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Indian Economy and Social Development

241 questions

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Question 181Question →

With reference to the Pradhan Mantri Suraksha Bima Yojana (PMSBY), a flagship micro-insurance initiative of the Government of India, evaluate the following statements:

1. It provides financial risk coverage of ₹2,00,000 in the event of accidental death or total permanent disability, and ₹1,00,000 for partial permanent disability.
2. The entry age criteria for eligible savings bank account holders under the scheme is between 18 and 50 years.
3. The annual premium of ₹20 per subscriber is automatically debited from the linked bank account in a single installment every year.

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

Show answer & explanation

Answer: Statement 1 and Statement 3 only

Answer

Only Statement 1 and Statement 3 are correct.
Statements 1 and 3 are correct. PMSBY offers accidental death and permanent total disability insurance coverage of ₹2 lakh, and permanent partial disability coverage of ₹1 lakh. The annual premium is ₹20 per subscriber, auto-debited annually. Statement 2 is incorrect because PMSBY is accessible to individuals aged 18 to 70 years, whereas the 18 to 50 years bracket applies to PMJJBY.

Step-by-Step Solution

1
Analyze Statement 1 regarding risk coverage amounts under PMSBY.
Statement 1 is correct. PMSBY provides ₹2,00,000 for accidental death and permanent total disability, and ₹1,00,000 for permanent partial disability.
This corresponds exactly to the mandated benefit structure for accidental casualties under the scheme.
2
Analyze Statement 2 regarding subscriber age eligibility criteria.
Statement 2 is incorrect. The subscriber entry age range for PMSBY is 18 to 70 years.
The 18 to 50 years age threshold applies to life insurance under the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), not PMSBY.
3
Analyze Statement 3 regarding premium payment and auto-debit mechanism.
Statement 3 is correct. Subscriptions require an annual premium of ₹20 per member, auto-debited annually from the subscriber's bank account.
This auto-debit process maintains uninterrupted financial security for subscribers year-on-year.

Key Concept

Pradhan Mantri Suraksha Bima Yojana (PMSBY) Coverage and Eligibility Parameters
Question 182Question →

Arrange the following stages of monetary policy transmission in chronological sequence, starting from the initial policy action taken by the Reserve Bank of India (RBI) to its ultimate impact on economic activity.

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Answer

The correct chronological sequence begins with the RBI lowering the policy repo rate, followed by commercial banks reducing their lending rates, which stimulates private consumption and corporate investment, and concludes with an expansion in overall macroeconomic aggregate demand.
Monetary transmission originates at the central bank level through policy repo rate adjustments. Financial intermediaries then alter their marginal lending rates. Lower borrowing costs subsequently stimulate private spending and capital investments, culminating in an increase in overall macroeconomic output.

Step-by-Step Solution

1
Identify the initial monetary policy trigger.
The RBI reduces the policy repo rate under LAF (item_1).
Monetary policy transmission starts with the central bank adjusting its signal policy rate.
2
Trace the response of financial intermediaries.
Commercial banks lower their MCLR and lending interest rates (item_2).
Lower central bank borrowing costs prompt commercial banks to reduce lending rates for consumers and enterprises.
3
Evaluate the behavioral response of real economy borrowers.
Private consumption expenditure and corporate investment expand (item_3).
Cheaper loan interest costs encourage firms to invest in capital projects and households to spend more.
4
Determine the final macroeconomic outcome.
Overall aggregate demand and GDP output increase (item_4).
Higher consumption and investment spending together raise total economic output and growth.

Key Concept

Monetary Policy Transmission Mechanism
Question 183Question →

Match the poverty estimation committees and inequality metrics in List-I with their corresponding methodology or definition in List-II:

Click a left item, then click its matching right item

Items

Suresh Tendulkar Committee (2009)
C. Rangarajan Committee (2014)
Palma Ratio
Gini Coefficient

Matches

Show answer & explanation

Answer

The correct matching aligns Suresh Tendulkar Committee with MRP expenditure methodology, C. Rangarajan Committee with MMRP and reinstated nutritional norms, Palma Ratio with the income share ratio of the top 10% to the bottom 40%, and Gini Coefficient with the geometric ratio derived from the Lorenz Curve.
Each item in List-I maps uniquely to its corresponding definition in List-II: Suresh Tendulkar Committee established MRP-based estimates including health and education; C. Rangarajan Committee established MMRP-based estimates incorporating calorie, protein, and fat requirements; Palma Ratio computes the top 10% to bottom 40% income share; and Gini Coefficient evaluates the area between the line of equality and the Lorenz curve.

