IASbaba 60 Day plan: Day 45- Economics and Current Affairsethics for managerial personnel applicable to PSEs and all government services. d) To advise the Government on a suitable

IASbaba 60 Day plan: Day 45- Economics and Current Affairs

www.IASbaba.com Page 1

Q.1) Which of the following can be the objectives behind setting up Public Sector

Undertakings (PSUs)?

1. To build a self reliant economy

2. To prevent or reduce concentration of private economic power

3. Establish sound economic infrastructure

4. Assist in ancillarisation and spread the benefits of industrialisation.

Select the correct answer

a) 1, 2 and 3 only

b) 1, 2 and 4 only

c) 1, 3 and 4 only

d) All of the above

Q.1) Solution (d)

All the above are objectives along with following

(i) To promote rapid economic development by filing critical gaps in the industrial structure

(ii) To provide basic infra-structural facilities for the growth of the economy;

(iii) To undertake economic activity strategically important for the growth of the country,

which, if left to private initiative, would distort the national objectives;

(iv) To achieve balanced regional development and dispersal of economic activity through

growth and diversification of economic activity in less developed areas by providing adequate

infra-structure and undertaking programmes of conservation and development of national

resources;

(v) To reduce disparities in income;

(vi) To avoid concentration of economic powder in a few hands;

(vii) To exercise social control and regulation of long-term finance through public financial

institutions;

(viii) To control over sensitive areas, i.e., allocation of scarce imported commodities; control



over the distribution system in relation to essential goods in order to reduce the margin

between prices obtained by the producers and those paid by the consumers;

(ix) To attain self-reliance in different technologies through development of capacity for design

and development of machinery, equipment and instruments and elimination of dependence of

foreign agencies for these services;

(x) To enhance the employment opportunities by heavy investment in industry and mining,

transport and communication; and

(xi) To increase exports and earn foreign exports and earn foreign exchange to ease the

pressure of Balance of Payments.

Q.2) Which of the following are correct w.r.t. Public Sector Undertakings (PSUs)?

1. The government-owned corporations are termed as Public Sector Undertakings (PSUs)

in India.

2. In a PSU majority (51% or more) of the paid up share capital is held by central

government or by any state government or partly by the central governments and partly

by one or more state governments.

3. The Comptroller and Auditor General of India (CAG) doesn’t audit government

companies.

4. In respect of government companies, CAG has the power to appoint the Auditor and to

direct the manner in which the Auditor shall audit the company's accounts.


a) 1 and 2 only

b) 1, 2 and 4only

c) 2, 3 and 4 only

d) All of the above

Q.2) Solution (b)



It is the CAG which audits the PSUs and the audit reports are verified by the Committee on

Public Sector Undertakings.

Q.3) Which of the following is incorrect about Public Enterprises Selection Board (PESB)?

a) The Public Enterprises Selection Board [P.E.S.B] is a high powered body constituted by

Government of India Resolution.

b) The P.E.S.B has been set up with the objective of evolving a sound managerial policy for

the Central Public Sector Enterprises and, in particular, to advise Government on

appointments to their top management posts.

c) To advise the Government on formulation and enforcement of a code of conduct and

ethics for managerial personnel applicable to PSEs and all government services.

d) To advise the Government on a suitable performance appraisal system for both the PSEs

and the managerial personnel in such enterprises

Q.3) Solution (c)

The code of conduct designed by PESB is applicable only to PSEs and not all services.

Further reading: http://pesb.gov.in/

Q.4) Consider the following about industrial policy 1991.

1. One of the major objectives was to liberalise the industry from regulatory devices such

as licenses and controls.

2. Ensuring PSUs are not exposed to competition and protected from private sector push.

Select the correct answer:

a) 1 only

b) 2 only

c) Both 1 and 2

d) None of the above

Q.4) Solution (a)

http://pesb.gov.in/



Introducing competition and ensuring PSUs are run on business lines with no undue protection

was the major objective of the industrial policy 1991.

Q.5) Consider the following about MRTP (Monopolies and Restrictive Trade Practices)Act.

1. The act came into force from 1st June, 1970 aiming to prevent concentration of

economic power, provide for control of monopolies, and protect consumer interest.

Currently, the MRTP Act has been renamed as the Competition Act, 2002, with a few

changes to it.

