EDITORIALS & ARTICLES

Hit List Questions 17 - PPP 100 PRELIMS 2024 - 35

Questions & Explanations:

 

1.

Consider the following statements.

1. Eight languages have been conferred the status of ‘Classical Language’ in India so far.

2. The non-scheduled languages are 99 as per 2011 census.

3. English is is a non-scheduled language of India.

Which of the above statements is/are incorrect?

(a) 1 and 3 only

(b) 2 and 3 only

(c) 1 and 2 only

(d) 1, 2, 3

Note:

https://indianexpress.com/article/explained/explained-law/language-used-in-courts-constitution-laws-8878248/

Classical Languages of India are the languages that have a lengthy body of written literature and their own literary tradition. Currently, there are six languages in India that enjoy the status of “Classical Languages of India.” Any language with independent literature and a large and ancient body of written script may be considered one of the Classical Languages of India. While Hindi is considered the official language of India, there are 22 other languages in India as per the Eighth Schedule of the Indian Constitution.

 

The Indian Government 2004 decided to declare languages that meet certain criteria as “Classical Languages of India”. The Classical Languages in India are listed in the Eighth Schedule of the Constitution. The Ministry of Culture provides guidelines to be fulfilled to be categorized as a classical language in India.

For a language to be given the “Classical Languages of India” status, there are a few guidelines which are listed below:

·        It should be ancient, and there must be proof of its earlier script or recorded history over a period of 1500 to 2000 years.

·        The literature should be original and not be borrowed from some other language or speech community.

·        There must be a body of antique texts, and they must be considered a valuable heritage across generations of speakers.

·        Language and literature must be distinguished from the modern, and there may also be a discontinuity between the language and its later forms.

C   

2.

Which of the above statements is/are incorrect w.r.t. “Indian Flying Fox” ?.

1. It is a keystone species.

2. It is nocturnal.

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.thehindu.com/sci-tech/science/flying-fox-bats-for-vigilance-while-roosting/article67184575.ece

https://frontline.thehindu.com/the-nation/public-health/nipah-outbreak-driving-away-bats-is-not-the-answer-interview-p-o-nameer/article67507820.ece

C

3.

1. A super moon arises when the moon is at its perigee.

2. A blue moon denotes two full moons in a single month.

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:

Super Moon

  • The orbit of the moon around the earth is not circular; it is elliptical, that is, an elongated or stretched-out circle. It takes the moon 27.3 days to orbit the earth.
    • It is 29.5 days from new moon to new moon, though.
    • This is because while the moon is orbiting the earth, both the earth and the moon are also moving around the sun.
    • Hence, it takes additional time for the sun to light up the moon in the same way as it does at the beginning of every revolution around the earth.
    • The new moon is the opposite of the full moon — it is the darkest part of the moon’s invisible phase, when its illuminated side is facing away from the earth.
  • The point closest to earth in the moon’s elliptical orbit is called perigee, and the point that is farthest is called apogee.
  • A super moon happens when the moon is passing through or is close to its perigee, and is also a full moon. This happens with a new moon as well, just that it is not visible.
    • A full moon occurs when the moon is directly opposite the sun (as seen from earth), and therefore, has its entire day side lit up.
    • The full moon appears as a brilliant circle in the sky that rises around sunset and sets around sunrise.
    • According to NASA, a full moon at perigee (super moon) is about 14% bigger and 30% brighter than a full moon at apogee (called a “micro moon”).

Blue Moon

  • Blue moon describes the situation when a full moon is seen twice in a single month.
  • Because the new moon to new moon cycle lasts 29.5 days, a time comes when the full moon occurs at the beginning of a month, and there are days left still for another full cycle to be completed.
    • Such a month, in which the full moon is seen on the 1st or 2nd, will have a second full moon on the 30th or 31st.
    • According to NASA, this happens every two or three years.
  • It is important to note that the term Blue Moon has nothing to do with the actual colour of the moon.
  • Moons can appear in various shades depending on atmospheric conditions, but a Blue Moon is not necessarily blue in colour.
    • Sometimes, smoke or dust in the air can scatter red wavelengths of light, as a result of which the moon may, in certain places, appear more blue than usual.
    • But this has nothing to do with the name “blue” moon.

