DAY – 47 (InstaTest-47): Insta 75 Days Revision Plan-2020: Topic – Economy, Subject-wise test 25, Textbook based test 9 & 10, November 2019 CA

Solution: A

El Salvador has, in a historic move, recognized forests as living entities. Its citizens, will now be required to preserve forests.

El Salvador has lost about 85 per cent of its native forests since the 1960s, while Earth has lost about 80 per cent of its native forests.

https://www.downtoearth.org.in/news/forests/el-salvador-recognises-forests-as-living-entities-65020

Solution: C

Tourism:

 Foreign Exchange Earnings (FEEs) – at US$24 billion in 2019 accounting for close to 2 per cent of the world’s tourism foreign exchange earnings. However, the sector witnessed a slowdown in 2018-19 which was a global phenomenon as well.

 Share in International tourist arrival – India ranked 22nd in the world in terms of international tourist arrivals in 2018, improving from the 26th position in 2017. India now accounts for 1.24 per cent of world’s international tourist arrivals and 5 per cent of Asia & Pacific’s international tourist arrival.

 Country profile of tourists: Foreign tourists from the top 10 countries visiting India – Bangladesh, USA, UK, Sri Lanka, Canada, Australia, Malaysia, China, Germany and Russia – accounted for 65 percent of the total foreign tourist arrival in India. Majority of them (62.4%) visited India for leisure, holiday and recreation.

 Preferred Destinations: Top five states attracting foreign tourists are Tamil Nadu, Maharashtra, Uttar Pradesh, Delhi and Rajasthan, accounting for about 67 percent of the total foreign tourist visits.

Solution: D

India toppled Vietnam to become the second largest manufacturer of mobile phones globally following China in 2018 with a world share of 11 per cent. India could manufacture around 1.25 billion handsets across various segments by 2025, firing up an industry worth around $230 billion (ICEA-McKinsey report, 2018). Between 2013 and 2017, while India’s import of telecom handsets declined from US$4.47 billion to US$3.31 billion that of telecom parts increased steadily from US$1.34 billion to US$9.41 billion. At the same time exports of telecom handset increased significantly during the last three years. This pattern is consistent with the emergence of India as an assembly centre for telecom handsets.

Solution: D

All members of the United Nations agree to accept and carry out the decisions of the Security Council. While other organs of the United Nations make recommendations to member states, only the Security Council has the power to make decisions that member states are then obligated to implement under the Charter.

The presidency of the Council is held by each of the members in turn for one month, following the English alphabetical order of the Member States names.

It was established in 1945 and headquartered in New York.

https://www.un.org/securitycouncil/content/what-security-council

Solution: C

Global Ranking – In 2019, when Indian economy is the fifth largest in the world, our highest ranked bank—State Bank of India— is ranked a lowly 55th in the world and is the only bank to be ranked in the Global top 100. Countries like Sweden and Singapore, which are respectively about 1/6th and 1/8th the economic size of India, have thrice the number of global banks as India does.

After the 1980 nationalization, PSBs had a 91 per cent share in the national banking market with the remaining 9 per cent held by “old private banks”

(OPBs) that were not nationalized. However, the share of PSBs has reduced to 70% in recent times. Reduced stake has been absorbed by New Private Banks (NPBs) which came up in early 1990s after liberalization.

Frauds and NPAs: In 2019 public sector banks reported gross NPAs of Rs.7.4 lakh crore amounting to about 80 per cent of the NPAs of India’s banking system. The gross NPAs of PSBs amount to a significant 11.59 per cent of their gross advances, although a slightly encouraging trend is that the NPA ratio is below the 14.58 per cent ratio in 2018, raising hopes that the nonperforming asset problem has peaked and is now coming down.

Solution: D

Diagnostic to Financial Fragility: a methodology is developed to estimate a dynamic health index for an individual NBFC (referred to this index as the Health Score) and it was found that it can predict the constraints on external financing (or refinancing risk) faced by NBFC firms. This index is called as the Health Score, which ranges between -100 to +100 with higher scores indicating higher financial stability of the firm/sector.