Step-by-Step Solution

1
Analyze the poverty estimation committees in List-I
The Tendulkar Committee (2009) introduced MRP and included expenditure on education and health, discarding direct calorie anchors. The Rangarajan Committee (2014) reintroduced calorie-protein-fat nutritional standards and adopted MMRP.
Differentiating reference periods (MRP vs MMRP) and calorie norm reliance is essential to distinguish between official poverty estimation frameworks in India.
2
Analyze the inequality metrics in List-I
The Palma Ratio isolates the upper tail (top 10%) relative to the lower tail (bottom 40%). The Gini Coefficient summarizes overall distribution by calculating the relative area between the Lorenz curve and the 45-degree line of perfect equality.
Palma ratio measures structural concentration at the distribution extremes, whereas Gini coefficient summarizes aggregate inequality.
3
Construct the correct pair mappings
Suresh Tendulkar Committee maps to MRP health/education focus; C. Rangarajan Committee maps to MMRP with nutritional norms; Palma Ratio maps to top 10% over bottom 40% share; Gini Coefficient maps to Lorenz curve area calculation.
Ensures every expert panel and statistical metric is accurately paired with its specific technical feature.

Key Concept

Poverty Estimation Methodologies and Inequality Indicators
Question 184Question →

Which administrative body in India is mandated to evaluate production costs and recommend the Minimum Support Prices (MSPs) for major agricultural crops?

Show answer & explanation

Answer: Commission for Agricultural Costs and Prices (CACP)

Answer

Commission for Agricultural Costs and Prices (CACP)
The Commission for Agricultural Costs and Prices (CACP) is the specialized body under the Ministry of Agriculture and Farmers Welfare responsible for formulating and submitting price policy reports to recommend Minimum Support Prices for 22 mandated crops and Fair and Remunerative Price (FRP) for sugarcane.

Step-by-Step Solution

1
Identify the mandate for recommending agricultural support prices in India.
The Commission for Agricultural Costs and Prices (CACP) analyzes factors such as cost of cultivation, market demand-supply trends, and inter-crop price parity to recommend MSPs.
CACP is the specialized advisory body established specifically to submit price policy reports for mandated agricultural commodities.
2
Distinguish between the recommending authority and the approving authority.
CACP recommends the prices, whereas the Cabinet Committee on Economic Affairs (CCEA) approves and announces the final MSP values.
Understanding institutional division of labor prevents confusing advisory bodies with executive approval cabinets.

Key Concept

Institutional Framework of Minimum Support Price (MSP) Determination
Question 185Question →

Consider the following statements regarding the World Trade Organization (WTO) Agreement on Agriculture (AoA) and India's food security subsidy mechanism:

1. Subsidies categorized under the Amber Box are considered trade-distorting and, for developing nations like India, are subject to a de minimis limit of 10%10\% of the total value of agricultural production.
2. The External Reference Price (ERP) used to calculate Market Price Support under WTO AoA rules is fixed at historical international prices from 1986–19881986\text{--}1988, without indexation for inflation.
3. The Peace Clause agreed upon at the Bali Ministerial Conference (20132013) provides permanent, unrestricted legal protection to member states for commercial agricultural export subsidies.

Which of the statements given above is/are correct?

Show answer & explanation

Answer: 1 and 2 only

Answer

The correct combination of statements is '1 and 2 only'.
The option stating '1 and 2 only' is correct. Developing nations have a 10%10\% de minimis threshold under Amber Box trade-distorting subsidies. Furthermore, India's primary dispute at the WTO centers on the fact that Market Price Support is measured against an outdated base period (1986–19881986\text{--}1988) without adjusting for inflation. Statement 3 is false because the Bali Peace Clause applies strictly to public stockholding for food security, not commercial export subsidies.

Step-by-Step Solution

1
Evaluate Statement 1 regarding Amber Box subsidies and de minimis caps.
Statement 1 is TRUE.
Under the WTO Agreement on Agriculture (AoA), Aggregate Measurement of Support (AMS) included in the Amber Box is subject to de minimis caps—5%5\% of agricultural production value for developed countries and 10%10\% for developing countries like India.
2
Evaluate Statement 2 regarding the calculation methodology of External Reference Price (ERP).
Statement 2 is TRUE.
Market Price Support (MPS) is calculated as the difference between the domestic administered price (MSP) and the ERP. Under WTO AoA rules, the ERP is fixed at 1986–19881986\text{--}1988 international prices, creating a structural distortion because it does not account for subsequent inflation.
3
Evaluate Statement 3 regarding the scope of the Bali Peace Clause.
Statement 3 is FALSE.
The Peace Clause negotiated at the 2013 Bali Ministerial Conference protects public stockholding programs for food security purposes against WTO dispute challenges if procurement prices exceed AMS limits. It does NOT protect commercial export subsidies.

