All questions of Economy & Finance for Bank Exams Exam

Unemployment rate in India - Definition and Calculation

The unemployment rate in India is defined as the ratio of the number of persons unemployed to the total labor force. It is a key indicator of the health of the economy and reflects the percentage of the labor force that is actively seeking employment but is unable to find work.

The calculation of the unemployment rate is based on the labor force, which consists of the employed and unemployed individuals in the country. To calculate the unemployment rate, the number of unemployed persons is divided by the total labor force, and then multiplied by 100 to express it as a percentage. The formula for calculating the unemployment rate is as follows:

Unemployment Rate = (Number of Unemployed / Total Labor Force) x 100

Explanation of the Correct Answer

The correct answer to the question is option 'C' - Labor Force. The unemployment rate is calculated based on the labor force, which consists of individuals who are either employed or unemployed and actively seeking work.

a) Population: The total population includes individuals of all ages, including children, retirees, and those not actively seeking employment. Including the entire population in the calculation would not provide an accurate measure of the unemployment rate.

b) Population excluding children: Excluding children from the calculation would still not give an accurate measure of the unemployment rate, as it is not only children who are not part of the labor force, but also retirees, students, and individuals who are not actively seeking work.

c) Labor Force: The labor force includes individuals who are either employed or unemployed and actively seeking work. It is the most appropriate measure to calculate the unemployment rate, as it focuses specifically on those individuals who are part of the economy's workforce.

d) Population excluding the aged: Excluding the aged population would also not provide an accurate measure of the unemployment rate, as there are individuals who may be unemployed and actively seeking work even in the older age groups.

In conclusion, the unemployment rate in India is defined as the ratio of the number of persons unemployed to the total labor force. It is calculated by dividing the number of unemployed individuals by the total labor force and expressing it as a percentage. The labor force is the most appropriate measure to calculate the unemployment rate, as it includes individuals who are either employed or unemployed and actively seeking work.

Reserve Bank of India (RBI) sets up the Base Rate for banks in India.

The Base Rate is the minimum interest rate at which commercial banks can lend to their customers. It forms the foundation for the interest rates charged by banks on loans and advances. The RBI sets up the Base Rate with the objective of ensuring that banks do not charge excessive interest rates and to promote transparency and fairness in the lending process.

Process of setting up the Base Rate:

The RBI follows a specific process to determine the Base Rate. Here are the steps involved:

1. Review of the existing Base Rate: The RBI regularly reviews the existing Base Rate to assess its effectiveness and relevance in the current economic environment. This review helps the central bank understand whether any changes are required in the Base Rate to achieve its objectives.

2. Analysis of various factors: The RBI considers various factors while determining the Base Rate. These factors include the cost of funds, operating expenses, risk premium, and profit margin. The central bank analyzes these factors to arrive at a fair and reasonable Base Rate that reflects the overall cost of funds for banks.

3. Consultation with stakeholders: The RBI consults with various stakeholders, including banks and industry experts, to gather their inputs and perspectives on the Base Rate. This consultation process helps the central bank in making informed decisions and ensuring that the Base Rate aligns with the requirements of the banking sector.

4. Announcement of the Base Rate: Once the RBI completes its analysis and consultation process, it announces the Base Rate. This rate becomes the benchmark for banks to determine the interest rates on their loans and advances. Banks are required to ensure that their lending rates do not fall below the Base Rate.

Importance of the Base Rate:

The Base Rate plays a crucial role in ensuring fairness and transparency in the lending process. Here are its key importance:

1. Protecting borrowers: The Base Rate prevents banks from charging excessive interest rates, ensuring that borrowers are not burdened with high borrowing costs.

2. Promoting competition: The Base Rate promotes healthy competition among banks as they have to keep their lending rates competitive while adhering to the minimum Base Rate set by the RBI.

3. Transparency: The Base Rate provides transparency to borrowers as they can easily compare the lending rates offered by different banks based on the common benchmark.

4. Monetary policy transmission: The Base Rate acts as a tool for monetary policy transmission. When the RBI reduces the policy rates, it expects banks to lower their Base Rate and pass on the benefit to borrowers.

In conclusion, the Reserve Bank of India sets up the Base Rate for banks in India. It follows a systematic process to determine the Base Rate, considering various factors and consulting with stakeholders. The Base Rate plays a crucial role in ensuring fairness, transparency, and competition in the lending process.

Explanation:

The consumer price index (CPI) measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. It is used to estimate the inflation rate and reflect the purchasing power of consumers.

If food prices increase at a relatively faster rate than other items, it means that the cost of agricultural products is rising more quickly compared to non-agricultural products. This can be due to factors such as supply and demand imbalances, changes in production costs, or market conditions.

When food prices increase, it directly affects the cost of agricultural labor, as farmers and other agricultural workers are involved in the production and harvesting of food. On the other hand, urban non-manual workers are not directly affected by changes in food prices as their work is unrelated to agriculture.

Impact on Consumer Price Index:
The consumer price index for agricultural labor measures the changes in the prices paid for labor in the agricultural sector. If food prices increase at a faster rate than other items, it implies that the cost of agricultural labor is also increasing.

On the other hand, the consumer price index for urban non-manual workers measures the changes in the prices paid for labor in non-agricultural sectors such as services, manufacturing, or construction. Since non-agricultural workers are not directly affected by changes in food prices, their labor costs may not increase at the same rate as agricultural labor.

Therefore, the consumer price index for agricultural labor is likely to increase at a faster rate compared to the consumer price index for urban non-manual workers. This is because the increase in food prices directly impacts the cost of agricultural labor, leading to a higher inflation rate in the agricultural sector compared to non-agricultural sectors.

Hence, the correct answer is option 'C' - Faster rate.

Overgeared means to borrow a lot. Hence, it is a company which is in a big debt. So, option b) is correct.

Taxes levied by the Union and collected and appropriated by the States are designed to generate revenue for the central government but are collected and used by the state governments. In this case, the correct answer is option 'D', which refers to taxes on newspapers.

Taxes on Newspapers:
- Taxes on newspapers are levied by the Union government, but they are collected and appropriated by the state governments.
- This means that the central government sets the tax rate for newspapers, but the revenue generated from this tax goes directly to the state governments.
- The state governments can then use this revenue for various purposes such as infrastructure development, welfare programs, and education.

Stamp Duties:
- Stamp duties are a type of tax levied on various legal documents, such as property transactions, agreements, and contracts.
- In most cases, stamp duties are levied and collected by the state governments.
- However, there are certain cases where stamp duties are levied and collected by the central government, such as in the case of bills of exchange and promissory notes.

Passenger and Goods Tax:
- Passenger and goods tax, also known as transportation tax, is a tax levied on the movement of passengers and goods.
- This tax is primarily levied and collected by the state governments.
- The revenue generated from this tax is used by the state governments to maintain and develop transportation infrastructure, such as roads, railways, and airports.

Estate Duty:
- Estate duty, also known as inheritance tax or estate tax, is a tax levied on the transfer of property or assets from a deceased person to their heirs.
- Estate duty was abolished in India in 1985, so it is no longer applicable.

In conclusion, among the taxes mentioned, only taxes on newspapers are levied by the Union government and collected and appropriated by the state governments. The other taxes mentioned are primarily levied and collected by the state governments.

Aadhaar Security Enhancement: Introduction of Face Authentication

The UIDAI (Unique Identification Authority of India) has recently announced the introduction of 'Face Authentication' as an additional option for inclusive authentication of residents. This move aims to further strengthen the security of Aadhaar, India's unique identification system. The new mode of authentication will be effective from July 1.

Importance of Aadhaar Security Enhancement

With the increasing reliance on Aadhaar for various services such as banking, government subsidies, and identification purposes, ensuring the security and integrity of the Aadhaar system is of utmost importance. The introduction of face authentication as an additional option is a proactive step taken by UIDAI to enhance the security measures and provide residents with a secure and convenient mode of authentication.

