Indian Economy MCQs

Notes:
The correct answer is “Letter of Credit.” A Letter of Credit (LC) is a financial document issued by a bank that guarantees payment to the exporter upon presentation of specified documents, such as shipping and insurance documents. This arrangement reduces risk for both parties in international trade, ensuring that the exporter receives payment and the importer receives the goods. LCs are widely used in global commerce, with the first recorded use dating back to the 12th century in the Mediterranean trade.

Notes:
All three statements are correct. The Market Stabilization Scheme was created to absorb surplus liquidity by issuing Treasury Bills and dated securities over and above the normal borrowing programme, subject to a ceiling. The proceeds are parked in the MSS Account, which is treated as part of the Consolidated Fund of India. Since these are government accounts, they fall within the audit scope of the Comptroller and Auditor General of India.

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There are 8 Core Industries or core sectors of the economy viz. coal, crude oil, natural gas, refinery products, fertilizer, steel, cement and electricity used in Index of Industrial Production (IIP).

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Transfer pricing refers to pricing of transactions between associated enterprises, specified in Section 92 of the Income Tax Act, 1961. India implemented transfer pricing provisions in 2001 to prevent shifting profits to low-tax jurisdictions by related parties. The law requires use of the arm’s length principle for cross-border and certain domestic transactions between related parties.

Notes:
The Mumbai-Ahmedabad High-Speed Rail corridor is a 508-kilometer project using Japan’s Shinkansen technology, featuring 12 stations across Maharashtra, Gujarat, and Dadra and Nagar Haveli. The National High Speed Rail Corporation Ltd. manages the project. As per official schedules, phased operations begin in 2027, with full end-to-end corridor operations targeted for 2029.

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The Directorate General of foreign Trade (DGFT) is the agency of the Ministry of Commerce and Industry of the Government of India, responsible for execution of the import and export Policies of India.

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The Doha Round negotiations collapsed in July 2008 over disagreements regarding the special safeguard mechanism (SSM) for developing countries in agriculture. The SSM was meant to allow developing nations to raise tariffs temporarily in response to import surges. India and China sought more flexibility, which the United States and others opposed, leading to a breakdown.

Notes:
Banaras Locomotive Works (BLW), formerly known as Diesel Locomotive Works, is located in Varanasi, Uttar Pradesh. BLW was established in 1956. It is the largest locomotive manufacturing facility in India. The unit was renamed BLW in October 2020. BLW manufactures electric locomotives including WAP-7 and WAG-9 models. The factory exports locomotives to countries like Sri Lanka, Myanmar, and Mozambique.

Notes:
Visakhapatnam Steel Plant is India’s first shore-based integrated steel plant. It is also known as Rashtriya Ispat Nigam Limited (RINL). The project was sanctioned in 1982, while the plant was commissioned in phases during the early 1990s. Located at Visakhapatnam in Andhra Pradesh, it was developed with foreign technological assistance and became a major steel production unit on India’s eastern coast.

Notes:
Primary capital markets are Organised markets that enable new issues of equity and debt to be traded.