DAY – 5(InstaTest-5): Insta 70 Days Revision Plan-2021: Topic – ECONOMY, Subject-wise Test 12, Test 13 and Test 25 Revision, Textbook-wise Tests 4 and July 2020 CA

Solution: C

Index of Industrial Production data or IIP as it is commonly called is an index that tracks manufacturing activity in different sectors of an economy. The IIP number measures the industrial production for the period under review, usually a month, as against the reference period. IIP is a key economic indicator of the manufacturing sector of the economy. There is a lag of six weeks in the publication of the IIP index data after the reference month ends. IIP index is currently calculated using 2011-2012 as the base year.

IIP Index Components:

Electricity, crude oil, coal, cement, steel, refinery products, natural gas, and fertilisers are the eight core industries that comprise about 40 percent of the weight of items included in the Index of Industrial Production. Mining, manufacturing, and electricity are the three broad sectors in which IIP constituents fall.

IIP is published by Central Statistics office (CSO).

https://www.financialexpress.com/what-is/index-of-industrial-production-iip-meaning/1616261/

Solution: B

External commercial borrowing forms the component of capital account. Other measures would result in current account surplus.

Solution: A

Through Full Capital account convertibility a company or person can withdraw long term investments from a country at any point of time. Thus, bringing economic instability. Hence Statement 2 is incorrect.

Solution: D

The Fiscal Responsibility and Budget Management Act (FRBM Act), 2003, establishes financial discipline to reduce fiscal deficit.

When was the FRBM Act enacted? Who introduced it in India?

The FRBM Bill was introduced by the then finance minister, Yashwant Sinha, in 2000. The Bill, approved by the Union Cabinet in 2003, became effective from July 5, 2004.

What are the objectives of the FRBM Act?

The FRBM Act aims to introduce transparency in India’s fiscal management systems. The Act’s long-term objective is for India to achieve fiscal stability and to give the Reserve Bank of India (RBI) flexibility to deal with inflation in India. The FRBM Act was enacted to introduce more equitable distribution of India’s debt over the years.

Key features of the FRBM Act

The FRBM Act made it mandatory for the government to place the following along with the Union Budget documents in Parliament annually:

1. Medium Term Fiscal Policy Statement
2. Macroeconomic Framework Statement
3. Fiscal Policy Strategy Statement

The FRBM Act proposed that revenue deficit, fiscal deficit, tax revenue and the total outstanding liabilities be projected as a percentage of gross domestic product (GDP) in the medium-term fiscal policy statement.

Solution: C

Most-Favoured-Nation (MFN)

Under the World Trade Organisation (WTO) agreements, countries cannot normally discriminate between their trading partners. If any country grants one country a special favour such as a lower customs duty rate for one of their products the same would need to be extended to all other WTO members. This principle is known as most-favoured-nation (MFN) treatment.

MFN is so important a principle that it is the first article of the General Agreement on Tariffs and Trade (GATT), which governs trade in goods. MFN is also a priority in the General Agreement on Trade in Services (GATS) (Article 2) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (Article 4). Together, those three agreements cover all three main areas of trade handled by the WTO.

Some exceptions, however, are allowed under WTO regime. For example, countries can set up a free trade agreement that applies only to goods traded within the group — discriminating against goods from outside. Or they can give developing countries special access to their markets. Or a country can raise barriers against products that are considered to be traded unfairly from specific countries. And in services, countries are allowed, in limited circumstances, to discriminate. But the agreements only permit these exceptions under strict conditions. In general, MFN means that every time a country lowers a trade barrier or opens up a market, it has to do so for the same goods or services for all its trading partners whether developed or developing.

MFN at the same time allows some exemptions as well:

Right to engage in Free Trade Agreements: This means members can participate in regional trade agreements or free trade agreements where there is discrimination between member countries and non-member countries.

Members can give developing countries special and differential treatment like greater market access. This special concession are in different forms like reduced tariff rates from developing country imports, concessions that allows developing countries to give subsidies to their production sectors etc.

Solution: B

Who are the developing countries in the WTO?

China became a WTO member in 2001. By 2011, China became the second-largest economy in GDP terms, the first largest merchandise exporter, the fourth largest commercial services exporter and the first destination for inward FDI among developing countries.

So if China is forced to take on the duties of a developed country and forego the benefits of a developing country, the West could soon ask other developing countries that are ahead of China (at least in per capita terms) to do the same.

Who are the developing countries in the WTO?

There are no WTO definitions of “developed” and “developing” countries. Hence Statement 1 is incorrect.

Members announce for themselves whether they are “developed” or “developing” countries.

