Department of Investments and Public Asset Management (DIPAM) acts as a nodal department for disinvestment.
Which of the statements given above is/are correct?
Correct Answer:
(B)
2 only
The policy on disinvestment gathered steam, when a new Department of Disinvestment was created in 1999, which became a full Ministry in 2001.
Ministry of Disinvestment was formed in 2001
But in 2004, the ministry was shut down and was merged in the Finance ministry as an independent department.
Later, the Department of Disinvestments was renamed as Department of Investments and Public Asset Management (DIPAM) in 2016.
Now, DIPAM acts as a nodal department for disinvestment.
Ques:
12
Consider the following pairs:
Further Public Offering (FPO) - Offer of shares by a listed Public Sector Enterprise (PSE) or the Government to the public for subscription.
Institutional Placement Program (IPP) - Offer of shares by an unlisted Public Sector Enterprise (PSE) or the Government to the public for subscription for the first time.
Which of the following pairs is/are correctly matched:
Correct Answer:
(A)
1 only
Initial Public Offering (IPO) - Offer of shares by an unlisted Public Sector Enterprise (PSE) or the Government to the public for subscription for the first time.
Further Public Offering (FPO) - Offer of shares by a listed Public Sector Enterprise (PSE) or the Government to the public for subscription.
Offer for Sale (OFS) - Auction of shares by promoters through the Stock Exchange platform. This method has been extensively used by the Government since 2012.
Strategic Sale - Sale of a substantial portion of Government shareholding (up to 50% or as determined) of a PSE along with transfer of management control.
Institutional Placement Program (IPP) - Offering where only Qualified Institutional Buyers can participate. These buyers are perceived to possess the expertise to invest in capital markets.
CPSE Exchange Traded Fund (ETF) - Disinvestment through the ETF route allows the simultaneous sale of the Government’s stake in various PSEs across diverse sectors through a single offering.
Ques:
13
Consider the following pairs:
Minority Disinvestment: The government retains a majority in the company, typically greater than 51%, thus ensuring management control.
Majority Divestment: 100% control of the company is passed on to the buyer.
Which of the pairs given above is/are correct?
Correct Answer:
(A)
1 only
Minority Disinvestment: The government retains a majority in the company, typically greater than 51%, thus ensuring management control.
Majority Divestment: The government hands over control to the acquiring entity but retains some stake.
Complete Privatisation: 100% control of the company is passed on to the buyer.
Ques:
14
Which one of the following is the primary objective of the Fiscal Responsibility and Budget Management Act (FRBM Act)?
Correct Answer:
(C)
It aims to reduce public debt and promote fiscal sustainability.
The primary objective of the Fiscal Responsibility and Budget Management Act (FRBM Act) is to reduce public debt and promote fiscal sustainability.
The FRBM Act was enacted in 2003 with the aim of institutionalizing financial discipline and reducing India’s high public debt levels. It sets targets for the government to reduce its fiscal deficit, revenue deficit, and public debt over time.
Ques:
15
With reference to the Fiscal Responsibility and Budget Management (FRBM) Act 2003, consider the following statements:
1. The FRBM Act requires the government to publish a medium-term fiscal policy statement (MTFP) every year.
2. The FRBM Act sets a target for the central government’s fiscal deficit of 2% of GDP.
3. The FRBM Act is not a flexible and adaptable piece of legislation.
How many of the above statements are correct?
Correct Answer:
(B)
Only two
Statements 1 and 3 are correct. The Fiscal Responsibility and Budget Management (FRBM) Act requires the government to publish a medium-term fiscal policy statement (MTFP) every year. The MTFP outlines the government’s fiscal plans for the next three years. It includes projections for the fiscal deficit, debt-to-GDP ratio, and other key fiscal indicators.
The MTFP is an important tool for ensuring transparency and accountability in the government’s fiscal management. It allows the public to see how the government plans to manage its finances, and it provides a benchmark for assessing the government’s performance.
The MTFP is also used to guide the government’s budget-making process. The government’s annual budget should be consistent with the targets set in the MTFP.
The FRBM Act is not a flexible and adaptable piece of legislation. It sets rigid targets for the fiscal deficit and debt-to-GDP ratio, which makes it difficult for the government to respond to economic shocks.
For example, during the COVID-19 pandemic, the government needed to increase spending on healthcare and economic relief. However, the FRBM Act’s rigid targets made it difficult for the government to do so. As a result, the government had to borrow more money, which increased the debt-to-GDP ratio.
Statement 2 is incorrect. The FRBM Act mandates the central government to eliminate revenue deficit and reduce fiscal deficit to 3% of GDP by March 31, 2021. The FRBM Act also requires the government to limit the debt of the central government to 40% of the GDP by 2024-25.
Ques:
16
FRBM Act aimed for:
Eliminating both revenue deficit and fiscal deficit
Giving flexibility to RBI for inflation management
Which of the statements given above is/are correct?
Correct Answer:
(B)
2 only
FRBM act had the objective of ensuring prudence in fiscal management by eliminating revenue deficit, REDUCING (and not eliminating) fiscal deficit, establishing improved debt management and improving transparency in a medium term framework with quantitative targets to be adhered by the state with regard to deficit measures and debt management. The act was also expected to give necessary flexibility to RBI for managing inflation in India.
Ques:
17
FRBM Review Committee headed by:
Correct Answer:
(A)
Nand Kishore Singh
The FRBM Review Committee was formed under the chairmanship of a former Revenue and Expenditure Secretary Nand Kishore Singh. The other members of the committee included former RBI Governor Urjit Patel, former Finance Secretary Arvind Subramanian, among others.
Ques:
18
Consider the following terms related to FRBM act:
A gradual reduction in the fiscal deficit over time is known as Fiscal Glide.
A reckless extravagance or wasteful expenditure of public money is known as fiscal slippage.
Which of the statements given above is/are correct?
Correct Answer:
(A)
1 only
A gradual reduction in the fiscal deficit over time is known as Fiscal Glide.
Fiscal profligacy is reckless extravagance or wasteful expenditure of public money.
The failure to meet the government’s fiscal deficit target is known as fiscal slippage.
Ques:
19
Consider the following statements:
Financial Sector Legislative Reforms Commission (FSLRC) aimed to streamline and modernize the laws governing India's financial sector.
The overall goal is to enhancing financial stability and promoting growth.
Which of the statements given above is/are correct?
Correct Answer:
(C)
Both 1 and 2
The Financial Sector Legislative Reforms Commission (FSLRC) was a high-level committee established by the Indian government in March 2011 to review and reform the financial sector's legal and regulatory framework. Headed by retired Supreme Court Judge B.N. Srikrishna, the FSLRC aimed to streamline and modernize the laws governing India's financial sector, with the goal of enhancing financial stability and promoting growth.
Ques:
20
Who among the following heads the Financial Sector Legislative Reforms Commission:
Correct Answer:
(B)
B.N.Srikrishna
The Financial Sector Legislative Reforms Commission (FSLRC) was chaired by Justice (Retd.) B.N. Srikrishna. The commission had ten members with expertise in finance, economics, law, and other relevant fields.