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(3/4) 7 June 2018 DNA
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Sumant Kumar
B.Tech NIT Allahabad. Scored 136 & 120 in UPSC Prelims. YouTube Channel "Crackers' IAS Academy". Telegram - CrackersIASAcademy

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Thanks a lot sir , we're very grateful to u.
  1. The rupee, along with other emerging market currencies, is hurting too, but RBI Governor Uriit Patel dismissed suggestions that the rate hike was a bid to stem outflows. OThe MPC, he asserted, is driven purely by its inflation management mandate, and there is no contradiction between the rate hike and the committee sticking to its neutral policy stance. Though seasonal food inflation spikes are delayed, input cost pressures have hardened owing to a spurt in global commodity prices, led by fuel. OMoreover, inflationary expectations among producers as well as consumers have Crude oil prices have been the biggest factor at play, rising 12% from $66 a barrel OThe committee said this rise is "sharper, earlier than expected and seems to be gathered steam. when the MPC met in April to $74 a barrel. durable", and termed it a major upside risk to its earlier inflation projections.

  2. Defend the dealA Iran's notification to the UN that IRAN would launch a plan to increase its uranium enrichment capacity illustrates the risks associated with the U.S. withdrawal from the nuclear deal last month. The Joint Comprehensive Plan of Action, reached among the five permanent members of the UN Security Council, besides Germany, the European Union and Iran, in 2015, curtailed Tehran's nuclear programme in return for the lifting of international sanctions DBut after President Donald Trump withdrew the U.S. from the agreement and threatened to impose new sanctions on Iran, its survival is in question. For now, the other signatories say they remain committed to the agreement. OBut almost a month after Mr. Trump announced his decision, they are yet to come up with a framework to salvage the deal The latest Iranian announcement is perhaps aimed at turning the heat up on European powers to come up with guarantees that the deal's benefits will be in place even with U.S. sanctions

  3. According to the deal, Iran can enrich uranium, but under tight restrictions. Olran now says it would open a centre for the production of new centrifuges at its Natanz OTehran could argue that it is not technically violating the agreement as long as it does not O But the move to open a production facility, that too soon after Supreme Leader Ayatollah facility, which could be used for enrichment. produce centrifuges. Ali Khamenei called for preparations to speed up uranium enrichment, could be seen as a provocative step by the remaining parties to the agreement Instead of such posturing, both Iran and Europe would do well to shift their focus to preserving DIf Europe remains politically committed to the agreement as it claims, there have to be Olt is not yet clear whether European companies will make any significant investments in the integrity of the agreement. proper measures to circumvent the impact of U.S. sanctions Iran, or even continue to do business in the country, once U.S. sanctions start targeting them. Earlier, European countries had discussed providing companies that do business with Iran special financing from the European Investment Bank and passing legislation to protect them from U.S.sanctions but no decision has been taken so far.

  4. The EU says it can create conditions for Iran to continue to benefit from the deal but is wary of giving any guarantee. DIran has made it clear that the U.S. withdrawal should not affect its oil exports and access to the SWIFT international bank payments messaging system Way Forward: The way forward is to continue a dialogue to find an economic and legislative package that would shield European companies and Iranian economic interests from U.S. sanctions. OFor that, Europe has to assure Iran it will stand up to U.S. pressure, as Iran remains cooperative and compliant with the terms of the 2015 agreement.

  5. India's rank marginally improves in peace index Global Peace Index (GPI), released by Australia-based Institute for Economics and Peace (IEP) The IEP, world's leading think tank that develops metrics to analyse peace and quantify its economic value, released the 12th edition of the GPI, or measure of global peacefulness, on Wednesday India's rank has marginally improved in "global peacefulness', at a time when there is an overall decline of global peace owing to escalation of violence in West Asia and and North Africa Pakistan's rank too has improved marginally India's GPI rank was 137 out of 163 countries in 2017, when the year 2016 was assessed. India's rank moved up to 136 for 2017. This is in line with the performance of some of the South Asian countries Nepal's rank moved up from 93 to 84, while Sri Lanka's position moved up too, from position 80 to 67. Pakistan's rank moved from 152 to 151 South Asia experienced the largest regional improvement in peacefulness." the report noted. However, the best performer of South Asia, Bhutan, slipped from 13th to 19th position, while Bangladesh' peace index deteriorated sharply. Bangladesh moved from 84th to 93rd position Peace continues to record a "gradual, sustained fall" across the world, the report noted Syria remained the least peaceful country in the world, a position that it had held for the past five years Iceland continues to remain the most peaceful country in the world, a position it has held since 2008.

  6. Monetary Policy Committee Olt is the committee which will decide India's Monetary Policy OThe formation of the monetary policy committee was mooted by the Urjit Patel committee. o The committee suggested that monetary policy be rule-based and not discretion-based. group of people OTargeting inflation is to be the core objective of the central bank, and it will be answerable to law-makers if it failed to achieve the target. Composition : 6 members. 3 members-nominated by Government o No government official will be nominated to the MPC. These 3 will be experts in economics, banking or finance. o The government nominees to the MPC will be selected by a Search-cum-Selection Committee under Cabinet Secretary with RBl Governor and Economic Affairs Secretary and three experts in the field of economics or banking or finance or monetary policy as its members. 13 members from RBI (RBI Governor(ex-officio chairperson), Deputy governor of RBl in charge of the monetary policy, an executive director of RBl.

  7. The RBI Governor will chair the committee. RBI Governor will not enjoy a veto power to overrule the other panel members, but will have a casting vote in case of a tie ODecisions will be taken by majority vote with each member having a vote. If there's a tie between the 'Ayes' and the 'Nays, the RBI governor gets the deciding vote. O The number of times the RBI Governor uses the deciding vote will make arn impression that the committee is not in consensus. So the onus will be on next Governor to find a consensus. Thus, deciding vote is a good way of keeping a check. Members of the MPC will be appointed for a period of 4 years and shall not be eligible for reappointment. As per rules, no member of MPC should have any financial or other interest that prejudicially affects his functions as a member. It will be considered that the panel failed in achieving the inflation target if the lower or the upper range of the target is breached for three consecutive quarters.

  8. RBI implements monetary policy using certain tools. Two types of tools: Quantitative Tools Qualitative Tools: 1) Margin/LTV 1) Reserve Ratios{CRR, SLR), 2) (Open Market Operations) : 2) Consumer Credit Operations means both Selling and Purchasing. Control/Down Payment 3) Policy Rates 3) Rationing 1.Bank Rate, 2.LAF (Repo Rate, Reverse Repo Ratel,5) Direct Action. 3.MSF 4) Moral Suasion

  9. Bank Rate: When banks borrow long term funds from RBIl. They've to pay this much interest rate to RBI o Banks commercial/cooperative banks, development banks etc oCollateral: nothing. (Bank can borrow money without pledging government securities to RBI) o Such loans are given out either by direct lending or by rediscounting (buying back) the bills of commercial banks and treasury bills. Thus, bank rate is also known as discount rate.

  10. If client borrows money from RBI (for short term) then client has to pay this much interest rate to RBl Repo Rate Repo Rate or repurchase rate, is the rate at which RBI lends to banks for short periods. This is done by RBI buying government bonds from banks with an agreement to sell them back at a fixed rate. objective of Repo : to inject liquidity in the system S If RBI wants to make it more expensive for banks to borrow money, it increases the repo rate. S Similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rate.

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