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Sunday test 06-12-2015

 

1)      Identify the reasons for urban flooding in India.

1)      Climate change and its impact

2)      Improper disaster response system in the country

3)      Exploitation of wetlands

4)      Improper Urban planning

A) 1,2,3

B) 2,3,4

C) 1,3,4 

D) 1,2,3,4

Answer - c

Explanation

Recent Chennai flooding is a typical example for this scenario.

  • Heavy rainfall of greater than 34cm on a single day is unprecedented in last 100 years. The growing climate change phenomenon is cited as a reason for this. Climate scientists say India is among the countries most vulnerable to climate change with the intensification of cyclones, droughts and floods.

 

  • More than the rainfall, there are many reasons in urban planning and management for this havoc.
  • Unregulated growth of real estate, clogging of drains, illegal occupation of flood plains of rivers all of them can be cited as reasons. Added to this, drainage system was not upgraded to facilitate the needs of growing city. (An Indian environmental think-tank, the Centre for Science and Environment (CSE), has said a lack of drainage channels and natural water reservoirs has made the flooding worse.)

Improper disaster response system cannot become a reason for a disaster. If question is about mismanagement of disaster relief than the above reason is valid.

So, the right statement answer is C with 1,3,4 statements

Educational Objective

Understand the Impact of climate change and Hazards of unplanned urbanization.

2)      Identify the correct statement on Gold Bond scheme

1)      It can create a positive Impact in reducing stress on BOP situation.

2)      It helps to mobilise the surplus gold with Household and institutions as deposits

A) 1 only

B) 2Only

C) Both 1and 2

D) Neither 1 Nor 2

Answer – A

Explanation

Under the Sovereign Gold Bond Scheme, instead of buying gold in physical form investors can park their money in bonds which are backed by gold. It will decrease the import of gold and eases the stress on BOP and current account deficit.

Gold Monetisation Scheme

The gold monetisation scheme is aimed to mobilise the surplus gold holdings held with Indian households and institutions as deposits.  “Under the scheme, gold lying idle with people can be deposited in banks and generate interest.  The deposited gold will be melted and make available for jewelers as raw material so as to restrict the increased dependence of imported gold.”

 

Educational Objective

Understand the differences between gold monetization scheme and sovereign gold bonds

3)      Which of the following is an incorrect statement related to Sovereign Gold Bond scheme.

a)      It is offered only to Indian citizens

b)      Returns on the bonds is linked to Market prices of Gold

c)       Maximum allowable limit is 500gms per person per year

d)      On maturity, the redemption can be made either in gold or cash

Answer – D

Explanation

Sovereign Gold Bond has more or equal advantage against the physical gold. The bond will be issued by RBI on behalf of the Government of India. The bond would be restricted for sale to resident Indian entities and the maximum allowable limit is 500 grams per person per year.

On maturity, the redemption will be in rupee amount only. The rate of interest on the bonds will be calculated on the value of the gold at the time of investment. The principal amount of investment, which is denominated in grams of gold, will be redeemed at the price of gold at that time.

(If redemption is in gold after maturity, the entire objective of the scheme is lost.)

Educational Objective

Have clarity on how gold bond scheme is implemented.

Please think on these

  1. How it decreases gold imports
  2. Impact on BOP, CAD
  3. How to make it successful
  4. Can it become a tool for lodging black money

 

4)      Which of the following are the objectives/components of International solar alliance

1)      Universal energy access

2)      Cooperation among solar resource rich countries

3)      Mobilization of financial resources towards solar energy

4)      Research and development of affordable sola energy

A)      1,2,3

B)      2,3,4

C)      1,3,4 

D)     1,2,3,4

Answer – D

Explanation

International solar alliance is initiative of Prime Minister Modi at Paris conference. The Major objectives include

1)      To Ensure affordable energy and energy security for all.

2)      To promote green, clean and sustainable energy for future

3)      To innovate policies, projects, programmes, and mobilise more than $1000bn of investments by 2030.

