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Question 1 of 5
1. Question
The Scheduled Commercial Bank’s NPAs can be recovered through which of the following channels?
- SARFAESI Act
- Debts Recovery Tribunals(DRTs)
- Lok Adalats
- Insolvency and Bankruptcy Code (IBC)
Select the correct answer code:
Correct
Solution: d)
Incorrect
Solution: d)
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Question 2 of 5
2. Question
Consider the following statements regarding Monetary Policy.
- The Reserve Bank of India (RBI) is vested with the responsibility of conducting monetary policy under the provisions of Agreement on Monetary Policy Framework Act.
- The primary objective of monetary policy is to maintain price stability and achieve growth.
- The inflation target is set by the Reserve Bank of India in consultation with Government of India, once in every five years.
Which of the above statements is/are correct?
Correct
Solution: b)
Monetary policy refers to the policy of the central bank with regard to the use of monetary instruments under its control to achieve the goals specified in the Act.
The Reserve Bank of India (RBI) is vested with the responsibility of conducting monetary policy. This responsibility is explicitly mandated under the Reserve Bank of India Act, 1934.
The primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth. Price stability is a necessary precondition to sustainable growth.
In May 2016, the Reserve Bank of India (RBI) Act, 1934 was amended to provide a statutory basis for the implementation of the flexible inflation targeting framework.
The amended RBI Act also provides for the inflation target to be set by the Government of India, in consultation with the Reserve Bank, once in every five years.
Prior to the amendment in the RBI Act in May 2016, the flexible inflation targeting framework was governed by an Agreement on Monetary Policy Framework between the Government and the Reserve Bank of India of February 20, 2015.
Incorrect
Solution: b)
Monetary policy refers to the policy of the central bank with regard to the use of monetary instruments under its control to achieve the goals specified in the Act.
The Reserve Bank of India (RBI) is vested with the responsibility of conducting monetary policy. This responsibility is explicitly mandated under the Reserve Bank of India Act, 1934.
The primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth. Price stability is a necessary precondition to sustainable growth.
In May 2016, the Reserve Bank of India (RBI) Act, 1934 was amended to provide a statutory basis for the implementation of the flexible inflation targeting framework.
The amended RBI Act also provides for the inflation target to be set by the Government of India, in consultation with the Reserve Bank, once in every five years.
Prior to the amendment in the RBI Act in May 2016, the flexible inflation targeting framework was governed by an Agreement on Monetary Policy Framework between the Government and the Reserve Bank of India of February 20, 2015.
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Question 3 of 5
3. Question
The actual liabilities of the Union government include which of the following
- Borrowings by PSUs
- Loans taken for the recapitalisation of banks
- Capital expenditures of various Ministries.
Select the correct answer code:
Correct
Solution: a)
In addition to the borrowings by PSUs, the actual liabilities of the government would include loans taken for the recapitalisation of banks.
Capital expenditure creates assets for the government and causes reduction in liabilities for the government.
Incorrect
Solution: a)
In addition to the borrowings by PSUs, the actual liabilities of the government would include loans taken for the recapitalisation of banks.
Capital expenditure creates assets for the government and causes reduction in liabilities for the government.
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Question 4 of 5
4. Question
Consider the following statements regarding Primary deficit.
- The primary deficit is the sum of Fiscal deficit and interest payments.
- It shows the net increase in the government’s indebtedness due to the current year’s fiscal operations.
- It includes the burden of the past debt.
Which of the above statements is/are correct?
Correct
Solution: b)
Primary Deficit = Fiscal Deficit – Interest Payments
The total borrowing requirement of the government includes the interest commitments on accumulated debts.
Primary deficit reflects the extent to which such interest commitments have compelled the government to borrow in the current period.
It excludes the burden of the past debt and shows the net increase in the government’s indebtedness due to the current year’s fiscal operations. A reduction in primary deficit is reflective of government’s efforts at bridging the fiscal gap during a financial year.
Incorrect
Solution: b)
Primary Deficit = Fiscal Deficit – Interest Payments
The total borrowing requirement of the government includes the interest commitments on accumulated debts.
Primary deficit reflects the extent to which such interest commitments have compelled the government to borrow in the current period.
It excludes the burden of the past debt and shows the net increase in the government’s indebtedness due to the current year’s fiscal operations. A reduction in primary deficit is reflective of government’s efforts at bridging the fiscal gap during a financial year.
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Question 5 of 5
5. Question
With reference to Union Budget, which of the following is/are covered under Capital receipts?
- Funds from Public Provident Fund
- Interest and dividend on government investment
- Disinvestment
- Revenue from Income tax
Select the correct answer code:
Correct
Solution: c)
Government receipts which either (i) create liabilities (e.g. borrowing) or (ii) reduce assets (e.g. disinvestment) are called capital receipts. Thus when govt. raises funds either by incurring a liability or by disposing off its assets, it is called a capital receipt.
Two examples of Capital Receipts which create liability are Borrowing and raising of funds from Public Provident Fund and Small savings deposits.
Two examples of Capital Receipts which reduce assets are Disinvestment and Recovery of Loans. Disinvestment by government means selling a part or whole of its shares of public sector undertakings. Funds raised from disinvestment reduce government assets.
Incorrect
Solution: c)
Government receipts which either (i) create liabilities (e.g. borrowing) or (ii) reduce assets (e.g. disinvestment) are called capital receipts. Thus when govt. raises funds either by incurring a liability or by disposing off its assets, it is called a capital receipt.
Two examples of Capital Receipts which create liability are Borrowing and raising of funds from Public Provident Fund and Small savings deposits.
Two examples of Capital Receipts which reduce assets are Disinvestment and Recovery of Loans. Disinvestment by government means selling a part or whole of its shares of public sector undertakings. Funds raised from disinvestment reduce government assets.
