Economic Development

51. Which of the following is the highest policy-making body for monetary

Which of the following is the highest policy-making body for monetary matters in India?

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The Securities and Exchange Board of India
The NITI Aayog
The Ministry of Finance
The Reserve Bank of India
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UPSC Combined Section Officer – 2019-20
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The Reserve Bank of India (RBI) is the central bank responsible for monetary policy in India. The Monetary Policy Committee (MPC) within the RBI is the statutory body entrusted with the task of setting the benchmark policy rate (repo rate) to achieve the inflation target set by the government, while keeping in mind the objective of growth. This makes the RBI the highest policy-making body for monetary matters.
– RBI is the monetary authority of India.
– The Monetary Policy Committee (MPC) within RBI decides the key interest rates.
– SEBI regulates capital markets, NITI Aayog is a planning/advisory body, and the Ministry of Finance handles fiscal policy.
The MPC was constituted in 2016 and consists of six members – three officials from the RBI and three external members nominated by the government. The Governor of RBI is the ex-officio Chairperson. The decisions of the MPC are binding on the RBI.

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52. The index that measures the average change in the prices of goods and

The index that measures the average change in the prices of goods and services consumed by urban households is called

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Wholesale Price Index
Consumer Price Index
Producer Price Index
Sensex
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UPSC Combined Section Officer – 2019-20
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The Consumer Price Index (CPI) measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. In India, CPI is calculated separately for rural, urban, and combined populations. The question specifically refers to urban households, which corresponds to CPI-Urban or CPI-Combined (which includes urban data). WPI measures prices at the wholesale level, PPI measures prices received by producers, and Sensex is a stock market index.
– CPI reflects the cost of living for typical consumers.
– It is used as a key measure of retail inflation.
– Different series of CPI are published based on the target population (urban, rural, combined).
In India, the CPI combined (CPI-C) is currently the main inflation indicator used for monetary policy formulation by the Reserve Bank of India.

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53. The fiscal deficit is the difference between

The fiscal deficit is the difference between

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total revenue and total expenditure
total imports and total exports
total investment and total savings
total debt and total assets
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UPSC Combined Section Officer – 2019-20
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Fiscal deficit is the difference between the government’s total expenditure and its total non-debt receipts (revenue receipts + non-debt capital receipts) in a financial year. It represents the total borrowing requirement of the government to cover its excess expenditure over its non-borrowing income. Option A, “total revenue and total expenditure,” while a simplified representation, captures the essence as the deficit (expenditure minus revenue) is the amount the government needs to borrow.
– Fiscal deficit indicates the government’s borrowing needs.
– It is calculated as Total Expenditure – (Revenue Receipts + Non-debt Capital Receipts).
– A high fiscal deficit can lead to increased government debt and potentially higher inflation.
Fiscal deficit is distinct from revenue deficit (Revenue Expenditure – Revenue Receipts) and primary deficit (Fiscal Deficit – Interest Payments). Managing the fiscal deficit is a key goal of fiscal policy.

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54. Which term refers to the total value of all the goods and services pro

Which term refers to the total value of all the goods and services produced within the country during a specific period?

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GDP
GNP
GNI
GVA
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UPSC Combined Section Officer – 2019-20
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Gross Domestic Product (GDP) is the total monetary value of all the finished goods and services produced *within the geographical boundaries* of a country during a specific period, usually one year. It is the most common measure of a country’s economic output.
– GDP measures production based on location (within the country’s borders).
– It includes production by both citizens and foreigners residing in the country.
– It is calculated for a specific time period (quarterly or annually).
GNP (Gross National Product) measures the total value of goods and services produced by the residents of a country, regardless of their location. GNI (Gross National Income) is conceptually similar to GNP. GVA (Gross Value Added) measures the contribution of individual producers, industries, or sectors to the GDP.

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55. Consider the following statements : The Reserve Bank of India is respo

Consider the following statements :
The Reserve Bank of India is responsible for the issuance of

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  • 1. currency notes and coins
  • 2. Government bonds
  • 3. corporate bonds
  • 4. stocks

Which of the above statements are correct?

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1, 2 and 4 only
1, 2, 3 and 4
3 and 4 only
1, 2 and 3 only
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UPSC Combined Section Officer – 2019-20
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The Reserve Bank of India (RBI) is the central bank of India and is responsible for the issuance of currency notes (except the one-rupee note and coins which are issued by the Government of India but put into circulation by RBI) and management of government debt, which includes issuing government bonds. RBI does not issue corporate bonds or stocks; these are issued by companies and traded in the securities market regulated by SEBI. Therefore, statements 1 and 2 are correct, while 3 and 4 are incorrect.
– RBI is the sole authority for issuing currency notes in India (except ₹1 note).
– RBI acts as the debt manager for both the Central and State Governments, involving the issuance and management of government securities (bonds).
– Corporate bonds and stocks are capital market instruments issued by non-government entities.
The one-rupee note and coins are minted by the Government of India, but RBI facilitates their distribution and circulation. RBI’s other functions include acting as a banker to the government, banker to banks, foreign exchange manager, and regulator of the banking system.

56. The term ‘inflation’ refers to the increase in

The term ‘inflation’ refers to the increase in

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unemployment rate
prices of goods and services
foreign exchange reserves
interest rates
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UPSC Combined Section Officer – 2019-20
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Inflation is defined as a sustained increase in the general price level of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.
– It is about the increase in the *general* price level, not just a few items.
– It leads to a decrease in the purchasing power of money.
– It is typically measured as an annual percentage increase.
Inflation can be caused by various factors, including demand-pull (excess aggregate demand) and cost-push (increase in production costs). It is typically measured using price indexes like the Consumer Price Index (CPI) and Wholesale Price Index (WPI).

