1. Which of the following statements are 2.

In a closed economy, a multiplier is

correct about the 14th Finance equal to one, which means that the
Commission? multiplier effect of a change in tax
1. It recommended that tax devolution offsets everything except the initial
should be the primary route for
production.
transfer of the resources to the states.
Select the correct answer using the code
2. It has recommended distribution of
grants to the states for local bodies given below:
using the 2011 population data. (a) 1 only
3. The Commission has adopted the (b) 2 only
previous Commission‟s vis-à-vis (c) Both 1 and 2
recommendation of the principles
(d) Neither 1 nor 2
governing grants-in-aid to the states
by the centre.
Select the correct answer using the code 4. Which of the following statements is/are
given below: correct?
(a) 1 and 2 only 1. Pollution Vouchers permit the
(b) 2 and 3 only producers to emit pollution in their
(c) 1 and 3 only production process.
(d) 1, 2 and 3 2. Whenever a producer chooses to use a
Pollution Voucher, she incurs an
2. Which of the following statements are opportunity cost.
correct?
Select the correct answer using the code
1. A carbon tax is the core policy for
given below:
reducing and eventually eliminating
the use of fossil fuels, whose (a) 1 only
combustion is destabilizing and (b) 2 only
destroying our climate.
(c) Both 1 and 2
2. India has committed to 40% of
(d) Neither 1 nor 2
electricity capacity being from non-
fossil fuels by 2040.
3. India has committed to lowering the 5. Which of the following statements is/are
ratio of emissions to the GDP by one- correct about the Neo-Schumpeterian
third from the 2005 levels. economics?
Select the correct answer using the code 1. Innovation is the core principle
given below:
underlying the Neo-Schumpeterian
(a) 1 and 2 only
approach.
(b) 1 and 3 only
2. It is concerned with all the facets of
(c) 2 and 3 only
open and uncertain developments in
(d) 1, 2 and 3
the socio-economic systems.
Select the correct answer using the code
3. Which of the following statements is/are
correct? given below:
1. A balanced budget multiplier (a) 1 only
measures the changes in the (b) 2 only
aggregate output, when the (c) Both 1 and 2
government changes its spending and
taxes at an equivalent rate. (d) Neither 1 nor 2

RAUSIAS-TS21E1030
https://t.me/upsc_pt_mains 1
6. Which of the following are the features of of Finance, is the Chairperson of the
a Contestable Market? Sub-Committee of the FSDC.
1. There are no barriers to entry or exit Which of the statements given above
barriers. is/are correct?
2. There are sunk costs. (a) 1 only
3. Both the incumbent firms and new (b) 2 only
entrants have access to the same level (c) Both 1 and 2
of technology. (d) Neither 1 nor 2
Select the correct answer using the code
given below: 10. Consider the following statements about
(a) 1 and 3 only the Priority Sector Lending:
(b) 2 and 3 only 1. The Small Finance Banks, the
(c) 1 and 2 only Payments Banks and the Rural Co-
(d) 1, 2 and 3 operative Banks have to follow the
Priority Sector Lending targets of the
RBI.
7. Consider the following statements about
2. Loans for education, start-ups and
the economic condition of the ASEAN
export credit are classified as Priority
countries during 1997 to 1998:
Sector.
1. Thailand‟s export growth was very 3. The banks which fail to achieve their
low. Priority Sector Targets can contribute
2. Foreign capital inflows increased. to the Rural Infrastructure
3. The Bank of Thailand virtually lost all Development Fund, created under the
its reserves while attempting to defend NABARD.
the Baht. Which of the statements given above
Which of the statements given above are is/are correct?
correct? (a) 1 and 2 only
(a) 1 and 2 only (b) 2 and 3 only
(b) 2 and 3 only (c) 1 only
(c) 1 and 3 only (d) 1, 2 and 3
(d) 1, 2 and 3
11. Consider the following statements about
8. The Stiglitz Report is related to which of „deposit insurance‟ in India:
the following? 1. Deposit insurance in India is provided
(a) Global financial crisis (2007-2008) by a statutory body, known as the
Deposit Insurance and Credit
(b) ASEAN countries financial crisis
Guarantee Corporation (DICGC).
(1997-1998)
2. The DICGC is a wholly owned
(c) Capital account convertibility
subsidiary of the RBI.
(d) Banking reforms in India
3. Deposits in the Co-operative Banks
and the NBFCs are not covered under
9. Consider the following statements about the DICGC.
the Financial Stability and Development Which of the statements given above
Council (FSDC): is/are correct?
1. The Union Finance Minister is the (a) 1 and 2 only
Chairperson of the FSDC. (b) 3 only
2. The Secretary of the Department of (c) 2 only
Economic Affairs, under the Ministry
(d) 1, 2 and 3

RAUSIAS-TS21E1030 2
12. Consider the following statements about 16. Consider the following statements about
the Lead Bank Scheme: the Municipal Bonds:
1. Only the Public Sector Banks can be 1. Only the urban local bodies,
assigned the role of a Lead Bank in a established under the 74th
district. Constitutional Amendment Act, are
2. It is a scheme of the Ministry of eligible to raise the Municipal Bonds.
Finance. 2. The regulation of the Municipal Bonds
is done by the Reserve Bank of India.
3. The District Collector is the
Chairperson of the District Which of the statements given above
is/are correct?
Consultative Committee formed for
the Lead Bank Scheme. (a) 1 only
Which of the statements given above (b) 2 only
is/are correct? (c) Both 1 and 2
(a) 1 and 2 only (d) Neither 1 nor 2
(b) 3 only
17. Consider the following statements about
(c) 1 and 3 only
the Innovators Growth Platform:
(d) 2 and 3 only
1. It is an initiative of the Ministry of
Commerce and Industry for the start-
13. The Reserve Tranche Position is related to ups to raise capital.
which of the following? 2. All start-ups are eligible for raising of
(a) The World Trade Organization capital on the Platform.
(b) The International Monetary Fund 3. All the investors, who can invest and
(c) The World Bank trade on the stock exchanges in India,
can invest in the Innovators Growth
(d) The UNCTAD
Platform.
Which of the statements given above
14. Consider the following statements about is/are correct?
the „Better Than Cash Alliance‟:
(a) 1 and 2 only
1. It is an initiative of the World (b) 3 only
Economic Forum.
(c) 1 and 3 only
2. India is a member of this organization.
(d) 1, 2 and 3
3. The Better Than Cash Alliance pushes
the countries and the organizations to
18. Consider the following statements about
adopt the Blockchain based payment
the Dedicated Freight Corridors in India:
solutions.
1. Only freight trains can run on the
Which of the statements given above Dedicated Freight Corridors.
is/are correct?
2. Dedicated Freight Corridor
(a) 1 and 3 only Corporation of India Limited is a
(b) 2 only statutory body constituted to operate,
(c) 2 and 3 only construct and maintain the Dedicated
(d) 1 and 2 only Freight Corridors.
3. Both the Eastern and the Western
Dedicated Freight Corridors are
15. India has entered into an agreement with
double-track in their entire length.
which of the following countries for
Which of the statements given above
Specified Skilled Worker?
is/are correct?
(a) The European Union
(a) 1 and 2 only
(b) The ASEAN (b) 2 and 3 only
(c) The USA (c) 1 only
(d) Japan (d) 1, 2 and 3

RAUSIAS-TS21E1030 3
19. Consider the following statements about 3. MGNREGA is a bottom-up, demand-
the Smart Cities Mission: driven, self-selecting and rights-based
1. The Smart Cities Mission is a programme.
Centrally Sponsored Scheme (CSS). Which of the statements given above are
2. It is a pan-city initiative in which at correct?
least one smart solution is applied
(a) 1 and 2 only
city-wide.
(b) 2 and 3 only
3. While AMRUT (Atal Mission for
Rejuvenation and Urban (c) 1 and 3 only
Transformation) follows an area-based (d) 1, 2 and 3
approach, the Smart Cities Mission
follows a project-based strategy.
22. Consider the following statements:
Which of the statements given above
1. The Securities and Exchange Board of
is/are correct?
India (SEBI) was set up in 1988 and
(a) 1 and 2 only
was given statutory recognition in
(b) 1 and 3 only
1992.
(c) 2 only
2. Capital market refers to the market
(d) 1, 2 and 3
for short to medium-term funds for
investment purposes.
20. Consider the following statements about
3. BSE is the largest stock market in the
the National Agriculture Market (e-NAM):
country.
1. The National Agriculture Market
(NAM) is a Pan-India electronic Which of the statements given above
trading portal. is/are correct?
2. It is implemented by the Small (a) 1 only
Farmers Agribusiness Consortium (b) 2 and 3 only
(SFAC). (c) 1 and 3 only
3. e-NAM is designed and implemented
(d) 1, 2 and 3
to benefit all the stakeholders.
4. It is completely funded by the Central
Government. 23. Which of the following are covered under
the non-tax revenues while calculating
Which of the statements given above are
correct? the Fiscal Deficit?

(a) 1, 2 and 3 only 1. Interest receipts

(b) 1, 3 and 4 only 2. Dividends and profits
(c) 2 and 4 only 3. External grants
(d) 1, 2, 3 and 4 4. Union excise duties
5. GST
21. Consider the following statements about Select the correct answer using the code
the Mahatma Gandhi National Rural given below:
Employment Guarantee Act (MGNREGA):
(a) 1, 2 and 3 only
1. The state governments have no
(b) 2, 3 and 5 only
powers to make rules for the effective
implementation of MGNREGA. (c) 1, 4 and 5 only
2. It is implemented in all rural districts (d) 1, 2, 3, 4 and 5
of the country.

RAUSIAS-TS21E1030 4
24. Consider the following statements about 3. The Act contains provisions for setting
the Fiscal Responsibility and Budget up of the grievance redressal
Management Act (The FRBM Act), 2003: mechanism at the district and the
1. The FRBM Act aims to introduce state levels.
transparency in India's fiscal Which of the statements given above are
management systems. correct?
2. The targets of fiscal deficits and (a) 1 and 2 only
revenue could not be exceeded at any
(b) 2 and 3 only
cost.
(c) 1 and 3 only
3. The FRBM Act made it mandatory for
the government to place the Fiscal (d) 1, 2 and 3
Policy Strategy Statement in the
Parliament annually. 27. Consider the following statements about
Which of the statements given above are „jobless growth‟:
correct? 1. Jobless growth means increasing GDP
(a) 1 and 2 only but decreasing or constant
(b) 2 and 3 only employment.
(c) 1 and 3 only 2. More men in the villages are jobless
(d) 1, 2 and 3 than women.
3. The National Sample Survey Office‟s
25. Consider the following statements about (NSSO) estimates for the year 2017-18
the Foreign Trade Policy, 2015-2020: show that India‟s joblessness is
1. The Foreign Trade Policy (FTP) aims to amongst the highest since 1972-73.
enable India to respond to the Which of the statements given above are
challenges of the external correct?
environment. (a) 1 and 2 only
2. FTP, 2015-20 introduces two new (b) 2 and 3 only
schemes, viz., the „Merchandise
(c) 1 and 3 only
Exports from India Scheme (MEIS)
(d) 1, 2 and 3
and the „Service Exports from India
Scheme (SEIS)‟.
Which of the statements given above 28. Consider the following statements about
is/are correct? the Digital India Programme:
(a) 1 only 1. The vision of the Digital India
(b) 2 only Programme is to transform India into
(c) Both 1 and 2 a digitally empowered society and
knowledge economy.
(d) Neither 1 nor 2
2. It is proposed to provide the citizens
with “digital lockers”.
26. Consider the following statements about
the National Food Security Act, 2013: 3. This places emphasis on availability of
1. The Act provides for coverage of up to digital resources in Hindi language.
75% of the rural population and up to Which of the statements given above are
50% of the urban population for correct?
receiving subsidized food grains. (a) 1 and 2 only
2. The Act has a special focus on the (b) 2 and 3 only
nutritional support to women and (c) 1 and 3 only
children.
(d) 1, 2 and 3

RAUSIAS-TS21E1030 5
29. Consider the following statements:
1. The WPI is measured based on the
prices at the wholesale level.
2. The WPI tracks the prices at the
factory gate before the retail level.
3. The CPI gives an idea of the cost of
living.
Which of the statements given above are
correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
30. Consider the following statements about
the Structural Adjustment Programmes
(SAPs):
1. The Structural Adjustment
Programmes (SAPs) are economic
policies for the developed and the
developing countries.
2. They are promoted by the World Bank
and the International Monetary Fund
(IMF).
3. They aim at removing “excess”
government controls and promoting
market competition as part of the neo-
liberal agenda followed by the Bank.
Which of the statements given above
is/are correct?
(a) 3 only
(b) 2 and 3 only
(c) 1 and 2 only
(d) 1, 2 and 3
31. Which of the following is/are the
principal tenet(s) in the Keynesian theory
of how the economy works?
1. Aggregate demand is influenced by
public and private economic
decisions.
2. Prices and wages respond quickly to
the changes in supply and demand.
3. Changes in aggregate demand have
their greatest short-run effect on
prices, not on real output and
employment.
RAUSIAS-TS21E1030
Select the correct answer using the code
given below:
(a) 1 only
(b) 2 and 3 only
(c) 1 and 2 only
(d) 1, 2 and 3
32. Consider the following statements about
the All India Trade Union Congress
(AITUC):
1. It was the first trade union of India.
2. It was founded by Bal Gangadhar
Tilak without any political affiliation.
3. It was formally established in 1920.
Which of the statements given above are
correct?
(a) 1 and 3 only
(b) 2 and 3 only
(c) 1 and 2 only
(d) 1, 2 and 3
33. Which of the following sources of tax
represent the correct ascending order of
their contribution in Budget 2019-20?
(a) Corporation Tax > Goods and Services
Tax > Taxes on Income > Union Excise
Duties
(b) Corporation Tax > Goods and Services
Tax > Union Excise Duties > Taxes on
Income
(c) Goods and Services Tax > Corporation
Tax > Taxes on Income > Union Excise
Duties
(d) Goods and Services Tax > Corporation
Tax > Union Excise Duties > Taxes on
Income
34. In the Ease of Doing Business, 2020,
India‟s ranking has deteriorated in which
of the following parameters?
1. Protecting minority investors
2. Getting electricity
3. Resolving insolvency
4. Enforcing contracts
Select the correct answer using the code
given below:
(a) 1 and 2 only
(b) 2, 3 and 4 only
(c) 2 and 4 only
(d) 1, 2, 3 and 4
6
35. Consider the following statements about
the Demographic Dividend:
1. The „Demographic Dividend‟ is defined
as the growth potential that results
from shifts in a population‟s age
structure.
2. The Demographic Dividend happens
due to increase in the total fertility
rate (TFR) after the increase in life
expectancy gets stabilized.
Which of the statements given above
is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
36. Which of the following functions is/are
undertaken by the IMF as the Global
Economic Stabilizer?
1. The IMF advises the member
countries on economic and financial
policies to promote stability and
reduce vulnerability to crises.
2. It monitors global economic trends
and developments.
3. It provides technical assistance to
help strengthen the members‟
institutional capacity.
3. Three percent interest subvention will
be provided using this Fund.
Which of the statements given above
is/are correct?
(a) 1 and 2 only
(b) 3 only
(c) 2 and 3 only
(d) 1, 2 and 3
38. Consider the following statements about
the Commission for Agricultural Costs
and Prices (CACP):
1. It is a statutory body under the
Ministry of Agriculture and Farmers‟
Welfare.
2. The body has no representation from
the farming community.
3. The body fixes the MSP of crops.
Which of the statements given above
is/are incorrect?
(a) 1 only
(b) 2 only
(c) 1 and 2 only
(d) 1, 2 and 3
39. Consider the following statements:
1. The SDR is an international reserve

