TnLCAESQuestionBank$ 3$Chapter1 3$ … · The!performance!in!2015J16is!better!than!theprevious!year ! 2. Average!agriculture!growthinLaJNina!years!has!been!3.7%! Choose!the!correct!option!

TnL CA ES Question Bank -‐ Chapter 1 -‐ Policy Challenges

1. It is necessary to recalibrate the growth expectations because 1. There is a volatile external environment 2. There is a slowdown in the domestic economy 3. The demand for Indian goods and services is on the rise

Choose the correct option

a. Only 1 is true b. Only 2 is true c. 1 and 2 are true d. All are true

The correct option is c

Explanation-‐recently it has been observed that there is volatility in the global demand with significant risks of global demand, which has had an effect on Indian exports which came down by 17.6%. Apart from this there is also a slowdown in the domestic economy

2. Which of the following has been observed in the Indian economy since 1980s 1. India has moved from being anti-‐market to pro-‐state 2. Industrial licensing has been dismantled 3. FDI has been liberalized


a. Only 1 is correct b. Only 2 is correct c. 2 and 3 are correct d. All are correct


Explanation-‐since 1980s Indian economy has the following features

• Moved from being anti-‐market and pro-‐state to being pro-‐entrepreneurship • Liberalized FDI • Dismantled license raj etc

3. The long run potential growth rate for India is a. 8-‐10% b. 9-‐10% c. 7-‐9% d. 7-‐7.75%

The correct option is a

4. The real GDP growth for 2015-‐16 is expected to be a. 8-‐10% b. 9-‐10% c. 7-‐9% d. 7-‐7.75%

The correct option is d

5. Consider the following statements 1. There are no risks of possible spillovers from the global slowdown 2. The correlation between Indian and global growth has come down over time 3. There is a volatile external environment

Which of the statements are incorrect?

a. Only 1 is incorrect b. 1 and 2 are incorrect c. 1 and 3 are incorrect d. All are incorrect

Correct option is b

Explanation-‐there are significant risks of weaker global activity with risks of possible spillovers. Also the correlation between the growth rate of India with that of the world has increased from 0.2 (1991-‐2002) to 0.42 since then.

6. Which of the following is delaying the prospects of reviving private investment a. Twin balance sheet problem b. Efficient implementation of JAM c. Delay in Implementation of GST d. Delay in Implementation of GAAR

The correct answer is a

Explanation-‐ corporate and bank balance sheets are both under stress which on one side has made the corporates to put on hold their investments decisions and on the other side the banks have reduced the volume of the loans to be offloaded and the cost of credit has gone up.

7. Twin balance sheet problem refers to a. Increased stress on the balance sheets of banks and corporates b. Increasing number of NPAs exerting stress on balance sheet of the banks c. Increased stress on the balance of payments situation d. None of the above



8. Consider the following statements with regards to RIRI 1. RIRI stands for Rational Investor Rating Index 2. It combines two elements-‐growth and inflation 3. India as a destination of investment proposition stands out



The correct option is b

Explanation-‐RIRI stands for Rational Investor Rating Index which measures two factor-‐risk and growth of a country-‐so as to attract the investors. The higher the value of RIRI, the better is the performance of the country. India has performed well in this case and stands out as an investment proposition.

9. Unicorn startups refer to

a. The startups in the ICT sector b. The startups in the with the valuation greater than $1 million c. The startups in the with the valuation greater than $1 billion d. None of the above

The correct answer is c

10. consider the following statements regarding Indian Agriculture 1. The performance in 2015-‐16 is better than the previous year 2. Average agriculture growth in La-‐Nina years has been 3.7%


a. Only 1 is true b. Only 2 is true c. Both are true d. Both are false


Explanation-‐although agriculture in 2015-‐16 is likely to register lower growth on account of weak monsoons, it has performed well compared to the previous year. During the La-‐Nina years the average agriculture growth has been 8.4%

11. Which of the following are the policy decisions taken by the government in the banking sector to deal with the menace of NPAs

1. Indradhanush 2. Pradhan Mantri Mudra Yojana 3. UDAY Yojana

Choose the correct option a. Only 1 is correct b. Only 3 is correct c. 2 and 3 are correct d. All are correct

The correct option is a. Explanation-‐Government has announced the Indradhanush framework under which it will focus on 7 broad points-‐Appointments, Banking Board Bureau, Capitalization, Destressing, Empowerment, Framework of accountability and Governance reforms

12. The dramatic decline of oil prices is a cause of worry because

1. May have an effect on the remittances 2. May force the oil exporting countries to curtail the use of foreign labor


a. Only 1 is correct b. Only 2 is correct c. Both are correct d. Both are wrong


Explanation-‐if the dramatic decline in the oil prices continues it may reduce the earnings of oil exporting countries which may force these countries to curtail the usage foreign labor which will have an impact on the remittances.

13. Which of the following statements regarding SSM are true

1. Can be imposed by all the countries 2. Can be imposed on all the imports 3. Was provided under Doha round


Choose the correct option a. Only 1 is correct b. Only 3 is correct c. 2 and 3 are correct d. All are correct

The correct option is b.

Explanation-‐Special Safeguard Mechanism has following features

• Can be imposed by developing countries • Can be imposed on agriculture imports • Was provided in the Doha round of Ministerial Conference

14. The stagnancy in the exports of services is puzzling because

1. More of the services go to Asian countries 2. The rupee has depreciated in the last year against dollar




Explanation-‐out of the total exports majority of the merchandises go to Asian countries and service exports go to United States. Along with the depreciation of rupee the service exports to US must have increased but over the period of time the service exports have flattened out.

15. Consider the following regarding inflation 1. The base year for new series of CPI 2012 2. WPI has been in negative territory since 2014 3. The fall in the WPI has been majorly because of domestic slowdown


a. Only 1 is correct b. 1 and 2 are correct c. 1 and 3 are correct d. All are correct


Explanation-‐the new CPI series is with a base year of 2012. It can be dissociated into CPI (urban), CPI (rural) and CPI (combined). WPI since 2014 has been in negative territory and recently (April 2016) turned positive. The drop in the WPI was majorly because of the drop of crude oil prices.

16. The increase in the wages with implementation of 7th Pay commission may not have larger impact on inflation because

1. The 7th pay awards do not determine the government demand 2. The pay awards determine only a small part of demand 3. There is a slack in the private sector labour market




Explanation-‐inflation reflects that there is excess demand in the market compared to supply. The wage increases account only for a small demand and it doesn’t determine the government demand (the government demand is determined by the fiscal deficit target). The rise in the wages can spillover and increase the private demand but the private labor is weak hence this is not possible at this moment. Hence the wage revision may not have a perceptible impact on inflation.

17. Through which of the following measures the Twin Balance Sheet Problem can be contained 1. RBI to provide capitalization by selling off some of its assets 2. The government may sell off the assets that it doesn’t want to hold and use the

proceeds for capitalizing the banks


a. Only 1 b. Only 2 c. Both can be used d. Neither can be used


Explanation-‐compared to other central banks RBI holds higher equity share which can be liquidated to recapitalize the banks. The government can also privatize some of the CPSE to capitalize the banks

18. The stability of remittances is puzzling even though 1. The crude prices of oil has come down drastically 2. The exports of steel and aluminum has increased in the last one year 3. FDI in various sectors has been liberalized


e. Only 1 is correct f. Only 2 is correct g. 1 and 3 are correct h. All are correct


Explanation-‐ the dramatic decline in the oil prices would have had a financial affect on the oil exporting countries which would have curtailed the use of foreign labour. But in case of India it as not yet been observed hence there is a need to monitor this source of earning

19. Which of the following is/are the reason/s for twin balance sheet problem 1. Slowdown in global demand 2. Slowdown in the domestic economy 3. Drop in the prices of crude oil




Explanation-‐because of the slowdown in the global demand the spillover effects, India’s exports have come down. India although is one of the largest producers and exporters of steel and aluminum, recently the domestic prices have become higher than the imports

20. The 4Rs in the Twin Balance Sheet Problem recommendations refer refer to a. Recognition, Recapitalization, Resolution, Reform b. Recognition, Reporting, Resolution, Reform c. Recognition, Recapitalization, Regrouping, Reform d. Recognition, Recapitalization, Result, Reform


Explanation-‐ Recognition, Recapitalization, Resolution, Reform

21. Consider the following statements regarding WTO 1. Nairobi meet was the 21st Ministerial Conference 2. WTO approved the food security/ stockholding issue in 2015 3. The Nairobi package includes SSM, commitment to abolish export subsidies on farm

exports and measures related to cotton


a. Only 1 is correct b. 1 and 2 are correct c. Only 3 is correct d. All are correct


Explanation-‐Bali declaration had the provision of public stockholding which was approved by WTO in 2014. Recently held Nairobi meet was the 10th Ministerial Conference.

22. Consider the following statements regarding monetary policy 1. The monetary transmission in 2015 has been very efficient/efficient 2. The gaps between the policy rate and bank rates have increased significantly in the last

year




Explanation-‐the monetary transmission refers to the process wherein the banks transfer the benefits of the decreased rate to the customers. In the last year RBI has reduced cumulatively 125 bps whereas the bank lending rates have been reduced by 50 bps. The gap between the policy rate and bank rates has increased significantly.

23. Consider the following statements 1. As per the Fitch Rating Agency, India is in the A investment category 2. As of now vulnerabilities exist in china, Brazil and Saudi Arabia 3. In the short run India must focus on domestic sources of demand.




Explanation-‐As per the Fitch Ratings Agency, India’s investment grade is BBB and it has performed well compared to its peers. The frequency of occurrence of financial crisis has increased hence there is a need to take the spillover risks seriously as there are certain vulnerabilities existing in China, Brazil and Saudi Arabia. There is a slowdown and there are vulnerabilities in the global demand hence there is a need to focus on domestic sources of demand.

