Daily Current Affairs (MCQ) | Date 15.03.22

Q1. Which of the following is/are correctly matched ?

Select the correct answer from the codes given below

a. 1 and 2 only
b. 2 and 3 only
c. 2 only
d. 1, 2 and 3

Answer : c

Why is the Question ?

Arms from the West too:
1. After the Cold War ended, India diversified its purchases to dilute its dependence on Russia for arms. While the narrative has been on the MiGs, Antonovs, Sukhois, S-400, T-90 tanks, Grad rocket launchers, Kilo-class submarines, et. al, one overlooks the fact that India has become heavily dependent on the West too for a multitude of frontline armament systems.
2. For example, the heavy-lift transport fleet of the Indian Air Force (IAF) relies heavily on the American C-17 and C-130J Super Hercules aircraft, while the helicopter fleet has the Chinook and Apache attack helicopters.
3. Similarly, the Indian Navy has the Boeing P-8I long-range aircraft for maritime surveillance and is acquiring MH-60 helicopters for anti-submarine warfare and Sea Guardian drones for reconnaissance.
4. The Indian Army’s M777 artillery guns are from the West, the IAF’s Rafale and Mirage fighters from France, Jaguars from Britain and a multitude of drones from Israel; even the basic infantry rifle is being imported.
5. And, India has signed three ‘foundational’ agreements with the U.S.; the sword of Damocles, through the Countering America’s Adversaries Through Sanctions Act (CAATSA) is ever-present.
6. The list is very long and encompasses both ‘camps,’ as it were. Are there any doubts now about why, besides political reasons, we abstained in the UN Security Council vote? So, what is the way out?

Q2. Which of the following are major components of the retail inflation measure CPI?

1. Cement and Metals
2. Food and Beverages
3. Housing
4. Fuel and Light
5. Clothing and Footwear
6. Pan, tobacco and intoxicants

Select the correct answer from the codes given below

a. 1 and 4 only
b. 2, 3, 4, 5 and 6 only
c. 1, 2 and 3 only

d. 1, 2, 3, 4, 5 and 6

Answer : b

Why is the Question ?

Retail inflation climbs to 6.07%
1. India’s retail inflation inched up to an eight-month high of 6.07% in February from 6.01% in January, with rural India experiencing a sharper price rise at 6.38%. For urban consumers, the inflation rate, in fact, fell from 5.91% in January to 5.75% in February.
2. Food prices saw an upward trajectory, with inflation measured by the Consumer Food Price Index rising to 5.85% in February from 5.43% in January.
3. This trend was divergent for rural and urban India, with the latter seeing a slight moderation in food inflation, while rural food inflation shot up by 0.7 percentage points to 5.87%.
4. Food and beverages inflation hit a 15-month high, and the rising prices of edible oils are likely to pose a challenge in the coming months.
5. Inflation appears to have become generalised and experts believe it will be 5.5% to 6% through 2022-23, so the Reserve Bank of India [RBI] may consider a change in its forecast too.

RBI may reconsider its accommodative growth-focused policy stance?
1. The RBI has projected average retail inflation of 4.5% for the coming year.
2. Most economists don’t expect the RBI to shift from its accommodative growth-focused policy stance yet, despite the retail inflation crossing its tolerance threshold of 6% for the second month.

Components of CPI
The major component in CPI (C) are as follows (along with their weights)
 Food and Beverages – 45.86
 Housing – 10.07
 Fuel and Light – 6.84
 Clothing and Footwear – 6.53
 Pan, tobacco and intoxicants – 2.38
 Miscellaneous – 28.32

Q3. Which of the following major components of the wholesale inflation measure WPI?

1. Manufactured Goods
2. Primary articles
3. Fuel & Power

Select the correct answer from the codes given below

a. 1 and 2 only
b. 2 and 3 only
c. 2 only
d. 1, 2 and 3

Answer : d

Why is the Question ?

February wholesale price inflation quickens to 13.11%
1. Inflation in wholesale prices resurged to 13.11% in February after two months of mild cooling off, staying above the 10% mark for the eleventh month in a row, as per official data released.