Select the correct answer using the code asset, created by the World Bank.
given below: 2. It was created as a supplementary
(a) 1 only international reserve asset in the
context of the Bretton Woods System
(b) 2 and 3 only
of fixed exchange rates.
(c) 1 and 2 only
3. The value of the SDR is based on a
(d) 1, 2 and 3
basket of three currencies – the U.S.
dollar, the euro and the Chinese
37. Consider the following statements about
renminbi only.
the Agriculture Infrastructure Fund:
Which of the statements given above
1. The Fund will be used to provide short
is/are correct?
term agriculture credit to the
agriculture sector. (a) 2 only

2. Only small and marginal farmers are (b) 2 and 3 only

eligible to get access to subsidized (c) 1 and 2 only
credit from this Fund. (d) 1, 2 and 3

RAUSIAS-TS21E1030 7
51. Consider the following statements about Which of the statements given above
the Real Estate Investment Trust (REIT): is/are correct?
1. A Real Estate Investment Trust (REIT) (a) 1 only
is a company that owns, operates or (b) 2 only
finances income-generating real (c) Both 1 and 2
estate. (d) Neither 1 nor 2
2. The REITs can be publicly traded like
stocks. 54. Consider the following statements about
3. The dividends from the REITs are the Regional Rural Banks (RRBs):
taxed as regular income. 1. The Regional Rural Banks (RRBs) are
the financial institutions which
Which of the statements given above are
ensure adequate credit for agriculture
correct?
and other rural sectors.
(a) 1 and 2 only
2. The RRBs were set up on the basis of
(b) 2 and 3 only the recommendations of the
(c) 1 and 3 only Narasimham Working Group.
(d) 1, 2 and 3 3. The first Regional Rural Bank was the
“Prathama Grameen Bank”.
4. The RRBs are under the ambit of
52. Consider the following statements about
Priority Sector Lending at par with the
the Warehouse Receipt:
commercial banks.
1. A Warehouse Receipt is used in the
Which of the statements given above are
futures markets. correct?
2. It guarantees both the quantity and (a) 1 and 2 only
quality of a commodity being stored in (b) 2, 3 and 4 only
a facility. (c) 1, 2 and 4 only
Which of the statements given above (d) 1, 2, 3 and 4
is/are correct?
(a) 1 only 55. Consider the following statements about
(b) 2 only the Imported Inflation:
(c) Both 1 and 2 1. Imported Inflation is the rise in prices
(d) Neither 1 nor 2 due to an increase in the costs of the
imported products.
2. Imported Inflation is caused by a
53. Consider the following statements about
decline in the value of a country's
the India Brand Equity Foundation currency.
(IBEF):
3. The RBI takes „Imported Inflation‟ into
1. The India Brand Equity Foundation account in policymaking.
(IBEF) is a Trust established by the Which of the statements given above are
Ministry of Textiles. correct?
2. Its objective is to promote and create (a) 1 and 2 only
international awareness of the „Made (b) 2 and 3 only
in India‟ label in the overseas (c) 1 and 3 only
markets. (d) 1, 2 and 3

RAUSIAS-TS21E1030 10
56. Consider the following statements about 4. The membership in the AIIB is open to
the Inflation Indexed Bonds (IIBs): all the members of the International
1. The Inflation Indexed Bond (IIB) is a Bank for Reconstruction and
Bond issued by the Sovereign. Development, or the Asian
2. It provides the investor a constant Development Bank.
return, irrespective of the level of Which of the statements given above are
inflation in the economy.
correct?
3. The IIBs are not eligible for the
(a) 1, 2 and 3 only
Statutory Liquidity Ratio (SLR) status.
(b) 2 and 3 only
4. The IIBs can be traded in the
secondary market. (c) 1, 2 and 4 only
Which of the statements given above are (d) 1, 2, 3 and 4
correct?
(a) 1 and 2 only 59. Consider the following statements about
(b) 2, 3 and 4 only the Small Finance Banks:
(c) 1, 2 and 4 only 1. There is no minimum paid-up equity
(d) 1, 2, 3 and 4 capital for the Small Finance Banks.
2. The Small Finance Banks are
57. Consider the following statements: subjected to the requirement of
1. Fiscal Consolidation refers to the maintenance of the Cash Reserve
policies undertaken by the Ratio (CRR) and the Statutory
governments to reduce their deficits Liquidity Ratio (SLR).
and accumulation of debt stock.
3. Foreign shareholding is not allowed in
2. The state governments can enact their
the Small Finance Banks.
own Fiscal Responsibility Legislations.
Which of the statements given above
3. So far, no state has enacted the Fiscal
is/are correct?
Responsibility Legislation.
Which of the statements given above are (a) 2 only
correct? (b) 2 and 3 only
(a) 1 and 2 only (c) 1 and 2 only
(b) 2 and 3 only (d) 1, 2 and 3
(c) 1 and 3 only
(d) 1, 2 and 3 60. Consider the following statements:
1. Indirect tax is a type of tax where the
58. Consider the following statements about incidence and the impact of taxation
the Asian Infrastructure Investment
fall on the same entity.
Bank:
2. GST is an indirect tax.
1. The Asian Infrastructure Investment
Bank (AIIB) is a multilateral Which of the statements given above
development bank that aims to is/are correct?
improve the economic and social (a) 1 only
outcomes in Asia. (b) 2 only
2. The AIIB is headquartered in Beijing, (c) Both 1 and 2
China.
(d) Neither 1 nor 2
3. The UK and the USA are the member
countries.

RAUSIAS-TS21E1030 11
61. Consider the following statements about Which of the statements given above are
the Basel III Norms: correct?
1. Basel III is an internationally agreed (a) 1 and 3 only
set of measures developed in response (b) 2 and 3 only
to the Great Depression of 1929. (c) 1 and 2 only
2. Basel III standards are the minimum (d) 1, 2 and 3
requirements which apply to the
internationally active banks. 64. Consider the following statements about
3. Basel Norms are released by the Basel the Business Correspondent (BCs):
Committee on Banking Supervision 1. Business Correspondents are the
(BCBS). retail agents engaged by the banks for
Which of the statements given above providing banking services at
is/are correct? locations other than a bank
(a) 3 only branch/ATM.
(b) 2 and 3 only 2. The banks take full responsibility for
the acts of omission and commission
(c) 1 and 2 only
of the BCs.
(d) 1, 2 and 3
3. The Business Correspondent model
aims at ensuring greater financial
62. Consider the following statements about inclusion.
the Society for Worldwide Interbank Which of the statements given above are
Financial Telecommunications (SWIFT): correct?
1. SWIFT holds funds on its own and (a) 1 and 3 only
manages external client accounts. (b) 2 and 3 only
2. SWIFT is a member-owned (c) 1 and 2 only
cooperative, that provides safe and (d) 1, 2 and 3
secure financial transactions for its
members.
65. Consider the following statements about
3. It uses a standardized proprietary the Financial Sector Assessment
communications platform to facilitate Programme (FSAP):
the transmission of information. 1. The FSAP is a key instrument of the
4. It is headquartered in Beijing, China. International Monetary Fund‟s
Which of the statements given above are surveillance.
correct? 2. It analyses the resilience of the
(a) 1, 2 and 3 only financial sector, the quality of the
regulatory and supervisory
(b) 2 and 3 only
framework, and the capacity to
(c) 1, 2 and 4 only
manage and resolve the financial
(d) 1, 2, 3 and 4 crises.
3. In the developing and emerging
63. Consider the following statements about market countries, the FSAPs are
the Most-Favoured Nation status: conducted jointly with the World
1. The Most-Favoured Nation (MFN) Bank.
status did not always mean equal Which of the statements given above are
treatment. correct?
2. Imported and locally-produced goods (a) 1 and 3 only
should be treated equally. (b) 2 and 3 only
3. The MFN principle is covered under all (c) 1 and 2 only
the three WTO Agreements- GATS, (d) 1, 2 and 3
TRIPS and GATT.

RAUSIAS-TS21E1030 12
66. Consider the following statements about 2. The Index will be published annually.
the IMF quotas: 3. Highest weightage is given to payment
1. The quotas determine the maximum infrastructure in the Index.
amount of financial resources a Which of the statements given above are
member is obliged to provide to the incorrect?
IMF.
(a) 1 and 2 only
2. The quotas are a key determinant of
(b) 2 and 3 only
the voting power in the IMF decisions.
(c) 1 and 3 only
3. The quotas determine a member‟s
share in a general allocation of the (d) 1, 2 and 3
ADRs.
Which of the statements given above are 69. Consider the following statements about
correct? the Digital Equalization Levy:
(a) 1 and 3 only 1. This tax is paid for the services and
(b) 1 and 2 only supply rendered by all the e-
(c) 2 and 3 only commerce players.
(d) 1, 2 and 3 2. The tax will be at the rate of two
percent of the profits generated by the
67. Consider the following statements: e-commerce players.

1. Gold played a central role in the Which of the statements given above
international monetary system, until is/are correct?
the collapse of the Bretton Woods (a) 1 only
System of fixed exchange rates in (b) 2 only
1973. (c) Both 1 and 2
2. A member of the IMF wishing to (d) Neither 1 nor 2
acquire the currency of another
member could do so by selling gold to
the IMF. 70. Consider the following statements about
Health Cess:
3. When the IMF was founded, it was
decided that 65% of the 1. Health Cess is imposed as a cess on
initial quota subscriptions and the imports to finance health
subsequent quota increases were to infrastructure.
be paid in gold. 2. It is imposed by the Central Board of
Which of the statements given above are Direct Taxes.
correct? 3. Health Cess is imposed on imports of
(a) 1 and 2 only all goods.
(b) 2 and 3 only Which of the statements given above are
(c) 1 and 3 only correct?
(d) 1, 2 and 3 (a) 1 and 2 only
(b) 2 and 3 only
68. Consider the following statements about (c) 1 and 3 only
the Digital Payments Index (DPI): (d) 1, 2 and 3
1. It is an Index composed by the NITI
Aayog.

RAUSIAS-TS21E1030 13
71. Consider the following statements about 74. Consider the following statements about
exchange rate: Mycorrhizal fungi:
1. Appreciation of rupee, relative to 1. They increase the surface absorbing
dollar, increases the competitiveness area of the roots.
of exports from India. 2. They help improve soil structure.
2. Increase in the interest rates in India 3. They help plants extract water from
leads to appreciation of rupee, relative the soil.
to dollar. 4. They especially help the plants take
Which of the statements given above more nitrogen from the soil.
is/are correct? Which of the statements given above are
(a) 1 only correct?
(b) 2 only (a) 1 and 2 only
(c) Both 1 and 2 (b) 1, 2 and 3 only
(d) Neither 1 nor 2 (c) 1, 2 and 4 only
(d) 1, 2, 3 and 4
72. Which of the following practices have
been included by the Food and 75. Which of the following are the benefits of
Agriculture Organization (FAO) in crop rotation?
Conservation Agriculture?
1. Increases agricultural biodiversity.
1. No tillage
2. Increases nutrition standard of
2. Direct seeding population.
3. Permanent Soil Organic Cover 3. Leads to biological pumping of
4. Use of bio-fertilizers and integrated nutrients.
pest management 4. Necessarily leads to higher incomes
5. Micro-irrigation for the farmers.
6. Crop rotation Select the correct answer using the code
Select the correct answer using the code given below:
given below: (a) 1, 2 and 4 only
(a) 1, 4 and 5 only (b) 3 and 4 only
(b) 2, 3, 4 and 5 only (c) 1, 2 and 3 only
(c) 1, 2, 3 and 6 only (d) 1, 2, 3 and 4
(d) 1, 2, 3, 4, 5 and 6
76. Consider the following statements about
73. Consider the following statements: the FAO Food Price Index:
1. Rhizobium is suitable nitrogen 1. The Index is released on a quarterly
fixation, especially for legumes. basis.
2. Azolla fixes atmospheric nitrogen into 2. It tracks the prices of major
the soil, especially for paddy. agricultural traded commodities.
3. Acetobacter is an atmospheric 3. The prices of fish and oilseeds are
nitrogen fixing bacteria suitable for included in the Index.
sugarcane. Which of the statements given above
Which of the statements given above are is/are correct?
correct? (a) 1 and 2 only
(a) 1 and 2 only (b) 2 only
(b) 2 and 3 only (c) 1 and 3 only
(c) 1 and 3 only (d) 1, 2 and 3
(d) 1, 2 and 3

RAUSIAS-TS21E1030 14
77. Consider the following statements about 3. A person having no bank account can
Organic Certification: remit funds through NEFT to a
1. PGS Green Certification is given to beneficiary having a bank account.
organic produce. Which of the statements given above
2. Third Party Certification, under the is/are correct?
National Programme for Organic
(a) 1 and 2 only
Production (NPOP), is necessary for
the organic producers to export (b) 3 only
organic food products. (c) 1 and 3 only
3. Jaivik Bharat Certification is (d) 1, 2 and 3
mandated by the Food Safety and
Standards Authority of India (FSSAI)
80. Consider the following statements about
for the benefit of the consumers of
the Integrated Management of Public
organic food products.
Distribution System:
Which of the statements given above are
correct? 1. The scheme allows a person to claim
(a) 1 and 2 only the benefits of subsidized food grains
across the country.
(b) 2 and 3 only
(c) 1 and 3 only 2. It is a scheme implemented by the
Ministry of Agriculture and Farmers‟
(d) 1, 2 and 3
Welfare.