Effective Date of Face Authentication

The correct answer to the question is option 'A' - July 1. The UIDAI has decided to implement face authentication as an additional mode of authentication from this date onwards. This means that starting from July 1, residents will have the option to authenticate themselves using their face in addition to the existing modes of authentication such as fingerprint and iris scanning.

Benefits of Face Authentication

Face authentication offers several benefits in terms of convenience and security. Some of these include:

1. Inclusive Authentication: Face authentication provides an additional option for residents who may have difficulty using other modes of authentication such as fingerprint or iris scanning due to physical disabilities or other reasons. It ensures that Aadhaar remains inclusive and accessible to all individuals.

2. Enhanced Security: By introducing face authentication, UIDAI is adding an extra layer of security to the Aadhaar system. Face recognition technology is considered highly secure and difficult to forge, making it an effective measure against identity theft and fraud.

3. Convenience: Face authentication offers a convenient mode of authentication for residents. It eliminates the need for physical contact or scanning, making it more user-friendly and accessible.

Conclusion

The UIDAI's decision to enable face authentication as an additional option for inclusive authentication of residents is a significant step towards enhancing the security of Aadhaar. By providing an alternative mode of authentication, UIDAI aims to make Aadhaar more inclusive and secure while ensuring convenience for the residents. The implementation of face authentication from July 1 will further strengthen the Aadhaar system and protect the personal information of millions of individuals in India.

Extent of Globalisation of the Goods Market in India

The measure of the extent of globalization of the goods market in India can be determined by examining the share of imports and exports in overall output. This measure provides a comprehensive understanding of how integrated India's goods market is with the global economy. Let's explore this in more detail:

1. Share of Imports in Overall Output:
- The share of imports in overall output indicates the extent to which India relies on foreign goods to meet domestic demand.
- If the share of imports is high, it suggests that India is heavily dependent on foreign countries for its goods and is more integrated into the global market.
- On the other hand, a lower share of imports implies a greater level of self-sufficiency and lower integration with the global market.

2. Share of Exports in Overall Output:
- The share of exports in overall output reveals the extent to which India is involved in international trade and the global supply chain.
- A higher share of exports indicates that India is actively participating in the global market by selling its goods to foreign countries.
- This suggests a higher level of integration with the global economy and a greater reliance on exports for economic growth.

3. Share of Imports and Exports in Overall Output:
- The combined share of imports and exports in overall output provides a more comprehensive measure of the extent of globalization.
- If both shares are significant, it indicates that India is both importing a substantial amount of goods and exporting a significant portion of its output.
- This suggests a high level of integration with the global market, as India is actively engaged in both importing and exporting goods.

4. Total Exports:
- While total exports alone can provide an indication of a country's participation in the global market, it does not capture the full extent of globalization.
- Total exports only reflect the goods that are sold to foreign countries, without considering the domestic demand and reliance on imports.
- Therefore, it is not as comprehensive a measure as the combined share of imports and exports.

Conclusion:
The most accurate measure of the extent of globalization of the goods market in India is provided by the share of imports and exports in overall output (option C). This measure takes into account both the reliance on foreign goods and the involvement in international trade, providing a comprehensive understanding of India's integration with the global economy.

Answer:

Introduction:
Excess capacity refers to a situation where firms are producing below their maximum potential output. It occurs when a firm has the ability to produce more goods or services than it currently is. In this case, the correct answer is option 'B' - monopolistic competition.

Explanation:
Monopolistic competition: Monopolistic competition is a market structure where many firms compete by selling similar but differentiated products. Each firm has some control over the price it charges due to product differentiation.

Product differentiation: In monopolistic competition, firms produce products that are slightly different from each other. They use strategies like branding, packaging, advertising, and other marketing tactics to differentiate their products from competitors. This differentiation creates a perceived difference in the minds of consumers, allowing firms to charge slightly higher prices.

Excess capacity in monopolistic competition:
In monopolistic competition, firms have excess capacity due to the following reasons:

1. Product differentiation: Firms in monopolistic competition differentiate their products to create a unique selling proposition. This differentiation often leads to excess capacity because firms are producing below their maximum potential output to maintain product differentiation.

2. Elastic demand: In monopolistic competition, firms face relatively elastic demand curves due to the availability of close substitutes. This means that if a firm raises its price, consumers can easily switch to a competitor's product. As a result, firms cannot fully exploit their production capacity without losing customers.

3. Profit maximization: Firms in monopolistic competition aim to maximize their profits. To do so, they must operate at a point where marginal revenue equals marginal cost. Operating at full capacity would require firms to set lower prices, resulting in lower profit margins. Therefore, firms may choose to operate with excess capacity to maintain higher profit levels.

4. Market power: While firms in monopolistic competition have some control over price, they do not have enough market power to fully exploit their production capacity. They must consider the reactions of competitors and the potential loss of market share if they fully utilize their capacity.

Conclusion:
In summary, firms in monopolistic competition have excess capacity due to product differentiation, elastic demand, profit maximization, and limited market power. This allows them to maintain higher profit margins and differentiate their products from competitors.

The correct answer is option 'C', which is the Fifth Five Year Plan.

The Five Year Plans in India are a series of comprehensive economic development strategies implemented by the government to achieve specific goals over a five-year period. The plans are formulated by the Planning Commission of India, which was replaced by the NITI Aayog in 2015.

The Five Year Plans have played a significant role in shaping India's economy since independence. They have focused on various sectors such as agriculture, industry, infrastructure, and social welfare.

Here is a detailed explanation of why the Fifth Five Year Plan was terminated before its targeted date of completion:

1. Background:
The Fifth Five Year Plan was implemented from 1974 to 1979. It aimed to achieve rapid economic growth and reduce poverty in the country. The plan focused on agricultural development, strengthening the industrial base, and improving social welfare programs.

2. Economic Challenges:
During the period of the Fifth Five Year Plan, India faced several economic challenges. The country was dealing with high inflation, low growth rates, and a balance of payments crisis. These factors posed significant obstacles to the successful completion of the plan's objectives.

3. Change in Government:
In 1977, there was a change in the central government due to the Janata Party's victory in the general elections. The new government had a different approach and policy perspective compared to the previous government.

4. Mid-Term Appraisal:
A mid-term appraisal of the Fifth Five Year Plan was conducted in 1978. The appraisal highlighted the slow progress in achieving the plan's targets and the need for significant policy changes.

5. Plan Termination:
Based on the mid-term appraisal and the changing political landscape, the government decided to terminate the Fifth Five Year Plan in 1978, a year before its targeted completion date. The plan was replaced by a Rolling Plan for the remaining period until the Sixth Five Year Plan was initiated.

6. Impact and Lessons:
The termination of the Fifth Five Year Plan had both short-term and long-term implications. It reflected the need for flexibility in economic planning and the importance of aligning policies with changing circumstances. The government learned valuable lessons from this experience, which influenced the subsequent Five Year Plans.

In conclusion, the Fifth Five Year Plan of India was terminated before its targeted date of completion due to economic challenges, a change in government, and the findings of a mid-term appraisal. This decision highlighted the need for adaptability and policy adjustments in economic planning.

To answer this question, let's analyze the options one by one:


Indian citizens are allowed to invest in Sri Lanka freely. There are no restrictions or limitations on investments in Sri Lanka by Indian citizens. Therefore, option 'a' is incorrect.


Indian citizens are allowed to invest in the UK freely. There are no specific restrictions on investments in the UK by Indian citizens. Therefore, option 'b' is incorrect.


Indian citizens are allowed to invest in Bangladesh freely. There are no restrictions or limitations on investments in Bangladesh by Indian citizens. Therefore, option 'c' is incorrect.


Indian citizens are allowed to invest in Nepal freely. There are no specific restrictions on investments in Nepal by Indian citizens. Therefore, option 'd' is incorrect.


