Indian Economy Mixed Quiz: Set 22

The correct answer is B, the Reserve Bank of India. The money market deals in short-term funds of up to one year, through treasury bills, commercial paper, certificates of deposit and call money, and the Reserve Bank regulates it as part of its control over credit and liquidity. Option A, SEBI, regulates the capital market, where long-term funds are raised through shares, debentures and bonds, and the question sets the two against each other on purpose. Option C, the Ministry of Corporate Affairs, administers company law, including the issue of shares by a company, but it is not a market regulator. Option D, the Insurance Regulatory and Development Authority of India, regulates insurers. Where a product straddles both markets, such as a corporate bond, the two regulators work under an agreed division of responsibility.

The correct answer is B, differentiates it from other products in the market. A brand is the name, term, sign, symbol or design a seller gives a product so that buyers can tell it apart from everything else on the shelf. That is the defining purpose of branding, which is identification. A brand name registered as a trademark cannot legally be copied, so it fixes responsibility for quality on one producer and lets a firm build a reputation, advertise, and set a price of its own instead of competing on price alone. Packaging, labelling and branding together make up a product's identity. Option A is wrong because a brand may well help sales, but higher sales are a result of branding and not what branding itself does. Option C is wrong for the same reason, since attractiveness comes from packaging and design. Option D is wrong because a rebate on the maximum retail price is a sales promotion offer and has nothing to do with branding. Exam tip: branding identifies and differentiates, packaging protects, and labelling informs.

The correct answer is C, one hundred days. The Act, passed in 2005, gives every rural household whose adult members volunteer to do unskilled manual work a legal right to one hundred days of wage employment in a financial year, and if work is not provided within the prescribed period the applicant becomes entitled to an unemployment allowance. Option A is wrong because fifty days corresponds to no provision of the Act, though additional days beyond the hundred have at times been allowed in areas hit by drought or natural calamity. Option B is wrong for the same reason; seventy-five is associated with no guarantee under this law. Option D is wrong because one hundred and fifty days is not the statutory entitlement either, and quoting it is a common error made by candidates who confuse a relief announcement with the provision in the Act itself.

The correct answer is A, World Bank. The International Bank for Reconstruction and Development (IBRD) is the oldest arm of the World Bank Group and the body people mean when they say 'World Bank'. It was agreed at the Bretton Woods Conference of 1944 along with the IMF and began work in 1946, first to rebuild Europe after the Second World War and later to lend for development. Its headquarters are in Washington, D.C., and IBRD lends to middle-income and creditworthy low-income governments. The World Bank Group also holds the IDA, which gives the poorest countries interest-free credits, plus IFC, MIGA and ICSID. Option B is wrong because the IMF is the other Bretton Woods twin and looks after exchange stability and balance-of-payments support, not project lending. Option C is wrong because the WTO replaced GATT in 1995 and frames trade rules, with its seat at Geneva. Option D is wrong because option A is correct. Exam tip: World Bank = IBRD + IDA; the wider World Bank Group adds IFC, MIGA and ICSID.

The correct answer is B, the Securities Appellate Tribunal. A person aggrieved by an order of SEBI may appeal to the Tribunal, which is provided for by the SEBI Act itself, and from the Tribunal a further appeal lies to the Supreme Court on a question of law. This ladder is what makes SEBI a quasi-judicial body: it passes orders that are appealable rather than final. Option A is wrong because a writ petition to a High Court is an extraordinary remedy, not the appeal the Act provides. Option C, the National Company Law Tribunal, hears matters under company law and insolvency, including mergers and oppression cases, not securities market appeals. Option D is wrong because the Reserve Bank is a separate regulator with no appellate authority over SEBI; the two supervise different segments of the financial market.

The correct answer is C, M3. The Reserve Bank of India publishes four measures of money supply, and M3 is the one called broad money, also known as aggregate monetary resources. It is made of currency with the public, demand deposits with banks, other deposits with the RBI and, above all, time deposits with banks. Adding time deposits captures almost all the money the banking system has created, which is why M3 is the figure policy makers watch. A is wrong because M1, currency plus demand deposits plus other deposits with the RBI, is narrow money, the most liquid measure of all. B is wrong because M2 is M1 plus savings deposits with post office savings banks, and it is still a narrow measure. D is wrong because M4 is M3 plus total post office deposits, the widest measure, but the name broad money belongs to M3. Exam tip: M1 and M2 are narrow, M3 and M4 are broad, and M3 is the benchmark.

