UPSC Essentials | Daily subject-wise quiz | Economy (Week 38)

1. Lower labour productivity

2. Lower consumer footfall

3. Increased health expenses

4. Welfare losses

How many of the above are the result of worst air pollution?

(a) Only one

(b) Only two

(c) Only three

(d) All four

QUESTION 2

Consider the following statements about gross domestic product (GDP):

1. It is the most basic way to assess the performance of any economy.

2. GDP is defined as the total “market value” of all final goods and services in an economy.

3. Nominal GDP is derived by removing the effect of inflation from the Real GDP.

How many of the statements given above are not correct?

(a) Only one

(b) Only two

(c) All three

(d) None

QUESTION 3

With reference to the Digital Banking Units (DBU), consider the following statements:

1. It is a specialised fixed point business unit or hub, housing a certain minimum digital infrastructure for delivering digital banking products and services.

2. Regional Rural Banks (RRBs) and Local Area Banks are permitted to open DBUs in tier 1 to tier 6 centres.

3. It does not offer the service of credit cards.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

QUESTION 4

With reference to the settlement cycle of funds and securities, consider the following statements:

1. The surveillance measures applicable in the T+1 settlement cycle will also apply to securities in the T+0 settlement cycle.

2. T+0 settlement shall be made available in the top 500 listed equity shares based on the market capitalisation.

3. Securities under the trade-for-trade settlement will be permitted for T+0.

How many of the above statements are proposed by the Securities and Exchange Board of India (SEBI)?

(a) Only one

(b) Only two

(c) All three

(d) None

QUESTION 5

With reference to microcredit, consider the following statements:

1. It refers to the granting of loans to impoverished borrowers

2. Microcredit agreements frequently do not require any sort of collateral.

3. It usually targets low-income individuals, to help them to become self-sufficient.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) Only three

(d) None

ANSWERS TO THE MCQs

1. (d)

FYI:

— Air pollution is an urgent prerogative in India, as more than 20 of the world’s 30 cities with the worst air pollution are in the country.

— A study published in The Lancet Planetary Health in 2021 found large inter-state variations in economic loss as a proportion of state GDP ranging from 0.67 per cent to 2.15 per cent, with the greatest losses in the low per-capita GDP states of Uttar Pradesh, Bihar, Rajasthan, Madhya Pradesh, and Chhattisgarh.

— The 2021 study cited above compiled anecdotal evidence from across India:

(i) Footfall in Mumbai’s Linking Road shopping district dropped by 5 per cent during the highly polluted period between November and January;

(ii) A rooftop solar company reported a 13 per cent decrease in the productivity of its solar panels on high pollution days, reducing the economic viability of solar in India; and

(iii) Employees at Bengaluru’s tech hub, Whitefield Corporate Zone, reported an 8-10.

— The costs of poor air quality, the study said, were manifested in six distinct ways:

(i) lower labour productivity,

(ii) lower consumer footfall,

(iii) lower asset productivity,

(iv) increased health expenses,

(v) welfare losses, and

(vi) premature mortality.

— The analysis used big data analytics, a primary survey, existing literature, and input from diverse stakeholders, including academic experts in air pollution, cross-sectoral business heads, and service providers, to calculate the impact of air pollution.

Therefore, option (d) is the correct answer.

2. (a)

FYI:

— The National Statistical Office (NSO) of the Ministry of Statistics and Programme Implementation (MoSPI) released economic growth data for the first quarter of the current fiscal year (April, May, and June). It revealed that India’s economy grew by 7.8 per cent in the first quarter.

— The GDP is the most basic way to assess the performance of any economy — both from one year to another as well as across different countries. Hence, statement 1 is correct.

— GDP is defined as the total “market value” of all final goods and services in an economy. Hence, statement 2 is correct.

— Nominal GDP is nothing but the total market value of all the goods and services produced in India in a financial year.

— The Real GDP is “derived” from the real GDP by removing the effect of inflation. Hence, statement 3 is not correct.