How rare is a blue supermoon?

  • According to NASA, the blue supermoons are a very rare phenomenon. It mentions that these moons often only appear once every ten years due to astronomical conditions.
  • But occasionally, the interval between blue supermoons can be as long as twenty years.
  • The following super blue moons will take place in pairs in 2037, in January and March.

C

4.

General Nguema was in news w.r.t. coup in

(a) Gabon

(b)  Cameroon  

(c) Congo

(d) Equatorial Guinea

Note:

https://indianexpress.com/article/opinion/coup-gabon-governance-francophone-africa-falling-like-dominoes-8920676/

A

5.

Which of the following correctly distinguishes devaluation and depreciation? 

(a) Depreciation is a deliberate effort while Devaluation is inadvertently.

(b) Devaluation happens under fixed exchange rate system while Depreciation happens under flexible exchange rate system.

(c) Depreciation is a government policy while Devaluation is market driven.

(d) Depreciation produces desired fall in the value of rupee while Devaluation produces undesired fall in the value of rupee.

Note:

Depreciation and Devaluation of currency

Devaluation of a currency

  • Devaluation of a currency is associated with countries having a fixed exchange rate regime.
  • Under the fixed rate regime, the central bank or the government decides the value of the currency with respect to other foreign currencies. The central bank or the government purchases or sells its currencies to maintain the exchange rate.
  • When the government or the central bank reduces the value of its currency, then it is known as the devaluation of the currency. Under this, the value of the domestic currency is deliberately reduced in terms of other foreign currencies.

Reasons of currency devaluation

  • To increase Exports
  • Competitive devaluation (race to the bottom)
  • To reduce trade deficits
  • To reduce the sovereign debt burden

Disadvantages of currency devaluation

  • Inflation: it can lead to increase in the inflation rate as essential imports such as oil etc will become more expensive. It can also lead to demand-pull inflation.
  • It reduces the purchasing power of the country’s citizens and foreign goods and foreign tours become expensive for them.
  • Large and quick devaluation of currency may reduce the faith of international investors in the domestic economy. Foreign investors would be less interested in holding the government debt as devaluation reduces the value of their holdings.
  • Devaluation of currency negatively impacts the corporates and individuals who hold debt in the foreign currency.

Reasons responsible for currency devaluation

  • Decline in exports: the decline in a country’s overall exports leads to a decline in export revenues. This reduces the demand for the country’s currency and leads to its depreciation.
  • Large increase in imports: a large increase in the demand for imported goods and services can lead to a trade deficit. Increase in the current account deficit can lead to a net outflow of the currency which can weaken the exchange rate leading to currency depreciation.
  • Monetary policy of Central Bank: if the central bank reduces its policy interest rates it can lead to the outflow of hot money such as foreign portfolio investment etc. This can lead to the depreciation of domestic currency.
  • Open market operations of the central bank: if the Central bank undertakes open market operations to buy foreign currency and gold etc it can lead to the depreciation of domestic currency. RBI undertakes open market operations in case of rapid appreciation or depreciation of the rupee and to reduce volatility in the foreign exchange market.

Depreciation of a currency

  • Depreciation of a currency is a phenomenon associated with countries with floating exchange rate regime.
  • In the floating exchange rate regimes, the value of a country’s currency is determined by the market forces of demand and supply. The exchange rate of the currency changes on daily basis as per the demand and supply of that currency with respect to foreign currencies.
  • A currency depreciates with respect to foreign currency when the supply of currency in the market increases while its demand falls.

 

B

6.

