Day-583 | Daily MCQs | UPSC Prelims | ECONOMICS

Answer: B
Explanation:
Statement 1 is correct: The first official set of estimates of national income for the entire India was compiled by the ‘National Income Committee’, a High-Powered Expert Committee set up by the Government of India under the Chairmanship of P.C. Mahalanobis in 1949. The estimates of national income and details of methodology adopted by the committee were published in the First and Final reports of the National Income Committee brought out in April 1951 and February 1954, respectively.
Before independence, several attempts were made to compute nation’s income by individual economists and research workers. But all these efforts were based essentially on macro-level data and involved several assumptions for want of requisite data and adequate resources.
Statement 2 is incorrect: The Central Statistics Office (CSO) introduced the new series of national accounts statistics in 2015 with base year 2011-12, in place of the previous series with base year 2004-05. The new series on National Accounts Statistics was introduced after a comprehensive review of both the database and the methodology employed in the estimation of various aggregates.
Statement 3 is correct: In 2015, significant changes were introduced in the methodology of capturing income of the informal sector by moving away from the conventional labour input (LI) method to an ‘effective labour input’ (ELI) method. Under the earlier LI method, various categories of labour such as owners, hired workers, and helpers were not differentiated by their marginal productivities. In contrast, the ELI method accounts for differential productivities of the workforce, based on weights.

Answer: D
Explanation
Statement I is incorrect but statement II is correct.
Transfer payments are the receipts which the residents of a country get for ‘free’, without having to provide any goods or services in return. They consist of gifts, remittances and grants. They could be given by the government or by the private citizens living abroad.
● These payments do not represent purchases of value, include zero consumption, and are not intended to bring material output. Therefore, they are excluded from the GDP, since nothing measurable gets generated.
Examples of transfer payments include:
● social security benefits
● state pension
● unemployment benefits
● civil service benefits
● survivor benefits
● public health services
Bonus received by employees is not part of transfer payments. It is a part of compensation of employees.

Answer: B
Explanation:
Statement 1 is incorrect: Providing free ration under the Pradhan Mantri Gareeb Kalyan Anna Yojana would result in increasing the expenditure of the government. This would increase the government’s fiscal deficit and not reduce it. Fiscal deficit is essentially excess of expenditure over the revenue, which is financed by borrowings.
Statement 2 is correct: Increase in the Goods and Services Tax rates on the luxury carmakers would result in increasing the revenue generation for the government and reduce fiscal deficit. An increase in revenue of the government gives it more space to undertake revenue as well as capital expenditures.
Statement 3 is correct: Proceeds from spectrum sale of 5G technology will generate non-tax revenue receipt for the government. Spectrum sale is a part of revenue receipt and not capital receipt because it neither reduces assets of the government, not it creates liability. It is treated as a one-time revenue receipt.

Answer: B
Explanation:
Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I
According to the World Bank’s Migration and Development Brief report, India retained its position as the largest recipient of remittances, with an estimated $125 billion in 2023.
This underscores the crucial role played by the Indian diaspora in supporting families and contributing to the country’s economic resilience.
● Apart from India, the top five remittance recipient countries include Mexico ($67 billion), China ($50 billion), the Philippines ($40 billion), and Egypt ($24 billion).
What is the Liberalised Remittance Scheme?
Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to $2,50,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both. This is a scheme for outward remittances.
● There are no restrictions on the frequency of remittances under LRS. However, the total amount of foreign exchange purchased from or remitted through, all sources in India during a financial year should be within the cumulative limit of $2,50,000.
Individuals can avail of foreign exchange facility for the following purposes within the LRS limit of $2,50,000 on financial year basis:
● Private visits to any country (except Nepal and Bhutan)
● Gift or donation
● Going abroad for employment
● Emigration
● Maintenance of close relatives abroad
● Travel for business, or attending a conference or specialised training or for meeting expenses for meeting medical expenses, or check-up abroad, or for accompanying as attendant to a patient going abroad for medical treatment/ check-up
● Expenses in connection with medical treatment abroad
● Studies abroad
● Any other current account transaction which is not covered under the definition of current account in FEMA 1999.
For inward remittances, Banks have general permission to enter into a partnership with other banks for conducting remittance business. The International Financial System platform of the Universal Post Union is generally used for the postal channel. Besides that, there are two more channels for receiving inward remittances, viz. Rupee Drawing Arrangement and Money Transfer Service Scheme.

Answer: B
Explanation:
Statement a is incorrect: India is one of the largest gold importers. Gold imports have to be paid through our foreign reserves. A reduction in the import duty on gold may lead to its higher demand that will translate to higher imports. This would impact the trade balance. Hence, current account deficit may deteriorate further.
Statement b is correct: Higher defence exports would improve the trade balance of the country. Thus, current account deficit can come down for a country.
● India’s defence exports have reached a record high of nearly Rs 16,000 crore in the fiscal year 2022-23, according to the Defence Ministry.
● The country’s indigenous defence industry has achieved this success by selling major defence systems, such as BrahMos missiles and Akash air defence systems.
Statement c is incorrect: The PM Matru Vandana Yojana is a maternity benefit scheme, providing Direct Benefit Transfer (DBT), or the direct transfer of financial subsidies, to pregnant lactating women to tackle the problem of undernourishment in women. Any increase in expenditure on the scheme will impact the fiscal deficit of the country.
Statement d is incorrect: RoDTEP (Refund of Duties and Taxes on Exported Products) is a flagship export promotion scheme of the Commerce Ministry of India. The scheme aims to refund to the exporters the embedded central, state and local duties and taxes paid on inputs that were so far not refunded or rebated.
● It is a scheme to promote exports and thus would help in improving trade balance and current account deficit. Its removal may impact the exports negatively.
● RoDTEP was announced in September 2019 with an aim to boost domestic exports and replace the export incentive scheme Merchandise Exports from India (MEIS) scheme.