SOLUTIONS
INSIGHTS REVISION TEST for Preliminary Exam 2018: Test – 42(Schemes and Programmes)
1. Which is the most appropriate description of interest rate corridor?
a) it is the interest range of all base rates of commercial banks
b) it is the benchmark movement of rates of RBI for the whole year
c) it is the weighted average where call money moves
d) it is the difference between repo and reverse repo rates
Solution: c
In the Above diagram, it can be established that the interest rate corridor is the range between Marginal Standing facility and the reverse repo rate. In India, policy rate is the fixed repo rate announced by the central bank – Reserve Bank of India (RBI) – for its overnight borrowing/lending operations through its mechanism for managing short term liquidity – the Liquidity Adjustment Facility. The Repo Rate is an instrument for borrowing funds by selling securities of the Central Government or a State Government or of such securities of a local authority as may be specified in this behalf by the Central Government or foreign securities, with an agreement to repurchase the said securities on a mutually agreed future date at an agreed price which includes interest for the funds borrowed.
Call Money: Rate at which banks borrow from each other. (MIBOR-Mumbai Inter Bank Operating Rate)
http://www.arthapedia.in/index.php?title=Interest_rate_corridor
2. Consider the following about monetary policy:
- In India, Monetary policy is solely based on Inflation Targeting
- Inflation Targeting is the primary goal whereas secondary goal remains growth
- Price stability is the necessary precondition for sustainable growth
Which of the above is/are correct:
a) Only 1
b) 1 and 3
c) 2 and 3
d) 1,2 and 3
Solution: c
- The primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth. Hence statement 2 is correct
Hence monetary policy is not solely based on inflation targeting. So statement 1 is incorrect.
- Price stability is a necessary precondition to sustainable growth. Hence statement 3 is correct
- In May 2016, the Reserve Bank of India (RBI) Act, 1934 was amended to provide a statutory basis for the implementation of the flexible inflation targeting framework.
- The amended RBI Act also provides for the inflation target to be set by the Government of India, in consultation with the Reserve Bank, once in every five years. Accordingly, the Central Government has notified in the Official Gazette 4 per cent Consumer Price Index (CPI) inflation as the target for the period from August 5, 2016 to March 31, 2021 with the upper tolerance limit of 6 per cent and the lower tolerance limit of 2 per cent.
- The Central Government notified the following as factors that constitute failure to achieve the inflation target: (a) the average inflation is more than the upper tolerance level of the inflation target for any three consecutive quarters; or (b) the average inflation is less than the lower tolerance level for any three consecutive quarters.
3. Consider the following with respect to monetary policy:
- Monetary policy committee is required to meet at least 4 times a year
- The quorum of the Monetary policy is 4 members
Which of the above is/are correct:
a) 1 only
b) 2 only
c) Both 1 and 2
d) None of the above
Solution: c
Under the amended RBI Act, the monetary policy making is as under:
- The MPC is required to meet at least four times in a year. Hence statement 1 is correct
- The quorum for the meeting of the MPC is four members. Hence statement 2 is correct
- Each member of the MPC has one vote, and in the event of an equality of votes, the Governor has a second or casting vote.
https://www.rbi.org.in/scripts/FS_Overview.aspx?fn=2752
4. Consider the following about banking ombudsman:
- Banking ombudsman is an alternative dispute redressal mechanism for resolution of disputes between a bank and its customers
- Banking ombudsman is there in every state
Which of the above statements is/are correct:
a) Only 1
b) Only 2
c) 1 and 2
d) None of the above
Solution: a
- The Reserve Bank’s initiatives in the field of consumer protection include the setting up of a Customer Redressal Cell, creation of a Customer Service Department in 2006 which was recently rechristened as Consumer Education and Protection Department. Further, the setting up of the Banking Codes and Standards Board of India (BCSBI), an autonomous body for promoting adherence to self-imposed codes by banks for committed customer service.
- In order to strengthen the institutional mechanism for dispute resolution, the Reserve Bank in the year 1995 introduced the Banking Ombudsman (BO) scheme. The BO is an Alternate Dispute Redressal mechanism for resolution of disputes between a bank and its customers. Hence statement 1 is correct
- There are 20 Banking Ombudsman offices in the country at present. Hence statement 2 is incorrect
- The scheme covers grievances of the customers against Commercial Banks, Scheduled Primary Cooperative Banks and Regional Rural Banks.
