PRAYAS - 2022 Test - 24: Economy
PRAYAS - 2022 Test - 24: Economy
Test – 24
Economy
Topics covered:
❖ Taxation and Public finance in India
❖ Important International Economic Origination
❖ Important Indian Economic bodies
❖ Reports, Index
❖ Poverty & Unemployment
❖ Important Key terminologies in news
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Q.1) With reference to taxation in India, consider the presents a preliminary outcome budget to the
following statements: Ministry of Finance
1. Indirect taxes have a deflationary impact. Q.5) One of the major objectives of introducing the
2. Direct taxes have an inflationary impact. Goods and Services Tax is to remove the cascading
Which of the given statement(s) is/are correct? effect of taxes. How does the Goods and Services Tax
a) 1 only (GST) remove the cascading effect that was present
b) 2 only in the earlier tax regimes?
c) Both 1 and 2 1. By subsuming multiple taxes such as central
d) Neither 1 nor 2 excise, customs duty, central sales tax and value
added tax
Q.2) With reference to the public finance, consider 2. By introducing the mechanism of input tax credits
the following statements: Select the correct answer by using the codes given
1. All revenues received by the government by way below:
of taxes whether direct or indirect except the a) 1 only
loans raised through T-Bills (treasury bills) are b) 2 only
credited to the consolidated fund of India c) Both 1 and 2
2. Receipts from treasury bills are included in the d) Neither 1 nor 2
Public Account of India as treasury bills are short
term instruments. Q.6) Under which of the following circumstances
Which of the given statement(s) is/are incorrect? may the Securities Transaction Tax arise?
a) 1 only 1. Profits are made on a certain security
b) 2 only 2. Company pays dividend to the owners
c) Both 1 and 2 3. A security is purchased or sold
d) Neither 1 nor 2 Select the correct answer using the codes given
below:
Q.3) If the amount authorized to be expended for a a) 1 only
particular service for the current financial year is b) 1 and 3 only
found to be insufficient for the purpose of that year c) 3 only
or when a need for new service has arisen during the d) 1, 2 and 3
current financial year, then which of the following is
laid before the parliament? Q.7) Which one of the following statements
a) Demand for Excess Grants regarding the levying, collecting and distribution of
b) Appropriation bill for grants from Contingency Land Revenue is correct?
Fund a) The Union levies, collects and distributes the
c) Supplementary Demand for Grants proceeds of land revenue between itself and the
d) None of the above states
b) The Union levies, and states collect it on behalf of
Q.4) Which of the following is not a feature of the the Union and all the proceeds of land revenue
Outcome Budget? are distributed among the states
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a) Outcome budgeting makes government c) The Union levies and collects the land revenue tax
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programmes more outlay oriented in which but all the proceeds are distributed among the
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performance during the projected (next) year. Q.8) With reference to the Resource building
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c) It is a progress card on what various Ministries and mobilization of the IMF, consider the following
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d) Outcome Budgeting was first introduced in 2005- concessional terms are provided by member
06, since then, every ministry handling a sector countries, primarily through their payment of
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quotas.
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List- I ( Reports). Listi- II (Organisations). Q.15) With reference to World Happiness Report
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(United Nations High Commissioner for Refugees). government was one of the factor supporting
successful COVID-19 Strategies
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Which of the following is/are correct ? b) Office of the Registrar General and Census
a) 1, 3 & 6 only Commissioner, India under Ministry of Home
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report released recently, Which of the following d) Ministry of Social Justice and empowerment in
statements is incorrect with respect to the outlines collaboration with respective state Governments.
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Q.23) What can be the possible reason for a) Poverty is generally caused by a sudden crisis or
determining poverty on the basis of consumption loss and is often temporary.
expenditure instead of income ? b) Poverty that persists because of internal
a) All people consume but not all earn. psychological factors driven by financial issues.
b) Presence of domination of the unorganized sector c) Poverty that is caused by a violent and unhealthy
in India. environment because of overcrowding.
c) Hindrance in collecting income data. d) Poverty due to less job opportunities, less access
d) All of the above to services, less support for disabilities and quality
education opportunities.
Q.24) Which of the following items is/are present in Q.28) A substantial percentage of Indian population
NSSO’s Mixed Recall Period for measuring lives in slums than it does in China. This refers to an
consumption? example of what kind of poverty ?
1. Food items a) Absolute poverty
2. Clothing b) Relative poverty
3. Foot wear c) Urban poverty
4. Institutional medical expenses d) All of the above.
5. Education
Select the correct answer from the options given Q.29) Recently Tholpavakkoothu was seen in the
below. news, is related to:
a) 1, 4 and 5 a) Martial Art
b) 1 only b) Bhimbetka painting
c) 2, 3, 4 and 5 only c) Rock cut paintings
d) 1, 2, 3, 4 and 5 d) Shadow puppetry
Q.25) With reference to Poverty Gap Ratio, consider Q.30) Recently,' The KURMA App' was frequently
the following statements; seen in news related to -
1. The poverty gap ratio is the mean shortfall of the a) To give information on government schemes and
total population from the poverty line (counting programs on one platform.
the non-poor as having zero shortfall), expressed b) Provide information on newly discovered flora
as a percentage of the poverty line. and fauna.
2. There was a nearly 50% decline in PGR both in c) For turtle conservation.
rural and urban areas during 2004-05 to 2011-12, d) None The Above
reflecting that the conditions of the poor have
improved both in rural and urban areas. Q.31) Binjarpuri, Motu, Ghumusari, recently seen in
Which of the statements given above is/are correct? news, refer to breeds of -
a) 1 only a) Cattle
b) 2 only b) Buffalo
c) Both 1 and 2 c) Sheep
d) Neither 1 nor 2 d) Goat
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Q.26) Which of the following options is not true, with Q.32) ‘Inspiration4’ recently seen in the news refers
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a) It is widely used and represents the cut-off point a) It is the world's first all-civilian mission to orbit.
below which people are considered as poor. b) It is a new scalable genetic control system that
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b) The Head Count ratio does give insights about the uses a CRISPR-based approach to suppress
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c) Below the Poverty Line category is marked with c) It is the first resource mapping mission on any
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Q.33) REX MKII recently seen in the news is - Q.38) Consider the following factors:
a) a remote-controlled armed robot. 1. Fear of currency war.
b) a long-range patrol aircraft. 2. Dear Money policy of USA’s federal reserves.
c) a short-range, ground-to-air, air defence system. 3. Stiff competition by stock markets around the
d) a mobile, surface-to-air missile system. world.
4. Rise in crude oil prices.
Q.34) Athikaraya, Kayame, Neelam samba recently Which of the above factors are responsible for the
seen in news refers to: fall in India’s forex reserves?
a) Higher biomass yielding bamboo species a) 1, 2, and 3 only
b) Folk varieties of rice b) 1, 3, and 4 only
c) Small rat-like animals that lived around 500 years c) 3 and 4 only
ago d) 1, 2, 3, and 4 only
d) A species of cricket found in Karnataka
Q.39) In relation to the Exchange rate system
Q.35) ‘XENON1T’, recently seen in the news, refers followed by India, which of the statements given
to? below is/are correct?
a) It is a Gamma Irradiation technology for the shelf 1. India follows a dual exchange rate system
life of food products. consisting of the official and the market rates.
b) It is a virus strain that causes haemorrhagic fever. 2. The official exchange rate of India has a direct
c) It is an experiment to detect dark matter and dark bearing on the market exchange rate.
energy. Select the correct answer using the codes given
d) It is the world’s largest galaxy detected through below:
the Hubble Space Telescope. a) 1 only
b) 2 only
Q.36) Consider the following statements regarding c) Both 1 and 2
Special Drawing Rights (SDR) of IMF: d) Neither 1 nor 2
1. The value of SDRs are immune from daily
exchange rate fluctuations. Q.40) Consider the following statements:
2. The least weightage is accorded to the latest 1. The appreciation and depreciation of a currency is
currency added to the SDR basket. a feature of the floating exchange rate regime.
Which of the statements given above is/are correct? 2. The official annual rate of appreciation and
a) 1 only depreciation of an asset are fixed by a country.
b) 2 only 3. The concept of deficit and surplus exists only in
c) Both 1 and 2 relation to the Current Account.
d) Neither 1 nor 2 Which of the statements given above is/are correct?
a) 1 and 2 only
Q.37) Consider the following statements: b) 2 and 3 only
1. The Blue Box subsidies are not trade distorting c) 1 and 3 only
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2. The per farmer Amber Box subsidy in India is less Q.41) In relation to the Extended Fund Facility of the
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as compared to the same given in the developed IMF, which of the statements given below is most
countries. appropriate?
