1. With reference to the “Fisheries Sector in India”, consider the following statements: (1) Recently, India became the second largest fish producing country in the world. (2) Marine fishery constitutes around 65% of the total fish production in India, the rest coming from inland fisheries. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Answer: (a) Explanation: Recently, India became second largest fish producing country in the world. There are two branches of fishery sector namely Inland Fisheries and Marine Fisheries. The total fish production has nearly 65% contribution from the inland sector and rest form marine fishing. Fish and fish products accounts for around 10% of the total exports of the country and nearly 20% of the agricultural exports. Constituting about 6.3% of the global fish production, the sector contributes to 1.1% of the GDP and 5.15% of the agricultural GDP.
2. The ‘Society for Worldwide Interbank Financial Telecommunications’ (SWIFT) was recently in news. Which of the following statements with respect to SWIFT is not correct? (1) It is an intergovernmental organization under the administrative control of the Bank for International Settlements (BIS). (2) It facilitates funds transfer across the world. Select the correct answer using the code given below: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Answer: (d) Explanation: Statement (1) is incorrect. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is an industry- owned limited liability cooperative society set up under Belgian law and controlled by its member banks (including central banks) and other financial institutions. SWIFT’s business is to supply secure messaging services and interface software, to contribute to greater automation of financial transaction processes and to provide a forum for financial institutions to address issues of common concern in the area of financial communication services. Messaging services are provided to banks, broker/dealers and investment managers, as well as to market infrastructures in payments, treasury, securities and trade. SWIFT is headquartered in Belgium. Statement (2) is incorrect. SWIFT does not facilitate funds transfer; rather, it sends payment orders, which must be settled by correspondent accounts that the institutions have with each other. There are four key areas that SWIFT services fall under in the financial marketplace- ➢ Securities ➢ Treasury & Derivatives ➢ Trade Services and Payments ➢ Cash Management Hence, Option (d) is the correct answer.
3. US hiked tariffs on foreign steel and aluminium recently. What could be the possible impacts on India of this action?
(1) Index of Industrial Production can decline drastically.
(2) India can become a dumping ground for cheap Chinese steel.
(3) Terms of Trade for India will improve.
(4) Inflation in USA might get imported to India in coming months.
Select the correct answer using the code given below:
(a) 1 and 2 only
(b) 2 and 4 only
(c) 1, 2 and 4 only
(d) 1, 2, 3 and 4
Answer: (c) Explanation: Statement (1) and (2) are correct. The Eight Core Industries comprise 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP). Steel production (weight: 17.92 per cent) would get hit, if China, hit by trade war diverts its cheap steel to India and make India a dumping ground for cheap Chinese steel, hence, IIP might decline drastically. Statement (3) is incorrect. The trade war will result in retaliatory protectionist measures by other countries, especially European Union (EU) which are markets for Indian exports; hence our exports can decline drastically. Our import bill is quite inelastic; hence this scenario will deteriorate our ‘Terms of Trade’ (the ratio of an index of a country's export prices to an index of its import prices). Statement (4) is correct. Such protectionist measures will spike inflation in USA, due to which US Federal Reserve will hike key interest rates, resulting in appreciation of US Dollar, the weakened Indian Rupee will result in higher import bill. Hence, it will give rise to inflation in our economy. Hence, Option (c) is the correct answer.
4. Infrastructure Investment Funds (InvITs) as mentioned in Budget, 2018 are being dubbed as an alternative source of fund-raising for infrastructure sector.
Which of the following statements in respect of InvITs is not correct?
(a) They help to raise cheap capital for long gestation infrastructure projects.
(b) They work like Mutual Funds.
(c) They do not attract long term capital gains tax.
(d) They are regulated as per the RBI guidelines.
Answer: (d) Explanation:
• Infrastructure investment trusts, or InvITs, are instruments that work like mutual funds. InvITs are designed to pool small sums of money from a number of investors to invest in assets that give cash flow over a period of time. Part of this cash flow would be distributed as dividend back to investors.
• Often, infrastructure projects such as roads or highways take some time to generate steady cash flows. Meanwhile, the infrastructure company has to pay interest to banks for the loans taken by it. An InvIT essentially gives the company the leeway to fulfil its debt obligations quickly.
• InvITs are formed by complying with the SEBI Infrastructure Investment Trust Regulation, 2014. The infrastructure company interested in getting funds from the public will, therefore, form this trust, and then appoint an investment manager who will be responsible for how the assets and investments of the InvIT are managed.
• If an investor exits an InvIT before three years, a short-term capital gains tax of 15 per cent is applicable. There are no long-term capital gains taxes on them. Hence, Option (d) is the correct answer.
5. The term ‘Fintech’ is seen in the news recently. Which of the following statements is not correct in this context? (a) They seek to improve and automate the delivery and use of financial services. (b) They include technological innovations in financial sector including financial literacy, but exclude bitcoin as it is not a legal tender. (c) Government is promoting them as they can help in financial inclusion. (d) All of the above statements are correct. Answer: (b) Explanation: Financial technology, often shortened to FinTech or fintech, is the new technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. It seeks to improve and automate the delivery and use of financial services. At its core, fintech is utilized to help companies, business owners and consumers better manage their financial operations, processes and lives by utilizing specialized software and algorithms that are used on computers and, increasingly, smartphones. It is an emerging industry that uses technology to improve activities in finance. The use of smartphones for mobile banking, investing services and cryptocurrency are examples of technologies aiming to make financial services more accessible to the general public. They are designed to be a threat to challenge and eventually usurp entrenched traditional financial services providers by being more nimble, serving an underserved segment or providing faster and/or better service hence furthering the cause of financial inclusion. Hence, government has recently setup a committee to create an enabling environment for them in India. Hence, Option (b) is the correct answer.