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Public Finance & Budget — UPSC Prelims Economy previous year questions — page 4

162 solved previous year questions on Public Finance & Budget, papers from 1995 to 2022, drawn from UPSC CSE Prelims, UPSC CDS, UPPCS. Each carries the printed answer key and the explanation from the source compilation.

1. #121Practice set
   Consider the following statements regarding various types of taxes: 1. Minimum Alternate Tax is levied to bring into the tax net certain 'zero tax companies: 2. Alternate minimum tax is levied on both corporate as well as non-corporate entities.Which of the statements given above is/are correct?
   • A1 only
   • B2 only
   • CBoth 1 and 2
   • DNeither 1 nor 2 Practiceb o o k
   Answer: (A) 1 only
   Explanation

   Option a is the correct 1 is correct: MAT is a tax levied under Act of India, 1961 to ensure minimum levels of all domestic and foreign companies in India. There zero tax companies that book high profit but nil taxes by rolling out substantial dividends to MAT is used to limit tax exemptions 2 is incorrect: Under the Income Tax Act 1961, certain tax benefits can significantly reduce regular tax amount. The alternative (AMT) applies to taxpayers with high economic setting a limit on those benefits. It helps to ensure taxpayers pay at least a minimum amount of is the tax levied on non-corporate (not on similarly as MAT is applied on corporate entities. Important Tips Minimum alternate tax rate is for corporate companies operating in India. In case of non-corporate taxpayer, AMT is levied at of adjusted total income

2. #122Practice set
   Which one of the following statements is correct regarding "tax expenditure"?
   • Ais expenditure incurred during exercise of tax collection
   • BIt is an incentive given by the government by means of various tax exemptions and deductions etc
   • CIt depicts the loss in revenue due to tax evasion
   • DIt is expenditure incurred on acquisition of assets like roads, machinery, etc
   Answer: (B) It is an incentive given by the government by means of various tax exemptions and deductions etc
   Explanation

   Option b is the correct a is incorrect: Tax Expenditure as the meaning word seems, is not related to the expenditures by the Government in the tax col kc I ion Z'xcrcisc. [I provided by the government lo the b is correct: Tax expettditures lower of individuals or businesses, through an etc. But such forgone taxes do not that they have been waived off by the incentives given by the government Lo promote in the absence of which they may not have come c is incorrect: Tax evasion means by illegal means for the purpose of lax payment individual. It is not related to tax expenditure as the provided by the government under taxation d is incorrect: Expenditure on acquisition like machines, roads, buildings cic is called (not the tax expenditure), is parl ofthc statement of the government mainly creation. Important Tips The divergence between the official lax rate and cffec,ivc tax rate in India

3. #123Practice set
   Consider the following statements regarding the Central Board of Indirect Taxes and Customs (CBIC): 1. It comes under the Department of Economics Affairs, Ministry of Finance. 2. It administers matters relating to Customs, Central Excise and Narcotics, etc. 3. It is a statutory body established under the Central Boards of Revenue Act, 1963.How many of the above given statements are correct?
   • AOnly one
   • BOnly two
   • CAll three
   • DNone
   Answer: (B) Only two
   Explanation

   Option b is the correct 1 is incorrect and 2 is correct: Central. Indirect Taxes and Customs (erstwhile Central Board Customs) is a part of the Department of the Ministry Government of India. with the tasks of formulation of policy collection of Customs, Central Fxcise duties, Services Tax and IGST, prevention of srnngg! administration of matters relating to Excise, Central Goods Services Tax, to the extent under CBIC's 3 is correct: CBIC is a statutory body the Central Boards of Revenue Act, 1963. Board of Excise and Customs (CBEC) was the Central Board of Indirect Taxes and Customs 2018 after the roll out of Goods and Services Tax (CST)

4. #124Practice set
   A Company named is registered in Australia and is providing digital services like advertisements, and e-commerce platform in India without any physical presence. In this context consider the following: 1. Corporate Tax 2. Income Tax 3. Equalization Levy 4. Excise DutyHow many of the above given taxes would apply to revenues of the company in India?
   • AOnly one
   • BOnly two
   • COnly three
   • DAll four
   Answer: (A) Only one
   Explanation

   Option a is the correct l is incorrect. Corporate tax is charged on registered in India under Companies Act the aforementioned company has not registered itself it will not have to pay corporate 2 is incorrect. Income tax is imposed under Tax Act of 1961. However, it would be on companies registered in 3 is correct. In 2020, the Indian expanded the scope of Equalization Levy to as 'Equalization Levy 2.0 or EL 2.0') as part of Finance Act 2020. EL 2.0 was made effective on April which now includes a 2 per cent tax on gross by a non-resident "e-commerce operator" provision of 'e-commerce supply or service' to or non-resident companies having a in India. The expression 'e-commerce service' includes the online sale of goods or the of services or facilitating the 4 incorrect. An excise or excise tax an excise duty) is a type of tax charged on within the country (as opposed to customs on goods

5. #125Practice set
   Consider the following types of taxes: 1. Ad valorem tax is a flexible tax levied on the assessed value of an asset, product or service. 2. Tobin tax is a duty proposed on spot currency trades to penalize short-term currency trading. 3. A Pigouvian tax is a tax imposed for engaging in activities that create adverse side effects for society.How many of the above given statements are correct?
   • AOnly one
   • BOnly two
   • CAll three
   • DNone
   Answer: (C) All three
   Explanation

