ENGLISH QUIZ 29.07.2020

1.Consider the following statements:

1.India announces 400 million dollar currency swap for Sri Lanka.

2.Sri Lanka was set to enter into an agreement with the RBI for a currency swap worth $300 million          under the South Asian Association for Regional Cooperation (SAARC) framework.

Which of the above statement/statements are correct?

A. 1 only

B. 2 only

C. Both 1 and 2

D. Neither 1 nor 2

2.Consider the following statements:

1.Flipkart to acquire Walmart India’s wholesale business.

2.Flipkart is also facing intense competition from JIL Mart of RIL, which was launched in December           2010.

3.Walmart has a total of 28 wholesale stores, two fulfillment centers and over 1.5 million members in           India, including large-scale mom-and-pop stores (grocery stores).

Which of the statements given above is/are correct?

A. 1 and 2 are correct

B. 1 and 3 are correct

C. 2 and 3 are correct

D. All of the above

3.Consider the following statements:

1.India extends medical assistance worth about USD 1 million to North Korea.

2.The Foreign Ministry also stated that this medical aid is under the aegis of the anti-tuberculosis                 program of the World Health Organization (WHO) in the Democratic People’s Republic of North               Korea.

Which of the above statement/statements are correct?

A. 1 only

B. 2 only

C. Both 1 and 2

D. Neither 1 nor 2

4.Consider the following statements:

1.India hands over 10 broad gauge locomotives to Bangladesh.

2.Indo-Bangladesh railway collaboration is a vital element of the Bilateral cooperation in promoting             connectivity and trade and in boosting the economic partnership.

3.Both the countries have been jointly working to enhance rail connectivity by developing some                      crucial railway projects and by restoring some of the old rail links with Bangladesh.

Which of the statements given above is/are correct?

A. 1 and 2 are correct

B. 1 and 3 are correct

C. 2 and 3 are correct

D. All of the above

ANSWERS:-

Answer: 1)A      

Explanation

The Reserve Bank of India (RBI) has signed an agreement for extending a $400-million currency swap facility to Sri Lanka. This currency swap is used to boost the foreign reserves and ensure the financial stability of the country, which is badly hit by the COVID-19 pandemic. The currency swap arrangement will remain available till November 2022. Sri Lanka was set to enter into an agreement with the RBI for a currency swap worth $400 million under the South Asian Association for Regional Cooperation (SAARC) framework.

Currency exchange agreement and its importance

• In general terms, currency swap is a type of foreign exchange agreement that is done between two parties for a fixed time to get another currency in exchange for one currency.
• The main objective of the currency regulation is to avoid stability and other risks in the foreign exchange market and exchange rate.
• Generally, the central bank of a country and its government engage in currency exchange agreements with foreign counterparts to ensure the adequacy of foreign exchange in the country.

How currency swap works?

• A currency swap is similar to an interest rate swap except that in a currency swap, there is often an exchange of principal, while in an interest rate swap, the principal does not change hands.
• In currency swap, on the trade date, the counter parties exchange notional amounts in the two currencies.
• Since swaps can last for a long time, depending on the individual agreement, the exchange rate in the marketplace (not on the swap) can change dramatically over time.
• This is one of the reasons institutions use these currency swaps. They know exactly how much money they will receive and have to pay back in the future.
• During the term of the agreement, each party pays interest periodically, in the same currency as the principal received, to the other party.
• There are a number of ways interest can be paid. It can pay at a fixed rate, floating rate, or one party may pay a floating while the other pays a fixed, or they could both pay floating or fixed rates.

Why is currency swap done?

• Central banks and Governments engage in currency swaps with foreign counterparts,
• To meet short term foreign exchange liquidity requirements or to ensure adequate foreign currency to avoid Balance of Payments (BOP) crisis till longer arrangements can be made.

SAARC currency swap facility:

• The SAARC Currency Swap Facility came into operation on November 15, 2012.
• This has been done to further financial stability and economic cooperation within the SAARC region.
• To provide a backstop line of funding for short term foreign exchange liquidity requirements or balance of payment crises till longer term arrangements are made.

What is a Currency Swap?

• In the swap arrangement, a country provides dollars to a foreign central bank, which, at the same time, provides the equivalent funds in its currency to the former, based on the market exchange rate at the time of the transaction.
• The parties agree to swap back these quantities of their two currencies at a specified date in the future, which could be the next day or even two years later, using the same exchange rate as in the first transaction.

Answer: 2)B

Explanation

Flipkart has strengthened its wholesale presence with the acquisition of Walmart India, which operates the Best Price cash-and-carry business. Bengaluru-based Flipkart, in which Walmart Inc holds a majority, has announced the launch of Flipkart Wholesale — a new digital marketplace that looks to transform the kirana retail ecosystem by leveraging technology.