Key Concept

WTO Agreement on Agriculture (AoA), Amber Box Subsidies, and Public Stockholding Peace Clause
Question 186Question →

When the Reserve Bank of India purchases government securities from commercial banks through Open Market Operations (OMO), what is the immediate impact on banking system liquidity and bond yields?

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Answer: System liquidity increases and bond yields decrease

Answer

System liquidity increases and bond yields decrease
When the Reserve Bank of India buys government securities in the open market, it credits funds to the accounts of commercial banks, thereby augmenting overall banking system liquidity. Furthermore, RBI's buying intervention increases demand for securities, raising their market prices and consequently driving down bond yields.

Step-by-Step Solution

1
Analyze the cash flow from RBI's purchase of government securities
RBI pays cash to commercial banks in exchange for securities, directly increasing loanable funds and banking system liquidity.
Open Market Purchases act as an expansionary monetary policy tool to inject primary liquidity.
2
Determine the impact of RBI's market purchase on bond prices and bond yields
Increased demand for government securities pushes bond prices up, causing bond yields to fall.
Bond prices and market interest yields share a strict inverse relationship.

Key Concept

Open Market Operations (OMO) and Bond Yield Mechanics
Estimated Time:1m 0s
Question 187Question →

Consider the following statements regarding the official evolution of poverty estimation methodologies in India:

1. The Y. K. Alagh Task Force (1979) established poverty lines based on a minimum daily nutritional requirement of 2400 kcal per person in rural areas and 2100 kcal per person in urban areas.
2. The D. T. Lakdawala Committee (1993) recommended updating state-specific poverty lines using the Consumer Price Index for Agricultural Labourers (CPI-AL) for rural areas and the Consumer Price Index for Industrial Workers (CPI-IW) for urban areas.
3. The Lakdawala Committee discontinued the earlier practice of scaling National Sample Survey (NSS) consumption expenditure data to match National Accounts Statistics (NAS) aggregate data.

Which of the statements given above are correct?

Show answer & explanation

Answer: 1, 2, and 3

Answer

All three statements (1, 2, and 3) are correct.
All three statements are historically and methodologically accurate. The Alagh Task Force (1979) fixed the daily caloric consumption norms (2400 kcal rural / 2100 kcal urban). The Lakdawala Committee (1993) introduced state-specific poverty lines updated via CPI-AL and CPI-IW, while simultaneously eliminating the pro-rata adjustment of NSS survey estimates to match National Accounts Statistics (NAS) data.

Step-by-Step Solution

1
Evaluate Statement 1 regarding the Y.K. Alagh Task Force (1979).
Statement 1 is correct.
The 1979 Alagh Task Force formally introduced calorie-based poverty lines of 2400 kcal/day for rural areas and 2100 kcal/day for urban areas based on average body requirements and activity levels.
2
Evaluate Statement 2 regarding the D.T. Lakdawala Committee (1993) inflation indexing.
Statement 2 is correct.
The Lakdawala Committee recommended disaggregated state-specific poverty lines updated for inflation using CPI-AL for rural workers and CPI-IW for urban industrial workers.
3
Evaluate Statement 3 regarding NAS data adjustment.
Statement 3 is correct.
Prior to 1993, NSS survey estimates were pro-rata adjusted upward to match NAS aggregate consumption figures. The Lakdawala Committee ended this adjustment practice, relying directly on unadjusted NSS survey distribution.

Key Concept

Methodological Milestones in Indian Poverty Estimation (Alagh and Lakdawala Committees)
Question 188Question →

Match the Reserve Bank of India (RBI) monetary policy tools and money supply aggregates in List I with their corresponding functional definitions in List II:

Click a left item, then click its matching right item

Items

Reserve Money (M0M_0)
Statutory Liquidity Ratio (SLR)
Standing Deposit Facility (SDF)
Marginal Standing Facility (MSF)

Matches

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Answer

Reserve Money (M0M_0) matches with Currency in circulation plus bankers' deposits with the RBI; Statutory Liquidity Ratio (SLR) matches with Mandatory percentage of NDTL maintained in liquid assets; Standing Deposit Facility (SDF) matches with Liquidity absorption tool without collateral; Marginal Standing Facility (MSF) matches with Penal rate window for overnight emergency borrowing.
Reserve Money (M0M_0) represents total high-powered money in the economy consisting of currency with the public, bankers' deposits with RBI, and other deposits. SLR requires banks to maintain a fixed percentage of NDTL in approved liquid assets like government bonds. SDF is the uncollateralized facility used by RBI to absorb surplus liquidity. MSF is the emergency borrowing window for banks operating at a penal rate above the repo rate.

