, large farmers all had consensus regarding the functions and uses.
However, land reforms were not being successful because large farmers were apprehensive and there were many loopholes regarding that like "Benami transfer" etc. Agriculture census exemplifies the same that marginal and small farmers, even though constitute around 90% of farmers, only have around 40-45% of the land with them.
I dint get you. Yes India attained self sufficiency in food grain production. And yes small and marginal farmers constitute the bulk. So what does this say about land consolidation or the rural agrarian structure?
Statement 3rd didn't ask about the land consolidation success. It asked in general about the rural agrarian structure constituting employment or wage or profitability etc.
Statement 1asked about land consolidation. -->Should have been a true statement a/c to me. It is marked false a/c to keys.
Statement 3talks about rural structure -->This statement is marked as correct in keys. False a/c to me.
I am unable to make sense of the key.
Now, can you please repeat the point you were making?
S1 - Land reforms promoted land consolidation which was the clear agenda out of the 4 agendas at that time. But the green revolution didn't promote land consolidation but landholding. In psir, we quote a renowned scholar VKRV Rao who had quoted that the green revolution actually reversed the process of land reforms. Land consolidation was in general done during land reforms for every stratum of the society but in the Green revolution, it was done by the rich farmers for their specific benefits. Plus the increased productivity after Green revolution allowed to grow the same amount of crops in a limited land now. Thanks to the green revolution, 1 hectare of land productivity was equal to 0.9 hectare of land productivity(data could vary)
S3- This statement was not about the land consolidation but as the agrarian structure in general which includes employment, wage, living conditions, etc. I just said that people found loopholes during land reforms like Benami transfers etc and so, inclusivity wasn't there. But the green revolution was being accepted by each and every class of the farmers and so, it had a major impact on the farmer's condition as evident from the facts too.
Shailputri,can someone explain monetising the deficit and deficit financing along with its implication like effect on money supply and monetary base and public debt .
Abit confused hence asking . Thanxs in advance
Refer to June 2021 Vision Monthly magazine once. Everything will be clear.
i had read it still the doubts which i had
1) two modes a) deficit financing b) monetisation of the deficit ...correct ??
2) deficit financing : omo rbi does( not primary market frbm act restriction) or borrows from outside correct ??
3) deficit financing increase in money supply as well as monetary base .....correct??
4) monetising the deficit : rbi prints money and give it govt ....money supply doesn't increase as such .however as govt spends oney supply will increase correct ???
any other concepts related to this and any correction in the above please suggest
Shailputri,
@Shailputri Read this chapter in NCERT: chap4.pmd (ncert.nic.in) The 3rd statement is almost verbatim from it.
Shailputri,can someone explain monetising the deficit and deficit financing along with its implication like effect on money supply and monetary base and public debt .
Abit confused hence asking . Thanxs in advance
Refer to June 2021 Vision Monthly magazine once. Everything will be clear.
i had read it still the doubts which i had
1) two modes a) deficit financing b) monetisation of the deficit ...correct ??
2) deficit financing : omo rbi does( not primary market frbm act restriction) or borrows from outside correct ??
3) deficit financing increase in money supply as well as monetary base .....correct??
4) monetising the deficit : rbi prints money and give it govt ....money supply doesn't increase as such .however as govt spends oney supply will increase correct ???
any other concepts related to this and any correction in the above please suggest
RAGNAROK,
@Shailputri Read this chapter in NCERT: chap4.pmd (ncert.nic.in) The 3rd statement is almost verbatim from it.
I see. Thanks.
Bond yields are inversely proportional to equity returns. True or False?
My take : Equity returns reduce -->Bond demand increases -->Price increases -->Yield decreases. So, bond yield and equity returns isdirectly proportional. Above statement is false.
Above statement is mentioned true. So, where am I going wrong?
Bond yields are inversely proportional to equity returns. True or False?
My take : Equity returns reduce -->Bond demand increases -->Price increases -->Yield decreases. So, bond yield and equity returns is directly proportional.
Above statement is mentioned true. So, where am I going wrong?
a hundred percent correct that there exist inverse relation between the two
Bond yields are inversely proportional to equity returns. True or False?
My take : Equity returns reduce -->Bond demand increases -->Price increases -->Yield decreases. So, bond yield and equity returns is directly proportional.
Above statement is mentioned true. So, where am I going wrong?
a hundred percent correct that there exist inverse relation between the two
Care to explain?
DIFFERANCE BETWEEN ASSET RECONSTRUCTON COMPANY AND BAD BANKS?Asset Reconstruction would just tend to take find potential buyers of the strained assets . It does not take over the control of the entire assets rather just facilitate the purchase.( in layman term you can equate them to real estate broker facilitating land sale/purchase). THE ARC take these Assets on discount and then resell. they do not take direct upfront NPA's.
