Daily Quiz: UPSC Prelims Marathon – August 7, 2018

The industrial policy that we adopted was closely related to the trade policy. In the first seven five year plans, trade was characterised by what is commonly called an inward looking trade strategy. Technically, this strategy is called import substitution. This policy aimed at replacing or substituting imports with domestic production. For example, instead of importing vehicles made in a foreign country, industries would be encouraged to produce them in India itself.

The WTO was founded in 1995 as the successor organisation to the General Agreement on Trade and Tariff (GATT). GATT was established in 1948 with 23 countries as the global trade organization to administer all multilateral trade agreements by providing equal opportunities to all countries in the international market for trading purposes. WTO is expected to establish a rule-based trading regime in which nations cannot place arbitrary restrictions on trade. In addition, its purpose is to enlarge production and trade of services, to ensure optimum utilisation of world resources and to protect the environment. Hence, statements 1 and 3 are correct.  IMF aims to lessen the degree of disequilibrium in the international balance of payments of members. Hence, statement 2 is not correct.

Price Stabilization Fund (PSF) refers to any fund constituted for the purpose of containing extreme volatility in prices of selected commodities. It was created in 2015 for perishable agricultural and horticultural commodities, but initially limited to support potato and onion prices only.

The Government of India, in 2015, approved the creation of a Price Stabilization Fund (PSF) with a corpus of Rs.500 crores as a Central Sector Scheme, to support market interventions for price control of perishable agri-horticultural commodities during 2014-15 to 2016-17. Initially the fund was proposed to be used for market interventions for onion and potato only and pulses were added subsequently. Nonperishable products include cereals, pulses, edible oil, sugar, salt and tea. Hence, statement 1 is not correct.

PSF mechanism is apart from the Minimum Support Price (MSP) based initiatives already existing in the country for certain agricultural goods. The MSP system has some price tempering properties, but it is from the perspective of the growers / farmers and becomes operative when prices fall below the cost of production. The output thus procured by the Government at MSP is later distributed at affordable rates through the public distribution system. In contrast to MSP and consumer fed operations, a PSF is generally conceived to be operative in both directions of price movement, subject to prices crossing some threshold level. Hence,statement 2 is not correct.

All except NABARD are the Institute structure of rural banking involves in direct credit to rural population. Hence option (c) is correct.

Among all commercial banks is the biggest lender to the rural population.

Whereas NABARD do not involves in direct credit system. It mainly provide loan to RRB, cooperatives and State government in the area of Rural Development and Agricultural Development.

The term Tiger Cub Economies collectively refers to the economies of the developing

countries of Indonesia, Malaysia, the Philippines and Thailand the four dominant

countries in Southeast Asia

Tiger Cub Economies are so named because they attempt to follow the same export-

driven model of technology and economic development already achieved by the

rich high-tech industrialized developed countries of Taiwan and South Korea along with

the wealthy financial centers of Hong Kong (China) and Singapore, which are all

collectively referred to as the Four Asian Tigers

Capital gains tax is a tax that is charged on the profits that is made by selling capital

asset. For making it easy for taxation, the capital assets are classified to ‘Short-Term

Capital Asset; and ‘Long-Term Capital Asset’.

Short-Term Capital Asset:

If the shares and securities are held by the taxpayer for a period not more than 36

months preceding the date of its transfer will be treated as a short-term capital asset.

Long- Term Capital Asset:

If the taxpayer holds the shares and securities for a period exceeding 36 months before

the transfer will be treated as a long-term capital asset.

Equity shares which are listed in a recognised stock exchange, units of equity oriented

mutual funds, listed debentures and Government securities, units of UTI and Zero

Coupon Bonds’ period of holding will be considered for 12 months instead of 36 months.

Transfer is giving up your right on an asset it includes sale, exchange, compulsory

acquisition under any law and relinquishment.

Capital Gains include any property held by the assesse except the following:

Stock in trade.

• Consumable stores or raw materials held for the purpose of business or
• profession.
• Personal effects that are movable except jewellery, archaeological collections,
• drawings, paintings, sculptures or any art work held for personal use.
• Agricultural land. The land must not be located within 8kms from a municipality,
• Municipal Corporation, notified area committee, town committee or a cantonment
• board with a minimum population of 10,000.
• 6.5 percent Gold Bonds, National Defence Gold Bonds and Special Bearer
• Bonds.
• Gold Deposit bonds under Gold Deposit Scheme.

Fiscal deficit means Government need to borrow from the market which leads to crowding-outof funding for private players.Withdrawals from cash balance held in RBI and borrowing from RBI leads to increase in moneysupply. This increase in money supply may lead to rise in prices.Borrowing from public has no effect on money supply in the country. When governmentborrows, money gets transferred from the public to the government. The net effect on totalmoney supply in the country is nil.Deficit financing may lead to inflation depending upon the mode of operation of deficitfinancing.