EDITORIALS & ARTICLES

Hit List Questions 13 - PPP 100 PRELIMS 2024 - 31

Questions & Explanations

1.

Palma ratio​​ defines

(a) Inequality of income

(b) Cryptocoins availability

(c) Volatility of Stock market

(d) Twin Deficit problem

Note:

https://www.schoolofeconomics.net/palma-ratio/

https://www.thehindubusinessline.com/opinion/columns/c-p-chandrasekhar/world-incomes-have-risen-the-wrong-way/article23357342.ece

A

2.

In the recent times, Indian companies have aggressively pursued ‘deleveraging’. Which of the following correctly defines ‘deleveraging’?.

(a) Converting their debt into equity

(b) Reducing the debt by selling assets of the companies

(c) Reducing the promoter’s equity in the company

(d) Increasing debt to fund business expansion plans

Note:

https://www.indiatoday.in/business/story/indian-companies-in-good-credit-shape-economic-growth-global-rating-agency-2401671-2023-07-04

According to a report by S&P Global Ratings, the companies tracked in India are in a favorable

credit position, supported by robust underlying growth and accommodative balance sheets.

The report highlights the country''s strong economic growth, which is projected to reach 6% in 2023

and 6.9% in 2024, making it the highest in the region. Additionally, the presence of strong onshore

liquidity helps counterbalance the challenges posed by tougher external-funding conditions.

While companies continue to focus on debt reduction, the pace of deleveraging may slow due to

increased capital expenditure.

Deleveraging refers to the process of reducing or eliminating debt in order to improve the financial

stability of an individual, company, or economy. It typically involves decreasing the ratio of debt to

equity or assets, thereby reducing the overall leverage or indebtedness.

B

3.

Consider the following statements w.r.t. Lambani Art:

1. It works on the principle of recycle and reuse.

2. It is yet to receive Geographical Indication tag.

3. The Lambani community is mainly present in Kerala.

How many statements given above is/are correct?

(a) Only One

(b) Only Two

(c) All the three

(d) None of the statements

Note:

https://indianexpress.com/article/lifestyle/art-and-culture/lambani-artisans-guiness-world-record-highest-number-embroidery-patches-8823918/

A

4.

India & Australia are part of

1. G20

2. QUAD

3. Economic Cooperation and Trade Agreement

(a) 1 and 2 only

(b) 2 and 3 only

(c) 2 only

(d) 1, 2 and 3

Note:

https://www.thehindu.com/news/national/india-australia-aim-to-boost-economic-defence-ties-at-first-summit-of-pms/article66594755.ece

D

5.

Consider the following w.r.t. ''Sovereign Green Bonds'':

1. They will be auctioned by Ministry of Commerce.

2. These bonds will be a debt on Govt. of India and will be reflected in Capital Receipts in the Budget.

3. India’s Sovereign Green Bonds Framework was first announced in the Union Budget 2022-23.

Which of the above are correct?

(a) 1 and 3 only

(b) 1 and 2 only

(c) 2 and 3 only

(d) 1, 2 and 3

Note:

  • The Reserve Bank of India (RBI) said that the maiden Sovereign Green Bonds (SGrBs) would be issued in two tranches for an aggregate amount of Rs 16,000 crore.
  • The RBI will auction 5-year and 10-year green bonds worth Rs 4,000 crore each on 25 January and on 9 February.
  • The proceeds will be utilised for funding public sector projects seeking to reduce carbon emissions.

In Union Budget 2022-23, the Finance Minister Nirmala Sitharaman had announced that sovereign green bonds will be issued for mobilising resources for ‘green projects’.

  • Prior to that, Prime Minister Narendra Modi at COP26 in November 2021 had announced India’s commitments under ‘Panchamrit’ to reduce carbon emissions.
    • Panchamrit is a set of five commitments that the Prime Minister made at the Conference of Parties (COP26) held at Glasgow, UK.
    • These five commitments are –
      • To raise the non-fossil fuel based energy capacity of the country to 500 GW by 2030.
      • By 2030, 50% of the country’s energy requirements would be met using renewable energy sources.
      • The country will reduce the total projected carbon emission by one billion tonnes between now and the year 2030.
      • The carbon intensity of the economy would be reduced to less than 45% by 2030.
      • India would become carbon neutral and achieve net zero emissions by the year 2070.

