Indian Economy

Option A is incorrect: Controlling inflation is a joint responsibility of both the Government of India and the Reserve Bank of India (RBI). While the government manages fiscal policy and supply-side measures (like buffer stocks), the RBI manages monetary policy.

Option B is incorrect: The RBI plays a central role in controlling inflation. Under the RBI Act, 1934, the RBI has a specific mandate to maintain price stability. The Monetary Policy Committee (MPC) of the RBI adjusts policy rates (like the Repo rate) specifically to keep inflation within a target range (4% +/- 2%).

Option C is correct: Decreased money circulation (contractionary monetary policy) is a standard tool to control inflation. By reducing the liquidity available in the economy, the central bank can reduce aggregate demand, which helps in cooling down rising prices.

Option D is incorrect: Increased money circulation generally leads to an increase in aggregate demand. If the supply of goods and services does not keep pace with this increased demand, it leads to demand-pull inflation.

Statutory Liquidity Ratio (SLR) is the minimum percentage of deposits that a commercial bank has to maintain in the form of liquid cash, gold, or other securities.

1. Mechanism of SLR Reduction: When the RBI reduces the SLR, banks are required to keep a smaller portion of their deposits in liquid assets. This frees up more funds for the banks to use for lending purposes. 2. Impact on Lending Rates: As the supply of loanable funds with the banks increases, they are likely to reduce their lending rates to encourage borrowing and stay competitive. This makes Option C the most likely outcome. 3. Why other options are incorrect: * Option A: While a reduction in SLR can stimulate economic activity, it is unlikely to cause a 'drastic' increase in the GDP growth rate on its own. * Option B: Foreign Institutional Investors (FIIs) are influenced by global market conditions, interest rate differentials, and ease of doing business, rather than domestic SLR changes. * Option D: Reducing the SLR increases the liquidity available to the banking system for lending; it does not reduce it.

The question refers to the economic trends in India during the decade preceding 2015.

Statement 1 is incorrect: The 'rate of growth' of real GDP refers to the percentage change in GDP from one year to the next. In India, this rate has not 'steadily increased'; instead, it has fluctuated. For example, growth was high in the mid-2000s, slowed down during the 2008 global financial crisis, recovered briefly, and then slowed again around 2012-13. A steady increase would mean the percentage growth rate rose every single year, which did not happen.

Statement 2 is correct: GDP at market prices (in absolute rupee terms) has steadily increased over the last decade. Even though the *rate* of growth fluctuated, as long as the growth rate remained positive (which it did), the total size of the economy (the absolute GDP value) continued to expand year after year.

Therefore, only statement 2 is correct.

The Fair and Remunerative Price of Sugarcane (FRP) for sugarcane in India is approved by the Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister.

The proposal for FRP is determined based on the recommendation of the Commission for Agricultural Costs and Prices (CACP) in its report on the price policy for sugarcane for a particular sugar season.

The Labour Bureau, attached to the Ministry of Labour and Employment, is responsible for compiling and publishing the Consumer Price Index Number for Industrial Workers (CPI-IW) in India. This index tracks changes in the retail prices of a basket of goods and services consumed by industrial workers. It serves as a crucial indicator of inflation faced by this specific segment of the population.

The Labour Bureau is responsible for maintaining: - CPI (Industrial Workers) - CPI (Rural Labourers) - CPI (Agricultural Labourers)

The World Bank publishes the Global Economic Prospects (GEP) report twice a year, typically in January and June. This flagship publication examines global economic developments and prospects, with a specific focus on emerging market and developing economies (EMDEs). It provides detailed analysis of key development issues and includes growth forecasts at the global and regional levels.

Statement 1 is incorrect: The Accelerated Irrigation Benefits Programme (AIBP) was indeed launched during 1996-97, but its objective was to provide central assistance to states to accelerate the pace of irrigation development, not specifically to provide loan assistance to poor farmers.

