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.
Official answer key is (A). I have 2 queries -
1) 1813 Act as per Spectrum - "EIC was to retain possessions and revenue for 20 more yearswithoutprejudice to the sovereignty of the Crown". How is this different from the term "asserting the sovereignty of the British Crown over Indian territories" mentioned in the question ?
2) Also under which Act, the 3rd statement would fall? Will it be 1858 Act as Indian territories came directly under the British Crown ?
I think it's because "sovereign" would imply absolute control which like you pointed out only happened in the 1858 Act.
Official answer key is (A). I have 2 queries -
1) 1813 Act as per Spectrum - "EIC was to retain possessions and revenue for 20 more yearswithoutprejudice to the sovereignty of the Crown". How is this different from the term "asserting the sovereignty of the British Crown over Indian territories" mentioned in the question ?
2) Also under which Act, the 3rd statement would fall? Will it be 1858 Act as Indian territories came directly under the British Crown ?
-3rd i guess shld fall in 1833 act when eic's commercial functions were ceased completely
-I guess 20 year term was made to assert the dominance of the crown over Indian subjects, and therefore sovg. over eic, both convey the same thing imo
Even I thought 1833 but this one confused me
- Sorry I could not understand what you mean by the 2nd statement. Isn't "without prejudice to the sovereignty of the Crown" contradicting it ?
Official answer key is (A). I have 2 queries -
1) 1813 Act as per Spectrum - "EIC was to retain possessions and revenue for 20 more yearswithoutprejudice to the sovereignty of the Crown". How is this different from the term "asserting the sovereignty of the British Crown over Indian territories" mentioned in the question ?
2) Also under which Act, the 3rd statement would fall? Will it be 1858 Act as Indian territories came directly under the British Crown ?
-3rd i guess shld fall in 1833 act when eic's commercial functions were ceased completely
-I guess 20 year term was made to assert the dominance of the crown over Indian subjects, and therefore sovg. over eic, both convey the same thing imo
Even I thought 1833 but this one confused me
Even in this case would the revenue be considered under the control of theBritish Parliamentthough? Wouldn't that only happen through the 1858 Act?
Even in this case would the revenue be considered under the control of theBritish Parliamentthough? Wouldn't that only happen through the 1858 Act?
I am interpreting like this ->1833 - Revenue under GG control, 1858 - Full British Parliament control. Am i thinking correct ?
@exman That's how I would interpret it.
Thanks mate !
Hey kind souls of the forum.
An elementary doubt. ECBs come under Capital Account if I am not wrong. So if Private investments seek external funding, why would it widen CAD (CAD I am guessing is Current Account Deficit)? Shouldn't it just have bearing just on Capital Account Balance reserve?
Thanks.
ECBs are mostly raised on floating interest rates that are volatile. The principal amount is a part of Capital account, However, the interests are to be paid yearly and hence, are a part of Current Account. So, ECBs can widen CAD courtesy the interest payments!
How do you guys eliminate the other options in questions where all options seem correct to some extent? What should be the chain of thoughts be?
Eg-
Few rules I adhere to-
1. Reverse engineering: I assume all are correct and read each of the statements with the question. I get 4 complete sets of dataset. Then, I explore the possible linkage. This exercise helps me get rid of at least one option in 90% of the cases.
Eg: Official poverty lines are higher because GSDP in the states vary. Assumed true. But, how? Can't see any linkage. Ummmmm!!!! Ridiculous. Must be wrong. But, the three other options did convince me of a possible relation.
2. I connect the question asked with the related topic I studied. This is on Poverty. So, I would also think whether there was any possible correlation explored, amongst the options and the question asked, in the material/notes/chapters I read for poverty. May not be useful at times because of the blurred distinction in the way topics are asked (When there's overlap across the subjects). But, sometimes it is ridiculously beneficial in eliminating options that are close.
3. Intuition?
A particular dataset (made as above) giving a more nuanced, convincing knowledge, sounding rational + uses a unit level keyword/concept (prices) to give a substantive scheme of things =Akkad Bakkadit and move on! Only if, in dire need to answer the question.
In short, it comes to one's own understanding and comprehensive skills to interpret the meaning to get closer to the answer. I too am looking for some mindblowing suggestions to tackle these!
Sherkhan1428,Is making laws on Fundamental rights exclusively vested in Parliament?
Not as a thumb rule.
1. Parliament has exclusive powers to legislate where it is mentioned explicitly. Eg 33,34,35
2. In all other cases, the legislative jurisdiction follows the principles of Seventh Schedule. Article 12 explicitly mentions that "the State" includes State legislatures as well. State legislatures have made many laws on rights that case a positive obligation on the State.(read as in Article 12)
whatonly,Is making laws on Fundamental rights exclusively vested in Parliament?Not as a thumb rule.