Consider the following statements about the Bar Council of India:

1. It is an executive body.

2. It performs an advisory role.

3. It funds welfare schemes for economically weaker and physically handicapped advocates.

(a) 1 and 3 only

(b) 2 and 3 only

(c) 1, 2 and 3

(d) 3 only

Note:

 Bar Council of India (BCI)

  • It is a statutory body established under the Advocates Act 1961 to regulate and represent the Indian bar.
  • Functions:
    • It performs the regulatory function by prescribing standards of professional conduct and etiquette and by exercising disciplinary jurisdiction over the bar.
    • It also sets standards for legal education and grants recognition to Universities whose degrees in law will serve as qualification for enrolment as an advocate.
    • It conducts the All India Bar Examination (AIBE) to grant a ''Certificate of Practice'' to advocates practising law in India.
    • BCI also funds welfare schemes for economically weaker and physically handicapped advocates.

D

7.

LK-99 in news refer to

(a) a superconductor

(b) an elementary particle

(c) a 3D Printer

(d) a humanoid

Note:

https://www.thehindu.com/opinion/editorial/superconducting-hype-on-south-koreas-lk-99/article67168534.ece

https://www.thehindu.com/sci-tech/science/lk-99-room-temperature-superconductor-hype/article67233834.ece

A

8.

With reference to

China Pakistan Economic Corridor, consider the following statements:

1. It is 3,000 km-long consisting of highways, railways, and pipelines.

2. It is a part of the Belt and Road Initiative.

Which of these statements is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2  

(d) Neither 1 nor 2

Note:

https://indianexpress.com/article/explained/explained-global/china-investment-pakistan-8978474/

https://indianexpress.com/article/world/pakistan-china-ink-six-agreements-under-2nd-phase-of-cpec-8869848/

c

9.

Consider the following statements regarding the Corporate Debt Market Development Fund Scheme:

1. It is an alternative investment fund.

2. It boosts liquidity in the primary market.

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:

It boosts liquidity in the secondary market.

https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1943686

https://news.cleartax.in/a-quick-note-on-corporate-debt-market-development-fund/9487/

Corporate Debt Market Development Fund

·  It is a backstop facility for specified debt funds during market dislocations.

·  The fund is intended to provide liquidity support in the event of a financial crisis.

·  It will be in the form of an alternative investment fund (AIF), meant to instil confidence among the participants in the Corporate Bond Market during times of stress

·  The fund has Rs 33,000-crore backstop facility for Mutual Funds.

·  Of the Rs 33,000 crore, Rs 30,000 crore will come from the government, while the balance Rs 3,000 crore will be contributed by the Asset Management Companies.

·  Contributions to the fund can be done by the specified debt-oriented mutual fund schemes and asset management companies of mutual funds.

·  This fund is guaranteed by the National Credit Guarantee Trust Company (NCGTC) and the backstop facility will be managed by SBI Mutual Fund.

Who can invest?

o   Specified debt-oriented mutual fund schemes here are ‘open-ended debt oriented mutual fund schemes, excluding the overnight funds and gilt funds and including conservative hybrid fund’.

o   These specified debt-oriented schemes will invest 25 basis points (0.25 per cent) of their asset under management (AUM) in CDMDF units and will increase their contribution when their AUM increases and review it every six months.

o   However, there will be no redemption from CDMDF in case their AUM reduces.

o   The same applies to the specified schemes of new mutual funds or such new schemes from the existing mutual funds.

o   The AMCs are also required to make a contribution of 2 per cent of their specified debt-oriented schemes’ AUM as a one-time contribution.

o   The initial contribution for this purpose will be based on the AUM as of December 31, 2022, in the specified schemes of the mutual funds.

Backstop facility

·  A backstop is an act of providing last-resort support or security in a security offering for the unsubscribed portion of shares.

·  When a company is trying to raise capital through an issuance, it may get a backstop from an underwriter or a major shareholder, such as an investment bank, to buy any of its unsubscribed shares.

C

10.

The ‘Tiranga point’ and ‘Jawahar Point’ seen in the news are in

(a) Little Andaman

(b) Purvanchal Hills

(c) Antarctica

(d) Moon

 

Note:

https://indianexpress.com/article/explained/everyday-explainers/shiv-shakti-tiranga-jawahar-sthal-chandrayaan-moon-names-8911906/

D

11.

