Current based PRELIMS QUESTION 10 July 2020

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1. Consider the following statements with respect to the Agricultural produce market committees (APMCs).
1. It is a statutory market committee constituted by a State Government under the Agricultural Produce Market Committee (APLM) Act.
2. The APMC system was introduced to protect farmers from the exploitation of intermediaries and to ensure better prices for their produce through the auctions in the APMC area.
3. The National Agriculture Market is envisaged as a pan-India electronic trading portal which seeks to network the existing APMCs and other market yards to create a unified national market for agricultural commodities.
Which of the statement(s) given above is/are correct?
(a) 2 and 3 only
(b) 1 and 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer-d
Explanation-
Agricultural produce market committees (APMCs)
Agricultural Produce Market Committee (APMC) is a statutory market committee constituted by a State Government in respect of trade in certain notified agricultural or horticultural or livestock products, under the Agricultural Produce Market Committee Act issued by that state government.
APMCs are intended to be responsible for:
 ensuring transparency in pricing system and transactions taking place in market area;
 providing market-led extension services to farmers;
 ensuring payment for agricultural produce sold by farmers on the same day;
 promoting agricultural processing including activities for value addition in agricultural produce;
 Publicizing data on arrivals and rates of agricultural produce brought into the market area for sale; and
 Setup and promote public private partnership in the management of agricultural markets
Salient Features of the Model APMC Act:
 The Preamble of the Act is to provide for development of efficient marketing system, promotion of agri-processing and agricultural exports and to lay down procedures and systems for putting in place an effective infrastructure for the marketing of agricultural produce.
 Legal persons, growers and local authorities are permitted to apply for the establishment of new markets for agricultural produce in any area. Under the existing law, markets are setup at the initiative of State Governments alone. Consequently, in a market area, more than one market can be established by private persons, farmers and consumers.
 There will be no compulsion on the growers to sell their produce through existing markets administered by the Agricultural Produce Market Committee (APMC). However, agriculturist who does not bring his produce to the market area for sale will not be eligible for election to the APMC
 Separate provision is made for notification of ‘Special Markets’ or ‘Special Commodities Markets’ in any market area for specified agricultural commodities to be operated in addition to existing markets.
 A new Chapter on ‘Contract Farming’ added to provide for compulsory registration of all contract farming sponsors, recording of contract farming agreements, resolution of disputes, if any, arising out of such agreement, exemption from levy of market fee on produce covered by contract farming agreements and to provide for indemnity to producers’ title/ possession over his land from any claim arising out of the agreement
 .Provision made for direct sale of farm produce to contract farming sponsor from farmers’ field without the necessity of routing it through notified markets.
 Provision made for imposition of single point levy of market fee on the sale of notified agricultural commodities in any market area and discretion provided to the State Government to fix graded levy of market fee on different types of sales.
 Licensing of market functionaries is dispensed with and a time bound procedure for registration is laid down. Registration for market functionaries provided to operate in one or more than one market areas.
 Commission agency in any transaction relating to notified agricultural produce involving an agriculturist is prohibited and there will be no deduction towards commission from the sale proceeds payable to agriculturist seller.
 Provision made for the purchase of agricultural produce through private yards or directly from agriculturists in one or more than one market area
 Provision made for the establishment of consumers’/ farmers’ market to facilitate direct sale of agricultural produce to consumers
 Provision made for resolving of disputes, if any, arising between private market/ consumer market and Market Committee.
 .State Governments conferred power to exempt any agricultural produce brought for sale in market area, from payment of market fee.
 Market Committees permitted to use its funds among others to create facilities like grading, standardization and quality certification; to create infrastructure on its own or through public private partnership for post harvest handling of agricultural produce and development of modern marketing system
 The State Agricultural Marketing Board made specifically responsible for:
 setting up of a separate marketing extension cell in the Board to provide market-led extension services to farmers;
 promoting grading, standardization and quality certification of notified agricultural produce and for the purpose to set up a separate Agricultural Produce Marketing Standards Bureau.
 Funds of the State Agricultural Marketing Board permitted to be utilized for promoting either on its own or through public private partnership, for the following:
 market survey, research, grading, standardization, quality certification, etc.;
 Development of quality testing and communication infrastructure.
