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Answers and Explanation: Economy Quiz, June 5

Following are the solutions of the Economy Quiz, June 5

Note: Find the Questions Here

1. b)

Statement 1 is incorrect. Geographical Indications of Goods are defined as that aspect of industrial property which refer to the geographical indication referring to a country or to a place situated therein as being the country or place of origin of that product.

Under Articles 1 (2) and 10 of the Paris Convention for the Protection of Industrial Property, geographical indications are covered as an element of IPRs.

GIs are also covered under Articles 22 to 24 of the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement, which was part of the Agreements concluding the Uruguay Round of GATT negotiations.

Statement 2 is correct. A geographical indication (GI) is a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin. In order to function as a GI, a sign must identify a product as originating in a given place.For example, Blue pottery of Jaipur.

A Geographical Indication right enables those who have the right to use the indication to prevent its use by a third party whose product does not conform to the applicable standards. For example, in the jurisdictions in which the Darjeeling geographical indication is protected, producers of Darjeeling tea can exclude the use of the term “Darjeeling” for tea not grown in their tea gardens or not produced according to the standards set out in the code of practice for the geographical indication.

Statement 3 is incorrect. It is the West Bengal government that is planning to provide GI tag for four Bengali sweets; that are Moa’ of Jainagar, ‘Sarpuria’ of Krishnagar, and ‘Sitabhog’ and ‘Mihidana’ of Burdwan.

2. b)

Statement 1 is incorrect.Under the Price Deficiency Payment system if the price in an Agriculture Produce Market Committee (APMC) mandi fell below the MSP (Minimum support Price) then the farmer would be entitled to a maximum of, say, 50 percent of the difference between the MSP and the market price.

Statement 2 is correct. The mechanism entails paying the benefit directly to the affected farmers. For instance, if a farmer sells maize at Rs 900 per quintal against the MSP of Rs 1,325 per quintal, the deficiency of Rs 425 per quintal should be directly transferred to the bank account of the concerned farmer according to the authentic documents which he possesses to claim the benefit.Such a system would keep the quantum of the subsidy bill in check and also be consistent with India’s obligations to the WTO.

3. d)

Integrated Child Development Services (ICDS) Scheme:

Launched on 2nd October, 1975, the Integrated Child Development Services (ICDS) Scheme is one of the flagship programmes of the Government of India and represents one of the world’s largest and unique programmes for early childhood care and development. It is the foremost symbol of country’s commitment to its children and nursing mothers, as a response to the challenge of providing pre-school non-formal education on one hand and breaking the vicious cycle of malnutrition, morbidity, reduced learning capacity and mortality on the other. The beneficiaries under the Scheme are children in the age group of 0-6 years, pregnant women and lactating mothers.

Objectives of the Scheme are:

1. To improve the nutritional and health status of children in the age-group 0-6 years;

2. To lay the foundation for proper psychological, physical and social development of the child;

3. To reduce the incidence of mortality, morbidity, malnutrition and school dropout;

4. To achieve effective co-ordination of policy and implementation amongst the various departments to promote child development; and

5. To enhance the capability of the mother to look after the normal health and nutritional needs of the child through proper nutrition and health education.

The ICDS Scheme offers a package of six services. They are:

1.Supplementary Nutrition

2.Pre-school non-formal education

3.Nutrition & health education


5.Health check-up and

6.Referral services

4. b)

Direct benefit transfer would reduce the leakage of subsidy and would reduce wasteful expenditure. Also, policy reforms such as increasing FDI limits will lead to more investments in the Indian economy and that will automatically increase productivity and tax collection. Hence, these steps would promote fiscal consolidation.

Fiscal consolidation is a process where government’s fiscal health getting improved indicated by reduced fiscal deficit which is manageable and bearable for the economy. Improved tax revenue realization and better aligned expenditure are thus components of fiscal consolidation.

In India, fiscal deficit is the king indicator to show the fiscal health of the government. Effectively, fiscal deficit indicates the amount of government borrowing for that particular year.

Excess fiscal deficit produces some adverse effects. For the government, it causes interest payment burden and for the economy it produces inflationary effect, and rising interest rate in the economy.Enactment of food security laws will increase the revenue expenditure.

Fiscal consolidation in India

In India, fiscal consolidation or the fiscal roadmap for the centre is expressed in terms of the budgetary targets (fiscal deficit and revenue deficit) to be realized in successive budgets. The Fiscal Responsibility and Budget Management (FRBM) Act gives the targets for fiscal consolidation in India. According to FRBM, the government should eliminate revenue deficit and reduce fiscal deficit to 3% (medium term) of the GDP. Following measures from the expenditure side and revenue side are envisaged by the government to achieve fiscal consolidation.

• Improved tax revenue realization: For this, increasing efficiency of tax administration by reducing tax avoidance, eliminating tax evasion, enhancing tax compliance etc. are to be made.• Enhancing tax GDP ratio by widening the tax base and minimizing tax concessions and exemptions also improves tax revenues.

• Better targeting of government subsidies and extending Direct Benefit Transfer scheme for more subsidies

• Higher economic growth rate will help government to get higher tax revenues as well. Augmentation of tax revenue is necessary to bring fiscal consolidation as there are limitations for reducing government expenditure in India.

5. c)

Most favoured nation: The tem means the country which is the recipient of this treatment must, normally, receive equal advantages as the ‘most favoured nation’ by the country granting such treatment.

In effect, a country that has been accorded MFN status may not be treated less advantageously than any other country with MFN status by the promising country.


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