   Option c is the correct l is correct: The term "ad valorem" is Latin to value;' which means that it is flexible on the assessed value of an asset, product or is charged by state and municipal governments. The is the property tax, which is charged on real personal Practkebook Statement 2 is correct: The Tobin tax is a duty proposed on spot currency trades to penalize short-term currency trading to stabilize markets and disincentive speculation. The Tobin tax is sometimes referred to as the Robin Hood tax, as many see it as a way for governments to take small amounts of money from the people making large, short-term currency exchanges. Statement 3 is correct: A Pigovian (or Pigouvian) tax is a tax assessed against private individuals or businesses for engaging in activities that create adverse side effects for society. Adverse side effects are those costs that are not included as a part of

6. #126Practice set
   With reference to the recently set up the National Asset Reconstruction Company Ltd. (NARCL) and the Indian Debt Resolution Committee Ltd. (IDRCL) by various banks of India, consider the following statements:l. Both NARCL and IDRCL are responsible for acquiring stressed assets from the financial institutions. 2. Public Sector Banks (PSBs) will have ownership of not less than 51 share in both NARCL and IDRCL.Which of the statements given above is/are correct? Efli
   • A1 only
   • B2 only
   • CBoth 1 and 2
   • DNeither 1 nor 2
   Answer: (A) 1 only
   Explanation

   Option a is the correct l is incorrect. The revenue deficit refers to the government's revenue expenditure over revenue total deficit Revenue expenditure - Revenue the contrary, Effective Revenue Deficit is the revenue deficit and grants for creation of 2 is correct. Primary deficit is the difference fiscal deficit of the current year and the interest paid government on loans obtained in the past. It government's borrowings that are utilised to pay on loans rather than on capital 3 is incorrect. Monetized deficit is the part of deficit which is financed by borrowing Monetised deficit, also known as debt the monetary support that Reserve Bank of India to the Centre as part of the government's In other words, the term refers to the government bonds by the central bank to finance needs of the government. Monetisation of in practice in India till 1997, whereby the central monetised governmen

7. #127Practice set
   Which of the following measures are likely to be adopted by the Government/RBI to tackle inflation? 1. Increase in indirect taxes 2. Surplus budget 3. Increasing Cash Reserve Ratio 4. Decreasing the Repo RateSelect the correct answer using the code given below
   • A1 and 2 only
   • B1, 2 and 3 only
   • C2 and 3 only
   • D1, 2, 3 and 4
   Answer: (C) 2 and 3 only
   Explanation

   Option c is the correct answer. Option l is incorrect. Increase in Indirect tax rate and service tax (GST), excise duty will push the up. So, reducing the indirect tax rate is a by the government to curb 2 is correct. Surplus budget means less receipts. It reduces the money supply and for goods and services. The price level will down due to 3 is correct. Scheduled banks are required to keep percentage of their Net Time and Demand RBI. Thus, the increased CRR means less money to lend which will reduce the money supply in 4 is incorrect. Repo rate is the rate at which banks borrow money from RBI by dated government securities and treasury bills. repo rate means the cheaper credit access from RBI which will ultimately increase the in the economy

8. #128Practice set
   Consider the following statements regarding Angel Investors in the financial market: 1. Start-ups registered with the Department for Promotion of Industry and Internal Trade (DPIIT) are exempted from paying Angel Tax. 2. Start-ups that invest in shares and securities are not eligible for Angle Tax exemption.Which of the statements given above is/are correct?
   • A1 only
   • B2 only
   • CBoth 1 and 2
   • DNeither 1 nor 2
   Answer: (C) Both 1 and 2
   Explanation

   Option c is the correct l is correct. Un August 23, 2019, the Finance announced that start-ups registered wilh for Promotion of Industry and Internal would be exempted from paying Angel Tax. This to give boost to the start-up ecosystem in the 2 is correct. Start-ups that invest in shares are not eligible for Angle Tax exemption. with overseas ties or foreign subsidiaries are making a capital contribution to any entity

9. #129Practice set
   Which of the following would most likely lead to a rise in the bond yields? 1. Rise in market interest rates 2. Increase in Fiscal Deficit 3. Rise in inflation 4. Increase in foreign investmentsSelect the correct answer using the codes given below
   • A1 and 2 only
   • B2, 3 and 4 only
   • C1 and 3 only
   • D1, 2 and 3 only
   Answer: (D) 1, 2 and 3 only
   Explanation

   Option dis the correct 1 is correct: Rise in market Interest Rates, a fall in bond prices, as the higher interest rate investors better returns in bank deposits rather than offered by the bonds. And as Bond Prices and are inversely related, a fall in Bond Prices would rise in Bond Yields, as market rates 2 is correct: Fiscal Deficit of the the amount of borrowings that the undertaken. An increase in Fiscal Deficit would the government plans to spend more than its revenues its borrowing from the market. This leaves for other economic players, making loans an increase in interest rates). And as Interest Bond Yields are directly related (as explained is an increase in bond Yields when there is an Fiscal 3 is correct: If there is a rise in inflation in the central bank will most likely follow a policy and increase policy rates for other making loans expensive, in order to suck out the econom

