1. Consider the following statements regarding India’s foreign exchange reserves:
- Reserve Tranche with the IMF is a component of forex reserves.
- India’s forex reserves have been increasing continuously for the last seven years.
- India’s forex reserves have never touched $700bn.
Which of the above statements is/are correct:
a) 1 and 3
b) 2 and 3
c) 1 and 2
d) 1 only
Exp: The correct answer is (a) 1 and 3.
The first statement is correct. Reserve Tranche with the IMF is a component of forex reserves. Reserve Tranche refers to the amount of funds that a member country of the International Monetary Fund (IMF) is permitted to access without any conditions or requirements. It is a part of a country's overall foreign exchange reserves.
The second statement is incorrect. While India's forex reserves have been increasing over the last few years, it is not accurate to say that they have been increasing continuously for the last seven years. In fact, India's forex reserves declined in 2018 and then started increasing again.
The third statement is correct. India's forex reserves have never touched $700bn. The highest level of forex reserves India has ever held was around $642bn, which was reached in September 2021.
2. Consider the following statements regarding the debt-payment record of central government of India.
- Fiscal deficit has never crossed 10% of GDP for India.
- India has never defaulted on its forex debt obligation.
- Government of India borrows more from foreign entities than domestic entities.
Which of the above statements is/are correct:
a) 1 only
b) 2 and 3
c) 3 only
d) 1 and 2
Exp: The correct answer is (d) 1 and 2.
The first statement is correct. Fiscal deficit, which is the difference between the government's total spending and its total revenue, has never crossed 10% of GDP for India. However, it has come close to this limit in certain years, such as during the global financial crisis in 2008-09 and Covid-19 pandemic.
The second statement is also correct. India has never defaulted on its forex debt obligation. In fact, India has a good track record of meeting its external debt obligations on time, which has helped to maintain investor confidence in the country.
The third statement is incorrect. The Government of India borrows more from domestic entities than foreign entities. While India does borrow from foreign sources, such as multilateral agencies and sovereign bonds, the majority of its debt is sourced domestically through instruments such as government bonds and treasury bills.
3. Consider the following statements about NITI Aayog’s national Multidimensional Poverty Index.
- It found 25.01% of India's population as multidimensionally poor.
- The index is developed by NITI Aayog in collaboration with Oxford Poverty and Human Development Initiative only.
Which of the statement(s) given above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
Exp: Statement 1 is correct. The recently released NITI Aayog’s national multidimensional poverty index found that 25.01% of India's population is still multidimensionally poor. Bihar has the highest multidimensionally poor people and Kerala has the lowest percentage of multidimensionally poor people.
Statement 2 is incorrect. The index is developed by NITI Aayog in collaboration with Oxford Poverty and Human Development Initiative and United Nations Development Program. And it has the same three dimensions viz health, standard of living and education.
4. Fincluvation initiative to collaborate with fintech startups to co-create innovative solutions for financial inclusion is launched by:
a) India Post Payments Bank
b) Reserve Bank of India
c) Niti Aayog
d) Economic Advisory Council
Exp: Fincluvation is an initiative launched by the India Post Payments Bank to collaborate with the Fintech Startup community to co-create and innovate solutions for financial inclusion. It will be a permanent platform of IPPB to co-create financial solutions with start-ups. IPPB (launched in 2018) was established under the Department of Posts, Ministry of Communication with 100% equity owned by the Government of India.
5. It is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. It is a decentralized system for verifying that the parties to a transaction have the money they claim to have, eliminating the need for traditional intermediaries, such as banks, when funds are being transferred between two entities. Individual ownership records are stored in a digital ledger.
Which of the following best fits the above description?
a) Digital Money
b) Electronic Money
A Cryptocurrency is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. It is a decentralized system for verifying that the parties to a transaction have the money they claim to have, eliminating the need for traditional intermediaries, such as banks, when funds are being transferred between two entities.
Individual coin ownership records are stored in a digital ledger, which is a computerized database using strong cryptography to secure transaction records, control the creation of additional coins, and verify the transfer of coin ownership.
Despite their name, cryptocurrencies are not considered to be currencies in the traditional sense, and while varying treatments have been applied to them, including classification as commodities, securities, and currencies, cryptocurrencies are generally viewed as a distinct asset class in practice.
A central bank digital currency (CBDC) (also called digital fiat currency or digital base money) is a digital currency issued by a central bank, rather than by a commercial bank. It is also a liability of the central bank and denominated in the sovereign currency, as is the case with physical banknotes and coins.
Rather than a new currency, CBDC is a form of central bank electronic money that could be used by households and businesses to make payments.
While decentralisation is often thought to promote local democracy, it may not always have that effect. Specifically, in cases where there are significant local disparities, decentralisation can sometimes exacerbate the concentration of power and dissuade participation from marginalised groups. For example, in certain tribal regions where affluent landlords and merchants from higher castes wield substantial influence over village matters, the delegation of power linked with the Panchayati Raj amendments has strengthened their control and perpetuated prevailing biases in the local power dynamics.
6. Which one of the following statements best reflects the most critical inference that can be made from the passage given above?
a) Local democracy should precede efforts to decentralisation of power.
b) Decentralisation and local democracy are quite distinct conceptualisations.
c) Without social democracy, political democracy is not possible
d) Decentralisation and local democracy are not mutually independent.
Exp: Decentralisation and local democracy are quite distinct conceptualisations.
Passage – 2
Agrobiodiversity refers to the variety of crops and livestock on which our lives depend. Farmers all over the world have been constantly improving it since agriculture began more than 10,000 years ago. This diversity of crops and livestock adapted to local conditions has made it possible for millions of people in rural areas to survive under some extremely difficult ecological conditions. Traditional agrarian landscapes managed in accordance with site conditions also provide a multiplicity of services for society as a whole, such as plant pollination and stable water catchment areas, and are thus critical to human life on earth. But this diversity is under threat. Like biological diversity, agricultural diversity is disappearing at an alarming rate. Often it is the unsustainable production methods of these very same farmers which are responsible for the massive losses of species we are seeing today. This not only compromises the productivity of agriculture, but also its potential to adapt to changing conditions. In times of climate change in particular, the genetic diversity of plants and animals has a crucial role to play.
7. Why conservation of agrobiodiversity is crucial as per the passage ?
a) It acts as an insurance against future threats to the world’s food supply
b) It has been the practise of earliest humans who demonstrated such possibilities of survival
c) It helps in increasing and sustaining the productivity levels of dry farming
d) Without conserving agriculture, biodiversity cannot be conserved
Exp: It acts as an insurance against future threats to the world’s food supply
Cover the entire CSAT syllabus in 70 hours.