Eco 500 MCQ Vivek Singh PDF

https://t.me/UPSC_PDF Website ➡ https://upscpdf.com https://t.
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ECO-500
“This booklet contains 500 MCQs with detailed explanation
and notes on ECONOMY covering the basic and static
concepts, Economic Survey 2019-20, Budget 2020-21,
Finance Commission 2020-21 and other updates from
various sources for the last one year.”
Specially designed for UPSC Prelims 2020
by
VIVEK SINGH
(IIT + MBA)
SHUBHRA RANJAN IAS STUDY
Website ➡ https://upscpdf.com
https://t.me/UPSC_PDF Website ➡ https://upscpdf.com https://t.me/UPSC_PDF
INDEX
SN DESCRIPTION Q. No. Page No.
Every Chapter includes questions on concept & current both

1 Macro fundamentals, GDP, Investment, Growth 1 – 45 1-7
2 Money, Banking and Financial Institutions 46 - 267 8 - 40
3 Budgeting Process and Tax 268 - 343 41 – 52
4 Agriculture, Subsidy and Food Processing 344 - 381 53 - 58
5 Inclusive growth and employment 382 - 410 59 - 62
6 World Organizations 411 - 444 63 - 67
7 Infra & Industries, Budget, Eco Survey, FC 445 - 500 68 - 75
8 Answer Sheet 76 - 77
9 Explanatory Notes 78 - 199
10 Trends 200 - 208
Note for the Students

 Please attempt the questions serial wise as it will help in building the concepts
 Explanation has been provided for all the questions but for detailed
understanding you may refer the book on INDIAN ECONOMY (4th Edition) by
VIVEK SINGH
 The original copy of the booklet can be downloaded from Vivek Sir Telegram
Channel “Vivek Singh Economy” link “https://t.me/VivekSingh_Economy”
 Any further information/clarification will be updated on the above channel. And

you can personally ask questions to Vivek Sir with telegram userid
@viveksingheconomy
For all current economy updates please follow Vivek Sir Telegram Channel “Vivek Singh Economy”
1. Which of the following are included as 5. Consider the following statements

part of India’s GDP? regarding Gross Domestic Product:
(i) Activities in Indian embassies and (i) It is the value added by all the firms
consulates in other countries in the economy
(ii) Air India services between two (ii) It is the final value of goods and
different countries services produced in the economy
(iii) Value addition in India’s economic (iii) It is the sum of final consumption
territory and investment expenditure by the
(iv) Economic activities of residents of household, private and government
India in international waters
sector and net of exports and
imports
Select the correct answer using the
(iv) It is the income received by the four
code given below:
(a) (i) & (ii) only factors of production
(b) (iii) only
(c) (ii) & (iii) only Select the correct answer using the
(d) All of the above code given below:
(a) (i) & (ii) only
2. The visit of foreigners in India to see the (b) (i), (ii) & (iii) only
various places/events in the country, (c) (i), (ii) & (iv) only
amounts to which of the following in (d) All of the above
terms of economy:
6. Consider the following statements
(a) Production
(b) Consumption (i) Capital goods are final goods and
(c) Import are not used as an input
(d) Export (ii) Intermediate goods are those which
have been produced but should be
3. Quarterly and Annual GDP data is further transformed before it can be
released by NSO with a time lag of: used for any purpose
(a) One month Select the correct answer using the

(b) Two months code given below:
(c) Three months (a) (i) only
(b) (ii) only
(d) Four months
(c) Both (i) & (ii)
(d) Neither (i) nor (ii)
4. The demand for GDP in the economy
comes from which of the following
7. Which of the following are not counted
sectors:
in India’s GDP calculation?
(i) Household
(i) Informal sector activity
(ii) Private (ii) Re-exports
(iii) Government
(iv) External Select the correct answer using the
code given below:
Select the correct answer using the (a) (i) only
code given below: (b) (ii) only
(a) (i) & (ii) only (c) Both (i) & (ii)
(b) (ii) & (iii) only (d) Neither (i) nor (ii)
(c) (i), (ii) & (iii) only
(d) All of the above 8. Economic growth in India is measured
by change in GDP at:
(a) Constant market prices Select the correct answer using the
(b) Current market prices code given below:
(c) Factor Cost at constant prices (a) (i) only
(d) Factor Cost at market prices (b) (ii) only
(c) Both (i) & (ii)
9. If India is experiencing economic (d) Neither (i) nor (ii)
growth, then which of the following
statements must hold true: 13. The National Income of a country
(India) is equal to which of the
(i) Real GDP is increasing following:
(ii) Nominal GDP is increasing
(iii) Rate of growth of real GDP is (a) Gross National Product (GNP)
increasing (b) Net National Product at Market
(iv) Rate of growth of nominal GDP is Prices
increasing (c) Net National Product at Factor Cost
(d) Income going to the household
Select the correct answer using the sector
code given below:
(a) (i) only 14. Which of the following statements are
(b) (i) & (ii) only true regarding Gross National Income:
(c) (i) & (iii) only
(d) (i) & (iv) only (i) It is the income earned by a
country's Residents
10. If a country is experiencing recession, (ii) It is the income earned by a
then which of the following shall be country's residents and non-
true: residents both
(iii) It is calculated at market price by
(a) Decrease in real GDP NSO
(b) Decrease in nominal GDP (iv) It is equal to GDP plus exports
(c) Decrease in rate of growth of GDP minus imports
(d) All of the above
11. Consider the following statements: code given below:
(a) (i) & (iii) only
(i) Real GDP has steadily increased in (b) (i) & (iv) only
the last decade (c) (ii) & (iii) only
(ii) GDP at current market prices has (d) (ii), (iii) & (iv) only
steadily increased in the last
decade 15. Consider the following statements:
(i) Net Factor Income from Abroad is
Select the correct answer using the equivalent to net of exports &
code given below: imports
(a) (i) only (ii) Net of Indirect taxes and subsidies
(b) (ii) only are included in the calculation of
(c) Both (i) & (ii) national income
(a) (i) only
(i) Real per capita GDP has steadily (b) (ii) only
increased in the last five years (c) Both (i) & (ii)
(ii) Real per capita income has steadily (d) Neither (i) nor (ii)
increased in the last five years
16. Welfare of the people of a country is (a) (i) & (iii) only
best represented by which of the (b) (ii) & (iv) only
following parameter: (c) (i) & (iv) only
(d) (ii) & (iii) only
(a) Per capita net national income at
constant prices 20. In domestic savings, generally which
(b) Per capita net national income at sector has the highest share?
current prices
(c) Per capita GDP at constant prices (a) Household
(d) Per capita GDP at current prices (b) Private corporate
(c) Public Sector
17. Which of the following constitutes (d) Almost equal contribution by the
investment in the economy? above sectors
(i) Production of consumption goods 21. Which of the following statements

(ii) Production of capital goods could be true for a high savings
(iii) Production of services economy?
(iv) Buying and selling of shares (i) Higher investment
(ii) Higher consumption
(iii) Higher exports
code given below:
(a) (i) & (ii) only
code given below:
(b) (ii) only
(a) (i) & (ii) only
(c) (ii) & (iv) only
(b) (i) & (iii) only
(d) All of the above (c) (ii) & (iii) only
18. Consider the following statements:
22. Which of the following statements are
(i) Imported capital equipment are true regarding GDP at constant market
part of investment in Indian prices in the last few quarters?
economy
(ii) Imported capital equipment are (i) Increasing
part of India’s GDP (ii) Growth rate increasing
(iii) Growth rate decreasing
Select the correct answer using the (iv) Stagnant
code given below:
(a) (i) only Select the correct answer using the
(b) (ii) only code given below:
(c) Both (i) & (ii) (a) (i) only
(d) Neither (i) nor (ii) (b) (i) & (ii) only
19. The decrease in dependency ratio (ratio (d) (iv) only
of dependent population to working age
population) of a country may lead to 23. Consider the following statements
which of the following situation: regarding Capital formation:
(i) Increase in savings rate (i) Gold and valuable metals are part
(ii) Decrease in savings rate of Fixed Capital Formation
(iii) Increase in Capital Formation (ii) Intellectual properties are part of
(iv) Decrease in Capital Formation Fixed capital formation
(iii) Construction of buildings and
Select the correct answer using the other structures are part of Capital
code given below: Formation
Select the correct answer using the 27. Capital formation in a country will
code given below: necessarily lead to which of the
(a) (i) only following:
(c) (ii) & (iii) only (i) Increase in ICOR
(d) (iii) only (ii) Decrease in ICOR
(iii) Economic growth
24. India is planning to become a $5
Trillion economy by 2024-25. Consider Select the correct answer using the
the following statements. code given below:
(i) It is in nominal terms (a) (i) & (iii) only
(ii) It is in PPP terms (b) (ii) & (iii) only
(iii) It will require compounded annual (c) (iii) only
real growth of around 8% , with 4% (d) None of the above
inflation
code given below:
(i) Investment in the economy
(a) (i) only
increases with decrease in capital
(b) (ii) only
output ratio
(ii) Economic output increases with
(d) (ii) & (iii) only
decrease in capital output ratio
25. Despite being a high saving economy,
capital formation may not result in
code given below:
significant increase in output due to:
(a) (i) only
(b) (ii) only
(a) weak administrative machinery
(c) Both (i) & (ii)
(b) illiteracy
(c) high population density
(d) high capital-output ratio
regarding Incremental Capital Output (i) Decrease in investments will lead to
Ratio (ICOR): depletion of capital stock in the
economy
(i) It shows how efficiently capital is (ii) Decrease in investments will lead to
being used to produce output increase in incremental capital
(ii) It is the extra unit of capital output ratio
(iii) Decrease in investments will lead to
required to produce one additional
decrease in the production of goods
unit of output
and services
(iii) It is the extra unit of output
produced from one additional unit Select the correct answer using the
of capital code given below:
(iv) It is the ratio of change in capital to (a) (i) only
change in output (b) (ii) only
Select the correct answer using the (d) None of the above
code given below:
(a) (i) only 30. For a sustained high growth, which of
(b) (i) & (ii) only the following statements will be true:
(c) (i), (ii) & (iv) only
(d) (i), (iii) & (iv) only
(a) Raising the investment by keeping 34. A country is going through a phase of
the incremental capital output ratio industrialization. Which of the
minimum following statements are correct?
(b) Raising the investment and
incremental capital output ratio (a) Capital to labour ratio increases
both (b) Productivity of labour increases
(c) Increasing capital output ratio and (c) Total factor productivity increases
keeping investment at a constant (d) All of the above
rate
(d) All of the above 35. Consider the following statements
regarding ‘GDP Deflator’:
31. If a country’s growth rate is good but
there is no corresponding growth in (i) It is an index of price which is
employment, then which of the calculated as the ratio of nominal
following could be the reasons: GDP to real GDP
(ii) The weights differ according to the
(a) The growth is coming from better production level of each good in
utilization of existing capacity and GDP deflator
not because of increase in
investment Select the correct answer using the
(b) The growth is coming from increase code given below:
in investment but not because of (a) (i) only
better utilization of existing (b) (ii) only
capacity (c) Both (i) & (ii)
(c) The growth is coming from both as (d) Neither (i) nor (ii)
a result of increase in investment
and increase in capacity utilization
correct about CPI rural, CPI urban and
(d) None of the above
CPI combined index?
32. If a factory is running at peak
(i) Inflation data is published by NSO
production with certain number of
(ii) The base year is 2011-12
labourers then the marginal
(iii) It is released for all India and for
productivity of labour will be:
states and UTs separately on a
(a) Positive monthly basis
(b) Negative
(c) Zero Select the correct answer using the
(d) One code given below:
(a) (i) only
(b) (ii) only
33. Economic growth in a country will
necessarily have to occur if: (c) (ii) & (iii) only
(a) There is technological progress in
the country 37. Consider the statements regarding the
(b) There is population growth in the various inflation indices published in
the country:
country
(c) There is capital formation in the
(i) Wholesale Price Index (WPI) does
country
not represent the inflation in
(d) The country's exports are
services
increasing
(ii) Consumer Price Index (CPI)
represents the inflation in goods
and services
(iii) CPI and WPI represent the inflation Which of the statements given above
of imported goods also is/are correct?
(iv) GDP deflator captures the inflation (a) (i) only
of the goods and services produced (b) (ii) only
domestically (c) Both (i) & (ii)
code given below: 41. Which of the following statements are
true regarding 'Terms of trade' (ToT) of
(a) (i) & (ii) only a country with another country:
(b) (i), (ii), (iii) only
(c) (ii), (iii) & (iv) only (i) It is ratio of export price index to
(d) All of the above import price index
(ii) It is a ratio of value of exports to
38. Wholesale Price Inflation (WPI) index value of imports
includes price change of which of the (iii) It is a measure of how much
following sectors: imports a country can get for a unit
of exported goods
(i) Agriculture
(iv) ToT increases with increase in price
(ii) Mining
of exported goods
(iii) Manufacturing
(iv) Electricity Select the correct answer using the
code given below:
code given below: (b) (ii) & (iv)
(a) (ii) & (iii) only
(c) (i), (iii) & (iv) only
(b) (iii) only
(d) (ii), (iii) & (iv) only
42. Which of the following is a common
measure of degree of 'openness of an
39. Consider the following statements economy'?
regarding CPI and WPI:
(a) Exports and imports share in world
(i) CPI includes indirect taxes
GDP
(ii) WPI includes indirect taxes
(b) Balance of Payments as a
percentage of GDP
code given below: (c) Trade balance as a percentage of
(a) (i) only GDP
(b) (ii) only (d) Exports and imports of goods and
(c) Both (i) & (ii) services as a percentage of GDP
40. Consider the following statement with regarding India’s merchandise trade:
reference to ‘Income Elasticity of
Demand’: (i) India’s merchandise imports as a
percentage of GDP has steadily
(i) It measures the responsiveness of decreased in the last decade
demand for a particular good to (ii) India’s merchandise exports as a
changes in consumer income. percentage of GDP has steadily
(ii) Using this concept, it is possible to decreased in the last decade
tell if a particular good represents a
necessity or a luxury. Select the correct answer using the
code given below:
(a) (i) only

(b) (ii) only
(c) Both (i) & (ii)

regarding services trade of India:
(i) Value of export of services is equal

to merchandise exports
(ii) India services trade is steadily in
surplus in the last decade

code given below:
(a) (i) only
(b) (ii) only
(c) Both (i) & (ii)

regarding India:
(i) Exports (of goods and services) as a

percent of GDP has steadily
decreased in the last decade
(ii) Imports (of goods and services) as a
percent of GDP has steadily
increased in the last decade
(iii) Trade as a percent of GDP has
steadily decreased in the last
decade

code given below:
(a) (ii) only
(b) (i) & (ii) only
(c) All of the above
46. Consider the following statements interest-free balances in order to

regarding Reserve Bank of India (RBI): meet the reserve requirements
(iii) Inflation tax
(i) It was set up on the basis of
recommendations of the Hilton Select the correct answer using the
Young Commission code given below:
(ii) It was set up as a shareholder’s (a) (i) only
bank, but was nationalized in 1949 (b) (ii) only
(c) (i) & (ii) only
Select the correct answer using the (d) All of the above
code given below:
(a) (i) only 50. If a country has ‘Pegged’ (fixed but
(b) (ii) only adjustable) exchange rate, then
(c) Both (i) & (ii) consider the following statements:
(i) Inflation in the country may make
47. Consider the following statements in its exports less competitive
an economy: (ii) If the country devalues its currency
in proportion to the inflation then its
(i) Value of transactions is generally exports may remain competitive
higher than the value of output
(GDP) Select the correct answer using the
(ii) Money required for transaction in code given below:
the economy is equal to the value of (a) (i) only
transactions (b) (ii) only
(c) Both (i) & (ii)
Select the correct answer using the (d) Neither (i) nor (ii)
code given below:
(b) (ii) only true regarding India’s present
(c) Both (i) & (ii) exchange rate system:
(i) Rupee-dollar rate depends on
48. The term “Seigniorage” means: market forces of demand & supply
(ii) RBI regulates the Rupee dollar rate
(a) The income generated by the (iii) RBI intervenes in the forex market
Central Bank on account of money (iv) RBI regulates the forex market
creation
(b) The income generated by Select the correct answer using the
Government on account of money code given below:
creation (a) (i) only
(c) The backup of physical gold (b) (i) & (iii) only
required to print currency notes (c) (i), (iii) & (iv) only
(d) It is the nominal value of all the (d) (ii) & (iii)
currency notes and coins
52. RBI intervenes in the foreign exchange
49. Which of the following are part of market to:
“Seigniorage”?
(i) To contain the volatility in the
(i) Interest income on reserves kept rupee
with RBI for money creation (ii) To set a price band for Rupee in
(ii) Interest accruing from bank terms of Dollar
balances kept central bank as
Select the correct answer using the (a) Increase in money supply in the
code given below: economy
(a) (i) only (b) Depreciation of rupee
(b) (ii) only (c) Appreciation of rupee
(c) Both (i) & (ii) (d) Increase in GDP
57. Which of the following situation may
53. Consider the following statements lead to depreciation of a country's
regarding purchasing power parity currency with respect to another
(PPP) exchange rates: country:
(i) If two countries have zero rate of (a) Foreign Investment inflow
inflation, their PPP exchange rates (b) Rise in the interest rate
will be constant (c) Increase in exports
(ii) The prices of goods will be same in (d) None of the above
both the countries when converted
at PPP exchange rate 58. The export competitiveness of a
country with its trading partners can
Select the correct answer using the be best measured through which of the
code given below: following exchange rates:
(a) (i) only
(b) (ii) only (a) Nominal Exchange Rate
(c) Both (i) & (ii) (b) Real Exchange Rate
(d) Neither (i) nor (ii) (c) Nominal Effective Exchange Rate
(d) Real Effective Exchange Rate
true in case "the currency of two 59. If 'Real Effective Exchange Rate' of a
countries are at purchasing power country appreciates then which of the
parity": following will be true:
(a) PPP exchange rate is equal to
Nominal exchange rate (a) Exports will become more
(b) PPP exchange rate is equal to Real competitive
exchange rate (b) Export competitiveness will reduce
(c) Nominal exchange rate is equal to (c) Imports will decrease
Real exchange rate (d) Will have no impact on trade
(d) PPP, Nominal and Real exchange
rates become equal 60. Consider the following statements
regarding the transactions happening
55. Which of the following statements is at the international level for trade and
correct? financial flows.
(a) An overvalued currency will boost (i) There is an international authority

exports from the country with the power to force the use of a
(b) An undervalued currency will boost particular currency
exports from the country (ii) There is a basket of currencies
(c) Overvaluation/ undervaluation of which can only be used to settle
currency does not impact exports international transactions
(d) None of the above (iii) Currencies which maintain a stable
purchasing power are generally
56. Increase in India's trade deficit may accepted
lead to which of the following: (iv) Freely convertible currencies are
generally accepted
Select the correct answer using the 64. Which of the following investors/
code given below: agencies can purchase government of
(a) (i) only India securities/bonds?
(b) (ii) & (iv) only
(c) (iii) & (iv) only (i) Reserve Bank of India
(d) (ii), (iii) & (iv) only (ii) Portfolio Investors
(iii) Financial Institutions
61. Which of the following statements are (iv) Individuals
true regarding the Foreign Currency Select the correct answer using the
Non-Resident (FCNR) Accounts: code given below:
(a) (i) only
(i) Resident Indians and NRI's both (b) (i) & (iii) only
can open (c) (iii) only
(ii) Only Foreign currency can be (d) All of the above
deposited
(iii) Rupee can be deposited 65. Which of the following is the largest
(iv) Can have both demand and time holder of Government securities?
deposits (a) Commercial banks
(b) Cooperative Banks
Select the correct answer using the code (c) Reserve Bank of India
given below: (d) Insurance companies
(a) (i) & (ii) only
(b) (ii) only 66. Consider the following statements
(c) (ii) & (iv) only regarding “State Development Loans”
(d) (i), (ii) & (iv) only
(i) It is a Government security
(ii) RBI manages the public debt of
62. The term "Nostro Account" was
states
recently in the news is related to:
(iii) It can be used under SLR by banks
(i) It is an account that one bank
holds in another bank
code given below:
(ii) It is used to facilitate international (a) (ii) only
transactions (b) (i) & (ii) only
code given below:
(b) (ii) only true regarding “Cash Management
(c) Both (i) & (ii) Bills”?
(i) Issued by Central Government and
63. The term "SWIFT" is sometimes seen in not by state governments
the news, is related to: (ii) It is used to fund fiscal deficit
(iii) It can be used for temporary
(a) It is used in space technology mismatches in the cash flow of the
(b) It is used to securely transmit government
information and instructions by
financial institutions Select the correct answer using the
(c) It is used for messaging in secret code given below:
defence communication (a) (i) & (ii)
(b) (ii) & (iii)
(d) It is used for faster transmission of
(c) (iii) only
data
(d) (i) & (iii) only
10
68. Which of the following statements will Select the correct answer using the
be true if the inflation in the economy code given below:
is increasing? (a) (i) only
(i) Bond price will decrease (c) (iii) & (iv) only
(ii) Bondholders will loose (d) (ii), (iii) & (iv) only
(iii) The yield on bonds will increase
Select the correct answer using the (i) Currency notes are legal tenders
code given below: (ii) Currency notes are unlimited legal
(a) (i) only
tenders
(b) (i), & (ii) only
(iii) Currency notes are guaranteed by
(c) (iii) only
the Central Government
(iv) Currency notes are guaranteed by
69. The price of government securities is the RBI
influenced by which of the following?
Select the correct answer using the code
(i) Interest rate in the economy given below:
(ii) Liquidity in the market (a) (i) & (iii) only
(iii) Developments in forex, money and (b) (i) & (iv) only
capital markets (c) (i), (ii) & (iii) only
(d) (ii) & (iv) only
code given below: 73. Who has the authority to issue
(a) (i) only currency notes in India?
(b) (ii) only
(c) (i) & (ii) only (a) Central Government
(d) All of the above (b) Ministry of Finance
(c) RBI
70. Which one of the following statements (d) RBI governor
correctly describes the meaning of legal
tender money? 74. Consider the following statements
regarding currency circulation in India:
(a) The money which is tendered in
courts of law to defray the fee of (i) Govt. of India has the sole right to
legal cases mint coins
(b) The money which a creditor is
(ii) The coins are issued for circulation
under compulsion to accept in
settlement of his claims only through RBI in terms of the
(c) The bank money in the form of RBI Act 1934
cheques, drafts, bills of exchange, (iii) Coins can be issued up to the
etc. denomination of Rs. 1000 as per
(d) The metallic money in circulation the Coinage Act 1906
in a country
(a) (i) only
(i) Currencies and coins are fiat (b) (i) & (ii) only
money (c) (iii) only
(ii) Currencies do not have intrinsic (d) All of the above
value but coins have
(iii) Currencies and coins are legal 75. If new currency is being issued, then
tenders who has the authority to decide its
(iv) Cheques are legal tenders "Denomination":
11
(a) RBI Governor (a) (i) only

(b) RBI Central Board of Directors (b) (ii) only
(c) Central Government (c) Both (i) & (ii)
(d) Monetary Policy Committee (d) Neither (i) nor (ii)
76. Who is the final authority in approving 80. Consider the following statements
the design, form and material of bank regarding ‘Agency Banks’ of RBI:
notes:
(i) RBI Act 1934 allows it to appoint
(a) Governor of RBI agency banks
(b) Central Board of RBI (ii) Public sector and private sector
(c) Central Government banks both can act as agency
(d) Governor of RBI in consultation banks
with Central Government
77. Prime Minister, on 8th of Nov 2016, code given below:
declared that the existing Rs. 500 and (a) (i) only
Rs. 1000 notes will not be legal tender. (b) (ii) only
This was done under which of the (c) Both (i) & (ii)
following Act. (d) Neither (i) nor (ii)
(a) RBI Act 1934 81. Which of the following functions are
(b) Banking regulation Act 1949 part of the Reserve Bank of India (RBI)
(c) Payment and Settlement Systems acting as Banker to Banks?
Act 2007
(d) Does not require any statutory (i) Enabling banks to maintain their
backing accounts with RBI for statutory
reserve requirements
78. Which agency has the authority to (ii) Enabling settlement of interbank
declare that certain bank notes cease transfer of funds
to be legal tender: (iii) RBI provides short term loans and
advances to banks
(a) RBI governor (iv) Acting as lender of last resort
(b) RBI Central Board
(c) Central Government Select the correct answer using the
(d) Central Government on the code given below:
recommendation of RBI Central (a) (i) only
Board (b) (i) & (ii) only
79. Which of the following statements are (d) All of the above
true regarding RBI?
82. RBI acts as a 'lender of last resort' to
(i) As per the RBI Act 1934, RBI is ensure the following in the economy:
bound to undertake the receipt and
payments and other banking (i) To prevent possible failure of the
operations of the central banks
government (ii) To protect the interest of the
(ii) As per the RBI Act 1934, RBI is depositors of the banks
obliged to act as banker to State (iii) To ensure financial stability in the
governments economy
Select the correct answer using the Select the correct answer using the
code given below: code given below:
12

(b) (i) & (ii) only code given below:
(c) (i) & (iii) only (a) (i) & (ii) only
(d) All of the above (b) (ii) & (iii) only
83. Which of the following are (d) All of the above
characteristic situation for ‘Bank Run’?
(i) Customers withdraw their deposits regarding ‘ways and means’ advance:
fearing that banks will run out of
reserves (i) It is available for both Central and
(ii) Banks are in risk of default State governments
(iii) The bank has been declared (ii) Government need to pay interest on
bankrupt ways and means advance
(iii) It is to meet the temporary
Select the correct answer using the mismatches of receipts and
payments
code given below:
(a) (i) & (ii) only
code given below:
(c) (iii) only
(a) (i) only
(c) (ii) & (iii) only
(i) RBI can act as lender of last resort
for banks and NBFCs both
regarding RBI:
(ii) All NBFCs are registered with and
regulated by RBI
(i) RBI regulates interest rates on
savings & Time deposits in
commercial banks
code given below:
(ii) RBI regulates "Money Market"
(a) (i) only
(b) (ii) only
(c) Both (i) & (ii)
code given below:
(a) (i) only
(b) (ii) only
85. Which of the following functions are
(c) Both (i) & (ii)
part of the Reserve Bank of India (RBI)
acting as Banker to Central
Government?
regarding “Commercial Papers”:
(i) RBI maintains the account for the
(i) It is an unsecured debt instrument
various central government funds
(ii) It is a short-term money market
like Consolidated Fund of India,
instrument
Contingency Fund and Public
(iii) NBFCs issue commercial papers
Account of India
(ii) RBI acts as advisor to the Select the correct answer using the
government on monetary and code given below:
banking related matters (a) (i) only
(iii) RBI provides Ways and Means (b) (ii) & (iii) only
Advances to the government (c) (ii) only
(iv) RBI floats loans and manages them (d) All of the above
on behalf of the government
13
89. Which of the following are (i) It will be responsible for

instrument/s of money market? appointment of heads in PSBs and
Financial Institutions
(i) Cash management bills (ii) It will help PSBs in developing
(ii) Treasury bills strategies and capital raising plans
(iii) Certificate of Deposits (iii) It will improve the governance of
(iv) State Development Loans the Public Sector Banks (PSBs)
(a) (i) & (ii) only (a) (i) only
(b) (ii) & (iii) only (b) (i) & (iii) only
(c) (i) & (iv) only (c) (ii) & (iii) only
(d) (i), (ii) & (iii) only (d) All of the above
90. Mergers and Acquisitions of 93. Consider the following statements

commercial banks may require regarding the insurance cover provided
approval of which of the following to depositors by Deposit Insurance and
agency/ies? Credit Guarantee Corporation (DICGC)
(i) Reserve Bank of India (RBI) (i) All commercial banks and urban
(ii) Competition Commission of India cooperative banks have to register
(CCI) with DICGC for providing
insurance to depositors
Select the correct answer using the (ii) RBI incurs the insurance premium
code given below: burden
(a) (i) only (iii) Government incurs the insurance
(b) (ii) only premium burden
(c) Both (i) & (ii)
(d) Neither (i) nor (ii) Select the correct answer using the
code given below:
91. The Government is planning merger of (a) (i) only
public sector banks. It will benefit in (b) (i) & (ii) only
which of the following ways: (c) (iii) only
(i) Reducing cost and achieving
efficiency
regarding payment banks:
(ii) Achieving economies of scale
(iii) Leading to consolidation
(i) They can open demand and time
(iv) The merged entity will have less
deposit accounts both
NPA as compared to the individuals
(ii) They are set up as differentiated
banks
(iii) They may act as Business
code given below:
Correspondents for other banks
(a) (i) & (ii) only
(iv) They will provide payments /
(b) (i), (ii) & (iii) only
remittance services to migrant
(c) (ii), (iii) & (iv)
labour workforce and small
businesses
regarding the "Banks Board Bureau Select the correct answer using the
(BBB)" constituted in 2016: code given below:
(a) (i) & (iv) only
14
(b) (i) & (ii) only (i) They are under dual regulation of
(c) (ii), (iii) & (iv) only central/state govt. and RBI
(d) All of the above (ii) They are supervised by NABARD
95. Consider the following statements Select the correct answer using the
regarding recently launched “India code given below:
Post Payment Bank”: (a) (i) only
(b) (ii) only
(i) It allows demand and fixed deposit (c) Both (i) & (ii)
both (d) Neither (i) nor (ii)
(ii) It allows savings and current
account both 99. Which of the following statements are
(iii) It is a public sector company correct regarding "Regional Rural
Banks (RRBs)":
code given below: (i) They are regulated by RBI
(a) (i) only (ii) They are supervised by NABARD
(b) (i) & (iii)
(c) (ii) & (iii) only Select the correct answer using the
(d) None of the above code given below:
(a) only (i)
96. What is the purpose of setting up of (b) only (ii)
Small Finance Banks (SFBs) in India? (c) Both (i) & (ii)
(i) To supply credit to small business
units 100. NABARD provides refinance to
(ii) To supply credit to small and which of the following types of financial
marginal farmers institutions:
(iii) To encourage young entrepreneurs
to set up business particularly in (i) Commercial Banks
rural areas. (ii) Regional Rural Banks
(iii) State Cooperative Banks & Land
Select the correct answer using the Development Banks
code given below: (iv) Non-Banking Financial Companies
(a) (i) & (ii) only
(b) (ii) & (iii) only Select the correct answer using the
(c) (i) & (iii) only code given below:
(d) (i), (ii) & (iii) (a) (ii) only
(b) (ii) & (iii) only
97. A new organizational structure ‘Board (c) (i), (ii) & (iii) only
of Management’ was proposed for the (d) All of the above
Urban Cooperative Banks by which
committee? 101. Consider the following statements
(a) Malegam Committee regarding MUDRA Bank:
(b) Nachiket Mor Committee
(c) Raghuram Rajan Committee (i) It will provide direct lending to
(d) Narasimhan Committee small entrepreneurs
(ii) MUDRA loans will be available for
98. Which of the following statements are agriculture, manufacturing,
correct regarding "Primary Cooperative trading and service activities
Banks":
code given below:
15
(a) (i) only (b) (ii) only

(b) (ii) only (c) (i) & (iii) only
(c) Both (i) & (ii) (d) All of the above
102. Consider the following statements regarding "Account Aggregators":
regarding National Housing Bank
(NHB): (i) These are new class of Non-
Banking Financial Companies
(i) NHB regulates Housing finance (ii) They will provide lending to small
companies customers
(ii) NHB is regulated by Govt. of India (iii) They will provide information to
(iii) NHB provides direct finance for their customers of their financial
individual housing loans assets invested in different
(iv) NHB provides refinance for instruments
individual housing loans
Select the correct answer using the code code given below:
given below: (a) (i) only
(a) (i) & (iv) only (b) (i) & (ii) only
(b) (i) & (iv) only (c) (i) & (iii) only
(c) (ii) & (iii) only (d) (iv) only
(d) (iv) only
106. NBFCs raise their resources from
103. Which of the following statements which of the following:
are true regarding Housing Finance
Companies (HFC)? (i) Loans from Banks
(ii) By issuance of bonds in the
(i) HFCs are under direct regulation of financial markets
RBI (iii) Through External Commercial
(ii) HFCs are a category of Non- Borrowing (ECB)
Banking Financial Companies (iv) Mutual Funds
(NBFCs)
Select the correct answer using the code given below:
code given below: (a) (i) only
(a) (i) only (b) (i) & (ii) only
(b) (ii) only
(c) Both (i) & (ii)
104. Consider the following statements 107. Which of the following were the
regarding "Peer to Peer Lending reasons for the recent NBFC crisis in
the economy?
Platforms" in India:
(i) Relying on short term financing to

(i) They are regulated by RBI as Non-
fund long-term investments
Banking Financial Companies
(ii) Asset liability mismatch (ALM)
(ii) They can lend on their own
(iii) Rollover risk of commercial papers
(iii) They provide credit guarantee
(a) (i) only (b) (i), (ii) only
16
(c) (ii), (iii) only (a) (i) only

(d) All of the above (b) (i) & (ii) only
(c) (iii) only
108. Consider the following statements (d) All of the above
regarding "Real Estate Investment
Trusts (REITs): 111. Consider the following statements
regarding "Sovereign Wealth Funds
(i) They are regulated by respective (SWFs)":
Real Estate Regulatory Authorities
(RERA) of every State (i) SWFs are State owned investment
(ii) It will make real estate sector funds
accessible to small investors (ii) SWFs are established through
fiscal and trade surpluses
Select the correct answer using the (iii) They are used to stabilize budget
code given below and economy of the country from
(a) (i) only excess volatility in revenues
(b) (ii) only
(iv) SWFs typically invests in
(c) Both (i) & (ii) government owned projects/assets
109. Which of the following statements code given below:
are true regarding "Angel Investors": (a) (i) & (iv) only
(i) Angel investors generally invest
(c) (ii), (iii) & (iv) only
their own money
(d) (i), (ii) & (iii) only
(ii) They invest in small start-ups and
entrepreneurs 112. Which of the following statements
(iii) They provide more favourable are true regarding the term "Crowd
terms and conditions as compared funding"?
to other lenders
(iv) Angel investment is regulated by (i) It is a method of financing through
SEBI the internet/social media
(ii) Small amounts of money are raised
Select the correct answer using the from large number of investors
code given below: (iii) It has the potential to increase
(a) (i) & (ii) only entrepreneurship
(b) (iii) only (iv) It is also referred as marketplace
(c) (ii) & (iii) only financing
110. Consider the following statements code given below:
regarding ‘Alternative Investment (a) (i) & (ii) only
Fund’ (AIF): (b) (i), (ii) & (iii) only
(i) Its privately pooled investment
vehicle established in India and
regulated by SEBI
(ii) It collects fund from sophisticated
regarding "Exchange Traded Funds
investors from India or Foreign
(ETF)":
(iii) Venture capital comes under AIF
(i) ETFs are traded like stocks and can
be bought and sold throughout the
code given below:
day
17
(ii) ETFs can be used as a vehicle for (b) As fixed by the Central Government
disinvestment while appointing, not exceeding
(iii) ETFs offers the benefit of three years and eligible for re-
diversification of risks appointment
(c) As fixed by the Central Government
Select the correct answer using the while appointing, not exceeding five
code given below: years and not eligible for re-
(a) (i) only appointment
(b) (i) & (ii) only (d) As fixed by the Central Government
(c) (ii) & (iii) only while appointing, not exceeding
(d) All of the above three years and not eligible for re-
appointment
114. The term "Bharat 22" recently seen
in the news is related to which of the 117. Consider the following statements:
following:
(a) RBI is fully autonomous institution
(a) A programme launched by (b) Central Government can give
Government to give incentives to directions to RBI if it considers
defence equipment manufacturing necessary
in India (c) Central government cannot
(b) It is an Exchange Traded Fund supersede the Central Board of
(ETF) launched by Government of Directors of RBI
India (d) All of the above
(c) A missile programme launched by
ISRO 118. Consider the following statements:
(d) A programme to make India "open
defecation free" by 2022 (i) Banks require prior approval of RBI
for appointment of directors
115. Which of the following statements (ii) Management of Public Sector
are true regarding the “Bharat Bond banks is under dual regulation of
ETF”:
Central Govt. & RBI
(i) It will provide liquidity to investors

(ii) It will deepen the corporate bond
code given below:
market
(a) (i) only
(iii) Individuals will not be allowed to
(b) (ii) only
purchase these instruments
(c) Both (i) & (ii)
(iv) It will be traded on stock exchange
code given below: 119. Consider the following statements:
(a) (i) & (ii) only
(b) (ii) & (iv) only (i) RBI is a wholly owned subsidiary of
(c) (i) & (iii) only Govt. of India
(d) (i), (ii) & (iv) only (ii) RBI’s surplus transfer to the
central government has steadily
116. Consider the following statements decreased in the last 5 years
regarding the term of appointment of
RBI Governor: Select the correct answer using the
code given below:
(a) As fixed by the Central Government (a) (i) only
while appointing, not exceeding five (b) (ii) only
years and eligible for re- (c) Both (i) & (ii)
appointment (d) Neither (i) nor (ii)
18
120. In the year 2018-19, RBI 123. Which of the following are revenue
transferred a much higher amount (Rs. source of RBI?
1.76 lakh cr) to the government of (a) Management of Forex reserves
India. Which of the following are the (b) Open market operations
sources of this higher fund? (c) Repo operations
(i) Transfer from Contingency Fund
(ii) Transfer from Asset Development 124. Consider the following statements
Fund of RBI regarding liquidity crisis in the debt
(iii) Income as a result of higher open markets:
market operations
(i) It may be caused due to defaults in
Select the correct answer using the the debt market
code given below: (ii) It may be caused due to FPIs
(a) (i) only running out of Indian markets
(b) (i) & (iii) only (iii) It may result in hardening of
(c) (ii) & (iii) only interest rates
(iv) RBI may do OMO to resolve the
liquidity crisis
(i) National Centre for Financial
code given below:
Education is an institution
(a) (i) & (ii) only
promoted by Ministry of Finance,
Govt. of India
(ii) Indian Financial Technology and (c) (ii), (iii) & (iv) only
Allied Services is a subsidiary of (d) All of the above
RBI
Select the correct answer using the regarding Monetary Base in India:
code given below:
(a) (i) only (i) It is the total liability of RBI
(b) (ii) only (ii) It is the total liability of
(c) Both (i) & (ii) Government of India
122. RBI giving its surplus reserves to code given below:
government may result in which of the (a) (i) only
following: (b) (ii) only
(c) Both (i) & (ii)
(i) Increasing inflation in the economy (d) Neither (i) nor (ii)
(ii) Decreasing inflation in the
economy 126. Which of the following could be the
(iii) No impact on inflation after effects of demonetization?
(iv) Meeting the fiscal deficit target of
the government (i) RBI's liability would reduce to the
extent the old notes does not come
Select the correct answer using the to the banking system
code given below:
(ii) Transfer of wealth from holders of
(a) (i) only
illicit black money to the public
(b) (ii) only
sector
(c) (i) & (iv) only
(d) (iii) & (iv) only (iii) Shift of resources from the private
sector to the government
19
(iv) Indirect and corporate taxes would (b) (ii) only

decline to the extent growth slows (c) Both (i) & (ii)
code given below: 130. Consider the following statements
(a) (i) & (iii) only regarding Money Multiplier:
(c) (ii), (iii) & (iv) only (i) It increases with increase in reserve
(d) All of the above requirements of banks
(ii) It decreases with increase in
127. Which of the following are part of reserve requirements of banks
Monetary Base of an economy? (iii) It increases with Monetary Base
(iv) It decreases with Monetary Base
(i) Currency notes and coins with the
public Select the correct answer using the
(ii) Vault cash of commercial banks code given below:
(iii) Deposits of commercial banks with (a) (i) only
RBI (b) (ii) only
(iv) Deposits of Government of India (c) (ii) & (iii) only
with RBI (d) (ii) & (iv) only
Select the correct answer using the 131. Consider the following statements
code given below: regarding ‘money supply’:
(a) (i) only
(b) (i) & (ii) only (i) It can be increased by increasing
(c) (iii) & (iv) only the money multiplier
(ii) It can be increased by increasing
the monetary base
128. Reserve money of the commercial
banks includes which of the following:
code given below:
(a) (i) only
(i) All deposits of Public
(b) (ii) only
(ii) Government securities held by (c) Both (i) & (ii)
banks (d) Neither (i) nor (ii)
(iii) Cash held by banks in their vaults
(iv) Money deposited with RBI 132. Consider the following statements
regarding “Open Market Operations”
Select the correct answer using the (buying and selling of govt. bonds by
code given below: RBI)
(a) (ii) & (iii) only
(b) (ii), (iii) & (iv) only (i) It changes the monetary base
(c) (iv) only (ii) It changes the money supply
(d) All of the above (iii) It changes the money multiplier
129. Money can be created in the Select the correct answer using the
economy in which of the following code given below:
ways? (a) (i) & (ii) only
(i) Full reserve banking (b) (ii) only
(ii) Fractional reserve banking (c) (i) & (iii) only
code given below: 133. Which of the following is not part of
(a) (i) only the money supply in the economy?
20
(i) Money lying with the government

(ii) Deposits of commercial banks with Select the correct answer using the
other commercial banks code given below:
(iii) Money lying with the Central bank (a) (i) only
(iv) Deposits of pubic with commercial (b) (i) & (iii) only
banks (c) (iii) only
code given below: 137. Consider the following statement
(a) (i) only regarding ‘Market Stabilization Bonds’
(b) (ii) & (iv) only (MSBs):
(c) (i) & (ii) only
(d) (i), (ii) & (iii) only (i) These are Treasury bills and Dated
securities
(ii) RBI is empowered to issue MSBs
134. Which of the following are part of
money supply? (iii) The interest payment on these
bonds is made by government from
(i) Cash and deposits of public its budgetary resources
(ii) Bonds held by public
(iii) Shares held by public Select the correct answer using the
code given below:
(a) (i) only
code given below:
(b) (i) & (ii) only (c) (ii) & (iii) only
(c) (ii) & (iii) only (d) All of the above
135. Consider the following statements regarding Cash Reserve Ratio (CRR):
regarding Open Market Operations:
(i) It helps in securing monetary
stability and managing liquidity in
(i) It is conducted by Commercial
the economy
Banks
(ii) There is no limit on CRR without
(ii) It is conducted by RBI
any floor or ceiling rate
(iii) It is about debt securities
(iv) It is about equity securities Select the correct answer using the
code given below:
(c) Both (i) & (ii)
(a) (i) & (iii) only (d) Neither (i) nor (ii)
(c) (ii), (iii) & (iv) only 139. Consider the following statements
(d) All of the above regarding Cash Reserve Ratio (CRR)
kept with RBI by commercial banks:
(i) It ensures safety to the people’s
(i) Open Market Operation is a deposits in banks
monetary policy tool (ii) It ensures solvency of banks
(ii) Open Market Operations take place (iii) It increases the cost of funds for the
in secondary market banks
(iii) Sterilization is a monetary policy (iv) Banks earn interest on CRR
tool
21
Select the correct answer using the (iv) If RBI fails to achieve the target, it
code given below: needs to submit report to the Govt.
(a) (i) only of India stating reasons of failure
(b) (i) & (ii) only
(c) (i), (ii) & (iii) only Select the correct answer using the
(a) (i) & (ii) only
140. In the context of Indian economy, (b) (iii) only
which of the following is/are the (c) (i), (ii) & (iv) only
purpose/purposes of “Statutory (d) All of the above
Reserve Requirements”?
143. As per the new Monetary Policy
(i) To enable the Central Bank to Framework, who will determine the
control the amount of advances the inflation target?
banks can create
(ii) To make the people’s deposits with (a) Government of India (GoI)
banks safe and liquid (b) Reserve Bank of India (RBI)
(iii) To prevent the commercial banks (c) Govt. of India in consultation with
from making excessive profits RBI
(iv) To force the banks to have (d) Monetary Policy Committee
sufficient vault cash to meet their
day-to-day requirements 144. Which of the following statements
are true regarding the Monetary Policy
Select the correct answer using the Committee (MPC)?
code given below.
(a) (i) only (i) It has the authority to decide repo
(b) (i) & (ii) only rate, CRR, SLR
(c) (ii) & (iii) only (ii) Its decision is binding on RBI
(d) (i), (ii), (iii) & (iv) only
141. The Scheduled Commercial Banks code given below:
(SCB) are required to maintain CRR (a) (i) only
with RBI as per which act: (b) (ii) only
(c) Both (i) & (ii)
(a) Reserve Bank of India Act 1934 (d) Neither (i) nor (ii)
(b) The Banking Regulation Act 1949
(c) Securities Contract (Regulation) 145. Which of the following statements
1956 are true regarding ‘Marginal Standing
(d) None of the above Facility’ (MSF)?
(i) Scheduled commercial banks
142. Consider the following statements borrow additional amount for
regarding the 'Monetary Policy overnight only
(ii) The banks can dip into their SLR
Framework' that exists between Govt.
of India and Reserve Bank of India: portfolio to borrow from RBI
(iii) It provides a safety valve against
(i) The primary objective of Monetary unanticipated liquidity shocks
Policy is price stability
(ii) There is a flexible target for
code given below:
inflation that RBI needs to achieve
(a) (i) & (ii) only
(iii) Monetary Policy Framework is
operated by RBI (c) (iii) only
22
146. The "Consumer Confidence Survey" (d) All of the above

in India is conducted by which of the
following: 150. If the US Central Bank raises their
interest rate then it may lead to which
(a) Reserve Bank of India of the following in the Indian economy:
(b) National Statistical Office (NSO)
(c) Department of Consumer Affairs (a) Rupee depreciation
(d) Ministry of Labour & Employment (b) Rupee appreciation
(c) Investors moving to India
147. Which of the following agencies (d) Increase in money supply
conducts ‘inflation expectation survey’
of households in India? 151. Which of the following RBI may do
to curb the rupee depreciation:
(a) Ministry of Statistics and (i) Allowing importers to directly buy
Programme Implementation foreign currency from RBI
(b) National Statistical Office (ii) Increasing the repo rate
(c) Reserve Bank of India (iii) Selling dollars in foreign exchange
(d) Ministry of Finance market
(iv) Buying dollars in foreign exchange
148. RBI is keeping the policy rate at a market
higher level for quite some time. Which
of the following conditions may have Select the correct answer using the
led to such behaviour? code given below:
(i) Inflation in the economy is high (b) (ii) & (iii) only
(ii) Inflation expectation in the (c) (i), (ii) & (iii) only
economy is high (d) (i), (ii) & (iv) only
Select the correct answer using the 152. Consider the following statement
code given below: regarding the term “Operation Twist”:
(a) (i) only
(b) (ii) only (i) It is a kind of open market
(c) Both (i) & (ii) operation
(d) Neither (i) nor (ii) (ii) RBI pumps additional money into
the system to increase liquidity
149. RBI changed its monetary policy (iii) It helps in monetary transmission
stance from accommodative to neutral.
Which of the following could be the Select the correct answer using the
probable reasons? code given below:
(a) (i) & (ii) only

(i) Inflation is edging up in the (b) (ii) & (iii) only
economy (c) (i) & (iii) only
(ii) Demand is firming up in the (d) All of the above
economy
(iii) A decline in Consumer confidence 153. Which of following statements are
(iv) RBI will have flexibility to move the true regarding “Term Repo
policy rate in any direction Operations”?
(i) The interest rate is between reverse
Select the correct answer using the repo and repo rate
code given below: (ii) The interest rate is above the repo
(a) (i) & (ii) only rate
(b) (ii) & (iv) only (iii) The interest rate is generally fixed
(c) (i), (ii) & (iv) only (iv) The interest rate is generally
variable
23
(a) (i) & (iii) only (a) (i) & (ii) only
(b) (i) & (iv) only (b) (i) & (iii) only
(c) (ii) & (iii) only (c) (iii) only
(d) (ii) & (iv) only (d) All of the above
154. Which of the following statements 157. Consider the following statements
are true regarding the “Long Term Repo regarding the interest rates linked with
Operation” (LTRO) Conducted by RBI an external benchmark rate:
as per the 6th February 2020 monetary
policy review meeting? (i) External benchmark rate can be
repo rate or yield on government
(i) It was a fixed term repo operation securities or any rate published by
(ii) It was done at above the repo rate Financial Benchmarks India Pvt.
(iii) RBI did not conduct auction to Ltd.
select the bank for this operation (ii) Once repo rate changes the lending
rate of banks will automatically
Select the correct answer using the change
code given below: (iii) Banks are mandated by RBI to link
(a) (i) only the deposit and lending rate with
(b) (i) & (iii) only external benchmark rate
(d) None of the above Select the correct answer using the
code given below:
155. Consider the following statements (a) (i) only
regarding the “Monetary Policy” (b) (i) & (ii) only
followed by RBI: (c) (ii) only
(i) It follows flexible inflation target
(ii) While inflation is in control, RBI 158. Consider the following statements
can focus on growth regarding the “spread” charged over the
(iii) Financial Stability is the explicit external benchmark rate by the banks:
mandate of monetary policy
(iv) Achieving monetary policy objective (i) The spread will be decided by the
will ensure financial stability banks
(ii) The spread will change with the
Select the correct answer using the change of external benchmark rate
code given below: (iii) The spread may be different for
(a) (i) only different category of loans
(b) (i) & (ii) only
(c) (ii) & (iv) Select the correct answer using the
(d) (ii), (iii) & (iv) code given below:
(a) (i) & (ii) only
156. Which of the following statements (b) (ii) & (iii) only
are true regarding the Marginal Cost of (c) (i) & (iii) only
Funds based Lending Rate (MCLR): (d) All of the above
(i) Banks will do lending at or above 159. Consider the following statements
MCLR regarding Non-Banking Finance
(ii) MCLR may increase because of Companies (NBFCs):
increase in CRR/SLR
(iii) MCLR helps in better transmission (i) RBI mandates NBFCs to link their
of policy rate into lending rate lending rates with an anchor rate
24
(ii) MCLR is an anchor rate which acts Select the correct answer using the
as external benchmark rate code given below:
(a) (ii) only
Select the correct answer using the (b) (i) & (ii) only
code given below: (c) (i), (iii) & (iv) only
(a) (i) only (d) All of the above
(b) (ii) only
(c) Both (i) & (ii) 163. Which of the following may have
(d) Neither (i) nor (ii) inflationary impact in the economy?
160. "Government offers above market (i) Forex swap

interest rate on the small savings (ii) Increase in inflow of foreign capital
schemes like PPF etc.". It leads to: (iii) General elections
(i) Hindrance in monetary policy Select the correct answer using the
transmission code given below:
(ii) Supports monetary policy (a) (i) only
transmission (b) (ii) only
(iii) Mostly benefits the rich people (c) (ii) & (iii) only
(iv) Mostly benefits the poor people (d) All of the above
164. Which of the following tools RBI

uses for monetary policy?
code given below:
(i) Forex Swap
(b) (i) & (iv) only
(ii) Liquidity Adjustment Facility (LAF)
(iii) Market Stabilization Scheme
(d) (ii) & (iv) only
(iv) Sterilization
161. Which of the following could create Select the correct answer using the
a hindrance in achieving the objective code given below:
of inflation targeting by RBI? (a) (i), (ii) & (iii) only
(b) (i), (iii) & (iv) only
(i) Government deviating from the (c) (iii) & (iv) only
fiscal road map (d) All of the above
(ii) Impediments in monetary policy
transmission 165. The Real Rate of Interest is equal to
(iii) Supply side bottlenecks the Nominal Interest Rate minus
inflation. Consider the following
Select the correct answer using the statements:
code given below:
(a) (i) only (i) Real Interest Rate must be positive
(b) (i) & (ii) only to encourage savings and reduce
(c) (ii) & (iii)
consumption
(ii) Real Interest Rate must be negative
162. Which of the following operations to encourage savings and reduce
by RBI will help in ‘monetary consumption
transmission’? (iii) Real interest rate is always positive
(i) Forex Swap (iv) Inflation rate in the market may be
(ii) Sale of Government bonds by RBI negative
(iii) Operation Twist
(iv) Long Term Repo Operation (LTRO) Select the correct answer using the
code given below:
(a) (i) only
25
(b) (iii) only

(c) (i) & (iii) only 169. Consider the following statements:
(d) (i) & (iv) only (i) Inflation benefits creditors
(ii) Inflation benefits debtors
166. Which of the following factors may (iii) Inflation benefits bondholders
lead to increase in savings in the (iv) Inflation benefits depositors
economy?
(i) Positive real interest rate code given below:
(ii) Low inflation rate (a) (i) & (iii) only
(iii) Rise in per capita income (b) (ii) only
(iv) Growth of financial intermediaries (c) (iii) only
Select the correct answer using the (d) (i), (iii) & (iv) only
code given below:
(a) (iii) only 170. Consider the following two
(b) (iii) & (iv) only statements:
(d) All of the above (i) Headline inflation measures price
inflation arising due to all types of
167. Inflation in the economy generally commodities in the economy
leads to which of the following: (ii) Core inflation measures the
headline inflation excluding volatile
(i) Depreciation of currency components i.e. food and fuel items
(ii) Appreciation of currency
(iii) Increase in real interest rate Select the correct answer using the
(iv) Increase in nominal interest rate code given below:
(a) (i) only
Select the correct answer using the (b) (ii) only
code given below: (c) Both (i) & (ii)
(a) (i) & (iii) only (d) Neither (i) nor (ii)
(c) (i) & (iv) only 171. The rise in prices of goods and
(d) (i), (iii) & (iv) only services in an economy may be caused
due to:
168. If an economy is in “Liquidity Trap”,
then which of the following statements (i) Increase in money supply
shall be true: (ii) Increase in government
expenditure
(i) The interest rate in the market will
(iii) RBI purchasing government
be very low/zero
securities from the public
(ii) People and businesses both will
(iv) Increase in wages
hold on to their cash and don’t
spend
(iii) People will be willing to spend code given below:
(iv) Demand Deposits of banks (a) (i) & (ii) only
increases (b) (i), (ii) & (iii) only
(c) (i), (ii), & (iv) only
code given below:
(a) (i) only 172. If a country is experiencing
(b) (ii) & (iv) only inflation then what will decrease:
(d) (i) & (iv) only (a) Wage level
26
(b) The output of goods and services (a) Rate of Interest

(c) The amount of money needed to (b) Price level
purchase a given quantity of goods (c) Output
and services (d) All of the above
(d) Purchasing Power
178. Which of the following scenarios
173. Which of the following may lead to can support sustainable economic
an increase in the overall prices? growth?
(i) Increase in effective demand (i) Deflation

(ii) Decrease in the aggregate level of (ii) Low and moderate inflation
output (iii) Galloping inflation
(iii) Increase in aggregate output (iv) Hyperinflation
(iv) An increase in overall employment
code given below: (a) (ii) only
(a) (i) & (iv) only (b) (i) & (ii) only
(b) (ii) & (iv) only (c) (ii) & (iii) only
(c) (i), (ii) & (iv) only (d) All of the above
179. Which of the following are the
174. Which of the following will reasons that make a moderate level of
necessarily lead to inflation? inflation good for the economy?
(a) Increase in aggregate demand (i) It increases consumption levels

(b) Increase in effective demand (ii) It keeps businesses profitable
(c) Decrease in Output (iii) It induces people to save more
(d) Increase in current account deficit
175. To reduce the rate of inflation, the code given below:
Government should: (a) (ii) only
(b) (i) & (ii) only
(a) Increase public expenditure (c) (iii) only
(b) Encourage consumer expenditure (d) All of the above
(c) Increase Income tax
(d) Reduce Interest Rate 180. Consider the following statements
regarding an economy facing deflation:
176. If the supply of money is increased
in the economy, then which of the (i) Companies defer their investments
following statements are true: (ii) People defer their expenditures
(iii) Demand decreases
(a) It may lead to increase in interest (iv) Unemployment increases
rates
(b) It may lead to decrease in interest Select the correct answer using the
rates code given below:
(c) It will necessarily lead to economic (a) (i) & (ii) only
growth (b) (iii) only
(d) None of the above (c) (iii) & (iv) only
177. The amount of Money Supply in the
economy affects the following 181. 'Stagflation' occurs in which of the
macroeconomic variables: following situation:
27
(i) Demand pull inflation (i) Higher employment leads to higher

