TEST-2 – INSIGHTS IAS REVISION PLAN FOR PRELIMS 2019 – DAILY REVISION TESTS: 16 March 2019

Solution: B

Structural change represents the fundamental changes that occurring in the basic features of the economy over a long period. Structure of the economy means the occupational structure, sectoral distribution of income, industrial pattern, composition of exports, saving- GDP ratio etc.

Due to LPG reforms, largely agriculture based economy has transformed into service based economy in subsequent years or decades.

Solution: B

Tax Expenditures, as the word might indicate, does not relate to the expenditures incurred by the Government in the collection of taxes. Rather it refers to the opportunity cost of taxing at concessional rates, or the opportunity cost of giving exemptions, deductions, rebates, deferrals credits etc. to the tax payers.

Tax expenditures indicate how much more revenue could have been collected by the Government if not for such measures. In other words, it shows the extent of indirect subsidy enjoyed by the tax payers in the country.

Solution: C

Twin balance sheet problem refers to the stress on balance sheets of banks due to non-performing assets (NPAs) or bad loans on the one hand, and heavily indebted corporates on the other.

https://www.thehindu.com/business/Economy/resolution-of-twin-balance-sheet-problem-to-take-upto-nine-months/article23546804.ece

Solution: B

Solution: A

http://pib.nic.in/newsite/PrintRelease.aspx?relid=186415

Solution: B

Open Acreage Licensing Policy (OALP) gives an option to a company looking for exploring hydrocarbons to select the exploration blocks on its own, without waiting for the formal bid round from the Government.

Under Open Acreage Licensing Policy (OALP), a bidder intending to explore hydrocarbons like oil and gas, coal bed methane, gas hydrate etc., may apply to the Government seeking exploration of any new block (not already covered by exploration).

http://www.arthapedia.in/index.php?title=Open_Acreage_License_Policy_(OALP)

Solution: D

All the above measures help to increase the tax income of government.

Solution: C

A decrease in the repo rate means the commercial banks can borrow more money from RBI at a cheaper rate, meaning lending rates for consumers may decrease.

Solution: A

About Agni-5 Ballistic Missile:

It is a surface-to-surface missile which can carry nuclear warhead weighing 1.5 tonnes to a distance of over 5,000 km and is the longest missile in India’s arsenal capable of reaching most parts of China.

The missile features many new indigenously-developed technologies, including the very high accuracy Ring Laser Gyro based Inertial Navigation System (RINS), and the most modern and accurate Micro Navigation System (MINS) which improves the accuracy of the missile.

The Kalvari class is a class of diesel-electric attack submarines based on the Scorpène-class submarine being built for the Indian Navy. The submarines are designed by French naval defence and energy company DCNS and are being manufactured by Mazagon Dock Limited in Mumbai.

Solution: A

Goods & Services Tax Council is a constitutional body for making recommendations to the Union and State Government on issues related to Goods and Service Tax. The GST Council is chaired by the Union Finance Minister and other members are the Union State Minister of Revenue or Finance and Ministers in-charge of Finance or Taxation of all the States.

States have power to impose indirect taxes on Petrol, Alcohol etc.

Solution: D

The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act,2002 (also known as the SARFAESI Act) is an Indian law. It allows banks and other financial institution to auction residential or commercial properties(of Defaulter) to recover loans.

Solution: A

RBI releases Financial Stability Report.  The FSR reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability, as also the resilience of the financial system. The Report also discusses issues relating to development and regulation of the financial sector.

https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=45862

Solution: A

Lending by a commercial bank for certain sectors which are identified as “priority sector” by the central bank (Reserve Bank of India) is called as priority sector lending.

Priority sector lending (PSL) should constitute 40 percent of Adjusted Net Bank Credit ANBC] or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher.

To the extent of shortfall in the achievement of target, banks may be required to invest in Rural Infrastructure Development Fund (RIDF) established with National Bank for Agriculture and Rural Development (NABARD) and other Funds with NABARD or National Housing Bank (NHB) or Small Industries Development Bank of India (SIDBI) or Micro Units Development Refinance Agency Bank (MUDRA Ltd)., as decided by the Reserve Bank from time to time, or purchase priority sector lending certificates (PSLC).