Step-by-Step Solution

1
Identify the composition of high-powered money / monetary base (M0M_0)
Reserve Money (M0M_0) represents total monetary liabilities of RBI, equal to currency in circulation + bankers' deposits + other deposits with RBI.
This establishes the core aggregate definition of monetary base.
2
Differentiate statutory reserve requirements (SLR vs CRR)
SLR requires banks to hold liquid assets (such as G-secs, cash, gold) as a proportion of NDTL.
This prevents over-leveraging and ensures liquidity safety.
3
Distinguish between liquidity adjustment facilities (SDF vs MSF)
SDF absorbs liquidity without requiring collateral, whereas MSF acts as an emergency overnight lending corridor at a penal rate.
SDF operates as the floor of the Liquidity Adjustment Facility (LAF) corridor without collateral, while MSF operates as the ceiling.

Key Concept

Monetary Policy Instruments and Money Supply Aggregates
Estimated Time:1m 30s
Question 189Question →

Match each type of unemployment in Column I with its appropriate economic definition or characteristic in Column II. Which of the following pair combinations correctly matches all items?

Click a left item, then click its matching right item

Items

Disguised Unemployment
Structural Unemployment
Frictional Unemployment
Seasonal Unemployment

Matches

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Answer

Disguised Unemployment matches with zero marginal productivity of labor; Structural Unemployment matches with skill mismatch due to economic shifts; Frictional Unemployment matches with transitional job search gaps; and Seasonal Unemployment matches with cyclic work demand tied to specific times of the year.
Each unemployment type corresponds strictly to its underlying economic mechanism: Disguised unemployment reflects zero marginal labor productivity; Structural unemployment reflects economic/technological skill mismatch; Frictional unemployment represents transitional job search lag; and Seasonal unemployment reflects weather or harvest cycle fluctuations.

Step-by-Step Solution

1
Analyze Disguised Unemployment
Identify that extra workers do not increase total output, corresponding to zero marginal productivity.
Disguised unemployment is defined by redundant labor where marginal product equals zero.
2
Analyze Structural Unemployment
Link it to long-term changes in technology and industry that create skill mismatches.
Structural unemployment results from systemic changes in economic structure rather than short-term fluctuations.
3
Analyze Frictional and Seasonal Unemployment
Match frictional unemployment with short-term job transition search time, and seasonal unemployment with annual seasonal cycles.
Frictional is voluntary/transitional search time, whereas seasonal is linked to climate and production cycles.

Key Concept

Classifications of Unemployment in Indian Economic Context
Question 190Question →

Arrange the following composite development indicators in the correct chronological order of their introduction in global development literature, from the earliest to the latest:

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Answer

The correct chronological sequence from earliest to latest is: Physical Quality of Life Index (1979) → Human Development Index (1990) → Gender Inequality Index (2010) → Planetary pressures-adjusted Human Development Index (2020).
The correct chronological timeline begins with PQLI in 1979, followed by HDI in 1990, GII in 2010, and PHDI in 2020.

Step-by-Step Solution

1
Determine the year of formulation for the Physical Quality of Life Index (PQLI).
PQLI was established in 1979 by Morris D. Morris.
It was created as an early composite measure aggregating infant mortality, life expectancy at age one, and basic literacy.
2
Determine the launch year of the Human Development Index (HDI).
HDI was launched in 1990 by Mahbub ul Haq and Amartya Sen under the UNDP.
It shifted focus from purely income-based growth metrics to human-centered development indicators.
3
Identify the introduction year of the Gender Inequality Index (GII).
GII was introduced in the 2010 Human Development Report.
It provided a refined framework measuring gender disparities in reproductive health, empowerment, and economic status.
4
Identify the publication year of the Planetary pressures-adjusted Human Development Index (PHDI).
PHDI was introduced in the 2020 UNDP report.
It adjusts traditional HDI to account for environmental degradation by factoring in per capita carbon emissions and material footprint.

Key Concept

Historical evolution and timeline of global development indicators
Question 191Question →

In India, agricultural fertilizer subsidies constitute a major component of government fiscal allocation and food security policy. Which of the following statements regarding the Nutrient Based Subsidy (NBS) policy and fertilizer subsidy mechanisms in India are correct?

Select all that apply

Show answer & explanation

Answer: Under the Nutrient Based Subsidy (NBS) scheme, the subsidy rate for Phosphatic and Potassic (P&K) fertilizers is determined on a per-kilogram nutrient basis, leaving their retail market prices to be declared by fertilizer companies.; Urea is excluded from the NBS regime, with its Maximum Retail Price (MRP) continuing to be statutorily controlled and fixed by the Central Government.

