 Welcome to the Hindu News Analysis by Shankar IAS Academy for the date 7th of June 2019. Displayed are the list of news articles taken up for today's analysis along with the page numbers of Chennai, Bengaluru, Delhi and Tiruvannandapuram editions. The handwritten notes in PDF format and the time stamping of all the news articles taken up for today's analysis will be available in the description section and also in the common section for the benefit of the smartphone users. Let us now start our analysis. First we shall see the economy related news article that has appeared in the front page in all the editions. The news is that RBI cuts interest rate by 25 basis points. Now the analysis of this news article will be relevant in your problems preparation under current events of national importance and under economic development. And it will also be relevant in your main preparation in your general studies paper 3 under Indian economy. Reserve Bank of India which is the central bank of India has cut the repo rates by 25 basis points from 6 percentage to 5.75 percentage. Here know that 25 basis points means 0.25 percentage. Basis points is a term which is generally used in the economy. This repo rate is the benchmark interest rate of the Reserve Bank of India. If you see this benchmark interest rate has fallen below 6 percentage for the first time since 2010. The discussion to cut the repo rate was unanimous among all the members of the monetary policy committee. The monetary policy committee has noted that the growth has weakened significantly. Also there is a drop in the outputs which means the economy is not growing. Hence the monetary policy committee has reduced the benchmark interest rate or the policy repo rate. Here policy repo rate or the benchmark interest rate that is mentioned in the newspaper is nothing but the repo rate. Repo rate is the rate at which the commercial banks borrow from the Reserve Bank of India that is the central bank by mortgaging their government securities and treasury bills. If the repo rate is reduced by RBI the banks will have two options. First is the banks will increase the borrowing from RBI since the rates have become low now. So if the banks borrow higher amounts from RBI the credit creating capacity of banks will increase since it has more money with it now. Second the banks will have to pass on the rate cut benefits to its customers nothing but the borrowers who borrow the money from the bank. So if you see because of the policy repo rate cuts the bank rates have been adjusted to 6 percentage. So the banks have to lend money to the customers at either 6 percentage or less than the 6 percentage interest rate that has been fixed by the RBI. So if the interest rates are lower and attractive the customers and the businesses will borrow more money. So the money supply in the economy will become more. Now if the repo rate is increased the banks have two options either to reduce the borrowing from RBI or borrow at a higher rate from RBI and pass it on to the bank customers by charging higher rates on them. Now let us know the definition of the bank rate. Before knowing the definition of bank rate let us first see what is meant by bill of exchange and discount. Bill of exchange denotes a written document. This document assures payment of money by purchaser to seller for the goods purchased at a future date. It means that you purchase goods say CCTV camera for your business purpose from the CCTV camera seller. You assure him to give him the money for the CCTV camera that you purchase in a future date. This particular future date is called as the maturity date. Let us see what is meant by discount. Discount implies the process of converting the bill into money at an earlier date than that is mentioned in the bill of exchange that is a maturity date that is mentioned in the bill of exchange. The discount is carried if the receiver of the bill of exchange needs the money very urgently. Here the receiver of the bill is nothing but the seller of the goods who has sold his goods to the purchaser. So the seller can approach the bank with the bill of exchange. The bank accepts the bill of exchange and pays the money. For that the bank deducts some percentage of money as interest. For example if you see for a bill of exchange of 1000 rupees the bank may pay 920 rupees after deducting 8 percentage interest rate. The bank will receive full amount from the purchaser on the maturity date. Here the full amount is 1000 rupees otherwise the bank can convert these into money at a lesser discount rate from RBA. So this is the second option. For example if you see at a 6 percentage interest rate the bank will receive 940 rupees from RBA. So here the profit for the bank is 20 rupees. So the difference in this amount from the 960 and 940 which is 20 rupees is called the re-discount. This 6 percentage rate that you can see here is the bank rate or the discount rate. Now apart from the bills of exchange the commercial banks can also get their government securities that they have with them discounted from the Reserve Bank of India. So we can define the bank rate as the rate fixed by the central bank in this case the RBA at which it re-discounts the first class bills of exchange and also the government securities that is held by the commercial banks. This bank rate can also be called as the discount rate. Now by varying the bank rates the Reserve Bank of India controls the credit in the system. If RBA increases the bank rate the bank's profit may be affected. So the banks will