QUESTIONS

1. In the context of recently launched Which of the above statements is/are correct?
“Food Safety Mitra Scheme” consider (a) 1 only
the following statements: (b) 2 only
1. Both “Eat Right Jacket” and “Eat Right Jhola”
initiatives are launched to strengthen the (c) Both 1 and 2
food safety administration. (d) Neither 1 nor 2
2. The Eat Right Jacket is a jacket that has
a smart design to hold technological
4. With reference to the Global
devices.
Microscope for Financial Inclusion
3. Eat Right Jhola is using re-usable cloth bag
to replace plastic bags.
report 2019, consider the following
statements:
Which of the above statements is/are correct?

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1. It is released by World Economic Forum
(a) 1 only along with INSEAD.
(b) 3 only 2. It measures financial inclusion enabling
(c) 1 and 2 only environment across 55 countries only.

(d) 1, 2 and 3 3. The 2019 report has ranked India among

top nations with the most conducive
environment for financial inclusion.
2. With reference to the strategic sale of
PSUs in India, consider the following
statements:
O Which of the above statements are correct?
(a) 1 and 2 only
1. The strategic sale involves the sale of 2 and 3 only
SC
(b)
majority governmental share in the PSU (c) 1 and 3 only
along with giving up managerial control of
the firm. (d) 1, 2 and 3
2. It will help in meeting the 3.3% fiscal deficit
target set for the financial year 2019-20. 5. Consider the following statements
3. Department of Investment and Public Asset regarding Core Investment Companies
Management (DIPAM) under the Ministry in India:
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of Commerce is the nodal department for

disinvestment. 1. They cannot invest more than 50% of their
net assets in the form of equity shares,
Which of the above statements are correct? bonds, debt or loans in group companies.
(a) 1 and 2 only 2. They are not required to submit their
(b) 1 and 3 only statutory auditor’s certificate (SAC) to RBI
in India.
(c) 2 and 3 only
Which of the above statements is/are correct?
(d) 1, 2 and 3
(a) 1 only
3. Consider the following statements (b) 2 only
regarding the recent credit rating (c) Both 1 and 2
released by Moody’s Analytics for
(d) Neither 1 nor 2
India:
1. It lowered back India’s credit rating from
Baa2 to Baa3 in 2019. 6. Consider the following statements
2. It predicted a fiscal deficit of 3.7% of GDP
regarding Washington Consensus:
as against the 3.3% set for the current 1. It is a reform package promoted for crisis-
financial year. wracked developed countries.

3 P2020_CRCA_500/D31
 2. These neoliberal economic prescriptions 9. Consider the following statements
recommended structural reforms in
regarding New Development Bank
exchange for immediate financial help.
(NDB) and National Investment and
Which of the above statements is/are correct?
Infrastructure Fund’s (NIIF):
(a) 1 only
1. New Development Bank (NDB), was
(b) 2 only formerly known as the BRICS Development
(c) Both 1 and 2 Bank.
(d) Neither 1 nor 2 2. Government of India holds majority equity
in NIIF.
7. Consider the following statements 3. Abu Dhabi Investment Authority is the first
regarding the recently released report institutional investor in NIIF’s Master Fund.
on Clean Industry: Which of the above statements are correct?
1. It is prepared by a task force led by FICCI.
(a) 1 and 2 only
2. It recommended action plan for clean
Industry in Delhi NCR only. (b) 1 and 3 only

RE
3. The report recommended usage of gas- (c) 2 and 3 only
based thermal power units.
(d) 1, 2 and 3
Which of the above statements is/are incorrect?
1 only
(a)
10. With reference to the Bharat Bond ETF,
(b) 1 and 2 only consider the following statements:
(c) 2 only
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1. It is the first corporate bond ETF in India.
(d) 3 only 2. This will increase the participation of retail
investors in bond markets.
SC
8. World Energy Outlook 2019 report 3. The bond ETF will be taxed as the different
spans three alternative “futures”. rates than debt mutual funds.
Which of the following is not part of
Which of the above statements are correct?
this report?
(a) Stated Policies Scenario (a) 1 and 2 only

(b) Sustainable Development Scenario (b) 2 and 3 only

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(c) Current Policies Scenario (c) 1 and 3 only

(d) Future Programmes Scenario (d) 1, 2 and 3

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P2020_CRCA_500/D31 4
 ANSWER HINTS

