UPSC 2017 Prelims Questions with Answers

Explanation

UPI allows direct bank-to-bank transfers without the need for intermediary wallets. This has led to a decline in mobile wallet transactions, as users and merchants prefer UPI for its seamless and direct approach. Options (b), (c) and (d) are incorrect:

While UPI has accelerated the adoption of digital payments but it is uncertain when or if physical cash will completely disappear. Cash is still widely used, and a full transition to digital payments would depend on many economic and social factors beyond just UPI’s impact. UPI enhances domestic digital transactions but its direct impact on a significant rise in FDI lacks strong evidence. UPI impact is limited as many beneficiaries withdraw DBT funds in cash soon after receiving them.

Explanation

The Small Finance Banks (SFBs) were established by the Reserve Bank of India (RBI) to further financial inclusion by providing essential banking services to underserved and un-served segments of the population.

Statement 1 is correct: Small Finance Banks (SFBs) focus on extending credit to micro and small enterprises, thereby supporting entrepreneurship and economic growth at the grassroots level.

Statement 2 is correct: SFBs aim to meet the unique needs of small and marginal farmers by offering tailored financial products and services which enhances agricultural productivity and rural development.

Statement 3 is incorrect: Though SFBs support small business units and micro-entrepreneurs but the specific emphasis on "young entrepreneurs" is not explicitly stated in the RBI’s guidelines.

Explanation

Statement 1 is correct: The primary function of the MPC is to determine the policy repo rate, which is the benchmark interest rate at which commercial banks borrow money from the RBI. This rate influences other interest rates in the economy

Statement 2 is incorrect: The MPC is a 6-member body consisting of: 3 members from the RBI, including the Governor (who acts as the chairperson). 3 external members nominated by the Government of India. Members are appointed for a four-year term

Statement 3 is incorrect: The MPC functions under the chairmanship of the Governor of the RBI, not the Union Finance Minister.

Explanation

Sathyamangalam Tiger Reserve (STR) is situated where the Western and Eastern Ghats converge. This region is home to a sizable tiger population and is adjacent to other landscapes dedicated to protecting tigers, including BRT, Bandipur, Mudumalai, and Nagarahole. The Nilgiri-Eastern Ghats Elephant Reserve includes this area as well. Due to its peculiar location, the tiger reserve offers a distinctive ecological landscape containing a wide variety and complex mix of vegetation and animals. The connectivity provided by Sathyamangalam also plays a crucial role in reducing human-wildlife conflict, preserving ecosystems, and supporting conservation initiatives.

Explanation

The Government of India Act, 1919 introduced dyarchy at the provincial level, dividing executive powers between the Governor and elected ministers. The system increased provincial authority, with the Governor as the chief executive. Subjects were divided into two lists: reserved and transferred. The reserved list (e.g., law and order, finance) was managed by the Governor and his executive council. The transferred list (e.g., education, health) was administered by ministers from the elected legislative council. This dual scheme of governance was known as ‘dyarchy’.

Explanation

The Butler Committee, chaired by Sir Harcourt Butler in 1927, investigated the relationship between British India and the princely states. Its 1929 report reaffirmed the doctrine of paramountcy, clarifying that the British Raj’s control over the princely states was not just contractual but a dynamic, evolving relationship shaped by history and policy. The committee recommended that the financial relationship between the Raj and the states should be fair.

Explanation

Option (a) is incorrect: Gharials inhabit deep fresh-water habitats, while crocodile species are found in both fresh-water and saltwater habitats. Bhitarkanika Mangroves is the home of saltwater crocodiles.

Option (b) is correct: Gharials (Gavialis gangeticus) are crocodiles native to the Indian subcontinent, recognized for their narrow snouts. They inhabit freshwater rivers, streams, and wet-lands, with the Chambal River in Madhya Pradesh, Rajasthan, and Uttar Pradesh being a prime location to see them. The National Chambal Sanctuary was established to protect and conserve this species, which has a significant population in the river. The Chambal River and its tributaries which flows through the states of Madhya Pradesh, Rajasthan, and Uttar Pradesh are one of the best places to see gharials in their natural habitat. The Chambal River is home to a significant population of gharials, and the National Chambal Sanctuary has been established to protect and conserve these magnificent creatures.

Option (c) is incorrect: Pulicat Lake is the second largest brackish water lake or lagoon in India after Chilika Lake while Gharials inhabit deep freshwater habitats.

Option (d) is incorrect: Deepor Beel is one of the largest fresh-water lakes in Assam and the State’s only Ramsar site besides being an Important Bird Area by Birdlife International. Till date no credible information has been found regarding Gharial population in Deepor beel.

Explanation

Statement 1 is correct: One of the primary objectives of the Goods and Services Tax (GST) is to replace multiple indirect taxes like VAT, service tax, excise duty, etc., that were levied by both the central and state governments. By creating a uniform tax structure, GST promotes the creation of a single national market, eliminating the cascading effect of taxes and simplifying the tax system.

