• Both the statements are correct.
• The ratio of tax collection against the National Gross Domestic Product (GDP) is the tax to GDP ratio. This ratio is the total government tax collections divided by the country’s GDP. Countries usually measure economic growth in terms of GDP, which is the total value of goods and services produced in an economy during a specific period of time. Impacts of better tax to GDP ratio are as follows:
• It is a key barometer that indicates the ability of the government to invest in various development initiatives.
• Recapitalization of public sector banks (PSBs).
• Investment in infrastructures, such as affordable housing, roads, railways, ports and airports, would improve the ease of doing business, and have a multiplier effect on economic growth.
• The enhanced tax revenues would also reduce the dependence on disinvestment and dividends from public sector firms, to keep the fiscal deficit in check.
• The inefficient tax administration and tax evasion lead to low tax collection thus tax to GDP ratio decreses. Thus, statement 1 is correct.
• An economic slowdown occurs when the rate of economic growth slows in an economy. Thus statement 2 is correct.

• All the statements are correct.
• Public Sector Undertakings are a major part of the Indian economy that comprises public services and enterprises and it provides services that benefit the entire society.
• The rationale behind the establishment of PSU’s was Industrialisation and the establishment of Capital Goods Industries and Basic Industries. The organizations that are not a part of the public sector are termed as private sector that works to raise profit for the organization.
• This sector has been a major reason for the generation of capital in the Indian economy. A large amount of the capital comes from the Public sector Units in India.
• Public sector has brought about a major change in the employment sector in the country. They provide a lot of opportunities under various domains and thus helps in uplifting the Indian economy and society.
• The establishment of major factories and plants has boosted the socio-economic development of different regions across the country. Inhabitants of the region are impacted positively concerning the availability of facilities like electricity, water supply, township, etc.
• Public sector units have been investing a lot to introduce advanced technology, automated equipment, and instruments. This investment would result in the overall cost of production.

Statements 1 and 3 are correct and 2 is incorrect.
Commercial bills:
• It refers to the bill of exchange which is used to finance the short term working capital requirements of any business. Hence statement 1 is correct.
• These are negotiable and self-liquidating financial instruments, in which the seller is the drawer while the buyer is the drawee. Hence statement 2 is incorrect and 3 is correct.

• Option 1 is correct. Options 2 and 3 are incorrect.
• Net borrowing at home includes that directly borrowed from the public through debt instruments (for example, the various small savings schemes) and indirectly from commercial banks through Statutory Liquidity Ratio (SLR). The gross fiscal deficit is a key variable in judging the financial health of the public sector and the stability of the economy.
• Disinvestment of Public Sector Undertakings means sale or liquidation of assets by the government, usually Central and state public sector enterprises, projects, or other fixed assets. Unlike borrowings, it does not create liabilities for the government but reduces the financial capital of the government.

Statements 1 and 3 are correct and 2 is incorrect.
Foreign Exchange Management Act, 2000:
• It gives powers to the Central Government to regulate the flow of payments to and from a person situated outside the country. Hence statement 1 is correct.
• All financial transactions concerning foreign securities or exchange cannot be carried out without the approval of FEMA. All transactions must be carried out through “Authorised Persons.”
• In the general interest of the public, the Government of India can restrict an authorized individual from carrying out foreign exchange deals within the current account.
• Empowers RBI to place restrictions on transactions from capital Account even if it is carried out via an authorized individual. Hence statement 3 is correct.
• The Head Office of FEMA, also known as Enforcement Directorate, headed by the Director is located in New Delhi. Hence statement 2 is incorrect.

Statement 1 and 2 are correct and 3 is incorrect.
What is External Commercial Borrowing?
• External commercial borrowings (ECB) are loans made in foreign currency by non-resident lenders to Indian borrowers. Hence statement 1 is correct.
• ECB have proven to be valuable tools in assisting Indian firms and organisations in raising funds from outside of India’s borders, particularly when it comes to attracting new investments.
• Debtors may include the government, corporations, or citizens of that country.
• Money owed to private commercial banks, foreign governments, or international financial institutions such as the IMF and World Bank is included in the debt.
• External commercial borrowings typically have a three-year minimum maturity length.
• The Department of Economic Affairs of the Ministry of Finance, in collaboration with the Reserve Bank of India, supervises and regulates ECB guidelines and regulations. Hence statement 2 is correct.
• Commercial borrowings account for the largest majority of India’s external debt.
• The majority of the external debt is still denominated in US dollars.
• There are currently two methods for using ECB to raise funds: the permission route and the automatic approach. Hence statement 3 is incorrect.