10. #130Practice set
    Which of the following are the possible reasons for the rise in economic inequality after the 1991 economic reforms in India? 1. Reduction in public investment in agriculture 2. Decline in the availability of casual labour 3. Poor growth of public expenditure in social sectors 4. Rapid decline in foreign direct investments in IndiaSelect the correct answer using the code given below
    • A1 and 2 only
    • B2, 3 and 4 only
    • C1 and 3 only
    • D1, 3 and 4 only rni
    Answer: (C) 1 and 3 only
    Explanation

    Option c is the correct l is correct. The share of agriculture the total investment declined from in to 2 is incorrect. Post-reform period saw an casual labour and not a decline. Also, a high the post-liberalisation period has been increased informalisation and de-unionisation Economically and socially deprived sections were mostly employed as casual 3 is correct. Public expenditure on social suffered after 1991. As a percentage of GDP, social after 1991 was generally less than what it was late This has impacted the improvement in quality of education in India, which affects and its 4 is incorrect. India's foreign direct increased significantly since 1991. FDI into from million in 1990-91 to about in FY

11. #131Practice set
    With reference to various curves representing a relation between macrneconomk indicators, consider the pairs: 1. Lorenz Curve Represents a relationship between Tax rate and Tax revenue collected. 2. Kuznets Curve Represents a relationship between economic growth and economic inequality. 3. Phillips Curve Represents a relationship between Inflation and Purchasing Power of money.How many of the above given pairs are correctly matched?
    • AOnly one
    • BOnly two Blli
    • CAll three
    • DNone
    Answer: (A) Only one
    Explanation

    Option a is the correct l is incorrect: A Lorenz curve is a of the distribution of income or a population. The farther the curve is from (represented by the straight diagonal line) the level of 2 is correct: Kuznets curve represents a relation growth and economic inequality. According curve, inequality first rises with increase in but inequality after a certain point starts to as economic growth 3 is The Phillips curve represents between rate of inflation and The Phillips curve demonstrates an inverse inflation and unemployment rate in an economy the inflation, lower the unemployment rate

12. #132Practice set
    "SPIC an initiative of the Government of India, is aimed at
    • AFacilitating the direct benefit transfer of subsidies to poor people
    • BPromoting the marketing and export of Indian spices in global markets
    • CMaking it easier for incorporating a business in India
    • DProtecting the interests of the persons affected by natural calamities
    Answer: (A) Facilitating the direct benefit transfer of subsidies to poor people
    Explanation

    Option a is the correct the economics of a plate of food in India' attempt to figure out how much a meal costs in notion of Thalinomics takes into account a factor of daily wage, indicating improved welfare of person. It is used to drive home the point of a plate of meal has improved. The introduced in the Economic Survey (2019-20)

13. #133Practice set
    Which of the following committees was formed for Revisiting and Revitalizing the PPP model of Infrastructure Development?
    • AVijay Kelkar committee
    • BAtanu Chakraborty
    • CBaba Kalyani Committee
    • DKirit Parikh
    Answer: (A) Vijay Kelkar committee
    Explanation

    Option a is the correct Kelkar committee was formed to study and evaluate public-private partnership (PPP) model in India. was set up following 2015 Union budget of the then finance minister of India Arun Jaitley

14. #134Practice set
    Consider the following statements with reference to Power sector in India: 1. India's aggregate technical and commercial losses have increased in last 5 years. 2. Populist tendencies and operational inefficiencies have adversely affected the financial health of State. 3. The capacity utilisation of thermal power plants (also called Plant Load factor or PLF) has declined in last decade.Which of the above statements is/are correct?
    • A1 and 2 only
    • B2 and 3 only
    • C1, 2 and 3
    • D2 only
    Answer: (B) 2 and 3 only
    Explanation

    Option bis the correct l is The Aggregate Technical losses at the all India level have in financial year (FY) 2015-16 to in a reduction in the five years. In Financial the losses declined to from a year loss is the Jiffercncc between the in the distribution network and revenue collected 2 is correct: Financial Health of State of populist tariff schemes, mounting losses inefficiencies have adversely affected health of State Discoms which are currently humongous out-standing debts. As of June 2017, the electricity sector amounted to Rs 37,941 3 is correct: The capacity utilisation of plants (also called Plant Load factor or PLF) from in 2009-10 to in 2018-19. Low that thermal plants have been lying idle, which due to non-availability of fuel, surplus capacity (in of the country), low demand for power, or met through other sources

15. #135Practice set
    Consider the following statements with reference to disinvestment and asset monetization: 1. Disinvestment, means sale or liquidation of assets by the government, 2. Privatization refers to the sale of the government's majority stake, or the whole enterprise, to private investors. 3. Monetization of public assets means selling the asset to the highest bidder.How many of the statements given above are correct?
    • AOnly one
    • BOnly two
    • CAll three
    • DNone
    Answer: (B) Only two
    Explanation

    Option bis the correct 1 is correct: Disinvestment means sale of assets by the government, usually Central public sector enterprises, projects, or other fixed government undertakes disinvestment to reduce burden on the exchequer, or to raise money for needs, such as to bridge the revenue shortfall regular 2 is correct: The transfer of ownership, business from the government to the private sector privatization. The government ceases to be the owner of the entity or business. Privatization is considered to efficiency and objectivity to the company, a government company is not concerned 3 is incorrect: In a monetization government is basically transferring revenue rights parties for a specified transaction period in uptront money, a revenue share, and commitment in the assets. It docs not sell the ownership asset

