Daily Quiz: UPSC Prelims Marathon (Economy) – June 16, 2020

In India, the first official attempt to compute the Index of Industrial Production (IIP) was made much earlier than the first recommendation on the subject came at the international level.

• The Office of the Economic Advisor, Ministry of Commerce and Industry made the first attempt of compilation and release of IIP with base year 1937, covering 15 important industries, accounting for more than 90% of the total production of the selected industries.
• The all-India IIP is being released as a monthly series since 1950. With the inception of the Central Statistical Organization in 1951, the responsibility for compilation and publication of IIP was vested with the same.
• When the index was commenced in India, the base year adopted was 1937 and this was revised successively to 1946, 1951, 1956, 1960, 1970, 1980-81, 1993-94, 2004-05 and recently to 2011-12.
• The IIP number measures the industrial production for the period under review, usually a month, as against the reference period. IIP is a key economic indicator of the manufacturing sector of the economy. There is a lag of six weeks in the publication of the IIP index data after the reference month ends.

Capital formation is a term used to describe the net capital accumulation during an accounting period for a particular country. The term refers to additions of capital goods, such as equipment, tools, transportation assets, and electricity.

Statement 1 is incorrect: GFCF in India is not following a particular trend in last 12 years.

Statement 2 is incorrect: Gross capital formation (formerly gross domestic investment) consists of outlays on additions to the fixed assets of the economy plus net changes in the level of inventories.

• Fixed assets include land improvements (fences, ditches, drains, and so on); plant, machinery, and equipment purchases;
• And the construction of roads, railways, and the like, including schools, offices, hospitals, private residential dwellings, and commercial and industrial buildings.
• Inventories are stocks of goods held by firms to meet temporary or unexpected fluctuations in production or sales, and work in progress. According to the 1993 SNA, net acquisitions of valuables are also considered capital formation.

Startups drive economic growth, create employment and foster a culture of innovation. In order to promote innovation and entrepreneurship among enterprising youth, the Hon’ble Prime Minister of India had announced the “Startup India, Stand-up India” initiative on August 15, 2015.

Statement 1 is correct: Maharashtra, Karnataka and Delhi are the top three performers in terms of State-wise distribution of recognized startups in India.

Statement 2 is incorrect: As per industry-wide distribution of recognized startups, IT Services accounted for 13.9 per cent followed by Healthcare and Life Sciences (8.3 per cent) and education (7.0 per cent).

According to the economic survey 2018-19, the overall production of raw coal in India is increased from 2008 to 2018.

Owing to the large rice production area of the country, preferential soil, and climate conditions, India is the largest rice producing country in the world after China. Rice contributes more than 40 per cent of the country’s total food grain production.

• West Bengal is the largest rice producing state in India. Almost half of its arable land is under rice cultivation. In the fiscal year 2016, the state produced about 15.75 million tonnes of rice over 5.46 million hectare cultivable area.
• Uttar Pradesh is the second largest rice producing state with almost 5.86 million hectare land under rice cultivation producing about 12.5 million tonnes of rice.
• The third largest rice producing state in the country is Punjab which produced about 11.82 million tonnes of rice during 2015-2016. The area on which rice was cultivated in the state amounted to 2.97 million hectares.
• Tamil Nadu produces 7.98 million tones.
• Andhra Pradesh produces 7.49 million tones.

Agriculture Credit.

Statement 1 is incorrect: Government fixes agriculture credit disbursement targets for the banking sector every year.

Statement 2 is correct: As per RBI directions, Domestic Scheduled Commercial Banks are required to lend 18% of the Adjusted Net Bank Credit (ANBC) or Credit Equivalent to Off-Balance Sheet Exposure (CEOBE), whichever is higher, towards agriculture.

A sub-target of 8% is also prescribed for lending to small and marginal farmers including landless agricultural labourers, tenant farmers, oral lessees and share croppers.

Statement 3 is correct: Similarly, in the case of Regional Rural Banks 18% of their total outstanding advances is required to be towards agriculture and a sub-target of 8% has been set for lending to small and marginal farmers.

Milk production in India.

• India continues to be the largest producer of milk in the world.
• Milk production in the country was 187.7 million tonnes in 2018-19 and registered a growth rate of 6.5 per cent over the previous year.
• The per capita availability of milk has reached a level of 394 grams per day during 2018-19.
  

The Economic Cost of food-grains consists of three components, namely, pooled cost of grains, procurement incidentals and the cost of distribution. The pooled cost of food grains is the weighted MSP of the stock of food-grains available with FCI at the time of calculating the economic cost.

Private Entrepreneurs Guarantee Scheme was formulated in 2008, for construction of storage godowns in Public Private Partnership (PPP) mode through private entrepreneurs, Central Warehousing Corporation (CWC) and State Warehousing Corporations (SWCs) to overcome storage constraints and ensure safe stocking of food-grains across the country.

• Assessment of additional storage capacities required under the scheme is based on the overall procurement/ consumption pattern and storage space already available.
• To augment the existing storage capacity, construction of godowns has been undertaken in PPP mode in 22 States under Private Entrepreneurs Guarantee (PEG) Scheme through private sector as well as CWC and SWCs.

Smurfing (also called structuring) is a method in which small sizes of money is kept in several number of bank accounts to hide the real identity of the real owner.

• This has been a very commonly used method of money-laundering.
• During the reform period, as more prudential norms of banking regulation evolved, such acts declined in India.
• ‘Smurfer’ (or ‘money mule’) is a person who does this.