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3. The De-minimis entitlement of the subsidy under a) It is the additional money that can be raised by a
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the Amber Box applies to both the developed and member country from the IMF and is pegged at
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Which of the statements given above is/are correct? b) It is a form of loan raised amongst the member
a) 1 and 2 only countries with each other without any collateral.
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d) It refers to interest free loans raised from the IMF 2. Invest India’s NIRVIC Scheme aims at boasting
to deal with the BoP crisis on the fulfillment of exports and increasing investment in India.
certain pre-conditions. Which of the statements given above is/are correct?
a) 1 only
Q.42) Consider the following pairs: b) 2 only
Currency Feature c) Both 1 and 2
1. Hard currency Least liquidity d) Neither 1 nor 2
2. Soft currency Easily available
3. Heated Currency Currency under Q.46) Consider the following statements on the
depreciation impact of global trade in the light of COVID
4. Cheap Currency Currency with the public pandemic:
Which of the statements given above is/are correctly 1. The contraction in trade and GDP was more
matched? severe for the Advanced Economies than for the
a) 1, 2, and 3 only Emerging Markets and Developing Economies.
b) 2, 3, and 4 only 2. Corporate defaults on loans coupled by widening
c) 1, 3, and 4 only fiscal deficit have increased the vulnerability for
d) 1, 2, and 4 only the global economy.
Which of the statements given above is/are correct?
Q.43) Consider the following statements regarding a) 1 only
SEZ (Special Economic Zones): b) 2 only
1. They can be created by the Centre and the state c) Both 1 and 2
governments only. d) Neither 1 nor 2
2. The creation of SEZs is not permitted in the
agricultural sector. Q.47) Consider the following statements regarding
3. There cannot be a common use of the commercial the pharmaceutical sector of India:
infrastructure between a SEZ and a non SEZ 1. India’s pharmaceutical industry is third largest in
entity. the world in terms of volume and value.
Which of the statements given above is/are 2. Drug formulations and biologicals are the second
incorrect? largest exported commodity in the Merchandise
a) 1 and 2 only exports.
b) 2 and 3 only Which of the statements given above is/are correct?
c) 1 and 3 only a) 1 only
d) 1, 2, and 3 b) 2 only
c) Both 1 and 2
Q.44) Consider the following statements regarding E- d) Neither 1 nor 2
commerce:
1. A 100% FDI is permitted in the market-place Q.48) Consider the following statements regarding
based E-commerce models. trade agreements:
2. In a marketplace-based model, the seller and 1. The Comprehensive Economic Partnership
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3. The recent e-commerce rules, 2020 are applicable with common currency and tariffs.
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only to the market-place based operators. 2. In a Custom union, members apply a common
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Which of the statements given above is/are correct? external tariff for non-member countries.
a) 1 and 2 only 3. The Comprehensive and Progressive Agreement
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a) 1 and 2 only
Q.45) Consider the following statements: b) 2 and 3 only
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introduce a Buy Back Tax on companies, which of the a) Water and Sanitation Reforms
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escape the capital gains tax d) One Nation One Ration Card
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for continuing shareholders and perks up the Q.66) Consider the following transactions:
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Q.68) Consider the following statements with Q.71) Which of the following document(s) is/are
reference to the Goods and Services Tax published while presenting the Union Budget?
Compensation Cess: 1. Fiscal Policy Strategy Statement
1. To compensate states, a new tax, offsetting the 2. Medium-Term expenditure Framework
revenue losses and proceeds from which will be Statement
transferred to the states has been introduced 3. Annual Financial Statement
2. In the present design of GST, there is no provision 4. Demand for Grants
for revenue compensation for the Union 5. Supplementary Demand for grants
government. Select the correct answer using the codes given
Which of the given statement(s) is/are correct? below:
a) 1 only a) 1, 3, 4 and 5 only
b) 2 only b) 1, 2, 3 and 5 only
c) Both 1 and 2 c) 1, 2, 3 and 4 only
d) Neither 1 nor 2 d) 1, 3 and 4 only
Q.69) Which of the given statements is not correct Q.72) Consider the following:
regarding the tax system of India? 1. Agricultural implements
1. According to the Article 265, no tax should be 2. Silkworm laying cocoon
levied/collected except the authority of the law 3. Processed fish
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cyclical fiscal policy Which of the following good(s) is/are exempted from
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3. The Goods and Services tax(GST) is a consumption the application of the Goods and Services Tax?
and destination based indirect tax a) 1, 4 and 5 only
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4. GST being a value added tax, it's collection will b) 2, 4 and 5 only
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c) 2 and 4 only
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a) Off budget borrowings are not added to the fiscal 1. Equalization levy has been introduced under the
deficit Income Tax Act, 1961 to tax foreign companies
b) These borrowings are not a part of total which have a significant local base
government debt, however the interest payments 2. It is a direct tax levied on the profits made by the
on these are paid through the Consolidated fund companies like Google, Amazon
of India 3. Equalization levy is applicable to foreign
c) Outstanding extra-budgetary liabilities need to be companies which have a tangible presence in
clearly identified and eliminated in a time-bound India
manner as per the amended FRBM Act of 2018 Which of the following statement(s)
d) Off-budget borrowings are loans that are taken is/are incorrect?
not by the Centre directly, but by another public a) 1 only
institution which borrows on the directions of the b) 2 and 3 only
central government c) 3 only
d) 1, 2 and 3
Q.74) Consider the following statements:
1. Most of India's external debt is short term in Q.78) The term 'escape clause' is often seen in news
nature in context of
2. Commercial borrowings form the largest a) Related to base erosion and profit shifting
component of India's external debt b) Related to interest subvention scheme for
Which of the statement(s) given above is /are exporters
correct? c) Related to climate action plan passed in Paris
a) 1 only agreement
b) 2 only d) Related to fiscal responsibility and budget
c) Both 1 and 2 management act
d) Neither 1 nor 2
Q.79) With reference to the Fugitive Economic
Q.75) Which one of the following Offenders Act, 2018, consider the following
committees/commission has recommended the statements.
establishment of an independent fiscal council? 1. A Fugitive Economic Offender is a person against
a) Narsimhan committee whom an arrest warrant has been issued for
b) Abid Hussain Committee committing any offence listed in the Act, and the
c) XIV Finance Commission value of the offence is at least Rs 1000 crore.
d) XV Finance Commission 2. The Department of Economic Affairs in
collaboration with the Ministry of Finance may
Q.76) Consider the following statements about the declare a person as a Fugitive Economic Offender.
debt sustainability of the Indian economy: 3. There is provision of confiscation of properties of
1. As far as the economy is growing at a higher rate a Fugitive Economic Offender which are proceeds
the difference between the interest rate on debt of crime, Benami properties and any other
and growth rate will be negative in most of the properties both in India and abroad.
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b) 2 only
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following statements.
Q.77) Consider the following statements with 1. Bilateral netting is a legally enforceable
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2. The provisions of the bill will apply to Qualified d) ‘Achieving Nutritional Security in India: Vision
Financial Contracts between two qualified 2030 ' report was recently released by it.
financial market participants where at least one
party is an entity regulated by the specified Q.84) Which of the following schemes are financed
authorities RBI, SEBI, IRDAI, PFRDA or the IFSCA. by NABARD?
Which of the statements given above is/are correct ? 1. Paramparagat Krishi Vikas Yojana.
a) 1 only 2. Dairy Entrepreneurship Development Scheme
b) 2only 3. Commercial production units of organic inputs
c) Both 1 and 2 scheme
d) Neither 1 nor 2 4. Interest Subvention Scheme
5. National Livestock Mission.
Q.81) In the context of Stock Exchanges, the term Select the correct answer from the codes given
‘Demutualisation‘ refers to as, below:
a) Transfer of shares from the brokers to the public. a) 1, 2, 3 and 4 only
b) Sudden fall of prices of the commodities. b) 1 and 2 only
c) Process of cooperative approach in managing the c) 2, 3, 4 and 5 only
shares. d) 1, 2, 3, 4 and 5.
d) Trade executed in the share market that is settled
without the approval of a party in question. Q.85) Consider the following statements about
Goods and Service Tax.
Q.82) Which among the following statements is 1. The GST Bill was first introduced in 2014 as The
incorrectly mentioned with respect to the Securities Constitution (122nd Amendment) Bill.
and Exchange Board of India ? 2. The Union Finance Minister is the Chairperson of
a) It can draft regulations, conduct inquiries, pass the GST council that is formed by the President of
rulings and impose penalties. India.
b) Autonomous organization accountable to the 3. Recent amendments in the GST Act
Parliament of India. made generating e-Invoices mandatory for
c) Securities Appellate Tribunal (SAT) constituted to companies having turnover of more than 50 crore.
protect the interest of entities that feel aggrieved Select the correct answer using the codes given
by SEBI’s decision can also hear and dispose of below:
appeals against orders passed by the Insurance a) 1 and 2 only
Regulatory Development Authority of India b) 1 only
(IRDAI) under the Insurance act, 1938. c) 2 only
d) Chairman of SEBI is nominated by the Union d) 1, 2 and 3
Finance Ministry with consultation with the RBI.