However, other members can challenge the decision of a member to make use of provisions available to developing countries.

What are the advantages of “developing country” status?

Developing country status in the WTO brings certain rights. Developing country status ensures special and differential treatment (S&DT) or provisions which allow them more time to implement agreements and commitments, include measures to increase trading opportunities, safeguard their trade interests, and support to build capacity to handle disputes and implement technical standards.

Solution: B

The Food Corporation of India was setup under the Food Corporation’s Act 1964 , in order to fulfill following objectives of the Food Policy: Hence Statement 1 is incorrect.

• Effective price support operations for safeguarding the interests of the farmers.
• Distribution of foodgrains throughout the country for public distribution system.
• Maintaining satisfactory level of operational and buffer stocks of foodgrains to ensure National Food Security

Since its inception, FCI has played a significant role in India’s success in transforming the crisis management oriented food security into a stable security system.

In its 50 years of service to the nation, FCI has played a significant role in India’s success in transforming the crisis management oriented food security into a stable security system. FCI’s Objectives are:

• To provide farmers remunerative prices
• To make food grains available at reasonable prices, particularly to vulnerable section of the society
• To maintain buffer stocks as measure of Food Security
• To intervene in market for price stabilization. Hence Statement 2 is correct.

Solution: D

All the statements given above are correct.

Drug Price Control Orders (DPCO) are issued by the Government, in exercise of the powers conferred under section 3 of the Essential Commodities Act, 1955, for enabling the Government to declare a ceiling price for essential and life saving medicines (as per a prescribed formula) so as to ensure that these medicines are available at a reasonable price to the general public.

National Pharmaceutical Pricing Policy (NPPP) is the policy governing price control and DPCO is the order by which price control is enforced. The Drug Price Control Orders are issued by Ministry of Chemicals and Fertilizers, which is the main nodal administrative ministry for pharmaceutical companies. They are issued under the “Essential Commodities Act 1955 whereby certain medicines could be declared to be essential commodities.

Drug prices are monitored and controlled by the National Pharmaceutical Pricing Authority (NPPA). All the powers of Government of pricing according to Essential Commodities Act have been delegated to it. Under DPCO, 2013 the powers to review are vested with the Government.  Hence, the Department of Pharmaceuticals is the reviewing authority whenever pharmaceutical companies file review petitions against any price fixation done by NPPA. (Orders issued by Department of Pharmaceuticals on various review petitions may be seen here.) Policy related matters are also dealt by the Department of Pharmaceuticals.

http://arthapedia.in/index.php?title=Drug_Price_Control_Orders_(DPCO)

Solution: B

Banking Correspondents (BCs) are individuals/entities engaged by a bank in India (commercial banks, Regional Rural Banks (RRBs) and Local Area Banks (LABs)) for providing banking services in unbanked / under-banked geographical territories. A banking correspondent works as an agent of the bank and substitutes for the brick and mortar branch of the bank.

BCs engage in

• identification of borrowers;
• collection and preliminary processing of loan applications including verification of primary information/data;
• creating awareness about savings and other products and education and advice on managing money and debt counselling;
• processing and submission of applications to banks;
• promoting, nurturing and monitoring of Self Help Groups/ Joint Liability Groups/Credit Groups/others;
• post-sanction monitoring;
• follow-up for recovery,
• disbursal of small value credit,
• recovery of principal / collection of interest
• collection of small value deposits
• sale of micro insurance/ mutual fund products/ pension products/ other third party products and
• receipt and delivery of small value remittances/ other payment instruments.

Solution: D

Both the statements are correct.

Fiscal Responsibility and Budget Management (FRBM) became an Act in 2003. The objective of the Act is to ensure inter-generational equity in fiscal management, long run macroeconomic stability, better coordination between fiscal and monetary policy, and transparency in fiscal operation of the Government.

The Government notified FRBM rules in July 2004 to specify the annual reduction targets for fiscal indicators. The FRBM rule specifies reduction of fiscal deficit to 3% of the GDP by 2008-09 with annual reduction target of 0.3% of GDP per year by the Central government. Similarly, revenue deficit has to be reduced by 0.5% of the GDP per year with complete elimination to be achieved by 2008-09. It is the responsibility of the government to adhere to these targets. The Finance Minister has to explain the reasons and suggest corrective actions to be taken, in case of breach.

FRBM Act provides a legal institutional framework for fiscal consolidation. It is now mandatory for the Central government to take measures to reduce fiscal deficit, to eliminate revenue deficit and to generate revenue surplus in the subsequent years. The Act binds not only the present government but also the future Government to adhere to the path of fiscal consolidation. The Government can move away from the path of fiscal consolidation only in case of natural calamity, national security and other exceptional grounds which Central Government may specify.

