[DAY 57] 60 DAY RAPID RE-VISION (RaRe) SERIES for UPSC Prelims 2022 –ECONOMICS, CURRENT AFFAIRS & CSAT; Test Series, Videos & Notes!

Solution (a)

Basic Info:

The World Bank classifies the world’s economies into four income groups — high, upper-middle, lower-middle, and low. This assignment is based on Gross National Income (GNI) per capita (current US$). The classification is updated each year on July 1st.

The classification of countries is determined by two factors:

• A country’s GNI per capita, which can change with economic growth, inflation, exchange rates, and population. Revisions to national accounts methods and data can also influence GNI per capita.
• Classification threshold: The thresholds are adjusted for inflation annually using the SDR deflator.

India and China have both transitioned from low-income countries to middle-income countries.
India currently falls in the World Bank’s lower-middle income category while China currently falls in the upper-middle income category.

Solution (c)

Basic Info:

The General Agreement on Trade in Services regime of the WTO classifies services in terms of its delivery modes. As per the GATS, there are four modes of services

Modes of Services Supply: The GATS define services in four ‘modes’ of supply: cross-border trade, consumption abroad, commercial presence, and presence of natural persons.

Mode 1: Cross Border

• Services which themselves cross-frontiers from one country to another e.g. Distance learning, consultancy, BPO services.

Mode 2: Consumption abroad

• Services, which are made available within a country for foreign consumers’, e.g.: tourism, educational students for students, medical treatment etc.

Mode 3: Commercial Presence

• Services supplied by an entity of one country, which is commercially pressed in another e.g.: banking, hotel etc.

Mode 4: Movements of natural persons

• This is a foreign national providing services like that of doctor, nurse, IT engineer etc. functioning as a consultant, employee, from one country to another.

Solution (b)

Basic Info:

The SDR is an interest bearing international reserve asset, created by the IMF in 1969 to supplement its member countries official reserves.

The SDR value in terms of the U.S. dollar is determined daily based on the spot exchange rates observed at around noon London time, and is posted on the IMF website.

The value of the SDR is based on a basket of five currencies—the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.

The SDR serves as the unit of account of the IMF and some other international organizations. The SDR is neither a currency nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. SDRs can be exchanged for these currencies.

The SDR basket is reviewed every five years, or earlier if warranted, to ensure that the SDR reflects the relative importance of currencies in the world’s trading and financial systems.

Criteria for inclusion in the SDR basket include:

• Export criterion: Issuer of currency is an IMF member or a monetary union, that includes IMF
  members, who are one of the top five exporters of the world.
• Determined to be “freely usable” currency by the IMF: Currency is widely used to make payments for international transactions and widely traded in the principal exchange markets.

The SDR interest rate: The SDRi provides the basis for calculating the interest rate charged to members on their non-concessional borrowing from the IMF and is paid to members for their remunerated creditor positions in the IMF. It is also the interest paid to members on their SDR holdings and charged on their SDR allocations.

Solution (d)

Both statements are correct.

Basic Info:

Capital Gains Tax: Any profit or gain realised during the year as a result of the transfer of a capital asset is taxed under the heading “Capital Gains.”

According to the Income Tax Act, if a person inherits property and does not sell it, no capital gains tax is required. However, if the person who inherited the property decides to sell it, he or she will have to pay tax on the earnings.

Capital assets include jewellery, machinery, leasehold rights, trademarks, patents, autos, real estate, buildings, and land.

The following items are not considered capital assets:

• Any stock, consumables, or raw materials stored for business or profession.
• Personal items held for personal use, such as clothing and furniture
• Agricultural land in India’s rural areas
• The central government’s 6½% per cent gold bonds (1977) or 7 per cent gold bonds (1980) or national defence gold bonds (1980).
• Special bearer bonds (1991)
• A gold deposit bond or deposit certificate issued under the Gold Deposit Scheme (1999) or the Gold Monetisation Scheme (2015).

Solution (a)

Basic Info:

In trade parlance, every product is categorised under an HSN code (Harmonised System of Nomenclature). The common HSN codes apply to Customs and GST, importers and exporters have been furnishing these codes in import/export documents.