16. #136Practice set
    Which of the following is not a challenge faced by the Food Processing Sector in India?
    • APoor availability of primary processing, storage and distribution facilities
    • BMany Food Processing Industries are in the unorganized sector
    • COnly FDI is permitted in the food processing sector, leading to fund shortages
    • DInadequate focus on quality and safety standards
    Answer: (A) Poor availability of primary processing, storage and distribution facilities
    Explanation

    Option a is the correct 1 is correct: Under the NBS policy, a fixed subsidy, decided on annual basis, is provided on fertilizers depending on their nutrient 2 is incorrect: The Ministry of chemicals administers the implementation of the 3 is incorrect: Urea is not covered in this India, urea is the only controlled fertilizer and is sold at notified uniform sale price

17. #137Practice set
    Consider the following statements with reference to the Fixed Exchange Rate regime: 1. In a fixed exchange rate system, government intervenes to take care of the Balance of Payments deficit gap by using its official reserves. k 2. As the fixed exchange rate system gives more flexibility, governments do not need to maintain large stocks of foreign exchange reserves. 3. In a fixed exchange rate system, increasing the exchange rate by the government is called Revaluation.How many of the statements given above are correct?
    • AOnly one
    • BOnly two
    • CAll three
    • DNone
    Answer: (A) Only one
    Explanation

    Option a is the correct l is correct: If there is a deficit in the balance in a fixed exchange rate system, to take care of the deficit gap by use of its 2 is incorrect: The flexible exchange rate Fixed) gives the government more flexibility and not need to maintain large stocks of foreign The major advantage of flexible exchange rates movements in the exchange rate automatically take the surpluses and deficits in the Also, countries in conducting their monetary policies, do not have to intervene to maintain exchange are automatically taken care of by the 3 is incorrect: In a fixed exchange rate some government action increases the exchange making domestic currency cheaper) is Important Tips A Revaluation is said to occur, when the Government decreases the exchange rate ( thereby, making domestic currency costlier) in a fixed exchange rate system

18. #138Practice set
    With reference to the Foreign Exchange Management Act (FEMA) and Foreign Contribution. Regulation Act (FCRA), consider the following statements 1. A violation of FEMA rules is considered as civil offence while the violation of FCRA provisions is a criminal offence. 2. Both FEMA and FCRA are governed by the Ministry of Home Affairs. 3. Both FCRA and FEMA are enforced by the Enforcement Directorate.How many of the statements given above are correct?
    • AOnly one
    • BOnly two
    • CAll three
    • DNone
    Answer: (A) Only one
    Explanation

    Option a is the correct l is correct: If there was a violation of then it is considered as civil offence and penalty, i.e., civil proceedings are violating the provisions of FCRA can be jailed to a term of 5 2 is incorrect: Money received for is governed by the Ministry of Finance while funds received for charity or social work by the Ministry of Home Affairs under 3 is incorrect: Enforcement Directorate a specialized financial investigation agency under Department of Revenue, Ministry of Finance. It has the task of enforcing the provisions of two laws: Foreign Exchange Management Act, 1999 (FEMA). The Prevention of Money Laundering Act, 2002 is not enforced by the ED. Important Tips FEMA focused on increasing the foreign exchange reserves of India, focused on promoting foreign payments and foreign trade

19. #139Practice set
    Which one of the following statements regarding fertilizer subsidy regime in India is incorrect?
    • AFarmers buys Urea fertilizers at Maximum Retail Prices which is based on the normal supply-and-demand-based market rates
    • BThere is a limit of 100 subsidised fertilizers bags that an individual can purchase at one time
    • CThe plantation sector is eligible for purchase of subsidised fertilisers as per the fertilizer policy in India
    • DUnder Nutrient-based subsidy policy, the subsidy on fertilizers is provided by Government on an annual basis for each nutrient on a per kg basis
    Answer: (C) The plantation sector is eligible for purchase of subsidised fertilisers as per the fertilizer policy in India
    Explanation

    Option c is the correct balance of payments records the transactions services and assets between residents of a the rest of the world for a specified time period country could use its reserves of foreign exchange to balance any deficit in its of transactions are called official reserve the official reserve transactions are made to bridge in the they are seen as the accommodating item (all others being autonomous). Important Tips Official reserve transactions are more relevant under a regime of fixed exchange rates than when exchange rates are floating. Flexible or Floating Exchange Rate is determined by the market forces of demand and supply. In Fixed Exchange Rate system, the Government fixes the exchange rate at a particular level

20. #140Practice set
    Consider the following statements with reference to types of farming: 1. Zero budget natural farming (ZBNF) is a method of chemical-free agriculture following the traditional Indian practices. 2. Permaculture is a farming method which involves practices like mulching and trellising.Which of the statements given above is/are correct?
    • A1 only
    • B2 only
    • CBoth 1 and 2
    • DNeither 1 nor 2
    Answer: (C) Both 1 and 2
    Explanation

    Option c is the correct 1 is correct: Zero Budget Natural Farming by agriculturist Subhash Palekar, in the an alternative to the Green Revolution's methods driven fertilizers and pesticides and intensive budget natural farming is a method of drawing from traditional Indian 2 is correct: Permaculture is the method ecological landscapes that produce food. placed on multi-use plants, cultural practices such and trellising (support a plant with the help trellis) and the integration of animals to recycle graze weeds