Q.86) Which of the following food items does not
Q.83) Which among the following statements is come under the ambit of Goods and Service tax (GST)
incorrectly mentioned relating to the provisions of ?
NABARD ? 1. Milk in Tetra Pack
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technology and institutional development for Select the correct answer using the codes given
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Q.87) Which of the following are the functions of the 4. Composite water management Index.
Reserve Bank of India ? 5. Sustainable Tourism in the Himalayan Region.
1. The RBI shall recommend the denominational 6. DigitalPayments Trends, Issues and Opportunities.
values of the notes as well as the discontinuance Select the correct answer from the codes given
of issue of notes. below:
2. RBI sells the foreign currency in the foreign a) 1, 2 ,3 and 5 only
exchange market when its supply decreases in the b) 3, 4 .5 and 6 only
economy and vice-versa. c) 1, 2, 4, 5 and 6 only
3. Setting of Inflation targeting. d) 1, 2, 3, 4, 5 and 6.
4. Maintaining price stability in the economy.
Select the correct answer answer using the codes Q.91) With reference to the recent proposed
given below : amendments made to the Consumer Protection (E-
a) 1, 2 and 3 only commerce) Rules 2020, consider the following
b) 2 and 3 only statements.
c) 1, 2 and 4 only 1. Conventional e-commerce flash sales are banned.
d) 1 and 4 only 2. A filter mechanism to identify goods based on
country of origin has to be incorporated by the e-
Q.88) Which of the following matters of the commerce platforms.
Commercial Banks are regulated by the Reserve Bank 3. Mandatory requirement for registration number
of India ? issued by Department for Promotion of Industry
1. Controlling credit creation by commercial banks. and Internal Trade.
2. Merger and winding up of commercial banks. Which of the statements given above is/are correct ?
3. Appointment of the board and its chairman of a a) 1 and 2 only
commercial bank. b) 1 only
Select the correct answer using the codes given c) 2 and 3 only
below : d) 1, 2 and 3
a) 1 only
b) 1 and 2 only Q.92) ‘New Arrangement to Borrow (NAB)’, is related
c) 3 only to which of the following organisations?
d) 1, 2 and 3. a) International Monetary Fund
b) World Bank
Q.89) Which of the following provisions is/are c) NITI Aayog
amended in the present Companies Act, then that of d) New Development Bank.
Companies Act of 1956 ?
1. Shareholders permitted for a private company Q.93) Which of the following statements is
increased. incorrectly mentioned with respect to Asian
2. A single person can start a company. Development Bank?
3. Decreasing the limit on maximum partners. a) China holds the largest share in Asian
4. Duties of the director of a company is defined. Development Bank followed by India.
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Select the correct answer using the codes given b) To eradicate extreme poverty is one of the main
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below : goals.
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Q.90) Which among the following index/reports are body of Asian Development Bank and consists of
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published by the NITI Aayog ? members from outside Asia region also.
1. Health Index of India.
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2. Agricultural Marketing and Farmer Friendly Q.94) With reference to Asian Infrastructure and
Reform Index. Investment Bank, consider the following statements:
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eliminating poverty.
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Q.2) Ans: c
Exp:
o The Accounts of the government of India are kept
in three parts: Consolidated Fund of India,
Contingency Fund and Public Accounts of India.
• Statement 1 is Incorrect: All revenues received
by the government by way of taxes whether
direct or indirect and other receipts flowing to
the government in connection with the conduct
of government business like receipts from
Railways, Post, transport, government PSU's etc.
are credited into the Consolidated Fund of
India. Similarly, all loans raised by the government
by issue of public notifications, treasury bills and
loans obtained from foreign governments and
international institutions are credited into this
fund.
• Statement 2 is Incorrect: Treasury bills are
also debt instruments through which the
government raises loans, hence they are also
credited to the Consolidated Fund of
India. Moreover, all expenditures incurred by the
government for the conduct of its business
including repayment of internal and external debt
and release of loans to States/ Union Territory
governments for various purposes are debited
against this fund and no amount can be
withdrawn from the Fund without the
authorization from the Parliament.
entity or individual. They are usually imposed on expenditure upon some 'new service' not
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a manufacturer or supplier who then passes on contemplated in the budget for that year then
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the tax to the consumer. Thus, they do not look at the President causes to be laid before both the
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the consumer’s ability to pay but are the same for Houses of Parliament another statement showing
everyone who buys the goods or services. the estimated amount of that expenditure which
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Hence, indirect taxes are usually inflationary. is called "Supplementary Demand for Grants".
• Statement 2 is Incorrect: Direct taxes, on the one
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hand, are taken from an presented to and passed by the House before the
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individual’s earnings, while indirect taxes are end of the financial year.
imposed on goods that consumers buy.
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direct taxes are not inflationary at all. Option A is the Correct answer.
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• Outcome Budgeting was first introduced in 2005- consumer bears the burden of the multiple taxes
06 by the then finance minister, P Chidambaram. imposed on every stage of production. Such a
It is practiced by most of the Ministries while situation leads to inflationary prices. Thus, ‘Tax
preparing their budget details and submitting it to on tax’ plagued the indirect tax structure of India
the Ministry of Finance for the preparation of the prior to GST.
annual budget towards the end of February. It • Statement 1 is Incorrect: GST removed the
replaced the system of performance budgeting cascading effect by subsuming 17 taxes.
by ministries, introduced in 1969 following the However, the customs duty still continues on
recommendations of the Administrative Reforms imports whereas, the exports come under the
Commission to address its weaknesses such as category of ‘Zero rated’ goods and services. Here
lack of a clear relationship between the financial are a few taxes that will be subsumed in GST:
and performance budgets and inadequate target 1. Central sales tax
setting for the ensuing year. 2. Central sales tax
• Outcome based budgeting is a practice of 3. Service tax
suggesting and listing estimated outcomes of 4. Octroi
each programme or schemes designed. 5. Special additional duty of customs
• Under outcome budgeting, the document 6. Additional excise duty
shows physical dimensions of the financial 7. Countervailing duty
budget indicating the actual physical performance 8. Purchase tax
in the previous year, current year and targeted 9. Entertainment tax
performance during the projected (next) year. 10. Central Excise duty
Outcome Budget helps in: 11. State Value Added Tax
1. Better service delivery • Statement 2 is Correct: Input tax credit means
2. Decision making that when a manufacturer pays the tax on his
3. Evaluating programme performance and results output, he can deduct the tax he previously paid
4. Improving programme effectiveness on the input he purchased. Here, while paying the
5. Make budgets cost effective tax on his output, he can deduct or take credit for
6. Accountable resource management the tax he paid while purchasing inputs. Thus, it is
7. Outcome budgeting makes the government the input tax credit that makes the GST efficient
programmes more result oriented, instead of and constructive and also eliminates the
outlay oriented. cascading effect. Providing ITC is a big
Difference between Outlay, Outcome and Outputs: administrative and technological work under the
1. Outlays are financial resources deployed for GST platform.
achieving certain outcomes.
2. Outputs are a measure of the physical quantity of Q.6) Ans: c
the goods or services produced through a Exp:
government scheme or programme. They are • The Securities Transaction Tax is a tax levied at
usually an intermediate stage between ‘outlays’ the time of purchase and sale of securities listed
and ‘outcomes. For example, construction of a on stock exchanges.
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health care centre is the ‘output’, while increase • Statement 1 is Incorrect: When profit is gained
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in the life expectancy is the ‘final outcome’ or on a certain security, the gains are taxed as per
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3. Outcomes or impact are the end results of various introducing STT was to curb evading of capital
government initiatives. Going beyond mere gains tax on profits earned by transecting in
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• Cascading tax effect is also termed as “tax on • Statement 3 is Correct: The Securities Transaction
tax”. This effect occurs when a good is taxed on Tax is a tax levied at the time of purchase and
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every stage of production. As a result, the final sale of securities listed on stock exchanges. This
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tax was introduced in the 2004 Union Budget and among members. The most recent increase in
came into effect from 1 October 2004. The rate of quotas, to SDR 477 billion (US$ 651 billion), was
STT differs based on the type of security traded agreed under the 14th Review (concluded in
and whether the transaction is a purchase or a December 2010, effective from January 2016.)
sale. The 15th Review was concluded in February 2020
without a quota increase. In
Q.7) Ans: d its resolution concluding the 15th Review, the
Exp: Board of Governors also provided guidance on the
Option D is the Correct answer. 16th Review, expected to be concluded no later
• Taxes Levied and Collected and Retained by than December 15, 2023.
