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Indian Economy and Social Development

241 questions

All types241Multiple choice126Multiple select32Numeric10Matching49Ordering24
Question 121Question →

Regarding the structural classification of economic transactions in India's Balance of Payments (BoP), which of the following statements are correct?

Select all that apply

Show answer & explanation

Answer: Foreign Direct Investment (FDI) inflows and Foreign Portfolio Investment (FPI) investments are recorded as entries under the Capital Account.; External Commercial Borrowings (ECBs) raised by Indian corporate entities from non-resident lenders are categorized under the Capital Account.; Interest payments made by domestic firms on foreign commercial loans are categorized under the Invisibles (Primary Income) section of the Current Account.

Answer

The correct statements are those indicating that FDI/FPI flows belong to the Capital Account, External Commercial Borrowings belong to the Capital Account, and interest payments on foreign loans are categorized under the Current Account as part of investment income.
Foreign Direct Investment, Foreign Portfolio Investment, and External Commercial Borrowings directly modify the foreign financial asset and liability balances of an economy, so they are recorded under the Capital Account. Interest payments represent factor income outgo for using foreign funds and are correctly recorded under Primary Income in the Current Account.

Step-by-Step Solution

1
Differentiate between Current Account and Capital Account items in BoP accounting.
Current Account records trade in goods, services (invisibles), primary income (interest, dividend, profit remittances), and secondary income (unilateral transfers/remittances). Capital Account records debt liabilities, asset creation, FDI, FPI, and loans.
Establishing clear accounting boundaries ensures correct classification of transactions.
2
Evaluate statements regarding FDI/FPI, ECBs, family remittances, and interest payments.
FDI, FPI, and ECBs alter financial liabilities/assets and belong to the Capital Account. Interest payments reflect income flows from investment and belong to the Current Account. Unilateral family remittances do not create future claims/liabilities, placing them in the Current Account.
Accurate placement depends on whether the transaction affects the foreign asset/liability position or represents income/transfers.

Key Concept

Balance of Payments Current Account vs Capital Account Classification
Question 122Question →

Arrange the following sequential stages of monetary policy transmission in India, from the initial Reserve Bank of India (RBI) policy rate action during an inflationary period to the ultimate macroeconomic impact, in the correct chronological order:

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Answer

The correct sequence begins with the RBI raising the Policy Repo Rate and CRR, followed by an immediate upward movement in the interbank Weighted Average Call Rate (WACR). Next, commercial banks transmit this policy signal by adjusting their lending rates (EBLR and MCLR). The resulting increase in overall borrowing costs leads to a moderation in private consumption and investment expenditure. Finally, reduced aggregate demand results in the deceleration of headline CPI inflation.
Monetary policy transmission follows a structured economic chain: Central Bank Policy Action → Financial Money Market Rates (WACR) → Commercial Bank Retail Rates (EBLR/MCLR) → Aggregate Demand Response (Consumption & Investment) → Macroeconomic Price Inflation.

Step-by-Step Solution

1
Identify the initial policy trigger
RBI's Monetary Policy Committee announces an increase in the Policy Repo Rate and Cash Reserve Ratio.
Monetary transmission originates at the central bank level through direct policy interest rate signals and liquidity reserve requirements.
2
Determine the money market operating rate response
The Weighted Average Call Rate (WACR) rises immediately within the LAF corridor.
WACR serves as the operating target of RBI monetary policy and responds directly to interbank liquidity conditions and policy rate changes.
3
Trace the commercial banking channel transmission
Banks reprice their lending benchmark rates (EBLR and MCLR).
Cost-of-funds changes pass through from money markets to commercial bank balance sheets, directly altering retail and corporate borrowing rates.
4
Analyze real economic demand response
Private consumption expenditure and capital investment slow down.
Higher real interest rates elevate the hurdle rate for corporate investment projects and increase debt-servicing burdens for household consumption.
5
Identify the final macroeconomic equilibrium outcome
Headline CPI inflation moderates.
The reduction in aggregate demand reduces demand-side pressure on prices, achieving the ultimate objective of monetary tightening.

Key Concept

Monetary Policy Transmission Mechanism
Question 123Question →

With reference to the price indices published in India, consider the following statements:
1. The Wholesale Price Index (WPI) is compiled and published by the National Statistical Office (NSO).
2. The Consumer Price Index (CPI) for rural, urban, and combined sectors is released by the Office of the Economic Adviser, Ministry of Commerce and Industry.

Which of the statements given above is/are correct?

Show answer & explanation

Answer: Neither 1 nor 2

Answer

Neither 1 nor 2 is correct.
Both statements are incorrect. In India, the Wholesale Price Index (WPI) is published by the Office of the Economic Adviser (Ministry of Commerce and Industry), while the Consumer Price Index (CPI Combined) is compiled and published by the National Statistical Office (NSO, Ministry of Statistics and Programme Implementation). Therefore, the option stating 'Neither 1 nor 2' is correct.

