1. With reference to the institution of Banking Ombudsman in India, which one of the statements is not correct?

1. The Banking Ombudsman is appointed by the Reserve Bank of India
2. The Banking Ombudsman can consider complaints from Non-Resident Indians having accounts in India
3. The orders passed by the Banking Ombudsman, are final and binding on the parties concerned
4. The service provided by the Banking Ombudsman is free of any fee

• This was in news around that time.
• If you don’t know anything, option c and do look suspect as generally there is an appellate mechanism and there can be some fee.
• And yes there is an appellate mechanism and appellate authority is one of the deputy governor of RBI.

Learning – salient provisions of banking ombudsman act, Banking regulation act

2. With reference to India, consider the following:

1. Nationalization of Banks
2. Formation of Regional Rural Banks
3. Adoption of villages by Bank Branches

Which of the above can be considered as steps taken to achieve the “financial inclusion” in India?

1. 1 and 2 only
2. 2 and 3 only
3. 3 only
4. 1, 2 and 3

• See financial inclusion is an oft repeated topic
• Common sense will tell you, RRB will provide banking to rural areas, so will 3rd option so financial inclusion
• Nationalisation was done so that credit can be provided to rural areas, low income segments

3. In order to comply with TRIPS Agreement, India enacted the Geographical Indications of Goods (Registration & Protection) Act, 1999. The difference / differences between a “Trade Mark” and a Geographical Indication is / are:

1. A Trade Mark is an individual or a company’s right whereas a Geographical Indication is a community’s right.
2. A Trade Mark can be licensed whereas a Geographical Indication cannot be licensed,
3. A Trade Mark is assigned to the manufactured goods whereas the Geographical Indication is assigned to the agricultural goods/products and handicrafts only.

Which of the statements given above is/ are correct?

1. 1 only
2. 1 and 2 only
3. 2 and 3 only
4. 1, 2 and 3

• Only in 3rd statement, red flag, pause and think. Obviously GI can also be assigned to manufactured goods, even natural products etc. Eliminate it. Now we only have to look at option 2
• You know trade mark is a private property so private party can license it to the 3rd party while GI is community property hence can not be licensed to 3rd party.
• In any case GO is due to particular geography, how can a manufacturer from other geography get GI status

Learning – TRIPS, TRIPS plus, public health safeguards under TRIPS, parallel imports, compulsory licensing

4. The SEZ Act, 2005 which came into effect in February 2006 has certain objectives. In this context, consider the following :

1. Development of infrastructure facilities.
2. Promotion of investment from foreign sources.
3. Promotion of exports of services only.

Which of the above are the objectives of this Act?

1. 1 and 2 only
2. 3 only
3. 2 and 3 only
4. 1, 2 and 3

• SEZ act came into force in 2006 but question in prelims in 2009 and in mains this year. Why- act keep getting amended. Always in news for all good and bad reasons
• Statement 3, only, red flag, pause and think. Obviously wrong. Promotion of services was the only objective. Special services zone would have been the name. Eliminate 3. You get to the answer

Learning– SEZ act, NIMZ, Make in INDIA, industrial and freight corridors

5. Which one of the following statements is an appropriate description of deflation?

1. It is a sudden fall in the value of a currency against other currencies
2. It is a persistent recession in both the financial and real sectors of economy
3. It is a persistent fall in the general price level of goods and services
4. It is a fall in the rate of inflation over a period of time

Simple. Fall in prices

Learning – Deflation v/s disinflation, recession v/s depression

6. With reference to the Non-banking Financial Companies (NBFCs) in India, consider the following statements :

1. They cannot engage in the acquisition of securities issued by the government.
2. They cannot accept demand deposits like Savings Account.

