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Quiz 627: Indian Economy

1. Consider the following statements:
1.Bulk of employment in India is in rural areas.
2.The disguised unemployment in agricultural sector is perennial.
3.Industrialization has rendered several people jobless in India.
Which of the statement(s) given above is/are correct ?
[A]1 and 2
[B]1 and 3
[C]2 and 3
[D]1, 2 and 3

1 and 2


2. Which is not one of the salient features of ‘Annapurna Scheme’?
[A]It was launched by the Ministry of Consumer Affairs, Food and Public Distribution in 2000-2001.
[B]The beneficiaries of the Scheme are indigent senior citizens of 65 years of age or above.
[C]10 kg of food grains per month are supplied free of cost to the target group.
[D]From 2002-2003, the scheme has been transferred to State Plan along with the National Social Assistance Programme.

Option [A]
The Ministry of Rural Development launched the scheme in 2000-01.


3. Public Distribution System (PDS) means distribution of essential commodities to a large number of people through a network of Fair Price Shops on a recurring basis. The Commodities distributed under PDS are:
(1) Wheat
(2) Rice
(3) Sugar
(4) Pulses
(5) Kerosene
Select the correct option:
[A]1 ,2 and 4
[B]1, 2, 3 and 4
[C]1, 2, 3 and 5
[D]All of the above

Option [C]
The commodities distributed under PDS are as follows :-
• Wheat
• Rice
• Sugar
• Kerosene


4. In context of ‘Indira Awaas Yojana’, consider the following statements:
(1) Indira Awaas Yojana seeks to provide shelter to rural BPL households.
(2) Allotment under this housing scheme is made only in the name of the female member of the household.
Which of the following is/are correct?
[A]Only 1
[B]Only 2
[C]Both 1 and 2
[D]Neither 1 nor 2

Both 1 and 2


5. The Laffer curve is the graphical representation of :
[A]The relationship between tax rates and absolute revenue these rates generate for the government.
[B]The inverse relationship between the rate of unemployment and the rate of inflation in an economy.
[C]The inequality in income distribution.
[D]The relationship between environmental quality and economic development.

Option [A]
In economics, the Laffer curve is a hypothetical representation of the relationship between government revenue raised by taxation and all possible rates of taxation. It is used to illustrate the concept of taxable income elasticity – that taxable income will change in response to changes in the rate of taxation.


6. The government has powers under the Essential Commodities Act, 1955 (EC Act) to declare a commodity as an essential commodity to ensure its availability to people at fair price. The Commodities covered under the Act include :
1.Paper
2.Hank Yarn
3.Fertilizers
4.Petroleum and Petroleum Products
5.Cotton and Jute seeds
[A]1, 2 and 3
[B]1, 3 and 4
[C]3, 4 and 5
[D]2, 3, 4 and 5

Option [D]
There are seven broad categories of essential commodities covered by the Act. These are (1) Drugs; (2) Fertilizer, inorganic, organic or mixed; (3) Foodstuffs, including edible oilseeds and oils; (4) Hank yarn made wholly from cotton; (5) Petroleum and petroleum products; (6) Raw jute and jute textile; (7) (i) seeds of food-crops and seeds of fruits and vegetables; (ii) seeds of cattle fodder; and (iii) jute seeds. Recently cotton seed was also included in the list.


7. The Non-Votable charges or ‘Charged Expenditure’ included in the Union Budget include :
1.Salary and Allowances of the Presiding Officers of the houses of Parliament.
2.Salary and Allowances of the Judges of the Supreme Court and High Courts.
3.Salary and Allowances of the CAG.
4.Pension of the retired Judges of the Supreme Court.
5.Pension of the retired Judges of High Courts.
Select the option(s) which is/are correct?
[A]1 and 2
[B]1, 2 and 3
[C]1, 2, 3 and 4
[D]All of them