Indian citizens are not allowed to invest in Pakistan freely. Due to the strained relationship between India and Pakistan, there are strict restrictions on investments from India to Pakistan. The Indian government has enforced regulations that prohibit Indian citizens from making direct investments in Pakistan. Therefore, option 'e' is the correct answer.

In conclusion, Indian citizens are allowed to invest overseas freely except in Pakistan. The Indian government has imposed restrictions on investments in Pakistan due to the geopolitical tensions between the two countries.

Top Position in Global Manufacturing Index 2018

The country that has been placed on the top position in the Global Manufacturing Index 2018 released by the World Economic Forum (WEF) is Japan.

Explanation:

The Global Manufacturing Index is an annual report published by the World Economic Forum (WEF) that measures the competitiveness of countries in the manufacturing sector. It assesses various factors such as infrastructure, technology adoption, human capital, and business environment to determine a country's manufacturing competitiveness.

Reasons for Japan's Top Position:

1. Technological Advancements: Japan has a reputation for being at the forefront of technological advancements. It has a strong focus on research and development, which has led to the development of advanced manufacturing technologies. This has allowed Japanese companies to innovate and stay competitive in the global market.

2. Strong Infrastructure: Japan has one of the most advanced infrastructures in the world. It has a well-developed transportation network, including efficient railways and ports, which facilitate the movement of goods. This infrastructure provides a solid foundation for the manufacturing sector to thrive.

3. Skilled Workforce: Japan is known for its highly skilled and disciplined workforce. The country has a strong emphasis on education and vocational training, which ensures that the manufacturing sector has access to a pool of skilled workers. This skilled workforce contributes to the high productivity levels in the manufacturing industry.

4. Quality Control: Japanese companies are renowned for their commitment to quality control. The manufacturing sector in Japan places a strong emphasis on producing high-quality products that meet global standards. This focus on quality has helped Japanese companies gain a competitive edge in global markets.

5. Strong Business Environment: Japan has a favorable business environment that supports manufacturing activities. It has a stable political and economic climate, transparent regulations, and a strong legal framework. These factors create a conducive environment for businesses to operate and attract investments in the manufacturing sector.

Conclusion:

Japan's top position in the Global Manufacturing Index 2018 can be attributed to its technological advancements, strong infrastructure, skilled workforce, focus on quality control, and favorable business environment. These factors have enabled Japan to maintain its competitiveness in the manufacturing sector and establish itself as a global manufacturing powerhouse.

The correct answer is option E) London.

The Union Ministry of Road Transport and Highways in India signed a memorandum of understanding (MoU) with the Transport System of London to revamp the public transport system in India. This MoU aims to enhance the capacity of the Indian government in planning, building, and managing urban transport infrastructure.

Importance of the MoU:
- The MoU is significant as it will help India learn from the experiences and best practices of London, which has a well-developed and efficient public transport system.
- London is known for its advanced transportation infrastructure, including an extensive network of buses, taxis, trains, trams, and cycling facilities. By partnering with London, India can benefit from their expertise and knowledge in urban transport planning and management.
- The collaboration will also assist in the implementation of various initiatives under the Smart Cities Mission and the Sustainable Urban Transport Project in India.

Key objectives of the MoU:
1. Capacity building: The MoU aims to enhance the capacity of the Indian government in planning, designing, and implementing sustainable transport solutions. This includes training programs, workshops, and sharing of best practices.
2. Technical cooperation: The agreement promotes technical cooperation between the two countries in areas such as integrated transport planning, traffic management, and intelligent transportation systems.
3. Policy exchange: The MoU facilitates the exchange of information and experiences in policy formulation and implementation related to urban transport. This will help India in formulating effective policies and strategies for improving public transport systems.
4. Institutional strengthening: The partnership aims to strengthen the institutional capacity of the Indian government in the areas of urban transport planning, financing, and project implementation.

Expected outcomes:
- The collaboration is expected to contribute to the development of sustainable and efficient public transport systems in Indian cities, reducing congestion, air pollution, and carbon emissions.
- The exchange of knowledge and best practices will help Indian policymakers in making informed decisions and implementing effective measures to improve the quality and accessibility of public transportation.
- The MoU will also support the Indian government's efforts to promote the use of clean and green modes of transport, such as electric vehicles, walking, and cycling.

In conclusion, the MoU between the Union Ministry of Road Transport and Highways in India and the Transport System of London is a significant step towards revamping the public transport system in India. By partnering with London, India aims to learn from their expertise and experiences in urban transport planning and management, ultimately improving the accessibility, efficiency, and sustainability of public transportation in the country.

Recent Appointment in the Ministry of External Affairs

Introduction:
The recent appointment in the Ministry of External Affairs is that of T S Tirumurti as the Economic Relations Secretary. This appointment holds significance as the Economic Relations Secretary plays a crucial role in shaping India's economic diplomacy and fostering relationships with other countries.

Appointment of T S Tirumurti:
T S Tirumurti has been appointed as the Economic Relations Secretary in the Ministry of External Affairs. The decision to appoint him to this important position was made by the Appointments Committee of the Cabinet, chaired by the Prime Minister of India. T S Tirumurti is a seasoned diplomat with extensive experience in international relations and has previously served as India's Permanent Representative to the United Nations.

Role of Economic Relations Secretary:
The Economic Relations Secretary in the Ministry of External Affairs is responsible for managing and promoting India's economic interests globally. This includes developing strategies to enhance bilateral and multilateral economic cooperation, negotiating trade agreements, attracting foreign investment, and ensuring the smooth functioning of economic and financial institutions.

Importance of Economic Diplomacy:
Economic diplomacy plays a vital role in today's interconnected world. It involves using diplomatic channels and negotiations to advance a country's economic interests and achieve mutually beneficial outcomes. Through economic diplomacy, countries can promote trade and investment, strengthen economic ties, and address global economic challenges.

T S Tirumurti's Experience:
T S Tirumurti brings a wealth of experience and expertise to his new role as the Economic Relations Secretary. He has served in various diplomatic capacities, including as India's Permanent Representative to the United Nations, Ambassador to the United Nations in Geneva, and Deputy Chief of Mission at the Indian Embassy in Jakarta.

Conclusion:
The appointment of T S Tirumurti as the Economic Relations Secretary in the Ministry of External Affairs is a significant development. With his vast experience in international relations and diplomatic negotiations, he is well-equipped to further India's economic interests and strengthen its economic diplomacy. This appointment reflects the government's commitment to promoting economic cooperation and enhancing India's presence on the global stage.

The demand curve for a given good is upward rising.

The demand curve is a graphical representation of the relationship between the price of a good and the quantity of that good that consumers are willing and able to purchase at various prices. It slopes downward from left to right, indicating that as the price of a good increases, the quantity demanded decreases, and vice versa. However, the question states that the demand curve is upward rising, which is incorrect.

Explanation:
The correct answer is option 'A', which states that the demand curve is upward rising. However, this is an incorrect statement. The demand curve always slopes downward. This is because of the law of demand, which states that as the price of a good increases, the quantity demanded decreases, ceteris paribus.

Law of Demand:
The law of demand is a fundamental concept in economics. It states that as the price of a good increases, the quantity demanded decreases, and vice versa, ceteris paribus (all other factors held constant). This inverse relationship between price and quantity demanded is represented by a downward-sloping demand curve.

Factors Affecting Demand:
Several factors can cause the demand curve to shift, including changes in:

1. Income: When consumers' income increases, they are typically able to purchase more goods at each price level, leading to an outward shift of the demand curve.

2. Price of Related Goods: The demand for a good can be affected by the prices of substitute goods and complementary goods. If the price of a substitute good increases, consumers may switch to the original good, leading to an increase in demand. Conversely, if the price of a complementary good increases, the demand for the original good may decrease.

3. Consumer Preferences: Changes in consumer tastes and preferences can also affect the demand for a good. For example, if a new trend or fashion emerges, the demand for related goods may increase.

