By : Basava Uppin

Merchandise Exports from India Scheme (MEIS)

Violated WTO Agreement on
Subsidies and Countervailing
Exporter
measures (SCM) and hence
replaced with RoDTEP

1
2

Duty Credit Scrips

Value depends upon:
1. Type of Product
2. Export Country.

3
By : Basava Uppin
By : Basava Uppin
 Prelims MCQ By : Basava Uppin
Prelims MCQ
Which among the following is/are benefits associated with The Government has recently announced new export promotion
the Remission of Duties or Taxes on Export Products scheme “Remission of Duties or Taxes on Export Product (RoDTEP)”. In
(RoDTEP) Scheme? this regard, consider the following statements related to Duty Scrips:
1. Remission of all direct and indirect taxes paid at the 1. The Duty Scrips can be used to pay customs duty, IGST or any
Centre, State and local level. other tax on import of commodities.
2. Ensure Zero Rating of Exports 2. The Duty scrips are transferrable.
3. Compliance with the WTO’s norms
Which of the statements given above is/are correct?
Select the correct answer using the code given below: (a) 1 only
(a) 1 only (b) 2 only
(b) 1 and 3 only (c) Both 1 and 2
(c) 2 and 3 only (d) Neither 1 nor 2
(d) 1, 2 and 3

Practice MCQ
Which among the following statements related to Remission of Duties or Taxes on Export
Product (RoDTEP) scheme is incorrect?
(a) The RoDTEP scheme has replaced the Merchandise Exports from India Scheme (MEIS).
(b) The Scheme provides for refund of embedded taxes imposed at Centre, state and local
level to the exporters.
(c) The refunds are provided in the form of Duty Scrips which can be used for the payment of
Customs duty only.
(d) The scheme is implemented by the Ministry of Finance.
 By : Basava Uppin
Net Terms of Trade (NTT)

Denotes how much a country pays for its imports and how much it gets for the exports.
Throws light on the extent to which a nation can fund its imports based on the returns of its exports.

Expressed as (Px/ Py) * 100 wherein Px denotes Price Index of Exports and Py denotes Price Index of Imports.

Practice MCQ
If there is improvement in Net terms of Trade (NTT) of a country, what does it denote?
(a) Higher volume of exports as compared to Imports
(b) Higher volume of imports as compared to exports
(c) Higher prices of exports as compared to prices of Imports
(d) Higher prices of imports as compared to prices of exports.
By : Basava Uppin
 Criteria IMF World Bank By : Basava Uppin
Establishment Bretton Woods Conference (UN Monetary and Financial Bretton Woods Conference(UN Monetary and Financial Conference)
Conference)
Year 1944 1944
Mandate (a) Lend Loans to the countries facing global crisis Promote Growth and Development.
(b) Global Surveillance
(c) Technical assistance to the Government
Criteria for Agree to the IMF Articles of the Agreement Agree to the World Bank Articles of the Agreement
becoming member Must be member of IMF to become member of World Bank Group.
Decision Making Board of Governors comprising of all member countries. Board of Governors comprising of all member countries. It consists of
It consists of one governor and one alternate governor for one governor and one alternate governor for each member country.
each member country. The governor is usually the minister The governor is usually the minister of finance or the governor of the
of finance or the governor of the central bank. central bank.
Chairperson As per convention, IMF is always headed by a European As per convention, IMF is always headed by US Citizen
Lending Does not lend for specific projects. Can lend to specific projects.
Lend Conditional loans to countries to tide over BoP Crisis. Usually, unconditional loans for the purpose of growth and
Conditional loans- Reduce Fiscal Deficit, CAD, Structural development.
Reforms etc.
Source of Funding Members’ contribution through Quota Raise money through Bonds in International Market.
Share capital by Member countries.
Headquarters Washington DC Washington DC
Member countries 190 189
Reports World Economic Outlook, Global Financial Stability Report, Human Capital Index (HCI); World Development Report; Global
Fiscal Monitor Report Economic Prospects; Logistics Performance Index; Women, Business
 By : Basava Uppin
Structure of IMF
Board of Governors
• Representatives of 190 Member countries
• Represented by Finance Minister
• Meet once in a year and take broad policy
decisions
IMFC
• Consists of 24 members appointed by
Board of Governors
• Meets twice a year and advises the Board
Executive Board of Governors
• Consists of 24 Members elected by Board of
Governors
• Looks after day-to-day functioning of the IMF

Managing Director
• Appointed by the Executive Board for a period of 5
years
 By : Basava Uppin
Quota and SDR in IMF
 By : Basava Uppin
QUOTA
• Contribution of the Lend to
member Countries
• Depends upon Size IMF Countries facing
of GDP, Forex
Reserves, Openness BoP Crisis
Determines
IMF Quota
• Quota review is undertaken every 5 years.
• Voting Rights • Changes in Quota approved by 85% of the votes.
• Access to Loans • Top 10 Countries in terms of Quota and Voting Rights: USA,
• Allocation of SDRs Japan, China, Germany, France, UK, Italy, India, Russia and
Brazil.
• India’s Quota (2.75%) and Voting Rights (2.63%).