Answer Key

Q. 1 (d) Q. 3 (b) Q. 5 (b) Q. 7 (a) Q. 9 (b)

Q. 2 (a) Q. 4 (b) Q. 6 (b) Q. 8 (d) Q. 10 (a)

1. Correct Option: (d)  This planned strategic sale will together

account for 85% of the disinvestment
Explanation: revenue that will help in meeting the fiscal

RE
 All statements are correct
Supplementary notes:
Safety Mitra Scheme
 ‘Eat Right Jacket’, and ‘Eat Right Jhola’
were launched to strengthen food safety
O
administration and scale up the ‘Eat Right
India’ movement.
 Eat Right Jacket’ has a smart design to hold
tech devices like tablets/smart phone, a QR
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code and RFID tag for identification and
tracking.
 Eat Right Jhola is a reusable cloth bag that is
expected to replace plastic bags for shopping
purpose in various retail chains.
2. Correct Option: (a)
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deficit target of 3.3% set for the FY 2019-
20.
 A strategic sale by a government is one
where the management control is ceded
to the buyer.
 It involves more selling more than 50%
share of the government in any entity.
 PSEs for strategic disinvestment are selected
based on certain criteria.
They may be incurring losses.

 Or it may be operationally difficult for the
government to continue with the PSE.
 The cabinet committee on economic affairs,
chaired by Prime Minister Narendra Modi also
accorded ‘in-principle’ approval for enabling
the reduction of the government’s paid-up
share capital below 51% in select state-run

firms while retaining management control on

Explanation:
 Statement 3 is incorrect: DIPAM comes
under the Ministry of Finance.
Supplementary notes:
Strategic Sale of Public Sector Undertakings
(PSUs)
 The government has set a target of raising Rs
1.05 lakh crore from disinvestment in state-
run companies in the current fiscal year.
 In this context, recently Indian government
approved strategic stake sale in five PSUs,
including fuel retailer Bharat Petroleum Corp
(BPCL) and Shipping Corporation of India,
power companies Tehri Hydro Development
Corp of India and North Eastern Electric Power
Corporation (Neepco) and logistics firm
‘Concor’.
case to case basis.
 The Centre had announced its intention to
go below 51% in state-run companies in the
2019-20 budget.
 For this purpose, the Department of
Investment and Public Asset Management,
DIPAM under the Ministry of Finance has
been made the nodal department for
disinvestment.
 DIPAM and NITI Aayog will now jointly identify
PSUs for strategic disinvestment.
3. Correct Option: (b)
Explanation:
 Statement 1 is incorrect: It has not lowered
India’s rating but has changed its outlook from
stable to negative.

P2020_CRCA_500/D31 6
 Supplementary notes:
Moody’s Credit Rating for India
 Moody’s Investor Service, which is a leading
provider of credit ratings, research, and risk
analysis has changed its outlook for India’s
sovereign rating(Baa2) from stable to
negative, saying that the domestic economic
downturn could be structural.
 The agency’s action does not amount to
a rating downgrade but comes as a caution
against policy inaction.
Moody’s credit rating of Baa2, the second-

