Indian Economy Mixed Quiz: Set 52

The correct answer is A, iron and steel. The Industrial Policy Resolution of 1948 made only three fields an exclusive monopoly of the central government: arms and ammunition, the production and control of atomic energy, and the ownership and management of railway transport. Iron and steel was placed in the next group, of six industries in which new units would in future be set up by the state while existing private units continued.

Option B, atomic energy, option C, railways, and option D, arms and ammunition, are exactly the three monopoly fields, so each of them is wrong as an answer to a question asking what was not a monopoly. The other industries in the second group with iron and steel were coal, aircraft manufacture, shipbuilding, mineral oils and telegraph and telephone equipment. Remembering the three monopolies is enough to answer most questions on the 1948 resolution.

The correct answer is C, 1 and 2 only. Necessities and luxuries are matched correctly, but an inferior good has a negative income elasticity, not a positive one.

Income elasticity of demand is the percentage change in quantity demanded divided by the percentage change in income. For a necessity such as salt or basic food grains, demand rises with income but more slowly, so the value lies between 0 and 1. For a luxury such as air travel or jewellery, demand rises faster than income, so the value is above 1. For an inferior good such as coarse grain, demand falls when income rises, so the value is below 0.

A is wrong: pair 3 is incorrect, because an inferior good has income elasticity less than zero.

B is wrong: it also includes the incorrect pair 3 and leaves out the correct pair 1.

D is wrong: all three cannot be right when pair 3 has the wrong sign.

Exam tip: inferior below 0, necessity 0 to 1, luxury above 1.

The correct answer is B, the Industrial Relations Code, 2020. These three Acts dealt with the registration of unions, the conditions of service to be published as standing orders, and the machinery for disputes, lay-off, retrenchment and closure, and all three subjects are now in one code. Option A is wrong because the Code on Wages carries the Payment of Wages, Minimum Wages, Payment of Bonus and Equal Remuneration Acts. Option C is wrong because the Code on Social Security carries the provident fund, state insurance, maternity benefit, gratuity and compensation laws. Option D is wrong because the safety code carries the Factories Act, the Mines Act, the Contract Labour Act and the Inter-State Migrant Workmen Act among others. Noting the three largest Acts in each code is the quickest way to answer such questions.

The correct answer is B, 1982. The Export-Import Bank of India was set up in 1982 under the Export-Import Bank of India Act of 1981, as the country's apex institution for financing and promoting foreign trade; it lends to exporters, finances overseas buyers of Indian goods and operates the lines of credit extended by the Government of India. A is wrong because 1964 is the year the Industrial Development Bank of India was established, an institution for industrial finance rather than trade. C is wrong because 1991 is the year of the balance of payments crisis and the opening of the economy, when the bank was already nine years old. D is wrong because 2000 is the year the special economic zone policy was announced, and no bank was created then.

The correct answer is B, the Industries (Development and Regulation) Act, 1951. Under this Act a company needed a licence to start a new undertaking, to expand capacity substantially, to make a new article or to change its location, and the schedule to the Act listed the industries covered. This power was the centre of what critics called the licence-permit raj, and most of it was abolished by the New Industrial Policy of 1991.

Option A, the Companies Act, 1956, governs the incorporation and management of companies, not entry into an industry. Option C, the MRTP Act, 1969, dealt with monopolistic and restrictive trade practices and with the size of large houses, and was replaced by the Competition Act, 2002. Option D, the Capital Issues (Control) Act, 1947, controlled the raising of capital from the public and was repealed in 1992 when SEBI took charge of the capital market.

The correct answer is C, 2008. NPCI was incorporated in 2008 as a not-for-profit umbrella organisation for retail payments, promoted by the Reserve Bank of India and the Indian Banks' Association under the framework of the Payment and Settlement Systems Act, 2007. Option A is wrong because 2005 is the year the Reserve Bank asked banks to offer no-frills accounts for financial inclusion. Option B is wrong because 2007 is the year of the Payment and Settlement Systems Act, the law under which payment systems are authorised and regulated, which examiners deliberately place next to the year of NPCI. Option D is wrong because 2010 is the year IMPS was launched by NPCI, two years after the organisation itself was set up, with RuPay following in 2012 and UPI in 2016.

The correct answer is D, three hundred workers. The code raises the threshold from the earlier figure and also makes three hundred the point at which certified standing orders become compulsory, so one number serves two provisions. Option A is wrong because fifty is the threshold for the contract labour provisions of the safety code, a different subject. Option B is wrong because one hundred was the threshold under Chapter VB of the Industrial Disputes Act, 1947, which the code replaces; candidates who revised from older material pick this. Option C is wrong because two hundred appears in none of the codes. The policy argument on both sides should also be known: employers call it flexibility to hire and adjust, while trade unions call it a dilution of protection against retrenchment.

