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Questions and Answers
What enabled the Government of India to prepay foreign currency loans?
What enabled the Government of India to prepay foreign currency loans?
- Lower foreign exchange reserves and low domestic interest rates
- High foreign exchange reserves and low domestic interest rates (correct)
- Lower foreign exchange reserves and high domestic interest rates
- High foreign exchange reserves and high domestic interest rates
How did the Government of India substitute the foreign debts with domestic debt?
How did the Government of India substitute the foreign debts with domestic debt?
- By issuing government securities on a private placement basis to the RBI (correct)
- By purchasing more foreign currency from RBI
- By seeking financial aid from international organizations
- By issuing government securities to international investors
What is the fiscal/monetary implication of the transactions mentioned in the text?
What is the fiscal/monetary implication of the transactions mentioned in the text?
- The transactions will lead to an increase in fiscal deficit and inflation
- The transactions will lead to a decrease in fiscal deficit but an increase in inflation
- There are no fiscal/monetary implications as it is a substitution of external sovereign debt with domestic sovereign debt placed with RBI (correct)
- There are no fiscal/monetary implications as it is a direct repayment of foreign currency loans
What type of debt was used to substitute the foreign debts?
What type of debt was used to substitute the foreign debts?
What action did the Government of India take to prepay US $ 5.2 billion of foreign currency loans?
What action did the Government of India take to prepay US $ 5.2 billion of foreign currency loans?
What role did the RBI play in the process of substituting foreign debts with domestic debt?
What role did the RBI play in the process of substituting foreign debts with domestic debt?
How do the low interest rates in domestic markets contribute to the prepayment of foreign currency loans?
How do the low interest rates in domestic markets contribute to the prepayment of foreign currency loans?
What distinguishes the mentioned transactions from traditional fiscal/monetary implications?
What distinguishes the mentioned transactions from traditional fiscal/monetary implications?
What was the purpose of issuing government securities on a private placement basis to the RBI?
What was the purpose of issuing government securities on a private placement basis to the RBI?
How did India manage to prepay certain foreign currency loans?
How did India manage to prepay certain foreign currency loans?
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