INSIGHTSIAS SIMPLYFYING IAS EXAM PREPARATION OFFLINE Centres at BENGALURU | DELHI | HYDERABAD INSTA Revision Plan 3.0 - 2020 INSTA Tests DAYS 31 to 34 SOLUTIONS For more visit: www.INSIGHTSONINDIA.com Copyright © by Insights IAS All rights are reserved. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission of Insights IAS. INSIGHTSIAS SIMPLYFYING IAS EXAM PREPARATION DAY – 31 1. Which of the following factors are taken into consideration for determination of MSP 1. International price situation 2. Effect on issue prices and implications for subsidy 3. Inter-crop price parity Which of the statements given above is/are correct? (a) 1 and 2 only (b) 1 and 3 only (c) 2 and 3 only (d) 1, 2 and 3 Solution: D Determination of MSP In formulating the recommendations in respect of the level of minimum support prices and other non-price measures, the Commission takes into account, apart from a comprehensive view of the entire structure of the economy of a particular commodity or group of commodities, the following factors:- 1. Cost of production 2. Changes in input prices 3. Input-output price parity 4. Trends in market prices 5. Demand and supply 6. Inter-crop price parity 7. Effect on industrial cost structure 8. Effect on cost of living 9. Effect on general price level 10. International price situation 11. Parity between prices paid and prices received by the farmers. 12. Effect on issue prices and implications for subsidy 2. Consider the following statements regarding Pricing policy for sugarcane 1. The pricing of sugarcane is governed by the statutory provisions under the Essential Commodities Act (ECA), 1955. www.insightsonindia.com 1 INSTA Revision 3.0 INSIGHTSIAS SIMPLYFYING IAS EXAM PREPARATION 2. States can also announce a price called the State Advisory Price (SAP) which is usually higher than the Statutory Minimum Price. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Solution: C Pricing policy for sugarcane The pricing of sugarcane is governed by the statutory provisions of the Sugarcane (Control) Order, 1966 issued under the Essential Commodities Act (ECA), 1955. Prior to 2009-10 sugar season, the Central Government was fixing the Statutory Minimum Price (SMP) of sugarcane and farmers were entitled to share profits of a sugar mill on 50:50 basis. As this sharing of profits remained virtually unimplemented, the Sugarcane (Control) Order, 1966 was amended in October, 2009 and the concept of SMP was replaced by the Fair and Remunerative Price (FRP) of sugarcane. A new clause ‘reasonable margins for growers of sugarcane on account of risk and profits’ was inserted as an additional factor for working out FRP and this was made effective from the 2009-10 sugar season. Accordingly, the CACP is required to pay due regard to the statutory factors listed in the Control Order, which are 1. the cost of production of sugarcane; 2. the return to the grower from alternative crops and the general trend of prices of agricultural commodities; 3. the availability of sugar to the consumers at a fair price; 4. the price of sugar; 5. the recovery rate of sugar from sugarcane; 6. the realization made from sale of by-products viz. molasses, bagasse and press mud or their imputed value (inserted in December, 2008) and; 7. reasonable margins for growers of sugarcane on account of risk and profits (inserted in October, 2009). States also announce a price called the State Advisory Price (SAP), which is usually higher than the SMP. 3. Consider the following statements regarding Removal of judges 1. A judge is removable from his office, only on the grounds of proved misbehavior or incapacity. 2. A judge may be removed from his office only by an order of the president. 3. The words “misbehaviour” and “incapacity” have been defined in the Constitution www.insightsonindia.com 2 INSTA Revision 3.0 INSIGHTSIAS SIMPLYFYING IAS EXAM PREPARATION Which of the pairs given above is/are correctly matched? (a) 1 and 2 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3 Solution: A Removal of Judges: Article 124(4) and the Judges Inquiry Act 1968 determine the procedure of removal of the judges: 1. A motion of impeachment addressed to the President is to be signed by at least 100 members of the Lok Sabha or 50 members of the Rajya Sabha and then delivered to the Speaker of Lok Sabha or the Chairman of Rajya Sabha. 2. The motion is to be investigated by a Committee of 3 judges of the Supreme Court and a distinguished jurist. 3. If the Committee finds the judge guilty of misbehavior or that he suffers from incapacity, the motion along with the report of the committee is taken up for consideration in the House where motion was moved. 