1.

Which of the following statements is/are correct about tax buoyancy in India?

1. It measures the corresponding change in tax revenues with the changes in GDP.

2. Higher tax buoyancy would potentially lead to increase in the deficit ratio.

3. Tax evasion and tax collection lags increase the tax buoyancy, hence improve the productivity of the economy.

4. Goods & Service Tax (GST) is less buoyant than Value added tax (VAT).

Select the correct answer using code given below:

(a) 1 only

(b) 1, 2 and 3 only

(c) 3 and 4 only

(d) 2, 3 and 4

2.

Consider the following statements w.r.t. Liquidity Coverage Ratio (LCR):

1. The LCR has been introduced as a part of the BASEL III reforms.

2. Under the LCR, the banks are required to hold sufficient reserve of high-quality liquid assets (HQLAs) to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

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

3.

The term ''creamy layer'' was introduced by the

(a) Sattanathan Commission

(b) Kaka Klaelkar Commission

(c) Mandal Commission

(d) Fazal Ali Commission 

4.

(I) It is being implemented by the Ministry of Rural Development.

(II) It is for the procurement of all agricultural commodities. 

(III) It is implemented in all states by the Central Government.

(IV) It is a non-adhoc scheme.

Which of the statements given above is/are correct w.r.t. “Market Intervention Scheme”?.

(a) II, III & IV

(b) I, II, & IV

(c) I, II, III & IV

(d) All are incorrect statements only.

5.

Consider the following.

1. Embargo is a non-tariff barrier.

2. India is the founding member of the Kimberley Process Certification.

(a) Only 2 is true

(b) Only 1 is true

(c) Both 1 and 2 are true

(d) Neither 1 nor 2 is true 

6.

Which of the following are the eligible instruments that can be maintained by the banks to fulfil their Statutory Liquidity Ratio (SLR) requirements?

1. Treasury Bills

2. Dated Securities of the Government

3. State Development Loans 

4. Recapitalization Bonds

Select the correct answer using the code given below:

(a) 1 and 2 only

(b) 1, 2 and 3 only

(c) 1, 2 and 4 only

(d) 1, 2, 3 and 4

7.

1. It can be produced by Pyrolysis.

2. Its calorific value is similar to that of Compressed Natural Gas.

Which of the statements given above is/are correct w.r.t. Bio-CNG?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2 

8.

If a commodity is provided free to the public, by the Government, then

(a) the opportunity cost is zero.

(b) the opportunity cost is ignored.

(c) the opportunity cost is transferred from the consumers of the product to the tax-paying public.

(d) the opportunity cost is transferred from the consumers of the. product to the Government.

9.

Which of the following is not a feature of human capital?

(a)  It is intangible

(b)  It is not sold in the market

(c)  It is perfectly mobile

(d)  It is inseparable from its owner

10.

1. It is the ratio between the nominal interest rate and the nominal rate of growth in an economy.

2.  Its negative value would mean that the growth rate is high enough to cater to the increase in interest rates on the government debt.

Which of the statements given above is/are correct w.r.t. Interest Rate Growth Rate Differential (IRGD)?

(a) 1 only 

(b) 2 only 

(c) Both 1 and 2 

(d) Neither 1 nor 2

11.

What describe(s) the “Helicopter Money”?

(a) monetary stimulus

(b) raise inflation

(c) Both (a) & (b)

(d) Neither (a) nor (b)

12.

1. It was established in the aftermath of the Great Depression. 

2. India is the founding member of the International Monetary Fund. 

3. It compiles the World Economic Outlook report.

Which of the given above statements are correct w.r.t. International Monetary Fund (IMF)?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

13.

Consider the following statements: 

1. The Green Box subsidies are direct payments under a production limiting programme and there is no limit on them.

2. The Amber Box includes subsidies that are trade-distorting, but are given by the government for welfare or for any other reason. 

3. The Blue Box includes subsidies on which there are no limits, as they are not considered trade-distorting.

Which of the statements given above is/are correct? 

(a) 1 only 

(b) 2 only 

(c) 1 and 2 only 

(d) 2 and 3 only

14.

Which of the following is/are true w.r.t. “Producer Price Index (PPI)”?.

(a) The Office of Economic Advisor, Ministry of Commerce and Industry publishes it.

(b) It excludes indirect taxes.

(c) Both (a) and (b)

(d) Neither (a) nor (b)

15.

1. It takes place on the last Saturday of March every year.

2. It is organized by the United Nations Environment Programme.

Which of the statements given above is/are correct regarding the Earth Hour?.

(a) 1 only 

(b) 2 only

(c) Both 1 and 2 

(d) Neither 1 nor 2

16.

In the context of India’s Five-Year Plans, a shift in the pattern of industrialization, with lower emphasis on heavy industries and more on infrastructure begins in

(a) Fourth Plan

(b) Sixth Plan

(c) Eighth Plan

(d) Tenth Plan

17.

Which of the following is/are components of Capital Expenditure in Public Expenditure?.