Step-by-Step Solution

1
Evaluate Statement 1 regarding the Wholesale Price Index (WPI).
Statement 1 is incorrect.
The Wholesale Price Index (WPI) is compiled and released by the Office of the Economic Adviser, Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry.
2
Evaluate Statement 2 regarding the Consumer Price Index (CPI).
Statement 2 is incorrect.
The Consumer Price Index (CPI) for Rural, Urban, and Combined sectors is compiled and released by the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI).
3
Determine the correct answer based on evaluations.
Since both statements swap the responsible publishing bodies, neither statement is correct.
Both statement 1 and statement 2 present inverted facts regarding the compiling agencies.

Key Concept

Releasing agencies of Indian price indices (CPI vs WPI)
Estimated Time:45s
Question 124Question →

In the structural evolution of official poverty estimation in India, evaluate the following statements concerning the methodology shift introduced by the Suresh Tendulkar Committee (2009):

1. The committee shifted away from anchoring poverty lines strictly to minimum calorie consumption requirements.
2. It recommended using a uniform Poverty Line Basket (PLB) derived from urban consumption patterns across both rural and urban areas.
3. It introduced the Modified Mixed Reference Period (MMRP) recall system for NSS household consumption expenditure surveys.

Which of the statements given above are correct?

Show answer & explanation

Answer: 1 and 2 only

Answer

1 and 2 only
The option stating '1 and 2 only' is correct. The Suresh Tendulkar Committee moved away from fixed calorie-intake norms and adopted a uniform urban consumption basket across rural and urban India. However, it utilized the Mixed Reference Period (MRP), not the Modified Mixed Reference Period (MMRP), which was instituted by the Rangarajan Committee.

Step-by-Step Solution

1
Analyze Statement 1 regarding calorie-based poverty estimation
Statement 1 is correct
Prior to Tendulkar (e.g., Task Force 1979, Lakdawala 1993), poverty lines were anchored to 2400 kcal (rural) and 2100 kcal (urban). Tendulkar decoupled the line from strict calorie norms, incorporating explicit monthly expenditure on health and education.
2
Analyze Statement 2 regarding the Poverty Line Basket (PLB)
Statement 2 is correct
The Tendulkar Committee adopted the urban consumption pattern of the 2004–05 NSS survey as the uniform reference basket (PLB) to evaluate poverty in both rural and urban areas after adjusting for spatial price variations.
3
Analyze Statement 3 regarding the recall period methodology
Statement 3 is incorrect
The Tendulkar Committee shifted from Uniform Reference Period (URP) to Mixed Reference Period (MRP - 365-day recall for 5 non-food items, 30-day for others). The Modified Mixed Reference Period (MMRP - 7-day recall for perishables) was recommended later by the C. Rangarajan Committee (2014).

Key Concept

Methodological differences between Suresh Tendulkar and C. Rangarajan Committees on poverty estimation in India
Question 125Question →

In the operational framework of monetary policy conducted by the Reserve Bank of India (RBI), various liquidity management instruments operate at different interest rate benchmarks forming the Liquidity Adjustment Facility (LAF) corridor. Arrange the following monetary policy rates in descending order of their prevailing interest rate levels (from highest rate to lowest rate).

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Answer

The correct sequence from highest to lowest interest rate is: Marginal Standing Facility (MSF) Rate, followed by Policy Repo Rate, Standing Deposit Facility (SDF) Rate, and lastly Fixed Reverse Repo Rate.
The Reserve Bank of India operates the Liquidity Adjustment Facility (LAF) corridor with the Marginal Standing Facility (MSF) Rate at the top (ceiling at Repo +25 bps+ 25\text{ bps}), the Policy Repo Rate at the middle as the primary policy rate, the Standing Deposit Facility (SDF) Rate as the operative floor (Repo −25 bps- 25\text{ bps}), and the Fixed Reverse Repo Rate at the lowest level (3.35%3.35\%). Thus, arranging them from highest to lowest yields MSF Rate →\rightarrow Policy Repo Rate →\rightarrow SDF Rate →\rightarrow Fixed Reverse Repo Rate.

Step-by-Step Solution

1
Identify the ceiling rate of the RBI's LAF corridor
Marginal Standing Facility (MSF) Rate is the penal rate at which commercial banks borrow overnight funds against SLR securities, making it the highest rate in the corridor (Repo +0.25%+ 0.25\%).
Establishing the ceiling rate anchors the upper boundary of overnight interbank borrowing costs.
2
Identify the central anchor rate of the monetary policy framework
Policy Repo Rate is the central benchmark rate at which RBI lends liquidity to banks against eligible government securities.
The repo rate serves as the benchmark around which both ceiling and floor rates are symmetrically positioned.
3
Identify the floor rate of the active LAF corridor
Standing Deposit Facility (SDF) Rate is the uncollateralized liquidity absorption rate set 25 bps25\text{ bps} below the Repo Rate (Repo −0.25%- 0.25\%).
SDF replaced the fixed reverse repo as the operative floor of the policy corridor.
4
Identify the passive/lowest liquidity rate in the framework
Fixed Reverse Repo Rate stands at 3.35%3.35\%, lower than the SDF rate.
While retained in RBI's toolkit, the fixed reverse repo rate operates below the SDF floor.