Answer

The correct statements are that the NBS scheme fixes subsidy rates per kilogram of nutrient for P&K fertilizers while allowing market pricing, and that urea remains outside the NBS regime under statutory government price control.
The correct statements accurately identify the core mechanisms of India's fertilizer subsidy regime: Phosphatic and Potassic fertilizers operate under the Nutrient Based Subsidy (NBS) policy where per-nutrient subsidy rates are fixed while MRPs are deregulated, whereas Urea is excluded from NBS and remains subject to statutory MRP fixation by the Union Government.

Step-by-Step Solution

1
Analyze the pricing and subsidy structure of P&K fertilizers under the NBS policy.
Confirm that NBS fixes per-kg nutrient subsidy rates for P&K fertilizers, while retail prices are market-determined by manufacturers.
This incentivizes efficient fertilizer usage and price reflection based on raw material costs.
2
Evaluate the regulatory regime governing Urea in India.
Confirm that Urea is kept outside NBS and its retail price is statutorily fixed by the Central Government.
Urea remains heavily subsidized and price-controlled to shield farmers from high nitrogen costs, though it leads to skewed NPK usage ratios.
3
Examine the operational mechanism of Fertilizer Direct Benefit Transfer (DBT).
Identify that DBT pays the subsidy to companies upon PoS device verification of sales to farmers, not cash transfer to farmers' bank accounts.
Direct cash transfers to farmers are complex due to tenant farming issues and landholding records, so point-of-sale verification at retail outlets is utilized.
4
Check provisions regarding micro-nutrient fortification under NBS.
Verify that additional subsidy per tonne is allocated for micro-nutrient fortified fertilizers.
The policy aims to tackle soil micronutrient deficiencies by encouraging manufacturers to incorporate Zinc and Boron.

Key Concept

Nutrient Based Subsidy (NBS) policy and Fertilizer Subsidy Delivery Architecture in Indian Agriculture
Question 192Question →

Under the flexible inflation targeting framework of the Reserve Bank of India (RBI), which financial metric serves as the official operational target of monetary policy?

Show answer & explanation

Answer: Weighted Average Call Rate (WACR)

Answer

The Weighted Average Call Rate (WACR) serves as the official operational target of monetary policy in India.
In RBI's operational framework, monetary policy operations are calibrated to anchor the Weighted Average Call Rate (WACR) around the policy Repo Rate. The WACR reflects the cost of uncollateralized overnight borrowing among commercial banks, making it the immediate operational target of liquidity management.

Step-by-Step Solution

1
Identify the distinction between the nominal anchor, intermediate target, and operational target in the RBI's monetary policy framework.
The nominal anchor is headline CPI inflation (4%±2%4\% \pm 2\%). The operational target is the overnight uncollateralized call money rate, specifically the Weighted Average Call Rate (WACR).
Monetary policy operations (like LAF Repo, SDF, MSF, and OMO) are designed to steer day-to-day money market rates so that WACR closely tracks the policy Repo Rate.
2
Evaluate the option choices against the operational target definition.
WACR is directly guided by RBI's Liquidity Adjustment Facility (LAF) corridor to transmit policy rates across the broader financial system.
Aligning WACR with the policy Repo Rate ensures smooth transmission of monetary signals to bank lending and deposit rates.

Key Concept

Operational Target of RBI Monetary Policy
Estimated Time:1m 0s
Question 193Question →

Consider the following statements regarding the institutional design and implementation of Land Reforms and Land Titling in India post-Independence:

1. The first phase of land ceiling laws (1950s–1960s) generally took the individual as the unit of application, whereas the revised national guidelines of 1972 recommended taking the family as the unit.
2. In early tenancy reform legislations, the term 'personal cultivation' was defined loosely without requiring personal manual labor, which resulted in widespread evictions of tenants through 'voluntary surrenders'.
3. The National Land Records Modernization Programme (NLRMP), launched in 2008, was designed to transition the Indian land administration system from a presumptive title framework to a conclusive title framework.

Which of the statements given above is/are correct?

Show answer & explanation

Answer: 1, 2 and 3

Answer

All three statements (1, 2, and 3) are correct.
The option selecting statements 1, 2, and 3 is correct because all three statements describe historical and policy facts regarding Indian land reform phases accurately. The shift from individual to family units occurred post-1972, broad definitions of personal cultivation led to tenant evictions via voluntary surrenders, and NLRMP aimed to transition from presumptive to conclusive titling.