1. Loans and Advances

2. Discharge of debts

3. Science & Research

(a) Only 1 and 2 is correct

(b) Only 1 & 3 is correct

(c) Only 2 is correct

(d) 1, 2 & 3 are correct

18.

Consider the following statements about Balance of Payments (BoP): 

1. Current account transactions do not alter Indian residents’ assets or liabilities outside India. 

2. If current account deficit is lesser than capital account surplus, it will result in Negative Balance of Payment (BoP). 

3. Negative BoP leads to reduction of forex reserves of a country while positive BoP add forex reserves. 

Which of the statements given above is/are incorrect?. 

(a) 2 only 

(b) 3 only 

(c) 1 and 3 only 

(d) 1, 2 and 3 only

19.

The Goods Trade Barometer was developed by

(a) UNCTAD

(b) WTO

(c) WEF

(d) IMF

20.

Which of these is a leakage from circular flow of income?

(a)  Saving

(b)  Investment

(c)  Consumption

(d)  Export

21.

Consider the following statements.

1. Prior sanction of the parliament is not required to spend from the contingency fund.

2. Receipts by way of repayment of loans form a part of the consolidated fund.

(a) Only 1 is correct

(b) 1 and 2 are correct

(c) Only 2 is correct

(d) Neither 1 nor 2 is correct 

22.

What is G-SAP?

(a) It is a program by the RBI to infuse more liquidity in the market by selling government securities.

(b) It is a program by the RBI to reduce the money supply in the market by selling government securities.

(c) It is a program by the RBI to reduce the money supply in the market by purchasing government securities.

(d) It is a program by the RBI to infuse more liquidity in the market by purchasing government securities.

23.

“Giffen goods” refer to

(a)  A product whose consumption falls with increase in supply

(b) A product whose consumption falls with increase in price

(c)  A product whose consumption is increased with a decrease in supply.

(d) A product whose consumption increases with increase in price.

24.

During the festival season, the people usually withdraw large amount of money from the banks, leading to

(a) Increase in the Money Multiplier. 

(b) Decrease in the Money Multiplier. 

(c) The Money Multiplier remains unaffected. 

(d) None of the above.

25.

Which of the following are true about Indian Money Market?

1. It provides a key link in the operations of monetary policy to financial markets.

2. It provides funds in non-inflationary way to the government.

3. Treasury Bill is a money market instrument.

(a) 1 and 2

(b) 1 and 3

(c) 2 and 3

(d) 1, 2 and 3

1.

Tax buoyancy

A tax is buoyant when revenues increase by more than 1 per cent for a 1 per cent increase in GDP.

https://indianexpress.com/article/business/economy/direct-tax-gdp-ratio-rose-to-15-year-high-in-fy23-tax-buoyancy-dipped-9124628/

 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

2.

https://www.financialexpress.com/business/banking-finance-if-liquidity-is-short-interest-rates-will-remain-high-sbi-chairman-3394546/

A failure to adequately monitor and control  liquidity risk led to the Great Financial  Crisis in 2008. To improve the banks''  short-term resilience to liquidity shocks,  the Basel Committee on Banking  Supervision (BCBS) introduced the  Liquidity Coverage Ratio (LCR), as a part of  the Basel III post-crisis reforms. The LCR is  designed to ensure that the banks hold a  sufficient reserve of high-quality liquid  assets (HQLAs) to allow them to survive a  period of significant liquidity stress lasting  30 calendar days. HQLAs are cash or  assets that can be converted into cash  quickly through sales (or by being pledged  as collateral) with no significant loss of  value. The LCR requires the banks to hold  a stock of HQLAs at least as large as  expected total net cash outflows over the  stress period of 30 days.

Total net cash outflows are defined as the  total expected cash outflows minus the  total expected cash inflows arising in the  stress scenario.

3.

https://iasgoogle.com/editorial_detail/what-is-creamy-layer-in-obc-and-how-it-is-determined

https://www.thehindu.com/news/national/explained-the-tn-experience-on-caste-survey/article67461395.ece

https://www.thehindu.com/news/national/tamil-nadu/why-tamil-nadus-first-bc-panel-was-against-caste-based-proportional-quota/article67426517.ece

A

4.

Market Intervention Scheme

It is a price support mechanism implemented on the request of State Governments for procurement of perishable and horticultural commodities in the event of a fall in market prices

Key features

·    MIS is implemented when there is at least 10% increase in production or 10% decrease in the ruling rates over the previous normal year.

·    The objective is to protect the growers of these horticultural/agricultural commodities from making distress sale in the event of the bumper crop during the peak arrival period when prices fall to a very low level.

·    It provides remunerative prices to the farmers in case of a glut in production and a fall in prices.

·    Proposal of MIS is approved on the specific request of State/Union Territory (UT) Government, if the State/UT Government is ready to bear 50% loss (25% in the case of North-Eastern States), if any, incurred on its implementation. Further, the extent of the total amount of loss shared is restricted to 25% of the total procurement value which includes the cost of the commodity procured plus permitted overhead expenses.

