BBA Business Environment June 2015 Solved Question Paper With Answers

Service Development and Efficiency : A second aim of privatisation is to improve the economic efficiency and development of the service in question. For example, some states allow for the deregulation of utilities. By allowing more than one utility company to provide electricity or gas,


customers are able to possibly reap the benefits of lower prices through competition. It is thought that privately-owned companies operate more efficiently than government entities. Efficiency is higher in the private sector due to a stronger connection between the business owners and its
executive operators.

Budget Improvement When services are provided by the private sector, a public entity such as a federal government is no longer financially responsible. Transferring the responsibility allows a public entity to gain income from the sale of the business or service in question and reduce its financial burden. The additional income gained from the transfer of ownership might be used to reduce citizen tax rates, pay down debts or go toward other expenses.

7. Discuss the main instruments used by ‘RBI’ for credit control.

Ans. The government through the Reserve Bank of India employees the monetary policy as an instrument of achieving the objectives of general economic policy. Quantitative measures and qualitative measures are taken by RBI iii the following manner:

(a) Quantitative Measures : The quantitative measures of credit control are:

(i) Bank Rate Policy: The bank rate is the official interest rate at which RBI rediscounts the approved bills held by commercial banks. For controlling the credit, inflation and money supply, RBI will increase the bank rate. Current bank rate is 6%.

(ii) Open Market Operations (OMO) : It refer to diret sales and purchase of securities and bills in the open market by Reserve Bank of India The aim is to control the volume of credit.

(iii) Cash Reserve Ratio: It refers to that portion of total deposits in commercial bank which it has to keep with RHI as cash reserves. The current cash reserve ratio is 6%.

(iv) Statutory Liquidity Ratio: It refers to that portion deposits with the banks, which it has to keep with itself as liquid assets (Gold, approved govt. securities etc.). The current SLR is 25%. If RBI wishes to control credit and discourage credit it would increase CRR & SLR.

(b) Qualitative Measures : Qualitative credit is used by the RBI for selective purposes. Some of them are:

(i) Margin Requirements : This refers to the difference between the securities offered and amount borrowed from the banks.

(ii) Consumer Credit Regulation : This refers to issuing rules regarding down payments and maximum maturities of instalment credit for purchase of goods.

(iii) Guidelines : RBI issues oral, written statements, appeals, guidelines, warnings etc. to the banks.

(iv) Rationing of Credit: The RBI controls the credit granted/allocated by commercial banks. Moral Suasion psychological means and informal means of selective credit control.

(v) Direct Action: This step is taken by the RBI against banks that don’t fulfil conditions and requirements. RB.I may refuse to re-discount their papers or may give excess credits or charge a penal rate of interest over and above the bank rate, for credit demanded beyond a limit.

8. What types of concessions are available to “SEZ’s”?

Ans. Concessions to SEZ’s

(a)Supplies to SEZ’s for the authorised operations of the SEZ units are exempted from payment of central excise duties and service tax. However, rebate for central excise duty paid by DTA supplier on supply of goods to SEZ units can be claimed from the jurisdictional central excise authorities.

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