TnL CA ES Question Bank -‐ Chapter 2 -‐ The Chakravyuha Challenge

1) A market economy will require

Statement 1-‐regulated entry of new firms Statement 2-‐exit so that resources are forced away from inefficient uses


a) Only statement 1 is correct b) Only statement 2 is correct c) Both are correct d) Both are wrong

2) Consider the following statements with regards to Indian economy since 1980s

1. industrial licensing has been dismantled 2. no public sector has been privatized 3. trade barriers have been reduced


a) statements 1 and 2 are correct b) Only statement 2 is correct c) Statements 1 and 3 are correct d) All the statements are correct

3) Consider the following statements with regards to sick companies

1. poor in a way are subsidizing the sick companies

2. poor end up paying higher prices for goods and services if the sick companies are not allowed to exit



4) The lack of exit framework in Indian context leads to creation of

1. Opportunity cost 2. Fiscal cost 3. Economic cost 4. Political cost


a) 1 & 2 are correct b) Only 2 is correct c) 2 and 3 are correct d) 2,3 and 4 are correct

5) Consider the following statements

1. firms averaging 40 years were 5 times larger (in terms of employment) than new ones in India

2. the exit problem in India in Private sector is becoming a major challenge




1. the implicit subsidies may lead to hike in the interest rates

2. bailouts by the government is a type of explicit subsidy



7) Consider the following statements with regards to DRTs

1. set up under Recovery of Debts Due to Banks &Financial Institutions Act 1993

2. only banks can approach DRTs

3. The government recently has announced that it would be setting up 5 more DRTs


a) Only statement 1 is correct b) statements 1 and 2 are correct c) Statements 1 and 3 are correct d) All the statements are correct

8) Which of the following represents the difference between “central sector scheme” and “centrally sponsored scheme”

a) Central sector schemes are more in number compared to centrally sponsored schemes b) In the former 75% contribution is from the centre whereas it is 100% in the latter c) Both are one and the same d) The former is implemented by its own machinery whereas the latter is implemented by state

machinery

9) “The imports of fertilizers has been canalized”. Here the word “canalization” means

a) The import of fertilizers is not allowed into India b) The import of fertilizers done through agencies designated by government of India c) Various agencies have been given a free hand in importing and distributing fertilizers d) Apart from certain agencies of the government even the private companies can freely import

the fertilizers for the purpose of selling.

10) Sick company refers to

a) The company has suffered huge loss in the present financial year b) The accumulated losses of the company to be equal to or more than its networth c) The accumulated losses of the company to be equal to or more than its market capitalization d) None of the above

11) SICA 1985 was the result of the recommendations of the following committee

a) T Tiwari committee b) Narasimhan committee c) Alagh Committee d) Rangarajan Committee

12) Consider the following statements in the background of impending exit

1. the strong institutions are in a way leading to ever-‐greening of loans

2. In case of India we can see a mix of strong as well as weak institutions



13) Consider the following statements regarding smartcards

1-‐the smart cards were utilized for paying MGNREGA wages in Telangana

2-‐the smartcards were able to reduce payment delays, reduce leakages, increased wages etc

3-‐the cost of implementation of the smartcard project was more than the benefits obtained


a) Only statement 1 is correct b) Only statement 2 is correct c) Statements 1 and 3 are correct d) All the statements are correct

14) The demand of the present situation is that the PPP (Perpetrator Pays Principle) must be applied in a careful manner because

1. The corporate houses wield a large political power 2. The investment scenario has to be revived 3. Ten large corporate houses account for majority of private capital expenditure

Which of the above statement/s are true?

a) Only statement 2 is correct b) statements 1 and 3 are correct c) Statements 2 and 3 are correct d) All the statements are correct

15) Consider the following statements regarding Insolvency and Bankruptcy code 2015

1. When the default occurs creditors/borrower must approach DRT only 2. The insolvency resolution must be finished in 180 days and no extension is provided 3. During the process of insolvency resolution the debtor/borrower is not immune to the

claims/lawsuits of creditors

Which of the above statements are incorrect?

a) Only statement 2 is incorrect b) statements 1 and 3 are incorrect c) Statements 2 and 3 are incorrect d) All the statements are incorrect

16) To overcome the problems of strong and weak institutions the government is taking following measure/s

1. The Insolvency and Bankruptcy code 2. Amending PCA 3. Providing blanket immunity to the bureaucrats

Which of the above is correct?

a) Only 2 is correct b) 1 and 2 are correct c) 2 and 3 are correct d) All are correct

17) Which committee was set up by GoI to recommend regarding revitalizing PPP

a) Rangarajan Committee b) TSR Subramaniam committee c) Parekh committee d) Kelkar committee

TnL CA ES Question Bank -‐ Chapter 2 -‐ The Chakravyuha Challenge -‐ Solutions

1) Correct option is b.

Explanation-‐ A market economy requires unrestricted entry of new firms, new ideas, and new technologies so that the forces of competition can guide capital and labor resources to their most productive and dynamic uses. But it also requires exit so that resources are forced or enticed away from inefficient and unsustainable uses.

2) Correct option is c. Explanation-‐ Since the early 1980s, the Indian economy has made remarkable progress in increasing entry: industrial licensing has been dismantled, public sector monopolies have been diluted, some public sector assets have been privatized, foreign direct investment has been considerably liberalized, a process that has been accelerated under this government, and trade barriers have been reduced.

3) Correct option is b. Explanation-‐the sick pay indirect taxes which are used to subsidize the sick companies and since

these sick companies are still existing they lead to supply of substandard goods and services whose prices would have come down as a result of competition if these companies were allowed to exit.

4) Correct option is d. Explanation-‐the impeded exit leads to creation of three costs-‐fiscal, economic and political 5)Correct option is b. Explanation-‐the size of companies averaging 40 years was 2.5 times the new ones. The exit

problem is not only restricted to the public sector and in fact has become the major problem in the private sector

6) Correct option is C Explanation-‐the subsidies that are provided to the sick firms can be of two types-‐implicit and

explicit. The bailout provided by the government is a type of explicit subsidy. The loans given by the banks are a type of implicit subsidy. Since the bank has given the loans and the company is has turned sick, the banks may become cautious and in order to prevent further accumulation of NPA may hike the interest rates.

7) Correct option is a Explanation-‐DRTs have following features a) Have been set up under The Recovery of Debt Due to Banks and Financial Institutions Act

1993 b) In principle both the borrower and lenders can approach DRTs c) GoI has recently announced that it would be setting up DRTs at 6 cities-‐Bangalore,

Chandigarh, Dehradun, Siliguri and Hyderabad 8)Correct option is d Central Sector Schemes are different (and less in number) than Centrally Sponsored Schemes.The major

difference is that the former is funded entirely by the Central government and implemented byits machinery, whereas the latter is based on subjects in the State List, and is majorly funded by the Centralgovernment but implemented by the states.

9)correct option is b. Explanaion-‐only three companies-‐STC, MMTC and IPL are allowed to import fertilizers into India.

10) correct option is b Explanation-‐Criterias to be declared as sick company are a) The accumulated losses to be more than the networth b) The company must have a factory license c) Company should have completed at least 5 years after having been incorporated under companies

act of 1956 d) The company must have had at least 50 workers on any of the working days in the preceding year

11) Correct option is a Explanation-‐because of the increase in the industrial sickness in the country, the then government

appointed T Tiwari committee, whose recommendations have led to formulation of SICA 1985 12) correct option is c Explanation-‐In India over the period of time there have been certain institutions which are becoming

weak because of various reasons (eg-‐DRT) and on the other hand we have institutions which are growing strong, now because of these strong institutions the managers have a fear that writing off the loans may bring them under the scanner of strong institutions which is leading to ever greening of the loans

13) correct option is c Explanation-‐in order to reduce leakages, root out ghost cards, decrease time delays, biometric smart

cards were used in the state of Andhra Pradesh. It achieved all the objectives. The return was seven times the cost of implementation. 90% of the beneficiaries also preferred the smart cards.

14) correct answer is c Explanation-‐the PPP although stipulates that the promoters gambit has not paid off it is them

who have to suffer the consequences. Having said so it is also imperative that there is a need to revive the growth and also the fact that the majority of the private capital expenditure comes from top 10 companies which also had taken the risk, there is a need to apply PPP with certain trade offs

15) correct option is d Explanation-‐the creditors/borrower can either approach DRT (individuals) or NCLT (companies).

If the IR is not over in 180 days then an extension of 90 days can be provided. During the process of IR, the borrower is immune from creditors’ claims and lawsuits

16) correct answer is b Explanation-‐the parliament in May 2016 has passed the Insolvency and Bankruptcy bill 2015

which will strengthen DRT/NCLT and on the other hand to mitigate the negative impact of strong institutions the government is mulling amending PCA which can differentiate cases of graft from those which are genuine errors in the decision making

17) correct answer is d

TnL CA ES Question Bank -‐ Chapter 3 -‐ Spreading JAM

1) Which of the following are examples of a direct subsidy 1. PAHAL 2. Scholarships 3. Food grains under NFSA


a) Only 1 is correct b) Only 3 is correct c) 1 and 2 are correct d) All are correct

The correct option is c.

Explanation-‐ in case of direct subsidy the beneficiary purchases the good at market price and the subsidy is transferred to him in the form of cash transfer whereas in case of indirect subsidy the goods are made available at a lower/subsidized price.

2) Which of the following means “exclusion errors” in implementation of JAM a) Benefits flow to ghost households b) Benefits flow to rich c) Te genuine beneficiaries are unable to avail the benefits

Which of the above are correct? a) Only 1 b) Only 3 c) 1 and 2 d) All are true


Explanation-‐in case of JAM, failure in implementation at any of the stages may lead to two types of errors-‐inclusion and exclusion. Inclusion failure refers to benefits flowing to ghost or rich households. Exclusion error refers to the inability of the beneficiaries to avail the benefits.

3) The beneficiary identification database which existed before Aadhaar suffer

from following drawbacks a) Administrative discretion b) Political discretion c) Beneficiary discretion

Identify the correct option

a) Only I is correct b) Only 2 is correct c) 1 and 2 are correct d) 1 and 3 are correct


Explanation-‐the identification of beneficiary database that are prepared before the Aadhaar suffer from administrative and political discretion where in discretion was involved in granting voter id, driver license, BPL cards apart from which ghost and duplicate names crept into the system.

4) Consider the following regarding Aadhaar 1. 210 million cards were created in 2015 2. It suffers from drawback i.e human discretion is allowed 3. It uses iris scans and fingerprints

Choose the incorrect option

a) Only 1 is incorrect b) 1 and 3 are incorrect c) Only 2 is incorrect d) All are incorrect

The correct answer is 2.

Explanation-‐Aadhaar’s virtue lies in the fact that it uses simple technology-‐fingerprints and iris scans-‐ to replace human discretion. In 2015 alone, 210 million cards were created.

5) Which of the following state has the least Aadhaar penetration a) Nagaland b) Mizoram c) Meghalaya d) Assam

Correct answer is d

Explanation-‐ there are 4 states which have lower than 50% Aadhaar penetration-‐Nagaland (48.9%), Mizoram (38%), Meghalaya (2.9%) and Assam (2.4%)

6) Consider the statements a) The banking penetration is on an average 38% b) Only 3 states have a banking penetration greater than 75% c) The state of chattisgarh has the maximum banking penetration


a) Only 1 is correct b) 1 and 2 are correct c) Only 3 is correct d) All are correct

Te correct option is c

Explanation-‐the banking penetration on an average is 46% in India and there are only two states which have coverage greater than 75% (chattisgarh and Madhya Pradesh) and the state of Chattisgarh has the highest penetration of 86%.

