3. ECBs are covered under the Foreign Exchange Management Act (FEMA).
How many of the statements given above are correct?
(a) Only one
(b) Only two
(c) All three
(d) None
Explanation
— The RBI unveiled plans to streamline and simplify regulations for External Commercial Borrowings (ECBs). The updated framework will expand the pool of eligible borrowers and recognised lenders, rationalise borrowing limits and maturity norms, eliminate restrictions on borrowing costs, relax end-use constraints, and simplify reporting requirements.
— External Commercial Borrowings (ECBs) are commercial loans made by qualifying Indian firms to recognised non-resident lenders, which are controlled by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act (FEMA). Hence, statements 1 and 3 are correct and statement 2 is not correct.
— They provide a substantial funding source for capital development and modernisation, with recent data indicating that total outstanding ECBs will be around $190.4 billion as of September 2024, mostly for infrastructure and industrial projects.
Therefore, option (b) is the correct answer.
QUESTION 2
With reference to the nominal GDP, consider the following statements:
1. It measures an economy’s output after adjusting for inflation.
2. Tax collections are benchmarked to nominal GDP.
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
— Nominal GDP measures an economy’s output at current market prices, while Real GDP measures it after adjusting for inflation. Hence, statement 1 is not correct.
— Nominal GDP is the main benchmark for almost all the key economic variables in the country. For instance, tax collections are benchmarked to nominal GDP, as is the country’s overall debt, the government’s gross fiscal deficit or even the total market capitalisation of listed companies. Hence, statement 2 is correct.
Therefore, option (b) is the correct answer.
QUESTION 3
The Rangarajan committee was formed to:
(a) recommend reforms in the financial sector and banking regulation.
(b) review the methodology for measurement of poverty in the country.
(c) draft the framework for the implementation of the Goods and Services Tax (GST).
(d) suggest measures for restructuring public sector enterprises.
Explanation
— Almost 15 years ago, the erstwhile Planning Commission set up a committee headed by C Rangarajan, a former governor of the Reserve Bank of India (RBI), to review the methodology for measurement of poverty in the country.
— The committee, which submitted its report in June 2014, caused a stir when it estimated the national poverty line at Rs 1,407 in terms of monthly per capita expenditure for urban areas and Rs 972 for rural areas.
Therefore, option (b) is the correct answer.
QUESTION 4
With reference to the Pradhan Mantri Awas Yojana (Grameen) (PMAY-G), consider the following statements:
1. The funding for PMAY-G is fully funded by the Central Government.
2. In PMAY-G, programme implementation and monitoring is to be carried out through an end to end e-Governance model- Using AwaasSoft and Awaas App.
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
— After Durga Puja, the West Bengal government will implement the second phase of the flagship “Banglar Bari” project in which 16 lakh families will be given Rs 1.20 lakh each to build pucca houses.
About PMAY-G
— The funding for PMAY-G, at Rs 1.2 lakh per unit, is shared by the Centre and states at a 60:40 ratio (with the exception of Northeastern and Himalayan states, where the Centre bears 90% of the cost, and Union Territories, where the Centre bears all of the cost). Hence, statement 1 is not correct.
— In PMAY-G, programme implementation and monitoring is to be carried out through an end to end e-Governance model- Using AwaasSoft and Awaas App. Hence, statement 2 is correct.
Therefore, option (b) is the correct answer.
(Other Source: pmayg.dord.gov.in)
QUESTION 5
The Repo Rate is the
(a) interest rate at which the Reserve Bank of India (RBI) loans money to commercial banks.
(b) interest rate at which commercial banks lend money to the RBI.
(c) interest rate charged by commercial banks on loans to the public.
(d) interest rate at which RBI accepts fixed deposits from the public.
Explanation
— The Reserve Bank of India (RBI) Monetary Policy Committee met from September 29 to October 1, and is widely expected to keep the repo rate unchanged for the second consecutive time amid strong GDP growth and expectations of benign inflation.
— A section of economists, however, see a possibility of a repo rate cut in the upcoming policy. The six-member rate-setting panel is unlikely to alter its present ‘neutral’ monetary policy stance.
— The Repo Rate is the interest rate at which the Reserve Bank of India (RBI) loans money to commercial banks. More specifically, it is the interest rate at which the Reserve Bank provides liquidity under the liquidity adjustment facility (LAF) to all LAF participants against the collateral of government and other approved securities.
Therefore, option (a) is the correct answer.
Previous Daily Subject-Wise-Quiz
Daily Subject-wise quiz — History, Culture, and Social Issues (Week 125)
Daily subject-wise quiz — Polity and Governance (Week 130)
Daily subject-wise quiz — Science and Technology (Week 130)
Daily subject-wise quiz — Economy (Week 129)
Daily subject-wise quiz — Environment and Geography (Week 129)
Daily subject-wise quiz – International Relations (Week 129)
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Check your progress and revise your topics through this quiz on the Economy. Find a question on the External Commercial Borrowings in today's quiz. (File Photo) 
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