Quiz 1 [ January 2024 ]

Q1. .Consider the following statements with respect to Gadgil Formula

1. It was evolved in 1969 for determining the allocation of central assistance for state plans
in India.
2. It sought to provide certain disadvantaged states with preferential treatment in the form of
central assistance and tax breaks.
3. Initially three states Assam, Nagaland and Jammu & Kashmir were granted special status
under the rationale.
Which of the above statement(s) is/are correct?

a. 1 only
b. 2 & 3 only
c. 1 & 3 only
d. All of the above

Q2. Consider the following statements with respect to Gandhian plan

1. The plan articulated a ‘decentralized economic structure’ for India with ‘self-contained
villages’.
2. Jayaprakash Narayan and Jawaharlal Nehru formulated the Gandhian Plan.
Which of the above statements is/are correct?

a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2

Select the correct answers by using the code given below

a. 1 only
b. 2 only
c. Both 1 and 2

By: Vibhas Jha Sir

d. Neither 1 nor 2

Q3. Consider the following statements with respect to Strategic Disinvestment

1. When the government sells majority shares in a public sector entity, that is strategic
disinvestment.
2. Under strategic disinvestment, the government transfers the ownership and control of a
public sector entity to another public entity and the private sector is not involved here.

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

Q4.Which statement is correct for nominal GDP?

1. Nominal GDP is calculated based on current prices.

2. Nominal GDP is calculated based on the base prices.
3. Data on Nominal GDP shows an accurate picture of the economy as compared to real
GDP.

a. Only 2, 3
b. only 2
c. only 1
d. 1 2 & 3

Q5. Consider the following statements regarding Special Drawing Rights (SDR)

1. The SDR is an international reserve asset, created by the WTO in 1969

2. 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.

By: Vibhas Jha Sir

Choose the correct statement/s:
a. Only 1
b. Only 2
c. Both 1 & 2
d. Neither 1 nor 2

Q6. Consider the following statements:

1. Sovereign Green Bonds are issued by the Reserve Bank of India.

2. The proceeds of the bonds are utilised only for projects classified as environmentally
sustainable.
Choose the correct statement/s:
a. Only 1
b. Only 2
c. Both 1 & 2
d. Neither 1 nor 2

Q7. Consider the following statements about the small savings scheme in India

1. All small savings schemes qualify for the exempt-exempt-exempt (EEE) status and
enjoy triple tax exemptions.
2. The interest rates on all small savings schemes are revised for every quarter of the
year by the Reserve Bank of India.
3. All small savings schemes are highly safe because of the sovereign guarantee given
by the Government of India.
Which of the statements given above is/are correct?

a. 1 only
b. 1 and 2 only
c. 2 and 3 only
d. 3 only

Q8. Consider the following statements regarding T+1 settlements:

By: Vibhas Jha Sir

 1. Securities and Exchange Board of India (SEBI) allowed stock exchanges to start the
T+1 system as an option in place of T+2 for completion of share transactions.
2. In T+1, settlement of the trade takes place in one working day and the investor will
get the money on the following day.
Which of the above statements is/are correct?

a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2

Q9. Consider the following statements regarding SEBI settlements:

1. It proposed to implement it in two phases – Phase 1: T+0 Settlement Cycle and

Phase 2: Instant Settlement Cycle.
2. SEBI has suggested that to begin with, T+0 settlement shall be made available in the
top 500 listed equity shares based on the market capitalisation.
3. Securities under the trade-for-trade settlement will not be permitted for T+0.
Which of the above statement(s) is/are correct?

a. 1 only
b. 2 only
c. 3 only
d. 1, 2 and 3

Q10. Which of the following parameters are included in the calculation of Human Development
Index (HDI)?

1. Standard of Living
2. Women empowerment
3. Level of education
4. Life expectancy

Select the correct answer using the code given below

By: Vibhas Jha Sir

a. 1 and 3 only
b. 1, 2 and 3 only
c. 1, 2 and 4 only
d. 1, 3 and 4 only

Answers

Ans1. d
● The Gadgil formula is named after Dhananjay Ramchandra Gadgil, a social scientist and
the first critic of Indian planning. It was evolved in 1969 for determining the allocation of
central assistance for state plans in India.
● It is important to note that the concept of a special category state was first introduced in
1969 when the 5th Finance Commission sought to provide certain disadvantaged states
with preferential treatment in the form of central assistance and tax breaks.
● Initially three states Assam, Nagaland and Jammu & Kashmir were granted special status
but since then eight more have been included (Arunachal Pradesh, Himachal Pradesh,
Manipur, Meghalaya, Mizoram, Sikkim, Tripura and Uttarakhand).

Some of the Features Required for Special Status are

● Hilly and difficult terrain;
● Low population density or sizeable share of tribal population;
● Strategic location along borders with neighbouring countries;
● Economic and infrastructural backwardness; and
● Non-viable nature of state finances

Ans2. a
In 1944, Sriman Narayan Agarwal authored The Gandhian Plan, in which he emphasized
the promotion of small unit production and agriculture, based on Gandhian economic ideas. Its
key characteristic was economic decentralization, with self-contained villages and cottage
enterprises.
● Bombay plan which supported a leading role for the heavy and large industries.
● The plan articulated a ‘decentralized economic structure’ for India with ‘self contained
villages’.

By: Vibhas Jha Sir

 ● Famous socialist leader Jayaprakash Narayan published the Sarvodaya plan in January
1950.

Ans3. a
● Disinvestment means sale or liquidation of assets by the government, usually Central and
state public sector enterprises, projects, or other fixed assets.
● The Department of Investment and Public Asset Management (DIPAM) under the
Ministry of Finance has been made the nodal department for the strategic stake sale in the
Public Sector Undertakings (PSUs).
● According to the government, strategic disinvestment would imply the sale of a
substantial portion of the Government shareholding of a central public sector enterprises
(CPSE) of upto 50%, or such higher percentage as the competent authority may
determine, along with transfer of management control.
● Strategic disinvestment is transferring the ownership and control of a public sector
entity to some other entity (mostly to a private sector entity).

Ans4. c
● Nominal GDP is calculated on the basis of current prices. While real GDP is
calculated on the base year prices and its data are more reliable or accurate as
compared to Nominal GDP.
● Real GDP is regarded as a reliable indicator of a nation’s economic growth as it solely
only considers production and free from currency fluctuations.

Ans5. b
● The SDR is an international reserve asset, created by the IMF in 1969 to supplement its
member countries’ official reserves. To date, a total of SDR 660.7 billion (equivalent to
about US$943 billion) have been allocated.
● 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

Ans6. d
● In the Union Budget 2022-23, the Government announced that, as a part of the
government’s overall market borrowings in 2022-23, sovereign Green Bonds will be
issued to mobilize resources for green infrastructure.

By: Vibhas Jha Sir

 ● The proceeds will be deployed in sector projects which help in reducing the carbon
intensity of the economy.

Ans7. d
https://www.livemint.com/money/personal-finance/will-modi-govt-raise-interest-rates-of-ppf-
ssy-senior-citizen-savings-scheme-and-other-small-saving-schemes-in-2024-1170383573888
7.html
● All small savings in India are not qualified for the EEE or exempt-exempt-exempt
status and enjoys triple tax exemptions.
● For example Investments in Public Provident Fund comes under the EEE category,
but Investments under the National savings certificate comes under the EET category
(Interest is taxed).
● The interest rates on all small savings schemes are revised for every quarter by the
Government of India (not by RBI).
● Investments in small savings schemes are also highly safe because of the sovereign
guarantee of the government of India. They are therefore almost risk-free.

Ans8. c
● It means that trade-related settlements must be done within a day, or 24 hours, of the
completion of a transaction.
● For example, under T+1, if a customer bought shares on Wednesday, they would be
credited to the customer’s demat account on Thursday.
● As many as 256 large-cap and top mid-cap stocks, including Nifty and Sensex stocks,
will come under the T+1 settlement.
● After China, India will become the second country in the world to start the
‘trade-plus-one’ (T+1) settlement cycle in top listed securities.
● The markets then moved to a rolling settlement system of T+3, and then to T+2 in
2003. T+1 is being implemented despite opposition from foreign investors.

Ans9. d
https://indianexpress.com/article/explained/everyday-explainers/is-2024-a-leap-year-why-doe
s-a-leap-year-not-come-every-four-years-9090829/

By: Vibhas Jha Sir

It said that for the equity cash segment, in addition to the existing T+1 settlement cycle, a shorter
settlement cycle may be introduced as an option. It proposed to implement it in two phases –
Phase 1: T+0 Settlement Cycle and Phase 2: Instant Settlement Cycle.

● In Phase 1, an optional T+0 settlement cycle (for trades till 1:30 PM) is envisaged, with
settlement of funds and securities to be completed on the same day by 4:30 PM.
● In Phase 2, an optional immediate trade-by-trade settlement (funds and securities) may be
carried out. In the second phase, trading will be carried out till 3.30 pm.

SEBI has suggested that to begin with, T+0 settlement shall be made available in the top 500
listed equity shares based on the market capitalisation. This will be done in three tranches of 200,
200, and 100, from lowest to highest market cap.

The surveillance measures applicable in the T+1 settlement cycle will also apply to securities in
the T+0 settlement cycle. Securities under the trade-for-trade settlement will not be permitted for
T+0.

Ans10. d

By: Vibhas Jha Sir