With reference to the ‘Fujiwhara Effect,’ consider the following statements:

1. It is an intense interaction between two cyclones.

2. It makes it difficult to predict the trajectories and strengths of the cyclone.

3. Complete straining out in which the smaller storm is completely lost to the atmosphere can produce it.

How many of the above statements are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

https://indianexpress.com/article/explained/explained-climate/fujiwhara-effect-cyclones-dance-8905398/

https://www.downtoearth.org.in/news/climate-change/perfect-storm-what-is-the-fujiwhara-effect--85337

C

12.

Which of the following are part of “Seigniorage”?  

(i) Interest income on reserves kept with RBI for money creation 

(ii) Interest accruing from bank balances kept with central bank as interest-free balances in order to meet the reserve requirements 

(iii) Inflation tax 

Select the correct answer using the code given below:

(a) (i) only 

(b) (ii) only

(c) (i) & (ii) only

(d) (i), (ii) & (iii)

Note:

https://www.thehindu.com/news/national/tamil-nadu/seigniorage-fee-for-mining-minor-minerals-to-be-revised-once-in-three-years/article67245560.ece

https://www.thehindubusinessline.com/opinion/columns/slate/all-you-wanted-to-know-about-seigniorage/article9844554.ece

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)

D  

13.

The predominant mode of financing fiscal deficit in India is through

(a) internal market borrowings

(b) securities against small savings

(c) provident funds

(d) external debt

Note:

https://www.thehindu.com/business/budget/explained-is-the-government-on-track-on-fiscal-deficit-targets/article66472080.ece

The predominant mode of financing fiscal deficit in India is through internal market borrowings. It is also to be financed through securities against small savings, provident funds and an insignificant component of external debt.

A  

14.

"Engel''s Law" is best stated by

(a) Decrease in income inequality due to higher GDP growth.

(b) Increase in income inequality due to higher GDP growth.

(c) Increase in the proportion of income spent on food due to increase in income levels.

(d) Decrease in expenditure on food as the income level of the family increases.

Note:

Engel''s Law is an economic theory put forth in 1857 by Ernst Engel, a German statistician. It states that the percentage of income allocated for food purchases decreases as a household''s income rises, while the percentage spent on other things (such as education and recreation) increases.

D

15.

Consider the following statements:

1. The interest rate management by the RBI through inflation targeting can only effectively control inflation.

2. The primary deficit, which reflects the current fiscal stance devoid of past interest payment liabilities will increase.

3. A high interest rate regime can provide stimulus to the economic growth process.

4. Rationalisation of subsidies can help the government reaching a fiscal deficit target of 4.5% by 2025-26.

How many of the following statements is/are the consequence of rising fiscal deficit?.

(a) Only one

(b) Only two

(c) Only three

(d) All four

Note:

The interest rate management by the RBI through inflation targeting alone cannot effectively control inflation.

A high interest rate regime can hurt the economic growth process.

https://www.thehindu.com/business/budget/explained-is-the-government-on-track-on-fiscal-deficit-targets/article66472080.ece

B

16.

Which of the above statements is/are incorrect w.r.t. RBI introduced a Public Tech Platform for Frictionless Credit?.

1. It was developed by its wholly-owned subsidiary, the Reserve Bank Innovation Hub.

2. It is an end-to-end digital platform that will have an open architecture and open Application Programming Interfaces.

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.thehindu.com/business/Economy/explained-what-is-rbis-pilot-programme-for-facilitating-frictionless-and-timely-credit/article67205655.ece

D  

17.

1. Sodium-ion batteries are a cost-effective alternative to lithium-ion batteries.

2. They are preferred for offering high energy density as compared to lithium-ion batteries.

Which of the statements given above is/are incorrect w.r.t. Sodium-ion batteries?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Note:

https://www.thehindu.com/business/start-up-ar4-tech-sodion-tie-up-to-make-sodium-ion-battery-packs/article67230681.ece

https://pib.gov.in/PressReleasePage.aspx?PRID=1924518

https://www.newindianexpress.com/business/2023/sep/23/gamechanger-sodium-ion-batteries-may-make-evs-far-more-affordable-says-report-2617611.html

•        Sodium-ion batteries generate electricity through a chemical reaction and are made up of an anode, cathode, separator and an electrolyte.