Harmonized System of Nomenclature Code (HSN)

• It is a six-digit identification code. Of the six digits, the first two denote the HS Chapter, the next two give the HS heading, and the last two give the HS subheading.
• It helps in systematic classification of goods across the globe.
• It was developed by the World Customs Organization (WCO)and it came into effect from 1988.
• India has been a member of the WCO (World Customs Organization) since 1971.
• Also called the “universal economic language” for goods.
• The system helps in harmonizing customs and trade procedures, thus reducing costs in international trade. It helps in the systematic classification of goods across the globe.

Under GST, the HSN codes are meant for most of the business entities. They need to mention two-, four-, or eight-digit HSN codes for their products, by their turnover for the previous year and the nature of the transaction (as in Import/Export).

Solution (c)

Basic Info:

FAO is a specialized agency of the United Nations that leads international efforts to defeat hunger.

Its Flagship Publications:

• The State of World Fisheries and Aquaculture (SOFIA).
• The State of the World’s Forests (SOFO).
• The State of Food Security and Nutrition in the World.
• The State of Food and Agriculture (SOFA).
• The State of Agricultural Commodity Markets (SOCO).
• World Food Price Index

World Investment Report is published by The United Nations Conference on Trade and
Development (UNCTAD). It focuses on trends in foreign direct investment (FDI) worldwide, at the regional and country levels and emerging measures to improve its contribution to development.

Solution (c)

Basic Info:

The Asia-Pacific Trade Agreement (APTA), previously named the Bangkok Agreement, signed in 1975 as an initiative of  Economic and Social Commission for Asia and the Pacific (ESCAP), is a preferential tariff arrangement that aims at promoting intra-regional trade through exchange of mutually agreed concessions by member countries.

Its current Members are Bangladesh, China, India, Republic of Korea, Lao PDR and Sri Lanka.

Mongolia has concluded bilateral negotiations on tariff concessions and is to become the seventh member.

APTA recognizes the special needs of Least Developing Countries (LDCs) and calls for concrete
preferential measures in their favor. Participating States may grant special concessions to LDC members and commit to giving special consideration for requests from participating LDCs for technical assistance.

In practice, in successive trade liberalization rounds, most members made special concessions to LDCs.

Solution (b)

Basic Info:

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a free
trade agreement (FTA) between Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia,
Mexico, Peru, New Zealand, Singapore, and Vietnam.

The CPTPP was signed by the 11 countries on 8 March 2018 in Santiago, Chile.

The CPTPP will enter into force for Brunei Darussalam, Chile, Malaysia and Peru 60 days after they complete their respective ratification processes.

The CPTPP incorporates, by reference, the provisions of the Trans-Pacific Partnership (TPP) agreement, with the exception of a number of provisions pertaining mainly to intellectual property and investor-state dispute settlement, whose application will be suspended once the CPTPP comes into force. These provisions will be suspended until all the parties decide otherwise.

India did not join CPTPP as it seeks to place greater labor and environmental standards on its other partners and CPTPP draft includes narrowly detailed qualifications on standards for investment protection, provisions to protect the host state’s right to regulate, and the imposition of detailed transparency requirements.

Solution (b)

Basic Info:

The IMF’s fundamental mission is to ensure the stability of the international monetary system. It does so in three ways: keeping track of the global economy and the economies of member countries; lending to countries with balance of payment difficulties; and giving practical help to members.

When a country joins the IMF, it is assigned an initial quota in the same range as the quotas of existing members of broadly comparable economic size and characteristics. A member’s quota determines that country’s financial and organizational relationship with the IMF including subscriptions; access to financing and voting power. The IMF uses a quota formula to help assess a member’s relative position.

The current quota formula is a weighted average of GDP (weight of 50 percent), openness (30 percent), economic variability (15 percent), and international reserves (5 percent). For this purpose, GDP is measured through a blend of GDP—based on market exchange rates (weight of 60 percent) and on PPP exchange rates (40 percent). The formula also includes a ―compression factor that reduces the dispersion is calculated quota shares across members.

Quotas are denominated in Special Drawing Rights (SDRs), the IMF’s unit of account. The largest member of the IMF is the United States and the smallest member is Tuvalu.

Solution (c)

Basic Info:

International Center for Settlement of Investment Disputes (ICSID) was established in 1966 by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention).

ICSID is one of the five organizations of the World Bank Group, along with the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA)

ICSID is the world’s leading institution devoted to international investment dispute settlement.

ICSID is an independent, depoliticized and effective dispute-settlement institution. Its availability to investors and States helps to promote international investment by providing confidence in the dispute resolution process.