not approach RBA for discounting and instead they will charge higher discount rates from the customer. So the customer may not discount his bill with the bank. If all the customers keep doing like this then the money will be concentrated in the banks only or you can tell that the money supply in the economy has become low or reduced. So depending on the economic condition RBA alters the bank rate. Now read the news again. The news tells that RBA cuts interest rate by 25 basis points. So if the interest rates are cut the money supply will increase in the economy overall. This picture given here also tells that the rate cut could lead to reduced EMIs for housing vehicle and also on personal loans. If the banks pass on the benefit of rate cut to the customers only, only if they pass then it is possible. Now the Reserve Bank of India has also changed the stance of its policy from neutral to accommodative which means hike in interest rates is ruled out in the future. If the stance is neutral the Reserve Bank of India gives an indication to the economy that it can either increase or decrease the interest rates in the future. But if the RBA stance is accommodative then it means that it will not hike or increase the interest rate at least in the next policy meeting. Next the Reserve Bank of India has revised the GDP growth projection for the current financial year from 7.2 percentage to 7 percentage. If you see in April's Monetary Policy Committee meeting the revised GDP growth projection was 7.2 percentage but now it is downgraded to 7 percentage. So if there is a possibility to boost the overall demand in the economy in particular the private investment activity we can achieve a higher GDP growth but we also need to make sure that we remain consistent in targeting the inflation that is nothing but the price rise. Next RBA has also revised the consumer price index based inflation. This has been revised downward to 3.4 percentage to 3.7 percentage in the second half of the current fiscal year that is nothing but the financial year 2019 to 2020. Now you need to know what is meant by CPI based inflation. It is nothing but the inflation rate that will be based on the final combined consumer price index that is the combined price consumer price index means both CPI urban and CPI rural data. Now let us see about Monetary Policy Committee in brief because this news article also mentions about Monetary Policy Committee. It is an executive body that contains or consists of 6 members on board where 3 members are from RBA and 3 members are nominated by the central government and this committee is headed by the governor of RBA. This committee should meet at least 4 times in a year to determine the policy interest rate that is required to achieve the inflation targets. At present the Monetary Policy Committee meets and releases policy statements every 2 months know that this is the second meeting of Monetary Policy Committee for this financial year. Now have a look at the practice problems question we shall discuss at the end of the analysis session. Let us move on to the next news article. The next news article is about leverage ratio. It is titled as lower leverage ratio may improve lending activity. Now the discussion will be relevant in your problems preparation under current events of national importance and also under economic development and it will also be relevant in your main syllabus in your general studies paper 3 under Indian economy. Now if you read the title and the first statement of the news article it mentions about the leverage ratio and that the leverage ratio is based on Basel 3 standards or norms. So for you to understand the article clearly you need to first understand about these two. Basel 3 is an internationally agreed set of measures developed by the Basel Committee on Banking Supervision. These measures were created in response to the financial crisis of 2007-2009. It is a comprehensive reform package entitled Basel 3 global regulatory framework for more resilient banks and banking systems. It was released in December 2010 and the Basel 3 standards are the minimum requirements which apply to internationally active banks. The measures aim to strengthen the regulation, supervision and risk management of banks. So the objective of the norm is to improve the banking sector's ability to absorb shocks arising from financial and economic stress. This will in turn help in reducing the risk of spillover of the shocks and stresses from the financial sector to the real economy. We saw that the Basel 3 norms were created in response to the financial crisis of 2007-2009 and underlying cause of this global financial crisis was the build up of excessive on and off balance sheet leverage in the banking system. Leverage in economics means the result that occurs from using borrowed capital as a funding source when investing to expand the firm's asset base and also to generate returns on risk capital. Leverage is an investment strategy of using the borrowed money specifically the use of various financial instruments or borrowed capital to increase the potential return of an investment. Leverage can also refer to the amount of debt a firm uses to finance its assets. When one refers to a company property or investment as a highly leveraged it means that item has a more debt than equity. Before the financial crisis in many cases the banks built up excessive leverage while apparently maintaining strong risk based capital ratios. So the Basel 3 introduced a simple, transparent, non-risk based