QUIZ – 2020: INSIGHTS STATIC QUIZ, 07 February 2020 – Economy

Solution: a)

The Central Board of Direct Taxes (CBDT) has entered into 26 Advance Pricing Agreements (APAs) in the first 5 months of the financial year (April to August, 2019). An advance pricing agreement (APA) is an ahead-of-time agreement between a taxpayer and a tax authority on an appropriate transfer pricing methodology. An APA provides certainty with respect to the tax outcome of the tax payer’s international transactions. An APA can be one of the three types – unilateral, bilateral and multilateral. A Unilateral APA is an APA that involves only the taxpayer and the tax authority of the country where the taxpayer is located. Bilateral APA (BAPA) is an APA that involves the tax payer, associated enterprise (AE) of the taxpayer in the foreign country, tax authority of the country where the taxpayer is located and the foreign tax authority. Multilateral APA (MAPA) is an APA that involves the taxpayer, two or more AEs of the tax payer in different foreign countries, tax authority of the country where the taxpayer is located and the tax authorities of AEs.

Solution: d)

Index of Industrial Production (IIP) is an index that shows the performance of different industrial sectors of the Indian economy. The IIP is estimated and published on a monthly basis by the Central Statistical Organisation (CSO). As an all India index, it gives general level of industrial activity in the economy. According to the CSO. “It is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products during a given period with respect to that in a chosen base period.” The current base year is 2011-2012.

Following are the three sectors of the IIP as per the revision based on 2011-12 series.

(i) Mining,

(ii) Manufacturing and

(iii) Electricity

Solution: c)

IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused exclusively on the private sector in developing countries. The Bank Group has set two goals for the world to achieve by 2030: end extreme poverty and promote shared prosperity in every country.

The IFC is owned and governed by its member countries, but has its own executive leadership and staff that conduct its normal business operations.

It is a corporation whose shareholders are member governments that provide paid-in capital and which have the right to vote on its matters.

Functions:

• It offers an array of debt and equity financing services and helps companies face their risk exposures, while refraining from participating in a management capacity.
• The corporation also offers advice to companies on making decisions, evaluating their impact on the environment and society, and being responsible.
• It advises governments on building infrastructure and partnerships to further support private sector development.

Since 2009, the IFC has focused on a set of development goals that its projects are expected to target. Its goals are to increase sustainable agriculture opportunities, improve healthcare and education, increase access to financing for microfinance and business clients, advance infrastructure, help small businesses grow revenues, and invest in climate health.

 Source

Solution: d)

Statement 1 – In the light of high NPAs, Banks tend to lower the interest rates on deposits on one hand and likely to levy higher interest rates on advances.

Statement 2 – The increased NPAs put pressure on recycling of funds and reduces the ability of banks for lending more and thus results in lesser interest income.

Statement 3 – As per Basel norms, banks are required to maintain adequate capital on risk-weighted assets on an ongoing basis. Every increase in NPA level adds to risk weighted assets which warrant the banks to shore up their capital base further.

Solution: d)

Seed capital is the funding required to get a new business started. This initial funding, which usually comes from the business owner(s) and perhaps friends and family, supports preliminary activities such as market research, product research and development (R&D) and business plan development.