Further, the Act prohibits borrowing by the government from the Reserve Bank of India, thereby, making monetary policy independent of fiscal policy. The Act bans the purchase of primary issues of the Central Government securities by the RBI after 2006, preventing monetization of government deficit. The Act also requires the government to lay before the parliament three policy statements in each financial year namely Medium Term Fiscal Policy Statement; Fiscal Policy Strategy Statement and Macroeconomic Framework Policy Statement.

http://arthapedia.in/index.php?title=Fiscal_Responsibility_and_Budget_Management_(FRBM)_Act

Solution: A

The Ministry of Environment, Forest and Climate Change notified the E-Waste Management Rules, 2016 on 23 March 2016 in supersession of the e-waste (Management & Handling) Rules, 2011.

Some of the additional provisions under E-Waste (Management) Rules, 2016 are:

Manufacturer, dealer, refurbisher and Producer Responsibility Organization (PRO) have been introduced as additional stakeholders in the rules. Hence, statement 1 is correct.

Compact Fluorescent Lamp (CFL) and other mercury containing lamp brought under the purview of rules. Hence, statement 2 is correct.

Provision for Pan India EPR Authorization by CPCB has been introduced replacing the state wise EPR authorization.

Hence, statement 3 is incorrect.

For more provisions, it is advised to refer: https://vikaspedia.in/energy/environment/waste-management/e-waste-management/e-waste-management-rules-2016

https://archive.pib.gov.in/documents/rlink/2016/mar/p201632302.pdf

Source: Yojana, January 2020.

Solution: B

Hence, statement 1 is incorrect.

Post-Consumer Recycled (PCR) garbage is used in creating new polymer modified asphalt roads. These are found to be more resistant to erosion from weather and vehicle use, and the number of new potholes formed is reduced. Hence, statement 2 is correct.

Hence, statement 3 is correct.

Source: Yojana, January 2020

Solution: A

Solution: C

Global Initiative for Academic Networks (GIAN) in Higher Education aims at tapping the talent pool of scientists and entrepreneurs internationally to encourage their engagement with the institutes of Higher Education in India so as to augment the country’s existing academic resources, accelerate the pace of quality reform, and elevate India’s scientific and technological capacity to global excellence. GIAN is envisaged to catalyse higher education institutions in the country, and that it will initially include all IITs, IIMs, Central Universities, IISc Bangalore, IISERs, NITs and IIITs subsequently cover good State Universities where the spinoff is vast.

Hence, statement 1 is correct.

The Scheme for Promotion of Academic and Research Collaboration (SPARC) is a Ministry of Human Resource Development initiative that aims at improving the research ecosystem of India’s Higher Educational Institutions by facilitating academic and research collaborations between Indian Institutions and the best institutions in the world.

The Government in August 2018 had sanctioned the scheme at a total cost of Rs.418 Cr for implementation up to 31.3.2020. Indian Institute of Technology Kharagpur is the National Coordinating Institute to implement the SPARC programme.

Source: Yojana, February 2020

Solution: C

Pradhan Mantri Matru Vandana Yojana  (PMMVY) is a Maternity Benefit Programme that is implemented in all the districts of the country in accordance with the provision of the National Food Security Act, 2013.

Objectives

1. Providing partial compensation for the wage loss in terms of cash incentive s so that the woman can take adequate rest before and after delivery of the first living child.
2. The cash incentive provided would lead to improved health seeking behaviour amongst the Pregnant Women and Lactating Mothers (PW& LM).

Target beneficiaries

1. All Pregnant Women and Lactating Mothers, excluding PW&LM who are in regular employment with the Central Government or the State Governments or PSUs or those who are in receipt of similar benefits under any law for the time being in force.
2. All eligible Pregnant Women and Lactating Mothers who have their pregnancy on or after 01.01.2017 for first child in family.
3. The date and stage of pregnancy for a beneficiary would be counted with respect to her LMP date as mentioned in the MCP card.
4. Case of Miscarriage/Still Birth :
   • A beneficiary is eligible to receive benefits under the scheme only once.
   • In case of miscarriage/still birth, the beneficiary would be eligible to claim the remaining instalment(s) in event of any future pregnancy.
   • Thus, after receiving the 1st instalment, if the beneficiary has a miscarriage, she would only be eligible for receiving 2nd and 3rd instalment in event of future pregnancy subject to fulfilment of eligibility criterion and conditionalities of the scheme. Similarly, if the beneficiary has a miscarriage or still birth after receiving 1 st and 2nd instalments, she would only be eligible for receiving 3rd instalment in event of future pregnancy subject to fulfilment of eligibility criterion and conditionalities of the scheme.
5. Case of Infant Mortality: A beneficiary is eligible to receive benefits under the scheme only once. That is, in case of infant mortality, she will not be eligible for claiming benefits under the scheme, if she has already received all the instalments of the maternity benefit under PMMVY earlier.
6. Pregnant and Lactating AWWs/ AWHs/ ASHA may also avail the benefits under the PMMVY subject to fulfilment of scheme conditionalities.