7) Consider the following statements a) 75% of the adult population has been covered under Aadhaar b) Banking penetration in india is over 50% c) To improve the banking penetration government of India recently

launched MUDRA bank


a) 1 and 2 are correct b) 1 and 3 are correct c) All are correct d) All are incorrect

Te correct option is c

Explanation-‐ Aadhaar has covered 75% of the total population and 955 of the adult population. The banking coverage on an average in India is 46% and to improve the penetration RBI has issued 23 new licenses.

8) To improve banking penetration RBI has issued 23 banking license of which there are

a) 2 universal banks, 11 payment banks, and 10 small banks b) 2 universal banks, 10 payment banks, and 11 small banks c) 2 universal banks, 12 payment banks, and 09 small banks d) 2 universal banks, 09 payment banks, and 12 small banks


Explanation-‐to increase the banking penetration RBI has recently issued 23 new banking licenses in which there are 2 universal banks, 11 payment banks, and 10 small banks.


a) Only 27% of villages have bank within 5 kms b) The unbanked in comparison with unidentified are more likely to

constrain the spread of JAM. c) IDFC and Bandhan are the two financial institutions granted universal

bank licenses



The correct option is d.

Explanation-‐ the Aadhaar coverage has crossed 75% of the total population whereas the banking penetration on an average is 46% hence the exclusion caused by unbanked will contain the implementation of JAM. RBI has issued 23 new banking licenses of which Bandhan and IDFC have been issued licenses for universal banks.

10) Consider the following statements a) There are only two states where the mobile penetration is lesser

than 60% b) Using mobile payments the money can be transferred very quickly

and securely c) The mobile payments improve quality and convenience of service

delivery



The correct option is d.

Explanation-‐the states of Bihar and Assam have mobile penetration of lesser than 60% (54% and 56% respectively). Mobile payments not only provide for faster and secure transfer but also provide quality and convenience of delivery.

11) Which of the following appears to be the weakest link in the JAM chain?

a) Government-‐Beneficiary link b) Government-‐Bank link c) Bank-‐Beneficiary link d) Government-‐Beneficiary link


Explanation-‐the Aadhaar coverage is more than 75% , Government is taking various measures like cash transfers, streamlining MGNREGA payments etc. whereas the bank-‐beneficiary, in spite of new licenses being issued is on average 46%

12) Consider the following statements 1) LPG pricing is an example for violation of One Product One Price

principle 2) LPG is available at three different prices 3) PAHAL is an example of indirect subsidy




Explanation-‐LPG in India is available at 3 different prices-‐subsidized, unsubsidized and market price (The first two are for households and third is for commercial uses). PAHAL is an example of Direct subsidy wherein the beneficiary purchases the product at market price and the benefit is transferred to his account.

13) Consider the following regarding PAHAL scheme

1) For availing PAHAL, Aadhaar is mandatory 2) Cylinders provided to households enjoy universal subsidy 3) Introduction of PAHAL has led to spike of black market prices of

cylinders



The correct option is c.

Explanation-‐for availing PAHAL, Aadhaar is not mandatory. The customer can link his account number with the gas customer number. The cylinders provided under PAHAL to households enjoy universal (every household is eligible). Since the introduction of PAHAL, the supply of subsidized cylinders has come down leading to spike in the black market prices.

14) The success of which is a precursor for the successful implementation of JAM

a) Jan Dhan Yojana b) BAPU c) MGNREGS d) PAHAL


Explanation-‐the banking penetration is much lesser that the coverage of Aadhaar. Hence the financial inclusion is the main constraint in the success of JAM.

15) Following which are useful in reducing leakages 1. BAPU 2. PAHAL 3. New MGNREGS system




16) Consider the following statements regarding new MGNREGS system 1) The new system can avoid misallocation 2) The new system disburses expenditure in real-‐time


a) 1 is correct b) 2 is correct c) Both are correct d) Both are incorrect

Correct answer is c

Explanation-‐The new MGNREGS system has following features

• The new system keeps funds in a central pool • Disburses the expenditure in real time i.e when the spending

has occurred • The funds will flow from either centre/state to panchayat • Since the funds are transferred in real time from the pool it

can avoid misallocation.

17) BAPU stands for a) Biometrically Authenticated Physical Uptake b) Biometrically Authenticated Primary Uptake c) Biologically Authenticated Physical Uptake d) Biometrically Authenticated Physical Udyog

Correct answer is a

18) In how many states the Aadhaar penetration is lesser than 50%? a) 4 b) 5 c) 6 d) 7

Correct answer is a

Explanation-‐there are 4 states which have lower than 50% Aadhaar penetration-‐Nagaland (48.9%), Mizoram (38%), Meghalaya (2.9%) and Assam (2.4%)

19) Even after the implementation of PAHAL , diversion of LPG from domestic to commercial sources continues because

a) Violation of One Product One Price Principle b) There is increased supply of LPG c) The usage of LPG by households has come down d) None of the above

The correct option is a.

Explanation-‐ LPG in India is available at 3 different prices-‐subsidized, unsubsidized and market price (The first two are for households and third is for commercial uses). The cylinders sold in market attract customs and excise duties. Since the cylinders are available at three different prices there is a still a scope for diversion.

20) Which of the following are examples of a direct subsidy 1) PAHAL 2) Fertilizers 3) Food grains under NFSA




Explanation-‐ in case of direct subsidy the beneficiary purchases the good at market price and the subsidy is transferred to him in the form of cash transfer whereas in case of indirect subsidy the goods are made available at a lower/subsidized price.

TnL CA ES Question Bank -‐ Chapter 4 -‐ Agriculture

1. Consider the following statements regarding Indian agriculture

1. Is pulse centric 2. Highly mechanized 3. The wheat production in India is higher than that of America




Explanation-‐In case of Indian agriculture it is cereal centric and that has led to over use of fertilizers, water and is input intensive. The usage of human labor is very high and hence is not highly mechanized. In 2013-‐14 the wheat production was 60% higher than that of America.

2. Following which is a proof of existence of exit problem in Agriculture

1. Agriculture is cereal centric 2. Fertilizer subsidy is universal


a. Only statement 1 is correct b. Only statement 2 is correct c. Both the statements are correct d. Both the statements are wrong


Explanation-‐to promote the agriculture production the government has brought in policies which have promoted higher production of cereals which are input intensive. The fertilizer subsidy is also given universally without any discrimination of a large/small/marginal farmer hence such policies put together have led to externalities and the well-‐off also getting benefits

3. Pink revolution refers to

a. meat b. potato c. oil seeds d. fruits


Explanation-‐After Green and White revolutions India has seen the rise of Pink revolution which refers to technological revolutions in the meat processing

4. Consider the following statements

1. the average wheat production of India is lower than the world average 2. only three states-‐Punjab, Haryana and Madhya Pradesh have much higher yields

compared to the world average




Explanation-‐the average production of wheat for the world is 3257 kg/hectare whereas for India it is 3075 kg/ha. Only two states Punjab and Haryana (4500 kg/ha) have average yield higher than the world average


1. The central problem of Indian agriculture is availability of fertilizers 2. The average of production of wheat and Rice in India are lower than the average

production in China 3. All the Indian states have a lower average yields of paddy compared to the world

average




Explanation-‐the central problem of Indian agriculture is the productivity i.e. yields/hectares in case of cereals is much lower compared to the world average and compared to that of china

comparison Wheat 39% less paddy 46% less

The average production of paddy is India is lesser than the average of the world.

6. Consider the following statements regarding pulses 1. India imports pulses 2. India is one of the major producers of pulses 3. Average production of pulses in India is lesser than the world average




Explanation-‐India is one of the largest producers and consumers of Pulses in the world but has lower yields compared to countries like Brazil, Nigeria, and Myanmar etc. because of various reasons the demand crosses over more than supply as a result of which the prices spike, India is forced to import pulses mainly yellow/green peas (matar) from Canada and Russia, chana from Australia, lentils (masoor) from Canada, urad and moong (green gram) from Myanmar, and tur from Myanmar, Tanzania, Mozambique and Malawi. The average production in India is much lower than the world’s average. 7. Consider the following statements regarding pulses

1. Most of the land dedicated to production of pulses is unirrigated 2. Government does not provide MSP for pulses 3. Most of the production of pulses come from irrigated land




Explanation-‐ In case of pulses most of the land under production is unirrigated and most of the production from the unirrigated land. Government provides MSP for pulses like moong, gram, urad etc

8. Consider the following statements regarding MSP

1. Was introduced in 1966-‐67 2. MSP is decided by CACP 3. MSP is announce at the beginning of Kharif season only




Explanation-‐ MSP stands for Minimum Support Price. It was announced in the year 1966-‐67 for the first time for wheat so as prevent the distress sales by farmers. Today it is the price at which the government will the produce from the farmers irrespective of the market price. It is usually announced twice a year-‐beginning of Kharif and rabi season. The recommendation of MSP is given by CACP (Commission for Agricultural Costs and Prices) and the decision is taken by CCEA

9. The social returns of the pulses are

1. It uses lesser water and fertilizer 2. It helps in keeping the soil well aerated and porous 3. Replenish the soil




Explanation-‐The social costs of producing pulses are higher compared to the private returns as they naturally fix nitrogen, keep the soil porous and well aerated; and use less water and fertilizers compared to the cereals.

10. Which of the following is/are components of Rainbow revolution

1. Round revolution 2. Yellow Revolution 3. Silver revolution




Explanation-‐Rainbow revolution refers to an integrated development of crop cultivation, horticulture, fisheries, poultry, animal husbandry etc which will lead to higher production. The various types are Green Revolution (Food grains), White Revolution (Milk), Yellow Revolution (Oil seeds), Blue Revolution (Fisheries); Golden Revolution (Fruits); Silver Revolution (Eggs), Round Revolution (Potato), Pink Revolution (Meat), Grey Revolution (Fertilizers) and so on.