 Development of media, cyber and long distance infrastructure relevant to marketing of agricultural and allied commodities.
The National Agricultural Market (NAM)
Union Budget 2014-15 and Union Budget 2015-16 had suggested the creation of a National Agricultural Market (NAM) as a priority issue.
On 2 July 2015, Union Cabinet unveiled its plan to go ahead with the project amidst the constitutional constrains as mentioned above.
The National Agriculture Market is envisaged as a pan-India electronic trading portal which seeks to network the existing APMCs and other market yards to create a unified national market for agricultural commodities.
NAM is a “virtual” market but it has a physical market (mandi) at the back end. NAM is proposed to be achieved through the setting up of a common e-platform to which initially 585 APMCs selected by the states will be linked.
The Central Government is provided the software free of cost to the states and in addition a grant of up to Rs. 30 lakhs per mandi will be given as a onetime measure for related equipment and infrastructure requirements.
In order to promote genuine price discovery, it is proposed to provide the private mandis also with access to the software but they would not have any monetary support from Government.
http://www.arthapedia.in/index.php%3Ftitle%3DAgricultural_Produce_Market_Committee_(APMC)

2. Consider the following statements with respect to the New Foreign Direct Investment (FDI) rules in e-commerce.
1. The new policy for e-commerce bars companies from selling products exclusively on their online portals.
2. FDI is not permitted in inventory based model of e-commerce.
3. India allows 100 percent FDI in the marketplace model of e-commerce, which it defines as a tech platform that connects buyers and sellers.
4. In marketplace model, payments for sale may be facilitated by the e-commerce entity in conformity with the guidelines of the RBI.
Which of the following statements is/are correct?
(a) 1, 2 and 3 only
(b) 2, 3 and 4 only
(c) 1 and 3 only
(d) All of the above
Answer-d
Explanation-
Foreign Direct Investment (FDI) rules in e-commerce
E-commerce entity- E-commerce entity means a company incorporated under the Companies Act 1956 or the Companies Act 2013 or a foreign company covered under section 2 (42) of the Companies Act, 2013 or an office, branch or agency in India as provided in section 2 (v) (iii) of FEMA 1999, owned or controlled by a person resident outside India and conducting the e-commerce business.
Inventory based model of e-commerce- Inventory based model of e-commerce means an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly.
Marketplace based model of e-commerce
Marketplace based model of e-commerce means providing of an information technology platform by an e-commerce entity on a digital & electronic network to act as a facilitator between buyer and seller.
Guidelines for Foreign Direct Investment on e-commerce sector
(i) 100% FDI under automatic route is permitted in marketplace model of e-commerce.
(ii) FDI is not permitted in inventory based model of e-commerce.
Other Conditions
 Digital & electronic network will include network of computers, television channels and any other internet application used in automated manner such as web pages, extranets, mobiles etc.
 Marketplace e-commerce entity will be permitted to enter into transactions with sellers registered on its platform on B2B basis.
 E-commerce marketplace may provide support services to sellers in respect of warehousing, logistics, order fulfillment, call centre, payment collection and other services.
 E-commerce entity providing a marketplace will not exercise ownership or control over the inventory i.e. goods purported to be sold. Such an ownership or control over the inventory will render the business into inventory based model. Inventory of a vendor will be deemed to be controlled by e-commerce marketplace entity if more than 25% of purchases of such vendor are from the marketplace entity or its group companies.
 An entity having equity participation by e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity.
 In marketplace model goods/services made available for sale electronically on website should clearly provide name, address and other contact details of the seller. Post sales, delivery of goods to the customers and customer satisfaction will be responsibility of the seller.
 In marketplace model, payments for sale may be facilitated by the e-commerce entity in conformity with the guidelines of the Reserve Bank of India.
 In marketplace model, any warrantee/ guarantee of goods and services sold will be responsibility of the seller.