Commodities under the scheme 

·    The MIS has been implemented in case of commodities like apples, malta, garlic, oranges, grapes, mushrooms, clove, black pepper, pineapple, ginger, red chillies, coriander seed, isabgol, chicory, onions, potatoes, cabbage, mustard seed, castor seed, copra, palm oil etc. in the States of Himachal Pradesh, Haryana, Punjab, Andhra Pradesh, Maharashtra, Karnataka, Rajasthan, Gujarat, Kerala, Jammu and Kashmir, Mizoram, Sikkim, Meghalaya, Tripura, Uttar Pradesh, West Bengal, Madhya Pradesh, Andaman and Nicobar Islands, Lakshadweep etc.

Implementation of the scheme

·    It is being implemented by the Department of Agriculture & Cooperation

Funding 

·    Under the scheme, funds are not allocated to the States.

Instead, the central share of losses as per the guidelines of MIS is released to the State Governments/UTs, for which MIS has been approved, based on specific proposals received from them.

https://pib.gov.in/PressReleseDetail.aspx?PRID=1982666

D

5.

https://www.thehindu.com/brandhub/how-diamond-consumers-can-avoid-the-dangers-of-greenwashing/article67697955.ece

https://indianexpress.com/article/business/economy/non-tariff-barriers-stymie-indias-efforts-to-boost-global-trade-8894365/  

C   

6.

Under the Statutory Liquidity Ratio (SLR), the banks are required to maintain certain percentage of Net Demand and Time Liabilities (NDTL) in the form of cash, gold and eligible G-Secs. These financial instruments include Treasury Bills, Dated Securities of the Government, State Development Loans and any other instrument as may be notified by the Reserve Bank of India. However, Recapitalization Bonds are not eligible instruments to fulfil the SLR requirements.

B

7.

Ø Bio CNG is the purified form of biogas where all the unwanted gases are removed to produce >95% pure methane gas.

Ø Bio CNG is similar to the commercially available natural gas in its composition (97%methane) and energy potential. It is generated by treating agricultural waste with a special bacterial solution, after which the gas so generated is cleaned and compressed for use in vehicles.

Ø As it is generated from biomass, it is considered a renewable source of energy.

The first Zero Liquid Discharge (ZLD) Bio CNG production facility has been set up at Pirangut in Pune.

How is CBG different from Compressed Natural Gas (CNG)?

Ø Chemically, CBG is the same as CNG — both are compressed methane — and have the same calorific value.

Ø But, CNG is a by-product of petroleum, and CBG can be produced from any biomass, be it crop residue, cattle dung, sugarcane press mud, municipal wet waste, or effluents from a sewage treatment plant.

Ø Hence, this makes CBG a commercially viable option as it can be directly used to replace CNG in transportation fuel. Just like CNG, CBG too can be transported through cylinders or pipelines to retail outlets.

Other advantages of CBG:

Ø Compressed biogas has the potential to minimize India’s need to import fuel.

Ø The solid by-products of CBG can be used as bio-manure. According to experts, bio-manure produced using paddy straw can result in a 20% increase in crop yield.

Ø The other by-product from CBG is CO2. It is used to produce a liquid or solid CO2. It has a high demand for food preservation or to be used in fire extinguishers.

https://www.deccanherald.com/opinion/bio-cng-the-future-fuel-1206268.html

https://www.thehindubusinessline.com/opinion/biogas-can-fuel-a-green-economy/article67625048.ece#:~:text=Yes%2C%20blending%20will%20create%20a,on%20a%20life%20analysis%20basis.%E2%80%9D

C   

8.

Opportunity cost is the cost of choosing one alternative over another and missing the benefit offered by the forgone opportunity, investing or otherwise.

Opportunity Cost = Return of Most Lucrative Option – Return of Chosen Option. If the government is investing in the priority sector, somebody has to bear the cost, and it is usually the taxpaying public itself.

C

9.

Human capital is not perfectly mobile between countries as movement is restricted by nationality and culture. It is intangible, it cannot be sold in the market only the services of human capital are sold and hence the necessity of the owner of the human capital to be present in the place of production.

C

10.

Interest Rate - Growth Differential (IRGD) is the difference between (not a ratio) the nominal interest rate and the nominal rate of growth in an economy (here Indian economy). Here, the interest rate is the interest rate on debt paid by the Indian government.

·                    The negative value of IRGD would mean lesser difficulty in ensuring debt sustainability by the government, since negative value would mean that the growth rate is high enough to cater to the increase in interest rates on the government debt.

It was negative (not positive) for Indian economy over the decade starting from financial year 2010-11 and ending at 2019-20. The Survey notes that the phenomenon of a negative IRGD in India, unlike advanced economies, is not due to lower interest rates but much higher growth rates.

https://www.financialexpress.com/policy/economy-pessimism-about-indias-public-debt-is-overdone-3353548/

B

11.

ü The idea of a helicopter money drop has been mooted by Milton Friedman helicopter money and Ben Bernanke, among others.

• It means giving everyone direct money transfers. In theory, people would see this as a permanent one-off expansion of the amount of money in circulation and would then start to spend more freely, increasing broader economic activity and pushing inflation back up to the central bank''s target.