2. A Monopolistic Trade Practice is that which represents abuse of market power in

production and marketing of goods and services by eliminating potential competitors,

charging unreasonably high prices, preventing or reducing competition, limiting

technical development, deteriorating product quality, etc.


a) 1 only

b) 2 only

c) Both 1 and 2


Q.5) Solution (c)

Self Explanatory

Further reading: http://www.slideshare.net/Dread_95/mrtpmonopolies-and-restrictive-trade-

practices-act (content verified)

Q.6) Which of the following is incorrect about Competition Commission of India (CCI)?

a) CCI is a statutory body established under the Competition Act 2002.

b) The Act prohibits anti-competitive agreements, abuse of dominant position by

enterprises and regulates combinations (acquisition, acquiring of control and M&A),

which causes or likely to cause an appreciable adverse effect on competition within

India applicable only for state and centre owned establishments.

http://www.slideshare.net/Dread_95/mrtpmonopolies-and-restrictive-trade-practices-act

http://www.slideshare.net/Dread_95/mrtpmonopolies-and-restrictive-trade-practices-act



c) The Commission is also required to give opinion on competition issues on a reference

received from a statutory authority established under any law and to undertake

competition advocacy, create public awareness and impart training on competition

issues.

d) To promote and sustain an enabling competition culture through engagement and

enforcement that would inspire businesses to be fair, competitive and innovative;

enhance consumer welfare; and support economic growth.

Q.6) Solution (b)

CCI applicable across India not limiting to government owned or private; Competition is a larger

concept is well understood.

Q.7) Corporate Governance refers to the way a corporation is governed. Consider the

following.

1. Narayan Murthy Committee was set up by SEBI in 2003 w.r.t Corporate governance.

2. Whistle blower policy was a key recommendation of the committee.

3. The committee observed nominee of the Government on public sector companies shall

be elected and shall be subject to the same responsibilities and liabilities as other

directors.


a) 1 and 2 only

b) 1 and 3 only

c) 2 and 3only

d) All of the above

Q.7) Solution (d)

A question of such nature can be not attempted until one has knowledge of the same. But the

concept of corporate governance is important for this year.

Further reading:

http://shodhganga.inflibnet.ac.in/bitstream/10603/8683/11/11_chapter%203.pdf

http://shodhganga.inflibnet.ac.in/bitstream/10603/8683/11/11_chapter%203.pdf



Q.8) Which of the following are Maharatnas?

1. Bharat Heavy Electricals Limited

2. Coal India Limited

3. GAIL (India) Limited

4. Indian Oil Corporation Limited

5. NHPC Limited

6. Oil & Natural Gas Corporation Limited

7. Steel Authority of India Limited

Select the correct answer.

a) 1, 2 ,3, 4, 6 and 7 only

b) 2 ,3, 4, 5, 6 and 7 only

c) 1, 2 ,3, 4, 5 and 7 only

d) All of the above

Q.8) Solution (a)

It is not NHPC but NTPC. (oh!!!! No!!!!)

Further reading: http://dpe.nic.in/publications/list_of_maharatna_navratna-and_miniratna

Q.9) The Department of Disinvestment has been renamed as Department of Investment and

Public Asset Management (DIPAM). Consider the following.

1. It is a department under the ministry of Heavy Industries and Public Enterprises.

2. The new department has been mandated to "advise the government in the matters of

financial restructuring of central public sector enterprises and for attracting investment

through capital markets".

3. The Cabinet Committee on Economic Affairs(CCEA), chaired by the Prime Minister gives

its approval for the procedure and mechanism for strategic disinvestment.


http://dpe.nic.in/publications/list_of_maharatna_navratna-and_miniratna



a) 1 and 2 only

b) 1 and 3 only

c) 2 and 3only

d) All of the above

Q.9) Solution (c)

It is a department under Ministry of Finance. Be careful with the ministry departments.

Further reading: http://pib.nic.in/newsite/PrintRelease.aspx?relid=137044

Q.10) Strategic sale is a part of disinvestment. Consider the following.