- In 2006, the Reserve Bank revised the BO scheme. Under the revised scheme, the BO and the staff in the offices of the BO are drawn from the serving employees of the Reserve Bank. The new scheme is fully funded by the Reserve Bank and virtually covers all banking transactions related grievances except their business decisions like sanctioning of credit etc.
https://www.rbi.org.in/scripts/FS_Overview.aspx?fn=2745
5. Which of the following is a feature of decentralized PDS:
- The surplus food grains are handed over to FCI after meeting the requirements of the state
- The shortage of food grains is met by long term storage by the states
Which of the above statements is/are correct ?
a) Only 1
b) Only 2
c) 1 and 2
d) None of the Above
Solution: a
The Scheme of Decentralised Procurement (DCP) of foodgrains (rice and wheat) was introduced in 1997-98 with a view to enhance the efficiency of procurement and Public Distribution System (PDS) and to encourage local procurement and reduce out go of food subsidy. Under the scheme, the States undertake the responsibility of procurement of foodgrains, its scientific storage and distribution through Targeted Public Distribution System (TPDS). The surplus of foodgrains procured by DCP States, in excess of their TPDS requirement is handed over to FCI for the Central Pool stocks and deficit, if any, is met by FCI.
Hence statement 1 is correct but statement 2 is incorrect.
6. Which of the following is/are true with respect to The National Policy for Farmers 2007
- Supports services for women like crèches
- Stressed on Curriculum reforms in agriculture universities
- It makes no mention of non-farm employment for rural households
Select your answer using the codes below:
a) 2 Only
b) 1 and 2 ONLY
c) 1, 2 and 3
d) 1 and 3 ONLY
Solution: b
National Policy for Farmers
Government of India approved the National Policy for Farmers (NPF) in 2007. The policy provisions include
- asset reforms in respect of land, water, livestock, fisheries, and bio-resources
- support services and inputs like application of frontier technologies
- agricultural bio-security systems
- supply of good quality seeds and disease-free planting material, improving soil fertility and health, and integrated pest management systems
- support services for women like crèches, child care centres, nutrition, health and training. (Hence statement 1 is correct)
- timely, adequate, and easy reach of institutional credit at reasonable interest rates, and farmer-friendly insurance instruments;
- use of Information and Communication Technology (ICT) and setting up of farmers’ schools to revitalize agricultural extension;
- effective implementation of MSP across the country, development of agricultural market infrastructure, and rural non-farm employment initiatives for farm households; (Hence statement 3 is incorrect)
- integrated approach for rural energy, curriculum reforms in agricultural universities; (Hence statement 2 is correct)
- special categories of farming like organic farming and contract farming etc
http://pib.nic.in/newsite/PrintRelease.aspx?relid=117468
7. Which of the following is NOT correct with respect to determinants of MSP in India:
a) Pricing policy is rooted in the “cost plus” approach
b) Terms of trade between agriculture and non-agricultural sector
c) Price parity between different crops
d) Efficient resource management
Solution: a
Determinants of MSP
Cost of production (CoP) is one of the important factors in the determination of MSP of mandated crops. Besides cost, the Commission considers other important factors such as demand and supply, price trend in the domestic and international markets, inter-crop price parity, terms of trade between agricultural and non-agricultural sectors and the likely impact of MSPs on consumers, in addition to ensuring rational utilization of natural resources like land and water.
Thus, pricing policy is rooted not in ‘cost plus’ approach, though cost is an important determinant of MSP.
8. Consider the following about job creation potential India:
- As per the survey Private Investment and Exports are two sustainable engines of job creation
- Public investment is constrained by need for fiscal consolidation and will only help in short run
Which of the above is/are correct:
a) Only 1
b) Only 2
c) 1 and 2
d) None of the above
Solution: a
Providing India’s young and burgeoning labor force with good, high productivity jobs will remain a pressing medium term challenge. An effective response will encompass multiple levers and strategies, above all creating a climate for rapid economic growth on the strength of the only two truly sustainable engines—private investment and exports. Hence statement 1 is correct
So many people chasing so few low-level government jobs points out that there is a dearth of jobs in the private sector and people fall back on government jobs due to uncertainty in the jobs market. Despite the government’s thrust on generating jobs through entrepreneurs by giving easy small loans, 200 people chasing one job shows that the jobs crisis in India is deep. Not only is the private sector not adding enough new jobs, the government is cutting its jobs. Steep salary hikes due to the Pay Commission awards and the need for performance-based specialist jobs are forcing state governments to hire workers on contract or just outsource jobs. Several state governments have opted for such steps. Recently, the Tamil Nadu government constituted a committee to identify non-essential posts that can be done away with, outsourced or filled through contract appointments for a fixed period.