•        In a sodium-ion battery, lithium ions are replaced with sodium ions in the battery’s cathode, and lithium salts swapped for sodium salts in the electrolyte.

•        Sodium-ion batteries are affordable as the materials used in sodium-ion batteries tend to be cheaper than those in lithium-ion batteries.It doesn’t use the expensive raw materials like cobalt, copper, lithium and graphite.Including potentially lower cost due to the abundance of sodium, which could make them more affordable than lithium-ion batteries.

•        Sodium-ion batteries have lower energy density: They store less energy per unit of weight or volume.

B

18.

Indian Constitution mentions three lists in the Seventh Schedule — union, state and concurrent lists under the Article

(a) 243

(b) 246

(c) 252

(d) 254

Note:

https://www.thehindu.com/opinion/lead/rethink-the-emerging-dynamics-of-indias-fiscal-federalism/article67235948.ece

B  

19.

Which of the following pollutants is not tracked by the Air Quality Index (AQI)?

(a) Ozone

(b) Carbon monoxide

(c) Carbon dioxide  

(d) PM 2.5

Note:

National Ambient Air Quality Standards (NAAQS)

The NAAQS set by the CPCB are applicable to the whole country. The CPCB draws this power from the Air (Prevention and Control of Pollution) Act, 1981. 

  • These standards are essential for the development of effective management of ambient air quality. 
  • The first ambient air quality standards were developed in 1982 pursuant to the Air Act. 
  • Later, in 1994 and 1998, these standards were revised. The latest revision to the NAAQS was done in 2009 and this is the latest version being followed.
  • The 2009 standards further lowered the maximum permissible limits for pollutants and made the standards uniform across the nation. Previously, industrial zones had less stringent standards as compared to residential areas.
  • The compliance of the NAAQS is monitored under the National Air Quality Monitoring Programme (NAMP). NAMP is implemented by the CPCB.
  • The current standards (2009) comprise 12 pollutants as follows:

·           Particulate Matter 10 (PM10)

·           Particulate Matter 2.5 (PM2.5) 

·                                  Nitrogen Dioxide (NO2)

·                                  Sulphur Dioxide (SO2)

·                                  Carbon Monoxide (CO)

·                                  Ozone (O3)

·                                  Ammonia (NH3)

·                                  Lead (Pb)

·                                  Benzene

·                                  Benzopyrene

·                                  Arsenic

·                                  Nickel

NAAQS and AQI

The National Air Quality Index (AQI) was launched in 2014 to measure the air quality and rate it in six categories (ranging from good to severe). Know more about the Air Quality Index in the linked article.

  • The NAAQS was more technical in nature and was not easy for the common man to comprehend. It was with the idea of making air quality levels more understandable to the general public that the AQI was formulated.
  • The AQI was launched keeping in mind the idea of ‘One Number-One Colour-One Description’.
  • Another difference between both standards is that while the NAAQS 2009 considers 12 pollutants, the AQI covers 8 major pollutants.
  • AQI includes all the NAAQS pollutants except benzene, benzopyrene, arsenic and nickel.
  • The measurement of air quality for AQI is based on the eight pollutants for which short-term (up to 24-hourly averaging period) National Ambient Air Quality Standards are prescribed and the worst reading in these pollutants represents the AQI for that city.

 

20.

Consider the following statements regarding the BRICS.

1. It has eleven members.

2. Through the Fortaleza Declaration, BRICS countries created New Development Bank.

3. The BRICS CRA would complement existing international arrangements from IMF as an additional line of defence.

How many of the statements given above is/are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Note:

https://indianexpress.com/article/india/brics-new-members-saudi-iran-ramaphosa-8907136/#:~:text=Leaders%20of%20the%20BRICS%20%E2%80%94%20Brazil,effect%20from%20January%201%2C%202024.

C

21.