Key Concept

RBI Liquidity Adjustment Facility (LAF) Corridor Architecture
Question 126Question →

With reference to labor market indicators and skill development institutional architecture in India, consider the following statements:

1. Disguised unemployment occurs when more people are engaged in a job than required, resulting in a marginal productivity of labor that approaches zero.
2. The Worker Population Ratio (WPR) measures the percentage of employed persons relative to the total labor force rather than the total population.
3. The Scheme for Higher Education Youth in Apprenticeship and Skills (SHREYES) is aimed at providing industry apprenticeship opportunities to non-technical general degree graduates.

Which of the statements given above are correct?

Show answer & explanation

Answer: 1 and 3 only

Answer

Statements 1 and 3 are correct. Disguised unemployment features near-zero marginal labor productivity, and SHREYES targets general degree graduates for apprenticeship. Statement 2 is false as Worker Population Ratio (WPR) calculates employed persons as a percentage of the total population.
The option selecting statements 1 and 3 only is correct because disguised unemployment is defined by zero marginal productivity of labor, and SHREYES provides apprenticeship pathways for non-technical general stream graduates. Statement 2 is false because Worker Population Ratio uses total population as its denominator, not the labor force.

Step-by-Step Solution

1
Analyze Statement 1 regarding disguised unemployment
Disguised unemployment is a scenario where extra labor adds no incremental output (marginal productivity of labor ≈0\approx 0). Thus, Statement 1 is correct.
This matches the economic definition commonly observed in agrarian economies.
2
Evaluate Statement 2 regarding Worker Population Ratio (WPR)
WPR is calculated as (Employed PersonsTotal Population)×100\left(\frac{\text{Employed Persons}}{\text{Total Population}}\right) \times 100. Statement 2 incorrectly substitutes 'total labor force' into the denominator.
The ratio relative to the labor force represents the employment rate within the labor force, not WPR.
3
Evaluate Statement 3 regarding SHREYES scheme target group
SHREYES (Scheme for Higher Education Youth in Apprenticeship and Skills) specifically targets non-technical degree courses (like BA, BSc, BCom) to enhance employability via apprenticeship stipend support. Thus, Statement 3 is correct.
This aligns with the Ministry of Education initiative for non-technical graduates.

Key Concept

Worker Population Ratio (WPR), Disguised Unemployment, and SHREYES Apprenticeship Scheme
Question 127Question →

Consider the following statements regarding the revenue and capital classifications in the Union Budget of India:

1. Recovery of loans advanced by the Central Government to State Governments is categorized as a Capital Receipt.
2. Dividends and profits earned by the Central Government from Public Sector Undertakings (PSUs) are categorized as Capital Receipts.
3. Interest payments on public debt incurred by the Central Government are categorized as Revenue Expenditures.

Which of the statements given above are correct?

Show answer & explanation

Answer: 1 and 3 only

Answer

Statements 1 and 3 are correct.
Recovery of loans reduces government assets and is therefore a non-debt capital receipt. Interest payments are recurring operational charges that do not reduce debt principal or build assets, qualifying as revenue expenditure. Hence, the statement combination comprising '1 and 3 only' is correct.

Step-by-Step Solution

1
Analyze Statement 1: Recovery of loans.
Recovery of loans decreases total financial claims/assets of the Central Government.
Any transaction that creates a financial liability or reduces financial assets is classified as a Capital Receipt.
2
Analyze Statement 2: Dividends and profits from PSUs.
Dividends represent routine income from government investments without liquidating assets or incurring liabilities.
Income earned on government property and enterprises is classified as non-tax Revenue Receipts.
3
Analyze Statement 3: Interest payments on public debt.
Interest payments are regular operational expenses that do not reduce the principal debt liability.
Expenditures incurred for operational services and debt maintenance without asset creation belong to Revenue Expenditure.

Key Concept

Distinction between Revenue and Capital heads in Government Budgeting
Estimated Time:1m 15s
Question 128Question →

Consider the following transactions occurring within the external sector of an economy:

1. External Commercial Borrowings (ECBs) raised by domestic private corporations from international markets.
2. Private remittances received from non-resident workers residing overseas.
3. Foreign Portfolio Investment (FPI) equity inflows into domestic listed companies.
4. Investment income payouts made to foreign investors in the form of dividends.

Which of the statements given above correctly identify transactions categorized under the Capital Account of the Balance of Payments?

Show answer & explanation

Answer: 1 and 3 only

Answer

1 and 3 only
The correct answer identifies External Commercial Borrowings (ECBs) and Foreign Portfolio Investment (FPI) as the only Capital Account entries among the choices. In Balance of Payments accounting, the Capital Account records foreign borrowings, foreign investments, and loan transactions that result in changes to a country's external financial assets and liabilities.

Step-by-Step Solution

1
Define the fundamental distinction between Balance of Payments (BoP) Current Account and Capital Account items.
Current Account records transactions of goods, services, primary income (dividends, interest), and secondary income (transfers/remittances). Capital Account records foreign financial asset and liability transactions (FDI, FPI, loans/ECBs, banking capital).
Classification relies on whether the transaction alters foreign asset or liability positions.
2
Evaluate statements 1 and 3.
Statement 1 (ECBs) and Statement 3 (FPI) both involve foreign debt and equity capital flows, altering net debt and equity obligations to non-residents.
Borrowings and portfolio investments directly affect national capital liabilities/assets.
3
Evaluate statements 2 and 4.
Statement 2 (private worker remittances) is classified as secondary income (unilateral current transfers). Statement 4 (dividend payments) is classified as primary income on foreign investment. Both are Current Account transactions.
Income servicing and unrequited transfers do not constitute capital transactions.
4
Select the option containing only Capital Account transactions.
Only statements 1 and 3 are Capital Account transactions.
Statements 2 and 4 belong to the Current Account.

