Expected Questions on Economics 2018 – Part 1 (Set - 3) (Download PDF)


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Government Steps to Boost Digital Transactions - Cabinet to give a shot in the arm to Digital India, Approved several steps like taking brunt of Merchant Discount Rate (MDR) on all debit card/BHIM UPI/AePS transactions up to a value of Rs. 2,000 (small transactions).

  • Move encourages digital transactions for the ease and low cost involved.

  • MDR is the fee paid by merchant to the bank as charges for allowing transaction to take place on its platform.

  • Transactions in this bracket are sizeable percentage.

  • Thus, the move is expected to move towards less cash economy.

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Expected Questions on Economics 2018 - UPSC IAS Prelims (Part 1) (In English)

Dr. Manishika Jain discusses Expected Questions on Economics 2018 for IAS Prelims

Chabahar Port- Phase-1 Inaugurated in Iran

  • First phase of Iran’s Chabahar port (Shahid Beheshti Port) with significant strategic and economic importance for India.

  • Inaugurated by Iran.

  • Iran’s only oceanic port located on the Gulf of Oman.

  • Southeast of Iran near Pakistani border jointly developed by India, Iran and Afghanistan.

  • Strategically located in the SE Sistan-Balochistan province, on the Gulf of Oman, near Iran’s border with Pakistan.

  • India and Iran signed agreement in May 2016.

  • Agreeing to refurbish one of the berths at Shahid Beheshti port.

  • Reconstructing a 600-metre long container handling facility at the port.

  • Port will also be connected to route eastern and northern Europe through Russia.

“Petro” Venezuela’S New Virtual Currency

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Bitcoin: Creation, Circulation, Usage, Problems & Advantages - Currency of Internet

Dr. Manishika Jain explains tCreation, Circulation, Usage, Problems & Advantages of Bitcoins - Cryptocurrency

  • Venezuela launched crypto currency called Petro to circumvent US-led financial sanctions backed by the country’s vast natural resource reserves.

  • Creation of Block chain Base observatory to oversee development and rollout of new crypto currency.

  • On March 9,2015, US declared Venezuela a threat to its national security.

  • Crypto currency the transactions maintain a public ledger.

  • Validate the transactions through mining carried out in a decentralized manner.

15Th Finance Commission Approved by Cabinet

  • Union cabinet approves 15th Finance Commission to decide the distribution of tax proceeds among the centre, states and local bodies. (Chairman NK Singh)

  • Finance Commission constituted under article 280 of the Constitution.

  • Recommendations of 14th Finance commission:

    • Chaired by former Reserve Bank of India (RBI) governor Y. V. Reddy.

    • Valid from 2015 to 2020.

Indian Income Tax Act: What is GAAR and How is It Different from SAAR?

  • GAAR is General Anti Avoidance Rule.

  • Aimed: To curtail tax avoidance.

  • GAAR empowers the revenue authorities to deny tax benefits to arrangements.

  • Not having any commercial substance other than achieving the tax benefit.

  • Tax avoidance deliberate measures to avoid or reduce tax burden by an individual or a company.

  • Tax avoidance is legal but large scale revenue loss.

  • It can occur due to aggressive tax planning.

  • Anti-Avoidance Rules in countries are of two categories:

    • GAAR which is general.

    • Specific Anti Avoidance Rules (SAAR) are special rules targeted at individual on case by case specific provisions.

PFMS- Public Finance Management System for Central Sector

  • Government has made use of Public Finance Management System (PFMS) for all Central Sector Schemes mandatory.

  • PFMS ensures that the benefits of the various Government schemes reach to the last mile.

  • PFMS Scheme was rolled-out by the Controller General of Accounts (CGA) at the behest of Finance Ministry.

  • Department of Expenditure as a Public Finance Management (PFM) reform.

  • PFMS was earlier known as Central Plan Schemes Monitoring System (CPSMS).

India Member of European Bank for Reconstruction and Development (EBRD)

  • Cabinet approved India’s Membership for European Bank for Reconstruction & Development (EBRD).

  • Paving way for necessary steps by the Department of Economic Affairs, Ministry of Finance.