(ii) Cost push inflation inflation
(ii) Higher inflation leads to higher
Select the correct answer using the employment
code given below:
(b) (ii) only code given below:
(c) Both (i) & (ii) (a) (i) only
(d) Neither (i) nor (ii) (b) (ii) only
(c) Both (i) & (ii)
182. Which of the following are supply (d) Neither (i) nor (ii)
side factor/s responsible for inflation?
(i) Increase in exports (i) Disinflation is declining rate of
(ii) Increase in government inflation but the rate of inflation
expenditure remains positive
(iii) Increase in credit creation (ii) Deflation is general decrease in
price level and the inflation rate is
Select the correct answer using the negative
code given below:
(b) (ii) & (iii) only code given below:
(c) (i) & (iii) only (a) (i) only
(d) (iii) only (b) (ii) only
(c) Both (i) & (ii)
183. If the interest rate is decreased in (d) Neither (i) nor (ii)
an economy, it will
(a) Decrease the consumption regarding an economy facing
expenditure in the economy disinflation:
(b) Increase the tax collection of the
Government (i) Companies defer their investments
(c) Increase the investment (ii) People defer their expenditures
expenditure in the economy (iii) Demand decreases
(d) Increase the total savings in the (iv) Unemployment increases
economy
(a) (i) only
(i) High output leads to high (b) (i) & (iii) only
unemployment (c) None of the above
(ii) High unemployment leads to high (d) All of the above
inflation
Select the correct answer using the regarding the ‘National Strategy for
code given below: Financial Inclusion for India 2019-
(a) (i) only 2024’:
(b) (ii) only
(c) Both (i) & (ii) (i) Banking access to every village
(d) Neither (i) nor (ii) within 5 km radius by March 2020
(ii) Every adult having access to
185. Consider the following statements: financial service provider through a
mobile device by March 2024
28
(iii) Public Credit Registry by March 191. Consider the following statements
2020 regarding "Islamic/ Sharia banking":
Select the correct answer using the (i) It is based on the principle of not
code given below: charging interest from the
(a) (i) only borrowers
(b) (iii) only (ii) It is based on the principle of
(c) (ii) & (iii) only prohibition of interest payment
(d) All of the above (iii) It is based on the principle of
sharing of profit and loss
189. Consider the following statements (iv) It will help in financial inclusion
regarding "Sovereign Gold Bonds":
(i) These are government securities given below:
denominated in grams of gold (a) (i) only
(ii) Issued by RBI on behalf of Govt. of (b) (ii) & (iv) only
India (c) (i), (ii) & (iv) only
(iii) Investors will receive fixed interest (d) All of the above
rate
(iv) If the market price of gold declines, 192. Which of the following statements
investors will be protected against are true regarding “Shadow Banking”:
capital loss
(i) They by and large raise funds from
Select the correct answer using the public deposits
code given below: (ii) Their activities are transparent
(a) (i) & (ii) only and properly regulated
(b) (ii) & (iii) only (iii) IL&FS is an example of Shadow
(c) (i), (ii) & (iii) only bank
regarding the “Gold Monetization (a) (i) only
Scheme”: (b) (ii) only
(c) (iii) only
(i) It will help in mobilization of gold (d) (i) & (ii) only
held by households and
193. "Enhanced Access and Service
institutions
Excellence (EASE)" is linked to which of
(ii) It will facilitate the use of gold for
the following:
productive purpose
(iii) It will help in reducing import of (a) Public sector bank reforms
gold and Current Account Deficit (b) e-Governance
(CAD) (c) Digital India Programme
(iv) Banks will be allowed to lend this (d) None of the above
gold to jewellers
Select the correct answer using the regarding the "Banking Ombudsman
code given below: Scheme":
(b) (i), (ii) & (iii) only (i) Banking Ombudsman is appointed
(c) (ii) & (iv) only by the RBI
(d) All of the above (ii) RBI management as the banking
ombudsman
29
(iii) It resolves customer complaints (c) Small Finance Banks

against deficiency in certain (d) Non-Banking Financial Institutions
banking services (NBFCs)
(iv) It has been introduced under the
Reserve Bank of India Act 1934 198. Which category of banks have the
highest share in agricultural credit:
code given below: (a) Commercial Banks (excluding
(a) (i) & (iii) only regional rural banks)
(b) (ii) & (iii) only (b) Regional Rural banks
(c) (ii), (iii) & (iv) only (c) Cooperative Banks
(d) (i) & (iv) only (d) Non-Banking Financial Companies
199. Which of the statements are correct

195. ‘Priority sector lending’ includes
which of the following categories? regarding the term "bail in" which was
(i) Renewable Energy recently in the news?
(ii) Export Credit
(iii) Social Infrastructure (a) rescuing of corporates by
(iv) Education government
(b) rescuing of financial institution by
Select the correct answer using the tax payers money
code given below: (c) rescuing of financial institution by
(a) (ii) & (iv) only its depositors/ creditors
(b) (ii), (iii) & (iv) only (d) All of the above
(c) (iii) & (iv) only
(d) All of the above 200. Which of the following statements
are true regarding "Prompt Corrective
196. Consider the following statements Action (PCA)" framework:
regarding "Kisan Credit Card (KCC)"
scheme: (i) It is applicable to banks and non-
banking financial companies
(i) It provides short term credit for (NBFCs)
cultivation of crops (ii) The institutions under PCA may
(ii) It provides long term credit cease to lend
(iii) It provides credit for consumption (iii) It is a supervisory tool of RBI for
requirements of farmers household banks
(iv) Available to owner cultivator, (iv) It applies once financial
tenant farmers and share croppers institutions reach certain threshold
level regarding Capital and NPAs.
code given below: Select the correct answer using the
(a) (i) only code given below:
(b) (ii) & (iv) only (a) (i), (ii) & (iii) only
(c) (i), (ii) & (iii) only (b) (iii) & (iv) only
(d) All of the above (c) (ii), (iii) & (iv) only
197. Which of the following category of
financial institutions are not involved 201. Consider the following statements
in the implementation of Kisan Credit regarding the ‘Supervisory Action
Cards (KCC)? Framework’:
(a) Regional Rural Banks (RRBs) (i) It is applicable for Urban-

(b) Cooperative Banks Cooperative banks
30
(ii) It can be initiated in case of serious (i) Bank for International Settlement
governance issues (BIS)
(ii) Foreign Commercial banks
Select the correct answer using the (iii) Other/foreign Central banks
code given below: (iv) Other institutions approved by
(a) (i) only Central Board of RBI
(b) (ii) only
(c) Both (i) & (ii) Select the correct answer using the code
(d) Neither (i) nor (ii) given below:
(a) (i) only
202. Which of the following statements
are true regarding "Domestic
Systemically Important Banks (DSIB)":
(i) These are also called "too big to fail"
(ii) They need to meet additional 206. Which of the following statements
is true regarding “Line of Credit”:
capital requirement
(iii) The list of DSIB should be declared
a) It is issued by one bank to another
annually by RBI
b) It is issued mainly in case of
(iv) The list of DSIB is declared by the
international transactions
Ministry of Finance
c) It is a preset amount of money that
a bank has agreed to lend
d) The company will have to pay
code given below
(a) (i) & (ii) only interest on the amount for which
(b) (ii) & (iii) only line of credit has been issued
are true regarding “Letter of credit”?
203. Which of the following bank is not
(i) It is a form of bank guarantee
in the list of "Domestic Systemically
(ii) It is an assurance that a buyer’s
Important Banks"
payment to a seller will be received
on time
(a) Axis Bank
(iii) It is a letter issued from a bank that
(b) HDFC Bank
the bank has agreed to lend
(c) ICICI Bank
(d) State Bank of India (SBI) Select the correct answer using the
code given below:
204. Which of the following statements (a) (i) only
are correct regarding the recently (b) (i) & (ii) only
launched "Electoral Bonds": (c) (i) & (iii) only
(a) It is an interest-bearing instrument
(b) The bond will have the name of the 208. Which of the following statements
donar are true regarding “Teaser Loans”?
(c) It can be bought and sold in the
market (i) It is a fixed cum floating loan
(d) It can be purchased by citizens and product
companies incorporated in India (ii) These are short term loans
(iii) These loans are banned by RBI
205. RBI keeps its foreign exchange
reserves with which of the following Select the correct answer using the
agency/ies? code given below:
31
(a) (i) only (c) (ii), (iii) & (iv) only

(b) (i) & (ii) only (d) All of the above
(c) (iii) only
(d) (ii) & (iii) only 212. Consider the following statements:
209. The term “provisioning” in the (i) Capital Adequacy Ratio (CAR) is the
banking sector is related to which of amount that banks have to
the following: maintain in the form of their own
funds to offset any loss that banks
(a) It is the loss that the bank incurs incur if the account-holders fail to
on sale of bad assets repay dues.
(b) It is the amount of fund that the (ii) CAR is decided by each individual
bank needs to set aside when the
bank.
loan turns NPA
(c) It is the minimum amount of funds
Which of the statements given above
that the depositors will receive
is/are correct?
when the bank goes bankrupt
(a) (i) only
(d) It is the minimum amount which
(b) (ii) only
the borrower will have to pay even
if the loan turns NPA (c) Both (i) & (ii)
210. The term ‘Securitization’ refers to
which of the following: 213. Consider the following statements
regarding Capital Adequacy Ratio
(a) Issuance of securities of smaller (CAR) of banks:
values to raise liquidity
(b) Pooling and repackaging of (i) Deposits of public is a part of the
financial assets into marketable capital for calculating CAR
securities (ii) Bondholders increases the CAR of
(c) Selling of debt securities to get the bank and hence safety of the
access to liquidity depositors
(d) An unconventional monetary policy
tool to pump liquidity in the Which of the statements given above
economy through creation of is/are correct?
securities (a) (i) only
(b) (ii) only
211. Which of the following statements (c) Both (i) & (ii)
are true regarding the “Partial Credit (d) Neither (i) nor (ii)
Guarantee Scheme” launched in the
2019-20 budget? 214. Consider the following statements:
(i) It is applicable for all govt. and (i) Non-Performing Assets of

private banks both scheduled commercial banks is
(ii) NBFCs assets will be purchased by more than non- banking financial
banks companies
(iii) It will help in resolving the problem (ii) Presently, Capital Adequacy Ratio
of asset liability mismatch of of scheduled commercial banks is
NBFCs around 15%
(iv) It will help in handling liquidity
issues of NBFCs Select the correct answer using the
code given below:
(a) (i) only (c) Both (i) & (ii)
(b) (ii) & (iii) only (d) Neither (i) nor (ii)
32
215. Consider the following statements (i) FDI investment happens through
regarding ‘Additional Tier 1 bonds’: secondary market
(i) They are part of capital under Basel (ii) FDI investment is about equity
III norms securities
(ii) They are perpetual in nature and (iii) FDI investment is about debt
have no maturity period securities
(iii) They can be written down in case of
bank failure Select the correct answer using the
code given below:
code given below:
(b) (i) & (ii) only
(a) (ii) only
(b) (iii) only
(d) (ii) only
216. Which of the following statements regarding Foreign Portfolio Investors
are true regarding the “Liberalized (FPI):
Remittance Scheme” (LRS)?
(i) FPI is mainly into primary market
(i) It is applicable for Individuals only (ii) FPI investment may happen through
and not companies primary market
(ii) It is applicable for both current and (iii) FPI investment happens only
capital account in equity shares
(iii) Foreign exchange trading is not (iv) FPI investment happens only
permitted in this scheme in debt securities
(a) (i) only (a) (i) only
(b) (i) & (iii) only (b) (ii) only
(c) (ii) & (iii) only (c) (ii) & (iii) only
(d) All of the above (d) None of the above
217. Foreign Direct Investment (FDI) in

India can happen by which of the
following ways:
(i) Foreign Portfolio investments are
more volatile than FDI
(i) Subsidiary
(ii) FDI investors can easily sell their
(ii) Joint Venture
holdings and quit the market
(iii) Acquisition of shares
(iii) Foreign Portfolio investment is
(iv) Purchase of government securities
sector specific
(iv) FDI investment in general target
code given below: the capital market
(a) (i) & (ii) only
(b) (ii) & (iii) only Select the correct answer using the
code given below:
(a) (i) only
regarding Foreign Direct Investment (d) (iv) only
(FDI):
33
(i) A Foreign Portfolio Investor can (b) Department for Promotion of

maximum invest 10 per cent in an Industry and Internal Trade (DPIIT)
Indian Company (c) Reserve Bank of India (RBI)
(ii) When Foreign Investment in an (d) Respective administrative
Indian company is more than 10 Ministry/ Department
per cent it is treated as FDI
Select the correct answer using the (i) Through masala bonds, capital is
code given below: raised in foreign currency
(a) (i) only (ii) Through masala bonds capital is
(b) (ii) only raised in domestic currency
(c) Both (i) & (ii) (iii) By issuance of masala bonds, the
(d) Neither (i) nor (ii) exchange risk is transferred to the
investor
(i) Foreign Direct Investment in India Select the correct answer using the
code given below:
has steadily increased in the last 5
years
(a) (i) only
(ii) Foreign Portfolio Investment in
(b) (ii) only
India has steadily increased in the
last 5 years (d) (ii) & (iii) only
Select the correct answer using the 226. Which of the following measures
code given below: will help in preventing rupee
(a) (i) only depreciation:
(b) (ii) only
(c) Both (i) & (ii) (i) Easing restriction on ECB
(d) Neither (i) nor (ii) (ii) Easing restrictions on raising funds
through Masala Bonds
223. Which of the following statements (iii) Restricting imports of non-
are true regarding Foreign Portfolio essential commodities
Investors (FPIs): (iv) Restricting FPI investments in
India
(i) They fund India’s Current Account
Deficit (CAD) code given below:
(ii) They help in achieving (a) (i) & (ii) only
governments disinvestment target (b) (i) & (iii) only
(iii) They are liable to pay capital gain (c) (i), (ii) & (iii) only
tax in India (d) (iii) & (iv) only
Select the correct answer using the 227. The term "Phantom Capital" was
code given below: recently in the news, is related to which
(a) (i) only of the following:
(c) (iii) only (a) Fake currency notes
(d) All of the above (b) Recapitalization of public sector
banks
224. Foreign Direct Investment in India (c) Circular Flow of Income in an
under "Government Route" is approved economy
by which of the following agency/body: (d) Foreign Direct Investment
(a) Department of Economic Affairs
34
228. Consider the following statements 232. Which of the following constitute
regarding “strategic disinvestment” of Capital Account in BoP?
PSUs:
(i) Global Depository Receipts (GDRs)
(i) Government sells up to 50% or (ii) International Trade Credit
higher percentage of shares to a (iii) Government securities purchased
strategic partner by foreign Investors
(ii) Management control must be (iv) Securities purchased by foreign
transferred to the strategic partner portfolio investors

(a) (i) only
(a) (i) & (ii) only
(b) (ii) only
(b) (iii) & (iv) only
(c) Both (i) & (ii)
229. Which of the following
ministries/departments identify PSUs 233. Which of the following are part of
for “Strategic Disinvestment”? capital account transaction?
(a) Department of Investment and (i) Masala bonds

Public Asset Management (DIPAM) (ii) Purchase of capital equipment
(b) NITI Aayog from abroad
(c) Jointly by DIPAM and NITI Aayog (iii) NRI deposits in Indian banks
(d) Inter-Ministerial body called
‘Alternative Mechanism’ Select the correct answer using the
code given below:
are true regarding “Alternative (b) (i) & (ii) only
Mechanism”? (c) (iii) only
(a) It is an inter-ministerial body to
fasten the process of strategic 234. Which of the following statements
disinvestment will be considered as part of ‘Transfer
(b) It is an inter-ministerial body to Payments’ in balance of payment?
identify PSUs for strategic
disinvestment (i) Gift sent by an NRI to his friend in
(c) It is the nodal department for India
strategic disinvestment (ii) Money sent by an Indian employee
(d) None of the above to his family in India who has gone
abroad temporarily
231. Which of the following will be
included in the balance of payments of Select the correct answer using the
India? code given below:
(i) Factor income of Indian residents (a) (i) only
from abroad (b) (ii) only
(ii) Gift received by a family in India (c) Both (i) & (ii)
from his NRI son (d) Neither (i) nor (ii)
code given below: 235. The Current Account Deficit in
(a) (i) only Balance of Payment can be financed
(b) (ii) only through:
(c) Both (i) & (ii)
35
(i) Net capital inflow Select the correct answer using the
(ii) Foreign exchange reserve code given below:
transaction (a) (i) only
(b) (ii) only
Select the correct answer using the (c) Both (i) & (ii)
code given below: (d) Neither (i) nor
(a) (i) only
(c) Both (i) & (ii) regarding resolution of stressed assets:
(i) RBI can issue directions to banking
companies for resolution of
stressed assets
regarding “Currency Swap Agreement”
(ii) RBI can direct banking companies
between two companies:
to move through IBC 2016 for
resolution of stressed assets only
(i) It is used to obtain foreign currency
upon authorization of Govt. of India
loans at cheaper interest rate
(iii) Lenders require RBI authorization
(ii) It removes the exchange rate risk
for resolution of stressed assets
under IBC Code 2016
(b) (ii) only (a) (i) only
(c) Both (i) & (ii) (b) (i) & (ii) only
(d) Neither (i) nor (ii) (c) (ii) & (iii) only
240. Which of the following kind of
(i) As per the Banking Regulation Act entities are covered under Insolvency
1949, RBI, in public interest, can and Bankruptcy Code 2016?
supersede the management of a (i) Individuals
banking company. (ii) Partnership firms
(ii) As per the RBI Act 1934, RBI, in (iii) Limited Liability Partnerships
public interest can supersede the (iv) Companies
management of a non-banking
financial company Select the correct answer using the
code given below:
Select the correct answer using the (a) only
code given below: (b) & (iv) only
(a) (i) only (c) (ii), (iii) & (iv) only
(b) (ii) only (d) All of the above
(c) Both (i) & (ii)
(d) Neither (i) nor (ii) 241. Which of the following statements
are true regarding the Insolvency and
238. Consider the following statements Bankruptcy Code 2016?
regarding Reserve Bank of India (RBI)
Act 1934: (i) Committee of Creditors consist of
(i) RBI can supersede the only financial creditors
management of a banking company (ii) Operational creditors do not share
under RBI Act 1934 the resolution proceeds
(ii) The Central Government can (iii) NCLT will decide the distribution of
supersede the ‘Central Board’ of proceeds between financial and
RBI under RBI Act 1934 operational creditors
36
Select the correct answer using the (ii) To initiate resolution of FSPs under
code given below: IBC 2016, the appropriate
(a) (i) only regulator should make an
(b) (i) & (ii) only application
(d) (iii) only Select the correct answer using the
code given below:
are true regarding the Insolvency and (b) (ii) only
Bankruptcy Code 2016? (c) Both (i) & (ii)
(i) The resolution plan should be
approved by NCLT 245. Who cannot bid for companies put
(ii) The resolution process must be up for sale under the new Insolvency
completed within 330 days and Bankruptcy Code (IBC):
including litigation (i) A wilful defaulter
(ii) Promoters of the company
(a) (i) only code given below
(b) (ii) only (a) (i) only
(c) Both (i) & (ii) (b) (ii) only
(d) Neither (i) nor (ii) (c) Both (i) & (ii)
regarding Insolvency and Bankruptcy 246. Consider the following statements
Code (IBC) 2016:
regarding the recent amendments done
in IBC 2016:
(i) IBC is applicable for Financial
Service Providers like NBFCs (i) It is applicable for corporate debtor
(ii) Central Government has the
and corporate guarantor
authority to decide which type of (ii) New management is ringfenced
financial service providers will be
from offences committed by the
included for resolution under IBC
erstwhile management
(iii) IBC has not been made applicable
for insolvency of banks Select the correct answer using the
code given below
code given below:
(b) (ii) only
(a) (i) only
(c) Both (i) & (ii)
(b) (i) & (ii) only
(c) (iii) only
244. Consider the following statements are true regarding the SARFAESI Act
regarding resolution of Financial 2002?
Service Providers (FSP) under IBC
2016. (i) It is applicable to banks and NBFCs
both
(i) Govt. of India in consultation with (ii) It allows selling of the security in
appropriate regulator will decide case of secured lending
which category of FSPs can be
taken up for resolution under IBC Select the correct answer using the
2016 code given below:
(a) (i) only
37
(b) (ii) only (iii) Liquidity crunch in the economy

(c) Both (i) & (ii)
code given below:
248. “Liquidity Coverage Ratio” is (a) (i) & (ii) only
defined as a ratio of: (b) (ii) & (iii) only
(a) High quality liquid assets to cash (d) All of the above
outflow for 30 days period
(b) High quality liquid assets to 252. The term “On-lending model” was
deposits of the public in the bank recently in the news is related to which
(c) High quality liquid assets to net of the following?
cash outflow amount over a 30
days period (a) Loan given by NBFCs out of bank
(d) High quality liquid assets to total borrowing to priority sectors will be
lending of banks considered as Priority Sector
Lending
249. Which of the following will be the (b) Loans given by Development
impact of rupee depreciation? Financial Institutions to banks for
(i) Exports will become more further lending
competitive (c) Loans given by banks to
(ii) Exporters will fetch more dollars for Development Financial Institutions
the same amount of goods exported (d) RBI giving loans to NBFCs for
(iii) Demand for domestic goods and onward lending
services will increase
253. Which of the following will deter
Select the correct answer using the investments in the economy?
code given below:
(a) (i) only (i) High real interest rate
(b) (ii) only (ii) High capacity utilization
(d) All of the above Select the correct answer using the
code given below:
regarding cryptocurrencies in India: (b) (ii) only
(i) Trading of cryptocurrencies is (c) Both (i) & (ii)
banned in India (d) Neither (i) nor (ii)
(ii) Cryptocurrencies acquired value
because they can be created only in 254. Consider the following statements
limited number in a market determined exchange rate
system:
code given below: (i) Imposing tariff may not help in
(a) (i) only improving trade balance as the
(b) (ii) only exchange rate moves to offset the
(c) Both (i) & (ii) tariff
(d) Neither (i) nor (ii) (ii) The exchange rate depends on the
demand and supply of the two
251. A reduction in repo rate by RBI may currencies
not be transmitted into lending rate in
the economy because of: Select the correct answer using the
code given below:
(i) Banks cost of funds remaining high (a) (i) only
(ii) Government offering higher (b) (ii) only
interest on its own savings schemes (c) Both (i) & (ii)
38
(d) Neither (i) nor (ii) (c) (ii) & (iii) only
regarding rupee-dollar rate in foreign 259. Microfinance is the provision of
exchange market: financial services to people of low-
income groups. This includes both the
(i) Inflation in the domestic economy consumers and the self-employed.
will lead to rupee depreciation Services rendered under microfinance
(ii) Rupee depreciation will lead to is/are:
inflation in the domestic goods in
the economy (i) Credit facilities
(ii) Savings facilities
Select the correct answer using the (iii) Insurance facilities
code given below: (iv) Fund transfer facilities
(a) (i) only
(b) (ii) only Select the correct answer using the
(c) Both (i) & (ii) codes given below the lists:
(d) Neither (i) nor (ii) (a) (i) only
(b) (i) & (iv) only
256. Which of the following activities will (c) (ii) & (iii) only
increase liquidity in the economy?
(d) (i), (ii), (iii) & (iv)
(i) Advance tax payment
(ii) Tax refunds for GST
regarding lending by “Microfinance
(iii) Front loading of government
Institutions (MFIs)”:
expenditure
(iv) Recapitalization of public sector
(i) RBI has put a cap on household
banks
income limit to avail credit from
MFIs
(ii) RBI has increased the lending limit
code given below:
by MFIs per borrower to Rs. 1.25
lakhs
(b) (ii), (iii) & (iv) only
code given below:
257. The problem of international (a) (i) only
(b) (ii) only
liquidity is related to the non-
(c) Both (i) & (ii)
availability of:
(a) Goods and services
(b) Gold and silver
(c) Dollars and other hard currencies
regarding ‘White Label ATMs (WLAs)’:
(d) Exportable surplus
(i) ATMs set up, owned and operated
258. Surplus liquidity in the economy by non-banks are called WLAs
may result in which of the following: (ii) Non-bank ATM operators are
(i) Softening of bond yield authorized under the Payment and
(ii) Reduction in cost of capital Settlement Systems Act, 2007 by
(iii) Depreciation of currency RBI.
(a) (ii) only (a) (i) only
(b) (i) & (iii) only (b) (ii) only
39
(c) Both (i) & (ii) 265. Consider the following statements
(d) Neither (i) nor (ii) regarding ‘Advance Pricing Agreement’:
262. Consider the following statements: (i) It is an agreement between a tax

authority and a tax payer
(i) Debt overhang refers to a debt (ii) It is an agreement between two
burden so large that an entity governments
cannot take on additional debt to (iii) It is an agreement to discover the
finance future projects. pricing methodology between
(ii) Debt trap is a situation in which it related company transactions
becomes difficult or impossible to (iv) It helps in making a country an
repay the debt attractive destination for foreign
investments
(a) (i) only codes given below the lists:
(b) (ii) only (a) (i) & (iii)only
(c) Both (i) & (ii) (b) (ii) & (iii) only
(d) Neither (i) nor (ii) (c) (ii) & (iv) only
regarding ‘Circuit Breaker’: 266. Enforcement Directorate enforces
which of the following laws:
(i) Circuit breaker applies when the
stock or indices moves too much in (i) Foreign Exchange Management Act
either direction (FEMA) Act 1999
(ii) Circuit breakers when triggered
(ii) Prevention of Money Laundering
may bring about a coordinated
Act (PMLA) 2002
trading halt in all the equity
markets nationwide
code given below:
(a) (i) only
code given below:
(b) (ii) only
(a) (i) only
(b) (ii) only (c) Both (i) & (i)
(c) Both (i) & (ii) (d) Neither (i) nor (ii)
267. In case of the recent Yes Bank
264. The term ‘Transfer Pricing’ was crisis:
recently in the news, it is related to (i) RBI superseded the Board of ‘Yes
which of the following? Bank’ through RBI Act 1934
(ii) RBI acted as ‘Lender of Last Resort’
(a) The price at which one company
sells intermediate goods to other Select the correct answer using the
companies code given below:
(b) The price at which goods are (a) (i) only
transferred within group (b) (ii) only
companies (c) Both (i) & (i)
(c) The price at which goods are (d) Neither (i) nor (ii)
transferred between shell
companies
(d) The price at which one company
transfers its goods from one state to
another state for stocking purpose
40
268. Which of the following figures are (b) It measures development outcomes
presented as part of the Budget of govt. programmes
presentation in Parliament? (c) It helps in better service delivery
(d) It reduces unnecessary expenses
(i) Budgeted receipts and expenses for
the next Financial Year (FY) 272. Consider the following statements
(ii) Budgeted receipts and expenses for regarding 'Contingency Fund of India'
the current FY
(iii) Revised receipts and expenses for (i) The fund is at the disposal of the
the current FY president of India
(iv) Actual receipts and expenses for (ii) The fund is at the disposal of the
the last FY Prime Minister of India
(iii) The funds spent shall ultimately be
Select the correct answer using the approved by the parliament
code given below: (iv) The funds spent are recouped from
(a) (i) only the Consolidated Fund of India
(b) (i) & (ii) only
(c) (i), (ii), & (iii) only Select the correct answer using the
(a) (i) only
269. Consider the following statements (b) (ii) & (iv) only
regarding presentation of Budget in the (c) (i), (iii) & (iv) only
Parliament: (d) (i) & (iv) only
(i) Finance Bill is introduced on the 273. Surplus reserve of RBI transferred
very first day when the Finance to Government of India (GOI) will come
Minister presents Budget in the under which of the following?
Parliament
(ii) Appropriation Bill is introduced (a) Market borrowings and other
after the voting on demand for liabilities
grants is over (b) Non-tax revenue receipts
(c) Non-debt capital receipts
Select the correct answer using the (d) Debt receipts
code given below:
(a) (i) only 274. The Grants-in-aid given by the
(b) (ii) only Central Government to the State
(c) Both (i) & (ii) Governments and local bodies for
(d) Neither (i) nor (ii) creation of capital assets are classified
in the Union budget under?
270. Which of the following department
prepares outcome budget? (a) Revenue expenditure
(b) Capital Expenditure
(a) Public finance division under (c) Both Revenue and Capital
department of expenditure expenditure
(b) Budget division under department (d) None of the above
of Economic affairs
(c) Department of financial services 275. Which of the following are Non-Tax
(d) NITI Aayog Receipts of the Central Government?
271. Which of the following statement is (i) Issue of Passport and Visa
not true regarding "Outcome Budget": (ii) Registration of Companies
(iii) Royalty from on shore oilfields
(a) It is not presented in parliament (iv) Royalty from offshore oilfields
41

code given below: (b) (ii) & (iii) only
(a) (i) only (c) (i) & (iii) only
(b) (i), (ii) & (iii) only (d) All of the above
(d) All of the above 279. Which of the following are part of
capital budget of Govt. of India?
276. Which of the following are Non-debt
capital receipts of Govt. of India? (i) Issuance of Sovereign Gold Bonds
(ii) Receipt from Gold Monetization
(i) Disinvestment
(ii) Recovery of loans Select the correct answer using the
(iii) Public Account receipts code given below:
(iv) Treasury Bills (a) (i) only
(b) (ii) only
Select the correct answer using the (c) Both (i) & (ii)
code given below: (d) Neither (i) nor (ii)
(a) (i) only
(b) (i) & (ii) only 280. Which of the following are revenue
(c) (iii) & (iv) only receipts of Central Government
budget?
(i) RBI paying dividend to govt. of
India
Capital Budget of Govt. of India?
(ii) PSUs paying dividend to govt. of
India
(i) Proceeds received in the public
(iii) PSUs earnings
account of India
(iv) Proceeds from sale of govt. land
(ii) PSUs purchasing capital
equipment
(iii) Establishment of “India Post
code given below:
Payment Bank”
(a) (i) only
(b) (i) & (ii) only
code given below:
(a) (i) only
281. Tax revenue collection in our
country mainly depends on which of
the following:
278. Which of the following is/are (i) Nominal GDP

included in the capital budget of the
(ii) Real GDP
Government of India?
(i) Expenditure on acquisition of
code given below:
assets like roads, buildings,
(a) (i) only
machinery, etc.
(b) (ii) only
(ii) Loans received from foreign (c) Both (i) & (ii)
governments (d) Neither (i) nor (ii)
(iii) Loans and advances granted to the
States and Union Territories 282. “Tax Buoyancy” in the economy is
defined as:
code given below.
42
(i) Ratio of percentage change in tax 285. Fiscal Deficit is equal to:
revenue to percentage change in
GDP (i) Total expenditure minus total
(ii) Ratio of change in tax revenue to receipts
change in GDP (ii) Total expenditure minus total
(iii) Percentage increase in tax revenues receipts excluding borrowing
as measured from previous year (iii) Revenue deficit plus capital
(iv) Incremental change in tax revenues expenditure minus non debt
required to increase the GDP by creating capital receipts
one percent (iv) Total borrowing
(a) (i) only (a) (i) & (iv) only
(b) (i) & (ii) only (b) (ii) & (iii) only
(c) (iii) only (c) (ii), (iii) & (iv) only
(d) (ii) & (iv) only (d) All of the above
283. Which of the following receipts goes 286. Fiscal Deficit of the Government of
to Public Account of India: India is equal to which of the following:
(i) Treasury Bills (a) Debt creating capital receipts

(ii) Kisan Vikas Patra (b) Non-Debt capital receipts
(iii) Sukanya Samriddhi Account (c) Debt and non-debt capital receipts
(iv) Public Provident Fund (d) Capital receipts less of revenue
receipts
given below: 287. There has been a persistent deficit
(a) (i) & (iv) only budget year after year. Which of the
(b) (ii) & (iii) only following actions can be taken by the
(c) (ii), (iii) & (iv) only Government to reduce the deficit?
(i) Reducing revenue expenditure
284. Consider the following statements (ii) Introducing new welfare schemes
regarding the "National Small Savings (iii) Rationalizing subsidies
Funds (NSSF)": (iv) Expanding industries
(i) The proceeds of small savings Select the correct answer using the
scheme of Central government goes code given below.
to NSSF (a) (i) & (iii) only
(ii) NSSF is a part of Public Account of (b) (ii) & (iii) only
India (c) (i) only
(iii) NSSF is a part of Consolidated (d) (i), (ii), (iii) & (iv) only
Fund of India (CFI)
Select the correct answer using the code regarding the government’s fiscal
given below: deficit:
(a) (i) only
(b) (i) & (ii) only (i) It may be inflationary
(c) (i) & (iii) only (ii) It may not be inflationary
(d) (iii) only (iii) It raises aggregate demand
43
Select the correct answer using the (i) It is a strategy to boost sluggish
code given below: economy
(a) (i) only (ii) RBI pumps money into the
(b) (ii) only economy
(c) (i) & (iii) only (iii) Government reduces subsidies
(d) All of the above (iv) Public spending increases
289. Postponing the "Fiscal Deficit" Select the correct answer using the
target or Fiscal Slippage may result in code given below:
which of the following: (a) (i) & (ii) only
(b) (i), (ii), & (iv) only
(i) Decrease in bond prices (c) (i), (iii) & (iv) only
(ii) Increase in bond yield (d) (i) & (iv) only
(iii) Increase in market interest rates
(iv) Decrease in market interest rates 293. Consider the following statements
regarding "counter-cyclical" fiscal
Select the correct answer using the policy:
code given below: (i) Government uses the counter
(a) (i) & (ii) only cyclical policy to cool down the
(b) (i) & (iii) only economy during boom period
(c) (ii) & (iii) only (ii) In counter cyclical policy,
(d) (i), (ii) & (iii) only government increases spending
and reduces taxes during economic
290. Which of the following can finance slowdown
Govt. of India’s fiscal deficit?
given below:
(i) Foreign Direct Investment (FDI) (a) (i) only
(ii) Foreign Portfolio Investment (FPI)
(b) (ii) only
(c) Both (i) & (i)
code given below:
(a) (i) only
(c) Both (i) (ii) regarding ‘Fiscal Consolidation’ policy:
(i) It is an effort by the government to
291. Consider the following statements: bring down fiscal deficit
(ii) It is an effort to reduce public debt
(i) Fiscal deficit increases aggregate (iii) It is an effort to reduce current
demand in the economy account deficit
(ii) Fiscal deficit is financed by (iv) It is an effort to raise revenues and
borrowing from RBI bring down wasteful expenses
(a) (i) only (a) (i), (ii) & (iii) only
(b) (ii) only (b) (i), (ii) & (iv) only
(c) Both (i) & (ii) (c) (iv) only
(d) Neither (i) nor (ii) (d) All of the above
292. Which of the following statements 295. Which of the following statement is
are true regarding "fiscal stimulus": true regarding “Tax Base”?
44
(a) It is the number of people falling Select the correct answer using the
under tax net code given below:
(b) It is the number of people and (a) (i) only
business units under tax net (b) (ii) only
(c) It is the income of people which can (c) Both (i) & (ii)
be taxed by the government (d) Neither (i) nor (ii)
(d) It is the aggregate value of financial
streams on which tax can be 299. Consider the following statements
imposed by the government regarding Goods and Services Tax
(GST):
regarding "Tax Avoidance" and (i) Taxes need to be paid at each point
"General Anti Avoidance Rules in the value chain
(GAAR)": (ii) It will have input tax credit
mechanism
(i) Tax avoidance is legal
(iii) The total taxes will be passed on to
(ii) Tax avoidance is illegal
the consumers
(iii) GAAR target business transactions
that are entered into with the
objective of avoiding tax code given below:
(iv) GAAR target transactions entered (a) (i) & (ii) only
into for tax evasion and tax (b) (i) & (iii) only
avoidance both (c) (ii) & (iii) only
given below:
regarding GST:
(b) (i) & (iv) only
(c) (ii) & (iii) only (i) The market price of a product will
(d) (ii) & (iv) only be same all across India
(ii) The producing State will not get
297. Which of the following taxes are GST
regressive in nature?
(iii) It will allow seamless passage of
input tax credit across States
(i) Income Tax
(iv) It will not lead to cascading effect of
(ii) Sales Tax
taxes
(iii) Goods & Services Tax (GST)
(iv) Value Added Tax (VAT)
code given below:
(a) (i) & (ii) only
code given below:
(a) (i) only
(b) (ii) only
(c) (i) & (ii) only
301. GST will lead to formalization of the
Indian economy because of the
following reasons.
regarding Goods and Services Tax
(GST):
(a) GST is consumption/ destination-
(i) GST is a value added tax
based tax
(ii) GST is a multipoint destination (b) GST has input tax credit
based tax mechanism
45
(c) All the businesses have to pay GST (b) (ii) only
without any threshold limit (c) (i) & (iii) only
(d) GST will be levied on goods and (d) All of the above
services both
302. Consider the following statements regarding Goods and Services Tax?
regarding IGST:
(i) It will lead to harmonization of
(i) It is levied by the Centre on inter- taxes
state supply of goods (ii) Supplies to exports are zero rated
(ii) The IGST rate is equal to CGST plus
the SGST/UTGST rate Select the correct answer using the
(iii) The tax revenue is shared equally code given below:
among the Centre and the (a) (i) only
consuming State/UT (b) (ii) only
(c) Both (i) & (ii)
Select the correct answer using the (d) Neither (i) nor (ii)
code given below:
(a) (i) only 306. Consider the following statements
(b) (ii) only regarding import of goods and services
(c) (i) & (iii) only in India:
(d) All of the above (i) They are treated as inter-state
supplies
(ii) Customs duty and IGST both are
303. What does "Revenue Neutral Tax applicable
Rate" means in reference to the Goods (iii) Only IGST is applicable
and Services Tax": (iv) Imports are zero-rated
(a) That GST rate at which tax Select the correct answer using the
(indirect) revenues of States and code given below:
Centre will not get impacted after (a) (i) & (ii) only
implementation of GST (b) (i) & (iii) only
(b) The tax rate will be same for the (c) (iii) only
Centre and State (d) (i) & (iv) only
(c) The tax rate at which Central and
States revenues will be same 307. Which of the following statements
(d) All of the above are true regarding the "Electronic - Way
Bill"?
regarding the GST Compensation Cess: (i) It is mandatory as per the GST law
(ii) It is a replacement of the Way Bill
(i) It is levied and collected by the which was required under the VAT
Centre regime
(ii) GST compensation fund has been (iii) It is required for goods transported
established in Consolidated Fund worth more than Rs. 50,000/-
of India (iv) It will check tax evasion
(iii) The States will be compensated if
their nominal revenue growth is Select the correct answer using the
less than 14% after the code given below:
implementation of GST. (a) (i) only
(b) (i) & (iv) only
Select the correct answer using the (c) (i) & (iii) only
code given below: (d) All of the above
(a) (i) only
46
308. Consider the following statements (d) All of the above

regarding "Composition Scheme" in
GST: 311. The term ‘Crowd-in’ in the economy
(i) It exempts small taxpayers from is related to which of the following?
payment of GST
(ii) It allows small businesses to pay (i) Targeted government spending acts
tax at a fix percent of their turnover as an engine of growth in the short
(iii) It reduces the compliance cost for run
small businesses (ii) Government spending
complements the private
Select the correct answer using the investment
code given below: (iii) Government spending substitutes
(a) (i) only the private investment
(b) (i) & (iii) only (iv) Government spending boosts
(c) (ii) only demand for goods which in turn
(d) (ii) & (iii) only increases private demand
regarding the Goods and Services Tax code given below:
Network (GSTN): (a) (i) & (ii) only
(i) It is a non-government, private (c) (i), (ii) & (iv) only
limited company (d) (i), (iii) & (iv) only
(ii) It is a not for profit company
Select the correct answer using the regarding the “Inverted Duty
code given below: Structure” in international trade:
(a) (i) only
(b) (ii) only (i) It makes domestic manufactured
(c) Both (i) & (ii) goods less competitive against
(d) Neither (i) nor (ii) finished product imports in the
domestic market.
310. The term ‘Crowd-out’ in economy is (ii) Finished goods are taxed at higher
related to which of the following: rate than the raw materials
(iii) Raw materials are taxed at higher
(i) Increased public sector spending rate than the finished products
replaces private sector spending (iv) This has reference to Customs
(ii) Governments deficit spending Duty
through borrowed money leads to
hardening of interest rates Select the correct answer using the
(iii) Government spending uses up code given below:
financial resources that would (a) (i) & (ii) only
otherwise be used by private firms (b) (i) & (iii) only
(iv) Government providing a service or (c) (i) & (iv) only
good that would otherwise be a (d) (i), (iii) & (iv) only
business opportunity for private
industry 313. Consider the following statements
regarding inverted duty structure in
Select the correct answer using the GST:
code given below: (i) It is the result of several tax slabs
(a) (i) only in our GST structure
(b) (i) & (ii) only (ii) It creates problem in claiming input
(c) (ii) & (iii) only tax credit
47
Select the correct answer using the (c) Raising taxes to provide funds to
code given below: repay the maturing bonds
(a) (i) only (d) Print additional paper currency to
(b) (ii) only meet maturing obligations
(c) Both (i) & (ii)
are true regarding “Deficit Financing”?
regarding use of Aadhar for benefit (i) It raises aggregate demand in the
transfer: economy
(i) The money can be drawn only from (ii) It may result in inflation in
the Consolidated Fund of India economy
(ii) The States can also use Aadhar to (iii) It is used as a developmental tool
transfer benefit from Consolidated by developing countries
Fund of States (iv) It is done by issuing government
(iii) Central government can make bonds
Aadhar mandatory for
authentication to provide any Select the correct answer using the
subsidy code given below:
(iv) It can be used for transfer of benefit (a) (i) & (ii) only
to individuals who are residing in (b) (i), (ii) & (iii) only
India for more than 182 days (c) (iii) & (iv) only
code given below: 318. Inflation acts as a tax in the
(a) (i) only economy. This tax is:
(b) (ii) & (iv) only (a) Progressive
(c) (i), (iii) & (iv) only (b) Proportional
(d) (ii), (iii) & (iv) only (c) Regressive
315. The term “Pump Priming” means:
(i) It is a way to stimulate the economy are correct?
by reducing tax (i) Progressiveness in personal income
(ii) It is done in economic slowdown by tax can be increased by having
increasing government spending more tax slabs
(iii) RBI prints extra money (ii) Redistribution of income can help
in stimulating the economy by
Select the correct answer using the increasing consumption
code given below:
(b) (i) & (ii) only code given below:
(c) (iii) only (a) (i) only
(d) All of the above (b) (ii) only
(c) Both (i) & (i)
316. When a portion of public debt falls (d) Neither (i) nor (ii)
due, refinancing of public debt is done
by: 320. Consider the following statements
regarding the Corporate Income Tax
(a) Selling new bonds and using which the government reduced
proceeds to pay off holders of effectively to 25.17%:
maturity bonds
(b) Extending maturity of debt by (i) It is applicable for Indian
raising the interest payable on rate Companies
maturing debt
48
(ii) It is applicable for domestic (ii) It comes under Department of

companies Expenditure, Ministry of Finance
(iii) It is applicable only if the (iii) It is an end to end online solution
companies are not availing various for processing payments,
exemptions reconciliation and reporting of
(iv) The above rate is including Cess central schemes
and Surcharge (iv) It tracks fund utilization up to the
last mile for central schemes
code given below:
code given below:
321. Which department decides the
outlay for Centrally Sponsored Scheme
(CSS)
regarding the Fifteenth Finance
Commission (FFC) recommendations:
(a) NITI Aayog
(b) Public Finance Division under
(i) It has recommended 41%
department of Expenditure
devolution from Central taxes to
(c) Economic Division under States in 2020-21
department of Economic Affairs (ii) It has recommended 1% devolution
(d) None of the above from Central taxes to the Union
Territories of J&K and Ladakh
322. Consider the following statements 2020-21
regarding the Centrally Sponsored
Schemes (CSCs): Select the correct answer using the
code given below:
(i) Central government gives grant to (a) (i) only
States to implement these schemes (b) (ii) only
(ii) For Central government, most of (c) Both (i) & (ii)
the expenditure on CSCs is revenue (d) Neither (i) nor (ii)
expenditure
(iii) Central government transfers the 325. Consider the following statements
amount to either State regarding the Fifteenth Finance
Consolidated Fund or directly to Commission (FFC) recommendations:
State implementing agencies
(i) For horizontal devolution, the
Select the correct answer using the population of 2011 Census will be
code given below: considered
(a) (i) only (ii) There are six parameters for
(b) (i) & (ii) only horizontal devolution out of which
(c) (ii) & (iii) only ‘Tax Effort’ is one
regarding the "Public Finance (a) (i) only
Management System (PFMS)": (b) (ii) only
(c) Both (i) & (ii)
(i) It comes under the office of (d) Neither (i) nor (ii)
Controller General of Accounts,
Ministry of Finance
49
326. Consider the following statements (iii) NRI deposits

regarding the “Grants in Aid” (iv) Foreign Direct Investment in India
recommended by the Fifteenth Finance (FDI)
Commission (FFC) for the year 2020-
21: Select the correct answer using the
code given below:
(i) It has recommended revenue deficit (a) (i) only
and local body grants (b) (i) & (iii) only
(ii) It has recommended sector specific (c) (i), (ii) & (iii) only
and performance grants (d) (ii) & (iv) only
(iii) It has recommended State-specific
grants
India’s External Debt?
code given below:
(i) External Commercial Borrowing
(a) (i) only
(ECB)
(ii) NRI Deposits
(d) All of the above (iii) Investments made by Portfolio
Investors in debt securities
327. Which UT/State’s per capita SGDP (iv) Portfolio Investors purchasing
has been taken as the reference by the government securities
Fifteenth Finance Commission for
calculating the ‘income distance’? Select the correct answer using the
code given below:
(a) Goa (a) (i) only
(b) Haryana (b) (iv) only
(c) Delhi (c) (i), (iii) & (iv) only
(d) Maharashtra (d) All of the above
328. Which of the following items had 332. Consider the following regarding
the highest share of expenditure in the India’s external debt:
overall budget of GoI in 2019-20?
(i) It is around 20% of GDP
(a) Salary and Pension (ii) Sovereign Debt is less than 5% of
(b) Interest payment GDP
(c) Capital Expenditure (iii) External Commercial Borrowings
(d) Explicit Subsidies (ECB) has the highest share in
India’s external debt
329. Which is the biggest source of
budgetary receipts in the year 2019-20 Select the correct answer using the
for Govt. of India? code given below:
(a) (i) & (ii) only
(a) Corporation Tax (b) (iii) only
(b) Income Tax (c) (i) & (iii) only
(c) Goods and Services Tax (d) All of the above
(d) Borrowings
330. The Public Debt of Government of (i) States and UTs combined
India includes which of the following: expenditure is more than Central
government expenditure
(i) Treasury Bills (ii) States and UTs combined
(ii) External Commercial Borrowing borrowing is more than Central
(ECB) government borrowing
50
Select the correct answer using the (iii) The States require Finance
code given below: Commission approval to deviate
(a) (i) only from their fiscal deficit target
(b) (ii) only
(c) Both (i) & (ii) Select the correct answer using the
(d) Neither (i) nor (ii) code given below:
(a) (i) & (ii) only
334. Which of the following statements (b) (iii) only
are true regarding FRBM Act 2003? (c) (i) & (iii) only
(i) RBI can subscribe to the primary (d) All of the above
issues of Central government
securities 337. “Central Government Debt”
(ii) RBI can fund Central government includes which of the following?
fiscal deficit (i) Outstanding liabilities on the
(iii) Central government can take security of the Consolidated Fund
advance from RBI in case there is a of India
mismatch in cash disbursements (ii) Outstanding liabilities in the Public
and cash receipts Account of India
(iii) Off-budget liabilities
(b) (i) & (iii) only (a) (i) only
(c) (ii) & (iii) only (b) (i) & (ii) only
(d) (iii) only (c) (ii) & (iii) only
335. As per the FRBM Act 2003, Central
Government shall endeavour to ensure 338. Consider the following statements
that: regarding Forex Reserves:
(i) The general government debt shall
not exceed 60% of GDP by 2024-25 (i) The country’s Forex Reserves fully
(ii) The central government debt shall covers the external debt
not exceed 40% of GDP by 2024-25 (ii) The country’s Forex Reserves fully
(iii) The central government shall not covers its one-year imports of goods
give additional guarantees on loan and services
in excess of 0.5% of GDP in any
financial year Select the correct answer using the
code given below:
(a) (ii) only (c) Both (i) & (ii)
(b) (iii) only (d) Neither (i) nor (ii)
(c) (i) & (ii) only
(d) All of the above 339. India’s external liabilities include
which of the following?
336. Consider the following statements: (i) FDI investment in India
(ii) FPI’s debt and equity investments
(i) FRBM Act 2003 has provided for an in India
escape clause in which central
government can deviate from the Select the correct answer using the
fiscal deficit target by 0.5% code given below:
(ii) The central government has also (a) (i) only
approved for additional fiscal deficit (b) (ii) only
to States by 0.5% over and above (c) Both (i) & (ii)
the normal limit of 3% (d) Neither (i) nor (ii)
51
340. Which of the following is not a case (a) (i) only

of Centre’s Off Budget Borrowings? (b) (ii) only
(c) Both (i) & (ii)
(a) Borrowing by FCI to fund the food (d) Neither (i) nor (ii)
subsidy programme
(b) Borrowing by HUDCO to fund the
affordable housing programme
(c) Borrowing by NABARD for govts’
irrigation projects
(d) Borrowing by NTPC for its power
generation projects
341. The "Internal and Extra Budgetary

Resources" of Central Public Sector
Undertakings (CPSUs) include which of
the following:
(i) Profit of the CPSUs

(ii) Domestic and foreign loans raised
by the CPSUs

given below:
(a) (i) only
(b) (ii) only
(c) Both (i) & (i)

regarding the “e-assessment scheme”:
(i) It allows faceless assessment of

taxpayers
(ii) It is for direct taxpayers
(iii) The national e-assessment centre
is based in Mumbai

code given below:
(a) (i) only
(b) (ii) only
(c) (i) & (ii) only

regarding “Vivad se Viswas” scheme
proposed in the budget:
(i) It is only for direct taxes

(ii) The objective is to generate timely
revenue for the government

code given below:
52
344. Consider the following statements: Select the correct answer using the
code given below:
(i) Agriculture GDP at constant prices (a) (i) only
has steadily increased in the last 10 (b) (ii) only
years (c) Both (i) & (ii)
(ii) GDP at constant prices has steadily (d) Neither (i) nor (ii)
increased in the last 10 years.
code given below: (i) Department of fisheries is under
(a) (i) only Ministry of Agriculture and
(b) (ii) only Farmers’ welfare
(c) Both (i) & (ii) (ii) Department of Animal Husbandry
(d) Neither (i) nor (ii) and dairying is under Ministry of
Agriculture and Farmers’ Welfare
345. Consider the following statements: (iii) Department of Agriculture and
Cooperation released the 20th
(i) Horticulture production is more Livestock Census
than food grain production in India
in the last few years Select the correct answer using the
(ii) Agriculture credit target for the code given below:
year 2020-21 has been set at Rs. 15 (a) (i) only
lakh crores in the budget (b) (i) & (ii) only
code given below:
(a) (i) only 349. Which of the following statements
(b) (ii) only are true regarding the Model
(c) Both (i) & (ii) Agricultural Land Leasing Act 2016?
(i) The model act allows consolidation
346. Consider the following statements of farm land
regarding ‘cropping intensity’: (ii) The duration of lease and the
consideration amount is regulated
(i) Cropping intensity is calculated as by the government
the ratio of gross cropped area to (iii) The model act does not allow
net sown leasing of land for animal
(ii) It is less than 100% in India husbandry purposes
Select the correct answer using the Select the correct answer using the code
code given below: given below:
(a) (i) only (a) (i) only
(b) (ii) only (b) (i) & (iii) only
(c) (ii) only
(c) Both (i) & (ii)
347. Consider the following statements regarding electronic National
regarding Minimum Support Price Agriculture Market (e-NAM)
(MSP):
(i) MSP is calculated 50% over actual
(i) It will ensure that the people get the
paid out costs
agri-commodities at the same price
(ii) Government announces MSP for over the entire country
commercial crops also
53
(ii) Farmers can sell their agri-produce 354. Consider the following statements
through e-NAM sitting at their regarding organic foods in India:
homes without bringing it in the
physical APMC mandis (i) FSSAI regulates organic foods in
India
Select the correct answer using the (ii) Any food to be sold as ‘organic’ in
code given below: India must be certified through
(a) (i) only National Program for Organic
(b) (ii) only Production (NPOP)
(c) Both (i) & (ii) (iii) ‘Jaivik Bharat’ is a logo developed
(d) Neither (i) nor (ii) by FSSAI for organic products in
India
are true regarding the Model Select the correct answer using the
Agriculture Produce and Livestock code given below:
Marketing Act 2017? (a) (i) only
(b) (iii) only
(i) It allows private wholesale mandi (c) (i) & (iii) only
trade (d) All of the above
(ii) It allows contract farming
(iii) The law proposes a cap on 355. Consider the following statements
market/mandi fee regarding "Krishi Vigyan Kendras
(KVKs)":
given below: (i) KVKs are completely financed by
(a) (i) only Govt. of India
(b) (ii) only (ii) KVKs are financed jointly by Govt.
(c) (ii) & (iii) only of India and the State governments
(d) All of the above (iii) KVKs work as knowledge and
resource centre of agricultural
352. Which of the following statements technologies to make it available to
are true regarding the Model Contract farmers
Farming Act 2018? (iv) KVKs produce quality product to
make it available to farmers
(i) It proposes establishment of State
level Contract Farming Authority Select the correct answer using the
(ii) FPOs are allowed to sign contract
code given below:
farming agreements with bulk
buyers
(b) (ii) & (ii) only
given below:
(a) (i) only
(b) (ii) only 356. Which of the following statements
(c) Both (i) & (ii) are true regarding “Farmer Producer
(d) Neither (i) nor (ii) Organization” (FPO):
353. Participatory Guarantee System for (i) It is a legal entity formed by

India (PGS-India) is related to which of farmers, fishermen, rural artisans
the following: etc.
(a) Organic Farming (ii) NABARD is providing support for
promotion of FPOs
(b) Patents
(c) Banking
code given below:
54
(a) (i) only (ii) The farmer is allowed to sell his

(b) (ii) only unbranded farm produce including
(c) Both (i) & (ii) seed of a variety protected under
(d) Neither (i) nor (ii) this act
regarding the scheme PM-KISAN: code given below:
(a) (i) only
(i) All the farmers are eligible without (b) (ii) only
any exception (c) Both (i) & (ii)
(ii) The scheme will not be inflationary (d) Neither (i) nor (ii)
in nature
Select the correct answer using the regarding “National Gene Fund”:
code given below:
(a) (i) only (i) It has been established under
(b) (ii) only Protection of Plant Varieties and
(c) Both (i) & (ii) Farmers Rights Act 2001
(d) Neither (i) nor (ii) (ii) It has been established under
Indian Patent Act 1970
358. Consider the following statements: (iii) It will receive benefit sharing from
(i) Fishing contributes around 1% in the breeder
overall GDP
(ii) Livestock contributes around 5% in Select the correct answer using the
overall GDP code given below:
(a) (i) only
Select the correct answer using the (b) (ii) only
code given below: (c) (i) & (ii) only
(a) (i) only (d) (i) & (iii) only
(b) (ii) only
(c) Both (i) & (ii) 362. FCI stores the food grains procured
(d) Neither (i) nor (ii) for the central pool in the following:
359. Consider the following statements: (i) FCI’s own godowns

