February 12 – INDIAN ECONOMY

Welcome to your February 12 - INDIAN ECONOMY

Consider the following statements about Monetary Policy Committee (MPC):1. The MPC decides on different policy rates except Repo and Reverse Repo.

2. Of the six members in the MPC , the government will nominate three.
The following recommendations are associated with:

1. Public debt to GDP ratio should be considered as a medium-term anchor for fiscal policy in India.

2. The central government should reduce its revenue deficit steadily by 0.25 percentage (of GDP) points each year, to reach 0.8% by 2023.

Which of the statements given below are correct?1. Urea Subsidy Scheme is is wholly financed by Central Government of India through budgetary support.

2. Implementation of DBT in Fertilizer Sector will reduce diversion of fertilizers to non-agricultural use and plug leakages.

3. The government has made it mandatory for domestic fertilizer firms to “Neem coat” at least 75 percent of their urea production.
Identify the mechanism:It works through various instruments devised by the RBI to inject liquidity into the banking system when the system/institutions need cash as well as to absorb liquidity when the banking system has excess money. The central point of the mechanism is that liquidity injection is done through Repo operations and liquidity absorption from banks to the RBI is done through Reverse repo operations.
Which of the following statements are correct?1. An Asset Reconstruction Company is a specialized financial institution that buys the NPAs or bad assets from banks and financial institutions so that the latter can clean up their balance sheets.

2. The SARFAESI Act helps reconstruction of bad assets without the intervention of courts.

3. RBI has stipulated that ARCs must perform only restructuring and should not engage in any other financial activity.

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