The correct answer is D, (A) is false but (R) is true. The National Infrastructure Pipeline was announced in the Budget speech of 2019-20 and the task force under the Secretary, Department of Economic Affairs, drew it up for the five years from 2019-20 to 2024-25, with projected capital expenditure of about 111 lakh crore rupees. The period in the assertion, 2020-30, is therefore wrong, which rules out A and B, both of which treat the assertion as true. The reason, however, states the pipeline aim correctly: the NIP report sets out to give every citizen equitable access to world-class infrastructure, and that purpose is genuine. C is wrong because it reverses the position, calling the false assertion true and the true reason false. Read such pairs by testing the assertion first, because a false assertion settles the answer at once.

The correct answer is B, the Industrial Policy Resolution, 1956. It is called the Economic Constitution of India because it settled for more than three decades which industries belonged to the state and which to private enterprise, through its Schedules A, B and C, and because it gave the Second Five Year Plan its heavy industry direction under the Mahalanobis strategy.

Option A, the resolution of 1948, was the first statement of the mixed economy and created the four-fold grouping, but it was replaced in 1956. Option C, the New Industrial Policy of 1991, is remembered for de-licensing and for cutting the reserved industries from seventeen to eight, and is sometimes called the charter of liberalisation rather than a constitution. Option D, the policy of 2021, defines four strategic sectors in which the government will keep a bare minimum presence.

The correct answer is B, Mahatma Gandhi National Rural Employment Guarantee Act. This law makes the right to work a legal guarantee: every rural household whose adult members are willing to do unskilled manual work is entitled to at least 100 days of wage employment in a financial year. The Act was passed in 2005 as NREGA, came into force from 2 February 2006 in 200 districts, was extended to the whole country by 2008 and renamed after Mahatma Gandhi in 2009. If work is not given within fifteen days, the worker is paid an unemployment allowance, and one third of the days are reserved for women. Option A is wrong because the IIM Act of 2017 only gives those management institutes the power to grant degrees. Option C is wrong because the Payment of Wages amendment merely allowed wages by cheque or bank transfer. Option D is wrong because the Citizenship Act deals with who is a citizen. Exam tip: NREGA 2005, in force 2 February 2006, 100 days of work.

The correct answer is A, the Code on Social Security, 2020. It defines a gig worker as one who works outside a traditional employer-employee relationship, a platform worker as one who gets work through an online platform, and an aggregator as the digital intermediary that connects buyer and seller, and it provides a social security fund for such workers. Option B is wrong because the Code on Wages deals with minimum wages, bonus and the payment of wages, though its coverage of all employees also benefits informal workers. Option C is wrong because the Industrial Relations Code is about unions, standing orders and disputes. Option D is wrong because the safety code deals with registration, safety, hours and welfare facilities. Aggregators contribute one to two per cent of their turnover to the fund.

The correct answer is B, Rural Cooperatives. Rural cooperative credit societies were the microfinance structure already in place when India became independent. They began with the Cooperative Credit Societies Act of 1904, which was passed to free village borrowers from moneylenders, and by 1947 a three tier structure of primary societies, district central cooperative banks and state cooperative banks was working across the provinces. The later forms of microfinance came much later. A is wrong because Joint Liability Groups were introduced by NABARD only in 2004 05 for small tenant farmers who lack land papers. C is wrong because the Self Help Group movement grew from the 1980s, and the SHG Bank Linkage Programme started as a pilot in 1992. D is wrong because the Grameen model belongs to Bangladesh, where Muhammad Yunus began it in the 1970s, and it reached India afterwards. Exam tip: cooperatives 1904, SHG Bank Linkage 1992, Joint Liability Groups 2004.

The correct answer is B, 1991 and 1992. In that financial year, following the balance of payments crisis and the New Industrial Policy, the government began selling small blocks of shares of selected enterprises to financial institutions and mutual funds. These were minority sales that raised money without giving up control.

Option A, 1980 and 1981, belongs to an era of expansion of the public sector, not of sale. Option C, 1999 and 2000, is the year of the first strategic sale, of Modern Food Industries to Hindustan Lever, and also the year the Department of Disinvestment was created, which makes it the most tempting wrong answer. Option D, 2004 and 2005, is when the National Investment Fund was set up to receive the proceeds. Disinvestment began in 1991 and 1992; privatisation proper began at the end of that decade.

