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Kerala PSC Indian Economy Book Study Materials Page 618
Book's First Page22.52 ndian onom ‘unsecured’ loan. Such loans are also known may have an ‘upward-sloping demand curve’ as as—signature loans and personal loans. If the opposed to a ‘downward-sloping demand curve’ loan is supported by some form of collateral (of because they practice conspicuous consumption secondary type, such as land, building, etc.), then (a downward - sloping demand curve means that the it is ‘secured’ loan. quantity demanded varies inversely to the price i.e. Basically, loans are provided by banks against demand falls with price rise). The concept suggests two kinds of securities—the creditwothiness of that quantity demanded of a particular good the borrower (known as the ‘primary security’) varies directly with a change in price (i.e., as price and collateral (known as the ‘secondary security’). increases, demand increases). usury velocity of circulAtion Charging an exorbitant rate of interest or even A measure of the average number of times each charging interest. Decried by many ancient unit of money is used, to purchase the final goods philosophers and many religions, today most and services produced in an economy in a year. modern economies have some law regulating the upper limit of the interest rates and they consider venture cApitAl interest as a reward to the lender for the lending Generally, a private equity capital which lends risk. capital to the entrepreneurs who are innovative and cannot get the required fund from the vgf conventional set-up of the lending mechanism. The Viability Gap Funding (VGF) is a fund In India, it was the Government of India assistance facility provided by the GoI to the which did set up the first such fund in 1998–the private players in the infrastructure projects being IVCF. developed under public private partnership (PPP). The fund is given by the GoI as one time ‘grant’ vulture funDs and it could be maximum 20 per cent of the project cost (in special cases an additional 20 per Vulture funds are privately owned financial firms cent might be approved by the ststes/ministries/ which buy up sovereign debt issued by poor authorities). countries at a fraction of its value, then file lawsuits (sue) against the countries in courts, usually in The facility which was operationalised in London, New York, or paris, for their full face September 2006, was aimed at attracting private value plus interest. investment towards this socio-economically desirable sector. Several infra projects were A paper prepared for IMF/WB (October 18, economically ‘non-viable’ which used to discourage 2007) showed that there are now $1.8b lawsuits private players away from such projects—this against poor countries where people typically live facility encourage them to take part. below $1 a day; 24 countries that have received debt cancellation under Heavily Indebted Poor Countries (HIPCs)initiative, 11 have been veblen effect targeted by such creditors (i.e., the VFs) and they Named after the American economist Thorstein has been awarded just under $1b.–money which Bunde Veblen (1857–1929), this is a theory of have gone for schools and hospitals; they are consumption which suggests that consumers neutralising the good deeds of WB/IMF. As per