78. Consider the following statements about 3. It is compulsory for all the states to
the Payments Infrastructure Development implement the scheme.
Fund: Which of the statements given above
1. It is a Fund established by the is/are correct?
National Payments Corporation of (a) 1 only
India.
(b) 2 and 3 only
2. The aim of the Fund is to subsidize
(c) 1 and 2 only
the deployment of payment
acceptance infrastructure across (d) 1, 2 and 3
India.
3. The card issuing banks will have to 81. Consider the following statements about
contribute, based on the number of pulses in India:
debit and credit cards issued by them. 1. Major production of pulses takes
Which of the statements given above places during the Rabi season.
is/are correct?
2. Gram is the major pulse of India
(a) 1 and 2 only
which contributes the highest share to
(b) 3 only pulse production in India.
(c) 1 and 3 only
3. Pulse production has been growing
(d) 1, 2 and 3
continuously in the last 5 years in
India.
79. Consider the following statements about
Which of the statements given above
NEFT:
is/are correct?
1. NEFT is a payment mechanism owned
(a) 1 only
and operated by the National
Payments Corporation of India. (b) 1 and 2 only
2. NEFT transactions are settled in real (c) 2 and 3 only
time. (d) 1, 2 and 3

RAUSIAS-TS21E1030 15
82. Consider the following statements about 2. The production of jute in India has
oilseeds in India: been growing in the last 10 years.
1. The production of oilseeds during the Which of the statements given above
Rabi season has doubled in the last is/are correct?
15 years in India. (a) 1 only
2. The production of sunflower has (b) 2 only
significantly reduced in India. (c) Both 1 and 2
3. Mustard has the highest contribution (d) Neither 1 nor 2
during the Rabi season among all
oilseeds. 85. Consider the following statements about
Which of the statements given above are Seed Certification in India:
correct? 1. Seed Certification in India is done by
(a) 1 and 2 only the Central Seed Certification Board,
(b) 2 and 3 only under the Ministry of Agriculture and
Farmers‟ Welfare.
(c) 1 and 3 only
2. Seed Certification is done under the
(d) 1, 2 and 3
provisions of the Protection of Plant
Variety and Farmers‟ Rights Act, 2001
83. Consider the following pairs: (The PPV & FR Act, 2001).
S.N. WTO’s Box Provision 3. Seeds for all agricultural commodities
produced in India are eligible for
1. Amber Box Nearly all domestic
certification in India.
support measures,
4. Seed Certification is compulsory in
considered to
India.
distort production
Which of the statements given above are
and trade (with
incorrect?
some exceptions),
fall into the Amber (a) 1 and 2 only
Box. (b) 2 and 3 only
(c) 1, 2 and 3 only
2. Green Box Any support that
would normally be (d) 1, 2, 3 and 4
in the Amber Box,
is placed in the 86. Which of the following are the aims of the
Green Box, if the National Broadband Mission?
support also 1. To make available the benefits of
requires the broadband infrastructure to everyone
farmers to limit in the villages.
production. 2. To make available broadband up to 50
mbps to everyone.
Which of the pairs given above is/are
correctly matched? 3. To accelerate fiberization.
4. To increase tower density.
(a) 1 only
5. Mapping of fibre using GIS.
(b) 2 only
6. To facilitate roll out of 5G.
(c) Both 1 and 2
Select the correct answer using the code
(d) Neither 1 nor 2
given below:
(a) 1, 2 and 3 only
84. Consider the following statements: (b) 1, 3 and 5 only
1. The production of cotton in India has (c) 1, 2, 3 and 4 only
nearly doubled in the last 20 years.
(d) 1, 2, 3, 4, 5 and 6

RAUSIAS-TS21E1030 16
87. Consider the following statements about
oil and gas pipelines in India:
1. The Petroleum and Natural Gas
Regulatory Board (PNGRB) grants the
authorization for the development of
oil and gas pipelines in India.
2. The tariff of petroleum and petroleum
product pipelines is determined under
the Petroleum and Natural Gas
Regulatory Board.
Which of the statements given above
is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
88. Consider the following statements about
gas pricing in India:
1. Domestically produced gas prices are
determined by the market mechanism
in India only.
2. The Hydrocarbon Exploration and
Licensing Policy gives marketing and
pricing freedom for crude oil and
natural gas produced.
Which of the statements given above
is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Which of the statements given above are
correct?
(a) 1 and 2 only
(b) 1, 3 and 4 only
(c) 2, 3 and 4 only
(d) 1, 2, 3 and 4
90. Consider the following statements about
“fiscal stimulus”:
1. It is an intense affirmative action of
the government to boost economic
activity in the country.
2. Fiscal stimulus works through direct
spending.
Which of the statements given above
is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
91. Which of the following best describes
“base effect” in the context of economy?
(a) It is the impact of strong
manufacturing base in the growth of
the economy.
(b) It is the impact of the basic, and
health and education infrastructure in
the economic growth.
(c) It is the impact of the price levels of
the previous year on the calculation of
the inflation rate.
(d) None of the above.

92. Consider the following statements about

89. Consider the following statements: the “teaser loans”:
1. The Cash Management Bills are used 1. They have fixed-cum-floating rate of
by the Government of India for interest.
maturities less than three months. 2. They are considered as an aspect of
2. The Treasury Bills are the sub-prime lending.
instruments used by the Government 3. The standard asset provisioning
of India for more than one year. requirement is higher for such loans.
3. The G-Sec is a tradable debt Which of the statements given above
instrument issued by the Central or is/are correct?
the State Government. (a) 1 only
4. The State Governments in India do (b) 1 and 2 only
not issue short term debt (c) 1 and 3 only
instruments. (d) 1, 2 and 3

RAUSIAS-TS21E1030 17
93. In the Index of Eight Core Industries, Select the correct answer using the code
which of the following is given the highest given below:
weight? (a) 1, 2 and 3 only
(a) Coal Production (b) 1, 2, 3 and 5 only
(c) 1, 2 and 4 only
(b) Electricity Generation
(d) 1, 2, 3, 4 and 5
(c) Petroleum and Refinery Production
(d) Steel Production
97. „The Andean Community‟ is a trade bloc
of four countries of which of the following
94. “A situation where the labour that is continents?
employed in a job is not actually utilised (a) Africa
for the production of goods and services. (b) South America
The employment does not contribute to (c) North America
the output of an economy”. (d) Asia
Which of the following is described by the
above passage? 98. Consider the following statements about
the International Development
(a) Recession
Association (IDA):
(b) Disguised unemployment 1. The International Development
(c) Underdevelopment Association is a part of the IMF, that
(d) Frictional unemployment helps the world‟s poorest countries.
2. The IDA aims to reduce poverty by
providing zero to low-interest loans
95. Consider the following statements about and grants for the programmes that
the „Open Market Operations‟: boost economic growth, reduce
1. The Open Market Operations allow the inequalities and improve people‟s
central banks great flexibility in the living conditions.
timing and volume of monetary Which of the statements given above
is/are correct?
operations.
(a) 1 only
2. They affect the money supply and
(b) 2 only
related financial measures through
(c) Both 1 and 2
their impact on the reserve base of the
(d) Neither 1 nor 2
banking system.
Which of the statements given above
99. The Human Capital Index is published by
is/are correct? which of the following organizations?
(a) 1 only (a) The South Asian Association for
(b) 2 only Regional Cooperation
(c) Both 1 and 2 (b) The World Bank
(d) Neither 1 nor 2 (c) The International Monetary Fund
(d) The Asian Development Bank

96. Which of the following countries are the

100. The Early Harvest Scheme (EHS),
members of SAFTA? sometimes seen in the news, deals with
1. Bangladesh which of the following?
2. Bhutan (a) Provision of early harvest seeds to the
3. India farmers.
(b) Precursor to the implementation of
4. China
the FTA.
5. Pakistan (c) Promotion of the start-up ecosystem.
(d) Promotion of the rural enterprises.

RAUSIAS-TS21E1030 18
 ANSWERS & EXPLANATIONS OF
Thematic: Economy
GS Paper-I: (TS21E1030)
1. Answer: (a) Out of which, the grant to the
Explanation: Panchayats is Rs.2,00,292 crore. The
 The 14th Finance Commission is of the reminder goes to the Municipalities.
view that tax devolution should be the  The Commission has significantly
primary route for transfer of the departed from the previous
resources to the states. Commission‟s vis-à-vis
 In understanding the states‘ needs, it recommendation of the principles
has ignored the ‗Plan‘ and the ‗non- governing grants-in-aid to the states
Plan‘ distinctions. by the centre.

 According to the Commission, the  It has chosen to take the entire revenue
increased devolution of the divisible expenditure for this purpose. Hence, it
pool of taxes is a ‗compositional shift in has decided to take into account a
transfers‘ – from grants to tax state‘s entire revenue expenditure needs
devolution. without making a distinction between
the ‗Plan‘ and the ‗non-Plan‘
 In recommending a horizontal
expenditure.
distribution, it has used broad
parameters – population (1971),  The Commission is of the view that the
changes in the population since then, sharing pattern in respect to various
income distance, forest cover and area, ‗centrally-sponsored schemes‘ needs to
among others. change. It wants the states to share a
greater fiscal responsibility for the
 It has recommended distribution of
implementation of such schemes.
grants to the states for local bodies
using the 2011 population data with
weight of 90% and area with weight of 2. Answer: (b)
10%. Explanation:
 Grants to the states are divided into A carbon tax is a fee imposed on the
two: burning of carbon-based fuels (coal, oil,
o One, grant to duly constituted Gram gas). More to the point: A carbon tax is the
Panchayats; and core policy for reducing and eventually
eliminating the use of fossil fuels, whose
o Two, grant to duly constituted
combustion is destabilizing and destroying
Municipal Bodies.
our climate.
o And, it has divided grants into two
A carbon tax is a way – the only way, really
parts:
– to have the users of carbon fuels pay for
 A basic grant and a performance one for
the climate damage caused by releasing
the Gram Panchayats and the
carbon dioxide into the atmosphere. If set
Municipal Bodies.
high enough, it becomes a powerful
 The ratio of basic to performance grant monetary disincentive that motivates
is 90:10 for the Panchayats and 80:20 switches to clean energy across the
for the Municipalities. economy, simply by making it more
 The total grant recommended is Rs. economically rewarding to move to non-
2,87,436 crore for a five-year period. carbon fuels and energy efficiency.