11. Consider the following statements regarding

1. Only around a half of land under cultivation is irrigated 2. Majority of the lands deploy water through flood irrigation methods 3. Recently the government has launched PMKSY to extend irrigation coverage




Explanation-‐ in case of India only around one third of the land under cultivation is irrigated. Although post independence the government has invested in canal and tube irrigation, water has been deployed via flood irrigation which is extremely inefficient use of water. The government in order to increase the coverage and to promote efficient usage has introduced PMKSY (Pradhan Mantri Krishi Sinchayee Yojana)

12. In order to increase coverage under irrigation and promote the efficient use of water, government should

1. New irrigation technologies must be given infrastructure lending status 2. Both centre and state must increase public spending on flood irrigation 3. The ongoing schemes must be consolidated into AIBP



The correct option is b Explanation-‐the irrigation must be given infrastructure lending status so that it can attract government incentives, tax benefits and subsidies (presently it is under canal irrigation). The central and state government must increse public expenditure on micro-‐irrigation and ongoing schemes such as AIBP (Accelerated Irrigation Benefits Programme), IWMP (Integrated Water Management Programme), etc must be consolidated into PMKSY (Pradhan Mantri Krishi Sinchayee Yojana)

13. What is “Fertigation”

a. Increase in the irrigation coverage b. Provide irrigation to fertile land c. Introducing fertilizer directly into the crop’s irrigation system d. None of the above


14. The term “exporting water refers to”

a. The government selling water to neighboring countries b. The water that is stuck up underground between to rocks c. Water that is embedded within the exports d. None of the above


Explanation-‐The agricultural exports from india contain moisture which is referred to as embedded water and cannot be extracted back as the agriculture produce has been exported. In 2010 India exported about 25 cu km of such water that is equal to water demand of nearly 13 million people

15. Which of the following represents the water deficiency in India

1. India exports rice, cotton, sugar and soyabean 2. The government subsidises electricity for agriculture




Explanation-‐rice, cotton, sugar and soya bean are water intensive and contain embedded water. Since Indian exports these, Indian is exporting water. The government subsidizes the electricity used for agriculture which has not only provided a benefit to the farmers but also has promoted excessive usage of water. As a result of which Indian water table is dropping by 0.3 meters per year.

16. The following are the features of an efficient drip irrigation system

1. No change in the usage of fertilizer 2. Reduces usage of water and also amount of water lost due to evaporation 3. Provides higher yields compared to traditional methods




Explanation-‐ In case of traditional methods like flood irrigation the whole field is flooded with water whereas in case of micro-‐irrigation methods such as drip irrigation, water is directly dropped near the roots by laying down the lines as a result of which the usage of water comes down, loss of water due to evaporation comes down, fertilizer usage can be reduced by using fertigation process (Introducing fertilizer directly into the crop’s irrigation system) and provides higher yields compared to the traditional methods of irrigation.

17. There is a need to promote the production of other crops especially pulses because

1. Indian agriculture has become cereal centric 2. The dietary patterns are evolving 3. The social returns of pulses is higher than cereals




Explanation-‐over the period of time Indian agriculture has become more cereal centric i.e. there is more production of cereals such as rice and wheat compared to production of pulses. One of the outcomes of this is there are periodic spikes of price of pulses. The dietary patterns of people are also changing. In case of pulses the social returns are higher than cereals because pulses they need lesser water, lesser fertilizers, fix nitrogen etc

18. The key bottlenecks in adoption of micro irrigation is/are

1. Availability of technology 2. High cost of purchase 3. Skills required for maintenance


a. 2 and 3 are correct b. Only 3 is correct c. 1 and 3 are correct d. All are correct


Explanation-‐ In the implementation of micro-‐irrigation methods, the bottlenecks are high cost of initial purchase and the skills required for maintenance, but the reduction in consumption of power, fertilizer and water along with increased yield can compensate for the initial high cost


1. Wheat production in India is greater than that of America 2. Milk production in India is greater than that of America




Explanation-‐although India was suffering food scarcity in 1960s, post green revolution we have not achieved self sufficiency. In 2013-‐14 wheat production in India was 60% higher and milk production was 50% higher than America.

20. Consider the following statements regarding MSP

1. CCEA announces MSP for 23 crops on the recommendation of CACP (excluding sugar) 2. In case of sugar the government announces FRP 3. The state governments can add some bonus to FRP and announce SAP


a. 2 and 3 are correct b. Only 3 is correct c. 1 and 3 are correct d. All are correct


Explanation-‐ CACP (Commission for Agricultural Costs and Prices) recommends (the recommendations are not binding) MSP for 23 crops (excluding sugar) and CCEA (Cabinet Committee on Economic Affairs) takes a decision on the prices. In case of sugar the government announces FRP (Fair and Remunerative Prices) to which the states can add some bonus and announce SAP (State Administered Price).

TnL CA ES Question Bank -‐ Chapter 5 -‐ Mother & Child

1. Consider the following statements on Neo-‐natal mortality 1. It is the number of children who die in the first 15 days per 1000 live children born 2. In case of India out of all the children that die, 70% die in the first month



The correct answer is b

Explanation-‐the neonatal mortality is the number of children that die within the first 28 days out of 1000 children born live. In case of India which has one of the high neo-‐natal mortality rates, 70% of the deaths amongst the children happen in the first month only.

2. Consider the following statements regarding pregnancy 1. Weight gain during pregnancy has a direct bearing on health of the new born 2. Indian women gain lesser weight during the pregnancy than the prescribed norms of

WHO




Explanation-‐As per the recommendation of Who, during pregnancy women are supposed to gain weight in the range of 12.5 kg to 18 kgs but in case of Indian women they gain only on an average 7 kgs and women who begin pregnancy thin and do not gain weight are more likely to give birth to underweight children, who die in the first few days of life

3. Which of the following are entitlements under NFSA 2013 1. Cash entitlement of Rs 5000 for pregnant women 2. Beneficiaries of Antyodaya Yojana will be covered under NFSA 3. 75% of the total population will be covered


a. Only 2 is true b. 2 and 3 are true c. Only 1 is true d. All are true


Explanation-‐ The features of NFSA are

a. Two thirds of the total population will be covered b. 50% of urban and 75% of rural population will be covered c. Beneficiaries of Antyodaya Anna Yojana will also be covered (however they will continue

to get higher entitlements)

4. “Project kilkari” provides a. Cash entitlements for pregnant women b. Pre-‐recorded messages containing information on pregnancy are sent to mobiles c. Nutritious food to pregnant women d. Free health check for pregnant women

The correct answer is b Explanation-‐following are features of Project Kilkari

a. Pre-‐recorded messages are sent to mobiles b. These messages are on nutrition, pregnancy, family planning, maternal health etc c. The app is developed by Bill and Melinda Gates foundation d. 72 messages of duration 2 minutes

5. Consider the following statements regarding open defecation

1. In south Asia, Pakistan and Afghanistan have higher open rural defecation 2. 61% of the rural population in India defecates in the open 3. All the population that defecate in the open do not have working latrines


a. Only 2 is true b. 2 and are true c. Only 1 is true d. All are true


Explanation-‐In south Asia India has the highest %age of population that defecates in the open (61%). Some of this population has the working toilets but since these people reject the model of these toilets (the pits of these toilets have to emptied after few years) they defecate in the open.

6. Environmental enteropathy 1. Reduces absorbing capacity of intestine of children 2. Is also known as tropical enteropathy 3. It may lead to growth stunting and malnutrition




Explanation-‐Environmental enteropathy has following features

a. Caused by constant exposure of children to their own or other peoples’ fecal bacteria b. Also referred to as Tropical Enteropathy or Environmental Enteric Dysfunction (EED) c. It affects the absorbing capacity of intestine and may lead to malnutrition and stunting

7. The open defecation problem is more dangerous in India because 1. India has high population density 2. India has high rural population 3. It causes diseases such as diarrhea and environmental enteropathy




Explanation-‐since India has got very high rural population and high population density, open defecation in high percentage will lead to more children getting sick. As open defecation spreads germs into environment and causes diseases such as diarrhea and environmental enteropathy.

8. Consider the following statements regarding Swacchh Bharat Abhiyaan 1. NBA was renamed as SBA 2. It envisages construction of IHHL, community toilets etc 3. In case of IHHL, the central government would provide the complete funds




Explanation-‐SBA has the following provisions

a. Nirmal Bharat Abhiyan has been renamed as Swachh Bharat Abhiyaan b. It envisages construction of IHHL (Individual House Hold Latrines), community Sanitation

Centres etc c. Has got two components-‐Gramin and Urban d. Unit cost of IHHL has been enhanced to Rs 12,000 (of which Rs 9000 is from central and

remaining from state government) e. It also has provisions of Solid Liquid Waste Management (SLWM)

9. Consider the following statements 1. As per SDG, open defecation has to be ended by 2022 2. If India wants to achieve the targets set under SDG, the rate of reduction has to be

tripled




Explanation-‐ as per the SDG target open defecation as to be ended by 2030. In case of India historically the rate of decline has been close to 1% per year and if the SDG goal has to be achieved then the rate must be tripled

10. Consider the following statements 1. The main reason leading to open defecation is income constrains 2. The main reason leading to open defecation is the design/type of toilets




Explanation-‐ In south Asia India has the highest %age of population that defecates in the open (61%). Some of this population has the working toilets but since these people reject the model of these toilets (the pits of these toilets have to emptied after few years) they defecate in the open.

11. Consider the following statements 1. As per MDG goals, the MMR was to be reduced by 50% by 2015 2. As per SDG goals, MMR to be reduced to less than 70 per 1000 live births



The correct answer is d

Explanation-‐ in case of MDG, goal 5 was to reduce MMR by three quarters and in case of SDG, MMR to be reduced to less than 70 per 1,00,000 live births.

12. Consider the following statements on SDG 1. Was adopted by WHO in 2015 2. Has 17 goals and 169 targets 3. All the SDGs are binding on the member countries




Explanation-‐SDGs (Sustainable Development Goals) have succeeded MDG (Millennium Development Goals) and were adopted by UN in September 2015. The resolution “Transforming Our World: The 2030 Agenda for Sustainable Development Goals” was adopted in this regard. It has 17 goals and 169 targets. These SDGs are legally non-‐binding on the member countries. The SDGs deal with 5Ps-‐Planet, People, Partnership, Peace and Prosperity.

13. Which of the following scheme/s has/have entitlements for pregnant women 1. ICDS 2. NFSA 3. JSY


a. Only 2 b. 1 and 2 c. Only 3 d. All the three


Explanation-‐

ICDS (Integrated Child Development Scheme)-‐pregnant and lactating mothers should receive 600 calories of food with 18-‐20 grams of protein

NFSA (National Food Security Act)-‐ Pregnant women and lactating mothers to get a maternity benefit of Rs 6000

JSY (Janani Suraksha Yojana)-‐ cash entitlements are given so as to promote institutional delivery and reduce maternal and infant mortality.

