Explanation:

Foreign Direct Investment (FDI)

Foreign Direct Investment (FDI) refers to the investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign company.

Characteristics of FDI

The major characteristic of FDI that sets it apart from other forms of international investment is that it is a largely non-debt creating capital flow. This means that unlike loans, bonds, or other forms of financial investment that require the borrower to make regular interest payments and eventually repay the principal amount (thus creating a debt obligation), FDI does not primarily involve borrowing money that needs to be repaid.

Instead, it represents an investment in the form of equity stakes, where the foreign investor becomes a part-owner of the business and earns returns in the form of profits, dividends, or appreciation of the investment value. This characteristic of FDI is beneficial for the host country as it does not increase the country’s external debt and interest liabilities, and it often brings additional benefits such as technology transfer, management know-how, and job creation.

Why the other options are incorrect:

a) “It is the investment through capital instruments essentially in a listed company.” – This statement is more aligned with portfolio investments rather than FDI. FDI can be made in both listed and unlisted companies and does not necessarily involve capital instruments in the stock market.

c) “It is the investment which involves debt-servicing.” – This is incorrect as FDI, by its nature, is equity-based and does not involve debt-servicing like loans or bonds.

d) “It is the investment made by foreign institutional investors in the Government securities.” – This describes foreign portfolio investment rather than FDI. Foreign institutional investors buying government securities is a form of portfolio investment, not direct investment in the productive capacity of another country.

Explanation:

1. Commercial Paper

‘Commercial Paper’ is a short-term unsecured promissory note. – This statement is correct. Commercial Paper (CP) is indeed a short-term, unsecured promissory note issued by high-rated corporations to meet their short-term liabilities, such as payroll, accounts payable, and inventories. It is a very common form of short-term borrowing and typically has a maturity period of less than one year.

2. Certificate of Deposit

‘Certificate of Deposit’ is a long-term instrument issued by the Reserve Bank of India to a corporation. – This statement is incorrect. A Certificate of Deposit (CD) is a short-term to medium-term financial instrument issued by banks and financial institutions to individuals, corporations, and other entities. They are not issued by the Reserve Bank of India (RBI) and are not specifically long-term; their maturity can range from a few weeks to a few years.

3. Call Money

‘Call Money’ is a short-term finance used for interbank transactions. – This statement is correct. Call Money is a very short-term loan, typically overnight, used by banks to meet their immediate liquidity needs. It is part of the money market and involves borrowing and lending between banks (interbank transactions).

4. Zero-Coupon Bonds

‘Zero-Coupon Bonds’ are the interest bearing short-term bonds issued by the Scheduled Commercial Banks to corporations. – This statement is incorrect. Zero-Coupon Bonds do not pay periodic interest (coupon) payments. Instead, they are issued at a discount to their face value, and the return to the investor is the difference between the purchase price and the face value at maturity. They can be issued by various entities, including governments and corporations, and their maturity can range from short to long-term. They are not specifically issued by Scheduled Commercial Banks to corporations.

Given the analysis, the correct statements are 1 and 3, making the correct answer:

c) 1 and 3 only

Explanation:

Procurement at Minimum Support Price (MSP)

In the case of all cereals, pulses, and oil-seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India. This statement is incorrect. While the government does set MSPs for various crops to provide a safety net to farmers, the procurement at MSP is not unlimited. The government and its agencies procure crops at MSP based on demand, storage capacities, and budgetary constraints. Additionally, not all crops procured at MSP are done so across all states and UTs; it often depends on the surplus production in a particular region and the central and state governments’ policies.

Market Price and Minimum Support Price (MSP)

In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise. This statement is also incorrect. The MSP is essentially a safety net intended to protect the farmer against any sharp fall in farm prices. It is not designed to cap the market price of these commodities. Market prices can and do rise above the MSP, influenced by factors such as demand and supply, quality of the produce, and market conditions. The MSP is set to ensure that farmers get a minimum profit for their harvest, but it does not prevent market prices from rising above these levels.

Therefore, neither of the statements provided is correct, making option d) the right choice.

Explanation:

1. Mekong — Andaman Sea:

The Mekong River actually flows into the South China Sea, not the Andaman Sea. Therefore, this pair is incorrectly matched.

2. Thames — Irish Sea:

The Thames River flows through southern England, including London, and eventually empties into the North Sea, not the Irish Sea. This pair is also incorrect.

3. Volga — Caspian Sea:

The Volga River is the longest river in Europe and it does indeed flow into the Caspian Sea. This pair is correctly matched.