The Health Score employs information on the key drivers of refinancing risk such as Asset Liability Management (ALM) problems, excess reliance on short-term wholesale funding (Commercial Paper) and balance sheet strength of the NBFCs.

The Health Score of a stressed NBFC was consistently low throughout the period 2011-19 with a sharp decrease in 2017-18. Hence, the Health Score of the stressed NBFC over the entire eight- year period provided significant early warning signal.

Solution: B

International Fund for Agricultural Development (IFAD) is an international financial institution and a specialized agency of the United Nations.

It established in 1977 and is one of the major outcomes of the 1974 World Food Conference. It is headquartered in Rome, Italy.

It invests in rural people by empowering them to reduce poverty, increase food security, improve nutrition and strengthen resilience.

https://www.ifad.org/en/about

Solution: D

The global output growth has been estimated to decline to 2.9 per cent in 2019 (from 3.6 per cent in 2018 and 3.8 per cent in 2017). (The World

Economic Outlook (WEO) Update of January 2020, IMF).

This is the slowest global output growth since the global financial crisis of 2009, arising from a geographically broad-based decline in manufacturing activity, trade and demand due to

1. Protectionist tendencies of China and the USA and rising USA-Iran geopolitical tensions.
2. In particular, global production in automobile industry fell sharply due to a decline in demand, which was caused by changes in technology and emission standards in many countries.
3. Muted inflation in advanced and emerging economies reflecting a slack in consumer demand.
4. Drop in growth of manufacturing exports from major economies.
5. Increasing trade barriers as well as trade uncertainty stemming from growing trade tensions also weakened business confidence and further limited trade.

Solution: B

GDP growth: – The National Statistical Office (NSO) has estimated India’s GDP to have grown at 4.8% in the first half (H1) (April September) of 2019-20, lower than 6.2% recorded in the second half (H2) (October-March) of 2018-19.

 On the supply side, the deceleration in GDP growth has been contributed generally by all sectors except ‘Agriculture and allied activities’ and ‘Public administration, defence, and other services’ whose growth in 2019-20 was comparatively higher than in 2018-19.

 On the demand side, the deceleration in GDP growth was caused by a decline in the growth of real fixed investment induced in part by a sluggish growth of real consumption.

Solution: D

Lithium-ion (Li-ion) batteries.

India has seen Four-fold jump in Li-ion batteries imports since 2016. India lacks manufacturing capacity and is the world’s largest importer of it.

Indian manufacturers source Li-ion batteries from China, Japan and South
Korea.

Indian Space Research Organisation (ISRO) manufactures such batteries but
volumes are limited, and they are restricted for use in space applications.

https://www.thehindu.com/sci-tech/science/towards-a-rechargeable-world/article29668204.ece

Solution: B

Mechanisation in Agriculture: With the shrinking land and water resources and labour force, the onus of increasing productivity rests on mechanization of production and post harvesting operations. Status:

 Farm Mechanisation – Lower farm mechanisation in India which is only about 40 per cent as compared to about 60 per cent in China and around 75 per cent in Brazil.

 Farm power – Government has decided to enhance farm power availability from 2.02 kW per ha (2016-17) to 4.0 kW per ha by the end of 2030 to cope up with increasing demand for food grains

 Indian tractor industry is the largest in the world, accounting for one-third of the total global production. A significant share of India’s tractor production is also exported. India, on average, exports 79,000 tractors annually; the primary markets being the African countries and ASEAN countries, having similar soil and agro climatic conditions.

 Growth – Farm mechanization market in India has been growing at a CAGR of 7.53 per cent during 2016-2018 due to thrust given by various government policies.

 Regional Disparities -Northern India has higher levels of mechanization compared to other regions. (Rice and Wheat crops having the largest extent of mechanization)

Solution: D

Tax revenue

 Budget 2019-20 estimated the Gross Tax Revenue (GTR) to be Rs. 24.61 lakhs crore which is 11.7 per cent of GDP.

 54 per cent of Gross Tax Revenue was estimated to accrue from direct taxes and the remaining 46 per cent from indirect taxes.