Key Concept

Classification of Balance of Payments (BoP) transactions into Current Account vs. Capital Account components
Estimated Time:1m 30s
Question 129Question →

Arrange the following key structural policy milestones in India's exchange rate and external trade sector reforms in chronological order from earliest to latest:

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Answer

The correct chronological order is: Two-stage devaluation of the Indian Rupee (July 1991) → Introduction of the Liberalized Exchange Rate Management System (LERMS) (March 1992) → Full convertibility of the Indian Rupee on the Current Account (August 1994) → Submission of the first Tarapore Committee Report on Capital Account Convertibility (May 1997) → Passage of the Foreign Exchange Management Act (FEMA) by Parliament (December 1999).
The sequence correctly reflects the economic progression of India's external sector reforms: emergency devaluation in July 1991, dual exchange rate under LERMS in March 1992, IMF Article VIII current account convertibility in August 1994, Tarapore Committee report on capital account convertibility in May 1997, and FEMA passage in December 1999.

Step-by-Step Solution

1
Determine the date of emergency exchange rate adjustments during the crisis.
The two-stage devaluation of the Rupee occurred on July 1 and July 3, 1991.
This was an immediate stabilization measure undertaken to halt foreign exchange reserve depletion.
2
Trace the transition from fixed/managed rates to current account convertibility.
LERMS was introduced in March 1992 (creating a 40:60 dual exchange rate structure), followed by official full current account convertibility under IMF Article VIII in August 1994.
LERMS served as a transitional step toward exchange rate unification (March 1993) and eventual current account convertibility.
3
Establish the chronology for capital account reforms and regulatory replacement.
The S.S. Tarapore Committee on Capital Account Convertibility submitted its first report in May 1997, and Parliament passed FEMA in December 1999.
The exploration of capital account openness preceded the legislative replacement of FERA with FEMA.

Key Concept

Chronological evolution of India's exchange rate policy, convertibility framework, and external sector legislation.
Question 130Question →

In external sector accounting, a Non-Resident Indian (NRI) deposits funds into a Non-Resident External (NRE) bank account maintained with a commercial bank in India. Under India's Balance of Payments (BoP) framework, how is this financial inflow classified?

Show answer & explanation

Answer: As a credit entry under Banking Capital within the Capital Account

Answer

NRI deposits into NRE account schemes are recorded as credit entries under Banking Capital within the Capital Account of India's Balance of Payments.
The correct answer highlights that NRE bank deposits represent repayable debt liabilities managed by the commercial banking system. In Balance of Payments accounting, all cross-border financial flows that change foreign asset or liability positions are recorded under the Capital Account, specifically under the 'Banking Capital' sub-component.

Step-by-Step Solution

1
Identify the economic nature of Non-Resident External (NRE) deposit accounts
NRE accounts represent foreign currency debt liabilities owed by Indian commercial banks to non-residents.
Because funds in deposit accounts are repayable to the account holder upon request, they create financial claims and liabilities across international borders.
2
Distinguish between Current Account and Capital Account transactions in Balance of Payments
Current Account records trade in goods, services, primary income, and secondary transfers. Capital Account records transactions altering external financial assets and liabilities.
Deposit balances represent cross-border debt liabilities rather than unrequited transfers or trade in services.
3
Classify the transaction under the specific BoP capital head
Cross-border banking liabilities are categorized under Banking Capital inside the Capital Account.
Commercial banking channels handling foreign deposit schemes fall under Banking Capital, distinct from FDI, FPI, or External Commercial Borrowings (ECB).

Key Concept

Classification of Banking Capital and NRI Deposits in Balance of Payments Accounting
Question 131Question →

Match the types of inflation listed in List-I with their corresponding macroeconomic descriptions in List-II.

Click a left item, then click its matching right item

Items

Headline Inflation
Core Inflation
Stagflation
Bottleneck Inflation

Matches

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Answer

Headline Inflation matches the total inflation figure including food and fuel; Core Inflation matches the measure excluding volatile food and fuel prices; Stagflation matches stagnant economic growth combined with high inflation and unemployment; Bottleneck Inflation matches price rises caused by supply-side disruptions.
Each inflation type is correctly aligned with its economic definition: Headline Inflation captures the total price level including food and energy; Core Inflation excludes volatile food and energy components; Stagflation merges economic stagnation with rising prices; and Bottleneck Inflation stems directly from supply disruptions.

Step-by-Step Solution

1
Differentiate between Headline and Core Inflation
Headline Inflation measures price changes in the entire consumer basket including food/fuel, whereas Core Inflation removes volatile food and energy prices.
Recognizing the basket composition distinction is essential for macroeconomic measurement.
2
Analyze Stagflation and Bottleneck Inflation concepts
Stagflation combines economic stagnation with inflation, while Bottleneck Inflation arises specifically from supply chain bottlenecks.
Identifying structural inflation drivers versus macroeconomic stagnation scenarios ensures accurate matching.