4. Population: The size and composition of the population can influence the demand for certain goods. An increase in population can lead to an increase in demand for goods and services.

5. Expectations: Consumer expectations about future prices, income, and other factors can also affect current demand. If consumers expect prices to rise in the future, they may increase their current demand to take advantage of lower prices.

Conclusion:
In conclusion, the demand curve for a given good is always downward-sloping, not upward rising. This is due to the law of demand, which states that as the price of a good increases, the quantity demanded decreases, and vice versa. Various factors can cause the demand curve to shift, but the slope of the demand curve remains the same.

Introduction:
The Insurance Regulatory and Development Authority (IRDA) is the regulatory body for the insurance sector in India. It was established to safeguard the interests of policyholders and promote the growth of the insurance industry. In this response, we will discuss the year in which the IRDA came into force and provide a brief explanation.

Explanation:
The correct answer is option 'B' - 2000. The Insurance Regulatory and Development Authority of India Act, 1999 was enacted by the Parliament of India to provide for the establishment of the IRDA.

Key Points:
Here are some key points to understand the establishment of the IRDA:

1. The Insurance Regulatory and Development Authority Act, 1999 was passed by the Parliament of India.
2. The Act received the assent of the President of India on 23rd December 1999.
3. The Act came into force on 19th April 2000.
4. The IRDA Act, 1999 superseded the Insurance Act, 1938 which had earlier regulated the insurance sector.
5. The primary objective of the IRDA is to protect the interests of policyholders and promote the growth and development of the insurance industry.
6. The IRDA is responsible for issuing licenses, regulations, and guidelines for insurance companies, intermediaries, and other entities involved in the insurance sector.
7. It also regulates the solvency and financial stability of insurance companies to ensure their ability to meet policyholder obligations.
8. The IRDA has the power to impose penalties and take disciplinary actions against insurance companies and intermediaries for any violations of the regulations.
9. It works towards enhancing the insurance penetration and density in the country by creating a conducive regulatory environment and promoting consumer awareness.
10. The IRDA Act, 1999 has been amended several times to keep pace with the changing dynamics of the insurance sector.

Conclusion:
The Insurance Regulatory and Development Authority (IRDA) came into force in the year 2000. It plays a crucial role in regulating and developing the insurance industry in India. The IRDA Act, 1999 provides the legal framework for its establishment and functioning.

Internal debt refers to the debt that a government owes to its own citizens or institutions within the country. It is different from external debt, which is the debt owed to foreign entities. In the context of India, internal debt consists of various components, including market borrowing, treasury bills, and special securities issued to the Reserve Bank of India (RBI).

Explanation:

1. Market Borrowing:
Market borrowing refers to the process through which the government raises funds by selling government securities in the open market. These securities can be in the form of bonds or long-term loans. Market borrowing is an important component of internal debt as it allows the government to finance its expenditure requirements.

2. Treasury Bills:
Treasury bills are short-term debt instruments issued by the government to meet its short-term financing needs. They are normally issued for a period of 91 days, 182 days, or 364 days. Treasury bills are typically sold at a discount to their face value and are redeemed at face value upon maturity. They are highly liquid and considered to be risk-free investments. Treasury bills are also a component of internal debt as they represent the government's borrowing from domestic sources.

3. Special Securities Issued to RBI:
The Reserve Bank of India (RBI) acts as the banker to the government and undertakes various activities to manage the government's finances. One of these activities involves the issuance of special securities to the RBI. These securities are issued to the RBI as a means of sterilizing the liquidity in the system. When the government receives funds from the RBI through various means, such as tax revenues or disinvestment proceeds, it issues these special securities to the RBI to neutralize the liquidity impact. These securities represent a component of the internal debt as they are a liability of the government.

In conclusion, all three components mentioned, namely market borrowing, treasury bills, and special securities issued to the RBI, are part of the internal debt of the government. These instruments allow the government to raise funds from domestic sources to meet its expenditure requirements and manage liquidity in the financial system.

Explanation:
In the given statements, we need to determine which ones are correct. Let's analyze each statement:

Statement 1: NTPC is the largest power utility in India.
This statement is correct. NTPC (National Thermal Power Corporation) is indeed the largest power utility in India. It is a public sector undertaking (PSU) engaged in the generation and distribution of electricity.

Statement 2: ONGC accounts for half of the LPG production in India.
This statement is incorrect. ONGC (Oil and Natural Gas Corporation) is primarily involved in the exploration and production of oil and gas. It does not directly produce LPG (liquefied petroleum gas). The major LPG producer in India is Indian Oil Corporation (IOC).

Statement 3: Indian Oil Corporation operates all the oil refineries in India.
This statement is incorrect. While Indian Oil Corporation (IOC) is the largest oil refining and marketing company in India, it does not operate all the oil refineries in the country. There are other oil refining companies as well, such as Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL), which also operate oil refineries.

Statement 4: The Indian Ordinance Factory is the largest departmentally run industrial undertaking in the country.
This statement is correct. The Indian Ordnance Factories (IOF) is the largest departmentally run industrial undertaking in India. It is a conglomerate of 41 factories that produce a wide range of products for the Indian Armed Forces.

Therefore, the correct statements are 1 and 4. So, the correct option is (D) 1 and 4.

The correct answer is option 'B', Equity Share.

Equity shares, also known as ordinary shares or common shares, represent ownership in a company. When a company earns a profit or surplus, it can distribute a portion of it among its shareholders. This distribution is known as a dividend and is usually paid in proportion to the number of equity shares held by each shareholder.

Let's understand why the other options are not correct:

a) Preference share: Preference shares are a type of share that gives preferential rights to shareholders in terms of dividend payment and repayment of capital in the event of liquidation. Preference shareholders receive a fixed dividend before equity shareholders. However, the question is asking about the distribution of profit or surplus, which is specific to equity shares.

c) Face Value: The face value, also known as the par value or nominal value, is the value stated on the face of a share or bond. It represents the initial price at which the shares were issued and has no relation to the distribution of profits among shareholders.

Now, let's discuss why option 'B', Equity Share, is the correct answer:

1. Definition of Equity Share:
- Equity shares represent ownership in a company.
- Equity shareholders have voting rights and are entitled to share in the company's profits and assets.
- They bear the highest risk and enjoy the highest potential for returns.

2. Distribution of Profit:
- When a company makes a profit, it can distribute a portion of it among its shareholders.
- Equity shareholders are entitled to a share in the profit in proportion to the number of equity shares they hold.
- The company's board of directors determines the dividend amount and declares it to the shareholders.

3. Proportional Distribution:
- The dividend is distributed proportionately among equity shareholders.
- For example, if a company declares a dividend of $1 per share and an investor holds 100 equity shares, they would receive $100 as a dividend.

4. Other Surpluses:
- Apart from profits, companies may also distribute other surpluses, such as reserves or surplus funds.
- These distributions are also made proportionately among equity shareholders.

In conclusion, the part of profit or other surpluses of a company distributed proportionately among shareholders is called Equity Share. Equity shareholders enjoy the benefits of ownership, including the right to receive dividends when the company earns a profit.

Answer:

The Central Statistics Office (CSO) has released the first advance estimates of India's Gross Domestic Product (GDP) for the fiscal year 2017-18. According to the CSO, the growth in India's GDP during 2017-18 is estimated at 6.5%.

Explanation:

The Central Statistics Office (CSO) is a government agency responsible for collecting and analyzing data related to the Indian economy. It releases estimates of national income and economic growth on a regular basis.

The first advance estimates of GDP are released by the CSO towards the end of the fiscal year. These estimates are based on available data for the first three quarters of the fiscal year and take into account various factors such as industrial production, agricultural output, and government expenditure.

The estimate of 6.5% growth in India's GDP for 2017-18 indicates a positive trend in the country's economic performance. This growth rate is higher compared to the previous fiscal year, where the GDP growth rate was estimated at 6.1%.