1. Parliament has exclusive powers to legislate where it is mentioned explicitly. Eg 33,34,35
2. In all other cases, the legislative jurisdiction follows the principles of Seventh Schedule. Article 12 explicitly mentions that "the State" includes State legislatures as well. State legislatures have made many laws on rights that case a positive obligation on the State.(read as in Article 12)
Laxmikanth unfortunately explicitly states that states cannot legislate on fundamental rights. Gots to be careful.
Laxmikanth unfortunately explicitly states that states cannot legislate on fundamental rights. Gots to be careful.
We must also bear in mind that rights that cast negative injunction on the State (within Article 12) are sole prerogative of the Parliament to legislate for the sake of uniformity of enforcement across the territory (within Article 1) of India. The book might be trying to convey this message.
However, it must be made abundantly clear that unless a state law violates FRs, it cannot be declared void just because it is a legislation concerning FRs! =>Such a state legislation will see light of the day.
We must also appreciate the minds of the makers of the Constitution. Take a look at Article 16. Article 16(3) mentions the word "Parliament" and blah blah. The very next, Article 16(4) uses the word "State" and blah blah.
These words have been carefully weighed up and written. We cannot discount the wisdom inherent in them in a casual manner.
Sherkhan1428,whatonlyHey kind souls of the forum.
An elementary doubt. ECBs come under Capital Account if I am not wrong. So if Private investments seek external funding, why would it widen CAD (CAD I am guessing is Current Account Deficit)? Shouldn't it just have bearing just on Capital Account Balance reserve?
Thanks.
ECBs are mostly raised on floating interest rates that are volatile. The principal amount is a part of Capital account, However, the interests are to be paid yearly and hence, are a part of Current Account. So, ECBs can widen CAD courtesy the interest payments!
@AzadHindFauz Thanks for the reply. Makes sense.
How would the same logic hold for FDI and FIIs. According to UPSC, adopting suitable policies which attract greater FDI and more funds from FIIs will reduce CAD (Q. 10, 2011 UPSC Paper).
FDIs are considered to be part of Capital Account but they are used to finance CAD unlike ECBs. (Am I thinking on the right lines?) Or ECBs can also be used to finance CAD but they have an interest liability while FDIs are completely liability free as far as Current Account calculations are concerned.
However if there is higher FDI, then NIIP is hampered.
Am I making sense?
Hey kind souls of the forum.
An elementary doubt. ECBs come under Capital Account if I am not wrong. So if Private investments seek external funding, why would it widen CAD (CAD I am guessing is Current Account Deficit)? Shouldn't it just have bearing just on Capital Account Balance reserve?
Thanks.
ECBs are mostly raised on floating interest rates that are volatile. The principal amount is a part of Capital account, However, the interests are to be paid yearly and hence, are a part of Current Account. So, ECBs can widen CAD courtesy the interest payments!
@AzadHindFauz Thanks for the reply. Makes sense.
How would the same logic hold for FDI and FIIs. According to UPSC, adopting suitable policies which attract greater FDI and more funds from FIIs will reduce CAD (Q. 10, 2011 UPSC Paper).
FDIs are considered to be part of Capital Account but they are used to finance CAD unlike ECBs. (Am I thinking on the right lines?) Or ECBs can also be used to finance CAD but they have an interest liability while FDIs are completely liability free as far as Current Account calculations are concerned.
However if there is higher FDI, then NIIP is hampered.
Am I making sense?
1. Please put the question for better contextualisation. From what I understood, FDIs and FIIs don't affect your CAD directly, but they do help in reducing the import bills if they are targeted in sectors that see high imports. Say, an FDI comes in for oil extraction from Mumbai High and we hit a jackpot in oil reserves that were hidden earlier.
2. For quite sometime, we are funding our CAD with Capital Account Surplus. FDIs help in that regard. But, instead of taking the ECB route that needs debt servicing from the Current Account, in effect, reinforcing the deficit till perpetuity- we prefer the FDI route. With FDI, there is no such obligation. True.
3. NIIP is a different indicator. It reveals about our creditworthiness. USA is the most indebted country in the world, yet the investors devour the country for investment purposes. A negative NIIP might also indicate a generally decent ecosystem for foreign investors.
Hey kind souls of the forum.
An elementary doubt. ECBs come under Capital Account if I am not wrong. So if Private investments seek external funding, why would it widen CAD (CAD I am guessing is Current Account Deficit)? Shouldn't it just have bearing just on Capital Account Balance reserve?