leverage ratio to act as a credible supplementary measure to the risk based capital requirements. So the leverage ratio under this Basel 3 is defined as the bank's capital measure divided by their exposure measure. The ratio is expressed as a percentage here. In simple terms leverage ratio is the relation between the amount of equity that a company has and the amount of debt that it is carrying in its books. It is a measure of the capacity of the company to meet its financial obligations. Now if you see the first objective of this ratio is to constrain the buildup of leverage in the banking sector to avoid the destabilizing deleveraging process which can damage the broader financial system and also the economy. The second objective is to reinforce the risk based requirements with a simple non-risk based backstop measure. So here backstop means an emergency precaution or last resort. Enough today's news tells that RBA is lower the minimum leverage ratio from 4.5 percentage. In its second bi-monthly policy review the RBA has mandated a leverage ratio of 3.5 percentage for all the banks except for the domestic systemically important banks that is in short DSIBs. The DSIBs will have a 4% ratio. Now why does this lower leverage ratio matters to the banks? Because the lower leverage ratio allows some freedom for the banks to take some additional exposure with respect to capital and also expand their balance sheets. Next why is leverage ratio so important to RBA? We saw that the leverage ratio is computed as capital in the numerator divided by the banks' exposures which will be in the denominator. Hence a rise in exposure would lead to a fall in the leverage ratio. So if a bank's leverage ratio falls below the RBA's threshold then it will serve as a warning signal for the regulator here nothing but the Reserve Bank of India which is a central bank for India. Now if you see this picture it mentions the leverage ratio of different banks. Going by these numbers we can say that most of the banks are well within the threshold. But however the leverage ratio of central bank of India is only 3.3 percentage. So they may have to trim or cut some exposures in order to meet the RBA's threshold. If you see the State Bank of India, ICICI Bank and HDFC Bank have an leverage ratio above the RBA's mandated requirement. Hence lowering of the threshold would not make any significant impact on these banks. You should also note that RBA named these three banks as DSIBs or Domestically Systemically Important Banks. In its March 2019 communique that is SBI, ICICI Bank and HDFC Bank are the DSIBs. DSIBs or Domestically Systemically Important Banks are nothing but those banks which become systemically important due to their size, cross-jurisdictional activities, complexity, lack of substitutability and interconnectedness. The disorderly failure of these banks has the potential to cause a significant disruption to the essential services they provide to the banking system. And this disruption in turn will affect the overall economic activity. Therefore the continued functioning of systemically important banks is very much critical for the uninterrupted or undisturbed availability of essential banking services to the real economy. In other words, we can also say that these systemically important banks are perceived as banks that are too big to fail. This perception of too big to fail creates an expectation of government support for these banks during the times of distress. Due to this perception, these banks enjoy certain advantages in the funding markets. The article also mentions that the RBA has also set up an internal working group to review the liquidity management framework with a view to simplify the current framework. This working group is expected to submit its report by mid of July 2019. So we shall be seeing about this liquidity management framework once the report is submitted. With this, we have come to the end of the analysis. Now have a look at the practice problems question. We shall discuss at the end of the analysis session. Let us move on to the next news article. Next, we shall be seeing about the editorial No Surprises. The analysis of this editorial will be relevant in your prelims preparation under current events of national importance and also under economic development. And it will also be relevant in your main preparation in your general studies paper 3 under Indian economy. The author has discussed about recent decision that has been taken by the Reserve Bank of India. The decisions are on policy report rate cuts and the problem in the transmission of the rates. Next, the change in RBA stands. Next on RBA's decision to remove the charges on NEFT and RTGS transactions and reduction in the leverage ratio and also on the growth rate projections by RBA. Finally, the author gives some suggestions to the new government on economy related matters. Now that we have analyzed about policy report rate, bank rate and leverage ratio in our previous two news articles, this editorial will be easy for you to understand. Now, let us see the editorial. The author of the editorial tells that RBA has played a conservative role in announcing a rate cut of just 25 basis points. He notes that there were no surprises in the second bi-monthly monetary policy announcement by the Reserve Bank of India where it has cut the policy rates by 25 basis points as it was widely expected. The author then notes that the inflation was well under the benchmark figure of 4%. But even then RBA has played a conservative role by