Print Friendly, PDF & Email

SOLUTIONS – INSIGHTS REVISION TEST for Preliminary Exam 2018: Test – 44(Schemes and Programmes)


INSIGHTS REVISION TEST for Preliminary Exam 2018: Test – 44(Schemes and Programmes)


1. A rise in general level of prices may be caused by

  1. An increase in the money supply.
  2. A decrease in the aggregate level of output
  3. An increase in the effective demand

Select the correct answer using the codes given below;

a) 1 only

b) 1 and 2 only

c) 2 and 3 only

d) 1, 2 and 3


Increase in money supply will result in more money chasing fewer goods thereby causing prices to rise. (Hence statement 1 is correct).

A decrease in the aggregate level of output may also be called a supply shock. For example, production of onions might be less than estimated causing a price rise in onions. (Hence statement 2 is correct).

An increase in effective demand would result in demand exceeding supply causing demand pull inflation. (Hence statement 3 is correct).

2. Which of the following also acts as a mechanism for government borrowing;

  1. CRR
  2. Repo Rate
  3. Reverse Repo Rate
  4. SLR

Select the correct answer using the codes below

a) 1 and 3 only

b) 1, 2 and 4 only

c) 4 only

d) 1 and 4 only

Solution: c

CRR or cash reserve ratio is the amount of money a commercial bank must keep with RBI at all times.

REPO rate or policy rate is the rate at which commercial banks borrow money from the RBI

Reverse Repo rate is the rate at which commercial banks lend to the RBI

SLR or statutory liquidity ratio is the amount of money a bank must keep with itself in the form of liquid assets for day to day operations. Purchases of government treasury bills form a huge part of SLR. Thus, SLR is a mechanism to indirectly finance government borrowings. (Hence statement 4 alone is correct).

3. Which of the following is true?

a) The initial public issues are made in primary market whereas all subsequent issues are made in the secondary markets.

b) Primary markets have been dematerialised whereas secondary markets are in the process of doing so

c) Primary markets deal in shares whereas secondary markets are meant for debentures.

d) Corporates raise resources directly from the investors through the Primary Market, whereas in the Secondary Markets, investors buy and sell securities from one another.


Solution: d

The Primary Market is the point of contact between the corporates and the investors directly. However, the secondary market is a platform for trading amongst the investor community and helps in price discovery for further issues and fund raising for companies in the future.

Thus, Primary market is having direct relationship whereas the secondary market is having an indirect relationship between the investor and the companies.


4. What is labour augmenting economic growth?

a) Growth with capital deepening

b) Growth without capital formation

c) Growth with substitution of labour with capital

d) Growth of productivity of workers with more capital or technology


Solution: d

The economic growth which results in increased effectiveness of labour is the labour augumenting growth. For example, workers working with hammers being given power drills would boost productivity of each person resulting in higher output. Thus equipping labour with more capital or technology may boost the productivity of workers itself. In other words the labour would have become more productive.


5. “Amrut Mahotsav”, part of budget speech of FM, refers to:

a) Celebration for success of white revolution, since India is the world’s largest Milk producer

b) Celebration on the eve of 75th year of Independence in 2022

c) Successful cleaning of Himalayan Rivers

d) Launch of Rainbow revolution

Solution: b

The year 2022 will be the Amrut Mahotsav, the 75th year, of India’s independence.


6. Which of the following is a new sub-scheme under the Rashtriya Krishi Vikas Yojana?

a) Bringing green revolution to eastern region

b) Special programme on oil palm area expansion

c) Accelerated fodder development programme

d) All the above

Solution: d

Bringing Green Revolution to Eastern India (BGREI), a sub-scheme of Rashtriya Krishi Vikas Yojna (RKVY) is being implemented in seven eastern states namely Assam, Bihar, Chhattisgarh, Jharkhand, Odisha, West Bengal and eastern Uttar Pradesh from 2010-2011 to address the constraints limiting the productivity of rice based cropping systems. Under this scheme, various activities like cluster demonstrations of improved package of practices, assets building, site specific activities and marketing support are being undertaken.

To boost oil palm cultivation, Government of India had supported a Special Programme on Oil Palm Area Expansion (OPAE) under RKVY

Pursuant to announcement in Union Budget, a scheme on ‘Accelerated Fodder Development Programme (AFDP)’ was launched in the year 2011-12 through a window of Rashtriya Krishi Vikas Yojna (RKVY). It aims at enhancing availability of green and dry fodder throughout the year and also to mitigate shortage of fodder caused by the natural calamities like droughts and floods.