https://vikaspedia.in/social-welfare/women-and-child-development/women-development-1/pradhan-mantri-matru-vandana-yojana

Source: Yojana, March 2020

Solution: D

National Animal Disease Control Programme for FMD and Brucellosis:

The Government has launched a new scheme National Animal Disease Control Programme for FMD and Brucellosis with a financial outlay of Rs. 13,343.00 crore for five years (2019-20 to 2023-24) by vaccinating 100% cattle, buffalo, sheep, goat and pig population for FMD and 100% bovine female calves of 4-8 months of age for brucellosis to prevent loss of Rs. 50,000 crore to the Government exchequer and also to increase the economic output of farmers. The mission mode approach for eradication of these diseases is the biggest step any country of the world has ever taken either for human or animal vaccination programme to control any disease. This programme combined with providing unique Pashu Aadhar to 535 million animals (Cattle, buffalo, sheep, goat, and pig).

Source: Yojana March, 2020

Solution: A

Which banks are insured by the DICGC?

Commercial Banks : All commercial banks including branches of foreign banks functioning in India, local area banks and regional rural banks are insured by the DICGC.

Cooperative Banks : All State, Central and Primary cooperative banks, also called urban cooperative banks, functioning in States / Union Territories which have amended the local Cooperative Societies Act empowering the Reserve Bank of India (RBI) to order the Registrar of Cooperative Societies of the State / Union Territory to wind up a cooperative bank or to supersede its committee of management and requiring the Registrar not to take any action regarding winding up, amalgamation or reconstruction of a co-operative bank without prior sanction in writing from the RBI are covered under the Deposit Insurance Scheme. At present all co-operative banks are covered by the DICGC.

Primary cooperative societies are not insured by the DICGC. Hence, statement 3 is incorrect.

https://m.rbi.org.in/Scripts/FAQView.aspx?Id=64

Solution: C

The Democracy Index is an index compiled by the Economist Intelligence Unit (EIU), the research division of the Economist Group, a UK-based private company which publishes the weekly newspaper The Economist. The index is self-described as intending to measure the state of democracy in 167 countries, of which 166 are sovereign states and 164 are UN member states.

Solution: A

Like the Directive Principles, the fundamental duties are also nonjusticiable. The Constitution does not provide for their direct enforcementby the courts. Moreover, there is not legal sanction against their violation. However, the Parliament is free to enforce them by suitable legislation.

Unlike some of the Fundamental Rights which extend to all persons whether citizens or foreigners , the Fundamental Duties are confined to citizens only and do not extend to foreigners. (Note the difference between citizens and residents)

Solution: B

The provisions of Part IX of the constitution relating to the Panchayats are not applicable to the Fifth Schedule areas. However, the Parliament may extend these provisions to such areas, subject to such exceptions and modifications as it may specify. Under this provision, the Parliament has enacted the “Provisions of the Panchayats (Extension to the Scheduled Areas) Act”, 1996, popularly known as the PESA Act or the Extension Act.

At present (2016), ten states have Fifth Schedule Areas. These are: Andhra Pradesh, Telangana, Chhatisgarh, Gujarat, Himachal Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Odisha and Rajasthan. All the ten states have enacted requisite compliance legislations by amending the respective Panchayati Raj Acts.

Solution: B

National Logistics Efficiency and Advancement Predictability and Safety Act (NLEAPS)

• The Ministry of Commerce and Industry is considering replacing the Multimodal Transportation of Goods Act, 1993 (MMTG) with a National Logistics Efficiency and Advancement Predictability and Safety Act (NLEAPS).
• This law tends to define various participants of the logistics space and create a light regulatory ecosystem.
• Multimodal transportation includes a combination of more than one mode of movement, such as rail, road or sea, for end-to-end delivery of goods.
• It aims to reduce the logistics cost from the present 14% of the Gross Domestic Product (GDP) to less than 10% of GDP.

