Daily Mains Practice Questions 06-04-2023

KEY POINTS

·        2021-22 and 2022-23 have both seen unusual rabi (winter-spring) cropping seasons in terms of weather and yield loss, especially in wheat.

·        If 2021-22 was largely wet, with five consecutive months of excess/surplus rain, 2022-23 was quite the opposite.

·        The surprise element, however, was rain — a 25.8% surplus in March 2023. But while the first half of March (1-15) reported 77.6% deficient rainfall, the second half (16-31) saw a 120.5% surplus.

·        The so-called “Ides of March”, seen in the heat wave that forced premature ripening and drying of the wheat crop last year, manifested itself in the form of unseasonal rain this year.

·        Wheat is sensitive to both heat stress and rain/ thunderstorms during the terminal grain filling and ripening period.

·        This is the time when the crop’s earheads are heavy with grains. The more the weight accumulated from grain-filling, the more vulnerable is the crop to rain.

·        Last year’s failed domestic crop came at a time when global commodity prices were on fire following Russia’s invasion of Ukraine.

·        The world has since overcome the effects of the war. Even in the unlikeliest possibility of India’s wheat output falling to the 2021-22 level or lower, a resurgence of cereal inflation looks improbable.

KEY POINTS

·        Growth becomes inclusive and sustainable only when ‘financial inclusion’ is integral to public policy. Inclusive growth, necessitated bank nationalisation.

·        Under the SHG-BLP members can access loans from banks only after individual savings, regular group meetings and inter-lending amongst members.

·        MFIs usually give loans through joint liability groups (about five borrowers per group), who are jointly and severally responsible for repayment.

·        But under SHG-BLP per borrower loan amount has been small and the loaning process a tad longer, as compared to quicker and bigger loans from MFIs.

·        While SHG-BLP movement started with social objectives for accessing formal finance, MFIs gradually transformed the movement into an efficient commercial operation.

·        Poverty, climate change and overexploitation of natural resources threaten sustainable development and SDGs. Microfinance has the potential to provide solutions. Its future is bright and still unexplored.

·        India is a vast country and many microfinance models are required. Efficiency and flexibility to meet clients’ needs must be the differentiators.

·        The RBI recently defined microfinance as collateral free loans given to households having annual income up to Rs 3 lakh.

·        The future of microfinance hence hinges on: ‘Moving all Microloans to Formal Sector’ either through banks/MFIs and that is possible.

KEY POINTS

·        The framework facilitates invoicing of exports and imports in rupee, market-determined exchange rates between currency pairs of the trading partners, and trade settlement via Special Rupee Vostro Account (SRVA).

·        Going by the BIS Triennial Central Bank Survey 2022, in terms of foreign exchange market turnover (daily averages), the dollar was the most dominant currency accounting for 88 per cent of the global forex turnover in 2022 .

·        The benefits of rupee invoicing are manifold, especially during geopolitical unrest and when economic sanctions are levied against India’s major trade partners.

·        Amongst the benefits, the prominent ones are lowering of transaction costs, a greater degree of price transparency, quick settlement time, most importantly, internationalisation of the rupee.

·        Analysis shows that invoicing in rupee would be more favourable with trade partners such as Russia, Saudi Arabia, Nigeria and the UAE, where India is a large importer and potential exists for Indian exports as well.