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Daily Quiz: August 28, 2018
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- Question 1 of 7
1. Question
1 pointsCategory: EconomyWhich of the following likely to happen due to a strong rupee in the international market?
- Lower landed cost of crude oil
- Upgradation of external credit ratings
- Boosts to export driven sectors like IT, textiles and pharma
Select the correct answer using the codes given below.
Correct
Statement 1 is correct.
India relies on imports for more than 80% of its daily crude requirement, the strong rupee comes as a major blessing in disguise. A stronger rupee means lower landed cost of crude oil, which is always expressed in dollar terms. A lower landed cost of oil will not only be anti-inflationary but will also reduce the burden on the government finances.
Statement 2 is correct.
On the subject of government finances, the fiscal deficit and the revenue deficit are largely driven by the rupee movement versus the dollar. Lower oil import bill means that India can afford to run a lower revenue deficit as well as a lower fiscal deficit. That explains why the government can afford to focus on fiscal discipline. When fiscal deficit and revenue deficit are in control, it is positive from the perspective of external credit ratings for the economy.
Statement 3 is incorrect.
Export driven sectors like IT, textiles and pharma tend to suffer from a strong rupee. However, due to a strong Rupee import intensive sectors tend to benefit. A stronger rupee makes imports more favourable and is especially suitable for sectors like capital goods and telecom where there is a strong import component. A strong rupee makes imports cheaper and generally tends to be positive for import intensive sectors.
Incorrect
Statement 1 is correct.
India relies on imports for more than 80% of its daily crude requirement, the strong rupee comes as a major blessing in disguise. A stronger rupee means lower landed cost of crude oil, which is always expressed in dollar terms. A lower landed cost of oil will not only be anti-inflationary but will also reduce the burden on the government finances.
Statement 2 is correct.
On the subject of government finances, the fiscal deficit and the revenue deficit are largely driven by the rupee movement versus the dollar. Lower oil import bill means that India can afford to run a lower revenue deficit as well as a lower fiscal deficit. That explains why the government can afford to focus on fiscal discipline. When fiscal deficit and revenue deficit are in control, it is positive from the perspective of external credit ratings for the economy.
Statement 3 is incorrect.
Export driven sectors like IT, textiles and pharma tend to suffer from a strong rupee. However, due to a strong Rupee import intensive sectors tend to benefit. A stronger rupee makes imports more favourable and is especially suitable for sectors like capital goods and telecom where there is a strong import component. A strong rupee makes imports cheaper and generally tends to be positive for import intensive sectors.
- Question 2 of 7
2. Question
1 pointsCategory: EconomyConsider the following statements:
- Tax buoyancy indicates growth based increase in tax collection.
- In Regressive Taxation the tax rate is fixed as the taxable base amount increases or decreases.
Which of the statements given above is/are correct?
Correct
Statement 1 is correct.
Tax buoyancy explains this 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.
Statement 2 is incorrect.
It is Proportional Taxation where Tax rate is fixed with no change as the taxable base amount increases or decreases. It is also called a flat tax. A regressive tax is the one in which tax rate decreases as the amount subject to taxation increases; and the tax rate progresses from high to low. The lowest amount is subject to higher taxation and this leads to individuals with low income bear the highest burden of regressive taxes. Such taxation system does not take into account the ability to pay.
Incorrect
Statement 1 is correct.
Tax buoyancy explains this 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.
Statement 2 is incorrect.
It is Proportional Taxation where Tax rate is fixed with no change as the taxable base amount increases or decreases. It is also called a flat tax. A regressive tax is the one in which tax rate decreases as the amount subject to taxation increases; and the tax rate progresses from high to low. The lowest amount is subject to higher taxation and this leads to individuals with low income bear the highest burden of regressive taxes. Such taxation system does not take into account the ability to pay.
- Question 3 of 7
3. Question
1 pointsCategory: EconomyWhich of the following are considered as core industries in India?
- Fertilizers
- Iron
- Textile
- Crude Oil
- Food processing
Select the correct answer using the codes given below.
Correct
The Eight Core Industries are Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement and Electricity. These 8 core industries comprises 40.27% of the weight of items included in the Index of Industrial Production (IIP).
Incorrect
The Eight Core Industries are Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement and Electricity. These 8 core industries comprises 40.27% of the weight of items included in the Index of Industrial Production (IIP).
- Question 4 of 7
4. Question
1 pointsCategory: EconomyWhich of the following statements is/are correct about Depository Receipts
(DR)?
- It is a negotiable financial instrument.
- It is denominated in a foreign currency.
- In India, any company, whether private limited or public limited or listed or unlisted are capable of issuing DRs.