Statement 2 is correct: The Command Area Development Programme (CADP) was launched in 1974-75, its primary focus was on improving the water-use efficiency and agricultural productivity in the command areas of major and medium irrigation projects.

Rupee convertibility means the system where any amount of rupee can be converted into any other currency without any question asked about the purpose for which the foreign exchange is to be used.

Non-convertibility can generally be defined with reference to the transaction for which foreign exchange cannot be legally purchased (e.g., import of consumer goods etc), or transactions which are controlled and approved on a case-by-case basis (like regulated imports etc).

Both the bank rate and open market operations are components of monetary policy in the Indian economy.

Bank rate: The bank rate is the rate at which the central bank (Reserve Bank of India in the case of India) lends money to commercial banks. It is one of the key tools used by the central bank to control the money supply and credit conditions in the economy.

Open market operations: Open market operations refer to the buying and selling of government securities (bonds) by the central bank in the open market. Through open market operations, the central bank can inject or withdraw liquidity from the banking system, thereby influencing the level of reserves held by banks and the overall money supply in the economy.

Public debt and public revenue are not typically considered components of monetary policy. Public debt refers to the total amount of money owed by the government through borrowing, while public revenue refers to the income generated by the government through taxes and other sources. These factors are more closely related to fiscal policy, which involves government spending and taxation decisions to achieve specific economic objectives.

Agricultural Markets in most parts of the Country are established and regulated under the APMC Acts enacted by the states.

The whole geographical area in the State is divided and declared as a market area wherein the markets are managed by the Market Committees constituted by the State Governments. Once a particular area is declared a market area and falls under the jurisdiction of a Market Committee, no person or agency is allowed freely to carry on wholesale marketing activities.

Capital-augmenting technological progress: This refers to technological advancements that increase the productivity of existing capital goods. In this case, replacing wooden ploughs (a less efficient capital good) with steel ploughs (a more efficient capital good) increases the productivity of the plough itself. Steel ploughs can till more land, last longer, and require less maintenance compared to wooden ploughs.

The Basel III Accord is a set of international banking regulations developed by the Basel Committee on Banking Supervision (BCBS). It was formulated in response to the financial crisis of 2007-2008 and aims to improve the banking sector's resilience to financial and economic stress and improve its risk management by:

Increasing capital adequacy requirements: Banks need to hold more capital relative to their risk-weighted assets to absorb potential losses during financial stress. Enhancing liquidity standards: Banks need to maintain a sufficient level of liquid assets to meet their short-term obligations. Strengthening risk management practices: Banks are required to implement more robust risk management frameworks to identify, measure, and manage various risks they face.

Statement 1 is Correct: Banaras Brocades and Sarees were granted Geographical Indication (GI) status in 2009, recognizing the unique handloom weaving traditions and historical origin in Varanasi, Uttar Pradesh.

Statement 2 is Incorrect: While Dal-Bati-Churma is a famous traditional food preparation from Rajasthan, it has not been accorded Geographical Indication (GI) status.

Statement 3 is Correct: Tirupati Laddu, the sacred prasad offered at the Tirumala Venkateswara Temple in Andhra Pradesh, was granted GI status in 2009 to protect its unique recipe and reputation from commercial imitation.

To reduce a persistent budget deficit, the government can take actions that decrease spending or increase revenue.

1. Reducing revenue expenditure (Correct): This involves cutting back on non-essential government spending. This can include areas like administrative costs, travel, or certain subsidies. 2. Introducing new welfare schemes (Incorrect): This would likely increase government spending and worsen the deficit. 3. Rationalizing subsidies (Correct): Subsidies can be a significant source of government expenditure. Reviewing and potentially reducing or reforming subsidies can help control spending. 4. Expanding industries (Depends): While industrial expansion can lead to increased tax revenue in the long run, it might not have an immediate impact on the budget deficit. In the short term, the government might need to invest in infrastructure to support expansion, potentially increasing expenditure.