C 

12.

Bretton Woods System

• The Bretton Woods System has founded post-World War II and lasted from 1945 to 1972.
• Representatives from 44 countries convened in New Hampshire in 1944 to develop a new postwar international monetary system.
• This system advocated for the implementation of a gold-and-foreign-currency-based exchange standard.
• Each country set a par value concerning the US dollar, which was fixed to gold at $35 per ounce under this system.
• The reserve currency country would strive to run a balance of payments (BOPs) deficit to supply reserves under this system.
• If the deficits turned out to be big, the reserve currency would be in jeopardy. The Triffin paradox is a term used to describe this situation.
• The aim was to aid in the reconstruction of the damaged postwar economy (World War II had just ended in 1945) as well as foster international economic cooperation.

IMF and World Bank

• The Bretton Woods Agreement established the IMF and the World Bank as Bretton Woods Institutions.
• Both organizations were formally established in December 1945 and have endured the test of time, functioning as major cornerstones for international capital financing and trade activity.
• The IMF''s job was to keep track of currency rates and identify countries that needed international monetary assistance.
• The World Bank, formerly known as the International Bank for Reconstruction and Development, was founded in 1945 to administer money for countries that had been physically and financially destroyed by World War II.
• The IMF has 189 member countries in the twenty-first century and continues to foster global monetary cooperation.
• Similarly, the World Bank, through its loans and grants to governments, aids in the promotion of similar activities.

Bretton Woods System’s Collapse

• Concerned that the United States'' gold supply was insufficient to meet the number of dollars in circulation, President Richard M. Nixon depreciated the dollar against gold in 1971.
• He declared a temporary suspension of the dollar''s convertibility into gold after a run on the gold reserves.
• The Bretton Woods System had crumbled by 1973. Countries may adopt any exchange arrangement for their currency at the time, except pegging its value to the price of gold.
• They could, for example, tie its value to the currency of another country or a basket of currencies, or simply let it float and let market forces determine its value about other currencies.

Concerns and Criticisms

• The World Bank and the International Monetary Fund''s critics are concerned about the conditions put on borrowing countries.
• The World Bank and the IMF frequently attach loan conditions based on the ''Washington Consensus,'' which emphasizes trade liberalization, investment, and privatization of nationalized enterprises.
• Many of the WB Group''s infrastructure projects have social and environmental consequences for the people living in the affected areas.
• The construction of hydroelectric dams in several countries, for example, has led to the relocation of indigenous peoples in the area.
• Criticisms of the developed countries'' hegemony over governance structures.
• As they represent the greatest funders, leading industrialized countries, the G7, make decisions and implement programs without much engagement with poor and emerging countries.

Significance

• The Bretton Woods system''s greatest benefit was that it offered a stable exchange rate environment that aided in the restoration of the global economy as well as the expansion of international trade and finance.
• They helped the economy grow by preventing competitive devaluations.

The Bretton Woods Agreement is still seen as a watershed moment in world finance. The International Monetary Fund and the World Bank, which is established at Bretton Woods, were instrumental in helping to rebuild Europe following World War II. Following that, both institutions have maintained their founding purposes while also shifting to serve modern-day global government interests.

D

13.

·      The Agreement on Agriculture aims to facilitate the international trade in agricultural goods, by putting a cap on the agricultural subsidies given by the member countries. This Agreement stands on 3 pillars, viz., Domestic Support; Market Access; and Export Subsidies. 

·      The Green Box Subsidies: R&D; Expansion of irrigation facilities; Income support to the farmers (which is not product specific) etc. Non-distortionary and hence, no limit. 

·      The Blue Box Subsidies: These subsidies are direct payments under a production limiting programme and there is no limit on them. For example, the farmers are paid to limit their production, so that the farms can be left fallow for it to regain top soil fertility.

The Amber Box Subsidies: These include the subsidies that are trade-distorting, but are given by the government for welfare or any other reason. Examples Electricity, fertilisers, seeds, water, MSP (Minimum Support Price) etc.

B

14.

https://indianexpress.com/article/opinion/columns/is-indias-growth-rate-overestimated-9239003/

https://www.financialexpress.com/policy/economy-india-planning-to-move-from-wpi-to-ppi-in-future-official-3335858/

India is considering transitioning from WPI to PPI to align with global practices and improve the accuracy of inflation measurement.

Producer Price Index

Producer Price Index (PPI) measures the average change in the price of goods and services which is received by the producers.

How is PPI different from WPI?

PPI is different from WPI on following grounds:

Firstly, WPI captures the price changes at the point of bulk transactions and may include some taxes levied and distribution costs up to the stage of wholesale transactions. PPI measures the average change in prices received by the producer and excludes indirect taxes.

Secondly, Weights of items in WPI are based on net traded value whereas in PPI weights are derived from Supply Use Table.

Thirdly, PPI removes the multiple counting biases inherent in WPI. PPIs can be compiled separately for Out PPIs, Input PPIs and Export and ImportPPIs. In build Stage of Processing indices can be compiles to avoid multiple counting.