TnL CA ES Question Bank -‐ Chapter 6 -‐ Bounties for The Well Off

1. What is the expenditure incurred by the government in subsidizing various goods and services a. 5% of GDP b. 4.2% of GDP c. 5.1% of GDP d. 4.5% of GDP


2. Consider the following is subsidy 1. Subsidy is always given to consumers in the form of cash 2. Food entitlements under NFSA is an example of an Indirect subsidy




Explanation-‐subsidy is form of transfer payments wherein the government transfers certain benefits to the consumers either directly or indirectly. DBT in LPG is a form of a direct subsidy and food entitlements are a form of indirect subsidy.

3. Monetary policy transmission refers to

a. RBI not reducing CRR and SLR on regular basis b. Government of India not reducing the tax rates c. Banks passing the benefits of policy rate reduction to the consumers d. None of the above


Explanation-‐In case of monetary policy, RBI has been reducing the key policy rates in the last one and half year but this reduction has not been transferred to the end customers by the banks

4. Consider the following statements on small saving schemes 1. Were introduced so as to mobilize savings by encouraging small earners 2. All the small saving schemes fetch approximately same rate of returns 3. All the small saving schemes are exempted from taxation as they are for small earners


a. Only 1 is true b. Only 2 and 3 are true c. Only 1 and 3 are true d. All are true


Explanation-‐the small saving schemes were introduced so as to mobilize savings by giving small earners returns which are above the market rates. Various SSS fetch varying returns as they are treated differently for the purpose of taxation.

5. The government has recently taken the following decisions regarding small saving schemes 1. Slashed returns on schemes like KVP and RD by 0.5% 2. Linked all the rates to CPI




Explanation-‐The government has taken the following decisions regarding SSS

a. The rate of returns on KVP and RD have been slashed by 0.25% b. The rate of returns of all the SSS have been linked to the market rate prevailing for G-‐

securities c. The returns will be re-‐calibrated every quarter w.e.f. 1st April 2016

6. Consider the following statements regarding monetary policy transmission in India 1. In the last one year it has been incomplete/inefficient 2. One of the main reasons is higher rate of interest on Small Saving Schemes




Explanation-‐ the policy rates (repo) is reduced by RBI but this reduction in not being transferred efficiently to the consumers as the banks are suffering from lower mobilization of deposits, high NPAs and higher rate of interest on small saving schemes.

7. Consider the following statements 1. The PPF accounts are treated EET in case of tax matters 2. The real rate of returns is lesser than tax free bonds




Explanation-‐

8. For following which commodity, Implicit subsidy is the maximum a. PPF b. Tax free bonds c. FD d. RD


Explanation-‐PPF falls under EEE category-‐the contribution, the interest accruals and the withdrawals are exempted from taxation hence the effective/real rate of returns would be 16%.

9. The monetary transmission is inefficient in India because 1. Twin Balance Sheet Problem 2. rate of returns on SSS (Small Saving Schemes)




Explanation-‐ The twin balance sheet refers to stress on balance sheet of corporate houses as well as on the banks. The profitability of the corporates is down because of gloomy external demand and slowdown in the domestic economy hence the NPAs are on the rise which is leading to banks reducing the volume of loans given and also increasing the cost of capital.

The real rate of returns on small saving schemes are higher compared to the returns on bank deposits, hence it would be working against the banks if they further reduce the interest rates.

10. ______ section of IT Act of 1961 allows for deductions from gross income for various saving schemes

a. 80G b. 80C c. 80H d. None of the above


Explanation-‐

Section 80G-‐exemptions on account of money given as charity

Section 80C-‐ deductions from gross income for various saving schemes

Section 80H-‐deductions in case of setting up of new industrial undertakings

11. Consider the following statements regarding tax free bonds 1. They are treated as EET for tax purposes 2. Per annum the maximum limit of investment is Rs 1,50,000 3. The real rate of returns is lower than that of PPFs




Explanation-‐the tax free bonds do not have any maximum limit of investment, are taxed-‐TET and the real rate of returns is lower than that of PPFs

12. Which of the following is/are small saving schemes 1. Post Office Savings Account 2. Senior Citizen Saving Scheme 3. National Saving Certificate





1. Subsidy leads to mis-‐allocation of resources 2. Government cross-‐subsidizes in case of electricity and train fares




Explanation-‐ Subsidy is usually given to producers/suppliers so that the prices are kept low, employment is maintained etc or directly to the consumers as in case of DBT in LPG, in any case it distorts the market thereby leading to mis-‐allocation of resources.

The government has various tariff rates in case of electricity and railway. In such cases it overcharges one segment and subsidizes the other heavily hence provides cross-‐subsidization

14. Consider the following statements 1. The higher rate of returns on small saving schemes lead to higher savings 2. The higher rate of returns on small saving schemes may lead to lower savings




Explanation-‐The higher rate of returns on SSS is an incentive for the investors to save and invest more but the higher rate may also act as an disincentive as the returns are higher, the future financial obligations could be taken care of.

15. The small saving schemes must be treated as EET because 1. The investor has higher ability to pay 2. There is no uncertainty in the tax treatment for the SSS




Explanation-‐ The SSS must be treated as EET (practice is catching up globally) because

a. The investor has higher ability to pay b. If taxed at the withdrawal it will promote more savings and penalize dis-‐savings c. It promotes future consumption d. If taxed at the beginning it will be penalizing savings e. There is no uncertainty in the tax treatment for the SSS

16. Consider the following regarding PAHAL

1. It is a form of direct subsidy 2. AADHAAR is mandatory 3. The government has decided not to give LPG subsidy to households having an annual

income greater than 5 lakh rupees




Explanation-‐AADHAAR number is not mandatory for availing LPG subsidy, it is a form of direct subsidy and the government has decided not to give this subsidy to those houses with annual income greater than 10 lakh rupees

17. Which of the following committee was set up by government to recommend regarding rates for GST

a. Subramanian committee b. Kelkar committee c. Mudgal committee d. Rangarajan committee


18. Which of the following is subjected to EET mode of taxation a. Tax free bonds b. NPS c. PPF d. Post office Savings Account


19. Consider the following statements 1. Gold is a strong demerit good 2. Education and health are other two examples of demerit goods




Explanation-‐as per one of the classification for goods, there are two types-‐merit and demerit. Consumption of merit goods is good for the society whereas the consumption of non-‐merit goods does not contribute to the welfare of the society. Hence gold is a non-‐merit good whereas; education and health are merit goods

20. In order to rationalize subsidy spending, the government has implemented 1. DBT in LPG 2. DBT in Kerosene 3. Rationalizing tax exemptions to corporate sector




Explanation-‐government has been implementing various schemes/programmes to reduce the subsidy burden. It has introduced the Direct Benefit Transfer for LPG, DBT in case of kerosene and has laid out a path for eliminating corporate exemptions to the tune of Rs 62000 cr

TnL CA ES Question Bank -‐ Chapter 7 -‐ Fiscal Capacity

1. Consider the statements regarding tax 1. It is an obligation on every citizen 2. GST is a direct tax 3. Income tax makes the maximum contribution to the total taxes collected


a. Only 1 b. Only 2 and 3 c. Only 1 and 3 d. All the three

The correct option is 1

Explanation-‐tax is an obligation of every Indian citizen. It is the link that binds the citizen with the government and creates an accountability framework.GST is a type of indirect tax and it is the corporate tax which has been contributing the highest out of the total taxes collected.

2. Currently the tax policy and related legislation is being handled by a. CBDT b. CBEC


a. Only 1 b. Only 2 c. Both d. None of the two


Explanation-‐currently it is Central Board of Direct Taxes and Central Board of Excise and Customs that formulate the policy but the government has proposed TPC and TPRU to take over these functions.

3. The property tax 1. Is a direct tax 2. Taxed differently at all the three levels of government 3. Would limit property speculation


a. Only 2 is correct b. Only 2 and 3 are correct c. Only 1 and 3 are correct d. All the three are correct


Explanation-‐ property tax in India has following features

a. Is a direct tax b. Is taxed differently at all the three levels of government c. Could turn out to be the important source of revenue for the local bodies (if reformed) d. Usually collected at municipalities e. Higher property tax may lead to end of property price speculation f. Is important because it is levied on an immovable good

4. Fiscal capacity refers to 1. Expenditure 2. revenue


a. Only 1 b. Only 2 c. Both d. None


Explanation-‐strictly under economics the fiscal capacity refers to ability of a group or institution is its ability to generate income/revenues.

5. What are the determinants of fiscal capacity 1. Monetary policy 2. Disinvestment policy 3. Taxation policy


a. Only 2 b. Only 2 and 3 c. Only 1 and 3 d. All


Explanation-‐ fiscal capacity refers to ability of a group or institution is its ability to generate income/revenues so the government uses taxation policy and disinvestment policy in the budget to raise the revenues.

6. GST will have a limited impact on broadening the citizen’s participation because 1. The rates of GST is very less 2. GST is a direct tax 3. The common doesn’t consider the tax paid as a direct contribution to the government


a. Only 2 b. Only 3 c. Only 2 and 3 d. All


Explanation-‐ It has been observed that only the payment of direct taxes pinches a common man and he doesn’t consider the indirect taxes as his direct contribution to the government so the implementation of GST is not going to receive increased participation of common man

7. Consider the following statements 1. Around 85% of the economy is outside the tax net 2. Only 10% of the earning individuals are under the tax net




Explanation-‐ around 85% of the economy is outside the tax net in India and roughly 5.5% of earning individuals are under the tax net.

8. What is the ratio of taxpayers to voters in India a. 5.5% b. 6.2% c. 4.5% d. 4%


9. Although compared to other countries India’s fiscal capacity is under performing, there is no need of panic because

1. The western countries have much longer period of political evaluation 2. The economies in the developed countries have expanded because of wars


a. Only 1 b. Only 2 c. Both d. None are true


Explanation-‐the western countries have had a very long period of political evaluation and have gone through the most difficult economic scenarios (great depression of 1930s) and their economies have expanded as a result of two world wars so in comparison India would not be performing that badly

10. To increase the fiscal capacity, the government should 1. Refrain from increasing the income threshold for income tax 2. Subsidies must be abolished 3. Property tax needs to be developed


a. Only 1 b. Only 1 and3 c. Only 2 and 3 d. All


Explanation-‐ The income tax exemption level must be maintained so that more and more income earners naturally fall under tax bracket as the data corroborates it. The subsidies cannot be completely eliminated but better targeting could hold the key. Property tax must be developed as it would reduce speculation, bring more revenues etc.

11. Which of the following is going to reduce the fiscal capacity of a country 1. Missing taxpayers 2. Exiting of the taxpayers 3. Well directed subsidy


a. Only 1 b. Only 1 and3 c. Only 1 and 2 d. All


Explanation-‐ The revenues reduce when the increase in the income tax exemption limit leads to more number of income earners getting exempted from paying tax (missing taxpayers) and the tax payers who believe that their taxes are not being well utilized may exit by not using any of the services provided by the government and not paying any taxes. In case of well directed subsidies, the fiscal capacity will increase as the subsidy burden is reduced.

