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Economic Survey 2016-17 for IAS Prelims: The Economic Vision for Precocious, Cleavaged India Part 2

Feb 17, 2017 14:11 IST

    Economy Survey chapter 2 quiz

    Ias questions from the Indian economy section are largely correlated with the socioeconomic developments registered in the economic survey of the preceding year and hence it is important to have an overall analysis of the survey.

    The Economic Vision for Precocious Cleavage India Part 1

    The Economic Survey of India is an annual document of the Ministry of Finance, Government of India. The Finance Ministry of India presents the Economic Survey in the parliament every year, just before the Union Budget.

    ECONOMIC SURVEY 2016-17 IMPORTANT QUESTIONS

    Here, we provide exclusive questions on Economic Survey 2017 which can prove to be extremely helpful in IAS Prelims 2017 preparation.

    1. According to the Economic Survey 2016-17, what are the “4 C’s ”referee institutions:

    a.  Courts, CVC (Central Vigilance Commission), CBI (Central Bureau of Investigation) and CAG (Comptroller and Auditor General).
    b. CEC (Chief Election Commissioner), CVC (Central Vigilance Commission), CBI (Central Bureau of Investigation) and CAG (Comptroller and Auditor General).
    c. CIC (Chief Information Commissioner), CVC (Central Vigilance Commission), CBI (Central Bureau of Investigation) and CAG (Comptroller and Auditor General).
    d. All of the above.

    Answer: a

    Explanation:

    In the case of the twin balance sheet problem mentioned above, it is well-known that senior managers in public sector banks are reluctant to take decisions to write down loans for fear of being seen as favouring corporate interests and hence becoming the target of the referee institutions, the so-called “4 Cs”. This encourages ever-greening of loans, thereby postponing a resolution of the problem.

    The 4 Cs are courts, CVC (Central Vigilance Commission), CBI (Central Bureau of Investigation) and CAG (Comptroller and Auditor General).

    Union Budget 2017 Questions for IAS Exam

    2. According to the Economic Survey 2016-17, the redistribution by the government is far from efficient in targeting the poor if the effectiveness of existing programs such as ICDS (Integrated Child Development Scheme) is being tested. Consider the following statements regarding the mentioned scheme:

    1) ICDS is a centrally sponsored scheme.
    2) ICDS aims at providing services to pre-school children so as to ensure proper growth and development of children in rural, tribal and slum areas.
    3) The chief beneficiaries are children in the age group of 14-16 years, pregnant women and lactating mothers.

    Which of the above statements is correct?

    a. 1 and 3
    b. 2 and 3
    c. 1 and 2
    d. All of the above

    Answer: c

    Explanation:

    The Integrated Child Development Service (ICDS) Scheme providing for supplementary nutrition, immunisation and pre-school education to the children is a popular flagship programme of the government. It is one of the world’s largest programs providing for an integrated package of services for the holistic development of the child. ICDS is a centrally sponsored scheme implemented by state governments and union territories.

    The prime objectives are to improve the nutritional and health status of children in the age-group 0-6 years; to lay the foundation for proper psychological, physical and social development of the child; to reduce the incidence of mortality, morbidity, malnutrition and school dropout; to achieve effective co-ordination of policy and implementation amongst the various departments to promote child development; and to enhance the capability of the mother to look after the normal health and nutritional needs of the child through proper nutrition and health education.

    The chief beneficiaries are children in the age group of 0-6 years, pregnant women and lactating mothers. The ICDS Scheme offers a package of six services that are supplementary nutrition, pre-school non-formal education, nutrition & health education, immunisation, health check-up and referral services.

    Review of Economic Development

    3. According to the Economic Survey 2016-17, India is amongst the handful of countries with perennial democracies. Which other countries are associated as perennial democracies by the survey?

    a. Botswana, Indonesia and Costa Rica
    b. Botswana, Mauritius and Jamaica
    c. Maldives, Jamaica, and Costa Rica
    d. All of the above

    Answer: b

    Explanation:

    The second set of accelerated economic successes mostly in East Asia began authoritarian, explicitly (Korea, China) or de facto (Singapore, Thailand, Taiwan), and gave way to political transformation only after a degree of economic success was achieved. Explicit authoritarianism came in three flavours: military (Korea), the party (China), or individual dictatorship (Indonesia).

    India, on the other hand, has attempted economic development while also granting universal franchise from the very beginning. India is amongst a handful of countries—Botswana, Mauritius, Jamaica, Trinidad and Tobago, and Costa Rica—which are perennial democracies (those on the right-hand side).

    4. According to the Economic Survey 2016-17, the exit problem can be especially difficult in a poor, cleavaged democracy like India because of:

    a. Cleavaged democracy is dominated by strong institutions and an ideology that favours redistribution over investments.
    b. Cleavaged democracy is dominated by weak institutions and an ideology that favours redistribution over investments.
    c. Cleavaged democracy is dominated by weak institutions and an ideology that favours investments over redistribution.
    d. None of the above.

    Answer: b

    Explanation:

    A poor country with weak state capacity like India when confronted with the pressure to redistribute had necessarily to redistribute inefficiently, using blunt and leaky instruments. The luxury of effectively targeted programs was not an option in 1950 or 1960 or even 1990.

    All this explains why such policy interventions began. But this cannot fully explain why such inefficient redistribution persists because, after all, other countries have graduated toward less inefficient forms of redistribution. A partial explanation is the difficulty of exit.

    The exit is difficult everywhere but it can be especially difficult in a poor, cleavaged democracy dominated by vested interests, weak institutions and an ideology that favours redistribution over investments.

    Economic Survey 2016-17 Fiscal Rules

    5. Consider the following statements regarding the Exit problem in Indian democracy:

    1) If the state's role is predominantly redistribution, the middle class will seek to exit from the state.
    2) Large taxpayers are a sign of exit problem.
    3) India’s income taxpayers number relative to the voting age population is low.

    Which of the above statements is correct?

    a. 1 and 2
    b. 2 and 3
    c. 1 and 3
    d. All of the above

    Answer: c

    Explanation:

    Unless the middle class in society perceives that it derives some benefits from the state, it will be unwilling to finance redistribution. In other words, the legitimacy to redistribute is earned through a demonstrated record of effectiveness in delivering essential services. A corollary is that if the state's role is predominantly redistribution, the middle class will seek to exit from the state.

    So, a precocious cleavaged democracy is almost destined to succumb to this pathology. One sign of exit is fewer taxpayers. This is abundantly evident in India. India’s income taxpayers number relative to the voting age population, especially when compared to other countries is very slowly growing.

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