Economic Development

21. Which of the following would be advisable to curb the revenue deficit

Which of the following would be advisable to curb the revenue deficit ?

1. Cutting expenditures on subsidy

2. Cutting social expenditures

3. Imposing import controls

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1 and 2 only
2 and 3 only
1 and 3 only
1, 2 and 3
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UPSC Combined Section Officer – 2024
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The correct answer is 1 and 2 only (A).
Revenue deficit is the excess of total revenue expenditure of the government over its total revenue receipts. To reduce the revenue deficit, the government must either increase its revenue receipts (e.g., through taxes) or decrease its revenue expenditure. Cutting expenditures on subsidies (1) and cutting social expenditures (2) are both measures that reduce government revenue expenditure, and are therefore advisable steps to curb the revenue deficit.
Imposing import controls (3), such as tariffs or quotas, is primarily a trade policy tool aimed at influencing the balance of trade, protecting domestic industries, or potentially generating customs revenue (which is part of revenue receipts). While higher customs duty can increase revenue receipts, import controls are not a primary or direct measure focused on managing the balance between general revenue expenditure and revenue receipts. Cutting expenditure is a more direct way to address a revenue deficit.

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22. Which one of the following is a qualitative tool of monetary policy ?

Which one of the following is a qualitative tool of monetary policy ?

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Bank Rate
Credit Ceiling
Credit Rationing
Cash Reserve Ratio
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UPSC Combined Section Officer – 2024
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The correct answer is Credit Rationing (C).
Monetary policy tools are generally classified into quantitative and qualitative measures. Quantitative tools affect the overall volume of credit in the economy (e.g., Bank Rate, CRR, Open Market Operations). Qualitative tools, also known as selective credit controls, aim to influence the direction or flow of credit to specific sectors or for particular purposes. Credit Rationing, where the central bank or government restricts the availability of credit to certain sectors or mandates allocation to others, is a classic example of a qualitative tool.
Bank Rate and Cash Reserve Ratio (CRR) are quantitative tools that impact the lending capacity and cost for banks across the board. Credit Ceiling, while potentially limiting overall credit, can sometimes be implemented in a selective manner, blurring the lines, but Credit Rationing is a more explicit form of selective credit control, making it a clear qualitative tool used to manage the distribution of credit rather than just its total volume.

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23. Consider the following taxes : 1. Stamp Duty 2. Property Tax 3. Exc

Consider the following taxes :

1. Stamp Duty

2. Property Tax

3. Excise Duty

Which of the above is/are the production taxes ?

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1 and 2 only
2 and 3 only
3 only
1, 2 and 3
This question was previously asked in
UPSC Combined Section Officer – 2024
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The correct answer is 3 only (C).
Production taxes are taxes on goods and services as they are produced, sold, or used, independent of income and property. Excise Duty is a tax on the manufacture or production of goods. Stamp Duty is a tax on the execution of certain documents (like sale deeds, agreements). Property Tax is a tax levied on the ownership of property. Therefore, among the given options, only Excise Duty is directly related to the act of production.
While India has largely moved to the Goods and Services Tax (GST) which subsumed most excise duties, the concept of excise duty as a production tax is fundamental. Stamp duty is a transaction tax, and property tax is a wealth or ownership tax. The question asks which is a production tax, and Excise Duty fits this definition.

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24. What is the General Anti-Avoidance Rule (GAAR) ?

What is the General Anti-Avoidance Rule (GAAR) ?

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GAAR is a set of rules aimed at curbing aggressive tax planning.
GAAR is a set of rules aimed at curbing money laundering by Indians to foreign countries.
GAAR is a set of rules aimed at regulating investments by Indians in foreign countries.
GAAR is a set of rules aimed at regulating investments by foreigners in India.
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The correct answer is GAAR is a set of rules aimed at curbing aggressive tax planning (A).
The General Anti-Avoidance Rule (GAAR) is a tax legislation designed to tackle aggressive tax planning arrangements that are primarily aimed at obtaining a tax benefit, without commercial substance or purpose other than tax avoidance. It gives tax authorities the power to deny tax benefits that arise from such arrangements.
GAAR is distinct from rules targeting money laundering (which falls under anti-money laundering laws like PMLA in India) or rules regulating cross-border investments (which are part of FEMA and RBI regulations). GAAR specifically focuses on arrangements considered ‘impermissible avoidance arrangements’ under the Income Tax Act, where the main purpose is to obtain a tax benefit and the arrangement lacks commercial rationale.

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25. A Non-Resident Indian wants to get approval under Government route for

A Non-Resident Indian wants to get approval under Government route for FDI in ‘Single Brand’ product retailing in India. Which among the following would be the appropriate agency to approach for this application ?

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Regional Office of Reserve Bank of India
Head Office of Reserve Bank of India
Department of Economic Affairs
Department of Industrial Policy and Promotion
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UPSC Combined Section Officer – 2024
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The correct answer is Department of Industrial Policy and Promotion (D).
In India, the Department for Promotion of Industry and Internal Trade (DPIIT), which was formerly known as the Department of Industrial Policy and Promotion (DIPP), under the Ministry of Commerce and Industry, is the nodal department responsible for formulating and implementing the FDI policy. Applications for FDI under the government approval route, including for ‘Single Brand’ product retailing beyond the automatic route limits, are processed through the Foreign Investment Facilitation Portal (FIFP), which is managed by DPIIT.
While the Reserve Bank of India (RBI) is involved in the regulation of foreign exchange and monitoring of FDI inflows/outflows, the policy formulation and approval process under the government route for FDI proposals typically falls under the purview of DPIIT (formerly DIPP). The Department of Economic Affairs (DEA) in the Ministry of Finance is also involved in broader economic policies, but the specific handling of FDI applications under the government route is managed by DPIIT. The name ‘Department of Industrial Policy and Promotion’ (DIPP) was used before the renaming to DPIIT; in the context of a question likely referencing the structure before the rename, DIPP is the correct choice. Assuming the question reflects the older terminology, DIPP (Option D) is correct. If it were updated terminology, the option would likely be DPIIT. Given the option, DIPP is the intended answer.