States: • In January 2021, a reform of the NAB took effect
Some taxes and duties exclusively belong to following consents from NAB participants,
states. They are mentioned in the State list. Every almost doubling the size of the NAB to SDR 361
state is entitled to levy, collect and appropriate these billion (US$521 billion) for the period from 2021
taxes. The taxes are: to 2025.
1. Duty on succession to agricultural land
2. Estate duty on agricultural land Q.9) Ans: b
3. Land revenue Exp:
4. Tax on agricultural income • Statement 1 is incorrect: A five-judge Constitution
5. Tax on land and buildings Bench of the Supreme Court (SC) has ruled that all
6. Capitation taxes co-operative banks in the country could make use
7. Tax on mineral rights of the SARFAESI Act to make recovery against
8. Tax on the consumption or sale of electricity defaulting persons.
9. Tax on vehicles • Cooperative banks come under the category of
10. Tax on the sales and purchase of goods (other banks as defined under Section 2(1)(c) of the
than newspaper) for e.g. Sales tax Sarfaesi Act, and the recovery procedures
11. Tolls mentioned under that law apply to cooperative
12. Tax on professions, trades and employment banks as well.
• Statement 2 is correct: "To improve credit
Q.8) Ans: a discipline while continuing to protect the interest
Exp: of small borrowers, for NBFCs with minimum
• Statement 1 is correct: Quotas are the IMF’s main asset size of Rs 100 crores, the minimum loan size
source of financing. Each member of the IMF is eligible for debt recovery under the Securitisation
assigned a quota, based broadly on its relative and Reconstruction of Financial Assets and
position in the world economy. Enforcement of Security Interest (SARFAESI) Act,
• Statement 2 is correct: The New Arrangements to 2002 is proposed to be reduced from the existing
Borrow (NAB) constitutes a second line of defense level of Rs 50 lakh to Rs 20 lakh," the finance
to supplement IMF resources to forestall or cope minister said.
with an impairment of the international monetary
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additional resources to the IMF. • Option c is incorrect: The ARC can take over only
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• Bilateral borrowing Agreements serve as a third secured debts which have been classified as a
line of defense after quotas and the NAB.Since the non-performing asset (NPA). Assets.The ARCs take
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onset of the global financing crisis, the IMF has over a portion of the debts of the bank that
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financing needs of its members. BBAs serve as a • All the rights that were held by the lender (the
third line of defense after quotas and the NAB. bank) in respect of the debt would be transferred
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• Statement 3 is incorrect: The IMF regularly to the ARC. Funds required to purchase such
conducts general reviews of quotas to assess the
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Financial Corporations, State Industrial imbalances that are highlighted in one of the
Development Corporations, trustee or ARCs IMF's other publications, the World Economic
registered under SARFAESI and Asset Outlook topics covered in the GFSR usually
Management Companies registered under SEBI include systemic risk assessments in worldwide
that invest on behalf of mutual funds, pension financial markets, worldwide debt management,
funds, FIIs, etc are qualified buyers. emerging economic markets and current
• Option a, b and d are correct. The very first Asset economic crises that could affect finances
Reconstruction Company (India) Ltd or Arcil, was worldwide.
set up in 2002 by -four banks: SBI, ICICI Bank, PNB • Global Information Technology Report: A report
and IDBI Bank under SARFAESI Act. The asset produced in cooperation with INSEAD, World
reconstruction companies or ARCs are registered Economic Forum, and the World Bank, the Global
under the RBI. The ARC proposed in the Budget Information Technology Report ranks the world
will be set up by state-owned and private sector economies in terms of networked readiness and
banks, and there will be no equity contribution effects on economic growth and productivity.
from the Centre. • Travel and Tourism Competitiveness
Report: Published every two years by the World
Q.11) Ans: a Economic Forum, the Travel & Tourism
Exp: Competitiveness Report and Index compares the
• Following are some of the reports/indices along competitiveness of 140 economies and measures
with the organization from where it is published. the set of factors and policies that enable the
1. Ease Of Doing Business: IBRD (World Bank). sustainable development of the Travel & Tourism
2. World Development Report: IBRD (World Bank). (T&T) sector, which in turn contributes to the
3. World Energy Outlook: International Energy development and competitiveness of a Country.
agency. • Global Competitiveness Report: The Global
4. Southeast Asia Energy Outlook: International Competitiveness Report (GCR) is a yearly report
Energy Agency. published by the World Economic Forum. Since
5. World Oil Outlook: OPEC ( Organization of the 2004, the report ranks countries based on the
Petroleum Exporting Countries). Global Competitiveness Index.The report
6. The Global Report: UNHCR (United Nations High "assesses the ability of countries to provide high
Commissioner for Refugees). levels of prosperity to their citizens". This in turn
7. Global Assessment Report: UNISDR (United depends on how productively a country uses
Nations Office for Disaster Risk Reduction). available resources. Therefore, the Global
8. Industrial Development Report: UN Industrial Competitiveness Index measures the set of
Development Organization. institutions, policies, and factors that set the
9. Global Informationation Technology Report: sustainable current and medium-term levels of
World Economic Forum. economic prosperity
10. World Happiness Report: Sustainable
Development Solutions Network. Q.13) Ans: b
Exp:
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• Option b is correct: The Global Financial Stability investment (FDI) worldwide, at the regional and
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Report (GFSR) is a semiannual report by country levels and emerging measures to improve
the International Monetary Fund (IMF) that its contribution to development.
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twice per year, in April and October. The GFSR organ of the United Nations General Assembly
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focuses on current conditions, especially financial dealing with trade, investment and development
and structural imbalances, that could risk an upset issues. It is also the United Nations focal point for
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in global financial stability and access to financing the least developed countries. Major functions
by emerging-market countries. It emphasizes the include maximizing the trade, investment and
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countries and assist them in their efforts to been operating since 2012 under the auspices of
integrate into the world economy. the UN Secretary-General. SDSN mobilizes global
scientific and technological expertise to promote
Q.14) Ans: c practical solutions for sustainable development,
Exp: including the implementation of the Sustainable
• Statement 1 is correct: The National Investment Development Goals (SDGs) and the Paris Climate
and Infrastructure Fund (NIIF) Limited has been Agreement India showed slight improvement in
incorporated as a company under the Companies ranking since last year's report
Act, 2013, duly authorized to act as investment • Statement 2 is Incorrect : Finding of the Report :
manager of National Investment and Top 5 countries were – Finland (topped the list for
Infrastructure Fund. fourth straight year), Iceland, Denmark,
• Statement 2 is incorrect: It provides funds directly Switzerland, The Netherlands and Sweden.
to commercially viable projects, both Greenfield • India ranked 139th out of the 149 countries in the
and Brownfield, including stalled projects, along list, a slight improvement since last year(ranked
with key transportation projects could be taken 140th).
up initially by the NIIF for funding. • India’s neighbours: Pakistan (105th), Bangladesh
• Greenfield project is one that lacks constraints (101st) and China (84th)
imposed by prior work. Simply means: a new • Statement 3 is Correct : As per the Report,
project. following were the factors supporting successful
• Brownfield project is used to describe land COVID 19 Strategies -:
previously used for industrial purposes or some o Confidence in public institutions: Trusted public
other uses. Brownfield project simply means: an institutions were more likely to choose the right
already existing/ stalled project. strategy and have their populations support the
• Statement 3 is correct: National Investment and required actions.
Infrastructure Fund (NIIF) is India’s first o Income inequality, acting partly as a proxy for
infrastructure specific investment fund or a social trust.
sovereign wealth fund that was set up by the o Learnings from SARS and other earlier pandemics.
Government of India in February 2015. The o Whether the head of the government was a
objective behind creating this fund was to woman
maximize economic impact mainly through
infrastructure investment in commercially viable Q.16) Ans: d
project. Exp:
• Statement 4 is incorrect: There will be a • Statement 1 is Incorrect : Ministry of Coal has
Governing Council of the NIIF which will have started Commercial Auction of coal mines on
Government representatives and experts in revenue share basis using NCI. NCI has been rolled
international finance, eminent economists and out on 4th June 2020. NCI is a price index which
infrastructure professionals. It could include reflects the change of price level of coal in a
representatives from other non-Government particular month relative to the fixed base year.
shareholders. The terms and period of The base year for the NCI is FY 2017-18.
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appointment of the Governing Council of the NIIF o Prices of coal from all the sales channels of coal,
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will be as decided by the Government. including import, as existing today are taken into
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• Provisions for one or more CEO (depending upon account for compiling the NCI.
