Test: Poverty, Planning, Finance And Economic / Social Development - 2 - UPSC MCQ

(i) Financial Stability and Development Council is an apex-level body constituted by the government of India. The idea to create such a super regulatory body was first mooted by the Raghuram Rajan Committee in 2008. Finally in 2010, the then Finance Minister of India, Pranab Mukherjee, decided to set up such an autonomous body dealing with macro prudential and financial regularities in the entire financial sector of India.
(ii) It falls under Dep. Of economic affairs and FM is the chairman. So, 1 is wrong and 2 is right. By elimination, we are left with answer “c”.

The Government of India has established NITI Aayog to replace the Planning Commission. The Union Government of India announced formation of NITI Aayog on 1 January 2015 and the first meeting of NITI Aayog was held on 8 February 2015.

Convertibility of rupee implies freely permitting the conversion of rupee to other currencies and vice versa. Currency Convertibility is the ease with which a country's currency can be converted into gold or another currency.

Union Government accepted the 14 th Finance Commission's recommendation to devolve an unprecedented 42 per cent of the divisible pool to states during 20015-16 to 2019-20, against 32 per cent suggested by the previous commission.

Pradhan Mantri Jan-Dhan Yojana (PMJDY) is National Mission for Financial Inclusion to ensure access to financial services, namely, Banking/ Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension in an affordable manner.

The Fair and Remunerative Price (FRP) of sugarcane is approved by Cabinet Committee on Economic Affairs.

To reduce the budget deficit, the government has to increase income and reduce Expenditure. Introducing new welfare schemes and Expanding industries will increase the government expenditure.

When inflation becomes very high, the RBI decreases supply of money (to check inflation) by adopting tight monetary policy. Decreasing the money circulation decreases the demand of goods and services, which helps in controlling the inflation. It is mainly effective in case of demand pull inflation.

IOR-ARC is a regional cooperation initiative of the Indian Ocean Rim countries which  was established in Mauritius in March 1997 with the aim of promoting economic and technical cooperation. IOR-ARC is the only pan-Indian ocean grouping. It brings together countries from three continents having different sizes, economic strengths, and a wide diversity of languages, cultures. It aims to create a platform for trade, socio-economic and cultural cooperation in the Indian Ocean rim area, which constitutes a population of about two billion people. Presently it has 19 members- Australia, Bangladesh, India, Indonesia, Iran, Kenya, Malaysia, Madagascar, Mauritius, Mozambique, Oman, Seychelles, Singapore, South Africa, Sri Lanka, Tanzania, Thailand, UAE and Yemen.
Six priority areas were identified to take forward the cooperation under IOR-ARC:
(i) Maritime Safety and Security;
(ii) Trade and Investment Facilitation;
(iii) Fisheries Management;
(iv) Disaster Risk Reduction;
(v) Academic and S&T Cooperation; and
(vi) Tourism Promotion and Cultural Exchanges.

Venture capital (VC) is a long term financial capital provided to early-stage, high-potential, growth startup companies or new companies.

Taxes on toothpaste come under GST which is administered by State government.Sales tax is paid to sales tax authority in the state from where the goods are moved.

Non-plan expenditure covers interest payments, subsidies (mainly on food and fertilisers), wage and salary payments to government employees, grants to States and Union Territories governments, pensions, police, economic services in various sectors, defence, loans to public enterprises, loans to States, Union Territories and foreign governments.

When interest rates decreases then investment expenditure by businesses on capital goods like factories and equipment will increase in an economy.

A country’s economic growth is reflected through capital formation, which in turn encourages private enterprises in enhancing the growth of a country’s economy.

Explanation: When the demand for money increases while the supply remains the same, it creates a shortage of money in the market. To balance this shortage, the rate of interest will increase. This is because when the demand for money is high, people are willing to borrow money at higher interest rates, and lenders are willing to lend money at higher interest rates to earn more profit.

Extremely high rates of inflation are generally associated with high rates of money growth. It is often the result of financing large deficits by printing money.

General Price rise may be caused by an increase in the money supply as the real value of the money reduces. The higher aggregate price level will reduce the purchasing power subsequently reducing the consumer spending. Effective demand also increases when there is less purchasing power due to inflation.

To reap the benefits of demographic dividend, skills have to be developed because a relatively larger portion of population fall under the category of productive labour force when there is a demographic dividend.

The National Development Council includes the Prime Minister, Union ministers, Chief ministers of all states, administrative heads of the Union Territories and members of the planning commission.

A Foreign direct investment (FDI ) involves establishing a direct business interest in a foreign country, such as buying or establishing a manufacturing business, while foreign Portfolio Investment (FPI) refers to investing in financial assets such as stocks or bords in a foreign country. Hence, FDI does not involve portfolio Investment.

1. Purchase of government securities from the public by the Central Bank
2. Borrowing by the government from the Central Bank

Capital gain is an increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. The gain is the difference between a higher selling price and a lower purchase price. The increase in the sales of a product does not mean increase the selling price of the product.

Demographic Transition is the transition from high birth and death rates to lower birth and death rates as a country or region develops from a pre-industrial to an industrialized economic System.

The 13th finance commission has an elaborate design for the GST. Statement 1 is correct. Statement 2 is incorrect. Report basically discusses the improved implementation of the existing schemes. The third statement is correct. The report in its para 10.44 mentions: “Taking into account the demand of local bodies that they be allowed to benefit from the buoyancy of central taxes and the constitutional design of supplementing the resources of Panchayats and municipalities through grants-in-aid, we recommend that local bodies be transferred a percentage of the divisible pool of taxes cover and above the share of the states, as stipulated by us, after converting this share to grant-in-aid under Article 275.”

Deprivation of education, health, assets and services at household level

DRDA has traditionally been the principal organ at the district level to oversee the implementation of anti-poverty programmes of the Ministry of Rural Development. It does not acts as Panchayati Raj Institutions.

Bank rate refers to the official interest rate at which RBI will provide loans to the banking system which includes commercial/cooperative banks, development banks etc. when RBI lowers the bank rate, the cost of borrowing for banks decreases and the credit volume gets increased leading to increase in money and more liquidity in the market.

Inflation and economic growth are parallel lines and can never meet. Inflation reduces the value of money and makes it difficult for the common people. Inflation and economic growth are incompatible because the former affects all sectors as indicated by CPI or Consumer Price Index.

When we say “Mainly” the money is to be used to pay the external debt, it is not correct to say so. Government though “may intend” to retain the management control, but there are fiscal constraints, that induce the government to go for disinvestment. Both statements are NOT correct.

The concept of the inclusive growth is based on both economic and social empowerment of ordinary and under privileged individuals. Thus all the statement are correct.