UPSC Prelims 2018 Analysis

Explanation

Air India was nationalised in 1953. The Government of India passed the Air Corporation Act in 1953 and purchased a majority stake in the carrier from Tata Sons.

Imperial Bank of India was nationalised in 1955, with RBI taking a 60 per cent stake, and its name was changed to SBI.

The first democratically elected communist party government was formed in a state in India in 1957. In the first general election held to the Kerala state legislative assembly in 1957, the Communist Party of India won 60 seats out of 126.

Goa became an independent state of India on 18 Dec 1961, and Goa was freed from the Portuguese. On Dec 18 1961, Operation Vijay was launched by the Indian Government to bring back Goa into India.

Therefore correct chronological sequence is 3-2-1-4

Explanation

Statement 1 is incorrect In 2013, NFSA was enacted to provide food security to 67% of the population in the form of highly subsidized food grains at Rs. 2 and 3 per Kg for wheat and rice respectively. Beneficiaries are identified using Socio-economic Caste Census (SECC) methodology so even non-BPL will also benefit.

Statement 2 is correct Under the NFSA, to issue ration cards the eldest woman of a household aged 18 years or above would be considered as head. Hence, this statement is correct.

Statement 3 is incorrect The Act does provide for pregnant women and lactating mothers to receive a take-home ration. However, it does not specify the calorie content should be 1600 calories per day. This makes the given statement incorrect.

Explanation

List of Tax-exempted Goods are;

• Several food items have been exempted from any of the tax slabs. Fresh meat, fish, chicken, eggs, milk, buttermilk, curd, natural honey, fresh fruits and vegetables, flour, besan, bread, all kinds of salt, jaggery and hulled cereal grains have been kept out of the taxation system.

• Bindi, sindoor, kajal, Palmyra, human hair and bangles also do not attract any tax under GST.

• Drawing or colouring books alongside stamps, judicial papers, printed books, newspapers also fall under this category.

Explanation

Capital formation This refers to the net increase in the capital stock of a country, which includes physical capital (machinery, buildings) and human capital (skills, education).

High savings A high savings economy implies people are saving a significant portion of their income. Ideally, these savings are then invested to create new capital.

Capital-output ratio (COR) This ratio measures the amount of additional capital needed to produce one unit of additional output (GDP). A high COR indicates that even with high savings and investment, the increase in output might be low.

Explanation

Human capital formation refers to the process of increasing the stock of knowledge, skills, and experiences that people in a country possess. This intangible wealth is what makes a workforce productive and adaptable. Therefore, statement 2 and 4 are correct.

Explanation

The National Payments Corporation of India (NPCI)

The NPCI operates the National Financial Switch (NFS), which is the largest network connecting ATMs across various banks in India. This network facilitates inter-bank transactions and allows users to withdraw cash from ATMs even if they don't belong to the bank that owns the ATM.

Explanation

The Cabinet Committee on Economic Affairs (CCEA) announces the Minimum Support Price (MSP) for certain staple crops and some key commercial crops.

Barley, Finger millet, Groundnut, and Sesamum are crops for which MSP is typically announced by the government. These are important food or oilseed crops and support farmer income.

Areca nut and Coffee are considered cash crops and MSP is generally not announced for them. Turmeric can be classified as a spice crop, and MSP announcements for spices is not very common,

Therefore, the most options for which CCEA announces MSP are 2, 4, 5 and 6.

Explanation

Capital Adequacy Ratio (CAR) This is a crucial regulatory tool used by central banks to ensure banks have sufficient capital reserves to absorb potential financial losses. It acts as a buffer to protect depositors' funds in case of loan defaults or other financial risks.

CAR is not decided by individual banks The CAR is mandated and regulated by the central bank of a country, in India's case, the Reserve Bank of India (RBI). The RBI sets a minimum CAR that all banks operating in the country must adhere to. This ensures a level playing field and safeguards the financial system's stability.

Explanation

Domestic production of edible oil in 2018 was around 100 Lakh Metric tons (LMT) while import was around 150 LMT. Hence, statement 1 is correct

The Government of India does impose customs duties on imported edible oils. The rates of these duties may vary depending on various factors, including the type of edible oil, international market conditions, and government policies aimed at promoting domestic production or protecting domestic producers. Hence, statement 2 is incorrect.

Explanation

Statement 1 is correct Bharat Interface for Money (BHIM) is a payment app that lets you make simple, easy, and quick transactions using Unified Payments Interface (UPI). You can make direct bank payments to anyone on UPI using their UPI ID or scanning their QR with the BHIM app. You can also request money through the app from a UPI ID.

Statement 2 is not correct From a consumer point of view, three levels of authentication are required in this app.

1. The device ID and mobile number,
2. The bank account which you are linking to this app, and
3. The UPI Pin which is needed to complete the transaction.