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57. Which among the following pairs pertaining to revolutions that changed

Which among the following pairs pertaining to revolutions that changed the country is/are correctly matched?

1. Verghese Kurien: Father of the Indian White Revolution
2. Chidambaram Subramaniam: Father of the Indian Green Revolution
3. Neel Kranti Mission: Enhanced the production of fish

Select the correct answer using the code given below.

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1 only
1 and 2
1 and 3
3 only
This question was previously asked in
UPSC Combined Section Officer – 2019-20
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Pair 1 and Pair 3 are correctly matched, while Pair 2 is incorrectly matched. Verghese Kurien is known as the Father of the White Revolution (Operation Flood), and the Neel Kranti Mission (Blue Revolution) aims to enhance fish production. M.S. Swaminathan is widely considered the Father of the Green Revolution in India, not Chidambaram Subramaniam, although Subramaniam played a significant political role as the Union Minister for Food and Agriculture during that period.
– Pair 1: Verghese Kurien is correctly matched with the White Revolution (Milk Production).
– Pair 2: Chidambaram Subramaniam is incorrectly matched; M.S. Swaminathan is considered the Father of the Green Revolution in India.
– Pair 3: Neel Kranti Mission means Blue Revolution, which is correctly associated with enhancing fish production.
– The question asks for correctly matched pairs.
The Green Revolution in India involved the adoption of high-yielding varieties of seeds, fertilizers, and irrigation techniques, primarily driven by the scientific work of M.S. Swaminathan and supported by political leaders like C. Subramaniam. The White Revolution transformed India into the world’s largest milk producer. The Blue Revolution focused on the growth of the aquaculture and fisheries sector.

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58. Consider the following statements : The ‘National Investment and Infra

Consider the following statements :
The ‘National Investment and Infrastructure Fund’ was created to

  • 1. promote Foreign Direct Investment in India
  • 2. support infrastructure projects in the country
  • 3. attract venture capital for startups
  • 4. finance defence projects

Which of the above statements is/are correct?

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1 only
2 only
2, 3 and 4 only
1, 2, 3 and 4
This question was previously asked in
UPSC Combined Section Officer – 2019-20
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The National Investment and Infrastructure Fund (NIIF) was primarily created to support infrastructure projects in India by attracting both domestic and international investments.
– Statement 1 is partially correct in that NIIF aims to attract foreign investment, but its core purpose is specifically for infrastructure, not general FDI promotion across all sectors.
– Statement 2 is the main objective of NIIF.
– Statement 3 is incorrect; NIIF focuses on infrastructure and related sectors, not venture capital for startups.
– Statement 4 is incorrect; NIIF is not designed to finance defence projects.
– Therefore, only statement 2 correctly describes the primary purpose of NIIF.
NIIF is a collaborative investment platform for international and Indian investors, anchored by the Government of India. It is structured as a fund of funds, but also makes direct investments. It manages funds across three funds: Master Fund, Fund of Funds, and Strategic Opportunities Fund, focusing on different sectors like roads, ports, energy, housing, and other infrastructure-related areas.

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59. The ‘Insolvency and Bankruptcy Code’ was introduced to facilitate the

The ‘Insolvency and Bankruptcy Code’ was introduced to facilitate the resolution of insolvency cases and to improve the ease of doing business in India. In which year was it enacted?

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2013
2015
2016
2017
This question was previously asked in
UPSC Combined Section Officer – 2019-20
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The Insolvency and Bankruptcy Code (IBC) was enacted in the year 2016.
The Insolvency and Bankruptcy Code, 2016, is a comprehensive law enacted by the Parliament of India to consolidate the laws relating to insolvency and bankruptcy in India. It provides a time-bound process for resolving insolvency of companies and individuals.
The IBC replaced multiple existing laws and frameworks related to insolvency and bankruptcy resolution, aiming to improve the ease of doing business in India by providing a clear, fast, and predictable mechanism for debt resolution. It established the Insolvency and Bankruptcy Board of India (IBBI) as the regulatory body.

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60. The Banking Regulation (Amendment) Bill, 2020 was passed to provide re

The Banking Regulation (Amendment) Bill, 2020 was passed to provide regulatory powers to the Reserve Bank of India for overseeing the functioning of which financial institution?

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  • 1. Mutual funds
  • 2. Insurance companies

Select the correct answer using the code given below.

Both 1 and 2
1 only
2 only
Neither 1 nor 2
This question was previously asked in
UPSC Combined Section Officer – 2019-20
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Neither mutual funds nor insurance companies were brought under the purview of the Reserve Bank of India’s regulatory powers by the Banking Regulation (Amendment) Bill, 2020.
The Banking Regulation (Amendment) Bill, 2020, aimed to bring cooperative banks under the direct supervision of the Reserve Bank of India. This was done to strengthen their governance, improve financial stability, and protect depositors’ interests.
Mutual funds are regulated by the Securities and Exchange Board of India (SEBI). Insurance companies are regulated by the Insurance Regulatory and Development Authority of India (IRDAI). The 2020 amendment specifically targeted cooperative banks and did not extend RBI’s regulatory ambit to mutual funds or insurance companies.

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