  • EBRD Headquarters are based in London.

  • Sir Suma Chakrabarti is the President of the EBRD.

  • EBRD is owned by 65 countries and 2 intergovernmental institutions:

    • European Union

    • European Investment Bank (EIB)

  • Minimum initial investment towards the membership of EBRD will be approximately (one) million.

  • If India decides to buy the minimum number of shares (100) required for membership.

Bank Recapitalization: Lesson from 1993

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Yojana January 2018 Summary: Banking Reforms

Dr. Manishika Jain explains Yojana January 2018: Banking Reforms

  • Indian government announced Rs. 2.11-lakh-crore capitalization plan for state-owned banks over two years.

  • It solves problems: Government’s approach insists on resolving the banking sector problems of NPA’s by infusing a huge amount of capital.

  • This funding will not affect the fiscal deficit.

  • It is funded through recapitalization bonds.

  • Government committed to a fiscal deficit of 3.2 % in FY18.

Recapitalization Process:

  • First government gives money to banks.

  • Banks, in turn, buy or subscribe to bonds issued by the government at a fixed coupon or interest.

👌 BHARAT-22 Exchange Traded Fund (ETF) Targets Initial Amount of Rs. 8,000 Crore

  • BHARAT-22 is an Exchange Traded Fund.

  • Purpose:

    • To benefit long term and retail investors.

    • Provide opportunities of participation in equity stocks of the Government run companies and earn stable returns.

  • Managed by ICICI Prudential Mutual Fund.

  • Targets an initial amount of about Rs. 8,000 crore.

What Are Non-Banking Financial Companies? RBI Regulating Peer-to-Peer Lending Firms

  • Government notified that Peer-to-peer lending (P2P) platforms. It will be treated as non-banking financial companies (NBFCs).

  • Regulated by Reserve Bank of India (RBI).

  • Ends the regulatory vacuum for P2P operation.

  • Help P2P lenders gain official recognition and opens new avenues for fund-raising and business expansion.

  • P2P lending one of the crowd funding models gathering momentum and taking root in India.

Reducing Infant Mortality Rate and Gender Gap - SRS Bulletin Points to Significant Decline in India

  • India registered significant decline in Infant Mortality Rate (IMR).

  • Released by SRS bulletin - IMR declined by three points (8 % decline)

    • From 37 per 1000 live births in 2015

    • To 34 per 1000 live births in 2016

  • Compared to two points decline last year.

  • India recorded a major drop in birth cohort- coming down to below 25 million.

  • 90000 fewer infant deaths in 2016 as compared to 2015.

HDFC Bank Listed in Domestic Systemically Important Banks (D-SIBs)

  • HDFC Bank, the second largest private sector lender.

  • It was added to the Reserve Bank of India’s (RBI) list of (D-SIBs).

  • State Bank of India (SBI) and ICICI Bank were added in 2016.

  • HDFC Bank third bank added in list of D-SIBs after SBI and ICICI Bank.

  • SIBs are certain big banks in country with country’s economy dependent upon them.

  • Perceived as ‘Too Big To Fail (TBTF) ‘.

First Hyperloop Planned in Andhra Pradesh

  • India’s first Hyperloop project planned in Andhra Pradesh.

  • Connecting its city centers, Vijayawada and Amaravati with Andhra Pradesh Economic Development Board (APEDB).

  • Linking MoU with Hyperloop Transportation Technologies (HTT) for developing the project.

  • First project in India to innovatively use Public Private Partnership (PPP) model with funding primarily from private investors.

  • Hyperloop is idea of entrepreneur Elon Musk.

Bharat Petroleum Becomes a Maharatna

  • State-run oil marketing company Bharat Petroleum Corporation (BPCL) awarded the Maharatna from the present Navratna status.

  • Decision to elevate BPCL to Maharatna status taken by panel headed by Cabinet secretary.

  • BPCL now in 8 Central Public Sector Enterprises (CPSE) with Maharatna status.

  • Status provides BPCL Board to enhanced powers enabling rapid expansion in India and abroad.