(ii) Central Warehousing godowns
(i) India is the largest exporter of rice (iii) State Warehousing godowns
in the world (iv) Godowns hired from private sector
(ii) India is the largest producer of milk
in the world Select the correct answer using the
code given below:
code given below: (b) (i), (ii) & (iii) only
(a) (i) only (c) (ii) & (iv)
(b) (ii) only (d) All of the above
(c) Both (i) & (ii)
(d) Neither (i) nor (ii) 363. “Private Entrepreneurs Guarantee
Scheme” is related to which of the
360. Consider the following statements following?
regarding “Protection of Plant Varieties (a) Construction of Godowns in PPP
and Farmers Rights (PPVFR) Act 2001: mode
(b) Construction of Mega Food Parks
(i) The ‘Breeder’ of the new variety will by private developers
decide the royalty (c) Export promotion
(d) Promotion of MSMEs
55
364. Which of the following statements 368. The term ‘under-recovery’ was
are true regarding “Open Market Sale recently in the news, is related to which
Scheme”: of the following?
(a) It is done by Reserve Bank of India (a) Government spending more on the
to sell Govt. securities subsidies than the budgeted
(b) It is done by Food Corporation of amount
India to sell food grains (b) Cost incurred by PSU’s in providing
(c) It is done by Securities and subsidies
Exchange Board of India (SEBI) to (c) Government giving exemptions on
sell shares certain types of taxes
(d) It is done by companies listed on (d) Central government getting less
stock exchange to issue shares repayment on loans given to States
365. Consider the following statements 369. Consider the following statements
regarding “Central Issue Price” (CIP): regarding Urea subsidy:
(i) It is the price at which food grains (i) The subsidy amount is transferred
are issued to the state governments directly into farmers account
(ii) It is fixed by Food Corporation of (ii) The per kg subsidy amount is fixed
India and does not change with market
(iii) The present CIP for rice and wheat fluctuation
is Rs. 3/kg and Rs. 2/kg (iii) Price of Urea is regulated by the
respectively government
(a) (i) only (a) (i) & (ii) only
(b) (ii) & (iii) only (b) (ii) & (iii) only
(c) (i) & (iii) only (c) (iii) only
(d) (iii) only (d) All of the above
366. Consider the following statements 370. Consider the following statements
regarding the 20th Livestock Census: regarding the 'Nutrient Based Subsidy'
(NBS) Scheme.
(i) Uttar Pradesh has the largest
number of cattle populations (i) It is given for phosphatic and
(ii) Maharashtra has the largest potassic fertilizers
poultry population (ii) It is given for urea
(iii) The prices of fertilizers under
Select the correct answer using the nutrient based scheme are
code given below: regulated by the government
(a) (i) only
(iv) Subsidy is based on per kg of
(b) (ii) only
nutrients present in the fertilizer
(c) Both (i) & (ii)
code given below:
367. Recently the term “Economic
Threshold Limit” was there in the news.
It is related to which of the following? (b) (ii) & (iii) only
(c) (i) & (iv) only
(a) Potential GDP growth (d) (iii) & (iv) only
(b) Capacity utilization of the economy
(c) Pest management for crops
(d) Underground water level
56
371. Consider the following statements: (i) It is under ministry of Agriculture

and Farmers Welfare
(i) Minimum Export Price (MEP) is the (ii) The fund is utilized to grant
price below which exports are not working capital loan to central
permitted agencies
(ii) MEP is imposed to curb the price (iii) The scheme promotes direct
rise and prevent disruptions in purchase of farm produce from the
domestic supply farmers
(iii) Minimum Import Price (MIP) is the
price below which imports are not
code given below:
allowed
(a) (i) only
(iv) MIP is imposed to curb imports and (b) (i) & (ii) only
protect domestic producers (c) (ii) & (iii) only
code given below: 375. Consider the following statements
(a) (i) & (iii) only regarding the onion price spike last
(b) (ii) & (iii) only year:
(c) (ii), (iii) & (iv) only (i) Central government put stocking
(d) All of the above limits on retailers and wholesalers
under Essential Commodities Act
372. Consider the following statements 1955
regarding "Warehouse Receipts": (ii) National Agricultural Cooperative
Marketing Federation of India
(i) They are issued as per the (NAFED) and National Cooperative
Warehousing (Development & Consumers Federation of India
Regulation) Act 2007 (NCCF) provided onions at cheaper
(ii) Warehousing Development & prices in the markets
Regulatory Authority (WDRA) is (iii) NAFED and NCCF are registered as
under ministry of Commerce and Multi-State Cooperative Societies
Industry
(iii) Warehouse receipts are negotiable
code given below:
(iv) These receipts are govt. recognized
(a) (i) only
and can be used for taking loan
(b) (ii) only
code given below:
(a) (i) only 376. Which of the following statements
(b) (iii) & (iv) only are true regarding SAMPADA scheme?
(c) (i), (iii) & (iv) only (i) It is implemented by Ministry of
(d) All of the above Agriculture
(ii) It is implemented by Ministry of
373. Which of the following scheme is consumer affairs, food and public
not part of PM-AASHA distribution
(a) Price Support Scheme (iii) It will focus on agro-marine
(b) Price Stabilization Scheme processing
(c) Price Deficiency Payment Scheme
(d) Pilot of Private Procurement and Select the correct answer using the
Stockist Scheme code given below:
(a) (i) only
374. Consider the following statements (b) (i) & (iii) only
regarding Price Stabilization Fund (c) (ii) & (iii) only
(PSF): (d) (iii) only
57
377. Consider the following statements (i) It is an E-commerce as well as a

regarding ‘Operation Greens’: knowledge platform
(ii) It is an initiative of Ministry of
(i) It is under ministry of Food Agriculture (MoA)
Processing Industries (iii) Through this portal, buyers can
(ii) NAFED will be the nodal agency to avail organic products at their
implement it door step at much lower prices
(iii) It focusses on building post-harvest
processing facilities and agri-
Which of the statements given above
logistics
is/are correct?
Select the correct answer using the (a) (i) & (ii) only
code given below: (b) (ii) & (iii) only
(a) (i) & (ii) only (c) (i) & (iii) only
(b) (ii) & (iii) only (d) All of the above
(d) All of the above 381. Which of the following statements
are true regarding "International Fund
378. Which of the following statements for Agricultural Development" (IFAD):
are true regarding recently released
“Agriculture Export Policy 2018”: (i) It is a specialized agency of the
United Nations
(i) Double agricultural exports by (ii) It is a specialized agency of the
2022 World Bank Group
(ii) Double India’s share in world agri- (iii) It focuses on food production in
exports developing countries
(iii) This policy will play a major role in (iv) It focuses on eradicating rural
doubling farmers income poverty in developing countries

code given below:
given below:
(a) (i) only
(b) (i) & (ii) only
(b) (i), (iii) & (iv) only
regarding the ‘National Technical
Textile Mission’:
(i) The aim is to promote our domestic

market through research and
development
(ii) Our growth in technical textiles is
high as compared to the 4% world
average growth
code given below:
(a) (i) only
(b) (ii) only
(c) Both (i) & (ii)
380. Consider the followings statements

with reference to ‘Jaivik-kheti portal’:
58
382. Which of the following statements (ii) It is a socioeconomic survey

are true regarding “Inclusive growth”? conducted annually
(iii) It is conducted on rotating topics
(i) Inclusive growth is fuelled by
market driven sources of growth Select the correct answer using the
(ii) Inclusive growth focuses on code given below:
productive employment (a) (i) only
(iii) Inclusive growth focuses on income (b) (i) & (iii) only
redistribution (c) (iii) only
code given below: 386. Which of the following statements
are true regarding “Labour Force
(a) (i) & (ii) only
Participation Rate”:
(a) Number of persons in the labour
force as a percentage of working
age population
383. Poverty Gap is defined as:
(b) Number of persons in the labour
(i) It is the ratio by which the mean force as a percentage of population
income of the poor falls below (c) Number of persons employed as a
poverty line as a proportion of percentage of labour force
poverty line (d) Number of persons searching for
(ii) It is used to reflect the intensity of job as a percentage of labour force
poverty
387. Match the following regarding how
Select the correct answer using the frequently they are conducted:
code given below:
(a) (i) only (i) Periodic Labour Force Survey
(b) (ii) only (ii) Economic Census
(c) Both (i) & (ii) (iii) Consumer Expenditure Survey
(d) Neither (i) nor (ii) (iv) Census
384. Consider the following statements 1. Decadal

regarding expenditure done by the 2. Quinquennial
General Government: 3. Annual
4. No fixed periodicity
(i) Expenditure on education is
around 3% Select the correct answer using the
(ii) Expenditure on health is around code given below:
1.5% (a) (i) – 4, (ii) – 2, (iii) – 4, (iv) – 1
(b) (i) – 3, (ii) – 4, (iii) – 2, (iv) – 1
Select the correct answer using the (c) (i) – 4, (ii) – 2, (iii) – 3, (iv) – 1
code given below: (d) (i) – 3, (ii) – 1, (iii) – 4, (iv) – 2
(a) (i) only
(c) Both (i) & (ii) regarding the “Periodic Labour Force
(d) Neither (i) nor (ii) Survey”:
385. Consider the following statements (i) It is conducted quinquennially

regarding National Sample Survey (ii) It is conducted for both rural and
(NSS): urban labour force
(i) It is conducted by National (iii) It collects data for urban labour on
Statistical Office (NSO) a quarterly basis
59
Select the correct answer using the 393. In a country, jobs are available but
code given below: still people are unemployed as there is
(a) (i) only a serious mismatch between what
(b) (i) & (ii) only companies need and what workers can
(c) (ii) only offer. This kind of unemployment is
(d) (ii) & (iii) only referred as:
389. Which of the following statements (a) Cyclical

are true regarding the findings of the (b) Structural
Periodic Labour Force Survey (PLFS) (c) Seasonal
Report 2017-18: (d) Frictional
(i) Overall Labour Force Participation 394. A person has left his current job
Rate is 36.9% and is looking for another job. He/ she
(ii) Labour Force Participation Rate of is facing which type of unemployment:
females is 17.5%
(iii) Unemployment rate is 6.1% (a) Structural
(b) Cyclical
Select the correct answer using the (c) Frictional
code given below:
(d) He/ she will not be considered as
(a) (i) & (ii) only
unemployed
395. In case of disguised
unemployment, which of the following
will hold true:
390. The ratio of labour force in the
informal to formal sector in India is
(i) Marginal productivity of capital will
approximately:
(a) 50:50 be zero
(b) 70:30 (ii) Productivity of labour will be less
(c) 80:20
(d) 90:10
code given below:
(a) (i) only
391. The unemployment caused due to
(b) (ii) only
the workers living far from the regions
and are unable to move to the locations (c) Both (i) & (ii)
where jobs are available is an example (d) Neither (i) nor (ii)
of:
(a) Cyclical regarding an economy facing cyclical
(b) Frictional unemployment:
(c) Structural
(i) It may lead to inflation in the
(d) Disguised
economy
392. The unemployment caused due to (ii) It may lead to deflation in the
the workers lacking the requisite job economy
skills is an example of: (iii) It can be tackled through
expansionary monetary policy
(a) Cyclical (iv) It can be tackled through
(b) Structural expansionary fiscal policy
(c) Frictional
(d) Disguised Select the correct answer using the
code given below:
60
(a) (i) only 400. Consider the following statements

(b) (ii) only regarding “Pradhan Mantri Rojgar
(c) (i), (iii) & (iv) only Protsahan Yojana”:
(i) It is targeted for workers earning
397. Which of the following are true for wages up to Rs. 15000
underemployment? (ii) Government provides employees
contribution of the EPF
(i) Workers in job that do not utilize (iii) Government reimburses the
their skills employer contribution of EPS
(ii) Workers in low paying jobs as (iv) The scheme is applicable for MSME
relative to their skills sector only
(iii) Part time workers preferring full
time jobs Select the correct answer using the
(iv) Productivity of labour is low code given below:
(a) (i) & (ii) only
Select the correct answer using the code (b) (i), (ii) & (iv) only
given below: (c) (i) & (iii) only
(a) (i) & (ii) only (d) (iii) & (iv) only
(c) (ii), (iii) & (iv) only 401. Consider the following statements:
(i) Insurance penetration is measured
398. 'Demographic Dividend' is as the percentage of insurance
estimated/calculated in terms of which premium to GDP
of the following: (ii) Insurance density is measured as
the ratio of premium (in US dollar)
(a) Population to total population
(b) Total Fertility Rate (TFR)
(c) Working Age to Non-Working Age Select the correct answer using the
population ratio code given below:
(d) Additional per capita income (a) (i) only
growth (b) (ii) only
(c) (i) & (ii) both
regarding employment elasticity:
(i) It measures the percentage change
are true regarding ‘replacement level
in economic growth with respect to
fertility’?
1% increase in employment
(a) It is the level of fertility at which
(ii) Agriculture sector has more
population remains constant
employment elasticity as compared
(b) It is the level of fertility at which
to other sectors of the economy
population growth remains
constant
(c) It is the level of fertility at which a
code given below:
population exactly replaces itself
(a) (i) only
from one generation to another
(b) (ii) only
(c) Both (i) & (ii)
are true regarding India’s Total Fertility
Rate (TFR)?
61
(i) It is declining and is expected to go (a) Absolute poverty

below the replacement level fertility (b) Relative poverty
by 2021 (c) Both (a) & (b)
(ii) Once it goes below the replacement (d) None of the above
level fertility, the population will
stop increasing 407. Consider the following statements:
(i) Lorenz curve represent economic
Select the correct answer using the inequality
code given below: (ii) Kuznets curve represent the level of
(a) (i) only inequality associated with
(b) (ii) only economic development
(c) Both (i) & (ii)
code given below:
are true regarding minimum wages in (b) (ii) only
India? (c) Both (i) & (ii)
(i) The National Floor Level Minimum
Wage (NFLMW) is not binding on 408. Which one of the following
States statements represent ‘Headcount
(ii) There are different level of ratio’?
minimum wages across States
(iii) Minimum wages are different for (a) When the number of poor is
different category of employments estimated as the proportion of
people below the poverty line
Select the correct answer using the (b) When the number of poor is
code given below: estimated as the proportion of
(a) (i) & (ii) only people above the poverty line
(b) (ii) only (c) When the number of people is
(c) (ii) & (iii) only estimated as the proportion of
(d) All of the above people below the median income of
the country
405. Bhoothalingam Committee was (d) None of the above
formed with the purpose of:
409. The wage rates of MGNREGA
(a) Giving recommendations on workers are revised annually based on
revisiting forest laws in India and which index?
argued for merging all the existing
(a) CPI-Agricultural Labourers
forest laws into single law
(b) CPI-Rural Labourers
(b) Giving nationwide poverty
(c) CPI-Rural
estimates using PPP as basis
(d) CPI-Combined
(c) Giving recommendations on
Minimum Wage and argued for 410. The National Census is conducted
adoption of National Floor Level by which of the following offices/
Minimum Wage agencies:
(d) Of estimating unemployment data (a) Central Statistical Office (CSO)
in India (b) National Sample Survey Office
(NSSO)
406. “Absence of minimum income to get (c) Registrar General and Census
the minimum needs of life” is Commissioner, Ministry of Home
concerned with which of the following Affairs
types of poverty? (d) Census Bureau of India
62
411. Consider the following statements (a) Avoiding double taxation of income
regarding World Bank classification of with respect to social security taxes
countries: (b) Free market access for trade in
(i) It classifies the countries into three services
groups based on per capita Gross (c) Bilateral agreement between
National Income (GNI) countries to enable unrestricted
(ii) It uses nominal exchange rate for movement of labour
converting respective countries per
(d) Agreement among all the WTO
capita GNI into dollars
members to promote e-commerce
code given below:
(a) (i) only are correct regarding the United
Nations TIR Convention:
(b) (ii) only
(c) Both (i) & (ii)
(i) India is a member to the convention
(ii) India is planning to become a
member of the convention
(iii) It will facilitate seamless movement
(i) India’s GNP is greater than GDP
of goods amongst the parties to the
(ii) China’s per capita GDP is more
than four times of India’s per capita convention
GDP
(b) (ii) only (c) (i) & (iii) only
(c) Both (i) & (ii) (d) (ii) & (iii) only
413. Consider the following statements regarding ‘Generalized System of
regarding different types of Free Trade Preferences (GSP)’:
Agreements (FTAs):
(i) Special and differential treatment
(i) Customs Union is an FTA in which is offered to developing and least
members apply a common external developed countries
tariff schedule to imports from non- (ii) WTO defines developing and least
members developed countries for offering
(ii) Common Market is a customs GSP benefits
union where movement of factors of (iii) It is offered on reciprocal basis
production is relatively free
amongst member countries Select the correct answer using the
code given below:
(a) (i) only (d) (ii) & (iii) only
(b) (ii) only
(c) Both (i) & (ii) 417. Which of the following statements
(d) Neither (i) nor (ii) are true regarding ‘Compulsory
Licenses’?
414. The "Totalization Agreement" was
in the news is related to which of the (i) Compulsory licenses are granted
following: under the Patents Act 1970
63
(ii) It can be granted if the product in 421. Which of the following statements
question is sold at an unaffordable are true regarding “Duty Credit Scrip”?
price
(i) Loan/credit given by government
Select the correct answer using the for trade purpose
code given below: (ii) The scrip is expressed as a
(a) (i) only percentage of export turnover
(b) (ii) only (iii) It can be used/adjusted for
(c) Both (i) & (ii) payment of taxes
418. Which of the following statements code given below:
are true regarding “Financial Action (a) (i) only
Task Force”: (b) (i) & (iii) only
(i) It is an inter-governmental body of (d) (iii) only
which India is a member
(ii) It has been established to combat 422. Consider the following statements
money laundering and terrorist regarding the “Remission of Duties or
financing Taxes on Export Products (RoDTEP)”
scheme:
Select the correct answer using the (i) It is a WTO compliant scheme
code given below: (ii) It will replace Merchandise Exports
(a) (i) only from India Scheme (MEIS)
(b) (ii) only
(c) Both (i) & (ii) Select the correct answer using the
(d) Neither (i) nor (ii) code given below:
(a) (i) only
419. Arrange the countries in (b) (ii) only
descending order in terms of FDI (c) Both (i) & (ii)
inflows in India in 2018-19: (d) Neither (i) nor (ii)
(a) USA>Singapore>Mauritius>UAE 423. Consider the following statements

(b) Singapore>Mauritius>USA>UAE regarding the “Remission of Duties or
(c) Mauritius>Singapore>USA>UAE Taxes on Export Products (RoDTEP)”
(d) Singapore>UAE>Mauritius>USA scheme:
(i) The scheme will cover levies that
are not reimbursed currently
420. Match the column of Index and (ii) The scheme is for reimbursing the
which agency publishes it: CGST and SGST paid on various
(i) Corruption Perception Index products in case of exports
(ii) Index of Economic Freedom (iii) The scheme will make exports zero-
(iii) Global Economic Freedom Index rated
1. Transparency International Select the correct answer using the

2. Heritage Foundation code given below:
3. Fraser Institute (a) (i) & (ii) only
(a) (i) – 1, (ii) – 2, (iii) – 3
(b) (i) – 2, (ii) – 3, (iii) – 1 424. The term “Certificates of Origin” is
(c) (i) – 3, (ii) – 1, (iii) – 2 related to which of the following?
(d) (i) – 1, (ii) – 3, (iii) – 2
64
(a) It is used in granting of visas to 430. Which of the following is dependent

individuals on “QUOTA” assigned by IMF to its
(b) It is used in protection of member countries?
intellectual property rights across
the country (i) Financial resources that the
(c) It is used in international trade member country is obliged to
(d) None of the above provide IMF
(ii) Voting Rights
425. Which of the following statements (iii) SDR allocation to member
are true regarding the scheme “Nirvik”? countries
(iv) Borrowing capacity of a member
(a) It is an insurance scheme for the country
exporters
(b) It is related to internal security Select the correct answer using the
(c) It is a subsidy provided by the code given below:
government (a) (ii) only
(d) It is related to MSME credit (b) (ii) & (iii) only
(c) (i) & (iv) only
426. Consider the following statements: (d) All of the above
(i) Germany has the second largest 431. Consider the following statements:
gold reserve in the world
(ii) India is among the top 10 countries (i) The main source of World Bank
holding gold reserves funding is share capital of member
countries
Select the correct answer using the (ii) The main source of funds for
code given below: International Monetary Fund (IMF)
(a) (i) only is borrowing from specific member
(b) (ii) only countries
(c) Both (i) & (ii)
code given below:
427. ‘Logistics Performance Index’ is (a) (i) only
released by which of the following (b) (ii) only
institutions? (c) Both (i) & (ii)
(a) World Bank (d) Neither (i) nor (ii)
(b) IMF
(c) World Economic Forum 432. Consider the following statements
(d) United Nations Conference on regarding the "Most Favoured Nation
Trade and Development (UNCTAD) (MFN)" principle of WTO trade:
(i) A member country can grant more
428. ‘World Migration Report’ is released favours to the other member
by which of the following institution? country
(ii) MFN is basically a principle of non-
(a) World bank discriminatory trade
(b) IMF (iii) Free Trade Agreements have been
(c) World Economic Forum exempted from the MFN principle
(d) United Nations
429. "Which countries are eligible to
code given below:
become member of BRICS Bank?"
(a) (i) only
(a) Any Country
(b) Members of United Nations
(c) (ii) only
(c) Members of World Bank or IMF
(d) Any 'developing' country (d) (ii) & (iii) only
65
433. Which of the following measures (ii) It is easy for the trading partners of
are considered as prohibitive under the country A to impose anti-dumping
Agreement on ‘Trade Related duty against A
Investment Measures (TRIMS)’ under (iii) Market economy status is related to
WTO? IMF
(i) Local content requirement
(ii) Export obligation Select the correct answer using the
(iii) Technology transfer requirement code given below:
(iv) Domestic employment (a) (i) & (ii) only
code given below:
(a) (i) only
regarding ‘Trademarks’:
(i) Trademarks can last for indefinite
time period
434. Which of the following are imposed (ii) Trademarks are assignable
in case a country’s government is (iii) Protected through ‘Trade Marks Act
subsidizing its exporters? 1999’
(a) Anti-Dumping Duty Select the correct answer using the

(b) Counter-vailing Duty code given below:
(c) Safeguard Duty (a) (i) only
(d) Customs Duty
(c) (iii) only
are true regarding ‘Safeguard Duty’:

(i) It is a WTO compliant measure
regarding ‘Trade secrets’:
(ii) It is imposed when there is an
increased import of particular
(i) No registration is required to
product
protect trade secrets
(iii) It is imposed as an additional
(ii) It can be protected for unlimited
import duty
time period
(iii) To qualify as a trade secret, the
information should have
code given below:
(a) (ii) only commercial value
(b) (ii) only
code given below:
(a) (i) only
436. Country A has not been granted (b) (i) & (iii) only
"market economy status" by its group (c) (iii) only
partners. Which of the following (d) All of the above
statements are true?
(i) Prices of majority of products in the
country A is regulated by the (i) PM Kisan will fall under “Green
government Box” in WTO subsidies
(ii) Peace Clause under WTO is still
continuing
66
Select the correct answer using the 444. Which agency/institution releases
code given below: the “Social Mobility Index”?
(a) only
(b) only (a) World Economic Forum
(c) Both (i) & (ii) (b) World Bank
(d) Neither (i) nor (ii) (c) OECD
are true regarding the “Multilateral
Convention to Implement Tax Treaties
Related Measures”?
(i) India has ratified the Treaty

(ii) It has come into force
(iii) It will replace double taxation
avoidance agreements

code given below:
(a) (i) only
(b) (i) & (ii) only
(d) (iii) only
441. Which of the following institution is

not part of World Bank Group?
(a) International Finance Corporation

(b) The Multilateral Investment
Guarantee Agency
(c) The International Centre for
Settlement of Investment Disputes
(d) Food and Agricultural Organization
442. ‘Harmonized System of

Nomenclature’ (HSN) was recently in
the news, is related to which of the
following?
(a) Classification of goods in

international trade
(b) International financial transactions
(c) Space technology
(d) Classification of seeds and plants
443. “Annual Observance Report” is

published by which
institution/agency?
(a) IMF
(b) World Bank
(c) RBI
(d) OECD
67
445. Which ministry/department grants is a publicly listed government

"Infrastructure Status" to the various company
sectors: (ii) The recently launched “Tejas
Express” is being run by private
(a) Department of Economic Affairs, players
Ministry of Finance
(b) Department of Financial Services, Select the correct answer using the
Ministry of Finance code given below:
(c) Reserve Bank of India (RBI) (a) (i) only
(d) None of the above (b) (ii) only
(c) Both (i) & (ii)
446. Which of the following has been (d) Neither (i) nor (ii)
granted infrastructure status?
450. “Public Private Partnership
(i) Multi-modal logistics park Appraisal Committee (PPPAC)” is under
(ii) Cold Chain which ministry/department?
(iii) Affordable Housing
(a) Department of Economic Affairs
(iv) Soil-testing laboratories
(DEA)
Select the correct answer using the (b) Department of Investment and
code given below: Public Asset Management (DIPAM)
(c) Ministry of Road, Transport and
(a) & (ii) only
Highways
(d) Ministry of Railway
(c) & (iv) only
regarding “Air India”:
(i) Air India was nationalized in early
regarding the services sector in India:
1960s
(i) Services sector receives 2/3 of total (ii) 100% FDI is allowed in Air India by
foreign entities
FDI inflows in India
(ii) Services sector accounts for around
40% of our total exports
code given below:
(a) (i) only (c) Both (i) & (ii)
(b) (ii) only (d) Neither (i) nor (ii)
(c) Both (i) & (ii)
(d) Neither (i) nor (ii) 452. Consider the following statements
regarding “National Pharmaceuticals
448. Which of the following sectors have Pricing Authority” (NPPA):
(i) It is under ministry of health and
the highest allocation in “National
Infrastructure Pipeline” (NIP)? family welfare
(ii) It fixes/revises the prices of
(a) Energy controlled drugs
(b) Road (iii) It implements the provisions of
(c) Rail Drug Price Control Order (DPCO)
(d) Urban
(a) (i) only
(i) Indian Railway Catering and (b) (i) & (iii) only
Tourism Corporation Ltd. (IRCTC) (c) (ii) & (iii) only
68
453. In light of the recent COVID-19 (i) Share of Gold imports in total
pandemic, which of the following acts merchandise imports has steadily
were invoked in reference to ‘masks’ decreased in the last decade
and ‘hand sanitizers’: (ii) Share of Petroleum, Oil and
Lubricants (POL) in total
(i) Essential Commodities Act 1955 merchandise imports has steadily
(ii) Prevention of Black marketing and increased in the last decade
Maintenance of Supplies of
Essential Commodities Act, 1980 Select the correct answer using the
(iii) Disaster Management Act 2005 code given below:
(a) (i) only
Which of the statements given above (b) (ii) only
is/are correct? (c) Both (i) & (ii)
(a) (i) only (d) Neither (i) nor (ii)
(c) (ii) & (iii) only 457. The theme for 2019-20 economic
(d) All of the above survey is:
(a) Wealth creation
(b) Investment led growth
(c) Domestic consumption led growth
regarding multi-brand FDI in retail:
(d) Welfare
(i) 51% FDI is allowed in inventory-
based model of e-commerce
458. The philosophy of “Invisible hand”
(ii) 51% FDI is allowed in brick and
was given by:
mortar model
(iii) 100% FDI is allowed in all models
(a) Adam Smith
for food products sourced from
(b) Karl Marx
Indian farmers or manufactured in
(c) Milton Freidman
India
(d) John Maynard Keynes
459. The budget of 2020-21 is focussed
code given below:
on three themes. Which of the following
(a) (ii) only
is not one of them?
(b) (iii) only
(a) Aspirational India
(b) Economic Development
(c) Caring Society
(d) Skilled India
(i) India’s share in world merchandise
exports is less than 2%
(ii) India is the second largest
460. The term ‘Rent seeking’ refers to
manufacturer of mobile phones in
which of the following?
the world
(a) Excessive rent collected by the
owners because of rise in demand
code given below:
(b) Practise of manipulating public
(a) (i) only
policy as a strategy to increase
(b) (ii) only
profits
(c) Both (i) & (ii)
(c) Higher prices collected by business
entities by forming cartels
(d) Manipulating profits by inflating
costs
with respect to India’s imports
69

regarding the "Zero Defect, Zero Effect (b) (i) & (ii) only
(ZED)" scheme: (c) (ii) & (iii) only
(i) The scheme is for MSME sector
(ii) It ensures producing high-quality 464. Which of the following are part of
manufacturing products the 'Index of Industrial Production
(iii) It ensures minimal negative impact (IIP)'?
on environment.
(iv) It is a cornerstone of the flagship (i) Mining and quarrying
Make in India programme (ii) Electricity generation
(iii) Construction
Select the correct answer using the (iv) Forestry
code given below:
(a) (i) & (iv) only code given below:
(b) (ii) & (iii) only (a) (i) & (ii) only
(c) (i), (ii) & (iii) only (b) (ii) & (iii) only
(d) All of the above (c) (i), (ii) & (iii) only
regarding the "Common Services 465. Which of the following statements
Centre (CSC)": are correct regarding the "SMILE"
scheme:
(i) They are part of the Digital India
programme (a) It is linked to providing credit to
(ii) They are implemented on public MSME enterprises under Make in
private partnership modal India
(iii) They are provided exclusively by (b) It is linked to providing financial
the government support by Govt. of India for
(iv) They act as access points for women and SC/ST entrepreneurs
delivery of various electronic (c) It is a scheme to provide support to
services small and marginal farmers for
allied activities
code given below:
(a) (i) & (ii) only 466. Which of the following statements
(b) (i) & (iii) only are true regarding the "Open Acreage
(c) (iii) & (iv) only Licensing Policy (OALP)"?
(d) (i), (ii) & (iv) only
(i) The policy is for oil and gas sector
463. Which of the following statements (ii) Any private developer can
are true for the Regional Connectivity participate without experience of oil
Scheme (RCS)/UDAN: and gas sector
(i) Connects unserved and (iii) Private players can suggest to
underserved airports Government to put specific blocks
(ii) Government provides Viability Gap on bid
Funding (VGF) (iv) The policy is a part of the New
(iii) There will be multiple players Exploration Licensing Policy
operating on each route
Select the correct answer using the code code given below:
given below: (a) (i) & (ii) only
70
(b) (ii) & (iii) only 471. Which of the following statements
(c) (i) & (iii) only are not correct regarding "Shell
(d) (ii) & (iv) only Companies":
467. The term "Graded Surveillance (a) They are generally involved in
Measure" recently seen in the news is money laundering and tax
related to which of the following: avoidance activities
(b) They generally do not hold any
(a) Security of Indian coastal areas assets in real
(b) Companies listed on stock (c) They are defined as illegal entities
exchanges as per the Company Act 2013
(c) ISRO's satellite programme (d) They do not have any active
(d) IMF monitoring various economies business operations
468. Which of the following statements 472. Which of the following statements
are true regarding the SAUBHAGYA are correct regarding Ujjwala Scheme?
scheme recently launched:
(i) It plans to provide free LPG
(i) The scheme aims to particularly connections to BPL families
electrify the villages (ii) It provides free/subsidized LPG
(ii) Government will be providing cylinders to BPL families
subsidized electrification to rural (iii) The connections will be issued in
and urban households the name of the women of the
(iii) Government will be providing households
subsidy on electricity consumption
(a) (i) only (b) (i) & (iii) only
(b) (ii) & (iii) only (c) (ii) & (iii) only
(c) (ii) only (d) All of the above
469. Which of the following regarding "Bharatmala" Project:
Ministries/departments releases the
"core industries" output data: (i) It is a part of National Highway
Development Programme (NHDP)
(a) Department for Promotion of (ii) It will particularly build border and
Industry and Internal Trade (DPIIT) international connectivity roads
(b) National Statistical Office (NSO) (iii) State PWDs will also be involved for
(c) Department of Economic Affairs its execution
470. The term "roll-on roll-off" recently code given below
in the news is related to which of the (a) (i) only
following: (b) (ii) only
(a) Transportation of vehicles through (d) (iii) only
ships
(b) Connecting two ports through 474. Consider the following statements
dedicated shipping channel regarding "Invest India":
(c) Railway engines and wagons
(d) Dedicated freight corridors (i) It is a non-profit agency
71
(ii) It is an agency under Dept. of (c) Captive mining of coal by

Economic Affairs government and private companies
(d) Government conducting auction to
Select the correct answer using the award coal blocks
code given below:
(a) (i) only 478. The term “Open access” in
(b) (ii) only electricity means which of the
(c) Both (i) & (ii) following:
(a) Large consumers have access to
475. Which of the following statements the transmission and distribution
are true regarding "India Infrastructure network to obtain electricity from
Finance Company Limited (IIFCL)": the suppliers of their choice
(b) Large consumers can choose the
(i) It is a non-Government company distribution company of their
(ii) It is an NBFC registered with RBI choice
(c) Any consumer of electricity can
Select the correct answer using the also generate electricity from their
code given below: own resource and can feed on to
(a) (i) only the distribution network.
(b) (ii) only (d) Distribution companies can choose
(c) Both (i) & (ii) from which of the power producers
they want to purchase power
without government interference
are true regarding "Serious Fraud
are true regarding “Swiss challenge”?
Investigation Office (SFIO)":
(a) It is a game
(i) It is under Dept. of Economic
(b) It is a method of awarding projects
Affairs, Ministry of Finance
by the government
(ii) It is under Ministry of Corporate (c) It is related to lottery business
Affairs (d) None of the above
(iii) It is an executive body established
through government resolution 480. Central Government has started
(iv) It has been established under an awarding airport projects under a new
Act model of PPP. Under this model the
basis of selection of the private
Select the correct answer using the operator is:
code given below
(a) (i) & (iii) only (a) Percentage Profit sharing
(b) (i) & (iv) only (b) Percentage Revenue sharing
(c) (ii) & (iii) only (c) Per passenger fee given to Govt.
(d) (ii) & (iv) only (d) Per passenger fee charged by
passengers
477. As per the Coal Mines (Special
Provisions) Act 2015, government has 481. Consider the following statements:
allowed:
(i) Share of MSME sector is around
(a) Mining and sale of coal by private 30% in overall GDP of our country
companies without end use (ii) Share of MSME sector is around
restriction 40% in overall exports of the
(b) Mining of coal by private companies country
with end use restriction
72
Select the correct answer using the statutory body first should come first
code given below: in the order.
(a) (i) only
(b) (ii) only (i) Pension Fund Regulatory
(c) Both (i) & (ii) Development Authority (PFRDA)
(d) Neither (i) nor (ii) (ii) Insurance Regulatory and
Development Authority of India
482. The term “MCA21” is related to (IRDAI)
which of the following: (iii) Securities and Exchange Board of
India (SEBI)
(a) It is an e-governance project
(b) It is a group of companies Select the correct answer using the
registered under SEBI code given below:
(c) It is a survey done by NSO (a) (ii) - (i)- (iii)
(d) It is a code used in space (b) (iii) – (ii) – (i)
technologies (c) (i) – (ii) – (iii)
(d) (ii) – (iii) – (i)
regarding “Concessional Finance 486. What do you understand by the
Scheme”: term “Circular Economy” often seen in
(i) Under the scheme, projects are news?
selected by Ministry of External
Affairs (a) It refers to an industrial system
(ii) Under the scheme, Govt. of India that is restorative or regenerative in
gives 2% interest subsidy nature
(iii) The scheme is operated through (b) It refers to the cyclical booms and
EXIM Bank of India recession in an economy
(c) It refers to a “Closed Economy” that
Select the correct answer using the primarily relies on internal trade
code given below: (d) It refers to a system in which there
(a) (i) & (ii) only is Cyclical correlation between
(b) (i) & (iii) only savings and investment
(c) (iii) only
487. The term ‘bilateral netting’ is
related to which of the following?
(a) Power sector contracts
484. Consider the following statements (b) Financial contracts
regarding the ‘National Statistical
(c) Inter-government contracts
Commission’ (NSC):
(d) Tax avoidance related contracts
(i) It was set up on the
recommendations of the 488. Consider the following statements
Rangarajan Commission
regarding the newly launched “Toll-
(ii) The chief Statistician of India is the
Operate-Transfer (TOT) model in the
secretary to the commission
road sector:
Select the correct answer using the (i) Toll revenue collection rights are
code given below:
auctioned to private players for
(a) (i) only
long term
(b) (ii) only (ii) Toll revenue need to be shared with
(c) Both (i) & (ii) the government authority
(d) Neither (i) nor (ii) (iii) Already constructed roads are
given to private players
485. Arrange the following in the correct
the correct chronological order i.e. the Select the correct answer using the
one which was established as a code given below:
73
(a) (i) only (b) (i) & (ii) only

(b) (ii) only (c) (iii) only
(c) (i) & (iii) only (d) (ii) & (iii) only
(d) (ii) & (ii) only
489. Consider the following statements: 492. Consider the following statements
regarding “BharatNet” project:
(i) India has total power generation
capacity of more than 350 GW (i) It will provide broadband
(ii) Renewable energy share is more connectivity to all the 2.5 lakh
than 25% gram panchayats
(ii) It is implemented through
Select the correct answer using the Universal Service Obligation Fund
code given below: (USOF)
(a) (i) only
(b) (ii) only Select the correct answer using the
code given below:
(c) Both (i) & (ii)
(a) (i) only
(b) (ii) only
(c) Both (i) & (ii)
regarding ‘National Investment and
Infrastructure Fund’ (NIIF):
(i) It is meant for both greenfield and regarding the SFURTI scheme:
brownfield project
(ii) It will invest into infrastructure (i) It is implemented by ministry of
projects and infrastructure MSME
financing companies like NBFCs (ii) It promotes cluster-based
(iii) It will raise funds from both development
domestic and international sources
(a) (ii) only (b) (ii) only
(b) (ii) & (iii) only (c) Both (i) & (ii)
(c) (iii) only (d) Neither (i) nor (ii)
494. Which of the following are the main
components of KUSUM scheme?
are true regarding Universal Service (i) Installation of grid connected solar
Obligation Fund (USOF)? power plants in remote areas
(ii) Installation of standalone off-grid
(i) This fund is under Dept. of solar water pumps
Telecommunication (iii) Solarization of existing grid-
(ii) This fund is used to provide ICT connected agricultural pumps
services in rural and remote areas
(iii) This fund is created out of the Select the correct answer using the
budgetary resources of Govt. of code given below:
India (a) (i) & (ii) only
(a) (i) only
74
495. The main objectives of setting up (c) Directorate General of Civil

Special Economic Zones (SEZ) are: Aviation (DGCA)
(d) Ministry of Civil Aviation
(i) Generation of additional economic
activity 499. Credit Rating Agencies are
(ii) Promotion of investment from regulated by which
foreign sources ministry/department/agency?
(iii) Creation of employment
opportunities (a) Reserve Bank of India
(b) Securities and Exchange Board of
Select the correct answer using the India
code given below: (c) Ministry of Corporate Affairs
(a) (i) & (iii) only (d) Ministry of Finance
(b) (i) only
(c) (iii) only 500. Which of the following statements
(d) All of the above are true regarding the term ‘Force
Majeure’ which was recently in the
496. Which of the following statements news?
are true with reference to Special
Economic Zones (SEZ)? (i) It is generally treated as a breach of
contract
(i) SEZ units may import/procure (ii) Unforeseeable circumstances that
goods and services from Domestic prevent someone from fulfilling a
Tariff Area (DTA) without payment contract
of customs/import duty (iii) Includes an Act of God or natural
(ii) Customs duty is imposed on sale disasters, war or war-like
from SEZ to DTA situations, epidemics, pandemics,
(iii) SEZ units should be net foreign etc.
exchange earners
code given below: (a) (i) & (iii) only
(a) (i) only (b) (ii) & (iii) only
(b) (i) & (iii) only (c) (iii) only
(c) (iii) only (d) All of the above
497. Arrange in decreasing order the

percentage share in power generation
capacity:
(a) Private > Central > States

(b) Central > Private > States
(c) Private > States > Central
(d) Central > States Private
498. Which of the following

agency/ministry regulates tariffs for
aeronautical services at the airports?
(a) Airport Authority of India (AAI)

(b) Airport Economic Regulatory
Authority (AERA)
75
ANSWER SHEET
Q.No. ANS Q.No. ANS Q.No. ANS Q.No. ANS Q.No. ANS
1 D 51 C 101 D 151 C 201 C
2 D 52 A 102 D 152 C 202 D
3 B 53 C 103 C 153 D 203 A
4 D 54 A 104 A 154 A 204 D
5 D 55 B 105 C 155 B 205 D
6 B 56 B 106 D 156 D 206 C
7 D 57 D 107 D 157 B 207 B
8 A 58 D 108 B 158 C 208 A
9 A 59 B 109 D 159 D 209 B
10 A 60 C 110 D 160 A 210 B
11 C 61 B 111 D 161 D 211 C
12 C 62 C 112 D 162 D 212 A
13 B 63 B 113 D 163 D 213 B
14 A 64 D 114 B 164 D 214 C
15 B 65 A 115 D 165 D 215 D
16 A 66 D 116 A 166 D 216 D
17 B 67 D 117 B 167 C 217 C
18 A 68 D 118 C 168 C 218 D
19 A 69 D 119 A 169 B 219 B
20 A 70 B 120 B 170 C 220 A
21 B 71 B 121 B 171 D 221 C
22 C 72 C 122 C 172 D 222 D
23 C 73 C 123 D 173 C 223 D
24 C 74 D 124 D 174 B 224 D
25 D 75 C 125 A 175 C 225 C
26 C 76 C 126 D 176 B 226 C
27 C 77 A 127 D 177 D 227 D
28 B 78 D 128 B 178 A 228 C
29 D 79 C 129 B 179 D 229 C
30 A 80 C 130 B 180 D 230 A
31 A 81 D 131 C 181 B 231 C
32 C 82 D 132 A 182 A 232 C
33 C 83 A 133 D 183 C 233 D
34 D 84 A 134 A 184 D 234 A
35 C 85 C 135 B 185 A 235 C
36 D 86 D 136 D 186 C 236 C
37 D 87 B 137 D 187 C 237 C
38 D 88 D 138 C 188 D 238 B
39 A 89 D 139 C 189 C 239 B
40 C 90 C 140 B 190 D 240 D
41 C 91 B 141 A 191 D 241 A
42 D 92 D 142 D 192 C 242 A
43 D 93 A 143 C 193 A 243 D
44 B 94 C 144 B 194 A 244 C
45 D 95 C 145 D 195 D 245 A
46 C 96 A 146 A 196 D 246 C
47 A 97 A 147 C 197 D 247 C
48 A 98 A 148 C 198 A 248 C
49 D 99 C 149 C 199 C 249 C
50 C 100 D 150 A 200 C 250 C
76
ANSWER SHEET
Q.No. ANS Q.No. ANS Q.No. ANS Q.No. ANS Q.No. ANS
251 D 301 B 351 D 401 C 451 D
252 A 302 D 352 C 402 C 452 C
253 A 303 A 353 A 403 A 453 D
254 C 304 C 354 C 404 D 454 C
255 A 305 C 355 D 405 C 455 C
256 B 306 A 356 C 406 A 456 D
257 C 307 D 357 D 407 C 457 A
258 D 308 D 358 C 408 A 458 A
259 D 309 C 359 C 409 A 459 D
260 C 310 D 360 B 410 C 460 B
261 C 311 C 361 D 411 C 461 D
262 C 312 D 362 D 412 B 462 D
263 C 313 C 363 A 413 C 463 B
264 B 314 D 364 B 414 A 464 A
265 D 315 B 365 C 415 C 465 A
266 C 316 A 366 D 416 A 466 C
267 B 317 D 367 C 417 C 467 B
268 D 318 C 368 B 418 C 468 C
269 C 319 C 369 C 419 B 469 A
270 A 320 C 370 C 420 A 470 A
271 A 321 B 371 D 421 C 471 C
272 C 322 B 372 C 422 C 472 B
273 B 323 C 373 B 423 C 473 D
274 A 324 A 374 C 424 C 474 A
275 C 325 C 375 D 425 A 475 B
276 B 326 B 376 D 426 C 476 D
277 C 327 B 377 D 427 A 477 A
278 D 328 B 378 D 428 D 478 A
279 C 329 D 379 C 429 B 479 B
280 B 330 A 380 D 430 D 480 C
281 A 331 D 381 B 431 D 481 C
282 A 332 D 382 A 432 D 482 A
283 C 333 A 383 C 433 D 483 D
284 B 334 D 384 C 434 B 484 C
285 C 335 D 385 D 435 D 485 B
286 A 336 A 386 A 436 A 486 A
287 A 337 D 387 B 437 D 487 B
288 D 338 D 388 D 438 D 488 C
289 D 339 C 389 D 439 C 489 C
290 B 340 D 390 D 440 B 490 D
291 A 341 C 391 C 441 D 491 B
292 D 342 C 392 B 442 A 492 C
293 C 343 C 393 B 443 A 493 C
294 B 344 B 394 C 444 A 494 D
295 D 345 C 395 B 445 A 495 D
296 A 346 A 396 D 446 D 496 D
297 D 347 B 397 D 447 C 497 C
298 C 348 D 398 D 448 A 498 B
299 D 349 A 399 B 449 A 499 B
300 D 350 D 400 C 450 A 500 B
77
1. (d)
GDP is the total final value of goods and services produced within the domestic territory
of a country in a specified time period (generally a financial year).
The concept of domestic territory (economic territory) is different from the geographical or
political territory of a country. Domestic territory of a country includes the following:
 Political frontiers of the country including its territorial waters.

 Ships, and aircrafts operated by the residents of the country between two or more
countries for example, Air India’s services between different countries.
 Fishing vessels, oil and natural gas rigs and floating platforms operated by the
residents of the country in the international waters or engaged in extraction in areas
where the country has exclusive rights of operation.
 Embassies, consulates and military establishments of the country located in other
countries, for example, Indian embassy in U.S.A., Japan etc. It excludes all embassies,
consulates and military establishments of other countries and offices of international
organisations located in India.
Thus, domestic territory may be defined as the political frontiers of the country including
its territorial waters, ships, aircrafts, fishing vessels operated by the residents of the
country, embassies and consulates located abroad etc.
2. (d)
Exports means produced within the country and sold to foreigners (or non-residents). If
a foreigner is coming to India and then purchasing goods and services, then it is a case
of exports.
In the same way, if a foreigner is coming to India for medical treatment or tourism then
the foreigner is basically purchasing medical and tourism services produced in our
country.
So, the best possible answer is exports.
3. (b)
National Statistical Office (NSO) releases the quarterly and annual GDP data with a lag of
two months. For example, the data for the GDP and GDP growth for FY 2019-20 will be
released on 31st May 2020.
4. (d)
An economy produces two types of final goods i.e. consumption and capital goods.
Consumption goods get consumed and capital goods are used for further production
process (capital goods are also called investment). The value of these two goods produced
in the economy in a year is called GDP. These two types of goods i.e. GDP is purchased
by the four sectors of the economy
 Household sector (consumption goods)

 Private sector (capital goods)
 Government sector (consumption and capital both)
 External sector (consumption and capital booth)
5. (d)
GDP is the sum of the final value of all goods and services (consumption and capital)
produced in the economy or it can also be defined as the value added by all the
enterprises/firms in the economy (by value added method). So (i) & (ii) statements are
true.
By expenditure method, GDP = C + I + G + X-M
78
C + I + G is the expenditure done by the three sectors of the economy on two types of final
goods i.e. consumption and capital (investment goods).
X-M is the net of exports and imports.
So, (iii) statement is also true.
By Income method, GDP is also equal to the income received by the four factors of
production i.e. Profit, Rent, Interest and wages.
So, (iv) statement is also true.
6. (b)
Intermediate goods are semi-finished goods which have been produced by a process but
cannot be used as it is and need to go through further production/transformation process
to be converted into a final good. For example, steel sheets. The steel sheets cannot be
used as it is and needs to be transformed into final products like automobiles, appliances
etc. So (ii) statement is true.
A particular good will be capital in nature only if it possesses the following three
characteristics:
 It is a produced durable output of a man-made process
 It again acts as an input for further production process (to be sold in the market)
 While acting as an input, it does not get transformed or consumed (hence it’s a final
good)
7. (d)
Informal economic activity constitutes around 30% of the GDP. We may not be able to
measure it accurately but while calculating the GDP figures informal activity is
extrapolated based on formal activities and are included in GDP.
Re-exports means, something imported and then processed and then again exported. So,
whatever goes in processing will be part of our GDP. For example, India imported crude
oil worth Rs 50 and then refined/processed it and then exported in Rs. 80, then Rs. 80 –
Rs. 50 = Rs. 30 will be included in India’s GDP
8. (a)
9. (a)
10. (a)
Real GDP growth measures growth in quantity only and nominal GDP measures growth
in value (which includes quantity as well as price).
Now, suppose an economy produces wheat and rice. The quantities produced and the
market price is given in the following table.
2011-12 2012-13 2013-14 2014-15
Wheat 10kg X Rs. 10/kg 11kg X Rs. 12kg X Rs. 11/kg 12.5kg X Rs. 12/kg
10.5/kg
Rice 8kg X Rs. 12/kg 9kg X Rs. 12.5/kg 10kg X Rs. 13/kg 10.5kg X Rs. 13.5/kg
Nominal 10X10 + 8X12 = 11X10.5 + 9X12.5 12X11 + 10X13 = 12.5X12+ 10.5X13.5

GDP Rs. 196 = Rs. 228 Rs. 262 = Rs. 291.75
To calculate Real GDP, we take the price of any year as constant and declare it as a
base year. So, suppose we declare 2011-12 as base year then we will take price of
wheat as Rs. 10/kg and price of rice as Rs. 12/kg as constant in all the subsequent
years to calculate the real GDP.
Real 10X10 + 8X12 = 11X10 + 9X12 = 12X10 + 10X12 = 12.5X10 + 10.5X12
GDP Rs. 196 Rs. 218 Rs. 240 = Rs. 251
79
The base year for calculation of GDP is 2011-12. So, if we want to calculate India's Real
GDP for 2014-15 then we will have to take the quantities produced in 2014-15 and the
prices of 2011-12 (base year). And if we want to calculate the Nominal GDP of 2014-15
then we will have to take the quantities produced in 2014-15 and the market prices of
the same year i.e. 2014-15.
In India, economic growth is measured by change in real GDP i.e. GDP at constant
Market Prices as per the global best practices. (Q. No. 8)
Consider the above table once again.
2011-12 2012-13 2013-14 2014-15

Nominal GDP Rs.196 Rs.228 Rs.262 Rs.291.75
Change in
Nominal GDP 16.3% 14.9% 11.4%
Real GDP Rs.196 Rs.218 Rs.240 Rs.251
Change in
Real GDP 11.2% 10.1% 4.6%
So, Real GDP is steadily/consistently increasing from 2011-12 to 2014-15 but "change in
real GDP" is decreasing from 11.2% to 4.6% and change in nominal GDP is also
decreasing from 2011-12 to 2014-15.
The above is a case of economic growth as real GDP is increasing. But since the rate of
change of real GDP is decreasing (but not negative), we say that economic growth is
slowing down. When the "real GDP" decreases or "change in real GDP" is negative then
it is a case of recession. (Q.No.10)
And if the prices are decreasing more but the production quantity is increasing then the
nominal GDP may decrease but Real GDP may increase. So, in case of economic growth,
nominal GDP may decrease.
Q.No.9, only (i) statement is the required criteria. Because even if (iii) statement is not
true (as in the above example), a country may experience economic growth.
11. (c)
Real GDP (i.e. GDP at constant market prices) and Nominal GDP (i.e. GDP at current
market prices) both have steadily increased in the last decade (in fact in last 30 years)
but the growth rate of Real GDP and Nominal GDP has fluctuated and has not increased
steadily in the last decade. Refer the Trends
12. (c)
India's population growth rate is around 1 percent annually.
Real GDP and Real GNP growth has been more than 5 percent in the last five years.
If GDP is represented by Y and population by P. Then per capita GDP is Y/P
Suppose the growth in GDP is 5% i.e. Y to 1.05 Y

And the growth rate in population is 1% P to 1.01 P
So, the growth in per capita GDP (Y/P) will be 1.05Y/1.01P = 1.0396 Y/P
80
So, the growth in per capita GDP (Y/P) will be 3.96%
So, till the time growth in GDP (Y) is more than the growth in population (P), then per
capita GDP will always increase. (In fact, our GDP/GNP has always increased more than
4% in the last 30 years). If, the growth of population and growth of GDP is same then per
capita GDP growth will be zero.
Hence, Real per capita GDP and Real per capita GNP has steadily increased in the last
five years.
13. (b)
National Income (NI) and Net National Income (NNI) are same terms and used
interchangeably.
National Income = Net National Income (NNI) = Net National Product (NNP)
Earlier (before January 2015) NSO was using factor cost to calculate NNP but now it uses
Market Prices to calculate NNP.
14. (a)
Gross National Income (GNI) is the income earned by Indian residents only whether in
India or abroad. (If an Indian has gone abroad for less than 6 months then also, he is an
Indian resident only). GNI does not include the income earned by Non-Resident Indians
(NRIs). And it is equal to GDP plus net factor income from abroad (NFIA).
GNI = GNP = GDP + NFIA
15. (b)
Goods and services produced in India and sold outside the country i.e. to the foreigners
is referred as exports. But the Net Factor Income from Abroad (NFIA) is the income earned
by the four factors of production from abroad. In case of NFIA the production happens in
abroad but in case of exports the production happens in the domestic country. So NFIA
is different from exports and hence statement (i) is false
Now (post 2015), the indirect taxes and subsidies are included in the GDP and GNP
calculation.
So, statement (ii) is true
16. (a)
The question talks about “people of a country” which is basically residents of the country
and the income coming to residents is represented by National Income rather than GDP.
As it talks about welfare, so it should be better calculated as per capita National Income
rather than just National Income. And since increase in price can increase the National
Income without increasing the welfare of the people. So, welfare can best be represented
by per capita National Income at constant market prices rather than current market
prices.
[Ref: Economic Survey 2017-18, Vol-II, Page 7, Per Capita Income]
17. (b)
The value of capital goods produced is defined as investment.
Hence, production of consumption goods and services are not investment.
Buying and selling of shares from one person to another person is also not investment for
the economy as only the ownership changes and nothing happens on ground.
So, only (ii) statement is true.
81
18. (a)
GDP is the goods and services produced within the domestic territory of the country, so
imported items are not part of GDP.
Investment in Indian economy means the value of capital goods that the economy will get
in a particular period whether by domestic production or through imports. This is
because, whatever capital equipment we import, that also helps in increasing future
production. So, investment in India is equal to capital goods produced in India plus
imported capital goods minus exported capital goods.
For detailed understanding, you can refer the book on Indian Economy by Vivek Singh.
19. (a)
Whenever in any country, the working population increases and dependent population
decreases, the savings in the economy increases. (This also happens at the family level. If
a family has more working members and less dependents then savings of the family
increases). The increased savings leads to increase in investments.
So, (i) & (iii) statements are true.
20. (a)
Domestic savings consist of Household savings, Corporate (Private) savings and
Government (Public) savings.
Household savings (17.2%), Private Corporate (11.6%), Public Sector (1.7%). Total
domestic savings around 30.5% in FY 2017-18.
Investment also consists of household, Corporate (Private) and Government (Public).