Banks who fail to lend stipulated PSL are not subjected suspension of bank license

Solution: D

Micro Units Development Refinance Agency (MUDRA) Bank is a refinance institution (Doesn’t lend directly to consumers or target group) for micro-finance institutions. MUDRA is conceived not only as a refinance institution and but also as a regulator for the micro finance institutions (MFIs).

The MUDRA Bank is primarily be responsible for –

1) Laying down policy guidelines for micro/small enterprise financing business

2) Registration of MFI entities

3) Regulation of MFI entities

4) Accreditation /rating of MFI entities

5) Laying down responsible financing practices to ward off indebtedness and ensure proper client protection principles and methods of recovery

6) Development of standardized set of covenants governing last mile lending to micro/small enterprises

7) Promoting right technology solutions for the last mile

8) Formulating and running a Credit Guarantee scheme for providing guarantees to the loans which are being extended to micro enterprises

9) Creating a good architecture of Last Mile Credit Delivery to micro businesses under the scheme of Pradhan Mantri Mudra Yojana.

Solution: A

Core Inflation is also known as underlying inflation, is a measure of inflation which excludes items that face volatile price movement, notably food and energy. In other words, Core Inflation is nothing but Headline Inflation minus inflation that is contributed by food and energy commodities.

Solution: A

Highlights of Ayushman Bharat Health Scheme

Highlights of the scheme:

• 
  Coverage: The scheme has the benefit cover of Rs. 5 lakh per family per year. To ensure that nobody is left out (especially women, children and elderly) there will be no cap on family size and age in the scheme. The benefit cover will also include pre and post-hospitalization expenses.
• Target: The target beneficiaries of the proposed scheme will be more than 10 crore families
  belonging to poor and vulnerable population based on SECC database. Benefits of the scheme are portable across the country and a beneficiary covered under the scheme will be allowed to take cashless benefits from any public/private empanelled hospitals across the country.

Who is eligible?
· It will be an entitlement based scheme with entitlement decided on the basis of deprivation criteria in the SECC database.

Implementation Strategy:
· At the national level to manage, an Ayushman Bharat National Health Protection Mission Agency (AB-NHPMA) would be put in place. States/ UTs would be advised to implement the scheme by a dedicated entity called State Health Agency (SHA).
· They can either use an existing Trust/ Society/ Not for Profit Company/ State Nodal Agency (SNA) or set up a new entity to implement the scheme. States/ UTs can decide to implement the scheme through an insurance company or directly through the Trust/ Society or use an integrated model.

Solution: D

The Reserve Bank has initiated steps to set up a wide-based digital Public Credit Registry (PCR) to capture details of all borrowers, including wilful defaulters and also the pending legal suits in order to check financial delinquencies.

The PCR will also include data from entities like market regulator SEBI, the corporate affairs ministry, Goods and Service Tax Network (GSTN) and the Insolvency and Bankruptcy Board of India (IBBI) to enable the banks and financial institutions to get 360 degree.

The PCR is the culmination of recommendations given by the committee headed by Y.M. Deosthalee. The idea behind creating the public registry is to collate the financial information of individual and corporate borrowers under one platform, inclusive of financial delinquencies, pending legal suits, and willful defaulters. The objective is to strengthen the credit culture of the Indian economy.

It is suggested that the PCR will improve India’s ease of doing business parameters at the World Bank.

https://economictimes.indiatimes.com/news/economy/policy/rbi-starts-process-to-set-up-digital-public-credit-registry-for-capturing-all-details-of-borrowers/articleshow/66496220.cms

Solution: D

Assumption Island is a small island in the Outer Islands of Seychelles north of Madagascar, with a distance of 1,135 km south-west of the capital, Victoria, on Mahé Island. In 2018, Seychelles and India signed an agreement to build and operate a joint military facility on a portion of the island.

The Spratly Islands are a disputed group of islands, islets and cays and more than 100 reefs, sometimes grouped in submerged old atolls, in the South China Sea. The archipelago lies off the coasts of the Philippines, Malaysia, and southern Vietnam.

The Marshall Islands are a sprawling chain of volcanic islands and coral atolls in the central Pacific Ocean, between Hawaii and the Philippines.

Solution: C

Every five years, an agricultural census is conducted in India. First such census was done in 1970s and the reference year for the first Agriculture Census was 1970-71. Under this scheme, centre provides funds to states and entire work is done by the states only.