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the number of funds created) and a small • Statement 2 is Incorrect : NCI is composed of a
set of 5 sub-indices: 3 for Non-Coking Coal and 2
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• Statement 1 is Correct : Recently, World produce good-quality coke, one of the key inputs
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Happiness Report, 2021 was released by the UN for the production of steel.
Sustainable Development Solutions Network Has
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improvements in internet inclusion overall, in part Fund’s (IMF) World Economic Outlook has raised
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because of increased availability. its Financial Year (FY) 2021 growth forecast for
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o People in low and lower-middle-income countries India to 12.5% from 11.5% estimated earlier in
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• Statement 2 is Correct: Report commented that: more than tripling by 2040. Natural gas import
dependency increased from 20% in 2010 to
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substantial and broad-based reforms. In addition o Coal Demand: Coal currently dominates India's
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to taking steps to improve fiscal health and electricity sector, accounting for over 70% of
strengthen the rule of law, the government would overall generation. Coal demand is seen rising to
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need to increase financial freedom and reform the 772 million tonnes in 2040 from the current 590
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• Statement 1 is correct: The Poverty Gap Ratio is calculate inequality in society. In a rapidly
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the gap by which mean consumption of the poor changing world, definitions of poverty based on
relative standards will be constantly changing.
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PGR, the worse is the condition of the poor. While what is poor in China is not the same as what is
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Q.31) Ans: a
Exp:
• Option a is correct: Four breeds of cattle —
puppetry is staged on a special structure Binjharpuri, Motu, Ghumusari and Khariar — and
in temple premises called Koothumadam. two breeds of buffalo — Chilika and Kalahandi
• In Malayalam, Thol means leather, pava means — and one breed of sheep, Kendrapada, have
doll and koothu means play. Though the origin of already received NBAGR recognition.
this ritualistic art form is not known exactly, some • The National Bureau of Animal Genetic
believe it to be as old as 1200 years. Resources (NBAGR) has recognised the Manda
• This entertainment art is performed on a special buffalo as the 19th unique breed of buffaloes
stage called koothumadam in the temple found in India. Manda buffalo are native to
courtyard. It is performed using the mythological Odisha and have ash grey and grey coat colour
figures along with the use of fire and lighting of with copper colour hairs.
lamps behind the screen. The chief puppeteer is • They are found in the Eastern Ghats and plateau
known as ‘Pulavan’. of the Koraput region of Odisha. Indian Council
of Agricultural Research (ICAR) -National Bureau
Q.30) Ans: c of Animal Genetic Resources, Karnal (ICAR-
Exp: NBAGR) is the nodal agency for the registration
The KURMA App: of newly identified germplasm of livestock and
• It is a mobile-based application aimed at turtle poultry of the country.
conservation. It was launched on the occasion of • Its mandate includes Identification, Evaluation,
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• It is developed by the Indian Turtle Conservation Utilization of Livestock and Poultry Genetic
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Q.32) Ans: a
• The KURMA App has a built-in digital field guide Exp:
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covering 29 species of freshwater turtles and • Option a is correct: Inspiration4 is the world’s
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tortoises of India, and information on turtle first all-civilian mission to orbit. The flight will be
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identification, vernacular names, and threats. privately operated by SpaceX (US Private Space
• It provides users a database to identify a species. Company) using a previously-flown Crew Dragon
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o The mission involves circling the Earth for three o These can supplement the arachidonic acid (ARA)
days, and then splashing down into the Atlantic and docosahexaenoic acid (DHA) in infants
Ocean. Inspiration4 will orbit the Earth at 575km, through breast-feeding.
higher than the International Space Station o DHA and ARA are fatty acids found in breast milk,
(408km) and the Hubble space telescope as well as in some foods, like fish and eggs. These
(547km). This will be the farthest distance rice varieties can be more cost-effective and
travelled by a crewed mission since 2009, when reliable than marketed formula foods.
astronauts last went to repair the Hubble. o In India, many folk varieties like Athikaraya, Dudh-
• Option b is incorrect: precision-guided Sterile sar, Kayame, Neelam samba, Srihati, Maharaji and
Insect Technique(pgSIT) is a new scalable genetic Bhejri are known in folk medicine to enhance milk
control system that uses a CRISPR-based production in lactating women. Other traditional
approach to engineer deployable mosquitoes that varieties like Kelas, DudheBolta and Bhutmoori
can suppress populations. are rich in iron and can be included in diet of
o It alters genes linked to male fertility — creating mothers to treat anaemia
sterile offspring — and female flight in Aedes
aegypti, the mosquito species responsible for Q.35) Ans: c
spreading wide-ranging diseases including dengue • Statement C is correct: XENON1T is a dark matter
fever, chikungunya, and Zika. research project run by the Gran
o pgSIT uses CRISPR to sterilize male mosquitoes Sasso National Laboratory in Italy. This is a deep
and render female mosquitoes, which spread underground research facility which aims
disease, as flightless to detect dark matter particles. It could also be
• Option c is incorrect: VIPER stands for Volatiles used to detect dark energy.
Investigating Polar Exploration Rover. It is a • Other Dark Matter and Energy Experiments:
mobile robot. It is the first resource mapping o LUX-Zeplin
mission on any other celestial body o in US and PandaX-xT project at China
• Option d is incorrect: Union Minister of
Electronics & Information Technology launched Q.36) Ans: d
Phase II of the Visvesvaraya PhD Scheme. It aims Exp:
to enhance the number of PhDs in Electronics • Statement 1 is incorrect: The value of SDR is
System Design & Manufacturing (ESDM) and determined in terms of the US dollars and
IT/IT Enabled Services (IT/ITES) sectors in the is determined on the daily basis based on the daily
country. exchange rate fluctuations. Hence, the value of
SDR undergoes daily fluctuations depending upon
Q.33) Ans: a the exchange rates.
Exp: • Statement 2 is incorrect: The latest currency to be
• Option a is correct: REX MKII is an Israeli remote- added to the SDR basket was Chinese Renminbi.
controlled armed robot that can The other currencies in the basket of SDR includes
patrol the battle zone, track intruders, and the US Dollars, Euros, Japanese Yen, and the
fire. Operated via an electronic tablet, it can be pound sterling. While the maximum weight is
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equipped with two machine guns, a camera and a assigned to the US Dollars, the minimum
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sensor. Robots can collect information weightage is to pound sterling. Chinese currency
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on ground forces, transport injured soldiers and was the last addition to the basket yet the weight
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supplies in and out of combat, and attack nearby assigned to it is after the dollars and euros.
targets.
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Q.37) Ans: b
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• Option b is correct: Researchers have examined on Agriculture allows a minimum amount of trade
12 folk varieties of Indian rice that can distorting subsidies for both the developed and
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supplement the nutritional demand of important developing countries to ensure food security of
fatty acids in undernourished mothers. the country. These subsidies are classified under
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and the Amber box subsidies. The Green box rate system. In this case, two exchange rates
subsidies do not distort the trade and hence there namely the market exchange rate and the official
is no limit on them. The Blue Box subsidies are rate are announced. The intervention of RBI
also provided without any limits. The subsidies occurs in this system when too much fluctuation is
under the Blue box are allowed by the WTO with witnessed in the exchange rate market.
the condition that they must be designed to • Statement 2 is incorrect: The market variations of
reduce the trade distortion. demand and supply decides the market exchange
• Statement 2 is correct: The per farmer Amber box rate. The official exchange rate is then dependent
subsidy is more for the USA than for India. Even on the market exchange rate and not the other
though India provides for a greater percentage of way round.
subsidies, it is more per farmer for the USA than
for India. Q.40) Ans: c
• Statement 3 is correct: The Amber Box provides Exp:
limitations on the subsidies for both the • Statement 1 is correct: In case
developed and the developing countries. of appreciation, the currency gains its value when
Developed countries are entitled to provide compared to the foreign currency whereas in case
subsidies worth 5% of their production while for of depreciation, the currency loses its value when
the developing countries, the limit is 10%. compared to the foreign currency. Hence,
appreciation and depreciation of a currency can
Q.38) Ans: d occur only when the exchange rate is based on
Exp: market-based fluctuations of the demand and
• Option D is correct: The forex reserves of India is supply. Therefore, it is a feature of the floating
maintained by the Reserve Bank of India and is in exchange rate system.
the form of foreign currencies, gold, Reserve • Statement 2 is incorrect: The concept of
Tranche position of the IMF and the SDR. To appreciation and depreciation are also linked to
strengthen the foreign exchange reserves, there the increase and the decrease in the value of an
needs to be greater incoming of foreign asset. Every asset undergoes wear and tear with
investments in the country which is possible by time and hence depreciates in its value. This
strengthening the investment ecosystem. Fear of depreciation is officially fixed by the
currency war among the major economies like the government annually. However, there is no such
USA and China is likely to reduce the forex official fixation for the appreciation of assets as it
reserves by causing volatility in the exchange rate is for the depreciation of the assets.
and the depreciation of rupee. The dear money • Statement 3 is correct: The deficit and surplus is
policy of the US Federal reserve increases the expressed in terms of Current accounts only and
loan interest rates by the commercial banks and not for the capital account. The current account
hence borrowers provide competitive interest includes the trade in goods and services, along
rates to the investors causing them to be with the transfer payments, and the Income. The
attracted to their domestic market. Huge Balance of Payment crisis occurs when the
competition among the stock exchanges of the country does not have sufficient forex reserves to
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world causes volatility in the exchange rates and finance its deficit.