7. Pradhan Mantri Krishi Sinchayi Yojana will amalgamate –

  1. Accelerated Irrigation Benefit Programme
  2. Integrated Watershed Management Programme 
  3. Jal Sinchay Yojana
  4. Farm Water Management

Select your answer using the codes below:

a) 1, 2 and 4 only

b) 2 and 3 only

c) 2, 3 and 4 only

d) 1, 2, 3 and 4


PMKSY has been formulated amalgamating ongoing schemes viz. Accelerated Irrigation Benefit Programme (AIBP) of the Ministry of Water Resources, River Development & Ganga Rejuvenation (MoWR,RD&GR), Integrated Watershed Management Programme (IWMP) of Department of Land Resources (DoLR) and the On Farm Water Management (OFWM) of Department of Agriculture and Cooperation (DAC).

The Ministry of Rural Development selected Project Jal Sanchay for the National Award for Excellence in the Mahatma Gandhi national rural employment guarantee programme (MGNREGP). It is water conservation model which is successfully adopted in Nalanda district of south-central Bihar,


8. What is true with respect to bids in the Swiss challenge method?

A) The original bid is public and others can challenge it

B) The bids are put out for open auction

C) The challenge is for legality of the bid

D) The challenge was pioneered by Swiss engineers while building a tunnel through the Alps

Solution: a

Swiss challenge is a way of awarding contracts in which without an invitation from government, a private player can submit a proposal to government for development of an infrastructure project with exclusive intellectual property rights. Government after receiving bid has to publish the bid and invite third parties to match or better it.

2009—  Supreme Court of India has approved the Swiss Challenge method for awarding contracts.

Advantages — would encourage the private players to bring innovation, technology and uniqueness in development of projects. It will bring in cost efficiencies, cuts the red tape and shortens the project timelines.


9. Logistics sector was lately given infrastructure status. What does it mean?

a) It will be eligible to to borrow from India Infrastructure Financing Company Limited (IIFCL).

b) It will be eligible for priority sector lending by banks in India

c) It will benefit from government schemes and policies favoring infrastructure

d) all of the above

Solution: a

It will enable the Logistics Sector to avail infrastructure lending at easier terms with enhanced limits, access to larger amounts of funds as External Commercial Borrowings (ECB), access to longer tenor funds from insurance companies and pension funds and be eligible to borrow from India Infrastructure Financing Company Limited (IIFCL).


10. Project insight is related to:

a) Using funds for renovating medical infrastructure

b) Addressing gaps in Fender participation in the workforce

c) use of bigdata to analyse mismatches in income declarations and spending patterns to trace tax evasions and black money

d) Finding a fool proof mechanism to double farmers income in India

Solution: c

Project Insight to strengthen the non–intrusive information driven approach for improving tax compliance and effective utilization of information in tax administration.

It is unique initiative as it will use big data analytics to match information from social media sites to deduce mismatches between spending pattern and income declaration


11. Hong Kong issues of WTO concerns with

1) Public Procurement

2) Government Stock holdings

3) Market Access

4) Agricultural subsidies

Select your answers using the codes below

a) 1, 2 and 3 only

b) 3 and 4 only

c) 2, 3 and 4 only

d) 1, 2, 3 and 4

Solution: b

Singapore Issues: four issues introduced to the WTO agenda at the December 1996 Ministerial Conference in SINGAPORE:

  1. Trade and Investment
  2. Trade and competition policy
  3. Transparency in Government procurement
  4. Trade Facilitation

Hong Kong Issues (2005):

  1. Market Access
  2. Domestic support*
  3. Export Subsidies*
  4. Services
  5. Singapore Issues

*agreement on Agriculture


12.Demand-pull inflation is said to exist when:

a) Costs are increasing faster than output

b) The level of aggregate demand is growing faster than the underlying level of supply

c) The prices of imports are rising faster than domestic goods

d) An external event has caused prices to rise e.g. an increase in oil prices

Solution: b

Inflation is broadly of two types- Demand Pull and Cost Push

Demand pull inflation is a case when demand pulls up the prices in a simple application of the market where demand is more than supply and thus price will tend to go up.


13. Which of the following are the components of “Integrated Power Development Scheme”

  1. Strengthening of sub-transmission and distribution network in urban areas
  2. Metering of distribution transformers/feeders/consumers in urban areas
  3. IT enablement of distribution sector and strengthening of distribution network

Select you answer using the codes below:

a) 1 and 2 only

b) 2 and 3 only

c) 2 only

d) 1, 2 and 3

Solution: d

“Integrated Power Development Scheme” (IPDS) objectives:

  1. Strengthening of sub-transmission and distribution network in the urban areas; (Hence statement 1 is correct).
  2. Metering of distribution transformers /feeders / consumers in the urban areas. (Hence statement 2 is correct).
  3. IT enablement of distribution sector and strengthening of distribution network (Hence statement 3 is correct).