21. #141Practice set
    With reference to trends in agricultural subsidies, which of the following statements is/are correct? 1. The share of agricultural subsidies has been greater than public investments in agriculture over the past three decades. 2. Share of Nutrient-Based Subsidy exceeded that of urea subsidy over the past three years.Select the correct answer using the code given below
    • A1 only
    • B2 only
    • CBoth 1 and 2
    • DNeither 1 nor 2
    Answer: (A) 1 only
    Explanation

    Option a is the correct l is correct: Farm subsidies have public investment in agriculture for more decades now. Today agricultural subsidies are as large as public 2 is incorrect: Share of urea subsidy far of the Nutrient-Based Subsidy. For instance, in Rs. 54,000 crore is the share of urea subsidy compared 26,000 crore for NBS

22. #142Practice set
    Which of the following statements is/are Agreement on Agriculture WTO? 1. The minimum level of trade distorting subsidies allowed for developing countries including India is l of agricultural GDP. 2. Developed countries are not allowed to provide trade distorting subsidies. 3. The peace clause protects developing country's food procurement programmes against WTO action. 4. The peace clause was accepted in Bali ministerial conference in 2013.Select the correct answer using the code given below
    • A3 and 4 only
    • B1, 2 and 3 only
    • C1, 2 and 4 only
    • D1, 3 and 4 only
    Answer: (D) 1, 3 and 4 only
    Explanation

    Option dis the correct minimum level of trade distorting subsidies allowed countries including India is of while that for developed countries is of peace clause protects a developing country's programmes against action from in case subsidy ceilings are breached. This was accepted at the Bali Ministerial in 2013

23. #143Practice set
    Consider the following statements regarding Agricultural Produce and Market Committee (APMC) Act 2003: 1. The revenue earned by the APMCs goes directly to the State Exchequer. 2. The Model APMC Act, 2003 emphasized on promotion of contract farming.Which of the statements given above is/are true?
    • A1 only
    • B2 only
    • CBoth 1 and 2
    • DNeither 1 nor 2
    Answer: (B) 2 only
    Explanation

    Option b is the correct I is incorrect: Though the market fee is like a tax, the revenue earned by the APMCs does to the State exchequer and hence does not require of the State legislature to utilize the funds Thus, APMC operations are hidden from 2 is correct: Under the Model APMC Act new chapter on 'Contract Farming' has been added contract farming

24. #144Practice set
    Consider the following statements: 1. Agricultural income is tax-free without any limit, under income tax Act, 1961. 2. Only state governments are competent to enact any law imposing tax on agricultural income. 3. None of the states tax any form of agricultural income.How many of the statements given above are correct?
    • AOnly one
    • BOnly two
    • CAll three
    • DNone
    Answer: (B) Only two
    Explanation

    Option b is the correct 1 is correct: As per Section of income 1961, any income derived from the agricultural not be included in Total Taxable 2 is correct: Taxes on agricultural income Entry 46 in State list under the constitution, only the state governments are competent to imposing a tax on agricultural income. on agricultural, if any, has to be considered by governments 3 is incorrect: In India, States that agricultural tax legislation on the books are Assam, Bihar, West Bengal and Odisha. But implementation varies substantially, from taxes levied at all to being levied only upon income

25. #145Practice set
    In the context of farm subsidies given to farmers by Government, Consider the following statements: 1. The agricultural subsidies have been greater than public investments in agriculture over the past two decades. 2. Farm input subsidies are a form of indirect subsidies. 3. WTO considers only indirect farm subsidies as market-distorting.How many of the statements given above are correct?
    • AOnly one
    • BOnly two
    • CAll three
    • DNone
    Answer: (B) Only two
    Explanation

    Option b is the correct l is correct: Farm subsidies have public investment in agriculture for more decades now. Today agricultural subsidies are as large as public 2 is correct: Indirect farm subsidies are the which subsidy is provided via indirect channels such credit facilities, providing farm inputs at farm loan waivers 3 is incorrect: WTO considers both direct farm subsidies to be market-distorting. income supports that are de-coupled from levels or prices are not considered to be

26. #146Practice set
    Consider the following statements regarding the Land Reforms in India: 1. It helped in the consolidation of land holdings. 2. It also involved reforms of the revenue administration. 3. The tenancy reform under the Land reforms was uniformly implemented all over India.How many of the statements given above are correct?
    • AOnly one
    • BOnly two
    • CAll three
    • DNone AGRICU 1950
    Answer: (B) Only two
    Explanation

    Option b is the correct l is correct: The land reforms provided of land holdings. Land consolidation is of land parcels with the aim the landowners larger parcels at one or more places in exchange former smaller and fragmented land 2 is correct: Land reforms in India reforms of the revenue administration, introduction of more equitable land revenue systems improvement of land 3 is incorrect: Land reforms in India aimed the rights of tenants and secure their tenure on they worked. This was done by providing tenants secure rights to the land they worked, and by rent they could be charged. The tenancy reform Land reform was not uniformly implemented all because land is subject to state control in India relationship between production and land tenure state to state. This political resistance, states where landlords held significant power, implementation of tenancy reforms. Important Tips Lan