Therefore, option (a) is the correct answer

3. (a)

FYI:

— In the Budget for 2022-23, the Finance Minister said: In recent years, digital banking, digital payments and fintech innovations have grown at a rapid pace in the country and to mark 75 years of our independence, it is proposed to set up 75 Digital Banking Units (DBUs) in 75 districts of the country by Scheduled Commercial Banks.

— A digital banking unit is a specialised fixed point business unit or hub, housing a certain minimum digital infrastructure for delivering digital banking products and services. Hence, statement 1 is correct.

— DBUs will service existing financial products and services digitally in self-service mode at any time.

— Commercial banks (other than regional rural banks, payment banks and local area banks) with past digital banking experience are permitted to open DBUs in tier 1 to tier 6 centres, unless otherwise specifically restricted, without having the need to take permission from the RBI in each case. Hence, statement 2 is not correct.

— The services include saving bank accounts under various schemes, current accounts, fixed deposit and recurring deposit accounts, digital kits for customers, mobile banking, Internet banking, debit cards, credit cards, and mass transit system cardss, digital kits for merchants, UPI QR codes, BHIM Aadhaar and point of sale (PoS). Hence, statement 3 is not correct.

— Currently, fintechs operating as neobanks offer digital banking services but they do so in partnership with non-banking financial companies (NBFCs). Some of the neobanks offering services in India are Jupiter, Fi Money, Niyo, Razorpay X.

Therefore, option (a) is the correct answer.

4. (b)

FYI:

— The Securities and Exchange Board of India (SEBI) has proposed the introduction of a facility for clearing and settlement of funds and securities on T+0 (same day) and instant settlement cycle on an optional basis.

— SEBI has shortened the settlement cycle to T+3 from T+5 in 2002 and subsequently to T+2 in 2003. At present, the settlement of funds and securities happens on the T+1 cycle. It was introduced in 2021 in a phased manner and was fully implemented in January 2023.

— SEBI proposed to implement it in two phases –

Phase 1: T+0 Settlement Cycle

Phase 2: Instant Settlement Cycle.

— In Phase 1, an optional T+0 settlement cycle (for trades till 1:30 PM) is envisaged, with settlement of funds and securities to be completed on the same day by 4:30 PM.

— In Phase 2, an optional immediate trade-by-trade settlement (funds and securities) may be carried out. In the second phase, trading will be carried out till 3.30 pm.

— SEBI has suggested that, to begin with, T+0 settlement shall be made available in the top 500 listed equity shares based on the market capitalisation. Hence, statement 2 is correct.

— The surveillance measures applicable in the T+1 settlement cycle will also apply to securities in the T+0 settlement cycle. Hence, statement 1 is correct.

— Securities under the trade-for-trade settlement will not be permitted for T+0. Hence, statement 3 is not correct.

Therefore, option (b) is the correct answer.

5. (c)

FYI:

— Microcredit refers to the granting of very small loans to impoverished borrowers, with the aim of enabling the borrowers to use that capital to become self-employed and strengthen their businesses. Hence, statement 1 is correct.

— The basic idea behind microcredit is that a small loan will give people who normally live outside the scope of the institutions that underpin the mainstream economy access to the larger economy.

— Microcredit agreements frequently do not require any sort of collateral, and sometimes may not even involve a written agreement, as many recipients of microcredit are often illiterate. Hence, statement 2 is correct.

— Microcredit is a subset of microfinance, which provides financial services to people who do not have access to traditional financial services.

— Microfinance activities typically target low-income people to assist them in becoming self-sufficient. In this way, microfinance activities also aim to alleviate poverty. Hence, statement 3 is correct.

Therefore, option (c) is the correct answer.

Previous Daily Subject-Wise-Quiz

Daily subject-wise quiz — Polity and Governance (Week 38)

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 38)

Daily subject-wise quiz — Environment, Geography, Science and Technology (Week 38)

Daily subject-wise quiz — Economy (Week 37)

Daily subject-wise quiz – International Relations (Week 37)

Subscribe to our UPSC newsletter and stay updated with the news cues from the past week.