 E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field. Services should be provided by e-commerce marketplace entity or other entities in which e-commerce marketplace entity has direct or indirect equity participation or common control, to vendors on the platform at arm’s length and in a fair and non-discriminatory manner. Such services will include but not limited to fulfillment, logistics, warehousing, advertisement/ marketing, payments, financing etc. Cash back provided by group companies of marketplace entity to buyers shall be fair and non-discriminatory. For the purposes of this clause, provision of services to any vendor on such terms which are not made available to other vendors in similar circumstances will be deemed unfair and discriminatory.
 Guidelines on cash and carry wholesale trading as given in para 5.2.15.1.2 of Consolidated FDI Policy Circular 2017 will apply on B2B e-commerce.
 E-commerce marketplace entity will not mandate any seller to sell any product exclusively on its platform only.
 E-commerce marketplace entity will be required to furnish a certificate along with a report of statutory auditor to Reserve Bank of India, confirming compliance of above guidelines, by 30th of September of every year for the preceding financial year.
Subject to the conditions of FDI policy on services sector and applicable laws/regulations, security and other conditionality’s, sale of services through e-commerce will be under automatic route.
The above decision will take effect from 01 February, 2019.

https://pib.gov.in/newsite/PrintRelease.aspx?relid=186804
https://www.livemint.com/Companies/5t08JnDkEBZw9mXU1Pwd3I/What-new-FDI-guidelines-mean-for-the-ecommerce-ecosystem.html

3. Consider the following statements regarding the International Monetary Fund (IMF).
1. The IMF was conceived in July 1944 at the United Nations Bretton Woods Conference in United States.
2. Its primary mission is to ensure the stability of the international monetary system i.e. the system of exchange rates and international payments that enables countries and their citizens to transact with each other.
3. It provides periodic assessments of global prospects in its World Economic Outlook and of financial markets in its Global Financial Stability Report.
Which of the following statements is/are correct?
(a) 2 and 3 only
(b) 1 and 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer-d
Explanation-
International Monetary Fund
The International Monetary Fund, or IMF, promotes international financial stability and monetary cooperation.
It also facilitates international trade, promotes employment and sustainable economic growth, and helps to reduce global poverty. The IMF is governed by and accountable to its 189 member countries.
Founding and mission: The IMF was conceived in July 1944 at the United Nations Bretton Woods Conference in New Hampshire, United States.
The 44 countries in attendance sought to build a framework for international economic cooperation and avoid repeating the competitive currency devaluations that contributed to the Great Depression of the 1930s.
The IMF’s primary mission is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries and their citizens to transact with each other.
Surveillance: In order to maintain stability and prevent crises in the international monetary system, the IMF monitors member country policies as well as national, regional, and global economic and financial developments through a formal system known as surveillance.
The IMF provides advice to member countries and promotes policies designed to foster economic stability, reduce vulnerability to economic and financial crises, and raise living standards.
It also provides periodic assessments of global prospects in its World Economic Outlook, of financial markets in its Global Financial Stability Report, of public finance developments in its Fiscal Monitor, and of external positions of the largest economies in its External Sector Report, in addition to a series of regional economic outlooks.
Financial assistance: Providing loans to member countries that are experiencing actual or potential balance-of-payments problems is a core responsibility of the IMF.
Individual country adjustment programs are designed in close cooperation with the IMF and are supported by IMF financing, and ongoing financial support is dependent on effective implementation of these adjustments.
In response to the global economic crisis, in April 2009 the IMF strengthened its lending capacity and approved a major overhaul of its financial support mechanisms, with additional reforms adopted in subsequent years.
These changes enhanced the IMF’s crisis-prevention toolkit, bolstering its ability to mitigate contagion during systemic crises and allowing it to better tailor instruments to meet the needs of individual member countries.
Loan resources available to low-income countries were sharply increased in 2009, while average limits under the IMF’s concessional loan facilities were doubled. Access limits under the IMF’s non-concessional lending facilities were again reviewed and increased in 2016, when the effectiveness conditions for the 14th Review were met (see below). In addition, zero interest rates on concessional loans were extended through end-June 2019, and the interest rate on emergency financing is permanently set at zero. Finally, loan resources in the amount of SDR 11.4 billion (SDR 0.4 billion above target) were recently secured to support the IMF’s concessional lending activities well into the next decade.