Therefore, the correct answer is 1 and 3 only (Reducing revenue expenditure and Rationalizing subsidies).

The correct answer is (C) dollars and other hard currencies

International Liquidity: This refers to a country's ability to meet its short-term external obligations (payments for imports, debt servicing, etc.) It essentially reflects the ease with which a country can access foreign currencies needed for international transactions.

Focus on Hard Currencies: While some transactions might involve other currencies, international reserves are predominantly held in major reserve currencies like the US Dollar, Euro, Japanese Yen, and British Pound. These currencies are considered "hard" because they are stable, widely traded, and liquid (easily convertible into other currencies).

About Eight Core Sectors: These comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).

The eight core sector industries in decreasing order of their weightage: Refinery Products> Electricity> Steel> Coal> Crude Oil> Natural Gas> Cement> Fertilizers.

The terms 'Marginal Standing Facility Rate' and 'Net Demand and Time Liabilities' are used in relation to banking operations, specifically related to short-term liquidity management by banks with the Reserve Bank of India (RBI).

Marginal Standing Facility (MSF): This is a facility offered by the RBI to banks as a last resort to borrow short-term overnight funds. It allows banks to meet their temporary liquidity shortfalls.

Net Demand and Time Liabilities (NDTL): This refers to the total amount of a bank's deposits that are repayable on demand (current and savings accounts) or after a specific period (fixed deposits).

* The guar or cluster bean, with the botanical name Cyamopsis tetragonoloba, is an annual legume and the source of guar gum.

* It is also known as Gavar, guar, or guvar bean.

* The gum made from its seeds is used in the extraction of shale gas . The seeds of the guar bean contain a large endosperm. This endosperm consists of a large polysaccharide of galactose and mannose. This polymer is water-soluble and exhibits a viscosifying effect in water.

* Guar gum has a multitude of different applications in food products, industrial products, and the extractive industry.

The aim of the 12th Five Year plan is to achieve 'faster, sustainable and more inclusive growth'. For this purpose, it seeks to achieve: - 4% growth in the agriculture sector - 10% in the manufacturing sector

The total budget of the 12th Five Year plan has been estimated at Rs.47.7 lakh crore which is 135 percent more than that for the 11th Five year Plan (2007-12).

Statement 1 is incorrect: India has a National Seeds Policy (2002), which provides a framework for quality assurance, seed certification, and private sector participation.

Statement 2 is incorrect: The private sector plays a significant role in the production and distribution of seeds, particularly for hybrid and vegetable crops (e.g., Mahyco, Syngenta, Nunhems, etc.).

Statement 3 is correct: For crops like pulses, coarse cereals, and oilseeds, which are low-value but high-volume, there is indeed a shortage of certified seeds due to lower profitability and investment.

Thus, only statement three is correct.

Balance of Trade: This refers to the net difference between a country's exports and imports of goods. It's a key component of the current account.

Foreign Assets: This refers to assets held by a country's residents outside the country. It's not part of the current account but might be included in the capital account.

Balance of Invisibles: This captures the net income from services, such as tourism, transportation, and royalties, as well as net current transfers (e.g., foreign aid). It's another crucial component of the current account.

Special Drawing Right (SDR): This is an international reserve asset created by the International Monetary Fund (IMF). It's not directly part of the current account but might be included in the reserve assets.

Therefore, only options 1 (Balance of Trade) and 3 (Balance of Invisibles) are constituents of the Current Account in the Balance of Payments.

There are two components of expenditure - plan and non-plan. Of these, plan expenditures are estimated after discussions between each of the ministries concerned and the Planning Commission.

Non-plan revenue expenditure is accounted for by - interest payments, - subsidies (mainly on food and fertilisers), - wage and salary payments to government employees, - grants to States and Union Territories governments, - pensions, - police, - economic services in various sectors, - other general services such as tax collection, - social services, and - grants to foreign governments.

Non-plan capital expenditure mainly includes defence , loans to public enterprises,and loans to States, Union Territories and foreign governments.