Step-by-Step Solution

1
Analyze Statement 1 regarding land ceiling policy evolution.
Statement 1 is correct.
During the first phase of land ceiling legislation in the 1950s and 1960s, state laws applied ceiling limits on an individual landholder basis. This allowed large landowners to distribute holdings among family members. To curb this, the 1972 National Guidelines recommended treating a family (husband, wife, and minor children) as a single unit with reduced ceiling limits.
2
Analyze Statement 2 regarding tenancy reform loopholes.
Statement 2 is correct.
Early tenancy laws permitted landowners to resume land for 'personal cultivation'. However, 'personal cultivation' was defined broadly without mandating actual physical manual labor by the owner (allowing personal supervision or family supervision), leading landowners to force tenants into 'voluntary surrenders' to resume land.
3
Analyze Statement 3 regarding land title modernization programmes.
Statement 3 is correct.
The National Land Records Modernization Programme (NLRMP), launched in 2008 (later restructured as DILRMP), explicitly aimed to replace India's deed-registration system (presumptive title) with a title-certification system (conclusive land titling based on Torrens principles).

Key Concept

Land Ceiling Acts, Tenancy Reform Loopholes, and Conclusive Land Titling
Question 194Question →

With reference to the Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY), which of the following statements is correct?

Show answer & explanation

Answer: It is a placement-linked skill training scheme for rural poor youth, implemented under the Ministry of Rural Development.

Answer

It is a placement-linked skill training scheme for rural poor youth, implemented under the Ministry of Rural Development.
The Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) is a placement-linked skill development scheme focused on rural poor youth between 15 and 35 years of age, administered by the Ministry of Rural Development.

Step-by-Step Solution

1
Identify the nodal ministry and primary mandate of DDU-GKY.
DDU-GKY is a key part of the National Rural Livelihoods Mission (NRLM) under the Ministry of Rural Development, designed to transform rural poor youth into an economically productive workforce.
Correctly identifying implementing agencies prevents confusion with urban or general skill initiatives.
2
Analyze the target demographic and structural mechanism of the scheme.
The scheme mandates placement-linked skill training for rural youth aged 15–35 (relaxed up to 45 for SC/ST/Women/PVTG/PWD).
Understanding age criteria and employment guarantees distinguishes placement-linked schemes from credit disbursement or self-employment schemes.

Key Concept

Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) Architecture and Objectives
Question 195Question →

Arrange the following Reserve Bank of India (RBI) money supply measures (monetary aggregates) in descending order of their operational liquidity, starting from the most liquid to the least liquid:

Drag items to arrange them in the correct order

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Answer

The correct descending order of liquidity among monetary aggregates is M1M_1, followed by M2M_2, then M3M_3, and finally M4M_4.
Liquidity measures how quickly an asset can be converted into a medium of exchange without loss of value. M1M_1 is the most liquid (cash and demand deposits). M2M_2 comes next as post office savings are liquid savings accounts. M3M_3 is third due to time deposits with fixed maturity. M4M_4 is the least liquid as it encompasses all broad money components and total post office deposits.

Step-by-Step Solution

1
Determine the liquidity level of M1M_1.
M1M_1 consists of physical currency in circulation and liquid demand deposits, representing 100% immediate transaction liquidity.
Demand deposits and cash can be spent directly without any conversion delay or financial penalty.
2
Compare the relative liquidity of M2M_2 and M3M_3.
M2M_2 adds post office savings deposits to M1M_1, whereas M3M_3 includes commercial bank time (fixed) deposits. Because fixed deposits carry lock-in tenures and early withdrawal penalties, M3M_3 is less liquid than M2M_2.
Time deposits cannot serve directly as a medium of exchange without liquidating the fixed deposit contract.
3
Evaluate the liquidity of M4M_4.
M4M_4 expands upon M3M_3 by adding long-term post office savings instruments, placing it at the bottom of the liquidity spectrum.
M4M_4 includes the largest volume of non-transactional savings deposits with longer lock-in periods.

Key Concept

Liquidity Hierarchy of Money Supply Aggregates (M1,M2,M3,M4M_1, M_2, M_3, M_4)
Question 196Question →

Arrange the following major committees and institutional milestones related to Indian agricultural policy, price determination, and food grain management in chronological order of their establishment or report submission, from the earliest to the latest:

Drag items to arrange them in the correct order

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Answer

The correct chronological order from earliest to latest is: Foodgrains Enquiry Committee (Asoka Mehta, 1957) -> Agricultural Prices Commission (1965) -> High-Level Committee on Long-Term Grain Policy (Abhijit Sen, 2002) -> High-Level Committee on Restructuring of FCI (Shanta Kumar, 2015).
The correct chronological arrangement starts with the Asoka Mehta Foodgrains Enquiry Committee set up in 1957, followed by the setting up of the Agricultural Prices Commission in 1965. Next is the submission of the Abhijit Sen High-Level Committee report on Long-Term Grain Policy in 2002, and the timeline concludes with the submission of the Shanta Kumar High-Level Committee report on FCI restructuring in 2015.