5. Correct Option: (b)
lowest investment grade score, is better than
those of other agencies, such as S&P and Fitch,
who have assigned the lowest investment
grade to India with a stable outlook.
RE
 Moody’s forecast predicted a 6.6 per cent of
GDP growth for the current fiscal year.
 The agency projected a fiscal deficit of 3.7
per cent of GDP in the current financial
year, compared to the budgeted target of
3.3 per cent. O Core Investment Companies
 India’s ratings were upgraded to Baa2 from
Baa3 in 2017 citing progress on ‘economic and
institutional reforms’.
Rating agencies are ultra-sensitive to fiscal
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deficit overruns but the positive factor here
is that India’s borrowings are almost wholly
domestic.
 External debt to GDP is just 20% but the ratings
do have an impact on investor sentiment.
4. Correct Option: (b)
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Explanation:
 Statement 1 is incorrect: It is released by the
Economic Intelligence Unit (EIU).
Supplementary notes:
Global Microscope Report 2019
 The Global Microscope for Financial Inclusion
is a benchmarking index that assesses the
enabling environment for financial access in
55 countries.
 The report is released by Economist
Intelligence Unit (EIU), a British research and
analysis division of The Economist Group.
 It measures financial inclusion via 4 parameters
i.e. in terms of allowing non-banks to issue
e-money, proportionate customer due
diligence and effective consumer protection.
7 P2020_CRCA_500/D31
 The 2019 report has placed India among
the top nations with the most conducive
environment for financial inclusion.
 According to it the overall environment for
financial inclusion has improved globally with
India, Colombia, Peru, Uruguay and Mexico
have the most favourable conditions for
inclusive finance.
 Only four countries - Colombia, India, Jamaica
and Uruguay - scored perfectly across all four
parameters.
Explanation:
 Statement 1 is incorrect: They have at least
90% of their net assets as investment in the
form of equity shares, preference shares,
bonds, debentures, debt or loans in group
companies.
Supplementary notes:
 Core investment companies are non-
banking financial companies (NBFCs)
holding not less than 90% of their net assets
in the form of investment in equity shares,
preference shares, bonds, debentures, debt
or loans in group companies.
 Further investments in equity shares in group
companies constitute not less than 60 per cent
of its net assets.
 With an objective to strengthen core
investment companies (CIC), a working
group formed by the Reserve Bank of India
recommended measures such as including
periodical inspection of the companies and
formation of board-level committees.
 The working group recommended capital
contribution by core investment companies
(CIC) in a step-down CIC, over and above 10
per cent, should be deducted from its adjusted
net worth.
 Currently, CICs are not required to submit
off-site returns or statutory auditors’
certificate (SAC).
 Off-site returns or statutory auditors’ certificate
are submitted to RBI by NBFCs where the
auditor certifies that the company continues
to operate as an NBFC.
 The committee recommended that off-site
returns may be designed by RBI and prescribed
for CICs on the lines of other NBFCs.
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P2020_CRCA_500/D31
  Experts have been seeking a review of CIC
guidelines ever since defaults by Infrastructure
Leasing and Financial Services Ltd (IL&FS), a
large systemically important core investment
company.
 In August 2019, there were 63 CICs registered
with RBI.
6. Correct Option: (b)
Explanation:
 Statement 1 is incorrect: It is a reform package
promoted for crisis-wracked developing
countries.
Supplementary notes:
Washington Consensus
RE
 This was a set of neoliberal economic
prescriptions made by the International
Monetary Fund, the World Bank, and the U.S.
Treasury to developing countries that faced
economic crises.
 It recommended structural reforms that
increased the role of market forces in

