UPSC Essentials: Daily subject-wise quiz — Economy (Week 6)

QUESTION 1

With reference to the Monetary Policy Committee (MPC), which of the following statement(s) is/are correct?

1. It is a five-member statutory body to be constituted by the Central Government by notification in the Official Gazette.

2. In case of equality of votes among the members, the Governor of the RBI has the second or casting vote.

3. The members of the committee hold the office for a period of five years.

Select the correct answer using the codes given below:

(a) 1 and 2 only

(b) 2 only

(c) 1 only

(d) 1, 2 and 3

QUESTION 2

Consider the following statements about Raising and Accelerating MSME Performance:

1. It is a World Bank assisted Central Sector Scheme.

2. The scheme aims at improving access to market and credit.

3. It will strengthen the coordination between the institutions at the National and State levels.

Which of the statement(s) given above is/are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 2 only

(d) 1, 2 and 3

QUESTION 3

This crop is traditionally grown in the Western Ghats spread over Karnataka, Kerala and Tamil Nadu in India. Crop cultivation is also expanding rapidly in the non-traditional areas of Andhra Pradesh, Odisha and the North East states. It is predominantly an export-oriented commodity and 65 per cent to 70 per cent of the produced crop in the country is exported while the rest is consumed within the country.

The above lines refer to which of the following crops?

(a) Groundnut

(b) Clove

(c) Coffee

(d) Cashew

QUESTION 4

With reference to the Primary Agricultural Credit Societies (PACS), which of the following statement(s) is/are correct?

1. They are village-level cooperative credit societies that serve as the last link in a three-tier cooperative credit structure.

2. They are involved in short-term lending.

3. A village can have only one Primary Agricultural Credit Society.

Select the correct answer using the codes given below:

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 only

(d) 1, 2 and 3

QUESTION 5

The term “Green Shoe Option” was recently in the news. It corresponds to 

(a) Investment that promotes environmentally positive activities.

(b) It helps to measure the levels of greenhouse gas emissions

(c) It is primarily used at the time of IPO or listing of any stock to ensure a successful opening price.

(d) It is the practice of creating structures and using processes that are environmentally responsible.

QUESTION 6

With reference to the Green Tug Transition Programme, consider the following statements:

1. It has been launched by the Ministry of Ports, Shipping and Waterways.

2. These tugs will adopt non-fossil fuel solutions.

Which of the statement(s) given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

QUESTION 7

Consider the following statements about Gig Workers:

1. They are typically hired by companies on a contractual basis and are not considered employees.

2. Non-platform gig workers are those whose work is based on online software apps or digital platforms.

Which of the statement(s) given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

QUESTION 8

“Vostro Account” was recently in the news. They are described as:

(a) It is an account in the International branch of an Indian Bank.

(b) It is an account that a domestic bank holds for a foreign bank in the domestic bank’s currency.

(c) It is an account of the Reserve Bank of India with the Scheduled Commercial Banks.

(d) It is an account which is used for International trading.

ANSWERS TO MCQs

1. (b)

FYI:

According to rbi.org.in —

— Section 45ZB of the amended RBI Act, 1934 provides for an empowered six-member monetary policy committee (MPC) to be constituted by the Central Government by notification in the Official Gazette. Hence, statement 1 is not correct.

— The first such MPC was constituted on September 29, 2016. The present MPC members, as notified by the Central Government in the Official Gazette of October 5, 2020, are as under

1. Governor of the Reserve Bank of India—Chairperson, ex officio;

2. Deputy Governor of the Reserve Bank of India, in charge of Monetary Policy—Member, ex officio;

3. One officer of the Reserve Bank of India to be nominated by the Central Board—Member, ex officio;

4. Prof. Ashima Goyal, Professor, Indira Gandhi Institute of Development Research —Member;

5. Prof. Jayanth R. Varma, Professor, Indian Institute of Management, Ahmedabad—Member.; and

6. Dr. Shashanka Bhide, Senior Advisor, National Council of Applied Economic Research, Delhi—Member.

— Members referred to at 4 to 6 above, will hold office for a period of four years or until further orders, whichever is earlier. Hence, statement 3 is not correct.

— The MPC determines the policy repo rate required to achieve the inflation target.