Select the correct answer using the codes given below.
Correct
Statement 1 is correct.
A Depository Receipt (DR) is a negotiable financial instrument issued by a company in a foreign jurisdiction.
Statement 2 is correct.
A Depository Receipt is always issued in a foreign jurisdiction. As an example; Indian firms will issue DR in US Dollar to attract foreign investors, i.e. investors from the United States of America. Thus, DRs is an important mechanism for raising funds by tapping foreign investors who otherwise may not be able to participate in the domestic market. Depository Receipts represent certain securities like bonds, shares etc.
Statement 3 is correct.
In India, any company, whether private limited or public limited or listed or unlisted are capable of issuing DRs. The issue of DRs is regulated by Ministry of Finance’s “The Depository Receipts Scheme, 2014′′. Depending upon the location in which DRs are issued, they are called as ADRs (American Depository Receipts), IDR (Indian Depository Receipts) or in general as GDR (Global Depository Receipt).
Incorrect
Statement 1 is correct.
A Depository Receipt (DR) is a negotiable financial instrument issued by a company in a foreign jurisdiction.
Statement 2 is correct.
A Depository Receipt is always issued in a foreign jurisdiction. As an example; Indian firms will issue DR in US Dollar to attract foreign investors, i.e. investors from the United States of America. Thus, DRs is an important mechanism for raising funds by tapping foreign investors who otherwise may not be able to participate in the domestic market. Depository Receipts represent certain securities like bonds, shares etc.
Statement 3 is correct.
In India, any company, whether private limited or public limited or listed or unlisted are capable of issuing DRs. The issue of DRs is regulated by Ministry of Finance’s “The Depository Receipts Scheme, 2014′′. Depending upon the location in which DRs are issued, they are called as ADRs (American Depository Receipts), IDR (Indian Depository Receipts) or in general as GDR (Global Depository Receipt).
- Question 5 of 7
5. Question
1 pointsCategory: EconomyWith reference to the Mahalanobis Model of economic growth, consider the following statements:
- It was heavy industry biased development strategy.
- It was implemented in India for the first time along with the economic liberalization of 1991.
Which of the statements given above is / are correct?
Correct
Statement 1 is correct.
The Mahalanobis Model of Growth was a heavy industry biased development strategy.
This model is known to have set the statistical foundations for state-directed investments and created the intellectual underpinnings of the license-raj through an elaborate input-output model. This Model suggested that there should be an emphasis on the heavy industries, which can lead the Indian Economy to a long-term higher growth path. India’s second five-year plan and Industrial policy Resolution 1956, which paved the way for the development of Public Sector and license raj; were based upon this model.
Statement 2 is incorrect.
India’s second five year plan and Industrial policy Resolution of 1956 were based upon this model. At the time of the formulation of the Second Five Year Plan, Prof.P.C. Mahalanobis who was friend and adviser to Late Prime Minister Jawaharlal Nehru and who was a one-time member of Planning Commission, prepared a growth model with which he showed that to achieve a rapid long-term rate of growth it would be essential to devote a major part of the investment outlay to build-ing of basic heavy industries.
The economic liberalisation of 1991 was initiated with the goal of making Indian economy more market and service-oriented and expanding the role of private and foreign investment. Specific changes include a reduction in import tariffs, deregulation of markets, reduction of taxes, and greater foreign investment. Liberalisation has been credited by its proponents for the high economic growth recorded by the country in the 1990s and 2000s.
Incorrect
Statement 1 is correct.
The Mahalanobis Model of Growth was a heavy industry biased development strategy.
This model is known to have set the statistical foundations for state-directed investments and created the intellectual underpinnings of the license-raj through an elaborate input-output model. This Model suggested that there should be an emphasis on the heavy industries, which can lead the Indian Economy to a long-term higher growth path. India’s second five-year plan and Industrial policy Resolution 1956, which paved the way for the development of Public Sector and license raj; were based upon this model.
Statement 2 is incorrect.
India’s second five year plan and Industrial policy Resolution of 1956 were based upon this model. At the time of the formulation of the Second Five Year Plan, Prof.P.C. Mahalanobis who was friend and adviser to Late Prime Minister Jawaharlal Nehru and who was a one-time member of Planning Commission, prepared a growth model with which he showed that to achieve a rapid long-term rate of growth it would be essential to devote a major part of the investment outlay to build-ing of basic heavy industries.
The economic liberalisation of 1991 was initiated with the goal of making Indian economy more market and service-oriented and expanding the role of private and foreign investment. Specific changes include a reduction in import tariffs, deregulation of markets, reduction of taxes, and greater foreign investment. Liberalisation has been credited by its proponents for the high economic growth recorded by the country in the 1990s and 2000s.
