DMPQ- Write a short note on followings: (A) National investment fund (B) Non-tariff trade barriers (C)Participatory notes or P-notes

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(A)National investment fund

The cabinet Committee on Economic Affairs (CCEA) on 27th January,  2005 had approved the constitution of a National Investment Fund (NIF). The Purpose of the fund was to  receive disinvestment proceeds of central public sector enterprises and to invest the same to generate  earnings without depleting the corpus. The earnings of the Fund were to be used for selected Central social welfare Schemes. This fund was kept outside the consolidated fund of India.

(B)Non-tariff trade barriers

Non-tariff barriers to trade (NTBs) are trade barriers that restrict  imports but are not in the usual form of a tariff. Some common examples of NTB’s are anti-dumping  measures and countervailing duties, sanitary and phytosanitary requirements, quotas, Import Licensing  requirements, Minimum import price limits, Embargoes, Standards disparities, Administrative fees   which, although they are called “non-tariff” barriers, have the effect of tariffs once they are enacted.  Their use has risen sharply after the WTO rules led to a very significant reduction in tariff use.

(C) Participatory notes or P-notes

Participatory Notes commonly known as P-Notes are  instruments issued by registered foreign institutional investors (FII) to overseas investors, who wish to  invest in the Indian stock markets without registering themselves with the market regulator, the  Securities and Exchange Board of India – SEBI. SEBI permitted foreign institutional investors to register and participate in the Indian stock market in 1992. SEBI was not happy with P-Notes because it is not possible to know who owns the underlying securities and hedge funds acting through PNs might therefore cause volatility in the Indian markets. P Notes may also be used by terrorist organizations as well.

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