Finally, WPI does not cover services and whereas PPI includes services.  

How is PPI different from Consumer Price Index (CPI)?

PPI is different from CPI on following grounds:

Firstly, PPI estimates the change in average prices that a producer receives while CPI measures the change in average prices that a consumer pays. The prices received by the producers differ from the prices paid by the consumers on account of various factors such as taxes, trade and transport margin, distribution cost etc..

Secondly, Weights of items in CPI are derived from Consumer Expenditure Surveys whereas for PPI it is calculated on the basis of Supply Use Table.

Finally, CPI based inflation estimates are used as nominal anchor for Monetary Policy formulation in general, whereas PPI estimates are used as deflators and for indexation of contracts etc  

B

15.

 Earth Hour:

·      It is a global grassroots movement uniting people to take action on environmental issues and protect the planet.

·      It is organized by World Wildlife Fund (WWF).

·      It was started by WWF and partners as a symbolic lights-out event in Sydney in 2007.

·      It takes place on the last Saturday of March every year.

·      “Earth Hour” encourages people to switch off all lights for an hour, from 8:30 pm to 9:30 pm local time to promote awareness of climate change challenges and energy conservation.

·      Governments and companies also participate by turning off non-essential lights in their buildings, monuments, and landmarks to raise awareness about the impact of energy consumption on our planet.

·  This symbolic act, known as the ‘lights off’ moment, unites people worldwide in a show of support for the planet and serves as a reminder of the environmental issues facing us.

A

16.

C

17.

A 

18.

· Balance of payment refers to Record of economic transactions between residents and non-residents for a period of 1 year. The BoP comprises of Current Account and Capital Account.

· Current account deals in those transactions which do not alter Indian residents’ assets or liabilities outside India and foreign resident’s assets or liabilities inside India.

· Capital account transactions are those transactions which alter Indian residents’ assets or liabilities outside India and foreign resident’s assets or liabilities inside India.

· If current account deficit (CAD) > capital account surplus then there will be Negative BoP

· If Current account deficit (CAD)< Capital account surplus then there will be   Positive BoP

· Negative BoP leads to reduction of forex reserves of a country while positive BoP add forex reserves

A

19.

https://www.thehindu.com/opinion/editorial/trade-puzzle-the-hindu-editorial-on-exports-and-global-trade/article67965009.ece#:~:text=The%20WTO%20expects%20global%20trade,a%20reading%20of%20just%20100.6.

B

20.

Circular flow of Income

The circular flow of income is an economic model that reflects how money or income flows through the different sectors of the economy. A simple economy assumes that there exist only two sectors, i.e., Households and Firms. Households are consumers of goods and services and the owners of the factors of production (land, labour, capital, and enterprise). However, the firm sector produces goods and services and sells them to households. 

Leakages

It means to withdraw money from the circular flow of an economy. Leakage from the circular flow of income of an economy happens when the firms and households save a part of their incomes. Therefore, leakage or withdrawal is that part of the income of an economy that does not pass through the circular flow of income, resulting in the unavailability of that money for spending on the goods and services produced recently. Thus, it can be said that leakages reduce the flow of income in an economy. 

Savings is that portion of the income of a firm or household that is not spent on the purchase of goods and services or distributed as profits but is retained for the future. 

Imports are the goods purchased by the residents of a country from foreign countries, resulting in an outflow of income from the economy.  

Tax is the amount paid to the government by firms and households. 

Injections

It means the addition or introduction of income to the circular flow of an economy. Injections into the circular flow of income are a result of money borrowed by households and firms from different external sources, like financial institutions. However, this additional income does not result in an immediate expenditure. Therefore, injections increase the flow of income in an economy. 

Investment is the part of the income which is used for the purchase of a capital asset. An investment generates a return in the future. In other words, investment is the expense made by a firm on capital expansion. 

Exports are the goods sold by firms to foreign countries, resulting in an inflow of income into the economy. 

Government Expenditure is the total consumption expenditure made by the government of a country on the purchase of goods and services, transfer payments to the households, and providing subsidies to firms. 

An economy can achieve Equilibrium when the Leakages of an economy are equal to the Injections.

A

21.

https://www.moneycontrol.com/news/business/budget/budget-2024-what-is-contingency-fund-12033771.html

B

22.

Government Securities Acquisition Program (G-SAP)

The Government Securities Acquisition Program (G-SAP) is essentially a much bigger and more unconditional Open Market Operation (OMO). The G-SAP is an OMO with a “unique character,” as per RBI.  The term “unconditional” in this context means that RBI has promised up front that it will purchase G-Securities regardless of the state of the market. A marketable instrument known as Government Security (G-Sec) is one that the federal or state governments have issued. It acknowledges the financial responsibilities of the government.  The government securities will be bought by the RBI through a multi-security auction using the multiple-price approach. It will make five different types of government securities purchases through a multi-security auction with various price methodologies. The Liquidity Adjustment Facility (LAF), OMOs, and Operation Twist will continue to operate as usual with G-SAP, and the program is integrated into the central bank’s overall liquidity planning framework for 2021–2022. The government can borrow money by using G-Secs, which are instruments of government-issued debt. The RBI has announced that as part of the G-sec Acquisition Program, it will buy government securities on the open market for Rs. 25,000 crores in August 2022 (G-SAP 2.0), which is why it has recently made headlines.