27. #147Practice set
    In the context of India which of the following statements represents possible negative impacts of Agricultural Subsidies given by the government? 1. Decrease in plantation of monoculture crops 2. Soil degradation 3. Overuse of fertilizers and pesticides 4. Increased Greenhouse Gas (GHG) emission 5. Increase in symbiotic efficiency of Nitrogen-fixing rhizobia with soil.Select the correct answer using the code given below
    • A1, 2 and 3 only
    • B1, 3, 4 and 5 only
    • C2, 3 and 4 only
    • D1, 2, 3, 4 and 5
    Answer: (C) 2, 3 and 4 only
    Explanation

    Option c is the correct l is incorrect: According to a recent report by and Agriculture Organisation of the United the United Nations Development and the United Nations Environment (UNEP), subsidies can have a negative impact on by encouraging monoculture and the agrochemicals and natural 2 is correct: Subsidies are particularly the case of nitrogen-based fertilisers as, overusing nitrous oxide, a gas that is around 300 times than carbon dioxide. Additionally, the use of is linked to soil degradation and surface 3 is correct: Farmers are urged to use inputs more often when their cost are subsidised 4 is correct and 5 is incorrect: Subsidies and production decisions and distorts By creating strong incentives for which in turn leads to greater usage of agrochemicals, pesticides and water, it has a on the environment by increasing GHG nitrogen runoff from agriculture. Excessive use reduce s

28. #148Practice set
    With reference to Agreement on Fisheries Subsidies (AFS), consider the following statements: 1. The agreement was recently concluded under the aegis of United Nations Conference on Trade and Development (UNCTAD). 2. Under the agreement a special transition period of 25 years is provided to the developing countries. 3. The Agreement prohibits providing subsidies for fishing on high seas, if they result in Illegal, Unreported and Unregulated (IUU) fishing.How many of the statements given above are correct?
    • AOnly one
    • BOnly two
    • CAll three
    • DNone
    Answer: (A) Only one
    Explanation

    Option a is the correct l is incorrect: The Agreement on (Agreement) agreed at the recently Trade Organization (WTO) Ministerial prohibit subsidies from being provided for and Unregulated (IUU) fishing and 2 is incorrect: Under the Special Treatment Developing Least Developed Countries (LDCs) have been transition period of two years (not 25 years) from of entry into force of this 3 is correct: The Agreement also subsidies for fishing on high seas, which are jurisdiction of coastal countries and Regional Organizations/ Arrangements (RFMO/ Important Tips As per the Agreement, no prohibition has been imposed on a WTO Member regarding granting or maintaining subsidy to its vessel or operator as long as it is not carrying out IUU. Similarly, no prohibition on providing subsidies has been imposed for fishing regarding overfished stocks as long as such subsidies are implemented to rebuild the s

29. #149Practice set
    With reference to Peace Clause in the WTO Agreement on Agriculture, consider the following statements:L The Peace Clause was introduced in 2013 as part of the Bali Package. 2. The Peace Clause permits developing nations to maintain subsidies for their agricultural sector, even if such subsidies are deemed to be trade-distorting. 3. Until now India has not invoked the peace clause.How many of the statements given above are correct?
    • AOnly one
    • BOnly two
    • CAll three
    • DNone
    Answer: (B) Only two
    Explanation

    Option b is the correct 1 is correct: The Peace Clause was in December 2013 as part of the Bali was a set of decisions made at the 9th Conference in Bali, Indonesia. The Peace protection to developing countries agaiml any to their food security programmes, which the WTO's limits on agricultural subsidies, until solution to this issue is 2 is correct: The Peace clause allows to continue to provide subsidies to their even if they are trade-distorting, without facing under WTO dispute settlement. The Peace in effect until a permanent solution is found for the public stockholding for food security 3 is incorrect: India has invoked the for the third time in 2022, due to its subsidies for exceeding the ceiling of allowed under The finl iuvucaliuu was in 2020 for the year when the support offered to rice farmers was above limit. The second invocation was in 2021 when exceeded the ceiling again

30. #150Full-length test
    Consider the following pairs: 1. Fiscal deficit Includes all the capital receipts of the central government. 2. Revenue Deficit Includes profits accrued by the Central Public Sector Undertakings (CPSUs). 3. Effective Includes grants given by Revenue Deficit the Central government to State Governments to create capital assets.How many pairs are correctly matched?
    • AOnly one
    • BOnly two
    • CAll three
    • DNone
    Answer: (A) Only one
    Explanation

    Option a is the correct gap between the receipts and expenditure is Following are the various types of deficits the Government. { } 1 is incorrect: Fiscal deficit is the difference expenditure and total receipts except borrowings deficit Total expenditure - (Capital receipts borrowings and other liabilities Revenue 2 is correct: Revenue deficit is the difference expenditure and revenue receipts. It accrued by the Central Public sector as such revenues are part of revenue receipts of 3 is Revenue deficit - Grants in aid for of Thus, ERD excludes grants in aid for creation assets

31. #151Full-length test
    Consider the following statements about "Direct monetisation of fiscal deficit": 1. It essentially means printing new currency by the Reserve Bank of India (RBI) without any collateral from the government. 2. Fiscal Responsibility and Budget Management (FRBM) Amendment { } Act,2017 completely prohibits the Central government to engage in direct monetisation of fiscal deficit. 3. Direct monetisation may lead to increase in inflation in the country.How many of the above given statements are correct?
    • AOnly one
    • BOnly two
    • CAll three
    • DNone
    Answer: (A) Only one
    Explanation