12. Consider the following statements regarding TPRU 1. Will get assistance from TPC in formulating tax policies 2. Carry out studies on topics suggested by CBDT and CBEC




Explanation-‐TPRU-‐ a. Carry-‐out studies on various topics of fiscal and tax policies referred to it by CBDT and

CBEC and will provide independent analysis on such topics b. Will also prepare and disseminate policy papers and background papers on various tax

policy issues c. Will assist Tax Policy Council chaired by FM in taking appropriate tax policy decisions d. Liaise with State Commercial Tax Departments.

13. What should have been the ideal taxpayer to voter turnout ratio for India a. 5.5% b. 4% c. 7.9% d. 23%


14. Consider the following statements regarding TPC 1. Will be headed by PM 2. Will suggest broad policy measures for taxation 3. Recommendations are binding on the government


a. Only 2 is correct b. Only 2 and 3 are correct c. Only 1 and 3 are correct d. All the three are correct


Explanation-‐TPC (Tax Policy Council)-‐Will be headed by Finance Minister. The Tax Policy Council will look at all the research findings coming from Tax Policy Research (TPRU) Unit and suggest broad policy measures for taxation. The Council will be advisory in nature, which will help the Government in identifying key policy decisions for taxation.

15. TPC and TPRU are the recommendations of

a. TARC b. ARC c. FSLRC d. None of the above


Explanation-‐Tax Policy Council and Tax Policy Research Unit are the recommendations of Tax Administrative Reforms Commission

16. _________ recently recommended changes to provisions of IT act of 1961 a. Easwar committee b. Kelkar committee c. Subramanian committee d. Rangarajan committee


17. The government has taken following measure/s in the field of taxation 1. e-‐filing of IT 2. e-‐Sahyog 3. TPC and TPRU




TnL CA ES Question Bank -‐ Chapter 8 -‐ India & Trade

1. When was WTO established 1. 1994 2. 1983 3. 1945 4. 1972


2. Which member country of WTO has not signed even one PTA 1. Sudan 2. Mongolia 3. Vietnam 4. Laos


3. Which of the following is the correct arrangement of Economic Integration 1. Partial Scope Arrangementà Free Trade Agreementà common marketàCustoms

Unionà Economic Union 2. Partial Scope Arrangement àCommon MarketàCustoms Union à Free Trade

Agreement à Economic Union 3. Partial Scope Arrangementà Free Trade Agreementà Customs UnionàCommon

Marketà Economic Union 4. Free Trade Agreementà Customs UnionàPartial Scope Arrangementà Customs

Unionà Economic Union


Explanation-‐

Partial Scope Arrangement-‐ allows for trade between countries on a small number of goods. Free Trade Agreement-‐is a preferential agreement wherein members will reduce tariffs on trade amongst themselves whereas for rest of the world they will impose their own tariffs Customs Union-‐is a free trade agreement where members apply a Common External Tariff schedule to imports from other countries Common Market-‐ is a customs union where movement of factors of production is relatively free amongst member countries

Economic Union-‐is a common market where member countries co-ordinate on their macro-economic and exchange rate policies

4. A Common Market refers to 1. Is a preferential agreement wherein members will reduce tariffs on trade amongst

themselves whereas for rest of the world they will impose their own tariffs 2. Is a FTA where members apply a Common External Tariff schedule to imports from

other countries 3. Is a customs union where movement of factors of production is relatively free amongst

the member countries 4. Is a common market where member countries co-‐ordinate their macroeconomic policies


Explanation-‐

Common Market-‐ is a customs union where movement of factors of production is relatively free amongst member countries

5. An Economic Union refers to a. Is a preferential agreement wherein members will reduce tariffs on trade amongst

themselves whereas for rest of the world they will impose their own tariffs b. Is a FTA where members apply a Common External Tariff schedule to imports from

other countries c. Is a customs union where movement of factors of production is relatively free amongst

the member countries d. Is a common market where member countries co-‐ordinate their macroeconomic and

exchange rate policies

The correct answer is d

Explanation-‐

Economic Union-‐is a common market where member countries co-ordinate on their macro-economic and exchange rate policies

6. India has signed which of the following FTAs 1. SAFTA 2. ASEAN 3. MERCOSUR

Choose the correct answer

a. Only 1 b. 1 and 3 c. Only 2 d. All


Explanation-‐ India has signed FTA in services and investments with ASEAN (Association of South-‐East Asian Nations) in 2010. SAFTA stands for South Asian Free Trade Area which was concluded in 2004 between Afghanistan, Bangladesh, Pakistan, India, Sri Lanka, Bhutan, Nepal and Maldives. India-‐MERCOSUR PTA was signed in 2004

7. A Customs Union refers to

1. Is a preferential agreement wherein members will reduce tariffs on trade amongst themselves whereas for rest of the world they will impose their own tariffs

2. Is a FTA where members apply a Common External Tariff schedule to imports from other countries

3. Is a customs union where movement of factors of production is relatively free amongst the member countries

4. Is a common market where member countries co-‐ordinate their macroeconomic and exchange rate policies


Explanation-‐

Customs Union-‐is a free trade agreement where members apply a Common External Tariff schedule to imports from other countries

8. The increased exports will lead to __________ of Indian currency 1. Depreciation 2. Appreciation 3. Both are independent of each other 4. Devaluation


Explanation-‐since the exports are increasing it will lead to higher inflow of foreign currency into India. The supply of these foreign currencies increase thereby increasing the demand for Indian rupees and thus appreciating its value.

9. Consider the following statements on SAFTA (South Asia Free Trade Agreement) 1. It replaced SAPTA 2. Consists of seven member countries of SAARC 3. India and Pakistan are both the members


a. Only 1 is true b. 2 and 3 is true c. 1 and 3 are true d. All are true


Explanation-‐the SAFTA has following features

a. Was signed amongst the 7 members of SAARC-‐Pakistan, India, Bangladesh, Nepal, Bhutan, Sri Lanka and Maldives

b. It replaced all the earlier SAPTA (South Asia Preferential Trade Agreement) c. It came into effect from 1st January 2006 d. The aim is to reduce tariffs on intraregional trade

10. With which of the following Asian country/ies India has not signed an FTA

1. China 2. Malaysia 3. Afghanistan


a. Only 1 b. 1 and 3 c. Only 2 d. All


Explanation-‐ India has signed FTAs with Sri-‐Lanka (1998), Afghanistan (2003), Malaysia (2011), Korea (2009) etc. The FTAs between India and China are at various stages of negotiations.

11. The higher inflow of FDI into India will lead to _________ of Indian currency 1. Depreciation 2. Appreciation 3. Both are independent of each other 4. Devaluation


Explanation-‐ The supply of foreign currencies increases thereby increasing the demand for Indian rupees and thus appreciating its value.

12. The impact of TPP on India could be

1. The exports will increase rapidly 2. Will contribute 2% to GDP


a. Only 1 is true b. Only 2 is true c. Both are false d. Bothe are true


Explanation-‐one of the main objectives of TPP is to reduce/eliminate all trade and non-‐trade barriers once this happens the countries such as India may start diverting their exports to these countries hence it is expected that there will be a marginal increase exports and the overall effect would be -‐0.2% on the GDP.

13. Consider the following statements regarding TPP 1. There are 12 member countries 2. The agreement aims to liberalize trade in nearly all goods and does not include services 3. There is a provision for establishing a common framework for Intellectual property




Explanation-‐ following are the features of TPP

a. It will have twelve members across pacific rim b. The agreement was recently signed at Auckland, NZ c. TPP is a free trade area, home to 800 million people and 40% of the global trade d. Has provisions regarding eliminating trade and non-‐trade barriers i.e liberalizing the

trade in almost all goods and services e. Establish a common framework for IP f. Establish an investor dispute settlement mechanism g. Enforce standards for environmental and labour laws h. Limit the functioning of SOEs

14. Which of the following countries is not a member of TPP

1. Japan 2. Canada 3. Indonesia 4. Brunei


Explanation-‐TPP has 12 members-‐Canada, US, Mexico, Peru, Chile, New Zealand, Australia, Singapore, Brunei, Malaysia, Vietnam and Japan.

15. Which of the following is/are the components of FTP 2015-‐2020 1. Objective is to increase the total trade to $ 900 bn by 2020 2. To be aligned with Make In India, Skill India initiatives 3. Duty Credit scrips will be easily transferable


a. Only 1 is true b. 1 and 3 are true c. 2 and 3 are true d. All are true


Explanation-‐ the FTP 2015-‐2020 has following features

a. To increase the exports of services and goods to $ 900 bn by FY 2020 b. SEIS and MEIS schemes c. Duty free scrips will be easily transferable d. Duty free scrips can be used to pay customs duty, excise duty, service tax e. FTP to be aligned with Make In India, Skill India initiatives f. Higher rewards for SEZs under MEIS

16. The evaluation of India’s FTA shows that 1. There has been no visible increase in the trade with implementation of FTAs 2. It takes a very long time for FTAs to show the effects on the trade 3. The increase in the trade has been more on import side compared to the export side


a. Only 3 is true b. 1 and 3 are true c. 2 and 3 are true d. All are true


Explanation-‐the FTAs have increased the trade with FTA countries in a perceptible manner. The effect has begun in the first year and thereafter has been increasing in the coming years. The increase in the imports has been greater than the exports as India has had higher tariff reductions.