Non-Tax Revenue: Non-tax revenue constitutes about 1.3 per cent of GDP in 2018-19. The Budget 2019-20 aimed to raise Non-Tax revenue to 1.5 percent of the GDP.

Solution: A

The African Union (AU) is a continental body consisting of the 55 member states that make up the countries of the African Continent.

It was officially launched in 2002 as a successor to the Organisation of African Unity (OAU, 1963-1999).

Tropic of Cancer Passes through:

• Algeria
• Niger
• Libya
• Egypt
• Saudi Arabia
• UAE (Abu Dhabi)
• Oman
• India
• Bangladesh
• Myanmar
• China
• Taiwan
• Mexico
• Bahamas
• Western Sahara (area claimed by Morocco; Sahrawi Arab Democratic Republic)
• Mauritania
• Mali.

Solution: A

Trends in Expenditure:

 Composition of government expenditure reveals that expenditure on defence, salaries, pensions, interest payments and subsidies account for more than 60 % of total expenditure.

 Budget 2019-20 estimated total expenditure at 27.86 lakhs crore, comprising revenue expenditure of Rs 24.48 lakh crore and capital expenditure of Rs 3.39 lakh crore, which work out to be 11.6 per cent and 1.6 per cent of GDP, respectively.

The expenditure on major subsidies, which is a significant component of noncommitted revenue expenditure was pegged at 1.4 per cent of GDP in 2019-20 BE. The budgetary expenditure on major subsidies has shown a declining trend over the past years.

Transfer to States

 Transfer of funds to States comprises essentially of three components: share of States in Central taxes devolved to the States, Finance Commission Grants, and Centrally Sponsored Schemes (CSS), and other transfers.

 Both in absolute terms and as a percentage of GDP, total transfers to States have risen between 2014- 15 and 2018-19 RE.

 The Budget 2019-20 envisages an increase in expected grants and loan to States relative to 2018-19 RE, on account of higher requirements under compensation to States for revenue losses on roll out of GST, grants to rural and urban bodies and releases under Samagra Shiksha.

Solution: C

Current account Developments: An increase in CAD as a ratio to GDP worsens the BoP by drawing down on forex reserves or building the potential to worsen it by increasing the external debt burden.

CAD to GDP ratio has been significantly improving from 2009-14 to 2014-19 and remained lower (1.5 per cent of GDP) in the first half of 2019-20 as compared to 2018-19.

CAD/forex ratio increased from 10.6 per cent in 2013-14 to 13.9 percent in 2018-19 and caused the rupee to depreciate.

 The Nominal Exchange Rate (NER) has more or less stayed stable in 2019-20 it appears that the strength of the backup has not changed.

Depreciation in NER makes imports costlier besides disincentivizing foreign portfolio investors, which increases the pressure on BoP to worsen.

Merchandise trade deficit: It is the largest component of India’s current account deficit (CAD)

Solution: C

The initial electronic fund transfer system introduced in the late 1990s enabled an account holder of a bank to electronically transfer funds to another account holder with any other participating bank. Later in 2005, RBI has launched National Electronic Fund Transfer (NEFT) Scheme with advanced and secure features for facilitating one-to-one funds transfer requirements of individuals / corporate.

The Reserve Bank of India (RBI) has operationalized round-the-clock (24 X 7) availability of the National Electronic Fund Transfer (NEFT).

Customers can now transfer money through NEFT without paying any charges any time of the day whereas banks charge a fee for fund transfer through cheques and Demand Draft (DD).

There is no limit – either minimum or maximum – on the amount of funds that could be transferred using NEFT. However, maximum amount per transaction is limited to Rs.50,000/- for cash-based remittances within India and also for remittances to Nepal under the Indo-Nepal Remittance Facility Scheme.

Solution: A

Merchandise Export: An increase in merchandise exports to GDP ratio has a net positive impact on BOP position. Over the years the merchandise exports to GDP ratio has been declining, entailing a negative impact on the BoP position.