It is also available for state-state disputes under investment treaties and free trade agreements and as an administrative registry.

ICSID provides for settlement of disputes by conciliation, arbitration or fact-finding. India is not a member of ICSID.

Solution (d)

Basic Info:

ICAO is funded and directed by 193 national governments to support their diplomacy and cooperation in air transport as signatory states to the Chicago Convention (1944).

Its core function is to maintain an administrative and expert bureaucracy (the ICAO Secretariat) supporting these diplomatic interactions, and to research new air transport policy and standardization innovations as directed and endorsed by governments through the ICAO Assembly, or by the ICAO Council which the assembly elects.

It also conducts educational outreach, develops coalitions, and conducts auditing, training, and capacity building activities worldwide per the needs and priorities governments identify and formalize.

ICAO is not an international aviation regulator. They cannot arbitrarily close or restrict a country’s airspace, shut down routes, or condemn airports or airlines for poor safety performance or customer service.

It is headquartered in Montreal, Canada.

Solution (a)

Basic Info:

The International Fund for Agricultural Development (IFAD), a specialized agency of the United Nations, was one of the major outcomes of the 1974 World Food Conference, held in Rome.

The conference was organized by the United Nations in response to the food crises of the early 1970s, when global food shortages were causing widespread famine and malnutrition, primarily in the Sahelian countries of Africa.

Three years after the Rome conference, IFAD was set up as an international financial institution in 1977.

The Framework sets three strategic objectives:

• increasing the productive capacity of poor rural people
• increasing their benefits from market participation
• strengthening the environmental sustainability and climate resilience of their economic activities.

IFAD has 177 Member States comprised of developing, middle and high-income countries from all regions of the world who are dedicated to eradicating poverty in rural areas.

Membership in IFAD is open to any State that is a member of the United Nations, any of its specialized agencies or the International Atomic Energy Agency.

Solution (d)

Basic Info:

It is the only tripartite U.N. agency which brings together governments, employers and workers of 187 member States, to set labour standards, develop policies and devise programmes promoting decent work for all women and men.

It was established in 1919 by the Treaty of Versailles as an affiliated agency of the League of Nations.

Headquarters: Geneva, Switzerland

The ILO sets international labour standards with conventions, which are ratified by member states which are are non-binding.

Conventions are drawn up with input from governments, workers’ and employers’ groups at the ILO and are adopted by the International Labour Conference.

After ratification of an ILO Convention it becomes legally binding. A ratifying country is subject to international supervisory procedures.

India is a founding member of the ILO and it has been a permanent member of the ILO Governing Body since 1922.

India has ratified six out of the eight-core/fundamental ILO conventions. These conventions are:

• Forced Labour Convention (No. 29)
• Abolition of Forced Labour Convention (No.105)
• Equal Remuneration Convention (No.100)
• Discrimination (Employment Occupation) Convention (No.111)
• Minimum Age Convention (No.138)
• Worst forms of Child Labour Convention (No.182)

Solution (b)

Basic Info:

The Asian Development Bank was conceived in the early 1960s as a financial institution that would be Asian in character and foster economic growth and cooperation in one of the poorest regions in the world.

ADB has headquarters in Manila, Philippines.

The Asian Development Bank envisions a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty in the region.

ADB is multilateral development finance institution providing loans, grants and technical assistance.

 ADB has grown to encompass 68 members of which 49 are from within Asia and Pacific and 19 outside.  

India is the largest borrower of Asian Development Bank and the fourth largest shareholder of ADB. The institution has approved nearly $30 billion to India. Recently, the Asian Development Bank has announced a $1.5 billion Covid-19 package for India to help funding the country’s response to tackle Covid-19.

ADB has 7 priority areas:

• Addressing remaining poverty and reducing inequality
• Accelerating progress in gender equality
• Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability
• Making cities more livable
• Promoting rural development and food security
• Strengthening governance and institutional capacity

Fostering regional cooperation and integration

Solution (c)

Basic Info:

The Convention has been designed to become an essential instrument in the facilitation of international trade and in the promotion of mediation as an alternative and effective method of resolving trade disputes.

It also contributes to strengthening access to justice, and to the rule of law.

The Convention defines two additional grounds upon which a court may, on its own motion, refuse to grant relief.

Those grounds relate to the fact that a dispute would not be capable of settlement by mediation or would be contrary to public policy.

