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General Science ➤ Economics ➤ 2
Question 21
Q21.  States earn maximum revenue through
 

Answer :  commercial taxes


States earn maximum revenue through commercial taxes.

Commercial Tax, currently referred to as Goods and Services Tax (GST) in India, is a tax that is levied on locally manufactured and imported goods and services, and contributes to the GDP of the country. However, there are certain exclusions under commercial tax. Also known as consumer tax, it is not applicable on zero-rated goods, that is, food and certain drugs, or exported goods.
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Question 22
Q22.  On July 12, 1982, the ARDC was merged into
 

Answer :  NABARD


On July 12, 1982, the ARDC was merged into NABARD.

National Bank for Agriculture and Rural Development (NABARD) is an Apex Development Financial Institution in India. It is an institution fully owned by Government of India, headquartered at Mumbai with regional offices all over India. The Bank has been entrusted with "matters concerning Policy Planning and Operations in the field of credit for Agriculture and other Economic activities in Rural areas in India". NABARD is active in developing Financial Inclusion policy.

NABARD was established on the recommendations of B.Sivaraman Committee, (by Act 61, 1981 of Parliament) on 12 July 1982 to implement the National Bank for Agriculture and Rural Development Act 1981. It replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of India, and Agricultural Refinance and Development Corporation (ARDC).
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Question 23
Q23.  If the cash reserve ratio is lowered by the RBI, its impact on credit creation will be to
 

Answer :  increase it


If the cash reserve ratio is lowered by the RBI, its impact on credit creation will be to increase it.

Cash Reserve Ratio (CRR) is the share of a bank’s total deposit that is mandated by the Reserve Bank of India (RBI) to be maintained with the latter in the form of liquid cash.

Cash Reserve Ratio (CRR) is one of the main components of the RBI’s monetary policy, which is used to regulate the money supply, level of inflation and liquidity in the country. The higher the CRR, the lower is the liquidity with the banks and vice-versa.

When the RBI decides to increase the Cash Reserve Ratio, the amount of money that is available with the banks reduces. This is the RBI’s way of controlling the excess flow of money in the economy. The cash balance that is to be maintained by scheduled banks with the RBI should not be less than 4% of the total NDTL, which is the Net Demand and Time Liabilities. This is done on a fortnightly basis.

During high levels of inflation, attempts are made to reduce the flow of money in the economy. For this, RBI increases the CRR, lowering the loanable funds available with the banks. This, in turn, slows down investment and reduces the supply of money in the economy. As a result, the growth of the economy is negatively impacted. However, this also helps bring down inflation.

On the other hand, when the RBI needs to pump funds into the system, it lowers CRR. which increases the loanable funds with the banks. The banks thus extend a large number of loans to businesses and industry for different investment purposes. It also increases the overall supply of money in the economy. This ultimately boosts the growth rate of the economy.
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Question 24
Q24.  In the state of India, the State Financial Corporation have given assistance mainly to develop
 

Answer :  medium and small-scale industries


In the state of India, the State Financial Corporation have given assistance mainly to develop medium and small-scale industries.

The State Finance Corporations (SFCs) are an integral part of institutional finance structure of a country. Where SFC promotes small and medium industries of the states. Besides, SFC help in ensuring balanced regional development, higher investment, more employment generation and broad ownership of various industries.

At present in India, there are 18 state finance corporations (out of which 17 SFCs were established under the SFC Act 1951). Tamil Nadu Industrial Investment Corporation Ltd. which is established under the Company Act, 1949, is also working as state finance corporation.
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Question 25
Q25.  The first wholly Indian Bank was set up in
 

Answer :  1894


The first wholly Indian Bank was set up in 1894.

The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in Faizabad. It failed in 1958.

The next was the Punjab National Bank, established in Lahore in 1894, which has survived to the present and is now one of the largest banks in India.
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