Key Concept

Types of inflation and their underlying economic mechanisms
Question 132Question →

With reference to inflation dynamics and price indices in India, consider the following statements:

1. The Wholesale Price Index (WPI), released by the Office of Economic Adviser under the Ministry of Commerce and Industry, completely excludes services and assigns the highest weightage to Manufactured Products.
2. In the Consumer Price Index (CPI-Combined) compiled by the National Statistical Office (NSO), the 'Food and Beverages' group accounts for a weightage exceeding 45%, which is substantially higher than the food weightage in WPI.
3. Core Inflation measures underlying long-term price trends by excluding volatile components such as food and fuel items from Headline Inflation.
4. An increase in the Cash Reserve Ratio (CRR) by the Reserve Bank of India increases commercial bank liquidity, thereby accelerating demand-pull inflation in the short run.

Which of the statements given above are correct?

Show answer & explanation

Answer: 1, 2 and 3 only

Answer

The correct combination of statements is 1, 2 and 3 only.
The combination listing statements 1, 2 and 3 only is correct because WPI is compiled by the Office of Economic Adviser without service sector inclusion, CPI-Combined assigns 45.86% weight to Food and Beverages, and Core Inflation measures price changes excluding food and energy. Statement 4 is false because raising the Cash Reserve Ratio sucks liquidity out of the banking sector, mitigating rather than accelerating inflation.

Step-by-Step Solution

1
Evaluate Statement 1 regarding Wholesale Price Index (WPI) characteristics.
Statement 1 is correct. WPI is published by the Office of Economic Adviser, Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry. It tracks bulk transactions at the wholesale level, completely excludes services, and assigns the largest weight (~64.2%) to Manufactured Products.
Understanding publishing agencies and index basket compositions is essential for evaluating macro price indicators.
2
Evaluate Statement 2 regarding Consumer Price Index (CPI) weightages.
Statement 2 is correct. CPI-Combined (base year 2012=100) is published by NSO (MoSPI). 'Food and Beverages' carries a weight of 45.86% in CPI-Combined, whereas food items carry a significantly lower weight in the WPI basket (~24.4% combined).
CPI measures retail price changes directly impacting households, hence food carries a higher weight than in wholesale indices.
3
Evaluate Statement 3 regarding Core Inflation definition.
Statement 3 is correct. Core Inflation strips out food and fuel/energy groups because of their seasonal and temporary price shocks, capturing the steady macroeconomic inflation baseline.
Distinguishing headline inflation from core inflation helps central banks assess non-transitory price pressures.
4
Evaluate Statement 4 regarding Quantitative Monetary Policy tools.
Statement 4 is incorrect. Increasing the Cash Reserve Ratio (CRR) mandates commercial banks to deposit a larger fraction of their NDTL with the RBI without interest. This reduces available lendable liquidity in the banking system, curbing money supply and checking demand-pull inflation.
An increase in CRR acts as a contractionary monetary tool, dampening liquidity rather than expanding it.

Key Concept

Structural differences between CPI and WPI indices, Core Inflation definition, and central bank monetary policy tools.
Estimated Time:2m 0s
Question 133Question →

Match the following flagship social welfare schemes of the Government of India with their respective primary target beneficiary groups:

Click a left item, then click its matching right item

Items

Pradhan Mantri Matru Vandana Yojana (PMMVY)
PM-KISAN (Pradhan Mantri Kisan Samman Nidhi)
Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM)
PM POSHAN (formerly Mid-Day Meal Scheme)

Matches

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Answer

Pradhan Mantri Matru Vandana Yojana matches with Pregnant women and lactating mothers; PM-KISAN matches with Landholding farmer families; Pradhan Mantri Shram Yogi Maan-dhan matches with Unorganized sector workers aged 18 to 40 years; PM POSHAN matches with Schoolchildren in government and government-aided primary classes.
Each scheme correctly matches its defined target group: PMMVY supports pregnant women and lactating mothers, PM-KISAN supports landholding farmer families, PM-SYM provides social security pensions for unorganized sector workers, and PM POSHAN ensures nutritional meal support for school children.

Step-by-Step Solution

1
Identify the target beneficiary for Pradhan Mantri Matru Vandana Yojana (PMMVY).
PMMVY provides cash incentives to pregnant women and lactating mothers for improved health and nutrition.
This establishes the correct pairing for PMMVY.
2
Identify the target beneficiary for PM-KISAN.
PM-KISAN targets landholding farmer families to supplement their financial needs for agricultural inputs and domestic requirements.
This establishes the correct pairing for PM-KISAN.
3
Identify the target beneficiary for Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM).
PM-SYM targets unorganized workers (such as street vendors, rickshaw pullers, construction workers) in the entry age bracket of 18 to 40 years.
This establishes the correct pairing for PM-SYM.
4
Identify the target beneficiary for PM POSHAN.
PM POSHAN covers eligible school-going children in primary and upper primary classes to improve enrollment and nutritional status.
This establishes the correct pairing for PM POSHAN.

