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IAS Prelims Exam: Economic Survey 2015-16 Questions: Reforming the Fertiliser Sector

Apr 5, 2016 15:29 IST

    To study Economic Survey is very important because UPSC in its IAS Prelims Exam used to ask various terms which are associated with the issues of Indian Economy. As per the recent trend, the subject Economy has important place in General Studies Paper I of IAS Prelims Exam in which around 15 to 25 questions used to ask every year. So, the aspirants need to study very hard to cover all the topics of GS Paper I of IAS Prelims Exam. Here, we have developed Multiple Choice Questions on one of the chapters of Economic Survey 2015-16 i.e. - Reforming the Fertiliser Sector

    1. In order to prevent diversion to industrial use of which of the following product, neem-coating has been done by the government of India?

    a.Medicines
    b.Stone
    c.Urea
    d.Agriculture Produce

    Answer: c

    Explanation:

    Since 2014, important reforms have been implemented in the fertiliser sector. These include the neem-coating of urea, which has likely reduced the diversion of fertiliser meant for Indian farmers; and gas pooling, which should increase efficiency of domestic urea production. Both steps should help small farmers by improving their access to low cost fertiliser. They will also provide good building blocks for further fertiliser sector reform.

    2. Which of the following statements is correct regarding the Urea sector?

    I.The urea sector is highly regulated creates a black market that burdens small farmers disproportionately.
    II.The urea sector is incentivises production inefficiency.
    III.The urea sector is depleting soil quality and damaging human health.

    Which of the following statement(s) is/are correct?

    a.Only I
    b.I and II
    c.I and III
    d.All of the above

    Answer: d

    Explanation:

    The urea sector is highly regulated which: creates a black market that burdens small farmers disproportionately; incentivises production inefficiency; and leads to over-use, depleting soil quality and damaging human health.

    Incentivising Production inefficiency means the highly efficient Fertiliser Manufacturing units are paid fewer subsidies because their production cost per unit is less than the inefficient units.

    For Example. In the present setup Government pays subsidy to the fertiliser producer directly.

    Let the market Price is Rs. 500 Per Kg.
    Unit 1 (efficient unit) Produces 1 Kg of Fertiliser in 800 Rs. Government will provide Rs. 200 as Subsidy.
    Unit 2 (inefficient unit) Produces 1 Kg of Fertiliser in 1000 Rs. Government will provide Rs. 500 as Subsidy.

    3. Consider the following statements regarding the leakages in subsidised urea:

    I.The 24 per cent of total subsidy is spent on inefficient urea producers
    II.The remaining, 41 per cent is diverted to non-agricultural uses and abroad
    III.Of the remaining, 24 per cent is consumed by larger—presumably richer— farmers.

    Which of the following statement(s) is/are correct?

    a.Only I
    b.I and II
    c.I and III
    d.All of the above

    Answer: d

    Explanation:

    In fact, subsidised urea suffers from 3 types of leakage: (i) 24 per cent is spent on inefficient urea producers (ii) of the remaining, 41 per cent is diverted to non-agricultural uses and abroad; (iii) of the remaining, 24 per cent is consumed by larger—presumably richer— farmers. These leakages imply that only 35 per cent—about Rs. 17500 crore of the total urea subsidy of Rs. 50300 crore—reaches the intended beneficiaries, small and marginal farmers.

    4. Which of the following basic types of fertilisers not in use in India?

    a.Urea
    b.Dendrovorm
    c.Diammonium Phosphate (DAP)
    d.Muriate of Potash (MOP)

    Answer: b

    Explanation:

    here are 3 basic types of fertiliser used—urea, Di-ammonium Phosphate (DAP), and Muriate of Potash (MOP) but in many ways, urea dominates the sector.