cutting the policy report rate by 25 basis points. The author guesses that maybe the idea of RBA is it is thinking for a further rate cut in the next monetary policy committee meeting. The author cautions that if the economy fails to recover well enough from the slow down by the month of August, the responsibility will again shift back to the RBA where it has to again work on the policy rate cuts. And he tells that the latest policy indicates that the RBA's focus is now on growth. The author also appreciates the fact that RBA is not only listening to the demands of the key stakeholders in the economy but are also acting on them. This is evident from two facts which the author has mentioned. First is the change of RBA stands to accommodative from neutral where the RBA Governor, Mr. Shakti Khan Tadas has ensured that the liquidity or the money flow in the system will remain a priority for the Reserve Bank of India. And second is the setting up of an internal working group to review the existing liquidity management framework. Now, we also saw this in our second news article as we told that once this framework comes into effect, we shall be discussing more on this. The author then gives some suggestions on where the RBA has to focus. First is the transmission of the bank rates. Here transmission means if the RBA is reducing the policy rates, then the same cuts in the interest rates or at the rates lesser than what RBA is cut have to be passed on to the borrowers or the consumers by the banks. For example, if RBA cuts the policy rate by 25 basis points, then some banks cut it by 25 basis points or some cut their interest rates by 10 basis points or some do not even cut their interest rates. Now, this passing on this rate cuts to the consumers is called the transmission of bank rates. But RBA itself has admitted that 1 day 21 of the cumulative 50 basis points rate cut which has been affected by RBA in the February and the April monetary policies has been passed on to the borrowers by the banks, which means the banks are not regularly passing on the rate cut benefits to the consumers. The excuse given by the commercial banks is that in the last few months the liquidity or the money supply was very tight and so the deposit rates could not be cut. The author notes that the liquidity has considerably improved in the last week and also the new government is focusing on more money supply in the economy. Therefore, the banks cannot give such lame excuses from not passing on the rate cuts fully. Next, the author welcomes the RBA's decision to do away with its charges or the fees that it imposes on the Neft and RTGS transactions, but again cautions that this decision will have no effect if the banks do not pass on the benefit of this fee waiver to the consumers. Here, note that NEFT or Neft means National Electronic Funds Transfer and RTGS means Real-Time Gross Settlement System. Both these are online mode of monetary transactions or you can simply call it as digital transactions. The difference between Neft and RTGS is that Neft transfers funds and time batches, that is all the Neft transfers will be done after the particular time say 2 hours or 4 hours depending on the bank, while RTGS transferred fund in Real-Time, that is the immediate transfer of funds. The next difference is in the transaction limit. If you see NEFT as no minimum value for transaction, while RTGS as a minimum fund value of rupees 2 lakhs. So, any money less than 2 lakh value cannot be transferred through RTGS mode. Now, let us come back to the editorial. The author has made some positive remarks on RTGS decision to reduce the leverage ratio under basal norms for banks. So, this will help the commercial banks to increase their lendable resources. Next, the author has noted the projected growth rate for this fiscal that is this financial year 2019-2020. The growth rates have been lower to 7 percentage from the 7.2 percentage which was projected in the April Monetary Policy Committee meeting. And also the first half growth for this financial year is estimated at 6.4 percentage to 6.7 percentage. Now, the author notes that this is a very ambitious projection by RBI when the current trends in the economy are not favoring higher growth. These are the author's views about the decisions taken by RBI which we just saw now. The author finally gives some suggestions to the government by telling that there are tremendous expectations from the government over the next round of reforms since the new government has been elected by a strong mandate that is by majority. The author also notes that it is the government's responsibility to lead the Indian economy to a higher growth path and it is possible only through a well-planned financial budget that is to be tabled by the new government and the parliament in the month of July. With this, we come to the end of the analysis of this editorial. Let us now move on to the next news article. This news article is about having a policy for artificial intelligence and cyber security in India. This article will be relevant in your prelim syllabus under current events of national importance and next under a public policy in Indian polity. And it will also be relevant in your main preparation in your general studies paper too under government policies and interventions for development in various sectors and issues arising out of their design and implementation. The news article states that Neethi Ayu has come up with a policy on artificial intelligence and cyber security. Note that India does not have