Slowdown of world output (due to escalation of global trade tensions) and appreciation in the real exchange rate have contributed to the declining exports to GDP ratio in recent times.

 In 2019-20 (April-November), in terms of value petroleum products is the largest exported commodity (Shown in Pie- chart below) while in terms of growth, it was drug formulations, biologicals.

 India’s largest export destination country continues to be the United States of America (USA) in 2019-20 (April-November), followed by United Arab Emirates (UAE), China and Hong Kong. (rest are shown in figure below)

Merchandise imports: An increase in the merchandise imports to GDP ratio has a net negative impact on the BoP position. Over the years the ratio has been declining for India entailing a net positive impact on the BoP position.

In the import basket of 2019-20 (April-November), crude petroleum had the largest share followed by gold and petroleum products. (rest are shown below in the image)

 Between 2011-12 and 2019-20, imports of Electronics grew the fastest from a negligible share to 3.6 per cent.

 China continues to be the largest exporter to India followed by USA, UAE and Saudi Arabia. In recent times, Hong Kong, Korea and Singapore have also emerged as significant exporters to India. (rest are shown below in figure)

Solution: B

Monetary Transmission: has been weak in 2019 on all three accounts: Rate Structure, Quantity of Credit, and Term Structure.

 Rate Structure:

 The Weighted Average Lending Rate (WALR) of SCBs has not declined at all in 2019 despite reduction of repo rate by 135 bps since January 2019.

 While there is no transmission of the cut in repo rate on outstanding loans of SCBs, the monetary transmission has been slightly better for fresh loans.

 The credit spread (difference between repo rate and WALR) is at the highest level in this decade.

 There has been only a slight reduction in the saving deposit rate.

 Reduction in the term deposit rate has been limited due to comparatively high rates of small savings scheme like Public Provident Fund (PPF).

Solution: C

Global Microscope on Financial Inclusion report:

• Produced by Economist Intelligence Unit (EIU), the research and analysis division of The Economist Group.
• Created in 1946 and is the world leader in global business intelligence.
• The Microscope report was first published in 2007 and was originally developed for countries in Latin American and Caribbean regions but in 2009 it was expanded into a global study.
• The report is a benchmarking index that assesses enabling environment for financial access in 55 countries across 5 categories.

Five parameters across which countries are assessed:

• Government and Policy Support.
• Products and Outlets.
• Stability and Integrity.
• Consumer Protection.
• Infrastructure.

Solution: B

Insurance Sector: The potential and performance of the insurance sector are generally assessed on the basis of two parameters, viz., insurance penetration and insurance density.

 The insurance density in India which was US$ 11.5 in 2001 has increased to US$ 74 in 2018 (Life- US$ 55 and Non-Life -US$ 19).

 Penetration for Life insurance has declined from 2011, whereas for the non-life insurance it has increased consistently. It is 2.74 percent for Life Insurance and 0.97 per cent for Non-Life insurance in 2018.

 Globally insurance penetration and density were 3.31 per cent and US$ 370 for the life segment and 2.78 per cent and US$ 312 for the non-life segment respectively in 2018.

Solution: B

Eco-sensitive zones:

• The Environment Protection Act, 1986 does not mention the word “Eco-sensitive Zones”.
• The section 3(2)(v) of the Act, says that Central Government can restrict areas in which any industries, operations or processes shall not be carried out or shall be carried out subject to certain safeguards
• Besides the section 5 (1) of this act says that central government can prohibit or restrict the location of industries and carrying on certain operations or processes on the basis of considerations like the biological diversity of an area, maximum allowable limits of concentration of pollutants for an area, environmentally compatible land use, and proximity to protected areas.
• The above two clauses have been effectively used by the government to declare Eco-Sensitive Zones or Ecologically Fragile Areas (EFA). The same criteria have been used by the government to declare No Development Zones.
• It aims to minimise the impact of urbanisation and other developmental activities, areas adjacent to protected areas.
• The purpose of declaring eco-sensitive zones around protected areas is for creating some kind of a ‘Shock Absorber’ for the protected area.
• They act as a transition zone from areas of high protection to areas involving lesser protection.