4. Zambezi — Indian Ocean:

The Zambezi River is one of Africa’s longest rivers and it flows into the Indian Ocean. This pair is correctly matched.

Given the analysis above, the pairs that are correctly matched are:

• Volga — Caspian Sea
• Zambezi — Indian Ocean

Therefore, the correct answer is:

c) 3 and 4 only

Explanation:

Weightage of Food in CPI and WPI

The weightage of food in the Consumer Price Index (CPI) is higher compared to the Wholesale Price Index (WPI). This is because the CPI focuses on measuring the changes in the price level of a basket of consumer goods and services purchased by households. Food constitutes a significant portion of consumer expenses, especially in countries like India. On the other hand, the WPI measures the changes in the price of goods at the wholesale level and has a broader basket that includes manufactured goods. As a result, the relative weightage of food is lower in the WPI compared to the CPI. The weightage of food in CPI is far higher (approx. 46%) than in WPI (approx. 24%).

Difference in Capturing Price Changes

The WPI does not capture changes in the prices of services, whereas the CPI does. The WPI is solely focused on goods and does not include services, which are a significant part of the economy. In contrast, the CPI includes both goods and services, making it a more comprehensive measure of inflation from the consumer’s perspective.

Role of WPI and CPI in Monetary Policy

Contrary to the statement, the Reserve Bank of India (RBI) primarily uses the CPI as its main measure of inflation for policy purposes. This includes decisions on changing the key policy rates. The CPI is considered a more accurate reflection of the retail inflation experienced by consumers and is thus used for monetary policy formulation.

Therefore, the correct answer is 1 and 2 only.

Explanation:

Kisan Credit Card (KCC) Scheme

The Kisan Credit Card (KCC) scheme is designed to provide farmers with timely and adequate credit for their agricultural needs. The scheme covers various aspects of farming and related activities, but it is primarily focused on ensuring that farmers have the financial support they need for their cultivation needs, including the purchase of inputs, day-to-day operations, and dealing with unforeseen expenses.

Breakdown of Purposes

Based on the purposes listed in the question, here’s a breakdown:

1. Working capital for maintenance of farm assets – Yes, the KCC scheme provides support for working capital requirements, including maintenance of farm assets.
2. Purchase of combine harvesters, tractors, and mini trucks – The primary focus of the KCC scheme is on providing credit for short-term needs related to cultivation and other agricultural operations. While it may cover some aspects of mechanization, large scale financing for the purchase of heavy machinery like combine harvesters, tractors, and mini trucks typically falls under different financing schemes or loans specifically designed for agricultural equipment.
3. Consumption requirements of farm households – Yes, the KCC scheme allows for a certain portion of the credit to be used for the consumption requirements of farm households, recognizing that the well-being of the farmer is integral to agricultural productivity.
4. Post-harvest expenses – Yes, the scheme covers post-harvest expenses, acknowledging the importance of these costs in the overall agricultural cycle.
5. Construction of family house and setting up of village cold storage facility – The KCC scheme is not designed to finance long-term projects like the construction of family houses or setting up of village cold storage facilities. These types of projects would typically require a different form of financial assistance or loan.

Given the purposes outlined and the focus of the Kisan Credit Card scheme, the correct answer to the question is:

b) 1, 3, and 4 only

Explanation:

Group of Twenty (G20)

Group of Twenty (G20) is an international forum for the governments and central bank governors from 19 countries and the European Union (EU). The G20 aims to discuss policy pertaining to the promotion of international financial stability, and it seeks to address issues that go beyond the responsibilities of any one organization.

Members of the G20

The members of the G20 are:

1. Argentina
2. Australia
3. Brazil
4. Canada
5. China
6. France
7. Germany
8. India
9. Indonesia
10. Italy
11. Japan
12. Mexico
13. Russia
14. Saudi Arabia
15. South Africa
16. South Korea
17. Turkey
18. United Kingdom
19. United States
20. European Union (The EU is represented by the European Commission and by the European Central Bank.)

These members represent the world’s largest economies, including both industrialized and developing nations, covering about two-thirds of the world population, 85% of global gross domestic product (GDP), and over 75% of global trade. The G20’s significance lies in its ability to bring together the world’s major economies to discuss and promote high-level policy dialogue on key issues related to global economic stability.