Key Concept

Primary Beneficiary Target Groups of Key Indian Social Welfare Schemes
Question 134Question →

Match the Expert Committees on Poverty Estimation in India (List-I) with their primary methodological features or recommendations (List-II):

Click a left item, then click its matching right item

Items

Y.K. Alagh Task Force (1979)
D.T. Lakdawala Expert Group (1993)
Suresh Tendulkar Committee (2009)
C. Rangarajan Expert Group (2014)

Matches

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Answer

The correct matches are: Y.K. Alagh Task Force (1979) matches with per capita daily calorie norms (2400 kcal rural / 2100 kcal urban); D.T. Lakdawala Expert Group (1993) matches with state-specific poverty lines using CPI-AL and CPI-IW; Suresh Tendulkar Committee (2009) matches with uniform Poverty Line Basket and Mixed Reference Period (MRP); and C. Rangarajan Expert Group (2014) matches with normative nutritional/non-food requirements using Modified Mixed Reference Period (MMRP).
Each expert committee corresponds to its historical methodological milestone in Indian poverty estimation: Y.K. Alagh (1979) established daily calorie thresholds (2400/2100 kcal); D.T. Lakdawala (1993) introduced state-specific price indexation via CPI-AL and CPI-IW; Suresh Tendulkar (2009) instituted a uniform Poverty Line Basket and Mixed Reference Period (MRP); and C. Rangarajan (2014) introduced a multi-nutrient normative framework using Modified Mixed Reference Period (MMRP).

Step-by-Step Solution

1
Identify the foundational methodology of the Y.K. Alagh Task Force (1979).
The Alagh Task Force anchored poverty directly to minimum daily calorie requirements (2400 kcal2400\text{ kcal} rural and 2100 kcal2100\text{ kcal} urban).
This established the calorie consumption paradigm for official Indian poverty line estimations.
2
Determine the inflation adjustment mechanism introduced by the D.T. Lakdawala Committee (1993).
The Lakdawala Committee adopted state-specific cost of living indices: CPI-AL for rural poverty and CPI-IW for urban poverty.
State-level variations in price indices were necessary to reflect real regional purchasing power.
3
Analyze the methodology shift under the Suresh Tendulkar Committee (2009).
Tendulkar discontinued calorie-only anchoring, adopted a uniform urban Poverty Line Basket (PLB), and shifted to Mixed Reference Period (MRP) recall data.
MRP accounted for 365-day recall on 5 infrequently purchased non-food item categories.
4
Evaluate the refinements made by the C. Rangarajan Expert Group (2014).
Rangarajan introduced comprehensive nutritional norms (calories, protein, fat) plus non-food normative requirements, utilizing Modified Mixed Reference Period (MMRP).
MMRP collects 7-day recall data for perishables, 30-day for general items, and 365-day for low-frequency expenses.

Key Concept

Evolution of Poverty Estimation Methodology in India
Estimated Time:1m 30s
Question 135Question →

When the Reserve Bank of India (RBI) conducts an Open Market Operation (OMO) sale of Government Securities while simultaneously raising the Marginal Standing Facility (MSF) rate, which of the following best describes the resulting combined impact on system liquidity, bond yields, and short-term interest rates?

Show answer & explanation

Answer: System liquidity contracts, bond yields rise (bond prices fall), and short-term money market interest rates increase.

Answer

System liquidity contracts, bond yields rise (bond prices fall), and short-term money market interest rates increase.
An OMO sale by the RBI absorbs excess liquidity from commercial banks as banks pay cash to buy government securities. The influx of securities into the market lowers bond prices and pushes bond yields up. Concurrently, raising the MSF rate elevates the upper bound of the Liquidity Adjustment Facility (LAF) corridor, making short-term money market borrowing more expensive.

Step-by-Step Solution

1
Analyze the impact of an OMO sale of Government Securities by the RBI.
When the RBI sells G-Secs to commercial banks, funds flow from banks to the RBI, absorbing primary liquidity from the banking system and reducing excess reserves.
Open Market Operation sales directly withdraw durable rupee liquidity from commercial bank balance sheets.
2
Evaluate the effect of G-Sec sales on bond prices and bond yields.
An increased supply of G-Secs in the secondary market depresses bond prices, which causes market bond yields to rise (Yield=CouponPriceYield = \frac{Coupon}{Price}).
Bond prices and yields move in opposite directions; higher market supply lowers prices and increases yields.
3
Analyze the impact of raising the Marginal Standing Facility (MSF) rate.
Raising the MSF rate shifts the upper ceiling of the LAF corridor upward, making emergency overnight borrowing costlier for commercial banks and driving up short-term money market rates (e.g., Weighted Average Call Rate).
The MSF rate acts as the upper ceiling for short-term interbank liquidity costs.

Key Concept

Impact of Quantitative Monetary Tools on Liquidity, Bond Yields, and Interest Rate Corridors
Estimated Time:1m 30s
Question 136Question →

Which of the following statements regarding the structural provisions and eligibility criteria of the Pradhan Mantri Matru Vandana Yojana (PMMVY) are correct?