Here household investment includes unregistered/informal business and construction of
houses etc.
Household investment (10.5%), Private Corporate (11.5%) and Government (Public)

(7.3%). Total fixed capital formation (investment) is 29.3% in 2018-19. The maximum
decline in investment in the last 8 years is in household sector from 16% to 10.5% .
21. (b)
“Exports must form an integral part of the investment led growth model because higher
savings preclude/prevents domestic consumption as the driver of final demand”.
[Ref: Economic Survey 2018-19, Vol – I, Page 1]
22. (c)
Since last five/six quarters GDP growth is decreasing, while GDP is still increasing.
23. (c)
Gross Capital Formation = Gross Fixed Capital Formation (machinery + equipment +
building + cultivated biological resources + intellectual property) + Valuable Metals +
Change in stock/inventory
Gross fixed Capital formation is around 30% and valuable metals and change in stock is
one per cent each. So Gross Capital Formation or Gross Investment is around 32% . Mostly
we use the gross fixed investment for all calculation and growth purpose.
Refer the Trends
82
24. (c)
2018-19 2024-25
$2.7 Trillion $ 5 Trillion
(nominal GDP) (Nominal GDP)
So, it requires 85% growth in six years, which comes down to around 12% compounded
annual growth. This 12% is nominal growth which can be achieved with real growth of
around 8% and inflation of around 4%.
25. (d)
First let us develop the general concept of (average) productivity and marginal
productivity.
1 Acre Land
5 Labourers
2 Tonne production
If one acre of land produces 2 Tonnes of food grains, then;

Productivity of Land = Output 2 Tonne = 2 Tonne/acre
Input(land) 1 acre
Productivity of Labour = Output = 2 Tonne = 0.4 Tonne/labour

Input (labour) 5 labourer
The above two are basically average productivity.
If by adding one extra labour, production increases by 0.2 tonne, then
Marginal productivity of labour = change in output = 0.2 tonne = 0.2 tonne/labour

Change in labour 1 labour
In the same way, productivity of capital = Output

Capital
Higher is the productivity of capital, it is good for the economy.
The inverse of “productivity of capital” is Capital/Output ratio.
Higher the capital/output ratio, it is bad for economy. If Capital/Output ratio is 3/1, that
means Rs. 1 unit of output is produced from Rs. 3 units of capital. And if Capital/Output
ratio is 4/1, that means to produce Rs. 1 unit of output, Rs. 4 units of capital is required.
So, 3/1 is better than 4/1 for the economy.
Generally, if an economy has higher savings, higher capital formation happens. But if
Capital/Output ratio in the economy is high, then that means the productivity of the
capital is low, so output production may not increase much even if capital formation is
high.
So, the answer is (d)
26. (c)
Incremental Capital Output Ratio (ICOR) is defined as:-
ICOR = change in capital = (change in capital/output) = investment % in GDP

change in output (change in output/output) % change in GDP
83
ICOR represents how much extra unit of capital is required to produce one additional
unit of output. It basically represents the (inverse of) efficiency of the new capital.
Hence, statement (iii) is false.
“Basically, capital/output ratio represents (average) productivity and ICOR

represents (marginal) productivity.”
So, if ICOR of India = 5 or (5/1), then India requires Rs. 5 of additional capital goods to
produce Rs. 1 of extra output.
If our ICOR is 5 and we want a growth of 8% in GDP then we will have to do 40%
investment.
27. (c)
Capital formation means production of capital goods.
Production of capital goods leads to future production of goods and services and hence
economic growth. So, statement (iii) is true
Production of capital goods increases the capital stock in the economy but does not tell
whether there is any increase in efficiency of that capital. Efficiency is measured as how
much output is produced from how much of inputs. So, we can’t say that ICOR will
increase or decrease with capital formation.
Basically, if you increase the number of hours you study, still you cannot say that
the “number of pages per hour” that you study will increase or decrease.
28. (b)
Capital/Output ratio represents (inverse of) productivity of capital. If capital/output ratio
is decreasing, that means capital is becoming more productive. But you cannot say that
investment will increase.
But if capital is becoming more productive, then economic output will increase.
29. (d)
If investments are decreasing that means there is less production of capital goods in the
economy but that does not mean that the existing capital stock will decrease. Existing
capital stock will keep on increasing even if investments are decreasing.
So, (i) statement is false.
And since existing capital stock will keep on increasing, therefore production of goods and
services i.e. GDP will keep on increasing.
So, (iii) statement is false.
If investments are decreasing, that means production of capital goods is decreasing. Then
you can’t say anything about productivity of capital i.e. ICOR.
So, (ii) stamen is also false.
30. (a)
% change in GDP = Investment %

Incremental Capital Output Ratio (ICOR)
So, for higher growth rate, we require more investment and less ICOR
84
31. (a)
Higher economic growth comes from
 additional investment, or
 increase in capacity utilization of the capital stock (factory)
When economic growth comes from new investment then generally more jobs are created
but when economic growth comes from better utilization of the existing capacity (which
was earlier not utilized properly) then jobs may not get created in the economy.
32. (c)
Marginal productivity of labour = Change in output
Change in labour
Marginal productivity of labour means how much extra production will increase by adding
one extra labour. When a factory is running at peak production, then its production
cannot be increased even by adding more labourers. So, marginal productivity of labour
will be zero.
33. (c)
Investment in the economy means production of capital goods.
When the economy produces all consumption goods and no capital goods (investment)
then its GDP shall remain constant i.e. it will not grow. But till the time there is net
production of capital goods i.e. investment in the economy, the production of goods and
services (GDP) will keep on increasing.
Capital formation means production of capital goods. So, if there is capital formation, it
will necessarily lead to increase in GDP i.e. economic growth.
34. (d)
When a country goes through industrialization, it uses more capital and less labour
comparatively or we can say labours are replaced by capital (machinery). That means
ratio of capital to labour increases sharply. So, statement (a) is true.
Industrialization also leads to increase in production of goods and services (with the same
amount of labour or may be less labour). So, production per labour also increases which
means increase in labour productivity. So, statement (b) is also true.
Total factor productivity means productivity of all factors of production i.e. labour, capital,
land etc. During industrialization, since overall production increases, production per unit
of inputs i.e. labour, capital, land etc also increases. So, statement (c) is also true.
Productivity of labour = Output

Labour
Productivity of land = Output

Land
We all know that because of industrialization output increased. Now if output increased
(with the same land and labour), then as per the above formula, productivity of land and
productivity of labour, both will increase. So, in case of industrialization, productivity of
all the factors of production increases.
85
35. (c)
GDP deflator is an index of price and measures the price changes quarterly.
GDP deflator = nominal GDP/real GDP
CPI and WPI indices are calculated by fixing the weights of different goods and services
but in case of GDP deflator, it varies as per actual production level.
(Its highly technical, if you don’t understand, leave it, will provide a video)
36. (d)
37. (d)
Services are not traded/transacted in the wholesale markets. So, WPI data does not
include the inflation due to services.
So, (i) statement is true
When goods are imported in India, first they move to the wholesale mandis and then they
come in the retail markets. So, wholesale prices and retail prices both get impacted
because of the imported goods.
So, (iii) statement is true.
As the formula of GDP Deflator (is) = Nominal GDP

Real GDP
Since, GDP includes only domestic goods and services, hence, GDP Deflator does not
include the inflation due to imported goods and services.
So, (iv) statement is true.
38. (d)
Wholesale Price Index (WPI) is released by Office of Economic Advisor, Department for
Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry.
The Base year has been revised to 2011-12 and includes 697 items. WPI inflation
measures the average change in prices of commodities for bulk sale at the level of early
stage of transactions pertaining to four sectors namely agriculture, mining,
manufacturing and electricity. WPI does not cover services. WPI covers commodities
falling under three Major Groups namely:
 "Primary Articles" (weight 22.62%) like agricultural commodities and minerals

 "Fuel and Power" (weight 13.15%) like coal and electricity and
 "Manufactured Products" (weight 64.23%) like textiles, leather, machine tools
The prices tracked are agri-market (mandi) prices for agricultural commodities, ex-factory
prices for manufactured products and ex-mines prices for minerals. The prices used for
compilation do not include indirect taxes in order to remove the impact of fiscal policy.
This is in consonance with best international practices and makes the new WPI
conceptually closer to "Produce Price Index" used internationally.
Weight given to each commodity covered in the WPI basked is based on the net traded
value of the item in the year 2011-12. The net traded value is the value of output in the
year 2011-12 adjusted for net imports. Thus, net traded value represents the total
transactions of each product in the economy during the base year.
39. (a)
CPI includes indirect taxes. So, when government increases GST rate, it is captured in
the CPI data. But in the new series of WPI (2011-12), government has excluded indirect
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taxes while measuring WPI. This is in consonance with international practices and will
make the new WPI conceptually closer to Producer Price Index (PPI).
Ref: https://pib.gov.in/newsite/PrintRelease.aspx?relid=169640
40. (c)
Income elasticity of demand is calculated as the ratio of the percentage change in quantity
demanded to the percentage change in income. It measures the responsiveness of the
quantity demanded for a good or service to a change in income.
If income elasticity of demand of a commodity is less than 1 that means that with change
in income, demand is not changing much, that means, it is a necessity good. If
the elasticity of demand is greater than 1, it is a luxury good or a superior good.
41. (c)
Consider an example:
If a country is exporting only apples and importing only oranges, then the terms of trade
(TOT) are simply the ratio of price of apples to the price of oranges.
Suppose the price of apple is Rs. 120/kg and Oranges is Rs. 40/kg
So, TOT = Export Price 120/40 = 3
Import Price
Which means if India is exporting apples and importing oranges then for one kg of apples
exported, we can import 3kg of oranges. In other words, how many oranges can we import
for a unit of export of apples.
So, TOT is a measure of how much imports an economy can get for a unit of exported
goods. Since economies typically export and import many goods, measuring the TOT
requires defining price indices for exported and imported goods and comparing the two.
A rise in the prices of exported goods in international markets would increase the TOT,
while a rise in the prices of imported goods would decrease it.
So, statements (i), (iii) & (iv) are true.
42. (d)
Openness is measured as, Exports + Imports of goods and services of a country as a
percentage of its GDP.
So, (d) is correct
Trade balance means Exports – Imports.
So, statement (c) is incorrect.
43. (d)
Refer the Trends
Economic Survey 2019-20, Vol- 2, Page no. 76 and 79
44. (b)
India’s services exports are around 7.7% of GDP in 2018-19, while merchandise exports
are around 12.1% of GDP. India’s services imports are around 4.6% of GDP in 2018-19.
India’s services trade has been consistently in surplus for the last decade.
Refer the Trends
45. (d)
Refer the Trends
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46. (c)
The Reserve Bank of India (RBI) was set up on the basis of the recommendations of the
Hilton Young Commission. The Reserve Bank of India Act, 1934 provides the statutory
basis of the functioning of the RBI, which commenced operations on April 1, 1935.
RBI began its operations by taking over from the Government the functions so far being
performed by the Controller of Currency and from the Imperial Bank of India, the
management of Government accounts and public debt. Burma (Myanmar) seceded from
the Indian Union in 1937 but the Reserve Bank continued to act as the Central Bank for
Burma till Japanese Occupation of Burma and later up to April, 1947. After the partition
of India, the Reserve Bank served as the central bank of Pakistan up to June 1948 when
the State Bank of Pakistan commenced operations. The Reserve Bank, which was
originally set up as a shareholder’s (private) bank, was nationalised in 1949.
47. (a)
GDP (Output) is the final value of goods and services produced in the economy. But there
are a lot of transactions that happen in the economy for intermediate goods, so value of
transactions is higher than the value of final output in the economy.
For example, suppose, I purchased Rs. 30 of input to produce Rs. 100 of final output,
which I sold in the market. GDP will be Rs. 100, while value of transactions in the
economy will be Rs. 130.
Since money keeps on moving between different hands, the same money is used for
transacting again and again (also referred as velocity of circulation), so the money
required for doing transactions will be less than the total value of transactions in the
economy.
As on 13th March 2020, Money Supply in the economy was Rs. 165 lakh crores. While
GDP of 2019-20 is expected to be Rs. 204.4 lakh crore. And the value of transactions is
much more than the GDP.
48. (a)
49. (d)
Seigniorage refers to the income from money creation. It is a way for governments to
generate revenue without levying conventional taxes. Seigniorage is the profit that accrues
to the central banks (which then may be transferred to the central government) in the
following ways:
 While issuing currency, the reserves/backup that the RBI keeps with itself, these
reserves give RBI interest Income on the total amount of currency in circulation
(minus cost of printing currency)
 Interest accruing from bank balances with central banks arises from funds banks
have to hold with the central banks to meet their reserve requirements, either as
interest-free balances (CRR) or at below market interest rates.
 the inflation tax concept which is measured as the product of the inflation rate and
the monetary base. (Because of inflation, the currency note that the public is holding
losses value which reduces the liability of RBI in real terms)
50. (c)
Pegged exchange rate means a country fixes its exchange rate with another country
currency or a basket of currencies and when required changes it accordingly.
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Suppose Nominal Exchange Rate is $1 = Rs.60 (Nominal exchange rate means how many
Rs. can be purchased in $1)
For example, suppose

India US
Burger Price Rs. 30 $1
In this case US will import the burgers from India as in $1 they will get Rs. 60 and in Rs.
60 they will get 2 burgers from India. So, India will export burgers to US.
But if due to inflation the burger price in India becomes Rs. 60 then exports from India
will stop. So, inflation in the country make exports less competitive.
Hence, (i) statement is true.
But when price of burger in India reaches to Rs. 60 and RBI devalues the exchange rate
to $1 = Rs. 120 then again exports from India will start. Because now foreigners will get
Rs. 120 in $1 and in Rs. 120 they will again get 2 burgers from India.
So (ii) statement is also true.
51. (c)
The rate of rupee-dollar is determined in the forex market based on market forces of
demand and supply. When rupee becomes highly volatile, then RBI intervenes in the
forex market, to contain the volatility. But RBI does not regulate or fix the rupee dollar
rate. This is called ‘Managed Float’ or ‘Dirt Float’.
RBI regulates the Forex Market, Money Market and Govt. securities Market.
52. (a)
RBI intervenes in the forex market to contain volatility in exchange rate of Rupee with
respect to dollar. There is no targeted band in which RBI tries to keep the Rupee Dollar
exchange rate.
For example, if Rupee starts depreciating slowly over a period of time and it moves to $1
= Rs 85, then RBI may not intervene in the forex market.
53. (c)
Suppose Nominal Exchange Rate is $1 = Rs.60 and India and US produces just burgers.
India US
To calculate PPP exchange rate, we need to compare the prices of a basket of goods in
India with US.
In the above case by comparing the prices of burger in India and US, we will get
$1 = Rs. 30
So, $1 = Rs. 30 is the PPP exchange rate. It implies that, whatever Rs. 30 can purchase
in India, $1 can purchase in US i.e. purchasing power of Rs. 30 in India is equal to
purchasing power of $1 in US.
So, if inflation rate is different in India and US, then PPP exchange rate will change. But
if there is no inflation (prices remain same) or same inflation, then PPP exchange rates
will remain same i.e. constant.
So, (i) statement is true.
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When we use PPP exchange ($1 = Rs. 30) rate to convert the price of burger in US in
Indian currency then it is Rs. 30 in US which is the same as in India also.
So, (ii) statement is also true.
54. (a)
When nominal exchange rate becomes equal to PPP exchange rate, then we say that the
currencies of two countries are at purchasing power parity.
55. (b)
Suppose (Nominal) exchange rate is $1 = Rs. 60
Now if an Indian exporter exported a particular commodity (1 unit) in the international
market whose price is $8, then he will get $8 and after conversion in India he will get
ultimately Rs. 480.
But if the rupee is undervalued (means less valued) i.e. $1 = Rs. 64 then he can sell his
product in the international market at a lesser price of $7.5 and can earn the same Rs.
480 after conversion. (When a country devalues its currency, then exporters are able to
sell their product in the international market at a lesser price without compromising their
earnings.) So, we also say that exporters become more competitive.
56. (b)
When trade deficit increases that means imports are increasing in the country as
compared to exports. Increase in imports causes an increase in demand for dollars which
results in decline in value of Indian currency.
Increase in trade deficit results in money going out of the Indian economy.
57. (d)
When foreign investors come to India, they bring dollars and this dollar they sell in forex
market and demand rupees which results in increase in demand of rupee and rupee
appreciates.
When exports increase, we earn more dollars from the foreign market and this dollar we
sell in the forex market to purchase rupees which results in increase in demand of rupees
and rupee appreciates.
When the interest rate in India increases, more foreign investors come to India to invest
in fixed interest rate instruments, which results in rupee appreciation.
So, none of the statements are true.
58. (d)
59. (b)
Suppose Nominal Exchange Rate is $1 = Rs.60
India US
Whether India will export burgers to US or not depends on three parameters/prices
 Price of Burger in US (directly proportional, i.e. if it increases, exports to US will
increase)
 Price of Burger in India (indirectly proportional, i.e. if it increases exports to US
will decrease)
 Nominal Exchange Rate (directly proportional, i.e. if it increases exports to US will
increase)
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And all the three parameters are captured in Real Exchange Rate
Real Exchange Rate = Price in US X Nominal Exchange Rate

Price in India
= 1 X 60
30
=2
Till Real Exchange Rate > 1, India will continue to export its burgers to US.
If Real Exchange Rate becomes equal to 1, then export & import will stop.
If Real Exchange Rate < 1, then US will start exporting its burgers to India.
So Real Exchange Rate determines export competitiveness between two countries.
But if India wants to measure its export competitiveness with all its trading partners then
it calculates Real Effective Exchange Rate which is a weighted average (weights being
the shares in foreign trade with respective countries) of the Real Exchange Rates of its
different trading partners.
If real effective exchange rate appreciates that means it moves from 2 to 1 (in the example
above) which means export competitiveness of Indian products will start reducing.
60. (c)
There is no international authority which directs that trade between two countries should
happen only with some specific currencies. Any two countries are free to transact with
any currency if they are willing.
Generally, any country will accept that currency for its trade (exports), if that currency is
not losing value (less inflation) and it is stable and it is freely convertible in other
currencies.
61. (b)
Foreign Currency Non-Resident (FCNR) Account can be opened only by NRI's/PIO's. This
account can be maintained in any freely convertible foreign currency but only in the form
of term/fixed deposits. The interest and principal are non-taxable and freely repatriable.
62. (c)
Nostro account refers to an account that a bank holds in a foreign currency in another
bank. Nostro account and vostro account refer to the same thing from a different
perspective. For example, Bank X has an account with Bank Y in Bank Y's home currency.
To Bank X, that is a nostro account, meaning "our account on your books," while to Bank
Y, it is a vostro, meaning "your account on our books." These accounts are used to
facilitate foreign exchange and international trade transactions.
63. (b)
SWIFT stands for the ‘Society for Worldwide Interbank Financial Telecommunications’. It
is a messaging network that financial institutions use to securely transmit information
and instructions through a standardized system of codes. SWIFT code is an 8 digit or 11-
digit code and is interchangeably also called Bank Identifier Code (BIC).
(It was in the news in the context of Punjab National Bank fraud of Rs. 11,000 crore)
64. (d)
65. (a)
As commercial banks are required to keep SLR (cash, gold, government securities) of
18.25%, they keep the maximum percent of government securities. Out of cash, gold and
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government securities, the government securities give the best returns (interest), so they
prefer this instrument. Cooperative banks also keep government securities under SLR but
since cooperative banks overall share in deposit and lending is around 10 percent of the
Scheduled commercial banks, so commercial banks have the highest share of government
securities.
66. (d)
A Government Security (G-Sec) is a tradeable instrument issued by the Central
Government or the State Governments. (G-Secs are issued through auctions conducted by
RBI. Auctions are conducted on the electronic platform called the E-Kuber, the Core Banking
Solution (CBS) platform of RBI). G-Secs carry practically no risk of default and, hence, are
called risk-free gilt-edged instruments. (Govt. issues only debt securities). There are four
kinds of government securities.
Government Securities (G-Sec)
Treasury Bills Cash Management Bills Dated Securities State Dev. Loans
SDLs are allowed to be kept under SLR by banks. SDLs have maturity of more than one
year.
In terms of Sec. 21A (1) (b) of the Reserve Bank of India Act, 1934, the RBI may, by
agreement with any State Government undertake the management of the public debt of
that State. Accordingly, the RBI has entered into agreements with 29 State Governments
and one Union Territory (UT of Puducherry) for management of their public debt.
67. (d)
In 2010, Government of India, in consultation with RBI introduced a new short-term
instrument, known as Cash Management Bills (CMBs). It is not used to fund the Fiscal
deficit but is used to meet the temporary mismatches in the cash flow of the Government
of India. The CMBs have the generic character of T-bills but are issued for maturities less
than 91 days. (Traded in money market)
Treasury bills or T-bills: These are short term debt instruments issued by the
Government of India for a maturity of less than one year. Treasury bills are zero coupon
securities and pay no interest. Instead, they are issued at a discount and redeemed at the
face value at maturity. For example, a 91-day Treasury bill of ₹100/- (face value) may be
issued at say ₹ 98.20, that is, at a discount of say, ₹1.80 and would be redeemed at the
face value of ₹100/-. (Treasury bills are traded in money market).
Dated Securities: Dated central government securities have a tenor of more than one
year up to 40 years.
68. (d)
A bond (debt paper) holder is expected to get a fix interest regularly and principal at
maturity. But if the inflation in the economy starts increasing the price of the bond
decreases (because now the actual value of the principal and interest which the
bondholder will get will be of less value) and bondholders lose. When the price of the bond
decreases in the market, the person who will purchase the bond will have to pay less price
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and hence he will get more return/yield. (The interest rate on the bond remains fixed but
its price fluctuates in the market and hence the return also fluctuates. If the market price of
the bond is low, then the return/yield on the bond will be high. This is because the person
who will purchase the bond will have to pay less price to get the same bond).
69. (d)
When the interest rate moves up in the economy, government securities (bonds) prices
goes down.
If the liquidity in the economy is surplus, the interest rate comes down in the economy
resulting in higher bond prices.
Developments in money, capital and forex market also impact interest rate and liquidity
in the domestic economy resulting in change in government securities prices.
70. (b)
As per the RBI Act 1934, Section 26, rupee notes (and coins) are legal tenders. It means
that notes and coins cannot be refused by any person of the country for
payment/discharge of debt.
(For example: Is an autowallah obliged to accept your currency note for a ride? Not
necessarily! If you are yet to get into the auto, the autowallah can turn you down despite it
being a legal tender. But once you make the trip, and you have incurred a debt, he cannot
refuse to take your currency note.)
71. (b)
Currencies and coins are fiat money because they derive their value from government
"fiat"/ order. If the coin is melted then it will not fetch the same value in the market and
the paper of which the currency note is made of does not have any value in the market.
Hence, Currency notes and coins are called fiat money and they do not have intrinsic
value.
They are also called legal tenders as they cannot be refused by any citizen of the country
for settlement of any kind of transaction. Cheques drawn on savings or current accounts,
however can be refused by anyone as a mode of payment. Hence cheques are not legal
tenders. So only (i) & (iii) statements are true.
72. (c)
A country or its citizens may use many modes of exchange in their daily lives. History
tells us that ancient humans used salt and spices as currency. But ‘Legal tender’ is the
money that is recognized by the law of the land, as valid for payment of debt. It must be
accepted for discharge of debt. RBI Act 1934, Section 26 states that “Every central bank
note shall be legal tender at any place in India in payment or on account for the amount
expressed therein”.
Legal tender can be limited or unlimited in character. In India, coins function as limited
legal tender. Therefore, 50 paise coins can be offered as legal tender for dues up to ₹10
and smaller coins for dues up to ₹1. Currency notes are unlimited legal tender and can
be offered as payment for dues of any size.
As per the RBI Act 1934, all currency notes are guaranteed by the Central Government
73. (c)
The RBI Act of 1934, Section 22 gives the central bank the sole right to issue currency
notes.
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74. (d)
[The Government of India has the sole right to mint coins. The responsibility for coinage
vests with the Government of India in terms of the Coinage Act, 1906. The designing and
minting of coins in various denominations is also the responsibility of the Government of
India. Coins are minted at the India Government Mints at Mumbai, Alipore (Kolkata),
Saifabad (Hyderabad), Cherlapally (Hyderabad) and NOIDA (UP).
The coins are issued for circulation only through the Reserve Bank in terms of the RBI Act.
Coins can be issued up to the denomination of Rs.1000 as per the Coinage Act, 1906.
The RBI shall issue rupee coins on demand and the Govt. of India shall supply/mint such
coins to the RBI on demand.
Exactly taken from the below source.

Ref: https://www.rbi.org.in/scripts/ic_coins.aspx
And RBI Act 1934, section 39
75. (c)
As per section 24 of RBI Act 1934, “Central Government, on the recommendation of Central
Board of Directors of RBI, has the authority to specify the denomination of the new currency
note to be issued in the country.”
76. (c)
As per the RBI Act 1934, Section 25, "the design, form and material of bank notes shall be
such as may be approved by the Central Government after consideration of the
recommendations made by the Central Board of RBI.”
77. (a)
As per the RBI Act 1934, Section 26, "on recommendation of the Central Board, the Central
Government may, by notification in the Gazette of India, declare that, with effect from such
date, any series of bank notes of any denomination shall cease to be legal tender".
78. (d)
As per section 26 of the RBI Act 1934, on recommendation of the Central Board the
Central Government may, by notification in the Gazette of India, declare that, with effect
from such date as may be specified in the notification, any series of bank notes of any
denomination shall cease to be legal tender.
79. (c)
In terms of Section 20 of the RBI Act 1934, RBI has the obligation to undertake the
receipts and payments of the Central Government and to carry out the exchange,
remittance and other banking operations, including the management of the public debt
of the Central Govt. Further, as per Section 21 of the said Act, RBI has the right to
transact Government business of the Union in India.
State Government transactions are carried out by RBI in terms of the agreement entered
into with the State Governments in terms of section 21 A of the RBI Act. As of now, such
agreements exist between RBI and all the State Governments except Government of
Sikkim.
Thus, the legal provisions vest Reserve Bank of India with both the right and
obligation to function as banker to the government.
80. (c)
RBI carries out the general banking business of the governments through its own offices
and commercial banks, both public and private, appointed as its agents (called Agency
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Banks). Section 45 of the Reserve Bank of India Act, 1934, provides for appointment of
scheduled commercial banks as agents at all places or at any place in India.
A network comprising the Government Banking Division of RBI and branches of agency
banks appointed under Section 45 of the RBI Act carry out the government transactions.
At present all the public sector banks and select private sector banks act as RBI's agents.
Only designated branches of agency banks can conduct government banking business.
81. (d)
As a banker to bank, RBI performs the following functions:
 RBI enables banks to open their (current) accounts with RBI for maintenance of
statutory reserve requirements (CRR and may be SLR)
 RBI acts as a common banker for different banks to enable settlement of interbank
transfer of funds
 RBI provides short term loans and advances to banks for specific purposes
 RBI acts as lender of last resort may be in case of a bank run situation. (Bank Run
is a situation that occurs when everybody wants to take money out of one’s bank
account before the bank runs out of reserves.)
82. (d)
RBI comes to the rescue of a bank that is solvent (has not gone bankrupt) but faces
temporary liquidity (funds) problems by supplying it with much needed liquidity when no
one else is willing to extend credit to that bank. RBI extends this facility to protect the
interest of the depositors of the bank and to prevent possible failure of a bank, which in
turn may also affect other banks and institutions and can have an adverse impact on
financial stability and thus on the economy.
83. (a)
A bank run is a situation that occurs when a large number of bank's customers withdraw
their deposits simultaneously due to concerns about the bank's solvency (Solvency is the
ability of a company to meet its long-term financial obligations which is essential to
staying in business). As more and more people withdraw their funds, the probability of
default increases, thereby prompting more people to withdraw their deposits. In extreme
cases, the bank's reserves may not be sufficient to cover the withdrawals. A bank run is
typically the result of panic which can ultimately lead to default. In such a situation, the
RBI stands by the commercial banks as a guarantor and extends loans to ensure the
solvency of the banks. This function of RBI is also called 'lender of last resort'.
RBI comes to the rescue of a bank as a ‘lender of last resort’ that is solvent (has not gone
bankrupt) but faces temporary liquidity/funds problems.
84. (a)
In all RBI related documents, it is written that, RBI acts as lender of last resort for banks.
But in case of IL&FS crisis in 2018, where it defaulted on loan papers, Mr. Viraj Acharya,
the ex-Deputy Governor of RBI clarified that RBI can act as lender of last resort for NBFCs
also.
All NBFCs are not registered or regulated by RBI. Some NBFCs are regulated by SEBI,
IRDAI etc. also
85. (c)
When RBI floats/raises loans on behalf of government then it is acting as a "Debt
Manager" of government and not as a Banker to government. So (iv) statement is not true.
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86. (d)
The Reserve Bank of India gives temporary loan facilities to the centre and state
governments as a banker to government. This temporary loan facility is called Ways and
Means Advances (WMA).
The WMA scheme was designed to meet temporary mismatches in the receipts and
payments of the government. This facility can be availed by the government if it needs
immediate cash from the RBI. The WMA is a loan facility from the RBI for 90 days which
implies that the government has to vacate the facility after 90 days. Interest rate for WMA
is currently charged at the repo rate. The limits for WMA are mutually decided by the RBI
and the Government of India.
87. (b)
RBI has deregulated interest rate on term/ time deposits since Oct 1997.
RBI had deregulated interest rate on savings deposits since May 2011.
RBI regulates three categories of financial markets; money markets, government

securities markets and foreign exchange markets.
88. (d)
Commercial Paper (CP) is an unsecured money market debt instrument issued in the form
of a promissory note for less than one year. NBFCs and high rated companies also are
allowed to issue commercial papers to raise short term money.
89. (d)
In money market, short term (less than one-year maturity), highly liquid and debt
instruments are traded. State Development Loans (SDL) have maturity more than a year.
Cash management bills, Treasury bills and Certificate of deposits are debt instruments
with less than one-year maturity.
Certificate of Deposit (CD) is a negotiable/tradable money market instrument (a kind of

Promissory Note) and issued in dematerialised form against funds deposited at a bank or
other eligible financial institution for a specified time period. (It is different from the Deposit
certificates that individuals get when they deposit money in bank which is non-tradable).
90. (c)
Mergers and Acquisitions of commercial banks require the approval of Competition
Commission of India (CCI) and Reserve Bank of India (RBI) both.
CCI is the "Fair Trade Regulator".
CCI looks into the competition part of such deal and RBI looks into the prudential aspects.
The RBI is the sector regulator, so the health of banks is its concern. The CCI’s concern
is their behaviour in the market and the consumers in the market,”
If any merger/amalgamation/acquisition is happening and after the

merger/amalgamation/acquisition the combined asset value is more than Rs. 1000 crore
or Turnover (sales in a year) is more than Rs 3000 crore then they are required to take
approval of Competition Commission of India (CCI) under the Competition Commission
of India Act 2002.
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But as per section 54 of the CCI Act, Central government may exempt from the application
of CCI Act, any class of enterprises, if such exemption is necessary in the interest of
security of the State or public interest. So, when SBI and its associates got merged, then
Central government had waived of the approval of CCI. When SBI was acquiring 49%
stake in Yes Bank then also central government waived off the CCI approval.
The merger is a process wherein two or more companies/entities are combined together
to form either a new company or an existing company absorbing the other target
companies. Basically, it’s a process to consolidate multiple businesses into one business
entity.
Amalgamation is a type of merger process in which two or more companies combine their
businesses to form an entirely new entity/company.
An acquisition is when one company purchases most or all of another company's shares
to gain control of that company.
Consolidation is a general term which means the action or process of combining a

number of things into a single more effective or coherent whole. So, merger, amalgamation
and acquisition all will come under consolidation.
91. (b)
Government is merging public sector banks to make them more efficient and achieve
economies of scale and consolidation. Just merging of banks will not reduce the absolute
value of NPAs.
92. (d)
With a view to improve the Governance of Public Sector Banks (PSBs), the GoI appointed
an autonomous Banks Board Bureau (BBB) which started functioning from 1st April,
2016. The Board has three ex-officio members and three expert members in addition to a
Chairman. The following are the functions of the BBB
 It will be responsible for the selection and appointment of Board of Directors in PSBs
and Financial Institutions (FIs)
 It will advise the Government on matters relating to appointments, confirmation or
extension of tenure and termination of services of the Board of Directors
 It will help banks to develop a robust leadership succession plan for critical positions
 It will build a data bank containing data relating to the performance of PSBs/FIs and
its officers
 It will advise the Government on the formulation and enforcement of a code of conduct
and ethics for managerial personal in PSBs/FIs
 It will advise the Government on evolving suitable training and development
programmes for management personnel in PSBs/FIs
 It will help banks in terms of developing business strategies and capital raising plan
etc.
93. (a)
As per "The Deposit Insurance and Credit Guarantee Corporation (DICGC) Act 1961",
DICGC must register all commercial banks (scheduled and non-scheduled both) and
Urban Cooperative banks (UCB) and State and District Central Cooperative Banks
(StCB/DCCB) as an insured bank. (StCB/DCCB are rural cooperative banks)
And every insured bank is liable to pay premium to DICGC as may be notified by DICGC
after the approval of RBI. But the premium shall not exceed fifteen paise per annum for
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every hundred rupees of the total amount of the deposits in that bank. Which means
premium has been capped under the DICGC Act. As per the rules, premium cost is
required to be borne by the bank themselves and cannot be passed on to depositors.
Since the insurance cover has been increased from the presently Rs. 1 lakh per depositor
per bank to Rs. 5 lakh per depositor per bank, the insurance premium has also been
increased from presently 10 paise per Rs. 100 of deposit to 12 paise per Rs. 100 of deposit.
Deposits of foreign governments, deposits of central and state governments, and inter-
bank deposits are not covered/insured.
94. (c)
The objectives of setting up of payments banks is to promote financial inclusion by
providing small savings accounts and payments/remittance services to migrant labour
workforce, low income households, small businesses, other unorganized sector entities
and other users.
The following will be the scope of activities for payment banks:

 Acceptance of demand deposits (savings and current) but no time deposits
 No lending activity
 Issuance of ATM/debit cards but not credit cards
 Payments and remittance services through various channels
 Acting as Banking Correspondent (BC) of another bank
 Distribution of simple financial products like mutual funds/insurance products, etc.
Payment banks will be required to maintain Cash Reserve Ratio (CRR) and Statutory
Liquidity Ratio (SLR). The total deposits of the public must be invested in government
securities and/ or deposited in other commercial banks (i.e. no lending is allowed). This
makes the public deposit in payment banks safe. Payment banks will be set up as
differentiated banks for serving niche interests. (Differentiated banks have restrictions
either in geography or in operation or both. Opposite of differentiated banks are universal
banks).
95. (c)
India Post Payment Bank is a public sector enterprise and comes under the Department
of Posts, Ministry of Communications. It is a payment bank and accepts only demand
deposits (current and savings account).
‘Department of Post’ is a department of Govt. of India to provide mail and various services.
Now, Govt. of India (through Department of Post, Ministry of Communication) created a
wholly owned PSU, ‘India Post Payment Bank’, to provide banking facilities.
96. (a)
The objectives of setting up of small finance banks are to promote financial inclusion by
providing provision of savings vehicles and supply of credit to small business units; small
and marginal farmers; micro and small industries; and other unorganized sector entities,
through high technology-low cost operations. They are required to extend 75% of their
loans to priority sectors and 50% of their loan portfolio shall constitute loans of up to 25
lacs.
The scope of activities for small finance banks will be basic banking activities of
acceptance of deposits and lending to unserved and underserved sections including small
business units, small and marginal farmers, micro and small industries and unorganized
sector entities and there will not be any restriction in the area of operations. They will be
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required to maintain CRR and SLR. They will be set up as differentiated banks for serving
niche interests
Small Finance Banks are not particularly for rural areas.
RBI released guidelines for ‘on-tap’ licensing of Small Finance Banks. Urban Cooperative
Banks and Payment Banks can apply for conversion into SFB. ‘On-tap’ means any time
they can apply for conversion into SFB and they don’t need to wait for a time window when
RBI will grant licenses.
97. (a)
In normal companies/banks, Board of Directors (BoD) are independent and
representatives of shareholders/owners, but not exactly the shareholders. But in
cooperative banks, the Board of Directors are selected from among the shareholders
themselves. Because of this, professionalism is missing from the cooperative banks and
there were several cases of frauds discovered.
To bring improvement in the governance and functioning of Urban-Cooperative Banks

(UCBs), a new organization structure consisting of a Board of Management (BoM), in
addition to the Board of Directors (BoD), was suggested by the Malegam Committee
(2011). (As changing the selection/appointment process of BoD required changes in
Cooperative Societies Act)
Accordingly, RBI published guidelines on 31st Dec 2019, as per which, the BoD of
UCBs with deposit size of ₹100 crore and above, shall constitute BoM. It shall be
mandatory for such banks to constitute BoM for seeking approval to expand their area of
operation and/or open new branches. These UCBs will also require prior approval of RBI
for appointment of their CEOs. UCBs with a deposit size less than ₹100 crore are
exempted from constituting BoM although they are encouraged to do so voluntarily. The
BoM shall report to the BoD and shall exercise oversight over the banking related
functions of the UCBs, assist the BoD on formulation of policies and any other related
matter specifically delegated to it by the BoD for proper functioning of the bank. The BoD
will continue to be the apex policy setting body and shall continue to be responsible for
the general direction and control of a UCB. It will continue to look after all the
administrative functions as spelt out in the respective Co-operative Societies Acts.
98. (a)
Urban cooperative banks (UCB) are also called Primary cooperative banks and are under
dual regulation of Central/State governments and the RBI.
Though the Banking Regulation Act came in to force in 1949, the banking laws were made
applicable to cooperative societies only in 1966 through an amendment to the Banking
Regulation Act, 1949. Since then there is ‘duality of control’ over cooperative banks
(urban and rural both) between the State Registrar of Cooperative Societies/Central
Registrar of Cooperative Societies and the Reserve Bank of India. The Reserve Bank
regulates and supervises the banking functions of UCBs/StCB/DCCB under the
provisions of Section 22 and 23 of Banking regulation Act, 1949 and the non-banking
aspects like registration, management, administration and recruitment, amalgamation
and liquidation are regulated by the State/ Central Governments.
PACS and long-term credit co-operatives (SCARDB and PCARDB), which are basically
rural cooperative banks, are outside the purview of the Banking Regulation Act, 1949 and
are hence not regulated by the Reserve Bank.
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Cabinet approved an Amendment on 5th Feb 2020 in Banking Regulation Act 1949 and
Govt. is planning to bring management functions also of UCB/StCB/DCCB under RBI but
not administrative.
Urban Cooperative Banks are under the supervision of RBI but supervision of all rural
cooperative banks including StCB/DCCB have been delegated to NABARD by RBI.
99. (c)
Regional Rural Banks (RRBs) are regulated by RBI and supervised by NABARD
100. (d)
NABARD does not give direct loan to individuals but it gives loan to Commercial Banks,
Regional Rural Banks (RRBs), State Cooperative Banks & Land Development Banks and
Non-Banking Financial Companies (NBFCs) for further lending (refinance) to the
agriculture and rural sectors.
[Ref: https://www.nabard.org/english/Longterm.aspx]
101. (d)
MUDRA would be responsible for refinancing all Last Mile Financiers such as Non-
Banking Finance Companies, Societies, Trusts, Companies, Co-operative Societies, Small
Banks, Scheduled Commercial Banks and Regional Rural Banks which are in the
business of lending to micro/small business entities engaged in manufacturing, trading
and services activities (not for agriculture). Refinancing means MUDRA loans will be
available through Banks/NBFCs/MFIs and not directly from MUDRA Bank.
MUDRA loans are available in three categories. For small business, loans up to 50000/-
is available under the ‘Shishu’ category, beyond 50,000 and up to 5 lakhs under the
‘Kishor’ category and between 5 lakhs to 10 lakhs under the 'Tarun' category. These
products have been designed to cater to customers operating at the lower end of the
enterprise spectrum i.e. informal/unorganized sector.
102. (d)
National Housing Bank (NHB) was set up in 1988 under the National Housing Bank Act,
1987. It operates as a principal agency to promote Housing Finance Companies (HFC)
both at local and regional levels and to provide financial and other support to such
institutions. NHB is regulated by RBI. Earlier, NHB regulated the activities of HFCs based
on regulatory and supervisory authority derived under the NHB Act 1987, but now RBI
does it. It does not extend direct credit at individual level but extends indirect financial
assistance by way of refinance (i.e. NHB finances those institutions which provide finance
to individual borrowers, builders etc.)
103. (c)
Recent changes:
National Housing Bank was a wholly owned (100%) subsidiary of RBI. But in 2019, Govt.
of India took over the entire stake of NHB from RBI.
Housing finance companies (HFCs) are a category of NBFCs and till recently, HFCs were
regulated by National Housing Bank (NHB). But this was changed in 2019 and now HFCs
have come under the direct regulation of RBI. This may have been done because of the
bankruptcy issues going on in various housing finance companies like DHFL.
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Even if housing finance companies (HFCs) were a category of NBFCs, in the news the
newspapers always mentioned NBFC and HFC separately. The reason being NBFCs were
regulated by RBI and HFC by National Housing Bank (which was regulated by RBI).
104. (a)
Peer to Peer (P2P) Lending:
P2P intermediaries (regulated by RBI) are a class of NBFCs that provide the platform which
pairs borrowers and individual lenders. With P2P lending, borrowers take loans from
individual investors who are willing to lend their own money for an agreed interest rate.
The profile of a borrower is usually displayed on a P2P online platform where investors can
assess these profiles to determine whether they want to risk lending money to a borrower.
The repayments are also made through the NBFC-P2P which processes and forwards the
payments to the lenders who invested in the loan. P2P lending is also called social lending
or crowd lending.
RBI guidelines regarding P2P lending:

 Fund transfer between the participants on the Peer to Peer Lending Platform shall be
through escrow account (a temporary pass through account held by a third party
during the process of a transaction between two parties) mechanisms operated by the
NBFC-P2P. All fund transfers shall be through and from bank accounts and cash
transaction is strictly prohibited.
 NBFC - P2P shall:
o not raise deposits
o not lend on its own
o not provide any credit guarantee
o not facilitate or permit any secured lending linked to its platform
o shall not provide any assurance for the recovery of loans.
o undertake due diligence on the participants;
o undertake credit assessment and risk profiling of the borrowers and disclose the
same to their prospective lenders;
o require prior and explicit consent of the participant to access its credit
information;
o undertake documentation of loan agreements and other related documents;
o provide assistance in disbursement and repayments of loan amount;
o render services for recovery of loans originated on the platform.
o The total amount of money that an investor can invest across all P2P platforms is
Rs. 50 lakhs
105. (c)
RBI, in Nov 2017, notified the rules and regulation for a new class of Non-Banking
Financial Companies (NBFCs) called Account Aggregators. Earlier, persons holding
financial assets, such as, savings bank deposits, fixed deposits, mutual funds, insurance
policies, do not get a consolidated view of their financial asset holdings, especially when
the entities fall under the purview of different financial sector regulators like RBI, SEBI,
IRDAI etc. Account Aggregators will fill this gap by collecting and providing the
information of customers’ financial assets (invested in different instruments and
regulated by different bodies) in a consolidated, organized and retrievable manner to the
customer or any other person as per the instructions of the customer. The investors will
be able to avail the service of an Account Aggregator purely at their option.
The RBI will regulate and supervise the activity of account aggregation with a view to
ensure that the services provided and the terms at which these are provided conform to
prescribed standards.
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106. (d)
NBFCs borrow from banks and then lend. They also issue bonds in financial markets to
raise money and then this money the lend at a higher interest rate. NBFCs also borrow
from abroad through debt financing (called ECB). Mutual funds also invest in NBFCs
which means, NBFCs issue debt papers to mutual funds and then this money they lend.
But, the main wholesale funding sources of the NBFCs comprise mainly of:
 Banks (primarily via term loans and rest through non-convertible debentures and
commercial paper); and
 debt mutual funds (via non-convertible debentures and commercial paper).
Debentures are long-term unsecured debt financial instruments (they are similar to
bonds in functioning). Some debentures have a feature of convertibility into shares after
a certain point of time. The debentures which can't be converted into shares or equities
are called non-convertible debentures (or NCDs) and earn a higher interest rate.
Commercial Paper (CP) is an unsecured money market debt instrument issued in the form
of a promissory note for less than one year.
107. (d)
NBFCs rely on short-term financing like commercial papers to fund long-term
investments (long term loans to businesses). So, the tenure of liability (the commercial
papers issued by NBFCs) is short and the tenure of asset (loans given by NBFCs) is long.
This is called Asset Liability Mismatch (ALM). So, NBFCs are required to refinance these
commercial papers at short frequencies of a few months. The frequent repricing of
loans/advances (as they need to be raised again and again and interest rate keeps on
changing in the market) exposes NBFCs to the risk of facing higher financing costs, and
in the worst case, credit rationing. Such refinancing risks are referred as rollover risks.
Credit rationing is the limiting by lenders of the supply of additional credit to borrowers who
demand funds, even if the latter are willing to pay higher interest rates.
108. (b)
A “Real estate investment trust" is a trust registered under the Indian Trusts Act, 1882
which manages a fund/ corpus where the funds are invested in real estate property.
REITS are mutual fund like institutions that enable investment into the real estate sector
by pooling small sums of money from multitude of individual investors. REITS are
regulated by Securities and Exchange Board of India (SEBI).
Most middle-class investors presently do not invest in commercial real estate because of
the big size of investment. This entry barrier will be removed through REITs as it will
make the expensive real estate sector accessible to the middle-class investor (min.
investment limit is Rs. 2 lac). REITS will also help the real estate industry which is
currently plagued with problems such as weak demand, cash constraints, stuck projects
etc. Now, the developers will be able to sell their property to REITs and move on to
execution of new projects.
SEBI has also approved Infrastructure Investment Trusts (InvITs) along with REITs
which are very similar to REITs but are for infrastructure sector.
109. (d)
An angel investor is a person who invests in highly risky companies, typically before
those companies have any revenue or profits. Angel investors are often among an
entrepreneur's family and friends and invest in small start-ups and entrepreneurs. Angel
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investors provide more favourable terms compared to other lenders, since they usually
invest in the entrepreneur starting the business rather than the viability of the business.
Angel investors are focused on helping start-ups take their first steps, rather than the
possible profit they may get from the business. Fund-raising with angel investors is
typically done more casually, using networking and crowd funding platforms. Essentially,
angel investors are the opposite of venture capitalists. Angel investors typically use their
own money, unlike venture capitalists who take care of pooled money from many other
investors and place them in a strategically managed fund.
Angel Investment in India is regulated by Securities and Exchange Board of India (SEBI)
under Category I of Alternative Investment Funds (AIF).
110. (d)
Alternative Investment Fund (AIF) means any fund established or incorporated in India
which is a privately pooled investment vehicle which collects funds from
sophisticated investors, whether Indian or foreign, for investing it in accordance with a
defined investment policy for the benefit of its investors. AIFs are registered with and
regulated by SEBI. Angel Investor Funds and Venture Capital Funds comes under AIF.
111. (d)
A Sovereign Wealth Fund (SWF) is a State (Government) owned investment fund or entity
that is commonly established from export surpluses, fiscal surpluses, proceeds from
privatization etc. Countries generally create SWFs to diversify their revenue streams to
protect and stabilize the budget and economy from excess volatility. For ex., UAE relies
on oil exports for its wealth. Hence, it devotes a portion of its reserves to an SWF that
invests in diversified assets that can act as a shield against oil-related risks (when oil
prices plunge, govt’s budgetary resources/taxes decline, and SWFs act as buffer). SWFs
typically invest in multiple asset classes including publicly listed shares, fixed income,
private equity, private debt, real estate, infrastructure etc.
112. (d)
Crowd funding or marketplace financing refers to a method of funding a project or new
venture through small amounts of money raised from a large number of people, typically
through a portal (internet/social media) acting as an intermediary. Crowd funding makes
use of the easy accessibility of vast networks of people through social media and crowd
funding websites to bring investors and entrepreneurs together. Crowd funding has the
potential to increase entrepreneurship by expanding the pool of investors from whom
funds can be raised beyond the traditional circle of owners.
113. (d)
The concept of a mutual fund is that various investors/individuals put their money in a
fund and this fund is used to purchase shares or bonds of various companies thus
diversifying the risk of the investors. The fund is managed by experts and
individuals/investors don’t trade the share/bonds directly. The fund managers decide in
which companies to invest and from which companies to exit. If the share price or bond
price of the companies increase then the value of the fund also increases and investors
gain. If some individual wants to put money into the mutual fund then it can be done
only once after the market has closed for that given day.
Exchange Traded Funds (ETFs) are almost similar to that of mutual funds but they differ
in the sense that ETFs are traded on the stock exchange throughout the day. So, if any
investor wants to purchase an ETF, they can always purchase it from the stock
exchange/market throughout the day, just like the shares of any company.
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The Central government announced in the budget 2018-19 that they will be creating an
ETF of various central public sector companies so that to attract investors to purchase
ETFs, and through which the disinvestment can be done. So, when an investor is
purchasing the shares of the ETF, he is indirectly purchasing the shares of various
companies from which the ETF has been created.
114. (b)
Bharat 22 is an Exchange Traded Fund (ETF) comprising shares of 22 Companies, mostly
public sector companies. The ETF is well diversified with investments across six core
sectors — basic materials, energy, finance, FMCG, industrial and utilities.
115. (d)
Government companies can issue bonds directly also to the investors/public but in case
of "Bharat Bond ETF", various govt companies will issue bonds to "Bharat Bond ETF" and
then "Bharat Bond ETF" will club these bonds and issue new bonds under the name
"Bharat Bond ETF". So now when a person is investing in "Bharat Bond ETF" means
purchasing the bonds of "Bharat Bond ETF" then basically he is investing in various PSUs
through "Bharat Bond ETF". The money which the "Bharat Bond ETF" will get, it will pass
on to the various govt companies to purchase their bonds.
The minimum size of bond is Rs. 1000, so retail public/individual can purchase and
hence the "corporate bond market" will deepen (reach to more and more people). It will
provide liquidity to investors as it will be traded on the stock exchange and it will be more
accessible. The bonds will be issued either with 3-year maturity or 10-year maturity. For
the government companies, it is a new way of finance other than the bank financing and
it will expand their investor base which will ultimately increase the demand for the bonds
of govt. companies resulting in lower cost of borrowing for government companies.
CPSU, CPSE, CPFI are just different categories of Public Sector companies, no need to go
into it.
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116. (a)
The term of appointment can be 5 years, but generally the practise has been to appoint
for 3 years and then extend.
117. (b)
Section 7, RBI Act 1934 says “The Central Government may from time to time give such
directions to RBI as it may, after consultation with the governor of the RBI, consider
necessary in the public interest”.
Section 30, RBI Act 1934 says that, “If RBI fails to carry out any of the obligations imposed
on it under the RBI Act, then Central government can supersede the Central Board” of
RBI.
118. (c)
RBI issues various guidelines for directors of banks and also has powers to appoint
additional directors on the board of a banking company. Banks need prior approval of
RBI for appointment/termination of Chairman, Directors and CEO. RBI in consultation
with Central Govt., can supersede the Board of Directors of Banks. Public Sector Banks
(PSBs) are under dual regulation of Central Govt. and RBI. RBI’s powers are curtailed
regarding to PSBs, where RBI cannot remove directors and management, cannot
supersede banks board and does not have the power to force a merger or trigger
liquidation.
A license is required from RBI to commence banking operations, opening of new bank
branches and closing of branches or change in the location of existing branches. RBI
regulates merger, amalgamation and winding up of banks. (For shifting, merger and closure
of urban branches, now no approval is required).
119. (a)
RBI is 100% owned by govt. of India but its surplus transfer to govt has fluctuated in the
previous years.
Refer the Trends
120. (b)
In 2018-19, to increase liquidity in the economy, RBI purchased a lot of Govt. bonds (open
market operations), on which it earned interest income, resulting in income (including
from other sources) of Rs. 1.23 lakh crore.
Rs. 53,000 crores were transferred from ‘Contingency Fund’ to RBI’s income. This resulted
in total income and then transfer of Rs. 1.76 lakh crore in 2018-19 from RBI to Govt.
RBI’s surplus/excess capital (a pie of which government was trying to extract) consists of
two distinct types of items:
 Contingency Fund:
It is meant for meeting unexpected and unforeseen contingencies, including
depreciation in the value of securities, risks arising out of monetary/exchange rate
policy operations, systemic risks and any risk arising on account of the special
responsibilities given to RBI.
[Based on the recommendations of the Jalan Committee, the excess risk provision
amounting to Rs. 53,000 crores were written back from Contingency Fund to RBI’s
income.
As per the Annual Report of RBI 2018-19, RBI’s income was Rs. 1.76 lakh crore in 2018-
19, out of which Rs. 53,000 crore was because of transfer from Contingency Fund and
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rest Rs. 1.23 lakh crore was regular income. This regular income in 2018-19 was also
quite high as compared to the previous year’s income of Rs. 60,000 cr to Rs. 70,000
crores because of RBI’s open market operations where RBI purchased government
securities from the market to pump liquidity in the economy. Holding cash does not give
any income to RBI but holding of government securities gives RBI interest income.]
 Asset Development Fund:

It is meant for investments in subsidiaries and associate institutions and meet
internal capital expenditure. In 2018-19, Rs. 64 crore provision was made towards
Asset Development Fund on account of new investments in National Centre for
Financial Education (NCFE) and Indian Financial Technology and Allied Services
(IFTAS).
121. (b)
National Centre for Financial Education (NCFE) is a Section 8 (Not for Profit) Company
promoted (owned) by Reserve Bank of India (RBI), Securities and Exchange Board of India
(SEBI), Insurance Regulatory and Development Authority of India (IRDAI) and Pension
Fund Regulatory and Development Authority (PFRDA).
Indian Financial Technology & Allied Services (IFTAS) is a wholly owned subsidiary of the
Reserve Bank of India, mandated to design, deploy & support IT-related services to the
Reserve Bank of India, and all Banks and Financial Institutions in the country.
122. (c)
Till the time, reserves are with RBI, it is not part of money supply. But if RBI gives its
surplus reserves to government which will ultimately spend this amount will result in this
extra money reaching to public resulting in higher inflation. RBI paying dividend to
government is a part of budgetary resources of govt. of India and it helps in reducing fiscal
deficit.
123. (d)
RBI earns income from all of the sources. RBI invests Forex to purchase US govt. bonds
and lend to other Central Banks and earns interest. It also earns interest on Indian Govt
securities (OMO) and it earns interest by lending to banks (Repo Operations).
124. (d)
When there is a default in the debt market, everyone wants to sell the debt paper and
hold cash which results in shortage of liquidity and increase/hardening of interest rates.
Liquidity crisis may also be caused if foreign portfolio investors are running out and
selling their bond holdings in the Indian bond markets.
To resolve the liquidity crisis, RBI may buy government bonds i.e. open market operations
and pump liquidity in the economy.
125. (a)
‘Monetary base’ is the total liability of RBI and it is also called ‘High Powered Money’ or
‘Reserve Money’ or M0.
126. (d)
The currency held by public is the liability of RBI as whenever somebody comes with the
currency note to the RBI, it needs to return a sum equivalent to the value of currency.
So, if some old notes do not come to the banking system then it will become invalid, and
RBI will never have to return equivalent value of those currency notes.
If the black money does not come back to the banking system after demonetization then
RBI's liability would reduce by that amount and its net Assets (net worth) will increase.
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This ultimately means that the private money has been transferred to the RBI. Hence it
is a kind of transfer of illicit black money to the public sector.
Demonetization may have some negative impact on GDP growth which will impact the
revenues from indirect and corporate taxes.
"Black economy is the market-based production of goods and services – legal or illegal –
that escapes capture in the official GDP statistics. And the tax that the government forfeits
on this activity circulates as black money."
127. (d)
Monetary Base or High-Powered Money is the total liability of the Monetary Authority of
India i.e. RBI.
All the currency notes and coins issued by RBI, does not matter who is holding it, is
always the liability of RBI. When Government and banks deposit their money with RBI, it
becomes liability of RBI. (In the same way as when you deposit money in your bank, then
the deposits become bank’s liability towards you).
128. (b)
When people deposit money in banks (public deposits), then banks keep only a certain
portion with them and the rest they lend. Whatever they keep with themselves is
considered as reserves.
The portion that they keep as reserves can be in the form of cash or gold or they can
purchase government securities (bonds) or they can also deposit with RBI.
So only (ii), (iii) & (iv) statements are true.
129. (b)
Banks are mandated to keep only a fraction of the deposits as reserves, rest they can lend
and this lending creates money in the system.
For example, If I had Rs. 100 cash with me which I deposited in a bank, and say the bank
kept Rs. 20 in reserves and rest i.e. Rs. 80 it lent to someone else. Now, money with me
is Rs. 100 (in deposit form) and money with the other person is Rs. 80. So, now total
money in the system is Rs. 180, while earlier it was only Rs. 100. And this became possible
just because the person deposited the money in the bank and the bank kept only a
fraction in the reserve and the rest it lent to someone else.
This is called fractional reserve banking.
In the above case monetary base is Rs. 100 and money supply is Rs. 180
Money multiplier = Money Supply/Monetary Base