TnL CA ES Question Bank -‐ Chapter 9 -‐ The Fertilizer Sector

1. Which of the following are the provisions under New Urea Policy 2015 1. It aims to increase domestic production of all the fertilizers 2. The government of India to announce MSP for urea 3. Gas pooling policy




Explanation-‐as per the new Urea Policy of 2015

a. Aims to increase the domestic production of urea b. Reduce the import c. Reduce the subsidy burden d. Make it available to farmers at MRP (Maximum Retail Price) and in a timely manner e. Gas pooling policy-‐all the producers would get the gas at a uniform price f. The MRP has been kept at the same level-‐Rs 268/50 kg (excluding local taxes) g. If neem coated extra 14 rupees

2. As per the Urea policy what proportion of urea produced must be neem coated?

a. 50% b. 25% c. 75% d. None of the above


3. Gas pooling policy for urea production refers to a. All the urea producers will get the gas from the same supplier b. All the urea producers will get the gas at the same rate c. All the urea producers will get same type of gas d. None of the above


Explanation-‐Previously the producers of gas were to make their own arrangements regarding buying the gas for producing the urea but since the announcement of gas pooling policy, all the producers of urea will get the gas at the same price, which will promote competition and also reduce the prices

4. What are the advantages of neem coated urea 1. Gives higher crop yields 2. Underground water contamination is reduced 3. Reduces diversion




Explanation-‐the advantages of neem coated urea are

a. It is unfit for industrial uses hence diversion can be reduced b. The crop yield increases c. It reduces underground water pollution as the leaching of nitrogen of this urea happens

at a slower rate d. The amount of this urea used is comparatively lesser

5. Which of the following attracts the highest subsidies

a. Food subsidy b. Fertilizer subsidy c. Diesel subsidy d. Kerosene subsidy


6. The new urea policy is applicable for the period 1. 2015-‐16 to 2018-‐19 2. 2015-‐16 to 2020-‐21 3. 2014-‐15 to 2019-‐20 4. 2014-‐15 to 2022-‐23


Explanation-‐New Urea Policy was announced by the government in 2015 and will be applicable for a period of 4 years (from 2015-‐16 to 2018-‐19)

7. Which of the following fertilizer consumes the highest subsidy allocated for fertilizers a. Urea b. DAP c. MOP d. None of the above


Explanation-‐of the total subsidy given to fertilizers in 2015-‐16, urea accounted for 70% of it

8. What are the reasons for diversion of urea 1. Only agriculture urea is subsidized 2. sales of urea is not regulated by government of India 3. movement of urea is not under control of government of india




Explanation-‐urea has following features

a. Maximum produced, maximum imported, maximum used, consumes maximum of subsidies allocated for fertilizers

b. Highly controlled-‐government fixes MRP, 50% of the total urea movements are decided by the government

c. Urea used for agriculture purposes are only subsidized

9. In which of the following sector/s urea is used 1. Agriculture 2. Automobile industry 3. Tobacco industry




Explanation-‐urea is used in chemical industries, explosives, automobile industry, medical uses, flavour enhancing additive in cigarettes and others

10. Subsidized urea suffers from following leakages 1. Subsidy is spent on inefficient producers 2. Some of it is diverted to non-‐agriculture uses 3. Consumption by rich farmers




Explanation-‐urea suffers from following three leakages

a. 24% of subsidy is spent on inefficient producers b. Of the remaining 41% is diverted to non-‐agricultural usages and abroad (approx 31%) c. Of the remaining 24% is consumed by larger/rich farmers (approx 10.7%)

Hence of the total subsidy given to it, only about 35% reaches the intended beneficiaries (small and marginal farmers)

11. Which of the following fertilizers is not produced in India a. Urea b. MOP c. DAP d. None of the above

The correct option is b Explanation-‐as there are no viable sources for production of MOP, the whole demand for this is met through the imports

12. Which of the following is allowed to import Urea 1. MMTC 2. IPL 3. STC 4. NABARD


a. 1 and 2 b. 1 and 3 c. 1,2 and 3 d. All the four


Explanation-‐the import of urea is canalized-‐only three agencies are allowed to import the urea-‐STC (State Trading Corporation), MMTC (Metals and Minerals Trading Corporation) and IPL (India Potash Limited).

13. Urea is overused because 1. Is available at a subsidized price 2. The supply is more compared to the demand




Explanation-‐Urea is subsidized heavily which makes it much more cheap compared to MOP and DAP. Although we import it, there is always higher demand compared to supply because of black marketing, diversion, smuggling etc

14. Consider the following statements regarding MOP and DAP

1. Subsidy given is based on the cost of production 2. Imports of MOP and DAP are controlled by the government




Explanation-‐following are the features related to MOP and DAP

a. The imports are not controlled b. Government gives subsidy based on the amount(per kg) of nutrients used (NBS) c. The prices have been deregulated d. Hence the subsidy given does not vary with the market prices e. Government role is limited to paying subsidy to the importers/importers

15. Consider the following statements on Nutrient based subsidy

1. Was introduced in 2012 2. Subsidy paid to the urea producers based on cost of production 3. If the fertilizer is coated with neem then extra subsidy is given


a. Only 1 and 2 are false b. Only 1 and 3 are false c. Only 2 and 3 are false d. All are false


Explanation-‐NBS has following features

a. Introduced w.e.f. 1st April 2010 b. Applicable to MOP and DAP c. Subsidy is paid based on the amount of nutrients used (per kg) d. The manufacturers/importers have the freedom to fix the MRP e. Variation in the market prices has no bearing the subsidy given

16. Consider the following statements on the subsidy given to urea 1. Government fixes the MRP at which urea is sold to farmers 2. The subsidy is given to the domestic manufacturers based on amount of nutrients that

they have used 3. Imports are canalized




Explanation-‐ following are the features of urea policy

a. Government fixes MRP at which the urea is sold to farmers b. Provides subsidy to 30 domestic producers based on the cost of production c. Provides subsidy to the importers and the subsidy is consignment specific d. The import of urea is canalized-‐only three agencies are allowed to import the urea-‐STC

(State Trading Corporation), MMTC (Metals and Minerals Trading Corporation) and IPL (India Potash Limited).

17. Urea is black-‐marketed because 1. It violates one product-‐one price principle 2. Imports are canalized 3. Subsidized at a very high rate




Explanation-‐

The government provides high subsidy as a result of which it is much cheaper than MOP and DAP. But the urea used only for agriculture purposes is subsidized hence there is an incentive to divert the subsidized urea into black market.

Only 3 agencies are given the permission to import urea and any miscalculation in the requirement may lead to shortage of supply and diversion into black market

18. As per the experts what is the ratio in which N, P and K should be used a. 2:4:1 b. 4:2:1 c. 1:2:4 d. 1:4:2


19. Consider the following statements 1. India overuses fertilizers more than china 2. All states use thrice more nitrogen as compared to phosphorous than is recommended




Explanation-‐china overuses fertilizers more than India. Most states use almost twice more nitrogen as compared to phosphorous than is recommended. In case of nitrogen used is 100% more than potash.

20. Consider the following statements 1. Decanalisation will lead to more black marketing 2. It would also lead to spike in the market prices 3. It would lead to better estimation of demand




Explanation-‐ with Decanalisation there would be more importers which will lead to better estimation of demand in the market. It will also lead to increased imports thereby stabilizing the prices. Since the supply is better estimated and imports are allowed more freely it would lead to reduced black marketing.

21. Following which measures should be taken to increase the efficiency of urea subsidy 1. Shifting to NBS 2. Deregulating the market 3. Neem coating




Explanation-‐ The government has to shift to NBS and deregulate the market so that the domestic manufacturers become more efficient and it would act as an incentive for achieving efficiency as they will be allowed to fix the price. It will also lead to reduction of prices thereby also reducing the black marketing. The neem coating has been successful in reducing the diversion of subsidized fertilizer for non-‐agricultural purposes.

TnL CA ES Question Bank -‐ Chapter 10 -‐ The Labour Markets

1. Good jobs have following features a. Are safe b. Pay well c. Encourage firms and employees to improve skills and productivity


a. Only 1 b. 1 and 2 c. 2 and 3 d. All the three


2. Demographic dividend refers to a. Increasing population b. Increase in the working population c. Increase in the working age d. None of the above


Explanation-‐The working population will keep on increasing till 2035-‐40 in case of India and this population will give boost to economic growth.

3. If India wants to make use of the demographic dividend it must a. Create more than million jobs b. Create good jobs c. Provide education d. Provide good food


Explanation-‐If India wants to take the advantage of demographic dividend (in favor of India till 2035-‐40) then it has to provide good jobs (are safe, pay well and encourage skill development)

4. The biggest constraint in hiring a regular employee today is a. Hiring laws b. Dismissal norms c. Bonus act d. None of the above


The biggest stumbling block in hiring more formal employees has been the dismissal norms under the Industrial Disputes Act (IDA)

5. In which Industry (under formal sector) the maximum number of good jobs been created? a. Manufacturing b. Services c. Exports d. None of the above


Explanation-‐The manufacturing industries have led to creation of more than 50% of good jobs under the formal sector

6. The informal sector has to be commended because 1. It has led to creation of maximum number of good jobs 2. It has had the maximum number of companies set up




Explanation-‐ the jobs in the informal sector do not pay well, are not secure. Although the maximum number of jobs have been created they are not “good jobs”. In case of establishments more than 90% of these were set up in informal sector.

7. The dismissal norms for the formal sector have been provided under_______ a. The Industrial Disputes Act 1947 b. Payment of Minimum Wages Act 1948 c. Payment of Bonuses Act 1965 d. Companies Act 2013


Explanation-‐As per section 2A of IDA-‐Where any employer discharges, dismisses, retrenches, or otherwise terminates the services of an individual workman, any dispute or difference between that workman and his employer connected with, or arising out of, such discharge, dismissal, retrenchment or termination shall be deemed to be an industrial dispute

8. Consider the following statements on EPF a. For employees earning up to Rs 15000 per month it is mandatory b. The employer contributes 12% of the take home salary c. Whole of this 12% goes as the contribution towards provident fund




Explanation-‐ The EPF has following features

a. Was created by The Employees’ Provident Funds & Miscellaneous Provisions Act, 1952, b. Is a fund to which most workers must involuntarily contribute at least 12 per cent of

their basic salary c. For all employees earning lesser than Rs 15000, it is mandatory d. The money goes into an account managed by the Employees

Provident Fund Organization (EPFO) and is meant to provide a lump sum benefit to workers upon retirement.

e. Employers must also contribute 12 per cent of their employees’ basic although about 70 per cent of the employers’ contribution goes into the Pension Scheme (EPS) while about 30 per cent goes into the EPF.

9. The benefit of contract labour are

1. It is cheaper to hire them 2. They do not form a part of formal labour hence the size of the firm essentially remains

unchanged 3. Since company has outsourced hiring of contract labour, it did not worry about

regulations, labour inspections of the contract laborers




Explanation-‐ It has been observed that hiring contract labour is 14% more expensive than the formal labor, but hiring contract labour has two advantages

a. The size of the firm remains same so it continues to enjoy same benefits/exemptions b. Since the function has been outsourced, the management and regulations of these

workers is the concern of the contract labour firm

10. In relation to contract labour and the firms, consider the following statements 1. In India hiring of contract labour has increased in the last decade 2. The same has been observed fir the world also 3. Hiring contract labour has not added to productivity




Explanation-‐because of regulatory cholesterol (slowness in labour reforms) hiring of contract labour has increased in India, the same has been observed around the world too. In case of manufacturing, contract labour increased from 12% to 25% during the period from 1999 to 2010. The contract labour has added 0.5% of GDP to the production.

