Static Quiz 12 February 2024 (Economy) 

About
• A stamp duty is essentially a government tax, which is levied to register documents, like an agreement or transaction paper between two or more parties, with the registrar.
• Duty to be Paid: Usually, the amount specified is fixed based on the document’s nature or is charged at a certain percentage of the agreement value stated in the document.
• Applicability: Stamp duties can be levied on bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts.
• Legality: Stamp duties are accepted as valid evidence in a court of law.
o They are levied by the Centre but appropriated by the concerned states within their territories under Article 268 of the Constitution.
• Need for the Bill: Several provisions of the Indian Stamp Act, 1899 have now become redundant or inoperative, also there is a lack of uniform legislation for all Indian states regarding stamp duties.

Green Revolution in India can be divided in three phases:
Phase I (1966 – 72): In 1966, India ordered the import of 18,000 Tonnes of HYV seeds of wheat that were distributed in the highly irrigated areas of Punjab, Haryana and western Uttar Pradesh.

Phase II (1973 – 80): The extension of HYV technology from wheat to rice, favoured by the growth of tube wells (private as well as govt.) spread the green revolution to new areas in eastern UP, Andhra Pradesh, coastal areas of Karnataka and Tamil Nadu.

Phase III (1981 – 90): The green revolution spread to the erstwhile low growth areas of eastern region of West Bengal, Bihar, Assam and Odisha.

Sovereign Bonds
• A sovereign bond is a debt security issued by a national government.
• They can be either local-currency-denominated or denominated in a foreign currency.
• Unlike corporate bonds, the risks associated with these bonds are the exchange rate (if the bonds are priced in local currency), economic risks, and political risks that can lead to a possible default on the interest payments or principal.
• Sovereign bond defaults aren’t very common and generally, they are low risk bonds and thus, provide low yield relatively.

Both the statements are correct.

Nominal Effective Exchange Rate (NEER) which is a multilateral rate representing the price of a representative basket of foreign currencies, each weighted by its importance to the domestic country in international trade (the average of export and import shares is taken as an indicator of this).

The nominal exchange rate is the amount of domestic currency needed to purchase foreign currency.

Both the statements are correct.

Most Favoured Nation (MFN): Under WTO agreements, countries cannot normally discriminate between their trading partners. In general MFN means that every time a country lowers a trade barrier (import duties) or opens up a market or gives some country a special favour, it has to do so for the same goods or services from all its trading partners – whether rich or poor, weak or strong. Certain exceptions are allowed in case of developing countries or if a product is traded unfairly from a country but only under strict conditions.

However, exceptions allowed to this rule include the following:

a. Free Trade Agreements (FTA): WTO member countries are allowed to sign free trade agreements but WTO says that whatever benefits are offered to the FTA partners, the same should be passed on to all WTO member countries progressively (no time limit specified).

b. Security Clause: India accorded the MFN status to Pakistan in 1996 as per India’s commitments as a member of the WTO. But after the attack in Pulwama, in Feb 2019 India withdrew MFN status making use of a ‘security exception’ clause in the GATT.

This is because Article 21(b)(iii) of GATT states that “Nothing in this Agreement shall be construed to prevent any contracting party (including India in this case) from taking any action which it considers necessary for the protection of its essential security interests taken in time of war or other emergency in international relations.”

c. Special and Differential Treatment given to developing/poor nations. Under the Generalized System of Preferences (GSP), developed countries offer non-reciprocal preferential treatment (such as zero or low duties on imports) to products originating in developing countries. Preference-giving countries unilaterally determine which countries and which products are included in their schemes.