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which are offering them the best returns. Rising Q.41) Ans: c
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the country for the same quantity of import of International Monetary Fund refers to any
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crude oil and makes our imports costlier. amount of loan or foreign exchange that can be
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• Statement 1 is correct: India has been following suggested by the IMF for the member country.
the floating exchange rate system since 1993. The India is a party to this agreement of the IMF and
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Indian model is referred to as the dual exchange during its BoP crisis of 1991, it agreed to the
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any other private parties. require the approval of the Government of India.
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• Statement 2 is incorrect: SEZs can be created in The move aimed at curbing China from overtaking
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any sector of the economy- Agriculture, businesses in India at a cheap price during the
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a new category for this purpose was added in the National Investment Promotion and
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2017 by the Ministry of Commerce and Industry. Facilitation Agency of India is a not-for-profit
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of the SEZs, it has been allowed that social and Commerce and Industry along with the FICCI,
commercial infrastructures located outside the NASSCOM, and others. The Nirvik scheme that
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India, a PSU under the Ministry of Commerce and Trade Agreement which is far more
Industry. comprehensive than a conventional free trade
agreement. In an FTA, the partner countries only
Q.46) Ans: c aim at the reduction of the tariffs. However, if the
Exp: countries go beyond simply reducing the tariffs to
• Statement 1 is correct: As per the Economic relaxing the norms for foreign investment and
Survey 2020-21, the COVID pandemic led to the movement of labor then it forms a
slowdown of the economic activity due the Comprehensive Economic Partnership Agreement.
imposition of lockdowns and the halt of economic It is not a common market that allows free
activity. It was observed that in the Advanced movement of labor along with a common tariff for
Economies, the impact of contraction in GDP and a non-member.
trade volume is much more than that of the • Statement 2 is correct: Customs Union is a Free
Emerging Markets and Developing Economies Trade Agreement where the members of the
(EMDE). The decline in exports and imports was Union charge reduced tariffs to each other while
very steep for the Advanced Economies as they charge a common tariff for external or non-
compared to the EMDEs. member countries.
• Statement 2 is correct: As per International • Statement 3 is correct: Trans-Pacific
Monetary Fund, there is a lot of vulnerability in Partnership or TPP was a free trade
the corporate sector and in the financial position agreement proposed by the USA with 11 other
of the sovereign governments. The corporate partners (Japan, Malaysia, Vietnam, Singapore,
loans are at a greater risk of defaults as further Brunei, Australia, New Zealand, Canada, Mexico,
loans are being raised by them to deal with the Peru, Chile) to facilitate lower tariffs and easy
cash shortages, further increased expenditure by movement of labor and investments. However,
the governments to deal with the pandemic the US withdrew from TPP in 2016 and the
has widened the fiscal deficits of the countries. remaining 11 countries revised TPP
to Comprehensive and Progressive Agreement
Q.47) Ans: b for Trans-Pacific Partnership or CPTPP.
Exp:
• Statement 1 is incorrect: Economic Survey 2020- Q.49) Ans: d
2021 highlights the potential of India to become Exp:
the pharmacy of the world. It highlights • Statement 1 is incorrect: The composition
that India’s pharmaceutical industry is third of SAARC and BIMSTEC differs greatly with each
largest in terms of volume while in terms of value other. SAARC or the South Asian Association for
it is 14th largest in the world. Further, India’s Regional Cooperation was established in 1985 at
exports in pharmaceuticals have doubled in the Kathmandu, Nepal. It comprises 8 countries: India,
past 10 years and India is at 11th position in terms Afghanistan, Pakistan, Nepal, Bhutan, Bangladesh,
of total share of world pharma exports as per Sri Lanka, and Maldives. Bay of Bengal Initiative
2019. for Multi Sectoral Technical and Economic
• Statement 2 is correct: USA is now the largest Cooperation or BIMSTEC was formed in 1997 with
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export destination for Indian exports followed by Headquarters at Dhaka, Bangladesh. It has 7
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China. A fall in the exports in 2020-21 have been members: India, Bangladesh, Bhutan, Nepal, Sri
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attributed to the fall in the exports of Petroleum, Lanka, Myanmar, and Thailand.
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Oil and Lubricants exports. Drug formulations, • Statement 2 is incorrect: Mekong Ganga
biologicals, have shown consistent positive Cooperation was formed in 2000 and is an
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growth and is the second largest exported agreement with India and the five countries
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commodity of the country. (Economic Survey through which river Mekong passes. These
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headquarters in Austria. It was established in to European Union. European Union was created
in
1961. It includes 13 members. India is not a in 1993 with the signing of the Maastricht
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member of this. SAFTA or the South Asia Free Treaty to create a common political, economic
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Trade Area is a trade agreement of the SAARC union that facilitates easy movement of goods,
nations. It includes all SAARC countries including services, and citizens. In 2002, it released its own
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agricultural exporting nations that aims to of Digital Single Market Strategy by 2020 is aimed
to promote various digital, E-commerce, and
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NSSF (net of withdrawals) is invested in special create assets, which are owned by the State
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Government securities and is counted as the government and not by the Central government.
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Bank of Reconstruction and Development which excludes such grants which are used for
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Exp:
Q.57) Ans: a • Statement 1 is Incorrect: Fiscal deficit indicates
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want to hike their stake in the company, countries where they operate and not just where
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sometimes to avoid any takeover threats. they have their headquarters; and the second
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o Companies resort to buyback mainly to escape pillar commits to a global minimum corporate tax
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payouts, the government has proposed that 20 % o This has been done mainly because companies
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tax will be levied on the difference between the preferred to book their profits in tax havens. For
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issue price and the buyback price of the share. instance, U.S. companies booked half of all foreign
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The Finance Ministry has said that it will look into profits in just seven low-tax jurisdictions:
the applicability of 20% tax proposed in the 2019- Bermuda, the Cayman Islands, Ireland,
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20 Budget on the current share buybacks by listed Luxembourg, the Netherlands, Singapore and
companies. Switzerland. Though small countries levy a low
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rate, they may capture what is significant revenue various tax concessions and incentives provided
for them. under the Income tax Law.
o U.S. Treasury Secretary Janet Yellen has asserted o Minimum Alternate Tax is applied when the
that a global minimum would end a destructive taxable income calculated according to the I-T
“race to the bottom” in international taxation. Act provisions is found to be less than 15.5 per
According to the London-based Tax Justice cent (plus surcharge and cess as applicable) of the
Network advocacy group, governments lose $245 book profit under the Companies Act, 2013.
billion annually to tax havens. If that money were • Statement 4 is Incorrect: Stamp duty is a legal tax
instead available to governments, they could use payable in full and acts as evidence for any sale
it for, among other things, managing their heavy or purchase of a property. It is payable under
costs for pandemic relief. Section 3 of the Indian Stamp Act, 1899. Although
o It would apply to companies’ overseas it is applicable to the companies, it is not a
profits. Therefore, if countries agree on a global direct tax.
minimum, governments could still set whatever o The levy of stamp duty is a state subject and thus
local corporate tax rate they want. the rates of stamp duty vary from state to
state. Beginning from July, 2020, all shares and
Q.64) Ans: c mutual fund purchases will attract a stamp duty
Exp: of 0.005 per cent and any transfer of security will
o A direct tax is a tax levied directly on a taxpayer attract a stamp duty of 0.015 per cent.
who pays it to the Government and cannot pass it
on to someone else. Q.65) Ans: a
• Statement 1 is Correct: Corporate income tax Exp:
(CIT) is imposed on the profits of the • The Finance Ministry has permitted some states
corporations/ companies/ entities. All profit- an additional borrowing of ₹ 1.06 lakh Cr as these
making companies need to pay a flat rate of have implemented some institutional reforms.