4. The judge is then removed by the requisite majority, i.e. majority of total and 2/3 of its members present and voting. Key facts: • A member of the higher judiciary, which means the Judges and Chief Justices of the Supreme Court of India and the state High Courts, can be removed from service only through the process of impeachment under Article 124 (4) of the Constitution. • A judge is removable from his office, only on the grounds of proved misbehavior or incapacity. • A judge may be removed from his office only by an order of the president. • The words “misbehaviour” or “incapacity” have neither been defined nor clarified in the Constitution. 4. Consider the following statements regarding Buffer Stock Policy 1. The concept of buffer stock was first introduced during the 1st Five Year Plan. 2. Buffer stock of food grains is used for price stabilisation or market intervention to augment supply so as to help moderate the open market prices. Which of the statements given above is/are correct? (a) 1 only (b) 2 only www.insightsonindia.com 3 INSTA Revision 3.0 INSIGHTSIAS SIMPLYFYING IAS EXAM PREPARATION (c) Both 1 and 2 (d) Neither 1 nor 2 Solution: B Buffer Stock Policy of the Government of India (GOI) The concept of buffer stock was first introduced during the IVth Five Year Plan (1969-74). Buffer stock of food grains in the Central Pool is maintained by the Government of India (GOI) / Central Government for 1. meeting the prescribed minimum buffer stock norms for food security, 2. monthly release of food grains for supply through Targeted Public Distribution System (TPDS) and Other Welfare Schemes (OWS), 3. meeting emergency situations arising out of unexpected crop failure, natural disasters, etc., and 4. price stabilisation or market intervention to augment supply so as to help moderate the open market prices. 5. Consider the following statements regarding Operation Twist 1. It has been launched by Ministry of Finance 2. It aims to ensure Fiscal consolidation Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Solution: D Operation Twist: • RBI launched US-style ‘Operation Twist’ to bring down interest rates. • ‘Operation Twist’ is when the central bank uses the proceeds from sale of short-term securities to buy long-term government debt papers, leading to easing of interest rates on the long-term papers. • The objective behind such an operation is management of the yield curve. • It will help to make loans less expensive with those looking to buy homes, cars and make savings less desirable as it doesn’t pay much interest. www.insightsonindia.com 4 INSTA Revision 3.0 INSIGHTSIAS SIMPLYFYING IAS EXAM PREPARATION • Other central banks, including the US Federal Reserve, have used similar measures. This is the first time RBI has undertaken such an unconventional policy measure with the aim of flattening the yield curve by lowering longer rates to boost lending and growth. 6. Consider the following statements regarding major features of Model APMC Act 2003 1. It provides for direct sale of farm produce to contract farming sponsors. 2. It introduced licensing for market functionaries and trade at any market area within state. 3. It permits private persons, farmers and consumers to establish new markets for agricultural produce in any area. Which of the statements given above is/are correct? (a) 1 and 2 only (b) 1 and 3 only (c) 2 and 3 only (d) 1, 2 and 3 Solution: B Model APMC Act 2003 • The monopoly of Government regulated wholesale markets has prevented development of a competitive marketing system in the country. An efficient agricultural marketing is essential for the development of the agriculture sector as it provides outlets and incentives for increased production, the marketing system contribute greatly to the commercialization of subsistence farmers. Worldwide Governments have recognized the importance of liberalized agriculture markets. In accordance with above objectives, Model APMC act was drafted by ministry of agriculture in 2003. Major Features: • It provides for direct sale of farm produce to contract farming sponsors. • It provides a provision for setting up “Special markets” for “specified agricultural commodities” • It permits private persons, farmers and consumers to establish new markets for agricultural produce in any area. • Every market shall levy market fee on sale or purchase of agriculture commodities which brought from within or outside state. • Replaces licensing with registrations of market functionaries and trade at any market area within state. • Market Committees permitted to use its funds to create facilities like grading, standardization and quality certification; to create infrastructure for post harvest handling of agricultural produce and development of modern marketing system.