The ‘G. Padmanabhan Committee’, seen in the news, is related to

(a) Suggesting ways to revive stalled real estate projects

(b) Halting Highway Projects in Himalayan Region

(c) Onshoring the Indian Innovation

(d) Digitising the Public Infrastructure

Note:

https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1952016

The Amitabh Kant committee: was tasked by the Government with suggesting ways to revive stalled real estate projects. The report by the committee acknowledged the financial stress of real estate developers but recommended no direct support. The report has essentially suggested that all stakeholders — developers, financiers and land authorities — take “haircuts” to make the stalled projects financially viable.

C  

22.

With reference to Terai Arc Landscape (TAL), which of the following statements is/are correct?

1. It is between the Yamuna and Bhagmati river.

2. It boasts Rajaji National Park.

3. It is shortlisted by the Food and Agriculture Organization (FAO) as the World Restoration Flagship.

Select the correct statement(s) using the code given below.

(a) 1 and 2 Only

(b) 2 Only

(c) 2 and 3 Only

(d) 1, 2 and 3

 

Note:

It is spread across the Indian states of Uttarakhand, Uttar Pradesh and Bihar, and the low lying hills of Nepal. • About 22% of the wild tiger population in India is found across the TAL, living amidst some of the highest human and livestock densities on the subcontinent.

https://www.thehindu.com/sci-tech/energy-and-environment/terai-tigers-poop-info-on-prey-selection/article67239254.ece

https://www.wwfindia.org/about_wwf/critical_regions/terai_arc_landscape/about_terai_arc_landscape/

D

23.

Consider the following statements w.r.t. Monetary Policy Committee.

1. It is an executive body.

2. It was established based on the recommendation of the Urjit Patel Committee.

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:

The Monetary Policy Committee (MPC) is a statutory body constituted as per Section 45ZB under the RBI Act of 1934 by the Central Government.

Monetary Policy Committee

The RBI Monetary Policy Committee (MPC) is a statutory body constituted as per Section 45ZB under the RBI Act of 1934 by the Central Government. It is a remarkable initiative by the Reserve Bank of India to surge the GDP growth and turn down the percentage of inflation in India.

  • It was brought as an initiative to bring accountability and transparency in fixing the Monetary Policy of India.
  • It was formed with the objective of fixing the benchmark policy interest rate (repo rate) in order to keep inflation within a particular target level.
  • RBI governor is in the charge of taking monetary policy decisions with the advice and recommendations of the technical advisory committee and internal team.

The RBI Monetary Policy Committee (MPC) was established based on the recommendation of the Urjit Patel Committee. They initially proposed the idea for the formation of a five-member Monetary Policy Committee -three members from the RBI and two nominated by the Government. Later The Government suggested a seven-member committee. Further negotiations resulted in the present composition with 6 members.

  • The Monetary Policy Committee (MPC) was set up under Section 45ZB of the RBI Act of 1934 by the Union government.
  • The first meeting of MPC was conducted on 3rd October 2016 in Mumbai.
  • With the adoption of the Monetary Policy Committee (MPC) in 2016, the monetary policy decision-making process in India has undergone a transformation. From Governor-centric decision-making to entrusting this responsibility to a collegial Monetary Policy Committee (MPC), India has made a transition that brings more transparency and accountability to fixing the Monetary Policy of India.

The RBI Monetary Policy Committee (MPC) is a 6 member committee. There are in total three internal members and three external experts. The RBI Governor and Deputy Governor are also members of the MPC Committee. Check the list here of all the members that will provide ideation of the structure of the Monetary Policy Committee.

It consists of three internal members – the Governor as the Chairperson, ex officio; the Deputy Governor in charge of monetary policy as Member, ex officio; and one officer of the Bank to be nominated by the Central Board as Member ex-officio – and three external experts appointed by the Central Government. Following are the members of MPC RBI

  • RBI Governor as its ex officio chairperson.
  • Deputy Governor in charge of monetary policy, member ex officio
  • An officer of the Bank to be nominated by the Central Board as member ex officio
  • Three persons are to be appointed by the central government. Appointments of this category must be from “persons of ability, integrity, and standing, having knowledge and experience in the field of economics or banking or finance or monetary policy.

