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

Total Questions: 50

31. With reference to inflation in India, which of the following statements is correct? [2015-1]

Correct Answer: (c) Decreased money circulation helps in controlling the inflation
Solution:When inflation becomes very high, the RBI decreases supply of money (to check inflation) by adopting tight monetary policy. Decreasing the money circulation decreases the demand of goods and services, which helps in controlling the inflation. It is mainly effective in case of demand pull inflation.
Various instruments used by the RBI to control the money supply can be categorized into two categories:
• Quantitative Tools – Quantitative tools of monetary policy are aimed at controlling the cost and quantity of credit.
• Qualitative Tools – Qualitative tools of monetary policy are aimed at controlling the use and direction of credit.
The qualitative measures do not regulate the total amount of credit created by commercial banks. Rather, they make a distinction between good credit and bad credit and regulate only such credit which creates economic instability. Therefore, qualitative measures are known as the selective measures of credit control.

32. There has been a persistent deficit budget year after year. Which of the following actions can be taken by the government to reduce the deficit? [2015-1]

1. Reducing revenue expenditure

2. Introducing new welfare schemes

3. Rationalizing subsidies

4. Expanding industries

Select the correct answer using the code given below.

Correct Answer: (a) 1 & 3 only
Solution:To reduce the budget deficit, the government has to increase income and reduce Expenditure. Introducing new welfare schemes and Expanding industries will increase the government expenditure.

33. The Fair and Remunerative Price (FRP) of sugarcane is approved by the [2015-1]

Correct Answer: (a) Cabinet Committee on Economic Affairs
Solution:

About Fair and Remunerative Price

  • It is the price declared by the government, which mills are legally bound to pay to farmers for the cane procured from them.
  • Who determines it? The FRP is fixed by the Union government (Cabinet Committee on Economic Affairs (CCEA)) on the basis of recommendations of the Commission for Agricultural Costs and Prices (CACP).
  • The payment of FRP across the country is governed by the Sugarcane Control order, 1966 which mandates payment within 14 days of the date of delivery of the cane.
  • Mills have the option of signing an agreement with farmers, which would allow them to pay the FRP in installments.
  • Delays in payment can attract an interest up to 15 per cent per annum, and the sugar commissioner can recover unpaid FRP as dues in revenue recovery by attaching properties of the mills.

34. 'Pradhan Mantri Jan-Dhan Yojana' has been launched for : [2015-1]

Correct Answer: (c) promoting financial inclusion in the country
Solution:Pradhan Mantri Jan-Dhan Yojana (PMJDY) is National Mission for Financial Inclusion to ensure access to financial services, namely, Banking/ Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension in an affordable manner.

Jan Dhan Account:

  • An individual can open an account under this scheme with any bank branch or Business Correspondent (Bank Mitr) outlet.
  • Accounts opened under PMJDY can be opened with zero balance. However, if the account holder wishes to get a chequebook, he/she will have to fulfill the minimum balance criteria.
  • The account holders under this scheme will be given a RuPay debit card which can be used across all ATMs for cash withdrawal

35. With reference to the Fourteenth Finance Commission, which of the following statements is/are correct? [2015-1]

1. It has increased the share of States in the central divisible pool from 32 percent to 42 percent.

2. It has made recommendations concerning sector-specific grants.

Select the correct answer using the code given below.

Correct Answer: (a) 1 only
Solution:Union Government accepted the 14th Finance Commission's recommendation to devolve an unprecedented 42 per cent of the divisible pool to states during 20015-16 to 2019-20, against 32 per cent suggested by the previous commission.
Finance Commission
  • The Finance Commission is a constitutional body in India established under Article 280 of the Constitution, tasked with maintaining fiscal federalism by recommending the distribution of tax revenues between the central and state governments. Constituted every five years by the President, it comprises a Chairman and four members with expertise in finance, economics, or public administration.
  • It recommends the sharing of net tax proceeds (e.g., income tax, GST) between the Union and states, grants-in-aid for revenue-deficient states, and measures to enhance local body resources for grassroots governance.
  • It also advises on fiscal discipline, public expenditure, and other financial matters referred by the President.

