UPSC Essentials | Daily subject-wise quiz : Economy MCQs on Goods and Services Tax, India-EU trade and more (Week 127)

QUESTION 1

With reference to the India-EU trade, consider the following statements:

1. The EU is India’s second-largest trading partner in 2024.

2. Trade in goods between the EU and India has increased by almost 90% in the last decade.

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 European Union (EU) has listed 102 new Indian fishery establishments from India for exports to EU member countries, the Commerce and Industry Ministry said.

— India is already an important trade and investment partner for the EU and could hold significant further potential. It represents a sizable and dynamic market, with an annual projected GDP growth rate of over 6% according to the IMF, making it one of the fastest-growing emerging economies in the G20.

— The EU is India’s second-largest commercial partner, accounting for goods worth €120 billion in 2024, or 11.5% of overall trade. India is the EU’s ninth largest trading partner, accounting for 2.4% of total EU trade in goods in 2024, well behind the United States (17.3%), China (14.6%), and the United Kingdom (10.1%). Over the previous decade, trade between the EU and India has surged by about 90%. Hence, statements 1 and 2 are correct.

— The EU’s biggest imports from India are machinery and appliances, chemicals, basic metals, mineral goods, and textiles. The EU’s biggest exports to India are machinery and appliances, transportation equipment, and chemicals.

— Trade in services amounted to €59.7 billion in 2023 (with a deficit for the EU of €7.9 billion).

Therefore, option (c) is the correct answer.

(Other Source: policy.trade.ec.europa.eu)

QUESTION 2

With reference to the Goods and Services Tax (GST), consider the following statements:

1. It was introduced in 2015.

2. It subsumed several state and central-level indirect taxes, such as octroi, luxury tax, value added tax, entry tax, etc., into a single unified structure.

3. Recently, in its 56th meeting of GST, the council has announced a new slab of 40 per cent.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Explanation

— The Goods and Services Tax Council, in its 56th meeting, cleared some reforms to the GST regime. The two main changes are that the four slabs — 5%, 12%, 18% and 28% — have been brought down to two, 5% and 18%, and a new 40% slab has been introduced. As a result of the restructuring, the end price of several frequently consumed items are likely to change from September 22, when the new rates come into effect. Hence, statement 3 is correct.

— The Goods and Services tax was introduced in 2017. Hence, statement 1 is not correct.

— It subsumed several state and central-level indirect taxes, such as octroi, luxury tax, value added tax, entry tax, etc., into a single unified structure, where one tax was charged at the destination level. Hence, statement 2 is correct.

Therefore, option (b) is the correct answer.

QUESTION 3

Which of the following are the objectives of the Production Linked Incentive (PLI) scheme?

1. To build up solar PV manufacturing capacity

2. Setting up of integrated plants

3. Employment generation

4. Technological self-sufficiency

Select the correct answer using the codes given below:

(a) 1 and 2 only

(b) 1 and 3 only

(c) 3 and 4 only

(d) 1, 2, 3 and 4

Explanation

— The government views PLI schemes to be crucial for India on two fronts: one, to leverage public funding to scale up the domestic manufacturing base such as to increase India’s contribution to the global supply chains, and second, to create lakhs of direct and indirect jobs.

— The Production Linked Incentive (PLI) Scheme intends to create an ecosystem in India for the production of high efficiency solar PV modules, reducing reliance on imports in the renewable energy sector.

The objectives of the PLI scheme are:

— To build up the solar PV manufacturing capacity of high-efficiency modules.

— To bring cutting-edge technology to India to manufacture high-efficiency modules.

— To promote the setting up of integrated plants for better quality control and competitiveness.

— To develop an ecosystem for sourcing local materials in solar manufacturing.

— Employment generation and technological self-sufficiency.

Therefore, option (d) is the correct answer.

QUESTION 4

Consider the following statements:

1. A less volatile rupee makes Indian assets more attractive to investors.

2. A weaker rupee benefits exporters by making their products cheaper to foreign buyers.

3. The rupee depreciation will not help in controlling the impact of the tariff.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Explanation

— The Indian rupee plummeted to a lifetime low versus the US dollar on Thursday, as Washington’s continuing tariff tensions harmed India’s trade and flow outlook.

— A weakening rupee benefits exporters by making their products cheaper for overseas purchasers, enhancing their competitiveness. The rupee’s depreciation will mitigate the impact of the tariff to some extent. India’s foreign exchange reserves, at $690.72 billion, are sufficient to absorb significant external shocks and provide the Reserve Bank with the flexibility to allow the rupee to depreciate gradually and steadily. Hence, statement 2 is correct and statement 3 is not correct.

— A less volatile currency makes Indian assets more appealing to investors, as they may expect higher performance and greater predictability. Unlike currencies in several Latin American and African economies, the rupee provides more constant returns, minimising risk for investors. Hence, statement 1 is correct.

— The rupee’s value stability allows firms to better plan and control their costs. It eliminates the risks associated with currency changes, making it easier for businesses to conduct international commerce and investment.

Therefore, option (b) is the correct answer.

(Other Source: http://www.pib.gov.in)

QUESTION 5

Which of the following crops are covered under the Kharif crops?

1. Barley

2. Sorghum

3. Mustard

4. Maize

5. Groundnut oilseeds

Select the correct answer using the codes given below:

(a) 1, 2 and 3

(b) 2 and 4 only

(c) 1 and 5 only

(d) 2, 4 and 5

Explanation

— Cropping pattern refers to the distribution of different crops within a specific area at a given time. It indicates the yearly sequence and spatial arrangement of crops that follow in an area.

— In India, cropping patterns have traditionally been shaped by the monsoons, which determine the agricultural calendar of the country.

— India’s agricultural landscape is broadly divided into Kharif (monsoon), Rabi (winter) and Zaid cropping seasons.

Kharif Cropping

— It begins in July and lasts around September or October.

— Major Kharif crops include rice, maize, sorghum, millet, pulses (arhar and moong), and oilseeds (groundnut and soybean).

— The area sown with Kharif crops exceeds 378 lakh hectares, reflecting a 14.10 per cent increase compared to the previous year.

Rabi Cropping

— It begins with the onset of winter in October and concludes with the harvesting season around March or April.

— The primary Rabi crops include wheat, barley, mustard, gram, and lentils. Wheat stands out as the most important Rabi crop, occupying a significant portion of the total cultivated area during this season.

Zaid Cropping

— These are grown in the short intervening season between Kharif and Rabi, typically from March to June. Common Zaid crops include watermelon, cucumber, pumpkin, bitter gourd, and fodder crops.

Therefore, option (d) is the correct answer.

Previous Daily Subject-Wise-Quiz

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 124)

Daily subject-wise quiz — Polity and Governance (Week 127)

Daily subject-wise quiz —  Science and Technology (Week 127)

Daily subject-wise quiz — Economy (Week 126)

Daily subject-wise quiz — Environment and Geography (Week 126)

Daily subject-wise quiz – International Relations (Week 126)

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