The Prayas ePathshala

Exams आसान है !

01 September 2022

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Q1.  Consider the following statements regarding the Importance of Fiscal Policy in India:

  • Fiscal policy plays a key role in elevating the rate of capital formation both in the public and private sectors.
  • Fiscal policy aims to minimise the imbalance in the dispersal of income and wealth.
  • Fiscal policy helps in providing stimulus to elevate the savings rate.

Which of the above statements is/are correct?

  1. 1, 2
  2. 1, 3
  3. 2, 3
  4. 1, 2, 3

   D –  EXPLANATION

Importance of Fiscal Policy in India:

  • In a country like India, fiscal policy plays a key role in elevating the rate of capital formation both in the public and private sectors.
  • Through taxation, the fiscal policy helps mobilise considerable amount of resources for financing its numerous projects.
  • Fiscal policy also helps in providing stimulus to elevate the savings rate.
  • The fiscal policy gives adequate incentives to the private sector to expand its activities.
  • Fiscal policy aims to minimise the imbalance in the dispersal of income and wealth.

Q2. Consider the following statements:

  • Primary deficit implies that the government is unable to contain recurring expenditure such as subsidies and other discretionary expenditures within the limits of recurring non-debt revenue.
  • Increasing primary deficit will lead to higher revenue deficit and unsustainable debt servicing in future.

Which of the above statements is/are incorrect?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

D – EXPLANATION

Primary deficit is the revenue deficit net of interest payments and the implication is that the government is unable to contain recurring expenditure such as subsidies and other discretionary expenditures within the limits of recurring non-debt revenue. So, the primary deficit ratio is the leading indicator for the revenue deficit ratio to follow and increasing primary deficit is the surest route to higher revenue deficit and unsustainable debt servicing in future.

Q3. Consider the following statements regarding Variable Rate Reverse Repo (VRRR) auction:

  • Reserve Bank of India (RBI) conducts Variable Rate Reverse Repo (VRRR) auction to absorb liquidity in the economy.
  • It is usually conducted for a shorter period, say less than 3 days.

Which of the above statements is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

A – EXPLANATION

The Reserve Bank of India (RBI) has increased the amount of variable rate reverse repo (VRRR) auctions in December, as it is shifting out of the fixed-rate overnight reverse repo auction and re-establishing VRRR as the main liquidity management operations. The operations of 14-day VRRR would continue to be complemented by longer-term VRRRs, the size and maturities of which will be decided based on continuous assessment.

Q4. Consider the following statements regarding Goods and Services Tax (GST):

  • GST is designed on the principle of destination-based consumption taxation, with seamless provision for input tax credit.
  • GST Council is the key decision-making body, chaired by the Union Finance Minister with a Minister of State in charge of Finance and the Finance Ministers of States as members.
  • GST is applicable to all goods and services except specified petroleum products.

Which of the above statements is/are correct?

  1. 1 only
  2. 1, 2
  3. 1, 3
  4. 1, 2, 3 

B – EXPLANATION

  • India’s GST architecture is built on the firm foundations of a GST Council and the GST Network (GSTN).
  • The first is the key decision-making body, chaired by the Union Finance Minister with a Minister of State in charge of Finance and the Finance Ministers of States as members. GSTN generates high frequency data and subjects them to analytics for informed policy making. Designed on the principle of destination-based consumption taxation, with seamless provision for input tax credit.
  • GST is applicable to all goods and services except alcohol for human consumption and five specified petroleum products with a common threshold exemption applicable to both CGST and SGST.

Q5. Consider the following statements regarding India’s gold imports:

  • India is the largest importer of gold in the world.
  • Majority of the gold demand is due to RBI’s requirements.

Which of the above statements is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2     

A – EXPLANATION

India is the largest importer of gold, which mainly caters to the demand of the jewellery industry. In volume terms, the country imports 800-900 tonnes of gold annually.

Q6. Consider the following statements:

  • At present India is among the top five largest importing nations in the world.
  • At present India’s share in global GDP is around 10 percent.

Which of the above statements is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

D – EXPLANATION

With a growing middle class and its rising discretionary spending, India will become the world’s third largest importer by 2050 with a share of 5.9% of global imports, right behind China and the US, a new report said. At present, India is ranked eighth among largest importing nations with a 2.8% import share and is set to become the fourth largest importer by 2030. At present, India is ranked fifth in size of world’s economies with a share of 3.3% in global GDP.

Q7. Consider the following statements regarding Hedge Funds:

  • Hedge funds are included in the category of Alternative Investment Fund (AIF).
  • These funds are not regulated by SEBI.

Which of the above statements is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

A – EXPLANATION

Hedge funds are included under Category III Alternative Investment Fund (AIFs). These are     regulated by SEBI.

Q8. Consider the following statements regarding Credit / Debit Card tokenisation:

  • Tokenisation is a process in which the customer would need to manually key in their card details each time they complete an online purchase.
  • Tokenisation would allow online purchases to go through without exposing card details, in a bid to improve data security.

Which of the above statements is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

B – EXPLANATION

Tokenisation is a process by which card details are replaced by a unique code or token, generated by an algorithm, allowing online purchases to go through without exposing card details, in a bid to improve data security.

The RBI has ordered all companies in India to purge saved credit and debit card data from their systems from Jan. 1, 2022.

Opting out of tokenisation would mean a customer would need to manually key in their card details each time they completed an online purchase.

Q9. Movements in the foreign currency assets (FCA) in India occur mainly on account of:

  • Purchase and sale of foreign exchange by the RBI
  • Income arising out of the deployment of the foreign exchange reserves
  • External aid receipts of the Central Government
  • Effects of revaluation of the assets

Select the correct answer code:

  1. 1, 2, 3
  2. 1, 3, 4
  3. 2, 3, 4
  4. 1, 2, 3, 4

 D – EXPLANATION

“Movements in the FCA occur mainly on account of purchases and sales of foreign exchange by the RBI, income arising out of the deployment of the foreign exchange reserves, external aid receipts of the Central Government and the effects of revaluation of the assets,”

Q10. In India, in the last 10 years the maximum number of elephants were killed due to:

  1. Train hits
  2. Poaching
  3. Electrocution
  4. Poisoning

Explanation: C

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