Indian Economy - General Knowledge Questions

Correct Answer :   Statutory Liquidity Ratio

Statutory liquidity ratio is the amount of liquid assets such as precious metals (Gold) or other approved securities, which a financial institution must maintain as reserves other than the cash. The statutory liquidity ratio is a term most commonly used in India. The objectives of SLR are to restrict the expansion of bank credit. They serve to augment the investment of the banks in government securities and ensure solvency of banks.

Correct Answer :   balanced industrial development across regions.

In India, there are some regulations and restrictions with regard to establishing industries in certain categories. This is done by making it mandatory to obtain licenses before setting up such an industry. The Licence Raj which continued till 1991 (liberalization was introduced) was a result of India’s decision to have a planned economy where all aspects of the economy are controlled by the state and licences are given to a select few. Up to 80 government agencies had to be satisfied before private companies could produce something and, if granted, the government would regulate production. The Industrial Policy Resolution 1956 aimed at the removal of regional disparities through development of regions with low industrial base. The Indian economy was then guided by the socialistic model of planned development rather than being guided by profit.

Correct Answer :   74 %

At present 74% to 100% FDI is permitted for various telecom services. 100% FDI is permitted in the area of telecom equipment manufacturing and provision of IT enabled services. This has made telecom one of major sectors attracting FDI inflows in India. For Basic and cellular, Unified Access Services, National / International Long Distance, VSat, Public Mobile Radio Trunked Services (PMRTS), Global Mobile Personal Communications Services (GMPCS) and other value added telecom services FDI upto 74% (including FDI, FII, NRI, FCCBs, ADRs, GDRs, convertible preference shares, and proportionate foreign equity in Indian promoters/ Investing Company) is permitted. FDI upto 49% is permitted under automatic route and beyond 49% by relevant FIPB guidelines. For ISP (with gateways), end to end bandwidth and Radio Paging Service FDI upto 74% is permitted subject to licensing and security requirements. Here also, FDI up to 49% is permitted under automatic route and beyond 49% by FIPB guidelines. For ISP without gateway, Infrastructure Providers providing dark fibre, right of way, duct space, Tower (Category-I), Electronic Mail and Voice Mail - FDI up to 100% is allowed subject to the conditions that such companies would divest 26% of their equity in favour of Indian public in 5 years, if these companies are listed in other parts of the world. Again, FDI up to 49% is permitted under automatic route and beyond 49% by FIPB guidelines.

Correct Answer :   exports

A country devalues its currency in order to promote exports. A key effect of devaluation is that it makes the domestic currency cheaper relative to other currencies. There are two implications of devaluation. First, devaluation makes the country’s exports relatively less expensive for foreigners. Second, the devaluation makes foreign products relatively more expensive for domestic consumers, thus discouraging imports. This may help to increase the country’s exports and decrease imports, and may therefore help to reduce the current account deficit. One typical example is Thailand in 1998 Asian financial crisis. The baht was pegged at 25 to the US dollar before the crisis. During the crisis, the slowdown in export growth caused Thailand to abandon the dollar peg and devalue its currency in order to promote exports.

Correct Answer :   HPCL Ltd

Navratna was the title given originally to nine Public Sector Enterprises (PSEs) identified by the Government of India in 1997 as “public sector companies that have comparative advantages”, giving them greater autonomy to compete in the global market so as to “support [them] in their drive to become global giants”. The number of PSEs having Navratna status has been raised to 16, the most recent addition being Oil India Limited. The list of such companies is: Bharat Heavy Electricals Limited; Bharat Electronics Limited; Bharat Petroleum Corporation Limited; Hindustan Aeronautics Limited; Hindustan Petroleum Corporation Limited; Mahanagar Telephone Nigam Limited; National Aluminium Company Limited; National Mineral Development Corporation Limited; Neyveli Lignite Corporation Limited; Oil India Limited; Power Finance Corporation Limited; Power Grid Corporation of India Limited; Rashtriya Ispat Nigam Limited; Rural Electrification Corporation Limited; Shipping Corporation of India Limited; GAIL (India) Limited.

Correct Answer :   Both go on simulta-neously in cycle

Planning and control are two basic and interrelated managerial functions. They are so interrelated that they can be and often are considered as being one function. Planning is the preparation activity while control is the post-operation function. Both of them are so closely related that they are treated as Siamese twins. Planning sets the objectives, goals, targets on the basis of available resources with their given constraints. Control is the integral part of effective planning. Similarly control involves assessment of the performance, such assessment can be made effectively only when some standard of are set in advance.

Correct Answer :   Domestic private savings

Domestic saving primarily consist of three components, viz., household sector saving, private corporate sector saving and public sector saving. Household sector saving constitutes the largest portion of gross domestic saving. Household sector saving comprises saving in financial assets and saving in physical assets. Household saving in financial assets (net) is estimated as gross financial assets net of financial liabilities, while household saving in physical assets is the net addition to physical assets by the households. Gross financial saving of the household sector include the saving in the form of currency, bank deposits, non-bank deposits, saving in life insurance fund, saving in provident and pension fund, claims on government, shares and debentures inclusive of investment in mutual funds and net trade.

Correct Answer :   Indian Railways

Indian Oil Corporation Limited is the largest commercial undertaking and India’s No.1 Company in Fortune the magazine’s prestigious listing of the world’s 500 largest Corporations, ranked 98 for the year 2011 based on fiscal 2010 performance.

Correct Answer :   Finance Commission

The Finance Commission of India came into existence in 1951. It was established under Article 280 of the Indian Constitution by the President of India. It was formed to define the financial relations between the centre and the state. The Constitution of India has made several provisions to bridge the gap of finances between the Centre and the States. These include various articles in the constitution like Article 268, which facilitates levy of duties by the Centre but equips the states to collect and retain the same. Similarly, there are Articles 269, 270, 275, 282 and 293 all of which specify ways and means of sharing resources between Union and States. Apart from the above- mentioned provisions, The Indian Constitution provides an institutional framework to facilitate Centre- State Transfers. This body is the Finance Commission

Correct Answer :   Fifth Five Year Plan (1974-79)

Garibi Hatao (Meaning “Abolish Poverty” in Hindi) was the theme and slogan of Indira Gandhi’s 1971 election bid. The slogan and the proposed anti-poverty programs that came with it were designed to give Gandhi an independent national support, based on rural and urban poor. The fifth plan prepared and launched by D.D. Dhar proposed to achieve two main objectives viz, ‘removal of poverty’ (Garibi Hatao) and ‘attainment of self reliance’, through promotion of high rate of growth, better distribution of income and a very significant growth in the domestic rate of savings.