The correct answer is C, Mahila Samriddhi Yojna. It is the micro-finance scheme under which women borrow small sums at a concessional rate of interest, so the rebate in interest is built into the scheme itself. It is run by the National Backward Classes Finance and Development Corporation under the Ministry of Social Justice and Empowerment, and the money reaches women through State Channelising Agencies and self-help groups, mostly for petty trade and self-employment. A parallel scheme is run for Scheduled Caste women by the National Scheduled Castes Finance and Development Corporation. Option A is wrong because the National Maternity Benefit Scheme paid a one-time cash grant to poor pregnant women and was later merged into Janani Suraksha Yojana. Option B is wrong because it is a pilot for social security cover, not a credit scheme for women. Option D is wrong because Raj Rajeshwari Mahila Kalyan Yojana is a personal accident insurance cover for women, not a loan. Exam tip: Mahila Samriddhi Yojana means micro-credit for women at a concessional interest rate, run by NBCFDC.

The correct answer is B, the Central Government. It fixes a floor wage after taking into account the minimum living standards of a worker, and may set different floor wages for different geographical areas; no state may then fix a minimum wage below that floor. Option A is wrong because states fix minimum wages, not the floor wage, and the whole purpose of a national floor is to stop a race to the bottom between states. Option C is wrong because the Reserve Bank's mandate is monetary policy, currency and banking regulation, with no role in wage fixation. Option D is wrong because a Finance Commission recommends the sharing of central taxes and grants between the Union and the states for a five-year period. Minimum wages are to be reviewed at intervals not exceeding five years.

The correct answer is C, Textiles. The eight core industries are coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity, so options A, B and D are all on the list. Textiles is one of the largest employers in Indian manufacturing and has a substantial weight inside the manufacturing component of the IIP, but it is not a core industry, because the core list is confined to energy and basic materials that feed the rest of industry. The same trap is set with sugar, automobiles, chemicals and paper, none of which is a core industry either. A quick way to hold the list is to count three fuels, namely coal, crude oil and natural gas, one product of refining, two construction materials in steel and cement, one farm input in fertilisers, and electricity.

The correct answer is B, the Department of Investment and Public Asset Management, known as DIPAM. It was created as the Department of Disinvestment in 1999, was a separate Ministry of Disinvestment from 2001 to 2004, returned as a department and was given its present name in April 2016. It works under the Ministry of Finance, NITI Aayog recommends which enterprises should be taken up and the Cabinet Committee on Economic Affairs approves each case.

Option A, the Department of Public Enterprises, frames policy for the enterprises themselves, including the Maharatna, Navratna and Miniratna scheme. Option C, the Department of Economic Affairs, handles the Budget, markets and external finance. Option D, the Department for Promotion of Industry and Internal Trade, handles industrial policy and foreign direct investment policy, not the sale of government shareholding.

The correct answer is C, the Concurrent List. Entry 22 covers trade unions and industrial and labour disputes, Entry 23 social security and social insurance including employment and unemployment, and Entry 24 the welfare of labour including conditions of work and provident funds, so both Parliament and the state legislatures can legislate, and each state notifies its own rules under the codes. Option A is wrong because the Union List deals with defence, foreign affairs, railways, banking and the like. Option B is wrong because the State List covers public order, police, land, agriculture and public health, though labour welfare is often wrongly placed there. Option D is wrong because residuary powers under Article 248 apply only to matters in none of the three lists, and labour is expressly listed.

The correct answer is B. In official usage strategic disinvestment, or strategic sale, means that the government sells a substantial block of shares and hands over management control to the buyer, so the enterprise passes out of the public sector. This is privatisation in the real sense, and the sales of Modern Food Industries, BALCO, VSNL and Air India were of this kind.

Option A describes a minority stake sale, done through an offer for sale or an exchange traded fund, where the government raises money but remains in control. Option C describes closure and asset monetisation, which is a separate route under the policy of 2021. Option D describes an employee stock offering, which changes nothing about control. The distinction asked in papers is always between a minority sale and a sale with transfer of control.

The correct answer is C, twenty-six weeks. The Maternity Benefit Act, 1961 originally provided twelve weeks; the amendment of 2017 raised it to twenty-six weeks for the first two children, and the Code on Social Security carries that provision forward along with a creche facility in larger establishments. Option A is wrong because twelve weeks is the older entitlement and now applies only in the limited cases the law specifies, such as a woman with two or more surviving children. Option B is wrong because sixteen weeks matches no Indian provision. Option D is wrong because fifty-two weeks, a full year, is the kind of entitlement some other countries give, partly unpaid, and has never been the Indian figure. The benefit is paid at the rate of the average daily wage.