a specific national policy on artificial intelligence. We also do not have a specific national policy on cyber security. Last year in June, Neethi Ayu published a discussion paper on national strategy for artificial intelligence. In that report, Neethi Ayu has stated that the need for the HAR is to develop a policy framework that will help in setting up a vibrant artificial ecosystem in our country. In the last three years, there has been a lot of activity happening worldwide with respect to artificial intelligence if you see. The governments in USA, United Kingdom, France, Japan and China have already released their version of artificial intelligence policy. It is vital or important for India also to establish the leadership role in artificial intelligence. Now, this can be made possible only when India is having a national policy on artificial intelligence and also by having a robust artificial intelligence program within India. Also, China estimates that around 26% of its GDP in 2030 will be sourced from artificial intelligence related activities and businesses. For the United Kingdom, the estimate is 10% of its GDP by the year 2030 that will be sourced from artificial intelligence related activities and businesses. So, India shall not lag behind in this sector. It is also mentioned that there is a need for national knowledge network for setting up centers of excellence for research on artificial intelligence. National knowledge network's role is to connect all the knowledge and research institutions in the country using high bandwidth or low latency network. Now, here I know that low latency network means a computer network that is optimized to process a very high volume of data but with a minimal delay. Artificial intelligence has wide number of uses and applications if you see. They are used in tackling the vulnerabilities in various sectors. They are also used for better forecasting especially in retail businesses and also to forecast weather. And it is found that the artificial intelligence systems are precise and faster than human beings. In the news article, it has been said that the union cabinet is yet to take up the draft policy which has been prepared by Niti Ayog on both these areas that is on artificial intelligence and cyber security. At a seminar, a Niti Ayog member has stated that data protection and cyber security is very crucial at the present times. This is because of the promotion of digitization program by the Indian government. If you see in terms of numbers of persons having internet access, India stands second in the world. Also, if you see even at the global level, data protection and regulation framework is in discussion. It is also stated that the digitization has brought in enormous data and therefore will impact the economies of the world just like oil sector. In oil sector, we know that there is oil protection, oil storage and also oil distribution. So here, the oil producing countries are having an upper hand in determining the price of the oil which has a huge impact on the many countries that import oil from these oil producing countries. So they can affect the oil market of the oil dependent countries if you see. Similarly, there is data generation, data storage, data processing and applications and also database businesses and database generation of income for the nation and even for other countries from the data of our country. Say in India now, a huge amount of data is generated. Our government is pressing for data localization, meaning data of Indian citizens shall be stored only in the Indian territory. Because of this, the data will benefit mostly the Indian economy. But imagine a condition where there is no data protection. In such a scenario, hackers from foreign countries can hack all these data and can also manage to play with our Indian economy and they may use the data for their businesses and other strategic advantages. Therefore, it is highly important that the government publishes the national policy on cyber security soon. With this, let us take up our analysis of the next news article. This news article is about the reconstitution of Neethi Iyog. The analysis will be relevant in your prelims syllabus under current events of national importance and in Indian governance. The news is that the prime minister has approved the reconstitution of the Neethi Iyog. Note that the prime minister is a chairperson of Neethi Iyog. In the full-time organizational framework, Neethi Iyog consists of a chairperson, a vice chairperson, full-time and part-time members, then ex-officio members and the chief executive officer. Neethi Iyog was set up by a cabinet secretariat resolution on 1st of January, 2015. The prime minister appoints the vice chairperson and the chief executive officer. Here, the ex-officio members are those who are in the union council of ministers and they are nominated by the prime minister. Part-time members are appointed from leading universities, research organizations and other relevant institutions. According to the cabinet resolution that established the national institution for transforming India, the chief executive officer as the fixer tenure. You need to note here that this particular Neethi Iyog is neither a statutory nor a constitutional body. So, a statutory body means a body which is created by a statute or a law. And a constitutional body means a body which is formed as per the constitution of India. But here, Neethi Iyog is formed just by a cabinet resolution. The present chief executive officer of Neethi Iyog