Key Point of the Operation:

·         The RBI has formally announced that the first stage of G-SAP 1.0 operations will begin on April 15, 2021.

·         The first step will be the acquisition of five dated securities for a total of Rs 25,000 crore.

·         The multiple pricing technique will be used for the first stage of the G-SAP acquisition, and bidders will pay at the rates they submitted in their bids.

·         Four securities with various maturities have been notified by the RBI for the G-Sec acquisition.

·         Along with implementing the G-SAP strategy, the RBI will carry on with routine activities.

·         The LAF, longer-term repo/reverse repo auctions, currency operations, and open market operations, including special OMOs, would fall under this.

·         This is done to make sure that the evolution of the liquidity conditions is consistent with the direction of monetary policy.

Objective of G-SAP:

·         As part of G-SAP 1.0, the RBI will agree in advance to buy a certain quantity of government securities on the open market in order to maintain a steady and orderly evolution of the yield curve amid favorable liquidity conditions.

·         To control the economy’s liquidity and produce a stable and orderly evolution of the yield curve.

·         A yield curve is a line that represents the yields (interest rates) of bonds with similar credit ratings but various maturities.

·         The yield curve’s slope provides insight into potential future changes in interest rates and economic activity.

Significance of the Government Securities Acquisition Program (G-SAP):

·         It will provide the bond market with more security. This year, the Government borrowed more money, thus RBI must make sure the Indian market doesn’t suffer, which lowers the cost of borrowing for the government and maintains the yield.

·         To enable a steady and controlled evolution of the yield curve, this open market purchase will be made.

·         The difference between the repo rate and the yield on ten-year government bonds will be narrowed as a result.

·         It will almost fulfill the function of an OMO calendar, which the bond market had long wished for.

·         With its extensive borrowing program (such as the National Infrastructure Pipeline Project), the Indian government can now sigh with satisfaction as long-term borrowing costs decline.  

Criticism of Government Securities Acquisition Program (G-SAP):

Critics of GSAP claim that the rupee may be in danger. They held the opinion that the rupee’s decline was already due to the GSAP announcement. Therefore, opponents point out that a weaker rupee trades off favourably with low rates or cheaper borrowing costs. A surplus of money will also drive up inflation. 

The issue with this substantial borrowing is that there is a cap on the amount of money that may be lent by the financial system. It is only natural for investors to start seeking a larger rate of return on their lending when the market’s demand for capital increases. Additionally, it causes the bond market to demand larger returns, which raises the yield on the G-Sec. The rising yields on its bonds are causing problems for the government. The RBI will have to offer a greater rate of return for the new securities it will be issuing in 2021–2022, which will ultimately raise the government’s interest cost as the yields on the existing securities increase. Since it is thought to be the safest form of investment, G-Sec serves as the standard for all other borrowings in the nation. All the other loan rates that the RBI is not monitoring will increase as soon as the G-Sec interest rates rise.

Open Market Operations (OMO)

·         It involves the RBI, the nation’s central bank, buying and selling treasury bills and other government securities. OMO’s goal is to control the amount of money in the economy.

·         The central bank will purchase government assets on the open market when it needs to inject liquidity into the financial system. In this manner, it offers liquidity to commercial banks.

·         In contrast, it reduces liquidity when it sells securities. This means that the central bank has some indirect control over the money supply and short-term interest rates.

·         These activities are frequently carried out on a daily basis in a way that keeps inflation in check while assisting banks in continuing to lend.

·         RBI works with the public indirectly through commercial banks to implement the OMO.

·         The RBI adjusts the quantity and cost of money in the system using OMO in addition to other monetary policy tools like the repo rate, cash reserve ratio, and statutory liquidity ratio.

D     

23.

https://www.economicshelp.org/blog/1189/economics/giffen-good/

https://economictimes.indiatimes.com/definition/giffen-good

A 

24.

The Currency Deposit Ratio (CDR) is the ratio of money held by the public in currency to that they hold in the bank deposits. It reflects the people’s preference for liquidity. For example, the CDR increases during the festive season, as the people convert the deposits to cash balance for meeting extra expenditure during such periods.  If the CDR increases, that means that the public is holding more of its money out of the banks, rather than depositing it. Hence, the Money Multiplier will go down.

B

25.

D

1.

https://iasgoogle.com/editorial/constitutional-bodies-and-non-constitutional-bodies

Statutory Bodies in India - These are non-constitutional bodies as they do not find any mention in the Constitution.

·       They are created by an Act of Parliament.

·       These are also termed non-constitutional bodies that make rules & regulations and take decisions on behalf of the government.

·       They are called ‘statutory’ since statutes are laws made by the Parliament or the legislature.

·       Since these bodies derive their power from statutes or laws made by the Parliament, they are known as statutory bodies.