=180/100 = 1.8
Another case, if I would have only Rs. 50, which I deposited in the bank and the bank kept
20% reserves i.e. Rs. 10 and the rest Rs. 40 it lent then,
Money multiplier = 90/50 = 1.8
If banks are mandated to keep all the deposited money i.e. Rs. 100 as reserves then banks
would not have lent and no new money would have been created in the system. And then;
Money multiplier would have been = 100/100 = 1
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130. (b)
From the above example, money multiplier decreases when banks are required to keep
more reserves.
From the above example, Money multiplier remains constant irrespective of change in
monetary base
131. (c)
Money supply = (Money Multiplier) X (Monetary Base)
From the above formula, money supply can be increased by increasing the money
multiplier or monetary base or both.
132. (a)
Money supply = (Money multiplier) X (Monetary base)
When RBI does open market operations, then monetary base changes (RBI buys/sells
govt. securities in lieu of cash), due to which money supply also changes. But it does not
change money multiplier, which depends on two things:
 People’s tendency of depositing money in banks (currency deposit ratio)
 Statutory reserve requirement of the banks, and; (reserve deposit ratio)
133. (d)
Money supply is defined as the stock of money in circulation among the public.
So, money lying with government, RBI and interbank deposits are not considered as
money supply.
134. (a)
Money supply is money with the public either in cash form or in deposit form (demand
and time both) with the bank (and Post offices). Securities like bonds and shares are
tradable instruments and their prices fluctuate and hence are not part of money supply.
135. (b)
Government issues only debt securities like treasury bills, cash management bills, dated
securities and state development loans.
Anybody can give loan (debt) to government but they cannot own government i.e. they
cannot purchase government shares. Government never issues shares.
‘Government’ is different from ‘government companies’ (PSUs) which can issue shares and
bonds both.
Open Market Operations is conducted by RBI where it buys or sells govt. bonds. (debt
securities)
So, (ii) & (iii) statements are true.
136. (d)
Open Market Operations (OMO) is a monetary policy tool where RBI buys/sells
government securities in the secondary (open) market to increase or decrease the money
supply.
Due to foreign investments inflow or outflow, money supply in the Indian economy
increases/ decreases. To prevent or sterilize the economy from such external shocks, RBI
buys or sells government securities to keep the money supply unchanged. This is called
sterilization or Market Stabilization Scheme (MSS) and it is not a day to day phenomenon,
rather less frequently used.
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137. (d)
Market Stabilization Scheme is an instrument of sterilisation, which empowered the RBI
to issue Government Treasury Bills and medium duration Dated Securities for the
purpose of liquidity absorption. This instrument of monetary management was
introduced in 2004 to absorb surplus liquidity of a more enduring nature arising from
large capital inflows. The scheme worked by impounding/taking the proceeds of auctions
of Treasury bills and Dated Government securities in a separate identifiable MSS cash
account maintained and operated by the RBI. At the same time, interest payments have
to be given to the institutions who buys the Market Stabilization Bonds (MSB) (the
Treasury bills and Dated securities of govt). Here, for the interest payment, the
government allocates money from its budget to the RBI. This expenditure to service
interest payment for MSBs is called carrying cost. The amounts credited into the MSS
cash account by selling MSBs are appropriated only for the purpose of redemption/buy
back of the Treasury Bills/dated securities issued under the MSS.
138. (c)
“In terms of Section 42(1) of the RBI Act, 1934 the Reserve Bank, having regard to the
needs of securing the monetary stability in the country, prescribes the CRR for Scheduled
Commercial Banks (SCBs) without any floor or ceiling rate”. The other purpose of CRR is
to manage liquidity (RBI can increase CRR to decrease liquidity in the economy) and it
also ensures that a part of the bank’s deposit is with the Central Bank and is hence, safe.
As a depositor, the CRR and SLR requirements together ensure that some portion of the
deposits with Indian banks remain secure, even if banks make poor lending decisions. In
absence of the CRR and SLR requirements, to make more profits bank may lend most of
the deposits and if there is a sudden rush to withdraw, banks will struggle to meet the
repayments to the depositors. The maximum limit for SLR is 40%.
139. (c)
One of the basic reasons of keeping CRR with RBI is to provide safety to the public
deposits. It also ensures solvency of banks i.e. staying in business and proper functioning
and liquidity situation.
Since banks do not earn interest on the CRR, so it is idle money for the banks which
increases costs for banks.
140. (b)
Statutory/Legal Reserve Requirements means all the reserve requirements mandated for
the banks and it includes both CRR and SLR. The purpose of CRR/SLR is not to prevent
banks from making excessive profit but rather make people’s deposit safe and liquid and
allow RBI to manage liquidity in the economy. Through CRR or SLR, RBI does not specify
any amount of vault cash that the banks need to keep with them. Through SLR, RBI
specifies liquid assets in any form like cash, gold or govt. bonds and not any specific
amount of vault cash.
141. (a)
As per Section 42 of the RBI Act 1934, every Scheduled (included in the second schedule
of RBI Act 1934, whether commercial or cooperative) bank need to maintain CRR with RBI.
142. (d)
The monetary policy framework in India, as it is today, has evolved over the years. A new
“Monetary Policy Framework” Agreement was signed between the Government of India
and RBI in Feb 2015. As per the new monetary policy framework agreement, following are
the important points: -
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 The objective of the monetary policy is to primarily maintain price stability, while
keeping in mind the objective of growth
 The monetary policy framework is operated by RBI
 The inflation target is 4% with a band of +/- 2%
 The inflation target is decided by the Government of India in consultation with RBI
 The inflation is the “Consumer Price Index (CPI) – Combined” published by Ministry
of Statistics and Programme Implementation (NSO)
 The RBI shall be seen to have failed to meet the Target if inflation is more than 6% or
less than 2% for three consecutive quarters
 In case RBI fails to meet the target, it will have to give a written report to Government
of India explaining the reasons of failure, remedial actions to be taken and an
estimated time period within which the Target would be achieved
143. (c)
The inflation target is decided by the Government of India in consultation with RBI
144. (b)
MPC has the authority to decide only the repo rate and not CRR & SLR or other things.
Its decision of repo rate is binding on RBI.
145. (d)
Marginal Standing Facility (MSF): It is a facility under which scheduled commercial banks
can borrow additional amount of overnight money from the Reserve Bank by dipping into
their Statutory Liquidity Ratio (SLR) portfolio up to a limit (2% of SLR) at a penal rate of
interest which is above repo rate (MSF rate = repo rate + 0.25%). This means that if a
bank is keeping the minimum SLR requirement of 18.25% and it wants money/cash from
RBI then, the bank can offer say 2% of the SLR reserve (securities) to RBI and can get
money/cash from RBI. This provides a safety valve against unanticipated liquidity shocks
to the banking system.
(This 2% has been raised to 3% because of the COVID-19 LOCKDOWN issue which resulted
in liquidity crisis). For detailed understanding, follow the telegram channel “Vivek Singh
Economy”.
146. (a)
The Reserve Bank has been conducting Consumer Confidence Survey (CCS) since June
2010. The survey captures qualitative responses on questions pertaining to economic
conditions, household circumstances, income, spending, prices and employment
prospects. The survey results are based on the views of the respondents and are not
necessarily shared by the Reserve Bank of India. It is conducted in 6 rounds in a year.
147. (c)
RBI conducts quarterly 'inflation expectation survey' of households wherein RBI gauges
the household’s expectation regarding inflation for the next one year. These surveys are
used for monetary policy purpose.
148. (c)
RBI keeps the repo rate high or increases it when the inflation in the economy increases.
When "inflation expectation" of the people is high, i.e. they are expecting that in future
inflation will increase, then such a behaviour of the people ultimately leads to higher
inflation in the economy due to which RBI increases the repo rate.
So, both the statements are true.
[Ref: Economic Survey 2015-16 Vol-II, Page 17, Monetary Developments]
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149. (c)
Accommodative Monetary Policy: When a central bank attempts to expand the overall
money supply to boost the economy when growth is slowing. This is done to encourage
more spending from consumers and businesses by making money less expensive to
borrow by lowering the interest rate.
A neutral monetary policy is also called "natural" or "equilibrium" rate where the policy
(repo) rate is such that neither it stimulates nor restrains economic growth.
Whenever RBI conducts its monetary policy review, it also tells the general public what
will be its future stand (this is also called ‘Forward Guidance’) i.e. going forward, in which
direction the policy rate may move. If it wants to move the repo rate down in future then
it will keep ‘accommodative stance’. If it expects to move the repo rate up in future then
it will keep ‘hawkish stance’. And if it wants that it should be able move the repo rate in
any direction then it keeps ‘neutral stance’.
When RBI is changing its stance from "accommodative" to "neutral", in any monetary
policy review, that means RBI is expecting that in future it may be required to change the
repo (policy) rate in any direction.
When RBI is having an accommodative monetary policy stance that means in future it
expects to lower the policy rate. But if it thinks that the inflation or demand in the
economy is edging up then it may change its stance from accommodative to neutral so
that it has the leeway to change the policy rate in even in the upward direction (or may
be downward direction).
When consumer confidence in the economy is up it shows that in future the consumers
will be willing to purchase more goods and services which may lead to an increase in
inflation. But if the consumer confidence is down then it implies that consumers will be
spending less in future.
150. (a)
When the US Federal Bank increases the interest rate, then the foreign investors sell their
investments in India (mostly debt instruments) and move to US. In the process they
convert the Rupee into dollars in the forex market and the demand for dollar increases
and rupee depreciates.
Money supply in the Indian economy will decrease in this case because foreign investors
are selling their investments and taking money out of India.
151. (c)
Rupee-dollar rate is discovered in the forex market. When importers buy dollars in the
foreign exchange market, rupee depreciates as the demand of dollars increases in the
forex market. But if they directly deal with RBI (and take dollars from RBI) and don’t go
in the forex market then it may not impact the rupee-dollar rate.
When RBI increases the repo rate, the interest rate in the market increases which may
attract foreign investors in debt instruments resulting in rupee appreciation.
152. (c)
Operation Twist is when the central bank uses the proceeds from sale of short-term
securities to buy long-term government debt papers, leading to easing of interest rates on
the long-term papers.
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When RBI's objective is to decrease the interest on long term lending, so that the
companies are able to borrow at cheaper rate for long term to promote economic growth
then RBI purchases debt papers of long-term maturity of government. So, when RBI is
purchasing the debt paper, that means RBI is giving loan/money for long term, which
results in easy availability of money for long term, hence decrease in long term interest
rate.
Operation Twist will resolve the problem of long-term liquidity. So now enough long-term
liquidity/money is available in the market. This helps in reducing interest rate on long
term borrowing.
As the long-term interest rate comes down in the financial market, banks cannot keep
the lending rate higher for long term due to competition in the market for lending among
banks. This will then help in reducing interest rate on long term lending by banks also.
Earlier RBI had reduced repo rate several times but banks have not passed/transmitted
this into lending rate. But since in the financial markets interest rate has come down due
to Operation Twist, banks will be pressurized to reduce lending rate, that means better
monetary transmission.
If RBI will purchase long term bonds, then the price of long-term bond will go up and the
yield/return will be low/soften. (If Rs. 100 bond paper (face value) with interest rate 8%
is available in Rs. 110 in the market then the yield will be (Rs.8/Rs. 110)*100 = 7.27%
Operation Twist is "Open Market Operation" and it is a part of RBIs Monetary Policy.
Monetary Transmission is the pass-through of RBI's policy actions to the economy at large
in terms of asset prices and general economic conditions.
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153. (d)
RBI lends to banks @repo rate but only up to 0.25% of banks NDTL. RBI further lends
from time to time above the repo rate up to 0.75% of the overall NDTL in the system. And
in this case the interest rate is decided by auction i.e. if more banks want money, the
interest rate will go higher, if less banks are competing for RBIs money then interest rate
will be less but it will always be above the repo rate (actually RBI puts a condition that all
the bids at or below the repo rate will be rejected). This is called "term repo" which means
RBI gives money for a fixed long term. Term Repo is also called Variable Term Repo
Operations.
154. (a)
On 6th Feb 2020 monetary policy review meeting, RBI decided to conduct long term repo
operation at a fixed rate of “repo rate” i.e. 5.15% worth Rs. 1 lakh crore (at that time repo
rate was 5.15%). Since it was done at a fixed rate, so auction was not required but a lot
of banks wanted money at repo rate, so RBI had to do auction to select the bank which
will get money from RBI at repo rate. As all banks combined together, during the auction,
quoted much more than Rs. 1 lakh crore, so proportionally it was given to banks
depending on which bank bid for how much amount during the auction. LTRO auctions
were conducted on the electronic platform called the E-Kuber, the Core Banking Solution
(CBS) platform of RBI.
155. (b)
As per the RBI Act 1934, RBI follows flexible inflation target of 4% +/- 2%. The Act says
“primary objective of the monetary policy is to maintain price stability while keeping in
mind the objective of growth”. It means that if inflation is in control, RBI can focus on
economic growth of the country and can reduce the repo rate.
The explicit mandate of monetary policy is price stability and not financial stability.
Price stability is not sufficient for financial stability as there may be less inflation but we
have huge NPAs and various financial institutions defaulting. (Like the situation in the last
4/5 years).
156. (d)
Base Rate was introduced in July 2010 replacing the Benchmark Prime Lending Rate
(BPLR) system. Base Rate is the minimum rate below which Scheduled Commercial Banks
cannot lend. RBI publishes guidelines for calculation of Base Rate and every bank
calculates its own base rate.
Base rate calculation methodology was based on various factors like:

 (Average) Cost of deposits/funds (interest rate that bank offers to its depositors)
 Cost of maintaining CRR and SLR (if the banks are required to keep higher reserves
like CRR and SLR, then they will be able to lend less money & will have to charge
higher interest rate)
 Operational Costs of Banks
 Return on Net worth (investment)
From 1st April 2016, RBI has introduced a new methodology for calculation of the Base
Rates based on marginal cost of funds rather than average cost of funds. This new
methodology is called Marginal Cost of Funds based Lending Rate (MCLR)
MCLR calculation methodology will be based on the following factors: -

 Marginal cost of deposits/funds
 Cost of maintaining CRR and SLR
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 Operational Costs of Banks

 Tenor Premium (based on the time period for which loan is given)
The basic difference between the previous Base Rate and the new MCLR based rate is the
change from average to marginal.
(When RBI reduces the repo rate, generally banks reduce their deposit rate. Earlier the
calculation of lending rate was based on average cost of deposits to the banks. So, due
to reduction in repo rate and further reduction of deposit rates by banks, the average cost
of deposits of the banks did not reduce immediately (it may reduce in future when new
depositors will deposit money at lower deposit rate) because still banks need to pay the
higher deposit rate to all its previous depositors.
In the new method banks will calculate the lending rate based on marginal cost of deposits
i.e. the new deposit rate. So, when RBI will reduce the repo rate and banks reduce the
deposit rate, the marginal cost of deposits will get reduced and the banks will have to
generally reduce the lending rates). This will help in better monetary policy transmission.
The banks shall review and publish their MCLR every month.
157. (b)
158. (c)
Every Bank calculates its own MCLR rate based on marginal cost of deposits, operational
costs, reserve requirements and tenor premium. So MCLR (or Base Rate) is an “internal
benchmark” which varies from bank to bank. Banks link their lending rate with MCLR.
But, the transmission of policy (repo) rate changes to the lending rate of banks under the
MCLR framework has not been satisfactory due the various reasons like:
 Banks feared that they will lose the depositors/customers if they will reduce the
deposit rate first, and since deposit rate was not reduced, MCLR (or base rate) was
also not coming down.
 Government offering higher interest rates on its own small savings schemes like Kisan
Vikas Patra, Sukanya Samriddhi Scheme, PPF etc.
Hence, RBI has made it mandatory for banks to link all new floating rate personal or retail
loans and floating rate loans to MSMEs to an external benchmark effective October 1,
2019. Banks can choose one of the four external benchmarks – repo rate, three-month
treasury bill yield, six-month treasury bill yield or any other benchmark interest rate
published by Financial Benchmarks India Pvt. Ltd. Banks are not mandated to link their
deposit rates with an external benchmark rate.
Now, suppose Axis Bank links its loan rates as per following:
Home Loan = repo rate + 3% (3% is called the Spread)

Education Loan = repo rate + 4%
Personal Loan = repo rate + 5%
Here, all the loans are linked to repo rate, which is an external benchmark, on which
Axis Bank do not have any control. So, the moment RBI changes the repo rate, it will
automatically be transmitted to all the lending rates at the same moment for the new
loans (Even if the bank links the lending rate with Treasury bill yield; when RBI changes
repo rate, the T-bill yield also changes in the market immediately). The purpose of linking
the lending rate with an external benchmark is faster transmission of repo rate into
lending rate and this mechanism is more transparent also. Adopting of multiple
benchmarks by the same bank is not allowed within a loan category.
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Banks are free to decide the components of spread and the amount of spread. But in
general, the spread consists of credit risk premium, business strategy, operational
costs of banks etc. While the banks will be free to decide on the spread over the external
benchmark, credit risk premium can change only when borrower’s credit assessment
undergoes a substantial change. The other components of the spread like operating cost
can be altered once in three years.
The interest rate under the external benchmark shall be reset at least once in three
months. This means that if a borrower has taken loan on 1 st Jan 2020 and RBI changes
the repo rate on 1st Feb 2020, then the borrower may not get immediate benefit of the rate
cut as the interest rate on his loan will only get revised latest by 1st April 2020 (within
three months of the loan taken).
RBI has mandated banks to link the lending rate with an “anchor rate” like MCLR or
repo rate (while MCLR was internal rate of banks, but repo is an external rate). But there
is no mandate for NBFCs to link their lending rates.
159. (d)
160. (a)
When government offers high rate on its own savings scheme then banks are
apprehensive of reducing their deposit rates as it will lead to people depositing money in
government savings schemes rather than in banks. When the banks are not able to reduce
their deposit rate, they do not reduce the lending rate also as it will squeeze/reduce their
profits.
It hinders in monetary policy transmission and benefits mostly rich people.
[Ref: Economic Survey 2015-16 Vol-I, Page 96, Small Savings]
161. (d)
When government deviates from the fiscal deficit target and spends more, it results in
higher inflation. So even if RBI is trying to bring down the inflation, deviation in the fiscal
deficit target will create issues in RBI achieving the inflation target.
To target inflation, RBI changes the repo rate which ultimately increases/decreases the
interest rate, resulting in change in money supply. Through change in money supply, RBI
tries to achieve its inflation target. So, hindrances in monetary policy transmission may
create issues in RBI achieving the inflation target.
In case of supply side challenges like drought, floods or governance issues, just reducing
the money supply may not result in bringing down the prices of commodities.
162. (d)
Monetary transmission is the pass-through of RBI’s monetary policy decisions to the
economy at large in terms of interest rates, asset prices, or other economic parameters
etc. And monetary transmission may result in any direction i.e. interest rates or asset
prices moving up or down.
163. (d)
In case of forex swap, RBI may give rupees to banks and can take dollars, which leads to
increase in rupee liquidity in the economy, resulting in inflation. Of course, forex swaps
can also be used take out the excess liquidity in the economy (RBI giving dollars to banks
and taking rupee).
Increase in foreign capital inflow leads to increase in money supply leading to inflation.
General elections lead to higher spending level by government increasing inflation.
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164. (d)
Recently RBI used the tool forex swap to increase liquidity in the economy under which,
RBI took dollars from Banks and it paid Indian currency to banks and this transaction
will be reversed after 3 years.
Market Stabilization Scheme and Sterilization are same and used to manage liquidity in
case of foreign capital inflow.
Under Liquidity Adjustment Facility (LAF), RBI does overnight as well as long term repo
operations.
165. (d)
Nominal Interest Rate (Deposit Rate) = Inflation + Real Interest Rate
If inflation is 5% and banks offer deposit rate 5% then nobody will deposit money in banks
as whatever banks are offering will be eaten away by inflation. People deposit money in
banks to earn something and this is possible only when real interest rate is positive.
So, if inflation is 5% and banks are offering deposit rate 7% then the real interest rate will
be 2%. This means the depositors are actually/really getting 2% return.
When real interest rate is positive then it leads to people saving (depositing) money in
banks, and somewhat reduction in their consumption.
When the inflation increases a lot and banks do not increase their deposit rate then the
real interest rate may turn negative.
Inflation in the economy may be negative
So, (i) & (iv) statements are true.
166. (d)
When inflation in the economy is low, people expenses decreases and they are able to
save more.
When per capital income increases it leads to higher savings in the economy.
Growth of financial intermediaries means financial institutions like banks. Increase in

banks in the economy leads to increased saving behaviour.
So, all the statements are true.
167. (c)
If there is inflation in the economy it leads to loss in the value of currency i.e. currency
depreciates.
Nominal interest rate (deposit rate) = Inflation + real interest rate
When inflation increases banks increase the nominal interest rate and generally real
interest rate remains same.
168. (c)
Liquidity Trap is a situation where the Central Bank wants to increase the money supply
in the economy in case of recession but fails to lower the interest rate as the interest rates
(repo rate and bank deposit rates) almost reaches zero. This makes the monetary policy
ineffective.
In such a situation people would like to hold on to their cash (may be in savings deposits
in banks that is also called cash and not the fixed deposit) and may not spend money as
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there is almost zero or negative inflation. (Actually, people are not willing to spend and
demand in the economy declines, that is why economy enters into liquidity trap).
So, (i), (ii) & (iv) statements are true.
169. (b)
 Creditor means the person who has given money to someone
 Debtor means who has taken money from someone
 Depositors means who has deposited money in banks or financial institutions
 Bondholders means person who is holding bonds
When a person holds physical asset whose price is denoted in Rupees then he benefits
from price increase or inflation.
But a person who holds financial assets (like Rs. 100 note) or any financial instrument
which guarantees fix return of cash payments in future then he loses from price rise. This
is because the purchasing power of the rupee (the fixed money which he is supposed to
get) decreases due to inflation.
Hence, in case of inflation, depositors, creditors and bondholders will lose.

So, only (ii) statement is true
170. (c)
171. (d)
One of the reasons of rise in prices of goods and services is due to increase in money
supply. And increase in money supply can be caused to government increasing the
expenditure or government increasing the salaries. When RBI purchases government
security from the public it pays money to the public and ultimately increases the money
supply.
172. (d)
When a country faces inflation, we require more money to purchase a given quantity of
goods and services because the purchasing power of rupee decreases. In case of inflation
generally wages increase but nothing can be said about the output.
And in case of inflation, the amount of money needed will be more to purchase the same
goods and services.
So, (d) option is true.
173. (c)
If aggregate demand increases by 10 percent and aggregate supply increases by only 8
percent then it leads to an effective increase in demand of 2 percent which results in
inflation.
When aggregate/overall output decreases then even if we assume demand as constant
then it will lead to an increase in effective demand which results in higher inflation.
Higher employment increases demand in the economy and may result in higher inflation.
174. (b)
Inflation will necessarily occur in case there is effective demand in the economy. If there
is increase in aggregate demand, there may not be inflation if the supply also increases.
If output decreases and demand also decreases then it may not result in inflation.
Govt borrowing and spending increases aggregate demand rather than effective demand.
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175. (c)
To reduce the rate of inflation government should reduce the money supply which it can
do through increase in income tax.
So, (c) option is true.
All the other options increases money supply.
176. (b)
Increase in money supply may not necessarily lead to economic growth. But when the
supply of money increases, the interest rate comes down (concept of demand and supply).
177. (d)
The amount of money supply in the economy impacts prices i.e. when money supply
increases inflation increases and when money supply decreases inflation decreases.
Money supply impacts GDP also, as more money is required to increase the output.
When the demand for money increases, rate of interest goes up in the economy. So, when
money supply increases then rate of interest may cool/decrease in the economy and vice
versa.
So, all statements are correct.
178. (a)
Deflation is bad for economic growth. Because when prices start declining people
postpone their purchase decisions and companies postpone their investment decisions.
This leads to decrease in demand in the economy which hurts economic growth.
Low and moderate inflation is good for economic growth as it creates demand in the
economy and people are also willing to save money in banks which ultimately increases
investment.
Galloping or Hyperinflation eats away the savings of the people as they spend too much
money in buying goods and services which ultimately decreases investment.
Banks also do not offer higher interest rate (than inflation) in such cases and people do
not keep money in banks as they do not get any real return.
So, only (ii) statement is true.
179. (d)
In case of low and moderate inflation, people are willing to save money and put in bank
deposits because bank offer deposit rates higher than inflation rates. People are willing
to sign long term contracts (linked with inflation index) in money terms because they are
confident that the relative prices of goods and services they buy and sell will not get too
far out of line and it helps in promoting business. As the prices are increasing, people are
also willing to consume because if they postpone their consumption, they will have to
spend more on consumption at a future date.
180. (d)
When the economy is facing deflation, that means prices are decreasing.
In such a situation, whatever I can buy today in Rs. 100, the same Rs. 100 is able to
purchase more in the next year. This leads to postponement of purchase decisions by the
people and the demand in the economy decreases. When the demand decreases,
companies defer their production and investment decisions which lead to increase in
unemployment.
So, all the statements are correct.
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181. (b)
Stagflation is an economic anomaly where stagnation in the economy is accompanied by
high inflation (instead of low inflation due to falling demand). Triggered first in 1973 by
the OPEC's fourfold increase in oil prices which raised all prices, thus slowing down
economic growth.
Stagflation = Stagnation in the economy + Inflation
Generally, when economy stagnates (slows down) then inflation also comes down due to
lower demand in the economy. But stagflation is an exception where economy slows down
but the inflation is high. And this may be because of the steep rise in prices of some
inputs required in the production process.
182. (a)
A supply shock is an unexpected event that suddenly changes the supply of a product
or commodity, resulting in an unforeseen change in price. Supply shocks can be negative,
resulting in a decreased supply, or positive, yielding an increased supply; however, they're
often negative.
A supply shock inflation is caused because of the problem (negative supply shock) in
supply of goods and services rather than change in demand.
If the exports from India increase because foreigners purchased more Indian products
then it may result in shortage in supply of that product in the domestic economy resulting
in supply shock inflation.
Because of increased government expenditure, more money reaches to the public

resulting in increased demand and hence demand-pull inflation.
If there is more money/credit creation in the economy then it results in higher demand
in the economy resulting in demand pull inflation.
183. (c)
When the cost of money (interest rate) is cheaper in the economy, it helps in investment.
For investment, the main cost is cost of capital i.e. the rate at which capital/money is
available.
184. (d)
When the output in the economy is high, that means factories are working at full potential
and employing more labour. So, (i) statement is not true.
When the unemployment in the economy is high, people have less money to purchase
goods and services i.e. the demand in the economy decreases which leads to decrease in
prices. So, (ii) statement is also not true.
185. (a)
As per the Fillips curve, if the unemployment starts decreasing (or employment starts
increasing) then it results in higher inflation in the economy. This is because the higher
employment results in more money in the hands of the people and this more money starts
chasing the output in the economy resulting in higher inflation.
Phillips curve says that, inflation is dependent on employment and there is an inverse
relationship. But it is not vice-versa true. So, if the economy is facing higher inflation then
it can’t be said that it will create employment.
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186. (c)
Consider an example:
2012 2013 2014 2015
Onion Prices (Rs/kg) 10 11 11.6 12

Inflation 10% 5.45% 3.45%
In the above example onion prices are increasing. But inflation (increase in prices) is
decreasing from 10% to 5.45% to 3.45% but it is positive. This is a case of Disinflation
(declining rate of inflation but the rate of inflation remains positive).
Consider next example:

2012 2013 2014 2015
Onion Prices (Rs/kg) 10 9.5 9 8

Inflation -5% -5.6% -11.1%
In the above example onion prices are decreasing, so the inflation is negative. This is a
case of Deflation.
So, (ii) statement is also true.
187. (c)
Disinflation is when inflation is decreasing but prices are still increasing. So, in an
economy when inflation decreases, the demand of goods and services increases and
people spending increases and it supports business activity resulting in decrease in
unemployment.
So, all the statements are wrong.
188. (d)
Continuing its financial inclusion drives, RBI has announced a “National Strategy for
Financial Inclusion (NSFI)” for India 2019-2024. The NSFI sets forth the vision and key
objectives of the financial inclusion policies in India to help expand and sustain the
financial inclusion process at the national level through a broad convergence of action
involving all the stakeholders in the financial sector. The strategy aims to provide access
to formal financial services in an affordable manner, broadening & deepening financial
inclusion and promoting financial literacy & consumer protection.
Following are the strategic objectives/pillars of National Strategy for Financial Inclusion.
 Universal Access to Financial Services
 Effective co-ordination
 Providing basic bouquet of financial services
 Customer protection and grievance redressal
 Financial literacy and education
 Access to livelihood and skill development
Some of the important milestones under the NSFI are:

 Banking access to every village within 5-km of radius or a hamlet of 500 households
in hilly areas by March 2020
 Every adult should have access to financial service provider through a mobile device
by March 2024
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 Every willing and eligible adult, who has been enrolled under the PMJDY, should be
enrolled under an insurance scheme (PMJJBY, PMSBY, etc.), and a pension scheme
(NPS, APY, etc.) by March 2020
 Public Credit Registry (PCR) fully operational by March 2020
189. (c)
Sovereign Gold Bonds (SGB) are government securities denominated in grams of gold.
They are substitutes for holding physical gold. Investors have to pay the issue price in
cash and the bonds will be redeemed in cash on maturity. The Bond is issued by RBI on
behalf of Government of India.
Suppose somebody is purchasing gold bonds worth Rs. 100 by payment in rupees, then
this Rs. 100 bond will also be denominated in grams of gold as per the market price of
gold at the time of purchase and the investor will earn a fix interest rate. So, an investor
holding gold bonds will get the benefit of price appreciation if the price of physical gold in
the market is increasing and interest both but he will lose if the price of gold in the market
decreases.
The quantity of gold for which the investor pays is protected, since he receives the ongoing
market price at the time of redemption/ premature redemption. The SGB offers a superior
alternative to holding gold in physical form. The risks and costs of storage are eliminated.
Investors are assured of the market value of gold at the time of maturity and periodical
interest (@2.5% per annum paid semi-annually). SGB is free from issues like making
charges and purity in the case of gold in jewellery form. It can be purchased from
Scheduled Commercial Banks, Post office, BSE and NSE.
190. (d)
Through this scheme, the households will be able to deposit their gold/ jewellery with the
banks which they will melt and convert into gold bars and could sell this gold bars to
jewellers. The depositors of gold will earn fix interest rate (denominated in terms of gold)
and they will get their gold back after the maturity period or cash whatever they want.
Through this scheme government wants to mobilize the gold jewellery lying with the
households for productive purpose. This will also help in reducing the gold imports and
Current Account Deficit (CAD).
191. (d)
Islamic banking is a banking system that is based on the principles of Islamic law, also
referred to as Shariah law, and guided by Islamic economics. Two basic principles behind
Islamic banking are the sharing of profit and loss and the prohibition of the collection and
payment of interest by lenders and investors.
In order to earn money without charging interest, Islamic banks use equity-participation
systems. This means that if a bank loans money to a business, the business pays back
the loan without interest, but it gives the bank a share in its profits. If the business
defaults on the loan or does not earn any profits, the bank does not receive any profit
either.
The depositors put their savings in Islamic bank and allow the bank to use this money,
with the assurance that they would get the full amount back. The bank is not liable to
pay interest to the savers. However, some banks do give a certain sum back to the account
holder as profit accrued from their operations.
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While an Islamic bank is a bank totally based on and run with Islamic principles in mind,
an "Islamic window" in a bank refers to conventional banks offering Islamic banking
services (in addition to conventional banking services) through dedicated windows.
The RBI has proposed the opening of "Islamic window" in conventional banks for gradual
introduction of Sharia compliant banking in the country to ensure financial inclusion of
those sections of society that remain excluded due to religious reasons.
192. (c)
Shadow banking operates outside the regular banking system and financial
intermediation activities are undertaken with less transparency and regulation than the
conventional banking. Shadow banks, like conventional banks undertake various
intermediation activities akin to banks, but they are fundamentally distinct from
commercial banks in various respects. NBFCs are example of shadow banks. The
following are differences between normal banks and shadow banks.
First, unlike commercial banks, which by dint of being depository institutions can create
money, shadow banks cannot create money. Second, unlike the banks, which are
comprehensively and tightly regulated, the regulation of shadow banks is not that
extensive and their business operations lack transparency. Third, while commercial
banks, by and large, derive funds through mobilization of public deposits, shadow banks
raise funds, by and large, through market-based instruments such as commercial paper,
debentures, or other structured credit instruments. Fourth, the liabilities of the shadow
banks are not insured, while commercial banks’ deposits, in general, enjoy Government
guarantee to a limited extent. Fifth, in the times of distress, unlike banks, which have
direct access to central bank liquidity, shadow banks do not have such recourse.
193. (a)
Government is planning bank recapitalization program under which it will issue bonds of
Rs. 80,000 crore in FY 2017-18. This recapitalization programme has been integrated
with an ambitious reform agenda, under the rubric of an "Enhanced Access and Service
Excellence (EASE)" programme and the six pillars to achieve this include customer
responsiveness, responsible banking, credit offtake, PSBs as Udyami Mitra, deepening
financial inclusion, and digitalisation and developing personnel.
194. (a)
The Banking Ombudsman Scheme enables an expeditious and inexpensive forum to bank
customers for resolution of complaints relating to certain services rendered by banks. The
Banking Ombudsman Scheme is introduced under Section 35 A of the Banking
Regulation Act, 1949 by RBI with effect from 1995. The Banking Ombudsman is a senior
official appointed by the Reserve Bank of India to redress customer complaints against
deficiency in certain banking services like non-payment or inordinate delay in the
payment or collection of cheques, drafts, bills etc.
195. (d)
Scheduled Commercial banks are mandated to give a portion (40%) of their total credit
to the priority sectors. Priority sector guidelines do not lay down any preferential rate of
interest for priority sector loans. Typically, these are small value loans to those sectors of
the society/economy that impact large segments of the population and weaker sections,
and to the sectors which are employment intensive such as agriculture and small
enterprises. The following have been declared as the priority sectors by RBI:
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Agriculture, Education, Housing, Micro, Small & Medium Enterprises (MSME), Export
Credit, Social Infrastructure (Schools, hospitals etc), Renewable Energy and Others
(weaker sections like artisans, village cottage industries, SC/ST, Self Help Groups etc.)
RBI has classified loan to food & agro-based processing units and Cold Chain under
agriculture activities for Priority Sector Lending (PSL).
196. (d)
The Kisan Credit Card (KCC) scheme is an innovative credit delivery mechanism to meet
the production credit requirements of the farmers in a timely and hassle-free manner.
The scheme is under implementation in the entire country by the vast institutional credit
framework involving Commercial Banks, RRBs and Cooperatives and has received wide
acceptability amongst bankers and farmers.
Kisan Credit Card Scheme aims at providing adequate and timely credit support from the
banking system under a single window to the farmers for their following needs:
 To meet the short-term credit requirements for cultivation of crops

 Post-harvest expenses
 Produce Marketing loan
 Consumption requirements of farmer household
 Working capital for maintenance of farm assets and activities allied to agriculture,
like dairy animals, inland fishery etc.
 Investment credit requirement for agriculture and allied activities like pump sets,
sprayers, dairy animals etc.
The following people are eligible for this scheme

 All Farmers – Individuals / Joint borrowers who are owner cultivators
 Tenant Farmers, Oral Lessees & Share Croppers
 Self Help Groups or Joint Liability Groups of Farmers
197. (d)
The Kisan Credit Card Scheme is being implemented by Commercial Banks, RRBs, Small
Finance Banks and Cooperatives.
198. (a)
Share of Commercial banks credit to agriculture sector is around 80%.
199. (c)
A bail-in is rescuing a financial institution on the brink of failure by making its creditors
and depositors take a loss on their holdings. A bail-in is the opposite of a bail-out, which
involves the rescue of a financial institution by external parties, typically governments
using tax payers money. Typically, bail-outs have been far more common than bail-ins,
but in recent years after massive bail-outs, some governments now require the investors
and depositors in the bank to take a loss before taxpayers.
200. (c)
RBI, under its supervisory framework, uses various measures/tools to maintain sound
financial health of banks. Prompt Correction Action (PCA) framework is one of such
supervisory tools under which RBI has specified certain regulatory trigger points in terms
of three parameters, i.e. capital to risk weighted assets ratio (CRAR), net non-performing
assets (NPA) and Return on Assets (RoA), for initiation of certain structured and
discretionary actions in respect of banks hitting such trigger points. It involves
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monitoring of certain performance indicators of the banks as an early warning exercise

and is initiated once such thresholds are breached.
Its objective is to facilitate the banks to take corrective measures including those
prescribed by the Reserve Bank, in a timely manner, in order to restore their financial
health. The framework also provides an opportunity to the Reserve Bank to pay focused
attention on such banks by engaging with the management more closely in those areas.
The PCA framework is, thus, intended to encourage banks to eschew certain riskier
activities and focus on conserving capital so that their balance sheets can become
stronger.
The RBI has clarified that the PCA framework is not intended to constrain normal
operations of the banks for the general public like lending and depositing. But in extreme
cases, RBI can put restrictions on lending activity also. The PCA framework is applicable
only to commercial banks and not extended to co-operative banks and non-banking
financial companies (NBFCs).
201. (c)
Since a lot of urban-cooperative banks (UCBs) were also facing issues, RBI has brought
in “Supervisory Action Framework” (SAF) for UCBs in place of PCA for commercial banks.
The three parameters (NPA level, Return on Assets i.e. profit and Capital Adequacy Ratio),
based on which PCA is invoked, SAF is also invoked based on three similar parameters
(NPA level, two consecutive years loss and capital adequacy ratio), but the level may be
different at which SAF is triggered. SAF in UCB can also be initiated in case of serious
governance issues. Once a UCB has been put under SAF, various restrictions on dividend,
donation, new loans, capital expenditure etc. can be imposed, which are again similar to
PCA restrictions.
202. (d)
Some banks, due to their size, cross-jurisdictional activities, complexity, lack of
substitutability and interconnectedness, become systemically important. The disorderly
failure of these banks has the potential to cause significant disruption to the essential
services they provide to the banking system, and in turn, to the overall economic activity.
Therefore, the continued functioning of Systemically Important Banks (SIBs) is critical for
the uninterrupted availability of essential banking services to the real economy.
All the banks under D-SIB are subject to additional capital requirements. Banks whose
assets exceed 2% of GDP are considered part of this group.
SIBs are perceived as banks that are ‘Too Big To Fail (TBTF)’. This perception of TBTF
creates an expectation of government support for these banks at the time of distress. Due
to this perception, these banks enjoy certain advantages in the funding markets. However,
the perceived expectation of government support amplifies risk-taking, reduces market
discipline, creates competitive distortions, and increases the probability of distress in the
future. These considerations require that SIBs should be subjected to additional policy
measures to deal with the systemic risks and moral hazard issues posed by them.
The concept of D-SIB emerged after the global financial crisis of 2008. As per the
framework, from 2015, every August, RBI has to disclose names of banks designated as
D-SIB.
203. (a)
Recently RBI included HDFC Bank under the list of DSIB, while SBI and ICICI were
already in the list.
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204. (d)
Electoral bonds can be purchased for any value in multiples of ₹1,000, ₹10,000, ₹10 lakh,
and ₹1 crore from any of the specified branches of the State Bank of India. The purchaser
will be allowed to buy electoral bonds only on due fulfilment of all the extant KYC norms
and by making payment from a bank account. A citizen of India or a body incorporated
in India will be eligible to purchase the electoral bond which will be an interest free
instrument.
The bonds will have a life of 15 days during which they can be used to make donations
to registered political parties (which they can encash through a designated bank account)
that have secured not less than 1% of the votes polled in the last election to the Lok Sabha
or Assembly.
At present, the donor, the quantum and the source of funds is not known. Now, with
electoral bonds, the balance sheet of the donor will reflect the purchase of these bonds.
The donor will know, which party he is depositing money to. The political party will file
return with the election commission as to how much money has come through electoral
bonds. Now, which donor gave to which political party, that is the only thing which will
not be known. It will ensure cleaner money coming from donors, cleaner money coming
to political party and ensure significant transparency against the current system of
unclean money.
205. (d)
Reserve Bank of India invests the reserves in the following types of instruments:
 Deposits with Bank for International Settlements
 Deposits with other central banks
 Deposits with foreign commercial banks
 Debt instruments representing sovereign or sovereign-guaranteed liability
 Other instruments/institutions as approved by the Central Board of RBI
206. (c)
A line of credit is a preset amount of money that a bank has agreed to lend to a
company/individual. The company can draw from the line of credit when it needs up to
the maximum amount. The company will pay interest only on the amount used.
207. (b)
A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller
will be received on time and for the correct amount. In the event that the buyer is unable
to make payment on the purchase, the bank will be required to cover the full or remaining
amount of the purchase.
208. (a)
“Teaser Loans” is the unofficial term used to describe housing loans that carry ultra-low
fixed rates in the initial years, but charge market-linked rates thereafter. These products
were first launched in 2009-10 by SBI. This scheme was termed a ‘teaser loan’ scheme
by market players because it lured the borrower with low rates in the initial years, only
to bump up the rates later.
Home loans in India face very low incidence of default, even amid NPAs. But RBI was
worried because in case of a teaser home loan, by offering borrowers ultra-low rates in
the first few years, may tempt them to take on a far bigger housing bet than they can
afford. In a rising rate cycle, a transition from a fixed to a floating rate can well throw a
salary-earner’s EMI calculation out of their range.
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While such teaser products are not banned by the regulator, the standard asset
provisioning requirement is higher for such loans. For normal home loans, the standard
asset provisioning is 0.4% but for teaser loans it is 2%. RBI, to discourage such
products, had increased the provisioning by five times for such loans since these loans
are perceived as riskier.
209. (b)
Higher NPAs worsens the financial health of a bank. To tackle the NPA or bad assets
problem, RBI has designed several mechanisms. An important among them is the
Provisioning norms.
In banking lexicon, provisioning means to set aside or provide some funds to cover up
losses if things go wrong and some of their loans turn into bad assets.
The banks need to provision some funds as a percentage of their loans/advances. For
standard asset (which have not turned NPAs), the requirement of provisioning is very less
(0.4%) but for NPAs, it may be quite high.
The provisioning coverage ratio is the prescribed percentage of funds to be set aside by
the banks for covering the prospective losses due to bad loans –most probably from their
profit. For example, if the provisioning coverage ratio is 70% for a particular category of
loan, then banks have to set aside funds equivalent to 70% of those loans out of their
profits.
210. (b)
Securitization is the process of pooling and repackaging of financial assets (like debt
papers generally) into marketable securities that can be sold to investors. For example,
an NBFC has given loan to different companies. Now these different loan papers are an
asset for NBFC. Suppose all the loan papers is of Rs. 100 crores. Now, one lakh shares
have been created out of this asset worth Rs. 100 each and these shares can be sold to
different people. NBFCs will get immediate liquidity/money and the share price will vary
depending on whether the loan is being serviced/repaid properly or not. If the companies
to whom NBFC gave loan are not returning the principal or interest, the price of
security/share will fall.
Banks/NBFCs can sell these loan papers directly (“Direct Assignment" with certain
restrictions) or they can also create security (“Securitization”) out of this loan paper and sell.
Both routes are adopted when they want liquidity.
In other words, basically securitization involves repackaging of less liquid assets into
saleable securities.
211. (c)
As announced in July 2019 budget presentation, Govt. on 10.08.2019 launched Partial
Credit Guarantee offered by Government of India (GoI) to Public Sector Banks (PSBs) for
purchasing high-rated pooled assets from financially sound Non-Banking Financial
Companies (NBFCs)/Housing Finance Companies (HFCs)".
Under the above scheme Public Sector Banks can purchase the loan papers of NBFCs
(only through Direct Assignment route and not through securitisation) to provide liquidity
to NBFCs and manage their asset liability mismatch issue. Central govt. will provide
partial credit guarantee on these assets i.e. if in future these loan papers turn NPA, then
Govt. of India will pay to Public Sector Banks. But there are restrictions on what kind of
loan papers of NBFCs can be purchased by PSU banks and only high rated loans is
allowed up to Rs. 1 lakh crore by February 2020.
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212. (a)
Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital to its risk weighted asset
ratio. A bank’s capital consists of Tier1 (share) and Tier2 (bonds) capital. The bank has to
maintain this capital so that, if there are defaults then the bank should be able to sustain.
RBI mandates how much CAR has to be maintained by banks.
Please watch the following video to understand this in a better way:

https://www.youtube.com/watch?v=eXeytc6QLvE&t=118s
213. (b)
Please watch the following video to understand this:
https://www.youtube.com/watch?v=eXeytc6QLvE&t=118s
214. (c)
The Gross Non-Performing Advances ratio of Scheduled Commercial Banks has remained
unchanged at 9.3 per cent between March and September 2019 and increased slightly for
the Non-Banking Financial Corporations from 6.1 per cent to 6.3 per cent. Capital to
Risk-weighted Asset ratio (Capital adequacy ratio) of Scheduled Commercial Banks
increased from 14.3 per cent to 15.1 per cent between March 2019 and September 2019.
215. (d)
Additional Tier 1 Bonds (AT-1) bonds have several unusual features lurking in their fine
print, which make them very different from normal bonds.
 One, these bonds are perpetual and carry no maturity date. Instead, they carry call
options that allow banks to redeem them after five or 10 years. But banks are not
obliged to use this call (redeem) option and can opt to pay only interest on these bonds
for eternity.
 Two, banks issuing AT-1 bonds can skip interest payments for a particular year or
even reduce the bonds’ face value without getting into hot water with their investors,
provided their capital ratios fall below certain threshold levels. These thresholds are
specified in their offer terms.
 Three, if the RBI feels that a bank is tottering on the brink (called point of non-viability)
and needs a rescue, it can simply ask the bank to cancel its outstanding AT-1 bonds
without consulting its investors.
AT-1 bonds are risky but people invest as it offers higher interest rate. In case of Yes Bank
crisis, AT-1 bonds worth Rs. 8415 were written down in March 2020. (This means now
investors will not get any interest or principal in future).
Under Basel III norms, banks need to have 11.5% capital requirement in which 9.5% is
Tier 1 capital and 2% is Tier 2 capital. Out of 9.5% Tier 1 capital, Additional Tier 1 capital
(AT-1 bonds) can be 1.5%.
216. (d)
In India, any money you send overseas is subject to controls, as the government is wary
of excessive outflows of foreign exchange draining its reserves and destabilising the rupee.
But there has been an effort to gradually liberalise these controls.
The window that was opened up in 2004 for individuals to remit/send money across the
border, without seeking specific approvals, was called the Liberalised Remittance
Scheme (LRS).
Under LRS, all resident individuals (in India) can freely remit/send $250,000 overseas
every financial year for a permissible set of current or capital account transactions.
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Remittances are permitted for overseas education, travel, medical treatment and
purchase of shares and property, apart from maintenance of relatives living abroad,
gifting and donations. Individuals can also open, maintain and hold foreign currency
accounts with overseas banks for carrying out transactions.
(Now anyone can say that, “Rupee is fully convertible at current account” then what is this
limit of $2,50,000? See, under this scheme you can freely send the money abroad without
specific government approvals, that is why the name is liberalized. But if you want to send
more under current account then it may be possible but you may have to take specific
approval of government which is not under this scheme)
However, the rules do not allow trading in “foreign exchange” (for example Dollar and
Pound trading). Sending money to certain countries and entities is also barred. Under
LRS, people can’t send money to countries identified as ‘non cooperative’ by the Financial
Action Task Force. Remittances are also prohibited to entities identified as posing terrorist
risks.
The LRS represents India’s baby steps towards dismantling controls on foreign exchange
movements in and out of the country. It has allowed large numbers of Indians to study
abroad and diversify their portfolios from purely desi stocks and property.
Ideally speaking, capital controls in any form have no place in a liberalised economy. But
for India, which is heavily dependent on imports of critical goods and perpetually spends
more foreign exchange than it earns, it is difficult to free up remittances because of the
havoc this can wreak on exchange rates.
The LRS gives you the freedom to put your money to work anywhere in the world. Until
India is ready to free all capital controls, the LRS remains the most viable way for
individuals to legally remit money overseas.
217. (c)
Foreign Direct Investment (FDI) happens in three ways: -
 A foreign company purchasing shares of Indian company
 A foreign company in collaboration with an Indian company establishing a new
company called Joint Venture Company in India
 A foreign company establishing a subsidiary or a child company in India
218. (d)
219. (b)
220. (a)
FDI FPI/FII
1 It is only in equity/shares/ownership It is both in equity and debt (loan)
2 It is through primary market Generally, through secondary market
but can happen through primary
market
3 Generally new shares are issued and the Generally, only the owners change
new capital (money) comes to the hands and new capital does not come
company through which the company to the company
invests in new factory, machines etc.
4 The foreign investors purchase large Foreign investors generally purchase
shareholding and appoints Board of small shareholdings and do not get
Directors and get involved in the involved in the management of the
decision making (active management) of company
the company
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5 Foreign investors try to make the Foreign investors target the share
company profitable through their price of the company and derive their
decision making and target the profit of gain from rise of share prices
the company
6 It is sector specific. For example, a steel It is in general capital market. For
company in US will invest only in a steel example, a foreign investor is not
company in India and try to make that particular about any company/ sector
company profitable through their in India and is willing to invest in any
management and decision making and company which gives a chance of
get a share of the profit share price appreciation
7 It is a long-term investment as to turn It is generally short-term investment
the company profitable, the foreign
investor needs to get invested for a long
time.
8 Generally, the government specify a lock There is no lock in period and the
in period and during this period the foreign investor can return any time by
foreign investor cannot sell his selling his investment. This makes the
investment and hence it is quite stable currency volatile
221. (c)
Government has accepted the international practice regarding the definitions of FDI and
FPI. Where the investor's stake is 10 percent or less in a company it will be treated as FPI
and, where an investor has a stake of more than 10 percent, it will be treated as FDI. A
single foreign portfolio investor can invest maximum up to 10 percent in an Indian
company and all FPIs on aggregate basis can maximum invest up to 24% or the sectoral
cap/ statutory ceiling as applicable for that sector under foreign investment. Government
now specifies composite cap/ceiling for foreign investors (rather than separate limits for
FDI and FPI) in various sectors under which all kinds of foreign investments are allowed.
Foreign Investment in an unlisted company irrespective of threshold limit may be treated

as FDI. An investor may be allowed to invest below the 10 percent threshold and this can
be treated as FDI subject to the condition that the FDI stake is raised to 10 percent or
beyond within one year from the date of the first purchase. The obligation to do so will
fall on the company. If the stake is not raised to 10% or above, then the investment shall
be treated as portfolio investment. In case an existing FDI falls to a level below 10 percent,
it can continue to be treated as FDI, without an obligation to restore it to 10% or more.
In a particular company, an investor can hold the investments either under the FPI route
or under the FDI route, but not both.
222. (d)
Refer the trends
223. (d)
FPI comes under capital account in Balance of Payment but they bring dollars/foreign
currencies and this dollar is used to finance/fund if we have deficit in current account.
When government is listing a PSU on stock exchange for disinvestment, then FPIs can
also purchase the PSU’s shares in the primary market. So, FPIs help in government’s
disinvestment plan.
FPI’s pay tax on the earnings they derive from gain in shares/bonds prices, called capital
gain tax.
224. (d)
Foreign Direct Investment can come through two routes viz. automatic and government
approval route. More than 95% of the FDI comes in India through the “Automatic Route”
where no government approval is required and are subject to only sectoral laws. Certain
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sectors that are still under “Government approval route” are scrutinised and cleared by
the respective departments and ministries.
In respect of applications in which there is a doubt about the Administrative