Statement 2 is incorrect: GST is a domestic tax reform aimed at simplifying the indirect tax structure within India. It primarily affects internal trade and taxation and does not have a direct impact on the Current Account Deficit (CAD), which is influenced by factors like imports, exports, remittances, and foreign investments. While improved efficiency might contribute indirectly to exports, the effect on CAD would not be drastic.

Statement 3 is incorrect: While GST is expected to boost economic growth by improving tax compliance, reducing logistics costs, and promoting ease of doing business, claiming that it will enormously grow the economy to the extent that India will over-take China in the near future seems exaggerated and unrealistic. Goods and Services Tax (GST) Definition It is a comprehensive tax levied on the manufacture, sale, and consumption of goods and services. Established By the 101st Constitutional Amendment Act, on the lines of "One Nation One Tax". Powers The Parliament and the state legislatures have concurrent powers to implement GST Features Applicable on supply side Destination based Taxation Dual GST(Centre and the States simultaneously levying tax on a common base.) GST rates to be mutually decided(CGST, SGST & IGST) Multiple Rates Merged Taxes Central Value Added Tax, Additional Customs Duty, Special Additional Duty of Customs, Central Sales Tax, Service Tax, State VAT (Sales tax) Tax Slabs 5%, 12%, 18% and 28%. 3-Tiers of GST Centre levies the CENTRAL GST (CGST) State levies STATE GST (SGST) Centre levies INTEGRATED GST (IGST) on transactions IGST When the commodity is produced in one state and is traded to another state (interstate trade). In this case, the share of SGST should go to the consuming state (as the GST is a destination-based tax). Compensation Parliament will compensate for any loss faced by the state As per the GST Act, states are guaranteed compensation for any revenue shortfall below 14% growth (base year 2015-16) for the first five years ending 2022. GST compensation is paid using funds specifically collected as compensation cess- is levied on products considered to be sin or luxury goods. Input Tax Credit It is a mechanism to avoid cascading of taxes. It means at the time of paying tax on output, one can reduce the tax one has already paid on inputs and just pay the balance amount. Cross utilisation of input tax credit is available Reverse Charge Mechanism The receiver becomes liable to pay the tax, i.e., the chargeability gets reversed. Self-invoicing is to be done when you have purchased from an unregistered supplier and such purchase of goods or services falls under reverse charge. E-Way Bill System It is an electronic way bill for movement of goods which can be generated on the e-Way Bill Portal Objective:

Facilitate faster movement of goods.

Improve the turnaround time of vehicles.

It helps track intra-state as well as inter-state movements of goods of value exceeding Rs 50,000, for sales beyond 10 km in the Goods and Services Tax (GST) regime. Commodities Outside GST Alcohol for human consumption, Petroleum products, Electricity, The supply of goods to the SEZ, Supply of goods that come under zero rate Fresh vegetables, fresh milk, cereal, meat etc. Raw materials. NOTE: Lottery, Gambling and Betting are also taxable under the Goods and Services Tax (GST) Act, 2017 Advantages Disadvantages Lesser compliance (returns, maintaining books of record, issuance of invoices). A limited territory of business. Limited tax liability. No Input Tax Credit available to composition dealers High liquidity as taxes are at a lower rate. The taxpayer will not be eligible to supply non-taxable goods under GST such as alcohol and goods through an e-commerce portal.

Explanation

Option (c) is correct:

Permanent Settlement Started by Lord Cornwallis in 1793. Prevalent in Bengal, Bihar, Orissa, Varanasi (United Provinces), and Northern Karnataka. Covered 19% of British India. A new section of Zamindars was appointed who would provide 10/11th part of the revenue collected to the British while keeping the remaining. Ryotwari System Started by Thomas Munro and Alexander Reed in 1820. Started in the Baramahal district of Tamil Nadu and later spread to Madras, parts of Bombay, East Bengal, Assam and Coorg (Karnataka). Covered 51% of British India. Ryots (farmers) were given ownership and other rights over the land and were required to pay the revenue directly to the government. Involved high taxes and strict collection. Mahalwari System The Mahalwari system was introduced by Holt Mackenzie in 1822. Prevalent in United Provinces, Central Provinces and Punjab. Covered 30% of British India. The village or mahal served as the unit for collecting revenue. Village land belonged to the community and it was the responsibility of the entire community to pay the land revenue.

Explanation

The Trade Disputes Act 1929 was a British Act of Parliament passed to regulate industrial disputes in India. The main objective of the Act was to make provisions for the establishment of Courts of Inquiry(tribunals) and Boards of Conciliation with a view to investigate and settle trade disputes. Strikes and lockouts in public utility services were prohibited without prior notice. Such strikes were illegal and punishable under the Act. Motilal Nehru called it " The slavery of India Bill".