·       Some examples of statutory bodies are National Commission for Women, National Human Rights Commission, National Green Tribunal, etc.

A

2.

https://iasgoogle.com/current_affair/may-20-2023-current-affairs

C 

3.

https://indianexpress.com/article/explained/explained-climate/imd-cyclone-mocha-formation-details-explained-8596533/

https://indianexpress.com/article/news-archive/web/anatomy-of-a-cyclone/

C

4.

Attorney General has the right to speak and to take part in the proceedings of both the Houses of Parliament or their joint sitting and any committee of the Parliament of which he may be named a member but without a right to vote. He enjoys all the privileges and immunities that are available to a Member of Parliament.

A

5.

https://iasgoogle.com/editorial/abc-of-comptroller-and-auditor-general-of-india-cag

A   

6.

https://www.ndtv.com/india-news/parliamentary-panel-alerts-centre-of-contamination-of-arsenic-fluoride-other-heavy-metals-in-ground-and-drinking-water-across-multiple-states-4678118

https://www.thehindu.com/sci-tech/health/even-limited-arsenic-exposure-mars-cognitive-function/article66869761.ece

https://timesofindia.indiatimes.com/city/kochi/ngt-notice-to-kerala-on-groundwater-contamination-high-levels-of-fluoride-and-arsenic/articleshow/106393366.cms

D

7.

https://iasgoogle.com/editorial_detail/national-population-register-all-you-need-to-know

·     Migrants belonging to the six non-Muslim minority communities from Afghanistan, Pakistan and Bangladesh, while applying for long-term visas (LTVs), can also produce National Population Register (NPR) enrolment slips as proof of duration of their stay in India.

·     The National Population Register (NPR) is a Register of usual residents of the country.

·     It is being prepared at the local (Village/sub-Town), sub-District, District, State and National level under provisions of the Citizenship Act 1955 and the Citizenship (Registration of Citizens and issue of National Identity Cards) Rules, 2003.

·     It is mandatory for every usual resident of India to register in the NPR.

·     The NPR will collect both demographic data and biometric data.

·     A usual resident is defined for the purposes of NPR as a person who has resided in a local area for the past 6 months or more or a person who intends to reside in that area for the next 6 months or more.

·     The NPR was first compiled in 2010 simultaneously with the decadal Census exercise and later updated in 2015.

https://www.thehindu.com/news/national/explained-how-can-citizens-file-census-details-online/article66901868.ece

C 

8.

They are negotiable financial instruments.

https://indianexpress.com/article/explained/explained-economics/direct-listing-foreign-exchanges-indian-companies-9012238/

Global Depository Receipts (GDRs)

• It is a foreign currency-denominated negotiable financial instrument issued by a depositary bank. 
• GDRs are certificates issued by a depository bank, which purchases foreign company shares and deposits them in the account. 
• GDRs are commonly used to raise capital from international investors through public stock offerings or private placement.
• Purpose:
• Indian companies can only get their shares listed on foreign exchanges through Global Depository Receipts (GDR).
• GDRs help Indian companies get foreign funds and gain access to international capital. 
• The depository bank is the intermediary that acts as the custodian of the shares issued by the Indian company.
• The depository bank can convert GDRs into shares and trade them on the domestic stock exchanges.
• GDRs are instruments denominated in foreign currencies. The shares are denominated in the deposit receipt issuer''s local currency.
• The value of a GDR depends on the value of the underlying share.
• GDRs are issued to investors throughout the country since they can be denominated as multiple forms of freely convertible currency.
• Only companies with a three-year sound financial record can get access to GDRs.
• Thus, Indian companies should get clearance from the Ministry of Finance and Foreign Investment Promotion Board (FIPB) to obtain GDRs.

https://iasgoogle.com/current_affair/may-19-2023-current-affairs

A

9.

At Present we have 11 Fundamental Duties.

https://indianexpress.com/article/explained/explained-what-are-the-fundamental-duties-of-indias-citizens-7785426/

C   

10.

https://iasgoogle.com/current_affair/may-21-2023-current-affairs

D

11.

https://www.thehindu.com/sci-tech/energy-and-environment/cheetahs-second-home-in-india-gandhi-sagar-wildlife-sanctuary-almost-ready-officials/article67775977.ece

https://iasgoogle.com/n/May-08-2023-current-affairs

D  

12.

Foreign exchange reserves are assets held on reserve by a central bank in foreign currencies, which can include bonds, treasury bills and other government securities. It needs to be noted that most foreign exchange reserves are held in US dollars.

India’s Forex Reserve include:

· Foreign Currency Assets

· Gold reserves

· Special Drawing Rights

· Reserve position with the International Monetary Fund (IMF).

https://indianexpress.com/article/business/banking-and-finance/reserve-banks-gold-reserves-rose-4-5-to-794-64-tonnes-in-2022-23-8598814/#:~:text=The%20latest%20WGC%20report%20showed,)%20during%20January%2DMarch%202023.&text=The%20Reserve%20Bank%20of%20India,reserves%20to%20794.64%20metric%20tonnes.