Thanks.
ECBs are mostly raised on floating interest rates that are volatile. The principal amount is a part of Capital account, However, the interests are to be paid yearly and hence, are a part of Current Account. So, ECBs can widen CAD courtesy the interest payments!
@AzadHindFauz Thanks for the reply. Makes sense.
How would the same logic hold for FDI and FIIs. According to UPSC, adopting suitable policies which attract greater FDI and more funds from FIIs will reduce CAD (Q. 10, 2011 UPSC Paper).
FDIs are considered to be part of Capital Account but they are used to finance CAD unlike ECBs. (Am I thinking on the right lines?) Or ECBs can also be used to finance CAD but they have an interest liability while FDIs are completely liability free as far as Current Account calculations are concerned.
However if there is higher FDI, then NIIP is hampered.
Am I making sense?
1. Please put the question for better contextualisation. From what I understood, FDIs and FIIs don't affect your CAD directly, but they do help in reducing the import bills if they are targeted in sectors that see high imports. Say, an FDI comes in for oil extraction from Mumbai High and we hit a jackpot in oil reserves that were hidden earlier.
2. For quite sometime, we are funding our CAD with Capital Account Surplus. FDIs help in that regard. But, instead of taking the ECB route that needs debt servicing from the Current Account, in effect, reinforcing the deficit till perpetuity- we prefer the FDI route. With FDI, there is no such obligation. True.
3. NIIP is a different indicator. It reveals about our creditworthiness. USA is the most indebted country in the world, yet the investors devour the country for investment purposes. A negative NIIP might also indicate a generally decent ecosystem for foreign investors.
Sorry for not contextualizing with the question. Please see attached. Thanks for your time. Wish the best for 4th October.
Hey kind souls of the forum.
An elementary doubt. ECBs come under Capital Account if I am not wrong. So if Private investments seek external funding, why would it widen CAD (CAD I am guessing is Current Account Deficit)? Shouldn't it just have bearing just on Capital Account Balance reserve?
Thanks.
ECBs are mostly raised on floating interest rates that are volatile. The principal amount is a part of Capital account, However, the interests are to be paid yearly and hence, are a part of Current Account. So, ECBs can widen CAD courtesy the interest payments!
@AzadHindFauz Thanks for the reply. Makes sense.
How would the same logic hold for FDI and FIIs. According to UPSC, adopting suitable policies which attract greater FDI and more funds from FIIs will reduce CAD (Q. 10, 2011 UPSC Paper).
FDIs are considered to be part of Capital Account but they are used to finance CAD unlike ECBs. (Am I thinking on the right lines?) Or ECBs can also be used to finance CAD but they have an interest liability while FDIs are completely liability free as far as Current Account calculations are concerned.
However if there is higher FDI, then NIIP is hampered.
Am I making sense?
1. Please put the question for better contextualisation. From what I understood, FDIs and FIIs don't affect your CAD directly, but they do help in reducing the import bills if they are targeted in sectors that see high imports. Say, an FDI comes in for oil extraction from Mumbai High and we hit a jackpot in oil reserves that were hidden earlier.
2. For quite sometime, we are funding our CAD with Capital Account Surplus. FDIs help in that regard. But, instead of taking the ECB route that needs debt servicing from the Current Account, in effect, reinforcing the deficit till perpetuity- we prefer the FDI route. With FDI, there is no such obligation. True.
3. NIIP is a different indicator. It reveals about our creditworthiness. USA is the most indebted country in the world, yet the investors devour the country for investment purposes. A negative NIIP might also indicate a generally decent ecosystem for foreign investors.
Sorry for not contextualizing with the question. Please see attached. Thanks for your time. Wish the best for 4th October.
The question asks which of them can "help" reduce CAD. So yes policies that promote FDI and FII inflows can help in reducing CAD though there's no guarantee that it will reduce the CAD. Like@AzadHindFauz said, it would depend on which sector the FDI and FII is coming into and whether the FDI actually does help reduce imports and/or increase exports. At the same time, this does not mean that FDI and FII are part of the CAD. They are still part of the capital/financial account. It's just that they have the potential to reduce current account deficit (CAD).
And on the question you asked earlier about FDIs being used to finance current account deficit is partly right. To be more precise, capital account surplus is used to finance current account deficit. Theoretically, the current account deficit should be equal to the capital account surplus.
AzadHindFauz,@msdian Check this link to get a better understanding.
https://www.economicshelp.org/blog/1895/economics/current-and-financial-account-balance/
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