The correct answer is B, Suresh Tendulkar. The Tendulkar expert group reported in 2009, moved away from the calorie anchor, used a mixed reference period for consumption and brought private spending on health and education into the basket, which raised the estimated share of the poor. Option A is wrong because the Lakdawala expert group of 1993 kept the calorie-based line and its contribution was to make the lines state-specific and to update them with price indices for industrial and agricultural workers. Option C is wrong because the Rangarajan expert group reported in 2014, after Tendulkar, and went back to separate rural and urban baskets while raising the line. Option D is wrong because the task force under Y. K. Alagh in 1979 is the one that fixed the calorie norm in the first place, so it is the opposite of the answer sought.

The correct answer is D, Industrial Disputes Act. The Industrial Disputes Act was passed in 1947 and governs how disputes between employers and workmen, including matters that concern trade unions as well as individual workmen, are raised and settled. It sets up works committees, conciliation officers, courts of enquiry, labour courts, industrial tribunals and a national tribunal, lays down when a strike or a lock-out is lawful, and requires larger establishments to take government permission before lay-off, retrenchment or closure. Its provisions have now been folded into the Industrial Relations Code, 2020. A is wrong because the Indian Councils Acts, of 1861, 1892 and 1909, dealt with legislative councils and not with labour. B is wrong because the Charter Acts, the last of them in 1853, renewed the East India Company's charter. C is wrong because the Rowlatt Act of 1919 allowed detention without trial and led to the protest at Jallianwala Bagh. Exam tip: Industrial Disputes Act 1947, now part of the Industrial Relations Code, 2020.

The correct answer is C, an initial public offering. An IPO is the first sale of shares by a company to the general public, after which the shares are listed and traded on a stock exchange; it belongs to the primary market, because the money raised goes to the company itself. Option A, a rights issue, is an offer of new shares made only to existing shareholders, usually in proportion to their holding and at a stated price. Option B, a follow-on public offer, is a further issue to the public by a company that is already listed, so it cannot be the first one. Option D, a private placement, is an issue to a small number of selected investors, often financial institutions, without a public offer; when the investors are qualified institutional buyers it is called a qualified institutional placement.

The correct answer is D, Gujarat. Amul grew out of the Kaira District Co-operative Milk Producers' Union, started at Anand in Gujarat in 1946 when the farmers of Kheda district organised against the low prices paid to them by middlemen. Tribhuvandas Patel led the farmers and Verghese Kurien built the dairy into a modern enterprise, so that milk from lakhs of small producers could be collected, chilled, processed and sold under one brand. The Anand pattern was carried across the country through Operation Flood from 1970, which made India the largest milk producer in the world, and Kurien is remembered as the father of the White Revolution. A is wrong because Delhi is a market for milk, not the home of the cooperative. B is wrong because Karnataka's cooperative brand is Nandini. C is wrong because Uttar Pradesh produces a great deal of milk but Amul did not begin there. Exam tip: Amul — Anand in Gujarat, 1946; Operation Flood 1970 under Verghese Kurien.

The correct answer is B, 2,400 calories per person per day. The task force of 1979 fixed the rural line at the consumption expenditure needed to obtain 2,400 calories a day, on the ground that rural work involves more physical labour. Option A is wrong because 2,100 calories a day is the corresponding urban norm, and the pair is deliberately placed together in options to test whether a candidate remembers which is which. Option C is wrong because 1,800 calories a day is a figure used in some international discussions of minimum dietary energy, not in the Indian official line. Option D is wrong because 3,000 calories a day is well above any subsistence norm and corresponds to no official Indian standard. The memory rule is simple: the rural norm is the larger of the two because rural work is harder.

The correct answer is A, JLGs. NABARD started a pilot project on Joint Liability Groups in 2004-05 so that small, marginal and tenant farmers, who often till land they do not own, could borrow without the land papers a bank usually demands. A JLG is an informal group of roughly four to ten farmers of the same village who take a bank loan together and stand guarantee for one another, so the trust within the group takes the place of collateral. The pilot ran through selected banks in a few states, worked well, and was then adopted as a regular channel of farm credit alongside the older self-help group route. B is wrong because MEDP is NABARD's Micro Enterprise Development Programme, a skill training effort for members of mature SHGs. C is wrong because SGSY was a self-employment scheme of the rural development ministry. D is wrong because the SHG Bank Linkage Programme began in 1992 and mainly serves women's savings groups. Exam tip: JLG pilot 2004-05, tenant and oral lessee farmers, joint guarantee and no collateral.

The correct answer is B, Mumbai. SEBI has its head office in Mumbai, at the Bandra Kurla Complex, which places the regulator in the same city as the Bombay Stock Exchange, the National Stock Exchange and the Reserve Bank of India, making Mumbai the financial capital of the country. Options A, C and D are wrong as the head office, but each is a regional office of SEBI: New Delhi for the northern region, Kolkata for the eastern region and Chennai for the southern region, with Ahmedabad serving the west. Questions sometimes ask which of the four is not a regional office, so learn all four together. Note also that the Board has a Chairman, two members from Union ministries dealing with finance and company law, one member from the Reserve Bank and five members appointed by the Union Government.