Green Bonds

  • Green bonds are issued by companies, countries and multilateral organisations to exclusively fund projects that have positive environmental or climate benefits and provide investors with fixed income payments.
  • The projects can include renewable energy, clean transportation and green buildings, among others.

Example of Green Bonds

  • The World Bank is a major issuer of green bonds and issued $14.4 billion of green bonds between 2008 and 2020.
  • These funds have been used to support 111 projects around the world, largely in renewable energy and efficiency (33%), clean transportation (27%), and agriculture and land use (15%).
  • By the end of 2020, 24 national governments had issued Sovereign Green, Social and Sustainability bonds totalling a cumulative $111 billion.

India’s Sovereign Green Bonds Framework

  • First announced in the Union Budget 2022-23, the proceeds of these green bonds will be issued for mobilising resources for green infrastructure.
  • Aim –
    • To mobilise Rs 16,000 crore through the issuance of green bonds in the current fiscal ending March 2023.
  • Under the framework, the Finance Ministry will, every year, inform the RBI about spending on green projects for which the funds raised through these bonds will be used.

Features of the SGrBs

  • Issuance Method –
    • SGrBs will be issued through Uniform Price Auction (a public sale in which a fixed number of similar things are sold at the same price).
  • Eligibility for Repurchase Transactions (Repo) –
    • SGrBs will be eligible for Repurchase Transactions (Repo).
    • SGrBs will also be reckoned as eligible investment for Statutory Liquidity Ratio (SLR) purpose.
  • Tradability –
    • SGrBs will be eligible for trading in the secondary market.
  • Investment by Non-residents –
    • SGrBs will be designated as specified securities under the ‘Fully Accessible Route’ for investment in Government Securities by non-residents.

Eligible Projects:

  • All eligible green expenditures will include public expenditure undertaken by the government in the form of investment, subsidies, grants-in-aid, or tax foregone (or a combination of all or some of these) or select operational expenditures.
  • R&D expenditures in public sector projects that help in reducing the carbon intensity of the economy and enable country to meet its Sustainable Development Goals (SDGs) are also included in the framework.
  • The eligible expenditures will be limited to government expenditures that occurred maximum 12 months prior to issuance of the green bonds.
  • Sectors not included –
    • Nuclear power generation, landfill projects, alcohol/weapons/tobacco/gaming/palm oil industries and hydropower plants larger than 25 MW have been excluded from the framework.

Where will the proceeds go?

  • The framework sets forth the obligations of the Government of India as a green bond issuer.
  • The proceeds from the green bonds issuance will be deposited in the Consolidated Fund of India (CFI) in line with the regular treasury policy, and then funds from the CFI will be made available for the eligible green projects.

Implementing Agency:

  • The Ministry of Finance has constituted a Green Finance Working Committee (GFWC) including members from relevant ministries and chaired by the Chief Economic Advisor.
  • The GFWC will meet at least twice a year to support the Ministry of Finance with selection and evaluation of projects and other work related to the Framework.

C

6.

Mill-wise Minimum Indicative Export Quotas (MIEQ) is applicable to

1. Sugar mills

2. Cotton mills

3. Paper Mills

(a) 1 only

(b) 2 only

(c) 2 and 3 only

(d) 1, 2 and 3

Note:

https://www.thehindu.com/business/agri-business/explained-what-is-the-dispute-about-sugar-subsidies-at-wto/article67014835.ece

A

7.

Consider the following statements w.r.t. Shaheed Laxman Nayak:

1. He was a part of Quit India Movement.

2. He was a tribal activist of the Bhumia tribe of Odisha.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Note:

https://www.mintageworld.com/media/detail/16171-remembering-shaheed-laxman-nayak-on-his-death-anniversary/

C

8.