Select all that apply

Show answer & explanation

Answer: It is a Direct Benefit Transfer (DBT) maternity scheme implemented by the Ministry of Women and Child Development under the Samarthya sub-scheme of Mission Shakti.; The scheme provides a conditional financial assistance incentive of ₹6,000 for the birth of a second child, provided the child born is female.

Answer

The correct statements are that PMMVY is implemented under the Samarthya sub-scheme of Mission Shakti by the Ministry of Women and Child Development, and that it provides an incentive of ₹6,000 for a second child if that child is a girl.
The statements confirming that PMMVY is implemented under the Samarthya sub-scheme of Mission Shakti and that a specific incentive of ₹6,000 is given for a second female child are accurate. PMMVY seeks to compensate for wage loss during pregnancy and lactation while promoting positive social behavior towards girl children.

Step-by-Step Solution

1
Analyze the administrative nodal ministry and umbrella scheme framework for PMMVY.
PMMVY is indeed a Direct Benefit Transfer scheme administered by the Ministry of Women and Child Development under Mission Shakti (Samarthya sub-scheme).
Verifies the institutional architecture of the maternity benefit initiative.
2
Evaluate the exclusion criteria for formal and government sector employees.
Women in regular public employment or receiving statutory benefits under the ESI Act or Maternity Benefit Act are excluded.
Prevents double-dipping and targets social assistance toward vulnerable and unorganized sector mothers.
3
Examine the differential benefit payout structure for the first and second child.
The scheme offers ₹5,000 for the first child in two installments, and an additional ₹6,000 for the second child strictly if the child is a girl.
Aligns financial incentives with demographic goals to improve the child sex ratio at birth.

Key Concept

Pradhan Mantri Matru Vandana Yojana (PMMVY) scheme architecture, targeted conditional assistance, and exclusion parameters
Question 137Question →

Regarding the constitutional provisions governing the distribution of revenues and taxation powers between the Union and the States in India, which of the following statements are correct?

Select all that apply

Show answer & explanation

Answer: Stamp duties on bills of exchange and promissory notes are levied by the Union government but collected and appropriated by the States.; Surcharges levied by Parliament for Union purposes under Article 271 do not form part of the divisible pool of taxes shared with States.

Answer

The correct statements are that stamp duties on negotiable instruments are levied by the Union but collected and appropriated by the States, and that surcharges levied under Article 271 for Union purposes do not form part of the divisible tax pool shared with States.
The statements confirming that stamp duties on negotiable instruments are levied by the Union but collected/appropriated by States (Article 268) and that Union surcharges under Article 271 are excluded from the divisible pool are accurate under Indian constitutional fiscal federalism.

Step-by-Step Solution

1
Examine the constitutional framework for duties levied by the Union but collected by States under Article 268.
Confirm that stamp duties on bills of exchange, cheques, and promissory notes are levied by the Union government but collected and appropriated by the States.
Article 268 explicitly outlines duties levied by the Union but collected and assigned to the States.
2
Analyze the levying authority and mechanism for Goods and Services Tax on inter-State supply under Article 269A.
Identify that IGST is levied and collected by the Government of India (Union) and then apportioned between the Union and States, contradicting the claim that States levy and retain it directly.
Article 269A establishes central administration for inter-State GST to ensure single-window compliance and structured revenue distribution.
3
Verify the composition of the divisible pool of taxes under Articles 270 and 271.
Confirm that surcharges under Article 271 are earmarked for Union purposes and excluded from devolution, while Corporation tax is included in the divisible pool under Article 270.
Since the 80th Amendment Act, all central taxes (including Corporation tax) except cesses and surcharges form part of the divisible pool.

Key Concept

Constitutional provisions for distribution of tax revenues between the Union and States (Articles 268, 269A, 270, and 271)
Question 138Question →

Regarding the accounting classification of transactions in India's Balance of Payments (BoP) and external sector, which of the following statements are correct?

Select all that apply

Show answer & explanation

Answer: Remittances sent by non-resident workers to their families in India are categorized as secondary income (private transfers) under the Current Account.; Foreign Direct Investment (FDI) equity flows into domestic enterprises are classified under the Capital Account as non-debt creating financial transactions.

Answer

The correct statements are that remittances from non-resident workers are categorized as secondary income under the Current Account, and Foreign Direct Investment (FDI) equity flows are classified under the Capital Account as non-debt creating flows.
The statements concerning worker remittances and FDI equity flows are correct. Remittances do not create future financial claims or debt liabilities, making them current transfer receipts (secondary income) under the Current Account. Foreign direct investments acquire ownership equity in domestic enterprises, directly altering the economy's foreign financial asset-liability position under the Capital Account.

Step-by-Step Solution

1
Analyze the classification of worker remittances in Balance of Payments accounting.
Remittances represent unrequited unilateral transfers without financial obligation.
Unrequited transfers belong to secondary income under the Current Account.
2
Evaluate the accounting treatment of interest payments on External Commercial Borrowings (ECBs).
Interest payments service existing debt as an investment income outflow.
Debt servicing cost (interest) is an income flow recorded under primary income in the Current Account, whereas principal loan disbursal and amortization are recorded in the Capital Account.
3
Determine the classification of Foreign Direct Investment (FDI) equity inflows.
FDI brings in cross-border foreign equity capital.
Cross-border ownership of enterprise equity creates foreign financial assets/liabilities under the Capital Account.
4
Examine the classification of Non-Resident External (NRE) deposit balance shifts.
NRE deposits constitute banking capital liabilities.
Commercial bank deposit liabilities owed to non-residents form part of foreign banking capital under the Capital Account.