Which of the statements given above is/ are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

• 2nd is what differentiates them from banks
• Obviously institutions other than banks including FII do acquire govt securities so no bar on nbfc

Learning – banks v/s NBFC, types of NBFCs, shadow banking

7. Which one of the following was not stipulated in the Fiscal Responsibility and Budget Management Act, 2003?

1. Elimination of revenue deficit by the end of the fiscal year 2007-08
2. Non – borrowing by the central government from Reserve Bank of India except under certain circumstances
3. Elimination of primary deficit by the end of the fiscal year 2008-09
4. Fixing government guarantees in any financial year as a percentage of GDP

• Even if you don’t remember all the details you know zero RD, 3% FD. Nothing about primary. You will reach the answer.
• FRBM always in news as govt keeps amending the act

Learning – Revised FRBM targets, statements to be presented under FRBM

8. In the parlance of financial investments, the term ‘bear’ denotes

1. An investor who feels that the price of a particular security is going to fall
2. An investor who expects the price of particular shares to rise
3. A shareholder or a bondholder who has an interest in a company, financial or otherwise
4. Any lender whether by making a loan or buying a bond

• Bear bull easy
• Bear is bearish, thinks market will go down. Price if shares will fall

Learning– share market terminology- bear, bull, capitalisation, blue chips, exchange traded funds, short selling

9. A great deal of Foreign Direct Investment (FDI) to India comes from Mauritius than from many major and mature economies like UK and France. Why?     .

1. India has preference for certain countries as regards receiving FDI
2. India has double taxation avoidance agreement with Mauritius
3. Most citizens of Mauritius have ethnic identity with India and so they feel secure to invest in India
4. Impending dangers of global climatic change prompt Mauritius to make huge investments in India

• Simple DATA
• 1, 3 and 4 are bogus options

Learning- DTAA and BEPS, round tripping of money, shell companies and Panama papers, SIT on DTAA, India Mauritius DTAA v/s India Singapore DTAA, B/L investment promotion and protection treaty

10. Consider the following countries:

1. Brazil
2. Mexico
3. South Africa

According to UNCTAD, which of the above is /are categorized as “Emerging Economies”?

1. 1 only
2. 1 and 3 only
3. 2 and 3 only
4. 1, 2 and 3

All are emerging. We hear about them everyday. Even if you don’t know the answer, it’s good to make a guess here

Learning – definition of LDC, emerging economies, reports of UNCTAD

11. With reference to the National Investment Fund to which the disinvestment proceeds are routed, consider the following statements :

1. The assets in the National Investment Fund are managed by the Union Ministry of Finance.
2. The National Investment Fund is to be maintained within the Consolidated Fund of India.
3. Certain Asset Management Companies are appointed as the fund managers.
4. A certain proportion of annual income is used for financing select social sectors.

Which of the statements given above is/ are correct?

1. 1 and 2
2. 2 only
3. 3 and 4
4. 3 only

• 2 is definitely incorrect. It’s kept I’m public accounts. Eliminate it.
• Look at 4 now. It’s correct.
• withdrawl of funds from NIF was changed in the wake of financial crisis of 2008, hence the question

Learning – NIF, consolidated fund of INDIA v/s public accounts of INDIA, Charged v/s non charged expenditure, divestment v/s strategic sale

12  In India, which of the following is regulated by the Forward Markets Commission?

1. Currency Futures Trading
2. Commodities Futures Trading
3. Equity Futures Trading
4. Both Commodities Futures and Financial Futures Trading

• Confusion b/w b and d but think, SEBI will regulate financial futures
• You can also remember that FMC was under consumer affairs ministry till very recently so how can it regulate financial futures

Learning- FMC-SEBI merger, forward v/s futures, derivatives, FSLRC salient recommendations, insurance amendment act

13. In the context of Indian economy, consider the following pairs:

  Term          Most appropriate description

1. Melt down     Fall in stock prices

2 Recession     Fall in growth rate

3. Slowdown     Fall in GDP

Which of the pairs given above is/are correctly matched?

1. 1 only
2. 2 and 3 only
3. 1 and 3 only
4. 1,2 and 3

Recession is negative growth rate that is fall in GDP. so 2 and 3 are interchanged answer 1 only

Learning – recession v/s depression v/s double dip recession v/s slow down, Disinflation v/s deflation

14. In India, the tax proceeds of which one of the following as a percentage of gross tax revenue has significantly declined in the last five years?