News report

At the launch of the solar industry alliance on the first day of the Paris COP21 conference, Indian Prime Minister Narendra Modi and French President Francois Hollande announced that 120 countries between the Tropics of Cancer and Capricorn will work together towards the goal of clean, affordable and renewable energy for all. Modi declared India would host the alliance and its work at its National Institute of Solar Energy in Gurgaon and contribute $30m to build a secretariat, as well as supporting the operation of the alliance for five years.

Educational Objective

Indian initiatives on global platforms need to be understood in detail.

5)      Identify the correct statements from below in reference to the Indian interests at the climate change conference

1)      India is in alignment with Least developed countries to decrease the allowed peak rise in temperature from the existing 2degrees c to 1.5degrees c

2)      India proposed for equal sharing of available carbon space for future needs.

A) 1 only

B) 2Only

C) Both 1and 2

D) Neither 1 Nor 2

Answer – D

Explanation

The 48 countries in the Least Developed Countries (LDC) group are the most vulnerable to climate change because of their poverty, economic vulnerability and lack of relevant capacity to respond effectively to climate change impacts. They are demanding for keeping the rise in temperature below 1.5Degree c to arrest the impact of climate change. This reduction is not in the interests of India and it may hamper its developmental needs. So, India opposed this move along with China, Saudi Arabia.

India supports for climate justice and it includes equitable distribution of available carbon space based on historical responsibilities.  The question talks about equal distribution and it is not in line with climate justice.

Educational Objective

Focus on India’s stand and interests on various issues coming at climate change conference.

 

 

 

6)      Which of the following in Indian constitution demands respect for National anthem and constitutional ideals and institutions.

1)      Fundamental rights

2)      Fundamental duties

3)      DPSP

a)      1,2

b)      2,3

c)       1,3

d)      2 only

Answer – D

Explanation

It is the constitutional duty of every citizen, under Article51A(a) of the Constitution, to respect its ideals and institutions, the National Flag and the National Anthem.

Supreme Court of India - Bijou Emmanuel vs state of Kerala held that rights of free speech and freedom to practice a religion stand over the obligations to stand and sing national anthem. -

To compel each and every pupil to join in the singing of the National Anthem despite his genuine, conscientious religious objection. . . would clearly contravene the rights guaranteed by Art. 19(1)(a) and Art. 25(1) [of the Constitution of India].” That is, Supreme Court was in favour of liberties and rights of citizens.

 

Educational Objective

Read all the fundamental duties and remember them.

 

7)      Identify the correct statements on Breakthrough energy coalition.

1)      It is aimed at future energy solutions for Zero carbon future

2)      The coalition is strongly promoting the solar and wind energy

3)      The coalition wants to involve with both to research and policy areas of Government

A) 1,2

B) 2,3

C) 1,3

D) 1,2,3

 

Explanation

Break through energy coalition

The coalition is based on the principle that technology will solve our global energy issues. The coalition will be a public-private partnership between governments, research institutions and investors.

Twenty countries, including the U.S., India and China, have committed to double their respective clean energy research investment in the next five years.

 Many of the investors in Breakthrough Energy Coalition have financially backed or expressed interest in next generation nuclear technology.

Bill gates clearly expressed the limitations of solar and wind energy as their production is intermittent.

 

The Breakthrough Energy Coalition will have to fund not only breakthrough energy solutions, but push for breakthrough energy policies that allow for technologies to quickly be deployed as they are developed.  

 

Educational Objective

Learn the latest clean initiatives launched at Paris(Cop 21)

 

8)      Recently, FAO working group declared one third of Indian soils are degraded. Identify the reasons highlighted by the group

 

1)      Wind and Rain

2)      Human activity

3)      Intensive agriculture

4)      Indiscriminate use of pesticides

A) 1,2,3

B) 2,3,4

C) 1,3,4 

D) 1,2,3,4

 

Answer D

Explanation

Degradation of Indian soils

  • One third of Indian soil was degraded and it may cause threat to the food security of the nation.
  • The Major reasons include Natural causes such as wind or rain and accentuated by Human activity like deforestation and urbanization.
  • Excessive use of chemical fertilizers, imbalanced nutrient application, and intensive cropping system are the major reasons for decline in soil bio diversity and depletion of organic matter in the soil.

