Date: 21/12/2006 Time: 11 am to 2 pm School of Distance Learning ADBFM (New Course) Semester I Economic Environment for Banking Marks: 100 -- Instruction: 1) Answer all questions as directed. 2) Figures in brackets in the margin indicate full marks. Section I Basic Concepts: Answer any Eight questions (8 x 5 = 40 Marks) 1. Discuss some of the implications of WTO which pose a challenge for India. 2. Differentiate between Consumer Price Index (CPI) & Wholesale Price Index (WPI). 3. Describe the purposes for which people hold money. 4. State & explain the components of M3. 5. State & explain Repo and Reverse Repo as tools of Monetary Policy. 6. Explain the impact of rising Fiscal Deficit on the Economy. 7. Explain the reason for increasing interest in implementing the Principles of Corporate Governance in the Indian Companies in the recent years. 8. Differentiate between Balance of Trade (BoT) & Balance of Payment (BoP). 9. Describe the unfinished areas of Financial Sector Reforms of India. 10. State and explain the two approximate sources of Thailand's Crisis in the late nineties. 11. Describe the benefits of a Joint Venture. 12. Describe the importance of Development Financial Institutions (DFI) for economic development of any country. Section II Conceptual Understanding and Analytical Ability: Answer any Three of the following questions (3x15=45 Marks) 1. Discuss the advantages and disadvantages of the recent transformation of the leading Development Finance Institutions (DFI) into banks, especially in the light of the experiences emanating from Asia and South-East Asian countries. 2. a) Define the term Fiscal Deficit. Describe the three major drawbacks pointed out by Raja J Chelliah, the eminent Fiscal Expert, in any popular definition of Fiscal Deficit. b) Describe the three different Deficit concepts and their relevance in overcoming the limitation of Fiscal Deficit. 3. a) State and explain the major components of Balance of Payment (BoP)of a country. b) What do you understand by Balance of Payment (BoP) deficit or surplus? 4. What is meant by convertibility of currency? Is India ready for 'Full Convertibility of Rupee'? 5. What is SWOT Analysis? State & explain in brief the strengths & weaknesses of the Indian Economy. 6. What do you understand by Demographic Environment? What is its relevance in the study of Business Environment? Section III Problems and Situational Analysis (15 Marks) Answer any One of the following questions. 1. a). What are the various methods for measuring Gross Domestic Product (GDP)? b). The following are the values of the various components of the National Income of India: Sr. No. 1 Components of National Income Rs (Crores) Value of all final consumption and capital 6,000 Qoods 2. Depreciation Allowances 750 3. Value of Imports 450 4. Subsidies 225 5 Value of Exports 375 6 Commodity Taxation 450 the above values, you are required to calculate 7 From Net Income from Abroad 50 I. GDP at Market Prices il. GNP at Market Prices iil. NNP at Market Prices iv. NNP at Factor Cost 2. The following are the cases of a few companies which had faced many problems because of certain weaknesses and threats from the environment. These companies have certain inherent strengths and favorable environment also which may enable them to overcome the problems, survive and grow: a. Peerless General Finance & Investment Company had faced many problems in the past such as instability in the top management, unfavorable public image, unfavorable Government relations, liquidity constraint, etc. But it has a huge amount of capital of Rs 800 crores invested in fixed assets which the company proposes to use for funding its diversification plans. b. LML has collected nearly Rs 126 crore as advance for booking of scooters. But within five years, its cash position deteriorated owing to a sudden and unforeseen cancellation of booking and withdrawal of deposit resulting in a huge interest burden. These had continually affected its profitability. On the other hand, another new entrant in the highly competitive scooter market namely Gujarat Narmada Auto Limited (GNAL), entered the industry with the financial backing of Gujarat Valley Narmada Fertilizer Company (GNFC). GNAL had the Government of Gujarat to support it during its initial difficult years. Questions: I. Please analyze the two cases separately; identify their strengths, weaknesses opportunities and threats (SWOT). il. Please also comment on the prospects of their survival and growth. xxxxx