1. The NITI Aayog will identify the CPSE for strategic sale.

2. The previous NDA government had between 1999 and 2004 privatised about a dozen

state-owned firms and hotels including Videsh Sanchar Nigam Ltd (VSNL), Bharat

Aluminium Company Ltd (BALCO), CMC Ltd and Hindustan Zinc (HZL).


a) 1 only

b) 2 only

c) Both 1 and 2


Q.10) Solution (c)

The above two statements are correct. In the strategic sale of a company, the transaction has

two elements:

Transfer of a block of shares to a Strategic Partner and

Transfer of management control to the Strategic Partner

Q.11) Consider the following regarding Central Pay Commission:

1. It is a statutory body formed after Pay Commission’s Act 1947.

2. It is constituted in every five years.

http://pib.nic.in/newsite/PrintRelease.aspx?relid=137044



3. It is set to review and make recommendations on the work and pay structure of all civil

and military divisions of the Government of India.

Which of the above statements are correct?

a) 1 and 2

b) 3 only

c) 2 and 3

d) 1 and 3

Q.11) Solution (b)

Pay Commission is set up intermittently by Government of India, and gives its

recommendations regarding changes in salary structure of its employees. Since India's

Independence, seven pay commissions have been set up on a regular basis to review and make

recommendations on the work and pay strcture of all civil and military divisions of the

Government of India. Headquartered in Delhi, the Commission is given 18 months from date of

its constitution to make its recommendations.

Q.12) Which of the following dimensions are included in calculating Social Progress Index

(SPI)?

1. Basic needs for survival

2. Access to the building blocks to improve living conditions

3. Access to opportunity to pursue goals and ambitions

Select the code from below:

a) 1 and 2

b) 2 and 3

c) 1 and 3

d) All of the above

Q.12) Solution (d)

The Social Progress Index measures the extent to which countries provide for the social and

environmental needs of their citizens. Fifty-four indicators in the areas of basic human needs,

foundations of wellbeing, and opportunity to progress show the relative performance of



nations. The index is published by the nonprofit Social Progress Imperative, and is based on the

writings of Amartya Sen, Douglass North, and Joseph Stiglitz.[1] The SPI measures the well-being

of a society by observing social and environmental outcomes directly rather than the economic

factors. The social and environmental factors include wellness (including health, shelter and

sanitation), equality, inclusion, sustainability and personal freedom and safety.

The Index combines three dimensions

1. Basic Human Needs 2. Foundations of Well-being, and 3. Opportunity

Q.13) Consider the following statements regarding the Expenditure Management

Commission:

1. The commission was set up by the Government under the Chairmanship of Dr. Bimal

Jalan.

2. It objective is to suggest ways of meeting development expenditure needs without

compromising on Fiscal Discipline.

Which of the above statements are correct?

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

Q.13) Solution (c)

The government in September 2014 decided to constitute an expenditure Management

Commission under the Chairmanship of Dr. Bimal Jalan.

The commission was asked to:

Review major areas of Central Government expenditure, the institutional arrangements

(Such as budgeting process)

https://en.wikipedia.org/wiki/List_of_countries_by_Social_Progress_Index#cite_note-1



Suggest ways of meeting development expenditure needs without compromising on

Fiscal Discipline.

Suggest a strategy to improve allocative efficiency, to meet reasonable proportion of

expenditure on services through user charges,etc.

Consider any other relevant issue concerning public expenditure management.

Recommendations of the report have not been made public yet.

Q.14) The Ministry of Micro, Small and Medium enterprises released a draft framework for

revival of MSMEs order,2015. Which of the following statements regarding the draft

framework are correct?

1. Banks are required to classify MSMEs into three categories, based on overdue principle

or interest payments.

2. MSMEs that predict a failure of business or inability to pay debts can voluntarily initiate

proceedings under the proposed Framework.

Select the code from the following:

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

Q.14) Solution (c)

The draft framework seeks to enable sick MSMEs to obtain financial support.

Key provisions for draft framework include:

Classification of Sick MSMEs

Committees for distressed MSMEs

Corrective Action plan

Do read it in detail.



Q.15) The action plan for the Start Up India initiative was released by the Prime Minister, Mr.

Narendra Modi in Jan 2016. The initiatives seeks to encourage start-ups in India, with the aim

of promoting sustainable economic growth and generating large scale employment. Which of

the following statements are correct about Start Up India initiative?

1. Start Ups will be allowed to self certify their compliance with six labour laws.

2. In case of Labour Laws and environmental Laws, inspections will not be conducted for

three years, unless a complaint is received.