- Question 6 of 7
6. Question
1 pointsCategory: EconomyWhich of the following statements is/are correct about the present norms of Priority Sector Lending in India?
- The Bank loans to food and agro processing units will form part of Agriculture.
- The priority sector non-achievement will be assessed on quarterly average basis at the end of the respective year.
- The foreign banks with less than 20 branches are exempt from the priority sector lending target.
Select the correct answer using the code given below.
Correct
Statement 1 is correct.
As per the Priority Sector Lending-Targets and Classification issued by the RBI on April 23, 2015, Bank loans to food and agro processing units will form part of Agriculture.
Statement 2 is correct.
The new rules say that the priority sector non-achievement will be assessed on quarterly average basis at the end of the respective year from 2016-17 onwards, instead of annual basis which was done earlier.
Statement 3 is incorrect.
Foreign banks with less than 20 branches also need to meet the assigned target of Priority Sector Lending. Foreign banks with less than 20 branches will move to Total Priority Sector Target of 40 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher, on par with other banks by 2019-20, and the sub-targets for these banks, if to be made applicable post 2020, would be decided in due course. Adjusted Net Bank Credit (ANBC) is the net bank credit plus investments made by banks in non-SLR bonds held in the held-to-maturity category or credit equivalent amount of off-balance-sheet exposure, whichever is higher.
Incorrect
Statement 1 is correct.
As per the Priority Sector Lending-Targets and Classification issued by the RBI on April 23, 2015, Bank loans to food and agro processing units will form part of Agriculture.
Statement 2 is correct.
The new rules say that the priority sector non-achievement will be assessed on quarterly average basis at the end of the respective year from 2016-17 onwards, instead of annual basis which was done earlier.
Statement 3 is incorrect.
Foreign banks with less than 20 branches also need to meet the assigned target of Priority Sector Lending. Foreign banks with less than 20 branches will move to Total Priority Sector Target of 40 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher, on par with other banks by 2019-20, and the sub-targets for these banks, if to be made applicable post 2020, would be decided in due course. Adjusted Net Bank Credit (ANBC) is the net bank credit plus investments made by banks in non-SLR bonds held in the held-to-maturity category or credit equivalent amount of off-balance-sheet exposure, whichever is higher.
- Question 7 of 7
7. Question
1 pointsCategory: EconomyWith reference to the Soil Health Card scheme, consider the following statements:
- A Soil Health Card is a printed report that a farmer will be handed over for each of his holdings.
- A Soil Health Card contains the status of the soil respect to 12 parameters that include Macro nutrients, Micro – nutrients, Secondary- nutrient and Physical parameters.
- A Soil Health Card will be provided to farmers prior to each cropping seasons, twice in a year.
Select the correct answer using the code given below.
Correct
Statement 1 is correct.
A SHC is meant to give each farmer soil nutrient status of his/her holding and advise him/her on the dosage of fertilizers and also the needed soil amendments, that s/he should apply to maintain soil health in the long run. SHC is a printed report that a farmer will be handed over for each of his holdings.
Statement 2 is correct.
A SHC will contain the status of his soil with respect to 12 parameters, namely N,P,K (Macro-nutrients) ; S (Secondary- nutrient) ; Zn, Fe, Cu, Mn, Bo (Micro – nutrients) ; and pH, EC, OC (Physical parameters). Based on this, the SHC will also indicate fertilizer recommendations and soil amendment required for the farm.
Statement 3 is incorrect.
SHC will be made available once in a cycle of 3 years, which will indicate the status of soil health of a farmer’s holding for that particular period. The SHC given in the next cycle of 3 years will be able to record the changes in the soil health for that subsequent period.
Incorrect
Statement 1 is correct.
A SHC is meant to give each farmer soil nutrient status of his/her holding and advise him/her on the dosage of fertilizers and also the needed soil amendments, that s/he should apply to maintain soil health in the long run. SHC is a printed report that a farmer will be handed over for each of his holdings.
Statement 2 is correct.
A SHC will contain the status of his soil with respect to 12 parameters, namely N,P,K (Macro-nutrients) ; S (Secondary- nutrient) ; Zn, Fe, Cu, Mn, Bo (Micro – nutrients) ; and pH, EC, OC (Physical parameters). Based on this, the SHC will also indicate fertilizer recommendations and soil amendment required for the farm.
Statement 3 is incorrect.
SHC will be made available once in a cycle of 3 years, which will indicate the status of soil health of a farmer’s holding for that particular period. The SHC given in the next cycle of 3 years will be able to record the changes in the soil health for that subsequent period.
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