— The MPC is required to meet at least four times a year. The quorum for the meeting of the MPC is four members.

— Each member of the MPC has one vote, and in the event of an equality of votes, the Governor has a second or casting vote. Hence, statement 2 is correct.

Therefore, option (b) is the correct answer.

Other Source: (http://www.rbi.org.in)

2. (d)

FYI:

— Raising and Accelerating MSME Performance (RAMP) is a World Bank assisted Central Sector Scheme, supporting various Corona Virus Disease 2019 (COVID) Resilience and Recovery interventions of the Ministry of Micro, Small and Medium Enterprises (MoMSME). Hence, statement 1 is correct.

— The programme aims at improving access to market and credit, strengthening institutions and governance at the Centre and State, improving Centre-State linkages and partnerships, addressing issues of delayed payments and greening of MSMEs. Hence, statement 2 is correct.

— Funds would flow through RAMP into the Ministry’s budget against Disbursement Linked Indicators (DLIs) to support ongoing MoMSME programmes, focusing on improving market access and competitiveness.

Objectives

— Strengthening coordination and institutions at the National and State level. Hence, statement 3 is correct.

— Building and integrating technology platforms.

— Enhancing firm capabilities and access to markets.

— Strengthening the receivables financing markets.

— Enhancing guarantee products towards increased greening and gender participation.

— Expanding access to Online Dispute Resolution Mechanism (ODR).

Therefore, option (d) is the correct answer.

Source: (ramp.msme.gov.in)

3. (c)

FYI:

— In India, coffee is traditionally grown in the Western Ghats spread over Karnataka, Kerala and Tamil Nadu.

— The cultivation of coffee is also expanding rapidly in the non-traditional areas of Andhra Pradesh, Odisha and the North East states.

— Coffee is predominantly an export-oriented commodity and 65% to 70% of coffee produced in the country is exported while the rest is consumed within the country.

— Indian coffee has created a niche for itself in the international market and Indian Coffees are earning high premiums, particularly Indian Robusta which is highly preferred for its good blending quality. Arabica Coffee from India is also well-received in the international market.

— The government of India established the ‘Coffee Board’ through a constitutional act “Coffee Act VII of 1942” under the administrative control of the Ministry of Commerce and Industry.

— Coffee Board is located in Bangalore, Karnataka.

— The activities of the Board are broadly aimed at:

(i) enhancement of production, productivity & quality;

(ii) export promotion for achieving higher value returns for Indian Coffee and

(iii) supporting the development of the Domestic market.

Therefore, option (c) is the correct answer.

Source: (vikaspedia.in)

4. (a)

FYI:

— Primary Agricultural Credit Societies (PACS) are village-level cooperative credit societies that serve as the last link in a three-tier cooperative credit structure headed by the State Cooperative Banks (SCB) at the state level. Hence, statement 1 is correct.

— The credit from the SCBs is transferred to the district central cooperative banks, or DCCBs, that operate at the district level. The DCCBs work with PACS, which deals directly with farmers.

— PACS are involved in short-term lending — or what is known as crop loans. At the start of the cropping cycle, farmers avail credit to finance their requirement of seeds, fertilisers, etc. Hence, statement 2 is correct.

— Banks extend this credit at 7 per cent interest, of which 3 per cent is subsidised by the Centre, and 2 per cent by the state government. Effectively, farmers avail the crop loans at 2 per cent interest only. A village can have multiple PACS. Hence, statement 3 is not correct.

Therefore, option (a) is the correct answer.

5. (c)

FYI:

— A green shoe option is nothing but a clause contained in the underwriting agreement of an IPO.

— This option permits the underwriters to buy up to an additional 15% of the shares at the offer price if public demand for the shares exceeds expectations and the share trades above its offering price.

— Green shoe option is also known as an over-allotment provision.

— This option is primarily used at the time of IPO or listing of any stock to ensure a successful opening price.

— Accordingly, companies can intervene in the market to stabilise share prices during the first 30 days’ time window immediately after listing.

— It involves the purchase of equity shares from the market by the underwriting syndicate in case the share price fall below the issue price or goes significantly above the issue price.

— The green shoe option acts as a price stabilising mechanism. From the investor’s point of view, an IPO with a green shoe option ensures that after listing the share price will not fall below its offer price.