Challenges in Quota review:

USA enjoys more than 15% voting rights and hence exercises
virtual veto.
 By : Basava Uppin
About Special Drawing Rights (SDRs)
• International Reserve Asset created by IMF to supplement the member countries’ official reserves.
What is SDR?
• SDRs become part of Forex Reserves
How are SDRs allocated? • Allocated to the member countries in proportion to IMF Quotas
• The value of the SDR is based on a basket of five currencies—the U.S. dollar, the Euro, the
Chinese Renminbi, the Japanese Yen, and the British Pound Sterling.
Value of SDR
• The value of SDR is set daily by the IMF on the basis of exchange rates between the currencies
included in SDR. The value of SDR is denominated in terms of dollars.
Criteria for inclusion of Export Criterion: Member of IMF and one of the Top 5 world exporters.
currency in SDR Basket Freely usable: Currency has to be widely used to make payments for international transactions
• SDRs can be held as part of Forex Reserves
• SDRs can be exchanged into other freely usable currencies among themselves. (This signifies
that SDR is neither claim nor currency of IMF. Rather, it is potential claim on freely usable
Uses of SDRs currencies of IMF members)
• IMF members can also use SDRs in their transactions with IMF such as repayment of loans,
payment of interest, payment for increasing their IMF quota and so on.
• Members can sell a part or all their SDR allocations.
By : Basava Uppin
 Practice MCQ Practice MCQ By : Basava Uppin
With respect to IMF’s Quota, consider the following statements: The Special Drawing Rights (SDRs) issued by the IMF can be used for
1. An individual member country’s quota broadly reflects its which among the following?
relative position in the world economy. 1. Held as part of Member country's forex reserves
2. Quotas are expressed and denominated in terms of dollars. 2. Member Countries can sell a part or all their SDR allocations.
3. Quota determine the SDR allocations of the IMF. 3. SDRs can be exchanged into other freely usable currencies.
4. SDRs can be used for the Increasing the IMF Quota.
Which among the statements given above is/are correct?
(a) 1 only Select the correct answer using the code given below:
(b) 1 and 2 only (a) 1 only
(c) 1 and 3 only (b) 1 and 3 only
(d) 1, 2 and 3 only (c ) 1, 2 and 3 only
(d) 1, 2, 3 and 4

Practice MCQ
With respect to Currencies included in the IMF's Special Drawing
Rights (SDRs), consider the following statements:
1. Presently, there is no well defined criteria for inclusion of a
currency in SDR basket.
2. All the currencies included in the SDR basket are assigned equal
weightage.
3. The SDR currency basket is reviewed every five years by the
Executive Board of the IMF.

Which among the statements given above is/are correct?

(a) 1 and 2 only (b) 3 only
(c) 2 and 3 only (d) 1, 2 and 3 only
 By : Basava Uppin
Prelims 2022 Practice MCQ
‘’Rapid Financing Instrument’’ and ‘’Rapid Credit Facility’’ Consider the following statements related to Poverty
are related to the provisions of lending by which one of Reduction and Growth Trust (PRGT):
the following? 1. It is a financial assistance program of the IMF for the
a) Asian Development Bank poor countries.
b) International Monetary Fund 2. Under this mechanism, poor countries currently get
c) United Nations Environment Programme Finance loans at zero interest rates.
Initiative
d) World Bank Which among the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
By : Basava Uppin
 By : Basava Uppin
STRUCTURE OF WORLD BANK

Board of Governors
• Representatives of 189 Member countries
• Represented by Finance Minister
• Meet once in a year and take broad policy
decisions

Delegates the
functions

Executive Directors
• Consists of 25 Directors
• Five largest shareholders appoint an executive
director, while other member countries are
represented by elected executive directors.

World Bank President

• Selected by the Board of Directors for a period of 5
years
 By : Basava Uppin
World Bank Group
International • Loans to the world’s poorest countries at concessional terms (zero or very low interest rates) and
Development maturity periods of around 30 to 35 years.
Association
• Loans to Middle-income and credit worthy poor countries.
International Bank for
Reconstruction and • Note: IBRD + IDA→ World Bank. All 5 Institutions together→ World Bank Group.
Development (IBRD) • Countries must first join the IMF to be eligible to join World Bank Group.
• Membership in the IDA, IFC and MIGA are conditional on membership in IBRD.
International Finance • Loans to the Private sector in developing countries.
Corporation
Multilateral Investment • Encourages Investment in the developing countries by giving Insurance against Political risk.
and Guarantee Agency
(MIGA)
International Centre for • Handle Disputes related to International Investment
Settlement of
Investment Disputes • Note: India is not a member of ICSID.
(ICSID)
 By : Basava Uppin
Prelims Pointers on WTO
• Bretton Woods Conference proposed ITO ( Opposed).
• Multilateral Agreement – GATT (1947) to promote free and fair International Trade
Establishment of WTO
• 8th Rounds of Negotiations: Uruguay Round (1986-95) → Dunkel Draft→ Establishment of WTO
through Marrakesh Treaty.
• Ministerial Conference: Highest DM body; Meets every 2 years; Member country represented by
Minister of Commerce and Industry; Functions on principle of “One Member, One Vote”
Structure of WTO
• Trade Policy Review Body
• Dispute Settlement Body
• Most Favoured Nation (MFN) Clause: Trade concession offered by a member country automatically
Founding Principles of
gets extended to other member countries.
WTO
• National Treatment
• Tariff Barriers: Imposition of different taxes which impede free trade.
Trade Barriers • Non-Tariff Barriers: Import licensing; Delays in Customs clearances; Quota, Higher subsidies;
Technical Barriers; Sanitary and Phytosanitary measures etc.
• Multilateral Agreements: GATT, GATS, TRIPS, AoA, TRIMS, Agreement on SCM, Agreement on TBT etc.
Types of WTO
• Plurilateral Agreements: ITA; Govt. Procurement; Trade in Civil Aircraft; Bovine Meat and Dairy
Agreements
related Agreements (Terminated in 1997)
Important Reports • World Trade Report; Goods Trade Barometer ( Earlier known as World Trade Outlook Indicator)