The responsibility of conducting the decennial Census rests with the Office of the Registrar General and Census Commissioner, India under Ministry of Home Affairs, Government of India. The decennial Census of India has been conducted 15 times.

It may be of historical interest that though the population census of India is a major administrative function; the Census Organisation was set up on an ad-hoc basis for each Census till the 1951 Census. The Census Act was enacted in 1948 to provide for the scheme of conducting population census with duties and responsibilities of census officers.

The Government of India decided in May 1949 to initiate steps for developing systematic collection of statistics on the size of population, its growth, etc., and established an organisation in the Ministry of Home Affairs under Registrar General and ex-Officio Census Commissioner, India.

This organisation was made responsible for generating data on population statistics including Vital Statistics and Census. Later, this office was also entrusted with the responsibility of implementation of Registration of Births and Deaths Act, 1969 in the country.

http://www.censusindia.gov.in/2011-common/aboutus.html

Solution: C

The Nuclear Energy Agency (NEA) is a specialised agency within the Organisation for Economic Co-operation and Development (OECD), an intergovernmental organisation of industrialised countries, based in Paris, France.

India has around 22 nuclear reactors in operation in 7 nuclear power plants, having a total installed capacity of around 7000 MW.

Solution: A

India is among the bottom five countries on the Environmental Performance Index 2018, plummeting 36 points from 141 in 2016, according to a biennial report by Yale and Columbia Universities along with the World Economic Forum.

Its overall low ranking — 177 among 180 countries — was linked to poor performance in the environment health policy and deaths due to air pollution categories.

The report was released on the sidelines of the ongoing World Economic Forum in Davos, Switzerland.

Solution: C

Solution:  A

The European Commission is the EU’s executive arm. It takes decisions on the Union’s political and strategic direction. Every year the Commission produces a report on the results achieved with the EU budget and how the previous year’s budget was managed.

The European Parliament (EP) is the directly elected parliamentary institution of the European Union (EU). Together with the Council of the European Union (the Council) and the European Commission, it exercises the legislative function of the EU.

The Parliament is composed of 751 members, who represent the second-largest democratic electorate in the world (after the Parliament of India) and the largest trans-national democratic electorate in the world (375 million eligible voters in 2009). It has been directly elected every five years by universal suffrage since 1979.

Solution: C

‘Invest India’ is India’s official agency dedicated to investment promotion and facilitation. It is a not-for-profit, single window facilitator, set up in 2010 for prospective overseas investors and to those aspiring Indian investors desiring to invest in foreign locations, and acts as a structured mechanism to attract investment. Invest India is essentially an Investment Promotion Agency in India.

Structure & Mandate

Operationalized in early 2010, Invest India is set up as a joint venture company between the Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry (35% equity), Federation of Indian Chambers of Commerce and Industry (FICCI) (51% equity), and State Governments of India (0.5% each).

Thus, essentially, Invest India is a private company, unlike India Brand Equity Foundation – another investment promotion agency in India set up by the same Ministry – Ministry of Commerce & Industry.

The core mandate of Invest India is investment promotion and facilitation. It provides sector-specific and state-specific information to a foreign investor, assists in expediting regulatory approvals, and offers hand-holding services. Its mandate also includes assisting Indian investors to make informed choices about investment opportunities overseas.

http://www.arthapedia.in/index.php?title=Invest_India

Solution: D

The Generalized System of Preferences (GSP) is a U.S. trade program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories. GSP was instituted on January 1, 1976, by the Trade Act of 1974.

India has been the biggest beneficiary of the GSP regime and accounted for over a quarter of the goods that got duty-free access into the US in 2017.

The announcement by the United States that it intends to “terminate” India’s designation as a beneficiary of its Generalised System of Preferences (GSP) could be a big blow for India’s competitiveness in items groups such as garments, engineering, and intermediary goods in the American market.

Export–Import Bank of India is a finance institution in India, established in 1982 under Export-Import Bank of India Act 1981. Since its inception, Exim Bank of India has been both a catalyst and a key player in the promotion of cross border trade and investment.

Commencing operations as a purveyor of export credit, like other export credit agencies in the world, Exim Bank India has, over the period, evolved into an institution that plays a major role in partnering Indian industries, particularly the Small and Medium Enterprises, in their globalisation efforts, through a wide range of products and services offered at all stages of the business cycle, starting from import of technology and export product development to export production, export marketing, pre-shipment and post-shipment and overseas investment.