Therefore, option (c) is the correct answer.

6. (c)

FYI:

— The Union Ministry of Ports, Shipping and Waterways (MoPSW) has launched the Green Tug Transition Programme(GTTP) which aims to make India the ‘Global Hub for Green Ship’ by 2030. Hence, statement 1 is correct.

— India’s first National Centre of Excellence in Green Port and Shipping (NCoEGPS) was inaugurated in Gurugram, Haryana.

— The Green Hybrid Tugs will be powered by Green Hybrid Propulsion systems, and subsequently adopt non-fossil fuel solutions like (Methanol, Ammonia and Hydrogen). Hence, statement 2 is correct.

— The PM Gati Shakti – National Master Plan for Multi-Modal Connectivity along with the Green Ports initiative has already accelerated the development of a green logistics supply chain in the country.

— The ports have also aimed to reduce Carbon emissions per ton of cargo handled by 30 per cent by 2030.

Therefore, option (c) is the correct answer.

Source: (pib.gov.in) 

7. (a)

FYI:

— Gig workers are typically hired by companies on a contractual basis and are not considered employees. They do not receive some of the benefits that an on-roll staff does. Hence, statement 1 is correct.

— Government think-tank Niti Aayog has proposed fiscal incentives, like tax breaks or startup grants, for companies with about one-third of their workforce as women and people with disabilities. This is in an attempt to increase the participation of women in the gig economy.

— In a report titled ‘India’s Booming Gig and Platform Economy’, the organisation also recommended extending social security measures such as income support, paid sick leaves, insurance and pension plans to people working for platform companies like Swiggy, Zomato, Ola, and Uber.

— Niti Aayog estimates that more than 7.5 million workers were engaged in the gig economy in 2020-21. 

— Gig workers can be broadly classified into platform and non-platform workers. Platform workers are those whose work is based on online software apps or digital platforms, while non-platform gig workers are generally casual wage workers, working part-time or full- time. Hence, statement 2 is not correct.

Therefore, option (a) is the correct answer.

8. (b)

FYI:

— The government announced that nine special Vostro accounts have been opened with two Indian banks after permission from the RBI to facilitate trade in the rupee in the wake of sanctions on Russia by the US and European countries.

— The RBI put in place a mechanism to settle international trade in rupees “in order to promote the growth of global trade with emphasis on exports from India and to support the increasing interest of the global trading community in the rupee”.

— A Vostro account is an account that a domestic bank holds for a foreign bank in the domestic bank’s currency — which, in the case of India, is the rupee. The RBI allowed nine such accounts, including IndusInd Bank and Uco Bank.

— In the case of trade with Russia, payments in rupee for the export and import of goods will go to these Vostro accounts. The owners and beneficiaries of this money will be the exporters and importers in both countries. The banks will keep a record of money transferred.

— There are two kinds of accounts, Vostro and Nostro, that are often mentioned together. Both Vostro and Nostro are technically the same types of account, with the difference being who opens the account and where.

Example

— If an Indian bank like the SBI wants to open an account in the United States, it will get in touch with a bank in the US, which will open a Nostro account and accept payments for SBI in dollars.

— The account opened by the Indian bank in the US will be a Nostro account for the Indian bank, while for the US bank, the account will be considered a Vostro account.

Therefore, option (b) is the correct answer.

Previous Quizzes:

Polity and Governance (Week 3)

Polity and Governance (Week 4)

Polity and Governance (Week 5)

History, Culture, and Social Issues (Week 3)

History, Culture, and Social Issues (Week 4)

History, Culture, and Social Issues (Week 5)

UPSC Weekly Quiz (Current Affairs)

UPSC Essentials: Daily subject-wise quiz — Economy (Week 3)

UPSC Essentials: Daily subject-wise quiz — Economy (Week 4)

UPSC Essentials: Daily subject-wise quiz — Economy (Week 5)

Environment, Geography, Science and Technology (Week 3)

Environment, Geography, Science and Technology (Week 4)

Environment, Geography, Science and Technology (Week 5)

International Relations (Week 3)

International Relations (Week 4)

International Relations (Week 5)

Tomorrow’s Quiz: International Relations 

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