• Option B is correct.
• Gross value added (GVA) is defined as the value of output less the value of intermediate consumption. It is used to measure the output or contribution of a particular sector. When such GVAs from all sectors (Σ GVA) are added together and adding taxes (product) and reducing subsidies (product), we can get the GDP (at market price). GVA thus shows the production contribution of a particular sector. Technically,
• GDP at Market Prices = Σ GVA at basic prices + product taxes – product subsidies.
• In this context, when GVA from all sectors are added together and necessary adjustment for taxes and subsidies are made, we will get the GDP for the economy.
• GVA is for a particular sector
• ΣGVA is for the economy
• GDP is for the economy
• When the value of taxes on products (less subsidies on products) is added to the gross value added, the sum of gross value added for all resident units gives the value of gross domestic product (GDP). Thus, Gross Domestic Product (GDP) of any nation represents the sum total of gross value added (GVA) in all the sectors of that economy during the said year after adjusting for taxes and subsidies.

• Option A is correct.
• The assets of the Issue Department of Reserve Bank of India shall consist of gold coin, gold bullion, foreign securities, rupee coin and rupee securities to such aggregate amount as is not less than the total of the liabilities of the Issue Department as hereinafter defined.
• As per the RBI Act, the only liability of the Issue Department is ‘Notes in Circulation’.
• The Reserve Bank of India Act, 1934 (RBI Act) provides that the Bank shall prepare separately a weekly account of the Issue Department and of the Banking Department in the forms prescribed by the Central Government. This weekly statement is reviewed every week by a Committee of the Central Board of the RBI. The same form holds good in the case of annual accounts of the Bank which is adopted by the Central Board.
• While Balance Sheets for the Issue and Banking Departments have been kept separate, only one Profit and Loss Account is prepared for the entire bank.

Option B is correct.
• Statement 1 is incorrect. Statement 2 is correct.
• India has a land frontier of 15,106.7 km. The total length of the coastline of India is 7,516.6 km. India shares its border with seven countries namely Afghanistan, Pakistan, China, Bhutan, Nepal, Myanmar, Bangladesh, Maldives and Sri Lanka.
• Statement 1 is incorrect. India does not have FTA with its largest trading partner China. India has currently individual FTA with Sri Lanka, Bhutan, and Nepal as well as all South Asian Countries through SAAFTA (an FTA of SAARC countries.)
• Statement 2 is correct. With Bangladesh being the central pillar of India’s Neighbourhood First policy, Bangladesh is India’s largest trade partner in South Asia. The bilateral trade between the two countries have grown at an unprecedented rate of more than 10 percent in recent years.

• Option B is the correct answer.
• Statement 1 is incorrect. A higher U.S. interest rate will cause depreciation of Rupee against the Dollar.
• This means foreign investors will earn fewer returns, so they will take out their money from India. To add to this, the Reserve Bank of India will also increase the interest rates in India as the spread between U.S. and Indian government bonds will narrow. The increases in interest rates in India may cause the bond prices to fall.
• Statement 2 is correct. As money flows out of India, it would affect the rupee-dollar exchange rate, depreciating the rupee. Such depreciation would put considerable pressure on the already high import prices of crude and raw materials. Higher import prices of crude would send these numbers out of range, making government borrowings costlier, as also increasing the public debt to GDP ratio.
• Statement 3 is correct. Higher interest rates in the US usually lead to foreign investors pulling their money from emerging markets like India. It will put pressure on the RBI to hike interest rates or lead to rupee depreciation against the dollar, which again would lead to imported inflation for India.
• Statement 4 is correct. Higher interest rates in the US usually lead to selling of Indian equities by the Foreign institutional investors and thus capital flight may occur.

Option C is correct.
• In 2018, the amended Section 17 of the RBI Act empowered the Reserve Bank to introduce the SDF – an additional tool for absorbing liquidity without any collateral. By removing the binding collateral constraint on the RBI, the SDF strengthens the operating framework of monetary policy. The SDF is also a financial stability tool in addition to its role in liquidity management.
• Option A is incorrect. SDF does not require any collateral for its operation. By removing the binding collateral constraint on the RBI, the SDF strengthens the operating framework of monetary policy.
• Option B is incorrect. The SDF rate will be 25 bps below the policy rate (Repo rate), and it will be applicable to overnight deposits at this stage. It would, however, retain the flexibility to absorb liquidity of longer tenors as and when the need arises, with appropriate pricing.
• Option C is correct. The main purpose of SDF is to reduce the excess liquidity in the Banking system, and control inflation.
• Option D is incorrect. The SDF will replace the fixed rate reverse repo (FRRR) as the floor of the liquidity adjustment facility corridor. Both the standing facilities- the MSF (marginal standing facility) and the SDF will be available on all days of the week, throughout the year.