is Sri Amitabh Kant. It is stated that his term comes to an end by June 30th this year. The reconstitution of Neethi Iyog is not new. If you look even in June 2018, it was reconstituted. Reconstitution normally means even dropping a member or including new designation or office as a member. If you see Mr. Vivek Debroy who is the chairperson of the prime minister's economic council is not a member of the recently reconstituted Neethi Iyog. The governing council of Neethi Iyog consists of chief ministers of all the states, chief ministers of union territories with legislatures. Here they mean the union territory of Puducherry and the government of national capital territory of Delhi. It also includes the lieutenant governors of other union territories. The governing council also includes the other members discussed in full-time organizational framework of Neethi. On June 15, the governing council meeting is expected to take place. In this meeting, the chairperson of Neethi Iyog, the prime minister and the other members of the governing council will discuss a wide range of issues and pressing concerns. Basically, Neethi Iyog is a think tank of the government to give policy directions and guidance. That is, it provides strategic and technical advice to the central government and also the state government. There is only one subordinate office to Neethi Iyog which is National Institute of Labor Economics, Research and Development. This institute is an autonomous institute under the Neethi Iyog. Now, have a look at the practice prelims question. Let us move on to the next news article. The final news article is about the suspension of the Republic of Sudan by the African Union. This article will be relevant in your prelim syllabus under current events of international importance. We know that Republic of Sudan is a country in the African continent. One geographical fact is that the equator does not pass through this country. Please keep this in mind. To the south of Sudan, one can find the South Sudan which is also called as the Republic of South Sudan. Equator is not passing through South Sudan as well. Please also keep this in mind. We have been seeing since December 2018 that there were severe protests against the then president of Sudan, Mr. Omar al-Bashir in Sudan. Though the protests were in the beginning for a better governance, slowly it asked the stepping down of Omar al-Bashir as there was no hope for improvement. The president was finally driven out of power by the military on 11th of April 2019 because of the protests and also because the president was not in a position to step down. He had been in power since 1989. After driving the president out of the power, the military leadership took control of the country. But people hoped that a civilian-led government will be put in place very soon. This did not happen. Therefore, the people started widespread protests demanding for a civilian-led government. But the military leadership was reluctant and even arrested and attacked the protesters. In the last week, if you see in the Republic of Sudan, reports say that around 108 persons have died because of the crackdown. Now, the news is that the Peace and Security Council of the African Union has suspended the Republic of Sudan with immediate effect in all the activities of the African Union. The suspension will be in place till the effective establishment of a civilian-led interim or temporary government. Interim government will take care for the time being and will take steps for a fair election for the formation of a fully democratic government. Here, you shall know that only in 2011, the South Sudan has got independence from the Republic of Sudan after a referendum. Because of this, the Sudan has lost around 70% of its oil wealth. Now, because of this, this had had some serious financial ramifications and implications for the Sudan government. The Sudan country was also facing US sanctions. There was also drop in oil revenue and subsequently, the financial issues were mishandled and therefore, this led to higher cost of living and inflation. It is said that inflation was almost 70% in November 2018. All these aroused the anger in the people and they started demanding for better governance. Therefore, there were protests and democratic actions since December 2018. In this context, let us see about African Union. African Union was launched in the year 2002 and this African Union consists of 55 member states or member countries that are nations in African continent. Earlier, there was an organization called as the Organization of African Unity whose primary focus was a decolonization and fight against apartheid. Now, we need to know about apartheid. Apartheid is a horrible practice of discrimination of someone on the basis of race or skin color. But in the year 1999, the African countries decided to move towards growth and development as apartheid was ended, at least in the overall political setup of various governments in the African continent. Therefore, in 1999, the Organization of African Unity issued the certain declaration calling for the establishment of an African Union. This African Union was finally launched in the year 2002 to shift the focus from decolonization and fight against apartheid towards the increased cooperation and integration to drive Africa's growth and development. In news, we saw that the African Union has a peace and security council, African Union also has the assembly of heads of state and government, the executive council, the permanent representatives