Educational Objective

Understand the factors that are responsible for food insecurity in India

 

9)      SDR – special drawing rights refers to

 

A)      A reserve currency to meet the emergency BOP situations

B)      A deposit held by the developing countries with IMF

C)      A fund contributed and maintained by the USA, UK, Japan, China, EU countries to face volatilities of BOP

D)     An hard currency that can be exchanged against gold

 

Answer – A

Explanation

  • The SDR is an international reserve asset, created by the IMF in 1969.
  • SDRs are allocated to member countries in proportion to their IMF quotas.
  • Also called paper gold, as it is not backed by any currency or precious metal.
  • Used only among governments of member countries and IMF for balance Of payments settlements.

 

  • The value of the SDR initially defined as

 0.888671 grams of fine gold = one U.S. dollar.

  • After the collapse of the Bretton Woods system in 1973, SDR was redefined as a basket of currencies
  • Basket consists of:
  • Euro
  • Japanese yen
  • Pound sterling
  • U.S. dollar
  • Chinese Yuan

Educational Objective

Don’t get confused between the play of words in Economy and related terminology

 

10)   Identify the correct statements related to SDRs

A)      Their value is pegged against dollar alone

B)      They are created to meet the inadequacy of global reserve asset – Gold and US dollar

C)      The weightage of different currencies is reviewed annually

D)     They can be used to buy the goods and services directly

Answer – B

Explanation

A)      The value of SDRs is calculated against the Basket consists of:

  • Euro
  • Japanese yen
  • Pound sterling
  • U.S. dollar
  • Chinese Yuan – This is newly added.

B)      The SDR was created by the IMF in 1969 as a supplementary international reserve asset, in the context of the Bretton Woods fixed exchange rate system. A country participating in this system needed official reserves—government or central bank holdings of gold and widely accepted foreign currencies—that could be used to purchase the domestic currency in foreign exchange markets, as required to maintain its exchange rate. But the international supply of two key reserve assets—gold and the U.S. dollar—proved inadequate for supporting the expansion of world trade and financial flows that was taking place. Therefore, the international community decided to create a new international reserve asset under the auspices of the IMF.

C)      The weightage of different currencies is reviewed once in 5 years.

D)     They cannot be directly used to buy the goods and services and need to be converted into one of the basket currencies to do so.

 

 

Educational Objective

Understand how SDR system functions

 

External Links

https://www.youtube.com/watch?v=67hNp-vsFew

 

11)   Identify the correct statement in the context of The International Monetary Fund (IMF), admitting China’s yuan into its benchmark currency basket.

1)      It will increase the demand for Chinese currency

2)      China need to make its foreign exchange management system open and market oriented.

A) 1 only

B) 2Only

C) Both 1and 2

D) Neither 1 Nor 2

 

Answer – C

 

Explanation

 

  • The yuan has become the fourth most-used currency in global payments with a 2.79 percent share in August, surpassing the yen.
  •  it is an acknowledgement by the global community of China’s economic prowess. The world’s second largest economy will have to be given its due place in the global financial architecture.

 

  • The important advantage accruing to China is the flexibility in settling all its international obligations with its own currency.

This, in technical parlance, is referred to as “exorbitant privilege”. For other countries, the benefit in having another reserve currency is that they can diversify their forex reserve portfolios to include renminbi. That would once again be a recognition of China’s economic strengths.

  • The world financial order is heavily skewed in favour of the dollar. About 62 per cent of international currency assets are held in dollars. The euro accounts for 23 per cent and yen and pound sterling four per cent each. Induction of the yuan is certainly going to help. It will reduce the instability associated with fluctuations in American interest rates.
  • In a factsheet accompanying the decision, the IMF said that since Chinese interest rates were higher than those of other currencies, it was likely that the SDR interest rate would rise as a result of the yuan’s inclusion

