22.52 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