corporate income tax. Last October, the central govt linked
• To promote manufacturing, for new the additional borrowing of 1% of GSDP to four
manufacturing firms (& electricity generation) set critical reforms:
up after 1st October 2019 and commencing its o One Nation One Ration Card
operations before 31st March 2023, the Standard o Ease of doing business reforms
Corporate Income Tax is 15% (after Cess and o Power sector reforms
Surcharge it will be 17.16%). o Urban and local body reforms
• Statement 2 is Incorrect: When a company • States implementing three of these are given
announces dividends, it has to pay tax (DDT) on additional grants from the centre for capex
the dividend which is to be distributed to the purposes. This was done under the AtmaNirbhar
owners and the owners also pay tax (as per their Bharat, the central govt announced support
income tax slab) on the dividend received. measures allowing them to raise the borrowing
• However, from Assessment Year 2021-22, the limit from 3% to 5%, which would translate to
domestic company isn't required to pay dividend additional borrowing of ₹ 4.28 lakh Cr. However,
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distribution tax on any amount declared, the Centre had attached conditions for the
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distributed or paid by such company by way of increased borrowing space, they are:
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dividend. Dividends received from domestic o Permitting only 0.5 per cent of GSDP as an
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• Statement 3 is Correct: Companies try to 0.25 per cent, with each tranche linked to
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minimise giving taxes by taking advantage of expenditure on ‘One Nation One Ration’, urban
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depreciation, deductions, exemptions, etc from local body revenues, power distribution, ease of
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companies" which in spite of having earned three out of four milestones are reached.
substantial book profits and having paid o States will also have to agree to take over the
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handsome dividends, do not pay any tax due to future losses of state power distribution
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• Statement 1 is Incorrect: Composition levy is not business cycle i.e. amplifying them. For example,
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a direct tax. The objective of the composition during a recession, the government reduces
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scheme is to bring simplicity and to reduce the spending and increases taxes, leading to further
compliance cost for the small taxpayers. Small slowdown in the economy. This kind of fiscal
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taxpayers with an aggregate turnover in a policy is dangerous and brings instability in the
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eligible for composition levy. • When the government reduces taxes during a
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o Suppliers opting for composition levy need not recession it follows a counter-cyclical fiscal policy.
worry about the classification of their goods or • Statement 3 is Correct: GST is also
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services or both, the rate of GST applicable on the called consumption based and destination-based
same, etc. They are not required to raise any tax
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State rather than the state which produces the underpinning assumptions and risks. It is not
goods. presented along with the budget.
• Statement 4 is Correct: One of the ways of • Statement 3 is Correct: The Annual Financial
classification of taxes is- Specific tax and Ad- Statement is a document presented to Parliament
valorem tax. Specific tax is the tax which is fixed every financial year as part of the Budget
as per each unit of good or service rather than process, as required under Article 112 of the
based on its value. Ad-valorem or the value Constitution of India. The documents consist of
added tax is levied as a percentage of value of receipts and expenditures of the government in
the item it is imposed on, and not on the item's the current year, previous year and the Budget
quantity, size, weight or other such factor. year in three separate parts — Consolidated Fund
o Hence, the collection of a value added tax like of India, Contingency Fund of India, and Public
GST is mainly based on the growth in Account of India.
the Nominal GDP. Whereas, that of a specific tax • Statement 4 is Correct: Article 113 of the
is based on the Real GDP because it is charged as Constitution mandates that the estimates of
per each unit of a particular good. expenditure from the Consolidated Fund of India
included in the Annual Financial Statement and
Q.70) Ans: b required to be voted by the Lok Sabha be
Exp: submitted in the form of Demands for
• Statement 1 is Incorrect: According to the Fiscal Grants. The Demands for Grants are presented to
Responsibility and Budget Management Act, the Lok Sabha along with the Annual Financial
2003, the Finance Minister shall review, on half- Statement.
yearly basis, the trends in receipts and • Statement 5 is Incorrect: When
expenditure in relation to the budget and place the amount authorized to be expended for the
before both Houses of Parliament the outcome of current financial year is found to
such reviews. be insufficient for the purpose of that year or
• Statement 2 is Correct: Budget 2021-22 when a need has arisen
announced that the FRBM Act will be amended during the current financial year for suppleme
and the government plans to continue on the ntary or additional expenditure upon some
path of fiscal consolidation, achieving a fiscal 'new service' not contemplated in the budget
deficit level below 4.5% of GDP by 2025-2026 for that year then the President causes to be
with a fairly steady decline over the laid the "Supplementary Demand for Grants".
period. Moreover, in light of the Covid-19 o The "Supplementary Demands for Grants" are
pandemic, the fiscal deficit in BE 2021-2022 is presented to and passed by the House before the
estimated to be 6.8% of GDP. The fiscal deficit in end of the financial year and not along the Union
RE 2020-21 is pegged at 9.5% of GDP. budget.
under Section 3(4) of the Fiscal Responsibility important. Following goods and services are
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and Budget Management (FRBM) Act, exempt from the application of the GST:
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2003, outlines the strategic priorities of the • Edible vegetables, roots and tubers
government in the fiscal area for the ensuing • Cereals
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lending and investments, administered pricing, • Fresh fruits and vegetables (other than frozen or
at
along with the budget. • Meat (other than frozen or put up in unit
• Statement 2 is Incorrect: The medium-term containers)
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• Off-budget borrowings are loans that are taken remained the largest component of external
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not by the Centre directly, but by another public debt, with a share of 37.4 per cent, followed by
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institution which borrows on the directions of the non-resident deposits (24.9 percent) and short-
central government. The repayment of the entire term trade credit (17.1 per cent).
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deficit calculations, but at the same time, are Option C is the Correct answer.
added to the total debt of the government. • A fiscal council is a permanent agency with a
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• Schemes like the Pradhan Mantri Krishi mandate to independently assess the
Sinchayee Yojana (PMKSY), Deen Dayal
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difference between the interest rate on debt and levied at 2% is applicable on non-resident e-
in
growth rate will be negative. As the IRGD is commerce operators, not having a permanent
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for India, a fiscal policy that provides an impetus India. Companies having a tangible presence in
to growth will lead to lower, not higher, debt to India have to pay income tax on their respective
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demonstrated counter-cyclical fiscal policy to o This was done mainly because in absence of the
at
enable growth during economic downturns like EL, non-resident e-commerce operators (not
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pay more interest on the debt than the growth pay taxes in respect of the consideration received
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rate, then it would be damaging to the economy in the e-commerce supply or services made in the
and it is advised to stop such borrowings at the Indian market.
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any offence listed in the Act, and the value of the • Statement 2 is correct: Qualified financial
in
offence is at least Rs 100 crore. Further, the contracts (QFC): QFC means any bilateral contract
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person has left the country and refuses to return, notified as a QFC by the relevant authority. The
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in order to avoid facing prosecution. The Act lists authority can be Reserve Bank of India (RBI),
55 economic offences in the Schedule, which Securities and Exchange Board of India (SEBI),
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include: (i) counterfeiting government stamps or Insurance Regulatory and Development Authority
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currency, (ii) dishonouring cheques, (iii) benami of India (IRDAI), Pension Fund Regulatory and
at
creditors, (v) tax evasion, and (vi) money- Financial Services Centres Authority (IFSCA). The
laundering. The central government may amend Central government may, by notification, exclude
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Union Finance Ministry, One member from the cost. All these projects aim at enhancing capital
in
Reserve Bank of India and the remaining five investment, sustained income flow and
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Government of India. Three of the five members NABARD has been a proud channel partner of the
should be full-time members. Hence, option d is Government in some of these schemes shown in
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credit flow for promotion and development of o Agriclinic and Agribusiness Centres Scheme
o National Livestock Mission
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mandate of invoices. CBIC has notified vide The current inflation-targeting framework in India
in
Central Tax Notification no.23 dated 1st June 2021 is flexible in nature. The amended RBI Act
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that the e-invoicing system shall not apply to a provides for the inflation target to be set by the
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government department and local authority. Government of India, in consultation with the
Reserve Bank, once every five years.
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o The Goods and Services Tax (GST) is a value-added conducting monetary policy. This responsibility is
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tax levied on most goods and services sold for explicitly mandated under the Reserve Bank of
domestic consumption. The GST is paid by India Act, 1934.The primary objective of monetary
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consumers, but it is remitted to the government policy is to maintain price stability while keeping
by the businesses selling the goods and services.
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2013 makes comprehensive provisions to govern initiative of the Ministry of New and Renewable
in
all listed and unlisted companies in the country. Energy (MNRE) and its partners to introduce a
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The Companies Act 2013 implemented many new measuring scale or an index to evaluate and rank
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sections and repealed the relevant corresponding all states according to their performance, growth,
sections of the Companies Act 1956. This is a
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• Statement 1 is correct: The Companies Act 2013 developed by NITI Aayog, with technical
increased the number of maximum shareholders assistance from the World Bank, in consultation
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in a private company from 50 to 200. with the Ministry of Health and Family Welfare.