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26. What is the impact on the “Social overhead capital requirements” of an

What is the impact on the “Social overhead capital requirements” of an economy, if the population increases ?

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Social overhead capital requirements fall.
Social overhead capital requirements remain unchanged.
Social overhead capital requirements increase.
Social overhead capital requirements fall drastically.
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UPSC Combined Section Officer – 2024
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The correct answer is Social overhead capital requirements increase (C).
Social overhead capital refers to the basic infrastructure and services necessary for economic development and social well-being, such as roads, railways, ports, communication systems, power grids, water supply, sanitation, schools, and hospitals. An increase in population directly leads to a greater demand for these facilities and services, thereby increasing the requirement for social overhead capital to maintain or improve living standards and support economic activity.
A growing population needs more housing, transportation, energy, education, healthcare, and civic amenities. Without a corresponding increase in social overhead capital, existing infrastructure becomes strained, leading to congestion, reduced quality of services, and potential bottlenecks for economic growth. Therefore, population growth necessitates significant investment in expanding and upgrading social infrastructure.

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27. Micro credit in India comes under which one of the following activitie

Micro credit in India comes under which one of the following activities ?

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Commercial Banking
Cooperative Banking
Private Banking
Non-Banking Finance
This question was previously asked in
UPSC Combined Section Officer – 2024
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The correct answer is Non-Banking Finance (D).
Micro credit in India is significantly provided by Microfinance Institutions (MFIs), many of which are registered as Non-Banking Financial Companies (NBFCs). While commercial and cooperative banks also offer microcredit, the non-banking finance sector, particularly dedicated MFIs, plays a crucial role in extending financial services to the unbanked or underbanked population, which is the primary target of microcredit.
NBFC-MFIs are a specific category of NBFCs regulated by the Reserve Bank of India (RBI) that primarily lend to low-income groups. They are distinct from traditional commercial, cooperative, or private banks, although these banking types can also offer microfinance products. The question asks what activity microcredit *comes under*, and given the prevalence of MFIs as NBFCs and the specialized nature of microfinance often operating outside traditional banking structures for wider reach, Non-Banking Finance is the most appropriate overarching category among the options provided that encompasses a large part of microcredit activity.

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28. Which among the following maintains Real Time Gross Settlement ?

Which among the following maintains Real Time Gross Settlement ?

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Reserve Bank of India
Asian Development Bank
World Bank
State Bank of India
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UPSC Combined Section Officer – 2024
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The Reserve Bank of India (RBI) maintains Real Time Gross Settlement (RTGS) in India.
Real Time Gross Settlement (RTGS) is a system where there is continuous (real-time) settlement of individual funds transfer orders. ‘Gross Settlement’ means the settlement of funds transfer instructions occurs individually (on an instruction-by-instruction basis). Because RTGS is a real-time system, transactions are settled as soon as they are processed.
In India, the RTGS system is operated and maintained by the central bank, the Reserve Bank of India (RBI). It is used for large-value interbank transactions.
RTGS is one of the prominent payment systems in India, alongside the National Electronic Funds Transfer (NEFT) system. While RTGS is primarily for large-value transactions, NEFT is for smaller value transactions and operates on a deferred net settlement basis. Both systems are critical components of the modern payment infrastructure in India, managed by the RBI. Commercial banks (like State Bank of India) are participants in these systems, facilitating transfers for their customers.

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29. Which one of the following industries is not covered in the index of e

Which one of the following industries is not covered in the index of eight core industries ?

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Electricity
Crude oil
Natural gas
Pharmaceuticals
This question was previously asked in
UPSC Combined Section Officer – 2024
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Pharmaceuticals is not included in the Index of Eight Core Industries.
The Index of Eight Core Industries measures the collective and individual production performance of eight significant sectors of the Indian economy. These eight industries are:
1. Coal
2. Crude Oil
3. Natural Gas
4. Refinery Products
5. Fertilizers
6. Steel
7. Cement
8. Electricity
The options A, B, and C (Electricity, Crude oil, Natural gas) are all part of the core industries. Pharmaceuticals is not.
The Index of Eight Core Industries constitutes about 40.27 percent of the weight of items included in the Index of Industrial Production (IIP). It is released by the Office of the Economic Adviser (OEA), Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry. Changes in this index significantly impact the IIP.

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30. In which year did the Monopolistic and Restrictive Trade Practices Act

In which year did the Monopolistic and Restrictive Trade Practices Act become effective ?

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1969
1970
1971
1972
This question was previously asked in
UPSC Combined Section Officer – 2024
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The Monopolistic and Restrictive Trade Practices (MRTP) Act became effective in 1970.
The MRTP Act was enacted in India in 1969 to curb monopolistic and restrictive trade practices and prohibit unfair trade practices. While it was enacted in 1969, it officially came into force on June 1, 1970.
The MRTP Act, 1969, was a significant piece of legislation aimed at promoting competition and preventing concentration of economic power. It established the MRTP Commission to investigate and take action against such practices. However, in the post-liberalization era, it was felt that the Act was insufficient to address the complexities of modern competition issues. Consequently, it was repealed and replaced by the Competition Act, 2002, which came into full effect in phases starting from 2003, and the Competition Commission of India (CCI) was established.

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