1. Service tax
2. Personal income tax
3. Excise duty
4. Corporation tax

• You know the share. Corporation is maximum followed by income tax.
• Service tax was introduced very late so it’s share would obviously increase.
• Answer is obvious now.

Learning – share of different taxes in ascending- descending order, FC recommendations, cess – surcharge

15. Inclusive growth as enunciated in the Eleventh Five Year Plan does not include one of the following:

1. Reduction of poverty
2. Extension of employment opportunities
3. Strengthening of capital market
4. Reduction of gender inequality

• Many questions from inclusive tax
• It’s clear strengthening of capital market does not automatically includes everyone.
• Other 3 options obviously do

Learning – inclusive growth strategies, schemes for women, children, minorities

16. Consider the following actions by the Government:

1. Cutting the tax rates
2. Increasing the government spending
3. Abolishing the subsidies

In the context of economic recession, which of the above actions can be considered a part of the “fiscal stimulus” package?

1. 1 and 2 only
2. 2 only
3. 1 and 3 only
4. 1, 2 and 3

• Question again from fiscal stimulus. It’s always in the news consolidation or stimulus
• Stimulus is slash taxes, increase expenditure
• 3rd is obviously incorrect.

Learning – fiscal consolidation, new FRBM targets

17. When the Reserve Bank of India announces an increase of the Cash Reserve Ratio, what does it mean?

1. The commercial banks will have less money to lend
2. The Reserve Bank of India will have less money to lend
3. The Union Government will have less money to lend
4. The commercial banks will have more money to lend

• A nd D contradictory, one has to be true
• Less to be kept aside as reserve . Banks will have more money to lend.
• Obviously union govt is not a bank which will do lending business

18. With reference to BRIC countries, consider the following statements:

1. At present, China’s GDP is more than the combined GDP of all the three other countries.
2. China’s population is more than the combined population of any two other countries.

Which of the statements given above is/are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

• 2 is easily incorrect. China’s population is not more than 200 million more than India. Brazil would be easily more than 200m
• 1st option is very dicey. This would be GDP at market exchange rate. But think China is some 5 times of INDIA at present . Both Russia and Brazil are behind India. So make your guess
• No idea about 2010

Learning – 1st and latest brics summit location, BRICS bank, CRA, AIIB

19. The International Development Association, a lending agency, is administered by the

1. International Bank for Reconstruction and Development
2. International Fund for Agricultural Development
3. United Nations Development Programme
4. United Nations Industrial Development Organization

It’s part of world bank group so IBRD

learning – parts of WB group, criteria for IDA financing, India and IDA

20. Consider the following statements:

 In India, taxes on transactions in Stock Exchanges and Futures Markets are

1. Levied by the Union
2. Collected by the State .

Which of the statements given above is/are correct?

1. 1 only
2. 2 only  
3. Both 1 and 2
4. Neither 1 nor 2

How can states tax transactions in stock exchanges. How would all 29 states do that.

Learning – taxes levied by whom, collected by whom, accrue to whom. Learn from Laxmikant, gross tax revenue v/s net tax revenue, tax expenditure

21. Consider the following statements:

1. The Union Government fixes the Statutory Minimum Price of sugarcane for each sugar season.
2. Sugar and sugarcane are essential commodities under the Essential Commodities Act.

Which of the statements given above is/ are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

• Many questions on minimum prices and ECA.
• You know the concept of FRP and SAP.
• Sugar as hell would be an essential commodity. If sugar is so would be the sugarcane

Learning– MSP, CACP, Essential commodities act, FRP, SAP, CCEA

22. Which one of the following is not related to United Nations?

1. Multilateral Investment Guarantee Agency
2. International Finance Corporation
3. International Centre for Settlement of Investment Disputes
4. Bank for International Settlements

You know the 1st 3 are part of world bank group. Odd one out that is 4th would be the answer

Learning – World bank group, BIS, Basel accord

23. As regards the use of international food safety standards as reference point for the dispute settlements, which one of the following does WTO collaborate with?