Select the code from below:

a) 1 only

b) 2 only

c) Both 1 and 2

d) Neither 1 nor 2

Q.15) Solution (a)

In case of Labour Laws inspections will not be conducted for three years, unless a

complaint is received.

For Environmental laws, random checks would be carried out to ensure compliance.

Q.16) Consider the following statements with regard to index of Industrial Production (IIP)

1) IIP conveys the status of production in the industrial sector of an economy in a given period of

time, in comparison with a fixed reference point in the past.

2) In the IIP index, the maximum weightage is given to Basic goods, followed by Consumer Goods,

followed by Intermediate and Capital Goods.

Select the correct code:

a) Only 1 is correct

b) Only 2 is correct

c) Both 1 and 2 is correct

d) Neither 1 nor 2 is correct

Q.16) Solution (c)



Explanation:

Index of Industrial Production (IIP) is an abstract number, the magnitude of which represents the

status of production in the industrial sector for a given period of time as compared to a reference

period of time It is a statistical device which enables us to arrive at a single representative figure to

measure the general level of industrial activity in the economy.

Strictly speaking the IIP is a short term indicator measuring industrial growth till the actual result of

detailed industrial surveys become available. This indicator is of paramount importance and is being

used by various organisations including Ministries/Departments of Government of India, Industrial

Associations, Research Institutes and Academicians.

In India, IIP is a representative figure which measures the general level of Industrial activity in the

country. Being an abstract number, it does not show volume of activity and only shows the

magnitude which represents the status of production in the industrial sector for a given period of

time as compared to a reference period of time.

The maximum weightage is given to Basic goods, followed by Consumer Goods, followed by

Intermediate and Capital Goods. Among Consumer goods, the weightage of consumer non-durables

is much more than of durables.

Q.17) Which of the following statements is true about 'P-Notes' in India?

1) These are issued by SEBI in India.

2) They cannot be used within the country.

3) Investors in P-Notes are not required to register with SEBI.

4) Due to the issue of money laundering, P-Notes are banned in India.



Select the correct answer using the code given below.

a) 1, 2 and 3 only

b) 2 and 3 only

c) 1 and 4 only

d) 1, 2, 3 and 4

Q.17) Solution (b)

Explanation:

Participatory Notes commonly known as P-Notes or PNs are instruments issued by registered

foreign institutional investors (FII) to overseas investors, who wish to invest in the Indian stock

markets without registering themselves with the market regulator, the Securities and Exchange

Board of India - SEBI.

SEBI permitted foreign institutional investors to register and participate in the Indian stock market in

1992. PNs have decreased but not completely banned.

A Participatory Note (PN or P-Note) in the Indian context, in essence, is a derivative instrument

issued in foreign jurisdictions, by SEBI and a registered Foreign Institutional Investor (FII) or its sub-

accounts or one of its associates, against underlying Indian securities. PNs are also known as

Overseas Derivative Instruments, Equity Linked Notes, Capped Return Notes, and Participating

Return Notes etc.

For more: 5 things to know about P-notes

Q.18) Consider the following statements regarding Universal Service Obligation Fund (USOF):

1) It is a statutory fund.

2) It is used to extend basic telephony services to the rural areas.

3) It is maintained as a part of Consolidated Fund of India.

4) Resources for USOF are raised exclusively through Universal Service Levy on revenues of all

Telecom Service Providers.

Which of the statements given above is/are correct?

a) 1 and 2 only

b) 2, 3 and 4 only

c) 2 and 4 only

d) 1, 2, 3 and 4

Q.18) Solution (a)

Explanation:

USOF is a statutory fund under Indian Telegraph Act, 2003. The objective is to extend basic telecom

services to the rural areas. For this purpose National Optical Fiber Network (NOFN) is being funded

by USOF. Hence, 1st and 2nd statements are correct.

http://www.business-standard.com/article/markets/5-things-to-know-about-p-notes-115072800122_1.html



USOF is maintained outside the Consolidated Fund, and is maintained by the Department of

Telecommunication, Ministry of Communication. Hence, 3rd statement is incorrect.

Apart from the Levy the resources are provided by the Central Government in the form of grants

and loans. Hence, 4th statement is incorrect.