The estimated growth rate of 6.5% reflects the overall expansion of the Indian economy during the fiscal year 2017-18. It suggests that various sectors of the economy, including manufacturing, agriculture, and services, have contributed to this growth.

This growth rate is significant as it indicates that the Indian economy is recovering from the impact of various policy reforms and external factors such as the implementation of Goods and Services Tax (GST) and demonetization.

It is important to note that the first advance estimates are subject to revision as more data becomes available. The final figures for GDP growth for 2017-18 will be released by the CSO in the coming months.

In conclusion, the first advance estimates of India's GDP for 2017-18 indicate a growth rate of 6.5%. This reflects the positive performance of the Indian economy and suggests a recovery from the impact of policy reforms and external factors.

The Answer:

In India, federal financial assistance to states is given on the basis of population, tax effort, and special problems of the states. This approach ensures a fair distribution of resources and helps in addressing regional disparities and promoting balanced development across the country.

Population:
Population is an important factor in determining the financial assistance given to states. States with higher populations typically require more resources to cater to the needs of their residents. Therefore, a portion of the financial assistance is allocated based on the population of each state. This helps in ensuring that states with larger populations receive adequate support to provide essential services and infrastructure.

Tax Effort:
The tax effort of the states is another crucial criterion for determining financial assistance. The tax effort refers to the revenue generated by the states through their own taxation efforts. States that exhibit higher tax efforts by effectively implementing tax policies and generating substantial revenue are rewarded with additional financial assistance. This approach encourages states to enhance their tax collection mechanisms and promotes fiscal discipline.

Special Problems:
Financial assistance is also provided to states based on their special problems or specific needs. Some states face unique challenges such as backwardness, lack of infrastructure, or geographical disadvantages. To address these issues and promote inclusive growth, additional funds are allocated to such states. This ensures that states with specific problems receive extra support to overcome their challenges and accelerate development.

Conclusion:
The distribution of federal financial assistance to states in India is based on a comprehensive approach that considers the population, tax effort, and special problems of each state. This approach aims to achieve equitable development, reduce regional disparities, and foster balanced growth across the country. By allocating resources in a fair and targeted manner, the government can support states in addressing their specific needs and promoting overall socio-economic progress.

The correct answer is option 'A' - I alone.

Explanation:
I. Package of new inputs:
- The new agricultural strategy in India focuses on providing a package of new inputs to farmers. This includes improved seeds, fertilizers, pesticides, and modern machinery.
- The aim is to enhance productivity and increase crop yields by using advanced technology and scientific methods.
- The government has launched various schemes and programs to provide subsidies and support to farmers for availing these new inputs.

II. Greater cropping intensity:
- Another component of the new agricultural strategy is to encourage greater cropping intensity.
- This means increasing the number of crops grown on a piece of land in a year by practicing multiple cropping or double cropping.
- By utilizing the land more efficiently, farmers can maximize their agricultural output and income.
- The government promotes this through awareness campaigns, training programs, and financial incentives.

III. Emphasis on land reforms:
- Contrary to the given statement, land reforms are not a part of the new agricultural strategy in India.
- Land reforms refer to various measures taken to redistribute land ownership, ensure equitable access to land, and protect the rights of farmers and agricultural workers.
- While land reforms have been an important aspect of agricultural policies in the past, the current focus is more on providing improved inputs and increasing cropping intensity to enhance productivity.

In conclusion, the correct answer is option 'A' - I alone. The new agricultural strategy in India includes the provision of a package of new inputs to farmers and promoting greater cropping intensity, but it does not emphasize land reforms.

Reasons for reducing the rate of interest in India:

There are several reasons for reducing the rate of interest in India. These include:

1. To reduce the burden of public debt:
- Reducing the rate of interest helps in reducing the burden of public debt as the government has to pay less interest on its borrowings.
- This allows the government to allocate more funds towards development projects and welfare programs.

2. To create easy credit facilities:
- Reducing the rate of interest makes borrowing cheaper for individuals and businesses.
- This encourages them to take loans and invest in various sectors of the economy, which leads to increased economic activity and growth.
- Easy credit facilities also promote entrepreneurship and innovation as individuals are more willing to take risks and start new ventures.

3. To align the interest rate structure with world interest rates:
- India is a part of the global economy and its interest rates need to be in line with the prevailing rates in the world.
- By reducing the rate of interest, the Indian government aims to align its interest rate structure with the world interest rates.
- This helps in attracting foreign investment and promoting international trade.

4. To accomplish all the above three:
- Reducing the rate of interest accomplishes all the above three objectives simultaneously.
- By reducing the burden of public debt, creating easy credit facilities, and aligning interest rates with the world, the government aims to stimulate economic growth, attract investment, and improve the overall financial health of the country.

In conclusion, reducing the rate of interest in India is done to achieve multiple objectives. It helps in reducing the burden of public debt, creating easy credit facilities, and aligning interest rates with the world. These measures are aimed at promoting economic growth, attracting investment, and improving the financial well-being of the country.

Explanation:

The Government has announced to lower the additional borrowing requirement for the current fiscal to Rs 20,000 crore from Rs 50,000 crore as estimated in December 2017. This decision has been taken due to the improved fiscal situation and the government's efforts to control the fiscal deficit.

Reasons for lowering the additional borrowing requirement:

1. Improved fiscal situation: The government has been able to improve its fiscal situation by increasing revenue through various measures such as the implementation of the Goods and Services Tax (GST) and demonetization. These efforts have helped in reducing the fiscal deficit and the need for additional borrowing.

2. Control over fiscal deficit: The government has been focused on controlling the fiscal deficit, which is the difference between the government's total expenditure and its total revenue. By lowering the additional borrowing requirement, the government aims to reduce the fiscal deficit and maintain fiscal discipline.

3. Economic growth: The Indian economy has been experiencing robust growth in recent years, which has led to increased tax revenues for the government. This has reduced the need for additional borrowing to fund the government's expenditure.

4. Market conditions: The government has also taken into consideration the prevailing market conditions while deciding to lower the additional borrowing requirement. Lowering the borrowing requirement will help in maintaining stability in the financial markets.

5. Investor confidence: By reducing the additional borrowing requirement, the government aims to boost investor confidence in the Indian economy. This will attract more investments, both domestic and foreign, and contribute to the overall economic growth.

Impact of lowering the additional borrowing requirement:

1. Reduced interest burden: Lowering the additional borrowing requirement will help in reducing the interest burden on the government. This will free up funds that can be used for developmental activities and other priority areas.

2. Better debt management: By lowering the borrowing requirement, the government will be able to manage its debt more effectively. This will help in maintaining the sustainability of public finances and reduce the risk of default.

3. Positive signal to the market: The decision to lower the additional borrowing requirement sends a positive signal to the financial markets. It shows the government's commitment to fiscal discipline and stability, which is likely to be appreciated by investors.

4. Fiscal consolidation: Lowering the additional borrowing requirement is a step towards achieving fiscal consolidation. It will help in reducing the fiscal deficit and bring the government's finances on a more sustainable path.

In conclusion, the government's decision to lower the additional borrowing requirement to Rs 20,000 crore from Rs 50,000 crore is a positive step towards fiscal consolidation and maintaining stability in the financial markets. It reflects the government's efforts to control the fiscal deficit and improve the overall fiscal situation.

Introduction:
The Indian Financial Services Code number is a unique identification number assigned to individuals by their banks. This code is essential for various financial transactions, such as electronic funds transfer, online banking, and other banking services. It helps in identifying the bank and branch where the account is held.

Identification of an Indian Financial Services Code number:
The Indian Financial Services Code number can be identified through various means, as mentioned below:

1. It is a 11 digit alpha numeric code:
The Indian Financial Services Code number is typically an 11-digit alphanumeric code. It consists of a combination of letters and numbers, which helps in identifying the bank and branch where the account is maintained.

