Poverty, Planning, Finance and Economic/Social Development (Part-I)

Total Questions: 50

31. In the context of independent India's economy, which one of the following was the earliest event to take place? [2009]

(a) Nationalization of Insurance companies
(b) Nationalization of State Bank of India
(c) Enactment of Banking Regulation Act
(d) Introduction of First Five-Year Plan

Correct Answer: (c) Enactment of Banking Regulation Act

Solution:Nationalization of State Bank of India 1955; Introduction of First Five-Year Plan-1951; Enactment of Banking Regulation Act-1949; Nationalization of Insurance Companies - 1955-56.

32. The SEZ Act, 2005 which came, into effect in February 2006 has certain objectives. In this context, consider the following: [2010]

1. Development of infrastructure facilities.

2. Promotion of investment from foreign sources.

3. Promotion of exports of services only.

Which of the above are the objectives of this Act?

(a) 1 & 2 only
(b) 3 only
(c) 2 & 3 only
(d) 1, 2 & 3

Correct Answer: (a) 1 & 2 only

Solution:The objectives of establishing SEZs Special export Zones include making available goods and services free of taxes and duties supported by an integrated infrastructure for export production, and single window approval mechanism and a package of incentives to attract foreign and domestic investments for promoting export-led growth.

A special economic zone (SEZ) is an area in which the business and trade laws are different from the rest of the country. SEZs are located within a country's national borders.

33. A great deal of Foreign Direct Investment (FDI) to India comes from Mauritius than from many major and mature economies like UK and France. Why? [2010]

(a) India has preference for certain countries as regards receiving FDI
(b) India has double taxation avoidance agreement with Mauritius
(c) Most citizens of Mauritius have ethnic identity with India and so they feel secure to invest in India
(d) Impending dangers of global climatic change prompt Mauritius to make huge investments in India

Correct Answer: (b) India has double taxation avoidance agreement with Mauritius

Solution:India has comprehensive Double Taxation Avoidance Agreements (DTAA) with 23 countries. This means that there are agreed rates of tax and jurisdiction on specified types of income arising in a country to a tax resident of another country. Under the Income Tax Act 1961 of India, there are two specific provisions, Section 90 and Section 91, which provide specific relief to taxpayers to save them from DTAA. Section 90 is for taxpayers who have paid the tax in a country with which India has signed DTAA, while Section 91 provides relief to taxpayers who have paid tax to a country with which India has not signed a DTAA. Thus, India gives relief to both kind of taxpayers Mauritius by itself is a low tax counting.

34. India-based Neutrino Observatory is included by the Planning Commission as a mega science project under the 11th Five-Year Plan. In this context, consider the following statements: [2010]

1. Neutrinos are chargeless elementary particles that travel close to the speed of light.

2. Neutrinos are created, in nuclear reactions of beta decay.

3. Neutrinos have a negligible, but non-zero mass

4. Trillions of Neutrinos pass through human body every second.

Which of the statements given above are correct?

(a) 1 & 3 only
(b) 1, 2 & 3 only
(c) 2, 3 & 4
(d) 1, 2, 3 & 4

Correct Answer: (d) 1, 2, 3 & 4

Solution:A neutrino is an elementary particle that usually travels close to the speed of light, is electrically neutral, and is able to pass through ordinary matter almost undisturbed. This makes neutrinos extremely difficult to detect. Neutrinos have a very small, but nonzero rest mass. Neutrinos are affected only by a 'weak' sub-atomic force of much shorter range than electromagnetism, and are therefore able to pass through great distances in matter without being affected by it.

35. Inclusive growth as enunciated in the Eleventh Five Year Plan does not include one of the following: [2010]

(a) Reduction of poverty
(b) Extension of employment opportunities
(c) Strengthening of capital market
(d) Reduction of gender inequality

Correct Answer: (c) Strengthening of capital market

Solution:Inclusive growth is 'broad-based growth', 'shared growth', and 'pro-poor growth'. It excludes the capital markets which is left to operate by itself in the open market.

36. Who of the following shall cause every recommendation made by the finance Commission to be laid before each House of Parliament? [2010]

(a) The President of India
(b) The Speaker of Lok Sabha
(c) The Prime Minister of India
(d) The Union Finance Minister

Correct Answer: (a) The President of India

Solution:As per provisions given under Article 281 of the Indian Constitution the recommendations of the finance commission go to the president who is constitutionally bound to place it before the two houses of the parliament.

37. Which one of the following is responsible for the preparation and presentation of Union Budget to the Parliament? [2010]

(a) Department of Revenue
(b) Department of Economic Affairs
(c) Department of Financial Services
(d) Department of Expenditure

Correct Answer: (b) Department of Economic Affairs

Solution:The DEA or the Department of Economic Affairs is responsible for preparation and presentation to the Parliament of Central Budget and the Budgets for the State Governments under President's Rule and Union Territory Administration.

38. Consider the following actions by the Government: [2010]

1. Cutting the tax rates

2. Increasing the government spending

3. Abolishing the subsidies in the context of economic recession

Which of the above actions can be considered a part of the "fiscal stimulus" package?

(a) 1 & 2 only
(b) 2 only
(c) 1 & 3 only
(d) 1, 2 & 3

Correct Answer: (a) 1 & 2 only

Solution:The word fiscal refers to government finances, i.e.. public expenditure or spending, taxation, and government debt. A stimulus is an attempt by policymakers to kickstart a sluggish economy through a package of measures. Fiscal stimulus may refer to either greater public spending or tax cuts. Hence, Statement 1 & 2 are correct.

A fiscal stimulus is an important tool that policymakers can use to reduce the severity of recessions. The federal government provides fiscal stimulus when it increases spending, cuts taxes, or both. A recession is a significant decline in economic activity lasting more than a few months, whose precise start and end dates are determined after the fact by the National Bureau of Economic Research.

39. In the context of India's Five Year Plans, a shift in the pattern of industrialization, with lower emphasis on heavy industries and more on infrastructure begins in: [2010]

(a) Fourth Plan
(b) Sixth Plan
(c) Eighth Plan
(d) Tenth Plan

Correct Answer: (b) Sixth Plan

Solution:Corporation tax and wealth tax are direct tax whereas custom duty and entire are put on good imported from outside which is not directly beared by common citizen and is only beared when concerned goods is bought or purchased.

40. With reference to the National Investment Fund to which the disinvestment proceeds are routed, consider the following statements: [2010]

1. The assets in the National Investment Fund are managed by the Union Ministry of Finance.

2. The National Investment Fund is to be maintained within the Consolidated Fund of India.

3. Certain Asset Management companies are appointed as the fund managers.

4. A certain proportion of annual income is used for financing select social sectors.

Which of the statements given above is/are correct?

(a) 1 & 2
(b) 2 only
(c) 3 & 4
(d) 3 only

Correct Answer: (c) 3 & 4

Solution:On 27 January 2005, the Government had decided to constitute a National Investment Fund' (NIF) into which realization from sale of minority shareholding of the Government in CPSEs would be channelised.

This fund is managed by professionals and a part of it is used for use in social sector-like education, health care and employment.

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