Main characteristics

• From January 2020, Flipkart was in talks with parent company Walmart on this deal. This comes at a time when many e-commerce companies, including Amazon, are trying to woo India’s mom-and-pop stores or grocery stores, which are considered to be the backbone of the economy.
• Flipkart is also facing intense competition from JIL Mart of RIL, which was launched in December 2019. Jio Mart is an omni-channel technology-platform that works with the grocery store and local merchants and producers to unite customers.
• RIL Chairman Mukesh Ambani recently announced that, he plans to gradually serve people across India and has more than 3 crore offline retailers with more than 200 million households in India. Helping to connect.
• Walmart has a total of 28 wholesale stores, two fulfillment centers and over 1.5 million members in India, including large-scale mom-and-pop stores (grocery stores). However, Walmart could not make money from this business.
• Under this deal, employees of Walmart India will join the Flipkart group and no layoffs will be done.

background

• India’s new e-commerce rules do not allow foreign investors to control and market their inventory on their e-commerce platforms.
• This has given local businesses like Jio Mart a relevant edge in emerging as a major growth market for e-commerce.

Answer: 3)C      

Explanation

India has extended medical assistance worth about USD 1 million to North Korea in response to a request received from the World Health Organisation (WHO), the Ministry of External Affairs. In light of this information, the Indian government has decided to provide US $ 01 million of humanitarian aid to North Korea as anti-tuberculosis drugs. The Foreign Ministry also stated that this medical aid is under the aegis of the anti-tuberculosis program of the World Health Organization (WHO) in the Democratic People’s Republic of North Korea.

India and North Korea Relations: Background

• India and North Korea have maintained growing trade and diplomatic relations. India has an embassy in Pyongyang (the capital of North Korea), while North Korea also has an embassy in New Delhi.
• India has also been North Korea’s major food aid provider and its largest trade partner. According to the Confederation of Indian Industry (CII), India’s exports to North Korea totaled more than US $ 60 million in 2013.
• On a diplomatic front, India has always mentioned that, any peaceful settlement between North and South Korea will be strongly supported by India and it seeks the reunification of Korea.

Answer: 4)D

Explanation

India provided 10 railway locomotives to Bangladesh on Monday as grant assistance, with the leadership of the two sides committing themselves to more connectivity and infrastructure initiatives to boost trade and create new supply chains.The broad gauge locomotives, modified to suit height restrictions in Bangladesh, were flagged off by external affairs minister S Jaishankar and railways minister Piyush Goyal during a virtual ceremony that also featured their Bangladeshi counterparts AK Abdul Momen and Mohammed Nurul Islam Sujan.

Significance:

• Indo-Bangladesh railway collaboration is a vital element of the Bilateral cooperation in promoting connectivity and trade and in boosting the economic partnership.
• Both the countries have been jointly working to enhance rail connectivity by developing some crucial railway projects and by restoring some of the old rail links with Bangladesh.

Rail Links between India and Bangladesh:

• Currently, there are four operational rail links between India and Bangladesh which connects West Bengal with Bangladesh, including Gede (India)- Darshana (Bangladesh), Petrapole (India)-Benapole (Bangladesh), Radhikapur (India)- Birol (Bangladesh), Singhabad (India)- Rohanpur (Bangladesh).
• Two passenger trains- Maitree express (Kolkata-Dhaka) runs for 5 days per week and Bandhan Express (Kolkata-Khulna) runs for 2 days per week.
• At present, the movement of the passenger trains between India and Bangladesh has been temporarily suspended due to the COVID-19 pandemic.
• Railway projects between India and Bangladesh:
• A total of 17 Railway projects have been included in the Line of Credit Assistance which was extended by India to Bangladesh, with a commitment of USD 2.44 billion.
• All Line of credit has been offered by India to Bangladesh at an interest rate of 1% per annum, with repayment over 20 years with a moratorium of 5 years.
• Out of the 17 railway projects, 9 have been successfully completed, which includes the supply of BG/MG locomotives, railway bridges and signalling equipment, flat wagons among others.
• Railway projects under implementation using LoC assistance include- Khulna-Mongla Railway line project which is likely to be completed by June 2021 and Kulaura-Shahbazpur railway line which is expected to be completed by the end of this year.
• Three other projects are at various stages of implementation pertaining to a double line track, conversion of meter gauge line to dual gauge line, and a new dual gauge line.
• A cross-border rail link of approximately 12 km is also being built under the grant-in-aid between Agartala and Akhaura town on the Dhaka Chittagong trunk line which is likely to be completed by March 2021. It will also further enhance the freight and passenger connectivity between India and north-eastern states.