UPSC Essentials | Daily subject-wise quiz : Economy MCQs on Minimum Support Price, Foreign Direct Investment and more (Week 133)

Explanation

— Foreign Direct Investment (FDI) inflows include three main components: equity capital, reinvested earnings, and intra-company loans.

— FDI is a long-term investment made by a foreign company in a domestic business with the intention of developing long-term influence or control over the enterprise.

— Portfolio investment entails purchasing stocks without managerial oversight or long-term interest; it is classified as Foreign Portfolio Investment (FPI), not FDI.

Therefore, option (c) is the correct answer.

(Source: unctadstat.unctad.org)

QUESTION 2

With reference to the Minimum Support Price (MSP), consider the following statements:

1. It is a form of market intervention by the Government to protect agricultural producers against any sharp fall in farm prices.

2. The minimum support prices are announced at the end of the sowing season for certain crops.

3. It is announced based on the recommendations of the Commission for Agricultural Costs and Prices.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Explanation

— Minimum Support Price (MSP) is a form of market intervention by the Government of India to ensure agricultural producers against any sharp fall in farm prices. Hence, statement 1 is correct.

— The minimum support prices are announced by the Government of India at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP). Hence, statement 2 is not correct and statement 3 is correct.

— MSP is price fixed by the Government of India to protect the producer-farmers against excessive fall in price during bumper production years.

— The major objectives are to support the farmers from distress sales and to procure food grains for public distribution. In case the market price for the commodity falls below the announced minimum price due to bumper production and glut in the market, government agencies purchase the entire quantity offered by the farmers at the announced minimum price.

Therefore, option (b) is the correct answer.

(Source: agriculture.vikaspedia.in)

QUESTION 3

Tambaram to Chengalpattu, a new rail line, has been approved by the government in:

(a) Kerala

(b) Telangana

(c) Karnataka

(d) Tamil Nadu

Explanation

— Indian Railways has approved the proposal to construct a fourth line between Tambaram and Chengalpattu in Tamil Nadu. This 30.02-km-long railway line will further improve regional connectivity and enhance smooth train operations. The area falls under the administrative control of Southern Railway (SR) zone.

— The Tambaram to Chengalpattu fourth line project will be executed by Southern Railway under Plan Head-15 (Doubling), identified as part of the ‘Energy, Mineral & Cement Corridor’ of Indian Railways. The railway project is estimated to cost Rs 713.56 crore at present, with the total expenditure expected to reach Rs 757.18 crore upon completion.

— The Tambaram to Chengalpattu section is presently a three-line stretch on the Chennai Beach-Villupuram– Tiruchchirappalli-Kanyakumari mainline.

Therefore, option (d) is the correct answer.

QUESTION 4

With reference to the Strait of Hormuz, consider the following statements:

1. It connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.

2. India’s LNG imports from Qatar primarily come through the Strait of Hormuz.

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 Strait of Hormuz is a narrow waterway between Iran and Oman that connects the Persian Gulf, the Gulf of Oman, and the Arabian Sea. Hence, statement 1 is correct.

— The US Energy Information Administration (EIA) refers to it as the “world’s most important oil transit chokepoint,” with the strait handling around one-fifth of worldwide liquid petroleum fuel usage and liquefied natural gas (LNG) traffic.

— Much of India’s oil comes from significant West Asian sources such as Iraq, Saudi Arabia, and the UAE and is transported to Indian ports via the Strait of Hormuz. The majority of India’s LNG imports, which are primarily from Qatar, also pass through this critical choke point. Hence, statement 2 is correct.

Therefore, option (c) is the correct answer.

QUESTION 5

Food and fuel inflation are largely driven by:

1. Production policies of major petroleum-exporting nations

2. Weather-related phenomena affecting food output

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

— Food and fuel inflation is primarily driven by supply-side factors such as rainfall, temperature, and other weather-related phenomena affecting food output, as well as geopolitical developments and production policies in key petroleum exporting countries. Hence, statements 1 and 2 are correct.

Therefore, option (c) is the correct answer.