    Option a is the correct financing is borrowing that a government uses budget deficits, printing more money or is some of the means used by the government its budget 1 is incorrect: In direct monetisation, asks the Reserve Bank of India (RBI) to currency in return for ne.w bonds that the to the RBI. Thus, direct monetisatir does mean printing of new currency,I 2 is incorrect: An escape clause in Responsibility and Budget Act,2017 act under special 3 is correct: It is true that Direct monetisation fiscal deficit most likely results in creating an in the country. Important Tips Fiscal deficit occurs when a government's total spending exceeds its total revenue within a given period. Government considers following options to reduce the fiscal deficit in the economy

32. #152Full-length test
    In context of Indian Economy, under which one of the following conditions will the Gross Domestic Product (GDP) of India shall be higher than its Gross Value Added (GVA)?
    • AIf the government earned more from taxes than it spent on subsidies
    • BIf there is an increase in inflation level greater than the previous financial year
    • CIf the government provided subsidies in excess of its tax revenues
    • DIt the capital expenditure of the government exceeds revenue expenditure { }
    Answer: (A) If the government earned more from taxes than it spent on subsidies
    Explanation

    Option a is the correct to the data released by the government, the of India's economy- 'gross value added' and product'-have grown at widely different a is Domestic Product calculates national income up all expenditures in the economy. On the Gross Value Added calculates the national the supply side by looking at the value-added in of the two measures of national income are linked as GVA Taxes earned by the government - by the if the government earned more from taxes than on subsidies, GDP will be higher than b is incorrect: Increase or decrease in Inflation no direct impact on the relationship between GDP c is incorrect: "If the government provided excess of its tax revenues" is also incorrect because in the situation will lead to a lower GDP than d is incorrect: The capital expenditure and do not directly affect the relationship and GVA. The direct relationship between the be realized

33. #153Full-length test
    In the context of Goods and Service Tax ( GST) regime, the term "Circular Trading" refers to the practice of
    • Aimporting GST exempted raw materials to reduce the impact of tax on final goods
    • Bissuance of invoices without availing any goods/services to claim input tax credits
    • Cselling final goods and services to the tax exempted areas to avoid payment of GST
    • Dforming a closed trade circle among traders to ensure better compliance of GST laws
    Answer: (A) importing GST exempted raw materials to reduce the impact of tax on final goods
    Explanation

    Option a is the correct 1 is correct. The term embryo splitting twinning") refers to the formation of twins through the artificial microsurgical splitting of at the cleavage or blastocyst stage. The early stage embryo is manually separated into individual cells to divide and develop on their 2 is incorrect. Identical twins are not the same. Scientists in Iceland in their that there was a mutation or alteration in a DNA that can influence physical features or certain diseases. Important Tips Comparison between Somatic Cell Nuclear Transfer (SCNT) and Artificial Embryo Twinning (AET) The key difference between AET and SCNT is that artificial embryo twinning is the technique in which splitting of a fertilized egg into two genetically identical embryos takes place under in vitro conditions while somatic cell nuclear transfer is a technique in which insertion of a somatic cell nucleus into an

34. #154Full-length test
    Which one of the following statements is incorrect regarding the 'Kheda Satyagraha' of 1918?
    • AIt was mainly against the colonial government's decision to increase 1 and revenue assessment despite poor crop yield
    • BOne of the demands of the movement was suspension of revenue assessment for the year 1919
    • CVallabhbhai Patel for his organizational skills during the movement, received the title 'Sardar' from Mahatma Gandhi
    • DIt was withdrawn after the informal acceptance of the demands of the protesters by the British government
    Answer: (C) Vallabhbhai Patel for his organizational skills during the movement, received the title 'Sardar' from Mahatma Gandhi
    Explanation

    Option c is the correct answer. Kheda Satyagraha of 1918 is known to be the first noncooperation movement led by Mahatma Gandhi. This satyagraha was centered on the peasant-Patidar community of Kheda, who refused to agree to a 23 percent tax hike imposed on them despite a disastrous crop failure and outbreak of plague and cholera. Statement a is correct: The struggle was against the British colonial government's decision to increase the land revenue assessment despite a poor crop yield due to a severe drought. The movement was aimed at securing relief for farmers who were unable to pay the increased taxes due to the drought conditions. Statement b is correct: The Gujarat Sabha (part of Kheda Satyagraha), consisting of the peasants, submitted petitions to the highest governing authorities of the province requesting that the revenue assessment for the year 1919 be suspended. The government

35. #155Full-length test
    Which among the following is the part of revenue receipts of the Government of India? 1. Dividend accrued from Public Sector Undertakings. 2. Return of loans given to State governments. 3. Money received by selling the assets of the Government. 4. Money received through Interest on loans provided by government of India. 5. Money raised by issuing government securities. Select thecorrect answer using the code given below
    • A1 and 4 only
    • B1, 2 and 4 only
    • C3 and 5 only
    • D1, 4 and 5 only
    Answer: (A) 1 and 4 only
    Explanation

    Option a is the correct receipts are those receipts which neither liability nor cause reduction in the assets of They are regular and recurring in nature government receives them in the normal course 1 is correct: Dividends accrued from Public (PSUs) forms part of the revenue the Government of India. It forms part of the receipts of the Gover.nment of 2 is incorrect: Recovery of loans given to from State governments) forms part of receipts. It is part of revenue receipts because assets of the government (loan granted by an asset). Also, fresh loans raised by the Government forms part of the capital receipts because it is the 3 is incorrect: Money received by selling the the Government known as the process of part of the non-debt creating capital 4 is correct: Money received through on loans forms part of the revenue receipts does not create any assets nor liabilities. Further form part o

