Day-425 | Daily MCQs | UPSC Prelims | ECONOMICS

Answer: D
Explanation:
● Statement 1 is correct: It can be traded over the stock exchange and comes under the regulatory ambit of SEBI.
● Statement 2 is correct: REITs are allowed to invest only in commercial real estate properties and not in residential ones.
● Statement 3 is correct: It cannot invest in infrastructure projects pertaining to roads, power plants, highways, warehouses, etc.
Additional information: Real estate investment trusts (“REITs”) allow individuals to invest in large-scale, income-producing real estate. A REIT is a company that owns and typically operates income-producing real estate or related assets. These may include office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans. Unlike other real estate companies, a REIT does not develop real estate properties to resell them. Instead, a REIT buys and develops properties primarily to operate them as part of its own investment portfolio. Many REITs are registered with the SEC and are publicly traded on a stock exchange. These are known as publicly traded REITs. Others may be registered with the SEC but are not publicly traded. These are known as non- traded REITs (also known as non-exchange traded REITs).

Answer: B
Explanation:
● Statement 1 is correct: Devaluation of currency makes exports cheaper.
● Statement 2 is incorrect: It reduces the volume of imports.
● Statement 3 is correct: It lowers down the cost of a country’s debt.
● Statement 4 is correct: Devaluation can result in an increase in the prices of products and services that lead to inflation in the short term.
Additional information: Devaluation happens when a government makes monetary policy to reduce a currency’s value; on the other hand, depreciation happens as a result of supply and demand in a free foreign exchange market.
● External devaluation: When a country’s production costs are high, its goods and services become more expensive abroad than its competitors’ and lose competitiveness. By devaluing its currency against another, it can increase exports because its goods and services will cost less in the international market. This type of devaluation is a common mechanism to revive the economy. However, in general, it can only occur in countries that issue their own currency, not in countries that share a currency (like the eurozone).
● Internal devaluation: Internal devaluation can happen in many cases — especially when a country is a member of a common currency area (like the eurozone). Because the area cannot devalue its currency to be more competitive, it will directly reduce its production costs through such measures as lowering taxes, salaries or the price of public services. While economists’ opinions about internal devaluation vary, it ultimately has the same purpose as external devaluation: making goods and services cheaper to increase exports.

Answer: A
Explanation:
● Statement 1 is correct: It is registered under the Multi-State Co-operative Societies Act.
● Statement 2 is incorrect: It comes under the Ministry of Agriculture and Farmers Welfare.
● Statement 3 is incorrect: NAFED deals with pulses and oil seeds procurement and distribution.
while FCI deals with procurement and distribution of rice, wheat and coarse grains only.
Additional information: The National Agricultural Cooperative Marketing Federation of India Ltd (NAFED) is an apex organization of marketing cooperatives for agricultural produce in India, National Agricultural Cooperative Marketing Federation of India Ltd, Official website. It was founded on the birthday of Mahatma Gandhi on 2 October 1958 to promote the trade of agricultural produce and forest resources across the nation. It is registered under the Multi State Co-operative Societies Act. NAFED is now one of the largest procurement as well as marketing agencies for agricultural products in India. With its headquarters in New Delhi, NAFED has four regional offices at Delhi, Mumbai, Chennai and Kolkata, apart from 28 zonal offices in capitals of states and important cities. NAFED is the nodal agency to implement price stabilization measures under “Operation Greens”which aims to double the farmers’ income by 2022. NAFED along with FCI with proactive role of state governments also physically procures oilseeds, pulses and copra under the Price Support Scheme (PSS) which in turn is under the umbrella scheme of PM-AASHA. In 2008, it established National Spot Exchange, a Commodities exchange as a joint venture of Financial Technologies (India) Ltd. (FTIL).

Answer: B
Explanation:
● Statement 1 is correct: It is announced by the Central Government on recommendation of the Commission for Agriculture Costs and Prices (CACP).
● Statement 2 is correct: It is based on the recommendation of the Rangarajan Committee report on reorganizing the sugarcane industry.
● Statement 3 is incorrect: There is statutory backing for FRP for mandating their implementation under the provisions of the Sugarcane (Control) Order, 1966 issued under the Essential Commodities Act(ECA), 1955.
Additional Information: FRP is the price declared by the government, which mills are legally bound to pay to farmers for the cane procured from them. The payment of FRP across the country is governed by The Sugarcane Control order, 1966. It mandates payment within 14 days of the date of delivery of the cane. The concept of Statutory Minimum Price (SMP) of sugarcane was replaced with the ‘Fair and Remunerative Price (FRP)’ of sugarcane for 2009-10 and subsequent sugar seasons with the amendment of the Sugarcane (Control) Order, 1966 in 2009. The cane price announced by the Central Government is decided on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP) in consultation with the State Governments and after taking feedback from associations of the sugar industry. Under the FRP system, the farmers are not required to wait till the end of the season or for any announcement of the profits by sugar mills or the Government. The new system also assures margins on account of profit and risk to farmers, irrespective of the fact whether sugar mills generate profit or not and is not dependent on the performance of any individual sugar mill.

Answer: A
Explanation:
● The first three statements are correct as they give the right descriptions of the phrase in the question.
● The term ‘Hindu Growth Rate’ was first used by the late economist Raj Krishna in 1978 for India’s slow rate of economic growth during the 1950s to 1980s. During this period, the Indian economy averaged 3.5%.
● Statement III is the definition of the term ‘Hindu Growth Rate’.
Causes of ‘Hindu Growth Rate’
● India’s annual population growth rate was over 2 per cent, GDP growth rate was 3.5 per cent and so, the per-capita GDP growth rate was a meagre 1 per cent.
● Due to the socialist policies of state control and import substitution, the economy experienced slow growth.
Why the term ‘Hindu’?
● Raj Krishna was trying to link the Hindu philosophy of being minimalistic, non-competitive and content, with the growth rate. According to reports, several economists believed that the term “Hindu” was used to link the belief in Karma and Bhagya with the slow growth.
● However, later liberal economists and historians like Paul Bairoch rejected this connection and instead attributed the low growth rate to the then governments’ protectionist and interventionist policies.
● Hence, it cannot be conclusively told that the term is a purely economic expression.