2. Inflation measured by the Wholesale Price Index (WPI) was at 12.96% in January after hitting a record high of 14.9% in November 2021.
3. Fuel and power inflation touched 31.5% this February, the lowest in five months and only slightly lower than January’s 32.3%. Manufactured products inflation picked up from 9.42% to 9.84%, signalling that producers have begun passing part of their rising input costs to end-users even as the pace of price rise in basic metals shot up to almost 20%, from 16.3% in January.
4. Primary articles continued to record elevated inflation at 13.39%, the fourth successive month above 10%. The Food Index, however, moderated from a 24-month high of 9.55% in January to 8.47% in February and helped limit the overall rise in inflation.

Major components of WPI

1. Primary articles is a major component of WPI, further subdivided into Food Articles and Non-Food Articles.
 Food Articles include items such as Cereals, Paddy, Wheat, Pulses, Vegetables, Fruits, Milk, Eggs, Meat & Fish, etc.
 Non-Food Articles include Oil Seeds, Minerals and Crude Petroleum
2. The next major basket in WPI is Fuel & Power, which tracks price movements in Petrol, Diesel and LPG
3. The biggest basket is Manufactured Goods. It spans a variety of manufactured products such as Textiles, Apparels, Paper, Chemicals, Plastic, Cement, Metals, and more.
4. Manufactured Goods basket also includes manufactured food products such as Sugar, Tobacco Products, Vegetable and Animal Oils, and Fats.

Q4. Consider the following statements

1. In India, long-term capital gains on equities held for more than a year is taxed at 10%
2. The long-term capital gains are taxed in many countries at the 25-30% range, or the applicable income tax rates

Which of the above statements is/are correct?

a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2

Answer : c

Why is the Question ?

Govt likely to reform capital gains tax to increase revenue Long-term capital gains on equities held for more than a year is taxed at 10%. The government estimates that long-term capital gains are taxed in many countries at the 25-30% range, or the applicable income tax rates.
Need to change the Capital gains tax structure
1. The Narendra Modi administration is likely to revamp the capital gains tax structure in the next budget to augment revenue collections and boost spending on welfare schemes.
2. At the heart of the proposal being studied in the finance ministry is the government’s philosophy that passive income earned from the capital market should not be taxed at a lower rate than income earned from doing business, which involves taking entrepreneurial risks and job creation.

3. The plan is also rooted in the government’s idea of welfarism for which revenue needs to be boosted.
4. Making the capital gains tax structure more efficient needs legislative amendments.
Current capital gains regime:
1. In India, long-term capital gains on equities held for more than a year is taxed at 10% on the portion of such gain above a threshold of ₹1 lakh. This provision was introduced with effect from April 1, 2019.
2. The capital gains tax regime prescribes the holding period for determining whether the gain made when selling the asset is short term or long term.
3. Short-term capital gain on equities held for less than a year is taxed at 15% in the case of listed shares and the applicable income tax slab if it is unlisted.
4. Taxation and benefit transfers were two levellers as far as tackling income inequality is concerned. In India, we do not have the data, but experience from countries such as the US, where data is available, suggests the picture of post-tax, posttransfer income inequality is quite different from the one painted by data on pre-tax, pre-transfer income inequality.
5. The capital gains tax structure has become too complicated and needs a relook. 80% of the long-term capital gains from equities in FY20 was made by people earning ₹50 lakh and more.
6. The government estimates that long-term capital gains are taxed in many countries at the 25-30% range, or the applicable income tax rates.

Challenges:
1. Higher capital gains tax in India when compared with other emerging market economies could reduce the country’s relative attractiveness as an investment destination and encourage Indians to invest in assets such as real estate. Lower investments in productive assets can also slow down economic growth.
2. Tax experts said that raising long-term capital gain tax on equities also faces other practical problems.
3. The buoyancy in the capital markets that we have seen in recent times is because of the tax regime. One needs to see if any such change also derails the government’s plan to pursue large disinvestments.

Q5. Which of the following assets when transferred are taxable under Capital gains tax?

1. Gold
2. House
3. Unlisted shares
4. Listed shares

Select the correct answer from the codes given below

a. 1 and 4 only
b. 2, 3 and 4 only
c. 1, 2 and 3 only
d. 1, 2, 3 and 4

Answer : d

Why is the Question ?

Capital gains tax applicable on many asset classes: