1. Economic Survey 2014-15 mentions – The Indian banking system is afflicted by what might be called “double financial repression”. In this context which of the following has caused financial repression on the asset side of the balance sheet?
1. high inflation.
2. SLR requirement.
3. PSL requirement.
Select the correct answer using the codes given below.
a) 3 only
b) 2 only
c) 2 and 3 only
d) 1, 2 and 3
Answer & Explanation
c) 2 and 3 only. The Indian banking system is afflicted by what might be called “double financial repression”. Financial repression on the asset side of the balance sheet is created by the statutory liquidity ratio (SLR) requirement that forces banks to hold government securities, and priority sector lending (PSL) that forces resource deployment in less than- fully efficient ways. Financial repression on the liability side has arisen from high inflation since 2007, leading to negative real interest rates, and a sharp reduction in households’ financial savings.
Reference – Economic Survey Volume 1 Page 84
2. According to Economic Survey 2014-15, what is the JAM number trinity?
a) a mechanism for targeted and less distortive way of supporting poor.
b) a balance between the budget deficit, revenue deficit and capital deficit.
c) a balance between current account deficit, capital deficit and fiscal deficit
d) a fiscal policy having a short, medium and long term goals.
Answer & Explanation
a) a mechanism for targeted and less distortive way of supporting poor. Eliminating or phasing down subsidies is neither feasible nor desirable unless accompanied by other forms of support to cushion the poor and vulnerable and enable them to achieve their economic aspirations. The JAM Number Trinity – Jan Dhan Yojana, Aadhaar and Mobile numbers – allows the state to offer this support to poor households in a targeted and less distortive way.
Reference – Economic Survey Volume 1 Page 70
3. Consider the following
1. Petroleum
2. Food
3. Fertilizer
The correct descending order of the subsidy given on these items according to Economic Survey 2014-15 is
a) 2 3 1
b) 2 1 3
c) 1 3 2
d) 1 2 3
Answer & Explanation
a) 2 3 1 . The subsidy given on food, fertilizer and petroleum is 0.9, 0.6 and 0.5 percent of GDP.
Reference – Economic Survey Volume 1 Page 52 (table 2.1)
4. The top reasons for stalling of government owned projects in last five years according to the Economic Survey 2014-15 is/are
1. land acquisition problems.
2. lack of environmental clearances.
3. lack of funds.
Select the correct answer using the codes given below.
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 1, 2 and 3
Answer & Explanation
b) 1 and 3 only. The top causes are 1. Land acquisition problem 2. Lack of non-environmental Clearances (and not environmental) 3. Lack of funds
Reference – Economic Survey Volume 1 Page 76 (table 4.3)
5. Region wise, India’s export shares to which of the following region has declined in the 10 year period from 2004 to 2014?
1. Asia.
2. America.
3. Europe.
4. Africa
Select the correct answer using the codes given below.
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 1 and 4 only
Answer & Explanation
c) 2 and 3 only. Region-wise, India’s export shares to Europe and America have declined over the years—from 23.6 per cent and 20.1 per cent respectively in 2004-05 to 18.6 per cent and 17.2 per cent respectively in 2013-14. Conversely, the shares of India’s exports to Asia and Africa have increased from 47.9 per cent and 6.7 per cent respectively in 2004-05 to 49.4 per cent and 9.9 per cent respectively in 2013-14. The change in direction immediately prior to the global financial crisis and since 2010-11 indicates the process of diversification underway.
Reference – Economic Survey Volume 2 Page 61
6. Consider the following:
1. Agriculture & allied products.
2. Manufactured goods.
3. Crude & petro products.
On the basis of their contribution in exports, the correct descending order is
a) 3 2 1
b) 2 1 3
c) 2 3 1
d) 3 1 2
Answer & Explanation
c) 2 3 1 . Manufactured goods constituted the bulk of exports—over 63 per cent in recent years—followed by crude and petroleum products (including coal) with 20 per cent share and agriculture and allied products with 13.7 per cent share.
Reference – Economic Survey Volume 2 Page 22
1. The GCF in public sector is more than that in private sector.
2. In last five years, the GCF has always been more than Gross savings.
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
Answer & Explanation
b) 2 only. The GCF in private sector is more than that in public sector. In last five years, the GCF has always been more than Gross savings.
Reference – Economic Survey Volume 2 Page 17 (table 1.9)
8. According to Economic Survey 2014-15, “unconditional convergence” should be a desirable feature of a sector that can serve as engine of structural transformation. Unconditional convergence means
a) high level of productivity.
b) faster productivity growth in higher productivity area.
c) faster productivity growth in lower productivity area.
d) both (a) and (b).
Answer & Explanation
c) faster productivity growth in lower productivity area. Unconditional Convergence (i.e. faster productivity growth in lower productivity areas): Convergence ensures that the relevant sector acts as an “escalator” which automatically leads to higher levels of sectoral and economy-wide productivity.
Reference – Economic Survey Volume 1 Page 110
9. Which of the following is/are true about price subsides in India, according to Economic Survey 2014-15?
1. Price subsidies are often progressive unlike other subsidies.
2. They may distort markets in ways that ultimately hurt the poor.
3. They benefit wealthy households more than poor households.
Select the correct answer using the codes given below.
a) 1 only
b) 1 and 2 only
c) 2 and 3 only
d) 1, 2 and 3
Answer & Explanation
c) 2 and 3 only. Price subsidies are often regressive- By regressive, we mean that a rich household benefits more from the subsidy than a poor household. Price subsidies can distort markets in ways that ultimately hurt the poor.
Reference – Economic Survey Volume 1 Page 59
10. The Economic Survey 2014-15 has made some key policy recommendations in respect of the banking sector. In this context, ‘disinter’ means
a) reducing financial repression.
b) diversifying bank and non-bank financial sources.
c) differentiating between Public Sector Banks based on their performance
d) none of the above
Answer & Explanation
d) none of the above. Four key policy recommendations called the four Ds: 1. deregulate (in relation to financial repression), 2. differentiate (within the PSBs), 3. diversify (within and outside banking), and 4. disinter (to create more efficient exit).
Reference – Economic Survey Volume 1 Page 84
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