[Mission 2022] QUIZ – 2022: INSIGHTS STATIC QUIZ, 26 May 2022 – Economy – INSIGHTSIAS

Solution: c)

What is the Kostak rate?

It relates to an IPO application. So, the rate at which an investor buys an IPO application before the listing is termed the Kostak rate.

Solution: a)

The debt-to-GDP ratio indicates how likely the country can pay off its debt. Investors often look at the debt-to-GDP metric to assess the government’s ability of finance its debt. Higher debt-to GDP ratios have fuelled economic crises worldwide.

The NK Singh Committee on FRBM had envisaged a debt-to-GDP ratio of 40 per cent for the central government and 20 per cent for states aiming for a total of 60 per cent general government debt-to-GDP

Solution: c)

What is cess?

• It is a form of tax levied or collected by the government for the development or welfare of a particular service or sector.
• It is charged over and above direct and indirect taxes.
• Cess collected for a particular purpose cannot be used for or diverted to other purposes.
• It is not a permanent source of revenue for the government, and it is discontinued when the purpose levying it is fulfilled.
• Currently, the cess and surcharge collected by the Centre are not part of the tax devolution.
• Examples: Education Cess, Swachh Bharat Cess, Krishi Kalyan Cess etc.

Solution: c)

Structural change represents the fundamental changes that occurring in the basic features of the economy over a long period.

Development is described as growth plus structural changes. Structural changes constitute to the most important part of development.

Structural changes refer to long term and persistent shifts in the sectoral composition of economic systems.

Structure of an economy refers to the fundamental features of the economy like the size of the primary, secondary and tertiary sectors in terms of their contribution to GDP and employment. Other important elements of structure are trade composition (the items that we export and import), saving GDP ratio (level of savings as a percent of GDP) etc. Structure of the economy thus means the occupational structure, sectoral distribution of income, industrial pattern, composition of exports, saving- GDP ratio etc.

Solution: d)

National Small Savings Fund (NSSF):

• A “National Small Savings Fund” (NSSF) in the Public Account of India has been established with effect from 1.4.1999.
• All small savings collections are credited to this Fund.
• Similarly, all withdrawals under small savings schemes by the depositors are made out of the accumulations in this Fund.
• The balance in the Fund is invested in Central and State Government Securities.
• The investment pattern is as per norms decided from time to time by the Government of India.
• The Fund is administered by the Government of India, Ministry of Finance (Department of Economic Affairs) under National Small Savings Fund (Custody and Investment) Rules, 2001, framed by the President under Article 283(1) of the Constitution.
• The objective of NSSF was to de-link small savings transactions from the Consolidated Fund of India and ensure their operation in a transparent and self-sustaining manner.
• Since NSSF operates in the public account, its transactions do not impact the fiscal deficit of the Centre directly.
• As an instrument in the public account, the balances under NSSF are direct liabilities and constitute a part of the outstanding liabilities of the Centre.
• The NSSF flows affect the cash position of the Central Government