The correct answer is D, 100. The Mahatma Gandhi National Rural Employment Guarantee Act, 2005 promises every rural household at least 100 days of unskilled manual wage work in a financial year. The scheme began in 200 districts in February 2006, covered the whole country by 2008, and was renamed after Mahatma Gandhi in 2009. Any adult member of a rural household can demand work; the job must be given within fifteen days of the demand and within five kilometres of the village, and if it is not given the state must pay an unemployment allowance. At least one third of the workers are to be women, wages are paid into bank or post office accounts, and the works taken up are mostly water conservation, ponds, roads and land development. A is wrong because 45 days is not the guarantee. B is wrong because 365 days would mean work all year, which the Act never promised. C is wrong because 250 days is not the figure in the law. Exam tip: MGNREGA 2005, 100 days a year, work within 15 days or an unemployment allowance.

The correct answer is A, seasonal unemployment. Agriculture needs labour at sowing, transplanting and harvest and very little in between, and industries tied to a crop, such as sugar mills and rice mills, work only for part of the year, so the workers attached to them are idle for the remaining months. Option B is wrong because structural unemployment comes from a mismatch between the skills of workers and the jobs an economy creates, and it lasts through the year rather than following a calendar. Option C is wrong because disguised unemployment means surplus workers on a job all through the season, whose withdrawal would not reduce output. Option D is wrong because educated unemployment describes qualified young people who cannot find work matching their qualification, a problem of the quality of jobs rather than the time of year.

The correct answer is A, Silk farming. Sericulture is the rearing of silkworms to produce raw silk. Mulberry or other host plants are grown, the worms are fed on the leaves until they spin cocoons, and the cocoons are then boiled and reeled into thread. India is the second largest producer of silk in the world after China, and the only country that makes all four commercial varieties, namely mulberry, tasar, eri and muga, the last of these grown only in Assam. Karnataka leads in mulberry silk, and the Central Silk Board at Bengaluru looks after the industry. Option B is wrong because rearing fish is called pisciculture. Option C is wrong because rearing birds, mainly poultry, is aviculture. Option D is wrong because keeping bees for honey and wax is apiculture. Exam tip: learn the family together, seri for silk, api for bees, pisci for fish, horti for fruit and vegetables, viti for grapes and flori for flowers.

The correct answer is A, the Securities Contracts (Regulation) Act, 1956. It defines what a security is, provides for the recognition of stock exchanges by the Government, and lays down the framework within which contracts in securities may be made; it is the oldest of the statutes governing this market and still the basic one. Option B, the Banking Regulation Act of 1949, governs banking companies and the powers of the Reserve Bank over them. Option C, the Depositories Act of 1996, allows securities to be held and transferred in electronic form and provides for depositories such as NSDL and CDSL, but not for the recognition of exchanges. Option D, the Foreign Exchange Management Act of 1999, governs dealings in foreign exchange and replaced the earlier and far stricter FERA of 1973.

The correct answer is C, current daily status. This measure notes what the person did in each half day of the seven days before the survey, so every day of idleness is counted; because it picks up short spells that the longer reference periods miss, it yields the highest estimate of unemployment of the three. Option A is wrong because usual status asks about the greater part of the last three hundred and sixty five days and therefore counts a person as employed if they worked for most of the year, hiding shorter spells of idleness. Option B is wrong because current weekly status treats a person as employed if they worked for even one hour on any day of the reference week. Option D is wrong because principal status is only a part of usual status, describing the activity pursued for the major part of the year.

The correct answer is B, NSDL. The National Securities Depository Limited was set up in 1996, the year the Depositories Act was passed, and was the first depository in India; it holds securities in electronic form so that shares need not change hands as paper certificates, a process called dematerialisation. Option A, the Central Depository Services Limited, was established in 1999 and is the second depository, so it is the closest distractor. Option C, the National Securities Clearing Corporation Limited, is a clearing corporation: it settles trades and guarantees their completion rather than holding securities. Option D, the Clearing Corporation of India Limited, clears and settles transactions in government securities, money market instruments and foreign exchange. An investor reaches a depository through a depository participant, usually a bank or a broker.

The correct answer is A, the Periodic Labour Force Survey. Begun in 2017, it replaced the five-yearly employment and unemployment surveys and gives annual estimates for rural and urban areas together along with more frequent estimates for urban areas, using the usual status and current weekly status measures. Option B is wrong because the Annual Survey of Industries collects data on registered factories, their output, capital and workers, and is not a household labour survey. Option C is wrong because the National Family Health Survey covers population, health and nutrition, including fertility and child mortality, not employment. Option D is wrong because the Economic Census counts establishments and the persons working in them at long intervals, and it cannot measure unemployment because it does not survey households at all.