1. It a grouping of India, Sri Lanka, the Maldives and Mauritius.

2. Bangladesh and the Seychelles are its observers.

Which of the statements given above is/are correct w.r.t. Colombo Security Conclave?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Note:

https://www.orfonline.org/expert-speak/the-colombo-security-conclave/

C

9.

Triffin dilemma is best described by

(a) Global Tax devolution defect in carbon trading

(b) An effect of internationalisation of a currency

(c) Oil payment issues durig war times

(d) Increasing expenditure for arms escalation.

Note:

https://www.thehindu.com/business/Economy/internationalisation-of-rupee-poses-challenge-of-excess-exchange-rate-volatility-says-rbi-group/article67046102.ece

The global economic system has often been based on an asymmetric relationship of an anchor economy — currently the US — that runs persistent current account deficits even as it provides liquidity to the rest of the world. This leads to a symbiotic relationship where the anchor country gets cheap financing and the rest of the world gets the monetary liquidity needed to lubricate economic activity. However, this system eventually breaks down because the anchor country needs to run continuous current account deficits in order to provide more and more liquidity needed by an expanding world economy, making it increasingly indebted over time. In turn, this undermines the very credibility on which the monetary system is based. This scenario was first described in the 1950s in relation to the Bretton Woods system by Robert Triffin and has since become known as Triffin’s Dilemma.

  • The Triffin dilemma or Triffin paradox says that when a national currency also serves as an international reserve currency, there could be conflicts of interest between short-term domestic and long-term international economic objectives.
  • The country whose currency foreign nations wish to hold (the global reserve currency) must be willing to supply the world with an extra supply of its currency to fulfill world demand for this ‘reserve’ currency (foreign exchange reserves) and thus cause a trade deficit.

The use of a national currency (i.e. the U.S. dollar) as global reserve currency leads to a tension between national monetary policy and global monetary policy. This is reflected in fundamental imbalances in the balance of payments, specifically the current account: some goals require an overall flow of dollars out of the United States, while others require an overall flow of dollars in to the United States. Net currency inflows and outflows cannot both happen at once.

The only clear historical solution to Triffin’s dilemma can be seen with the ‘triangular trade’ system between Britain, India and China in the 19th century. Under this arrangement, the British sold manufactured goods to the Indians and purchased opium. The opium was then sold to the Chinese in exchange for goods that were then sold back in Europe. Britain did not bleed gold in order to keep the system flowing. This system was stable in the sense that it did not suffer from Triffin’s Dilemma but functioned because the East India Company was militarily able to impose its will. Chinese attempts to close down the opium trade resulted in the Opium Wars of 1839-42 and 1856-60. In other words, Triffin’s dilemma was circumvented through war, colonisation and drug-running.

B

10.

The International Development Association, a lending agency, is administered by the

(a) International Bank for Reconstruction and Development

(b) International Fund for Agricultural Development

(c) United Nations Development Programme.

(d) United Nations Industrial Development Organization

 

Note:

The International Development Association (IDA) is an international financial institution which offers concessional loans and grants to the world''s poorest developing countries. The IDA is a member of the World Bank Group and is headquartered in Washington, D.C., United States. It was established in 1960 to complement the existing International Bank for Reconstruction and Development by lending to developing countries which suffer from the lowest gross national income, from troubled creditworthiness, or from the lowest per capita income. Together, the International Development Association and International Bank for Reconstruction and Development are collectively generally known as the World Bank, as they follow the same executive leadership and operate with the same staff.

A

11.

Which of the following states has been ranked the No. 1 State in Export Preparedness Index (EPI) for 2022?.

(a) Andhra Pradesh

(b) Maharstra

(c) Tamil Nadu

(d) Karnataka

Note:

https://www.thehindu.com/news/national/tamil-nadu/tamil-nadu-tops-niti-aayog-export-preparedness-index-2022-gujarat-skids-to-4th-slot/article67091437.ece#:~:text=Tamil%20Nadu%20has%20been%20ranked,the%20fourth%20slot%20this%20time.

C

12.

What is "floating gold”?.

(a) Zinc oxide

(b) Ambergris

(c) Tamarind

(d) Potassium chlorate

Note:

https://www.wionews.com/trending/floating-gold-worth-54mn-found-in-dead-whale-in-canary-islands-612033

B

13.