Ministry/Department concerned, DPIIT shall identify the Administrative
Ministry/Department where the application will be processed. In respect of proposals
where the respective department/ ministry proposes to reject the proposals or in cases
where conditions for approval are stipulated in addition to the conditions laid down in the
FDI policy or sectoral laws/regulations, concurrence of DPIIT shall compulsorily be
sought by the said Ministry. The Department for Promotion of Industry and Internal Trade
(DPIIT), Ministry of Commerce and Industry sets the rules for foreign investment and
makes policy pronouncements on FDI through various Press Releases.
225. (c)
Through Masala bonds money is raised from abroad in foreign currency but the bonds
are denominated in Rupee.
Masala Bonds are a kind of ECB where the bonds are issued outside India but
denominated in Indian Rupees, rather than the local currency. Masala is an Indian word
and it means spices. Unlike dollar bonds, where the borrower takes the currency risk,
Masala bond makes the investors bear the risk.
ECB MASALA Bonds
$1 = Rs. 70 (2019)
$1 Bond was issued to foreign investor Rs. 70 Bond was issued to foreign investor
and the borrower (Indian company) got $1 and the borrower (Indian company) got $1
for one year. Money is raised in foreign (as the rupee dollar rate was $1=Rs.70) for
currency and the borrower issued Dollar one year. Money is raised in foreign
denominated bond to the foreign investor. currency but the borrower issued Rupee
denominated bond to the foreign investor.
$1=Rs. 80 (2020)
In 2020, the borrower needs to return $1 In 2020, the borrower needs to return Rs.
to the foreign investor and for that he will 70 to the foreign investor rather than $1.
have to spend Rs. 80 to get $1. The The conversion/exchange risk from Rupee
conversion/exchange risk is of the to Dollar is of the foreign investor.
borrower (Indian company).
226. (c)
Through ECB and Masala Bonds, the money is raised in foreign currency which
is then sold in the forex market to purchase rupees which leads to rupee appreciation.
Restricting FPI investments will reduce the supply of dollar and will have an opposite
impact.
When we reduce imports by restricting non-essential items, it leads to reduction in
demand of dollars and appreciation of rupee.
227. (d)
In practice, FDI is defined as cross-border financial investments between firms belonging
to the same multinational group, and much of it is phantom in nature which means
investments that pass through empty corporate shells. These shells, also called special
purpose entities, have no real business activities.
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228. (c)
The term “Strategic Disinvestment” means the sale of substantial portion of the
Government share-holding of a central public sector enterprise (CPSE) of up to 50%, or
such higher percentage (to the strategic partner) along with transfer of management
control.
(It has to be kept in mind that even by selling less than 50% stake to the strategic partner,
the government can transfer the management control to the strategic partner, it is legally
possible.)
In Strategic Disinvestment, management control must be transferred to the private strategic

partner. Strategic disinvestment is a way of privatisation
229. (c)
230. (a)
As per the new policy (2019), Department of Investment and Public Asset Management
(DIPAM) under the Ministry of Finance has been made the nodal department for the
strategic disinvestment. DIPAM and NITI Aayog will now jointly identify PSUs for strategic
disinvestment and then it is approved by CCEA.
Government has created an “Alternative Mechanism”, which is an inter-Ministerial body

to fasten the process of strategic disinvestment. It will decide the following:
 The quantum of shares to be transacted, mode of sale and final pricing of the
transaction or lay down the principles/ guidelines for such pricing; and the selection
of strategic partner/ buyer; terms and conditions of sale; and
 To decide on the proposals of Core Group of Secretaries on Disinvestment (CGD) with
regard the timing, price, the terms & conditions of sale, and any other related issue
to the transaction.
This will facilitate quick decision-making and obviate the need for multiple instances of
approval by CCEA for the same CPSE.
231. (c)
Those transactions which happen between Indian residents and Foreigners or non-
resident Indians (NRIs) are recorded in India’s balance of payment.
In the first statement, an Indian resident is earning income from abroad from a foreign
entity and in the second statement also, an Indian family is getting money free from an
NRI. So, both will be recorded in India’s balance of payments under current account.
232. (c)
Those transactions come under Capital Account (BoP) which creates future obligations/
liabilities or change in assets/liabilities. For example, loans, shares, deposits etc.
Global Depository Receipts (GDRs) are basically shares issued abroad by a domestic
company.
International Trade Credit means credit/loan given for trade purpose abroad.
Securities are basically financial assets, so it will always be included in Capital Account.
So, all are part of Capital Account of BoP
233. (d)
Masala bonds are issued outside India and money is raised in foreign currency, so it is
part of our capital account. When NRIs are depositing money in Indian banks then it’s a
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transaction between Indian residents (banks) and non-resident Indians and it creates a
liability on Indian banks for future, hence it’s a capital receipt.
Import of capital equipment are part of current account.
234. (a)
BoP is basically transactions of the residents of the country with the rest of the world.
And transfer payments mean anything given for free.
In the (i) statement, the transaction between Indian resident and Non-Resident Indian
(NRI) is for free, without any work done or consideration. So, it is a case of transfer
payment and will be recorded in BoP.
In the (ii) statement, the transaction is between Indian resident (who has gone abroad
temporarily) and his family in India. Both are Indian residents, so, this transaction will
not be recorded in BoP.
235. (c)
If the Current Account is negative that means we are spending more and earning less
(imports are more than exports), then we require foreign exchange to fund the Current
Account Deficit.
This foreign exchange can come if we are surplus in Capital Account i.e. there is a net
inflow in Capital Account. Or we can also use the foreign exchange reserves of our
country.
So, both statements are true.
236. (c)
Currency Swap Agreement:
US India
$1 = Rs. 70
In US, the US company can raise loan at In India, the Indian company can raise
6%, but for an Indian company doing loan at 9%, but for a US company doing
business in US, the loan rate is 8%. business in India, the loan rate is 11%.
So, the US company will raise loan of $1 So, the Indian company will raise loan of
billion at 6% and give it to the Indian Rs. 70 billion at 9% and give it to the US
company working in US. company working in India.
The Indian company will keep on paying The US company will keep on paying the
the interest rate at 6% and after the term interest rate 9% and after the term ends,
ends, it will give back the $1 billion it will give back the Rs. 70 billion
amount to the US company. amount to the Indian company.
 A currency swap is an agreement in which the two parties (multinational

corporations/governments) exchange the principle amount of a loan (and the interest)
in one currency for the principle and interest in another currency. At the start of the
swap, the equivalent principle amounts are exchanged at the prevailing rate.
 At the end of the swap period, the principle amounts are swapped back at either the
prevailing rate or at a pre-agreed rate such as the rate of the original exchange of
principle amount.
 Currency swaps are used to obtain foreign currency loans at a better interest rate or
as a method of hedging transaction risk on foreign currency loans.
 Currency swap agreements can be at the government and the company level both.
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237. (c)
As per the Banking Regulation Act 1949 (Section 36), RBI, in public interest, can
supersede the Board of Directors (management) of a banking company. This is generally
done if there is mismanagement in the bank or it is on the verge of default.
As per RBI Act 1934, RBI, in public interest, can supersede the Board of Directors
(management) of a non-banking financial company.
(RBI can supersede a bank’s board through Banking Regulation Act 1949, but NBFCs are
not covered in that Act. So, an amendment was done in RBI Act 1934 in July 2019,
to allow RBI to supersede the board of NBFCs, in the wake of the crisis faced by
various NBFCs like DHFL, IL&FS etc.)
238. (b)
As per Banking Regulation Act 1949 (Section 36) (and not by RBI Act 1934), RBI, in public
interest, can supersede the Board of Directors (management) of a banking company.
As per RBI Act 1934 (Section 30), the Central Government can supersede the ‘Central
Board’ of RBI, and thereafter the general superintendence shall be entrusted to such
agency as the government may decide and can exercise all the powers exercised by
‘Central Board’.
239. (b)
Following are the amendments done in 2017 in Banking Regulation Act 1949 regarding
resolution of stressed assets/NPAs
 The Central Government may, by order, authorize RBI to issue directions to any
banking company to initiate insolvency resolution process in respect of a default,
under the provisions of Insolvency and Bankruptcy Code 2016
 RBI may from time to time issue directions to any banking company for resolution of
stressed assets
Based on the above amendments, RBI issued directions to banks (in general and not
against any specific default) to move to IBC 2016 for resolution of stressed assets, then
some lenders approached Court and the Supreme Court gave the following judgement
dated 2nd April 2019:
“RBI can only direct banking institutions to move under the IBC Code 2016 if there is a
central government authorization and it should be in respect of specific defaults. Thus,
any directions which are in respect of debtors in general, would be ultra vires Section 35AA
of Banking Regulation Act 1949”.
So, RBI in general can issue guidelines for resolution of stressed assets but it cannot force
a banking company to move to IBC 2016 without Govt. of India authorization. And in case
after Govt. approval, RBI is asking a banking company to move to IBC 2016 for resolution
of stressed assets, then it should be in cases of specific defaults.
Lenders do not require RBI permission to move to IBC Code 2016.
240. (d)
The IBC Code 2016 covers solvency of Individuals/personal, Corporate Debtor,
Proprietorship, Partnership firms and Limited Liability Partnership (LLPs) firms. But the
provisions of IBC Code are being implemented/notified in phased manner and till now
only Corporate Debtors have been notified under IBC. Personal insolvencies,
Proprietorship (one-man company) and partnership firms (which are not "limited") and
LLPs will be done soon.
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241. (a)
Committee of Creditors (CoC) consists of only financial creditors (like banks, NBFCs etc.).
But the proceeds/money from the resolution process is shared by the financial and
operational creditors both. Only CoC will decide how the resolution proceeds will be
shared among financial and operational creditors and NCLT will not have any say. NCLT
cannot interfere in the merits of the commercial decision taken by the CoC but a “limited
judicial review” was possible to see that the CoC had taken into account, inter alia, the
fact that the interest of all stakeholders, including operational creditors had been taken
care of.
242. (a)
The resolution plan finalized by the Committee of Creditors must be approved by the
NCLT (NCLT is the final approving authority). Supreme Court on 15th Nov 2019 ruled that,
corporate insolvency resolution process can be extended beyond 330 days in case of
exceptional cases. But ordinarily the time taken in relation to the resolution process must
be completed within the outer limit of 330 days from the insolvency commencement date,
including extensions and the time taken in legal proceedings.
Extension of time should be granted by NCLT/NCLAT, only in case of exceptional cases,

if parties are able to prove there is very little time left in the resolution process and the
delay has been caused by ‘tardy’ legal proceedings.
Timelines in IBC
In normal case, resolution process should be completed in 180 days
In complex case, resolution process should be completed in 270 days
Including litigation, resolution process should be completed in 330 days
Exceptional cases (tardy legal proceedings), resolution process may go beyond 330 days
243. (d)
IBC Code 2016 was not made applicable for the insolvency of financial service provider
like Banks and NBFCs. But since some major NBFCs like DHFL, IL&FS faced crisis,
government thought of bringing NBFCs temporarily under IBC for resolution. So, GoI,
on 15th Nov 2019 notified section 227 under IBC Code which says that the IBC rules
shall apply to such financial service providers or categories of financial service providers,
as may be notified by the Central Government under section 227, from time to time, for
the purpose of their insolvency and liquidation proceedings under these rules.
This is a temporary mechanism because for the resolution of insolvencies of Banks and
NBFCs, we have a bill pending, Financial Resolution and Deposit Insurance (FRDI) Bill,
which the government is planning to introduce soon.
244. (c)
Section 227 of IBC 2016 says that " Notwithstanding anything to the contrary examined in
this Code or any other law for the time being in force, the Central Government may, if it
considers necessary, in consultation with the appropriate financial sector
regulators, notify financial service providers or categories of financial service providers for
the purpose of their insolvency and liquidation proceedings, which may be conducted under
this Code.”
And the rules also say that to initiate resolution of FSPs under IBC 2016, the appropriate
regulator should make an application. This is not applicable in other cases where in case
of default, either the creditor or the debtor (company), anyone can move for resolution
under IBC 2016.
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Since, section 227 got notified, Ministry of Corporate Affairs (GoI) (using the powers under
section 227) consulted the regulator (RBI) and said that those NBFCs with asset size of
more than Rs. 500 crores can be brought under IBC code for resolution. This has been
done only for those NBFCs which are regulated by RBI and not for those NBFCs which
are regulated by other regulatory bodies like SEBI, IRDAI etc.
245. (a)
As per the amendment done in the Insolvency and Bankruptcy Code (IBC) in November
2017, Wilful Defaulters cannot bid for the companies put up for sale during the resolution
process. It also prohibits from bidding any borrower (or promoter) whose account has
been identified as an NPA for over a year and has not repaid the dues. But if the
borrower/promoter has made payment of all overdue amounts with interest and
charges, then he can bid (submit a resolution plan) for the company.
[Ref: Economic Survey 2017-18 Vol 2 page 52]
246. (c)
If a company has given guarantee to another company, then the IBC will be applicable to
that corporate guarantor also.
If the previous management did some offence/fraud then the new management taking
over the company will be protected (also called ringfenced) from the crimes done by the
previous management.
247. (c)
Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest (SARFAESI) Act, 2002 was enacted to regulate securitisation and reconstruction
of financial assets and enforcement of security interest. The act allows banks and
financial institutions to sell the security in case the debt/ loan is secured and it has
become non performing. The provisions have enabled banks and financial institutions to
improve recovery by exercising powers to take possession of securities (without moving to
court), sell them and reduce nonperforming assets by adopting measures for recovery or
reconstruction.
248. (c)
The LCR is calculated by dividing an institution (Banks/NBFCs) high-quality liquid assets
(for example cash, govt. securities, securities issued or guaranteed by foreign
governments etc.) by its total net cash flows, over a 30-day period. In background of IL&FS
and HDFL crisis, RBI on 24th May 2019 proposed introducing LCR for large NBFCs to
help tackle liquidity issues in the sector. NBFCs will have to maintain minimum high-
quality liquid assets of 50% of total net cash outflows over the following 30 calendar days
starting from Dec 1, 2020 and from Dec 1, 2024 100%. Suppose a bank's expected cash
outflow/spending for the next 30 days is Rs. 150 and cash inflow is expected to be Rs.
50, that means net cash outflow for next 30-day period is Rs. 100. In such a case if bank
is holding cash and govt. securities (which are called High Quality Liquid Assets) of Rs.
60, then LCR = (High Quality Liquid Asset)/ (Banks Net cash outflow for 30-day period) =
Rs. 60/ Rs. 100 = 60%.
249. (c)
Suppose (Nominal) exchange rate is $1 = Rs. 60
Now if an Indian exporter exported a particular commodity (1 unit) in the international
market whose price is $8, then he will get $8 and after conversion in India he will get
ultimately Rs. 480.
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But if the rupee depreciated i.e. $1 = Rs. 64 then he can sell his product in the
international market at a lesser price of $7.5 and can earn the same Rs. 480 after
conversion. (When a country devalues its currency, then exporters are able to sell their
product in the international market at a lesser price without compromising their
earnings.) So, we also say that exporters become more competitive and demand for
domestic goods and services increases as the price gets reduced.
So, exporter will not earn more dollars when rupee depreciates. He will still get the same
dollars or if he reduces the price, then he will get less dollars per unit of goods sold.
So, (ii) statement is false.
250. (c)
Cryptocurrencies are not legal tender but as such there is no blanket ban on trading in
cryptocurrencies. There is a draft bill "Banning of Cryptocurrency and Regulation of
Official Digital Currency Bill 2019", as per which holding, selling or dealing in
cryptocurrencies such as Bitcoin could soon land you in jail for 10 years. But till now it
is just in draft stage and has not become an act.
Cryptocurrencies acquire value as they can be generated/mined only in limited number

and if more and more people would like to hold/possess it, its value increases.
In a circular in April 2018, RBI had imposed a virtual ban on cryptocurrency trading in India
and had directed all entities which fall under the purview of (regulated by) RBI to not deal
in virtual currencies or provide services to those who want to deal in it. In March 2020 the
Supreme court has set aside (quashed) the order, allowing trade in digital assets.
251. (d)
The price of a product depends on its cost of production and its demand in the market
both. If cost of production increases then the price of product will increase and if cost of
production does not increase but if demand increases then also price will increase
because suppliers will sell at higher rate. Apply the same logic for this question. The
product here is money/rupee.
The lending rate in the economy may remain high, in spite of RBI reducing the repo rate
because, banks may be offering higher deposit rates to the public, which is basically the
cost of money for banks.
When Government offers higher interest rate on its savings schemes then banks are not
willing to reduce their own deposit rate, as they fear that they will lose depositors. When
banks don’t reduce deposit rate, they do not reduce lending rate.
If there is liquidity crunch in the economy i.e. there is more demand for money than the
supply then the suppliers of money i.e. banks may not reduce the lending rate (price of
money) in spite of RBI reducing the repo rate.
252. (a)
Priority sector lending is applicable to banks and not NBFCs.
RBI recently allowed that onward lending by registered Non-Banking Finance Companies
(NBFCs) including Micro Finance Institutions (MFI) for the various priority sectors will be
considered as Priority Sector Lending (PSL) by BANKS.
RBI has done the above changes in order to boost credit to the needy segment of
borrowers. Under the revised on-lending model, banks can classify only the fresh loans
sanctioned by NBFCs out of bank borrowing as priority sector lending (it will be
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considered as PSL by banks). Bank credit to NBFCs for ‘On-Lending’ will be allowed up to
a limit of five percent of individual bank’s total priority sector lending on an ongoing basis.
253. (a)
Investments depend essentially on real interest rate. It is the difference in the lending rate
and inflation. For businessmen, it is this cost i.e. the real interest rate which matters. If
it is high, businessmen will not borrow and invest.
For example, if inflation is 6% and lending rate is 10%, then real interest rate for the
businessmen is 4%. For businessmen, it is the real interest rate of 4% that matters. If the
real interest is high then it deters investment.
If in the economy, capacity utilization is high that means factories are running at full
utilization and then the businessmen plan for increase in capacity so that in future they
are able to supply the goods and services in case there is increase in demand. But, if the
existing capacity is not fully utilized, then businessmen defer new investments.
254. (c)
Suppose country A imposed tariff against country B to reduce imports from B. Then it
will lead to reduction in demand of currency B for import purpose, which will lead to
depreciation of currency B, resulting in negating the effect of tariffs imposed.
In a market determined exchange rate, the rate of exchange between two currencies
depends only on the demand and supply of the two currencies. But the demand and
supply of two currencies may depend on several factors like export and import and foreign
people coming in or going out of the country and so on.
255. (a)
If there is inflation in the economy then it means rupee is losing value with respect to
goods and services. Now, when rupee loses value with respect to goods and services in
the economy (and the only purpose of rupee is to purchase goods and services in the
economy) then anyone selling dollars and demanding rupees will now demand more
rupees per unit of dollar and rupee will depreciate.
But if rupee is depreciating, then it means rupee is losing value with respect to a specific
item i.e. dollar. That does not mean rupee will lose value with respect to all the goods and
services in the economy. (Layman’s explanation: If rupee is losing value with respect to
onions means onion becoming costlier………. That does not mean rupee will lose value with
respect to all goods and services, and prices of other goods and services will not increase.)
256. (b)
Advance tax payment means paying a part of the yearly taxes in advance to the
government. This reduces liquidity in the economy because the money moves from public
to government. (the logic is money with the government is not part of money supply in the
economy)
In case of GST, the government credits/gives back the taxes paid on inputs, to the
suppliers which increases liquidity in the economy.
Front loading of government expenditure means government is spending its yearly
targeted expenditure in the starting months rather than in the year end. This increases
liquidity in the economy.
Recapitalization of public sector banks means government is putting money in public

sector banks which increases the lending capacity of the banks resulting in increase in
money supply and liquidity.
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257. (c)
In international transactions, generally dollars and some other stable/hard currencies
like Euro, Pound, Yen etc. are used/accepted. So, if there is a problem of international
liquidity then it means non-availability of these hard currencies.
258. (d)
Whenever something is surplus, its value decreases. So, when there is surplus liquidity
(money) in the economy, the value of money decreases, which means money is available
at cheaper rate i.e. lesser interest rate. And since the value of money (Rupee) has
decreased, it also means that the same amount of rupee will be able to purchase less
dollars i.e. rupee will depreciate. And it also means that purchasing power of rupee will
decrease.
When the interest rate comes down in the economy then if you will purchase bonds then
your return/yield will also be less. This you can also determine as, when the interest rate
comes down in the economy, the bond prices go up and return/yield comes down.
259. (d)
Microfinance is a category of financial services targeting individuals and small businesses
who lack access to conventional banking and related services. Microfinance
includes microcredit (the provision of small loans to poor clients); savings and current
accounts; microinsurance; and payment systems etc. Microfinance services are designed
to reach excluded customers, usually poorer population segments, possibly socially
marginalized, or geographically more isolated, and to help them become self-sufficient
260. (c)
RBI has increased the income limit for each rural household to be eligible for microfinance
from Rs. 1 lakh to Rs. 1.25 lakh, and from ₹1.6 lakh to ₹2 lakh for urban and semi-urban
areas. Second, RBI has also increased the lending limit per borrower from ₹1 lakh to ₹1.25
lakh. Both these eligibility measures are necessary to qualify a loan as a microfinance
asset by MFIs. (One individual can borrow from two MFIs at the most, no need to remember)
Both measures are expected to expand the pool of beneficiaries at the bottom of the
pyramid, as well as increase the flow of credit in absolute amounts through this channel.
The RBI board set up a sub-committee in 2011, under the chairmanship of Y.H. Malegam,
to study issues and concerns relating to the microfinance industry. It covers a range of
services which include, in addition to the provision of credit, many other services such as
savings, insurance, money transfers, counselling, etc. As a consequence of the Malegam
committee report, RBI decided to set up a separate category of non-banking financial
institutions: Non-banking financial company-micro finance institution (NBFC-MFI).
261. (c)
ATMs set up, owned and operated by non-banks are called WLAs. Non-bank ATM
operators are authorised under the Payment & Settlement Systems Act, 2007 by the
Reserve Bank of India (RBI). The rationale to allow non-bank entities to set up WLAs has
been to increase the geographical spread of ATMs for increased / enhanced customer
service, especially in semi-urban / rural areas.
In case of Brown Label ATMs, the service providers own the hardware of ATM machine.
The responsibility of identifying ATM site, lease agreement with landlord, power supply to
ATM kiosk lies with the service provider. Thus, service provider takes the responsibility
of maintenance of the ATM whereas sponsor bank takes the responsibility of cash
management and provide connectivity to ATM to banking network.
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Logo of sponsor bank is displayed on brown label ATM kiosk premises. Brown Label ATMs
are most cost-effective solution for the banks. Unlike Brown Label ATMs, White Label
ATMs will not display logo of any bank like SBI, CANARA BANK, PNB ETC. Logo of White
Label ATM operator like Tata Indicash, Muthoot Finance etc.
262. (c)
263. (c)
Circuit breakers are pre-defined values in percentage terms, which trigger an automatic
check/halt/stop when there is a runaway move in any security or index on either
direction (either increase or decrease). The values are calculated from the previous closing
level of the security or the index. Usually, circuit breakers are employed for both
stocks (share of a particular company) and indices (SENSEX/NIFTY). That means if
one company's share fluctuates too much then also circuit breakers can apply OR if the
overall market i.e. either SENSEX/NIFTY fluctuates then also circuit breakers come into
play.
The index-based market-wide circuit breaker system applies at 3 stages of the index
movement, either way viz. at 10%, 15% and 20%. These circuit breakers when triggered
bring about a coordinated trading halt in all equity and equity derivative markets
nationwide. The market-wide circuit breakers are triggered by movement of either the
BSE Sensex 30 or the Nifty 50, whichever is breached earlier. This means that if either
NIFTY or SENSEX moves beyond 10% then the nationwide markets regulated by SEBI
will come to halt. (But in case of a company, only the trading in that company is halted.)
Stock exchanges BSE and NSE on 23rd March 2020 halted trading for 45 minutes within
less than an hour of market opening after benchmark index Sensex crashed 10% in early
trade.
The Securities and Exchange Board of India (SEBI) is the regulatory body for dealing with
all matters related to the development and regulation of securities market in India. SEBI
was established on 12th of April in 1988. SEBI was given statutory powers on 12 April
1992 through the SEBI Act, 1992.
264. (b)
265. (d)
One of the disputed issues in taxation related to MNCs is the area of intra (group)
company transactions. The pricing of goods and services between two related companies
(companies belonging to the same owner or subsidiaries) is called transfer pricing.
Here, a parent company say in Japan may charge a convenient price from its subsidiary
in India to minimise its tax payment in India. For example, suppose that Maruti Suzuki
India has higher profit and has to pay higher tax to the Government of India. In this case,
if Suzuki Japan charges a high price for a component it sold to Maruti, profit of Maruti
will come down and the tax payment of the company to GoI will also come down. On the
other hand, the revenue of Suzuki Japan will go up. Altogether, the Suzuki Motor
Corporation (SMC) group improves its position; but GoI’s tax revenue gets affected.
To avoid such a manipulation, tax department of India pre-sets the price charged for
different components between Maruti Suzuki India and Suzuki Japan. But this price
should follow “arms-length principle” i.e. market based. An arm's length transaction
refers to a business deal in which buyers and sellers act independently without one party
influencing the other. These types of sales assert that both parties act in their own self-
139
interest and are not subject to pressure from the other party; furthermore, it assures
others that there is no collusion between the buyer and seller.
At the beginning of the year, the price charged for intra company transactions will be
determined in advance and will be kept for the coming five years or so. This price
arrangement between Maruti and India’s tax department is called advance pricing
agreement.
An APA is a contract, usually for multiple years, between a taxpayer and at least one tax
authority specifying the pricing method that the taxpayer will apply to its related-
company transactions. These programmes are designed to help taxpayers voluntarily
resolve actual or potential transfer pricing disputes in a proactive, cooperative manner,
as an alternative to the traditional examination process. APAs gives certainty to taxpayers,
reduce disputes, enhance tax revenues and make the country an attractive destination
for foreign investments. These agreements would be binding both on the taxpayer as well
as the government. Similarly, they lower complaints and litigation costs.
266. (c)
Directorate of Enforcement is a specialized financial investigation agency under the
Department of Revenue, Ministry of Finance, Government of India, which enforces the
following laws: -
 Foreign Exchange Management Act,1999 (FEMA) - A Civil Law, with officers
empowered to conduct investigations into suspected contraventions of the Foreign
Exchange Laws and Regulations, adjudicate and impose penalties on those adjudged
to have contravened the law.
 Prevention of Money Laundering Act, 2002 (PMLA) - A Criminal Law, with the officers
empowered to conduct investigations to trace assets derived out of the proceeds of
crime, to provisionally attach/ confiscate the same, and to arrest and prosecute the
offenders found to be involved in Money Laundering.
267. (b)
When there is liquidity crisis with a bank, then RBI acts as "Lender of last resort" and
provides loan at a particular interest rate to the bank.
But when there is a major mismanagement in the bank and there are chances of major
default/bankruptcy, then RBI, in consultation with Govt. of India, can supersede the
"Board of Directors" of banks in public interest. (But RBI may not supersede the Board of
PSU banks). Once RBI supersedes the Board of Directors (management), then it appoints
an "Administrator". This is done as per the "Banking Regulation Act 1949" Section 36ACA.
So, (i) statement is false as, RBI supersedes a bank's Board under "Banking Regulation
Act 1949" and not under RBI Act 1934
In case of Yes Bank Crisis, RBI superseded the management of Yes Bank and it also
acted as lender of last resort and provided 90-day loan AT BANK RATE of 5.4% (at that
time Bank Rate was repo plus 0.25% , which comes out as 5.15% + 0.25% = 5.4%), plus
3% (so basically RBI charged 5.4% + 3% = 8.4% as penalty) to meet the immediate
liquidity needs of the Yes Bank.
Under the Lender of Last Resort, RBI gives loans against eligible securities to financial
institutions (Banks and NBFCs both) in emergencies.
268. (d)
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269. (c)
Budget is discussed in two stages - the general discussion followed by detailed discussion.
Voting on
General Houses Appropriation
Budget Presentation Demand for Finance Bill
Discussion Adjourned Bill
grants
1st Feb 31st March

Detailed Discussion
On 1st Feb, Finance bill is also introduced after budget presentation.
270. (a)
The Public Finance (Central) Division, under Department of Expenditure, Ministry of
Finance is responsible for preparation of outcome budgets in consultation with the NITI
Aayog. This output-outcome framework (outcome budget) is prepared for all Centrally
Sponsored Schemes (CSSs) and Central Sector Schemes (CSs) dealing with identified
measurable outcomes in the relevant medium-term framework and physical and financial
outputs are targeted on a year to year basis.
For example, suppose if government is budgeting Rs. 30,000 crores for the LPG subsidy
for FY 2020-21 then under the outcome budget it may set a target that it is planning to
distribute LPG cylinders to 10 crore households.
271. (a)
The “Outcome Budget” reflects the endeavour of the Government to convert "Outlays" into
"Outcomes" by planning expenditure, fixing appropriate targets and quantifying
deliverables of each scheme. The “Outcome Budget” is an effort of the Government to
be transparent and accountable to the people. Outcome budget is presented in the
parliament.
272. (c)
This fund is in the nature of an imprest (a fixed fund for a specific purpose) account and
is kept at the disposal of the President of India (by the Secretary to the Government of
India, Ministry of Finance, Department of Economic Affairs) to enable the government to
meet unforeseen expenses pending authorization by the Parliament. The money is used
to provide immediate relief to victims of natural calamities and also to implement any new
policy decision taken by the Government pending its approval by the Parliament.
273. (b)
The RBI transferred its (accumulated) surplus reserve to its annual income and then
this annual income was transferred to Govt. of India as dividend. Dividend from PSUs
(RBI is a PSU which is 100% owned by Govt. of India) is considered as non-tax revenue
receipts.
274. (a)
Grants in aid by the Centre to the States will always be revenue expenditure for the
Centre. Whether States spend it on capital expenditure or revenue expenditure, does not
matter.
275. (c)
Royalty from onshore (on land) oilfields goes to the State Governments as State
governments are the owners of the minerals beneath the land in their territory. From
offshore (within sea) oilfields, royalty goes to Central Government as Central Govt. is the
owner of the offshore fields. So, (iii) statement is not true.
141
276. (b)
There are certain capital receipts of the Central Government which does not create
debt/liability on it. For example, when the government is selling its shares in PSUs it is
capital receipts but is not creating debt on Govt. rather it is decreasing its assets.
In the same way recovery of loans is capital receipt but does not create debt.
But, if the Govt. issues securities (treasury bills) then it will be debt creating capital
receipts. And money received in Public Account are liabilities for Govt. of India and are
considered as debt creating capital receipts.
277. (c)
Money received in Public Account of India creates liability on Govt. of India and hence it’s
a part of capital receipt/budget.
India Post Payment Bank is a PSU and expenditures done by Govt. to create a PSU (an
asset) will come under capital budget/expenditure of Govt. of India.
A PSU purchasing a capital equipment is not part of Govt. of India budget.
278. (d)
Those receipts/expenditures of the government which changes the liability or the assets
(physical or financial) of the Govt. comes under capital budget.
Expenditure on acquisition of assets like roads or buildings come under capital

expenditure.
Loans received increases the liability and loans given by govt. increases the assets of govt.,
hence capital budget.
279. (c)
In case of Sovereign Gold Bonds, government issues/creates the gold bond and in return
it gets money from the public. This money will come under capital receipt because the
gold bond is a kind of liability for the govt. which the govt. must pay in future. Principal
payment will come under capital expenditure and interest payment will come under
revenue expenditure.
The physical gold which the govt. receives from the pubic in case of gold monetization
scheme becomes a liability for the govt. (in return for the physical gold, govt issues a
paper which is basically liability for the govt.) which the govt. will have to pay in future
either in physical gold form or in cash.
280. (b)
Dividend paid by PSUs is revenue receipts of govt. of India. RBI is also a body corporate
and owned by govt. of India and its dividend is also revenue receipts for govt. of India.
PSUs business earnings are not part of govt. of India receipts rather it belongs to the PSU.
Sale of govt. land will be capital receipt for govt. because govt’s assets gets reduced.
281. (a)
Most of the taxes in the country are imposed on value (Quantity X Price) and not on
quantity. So, tax revenue collection depends on the value of production i.e. Nominal GDP
282. (a)
Tax buoyancy = % Change in Tax Revenue

% Change in Nominal GDP
If nominal GDP growth is 12% and Tax revenue growth in a particular year is 15% then
tax buoyancy will be 15%/12% = 1.25. It tells what is the growth in tax revenue with
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every percentage change in GDP. If tax buoyancy is greater than one then it is good for
economy.
283. (c)
Receipts under Public Account account mainly flow from the sale of Savings Certificates,
contributions into General Provident Fund, Public Provident Fund, Security Deposits and
Earnest Money Deposits (a kind of security deposits) received by the government. It also
includes schemes like Kisan Vikas Patra, Sukanya Samridhi Scheme etc. In respect of
such deposits, the government is acting as a Banker or Trustee and refunds the money
after the completion of the contract/ event.
All government borrowings through Treasury bills and Dated securities goes to
Consolidated fund of India.
284. (b)
Post Office Savings Account, National Savings Certificate, Public Provident Fund, Kisan
Vikas Patra, Sukanya Samriddhi Account are all Small Savings Schemes and the funds
accruing in through these schemes goes in to National Small Savings Funds (NSSF)
maintained in Public Account of India. These all receipts create debt on Government of
India and are capital receipts.
National Small Savings Fund (NSSF) was set up on 1st April, 1999 under Public Account
of India. The objective of NSSF was to account all the monetary transactions under small
savings schemes of the Central Government under one umbrella. The net collection in
NSSF is invested in Central and State Government Securities.
285. (c)
Fiscal Deficit = Total Expenditure - Total Receipts except borrowing
= (Rev Exp. + Cap Exp.) - (Rev Rec. + Cap Rec. except borrowing)
= (Rev Exp. - Rev Rec.) + (Cap Exp. - Cap Rec. except borrowing)
= Revenue Deficit + Cap Exp. - Cap Rec. except borrowing
= Total borrowing
= Net borrowing at home + borrowing from RBI + Borrowing from abroad
Let us understand with an example.

Suppose, government's total expenditure = 17 lakh crore
and receipts = 13 lakh crore
Then government will have to borrow (17 lakh crore -13 lakh crore) 4 lakh crore to meet
its expenditure. And this 4 lakh crore is called the fiscal deficit. That is why fiscal deficit
is also equal to the total borrowing i.e. 4 lakh crore.
But this 4 lakh crore which government borrows becomes part of capital receipt for the
government and it must be included in capital receipts. So, in actual sense government's
total receipts will become 17 lakh crore (i.e. 13 lakh crore + 4 lakh crore borrowing).
Hence, in the above example:

Fiscal Deficit = Total expenditure - total receipts except borrowing
Otherwise the difference of total expenditure and total receipts will always be zero.
286. (a)
Fiscal Deficit is equal to total borrowing and the borrowing is part of capital receipts which
create debt. So fiscal deficit is equal to debt creating capital receipts.
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287. (a)
Here, budget deficit means fiscal deficit.
Rationalization of subsidies means reducing leakages and wastages in subsidies.
288. (d)
When government incurs fiscal deficit, then it spends more in the economy resulting in
increase in total/aggregate demand. But if total supply also increases, then inflation may
not increase. So, government’s fiscal deficit will necessarily increase aggregate demand
but may not increase effective demand.
When the economic capacity is fully (100%) utilized and government spends more then
demand increases in the economy but supply may not immediately increase and the
companies will have to set up new capacity which may increase cost, resulting in inflation.
But if the economic capacity is underutilized, because of less demand and then
government spends more then the increase in aggregate demand will be met by increased
supply, and there may not be inflation.
So, fiscal deficit may or may not cause inflation.
289. (d)
When government postpones its fiscal deficit target or when fiscal deficit increases then
interest rate in the economy goes up because government borrows more (demand supply
concept). When interest rate in the economy goes up bond prices comes down and the
return/yield on bonds goes up.
290. (b)
Fiscal Deficit is govt of India’s borrowing either from domestic sources or from abroad.
So, when Govt. of India issues bonds to borrow money, it can be purchased by FPI’s also.
But FDI is into equity/shares and not in debt instruments.
291. (a)
When government incurs fiscal deficit, the expenditure leads to increase in total demand
in the economy. RBI is not allowed to lend to Government for long term for fiscal deficit
bonds as per the FRBM Act 2003.
292. (d)
A ‘stimulus’ is an attempt by policymakers to kickstart a sluggish economy through a
package of measures. In case of fiscal stimulus, the Government increases its spending
and or slashes tax rates to put more money in the hands of consumers.
A monetary stimulus will see the central bank expanding money supply or reducing the
cost of money (interest rates), to spur consumer spending.
293. (c)
Government’s fiscal policy has big role in stabilizing the economy during business cycles.
The two important phases of business cycles are boom and recession. A recession should
not be allowed to grow into a deep recession. Similarly, a boom should not explode bigger.
We may say that amplifying the business cycle is dangerous (growing boom and deepening
recession). Practically fiscal policy responses using taxation and expenditure can go in
two ways in response to the business cycle: Countercyclical and pro-cyclical.
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Business Cycle Boom Recession

Fiscal Policy
Pro-Cyclical Expenditure increases Expenditure decreases
Tax decreases Tax increases
Counter Cyclical Expenditure decreases Expenditure increases
Tax increases Tax decreases
294. (b)
Fiscal Consolidation policy is an effort by the Government to bring down fiscal deficit. It
is an effort to reduce public debt, raise revenues and bring down wasteful expenses.
295. (d)
Tax base is defined as the total value of the financial streams or assets on which tax can
be imposed by the government. For example, in case of income tax, the tax base is the
minimum amount of annual income that can be taxed by the government (taxable
income). If this minimum amount (tax threshold) is lowered, this will automatically
increase (widen) the tax base; if it is raised, the tax base will be narrowed. In case of GST,
tax base is the value of goods and services on which GST is imposed. In case of property
tax, tax base is the value of property on which property tax is imposed. Because the size
of the tax base influences the taxable revenues that are available to a government, the
size and growth of the tax base is crucial to the planning efforts of any government.
296. (a)
The tax liability of a person can be reduced through Tax Planning, Tax avoidance and Tax
Evasion. Although, in common parlance these terms are used interchangeably, these
terms are technically different from each other and should not be used interchangeably.
Although, the objective of all the three is to reduce the taxes, the method adopted by them
is different.
Tax Planning is the art of reducing the tax liability of a person by making use of the
various provisions of law. The government in many cases provides various deductions
and exemptions which can be used by a person to reduce his tax liability. Tax planning
is 100% legal and all tax payers are advised to make use of the same to reduce their tax
burden.
Tax Avoidance basically means use of the loopholes in the tax law to one's own advantage
to reduce the tax burden. Although tax avoidance is legal, it is not advisable as the
taxpayer has defeated the intention of the law maker and used this to his own advantage.
Although both tax planning and tax avoidance are legal ways to reduce tax, there is only
a thin line of difference between tax planning and tax avoidance. In tax planning, a
taxpayer is doing what the government wants him to do whereas in tax avoidance, a
taxpayer is doing something which the government did not expect the taxpayer to do.
Tax evasion involves breaking the law, not paying one's taxes where the law clearly states
that they must be paid. Tax evasion is the method by which a person illegally reduces his
tax burden by either deflating their income or inflating their expenses.
General Anti Avoidance Rules (GAAR) refer to the rules that target any transaction or
business arrangement that is entered into with the objective of avoiding tax.
Tax avoidance is legal; but now, large scale revenue loss is occurring due to aggressive
tax planning by corporate using avoidance opportunities. Governments in many countries
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are introducing anti-avoidance rules to check this revenue loss from excessive avoidance.
GAAR has come into effect from 1st April 2017.
After the implementation of GAAR, the Income-tax department will have powers to deny
tax benefit if a transaction was carried out exclusively for the purpose of avoiding tax. For
example, if an entity is set up in Mauritius with the sole intention of claiming exemption
from capital gains tax, the tax authorities will have the right to deny the claim for
exemption provided under the India-Mauritius tax treaty.
297. (d)
Suppose GST on car of Rs. 5 lacs is Rs. 1 lakh. Now if I purchase one car then I will pay
Rs. 1 lakh tax and if my income is Rs. 10 lacs then tax as a percentage of income will be:
1 lakh x 100% =10%

10 lakhs
Suppose the same car a rich person purchases whose income is Rs 10 crores then tax as
a percentage of his income will be:
1 lakh x 100% = 0.1%

10 crores
So, a rich person pays less tax as a percentage of his income, hence GST is regressive. In
similar way all indirect taxes are regressive in nature.
Income tax is progressive, as poor people need to pay less tax rate as compared to rich
people.
298. (c)
299. (d)
300. (d)
301. (b)
Consider an example to understand GST in a better way (GST rate 18%):
Cost of Inputs = Rs.118

Cost of Inputs = 0
Value Addition = Rs. 200
Value Addition = Rs.100
GST refund = -Rs. 18
GST refund =0
Sale Price =Rs. 300
Sale Price = Rs. 100
GST (18%) = Rs. 54
GST (18%) = Rs. 18
Invoice = Rs. 354
Invoice = Rs. 118
A B
Value Add Value Add
= Rs. 100 = Rs. 200 Consumer
100 + 118 300 + 54
Tax = Rs.18 Tax = Rs. 36 (Rs.54 - Rs.18)

(CGST = 9, SGST = 9) (CGST = 18, SGST = 18)
Govt. Govt.
In the above example, A is doing value addition of Rs. 100 and selling the product to B in
Rs. 118 and paying Rs. 18 GST to the government. B is doing value addition of Rs. 200
and is paying Rs. 36 GST to the government. Since GST is a value added tax, so every
entity in the value chain shall pay to the government tax only on their value addition.
Practically B shows the invoice of Rs. 354 to the government and pays a tax of Rs. 54 to
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the government but when it produces the tax receipt obtained from A to the government
worth Rs. 18 then government credits/refunds Rs. 18 to B. This is called Input Tax
Credit Mechanism as the taxes paid by B on the purchase of inputs from A i.e. Rs. 18 is
credited by the government back to B.
Since there is only one tax i.e. GST and credits of input taxes paid at each stage is
available in the subsequent stage of value addition across India (whereas in case of VAT
input credit was available only within the State), hence it will prevent the dreaded
cascading effect of taxes. This is the basic feature and advantage of GST.
Important aspects regarding implementation of GST:
 If A belong to one State (say UP) and B and the consumer belong to another State (say
Bihar) then all the State GST i.e. Rs. 9 and Rs. 18 (=Rs. 27) will be passed on to the
State where the product is being consumed by the consumer i.e. Bihar and the State
where A belongs i.e. UP will not get any SGST. This is why GST is also called
consumption based and destination-based tax as all the SGST is passed on to the
consuming State i.e. Bihar.
 If A and B belong to different states then rather than GST, IGST will be levied by the
Centre on the transaction between A and B which is again equal to the sum of CGST
and SGST and ultimately distributed to the Centre and the consuming State equally.
Practically everything remains same, only the tax name changes to Integrated GST
(IGST)
 If B, rather than selling the product to the consumer in India, exports the products
then IGST will be imposed as IGST is levied on inter-State supplies. The GST paid in
the entire value chain and the IGST paid at the border is refunded/credited back to
the suppliers. So effectively there is no tax on exports and hence we say that exports
are "zero rated" supplies. Supplies to SEZs are also zero rated.
 If a trader is importing a product into India then he will have to pay first customs duty
and then IGST on the imported product as imports are also considered to be Inter-
State supplies.
302. (d)
Integrated GST (IGST) is levied by Centre on inter-state supply of goods and services and
on imports and exports (on exports effectively there is no tax) of goods and services. The
IGST rate is equal to CGST and the SGST/UTGST rate. The tax revenue is shared equally
among the Centre and the consuming State/UT.
303. (a)
Revenue neutral tax rate means that the average GST rate should be such that the
indirect tax revenues of the government after the implementation of GST should not be
impacted as compared to before implementation of GST. And that such GST rate was
estimated by ex-Economic Advisor as on an average 16%. That means if we keep GST
rate on an average 16%, then whatever revenue collection was there before GST will not
get impacted after GST. Actually, Before GST, States indirect tax revenues were growing
at 14%, so in GST we have tried to keep such a GST rate (16% revenue neutral rate) so
that even after GST, states revenue should continue to grow at 14% and if does not
happen, then States will be compensated for the first five years.
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304. (c)
When Central govt was planning to introduce GST, States were worried that after the
implementation of GST the tax revenue of States may fall and they will not have the
freedom under GST to impose extra taxes or increase the tax rate. So, Central government
calculated the tax revenue growth of State's indirect taxes from 2012-13 to 2013-14,
2013-14 to 2014-15 and 2014-15 to 2015-16, i.e. for three years and the result was on
an average growth of 14%. So, Govt. of India promised states and UTs that if after
implementation of GST the States/UTs Indirect Revenue growth will be less than 14%
annually from 2015-16 (base year) onwards, then the Govt. of India will compensate
states/UTs. Accordingly, The GST Compensation to States Act 2017 (GoI Act) was
enacted. The GST council recommends on what items (mostly luxury and demerit goods)
cess will be imposed and at what rate. The compensation cess will be levied for five years.
In 2019-20, Central government has compensated more than Rs. 1 lakh crore to states.
Govt of India levies and collects the Cess and keeps it in “GST Compensation Fund” in
Public Account of India (because it is not Govt. of India’s money and it belongs to States)
and then it transfers to States/UTs.
305. (c)
GST has led to reduction in number of taxes and now the same tax rate is applicable
across all the country on all goods and services. This is called harmonization of taxes. On
exports, Govt credits back the GST paid to suppliers and hence effectively there is no GST
on exports which is also called zero rated.
306. (a)
Exports, imports and movement of goods from one state to another state is treated as
interstate supply for the purpose of GST. On imports, first customs duty is imposed and
then Integrated GST (IGST) is also imposed.
307. (d)
Electronic Way Bill (E-Way Bill) is a document issued by a carrier giving details and
instructions relating to the shipment of a consignment of goods like name of consignor,
consignee, the point of origin of the consignment, its destination, and route. If the value
of goods transported is more than worth Rs. 50,000/- then e-way bill should be generated.
E-Way Bill is basically a compliance mechanism wherein by way of a digital interface the
person causing the movement of goods uploads the relevant information prior to the
commencement of movement of goods and generates e-way bill on the GST portal. E-way
bill is a mechanism to ensure that goods being transported comply with the GST Law and
is an effective tool to track movement of goods and check tax evasion. The E-Way bill
under the GST regime replaces the Way bill (which was a physical document) which was
required under the VAT regime for the movement of goods.
308. (d)
Composition levy is an alternative method of levy of tax designed for small businesses
whose turnover is up to Rs. 1.5 crore (and above 40 lacs). The objective of composition
scheme is to bring simplicity and to reduce the compliance cost for the small businesses.
Moreover, it is optional and the eligible person opting to pay tax under this scheme can
pay tax at 1% flat rate, of his turnover, instead of paying tax at normal GST rate. Similarly,
small service providers with turnover of Rs. 50 lakhs can opt for composition scheme and
pay GST at 6%. In case of composition scheme, the businesses can’t claim input tax
credit.
309. (c)
Goods and Services Tax Network (GSTN) is a Section 8 (under new companies Act, not for
profit companies are governed under section 8), non-Government company. (But cabinet
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has approved a decision to make it a wholly owned govt. company). It was incorporated
on March 28, 2013. The Company has been set up primarily to provide IT infrastructure
and services to the Central and State Governments, tax payers and other stakeholders
for implementation of the Goods and Services Tax (GST).
310. (d)
When government borrows more, then there may be a decrease in private investment due
to reduction in the amount of savings available to the private sector. This is because if
the government decides to borrow from the private citizens by issuing bonds to finance
deficits, these bonds (which are risk free) compete with corporate bonds and other
financial instruments for the available supply of funds. If people decide to buy government
bonds, the funds remaining to be invested in private sector will be less. Thus, some
private/corporate borrowers will get "crowded out" of the financial markets as the
government claims an increasing share of the economy's total savings. This also increases
the interest rate for the private sector.
311. (c)
Opposite of crowding out is "crowding in" where private investment increases as debt
financed government spending increases. If the economy is in slowdown phase or the
demand in the economy is less, then an increased government spending boosts the
demand for goods which in turn increases the private sector demand for new output
sources such as factories, equipment. Thus, the private sector crowds in to satisfy
increasing consumer needs.
312. (d)
When the import duty on raw materials is quite higher than the import duty on finished
goods then it makes the domestic manufacturers less competitive because then traders
start importing manufactured goods in the country rather than manufacturing the goods
domestically.
India levies the highest duties on import of raw rubber and one of the lowest duties on
import of finished rubber goods i.e. tyre. This has created inverted duty structure.
313. (c)
The term ‘Inverted Duty Structure’ refers to a situation where the rate of tax on inputs
purchased is more than the rate of tax on outward supplies (or finished products). This
is the result of several tax rates of 0%, 5%, 12%, 18% and 28% in our GST structure. For
example, on "Paper" we have 5% GST rate but on Books (a finished product) we have 0%
GST rate, so it is a classic case of inverted duty structure.
This creates problem in claiming input tax credit as the supplier in the chain pays taxes
on inputs purchased but he does not collect taxes from the outward supplies.
314. (d)
The Aadhaar (Targeted Delivery of Financial and other Subsidies, Benefits and Services)
Act 2016 is an Act to provide for, as a good governance, efficient, transparent, and
targeted delivery of subsidies, benefits and services, the expenditure for which is incurred
from the Consolidated Fund of India or Consolidated Fund of States (States were allowed
to transfer benefit through an amendment done 2019), to individuals residing in India
(for more than 182 days) through assigning of unique identity numbers.
As per section 7 of Aadhar Act:

“The Central Government or, as the case may be, the State Government may, for the purpose
of establishing identity of an individual as a condition for receipt of a subsidy, benefit or
service for which the expenditure is incurred from, or the receipt therefrom forms part of, the
Consolidated Fund of India, require that such individual undergo authentication, or furnish
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proof of possession of Aadhaar number or in the case of an individual to whom no Aadhaar

number has been assigned, such individual makes an application for enrolment:
Provided that if an Aadhaar number is not assigned to an individual, the individual shall
be offered alternate and viable means of identification for delivery of the subsidy, benefit
or service.”
Pursuant to the Act, government made Aadhaar Regulations 2016:

“Any Central or State department or an agency which requires an individual to undergo
authentication or furnish proof of possession of Aadhar number as a condition of receipt of
any subsidy, benefit or service pursuant to Section 7 of the Aadhar Act, shall ensure
enrolment of its beneficiaries who are yet to be enrolled, through appropriate measures.”
315. (b)
Pump priming is the action taken to stimulate an economy, usually during a recessionary
period, through government spending and tax reductions. The term pump priming is
derived from the operation of older pumps - a suction valve had to be primed with water
so that the pump would function properly.
316. (a)
Refinancing means replacing an existing loan with a new loan that pays off the debt of
the old loan. So, when a governments debt (public debt) is due, to refinance it, the govt
can issue/sell new bonds to raise money.
Alternative definition of refinance: A refinance occurs when an individual or business

revises the interest rate, payment schedule, and terms of a previous credit agreement.
Debtors will often choose to refinance a loan agreement when the interest rate
environment has substantially changed, causing potential savings on debt payments from
a new agreement. A refinance involves the re-evaluation of a person or business's credit
terms and credit status.
317. (d)
Deficit financing is the budgetary situation where expenditure is higher than the receipts.
The expenditure revenue gap is financed by either printing of currency or through
borrowing. Nowadays most governments both in the developed and developing world are
having deficit budgets and these deficits are often financed through borrowing. Hence the
fiscal deficit is the ideal indicator of deficit financing. Deficit financing is very useful in
developing countries like India because of revenue scarcity and development expenditure
needs.
Since government spends more than receipts, it leads to increase in demand and may
result in inflation also.
318. (c)
If the price of a product increased from Rs. 30 to Rs. 40 i.e. an increase of Rs. 10. For a
poor person earning Rs. 1000, it is 1% tax, but for a rich person earning Rs. 1,00,000, it
is 0.01% tax. So, as a percentage of his income, poor person is paying tax 1% but rich
person is paying tax only 0.01%. Hence its regressive (tax % is less for rich people and
more for poor people)
319. (c)
Progressive tax means for higher income tax rate is high. Now in personal income tax
(PIT), we have different slabs. For example, for Income Slab of less than Rs. 2.5 lakh 0%
tax rate. For Rs. 2.5 to 5 lakhs income slab the tax rate is 5% etc. For income of above
Rs. 10 lakh the rate is 30% , which means who earn Rs. 15 lakhs, he also pays 30% and
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those who earn 30 lakhs, they also pay 30%. But if we create another slab that income
above Rs. 20 lakhs the rate will be 35%, then it will be more progressive.
Redistribution of income means taking money from the rich and giving it to poor. When
money is with rich people it may not increase their consumption much because they are
already consuming everything but when it reaches to the poor, they will be able to
consume more with the same money, which increases the demand of goods and services
in the economy. So, income redistribution helps in stimulating economy.
320. (c)
Indian Company means a company registered in India under The Company’s Act 2013.
A Foreign Company means a company registered outside India.
A Domestic Company means an Indian Company or it can be a Foreign Company but it
should have made arrangements for the declaration and payment of Dividend in India
under Income Tax Act 1961.
The 25.17% tax rate is applicable to Domestic Companies only.
Standard Tax Rate = 22%

Surcharge = 10% of 22% = 2.2%
Cess = 4% of (22% + 2.2%) = 0.968%
Effective Tax Rate = 22% + 2.2% + 0.968% = 25.168% = 25.17%
This rate of 25.17% is applicable to those companies which do not opt for various
exemptions provided by government (and hence there will be no MAT). Govt. gives lot of
tax exemptions because of which even if the official tax rate was 30% plus cess and
surcharge, effectively the tax rate was 25-26% after claiming various exemptions. But it
was giving a wrong image to the outside world that India has such a high rate of 30%. So,
govt. removed the exemptions and brought the official tax rate down to 25.17% .
To promote manufacturing, for new manufacturing firms set up after 1st October 2019
and commencing its operations before 31st March 2023, the Standard Corporate Income
Tax is 15% (after Cess and Surcharge it will be 17.01%).
321. (b)
Public Finance (Central) Division under Department of Expenditure, Ministry of Finance
in consultation with the Budget Division, Department of Economic Affairs, Ministry of
Finance decides the outlay for Centrally Sponsored Schemes (CSS) and Central Sector
Schemes.
322. (b)
Central government gives grant to States to implement Centrally Sponsored Schemes
(CSCs). And for Central Government (almost) all the expenditure is revenue expenditure.
For example, the budgeted amount for the CSC (core of the core) MGNREGA for the year
2020-21 is Rs. 61,500 crore and is revenue expenditure for Govt. of India. And since it is
a GRANT from Govt. of India side to States, so it must be Revenue exp for Govt. of India.
But States can spend this as revenue or capital expenditure in creation of assets. If States
spend this on capital expenditure, then Centres "Effective Revenue Deficit" will get
reduced by that amount.
Effective Revenue Deficit = Revenue Deficit - Grants given to States for capital expenditure
Till 2013-14, Funds for CSS were routed through two channels, the consolidated fund of
the States and directly to the State/ District Level Autonomous Bodies/Implementing
Agencies. (CSSs are a part of funds transfer to States/UTs). In 2014-15, direct transfers to
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State implementing agencies were discontinued and all transfers to States including for
the CSS are now routed through the Consolidated Funds of the States.
323. (c)
The Public Finance Management System (PFMS) comes under the office of Controller
General of Accounts, Ministry of Finance. It is an end-to-end online solution for
processing payments, tracking, monitoring, accounting, reconciliation and reporting. The
Centre has integrated the treasuries of almost all states into the PFMS to track fund
utilization up to the last mile as well as transfer funds “just-in-time” for central
schemes. Integration of State treasuries has virtually wiped out indefinite parking of
central funds at the state level.
324. (a)
The Finance Commission recommends for devolution of taxes (from the divisible pool)
from Centre to States only (called Vertical devolution) and is not meant for UTs, whether
they have their own assembly/legislature or not.
The Fifteenth Finance Commission (FFC) recommendations will be applicable for six years
period from 2020-21 to 2025-26. For the year 2020-21, the recommendations have
been submitted and the final recommendations for the five-year period 2021-22 to 2025-
26 will be submitted by October 2020.
FFC quoted:
“The State of Jammu & Kashmir was reorganised into the Union Territories (UT) of Ladakh
and Jammu & Kashmir through the Jammu & Kashmir Reorganisation Act, 2019. Article
280 of the Constitution, along with the Jammu and Kashmir Reorganisation Act puts the
newly-created UTs of Ladakh and Jammu and Kashmir outside the purview of the
Finance Commission's award. Since UTs are the responsibilities of the Union, they
are within the purview of the Union budget. We have notionally estimated that the
share of the erstwhile State of Jammu & Kashmir would have come to around 0.85 per cent
of the divisible pool. We believe that there is a strong case for enhancing this to 1 per cent
of the divisible pool in order to meet the security and other special needs of the Union
Territories of Jammu and Kashmir and Ladakh. Since this enhancement has to be
met from the Union' Government's resources (through Ministry of Home Affairs), we
recommend that aggregate share of States may be reduced by 1 percentage point
to 41 per cent of the divisible pool.”
So basically, FFC has not recommended transfer of taxes to Jammu & Kashmir and
Ladakh Union Territories for the period 2020-21.
325. (c)
The parameters for distribution of taxes among the states (horizontal distribution) for FFC
are Income Distance (45%), Population (2011 Census) (15%), Demographic Performance
(12.5%), State Area (15%), Forest Cover (10%), Tax effort (2.5%).
326. (b)
As per article 275 of the Constitution, the Finance Commission should recommend
‘Grants-in-Aid’ for the states out of the Consolidated Fund of India. The Fifteenth Finance
Commission (FFC) has recommended the following six types of grants in aid:
 Revenue deficit grants: Post vertical devolution from centre to states, fourteen states
faced revenue deficit and they have been recommended for revenue deficit grants (also
called post tax devolution revenue deficit grants)
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 Grants to local bodies: The FFC has recommended Rs. 90,000 crores of grants for
local bodies in 28 States for the period 2020-21. The inter-se distribution for local
bodies among the States will be based on population and area in the ratio 90:10
 Disaster management grants: The coverage of funds recommended by FFC goes

beyond the disaster response funds that already exist at national (NDRF) and state
(State Disaster Response Funds, SDRF) levels. FFC has recommended the creation of
funds for disaster mitigation along with disaster response which will now together be
called as National Disaster Risk Management Fund (NDRMF) and State Disaster
Risk Management Fund (SDRMF).
 Sector specific grants: The FFC is considering recommending, in the final report (for
2021-22 to 2025-26), sector specific grants for nutrition, health, pre-primary
education, judiciary, rural connectivity, railways, statistics and police training and
housing. However, to augment the efforts of the States towards reducing and
ultimately eliminating malnutrition, FFC has recommended grants for nutrition
even in 2020-21.
 Performance grants: FFC will be recommending performance-based incentives to