exchange for immediate financial help.
O
The term was coined by British economist
John Williamson in 1989.
SC
 While some said that the Washington
Consensus was used to impose harsh
conditions that were unhelpful for economic
recovery, others have argued that although
not perfect, it was favourable to long-term
economic growth in developing economies.
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7. Correct Option: (a)
Explanation:
 The report recommended usage of:
 Statement 1 is incorrect: It is prepared by
a Task Force led by both NITI Aayog and the
Confederation of Indian Industry (CII).
Supplementary notes:
Action Plan for Clean Industries
 NITI Aayog released the report on Clean
Industry prepared by a Task Force led by
both NITI Aayog and the Confederation of
Indian Industry (CII).
 The report identifies sources of Industrial
Pollution in Delhi NCR and recommend
action plan for clean Industry.
 The Task Force considers three key air
pollutants in Delhi NCR: road/soil dust, fly ash
and secondary particles.
9 P2020_CRCA_500/D31
 The report recommended two different sets
of strategies for tackling these two broad
categories of sources.
 Prevention and Control of Fugitive PM
Emissions:
 Mandatory contractual obligations for
clean construction need to be specified
for individuals/ organisations under
the mechanism of ‘building permits/
approvals’ by local bodies/authorities
and ‘environmental clearances’ by
Ministry of Environment Forest and
Climate Change.
 Linking of green incentives to clean
construction practices: Currently
there are multiple incentives which
are conferred to projects which are
provisionally rated to be green by
buildings rating systems such as
GRIHA, IGBC, LEEDS etc.
 Strengthened building code and
building byelaws for ambient air
quality: It is recommended that
unified building code is adopted
at national level for addressing
various aspects of building and
promoting adherence to code across
all commercial and urban residential
buildings.
 Mitigation of Energy- related
Emissions:
 Prioritizing Clean Fuels and
Technologies: It is required in NCR
region and other dense urban areas
suffering from severely degraded air
quality.
 Gas-based thermal power units
 Coal- based thermal power units with
advanced emission controls for SOx, NOx
and PM.
 Incentives for biomass co-firing in existing
coal power units.
 Leapfrogging to advanced (up to 50%)
biomass co-firing in coal power plants in
North West region.
 Emission norms for all Diesel Generators:
Adoption of best available technology and
emission standards strict in-use emission
norms for all diesel generators along with
minimum performance requirements for
retrofit devices.
8. Correct Option: (d)
Explanation:
 Option (d) is correct
Supplementary notes:
World Energy Outlook 2019
 The International Energy Agency (IEA) has
released World Energy Outlook for the year
2019.
 The world’s CO2 emissions are set to continue
rising for decades unless there is greater
ambition on climate change, despite the
“profound shifts” already underway in the
global energy system.
 But a plateau for coal, along with rising
demand for oil and gas, would mean global
emissions continue to rise throughout the
outlook period to 2040.
 The outlook spans three alternative
“futures”:
 Stated Policies Scenario (STEPS): This
scenario provides a detailed sense of the
O
direction in which today’s policy ambitions
would take the energy sector.
 Sustainable Development Scenario
(SDS): This scenario charts a path fully
SC
aligned with the Paris Agreement by
holding the rise in global temperatures to
“well below 2°C and pursuing efforts to
limit to 1.5°C”, and meets objectives related
to universal energy access and cleaner air.
 Current Policies Scenario: The Current
Policies Scenario is a baseline picture of
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how global energy markets would evolve
if governments make no changes to their
existing policies and measures.
9. Correct Option: (b)
Explanation:
 Statement 2 is incorrect: The government
of India holds 49% equity in NIIF and the rest
held by foreign and domestic investors.
Supplementary notes:
New Development Bank (NDB):
 The New Development Bank was formed
to support infrastructure and sustainable
development efforts in BRICS and other
underserved, emerging economies for faster
development through innovation and cutting-
edge technology.
P2020_CRCA_500/D31
 New Development Bank (NDB), earlier
known as the BRICS Development Bank,
has committed $100 million to India’s National
Investment and Infrastructure Fund’s (NIIF)
Fund of Funds.
National Investment and Infrastructure
Fund’s (NIIF)
 NIIF is a professional fund manager, anchored
by the Government of India along with
participation from institutional investors such
as ADIA and leading Indian private financial
institutions. They are a collaborative investment
platform focused on Indian infrastructure with
best-in-class governance and a strong team
with Indian and international experience in
infrastructure investing.
 NIIF is a quasi-sovereign wealth fund, in
RE
which the government of India holds 49%
equity with the rest held by foreign and
domestic investors, is mandated to invest in
infrastructure and related sectors that could
help fuel economic growth in the country.
 Its Fund of Funds is mandated to invest as an
anchor investor in third party fund managers.
It can also selectively form joint ventures with
fund managers.
 In 2017, Abu Dhabi’s sovereign wealth
fund—Abu Dhabi Investment Authority—
committed to invest $1 billion, becoming
the first institutional investor in NIIF’s
Master Fund and a shareholder in NIIF Ltd, its
investment management firm.
10. Correct option: (a)
Explanation:
 Statement 3 is incorrect: The bond ETF will
be taxed at the same rate like debt mutual
funds.
Supplementary notes:
Bharat Bond ETF
 In a move aimed at strengthening the
corporate bond market and reducing the
cost of borrowing, the Cabinet Committee on
Economic Affairs, chaired by Prime Minister
Narendra Modi, approved the creation of
Bharat Bond Exchange Traded Fund (ETF). This
will be India’s first corporate bond issued
by state-run companies to be traded on stock
market.
 A basket of bonds issued by public-sector
companies or any government organisation,
Bharat Bond ETF will be tradable on the stock
10
 exchange. Announcing the development,
Finance Minister Nirmala Sitharaman said
the unit size of these bonds, of Rs 1,000, will
allow small investors to put their money with
a fixed maturity date. As of now, the bond will
have two maturity series — three years and 10
years, with each series having a separate index
of the same maturity series.
 The move will help public-sector companies
raise funds through debt instruments and
further develop domestic capital markets,
boosting alternative sources of funding for
**********
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P2020_CRCA_500/D31
firms, even as a series of corporate defaults
keep banks and shadow lenders wary. This
will also increase the participation of retail
investors who are currently not participating in
bond markets due to liquidity and accessibility
constraints.
 The bond ETF will be taxed at the same rate
like debt mutual funds (20 per cent with
indexation benefits, if held for more than three
years), leading to an after-tax yield of around
6.3 per cent and 7 per cent for three years and
10 years, respectively.
RE
12