UPSC Essentials | Daily subject-wise quiz : Economy MCQs on SME listed entities, Sovereign Gold Bond scheme and more (Week 89)

1. These are debt securities issued by the Reserve Bank of India (RBI) on behalf of the government.

2. Each unit denotes a 10 gram of gold.

3. These bonds do not offer the flexibility of trading in the secondary market.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 2 only

(c) 1 only

(d) 1 and 3 only

Explanation

— The government is considering abandoning the sovereign gold bond scheme due to the high cost of funding. Officials believe that sovereign gold bonds were created with the intention of increasing investment in gold; however, the recent announcement to reduce import duties on gold in Budget 2024-25 is already in accordance with that goal and has contributed to increased demand for gold.

— The Indian government covers its fiscal deficit through a variety of instruments, including dated securities, the National Small Savings Fund (NSSF), provident funds, and sovereign gold bonds (SGBs).

— SGBs are debt securities issued by the Reserve Bank of India (RBI) on behalf of the government, with each unit representing one gramme of gold. Hence, statement 1 is correct and statement 2 is not correct.

— These bonds allow for secondary market trading, and the interest rate on SGBs is fixed at 2.5 per cent per annum based on the initial investment. Hence, statement 3 is not correct.

— The amount of gold for which the investor pays is protected since he or she obtains the current market price at the time of redemption or early redemption. Interest is often credited to the investor’s bank account semi-annually, with the last interest payment due along with the principal at maturity.

Therefore, option (c) is the correct answer.

QUESTION 2

With reference to the small and medium enterprises (SME) listed entities, consider the following statements:

1. They are typically promoter-driven or family business companies.

2. There is a high concentration of shareholding among a few promoter or promoter group persons or entities.

3. Private equity investors or sophisticated investors have an absolute presence.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Explanation

— The Securities and Exchange Board of India (SEBI) is expected to revise rules governing small and medium-sized firms’ initial public offerings (IPOs) at its upcoming meeting.

— SME IPOs have increased in recent years, particularly between 2022 and 2023. Since the inception of SME platforms, FY2023-24 saw the biggest number of SME public issues and SME fundraising, with 196 IPOs entering the market to raise more than Rs 6,000 crore.

— SEBI has highlighted that as the number of SME issues has expanded, so has investor involvement in these offerings. The applicant-to-allotted investor ratio rose from four times in FY2022 to 46 times in FY2023 and 245 times in FY2024.

— SME-listed entities are often promoter-driven or family-owned businesses with a concentrated shareholding among a small number of promoters or promoter group individuals or entities. Hence, statements 1 and 2 are correct.

— There is also a lack of private equity or knowledgeable investors in such companies, who operate as a check on the promoter’s influence, according to a recent SEBI consultation paper. Hence, statement 3 is not correct.

Therefore, option (b) is the correct answer.

QUESTION 3

Consider the following statements:

1. It is the second most important staple food which is consumed by more than half of the population in India.

2. It is predominantly grown in the Central and Peninsular parts of India.

3. The optimum time for sowing this crop is when the mean daily temperature is between 23±3°C.

4. The Yellow Rust disease affects this crop.

The above-mentioned statements refer to:

(a) Rice

(b) Wheat

(c) Pulses

(d) Pearl millet

Explanation

— In November, retail food inflation fell to 9.04% year on year, down from 10.87% the previous month.

— Vegetable inflation, which was 42.23% in October and 29.33% in November, is likely to ease due to increased winter season supplies, but two major commodities remain a source of concern.

About Wheat

— Wheat is India’s second most important staple food after rice, consumed by 65% of the population, and its consumption is expected to rise further as food patterns change.

— It is primarily grown in the Central and Peninsular regions of India.

— It is cultivated in the Northern Hill Zone (NHZ), North Western Plains Zone (NWPZ), North Eastern Plains Zone (NEPZ), Central Zone (CZ), Peninsular Zone (PZ), and Southern Hills Zone (SHZ).

— Wheat should be sown when the average daily temperature is 23±3°C; for optimal tillering, the temperature should be 16-20°C.

— Yellow Rust disease causes yellow streaks of powder or dust to form on wheat leaves and leaf sheaths. When handled, this yellow powder stains clothing or fingers. Under favourable conditions, the disease spreads quickly and has an impact on crop development and, ultimately, production.

Therefore, option (b) is the correct answer.

(Other Source: agriculture.vikaspedia.in)

QUESTION 4

The term “Gross fixed capital formation” (GFCF) is defined as:

(a) the total value of all goods and services produced by a country’s residents, whether within the country or abroad.

(b) the increase in an economy’s production of goods and services.

(c) the net accumulation of capital goods

(d) the acquisition of produced assets (including second-hand asset purchases), as well as the production of such assets for personal use by producers, without disposals.

Explanation

— India’s GDP growth slumped to an almost two-year low of 5.4% in July-September. According to the Economic Survey, the Indian economy is predicted to increase 6.5-7% in FY25, whereas the Reserve Bank of India predicts GDP growth of 6.6% in the current fiscal year.

— Investments are predicted to be a key economic driver in FY26, as they were in FY22 and FY24, with Gross Fixed Capital Formation (GFCF), a measure of capital investment in the economy, projected to rise 7.2% in FY26 from 6.7% in FY25.

— Gross fixed capital formation (GFCF), commonly known as “investment,” is defined as the acquisition of created assets (including the purchase of used assets), as well as the production of such assets by producers for their own use, without disposals.

Therefore, option (d) is the correct answer.

QUESTION 5

Consider the following flight routes:

1. Mumbai – Delhi

2. Melbourne – Sydney

3. Beijing – Shanghai Hongqiao

4. Jeju International – Seoul Gimpo

What is the correct sequence (ranking) of these busiest flight routes from top to bottom?

(a) 4–2–1–3

(b) 1–2–3–4

(c) 1–4–2–3

(d) 2–1–4–3

Explanation

— OAG, an international aviation and travel data and analytics business, has classified Mumbai-Delhi, India’s largest flight route, as the ninth busiest domestic route globally in the 2024 rankings. Within Asia Pacific, the Mumbai-Delhi route was ranked sixth busiest.

— According to OAG data, the seat capacity deployed by airlines on the Mumbai-Delhi route in 2024 increased by 9% over last year to 7.96 million seats. However, seat capacity on the route in 2024 was still 3% lower than in 2019.

— India is the world’s third-largest domestic aviation market, as well as one of the fastest expanding major aviation markets in the world.

— The Jeju International-Seoul Gimpo route in South Korea, with a seat capacity of 14.18 million in 2024, remains Asia Pacific’s and the world’s biggest domestic flight route.

Therefore, option (a) is the correct answer.

Previous Daily Subject-Wise-Quiz

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 89)

Daily subject-wise quiz — Polity and Governance (Week 89)

Daily subject-wise quiz —  Science and Technology (Week 89)

Daily subject-wise quiz — Environment and Geography (Week 89)

Daily subject-wise quiz — Economy (Week 88)

Daily subject-wise quiz – International Relations (Week 88)

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