1.

For the past five years, the world economy has been heavily influenced by the policy of
quantitative easing that the United States Federal Reserve launched in November 2008.
Explain how? (200 Words)
Quantitative easing (QE) is an unconventional monetary policy used by central banks to stimulate
the national economy when conventional monetary policy has become ineffective. A central bank
implements quantitative easing by buying financial assets from commercial banks and other private
institutions with newly created money in order to inject a pre-determinedquantity of money into the
economy. This is distinguished from the more usual policy of buying or selling government bonds to
keep market interest rates at a specified target value. Quantitative easing increases the excess
reserves of the banks, and raises the prices of the financial assets bought, which lowers their yield.
As the federal reserve of US started reversal of Quantitative easing, there would be negative effect on
indian economy as the foreign investors are going to withdraw dollars from indian markets.But indian
economy was in better postion to tackle the arising problems.
Quantitative easing on a short term basis may bring huge investments in to india but on a long term
basis there will be tapering of QE and this will have drastic effects on India as India is highly
dependent on foreign investments.
QE will have bearing on the financial policy of india as the policies has to be formulated to attract
investments and also to bounce back when the investments are withdrawn.
It may not have direct affect on CAD but when QE is reduced domestic production may get slowed
due to withdrawal of investments and it may impact the exports of india, also at the same time as the
rupee value may fall against the dollar in context of demand for dollars and it may make indian
exports cheaper in the global market.
2. "The future for Indian IT is as exciting as it is challenging." Elaborate. (200 Words)?
Quite big actually. IT sector is growing massively in India. There are many tech startups,
some of grads from India are getting the highest paying jobs, Oracle offered $220,000 jobs to
2 students. Ericsson's 2nd largest number of employees as per country are Indians and even
Microsoft's over 35% of the engineers are Indians, employing more in others functions as
well. Many people in India are making softwares to sell and other applications. New IT parks
are being built accross India. I would actually say IT has a big impact on India.