Day-715 | Daily MCQs | UPSC Prelims | ECONOMY

Answer: A
Explanation:
Statement 1 is correct: Defence exports have touched a record Rs 21,083 crore (approx. US$ 2.63 Billion) in the financial year 2023-24, a growth of 32.5% over the last fiscal when the figure was Rs 15,920 crore. The recent figures indicate that the defence exports have grown by 31 times in the last 10 years as compared to FY 2013-14.
Statement 2 is incorrect: The defence Industry, including the private sector and Defence Public Sector Undertakings (DPSUs), have made tremendous efforts in achieving the highest-ever defence exports. The private sector and the DPSUs have contributed about 60% and 40%, respectively.
• A comparative data of two decades i.e. the period from 2004-05 to 2013-14 and 2014-15 to 2023-24 reveals that there has been a growth of 21 times in the defence exports. Total defence exports during 2004-05 to 2013-14 were Rs 4,312 crore, which has gone up to Rs 88,319 crore in the period from 2014-15 to 2023-24.
• However, India continued to be the world’s largest arms importer.

Answer: C
Explanation:
Statement-I is correct: Credit ratings are divided into “Investment Grade”, “Speculative” or “Default” categories. When evaluating the creditworthiness of a country, credit rating agencies consider various factors such as the political environment, economic status, and its creditworthiness to assign an appropriate credit rating.
India is not merely the world’s fastest-growing major economy, its ability to repay external debt is exceptionally good. India holds over $600 billion in foreign exchange reserves, its public debt is mostly in Indian rupees, its banking system is well capitalised and its corporate sector is profitable. Even with the tag of being the fastest-growing major economy and being called a ‘bright spot’ in the global economy, sovereign investment ratings for India have remained the same for a long time. Both Fitch Ratings and S&P Global Ratings have kept India’s credit rating unchanged at ‘BBB- with stable outlook’. Moody’s maintains it at Baa3. These are the lowest rungs of investment grading.
Statement-II is incorrect: As stated by the Finance Ministry, India’s public debt-to-GDP ratio has barely increased from 81% in 2005-06 to 84% in 2021-22, and is back to 81% in 2022-23.
According to a recent IMF report (International Monetary Fund), India’s general government debt, including the Centre and States, could be 100% of GDP under adverse circumstances by fiscal 2028. This created a controversy, with the government refuting the IMF projections as “a worst-case scenario and is not fait accompli”.
General government debt/public debt includes debt of both the Centre and the state governments.

Answer: B
Explanation:
Only recurring deposits and fixed deposits can be classified as time deposits. A time deposit is an interest-bearing bank account that has a specific date of maturity.
• Recurring deposits entails depositing a fixed amount of money at regular intervals for the predetermined period. The minimum and maximum duration of RDs are 6 months and 10 years, respectively. Withdrawal can be done after the tenure expires. Premature withdrawal can attract penal charges. Hence, it is a time deposit.
• Savings accounts allow a person to deposit and withdraw money freely, whenever the money is needed. There are no penalties involved.
• Current accounts are similar to savings accounts but may offer additional features like check writing and a debit card. They are designed for everyday transactions.
• Fixed deposits (FDs) lock the money for a specific term (ranging from a few weeks to several years). In return for committing the money for a fixed period, a higher interest rate compared to savings accounts is also earned. Premature withdrawal invites penalty.

Answer: A
Explanation:
Statement 1 is correct: Alternative Investment Fund or AIF is a privately pooled investment vehicle that invests in alternative asset classes such as private equity, venture capital, hedge funds, real estate, commodities, and derivatives. Generally, HNIs (High net worth individuals) and institutions invest in the AIFs as the investment amount is substantially higher.
Statement 2 is incorrect: AIFs are regulated by the SEBI (Securities and Exchange Board of India). As per the SEBI (Alternative Investment Funds) Regulations, 2012, an AIF can be set up as a trust, a company, a limited liability partnership, or a corporate body. However, many of the AIFs that have been registered with SEBI are in the form of trusts.
Statement 3 is incorrect: AIFs are unrelated to the stock market and, hence, are less volatile than other investments like equity or mutual funds’ investments.
• Investing in AIFs may not be an ideal option for small investors who want to invest a small amount regularly, as investing in AIFs requires a big chunk of corpus. AIFs are generally considered suitable for individuals with huge corpus, like HNIs (High net worth individuals), who are willing to take a higher risk and can invest a substantial corpus in one go.

Answer: A
Explanation:
The government recently warned about “drip pricing”, saying it can surprise consumers with “hidden charges” and advised them to seek assistance if they encounter such surges in charges on a product’s MRP (maximum retail price).
The charges often involve withholding essential fees like local taxes or booking charges, or omitting necessary add-ons like internet access or amenities, which may be required for product or service usage.
• Drip pricing complicates comparison shopping and disadvantages sellers who provide more transparent pricing structures.
• Drip pricing forms a part of “Dark Patterns” that involve using design and choice architecture to deceive, coerce, or influence consumers into making choices that are not in their best interest. Dark patterns encompass a wide range of manipulative practices such as drip pricing, disguised advertisement, bait and switch, false urgency, etc.
Such practices fall under the category of “unfair trade practices” as defined under the Consumer Protection Act, 2019.
• The Central Consumer Protection Authority, recently, in exercise of the powers conferred by Section 18 of the Consumer Protection Act, 2019, has issued “Guidelines for Prevention and Regulation of Dark Patterns”.
• The Department of Consumer Affairs has also notified the Consumer Protection (E commerce) Rules, 2020 under the provisions of the Consumer Protection Act, 2019. These rules inter-alia outline the responsibilities of e-commerce entities and specify the liabilities of marketplace and inventory e-commerce entities, including provisions for customer grievance redressal.