committee, specialized technical committees, and the African Union Commission. These are some of the main organs of the African Union. If you see, there is one special term with reference to this African Union that is Agenda 2063. Agenda 2063 is the Africa's blueprint and master plan for transforming Africa into the global powerhouse of the future in a 50-year period from 2013 to 2063. We have learned a lot about the Organization of Africa Unity now. This was started in the year 1963. This means 2013 is its 50th anniversary for that particular organization. The headquarter of the African Union is located in Ethiopia in the city of Addis Ababa, which is the capital of Ethiopia. And also know that Khartoum is the capital of the Republic of Sudan. Now, have a look at the practice film's question. Let us move on to the practice question discussion session. The first question is, a lower policy report rate announcement by Reserve Bank of India denotes which of the following. So, we saw that when the policy report rate or the report rate is being reduced by the bank, it means that the bank rates will also become lower. And why it has gone for the reduction in policy report rate is because the economy is growing at a very slower pace. And also the investments and the money supply are in the lower side. So, here the correct answer is option B, the money supply in the economy needs to be boosted. So, when the bank reduces the bank rates, the money supply in the economy can be boosted. So, the correct answer is option B. Moving on to the next question, consider the following statements with reference to the leverage ratio of banks. And it has given three statements and asked for which of the statements are correct. So, here the first statement is correct. Leverage ratio is defined as the bank's capital measure divided by their exposure measure. It is a relation between the amount of equity that a company has and the amount of debt that it is carrying in its books. Now, if you look at the second statement, it mentions that leverage ratio was introduced by RBI. We know that the statement is wrong because during our analysis today, we first discussed about Basel III. And based on that, we went to our discussion about leverage ratio. So, by this trick, you can remember that it was introduced by Basel III norms or standards. Or else if you know the answer directly, you can just mark it directly. Anyway, statement 2 is wrong over here. Now, if you see the options, statement 2 is given in three options, that is option A, C and B. So, you can directly eliminate these options and you can arrive at the answer option B, 1 and 3 would not be. But also remember that RBI has reduced this ratio to 4 percentage for the domestic, systemically important banks and 3.5 percentage for the other banks. This was what the news was about. So, the statement 3 is correct here. So, statement 1 and 3 are correct. So, the correct answer is option B, 1 and 3 only. Moving on to the next question, the National Institute of Labor Economics Research and Development is an autonomous institute under which of the following? So, during our discussion, we saw that this National Institute of Labor Economics Research and Development is an autonomous institute under Niti Ayog. So, the correct answer is option C, Niti Ayog. Moving on to the next question, Agenda 2063 recently seen in the news is associated with which of the following? So, they have given a European Union, African Union, International Customs Union and South Asian Association for Regional Cooperation. Now, during our discussion, we saw that the Agenda 2063 is the master plan for the transforming Africa into global powerhouse for the future. They are determined to achieve this in a 50 year period from the year 2013 to 2063 and also 2013 is the 50th anniversary of Africa Union. Moving on to the next question, consider the following statements. They have given two statements and have asked for the correct answer. Here, the organization of African unity was established in the year 1963. African Union was established in 2002. Both are not one and the same. Although both had the area of operation in Africa, even in their focus also they were different. The organization of African unity focused decolonization and fight against apartheid, whereas the conditions were far better than that was in the year 1963. Hence, African Union has its focus on growth and development of Africa since the year 2002. Thus, the first statement is wrong. Moving on to the second statement, precedes means coming before an order. The statement 2 says that organization of African unity is preceded by the African Union. That means African Union came first before the organization of African Union. This statement is wrong because of organization of African Union was established in the year 1963 and more than almost 38 years afterwards, the establishment of this particular organization of African Union, the African Union was launched. So, the African Union was launched in Durban in South Africa in the year 2002. So, both the statements are wrong. The question is asked for the correct answer. So, the correct answer is option D neither one nor two since both the statements are wrong. With this, we come to the end of the analysis of all the news articles taken up for today's discussion and also the practice question discussion session. Please do like, comment and share the video and please subscribe to Shankar Ayes Academy channel for latest videos and updates. Stay focused and motivated friends. Thank you.