Group of Countries in the G20

To determine which group of countries are all members of the G20, let’s examine each option:

a) Argentina, Mexico, South Africa, and Turkey

All of these countries are indeed members of the G20, which is a forum of the world’s major economies that includes 19 countries and the European Union.

b) Australia, Canada, Malaysia, and New Zealand

While Australia and Canada are members of the G20, Malaysia and New Zealand are not.

c) Brazil, Iran, Saudi Arabia, and Vietnam

Brazil and Saudi Arabia are members of the G20, but Iran and Vietnam are not.

d) Indonesia, Japan, Singapore, and South Korea

Indonesia, Japan, and South Korea are members of the G20, but Singapore is not.

Therefore, the correct answer is:

a) Argentina, Mexico, South Africa, and Turkey

Explanation:

India and Bangladesh Trade

Textiles and textile articles are a significant part of the trade between India and Bangladesh. India exports a substantial amount of cotton, apparel, and textile products to Bangladesh. The textile industry is a key sector in Bangladesh, and the country relies on imports of raw materials, especially from India, to support its garment manufacturing industry, which is one of the largest in the world.

Statement 1 is not correct: As per data from the Department of Commerce, Indo-Sri Lanka bilateral trade value for a decade (2007 to 2016) was 3.0, 3.4, 2.1, 3.8, 5.2, 4.5, 5.3, 7.0, 6.3, 4.8 (in billion USD). It reflects the continuous fluctuation in the trend of trade value.

Statement 3 is not correct: Bangladesh is India’s largest trading partner in South Asia

Explanation:

Factors/Policies Affecting the Price of Rice in India

1. Minimum Support Price (MSP)

The Government of India sets a minimum price for rice (and other crops) every year, known as the Minimum Support Price, at which it buys rice from the farmers, regardless of the market price. This policy is aimed at safeguarding the farmers from any sharp fall in the market price of rice. By setting an MSP, the government ensures that farmers get a minimum profit for their produce, which can lead to an increase in the price of rice in the market if the MSP is set higher than the prevailing market rates.

2. Government’s Trading

The government, through various agencies like the Food Corporation of India (FCI), also participates in the trading of rice. It buys rice from farmers at the MSP and sells it in the market or distributes it under various food security programs. This trading activity can influence the supply of rice in the market, thereby affecting its price. For instance, if the government decides to release more rice from its stocks into the market, it could lead to a decrease in rice prices, and vice versa.

3. Government’s Stockpiling

The government stockpiles rice for several reasons, including ensuring food security, stabilizing rice prices, and managing emergency situations. By holding significant quantities of rice, the government can influence rice prices. If the government stockpiles large amounts, it reduces the supply of rice in the market, which can lead to an increase in prices. Conversely, releasing rice from these stockpiles can help to lower prices.

4. Consumer Subsidies

The government provides rice at subsidized rates to a large section of the population under various welfare schemes, such as the Public Distribution System (PDS). These subsidies make rice affordable to the poor but can also influence market prices. By providing rice at lower prices, the demand for rice in the open market can be affected, which in turn can influence the market price of rice.

All these factors and policies are interconnected and play a significant role in determining the price of rice in India.

Explanation:

Interest Coverage Ratio (ICR)

The Interest Coverage Ratio (ICR) is a financial metric used to determine a company’s ability to pay the interest on its outstanding debt. It is calculated by dividing a company’s earnings before interest and taxes (EBIT) by its interest expenses for the same period. The formula is:

Interest Coverage Ratio = Earnings Before Interest and Taxes (EBIT) / Interest Expenses

Given the options and the explanation of what the Interest Coverage Ratio signifies, let’s evaluate each statement:

1. It helps in understanding the present risk of a firm that a bank is going to give loan to.

This statement is correct. The Interest Coverage Ratio is indeed used by lenders, including banks, to assess the risk level of lending to a firm. A higher ratio indicates that the firm is more capable of meeting its interest obligations from its operating income, which implies lower risk for the lender.

2. It helps in evaluating the emerging risk of a firm that a bank is going to give loan to.

This statement is also correct. The Interest Coverage Ratio can be used to evaluate not just the current, but also the potential future risk associated with lending to a firm. If a firm’s ICR is declining, it may indicate emerging risks that could affect the firm’s ability to service its debt in the future.

3. The higher a borrowing firm’s level of Interest Coverage Ratio, the worse is its ability to service its debt.

This statement is incorrect. The opposite is true; a higher Interest Coverage Ratio indicates a better ability of the firm to service its debt. It means the firm generates significantly more earnings relative to its interest obligations, which is a positive indicator of financial health.

Given the analysis, the correct answer is:

a) 1 and 2 only