Educational Objective –

Implications of Yuan becoming a new reserve currency

12)   Consider the following statements related to GST

1)      It can create single unified market system in the country

2)      It decreases the cascading effect of taxation

3)      It can decrease the fiscal autonomy of the states

A) 1,2

B) 2,3

C) 1,3

D) 1,2,3,

Answer – D

Explanation

Advantages of GST

  • Reduction in prices: Due to full and seamless credit, manufacturers or traders do not have to include taxes as a part of their cost of production, which is a very big reason to say that we can see a reduction in prices. However, if the government seeks to introduce GST with a higher rate, this might be lost.
  • Increase in Government Revenues: This might seem to be a little vague. However, even at the time of introduction of VAT, the public revenues actually went up instead of falling because many people resorted to paying taxes rather than evading the same. However, the government may wish to introduce GST at a Revenue Neutral Rate, in which case the revenues might not see a significant increase in the short run.
  • Less compliance and procedural cost: Instead of maintaining big records, returns and reporting under various different statutes, all assessees will find comfortable under GST as the compliance cost will be reduced. It should be noted that the assessees are, nevertheless, required to keep record of CGST, SGST and IGST separately.
  • Move towards a Unified GST: Internationally, the GST is always preferred in a unified form (that is, one single GST for the whole nation, instead of the dual GST format). Although India is adopting Dual GST looking into the federal structure, it is still a good move towards a Unified GST which is regarded as the best method of Indirect Taxes.

 

 

 

 

Issues of  GST

  1. GST is not amenable to precise quantification.
  2. If one moving from origin based to destination based taxation system, few states involved with production may lose. Ex. Maharashtra, Gujarat
  3. Few states levying purchase tax may lose. Ex - Punjab
  4. Only few federal nations has GST. Canada, EU and Brazil. Canadian example is the best how GST has to be calibrated. 
  5. Loss of fiscal autonomy for states - They can no more determine the tax rates, tax exemptions to reflect their developmental priorities. One way, it keeps the vested interests away from the states. But, loosing of this fiscal space may have long term consequences. Also, instead of an earlier proposal for a  uniform GST rates across the country, the Union Government has agreed  to have a floor rate of taxation with a narrow band.
  6. Across the globe, if observed, GST implementation led to expansion of tax bases with raise in indirect tax revenues. It means that , poor people are also brought in to the tax net and Indirect taxes will hurt the poor most. It raises the issues of equity.

 

Educational Objective

Understand the advantages and issues surrounding GST

 

13)   Which of the following is not a founding country in ASEAN

A)      Malaysia

B)      Myanmar

C)      Indonesia

D)     Singapore

Ans – B

 

Explanation

The five founding members of ASEAN include Indonesia, Malaysia, Singapore, Philippines, and Thailand.

 

Educational Objective

Learn history of successful regional groupings and their memberships. But, this type of questions have become rare.

 

14)   Consider the following statements related to criminal defamation

1)      It is acting as a restriction on freedom of speech and expression

2)      he United Nations Special Rapporteur on freedom of expression, the Human Rights Committee of the International Covenant on Civil and Political Rights and other international bodies have called upon states to abolish criminal defamation

A)      1 only

B) 2Only

C) Both 1and 2

D) Neither 1 Nor 2

 

Answer – C

 

 

Explanation

  • State can use criminal defamation to stifle criticism.
  • It also goes against democratic opinion and in many countries defamation essentially is a civil wrong, and not something to be remedied by the use of the state’s coercive police powers.
  • The United Nations Special Rapporteur on freedom of expression, the Human Rights Committee of the International Covenant on Civil and Political Rights and other international bodies have called upon states to abolish criminal defamation, recognizing that it intimidates citizens and dissuades them from exposing wrongdoing. 

Educational Objective

Limitations on freedom of speech – sedition law, criminal defamation, section 66A of IT act etc need to be understood

 

External Links

http://www.thehindu.com/opinion/editorial/criminal-defamation-a-pernicious-law/article7426091.ece

 

15)   Consider the following statements related to Executive clemency and identify the correct statements

1)      Constitution of India clearly said remission of a sentence is only the function of president of India.

2)      Governor of a state can not pardon a death sentence

 

A) 1 only B) 2Only C) Both 1and 2 D) Neither 1 Nor 2

 

Answer B

 

Explanation

Indian Constitution permits the President and the Governors to exercise the power of pardon under Articles 72 and 161 of the Constitution of India. But, clemency in case of death sentences is the power of president of India.

 

Educational Objective

Differences between pardoning powers of president of India and Governor of a state.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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