RAUSIAS-TS21E1030 1
 India has committed to 40% of
electricity capacity being from non-fossil
fuels by 2030 and lowering the ratio of
emissions to the GDP by one-third from the
2005 levels. It is in the country‘s interest to
take stronger action before 2030, leading to
no net carbon increase by 2050. A smart
approach is pricing carbon, building on the
small steps taken thus far, such as plans
by some 40 large companies to price
carbon, government incentives for electric
vehicles and an environmental tax in the
2020-21 budgets.
Big economies, like India, should also use
their global monopsony or the power of a
large buyer in the international trade, to
impose a carbon tariff, as envisaged by the
EU. Focusing on trade is vital, because
reducing the domestic carbon content of
production alone would not avert the harm
if imports remain carbon-intensive.
Therefore, the leading emitters should use
their monopsony, diplomacy and financial
capabilities to forge a climate coalition with
the partners.
India is among the nations that are hardest
hit by climate impacts. There is growing
public support for climate action, but we
need solutions that are seen to be in India‘s
interest. A market-oriented approach to tax
and trade carbon domestically and to
induce similar action by others through
international trade and diplomacy offers a
way forward.
Note: India ranks fifth in the Global
Climate Risk Index 2020. China is the
largest carbon dioxide emitter.
3. Answer: (c)
Explanation:
A balanced budget multiplier measures the
changes in the aggregate output, when the
government changes its spending and taxes
at an equivalent rate. In a closed economy,
a multiplier is equal to one, which means
that the multiplier effect of a change in tax
offsets everything except the initial
RAUSIAS-TS21E1030
production that is triggered by a change in
government purchases.
Note: A balanced budget multiplier does
not mean that it occurs when the
government implements a balanced budget,
where the government revenue equals
expenditure. However, the word ‗balanced‘
refers to the changes in expenditure that
are equivalent to changes in taxes. So,
when doing so, the government may run a
budget deficit or a budget surplus.
4. Answer: (c)
Explanation:
Pollution Vouchers have value to the
producers, because they permit the
producers to emit pollution in their
production process. At the same time,
whenever a producer chooses to use a
Pollution Voucher, she incurs an economic
(or opportunity) cost, because she could
have chosen to sell the Voucher to someone
else instead.
5. Answer: (c)
Explanation:
The Neo-Schumpeterian economics puts a
strong emphasis on knowledge, innovation
and entrepreneurship at market level.
Innovation is identified as the force
propelling economic dynamics.
So, it is clear that ‗innovation‘ is the core
principle underlying the Neo-
Schumpeterian approach.
The Neo-Schumpeterian economics is
concerned with all the facets of open and
uncertain developments in the socio-
economic systems.
6. Answer: (a)
Explanation:
‗The Contestable Market Theory‘ is an
economic concept stating that the
companies with a few rivals behave in a
competitive manner, when the market they
operate in has weak barriers to entry.
2
 ‗Contestable‘ in economics means that a
company can be challenged or contested by
the rival companies looking to enter the
industry or the market.
In other words, a Contestable Market is a
market whereby the companies can enter
and leave freely with low sunk costs.
Sunk costs are major irrecoverable costs to
enter an industry, such as the purchase of
a manufacturing plant or equipment.
The Contestable Market Theory assumes
that even in a monopoly or oligopoly (It is a
market form wherein a market or an
industry is dominated by a small group of
large sellers), the dominant companies will
act competitively when there is a lack of
barriers for the competitors. Dominant
players in an industry will do everything to
reduce the contestability of their industry
by preventing new entrants from driving
them out of business.
The features of a Contestable Market
include:
 There are no barriers to entry or exit
barriers.
 There are no sunk costs: The costs
that have already been incurred and
cannot be recovered.
 Both the incumbent firms and new
entrants have access to the same level
of technology.
Note:
 The continuous risk of new entrants
emerging and stealing market share
leads the incumbents to focus more on
maximizing sales rather than profits.
 They realize that if they are too
profitable, an entrant could easily come
and undercut their business.
7. Answer: (d)
Explanation:
Financial crisis of the ASEAN countries:
Most ASEAN countries maintained an
exchange rate pegged to the U.S. dollar for
RAUSIAS-TS21E1030
many years. This provided a sense of
security to the business community.
However, when the U.S. dollar started to
strengthen in 1995 and throughout 1996,
particularly vis-a-vis the yen, the ASEAN
currencies also became stronger.
The stronger ASEAN currencies partly
explain the decline in exports of the ASEAN
in 1996, which grew by only about 8%,
compared with 14% in 1995.
For Thailand, export growth was essentially
‗nil‘ in 1996. The decline in exports could
also be partly explained by the loss of the
ASEAN countries‘ export competitiveness,
particularly in electrical goods, which
constituted more than half of the ASEAN
exports. The decrease in exports worsened
the trade deficit, increasing the current
account deficit.
The rapid economic expansion in the region
had increased the demand for foreign
borrowing.
In an environment of stable exchange rates
and high interest rates in the ASEAN
countries, foreign capital inflows increased.
Statistics from the Bank for International
Settlements show that by the end of June
1997, cross-border claims in all currencies
and local claims in the non-local currencies
for eight ASEAN countries (excluding
Singapore) reached a total of US$173
billion.
It is interesting to note that about 60% of
these claims were from the non-bank
private sector. This was stimulated by the
opening of the capital accounts in the
ASEAN countries. In Indonesia, Malaysia
and Thailand, the non-bank private sector
shares were as high as 67%, 57% and 59%,
respectively.
The increase in the availability of capital
enabled the expansion of loans for private
spending, particularly in real estate and
motor cars, creating a price bubble for
these sectors. When the bubble collapsed,
the entire financial system was severely
affected.
3
 In Thailand, the Bank of Thailand initially
attempted to support the financial
institutions in difficulty. Its failure to
salvage the biggest of the finance
companies, Finance One, in early 1997,
attracted international attention,
particularly from the foreign lenders,
triggering fears of loan defaults and
worsening creditworthiness. Short-term
loan creditors started to withdraw their
funds from these institutions.
In addition, expectations of a Japanese
recovery in early May 1997, led to a sharp
appreciation of the yen and a sudden rise
in Japanese short-term interest rates. The
investors started to withdraw their funds
from the South-east Asian markets to take
advantage of the higher interest rates in
Japan.
The withdrawal of short-term credit placed
considerable pressure on the reserves and
exchange rates, making the Baht vulnerable.
The Bank of Thailand virtually lost all its
reserves while attempting to defend the
Baht and was forced to float the currency
in July 1997.
By the end of July 1997, Thailand had
requested assistance from the International
Monetary Fund (IMF). By then, the
contagion effect had spread to the
Philippines, Malaysia and Indonesia, which
then floated their exchange rates.
8. Answer: (a)
Explanation:
The Stiglitz Report: Reforming the
International Monetary and Financial
Systems in the Wake of the Global Crisis is
a book on economics, written by Nobel
laureate economist Joseph Stiglitz,
documenting the necessary changes and
reforms of the international financial
institutions in the wake of the financial
crisis of 2007–2008 and the subsequent
‗Great Recession‘ arisen from it.
Note: The global financial crisis (GFC)
refers to the period of extreme stress in the
global financial markets and the banking
RAUSIAS-TS21E1030
systems between mid-2007 and 2008.
During the GFC, a downturn in the US
housing market was a catalyst for a
financial crisis that spread from the United
States to the rest of the world through
linkages in the global financial system.
Many banks around the world incurred
large losses and relied on the government
support to avoid bankruptcy. Millions of
people lost their jobs as the major
advanced economies experienced their
deepest recessions since the Great
Depression in the 1930s. Recovery from the
crisis was also much slower than the past
recessions that were not associated with a
financial crisis.
Main causes of the GFC: As for all
financial crises, a range of factors explain
the GFC and its severity, and the people
are still debating the relative importance of
each factor. Some of the key aspects
include:
Excessive risk-taking in a favourable
macro-economic environment: In the
years leading up to the GFC, economic
conditions in the United States and other
countries were favourable. Economic
growth was strong and stable, and rates of
inflation, unemployment and interest were
relatively low. In this environment, house
prices grew strongly.
Expectations that house prices would
continue to rise led the households,
especially in the United States, to borrow
imprudently to purchase and build houses.
A similar expectation on house prices also
led the property developers and the
households in the European countries
(such as Iceland, Ireland, Spain and some
countries in Eastern Europe) to borrow
excessively.
Many of the mortgage loans, especially in
the United States, were for amounts close
to (or even above) the purchase price of a
house. A large share of such risky
borrowing was done by the investors
seeking to make short-term profits by
‗flipping‘ houses and by ‗sub-prime‘
4
 borrowers (who have higher default risks,
mainly because their income and wealth
are relatively low and/or they have missed
loan repayments in the past).
Increased borrowings by the banks and
the investors: In the lead up to the GFC,
the banks and other investors in the United
States and abroad borrowed increasing
amounts to expand their lending and
purchase the MBS (mortgage-backed
securities) products. Borrowing money to
purchase an asset magnifies potential
profits, but also magnifies potential losses.
As a result, when house prices began to
fall, the banks and the investors incurred
large losses because they had borrowed so
much.
Regulation and policy errors: Regulation
of sub-prime lending and MBS products
was too lax. In particular, there was
insufficient regulation of the institutions
that created and sold the complex and
opaque MBS to the investors. Not only were
many individual borrowers provided with
loans so large that they were unlikely to be
able to repay them, but fraud was
increasingly common – such as over-stating
a borrower's income and over-promising
the investors on the safety of the MBS
products they were being sold.
9. Answer: (a)
Explanation:
The Financial Stability and Development
Council (FSDC): It is a body formed to
institutionalize and strengthen the
mechanism of financial stability, financial
sector development and inter-regulatory co-
ordination. The Council is headed by the
Union Finance Minister, with
representation from all the financial
regulators, such as the RBI, SEBI, IRDAI
(The Insurance Regulatory and
Development Authority), IFSCA (The
International Financial Services Centres
Authority), PFRDA (The Pension Fund
Regulatory and Development Authority) etc.
RAUSIAS-TS21E1030
The Sub-Committee of the FSDC is
headed by the Governor of the Reserve
Bank of India (RBI).
10. Answer: (b)
Explanation:
Priority Sector Lending: These are the
guidelines issued by the RBI to the
Commercial Banks, the Regional Rural
Banks (RRB), the Small Finance Banks
(SFB), the Local Area Banks (LAB) and the
Primary Urban Co-operative Banks for
lending to certain sectors which need
credit.
The Payments Banks, the Rural Co-
operative Banks and the NBFCs (Non-
Banking Financial Companies) are not
required to observe the Priority Sector
Lending targets.
The following categories are eligible for the
Priority Sector Lending:
1. Agriculture
2. MSME
3. Export Credit
4. Education
5. Housing
6. Social Infrastructure
7. Renewable Energy
8. Others
In the latest notification, the RBI has
allowed for loans given to the start-ups up
to Rs. 50 crore to be classified as the
Priority Sector Lending.
If a bank fails to meet its targets under the
Priority Sector Lending, it needs to credit
the same amount with the Rural
Infrastructure Development Fund with the
National Bank for Agriculture and Rural
Development (NABARD).
11. Answer: (d)
Explanation:
The Deposit Insurance and Credit
Guarantee Corporation (DICGC) is a wholly
owned subsidiary of the Reserve Bank of
India (RBI), constituted under the DICGC
5
 Act, 1961. The deposit insurance extended
by the DICGC covers all commercial banks,
including LABs, PBs (Payments Banks),
SFBs, RRBs and Co-operative Banks.
The DICGC raised the limit of insurance
cover for the depositors in the banks to Rs.
5 lakh per depositor, with effect from
February 2020, from the earlier level of Rs.
1 lakh, with the approval of the
Government of India, with a view to
providing a greater measure of protection to
the depositors in the banks.
12. Answer: (b)
Explanation:
The Lead Bank Scheme: The Lead Bank
Scheme was introduced on the
recommendation of the Gadgil Committee
for an ‗area based‘ approach to financial
inclusion and improved access to rural
credit and financial services. It is a
scheme of the RBI.
The Private Sector Banks can also be
given the responsibility of being a Lead
Bank for a district. Currently, one Private
Bank has been assigned this responsibility.
The District Collector is the chairman of
the District Consultative Committee formed
to implement the Lead Bank Scheme.
13. Answer: (b)
Explanation:
The Reserve Tranche Position is a
facility of the International Monetary
Fund.
A country's Reserve Tranche Position (RTP)
is the difference between the International
Monetary Fund's (IMF) holdings of that
country's currency and the country's IMF-
designated quota. The RTP of the country is
a part of the foreign reserves of the Central
Bank.
14. Answer: (b)
Explanation:
Better Than Cash Alliance: It is an
initiative of the United Nations. It is a
RAUSIAS-TS21E1030
partnership of the governments, companies
and international organizations that
accelerates the transition from cash to
digital payments to help achieve the
Sustainable Development Goals. The
Secretariat of the organization is hosted in
the United Nations Capital Development
Fund.
The Better Than Cash Alliance is neutral
on what types of digital payment
platforms or channels are appropriate in
each market. We recognize that digital
payment solutions will vary across
geographies and that, as innovation is a
constant in this sector, digital payment
options will also change quickly. What
matters to us is that the shift from cash to
digital payments is done responsibly and
builds the foundations for inclusive growth.
The Government of India is a member of
this organization.
15. Answer: (d)
Explanation:
India has entered into an agreement with
Japan on a Basic Framework for
Partnership for Proper Operation of the
System Pertaining to ‗Specified Skilled
Worker‘.
The present Memorandum of Co-operation
would set an institutional mechanism for
partnership and co-operation between India
and Japan on sending and accepting
skilled Indian workers, who have qualified
the required skill and Japanese language
test, to work in 14 specified sectors in
Japan. These Indian workers would be
granted a new status of residence of
"Specified Skilled Worker" by the
Government of Japan.
Skilled Indian workers from 14 sectors,
viz., Nursing care; Building cleaning;
Material processing industry; Industrial
machinery manufacturing industry;
Electric and electronic information related
industry; Construction; Ship-building and
ship-related industry; Automobile
maintenance; Aviation; Lodging;
6
 Agriculture; Fisheries; Food and beverages
manufacturing industry; and Food service
industry, would have enhanced job
opportunities to work in Japan.
16. Answer: (d)
Explanation:
Municipal Bonds: The regulation of the
Municipal Bonds is done by the SEBI (The
Securities and Exchange Board of India).
Under the new regulations, apart from the
Municipalities (given the Constitutional
status by the 74th Constitutional
Amendment Act), 1992 the SPVs (Special
Purpose Vehicles) meant for implementing
the Smart City Mission programmes, the
Urban Development Authority for the state
and one entity for the entire state raising
pooled finances for the development of the
urban centers are eligible to float the
Municipal Bonds.
17. Answer: (b)
Explanation:
Innovators Growth Platform: It is an
initiative of the Securities and Exchange
Board of India (SEBI), by which the start-
ups can access capital markets for
accessing growth capital.
The Securities and Exchange Board of
India (SEBI) had reviewed the erstwhile
framework for the Institutional Trading
Platform (ITP) and proposed modifications
to the existing guidelines of the ITP,
including a change of the name to the
Innovators Growth Platform (IGP).
A summary of the key changes is provided
below for ease of reference:
Companies eligible to raise capital on
the Platform: Companies with intensive
use of technology, information technology,
intellectual property, data analytics, bio-
technology or nano-technology in their
businesses.
At least 25% of the pre-issue capital of the
issuer shall be held by a set of investors for
a period of minimum 2 years.
RAUSIAS-TS21E1030
Eligible investors: All investors eligible to
participate in the capital markets can
invest in the securities listed on the IGP.
However, the platform is meant for
sophisticated and informed investors as
indicated by the minimum trading lot size
of INR 2,00,000 (Rupees Two Lakh only).
Most of the PE (Private equity)/VCs
(Venture capitals) funds, which are active
in the start-up ecosystem, along with the
individual investors/High Networth
Individuals (HNIs) investing
directly/indirectly through angel networks,
will be eligible to invest in the securities
listed on the IGP.
The minimum lot size for trading in the
