Explanation : 

Process of Amending the Indian Constitution

The process of amending the Indian Constitution is a critical aspect of the country’s parliamentary democracy. This process is governed by Article 368 of the Indian Constitution, which lays down the procedure for its amendment. Here’s an in-depth look at the statements provided to clarify the procedure.

Presidential Recommendation for Constitution Amendment Bills

Contrary to the first statement, a Constitution Amendment Bill does not require a prior recommendation of the President of India to be introduced in the Parliament. Members of either House of Parliament can introduce such a bill without the President’s recommendation. However, for amendments that affect the federal structure, ratification by state legislatures is necessary.

Presidential Assent to Constitution Amendment Bills

The second statement is accurate as it highlights the obligatory nature of the President’s assent. Once a Constitution Amendment Bill has been passed by both Houses of Parliament with the required special majority, the President must give his/her assent, thereby making it mandatory.

Special Majority and No Provision for Joint Sitting

The third statement correctly mentions that a Constitution Amendment Bill must be passed by both the Lok Sabha and the Rajya Sabha with a special majority. Additionally, it emphasizes that there is no provision for a joint sitting in case of a deadlock between the two Houses, which is a unique aspect of the amendment process.

In conclusion, statements 2 and 3 provide an accurate representation of the constitutional amendment process in India, while statement 1 does not align with the procedural requirements as per the Indian Constitution.

Explanation :

1. Foreign-owned e-commerce firms operating in India are not allowed to sell their own goods directly to consumers. They can only operate as marketplaces where third-party sellers can list and sell their products. This means that statement 1 is incorrect.
2. Incorrect according to official answer key.

Explanation : 

Inflation-Indexed Bonds (IIBs) UPSC

Inflation-Indexed Bonds (IIBs) are a type of bond designed to help protect investors from inflation. The principal amount of the bond is indexed to inflation, ensuring that the purchasing power of the investor’s money is maintained.

Benefits of IIBs for Government Borrowing

Government can reduce the coupon rates on its borrowing by way of IIBs. Since IIBs provide a hedge against inflation, investors are typically willing to accept lower nominal coupon rates on these bonds compared to conventional bonds. The real return is adjusted for inflation, so the government can issue these bonds with a lower coupon rate, potentially reducing its cost of borrowing.

Protection from Inflation Uncertainty

IIBs provide protection to the investors from uncertainty regarding inflation. The principal value of IIBs is adjusted according to the inflation rate, which means that the returns on these bonds are designed to keep up with inflation. This protects investors from the erosion of purchasing power that can occur with fixed-rate bonds during periods of high inflation.

Tax Implications of IIBs

The interest received as well as capital gains on IIBs are not taxable. This statement is incorrect. In India, like many other countries, the interest received on bonds is typically subject to income tax. Capital gains from bonds may also be taxable depending on the holding period and applicable tax laws at the time of sale or redemption. There may be specific tax-exempt bonds issued by the government, but IIBs do not inherently come with a tax exemption on interest and capital gains.

Explanation : 

G20 Common Framework Initiative

The G20 Common Framework is an initiative that has been endorsed by the G20 together with the Paris Club. The Paris Club is a group of officials from major creditor countries whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by debtor countries. The G20 is an international forum for governments and central bank governors from 19 countries and the European Union.

Addressing Debt Challenges in Low-Income Countries

The G20 Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative (DSSI) is designed to address the challenges faced by Low-Income Countries (LICs) with unsustainable debt. The framework aims to provide a structured approach to debt treatment for these countries, ensuring that all creditors (both public and private) work together to address the debt vulnerabilities so that the affected countries can work towards achieving economic stability and sustainable growth.

The Common Framework was established in response to the financial strains caused by the COVID-19 pandemic, which exacerbated the debt vulnerabilities of many developing countries. It seeks to provide a coordinated approach to debt restructuring, tailored to the needs of each eligible country, while ensuring fair burden-sharing among creditors and maintaining the debtor country’s access to financing.

Explanation : 

Nominal Effective Exchange Rate (NEER) & Real Effective Exchange Rate (REER)

1. An increase in Nominal Effective Exchange Rate (NEER) indicates the appreciation of the rupee.

This statement is correct. The NEER is an index that measures the value of a country’s currency relative to a basket of other major currencies, weighted by their relative trade with the country. An increase in NEER means that the Indian rupee has appreciated in value compared to this basket of currencies, which implies that it takes fewer rupees to buy the same amount of foreign currency.

2. An increase in Real Effective Exchange Rate (REER) indicates an improvement in trade competitiveness.

This statement is not necessarily correct. The REER adjusts the NEER for inflation differentials between India and its trading partners. An increase in REER suggests that the Indian currency has appreciated in real terms, which could make Indian exports more expensive and imports cheaper, potentially reducing trade competitiveness. However, it is also possible that an increase in REER reflects higher productivity or quality improvements in a country’s goods and services, which could enhance competitiveness. Therefore, an increase in REER does not unambiguously indicate an improvement in trade competitiveness.

3. An increasing trend in domestic inflation relative to inflation in other countries is likely to cause an increasing divergence between NEER and REER.

This statement is correct. If India experiences higher inflation than its trading partners, the NEER may not change much, but the REER will increase because the domestic currency’s real value is eroding due to higher prices. This divergence occurs because the REER is adjusted for inflation, while the NEER is not.

Given the explanations above, the correct answer is that statements 1 and 3 are correct, making the correct choice “1 and 3 only”.