Economy & Business MCQs

PLI schemes, tax concessions, and direct subsidies are common incentives used by governments to boost manufacturing and attract investment.

Manufacturing incentives are typically aimed at strengthening the domestic manufacturing base, reducing import dependence (Make in India initiative's spirit), and creating jobs.

When liquidity is managed cautiously, it often means tighter conditions, leading to higher borrowing costs for banks (e.g., through higher repo rates) which can then translate to higher lending rates for customers.

OMOs (selling government securities) and Reverse REPO are key tools for absorbing excess liquidity, aligning with a cautious stance. QE and CRR reductions are typically expansionary.

A cautious liquidity stance by the RBI typically aims to manage inflationary pressures and ensure overall financial stability, rather than directly stimulating growth or reducing fiscal deficits.

Interest subvention on export credit (e.g., pre-shipment and post-shipment credit) is a common incentive provided by the government to reduce the cost of borrowing for exporters, making their products more competitive. Other common incentives include duty remission schemes and tax benefits.

The Ministry of Commerce and Industry is the nodal ministry responsible for India's foreign trade policy, including the formulation and implementation of various schemes to promote exports.

Government schemes to boost exports are designed to make domestic products more competitive in international markets, thereby increasing India's share in global trade and earning foreign exchange.

Maintaining a "status quo" means that the Monetary Policy Committee has decided to keep the key policy rates, such as the repo rate, reverse repo rate, and bank rate, unchanged from their previous levels.

The primary objective of the MPC is to maintain price stability while keeping in mind the objective of growth. The current inflation target is 4% with a band of +/- 2%.