2. It is available on the cheque leaves of an individual's cheque book:
One of the common places to find the Indian Financial Services Code number is on the cheque leaves of an individual's cheque book. The code is usually printed at the bottom of each cheque leaf, along with other essential details such as the bank account number and branch details.

3. It is provided by the bank if asked:
If an individual needs to know their Indian Financial Services Code number, they can approach their bank and request the code. The bank will provide the code upon verification of the account holder's identity. Banks typically provide this information to their customers as it is essential for various banking services.

Conclusion:
In conclusion, the Indian Financial Services Code number can be identified through multiple means. It is an 11-digit alphanumeric code that is often printed on the cheque leaves of an individual's cheque book. Additionally, banks provide this code upon request by the account holder. It is crucial for individuals to know their Indian Financial Services Code number as it is required for conducting various financial transactions.

India's Position as the Fastest Growing Economy in 2018

India is projected to become the fastest growing economy in the world in 2018, according to the latest report by Sanctum Wealth Management. This means that India will be in the first position in terms of economic growth among all countries. Let's take a closer look at the factors that contribute to this forecast.

Economic Growth Rate

India's economic growth rate has been steadily increasing over the years, and it is expected to reach new heights in 2018. The country's GDP growth rate is projected to be around 7.4% in the fiscal year 2018-2019. This is significantly higher than the global average growth rate, which is estimated to be around 3.9% for the same period.

Government Initiatives

The Indian government has implemented several initiatives to promote economic growth and development. The introduction of the Goods and Services Tax (GST) has streamlined the taxation system and boosted business activities. Other reforms, such as the Insolvency and Bankruptcy Code and the introduction of the Real Estate (Regulation and Development) Act, have also contributed to improving the business environment in the country.

Foreign Direct Investment

India has been attracting significant foreign direct investment (FDI) in recent years. The government's policies and reforms aimed at liberalizing the economy and easing regulations have made India an attractive investment destination. Sectors such as manufacturing, infrastructure, and services have witnessed a surge in FDI inflows, which has further fueled economic growth.

Demographic Dividend

India has a young and growing population, which presents a significant demographic dividend. This means that India has a large workforce that can contribute to economic growth and productivity. With the right investments in education, skill development, and job creation, India can leverage its demographic advantage to drive economic growth.

Infrastructure Development

Infrastructure development plays a crucial role in economic growth. The Indian government has been investing heavily in infrastructure projects such as highways, railways, airports, and smart cities. These investments not only improve connectivity and facilitate trade but also create employment opportunities and stimulate economic growth.

Conclusion

India's position as the fastest growing economy in the world in 2018 is a result of various factors such as a high economic growth rate, government initiatives, foreign direct investment, demographic dividend, and infrastructure development. These factors combined have created a conducive environment for economic growth and have positioned India as a global economic powerhouse.

State Taxation:
State taxation refers to the collection of taxes by the state government. These taxes are imposed on various aspects such as income, property, goods and services, and other transactions. Each state has the power to levy and collect taxes within its jurisdiction.

Taxes Under State Jurisdiction:
State taxation includes several types of taxes that fall under its jurisdiction. These taxes are primarily imposed on activities and properties within the state's boundaries. Some of the common taxes under state jurisdiction include:

1. Land Revenue:
Land revenue refers to the tax collected by the state government on the income generated from land. It is one of the primary sources of revenue for the state. The tax is usually determined based on the land's value, location, and usage. Land revenue is an important source of income for the state, which is utilized for various developmental activities.

2. Taxes on Agricultural Income:
Taxes on agricultural income are also levied by the state government. However, it is important to note that agricultural income is subject to certain exemptions and limitations under the Income Tax Act. While the taxation of agricultural income is primarily under the jurisdiction of the state, the central government also plays a role in determining the tax laws related to agricultural income.

3. Taxes on Land and Buildings:
The state government also has the authority to impose taxes on land and buildings within its jurisdiction. These taxes are usually based on the property's value and are collected annually or periodically. The revenue generated from these taxes is utilized for the development and maintenance of public infrastructure and services.

Taxes NOT under State Jurisdiction:
The option 'D' - Personal income tax, does not come under the jurisdiction of state taxation. Personal income tax is imposed and collected by the central government. It is a direct tax levied on the income earned by individuals, including salaries, wages, business profits, and other sources of income. The central government has the authority to determine the rates, exemptions, and other provisions related to personal income tax.

Conclusion:
In summary, while land revenue, taxes on agricultural income, and taxes on land and buildings fall under the jurisdiction of state taxation, personal income tax is not within the purview of state taxation. Personal income tax is levied and collected by the central government.

India’s first agri-commodity options were launched by the Union Finance Minister in 2017. The options were initially launched for trading in two agricultural commodities – guar seed and soybean – on the National Commodity and Derivatives Exchange (NCDEX). The introduction of agri-commodity options aimed to provide farmers with a tool to hedge their price risks and protect their income. It also aimed to deepen the commodity derivatives market in India and provide a new investment avenue for traders and investors.

Wage Fund Theory

The wage fund theory was propounded by J.S. Mill. It is an economic theory that attempts to explain the determination of wages in an economy. According to this theory, the total amount available for wages in an economy is fixed and determined by the aggregate capital or wealth of the society, which is often referred to as the wage fund.

Explanation:

1. Background
- The wage fund theory was developed in the 19th century during a time of significant economic and social changes.
- Economists were grappling with questions related to the determinants of wages and the distribution of wealth in society.

2. J.S. Mill's Contribution
- J.S. Mill, a prominent economist of the time, proposed the wage fund theory in his book "Principles of Political Economy" published in 1848.
- According to Mill, the wage fund is determined by the total wealth or capital of the society.
- The wage fund is then divided among the labor force to determine the wage level.

3. Determination of Wages
- According to the wage fund theory, the wage level is determined by the ratio between the total amount available for wages (wage fund) and the number of workers in the economy.
- If the wage fund remains constant and the number of workers increases, wages will decrease as they have to be divided among a larger labor force.
- Conversely, if the wage fund increases or the number of workers decreases, wages will increase.

4. Criticisms of Wage Fund Theory
- The wage fund theory has been widely criticized by economists for its oversimplification of the wage determination process.
- It assumes a fixed wage fund, which is unrealistic as capital accumulation and investment can vary over time.
- The theory also overlooks other important factors that influence wages, such as labor productivity, bargaining power, and market forces.

Conclusion
- The wage fund theory, propounded by J.S. Mill, attempted to explain the determination of wages based on the concept of a fixed wage fund.
- However, the theory has been criticized for its oversimplification and failure to account for other important factors influencing wages.
- Despite its limitations, the wage fund theory contributed to the development of economic thought and sparked further research on wage determination.

Statutory Obligations of a Bank to Honour Customer's Cheques


A bank is a financial institution that provides various services to its customers, including the issuance of cheques. When a customer issues a cheque, it is the bank's responsibility to honor that cheque and make the payment to the payee. This obligation is backed by specific statutes and laws to ensure the smooth functioning of the banking system.


The correct answer to the question is option 'C,' which states that a bank is under a statutory obligation to honor its customer's cheques as per Section 31 of the Negotiable Instruments Act, 1881. This section deals with the liability of a banker to pay a customer's cheque.


- The Negotiable Instruments Act, 1881, is an Indian legislation that governs negotiable instruments such as promissory notes, bills of exchange, and cheques.
- Section 31 of this Act specifically addresses the obligations of a bank when it comes to honoring its customer's cheques.
- According to this section, when a customer issues a cheque, the bank is bound to pay it if there are sufficient funds available in the customer's account.
- The bank must pay the cheque as per the customer's mandate, regardless of any internal arrangements or disputes between the bank and the customer.


The other options mentioned in the question, namely:
a) Section 10 of the Banking Regulation Act, 1949
b) Section 3 of the RBI Act, 1934

Though these acts and sections govern various aspects of banking and regulate the functioning of banks in India, they do not specifically address the obligations of banks to honor customer's cheques. Therefore, these options are incorrect in the context of the question.


