PRELIMS मतलब MAD

Answer – (d)

Explanation:

About Gross National Product: It measures the total value of all goods and services produced by the citizens or entities of a country, regardless of where they are located.

It includes the income earned by citizens and companies of the country, both domestically and abroad, during a specified period. Hence Statement-II is not correct.

About Gross Domestic Product: It measures the total value of all goods and services produced within a country’s borders over a specific period, typically a year or a quarter.

It considers the value of production regardless of the nationality of the individuals or entities involved in the production process. Hence Statement-III is not correct.

GNP can differ from GDP in countries with significant international investment or a large number of citizens working abroad.

For example, if a country has many multinational corporations or citizens working in foreign countries, its GNP may be higher than its GDP due to the earnings generated overseas. Hence Statement-I is correct.

Answer – (a)

Explanation:

About First Loss Default Guarantee (FLDG) programme: Recently, the Reserve Bank of India approved the First Loss Default Guarantee (FLDG) framework. The FLDG scheme allows Indian fintechs to partner with banks and NBFCs.

Statement 1 is correct: As per the first loss default guarantee (FLDG) model, the first hit on a default is taken by the fintech firm that originated the loan. It will strengthen credit penetration and boost the digital lending ecosystem. It will promote more transparency and discipline in the digital lending environment.

Statement 2 is not correct: The Regulated Entities shall invoke DLG within a maximum overdue period of 120 days, unless made good by the borrower before that.

Under the framework, RBI directed that RE shall ensure that the total amount of DLG cover on any outstanding portfolio which is specified upfront shall not exceed 5% of the amount of that loan portfolio.

Statement 3 is not correct: RBI has noted any Default Loss Guarantee arrangement shall not act as a substitute for credit appraisal requirements and robust credit underwriting standards need to be put in place irrespective of DLG cover.

Additional information: FLDG arrangements conforming to these guidelines shall not be treated as ‘synthetic securitization’ and/or shall also not attract the provisions of ‘loan participation’.

Answer – (d)

Explanation:

Statement 1 is not correct: Labour Force Participation Rate is defined as the percentage of persons in the labour force i.e. working or seeking or available for work in the population.

Statement 2 is not correct: Unemployment Rate is defined as the percentage of persons unemployed among the persons in the labour force.

Statement 3 is not correct: Worker Population Ratio is defined as the percentage of employed persons in the population.

Additional information:

Activity Status- Usual Status: The activity status of a person is determined on the basis of the activities pursued by the person during the specified reference period. When the activity status is determined on the basis of the reference period of the last 365 days preceding the date of survey, it is known as the usual activity status of the person.

Activity Status- Current Weekly Status (CWS): The activity status determined on the basis of a reference period of last 7 days preceding the date of survey is known as the current weekly status (CWS) of the person.

Answer – (a)

Explanation:

About Paradox of thrift: It refers to the theory that a rise in the savings rate of individuals can surprisingly cause a fall in the overall savings in an economy.

This is in contrast to the general belief that a rise in individuals’ savings rates will cause a rise in the overall savings in the economy.

Hence option (a) is the correct answer.

Answer – (b)

Explanation:

About Participatory notes: Participatory notes are issued by foreign institutional investors (FIIs) to foreign investors who want exposure to Indian markets without going through the hassles of the regulatory protocols. Participatory notes were introduced by SEBI in 2003 to boost foreign investment inflow.

Statement 1 is correct: They are essentially Overseas Derivative Instruments (or ODIs) that had Indian stocks or derivatives as their underlying securities, with the holder entitled to the income or capital appreciation from such investment.

Statement 2 is not correct: SEBI regulates the FIIs, commonly the foreign banks that issue P-notes, but it has no direct links with the P-note holders.

Statement 3 is correct: The concern with respect to them is their nature of being anonymous. The investors of P-notes are beyond the reach of Indian regulators or taxmen.

The concerns were first flagged by the Joint Parliamentary Committee on the 2001 securities market scam, which said that P-Notes enabled their holders to conceal their identities.