UPSC 2013 Prelims Questions with Answers

Explanation

Statement 1 is incorrect: In accordance with Article 64 of the Constitution of India, the Vice President of India is the ex-officio Chairman of Rajya Sabha. The House also elects a Deputy Chairman from among its members. Hence, the Deputy Chairman of the Rajya Sabha is the member of that house.

Statement 2 is correct: The Vice President is elected indirectly by an electoral college consisting of all members of parliament (Both elected & nominated). The election is conducted in accordance with the system of proportional representation by means of single transferable vote.

Explanation

Water is an indispensable resource for various indus-trial processes. In India, different industries use water in varying amounts, but the thermal power sector stands out as the high-est consumer due to its extensive cooling and steam generation requirements. While engineering, paper and pulp, and textiles industries do require water for various operations such as manufacturing, cleaning, and processing, their water consumption is comparatively much lower than that of thermal power plants.

Explanation

Statement 1 is incorrect: Parliamentary Committee on Public Accounts consists of 22 members of which 15 are from Lok Sabha and 7 from Rajya Sabha. It is formed every year with its members serving one-year terms in office. The chairperson of the PAC is usually a member of the opposition party in the Lok Sabha.

Statement 2 is correct: It scrutinises appropriation and finance accounts of the Government. The Committee ensures that the government does not misuse or misappropriate public funds.

Statement 3 is correct: The CAG audits the accounts of the government and submits reports to Parliament which is scrutinized by PAC to ensure that public funds are being used efficiently and according to the law. CAG acts as a guide, friend and philosopher of the committee.

Explanation

Statement 1 is incorrect: As per Article 75(3) of the constitution "the Council of Ministers shall be collectively responsible to the House of the People" not to the whole Parliament which includes both Rajya Sabha and Lok Sabha.

Statement 2 is correct: Article 75(2) of the Constitution of India mandates that the Ministers shall hold office during the pleasure of the President.

Statement 3 is correct: According to Article 78, it is the duty of the Prime Minister to communicate to the President all decisions of the Council of Ministers relating to the administration of the affairs of the union and proposals for legislation.

Explanation

Money Bill is defined under Article 110 of the Indian Constitution. It is concerned with financial matters like the imposition, abolition, remission, alteration or regulation of any tax. It is introduced only on the recommendation of the President and only in Lok Sabha. It must be passed in Lok Sabha by a simple majority of all members present and voting. Following this, it may be sent to the Rajya Sabha for its recommendations. Rajya Sabha has limited power with respect to money bills so no chance of any disagreement. Rajya Sabha can keep it for a maximum period of 14 days.The Rajya Sabha cannot amend or reject the bill. It should return the bill with or without recommendation. Lok Sabha may accept or reject recommendation.

Explanation

The Parliament is empowered to make laws on all matters listed in the Union List and the Concurrent List of the Constitution. Under Article 253 of the Constitution of India, Parliament can make laws for the whole or any part of India to give effect to international treaties, agreements, or conventions, and this can be done without the consent of any State. Article 253 says that it can also formulate laws on any matter pertaining to the State List if it is deemed necessary for the implementation of international treaties or agreements concluded with foreign nations. This is a unique provision where Parliament can legislate beyond its usual jurisdiction without requiring the consent of the states.

Explanation

The idea of a constituent assembly was put forward for the first time by M N Roy. The Indian National Congress (INC) first formally requested a constituent assembly to draft an Indian constitution in 1935. Representatives of each community were to be elected by members of that community in the provincial legislative assembly and voting was to be by the method of proportional representation by means of single transferable vote. In case of princely states, the heads of princely states were supposed to nominate the representatives.

Explanation

Option (a) is incorrect: A fall in the price level (deflation) is not a direct result of increased demand for money with an unchanged supply. A fall in prices (deflation) is more likely to occur when there is a decrease in demand for money or an increase in the supply of money.

Option (b) is correct: When the supply of money remains constant and the demand for money increases, the equilibrium interest rate rises. This is because with higher demand and a fixed supply of money, individuals and businesses are willing to pay more for the same amount of money which leads to higher interest rates. The demand for money is inversely related to the interest rate: as interest rates rise, the cost of holding money increases, reducing the demand. Conversely, lower interest rates make holding money cheaper, increasing demand.

Option (c) is incorrect: A decrease in interest rates would occur if there was a decrease in the demand for money or an increase in the supply of money.

Option (d) is incorrect: Although changes in interest rates can influence economic activity, an increase in the demand for money with a constant supply primarily affects interest rates directly. The impact on income and employment depends on multiple other economic factors and is not an immediate consequence.

Explanation

Option (c) is correct: Open Market Operations (OMOs) refer to the purchase and sale of government securities (G-Secs) by the Reserve Bank of India (RBI) in the open market to regulate the money supply in the economy. Role of OMOs in Monetary Policy:

Monetary Policy RBI Action Effect on Economy Expansionary (Loose Monetary Policy) Buys Government Securities Injects more money into the economy, lowers interest rates, encourages borrowing & investment. Contractionary (Tight Monetary Policy) Sells Government Securities Absorbs excess liquidity, increases interest rates, reduces inflationary pressure.

Option (a) is incorrect: Borrowing by scheduled banks from the RBI is part of the Liquidity Adjustment Facility (LAF).

Option (b) is incorrect: Commercial banks lending to businesses is a part of credit policy.

Explanation

Priority Sector Lending (PSL) is a mandated policy by the Reserve Bank of India (RBI) that requires banks to allocate a certain percentage of their total lending to economically and socially important sectors that may not get adequate credit otherwise. RBI Mandate on PSL:

Domestic Banks & Foreign Banks (with 20+ branches):

Minimum 40% of total lending should go to priority sectors. Small Finance Banks & Regional Rural Banks (RRBs):

Minimum 75% of total lending under PSL.

Sectors Covered Under PSL:

Category Examples

1. Agriculture Loans to farmers, self-help groups (SHGs), agricultural infrastructure

2. Micro, Small & Medium Enterprises (MSMEs) Loans for small businesses, startups, working capital needs

3. Export Credit Loans to exporters, incentives for foreign trade

4. Education Student loans for higher education in India and abroad

5. Housing Affordable housing loans, low-income group housing

6. Weaker Sections SC/ST, women, self-employed, artisans, etc.

7. Renewable Energy Loans for solar, wind, biomass energy projects

8. Social Infrastructure Schools, hospitals, sanitation projects