Nav-Ratan Companies

  • Nav-Ratan Companies are nine Defence Public Sector Undertakings (DPSUs) with 47 units & 41 Ordnance factories spread all over India.

  • OFB: Ordnance Factory Board developed infrastructure facilities for construction of - Missile, Tanks.

  • High explosive Cartridge 105mm, Rocket Pinaka restricted high explosives etc.

  • Details of major infrastructure and assets developed by Ordnance Factories.

  • Defence Sector Undertakings are as under:

    • HAL

    • BEL

    • BEML

    • BDL


    • MDL

    • GRSE

    • GST

    • HSL

First Diesel Consignment Sent to Myanmar

  • With growing hydrocarbon engagement between India and Myanmar.

  • First consignment of 30 MT of High Speed Diesel was sent from India to Myanmar.

  • Numaligarh Refinery Ltd. (NRL) supplying HSD to Bangladesh, despatched the first diesel consignment to Myanmar.

  • High speed diesel has good cetane number 56 - 60 whereas normal diesel has cetane number ranging from 45 - 55.

SAIL’S Sales Boost with SAIL’S “Gaon Ki Ore”

  • Steel Authority of India Ltd. (SAIL) has a nation-wide campaign “SAIL Steel – Gaon ki Ore”.

  • Aimed: At boosting steel consumption in country especially in rural areas.

  • SAIL targets 1 Million Tonnes steel through its dealer network

  • Gaon ki ore campaign designed target end users at grass-root level in rural areas.

  • Steel Authority of India Limited (SAIL) is largest state-owned steel making company and one of the top steel makers in world.

MCX Launches World’S First Brass Futures Contracts

  • India’s largest commodities exchange platform, Multi Commodity Exchange of India Limited (MCX) launched world’s first brass futures contracts.

  • It will facilitate brass stakeholders to hedge their price risk.

  • MCX Brass futures will be the first non-ferrous contract with compulsory delivery option.

  • Price will be quoted as per rate at ex-warehouse Jamnagar (delivery centre) inclusive of taxes and duties.

Importance of MCX Brass futures:

  • Provide its stakeholders with more organised and robust price discovery platform.

  • Help them to use national level benchmark price as ready reference.

  • Enable them to mitigate their price risk.

  • Lead to best price discovery for brass.

MCX Launches India’S First Commodity Options in Gold

  • Largest commodity bourse Multi-Commodity Exchange of India Ltd (MCX) launched India’s first commodity options in gold.

  • Gold futures contract will have bi-monthly duration.

  • Option will also have the existing gold kilo futures contract as its underlier.

  • Options are an instrument that gives buyer right to buy or sell an underlined at present price on a future date.

  • MCX’s Gold Option contract is European-styled Gold options with Gold (1 Kg) futures as underlying asset.

👌 Guarseed Became First Agri-Commodity Option by NCDEX

  • NCDEX’s guarseed option is one of the liquid contracts on the exchange platform.

  • Around 15 lakh farmers are associated with this commodity.

  • Guar gum is extracted from guar seed.

  • Used by drilling companies to thicken water mixed with sand and pumped through shale rock cracks to extract gas.

  • Considered as one of major steps towards taking farmers out of situation.

  • Resulting in drastic fall in prices of some agri-commodities because of higher production.

  • National Commodity and Derivatives Exchange Ltd. (NCDEX) launched India’s first agricultural-commodity options in Guarseed.

  • Designed as hedge for farmers to safeguard against price risks.

  • One of the most liquid contracts on the exchange platform.

  • Its three options contracts in guarseed will expire in February, March and April 2018.

  • It will be made available for trading.

  • NCDEX is second exchange after MCX to launch options trading in commodities.

  • In October 2017, MCX launched gold options.

👌 World’S First Diamond Futures Contracts by ICEX

  • Indian Commodity Exchange (ICEX) launched world’s first diamond futures contracts providing exporters with means to contain their losses.

  • ICEX received approval from market regulator Securities Exchange Board of India (SEBI) for trading in diamond futures contracts.

  • India is a global diamond polishing hub, handling 14 out of every 15 rough diamonds polished.