36. Convertibility of rupee implies [2015-1]

Correct Answer: (c) freely permitting the conversion of rupee to other currencies and vice versa
Solution:Convertibility of rupee implies freely permitting the conversion of rupee to other currencies and vice versa. Currency Convertibility is the ease with which a country's currency can be converted into gold or another currency.
Currency Convertibility, encompassing both current and capital account aspects, is crucial for integrating a country’s economy with the global financial system. While current account convertibility has been fully achieved in India, capital account convertibility remains a work in progress, balancing the benefits of increased financial access with the risks of economic instability. By carefully managing these components, countries can optimise their economic interactions on the international stage, fostering growth, competitiveness, and resilience in an interconnected world.

37. The Government of India has established NITI Aayog to replace the : [2015-1]

Correct Answer: (d) Planning Commission
Solution:The Government of India has established NITI Aayog to replace the Planning Commission. The Union Government of India announced formation of NITI Aayog on 1 January 2015 and the first meeting of NITI Aayog was held on 8 February 2015.
Key Functions of NITI Aayog
  • Policy Formulation: Prepares long-term, strategic, and sectoral policies for India's economic development.
  • Cooperative Federalism: Acts as a bridge between the central and state governments for coordinated policy implementation.
  • Monitoring and Evaluation: Tracks the implementation of schemes and evaluates the outcomes.
  • Think Tank: Provides knowledge, innovation, and thought leadership to address national challenges.

38. With reference to 'Financial Stability and Development Council', consider the following statements: [2016-1]

Council', consider the following statements:

1. It is an organ of NITI Aayog.

2. It is headed by the Union Finance Minister.

3. It monitors macroprudential supervision of the economy.

Which of the statements given above is/are correct?

Correct Answer: (c) 2 & 3 only
Solution:(i) Financial Stability and Development Council is an apex-level body constituted by the government of India. The idea to create such a super regulatory body was first mooted by the Raghuram Rajan Committee in 2008. Finally in 2010, the then Finance Minister of India, Pranab Mukherjee, decided to set up such an autonomous body dealing with macro prudential and financial regularities in the entire financial sector of India. (ii) It falls under Dep. Of economic affairs and FM is the chairman. So, 1 is wrong and 2 is right. By elimination, we are left with answer "c".

39. Regarding "Atal Pension Yojana', which of the following statements is/are correct? [2016-1]

1. It is a minimum guaranteed pension scheme mainly targeted at unorganized sector workers.

2. Only one member of a family can join the scheme.

3. Same amount of pension is guaranteed for the spouse for life after subscriber's death

Select the correct answer using the code given below.

Correct Answer: (c) 1 & 3 only
Solution:There is no restriction as such that only one member of a family can join the scheme.

Atal Pension Yojana is uniquely designed to ensure a stable income for people in their retirement years. Key features of the scheme include:

  • Eligibility: Open to all Indian citizens aged between 18 and 40 years.
  • Guaranteed Pension: Subscribers can opt for a fixed pension ranging from ₹1,000 to ₹5,000 per month, depending on the contribution made.
  • Government Co-Contribution: For subscribers who enrolled between June 1, 2015, and March 31, 2016, and met certain criteria, the government contributed 50% of the subscriber’s amount or ₹1,000 per annum for five years.
  • Auto-Debit Facility: Monthly contributions are auto-debited from the subscriber’s bank account, ensuring consistency and ease of saving.
  • Tax Benefits: Contributions under APY qualify for tax deductions under Section 80C of the Income Tax Act.
  • Portability: Subscribers can continue with their accounts even if they change their residence or job.
  • Nominee Option: Subscribers can nominate a beneficiary to receive the pension amount in case of their demise.

40. With reference to 'Stand up India scheme', which of the following statement is/are correct? [2016-1]

1. Its purpose is to promote entrepreneurship among SC/ST and women entrepreneurs.

2. It provides for refinance through SIDBI.

Select the correct answer using the code given below.

Correct Answer: (c) Both 1 & 2
Solution:(i) Prime Minister launched the 'Stand up India Scheme' aimed at promoting entrepreneurship among Scheduled Castes/Scheduled Tribes and women by giving loans in the range of 10 lakh to 1 crore for setting up a new enterprise.

There would be a₹ 10,000 crore refinance window through Small Industries Development Bank of India (SIDBI) and the National Credit Guarantee Trustee Company Ltd (NCGTC) will create a corpus of ₹ 5,000 crore.

(ii) Both statements are correct as per: Press Information Bureau (PIB) Government of India Ministry of Finance/03-April-2016.