Solution: B

Governor:

• A governor is a nominal head of a state, unlike the Chief Minister who is the real head of a state in India.
• According to 7th Constitutional Amendment Act 1956, the same person can be the Governor of two or more states.
• Appointment: The governors and lieutenant-governors are appointed by the president.

 Removal:

• The term of governor’s office is normally 5 years but it can be terminated earlier by: Dismissal by the president (usually on the advice of the prime minister of the country), at whose pleasure the governor holds office or Resignation by the governor. Thus, the term is subject to pleasure of the president.
• There is no provision of impeachment, as it happens for the president.

Some discretionary powers are as follows:

• Can dissolve the legislative assembly if the chief minister advices him to do following a vote of no confidence. Following which, it is up to the Governor what he/ she would like to do.
• Can recommend the president about the failure of the constitutional machinery in the state.
• Can reserve a bill passed by the state legislature for president’s assent.
• Can appoint anybody as chief minister If there is no political party with a clear-cut majority in the assembly.
• Determines the amount payable by the Government of Assam, Meghalaya, Tripura and Mizoram to an autonomous Tribal District Council as royalty accruing from licenses for mineral exploration.
• Can seek information from the chief minister with regard to the administrative and legislative matters of the state.
• Can refuse to sign to an ordinary bill passed by the state legislature.

Solution: D

United Nations Population Fund (UNFPA) has released the State of the World Population 2020 report, titled ‘Against my will: defying the practices that harm women and girls and undermine equality’.

Solution: D

Article 164 (1A) of the Constitution prescribed that the total number of Ministers, including the Chief Minister, in the Council of Ministers in a State shall not exceed 15% of the total number of members of the Legislative Assembly of that State.

This provision was introduced through the 91st Constitution (Amendment) Act, 2003.

Exceptions: Provided that the number of Ministers, including the Chief Minister in a State shall not be less than twelve.

Article 164 (2) provides that the Council of Ministers shall be collectively responsible to the State Legislative Assembly.

Article 164 (4) provides that a person can remain as Minister without being a member of the state legislature for a period of six consecutive months.

Solution: D

National Testing Agency:

National Testing Agency (NTA) is a registered society under the Societies Registration Act, 1860. Hence, statement 1 is correct.

National Testing Agency (NTA) as an autonomous and self-sustained premier testing organization to conduct entrance examinations for Higher Education Institutions (HEIs) in the country.

• To conduct efficient, transparent and international standards tests in order to assess the competency of candidates for admission and recruitment purposes. Hence, statement 3 is correct.

Constitution:

• NTA will be chaired by an eminent educationist appointed by Ministry of Education. Hence, statement 2 is incorrect.
• The CEO will be the Director General to be appointed by the Government.
• There will be a Board of Governors comprising members from user institutions.
• The Director General will be assisted by 9 verticals headed by academicians/ experts.

Finances:

NTA will be given a one-time grant of Rs.25 crore from the Government of India to start its operation in the first year. Thereafter, it will be financially self-sustainable.

Solution: D

If a pipe fills the tank in ‘x’ hrs.

If there is a leakage in the bottom,  the tank will be emptied in ‘y’ hrs.

The time taken by the leak to empty the full tank = xy/(y-x) hrs

= (4 x 4.5)/4.5 – 4)

= 18/0.5 = 36 hrs

Solution: C

Let Bharat takes x days.

Then, Amar takes 2x days.

By the given data:

x = 2x-90

or x = 90.

Therefore, Bharat takes 90 days and Amar takes 180 days.

Part of the work done by them in one day when working together

= 1/90 + 1/180

= (2+1)/180 = 1/60

Therefore, total time required = 60 days

Solution: A

If ‘w₁‘ work is done by ‘m₁‘ men by working for ‘h₁‘ hours per day in ‘d₁‘ days & ‘w₂‘ is work done by men ‘m₂‘ working for ‘h₂‘ hours per day in ‘d₂‘ days, then

m₁d₁h₁/w1 = m₂d₂h₂/w2

or 6x7x7/12 = 14xd₂x9/18

or d_{2 = (}6x7x7x18)/(12x14x9)

or d₂ = 3.5 days

Solution: C

Work done in one day when A and B work together = 1/6

Work done in one day by A alone = 1/14.

Therefore, work done in one day by B alone = 1/6 – 1/14 = (7-3)/42 = 4/42.

Total number of days required by B alone to complete the work

= 42/4 = 10.5 hrs

Ans. C.

B and D are not in tune with what is being conveyed in the passage. A is extraneous to the issue under discussion in the passage. C is the most accurate inference.