UPSC Essentials | Daily subject-wise quiz : Economy MCQs on India-UK Free Trade Agreement, new railway lines in NorthEast India and more (Week 120)

QUESTION 1

Consider the following statements:

Statement 1: The India-UK Free Trade Agreement (FTA) ensures comprehensive market access for goods across all sectors, covering all of India’s export interests.

Statement 2: India will benefit from tariff elimination on approximately 99 per cent of tariff lines, covering nearly 100 per cent of trade value.

Which one of the following is correct in respect of the above statements?

(a) Both Statement 1 and Statement 2 are correct and Statement 2 is the correct explanation for Statement 1.

(b) Both Statement 1 and Statement 2 are correct and Statement 2 is not the correct explanation for Statement 1.

(c) Statement 1 is correct but Statement 2 is incorrect.

(d) Statement 1 is incorrect but Statement 2 is correct.

Explanation

— At the India-UK trade deal signing ceremony, Prime Minister Narendra Modi said the agreement would benefit India’s textile, gems and jewellery sectors, and MSMEs, while helping Indians access medical devices and aircraft parts at affordable prices. He said the deal, signed after years of effort, is not merely an economic partnership but also a blueprint for shared prosperity.

— India has finally opened its doors to high-end British cars and whisky, albeit in a phased manner. The India-UK Free Trade Agreement (FTA) ensures comprehensive market access for goods across all sectors, covering all of India’s export interests. Hence, statement 1 is correct.

— India will benefit from tariff elimination on approximately 99 per cent of tariff lines, covering nearly 100 per cent of trade value — offering opportunities to boost bilateral trade between India and the UK, according to India’s Commerce and Industry Ministry. Hence, statement 2 is correct.

Both Statement 1 and Statement 2 are correct and Statement 2 is the correct explanation for Statement 1.

Therefore, option (a) is the correct answer.

QUESTION 2

With reference to the new railway lines and their connectivity to respective states, consider the following pairs:

1. Bairabi-Sairang line – Mizoram

2. Sivok-Rangpo line – Sikkim

3. Dimapur-Kohima line – Arunachal Pradesh

How many of the pairs given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Explanation

— The Indian Railways has incurred losses worth over Rs 200 crore in the last five years due to the relentless impact of natural disasters such as floods and landslides on the projects in the Northeast.

— The Bairabi-Sairang line, which connects Mizoram’s capital Aizawl for the first time, is set to be operational, some of the key ongoing projects in the Northeast are the Dimapur-Kohima New Line (Dhansiri-Zubza) to connect Nagaland’s capital Kohima, the Murkongselek-Pasighat new line, the Sivok-Rangpo new line to connect Sikkim to the national network for the first time and the Jiribam-Imphal new line. Hence, pairs 1 and 2 are correct and pair 3 is not correctly matched.

Therefore, option (b) is the correct answer.

QUESTION 3

With reference to the repo rate, consider the following statements:

1. When the RBI wants to encourage economic activity in the economy, it increases the repo rates.

2. The interest rate the central bank pays commercial banks when they park their excess cash is called the repo rate.

3. When the RBI wants to control inflation, it decreases the repo rate.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Explanation

— The interest rate that the RBI charges when commercial banks borrow money from it is called the repo rate. The interest rate the central bank pays commercial banks when they park their excess cash is called the reverse repo rate. Hence, statement 2 is not correct.

— When the RBI wishes to boost economic activity, it lowers repo rates. This allows commercial banks to reduce both the interest rates they charge (on loans) and the interest rates they pay on deposits. This, in turn, encourages people to spend money because keeping their savings in the bank now pays back a bit less, while businesses are encouraged to take out new loans for new investments because new loans now cost a little less. Hence, statement 1 is not correct.

— When the RBI seeks to limit inflation, it raises the repo rate. Banks must thus pay more interest to borrow from the RBI, resulting in higher interest rates for their borrowers. Hence, statement 3 is not correct.

Therefore, option (d) is the correct answer.

QUESTION 4

The Reserve Bank of India has issued directions not to levy any pre-payment charges on loans with sanctioned amount/ limit up to Rs 50 lakh for:

1. Small finance bank

2. Regional rural bank

3. State cooperative bank

4. NBFC-ML( medium layer)

Select the correct answer using the codes given below:

(a) 1 and 2 only

(b) 1 and 4 only

(c) 2, 3 and 4

(d) 1, 2, 3 and 4

Explanation

— The Reserve Bank of India has issued directions that commercial banks, tier 4 primary (urban) co-operative bank, non-banking financial companies-upper layer (NBFC-UL), and All India Financial Institutions will not levy any pre-payment charges for all loans granted for business purpose to individuals and small businesses.

