Question Discussion & Solution

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.

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 Option 4.

• POLICIES AND PROGRAMMES TOWARDS POVERTY ALLEVIATION
  • ​The government’s approach to poverty reduction was of three dimensions.
    • Growth-oriented approach
      • ​It is based on the expectation that the effects of economic growth — rapid increase in gross domestic product and per capita income — would spread to all sections of society and will trickle down to the poor sections also.
      • Rapid industrial development and transformation of agriculture through a green revolution in select regions would benefit the underdeveloped regions and the more backward sections of the community. 
    • Poverty alleviation programs
      • Expanding self-employment programs and wage employment programs are being considered as the major ways of addressing poverty.
      • For example - Rural Employment Generation Programme (REGP), Prime Minister’s Rozgar Yojana (PMRY), and Swarna Jayanti Shahari Rozgar Yojana (SJSRY), Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA).
    • Providing minimum basic amenities to the people
      • ​India was among the pioneers in the world to envisage that through public expenditure on social consumption needs — provision of food grains at subsidized rates, education, health, water supply, and sanitation—people’s living standards could be improved.
      • Three major programs that aim at improving the food and nutritional status of the poor are the Public Distribution System, Integrated Child Development Scheme, and Midday Meal Scheme.
      • Pradhan Mantri Gram Sadak Yojana and Valmiki Ambedkar Awas Yojana are also attempted in developing infrastructure and housing conditions.
      • Pradhan Mantri Jan-Dhan Yojana is available in which people in India are encouraged to open bank accounts.

The correct answer is Revenue and Forest Department.

• Revenue and Forest Department will be the nodal agency in the Ghar-Ghar Aushadhi Yojana.

Key Points

• Ghar-Ghar Aushadhi Yojana:
  • The scheme aims for medicinal plant distribution by the district administration.
  • It was launched on 29 June 2021.
  • Under this, nurseries of medicinal plants like Tulsi, Giloy, Ashwagandha, etc. will be developed.
  • The plants will be made available to the interested persons.
  • The Forest Department will be the nodal department of the scheme.
  • For the implementation of the scheme, a district-level task force will be constituted under the chairmanship of the District Collector.
  • Whereas, a monitoring committee will be constituted at the Rajasthan state level under the chairmanship of the Chief Secretary.
    • This committee will review the plan every third month.

The correct answer is Crude oil.

Important Points

• An import is a good or service bought in one country that was produced in another.
• Imports and exports are components of international trade.
• If the value of a country's imports exceeds the value of its exports, the country has a negative balance of trade (BOT), also known as a trade deficit.

Key Points

• India produces just 20% crude oil of its demand and rests 80% is imported from abroad.
• Crude oil and other related products account for around 22% total import of India.
• The second spot is obtained by the capital goods (machinery, base metal, transport equipment) which accounts for 19.2% of the total Indian imports.
• The third spot is obtained by the import of gems and jewellery (16.8 per cent of the total imports), the fourth and fifth spot is secured by the chemical & related products (12.7%), and electronic goods (11.4%) respectively.