Sign Up on Practicemock for Free Tests, Current Affairs, Exam Notifications and Updates

Today, we bring to you the difficult words and their meanings from the editorial which is about “The Covid crisis may lead to a CAD surplus (excess) this year”. These editorials are being published on regular basis and it comes handy to you at the time of last minute revision of important vocabulary words. These will not only help the candidates to prepare better for the English section, but will also make them feel confident about their all such competitive exams.

SEBI Grade A 2020 Free Mock

Word/PhraseContextual Meaning
surplusexcess
complacencyfeeling of calm satisfaction with your own abilities or situation
deterioratingto become worse
depreciatingto lose value
forexforeign exchange
war-chesta large amount of money that a company or a government keeps for a particular purpose
merchandisegoods that are bought and sold
discretionarydecided by officials and not fixed by rules
remittancesact of sending payment to someone
diasporathe scattering of people from their original country to other places
expedienthelpful or useful in a particular situation
flip-flopsto change a plan completely

SEBI Grade A Free Mock Test

The Covid crisis may lead to a CAD surplus (excess) this year

But that’s no cause for complacency (feeling of calm satisfaction with your own abilities or situation) as it is likely to be caused more by India’s imports collapsing than rising exports

In the past, global economic crises have always triggered a deteriorating (to become worse) balance of payments situation for India — with a widening Current Account Deficit (CAD) and a depreciating (to lose value) currency. But the Covid outbreak seems to be leading to a diametrically opposite situation — a current account surplus caused more by India’s imports collapsing more than rising exports. Barclays recently forecast that India would report a current account surplus of $19.6 billion or 0.7 per cent of GDP in FY21 while characterising this as an ‘unwelcome surplus’ because it is triggered mainly by the demand shock caused by the pandemic. SBI’s estimate earlier this month also made a similar forecast. Both institutions also expect India to report a Balance of Payments surplus this fiscal. Should these forecasts come good, they would offer a breather to domestic policymakers from having to find forex (foreign exchange) flows to finance the trade gap this fiscal. The rupee too, backed by the RBI’s forex war-chest (a large amount of money that a company or a government keeps for a particular purpose) may hold up. But given the highly fluid situation on global trade and the fact that India’s positive trade balance may be short-lived, policymakers will need to use this window wisely instead of getting complacent.

Sign up for Special Lockdown Sectional Tests

While India’s import bill is quite likely to bounce back once the Covid impact subsides, the pandemic appears to be permanently re-ordering India’s BOP dynamics in three ways. One, India’s merchandise (goods that are bought and sold) exports have always been hyper-sensitive to demand and growth in destination markets. Here, the WTO’s forecast that global trade could shrink by a third in 2020, as well as rising protectionist tendencies in key markets like the US, could pose challenges to a quick revival in merchandise exports, particularly for discretionary (decided by officials and not fixed by rules) items like jewellery and apparel. Apart from getting battered MSMEs — critical cogs in the export supply chain — back on their feet in short order, diversifying India’s export basket may now be essential for export revival. Two, India’s services exports driven by IT and IT-enabled services have traditionally weathered crises by leveraging their labour cost advantage, to grab a bigger share of the global offshoring pie. But this time around, curbs on global travel and rising barriers of protectionism threaten the offshoring model itself. Three, inward remittances from NRIs particularly in West Asia have been a key safety net on India’s BOP position during past crises. But with West Asian economies laid low by the oil rout, this time around India may have to brace for not just a sharp fall in remittances (act of sending payment to someone), but also a reverse migration of its diaspora (the scattering of people from their original country to other places). 

Lockdown Warm-Up Tests – Attempt Tests Daily

India may need to focus on ensuring that foreign direct and portfolio investors continue to find it an attractive destination once the dust settles on Covid. This would call for expedient (helpful or useful in a particular situation) demand-side measures to lift the GDP from this slump and honest efforts to reduce the policy flip-flops (to change a plan completely) and sectoral interventions that make India such a difficult place to do business in. The stimulus so far has been of limited help on these fronts.

SEBI 2020 Free Notes – Download PDF

This is all from us regarding today’s editorial. We sincerely hope that these daily editorial articles will be extremely beneficial to all the aspirants preparing for the upcoming banking, government and insurance exams. This is one of the best ways by which you can enhance your vocabulary. 

Download Practicemock App for Updated Current Affairs, Free Topic-Wise Quizzes and Free Mini Mocks
PracticeMock recommends AffairsCloud Current Affairs 2020 PDF. Buy Now and get Rs. 30 off by using the coupon code "PRACTICEMOCK"

    Free Mock Tests & Relevant Articles for the Upcoming Exams

Other Exams
Free Mock TestRelevant Articles
SEBI Grade A Phase I Free Mock TestSEBI Grade A
SBI Clerk Mains Free Mock TestSBI Clerk
RBI Assistant Mains Free Mock TestRBI Assistant
LIC AAO (Specialist) Prelims Free Mock TestLIC AAO (Specialist)
RRB NTPC Free Mock TestRRB NTPC
SBI PO Prelims Free Mock TestSBI PO 
RBI Grade B Phase I Free Mock TestRBI Grade B
Author

Write A Comment