The Convention ensures that a settlement reached by parties becomes  binding  and  enforceable in accordance with a simplified and streamlined procedure.

India is a Signatory to UNISA.

Solution (b)

Basic Info:

International Debt Statistics (IDS), a long-standing annual publication of the World Bank, features external debt statistics and analysis for the 120 low and middle-income countries that report to the World Bank Debtor Reporting System.

Solution (b)

Basic Info:

United Nations Commission on International Trade Law is the core legal body of the United Nations in the field of international trade law. It is a legal body with universal membership specialising in commercial law reform worldwide after its establishment in 1965.

The role of UNCITRAL is to provide the rules for international arbitration.

It does not participate in either public or private disputes.

UNCITRAL does not offer legal advice in specific disputes and does not nominate arbitrators, administer arbitrations etc.

The UNCITRAL’s main function is formulating modern, fair and harmonised rules on commercial transactions. These include:

• Conventions, model laws and rules which are acceptable worldwide
• Legal and legislative guides and recommendations of great practical value
• Updated information on case law and enactments of uniform commercial law
• Technical assistance in law reform projects
• Regional and national seminars on uniform commercial law.

Solution (d)

Basic Info:

The International Maritime Organization (IMO) is a specialized agency of the United Nations (UN).

It is a global standard-setting authority with responsibility to improve the safety and security of international shipping and prevention of marine and atmospheric pollution by ships.

Its main role is to create a regulatory framework for the shipping industry that is fair and effective, universally adopted and universally implemented.

It is also involved in legal matters, including liability and compensation issues and the facilitation of international maritime traffic.

Important Treaties/Conventions:

• International Convention for the Safety of Life at Sea (SOLAS)
• International Convention on Standards of Training, Certification, and Watchkeeping for Seafarers (STCW)
• International Convention for the Prevention of Pollution from Ships (MARPOL)

India joined the IMO in 1959. The IMO currently lists India as among the 10 states with the ‘largest interest in international seaborne trade’.

Solution (b)

Basic Info:

It is the UN specialised agency for Information and Communication Technologies – ICTs.

Founded in 1865 to facilitate international connectivity in communications networks. It is Headquartered in Geneva, Switzerland.

It allocates global radio spectrum and satellite orbits, develops the technical standards that ensure networks and technologies seamlessly interconnect, and strives to improve access to ICTs to underserved communities worldwide.

ITU currently has a membership of 193 countries and over 900 private-sector entities and academic institutions.

 India got elected as a member of ITU Council for another 4-year term – from 2019 to 2022. India has remained a regular member since 1952.

Important publication of the ITU is the Global Cybersecurity Index (GCI).

Solution (a)

Basic Info:

The OECD is an intergovernmental economic organisation, founded to stimulate economic progress and world trade. Most OECD members are high-income economies with a very high Human Development Index (HDI) and are regarded as developed countries.

It was founded in 1961 and is headquartered in Paris, France.

There are total 36 members.

India is not a member, but a key economic partner.

Reports and Indices by OECD

• Government at a Glance 2017 report.
• International Migration Outlook.
• OECD Better Life Index.

Solution (c) 

Statement Analysis:

 Context – Germany withdrew case against Italy over World War II at ICJ

Solution (b)

Green Steel is the steel with the lowest carbon footprint. It can be produced using HYBRIT technology. Hydrogen Breakthrough Ironmaking Technology (HYBRIT) is a groundbreaking effort to reduce CO2 emissions and de-carbonise the steel industry.

Context – Parliamentary committee meeting was convened on ‘Transition towards Green Steel’

Solution (d)

Statement Analysis:

 Context – The danceform was in news.

Solution (a)

Statement Analysis:

 Context – The organization was in news due to a doping incident

Solution (b)

Statement Analysis:

 Context – Centre pushed for increased exports of tissue culture plants and offered help to exporters to access new markets

Solution (b)

E             B         A            C             D

Therefore, A is sitting in between B and C.

Solution (c)

Solution (b)

Hence, I is in the middle

Solution (a)

Hence, S is sitting diagonally opposite to B

Solution (a)

The passage clearly tells that the recipient has been infected with the HIV positive blood sample and also the last line speaks about the death of the donor.

Option c is incorrect because the donor had consented to be informed of a positive result back in 2016

Option d is not related to the passage

From this we can infer that option a, is correct.