Containing public investment will affect the economy in short run as it deprives the economy of money supply. But it will help in long run as it reduces the burden of interest payment and builds up fiscal discipline. Hence statement 2 is incorrect
9. Firm can be said to be within formal sector of economy when
- firms are providing some form of social security to employees
- firms are part of tax net regardless whether they pay tax or not
- firms are registered under any central or state law
- If firms are receiving some subsidy from the government
Which of the above is/are correct:
a) 1 and 2
b) 1, 2 and 3
c) 1 and 3
d) 1, 2 ,3 and 4
Solution: d
Conceptually, formal (or informal) enterprises are distinguished by registered (or unregistered), organized (or unorganized), and regulated (or unregulated) enterprises. Employment size is a major criterion to define these enterprises.
The economic survey comes up with social security and tax payments as a information source to gauge formality of firms in India. Also, if the firm is receiving any subsidy in any part from the government it has to be registered thus, comes under the definition of formal sector.
10. Consider the following statements about gender sensitivity in India:
Assertion (A): In the absence of old age social security schemes, the son is considered to be the insurance against old age.
Reason (R): The labour force participation rate for females remains low
Select your answer using the codes below where Assertion is (A) and Reason is (R):
a) A is true and R is the correct explanation of A
b) A is true and R is not the correct explanation of A
c) A is true and R is false
d) Both A and R are false
Solution: b
The Assertion of son being an insurance is often cited as a factor for lack of gender neutrality in the house in terms of entitlements for food, education etc.
India’s Female Labour Force Participation (FLFP) rate has remained visibly low and the International Labour Organisation ranks India’s FLFP rate at 121 out of 131 countries in 2013, one of the lowest in the world. India had the lowest FLFP rate in South Asia, with the exception of Pakistan. Globally, only parts of the Arab world held a lower FLFP rates than India.
However, the female often is not able to support the household after marriage because of family system in India rather than the lack of opportunities per se.
11. What is circle rates that’s is used in real estate?
a) Circle rate is the market rate of the property being sold.
b) Circle rate is the maximum price at which property is registered.
c) Circle rate is the rate at which the property is bought and is equal to transaction value of property.
d) None of the above
Solution: d
Circle rates can be defined as the minimum price at which any real estate asset has to be registered when being transferred.
These rates are set by the state government and undergo revision from time to time. These rates act as an indicator of property prices in a particular area.
A buyer needs to register the property on the actual transaction value or the prescribed circle rate, whichever is higher. Usually, market rate is higher than the circle rates.
12. Consider the following statements are correct with respect to reasons for high dropout rates among boys in India:
- Engagement in economic activities
- financial constraints
- not interested in education
Which of the above statements is/are correct:
a) 1 and 2
b) Only 1
c) 1, 2 and 3
d) 1 and 3
Solution: c
13. Consider the following statements:
Assertion (A): India is one of the country to be blessed with some of the largest river system in the world but significant portion is rendered unavailable
Reason(R) : The natural circumstances like geography, terrain makes it difficult to use all the available water.
Consider the following statements:
a) A is correct and R is the correct explanation of A
b) A is correct and R is not the correct explanation of A
c) A is correct and R is incorrect
d) A and R are incorrect
Solution: a
The average annual water availability of the country is assessed as 1869 billion cubic metres (BCM). Of this, total utilizable water resource is assessed as 1123 BCM, surface water 690 BCM and ground water as 433 BCM. While India is blessed with some of the largest river systems in the world, a significant part of this water is rendered unavailable for use due to natural circumstances. For example, Brahmaputra has the highest total water potential of all rivers in India, but only about 4% of this can be successfully used because the mountainous terrain through which it flows makes further extraction impossible. The use of surface water is also affected by dams. With over 5,000 dams, India is behind only China and US on this count. While facilitating irrigation and electricity generation, the dams are adversely affecting water quality in the country.