The contraction of private investment spending due to deficit spending by the Governmentis called

(a) crowding out

(b) crowding in

(c) fiscal priming

(d) fiscal dumping

Note:

https://www.thehindu.com/opinion/op-ed/whats-crowding-out-effect-in-economics/article25382539.ece

A

14.

Among the following, which one is the largest exporter of rice in the world in the last five years?

(a) China

(b) India

(c) Myanmar

(d) Vietnam

Note:

https://www.ifpri.org/blog/indias-new-ban-rice-exports-potential-threats-global-supply-prices-and-food-security

B

15.

Consider the following statements w.r.t. Ashadha Purnima:

1. It is observed as Guru Purnima by both Buddhists and Hindus.

2. It is a period of three lunar months, from July to October.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Note:

https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1936890

C  

16.

1. It is a United Nations-adopted legal instrument.

2. India is not a signatory to this.

Which of the statements given above is/are correct w.r.t. Convention on Cluster Munitions?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

 

Note:

https://www.thehindu.com/news/national/cluster-munitions-civilian-killer/article67058331.ece

C

17.

1. Manipur

2. Nagaland

3. Punjab

4. Arunachal Pradesh

States which have a debt-GSDP ratio of less than 20 per cent include

(a) 1, 2 and 4 only

(b) 2, 3 and 4 only

(c) 1, 2 and 3 only

(d) None of these

Note:

https://indianexpress.com/article/business/economy/manipur-punjab-2-others-have-high-debt-to-gsdp-level-of-over-40-8924655/

D

18.

Consider the following Statements regarding Economic Survey.

1. It is prepared by Budget Division of Department of Economic Affairs.

2. It is one of the documents mandated under FRBM Act 2003.

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Note:

The Economic Survey of India is an annual document released by the Ministry of Finance. It is usually presented in Parliament a day before the Union Budget.

It is prepared by the Economics Division of the Department of Economic Affairs (DEA) under the guidance of the Chief Economic Advisor.

Statements mandated under the FRBM Act (Fiscal Responsibility and Budget Management Act) 2003: (a) Macro-Economic Framework Statement (b) Fiscal Policy Strategy Statement (c) Medium Term Fiscal Policy Statement.

D

19.

The Common Framework for debt treatment beyond the Debt Service Suspension Initiative (DSSI) is an initiative endorsed by

(a) WEF

(b) IMF

(c) G20

(d) G7

Note:

https://economictimes.indiatimes.com/news/international/business/g20-for-urgently-effectively-addressing-debt-vulnerabilities-in-developing-countries/articleshow/103538603.cms

https://www.downtoearth.org.in/news/economy/why-g20-s-debt-relief-strategy-is-failing-91631

The Common Framework for debt treatment beyond the Debt Service Suspension Initiative (DSSI) is an initiative endorsed by the G20 in 2020, together with the Paris Club, to support, in a structural manner, Low Income Countries with unsustainable debt.

The framework is aimed at providing a coordinated and comprehensive approach to addressing the debt vulnerabilities of low-income countries (LICs) that are facing the most severe debt challenges, exacerbated by the COVID-19 pandemic.

C

20.

1. RAMBHA

2. ChaSTE

3. LIBS

How many of the above are on Chandrayaan 3?

(a) Only one

(b) Only two

(c) All three

(d) None

Note:

https://www.isro.gov.in/Chandrayaan3_Details.html

Instruments and Experiments on Chandrayaan 3

Lander Experiments:

Radio Anatomy of Moon Bound Hypersensitive Ionosphere and Atmosphere (RAMBHA): This experiment studies the electrons and ions near the moon’s surface, investigating their behaviour and changes over time.

Chandra’s Surface Thermo Physical Experiment (ChaSTE): ChaSTE focuses on the thermal properties of the lunar surface near the polar region, contributing to our understanding of temperature variations.

Instrument for Lunar Seismic Activity (ILSA): ILSA measures lunar quakes near the landing site, analyzing the composition of the Moon’s crust and mantle through seismic activity.