Step-by-Step Solution

1
Determine the historic year of constitution or report submission for each agricultural policy milestone.
Asoka Mehta Foodgrains Enquiry Committee: 1957; Agricultural Prices Commission: 1965; Abhijit Sen Committee on Long-Term Grain Policy: 2002; Shanta Kumar Committee on FCI Restructuring: 2015.
Identifying exact historic dates is required to form a chronological timeline of post-Independence agricultural management policies.
2
Sequence the events from the earliest year to the most recent year.
1957 (Asoka Mehta Committee) -> 1965 (APC setup) -> 2002 (Abhijit Sen Report) -> 2015 (Shanta Kumar Report).
Ordering the chronological timeline sequentially satisfies the prompt criteria.

Key Concept

Chronological evolution of food security policies, price advisory bodies, and public distribution system committees in India.
Question 197Question →

Which of the following statements concerning demographic trends and types of unemployment in economic development are correct?

Select all that apply

Show answer & explanation

Answer: Disguised unemployment is characterized by a situation where more workers are engaged in an activity than necessary, resulting in near-zero marginal productivity of labor.; Demographic dividend represents the potential economic growth resulting from a shift in a population's age structure, specifically when the proportion of the working-age population is higher than the non-working dependent population.

Answer

The correct statements are the one defining disguised unemployment as having near-zero marginal productivity of labor and the one describing demographic dividend as economic growth potential driven by a larger working-age ratio.
Disguised unemployment accurately reflects surplus labor with zero marginal productivity, typical in crowded agricultural fields. Demographic dividend accurately describes the growth window created when the working-age population outnumbers dependents.

Step-by-Step Solution

1
Analyze the concept of disguised unemployment
Disguised unemployment occurs when excess labor yields zero marginal output.
It is a structural feature of agriculture and informal sectors in developing economies.
2
Differentiate between frictional and structural unemployment
Mismatch between available skills and industry demands defines structural unemployment, not frictional.
Frictional unemployment involves temporary transition periods between jobs.
3
Evaluate the definition and metrics of demographic dividend
Demographic dividend requires an expanding working-age population (15–64 years) relative to dependents, which lowers the dependency ratio.
A lower dependency ratio frees up resources for savings, capital formation, and productivity growth.

Key Concept

Demographic Dividend and Unemployment Types
Estimated Time:1m 30s
Question 198Question →

Consider the following statements regarding national income accounting identities and price deflators in India:

1. Gross Value Added (GVA) at basic prices is calculated by adding net production taxes (production taxes minus production subsidies) to GVA at factor cost.
2. Gross Domestic Product (GDP) at market prices is obtained by adding net product taxes (product taxes minus product subsidies) to GVA at basic prices.
3. The GDP Deflator incorporates price changes of imported goods consumed domestically, whereas the Consumer Price Index (CPI) reflects only domestically produced goods.

Which of the statements given above are correct?

Show answer & explanation

Answer: 1 and 2 only

Answer

Statements 1 and 2 are correct, while Statement 3 is incorrect.
Statements 1 and 2 accurately describe the relationship between Factor Cost, Basic Prices, and Market Prices established under India's revised national accounts methodology. Statement 3 is incorrect because the GDP Deflator strictly covers domestically produced output and excludes imports, whereas the Consumer Price Index includes imported consumer items.

Step-by-Step Solution

1
Evaluate Statement 1 regarding GVA at basic prices
Statement 1 is correct
GVA at basic prices equals GVA at factor cost plus net production taxes (production taxes minus production subsidies). Production taxes (like land revenue and stamp duty) are independent of the volume of production.
2
Evaluate Statement 2 regarding GDP at market prices
Statement 2 is correct
GDP at market prices is derived by adding net product taxes (product taxes like GST minus product subsidies) to GVA at basic prices.
3
Evaluate Statement 3 regarding GDP Deflator versus CPI
Statement 3 is incorrect
The GDP Deflator measures the price level changes of all domestically produced final goods and services included in GDP and excludes imported goods. Conversely, the Consumer Price Index (CPI) includes prices of imported consumer goods.

Key Concept

National Income Accounting Identities and Price Deflators
Question 199Question →

Match the institutional bodies and mechanisms of the Indian financial architecture in List I with their corresponding primary operational functions or features in List II. Select the correct matching pair combinations.

