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Economy of India: GK Quiz on Bank Privatisation

Tulika Tandon

Recently a World Bank Report has predicted that the Indian Economy would grow at a higher rate in the fiscal year 2021-22. The growth rate that has been predicted is of 8.3%. Also the NITI Aayog has submitted its report regarding the banks it finds resourceful to be privatized. Take a look at the GK Quiz below with questions based on Bank Privatization and Indian Economy. 

1. What is also known as Fiscal Stimulus?

  1. A massive investment by the Government in manufacturing sector to ensure the supply of goods to meet the demand surge caused by rapid economic growth
  2. Intense affirmative action of the Government to boost economic activity in the country
  3. Government’s intensive action on financial institutions to ensure disbursement of loans to agriculture and allied sectors to promote greater food production and contain food inflation
  4. An extreme affirmative action by the Government to pursue its policy of financial inclusion

Ans. d

Explanation: Fiscal stimulus is the policy measures any government undertakes, that reduce taxes or regulations, or increase government spending to boost economic activity.

2. How much growth of the Indian Economy has been predicted by the World Bank in 2021?

  1. 6.4%
  2. 8.3%
  3. 7.8%
  4. 5.4%

Ans. b

Explanation: The Indian Economy would expand by 8.3% in the fiscal year 2021-22 as said by the World Bank.

3. Which of the below mentioned tactics of the Government lead to reduction in the current account deficit?

i) Devaluation of the domestic currency

ii) Reduction in the export subsidy

iii) Adoption of suitable policies to get greater FDI and funds from FIIs

  1. Only i
  2. Both i and ii
  3. Both ii and iii
  4. All of the above 

Ans. b

Explanation: In case any Government devalues the domestic currency, more money flows into the population and the same happens when export subsidy is reduced. This leads to reduction in the deficit that is created in the current account. 

  1. Economic Growth also causes:
  1. Inflation
  2. Deflation
  3. Stagflation
  4. None of the above

Ans. a

Explanation: Economic Growth of any country is coupled with Inflation. 

  1. Which of the following banks has been suggested to be privatised by the Government of India in 2021?
  1. Bank of Baroda
  2. Punjab National Bank
  3. Bank of India
  4. State Bank of India

Ans. c

Explanation: 

  1. Who has to decide as to which banks would be privatised in India?
  1. Finance Ministry
  2. World Bank
  3. Reserve Bank of India
  4. NITI Aayog

Ans. d

Explanation: NITI Aayog has submitted the names of two public sector banks (PSBs) and one public sector general insurer, which can be sold off under the government’s new privatisation policy

  1. What are the consequences of a lowered Bank rate by RBI?
  1. Increased liquidity in the market
  2. Decreased liquidity in the market
  3. No change in liquidity of the market
  4. More deposition in the banks

Ans. a

Explanation: In case the RBI lowers the bank rate, the liquidity of money that is the flow of money increases in the market. 

  1. In which year was the ordinance passed to nationalise the Indian Banks?
  1. 1965
  2. 1969
  3. 1970
  4. 1972

Ans. b

Explanation: Prime Minister Indira Gandhi issued an ordinance to nationalize 14 largest commercial banks in India with effect from July 19, 1969, under the regulatory authority of the Reserve Bank of India. 

  1. Which of the following statements justify the Reserve Bank's status as Banker of Banks?

i) RBI lends funds to the commercial banks in times of need

ii) Other banks retain their deposits with the RBI

iii) RBI advises the commercial banks on monetary matters

  1. Only i
  2. i and ii
  3. ii and iii
  4. All of the above 

Ans. d

Explanation: Reserve bank is the source of funding to all commercial banks in India and also acts as a bank to the banks. It also helps to frame the monetary policy of India. 

  1. Which was the first bank to be nationalised in India?
  1. RBI
  2. SBI
  3. PNB
  4. BOB

Ans. a

Explanation: The first bank in India to be nationalized was the Reserve Bank of India. This happened in January 1949. 

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