Capacity development: The IMF provides technical assistance and training to help member countries build better economic institutions and strengthen related human capacities. This includes, for example, designing and implementing more effective policies for taxation and administration, expenditure management, monetary and exchange rate policies, banking and financial system supervision and regulation, legislative frameworks, and economic statistics.
SDRs: The IMF issues an international reserve asset known as Special Drawing Rights, or SDRs, that can supplement the official reserves of member countries. Total global allocations are currently about SDR 204 billion (some $283 billion). IMF members can voluntarily exchange SDRs for currencies among themselves.
Resources: Member quotas are the primary source of IMF financial resources. A member’s quota broadly reflects its size and position in the world economy. The IMF regularly conducts general reviews of quotas. The lastest review (the 14thReview) was concluded in 2010 and the quota increases became effective in 2016. This review doubled quota resources to SDR 477 billion (about US$661 billion). In addition, credit arrangements between the IMF and a group of members and institutions provide supplementary resources of up to about SDR 182 billion ($253 billion), and are the main backstop to quotas. As a third line of defense, member countries have also committed resources to the IMF through bilateral borrowing agreements, totaling about SDR 317 billion ($440 billion).
Governance and organization: The IMF is accountable to its member country governments. At the top of its organizational structure is the Board of Governors, consisting of one governor and one alternate governor from each member country, usually the top officials from the central bank or finance ministry. The Board of Governors meets once a year at the IMF–World Bank Annual Meetings. Twenty-four of the governors serve on the International Monetary and Financial Committee, or IMFC, which advises the IMF’s Executive Board on the supervision and management of the international monetary and financial system. The day-to-day work of the IMF is overseen by its 24-member Executive Board, which represents the entire membership and supported by IMF staff. The Managing Director is the head of the IMF staff and Chair of the Executive Board and is assisted by four Deputy Managing Directors.

https://www.imf.org/en/About/Factsheets/IMF-at-a-Glance

4. Consider the following statements regarding the Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme.
1. This would support setting up of both Electronics Manufacturing Clusters (EMCs) and Common Facility Centers (CFCs).
2. The Scheme will create a robust infrastructure base for electronic industry to attract flow of investment in ESDM sector and lead to greater employment opportunities.
3. India’s share in global electronics manufacturing grew and it accounts for 2.3% of India’s GDP at present.
Which of the following statements is/are correct?
(a) 2 and 3 only
(b) 1 and 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer-d
Explanation-
Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme
The Union Cabinet chaired by the Prime Minister, has approved financial assistance to the Modified Electronics Manufacturing Clusters (EMC2.0) Scheme for development of world class infrastructure along with common facilities and amenities through Electronics Manufacturing Clusters (EMCs).
It is expected that these EMCs would aid the growth of the ESDM sector, help development of entrepreneurial ecosystem, drive innovation and catalyze the economic growth of the region by attracting investments in the sector, increasing employment opportunities and tax revenues.
The Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme would support setting up of both Electronics Manufacturing Clusters (EMCs) and Common Facility Centers (CFCs).
For the purpose of this Scheme, an Electronics Manufacturing Cluster (EMC) would set up in geographical areas of certain minimum extent, preferably contiguous, where the focus is on development of basic infrastructure, amenities and other common facilities for the ESDM units.
For Common Facility Centre (CFC), there should be a significant number of existing ESDM units located in the area and the focus is on upgrading common technical infrastructure and providing common facilities for the ESDM units in such EMCs, Industrial Areas/Parks/industrial corridors.
Financial Implications
The total outlay of the propose EMC 2.0 Scheme is Rs. 3,762.25 crore (Rupees Three Thousand Seven Hundred Sixty Two Crore and Twenty Five Lakh Only) which includes the financial assistance of Rs. 3,725 crore (Rupees Three Thousand Twenty Five Hundred Crore Only) and administrative and management expense to the tune of Rs. 37.25 crore (Rupees Thirty Seven Crore and Twenty Five Lakh Only) over a period of eight (8) years.
