Indian Economy GK Questions with Answers – Page 30

The Targeted Public Distribution System was introduced in June 1997. Until then the distribution system was universal, open to any cardholder; from 1997 households were classified as Below or Above the Poverty Line and given different quotas at different prices, with the poorer group receiving a larger subsidy.

Article 47, a Directive Principle of State Policy, declares that the State shall regard the raising of the level of nutrition and of the standard of living of its people and the improvement of public health as among its primary duties, and the same Article speaks of prohibiting intoxicating drinks…

The Commission, set up in 1965 as the Agricultural Prices Commission and renamed in 1985, recommends the minimum support price for twenty-two mandated crops after weighing the cost of production, demand and supply, price trends and the terms of trade; the Cabinet Committee on Economic Affairs takes the final decision…

The Food Corporation of India was established in 1965 under the Food Corporations Act of 1964, in the years of acute shortage that preceded the Green Revolution, to procure foodgrain at the support price, store it, move it across the country and issue it to the distribution system.

The Antyodaya Anna Yojana was launched in December 2000 for one crore of the poorest households, which were given foodgrain at the lowest issue price; the quota was twenty-five kilograms a household a month at first and was raised to thirty-five kilograms in 2002.

The Act fixed the issue price at three rupees a kilogram for rice, two rupees for wheat and one rupee for coarse grains, and provided that these prices would hold for three years from the date of commencement, after which the Central Government could revise them up to the minimum…

The Act provides that the ration card shall be issued in the name of the eldest woman of the household who is eighteen years of age or more, so that the entitlement is held by a woman; if there is no such woman, the eldest male member holds it until…

Those two ceilings together work out to about two-thirds of the country, and the Union Government fixes the state-wise coverage within them while the states identify the households.

The Act creates two categories of beneficiary. A priority household receives five kilograms of foodgrain for every member every month, so a family of five draws twenty-five kilograms.

The National Food Security Act, often called the Right to Food Act, was passed by Parliament in 2013 and converted the subsidised grain of the Targeted Public Distribution System from a scheme benefit into a legal entitlement, enforceable through a District Grievance Redressal Officer and a State Food Commission.

It was set up in 1988 on the recommendation of the Vaghul Working Group to deal in short-term instruments such as treasury bills and commercial bills and so give depth and liquidity to the money market; it later became a primary dealer.

Cash Management Bills were introduced by the Government of India and the Reserve Bank in 2010 to meet temporary mismatches in the government's cash flow, and they are issued for periods shorter than 91 days, sometimes for just a few weeks.

M1, narrow money, is the most liquid aggregate: currency, that is notes and coins, with the public, plus the demand deposits of banks, which are withdrawable at any time, plus other deposits with the Reserve Bank, a small residual item.

In a repo the bank that needs funds sells government securities to the Reserve Bank and simultaneously agrees to repurchase them a day or a few days later at a slightly higher price; the difference is the interest, and the rate charged is the repo rate, which is the policy…

An equity share has no maturity date at all; it represents ownership of a company for as long as the company exists, so it is the classic capital market instrument, issued in the primary market and traded on stock exchanges under SEBI's regulation.

Following the Vaghul Committee's recommendations on the money market, the Reserve Bank allowed scheduled commercial banks to issue negotiable certificates of deposit in 1989, and commercial paper followed a year later in 1990.

Call money is the overnight, unsecured borrowing between banks and primary dealers that lets a bank square its cash reserve position at the end of the day; the interest on it is the call rate, the most sensitive interest rate in the system.

These are the three tenors of treasury bills auctioned by the Reserve Bank, with the 91-day bill auctioned most frequently.

A treasury bill is an instrument of the government's short-term borrowing, and the Reserve Bank of India, as banker and debt manager to the government, issues it on the government's behalf through auctions.

By definition the money market is the market for short-term funds, and the dividing line drawn in India and everywhere else is a maturity of one year; anything longer belongs to the capital market.