1. Codex Alimentarius Commission
2. International Federation of Standards Users
3. International Organization for Standardization
4. World Standards Cooperation

Food safety, name itself suggest codex alimentarius would be it – alimentarius – elementary canal

Learning – Sanitary and phyto sanitary measure,SPS,  Technical barriers to trade, TBT, FSSAI, Food safety act

24. With reference to Indian economy, consider the following statements:

1. The Gross Domestic Product (GDP) has increased by four times in the last 10 years.
2. The percentage share of Public Sector in GDP has declined in the last 10 years.

Which of the statements given above is/ are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

• For GDP to double, country has to grow by 10% for some 7 years. Even then it would take 20 years to grow 4 times. Obviously incorrect
• 2nd can be correct. 10% is reasonable. Contribution of public sector is constantly going down but you may not be sure. Make a guess. I have no idea. Just google it

25. In India, the interest rate on savings accounts in all the nationalized commercial banks is fixed by

1. Union Ministry of Finance
2. Union Finance Commission
3. Indian Banks’ Association
4. None of the above

Saving rates are deregulated

Learning – Base rate, benchmark prime lending rate, base rate bases on marginal cost of funding, current account v/s saving account

26. With reference to India, consider the following statements:

1. The Wholesale Price Index (WPI) in India is available on a monthly basis only.
2. As compared to Consumer Price Index – for Industrial Workers CPI (IW), the WPI gives less weight to food articles.

Which of the statements given above is/ are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

• 2nd is obviously correct
• Only in 1st, red flag, pause and think. Yes it’s correct. It’s only monthly  why would it be announced monthly as well as weekly. If you announce it weekly, you can calculate monthly from that

Learning -CPI, WPI maximum weight to particular items?, food product inflation v/s food article inflation, divergence b/w CPI and WPI, different varieties of CPI, monetary anchor in India

27. In the context of governance, consider the following:

1. Encouraging Foreign Direct Investment inflows
2. Privatization of higher educational Institutions
3. Down-sizing of bureaucracy
4. Selling/offloading the shares of Public Sector Undertakings

Which of the above can be used as measures to control the fiscal deficit in India?

1. 1, 2 and 3
2. 2, 3 and 4
3. 1, 2 and 4
4. 3 and 4 only

• Fiscal deficit again
• Reduce expenditure, increase taxes
• 3 reduces expenditure as less wages, 4th generate capital receipt.
• B/w b and D,  look at statement 2
• Privatization of education, cuts subsidy on education , reduces FD

Learning – latest fiscal, revenue, primary deficit, revised FRBM targets

28. In the context of India’s Five Year Plans, a shift in the pattern of industrialization, with lower emphasis on heavy industries and more on infrastructure begins in

1. Fourth Plan
2. Sixth Plan
3. Eighth Plan
4. Tenth Plan

• 6th plan – infra
• Do check again though

Learning–  pointers about every 5 year plan

29. Which one of the following is not a feature of Limited Liability Partnership firm?

1. Partners should be less than 20
2. Partnership and management need not be separate
3. Internal governance may be decided by mutual agreement among partners
4. It is corporate body with perpetual succession

• There is no limit to partners. Minimum is 2.
• LLP is hybrid of partnership and corporation. B, c and d are characterstics of partnership.

Learning-:LLP, Joint liability group, private Ltd company v/s public limited company, new companies act

30.Which of the following terms indicates a mechanism used by commercial banks for providing credit to the government?

1. Cash Credit Ratio
2. Debt Service Obligation
3. Liquidity Adjustment Facility
4. Statutory Liquidity Ratio

In SLR, they hold govt securities thus provide credit to govt

Learning – financial repression, double financial repression, treasury bonds v/s treasury bills, state development loans

30. In the context of the affairs of which of the following is the phrase “Special Safeguard Mechanisms” mentioned in the news frequently?

1. United Nations Environment Programme
2. World Trade Organization
3. ASEAN – India Free Trade Agreement
4. G – 20 Summits

• Terms, agreements
• SSM – WTO
• details in the WTO article I wrote

Learning – SSM, Special products SP, special and differential treatment, S&D, SSM v/s safeguard duties, anti dumping v/s countervailing duty

P.S. – Analysis of pre 2009 and CAPF 2016 economy will be posted in next article