Solution: D

Trends in Inflation:

 Headline inflation – based on Consumer Price Index-Combined (CPI-C) has been sliding on a downward path since 2014. The average CPI-C headline inflation, which was 5.9 per cent in 2014- 15, has fallen continuously to around 3.4 per cent in 2018-19.

 Food inflation – a drastic fall has been observed from 6.4 per cent in 2014-15 to 0.1 per cent in 2018-19.

 Rural –urban Inflation: Since July 2018, CPI-Urban inflation has been consistently above CPI-Rural inflation. This is in contrast to earlier experience where rural inflation has been mostly higher than urban inflation. The divergence has been mainly on account of the differential rates of food inflation between rural and urban areas witnessed during this period. In 2019-20, there has been sudden change in the trend.

 Urban areas have registered much higher food inflation when compared to rural areas.

 The slide in rural inflation could be because of fall in the growth of real rural wages.

 The divergence in rural-urban inflation is not just observed in the food component but in other components also.

 In clothing and footwear, inflation in urban areas is higher than that observed in rural areas.

 For Pan, tobacco and intoxicants, Fuel and light and miscellaneous groups, inflation observed in rural areas was higher than that in the urban areas.

Solution: B

Indian Air quality Interactive Repository (IndAIR)

• It is being prepared by National Environmental Engineering Research Institute (NEERI) along with the Council of Scientific and Industrial Research (CSIR).
• It is the first comprehensive effort to enlist existing Indian research and analysis on air pollution, its causes and effects.
• IndAIR has archived scanned documents from pre-Internet times (1950-1999), research articles, reports and case studies, and over 2,000 statutes to provide the history of air pollution research and legislation in the country.
• The aim of the project is to make air quality research available to everyone. It presents these studies in an easily accessible web format for the media, researchers, and academics.

Solution: C

Mega Diversity – India is one of the 17 mega diverse countries in the world as per the Shannon-Weiner Index used in India State of the Forest Report 2019. The index is used for measuring species richness and abundance among various habitats. The Index shows that:

 Tropical Evergreen forest is high in Karnataka followed by Kerala.

 Semi-evergreen forest are high in Karnataka.

 Tropical moist deciduous forests cover is high in Arunachal Pradesh, Karnataka and Maharashtra.

 Tropical dry deciduous forest is high in Arunachal Pradesh

 Tropical Littoral and swamp forests are high in UP and

 Tropical thorn forests are high in Andhra Pradesh.

Solution: C

The all-India Household Consumer Expenditure Survey (CES) is traditionally a quinquennial (recurring every five years) survey conducted by the government’s National Sample Survey Office (NSSO).

It is designed to collect information on the consumption spending patterns of households across the country, both urban and rural.

The data gathered in this exercise reveals the average expenditure on goods and services and helps generate estimates of household Monthly Per Capita Consumer Expenditure (MPCE) as well as the distribution of households and persons over the MPCE classes.

Solution: D

The equation can be written as 38+336/24*2-18

Applying the BODMAS  rule we get,

= 38+14*2-18

= 38+28-18

=66-18

= 48

Solution: B

Given, smallest number = X

Average of five consecutive numbers will always be middle (3^rd) number

Therefore, third number in consecutive even numbers = (Smallest number + 4)

Therefore, X&4 will be the average number.

Solution: A

V (22^nd alphabet) -> S (19^th alphabet) -à(Difference is 3 positions)

X (24^th alphabet) -> U (21^st alphabet) à (Difference is 3 positions)

U(21^st alphabet) -> R(18^th alphabet) à (Difference is 3 positions)

So on.

Therefore, OHPRQ can be coded as LEMON

Solution: D

As per their place in the English Alphabet, H is in 8^th place, E is in 5^th place and N is 14^th place.

Now adding the position of all the positions, i.e 8+5+14 we get 27.

Therefore, code for ASK = (1+19+11) =31.

Answer. B.

School safety includes safety also from school to home. Hence 1 is wrong. School safety has been talked about at Hyogo Conference, hence 2 is correct. Hence B