Weekly Editorial Summary Q/A April 1 to April 8 2017: Part I

Ques 1. Explain the role and significance of G20 forum?

Ans : The G-20 was created as the Forum of the Finance Ministers and the Central Bank Governors on September 26, 1999 by the Seven major industrial countries of the world, namely Canada, France, Germany, Italy, Japan, U.K. and USA with an objective “To bring together industrialized and developing nations to discuss key issues in the global economy.”One of the G20 countries is selected to hold the Chair on a rotational basis, being known as “G20 Presidency”. The immediate past, present and the next chair constitute a “Troika” and manage continuity in the G20 work.

Ques 2. Explain the specifics of the system in place for selecting the Presidency to the G20 forum? 

Ans: For selecting the Presidency, a system came into existence when South Korea hosted the Fifth Summit. As per the system, 19 countries have been categorised into the following 5 regional groupings and India is in Group 2:

Group 1: Australia, Canada, Saudi Arabia, USA
Group 2: India, Russia, South Africa, Turkey
Group 3: Argentina, Brazil, Mexico
Group 4: France, Germany, Italy, U.K.
Group 5: China, Indonesia, Japan, South Korea
Each group holds a maximum of four nations. The chair rotates among the groups and one country from a group is selected in a specific year.

Ques 3.How do the member nations get ample representation in the G20 forum? 

Ans: Each member of G20 is represented by its Head of the State in the Leaders’ Summit. Leaders are assisted by their Finance Ministers and Central Bank Governors, and the personal representatives of the respective Leaders called the Sherpas. The Finance Ministers and Central Bank Governors are assisted by their Deputies. G20 members include the G8 countries, namely, USA, Japan, Germany, UK, France, Italy,Canada and Russia and the 11 emerging and developing countries, namely Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Saudi Arabia, South Korea, South Africa and Turkey and the EU.G20 represents two thirds of World Population. 

Ques 4.. Explain the objectives of the G20 forum? 

Ans: The objectives of the G20 forum includes: 

• Policy coordination among its members in order to achieve global economic stability and sustainable growth; 
• To promote financial regulations that reduce risks and prevent future financial crises; and 
• To create a new international financial architecture. 

Ques 5. Briefly, explain the schedule as well as the restructuring that G20 forum has witnessed since 1999? 

Ans: The Finance Ministers and the Central Bank Governors of the member nations meet annually and the First Meeting took place on December 15-16, 1999 in Berlin (Capital of Germany). The subsequent meetings were held in Canada in 2000 and 2001, in India in 2002, in Mexico in 2003, in Germany in 2004, in China in 2005, in Australia in 2006, in South Africa in 2007, and in Brazil in 2008.The Forum of the Finance Ministers and the Central Bank Governors was elevated to Heads of States in the wake of the global financial crisis in 2008. 

Ques 6. Comment on the nature and themes of the first G20 leaders' summit? 

Ans: The first Leaders summit of the G20 forum was held in Washington D.C. on November 14-15, 2008 and the initiative was taken by the 43rd US President George W. Bush in the wake of Financial Crisis of 2008. The Leaders emphasised that the International Monetary Fund’s (IMF) and the World Bank must play their significant roles in the crisis. The Leaders also ensured that the IMF, World Bank and other Multilateral Development Banks have sufficient resources to continue playing their role in overcoming the crisis. 

Ques 7. Comment on the nature and significance of second G20 leaders' summit? 

Ans: The Second G20 Leaders' Summit was hosted by London on April 2, 2009, under the leadership of the then Prime Minister of United Kingdom, James Gordon Brown.The leaders pledged to act together to bring the world economy out of recession and prevent recurrence of a similar crisis in the future. 

Ques 8. Comment on the nature and significance of the Third G20 leaders' summit?

Ans: The Third G20 Leaders' Summit was held in Pittsburgh (USA) on September 24-25, 2009 and was hosted by the 44th US President Barack Obama.The Leaders agreed to launch a framework laying out the policies to act together to generate strong, sustainable and balanced growth. 

Ques 9. Comment on the specifics of the Fourth G20 leader's summit?

Ans: The Fourth G20 Leaders’ Summit was held in Toronto (Canada) on June 26-27, 2010 and was hosted by Stephen Joseph Harper who served as the 22nd Prime Minister of Canada. On June 27, 2010, the leaders declared that this was their first summit of the G20 in its new capacity as the premier forum for international economic cooperation.The theme of the Toronto Summit was stated as “Recovery and New Beginnings”. “Development” was introduced for the first time on the G20 agenda and a High-Level Development Working Group was created. 

Ques 10. Comment on the nature and significance of the Fifth G20 leaders' summit? 