LASER Retroreflector Array (LRA): This passive experiment, provided by NASA, acts as a target for lasers, enabling precise measurements for future missions.

Rover Experiments:

LASER-Induced Breakdown Spectroscope (LIBS): LIBS determines the chemical and mineral composition of the lunar surface, offering insights into its geological makeup.

Alpha Particle X-ray Spectrometer (APXS): APXS identifies elements like magnesium, aluminium, silicon, and more in the lunar soil and rocks, contributing to our understanding of lunar materials.

C

21.

1. According to the International Union for Conservation of Nature (IUCN), the extraction of mineral resources from the ocean below 200 nautical miles is called deep sea mining.

2. The Clarion Clipperton Zone contains more nickel, manganese and cobalt than all terrestrial resources combined.

Which of the statements given above is/are correct w.r.t. deep sea mining?.

(a) 1 Only

(b) 2 Only

(c) Both 1 and 2

(d) Neither 1 nor 2

Note:

https://www.thehindu.com/sci-tech/energy-and-environment/explained-what-is-deep-sea-mining-and-what-are-the-concerns-related-to-the-industry/article67067275.ece  

B  

22.

1. It is a credit instrument.

2. It comes under External Commercial Borrowing.

Which of the statements given above is/are correct w.r.t. “Financial Lease”?.

(a) 1 Only

(b) 2 Only

(c) Both 1 and 2

(d) Neither 1 nor 2

Note:

https://www.schoolofeconomics.net/financial-lease/

https://timesofindia.indiatimes.com/business/india-business/air-india-acquires-indias-first-a350-900-through-gift-ifsc/articleshow/104034139.cms?from=mdr

B  

23.

“Tax Buoyancy” in the economy is defined by

1. Ratio of percentage change in tax revenue to percentage change in GDP

2. Percentage increase in tax revenues as measured from previous year

4. Incremental change in tax revenues required to increase the GDP by one percent

Select the correct answer using the code given below:

(a) 1 only

(b) 1 & 3 only

(c) 3 only

(d) 2 & 3 only

Note:

Tax buoyancy

  • Tax buoyancy explains the relationship between the changes in government’s tax revenue growth and the changes in GDP.
  • It refers to the responsiveness of tax revenue growth to changes in GDP.
  • When a tax is buoyant, its revenue increases without increasing the tax rate.
  • It depends upon:
  • the size of the tax base;
  • the friendliness of the tax administration;
  • the rationality and simplicity of tax rates;

Tax Elasticity

  • It refers to changes in tax revenue in response to changes in tax rate.
  • For example, how tax revenue changes if the government reduces corporate income tax from 30 per cent to 25 per cent indicate tax elasticity.

Elasticity vs buoyancy:

  • Tax elasticity considers the automatic response of revenues to the change in income given that tax structure is unchanged.
  • On the other hand, tax buoyancy reflects both the impacts of income and discretionary changes on revenue earnings.

 Laffer Curve

  • It is an economic theory pioneered by economist Arthur Laffer suggesting that tax rates above a certain threshold reduce tax revenue since they incentivize people not to work. As such, it suggests that lowering tax rates motivates people to earn more money, resulting in greater tax revenue.

A

24.

Components of India’s external debt in ascending order

1. U.S. dollar-denominated debt

2. Yen denominated debt

3. SDR denominated debt

4. Euro denominated debt

Select the correct answer using the code below-

(a) 4, 2, 3, 1

(b) 4, 3, 2, 1

(c) 2, 4, 3, 1

(d) 3, 2, 4, 1

Note:

https://www.thehindu.com/business/indias-external-debt-rises-47-billion-in-one-quarter-to-6291-billion-as-at-june/article67357576.ece

A

25.

Tehseen Poonawalla case in news refer to the context of

(a) Child Labour

(b) Triple Talaq

(c) Mob Lynching

(d) Temple entry

 

 

Note:

https://www.thehindu.com/news/national/supreme-court-seeks-centre-states-response-on-nfiw-plea-sounding-the-alarm-on-lynchings-mob-fury/article67131163.ece

C







POSTED ON 13-05-2024 BY ADMIN
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