Objectives of Monetary Policy Committee [MPC]

The Monetary Policy Committee is an initiative to improve the repo rate, reverse repo rate, liquidity etc. The RBI Monetary Policy Committee determines the policy interest rate in order to achieve the following objectives.

  1. Provide reasonable price stability.
  2. Stabilize the business cycle.
  3. Provide faster economic growth.
  4. Exchange Rate Stability.
  5. Generate employment.

Functions of Monetary Policy Committee

The main objectives and functions of monetary policy committee are to maintain a balance in the business cycle, to surge the rate of GDP and economic growth, and to turn down the witnessed inflation rates. The Monetary Policy Committee and its functions are as follows:

  • The Monetary Policy Committee(MPC) is required to meet at least four times a year.
  • The quorum required for the meeting of the MPC is four members.
  • Each member of the MPC has one vote, and in the event of an equality of votes, the Governor has a second or casting vote.
  • Once every six months, the Reserve Bank is required to publish a document called the Monetary Policy Report.

Instruments of Monetary Policy Committee [MPC]

There are two types of monetary policy instruments: qualitative instruments and quantitative instruments. The numerous instruments of the monetary policy committee assist it in achieving the requisite objectives. The candidates must have complete knowledge of the objectives and tools of monetary policy.

  • Quantitative instruments: Repo rate, Reverse Repo rate, Marginal Standing Facility (MSF), Bank Rate, Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), Open Market Operations (OMOs)
  • Qualitative Instruments: Direct action, change in the margin money, and moral suasion.

By managing the Monetary Policy, the monetary authority of the country regulates the supply of money in an economy and influences macroeconomic factors.

  • The Monetary Policy adjusts interest rates to sustain price stability and to maintain the predictable foreign exchange rates.
  • The Reserve Bank of India is the country’s central banking authority. It is in charge of monetary policy in accordance with the government’s development goals.
  • Monetary policy can be either contractionary or expansionary. A policy that increases the supply of money in the economy is called expansionary monetary policy, and a policy that decreases the supply of money is called contractionary policy.

Significance of MPC

The monetary policy committee holds the authority of governing the money supply and economy in the country. It also formulates major decisions about the financial matters and economy of the country.

  • The stability in the price of the existing commodities is also governed by the MPC.
  • The Reserve Bank of India has been entitled and endowed with the responsibility of establishing monetary policies by the provisions of the Indian Constitution.
  • The section 45ZB gurantees the right of formulating monetary policies to the Reserve Bank of India.
  • The contractionary and expansionary forms of monetary policies are usually observed.
  • The monetary policy committee takes charge of the monetary policies.

B

24.

The official languages of the WTO are

(a) English, French and Chinese

(b) English, Japanese and Chinese

(c) English, French and Spanish

(d) English, Korean and Chinese

Note:

The Secretariat of WTO is located in  Geneva, Switzerland. The three official  languages of the WTO are English, French  and Spanish.  Decisions in the WTO are generally taken  by consensus of the entire membership.  The highest institutional body is the Ministerial Conference, which meets  roughly every two years. A General  Council conducts the organization''s  business in the intervals between  Ministerial Conferences. Both of these  bodies comprise all members. Specialised  subsidiary bodies (Councils, Committees,  Sub-committees), also comprising all  members, administer and monitor the  implementation by members of the  various WTO agreements.

C

25.

Zero Primary Deficit in an economy indicates

(a) Entire borrowings of the Government are used to make interest payments. 

(b) Zero interest payments by the Government. 

(c) The Government is not borrowing money to make interest payments. 

(d) The Government is not borrowing money to bridge the deficit.

Note:

Zero  primary deficit means the government resorts to borrowing only to clear the existing backlog of interest payments. It is not adding to the existing loans for any purpose other than meeting its existing obligations of interest payment. It is a sign of fiscal discipline or fiscal responsibility on the part of the government. High primary deficit, on the other hand, reflects fiscal irresponsibility of the government.

A







POSTED ON 13-05-2024 BY ADMIN
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