https://archive.india.gov.in/sectors/water_resources/index.php?id=11
14. Which of the following is/are included in National Small Savings:
- Postal deposits
- Saving certificates
- Public provident funds
- Employee provident fund
Select your answer using the codes below:
a) 1,2 and 3
b) 1,2 and 4
c) 1 and 2 only
d) 1,2,3 and 4
Solution: a
Small Saving schemes have been always an important source of household savings in India. Small savings instruments can be classified under three heads. These are:
(i) postal deposits [comprising savings account, recurring deposits, time deposits of varying maturities and monthly income scheme(MIS)];
(ii) savings certificates [(National Small Savings Certificate VIII (NSC) and Kisan Vikas Patra (KVP)];
(iii) social security schemes [(public provident fund (PPF) and Senior Citizens‘ Savings Scheme(SCSS)].
http://www.arthapedia.in/index.php?title=National_Small_Savings_Fund
15. Consider the following about National Biopharma Mission:
- This is the first ever Industry-Academia mission to accelerate biopharmaceutical development in India
- As a flagship program of the Government of India in collaboration with World Health Organisation, it promises to boost the growth curve for domestic biopharma in India
Select the correct statements based on the codes below:
a) Only 1
b) Only 2
c) 1 and 2
d) None of the Above
Solution: a
http://pib.nic.in/newsite/PrintRelease.aspx?relid=166951
As a flagship program of the Government of India in collaboration with World Bank.The Mission will provide a holistic and integrated approach to strengthen and support the entire product development value chain for accelerating the research leads to product development. This will help not only in immediate product development addressing public health needs, but will also help to create an ecosystem which will facilitate development of a continuous pipeline of products.
16. Consider the following about NIVARAN-Grievance Portal:
- It is the platform for resolution of service related grievances of railway commuters
- ‘NIVARAN-Grievance Portal’ is the first IT application to be launched on the RailCloud
Select the correct statements based on the codes below:
a) Only 1
b) Only 2
c) 1 and 2
d) None of the above
Solution: b
Following new railway initiatives were recently launched:
RailCloud:
o Rail Cloud works on Cloud Computing system. Most Important works are done through Cloud Computing.
o It is developed by rail PSU RailTel.
NIVARAN-Grievance Portal:
o ‘NIVARAN-Grievance Portal’ is the first IT application to be launched on the RailCloud.
(Hence statement 2 is correct).
o It is the platform for resolution of service related grievances of serving and former railway employees. (Hence statement 1 is incorrect)
17. Consider the following about sovereign gold bond scheme:
- Investments in such bonds by banks will be counted in calculation in SLR
- Bonds cannot be used as collateral for loans.
- It is issued by the RBI on behalf of the Government of India.
Which of the above statements is/are correct:
a) 1 and 3
b) 2 and 3
c) Only 3
d) 1,2 and 3
Solution: a
The Government announced a few changes in its Sovereign Gold Bond (SGB) Scheme recently.
- The primary change was the increase in the limit to 4 kg (from 0.5kg) for individuals, HUF and 20 kg for Trusts.
- This was probably done to encourage high net-worth individuals, rich farmers as well as trusts to invest in these bonds.
- The Government also introduced flexibility in the scheme to design and introduce variants to cater to a cross-section of investors.
- SGBs are government securities denominated in grams of gold.
- It was first launched under the gold monetization scheme of 2015.
- It is issued by the RBI on behalf of the Government of India. (Hence statement 3 is correct)
- The Sovereign Gold Bonds will be available both in demat and paper form.
- The tenor of the bond is for a minimum of 8 years with option to exit in 5th, 6th and 7th years.
- Bonds can be used as collateral for loans. (Hence statement 2 is incorrect)
- Tradable through National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
- Fixed Interest rate of 2.5% per annum payable once in 6 months.
- Capital Gains Tax exempted on redemption.
- Investments in such bonds by banks will be counted in calculation in SLR (Statutory Liquidity Ratio). (Hence statement 1 is correct)
Insights PT 2018 Exclusive (Economy)
18. Which of the following describes Agri-Udaan appropriately:
a) Steps taken to effectively double farmers income by 2022
b) To support diversification of agriculture
c) To support innovation and entrepreneurship in agriculture
d) To develop agricultural exports to their optimum potential
Solution: c
AGRI-UDAAN
- To promote innovation and entrepreneurship in agriculture, the government launched a new AGRI-UDAAN programme that will mentor startups and help them connect with potential investors.