The Plan and Non-Plan classification was done away with from fiscal 2017-18. Now emphasis is on Revenue and Capital expenditure.

Venture capital is financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential. Venture capital generally comes from well-off investors, investment banks, and other financial institutions.

Pair 1 is not correct: The drought prone area programme comes under Ministry of Rural Development. This programme aims to mitigate the impacts of droughts on crop production, livestock, land and water resources.

Pair 2 is not correct: The Desert Development Programme comes under Ministry of Rural Development. The basic objective of the Desert Development Programme is to minimise negative effect of drought and control desertification.

Pair 3 is not correct: The national watershed project for rainfed areas implemented by Ministry of Agriculture is an umbrella scheme under Pradhan Mantri Krishi Sinchayi Yojana.

The answer is (D) tax imposed and collected by the State Government is correct.

In India, sales tax has been replaced by the Goods and Services Tax (GST).

However, before the implementation of GST, sales tax was levied by individual states in India. While there might have been some central guidelines, the power to impose and collect sales tax primarily rested with the state governments.

1. Finance Commission: Deals with the distribution of tax revenue between the central government and states, not overall national planning.

2. National Development Council (NDC): This was the apex body for planning at the national level. It is used to formulate and review India's five-year plans.

3. Union Ministry of Rural Development: Implements specific development schemes related to rural areas, not national-level planning.

4. Union Ministry of Urban Development: Implements specific development schemes related to urban areas, not national-level planning.

5. Parliament: While not directly involved in day-to-day planning, the Parliament is used to approve the five-year plans formulated by the NDC. Additionally, Members of Parliament (MPs) can utilize funds allocated for their constituencies through MPLADS (Member of Parliament Local Area Development Scheme), which contributes to local-level planning.

Statement 1 is correct: Statutory Reserve Requirements, which include the Cash Reserve Ratio (CRR) and the Statutory Liquidity Ratio (SLR), are the primary quantitative tools used by the RBI to regulate the money supply and control the credit-creation capacity (advances) of commercial banks.

Statement 2 is incorrect: Although maintaining reserves helps manage bank liquidity, the specific "safety" of people's deposits is the mandate of the Deposit Insurance and Credit Guarantee Corporation (DICGC) and the implementation of Capital Adequacy Ratios (Basel norms), rather than being the primary policy purpose of statutory reserves.

Statement 3 is incorrect: These requirements are instruments of monetary policy and are not designed to regulate or prevent the profits made by commercial banks.

Statement 4 is incorrect: Statutory reserves like CRR must be kept with the RBI, and SLR is kept in liquid assets like government securities. Banks maintain their own "vault cash" separately to meet day-to-day operational requirements.

* Lower Interest rates encourage additional investment spending , which gives the economy a boost in times of slow economic growth.

* Changes in interest rates affect the public's demand for goods and services and, thus, aggregate investment spending.

* A decrease in interest rates lowers the cost of borrowing, which encourages businesses to increase investment spending. * Lower interest rates also give banks more incentive to lend to businesses and households, allowing them to spend more.

The World Economic Outlook (WEO) is a flagship report published by the International Monetary Fund (IMF) twice a year, typically in April and October. It provides a comprehensive analysis of global economic developments, short-term and medium-term growth projections, and examines pressing policy issues. Other key reports published by the IMF include the Global Financial Stability Report and the Fiscal Monitor.

1. Regional Rural Banks (RRBs): RRBs are established to provide credit and banking facilities to rural areas, especially to small and marginal farmers, agricultural laborers, and rural artisans. They grant direct credit assistance to rural households.

2. National Bank for Agriculture and Rural Development (NABARD): NABARD primarily provides refinance facilities to banks and financial institutions for lending to rural sectors. It does not directly lend to rural households, except in very limited cases through pilot schemes.

3. Land Development Banks (LDBs): LDBs provide long-term credit to farmers for land development and agricultural improvements. They grant direct loans to rural households.