    5. Which of the following fertilisers considered as the most physically controlled fertiliser?

    a.Diammonium Phosphate (DAP)
    b.Muriate of Potash (MOP)
    c.Urea
    d.Dendrovorm

    Answer: c

    Explanation:

    Of all the fertilisers, it is the most produced (86 per cent), the most consumed (74 per cent share), and the most imported (52 per cent). It also faces the most government intervention. Urea is the most physically controlled fertiliser, with 50 per cent under the Fertiliser Ministry’s movement control order compared with 20 per cent for DAP and MOP.

    6. Which of the following statements is correct regarding the Comprehensive Cost of Cultivation Survey?

    a.The Comprehensive Cost of Cultivation (CoC) Survey is a mechanism for data generation on cost structure of forested land and required cost of making that land cultivable.

    b.The Comprehensive Cost of Cultivation (CoC) Survey is a mechanism for data generation on cost structure of crops and various inputs which are used for cultivation of different crops in India.

    c.The Comprehensive Cost of Cultivation CoC) Survey is a mechanism for data generation on cost structure of lands and various inputs which are used for cultivation of different crops in India.

    d.The Comprehensive Cost of Cultivation (CoC) Survey is a mechanism for data generation on cost structure of Kharif crops and various inputs required for cultivation of Kharif crops in India.

    Answer: b

    Explanation:

    The Comprehensive Cost of Cultivation (CoC) Survey is a mechanism for data generation on cost structure of crops and various inputs which are used for cultivation of different crops in India. The survey has been designed by the Central Statistics Office (CSO) and the data collection is performed annually by the Department of Agriculture and Cooperation.

    7. Urea is used as one of the ingredients in:

    a.Explosives
    b.Chemical industry
    c.Automobile system
    d. All of the above

    Answer: d

    Explanation:

    Urea is used as one of the ingredients in chemical industry, explosives, automobile systems, laboratories, medical uses, flavour enhancing additive in cigarettes and others.

    8. Among which of the following firms have permission to import urea in India?

    a.State Trading Corporation of India (STC)
    b.Metals and Minerals Trading Corporation of India (MMTC)
    c.India Potash Limited (IPL)
    d.All of the above

    Answer: d

    Explanation:

    Only three firms are allowed to import urea into India, and the canalisers are also instructed when to import, what quantities to import, and in which districts to sell their goods. Every season the Fertiliser Department estimates how much imports are required by forecasting domestic supply and demand.

    9. The Situational Assessment Survey of Agricultural Households aimed at

    I. at capturing the condition of agricultural households in the rural areas of the country in the context of policies and programmes of Government of India.

    II. to collect information on various aspects relating to farming and other socio-economic characteristics of agricultural households.

    Which of the following statement(s) is/are correct?

    a.Only I
    b.Only II
    c.I and II
    d.Neither I nor II

    Answer: c

    Explanation:

    The Situational Assessment Survey of Agricultural Households aimed at capturing the condition of agricultural households in the rural areas of the country in the context of policies and programmes of Government of India. It was designed to collect information on various aspects relating to farming and other socio-economic characteristics of agricultural households. Information on consumer expenditure, information on income and productive assets, their indebtedness, farming practices and preferences, resource availability, awareness of technological developments, access to modern technology in the field of agriculture and information on crop loss & crop insurance was also collected.

    10. Fertiliser accounts for large fiscal subsidies. It is second highest among all. Which type of subsidy accounts the highest percentage of GDP?

    a. Oil Subsidy
    b. Energy Subsidy
    c. Food Subsidy
    d. None of the Above

    Answer. c

    Explanation:

    Food Subsidy has the highest share of the GDP. Fertiliser accounts for large fiscal subsidies (about 0.73 lakh crore or 0.5 percent of GDP), the second-highest after food. Food Subsidy Bill stands at Rs 105,509.41 crore (US$ 15.35 billion) during 2015-16 (up to January, 2016). It accounts for around 0.75 percent of GDP.


    Click here for Questions of Various chapters of Economic Survey 2015-16

     

     

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