securities will be INR 2,00,000 (Rupees Two
Lakh only).
18. Answer: (c)
Explanation:
Dedicated Freight Corridors (DFCs):
DFCCIL (Dedicated Freight Corridor
Corporation of India Limited) is a wholly
owned company of the Ministry of
Railways, registered under the Companies
Act, 1956, and was incorporated in 2006. It
is currently developing two DFCs:
1. The Eastern Dedicated Freight Corridor
(An electrified double-track segment of
1,409 km between Dankuni in West
Bengal and Khurja in Uttar Pradesh,
and an electrified single-track
segment of 447 km between
Ludhiana (Dhandarikalan) - Khurja -
Dadri in the states of Punjab,
Haryana and Uttar Pradesh).
2. The Western Dedicated Freight Corridor
(A distance of 1,504 km of double line
electric - 2 X 25 KV - track from JNPT
(Jawaharlal Nehru Port Trust) to Dadri,
via Vadodara-Ahmedabad-Palanpur-
Phulera-Rewari).
Only freight trains will run on the
Dedicated Freight Corridors.
7
19. Answer: (a)
Explanation:
 The Smart Cities Mission is an
innovative and new initiative by the
Government of India to drive economic
growth and improve the quality of life of
the people by enabling local
development and harnessing technology
as a means to create smart outcomes
for the citizens.
 It is a pan-city initiative in which at
least one smart solution is applied city-
wide.
 The Smart Cities Mission will be
operated as a Centrally Sponsored
Scheme (CSS) and the Central
Government proposes to give financial
support to the Mission to the extent of
Rs. 48,000 crores over five years, i.e.,
on an average Rs. 100 crore per city per
year. An equal amount, on a matching
basis, will have to be contributed by the
states/ Urban Local Bodies (ULBs).
Therefore, nearly Rupees one lakh crore
of the government/ULB funds will be
available for smart cities development.
 The Mission will cover 100 cities and its
duration will be five years (Financial
Year 2015-16 to Financial Year 2019-
20). The Mission may be continued
thereafter in the light of an evaluation
to be done by the Ministry of Urban
Development (MoUD) and incorporating
the learnings into the Mission.
 Comprehensive development occurs in
the areas by integrating the physical,
institutional, social and economic
infrastructure. Many of the sectoral
schemes of the government converge in
this goal, although the path is different.
There is a strong complementarity
between the AMRUT (Atal Mission for
Rejuvenation and Urban
Transformation) and the Smart Cities
Mission in achieving urban
transformation. While AMRUT follows
a project-based approach, the Smart
RAUSIAS-TS21E1030
Cities Mission follows an area-based
strategy.
20. Answer: (d)
Explanation:
 The National Agriculture Market (NAM)
is a Pan-India electronic trading portal
launched in 2016, completely funded by
the Central Government and
implemented by the Small Farmers‘
Agribusiness Consortium (SFAC).
 The NAM portal networks the existing
APMC (Agriculture Produce Marketing
Committee)/Regulated Market
Committee (RMC) market yards, sub-
market yards, private markets and
other unregulated markets to unify all
the nationwide agricultural markets by
creating a central online platform for
agricultural commodity price discovery.
 The scheme envisages the deployment
of a common e-market platform. The
common electronic trading portal will be
called as e-NAM.
 e-NAM is designed and implemented to
benefit all the stakeholders – Farmers;
Mandis; Traders; Buyers; Processers;
and Exporters.
21. Answer: (b)
Explanation:
 MGNREGA (The Mahatma Gandhi
National Rural Employment Guarantee
Act) is a demand-driven wage
employment programme and resource
transfer from the centre to the states is
based on the demand for employment in
each state. MGNREGA is a bottom-up,
people-centred, demand-driven, self-
selecting and rights-based programme.
It provides a legal guarantee for wage
employment by providing allowances
and compensation, both in the cases of
failure to provide work on demand and
delays in the payment of wages for the
work undertaken.
8
  The state government may, by
notification, make rules to carry out
the provisions of the Act, subject to
the conditions of consistency with
MGNREGA and rules made by the
Central Government.
22. Answer: (a)
Explanation:
 Capital market refers to the market
for long-term funds for investment
purposes. The capital market is the
source of funds for the corporates and
the governments, and provides
opportunities to the savers to park their
long-term savings. The capital market
comprises two segments: the primary
and the secondary markets.
 The Securities and Exchange Board of
India (SEBI) was set up in 1988 and
was given statutory recognition in 1992.
 The setting up to the NSE (The National
Stock Exchange of India Ltd) is a
landmark in the Indian capital markets.
At present, the NSE is the largest
stock market in the country. Trading
on the NSE can be done throughout the
country through the network of satellite
terminals. The NSE has introduced
inter-regional clearing facilities.
23. Answer: (a)
Explanation:
Fiscal Deficit is the difference between the
total income of the government (total taxes
and non-debt capital receipts) and its total
expenditure.
Revenue receipts of the government –
 Corporation tax
 Income tax
 Custom duties
 Union excise duties
 GST and taxes of the Union Territories
Non-tax revenues –
 Interest receipts
 Dividends and profits
RAUSIAS-TS21E1030
 External grants
 Other non-tax revenues
 Receipts of the Union Territories
Expenditure of the government –
 Revenue expenditure
 Capital expenditure
 Interest payments
 Grants-in-aid for the creation of capital
assets
24. Answer: (c)
Explanation:
The Fiscal Responsibility and Budget
Management Act (The FRBM Act), 2003,
establishes financial discipline to reduce
fiscal deficit.
The FRBM Act aims to introduce
transparency in India's fiscal management
systems. The Act‘s long-term objective is for
India to achieve fiscal stability and to give
the Reserve Bank of India (RBI) flexibility to
deal with inflation in India. The FRBM Act
was enacted to introduce more equitable
distribution of India's debt over the years.
The FRBM Act made it mandatory for the
government to place the following along
with the Union Budget documents in the
Parliament annually:
(1) Medium Term Fiscal Policy Statement
(2) Macro-economic Framework Statement
(3) Fiscal Policy Strategy Statement
The FRBM Act proposed that revenue
deficit, fiscal deficit, tax revenue and the
total outstanding liabilities be projected as
a percentage of gross domestic product
(GDP) in the Medium Term Fiscal Policy
Statement.
On grounds of national security,
calamity, etc., the set targets of fiscal
deficits and revenue could be exceeded.
25. Answer: (c)
Explanation:
The Foreign Trade Policy (FTP) 2015-20 was
unveiled in 2015.
9
 The following are the highlights of the FTP:
 The FTP 2015-20 provides a framework
for increasing exports of goods and
services, as well as generation of
employment and increasing value
addition in the country, in line with the
‗Make in India‘ programme.
 The Policy aims to enable India to
respond to the challenges of the
external environment, keeping in step
with a rapidly evolving international
trading architecture and make trade a
major contributor to the country‘s
economic growth and development.
 The FTP 2015-20 introduces two new
schemes, viz., the ‗Merchandise Exports
from India Scheme (MEIS)‘ for export of
specified goods to specified markets and
the ‗Service Exports from India Scheme
(SEIS)‘ for increasing exports of notified
services.
 Duty credit scrips issued under the
MEIS and the SEIS, and the goods
imported against these scrips are fully
transferable.
 For grant of rewards under the MEIS,
the countries have been categorized into
3 groups, whereas the rates of rewards
under the MEIS range from 2% to 5%.
Under the SEIS, the selected services
would be rewarded at the rates of 3%
and 5%.
 Measures have been adopted to nudge
the procurement of the capital goods
from the indigenous manufacturers
under the Export Promotion Capital
Goods (EPCG) Scheme by reducing
specific export obligation to 75% of the
normal export obligation.
 Measures have been taken to give a
boost to the exports of defence and hi-
tech items.
 E-Commerce exports of handloom
products, books/periodicals, leather
footwear, toys and customized fashion
garments through courier or foreign
post office would also be able to get the
RAUSIAS-TS21E1030
benefit of the MEIS (for values up to INR
25,000).
 Manufacturers, who are also status
holders, will now be able to self-certify
their manufactured goods in phases, as
originating from India, with a view to
qualifying for preferential treatment
under various forms of bilateral and
regional trade agreements. This
‗Approved Exporter System‘ will help the
manufacturer exporters considerably in
getting fast access to the international
markets.
 A number of steps have been taken for
encouraging manufacturing and
exports. The steps include a fast track
clearance facility for these units,
permitting them to share infrastructure
facilities, permitting inter unit transfer
of goods and services, permitting them
to set up warehouses near the port of
export and to use duty free equipment
for training purposes.
 108 MSME clusters have been identified
for focused interventions to boost
exports. Accordingly, the ‗Niryat
Bandhu Scheme‘ has been galvanized
and repositioned to achieve the
objectives of ‗Skill India‘.
26. Answer: (d)
Explanation:
As passed by the Parliament, the
government has notified the National Food
Security Act, 2013, in 2013, with the
objective to provide for food and nutritional
security in human life cycle approach, by
ensuring access to adequate quantity of
quality food at affordable prices to the
people to live a life with dignity. The Act
provides for coverage of up to 75% of the
rural population and up to 50% of the
urban population for receiving subsidized
food grains under the Targeted Public
Distribution System (TPDS), thus covering
about two-thirds of the population. The
eligible persons will be entitled to receive 5
kgs of food grains per person per month at
10
 subsidised prices of Rs. 3/2/1 per kg for
rice/wheat/coarse grains.
The existing Antyodaya Anna Yojana (AAY)
households, which constitute the poorest of
the poor, will continue to receive 35 kgs of
food grains per household per month.
The Act also has a special focus on the
nutritional support to women and children.
Besides meal to the pregnant women and
lactating mothers during pregnancy and six
months after the child birth, such women
will also be entitled to receive maternity
benefit of not less than Rs. 6,000. Children
up to 14 years of age will be entitled to
nutritious meals as per the prescribed
nutritional standards.
In case of non-supply of entitled food grains
or meals, the beneficiaries will receive food
security allowance. The Act also contains
provisions for setting up of the grievance
redressal mechanism at the district and
state levels. Separate provisions have also
been made in the Act for ensuring
transparency and accountability.
27. Answer: (d)
Explanation:
 Jobless growth means that the economy
under consideration is experiencing
growth, i.e., increasing GDP, but, at the
same time, either employment is
constant or is, in fact, decreasing. This
term was coined by economist Nick
Perna in the early 1990s. Policy makers,
academicians and political analysts
have, time and again, shifted focus on
the alarming situation of jobless growth
in India, especially in the last two
decades.
 The National Sample Survey Office‘s
(NSSO) estimates for the year 2017-18
show that India‘s joblessness was 6.1%
of the labour force, which is amongst
the highest since 1972-73.
 In fact, this unemployment crisis seems
to be cutting across location and
gender. At 27.2%, urban women are
RAUSIAS-TS21E1030
worst affected, followed by their male
counterparts at 18.7%.
 More men in the villages (17.4%) are
jobless than women (13.6%).
 Although it cannot be disputed that the
presence of jobless growth in India has
been apparent for the past decade and
more, the numbers today have become
strikingly high.
28. Answer: (a)
Explanation:
 The vision of the Digital India
Programme is to transform India into a
digitally empowered society and
knowledge economy.
 A key component under this vision is
high speed internet as a core utility to
facilitate online delivery of various
services. It is planned to set up enabling
infrastructure for digital identity,
financial inclusion and ensure easy
availability of common services centres.
 It is also proposed to provide the
citizens with ―digital lockers‖, which
would be sharable private spaces on a
public cloud and where the documents
issued by the government departments
and agencies could be stored for easy
online access. It is also planned to
ensure that the cyberspace is made safe
and secure
 The Digital India Programme itself
promises to transform India into a
digitally empowered society by focusing
on digital literacy, digital resources and
collaborative digital platforms. This
also places emphasis on universal
digital literacy and availability of
digital resources / services in Indian
languages.
29. Answer: (d)
Explanation:
The Consumer Price Index (CPI) –
 A comprehensive measure used for the
estimation of price changes in a basket
11
 of goods and services representative of
the consumption expenditure in an
economy is called the Consumer Price
Index.
 The calculation involved in the
estimation of the CPI is quite rigorous.
Various categories and sub-categories
have been made for classifying
consumption items and on the basis of
consumer categories like urban or
rural.
 Based on these indices and sub-indices
obtained, the final overall index of price
is calculated mostly by the national
statistical agencies. It is one of the most
important statistics for an economy and
is generally based on the weighted
average of the prices of the
commodities. It gives an idea of the cost
of living.
 Inflation is measured using the CPI. The
percentage change in this Index over a
period of time gives the amount of
inflation over that specific period, i.e.,
the increase in the prices of a
representative basket of goods
consumed.
The Wholesale Price Index (WPI) –
 The other index measures inflation is
the Wholesale Price Index (WPI). While
retail inflation looks at the price at
which the consumer buys the products,
the WPI is measured based on the
prices at the wholesale level.
 The WPI measures the changes in the
prices of the goods sold and traded in
bulk by wholesale businesses to other
businesses. To put it simply, the WPI
tracks the prices at the factory gate
before the retail level.
30. Answer: (b)
Explanation:
The Structural Adjustment Programmes
(SAPs) are economic policies for the
developing countries that have been
promoted by the World Bank and the
RAUSIAS-TS21E1030
International Monetary Fund (IMF), since
the early 1980s by the provision of loans
conditional on the adoption of such
policies.
The Structural Adjustment Loans are the
loans made by the World Bank. They are
designed to encourage the structural
adjustment of an economy by, for example,
removing ―excess‖ government controls and
promoting market competition as part of
the neo-liberal agenda followed by the
Bank.
The Enhanced Structural Adjustment
Facility is an IMF (The International
Monetary Fund) financing mechanism to
support the macro-economic policies and
the SAPs in the low-income countries
through loans or low interest subsidies.
31. Answer: (a)
Explanation:
During the Great Depression of the 1930s,
the existing economic theory was unable
either to explain the causes of the severe
worldwide economic collapse or to provide
an adequate public policy solution to jump-
start production and employment.
British economist John Maynard Keynes
spearheaded a revolution in economic
thinking that overturned the then-
prevailing idea that free markets would
automatically provide full employment –
that is, that everyone who wanted a job
would have one, as long as the workers
were flexible in their wage demands.
The main plank of the Keynes‘s theory,
which has come to bear his name, is the
assertion that aggregate demand –
measured as the sum of spending by the
households, businesses and the
government – is the most important driving
force in an economy. Keynes further
asserted that free markets have no self-
balancing mechanisms that lead to full
employment. Keynesian economists justify
government intervention through public
policies that aim to achieve full
employment and price stability.
12
 There are three principal tenets in the component of spending—consumption,
Keynesian description of how the economy investment or government expenditure –
works: cause output to change. If government
 Aggregate demand is influenced by spending increases, for example and all
many economic decisions – public and other spending components remain
private. Private sector decisions can constant, then output will increase.
sometimes lead to adverse macro- Keynesian models of economic activity
economic outcomes, such as reduction also include a multiplier effect; that is,
in consumer spending during a output changes by some multiple of the
recession. These market failures increase or decrease in spending that
sometimes call for active policies by the caused the change. If the fiscal
government, such as a fiscal stimulus multiplier is greater than one, then a
package. Therefore, Keynesian one-dollar increase in government
economics supports a mixed economy, spending would result in an increase in
guided mainly by the private sector, but output greater than one dollar.
partly operated by the government.
 Prices, and especially wages, respond 32. Answer: (a)
slowly to the changes in supply and Explanation:
demand, resulting in periodic shortages The All India Trade Union Congress
and surpluses, especially of labour. (AITUC) was the first trade union of
 Changes in aggregate demand, India, founded by freedom fighters like
whether anticipated or Lala Lajpat Rai and Joseph Baptista
unanticipated, have their greatest without any political affiliation.
short-run effect on real output and Bal Gangadhar Tilak was behind the move,
employment, not on prices. but he was dead before it was formally
Keynesians believe that, because prices established in 1920.
are somewhat rigid, fluctuations in any
33. Answer: (a)
Explanation:
Break up of central government receipts in 2019-20 (Rs. Crore)
Actuals Budgeted Revised Budgeted % change (RE 2018-19
2017-18 2018-19 2018-19 2019-20 to BE 2019-20)

