UPSC Indian Economy Test 5 (Old Year Questions)

Ans c
Saltpetre and rockphosphate are not utilized by majority Steel companies in India. Further, India is a producer of saltpetre and usually does not import this product in large quantity.

Ans b
Central Govt., during 1996-97, launched an Accelerated Irrigation Benefits Programme (AIBP) to provide Central Loan Assistance (CLA) to major/medium irrigation projects in the country, with the objective to accelerate the implementation of those projects which were beyond resource capability of the states or were in advanced stage of completion.
Government of India initiated a Centrally Sponsored Command Area Development Programme (CADP) in December 1974 to improve irrigation potential utilisation and optimise agricultural production from irrigated land through integrated and coordinated approach of efficient water management.

Ans b
Basel III is a global, voluntary regulatory framework on bank capital adequacy, stress testing and market liquidity risk

Ans b
Rate of growth of Real Gross Domestic Product has fluctuated a lot during the last decade and decreased significantly in 2008-09 due to global financial crisis. Gross Domestic Product at market prices (in rupees) has increased and did not show a declining treand even once during the last decade as clearly seen from the planning commission data

Ans c
Over the last two decades, central banks have veered round to conducting monetary policy through a single short-term interest rate as a policy rate that it controls through open market operations (OMOs). These OMOs are conducted under an operating framework that typically includes liquidity infusion/absorption through repurchase agreements (repos) or outright transactions in eligible securities between the central bank and the market participants. Public Revenue and debt are not part of monetary policy. These are related to fiscal policy.

Ans c
RBI and government both play a role in controlling the inflation, often termed as “inflation targeting” by the RBI. Hence, a and b are incorrect. Increased money circulation leads to increased inflation as demand increases. RBI increases bank rates and SLR etc. to reduce money supply in the market which tames demand and hence, inflation.

Ans b
Labor augmenting is technology that increases skills and productivity of existing labor force (example – teaching people how to use the computer). Capital augmenting technology increases productivity of existing capital goods. In this case, replacement of wooden by steel, increases the productivity of plough
to use the computer). Capital augmenting technology increases productivity of existing capital goods. In this case, replacement of wLabor augmenting is technology that increases skills and productivity of existing labor force (example – teaching people how ooden by steel, increases the productivity of plough.

Ans c
Refers to the adequacy of a country’s, or the world’s, international reserves. Under the Bretton Woods System, liquidity was a problem, since it depended on US dollars and thus a US deficit

Ans a
Budget deficit is used to define a status of financial health in which expenditures exceed revenue. Reducing the revenue expenditure will certainly help in bridging the gap. Subsidies are a part of expenditure and rationalizing them would reduce the deficit.
Introducing new welfare schemes will most likely result in increasing expenditure and so will expanding industries which would require capital infusion.
Budget deficit is used to define a status of financial health in which expenditures exceed revenue. Reducing the revenue expenditure will certainly help in bridging the gap. Subsidies are a part of expenditure and rationalizing them would reduce the deficit.
Introducing new welfare schemes will most likely result in increasing expenditure and so will expanding industries which would require capital infusion.

Ans d

Ans d
Swayamsiddha (2000-01) is an integrated scheme for the development and empowerment of women both socially and economically through Self Help Groups to enable them live with dignity and self-reliance. The scheme lays stress on access to micro-credit and envisages block and panchayat-level participation among women, cutting across all regional, economic and social groups. Swadhar: The Swadhar scheme was launched in the Department during the year 2001-02 as a Central Sector Scheme for providing holistic and integrated services to women in difficult circumstances such ad destitute widows deserted by their family in religious places like Vrindaban and Kashi, women prisoners from jail and without family support. The scheme is implemented through PSUs, District Rural Development Agencies, Federations, Cooperatives and Voluntary Organizations – Non-governmental Voluntary Organizations working in rural areas with legal status as society.

Ans b
Forward Markets Commission (FMC) is a statutory body set up under Forward Contracts (Regulation) Act, 1952 and functions under the administrative control of the Ministry of Consumer Affairs, Food and Public Distribution. The FMC regulates forward markets in commodities through the recognized associations, recommends to the Government the grant/withdrawal of recognition to the associations organizing forward trading in commodities and makes recommendations for general improvement of the functioning of forward markets in the country.

Ans a
A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liability. It therefore exhibits elements of partnerships and corporations. In an LLP one partner is not responsible or liable for another partner’s misconduct or negligence. LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession. Indian Partnership Act, 1932 shall not be applicable to LLPs and there shall not be any upper limit on number of partners in an LLP unlike an ordinary partnership firm where the maximum number of partners cannot exceed 20.

Ans c
Banking Ombudsman is a quasi judicial authority functioning under India’s Banking Ombudsman Scheme 2006, and the authority was created pursuant to the a decision by the Government of India to enable resolution of complaints of customers of banks relating to certain services rendered by the banks. The Banking Ombudsman Scheme was first introduced in India in 1995, and was revised in 2002. The Banking Ombudsman is a senior official appointed by the RBI to redress customer complaints against deficiency in certain banking services. The Banking Om does not charge any fees for his services. If one is not satisfied with the decision passed by the Banking Ombudsman, one can approach the appellate authority against the Banking Ombudsmen’s decision. Appellate authority is vested with a Deputy Governor of the RBI. One can also explore any other recourse and/or remedies available to him/her as per the law. The bank also has the option to file an appeal before the appellate authority under the scheme.

Ans d
Financial inclusion is the delivery of banking services at affordable costs to vast sections of disadvantaged and low income groups. The Reserve bank of India setup a commission (Khan Commission) in 2004 to look into Financial Inclusion and the recommendations of the commission were incorporated into the Mid-term review of the policy (2005-06). Financial inclusion is “the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost.” – C Rangarajan. Steps taken by industry for financial inclusion in India includes:

Nationalization of Banks
Introduction of Lead Bank Scheme
Introduction of Priority Sector Norms
Introduction of Service Area Concept
Adoption of Villages by Bank Branches
Formation of Regional Rural Banks
Strengthening of Cooperatives

Ans c

Ans c
Service tax, personal income tax and corporation tax have been reduced in the recent past to boost aggregate demand, so as to protect the economy from global recession. Excise duty rates have been reduced in the recent past to boost aggregate demand, so as to protect the economy from global recession.

Ans c
The central government announces a price called the Statutory Minimum Price (SMP) for sugarcane, which is liked to several factors such as cost of growing cane, alternative crops, fair price of sugar and the yield of cane (sugar content). States also announce a price called the State Advisory Price (SAP), which is usually higher than the SMP. The Essential Commodities Act, 1955 was enacted to ensure easy availability of essential commodities to the consumers and to protect them from exploitation by unscrupulous traders. Sugar and sugarcane are essential commodities under the Essential Commodities Act, 1955. Under the system of partial control on sugar, a part of the sugar produced by sugar mills is requisitioned as levy sugar and the balance is allowed to be sold as non-levy (free sale) sugar in the open market. While price of non-levy sugar is determined by the market forces, the price of levy sugar is determined by the Central Government under the provisions of sub-section (3C) of section 3 of the Essential Commodities Act, 1955.

Ans b
GDP in 2000-01 was Rs. 19.2 lakh crore which increased to Rs. 58 lakh crore in 2009-10. With 6.7% growth rate in 2009-10, it is nearly three times the GDP in 2000-01. With the rapid growth of the private sector after 1991, the share of public sector in GDP has gone down.

Ans d
Central Statistical Organization publishes the “Energy Statistics” from time to time with the objective to meet the information needs of national and international policy makers, administrators and researchers concerned with the energy sector.