States for the period 2021-22 to 2025-26 in their final report (and before that it wants
that States should do ground work to implement these reforms), in six areas if they
implement reforms. These are, Agriculture reforms, Development of Aspirational
Districts and Aspirational Blocks, Power sector reforms, enhancing trade including
exports, Education, Promotion of domestic and international tourism.
 State-specific grants: FFC believed that because of its recommendations for 2020-21,
no State should, in absolute terms, get less than the total amount of devolution and
revenue deficit grants estimated to be received in 2019-20. Since, tax devolution and
revenue deficit grants are projected to decline from 2019-20 to 2020-21 for three
states, namely, Karnataka, Mizoram and Telangana, so FFC has recommended State-
specific grants (special grants) to these three states.
327. (b)
‘Income distance’ is calculated as the difference between the per capita gross state
domestic product (GSDP) of the state from that of the state with the highest per capita
GSDP. This ensures that states with less income get a higher share in order to allow them
to provide services comparable to those provided by the richer ones.
The XV FC used the per capita GSDP of Haryana as the reference for calculating the
income distance, and has given it a weight of 45%, down from the 50% assigned by the
XIV FC.
328. (b)
The following are the various expenditure of Govt. of India out of the total expenditure of
Rs. 27 lakh crores in 2019-20.
 Salary and Pension Rs. 3.1 lakh crore
 Interest payment Rs. 6.6 lakh crore
 Capital Expenditure Rs. 3.5 lakh crore
 Explicit subsidies Rs. 3 lakh crore
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329. (d)
330. (a)
Public Debt of Govt. of India is Central Government's internal and external debt.
Treasury Bill is Govt. of India's debt because these are bonds issued by GoI.
ECB and FDI relates to companies and PSUs. And NRI deposits are in banks and it is not
a debt of Govt. of India.
So, only (i) statement is correct.
331. (d)
India's external debt includes the debt of the Central Government, State Governments,
companies (ECB), NRI deposits, debt investments in India like FPIs purchasing bonds etc.
332. (d)
As on June 2019, India’s external debt to GDP ratio stood at approximately 20%. And out
of it, Sovereign debt (Govt. of India’s external debt) was around 3.5%. Total India’s
external Debt as of end June 2019 stood at $557 billion (20% of GDP) and out of it around
more than $200 billion was external commercial borrowing (ECB).
333. (a)
For the year 2019-20, States and UTs (government) combined expenditure was Rs. 37.7
lakh crore and Central government expenditure was around Rs. 27 lakh crores. So, States
and UT combined expenditure is around 1.4 times of Centre.
And States and UTs combined borrowing for 2019-20 is around Rs. 5.52 lakh crore (2.6%
of GDP), while Centres borrowing for 2019-20 is around Rs. 7.7 lakh crore (3.8% of GDP).
334. (d)
As per Fiscal Responsibility and Budget Management (FRBM) Act 2003, RBI has been
prohibited from subscribing Central government securities in the primary market. This
has been done so that government should raise money from the market at market interest
rate rather than from RBI at cheaper rate.
Central government is not allowed to borrow from RBI to fund its fiscal deficit but if there
is a temporary mismatch in government’s cash disbursement and cash receipts then,
government can take advance (called ways and means advance) from RBI.
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335. (d)
The N.K. Singh committee recommendations of Central Govt. debt of 40% of GDP and
General Government (Centre and States combined) debt of 60% of GDP has been put
under the FRBM Act 2003 by introducing an amendment through Finance Act 2018. The
additional guarantee of 0.5% of GDP was there from the beginning of FRBM Act 2003.
Basically, central government acts as guarantor when PSUs borrow and States borrow
from abroad.
336. (a)
New provisions were introduced in FRBM Act 2003 (through Finance Act 2018) and
Escape Clause (in which govt. can deviate the targets of FRBM act 2003) was added: (for
some conditions slippage was allowed earlier also) Following is the new escape clause:
"On grounds of national security, act of war, national calamity, collapse of agriculture
severely affecting farm output and incomes, structural reforms in the economy with
unanticipated fiscal implications, decline in real output growth of a quarter by at least three
per cent. points below its average of the previous four quarters"
And in the above conditions, central govt. can deviate fiscal deficit by 0.5%.
Govt. of India had earlier set a target of Fiscal Deficit as 3.3% for 2019-20 and 3% for
2020-21.
When GoI presented budget for 2020-21, it said that it is using the escape clause and
revising the fiscal deficit target as 3.3% + 0.5% = 3.8% for 2019-20 and 3% + 0.5% = 3.5%
for 2020-21. And GoI also said that it has maintained fiscal prudence. This is so because
the FRBM Act 2003 (with amendments in 2018) allowed slippage in fiscal deficit by 0.5%
from the targeted (the target was 3.3% for 2019-20 and 3% for 2020-21) by using the
escape clause.
As per the recommendation of Fourteenth Finance Commission, the Union Government

has approved year-to-year flexibility for additional fiscal deficit to States for the period
2016-17 to 2019-20 to a maximum of 0.5 per cent over and above the normal limit of 3
per cent in any given year to the States subject to ……..the States maintaining the debt-
GSDP ratio within 25 per cent and Interest Payments to the Total Revenue Receipts ratio
within 10 per cent in the previous year. However, the flexibility in availing the additional
fiscal deficit will be available to State if there is no revenue deficit in the year in which
borrowing limits are to be fixed and immediately preceding year. (no need to remember the
things after subject to…….)
As per XV Finance Commission Chairman, no approval of Finance Commission is required

to amend the FRBM rules of centre or States.
Some additional information

[[As per article 293 of Constitution, A State may not without the consent of the Government
of India raise any loan if there is still outstanding any part of a loan which has been
made to the State by the Government of India or by its predecessor Government.
Like Centre, every state has also fixed Fiscal deficit limit of 3% as per their law.
Now as such its nowhere written that if States want to breach the 3% Fiscal Deficit limit
then they require Central Govt approval. But everywhere and in Economic Survey of this
year also it is written that "Centre has approved extra borrowing by states and it has
allowed states to borrow beyond 3% of their FD).
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This Central Govt. approval was required because practically every State till now has some
sort of debt from Central Govt. and as per article 293 above, States require centre approval
if there is some debt due from the Centre.]]
337. (d)
As per the FRBM Act 2003, Central Government debt includes the following:
 Total outstanding liabilities of the Central Government on the security of Consolidated
Fund of India, including external debt. (This is also called Public Debt)
 The outstanding liabilities in the Public Account of India
 Such financial liabilities of any corporate or other entity owned or controlled by the
Central Government, which the government is to repay or service from the Annual
Financial Statement. (This is also called off-budget liabilities, explained later)
338. (d)
The country’s forex reserves as of end Feb 2020 stood at $476 billion, but India’s external
debt crossed $557 billion as on June 2019 (and it is still increasing with time). So, at any
point of time if we want to pay of the complete external debt, it is not possible as forex
reserve is only $476 billion.
(As all external debt is denominated in foreign currencies and hardly $1 billion is in rupee
debt (Masala bonds), so it has to be paid only through our Forex reserve).
Since the ratio of Forex to External debt is $476/ $557 = 85%, that means our forex
reserves don’t cover external debt. If it would have been greater than 100% then we say
that our external debt is fully covered (with forex reserves).
The country’s one-year imports are around $630 billion (2018-19). So again, our forex
reserves don’t fully cover imports also.
339. (c)
If you have purchased shares/equity of a company then it is the liability of the company
towards you.
India’s external liabilities include all the investments made in India either in the form of
debt or equity. So, it will include everything FDI, FPI (debt and equity both), External
Commercial Borrowing, Govt. of India borrowings from abroad, NRI deposits in India.
Total external liabilities are around 41% of GDP, in which both debt and equity are around
equally distributed.
340. (d)
When Centre does not have the budgetary resources to fund its various
schemes/programmes then it asks its agencies to borrow and fund these programmes.
For example, for the public distribution scheme, FCI borrows from National Small Savings
Fund (NSSF). Similarly, HUDCO and NHB borrows to fund the affordable scheme of the
government, NABARD borrows for irrigation and rural housing. Rural Electrification
Corporation (REC) borrows for rural electrification. Ideally, Centre should borrow for these
schemes but it asks its various agencies to take the loan in their name which is then not
shown in the Centre’s budget. These Off-Budget Borrowings (also called extra budgetary
resources) allows the Centre to reduce the immediate impact on the fiscal, as the
repayments made by government are calibrated over many years. These however add to
the overall public debt of Govt. of India. CAG has expressed concern over it and if these
off- budget borrowings would have been included in the budget then the Centre’s fiscal
deficit would have been more than 5% rather than 3.8% in 2019-20.
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341. (c)
The investment by Central Public Sector Undertakings (CPSUs) is financed through the
following two modes:
 Budgetary support provided by the Central Government
 IEBR raised by CPSUs on their own.
Internal and Extra Budgetary Resources (IEBR) comprises of internal resources, and
extra-budgetary resources. Broadly, the internal resources comprise of retained profits –
net of dividend to Government and carry forward of reserves and surpluses. And extra-
budgetary resources are the sum of domestic and foreign loans raised directly by the
CPSUs but repaid by government.
342. (c)
In the budget 2019-20 government had proposed electronic or e-assessment scheme
which was notified in September 2019 and to implement this scheme government
launched "National e-assessment Centre" (based in Delhi) on 7th October 2019.
There are around 7.5 crore direct taxpayers. They pay tax and file return (tax document).
Taxpayers use various ways to avoid paying taxes and showing their income way below
the actual income. So, government has set certain parameters to pick for
assessment/review of these cases. For example, those tax payers whose income is quite
high (say 30 lakhs) but tax payment is very less supposing only 2 lakhs OR suppose in
any particular savings account more than Rs. 10 lakhs got deposited in a financial year
etc.
Now suppose there are 5 lakh such cases. Now out of these 5 lakh cases government may
pick randomly 50,000 cases for review/assessment (as all cannot be reviewed because of
resource constraint). So, government will send notice and you will have to give
clarifications. And govt may scrutinise such cases in quite detail and if some wrong doings
were found, you may be penalized.
Earlier (before e-assessment scheme was launched), these cases were selected by tax
officials and there used to be face to face meetings between tax officials and taxpayers
and where taxpayers were used to be harassed. But now all such cases will be randomly
picked by computer and no face to face grilling would happen but only through electronic
mode of communication. So, this will improve transparency and efficiency, and
governance and thus improves the quality of assessment and monitoring.
Income Tax Act 1961 was amended to introduce this scheme which implies it is for direct
taxes. Budget 2020-21 has proposed to amend the Income Tax Act so as to enable
Faceless Appeal on the lines of Faceless assessment.
343. (c)
The ‘Vivad se Vishwas’ Scheme was announced during the Union Budget, 2020-21, to
provide for dispute resolution in respect of pending income tax litigation. Pursuant to the
Budget announcement, the Direct Tax Vivad se Vishwas Bill, 2020 (hereinafter
called Vivad se Vishwas) was introduced in the Lok Sabha on 5th of February, 2020 and
passed by it on 4th of March, 2020. The objective of Vivad se Vishwas is to inter
alia reduce pending income tax litigation, generate timely revenue for the Government
and benefit taxpayers by providing them peace of mind, certainty and savings on account
of time and resources that would otherwise be spent on the long-drawn and vexatious
litigation process.
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As per the scheme, taxpayer is required to pay only the amount of the disputed taxes and
will get complete waiver of interest and penalty provided he pays by March 31, 2020.
Those who avail this scheme after 31st March, 2020 will have to pay some additional
amount. The scheme will remain open till June 30, 2020. This scheme covers taxpayers
whose case appeals are pending at any level.
344. (b)
GDP has steadily increased in the last 10 years but agriculture growth has turned
negative once in 2014-15.
Refer the Trends.
345. (c)
Horticulture production surpassed food grain (wheat, rice, pulses and coarse grains)
production since 2012-13. In 2018-19, horticulture production was 311 MT and food
grain production was 284 MT. The (budget) target of farm/agriculture credit for the year
2020-21 is Rs. 15 lakh crores as compared to Rs. 13 lakh crores in 2019-20.
346. (a)
Cropping intensity = Gross cropped area X 100 %

Net sown area
Suppose on a one-hectare land, a farmer grows crops twice a year then;
Cropping intensity = (2/1)X 100% = 200%
As per Indian Council of Agricultural Research (ICAR), cropping intensity of India is

around 136% which means that crops are not grown twice a year on all the agricultural
land and this is due to less irrigation facility.
347. (b)
Commission for Agricultural Cost and Prices (CACP) takes into account several factors to
recommend MSP to Ministry of Agriculture and Farmers Welfare. Some of these factors
are cost of production and margin (profit) to farmers, Demand and supply, Price trends
in the market both domestic and international, Inter crop price parity etc.
Among several criteria for recommending the MSP, the most important one is the cost of
production of farmers and margin/profit on it.
The cost of production of agricultural produce is calculated in three ways: A2, A2+FL
and C2.
 A2 costs basically cover all paid-out expenses, both in cash and in kind, incurred by
farmers on seeds, fertilizers, chemicals, hired labour, fuel, irrigation, etc.
 A2+FL cover actual paid-out costs plus an imputed value of unpaid family labour.
 C2 costs are more comprehensive, accounting for the rentals and interest forgone on
owned land and fixed capital assets respectively, on top of A2+FL.
Finance Minister, while presenting the budget 2018-19 announced that, the Government
will be offering MSP of 50 percent over cost of production (A2 + FL).
MSP is announced for 25 crops including sugarcane. The mandated crops are 14 for
kharif season viz. paddy, jowar, bajra, maize, ragi, arhar, moong, urad, groundnut-in-
shell, soyabean, sunflower, sesamum, nigerseed and cotton; 6 rabi crops viz. wheat,
barley, gram, masur (lentil), rapeseed/mustard and safflower and two other commercial
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crops viz. jute and copra. In addition, the MSPs of toria and de-husked coconut are fixed
on the basis of the MSPs of rapeseed/mustard and copra respectively.
348. (d)
A separate ministry “Ministry of Fisheries, Animal Husbandry and Dairying” has been
carved out of “Ministry of Agriculture and Farmers’ Welfare”
‘Department of Fisheries’ is under “Ministry of Fisheries, Animal Husbandry and

Dairying”
‘Department of Animal Husbandry and Dairying’ is under “Ministry of Fisheries, Animal

Husbandry and Dairying”
Department of Animal Husbandry and Dairying, under “Ministry of Fisheries, Animal

Husbandry and Dairying” released the 20th Livestock Census.
349. (a)
As a lot of states in the in post-independence period restricted leasing of agricultural
land, it has started hurting agricultural productivity. Central Government got a model
act drafted on land leasing by an expert panel under the NITI Aayog in April 2016 and
has forwarded it to States to implement it.
Important features of the model Act:

 The model law enables tenant farmers and share croppers to avail bank credit, crop
insurance and disaster relief benefits.
 The model law will allow consolidation of farm land so that small plots of land that
are economically unviable can be leased out (using tractors and farm equipment is not
economically viable for small plots of 2-3 acres). Large operational holdings will reduce
the cost of cultivation and increase profitability of farming.
 The duration of the lease and the consideration amount will be decided mutually by
the owner and the tenant.
 There will be no ceiling on the amount of land that can be leased out or consolidated
as the state wants market forces to determine the size of operational holdings.
 Under the new law, land can also be leased out for allied activities like livestock or
animal husbandry for a maximum period of five years.
 The Model Act proposes quicker litigation process in case of disputes, by suggesting
recourse through criminal proceedings and special tribunal. The dispute settlement
will be taken up at the level of the Gram Sabha, Panchayat and Tehsildar and are kept
outside the jurisdiction of courts.
350. (d)
In e-NAM sale, traders from all over India could bid and whoever quotes highest price, the
farmer can sell his produce to that trader (it may be across the state). Then farmer will
receive the payment in his account and then only the trader can take the physical produce
from the mandi. Transportation charge will be on traders account. (Because of the
transportation cost involved, e-NAM would not be able to ensure that the people get the agri-
commodity at the same price across the country. E-NAM will help that the farmers get the
same price across different mandis).
Even if a farmer wants to sell his produce online through e-NAM, presently, he needs to
take the produce in physical APMC mandi and then login to the online portal. Govt is
working on the modalities so that the farmers will be able to sell their produce online
sitting at their home through their mobile with their physical produce at home, but it may
take a year or more.
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But on 2nd April 2020, new features were enabled in e-NAM through which:
 Farmers stocking their produce in registered warehouses and having Electronic

Negotiable Warehouse Receipts (e-NWR), will be able to trade on e-NAM without
physically bringing their produce in the APMC mandis
 FPOs can trade their produce on e-NAM, from their collection centre without bringing
the produce to APMC mandi.
351. (d)
As the Agriculture Produce Marketing Committee Acts (APMC) enacted by States did not
allow whole sale trade through private mandis and exploited the farmers and consumers
both, Central Govt. in April 2017 got a Model Agriculture Produce and Livestock
Marketing (APLM) Act 2017 drafted and circulated to States to implement. Following are
the important features:
 Allow private wholesale mandis (rather than just govt mandis in wholesale trade)
 Allow godowns, warehouses and cold storages to act as markets (this means that
earlier they were not allowed to purchase from farmers in bulk and now they can act
as private wholesale mandis and can procure in bulk from farmers)
 The model act has also proposed to cap mandi fees (2% for fruits and vegetables and
1% for food grains, this is charged by the mandi operators for the maintenance of
mandi)
 Farmers can now directly sale to big retailers (through contract farming)
352. (c)
The Model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act,
2017 allowed direct sale by farmers to big retailers i.e. contract farming but left out all the
provisions relating to contract farming and paved the way for drafting an exclusive
model law on the subject of contract farming.)
Accordingly, Govt. drafted Model Agriculture Produce and Livestock Contract

Farming and Services (Promotion & Facilitation) Act, 2018 and has asked States to
implement the same. Following are important features:
 Setting up of an appropriate and unbiased state level agency called “Contract Farming
(Development and Promotion) Authority” to carry out the assigned mandates under the
provisions of contract farming and popularize it among the stakeholders.
 No rights, title ownership or possession to be transferred or alienated or vested in the
contract farming sponsor etc.
 Promoting Farmer Producer Organization (FPOs) / Farmer Producer Companies (FPCs) to
mobilize small and marginal farmers to benefit from scales of economy in production and
post-production activities. (i.e. FPOs can sign contract farming agreements with big retail
chains or bulk buyers)
353. (a)
Participatory Guarantee System (PGS-India) programme is being implemented by Ministry
of Agriculture through the National Centre for Organic Farming. It is a self-certification
process for organic crops which involves a peer-review approach and is supported through
the Paramparagat Krishi Vikash Yojana. Here, farmers play a role in certifying whether
the farms in their vicinity adhered to organic cultivation practices.
354. (c)
Food Safety and Standards Authority of India (FSSAI) regulates organic foods in India.
FSSAI in Nov 2017, published regulations on organic food which regulates manufacture,
160
sale, distribution and import of organic food in India. As a consequence, any food to be
sold as ‘organic’ in India will have to be certified under either of the two prevailing
systems. The two systems are National Programme for Organic Production (NPOP) and
the Participatory Guarantee System for India (PGS-India).
Organic Products
PGS – India NPOP

(Self-Certification) (Third Party Certification)
(Ministry of Agriculture & Farmers Welfare) (Ministry of Commerce & Industry)
APEDA NAB
Prior to application of these regulations, only food products meant for export have to be
certified and that too under the NPOP system. The PGS-India system is meant for
domestic market only. Drafted with an objective of addressing the problem of fraud and
mis-labelling in food claimed as ‘organic’, the organic regulations allow import of organic
food into India without being re-certified in India if the organic standards of the exporting
country have been recognised as equivalent to NPOP.
Apart from operationalising these regulations, FSSAI has also developed a common logo
for organic food from India called ‘Jaivik Bharat’ which would integrate the logos of
both—the NPOP system and PGS-India.
355. (d)
The Krishi Vigyan Kendras (KVKs) scheme is 100% financed by Govt. of India and the
KVKs are sanctioned to Agricultural Universities, Indian Council of Agricultural Research
(ICAR) institutes, related Government Departments and Non-Government Organizations
(NGOs) working in Agriculture.
KVK, is an integral part of the National Agricultural Research System (NARS), and aims
at assessment of location specific technology modules in agriculture and allied
enterprises, through technology assessment, refinement and demonstrations. KVKs have
been functioning as Knowledge and Resource Centre of agricultural technology
supporting initiatives of public, private and voluntary sector for improving the agricultural
economy of the district and are linking the NARS with extension system and farmers. The
mandate of KVK is Technology Assessment and Demonstration for
its Application and Capacity Development.
KVKs also produce quality technological products (seed, planting material, bio-agents,
livestock) and make it available to farmers, organize frontline extension activities, identify
and document selected farm innovations and converge with ongoing schemes and
programs within the mandate of KVK.
356. (c)
A Producer Organisation (PO) is a legal entity formed by primary producers, viz. farmers,
milk producers, fishermen, weavers, rural artisans, craftsmen. A PO can be a producer
company, a cooperative society or any other legal form which provides for sharing of
profits/benefits among the members. The main aim of PO is to ensure better income for
the producers through an organization of their own. Farmers Producer Organization (FPO)
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is one type of PO where the members are farmers. Small Farmers’ Agribusiness
Consortium (SFAC) and NABARD is providing support for promotion of FPOs.
357. (d)
All landholding farmers' families, which have cultivable landholding in their names are
eligible to get benefit under the PM-KISAN scheme, in which government gives Rs. 6000
annually in three instalments of Rs. 2000 each. The following category of farmers are not
eligible:
 Institutional land-holders
Farmer families in which one or more of its members belong to following categories:
 Former and present holders of constitutional posts
 Former and present Ministers/ State Ministers and former/present Members of Lok
sabha/ Rajya sabha/ state Legislative Assemblies/ State Legislative councils, former
and present Mayors of Municipal corporations, former and present Chairpersons of
District Panchayats.
 All serving or retired officers and employees of Central/ State Government Ministries
/Offices/Departments and its field units Central or State PSEs and Attached offices
/Autonomous institutions under Government as well as regular employees of the
Local Bodies
 All superannuated/retired pensioners Rs.10,000/-or more
 All Persons who paid Income Tax in last assessment year
 Professionals like Doctors, Engineers' Lawyers, Chartered Accountants, and
Architects registered with Professional bodies and carrying out profession by
undertaking practices.
Through PM-KISAN scheme, money will reach in the hands of the poor farmer which will
ultimately increase the demand in the rural areas and may result in higher inflation.
358. (c)
Agriculture contributes around 16.5 % in GDP, out of which fishing is around 1% and
livestock is around 5% , crops around 9.5% and forestry around 1% .
359. (c)
360. (b)
The PPVFR Act 2001 provides for the establishment of an effective system for protection
of plant varieties, the rights of farmers and plant breeders and to encourage the
development of new varieties of plants. The breeder will be entitled for benefit-sharing
(royalty) under this Act as decided by the PPVFR Authority.
The farmer shall be deemed to be entitled to save, use, sow, resow, exchange, share or
sell his farm produce including seed of a variety protected under this Act in the same
manner as he was entitled before the coming into force of this Act, provided that the
farmer shall not be entitled to sell branded (packaged) seed of a variety protected under
this Act.
361. (d)
As per the Protection of Plant Variety and Farmers Rights Act, 2001 Section 45, “National
Gene Fund” has been constituted to receive (or give) contributions from:
 The Breeder will have to pay royalty which will go to the National Gene Fund
162
 The amount of the benefit sharing to a variety will have to be deposited by the breeder
of such variety to the National Gene Fund.
 If someone gives a claim that the genetic material possessed by him was used in the
development of the seed variety by the breeder then the claimant will get benefit
sharing from the National Gene Fund
362. (d)
Ref: Economic Survey 2019-20, Vol-II, Page 215
363. (a)
Private Entrepreneurs Guarantee (PEG) Scheme was formulated in 2008, for construction
of storage godowns in Public Private Partnership (PPP) mode through private
entrepreneurs, Central Warehousing Corporation (CWC) and State Warehousing
Corporations (SWCs) to overcome storage constraints and ensure safe stocking of food
grains across the country. Assessment of additional storage capacities required under the
scheme is based on the overall procurement/ consumption pattern and storage space
already available.
Under PEG scheme, no funds are allocated by Central Government for construction of
godowns and full investment is done by the private parties/CWC/State Agencies by
arranging their own funds and also the land. After a godown is constructed and taken
over, FCI gives a guarantee of rent for 10 years in the case of private investors and for 9
years in case of CWC/SWCs/State Agencies, irrespective of quantum of food grains
stored.
364. (b)
Food Corporation of India sells surplus stocks of wheat and rice under Open Market Sale
Scheme (Domestic) at pre-determined prices through e-auction in the open market from
time to time to enhance the supply of food grains during the lean season and thereby
moderate the open market prices specially in the deficit regions.
365. (c)
Central Issue Price (CIP) is the price at which food grains (wheat and rice) are issued to
the state governments/ UTs from the central pool at uniform prices for distribution under
TPDS. CIP is fixed by Department of Food and Public Distribution, Ministry of Consumer
Affairs, Food and Public Distribution. CIP for rice and wheat has been fixed at Rs. 3/kg
and Rs. 2/kg respectively in the National Food Security Act 2013, which should be revised
in three years.
The eligible households get the food grains at the same price of Rs. 3/kg rice, Rs. 2/kg
wheat and Rs. 1/kg coarse grains.
366. (d)
The provisional data for the 20th Livestock Census 2018 was released in Oct 2019 by the
Dept. of Animal Husbandry and Dairying under the “Ministry of Fisheries, Animal
Husbandry and Dairying”. As per the data, West Bengal has the largest number of cattle
(in the previous census UP had the largest cattle population) and Tamil Nadu has the
largest number of poultry. Livestock population increased by 4.6% over Census 2011-12.
Livestock is commonly defined as domesticated animals raised in an agricultural setting

to produce labour and commodities such as meat, eggs, milk, fur, leather, and wool.
Livestock (major species) includes Cattle (cows & ox), Buffalo, Sheep, Goat, Pig, Mithun,
Yak, Horses & Ponies, Mule, Donkey, Camel etc. which stood at 54 crore in the latest
census.
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367. (c)
In integrated pest management, Economic Threshold Limit is the insect’s population level
or extent of crop damage at which the value of the damaged crops exceeds the cost of
controlling the pests.
Central Institute of Cotton Research (CICR), Nagpur, in June 2019 said that the Pink
Bollworm infestation on cotton crops has crossed the “Economic Threshold limit” in some
parts of Maharashtra.
368. (b)
Let us understand with an example:
Suppose the imported LPG cylinder price (i.e. international market price) is Rs.
800/cylinder. And govt announced that it will give Rs. 300/cylinder as subsidy through
Direct Benefit Transfer (DBT). So, the consumers will purchase the cylinder from Oil
Marketing Companies (OMC) like IOCL/BPCL at Rs. 800/cylinder and government will
transfer Rs. 300/cylinder in consumers account.
Now, if the international price increases to Rs. 900/cylinder, then there are three options:
1) Consumers pay Rs. 900/cylinder and government transfers Rs. 400/cylinder in

account as DBT. But it will increase the overall subsidy bill of the government, which
government don’t like.
2) Consumers pay Rs. 900/cylinder and government still transfer Rs. 300/cylinder in
consumers account, but it will increase the price per cylinder Rs. 600 (=Rs. 900 - Rs. 300)
to the consumer from the earlier price of Rs. 500 (=Rs. 800- Rs. 300). For political and
social reasons, govt. may not like this also.
3) Government forces OMCs (LPG cylinders are supplied through OMCs) to sell the
cylinder still at Rs. 800/cylinder (a kind of forced regulation), So consumers pay Rs.
800/cylinder and they will get Rs. 300 in account from Govt. This will not increase govt.
subsidy bill and consumers will also be happy. But it impacts finances of OMCs.
If government will choose the 3) option, then for OMCs it is a loss of Rs. 100/ cylinder.
And this is called "Under-recovery" per cylinder.
Generally, because of political and social compulsions govt. uses this 3) option leading to
huge under recoveries by OMCs. Till the time price of crude/gas is benign/moderate, the
under recovery may be very less or nil but when it increases, under-recovery of OMCs
increases.
369. (c)
The subsidy amount is transferred into fertilizer’s company account upon verification of
sale to farmers through Aadhaar. The price of Urea is regulated by Central Government
and it is Rs. 5.36/kg and the per kg subsidy by the government varies with the market
fluctuations in the price of Nitrogen and other costs.
370. (c)
Nutrient Based Subsidy" is applicable for Phosphatic and Potassic (P&K) fertilizers only
and not for Urea which is a Nitrogenous fertilizer. Govt. fixes the subsidy annually based
on the per kg of nutrient present in the fertilizer. As the subsidy given by the Govt. is
fixed, so the market price of the fertilizers varies with the change in international prices.
So, market prices are not regulated by the government rather it is decontrolled.
371. (d)
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372. (c)
A warehouse receipt is a document which proves ownership of a given commodity that is
stored in a recognized location, like a warehouse or a godown. Negotiable warehouse
receipts (NWRs) allow transfer of ownership of a commodity stored in a warehouse without
having to deliver the physical commodity.
Government of India enacted the Warehousing (Development & Regulation) Act 2007
under which it has constituted the Warehousing Development and Regulatory Authority
(WDRA) under Ministry of Consumer Affairs, Food and Public Distribution for the
implementation of the provisions of the Act. The main objectives of the Act are to make
provisions for the development and regulation of warehouses, negotiability of warehouse
receipts and related matters. Any person commencing or carrying on the warehousing
business and intending to issue Negotiable Warehouse Receipts (NWRs) has to get the
warehouse registered with the Warehousing Development & Regulatory Authority
(WDRA). The WDRA checks the warehouse on various parameters and then issues a
booklet containing the NWRs. The warehouse then issues these receipts to customers
(farmers and people who have stored their produce in the godowns). As these receipts are
recognized by the government, banks can easily grant loans against them. The farmer
gets an officially recognized receipt against which he can take loan from bank for further
farming activities or alternatively sell his produce to a third person by endorsing the
receipt, without even taking physical possession.
As per the Act, as on November 2017, WDRA has notified 123 agricultural commodities
and 26 horticulture commodities for issuing NWRs. In September 2017, Government
launched the Electronic Negotiable Warehouse Receipts (e-NWRs).
373. (b)
PM-AASHA Scheme is aimed at ensuring remunerative prices to the farmers for their
produce as announced in the Union Budget for 2019. The new Umbrella Scheme includes
the mechanism of ensuring remunerative prices to the farmers and is comprised of
three sub schemes:
 Price Support Scheme
 Price Stabilization Scheme
 Pilot of Private Procurement and Stockist Scheme
374. (c)
The Price Stabilization Fund (PSF) was set up in 2014-15 under the Department of
Agriculture, Cooperation & Famers Welfare (DAC&FW) to help regulate the price volatility
of important agri-horticultural commodities like onion, potatoes and pulses were also
added subsequently. The PSF scheme was transferred from DAC&FW to the Department
of Consumer Affairs (DOCA) w.e.f. 1st April, 2016.
The scheme provides for maintaining a strategic buffer of aforementioned

commodities for subsequent calibrated release to moderate price volatility and
discourage hoarding and unscrupulous speculation. For building such stock, the scheme
promotes direct purchase from farmers/farmers’ association at farm gate/Mandi. The PSF
is utilized for granting interest free advance of working capital to Central Agencies like
NAFED (National Agricultural Cooperative Marketing Federation of India Ltd.) and SFAC
(Small Farmers Agri-business Consortium), State/UT Governments/Agencies to
undertake market intervention operations. Apart from domestic procurement from
farmers/wholesale mandis, import may also be undertaken with support from the Fund.
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375. (d)
“The Essential Commodities Act 1955 provides for the regulation and control of production,
distribution and pricing of commodities which are declared as essential for maintaining or
increasing supplies or for securing their equitable distribution and availability at fair prices.
Exercising powers under the Act, various Ministries/Departments of the Central Govt. and
under the delegated powers, the State Governments/UT Administrations can issue orders
for regulating production, distribution, pricing and other aspects of trading in respect of the
commodities declared as essential”
Generally, in the past (Pulses price crossed Rs. 200 in 2016) when the prices of basic
commodities have increased, Central Govt. have brought those commodities under the
Essential Commodities Act 1955 and then respective State Governments put stocking
limits. But, this time, in an unusual move on 29th Sept 2019, Central Govt. directly
imposed a holding limit of 100 quintals on retailers and 500 quintals on wholesale onion
traders across the country.
So basically, under the Essential Commodities Act 1955, Central Govt. has
delegated the powers for the implementation of the Act to States but that does not
mean that Central Govt. can’t implement on its own.
So, to give relief to the consumers from high prices of onions, Central govt. offloaded
50,000 tonnes of buffer stock (which Central Govt. holds through Price Stabilization Fund
Scheme) of onions across the country. Mother Dairy and Cooperatives like NAFED and
NCCF sold the buffer stock at a cheaper rate of Rs. 23.9/kg in Delhi and other States.
National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED) was

established on 2nd October 1958. NAFED is registered under the Multi State Co-operative
Societies Act 2002. NAFED was setup with the object to promote Co-operative marketing
of Agricultural Produce to benefit the farmers. Agricultural farmers are the main members
of NAFED, who have the authority to say in the form of members of the General Body in
the working of NAFED. NAFED works in coordination with Ministry of Agriculture.
NAFED is the Nodal agency to implement PSF scheme.
National Cooperative Consumers Federation of India Limited (NCCF) was established on

16th October, 1965 to function as the apex body of consumer cooperatives in the country.
It is registered under the Multi-State Co-operative Societies Act, 2002. It operates through
a network of 29 Branch Offices located in different parts of the country. Main objectives
of the NCCF are to provide supply support to the consumer cooperatives and other
distributing agencies for distribution of consumer goods at reasonable and affordable
rates. NCCF works under the Ministry of Consumer Affairs, Food and Public
Distribution.
376. (d)
SAMPADA (Scheme for Agro-Marine Processing and Development of Agro-processing
clusters) is a Central Sector scheme with an allocation of Rs. 6000 crore for the period
2016-20. The objective of the scheme is to supplement agriculture, modernize processing
(of marine and agri-produce) and decrease agri-waste.
SAMPADA is an umbrella scheme incorporating ongoing schemes of the government like

Mega Food Parks, Integrated Cold Chain and Value Addition Infrastructure, Food Safety
and Quality Assurance Infrastructure, etc. and also new schemes like Infrastructure for
Agro-processing Clusters, Creation of Backward and Forward Linkages, Creation of Food
Processing & Preservation Capacities.
The SAMPADA is a comprehensive package to give a renewed thrust to the food processing
sector in the country. It aims at development of modern infrastructure to encourage
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entrepreneurs to set up food processing units based on cluster approach, provide effective
and seamless backward and forward integration for processed food industry by plugging
gaps in supply chain and creation of processing and preservation capacities and
modernization/ expansion of existing food processing units.
The objective of SAMPADA scheme is to supplement agriculture, modernize processing (of

marine and agri-produce) and decrease agri-waste. It is implemented by ministry of Food
Processing Industries.
377. (d)
In the budget speech of Union Budget 2018-19, a new Scheme “Operation Greens” was
announced on the line of “Operation Flood”, with an outlay of Rs.500 crore to promote
Farmer Producers Organizations (FPOs), agri-logistics, processing facilities and
professional management. Accordingly, the Ministry of Food Processing Industries
(MoFPI) has formulated a scheme for integrated development of Tomato, Onion and Potato
(TOP) value chain.
The scheme will have two-pronged strategy of Price stabilization measures (for short
term) and Integrated value chain development projects (for long term).
Short term Price Stabilization Measures: NAFED will be the Nodal Agency to implement
price stabilization measures. MoFPI will provide 50% of the subsidy on the following two
components:
 Transportation of Tomato Onion Potato (TOP) Crops from production to storage
 Hiring of appropriate storage facilities for TOP Crops
Long Term Integrated value chain development projects

 Capacity Building of FPOs & their consortium
 Quality production
 Post-harvest processing facilities
 Agri-Logistics
 Marketing / Consumption Points
 Creation & Management of e-platform for demand and supply management of TOP
Crops
378. (d)
Objectives of the Agriculture Export Policy are as under:
 To double agricultural exports from ~US$ 30+ Billion (2017-18) to ~US$ 60+ Billion
by 2022 and reach US$ 100 Billion in the next few years thereafter, with a stable trade
policy regime
 To diversify our export basket, destinations and boost high value and value added
agricultural exports including focus on perishables
 To promote novel, indigenous, organic, ethnic, traditional and non-traditional Agri
products exports
 To provide an institutional mechanism for pursuing market access, tackling barriers
and deal with sanitary and phyto-sanitary issues.
 To strive to double India’s share in world agri exports by integrating with global value
chain at the earliest
 Enable farmers to get benefit of export opportunities in overseas market
 This policy will play a major role in doubling farmers income by 2022
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379. (c)
Technical textiles are textiles materials and products manufactured primarily for specific
scientific functions and industrial applications rather than for its look and beauty
(aesthetic properties) is described as technical textiles. In a nutshell, technical textiles is
any fibre, yarn or fabric produced with a particular purpose and finish for a well-defined
end use.
Function wise, Technical textiles are categorized into four main aspects:
1) Mechanical functions: Pliability, resilience, tenacity and resistances are considered
2) Exchange functions: Substitutes, materials used for separation, heat transfer, and
absorptions are looked for
3) Utility (for day to day living) functions: Eco systems and health care products are
wisely pooled together to form utility functions
4) Protective functions: It includes fabrics which protect/shield us against electrical, IR,
UV and chemical harshness
Indian textile segment is estimated at $16 billion which is approximately 6% of world

market size of $250 billion. Penetration level of technical textiles is low in India at 5-10%,
against 30-70% in advanced countries. However, the annual average growth of the
segment is 12% in India, as compared to 4% world average growth.
CCEA approved setting up of “National Technical Textiles Mission” at a total

outlay/budget of Rs. 1480 crore, (it was proposed in the budget 2020-21) which will be
implemented for four years starting from 2020-21 and will have four components:
 Component I: It will focus on research and development and innovation

 Component II: The mission will focus on promotion and development of domestic
market, targeting an average growth of 15-20%
 Component III: This component aims at export promotion of technical textiles
 Component IV: This component will promote technical education at higher
engineering and technology levels
380. (d)
Jaivik-kheti portal is a unique initiative of Ministry of Agriculture (MoA), Department of
Agriculture (DAC) along with Metal Scrap Trade Corporation (MSTC) to promote organic
farming globally. It is a one stop solution for facilitating organic farmers to sell their
organic produce and promoting organic farming and its benefits.
Jaivik-kheti portal is an E-commerce as well as a knowledge platform.
Buyers can now avail organic products at their door step through the portal at much
lower prices.
Ref: https://www.jaivikkheti.in/aboutus/
381. (b)
The International Fund for Agricultural Development (IFAD), a specialized agency of the
United Nations, was established as an international financial institution in 1977 as one
of the major outcomes of the 1974 World Food Conference. The conference was organized
in response to the food crises of the early 1970s that primarily affected the Sahelian
countries of Africa. It resolved that "an International Fund for Agricultural Development
should be established immediately to finance agricultural development projects primarily
for food production in the developing countries." Through low interest loans and grants,
IFAD works with governments to develop and finance programmes and projects that
enable rural poor people to overcome poverty.
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382. (a)
Inclusive growth is typically fuelled by market-driven sources of growth with the
government playing a facilitating role. Inclusive growth focuses on both the pace and
pattern of growth. How growth is generated is critical for accelerating poverty reduction,
hence it focuses on productive employment rather than income redistribution.
383. (c)
Poverty gap is the ratio by which the mean income of the poor falls below poverty line as
a proportion of poverty line.
Poverty gap is used to reflect the intensity of poverty.
384. (c)
General Government means, central and state combined.
Ref: Economic Survey 2019-20, Vol – II, Page 275.
385. (d)
The National Sample Survey (NSS), conducted by National Statistical Office (NSO) is a
national socioeconomic survey conducted in annual rounds with a cycle of rotating
topics. For example, the purpose of the 71st round of the National Sample Survey (NSS)
conducted in 2014 was to develop indicators on health and education. The purpose of the
68th round (July 2011 – June 2012) of National Sample Survey was household
consumption expenditure.
The household Consumption Expenditure Survey (CES), generally comes after every five
years (quinquennial) during these annual rounds of NSS.
The NSS Consumer Expenditure Survey (CES) generates estimates of household Monthly
Per Capita Consumer Expenditure (MPCE) and the distribution of households and
persons over the MPCE classes. It is designed to collect information regarding expenditure
on consumption of goods and services (food and non-food) consumed by households. The
results, after release, are also used for rebasing of the GDP and other macro-economic
indicators.
Current Controversy
The 75th round of the National Sample Survey (NSS) was again done on Household
Consumption Expenditure from the period July 2017 – June 2018 by National Statistical
Office (NSO) (Earlier it used to be done by NSSO, but now NSSO and CSO has been merged
under NSO). The survey reported that the consumer expenditure in the period 2011-12 –
2017-18 has fallen, which could have been because it was carried out during a period
when the economy was reeling from the effects of demonetisation and the shift to GST.
But the government has withheld the report as it noticed that there was divergence in not
only the levels in the consumption pattern but also the direction of the change when
compared to the other administrative data sources like the actual production of goods.
So, government has decided not to release this report. In view of the above controversy,
the rebasing of GDP series, which was earlier considered to be 2017-18 (moving from
present 2011-12), may not be done and another base year may be taken.
386. (a)
India’s labour force is around 50 crore which includes people who are employed or not
employed but actively searching for job. Working age population is more than the labour
force because a lot of persons may not be part of labour force but are in working age
population for example house wives or a person taking a break from his job.
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Employment rate is defined as the number of people employed as a percentage of labour

force.
Labour force participation rate is defined as the number of persons in the labour force as
a percentage of working age population.
387. (b)
Economic Census is conducted by NSO, MoSPI and has no fixed periodicity and presently
the 7th Economic Census is being conducted (2019). Economic census gives insights on
the economic activities being carried out across the country, their geographical
distribution, the number and distribution of workers, types of ownership and sources of
finance. It covers all structures across the country, whether residential or commercial
including informal/unorganized units but excludes certain economic activities such as
crop-production, plantation activities, illegal activities, public administration and
defence, and activities of extra-territorial organisations.
Periodic Labour Force Survey is conducted by National Statistics Office (NSO) to produce
annual statistics of employment and unemployment characteristics for both rural and
urban areas, along with quarterly estimates for urban areas. Earlier it was conducted
after five years.
Household consumption expenditure survey is conducted by National Statistical Office

(NSO), after every five years and generates estimates of household Monthly Per Capita
Consumer Expenditure.
Census (of the population) is conducted by Registrar General and Census Commissioner
under Ministry of Home Affairs after every 10 years. The 2020 census will be digital.
Annual Survey of Industries (ASI) is the most important source of industrial statistics of the
registered organized manufacturing sector (Factories registered under Factories Act 1948)
of the economy and extends to the entire country. It is conducted annually by MoSPI.
388. (d)
Employment and Unemployment Surveys (EUS) conducted by NSSO were the primary
source of labour market data at National and State level in India. Regular EUS were
conducted quinquennially (after every five years) since 1972. Considering the importance
of availability of labour force data at more frequent intervals, the Ministry of Statistics
and Programme Implementation constituted a committee on Periodic Labour Force Survey
(PLFS). Now, National Statistics Office (NSO) is conducting PLFS to produce annual
statistics of employment and unemployment characteristics for both rural and urban
areas, along with quarterly estimates for urban areas. The first annual report based on
the data collected in PLFS during July 2017- June 2018 was published in May 2019.
As per the PLFS 2017-18, 6.1% of India’s labour force are unemployed.
The PLFS was designed with two major objectives for measurement of employment and
unemployment.
 The first was to measure the dynamics in labour force participation and employment
status in the short time interval of three months for only the urban areas.
 The second was for both rural and urban areas, to measure the labour force estimates
on key parameters on an annual basis such as labour force participation rate, worker
population ratio etc.
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389. (d)
As per the PLFS 2017-18, 6.1% of India’s labour force are unemployed. Labour Force
Participation Rate (LFPR) of females is 17.5% and LFPR for males is 55.5%. And overall
LFPR is 36.9%
(Ref: https://pib.gov.in/newsite/PrintRelease.aspx?relid=190167)
390. (d)
Employment Data (2017-18)
Total labour force = 50 crore
Formal = 5 crore
Informal = 45 crore (90% informal labour force)
Those firms which have ten or more workers using electricity and those with twenty or more
workers, even if not using electricity belong to the formal sector else it is in the informal
sector. In general, those firms/companies which do not have any kind of registration with
the government or do not pay tax belong to the informal sector.
391. (c)
392. (b)
393. (b)
Structural unemployment occurs for a number of reasons - workers lacking the requisite
job skills, change in government policy or change in technology, or they may live far from
regions where jobs are available but are unable to move there or simply unwilling to work
because existing wage levels are too low. So, while jobs are available, there is a serious
mismatch between what companies need and what workers can offer.
Structural unemployment exists when there are jobs available and people willing to do
work, but there are not sufficient number of people qualified to fill the vacant jobs.
394. (c)
Frictional unemployment arises due to people moving between jobs, career or location or
people entering and exiting the labour force or workers and employers having
inconsistence or incomplete information. Actually, people first leave job and then they try
to find a new job according to their choice and this process takes some time to apply for
new jobs and for employers to make a selection and hence they remain unemployed for
this transition period. That is why frictional unemployment is also called as transitional
unemployment and it is always present in the economy.
395. (b)
Disguised unemployment arises because more labourers work in the factory/land than
are required. And hence productivity i.e. production per unit of labour will be less.
So, (ii) statement is correct.
In such case if we add more capital then production may increase but if we add more
labour then production will not increase.
So, marginal productivity of capital = change in production will be positive

change in capital
but marginal productivity of labour = change in production will be zero

change in labour
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396. (d)
When the economy slows down or in recession (due to reduced demand) then production
in the economy decreases and employers lay off workers which causes cyclical
unemployment.
It is a case of reduced demand, so it generally leads to deflation.

So, (ii) statement is true.
It can be tackled by increasing the demand in the economy. RBI can increase the demand
through expansionary monetary policy i.e. reduction in repo rate. And government can
also increase the demand in the economy by expansionary fiscal policy i.e. increase in
government expenditure or reduction in taxes. Through both these policies, more money
reaches to the people and demand in the economy increases.
So, (iii) & (iv) statements are also true.
397. (d)
Underemployment is a situation in which a worker is employed, but not in the desired
capacity, whether in terms of compensation, skill level, experience, education or their
availability. While not technically unemployed, the underemployed are often competing
for available jobs. Underemployment is a social problem that affects job growth, poverty
level, economic growth and emotional health of underemployed workers.
398. (d)
"Demographic Dividend" is the dividend/benefit that a country derives because of the
demographic change and it is measured in terms of additional Per Capita Income
Growth. [Ref: Economic Survey 2016-17, Vol I, Page 33]
399. (b)
Employment Elasticity (of growth) is a measure of percentage change in employment
associated with 1 percentage change in economic growth.
Employment elasticity = % change in employment/ % change in economic growth
An employment elasticity of 0.01 implies that with every 1 percentage point growth in
GDP, employment increases by just .01 percent. Employment elasticity is falling
consistently from 0.4 in 1990s to 0.2 in 2014 and then 0.1 now.
Agriculture sector is highly labour-intensive employing around 47% of labour force to

produce 16% of GDP. So, employment elasticity of agriculture sector is more.
400. (c)
Employee Provident Fund (EPF) consist of 12% employee salary and 12% is contributed
by employer. Out of the 12% employer contribution, 8.33% goes to Employee Pension
Scheme (EPS). Under Pradhan Mantri Rojgar Protsahan Yojana, the 8.33% employer
contribution will be reimbursed by the government to the employer which will motivate
the employer to higher more worker. This scheme is applicable for any sector worker,
whose wage is up to Rs. 15000.
401. (c)
Life Insurance penetration is 2.74% and Life insurance density is $55.
402. (c)
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403. (a)
 Population growth in India has been slowing in recent decades from an annual growth
rate of 2.5% during 971-81 to an estimated 1.3% as of 2011-16 and is projected to
slow down to 1% during 2021-31 and under 0.5% during 2031-41.
 A key driver of the above trend has been the steady decline in India’s Total Fertility
Rate (TFR) since the mid-1980s. TFR declined from 4.5 in 1984 to 2.3 in 2016
(The Total Fertility Rate is defined as the total number of children that would be born to
each woman if she were to live to the end of her child-bearing years)
 Replacement level fertility is usually marked at 2.1. But the required replacement level
fertility for India is higher than the usual benchmark of 2.1. The reason is the skewed
sex ratio, because of which a woman would have to give birth to more than 2.1
children in order for the population to replace itself. Estimates suggest that the
effective replacement level fertility after taking into account the skewed sex ratio could
be around 2.15 to 2.2 for India with a sex ratio of 1.11 (Replacement level fertility is
the level of fertility at which a population exactly replaces itself from one generation
to the next.)
 India’s TFR is projected to fall well below replacement level fertility by 2021 to 1.8
(from 2.3 in 2016). But there will be positive population growth in the next two
decades due to,
(a) Population momentum (it occurs because it is not only the number of children per
woman that determine population growth, but also the number of women in
reproductive age which is more for India.), and
(b) Continued rise in life expectancy
404. (d)
Central government announces National Floor Level Minimum Wage (NFLMW) which is
non-statutory but acts as a benchmark that pulls up the wages of the workers. NFLMW
does not operate as a conventional floor wage to protect the lowest paid workers.
Currently NFLMW is Rs. 176/day.
There are nearly 429 scheduled employments and 1,915 scheduled job categories across
India for unskilled workers for which minimum wages is set by different states. One in
every three wage workers in India is not protected by the minimum wage law.
States have different minimum wages and the main justification for it is the different level
of economic development. The proliferation of minimum wage rates and scheduled
employments is a strong deterrent for compliance.
405. (c)
The idea of a national level minimum wage has been debated since the enactment of the
Minimum Wages Act 1948 in India. The main argument against a national minimum wage
has been the existence of wide disparities in economic development and large variations
in cost of living between regions and states. Bhoothalingam Committee, 1978, argued for
adoption of National Floor Level Minimum Wage to ensure a uniform wage for all workers
and enhance protection of the most vulnerable workers and eliminate arbitrariness in the
determination of level of minimum wages for different States and occupations.
Recommendations were mainly for the organized sector.
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406. (a)
Absolute poverty is when you are unable to buy or pay for basic living needs such as basic
food, water, simple housing, simple clothing. Relative poverty is when you are unable to
buy or pay for food, water, housing, clothing etc that others are able to spend.
407. (c)
Lorenz curve was developed by Max O Lorenz in 1905 for representing inequality of the
wealth distribution of a country or province. The Lorenz curve is used to show what
percentage of a nation's residents possess what percentage of that nation's wealth. While
the Lorenz curve is most often used to represent economic inequality, it can be used to
represent inequality in any system.
The Kuznets curve is a hypothetical curve that graphs economic inequality against per
capita income over the course of economic development. In the 1950s and 1960s, Simon
Kuznets hypothesized that as an economy develops, market forces first increase then
decrease the overall economic inequality of the society, which is illustrated by the inverted
U-shape of the Kuznets curve.
408. (a)
The Head count ratio (HCR) is the proportion of a population that exists, or lives, below
the poverty line. The Poverty headcount ratio at national poverty line (percentage of
population) in India was last reported at 21.9% in 2011-12 as per Tendulkar committee.
409. (a)
Wage rates for workers under the Mahatma Gandhi National Rural Employment
Guarantee Act (MGNREGA), 2005 are notified and revised annually based on Consumer
Price Index-Agricultural Labourers (CPI-AL) by the Central Government in accordance
with the provisions of Section 6(1) of the Mahatma Gandhi NREGA. The revised wage rates
are made applicable from 1st April of the year.
A Committee under the chairpersonship of former Additional Secretary, Ministry of Rural

Development was constituted to study among other things the appropriate index for
revising MGNREGA wages. The Committee recommended using Consumer Price Index-
Rural instead of the existing CPI-AL for revising MGNREGA wages every year. The
Committee also recommended use of annual average instead of the existing practice of
using December month index only. The recommendations of the Committee are under
consideration in consultation with the Ministry of Finance (This is the status as on
January 2019. No information is available whether it has been approved or not, that’s why
I am assuming that till now it has not been approved).
Ref: https://www.thehindubusinessline.com/economy/mgnrega-wages-up-about-11-yet-
at-least-40-lower-than-minimum-wages/article31197140.ece
Different States can have different MGNREGA wages depending on their minimum wages.
The prevailing rates for unskilled agricultural workers are between ₹347-383 per day,
depending on the region of employment.
410. (c)
411. (c)
World Bank classifies the world's economies based on estimates of gross national income
(GNI) per capita based on nominal exchange rate. The GNI per capita estimates are also
used as input to the World Bank's operational classification of economies that determines
lending eligibility. As per the 2018 data, the following is the classification of world
economies:
174
 High Income $12,376 < GNI per capita

Upper Middle $3,996 < GNI per capita < $12,375
 Middle Income
Lower Middle $1,026 < GNI per capita < $3,995
 Low Income GNI per capita < $1,025
India belongs to the "Lower Middle" group as its GNI per capita is $2141 (Rs. 202.4 lakh
cr/ 135 crore population = Rs. 1.5 lakh = $2141) in terms of nominal exchange rate.
As per the PPP exchange rate, India's GNI per capita is $7500.
412. (b)
India’s GDP for 2019-20 is going to be around Rs. 204.4 lakh crore (and GNP Rs. 202.4
lakh crore) and population around 135 crores. So, its per capita GDP is Rs. 1.51 lakh
In dollar, India’s GDP is around $2.9 Trillion and per capita GDP is around $2100
China’s GDP is around $14 Trillion and population around 140 crore. So, per capita GDP
is around $10,000
413. (c)
Free Trade Agreements (FTA): A free trade agreement is a preferential arrangement in
which members reduce tariffs on trade among themselves, while maintaining their own
tariff rates for trade with non-members.
Customs Union (CU): A customs union is a free trade agreement (FTA) in which members
apply a common external tariff (CET) schedule to imports from non-members.
Common Market (CM): A common market is a customs union (CU) where movement of
factors of production is relatively free amongst member countries.
Economic Union (EU): An economic union is a common market (CM) where member
countries coordinate macro-economic and exchange rate policies.
414. (a)
These are bilateral agreements entered between countries to avoid double taxation of
income with respect to social security taxes. United States has entered into Totalization
Agreements with several countries. These agreements must be taken into account when
determining whether any alien is subject to the U.S. Social Security/Medicare tax, or
whether any U.S. citizen or resident alien is subject to the social security taxes of a foreign
country.
Any alien who wishes to claim an exemption from U.S. Social Security taxes and Medicare
taxes because of a Totalization Agreement must secure a Certificate of Coverage from the
social security agency of his home country and present such Certificate of Coverage to his
employer in the United States.
India has till now not signed Totalization Agreement with US. But it will pitch for a
'totalization pact' to protect interests of professionals of Indian origin who contribute more
than $1 billion each year to the US social security through federal taxes without availing
any benefits in return.
415. (c)
On 19th June 2017, India became the 71st country of the world to have joined the United
Nations TIR (Transports Internationaux Routiers or International Road Transport)
convention. The ratification of the international treaty is expected to boost India’s status
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as a trade transit hub in Asia and also help counter the impact of China’s OBOR. The
following are its various benefits:
 The convention facilitates seamless movement of goods within and amongst the
parties to the Convention.
 It will help Indian traders to have access to fast, easy, reliable and hassle-free
international system for movement of goods by road or multi-modal means across the
territories of other contracting parties.
 By joining the convention, the need for inspection of goods at intermediate borders as
well as physical escorts en-route shall be obviated due to reciprocal recognition of
Customs controls.
 As per the Convention, Customs clearance can take place at internal Customs
locations thereby avoiding clearances at Border Crossing Points and ports that may
often be congested.
 Movement under the TIR can be allowed by checking only the seals and the external
conditions of the load compartment or the container thereby reducing border delays,
transport and transaction costs thereby leading to increased competitiveness and
growth for the trade and transport sectors.
416. (a)
The WTO recognizes as Least-Developed Countries (LDCs) those countries which have
been designated as such by the United Nations.
There are no WTO definitions of “developed” and “developing” countries. Members

announce for themselves whether they are “developed” or “developing” countries.
However, other members can challenge the decision of a member to make use of
provisions available to developing countries. (UN declares a list of developing economies
also)
Under the normal WTO trade laws, the WTO members must give equal preferences to
trade partners. There should not be any discrimination between countries. This trade rule
under the WTO is called the Most Favoured Nation (MFN) clause/principle. The MFN
instructs non-discrimination i.e. no favourable treatment to a particular country. At the
same time, the WTO allows members to give special and differential treatment to
developing and LDC countries (like zero or less tariff imports). This is an exemption to
MFN principle. The Generalized System of Preferences (GSP) given by developed countries
including the US is an exception to MFN.
Under GSP, developed countries offer preferential trade treatment on a non-reciprocal

basis to products originating in developing countries. The reason for the non-reciprocal
arrangement was to provide differential and more favourable treatment with a view to
incentivising developing countries and promote their fuller participation in global trade.
Effective from 5th June 2019, US terminated India’s designation as a ‘beneficiary

developing country’ under the GSP programme.
417. (c)
Under the WTO’s TRIPS Agreement, a reasonable restriction on the rights of the patent
holder has been granted under certain circumstances. This restriction is provided by
allowing other member countries to enact provisions for granting Compulsory Licenses
to prevent the abuse of patent right and member countries have been given freedom to
determine the grounds for granting Compulsory Licenses. Compulsory licensing means
that the government allows someone else to produce the patented product or process
without the consent of the patent owner.
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Accordingly, our Patent Act 1970 has introduced provisions regarding Compulsory
licenses (introduced through amendment), which can be granted if the patented product
is sold at an unreasonably high price which is not affordable to the public or it is not
sold/supplied at all.
418. (c)
The Financial Action Task Force (FATF) is an inter-governmental body established in 1989
by the Ministers of its Member jurisdictions. The objectives of the FATF are to set
standards and promote effective implementation of legal, regulatory and operational
measures for combating money laundering, terrorist financing and other related threats
to the integrity of the international financial system. The FATF is therefore a “policy-
making body” which works to generate the necessary political will to bring about national
legislative and regulatory reforms in these areas.
The FATF monitors the progress of its members in implementing necessary measures,
reviews money laundering and terrorist financing techniques and counter-measures, and
promotes the adoption and implementation of appropriate measures globally. In
collaboration with other international stakeholders, the FATF works to identify national-
level vulnerabilities with the aim of protecting the international financial system from
misuse.
FATF has put Pakistan on its 'watch list' or 'grey-list' till June 2020 and has been asked
to comply with the action plan to control funding to terrorist groups. Grey-listing Pakistan
may result in a downgrade of its debt ratings, making it more difficult for it to tap into
international bond markets.
419. (b)
FDI inflows in India from top four countries in 2018-19:
Singapore $14.6 billion (1)

Mauritius $6.5 billion (2)
USA $2.8 billion (3)
Japan $2.7 billion (4)
From UAE India received $0.85 billion FDI (9th position).
420. (a)
421. (c)
Duty credit scrip is an important export promotion incentive (under Foreign Trade Policy
2015-20) provided by the government to exporters in which government gives tax
incentives to the exporters. The government gives a receipt/paper to the exporter worth
some percentage (2% to 5%) of the export value. This paper the exporter can use to adjust
against tax payment for example import duty on raw materials used for exports or other
taxes on manufacturing processes.
422. (c)
423. (c)
At present, GST is exempted in case of exports and it is called zero rated. So, first
exporters pay GST to the government and then they provide a proof to the government
that it is a case of export (sold abroad) and the government reimburses the entire GST.
And taxes on import/customs duties for inputs required to manufacture exported

products were refunded through Merchandise Export of India Scheme (by giving Duty
Credit Scrips to exporters as some percentage of exports value).
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However, certain product are outside GST and the taxes/duties/levies imposed on these
products are still not refunded for exports, such as, VAT on fuel used in transportation,
Mandi tax, Duty on electricity used during manufacturing etc. These would be covered
for reimbursement under the new Remission of Duties or Taxes on Export Products
(RoDTEP) Scheme.
The new scheme RoDTEP is WTO compatible and will replace the existing WTO
incompatible scheme “Merchandise Exports from India Scheme” (MEIS).
With the new scheme RoDTEP, the few taxes which were not reimbursed (taxes on
products outside GST) currently in the present GST regime, even those will be
reimbursed and the exports will become effectively zero-rated.
The sequence of introduction of the Scheme across sectors, prioritization of the sectors
to be covered, degree of benefit to be given on various items within the rates set by the
Committee will be decided and notified by the Department of Commerce.
424. (c)
“Certificate of Origin” (CO) is a document declaring in which country a commodity/
product was manufactured. The CO contains information regarding the product, its
destination, and the country of export. It is required by many international treaty/
agreements for cross border trade. CO helps in determining whether certain goods are
eligible for free import or it will be subject to duties.
“Rules of Origin” are used in international trade which contains provisions to check the
origin of a particular product. For example, if India puts high import duty on goods coming
from China but less duty on goods coming from Japan, then it may be possible that a
product coming from Japan has most of the value addition/ manufacturing being done
in China first and then it moved to Japan where hardly 10% of the value addition was
done and then it is being imported in India. This is done to avoid high import duty by
China and is possible if India do not have any “Rules of Origin” to check the real source
of a product.
So, generally countries specify “Rules of Origin”, for example import duty will be
applicable as per that country where more than 50% of value addition is done. Then such
diversion is not possible. To give effect to the “Rules of Origin”, a “Certificate of Origin” is
issued.
For exports to countries with which India has Free Trade Agreements (FTA), exporters
have to show a certificate that the consignment originated in India. Recently, government
launched a common digital platform for the issuance of certificates of origin and now
these certificates can be obtained online and all the issuing authorities will be on the
same panel.
425. (a)
Export Credit Guarantee Corporation (ECGC) Ltd. is wholly owned by Government of
India, was set up in 1957 with the objective of promoting exports from the country by
providing credit risk insurance and related services for exports. Over the years it has
designed different export credit risk insurance products to suit the requirements of Indian
exporters. Because of the insurance cover provided by ECGC, banks extend timely and
adequate export credit/loan facilities at cheaper rates to the exporters. To avail the
insurance cover from ECGC, the exporters pay nominal premium to ECGC. Earlier the
ECGC used to give a cover of 60% of the loss to banks. But under the new scheme
“NIRVIK”, 90% coverage of the “principal and interest of the loan” for pre and post
shipment credit will be given.
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426. (c)
According to the latest release by the World Gold Council, U.S. leads the country list with
total gold reserves of 8,133.5 tonnes followed by Germany with 3,366.8 tonnes. While the
IMF is ranked third with a holding of 2,451.8 tonnes, it is followed by countries such as
Italy (2,451.8 tonnes), France (2,436.1 tonnes), Russia (2,219.2 tonnes), China (1,936.5
tonnes), Switzerland (1,040 tonnes) and Japan (765.2 tonnes) before India at the 10th
spot (635 tonnes).
Among the countries, India stands at 9th, if you remove IMF from the list.
427. (a)
428. (d)
429. (b)
BRICS bank has five members but any country which is a member of United Nations is
eligible to become a member of BRICS bank.
430. (d)
When a country joins IMF, it is assigned QUOTA which is based on the country's GDP
(50%), openness (30%), economic variability (fluctuations in current and capital account)
(15%) and international reserves (5%). Quotas are denominated in Special Drawing Rights
(SDRs), the IMF's unit of account. India’s quota is 2.76% and China is 6.41% while US is
17.46%
A member's quota subscription determines the maximum amount of financial resources

the member is obliged to provide to the IMF. A member must pay its subscription in full
upon joining IMF: up to 25% must be paid in SDRs or widely accepted currencies (US
dollar, Euro, Yen, Pound, Yuan) while the rest 75% is paid in the member's own currency.
Quota is supposed to be reviewed after every five years.
The amount of financing a member can obtain from the IMF is also based on its quota.
For example, a member can borrow up to 200 percent of its quota annually and 600
percent cumulatively. However, access may be higher in exceptional circumstances. IMF
grants loans only to member countries.
Quotas is used to determine the following:

 Subscription (maximum amount of financial resources that a member is obligated to
provide to the IMF),
 Voting power/rights in IMF decision making,
 Member country's share of SDR allocations
 Borrowing capacity (financial assistance a member may obtain from the IMF)
431. (d)
World Bank has two sources of funds:
 Share capital of each member country based on their share in GDP
 Issuance of bonds in the international financial markets
Out of the above two sources, main source is issuance of bonds (debt finance)
IMF has again two sources of funds

 QUOTA (every member country has put/subscribed funds)
 Borrowing from specific member countries
Out of the above two sources, mains source is QUOTA
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432. (d)
Under WTO agreements, countries cannot normally discriminate between their trading
partners. In general MFN means that every time a country lowers a trade barrier (import
duties) or opens up a market or gives some country a special favour, it has to do so for
the same goods or services from all its trading partners - whether rich or poor, weak or
strong. According to the WTO, though the term MFN “suggests special treatment, it
actually means non-discrimination.” However, exemptions allowed to this rule include
free trade pacts and special benefits to poor nations.
India accorded the MFN status to Pakistan in 1996 as per India’s commitments as a
member of the WTO but Pakistan never gave India MFN status. After the Pulwama attack,
India also cancelled the MFN status granted to Pakistan under the provisions of ‘security
exception’ clause in GATT under WTO.
Article 21(b)(iii) of GATT states that “Nothing in this Agreement shall be construed to
prevent any contracting party (including India in this case) from taking any action which
it considers necessary for the protection of its essential security interests taken in time of
war or other emergency in international relations.”
US in march 2018 also increased duties against China, India and few other countries
using the “national Security” clause.
433. (d)
The Agreement on TRIMs of the WTO is based on the belief that there is strong connection
between trade and investment. Restrictive measures on investment are trade
distorting. Several restrictive measures on investment are prohibiting trade and hence
are not allowable like local content requirement, export obligation, domestic employment,
technology transfer requirement etc.
434. (b)
When a government is giving subsidies to its exporters then the importing country can
put extra tariff/duty (other than its normal customs/import duty) on those products
entering into their market. This extra duty is called "Countervailing Duty". It is country
specific.
Anti-dumping Duty: When the goods are exported by a country (say A) to another country
(say B) at a lower price as compared to the prevailing price in the country A, then this is
called dumping. And to stop this, the country B is allowed to put extra duty/tariff (other
than its normal customs/import duty) on imports coming from country A. This extra tariff
is called "Anti-Dumping Duty".
Anti-dumping is a measure to rectify the situation arising out of the dumping of goods
and its trade distortive effect. Thus, the purpose of anti-dumping duty is to rectify the
trade distortive effect of dumping and re-establish fair trade. The use of anti-dumping
measure as an instrument of fair competition is permitted by the WTO. In fact, anti-
dumping is an instrument for ensuring fair trade and is not a measure of protection per
se for the domestic industry. It provides relief to the domestic industry against the injury
caused by dumping. It is country specific.
435. (d)
Safeguard Duty are applied when there is a surge in imports of a particular product
irrespective of a particular country/ies. Safeguard duty is a WTO compliant temporary
measure that is brought in for a certain time frame to avert any damage to a country's
domestic industry from cheap imports.
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In 2018, India imposed safeguard duty for two years on solar modules to stimulate
domestic production.
436. (a)
When China joined the WTO on 11 December, 2001 it was written into the terms of the
deal that member states could treat it as a non-market economy, allowing them to impose
heavy anti-dumping duties on the basis that its low prices did not reflect market reality.
China was declared a "non-market economy" at that time as most of the goods prices in
China were regulated by the government and not by the market forces of demand and
supply. And in such a case it becomes easy for its trading partners to impose anti-
dumping duty against Chinese imports without much of justification and detailed proof.
China was told that it would change by the end of 2016 when it would be upgraded to
market economy status. But the clause expired on 11th Dec 2016 and Beijing's hopes of
being upgraded to market economy status have been overshadowed as a number of major
Chinese trade partners like US, European Union and Japan are not honoring their WTO
promises to Beijing.
International trade experts say China will have to start a lengthy legal battle at the WTO
against its trade partners in order to get recognition of its new status.
437. (d)
Trademark is typically a name, word, phrase, logo, symbol, design, image or a
combination of these elements. A trademark is a sign that you can use to distinguish your
business’ goods or services from those of other traders. Through a registered trade mark,
you can protect your brand (or “mark”) by restricting other people from using its name or
logo. Once acquired, a trade mark can last indefinitely. Trademark owner can be an
individual, business organization or any legal entity. In India, trademarks are protected
through "The Trade Marks Act 1999".
Basically, trademarks are treated as an asset. Therefore, it is transferable from one person
to another. An Assignment of a trademark is a permanent process, whereas licensing is
treated as a temporary process. An assignor is a person who transfers the ownership
rights and the assignee is the person who acquires the ownership.
438. (d)
Broadly speaking, any confidential business information which provides an enterprise a
competitive edge may be considered a trade secret. The subject matter of trade secrets is
usually defined in broad terms and includes sales methods, distribution methods,
consumer profiles, advertising strategies, lists of suppliers and clients, and
manufacturing processes.
Contrary to patents, trade secrets are protected without registration, that is, trade secrets
are protected without any procedural formalities. Consequently, a trade secret can be
protected for an unlimited period of time unless it is discovered or legally acquired by
others and disclosed to the public. As per the TRIPS, the following are prerequisites for a
trade secret.
 The information must be secret (i.e. it is not generally known among, or readily
accessible to, circles that normally deal with the kind of information in question).
 It must have commercial value because it is a secret
 It must have been subject to reasonable steps by the rightful holder of the information
to keep it secret (e.g., through confidentiality agreements)
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439. (c)
PM-Kisan scheme is not linked to production i.e. the farmers will get the subsidy even if
they do not produce hence it is non-distorting and will belong to “Green Box”.
And Peace Clause is still valid and continuing till a permanent solution to the issue of
agricultural subsidies is arrived at.
440. (b)
Multilateral Convention to Implement Tax Treaty Related Measures (MLI)
On 25th June, 2019, India has deposited the instrument of ratification to OECD, Paris
along with its final position in terms of Covered Tax Agreements (CTAs), reservations,
options and notifications under the MLI, as a result of which MLI entered into force for
India on October 1, 2019 and its provisions will have effect on India’s DTAAs from FY20-
21 onwards. It will prevent Base Erosion and Profit Shifting (BEPS), which will pave way
for amendments to double taxation avoidance agreements (DTAA) with the countries
signatories to the convention to plug revenue leakages.
441. (d)
‘World Bank Group’ consists of five organizations:
 International Bank for Reconstruction and Development (IBRD)
 International Development Association (IDA)
 International Finance Corporation (IFC)
 The Multilateral Investment Guarantee Agency (MIGA)
 The International Centre for Settlement of Investment Dispute (ICSID)
IBRD and IDA jointly are called ‘World Bank’.
442. (a)
The Harmonized System of Nomenclature (HSN) is an international nomenclature for the
classification of products. It allows participating countries to classify traded goods on a
common basis for customs purposes. HSN is an internationally standardized system of
names and numbers to classify the traded products. HSN code helps to classify the goods
from all over the world in a logical and systematic manner.
HSN is a 6-digit code, however, in India, 2 more digits are added for deeper classification
and hence in India 8-digit code is adopted.
The Harmonized System was introduced in 1988 and has been adopted by most of the
countries worldwide. World Customs Organization (WCO) is responsible for developing
and maintaining the HSN. WCO, established in 1952 as the Customs Co-operation
Council CCC, is an independent intergovernmental body whose mission is to enhance the
effectiveness and efficiency of Customs administrations.
443. (a)
The IMF has taken steps to enhance member country transparency and openness,
including setting voluntary standards for dissemination of economic and financial data.
The Special Data Dissemination Standard (SDDS) was established in 1996 to guide
members that have, or might seek, access to international capital markets in providing
their economic and financial data to the public. Data dissemination standards enhance
the availability of timely and comprehensive statistics, which contributes to sound
macroeconomic policies and the efficient functioning of financial markets. IMF releases
“Annual Observance Report (of SDDS)” for each member country annually. As per the
IMF's "Annual Observance Report" for 2018, India delays its release of economic data and
is falling short of SDDS obligations.
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444. (a)
Social mobility is the movement of individuals, families, households, or other categories
of people within or between social strata in a society. It is a change in social status relative
to one's current social location within a given society. The Social Mobility Index is released
by World Economic Forum. India ranked 76th place while Denmark has topped the list of
82 countries in 2020. The five key dimensions used for measuring the countries on this
index are:
 Health
 Education (access, quality and equity)
 Technology
 Work (opportunities, wages, conditions)
 Protections and institutions (social protection and inclusive institutions)
445. (a)
"Department of Economic Affairs", Ministry of Finance grants "Infrastructure Status" to
the various sectors.
446. (d)
Granting of infrastructure status enable the sectors to avail infrastructure lending at
easier terms with enhanced limits, access to larger volume of funds as External
Commercial Borrowings (ECB) and access to longer tenure funds from insurance
companies
447. (c)
The services sector’s significance in the Indian economy has continued to increase, with
the sector now accounting for around 55 per cent of GVA, two-thirds of total FDI inflows
into India and about 38 per cent of total exports.
Ref: Economic Survey 2019-20, Vol – II, Page 273.
448. (a)
Under National Infrastructure Pipeline (NIP), Government has a plan to spend around Rs.
102 lakh crores in various infrastructure sectors to achieve the $5 Trillion economy by
2024-25. NIP will cover the period from 2019-20 to 2024-25. To draw up the NIP plan, an
inter-ministerial Task Force was set up in September 2019 under the chairmanship of
Secretary (DEA), Ministry of Finance.
As per the NIP, Central Government (39 per cent) and State Government (39 per cent) are
expected to have equal share in funding of the projects followed by the Private Sector (22
per cent). The funds allocated to some major sectors are Energy (24%), Roads (19%),
Urban (16%) and Railways (13%) etc.
449. (a)
Indian Railway Catering and Tourism Corporation (IRCTC), was a 100% Government of
India Company (PSU) till October 2019, under the administrative control of Ministry of
Railway. (Every PSU is attached to a specific ministry). IRCTC was not listed on any stock
exchange, which means it was privately held by Govt. of India. (Privately held does not
mean a private company. It means that no one can purchase its shares from the stock
market i.e. it is not listed). But government brought in Initial Public Offering (IPO) of IRCTC
in October 2019 and listed it on the Bombay stock exchange and reduced its ownership
from 100% to 87.5%. So, Govt. of India did disinvestment of IRCTC which is in general
reduction of ownership but it is still majority owned by Govt. of India
Till now "Ministry of Railway (Govt. of India)" is running (operating) the trains. But in
future the government is planning to bring in private players in operating/running the
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trains. TEJAS train from Delhi to Lucknow and Mumbai to Ahmedabad are now
run/operated by IRCTC (a PSU) rather than by Ministry of Railway (Govt. of India). So,
basically earlier Govt. of India (Ministry of Railway) was running the trains but now the
TEJAS train operations is being given to a “body corporate” i.e. IRCTC. So, it is basically
an experiment by the Govt. to run trains by a separate entity (IRCTC) but it is a
step/experiment in the direction of bringing in private players in trains
running/operations. In future, from IRCTC, the operations may be given to private entities
and other trains will also be given to private players for running/operation.
The media quoted that TEJAS is the first private train and bla...bla.....(which is not true).
TEJAS is not being run by private operators but by a PSU, IRCTC. But definitely this will
pave the way for private players in train running/operation in future. Private players will
pay some charge to Ministry of Railway for using the rail infrastructure.
Railway is going through its biggest reform since independence as proposed by "Bibek
Debroy Committee". As per the committee’s suggestions, The Indian Railway will be
separated into:
(a) Railway Infrastructure Corporation (RIC), and
(b) Indian Railway Trains (IRT)
As IRTs are public service provider of railway transport services, there must be private
trains also running on the infrastructure provided by RIC. So basically, on RIC
infrastructure both Govt trains (IRTs) and private trains will run. Since both govt. and
private trains will be running, it will require a "Regulatory Body", whose role will not be
merely to set tariffs, but also to ensure fair competition (such as access to track) between
IRTs (govt trains) and private train operators. So, the idea is that the Railway ministry
will set up a broad policy and the Regulator will implement the principles of competition
determined by that policy and the present Railway Board will become a corporate Board
for just the IRTs.
450. (a)
451. (d)
Air India (Tata Airlines) was founded by J.R.D. Tata in 1932. In 1953, the Government
of India passed the Air Corporations Act and purchased a majority stake (nationalized) in
the carrier from Tata Sons though its founder J. R. D. Tata
As per the present FDI Policy, 100% FDI is permitted in "scheduled Air Transport
Service/Domestic Scheduled Passenger Airline". However, for Air India, as per the present
policy, foreign investment (FDI/FPI) in Air India, including that of foreign Airline(s) shall
not exceed 49%, subject to the condition that substantial ownership and effective control
of Air India shall continue to be vested in Indian Nationals.
Now cabinet in early March 2020 approved changes in the FDI policy specific to Air India
only where NRIs (who are Indian Nationals either through Individuals or through their
companies) will be allowed to own 100% in Air India and that too under automatic route.
So Foreign Airlines (treated as Foreign Nationals) will still be allowed to own only 49% in
Air India.
452. (c)
Drug Price Control Orders (DPCOs) are issued by the Government, in exercise of the
powers conferred under section 3 of the Essential Commodities Act 1955 to ensure that
the medicines listed under National List of Essential Medicines (NELM) are available at a
reasonable price to the general public. The National List of Essential Medicines (NELM),
prepared by Ministry of Health and Family Welfare, is a list of medicines considered
184
essential and high priority for India’s health needs. It is based on aspects like prevalence
of disease in the population, safety and efficacy of the medicine, and current affordability.
National Pharmaceuticals Pricing Authority (NPPA) is an independent body of experts

constituted by Government of India Resolution in 1997, is under department of
pharmaceuticals, ministry of chemicals and fertilizers. NPPA is responsible for fixing
and revising the prices of pharmaceutical products and availability of the medicines
in the country as well as the enforcement of DPCO. The organization is also entrusted
with the task of recovering amounts overcharged by manufacturers for the controlled
drugs from the consumers. It also monitors the prices of decontrolled drugs in order to
keep them at reasonable levels.
For regulating the prices, the ceiling prices are determined based on market-based pricing
method, as the maximum mark-up that a retailer can charge over the reference price,
which is the simple average of the prices of the all the brands with market share of greater
than or equal to 1 per cent based on market data provided by IMS Health, a market
research firm.
453. (d)
All the three acts were invoked.
The Centre on 15th March 2020 brought masks and hand sanitisers under the Essential
Commodities Act, 1955 to make sure that these products, key for preventing the spread
of Covid-19 infection, are available to people at the right price and in the right quality.
Taking note of the fact that masks and hand sanitisers are not easily available and
vendors are charging exorbitant prices for them, the government declared these items as
essential commodities till June 30 2020 under the EC Act. Under this Act, the States and
Union Territories can ask manufacturers to enhance their production capacity so that
these products are widely available to consumers.
An offender under the EC Act 1955 may be punished with imprisonment of up to seven
years or fine, or both, and under the Prevention of Black marketing and Maintenance of
Supplies of Essential Commodities Act, 1980, he can be detained for up to six months.
The central government on 14th March 2020 declared/notified COVID-19 as a national

'disaster' and announced to provide ex-gratia relief of Rs 4 lakh to the families who died of
the virus. The move by the centre would allow the states to spend larger chunk of funds
from the State Disaster Response Fund (SDRF) to fight the pandemic.
Govt. of India, in exercise of the powers conferred under Section 3 and 5 of the Essential
Commodities Act, 1955 has delegated the powers in respect of some sections of EC Act
1955 to National Pharmaceutical Pricing Authority (NPPA) to exercise the functions of the
Central Government.
Under section 10 of the Disaster Management Act, 2005, Ministry of Health and Family
Welfare, on 13th March 2020, directed National Pharmaceutical Pricing Authority (NPPA)
(to implement plans to tackle disaster and accordingly) to ensure the availability and
prices of the Surgical and protective masks, Hand sanitizers and Gloves. Accordingly,
NPPA vide order dated 13th March, 2020 has directed to all State /UT Governments, in
public interest, in order to deal with the situation arising out of COVID-19, to take
necessary steps to ensure sufficient availability of Surgical and protective masks, Hand
sanitizers and Gloves at prices not exceeding the MRP printed on the pack size.
For Essential Commodities Act 1955; AND Prevention of Black marketing and
Maintenance of Supplies of Essential Commodities Act, 1980, please refer the following
article
185
Ref: https://www.thehindubusinessline.com/news/masks-sanitisers-put-under-
essential-commodities-act/article31062832.ece
For Disaster Management Act 2005, please refer the following article
Ref: https://www.livemint.com/news/india/coronavirus-govt-makes-sanitizers-masks-
essential-commodities-to-ensure-supplies-11584114694202.html
https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1606405
454. (c)
FDI in Retail
Single Brand Multi - Brand

(100%)
Brick & Mortar (51%) E-Commerce
Marketplace Inventory
(100%) (0%)
But, 100% FDI is allowed in all models of retail for food products sourced from Indian
farmers or processed/manufactured in India. This has been allowed thinking about the
farmers in India.
455. (c)
India’s share in world merchandise exports is around 1.7%
India toppled Vietnam to become the second largest manufacturer of mobile phones
globally following China in 2018.
Ref: Economic Survey 2019-20, Vol – I, Chapter 5, Page No. 101 and 115
456. (d)
Share of Gold imports in total merchandise imports is around 6.4%. Share of POL imports
in total merchandise imports is round 26%. But both share have fluctuated.
457. (a)
The overarching theme of economic survey 2019-20 is wealth creation and the policy
choices that enable the same. Wealth creation happens in an economy when the right
policy choices are pursued. The economic survey says that, wealth creation and economic
development in several advanced economies has been guided by the philosophy of the
invisible hand.
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458. (a)
The phrase ‘Invisible hand’ was introduced by ‘Adam Smith’ in his book ‘The Wealth of
Nations’. It is a metaphor for the unseen forces (of demand and supply) that move the free
market economy. Through individual self-interest and freedom of production as well as
consumption, the best interest of society, as a whole are fulfilled.
459. (d)
The budget (2020-21) is woven around three prominent themes:
 Aspirational India
 Economic Development
 Caring society
This budget is dedicated to provide “Ease of Living” to all citizens. The “Ease of Living” is
a bouquet and holding this bouquet are two hands- one, corruption free, policy driven
good governance and two, clean and sound financial sector. And the details under the
three broad themes are the flowers in the bouquet.
460. (b)
Rent seeking means engaging in or involving in the manipulation of public policy or
economic conditions as a strategy for increasing profits. For example, lobbying for
government contracts by changing the terms and conditions of the bidding contract.
461. (d)
Micro Small and Medium Enterprises (MSMEs) sector is crucial for the economic progress
of India and it must match global quality control standards. The Zero Defect, Zero Effect
(ZED) scheme was launched in October 2016 to ensure that all the MSMEs are delivering
top quality product and using clean technology. This means the public will now onwards
be able to use clean technology products and they will also set parameters that are specific
to each industry. The main purpose of the scheme is to match the global quality control
standards.
The ZED scheme is the cornerstone of the Make in India project which aims to turn India
into a manufacturing hub and generate jobs and increase incomes and boost the overall
economy of the country.
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462. (d)
The concept of Common Services Centre (CSCs) was approved in 2006 as part of the
National e -Governance Plan. CSCs are set up in a public-private partnership mode, with
a designated state agency being a franchisor of sorts for village level entrepreneurs (VLEs)
to set up centres. VLEs must meet a set of minimum requirements. They must have
passed a matriculation-level examination by a recognized board, be fluent in reading and
writing the local language, and make arrangements for infrastructure. Presently there are
close to 2,00,000 CSCs across India.
CSCs help people apply online for a range of services — passport registration, PAN cards
and Aadhaar cards, banking correspondents, and a whole host of other certificates, and
without them people will have to visit a government office. CSC operators scan documents
and upload them through a portal to the relevant government office that will then send
back a completed certificate or card. They are like cybercafes, except they connect only to
Digital India.
CSCs are a cornerstone of the Digital India programme. They are the access points for
delivery of various electronic services to villages in India, thereby contributing to a
digitally and financially inclusive society. CSCs are more than service delivery points in
rural India. They are positioned as change agents, promoting rural entrepreneurship and
building rural capacities and livelihoods. They are enablers of community participation
and collective action for engendering social change through a bottom-up approach with
key focus on the rural citizen.
CSCs enable the three vision areas of the Digital India programme:
 Digital Infrastructure as a core utility to every citizen
 Governance and services on demand
 Digital empowerment of citizens
Over the past three or four years, a huge number of these centres have added services
like banking and insurance to their offerings. In a sense, they are an organic response to
the growth in demand for digitized government services that a static State machinery
cannot keep up with and the free market has seemingly ignored.
463. (b)
UDAN (Ude Desh ka Aam Naagrik) is an initiative by the government to connect the
country’s under-served and unserved airports. Under the Centre’s Regional Connectivity
Scheme (RCS), the operators will be extended viability gap funding (VGF) which will be
operational for three years from the date of starting operations in a specific UDAN route.
The selection of the operators will be based on the bidder asking for the minimum VGF.
Five airlines operators won bids in the first phase to operate on 128 routes which will be
connecting 70 airports, out of which 31 are unserved and 12 under-served. There will be
one operator operating the flights per route.
As per the scheme, the Centre will subsidize the losses incurred by airlines operating on
RCS routes so that the airlines charge a maximum of Rs. 2500 for an hour's flight (around
500 km). 80% of the subsidy will be collected by charging a levy of up to Rs. 8500 on each
departing flight of normal domestic airlines and the rest 20% will come from the respective
State governments.
464. (a)
The scope of the Index of Industrial Production (IIP) as recommended by the United
Nations Statistical Office (UNSO) includes mining, manufacturing, construction,
electricity, gas and water supply. But due to constraints of data availability, the IIP
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compiled in India has excluded construction, gas and water supply sectors. (And Forestry
is not part of industrial activity)
Base Year 2011-12 Index of Industrial Production (IIP)
Mining Manufacturing Electricity
Weights 14.373 77.633 7.994
465. (a)
SIDBI Make in India Soft Loan Fund for Micro, Small & Medium Enterprises (SMILE)
scheme:
The objective of the Scheme is to provide soft loan (mainly long-term loan) on relatively
soft terms to MSMEs to meet the required debt-equity ratio for establishment of an MSME
as also for pursuing opportunities for growth for existing MSMEs. The focus is on all the
identified 25 Make in India sectors or other sectors as may be added, in the Make in India
Programme.
Emphasis will be on covering new enterprises in the manufacturing as well as services

sector. Existing enterprises will also be covered which are undertaking expansion, to take
advantage of new emerging opportunities, as also undertaking modernization, technology
upgradation or other projects for growing their business.
466. (c)
Government of India in 2016 launched Hydrocarbon Exploration and Licensing Policy
(HELP) for the exploration and production (E&P) of oil and gas which will replace the New
Exploration Licensing Policy (NELP). The following are some of the important features of
the policy:
 A uniform/single license to enable the E&P operators to explore and extract
conventional and unconventional oil and gas resources including Coal Bed Methane,
Shale Gas/Oil, Tight gas, Gas hydrates and any other resource which falls within the
definition of "Petroleum" and "Natural Gas"
 Open Acreage Licensing Policy (OALP): Earlier E&P operators were forced to bid for
only those blocks which were chosen by the government. Now they can apply for
particular areas/blocks they deem to be attractive to invest in, and the Centre will
put those areas up for bids. This is more attractive for prospective operators because
in the past, the blocks chosen by the government often were large swathes of land or
sea in which only a small fraction had hydrocarbon reserves. By offering companies
the freedom to choose exactly the areas they want to explore, and their size, the
government has a better chance to woo serious energy investors in an effort to help
achieve a more cohesive framework of the country’s energy security.
 The E&P operators will have to bid for the blocks based on revenue sharing model
rather than profit sharing. Bidders will be required to quote % of revenue share to the
Govt. in their bids which will be a key parameter for selecting the winning bid. In this
model the operator will have to share the revenue with the government from the first
year of production notwithstanding the operator is making a profit or loss. This model
does not require auditing of costs incurred by the operator but is more risky for
investors as it requires sharing of the revenues with the government from the first
year itself before the operators have recovered their costs and even if they are making
losses.
 National Data Repository, which is envisaged as a centralized database of geological
and hydrocarbon information, in line with the Digital India initiative, will be available
to all. Besides allowing potential investors to make informed decisions, this will open
up a new sector in India. There are a number of companies around the world that
make it their business to simply explore hydrocarbon basins and sell the information
they gather. The new initiative seeks to incentivise such prospectors.
189
467. (b)
SEBI has introduced the 'Graded Surveillance Measure' to keep a tab on the
securities/shares of those companies which witness an abnormal price rise that is not
commensurate with the financial health and fundamentals of the company. The
underlying principle behind the graded surveillance framework is to alert and protect
investors trading in a security, which is seeing abnormal price movements. SEBI may put
shares of companies under the measure for suspected price rigging.
The main objective of these measures are to -

 Alert and advise investors to be extra cautious while dealing in these securities and
 Advise market participants to carry out necessary due diligence while dealing in these
securities
It became effective from March 2017
468. (c)
Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) scheme was launched in July 2015
for power sector reforms in rural areas with a view to ensuring round the clock electricity
supply to farmers and rural households. The following were the various objectives/
components of DDUGJY:
 Separation of agriculture and non-agriculture feeders

 Strengthening and augmentation of sub-transmission and distribution
infrastructure in rural areas, including metering at distribution transformers,
feeders and consumers end
 Completion of targets laid down under Rajiv Gandhi Grameen Vidyutikaran
Yojana (RGGVY) by subsuming RGGVY under DDUGJY (The RGGVY was
launched in April 2005 with an objective of providing access to electricity to all
rural households. Households belonging to BPL are provided connections free of
cost.)
Despite the government’s aggressive village electrification programme, the DDUGJY

launched in July 2015, under which 78% of 18,000 villages were electrified as in
September 2017 (Out of total 597,464 census villages, 594,547 villages (99.5%) were
electrified), it was realized that the problem of electricity ‘access’ wasn’t resolved. A village
is declared to be electrified if 10% of the households are given electricity along with public
places such as schools, panchayat office, health centres, dispensaries and community
centres.
With a large number of households still remaining without access to electricity, the
Government of India launched the SAUBHAGYA scheme in September 2017 which aims
at ensuring the coverage of households as opposed to villages (under DDUGJY). The
SAUBHAGYA scheme, with an outlay of Rs. 16,320 crore, funds the cost of last-mile
connectivity to willing households to help achieve the goal of lighting every household in
rural and urban areas (about 4 crore households) by 31 December 2018.
Under the SAUBHAGYA scheme, BPL households were provided free electricity
connections and the rest of the households not covered under BPL can avail it by paying
Rs 500 in 10 instalments of Rs50 each along with their monthly bill. The beneficiaries for
free electricity connections will be identified using Socio Economic and Caste Census
(SECC) 2011 data. For those household where the national electricity grid can’t reach,
households will be provided with solar power packs along with battery banks. State-run
Rural Electrification Corporation is the nodal agency for the scheme. There will be
no government subsidy for the monthly electricity consumption. 99.99% of
households have been electrified as on March 2020.
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469. (a)
470. (a)
Roll-on roll-off (ro-ro is an acronym for roll-on roll-off) ships are vessels designed to carry
wheeled cargo such as cars, trucks, trailers that are driven on and off the ship on their
own wheels or using a platform vehicle. (Earlier wheeled vehicles were carried as cargo
on oceangoing ships and were treated like any other cargo. Automobiles had their fuel
tank emptied and their batteries disconnected before being hoisted on to the ship which
was a difficult and tedious process and vehicles were subject to damage and could not be
used for routine/daily travel.)
On 23rd Oct 2017, Prime Minister inaugurated the first phase of the roll-on roll-off ferry
service (for conveying passenger and goods both) connecting Saurashtra with south
Gujarat.
471. (c)
There is no clear definition of what a shell company is in the Companies Act, or any other
Act. But typically, shell companies include multiple layers of companies that have been
created for the purpose of diverting money or for money laundering or tax avoidance. Most
shell companies do not have any active business operations and they do not manufacture
any product or deal in any product or render any service. They are mostly used to make
financial transactions. These types of corporations are not necessarily illegal, but they are
sometimes used illegitimately such as to disguise business ownership from law
enforcement or the public. Generally, these companies hold assets only on paper and not
in reality. These companies conduct almost no economic activity.
472. (b)
Pradhan Mantri Ujjwala Yojana (PMUY) is a scheme of the Ministry of Petroleum &
Natural Gas for providing LPG connections (and not the cylinder, as cylinders were
already subsidized before this scheme) to women from Below Poverty Line (BPL)
households. LPG connection under this Scheme shall be in the name of the women
belonging to the BPL family. The scheme aims to safeguard the health of women &
children by providing them with a clean cooking fuel – LPG, so that they do not have to
compromise their health in smoky kitchens or wander in unsafe areas collecting firewood.
Till now there are more than 8 crore beneficiaries.
473. (d)
The largest highway construction programme was launched under "National Highway
Development Grogramme (NHDP)" in 1998 by the then Prime Minister Atal Bihari
Vajpayee. NHDP spread across phase - I to phase - VII and had an aggregate length of
55,792 Kms. A large part has been completed and the rest will be subsumed under
Bharatmala Pariyojana.
Bharatmala Pariyojana is a new umbrella program for the highways sector that focuses
on optimizing efficiency of freight and passenger movement across the country by bridging
critical infrastructure gaps through effective interventions like:
 development of Economic Corridors
 Inter Corridors and Feeder Routes
 National Corridor Efficiency Improvement
 Border and International connectivity roads
 Coastal and Port connectivity roads
 Green-field expressways
A total of around 24,800 kms are being considered in Phase I. In addition, Phase I also
includes 10,000 kms of balance road works under NHDP. Estimated outlay for Phase I is
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Rs 5,35,000 crores spread over 5 years. The objective of the program is optimal resource
allocation for a holistic highway development/improvement initiative.
The project will be implemented through National Highway Authority of India, National
Highways and Infrastructure Development Corporation Limited (NHIDCL), Ministry of
Road, Transport and Highways and State PWDs.
474. (a)
"Invest India" is the National Investment Promotion and Facilitation Agency of India and
acts as the first point of reference for investors in India. Invest India is set up as a non-
profit venture under the Department for Promotion of Industry and Internal Trade (DPIIT),
Ministry of Commerce and Industries, Government of India.
Invest India is transforming the country’s investment climate by simplifying the business
environment for investors. Its experts, specializing across different countries, Indian
states and sectors, handhold investors through their investment lifecycle from pre-
investment to after-care. Invest India’s specialists provide multiple forms of support such
as market entry strategies, deep dive industry analysis, partner search and location
assessment, and policy advocacy with decision makers.
475. (b)
India Infrastructure Finance Company Limited (IIFCL) is a wholly owned Government of
India company set up in 2006 to provide long-term financial assistance to viable
infrastructure projects.
The sectors eligible for financial assistance from IIFCL are as per the Harmonized list of
Infrastructure Sub-Sectors as approved by the Government. These broadly include
transportation, energy, water, sanitation, communication, social and commercial
infrastructure.
IIFCL is registered as a "NBFC-ND-IFC" i.e. Non-Banking Financial Company - Non

Deposit - Infrastructure Finance Company. NBFCs have been classified into 'Deposit' and
'Non-Deposit (ND)' accepting. NBFCs are also classified as per what kind of activity they
conduct and one of the categories is 'Infrastructure Finance Company (IFC)'
476. (d)
In exercise of the powers conferred by sub section (i) of section 211 of the Companies Act,
2013, the Central Government established the Serious Fraud Investigation Office (SFIO)
on 21st of July, 2015. Earlier this office was established vide Government of India’s
Resolution dated 2nd July, 2003.
SFIO is a multi-disciplinary organization under Ministry of Corporate Affairs, consisting
of experts in the field of accountancy, forensic auditing, law, information technology,
investigation, company law, capital market and taxation for detecting and prosecuting or
recommending for prosecution white-collar crimes/frauds.
477. (a)
The Supreme Court of India in September 2014 had cancelled 204 coal mines/blocks
allocated to the various Government and Private Companies since 1993 under the
provisions of Coal Mines (Nationalisation) Act, 1973. To bring transparency and
accountability and to re-award these cancelled blocks and new blocks, the Coal Mines
(Special Provisions) Bill 2015 was passed by the Parliament which was notified as an Act
on 30.03.2015. Enabling (power to enforce a law may be at a later date) provisions had
been made in the Coal Mines (Special Provisions) Act, 2015 for allocation of coal mines
by way of auction for the sale of coal by private companies (sale of coal by government
companies was already allowed).
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Cabinet Committee on Economic Affairs (CCEA) on 20th Feb 2018 decided to open up the
coal sector to commercial mining by private entities in a game changing move that puts
an end to state-backed Coal India Ltd’s (CIL) monopoly. Now there will be no end use
restriction or price restriction for the coal that is mined from these blocks.
Under private commercial mining modalities approved by the Cabinet, coal blocks will be
allocated by “ascending forward auction” in which the winner will be determined by the
price per tonne of coal offered to the state government where the mine is located. The
amount accrued through the bids will be in addition to the royalty that the States get. All
the revenue from the sale of these blocks will go into coffers of the States where they are
located.
478. (a)
Open access is the non-discriminatory use of transmission and distribution
infrastructure of the licensees by consumers with demand greater than or equal to 1MW
for procuring electricity from the source of their choice.
479. (b)
It is a method of awarding projects by the government. Under this method, various bidders
submit their plan for the project and the company (bidder) whose project plan is accepted
by the govt. is given the opportunity to work on the project at the price quoted by the
lowest bidder. If it does not accept this, then the project is given to the lowest bidder.
480. (c)
Airport Authority of India (AAI) awarded bids for Ahmedabad, Jaipur, Lucknow,
Thiruvananthpuram, Mangaluru and Guwahati in Feb 2019 on per passenger fee basis.
AAI selected Adani Enterprises for all the six airports as Adani quoted the highest bid (per
passenger fee), and now it will have to give the fee to AAI on per passenger basis depending
on how many passengers travel through that ariport.
Recently, a new airport in the NCR region, “Yamuna International Airport Private Limited
(YIAPL)” was bid out on the same model to Zurich International. The company offered Rs.
400.97 per passenger fee to AAI.
481. (c)
MSME sector contributes approximately 30% to the GDP of the country and 40% to the
exports. The MSME sector comprises of over 6 crore enterprises and employs 11 crore
people (approx. 26% of the workforce).
482. (a)
MCA21 is an e-Governance initiative of Ministry of Company Affairs (MCA), Government
of India that enables an easy and secure access of the MCA services to the corporate
entities, professionals and citizens of India. Core philosophy is to encompass and facilitate
stakeholders for access to database which would be of immense value for business
operations.
483. (d)
Under the Concessional Finance Scheme (CFS), Govt. of India supports Indian entities
bidding for strategically important infrastructure projects abroad.
The Scheme is presently being operated through the Export-Import (EXIM) Bank of India,
which raises resources from the market to provide concessional finance to the Indian
entities abroad. Govt. of India provides counter guarantee and interest equalization
(subsidy) support of 2% to the EXIM Bank.
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Under the Scheme, Ministry of External Affairs (MEA) selects the specific projects keeping
in view strategic interest of India and sends the same to Department of Economic Affairs
(DEA). There is an inter-ministerial committee which approves the project for availing
CFS. Once approved by the Committee, DEA issues a formal letter to EXIM Bank
conveying approval for financing of the project under CFS.
Prior to the introduction of CFS, Indian entities were not able to bid for large projects
abroad since the cost of financing was very high for them and bidders from other countries
such as China, Japan, Europe and US were able to provide credit at superior terms, i.e.,
lower interest rate and longer tenures which works to the advantage of bidders from those
countries.
484. (c)
Based on the recommendations of the Rangarajan Commission, the government through
a resolution dated 1st June 2005 set up the National Statistical Commission (NSC) which
became effective from 12th July 2006. The mandate of the NSC is to evolve policies,
priorities and standards in statistical matters. The Chief Statistician of India, the post
created specifically as the Head of the National Statistical Office is the Secretary of the
Commission. He is also the Secretary to the Government of India in the Ministry of
Statistics and Programme Implementation.
485. (b)
The Securities and Exchange Board of India was established on April 12, 1992 in
accordance with the provisions of the Securities and Exchange Board of India Act, 1992.
As per the section 4 of IRDAI Act 1999, Insurance Regulatory and Development Authority
of India (IRDAI) was constituted by an act of parliament, Insurance Regulatory and
Development Authority Act 1999.
The Pension Fund Regulatory Development Authority (PFRDA) Act was passed in
September, 2013 and the same was notified on 1st February, 2014. PFRDA is regulating
National Pension System, subscribed by employees of Govt. of India, State Governments
and by employees of private institutions, self-employed professionals and unorganized
sectors.
486. (a)
A circular economy is an industrial system that is restorative or regenerative by intention
and design. It replaces the end-of-life concept with restoration, shifts towards the use of
renewable energy, eliminates the use of toxic chemicals, which impair reuse and return
to the biosphere, and aims for the elimination of waste through the superior design of
materials, products, systems and business models.
487. (b)
A bilateral netting agreement enables two counterparties in a financial contract to offset
claims against each other to determine a single net payment obligation due from one
counterparty to the other. As of now, bilateral netting for financial contracts is not allowed
in India and government is planning to introduce a bill. (No need to go in detail)
488. (c)
NHAI is giving the already public-funded/constructed highway projects through the TOT
model to private players. NHAI is transferring these operational projects on a long-term
lease basis to domestic and foreign investors, so that it can use the upfront receivables
exclusively for funding construction of other/new highways. Under Toll-Operate-Transfer
(TOT) model, bidder quoting the maximum upfront amount (to be given to NHAI) wins the
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bid. The successful bidder will be responsible to collect the toll for the lease period
(generally for 30 years) and will operate and maintain the road. (It is a PPP model)
489. (c)
Generation Capacity from various sources as on 31.12.2019
Coal Gas Nuclear Renewable Total
(Hydro, Solar, Wind)
55.8% 6.8% 2% 35.4% 100%
(205 GW) (25 GW) (7 GW) (130 GW) 367 GW
As per the new classification of government, all hydro projects, big or small come under
renewable energy.
490. (d)
Government established NIIF in 2015 with the aim to attract investment from both
domestic and international sources for funding commercially viable Greenfield,
Brownfield and stalled projects in infrastructure sector. NIIF has been formed as a trust
and is registered with SEBI under Category II of Alternative Investment Fund (for tax
benefit). It is basically a quasi-sovereign wealth fund as government holds only 49%
ownership.
NIIF will get funds from:

 Overseas sovereign/quasi-sovereign/ multilateral/bilateral investors through
equity. Cash rich central PSU, provident funds, insurance funds can also invest
in NIIF over and above Govt. of India share.
 Market borrowings (debt).
NIIF will invest in:

 Infrastructure projects through equity and debt both; and
 Non-Banking Financial Companies (NBFCs) and Financial Institutions (FIs)
involved in infrastructure financing through equity.
Structure of NIIF
Sovereign wealth funds, Pension
Govt. of India funds, Multilateral institutions
equity (49%) (equity 51%)
Market
Source of funds for (debt)
Borrowings
..................................................
NIIF NIIF ..........................................................
Target
equity/debt equity
Infrastructure NBFCs/FIs involved in infra

Projects financing
491. (b)
Apart from the higher capital cost of providing telecom services in rural and remote areas,
these areas also generate lower revenue due to lower population density, low income and
lack of commercial activity. Thus, normal market forces alone would not direct the
telecom sector to adequately serve backward and rural areas. Keeping in mind the
inadequacy of the market mechanism to serve rural and inaccessible areas on one hand
and the importance of providing vital telecom connectivity on the other, most countries of
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the world have put in place policies to provide Universal Access and Universal Service to
ICT.
The New Telecom Policy (of India)- 1999 (NTP'99) provided that the resources for meeting
the Universal Service Obligation (USO) would be raised through a 'Universal Access Levy
(UAL)', which would be a percentage of the revenue earned by the telecom operators under
various licenses. The Universal Service Support Policy came into effect from 01.04.2002.
The Indian Telegraph (Amendment) Act, 2003 giving statutory status to the Universal
Service Obligation Fund (USOF) was passed by both Houses of Parliament in December
2003. USOF is under Dept. of Telecommunication, Ministry of Communication and is
being used to connect villages in rural areas under BharatNet project.
USOF provides widespread and non-discriminatory access to quality ICT services at

affordable prices to people in rural and remote areas. It provides an effective and powerful
linkage to the hinterland thereby mainstreaming the population of rural and remote parts
of the country. It ensures that universal services are provided in an economically efficient
manner. It also ensures that by developing hitherto unconnected areas, the benefits of
inclusive growth are reaped by our nation, bringing in its wake rapid socio-economic
development and improved standards of living.
492. (c)
Bharat Net Project is the new name of National Optical Fibre Network (NOFN) which was
launched in October, 2011 to provide broadband connectivity to all 2.5 Gram Panchayats.
It was renamed to BharatNet in 2015.
The project is planned to be implemented in two phases by Central Public Sector

Enterprises (CPSEs) like...... BSNL, BBNL, PGCIL, RailTel.
The project (infrastructure) is being implemented through Universal Service Obligation

Fund (USOF)
We need to understand that providing the Network Infrastructure of Optical Fibre is

separate and provision of internet services using that infrastructure is separate.
Network Infrastructure is being provided by CPSEs like BSNL/BBNL/PGCIL/RailTel and
Operation and Maintenance (O&M) will also be done by these agencies, but Internet
services will be provided by Private Internet Service Providers (ISP) or Common Service
Centres (CSCs) or Village Level Entrepreneurs.
Wifi Services on BharatNet is free till March 2020, but after that ISP/CSC/ Village level
entrepreneurs will start charging.
The fibre infrastructure which was being built through BSNL is now lagging and there are
issues and that is why Govt. and NITI Aayog decided to bring in Private Players on PPP
model to create the Fibre Infrastructure. For example, Government will ask a private
player that you have to create and operate and maintain the fibre infrastructure for 25
years and you tell me how much money you want and the private player asking for
Minimum Money will be given the project. This is called Viability Gap Funding (VGF) and
the VGF money will be provided by Govt from the USOF.
Bharat Broadband Network Limited (BBNL) is a Special Purpose Vehicle set up under
Companies Act 2013 by Government of India under the Administrative Ministry of
Communication & IT, Department of Telecommunications for the establishment,
management and operation of National Optical Fibre Network (NOFN)/Bharatnet. It has
196
been mandated to create the National Optical Fiber Network (NOFN) in India for a total of
around 2,50,000 Gram Panchayats spread over 6,600 Blocks and 641 Districts.
493. (c)
Ministry of MSME is implementing a ‘Scheme of Fund for Regeneration of Traditional
Industries’ (SFURTI) Scheme under which financial support is being provided for setting
up of traditional industries clusters viz. Khadi, Coir & Village industries clusters.
The objectives of the SFURTI Scheme are:
 To develop clusters of traditional industries in the country over a period of five years.
 To make traditional industries more competitive, market-driven, productive and
profitable.
 To strengthen the local governance system of industry clusters, with active
participation of the local stakeholders, so that they are enabled to development
initiatives.
 To build up innovated and traditional skills, improved technologies, advanced
processes, market intelligence and new models of public-private partnerships, so as
to gradually replicate similar models of cluster-based regenerated traditional
industries.
494. (d)
Kisan Urja Suraksha evam Utthaan Mahabhiyan (KUSUM) Scheme is for harnessing solar
power for rural India. Solar water pumps to be installed in remote areas for irrigation
needs Farmers can get extra income by selling surplus solar power to DISCOMs. The
following are the main components of the scheme:
 Installation of grid-connected solar power plants each of capacity up to 2 MW in the

rural areas;
 Installation of standalone off-grid solar water pumps to fulfil irrigation needs of
farmers not connected to grid;
 Solarization of existing grid-connected agriculture pumps to make farmers
independent of grid supply and also enable them to sell surplus solar power generated
to DISCOM and get extra income; and
 Solarization of tube-wells and lift irrigation projects of Government sector
495. (d)
The main objectives of establishment of SEZs are:
 Promotion of exports of goods and services
 Generation of additional economic activity
 Promotion of investment from domestic and foreign sources
 Creation of employment opportunities
496. (d)
“Domestic Tariff Area” (DTA) means the whole of India (including the territorial waters
and continental shelf) but does not include the areas of the Special Economic Zones
(SEZs).
“Special Economic Zone” (SEZ) is a specifically delineated duty-free enclave and shall
be deemed to be foreign territory for the purposes of trade operations and duties and
tariffs. SEZ units may be set up for manufacture of goods and rendering of services. Goods
and services going into the SEZ area from DTA shall be treated as exports and goods
coming from the SEZ area into DTA shall be treated as if these are being imported.
Some important points related to duties in SEZs:
197
 SEZ units may import/procure goods and services from DTA without payment of duty
for setting up, operation and maintenance of units in the Zone.
 SEZ unit may sell goods, including by-products, and services in DTA in accordance
with the import policy in force, on payment of applicable (customs etc.) duty.
 SEZ unit shall be a positive Net Foreign exchange Earner. Net Foreign Exchange
Earning (NFE) shall be calculated cumulatively for a period of five years from the
commencement of production.
Ref: (All the above content has been taken from the official sources below)
http://dgftcom.nic.in/exim/2000/policy/pol05/chap-7.htm
https://commerce.gov.in/writereaddata/aboutus/actspdfs/SEZ%20Act,%202005.pdf
497. (c)
Following the power generation capacity as on October 2019:
Private = 46.5%
States = 28.4%
Central = 25.1%
Ref: Economic Survey 2019-20, Vol 2, Page 246
498. (b)
The Airports Economic Regulatory Authority (AERA) is a statutory body constituted under
the Airports Economic Regulatory Authority of India Act, 2008 with its head office at
Delhi. The statutory functions of the AERA as enshrined in the Airports Economic
Regulatory Authority of India Act, 2008 are as below:
 To determine the tariff for the aeronautical services taking into consideration of the
various expenses
 To determine the amount of the Development Fees in respect of major airports.
 To determine the amount of Passenger Service Fee
 To monitor the set Performance Standards relating to quality, continuity and
reliability of service
Airports Authority of India (AAI) was constituted by an Act of Parliament and came into
being on 1st April 1995 and it is entrusted with the responsibility of creating,
upgrading, maintaining and managing civil aviation infrastructure both on the
ground and air space in the country.
The Directorate General of Civil Aviation (DGCA) is the regulatory body in the field of
Civil Aviation, primarily dealing with safety issues. It is responsible for regulation of
air transport services to/from/within India and for enforcement of civil air regulations,
air safety, and airworthiness standards. The DGCA also co-ordinates all regulatory
functions with the International Civil Aviation Organisation (ICAO).
499. (b)
Credit Rating Agencies (CRAs) are regulated by SEBI. In light of the COVID-19 crisis,
SEBI directed CRAs that, if the default by the companies (which are listed on the exchange
and which has been provided Credit Rating by any of the CRAs) is because of solely due
to COVID-19 LOCKDOWN then the CRAs should not recognize it as a DEFAULT and
should not degrade their rating.
198
The definition of NPA is given by RBI for financial institutions regulated by RBI like banks
and NBFCs. But some (financial institutions) like Mutual Funds, Exchange Traded Funds
(ETFs), are also regulated by SEBI for which NPA definition has been given by SEBI.
500. (b)
Force Majeure is a French phrase that means a ‘superior force’. It is an unforeseeable
circumstance that prevent someone from fulfilling a contract. It is a contractual provision
agreed upon between parties. The occurrence of a force majeure event protects a party
from liability for its failure to perform a contractual obligation. Typically, force majeure
events include an Act of God or natural disasters, war or war-like situations, epidemics,
pandemics, etc. The intention of a force majeure clause is to save the performing party
from the consequences of something over which it has no control. Force Majeure is an
exception to what would otherwise amount to a breach of contract. This term is generally
used in commercial contracts.
199
1. The following chart represents gross fixed investment (as % of GDP) of India in last few years.
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20*
33.40% 31.30% 30.10% 28.50% 28.50% 28.50% 29.30% 28.10%
34.00%
33.40%
33.00%
Fixed Investment as % of GDP
32.00%
31.30%
31.00%
30.00% 30.10%
29.30%
29.00%
28.50% 28.50% 28.50%
28.00% 28.10%
27.00%
26.00%
25.00%
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
2. The following chart represents Real GDP growth rate of India in the last few years.
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20*
4.50% 6.60% 7.20% 8.20% 7.00% 6.50% 6.80% 5.00%
9.00%
Real GDP growth rate
8.00% 8.20%
7.00% 7.20% 7.00%

6.60% 6.80%
6.50%
6.00%
5.00% 5.00%
4.50%
4.00%
3.00%
2.00%
1.00%
Year
0.00%
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
200
3. Following chart represents agriculture (and allied) sector real GDP growth rate in last few years
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20*
5.6% -0.2% 0.6% 6.3% 5.0% 2.90% 2.8%
7.0%
Real Agri GDP Growth rate
6.3%
6.0%
5.6%
5.0% 5.0%
4.0%
3.0% 2.90% 2.8%
2.0%
1.0%
0.6%
0.0%
-0.2%
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
-1.0%
4. The following chart represents RBI’s surplus transfer to central government in Rs. Crores.
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
18759 15009 16010 33010 52679 65896 65876 30659 50000 176000
RBI surplus transfer to Government in Rs. crores

200000
180000
160000
140000
120000
100000
80000
60000
40000
20000
0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
201
5. The following chart represents Fiscal Deficit (as % of GDP) of Govt. of India for last few years.
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20*
5.8% 4.9% 4.5% 4.1% 3.9% 3.5% 3.5% 3.4% 3.80%
7.0%
6.0%
5.8%
5.0% 4.9%
4.5%
4.0% 4.1%
3.9% 3.80%
3.5% 3.5% 3.4%
3.0%
2.0%
1.0%
0.0%
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
6. Following chart represents Fiscal Deficit (as % of GDP) of State Governments for last few years.
2015-16 2016-17 2017-18 2018-19 2019-20*
3.10% 3.50% 2.40% 2.90% 2.60%
4.00%
3.50% 3.50%
3.00% 3.10%
2.90%
2.50% 2.60%
2.40%
2.00%
1.50%
1.00%
0.50%
0.00%
2015-16 2016-17 2017-18 2018-19 2019-20
202
7. The following chart represents Debt to GDP ratio of Centre and states for the last few years:
Debt/GDP 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Centre 52.2% 51.4% 51.5% 49.6% 49.6% 48.7%
State 22.3% 22.0% 23.7% 25.1% 25.1% 24.8%
60.0%
Centre
52.2% 51.4% 51.5%
50.0% 49.6% 49.6% 48.7%
40.0%
States
30.0%
23.7% 25.1% 25.1% 24.8%

22.3% 22.0%
20.0%
10.0%
0.0%
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
8. Following chart represents India’s External Debt/GDP (in % left side) and Forex Reserves
(Billion $ Right side).
203
9. Following chart represents the net FDI in the last few years in India in Billion dollars.
Year 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
FDI 20 6 34.9 36 35.6 30.3 30.7
FDI (net of inflow and outflow) in India (Billion $)

40
35
30
25
20
15
10
0
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
10. Following chart represents the net FPI in the last few years in India in Billion dollars.
Year 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
FPI 26 0 40 -4.5 7.6 22.1 -2.4
FPI (net of inflow and outflow) in India (Billion $)

45
40
35
30
25
20
15
10
5
0
-5 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
-10
204
11. Following chart represents India’s exports of goods and services as per cent of GDP (calendar
year, data from World Bank)
12. Following chart represents India’s imports of goods and services as per cent of GDP. (calendar
year, data from World Bank)
205
13. Following chart represents India’s merchandise (goods) exports as per cent of GDP.
India's merchandise exports as percent of GDP

18.00%
16.70% 16.50% 16.90%
16.00%
15.20%
14.00%
12.00% 12.50% 12.10% 12.10%
11.50% 11.30%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
14. Following chart represents India’s merchandise (goods) imports as percent of GDP.
206
15. Following chart represents India’s services exports as percent of GDP
16. Following chart represents India’s services imports as percent of GDP
From the above two charts, it is clear that services exports is always greater than
services imports.
207
17. Following chart represents India’s trade (exports plus imports) of goods and services as a per
cent of GDP. (calendar year, data from World Bank)
Thanks
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Specially designed for UPSC Prelims 2020

SHUBHRA RANJAN IAS STUDY

SN DESCRIPTION Q. No. Page No.

Every Chapter includes questions on concept & current both

2 Money, Banking and Financial Institutions 46 - 267 8 - 40

3 Budgeting Process and Tax 268 - 343 41 – 52

4 Agriculture, Subsidy and Food Processing 344 - 381 53 - 58

5 Inclusive growth and employment 382 - 410 59 - 62

6 World Organizations 411 - 444 63 - 67

7 Infra & Industries, Budget, Eco Survey, FC 445 - 500 68 - 75

9 Explanatory Notes 78 - 199

10 Trends 200 - 208

Note for the Students

 Any further information/clarification will be updated on the above channel. And

1. Which of the following are included as 5. Consider the following statements

(a) One month Select the correct answer using the

(i) Production of consumption goods 21. Which of the following statements

(a) (i) only

44. Consider the following statements

(i) Value of export of services is equal

Select the correct answer using the

45. Consider the following statements

(i) Exports (of goods and services) as a

Select the correct answer using the

46. Consider the following statements interest-free balances in order to

(a) An overvalued currency will boost (i) There is an international authority

(a) RBI Governor (a) (i) only

(a) (i) only Select the correct answer using the

89. Which of the following are (i) It will be responsible for

90. Mergers and Acquisitions of 93. Consider the following statements

(a) (i) only (b) (ii) only

(i) Relying on short term financing to

(c) (ii), (iii) only (a) (i) only

(i) It will provide liquidity to investors

(iv) Indirect and corporate taxes would (b) (ii) only

(i) Money lying with the government

146. The "Consumer Confidence Survey" (d) All of the above

(a) (i) & (ii) only

160. "Government offers above market (i) Forex swap

164. Which of the following tools RBI

(b) (iii) only

(b) The output of goods and services (a) Rate of Interest

(i) Increase in effective demand (i) Deflation

(a) Increase in aggregate demand (i) It increases consumption levels

(i) Demand pull inflation (i) Higher employment leads to higher

(iii) It resolves customer complaints (c) Small Finance Banks

199. Which of the statements are correct

(a) Regional Rural Banks (RRBs) (i) It is applicable for Urban-

(a) (i) only (c) (ii), (iii) & (iv) only

(i) It is applicable for all govt. and (i) Non-Performing Assets of

217. Foreign Direct Investment (FDI) in

(i) A Foreign Portfolio Investor can (b) Department for Promotion of

(a) Department of Economic Affairs

Select the correct answer using the

(a) Department of Investment and (i) Masala bonds

(b) (ii) only (iii) Liquidity crunch in the economy

262. Consider the following statements: (i) It is an agreement between a tax

Select the correct answer using the (a) (i) only