In conclusion, a bank is under a statutory obligation to honor its customer's cheques as per Section 31 of the Negotiable Instruments Act, 1881. This section ensures that banks fulfill their responsibility to pay customer's cheques as per the customer's mandate. It is important for banks to adhere to these statutory obligations to maintain the trust and confidence of their customers in the banking system.

Answer:

The correct answer is option 'b) 562'.

Explanation:

To provide quality education to the tribal population, the government has taken the initiative to establish Ekalavya Model Residential Schools. These schools aim to cater to the educational needs of tribal students, ensuring that they receive high-quality education.

By establishing more Ekalavya Model Residential Schools, the government aims to improve access to education for the tribal population and bridge the educational gap between tribal and non-tribal communities. These schools provide residential facilities to students, ensuring that they have a conducive environment for learning.

Target:

The government has set a target to establish a certain number of Ekalavya Model Residential Schools by 2022. The question asks for the number of schools that need to be established.

Correct Answer:

The correct answer is option 'b) 562'. This means that the government aims to establish 562 more Ekalavya Model Residential Schools by 2022.

Importance of Ekalavya Model Residential Schools:

The establishment of these schools is crucial for several reasons:

1. Providing Access to Education: By establishing more Ekalavya Model Residential Schools, the government aims to ensure that every block with more than 50% tribal population has access to high-quality education. This is essential in promoting inclusive and equitable education.

2. Improving Learning Outcomes: Ekalavya Model Residential Schools focus on providing quality education to tribal students. By providing a conducive learning environment, these schools aim to improve learning outcomes and bridge the educational gap between tribal and non-tribal communities.

3. Promoting Holistic Development: These schools not only focus on academic education but also provide facilities for sports, extracurricular activities, and vocational training. This helps in promoting the overall development of tribal students and preparing them for future challenges.

4. Preserving Tribal Culture: Ekalavya Model Residential Schools also aim to preserve and promote tribal culture and traditions. They incorporate local languages, arts, and crafts into the curriculum, ensuring that students stay connected to their roots.

5. Addressing Social Inequality: By providing quality education to tribal students, Ekalavya Model Residential Schools contribute to reducing social inequality and promoting social justice.

Conclusion:

In conclusion, the government has set a target to establish 562 more Ekalavya Model Residential Schools by 2022. This initiative aims to provide high-quality education to the tribal population, improve learning outcomes, and bridge the educational gap between tribal and non-tribal communities.

CBLO - Collateralized Borrowing and Lending Obligation

Statement 1: CBLO is like a repo, i.e. it can be interpreted as borrowing backed by securities as collateral.

- CBLO is a money market instrument that involves borrowing and lending of funds between two parties.
- It is similar to a repo (repurchase agreement) in which one party sells securities to another party with an agreement to buy them back at a later date.
- In CBLO, the borrower pledges securities as collateral to the lender and borrows funds against them.
- The borrower pays interest on the borrowed funds to the lender and receives the pledged securities back on maturity of the CBLO.

Statement 2: Issued at a discount to face value, CBLOs always redeem at par, similar to treasury bills or zero coupon bonds.

- CBLOs are issued at a discount to face value, which means that the borrower receives less than the face value of the securities pledged as collateral.
- The discount is calculated based on the prevailing market interest rates and the maturity of the CBLO.
- CBLOs always redeem at par, which means that the borrower receives the face value of the securities back on maturity of the CBLO.
- This is similar to treasury bills or zero coupon bonds, which are also issued at a discount to face value and redeem at par.

Statement 3: Its maturities range from 1 year to 5 years.

- CBLOs have a maturity ranging from 1 day to 1 year.
- They are issued for a fixed term and cannot be redeemed before maturity.
- The maturity of the CBLO depends on the agreement between the borrower and the lender.
- CBLOs with longer maturities are generally used by institutional investors for managing their short-term funds.

Conclusion:

Hence, statement 1 and 2 are correct while statement 3 is incorrect. CBLOs have a maturity ranging from 1 day to 1 year.

The correct answer is option 'D' i.e. None of these. None of the mentioned committees recommended tax on Agriculture holdings.

Explanation:
The question asks about the committee that recommended tax on Agriculture holdings, but none of the given options (Bhootlingam Committee, Wanchoo Committee, and Raj Committee) recommended such a tax. Therefore, the correct answer is option 'D' i.e. None of these.

It's important to note that the question doesn't specify any particular country or time period. However, in general, the taxation of agriculture holdings varies from country to country and is influenced by various factors such as agricultural policies, economic conditions, and political considerations.

In some countries, agriculture holdings may be exempt from certain taxes or may be subject to specific tax provisions aimed at supporting the agricultural sector. On the other hand, some countries may impose taxes on agricultural income or agricultural land.

However, without any specific context provided in the question, it is not possible to attribute a specific committee to the recommendation of tax on agriculture holdings.

The revised annual GDP-growth rate for the Ninth Plan period is 6.5 per cent. This means that the economy is expected to grow at a rate of 6.5 per cent per year during the Ninth Plan period.

The Ninth Plan period refers to the five-year plan period from 1997 to 2002 in India. During this period, the government sets targets and formulates policies to achieve certain economic and social objectives.

There are several factors that determine the GDP growth rate during a particular plan period. These factors include investment, government spending, consumption, exports, imports, and overall economic conditions.

The revised annual GDP-growth rate of 6.5 per cent for the Ninth Plan period was based on various considerations and assessments made by the government and experts. It takes into account the expected performance of different sectors of the economy, such as agriculture, industry, and services.

The government's target of 6.5 per cent GDP growth rate for the Ninth Plan period reflects its aspirations for economic development and poverty reduction. A higher GDP growth rate indicates a faster pace of economic growth and development.

The GDP growth rate of 6.5 per cent for the Ninth Plan period is considered achievable based on the prevailing economic conditions and the government's policies and initiatives. It is a realistic target that takes into account the potential of the Indian economy and the challenges it faces.

In conclusion, the revised annual GDP-growth rate for the Ninth Plan period is 6.5 per cent. This target reflects the government's aspirations for economic development and poverty reduction and takes into account the prevailing economic conditions and policy initiatives.

Explanation:

Context: The question is about the changes in the interest rate for the GoI Savings (Taxable) Bonds, 2003, as announced by Subhash Chandra, Secretary of the Department of Economic Affairs under the Ministry of Finance.

Interest Rate Change: According to the tweet by Subhash Chandra, the new subscription to GoI Savings (Taxable) Bonds, 2003 would now bear a certain interest rate, which is different from the earlier rate. We need to determine the new interest rate mentioned in the tweet.

Options: The options provided are:
a) 7.70%
b) 7.75%
c) 7.77%
d) 7.79%
e) 7.85%

Correct Answer: The correct answer is option 'B' - 7.75%.

Calculation: There is no specific information provided in the question or tweet about the earlier interest rate. Therefore, we cannot determine the exact change in the interest rate. However, we can conclude that the new interest rate is 7.75% based on the given options.

Summary: Subhash Chandra, Secretary of the Department of Economic Affairs, announced that the new subscription to GoI Savings (Taxable) Bonds, 2003 would now bear a 7.75% interest rate, which is different from the earlier rate.

Engle's Law: Relationship between Quantity Demanded and Income of Consumers

Engle's law, also known as the Engel curve, is an economic theory that describes the relationship between the quantity demanded of a good or service and the income of consumers. It was first proposed by the German economist Ernst Engel in the 19th century.

Explanation:

Engel's law suggests that as individuals' incomes increase, their demand for certain goods and services also increases. This relationship between quantity demanded and income is often referred to as the income elasticity of demand.

Income Elasticity of Demand:
- The income elasticity of demand measures the responsiveness of the quantity demanded to changes in income.
- It is calculated as the percentage change in quantity demanded divided by the percentage change in income.