All of them


8. In context of the present ceiling on investment for categorization of various enterprises as Micro, Small and Medium Manufacturing Enterprises (MSMEs), which of the following statements are correct :
1.A micro enterprise is an enterprise where the investment in equipment does not exceed Rs.25 lakh.
2.A small enterprise is an enterprise where the investment in equipment is more than Rs.25 lakh but does not exceed Rs.5 crore.
3.A medium enterprise is an enterprise where the investment in equipment is more than Rs.5 crore but does not exceed Rs.10 crore.
[A]Only 1
[B]Only 2
[C]Only 3
[D]All of them

All of them


9. Consider the following statements:
1.The Direct Taxes Code proposes a Corporate rate tax of 30% as against the current effective rate of 33.2%
2.The Direct Taxes Code incorporates taxation mechanisms to deal with the international issue of ‘Transfer Pricing’.
Which of the above statement(s) is/are correct?
[A]Only 1
[B]Only 2
[C]Both 1 and 2
[D]Neither 1 nor 2

Option [C]
Transfer pricing deals with the technique where parent companies sell goods and services to subsidiary entities at an inflated price to deliberately reduce profits and tax liability. The law requires that goods and services should be sold to subsidiary companies at arm’s length price — the price at which goods are traded between unconnected companies. Taxing these units has become a complex area for the revenue department, with the government often disagreeing on the profits declared by a foreign company for its Indian unit. The Direct Taxes Code incorporates taxation mechanisms to deal with ‘Transfer Pricing’.


10. Which of the following are among the taxes levied exclusively by the Central Government and are mentioned in the Union List of the Seventh Schedule of the Constitution of India?
1.Corporation Tax
2.Taxes on advertisement in the newspapers
3.Taxes on Agricultural income
4.Taxes on consumption/sale of electricity
[A]Only 2
[B]Only 4
[C]1 and 2
[D]3 and 4

Option [C]
Taxes on Agricultural income and Taxes on consumption/sale of electricity are levied by the State Governments.


11. Which of the following statements regarding the ‘Viability Gap Funding Scheme (VGF)’ is not true?
[A]Under VGF, the central government meets up to 20% of capital cost of a project being implemented in public private partnership (PPP) mode
[B]The scheme is administered by the ministry of finance.
[C]Sectors eligible for VGF are Infrastructure, health and education.
[D]VGF is a force multiplier, enabling government to leverage its resources more effectively.

Option [C]
There are many projects with high economic returns, but the financial returns may not be adequate for a profit-seeking investor. For instance, a rural road connecting several villages to the nearby town. This would yield huge economic benefits by integrating these villages with the market economy, but because of low incomes it may not be possible to charge user fee. In such a situation, the project is unlikely to get private investment. In such cases, the government can pitch in and meet a portion of the cost, making the project viable. This method is known as viability gap funding. The scheme is administered by the ministry of finance. Sectors eligible for VGF is only Infrastructure at present. (Hence Statement c. is not true)


12. Indian Currency Printing Institutions are located in which of the following places?
(1) Nasik
(2) Hoshangabad
(3) Hyderabad
(4) Aurangabad
(5) Devas
Select the correct option:
[A]1 ,2 and 4
[B]1, 2, 3 and 4
[C]1, 2, 3 and 5
[D]All of the above

1, 2, 3 and 5


13. Who operates the National Disaster Response Fund which was constituted under the Disaster Management Act, 2005?
[A]Prime Minister
[B]Union Minister for Home Affairs
[C]Union Minister for Parliamentary Affairs
[D]Union Minister for Environment and Forests

Union Minister for Home Affairs


14. Which of the following are the provisions of SARFAESI Act which enables banks to reduce their non-performing assets (NPAs) ?
1.Enforcement of Security Interest by secured creditor (Banks/ Financial Institutions).
2.Transfer of non- performing assets to asset reconstruction company , which will then dispose of those assets and realise the proceeds.
3.To provide a legal framework for securitization of assets.
4.Assisting banks in making the credibility track record of customers under Credit Information Bureau of India (CIBIL).
[A]1 and 2
[B]1, 2 and 3
[C]2 ,3 and 4
[D]1, 2, 3 and 4

1, 2 and 3


15. The central nodal agency for implementing the price support operations for commercial crops is:
[A]NAFED
[B]NABARD
[C]TRIFED
[D]FCI

NAFED