Option C is correct.
• Statements 1 and 2 are correct. Statement 3 is incorrect.
• Statement 1 is correct and 3 is incorrect. Off-budget borrowings are loans that are taken not by the Centre directly, but by another public institution, like public sector undertakings, which borrow on the directions of the central government. These also include the deferred payments of bills and loans by the Centre.
These items constitute off-budget borrowings because these loans and deferred payments are not part of fiscal deficit calculations. Off budget borrowings is not counted in the calculation of fiscal deficit. This helps keep the country’s fiscal deficit within acceptable limits. Hence, Statement-3 is incorrect.
• Statement 2 is correct. Off-budget Borrowings are those financial liabilities that are raised by public sector undertakings for which repayment of entire principal and interest is done from the Central Government Budget.
• Such borrowings are made by state-owned firms to fund government schemes but are not part of the official budget calculations.
• This means that though the borrowing is not a part of the consolidated fund of India, the interest payment for such borrowings is made out of the consolidated fund.
• Extra Budgetary Resources (EBR) are taken into account while calculating the Government Debt.

Option D is correct.
• All Statements are incorrect. The Deposit Insurance and Credit Guarantee Corporation (DICGC) was established for the purpose of insurance of deposits and guaranteeing of credit facilities and for other matters connected therewith.
• Statement 1 is incorrect. Recently, the Parliament passed the Deposit Insurance and Credit Guarantee Corporation (DICGC) Amendment Act, 2021. Under the Act, each depositor in a bank is insured upto a maximum of ₹5 lakh for both principal and interest amount. Earlier, the depositor insurance limit was ₹ 1 lakh. Thus, it is not just the principal amount of the depositor but also the interest amount that is insured.
• Statement 2 is incorrect. The DICGC insures all deposits such as savings, fixed, current, recurring, etc. deposits except the following types of deposits:
1) Deposits of foreign Governments;
2) Deposits of Central/State Governments;
3) Inter-bank deposits;
4) Deposits of the State Land Development Banks with the State co-operative bank;
5) Any amount due on account of and deposit received outside India
6) Any amount, which has been specifically exempted by the corporation with the previous approval of Reserve Bank of India
• Statement 3 is incorrect. At present, following are covered by the DICGC:
1) All commercial banks including branches of foreign banks functioning in India, local area banks and regional rural banks are insured by the DICGC.
2) At present all co-operative banks are covered by the DICGC. Primary cooperative societies are not insured by the DICGC.

• All the statements are correct.
• The Balance of Payments records transactions in goods, services, transfer payments and assets between residents of a country and the rest of the world. BoP includes a Current account records export and import of goods, services and transfer of payments. Trade in services is denoted as invisible trade include both factor income (interest, profits and dividends earned on assets abroad minus the income foreigners earn on their assets in India) and non-factor income (shipping, banking, tourism etc). Capital account all international purchases and sales of assets such as money, bonds, stocks etc.
• The Balance of Payments deficit can be reduced by:
• Statement 1 is correct. Currency swap agreements are undertaken to increase the foreign exchange reserves of a country. In case of a current account deficit the central bank can run down its foreign exchange reserves by selling the foreign currency in the foreign exchange market thus reducing the overall Balance of Payments deficit.
• Statement 2 is correct. The sale of sovereign bonds will lead to a positive Capital account balance and thus reduce the BoP deficit.
• Statement 3 is correct. Restricting non-essential imports will lead to reduction in imports and thus reduce the Current Account Deficit which can be done through imposing minimum import prices or safeguard duties on some goods.
• Minimum import prices are measures which create a pre-established import price below which imports cannot take place.

Option B is correct.
• Options 2 and 4 are correct. Options 1 and 3 are incorrect.
• The following reports are published by the World Bank:
1. Ease of Doing Business World Bank
2. World Development Report
3. Global Economic Prospect (GEP) Report
4. Remittance Report
5. Ease of Living Index
6. India Development Update
7. Universal Health Coverage Index
8. The Service Trade Restriction Index
• World Economic Outlook and World Trade Report are published by the IMF and World Trade Organization respectively.

Option A is correct.
• Statement 1 is correct. Statement 2 is incorrect.
• A dirty float (also known as ‘managed float’) is an exchange rate regime in which the exchange rate is neither entirely free (or floating) nor fixed.
• Statement 1 is correct. In a managed floating exchange rate system, the central bank allows the exchange rate to be determined by market forces but intervene at times to influence the rate.
• Statement 2 is incorrect. India follows a managed floating exchange rate system. RBI acts as a controller in the exchange rate market.
• In most instances, the central bank in a dirty float system acts as a buffer against an external economic shock before its effects become disruptive to the domestic economy. A dirty float is also known as a “managed float.”
• On the other hand, this can be a clean float, where the central bank does not intervene.