11. Which of the following state has introduced labour reforms a. Punjab b. Uttar Pradesh c. Maharashtra d. Rajasthan


Explanation-‐The Rajasthan government has brought in reforms in Industrial Disputes atc, Contract labour act and factory act.

12. What a country export matters because 1. It contributes to growth 2. It leads to creation of employment 3. Manufacturing may branch out




Explanation-‐the manufacturing not only contributes to growth and creation of employment today, it will also lead to manufacturing branching out to produce more technologically superior goods with time


1. Apparel industry is an employment intensive industry 2. Fertilizer manufacturing industry is an employment intensive industry




Explanation-‐

a. The apparel industry is labour intensive as 30% of the costs are in the form of wages

b. In case of fertilizer manufacturing industry, 75-‐80% of the production costs are due to energy, hence it is not employment intensive

14. India should have been a leader in apparel industry because 1. It is capital intensive 2. It is labour intensive 3. Only a fraction of the costs are consumed by capital intensive inputs




Explanation-‐apparel industry is labour intensive wherein 25 to 30% of the costs are in the form of wages and only about 2-‐3% of the costs are consumed by capital intensive inputs like power. Hence India should have been a leader as both favor India

15. India has ceded global market share in apparel industry to following countries 1. Bhutan 2. Vietnam 3. Bangladesh




16. Consider the following statements on apparel sector 1. Apparel firms make the largest share of establishments in the informal sector 2. The formal sector more employment than the informal sector




Explanation-‐India’s apparel sector is dominated by informal firms (2 million in comparison to 2800 formal firms) hence; such apparel firms form the largest part of the informal sector. The formal apparel firms employ 330000 workers whereas informal firms employ 3.3 million workers.

17. Consider the following statements on apparel sector 1. The large number of informal apparel firms are because of one person establishments 2. Formal sector apparel firms are 15 times more efficient than informal firms




18. The apparel firms must be relocating to small cities will 1. Improve labour force participation of women 2. Contribute to growth 3. Commercially will favor the manufacturer.




Explanation-‐ The women participation in work is limited because there are no good jobs available near their houses but this apparel firm’s relocation would favor the participation of women, will also be commercially viable to manufacturers and contribute to growth. Hence is a win-‐win-‐win model.

19. The firms hire contract labour because a. It is cheaper to hire them b. They exhibit more loyalty towards the company c. Slowness of labour reforms d. None of the above


Explanation-‐Because of slowness in labour reforms especially the dismissal laws of IDA, the firms are forced to hire contract labour

20. Consider the following statements 1. It is cheaper to hire contract labour 2. The employer does not have any incentive to invest in the skill development of contract

labour


e. Only 1 is true f. Only 2 is true g. Both are true h. Both are false


Explanation-‐it is 14% more costly to hire a contract labour. Since the contract labour doesn’t owe any loyalty to the employer, he doesn’t have any incentive in training/skilling them.

21. Participation of women in paid work is important because 1. It contributes to growth 2. Investment in children’s health and education will increase




Explanation-‐If women participate in equal numbers as that of men, then the GDP growth will be more by 1.4%. There is also a correlation between paid employment of women and host of positive outcomes such as greater investment in children’s education and health

22. Presently EPF for calculation of taxes is treated as _____ a. EEE b. EET c. TET d. TTE


Explanation-‐The contribution, interest accrued and withdrawals all are exempt for taxation purposes hence EPF’s tax treatment is EEE

23. Consider the following regarding EPF 1. The employer has to pay an administrative charge as well as service tax 2. The EPFO has introduced Universal account Numbers for all employees




Explanation-‐in case of EPF, the employer incurs three costs-‐12% contribution, administrative charge of 0.85% of employee’s salary and service tax of about 3.54%.

EPFO has recently introduced various new initiatives-‐has introduced Universal account Numbers for all employees that are portable between employers, has reduced transaction costs.

TnL CA ES Question Bank -‐ Chapter 11 -‐ One India & Power Sector

1. India achieved complete grid integration in which year a. 2014 b. 2013 c. 2012 d. 2010


Explanation-‐ India achieved complete grid integration on 31st December 2013

2. Consider the following statements 1. Open access policy was introduced in Electricity Act of 2003 2. Under this consumers with any requirement can buy it directly in electricity markets




Explanation-‐ Open access policy was introduced in the Electricity Act of 2003. It allows the consumers having a requirement of more than 1 MW to purchase it directly from power exchanges.

3. Consider the following statements 1. Synchronization of grids will lead to establishment of vibrant electricity market 2. For planning and operational purposes, the grid in india are divided into 6 regional grids




Explanation-‐The integration of grids will lead to supply of power from one grid to another which will lead to a vibrant electricity market. For planning and operational purposes, India was demarcated into 5 regions namely Northern, Eastern, Western, North Eastern and Southern region.

4. The renewable energy targets have been revised to a. 150 GW by 2020 b. 175 GW by 2022 c. 172 GW by 2020 d. 150 GW by 2022


Explanation-‐The renewable energy targets has been revised from 32 GW to 175 GW by 2022 of which the respective components are –solar (100 GW) + Wind (60 GW) + Biomass and others (10GW) + small hydro projects (5 GW)

5. In which were the power exchanges set up a. 2010 b. 2012 c. 2008 d. 2007


Explanation-‐Open Access policy on electricity was announced in 2003 and to operationalized it power exchanges were set up in 2008, here the price discovery would happen though competitive bidding.

6. The peak level deficit for the year 2014-‐15 was a. 3.5% b. 3.0% c. 2.0% d. 2.4%


Explanation-‐Peak level deficit refers to the shortfall in the demand and supply of power during the peak levels such as summer.

7. The correct breakup of renewable energy targets is a. solar (120 GW) + Wind (40 GW) + Biomass and others (10GW) + small hydro projects (5

GW) b. solar (100 GW) + Wind (50 GW) + Biomass and others (20GW) + small hydro projects (5

GW) c. solar (80 GW) + Wind (60 GW) + Biomass and others (20GW) + small hydro projects (15

GW) d. solar (100 GW) + Wind (60 GW) + Biomass and others (10GW) + small hydro projects (5

GW)


8. recently the government has introduced a scheme to revitalize the distribution companies which is_________

a. UJALA b. UNNATI c. UDAY d. DDUGJY


Explanation-‐ The government of India has launched UJALA (Ujjwal Discom Assurance Yojana) to solve the debt problem of Discoms

9. Which of the following is/are the problem/s of power sector 1. Average tariffs in some cases is lesser than average cost of supplying 2. The only factor from this sector affecting Make In India is the variable quality of

electricity 3. AT&C losses are high


a. Only 1 is true b. Only 2 is true c. Only 2 and 3 d. All are true


Explanation-‐The power sector in India suffers from following problems

a. Complexity of tariff schedules prevents economic actors from responding sufficiently to price signals.

b. Average tariffs in some cases are set below the average cost of supplying electricity. c. High industrial tariffs and variable quality of electricity adversely affects ‘Make in India’.

d. Price and non-‐price barriers come in the way of single-‐nationwide electricity prices through open access.

e. Determination of progressive tariff schedules for domestic consumers. f. India suffers from high AT&C losses (25% for 2014-‐15)

10. The government has introduced which of the following scheme/s in the power sector

1. UDAY 2. IPDS 3. DDUGJY




Explanation-‐the government of India has introduced following schemes in the power sector

a. UDAY-‐Ujwal Discom Assurance Yojana b. DDUGJY-‐Deen Dayal Upadhyaya Gram Jyoti Yojana c. IPDS-‐Integrated Power Development Scheme d. DELP-‐Domestic Efficient Lighting Programme (renamed as UJALA in 2016) e. National Tariff Policy 2016

11. Which of the following is/are provision/s of DDUGJY

1. Providing 24*7 electricity to all by 2021-‐22 2. Electrification of all the villages 3. Reducing losses




Explanation-‐ DDUGJY has following provisions a. Electrification of all villages. b. Metering of unmetered connections for reducing losses. c. Separation of feeders to ensure sufficient electricity to agriculture and continuous

supply to other categories.

d. Improvement of sub-‐transmission and distribution network to improve the quality and reliability of supply.


1. POWERGRID was set up in 1991 2. The main function of this was distribution




Explanation-‐Powergrid was set up in 1989 and its main function has been transmission. (Electricity supply chain involves three activities-‐generation, transmission and distribution)


1. On 31st December 2013, Southern Region was connected to Central Grid with the commissioning of 765kV Raichur-‐Solapur Transmission line

2. With this India achieved 'ONE NATION'-‐'ONE GRID'-‐'ONE FREQUENCY'.




14. What are the provisions of the UDAY 1. The state government will take up all the debt of Discoms in one financial year 2. The state governments are allowed to issue bonds to take the debt 3. The states will not be compensated in any manner by the central government




Explanation-‐ Ujwal DISCOM Assurance Yojana (UDAY)

a. States shall take over 75 per cent of discom debt outstanding as of September 2015. b. Reduction of Aggregate Technical & Commercial (AT&C) losses to 15 per cent by 2018-‐

19. c. Reduction in difference between average cost of supply and average revenue realized

(ARR) by 2018-‐19 d. Increased supply of domestic coal to substitute for imported coal. e. States shall take over future losses of discoms in a phased manner. f. Banks/FIs not to advance short term debt to discoms for financing losses. g. States shall be compensated in the form of-‐priority funding under DDUGJY,IPDS etc;

they shall also get additional coal at notified prices etc

15. As per UDAY, AT&C losses must be brought down to a. 15% by 2018-‐19 b. 17% by 2020-‐21 c. 15% by 2022-‐23 d. 13% by 2018-‐19


16. Consider the following statements 1. UJALA scheme has been renamed as DELP 2. National Programme for LED has two components DELP and SLNP




Explanation-‐National Programme for LED has two components

1. DELP-‐Domestic Efficient Lighting Programme under which LED bulbs are distributed to households to replace all the incandescent bulbs. Recently it was renamed as UJALA (Unnat Jyoti by Affordable LEDs for All)

2. SLNP-‐Street Ligthing National Progrmme, wherein street lights will be replaced with LEDs

For the implementation of this scheme, the government has set up EESL (Energy Efficiency Services Limited).

17. As per the budget the target year for electrifying all the villages is a. 2018 b. 2019 c. 2020 d. 2022


18. As per the National Tariff policy the deadline for ensuring 24*7 electricity to all is a. 2019-‐20 b. 2020-‐21 c. 2021-‐22 d. 2022-‐23


Documents

TnLCAESQuestionBank$ 3$Chapter1 3$ … · The!performance!in!2015J16is!better!than!theprevious!year ! 2. Average!agriculture!growthinLaJNina!years!has!been!3.7%! Choose!the!correct!option!