Test: The Tertiary Sector In The Indian Economy - 1 - UPSC MCQ

• A: Human Capital would be a suitable word.
• B: Economic capital or tangible capital would be a suitable word.
• C: Demographic dividend would be a suitable word.
• By elimination we are left with Ans (d).

Participatory Note (P-Notes): A for eigner wishes to invest in India but does not want to go through the hassles of registering with SEBI, getting PAN card number, opening a DEMAT account etc. So, he will approach a SEBI registered foreign institutional investor (FII) / foreign portfolio investor (FPI) and invest via Participatory Notes.

Basic function of Lead Bank: Preparation of service area credit plan. Coordination with the efforts of Government, banks and credit agencies. Service Area approach is a modification of Lead Bank scheme.

Legal tender- is a fiat money which cannot be refused by any citizen of the country for settlement of any kind of transaction. So, B is the appropriate description.

From government reports, If we look at the data graph of capital infusion in last one decade, there have been ups and downs to #1 is wrong. And as per Economic Survey, #2 is correct.

(i) The Global Financial Stability Report (GFSR) is a survey by the IMF staff published twice a year, in the spring and fall. The report draws out the financial ramifications of economic issues highlighted in the IMF’s World Economic Outlook (WEO).
(ii) IMF prepares this report.

The main items of capital budget are receipts and expenditure for capital (Financial) gains. It also includes loans raised by Government from public, Reserve Bank and other parties, and from foreign Governments and bodies. It also includes capital expenditure on acquisition of assets like land, buildings, machinery, equipment, etc and loans and advances granted by Central Government to State and Union Territory Governments, Government companies, Corporations and other parties.

(i) In order to reduce the fiscal deficit, the government needs to increase its earnings and reduce its expenditure.
This is done by following methods: Cut down the subsidies; reforms in tax structures; improve profit generated by Public Sector Enterprises and austerity measures.
(ii) Just by applying logic i.e. to reduce deficit, we’ve to increase income and reduce Expenditure.

(i) Base Erosion and Profit Shifting (BEPS) is a tax avoidance strategy used by multinational companies, wherein profits are shifted from jurisdictions that have high taxes (such as the United States and many Western European countries) to jurisdictions that have low (or no) taxes (so-called tax havens). The BEPS project is said to be an “attempt by the world’s major economies to try to rewrite the rules on corporate taxation to address the widespread perception that the [corporations] don’t pay their fair share of taxes”.
(ii) BEPS aims to curb the tax evasion by MNCs, hence B is the answer.

(i) Bitcoin are not maintained by the Central Bank. Bitcoins are created as a reward for payment processing work in which users offer their computing power to verify and record payments into a public ledger.
(ii) They’re not tracked by any central bank or authority. Both 2 and 3 are right.

(i) Core Banking Solution (CBS) is networking of branches, which enables Customers to operate their accounts, and avail banking services from any branch of the Bank on CBS network, regardless of where he maintains his account. The customer is no more the customer of a Branch. He becomes the Bank’s Customer. Thus CBS is a step towards enhancing customer convenience through Anywhere and Anytime Banking.
(ii) 3 is definitely not the purpose, so by elimination the answer is (a).

(i) They can enable transfers and remittance through mobile phones. The RBI guidelines say that the payments bank cannot undertake lending activities.
(ii) Mobile phone companies and supermarket eligible. But, Payment banks can’t issue credit card or give loans. Go by eliminating all options with “2”, and you’re left with (b) 1 and 3 only.

(i) With effect from 1st April, 2016, all loans in India shall be priced with reference to Marginal Cost of Funds based Lending Rates (MCLR) which will comprise of :- 1. Marginal Cost of Funds 2. Negative carry on account of CRR 3. Operating Costs 4. Tenor of premium. Banks shall review and publish their MCLR every month on a preannounced date. Marginal Cost of Funds which will comprise of marginal cost of borrowings and return on networth.
(ii) Both right. Verbatim lifted from RBI's press statement first paragraph.

When the Reserve Bank of India reduces the Statutory Liquidity Ratio by 50 basis points; the Scheduled Commercial Banks may cut their lending rates.

The RBI implements the monetary policy through open market operations, bank rate policy, reserve system, credit control policy, moral persuasion and through many other instruments.

Basel III is a comprehensive set of reform measures which was  developed by the Basel Committee on Banking Supervision and  to strengthen the regulation, supervision and risk management of the banking sector. These measures aim to:
Improve the banking sector's ability to absorb shocks arising from financial and economic stress, whatever the source; improve risk management and governance; strengthen banks' transparency and disclosures.

1 is definitely correct as CRR. SLR is used to control money supply and credit off take. 2 may or may not be correct, to make people's deposit safe, capital adequacy ratio is the norm. 3 is definitely wrong as to control excess profit, margins would have to be reduced, not CRR, SLR.

Besides giving access to banking, it also enables government subsidies and social security benefits to be directly credited to the accounts of the beneficiaries, enabling them to draw the money from the bank saathi or business correspondents in their village itself.

Currency/cash is the most liquid, then the demand deposits (current accounts), then the saving deposits with bank and finally the least liquid is the time deposits with the bank (fixed deposits).

Those who benefit from higher inflation are debtors and those who suffer from it are creditors. If one has substantial debt, each rupee one has to repay would be worth less than when it was borrowed. In this way, one pays back less in real terms.