INTERNATIONAL MANAGEMENT

INSTITUTE KOLKATA

COURSE: Indian Economy

Course Code: ESB1006

PGDM: 2020- 2022

END TERM EXAMINATION

Date: Mar 13, 2021

Time: 90 mins
Full marks: 30

Instructions

1. Answer all questions (as instructed).

2. Do NOT use scrap paper or write notes on your timetable; do all rough work in the answer books and
cross it through (including any questions which you have answered over and above the number required
by the examiners), as well as any other work you do not wish to be marked. Supplementary answer books
should be used only when the main answer book is full (and not just for rough work) and should be tied
securely behind the main answer book with the string/staples provided.
3. Answer books and all other materials provided by IMI Kolkata must be submitted to the officials. You may,
however, take away the question paper. All answers to examination questions must be in English unless
instructions are given to the contrary. Write in ink (BLACK OR BLUE ONLY) and write as clearly as
possible. Examiners may refuse to mark scripts which are illegible.
4. Silent, cordless, non-programmable calculators are allowed.
5. Once time has been called, you must not write anymore and your script must be ready for collection. You
must obey this and any other instructions given to you by the invigilating staff.
6. You are reminded that examination conditions still apply when you are instructed by the Supervisor to
vacate the examination hall in the event of an emergency. You must not communicate with any other
candidate on any topic. In the event of fire or any other emergency which necessitates the evacuation of
an examination hall, you will be instructed to leave all materials on your desk and to leave as quickly as
possible in an orderly manner.

1
Credit will be given ONLY to brief and to the point answers.

1. “Designing MSPs (minimum support price) have several public policy

challenges”. Give 3 arguments in favor of this statement.

6
2. Mention 4 main distinguishing features of the Insolvency and Bankruptcy
Code 2016 adopted in India as against the erstwhile regulation on the
resolution of bankruptcy for non-financial firms. 6
3. (a) Give 3 reasons why GST by its principle and design, is not ex-
pected to be inflationary.
(b) Do you agree that reducing informalization (defined by: more
sectors/goods and services coming under tax net) will lead to an
expected fall in the GST rates, on an average?
(c) Suppose there is only one ‘final’ good ‘cheesecake’ in an economy,
which uses Good B-cheese as input. Again, Good B uses Good A-
milk as input. Suppose the value addition (VA) made by each of
the producers of A, B and C is Rs.100 at respective stages of
production, and the tax rate in 10%. Compare the ‘tax
incidence on the consumer’ (net-tax on consumers as % of
VA consumed) under the scenarios: (1) when tax is imposed on
the VA and input tax credit - ITC, is received by the tax payer
on every stage of production and (2) Government has decided
to keep the cheesecake industry (VA therein) under ’NIL’ tax
bracket.
3+2+4=9
4. (a) Put forward economic rationale for the following: government’s
intervention is necessary in the health sector with regard to -
infectious disease, immunization drive, insurance.
(b) Consider the diagram below and interpret the claim that “sub-
sidy has (mostly) missed the target”. The diagram relates to the
impact of subsidies (implicitly or explicitly) given by the gov-
ernment on different commodities. We define Benefit as: How
important is that commodity for the “target group”, say bot-
tom 30-40%; Measured as expenditure on that commodity as a
share of total expenditure for the target households; and Cost
as: What fraction of the subsidy goes to the “non-target” group
(top 40% as per NSS Consumer expenditure Survey), measured
as what fraction of the subsidy goes to the “non-target” group.
6+3=9

2
End of Question Paper