Question Discussion & Solution

The correct answer is Inflation.

Key Points

• Inflation:
  • ​Inflation is an increase in the level of prices of the goods and services that households buy.
  • It is measured as the rate of change of those prices.
  • The well-known indicator of inflation is the Consumer Price Index (CPI), which measures the percentage change in the price of a basket of goods and services consumed by households.
  • Inflation refers to the increase in the prices of the goods and services of daily use, such as food, housing, clothing, transport, recreation, consumer staples, etc.
  • Inflation is calculated in India by the Ministry of Statistics and Program Implementation.

Additional Information

• Deflation: 
  • ​It is also called negative inflation.
  • During a deflationary period, prices fall in the same way as they arise in the case of inflation: continuously and in a generalized manner.
• Stagflation:
  • ​Stagflation is the extreme economic situation, a peculiar combination of stagnant growth and rising inflation leading to high unemployment.
  • Causes of Stagflation:
    • ​Government expansion of the money supply.
    • Decreasing level of Productivity.
    • Supply-side shock.
    • Increasing structural Unemployment.
    • Central bank raising Interest rates.
    • A sudden increase in oil prices.
  • Hyperinflation:​
    • It is the situation when the price of goods and services rises uncontrollably over a definite time period.
    • It is also called Rapid Inflation.

The correct answer is Residential hostel.

• Under the Rajasthan Ambedkar DBT Voucher Yojana, Students will be provided facility of residential hostels.

Key Points

• Ambedkar DBT Voucher Scheme
  • Under this scheme, the state government will provide vouchers for residential facilities to the students studying in various reserved categories of colleges of Rajasthan to stay away from their homes in urban areas. 
  • Chief Minister Ashok Gehlot has approved the proposal to implement Ambedkar DBT Voucher Scheme for SC, ST, OBC, MBC, and EWS students.
  • Under the scheme, the beneficiary students will be given Rs. 7 thousand per month for the residential facility at the divisional headquarters and Rs. 5 thousand per month for other district headquarters.
  • Under this scheme, 5000 students will be provided vouchers on a merit basis for 10 months.
  • Only those students will be able to take advantage of Rajasthan Ambedkar DBT Voucher Yojana, who live in urban areas away from their homes to get an education.

The correct answer is Sales tax.

Key Points

• The principal source of State's own tax revenues is a sales tax which accounts for about 60 percent of the total.
• The taxation system in India is such that the taxes are levied by the Central Government and the State Governments. Some minor taxes are also levied by the local authorities such as the Municipality and the Local Governments.
• To run the government and manage the affairs of a state, money is required. So the government imposes taxes in many forms on the incomes of individuals and companies.
• Broadly taxes are divided into two categories:
  • Direct Taxes
  • Indirect Taxes
• Indirect Taxes:
  • The term indirect tax has more than one meaning. In the colloquial sense, an indirect tax such as sales tax, a specific tax, value-added tax (VAT), or goods and services tax (GST) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the consumer).
  • The intermediary later files a tax return and forwards the tax proceeds to the government with the return. In this sense, the term indirect tax is contrasted with a direct tax which is collected directly by the government from the persons (legal or natural) on which it is imposed.
  • Excise duty, value-added tax, and sales tax are included under the GST.

The correct answer is Mycem Cement Factory - Katani.

Key Points

• Mycem Cement Factory is situated in Damoh.
  • It was established in 2013.
  • It is a subsidiary of Heidelberg cement of Germany.
• National Newsprint and Paper Mill are situated in Nepanagar, Burahnpur, Madhya Pradesh.
  • It was established in 1948.
  • It is India's first newspaper printing mill.
• Security Paper Mill is situated in Hoshangabad.
  • It was established in 1968.
  • Stamp paper, postal tickets, and currency notepaper are manufactured here.
  • It is under the control of the Ministry of Finance, Government of India.
• Tissue Paper Mill is situated in Indore.
• Kaimur factory is situated in Katani.
  • It was established in 1923.
  • This factory is operated under ACC cement company.

The correct answer is Cash reserve ratio.

Key Points

• The Cash Reserve Ratio (CRR) refers to the share of Net Demand and Time Liabilities that banks have to hold as balances with the RBI.
• The objective of CRR is to keep inflation under control.
• During high inflation in the economy, the central bank raises the CRR to lower the bank’s loanable funds.
• The current Cash Reserve Ratio is 4.00% (as of June 2021).
• The current Reverse repo rate is 3.35% (as of June 2021).
• The Central bank has the authority to regulate monetary policies.
• The Ministry of Finance has the authority to regulate fiscal policies.

Additional Information

• Marginal Standing facility:
  • MSF is a facility under which scheduled commercial banks can borrow an additional amount of overnight money from the RBI by dipping into their SLR portfolio up to a limit at a penal rate of interest. 
  • This provides a safety wall against unanticipated liquidity shocks to the banking system.
  • The MSF is a scheme launched by RBI in 2011-12.
  • Under MSF banks can borrow funds up to 1% of their net demand and time liability.
  • The minimum amount for which RBI receives application is Rs. 1 crore and afterwards in multiples of rupees 1 crore.
• ​SLR is a kind of reserve that commercial banks need to maintain before crediting their money to borrowers.
  • Regulating the SLR rates is a component of RBI's monetary policy.
  • Reserve Bank of India sets the limit for banks (under Banking Regulation Act, 1949) to hold a certain proportion of their assets as SLR.
• Repo Rate:- It is a rate at which the central bank (RBI) lends money to its clients against the government securities.
• Reverse Repo- It is the rate at which the central bank (RBI) borrows money from its clients.
  • Reverse Repo is used in India as a tool in which banks will give their surplus fund to RBI for a short-term period and earn money.
  • The repo rate is always higher than the reverse repo rate.
  • Repo and Reverse repo rates are decided by the Monitory policy committee (MPC) of RBI.