Gross Tax 19,19,009 22,71,242 22,48,175 24,61,195 9.5%

Revenue
of which:
Corporation Tax 5,71,202 6,21,000 6,71,000 7,66,000 14.2%
Taxes on Income 4,30,772 5,29,000 5,29,000 5,69,000 7.6%
Goods and 4,42,562 7,43,900 6,43,900 6,63,343 3.0%
Services Tax
Customs 1,29,030 1,12,500 1,30,038 1,55,904 19.9%
Union Excise 2,59,431 2,59,600 2,59,612 3,00,000 15.6%
Duties
Service Tax 81,228 – 9,283 – –

RAUSIAS-TS21E1030 13
34. Answer: (a)
Explanation:
 India climbed 14 rungs in the World
Bank‘s Ease of Doing Business 2020
survey to stand at 63, among 190
countries, making it one of the world‘s
top 10 most improved countries for the
third consecutive time.
 India saw the biggest jump in the
ranking in the ―resolving insolvency"
category, to 52nd rank from 108th, on
the back of the implementation of the
Insolvency and Bankruptcy Code, while
its ranking improved substantially in
―Dealing with Construction Permits‖ (to
27th from 52nd) and ―Trading across
Borders" (to 68th from 80th).
 Compared with last year, India‘s
ranking deteriorated on two parameters
– ―protecting minority investors" (from
7th to 13th position) and ―getting
electricity" (from 22nd to 25th) –and
remained unchanged in ―enforcing
contracts" at 163rd.
 India‘s ranking improved in ―Registering
Property" to 154th rank from 166th,
despite a drop in the score.
35. Answer: (a)
Explanation:
 Since 2018, India‘s working-age
population (people between 15 and 64
years of age) has grown larger than the
dependant population – children aged
14 or below, as well as people above 65
years of age. This bulge in the working-
age population is going to last till 2055,
or 37 years from its beginning.
 Many Asian economies – Japan, China
and South Korea – were able to use this
‗Demographic Dividend‘, defined by the
United Nations Population Fund
(UNFPA) as the growth potential that
results from shifts in a population‘s age
structure.
 This transition happens largely
because of a decrease in the total
RAUSIAS-TS21E1030
fertility rate (TFR, which is the
number of births per woman) after
the increase in life expectancy gets
stabilized.
 Japan was among the first major
economies to experience rapid growth
because of changing population
structure. The country‘s Demographic
Dividend phase lasted from 1964 to
2004.
 China entered this stage in 1994 – 16
years after Deng Xiaoping‘s economic
reforms started in December 1978.
Although its growth accelerated
immediately after the reforms, the years
of Demographic Dividend helped
sustain this rate for a very long period.
In the 16 years between 1978 and 1994
(post-reform, pre-dividend) China saw
eight years of double-digit growth.
36. Answer: (d)
Explanation:
The IMF (The International Monetary Fund)
advises the member countries on economic
and financial policies that promote
stability, reduce vulnerability to crises and
encourage sustained growth and high living
standards.
It also monitors global economic trends and
developments that affect the health of the
international monetary and financial
system and promotes dialogue among the
member countries on the regional and
global consequences of their policies.
In addition to these surveillance activities,
the IMF provides technical assistance to
help strengthen the members‘ institutional
capacity and makes resources available to
them to facilitate adjustment in the event of
a Balance of Payments crisis.
37. Answer: (b)
Explanation:
The Agriculture Infrastructure Fund –
The scheme shall provide a medium - long
term debt financing facility for investment
14
 in viable projects for post-harvest
management infrastructure and
community farming assets through interest
subvention and financial support.
The duration of the scheme shall be from
Financial Year 2020 to Financial Year 2029
(10 years).
Under the scheme, Rs. One Lakh crore will
be provided by the banks and financial
institutions as loans to the Primary
Agricultural Credit Societies (PACS);
Marketing Cooperative Societies; Farmer
Producer Organizations (FPOs); Self Help
Groups (SHGs); farmers; Joint Liability
Groups (JLGs); Multipurpose Cooperative
Societies; Agri-entrepreneurs; Startups;
Aggregation Infrastructure Providers; and
central/state agency or local body
sponsored Public Private Partnership
Projects.
All loans under this financing facility will
have interest subvention of 3% per annum,
up to a limit of Rs. 2 crore. This subvention
will be available for a maximum period of 7
years.
Further, credit guarantee coverage will be
available for the eligible borrowers from
this financing facility under the Credit
Guarantee Fund Trust for Micro and Small
Enterprises (CGTMSE) scheme for a loan
up to Rs. 2 crore. The fee for this coverage
will be paid by the government.
In case of the Farmer Producer
Organizations (FPOs), the credit guarantee
may be availed from the facility created
under the FPO promotion scheme of the
Department of Agriculture, Cooperation
and Farmers Welfare (DACFW).
Moratorium for repayment under this
financing facility may vary, subject to
minimum of 6 months and maximum of 2
years.
38. Answer: (d)
Explanation:
The Commission for Agricultural Costs
and Prices (CACP) is an attached office
RAUSIAS-TS21E1030
of the Ministry of Agriculture and
Farmers‟ Welfare, Government of India. It
came into existence in January, 1965.
Currently, the Commission comprises a
Chairman, Member Secretary, one Member
(Official) and two Members (Non-Official).
The non-official members are the
representatives of the farming
community and usually have an active
association with the farming community.
The CACP recommends the MSP (Minimum
Support Price) for 23 crops. The MSP is
fixed by the Cabinet Committee on
Economic Affairs, on the
recommendation of the CACP.
39. Answer: (a)
Explanation:
The SDR (The Special Drawing Right) is
an international reserve asset, created
by the International Monetary Fund
(IMF) in 1969, to supplement its member
countries‘ official reserves. So far SDR
204.2 billion (equivalent to about US$281
billion) have been allocated to the
members, including SDR 182.6 billion
allocated in 2009 in the wake of the global
financial crisis. The value of the SDR is
based on a basket of five currencies –
the U.S. dollar, the euro, the Chinese
renminbi, the Japanese yen and the
British pound sterling.
The Role of the SDR: The SDR was
created as a supplementary international
reserve asset in the context of the Bretton
Woods System of fixed exchange rates.
The collapse of the Bretton Woods System
in 1973 and the shift of major currencies to
floating exchange rate regimes lessened the
reliance on the SDR as a global reserve
asset. Nonetheless, SDR allocations can
play a role in providing liquidity and
supplementing the member countries‘
official reserves, as was the case amid the
global financial crisis.
The SDR serves as the unit of account of
the IMF and some other international
organizations.
15
 The SDR is neither a currency nor a claim
on the IMF. Rather, it is a potential claim
on the freely usable currencies of the IMF
members. The SDRs can be exchanged for
these currencies.
40. Answer: (d)
Explanation:
India-Sri Lanka Trade Relations – India-
Sri Lanka Free Trade Agreement (ISLFTA)
has been in operation since 2000. India
and Sri Lanka are discussing economic
engagement through a proposed Economic
and Technology Cooperation Agreement
(ETCA). The proposed ETCA would cover
trade in services, investment and economic,
and technology cooperation, in addition to
trade in goods.
India has run a trade surplus with Sri
Lanka ever since 2000.
41. Answer: (c)
Explanation:
The Essential Commodities
(Amendment) Act, 2020 – According to
the Act, supply of such foodstuffs, which
will be notified by the Central Government,
may be regulated only under extraordinary
circumstances, which may include war,
famine, extraordinary price rise and
natural calamity of grave nature.
Imposition of stock limits based on the
price rise and an order for regulating stock
limit on any agricultural produce only
when the price rises by
(1) Hundred percent (in retail price for
horticulture produce)
(2) Fifty percent (in retail price for non-
perishable agricultural foodstuffs)
Over the price prevailing immediately
preceding twelve months, or the average
retail price of last five years, whichever is
lower.
Any order for stock limits cannot be
imposed on a processor or a value chain
participant of any agricultural produce, if
the stock limit of such person does not
RAUSIAS-TS21E1030
exceed the overall ceiling of installed
capacity of processing, or the demand in
case of an exporter.
No action done under the Act will apply for
the Public Distribution System and the
Targeted Public Distribution System.
42. Answer: (d)
Explanation:
The National Statistical Commission – It
is a body formed by an executive
resolution (non-statutory) order of the
Ministry of Statistics and Programme
Implementation. The body will be headed
by a part time Chairperson and four other
members.
The Chairperson and other members will
be appointed on the recommendation of a
Search Committee.
The Chief Statistician of India will be
the Secretary of the body.
43. Answer: (c)
Explanation:
Budget is prepared by the Department of
Economic Affairs, under the Ministry of
Finance. Article 112 of the Constitution
mandates that the Annual Financial
Statement makes a difference between
revenue expenditure from other
expenditure. There is no mention of Plan
and non-Plan budgetary distinction in the
Constitution.
44. Answer: (b)
Explanation:
FAME - Faster Adoption and
Manufacturing of Hybrid and Electric
Vehicles in India (Phase II): The
Department of Heavy Industry, under the
Ministry of Heavy Industries and Public
Enterprises, shall be the nodal department
for implementing the Scheme.
Keeping in view the fact that the cost of
batteries is one of the main factors of
difference in the acquisition price of xEVs
16
 and internal combustion engine (ICE)
vehicles, the demand incentive would be
based on the battery capacity (i.e., energy
content measured in Kw-Hr) used in such
vehicles.
With greater emphasis on providing
affordable and environmentally friendly
public transportation options for the
masses, the Scheme will be applicable
mainly to the vehicles used for public
transport or those registered for
commercial purposes in 3W, 4W and Bus
segments. However, privately owned
registered 2Ws will also be covered
under the Scheme as a mass segment.
The Scheme envisages support for
setting up of adequate public charging
infrastructure to instill confidence
amongst the EV users, through active
participation and involvement of various
stakeholders, including the government
agencies, industries and the Public Sector
Enterprises (PSEs).
45. Answer: (c)
Explanation:
The Bank Investment Company (BIC) –
The Bank Investment Company is a holding
company or core investment company,
which was suggested by the P. J. Nayak
Committee. The government would transfer
the shares of the government in the banks
to the BIC, which would become the parent
company of all these banks, as a result of
this; all the PSBs would become ‗Limited
Banks‘.
46. Answer: (a)
Explanation:
Taking a major step to boost exports, the
government has decided to extend the
benefit of the Scheme for Remission of
Duties and Taxes on Exported Products
(RoDTEP) to all export goods, with effect
from 1st January, 2021.
RAUSIAS-TS21E1030
The RoDTEP Scheme would refund to the
exporters the embedded central, state and
local duties/taxes that were, so far, not
being rebated/refunded and were,
therefore, placing our exports at a
disadvantage. The refund would be credited
in an exporter‘s ledger account with the
Customs and used to pay the Basic
Customs Duty on imported goods. The
credits can also be transferred to other
importers.
The scheme will be implemented by the
Central Board of Indirect Taxes and
Customs, under the Ministry of Finance.
47. Answer: (a)
Explanation:
The Corporate Bonds are debt securities
issued by the private and the public
corporations. The companies issue the
Corporate Bonds to raise money for a
variety of purposes, such as building a new
plant, purchasing equipment or growing
the business.
When one buys a Corporate Bond, one
lends money to the "issuer," the company
that issued the Bond. In exchange, the
company promises to return the money,
also known as "principal," on a specified
maturity date. Until that date, the company
usually pays a stated rate of interest,
generally semi-annually.
While a Corporate Bond gives an IOU (I
Owe You) from the company, it does not
have an ownership interest in the
issuing company, unlike when one
purchases the company's equity stock.
48. Answer: (c)
Explanation:
 A CIC-ND-SI (Systematically Important
Core Investment Company)/CIC is a
Non-Banking Financial Company
o with an asset size of Rs. 100 crore
and above;
17
 o carrying on the business of
acquisition of shares and securities,
and which satisfies the following
conditions as on the date of the last
audited Balance Sheet:
o it holds not less than 90% of its net
assets in the form of investment in
equity shares, preference shares,
bonds, debentures, debt or loans in
group companies;
o its investment in the equity shares
(including instruments compulsorily
convertible into equity shares within
a period not exceeding 10 years from
the date of issue) in group
companies constitutes not less than
60% of its net assets.
o it does not trade in its investments
in shares, bonds, debentures, debt
or loans in group companies, except
through block sale for the purpose
of dilution or disinvestment;
o it does not carry on any other
financial activity referred to in
Section 45I(c) and 45I(f) of the RBI
Act, 1934, except investments in
bank deposits, money market
instruments, government securities,
loans to and investments in debt
issuances of group companies or
guarantees issued on behalf of the
group companies;
o it accepts public funds.
 The CICs having an asset size of
below Rs. 100 crore are exempted
from registration and regulation from
the Reserve Bank of India (RBI),
except if they wish to make overseas
investments in the financial sector.
 The CICs are prohibited from
contributing capital to any partnership
firm or to be partners in partnership
firms, including Limited Liability
Partnerships (LLPs) or any association
RAUSIAS-TS21E1030
of persons similar in nature to the
partnership firms.
 The CICs/ CICs-ND-SI cannot accept
deposits. That is one of the eligibility
criteria.
49. Answer: (a)
Explanation:
The Headline Inflation Measure
demonstrates overall inflation in the
economy. Conversely, the Core Inflation
Measure strips the prices of highly volatile
food and fuel components to distinguish
the inflation signal from transitory noise.
The inflation process in India is dominated,
to a great extent, by supply shocks. The
supply shocks (e.g., rainfall, oil price
shocks, etc.) are transitory in nature and
hence, produce only temporary movements
in relative prices.
The Headline Inflation figure includes
inflation in a basket of goods that
includes commodities like food and
energy. It is different from the Core
Inflation, which excludes food and energy
prices while calculating inflation.
50. Answer: (c)
Explanation:
The Special Safeguard Mechanism or
“SSM”
The SSM would be available for the
developing countries only.
Objective: For the developing countries to
address import surges or price falls.
Like the SSG (The Special Agricultural
Safeguard), it could be triggered if the
import surge or price fall is big enough,
without any need to test injury or to
negotiate.
More details of the Mechanism are being
negotiated.
18
 GATT safeguard Special Agricultural Special Safeguard Mechanism
Safeguard (SSG) (SSM) (details still being
negotiated)
Which All, including Agricultural, only if Agricultural
products? agricultural ―tariffied‖ and
identified in
member‘s schedule
of commitments
(with SSG)
Which All Developed and Only developing
countries? developing
Trigger Import surge causing Import surge or price Import surge or price fall
injury fall
Remedy Quantity restriction, Tariff increase Tariff increase
tariff increase
Constraint / Show injury or threat Respect numerical Trigger, remedy, duration etc. (to
condition or injury, negotiate trigger and remedy be negotiated)
compensation requirements, and
transparency
obligations

 Stable cash flow  Subject to

51. Answer: (d) through dividends market risk
Explanation:  Attractive risk-  Potential for high
A Real Estate Investment Trust (REIT) is a adjusted returns management and
company that owns, operates or finances transaction fees
income-generating real estate.
The REITs generate a steady income stream
52. Answer: (c)
for the investors, but offer little in the way
Explanation:
of capital appreciation.
A Warehouse Receipt is a type of
Most REITs are publicly traded like stocks,
documentation used in the futures markets
which makes them highly liquid (unlike
to guarantee the quantity and quality of a
physical real estate investments).
particular commodity being stored within
The REITs invest in most real estate
an approved facility.
property types, including apartment
The Warehouse Receipts are important
buildings, cell towers, data centres, hotels,
because they serve as proof that the
medical facilities, offices, retail centres and
commodity is in the warehouse and that
warehouses.
proper documentation has been verified.
Pros Cons
The Warehouse Receipt provides the
 Liquidity  Low growth Exchange with documentation that the
 Diversification  Dividends are goods authorized for sale are available for
taxed as regular transfer to a buyer.
income