D   

13.

https://iasgoogle.com/current_affair/may-15-2023-current-affairs 

C

14.

It is an “informal mechanism” to support Pacific islands and to boost diplomatic, and economic ties in the pacific region.

It is launched by US, Australia, New Zealand, Japan and the United Kingdom.

https://indianexpress.com/article/explained/explained-us-partners-in-the-blue-pacific-initiative-counter-china-7994547/

D 

15.

https://iasgoogle.com/n/May-05-2023-current-affairs

https://indianexpress.com/article/explained/everyday-explainers/iran-co-new-member-explained-8741027/     

https://iasgoogle.com/editorial_detail/abc-of-shanghai-cooperation-organisation

C

16.

https://iasgoogle.com/current_affair/may-21-2023-current-affairs

https://indianexpress.com/article/explained/antiquities-abroad-indian-international-laws-metropolitan-museum-of-art-subhash-kapoor-8495034/#:~:text=In%20India%2C%20Item%2D67%20of,deal%20with%20the%20country''s%20heritage. 

D

17.

MRT include different techniques like spindles transfer (ST), pronuclear transfer (PNT) or polar body transfer (PBT). Transmission of defective mitochondrial DNA to the next generation can also be prevented by using these approaches.

https://www.thehindu.com/sci-tech/health/babys-got-three-parents-explaining-mitochondrial-donation-treatment/article66841615.ece

https://indianexpress.com/article/lifestyle/health/baby-born-three-peoples-dna-united-kingdom-mitochondria-diseases-8601790/

C 

18.

National Ganga Council is not a statutory body. It is an authority created under the River Ganga (Rejuvenation, Protection and Management) Authorities Order, 2016.

National Mission for Clean Ganga (NMCG) was registered as a society on 12th August 2011 under the Societies Registration Act 1860.

It acted as implementation arm of National Ganga River Basin Authority (NGRBA) which was constituted under the provisions of the Environment (Protection) Act (EPA),1986.

NGRBA has since been dissolved with effect from the 7th October 2016, consequent to constitution of National Council for Rejuvenation, Protection and Management of River Ganga (referred as National Ganga Council)

National Ganga Council under chairmanship of Hon’ble Prime Minister of India.

https://www.thehindu.com/sci-tech/energy-and-environment/the-guardians-of-the-ganga/article66877758.ece

B

19.

https://indianexpress.com/article/explained/picking-election-commissioners-9149779/

https://iasgoogle.com/editorial/selection-and-appointment-of-election-commissioners

D

20.

https://education.nationalgeographic.org/resource/el-nino/

The Southern Oscillation is the atmospheric component of ENSO. This component is an oscillation in surface air pressure between the tropical eastern and the western Pacific Ocean waters. The strength of the Southern Oscillation is measured by the Southern Oscillation Index (SOI).

https://iasgoogle.com/current_affair/may-17-2023-current-affairs

B 

21.

Forest Advisory Committee - It is a statutory body which was constituted by the Forest (Conservation) Act 1980. It comes under the Ministry of Environment, Forests & Climate Change (MoEF&CC). It considers questions on the diversion of forest land for non-forest uses such as mining, industrial projects, townships and advises the government on the issue of granting forest clearances. However, its role is advisory.

https://www.thehindu.com/sci-tech/energy-and-environment/fac-seeks-revised-proposal-for-etalin-hydro-project-in-arunachal-pradesh/article66396079.ece

D

22.

https://timesofindia.indiatimes.com/world/rest-of-world/historic-un-meet-on-migratory-species-concludes-with-adopting-indias-major-initiative-on-a-central-asian-flyway/articleshow/107784378.cms

https://iasgoogle.com/n/May-06-2023-current-affairs

https://timesofindia.indiatimes.com/india/india-gears-up-for-a-leadership-role-in-central-asian-flyway-for-conserving-migratory-birds-and-their-habitats/articleshow/100041778.cms

C 

23.

https://www.downtoearth.org.in/news/water/india-s-first-census-of-waterbodies-is-a-much-awaited-one-but-experts-question-the-methodology-here-is-why-89234#:~:text=The%20findings%20show%20that%20there,created%20under%20water%20conservation%20schemes.

C

24.

https://www.thehindu.com/business/irdai-forms-expert-panel-for-advice-on-mental-health-cover/article66847262.ece

B 

25.

·      Taiga and temperate forests act as an important carbon sink. Global warming by 3°C will turn these forests into carbon source.

·      Corals are very sensitive to temperature changes. 3°C rise in global temperature will lead to widespread coral mortality.

·      3°C rise in global temperature will lead to submergence of many low-lying coastal wetlands (not all) due to rise in sea levels. Inland wetlands like Keoladeo Ghana National Park will not be effected (it is 100s of kilometers away from coast).

·      Because of the slow inertia, long response time for parts of the climate system, it has been estimated that we are already committed to a sea-level rise of approximately 2.3 metres (7.5 ft) for each degree Celsius of temperature rise within the next 2,000 years.

·      Cultivation of cereals in tropics will take a hit. But in temperate regions their production increases in the short run

A