36. #156Full-length test
    Which of the following best describes "Tax Expenditure"?
    • ARevenue foregone on account of the incentives and exemptions that are given to taxpayers
    • BThe expenditures incurred by the government on the collection of taxes
    • CThe proportion of income that households pay as taxes
    • DThe expenditure incurred by the government in meeting claims of Input Tax Credit under GST
    Answer: (A) Revenue foregone on account of the incentives and exemptions that are given to taxpayers
    Explanation

    Option a is the correct expenditure is the revenue foregone on account of and exemptions that are given to taxpayers. than viewing them as waivers, they may be incentives given to certain sectors to enable them up

37. #157Full-length test
    Consider the following statements: 1. Regressive taxes have a greater financial impact on lower-income individuals than the wealthy. 2. Progressive tax has more of a financial impact on higher-income individuals than on low-income earners. 3. Proportional tax affects low-, middle-, and high-income earners relatively equally.How many of the above statements are correct?
    • AOnly one
    • BOnly two
    • CAll three
    • DNone
    Answer: (C) All three
    Explanation

    Option c is the correct 1 is correct. Low-income individuals pay a of taxes compared to high-income earners regressive tax system. That's because the tax as a percentage of the value of the asset taxpayer purchases or owns. This type of tax has with an individual's earnings or income employees effectively pay a lower their overall pay into the Social Security system 2 is correct. Taxes assessed under a are based on the taxable amount of an They follow an accelerating schedule, so high income earners pay more than low-income earners. Tax with tax liability, increases as an individual's The overall outcome is that higher earners pay percentage of taxes and more money in taxes than 3 is correct. A proportional system assesses tax rate on everyone regardless of income or system is meant to create equality between marginal and average tax rates paid

38. #158Full-length test
    On which of the following events/ activities can Government of India collect the 'capital gains tax' as per the provisions of Income Tax Act, 1961? 66. 1. Profit on the sale of equity shares 2. Profit on the sale of jewellery held for personal use 3. Profit on the sale of residential house property 4. Transfer of gold from father to son as inheritanceChoose the correct answer from the codes given below
    • A1, 2 and 3 only
    • B1 and 2 only
    • C1 and 3 only
    • D1, 2, 3 and 4
    Answer: (A) 1, 2 and 3 only
    Explanation

    Option a is the correct to the provisions of the Income Tax Act, or gains arising from "transfer" of a "capital asset" "Capital Gains" and are charged to tax under the Gains". Hence, to attract capital gain tax, the should be a transfer should be of a capital an asset in lieu of compensation comes within of 1 and 3 are correct: Both equity shares property can be considered as "capital asset" profits/ gains on sale of these assets can attract 2 is correct: In general, movable personal wearing apparel etc. are excluded from the definition assets". However, as an exception, following included in the definition of capital assets: Jewellery Archaeological Drawings Collections Paintings Sculptures Any work of transfer of above-mentioned assets can attract 4 is incorrect: When a property is received or as a gift, it is not taxable for the gold received from father to son under not attract capit

39. #159Full-length test
    Which of the following groups of Industries represents the Eight core Industries in India?
    • ARefinery Products, Fertilisers, Pharmaceuticals and Crude oil
    • BCement, Steel, Fertilisers and Natural Gas
    • CAutomobiles, Crude oil, Electricity and Coal
    • DRefinery Products, Steel, Coal and Textiles
    Answer: (D) Refinery Products, Steel, Coal and Textiles
    Explanation

    Option d is the correct budget consists of two types of expenditure 'charged' upon the Consolidated Fund and the expenditure 'made' from the of India. The charged expenditure is the Parliament, that is, it can only be discussed by while the other type has to be voted by Example of Charged expenditure allowances of the President and other to his 1 and 2 are correct: Some of the is charged on the Consolidated sum required to satisfy any judgement, decree of any court or arbitral tribunal related to of debt charges for which the Central government is liable, including interest, sinking fund charges charges and other expenditure relating to the of loans and the service and redemption of 3 is correct: Article 275 empowers make grants to the states which are in need of and not to every state. Also, different sums fixed for different states: These sums are charged on Fund of India every 4 is co

40. #160Full-length test
    With reference to the ptites products in India, consider the following statements: 1. Public sector Oil Marketing companies revise the retail prices diesel on a daily basis based. on. in global crude oil prices. 2. The retail prices of petrol and diesel vary from state to state because the excise duty varies from state to state. 3. Generally, the central government taxes the production of petroleum products while states tax their sales.Which of the statements given above are correct?
    • A1 and 2 only
    • B2 and 3 only
    • C1 and 3 only
    • D1, 2 and 3 62
    Answer: (C) 1 and 3 only
    Explanation

    Option c is the correct 1 correct: Both petrol and diesel prices deregulated i.e., their prices will be market sector Oil Marketing Companies (OMCs) revise the { prices of petrol and diesel in India on a daily, to changes in the price ofglobal.crude 2 is incorrect: Excise duty is constant country as it is levied by the Centre. The retail petrol and diesel vary because the state taxes imposed upon them vary from state to 3 is correct: The central government taxes of petroleum products, while states tax

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