UPSC Essentials | Daily subject-wise quiz : Economy (Week 30)

1. India’s total trade with Canada in the last (2022-23) financial year was 10 per cent of India’s total trade with the world.

2. The major portion of the exports to Canada consists of mineral oil, wood pulp and edible vegetables.

3. The major imports from Canada include pharmaceutical products.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

QUESTION 2

With reference to the technical textiles, consider the following statements:

1. Technical textiles are functional fabrics that have applications across various industries.

2. Two-thirds of international trade in textiles is of man-made and technical textiles.

3. Technical textiles are not used for medical and defence purposes.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

QUESTION 3

With reference to the liquidity, consider the following statements:

1. Liquidity in the banking system refers to readily available cash that banks need to meet short-term business and financial needs.

2. A tight liquidity condition could lead to a rise in the government securities yields.

3. Excessive liquidity can pose risks to price stability and also to financial stability.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

QUESTION 4

Which of the following organisation releases Financial Inculsion Index (Fi-Index)?

(a) International Monetary Fund

(b) Asian Development Bank

(c) Securities and Exchange Board of India

(d) Reserve Bank of India

QUESTION 5

Consider the following:

1. Unified Logistics Interface Platform

2. E-logs

3. FASTag

How many of the above aims to improve logistics?

(a) Only one

(b) Only two

(c) All three

(d) None

ANSWERS TO THE MCQs

1. (d)

FYI:

— India’s total trade with Canada in the last (2022-23) financial year was $8 billion — that’s 0.7% of India’s total trade ($1.1 trillion) with the world. Hence, statement 1 is not correct.

— Bilateral trade has also been fairly evenly balanced; for example, in 2022-23, roughly $4 billion in imports were matched by $4 billion in exports, despite India’s tiny trade surplus of $58 million.

— Three categories of goods dominate India’s imports from Canada, accounting for 46% (nearly half) of total import value. These are:

1. Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes.

2. Pulp of wood or of other fibrous cellulosic material; waste and scrap of paper or paperboard

3. Edible vegetables and certain roots and tubers. Hence, statement 2 is not correct.

— The top three exports, on the other hand, accounted for only 30% of the total exports. These were:

1. Pharmaceutical products. Hence, statement 3 is not correct.

2. Articles of iron or steel

3. Nuclear reactors, boilers, machinery and mechanical appliances.

— Canada is important to India as a supplier of two major agri-related commodities:

(a) Muriate of potash (MOP)

(b) Masur or red lentil

Therefore, option (d) is the correct answer.

2. (b)

FYI:

— Technical Textiles is a high technology sunrise sector which is steadily gaining ground in India.

— Technical textiles are functional fabrics that have applications across various industries including automobiles, civil engineering and construction, agriculture, healthcare, industrial safety, personal protection etc. Hence, statement 1 is correct.

— Based on usage, there are 12 technical textile segments; Agrotech, Meditech, Buildtech, Mobiltech, Clothtech, Oekotech, Geotech, Packtech, Hometech, Protech, Indutech and Sportech.

— The PLI scheme for textiles aims to promote the production of high value Man-Made Fibre (MMF) fabrics, garments and technical textiles.

— Two-thirds of international trade in textiles is of man-made and technical textiles. This scheme has been approved so India can also contribute to the ecosystem of fabrics and garments made of MMF. Hence, statement 2 is correct.

— Technical textiles that are set to be covered under the scheme include defence textiles such as bulletproof vests, fighter aircraft and submarine clothing and tents, mobile textiles such as safety airbags and tyre cords and protective textiles such as personal protective equipment and fire-retardant fabrics and clothing.

— The scheme also incentivises the production of smart textiles embedded with active devices for medical, defence, and special purposes. Hence, statement 3 is not correct.

Therefore, option (b) is the correct answer.

3. (c)

FYI:

— Liquidity in the banking system refers to readily available cash that banks need to meet short-term business and financial needs. Hence, statement 1 is correct.

— On any given day, the banking system’s liquidity is said to be in deficit if it is a net borrower from the RBI under the Liquidity Adjustment Facility (LAF), and it is said to be in surplus if it is a net lender to the RBI.

— The LAF refers to the RBI’s operations through which it injects or absorbs liquidity into or from the banking system.

— The deficit in the liquidity situation has been caused by an uptick in the bank credit, advance tax payments by corporates, intervention of the RBI into the forex market, and also incremental deposit growth not keeping pace with credit demand.

— A tight liquidity condition could lead to a rise in the government securities yields and subsequently lead to a rise in interest rates for consumers too. Hence, statement 2 is correct.

— The RBI announced I-CRR as a temporary measure to absorb excess liquidity from the banking system. The level of surplus liquidity in the system surged because of the return of Rs 2,000 banknotes to the banking system, RBI’s surplus transfer to the government, pick up in government spending and capital inflows.

— Excess liquidity can pose a risk to both price stability and financial stability. As a result, effective liquidity management necessitates continuous assessment of the level of surplus liquidity so that additional measures can be taken as needed to impound the element of excess liquidity. Hence, statement 3 is correct.

Therefore, option (c) is the correct answer.

4. (d)

FYI:

— The Reserve Bank of India (RBI) said that India’s financial inclusion index (FI-Index) for the year ended March 31, 2022 improved to 56.4 from 53.9 in the previous year, with growth seen across all its sub-indices.

— The Reserve Bank of India had constructed a composite Financial Inclusion Index (FI-Index) to capture the extent of financial inclusion across the country, in consultation with the concerned stakeholders including the Government and published it in August 2021 for the FY ending March 2021.

— The index comprises of three parameters including access, usage and quality. The FI-Index is responsive to ease of access, availability and usage of services and quality of services, consisting of 97 indicators.

— The index has been constructed without any base year and reflects cumulative efforts of all stakeholders over the years towards financial inclusion.

Therefore, option (d) is the correct answer.

5. (c)

FYI:

— Logistics broadly includes facilities crucial to trade: transport services for the movement of goods, storage facilities that are particularly essential for trade in perishable goods such as food items, fruits, and vegetables, and smooth functioning of government services that facilitate trade such as licensing and customs.

— The new logistics policy has four features: Integration of Digital System (IDS); Unified Logistics Interface Platform (ULIP); Ease of Logistics (ELOG); and System Improvement Group (SIG).

— A Unified Logistics Interface Platform ULIP will “bring all the digital services related to the transportation sector into a single portal”. Similarly, a new digital platform Ease of Logistics Services (E-Logs) has also been started for industry associations to resolve issues by reaching out to the government.

— Previous programmes and schemes aimed at improving logistics aspects, such as the FASTag for electronic toll tax collection and faceless assessment for customs.

Therefore, option (c) is the correct answer.

Previous Daily Subject-Wise-Quiz

Daily subject-wise quiz — Polity and Governance (Week 30)

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 29)

Daily subject-wise quiz — Environment, Geography, Science and Technology (Week 30)

Daily subject-wise quiz — Economy (Week 29)

Daily subject-wise quiz – International Relations (Week 29)

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