  • ICEX started trading in 1 carat/100 cent contracts and will add 50 cent and 30 cent contracts.

NMCE, ICEX to Merge to Create India’S Third Biggest Commodity Exchange

  • National Multi Commodity Exchange (NMCE) will merge with Indian Commodity Exchange (ICEX).

  • Merged entity will create India’s third biggest commodity exchange.

  • Largest commodity exchange by volume is the Multi Commodity Exchange (MCX) followed by National Commodity and Derivatives Exchange (NCDEX).

  • This is the first merger deal in the commodity exchange space in India.

  • In the merged entity, ICEX will hold a 62.8 % stake, while NMCE shareholders will own the rest.

What Are Poll Bonds? Life of 15 Days, Donor Name Secret but KYC Must

  • Electoral Bond is a financial instrument for donating to political parties.

  • These are issued by Scheduled Commercial banks upon authorization from Central Government to intending donors, but only against cheque and digital payments.

  • It cannot be purchased by paying cash.

  • Poll bonds introduced by the government to bring some transparency in the funding of the political parties.

  • Can be bought for any value, in multiples of Rs. 1,000, Rs. 10,000, Rs. 1 lakh, Rs. 10 lakh, or Rs. 1 crore

  • Transparency in funding is nil at present.

  • Fulfilling all the existing Know Your Customer (KYC) norms

  • Making payments from a bank account

Insolvency and Bankruptcy Board of India (IBBI)

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Insolvency & Bankruptcy Code & IBBI

Dr. Manishika Jain explains Insolvency & Bankruptcy Code & IBBI

  • Insolvency and Bankruptcy Board of India (IBBI) amended its Corporate Insolvency Resolution Process Regulations.

  • To ensure that as part of due diligence to approve:

    • Resolution Plan the antecedents

    • Credit worthiness

    • Credibility of a Resolution Applicant

  • In the latest development, government promulgated an ordinance to bar promoters of companies.

  • Facing insolvency proceedings from bidding for the ailing entities.

  • Recently, Insolvency and Bankruptcy Board of India (IBBI) signed Memorandum of Understanding (MoU) with Reserve Bank of India (RBI) for increased cooperation in effective implementation of insolvency law.

Advantages of New Regulations:

  • Resolution Applicants including promoters are put to a stringent test.

  • Imposes greater responsibility on the Resolution Professionals and the committee of creditors in discharging their duties.

Secure Fund for Bangalore Metro Rail Project- European Investment Bank (EIB)

  • Government of India and European Investment Bank (EIB) signed the Finance Contract for lending of million for Bangalore Metro Rail Project Phase II Line R6.

  • Project implemented in 5 years from date of commencement.

  • Bangalore Metro Rail Project Phase II jointly financed by the European Investment Bank & Asian Infrastructure Investment Bank .

India, China to Not Be Global Growth Poles: UNCTAD What Are Growth Poles?

  • UNCTAD’s Trade and Development Report (TDR) 2017 predict with India and China at their current growth will not serve as global growth polls.

  • Global growth expected to reach 2.6%, well below pre 2008 financial crisis average of 3.2%.

  • India’s Growth Likely to slow down to 6.7 % in 2017 from 7 % in 2016.

  • United Nations General Assembly (UNGA) organization dealing with trade, investment, and development issues.

TDR: Flagship report of the United Nations Conference on Trade and Development (UNCTAD).

India’S Forex Reserves Cross Record $400 Billion

  • India’s foreign exchange (Forex) reserves crossed billion due to sharp rise in foreign currency assets, according to RBI.

  • Increase confidence in the monetary and exchange rate policies.

  • This makes India 6th in forex reserves ranking behind

    • China with $3,053 billion reserves

    • Japan with $1,188 billion

    • Switzerland with $743 billion

    • Saudi Arabia with $489 billion

    • Taiwan with $441 billion reserves

  • Foreign exchange reserves buffer against immediate import requirements for example in the times of war.

  • Components of India’s Foreign Exchange Reserves include:

    • Foreign currency assets (FCAs)

    • Special Drawing Rights (SDRs)

    • Gold

    • RBI’s Reserve position with International Monetary Fund (IMF).