Click a left item, then click its matching right item

Items

Board for Financial Supervision (BFS)
Monetary Policy Committee (MPC)
Financial Stability and Development Council (FSDC)
Deposit Insurance and Credit Guarantee Corporation (DICGC)

Matches

Show answer & explanation

Answer

Board for Financial Supervision (BFS) matches with the integrated supervisory committee for commercial banks, NBFCs, and primary dealers; Monetary Policy Committee (MPC) matches with the six-member statutory body determining the policy repo rate; Financial Stability and Development Council (FSDC) matches with the non-statutory apex body chaired by the Union Finance Minister for inter-regulatory coordination; Deposit Insurance and Credit Guarantee Corporation (DICGC) matches with the wholly owned RBI subsidiary insuring bank deposits up to 5 lakh5\text{ lakh}.
Each institution is matched correctly according to its governance structure: the Board for Financial Supervision handles unified banking oversight; the Monetary Policy Committee determines interest rates for inflation targeting; the Financial Stability and Development Council facilitates macroprudential coordination under the Finance Minister; and the Deposit Insurance and Credit Guarantee Corporation guarantees bank deposits up to 5 lakh5\text{ lakh}.

Step-by-Step Solution

1
Identify the primary role and statutory status of the Board for Financial Supervision (BFS).
The BFS functions as the main supervisor for commercial banks, NBFCs, and primary dealers under the guidance of the RBI Central Board.
This pairs BFS with the description focused on integrated supervisory control.
2
Identify the mandate of the Monetary Policy Committee (MPC).
The MPC is a six-member panel established under Section 45ZB of the RBI Act to fix the policy repo rate.
This pairs MPC with the statutory six-member body responsible for setting interest rates.
3
Analyze the structural role of the Financial Stability and Development Council (FSDC).
FSDC is an apex non-statutory body headed by the Union Finance Minister aimed at resolving inter-agency regulatory conflicts.
This pairs FSDC with the non-statutory body chaired by the Finance Minister.
4
Examine the function of the Deposit Insurance and Credit Guarantee Corporation (DICGC).
DICGC is a 100% RBI-owned statutory entity that guarantees customer deposits up to 5 lakh5\text{ lakh}.
This pairs DICGC with the deposit insurance subsidiary providing coverage up to 5 lakh5\text{ lakh}.

Key Concept

Institutional Framework of Indian Financial System and RBI Regulatory Architecture
Question 200Question →

Consider the following statements regarding the cost estimation methodologies used for recommending the Minimum Support Price (MSP) in Indian agriculture:

1. The A2A_2 cost framework accounts for all out-of-pocket expenses incurred by the farmer on inputs such as seeds, fertilizers, pesticides, fuel, and rented land.
2. The Comprehensive Cost (C2C_2) includes A2+FLA_2+FL cost along with the opportunity cost of interest on owned fixed capital assets and the rental value of owned land.
3. The National Commission on Farmers, chaired by Dr. M. S. Swaminathan, recommended that the Minimum Support Price should be determined at a benchmark of at least 50%50\% above the A2+FLA_2+FL cost formula.

Which of the statements given above are correct?

Show answer & explanation

Answer: 1 and 2 only

Answer

1 and 2 only
The combination stating that statements 1 and 2 are correct is accurate because A2A_2 cost represents direct paid-out inputs and C2C_2 includes full opportunity costs of capital and land. Statement 3 is false because Dr. M. S. Swaminathan's National Commission on Farmers recommended setting MSP at 50%50\% over C2C_2 rather than A2+FLA_2+FL.

Step-by-Step Solution

1
Evaluate Statement 1 regarding the A2A_2 cost concept.
Statement 1 is correct. A2A_2 covers all direct paid-out expenses in cash and kind incurred by the grower (seeds, fertilizers, pesticides, hired labor, leased-in land rent, fuel, irrigation).
It represents the explicit variable costs paid out directly during cultivation.
2
Evaluate Statement 2 regarding the Comprehensive Cost (C2C_2).
Statement 2 is correct. C2C_2 is a holistic cost concept that encompasses A2+FLA_2+FL (which includes imputed family labor value) plus rent paid for leased land, rental value of owned land, and interest on owned fixed capital assets.
It captures both explicit paid-out expenses and implicit opportunity costs of land and capital.
3
Evaluate Statement 3 regarding the Swaminathan Commission recommendation.
Statement 3 is incorrect. The National Commission on Farmers (Swaminathan Commission) recommended fixing MSP at a minimum of 50%50\% over the Comprehensive Cost (C2C_2), not over the A2+FLA_2+FL cost.
While the Government of India aligned the MSP policy in the 2018-19 Union Budget to return at least 50%50\% over A2+FLA_2+FL, the Swaminathan Commission's original recommendation was specifically pegged to C2C_2.

Key Concept

Agricultural Cost Estimation Formulas (A2, A2+FL, C2) and MSP Policy Framework
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