Benefit
The Scheme will create a robust infrastructure base for electronic industry to attract flow of investment in ESDM sector and lead to greater employment opportunities. Following are the expected outputs/outcomes for the Scheme:
i. Availability of ready infrastructure and Plug & Play facility for attracting investment in electronics sector:
ii. New investment in electronics sector
iii. Jobs created by the manufacturing units;
iv. Revenue in the form of taxes paid by the manufacturing units
Background
To build and create requisite infrastructure ecosystem for electronics manufacturing; Ministry of Electronics and Information Technology (MeitY) notified Electronics Manufacturing Clusters (EMC) Scheme which was open for receipt of applications upto October, 2017.
A period of 5 years (i.e. upto October, 2022) is available for disbursement of funds for the approved projects.
Under EMC scheme, 20 Greenfield EMCs and 3 Common Facility Centres (CFCs) measuring an area of 3565 acres with project cost of Rs. 3898 crore including Government Grant-in-aid of Rs. 1577 crore have been approved in 15 states across the country.
There is a need for continuation of such scheme in modified form for further strengthening the infrastructure base for electronics industry in the country and deepening the electronics value chain.
India’s electronics production has increased from Rs. 1,90,366 crore (US$29 billion) in 2014-15 to Rs. 4,58,006 (US$ 70 billion) in 2018-19, at a Compound Annual Growth Rate (CAGR) of about 25%.
India’s share in global electronics manufacturing grew from 1.3% (2012) to 3.0% (2018). It accounts for 2.3% of India’s GDP at present.
https://pib.gov.in/PressReleasePage.aspx?PRID=1607489

5. Consider the following statements With reference to the Remission of Duties and Taxes on Exported Products (RoDTEP).
1. It will replace the Merchandise Export from India Scheme (MEIS) that was found to violate the World Trade Organization rules as it was export focused.
2. The rebate would be claimed as a percentage of the Freight On Board (FOB) value of exports.
3. Under the Scheme an inter-ministerial Committee will determine the rates and items for which the reimbursement of taxes and duties would be provided.
Which of the statement(s) given above is/are correct?
(a) 2 and 3 only
(b) 1 and 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer-d
Explanation
Remission of Duties and Taxes on Exported Products (RoDTEP)
The Cabinet Committee on Economic Affairs, chaired by Prime Minister has given its approval for introducing the Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP) under which a mechanism would be created for reimbursement of taxes/ duties/ levies, at the central, state and local level, which are currently not being refunded under any other mechanism, but which are incurred in the process of manufacture and distribution of exported products.
This scheme is going to give a boost to the domestic industry and Indian exports providing a level playing field for Indian producers in the International market so that domestic taxes/duties are not exported.
Under the Scheme an inter-ministerial Committee will determine the rates and items for which the reimbursement of taxes and duties would be provided.
In line with “Digital India”, refund under the Scheme, in the form of transferable duty credit/electronic scrip will be issued to the exporters, which will be maintained in an electronic ledger. The Scheme will be implemented with end to end digitization.
The refunds under the RoDTEP scheme would be a step towards “zero-rating” of exports, along with refunds such as Drawback and IGST.
This would lead to cost competitiveness of exported products in international markets and better employment opportunities in export oriented manufacturing industries.
In line with the vision of Prime Minister, various export oriented industries are being reformed and introduced to better mechanisms so as to increase their productivity, boost exports and contribute to the overall economy.
Salient features:
At present, GST taxes and import/customs duties for inputs required to manufacture exported products are either exempted or refunded. However, certain taxes/duties/levies are outside GST, and are not refunded for exports, such as, VAT on fuel used in transportation, Mandi tax, Duty on electricity used during manufacturing etc. These would be covered for reimbursement under the RoDTEP Scheme.
The sequence of introduction of the Scheme across sectors, prioritization of the sectors to be covered, degree of benefit to be given on various items within the rates set by the Committee will be decided and notified by the Department of Commerce (DoC).
The rebate would be claimed as a percentage of the Freight On Board (FOB) value of exports.
A monitoring and audit mechanism, with an Information Technology based Risk Management System (RMS), would be put in to physically verify the records of the exporters. As and when the rates under the RoDTEP Scheme are announced for a tariff line/ item, the Merchandise Exports from India Scheme (MEIS) benefits on such tariff line/item will be discontinued.
https://pib.gov.in/newsite/PrintRelease.aspx?relid=200197