• Statement 2 is correct: The Companies Act 2013 • AMFRI Index: NITI Aayog has released the
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provides a new form of private company, i.e., one Agricultural Marketing & Farm Friendly Reforms
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Index (AMFFRI) 2019. The first-ever index was placed by the e-commerce entity. This would help
released in October. AMFFRI is an index which create a database of genuine e-commerce entities
compares the status of reforms in the agriculture and ensure that the consumers are able to verify
sector across all the states and UTs in the country. the genuineness of an e-commerce entity before
• Sustainable Tourism in Himalayan transacting through their platform.
Region: Sustainable Tourism in the Indian
Himalayan Region released by the NITI Aayog in Q.92) Ans: a
August this year, except for Sikkim and Himachal Exp:
Pradesh, the environmental index of the rest of • Option a is correct: The New Arrangement to
Himalayan states is very low. The report notes Borrow is the fund mobilization arrangement of
that the tourism and hospitality sector is a highly the IMF to mobilise additional funds through
lucrative one as far as the Indian Himalayan borrowing from member countries. Under NAB,
Region (IHR) is concerned. The sector directly member countries and institutions can stand
contributes about US$ 71.5 billion to the nation’s ready to lend to the Fund. The NAB is structured
GDP. as a set of credit arrangements between the IMF
• Digital Payments Trends, Issues and and 38-member countries (can be changed) and
Opportunities: A report on Digital Payments was institutions.
prepared by NITI Aayog and released in July 2017 • The NAB was proposed for the first time at the
for the first time. Primary objective of the report 1995 G-7 Halifax Summit following the Mexican
was to provide relevant data on the growth of financial crisis. In January 1997, the IMF’s
digital payments so that policy makers can Executive Board adopted a decision establishing
monitor the progress of digital payments in the the NAB, which became effective in November
country. 1998.
• The NAB was revived in the context of the global
Q.91) Ans: c financial crisis in 2009; to meet the lending
Exp: requirements of the Eurozone crisis.
• Statement 1 is incorrect: Conventional flash sales
by third party sellers are not banned on e- Q.93) Ans: a
commerce platforms. But, certain e-commerce Exp:
entities are engaging in limiting consumer choice • Option a is incorrect. Asian Development Bank
by indulging in “back to back” or “flash” sales (ADB) was established in the year 1966, with head
wherein one seller selling on platform does not office at Manila (Philippines). It has 67 members
carry any inventory or order fulfilment capability from the Asia Pacific region. This bank was
but merely places a “flash or back to back” order modeled on the lines of the world bank. Japan
with another seller controlled by platform. This holds the largest share in ADB with 15.677%,
prevents a level playing field and ultimately limits followed by U.S.A (15.567%), China (6.473%), and
customer choice and increases prices. India (5.812%). China is the largest shareholder
• Statement 2 is correct: To ensure that the followed by India in Asian Infrastructure and
domestic manufacturers and suppliers get a fair Invest Bank and not in ADB.
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and equal treatment on the e-commerce platform • ADB is committed to achieving a prosperous,
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it has been provided that where an e-commerce inclusive, resilient, and sustainable Asia and the
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entity offers imported goods or services, it shall Pacific, while sustaining its efforts to eradicate
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incorporate a filter mechanism to identify goods extreme poverty. Established in 1966, it is owned
based on country of origin and suggest by 68 members—49 from the region.
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alternatives to ensure fair opportunity to • ADB was conceived in the early 1960s as a
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• Statement 3 is correct: Framework for character and foster economic growth and
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registration of every e-commerce entity with the cooperation in one of the poorest regions in the
DPIIT ( Department for Promotion of Industry and world.A resolution passed at the first Ministerial
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Internal Trade) for allotment of a registration Conference on Asian Economic Cooperation held
number which shall be displayed prominently on
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Asia and the Far East in 1963 set that vision on the Directors shall be from Brazil. The first President
way to becoming reality. of the Bank shall be from India. The headquarters
• ADB's highest policy-making body is the Board of of the Bank shall be located in Shanghai. The New
Governors, which comprises one representative Development Bank Africa Regional Center shall be
from each member nation – 48 from the Asia- established in South Africa concurrently with the
Pacific and 19 from outside the region. Hence headquarters.” (Fortaleza Declaration)
option b, c and d are correct. • Option d is incorrect: Recently Government of
India signed a $304 million pact with AIIB for
Q.94) Ans: c power transmission network in Assam. The fund
Exp: will be utilised for the ‘Assam Intra-
• Statement 1 is correct: AIIB is a multilateral State Transmission System Enhancement Project’,
development bank focused on developing Asia, aiming to improve reliability, capacity and security
with members from all over the world, and invests of the power transmission network in the state.
in infrastructure and other productive sectors to
foster sustainable economic development, create Q.96) Ans: c
wealth and improve infrastructure connectivity. Exp:
• Membership to the bank is open to all members • Option c is correct: The Reserve Bank of India
of the Asian Development Bank or the World (RBI) releases House price index (HPI). It is a
Bank. The bank also allows non-sovereign entities quarterly produced index. The HPI is calculated on
to apply for membership provided their home base year 2010-11. The index is based on
countries are members. transaction level data received from housing
• Statement 2 is correct: In 2018, AIIB was registration authorities in ten major cities (viz.,
granted Permanent Observer status in the Ahmedabad, Bengaluru, Chennai, Delhi, Jaipur,
deliberations of both the United Nations General Kanpur, Kochi, Kolkata, Lucknow and Mumbai).
Assembly and the Economic and Social Council, "The all-India HPI contracted by (-) 0.2 per cent on
the two development-focused principal organs of a sequential basis, largely due to decline in the
the global body house prices in Delhi, Bengaluru, Ahmedabad and
Jaipur; Mumbai recorded the highest sequential
Q.95) Ans: a rise," the statement said. However, on an annual
Exp: basis), the all-India HPI increased by 3.9 per cent
• Option a is correct: During the fifth BRICS summit in the fourth quarter of 2019-20. The index had
in Durban (2013), the leaders agreed on the risen by 3 per cent in the previous quarter and 3.6
feasibility of establishing the New Development per cent In Jan-March 2019.
Bank and made the decision to do so. It was also
agreed that the initial contribution to the Bank Q.97) Ans: b
should be substantial and sufficient for it to be Exp:
effective in financing infrastructure and finally • Option b is incorrect: The Bank only finances
during the sixth BRICS Summit in Fortaleza (2014), sovereign governments directly or projects
the leaders signed the Agreement establishing the backed by sovereign governments. It provides
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New Development Bank (NDB). loans, guarantees, advisory services, and risk
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• Option b is incorrect: Unlike the World Bank, management products to middle-income and
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which assigns votes based on capital share, in the creditworthy low-income countries. It does not
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New Development Bank each participant country cater to the private entities.
will be assigned one vote, and none of the • The International Bank for Reconstruction and
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• Option c is incorrect: “The Bank shall have an institution, established in 1944 and
at
billion, equally shared among founding members. developing countries. The IBRD is the first of five
member institutions that compose the World
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1944, was to finance the reconstruction of projecting the income of a nation’s populace. The
European nations devastated by World War II. The Gini coefficient is the most commonly used
IBRD and its concessional lending arm, the estimation of inequality.
International Development Association (IDA), are • Statement 1 is correct: The Gini index is a
collectively known as the World Bank as they measure of the distribution of income across a
share the same leadership and staff. population. A higher Gini index indicates greater
• India is the largest IBRD client of the World Bank inequality, with high-income individuals receiving
and is a founding member of IBRD. Infrastructural much larger percentages of the total income of
development of the Indian Railways was the first the population. Practically, the value falls
project undertaken with the help of IBRD just between 0 and 1 for most countries. In countries
after independence and it became an important with high inequality, the value would be close to
source of long -term funding for developmental 1.
projects. • Statement 2 is correct: It is published by the
• IBRD has maintained a triple-A credit rating since World Bank. As per the World Bank, India’s Gini
1959. Its high credit rating allows it to borrow at Index is 35.2 (0.35) as of March 2020.
low cost and offer middle-income developing
countries access to capital on favorable terms in
larger volumes, with longer maturity period.
Q.98) Ans: a
Exp:
• Option a is correct: In 1990, the World Bank
introduced the concept of ‘poverty line’ to
capture absolute poverty. As per the revised
measures (2017), the World Bank defines extreme
poverty as someone living on less than US1.90 a
day at 2011 international prices. The
'international poverty line' is currently set at $1.90
a day at 2011 international prices.
Q.99) Ans: a
Exp:
• Option a is correct: Poverty trap is a spiraling
mechanism which forces people to remain poor. It
is so binding in itself that it doesn't allow the poor
people to escape it. Poverty trap generally
happens in developing and under-developing
countries, and is caused by a lack of capital and
credit to people. Many factors contribute to
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Q.100) Ans: c
Exp:
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