— “A small finance bank, a regional rural bank, a tier 3 primary (urban) co-operative bank, state cooperative bank, central cooperative bank and an NBFC-ML( medium layer) shall not levy any pre-payment charges on loans with sanctioned amount/ limit up to Rs 50 lakh,” the RBI said.

Therefore, option (d) is the correct answer

QUESTION 5

With reference to the synthetic rubber, consider the following statements:

1. Malaysia is one of the biggest exporters of synthetic rubber.

2. Synthetic rubber imports have impacted the farm-gate price of natural rubber in India.

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

— As uncertainty over the India-US interim trade deal continues following the conclusion of an extended round of negotiations, the Ministry of Commerce and Industry has adopted a fresh approach — operating outside the purview of the standard operating procedure (SOP) which has been under preparation since last year —to respond to challenging US demands, The Indian Express has learnt.

— The Indian Coordination Committee of Farmers Movements (ICCFM), representing farmers from 11 states, said agriculture should be excluded from the trade deal. It highlighted that the US is one of the world’s largest exporters of synthetic rubber. Hence, statement 1 is not correct.

— “The US is one of the biggest exporters of synthetic rubber. Synthetic rubber imports have seriously impacted the farm-gate price of natural rubber in India. India imported Rs 1,556.54 crore worth of synthetic rubber and related products from the US in 2017–18, and Rs 71,490.73 crore in 2018–19. If India reduces import duties on synthetic rubber from the US, it will severely affect rubber farmers,” the ICCFM said. Hence, statement 2 is correct.

— Farmers also warned that if India signs a trade deal with the US, the latter could import raw sugar from Brazil, process it in the US, and then export it to India—hurting the domestic sugar industry.

Therefore, option (b) is the correct answer.

QUESTION 6

Why did the Royal Swedish Academy of Sciences award the 2019 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Abhijit Banerjee, Esther Duflo, and Michael Kremer?

(a) for their experimental approach to alleviating global poverty

(b) for studies of how institutions are formed and affect prosperity

(c) for improvements to auction theory and inventions of new auction formats

(d) none of the above

Explanation

— The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2019 was awarded jointly to Abhijit Banerjee, Esther Duflo and Michael Kremer “for their experimental approach to alleviating global poverty”

Therefore, option (a) is the correct answer.

QUESTION 7

Consider the following statements:

1. Pradhan Mantri MUDRA Yojana (PMMY) is a scheme for providing loans up to 20 lakh (for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category) to the non-corporate, non-farm small/micro enterprises. 

2. These loans are given by Commercial Banks, RRBs, Small Finance Banks, MFIs and NBFCs.

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

According to mudra.org.in,

“Pradhan Mantri MUDRA Yojana (PMMY) is a scheme launched by the Hon’ble Prime Minister on April 8, 2015 for providing loans up to 20 lakh (for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category) to the non-corporate, non-farm small/micro enterprises. These loans are classified as MUDRA loans under PMMY. These loans are given by Commercial Banks, RRBs, Small Finance Banks, MFIs and NBFCs. Under the aegis of PMMY, MUDRA has created four products namely ‘Shishu’, ‘Kishore’, ‘Tarun’ and ‘TarunPlus’ to signify the stage of growth / development and funding needs of the beneficiary micro unit / entrepreneur and also provide a reference point for the next phase of graduation / growth.”

Therefore, option (c) is the correct answer.

QUESTION 8

Which ministry/department was the government nodal agency responsible for coordinating the implementation of the Garib Kalyan Rojgar Abhiyaan?

(a) Ministry of Rural Development 

(b) Departments of Economic Affairs

(c) Department of Employment and Labour

(d) None of the above

Option (a) is the correct answer.

Previous Daily Subject-Wise-Quiz

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 118)

Daily subject-wise quiz — Polity and Governance (Week 120)

Daily subject-wise quiz —  Science and Technology (Week 120)

Daily subject-wise quiz — Economy (Week 119)

Daily subject-wise quiz — Environment and Geography (Week 119)

Daily subject-wise quiz – International Relations (Week 119)

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