Ans: The Fifth G20 Leaders’ Summit was held in Seoul, South Korea on November 11-12, 2010. Lee Myung-Bak, the 10th President of South Korea hosted the summit.The Leaders pledged to continue their coordinated efforts and act together to generate strong, sustainable and balanced growth. 

Ques 11. Comment on the significance of sixth G20 summit? 

Ans: The Sixth G20 Leaders’ Summit was held in Cannes, France on November 3-4, 2011 and was hosted by Nicolas Sarkozy, the then President of France.The Cannes summit final Declaration was titled “Building our Common Future: Renewed Collective Action for the Benefit of All” and was accompanied by “Cannes Action Plan for Growth and Jobs”. 

Ques 12. Comment on the significance of the seventh G20 summit? 

Ans: The Seventh G20 Leaders’ Summit was held in Los Cabos, Mexico on 18-19 June 2012 and was hosted by Felipe de Hinojosa, 56th President of Mexico. One of the summit’s main outcomes was the adoption of the Los Cabos Growth and Jobs Action Plan.The Action Plan was developed by the Framework Working Group co-chaired by India and Canada. Other key issues addressed at the summit included development policy, green growth, and trade and employment. 

Ques 13. What was the significance of the Eighth G20 summit? 

Ans: The Eighth G20 Leaders’ Summit was held on 5-6 September 2013 in St Petersburg, Russia and was hosted by Vladimir Putin, the President of Russia. G20 Leaders marked the 5th Anniversary of the G20, reaffirming their conviction for the foundation of sustainable growth and rising prosperity based on market principles, effective regulation, inclusiveness and strong global institutions, through shared responsibility of the G20, based on effective policy coordination. 

Ques 14. Explain the significance of the ninth G20 leaders' summit? 

Ans: The Ninth G20 Leaders’ Summit was held on November 15-16, 2014 in Brisbane, Australia and was hosted by Tony Abbott, 28th Prime Minister of Australia. G20 Leaders expressed their commitment to work in partnership to lift growth, boost economic resilience and strengthen global institutions and to achieve these goals they set out Brisbane Action Plan.Leaders also called for improving energy efficiency and for the creation of the Green Climate Fund to address the climatic issues. 

Ques 15. Comment on the significance of the tenth G20 leader's summit? 

Ans: The Tenth G20 Leaders’ Summit was held on 15-16 November 2015 in Antalya, Turkey and was hosted by Recep Tayyip, 12th President of Turkey. The agenda discussed was the world's biggest political and security crises, including Syria and the mass migration of refugees. Some other issues, such as how the world could work together to boost the world economy were also discussed during the summit. The G20 summit was mostly focused on political rather than economic issues due to the Terrorist Attacks in Paris in which 132 people were killed on November 13, 2015, and the French President François Hollande did not attend the summit. 

Ques 16. Comment on the significance of the eleventh G20 leaders' summit? 

Ans: The Eleventh G20 Leaders’ Summit was held in Hangzhou, China on 4-5 September 2016 and was hosted by Xi Jinping, President of the People's Republic of China.The theme of this Summit was: “Toward an Innovative, Invigorated, Interconnected and Inclusive World Economy”.G-20 leaders pledged to continue working for a globally fair and modern international tax system, mutual growth and refrain from competitive devaluation of currencies. 

Ques 17. When is the 12th G20 leaders' summit scheduled and which country will be hosting it? 

Ans: The 12th G20 Leaders' summit is expected to be hosted by Hamburg(Germany) from 7-8 July 2017. 

Ques 18. What does it mean by Asset Reconstruction Companies? 

Ans: An Asset reconstruction company acquires Non-performing assets (NPAs). 

Ques 19. Explain the working mechanism of Asset Reconstruction Companies? 

Ans: The Banks and an ARC get into an agreement in which the ARC takes over the NPA from a bank at a definite price which is less than the actual amount of the NPA. Then, the NPA is transferred to ARC along with any security that was pledged while taking a loan. Now ARC will issue security receipts for fixed interest rate and will raise money for investing in other financial institutions. And in this way, Bank can recover its loan amount. 

Ques 20. What is PARA or Bad Bank? 

Ans:  For tackling the problem of rising NPAs in Indian Banking System, the Union Government and NITI Aayog has recommended to set up an Asset Reconstruction Company(ARC) with funding from, the RBI and the Government. This ARC will be known as Public Sector Asset Rehabilitation Agency (PARA, also dubbed as a Bad Bank). As on June 2016, the total Gross Non-Performing Assets (NPAs) for public and private sector banks is around Rs. 6 lakh crore. And this problem can be solved by the proposed ARC. 

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