There are three factors of authentication versus a normal net banking app or a chip-in debit card which will only have two factors of authentication.

Explanation

The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report indeed recommended a debt-to-GDP ratio of 60% for the general (combined) government by 2023, with 40% for the Central Government and 20% for the State Governments. This recommendation aimed to ensure fiscal discipline and sustainability. Hence, statement 1 is correct.

The Central Government has domestic liabilities of 46.1% of GDP (2016-17) and as a percentage of GDP, States liabilities increased to 23.2 per cent at end-March 2016. Hence, statement 2 is not correct.

The Constitution of India empowers State Governments to borrow only from domestic sources (Article 293(1)). Further, as long as a State has outstanding borrowings from the Central Government, it is required to obtain the Central Government's prior approval before incurring debt (Article 293 (3)). Hence, statement 3 is correct.

Explanation

The World Trade Organization (WTO) has an agreement called the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

TRIPS requires member countries to protect Geographical Indications (GIs). GIs identify a product as originating from a specific geographical location where its qualities or reputation are essentially due to that origin.

India enacted the Geographical Indications of Goods (Registration and Protection) Act, 1999 to comply with its obligations under the TRIPS agreement of the WTO.

Explanation

Opportunity cost It refers to the potential benefit an individual or entity gives up when choosing one option over another. In simpler terms, it's what you miss out on by making a specific choice.

Free commodity and government When the government provides a good or service for free, it doesn't eliminate the opportunity cost. The resources used to provide that free good could have been used for something else.

Taxpayers bear the burden The resources for "free" public goods come from somewhere, usually taxpayer money. So, the opportunity cost isn't eliminated, it's simply shifted. Taxpayers give up the potential use of those resources in exchange for a free good or service.

In essence, while the individual consumer might not directly pay for the good, the cost is still there and borne by the tax-paying public.

Explanation

Legal tender refers to money that is legally recognized for the payment of debts. This means that if a creditor offers you legal tender to settle a debt, you are legally obligated to accept it. Hence, option 'B' is the correct answer.

Explanation

The govt has been infusing large amounts in seven public sector banks through recapitalisation bonds but this not has been steady as statement 1 says, so, statement 1 is incorrect.

Statement 2 is correct. To put the public sector banks in order, the merger of associate banks with the parent State Bank of India has been affected. For example, the merger of SBI associate banks will result in the creation of a stronger merger entity.

Explanation

The equalization levy on online advertisement services offered by non-resident entities is introduced as a separate tax under the Finance Act, not as a part of the Income Tax Act.

Non-resident entities cannot claim a tax credit in their home country under the "Double Taxation Avoidance Agreements" because the equalization levy is not an income tax. It is a separate tax levied on specified services provided by non-residents to residents.

Explanation

1. Incorrect The National Programme for Organic Production (NPOP) is operated under the guidelines and directions of the Ministry of Agriculture and Farmers Welfare (MoA&FW), not the Ministry of Rural Development.

2. Correct The Agricultural and Processed Food Products Export Development Authority (APEDA) does function as the Secretariat for the implementation of NPOP. APEDA plays a crucial role in promoting and certifying organic products in India.

3. Correct Sikkim has indeed become India's first fully organic State. This achievement signifies India's efforts to promote sustainable agricultural practices.

Therefore, the correct answer is 2 and 3 only

Explanation

Economic Growth vs. Economic Development An increase in absolute and per capita real GNP signifies economic growth, which means the overall production of goods and services in a country is expanding.

Economic development is a broader concept that goes beyond just increasing production. It encompasses factors like

1. Improved living standards for citizens
2. Reduction in poverty and unemployment
3. Increased literacy and education levels
4. Improved healthcare and infrastructure

If poverty and unemployment are increasing even with economic growth (GNP increase), it suggests the benefits of growth are not being shared widely. This indicates a lack of true economic development.

Explanation

The Reserve Bank of India manages public debt and issues Indian currency-denominated loans on behalf of the central and state governments under the powers derived from the Reserve Bank of India Act. The RBI is the debt manager for both the Central Government and the State Governments. RBI manages the debt of state governments based on separate agreements. Hence, statement 1 is incorrect.

Treasury bills or T-bills, which are money market instruments, are short-term debt instruments issued by the Government of India and are presently issued in three tenors, namely, 91-day, 182-day and 364 days.

Treasury bills are zero coupon securities and pay no interest. They are issued at a discount and redeemed at the face value at maturity.

Therefore, statements 2 and 3 are correct.

Explanation

The Merchant Discount Rate (MDR) is a fee levied on merchants by payment processors for accepting debit and credit card transactions. It's typically a percentage of the transaction value. So, when a customer uses a debit card at a store, the store pays a fee to the bank that processes the transaction.