Q.19) Recently, there has been large contraction in India’s trade surplus in services. It is due to:

a) sharp drop in non-software services exports

b) global economic slowdown

c) drop in software services exports

d) All of the above

Q.19) Solution (d)

Explanation:

India’s trade surplus in services has been contracting, mainly due to a sharp drop in non- software

services exports

According to economists, the global economic slowdown is finally beginning to affect India’s services

sector.

Both software services and non-software services exports are on decline due to global economic

slowdown.

Link: Slowdown hits services sector

Q.20) Identify the organization that prepared a standardised electronic format for information

exchange on Base Erosion and Profit Sharing (BEPS) to help tax authorities

a) Organisation for Economic Cooperation and Development (OECD)

b) Agency for Cooperation and Research in Development (ACORD)

c) International Bank for Reconstruction and Development (IBRD)

d) International Monetary Fund (IMF)

Q.20) Solution (a)

Explanation:

There have been concerns across the globe about companies making profits in a particular country

but not paying taxes to the local government. The Organization for Economic Cooperation and

Development (OECD) states that BEPS is of major significance for developing countries due to their

heavy reliance on corporate income tax, particularly from multinational enterprises. It also states

that estimates since 2013 conservatively indicate annual losses of anywhere from 4 to10 per cent of

global corporate income tax revenues, or $100-$240 billion annually.

The OECD, under the authority of the Group of 20 countries, has considered ways to revise tax

treaties, tighten rules, and to share more government tax information under the BEPS project, and

has issued action plans last year. One of the areas discussed was on addressing tax challenges in the

digital economy.

http://www.thehindu.com/business/Industry/slowdown-hits-services-sector/article8505380.ece



Link: What’s Base Erosion and Profit Shifting?

Q.21) Khankahs are—

a) A Sufi convent

b) A retreat designed specifically for gatherings of Sufi brotherhood to meet, reside, study,

and assemble and pray together as a group in the presence of a Sufi master

c) Pillars carved in red sandstone

d) A type of pottery practiced during the Neolithic period

Q.21) Solution(b)

Q.22) Identify the State hosting Raas, Sankirtana and Thang-ta as its dance-forms—

a) Meghalaya

b) Assam

c) Nagaland

d) Manipur

Q.22) Solution (d)

Raas

Exhibits the transcendental love of Krishna and Radha and the Gopis’ devotion to the Lord

Theme: Pangs of separation of the gopis and Radha— from Krishna

Sankirtana

Accompanied with congregational singing

During all festivals and social functions

Thang-Ta: Martial dance form

Q.23) Consider the following statements:

1. INCOIS is an attached office of the Government of India, under the Ministry of Earth

Sciences.

2. Prime Minister’s National Relief Fund consists of public contributions and budgetary

support in the 60:40 ratios respectively.

Choose the correct option/s:

a) Only 1

b) Only 2

c) Both 1 and 2


http://www.thehindu.com/news/cities/mumbai/whats-base-erosion-and-profit-shifting/article8404293.ece



Q.23) Solution (a)

PMNRF consists of public contributions only. (CSR included)

Q.24) Where will the joint operations centre of the Islamic Military Alliance be established?

a) Hyderabad

b) Islamabad

c) Riyadh

d) Cairo

Q.24) Solution (c)

An intergovernmental military alliance of countries in the Muslim world united around

military intervention against ISIL and other counter-terrorist activities

Its primary objective is to protect the Muslim countries from all terrorist groups and

terrorist organizations irrespective of their sect and name

It would operate in line with the United Nations and Organization of Islamic Conference

(OIC) provisions on terrorism

Riyadh

The capital and largest city of the Kingdom of Saudi Arabia; also the capital of Riyadh

Province

Houses the largest all-female university in the world, the Princess Nora bint Abdul Rahman

University

Q.25) ‘On 15 January 2016, gunmen armed with heavy weapons attacked the Cappuccino

restaurant and the Splendid Hotel in the heart of Ouagadougou wherein 28 people were killed

and many were injured.’ In which country does Ouagadougou lie?

a) Burkina Faso

b) Texas

c) Florida

d) France

Q.25) Solution (a)

Burkina Faso is a landlocked country in West Africa.

Documents

IASbaba 60 Day plan: Day 45- Economics and Current Affairsethics for managerial personnel applicable to PSEs and all government services. d) To advise the Government on a suitable