Dairy Processing & Infrastructure Development Fund Approved

  • Dairy Processing & Infrastructure Development Fund (DIDF) approved by economic committee with an outlay of Rs. 10,881 crore during 2017 - 18 to 2028 - 29.

  • Fund set up in response to Union Budget 2017 - 18 announcements.

  • End borrowers will get loan per annum for 10 years with initial 2 years moratorium.

  • An Implementation and Monitoring Cell (IMC) located at NDDB, Anand, will manage and monitor day-to-day project activities.

  • 95,00,000 farmers in about 50,000 villages expect to be benefitted by Additional milk processing capacity of 126 lakh litre per day.

  • Milk drying capacity: 210 MT per day

  • Milk chilling capacity: 140 lakh litre per day

  • 28000 Bulk Milk Coolers (BMCs) along with electronic milk adulteration testing equipment.

  • Value added products manufacturing capacity of 59.78 lakh litre per day of milk equivalent.

India’S Silk Industry and MoU between India and Japan

  • MoU signed in November 2016 between India and Japan for collaborative research in the field of silkworm & silk industries:

    • Central Silk Board (CSB) India

    • National Institute of Agrobiological Sciences (NIAS), Japan

  • Aim: To initiate collaborative research for developing prolific bivoltine hybrids of silkworm for Indian tropical conditions.

  • India’s Silk Industry is world’s second largest after China.

  • India produces four varieties of silk:

    • Mulberry

    • Eri

    • Tasar

    • Muga

  • Over April-February 2016 - 17, export of silk and silk products from India stood at million.

Alang-Sosiya Shipyards: 76 Million US Dollar Loan Deal with Japan International Cooperation Limited

  • Loan deal worth $76 million with Japan International Cooperation Agency (JICA) approved.

  • To upgrade environment management plan at Alang-Sosiya ship recycling yards.

  • Total cost of the project $111 million:

    • $76 million provided as soft loan from JICA.

    • $25 million as taxes and fees will be borne by Government of Gujarat.

    • $10 million will be shared by Ministry of Shipping & Government of Gujarat.

  • Project executed by Gujarat Maritime Board (GMB) to be completed by 2022.

  • Alang is a census town in Bhavnagar district in Gujarat and a major centre for ship breaking.

  • Project to help Alang-Sosia ship-recycling yards comply with international safety & environmental regulations.

Northeast Venture Fund for Young Startups

  • Young Start-Ups can avail of the “Venture Fund” facility provided by Ministry of Development of Northeast to anybody who wishes to set up an entrepreneurship Northeast region.

  • Fund in addition to the provisions of tax holiday.

  • Exit period available in the Government of India’s “Standup India, Startup India” programme.

  • Provide a huge financial relief to young entrepreneurs.

  • Northeast Venture Fund first dedicated venture capital fund for North-Eastern region.

  • North Eastern Development Finance Corporation Ltd (NEDFi) is an ISO 9001: 2008 certified company since 2001.

What is TAPI Gas Pipeline? India Hosting Steering Committee Meeting of TAPI Gas Pipeline

  • India hosting next steering committee meeting of 1,814 km long Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline.

  • As decided by sixth joint India-Turkmenistan Inter-Governmental Committee (IGC) meeting on trade, economic, scientific and technological cooperation.

  • TAPI or Trans-Afghanistan Pipeline is trans-country natural gas pipeline.

  • Developed by the Asian Development Bank (ADB).

  • Construction started in Turkmenistan on December 2015.

  • It is expected to be operational by 2019.

  • Considered important initiative connecting energy rich Central Asia with energy starved South Asia.

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Expected Questions on Economics 2018 - UPSC IAS Prelims (Part 1) (In Hindi)

Dr. Manishika Jain discusses Expected Questions on Economics 2018 for IAS Prelims

👌 implies important for Objective Questions/MCQ

📝 implies important for Subjective Questions

📹 implies covered in Videos or Upcoming Videos

- Published/Last Modified on: May 9, 2018


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