• Statement 1 is incorrect. Statement 2 is correct.
• Statement 1 is incorrect. Strategic disinvestment involves sale of a substantial portion of the government’s shareholding in a CPSE (up to 50% or more) along with transfer of management control.
• The government uses various methods for disinvestment. In the last six years, the most significant modes of disinvestment have been exchange-traded funds (ETFs), offer-for-sale (OFS), strategic disinvestment, buybacks, and initial public offer (IPO). Hence, statement 2 is correct.
• An ETF is a basket of stocks. The government has two primary ETFs: (i) CPSE-ETF and (ii) Bharat 22 ETF. Between 2015-16 and 2020-21, the government raised the maximum disinvestment receipts from ETFs.
• New Public Sector Enterprises (PSE) Policy:
• According to the new New Public Sector Enterprises (PSE) Policy, the central government has divided most sectors into strategic and non-strategic.
• In strategic sectors, the government will maintain a bare minimum presence. The remaining entities will be considered for privatisation, merger, subsidiarisation or closure. Sectors categorised as strategic include: (i) atomic energy, space and defence, (ii) transport and telecommunication; (iii) power, petroleum, coal and other minerals, and (iv) banking, insurance, and financial services.
• CPSEs in non-strategic sectors will be either privatised or closed.
• Certain sectors such as development financing/refinancing institutions, major port trusts, and CPSEs providing support to vulnerable groups have been kept out of the framework.

Statement 1 and 2 are correct. Statement 3 is incorrect.
Physical Quality of Life Index (PQLI) was developed by famous economist Morris David in 1979 for 23 developed and developing countries. Morris David used the following three indicators to prepare a composite index known as Physical Quality of Life Index:
Life Expectant Rate (L.E.I)
Infant Mortality Rate (I.M.I)
Basic Literacy Rate (B.L.I)
Hence statement 1 and 2 are correct.
Life Expectant Rate (L.E.I): Life expectancy means average number of year a person is expected to live. As per census of 2011, it is 66.8 years in India.
Infant Mortality Rate (I.M.I): It refers to the number of infants dying within one year of their birth out of every 1000 births. As per census report of 2011, it is 47 per 1000. Higher infant mortality is harmful for economic development.
Basic Literacy Rate (B.L.I): Any person above the age of 7 year who can read and write in any one language with an ability to understand it is considered as literate. As per census 2011, it is 74.04% in India.
PQLI ignores many factors which influence the quality of life such as employment, housing, justice, social security as well as human rights. Hence statement 3 is incorrect.

Statement 2 and 3 are incorrect. Statement 1 is correct.
MPI is the product of the incidence of poverty (proportion of poor people) and the intensity of poverty (average deprivation score of poor people) and is therefore sensitive to changes in both components.
The global Multidimensional Poverty Index (MPI) is an international measure of acute multi-dimensional poverty covering over 100 developing countries. Hence statement 2 is not correct.
The MPI ranges from 0 to 1 and higher values imply higher poverty. Hence statement 3 is not correct.
The MPI looks beyond income to understand how people experience poverty in multiple and simultaneous ways.
It identifies how people are being left behind across three key dimensions: health, education and standard of living, comprising 10 indicators. People who experience deprivation in at least one-third of these weighted indicators fall into the category of multidimensionally poor.
2020 Global Multidimensional Poverty Index was released recently. The Global Multidimensional Poverty Index (MPI) was developed in 2010 by the Oxford Poverty & Human Development Initiative (OPHI) and the United Nations Development Programme. 2020 marks the ten year anniversary since the global MPI was first launched. Hence statement 1 is correct.

Statement 2 and 3 are incorrect. Statement 1 is correct
An Informal economy represents enterprises that are not registered, where employers do not provide social security to employees. Hence Statement 1 is correct.
In many parts of the developing world, including India, informality has reduced at a very sluggish pace, manifesting itself most visibly in urban squalor, poverty and unemployment.
Despite witnessing rapid economic growth over the last two decades, 90% of workers in India have remained informally employed, producing about half of GDP.
Official Periodic Labor Force Survey data shows that 75% of informal workers are self-employed and casual wage workers with average earnings lower than regular salaried workers.
The formal sector is more productive than the informal sector, and formal workers have access to social security benefits. Hence Statement 2 is incorrect.
The persistence of a high share of informal employment in total employment represents a lack of adequate growth or continuation of underdevelopment. Hence Statement 3 is incorrect.