RAUSIAS-TS21E1030 19
53. Answer: (b)
Explanation:
The India Brand Equity Foundation
(IBEF) is a Trust established by the
Department of Commerce, Ministry of
Commerce and Industry, Government of
India.
The IBEF's primary objective is to promote
and create international awareness of the
‗Made in India‘ label in the overseas
markets and to facilitate dissemination of
knowledge of Indian products and services.
Towards this objective, the IBEF works
closely with the stakeholders across the
government and the industry.
The IBEF works with a network of
stakeholders - domestic and international -
to promote Brand India.
54. Answer: (d)
Explanation:
The Regional Rural Banks (RRBs) are the
financial institutions which ensure
adequate credit for agriculture and other
rural sectors.
The RRBs were set up on the basis of the
recommendations of the Narasimham
Working Group (1975) and after the
legislation of the Regional Rural Banks Act,
1976.
The first Regional Rural Bank, the
―Prathama Grameen Bank‖, was set up in
1975.
The equity of a RRB is held by the Central
Government, the concerned State
Government and the Sponsor Bank, in the
proportion of 50:15:35.
The RRBs have also been brought under
the ambit of Priority Sector Lending at par
with the commercial banks. Priority Sector
Lending has been devised so that
assistance from the banking system flowed
in an increasing measure to the vital
sectors of the economy and according to
the national priorities.
Sectors like agriculture, small business,
housing, retail trade, education are
RAUSIAS-TS21E1030
categorized as ‗Priority Sector‘ by the
Reserve Bank of India and a stipulated
amount has to be lent to these sectors by
the banks.
Within the 40% priority target, 25% should
go to the weaker section or 10% of their
total advances should go to the weaker
section. The weaker sections, under the
Priority Sector Lending purposes, include
the scheduled castes, the scheduled tribes,
small and marginal farmers, artisans and
self-help groups.
55. Answer: (d)
Explanation:
Imported Inflation is a general and
sustainable price increase due to an
increase in the costs of the imported
products. This price increase concerns the
price of raw materials and all imported
products or services used by the companies
in a country. Imported Inflation is also
referred to as Cost Inflation.
Imported Inflation is caused by a decline in
the value of a country's currency. The more
the currency depreciates on the foreign
exchange market, the higher the price of
imports. Effectively, more money is needed
to buy goods and services outside the
country.
With Imported Inflation, production costs
are higher for the companies. These
companies, most often, reflect this increase
in the selling price of goods and services
sold. As a result, the prices within the
country rise. Imported Inflation causes
inflation.
When the general price level rises in a
country because of the rise in the prices of
the imported commodities, inflation is
termed as imported.
It is prudent on the part of the central bank
to take Imported Inflation into account in
policymaking, as it affects the inflationary
expectations in the country. The Reserve
Bank of India (RBI) raised the interest rates
when the oil prices were rising before the
financial crisis of 2008.
20
56. Answer: (c)
Explanation:
The Inflation Indexed Bond (IIB) is a Bond
issued by the Sovereign, which provides the
investor a constant return, irrespective of
the level of inflation in the economy.
The main objective of the IIBs is to provide
a hedge and to safeguard the investor
against macro-economic risks in an
economy.
The IIBs would be a Government Security
(G-Sec) and issued as part of the approved
Government Market Borrowing Programme.
Therefore, the IIBs would automatically
get the SLR (Statutory Liquidity Ratio)
status.
As the IIBs are G-Secs, they can be traded
in the secondary market like other G-Secs.
The investors will be able to trade them in
the NDS-OM (Negotiated Dealing System-
Order Matching System), NDS-OM (web-
based), OTC (over-the-counter) market and
stock exchanges.
57. Answer: (a)
Explanation:
Fiscal Consolidation refers to the policies
undertaken by the governments (national
and sub-national levels) to reduce their
deficits and accumulation of debt stock.
Key deficits of the government are the
revenue deficit and the fiscal deficit. The
gains from the economic reforms,
introduced in India in the early nineties,
could not be sustained for a much longer
period. Deficits were widening and, by
1999-2000, the combined fiscal deficit (of
the centre and the states) almost reached
the levels of the crisis year ‗1990-91‘.
Sustainability of debt too was becoming a
major issue. In December, 2000, the
Government of India introduced the Fiscal
Responsibility and Budget Management
(FRBM) Bill in the Parliament, as it was felt
that institutional support, in the form of
fiscal rules, would help in setting the
RAUSIAS-TS21E1030
agenda for the future fiscal consolidation
programme.
The Twelfth Finance Commission
recommended in 2004 that the state
governments too enact their Fiscal
Responsibility Legislations.
However, states like Karnataka, Kerala,
Punjab, Tamil Nadu and Uttar Pradesh
had already enacted their Fiscal
Responsibility Legislations, even before
the Commission recommended so.
58. Answer: (c)
Explanation:
The Asian Infrastructure Investment Bank
(AIIB) is an open and inclusive multilateral
financial institution. Its doors are always
open to the countries and regions dedicated
to promoting economic and social
development in Asia.
The membership in the AIIB shall be open
to the members of the International Bank
for Reconstruction and Development, or the
Asian Development Bank.
The AIIB does not have country strategies
for its members. It will review any project
that is aligned with the Bank‘s thematic
priorities and will bring clear benefits to
Asia.
The AIIB is headquartered in Beijing,
China.
The USA is not a member country of the
AIIB.
59. Answer: (a)
Explanation:
 The Small Finance Banks can play an
important role in the supply of credit to
the micro and small enterprises,
agriculture and banking services in
unbanked and under-banked regions in
the country. The RBI has decided to
licence new ―Small Finance Banks‖ in
the private sector.
 While permitting the Small Finance
Banks, however, the issues relating to
their size, capital requirements, area of
21
 operations, exposure norms, regulatory
prescriptions, corporate governance and
resolution need to be suitably
addressed in the light of the experience
gained. Hence, the RBI has come out
with the following guidelines for
licensing of the Small Finance Banks in
the private sector.
 The objectives of setting up of the Small
Finance Banks will be to further
financial inclusion by
o provision of savings vehicles; and
o supply of credit to the small
business units, small and marginal
farmers, micro and small industries
and other unorganized sector
entities, through high technology-
low cost operations.
 The minimum paid-up equity capital
for the Small Finance Banks shall be
Rs. 100 crore.
 The foreign shareholding in the Small
Finance Banks would be as per the
Foreign Direct Investment (FDI)
policy for the private sector banks, as
amended from time to time.
 If the Small Finance Bank aspires to
transit into a universal bank, such
transition will not be automatic, but
would be subject to fulfilling minimum
paid-up capital/net worth requirement,
as applicable to the universal banks; its
satisfactory track record of performance
as a Small Finance Bank and the
outcome of the Reserve Bank‘s due
diligence exercise.
 The Small Finance Bank will be subject
to all prudential norms and regulations
of the RBI, as applicable to the existing
commercial banks, including the
requirement of maintenance of the Cash
Reserve Ratio (CRR) and the Statutory
Liquidity Ratio (SLR). No forbearance
would be provided for complying with
the statutory provisions.
 The Small Finance Banks will be
required to extend 75% of its Adjusted
RAUSIAS-TS21E1030
Net Bank Credit (ANBC) to the sectors
eligible for classification as Priority
Sector Lending (PSL) by the Reserve
Bank of India.
 At least 50% of its loan portfolio should
constitute loans and advances of upto
Rs. 25 lakh.
60. Answer: (b)
Explanation:
Indirect tax is a type of tax where the
incidence and the impact of taxation
does not fall on the same entity.
In the case of indirect tax, the burden of
tax can be shifted by the taxpayer to
someone else. Indirect taxes have the effect
to raising the price of the products on
which they are imposed. Customs duty,
central excise, service tax and value added
tax are the examples of indirect taxes.
GST is an indirect tax.
61. Answer: (b)
Explanation:
Basel III is an internationally agreed set
of measures developed by the Basel
Committee on Banking Supervision in
response to the financial crisis of 2007-
09. The measures aim to strengthen the
regulation, supervision and risk
management of the banks.
Like all Basel Committee standards, Basel
III standards are the minimum
requirements which apply to the
internationally active banks. The members
are committed to implementing and
applying standards in their jurisdictions
within the time frame established by the
Committee.
62. Answer: (b)
Explanation:
The Society for Worldwide Interbank
Financial Telecommunications (SWIFT) is a
member-owned cooperative that provides
safe and secure financial transactions for
its members.
22
 Established in 1973, SWIFT uses a
standardized proprietary communications
platform to facilitate the transmission of
information about financial transactions.
Financial institutions securely exchange
this information, including payment
instructions, among themselves.
SWIFT neither holds funds on its own,
nor manages external client accounts.
The cooperative began operating in 15
countries in 1973 and now operates in
more than 200 countries, linking more
than 11,000 financial institutions.
SWIFT is headquartered in Belgium.
63. Answer: (a)
Explanation:
Most-Favoured Nation (MFN) – Treating
other people equally: Under the WTO
Agreements, the countries cannot normally
discriminate between their trading
partners. Grant someone a special favour
(such as a lower customs duty rate for one
of their products) and the country
concerned has to do the same for all other
WTO members.
This principle is known as the Most-
Favoured Nation (MFN) treatment. It is so
important that it is the First Article of the
General Agreement on Tariffs and Trade
(GATT), which governs trade in goods. MFN
is also a priority in the General Agreement
on Trade in Services (GATS) and the
Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS) (Article
4), although in each Agreement, the
principle is handled slightly differently.
Together, these three Agreements cover all
the three main areas of trade handled by
the WTO.
The MFN status did not always mean equal
treatment. The first bilateral MFN treaties
set up exclusive clubs among a country‘s
―most-favoured‖ trading partners. Under
GATT and now the WTO, the MFN club is
no longer exclusive. The MFN principle
RAUSIAS-TS21E1030
ensures that each country treats its over
140 fellow-members equally.
Some exceptions are allowed. For example,
the countries can set up a free trade
agreement that applies only to the goods
traded within the group – discriminating
against the goods from outside. Or they can
give the developing countries special access
to their markets. Or a country can raise
barriers against the products that are
considered to be traded unfairly from
specific countries. And in services, the
countries are allowed, in limited
circumstances, to discriminate.
But the Agreements only permit these
exceptions under strict conditions.
In general, MFN means that every time a
country lowers a trade barrier or opens up
a market, it has to do so for the same goods
or services from all its trading partners –
whether rich or poor, weak or strong.
National treatment – Treating foreigners
and locals equally: Imported and locally-
produced goods should be treated equally –
at least after the foreign goods have entered
the market. The same should apply to the
foreign and domestic services, and to the
foreign and local trademarks, copyrights
and patents. This principle of ―national
treatment‖ (giving others the same
treatment as one‘s own nationals) is also
found in all the three main WTO
Agreements.
64. Answer: (d)
Explanation:
The Reserve Bank of India (RBI) has taken
several initiatives over the years for
increasing banking outreach and ensuring
greater financial inclusion. A significant
step in this direction was the issue of the
RBI guidelines in 2006, for engagement of
Business Correspondents (BCs) by the
banks for providing banking and financial
services. Since then, the regulatory
framework for the BC model has been
23
 progressively honed to ensure that
consumer protection is not compromised
while facilitating enhanced outreach of
banking services.
Business Correspondents are the retail
agents engaged by the banks for providing
banking services at locations other than a
bank branch/ATM.
The banks are required to take full
responsibility for the acts of omission and
commission of the BCs that they engage
and have, therefore, to ensure thorough
due diligence and additional safeguards for
minimizing the agency risk.
Basically, the BCs enable a bank to expand
its outreach and offer limited range of
banking services at low cost, as setting up
a brick and mortar branch may not be
viable in all cases. The BCs, thus, are an
integral part of a business strategy for
achieving greater financial inclusion.
65. Answer: (d)
Explanation:
The Financial Sector Assessment
Programme (FSAP), established in 1999, is
a comprehensive and in-depth assessment
of a country‘s financial sector. The FSAPs
analyse the resilience of the financial
sector, the quality of the regulatory and
supervisory framework, and the capacity to
manage and resolve the financial crises.
Based on its findings, the FSAPs produce
recommendations of a micro and macro-
prudential nature, tailored to the country-
specific circumstances.
The FSAP is a key instrument of the
International Monetary Fund‘s surveillance.
In the developing and emerging market
countries, the FSAPs are conducted jointly
with the World Bank. In these countries,
the FSAP assessments include two
components: a financial stability
assessment, which is the responsibility of
the Fund; and a financial development
assessment, which is the responsibility of
the World Bank.
66. Answer: (b)
Explanation:
The International Monetary Fund (IMF) is a
quota-based institution. The quotas are the
building blocks of the IMF‘s financial and
governance structure. An individual
member country‘s quota broadly reflects its
relative position in the world economy. The
quotas are denominated in the Special
Drawing Rights (SDRs), the IMF‘s unit of
account.

Multiple Roles of the IMF‟s Quotas

Resource Voting Power Access to SDR Allocations
Contributions Financing
The quotas The quotas are a The maximum The quotas determine a
determine the key determinant of amount of member‘s share in a general
maximum amount the voting power in financing a allocation of the SDRs.
of financial the IMF decisions. member can obtain
resources a The votes comprise from the IMF under
member is obliged one vote per normal access is
to provide to the SDR1,00,000 of based on its quota.
IMF. quota plus basic
votes (same for all
the members).

RAUSIAS-TS21E1030 24
67. Answer: (a)
Explanation:
Gold played a central role in the
international monetary system, until the
collapse of the Bretton Woods System of
fixed exchange rates in 1973. Since then,
its role has diminished. But it remains an
important asset in the reserve holdings of
several countries and the International
Monetary Fund (IMF) is still one of the
world‘s largest official holders of gold. In
line with the new income model for the
Fund agreed in 2008, the profits from
limited gold sales were used to establish an
endowment and used to boost the IMF‘s
concessional lending capacity to the eligible
low-income countries (LICs).
The IMF acquired its gold holdings through
4 main channels:
 When the IMF was founded in 1944,
it was decided that 25% of the
initial quota subscriptions and
subsequent quota increases were to be
paid in gold. This represents the largest
source of the IMF's gold.
 All payments of charges (interest on the
member countries' use of IMF credit)
were normally made in gold.
 A member wishing to acquire the
currency of another member could do
so by selling gold to the IMF.
 The member countries could also use
gold to repay the IMF for credit
previously extended.
Note: The IMF may sell gold outright
according to the prevailing market prices. It
may accept gold in the discharge of a
member country's obligations (loan
repayment) at an agreed price, based on
the market prices at the time of acceptance.
Such transactions require Executive Board
approval by an 85% majority of the
total voting power.
The IMF does not have the authority to
engage in any other gold transactions –
such as loans, leases, swaps, or use of gold
as collateral – nor does it have the
authority to buy gold.
RAUSIAS-TS21E1030
68. Answer: (d)
Explanation:
The Reserve Bank of India (RBI) has
constructed a composite Digital
Payments Index (DPI) to capture
payment digitization in the country. The
RBI-DPI has been constructed with March,
2018, as the base period, i.e., the DPI score
for March, 2018, is set at 100.
The RBI-DPI comprises 5 broad parameters
that enable the measurement of deepening
and penetration of digital payments in the
country over different time periods. These
parameters are – (i) Payment Enablers
(weight 25%); (ii) Payment Infrastructure –
Demand-side Factors (10%); (iii) Payment
Infrastructure – Supply-side Factors (15%);
(iv) Payment Performance (45%); and (v)
Consumer Centricity (5%).
Going forward, the RBI-DPI shall be
published on the RBI‟s website on a
semi-annual basis from March, 2021
onwards.
69. Answer: (d)
Explanation:
Digital Equalization Levy on e-commerce
players: This tax has been imposed in the
budget 2020-21 upon the e-commerce
operators which are non-residents, who
own, operate or manage digital or electronic
facility or platform for online sale of goods
or online provision. This tax is charged as
an equalization levy at the rate of 2% of
the amount of consideration received or
receivable by an e-commerce operator
from the e-commerce supply or services
made to a person resident of India, or an
Indian address.
E-commerce operators, who are the
residents of India, will not need to pay this
tax.
70. Answer: (c)
Explanation:
Health Cess is imposed on the goods
specified as medical devices, as a customs
25
 duty. It will be used for financing the o Azotobacter/Azospirillum for non-
health infrastructure and services. legume crops.
It will be levied and collected by the o Acetobacter for sugarcane only.
Central Government (The Central Board
o Blue –Green Algae (BGA) and Azolla
of Indirect Taxes).
for low land paddy.
 For Phosphorous
71. Answer: (b)
o Phosphatika for all crops to be
Explanation:
applied with Rhizobium,
Appreciation of rupee, relative to dollar,
Azotobacter, Azospirillum and
will make it cheaper to import in India,
as compared to exporting. Acetobacter.

