UPSC Essentials | Daily subject-wise quiz : Economy MCQs on Generalised System of Preferences, core steel and more (Week 86)

1. It is majorly imported by the steel sector.

2. The import of coking coal has consistently increased from 2020-21 to 2023-24.

3. India has included coking coal in the list of critical minerals in 2022.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Explanation

— The government must include coking coal in the list of critical minerals and provide special dispensation to enhance the domestic production of the key raw material for steel production, according to a Niti Aayog report. Hence, statement 3 is not correct.

— The report ‘Enhancing Domestic Coking Coal Availability to Reduce the import of Coking Coal’, said considering India’s commitments to Net Zero by 2070, the country’s interests would be better served by fully utilising the proved reserves of medium coking coal (16.5 billion tonne) in India for metallurgical purposes.

— The European Union has declared the ingredient as a critical raw material along with 29 other raw materials which include ‘green energy’ minerals like lithium, cobalt, and rare earths.

— Coking coal is imported by the steel industry primarily to bridge the gap between demand and indigenous availability and to improve quality. Other sectors, such as the power sector, cement, and coal traders, import non-coking coal. Hence, statement 1 is correct.

(*Import (in million tonnes) up to April-Sept, 2024 (Source:-CCO))

— The import of coking coal has not increased consistently from 2020-21 to 2023-24. Hence, statement 2 is not correct.

Therefore, option (a) is the correct answer.

(Other Source: coal.gov.in)

QUESTION 2

With reference to the municipal corporations (MCs), consider the following statements:

1. Municipal revenue receipts were subdued during 2020-21 and grew by 22.5 per cent in 2021-22 mainly due to a rise in non-tax revenues.

2. MCs’ revenue receipts accounted for 0.6 per cent of GDP in 2023-24.

3. The top 10 MCs account for over half of municipal revenue receipts.

4. The introduction of GIS (Geographic Information System)-based property tax mapping and digital platforms for tax collection can help improve compliance and plug revenue leakages.

Which of the statements given above are correct?

(a) 1 and 3 only

(b) 2, 3 and 4 only

(c) 1, 3 and 4 only

(d) 1, 2, 3 and 4

Explanation

— The municipal corporations’ revenue receipts were quite modest — just 0.6 per cent of GDP in 2023-24 — and pale in comparison to those of the Central and State governments at 9.2 per cent and 14.6 per cent of GDP in 2023-24, respectively. Hence, statement 2 is correct.

— MCs need to boost their own-source revenue stream through tax reforms, rationalising user charges, and strengthening collection mechanisms to meet the rapid growth in urbanisation and the increased demand for high-quality reliable public services in cities, a new Reserve Bank of India (RBI) study said.

— The report said that municipal corporations should not rely heavily on the government for revenues as it can limit their financial autonomy and capacity to plan and execute long-term projects.

— Municipal revenue receipts, which were subdued during 2020-21, grew by 22.5 per cent in 2021-22 mainly due to a rise in non-tax revenues. The growth in the revenue receipts moderated to 3.7 per cent in 2022-23 (Revised Estimate (RE)) and was budgeted to increase by 20.1 per cent in 2023-24. Hence, statement 1 is correct.

— The report said that the revenue receipts of MCs exhibit concentration, with the top 10 MCs accounting for over 58 per cent of total municipal revenue receipts. Hence, statement 3 is correct.

— “The introduction of GIS (Geographic Information System)-based property tax mapping and digital platforms for tax collection can help improve compliance and plug revenue leakages,” the report said. Hence, statement 4 is correct.

Therefore, option (d) is the correct answer.

QUESTION 3

Recently, the Indian government has signed an agreement for establishing a framework to promote the use of local currencies with:

(a) Australia

(b) Japan

(c) Maldives

(d) China

Explanation

— The RBI and the Maldives Monetary Authority signed an agreement in Mumbai for establishing a framework to promote the use of local currencies — the Indian Rupee and the Maldivian Rufiyaa (MVR) for cross-border transactions.

— The Memorandum of Understanding (MoU) was signed by Governor of Reserve Bank of India Shaktikanta Das and Governor of Maldives Monetary Authority Ahmed Munawar.

— “The MoU encourages the use of INR and MVR in current account transactions, permissible capital account transactions and any other economic and financial transactions as agreed upon by both countries,” the RBI said in a statement.

— This framework would enable exporters and importers to invoice and settle in their respective domestic currencies, which in turn would enable the development of trading in the INR-MVR pair in foreign exchange market.

Therefore, option (c) is the correct answer.

QUESTION 4

With reference to the Generalised System of Preferences (GSP) programme, consider the following statements:

1. It is the largest and oldest trade preference programme in Russia.

2. In 2019, India lost duty-free access under the Generalised System of Preferences (GSP) programme.

3. It promotes economic development by eliminating duties on products when imported.

Which of the statements given above are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

Explanation

— US President-elect Donald Trump, who is set to take over the White House on January 20, has announced plans to impose tariffs on China, Mexico, and Canada, indicating that his administration will continue to use tariffs to bring manufacturing jobs back to the country and as leverage in trade negotiations. However, India is not included in Trump’s original tariff proposals.

— Notably, Mexico, China, and Canada are the three US trading partners most vulnerable to future policy changes under Trump’s presidency, according to the Economist Intelligence Unit (EIU), which evaluates countries based on their bilateral trade balance with the US. The EIU ranks India eighth among ten such countries.

— The Generalised System of Preferences (GSP) programme is the largest and oldest U.S. trade preference programme which was established by the Trade Act of 1974. Hence, statement 1 is not correct.

— GSP promotes economic development by eliminating duties on thousands of products when imported from one of 119 designated beneficiary countries and territories. Hence, statement 3 is correct.

— In 2019, India lost duty-free access under the Generalised System of Preferences (GSP) programme, of which it was the largest beneficiary. Hence, statement 2 is correct.

Therefore, option (b) is the correct answer.

QUESTION 5

With reference to the Core steel, consider the following statements:

1. India’s steel trade data for FY24 reflects a trade surplus in core steel but a deficit in steel products.

2. Core steel exports increased in FY24 from FY21.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Explanation

— The Japanese Embassy in India has expressed concerns to two central ministries — the Ministry of Steel and the Ministry of Commerce and Industry — about Japanese steel consignments being held up at Indian ports by Customs officers due to a lack of a No Objection Certificate (NOC).

— Indian importers have also expressed their concerns, claiming that many steel containers have been detained at ports for nearly two months.

— The government’s Steel Import Monitoring System (SIMS) requires thorough statements before items arrive, and Quality Control Orders (QCOs) require specific steel products to be registered with the Bureau of Indian Standards (BIS).

— India’s steel trade data for FY24 reflects a trade deficit in core steel but a surplus in steel products. Core steel exports (HS 72) totalled $11.9 billion, while imports surged to $18.6 billion, resulting in a significant trade deficit. Hence, statement 1 is not correct.

— Overall, India exported $21.8 billion worth of steel and steel products, while imports stood at $23.7 billion, underscoring challenges in the core steel segment. Core steel exports declined slightly from $12.1 billion in FY21 to $11.9 billion in FY24. Hence, statement 2 is not correct.

Therefore, option (d) is the correct answer.

Previous Daily Subject-Wise-Quiz

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 86)

Daily subject-wise quiz — Polity and Governance (Week 86)

Daily subject-wise quiz —  Science and Technology (Week 86)

Daily subject-wise quiz — Environment and Geography (Week 86)

Daily subject-wise quiz — Economy (Week 85)

Daily subject-wise quiz – International Relations (Week 85)

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