Key Concept

Classification of Economic Transactions between Current and Capital Accounts in Balance of Payments
Question 139Question →

Match the following Reserve Bank of India (RBI) monetary policy mechanisms and liquidity tools in List I with their corresponding statutory or operational features in List II:

Click a left item, then click its matching right item

Items

Cash Reserve Ratio (CRR)
Statutory Liquidity Ratio (SLR)
Standing Deposit Facility (SDF)
Marginal Standing Facility (MSF)

Matches

Show answer & explanation

Answer

Cash Reserve Ratio (CRR) matches with the mandatory cash reserve earning no interest; Statutory Liquidity Ratio (SLR) matches with the reserve maintained in liquid assets under the Banking Regulation Act, 1949; Standing Deposit Facility (SDF) matches with the uncollateralized liquidity absorption mechanism at the LAF floor; Marginal Standing Facility (MSF) matches with the overnight penal borrowing window at the LAF ceiling.
Each instrument aligns with its exact regulatory authority and operational purpose: Cash Reserve Ratio is a non-interest-bearing cash reserve held directly with the RBI; Statutory Liquidity Ratio represents liquid assets (like G-Secs) held under the Banking Regulation Act; Standing Deposit Facility acts as the uncollateralized liquidity absorber at the corridor floor; and Marginal Standing Facility serves as the emergency penal borrowing window at the corridor ceiling.

Step-by-Step Solution

1
Analyze the operational framework of Cash Reserve Ratio (CRR).
CRR is held exclusively in cash form directly with the Reserve Bank of India under Section 42(1) of the RBI Act, 1934, and earns no interest for commercial banks.
Establishes the distinction between CRR and other reserve ratios that allow interest-yielding assets.
2
Examine the statutory mandate of Statutory Liquidity Ratio (SLR).
SLR is governed by Section 24 of the Banking Regulation Act, 1949, requiring banks to invest a portion of their NDTL in liquid assets like unencumbered government securities, cash, and gold.
Differentiates SLR as a self-maintained liquid asset portfolio under banking regulation law.
3
Identify the feature distinguishing Standing Deposit Facility (SDF).
Introduced as an uncollateralized liquidity absorption tool, SDF allows RBI to suck out liquidity without pledging G-Secs, serving as the floor of the Liquidity Adjustment Facility (LAF) corridor.
Separates SDF from collateral-backed instruments like traditional Reverse Repo.
4
Evaluate the mechanism of Marginal Standing Facility (MSF).
MSF operates as an emergency overnight window for banks facing acute liquidity shortages, allowing borrowing above the Repo rate and defining the ceiling of the LAF corridor.
Confirms MSF as the top rate of the LAF corridor.

Key Concept

RBI Monetary Policy Instruments and Liquidity Management Corridor
Question 140Question →

Match the infrastructure project delivery and financing models in List-I with their corresponding operational features in List-II:

Click a left item, then click its matching right item

Items

Build-Operate-Transfer (BOT) Toll
Hybrid Annuity Model (HAM)
Engineering, Procurement, and Construction (EPC)
Toll-Operate-Transfer (TOT)

Matches

Show answer & explanation

Answer

Build-Operate-Transfer (BOT) Toll pairs with private developer bearing traffic risk and user fee recovery; Hybrid Annuity Model (HAM) pairs with 40% government grant during construction and 60% annuity payments; Engineering, Procurement, and Construction (EPC) pairs with 100% government funding and private design/construction execution; Toll-Operate-Transfer (TOT) pairs with monetization of operational public assets via upfront lump-sum payment.
Each infrastructure model correctly matches its defining financial and risk-sharing structure: BOT Toll assigns 100% traffic risk and toll collection rights to the private developer; HAM splits costs into 40% government grant and 60% annuity; EPC is fully government-funded; and TOT monetizes completed government assets via upfront concession fees.

Step-by-Step Solution

1
Analyze the features of Build-Operate-Transfer (BOT) Toll
Identify that BOT Toll places traffic and commercial risk on the private concessionaire who collects tolls directly.
Differentiates BOT Toll from annuity-based or government-funded contract models.
2
Analyze the financial structure of the Hybrid Annuity Model (HAM)
Identify the 40:60 risk-sharing mix (40% construction grant by authority, 60% annuity payment over time).
HAM was introduced to mitigate high commercial risks associated with BOT Toll models.
3
Examine the Engineering, Procurement, and Construction (EPC) procurement model
Confirm 100% government funding where private entities act purely as design and construction contractors.
EPC carries zero operational or traffic risk for the private contractor.
4
Examine the Toll-Operate-Transfer (TOT) asset monetization model
Match it with the leasing of already operational public road projects against an upfront concession fee.
TOT is designed to recycle government capital from completed roads into new infrastructure projects.

Key Concept

Public-Private Partnership (PPP) Models and Infrastructure Financing Mechanisms
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