Direct Relationship:
- Engel's law states that for normal goods, which are goods that individuals consume more of as their income increases, the income elasticity of demand is positive.
- This means that as income rises, people have more purchasing power, and they tend to buy more of these goods.
- Examples of normal goods include clothing, housing, transportation, and leisure activities.

Types of Goods:
- There are three categories of goods based on their income elasticity of demand:
1. Normal goods: These are goods for which the income elasticity of demand is positive.
2. Inferior goods: These are goods for which the income elasticity of demand is negative.
3. Luxury goods: These are goods for which the income elasticity of demand is greater than 1.

Implications of Engel's Law:
- Engel's law has important implications for businesses, policymakers, and economists.
- Businesses can use Engel's law to understand how changes in income will affect the demand for their products.
- Policymakers can use this law to analyze the impact of income changes on consumer behavior and make informed decisions regarding income distribution and social welfare.
- Economists can use Engel's law to study consumption patterns and make predictions about the overall economy.

Conclusion:
Engel's law provides valuable insights into the relationship between quantity demanded and income of consumers. By understanding this relationship, businesses and policymakers can make more informed decisions and predictions about consumer behavior and the overall economy.

Introduction:
India has been focusing on promoting its commodity exports in value-added forms. This strategy aims to increase the revenue and reduce the cost of production. This approach is beneficial as it helps in creating a considerable margin between revenue and various cost components such as labor, raw material, and imported components. Let's analyze each statement in detail to understand the correct answer.

Statement 1: Labour
India has a competitive advantage in terms of labor costs. By promoting commodity exports in value-added forms, India can utilize its skilled labor force to produce goods that have higher value in the international market. This allows India to earn higher revenue per unit of labor employed. Therefore, the statement that there is a considerable margin between revenue and the cost of labor is correct.

Statement 2: Raw material
Raw material cost is a significant component of the overall production cost. By adding value to commodities through processing or manufacturing, India can utilize its domestic raw materials more effectively. This can lead to higher revenue as the value-added products command a higher price in the international market. Consequently, the statement that there is a considerable margin between revenue and the cost of raw material is also correct.

Statement 3: Imported components
In the process of value addition, India may need to import certain components or inputs to enhance the quality or functionality of the commodity. However, the cost of these imported components can be relatively low compared to the final value of the value-added product. This allows India to earn a higher margin between revenue and the cost of imported components. Hence, the statement that there is a considerable margin between revenue and the cost of imported components is correct.

Conclusion:
Based on the analysis of each statement, it can be concluded that both statements 1 and 2 are correct. India's strategy to promote commodity exports in value-added forms aims to maximize revenue and minimize costs, including labor, raw material, and imported components. This approach helps in creating a considerable margin between revenue and these cost components. Therefore, the correct answer is option 'C' - 1 and 2.

Introduction
The Tarapore Committee was established in 1997 by the Reserve Bank of India (RBI) to examine the issue of full convertibility of the Indian Rupee. The committee was headed by former RBI Deputy Governor S.S. Tarapore.

Background
Convertibility refers to the ability to freely exchange one currency for another. Full convertibility implies that the currency can be freely converted without any restrictions or limitations. The Tarapore Committee was tasked with evaluating the feasibility and implications of full convertibility on the Indian Rupee.

Options:
a) Current account
b) Capital account
c) Both in current as well as in capital account
d) Special Drawing Rights (SDR)

Explanation:
The correct answer is option 'b' - Capital account.

Current account convertibility:
Current account convertibility refers to the freedom to convert domestic currency for current account transactions, which include trade in goods and services, income from investments, and unilateral transfers. India had already achieved current account convertibility by 1994. Therefore, the Tarapore Committee did not focus on this aspect.

Capital account convertibility:
Capital account convertibility refers to the freedom to convert domestic currency for capital transactions, which include investments in foreign financial assets and liabilities, portfolio investments, and borrowing and lending between residents and non-residents. It allows the free movement of capital in and out of the country.

Tarapore Committee's focus:
The Tarapore Committee primarily focused on the issue of full convertibility on the capital account. It analyzed the potential benefits, risks, and challenges associated with achieving full convertibility.

Reason for choosing option 'b':
The correct answer is option 'b' because the Tarapore Committee's report specifically dealt with the issue of full convertibility on the capital account. It did not cover the current account convertibility or special drawing rights (SDR).

Conclusion:
In conclusion, the Tarapore Committee submitted its report on full convertibility of the Indian Rupee on the capital account. It aimed to provide recommendations and guidelines for achieving full capital account convertibility, which would allow the free movement of capital in and out of the country.

Kharif Crops:
Kharif crops are the crops that are sown and harvested during the monsoon season in India, which generally starts in June and ends in September. These crops are well-suited to the rainy season and require a lot of water for their growth. They are typically sown at the beginning of the monsoon and harvested before the arrival of winter.

Group of Kharif Crops:
Among the given options, option C - Rice, Millet, Maize, Cotton, is the group of Kharif crops. Let's take a closer look at each crop in this group:

1. Rice:
Rice is a major Kharif crop in India and is widely cultivated in regions with high rainfall. It requires standing water for its growth and is typically sown during the monsoon season. Rice is a staple food for a large population in India.

2. Millet:
Millet is another Kharif crop that is grown extensively in India. It is a drought-resistant crop and can tolerate high temperatures. Millets like jowar (sorghum), bajra (pearl millet), and ragi (finger millet) are commonly grown during the Kharif season.

3. Maize:
Maize, also known as corn, is a major Kharif crop in India. It requires warm weather and adequate rainfall for its growth. Maize is used for various purposes such as human consumption, animal feed, and industrial applications.

4. Cotton:
Cotton is a cash crop that is grown during the Kharif season. It requires a long growing season with high temperatures and abundant rainfall. Cotton is primarily cultivated for its fibers, which are used in the textile industry.

Conclusion:
The group of Kharif crops in option C - Rice, Millet, Maize, Cotton, is the correct answer. These crops are well-suited to the monsoon season and are widely cultivated in India.

B) Mahatma Gandhi National Rural Employment Guarantee Act

The correct answer is option 'B', which is the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). The National Food for Work Scheme was merged with MGNREGA.

Explanation:
The National Food for Work Scheme was a centrally sponsored scheme launched in 2004. It aimed to provide additional food grains to the rural poor in exchange for labor-intensive work. The scheme was implemented in 150 of the most backward districts of India.

MGNREGA, on the other hand, is a landmark social security and employment generation program launched in 2005. It guarantees 100 days of wage employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work. The program aims to enhance livelihood security in rural areas by providing sustainable employment opportunities.

The merger of the National Food for Work Scheme with MGNREGA was a strategic move to align and streamline the various rural development initiatives of the government. By merging the two schemes, the government aimed to improve the efficiency and effectiveness of the programs while ensuring better coordination and utilization of resources.

Benefits of the merger:
1. Synergy: The merger allows for better coordination and synergy between the employment generation and food security programs. It ensures that the labor-intensive work undertaken under MGNREGA is linked with the provision of food grains, thereby addressing both employment and food security concerns.

2. Streamlined implementation: The consolidation of the schemes simplifies the administrative processes and reduces duplication of efforts. It enables a more streamlined implementation and monitoring of the programs, leading to better outcomes.

3. Enhanced impact: The merger of the two schemes allows for a more comprehensive and integrated approach to rural development. It combines the objectives of providing employment opportunities, improving rural infrastructure, and ensuring food security for the rural poor.

4. Efficient resource utilization: The consolidation of resources and efforts leads to better utilization of funds and resources. It avoids duplication and wastage, ensuring that the available resources are effectively used to achieve the desired outcomes.

Overall, the merger of the National Food for Work Scheme with MGNREGA strengthens the government's efforts towards rural development, poverty alleviation, and inclusive growth. It ensures a more holistic approach to addressing the needs of the rural poor by combining employment generation, infrastructure development, and food security initiatives.