OAS Mains-2019 Daily Answer Writing-22/04/2020


Paper:   General Studies Paper-II

Section:  International Affairs and Institutions

Topic:  International Institutions

Question 1

State the principles on which the WTO has been set up

Sample Answer

In its broad perspective, the WTO was to strive at creating a liberal and open trading environment by which business enterprises could trade under conditions of fair and undistorted competition. Towards the achievement of this, the four principles that were laid down to guide the trading rules of its members are as follows:

  1. Most Favoured Nation (MFN) Treatment: The principle of MFN treatment laid that tariffs and regulations must be applied to imports or exports without discrimination among members. In other words, no member country was to be accorded a treatment of ‘a favoured nation’.
  2. National Treatment: It prevents discrimination between imported products and equivalent domestically produced goods, especially in levying internal taxes and domestic regulations.
  3. Protection through Tariffs: While advocating liberal trade, the WTO recognizes that some members may need to protect their domestic production against foreign competition. The underlying principle was, however, that such protections through tariffs must be kept at low levels in what was called as ‘bound tariff framework’
  4. Bound Tariffs: The principle of ‘bound tariff’ advises the member countries to reduce and gradually eliminate protection to domestic production. By seeking to reduce tariffs and eliminating non-tariff barriers, the principle requires the member countries to commit in
    their respective national schedules against further increase of tariff levels at later points of time. In other words, the reduction and ultimate phase-outs of tariffs was meant to provide the cushion time required for gaining competitive strength and the tariffs were to be phased out firmly in a committed time frame.

Question 2

Membership of IMF greatly beneficial for India. Show how

Sample Answer

It is good that India joined the IMF. There is no doubt that this membership has been greatly beneficial to India as follows:

  1. International regulation by IMF in the field of money has certainly contributed towards expansion of international trade and thus prosperity. India has, to that extent, benefitted from these fruitful results.
  2. Large Financial Assistance: India has been one of the most frequent borrowers from the IMF. From the inception of IMF up to March 31, 1971, India purchased foreign currencies of the value of Rs. 817.5 crores from the IMF, and the same have been fully repaid.
  3. Aid from World Bank and Other International Financial Agencies. The membership of the IMF has benefited India in yet another important way. India wanted large foreign capital for her various river projects, land reclamation schemes and for the development communications. Since private foreign capital was not forthcoming, the only practicable method of obtaining the necessary capital was to borrow from the International Bank for Reconstruction and Development (i.e. World Bank).
  4. The membership of the IMF is a necessary condition precedent to the membership of the World Bank. Thus, India’s membership of the IMF has entitled her to be a member of the World Bank and its affiliates viz., International Finance Corporation (IFC) and International Development Association (IDA). In fact, in absolute figures though not on per capita basis, India has been the largest borrower from the World Bank group.
  5. India has availed of the services of specialists of the IMF for the purpose of assessing the state of the Indian economy.
  6. Contribution to International Monetary Concord. The important place which India has thus occupied in the international councils in the fields of world trade and finance has been a guarantee that her interests would not suffer.
  7. Provision of Oil Facility. The balance of payments position of India having gone utterly out of gear on account of the oil price escalation since October 1973, the IMF has started making available oil facility by setting up a special fund for the purpose

N.B.: You may add or subtract points according to the flexibility of time.

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