- The programme will help convert innovative ideas from India’s rural youth into viable businesses.
- It will be managed by ICAR-NAARM’s technology incubator, a-IDEA along with IIM Ahmedabad’s Centre for Innovation.
- Start-ups will get incubation space to run their businesses and have access to research laboratories and libraries.
- AGRI UDAAN will also help the selected start-ups with regulatory services like company registration and environmental compliances.
19.consider the following statements about Millets:
- Government has approved 2018 as the ‘National Year of Millets’ to boost production of the nutrient-rich millets and the sunrise agro-industry involved in it
- India is the largest producer of millets followed by the African countries of Nigeria and Niger
Which of the above statements is/are correct:
a) Only 1
b) Only 2
c) 1 and 2
d) None of the Above
Solution: c
National Year of Millets
- Government has approved 2018 as the ‘National Year of Millets’ to boost production of the nutrient-rich millets and the sunrise agro-industry involved in it.
- In November 2017, India had forwarded proposal to United Nations (UN) for declaring year 2018 as ‘International Year of Millets’.
- India is the largest producer of millets followed by the African countries of Nigeria and Niger.
20. Which of the following provides for recognition of trade unions at the central level?
a) Industrial Disputes Act
b) Trade Unions Act
c) Code of Discipline in Industry
d) Inter-Union Code of Conduct
Solution: c
There is no provision in the Indian Trade Unions Act or Industrial Disputes Act, 1947, the only two central enactments in this respect in the country regarding recognition of the trade union by employers.
Code of Discipline and Trade Union Recognition
With the evolution of the voluntary measures in the nature of the Code of Discipline in the industry, an attempt has been made to make a provision for recognition of the unions by the employers.
https://labourlawkerala.wordpress.com/2011/03/19/recoginition-of-trade-unions/
21. Eight persons – P, Q, R, S, T, U, V and W are sitting around a circular table. S is to the immediate right of W. V is not next to either R or T. W is to the immediate right of T, who is sitting opposite to R. U and W are sitting opposite to each other.
Who is to the right of U?
a) R
b) V
c) P
d) Q
Solution: b
Justification:
22. A – W, B – X, C – Y and D – Z are four married couples. In a restaurant they are sitting around a rectangular table, with three persons along each of the longer sides of the table and one person along each of the shorter sides. All the male persons A, B, C and D are sitting along the longer sides and no male persons are sitting together. X is sitting to the right of C. W and Z are sitting at the longer sides and neither of them is sitting adjacent to their respective husbands. Y is sitting to the right of A.
Which pair of people are sitting at the shorter sides of table?
a) Z and X
b) Z and Y
c) X and W
d) X and Y
Solution: d
Justification:
23. A family of eight persons has three married couples. A is the grandmother of C and is the mother-in-law of F. H is the daughter of B, who is the brother of G. D is the only child of G and is the mother of C. E is the wife of B. How is G related to H?
a) Uncle
b) Father
c) Brother
d) Cousin
Solution: a
Justification:
24. A watch, which loses time uniformly, was observed to be 5 minutes fast at 8.00 p.m. on Thursday. It was noticed to be 7 minutes slow at 8.00 a.m. on the subsequent Monday. When did the watch show the correct time?
a) 7 a.m. Saturday
b) 7 a.m. on Friday
c) 10 a.m. on Sunday
d) 11 a.m. on Friday
Solution: a
Justification:
The number of hours from 8:00 p.m. on Thursday to 8:00 a.m. on Monday = 84 hours.
In 84 hours, the clock gained 12 minutes.
But to show the correct time, the clock has to gain 5 minutes.
(5/12)×84 = 35 hours.
35 hours from 8:00 p.m. on Thursday is 7:00 a.m. on Saturday.
25.March 1st, 2017 is Wednesday. Which month of the year 2018 has the same calendar?
a) August
b) November
c) December
d) October
Solution: a
Justification:
We have to find the sum of odd days from March which is a multiple of 7.
Odd days from March, 2017 to August, 2018 : 3 + 2 + 3 + 2 + 3 + 3 + 2 + 3 + 2 + 3 + 3 + 0 + 3 + 2 + 3 + 2 + 3 = 42
Also, August has 31 days.
Hence, August of the year 2018 has the same calendar of that of March, 2017.