14. Government of India launched a new scheme namely “Deendayal Upadhyaya Gram Jyoti Yojana” (DDUGJY) with which of the following objective:

a) To separate agriculture and non-agriculture feeders for judicious rostering of supply to agricultural and non-agricultural consumers in rural areas

b) Strengthening of electricity production in rural areas

c) Metering in Urban areas (Feeders, Distribution Transformers and Consumers)

d) To enable transmission of electricity from urban to rural areas

Solution: a

 DeenDayal Upadhyaya Gram Jyoti Yojana (DDUGJY)

  • To provide electrification to all villages
  • Feeder separation to ensure sufficient power to farmers and regular supply to other consumers
  • Improvement of Sub-transmission and distribution network to improve the quality and reliability of the supply
  • Metering to reduce the losses


15. Which of the following are the components of a solar city:

a) A city which is running its public services such as street lighting on solar energy

b) A city which is able to convert at least 10% of its conventional power needs to other sources including solar, wind, biomass etc

c) A city with a high potential for development of solar rooftop projects

d) A city which is declared as a city of importance on India’s solar atlas

Solution: b

What is a Solar City?

The Solar City aims at minimum 10% reduction in projected demand of conventional energy at the end of five years, through a combination of enhancing supply from renewable energy sources in the city and energy efficiency measures.

The basic aim is to motivate the local Governments for adopting renewable energy technologies and energy efficiency measures.

 In a Solar City all types of renewable energy based projects like solar, wind, biomass, small hydro, waste to energy etc. may be installed along with possible energy efficiency measures depending on the need and resource availability in the city.

16. Consider the following statements as per the Essential commodities Act, 1955:

  1. The act enables the government to to regulate the production, supply and distribution of acommodities declared as ‘essential’
  2. The excess stocks are auctioned or sold through fair price shops.

Which of the above statements is/are correct:

a) 1 only

b) 2 only

c) Both 1 and 2

d) None of the above

Solution: c

The Essential Commodities Act is an act of Parliament of India which was established to ensure the delivery of certain commodities or products, the supply of which if obstructed owing to hoarding or blackmarketing would affect the normal life of the people. This includes foodstuff, drugs, fuel (petroleum products) etc.

 A State can, however, choose not to impose any restrictions. But once it does, traders have to immediately sell into the market any stocks held beyond the mandated quantity

Government to regulate the production, supply and distribution of a whole host of commodities it declares ‘essential’in order to make them available to consumers at fair prices.

 The excess stocks are auctioned or sold through fair price shops.


17. Consider the following about International solar alliance:

a) It is the first International Intergovernmental Treaty Based organsation headquarterd in India

b) It is a collaboration of governments of tropical and temperate countries

c) ISA member states can launch various programmes independently

d) The ISA framework agreement was open to signatures at the Paris summit

Solution: a

International Solar Alliance (ISA) is the first  a treaty-based international intergovernmental organization headquartered in India,

It’s Secretariat is located in the campus of National Institute of Solar Energy, Gwalpahari, Gurgaon, Haryana.



18. Consider the following about employee state insurance scheme:

  1. The family members of the insured are also eligible for medical benefit
  2. The workers are not entitled to sickness benefits/lost wages

Which of the above statements is/are correct:

a) 1 only

b) 2 only

c) Both 1 and 2

d) None of the above

Solution: a

The Employees’ State Insurance Scheme provides full medical care in the form of medical attendance, treatment, drugs and injections, specialist consultation and hospitalization to insured persons and also to members of their families where the facility for Specialist consultation, hospitalization has been extended to the families. (Hence statement 1 is correct).


SICK LEAVE IS NOT LEAVE OF EARNINNG ESIS provides 70% of average daily wages in cash during medical leave, upto 91 days in two consecutive benefit periods.

(Hence statement 2 is correct).



19. The World Investment Report is published by:

a) International Finance Corporation

b) United Nations Conference on Trade and Development

c) World Bank

d) International Monetary Fund

Solution: b

The World Investment Report has been published annually since 1991.

Each year´s Report covers the latest trends in foreign direct investment around the World and analyses in depth one selected topic related to foreign direct investment and development.



20. The tax to GDP ratio in India has been low compared to other major economies in the world. The reasons that can be attributed for this are

  1. Service tax is imposed late and on few sectors
  2. Low tax payers base because of exemptions and also under reporting of tax

Select the correct option

a) only 1

b) only 2

c) both 1 and 2

d) None

Solution: c


Tax to gross domestic product (GDP) ratio is the ratio of taxes collected by a government and the GDP of the nation.

Why it’s important?

It indicates the ability of the government to invest in various development initiatives as taxes constitute major revenue of government.

India’s tax-to-GDP ratio which stands at 16.6% has traditionally been lower than other developing economies. The possible reasons for this are

1) structural factors such as low per capita income, high poverty rate result in a very small portion of the labor force being eligible to pay personal income taxes.

2) A large proportion of economic activity that is generated by small and medium enterprises (SMEs). Although these enterprises have enjoyed strong profitability growth over the past decade, the government has not captured their earnings in tax revenues due to a variety of exemptions and compliance issues.

3) service tax in India was imposed late and imposed only on few sectors. Its share has been traditionally low in gross tax revenues of the government.

4) lack of policy initiatives, parallel economy and unorganised sectors also adversely impacts the tax collection.