BAD banks will just take over the entire NPA of PSB,s . Effect will be that PSB will recover entire amount upfront. While the Bad bank will suffer the loss of the NPA,s. Burden of NPA gets transferred to bad bank.
Hope this helps.
FROM VIVEK SIRS EXPLAINATION : THIS MIGHT GIVVE MORE CLARITY REG BAD BANK :
The above is news from Hindu. Following are some relevant points.
1) Govt. of India has created a "bad bank" named "National Asset Reconstruction Company Limited (NARCL)". NARCL is owned by Government of India, which basically means NARCL/bad bank is a PSU.
2) Let us understand what the article is trying to say through an example:
Suppose SBI had earlier given loan worth Rs. 1000 crore and it turned into NPA.
So, SBI would like to sell this NPA/bad loan to the bad bank (NARCL) and recover the money and would like to focus on its banking business.
So, Bad bank will purchase this NPA from SBI but not in Rs. 1000 crore. The bad bank will try to estimate how much money it would actually be able to recover from the NPA and accordingly it would quote a price for it. If SBI also agrees then, SBI will sell this NPA/bad loan (paper) to bad bank, let us say in Rs. 300 crore. But the bad bank will not immediately pay in cash Rs. 300 crore to SBI. Rather, the bad bank will pay 15% of the agreed amount (of the Rs. 300 crore) i,e. Rs. 45 crore in cash and the rest 85% i.e. Rs. 255 crore in securities (a kind of debt paper). But what if the bad bank/NARCL in future does not pay the amount mentioned in the security ?? i.e. bad bank does not repay its debt of Rs. 255 crore.
So, as per the news article, Govt. of India has agreed to provide "Government Guarantee" on the securities that will be issued by the bad bank.
You may be wondering that why there is a need of Govt. guarantee, when the bad bank is already a Govt. company. You should know that a Govt. company can also default. Govt. of India is not legally bound to pay the liabilities of a Govt. company.
Shailputri,Care to explain?
arrey simple : see bond yield and demand u know the relation as explained above
now if bond yield is low will investor invest in bonds or look for other avenues ......he sees that okk no good in investing in bond lets move to equity market correct .....(this you only have explained above)
what you have explained is hundred percentage correct just that u have deduced the relation wrong. ask your self you will get the answer. the statement "MY Take " is correct just you reread twice you will come to the answer
a increases then b increases = direct relation
a increases then b decreases = inverse relation
hope you are cleared on this
Shailputri,
Shailputri,Yes. Maybe the question was trying to say equity "market" and erroneously mentioned equity "return". It would make sense then. Thanks!
Tk17,Care to explain?
arrey simple : see bond yield and demand u know the relation as explained above
now if bond yield is low will investor invest in bonds or look for other avenues ......he sees that okk no good in investing in bond lets move to equity market correct .....(this you only have explained above)
what you have explained is hundred percentage correct just that u have deduced the relation wrong. ask your self you will get the answer. the statement "MY Take " is correct just you reread twice you will come to the answer
a increases then b increases = direct relation
a increases then b decreases = inverse relation
hope you are cleared on this
Yo.
@Shailputrihigh bond yield >money flows out of risky equity to safe and assured return on bonds >equity returns decrease. There may be exceptions but generally there's a negative relation between the two. The movement in bonds may be like 6% to 8% to 7.5% as investors flock towards bonds but in parallel equity may be going 8% to 6% to 5%.
I beg to differ with you on this point. If you say a is proportional to b you see how the change in b changes a. But what you are doing here is changing a to see the effect on b , which is different . I know you may be true but mathematically it is not correct.
Care to explain?
arrey simple : see bond yield and demand u know the relation as explained above
now if bond yield is low will investor invest in bonds or look for other avenues ......he sees that okk no good in investing in bond lets move to equity market correct .....(this you only have explained above)
what you have explained is hundred percentage correct just that u have deduced the relation wrong. ask your self you will get the answer. the statement "MY Take " is correct just you reread twice you will come to the answer
a increases then b increases = direct relation
a increases then b decreases = inverse relation
hope you are cleared on this
I beg to differ with you on this point. If you say a is proportional to b you see how the change in b changes a. But what you are doing here is changing a to see the effect on b , which is different . I know you may be true but mathematically it is not correct.
Bond yields are inversely proportional to equity returns. True or False?
My take : Equity returns reduce -->Bond demand increases -->Price increases -->Yield decreases. So, bond yield and equity returns isdirectly proportional. Above statement is false.
Above statement is mentioned true. So, where am I going wrong?
@Shailputri you are correct the statement is false, maybe the answer given is false. However "equity returns are inversely proportional to bond yields " this statement is true.
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