Increase in the domestic interest rates in  For enriched compost

India will attract foreign money in the o Cellulolytic fungal culture.
country. This will result in an increase in o Phosphotika and Azotobacter
the demand for rupee and hence, rupee will culture.
appreciate.

74. Answer: (b)

72. Answer: (c)
Explanation:
Conservation agriculture is a farming
system that promotes minimum soil
disturbance (i.e., no tillage), maintenance of
a permanent soil cover and diversification
of plant species. It enhances biodiversity
and natural biological processes above and
below the ground surface, which contribute
to increased water and nutrient use
efficiency, and to improved and sustained
crop production.
Three principles of conservation
agriculture, given by the Food and
Agriculture Organization (FAO) are:
1. Minimum mechanical soil disturbance
(i.e., no tillage) through direct seed
and/or fertilizer placement.
2. Permanent soil organic cover with crop
residues and/or cover crops.
3. Species diversification through varied
crop sequences and associations
involving at least three different crops.
73. Answer: (d)
Explanation:
 For Nitrogen
o Rhizobium for legume crops.
Explanation:
Mycorrhizal fungi create a symbiotic
relationship with the plants. They enable
the crops to uptake more nutrients
(especially phosphorus), prevent stress and
promote healthy soil for increased
production, resilience, plant growth and
vitality. Mycorrhizae play an important,
positive role in plant physiology, mineral
nutrition, water absorption and disease
resistance. Adding Mycorrhizal fungi to the
transplants and the newly potted plants
will help them thrive.
Enhancing nutrient uptake – absorbing up
to 15 macro- and micro-nutrients.
Increasing the absorption area of the roots
by 10 to 1,000 times.
Assisting plants in utilizing hard to capture
nutrients, particularly phosphorous.
Improving soil structure by producing
humic compounds and Glomalin required
to form soil aggregates.
Glomalin produced by Mycorrhizal fungi is
a vital link in carbon sequestration. The
plants move CO2 from the environment and
store in Glomalin earth sinks.

RAUSIAS-TS21E1030 26
75. Answer: (c)
Explanation:
Crop Rotation – The rotation of crops is
not only necessary to offer a diverse "diet"
to the soil micro-organisms, but as they
root at different soil depths, they are
capable of exploring different soil layers for
nutrients. Nutrients, that have been
leached to the deeper layers and that are
no longer available for the commercial crop,
can be "recycled" by the crops in rotation.
This way the rotation crops function as
biological pumps.
Furthermore, a diversity of crops in
rotation leads to a diverse soil flora and
fauna, as the roots excrete different organic
substances that attract different types of
bacteria and fungi, which in turn, play an
important role in the transformation of
these substances into plant available
nutrients. Crop rotation also has an
important phytosanitary function, as it
prevents the carryover of crop-specific
pests and diseases from one crop to the
next via crop residues.
The effects of crop rotation –
Higher diversity in plant production and
thus, in human and livestock nutrition.
Reduced risk of pest and weed infestations.
Greater distribution of channels or biopores
created by diverse roots (various forms,
sizes and depths).
Better distribution of water and nutrients
through the soil profile.
Exploration for nutrients and water of
diverse strata of the soil profile by the roots
of many different plant species, resulting in
a greater use of the available nutrients and
water.
Increased nitrogen fixation through certain
plant-soil biota symbionts and improved
balance of N/P/K (Nitrogen (N), Phosphorus
(P), Potassium (K)) from both organic and
mineral sources.
Increased humus formation.
Crop rotation will make agriculture more
sustainable. However, the income of the
RAUSIAS-TS21E1030
farmers depends on many policy and
economic factors.
76. Answer: (b)
Explanation:
FAO (The Food and Agriculture
Organization) Food Price Index: It
consists of 5 commodity group price
indices, weighted with the average export
shares of each group for 2014-16. The FAO
Food Price Index (FFPI) is a measure of the
monthly change in the international prices
of a basket of food commodities. It consists
of the average of five commodity group
price indices weighted by the average
export shares of each of the groups over
2014-2016
 Cereal Price Index
 Vegetable Oil Price Index
 Sugar Price Index
 Meat Price Index
 Dairy Price Index
77. Answer: (b)
Explanation:
Organic Farming: India ranks first in the
number of organic farmers and ninth in
terms of area under organic farming.
Sikkim became the first state in the world
to become fully organic and other states,
including Tripura and Uttarakhand, have
set similar targets.
Both the Paramparagat Krishi Vikas Yojana
(PKVY) and the Mission Organic Value
Chain Development (MOVCD) are
promoting certification under the
Participatory Guarantee System (PGS) and
the National Programme for Organic
Production (NPOP), respectively, targeting
domestic and exports markets. The Food
Safety and Standards (Organic Foods)
Regulations, 2017, are based on the
standards of NPOP and PGS. The consumer
should look for the logos of FSSAI (The
Food Safety and Standards Authority of
India), Jaivik Bharat / PGS Organic India
27
 on the produce to establish the organic 80. Answer: (a)
authenticity of the produce. Explanation:
PGS Green Certification is given to One Nation One Ration Card Scheme:
chemical free produce under transition The main objective of the IM-PDS (The
to „organic‟, which takes 3 years. Integrated Management of Public
Distribution System) scheme is to
78. Answer: (b) implement nation-wide portability of
Explanation: benefits under the NFSA (The National
Food Security Act, 2013) i.e., eligible
The Payments Infrastructure
households/beneficiaries covered under the
Development Fund (PIDF): It is a Fund
NFSA shall be able to lift their entitled food
established by the Reserve Bank of India
grains from any Fair Price Shop (FPS) of
(RBI) to promote payment acceptance
their choice in the country, by using their
infrastructure across tier 3 to tier 6 centres
same/existing ration card after biometric /
with special focus on North-East India.
Aadhaar authentication on the electronic
Funding mechanism: Initial corpus of the
Point of Sale (ePoS) device at the FPS in a
PIDF has to be substantial to initiate Pan-
destination/sale state / UT through ‗One
India terminalization and to cover the pay-
Nation One Ration Card‘ System by
outs in the first year. Contributions to the
integrating the existing PDS systems /
PIDF shall be mandatory for the banks and
portals of the states/UTs with the central
the card networks.
systems / portals under the Central
The RBI shall contribute Rs. 250 crore to
Repository of all NFSA ration
the corpus. The authorized card networks
cards/beneficiaries. The creation of a
shall contribute in all Rs. 100 crore.
Central Repository of all ration
The card issuing banks shall also cards/beneficiary data of all states / UTs
contribute to the corpus, based on the card shall ensure that no duplicate ration
issuance volume (covering both debit cards card/beneficiary exists in any state/UT
and credit cards) at the rate of Re. 1 and under the NFSA.
Rs. 3 per debit and credit card,
It is a scheme implemented by the
respectively, issued by them.
Ministry of Consumer Affairs, Food and
Public Distribution.
79. Answer: (b) The scheme is voluntary for the states.
Explanation: Not all the states have agreed to
The National Electronic Funds Transfer implement the scheme.
(NEFT) is a nation-wide centralized
payment system, owned and operated by 81. Answer: (b)
the Reserve Bank of India (RBI).
Explanation:
A person having no bank account can remit
Pulses production trend in India: The
funds through NEFT to a beneficiary having
Rabi season contributes principally to the
a bank account, with another NEFT
pulses output of India.
member bank.
Gram is the major pulse crop of India,
The NEFT system is available round the
accounting for the most output among all
clock throughout the year on all days, i.e.,
pulse crops in India.
on 24 × 7 × 365 basis. NEFT presently
In the last 5 years, pulse production has
operates in batches on half-hourly
not been growing.
intervals throughout the day.

RAUSIAS-TS21E1030 28
82. Answer: (b)
Explanation:
Oilseeds production trend in India: Rabi
oilseeds production has not been
growing in the country during the last
15 years. During 2005-06, India produced
112 lakh tonnes of oilseeds, which declined
to 85.53 lakh tonnes in 2015-16. In 2018-
19, India produced 111 lakh tonnes of
oilseeds during the Rabi season.
Sunflower is grown both in the Rabi and
the Kharif seasons in India. Sunflower
production was 15 lakh tonnes in 2005-06,
which has reduced to 2 lakh tonnes in
2018-19.
Mustard is the principal oilseed grown in
India during the Rabi season, contributing
close to 70% of the overall Rabi oilseed
production.
83. Answer: (a)
Explanation:
The Amber Box: Nearly all domestic
support measures, considered to distort
production and trade (with some
exceptions), fall into the Amber Box. These
include the measures to support prices, or
subsidies directly related to the production
quantities.
The Blue Box: This is the ―Amber Box with
conditions‖ – conditions designed to reduce
distortion. Any support that would
normally be in the Amber Box, is placed in
the Blue Box, if the support also requires
the farmers to limit production.
At present, there are no limits on spending
on the Blue Box subsidies. In the current
negotiations, some countries want to keep
the Blue Box as it is, because they see it as
a crucial means of moving away from
distorting the Amber Box subsidies,
without causing too much hardships.
Others wanted to set limits or reduction
commitments, some advocating moving
these supports into the Amber Box.
The Green Box: In order to qualify, the
Green Box subsidies must not distort
trade, or at the most cause minimal
RAUSIAS-TS21E1030
distortion. They have to be government-
funded (not by charging the consumers
higher prices) and must not involve price
support.
They tend to be the programmes that are
not targeted at particular products and
include direct income supports for the
farmers that are not related to (are
―decoupled‖ from) the current
production levels or prices. They also
include environmental protection and
regional development programmes.
84. Answer: (a)
Explanation:
The production of cotton has nearly
doubled in the last 20 years. This is mainly
due to the introduction of the BT cotton
seeds.
The production of jute in India has not
been growing in the last 10 years.
85. Answer: (d)
Explanation:
Seed Certification: In general, Seed
Certification is a process designed to
maintain and make available to the general
public continuous supply of high-quality
seeds and propagating materials of notified
kinds and varieties of crops so grown and
distributed to ensure the physical identity
and genetic purity. Seed Certification is a
legally sanctioned system for quality
control of seed multiplication and
production.
Seed Certification is done under the
provisions of the Seeds Act, 1966. The
Seeds Act of 1966 provided the required
impetus for the establishment of the official
Seed Certification Agencies by the states.
At present, 22 states in the country have
their own Seed Certification Agencies,
established under the Seeds Act, 1966. In
India, Seed Certification is voluntary
and labelling is compulsory.
Seeds of only those varieties which are
notified under Section 5 of the Seeds
29
 Higher provisioning discourages the banks 95. Answer: (c)
from offering such products. Following the Explanation:
introduction of higher risk weights, the By buying or selling bonds, bills and other
banks had discontinued these products. financial instruments in the open market, a
central bank can expand or contract the
93. Answer: (c) amount of reserves in the banking system
Explanation: and can ultimately influence the country's
money supply. When the central bank sells
S.N. Industry Weight (In
such instruments, it absorbs money from
percentage)
the system. Conversely, when it buys, it
1. Petroleum & 28.04 injects money into the system. This method
Refinery of trading in the market, to control the
production money supply, is called the Open Market
2. Electricity 19.85 Operation.
generation The Open Market Operations allow the
3. Steel production 17.92 central banks great flexibility in the timing
and volume of monetary operations at their
4. Coal production 10.33
own initiative, encourage an impersonal,
5. Crude Oil 8.98 business-like relationship with the
production participants in the marketplace and provide
6. Natural Gas 6.88 a means of avoiding the inefficiencies of
production direct controls.

7. Cement 5.37 The Open Market Operations affect the

production
8. Fertilizers 2.63
production
94. Answer: (b)
Explanation:
Disguised unemployment, also known as
‗hidden unemployment‘, refers to a
situation where the labour that is employed
in a job is not actually utilised for the
production of goods and services.
In other words, such employment does not
contribute to the output of an economy and
is, thus, akin to a form of unemployment.
Sometimes disguised unemployment could
simply be a form of underemployment,
wherein the skills of a labour force are not
utilised to their full capacity. In many other
cases, however, such unemployment could
simply be due to the lack of other
alternative avenues of production, where
the surplus labour could be employed
profitably.
money supply and related financial
measures through their impact on the
reserve base of the banking system. As a
matter of monetary policy tactics in
controlling these reserves, the Open Market
Operations can be conducted in one of two
ways : actively, by aiming for a given
quantity of the reserves and allowing the
price of the reserves (that is, the interest
rate) to fluctuate freely; or passively, by
aiming at a particular interest rate,
allowing the amount of the reserves to
fluctuate.
96. Answer: (b)
Explanation:
The South Asian Free Trade Area (SAFTA)
is the free trade arrangement of the South
Asian Association for Regional Cooperation
(SAARC). The agreement came into force in
2006, succeeding the 1993 SAARC
Preferential Trading Arrangement. SAFTA
signatory countries are Afghanistan,
Bangladesh, Bhutan, India, the Maldives,
Nepal, Pakistan and Sri Lanka.

RAUSIAS-TS21E1030 32
 SAFTA recognizes the need for special and
differential treatment for the LDCs in its
Preamble.
97. Answer: (b)
Explanation:
The Andean Community is a trade bloc of
four countries: Bolivia, Colombia, Ecuador
and Peru.
The headquarter of CAN is located in Lima,
Peru.
99. Answer: (b)
98. Answer: (b)
Explanation:
The International Development
Association (IDA) is a part of the World
Bank, that helps the world‟s poorest
countries. Overseen by 173 shareholder
nations, the IDA aims to reduce poverty by
providing zero to low-interest loans (called
―credits‖) and grants for the programmes
that boost economic growth, reduce
inequalities and improve people‘s living
conditions.
The IDA complements the World Bank‘s
original lending arm – the International
100. Answer: (b)
Bank for Reconstruction and Development
(IBRD). The IBRD was established to
function as a self-sustaining business, and
it provides loans and advice to the middle-
income and credit-worthy poor countries.
The IBRD and the IDA share the same staff
and headquarters, and evaluate the
projects with the same rigorous standards.
RAUSIAS-TS21E1030
The IDA is a multi-issue institution,
supporting a range of development
activities that pave the way towards
equality, economic growth, job creation,
higher incomes and better living conditions.
The IDA's work covers primary education,
basic health services, clean water and
sanitation, agriculture, business climate
improvements, infrastructure and
institutional reforms.
Explanation:
India has been ranked at the 116th
position in the latest edition of the World
Bank‘s annual Human Capital Index that
benchmarks the key components of human
capital across the countries.
The 2020 Human Capital Index update
includes health and education data for 174
countries – covering 98% of the world‘s
population – up to March, 2020, providing
a pre-pandemic baseline on the health and
education of the children, with the biggest
strides made in the low-income countries.
Explanation:
The Early Harvest Scheme is a precursor to
a free trade agreement (FTA) between two
trading partners. This is to help the two
trading countries to identify certain
products for tariff liberalization, pending
the conclusion of the FTA negotiation. It is
primarily a ―confidence building measure‖.
33